Professional Documents
Culture Documents
Mutual Fund: Prof. Shriram Nerlekar
Mutual Fund: Prof. Shriram Nerlekar
Mutual Fund: Prof. Shriram Nerlekar
• Presentation by
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1. The Concept and Role of Mutual Funds.
2. Funds Structure and Constituents.
3. Legal and Regulatory Framework.
4. The Offer Document.
5. Fund Distribution and Sales Practices.
6. Accounting, Valuation & Taxation.
7. Investor Services.
8. Investment Management.
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09. Measuring and Evaluating Mutual Fund Performance.
10. Helping Investors with financial planning.
11. Recommending Financial Planning Strategies to Investors.
12. Selecting the right Investment Products for Investors.
13. Helping Investors understand Risks in Fund Investing.
14. Recommending Model Portfolios and selecting the right Fund.
15. Business Ethics in Mutual Fund.
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Chapter 1
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Important characteristics of a Mutual Fund?
• The ownership is in the hands of the investors who have
pooled in their funds.
• It is managed by a team of investment professionals and
other service providers.
• The pool of funds is invested in a portfolio of marketable
investments.
• The investors share is denominated by ‘units’ whose
value is called as Net Asset Value (NAV) which changes
everyday.
• The investment portfolio is created according to the
stated investment objectives of the fund.
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Advantages of Mutual Funds to Investors?
• Portfolio diversification
• Professional Management
• Reduction in Risk
• Reduction in Transaction costs
• Liquidity
• Convenience and Flexibility
• Safety – Well regulated by SEBI
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What are the disadvantages of investing
through Mutual Funds?
• No control over the costs. Regulators limit the
expenses of Mutual Funds. Fees are paid as percentage
of the value of investment.
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Important phases in Indian Mutual Fund Industry
UTI sole player in the industry, created by an Act of Parliament ,1963
UTI launches first product Unit Scheme 1964
1963 – 1987
UTI creates products such as MIP's, children plans ,offshore funds etc
MASTERSHARE – Ist Diversified Equity Investment Scheme in India.
INDIA Fund – Ist indian offshore fund lauched in August 1996.
In 1987 Public Sector Banks and FI's got permission to set up MF.
1987 - 1993
SBI mutual fund was the first non -UTI mutual fund
In 1993, Mutual Fund Industry was open to private players.
1993 - 1996 SEBI's first set of regulations for the industry formulated in 1993
Significant innovations, mostly initiated by private players
Implementation of new SEBI regulations led to rapid growth
Bank mutual funds were recast as per SEBI guidelines
1996 - 1999
UTI came under voluntary SEBI supervision.
Dividends made tax free in 1999.
Rapid growth, significant increase in corpus of private players
1999 - 2000 Tax break offered created arbitrage opportunities
Bond funds and liquid funds registered highest growth
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Emergence of Large and Uniform Industry
• UTI Act repealed in 2003.
• UTI now does not have a special status.( now under
SEBI)
• Size of industry was 150000 crore in 2005.
• Merger and Acquisitions happening.
• Fidelity, Largest MF has entered.
• As on March 2006- 29 Funds.
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Mutual Fund Products
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What are open-ended funds?
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What are closed end funds?
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Types of Funds - By Investment
Objective
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What are equity funds?
• Predominantly invest in equity shares of the company.
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What are liquid and money market funds?
• These debt funds invest only in instruments with
maturities less than a year.
• The investment portfolio is very liquid and enables
investors to hold their investments for very short
horizons of a day or more.
What are Gilt Funds?
• It invests only in securities that are issued by the
Government and therefore do not carry any credit risk
• It invests in both long-term and short-term paper.
• Ideal for institutional investors who have to invest in Govt.
Securities
• Enables retail Participation
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) ELSS ) Equity linked saving scheme
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How are funds different in terms of their risk
profile?
Equity Funds High level of Return , but has a high level of risk too
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Important points
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Chapter 2
AMC
Savings
Trust Investments
Units
Unit holders Returns
Registrar
Trust
SEBI
Custodian AMC
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Unit Trusts – Constituents
• Fund Sponsor.
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?What is the regulatory structure of MF in India
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Who can be the Sponsor? What does the Sponsor do?
• The sponsor establishes the mutual fund and registers
the same with SEBI
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How are Mutual Funds Structured?
• In India Mutual fund is the form of a Public Trust created
under the Indian trust Act. 1882.
