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place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund. Mutual Fund Operation Flow Chart A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund: Mutual Fund Operation Flow Chart ADVANTAGES OF MUTUAL FUNDS The advantages of investing in a Mutual Fund are: ♣ Professional Management ♣ Diversification ♣ Convenient Administration ♣ Return Potential
if you invest in Index Funds. risk tolerance and return expectations etc. • Taxes: During a typical year. Even if you don't use a broker or other financial adviser. you will pay taxes on the income you receive. . because these funds do not employ managers Types of mutual fund scheme Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position. • Fees and commissions: All funds charge administrative fees to cover their day-today expenses. Unit Trust of India invited investors or rather to those who believed in savings. If the manager does not perform as well as you had hoped. financial consultants. the value of mutual fund shares will go down as well. you will pay a sales commission if you buy shares in a Load Fund. most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. Some funds also charge sales commissions or "loads" to compensate brokers. The table below gives an overview into the existing types of schemes in the Industry. no matter how balanced the portfolio. you depend on the fund's manager to make the right decisions regarding the fund's portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. The year was 1963.♣ ♣ ♣ ♣ ♣ ♣ Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Well regulated DRAWBACKS OF MUTUAL FUNDS Mutual funds have their drawbacks and may not be for everyone: • No Guarantees: No investment is risk free. even if you reinvest the money you made. or financial planners. Of course. However. Performance of Mutual Funds in India Let us start the discussion of the performance of mutual funds in India from the day the concept of mutual fund took birth in India. If the entire stock market declines in value. you forego management risk. If your fund makes a profit on its sales. to park their money in UTI Mutual Fund. you might not make as much money on your investment as you expected. anyone who invests through a mutual fund runs the risk of losing money. • Management risk: When you invest in a mutual fund.
From Rs. The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. 67bn. the investors disinvested by selling at a loss in the secondary market.For 30 years it goaled without a single second player. few other mutual fund companies in India took their position in mutual fund market. some 24 million shareholders was accustomed with guaranteed high returns by the begining of liberalization of the industry in 1992. by the end of 1987. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. the Unit Trust of India (UTI). Indian Bank Mutual Fund. The Assets Under Management of UTI was Rs. mutual funds have not yet recovered. the Assets Under Management rose to Rs. Canbank Mutual Fund. At last to mention. since only closed-end funds were floated in the market. more and more people will be inclined to invest until and unless they are fully educated with the dos and donts of mutual funds. Those days. but UTI remained in a monopoly position. The new entries of mutual fund companies in India were SBI Mutual Fund. Mutual Fund Companies in India The concept of mutual funds in India dates back to the year 1963. People rarely understood. But yes. It rose as high as Rs. Punjab National Bank Mutual Fund. 67bn. The expectations of investors touched the sky in profitability factor. with funds trading at an average discount of 1020 percent of their net asset value. The era between 1963 and 1987 marked the existance of only one mutual fund company in India with Rs. by the end of its monopoly era. the market regulations did not allow portfolio shifts into alternative investments. This good record of UTI became marketing tool for new entrants. Bank of . 470 bn. One more thing to be noted. Though the 1988 year saw some new mutual fund companies. and paving the gateway for mutual funds to launch pension schemes. The 1992 stock market scandal. However. The measure was taken to make mutual funds the key instrument for long-term saving. introduction of open-ended funds. as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time. the quantitative will be investors. 1. in March 1993 and the figure had a three times higher performance by April 2004. Partly owing to a relatively weak stock market performance. Some of them were like relaxing investment restrictions into the market. the losses by disinvestments and of course the lack of transparent rules in the whereabout rocked confidence among the investors. people were miles away from the praparedness of risks factor after the liberalization. There were rather no choice apart from holding the cash or to further continue investing in shares. The performance of mutual funds in India suffered qualitatively. The supervisory authority adopted a set of measures to create a transparent and competitve environment in mutual funds. and of course investing was out of question. By the end of the 80s decade. 67bn assets under management (AUM). Let me concentrate about the performance of mutual funds in India through figures.540bn. The more the variety offered.
