This document provides information about mutual funds in South Africa and India by comparing their respective markets. It discusses what mutual funds are, their advantages and disadvantages, and the types of mutual funds. For South Africa, it outlines the major mutual funds, market regulators, and why people invest in mutual funds. For India, it discusses the history and introduction of mutual funds in the country. The key comparison points are that South Africa has multiple regulators while India only has one, South Africa's market is more developed while India's is still growing, and South Africa has over 50 funds while India has under 50.

1. MUTUAL FUND
MARKET IN
SOUTH AFRICA
VIS-À-VIS INDIA: A
COMPARISON
Supragya
Roll:875
B.B.A LL.B(Hons.)
Semester VI

2. WHAT ARE MUTUAL FUNDS?
 It is a type of professionally managed collective
investment scheme that pools money from many
investors to purchase securities.
 There is no legal definition of the term "mutual
fund", it is most commonly applied only to those
collective investment vehicles that are regulated
and sold to the general public.
 They are sometimes referred to as "investment
companies" or "registered investment
companies.“
 Most mutual funds are "open-ended," meaning
stockholders can buy or sell shares of the fund at
any time.

3. ADVANTAGES OF MUTUAL FUNDS
 Increased Diversification: A fund must hold many
securities. Diversifying reduces risks compared to
holding a single stock, bond, other available
instruments.
 Daily Liquidity: This concept applies only to open-end
funds. Shareholders may trade their holdings with the
fund manager at the close of a trading day based on the
closing net asset value of the fund's holdings.
 Professional Investment Management: A highly
variable aspect of a fund discussed in the prospectus.
Actively managed funds may have large staffs of
analysts who actively trade the fund holdings.
Management of an index fund may just passively re-
balance holdings to match a market index.

4.  Ability to participate in investments that may be
available only to larger investors: Foreign markets, in
particular, are rarely open and affordable for individual
investors. More over the research required to make sensible
foreign investments may require knowledge of another
language, and the rules of regulations of other markets.
 Service and Convenience: This is not a feature of a mutual
fund but rather a feature of the fund management company.
Increasingly in recent years, there are funds, notably Exchange
Traded Funds(ETFs) that are purely investment instruments
without any additional services from the fund management
company.
 Government Oversight: Largely, the US government's role
with mutual funds is to require the publication of a prospectus
describing the fund. No such document is required for stock,
bonds, currencies, and other investment instruments. There is
no governmental oversight of a fund's investment
success/failure.
 Ease of Comparison: Since mutual funds are available from
many providers, it is generally easy to find similar funds and
compare features such as expenses.

5. DISADVANTAGES
 Fees
 Less control over timing of recognition of gains
 Less predictable income
 No opportunity to customize

6. THE SOUTH-
AFRICAN
PERSPECTIVE

8. WHY INVEST IN MUTUAL FUNDS?
 Professional management. Mutual funds offer investors access to
full time, professional money managers who have the expertise,
experience and resources to actively buy, sell and monitor
investments.
 Affordability. Initial investments in most funds are reasonable for
the average investor, and the requirement for additional investments
are lower than initial investment requirements.
 Diversification. An investment in a mutual fund generally includes
a number of different securities. For example, diversified stock fund
portfolios usually hold an array of stocks representing different
companies, different industries and perhaps even different nations.
Diversification can help reduce the financial risk inherent in
investing. If one investment decreases in value, another investment in
the portfolio may increase.
 Flexibility. Many mutual funds are part of a "family of funds" and
you can exchange your shares from one fund to another in the same
family when your investment objectives change. For example,
Franklin Templeton Investments offers Franklin, Templeton and
Mutual Series funds.
 Liquidity. This means it is easy to withdraw some or all of the money
you've invested. With proper written notice you can usually get the
money you've requested within 7 business days. Of course, the value
of the shares you redeem may be more or less than your original cost.

9. VALUATION OF MUTUAL
FUNDS
The value of a mutual fund is equal
to the total market value of all
securities and cash held within that
fund. Referred to as Net Asset Value
per share (NAV), this value is
calculated daily and changes with
the rise or fall in the market value of
the underlying assets held by the
fund.

