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Presentation on Mutualfunds


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Presentation on Mutual funds

Presentation on Mutual funds

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  • 1. • A MF is a trust that pools the savings of a number of investors who share a common financial goal. MUTUAL FUNDS • MFs represent pooled savings of numerous investors which are invested by professional fund managers as a diversified portfolio to obtain optimum return on investments with least risk to the investors.
  • 2. MUTUAL FUNDS The professional manager of a fund invests the collected money in different types of securities for and on behalf of the investors. The investment is based on the objectives for which the money is collected. The investment avenues could range from shares to debentures to money market instruments.
  • 3. MUTUAL FUND • A MF is a non depository, non banking financial intermediary. • MFs are mobilizers of savings, particularly of the small & household sectors, for investment in the stock market and money market.
  • 4. MUTUAL FUNDS According to the Mutual Fund Fact Book (published by the Investment Company Institute of the US)- “A MF is a Financial Service Organisation that“A MF is a Financial Service Organisation that receives money from shareholders, invests it, earns returns on it, attempts to make it grow and agrees to pay the shareholder cash on demand for the current value of his investment.”
  • 5. MUTUAL FUNDS • The income earned through these investments and the capital appreciation realised by the scheme are shared by its unit holders in proportion to the number ofunit holders in proportion to the number of units owned by them ( pro-rata). • Each MF scheme has a defined objective and strategy.
  • 6. MUTUAL FUND INCORPORATION A MF can be constituted either as a corporate entity or as a trust. The basic difference between a corporation and a trust is that in case of a company, the liability istrust is that in case of a company, the liability is limited whereas in case of a trust it is unlimited. Also, a Company enjoys the status of a separate legal entity who can act on its behalf. A trust has to work on behalf of its trustees.
  • 7. • MFs are to be established in the forms of trusts under the Indian Trusts Act and are to be operated by separate Asset Management Companies (AMCs) OR it MUTUAL FUND INCORPORATION Management Companies (AMCs) OR it can be initiated as a Company under the Indian Companies Act, 1956. • No Company can register an AMC under the Companies Act, 1956 without the Memorandum & Articles of Association being approved by SEBI.
  • 8. MUTUAL FUND INCORPORATION • AMCs shall have a minimum networth of Rs 50 crores. • AMCs and trustees of MFs are to be two• AMCs and trustees of MFs are to be two separate legal entities and that an AMC cannot act as a manager for any other fund.
  • 9. MUTUAL FUND INCORPORATION • MFs dealing exclusively with money market instruments are to be regulated by RBI • MFs dealing primarily in capital market• MFs dealing primarily in capital market instruments and partly in money market instruments are to be regulated by SEBI. • All schemes floated by MFs are to be registered with SEBI.
  • 10. MUTUAL FUND PLAYERS In India, the MFs have taken the services of the following outside agencies: • Registrars and Transfer Agents• Registrars and Transfer Agents • Advertisers • Legal Advisors • Custodians
  • 11. MUTUAL FUND PLAYERS Registrars and Transfer Agents: Receive & process the application form of investors. Issue unit certificatesIssue unit certificates Maintain detailed records of unit holders Purchase, sell, transfer & redeem the units Issue income warrants, broker cheques etc Paperwork on units for loan against them
  • 12. MUTUAL FUND PLAYERS Custodian: • Holds securities • Receives & delivers securities• Receives & delivers securities • Collects income on securities • Holds & processes cash
  • 13. TYPES OF MFs Types of Mutual Funds based on: • Maturity • Investment Objective • Management
  • 14. TYPES OF MFs Based on Maturity: • Open Ended Scheme • Close Ended Scheme• Close Ended Scheme • Interval Scheme
  • 15. TYPES OF MFs Open Ended Scheme: This fund is available for subscription & redemption on a continuous basis. These schemes do not have a fixed maturity.schemes do not have a fixed maturity. Investors can buy & sell units at the NET ASSET VALUE (NAV) related prices. NAV prices are declared on a daily basis. These are very liquid schemes.
  • 16. TYPES OF MFs Open-Ended Scheme: • The fund manager buys and sells units constantly on demand by the investors. • Units of such schemes are not listed.• Units of such schemes are not listed. • No intermediaries are required.
  • 17. TYPES OF MFs Close Ended Scheme: These have a stipulated maturity period. One can invest directly in the scheme at the time of the initial issue.time of the initial issue. Thereafter, the investor can buy/sell the units of the scheme on the stock exchange where they are listed.
