In this presentation you will get the proper detailing of mutual funds..... This Power point presentation contains all elements of presentation

1. Presented By –
Nikhilesh Modgil
Brajesh Kumar

2. MEANING
A mutual fund is an investment vehicle made up of
a pool of money collected from many investors for
the purpose of investing in securities such
as stocks, bonds, money market instruments and
other assets.

4. NET ASSET VALUE (NAV)
Net Asset Value is the market value of all the
securities held by the scheme. It is measured on a
per-unit basis. Since market value of securities
changes every day, NAV of a scheme also varies
on day-to-day basis.

5. CALCULATION OF NAV

6. FOR EXAMPLE:-
For example, if the market value of securities of
a mutual fund scheme is Rs 200 crore and it has
issued 10 crore units to investors, then the fund’s
NAV per unit is Rs 20. NAV is required to be
disclosed by mutual funds on a regular basis –
either daily or weekly depending on the type of
scheme.

8. TYPES OF MUTUAL FUNDS
 On the basis of Structure :
1. Open-ended Funds
2. Close- ended Funds
3. Interval Funds
 On the basis of Objectives:
1. Growth Funds
2. Income Funds
3. Balance Funds
4. Tax Saving Funds

9.  On the basis of Composition Of Funds:
1. Equity Funds
2. Debt Funds
3. Money Market Mutual Funds
4. Gilt Funds
5. Sector Funds
 Other Schemes:
1. Load Funds
2. No Load Funds

11. OPEN-ENDED FUNDS
 It has units available for the free entry and exits of the investor in purchasing
and selling all the times at NAV price
 It normally provide facility to redeem existing units
 It subject to certain obvious conditions to its investors.

12. CLOSE-ENDED FUNDS
 It does not provide the facility of subscription throughout the year.
 Shares can be applied by the investors only during the initial offer period
 Units can be bought and sold only at the stock exchange where they are listed
at a market price.

13. INTERVAL FUNDS
 This is basically a combination of both open and close ended schemes.
 While units can be bought and sold by the investors at NAV related prices.
 For a certain stipulated period it is also traded in the stock exchange where it is
listed at times.

14. ON THE BASIS OF OBJECTIVES
Growth Funds
 The main objective of these funds is to reach capital appreciation instead of
dividend in the medium to long term period.
 Dividend basically is reinvested for returns in the form of capital appreciation.
 Assets of such fund are usually comprised of equity.

15. INCOME FUNDS
 It aims at generating and distributing regular income to unit holders on a
periodical basis .
 Concentrates on short term goals.
 Fixed Income Assets like corporate debentures, government securities , bonds
etc. where the fund is invested.

16. BALANCED FUNDS
 These are combination of both growth and income funds which provide both
growth as well as regular income to the investors .
 Aims at distributing regular income as well as capital appreciation.
 This can be achieved by balancing investments between high growth equity
shares and fixed income securities.

17. TAX SAVING FUNDS
 It offers tax benefits to investor under the Income Tax Act 1961.
 Government offers tax incentives for investment in specifies avenues.
eg. Equity Linked Savings Schemes , PPF , Employee Provident Fund ,
Sukanya Samriddhi Yojana ..

18. ON THE BASIS OF COMPOSITION OF
FUNDS
Equity Funds
 A major portion of the corpus of such funds is invested in equity shares
issued by companies.
 They do not offer any guaranteed repayment due to risky funds.
 NAV of such funds is influenced by price moments caused by political,
economic and social factors .
 Investors seeking capital appreciation normally invest in these funds.

19. DEBT FUNDS
 Corpus of such funds is invested in debt investment issued by government ,
private companies , banks , financial instruments .
 It provides low risks and stable income to investors.

20. MONEY MARKET MUTUAL FUNDS
 There are some highly liquid and safe securities
e.g. Commercial Papers , Certificate of deposits and treasury bills where the
corpus of such funds is invested.
 It provides liquidity and safety of principals to investors.

21. GILT FUNDS
 Government Securities and treasury bills are the main instruments for such
funds.
 Less risk of default
 It offers better protection of principal in providing timely payment of principal
and interest.

22. SECTOR FUNDS
 Stocks of particular industry or sector are identified for investing funds which
are more risky as they are not diversified
 Normally informed investor invest in these funds.

23. OTHER SCHEMES
Load Funds:-
 It charges entry or exit load each time the investor buys or sell the units of
funds
 These charges are used for distribution , sales and marketing expenses.
No Load Funds:-
 It does not change either entry or exit load on purchase or sale of units.

