Associaion of mutual fund of india


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Associaion of mutual fund of india

  1. 1. BY: Anil Kumar Ashish Pandey Nishant Jain
  2. 2. MUTUAL FUNDS <ul><li>The mutual fund industry in India started in 1963 with the </li></ul><ul><li>formation of Unit Trust of India, at the initiative of the </li></ul><ul><li>Government of India and Reserve Bank. The history of mutual </li></ul><ul><li>funds in India can be broadly divided into four distinct phases. </li></ul><ul><li>First Phase – 1964-87 Established Unit Trust of India (UTI) . </li></ul><ul><li>Second Phase – 1987-1993 Entry of Public Sector Funds </li></ul><ul><li>Third Phase – 1993-2003 Entry of Private Sector Funds) </li></ul><ul><li>Fourth Phase – since February 2003 consolidation and growth. </li></ul>
  3. 3. 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 realised are shared by its unit holders in proportion to the number of units owned by them.
  5. 5. Advantages of Mutual Funds <ul><li>Diversification </li></ul><ul><li>Professional management </li></ul><ul><li>Regulatory oversight </li></ul><ul><li>Liquidity </li></ul><ul><li>Convenience </li></ul><ul><li>Ease of process </li></ul><ul><li>Well Regulated </li></ul>
  6. 6. Drawbacks of Mutual Funds <ul><li>No guarantees </li></ul><ul><li>Taxes </li></ul><ul><li>Fees and commission </li></ul><ul><li>Risk management </li></ul>
  7. 7. Association of Mutual Funds in India <ul><li>Association of Mutual Funds ( Established in 1995) in India is an important organ of all Asset Management Companies that are registered with Securities and Exchange Board of India. Till today, all the Asset Management Companies with Mutual Fund schemes are the members of Association of Mutual Funds in India. </li></ul><ul><li>Association of Mutual Funds India, also referred to as AMFI, has helped the Indian Mutual Fund Industry to enter into a healthy and professional market, maintaining the market ethics and standards. It attempts to promote the interests of both Mutual Funds and unit holders </li></ul>
  8. 8. Aims of Association of Mutual Funds in India <ul><li>Association of Mutual Funds endeavors to maintain high standards in all fields of operation within the industry. </li></ul><ul><li>Association of Mutual Funds maintains an interaction with Securities and Exchange Board of India, and functions in accordance with the guidelines established by SEBI. </li></ul><ul><li>Association of Mutual Funds in India takes up all India awareness program on behalf of the investors. </li></ul><ul><li>At last but not the least association of mutual fund of India also circulate information related to Mutual Fund Industry . </li></ul>
  9. 9. Advantages of Mutual Funds <ul><li>Diversification </li></ul><ul><li>Professional management </li></ul><ul><li>Regulatory oversight </li></ul><ul><li>Liquidity </li></ul><ul><li>Convenience </li></ul><ul><li>Ease of process </li></ul><ul><li>Well Regulated </li></ul>
  10. 10. TYPES OF MUTUAL FUNDS <ul><li>By Structure </li></ul><ul><ul><li>Open-Ended – anytime enter/exit </li></ul></ul><ul><ul><li>Close-Ended Schemes – listed on exchange, redemption after period of scheme is over. </li></ul></ul><ul><li>By Investment Objective </li></ul><ul><ul><li>Equity (Growth) – only in Stocks – Long Term (3 years or more) </li></ul></ul><ul><ul><li>Debt (Income) – only in Fixed Income Securities (3-10 months) </li></ul></ul><ul><ul><li>Liquid/Money Market (including gilt) – Short-term Money Market (Govt.) </li></ul></ul><ul><ul><li>Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years) </li></ul></ul><ul><li>Other Schemes </li></ul><ul><ul><li>Tax Saving Schemes </li></ul></ul><ul><ul><li>Special Schemes </li></ul></ul><ul><ul><ul><li>ULIP </li></ul></ul></ul>
  11. 12. The graph indicates the growth of assets over the years.  GROWTH IN ASSETS UNDER MANAGEMENT
  12. 13. Money Market Mutual Funds <ul><li>A money market fund is a mutual fund that invests solely in cash/cash equivalent securities, which are also often referred to as money market instruments. These investments are short-term, very liquid investments with high credit quality. They generally include:  </li></ul><ul><li>Certificates of deposit (CDs) </li></ul><ul><li>Commercial paper </li></ul><ul><li>Bankers' acceptances </li></ul>
