KES' B K Shroff College of Arts &

M H Shroff College of Commerce

ISO 9001: 2008 Certified & NAAC accredited A Grade
Institution

Project Report On: Money market mutual fund

Submitted To: Mrs. Vaishali Ojha
Date of Submission: 25th September 2018
ROLL NOS. NAME OF THE STUDENTS

51 PARAS MEHTA

52 RIDHIMA CHAUHAN

53 MITESH PADIA

54 VISHAL GUPTA

57 MOKSHA SANGHVI

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 MONEY MARKET MUTUAL FUND

CONTENTS
1. INTRODUCTION OF MONEY MARKET MUTUAL FUND
2. FEATURES OF MONEY MARKET MUTUAL FUND
3. IMPORTANCE E OF MONEY MARKET MUTUAL FUND
4. TYPES OF CALL MONEY MARKET
5. MUTUAL FUNDS IN INDIA
6. CUSTODION IN MUTUAL FUND
7. ROLE OF A REGISTRAR AND TRANSFER AGENTS
8. SEBI'S DIRECTIVES FOR MUTUAL FUNDS
9. PERFORMANCE OF MUTUAL FUNDS IN INDIA
10.ADVANTAGES OF MUTUAL FUNDS
11.DISADVANTAGES OF CALL MONEY MARKET
12.CONCLUSION
13.REFERENCES

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 INTRODUCTION ON MONEY MARKET MUTUAL FUND

Mutual funds are financial intermediaries which collect the savings of investors and invest
them in a large and well diversified portfolio of securities such as money market instruments,
corporate and Government bonds arid equity shares of joint stock companies. A mutual funds
a pool of commingle funds invested by different investors, who have no contact with each
other. Mutual funds are conceived as institutions for providing small investors with avenues
of investment in the capital market.

 Money market basically refers to a section of the financial market where financial
instruments with high liquidity and short-term maturities are traded.
 India money market has seen exponential growth just after the globalization initiative
in 1992.
 Money market has become a component of the financial market for buying and selling
of securities of short-term maturities, of one year or less, such as treasury bills and
commercial papers

FEATURES OF MUTUAL FUND

1) A mutual fund that invests only in money markets such as commercial papers, commercial bills, and
treasury bills and other instruments specified by RBI
2) These funds have a minimum lock-in period of 15 days. Till recently, the RBI regulated money
market funds but they now come under SEBI.

Examples: Bills of exchange, repurchase agreements, federal funds, and short-lived mortgage

IMPORTANCE OF MONEY MARKET

1) Growth:: Growth funds strive for large capital gains; In general, growth funds seem to
have the highest risk • Growth-income: while growth-income funds seek both dividend
income and capital gains from the common stocks. Income growth funds and
intermediate risk.
2) Balanced income: The balanced fund generally holds a portfolio of diversified
common stocks, preferred stocks and bonds with the hope of realizing capital gains,
dividend and interest income, while at the same time, conserving the principal Income
funds concentrate heavily on high interest and high dividend yielding securities.
balanced funds, the lowest risk
3) Industry specific funds: The industry specific mutual funds obviously specialize in
selected industries such as chemicals, petroleum or power stocks.

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 TYPES OF CALL MONEY MARKET

Two major fund categories of mutual funds are closed-end funds and the open-end funds.
Open-end funds are commonly referred to as the mutual funds.

Closed-end Funds:

 Firstly, closed-end fund Investment Company cannot sell share units after its initial
offering. Its growth in terms of the number of share is limited. The shares are issued
like the new issues of any other company; listed and quoted on a stock exchange.
Secondly, the shares of the closed-end funds are not redeemable at their NAV as in
the case of open-end funds. On the other hand, these shares are traded in the
secondary market on a stock change, at market prices that may be above or below
their Net Asset Value (NAV).
 The objectives of the closed-end funds may differ from that of the open-end funds.
 The prices of closed-end mutual funds' shares are determined by demand and supply
and not by NAV as in the case of open-end mutual fund shares. The minimum amount
of the fund is Rs.20 crores or 60% of targeted amount. Redemption is after a specified
period (4 to 7 years). Morgan Stanley's scheme is for 15 years.

