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Structure[edit]

In the US, a mutual fund is registered with the Securities and Exchange Commission (SEC) and is overseen by a board of directors (if organized as a cor oration) or board of trustees (if organized as a trust)! "he board is charged with ensuring that the fund is managed in the best interests of the fund#s investors and with hiring the fund manager and other service roviders to the fund! "he fund manager, also $nown as the fund s onsor or fund management com any, trades (buys and sells) the fund#s investments in accordance with the fund#s investment ob%ective! & fund manager must be a registered investment advisor! 'unds that are managed by the same fund manager and that have the same brand name are $nown as a (fund family( or (fund com lex(! )utual funds are not taxed on their income and rofits as long as they com ly with re*uirements established in the U!S! Internal +evenue Code! S ecifically, they must diversify their investments, limit ownershi of voting securities, distribute a high ercentage of their income and ca ital gains (net of ca ital losses) to their investors annually, and earn most of the income by investing in securities and currencies!,-. )utual funds ass taxable income on to their investors by aying out dividends and ca ital gains at least annually! "he characterization of that income is unchanged as it asses through to the shareholders! 'or exam le, mutual fund distributions of dividend income are re orted as dividend income by the investor! "here is an exce tion/ net losses incurred by a mutual fund are not distributed or assed through to fund investors but are retained by the fund to be able to offset future gains! )utual funds may invest in many $inds of securities! "he ty es of securities that a articular fund may invest in are set forth in the fund#s ros ectus, which describes the fund#s investment ob%ective, investment a roach and ermitted investments! "he investment ob%ective describes the ty e of income that the fund see$s! 'or exam le, a (ca ital a reciation( fund generally loo$s to earn most of its returns from increases in the rices of the securities it holds, rather than from dividend or interest income! "he investment a roach describes the criteria that the fund manager uses to select investments for the fund! & mutual fund#s investment ortfolio is continually monitored by the fund#s ortfolio manager or managers! 0edge funds are not considered a ty e of (unregistered) mutual fund! 1hile they are another ty e of collective investment vehicle, they are not governed by the Investment Com any &ct of 2345 and are not re*uired to register with the Securities and Exchange Commission (though many hedge fund managers must register as investment advisers)! )utual funds have advantages com ared to direct investing in individual securities!,4. "hese include/

Increased diversification: A fund must hold many securities. Diversifying reduces risks compared to holding a single stock, bond, other available instruments. Daily liquidity: This concept applies only to open-end funds. hareholders may trade their holdings !ith the fund manager at the close of a trading day based on the closing net asset value of the fund"s holdings. #o!ever, there may be fees and restrictions as stated in the fund prospectus. $or holders of individual stocks, bonds, closed-end funds, %T$s, and other available instruments, there may not be a buyer&seller for that instrument everyday. uch instruments are termed, illiquid.

'rofessional investment management: A highly variable aspect of a fund discussed in the prospectus. Actively managed funds funds may have large staffs of analysts !ho actively trade the fund holdings. (anagement of an inde) fund may *ust passively rebalance holdings to match a market inde) like the tandard and 'oors +,, Inde). Ability to participate in investments that may be available only to larger investors: $oreign markets, in particular, are rarely open and affordable for individual investors. (ore over the research required to make sensible foreign investments may require kno!ledge of another language, and the rules of regulations of other markets. ervice and convenience: This is not a feature of a mutual fund, but rather a feature of the fund management company. Increasingly in recent years, there are funds, notably %)change Traded $unds-%T$s. that are purely investment instruments !ithout any additional services from the fund management company. /overnment oversight: 0argely, the 1 government"s role !ith mutual funds is to require the publication of a prospectus describing the fund. 2o such document is required for stock, bonds, currencies, and other investment instruments. There is no governmental oversight of a fund"s investment success&failure. %ase of comparison: 'icking a mutual fund is a lot like *udging a dog sho!. 3ou select the best of the breed !hich has the qualities you seek. If you !ant protection, you choose among /erman hepherds&4ond funds, not 5hihuahuas& mall 5ompany funds. tocks are much more like mi)ed breed dogs. %ach has their o!n unique qualities !hich are hard to compare. $ees 0ess control over timing of recognition of gains 0ess predictable income 2o opportunity to customi6e

)utual funds have disadvantages as well, which include/,6.

History[edit]
"he first mutual funds were established in Euro e! 7ne researcher credits a 8utch merchant with creating the first mutual fund in 2994!,:. "he first mutual fund outside the ;etherlands was the 'oreign < Colonial =overnment "rust, which was established in >ondon in 2?:?! It is now the 'oreign < Colonial Investment "rust and trades on the >ondon stoc$ exchange!,9. )utual funds were introduced into the United States in the 2?35s!,?. "hey became o ular during the 23@5s! "hese early funds were generally of the closedAend ty e with a fixed number of shares which often traded at rices above the value of the ortfolio!,3. "he first o enAend mutual fund with redeemable shares was established on )arch @2, 23@4! "his fund, the )assachusetts Investors "rust, is now art of the )'S family of funds! 0owever, closedAend funds remained more o ular than o enAend funds throughout the 23@5s! By 23@3, o enAend funds accounted for only 6C of the industry#s D@9 billion in total assets!,25. &fter the stoc$ mar$et crash of 23@3, Congress assed a series of acts regulating the securities mar$ets in general and mutual funds in articular! "he Securities &ct of 23-- re*uires that all investments sold to the ublic, including mutual funds, be registered with the Securities and Exchange Commission and that they rovide ros ective investors with a ros ectus that discloses essential facts about the investment! "he Securities and Exchange &ct of 23-4 re*uires that issuers of securities, including mutual funds, re ort regularly to their investorsE this act also created the Securities and Exchange Commission, which is the rinci al regulator of mutual

