Mutual Funds


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  • We want to network with you about our Film 'JAIN ENLIGHTENMENT - A Way of Life' for America and the world

    We are New York documentary filmmakers who have produced a beautiful 10 min DEMO film 'JAIN ENLIGHTENMENT - A Way of Life' and also working on 'Palitana - City of Temples on the Hill' to inform and educate America about Ahimsa, Anekantvad, Aparigrah ... involving Forgiveness, Compassion, and Peace.

    We returned from India with over 200 hours of film and are also producing a series of films on Legend of Lord Bahubali; King Adhinathan, Lord Mahavira and Sacred Pilgrimages - including Ranakpur, Ellora etc. to show Jain Images of Perfection.

    Vinanti Sarkar,Director, Global Cultural Diversity Films (GCDF) Inc. 425 East 51st Street, New York, NY 10022. Tel: 22-759-4568 Website: Linkedin / Twitter / Facebook / MySpace, etc. Review short clips on 5084696 or 5084856 or 50864417 or 5092260 or 5092316 and join our discussions on blog: ttp:// where we are inviting donors to help in funding and receive free DVDs in return.
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  • Professional Management: strong research Low Costs: relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Even 500 rupees in SIP start with. Transparency: investor gets regular information on the value of his investment in addition to disclosure on the specific investments made by the fund, the proportion invested in each class of assets and the fund manager's investment strategy and outlook
  • Still the largest is UTI- UTI Liquid Cash Plan has 8863 Cr Asset Size. Next is Birla Cash Plus at 8372. Standard Chartered Liquidity Manager Plus at 7910 Cr.
  • Sponsor: Establishes a MF, obtains Certificate of Registration from SEBI, forms a trust, appoints board of trustees & AMC, appoints Custodian Trustees: MF managed by body of individuals or a trust company (corporate body). Guardians of assets of Unitholders. Responsible. AMC: Investment Manager of Trust. Under the supervision of Board of Directors, Trustees, SEBI. Floates & manages different schemes. Mutual Fund: Formed under Indian Trusts Act, 1982. Invites subscriptions to units. Transfer agents: Issue and Redemption of units Custodian: For safekeeping of securities, participating in clearing system
  • AMFI: a forum where mutual funds have been able to present their views, debate and participate in creating their own regulatory framework. the body that is consulted on matters long before regulations are framed, and it often initiates many regulatory changes that prevent malpractices that emerge from time to time. Receive Unit certificates within 6 weeks from the date your request for a unit certificate is received by the Mutual Fund. Receive dividend within 42 days of their declaration Receive the redemption or repurchase proceeds within 10 days from the date of redemption or repurchase.
  • Ultra Short term (180 days) debt funds called liquid funds or floating rate fund or cash funds, Bond funds– fixed return instruments, term papers, G-Secs, Corporate bonds, interest rate floating – depending on interest rate in economy – return of 5.5% per annum last year– aim: preserve the principal and earn a modest return. Savings bank rate= 3.5% p.a. Balanced funds for those who are not comfortable with 100% exposure to equity. B est of both worlds-Power of equities & stability of debt market instruments- 60:40 equity debt ratio. Performance ≈ average 30% return, Volatility (Risk) = Moderate Income: fixed income securities such as bonds, corporate debentures and Government securities. capital stability and regular income. Money Market: safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. easy liquidity, preservation of capital and moderate income. Unit Linked Insurance Plan - life insurance as well as an investment like a mutual fund. Part of the premium towards the sum assured (amount you get in a life insurance policy) and the balance invested whichever investments you desire - equity, fixed-return or a mixture of both. benefit under Section 80C. Gilt funds are those that only invest in government securities and are hence zero credit risk, very safe MIP - 5-25% in stocks, rest in fixed income instruments
  • Standard Deviation: how much the actual performance of a fund over a period of time deviates from the average performance. Low SD = good Sharpe Ratio : returns that a fund delivered were commensurate with the kind of volatility it exhibited; looks at both, returns and risk, and delivers a single measure that is proportional to the risk adjusted returns. High SR =Good Market Risk: overall stock or bond markets fall Non-Market Risk: Bad news about an individual company can pull down its stock price, which can negatively affect fund holdings. Credit Rate Risk: Bonds are debt obligations. corporate defaulting on their interest and principal payment obligations
  • AMFI: Under the heading Investors Zone, you will find another one called ARN Search . This refers to the AMFI Registration Number. Click on it and you will arrive at a search page. You can locate an agent in your vicinity by just putting in your PIN code or name of your city
  • Mutual Funds

