INTRODUCTION

Mutual funds have become a hot favorite of millions of people all over the world. The driving force of mutual funds is the safety of the principal guaranteed plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer mutual funds to bank deposits, the insurance and even bonds because with a little money, they can get into the investment game. One can own a string of blue chips like ITC, TISCO, Reliance etc., through mutual funds. Thus, mutual funds act as a gateway to enter into big companies hitherto inaccessible to an ordinary investor with his small investment. Mutual Funds refer to a fund, managed by an investment company with the financial objective of generating high Rate of Returns. These asset management or investment management companies collects money from the investors and invests those money in different Stocks, Bonds and other financial securities in a diversified manner. Before investing they carry out thorough research and detailed analysis on the market conditions and market trends of stock and bond prices. These things help the fund managers to speculate properly in the right direction.

WHAT IS MUTUAL FUND To in simple words, a mutual fund collects the saving from small investors, invest them in government and other corporate securities and earn income through interest and dividends, besides capital gains, Its works on the principle of small drop of water makes a big ocean. For instance, if one has Rs1000 to invest, it may not fetch very much on its own. But, when it is pooled with Rs.1000 each from a lot of other people, then, one could create a big fund large enough to invest in a wide varieties of share and debentures on a commanding scales thus, to enjoy the economics of large scale on operations. Hence a mutual fund is nothing but a form of collective investment. It is formed by the coming together of a number of investors who transfer their surplus fund to professionally qualified organization to manage it. Each fund is divided into a small fraction called unites of equal value. Each investor is allocated unites in portions to the size of his investment. Thus, every investor, whether big or small, will have stake in fund. Hence, mutual funds enable millions of small and large investors who emerge to participate in and derive the benefit of the capital market growth. It has emerged as a popular vehicle of creation of wealth due to high return, lower cost and diversified risk.

DEFINITION According to Weston J. Ferd and Brigham, Eugene, F., Unit trusts are Corporations which accept dollars from savers and then use these dollars to buy stocks, long term bonds, and short term debt instruments issued by business or governments units, these corporations pool funds and thus reduce risk by diversification. Thus mutual funds are corporations which pool funds by selling their own shares and reduce risk by diversification.

HISTORY
The first mutual funds were established in Europe. One researcher credits a Dutch merchant with creating the first mutual fund in 1774. The first mutual fund outside the Netherlands was the Foreign & Colonial Government Trust, which was established in London in 1868. It is now the Foreign & Colonial Investment Trust and trades on the London stock exchange. Mutual funds were introduced into the United States in the 1890s. They became popular during the 1920s. These early funds were generally of the closed-end type with a fixed number of shares which often traded at prices above the value of the portfolio. The first open-end mutual fund with redeemable shares was established on March 21, 1924. This fund, the Massachusetts Investors Trust, is now part of the MFS family of funds. However, closed-end funds remained more popular than open-end funds throughout the 1920s. By 1929, open-end funds accounted for only 5% of the industry's $27 billion in total assets. After the stock market crash of 1929, Congress passed a series of acts regulating securities markets in general and mutual funds in particular. The Securities Act of 1933 requires that all investments sold to the public, including mutual funds, be registered with the Securities and Exchange Commission and that they provide
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prospective investors with a prospectus that discloses essential facts about the investment. The Securities and Exchange Act of 1934 requires that issuers of securities, including mutual funds, report regularly to their investors; this act also created the Securities and Exchange Commission, which is the principal regulator of mutual funds. The Revenue Act of 1936 established guidelines for the taxation of mutual funds, while the Investment Company Act of 1940 governs their structure. When confidence in the stock market returned in the 1950s, the mutual fund industry began to grow again. By 1970, there were approximately 360 funds with $48 billion in assets. The introduction of money market funds in the high interest rate environment of the late 1970s boosted industry growth dramatically. The first retail index fund, First Index Investment Trust, was formed in 1976 by The Vanguard Group, headed by John Bogle; it is now called the Vanguard 500 Index Fund and is one of the world's largest mutual funds, with more than $100 billion in assets as of January 31, 2011. Fund industry growth continued into the 1980s and 1990s, as a result of three factors: a bull market for both stocks and bonds, new product introductions (including tax-exempt bond, sector, international and target date funds) and wider distribution of fund shares. Among the new distribution channels were retirement plans. Mutual funds are now the preferred investment option in certain types of
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fast-growing retirement plans, specifically in 401(k) and other defined contribution plans and in individual retirement accounts (IRAs), all of which surged in popularity in the 1980s. Total mutual fund assets fell in 2008 as a result of the credit crisis of 2008. In 2003, the mutual fund industry was involved in a scandal involving unequal treatment of fund shareholders. Some fund management companies allowed favored investors to engage in late trading, which is illegal, or market timing, which is a practice prohibited by fund policy. The scandal was initially discovered by then-New York State Attorney General Eliot Spitzer and resulted in significantly increased regulation of the industry. At the end of 2011, there were over 14,000 mutual funds in the United States with combined assets of $13 trillion, according to the Investment Company Institute (ICI), a trade association of investment companies in the United States. The ICI reports that worldwide mutual fund assets were $23.8 trillion on the same date. Mutual funds play an important role in U.S. household finances and retirement planning. At the end of 2011, funds accounted for 23% of household financial assets. Their role in retirement planning is particularly significant. Roughly half of assets in 401(k) plans and individual retirement accounts were invested in mutual funds.

