This document provides an overview of mutual funds, including their concept, types, advantages, organization, investment strategies, and growth in India. It discusses key mutual fund topics such as open-ended and closed-ended schemes, growth, income, balanced, and money market funds. The document also summarizes the history and growth of the mutual fund industry in India, from its beginnings in 1964 to recent growth and future prospects, with the industry expected to reach $800 billion by 2022 based on past growth rates.

1. MUTUAL
FUNDS

2. TOPICS COVERED
 Concept
 Types of Mutual Fund Schemes
 Advantages of Mutual Funds
 Organisation of a Mutual Fund
 Investment Strategies
 Mutual Fund Market in India
 Growth of Mutual Fund Industry in India
 Future of Mutual Fund in India

3. CONCEPT
 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 realised are shared by its
unit holders in proportion to the number of units
owned by them.

4. MUTUAL FUND OPERATION
FLOW CHART
Investors
Fund
Securities
Return
Pool their money in
Which is invested inThat generates
Given back to

5. ADVANTAGES OF MUTUAL FUNDS

6. TYPES OF MUTUAL FUNDS
 No matter what type of investor you are, there is bound
to be a mutual fund that fits your style.
It's important to understand that each mutual fund has
different risks and rewards. In general, the higher the
potential return, the higher the risk of loss. Although
some funds are less risky than others, all funds have
some level of risk - it's never possible to diversify away
all risk. This is a fact for all investments.
Each fund has a predetermined investment objective
that tailors the fund's assets, regions of investments and
investment strategies. At the fundamental level, mutual
funds can be classified on three parameters:
1) On the basis of structure.
2) On the basis of investment objective.
3) On the basis of special schemes.

7. TYPES OF MUTUAL FUNDS
Type of
Mutual Fund
Schemes
Structure
Investment
Objective
Special
Schemes
Open Ended
Funds
Close Ended
Funds
Growth Funds
Income Funds
Balanced Funds
Money Market
Funds
Industry Specific
Schemes
Index
Schemes
Sectoral
Schemes

8. ON THE BASIS OF STRUCTURE
 Open ended Schemes
 Closed ended Schemes.

9. OPEN ENDED SCHEMES
 Open ended Schemes are schemes which offers
unit for sale without specifying any duration for
redemption.
 They sell and repurchase schemes on a continuous
basis.
 The main feature of such kind of scheme is liquidity

10. CLOSED ENDED SCHEMES
 These are the schemes in which redemption period
is specified.
 Once the units are sold by mutual funds, then any
transaction takes place in secondary market only i.e
stock exchange.
 Price is determined by forces of market.

11. ON THE BASIS OF GROWTH OBJECTIVE
 Growth funds
 Income funds
 Balanced Funds
 Money Market funds

12. GROWTH FUND
 The aim of growth funds is to provide capital
appreciation over the medium to long- term. Such
schemes normally invest a major part of their
corpus in equities. Such funds have comparatively
high risks

13. INCOME FUNDS
 Funds that invest in medium to long-term debt
instruments issued by private
companies, banks, financial
institutions, governments and other entities
belonging to various sectors (like infrastructure
companies etc.) are known as Debt / Income Funds

14. BALANCED FUND
 These funds provide both growth and regular
income as these schemes invest in debt and equity.
 The NAV of these schemes is less volatile as
compared pure equity funds.

15. MONEY MARKET FUNDS
 Money market / liquid funds invest in short-term
(maturing within one year) interest bearing debt
instruments. These securities are highly liquid and
provide safety of investment, thus making money
market / liquid funds the safest investment option
when compared with other mutual fund types.

16. ON THE BASIS OF SPECIAL SCHEMES
 Industry Specific Schemes
 Index Schemes
 Sectoral Schemes.

17. INDUSTRY SPECIFIC SCHEMES
 Industry Specific Schemes invest only in the
industries specified in the offer document. The
investment of these funds is limited to specific
industries like Infotech, FMCG, Pharmaceuticals etc

18. INDEX SCHEMES
 In this schemes, the funds collected by mutual
funds are invested in shares forming the Stock
Exchange Index.
 Example- Nifty Index Scheme of UTI Mutual Fund
and Sensex Index Scheme of Tata Mutual Fund.

