GROUP 3

Samruddhi Naik
Sheena Kumar
Edvigio Rebelo
Priyanka Sharma

Collective Pooled Investment

YOU

ME

MONEY TO
INVEST
Fees

Smart Market Person

Anand

Invests

MUTUAL FUNDS
Rahul
+

Amir
+

Riya

FUND MANAGER

MUTUAL
FUND

Stock

Derivatives

Bonds

 An investment vehicle that is made up of a

pool of funds collected from many investors
for the purpose of investing in securities such
as stocks, bonds, money market instruments
and similar assets.

How does it work?

10 people,
Rs. 1 lakh each
Divided into 100,000
"units"of Rs.10 each.
Everyone gets 10,000
units.

Reflecting 100,000
investement
Fund Manager Invests

In 1 year
Grows 10L to 15 L
Fees- 2% of assets
= 30,000
14.7L left in fund

New Buyer:Wants to
buy for 100,000
Gets 100,000/14.7=
6802.7211
Four Decimal in NAV

Same number of units

:100,000 units

Lesser Units

Price per unit:14.70

No of Units =
106,802.7211

Advantages of Mutual Fund

Professional investment management

Systematic Plan
Diversification
Liquidity
Monthly Portfolios

Disadvantage of Mutual Fund

Risks and Costs

No Guarantees
Sales Charge
Too Many Choices
No insurance

Phase 1 1964 1987: Growth Of Unit

Trust Of India

Established by Act Of Parliament.

Set-up by RBI.
First scheme- Unit Scheme 1964.
Unit Linked Insurance Plan 1971.
Children Gifts Growth Fund 1986.
Mastershare 1987.

Phase 2 1987 1993: Entry of Public

Sector Funds
SBI first to establish non-UTI mutual fund (1987).
Followed by:CanBank Mutual Fund
LIC Mutual Fund
Indian bank Mutual Fund
BOI Mutual Fund
GIC Mutual Fund
PNB Mutual Fund

Phase 3 -1993 1996: Emergence of

Private Funds
Indian investors broader choice of fund families.
Foreign Fund management companies allowed to
operate.
Development of SEBIs regulatory framework.

Phase 4 1966 1969: Growth and SEBI

Regulations
Deregulations and liberalizations provided growth to
the industry.
Rules introduced by SEBI- SEBI (Mutual Fund)
Regulations 1996.
1996 Regulation and 1999 Budget a historic
importance.
Launched Investor Awareness Programme by SEBI
and AMFI.

Phase 5 1999 2004: Emergence of a

Large and Uniform Industry
UTI was repealed.
Adoption of AMC and a Trust.
UTI was re-organised into:
The Specified Undertaking
The UTI Mutual Fund

Phase 6 From 2004 onwards:

Consolidation and Growth
Entry of new international and private sector players.
Alliance
Birla Sun Life
Sun F&C
Fidelity

CLASSIFICATIONS
Open for the whole year
No duration
Repurchased anytime
Redeemed anytime with the
fund at NAV-based prices
As repurchased so not listed
at stock exchange

Open for fixed period

Duration (5 to 7 years)
May be repurchased (after 23 years)
Redemption before time will
be only allowed by paying
exit charges
Listed at stock exchange

Mutual funds come in two main flavors, categorized

by how the fees are charged.

Loads Funds
Charges you for the shares/units
purchased plus an initial sales fee. This
charge is typically anywhere from 4%
to 8% of the amount you are investing
or it can be a flat fee depending on the
mutual fund provider.
There are a couple different types of
load funds out there.
Back-end loads.
Front-end load
Deferred loads

No-loads Funds
A no-load fund simply means that
you can buy and redeem the mutual
fund units/shares at any time without
a commission or sales charge.
However, some companies such
as banks and broker-dealers may
charge their own fees for the sale and
redemption of third-party mutual
funds.

Tax-exempt Funds

&

Non-Tax-exempt
Funds

When a fund invests in tax-exempt securities, it is

called tax-exempt fund.
In non-tax- exempt we dont have to pay tax.
Open-ended equity oriented fund have to pay
distribution tax, before distributing the income to the
investors.

TYPES
Money market/Liquid funds:
Considered to be at lowest rung in risk level.
Invested in debt securities of a short term nature.
Invests in treasury bills, certificate of deposit and
commercial paper.
Liquidity and safety

Gilt funds:
Are govt. securities with medium to long-term maturities.
Gilt funds that invest in govt. paper are called dated
securities.
Issuer is government.
Little risk
offer better protection of principal

TYPES
Debt funds:

Invest in debt instruments.

These funds target low risk and stable income for the investor.
Debt funds are largely considered as income funds.
Dont target capital appreciation but look for income and
distribute a part of their surplus to investors.

Equity funds:

Invests in equity shares.

Risk is higher than debt funds.
Offer long-term capital appreciation.
Risk level can differ depending upon the investment strategy
adopted by the fund manager.

HYBRID FUNDS
A category of mutual fund that is characterized by portfolio that is made
up of a mix of stocks and bonds, which can vary proportionally over
time or remain fixed.
Balanced funds
Mutual fund that aims to provide income as well as capital
appreciation while avoiding excessive risk by investing in
both stocks and bonds
Growth and income funds
The growth and income objective for mutual funds is a combination of
two parts -- one part growth and one part income.
Asset allocation funds
A single mutual fund which tries to accomplish the goals of asset
allocation all by itself.

COMMODITY FUNDS
Commodity funds are funds which basically invest in
commodities, such as gold, oil or livestock. They also invest in
commodity futures and options. Some commodity funds
invest in the stocks of companies, like gold funds which invest
in the stocks of gold mining companies.

REAL ESTATE FUNDS

A real estate mutual fund is a type of investment made up of
securities, usually stocks, of companies that purchase real
estate with money collected from investors.

EXCHANGE TRADED FUNDS

An exchange traded fund is also known as a ETF. ETF is a fund
that tracks what the index is doing, but can be treated and
traded like a stock.

FUND OF FUNDS
A mutual fund which invests in other mutual funds. Just as a
mutual fund invests in a number of different securities, a
fund of funds holds shares of many different mutual funds

Disclaimer

Thank you!!!