24. WHY CHOOSE MUTUAL FUNDS?
 PROFESSIONAL MANAGEMENT
 Easy to buy and sell
 TRANSPARENCY

25. PROFESSIONAL MANAGEMENT
You may not have the skills and knowledge to manage your own investments or
want to spend the time. Mutual funds allow you to pool your money with other
investors and leave the specific investment decisions to a portfolio manager.
Portfolio managers decide where to invest the money in the fund, and when to
buy and sell investments.

26. 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. But
you may get back less than you invested.

27. HOW TO CHOOSE A FUND

28. Past Performance
Match the scheme risk with your profile
Diversification
Costs
Patience

29. HOW TO BUY MUTUAL FUNDS :

31. COMMON MISTAKES TO AVOID WHEN
BUYING AND SELLING MUTUAL FUNDS

32. HISTORY OF MUTUAL FUNDS
INDUSTRY
 Two Scenarios:-
1. International Scenario
2. Indian Scenario

33. INTERNATIONAL SCENARIO
• Inception Phase
• Modern Mutual Fund Phase
. • Regulation and expansion Phase
.
• Development Phase
• Current Phase
History of Mutual Fund Industry

34. INCEPTION PHASE
 Mutual Funds were first introduced by King William I (Netherlands in 1822)
 Idea of mutual funds first came from a Dutch merchant (Adriaan van Ketwich )
 He felt that diversification would increase the appeal of investment to smaller investor.
 M.F. concept emerged in Switzerland in 1849 , thereafter in Scotland in 1880s.
 M.F. become popular in Great Britain , France and moved to U.S. in 1890s.
 Boston Personal Property Trust was the first closed-end fund (formed in 1893 in U.S.)

35. MODERN MUTUAL FUND PHASE
 Came into existence in 1924 in Boston.
 These funds were introduced by Massachusetts Investor Trust .
 Currently known as MFS Investment Management Company in 1928.
 In 1920s and 30s the mutual fund popularity reached a new high.
 State Street Investors Trust started its mutual fund in 1924 with Richard Paine,
Richard Saltonstall and Paul Cabot at the helm.
 Wellington Fund was initiated to include stocks and bonds in 1928.

36. REGULATION AND EXPANSION PHASE
 By 1929 there were 19 open-ended mutual funds competing with nearly 700
closed end funds.
 Stock market crash in 1929 negatively influenced the mutual fund industry
growth pace.
 Closed-end funds lost their popularity with the stock market crash in 1929 and
small open-ends funds become popular.
 Securities and Exchange Commission was formed on 6 June 1934 and the
Securities Act of 1933 and the securities Exchange Act of 1934 were enacted
to safeguard the investor interest in the U.S.
 Mutual Funds were required to be registered with the SEC and to provide
disclosure in the form of a prospectus.

37.  The Investment Company Act of 1940 was enacted to make more disclosures
and to minimize conflicts of interest
 The first international stock mutual fund was introduced in the U.S. in 1940.
 With the innovations in products and services in the 1950s and 60s mutual
funds become more popular.
 The mutual fund industry continued to expand as the number of open-ended
funds topped 100 at the beginning of the 1950s.
 1960s witnessed the rise of aggressive growth mutual funds.
 During this period, around 100 new funds were established and billions of
more dollars were invested by the investors of U.S.

38. DEVELOPMENT PHASE
 The first index mutual fund ---- established by William Fouse and John
McQuown of the Wells Fargo Bank – evolved into The VanGaurd group
known for its low price index mutual funds.
 Tremendous growth in the development of no load funds in the 1970s.
 Mutual fund industry witnessed substantial growth in the 80s and 90s when
there was a significant increase in the number of mutual funds, schemes, assets
and shareholders.
 In the U.S. mutual fund industry registered a ten –fold growth in the 80s(1980-
89)

39. CURRENT PHASE
 The year 2003 stood witness to a number of mutual fund scandals and
there was a global crisis of 2008-2009.
 In spite of this backdrop, the mutual fund industry is still growing.
 Currently there are 10,000 mutual funds in the U.S.
 Despite the launch of separate accounts, exchange traded funds and
other competing products is becoming stronger day by day.