  • 18. TYPES OF MFs Close-Ended Schemes- • There will be two prices for these schemes- one that is market determined and the other which is NAV based.and the other which is NAV based.
  • 19. TYPES OF MFs Close Ended Schemes: The market price at the stock exchange could vary from the scheme’s NAV because of demand & supply situation etc.because of demand & supply situation etc. These are generally traded at a discount to the NAV. If maturity approaches, the discount narrows.
  • 20. TYPES OF MFs Close Ended Schemes: • Some close ended schemes give an additional option of selling one’s units directly to the MF through periodicdirectly to the MF through periodic repurchase at NAV related prices. SEBI ensures that at least one of the two exit routes is provided to the investor. • Such MFs generally disclose NAV on a weekly basis.
  • 21. MUTUAL FUNDS Interval Schemes- It is a kind of close-ended scheme with the feature that it remains open during a particular part of the year for the benefit ofparticular part of the year for the benefit of the investors, either to offload their holdings or to undertake purchase of units at NAV.
  • 22. TYPES OF MFs Based on Investment Objective: • Growth • Income • Balanced• Balanced • Money Market • Gilt • Index • Sectoral • Fund of Fund
  • 23. TYPES OF MFs Based on Investment Objective (cont’d)- • Leverage Fund • Index Funds • Tax savings schemes• Tax savings schemes • Exchange Traded Funds • Others
  • 24. TYPES OF MFs Types of “Other Funds” • Load Funds • MMMF • Offshore Mutual Funds• Offshore Mutual Funds • Others- Property Funds, art funds, commodity funds, energy funds etc
  • 25. TYPES OF MFs GROWTH OR EQUITY ORIENTED SCHEME: These schemes primarily invest in equities. The aim is to provide capital appreciationThe aim is to provide capital appreciation over the medium or long term. These have the highest risk .
  • 26. TYPES OF MFs Equity Schemes can further be subdivided into: • Dividend Scheme- Here the investor receives dividend as and when it isreceives dividend as and when it is declared by the MF. • Dividend Reinvestment- The MF declares dividend & the investor uses this dividend to buy additional units of the MF. • Growth- No dividend is declared by the MF.
  • 27. TYPES OF MFs • MFs allow investors to switch amongst Dividend/Dividend Reinvestment/ Growth schemes. • The investor has to specify at the time of• The investor has to specify at the time of purchase of units. • Growth/Equity schemes are not for investors seeking regular income or need their money back in the short term.
  • 28. TYPES OF MFs INDEX FUND: Index funds invest only in the shares of the companies included in a particular index and in the same weightage.and in the same weightage. For example : Shares comprising the BSE 30 Sensex or the Nifty 50 companies. The fund’s performance is linked to the growth of the concerned index subject to tracking errors.
  • 29. TYPES OF MFs Income or Debt Oriented Schemes: Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Governmentcorporate debentures, Government securities & money market instruments. These funds are less risky compared to Equity schemes.
  • 30. TYPES OF MFs Liquid Funds- These are debt schemes which invest in short term money market instruments.short term money market instruments. This focus on liquidity delivers the twin features of lower risks and low returns.
  • 31. TYPES OF MFs Income or Debt Oriented Schemes: Opportunities of capital appreciation are limited in such funds. The NAVs of such funds are affected because ofThe NAVs of such funds are affected because of change in the interest rates in the economy. If the interest rates fall, NAVs of such funds are likely to increase in the short run & vice versa.
  • 32. TYPES OF MFs Income or Debt Oriented Schemes: Retired people or people with a need for capital stability & regular income opt for these schemes.these schemes. Such schemes are also favoured by investors who need some income to supplement their earnings
  • 33. TYPES OF MFs Some of the new variants of debt schemes are: • MIPs or Monthly Income Plans and• MIPs or Monthly Income Plans and • FMPs or Fixed Maturity Plans
  • 34. TYPES OF MFs MIPs-Monthly Income Plans MIPs invest predominantly in debt instruments with a small portion of assets allocated to equities.allocated to equities. The equity component provides MIPs with just the edge it needs to outperform conventional debt funds.
  • 35. TYPES OF MFs MIPs The equity component usually varies between 5% to 30% of assets Since the equity component is capped, thisSince the equity component is capped, this ensures that the MIP does not take on more risk than it should.
  • 36. TYPES OF MFs Fixed Maturity Plans- FMPs are the equivalent of a fixed deposit in a bank with a caveat. The maturity amount of a FD in a bank is “guaranteed”, but onlyof a FD in a bank is “guaranteed”, but only “indicated” in a FMP of a MF. The regulator does not allow fund companies to guarantee returns, hence the “indicative returns” in FMPs.