ABN AMRO Asset Management (India) Ltd. as the Trustee Company. 2004 with ABN AMRO Trustee (India) Pvt.04 bn. Indonesia and Bermuda apart from India. • HSBC Mutual Fund HSBC Mutual Fund was setup on May 27. 1993 with two sponsorers. The private sector funds started penetrating the fund families. • Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial.000 crores • Bank of Baroda Mutual Fund (BOB Mutual Fund) Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30. the US. By the end of 1993. Major Mutual Fund Companies in India • ABN AMRO Mutual Fund ABN AMRO Mutual Fund was setup on April 15. Prudential Plc. 470. The AMC. The Trustee Company formed is Prudential ICICI Trust Ltd. the Philippines. and ICICI Ltd. The AMC.India Mutual Fund. was incorporated on April 6.05 bn. Ltd. Deutsche Bank AG is the custodian. It is a joint venture of Vysya and ING. • Prudential ICICI Mutual Fund The mutual fund of ICICI is a joint venture with Prudential Plc. Today there are 33 mutual fund companies in India. Just after ten years with private sector players penetration. HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund. The succeeding decade showed a new horizon in indian mutual fund industry. 10.Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. 2000 with two sponsorers nemely Housing Development Finance Corporation Limited and Standard Life Investments Limited. was incorporated on November 4. In the same year the first Mutual Fund Regulations came into existance with re-registering all mutual funds except UTI. Prudential ICICI Mutual Fund was setup on 13th of October. one of the largest life insurance companies in the US of A. and the AMC is Prudential . The regulations were further given a revised shape in 1996. 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Japan. the total AUM of the industry was Rs. 2003. • HDFC Mutual Fund HDFC Mutual Fund was setup on June 30. ING Investment Management (India) Pvt. 1992. • ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11. Board of Trustees. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. the total assets rose up to Rs. Ltd. 1218. 1992 under the sponsorship of Bank of Baroda. Recently it crossed AUM of Rs. of America. 1999 with the same named Trustee Company. Sun Life Financial is a golbal organisation evolved in 1871 and is being represented in Canada. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund. 1998. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5.
UTI Asset Management Company presently manages a corpus of over Rs. • Unit Trust of India Mutual Fund UTI Asset Management Company Private Limited. • State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund. 2005) of AUM. The paid-up capital of the AMC stands at Rs 25. It was registered on June 30. as the sponsor. 1882. Punjab National Bank (PNB). Index Funds. 2004. • Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act. 7. 1995 as Reliance Capital Mutual Fund which was changed on March 11. approximately. • Sahara Mutual Fund Sahara Mutual Fund was set up on July 18. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. KMAMC started its operations in December 1998. the India Magnum Fund with a corpus of Rs.703 crores (as on April 30. 1882. and Life Insurance Corporation of India (LIC).99. Asset Management Funds. State Bank of India (SBI). 1996 with Sahara India Financial Corporation Ltd. established in Jan 14.500 Crores as AUM. 1993. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. and Tata Investment Corporation Ltd.20000 Crore. 2003. manages the UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB). It is presently having more than 1. The sponsor for Tata Mutual Fund are Tata Sons Ltd. Now it has an investor base of over 8 Lakhs spread over 18 schemes. State Bank of India Mutual Fund has more than Rs. Equity Funds and Balance Funds. Income Funds. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.8 crore.818 investors in its various schemes. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk .. • Standard Chartered Mutual Fund . The schemes of UTI Mutual Fund are Liquid Funds. 225 cr. Today it is the largest Bank sponsored Mutual Fund in India. Limited. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. Sahara Asset Management Company Private Limited incorporated on August 31.return profiles. • Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act. • Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It was the first company to launch dedicated gilt scheme investing only in government securities. 5. Limited is the Trustee.ICICI Asset Management Company Limited incorporated on 22nd of June. 1995 works as the AMC of Sahara Mutual Fund.
with the corporate office in Mumbai.Pvt. 1996 with Excorts Finance Limited as its sponsor. Open end Tax Saving schemes. pension funds and non-profit organisations. 1987 with Canara Bank acting as the sponsor. 2000 and headquartered in Mumbai. • Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities. This is the first close end diversified equity scheme serving the needs of Indian retail investors focussing on a long-term capital appreciation. • Escorts Mutual Fund Escorts Mutual Fund was setup on April 15. Benchmark Asset Management Company Pvt.2 bn. The Trustee is Standard Chartered Trustee Co. • Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance . 2001 with Niche Financial Services Pvt. incorporated on March 2. • Canbank Mutual Fund Canbank Mutual Fund was setup on December 19. Canbank Investment Management Services Ltd. Ltd. and AMC. corporations. Closed end Income schemes and Open end Fund of Funds schemes to offer. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. • Franklin Templeton India Mutual Fund The group. is the AMC. • Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12. The Trustee Company is Escorts Investment Trust Limited. 2005). Open end Income and Liquid schemes. the Alliance Capital Asset Management India (Pvt) Ltd. Ltd. 2000 sponsored by Standard Chartered Bank.Ltd. (as of April 30. The Corporate Office of the AMC is in Mumbai. Open end Hybrid schemes. Frnaklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409. as the sponsorer and Benchmark Trustee Company Pvt. Its AMC was incorporated on December 1.Standard Chartered Mutual Fund was set up on March 13. Ltd. Morgan Stanley Investment Management (MISM) was established in the year 1975. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). as the Trustee Company. The Trustee is ACAM Trust Company Pvt. Its services are also extended to high net worth individuals and retail investors. 1995 with the name Escorts Asset Management Limited. It is one of the largest financial services groups in the world. Ltd. Open end Sector Equity schemes. 1993 is the AMC. investmenty management and credit services. They have Open end Diversified Equity schemes. Incorporated on October 16. • Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30. of Delaware (USA) as sponsorer. It provides customized asset management services and products to governments. 1994 with Alliance Capital Management Corp.
