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An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by fund managers(money managers), who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.
According to the last count there are more than 10,000 mutual funds in North America! That means there are more mutual funds than stocks.

A) Open ended funds Close ended funds

B) Equity scheme. Debt scheme. Hybrid scheme.

Diversified equity schemes - Typically such scheme have 20-50 or even more equity stocks from a wide range of industries to invest on. Eg: HDFC equity scheme and Reliance vision fund.
Index scheme - The principal objective of the index scheme is to give a return in the line with the index. Eg: UTI master index and Franklin India index. Sectoral schemes It invests its corpus in the equity stocks of a given sector such as information technology, telecommunications, power, pharmaceuticals and so on. Eg: UTI petro and Reliance Pharma fund.

Gilt schemes - A Government securities scheme invests only in Government bonds(which may typically account for 80-85% of the corpus) and cash(which may typically account for 10-15% of the corpus). Eg: Tata GSF and UTI G-Sec. Mixed debt scheme It invests in Government bonds, Corporate bonds and cash. Typically 30-40%- is invested in government bonds,40-55% is invested in corporate bonds and the balance in cash. Eg: HDFC income and UTI bond. Floating rate debt scheme Cash scheme

Equity oriented schemes Is a scheme titled in favor of equities which may account for about 60% of the portfolio, the balance being invested in debt instruments(bonds and cash) Eg: HDFC Prudence and Unit scheme 95.

Debt oriented scheme Is a scheme titled in favour of debt instruments. The most popular debt oriented schemes in India are the monthly income plans which typically have a debt component of 85-90%(dominated by bonds) and an equity component of 10-15%. Eg: Birla MIP and FT India MIP.

A collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices.

The person responsible for implementing a fund's investing strategy and managing its portfolio trading activities. A fund can be managed by one person, two people or by a team of three or more people. Fund managers are paid a fee for their work, which is a percentage of the fund's average assets under management.

Qualifications in business studies, management, statistics, finance, mathematics, accounting or economics, as can an MBA or similar professional qualification. Key skills for fund managers Ambition Confidence Determination Strong time management skills Ability to work effectively under pressure Good IT skills Analytical skills Team-working skills Numerical skills Problem-solving skills Communication skills.

A fund manager is responsible : In deciding the best investment plan for an individual as per his income, age as well as ability to undertake risks.

For making an individual aware of the various investment tools. For designing customized investment solutions for the clients. To be unbiased and a thorough professional. For making informed financial recommendations and decisions. For keeping knowledge up-to-date about the world economy, current financial news, financial markets and more.

Specification of investment objectives and constraints

Choice of asset mix

Formulation of portfolio strategy


Selection of securities

Portfolio execution

Portfolio revision

Portfolio evaluation

Investment objectives and constraints Objectives -return requirements -risk tolerance Constraints and Preferences -investment horizon -taxes and regulations Choice of asset mix Should be based on the investor preference and risk appetite. Can be invested in the following assets Cash, bonds, stock, debentures others.

Formulation of portfolio strategy Active portfolio strategy Passive portfolio strategy Selection of security Selection of bonds on basis of yield to maturity, risk to default, tax shield and liquidity. Selection of stocks on the basis of technical analysis, fundamental analysis and random selection.

Portfolio execution Trading of securities Buying of securities chosen or Selling of securities chosen Portfolio revision Portfolio rebalancing Portfolio upgrading Portfolio evaluation Treynor measure Sharpe measure Jensen measure


of fluctuating returns

assessment diversification issue

Over Cost Tax




A N Y Q U E S T I O N S ??