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Mutual Funds By Mrs.Lalitha PPM
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Mutual Funds By Mrs.Lalitha PPM

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  • 1. Mutual Funds By Mrs.Lalitha PPM
  • 2. What is Mutual Fund?
    • A Mutual Fund is an investment vehicle that pools the money of several investors and invests it in different securities.
  • 3. Organisation of Mutual Fund
  • 4. Some Concepts Clarified…..
    • NAV - N et asset value is the market value of a unit of a scheme after accounting for all expenses on any given business day.
    • Load
  • 5. Load
    • Charged directly to the investor
    • Includes Agent’s commission, Marketing and Selling expenses
    • Front end Load and Back end Load
    • Entry loads vary between 1.00% and 2.5%.
    • Exit loads vary between 0.25% and 3.00%.
    • Regulations do not allow either front-end load or back-end load in any combination to be higher than 6%.
  • 6. …….Some Concepts Clarified
    • Purchase price is the price paid by a customer to purchase a unit of the fund.
    • Redemption price is the price received by the customer on selling units of an open-ended scheme to the fund.
    • Repurchase price is different from redemption price and refers to the price at which a close-ended scheme repurchases its units.
    • Expense ratio
  • 7. Expense Ratio
    • Operating Expenses paid out of the fund’s earnings
    • Includes advisory fees paid to investment managers, audit fees, custodial fees, transfer agent fees, trustee fees etc.
    • Advisory fees range from 1% to 1.5% of the corpus
    • Limits mandated by SEBI
    • First Rs. 100 crores 2.50% 2.25%
    • Next Rs. 300 crores 2.25% 2.00%
    • Next Rs. 300 crores 2.00% 1.75%
    • On the balance of assets 1.75% 1.50%
    • The annual expense expressed a percentage of the fund's average daily net assets.
  • 8. Exploding a Myth-A Fund with lower NAV is cheaper than that with higher NAV
    • A Mutual Fund with lower NAV will give better returns !!!!!!
  • 9. Classification Of Mutual Fund
    • By Asset Class
    • By Investment Sector
    • By Liquidity
    • By Trading Strategy
    • By Investment Strategy
    • By Security Selection
    • By Load Charged / Cost
    • By Place of origin
  • 10. WHY Choose Mutual Funds?
    • Professional Management
    • Lower Risk
    • A better portfolio for less Money
    • Lower Transaction Cost
    • Liquidity
    • Transparency
    • Affordability
    • Choice of Schemes
    • Well Regulated
  • 11. Ground Rules of Mutual Fund Investing
    • Define your Investment Objectives
    • Draw up your Asset Allocation
  • 12. ….Ground Rules of Mutual Fund Investing
    • Identify Funds with matching Investment objectives.
    • Evaluate Past Performance, look for Consistency
    • Diversify
    • Consider Fund Costs
    • Factor Tax Implications
  • 13. Tax Implications – on Dividend Equity Oriented Scheme Nil Nil Debt Oriented Scheme Nil 12.5% + Surcharge + Cess -> 14.025% Mutual Fund Scheme TDS Dividend Distribution Tax
  • 14. Tax Implications – on Capital Gains Equity Oriented Scheme Debt Oriented Scheme TAX NIL Lower of - 10% without indexation - 20% with indexation LTCG 10 % Marginal Rate of Taxation STCG 0.2 % Nil STT
  • 15. Which Option to Choose? Growth Dividend Payout Mutual Fund Scheme 0% < 10% Profit Booking
    • Equity Oriented Scheme
    • < 1 Year
    • > 1 Year
    10%or20%(WI)<14.025% 14.025 % <30%
    • Debt Oriented Scheme
    • < 1 Year
    • >1 Year
  • 16. ….Ground Rules of Mutual Fund Investing
    • Look for Size and Credentials
    • Customer Service
    • Monitor regularly and Review
    • Invest Regularly
  • 17. When To Sell Mutual Funds?
    • The Fund Manager leaves
    • Below par performance for the last 2 years
    • Size of the corpus increases too fast
    • The Promoter of Mutual Fund is going through financial difficulties
    • The scheme changes its investment objectives
    • You change your plan
    • Enough has been earned
  • 18. Systematic Investment Plan(SIP)
    • Advantages
    • Disciplined investing
    • Convenience
    • Avoiding market prediction
    • Rupee Cost Averaging
  • 19. Rupee Cost Averaging
    •  
  • 20. Advantages of Early Investing IRS 66,35,367.20/= IRS 1,37,82,803.88/= Growth (assume 15 % CAGR) IRS 12,00,000/= IRS 15,00,000/= Total Contribution 60 yrs 60 Yrs Investment Stopped @ IRS 5000 IRS 5000 Monthly Investment @ 40 Yrs @ 35 Yrs Investing in a Diversified MF - SIP
  • 21. Mutual Fund Investing by NRIs
    • Power of Active Funds Management
    • Online trading simplifies procedure
    • Some online trading sites
    • www.icicidirect.com
    • www.Indiainfoline.com
    • www.Myiris.com
  • 22. ICICIDirect one up on others.
    • No Application forms to be filled up
    • Automatic debit from and credit to bank account
    • Automatic paperless SIP/SWP
    • Online order confirmations and status tracking
    • Online dividend payout / reinvestment facility
    • Online updation of portfolio of unit holdings at latest NAV
  • 23. Few Mutual Funds NRIs can consider
    • For Conservative investors
    • HDFC Top 200 Fund
    • Sundaram Growth
    • HDFC Prudence
    • Principal MIP
    • For Aggressive investors
    • HSBC Equity Fund
    • Franklin India Bluechip
    • FT India Balanced Fund
    • FT India MIP
  • 24. Product Innovations
    • Fund Of Funds is a fund that invests in other funds instead of securities.
    • Super SIP isn't a fund but a way of buying funds that combines long-term SIP with term insurance.
    • ETF is a hybrid financial product, a cross between a stock and a mutual fund .
  • 25. ???