2. Introduction
A mutual fund is a financial intermediary that
pools the savings of investors for collective
investment in a diversified portfolio of
securities. A fund is mutual as all of its
returns, minus its expenses, are shared by the
fund’s investors.

3. Definition
• “a fund established in the form of
a trust to raise money through the
sale of units to the public or a
section of the public under one or
more schemes, for investing in
securities, including money market
instruments or gold or gold related
instruments or real estate assets”
-The SEBI of India (Mutual Fund) regulations 1996

4. Advantages
• Professional management
• Portfolio diversification
• Reduction in transaction cost
• Liquidity

5. • Tax benefits
• Transparency
• Stability to the stock market
• Equity research

6. • Convenience
• Flexibility
• Protection of interest of investors
• Promoting, industrial development of the
country

7. Limitation of Mutual Funds
• Market risk
• Misappropriation of funds
• Political risk

8. Mutual fund investors
• Resident Indian individuals
• Indian companies
• Indian trusts/charitable institutions
• Banks
• Non-banking finance companies
• Insurance companies
• Provident funds
• Non-residents, including Non-resident Indians
• Foreign entities(FII’s)

9. Organization of a mutual
fund
• The Sponsor
• The Mutual Fund trust
• The Asset Management Company
• Other Administrative Entities

10. Sponsor
• The sponsor is similar to the promoter of a
company as he gets the fund registered with
the SEBI. Criteria’s required are
• Sound track and general reputation for
minimum 5 years
• Not have been found of guilty of fraud

11. • He forms trust and appoints
a board of trustees
• Also appoints AMC as fund managers
• And appoints a custodian to hold the fund
assets.
• The sponsored is required to contribute at
least 40% of the min net worth of the asset
management company

12. A mutual fund is sponsored by
• Banks
• Financial institutions
• Companies(Indian or
foreign or joint venture)

13. Out of 39 mutual funds
• 4 by bank
• 1 by LIC
• 16 by Indian entities
• 5 by foreign entities
• Remaining are joint ventures

14. Mutual fund trust
• A mutual fund is a trust that pools the savings
of investors and invests these savings in
capital market/money market instruments.
• The duty of the trust is to review the
performance of the fund and thereby
safeguarding the interest of the investors.

15. contd
• A mutual fund in India is constituted in the
form of a public trust created under the Indian
Trusts Act,1882.
• The trust is formed by sponsor and registerd
with SEBI
• The fund sponsors act as the settler of the
trust, contributes to initial capital and
appoints trustees

16. • Collected funds are managed by board of
trustees,who are independent body and acts
as a protector of the unit holders interest.
• At least 2/3 of the trustees are independent
trustees
eg: HDFC Trustee Company Limited for HDFC
mutual fund

17. Asset Management Company
• Asset management company manages the
funds by investing in various securities. It acts
like the investment manager of the trust.
• The success or failure of the mutual fund
depends upon the efficiency of AMC

18. • AMC is a company formed and registered under
companies act,1956.
• They charge a fee for the service rendered to
mutual fund trust.
• Investment manager
• Manages the different investment schemes as per
the SEBI regulation and the trust deed.
• AMC should be registered with the SEBI
• Net worth of atleast Rs.10 crore the form of cash

19. • Most AMC’s in India are private limited
companies
• Eg:HDFC asset management company limited
for HDFC mutual fund

20. Other Administrative Entities
• Custodian :A custodian is responsible for safe
keeping of cash securities gold or gold related
instruments or real estate mutual fund
instruments.
A custodian also participates in the clearing
system through approved depository.
• Registrar and transfer agents is a vital
communication link between the unit holder
and mutual fund.

21. FIXEDD DEPOSITS MUTUAL FUND SCHEMES
Investment for a fixed period No fixed tenure in open ended schemes
Assured return on fixed deposits No assurance for either returns of capital
growth
Low returns High returns
High safety in banks Safety depends upon the investment
objective
Objective is to earn income Objective is to earn income and capital
growth

22. Types of Mutual Fund Schemes
Functional Investment Portfolio Geographical Other
classification classification
• Open- •Equity fund •Income •Domestic •P/E ratio fund
ended
schemes
• Close- •Debt fund •Growth •Off shore •Exchange
ended traded funds
schemes
• Interval •Hybrid fund •Balanced •Gold exchange
schemes traded funds
•Real estate
mutual funds

23. Functional classification
• Open-ended schemes
• Close-ended schemes
• Interval schemes

24. Portfolio classification
• Income funds
• Growth funds
• Balanced funds

25. Geographical classification
• Domestic funds
• Off shore funds

26. Investment classification
• Equity fund
• Debt fund
• Hybrid fund

27. Investment classification
 Equity fund
• Diversified
• Value
• Special
• Sectoral
• Derivatives arbritage
• Tax savings

28. Debt funds
• Money market mutual funds
• Short term bond
• Long term
• Gilt
• Floating maturity plans
• Fixed maturity plans
• Capital protection Schemes

29. Other classification
• P/E ratio fund
• Exchange traded funds
• Gold exchange traded funds
• Real estate mutual funds

30. Conclusion
• In India, mutual funds have a potential to
grow. Mutual fund companies have to create
and market innovative products and frame
distinct marketing strategies.
• They have coma a long way, but a lot more
can be done.

31. Bibliography
• Info: THE INDIAN FINANCIAL SYSTEM
by Bharati V Pathak
• Images: Google

32. Thank you