Mutual Funds In India (1964 - 2000)
o Started with the commencement of UTI in JULY 1964.
o Monopoly of UTI broke in 1987 owing to the entry of SBI along with
LIC & GIC later.
o Fast growth rate , of about 27%, rising from 25 crores to 90000
o Year 1999 is considered as a milestone year for mutual funds industry
because of entry of private players.
An investment pool, such as a mutual fund or
exchange-traded fund, in which core holdings are fixed
A debt fund may invest in short-term or long-term
bonds, securitized products, money market
instruments or floating rate debt.
The fee ratios on debt funds are lower, on average,
than equity funds because the overall management
costs are lower.
In order to ensure regular income to investors debt
funds distribute large fraction of there surplus to
The NAVs of such funds are affected because of change
in interest rates in the country.
Returns through interest earnings and trading of
securities in secondary market .
There are several reasons why one should look at debt
as an asset class to invest in. Some of the main reasons
Need to balance risk and return - The Risk/Return
Need to diversify - Portfolio Diversification and Asset
Need for Tax Planning.
Fix Term Plan
Series Focused Debt
Assured High Yield
Return Funds Debt Funds
Based on Different Investment Objectives,
there can be following types of Debt Funds :
:- DIVERSIFIED DEBT FUNDS
:- Focused Debt Funds.
:- High Yield Debt Funds.
:- Assured Return Funds.
:- Fixed Term Plan Series.
Invest in all securities issued by entities
belonging to all sectors of market.
Investments are properly diversified into all
sectors which results in risk reduction
Any loss incurred, on account of debt issuer, is
shared by all investors further reducing the risk.
Narrow focus funds more confined to investments
in certain selected industries of specific sectors or
industry or origin.
Because of there narrow orientation they are more
risky as compared with diversified debt funds.
These funds prefer securities issued by those
issuers that are considered to be of “below
Sole motive is to earn higher interest returns from
More volatile and bear higher default risk.
Although they may earn at times higher returns
Funds that come with a locking period and
offer assurance of annual return to investors
during the lock-in period.
It provides low risk & safe guard the interest
of the investors.
SEBI permits assured returns to those funds
who has adequate net worth to guarantee
returns in the future.
Usually are closed ended schemes having short term
Offers a series of plans and issue units to investors at
Not listed in exchanges.
Main objective is to gratify investors by generating
expected returns in short duration of time.
Offers all benefits associated with mutual funds in general. Like
: Transparency in operation.
: Professional management.
: Convenience & Low cost.
They are towards lower ends of risk spectrum.
Provide an alternative for diversification of one’s portfolio.
More predictable performance in comparison with equity as an asset class.
Offers tax benefits.
Dividend/ Short term capital Long term capital Maximum amount Lock-in-period
interest gains (holding period gains (holding period that can be invested
<1 year) >=1 year)
Debt mutual funds Tax free in hands of Taxable as par relevant 10% without cost No limit Not applicable
investors tax slab inflation
PPF Tax free Not applicable Not applicable Rs 70000 15 years
Bonds notified u/s 54 Taxable as par relevant Taxable as par relevant 20% without cost No limit 3 years
EC tax slab tax slab inflation index benefit
6.5 % saving bonds Taxable as par relevant Not applicable Not applicable No limit 6 years
KVP Taxable as par relevant Not applicable Not applicable No limit 2.5 years
Bank FD Taxable as par relevant Not applicable Not applicable No limit variable
NSC Taxable as par relevant Not applicable Not applicable No limit 6 years
Name of scheme HSBC Flexi Debt Fund
Investment objective To deliver returns in the form of interest income and capital gains, along with high liquidity,
commensurate with the current view on the markets & interest rate cycle, through active investment
in debt & money market instruments
Plan/options Regular & Institutional option
Sub options Regular & Institutional :Fortnightly,Montly, Quarterly & half yearly dividend(payout /reinvestment) &
growth sub option
Dividends Declaration of dividends & its frequency will inter alia depend upon the distributable surplus
Minimum application Regular : Rs 10000 per application
amount Institutional : Rs 5,000,000 per application
Minimum additional Rs 1000 & multiples of Re 1 for regular option, Rs 10000 & multiples of Rs 10000 thereafter for
investment institutional option.
Minimum redemption Regular Rs 1000 & multiples of Re 1 there after.
Bench mark index CRISIL Composite Bond Fund Index
Loads Entry Load : NIL
Exit load :0.75% in regular option
Liquidity/ ongoing Purchased /redeemed on every business day at NAV prices