The document discusses cost of capital and sources of finance for businesses. It defines cost of capital as the opportunity cost or expected rate of return of making an investment of equal risk. It then discusses various sources of finance available to entrepreneurs, including personal investment, venture capital, business angels, government assistance, bank loans, financial bootstrapping, and buyouts. Each source is briefly described.
International financial markets and institutionsJaswinder Singh
This document provides an overview of international financial markets and the institutions that operate within them. It defines international financial markets as connecting those with surplus funds to those seeking funds globally. It then describes various types of markets and the roles of major financial institutions like investment banks, commercial banks, and mutual funds in facilitating the transfer of capital between savers and borrowers. It also outlines key settlement systems used for international cash transfers.
1) A mutual fund is a pool of money belonging to a group of investors that is invested by a professional fund manager on behalf of the group. Each investor owns shares that represent a portion of the fund's holdings.
2) Investors can make money from mutual funds through income from dividends and interest, capital gains if securities increase in price and are sold, or from share price appreciation if holdings increase in value.
3) Mutual funds provide diversification, professional management, low minimum investments, liquidity and transparency but also have costs, potential tax implications, and risks depending on the type of fund.
The document provides an overview of mutual funds, including what they are, their concept, types, objectives, advantages, disadvantages and how to buy one. A mutual fund is a professionally managed investment tool that pools money from investors to purchase securities like stocks, bonds, and money market instruments. The main types discussed are open-ended and close-ended funds, as well as equity, income, balance, money market, gilt and index funds.
This document provides an overview of capital markets and various investment instruments, including:
1) Equity investments such as stocks, mutual funds, and venture capital. Bonds are also discussed as a type of fixed-income investment where the issuer owes the holder interest payments and repayment of principal.
2) Other financial instruments include deposits in bank accounts, cash equivalents like money market holdings, and commodities like gold.
3) Non-financial instruments for investment include real estate (to generate rental income and capital appreciation) and other assets like precious metals.
This document discusses mutual funds and other managed investments. It defines mutual funds as investment vehicles that pool money from shareholders to invest in a portfolio of stocks, bonds, and other securities. The document outlines how mutual fund performance is measured by changes in their net asset value per share. It also describes the various fees and expenses associated with mutual funds and factors investors should consider, such as loads, management fees, and portfolio turnover. The document compares mutual funds to other investment vehicles like closed-end funds, exchange-traded funds, and variable annuities.
Money market funds invest in short-term debt instruments like treasury bills to provide a safe place for savings with low returns. Bond funds invest in government and corporate debt and aim to provide income but carry more risk than money market funds. Balanced funds contain a mix of bonds and stocks, typically 60% equity and 40% fixed income. Equity funds focus on long-term capital growth through stock investments. International and global funds invest overseas to provide currency and geographic diversification to portfolios. Specialty funds target specific sectors, regions, or socially responsible criteria. Index funds replicate the performance of broad market indices.
The document discusses cost of capital and sources of finance for businesses. It defines cost of capital as the opportunity cost or expected rate of return of making an investment of equal risk. It then discusses various sources of finance available to entrepreneurs, including personal investment, venture capital, business angels, government assistance, bank loans, financial bootstrapping, and buyouts. Each source is briefly described.
International financial markets and institutionsJaswinder Singh
This document provides an overview of international financial markets and the institutions that operate within them. It defines international financial markets as connecting those with surplus funds to those seeking funds globally. It then describes various types of markets and the roles of major financial institutions like investment banks, commercial banks, and mutual funds in facilitating the transfer of capital between savers and borrowers. It also outlines key settlement systems used for international cash transfers.
1) A mutual fund is a pool of money belonging to a group of investors that is invested by a professional fund manager on behalf of the group. Each investor owns shares that represent a portion of the fund's holdings.
2) Investors can make money from mutual funds through income from dividends and interest, capital gains if securities increase in price and are sold, or from share price appreciation if holdings increase in value.
3) Mutual funds provide diversification, professional management, low minimum investments, liquidity and transparency but also have costs, potential tax implications, and risks depending on the type of fund.
The document provides an overview of mutual funds, including what they are, their concept, types, objectives, advantages, disadvantages and how to buy one. A mutual fund is a professionally managed investment tool that pools money from investors to purchase securities like stocks, bonds, and money market instruments. The main types discussed are open-ended and close-ended funds, as well as equity, income, balance, money market, gilt and index funds.
This document provides an overview of capital markets and various investment instruments, including:
1) Equity investments such as stocks, mutual funds, and venture capital. Bonds are also discussed as a type of fixed-income investment where the issuer owes the holder interest payments and repayment of principal.
2) Other financial instruments include deposits in bank accounts, cash equivalents like money market holdings, and commodities like gold.
3) Non-financial instruments for investment include real estate (to generate rental income and capital appreciation) and other assets like precious metals.
This document discusses mutual funds and other managed investments. It defines mutual funds as investment vehicles that pool money from shareholders to invest in a portfolio of stocks, bonds, and other securities. The document outlines how mutual fund performance is measured by changes in their net asset value per share. It also describes the various fees and expenses associated with mutual funds and factors investors should consider, such as loads, management fees, and portfolio turnover. The document compares mutual funds to other investment vehicles like closed-end funds, exchange-traded funds, and variable annuities.
Money market funds invest in short-term debt instruments like treasury bills to provide a safe place for savings with low returns. Bond funds invest in government and corporate debt and aim to provide income but carry more risk than money market funds. Balanced funds contain a mix of bonds and stocks, typically 60% equity and 40% fixed income. Equity funds focus on long-term capital growth through stock investments. International and global funds invest overseas to provide currency and geographic diversification to portfolios. Specialty funds target specific sectors, regions, or socially responsible criteria. Index funds replicate the performance of broad market indices.
This document provides information about mutual funds in South Africa and India by comparing their respective markets. It discusses what mutual funds are, their advantages and disadvantages, and the types of mutual funds. For South Africa, it outlines the major mutual funds, market regulators, and why people invest in mutual funds. For India, it discusses the history and introduction of mutual funds in the country. The key comparison points are that South Africa has multiple regulators while India only has one, South Africa's market is more developed while India's is still growing, and South Africa has over 50 funds while India has under 50.
