ORIGIN OF MUTUAL FUND:

The modern mutual fund was first introduced in Belgium in 1822. This form of investment soon

spread to Great Britain and France. Mutual funds became popular in the United States in the

1920s and continue to be popular since the 1930s, especially open-end mutual funds. Mutual

funds experienced a period of tremendous growth after World War II, especially in the 1980s and

1990s.

WHAT IS MUTUAL FUND:

A mutual fund is a managed group of owned securities of several corporations. These

corporations receive dividends on the shares that they hold and realize capital gains or losses on
their securities traded. Investors purchase shares in the mutual fund as if it was an individual
security. After paying operating costs, the earnings (dividends, capital gains or loses) of the
mutual fund are distributed to the investors, in proportion to the amount of money invested.
Investors hope that a loss on one holding will be made up by a gain on another. Heeding the
adage "Don't put all your eggs in one basket" the holders of mutual fund shares are able
collectively to gain the advantage by diversifying their investments, which might be beyond their
financial means individually.

A mutual fund may be either an open-end or a closed-end fund. An open-end mutual fund does
not have a set number of shares; it may be considered as a fluid capital stock. The number of
shares changes as investors buys or sell their shares. Investors are able to buy and sell their
shares of the company at any time for a market price. However the open-end market price is
influenced greatly by the fund managers. On the other hand, closed-end mutual fund has a fixed
number of shares and the value of the shares fluctuates with the market. But with close-end
funds, the fund manager has less influence because the price of the underlining owned securities
has greater influence.

Mutual Funds - The Logic behind Investing in Them

Mutual funds are investment companies that pool money from investors at large and offer to sell and
buy back its shares on a continuous basis and use the capital thus raised to invest in securities of
different companies. This article helps you to know in depth on:

 Is it possible to diversify investment if invested in mutual funds?

 Find more on the working of mutual fund
  Know more about the legal aspects in relation to the mutual funds

At the beginning of this millennium, mutual funds out numbered all the listed securities in New York
Stock Exchange. Mutual funds have an upper hand in terms of diversity and liquidity at lower cost in
comparison to bonds and stocks. The popularity of mutual funds may be relatively new but not their
origin which dates back to 18th century. Holland saw the origination of mutual funds in 1774 as
investment trusts before spreading to Anglo-Saxon countries in its current form by 1868.

We will discuss now as to what are mutual funds before going on to seeing the advantages of mutual
funds. Mutual funds are investment companies that pool money from investors at large and offer to sell
and buy back its shares on a continuous basis and use the capital thus raised to invest in securities of
different companies. The stocks these mutual funds have are very fluid and are used for buying or
redeeming and/or selling shares at a net asset value. Mutual funds posses shares of several companies
and receive dividends in lieu of them and the earnings are distributed among the share holders.

A Brief of How Mutual Funds Work

Mutual funds can be either or both of open ended and closed ended investment companies depending
on their fund management pattern. An open-end fund offers to sell its shares (units) continuously to
investors either in retail or in bulk without a limit on the number as opposed to a closed-end fund.
Closed end funds have limited number of shares.

Mutual funds have diversified investments spread in calculated proportions amongst securities of
various economic sectors. Mutual funds get their earnings in two ways. First is the most organic way,
which is the dividend they get on the securities they hold. Second is by the redemption of their shares
by investors will be at a discount to the current NAVs (net asset values).

Are Mutual Funds Risk Free and What are the Advantages?
One must not forget the fundamentals of investment that no investment is insulated from risk. Then it
becomes interesting to answer why mutual funds are so popular. To begin with, we can say mutual
funds are relatively risk free in the way they invest and manage the funds. The investment from the pool
is well diversified across securities and shares from various sectors. The fundamental understanding
behind this is not all corporations and sectors fail to perform at a time. And in the event of a security of
a corporation or a whole sector doing badly then the possible losses from that would be balanced by the
returns from other shares.

This logic has seen the mutual funds to be perceived as risk free investments in the market. Yes, this is
not entirely untrue if one takes a look at performances of various mutual funds. This relative freedom
from risk is in addition to a couple of advantages mutual funds carry with them. So, if you are a retail
investor and planning an investment in securities, you will certainly want to consider the advantages of
investing in mutual funds.

