A mutual fund is a type of investment vehicle where funds from multiple investors are pooled together to invest in a diversified portfolio

1. MUTUAL FUND AND ITS TYPES

2. FOLLOWING ARE THE CONTENTS OF MY
PRESENTATION
• Meaning of Mutual Fund
• History of Mutual Fund
• Flow chart of Mutual Fund
• Types of Mutual Funds
• Advantages of Mutual Fund
• Name of the companies who
launched various Mutual Funds

3. WHAT IS MUTUAL FUND?
• Mutual Fund is a financial intermediaries that
pools the savings of investors for collective
investment in a diversified portfolio of securities.
A fund is mutual as all of its returns minus its
expenses is shared by the fund’s investors

4.  The Securities and Exchange Board of India
Regulations 1996 defined Mutual fund as
“ A fund established in the form of a trust to raise
money through the sale of units to the public or a
section of the public under one or more schemes
for investing in securities including money market
instruments or gold or gold related instruments or
real estates assets”

5.  A mutual fund serves a s a link between the
investor and the securities market by mobilising
savings from the investors and investing them in
the securities market to generate returns

6. BENEFITS OF MUTUAL FUNDS
 Professional Management
 Portfolio Diversification
 Reduction in Transaction Cost
 Liquidity
 Convenience
 Flexibility
 Tax Benefits
 Dividends received from the mutual funds debt schemes
are tax exempt to the overall limit of Rs. 100000 allowed
under section 80C of the income Tax Act
 Stability to the stock market
 Protection of Interest of Investors

7. History of the Indian Mutual
Fund Industry
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 history of mutual funds in India can be
broadly divided into four distinct phases:

8. First Phase – 1964-87
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.
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.

9. Second Phase – 1987-1993 (Entry of
Public Sector Funds)
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.

10. Third Phase – 1993-2003 (Entry of
Private Sector Funds)
With the entry of private sector funds in 1993, a
new era started in the Indian mutual fund
industry, giving the Indian investors a wider
choice of fund families.
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.

11. Fourth Phase – since
February 2003
In February 2003, following the repeal of the Unit Trust of
India Act 1963 UTI was divided 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.
The second is the UTI Mutual Fund Ltd, sponsored by
SBI, PNB, BOB and LIC. It is registered with SEBI and
functions under the Mutual Fund Regulations.

12. The flow chart below describes the
working of a mutual fund:

13. Schemes according to Maturity
Period
A mutual fund scheme can be classified into open-ended
scheme or close-ended scheme depending on its maturity
period.
Open-ended
Fund
An open-ended Mutual fund is one that is available for subscription and
repurchase on a continuous basis. These Funds do not have a fixed
maturity period.
close-ended
Fund
A close-ended Mutual fund has a stipulated maturity period e.g. 5-7
years. The fund is open for subscription only during a specified period
at the time of launch of the scheme.

14. Portfolio Classification
A scheme can also be classified as growth fund, income
fund, or balanced fund considering its investment objective.
Growth Funds
The aim of the growth funds is capital appreciation over the medium to
long term return to investors in the long term
Such funds have comparatively high risks.
There is no guarantee or assurance of returns. These schemes are
usually close ended and listed on stock exchanges.

15. Income Funds
The aim of income funds is to provide regular and
steady income to investors.
Such schemes generally invest
predominately in income bearing
instruments like bonds, debentures,
government securities, and Commercial
paper.
Returns and Risk are lower in income funds
as compared to growth funds.

16. Balanced Fund
The aim of balanced funds is to provide both
growth and regular income as such schemes
invest both in equities and fixed income securities
in the proportion indicated in their offer
documents.
These are appropriate for investors looking for
moderate growth.

17. INVESTMENT CLASSIFICATION
 Here the funds can be classified on the basis of the asset
class /types of securities in which they are invested.
 1. Equity Fund
 If funds of a particular scheme are invested in equity shares then
it is as an equity fund. They are riskier compared to debt funds
and they can be further be classified on the basis of their
investment strategy as diversified, aggressive, growth, value and
sector funds.
 Ex: index funds, diversified funds, large cap funds, small cap
funds, sector funds etc.
 2. Debt Funds
if funds of a particular scheme are invested in debt instruments
then it is a debt fund. They are characterised as low risk and high
liquidity investments.
Debt funds invest in government securities, money market
instruments, PSU bonds etc.
Ex: income funds, gilt funds etc.