This document provides information on AIA Capital Technology Fund, L.L.C., a long/short technology hedge fund. It discloses various risks and that this is not an offer to sell investments. The fund will utilize five investment strategies focused on technology companies, including new issue equities and debt securities. It is targeted at institutional investors like pension funds. The management team has over 50 years of combined experience. The goal is to achieve $50 million in assets under management by utilizing proprietary strategies and risk management processes.
This document provides an overview of stock investing, including why people invest in stocks, where they can invest, what a stock market is, how to earn money by investing in stocks, and how to get started in stock investing. The key points covered are that investing in stocks can help grow money and beat inflation, common places to invest include stocks, bonds, mutual funds and real estate, a stock market is where people buy and sell shares of public companies, and investors can earn money from price appreciation and dividends. Steps to get started include learning the basics, finding a reliable broker, opening an account, making deposits, and starting to invest.
This document provides an introduction to hedge funds and their relationship to mergers and acquisitions (M&A). It defines hedge funds as privately managed investment vehicles that can invest in a variety of assets and employ various strategies to generate returns. The document notes that hedge funds are involved in leveraged buyouts and provide debt financing for these deals. It highlights advantages hedge funds have in terms of leverage, investment choices, and regulatory requirements. The document also contrasts hedge funds with mutual funds and describes common hedge fund investment strategies and fees. It provides an overview of merger arbitrage as a strategy that aims to profit from inefficiencies in merger deal pricing.
This document discusses mutual funds, including what they are, their benefits, types of mutual funds, and how to invest in them. A mutual fund is a way for individual investors to pool their money together into a professionally managed investment fund that invests in stocks, bonds, and other securities. The main benefits of mutual funds are professional management, diversification of risk, convenience, and potential tax advantages. There are various types of mutual funds such as equity funds, debt funds, balanced funds, and fund of funds. To invest in a mutual fund, an investor must complete the Know Your Customer process, choose a fund type based on their goals and risk tolerance, select a fund, and set up automatic contributions through a systematic investment plan
A mutual fund is a professionally managed investment scheme that pools money from many investors to purchase stocks, bonds and other securities. It allows individual investors to diversify their holdings and benefit from professional fund management at a low cost. The money collected is invested in different securities and the income and capital appreciation is shared by unit holders proportionate to their investment. Mutual funds provide an opportunity for common investors to invest in a basket of securities with a relatively small amount of money.
Introduction to Stocks, Bonds, Mutual fundsaniruddha4104
This document provides an introduction to stocks, bonds, and mutual funds. Stocks represent ownership in a company and can generate returns through dividends or price appreciation, but carry more risk. Bonds provide predictable interest income with less risk. Mutual funds allow investors to pool money and gain exposure to a variety of assets through a single investment. The appropriate investment choice depends on an individual's risk tolerance, goals, and need for diversification.
Investment products vary in risk, return and duration. So do investor objectives. Successfully matching financial instruments with financial plans takes skill, know how and ability.
1) The document discusses the history and purpose of stock markets, which originated with the Dutch East India Company in the 17th century and allow companies to raise money by selling shares.
2) Stock markets are organized marketplaces that help discover stock prices and prevent powerful groups from influencing markets for their own benefit.
3) The document also covers stock splits, dividend discount models for valuing stocks based on expected future dividends, and the inherent volatility of stock markets.
Types of unit trust funds available in Malaysia include equity funds, fixed income funds, money market funds, real estate investment trusts, exchange traded funds, balanced funds, and Syariah funds. Equity funds provide exposure to companies listed on Bursa Malaysia and come in forms like aggressive growth funds and index funds. Fixed income and money market funds invest in bonds and short-term instruments. Real estate investment trusts allow investment in property markets. Balanced funds maintain a mix of equities, bonds and cash. Syariah funds exclude companies incompatible with Islamic principles.
Stanford CS 007-07 (2019): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given in November 2019. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Stanford CS 007-07 (2020): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on October 27, 2020. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Stanford CS 007-07 (2021): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on November 9, 2021. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Mutual funds pool money from investors and invest it in stocks, bonds, and other securities. The money collected is invested in capital market instruments to earn income and capital appreciation, which is then shared by unit holders proportionate to their investment. A mutual fund allows small investors to participate in a diversified portfolio managed by professionals at a low cost. SEBI defines mutual funds as funds established in the form of a trust to raise money through unit sales to the public under various schemes for investing in accordance with regulations.
Clueless about investments? They are not as hard as you think. This workshop was created to help participants understand the basics of the financial instruments that they can use to achieve their goals.
Stanford CS 007-07: Personal Finance for Engineers / Good Investing is BoringAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on November 7, 2017. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Stanford CS 007-07 (2018): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on November 6, 2018. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
This document provides information about mutual funds in South Africa and India by comparing their respective markets. It discusses what mutual funds are, their advantages and disadvantages, and the types of mutual funds. For South Africa, it outlines the major mutual funds, market regulators, and why people invest in mutual funds. For India, it discusses the history and introduction of mutual funds in the country. The key comparison points are that South Africa has multiple regulators while India only has one, South Africa's market is more developed while India's is still growing, and South Africa has over 50 funds while India has under 50.
This document provides information on AIA Capital Technology Fund, L.L.C., a long/short technology hedge fund. It discloses various risks and that this is not an offer to sell investments. The fund will utilize five investment strategies focused on technology companies, including new issue equities and debt securities. It is targeted at institutional investors like pension funds. The management team has over 50 years of combined experience. The goal is to achieve $50 million in assets under management by utilizing proprietary strategies and risk management processes.
This document provides an overview of stock investing, including why people invest in stocks, where they can invest, what a stock market is, how to earn money by investing in stocks, and how to get started in stock investing. The key points covered are that investing in stocks can help grow money and beat inflation, common places to invest include stocks, bonds, mutual funds and real estate, a stock market is where people buy and sell shares of public companies, and investors can earn money from price appreciation and dividends. Steps to get started include learning the basics, finding a reliable broker, opening an account, making deposits, and starting to invest.