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• There must be at least 4 members in the Board of
Trustees and at least 2/3 of the members of the board of
trustees must be independent.
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What are the rights of the Trustees?
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What are the obligations of the Trustees?
• Trustees must ensure that the transactions of the mutual
fund are in accordance with the trust deed
• Trustees must ensure that the AMC has systems and
procedures in place, and that all the fund constituents are
appointed
• Trustees must ensure due diligence on the part of AMC in
the appointment of constituents and business associates
• Trustees must furnish to the SEBI, on half yearly basis a
report on the activities of the AMC
• Trustees must ensure compliance with SEBI regulations
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Compliance with Sebi’s Requirements
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Regulatory requirements for the AMC?
• Only SEBI registered AMC can be appointed as investment
managers of mutual funds
• AMC must have a minimum net worth of Rs. 10 Cr., at all times
• An AMC cannot be an AMC or Trustee, of another Mutual Fund
• AMC’ s cannot indulge in any other business, other than that
of asset management
• At least half of the members of the Board of an AMC, have to
be independent
• The 4th Schedule of SEBI regulations spells out rights and
obligations of both trustees and AMC’s
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Who appoints the AMC and defines its functions?
• The trustees, on the advice of the sponsors usually
appoint the AMC
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How are Indian mutual funds organised?
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What are the restrictions on the AMC ?
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What do the Registrar and Transfer Agents do?
They are responsible for investor servicing functions
• Process investor applications
• Record details of Investors
• Send information to Investors
• Process dividend payout
• Incorporate changes in investor information
• Keeping Investor information up to date
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What is the role of Brokers in a mutual fund?
• Enable investment managers to buy sell securities
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What is the role of selling and distribution
agents ?
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What are the functions of the custodians ?
• Responsible for the securities held in the mutual fund’s
portfolio
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Various Forms of Fund Mergers and Takeovers
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What are the conditions under which two AMC’s
can be merged?
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Under what conditions can an AMC be
taken over by another sponsor ?
• SEBI approval is required of the change of ownership and
unit holders have to be informed of the takeover
• Investors have to be informed but HIGH Court approval
not required
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Important Points
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Chapter
3
• SEBI
• RBI
- as a supervisor of bank owned mutual funds
- as a supervisor of MMMFs
• Ministry of Finance
• Company Law Board, Department of Company Affairs
and Registrar of Companies
• Stock Exchanges -(For listed Mutual Funds)
• Office of the Public Trustee
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What is the regulatory jurisdiction of RBI
over mutual funds ?
• RBI is the monetary authority and the regulator of the
banking system
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What is the role of Ministry of Finance in
mutual fund regulations ?
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What are self regulatory organisations )SRO’s)?
• SRO’ s are the second-tier regulatory mechanism created
by market participants, to regulate the working of a group
of persons/organizations
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What are the objectives of AMFI ?
AMFI is an industry association, incorporated in 1995, is
not an SRO, so it can just issue guidelines to members. It
cannot enforce regulations.
Objectives
• To promote the interests of mutual funds and unit holders.
• To set ethical, commercial and professional standards in
the industry.
• To increase public awareness of the mutual fund industry.
• To develop a cadre of well trained distributors
AMFI is governed by a board of directors elected from
mutual funds and is headed by a full time chairman.
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What are the rights of the investors in respect of
service standards that they can expect from MFs?
1. Investors are entitled to receive dividends declared in a scheme within 30 days
2. Redemption proceeds have to be sent to investors within 10 days
3. If an investor fails to claim the dividend or redemption proceeds he has the rights to
claim it up to a period of 3 years from the due date at the then prevailing NAV.
4. Mutual funds have to allot units within 30 days of the IPO an dalso open the
scheme for redemption, if it is an open -ended scheme
5. Mutual funds have to publish their half yearly results in at least one national daily
and publish their entire portfolios, at least once in 6 months . Such disclosure should
be done within 30 days from 6 monthly account closing dates of the fund
6. Trustees will have to ensure that any information having a material impact on the
unit holders investments should be made publicby the mututal fund
7. If 75% of the unit holders so decide, 1)The scheme can be wound up 2)Meeting of
unit holders can be called 3)Appointment of the AMC of the mutual fund can be
terminated
8. If there is any change in the fundamental attributes of the scheme, the unit holders
have to be notified through a letter. They also have a right to repurchase at NAV
without any load, before such change is effected.
9. Unit holders have the right to inspect certain documents
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What are the limitations to investors right ?
