Professional Documents
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Mutual Funds
Risk Management Factsheets Return Portfolio Tax Saving Redemption Entry Load Investment Objective Asset Allocation Open Ended Growth Fund Manager Repurchase Price AUMs Professional Management
Close Ended
Sale Price
Snapshot.
Mutual Fund
An old Axiom :
was probably in the minds of those who formed the first mutual fund.
Indian Institute of Capital Markets
Contents
Flow Cycle of a Mutual Fund Diff. b/w MF and Direct Investment History of Mutual Funds in India Balance sheet of a Bank and Mutual Fund Risk-return structure of schemes Organizational Structure of a Mutual Fund Classification of Mutual Fund Schemes
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Returns
Investors
Securities
Fund Manager
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.
The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Diff. b/w MF and Direct Investment Mutual fund investing vs. Direct investing
Professional investment management Risk reduction through diversification Convenience Availability of alternative portfolio objectives
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Trustees
Holds assets on behalf of unit holders in trust, Trustees are caretaker of unit holders money, Two third of the trustees shall be independent persons (not associated with the sponsor), Trustees ensure that the system, processes & personnel are in place, Resolves unit holders GRIEVANCES, Appoint AMC & Custodian, & ensure that all activities are accordance with the SEBI regulation.
Indian Institute of Capital Markets
Distributor / Agents
Sell units on the behalf of the fund, It can be bank, NBFCs, individuals.
Indian Institute of Capital Markets
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Portfolio objectives
High Risk & High Return Moderate Risk & Return Fixed Return Zero Risk Tax Saving Additional diversification Market Driven
By Investment Objective
Equity (Growth) only in Stocks Long Term (3 years or more)
Other Schemes
Tax Saving Schemes such as ELSS Special Schemes (ETFs, foreign funds)
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
2009 ?
Regulatory Aspects
Flow Cycle of a Mutual Fund Diff. b/w MF and Direct Investment History of Mutual Funds in India Balance sheet of a Bank and Mutual Fund Risk-return structure of schemes Organizational Structure of a Mutual Fund Classification of Mutual Fund Schemes
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Risk Management
Flow Cycle of a Mutual Fund Diff. b/w MF and Direct Investment History of Mutual Funds in India Balance sheet of a Bank and Mutual Fund Risk-return structure of schemes Organizational Structure of a Mutual Fund Classification of Mutual Fund Schemes
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Risk factors
Volatility in performance, portfolio concentration, Interest rate movement, liquidity risk & credit risk. Deal error, settlement problem, NAV & fund pricing Operations error, inaccurate financial reporting, fraud. Error in deal processing, fraud . Customer Marketing & distribution New product development, selling & distribution Critical knowledge loss, skills shortage, third party Other business risk risk Disaster recovery & business contingency plans. Insurance against third party loss (R&TA), arising from error & omission.
Investment Checklists
Flow Cycle of a Mutual Fund Diff. b/w MF and Direct Investment History of Mutual Funds in India Balance sheet of a Bank and Mutual Fund Risk-return structure of schemes Organizational Structure of a Mutual Fund Classification of Mutual Fund Schemes
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Benchmark returns
SEBI directs Fund's returns compared to its benchmark
Time period
Equal to time for which you plan to invest Equity- compare for 5 years, Debt- for 6 months
Market conditions
Proved its mettle in bear market
Expenses
Flow Cycle of a Mutual Fund Diff. b/w MF and Direct Investment History of Mutual Funds in India Balance sheet of a Bank and Mutual Fund Risk-return structure of schemes Organizational Structure of a Mutual Fund Classification of Mutual Fund Schemes
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
An asterisk * indicates fee which is included in a funds expense ratio. As per SEBI Rule, expense ratio should be 2.5% for equity & 2.25% for debt fund of fund value.
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Keeping Track
Filling up an application form and writing out a cheque = end of the story No! Periodically evaluate performance of your funds Fact sheets and Newsletters Websites such as www.valueresearchonline.com, www.mutualfundsindia.com, www.morningstar.in, www.lipperweb.com et al. Newspapers Professional advisor
Warning Signals
Flow Cycle of a Mutual Fund Diff. b/w MF and Direct Investment History of Mutual Funds in India Balance sheet of a Bank and Mutual Fund Risk-return structure of schemes Organizational Structure of a Mutual Fund Classification of Mutual Fund Schemes
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
Warning Signals
Warning Signals
Fund's management changes; Performance slips compared to similar funds; Fund's expense ratios climb; Beta, a technical measure of risk, also climbs; Independent rating services reduce their ratings of the fund; It merges into another fund; Change in management style or a change in the objective of the fund.
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
3927 3730
8726 2057
19063 1975
11577 6368
12105
17996
70% 60% 50% 40% 30%
59447
14371 4663 22938 5472 67144 119538 6833 9170
19937
11659
99081 192129
20% 10%
0%
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec 08
Income
Equity
Balanced
Liquid/Money Market
Gilt
ELSS
GOLD ETFs
Other ETFs
FoFs
Stock Funds have become a mainstream product. Liquid Plus Funds and FMPs have seen aggressive inflows due to regulatory changes. New asset classes like ETFs and FoFs have emerged.
Indian Institute of Capital Markets
549936
500000
-13 %
413365
400000
66 %
300000
323597
14 %
200000
101822
100000
122600
Total Assets Under Management as on March 2009 Rs 493286 crores Total No. of players - 36
Indian Institute of Capital Markets
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
235
230
200
182
In Millions
150
100
90
58
50
26 8.4
0
Bank A/cs
Credit Cards
Debit Cards
Mobile Subscribers
Note: Penetration of Mutual Funds is still low as compared to Banks and Insurance Companies.
Indian Institute of Capital Markets
Regulatory Aspects
Risk Management
Investments Checklists
Warning Signals
Expenses
What Mutual Funds are not? MFs are not MFs are not MFs are not MFs are not get rich quick investments risk free investment assured return investment a universal solution to all investment needs
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