  13. 14. Advantages…. <ul><li>Money market funds are special for three reasons : </li></ul><ul><li>SAFETY </li></ul><ul><li>LOW INITIAL INVESTMENT </li></ul><ul><li>ACCESSABILITY </li></ul>
  14. 15. Open-ended Funds <ul><li>An open-end fund is one that has units available </li></ul><ul><li>for sale and repurchase at all the times at a price </li></ul><ul><li>based on the NAV per unit. </li></ul><ul><li>Such funds are open for subscription the whole year. </li></ul><ul><li>Capitalization/corpus is continuously changing.- subscription & redemption </li></ul><ul><li>  </li></ul>
  15. 16. Continue…. <ul><li>Shares or units of such funds are normally not traded on the stock exchange but are repurchased by the fund at announced rates. </li></ul><ul><li>Dividend reinvestment option is also available in case of such funds. </li></ul><ul><li>Unexpected withdrawals require funds to maintain a high level of cash available every time implying thereby idle cash. By virtue of this situation such funds may fail to grab favorable opportunities. </li></ul>
  16. 17. Close-ended Funds <ul><li>Close end funds can be subscribed to, only during the </li></ul><ul><li>initial public offer.Thereafter the units of such funds can </li></ul><ul><li>be bought and sold on the stock exchange on which they </li></ul><ul><li>are listed through a broker. </li></ul><ul><li>Such funds have a stipulated maturity period. </li></ul><ul><li>The duration of such funds is generally 2 to 15 years. </li></ul><ul><li>The funds units may be traded at the discount or premium to NAV based on demand for a supply of the funds units. </li></ul>
  17. 18. Continue….. <ul><li>An important point to note here is that the number of outstanding units of such fund doesn’t vary on account of trading in the funds units at the stock exchange. </li></ul><ul><li>Managing close ended schemes is comparatively easy since fund managers can evolve and adopt long term investment strategies depending on the life of the scheme. </li></ul>
  18. 19. CURRENT DATA FROM AMFI <ul><li>Monthly data of sales, redemption </li></ul><ul><li>& assets under management of all </li></ul><ul><li>mutual funds issued by AMFI. </li></ul>
  19. 20. CURRENT MARKET NEWS ABOUT MUTUAL FUNDS <ul><li>FMPs: Upset with mutual funds, investors shy </li></ul><ul><li>away (4NOV.) </li></ul><ul><li>This was attributed to the fact that many of Fixed Maturity Plans (FMPs) of mutual funds had invested significantly in commercial papers (CPs) , bonds of real estate companies and non-banking financial institutions (NBFCs), pass through certificates (PTCs) and only a small portion in bank CDs </li></ul>
  20. 21. Continue… <ul><li>Investors pull out Rs 47k cr (NOV. 13) </li></ul><ul><li>Mutual fund investors pulled out as much as Rs 47,000 crore in October — the highest redemption from MF schemes in a month so far this finanicial year — triggered by the meltdown in equity markets. </li></ul><ul><li>The combined assets under management of the mutual fund industry saw an 18 per cent fall in October, dipping below the Rs 5 trillion mark for the first time this year. </li></ul>
  21. 22. Continue… <ul><li>Mutual funds see value erosion of Rs 76k crore </li></ul><ul><li>in seven months (15 Nov.) </li></ul><ul><li>The mutual fund industry has witnessed a value erosion of Rs 75,966 crore in equity-related schemes in the first seven months of the current financial year. This is primarily because of the slide in the equity market on account of the global financial turmoil. </li></ul>
  22. 23. Continue…. <ul><li>Funds book Rs 3,858-cr loss in FY09 first half (19 NOV.) </li></ul><ul><li>29 fund houses, which published their unaudited financial results for the first half ended September 30, 2008, 22 mutual funds have posted a combined net loss of Rs 4,466 crore, while the remaining seven fund houses have reported an aggregate net profit of Rs 608 crore in the first six months of 2008-09. The fund houses had made a profit of Rs 18,528 crore in the second half of 2007-08. </li></ul>
  23. 24. REFERENCES