• Investors cannot sue the trust as they are not distinct from
the trust
• Investors cannot lodge complaints against the
trustees (with the Registrar of Public Trusts) or the
AMC (with the CLB).
• Investors can lodge complaints with SEBI for non-
compliance.
• Investors cannot be compensated if the performance
of the fund is below expectations.
• There are not legal remedies for to a prospective
investor
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Important Points
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Chapter 4
Offer Document
Where can the investors find out the details about a
? MF scheme, before investing
• The mutual fund is required to file with SEBI a detailed
information memorandum called the offer document , in a
prescribed format giving all the information of the fund and
the scheme.
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?What does the Offer Document usually contain
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Importance of Offer Document
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Is the offer document issued only when the MF
?issues units for the first time
• Closed ended scheme- offer document during the IPO
• Open ended scheme- offer document is valid through the
life of the scheme, which is revised every 2 years
• Major changes that have to be notified to the investors:
• Change in the AMC or Sponsor of the mutual fund
• Changes in the load structure
• Changes in the fundamental attributes of the schemes
• Changes in the investment options to investors;
inclusion or deletion of options
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What are the mandatory disclosures to be made
on the cover page of the OD?
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What are the standard risk factors?
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What are scheme specific risks?
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What is the Key Information Memorandum (KIM)
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Is the offer document verified by SEBI for its accuracy?
• No
• SEBI does not approve or disapprove anything contained
in the offer document
• The offer document is prepared as per a certain format
prescribed by SEBI
• The contents of the offer document are verified by the
trustees, and the compliance officer
• The compliance officer has to also certify that the
constituents of the fund are all SEBI registered entities
• The AMC is responsible for the contents and accuracy of
information in the offer document
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Important Points regarding OD and KIM
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Chapter 5
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What are the categories of investors eligible to
buy MF units?
• Resident Individuals
• Indian Companies
• Indian trusts and charitable institutions
• Banks
• NBFC’s
• Insurance companies
• Provident funds
• Non-resident Indians
• OCB’s
• SEBI registered FII’s
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Important point
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Distribution Channels
• Individual Agents- A person has to sign an agreement with a fund
on non judicial stamp paper. He has to be AMFI certified also to sell
Mutual Fund products.
• Only exemption is distributors abvoe 50 years of age and with at
least 5 years of experience as on Sep 30, 2003. Such exempted
distributors were required to complete AMFI’s refresher course by
Sep 30, 2004.
• UTI MF requires its agents to have atleast passed the level of
matriculation and also to provide 2 references.
• Distribution Companies
• Banks and NBFCs
• Post Offices
• Direct Marketing
- CURRENTLY 49837 are amfi certified and 30028 have
taken the ARN numbers ( as on 31/3/2005)
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What are the AMFI recommended best
practices for mutual fund agents?
1. Agents must be fully aware and informed about the features of the
products that they offer to the investors
2.Agents should be highly familiar with the profile of the investors, in terms
of return expectations, requirements and risk tolerance
3. Agents must strive to cultivate disciplined approach to investing and a
regular investment habit among clients
4. Agents must have a thorough understanding of the needs of their
investors
5. Agents must be able to help investors to choose from alterntative
investment products, and enable an appropriate asset allocation
6. Agents should seek from investors the commitment to invest to enable
which they may assist the client with the forms and procedures for
investing
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What is SEBI’s advertising code?
1.The dividends declared or paid shall be mentioned in Rs/unit along
with the face value of each unit and the prevailing NAV at the time of
declaration of the dividend.
2.Only compounded annualised yield can be advertised if the scheme
has been in existance for more than 1 year
3.All performance calculations shall be based only on NAV and the
payouts to the unit holders .
4.Annualised yield should be shown for 1,3,5 years and since launch of
the scheme. For funds with less than 1 year performance can be in
terms of total returns.
5.Appropriate benchmarks and identical time period must be used
while comparing. Once chosen the benchmark should be used
consistently over time.
6. All advertisements should in the main body of the adevertisement
immediately after the return/yields and in the same font mention that
past performance may or may not be sustained in future
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What is the AMFI Code of Ethics?
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What is the commission structure for mutual fund
agents?
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Fundamental Attributes of a Scheme
• Type of Scheme, Investment Objective and Terms of the
issue, Investment Pattern, Fees and Expenses,
Valuation norms and Investment Restrictions.