Open-end Funds:

 The open-end mutual funds are characterised by the continual selling and redeeming
of shares. In other words, mutual funds do not have a fixed capitalisation. It sells its
shares to the investing public, whenever it can, at their Net Asset Value per share
(NAV) and stands ready to repurchase the same, directly from the investing public, at
the net asset value per share. Minimum amount of the fund is Rs.50 crores or 60% of
targeted amount. Examples are UTFs Unit 64, Kothari/ Pioneer, Prima and LIC
schemes.

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 MUTUAL FUNDS IN INDIA

The first mutual fund to be set up was the Unit Trust of India in 1964 under an Act of
Parliament. During the years 1987-1992, seven new mutual funds were established in the public
sector. In 1993, the government changed its policy to allow the entry of private corporates and
foreign institutional investors into the mutual fund segment. By the end of March 2000, apart
from UTI there were 36 mutual funds, 9 in the public sector and 27 in the private sector.

The Unit Scheme 1964 commonly referred to as US 64, which is a balanced fund, is the biggest
scheme with a corpus of about Rs200bn. Most of its investors believe that the UTI is
government owned and controlled, which, while legally incorrect, is true for all practical
purposes.

The second largest category of mutual funds is the ones floated by nationalized banks. Can
bank Asset Management floated by Canara Bank and SBI Funds Management floated by the
State Bank of India are the largest of these. GIC AMC floated by General Insurance
Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other
prominent ones.

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 CUSTODION
 A mutual fund custodian is a trust company, bank or similar financial institution
responsible for holding and safeguarding the securities owned within a mutual fund
 A mutual fund's custodian holds assets for safekeeping and can also provide a range
of services including fund administration, fund accounting, legal, compliance, tax
support and transfer agency services
 Since they are responsible for the safety of assets and securities that may be worth
hundreds of millions or even billions of dollars, custodians generally tend to be
large and reputable firms. A custodian is sometimes referred to as a "custodian
bank

Role of a Registrar and Transfer Agents

• It is binding for the respective Mutual Fund house to maintain a record of all such
transactions. This is because it would become a burden for a Mutual Fund house to
take care of all these transactions on its own.

• These agencies can directly handle these requests made by investors. This job is
performed by people who are also known as Registrar and Transfer agents

• It is the sole responsibility of an R & T agent to maintain the records of all such
transactions carried by them on behalf of the fund house, through various branches of
offices set up in various parts of the country. These agencies act as a single -window
system for investors.

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SEBI'S DIRECTIVES FOR MUTUAL FUNDS

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The Government brought mutual funds in the security market under the regulatory framework
of the Securities and Exchange Board of India (SEBI) in the year 1993. SEBI issued
guidelines in the year 1991 and a comprehensive set of regulations relating to the
organisation and management of mutual funds in 1993.

SEBI Regulations for Mutual Funds (20.1.1993)

The regulations bar mutual funds from options trading, short selling and carrying forward
transactions in securities. The mutual funds have been permitted to invest only in transferable
securities in the money and capital markets or any privately placed debentures or securities
debt. Restrictions have also been placed on them to ensure that investments under an
individual scheme, do not exceed five per cent and investment in all the schemes put together
does not exceed 10 per cent of the corpus. Investments under all the schemes cannot exceed
15 percent of the funds in the shares and debentures of a single company.

SEBI grants registration to only those mutual funds that can prove an efficient and orderly
conduct of business. The track record of sponsors, a minimum experience of five years in the
relevant field of financial services, integrity in business transactions and financial soundness
are taken into account.

Performance of Mutual Funds in India

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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.

