Mutual Fund And Its Trend In India

Made ByMr. Vishal Narvekar

[SYBFM]

Introduction • A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal.

• The money collected is invested in capital market instruments such as shares, debentures etc.

• The income earned through these investments and the capital

appreciation realized are shared by its unit holders.

• The income earned is shared in proportion to the number of units owned by them.

• It is 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.

Emergence of Mutual Fund in India

• Mutual funds in India began in 1964

• Unit Trust of India (UTI) was the first MF company • Remains the market leader even today, Having about 68%

of the market share

• Lost monopoly in 1987 With entry of public sector mutual funds Promoted by public sector banks and insurance companies

• Industry was open to foreign institutions in 1993

Trends Of Mutual Fund In India

• In 1963, finance minister Shri T. Krishnaswami gave the idea of mutual funds.

• The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963.

• The first scheme launched by UTI was Unit Scheme in 1964.

• At the end of 1988 UTI had Rs.6,700 crores of assets under management.

• Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.

• SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 – followed by:-

Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92)

• The private sector entry to the MF rose the AUM to Rs. 470 bn in March 1993.

• The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.

• The industry now functions under the SEBI (Mutual Fund) Regulations 1996.

• The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India.

• The industry has also witnessed several mergers and acquisitions.

• At the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

• The Unit Trust of India was having highest Rs.44,541 crores of assets under management in year 2003.

• SEBI Removed Entry Load in MF on 1 August, 2009

• Introduction of Purchase/Sale facility through Stock Exchanges November, 2009

• National Stock Exchange (NSE) launched India's first Mutual Fund Service System (MFSS) on November 30, 2009 through which an investor can subscribe or redeem units of a mutual fund scheme

Advantage of Mutual Fund

Diversification

Economies of Scale

Divisibility

Liquidity

Professional Management

The Bottom Line

Disadvantages of Mutual Fund

Fluctuating Returns

Diversification

Cash, Cash & More Cash

Costs

Misleading Advertisements

Evaluating Funds

Schemes of Mutual Fund

By Structure

Open Ended Mutual Funds

Close Ended Mutual Funds

By Objective

Income Oriented Schemes

Growth Oriented Schemes

High Growth Schemes

Hybrid Schemes

Tax Saving Schemes

Money Market Mutual Funds

Process of Mutual Fund

Investors

Fund Manager

Securities

Returns Pool their money with

Invest in

Generates

Pass it to

Organisation of a Mutual Fund

FUND SPONSPOR/SETTLOR KOTAK MAHINDRA FINANCE LTD.

UNIT HOLDERS

TRUSTEE KOTAK

MAHINDRA TRUSTEE CO. LTD.

INVESTMENT MANAGER &

ADVISOR KOTAK MAHINDRA ASSET MANAGEMENT CO. LTD.

TRUST KOTAK MAHINDRA MUTUAL FUND

INVESTMENT MANAGER & ADVISOR

KOTAK MAHINDRA ASSET MANAGEMENT CO. LTD.

APPOINTS •CUSTODIANS •REGISTRARS• BANK•DISTRIBUTORS

Investment Avenues of Mutual Fund

Equity Fund

Debt Fund

Index Fund

Sectoral Fund

Diversified Fund

Gold ETF

Regulatory Body of Mutual Fund

• AMFI (Association of Mutual Fund in India), the apex body of all the registered Asset Management Companies.

• Was incorporated on August 22, 1995, as a non-profit organisation.

• As of now, all the 44 Asset Management Companies that are registered with SEBI, are its members.

Restrictions on investments by Mutual Funds

• Investment in debts instruments (rated below Investment) shall not exceed 15% of NAV

• Debt instruments issued by a single issuer only up to 10% of the NAV

• Not more than 10% of the paid up capital in any Co.

• Issue expenses shall not exceed 6% of the fund

• No investment in unlisted associate company

Growth In Asset Under Management

Mar/65

Mar/87

Mar/93

Feb/01

Feb/03

Mar/03

Mar/04

Mar/05

Mar/06

Mar/07

Mar/08

Mar/09

Mar/10

Mar/11

0

100000

200000

300000

400000

500000

600000

700000

Years

Re. (

cror

es)

Source: AMFI website

Valuation of NAV

Total Market Value of the Assets /Securities in the Portfolio of the Fund – All Liabilities

NAV = -------------------------------------------------------Number of fund’s units outstanding

Major Mutual Fund Companies in India & Comparison

Birla Sun Life Mutual Fund

HDFC Mutual Fund

ICICI Prudential

Mutual Fund

Reliance Mutual Fund

UTI Mutual Fund

Conclusion

Mutual fund industry is one of the fastest growing industry in India and it has already established in foreign countries. Investing in Mutual Funds is more safe as compared to equity as well as it give handsome returns.

Sources

• http://www.amfiindia.com• http://www.investopedia.com• http://www.livemint.com/Leisure/

7geeBIScf3HZAN8M5marTJ/5-top-mutual-fund-houses.html

• http://www.preservearticles.com/2012033129506/short-notes-on-organisation-of-mutual-funds.html

Thank Y u…!!!