  • 37. TYPES OF MFs FMPs cont’d: • FMPs are debt schemes, where the corpus is invested in fixed income securities. The tenure can be of differentsecurities. The tenure can be of different maturities, from one month to three years. • FMPs are close ended schemes. • FMPs invest in CDs, CPs, money market instruments, corporate bonds & sometimes bank deposits.
  • 38. TYPES OF MFs Balanced Fund: This has a mix of equity and debt in the portfolio of investments. The portfolio of such funds will often be shifted between debt & equity depending upon the prevailing market trends.
  • 39. TYPES OF MFs Sectoral Funds: Amount collected from the investors is invested in various specific sectors of the economy like real estate, gold, silver,economy like real estate, gold, silver, specific industry such as oil and gas companies etc.
  • 40. TYPES OF MFs Fund of fund schemes: Here funds of one MF are invested in the units of another MF/MFs.units of another MF/MFs.
  • 41. TYPES OF MFs Leveraged Fund Scheme: Here, the fund manager borrows from the capital markets and this borrowing along with the amount mobilised by way ofwith the amount mobilised by way of investments are invested as per the investment objectives of the fund. Options, especially call options are used by these funds.
  • 42. TYPES OF MFs Gilt Funds: Here funds are invested in Central & State Government securities and repos/reverse repos in such securities and not in equityrepos in such securities and not in equity or corporate debt securities. A part of the corpus may be invested in the call money market to meet liquidity requirements.
  • 43. TYPES OF MFs Gilt Funds Cont’d- Government securities carry zero credit risk or default risk. Their prices are however, influenced byTheir prices are however, influenced by movement of interest rates in the economy.
  • 44. TYPES OF MFs Tax Saving Schemes or ELSS( Equity Linked Savings Scheme): If an investor invests in an ELSS, upto the extent of RS 1 lac, the investor gets a taxextent of RS 1 lac, the investor gets a tax rebate u/s 80C of the Income Tax Act,1961. There is a lock in period of 3 years on ELSSs as of date.
  • 45. TYPES OF MFs ELSS cont’d: • An ELSS generally invests in equities, cumulative convertible preference sharescumulative convertible preference shares & fully convertible debentures & bonds to the extent of 80% to 100% and the rest in money market instruments.
  • 46. TYPES OF MFs LOAD FUNDS: SEBI has banned Entry Load and as of date, there is no Entry Load on MF purchase. Load Funds are funds where MF managersLoad Funds are funds where MF managers charge a fee over and above the NAV from the purchaser. MFs, as of date are allowed to charge EXIT Load at the time of redemption.
  • 47. TYPES OF MFs MMMFs( Money Market Mutual Funds) RBI introduced the MMMF scheme in April 1972. A MMMF has to invest exclusively in moneyA MMMF has to invest exclusively in money market instruments, as listed below: • Treasury Bills & dated Government securities • Call/Notice Money • Commercial Paper ( exposure to CP of an individual Company limited to 3% of the
  • 48. TYPES OF MFs Resources of the MMMF • Commercial Bills arising out of genuine trade/commercial transactions and accepted/co-accepted by banksaccepted/co-accepted by banks • Certificates of Deposits MMMFs aim at providing additional short term avenues to individual investors in order to bring MM instruments within their reach.
  • 49. TYPES OF MFs MMMFs cont’d • RBI is the regulator. • Private sector MMMFs would need the clearance of SEBI, as also the approval ofclearance of SEBI, as also the approval of RBI. •
  • 50. TYPES OF MFs MMMFs Scheduled commercial banks, public financial institutions & private sector MFs may set up MFs.may set up MFs. Banks/ FIs may set up MMMFs either directly or through their existing MFs/ subsidiaries engaged in funds management.
  • 51. TYPES OF MFs MMMFs Units of MMMFs can be sold only to individuals. NRIs included.NRIs included. Dividend/Income on such funds can be repatriated but the principal amount of subscription cannot be repatriated.
  • 52. TYPES OF MFs MMMFs Minimum lock in period is 46 days MMMFs to decide the minimum size of investment by a single investor.investment by a single investor. The investor cannot be guaranteed a minimum rate of return.
  • 53. TYPES OF MFs Offshore MFs: • Also known as regional or country funds. • Funds are mobilized from abroad to be• Funds are mobilized from abroad to be deployed in the Indian market.