 Lowest per unit investment in almost all the cases

 Your investment will be diversified
  Your investment will be managed by professional money managers

Definition
An open-ended fund operated by an investment company which raises money from shareholders
and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise
money by selling shares of the fund to the public, much like any other type of company can sell
stock in itself to the public. Mutual funds then take the money they receive from the sale of their
shares (along with any money made from previous investments) and use it to purchase various
investment vehicles, such as stocks, bonds and money market instruments. In return for the
money they give to the fund when purchasing shares, shareholders receive an equity position in
the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders
are free to sell their shares at any time, although the price of a share in a mutual fund will
fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of
mutual funds include diversification and professional money management. Mutual funds offer
choice, liquidity, and convenience, but charge fees and often require a minimum investment. A
closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment
trust. There are many types of mutual funds, including aggressive growth fund, asset allocation
fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund,
crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund,
hedge fund, income fund, index fund, international fund, money market fund, municipal bond
fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond
fund.

HISTORY OF MUTUAL FUND

The modern mutual fund was first introduced in Belgium in 1822. This form of investment soon spread
to Great Britain and France. Mutual funds became popular in the United States in the 1920s and
continue to be popular since the 1930s, especially open-end mutual funds. Mutual funds experienced a
period of tremendous growth after World War II, especially in the 1980s and 1990s

How mutual funds earn money

A mutual fund is a means of investing that enables individuals to share the risks of investing with other
investors. All contributors to the fund experience an equal share of gains and losses for each dollar
invested. A mutual fund owns the securities of several corporations. A mutual fund pools money from
hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other
securities, according to the kind of investments the mutual fund
trades. Investors purchase shares in the mutual fund as if it was an individual security. Fund managers
hired by the mutual fund company are paid to invest the money that the investors have placed in the
fund. Heeding the adage "Don't put all your eggs in one basket" the holders of mutual fund shares are
able to gain the advantage of diversification which might be beyond their financial means individually.

MUTUAL FUND RANKING

Mutual fund ranking

Funds are ranked based upon their performance as a whole and performance against their peers by such
companies as MorningStar which has an industry recognized rating system for mutual funds. They have
a one-to-five star system in which five stars is the best. Usually the higher the rank, the higher the
quality of the fund. For example MorningStar rates mutual funds from 1 to 5 stars based on how well
they've performed (after adjusting for risk and accounting for sales charges) in comparison to similar
funds. Within each MorningStar Category, the top 10% of funds
receive 5 stars and the bottom 10% receive 1 star. Funds are rated for
up to three time periods: three-, five- and 10- years and these ratings are combined to produce an
overall rating. Funds with less than three years of history are not rated. Ratings are objective, based
entirely on a mathematical evaluation of past performance. The ratings are a useful tool for identifying
funds worthy of further research, but should not be considered signals to buy or sell.

The advantages of investing in a Mutual Fund are:

 Diversification: The best mutual funds design their portfolios so individual investments
will react differently to the same economic conditions. For example, economic conditions
like a rise in interest rates may cause certain securities in a diversified portfolio to
decrease in value. Other securities in the portfolio will respond to the same economic
conditions by increasing in value. When a portfolio is balanced in this way, the value of
the overall portfolio should gradually increase over time, even if some securities lose
value.

 Professional Management:Most mutual funds pay topflight professionals to manage their

investments. These managers decide what securities the fund will buy and sell.

 Regulatory oversight: Mutual funds are subject to many government regulations that
protect investors from fraud.
  Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a call,
and you've got the cash.

 Convenience: You can usually buy mutual fund shares by mail, phone, or over the
Internet.

 Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment.
Expenses for Index Funds are less than that, because index funds are not actively
managed. Instead, they automatically buy stock in companies that are listed on a specific
index

 Transparency

 Flexibility

 Choice of schemes

 Tax benefits

 Well regulated

6 advantages of investing in a mutual fund

Professional expertise: Investing requires skill. It requires a constant study of the dynamics of
the markets and of the various industries and companies within it. Anybody who has surplus
capital to be parked as investments is an investor, but to be a successful investor, you need to
have someone managing your money professionally.

Just as people who have money but not have the requisite skills to run a company (and hence
must be content as shareholders) hand over the running of the operations to a qualified CEO,
similarly, investors who lack investing skills need to find a qualified fund manager.

