Mutual funds pool money from investors and invest it in a portfolio of stocks, bonds, and other securities. The portfolio is managed by a professional investment manager who buys and sells holdings with the goal of growing the fund over time. Investors receive dividends from profits and see the value of their shares decrease with losses. The first mutual fund in India was introduced in 1963 as a government-run fund, though private funds later emerged. There are several types of mutual funds including open-ended, closed-ended, exchange-traded, and unit investment trusts. Benefits of mutual funds include diversification, professional management, convenience, and liquidity, while disadvantages can include fees, management issues, and tax inefficiency.

1. Mutual Funds
Presented By:
Vritti Malhotra

2. What are Mutual Funds?
• A mutual fund is a company that pools investors'
money to make multiple types of investments, known
as the portfolio. Stocks, bonds, and money market
funds are all examples of the types of investments that
may make up a mutual fund.
• The mutual fund is managed by a professional
investment manager who buys and sells securities for
the most effective growth of the fund. As a mutual
fund investor, you become a "shareholder" of the
mutual fund company. When there are profits you will
earn dividends. When there are losses, your shares
will decrease in value.

3. Mutual Funds in India
• The first introduction of a mutual fund in India occurred in
1963, when the Government of India launched Unit Trust of
India (UTI). Until 1987, UTI enjoyed a monopoly in the
Indian mutual fund market.
• Then a set of other government controlled Indian Financial
Companies came up to handle funds. These included:
 State Bank of India,
Canara Bank, and
Punjab National Bank.

4. Working Of a Mutual Funds

5. Types Of Mutual Funds
There are 4 principal types of funds that you can invest
in:
• Open Ended Funds
• Close Ended Funds
• Exchange traded Funds
• Unit investments Trusts

6. Open Ended Funds
• It is a collective investment scheme which can issue and
redeem shares at any time. An investor will generally
purchase shares in the fund directly from the fund itself
rather than from the existing shareholders.
• Open-ended funds are available in most developed
countries, though terminology and operating rules vary.
• U.S. mutual funds, UK unit trusts and exchange-traded
funds are all examples of open-ended funds.
• The price at which shares in an open-ended fund are issued
or can be redeemed will vary in proportion to the net asset
value of the fund, and therefore directly reflects the fund's
performance.

7. Close Ended Funds
• It is a collective investment scheme that has a fixed number of
shares. Unlike open-end funds, new shares/units in a closed-end
fund are not created by managers to meet demand from
investors. Instead, the shares can be purchased (and sold) only
in the market.
• Closed-end funds are usually listed on a recognized stock
exchange and can be bought and sold on that exchange.

8. Exchange Traded Funds (ETF’s)
ETFs hold the same mix of investments as a stock or bond
market index and trade on a stock exchange. Most ETFs
simply follow an index but some are more actively managed.
You’ll pay a commission when you buy and sell an ETF.
Unit Investment Trusts (UIT’s)
UIT’s issue shares to the public only once, when they are
created. UIT does generally have a limited life span,
established at creation. Investors can redeem shares directly
with the fund at any time (as with an open-end fund) or wait
to redeem upon termination of the trust.

9. Association of Mutual Funds in
India (AMFI)
• It is dedicated to developing the Indian Mutual Fund Industry
on professional, healthy and ethical lines and to enhance and
maintain standards in all areas with a view to protecting and
promoting the interests of mutual funds and their unit
holders. It was incorporated on August 22, 1995, as a non-profit
organization.
Objectives:
• To define and maintain high professional and ethical standards
in all areas of operation of mutual fund industry.
• To represent to the Government, Reserve Bank of India and
other bodies on all matters relating to the Mutual Fund
Industry.

10. Advantages of Investing in
Mutual Funds
• Diversification:
Using mutual funds can help an investor diversify their
portfolio with a minimum investment. When investing in a
single fund, an investor is actually investing in numerous
securities.
• Professional Management:
Mutual funds are managed and supervised by investment
professionals. As per the stated objectives set forth in the
prospectus, along with prevailing market conditions and
other factors, the mutual fund manager will decide when to
buy or sell securities.

11. Advantages (contd..)
• Convenience
With most mutual funds, buying and selling shares, changing
distribution options, and obtaining information can be
accomplished conveniently by telephone, by mail, or online.
• Liquidity
Mutual fund shares are liquid and orders to buy or sell are
placed during market hours.

13. Disadvantages of Investing in
Mutual Funds
• High Expense Ratios and Sales Charges
If you're not paying attention to mutual fund expense ratios and
sales charges, they can get out of hand. Be very cautious when
investing in funds with expense ratios higher than 1.20%, as they
will be considered on the higher cost end.
• Management Abuses
Churning, turnover and window dressing may happen if your
manager is abusing his or her authority.
• Tax Inefficiency
Like it or not, investors do not have a choice when it comes to
capital gain payouts in mutual funds. Due to the turnover,
redemptions, gains and losses in security holdings
throughout the year, investors typically receive distributions
from the fund that are an uncontrollable tax event.

15. Various Mutual Funds in India
• State Bank of India mutual fund
• ICICI prudential mutual fund
• TATA mutual fund
• HDFC mutual fund
• Birla sun life mutual fund
• Reliance mutual fund
• Kotak Mahindra mutual fund etc.

16. Thank you