GROUP 3

Samruddhi Naik

Sheena Kumar

Edvigio Rebelo

Priyanka Sharma

Collective Pooled Investment

ME

MONEY TO INVEST

YOU

Smart Market Person Anand

Invests

Fees

MUTUAL FUNDS

Rahul

Amir

Riya

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+

MUTUALFUND

FUND MANAGER

Stock BondsDerivatives

• 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?

Divided into 100,000 "units"of Rs.10 each.

Everyone gets 10,000units.

Reflecting 100,000 investement

Fund Manager Invests

10 people,Rs. 1 lakh each

In 1 year

Grows 10L to 15 L

Fees- 2% of assets= 30,000

14.7L left in fund

Same number of units:100,000 units

Price per unit:14.70

New Buyer:Wants to buy for 100,000

Gets 100,000/14.7=6802.7211

Four Decimal in NAV

Lesser Units

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 Gift’s 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 SEBI’s 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• UTI was repealed.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 2-3 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 No-loads Funds

Charges you for the shares/unitspurchased plus an initial sales fee. Thischarge is typically anywhere from 4%to 8% of the amount you are investingor it can be a flat fee depending on themutual fund provider.

There are a couple different types ofload funds out there.

Back-end loads.

Front-end load

Deferred loads

A no-load fund simply means thatyou can buy and redeem the mutualfund units/shares at any time withouta commission or sales charge.

However, some companies suchas banks and broker-dealers maycharge their own fees for the sale andredemption of third-party mutualfunds.

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

In non-tax- exempt we don’t have to pay tax.

Open-ended equity oriented fund have to pay distribution tax, before distributing the income to the investors.

Tax-exempt FundsNon-Tax-exempt

Funds&

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.

• Don’t 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 FUNDSA 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 FUNDSCommodity 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 FUNDSA 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 FUNDSAn 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 FUNDSA 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

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