Mutual funds help investors by providing them with a qualified fund manager. Increasingly, in
India [ Images ], fund managers are acquiring global certifications like CFA and MBA which
help them be at the cutting edge of the knowledge in the investing world.

Diversification: There is an old saying: Don't put all your eggs in one basket. There is a
mathematical and financial basis to this. If you invest most of your savings in a single security
(typically happens if you have ESOPs (employees stock options) from your company, or one
investment becomes very large in your portfolio due to tremendous gains) or a single type of
security (like real estate or equity become disproportionately large due to large gains in the
same), you are exposed to any risk that attaches to those investments.

In order to reduce this risk, you need to invest in different types of securities such that they do
not move in a similar fashion. Typically, when equity markets perform, debt markets do not yield
good returns. Note the scenario of low yields on debt securities over the last three years while
equities yielded handsome returns. Similarly, you need to invest in real estate, or gold, or
international securities for you to provide the best diversification.

If you want to do this on your own, it will take you immense amounts of money and research to
do this. However, if you buy mutual funds -- and you can buy mutual funds of amounts as low as
Rs 500 a month! -- you can diversify across asset classes at very low cost. Within the various
asset classes also, mutual funds hold hundreds of different securities (a diversified equity mutual
fund, for example, would typically have around hundred different shares).

Low cost of asset management: Since mutual funds collect money from millions of investors,
they achieve economies of scale. The cost of running a mutual fund is divided between a larger
pool of money and hence mutual funds are able to offer you a lower cost alternative of managing
your funds.

Equity funds in India typically charge you around 2.25% of your initial money and around 1.5%
to 2% of your money invested every year as charges. Investing in debt funds costs even less. If
you had to invest smaller sums of money on your own, you would have to invest significantly
more for the professional benefits and diversification.

Liquidity: Mutual funds are typically very liquid investments. Unless they have a pre-specified
lock-in, your money will be available to you anytime you want. Typically funds take a couple of
days for returning your money to you. Since they are very well integrated with the banking
system, most funds can send money directly to your banking account.

Ease of process: If you have a bank account and a PAN card, you are ready to invest in a mutual
fund: it is as simple as that! You need to fill in the application form, attach your PAN (typically
for transactions of greater than Rs 50,000) and sign your cheque and you investment in a fund is
made.

In the top 8-10 cities, mutual funds have many distributors and collection points, which make it
easy for them to collect and you to send your application to.

Well regulated: India mutual funds are regulated by the Securities and Exchange Board of
India, which helps provide comfort to the investors. Sebi forces transparency on the mutual
funds, which helps the investor make an informed choice. Sebi requires the mutual funds to
disclose their portfolios at least six monthly, which helps you keep track whether the fund is
investing in line with its objectives or not.

Disadvantage 1: Mutual Funds Have Hidden Fees

 If fees were hidden, those hidden fees would certainly be on the list of disadvantages of mutual funds.
The hidden fees that are lamented are properly referred to as 12b-1 fees. While these 12b-1 fees are no
fun to pay, they are not hidden. The fee is disclosed in the mutual fund prospectus and can be found on
the mutual funds’ web sites. Many mutual funds do not charge a 12b-1 fee. If you find the 12b-1 fee
onerous, invest in a mutual fund that does not charge the fee. Hidden fees cannot make the list of
disadvantages of mutual funds because they are not hidden and there are thousands of mutual funds
that do not charge 12b-1 fees.
 Disadvantage 2: Mutual Funds Lack Liquidity
How fast can you get your money if you sell a mutual fund as compared to ETFs, stocks and closed-end
funds? If you sell a mutual fund, you have access to your cash the day after the sale. ETFs, stocks and
closed-end funds require you to wait three days after you sell the investment. I would call the “lack of
liquidity” disadvantage of mutual funds a myth. You can only find more liquidity if you invest in your
mattress.

 Disadvantage 3: Mutual Funds Have High Sales Charges

Should a sales charge be included in the disadvantages of mutual funds list? It’s difficult to justify paying
a sales charge when you have a plethora of no-load mutual funds. But, then again, it’s difficult to say
that a sales charge is a disadvantage of mutual funds when you have thousands of mutual fund options
that do not have sales charges. Sales charges are too broad to be included on my list of disadvantages of
mutual funds.