funds! "he +evenue &ct of 23-: established guidelines for the taxation of mutual funds, while the Investment Com any &ct of 2345 governs their structure! 1hen confidence in the stoc$ mar$et returned in the 2365s, the mutual fund industry began to grow again! By 2395, there were a roximately -:5 funds with D4? billion in assets!,22. "he introduction of money mar$et funds in the high interest rate environment of the late 2395s boosted industry growth dramatically! "he first retail index fund, 'irst Index Investment "rust, was formed in 239: by "he Fanguard =rou , headed by Gohn BogleE it is now called the Fanguard 655 Index 'und and is one of the world#s largest mutual funds, with more than D255 billion in assets as of Ganuary -2, @522!,2@. 'und industry growth continued into the 23?5s and 2335s, as a result of three factors/ a bull mar$et for both stoc$s and bonds, new roduct introductions (including taxAexem t bond, sector, international and target date funds) and wider distribution of fund shares!,2-. &mong the new distribution channels were retirement lans! )utual funds are now the referred investment o tion in certain ty es of fastAgrowing retirement lans, s ecifically in 452($) and other defined contribution lans and in individual retirement accounts (I+&s), all of which surged in o ularity in the 23?5s! "otal mutual fund assets fell in @55? as a result of the credit crisis of @55?! In @55-, the mutual fund industry was involved in a scandal involving une*ual treatment of fund shareholders! Some fund management com anies allowed favored investors to engage in late trading, which is illegal, or mar$et timing, which is a ractice rohibited by fund olicy! "he scandal was initially discovered by thenA;ew Hor$ State &ttorney =eneral Eliot S itzer and resulted in significantly increased regulation of the industry! &t the end of @522, there were over 24,555 mutual funds in the United States with combined assets of D2- trillion, according to the Investment Com any Institute (ICI), a trade association of investment com anies in the United States! "he ICI re orts that worldwide mutual fund assets were D@-!? trillion on the same date!,24. )utual funds lay an im ortant role in U!S! household finances and retirement lanning! &t the end of @522, funds accounted for @-C of household financial assets! "heir role in retirement lanning is articularly significant! +oughly half of assets in 452($) lans and individual retirement accounts were invested in mutual funds!,24.

Leading complexes[edit]
&t the end of 7ctober @522, the to 25 mutual fund com lexes in the United States were/,26.
7. 8anguard 9. $idelity :. American $unds -5apital ;esearch. <. 4lack;ock +. 'I(5= >. $ranklin Templeton ?. @'(organ 5hase A. tate treet /lobal Advisors B. T. ;o!e 'rice 7,. $ederated Investors

Types[edit]
"here are - rinci al ty es of mutual funds in the United States/ o enAend funds, unit investment trusts (UI"s)E and closedAend funds! ExchangeAtraded funds (E"'s) are o enAend funds or unit

investment trusts that trade on an exchangeE they have gained in o ularity recently! 1hile the term (mutual fund( may refer to all three ty es of registered investment com anies, it is more commonly used to refer exclusively to the o enAend ty e!
Open-end funds[edit] Main article: Open-end fund

7 enAend mutual funds must be willing to buy bac$ their shares from their investors at the end of every business day at the net asset value com uted that day! )ost o enAend funds also sell shares to the ublic every business dayE these shares are also riced at net asset value! & rofessional investment manager oversees the ortfolio, buying and selling securities as a ro riate! "he total investment in the fund will vary based on share urchases, share redem tions and fluctuation in mar$et valuation! "here is no legal limit on the number of shares that can be issued! 7 enAend funds are the most common ty e of mutual fund! &t the end of @522, there were 9,6?2 o enAend mutual funds in the United States with combined assets of D22!: trillion!,24.
Closed-end funds[edit] Main article: Closed-end fund

ClosedAend funds generally issue shares to the ublic only once, when they are created through an initial ublic offering! "heir shares are then listed for trading on a stoc$ exchange! Investors who no longer wish to invest in the fund cannot sell their shares bac$ to the fund (as they can with an o enAend fund)! Instead, they must sell their shares to another investor in the mar$etE the rice they receive may be significantly different from net asset value! It may be at a ( remium( to net asset value (meaning that it is higher than net asset value) or, more commonly, at a (discount( to net asset value (meaning that it is lower than net asset value)! & rofessional investment manager oversees the ortfolio, buying and selling securities as a ro riate! &t the end of @522, there were :-4 closedAend funds in the United States with combined assets of D@-3 billion!,24.
Unit investment trusts[edit] Main article: Unit investment trust