SCOPE OF MUTUAL FUND As stated earlier, a mutual fund is nothing but a pool of the investor funds. The special feature of a mutual fund is that the contributors and the beneficiaries of the fund are one and the same class of people i.e. investors. Nobody else can claim that fund. Since the investors themselves contribute to the pool of fund and enjoy it and its fruits, the term mutual has been employed. The important features of mutual funds are the following: (1) A mutual fund belongs to those who have contributed to that fund and thus, the ownership of the fund lies in the hands of the investor. (2) Since all investors cannot take part in the management of the fund, it is left in the hands of investment professionals who earn a fee for their services. (3) The pool of funds collected is invested in a portfolio of marketable securities. (4) The investors share in the fund is represented by units just like shares in the case of share capital of a company. The unit value depends upon the value of the portfolio held by the fund. Hence, the value changes almost every day and it is called Net Asset Value.

(5) Generally the investment portfolio of the mutual fund is created according to the objective of the fund. For example a sectoral mutual funds invests its funds in a specific sector like IT sector, Oil sector etc. Scope of Mutual Funds has grown enormously over the years. By investing in these funds they were able to diversify their investment in common stocks, preferred stocks, bonds and other financial securities. At the same time they also enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy access to their invested funds on requirement. In todays world, Scope of Mutual Funds has become so wide, that people sometimes take long time to decide the mutual fund type; they are going to invest in.

STRUCTURE
In the US, a mutual fund is registered with the Securities and Exchange Commission (SEC) and is overseen by a board of directors (if organized as a corporation) or board of trustees (if organized as a trust). The board is charged with ensuring that the fund is managed in the best interests of the fund's investors and with hiring the fund manager and other service providers to the fund. The fund manager, also known as the fund sponsor or fund management company, trades (buys and sells) the fund's investments in accordance with the fund's investment objective. A fund manager must be a registered investment advisor. Funds that are managed by the same fund manager and that have the same brand name are known as a "fund family" or "fund complex". Mutual funds are not taxed on their income and profits as long as they comply with requirements established in the U.S. Internal Revenue Code. Specifically, they must diversify their investments, limit ownership of voting securities, distribute a high percentage of their income and capital gains (net of capital losses) to their investors annually, and earn most of the income by investing in securities and currencies.

Mutual funds pass taxable income on to their investors by paying out dividends and capital gains at least annually. The characterization of that income is unchanged as it passes through to the shareholders. For example, mutual fund distributions of dividend income are reported as dividend income by the investor. There is an exception: net losses incurred by a mutual fund are not distributed or passed through to fund investors but are retained by the fund to be able to offset future gains.Mutual funds may invest in many kinds of securities. The types of securities that a particular fund may invest in are set forth in the fund's prospectus, which describes the fund's investment objective, investment approach and permitted investments. The investment objective describes the type of income that the fund seeks. For example, a "capital appreciation" fund generally looks to earn most of its returns from increases in the prices of the securities it holds, rather than from dividend or interest income. The investment approach describes the criteria that the fund manager uses to select investments for the fund. A mutual fund's investment portfolio is continually monitored by the

fund's portfolio manager or managers.Hedge funds are not considered a type of (unregistered) mutual fund. While they are another type of collective investment vehicle, they are not governed by the Investment Company Act of 1940 and are not required to register with the Securities and Exchange Commission (though many hedge fund managers must register as investment advisers)
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THE WIDE CHOICES IN MUTUAL FUNDS GO AS THE FOLLOWING:

Equity Funds or Stock Funds These types of Mutual Funds generally invest in stocks which are publicly traded. Amount of risk, involved with these funds vary according to different types of Equity Funds. Bond Funds These funds invest in government bonds and corporate bonds. These Bond Funds offer a steady source of income and in many times these incomes get the advantage of Tax Exemption. Money Market Funds These funds invest in the money market. These funds involve low level of risk and promises comparatively low rate of return.

Balanced Fund These funds invest both in Stocks and Bonds and thus offer a well diversified investment portfolio.

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INVESTMENT
Mutual Funds Investment has become a subject of great importance in the present context, especially when all the investors are keen to diversify their investment to maintain a balance between Investment Return and Investment Risk. For gaining the Diversified Investment Solution and the liquidity advantage, any person needs to invest in Mutual Funds. But, before investing their hard earned money one needs to carry out sincere research on the performance of those mutual funds, he is considering to invest in.

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The things that one needs to consider before deciding on any particular mutual fund are the following: Performance of the Fund and the Rate of Returns Investment Psychology of the Mutual Fund Risk Adjustment Fund Management

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TYPES OF MUTUAL FUNDS

OPEN-END FUNDS Open-end mutual funds must be willing to buy back their shares from their investors at the end of every business day at the net asset value computed that day. Most open-end funds also sell shares to the public every business day; these shares are also priced at net asset value. A professional investment manager oversees the portfolio, buying and selling securities as appropriate. The total investment in the fund will vary based on share purchases, share redemptions and fluctuation in market valuation. There is no legal limit on the number of shares that can be issued. Open-end funds are the most common type of mutual fund. At the end of 2011, there were 7,581 open-end mutual funds in the United States with combined assets of $11.6 trillion. CLOSED-END FUNDS Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. Their shares are then listed for trading on a stock exchange. Investors who no longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an open-end fund). Instead, they must sell their shares to another investor in the market; the price they receive may
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be significantly different from net asset value. It may be at a "premium" to net asset value (meaning that it is higher than net asset value) or, more commonly, at a "discount" to net asset value (meaning that it is lower than net asset value). A professional investment manager oversees the portfolio, buying and selling securities as appropriate. At the end of 2011, there were 634 closed-end funds in the United States with combined assets of $239 billion. INCOME FUNDS As the name suggest,these funds aims at generating and distributing regular income to the members on a periodical basis. It concentrates more on the distributing regular income and it also sees that the average return is higher than that of the income from bank deposits. The investors are assured of regular income at periodic intervals,say half-yearly or yearly or so on. The main objective of this type of fund is to declare regular dividends and not capital appreciation.

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 PURE GROWTH FUNDS (GROWTH ORIENTED FUNDS) Unlike the Income, Growth Funds concentrate mainly on long runs, i.e., capital appreciation. They do not offer regular income and they aim at capital appreciation in the long run. Hence, they have been described as NEST EGGS investments. BALANCED FUNDS This is otherwise called as income-cum-growth funds. It is nothing but a combination of both income and growth funds. It aims at distributing regular income as well as capital appreciation. This is achieved by balancing the investment between the high growth equity shares and also the fixed income earning securities. MONEY MARKET MUTUAL FUNDS These funds are basically Open ended Mutual Funds and such that they have all features in Open ended Funds. But, they invest in highly liquid and safe securities like commercial paper, bankers acceptance, certificate of deposits, treasury bills, etc. These instruments are called as Money Market instrument. They take the place of shares, debentures, and bonds in a capital market. They pay money market rate of interest. These Funds are called as Money Funds in USA and they have been functioning since 1972.

