Mutual fund

1. MUTUAL FUND
MADE BY- DEVNDRA AGRAWAL
RAHUL LADUNA
ANUJ KEDIA
RITIK GOYAL
FANINDRA PATEL
NAVINA NAGESIA

2. A mutual fund is a common pool of money into which
investors place their contributions that are to be invested
in different types of securities in accordance with the
stated objective.
WHAT IS MUTUAL FUND?

3. Advantages of Mutual Funds
•Portfolio diversification: It enables him to hold a diversified investment
portfolio even with a small amount of investment.
•Professional management: The investment management skills, along
with the needed research into available investment options, ensure a
much better return as compared to what an investor can manage on his
own.
•Reduction/Diversification of Risks: The potential losses are also
shared with other investors.
•Reduction of transaction costs: The investor has the benefit of
economies of scale; the funds pay lesser costs because of larger volumes
and it is passed on to the investors.
•Wide Choice to suit risk-return profile: Investors can chose the fund
based on their risk tolerance and expected returns.

4. Disadvantages of Mutual Funds
•No control over costs: The investor pays investment
management fees as long as he remains with the fund, even while
the value of his investments are declining.
•No tailor-made portfolios: The very high net-worth individuals or
large corporate investors may find this to be a constraint as they will
not be able to build their own portfolio of shares, bonds and other
securities.
•Managing a portfolio of funds: Availability of a large number of
funds can actually mean too much choice for the investor.
•Delay in redemption: It takes 3-6 days for redemption of the units
and the money to flow back into the investor’s account.

5. TYPES OF MUTUAL FUNDS

6. By Structure:
1. Open-ended Funds
2. Closed-ended Funds

7. A mutual fund scheme can be classified into open-ended
scheme or close-ended scheme depending on its maturity
period.
• Open-ended Fund: An open-ended Mutual fund is one that is
available for subscription and repurchase on a continuous
basis. These Funds do not have a fixed maturity period.
• close-ended Fund: A close-ended Mutual fund has a
stipulated maturity period e.g. 5-7 years. The fund is open for
subscription only during a specified period

8. By Investment Objective:
1. Growth Funds
2. Income Funds
3. Balanced Funds
4. Money Market Funds
5. Gilt Funds
6. Index Funds

9. Fund according to Investment objective
Growth Funds: The aim of growth fund is to provide capital
appreciation over the medium to long term.
Such fund have comparitively high risks.
These schemes provide different options to the investors like
dividend option, capital appreciation etc.
Income Funds: The aim of income funds is to provide regular
and steady income to investors.
Such schemes generally invest in fixed incom securities such as
bonds, corporate debentures,Government securities and money
market instruments.
Such funds are less risky compared to equity schemes.

10. Balanced Funds:The aim of balanced funds is to provide
both growth and regular income as such schemes invest both in
equities and fixed income securities in the proportion indicated
in their offer documents. These are appropriate for investors
looking for moderate growth.
Money Market:These funds are also income funds and their aim is
to provide easy liquidity, preservation of capital and moderate income.
These schemes invest exclusively in safer shortterm instruments such
as treasury bills, commercial paper and government securities, etc.
Gilt Funds :These funds invest exclusively in government
securities. Government securities have no default risk.

11. Index Funds
This schemes invest in the securities in the same weightage
comprising of an index.
This schemes would rise or fall in accordance with the rise or
fall in the index

12. Types of Marketing Risks
Equity risk: It refers to the risk when an individual is forced
to sell the stock at low prices which eventually reduces the
value of investment.
Interest rate risk: This type of risk applies to the
investments made in debt securities, such as government
and corporate bonds.
Inflation risk: As the name suggests, it is the risk which is
caused due to gradual inflation which generally reduces the
value of long-term investments.
Sociopolitical risk: In this risk factor, events such as war,
acts of terror or political elections might cause drastic impacts
on the market in general

13. Mutual Funds
A Cyclic Process

14. Tax Benefits
Tax Saving Schemes
Some times the investors investing their money
in the mutual funds to get some tax benefits.

15. Mutual Funds Prove Best!
While instruments like shares give high returns at the cost of
high risk, instruments like NSC and bank deposits give lower
returns and higher safety to the investor.
Mutual Funds aim to strike a balance between risk and
return and give the best of both to the investor.

16. Asset Management Company
• Acts as an invest manager of the Trust under the Board
Supervision and direction of the Trustees.
•
•
Has to be approved and registered with SEBI.
Will float and manage the different investment schemes in
the name of Trust and in accordance with SEBI regulations.
• Acts in interest of the unit-holders and reports to the
trustees.
• At least 50% of directors on the board are independent
of the sponsor or the trustees.

17. Structure of Mutual Funds
Custodian
•Has the responsibility of physical handling and safe keeping
of the securities.
•Should be independent of the sponsors and registered with
SEBI.
Depositories
•Indian capital markets are moving away from physical
certificates for securities to ‘dematerialized’ form with a
Depository.
•Will hold the dematerialized security holdings of the Mutual
Fund.