40. INDIAN SCENARIO
Mutual Fund Industry in India emerged with the
introduction of the concept of mutual fund by the
UTI in 1963.
The growth patterns was slow initially but
accelerated with the entrance of non-UTI players in
the industry since 1987

41. HISTORY OF MUTUAL FUND
INDUSTRY
.
• First Phase (1964-87) Monopoly Of UTI
.
• Second Phase (1987-93) Entry of Public Sector Funds.
• Third Phase (1993-2003) Entry of private sector Funds.
.
• Fourth Phase (since February 2003 )

42. FIRST PHASE (1964-87)
MONOPOLY OF UTI
 Union Trust of India was set up by the Reserve Bank of India through an act of
parliament in 1963.
 RBI basically regulated and controlled the functioning of UTI.
 In 1987 the UTI de-linked from the RBI and IDBI took over the regulatory and
administrative control.
 Unit scheme1964 was the first scheme launched by the UTI.
 UTI had Rs.6700 crores of assets under management.

43. SECOND PHASE (1987-93)
ENTRY OF PUBLIC SECTOR FUNDS
 Public Sector Funds are mostly non-UTI mutual funds.
 SBI mutual funds was the first public sector fund followed by Canbank Mutual
Fund in Dec 1987.
 Punjab National Bank Mutual Fund in Aug 1989
 Indian Bank Mutual Fund in Nov 1989
 Bank Of India in June 1990
 Bank Of Baroda Mutual Fund in Oct 1992
 LICI in 1989 and GICI in Dec 1990
 At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.

44. THIRD PHASE (1993-2003)
ENTRY OF PRIVATE SECTOR FUNDS
 First Private Sector Mutual Fund Registered in July 1993 was the Kothari Pioneer
which has now merged with Franklin Templeton.
 The SEBI (Mutual Fund) regulations 1993 were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996 which now govern
the mutual fund industry.
 Many foreign mutual funds were set up in India and there were several mergers
and acquisitions in the mutual fund industry .
 No of mutual fund houses gradually increased over time.
 At the end of Jan 2003 there were 33 mutual funds with total assets of Rs 1,21,805
crores.
 The UTI with Rs.44,541 crores of assets under management was way ahead of
other mutual funds.

45. FOURTH PHASE (SINCE FEBRUARY
2003)
 UTI was bifurcated into two separate entities:-
First entity was a specified undertaking of the UTI –Assets Under Management
of Rs.29,835 crore as on Jan 2003.
The functioning of specified undertaking of the UTI was made under rules
framed by the Govt. Of India. It does not comes under the purview of Mutual
Fund Regulations.
 The second entity was the UTI Mutual Fund Ltd. Sponsored by SBI, PNB,BOI
and LICI
It is registered with SEBI and functions under the Mutual Fund Regulations.

48. BENEFITS OF MUTUAL FUNDS
 Professional Management
 Portfolio Diversifications
 Expediency
 Flexibility
 Reduction in Transaction Costs
 Liquidity
 Tax Benefits
 Transparency
 Stability to stock market

49. RISK ASSOCIATED WITH MUTUAL
FUNDS
 Mutual Fund and Securities investment cannot deny market risks and cannot
provide assurance or guarantee about whether or not the objective of the
schemes will be achieved.
 The future performance of the schemes does not depend upon the last
performance of the sponsor or of fund existence.
 The NAV of the mutual fund units issued under the schemes may vary with the
factors and forces affecting the capital and money market.
 The returns on investment in units are affected with the change in tax laws.

50. MUTUAL FUND INVESTORS
Mutual
Fund
High net worth
individuals and the
retail or small
investors, Indian
Companies , Trusts ,
Banks, Non-fiancé
banking companies,
insurance companies
and provident funds.
Non resident
Indians and
other
corporate
bodies
Foreign institutional
investor
Investor who are allowed to make investments in mutual funds in India

51. CONSTITUENTS OF MUTUAL FUND
 Sponsors
 Trust/Board of Trustees
 Fund Managers/Asset Management Companies (AMC)
 Custodian
 Transfer Agents

52. SPONSORS
 Idea for setting up a mutual fund is initiated by sponsor who could be a
registered company, scheduled bank or financial institution.
 They must satisfy certain conditions such as capital track records including the
minimum of 5 year period of operations in financial services.
 The trustee AMC and the custodian are appointed by the sponsors.

53. TRUST/BOARD OF TRUSTEES
 Main responsibility of trustees for floating schemes is to safeguard the interests
of unit holders.
 They submit SEBI reports every six months.
 Investor get an annual report.