18. INVESTMENT CLASSIFICATION
 3. Hybrid Fund
 In order to provide the benefits of both equity and debt
investment to the investors, some funds invest in both
the asset classes and they are known as hybrid funds.
Hybrid funds may be further categorised into equity
oriented fund and debt oriented fund. .
 Equity oriented funds are those schemes where the
equity holding of the fund in domestic companies is
more than 65 percent
 Debt oriented funds are those where the investment in
debt securities exceeds 65%
 Balanced funds are those where the 50% is invested in
equity instruments and 50% instruments in debt
instruments.

19. GEOGRAPHICAL CLASSIFICATION
 1. Domestic Funds
 Funds which mobilise resources from a particular
geographical locality like a country or region are
domestic funds
 The market is limited and confined to the boundaries of
a nation in which the funds operates.
2. Offshore Funds
 They attract foreign capital for investment in the country
of the issuing company.
 They facilitate cross border fund flow which leads to an
increase in foreign currency and foreign exchange
reserves.

20. EQUITY FUNDS
 Diversified Equity Fund
 These funds invest in equity shares and hold a
diversified equity portfolio
 These funds are characterised as high risk and high
return investments as their returns are linked to the
performance of stock market.
 Further these can be classified as
 Large Cap Funds
 These are funds that make investments mainly in the
shares of high companies.
 The portfolio consist of well established companies with
high trading volumes and market capitalisation of more than
Rs.1000 Cr.
 Ex: Reliance growth fund

21.  Mid Cap Funds
 These funds invest in equity shares of medium sized
companies that have a market cap between Rs. 500 cr
and Rs. 1000 Cr. And has a huge potential of becoming
big.
 Small Cap
 These funds invest in equity shares of small companies
with a market capitalisation up to Rs.500Cr.

22.  Values Funds
 These funds invest in undervalued stocks with strong
fundamentals but are under performing either due to a
difficult phase or economic down
 Special funds
 These are launched to cater special need of investors
 Ex: ICICI Child Care Mutual Funds
 Sectoral Funds
 These Funds restrict their investments to a particular
segment or sector of the economy such as
infrastructure, banking, FMCG etc.

23.  Derivative Arbitrage Funds
 They are open ended schemes aimed to generate low
votality and better returns by investing in a mix of cash
equities, equity derivatives, and debt market
 Tax Savings Scheme
 Equity linked Saving Schemes
 These are diversified schemes investing in shares of blue chip
companies. Returns in these schemes are linked to the returns
of the stock market. These schemes provides the income tax
rebate but have lock in period of three years.
 Pension Schemes
 These are balanced schemes which aim to provide regular
income to the individual after their retirement.

24.  Index Funds
 An index fund is a mutual fund which invests in
securities in the index on which it is based, eg. BSE
Sensex, NIFTY etc.
 It invests only in those shares which comprise the
market index and exactly the same proportion as the
companies in the index so that the value of such index
funds varies with the market index.
 Funds of Funds
 A Funds of Funds scheme invests in a combination of
equity and debt mutual funds available in the market
 These scheme invests in schemes of the same mutual
fund of other mutual funds.

25. DEBT FUNDS
 Liquid Funds
 It makes investment in purchasing debt and money
market securities with maturity of upto 91 days only.
 Short term bond Funds
 These are funds that seek to provide a high degree
of liquidity along with the generation of reasonable
returns by investing in a portfolio consisting of
short term debt and money market instruments

26.  Long Term Bonds
 These funds invest in long term government dated
securities and corporate bonds
 The market price of the underlying securities –
government securities bonds, debentures determines
the net asset value of these funds
 Gilt Funds
 Mutual Funds which invest exclusively in government
securities.
 Floating rate funds
 These funds invest in floating rate instruments

27.  Fixed Maturity Plan
 Short term close ended schemes, investing in short
term debt instruments.
 They have fixed maturity period ranging from 15 days to
1 year.

28. RISK VS RETURNS IN MUTUAL FUNDS