mutual funds

1. Portfolio Management:
Structured Portfolios & Mutual
Funds

2. Mutual Fund Management
• Nomenclatures:
– NAV, AUM
– OD, KIM, FFS
– Entry, exit loads - CDSC
– Systematic investment/transfer & target investment
plans
– Systematic withdrawal plans
– Lock in period
– Expense ratio
– Portfolio turnover

3. NAV
Assets Rs. Crs. Liabilities Rs.
Crs.
Shares 345 Unit Capital 300
Debentures 23 Reserves & Surplus 85.7
Money Market Instruments 12 Accrued 1.5
Accrued Income 2.3 Expenditure
Other Current Assets 1.2 Other Current Liabilities 0.5
Deferred Revenue
Expenditure
4.2
387.7 387.7
Units Issued (Cr.) 30
Face Value (Rs.) 10
Net Assets (Rs.) 385.7
NAV (Rs.) 12.86

4. Mutual Fund: Equity
• 65% of net assets in Indian Equities
• Classification
– Open Vs close ended
– Plans: Regular Vs. Direct
– Styles
• Investment style Vs. mkt. cap
– Types
• Index, sectoral, tax planning or ELSS, size, geography,
arbitrage, multicap, quant, P/E, fund of funds, hybrid,
others
– Schemes
• Growth, dividend payout, dividend reinvestment

7. Mutual Fund: Debt
• Classification:
– Credit quality Vs. duration (int. rate sensitivity)
– ST Vs. LT
• Li Bex, Mi Bex and Si Bex
• Types
– Liquid, ultra ST, ST, FMPs, income- MIPs, gilts,
credit opportunity, dynamic bond, capital
protection, hybrid, balanced, child plans, asset
allocation
• Taxations
– LT, ST, Indexation

13. Mutual Fund Vs ETF
• Mutual Funds
– Tax inefficient; liquidity needs; low returns for
index tracking
– Cannot be shorted or margined
• Exchange Traded Funds
– Tax efficient; low portfolio turnovers
– Can be shorted or margined
– International diversification made easy
– Arbitrage trades and NAVs

14. ETF
• Calculate ETF price (0), price (1), individual
wealth (1), value of each share (1), strategy to
redeem Rs. 200 Mn in ST
Stock A B C
SP0 150 300 60
No. S (Mn) 2 1 5
SP1 175 280 85
Total units allocated Mn 30

15. Schemes
• Calculate no. of units, NAV and value for
investors at the end of the period for the three
schemes for ST & LT investments
Initial investment 1000
NAV 10
No. of units 100
Return on portfolio ex dividends 12%
Dividends per unit 0.5
DDT on equity (debt) schemes 0% (28.325%)

16. Taxation
• Calculate after-tax value and returns to
investor for an FD, FMP dividend payout,
FMP growth with and w/o indexation
Tax bracket 33.99%
Fixed returns 11.75%
Initial Investment 10000
Tax w/o indexation 11.33%
Tax with indexation 22.66%
DDT 28.33%
Marginal maturity 1 year
Inflation 7.25%