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Mutual Funds-B.V.Raghunandan

Mutual Funds-B.V.Raghunandan



formation of mutual funds, types, calculation of NAV and mutual fund vis-a-vis exchange traded fund

formation of mutual funds, types, calculation of NAV and mutual fund vis-a-vis exchange traded fund



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    Mutual Funds-B.V.Raghunandan Mutual Funds-B.V.Raghunandan Presentation Transcript

    • Mutual Funds
      Chapter 11
    • Meaning and Definition
      Praveen N. Shroff defines a Mutual Fund as, ”a portfolio of stock market shares and other financial instruments built with funds collected from small investors, whose primary concern is security of investment”
    • Formation and Management
      Established under Indian Trust Act, 1882
      Registered under Securities Exchange Board of India (Mutual Funds Regulations), 1996
      Promoter is called the Sponsor
      Sponsor appoints a Board of Trustees
      Board of Trustees enter into an agreement with an Asset Management Company and a Custodian
    • Parties to a Mutual Fund
      A. Sponsor
      B. Trustees
      C. Asset Management Company
      D. Custodians
      Other Functionaries
    • A. Sponsor: Activities/Functions
      Appointment of Board of Trustees
      Track Record of Operating in Financial Markets for the last five years
      At least 3 years of profit making
      Should contribute a minimum of 40% of capital of Asset management Company
    • B. Trustees
      Board of Trustee is in charge of day to day management through the powers obtained from the Trust Deed executed by the Sponsor
      Protection of Interest of Investors
      Appointment of others like Custodian, Asset Management Company and Other Functionaries
      Supervision of AMC
      AMC should obtain the permission of Board of Trustees before Launching any new Scheme
    • C. Asset Management Company: Features
      Registered as a Private Limited Company
      Registered with SEBI
      Capital Provided by Sponsors, Associates and Joint Venture Partners
      Rs.10 Crore , Minimum Networth
      AMC for only one Fund
      AMC can not undertake any other business
      AMC signing an Investment Management Agreement with the Trustees
      A Fee is charged
      All Operational Decisions are made by an AMC
    • D. Custodian
      Maintaining Securities in the Physical Form
      Operate the Demat Account for the shares received in the Electronic Form
      Ensuring that the securities bought by AMC are credited to the Demat Account
      Issue the Delivery Order for the securities sold
      Receive Dividend and interest on the Investment
      Responding to Corporate Action as per the instruction of the AMC
    • Other Functionaries
      Registrar & Transfer Agents
      Selling Agents & Distributors
      Depository Participant
      Legal Advisors
    • Types of Mutual Funds
      A. Classification on the Basis of Structure
      B. Classification on the Basis of Investment Objectives
    • A. Classification on the Basis of Objectives
      Open-End Schemes
      Close-Ended Scheme
      Interval Scheme
    • B. Classification on the Basis of Investment Objectives
      Growth Scheme
      Income Scheme
      Balanced Scheme
      Index Fund
      Gilt Funds
      Fund of Funds
      Contra Fund
      Inverse Index Fund
      Emerging Opportunities Fund
      Theme Funds
      Other Funds
    • Net Asset Value
      NAV= Market Value of Investment
      + Current Assets
      + Other assets
      + Accrued Income
      - Current Liabilities
      - Other Liabilities
      - Accrued Expenses
    • Benefits of Mutual Funds
      Suitability for Small Investors
      Risk Management
      For Corporates, Lesser Administrative Expenses
      Investor Education
      Investment Research
      Liquidity of Stock Market
      Development of Money Market
      Savings Mobilisation
    • Mutual Fund & Exchange Traded Fund
      Mutual Fund
      1.Investor pays cash
      2.Less Trading Expenses
      3. No cash in Hand
      4.Close-Ended are Listed
      5. Portfolio Flexibility
      6. NAV at regular interval
      1.Investor may pay cash or surrender underlying asset
      2. More Trading Expenses
      3. A lot of cash in hand
      4. All Schemes are listed
      5. Fixed Portfolio
      6. Continuous Valuation
    • Mutual Funds in India
      Unit Trust of India
      Term Lending Institutions
      Insurance Companies
      Private Sector
      Foreign Funds