 Disadvantage 4: Mutual Funds and Poor Trade Execution

If you buy or sell a mutual fund, the transaction will take place at the close of the market regardless of
the time you entered the order to buy or sell the mutual fund. I find the trading of mutual funds to be a
simple, stress-free feature of the investment structure. However, many advocates and purveyors of ETFs
will point out that you can trade throughout the day with ETFs. If you decide to invest in ETFs over
mutual funds because your order can be filled at 3:50 pm EST with ETFs rather than receive prices as of
4:00 pm EST with mutual funds, I recommend that you sign up for the Stress Management Weekly
Newsletter at About.com.

 Disadvantage 5: All Mutual Funds Have High Capital Gains Distributions

If all mutual funds sell holdings and pass the capital gains on to investors as a taxable event, then we
have a found a winner for the list of disadvantages of mutual funds list. Oh well, not all mutual funds
make annual capital gains distributions. Index mutual funds and tax-efficient mutual funds do not make
these distributions every year. Yes, if they have the gains, they must distribute the gains to shareholders.
However, many mutual funds (including index mutual funds and tax-efficient mutual funds) are low-
turnover funds and do not make capital gains distributions on an annual basis.

Advantages of Mutual Funds-Overview

 Flexibility: The investments pertaining to the Mutual Fund offers the public a lot of flexibility by
means of dividend reinvestment, systematic investment plans and systematic withdrawal plans.
 Affordability: The Mutual funds are available in units. Hence they are highly affordable and due
to the very large principal sum, even the small investors are benefited by the investment
scheme.
 Liquidity: In case of Open Ended Mutual Fund schemes, the investors have the option of
redeeming or withdrawing money at any point of time at the current rate of net value asset.
 Diversification: The risk pertaining to the Mutual Funds is quite low as the total investment is
distributed in several industries and different stocks.
  Professional Management: The Mutual Funds are professionally managed. The experienced
Fund Managers pertaining to the Mutual Funds examine all options based on research and
experience.
 Potential of return: The Fund Managers of the Mutual Funds gather data from leading
economists and financial analysts. So they are in a better position to analyze the scopes of
lucrative return from the investments.
 Low Costs: The fees pertaining to the custodial, brokerage, and others is very low.
 Regulated for investor protection: The Mutual Funds sector is regulated by the Securities
Exchange Board of India (SEBI) to safeguard the rights of the investor.

Disadvantages of mutual funds

 No Guarantees: No investment is risk free. If the entire stock market declines in value, the value
of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors
encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on
their own. However, anyone who invests through a mutual fund runs the risk of losing money.

 Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses.
Some funds also charge sales commissions or "loads" to compensate brokers, financial
consultants, or financial planners. Even if you don't use a broker or other financial adviser, you
will pay a sales commission if you buy shares in a Load Fund.

 Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70
percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay
taxes on the income you receive, even if you reinvest the money you made.

 Management risk: When you invest in a mutual fund, you depend on the fund's manager to
make the right decisions regarding the fund's portfolio. If the manager does not perform as well
as you had hoped, you might not make as much money on your investment as you expected. Of
course, if you invest in Index Funds, you forego management risk, because these funds do not
employ managers.

OVERVIEW
Our mission is to make UTI Mutual Fund:

 The most trusted brand, admired by all stakeholders

 The largest and most efficient money manager with global presence
 The best in class customer service provider
 The most preferred employer
 The most innovative and best wealth creator
 A socially responsible organisation known for best corporate governance

Genesis
Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI
Asset Management Company Limited, who has been appointed by the UTI Trustee Company
 Limited for managing the schemes of UTI Mutual Fund and the schemes transferred/migrated
from the erstwhile Unit Trust of India.

The UTI Asset Management Company provides professionally managed back office support
for all business services of UTI Mutual Fund (excluding fund management) in accordance
with the provisions of the Investment Management Agreement, the Trust Deed, the SEBI
(Mutual Funds) Regulations and the objectives of the schemes. State-of-the-art systems and
communications are in place to ensure a seamless flow across the various activities undertaken
by UTIMF.

UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers) Regulations,
1993 on 3rd February 2004, for undertaking portfolio management services and also acts as
the manager and marketer to offshore funds through its 100 % subsidiary, UTI International
Limited, registered in Guernsey, Channel Islands.