Unit investment trusts or UI"s issue shares to the ublic only once, when they are created! UI"s generally have a limited life s an, established at creation! Investors can redeem shares directly with the fund at any time (as with an o enAend fund) or wait to redeem u on termination of the trust! >ess commonly, they can sell their shares in the o en mar$et! Unit investment trusts do not have a rofessional investment manager! "heir ortfolio of securities is established at the creation of the UI" and does not change! &t the end of @522, there were :,5@@ UI"s in the United States with combined assets of D:5 billion!,24.
Exchange-traded funds[edit] Main article: Exchange-traded fund

& relatively recent innovation, the exchangeAtraded fund or E"' is often structured as an o enA end investment com any, though E"'s may also be structured as unit investment trusts,

artnershi s, investments trust, grantor trusts or bonds (as an exchangeAtraded note)! E"'s combine characteristics of both closedAend funds and o enAend funds! Ideally, E"'s are traded throughout the day on a stoc$ exchange at a rice that is close to net asset value of the E"' holdings! E"' shares may be created or li*uidated during the trading day by the fund manager wor$ing with s ecialist and institutions that rofit from arbitrage trading the slight differences between the E"' trading rice and the rice of the E"' holdings! "his arbitrage is su osed $ee the E"' mar$et rice close to net asset value of its holdings, but there is no guarantee es ecially with thinly traded E"'s (more than half of E"'S are thinly traded,2:.)! )ost E"'s are index funds! E"'s have been gaining in o ularity! &t the end of @522, there were 2,2-4 E"'s in the United States with combined assets of D2!2 trillion!,24.

Investments and classification[edit]

The neutrality of this article is questioned because of its systemic bias. 'lease see the discussion on the talk page. 'lease do not remove this message until the issue is resolved. (August 20 2!

)utual funds are normally classified by their rinci al investments, as described in the ros ectus and investment ob%ective! "he four main categories of funds are money mar$et funds, bond or fixed income funds, stoc$ or e*uity funds and hybrid funds! 1ithin these categories, funds may be subclassified by investment ob%ective, investment a roach or s ecific focus! "he SEC re*uires that mutual fund names not be inconsistent with a fund#s investments! 'or exam le, the (&BC ;ew Gersey "axAExem t Bond 'und( would generally have to invest, under normal circumstances, at least ?5C of its assets in bonds that are exem t from federal income tax, from the alternative minimum tax and from taxes in the state of ;ew Gersey!,29. Bond, stoc$ and hybrid funds may be classified as either index ( assively managed) funds or actively managed funds!
Money market funds[edit] Main article: Mone" mar#et fund

)oney mar$et funds invest in money mar$et instruments, which are fixed income securities with a very short time to maturity and high credit *uality! Investors often use money mar$et funds as a substitute for ban$ savings accounts, though money mar$et funds are not government insured, unli$e ban$ savings accounts! )oney mar$et funds strive to maintain a D2!55 er share net asset value, meaning that investors earn interest income from the fund but do not ex erience ca ital gains or losses! If a fund fails to maintain that D2!55 er share because its securities have declined in value, it is said to (brea$ the buc$(! 7nly two money mar$et funds have ever bro$en the buc$/ Community Ban$er#s U!S! =overnment )oney )ar$et 'und in 2334 and the +eserve Irimary 'und in @55?! &t the end of @522, money mar$et funds accounted for @-C of o enAend fund assets!,24.
Bond funds[edit] Main article: $ond fund

Bond funds invest in fixed income or debt securities! Bond funds can be subclassified according to the s ecific ty es of bonds owned (such as highAyield or %un$ bonds, investmentAgrade cor orate bonds, government bonds or munici al bonds) or by the maturity of the bonds held

(shortA, intermediateA or longAterm)! Bond funds may invest in rimarily U!S! securities (domestic or U!S! funds), in both U!S! and foreign securities (global or world funds), or rimarily foreign securities (international funds)! &t the end of @522, bond funds accounted for @6C of o enAend fund assets!,24.
tock or e!uity funds[edit] Main article: %toc# fund

Stoc$ or e*uity funds invest in common stoc$s which re resent an ownershi share (or e*uity) in cor orations! Stoc$ funds may invest in rimarily U!S! securities (domestic or U!S! funds), in both U!S! and foreign securities (global or world funds), or rimarily foreign securities (international funds)! "hey may focus on a s ecific industry or sector! & stoc$ fund may be subclassified along two dimensions/ (2) mar$et ca italization and (@) investment style (i!e!, growth vs! blendJcore vs! value)! "he two dimensions are often dis layed in a grid $nown as a (style box!( )ar$et ca italization ((ca () indicates the size of the com anies in which a fund invests, based on the value of the com any#s stoc$! Each com any#s mar$et ca italization e*uals the number of shares outstanding times the mar$et rice of the stoc$! )ar$et ca italizations are ty ically divided into the following categories/

(icro cap mall cap (id cap 0arge cap

1hile the s ecific definitions of each category vary with mar$et conditions, large ca stoc$s generally have mar$et ca italizations of at least D25 billion, small ca stoc$s have mar$et ca italizations below D@ billion, and micro ca stoc$s have mar$et ca italizations below D-55 million! 'unds are also classified in these categories based on the mar$et ca s of the stoc$s that it holds! Stoc$ funds are also subclassified according to their investment style/ growth, value or blend (or core)! =rowth funds see$ to invest in stoc$s of fastAgrowing com anies! Falue funds see$ to invest in stoc$s that a ear chea ly riced! Blend funds are not biased toward either growth or value! &t the end of @522, stoc$ funds accounted for 4:C of the assets in all U!S! mutual funds!,24.
"y#rid funds[edit]