This document provides an introduction to hedge funds and their relationship to mergers and acquisitions (M&A). It defines hedge funds as privately managed investment vehicles that can invest in a variety of assets and employ various strategies to generate returns. The document notes that hedge funds are involved in leveraged buyouts and provide debt financing for these deals. It highlights advantages hedge funds have in terms of leverage, investment choices, and regulatory requirements. The document also contrasts hedge funds with mutual funds and describes common hedge fund investment strategies and fees. It provides an overview of merger arbitrage as a strategy that aims to profit from inefficiencies in merger deal pricing.
This document discusses mutual funds, including what they are, their benefits, types of mutual funds, and how to invest in them. A mutual fund is a way for individual investors to pool their money together into a professionally managed investment fund that invests in stocks, bonds, and other securities. The main benefits of mutual funds are professional management, diversification of risk, convenience, and potential tax advantages. There are various types of mutual funds such as equity funds, debt funds, balanced funds, and fund of funds. To invest in a mutual fund, an investor must complete the Know Your Customer process, choose a fund type based on their goals and risk tolerance, select a fund, and set up automatic contributions through a systematic investment plan
A mutual fund is a professionally managed investment scheme that pools money from many investors to purchase stocks, bonds and other securities. It allows individual investors to diversify their holdings and benefit from professional fund management at a low cost. The money collected is invested in different securities and the income and capital appreciation is shared by unit holders proportionate to their investment. Mutual funds provide an opportunity for common investors to invest in a basket of securities with a relatively small amount of money.
Introduction to Stocks, Bonds, Mutual fundsaniruddha4104
This document provides an introduction to stocks, bonds, and mutual funds. Stocks represent ownership in a company and can generate returns through dividends or price appreciation, but carry more risk. Bonds provide predictable interest income with less risk. Mutual funds allow investors to pool money and gain exposure to a variety of assets through a single investment. The appropriate investment choice depends on an individual's risk tolerance, goals, and need for diversification.
Investment products vary in risk, return and duration. So do investor objectives. Successfully matching financial instruments with financial plans takes skill, know how and ability.
1) The document discusses the history and purpose of stock markets, which originated with the Dutch East India Company in the 17th century and allow companies to raise money by selling shares.
2) Stock markets are organized marketplaces that help discover stock prices and prevent powerful groups from influencing markets for their own benefit.
3) The document also covers stock splits, dividend discount models for valuing stocks based on expected future dividends, and the inherent volatility of stock markets.
Types of unit trust funds available in Malaysia include equity funds, fixed income funds, money market funds, real estate investment trusts, exchange traded funds, balanced funds, and Syariah funds. Equity funds provide exposure to companies listed on Bursa Malaysia and come in forms like aggressive growth funds and index funds. Fixed income and money market funds invest in bonds and short-term instruments. Real estate investment trusts allow investment in property markets. Balanced funds maintain a mix of equities, bonds and cash. Syariah funds exclude companies incompatible with Islamic principles.
Stanford CS 007-07 (2019): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given in November 2019. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Stanford CS 007-07 (2020): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on October 27, 2020. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Stanford CS 007-07 (2021): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on November 9, 2021. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Mutual funds pool money from investors and invest it in stocks, bonds, and other securities. The money collected is invested in capital market instruments to earn income and capital appreciation, which is then shared by unit holders proportionate to their investment. A mutual fund allows small investors to participate in a diversified portfolio managed by professionals at a low cost. SEBI defines mutual funds as funds established in the form of a trust to raise money through unit sales to the public under various schemes for investing in accordance with regulations.
Clueless about investments? They are not as hard as you think. This workshop was created to help participants understand the basics of the financial instruments that they can use to achieve their goals.
Stanford CS 007-07: Personal Finance for Engineers / Good Investing is BoringAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on November 7, 2017. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Stanford CS 007-07 (2018): Personal Finance for Engineers / InvestingAdam Nash
These are the slides from the 7th session of the Stanford University class, CS 007 "Personal Finance for Engineers" given on November 6, 2018. This seminar covers compounding, types of investments, diversification, how to invest, and the four keys to good investing (all boring).
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
SATTA MATKA SATTA FAST RESULT KALYAN TOP MATKA RESULT KALYAN SATTA MATKA FAST RESULT MILAN RATAN RAJDHANI MAIN BAZAR MATKA FAST TIPS RESULT MATKA CHART JODI CHART PANEL CHART FREE FIX GAME SATTAMATKA ! MATKA MOBI SATTA 143 spboss.in TOP NO1 RESULT FULL RATE MATKA ONLINE GAME PLAY BY APP SPBOSS
Top mailing list providers in the USA.pptxJeremyPeirce1
Discover the top mailing list providers in the USA, offering targeted lists, segmentation, and analytics to optimize your marketing campaigns and drive engagement.
Industrial Tech SW: Category Renewal and CreationChristian Dahlen
Every industrial revolution has created a new set of categories and a new set of players.
Multiple new technologies have emerged, but Samsara and C3.ai are only two companies which have gone public so far.
Manufacturing startups constitute the largest pipeline share of unicorns and IPO candidates in the SF Bay Area, and software startups dominate in Germany.
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...my Pandit
Explore the fascinating world of the Gemini Zodiac Sign. Discover the unique personality traits, key dates, and horoscope insights of Gemini individuals. Learn how their sociable, communicative nature and boundless curiosity make them the dynamic explorers of the zodiac. Dive into the duality of the Gemini sign and understand their intellectual and adventurous spirit.
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
Storytelling is an incredibly valuable tool to share data and information. To get the most impact from stories there are a number of key ingredients. These are based on science and human nature. Using these elements in a story you can deliver information impactfully, ensure action and drive change.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.AnnySerafinaLove
This letter, written by Kellen Harkins, Course Director at Full Sail University, commends Anny Love's exemplary performance in the Video Sharing Platforms class. It highlights her dedication, willingness to challenge herself, and exceptional skills in production, editing, and marketing across various video platforms like YouTube, TikTok, and Instagram.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
MUTUAL FUNDS.pptx
1.
2. IN SIMPLE TERMS!
• A MUTUAL FUND IS A TYPE OF FINANCIAL VEHICLE MADE UP OF A POOL OF
MONEY COLLECTED FROM MANY INVESTORS TO INVEST IN SECURITIES LIKE
STOCKS, BONDS, MONEY MARKET INSTRUMENTS, AND OTHER ASSETS.