10. TYPES OF MUTUAL FUNDS
There are many types of mutual funds
with differing objectives to meet investor’s
needs. In general there are four basic
types:
 equity funds
 fixed income funds
 balanced funds
 money market funds

11. EQUITY FUNDS
 Equity mutual funds invest primarily in common stocks
and represent the largest category of mutual funds. Some
equity funds only invest in companies from a specific
country or industry while others can invest broadly in
any country or industry.
 General characteristics: Equity funds are usually
more volatile than money market or fixed income funds,
however, they also offer the highest potential returns.
While a stock's value may rise and fall quickly over a
short period of time, history has shown stocks to perform
better over the long term than other types of
investments, such as bonds and money market
instruments.
 Investor profile: Equity funds are often appropriate for
investors with a longer-term investment horizon.

12. FIXED INCOME FUNDS
 Fixed income funds invest primarily in long-term debt
instruments, such as corporate, government and
municipal bonds, debentures and mortgages, with a
specified interest rate.
 General characteristics: Fixed income funds are
intended to provide investors with income on a steady
basis, while offering the possibility of capital growth
with capital protection. Fixed income funds can be
affected by interest rate changes, currency changes
and economic outlook.
 Investor profile: Income funds may be appropriate
for conservative investors seeking regular cash flow.
This type of fund is also a good choice for adding
diversification to any investment portfolio.

13. BALANCED FUNDS
 Balanced funds invest primarily in equities and fixed income
securities, shifting assets among stocks, bonds and money
market instruments depending on current market conditions.
 General characteristics: Balanced funds are intended to
provide a balanced mixture of safety, income and capital
appreciation. Balanced mutual funds are affected by interest rate
changes, stock market performance, and economic outlook.
 Another similar fund is an asset allocation fund, which
maintains comparable objectives to balanced funds, but which
typically do not hold a specified percentage of any asset class. In
asset allocation funds, the portfolio manager is usually free to
hold whichever assets, in whatever amounts, he or she
determines may best benefit from current and future market
trends.
 Investor profile: Balanced funds may be appropriate for
investors seeking a more diversified portfolio in one fund. If you
are new to mutual fund investing or have only a small amount to
invest, a balanced fund may be a good starting place. It can give
you the benefits of diversification in a single fund.

14. MONEY MARKET FUNDS
 Money market funds are conservative investment that offer minimal
returns but are liquid and provide safety of capital.
 General characteristics: Money funds provide investors with
current income and are managed to maintain a stable share price.
Because of their stability, money funds are often used for cash
reserves or money that might be needed right away.
 Money funds typically invest in short-term, high-quality fixed
income securities. The average maturity of a money fund's portfolio
must be 90 days or less to help protect against interest rate risk.
The income money funds provide is generally determined by short-
term interest rates
 Investor profile: This type of fund is appropriate for investors
looking for safety of principle and a slightly better return than they
would earn in a regular savings or debit account. A money-market
fund may be the ideal place to keep money needed in the near future
or holding while seeking more attractive investment opportunities.

15. SOUTH AFRICAN MUTUAL FUNDS
 Sage Fund – SAGE
 National Growth Fund – NGF
 S. A. Trust Selections – SATS
 Old Mutual Unit Trust – Mutual
 The UAL Unit Trust – UAL
 Sanlam Trust – Sanlam
 The Trust Bank Growth Fund – Trust
 Santamgro – Santam
 UAL Intergrowth Fund – Inter
 Guardian Bankers Growth Fund – Guardbank
 Standard Bank Mutual Fund - Standard

16. MARKET REGULATORS
Financial Services Board
Reserve Bank of South Africa
Department of Trade and
Industry
Johannesburg Stock
Exchange.

17. THE INDIAN
PERSPECTIVE

18. INTRODUCTION
 The Indian mutual fund industry offers Indian and global
investors, both big and small, an avenue to invest safely
and securely, at a reduced cost, in a diverse range of
securities, spread across a wide range of industries and
sectors.
 The erstwhile Unit Trust of India (UTI) was set up by
the Reserve Bank of India in 1963 and functioned under
its regulatory and administrative control.
 In 1978, the Industrial Development Bank of
India (IDBI) took over regulatory and administrative
control of the UTI.
 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).

19. COMPARISON
 The Mutual Fund Market in South Africa has
multiple regulators whereas India has only one
regulator.
 The Mutual Fund Market in South Africa is a
developed market with huge market
capitalization whereas the Indian market is still
largely untapped.
 The South African market was setup much before
the Indian market.
 South Africa has over 50 mutual funds whereas
India has under 50.

20. THANK YOU!