Professional Documents
Culture Documents
OF
FINANCIAL INSTITUTIONS
&
SERVICES
Since 1940, there have been three basic types of investment companies in the United States:
open-end funds, also known in the U.S. as mutual funds; unit investment trusts (UITs); and
closed-end funds. Similar funds also operate in Canada. However, in the rest of the world,
mutual fund is used as a generic term for various types of collective investment vehicles, such
as unit trusts, open-ended investment companies (OEICs), unitized insurance funds, and
undertakings for collective
Mutual funds can invest in many kinds of securities. The most common are cash instruments,
stock, and bonds, but there are hundreds of sub-categories. Stock funds, for instance, can
invest primarily in the shares of a particular industry, such as technology or utilities. These
are known as sector funds. Bond funds can vary according to risk (e.g., high-yield junk bonds
or investment-grade corporate bonds), type of issuers (e.g., government agencies,
corporations, or municipalities), or maturity of the bonds (short- or long-term). Both stock
and bond funds can invest in primarily U.S. securities (domestic funds), both U.S. and
foreign securities (global funds), or primarily foreign securities (international funds).
Most mutual funds' investment portfolios are continually adjusted under the supervision of a
professional manager, who forecasts cash flows into and out of the fund by investors, as well
as the future performance of investments appropriate for the fund and chooses those which he
or she believes will most closely match the fund's stated investment objective. A mutual fund
is administered under an advisory contract with a management company, which may hire or
fire fund managers.
Mutual funds are subject to a special set of regulatory, accounting, and tax rules. In the U.S.,
unlike most other types of business entities, they are not taxed on their income as long as they
distribute 90% of it to their shareholders and the funds meet certain diversification
requirements in the Internal Revenue Code. Also, the type of income they earn is often
unchanged as it passes through to the shareholders. Mutual fund distributions of tax-free
municipal bond income are tax-free to the shareholder. Taxable distributions can be either
ordinary income or capital gains, depending on how the fund earned those distributions. Net
losses are not distributed or passed through to fund investors.
PROCEDURE FOR REGISTERING A MUTUAL FUND WITH SEBI
An applicant proposing to sponsor a mutual fund in India must apply in Form A with a fee of
Rs.25, 000. The application is examined and once the sponsor satisfies certain conditions
such as being in the financial services business and possessing positive net worth for the last
five years, having net profit in three out of the last five years and possessing the general
reputation of fairness and integrity in all business transactions, it is required to complete the
remaining formalities for setting up a mutual fund. These include inter alia, executing the
trust deed and investment management agreement, setting up a trustee company/board of
trustees comprising two- thirds independent trustees, incorporating the asset management
company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a
custodian. Upon satisfying these conditions, the registration certificate is issued subject to the
payment of registration fees of Rs.25.00 lacks for details, see the SEBI (Mutual Funds)
Regulations, 1996.
➢ Regulatory oversight: Mutual funds are subject to many government regulations that
protect investors from fraud.
➢ Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a
call, and you've got the cash.
➢ Convenience: You can usually buy mutual fund shares by mail, phone, or over the
Internet.