0ybrid funds invest in both bonds and stoc$s or in convertible securities! Balanced funds, asset allocation funds, target date or target ris$ funds and lifecycle or lifestyle funds are all ty es of hybrid funds! 0ybrid funds may be structured as funds of funds, meaning that they invest by buying shares in other mutual funds that invest in securities! )ost fund of funds invest in affiliated funds (meaning mutual funds managed by the same fund s onsor), although some invest in unaffiliated funds (meaning those managed by other fund s onsors) or in a combination of the two! &t the end of @522, hybrid funds accounted for 9C of the assets in all U!S! mutual funds!,24.
$ndex %passively managed& versus actively managed[edit] Main articles: &ndex fund and active management

&n index fund or assively managed fund see$s to match the erformance of a mar$et index, such as the S<I 655 index, while an actively managed fund see$s to out erform a relevant index through su erior security selection!

Expenses[edit]
Investors in a mutual fund ay the fund#s ex enses! "hese ex enses fall into five categories/ distribution charges (sales loads and 2@bA2 fees), the management fee, other fund ex enses, shareholder transaction fees and securities transaction fees! Some of these ex enses reduce the value of an investor#s accountE others are aid by the fund and reduce net asset value! +ecurring fees and ex ensesKs ecifically the 2@bA2 fee, the management fee and other fund ex ensesKare included in a fund#s total ex ense ratio, or sim ly the (ex ense ratio(! Because all funds must com ute an ex ense ratio using the same method, it allows investors to com are costs across funds!
'istri#ution charges[edit] Main article: Mutual fund fees and expenses

8istribution charges ay for mar$eting, distribution of the fund#s shares as well as services to investors!
Front-end load or sales charge[edit]

& frontAend load or sales charge is a commission aid to a bro$er by a mutual fund when shares are urchased! It is ex ressed as a ercentage of the total amount invested or the ( ublic offering rice,( which e*uals the net asset value lus the frontAend load er share! "he frontAend load often declines as the amount invested increases, through brea$ oints! "he frontAend load is aid by the shareholderE it is deducted from the amount invested!
Back-end load[edit]

Some funds have a bac$Aend load, which is aid by the investor when shares are redeemed! If the bac$Aend load declines the longer the investor holds shares, it is called a contingent deferred sales charges (or C8SC)! >i$e the frontAend load, the bac$Aend load is aid by the shareholderE it is deducted from the redem tion roceeds!
12b-1 fees[edit]

Some funds charge an annual fee to com ensate the distributor of fund shares for roviding ongoing services to fund shareholders! "his fee is called a 2@bA2 fee, after the SEC rule authorizing it! "he 2@bA2 fee is aid by the fund and reduces net asset value!
No-load funds[edit]

& noAload fund does not charge a frontAend load under any circumstances, does not charge a bac$Aend load under any circumstances and does not charge a 2@bA2 fee greater than 5!@6C of fund assets!
Management fee[edit]

"he management fee is aid to the fund manager or s onsor who organizes the fund, rovides the ortfolio management or investment advisory services and normally lends its brand name to the fund! "he fund manager may also rovide other administrative services! "he management fee often has brea$ oints, which means that it declines as assets (in either the s ecific fund or in the

fund family as a whole) increase! "he management fee is aid by the fund and is included in the ex ense ratio! "he fund#s board of directors reviews the management fee annually! 'und shareholders must vote on any ro osed increase in the management! 0owever, the fund manager or s onsor may agree to waive all or a ortion of the management fee in order to lower the fund#s ex ense ratio!
Other fund expenses[edit]

& mutual fund may ay for other services including/

4oard of directors or trustees fees and e)penses 5ustody fee: paid to a custodian bank for holding the fund"s portfolio in safekeeping and collecting income o!ed on the securities $und administration fee: for overseeing all administrative affairs of the fund such as preparing financial statements and shareholder reports, preparing and filing myriad %5 filings required of registered investment companies, monitoring compliance !ith investment restrictions, computing total returns and other fund performance information, preparing&filing ta) returns and all e)penses of maintaining compliance !ith state Cblue skyC la!s $und accounting fee: for performing investment or securities accounting services and computing the net asset value -usually each day the 2e! 3ork tock %)change is open. 'rofessional services fees: legal and auditing fees ;egistration fees: for 9<$-9 fees o!ed to the %5 for net sales of registered fund shares and state blue sky fees o!ed for selling shares to residents of states in the 1 and *urisdictions such as 'uerto ;ico and /uam hareholder communications e)penses: printing and mailing required documents to shareholders such as shareholder reports and prospectuses Transfer agent service fees and e)penses: for keeping shareholder records, providing statements and ta) forms to investors and providing telephone, internet and or other investor support and servicing =ther&miscellaneous fees

"he fund manager or s onsor may agree to subsidize some of these other ex enses in order to lower the fund#s ex ense ratio!
hareholder transaction fees[edit]

Shareholders may be re*uired to ay fees for certain transactions! 'or exam le, a fund may charge a flat fee for maintaining an individual retirement account for an investor! Some funds charge redem tion fees when an investor sells fund shares shortly after buying them (usually defined as within -5, :5 or 35 days of urchase)E redem tion fees are com uted as a ercentage of the sale amount! Shareholder transaction fees are not art of the ex ense ratio!
ecurities transaction fees[edit]