• THE VALUE OF THE MUTUAL FUND COMPANY DEPENDS ON THE PERFORMANCE OF
THE SECURITIES IT DECIDES TO BUY
• INVESTING IN A SHARE OF A MUTUAL FUND IS DIFFERENT FROM INVESTING IN
SHARES OF STOCK.
• THE AVERAGE MUTUAL FUND HOLDS OVER A HUNDRED DIFFERENT SECURITIES,
WHICH MEANS MUTUAL FUND SHAREHOLDERS GAIN IMPORTANT DIVERSIFICATION
AT A LOW PRICE.
3. PRICING
• INVESTING IN A SHARE OF A MUTUAL FUND IS DIFFERENT FROM INVESTING IN
SHARES OF STOCK.
• THAT'S WHY THE PRICE OF A MUTUAL FUND SHARE IS REFERRED TO AS THE NET
ASSET VALUE (NAV) PER SHARE
• NAV= TOTAL VALUE OF SECURITIES IN THE PORTFOLIO
TOTAL AMOUNT OF SHARES OUTSTANDING
• THE PRICE OF A MUTUAL FUND IS ALSO UPDATED WHEN THE NAVPS IS SETTLED.
5. HOW THEY WORK
• INCOME IS EARNED FROM DIVIDENDS ON STOCKS AND INTEREST ON BONDS
HELD IN THE FUND'S PORTFOLIO.
• IF THE FUND SELLS SECURITIES THAT HAVE INCREASED IN PRICE, THE FUND
HAS A CAPITAL GAIN. MOST FUNDS ALSO PASS ON THESE GAINS TO
INVESTORS IN A DISTRIBUTION.
• IF FUND HOLDINGS INCREASE IN PRICE BUT ARE NOT SOLD BY THE FUND
MANAGER, THE FUND'S SHARES INCREASE IN PRICE.
• IF A MUTUAL FUND IS CONSTRUED AS A VIRTUAL COMPANY, ITS CEO IS
THE FUND MANAGER, SOMETIMES CALLED ITS INVESTMENT ADVISER. THE
FUND MANAGER IS HIRED BY A BOARD OF DIRECTORS AND IS LEGALLY
OBLIGATED TO WORK IN THE BEST INTEREST OF MUTUAL FUND
SHAREHOLDERS. MOST FUND MANAGERS ARE ALSO OWNERS OF THE FUND.
6. • THE INVESTMENT ADVISER OR FUND MANAGER MAY EMPLOY SOME ANALYSTS
TO HELP PICK INVESTMENTS OR PERFORM MARKET RESEARCH. A FUND
ACCOUNTANT IS KEPT ON STAFF TO CALCULATE THE FUND'S NAV, THE DAILY
VALUE OF THE PORTFOLIO THAT DETERMINES IF SHARE PRICES GO UP OR
DOWN. MUTUAL FUNDS NEED TO HAVE A COMPLIANCE OFFICER OR TWO, AND
PROBABLY AN ATTORNEY, TO KEEP UP WITH GOVERNMENT REGULATIONS.
• MOST MUTUAL FUNDS ARE PART OF A MUCH LARGER INVESTMENT COMPANY;
THE BIGGEST HAVE HUNDREDS OF SEPARATE MUTUAL FUNDS. SOME OF
THESE FUND COMPANIES ARE:
1. ADITYA BIRLA SUN LIFE MUTUAL FUND
2. AXIS MUTUAL FUND
3. HDFC MUTUAL FUND
4. ICICI PRUDENTIAL MUTUAL FUND
7. TYPES
• MUTUAL FUNDS ARE DIVIDED INTO SEVERAL KINDS OF CATEGORIES,
REPRESENTING THE KINDS OF SECURITIES THEY HAVE TARGETED FOR THEIR
PORTFOLIOS AND THE TYPE OF RETURNS THEY SEEK. THERE IS A FUND FOR
NEARLY EVERY TYPE OF INVESTOR OR INVESTMENT APPROACH. OTHER
COMMON TYPES OF MUTUAL FUNDS INCLUDE MONEY MARKET
FUNDS, SECTOR FUNDS, ALTERNATIVE FUNDS, SMART-BETA FUNDS, TARGET-
DATE FUNDS, AND EVEN FUNDS OF FUNDS, OR MUTUAL FUNDS THAT BUY
SHARES OF OTHER MUTUAL FUNDS
CONTD.
8. EQUITY FUNDS
• THE LARGEST CATEGORY IS THAT OF EQUITY OR STOCK FUNDS.
• WITHIN THIS GROUP ARE VARIOUS SUBCATEGORIES. SOME EQUITY FUNDS ARE NAMED FOR
THE SIZE OF THE COMPANIES THEY INVEST IN: SMALL-, MID-, OR LARGE-CAP. OTHERS ARE
NAMED BY THEIR INVESTMENT APPROACH: AGGRESSIVE GROWTH, INCOME-ORIENTED,
VALUE, AND OTHERS.
• EQUITY FUNDS ARE ALSO CATEGORIZED BY WHETHER THEY INVEST IN DOMESTIC STOCKS
OR FOREIGN EQUITIES. THERE ARE SO MANY DIFFERENT TYPES OF EQUITY FUNDS
BECAUSE THERE ARE MANY DIFFERENT TYPES OF EQUITIES
• THE TERM VALUE FUND REFERS TO A STYLE OF INVESTING THAT LOOKS FOR HIGH-QUALITY,
LOW-GROWTH COMPANIES THAT ARE OUT OF FAVOR WITH THE MARKET. THESE COMPANIES
ARE CHARACTERIZED BY LOW PRICE-TO-EARNINGS (P/E) RATIOS, LOW PRICE-TO-BOOK
(P/B) RATIOS, AND HIGH DIVIDEND YIELDS. CONVERSELY, SPECTRUMS ARE GROWTH FUNDS,
WHICH LOOK TO COMPANIES THAT HAVE HAD (AND ARE EXPECTED TO HAVE) STRONG
GROWTH IN EARNINGS, SALES, AND CASH FLOWS. THESE COMPANIES TYPICALLY HAVE
HIGH P/E RATIOS AND DO NOT PAY DIVIDENDS.
