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MF Module 1
MF Module 1
Growth Option
The relative size of MF companies is assessed by their
assets under management (AUM). When a scheme is
first launched, AUM is the amount mobilized from
investors .
Further, if the scheme is open to receiving money
from investors even post-NFO, then such
contributions from investors boost the AUM.
Conversely, if the scheme pays any money to the
investors, either as dividend or as consideration for
buying back the units of investors, the AUM falls.
AUM captures the impact of the profitability metric &
the flow of unit-holder money to or from the scheme
Professional Management
Affordable Portfolio Diversification
Liquidity
Economies of scale
Tax Deferral
Tax Benefits
Convenient Options
Investment Comfort
Regulatory Comfort
Systematic Approach to Investments
Low Costs
Transparency
Flexibility
Well regulated(systematic approach)
Tax Benefits
ELSS
RGESS offers a rebate to first time retail
investors (in direct equity) with annual income
upto Rs. 12 lakhs
RGESS Investment limit is 50,000
Rebate of 50% on amount invested can be
claimed as deduction from taxable income
Dividends received from mutual fund
schemes are tax-free in the hands of the
investors.
Lack of portfolio customization
Choice overload
No control over costs
NAV:- Net Asset Value =market value of the assets
of the scheme -liabilities.
Classification by Nature
Debt
Equity
Hybrid/Balanced Fund
Classification by Others
Actively Managed Funds
Passive Funds
Exchange Traded Funds
Open-Ended Funds
enter or exit at any time
does not have any kind of time frame in which it is to be
closed
Sale transaction-at sales price linked to NAV
Re-purchase transaction-re-purchase price that is linked
to the NAV
Some may exit wholly or partly, still the scheme
continues with remaining investors
on-going entry & exit of investors implies that the unit
capital in an open-ended fund would keep changing on a
regular basis
Close-Ended Funds
Have a fixed maturity
Investors can buy units only during its NFO
Post NFO it is traded on SE-done through listing of
scheme in SE
Listing is compulsory for close-ended schemes
After NFO, investors who want to buy units will have to
find a seller for those units in the SE and vice versa
Sale & purchase of units happen to or from counter-
party in the SE– and not to or from the scheme.
Transaction price is likely different from
NAV(higher/lower based on demand & supply)
Unit capital of the scheme remains stable or fixed.
Interval Funds
Combination of open-ended & close-ended schemes