Assets Under Management

UTI Asset Management Company presently manages a corpus of over Rs. 56,854 Crores as on
31st Dec 2007 (source: www.amfiindia.com) . UTI Mutual Fund has a track record of
managing a variety of schemes catering to the needs of every class of citizenry. It has a
nationwide network consisting 79 UTI Financial Centres (UFCs) and UTI International offices
in London, Dubai and Bahrain. With a view to reach to common investors at district level, 3
satellite offices have also been opened in select towns and districts.

We have a well-qualified, professional fund management team, who have been highly
empowered to manage funds with greater efficiency and accountability in the sole interest of
unit holders. The fund managers are also ably supported with a strong in-house securities
research department. To ensure better management of funds, a risk management department is
also in operation.

Reliability
UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs
and registrar offices are connected on a robust IT network to ensure cost-effective quick and
efficient service. All these have evolved UTI Mutual Fund to position as a dynamic,
responsive, restructured, efficient and transparent SEBI compliant entity.

UTI MUTUAL FUND

The setting up of the Unit Trust of India (UTI) in 1963 heralded the birth of the Indian mutual fund
industry. In 1964, UTI mutual fund launched its flagship scheme US-64 and went on to become a generic
term for the mutual fund sector till the government allowed public sector banks to start mutual funds in
1987.

Despite being the trendsetter in the segment, the UTI mutual fund could not sustain the initial tempo
and was on the verge of a collapse in 2001, before the government bailed it out and restructured the
fund. After the restructuring, the fund has somewhat redeemed its credibility through professional
management and a booming market.
The fund's sponsors are public sector financial giants like Life Insurance Corporation, SBI, Bank of Baroda
and Punjab National Bank. The sponsors hold equal stakes in the asset management company, UTI Asset
Management Company Private Limited. UTI Mutual Fund remains the largest fund in the country with
assets of over Rs.35,028 crore under management as of Aug 2006.

CONCEPT

A Mutual Fund is a trust that pools the savings of a number of investors who share a common

financial goal. The money thus collected is then invested in capital market instruments such as shares,

debentures and other securities. The income earned through these investments and the capital

appreciations realized are shared by its unit holders in proportion to the number of units owned by

them. Thus a Mutual Fund is the 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.

The flow chart below describes broadly the working of a mutual fund.

BACK GROUND OF MUTUAL FUNDS

1) Mobilizing Small Savings

Mutual funds mobilize funds by selling their own shares, know as units. To an investor, a

unit in mutual funds means ownership of a proportional share of securities in the portfolio of a

mutual fund.

2) Providing Investment Avenue

One of the basic characteristics of a mutual fund is that it provides an ideal avenue for

investment for persons of small means, and enables them to earn a reasonable return with the

advantages of relatively better liquidity. It offers investors a proportionate claim on the portfolio of

assets that fluctuate in value in comparison to the value of the assets that comprise the portfolio.
3) Professional management

It is possible for the small investors to have the benefit of professional and expert management

of their funds. Mutual funds employ professional experts who manage the investment portfolios

efficiency and profitably.

4) Diversified investment

Mutual Funds have the advantage of diversified of funds un various industry segments spread

across the country. This is advantageous to small investors who cannot afford having market price. Thus,

mutual funds allow millions of investors to have investments in a variety of securities of many different

companies.

5) Better liquidity

Mutual funds have the distinct advantage of offering to its investors the benefit of better

liquidity of investment. There is always a ready market available for the mutual funds units. In

addition, there is also an obligation imposed by SEBI guidelines.

6) Reduced risks

There is only a minimum risk attached to the principal amount and return for the

investments made in mutual fund schemes. This is usually made possible by expert supervision,

diversification and liquidity of units. Mutual funds provide small investors the access to a

reduced investments risk resulting from diversification, economies of scale in transaction cost

and professional finance management.

7) Investment protection

Mutual Funds in India are largely regulated by guidelines and legislative provisions put in a place

by regulatory agencies such as the SEBI. The Securities Exchange commission (SEC) in the USA allows for

provision of safety of investments.

In order to protect the investor interest, it is incumbent on the part mutual funds to broadly follow the

provisions laid down in this regard.

8) Switching facility

Mutual funds provide investors with flexible investment opportunities, whereby it is

possible to switch from one scheme to another. This flexibility enables investors to shift from

income scheme, vice versa, or form a close-ended scheme to an opened scheme, all at will.