    2. 2. Disclaimer <ul><li>WE - no expert </li></ul><ul><li>Not Comprehensive </li></ul><ul><li>Majority from websites books and some practical experience </li></ul>
    3. 3. Mutual Fund ?? <ul><li>A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. </li></ul>
    4. 5. History <ul><li>The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases: </li></ul>
    5. 6. First Phase – 1964-87 <ul><li>Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.   </li></ul>
    6. 7. Second Phase – 1987-1993 <ul><li>1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), 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). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. </li></ul>
    7. 8. Third Phase – 1993-2003 <ul><li>In 1993 was the year in which the first Mutual Fund regulations came into being, under which all mutual funds, except UTI were to be registered and governed. the erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. </li></ul><ul><li>  The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. </li></ul>
    8. 9. Fourth Phase – since 2003 <ul><li>In February 2003, following the repeal of the Unit Trust of Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.   </li></ul>
    9. 10. Organization of a Mutual Fund
    10. 11. Regulations <ul><li>Governed by SEBI (Mutual Fund) Regulation 1996 </li></ul><ul><ul><li>All MFs registered with it, constituted as trusts ( under Indian Trusts Act, 1882) </li></ul></ul><ul><li>Bank operated MFs supervised by RBI too </li></ul><ul><li>AMC registered as Companies registered under Companies Act, 1956 </li></ul><ul><li>SEBI- Very detailed guidelines for disclosures in offer document, offer period, investment guidelines etc. </li></ul><ul><ul><li>NAV to be declared everyday for open-ended, every week for closed ended </li></ul></ul><ul><ul><li>Disclose on website, AMFI, newspapers </li></ul></ul><ul><ul><li>Half-yearly results, annual reports </li></ul></ul><ul><ul><li>Select Benchmark depending on scheme and compare </li></ul></ul>
    11. 12. Types of Mutual Fund <ul><li>By Structure </li></ul><ul><ul><li>Open-Ended – anytime enter/exit </li></ul></ul><ul><ul><li>Close-Ended Schemes – listed on exchange, redemption after period of scheme is over. </li></ul></ul><ul><li>By Investment Objective </li></ul><ul><ul><li>Equity (Growth) – only in Stocks – Long Term (3 years or more) </li></ul></ul><ul><ul><li>Debt (Income) – only in Fixed Income Securities (3-10 months) </li></ul></ul><ul><ul><li>Liquid/Money Market (including gilt) – Short-term Money Market (Govt.) </li></ul></ul><ul><ul><li>Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years) </li></ul></ul><ul><li>Other Schemes </li></ul><ul><ul><li>Tax Saving Schemes </li></ul></ul><ul><ul><li>Special Schemes </li></ul></ul><ul><ul><ul><li>ULIP </li></ul></ul></ul>
    12. 13. Risks <ul><li>Historical analysis </li></ul><ul><ul><li>Return is remembered, Risk forgotten </li></ul></ul><ul><li>Risk = Potential for Harm </li></ul><ul><li>Market Risk </li></ul><ul><li>Non-Market Risk </li></ul><ul><li>Credit Rate Risk </li></ul><ul><li>MF Risk = Volatility (fluctuation of NAV) </li></ul><ul><ul><li>Standard Deviation </li></ul></ul><ul><ul><li>Websites give star rating ( basis = risk-adjusted return) </li></ul></ul>
    13. 15. Investing Checklist <ul><li>Draw up your asset allocation </li></ul><ul><ul><li>Financial goals & Time frame (Are you investing for retirement? A child’s education? Or for current income? ) </li></ul></ul><ul><ul><li>Risk Taking Capacity </li></ul></ul><ul><li>Identify funds that fall into your Buy List </li></ul><ul><li>Obtain and read the offer documents </li></ul><ul><li>Match your objectives </li></ul><ul><ul><li>In terms of equity share and bond weightings, downside risk protection, tax benefits offered, dividend payout policy, sector focus </li></ul></ul><ul><li>Check out past performance </li></ul><ul><ul><li>Performance of various funds with similar objectives for at least 3-5 years (managed well and provides consistent returns) </li></ul></ul>
    14. 16. Checklist Continued… <ul><li>Think hard about investing in sector funds </li></ul><ul><ul><li>For relatively aggressive investors </li></ul></ul><ul><ul><li>Close touch with developments in sector, review portfolio regularly </li></ul></ul><ul><li>Look for `load' costs </li></ul><ul><ul><li>Management fees, annual expenses of the fund and sales loads </li></ul></ul><ul><li>Does the fund change fund managers often? </li></ul><ul><li>Look for size and credentials </li></ul><ul><ul><li>Asset size less than Rs. 25 Crores </li></ul></ul><ul><li>Diversify, but not too much </li></ul><ul><li>Invest regularly, choose the S-I-P </li></ul><ul><ul><li>MF- an integral part of your savings and wealth-building plan. </li></ul></ul>
    15. 17. Buying Mutual Funds <ul><li>Contacting the Asset Management Company directly </li></ul><ul><ul><li>Web Site </li></ul></ul><ul><ul><li>Request for agent </li></ul></ul><ul><li>Agents/Brokers </li></ul><ul><ul><li>Locate one on AMFI site </li></ul></ul><ul><li>Financial planners </li></ul><ul><ul><li>Bajaj Capital etc. </li></ul></ul><ul><li>Insurance agents </li></ul><ul><li>Banks </li></ul><ul><ul><li>Net-Banking </li></ul></ul><ul><ul><li>Phone-Banking </li></ul></ul><ul><ul><li>ATMs </li></ul></ul><ul><li>Online Trading Account </li></ul><ul><ul><li>ICICI Direct </li></ul></ul><ul><ul><li>Motilal Oswal, Indiabulls- Send agents </li></ul></ul>
    16. 18. Warning Signals <ul><li>Fund's management changes </li></ul><ul><li>Performance slips compared to similar funds. </li></ul><ul><li>Fund's expense ratios climb </li></ul><ul><li>Beta, a technical measure of risk, also climbs. </li></ul><ul><li>Independent rating services reduce their ratings of the fund. </li></ul><ul><li>It merges into another fund. </li></ul><ul><li>Change in management style or a change in the objective of the fund. </li></ul>
    17. 19. ADVANTAGES OF MUTUAL FUNDS <ul><li>The advantages of investing in a Mutual Fund are: </li></ul><ul><li>Professional Management </li></ul><ul><li>Diversification </li></ul><ul><li>Convenient Administration </li></ul><ul><li>Return Potential </li></ul><ul><li>Low Costs Liquidity </li></ul><ul><li>Transparency Flexibility </li></ul><ul><li>Choice of schemes </li></ul><ul><li>Tax benefits </li></ul><ul><li>Well regulated </li></ul>
    18. 20. Thank You