• Any change in Fundamental Attributes, Trust, Fees and
expenses payable and other changes which affect unit
holders interest have to be informed to investors either
in writing or newspaper advertisement( one in English
daily and other in a paper published in the language of
the region where the HO of a MF is situated)
• The unit holders are given option to redeem their
holdings in the fund without any exit if anything in above
is changed.
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Loads
• Load is charged to investor when the investor buys or redeems
units. It is primarily used to meet the expenses related to sale and
distribution of units
• Load charged on sale of units is entry load. It increases the price
above the NAV for new investor.
• Load charged on redemption is exit load. It reduces price.
• Maximum Entry load or Exit load is 7%.( For Open ended Funds)
• Max. Entry or Exit load for closed ended funds is 5%
• CDSC is an exit load that varies with holding period.
• Load is an amount which is recovered from the investor.
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Chapter 6
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How frequently is the NAV calculated ?
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Numerical
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What are the initial issue expenses ?
Expenses that are incurred in the launch of the fund are
called as initial issue expenses.
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Can the Fund be launched without bearing any
initial issue expenses ?
∙ Yes
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Latest changes on Initial Issue Expenses
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What are the expenses incurred by a mutual fund?
Investment management fees to the AMC
• Custodian’s fees
• Trustee fees
• Registrar and transfer agent fees
• Marketing and distribution expenses
• Operating expenses
• Audit fees
• Legal expenses
• Cost of mandatory advertisements & communications to
investors
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Can the AMC charge all the expenses that it
incurs, to the income of the fund ?
• No. There are two levels of restrictions
• At the first level only certain kinds of expenses, that are
identified as having been incurred for the conduct of the
business of the fund, can be charged to the fund.
• The second level of regulation refers to the limit on the total
expenses, that can be charged to the fund
Following is the maxmum limit on the expenses
For net assets up tp Rs. 100 Cr 2.50%
For the next Rs 300 Cr. Of net assets 2.25%
For the next Rs 300 Cr. Of net assets 2%
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What are the fees charged by the AMC ?
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Numerical
• Weekly Net average asset=1400 Cr.
• What could be the maximum ongoing expenses.
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Tax Implication in Mutual Funds
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Capital Gain Taxation
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Other points
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Numerical
• Answer :
– Long term capital gain = 250000/
– So Tax on LTCG = 2500000* 10% = Rs. 25000/-
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Valuation of Securities
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Valuation of Equity Securities
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Thinly traded Equity Securities
• Equity and equity related security
• Rs. 5 lakhs or less OR less than 50000 shares in a
month
• For unlisted: AMC need to make its own judgement and
guideline - which need to be documented
• Aggregate of illiquid securities - non traded, thinly
traded, and unlisted equity shares should not exceed
15% if the total assets of the scheme and any assets
above that limit will be valued at zero.
• If no Trade done during the past thirty days then has to
be treated as non traded security and the Valuation is
done on basis of “Good Faith
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Valuation of Thinly Traded Equity
• Networth per share
– EPS if negative
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Valuation of Debt Securities
• Valuation of a Thinly Traded Security (<182 Days)
For example, if a security was issued at Rs. 90 and
redeemable at Rs. 100, after 364 days, the accrued
interest for each day is
= 10/364
= 0.02747
The value of the security is increased by 2.747 paise every
day, so that the security is worth Rs. 100 on the date of
maturity.
If it has to be valued 200 days after issuance, its value is
90+(0.02747*200) = 95.494
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(Valuation of other debt security (>182 days
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Chapter 7
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Other Investment Services
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Chapter 8
Investment Management
Equity Portfolio Management
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What are large-cap and small cap shares?
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P/E Ratio
• P/E Ratio=share price/ post tax earnings
• Indicator of value the market assigns to every rupee
earned by the company
• P/E ratio reflects overvaluation and under valuation
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What is dividend yield?
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Classifications of Stocks
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What is active equity fund management
• Fund manager tends to look at specific attributes in selecting stocks.
• Active fund manager believes, that his ability to buy right stock at the
right time, can translate into superior performance for his portfolio.
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What is passive equity fund management?
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What is the types of equity research done in MF?
• Fundamental analysis – Future earnings and risk
profile considered ( whether to buy or not)
• Technical analysis – Study of historic data on the
company’s share price movements and volume ( To find
timing)
• Quantitative analysis – Equity valuation and evaluate
the market as a whole
What are the various steps involved in equity fund Management?
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Important points on Debt Portfolio
Management
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Instruments in Indian Debt Market
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What is real rate and nominal rate?
