Mutual funds types-presentation-hareesh

1. Mutual Funds-Types
-Hareesh.M
2014600120

2. What are Mutual Funds..?
• A Mutual Fund is a trust that pools the savings of a
number of investors who share a common financial
goal.
• The money thus collected is then invested in capital
market instruments such as shares, debentures and
other securities.
• The income earned through these investments and the
capital appreciation realized are shared by its unit
holders in proportion to the number of units owned by
them.

3. How do I make money from a mutual fund?
1. Capital appreciation:
As the value of securities in the fund increases, the fund's unit price will also
increase. You can make a profit by selling the units at a price higher than at which
you bought
2. Coupon / Dividend Income:
Fund will earn interest income from the bonds it holds or will have dividend income
from the shares
3. Income Distribution:
The fund passes on the profits it has earned in the form of dividends

4. Mutual Funds Schemes
A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
depending on its maturity period.

5. Mutual Funds Schemes-By Structure
1. Open-ended Fund/ Scheme - An open-ended fund or scheme is one that is
available for subscription and repurchase on a continuous basis. These schemes
do not have a fixed maturity period. Investors can conveniently buy and sell units
at Net Asset Value (NAV) related prices which are declared on a daily basis. The
key feature of open-end schemes is liquidity.
2. Close-ended Fund/ Scheme: A close-ended fund or scheme has a stipulated
maturity period e.g. 5-7 years. The fund is open for subscription only during a
specified period at the time of launch of the scheme. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell
the units of the scheme on the stock exchanges where the units are listed.
3. Interval Schemes : Interval Schemes are that scheme, which combines the
features of open-ended and close-ended schemes.

6. Mutual Funds- By Investment
Objectives
1) Growth Schemes are also known as equity
schemes. The aim of these schemes is to
provide capital appreciation over medium to
long term. These schemes normally invest a
major part of their fund in equities and are
willing to bear short-term decline in value for
possible future appreciation.

7. Mutual Funds- By Investment
Objectives
2) Income Schemes are also known as debt
schemes. The aim of these schemes is to
provide regular and steady income to
investors. These schemes generally invest in
fixed income securities such as bonds and
corporate debentures. Capital appreciation in
such schemes may be limited.

8. Mutual Funds- By Investment
Objectives
3) Balanced Schemes aim to provide both
growth and income by periodically distributing
a part of the income and capital gains they
earn. These schemes invest in both shares and
fixed income securities, in the proportion
indicated in their offer documents (normally
50:50).

9. Mutual Funds- By Investment
Objectives
4) Money Market Schemes aim to provide easy
liquidity, preservation of capital and moderate
income. These schemes generally invest in
safer, short-term instruments, such as treasury
bills, certificates of deposit, commercial paper
and inter-bank call money.

10. By Investment based classification
• Equity fund: Such fund invest in equity shares they carry a
high degree of risk such fund do well in favorable market
conditions. Investments are made in equity shares in diverse
industries and sectors.
• Debt funds: Such fund invest in debt instruments like bonds
and debentures. These funds carry the advantage of secure
and steady income there is little chance of capital
appreciation. Such funds carry no risk.
• Balanced funds: Such scheme have a mix of debt and equity in
their portfolio of investments. The portfolio is often shifted
between debt and equity depending upon the prevailing
market conditions.

11. By Investment based classification
• Sectoral fund: Such fund invest in specific sectors of the economy.
The specialized sectors may include real estate infrastructure, oil and
gas etc, offshore investments, commodities like gold and silver.
• Fund of Funds: Such funds invest in units of other mutual funds
there are a number of funds that direct investments into specified
sectors of economy. This makes diversified and intensive investments
possible.
• Leverage funds: The funds that are created out of investments with
not only the amount mobilized from investors but also from
borrowed money from the capital markets are known as leveraged
funds. Fund managers pass on the benefit of leverage to the mutual
fund investors. Additional provisions must be made for such funds to
operate. Leveraged funds use short sale to take advantage of
declining markets in order to realize gains. Derivative instruments like
options are used by such funds.

12. By Investment based classification
• Gilt fund : These funds seek to generate returns through
investment in govt. securities. Such funds invest only in central
and state govt. securities and REPO/ reverse REPO securities. A
portion of the corpus may be invested in call money markets to
meet liquidity requirements. Such funds carry very less risk.
Their prices are influenced only by moment in interest rates.
• Indexed funds: These funds are linked to specific index. Funds
mobilized under such schemes are invested in securities of
companies included in the index of any exchange. The fund
performance is linked to the growth in concerned index.
• Tax saving schemes: The amount invested in tax-saving funds
(ELSS) is eligible for deduction under Section 80C, However the
aggregate amount deductible under the said section cannot
exceed Rs 100,000 (in a financial year).

13. Rating Agencies
 CRISIL~CPR Rankings and Value Research Star Rating are prominent ones
Role of Rating Agencies
1. Facilitate informed investment decision making
2. Provide independent and reliable opinion of schemes
3. The quality of the Fund’s management and operations
4. Help meet specific investment objective

14. Mutual Fund: How to buy?
Financial Goals
Identify ‘What to Buy’
Evaluate Funds from various Mutual Fund Cos.
Online Offline
Mutual Fund Co. and
others
Financial Distributor
Fill Up Form
Attach Relevant Documents
Submit
Banks,
Financial Svc.
Cos.,
Brokers,
Individual
Agents

15. Mutual Fund: How to redeem?
Fill-up relevant details
(You could do partial redemption as well)
Sign the Form
(All applicants to the units need to sign)
Submit
(Submit the form to the Branch of the specific Mutual Fund Co.)
Money into your Bank Account
(Money gets credited to you as per the scheme-specific turnaround time)
Choose ‘redemption’
Download Common Transaction Slip
(Download from Mutual Fund Company’s website or get it from the branch)

16. Advantages of Mutual Funds
1.Professional Management
2.Diversification
3.Convenient Administration
4.Return potential
5.Low cost
6.Liquidity
7.Transparency
8.Flexibility
9.Choice of schemes
10.Well regulated
11.Tax benefits

17. Types of risks associated with Mutual Fund
Investment
Risk is an inherent aspect of every form of investment. For Mutual Fund investments, risks would
include variability, or period-by-period fluctuations in total return.
Market risk: At times the prices or yields of all the securities in a particular market rise or fall due to
broad outside influences. This change in price is due to 'market risk'.
Inflation risk: Sometimes referred to as 'loss of purchasing power'. Whenever the rate of inflation
exceeds the earnings on your investment, you run the risk that you'll actually be able to buy less, not
more.
Credit risk: In short, how stable is the company or entity to which you lend your money when you
invest? How certain are you that it will be able to pay the interest you are promised, or repay your
principal when the investment matures?
Interest rate risk: Interest rate movements in the Indian debt markets can be volatile leading to the
possibility of large price movements up or down in debt and money market securities and thereby to
possibly large movements in the NAV.
Other risks associated are:
Investment risks Liquidity risk Changes in the government policy

18. Various Mutual Funds in India
 State Bank of India mutual fund
 ICICI prudential mutual fund
 TATA mutual fund
 HDFC mutual fund
 Birla sun life mutual fund
 Reliance mutual fund
 Kotak Mahindra mutual fund etc..

19. by: Gurmeet Singh
moneycontrol.com
money.rediff.com
wikipedia.co.in
REFERENCES