9. A great way to
understand the
universe of equity
funds is to use a style
box
10. • LARGE-CAP COMPANIES HAVE HIGH MARKET CAPITALIZATIONS, WITH VALUES OVER $10
BILLION. MARKET CAP IS DERIVED BY MULTIPLYING THE SHARE PRICE BY THE NUMBER
OF SHARES OUTSTANDING. LARGE-CAP STOCKS ARE TYPICALLY BLUE CHIP FIRMS THAT
ARE OFTEN RECOGNIZABLE BY NAME. SMALL-CAP STOCKS REFER TO THOSE STOCKS
WITH A MARKET CAP RANGING FROM $300 MILLION TO $2 BILLION. THESE SMALLER
COMPANIES TEND TO BE NEWER, RISKIER INVESTMENTS. MID-CAP STOCKS FILL IN THE
GAP BETWEEN SMALL- AND LARGE-CAP.
• A MUTUAL FUND MAY BLEND ITS STRATEGY BETWEEN INVESTMENT STYLE AND
COMPANY SIZE. FOR EXAMPLE, A LARGE-CAP VALUE FUND WOULD LOOK TO LARGE-CAP
COMPANIES THAT ARE IN STRONG FINANCIAL SHAPE BUT HAVE RECENTLY SEEN THEIR
SHARE PRICES FALL AND WOULD BE PLACED IN THE UPPER LEFT QUADRANT OF THE
STYLE BOX (LARGE AND VALUE). THE OPPOSITE OF THIS WOULD BE A FUND THAT
INVESTS IN STARTUP TECHNOLOGY COMPANIES WITH EXCELLENT GROWTH
PROSPECTS: SMALL-CAP GROWTH. SUCH A MUTUAL FUND WOULD RESIDE IN THE
BOTTOM RIGHT QUADRANT (SMALL AND GROWTH).[REF TO THE EQUITY STYLE BOX]
11. FIXED INCOME FUNDS
• ANOTHER BIG GROUP IS THE FIXED INCOME CATEGORY. A FIXED-INCOME
MUTUAL FUND FOCUSES ON INVESTMENTS THAT PAY A SET RATE OF RETURN,
SUCH AS GOVERNMENT BONDS, CORPORATE BONDS, OR OTHER DEBT
INSTRUMENTS. THE IDEA IS THAT THE FUND PORTFOLIO GENERATES INTEREST
INCOME, WHICH IT THEN PASSES ON TO THE SHAREHOLDERS
• SOMETIMES REFERRED TO AS BOND FUNDS, THESE FUNDS ARE
OFTEN ACTIVELY MANAGED AND SEEK TO BUY RELATIVELY UNDERVALUED
BONDS IN ORDER TO SELL THEM AT A PROFIT. THESE MUTUAL FUNDS ARE
LIKELY TO PAY HIGHER RETURNS THAN CERTIFICATES OF DEPOSIT AND
MONEY MARKET INVESTMENTS, BUT BOND FUNDS AREN'T WITHOUT RISK.
12. INDEX FUNDS
• ANOTHER GROUP, WHICH HAS BECOME EXTREMELY POPULAR IN THE LAST
FEW YEARS, FALLS UNDER THE MONIKER "INDEX FUNDS.“
• THEIR INVESTMENT STRATEGY IS BASED ON THE BELIEF THAT IT IS VERY
HARD, AND OFTEN EXPENSIVE, TO TRY TO BEAT THE MARKET
CONSISTENTLY. SO, THE INDEX FUND MANAGER BUYS STOCKS THAT
CORRESPOND WITH A MAJOR MARKET INDEX.
13. BALANCED FUNDS
• BALANCED FUNDS INVEST IN A HYBRID OF ASSET CLASSES, WHETHER STOCKS,
BONDS, MONEY MARKET INSTRUMENTS, OR ALTERNATIVE INVESTMENTS. THE
OBJECTIVE IS TO REDUCE THE RISK OF EXPOSURE ACROSS ASSET CLASSES.THIS KIND
OF FUND IS ALSO KNOWN AS AN ASSET ALLOCATION FUND. THERE ARE TWO
VARIATIONS OF SUCH FUNDS DESIGNED TO CATER TO THE INVESTORS OBJECTIVES.
• SOME FUNDS ARE DEFINED WITH A SPECIFIC ALLOCATION STRATEGY THAT IS FIXED, SO
THE INVESTOR CAN HAVE A PREDICTABLE EXPOSURE TO VARIOUS ASSET CLASSES.
OTHER FUNDS FOLLOW A STRATEGY FOR DYNAMIC ALLOCATION PERCENTAGES TO
MEET VARIOUS INVESTOR OBJECTIVES.
• WHILE THE OBJECTIVES ARE SIMILAR TO THOSE OF A BALANCED FUND, DYNAMIC
ALLOCATION FUNDS DO NOT HAVE TO HOLD A SPECIFIED PERCENTAGE OF ANY ASSET
CLASS.
14. MONEY MARKET FUNDS
• THE MONEY MARKET CONSISTS OF SAFE (RISK-FREE), SHORT-TERM DEBT
INSTRUMENTS, MOSTLY GOVERNMENT TREASURY BILLS
• A TYPICAL RETURN IS A LITTLE MORE THAN THE AMOUNT YOU WOULD EARN IN
A REGULAR CHECKING OR SAVINGS ACCOUNT AND A LITTLE LESS THAN THE
AVERAGE CERTIFICATE OF DEPOSIT (CD).
15. INCOME FUNDS
• INCOME FUNDS ARE NAMED FOR THEIR PURPOSE: TO PROVIDE CURRENT
INCOME ON A STEADY BASIS. THESE FUNDS INVEST PRIMARILY IN
GOVERNMENT AND HIGH-QUALITY CORPORATE DEBT, HOLDING THESE BONDS
UNTIL MATURITY IN ORDER TO PROVIDE INTEREST STREAMS.
• WHILE FUND HOLDINGS MAY APPRECIATE IN VALUE, THE PRIMARY OBJECTIVE
OF THESE FUNDS IS TO PROVIDE STEADY CASH FLOW TO INVESTORS.
16. INTERNATIONAL/GLOBAL FUNDS
• AN INTERNATIONAL FUND (OR FOREIGN FUND) INVESTS ONLY IN ASSETS
LOCATED OUTSIDE YOUR HOME COUNTRY. GLOBAL FUNDS, MEANWHILE, CAN
INVEST ANYWHERE AROUND THE WORLD, INCLUDING WITHIN YOUR HOME
COUNTRY.
