This document provides information about mutual funds in three paragraphs: 1) It defines a mutual fund as an investment company that pools money from individual and institutional investors and uses it to form a diversified portfolio managed by professionals. Owners of the fund shares share in the profits and risks. 2) It describes the main types of mutual funds including stock, balanced, bond, and money market funds which invest in different asset classes like stocks, bonds, and short-term securities. 3) It outlines the process for individuals to invest in mutual funds in the Philippines including minimum investment amounts, typical returns, and risk levels for different fund types.

1. Pranjal Mehta
Roll No: 871

2. A Mutual Fund is an investment company that
pools the funds of many individual and
institutional investors to form a massive asset
base. The assets are then entrusted to a full
time professional fund manager who develops
and maintains a diversified portfolio of security
investments. People who buy shares of a
mutual fund are its owners or shareholders.”

3. Mutual funds are classified into the following:
 Stock fund- 90% of the fund is invested in stocks
or equities
 Balanced fund- 45% invested in stocks and 45%
in fixed-income instruments
 Bond fund- 90% invested in fixed income
instruments such as government securities and
corporate papers
 Money market fund- placed in fixed-income
short term funds

4. Depending on the type of mutual fund, a
professional fund manager invests the gathered
funds in stocks, government securities, and other
financial instruments.
A mutual fund can make money from its
securities investments in two ways: a security can
pay dividends and interest to the fund, or a
security can rise in value.

5.  The fund passes any dividends, interest or
profits on the sale of its portfolio securities,
less fund expenses, to shareholders in the
form of distributions.These gains are
reflected in the NETASSETVALUE (or price)
of each share of the mutual fund.

6. In the Philippines:
 If you choose to invest in a mutual fund
exclusively, the initial deposit that you can
start with is P5,000.You can then choose to
invest P1,000 monthly.

8.  Gives an average annual returns of 8% to 20%.
Returns are not guaranteed.
 Medium Risk – Highly convenient since a
professional fund manager takes care of the
fund
 Medium Risk –The fund is diversified
 Medium Risk – Grants you opportunity to invest
in more than one company It’s affordable
because you will only pay P5,000 or P10,000 to
start investing.
 Ideal for your medium to long term financial
goals.

9. 1. Money Market Funds - Super Short-term (one
year or less)
- invest in fixed-income securities
- very liquid so you can tap into them as needed
- growth of your investment is conservative
- low-risk

10. 2. Bond Funds - Short-term (1-5 years)
- invest in fixed-income securities like
government bonds or corporate papers issued by
solid Philippines companies
- it's like you're lending money to the government
or to the solid companies and they promise to pay
you a guaranteed (low) interest rate
- growth of your investment is conservative
- low-risk

11. 3. Balanced Funds - Medium-term (6-9 years)
- combination of bond funds & equity funds
- moderately aggressive
- higher growth potential than bonds but lower
growth potential than equity funds

12. Stocks/Equity Funds - Long-term (10 years or
more)
- your money is invested by buying shares of
"ownership" of reputable Philippines companies
listed in the Philippine Stock Exchange
- you become a part-owner of the company you
bought shares from
- high risk because if the company you invested in
is a growing one, you get great returns;
- highest possibility of growth

13. Before anything else, the investor is given an
assessment by answering a form usually called
Investor Profile Questionnaire. From the result
or score, he could know what type of investor he
is (conservative, moderate, aggressive) and he
could also choose what type of MF is suitable for
him.

14. The Mutual Fund licensed representative or
adviser is usually the one who will assist an investor
in opening an account and choosing an account
appropriate for him. They would tell the investor
everything they need to know and tackle about the
investment they are getting into. They would also
advise and give recommendations as to what type
of mutual fund suitable for their financial status
and goal.
It’s important to read and understand the fund’s
prospectus before you start your investment.

15. In reviewing the prospectus, one should focus on the following:
- investment objective
- risks in investing in a particular fund
- investment management and bonus fees, in case of asset
management firms
- other fund operating expenses like fund administration,
transfer agent, custodian, audit and legal fees
- entry/exit fees covering the period they are applicable
- track record of the fund and the asset management company
- background of the officers and directors of the fund
- background of the officers and directors of the asset
management company

16. As of September 30, 2010, there are a total of 43 mutual
funds in the country, broken down as follows:
Category:
Equity Funds (PhP) 8
Equity Funds (USD) 1
Balanced Funds (PhP) 7
Balanced Funds (USD) 1
Bond Funds (PhP) 10
Bond Funds (USD 9
Bond Funds (Euro) 2
Money Market (PhP) 5
TOTAL 43

17. From a single-player monopoly in 1964, the Indian
mutual fund industry has evolved into a high-growth
and competitive market on the back of favourable
economic and demographic factors.
 As of August 2012, 44 asset management companies
(AMCs) were operating in India with assets under
management (AUM) of INR 6.4 trillion. However, after
several years of persistent growth, the industry
witnessed consistent declines of 6.3 percent and 5.1
percent in its AUM during FY11 and FY12, respectively.

18.  One of the reasons could be the changes in
regulatory guidelines-example ban on entry
load, stringent KYC norms, guidelines on
transaction charges, tightening valuation and
advertisement norms - which were
introduced in a short span of time thus giving
less time to the industry to adjust in the new
environment.

19.  Further, the penetration of mutual funds in
India (as measured by theAUM/GDP ratio)
remains low at 4.7 percent as compared to
77.0 percent in the US, 41.1 percent in Europe
and 33.6 percent in the UK. Mutual funds also
constituted only 3.3 percent of households’
financial savings in FY10, which further
contracted to -1.2 percent and -1.1 percent in
FY11 and FY12, respectively, due to large
redemption and capital losses

20. Through its recent initiatives and
announcements, SEBI has given a much needed
boost to the mutual fund sector but the industry
is waiting for a long term initiative by the
regulator that will put this sector amongst the
most preferred instrument of investment.

21.  The Government of India enacted the Securities and
Exchange Board of India Act, 1992 on 4 April 1992 which
created the Securities and Exchange Board of India (SEBI).
 SEBI issued a comprehensive set of regulations in 1993 and
revised them again in 1996. These included regulations
covering the Indian mutual fund industry.
 All mutual funds in India today are regulated by SEBI. The
Association of Mutual Funds of India (AMFI) is a self-
governing association of Indian Mutual Funds that regulates
its members' sales, distribution and communication
practices.
 Investors can invest in Indian mutual funds directly or
through distributors under codes of practice developed by

22. Thank you !