 The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. bonds etc. short-term money market instruments and other securities. . the worldwide value of all mutual funds totals more than $US 26 trillion.MUTUAL FUNDS  A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks.  Mutual funds have a fund manager who invests the money on behalf of the investors by buying / selling stocks. bonds.  Currently.


 Once SEBI is convinced.  . the sponsor creates a Public Trust (the Second tier) as per the Indian Trusts Act.STRUCTURE OF MF IN INDIA  Mutual Funds in India follows a 3-tier structure. who thinks of starting a mutual fund. 1882. There is a Sponsor (the First tier). which is the market regulator and also the regulator for mutual funds. The Sponsor approaches the Securities & Exchange Board of India (SEBI).

to manage investor’s money. . The AMC has to be approved by SEBI.WHO MANAGES INVESTOR’S MONEY?  This is the role of the Asset Management Company (the Third tier).  Trustees appoint the Asset Management Company (AMC).  The AMC’s Board of Directors must have at least 50% of Directors who are independent directors.  The AMC in return charges a fee for the services provided and this fee is borne by the investors as it is deducted from the money collected from them.

 The Principal objective of AMFI are to    Promote the interests of the mutual funds and unit holders and interact with regulators.ASSOCIATION OF MUTUAL FUNDS IN INDIA  AMFI (Association of Mutual Funds in India) is the industry association for the mutual fund industry in India which was incorporated in the year 1995. ./Regulators. To increase public awareness and understanding of the concept and working of mutual funds in the country To develop a cadre of well trained distributors and to implement a programme of training and certification for all intermediaries and others engaged in the industry.SEBI/RBI/Govt.


Ended: These are funds that are open only for a specific period after which you'd have to buy them from the secondary market.TYPES OF MUTUAL FUND SCHEMES  Open Ended: These are funds that you can buy and sell anytime throughout the year. schemes: These schemes combine the features of open ended and close ended schemes and are available for purchase or sale during a select period  Close  Interval .

Contd.  By Investment Objective Equity (Growth) – only in Stocks – Long Term (3 years or more)  Debt (Income) – only in Fixed Income Securities (3-10 months)  Liquid/Money Market (including gilt) – Short-term Money Market (Govt..)  Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)   Other Schemes Tax Saving Schemes  Special Schemes  .

SPECIAL SCHEMES-EXAMPLE  Funds based on Size of the Companies Invested in Large cap funds: Funds that invest in companies whose total market cap is above Rs40bn  Mid cap funds: Funds that invest in companies whose market cap is between Rs20-40bn  Small cap funds: Funds that invest in companies whose market cap is below Rs20bn  .

to an equity scheme of the same mutual fund . and more units when the share prices are low. at a fixed interval. Average cost price tends to fall below the average NAV.  Systematic Transfer Plan (STP)  Invest in debt oriented fund and give instructions to transfer a fixed sum. (6 months to 10 yearsthrough post-dated cheques or Direct Debit facilities)  Fewer units when the share prices are high.INVESTMENT STRATEGIES  Systematic Investment Plan (SIP)  Invest a fixed sum every month.

Investment strategies  Systematic Withdrawal Plan (SWP)  Here the investor invests a lump sum amount and withdraws some money regularly over a period of time. . This results in a steady income for the investor while at the same time his principal also gets drawn down gradually.

ADVANTAGES OF MUTUAL FUNDS  Expert on your side: When you invest in a mutual fund. you could get yourself a number of units across a number of companies and industries when you invest in a fund! Easy investing: You can invest in a mutual fund with as little as Rs. or through your bank or financial adviser. you buy     into the experience and skills of a fund manager and an army of professional analysts Limited risk: Mutual funds are diversification in action and hence do not rely on the performance of a single entity. 5. . Salaried individuals also have the option of investing in a monthly savings plan.000. or even over the internet. More for less: For the price of one blue chip stock for instance. Convenience: You can invest directly with a fund house.

Tax benefits: Over the years. Transparency: As an investor. information on specific investments made by the mutual fund and the fund manager's strategy and outlook. by sheer scale of its investments is able to carry out cost-effective brokerage transactions.Contd…  Investor protection: A mutual fund in India is registered with     SEBI. Low transaction costs: A mutual fund. Quick access to your money: It's good to know that should you need your money at short notice. which also monitors the operations of the fund to protect your interests. you can usually get it in four working days. tax policies on mutual funds have been favorable to investors and continue to be so . you get updates on the value of your units.