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Since MMMFs are a new concept in India, the RBI has laid down certain stringent regulations. For instance, the entry to MMMFs is restricted to only schedule commercial banks and their subsidiaries. MMMFs can invest in only in specified short term money market instruments like Certificate of Deposit, Commercial Papers, and 182 days treasury bills. They can also lend to call market. EXCHANGE-TRADED FUNDS A relatively recent innovation, the exchange-traded fund or ETF is often structured as an open-end investment company, though ETFs may also be structured as unit investment trusts, partnerships, investments trust, grantor trusts or bonds (as an exchange-traded note). ETFs combine characteristics of both closed-end funds and open-end funds. Like closed-end funds, ETFs are traded throughout the day on a stock exchange at a price determined by the market. However, as with open-end funds, investors normally receive a price that is close to net asset value. To keep the market price close to net asset value, ETFs issue and redeem large blocks of their shares with institutional investors. Most ETFs are index funds. ETFs have been gaining in popularity. At the end of 2011, there were 1,134 ETFs in the United States with combined assets of $1.1 trillion.

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 SPECIALISED FUNDS Besides the above, a larger number of specialized funds are in existence in abroad. They offer special schemes so as to meet the specific needs of specific catagories of people like pensioners, widows etc. There are also fund for investment in securities of specified areas. For instance, Japan Fund, South Korea Fund, and etc. In fact these funds open door for foreign investors to invest on domestic securities of these countries. Again some certain Funds may be confined to one particular sector or industry like fertilizer, automobiles, petroleum, etc. These Funds carry heavy risk since the entire investment is in one industry. But, there are high risk taking investors who preferthis type of Fund. Of course, in such cases the reward may commensurate with the risk taken. At times, it may be erratic. The best example of this type is the petroleum industry funds in the USA.

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RISKS IN MUTUAL FUNDS

Mutual funds are not free from risks. It is so because basically the mutual funds also invest their funds in the stock market on shares which are volatile in nature and are not free from risk. Hence, the following are risk inherent in their dealings: (i) Market Risks In general, there are certain risks associated with every kind of investment in shares. They are called market risks. These market risks can be reduced, but not eliminated even by a good investment management. The prices of shares are subject to wide price fluctuations depending upon market condition over which nobody has control. (ii) Scheme Risks There are certain risks inherent in the scheme itself. It all depends upon the nature of the scheme. For instance, in a pure growth funds scheme, risks are greater because if one expects more returns as in the case of growth scheme, one has to take more risks. (iii) InvestmentRisks Whether the Mutual Funds makes money in shares or loses depends upon the investment expertise of the ASSET MANAGEMENT COMPANY (AMC). If the
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investment advice goes wrong, the fund has to suffer a lot. The investment expertise of various funds is different and it is reflected on the returns which they offer to investors. (iv) Business Risks The corpus of mutual funds might have been invested in a companys shares. If the business of that company suffers any set back, it cannot declares any dividend (v) Political Risks Successive Governments brings with them new economic ideologies and policies. It often said that many economic decisionsare politically motivated. Changes in Government bring in the risks of uncertainty which every player in financial service industry has to face. So mutual funds are no exception to it.

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RISKS VS RETURN

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SEMI GUIDELINES ON MUTUAL FUND

The SEBI has laid down the following conditions for the use of Mutual funds: (i) Mutual funds should use only those mutual funds that reflect the asset

allocation of the fund. (ii) The period of comparison of returns should be identical for the fund and the

mutual fund. (iii) If the schemes offer document indicial a benchmark for return comparisons,

the same should be the scheme. (iv) Growth funds with more than 60% in equity should always use any of the

standard indices like Sensex, NSE Nifty, BSE 100 and Crisil 500. These indices should be used consistently throughout. Changes can happen only when asset allocation of the fund has changed significant, and trustees approve the change. (v) Income funds with more than 60% in the debt should use a bond market

index on bench mark. (vi) Balanced Funds can make use of tailor benchmarks that combine equity and

bond index returns in the same proportion as in the asset allocation of the fund. (vii) Money market funds can made use of a money market funds

(viii) Can made use of a money market instrument or the combination of such
instruments as benchmarks.
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CONTROVERSY
Critics of the fund industry argue that fund expenses are too high. They believe that the market for mutual funds is not competitive and that there are many hidden fees, so that it is difficult for investors to reduce the fees that they pay. They argue that the most effective way for investors to raise the returns they earn from mutual funds is to invest in funds with low expense ratios. Fund managers counter that fees are determined by a highly competitive market and, therefore, reflect the value that investors attribute to the service provided. In +addition, they note that fees are clearly disclosed.