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Important points
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Measure of Bond Yields
• Current yield – Coupon Rate / Current Market Price
• Yield to Maturity( YTM) – It is also known as bond’s IRR.
It is annual rate of return an investor would realize if he
bought a bond at a particular price, received all the
coupon payments, reinvested the coupon at same YTM
and received the principal at maturity.
• There is inverse relationship between price and YTM of
a bond.
• Yield Curve – Graph showing yields for bonds of various
maturities, using a benchmark group of bonds. Also
known as TSIR ( term structure of interest rates). The
curve is usually upward sloping because longer
maturities generally offer higher yields.
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Risks in Investing in Bonds
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Yield Spreads
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Duration
• It is a more accurate measure of the portfolio maturity profile.
• It measure the percentage change in bond’s price with a change in
yield of 1%
• It computes the proportion of the present value of each individual
payment as a %age of the sum of the present values of all
payments and make this proportion the weight for the year of
payment.
• The Duration of a bond is less than its maturity, except for zero
coupon bonds
• Bonds with longer maturities have longer durations.
• An interest bearing bond with a higher coupon rate will have lower
duration because a higher proportion of the total inflows will be
received in the interim.
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What is the relationship between the price
? and the yield of the bond
• Price and Yield are inversely related.
• Changes in interest rate impact bond values in the
opposite direction.
• Yield also gets increased by downgrading of credit rating
of the bond.
Yield Curve :
Rates at which bonds of similar risk of various tenors
are traded on a given point in time, are plotted in a
graph. This is known as the Yield Curve
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What are the various types of fixed income
securities available in the Indian Market?
Issuer Instrument Maturity Investors
RBI, Banks , Insurance
Companies, Provident funds,
Dated Mutual Funds , Primary
Central Govt. Securities 2- 30 Years Dealers
RBI, Banks , Insurance
Companies, Provident funds,
Mutual Funds , Pd's,
Central Govt. T-Bills 91/364 days Individuals
Dated Banks, Insurance
Stare Govt. Securities 5-10 Years Companies, Provident funds
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Restrictions
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Inter Scheme Transfer
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Investment in Sponsor Company
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Borrowings by Mutual Fund
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New Provisions on Investment Policy
• Minimum Number of Investors per scheme
• Purpose of MF is sharing the risks with a large number of
investors.
• SEBI requires each scheme to have a minimum number
of investors.
• So now each scheme and individual plan under the
scheme should have a minimum number of 20 investors
AND no single investor should account for more than
25% of the corpus of such scheme.
• OES are allowed three months or upto end of the
succeeding calendar quarter from the close of IPO to
ensure compliance with this requirement
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Fund of Funds Scheme
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Important points
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Chapter 9
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Performance Measurement
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Numerical
• Answer
- % change in NAV = ( 24 -22) *100 = 9.09%
» 22
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• Purchase price Rs. 22 per Unit
• NAV at year end Rs. 23 per Unit
• Interim Div. Rs. 3
• Ex.-Div. NAV Rs. 21
• Total Return=?
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Benchmarking
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Criteria for peer group comparisons
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Chapter
10
Helping Investors with financial
planning
Definition and objective
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Steps to Financial Planning
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Important responsibilities of investors in the
?financial planning exercise
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Very important points on financial planning
• The planner can look at all the clients need including budgeting,
saving, taxes, investments, insurance and retirement planning.
• A financial planner can link his own rewards and fees to the client’s
financial success and the achievement of their financial goals
• MUTUAL FUND IS THE MOST IMPORTANT TOOL FOR
FINANCIAL PLANNING.( CORE PRODUCT)
• Financial is not only investing. It comes before investing.
• It is relevant for all category of clients.
• It is not as same as retirement planning.
• It is not only Tax Planning.
• Financial planning is important at younger stage of life.
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Important points on Financial Planning
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Wealth cycle for investors
Stage Financial needs Investment preferences
Accumulation stage Investing for long term identifed Growth options and long term
financial goals products.High risk appetite
Transition Stage Near term needs for funds as Liquid and medium term investments.
pre-specified needs draw closer Lower risk appetite
Reaping Stage Higher liquidity requirements Liquid and medium term investments.
Preference for income and debt products
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Chapter 11
Index
• Harness the Power of Compounding – 1% interest per month is
better than 12% yearly retrun.
