The document provides information about mutual funds in India. It discusses: - The origin of mutual funds in Belgium and their development in the UK and US. - The establishment of Unit Trust of India in 1964 which marked the advent of mutual funds in India. - The evolution of the mutual fund industry in India over four phases from 1963-2014. - Key features and advantages of mutual fund investing such as professional management and risk reduction through diversification.

1. ASSIGNMENT
M.voc (BSI)
MUTUAL FUNDS
• Submitted by
Mansi Singh
421548
• Submitted to
Dr jivan kumar chowdhary

2. Introduction of MF
• In 1822, King William of the Netherlands formed “Societe Generale
de Belique”, at Brussells, which appears to be the first mutual fund.
It was intended to facilitate small investments in foreign
government loans, which then offered more security and returns
than the home industry.
• Later on, another similar company was started with an objective to
make cooperative investments, to protect investors against loss by
wide undertakings, and to secure larger returns through investing in
industries.
• While the mutual funds had its origin in Belgium, it did not take firm
root in continental soil but flourished when transplanted in UK and
USA surroundings.
• Mutual fund in UK and USA, began as private enterprise, known as
investment trust.

3. Mutual Fund in India
• In India, the setting up of Unit Trust of India(UTI) in 1964
marked the advent of mutual fund industry. Unit trust of India
was set up by an act of Parliament.
• The objectives of establishing the unit trusts are many and
varied, but basically it is an attempt to mobilize the savings of
the small investors
• UTI was regulated since its inception by the UTI Act, 1963 and
regulations framed there under. UTI was established as a
corporate body.
• The general superintendence, direction and management of
the affairs and business of this corporate body vested in a
board of trustees.

4. • An executive committee was formed with a view to effectively
supervise the asset management functions. The members of the
executive committee were drawn from the board of trustees. The
executive committee reported to the board.
• In matters involving public interest the Central Government and the
Reserve Bank of India had posers to give directions. The day to day
functioning of UTI was left to the chairman and the operating
management reporting to him.
• Impetus to Equity Market: The purpose In the wake of the Indo-
China war of 1961, there was shortage of savings going into
industrial investment for economic development.
• There was a need to mobilize adequate amount of risk capital for
industrial enterprises.
• The household savings were sought to be channelized into the
primary and secondary share markets through units.

5. • In the initial years, the emphasis in UTI was on income products. Master
Share launched in 1986 ushered in the equity-oriented schemes in India.
• Unit Trust of India launched a variety the innovative products suited to
meet diverse needs of investors, virtually the complete life cycle of the
investors.
• Evolutionof Mutual Fund Industry in India:
• The Association of Mutual Funds in India has officially classified the six
decades of mutual funds in India into four phases.
• The First phase during the years 1963 – 1987 saw UTI consolidating its
position by offering a variety of products and extending its reach
throughout the country.
• The next phase 1987 to 1993 marked the arrival of mutual funds
sponsored by public sector banks and financial institutions.
• The third phase began in 1993 with the arrival of private sector players,

6. • Both Indian and foreign. The fourth phase started with SEBI (Mutual Fund)
Regulations, 1996 to April 2014.
• Fifth Phase since May 2014, the industry has witnessed steady inflows and
increase in the AUM as well as the number of investor folios(accounts)
• The Industry’s AUM crossed the milestone of Rs 10 Trillion ( Rs. 10 lakh
crores) for the first time as on 31st May 2014 and a short span of two years
the AUM size has crossed Rs. 15 lakh crore in July 2016.
• The overall size of the Indian MF Industry has grown from Rs. 3.26 trillion
as on 31March 2007 to Rs. 15.63 trillion as on 31st August 2016, the
highest AUM ever and five fold increase in a span of less than 10 years.
• AUM – Assets under Management is the total market value of the
investments that a person or entity manages on behalf of clients.
• Assets under Management vary by company to company. In the
calculation of AUM, some financial institutions include bank deposits,
mutual funds, and cash in their calculations.

