Mutual funds pool money from investors to invest in capital market instruments like stocks, bonds, and other securities. Investors share the income and capital appreciation from these investments proportional to how many units they own. The history of mutual funds in India progressed from the establishment of UTI in 1964, to the entry of public and private sector funds in the late 1980s and 1990s, and further growth and regulation since 2003. There are various types of mutual fund schemes categorized by structure, investment objectives, and other factors. Investors have options to invest lump sum or systematically through SIP, SWP, and STP plans for their long term financial goals.

2. Concept
• Mutual fund is a trust that pools savings of a number of investors
who share a common financial goal.
• The money thus collected is invested in capital market instruments
such as Shares, debentures and other securities.
• The income earned through these investments and the capital
appreciation released are shared by its unit holders in proportion to
the number of units owned by them.

3. History
• 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 Phase-1987-1993
Entry of Public Sector Funds 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. At the end of 1993, the mutual
fund industry had assets under management of Rs.47,004 crores.

4. • 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
In February 2003, following the repeal of the Unit Trust of India Act 1963. UTI Mutual Fund Ltd, sponsored
by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the SEBI Mutual Fund Regulations.

5. How mutual fund works

6. Types of mutual funds schemes
• By Structure
• Open-Ended – anytime enter/exit
• Close-Ended Schemes – listed on exchange, redemption after period of scheme is over.
• By Investment Objective
• Equity (Growth) – only in Stocks – Long Term (3 years or more)
• Debt (Income) – only in Fixed Income Securities (3-10 months)
• Liquid/Money Market (including gilt) – Short-term Money Market (Govt.)
• Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)
• Other Schemes
• Industry specific Schemes
• Sector Schemes & Index schemes

7. Options in Mutual Funds
• Growth Option
• Dividend Payout Option
• Dividend re-investment Option

8. Methods of investing in mutual funds
• SIP
• SWP
• STP

9. Systematic Investment Plan (SIP):
• An SIP is an option of investing a fixed sum in a mutual fund scheme on a regular basis i.e. predefined regular
intervals. It is similar to regular saving schemes like a recurring deposit.
• It is a disciplined investment plan and cost averaging helps reduce impact of market volatility.
• With SIP, one can build up significant wealth in long run with small sums of money.
Systematic Withdrawal Plan (SWP):
• SWP is a smart way to plan for your future needs by withdrawing amounts systematically from your existing portfolio
either to reinvest in another portfolio or to meet your expenses.
• It is suitable for retirees who are looking for a fixed flow of income.
• SWP helps investors who require liquidity as it allows them to access their money precisely when they need it..
Systematic Transfer Plan (STP):
• STP is a plan that allows the investor to give a mandate to the fund to periodically and systematically transfer a
certain amount/ number of units from one scheme and invest in another scheme.
• This helps ensure that your money is unaffected by any market volatility in short term.

10. 10 reasons to invest in mutual funds
• Expert on your side
• Limited risk
• Easy investing
• More for less
• Convenience
• Investor protection
• Quick access to your money
• Transparency
• Low transaction costs
• Tax benefits

11. Comparison of financial products
Return Safety Volatility Liquidity
Equity High Low High High-Low
FI Bonds Moderate High Moderate Moderate
Corp Debentures Moderate Moderate Moderate Low
Company FDs Moderate Low Low Low
Bank Deposits Low High Low High
PPF Moderate High Low Low-Moderate
LI (Traditional) Low High Low Low
LI (ULIPs) High High Moderate - High Low-Moderate
Gold Moderate High Moderate Moderate
Real Estate High Moderate High Low
Mutual Funds High High Moderate-High High
Mutual Funds

12. Risks involved
• Market Risk
• Concentration Risk
• Interest Rate Risk
• Liquidity Risk
• Credit Risk

13. Lock-in period
If investment is in equity linked saving schemes (ELSS) the lock in period is three
years. Which means your money will remain locked in with the mutual fund
company for a period of three years.

14. Advantages

15. Disadvantages

16. Documents involved
• Offer Document( Like Prospectus)
• It contains 2 parts SID(Scheme investment document) and
SAI(Scheme additional information)
• SAI is a part of SID
• KIM(Key information memorandum): consists of both SAI and SID.
• Application form is attached to KIM.

17. Top 3 mutual funds in India
• ICICI Prudential Focused Blue chip Equity Fund.
• Aditya Birla Sun Life Small & Midcap Fund.
• Tata Equity PE Fund.

18. THANK YOU