54. FUND MANAGERS/ASSET
MANAGEMENT COMPANIES
 They manage investor money.
 They are supposed to take decisions , compensate investor through dividends.
 They also have to maintain proper accounting and information for pricing of
units , calculate the NAV and provide the information on listed schemes.
 Submit Quarterly reports to the trustees.
 Its net worth must be 10 crore.

55. CUSTODIAN
 It is an independent organisation.
 It takes the custody of securities and other mutual fund assets.
 Main Responsibilities include:-
(i) Receipt and Delivery of the securities.
(ii) Collecting income and distributing dividends.
(iii) Safekeeping of units
(iv) Segregating assets and settlement between the schemes.

56. TRANSFER AGENT
 AMC appoints mutual fund transfer agents.
 Transfer agents process the application form , redemption request and dispatch
account statements to unit holders.
 It make a link between investors and mutual fund company.

57. DRAWBACKS OF MUTUAL FUND
 Uncertainty
 Fees and Commissions
 Taxes
 Management Risk
 Motivation

58. REGULATORY FRAMEWORK

59. STRUCTURE OF INDIAN MUTUAL
FUND INDUSTRY
UNIT TRUST OF INDIA
PUBLIC SECTOR MUTUAL
FUND
PRIVATE SECTOR MUTUAL
FUND

60. UNIT TRUST OF INDIA
 UTI having total corpus of 5100 crore collected from over 20 million investors.
 It basically dominates mutual fund industry in India.
 Schemes in all categories
(i) Equity
(ii) Balanced Debt
(iii) Money Market
It includes open and close ended schemes.
Balance Fund is the biggest scheme with a corpus of about Rs. 10,000 crore.

61. PUBLIC SECTOR MUTUAL FUNDS
 Nationalised Banks in India have floated the second largest category of mutual
funds.
 For instance,
SBI fund management is floated by State Bank Of India
GIC AMC is floated by General Insurance Corporation

62. PRIVATE SECTOR MUTUAL FUND
 Private Sector Domestic Mutual Fund and Private Sector Foreign Mutual
Funds have floated the third largest category of Mutual Funds
 Private Sector Domestic Mutual Fund
(i) Tata Mutual
(ii) Birla Sun Life Asset Management Private Limited
 Private Sector Foreign Mutual Fund
(i) Alliance Capital Asset Management Private Limited
(ii) Franklin Templeton Investments
(iii) Lurich Asset Management Company Private Limited

63. LEADING MUTUAL FUND COMPANIES
IN INDIA
 Birla SL Frontline Equity Fund (Large-cap Fun Category)
 ICICI Prudential Value Discovery Fund (Multi-cap Category)
 HDFC Mid-cap Opportunities Fund (Mid-cap Category)
 DSP Micro Cap Fund (Small-cap Category)
 Axis Long Term Equity Fund (ELSS/Tax Saving Category)

65. UNIT TRUST OF INDIA
 It is a statutory public sector investment institutions
 It was established under the Unit Trust of India Act 1963.
 It was given special status as it was under a separate Law of Parliament and not as
a company.
 On July 1,1964 it started its operations as a first mutual fund with a initial capital of
Rs. 5 crore
Contributed As:-
RBI- Rs 2.5 crore
Life Insurance Corporations- RS. 75 Lakh
SBI – Rs.75 lakh
Schedule Bank and other financial institutions – Rs.1 crore

66.  It is an investment trust which mobilizes the saving of people through the sale
of units.
 Savings are invested in shares and debentures of blue chip companies.
 Receives interest and dividend against investment and these are shared among
the shareholders by the way of dividend after meeting the management
expenses of the trust.
 Total investment made by the UTI in corporate securities is divided into
smaller parts called units.
 A larger number of unit schemes both open and closed end were also
introduced by the UTI in order to mobilize the saving of different classes of
investors.
 On June 30, 1998 , 79 unit schemes were in operation consisting of 28 open
and 51 closed ended schemes.

67.  Objectives:-
(i) To encourage savings of people belonging to middle and low income
groups.
(ii) To mobilize savings from small savers.
(iii) Channelize saving to industrial growth which in turn lead to economic
development.
(iv) To allow investors to participate in the prosperity of the industries.
Functions:-
(i) To invest the savings so mobilize in corporate securities such as shares and
debentures.
(ii) To serve unit holders in providing sound returns.
(iii) To mobilize the saving of investors through sale of units.
(iv) To underwrite the issue of shares and investors.

68.  https://www.kotaksecurities.com/ksweb/Research/Investment-
knowledge-Bank/introduction-to-mutual-funds