In the last 5 years we have seen annual growth rate of 9%. • Trying to curb the late trading practices. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund. Cholamandalam Trustee Co. • LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. with over US$1trillion assets under management worldwide. Ltd. • Our saving rate is over 23%.537 crore. A large number of plans have come up from different financial resources.Company Ltd. 1882.50. 2 Crores towards the corpus of the Fund. • Introduction of Financial Planners who can provide need based advice. Today most of the mutual funds are concentrating on the 'A' class cities.90. With the Stock markets soaring the investors are attracted towards these schemes. mutual fund assets will be double. 1997. • Number of foreign AMC's are in the que to enter the Indian markets like Fidelity Investments.000 crore. • Emphasis on better corporate governance. There is a big scope for expansion. Indian mutual fund industry reached Rs 1. highest in the world. . by year 2010. • We have approximately 29 mutual funds which is much less than US having more than 800. the total assets of all scheduled commercial banks should be Rs 40. is the Trustee Company and AMC is Cholamandalam AMC Limited.4% during the rest of the decade. Only channelizing these savings in mutual funds sector is required. was setup on January 3. CONCLUSION The Mutual fund industry is growing at a tremendous pace. US based. • Mutual fund can penetrate rurals like the Indian insurance industry with simple and limited products. According to the current growth rate. It is estimated that by 2010 March-end. • 'B' and 'C' class cities are growing rapidly. Some facts for the growth of mutual funds in India • 100% growth in the last 6 years. • SEBI allowing the MF's to launch commodity mutual funds. Soon they will find scope in the growing cities. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act. It contributed Rs. The Company started its business on 29th April 1994. Future of Mutual Funds in India By December 2004. The annual composite rate of growth is expected 13.
OCCUPATION:……………………… 1. The Indian investor generally investors over a period of 2 to three years. Also there is a greater tendency to invest in fixed deposits due to the security attached with it. companies still need to create awareness and understand the Psyche of the Indian customer. MONTHLY INCOME:…………………………. QUESTIONNAIRE ON MUTUAL FUNDS NAME:………………………………………… AGE:……………………….Only a small segment of the investors still invest in Mutual funds and the main sources of information still are the financial advisors followed by advertisements in different media. What is your source of information while investing in mutual funds? a) Internet [ ] b) Magazine [ ] c) Newspaper [ ] d) Financial Advisor [ ] e) Spouse [ ] f) Friends [ ] g) Advertisements [ ] 2. Which type of fund you prefer the most? a) Regular income [ ] b) Debt [ ] . Are you a regular or a new investor in mutual fund? REGULAR [ ] NEW [ ] 3. Your investment portfolio consists in %) a) Real Estate [ ] b) Post office schemes [ ] c) Mutual Funds [ ] d) Debt [ ] e) Shares [ ] f) Fixed Deposits [ ] 4. In order to excel and make mutual funds a success.
What type of return you expect? Monthly [ ] Quarterly [ ] Semi annual [ ] Annual [ ] 8.c) Diversified Equity [ ] d) Sector funds [ ] e) ELSS (tax shield) [ ] 5 . What are your near future liabilities? Child marriage [ ] Education [ ] Any other please specify…………………………. Which Features attract you the most while choosing a specific Mutual Fund? a) Flexibility [ ] b) Return [ ] c) Managed by professional people [ ] d) Risk Diversion [ ] e) Less Expenses [ ] 6. What type of Mutual Fund Scheme you prefer? a) Open Ended Scheme [ ] b) Close Ended Scheme [ ] 7.com/135-projects-mutual-funds.html .citefin. http://www. What is your investment horizon? Up to 6 months [ ] Up to 1 year [ ] Up to 2 years [ ] Up to 3 years [ ] Up to 5 years [ ] Up to 10 years [ ] 9.
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