Overview.• What is Mutual fund?• Phases of Mutual Fund.• Types of Mutual Funds.• Selection Of Top Funds.• Future Prospects of my study.
What is M.F• A Mutual Fund is a trust that pools the savings of a number of investors who share a common investment objective.
• First Phase – 1964-87: An Act of Parliament established Unit Trust of India (UTI) on 1963.• Second Phase – 1987-1993 (Entry of Public Sector Funds)• Third Phase – 1993-2003 (Entry of Private Sector Funds)• Fourth Phase – since February 2003.
Types Of M.F Type of Mutual Fund Schemes Special Investment Structure Schemes ObjectiveOpen Ended Industry Specific Growth Funds Funds SchemesClose Ended Index Income Funds Funds Schemes SectoralInterval Funds Balanced Funds Schemes Money Market Funds
Growth Factors.• Large Market Potential – High Savings Rate.• Comprehensive Regulatory Framework• Favourable Tax Policies• Introduction of New Products• Role of Distributors• Investor Education Campaign• Performance Record
Tax Benefits.• Debt schemes – The fund pays upfront Dividend Distribution Tax (DDT) @ 14.1% for Individuals and @ 22.66 % for others, before distribution to investors. In case of Money Market / Liquid Funds, DDT is payable @ 28.3%. Dividend so received, is Tax Free in the hands of the investors.• Investment in Equity oriented Tax saver schemes up to• Rs.1 Lac with lock in period of 3 years is eligible for deduction from taxable income.• On Equity oriented Mutual Fund Schemes – Short Term Capital Gains Tax is 10 % and for Long Term it is Nil.
Factors inhibiting growth of M.F• Lack of awareness and knowledge about Mutual• Funds – only about 8 percent of household savings are invested in Mutual Funds.• Unwillingness to undertake even minimal risk.• Inadequate reach of Funds / Distributors.• Competition from assured return products from Government like Government Of India Bonds,• Post Office Monthly Income Schemes, Senior Citizen Savings Schemes, National Savings Certificates etc.
Future Prospects• Analysis of the Sample based on Technical analysis.• And analysis of sectoral performance.• Comparative analysis of other investment products.• Relative study of Macro Economic factors.