MUTUAL FUNDS

A PRESENTATION
BY
SANCHEET WAGLE
FY(A&F) 52
Contents
 INTRODUCTION
 OBJECTIVES

 DEFINITION

 TYPES OF MUTUAL FUNDS

 DIFFERENCE BETWEEN EQUITIES & MUTUAL

FUNDS
 NET ASSET VALUE (NAV)

 UNIT TRUST OF INDIA

 GUIELINES FOR MUTUAL FUNDS

 LEDING ASSET MANAGEMENT COMPANIES

 DISCLAIMER
 Introduction
 Mutual funds are one of the most important segments of
the financial system of the country

 The financial system consists of –

Financial institution
Bank
Investment bodies
The capital market
 Introduction

 Mutual funds are financial intermediaries that collect

funds from public and invest on behalf of investors.

 Mutual funds, thus, operate as collective investment

vehicle that pools resources by issuing units to investors
and collectively invests those resources in a diversified
portfolio.
 Mutual funds

 The concept of Mutual Funds was originated in

the USA and UK way back in 1930s Known as
Unit Funds.

 Mutual Funds started in India only in the year

1960.
 Objective of Funds
 To provide an opportunity for lower income
groups to acquire without much difficulty
property in the form of shares
 To cater mainly to the need of individual
investors whose means are small.
 To manage investors portfolio in a manner that
provides regular income, growth, safety,
liquidity and diversification.
 Definition of mutual fund

A mutual fund is a professionally managed

type of collective investment scheme that
pools money from many investors
and invests it in stocks,bonds, short-
term money market instruments, and or
other securities.The mutual fund will have
a fund manager that trades the pooled
money on a regular basis. The net proceeds or
losses are then typically distributed to the
investors annually.
Types of mutual funds

 Open Ended Funds

 Exchange Traded funds (ETF)

 Equity Funds

 Bond Funds
 Open-end fund

o The term mutual fund is the common name

for what is classified as an open-end
investment company by the SEBI.
Being open-ended means that, at the end of
every day, the fund issues new shares to
investors and buys back shares from investors
wishing to leave the fund.
 Exchange-traded funds

 The exchange-traded fund or ETF, is the

combination of characteristics of both mutual
funds and closed-end funds. ETFs are traded
throughout the day on a stock exchange. Most
ETFs are index funds and track stock market
indexes.
 Equity funds

 Equity funds, which consist mainly of stock

investments, are the most common type of
mutual fund. Equity funds hold 50 percent of
all amounts invested in mutual funds in
India. Often equity funds focus investments
on particular strategies and certain types of
issuers.
 Bond funds

 Types of bond funds include term funds, which

have a fixed set of time before they
mature. Bond funds are invested in Municipal
(Governmental ) or Corporate (Private) Bonds.
DIFFERENCE BETWEEN EQUITIES &
MUTUAL FUNDS ?
NET ASSET VALUE (NAV)
 Net asset value (NAV) is a term used to
describe the value of an
entity's assets less the value of its liabilities..
 There is no universal method of valuing assets
and liabilities for the purposes of calculating
net asset value, and the criteria used for the
valuation will depend upon the circumstances,
the purposes of the valuation and any
regulations that may apply.
Valuation of assets in funds
 The NAV of a collective investment
scheme (such as a mutual funds) is calculated
by reference to the total value of the
fund's portfolio (its assets) less money owed
to lending banks, fees owed to investment
managers and service providers and other
liabilities.
Unit trust of india
 The Unit Trust of India was formed in 1963. It
was entrusted the job of creating mutual funds
for the Indian public.
 The UTI Offered the New fund US 64 in 1964
the 1st mutual fund of India.
 It Grossly yielded 18 % upon redemption.
 Mutual fund industry
An overview
2. 1964 – 1987 UTI
3. 1987-1993 banks,LIC & GIC
4. 1993 Private & Foreign sectors
Guidelines for mutual funds
 The Government of India has on Feb. 14, 1992 issued
a set of comprehensive guideline applicable to
public, private and joint sector mutual fund.
 Mutual Funds are to be established in the form of
trust under the Indian Trust Act and are to be
operated by separate Asset Management Companies
(AMC).
 AMCs shall have a minimum net worth of Rs. 5
crores.
 AMCs and trustees of mutual fund are to be the
separate legal entities and that an AMC or its affiliate
cannot act as a manager in any other fund.
Guidelines for mutual funds
 Mutual funds dealing primarily in the capital market
and also partly in money market instrument one to
be regulated by the securities and exchange board of
India.
 Mutual fund dealing primarily in the capital market
and also partly in money market instruments is to be
regulated by the Reserve Bank of India.
 All scheme floated by mutual fund are to be
registered with SEBI
Leading asset management
Companies
disclaimer
 Mutual funds investment are subject to market
risk. Please read the offer document carefully
before investing.