& mutual fund ays ex enses related to buying or selling the securities in its ortfolio! "hese ex enses may include bro$erage commissions! Securities transaction fees increase the cost basis of investments urchased and reduce the roceeds from their sale! "hey do not flow through a fund#s income statement and are not included in its ex ense ratio! "he amount of securities transaction fees aid by a fund is normally ositively correlated with its trading volume or (turnover!(

Controversy[edit]

Critics of the fund industry argue that fund ex enses are too high! "hey believe that the mar$et for mutual funds is not com etitive and that there are many hidden fees, so that it is difficult for investors to reduce the fees that they ay! "hey argue that the most effective way for investors to raise the returns they earn from mutual funds is to invest in funds with low ex ense ratios! 'und managers counter that fees are determined by a highly com etitive mar$et and, therefore, reflect the value that investors attribute to the service rovided! In addition, they note that fees are clearly disclosed!

Share classes[edit]
& single mutual fund may give investors a choice of different combinations of frontAend loads, bac$Aend loads and 2@bA2 fees, by offering several different ty es of shares, $nown as share classes! &ll of the shares classes invest in the same ortfolio of securities, but each has different ex enses and, therefore, a different net asset value and different erformance results! Some of these share classes may be available only to certain ty es of investors! 'unds offering multi le classes often identify them with letters, though they may also use names such as (Investor Class(, (Service Class(, (Institutional Class(, etc!, to identify the ty e of investor for which the class is intended! "he SEC does not regulate the names of share classes, so that s ecifics of a share class with the same name may vary from fund family to fund family! "y ical share classes for funds sold through bro$ers or other intermediaries are as follows!/

Class A shares usually charge a front-end sales load together !ith a small 79b-7 fee. Class B shares usually don"t have a front-end sales load. Instead they, have a high contingent deferred sales charge, or 5D 5 that declines gradually over several years, combined !ith a high 79b-7 fee. 5lass 4 shares usually convert automatically to 5lass A shares after they have been held for a certain period. Class C shares usually have a high 79b-7 fee and a modest contingent deferred sales charge that is discontinued after one or t!o years. 5lass 5 shares usually do not convert to another class. They are often called Clevel loadC shares. Class I are usually sub*ect to very high minimum investment requirements and are, therefore, kno!n as CinstitutionalC shares. They are no-load shares. Class R are usually for use in retirement plans such as <,7-k. plans. They typically do not charge loads, but do charge a small 79b-7 fee. Class I shares do not charge a 79b-7 fee. Class N shares charge a 79b-7 fee of no more than ,.9+D of fund assets.

;oAload funds often have two classes of shares/

;either class of shares ty ically charges a frontAend or bac$Aend load!

Definitions[edit]
8efinitions of $ey terms!
(et asset value or ()*[edit] Main article: 'et asset value

& fund#s net asset value or ;&F e*uals the current mar$et value of a fund#s holdings minus the fund#s liabilities (sometimes referred to as (net assets()! It is usually ex ressed as a erAshare amount, com uted by dividing net assets by the number of fund shares outstanding! 'unds must com ute their net asset value according to the rules set forth in their ros ectuses! 'unds

com ute their ;&F at the end of each day that the ;ew Hor$ Stoc$ Exchange is o en, though some funds com ute their ;&F more than once daily! Faluing the securities held in a fund#s ortfolio is often the most difficult art of calculating net asset value! "he fund#s board ty ically oversees security valuation!
Expense ratio[edit]

"he ex ense ratio allows investors to com are ex enses across funds! "he ex ense ratio e*uals the 2@bA2 fee lus the management fee lus the other fund ex enses divided by average daily net assets! "he ex ense ratio is sometimes referred to as the (total ex ense ratio( or "E+!
)verage annual total return[edit]

"he SEC re*uires that mutual funds re ort the average annual com ounded rates of return for 2A year, 6Ayear and 25Ayear eriods using the following formula/,2?.
'-7ET.n F %;8

1here/
' F a hypothetical initial payment of G7,,,,. T F average annual total return. n F number of years.

E+F L ending redeemable value of a hy othetical D2,555 ayment made at the beginning of the 2A, 6A, or 25Ayear eriods at the end of the 2A, 6A, or 25Ayear eriods (or fractional ortion)!
+urnover[edit]

Turnover is a measure of the volume of a fund#s securities trading! It is ex ressed as a ercentage of average mar$et value of the ortfolio#s longAterm securities! "urnover is the lesser of a fund#s urchases or sales during a given year divided by average longAterm securities mar$et value for the same eriod! If the eriod is less than a year, turnover is generally annualized!

