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Transcript of Mutual Fund1
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SUBMITTED TO: SUBMITTED BY:
MRS.SIMMI VASHISHTHA SUKHWINDER
KARISHMA
MBA(SM) F
MUTUAL
FUND
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CONTENT
MEANING OF MUTUAL FUND WORKING
REGULATORY BODY
HISTORY
TYPES ADVANTAGES
DISVANTAGES
SELECTION PROCEDURE
HOW TO INVEST INVESTMENT MENU CARD
SEBI REGULATION
MANAGEMENT
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MUTUAL FUND
A mutual fund is the trust that pools the
savings of a number of investors who
share a common financial goal.
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REGULATORY BODY FOR MUTUAL FUND
Securities Exchange Board of India (SEBI) is the
regulatory body for all the mutual funds. All
the mutual fund must get registered withSEBI.
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HOW MUTUAL FUND WORKS
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BRIEF HISTORY
1964- UTI was established.
1987- entry of Public Sector banks.
Canara bank (Canbank)
SBI (magnum regular income)
1989- LIC (dhanraksha, dhanvridhi)
1990- GIC (GIC safe,GIC rise)
1995- Entry of Private Sector.
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SCHEMES OF MF
TYPES
OWNERSHIPSCHEMES OF
OPERATIONPORTFOLIO LOCATION
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ACCORDING TO OWNERSHIP
OWNERSHIP
PUBLICSECTOR
PRIVATESECTOR
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ACCORDING TO SCHEMES OF OPERATION
SCHEMES OF
OPERATION
OPEN ENDED
SCHEMES
CLOSE
ENDED
SCHEMES
INTERVAL
SCHEMES
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PORTFOLIO
INCOME FUND
GROWTH FUND
BALANCED FUND
STOCK/EQUITY FUND
BOND FUND
SPECIALISED FUND
TAXATION FUND
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ACCORDING TO LOCATION
LOCATION
DOMESTIC
FUNDS
OFF-SHORE
FUNDS
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ADVANTAGES OF MUTUAL FUND
1. Diversification
2. Professional fund management
3. Liquidity
4. Reduced risk
5. Tax advantage
6. Flexibility
7. Higher returns
8. Investor protection
9. Choice of schemes
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LIMITATIONS OF MUTUAL FUND
Liquidity crisis
Lack of innovation
Inadequate research
No provision for performance guarantee
Inadequate disclosure
Delay in service
No rural investment
Poor risk management
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INVESTING CHECKLIST
Draw up your asset allocation Financial goals & Time frame (Are you investing for retirement? A
childs education? Or for current income? )
Risk Taking Capacity
Identify funds that fall into your Buy List
Obtain and read the offer documents
Match your objectives
In terms of equity share and bond weightings, downside risk protection,tax benefits offered, dividend payout policy, sector focus
Check out past performance Performance of various funds with similar objectives for at least 3-5
years (managed well and provides consistent returns)
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CHECKLIST CONTD
Think hard about investing in sector funds
For relatively aggressive investors
Close touch with developments in sector, review portfolio regularly
Look for `load' costs
Management fees, annual expenses of the fund and sales loads
Diversify, but not too much
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INVESTMENT MENU CARD
Instrument Tax Benefit Return Duration
EPF 8.50% Long TermPPF 8% Long Term
NSC 8% Long Term
FDs Banks & Post Office 5.70 to 8.50% Short Term
Senoir Citizen Savings
Scheme
9% Long Term
Mutual Funds Market Linked Long Term & ShortTerm
ULIP Market Linked Long Term
Direct Equity Market Linked Long Term
Gold Market Linked Short Term
Real Estate Market Linked Long Term
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How to invest in Mutual Funds?
Step 1 Identify your
investment needs
1. What are my investment
objectives and needs?
2. How much risk am I willing
to take?
3. What are my cash flow
requirements?
Step 2 Choose the right
mutual fund.
1. The track record of
performance over the last few
years in relation to theappropriate Benchmark and
similar funds in the same
category
2. How well the mutual fund is
organized to provide efficient,
prompt and personalized
service.
3. Degree of transparency as
reflected in frequency an d
quality of their communications.
Step 3 Select the ideal
mix of schemesInvesting in just 1
scheme may not meet all
your investment needs.
You may consider
investing in a
combination of schemes
to achieve your specific
goals.
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FACILITIES AVAILABLE TO INVESTORS
Repurchase Facilities
Reissue Facilities
Roll Over Facilities
Lateral Shifting Facilities
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SEBI REGULATION,1996
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MANAGEMENT OF MUTUAL FUND
Sponsor
AMC (Asset Management Company)
Custodian
Trustee
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Sponsor :-
Any person who alone or incombination with another body establish a
mutual fund is called as sponsor
Trustee :-
Trustee is a person who holds
the property of MF interest for the benefit ofunit holders and includes a trustee company
and directors of trustee company
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AMC:-
The sponsor or the trustee shall
appoint an AMC. The application for AMC has
to be made in form D.
Custodian:-
Custodian is a person who has been
guaranteed is a certificate of registration to
carry on the business of custodian of
securities.
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THE SPONSOR
Application and Fee
Eligibility Criteria
Grant of Certificate of Registration
Service Fee
Net Asset as on 31st March
(RS. Crores)
Services fee payable
(rs. Lakhs)
Upto 500 2.50500-1000 3.50
1000-3000 4.50
3000-5000 5.50
5000-10000 6.50
Above 10000 7.50
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THE TRUSTEES
Regulation 14: Trust deed to be registeredunder the Registration Act
Regulation 15: Contents of trust deed
Regulation 16: Disqualification from beingappointed as trustees
Regulation 17: Approval of the Board for
appointment of trustees Regulation 18: Rights & obligations of the
trustees
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ASSET MANAGEMENT COMPANY
Regulation 21: Eligibility criteria for appointmentof asset management company
Regulation 22: Terms and conditions
Regulation 23: Procedure where the approval isnot granted
Regulation 24: Restrictions on business activitiesof the asset management company
Regulation 25: Asset Management Company andits obligations
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CUSTODIAN
Regulation 26: Appointment of custodian
Regulation 27: Agreement with the custodian
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SEBI REGULATION 28 TO 42- LAUCHING OF
MUTUAL FUNDS
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ADVERTISEMENT CODE
An investment shall be truthful, fair, clear, and
shall not contain a statement, promise or
forecast which is untrue or misleading.
The advertisement not to be designed in
content and format or in print as to be likely
to disguise the significance of any statement.
The sales literature may contain only
information.
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SUMMING UP
A mutual fund represents a vehicle for collective investment.
In India, the following entities are involved in a mutual fundoperation the sponsor, the mutual fund, the trustees, the AMC,the custodian, and the registrars and transfer agents.
A mutual fund scheme may be a close-ended or an open-ended
scheme. Mutual funds invest in three broad categories of financial assets:
stocks, bonds, and cash.
The investments of a mutual fund are subject to certain regulations.
Mutual fund schemes are periodically evaluated by independent
institutions.
Mutual funds offer various options and value-added services toattract and retain customers.
Mutual funds offer the advantages of diversification, professionalmanagement, liquidity, assured allotment, tax savings etc.
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