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IMPORTANCE OF MUTUAL FUNDS

Channelizing Saving For Investment Mutual funds act as a vehicle in galvanizing the savings of the people by offering various schemes suitable to the various classes of customer for the development of the economy as a whole. A number of schemes are being offered by MFs so as to meet the varied requirement of the masses and thus, savings are directed towards capital investments directly. Offering Wide Portfolio Investment Small and medium investors used to burn their fingers in stock exchange operations with a relatively modest outlay. If they invest in a select few shares, some may even sink without a trace never to rise again. Now, these investors can enjoy the wide portfolio of the investment held by the mutual fund. Providing Better Yields The pooling of funds from a large number of customersisenabling the fund to have a large funds disposal. Due to these large funds, mutual funds are able to buy cheaper and sell dearer than the small and medium investors. Thus, they are able to command better market rates and lower rates of brokerage. So they, provide better yields to their customer.
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 Rendering Expertise Investment Service At a Low Cost The management of the fund is generally assigned to professionals who are well trained and have adequate experience in the field of investment. The investment decisions of these professionals are always backed by informed judgement and experience. Providing Better Service A mutual fund is able to command vast resources and hence it is possible for it to have an in depth study and carry out research on corporate securities. Each fund maintains a large research team which constantly analyses the companies and the industries and recommends the funds to buy or sell a particular share. Thus, investments are made purely on the basis of a research. Offering Tax Benefits Certain funds offer tax benefits to its customer. Thus, apart from dividends, interest and capital appreciation, investors also stand to get the benefit of tax concession. Introducing Flexible Investment Schedule Some mutual funds have permitted the investors to exchange their units from one scheme to another & this flexibility is a great boon to investors. Income Units can

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be exchanged for growth units depending upon the performance of the funds. One cannot derive such flexibility in any other investments. Providing Greater Affordability and Liquidity Even very small investors can afford to invest in mutual funds. They provide an attractive and cost effective alternative to direct purchase of shares. Units can be sold to the fund at any time at the NAV and thus quick access to liquid cash is assured. Supporting Capital Market Mutual Funds play a vital role in supporting the development of capital markets. The Mutual funds make the capital market active by means of providing a sustainable domestic source of demand for capital market instrument. In other words the savings of the people are directed towards investment in capital markets through these mutual funds. Thus, funds serve as a conduit for dis-intermediating bank deposits into stocks, shares and bonds. Mutual funds also provide a valuable liquidity to the capital market, and thus, the capital is made very active and stable.

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 Promoting Industrial Development The economic development of any country or nation depends upon its industrial advancement and agricultural development. All industrial development units have to raise their funds by resorting to the capital market by the issue of shares and debentures. The mutual funds not only create a demand for these capital market instruments but also supply a large source of funds to the market, and thus, the industries are assured for capital requirement. Reducing Market Cost Of New Issues The mutual fund helps to reduce the marketing cost of the new issues. The promoters used to allot a major share of the initial public offering to the mutual funds and thus they are saved from the marketing cost of such issue.

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THE ADVANTAGES OF INVESTING IN A MUTUAL FUND

The advantages of investing in a Mutual Fund are: 1. Professional Management The investor avails of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. 2. Diversification Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. 3. Convenient Administration Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with

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brokers and companies. Mutual Funds save your time and make investing easy and convenient. 4. Return Potential Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. 5. Low Costs Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. 6. Liquidity In open-ended schemes, you can get your money back promptly at net asset value related prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a stock exchange at the prevailing market price or avail of the facility of direct repurchase at NAV related prices which some close-ended and interval schemes offer you periodically.

