Mutual Fund
Content
MUTUAL FUND
CONTENTS : STRUCTURE HISTORY IN INDIA INVESTMENT STRATEGY LEGAL FRMEWORK DYNAMICS & CRITICISM
PRESENTED BY:
ARUP KUMAR NAYAK VIKAS KAUSHIK ASHIS SINGH
INTRODUCTION
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, and commodities such as precious metals). The mutual fund will have a fund manager that trades (buys and sells) the fund's investments in accordance with the fund's investment objective. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Mutual Fund Operation Flow Chart
STRUCTURE
HISTROY IN INDIA
Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21, 1924.. The entire industry, which included a few closedend funds, represented less than $10 million in 1924. The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. The end of the 1960s, there were approximately 270 funds with $48 billion in assets.. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under First Phase - 1964-87 Second Phase - 1987-1993 (Entry of Public Sector Funds) Third Phase - 1993-2003 (Entry of Private Sector Funds) Fourth Phase - since February 2003
A key factor in mutual-fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual retirement accounts (IRAs). .
INVESTMENT STRATEGY
Since mutual funds are essentially pools of money managed by a professional money manager, there are many different mutual fund investment strategies. Potential mutual fund investment strategies are only limited by regulatory issues, the ability of money managers, the desire of a sponsor to establish such a fund and the demand from investors for that type of fund.
Equity Funds Bond or Fixed Income Funds, Balanced Funds
LEGAL FRAMEWORK
Mutual Funds come under the regulation of the Securities and Exchange Board of India and have to meet stringent regulations. Therefore, they cannot just close shop and run away with investors' money. In fact, India happens to have quite stringent rules and norms regarding the setting up of an AMC and making periodic portfolio disclosures (stating where their have invested their money). Moreover, in the set-up of a mutual fund, there is a body of trustees who are supposed to look after the interest of investors whose money is being managed under different schemes. The mutual fund itself is a trust registered under the Indian Trust Act, and is initiated by a sponsor. The sponsor is the person who acts alone or with another corporate to establish a mutual fund. The sponsor then appoints an AMC to manage the investment, marketing, accounting and other functions pertaining to the fund.
DYNAMICS
Dynamic Mutual Funds is a leading Canadian investment company offering comprehensive investment services that cover the entire spectrum of choice, including mutual funds, tax advantage products and customized high net worth programs. Dynamic Funds was established in 1957 and pioneered professional investment management services in Canada in 1963. Today, Dynamic Funds provides an ever-larger number of products and services ranging from mutual funds, tax advantaged products and customized programs for high net worth individuals.
ADVANTAGES
Professional Management Diversification Convenient Administration Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Well regulated
CRITICISM (DISADVANTAGES)
5 Problems With Mutual Funds
Expenses Sub-Optimal Purchases Over Diversification Forced Redemption Tax Consequences
TYPES OF SCHEMES
By Structure
y Open Ended Schemes y Close Ended Schemes y Interval Schemes
By Investment Objectives
y y y y
Growth Schemes Income Schemes Balance Schemes Money Market Schemes
Other Schemes
y Tax Saving Schemes
Special Schemes
y Index Schemes y Sector Specific Schemes
CONTENTS : STRUCTURE HISTORY IN INDIA INVESTMENT STRATEGY LEGAL FRMEWORK DYNAMICS & CRITICISM
PRESENTED BY:
ARUP KUMAR NAYAK VIKAS KAUSHIK ASHIS SINGH
INTRODUCTION
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, and commodities such as precious metals). The mutual fund will have a fund manager that trades (buys and sells) the fund's investments in accordance with the fund's investment objective. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Mutual Fund Operation Flow Chart
STRUCTURE
HISTROY IN INDIA
Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21, 1924.. The entire industry, which included a few closedend funds, represented less than $10 million in 1924. The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. The end of the 1960s, there were approximately 270 funds with $48 billion in assets.. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under First Phase - 1964-87 Second Phase - 1987-1993 (Entry of Public Sector Funds) Third Phase - 1993-2003 (Entry of Private Sector Funds) Fourth Phase - since February 2003
A key factor in mutual-fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual retirement accounts (IRAs). .
INVESTMENT STRATEGY
Since mutual funds are essentially pools of money managed by a professional money manager, there are many different mutual fund investment strategies. Potential mutual fund investment strategies are only limited by regulatory issues, the ability of money managers, the desire of a sponsor to establish such a fund and the demand from investors for that type of fund.
Equity Funds Bond or Fixed Income Funds, Balanced Funds
LEGAL FRAMEWORK
Mutual Funds come under the regulation of the Securities and Exchange Board of India and have to meet stringent regulations. Therefore, they cannot just close shop and run away with investors' money. In fact, India happens to have quite stringent rules and norms regarding the setting up of an AMC and making periodic portfolio disclosures (stating where their have invested their money). Moreover, in the set-up of a mutual fund, there is a body of trustees who are supposed to look after the interest of investors whose money is being managed under different schemes. The mutual fund itself is a trust registered under the Indian Trust Act, and is initiated by a sponsor. The sponsor is the person who acts alone or with another corporate to establish a mutual fund. The sponsor then appoints an AMC to manage the investment, marketing, accounting and other functions pertaining to the fund.
DYNAMICS
Dynamic Mutual Funds is a leading Canadian investment company offering comprehensive investment services that cover the entire spectrum of choice, including mutual funds, tax advantage products and customized high net worth programs. Dynamic Funds was established in 1957 and pioneered professional investment management services in Canada in 1963. Today, Dynamic Funds provides an ever-larger number of products and services ranging from mutual funds, tax advantaged products and customized programs for high net worth individuals.
ADVANTAGES
Professional Management Diversification Convenient Administration Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Well regulated
CRITICISM (DISADVANTAGES)
5 Problems With Mutual Funds
Expenses Sub-Optimal Purchases Over Diversification Forced Redemption Tax Consequences
TYPES OF SCHEMES
By Structure
y Open Ended Schemes y Close Ended Schemes y Interval Schemes
By Investment Objectives
y y y y
Growth Schemes Income Schemes Balance Schemes Money Market Schemes
Other Schemes
y Tax Saving Schemes
Special Schemes
y Index Schemes y Sector Specific Schemes