19. SECTORAL SCHEMES
Sectoral funds are those mutual funds which
invest in a particular sector of the
market, e.g. banking, information
technology etc. Sector funds are riskier than
equity diversified funds since they invest in
shares belonging to a particular sector
which gives them fewer diversification
opportunities

20. OTHER SCHEMES
 Gilt Security Schemes
 Funds of Funds
 Domestic Funds
 Tax Saving Schemes.

21. ORGANISATION OF A MUTUAL FUND

22. INVESTMENT STRATEGIES
 Systematic Investment Plan (SIP)
 Invest a fixed sum every month. (6 months to 10
years- through post-dated cheques or Direct Debit
facilities)
 Fewer units when the share prices are high, and more
units when the share prices are low.
 Convenience and Discipline are the benefits of SIP.
 Systematic Withdrawal Plan (SWP)
Is a facility provided by a mutual fund to withdraw
money on a regular basis.

23. MUTUAL FUNDS IN INDIAN CAPITAL
MARKET
 First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. At the end of 1988 UTI had Rs.6,700 crores of
assets under management.
 Second Phase1987-1993( Entry of Public Sector Funds)
SBI MF marked the entry of non- UTI, public sector mutual
funds set up by public sector banks and Life Insurance
Corporation (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987. At the end of 1993, the mutual fund
industry had assets under management of Rs.47,004 crores.

24. Third Phase-1993-2003(Entry of Private Sector Funds)
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. As at the
end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores.
 Fourth Phase – since February 2003
There have been several amalgamation of mutual funds. The
MF have also become popular among retail investors. There
were 28 mutual funds operating in India in April,2005.

25. GROWTH IN MF INDUSTRY IN INDIA
 The size of Indian mutual fund industry has grown
in recent few years. The total AUM has increased
from Rs.1, 01, 565 crores in January 2000 to
Rs.5, 67, 601.98 crores in April 2008. As on august
end 2000, there were 33 Funds with 391 schemes
and assets under management with Rs 1, 02,849
crores. There are 34 Mutual Fund organizations in
India managing 1,02,000 crores.

26.  Indian Mutual Funds Future - Growth Facts
 In the past 6 years, Mutual Funds in India have
recorded a growth of 100 %.
 One of the major factors contributing to the growth
of this industry has been the booming stock market
with an optimistic domestic economy.
 Second most important reason for this growth is a
favorable regulatory regime which has been
enforced by SEBI. This regulatory board has
improved the market surveillance to protect the
investor’s interest.
 In India, the rate of saving is 23 %.

27.  In the future, there lies a big scope for the Indian Mutual
Funds industry to expand.
 Several asset management companies which are
foreign based are now entering the Indian markets.
 A number of commodity Mutual Funds will be introduced
in the future. The SEBI (Securities Exchange Board of
India) has granted the permission for the same.
 More emphasis is put on the effective Mutual Funds
governance.
 There is also enough scope for the Indian Mutual funds
to enter into the semi-urban and rural areas.
 Financial planners will play a major role in the Mutual
Funds market by providing people with proper financial
planning.

28. FUTURE OF MF IN INDIA
 By end of 2012, the mutual fund industry of
India will reach Rs 40,90,000 crore. In the
coming 10 years the annual composite
growth rate is expected to go up by 13.4%.
Since the last 5 years, the growth rate was
recorded as 9% annually.

29.  Future of Mutual Funds in India - An Overview
 Financial experts believe that the future of Mutual
Funds in India will be very bright. It has been
estimated that by March-end of 2010, the mutual
fund industry of India will reach Rs 40,90,000
crore, taking into account the total assets of the
Indian commercial banks. The estimation was
based on the December 2004 asset value of Rs
1,50,537 crore. In the coming 10 years the annual
composite growth rate is expected to go up by
13.4%. Since the last 5 years, the growth rate was
recorded as 9% annually. Based on the current rate
of growth, it can be forecasted that the mutual fund
assets will be double by 2010.