• ON THE FLIP SIDE, THEY CAN, AS PART OF A WELL-BALANCED PORTFOLIO,
ACTUALLY REDUCE RISK BY INCREASING DIVERSIFICATION, SINCE THE
RETURNS IN FOREIGN COUNTRIES MAY BE UNCORRELATED WITH RETURNS AT
HOME. ALTHOUGH THE WORLD'S ECONOMIES ARE BECOMING MORE
INTERRELATED, IT IS STILL LIKELY THAT ANOTHER ECONOMY SOMEWHERE IS
OUTPERFORMING THE ECONOMY OF ONES’ HOME COUNTRY.
17. SPECIALITY FUNDS’
• THIS CLASSIFICATION OF MUTUAL FUNDS IS MORE OF AN ALL-ENCOMPASSING
CATEGORY THAT CONSISTS OF FUNDS THAT HAVE PROVED TO BE POPULAR BUT DON'T
NECESSARILY BELONG TO THE MORE RIGID CATEGORIES WE'VE DESCRIBED SO FAR.
• . SECTOR FUNDS ARE TARGETED STRATEGY FUNDS AIMED AT SPECIFIC SECTORS OF
THE ECONOMY, SUCH AS FINANCIAL, TECHNOLOGY, HEALTH, AND SO ON. THERE IS A
GREATER POSSIBILITY FOR LARGE GAINS, BUT A SECTOR MAY ALSO COLLAPSE
• REGIONAL FUNDS MAKE IT EASIER TO FOCUS ON A SPECIFIC GEOGRAPHIC AREA OF
THE WORLDAN ADVANTAGE OF THESE FUNDS IS THAT THEY MAKE IT EASIER TO BUY
STOCK IN FOREIGN COUNTRIES, WHICH CAN OTHERWISE BE DIFFICULT AND
EXPENSIVE.
• SOCIALLY RESPONSIBLE FUNDS (OR ETHICAL FUNDS) INVEST ONLY IN COMPANIES THAT
MEET THE CRITERIA OF CERTAIN GUIDELINES OR BELIEFS. FOR EXAMPLE, SOME
SOCIALLY RESPONSIBLE FUNDS DO NOT INVEST IN "SIN" INDUSTRIES SUCH AS
TOBACCO, ALCOHOLIC BEVERAGES, WEAPONS, OR NUCLEAR POWER.
18. EXCHANGE TRADED FUNDS (ETF)
• A TWIST ON THE MUTUAL FUND IS THE EXCHANGE TRADED FUND (ETF). THESE EVER MORE
POPULAR INVESTMENT VEHICLES POOL INVESTMENTS AND EMPLOY STRATEGIES
CONSISTENT WITH MUTUAL FUNDS, BUT THEY ARE STRUCTURED AS INVESTMENT TRUSTS
THAT ARE TRADED ON STOCK EXCHANGES AND HAVE THE ADDED BENEFITS OF THE
FEATURES OF STOCKS.
• ETFS ALSO TYPICALLY CARRY LOWER FEES THAN THE EQUIVALENT MUTUAL FUND. MANY
ETFS ALSO BENEFIT FROM ACTIVE OPTIONS MARKETS, WHERE INVESTORS
CAN HEDGE OR LEVERAGE THEIR POSITIONS.
• BENEFIT FROM ACTIVE OPTIONS MARKETS, WHERE INVESTORS
CAN HEDGE OR LEVERAGE THEIR POSITIONS. ETFS ALSO ENJOY TAX ADVANTAGES FROM
MUTUAL FUNDS. COMPARED TO MUTUAL FUNDS, ETFS TEND TO BE MORE COST EFFECTIVE
AND MORE LIQUID. THE POPULARITY OF ETFS SPEAKS TO THEIR VERSATILITY AND
CONVENIENCE.
19. MUTUAL FUND FEES
annual operating fees Shareholder fees
Annual fund operating fees are an annual percentage of
the funds under management, usually ranging from 1–3%.
Shareholder fees, which come in the form of sales charges,
commissions, and redemption fees, are paid directly by
investors when purchasing or selling the funds.
Annual operating fees are collectively known as
the expense ratio. A fund's expense ratio is the summation
of the advisory or management fee and its administrative
costs.
Sales charges or commissions are known as "the load" of a
mutual fund. When a mutual fund has a front-end load, fees
are assessed when shares are purchased. For a back-end
load, mutual fund fees are assessed when an investor sells
his shares.
Sometimes, however, an investment company offers a no-
load mutual fund, which doesn't carry any commission or
sales charge. These funds are distributed directly by an
investment company, rather than through a secondary
party.
20. CLASSES OF MUTUAL FUND SHARES
• MUTUAL FUND SHARES COME IN SEVERAL CLASSES. THEIR DIFFERENCES
REFLECT THE NUMBER AND SIZE OF FEES ASSOCIATED WITH THEM.
• CURRENTLY MOST MUTUAL FUNDS COME IN THREE TYPES OF SHARES. ‘A’, ‘B’
AND ‘C’.
21. ADVANTAGES
• DIVERSIFICATION: DIVERSIFICATION, OR THE MIXING OF INVESTMENTS AND ASSETS WITHIN A
PORTFOLIO TO REDUCE RISK, IS ONE OF THE ADVANTAGES OF INVESTING IN MUTUAL
FUNDS. EXPERTS ADVOCATE DIVERSIFICATION AS A WAY OF ENHANCING A PORTFOLIO'S
RETURNS, WHILE REDUCING ITS RISK. A TRULY DIVERSIFIED PORTFOLIO HAS SECURITIES
WITH DIFFERENT CAPITALIZATIONS AND INDUSTRIES AND BONDS WITH VARYING
MATURITIES AND ISSUERS.
• EASY ACCESS: TRADING ON THE MAJOR STOCK EXCHANGES, MUTUAL FUNDS CAN BE
BOUGHT AND SOLD WITH RELATIVE EASE, MAKING THEM HIGHLY LIQUID INVESTMENTS.
ALSO, WHEN IT COMES TO CERTAIN TYPES OF ASSETS, LIKE FOREIGN EQUITIES OR
EXOTIC COMMODITIES, MUTUAL FUNDS ARE OFTEN THE MOST FEASIBLE WAY—IN FACT,
SOMETIMES THE ONLY WAY—FOR INDIVIDUAL INVESTORS TO PARTICIPATE.