  • 54. TYPES OF MFs Other Funds • Property Funds • Art Funds • Commodity Funds• Commodity Funds • Energy Funds
  • 55. TYPES OF MFs Exchange Traded Funds (ETFs): • An ETF is traded like a share on the stock exchange on real time basis. • An ETF comprises a set of specified• An ETF comprises a set of specified stocks ( e.g. an index like Nifty/Sensex) or a commodity eg Gold. • Hence, the returns expected from ETFs will be equal to the rise in index.
  • 56. TYPES OF MFs ETFs cont’d: In an ETF, there are “authorised participants” appointed by the AMC. They will deposit all the shares that comprisewill deposit all the shares that comprise the index ( or the gold in case of gold ETF) with the AMC and receive what is called the “ creation units” from the AMC. Since, these units are created by depositing underlying shares/gold they are called “in kind “ units.
  • 57. TYPES OF MFs ETFs cont’d: • These creation units are a large block, which are then split into small units and accordingly bought/sold in the openaccordingly bought/sold in the open market on the stock exchange by these “authorised participants”. • Therefore, every buy & sell need not change the corpus of an ETF unlike a conventional MF.
  • 58. TYPES OF MFs ETFs (cont’d): • However, as & when there is more demand, these authorised participants deposit more shares with the AMC and getdeposit more shares with the AMC and get more creation units to satisfy the demand. Or if there is more redemption, then they give back these creation units to the AMC, take back their shares, sell them in the market & pay the investor.
  • 59. TYPES OF MFs ETFs cont’d • An ETF is usually index specific while a conventional MF can have any portfolio. • Because an ETF is index specific, the• Because an ETF is index specific, the portfolio remains more or less constant, whereas the portfolio of a conventional MF will change on a day to day basis.
  • 60. TYPES OF MFs ETFs cont’d: • ETFs are to be bought/sold on the stock exchange and need a demat account whereas conventional MFs (open ended) are bought/sold from/to the AMC. Most MFs can be bought/soldfrom/to the AMC. Most MFs can be bought/sold via a DEMAT A/C. • ETFs can be traded like a stock at any time of the day & at real time prices, while the market is open whereas one can buy MFs only at the NAV based on the closing prices.
  • 61. TYPES OF MFs ETFs cont’d • The unit capital of close ended funds ( and even shares) will not change with trading. But unit capital of ETF can change withBut unit capital of ETF can change with trading & hence to that extent they behave like open ended funds.
  • 62. TYPES OF MFs ETFs cont’d: • There are some close ended funds listed on the stock exchange. But because they are structurally different from an ETF, theyare structurally different from an ETF, they trade at a substantial discount ( or premium) to the NAV. This will not be the case with ETFs.
  • 63. TYPES OF MFs ETFs cont’d: • In ETF, AMCs need not keep a large portion in cash to meet redemption pressures.pressures. • In ETF, each investor pays his share of costs, unlike conventional MFs where costs are deducted from the NAV on an average basis.
  • 64. TYPES OF MFs ETFs cont’d: • Convenient to trade as it can be bought/sold on the stock exchange at any time of the day when the market is open(time of the day when the market is open( index funds can be bought only at NAV based on closing prices). • ETFs are passively managed, have low distribution costs & minimal administrative charges. Hence, most ETFs have lower expense ratios than conventional MFs.
  • 65. TYPES OF MFs ETFs cont’d: • Not dependent on the fund manager • Like an index fund, they are very transparent.transparent. • SIP in ETF not convenient, as you have to place a fresh order every month. • SIP may prove to be more expensive as compared to a no load, low expense index funds as you have to pay brokerage every time you buy or sell.
  • 66. TYPES OF MFs ETFs cont’d: • ETFs are convenient to trade, so people tend to trade more in ETFs- this pushes up the costs.the costs. • In ETFs, you cannot automatically reinvest your dividends. Secondly, you may have to pay brokerage to reinvest dividends in ETFs, whereas dividend reinvestment is MFs is automatic with no entry load.
  • 67. TYPES OF MFs ETFs cont’d: • Comparatively, lower liquidity as the market still has not caught up on the concept.concept. • For SIPs, index funds may prove to be better than ETFs. • If an investor is looking for a long term & defensive investment strategy is equities by backing the index, rather than looking
  • 68. TYPES OF MFs ETFs cont’d: • At active management, ETF offers an alternative to index based funds. • It offers trading convenience & probably• It offers trading convenience & probably lower costs than index funds. • However, some index funds may be cheaper so a case to case study is needed.