 The year was 1963. Unit Trust of India invited investors or rather to those who
believed in savings, to park their money in UTI Mutual Fund. The performance of
mutual funds in India in the initial phase was not even closer to satisfactory level.
People rarely understood, and of course investing was out of question. But yes, some
24 million shareholders were accustomed with guaranteed high returns by the
beginning of liberalization of the industry in 1992. This good record of UTI became
marketing tool for new entrants.
 The expectations of investors touched the sky in profitability factor. However, people
were miles away from the preparedness of risks factor after the liberalization. The
Assets under Management of UTI was RS. 67bn. by the end of 1987. Let me
concentrate about the performance of mutual funds in India through figures. From Rs.
67bn. the Assets under Management rose to Rs. 470 bn. in March 1993 and the figure
had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn.
 The net asset value (NAV) of mutual funds in India declined when stock prices
started falling in the year 1992. Those days, the market regulations did not allow
portfolio shifts into alternative investments. There was rather no choice apart from
holding the cash or to further continue investing in shares. One more thing to be
noted, since only closed-end funds were floated in the market, the investors 14
disinvested by selling at a loss in the secondary market. The performance of mutual
funds in India suffered qualitatively.
 The 1992 stock market scandal, the losses by disinvestments and of course the lack of
transparent rules in the whereabouts rocked confidence among the investors. Partly
owing to a relatively weak stock market performance, mutual funds have not yet
recovered, with funds trading at an average discount of 1020 percent of their net asset
value. The measure was taken to make mutual funds the key instrument for long-term
saving. The more the variety offered, the quantitative will be investors.
 At last to mention, as long as mutual fund companies are performing with lower risks
and higher profitability within a short span of time, more and more people will be
inclined to invest until and unless they are fully educated with the dos and don'ts of
mutual funds

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 ADVANTAGES OF MUTUAL FUNDS

In India, commercial banks play a dominant role in the call loan market. They used to borrow
and lend among themselves and such loans are called inter-bank loans. They are very popular
in India. So, many advantages are available to commercial banks. They are as follows:

 Professional Money Management & Research

Mutual funds are managed by professional fund managers who regularly monitor market
trends and economic trends for taking investment decisions. They also have dedicated
research professionals working with them who make an in depth study of the investment
option to take an informed decision.

 Convenience

With features like dematerialized account statements, easy subscription and redemption
processes, availability of NAVs and performance details through journals, newspapers and
updates and lot more; Mutual Funds are sure a convenient way of investing.

 Risk Diversification

Diversification reduces risk contained in a portfolio by spreading it. It is about not putting all
your eggs in one basket. As mutual funds have huge corpuses to invest in, one can be part of
a large and well-diversified portfolio with very little investment.

 Reduction in Costs

Mutual funds have a pool of money that they have to invest. So they are often involved in
buying and selling of large amounts of securities that will cost much lower than when you
invest on your own.

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 DISADVANTAGES OF CALL MONEY MARKET

 No Guarantees: No investment is risk free. If the entire stock market declines in value,
the value of mutual fund shares will go down as well, no matter how balanced the
portfolio. Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own. However, anyone who invests through a mutual
fund runs the risk of losing money.
 Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate
brokers, financial consultants, or financial planners. Even if you don't use a broker or
other financial adviser, you will pay a sales commission if you buy shares in a Load
Fund.
 Taxes: During a typical year, most actively managed mutual funds sell anywhere from
20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its
sales, you will pay taxes on the income you receive, even if you reinvest the money
you made.
 Management risk: When you invest in a mutual fund, you depend on the fund's
manager to make the right decisions regarding the fund's portfolio. If the manager
does not perform as well as you had hoped, you might not make as much money on
your investment as you expected. Of course, if you invest in 21 Index Funds, you
forego management risk, because these funds do not employ managers.

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 CONCLUSION

Mutual funds are funds that pool the money of several investors to invest in equity or debt
markets. Mutual Funds could be Equity funds, Debt funds or balanced funds. Fund are
selected on quantitative parameters like volatility, FAMA Model, risk adjusted returns, and
rolling return coupled with a qualitative analysis of fund performance and investment styles
through regular interactions / due diligence processes with fund managers.

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 REFERENCES

 Investopedia
 www.indianeconomy.net
 www.jagranjosh.com
 www.financialkingdom.in
 Indianmoney.com

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