• ECONOMIES OF SCALE: MUTUAL FUNDS ALSO PROVIDE ECONOMIES OF SCALE. BUYING
ONE SPARES THE INVESTOR OF THE NUMEROUS COMMISSION CHARGES NEEDED TO
CREATE A DIVERSIFIED PORTFOLIO. BUYING ONLY ONE SECURITY AT A TIME LEADS TO
LARGE TRANSACTION FEES, WHICH WILL EAT UP A GOOD CHUNK OF THE INVESTMENT.
22. • BECAUSE A MUTUAL FUND BUYS AND SELLS LARGE AMOUNTS OF SECURITIES AT A TIME,
ITS TRANSACTION COSTS ARE LOWER THAN WHAT AN INDIVIDUAL WOULD PAY FOR
SECURITIES TRANSACTIONS. MOREOVER, A MUTUAL FUND, SINCE IT POOLS MONEY
FROM MANY SMALLER INVESTORS, CAN INVEST IN CERTAIN ASSETS OR TAKE LARGER
POSITIONS THAN A SMALLER INVESTOR COULD.
• PROFESSIONAL MANAGEMENT: A PROFESSIONAL INVESTMENT MANAGER TAKES CARE
OF ALL OF THIS USING CAREFUL RESEARCH AND SKILLFUL TRADING.
• VARIETY AND FREEDOM OF CHOICE
• TRANSPARENCY: MUTUAL FUNDS ARE SUBJECT TO INDUSTRY REGULATION THAT
ENSURES ACCOUNTABILITY AND FAIRNESS TO INVESTORS.
PROS CONS
LIQUIDUTY HIGH FEES, COMMISSION AND OTHER EXPENSES
DIVERSIFICATON LARGE CASH PRESENCE IN PORTFOLIOS
MINIMAL INVESTMENT REQUIREMENTS DIFFICULTY IN COMPARING FUNDS
PROFESSIONAL MANAGEMENT LACK OF TRANSPARENCY IN HOLDIMGS
VARIETY OF OFFERINGS
23. DISADVANTAGES
• FLUCTUATING RETURNS: LIKE MANY OTHER INVESTMENTS WITHOUT A GUARANTEED RETURN,
THERE IS ALWAYS THE POSSIBILITY THAT THE VALUE OF YOUR MUTUAL FUND
WILL DEPRECIATE. EQUITY MUTUAL FUNDS EXPERIENCE PRICE FLUCTUATIONS, ALONG
WITH THE STOCKS THAT MAKE UP THE FUND
• CASH DRAG: TO MAINTAIN LIQUIDITY AND THE CAPACITY TO ACCOMMODATE WITHDRAWALS,
FUNDS TYPICALLY HAVE TO KEEP A LARGER PORTION OF THEIR PORTFOLIO AS CASH
THAN A TYPICAL INVESTOR MIGHT. BECAUSE CASH EARNS NO RETURN, IT IS OFTEN
REFERRED TO AS A "CASH DRAG.“
• HIGH COSTS: MUTUAL FUNDS PROVIDE INVESTORS WITH PROFESSIONAL MANAGEMENT,
BUT IT COMES AT A COST—THOSE EXPENSE RATIOS MENTIONED EARLIER. THESE FEES
REDUCE THE FUND'S OVERALL PAYOUT, AND THEY'RE ASSESSED TO MUTUAL FUND
INVESTORS REGARDLESS OF THE PERFORMANCE OF THE FUND.
• EXCESS DIVERSIFICATION AND DILUTION: DILUTION IS THE RESULT OF A SUCCESSFUL FUND
GROWING TOO BIG.
24. • ACTIVE FUND MANAGEMENT: MANAGEMENT IS BY NO MEANS INFALLIBLE, AND EVEN IF THE
FUND LOSES MONEY, THE MANAGER STILL GETS PAID. ACTIVELY MANAGED FUNDS
INCUR HIGHER FEES, BUT INCREASINGLY PASSIVE INDEX FUNDS HAVE GAINED
POPULARITY.
• LACK OF LIQUIDITY: A MUTUAL FUND ALLOWS YOU TO REQUEST THAT YOUR SHARES BE
CONVERTED INTO CASH AT ANY TIME, HOWEVER, UNLIKE STOCK THAT TRADES
THROUGHOUT THE DAY, MANY MUTUAL FUND REDEMPTIONS TAKE PLACE ONLY AT THE
END OF EACH TRADING DAY.
• TAXES: WHEN A FUND MANAGER SELLS A SECURITY, A CAPITAL-GAINS TAX IS TRIGGERED.
INVESTORS WHO ARE CONCERNED ABOUT THE IMPACT OF TAXES NEED TO KEEP
THOSE CONCERNS IN MIND WHEN INVESTING IN MUTUAL FUNDS.
• EVALUATING FUNDS
25.
26. REGULATORY FRAMEWORK
• TODAY, THE MUTUAL FUNDS ARE DISTINCTLY REGULATED AND PROVIDES EXCELLENT PROTECTION TO
INVESTORS. THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) IS THE KEY AUTHORITY WHICH
FORMULATES POLICIES AND PROCEDURES, ISSUES GUIDELINES AND REGULATES THE MUTUAL FUNDS.
• THE MUTUAL FUNDS WHICH DEAL EXCLUSIVELY WITH MONEY MARKET AND OTHER SCHEME REQUIRE
REGISTRATION WITH RESERVE BANK OF INDIA. IT REGULATES NRIS INVESTING IN INDIA AND ISSUES
RELATING TO OWNERSHIP OF ASSET MANAGEMENT COMPANIES BY BANK AND SUPERVISES OPERATION OF
FUND OWNED BY BANK.