  • 69. MFs BY MANAGEMENT • ACTIVE- MF Manager is actively buying and selling stocks/other assets according to his judgment. • PASSIVE- MF Manager is mimicking an index-• PASSIVE- MF Manager is mimicking an index- • Example of Passive Management- Index Funds and ETFs.
  • 70. MF MANAGEMENT Agencies of a MF: • The Sponsor • The Trustees• The Trustees • The Custodians • Asset Management Company AMC
  • 71. MF MANAGEMENT The Sponsor: • Any corporate body, which initiates the launching of a MF, is referred to as to the “Sponsor”“Sponsor” • Minimum relevant experience is 5 years • Minimum contribution by the sponsor to the tune of 40% of the net worth of the AMC.
  • 72. MF MANAGEMENT The Trustees: • Persons who hold the property of the MF for the benefit of unit holders are called trustees.trustees. • Trustees look after the MF, which is constituted as a TRUST under the provisions of the Indian Trusts Act.
  • 73. MF MANAGEMENT The Trustees: • A Company is appointed as a trustee to manage the MF with prior approval from SEBI.SEBI. • A minimum of 75% of the trustees must be independent of the sponsors so as to ensure fair dealings.
  • 74. MF MANAGEMENT Functions of the Trustees: • Keep under its custody all the property of the MF schemes administered by the MF. • Furnish information to UNIT HOLDERS as• Furnish information to UNIT HOLDERS as well as SEBI about the MF schemes • Appoint an AMC for the purpose of floating the MF schemes
  • 75. MF MANAGEMENT Functions of the Trustees: • Evolve an investment management agreement to be entered into with the AMCAMC • Ensure that the AMC is managing schemes in accordance with the trust deed • Dismiss the AMC appointed by the trustees
  • 76. MF MANAGEMENT Functions of the Trustees: • Supervise the collection of any income due to be paid to the scheme • Get Trusteeship fees as specified in the• Get Trusteeship fees as specified in the Trust Deed • Present annual report to the investors.
  • 77. MF MANANGEMENT The Custodians: • They keep custody of the SECURITIES that are bought by the MF managers. • They ensure safety & ready availability of• They ensure safety & ready availability of scrips. • According to SEBI guidelines, the Custodian cannot act as Sponsor/ Trustee to any MF and cannot be associated with the AMC in any way.
  • 78. MF MANAGEMENT The Custodians: • A custodian is to act only for a single MF unless otherwise approved by SEBI. Functions of the Custodians:Functions of the Custodians: • Safe keeping of the securities • Participation in the clearing system on behalf of the client to effect deliveries of the securities.
  • 79. MF MANAGEMENT Functions of the Custodians: • Collecting income/dividends on the securities as per the agreement • Delivery of scrips only on receipt of• Delivery of scrips only on receipt of payments and payment only upon receipt of scrips Regular reconciliation of assets with accounting records
  • 80. MF MANAGEMENT Functions of the Custodians: • Timely resolution of discrepancies & failures • Proper registration of securities• Proper registration of securities
  • 81. MF MANAGEMENT Asset Management Company (AMC): • The investment manager of a MF is technically known as the AMC & is appointed by the sponsors or the trustees.appointed by the sponsors or the trustees. • The AMC manages the affairs of the MF • The AMC is responsible for operating all the schemes of the fund & can act as an AMC of only one MF.
  • 82. MF MANAGEMENT AMC cont’d: • Only activities which are in the nature of management & advisory service to offshore funds, pension funds, providentoffshore funds, pension funds, provident funds, venture capital funds, management of insurance funds, financial consultancy & exchange of research on commercial basis can be undertaken by the AMC. If SEBI permits, it can also act as an underwriter.
  • 83. MF MANAGEMENT SEBI’s requirements of AMC: • Sound Track record with a net worth of at least Rs 50 crores • Reputation & Expertise• Reputation & Expertise • 50% of the Directors of the AMC should have no association with the sponsors or the trustees & Chairman should be independent.
  • 84. AGENCIES OF AN AMC • Registrars & Transfer Agents • Fund Accountants • Lead Mangers • Investment Advisors• Investment Advisors • Legal Advisors • Auditors • Underwriters
  • 85. AGENCIES OF AN AMC Registrars & Transfer Agents: • Receiving & processing the application forms of investors. • Issuing unit certificates• Issuing unit certificates • Sending refund orders • Giving approval for all transfer of units & maintaining all such records • Redemption of units • Issuing dividend/income warrants
  • 86. FUND ACCOUNTANTS • Computing the NAV per unit of the scheme • Maintaining its books & records • Compliance with SEBI regulations• Compliance with SEBI regulations • Preparing & distributing reports of the scheme for unit holders & SEBI • Monitoring the performance of custodians & other service providers.