See also[edit]

$und derivative /lobal assets under management Institutional investor Investment management 0ipper average 0ist of mutual fund companies in 5anada 0ist of mutual-fund families in the 1nited tates 0ist of 1 mutual funds by assets under management (utual funds in India (oney fund (utual-fund scandal -9,,:. =peration 'erfect #edge 'ension 'ension fund ;etirement plans in the 1nited tates

eparately managed account or (As ocially responsible investing 8alue investing 8enture capital 7.
Jump up ^ C1. . ecurities and %)change 5ommission Information on (utual $undsC. 1. . ecurities and %)change 5ommission - %5.. ;etrieved 9,77-,<-,>. 9. H @ump up to: a b 0emke, 0ins and mith, (egulation of &nvestment Companies -(atthe! 4ender, 9,7:.. :. Jump up ^ I.;.5. I A+7-b.-:. and I.;.5. I A+9-a. <. Jump up ^ 'o6en, ;obertJ #amacher, Theresa -9,77.. )he *und &ndustr": +o, -our Mone" is Managed. @ohn Kiley L ons. pp. +M?. +. Jump up ^ 'o6en and #amacher -9,77., pp. ?MB. >. Jump up ^ ;ou!enhorst, N. /eert, CThe =rigins of (utual $unds,C -ale &C* .or#ing /aper 'o0 01-12 -December 79, 9,,<., p. +. ?. Jump up ^ ;ou!enhorst -9,,<., p. 7>. A. Jump up ^ ;ou!enhorst -9,,<., p. 7?. B. Jump up ^ $ink, (atthe! '. -9,,A.. )he (ise of Mutual *unds. =)ford 1niversity 'ress. p. B. 7,. Jump up ^ $ink -9,,A., p. 7+. 77. Jump up ^ $ink -9,,A., p. >:. 79. Jump up ^ C8anguard M +,, Inde) $und Investor haresC. The 8anguard /roup. ;etrieved 9,77-,9-99. 7:. Jump up ^ 'o6en and #amacher -9,77., pp. 77M7+. 7<. H @ump up to: a b c d e f g h i j C9,77 Investment 5ompany $act 4ookC. Investment 5ompany Institute. ;etrieved 9,7:-,7-9<. 7+. Jump up ^ Investment 5ompany Institute, as cited in &gnites, December :,, 9,77 7>. Jump up ^ http:&&!!!.fasttrack.net&ThinlyOTradedO%T$s.png 7?. Jump up ^ 7? 5.$.;. I 9?,.:+d-7 7A. Jump up ^ C$inal ;ule: ;egistration $orm 1sed by =pen-%nd (anagement Investment 5ompanies: ample $orm and instructionsC. 1. . ecurities and %)change 5ommission - %5.. ;etrieved 9,,A-,B-9+.

Notes[edit]

eferences[edit]

$ink, (atthe! '. -9,,A.. The ;ise of (utual $unds. =)ford 1niversity 'ress. 0emke, Thomas '.J 0ins, /erald T.J mith, A. Thomas -9,7:.. ;egulation of Investment 5ompanies. (atthe! 4ender. 'o6en, ;obertJ #amacher, Theresa -9,77.. The $und Industry: #o! 3our (oney is (anaged. @ohn Kiley L ons. ;ou!enhorst, N. /eert, CThe =rigins of (utual $unds,C 3ale I5$ Korking 'aper 2o. ,<<A -December 79, 9,,<.. PhideQ

v t

Investment management

5ommon contractual fund %)change-traded fund $ond commun de placement $und of funds Inde) fund Investment trust #edge fund 0isted investment company (utual fund =ffshore fund =pen-ended investment company 'rivate equity fund ;eal estate investment trust ;oyalty trust I5A8 1mbrella fund 1nit investment trust 1nit trust 1nitised insurance fund

Collective investment scheme structures

Active or passive management Impact investing (anager of managers ocially responsible investing

Investment styles

8alue or gro!th investing

5losed-end fund %fficient-market hypothesis 2et asset value =pen-end fund

Theory and terminology

Alternative investment Asset management firms ;eturns-based style analysis Traditional investments 15IT

Related topics

htt /JJmyinvestmentideas!comJ@52-J5:JwhatAareAmutualAfundsAandAhowAdoAtheyAwor$J
;etrieved from Chttp:&&en.!ikipedia.org&!&inde).phpRtitleF(utualOfundLoldidF+B<>?9A?,C 5ategories: (utualism -movement. Institutional investors 5ollective investment schemes (utual funds of the 1nited tates #idden categories: Articles !ith limited geographic scope from eptember 9,77 1 A-centric Kikipedia articles needing style editing from 2ovember 9,79 Articles containing pro and con lists 2'=8 disputes from August 9,79 All 2'=8 disputes

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History of !utual "unds in India[edit]

"he first Indian mutual fund was set u in 23:-, when the =overnment of India created the Unit "rust of India (U"I)! Until 23?9, U"I en%oyed a mono oly in the Indian mutual fund mar$et and sold a range of mutual funds through a networ$ of financial intermediaries! &t the end of 23?? U"I had +s! :,955 crores of assets under management!,2. In 23?9, the =overnment of India ermitted ublic sector ban$s and the >ife Insurance Cor oration of India (>IC) and =eneral Insurance Cor oration of India (=IC) to enter the mutual fund industry! "he State Ban$ of India#s SBI )utual 'und was the first such mutual fund to be established in 23?9! Canara Ban$ set u Canban$ )utual 'und shortly after in the same year, followed by funds from Iun%ab ;ational Ban$ and Indian Ban$ in 23?3, Ban$ of India in 2335 and Ban$ of Baroda in 233@! "he >IC established its mutual fund in 23?3 and the =IC in 2335! &t the end of 233-, the mutual fund industry had assets under management of +s! 49,554 crores!,@. in 233-, with the creation of SEBI and better regulation, trans arency and liberalisation of ca ital mar$ets (which included the creation of the ;SE and the ;S8>), the rivate sector was allowed to enter the mutual fund industry! Mothari Iioneer )utual 'und (now merged into 'ran$lin "em leton Investments) was

