Mutual Fund And Its Trend InIndiaMade ByMr. Vishal Narvekar[SYBFM]
Introduction• A Mutual Fund is a trust that pools the savings of a number ofinvestors who share a common financial goal.• The money collected is invested in capital market instruments suchas shares, debentures etc.• The income earned through these investments and the capitalappreciation realized are shared by its unit holders.• The income earned is shared in proportion to the number of unitsowned by them.• It is most suitable investment for the common man as it offers anopportunity to invest in a diversified, professionally managedbasket of securities at a relatively low cost.
Emergence of Mutual Fund in India• Mutual funds in India began in 1964• Unit Trust of India (UTI) was the first MF company• Remains the market leader even today, Having about68% of the market share• Lost monopoly in 1987 With entry of public sectormutual funds Promoted by public sector banks andinsurance companies• Industry was open to foreign institutions in 1993
Trends Of Mutual Fund In India• In 1963, finance minister Shri T. Krishnaswami gave theidea of mutual funds.• The origin of mutual fund industry in India is with theintroduction of the concept of mutual fund by UTI inthe year 1963.• The first scheme launched by UTI was Unit Scheme in1964.• At the end of 1988 UTI had Rs.6,700 crores of assetsunder management.
• Though the growth was slow, but it acceleratedfrom the year 1987 when non-UTI playersentered the industry.• SBI Mutual Fund was the first non- UTI MutualFund established in June 1987– followed by:-Punjab National Bank Mutual Fund (Aug 89),Indian Bank Mutual Fund (Nov 89),Bank of India (Jun 90),Bank of Baroda Mutual Fund (Oct 92)• The private sector entry to the MF rose the AUMto Rs. 470 bn in March 1993.
• The 1993 SEBI (Mutual Fund) Regulations were substituted by amore comprehensive and revised Mutual Fund Regulations in 1996.• The industry now functions under the SEBI (Mutual Fund)Regulations 1996.• The number of mutual fund houses went on increasing, with manyforeign mutual funds setting up funds in India.• The industry has also witnessed several mergers and acquisitions.• At the end of January 2003, there were 33 mutual funds with totalassets of Rs. 1,21,805 crores.• The Unit Trust of India was having highest Rs.44,541 crores of assetsunder management in year 2003.
• SEBI Removed Entry Load in MF on 1 August,2009• Introduction of Purchase/Sale facility throughStock Exchanges November, 2009• National Stock Exchange (NSE) launchedIndias first Mutual Fund Service System(MFSS) on November 30, 2009 through whichan investor can subscribe or redeem units of amutual fund scheme
Advantage ofMutual FundDiversificationEconomies of ScaleDivisibilityLiquidityProfessional ManagementThe Bottom Line
Regulatory Body of Mutual Fund• AMFI (Association of Mutual Fund in India),the apex body of all the registered AssetManagement Companies.• Was incorporated on August 22, 1995, as anon-profit organisation.• As of now, all the 44 Asset ManagementCompanies that are registered with SEBI, areits members.
Restrictions on investments byMutual Funds• Investment in debts instruments (rated belowInvestment) shall not exceed 15% of NAV• Debt instruments issued by a single issuer only up to10% of the NAV• Not more than 10% of the paid up capital in any Co.• Issue expenses shall not exceed 6% of the fund• No investment in unlisted associate company
Growth In Asset Under Management0100000200000300000400000500000600000700000Re.(crores)YearsSource: AMFI website
Valuation of NAVTotal Market Value of the Assets /Securities in thePortfolio of the Fund – All LiabilitiesNAV = -------------------------------------------------------Number of fund’s units outstanding
Major Mutual Fund Companies inIndia & ComparisonBirla SunLifeMutualFundHDFCMutualFundICICIPrudentialMutualFundRelianceMutualFundUTIMutualFund
ConclusionMutual fund industry is one of the fastestgrowing industry in India and it has alreadyestablished in foreign countries. Investing inMutual Funds is more safe as compared toequity as well as it give handsome returns.