  • 87. LEAD MANAGERS • Managing the advertising agencies, printers, collection centres. • Extensive campaigns about the scheme • Acting as marketing associates to attract• Acting as marketing associates to attract investors • Assisting the AMC to approach potential investors through meetings, exhibitions, publicity & sales promotion.
  • 88. INVESTMENT ADVISORS • Carrying out the market & security analysis • Advising the AMC to design its investment strategies on a continuous basis.strategies on a continuous basis. • Payment for investment advice on the average weekly value of the fund’s net assets • Majority of Indian MFs have inhouse market analysts.
  • 89. LEGAL ADVISORS • They offer legal guidance about planning & execution of different schemes. • Fees of the advocates /solicitors are in no way associated with the net assets of theway associated with the net assets of the fund.
  • 90. AUDITORS • They undertake independent inspection & verification of the Fund’s activitiesverification of the Fund’s activities
  • 91. UNDERWRITERS • In recent times, MFs also undertake the activity of underwriting issues. • MFs earn additional income by underwritingunderwriting • Prior approval from SEBI is necessary for doing underwriting
  • 92. WORKING OF AMC • Creating Fund Manager • Research & Planning • Creating Dealers• Creating Dealers
  • 93. CREATING FUND MANAGER • A fund manager manages the funds of an AMC • In India a single Fund Manager manages many schemesmany schemes • The Fund Manager decides the rate, time, kind & quantum of securities to be bought or sold • Bank sponsored funds may have an “Investment Committee” for investments.
  • 94. CREATING FUND MANAGER • The Investment Committee may have nominees of the sponsor & decided on PRIMARY market investments. • The MARKET OPERATION Committee• The MARKET OPERATION Committee deals with the Secondary Market investments/disinvestments.
  • 95. RESEARCH & PLANNING • This cell of the AMC undertakes research activities relating to securities. • This research is used to draft investment• This research is used to draft investment policies.
  • 96. DEALERS • They execute the sale & purchase transactions in the capital & money markets. • Dealers work via brokers• Dealers work via brokers
  • 97. PORTFOLIO DESIGNING REGULATIONS: • Cannot invest in unlisted securities • Cannot own more than 10% of any Company’s paid up capital carrying votingCompany’s paid up capital carrying voting rights • Can make investments in other schemes of the same MF upto 5% of the NAV. • Can invest only in transferable securities in the money market or capital markets.
  • 98. NAV • NAV/unit= {TMV-CL}/SU, where • TMV=Total market value of investment portfolio + Written down value of fixed assets + cost value of other current assetsassets + cost value of other current assets • CL= Current Liabilities • SU= Number of outstanding units in that scheme
  • 99. • GROSS RETURN LESS EXPENSES • Expenses could be Trusteeship Fees, Management Fees, Administrative Expenses, Fund Accounting fee, Initial NET RETURN Expenses, Fund Accounting fee, Initial Charges etc • SEBI has fixed an overall limit on expenses besides laying down limits on certain specific expenses.
  • 100. TREYNOR MODEL • PM=(ARi-ARf)/Beta • Ari=Average rate of return for portfolio “i” during a period • Ar =Average rate of return on a risk free• Arf=Average rate of return on a risk free investment during a period • Beta= Portfolio’s relative volatility • PM= Treynor portfolio performance measure of a fund.
  • 101. SHARPE MODEL • PM= (ARi-ARf)/Ni • Ni=Standard deviation of rate of returns for the portfolio for the period
  • 102. Accumulation Account • An investor begins account with a small initial investment & continue adding to the fund periodically • Accumulation may be contractual or• Accumulation may be contractual or voluntary Contractual- Predetermined amount of investment at regular intervals for a pre- determined period of time which may range upto 10-15 years.
  • 103. WITHDRAWAL ACCOUNT • An individual investor can withdraw a certain amount of funds on a regular basis • Over a period of time, the investors can exhaust the assets of the account.exhaust the assets of the account.
  • 104. CALL/NOTICE MARKET • Select MFs can operate in the Call/Notice Market. • MFs can operate only as lenders in the Call Money Market.Call Money Market.
  • 105. TRANSACTION FEES • From 2011, if an investor invests in a MF for the first time he pays RS 150 per transaction and for subsequent transactions he pays RS 100/=transactions he pays RS 100/=