Successfully reported this slideshow.

Mutual Funds

3,640 views

Published on

This is an introductory presentation for Mutual Funds.

Published in: Economy & Finance, Business
  • Be the first to comment

Mutual Funds

  1. 1. Introduction to Mutual Funds
  2. 2. What is a Mutual Fund ? <ul><li>It is a trust that pools the savings of a number of investors who share a common financial goal </li></ul><ul><li>Professional fund managers then invest these funds in a way that helps investors achieve their goal </li></ul>
  3. 3. Mutual Funds Pool their money with INVESTORS FUND MANAGERS Passed back to Generate RETURNS SECURITIES Invest in
  4. 4. Mutual fund industry - International perspective <ul><li>In the U.S., mutual fund assets are greater than banking sector assets </li></ul><ul><li>Tremendous growth in the last two decades, especially from retail investors </li></ul><ul><li>Mutual funds becoming popular in Japan, Europe and Asia </li></ul>
  5. 5. Mutual Fund industry - Domestic perspective <ul><li>UTI is the largest fund manager </li></ul><ul><li>Private sector experiencing good growth </li></ul><ul><li>Emphasis on investment performance, service standards and transparency </li></ul>
  6. 6. Types of mutual funds - Structure <ul><li>Open ended </li></ul><ul><li>Close ended </li></ul>
  7. 7. Types of Mutual Funds - Investment Objective <ul><li>Equity </li></ul><ul><li>Balanced </li></ul><ul><li>Debt </li></ul>
  8. 8. Investment Options
  9. 9. Investment Avenues Direct Equity Bank Deposits Gold / Real Estate Corporate Bonds / Deposits Mutual Funds Government Securities
  10. 10. Growth Across All Asset Classes <ul><li>Cumulative Annualized Returns (1980-98) </li></ul>Source: RBI report on Currency and Finance (1997-98) BSE Sensitive Index of Equity Prices-BSE Equities are the best long term bet
  11. 11. Where do Mutual Funds come in? DIRECTLY THROUGH MUTUAL FUNDS Stocks Bonds/Debentures Corporate FD’s Short Term Deposits Govt.. Paper, C.P and C.D Equity Funds Debt Funds Money Market Funds
  12. 12. How to Invest
  13. 13. Why Invest? 25 28 30 35 40 50 60 Start Career Marriage Buy Automobile Buy House Children’s Education Daughter’s Marriage Retirement AGE
  14. 14. Key Portfolio Building Components Start Investing Early Asset Allocation Invest Regularly
  15. 15. Key Portfolio Building Components Start Investing Early Asset Allocation Invest Regularly
  16. 16. 1. Start Investing Early Mr. A Age 25 years Begins investing at 25 Invests Rs. 20,000 p.a. for 5 years then stops Redeems on his retirement at 60 Mr. B Age 25 years Begins investing at 35 Invests Rs. 20,000 p.a. till he is 60 Redeems on his retirement at 60
  17. 17. Who has more? Is it Mr. A, who invested Rs. 1 lakh over 5 years or Is it Mr. B, who invested Rs. 5 lakhs over 25 years?
  18. 18. Key Portfolio Building Components Start Investing Early Asset Allocation Invest Regularly
  19. 19. 2. Invest Regularly & Systematically <ul><li>Small investments </li></ul><ul><li>The Power of compounding </li></ul><ul><li>Rupee cost averaging </li></ul><ul><li>Don’t let money lie idle </li></ul>
  20. 20. Key Portfolio Building Components Start Investing Early Asset Allocation Invest Regularly
  21. 21. Portfolio 1 - A Low Risk Portfolio Average Annual Return: Approx. 10%
  22. 22. Portfolio 2 - A Medium Risk Portfolio Average Annual Return: Approx 13%
  23. 23. Portfolio 3 - A High Risk Portfolio Average Annual Return: Approx. 16%
  24. 24. Investing Through Mutual Funds
  25. 25. The Advantages <ul><li>Risk reduction </li></ul><ul><ul><li>Professional investment management </li></ul></ul><ul><ul><li>Diversification </li></ul></ul><ul><li>Liquidity </li></ul><ul><li>Tax Efficiency </li></ul><ul><li>Flexibility </li></ul><ul><ul><li>Systematic Investment Plan (SIP) </li></ul></ul><ul><ul><li>Systematic Withdrawal Plan (SWP) </li></ul></ul>
  26. 26. The Risks <ul><li>In most instances, returns are not guaranteed </li></ul><ul><li>Mutual funds carry market risk </li></ul>
  27. 27. Summary <ul><li>The Mutual Fund Industry is a growth industry </li></ul><ul><li>Mutual Funds cover a spectrum of Investment Options </li></ul><ul><li>Start Investing Early & Systematically </li></ul><ul><li>You could invest directly or through a Professional Money Manager </li></ul>

×