Mutual Funds

Presented by: Sunny Maghnani (16146)

What are Mutual Funds?

Mutual funds are basically a large public

portfolio that accepts funds from members

and then use these funds to purchase
securities.

Mutual Funds are Non-Depository

Because they do not take or offer time

deposit.
Funds can be withdrawn at any time without

any advance notice to the depository

institution.

Broad Category of Mutual Funds

Open-ended Funds

Investors can buy and sell the units from the fund, at any point of time. These are
not listed on the stock exchanges so they have only primary market. No restrictions
on the amount of shares the fund will issue. Can also buy back shares. Prices are
determined by net asset value on the end of the day. At the time of selling open
ended are always sold back to the company.
Net Asset Value:- The NAV or Net Asset Value per share is the value of one share
in a fund. When you buy shares, you pay the current NAV per shares, plus any sales
charge (also called a sales load). When you sell your shares, the fund will pay you
NAV less any other sales load. A fund's NAV goes up or down daily as its holdings
change in value. For example: You invest $1,000 in a mutual fund with an NAV of
$10.00. You will therefore own 100 shares of the fund. If the NAV drops to $9.00
(because the value of the fund's portfolio has dropped), you will still own 100
shares, but your investment is now worth $900.00. If the NAV goes up to $11.00,
your investment is worth $1,100. (This example assumes no sales charge.)

Close-ended Funds
These funds raise money from investors only once. These are listed on the stock
exchanges. These are publicly traded company shares issued by IPO. The price is
determined by demand and supply. Close ended can be sold in market.

Further Classification of Mutual

Funds
Equity funds:- These funds invest instocks. These funds aim
to grow faster than money market or fixed income funds, so there is
usually a higher risk that you could lose money.

Balanced funds:- These funds invest in a mix of equities and

debt securities.

Debt Funds:- Debt funds generally invest in securities such

as bonds. By investing in debt instruments, these funds provide
low risk and stable income to investors with preservation of capital.
These funds tend to be less volatile than equity funds and produce
regular income. These funds are suitable for investors whose main
objective is safety of capital with moderate growth.

Advantages of Mutual
Funds
Professional management:- We dont have enough market
inside which particular institutes do have.
Diversification:- Diversification lowers your risk of loss by

spreading your money across various industries

More choice:- Mutual funds offer a variety of schemes that will

suit your needs over a lifetime.

Affordability:- As a small investor, you may find that it is not

possible to buy shares of larger corporations. Mutual funds

generally buy and sell securities in large volumes which allow
investors to benefit from lower trading costs. The smallest investor
can get started on mutual funds because of the minimal
investment requirements.

Mutual Funds in Pakistan

In 1962, National Investment Trust first

introduced the open-end mutual fund.

Thereafter, Investment Corporation of
Pakistan (ICP) was established in 1966, that
too in the public sector.
The private sector entered for the first time in
mid-nineties.
It could not make any appreciable progress in
the initial phase.
The industry got a boost from 2002 onwards.

Mutual Funds in India

Phase I 1964 87: In 1963, UTI was set up by Parliament

under UTI act and given a monopoly. The first equity fund
was launched in 1986.
Phase II 1987 93: Non-UTI, Public Sector mutual funds.

Like Indian Bank Mutual Fund etc.

Phase III 1993 96: Introducing private sector funds. As

well as open-end funds.

Phase IV 1996: There have been several mergers of

mutual funds.

Reasons For Slow Growth In

Pakistan
No proper marketing.
Poor governmental policies.
Low savings.

Reasons For Growth In India

Infrastructure development.
Rise of Foreign Participation.
Rising Income.
Increase Awareness.

THANK YOU