the first rivate sector mutual fund to be registered in Guly 233-! In the following years, international giants in the industry as well as Indian cor orates and industrial families setting u their own mutual funds, urchasing existing fund com anies or merging with them! &t the end of Ganuary @55-, there were -- mutual funds with assets totalling +s! 2,@2,?56 crores! "he U"I still led the ac$ with +s! 44,642 crores worth of assets! In 'ebruary @55-, faced with financial mismanagement, o a*ue boo$$ee ing and huge, growing liabilities at the U"I, the =overnment of India sus ended redem tions, guaranteed the assets, unveiled a com rehensive suite of reforms and re ealed the Unit "rust of India &ct 23:-!,-. "he U"I was s lit into two arts!,4. 7ne was called the (S ecified Underta$ing of the Unit "rust of India( with +s! @3,?-6 crores of assets largely belonging to the U"I#s Unit :4 fund! "he fund was rumoured to own ro erty, commodities and a whole range of unconventional and often undocumented assets! "he fund would attract millions of investors by romising generous annual dividends that were far in excess of the returns on its actual ortfolio!,6. "his S ecified Underta$ing of Unit "rust of India, functioned under an administrator a ointed by =overnment of India, outside of SEBI#s urview, until it was eventually li*uidated in @55?! "he =overnment as$ed the SBI, I;B, B7B and >IC to ste in as s onsors of the second art, now called U"I )utual 'und (in addition to being s onsors of their own mutual funds) under SEBI#s regulation! &s of -5 Gune @52-, the Indian mutual fund industry manages assets worth a roximately +s!?49,555 crores! age 4,:.

egulation and Distri#ution[edit]

"he erstwhile Unit "rust of India (U"I) was set u by the +eserve Ban$ of India in 23:- and functioned under its regulatory and administrative control! In 239?, the Industrial 8evelo ment Ban$ of India (I8BI) too$ over regulatory and administrative control of the U"I!,9. "he =overnment of India enacted the Securities and Exchange Board of India Act, 1992 on 4 & ril 233@ which created the Securities and Exchange Board of India (SEBI)! SEBI issued a com rehensive set of regulations in 233- and revised them again in 233:! "hese included regulations covering the Indian mutual fund industry! &ll mutual funds in India today are regulated by SEBI! "he &ssociation of )utual 'unds of India (&)'I) is a selfAgoverning association of Indian )utual 'unds that regulates its members# sales, distribution and communication ractices! Investors can invest in Indian mutual funds directly or through distributors under codes of ractice develo ed by &)'I!

!utual funds are an under tapped mar$et in India %section appears su#&ective and re'uires revie()[edit]
8es ite being available in the mar$et for over two decades now with assets under management e*ualing +s 9,?2,92,26@ >a$hs (as of @? 'ebruary @525),,?. less than 25C of Indian households have invested in mutual funds! & recent re ort on )utual 'und Investments in India ublished by research and analytics firm, Boston &nalytics, suggests investors are holding bac$ from utting their money into mutual funds due to their erceived high ris$ and a lac$ of information on how mutual funds wor$!,3. "his re ort is based on a survey of a roximately 25,555 res ondents in 26 Indian cities and towns as of )arch @525! "here are 4: )utual 'unds as of Gune @52-!,25. "he rimary reason for not investing a ears to be correlated with city size! &mong res ondents with a high savings rate, close to 45C of those who live in metros and "ier I cities considered such investments to be very ris$y, whereas --C of those in "ier II cities said they did not $now how or where to invest in such assets!

;easons for not investing in mutual funds in India

7n the other hand, among those who invested, close to nine out of ten res ondents did so because they felt these assets were more rofessionally managed than other asset classes! Exhibit @ lists some of the influencing factors for investing in mutual funds! Interestingly, while nonA investors cite (ris$( as one of the rimary reasons they do not invest in mutual funds, those who do invest consider that they are ( rofessionally managed( and (more diverse( most often as their reasons to invest in mutual funds versus other investments! & mutual fund is a ty e of rofessionally managed collective investment vehicle that ools money from many investors to urchase securities! 1hile there is no legal definition of the term (mutual fund(, it is most commonly a lied only to those collective investment vehicles that are regulated and sold to the general ublic! "hey are sometimes referred to as (investment com anies( or (registered investment com anies!( )ost mutual funds are (o enAended,( meaning investors can buy or sell shares of the fund at any time! 0edge funds are not considered a ty e of mutual fund!