• Buy and hold is most common strategy BUT most common
mistake. Ideally it should be, track your investments, discard the
non performers and keep the good performers.
• Have realistic expectations
• Rupee cost averageing
• Value Averaging.
• Jacob’s Rebalancing Strategy
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Rupee Cost Averaging
Amount NAV per Number of Cumulative Value of
I nvested unit units bought number of holding
(Rs) units
1000 12.5 80.00 80.00 1000.00
1000 11.25 88.89 168.89 1900.00
1000 10.75 93.02 261.91 2815.56
1000 11 90.91 352.82 3881.03
1000 12.75 78.43 431.25 5498.47
1000 13.35 74.91 506.16 6757.22
1000 13.85 72.20 578.36 8010.30
1000 14.45 69.20 647.57 9357.32
1000 13.85 72.20 719.77 9968.78
1000 13.5 74.07 793.84 10716.86
Average cost 12.60
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What are the financial planning strategies that can
?be recommended to investors
• Rupee cost averaging.
– More units are bought when prices are low and fewer units are bought when prices are
high. Over a period of time, the average purchase price of investor is lower than average
NAV.
• Value averaging.
• A fixed amount is targetted as the desired value of the portfolio at regular intervals
• If markets have moved up, the units are sold to restore target value and vice versa.
• It is superior than RCA as it enables the investor to book profits and rebalance the portfolio.
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Chapter 12
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Comparison by Nature of Investment
Safety
Return Volatility Liquidity
Convenice
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The Investor Perspective Funds vs. Other Products
Investment Investment
Risk Tolerance
Objective Horizon
Capital
Equity High Long Term
Appreciation
Medium to Long
FI Bonds Income Low
Term
Corporate Debentures Income H-M-Low The same
Company Fixed
Income The same Medium
Deposites
Bank Deposites Income Generally Low Flexible-All Terms
Index
• Real Estate ( High investment required)
• Bank Deposits ( Preferred due to the perception of bank
deposits being safe and free of default.
• PPF
• RBI Relief Bonds
• Indra Vikas Patra
• MF – Best Option
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Chapter 13
• What is Risk ?
– Risk means the possibility of financial loss.
– “Risk” is thus equated with Volatility of Earnings
• Equity Price Risk
– Company Specific
– Sector Specific
– Market Level
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Evaluating the Risks of a Mutual Fund
• Market Cycles
• Risk Measures
– Standard Deviation – SD measures the fluctuations
of a fund`s returns around a mean level.
– Beta Coefficient – Beta relates a fund`s return with a
market index and measures the sensitivity of the
fund`s returns to change in market index. A beta of 1
means the fund moves with market. A beta of less
than one means the fund will less volatile than the
market.
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Evaluating the Risks of a Mutual Fund
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Evaluating the Risks of a Mutual Fund
• Alpha
– Risk adjusted performance calculation is called
Alpha.
– Alpha of a fund compares the fund`s actual results
with what would have been expected given the fund`s
beta and the market index performance.
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Chapter 14
Index
?What is Bogle’s strategic asset allocation
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The steps in developing a model portfolio for
?an investor
• Develop long term goals.
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Model portfolios recommended for investors
:according to their life cycle stages
• Young unmarried professionals :
– 50% in aggressive equity funds.
– 25% in high yield bond funds, growth and income funds.
– 25% in conservative money market funds.
Young couple with 2 incomes and 2 children:
– 10% in money market funds.
– 30% in aggressive equity funds.
– 25% in high yield bond funds and long term growth funds.
– 35% in municipal bond funds.
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:Contd
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What is the recommended portfolio for
?investors in accumulation phase
– 65 – 80%
• Income and gilt funds :
– 15 – 30%
• Liquid funds and bank deposits :
– 5%
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What is the recommended portfolio for investors in
?distribution phase
– 15 – 30%
• Income funds :
– 65 – 80%
• Cash funds:
– 5%
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Chapter 15
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Business Ethics for Mutual Fund Business
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Business Ethics for Mutual Fund Business
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Objectives of Business Ethics
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Areas particularly monitored by SEBI
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Regulatory Requirements regarding Principle
of Independence
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Examples of Unethical practices
• Insider Trading
• Preferential Treatment to Selected investors – Cut off
time has been introduced now to prevent late trading
abuses.
• Personal trading by fund managers and employees
• Front Running – Fund manager buying or selling
securities ahead of doing the same transaction for the
fund
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Regulations on Personal Trading
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Other Regulations
Index
Thanks