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MUTUAL FUND

SUBMITTED TO: MRS.SIMMI VASHISHTHA SUBMITTED BY: SUKHWINDER KARISHMA MBA(SM) F

CONTENT
MEANING OF MUTUAL FUND WORKING REGULATORY BODY HISTORY TYPES ADVANTAGES DISVANTAGES SELECTION PROCEDURE HOW TO INVEST INVESTMENT MENU CARD SEBI REGULATION MANAGEMENT

MUTUAL FUND A mutual fund is the trust that pools the savings of a number of investors who share a common financial goal.

REGULATORY BODY FOR MUTUAL FUND

Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual funds. All the mutual fund must get registered with SEBI.

HOW MUTUAL FUND WORKS

BRIEF HISTORY
1964- UTI was established. 1987- entry of Public Sector banks. Canara bank (Canbank) SBI (magnum regular income) 1989- LIC (dhanraksha, dhanvridhi)

1990- GIC (GIC safe,GIC rise)


1995- Entry of Private Sector.

SCHEMES OF MF
TYPES

OWNERSHIP

SCHEMES OF OPERATION

PORTFOLIO

LOCATION

ACCORDING TO OWNERSHIP

OWNERSHIP

PUBLIC SECTOR

PRIVATE SECTOR

ACCORDING TO SCHEMES OF OPERATION

SCHEMES OF OPERATION

OPEN ENDED SCHEMES

CLOSE ENDED SCHEMES

INTERVAL SCHEMES

PORTFOLIO
INCOME FUND GROWTH FUND BALANCED FUND

STOCK/EQUITY FUND
BOND FUND SPECIALISED FUND TAXATION FUND

ACCORDING TO LOCATION

LOCATION

DOMESTIC FUNDS

OFF-SHORE FUNDS

ADVANTAGES OF MUTUAL FUND


1. 2. 3. 4. 5. 6. 7. 8. 9. Diversification Professional fund management Liquidity Reduced risk Tax advantage Flexibility Higher returns Investor protection Choice of schemes

LIMITATIONS OF MUTUAL FUND


Liquidity crisis Lack of innovation Inadequate research No provision for performance guarantee Inadequate disclosure Delay in service No rural investment Poor risk management

INVESTING CHECKLIST
Draw up your asset allocation
Financial goals & Time frame (Are you investing for retirement? A childs education? Or for current income? ) Risk Taking Capacity

Identify funds that fall into your Buy List

Obtain and read the offer documents


Match your objectives
In terms of equity share and bond weightings, downside risk protection, tax benefits offered, dividend payout policy, sector focus

Check out past performance


Performance of various funds with similar objectives for at least 3-5 years (managed well and provides consistent returns)

CHECKLIST CONTD
Think hard about investing in sector funds
For relatively aggressive investors Close touch with developments in sector, review portfolio regularly

Look for `load' costs


Management fees, annual expenses of the fund and sales loads

Diversify, but not too much

INVESTMENT MENU CARD


Instrument EPF PPF NSC FDs Banks & Post Office Senoir Citizen Savings Scheme Tax Benefit Return 8.50% 8% 8% 5.70 to 8.50% 9% Duration Long Term Long Term Long Term Short Term Long Term

Mutual Funds
ULIP Direct Equity Gold Real Estate

Market Linked
Market Linked Market Linked Market Linked Market Linked

Long Term & Short Term


Long Term Long Term Short Term Long Term

How to invest in Mutual Funds?


Step 3 Select the ideal mix of schemes Step 2 Choose the right mutual fund. 1. The track record of performance over the last few years in relation to the appropriate Benchmark and similar funds in the same category 2. How well the mutual fund is organized to provide efficient, prompt and personalized service. 3. Degree of transparency as reflected in frequency an d quality of their communications. Investing in just 1 scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals.

Step 1 Identify your investment needs 1. What are my investment objectives and needs? 2. How much risk am I willing to take? 3. What are my cash flow requirements?

FACILITIES AVAILABLE TO INVESTORS


Repurchase Facilities Reissue Facilities Roll Over Facilities Lateral Shifting Facilities

SEBI REGULATION,1996

MANAGEMENT OF MUTUAL FUND Sponsor AMC (Asset Management Company) Custodian Trustee

Sponsor :Any person who alone or in combination with another body establish a mutual fund is called as sponsor

Trustee :Trustee is a person who holds the property of MF interest for the benefit of unit holders and includes a trustee company and directors of trustee company

AMC :The sponsor or the trustee shall appoint an AMC. The application for AMC has to be made in form D. Custodian:Custodian is a person who has been guaranteed is a certificate of registration to carry on the business of custodian of securities.

THE SPONSOR
Application and Fee Eligibility Criteria Grant of Certificate of Registration Service Fee
Net Asset as on 31st March (RS. Crores) Upto 500 500-1000 1000-3000 3000-5000 5000-10000 Above 10000 Services fee payable (rs. Lakhs) 2.50 3.50 4.50 5.50 6.50 7.50

THE TRUSTEES
Regulation 14: Trust deed to be registered under the Registration Act Regulation 15: Contents of trust deed Regulation 16: Disqualification from being appointed as trustees Regulation 17: Approval of the Board for appointment of trustees Regulation 18: Rights & obligations of the trustees

ASSET MANAGEMENT COMPANY


Regulation 21: Eligibility criteria for appointment of asset management company Regulation 22: Terms and conditions Regulation 23: Procedure where the approval is not granted Regulation 24: Restrictions on business activities of the asset management company Regulation 25: Asset Management Company and its obligations

CUSTODIAN
Regulation 26: Appointment of custodian Regulation 27: Agreement with the custodian

SEBI REGULATION 28 TO 42- LAUCHING OF MUTUAL FUNDS

ADVERTISEMENT CODE
An investment shall be truthful, fair, clear, and shall not contain a statement, promise or forecast which is untrue or misleading. The advertisement not to be designed in content and format or in print as to be likely to disguise the significance of any statement. The sales literature may contain only information.

SUMMING UP
A mutual fund represents a vehicle for collective investment. In India, the following entities are involved in a mutual fund operation the sponsor, the mutual fund, the trustees, the AMC, the custodian, and the registrars and transfer agents. A mutual fund scheme may be a close-ended or an open-ended scheme. Mutual funds invest in three broad categories of financial assets: stocks, bonds, and cash. The investments of a mutual fund are subject to certain regulations.
Mutual fund schemes are periodically evaluated by independent institutions. Mutual funds offer various options and value-added services to attract and retain customers. Mutual funds offer the advantages of diversification, professional management, liquidity, assured allotment, tax savings etc.