• FURTHER, THE MINISTRY OF FINANCE SUPERVISES BOTH RESERVE BANK OF INDIA AND SECURITIES AND
EXCHANGE BOARD OF INDIA IN THEIR RESPECTIVE FUNCTIONING. AN APPEAL AGAINST SECURITIES AND
EXCHANGE BOARD OF INDIA RULING CAN BE MADE TO THE MINISTRY OF FINANCE. ADDITIONALLY, SINCE
THE CORPORATE TRUSTEES AND ASSET MANAGEMENT COMPANIES ARE REGISTERED UNDER THE COMPANIES
ACT, 1956 THEY ARE ANSWERABLE TO THE REGULATORY AUTHORITIES ASSOCIATED THERETO
27. • WHEN AN INVESTOR INVESTS IN MUTUAL FUNDS HE IS NOT ONLY GUARANTEED THE FLEXIBILITY IN THE OPERATIONAL
FUNCTIONING BUT ALSO, THE RETURNS ARE ALLURING. PRIMARILY, THE UNIT TRUST OF INDIA FOUNDED UNDER THE
UNIT TRUST OF INDIA ACT, 1963 WAS ASSIGNED WITH THE RESPONSIBILITY OF REGULATING MUTUAL FUNDS IN INDIA.
LATER ON, THE UNIT TRUST OF INDIA WAS REPEALED BY THE UTI REPEAL ACT 2002 AND THE AUTHORITY WAS BESTOWED
UPON THE SECURITIES AND EXCHANGE BOARD OF INDIA.
• AT PRESENT, THE MATRIX ASSOCIATED WITH THE MUTUAL FUNDS INDUSTRY IS CONTROLLED BY NUMEROUS BODIES
INCLUDING SECURITIES EXCHANGE BOARD OF INDIA, MINISTRY OF FINANCE, RESERVE BANK OF INDIA, ASSOCIATION OF
MUTUAL FUNDS IN INDIA, INVESTORS ASSOCIATION AND INCOME TAX REGULATIONS. THE REGULATION OF MUTUAL
FUNDS SCHEMES BY SECURITIES EXCHANGE BOARD OF INDIA AND OTHER REGULATORY BODIES HELPS PROMOTE NOT
ONLY TRANSPARENCY AND CONFIDENTIALITY BUT ALSO, PAVES THE WAY FOR INDUSTRIALIZATION AND ENSURES
STABILITY OF CASH FLOW.
28. • THE ASSOCIATION OF MUTUAL FUNDS PERFORMS SELF-REGULATING FUNCTIONS
• AS PER THE PROVISO PRESENT IN THE SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) REGULATIONS
1996 AN INDIVIDUAL IS REQUIRED TO REGISTER HIMSELF WITH THE BOARD BEFORE SETTING UP MUTUAL FIND.. THE SET
UP MUST BE IN THE FORM OF A TRUST AND IN COMPLIANCE WITH THE INDIAN TRUSTS ACT, 1882. THE FORMAT OF
INSTRUMENT MUST BE OF A DEED EXECUTED BETWEEN THE SPONSOR AND THE TRUSTEES OF THE MUTUAL FUND AND
REGISTERED AS PER THE INDIAN REGISTRATION ACT, 1908
• THE BOARD HAS BEEN CONFERRED POWER U/S 30 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT,
1992. CHAPTER I AND II OF THE REGULATIONS DEALS PRELIMINARY WITH THE INTRODUCTION AND
REGISTRATION RESPECTIVELY. THE ESTABLISHMENT AND MANAGEMENT OF MUTUAL FUNDS ALONG WITH
OPERATION HAS BEEN DISCUSSED UNDER CHAPTER III. WHILST THE SCHEME OF MUTUAL FUNDS IS DEALT
WITH UNDER CHAPTER V, THE CONSTITUTION AND MANAGEMENT OF AMC AND CUSTODIAN IS DISCUSSED IN
CHAPTER IV.
• THE SET UP OF AMC MUST HAVE 50% INDEPENDENT DIRECTORS AND A SEPARATE BOARD WHICH CONSISTS OF 50%
INDEPENDENT TRUSTEES AND CUSTODIANS EACH. FURTHER, WHILE AMC DEALS WITH THE FINDS, TRUSTEES HOLD THE
CUSTODY OF ASSETS THUS, BALANCE MUST BE MAINTAINED BETWEEN THEM.
29. • AS PER SEBI GUIDELINES CORPUS OF MINIMUM 50 CRORES AND 20 CRORES MUST BE MAINTAINED IN CASE OF OPEN-
ENDED SCHEME AND CLOSE-ENDED SCHEME RESPECTIVELY. THE MONEY RAISED THROUGH SCHEMES OUGHT TO BE
INVESTED WITHIN NINE MONTHS. IT SHALL BORROW NOT MORE THAN 20% OF THE ASSET OF SCHEME THAT TOO ONLY
WHEN NEEDED TO MEET TEMPORARY LIQUIDITY NEEDS.
• THE TRUSTEE MUST BE A PERSON OF ABILITY, INTEGRITY AND STANDING AND ENSURE LEGAL COMPLIANCE.
• THERE MUST BE CLEAR IDENTIFICATION AND APPROPRIATION OF EXPENSES IN INDIVIDUAL SCHEME. FURTHER, SEVERAL
RESTRICTIONS HAVE BEEN IMPOSED ON CLOSE-ENDED SCHEME WHICH INCLUDES BUT IS NOT LIMITED TO, DISCLOSURE
OF PORTFOLIO OF DEBT ORIENTED CLOSE END AND INTERVAL SCHEME, PROHIBITION OF DISCLOSURE OF INDICATIVE
PORTFOLIO, RESTRICTION ON INVESTMENT IN OR PURCHASE OF DEBT AND MONEY, MANDATORY LISTING OF SCHEMES
ETC.,
• THE INVESTMENT MUST BE MADE IN ACCORDANCE WITH THE OBJECTIVE OF CONCERNED MUTUAL FUND SCHEME. NO
INVESTMENT OF MORE THAN 10% OF THE NAV OF SCHEME CAN BE MADE IN EQUITY OF AN ENTERPRISE.
• RECENTLY, THE MARKET REGULATOR HAS INTRODUCED SOME CHANGES RELATING TO THE MANDATE OF MULTI CAP
FUNDS AND NAV CALCULATION. FURTHER, THE BOARD HAS INTRODUCED FLEXI CAP CATEGORY AND RISK-O-METER,
MANDATED SEGREGATION OF ADVISOR AND DISTRIBUTOR, RENAMED DIVIDEND OPTIONS AND TIGHTENED INTER-
SCHEME TRANSFER NORMS