;easons for investing in mutual funds in India

*verage *ssets under !anagement[edit]

&ssets under management (&U)) is a financial term denoting the mar$et value of all the funds being managed by a financial institution (a mutual fund, hedge fund, rivate e*uity firm, venture ca ital firm, or bro$erage house) on behalf of its clients, investors, artners, de ositors, etc! "he average &ssets under management of all )utual funds in India for the *uarter GulA2- to Se A 2- (in I;+ billion) is given below/,22.
r No 7 9 : < + > ? A B 7, 77 79 !utual "und Name #D$5 (utual $und ;eliance (utual $und Average A#! 7,,:<.<9 ,B+9.9A $ 79.?, D 77.>B D 7,.<A D ,B.+, D ,A.>, D ,?.:7 D ,+.+, D ,<.A? D ,<.:< D ,:.?< D ,9.97 D ,9.7,

I5I5I 'rudential (utual $und ,A+:.,: 4irla un 0ife (utual $und 1TI (utual $und 4I (utual $und $ranklin Templeton (utual $und ID$5 (utual $und ,??:.<< ,?,,.+? ,+B+.+A ,<<A.79 ,:B>.>+

Notak (ahindra (utual $und ,:+9.BB D ' 4lack;ock (utual $und ,:,<.A> Tata (utual $und Deutsche (utual $und ,7?B.>> ,7?,.+B

r No

!utual "und Name

Average A#! D

7: 7< 7+ 7> 7? 7A 7B 9, 97 99 9: 9< 9+ 9> 9?

0LT (utual $und undaram (utual $und @'(organ (utual $und

,7+,.?B ,7:B.<? ,7:9.+?

,7.A+ D ,7.?7 D ,7.>: D ,7.+< D ,7.+7 D ,,.BA D ,,.B< D ,,.A: D ,,.?? D ,,.>+ D ,,.+B D ,,.+: D ,,.+7 D ,,.<: D ,,.<, D

;eligare Invesco (utual $und ,79+.79 A)is (utual $und 0I5 2=(1;A (utual $und ,79:.7A ,,?B.?>

5anara ;obeco (utual $und ,,?>.7> # 45 (utual $und @( $inancial (utual $und ,,>?.7A ,,>9.<<

4aroda 'ioneer (utual $und ,,+9.>: ID4I (utual $und ';I25I'A0 (utual $und ,,<?.?7 ,,<:.,,

/oldman achs (utual $und ,,<7.<B 42' 'aribas (utual $und ,,:+.:A

(organ tanley (utual $und ,,:9.B,

r No 9A 9B :, :7 :9 :: :< :+ :> :? :A :B <, <7 <9 <:

!utual "und Name 'eerless (utual $und Taurus (utual $und 'ramerica (utual $und 1nion N45 (utual $und Indiabulls (utual $und I2/ (utual $und 'ine4ridge (utual $und 4=I AfA (utual $und (irae Asset (utual $und (otilal =s!al (utual $und guantum (utual $und ''$A (utual $und %scorts (utual $und ahara (utual $und II$0 (utual $und %del!eiss (utual $und

Average A#! ,,9A.:+ ,,9?.:9 ,,97.>> ,,7B.A, ,,7>.,> ,,77.,+ ,,77.,: ,,7,.A9 ,,,+.,A ,,,<.:? ,,,:.7+ ,,,9.>? ,,,9.+9 ,,,9.:: ,,,9.,? ,,,7.B<

$ ,,.:+ D ,,.:< D ,,.9? D ,,.9< D ,,.9, D ,,.7< D ,,.7< D ,,.7: D ,,.,> D ,,.,+ D ,,.,< D ,,.,: D ,,.,: D ,,.,: D ,,.,: D ,,.,9

r No

!utual "und Name

Average A#! D

<< <+ <> <?

Dai!a (utual $und I0L$ (utual $und -ID$. hriram (utual $und ;%I (utual $und -ID$. %rand Total

,,,,.+7 ,,,,,,,,,&'()*+,&

,,.,7 D ,,.,, D ,,.,, D ,,.,, D (--+D

eferences[edit]
7. Jump up ^ http:&&!!!.amfiindia.com&research-information&mf-history 9. Jump up ^ http:&&!!!.amfiindia.com&research-information&mf-history :. Jump up ^ http:&&!!!.siliconindia.com&sho!ne!s&(a*orOreformOpackageOforOtroubledO1TI-nid7>>?+-cid-:.html <. Jump up ^ http:&&articles.economictimes.indiatimes.com&9,,+-,97A&ne!s&9?<A<+:?O7Osbi-mutual-fund-us-><-uti-bailout +. Jump up ^ http:&&!!!.frontline.in&navigation&R typeFstaticLpageFflonnetLrdurlFfl7B7B&7B7B799,.htm >. Jump up ^ http:&&portal.amfiindia.com&spages&aqu-vol7:-issueI.pdf ?. Jump up ^ http:&&!!!.amfiindia.com&research-information&mf-history A. Jump up ^ CAssociation of (utual $unds, IndiaC. ;etrieved < eptember 9,7:. B. Jump up ^ C4oston Analytics - India KatchC. ;etrieved < eptember 9,7:. 7,. Jump up ^ CAverage A1( - $und-!iseC. @une 9,7:. ;etrieved < eptember 9,7:. 77. Jump up ^ CAverage A1(C. Association of (utual $unds in India. ;etrieved A December 9,7:. ;etrieved from Chttp:&&en.!ikipedia.org&!&inde).phpR titleF(utualOfundsOinOIndiaLoldidF+B<+A+9>+C 5ategories: (utual funds of India (utual funds #idden categories: 1se dmy dates from (ay 9,7: 1se Indian %nglish from (ay 9,7:

All Kikipedia articles !ritten in Indian %nglish Articles needing additional references from (ay 9,7: All articles needing additional references

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