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Direct - Equity Share Markets, Debt & Bonds Market Indirect - Mutual Funds
INTRODUCTION
A mutual fund is a trust that pools the savings of a number of investors with common financial goals. The collected money is invested in various instruments like debentures, shares, etc. The income generated from these instruments and the capital appreciation is shared by the investors in proportion to the number of units owned by them
HISTORY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank.
2009 ?
FLOW CHART
INVESTORS
FUND MANAGERS
SECURITIES
RETURNS
Open ended
Close ended
Equity
Gilt fund
Income
Index fund
Open-ended Fund
An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period.
Close-ended Fund
A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme.
The aim of growth funds is to provide capital appreciation over the medium to long- term.
Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc.
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents.
These are appropriate for investors looking for moderate growth.
Money Market
These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income.
These schemes invest exclusively in safer shortterm instruments such as treasury bills, commercial paper and government securities, etc.
These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.
Gilt Funds
These funds invest exclusively in govt. securities.
Index Funds
This schemes invest in the securities in the same weightage comprising of an index. This schemes would rise or fall in accordance with the rise or fall in the index
An investment plan to invest a fixed amount regularly at a specified frequency say, monthly or quarterly.
SIP is a simple method of investing used across the world as a means to creating wealth
Dividend Profits given to the investor from time to time. Growth Profits ploughed back into scheme. This causes the NAV to
rise.
NAV Market value of assets of scheme minus its liabilities. Per unit NAV
Valuation date
Entry Load/Front-End Load (0-2.25%) The commission charged at the time of buying the fund. To cover costs for selling, processing Exit Load/Back- End Load (0.25-2.25%) The commission or charge paid when an investor exits from
a mutual fund. Imposed to discourage withdrawals May reduce to zero as holding period increases.
Management risk
Contacting the Asset Management Company directly Web Site Request for agent Agents/Brokers Locate one on AMFI site Financial planners Bajaj Capital etc.
Online Trading Account ICICI Direct Motilal Oswal, Indiabulls- Send agents
SUMMARY
Mutual funds offer investors an affordable way to diversify their investment portfolios. These investments include: stocks, bonds, money markets, real estate, commodities, etc Individually, an investor may be able to own stock in a few companies, a few bonds, and have money in a money market account. Participation in a mutual fund, however, allows the investor to have much greater exposure to each of these asset classes.