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A Mutual Fund Is A Professionally-managed Firm Of Collective Investments That Pools Money From Many Investors And Invest It In Stocks, Bonds Etc.

Mutual Fund Have A Fund Manager Who Invests The

Money On Behalf Of The Investors By Buying/Selling

Stocks, Bonds Etc.

Professional Investment Management

Diversification Small Investment Amounts Lower Investment Cost Liquidity

Well Regulated- AMFI

The ownership of the mutual fund is in the hands of the Investors.

A Mutual Fund is managed by investment professional and other Service providers

The pool of Funds is invested in a portfolio of marketable investments.

The investors share in the fund is denominated by units. The value of the units changes with change in the portfolio value, every day.

The value of one unit of investment is called net asset value (NAV). The investment portfolio of the mutual fund is created according to the stated investment objectives of the Fund.

To provide an opportunity for lower income groups to acquire without much difficulty, property in the form of shares.

To cater mainly of the need of individual investors who have limited


To manage investors portfolio that provides regular income, growth, safety, liquidity, tax advantage, professional management and diversification.

Professional Management
Diversification of portfolio Convenient Administration Return Potential Low Costs Liquidity for some schemes Transparency

Choice of schemes Tax benefits Well regulated

Two methods Lump sum or one time payment method Systematic investment plan (SIP)

Under this a fixed sum is invested

each month on a fixed date of a month.

Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the

NAV is low.

MFs are subject to market fluctuation

No fixed return Entry and exit load (abolish right now) No Guarantees Management Risk



The Fund Sponsor

Any person or corporate body that establishes the Fund and registers it with SEBI.

Forms a Trust and appoints a Board of Trustees.

Appoints a Custodian and Asset Management Company either directly or through Trust, in accordance with SEBI regulations.

SEBI regulations also define that a sponsor must contribute at least 40% to the net worth of the asset management company.



Created through a document called the Trust Deed that is executed by the Fund Sponsor and registered with SEBI.

The Trust i.e. the mutual fund may be managed by a Board of Trustees i.e. a body of individuals or a Trust Company i.e. a corporate body.
Protector of unit holders interests. 2/3 of the trustees shall be independent persons and shall not be associated with the sponsors.

Rights and Roles of Trustees:

Approve each of the schemes floated by the AMC. The right to request any necessary information from the AMC.

May take corrective action if they believe that the conduct of the fund's business is not in accordance with SEBI Regulations.
Have the right to dismiss the AMC Ensure that, any shortfall in net worth of the AMC is made up.


AMC has to discharge mainly three functions as under:

1) Taking investment decisions and making investments of the funds through market dealer/brokers in the secondary market securities or directly in the primary capital market or money market instruments. 2) Realize fund position by taking account of all receivables and realizations, moving corporate actions involving declaration of dividends, etc to compensate investors for their investments in units. 3) Maintaining proper accounting and information for pricing the units and arriving at net asset value (NAV), the information about the listed schemes and the transactions of units in the secondary market. An AMC has to give feedback to the trustees about its fund management operations and has to maintain a perfect information system.

CUSTODIANS OF MUTUAL FUNDS:A custodians role is safe keeping of physical securities and also keeping a tab on the corporate actions like rights, bonus and dividends declared by the companies in which the fund has invested. The Custodian is appointed by the Board of Trustees. Mutual funds run by the subsidiaries of the nationalized banks have their respective sponsor banks as custodians like Canara bank, SBI, PNB, etc. Foreign banks with higher degree of automation in handling the securities have assumed the role of custodians for mutual funds.

RESPONSIBILITY OF CUSTODIANS:Receipt and delivery of securities Holding of securities. Collecting income Holding and processing cost Corporate actions etc

Association of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. AMFI has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.


Promote the interests of the mutual funds and unit holders and interact with regulators- SEBI/RBI/Govt./Regulators.
To set and maintain ethical, commercial and professional standards in the industry and to recommend and promote best business practices and code of conduct to be followed To increase public awareness and understanding of the concept and working of mutual funds in the country To undertake investor awareness programmes and to disseminate information on the mutual fund industry. 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.


All mutual funds are regulated by the Securities and Exchanges Board of India (SEBI). It issued detailed guidelines for their setting up and operation on 20th January, 1993.
The following are the highlights of SEBI regulations:

Mutual funds are to be established in the form of a trust under the Indian Trusts Act, 1882 and operated by separate asset management companies (AMC) They have to set up a Board of Trustees and Trustee Companies and constitute their Board of Directors. The minimum net worth of AMCs is stipulated at Rs. 5 crore(later increased to Rs. 10 crore). The AMCs and trustees are to be two separate legal entities and an arms length relationship must be maintained between the two.

An AMC or its affiliate cannot act as a manager in any other fund.

The AMCs are required to furnish SEBI their respective Memorandum and Articles of Association for approval. Mutual funds dealing exclusively with money market instruments (Such as CDs, CPs and bill discounting) are to be regulated by the Reserve Bank of India. All schemes floated by mutual funds are to be registered with SEBI. There are some very detailed guidelines for disclosures in offer document, offer period, investment guidelines etc. NAV to be declared everyday Disclose on website, AMFI, newspapers Quarterly, Half-yearly results, annual reports 19 Select Benchmark depending on scheme and compare

By Structure
Open-Ended anytime enter/exit Close-Ended Schemes redemption after period of scheme is

over, listed.


Equity Diversified Schemes- Invest in equity Sectors Schemes Focus on particular sectors

Index Schemes Invest in all Stocks comprising the index

Equity Tax saving Scheme Demand a lock in period of 3 years Dynamic Funds Alter the exposure to different assets classes based on market scenario

Debt Schemes Invest in medium and short term debts Floating Rate Funds Invest in debt securities with floating interest rates

Birla Mutual Fund BOB Mutual Fund Canara Bank Mutual Fund Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund LIC Mutual Fund Prudential ICICI Mutual Fund Reliance Mutual Fund SBI Mutual Fund Franklin Templeton Investments

HDFC Mutual Fund

HSBC Mutual Fund ING Vysya Mutual Fund Kotak Mahindra Mutual Fund Franklin Templeton Investments HDFC Mutual Fund HSBC Mutual Fund

ING Vysya Mutual Fund

Escorts Mutual Fund