Presented by

Swati Jaiswal
 What is a Mutual Fund ?
• A mutual fund is a pool of money collected
from investors and is invested according to
stated investment objectives.
• A mutual fund is a trust that pools the savings
of a number of investors who share a
common financial goal.
• It floats different schemes into which
investors based upon their financial needs and
risk profiles place their contributions
Flow Chart of Mutual Fund
 Characteristics of A Mutual Fund
• Investors own the mutual fund.
• Professional managers manage the affairs for
a fee.
• The funds are invested in a portfolio of
marketable securities, reflecting the
investment objective.
• Value of the portfolio and investor’s holdings,
alters with change in market value of
investments.
 Emergence Of Mutual Funds
• Most appropriate investment opportunity.
• USA – The birthplace of Mutual Funds.
• More savings to funds than to banks.
• Today Mutual Funds collectively manage
almost as much as or more money as
compared to banks.
 History Of Mutual Funds
Phase 1: 1964 – 87 (Unit trust of India)
• 1963 – UTI was established by an Act of
Parliament.
• 1970’s UTI started innovating & offering
different schemes
• 1971 – Launched of ULIP
• 1986 Children Growth Plan
• 1987 Mastershare
Phase 2: 1987 – 93 ( Entry of Public
Sector Funds )
• 1987 marked the entry of Non-UTI Public
Sector mutual funds, bringing in competition
• SBI established first Non-UTI mutual fund in
Nov 1987
• From 1987 – 93 fund industry expanded seven
times
  Phase 3: 1993 – 96 (Emergence of
Private Funds)
• Entry of Private Sector Funds
• 1993 – 94, Private sector launched 5 mutual
funds
• Kothari Pioneer Mutual Fund the first fund by
the Private Sector
 1999 Year of the Funds
• 1999 saw immense future potential &
development in this sector
• Resurgence of Mutual funds & regaining of
investor confidence
• Union Budget gave life to the revival of the
funds
• Exemption of mutual fund dividend
STANDARD RISK FACTORS IN
A MUTUAL FUND
RISK HIERARCHY OF MUTUAL FUNDS

EQUITY
RISK FUND

LEVEL BALANCED FUND

DEBT FUND

GILT FUND

MONEY
MARKET
FUND

RETURN LEVEL
 NET ASSET VALUE (NAV)
TOTAL ASSETS -
NET ASSETS CURRENT
LIABILITIES

NAV OF A FUND NET ASSETS OF THE SCHEME

NO. OF UNITS OUTSTANDING
ON VALUATION DATE
 AMFI
(Association of Mutual Funds in India)

• The industry association for the mutual fund

industry in India which was incorporated in
the year 1995.
 Principal Objectives Of MF
1) Promote the interests of the mutual funds and unit holders and
interact with regulators- SEBI/RBI/Govt./Regulators.

2) To set and maintain ethical, commercial and professional standards

in the industry and to recommend and promote best business
practices and code of conduct to be followed by members and others
engaged in the activities of mutual fund and asset management.

3) To increase public awareness and understanding of the concept and

working of mutual funds in the country, to undertake investor
awareness programmes and to disseminate information on the
mutual fund industry.

4) To develop a cadre of well trained distributors and to implement a

programme of training and certification for all intermediaries and
others engaged in the industry.
 Advantages Of a Mutual Fund Over
Direct Investment
• Professional fund management.

• Portfolio diversification & risk reduction.

• Choice of fund schemes

• Market linked returns

• Easy liquidity
• Flexibility and convenience

• Transparency in NAV & portfolio disclosure

• Tax benefits

• Lower transaction cost

• Well regulated
Disadvantages of investing through MF
over Direct Investment
• No guarantee of returns
• No tailor made portfolio.
• Cost of professional fund management &
initial expenses borne by investors
• Risk of mismanagement of fund
• Over diversification leading to lower returns
• Over liquidity may effect returns
 Structure of MF schemes
op

•Open ended funds •Growth funds

•Close ended funds •Income funds •Tax saving funds
•Load funds •Balanced funds •Index fund
•No load funds •Liquid funds •Sector fund