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MUTUAL FUNDS

PRESENTED BY: Anto Sebastian Divya Antony Anjali V Mohan Jeff AC Akshara Peter

Mutual Fund
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 appreciation 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.

Working of a Mutual Fund

Structure of a Fund

Sponsor: Akin to the Promoter of the company. Contribute min 40% of net worth of AMC. Establishes the Fund, Gets it registered with the SEBI. Forms a trust, & appoints Board of trustee. Trustees: Holds assets on behalf of unit holders intrust. Two third of the trustees shall be independent persons . Trustees ensure that the system, processes & personnel are in place.

Asset Management Company: Floats schemes & manages according to SEBI. Can not undertake any other business activity, other than portfolio management services. At least 50% of independent directors. Depository: Facilitates financial transactions, Provides remittance facilities. Registrar & Transfer Agent: Maintains records of unit holders accounts& transactions Disburses & receives funds from unit holder transactions. Custodian: Holds the funds securities in safekeeping. Collects interest & dividends paid on securities. Settles securities transaction for the fund.

Types of Mutual Funds


By Structure Open-Ended Close-Ended Schemes By Investment Objective Equity (Growth) Debt (Income) Liquid/Money Market (including gilt) Balanced/Hybrid Other Schemes Tax Saving Schemes. Index schemes. Sector specific schemes.

Regulation of Mutual Funds


Governed by SEBI (Mutual Fund) Regulation, 1996. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of the fund in its custody. According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be independent. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework.

Benefits of Investing in Mutual Fund


Professional Management.
Diversification. Economies of scale. Simplicity. Liquidity.

Types of Returns
Income is earned from dividends on stocks and interest on bonds. If the fund sells securities that have increased in price,

the fund has a capital gain.


If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price, which is sold for a profit.

Mutual Funds in India


UTI Asset Management Company. Reliance Capital Asset Management. JPMorgan Asset Management India Kotak Mahindra Asset Management Company. IDBI Asset Management Ltd. ICICI Prudential Asset Company Limited. Franklin Templeton Asset Management. Axis Asset Management Company Ltd. HDFC Asset Management Company Limited. HSBC Asset Management (India) Private Ltd.

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