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7. Transparency You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook. 8. Flexibility Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. 9. Choice of Schemes Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. 10.Well Regulated All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

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DISADVANTAGES /LIMITATIONS OF MUTUAL FUNDS

The main limitations or disadvantages of mutual funds are as follows: Mutual funds are subject to market risk. No guarantee of returns. Diversification of portfolio doesn't maximize returns. Selecting right financial securities is not easy. Cost management not proportional to performance. Unethical practices may creep in. Now let's discuss above limitations of mutual funds one by one. 1. Subject to market risk Mutual fund investments are subject to market risk involved. This caution (warning) can be checked with the offer document where it is clearly mentioned as follows: "Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing."

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2. No guarantee of returns Mutual funds do not give any guarantee of the returns for the investments made in its various schemes. 3. Diversification of portfolio doesn't maximize returns Mutual fund helps to diversify the portfolio. However, though the diversification of portfolio helps in minimization of risk, these do not results in maximization of returns to the investors. 4. Selecting right financial securities is not easy It's difficult task for a mutual fund manager to select appropriate and suitable financial securities for investment to generate higher returns. 5. Cost management not proportional to performance Mutual fund managers are one of the highest-paid executives in the finance domain. Furthermore, the fee paid to the Asset Management Company (AMC) is no way related to the performance of these funds. 6. Unethical practices may creep in Mutual fund managers may follow unethical (corrupt) practices to boost the performance of the various fund-related schemes.

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FUTURE OF MUTUAL FUNDS IN INDIA Financial experts believe that the future of Mutual Funds in India will be very bright. It has been estimated that by March-end of 2010, the mutual fund industry of India will reach Rs 40,90,000 crore, taking into account the total assets of the Indian commercial banks. The estimation was based on the December 2004 asset value of Rs 1, 50,537 crore. In the coming 10 years the annual composite growth rate is expected to go up by 13.4%. Since the last 5 years, the growth rate was recorded as 9% annually. Based on the current rate of growth, it can be forecasted that the mutual fund assets will be double by 2010. Indian Mutual Funds Future - Growth Facts

In the past 6 years, Mutual Funds in India have recorded a growth of 100 %. In India, the rate of saving is 23 %. In the future, there lies a big scope for the Indian Mutual Funds industry to expand.

Several asset management companies which are foreign based are now entering the Indian markets.

A number of commodity Mutual Funds will be introduced in the future. The SEBI (Securities Exchange Board of India) has granted the permission for the same.
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The SEBI is lending its full support for the promotion of the mutual funds industry directly or indirectly.

More emphasis is put on the effective Mutual Funds governance. Mutual funds provide wide range of products so as to meet the diverse needs of the investing public. The investors have a good choice to meet their different expectations like security, growth and liquidity.

There is also enough scope for the Indian Mutual funds to enter into the semi-urban and rural areas.

Financial planners will play a major role in the Mutual Funds market by providing people with proper financial planning.

A three year dividend tax exemption from UTI and equity dominated Open ended Mutual Funds.

A full Income tax exemption for all income from the UTI and mutual funds in the hands of the investors.

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CONCLUSION

A mutual fund brings together a group of people and invests their money in stocks, bonds, and other securities.

The

advantages

of

mutual

are

professional

management, diversification, economies of scale, simplicity and liquidity.

The disadvantages of mutual fund are high costs, over-diversification, possible tax consequences, and the inability of management to guarantee a superior return.

There are many, many types of mutual funds. You can classify funds based on asset class, investing strategy, region, etc.

Mutual funds have lots of costs. Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees (loads).

The biggest problems with mutual funds are their costs and fees. Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party.

Mutual fund ads can be very deceiving.

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ABBREVATIONS MFS- Mutual Funds MMMFS-Money Market Mutual Funds AMC - Asset Management Company SEBI- Securities Exchange Board of India USA United States of America. IRA- Individual Retirement Accounts SEC-Securities and Exchange Commission IPO- Initial Public Offering.

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REFERENCES

Books Referred: 1. Book-Financial Markets and Services. Author- Gordon &Natrajan Edition- Fifth revised Edition 2009 Publisher- Himalaya publishing house.

2. Book- Indian Economy Author-Misra S.K Puri V.K Edition- 28th Edition (October 2010) Publisher- Himalaya publishing house. Websites www.google.com www.wikipedia.com www.mutualfunds.in

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