A mutual fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities. While 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."

2. Mutual Fund
A mutual fund is a type of professionally
managed collective investment scheme that
pools money from many investors to
purchase securities. While 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."

3. Types Of Mutual Funds
 On the Basis of Ownership
• Public Sector Mutual Funds
• Private Sector Mutual Funds
 On the Basis of Scheme of Operations
• Open Ended Schemes
• Close Ended Schemes

4. Contd..
On the Basis of Portfolio
• Growth Funds/Equity Funds
• Balanced/Conservative Funds
• Taxation Funds
• Money Market Mutual Funds
• Sectoral/Thematic Funds
On the Basis of Location
• Domestic Funds
• Off-Shore Funds

5. Benefits of Investment in Mutual
Funds
Diversification
Expert supervision & management
Liquidity
Reduced risk
Tax advantage
Higher returns
Investor’s Protection

6. Limitations of Investment in Mutual
Funds
Fees
Less control over timing of recognition of
gains
Less predictable income
No opportunity to customize

7. Structure of Mutual Fund Industry in
India
 1 Tier – Sponsor
 2 Tier – Trustees
 3 Tier – Asset Management Company

8. Phases of Mutual Fund Industry in
India
Phase 1 1964-87 Growth of UTI
Phase 2 1987-93 Entry of Public Sector Funds
Phase 3 1993-96 Emergence of Private Funds
Phase 4 1996-99 Growth & SEBI Regulations
Phase 5 1999-04 Emergence of a Large &
Uniform Industry
Phase 6 2000 Onwards Consolidation &
Growth

9. Are Mutual Funds credible
for Small Investors ?
The credibility of Mutual Funds for small
investors can either be Favorable or
Unfavorable.
Therefore, we can study the same with the
help of following Age Groups :-
I. Below 35 Years
II. 35 - 50 Years
III. Above 50 Years

10. FAVORABLE
FACTORS

11. Age Group :
Below 35 Years
Small Investors below 35 years of age may
belong to either Middle Income Group or Lower
Middle Income Group. These can be further
classified as :-
i. College Students
ii. Employees
iii. Professionals
iv. Entrepreneurs

12. Benefits Of Mutual Funds
For Investors Below 35 years
Affordability
Mutual Funds cater to people who’d like to invest for
duration ranging from a day to years. Minimum
amounts of investment range from as low as Rs. 500,
with no upper limit.
Easy to buy and sell
Mutual funds are widely available through banks,
financial planning firms, investment firms, credit
unions and trust companies. You can sell your fund
units or shares at almost any time if you need to get
access to your money.

13. Contd..
 Helps In Handling Paperwork
Capital gains and losses from the sale of stocks, as well as
dividend- and interest-income earnings, are summarized
into a report for each shareholder at the end of the year
for tax purposes. Funds also manage the day-to-day chores
such as dealing with transfer agents, handling stock
certificates, reviewing brokerage confirmations, and more.
 Diversification
Going by the adage, 'Do not put all your eggs in one
basket', mutual funds help mitigate risks to a large extent
by distributing your investment across a diverse range of
assets. Mutual funds offer a great investment opportunity
to investors who have a limited investment capital.

14. Contd..
 Reduces the anxiety of Investing
Most investors constantly live with a certain amount of anxiety
and fear about their investments because they feel they lack
one or more of the following essentials:
(1) Market knowledge
(2) Investing experience
(3) Self-discipline
(4) Proven game plan
(5) Time
Because of their inherent design that taps professional expertise
and spreads risk, mutual funds can go a long way toward
relieving the anxiety associated with investing.

15. Contd..
Education
Many parents use mutual funds to invest for
children’s college education. The investor’s time
horizon is an essential consideration when
investing for education.
Emergency Reserves and Other Short-Term
Goals
Emergency reserves are assets one may need
unexpectedly on short notice. Many investors use
money market funds for their reserves.