7. • Advantages of Mutual Fund investing:
• The mutual fund industry has enjoyed substantialgrowth in terms of the
assets under managementas well as the investors’ accounts. Of many
reasons that contributed to the growth of mutual fund industry, the
fundamental one is the increasing complexity of modern investment.
• The number of securities available for investmenthas increased
substantially.
• In such a situation mutual funds offer several advantages to the investors
over direct investing.
• a) Professional investmentmanagement
• b) Risk reduction through diversification
• c) Convenience
• d) Availability of alternative portfolio objectives and products
• e) Unit holders account administration and service ensuring liquidity of
investment
• f) Lower transaction and other costs g) Regulatoryprotection
• h) Relatively higher returns than other financial instruments

8. • Variety:
• Availability of varied Portfolio investment objectives and options
objectives: There are more than 400 mutual fund schemes with
wide variety of investment objectives and options available to
investors in India. The classification of MF scheme as:
• i) Growth
• ii) Income
• iii) Balanced
• iv) Liquid and Money Market
• v) Gilt
• vi) Equity Linked Saving Schemes (ELSS) vii) Fund of Funds

9. Features of mutual funds investment Product
• The simplest way to categorise funds would be to group them as:
• Equity funds
• Bond funds
• Hybrid funds
• Money market funds
• Equity funds concentrate their investment in equity shares. This broad
category includes about a dozen categories – classified by objectives. The
distinction between categories is not always clear. For our purpose we
have grouped them into some broad categories:
• Growth funds
• Mid – cap funds
• Value funds Index funds
• Equity income funds Sector Funds
• Equity Linked Saving Scheme

10. Systematic Withdrawal Plan
• In this plan the investor withdraws fixed amount of money periodically.
SWP is a mirror image of SIP. SWP is afacility offered by mutual funds
through which an investor can withdraw a pre-determined amount at pre
– decided.
• An investor can customise the cash flows as dedsired; he can either
withdraw a fixed amount or just the capital gains on his investments. SWP
provides the investor with a regular income and returns on the money
that is still invested in the scheme.
• Systematic InvestmentPlan
• Under this facility an investor can invest fixed amount every month for a
pre-decided period of time usually six months or one year through post
dated cheques at applicable NAV – related prices.
• This facilities helps the investors to average out their cost of investments
over a period of six months or one year and thus overcome the short –
term fluctuations in the market. This strategy is popularly known as Dollar
– cost of averaging ( Rupee – cost of Averaging).

11. • With SIP, investors can invest a fixed amount in mutual funds
step – by – step monthly or quarterly over a period of time,
thereby averaging out your cost of investing and benefiting
from the power of compounding.
• There are a few points that require classification before
starting an SIP or throwing in the towel in their existing SIPS
• SIPs are not an investment in itself but a route to investment.
• SIPs are long term and benefits due to the vagaries of the
market.
• For the salaried class this is a good way to build up a corpus.
For the investors who have a corpus already they should opt
for the STP route.

12. • When the market are down that is the best time for SIPs,
unfortunately most of us stop or withdraw our SIPs in this scenario.
• SIPs are an investment route into the fund of your choice, capturing
the markets at all points through their ups and downs by investing
the money in instalments. This is called “ Rupee cost averaging” and
fetches an average return of the market of units when the market
are cheap and less number of units when they are expensive, thus
giving you an average of the markets.
• SIPs can not be for short – term goals. The tenure of a SIP is
minimum for a period of four to five years because that is the
average period of the Indian market cycle. The longer duration is
better.
• It is recommended to young salaried investors who have just
started working to start a SIP to build a retirement corpus through
the SIP route.

13. • There are three ways to invest in Mutual funds and they are
SIPs, STPS and Lump Sum, suiting all types of investors. SIPs
are meant for those investors who do not have a corpus
presently but would like to build one.
• STPs: An STP or Systematic Transfer Plan moves a fixed
amount of money from one mutual fund to another at regular
intervals.
• It should be noted that STPs can only transfer money between
two mutual funds schemes of the same Asset Management
Companies.