9) Tax benefits

An attractive benefit of mutual funds is that the various scheme offered by them provide

tax shelter to the investor. This benefit is available under the provision of the Income Tax Act.

10) Low transaction costs

The cost of purchase and sale of mutual fund units is relatively lower. This is due the large

volume of money being handled by mutual funds in the capital market. The fees payable, such as

brokerage fee or trading commission etc is lower. This obviously enhances the quantum of distributable

income available for investors.

NEED FOR THE STUDY

SCOPE OF THE STUDY NEEDED FROM SUKANYA

MUTUAL FUND IN INDIA

The mutual fund industry in India made its debut with the setting up of the largest public sector

mutual fund in the world, namely the Unit Trust of India (UTI). It was set up in the year 1964 by a special

Act of Parliament. The first unit scheme offered was the “US-64”. A host of other fund schemes were

subsequently introduced by the UTI. The basic objective behind the setting up of the Trust was to

mobilize small savings and to allow channeling of those savings into productive sectors of the economy,

so as to accelerate the industrial and economic development of the country.

The monopoly of the UTI has ended in the year 1987, when the government of India

permitted commercial banks in the public sector to set up subsidiaries operating as trusts to

perform the functions of mutual by amending the Banking Regulation Act.

SBI set up the first mutual fund, which was followed by Central Bank. Later, many large

financial institutions under government control also came out with mutual funds subsidiaries.

The government introduced a number of regulatory measures, through various agencies such as

the SEBI, for the purpose of allowing the growth of the mutual funds industry in an orderly

fashion for the benefit of the investors, especially the small investors.

REASONS FOR SLOW GROWTH

1 Diaphaneity between NAV and listed price.

2 Non-uniformity in the calculation of NAV.

3 Lack of transparency.

4 Poor investors servicing.

5 Too much dependence on outside agencies.

6 Investors’ psychology.

7 Absence of qualified sales force.

FUTURE OF MUTUAL FUND IN INDIA

1 The SEBI support only big investors.

2 Disbanding of controller of capital issues office,

3 Opening of market to foreign investors.

4 Entry of large domestic institutions investments.

5 Government support.

6 Mutual fund permitted to under mix shares.

7 Union budget.

PROFILE

When a large amount of money is needed for any enterprise, from building a factory to funding

a corporation to drilling wells in a new oil field, that money is raised from investors—usually a large

number of them. Commonly, the enterprise raises that money by either selling ownership shares in it or

simply borrowing the money. When ownership is sold, the investor gets stock shares. When money is

borrowed, the investor gets bonds. Stocks and bonds are both securities.
 Additionally, mutual fund companies—and other so-called asset management firms—form

funds, which consist of a variety of securities. The asset management company buys and sells the

securities in a fund, seeking to maximize its value, and it sells shares in these funds to investors directly

and through securities brokers.

More people invest in securities today than ever before, and they have more choices. Not only are

there more investments to choose from, including stocks, bonds, real estate trusts, limited partnerships, and

an ever-growing diversity of mutual funds; there are also more ways to invest: full-service brokerages,

discount brokerages, and electronic trading for most of us; exclusive opportunities such as hedge funds and

venture capital funds for so-called high-net-worth individuals, such as multimillionaires, and institutional

investors, such as pension funds, insurance companies, and university endowments.

With the tremendous proliferation of 401(k), IRA, and other types of retirement plans during the

1990s, more people than ever before can now be classified as investors, either directly or indirectly. The

choices for the small-time investor have never been greater, and they include stocks, bonds, mutual

funds, real estate trusts, individually managed accounts, and various alternative investments. There’s

also a range of venue options available should one have an itch to invest, including traditional full-

service firms, discount brokerages, and do-it-yourself online trading. And we haven’t even considered

the institutional investor yet. The pensions, insurance companies, corporate accounts, and foundations

and endowments that used to comprise nearly all investors are still around, and money managers are

still there to try to create wealth for them.

 This all boils down to a wide range of career options in a dynamic industry. Though firms say

they will hire in 2005, hiring won’t be uniformly aggressive. Companies catering to lower-end investors,

the discount brokers, are still smarting from their past irrational exuberance. In all, the downward spiral

seems to have stopped and some insiders feel that the industry can’t continue to grow without doing

some substantial hiring. Additionally, the top-tier firms always have slots open for new talent.