➢ Low cost: Mutual fund expenses are often no more than 1.5 percent of your
investment. Expenses for Index Funds are less than that, because index funds are not
actively managed. Instead, they automatically buy stock in companies that are listed
on a specific index
➢ Transparency
➢ Flexibility
➢ Choice of schemes
➢ Tax benefits
➢ Well regulated
Latest NAV
Scheme Name NAV (Net Asset Date
Value)
Tata Fixed Horizon Annual Aug 04 App 0.0000 4-Jan-2006
Tata Fixed Horizon Annual Aug 04 Div 0.0000 4-Jan-2006
Tata Fixed Horizon Annual Plan 3 (Nov 04) (App) 0.0000 4-Jan-2006
Tata Fixed Horizon Annual Sept 04 App 0.0000 4-Jan-2006
Tata Fixed Horizon Fund Annual Jan 05 Appr 0.0000 7-Sep-2007
Tata Fixed Horizon Qrtly Dividend (Nov 04) 0.0000 4-Jan-2006
Tata Fixed Horizon Qtrly Aug04 App 0.0000 4-Jan-2006
Tata Fixed Horizon Qtrly Aug04 Div 0.0000 4-Jan-2006
Tata Fixed Horizon Qtrly Sept 04 Div 0.0000 4-Jan-2006
Tata Income Fund - Div Qtrly 10.2888 12-Oct-2009
Tata Income Fund - Div Semi 11.0121 12-Oct-2009
Tata Income Fund – Growth 28.3028 12-Oct-2009
Tata Income Fund - Growth Bonus Option 14.1660 12-Oct-2009
Tata Income Fund Appreciation - Per Dividend 16.4083 12-Oct-2009
Tata Income Plus Fund - Option C Dividend 0.0000 07-Jul-2009
Tata Income Plus Fund - Option C Growth 0.0000 07-Jul-2009
Tata Income Plus Fund A - Growth Option 14.4064 12-Oct-2009
Tata Income Plus Fund A - Income / Bonus Option 10.8103 12-Oct-2009
Tata Income Plus Fund B - Growth Option 14.4473 12-Oct-2009
Tata Income Plus Fund B - Income / Bonus Option 10.8241 12-Oct-2009
Tata M I P Plus Fund – Growth 14.3901 12-Oct-2009
Tata M I P Plus Fund - Half Yearly Dividend 11.5303 12-Oct-2009
Tata M I P Plus Fund - Monthly Dividend 10.9966 12-Oct-2009
Tata M I P Plus Fund - Quarterly Dividend 10.9035 12-Oct-2009
Tata Monthly Income Fund - Qrtly Option 12.4187 12-Oct-2009
Tata Monthly Income Fund – Regular 12.3262 12-Oct-2009
Tata Monthly Income Fund Growth 17.6927 12-Oct-2009
Tata Short Term Bond Fund - App Option 16.8415 12-Oct-2009
Tata Short Term Bond Fund - Reg Income Option 11.9919 12-Oct-2009
Tata Contra Fund – Dividend 13.5634 12-Oct-2009
Tata Contra Fund – Growth 14.3976 12-Oct-2009
Tata Dividend Yield Fund ( Div) 17.5507 12-Oct-2009
Tata Dividend Yield Fund (App) 24.6525 12-Oct-2009
Tata Equity Opportunities Fund - A Dividend 21.7129 12-Oct-2009
Tata Equity Opportunities Fund - B Growth 71.1978 12-Oct-2009
Tata Equity P/E Fund (Dividend Trigger Option B - 10%) 37.1095 12-Oct-2009
Tata Equity P/E Fund (Growth Option) 38.9631 12-Oct-2009
Tata Growth Fund - Bonus (Growth) 33.9258 12-Oct-2009
Tata Growth Fund – Dividend 16.7642 12-Oct-2009
Tata Growth Fund – Growth 37.3327 12-Oct-2009
Tata Index Fund - Nifty A 30.2060 12-Oct-2009
Tata Index Fund - Nifty B 0.0000 07-Jul-2009
Tata Index Fund - Sensex A 41.6218 12-Oct-2009
Tata Index Fund - Sensex B 13.4180 12-Oct-2009
Tata Infrastructure Fund – Dividend 21.4600 12-Oct-2009
Tata Infrastructure Fund – Growth 31.7145 12-Oct-2009
Tata Life Science & Technology Fund - Dividend Option 30.7992 12-Oct-2009
Tata Life Sciences & Technology Fund – Growth 57.8614 12-Oct-2009
Tata Mid Cap Fund – Dividend 14.6352 12-Oct-2009
Tata Mid Cap Fund – Growth 15.5533 12-Oct-2009
Tata Pure Equity Fund - Dividend Option 33.3764 12-Oct-2009
Tata Pure Equity Fund – Growth 84.1347 12-Oct-2009
Tata Select Equity Fund 51.9902 12-Oct-2009
Tata Select Equity Fund – Dividend 37.2989 12-Oct-2009
Tata Service Industries Fund – Appreciation 22.4586 12-Oct-2009
Tata Service Industries Fund – Dividend 18.0252 12-Oct-2009
Tata Balanced Fund - Dividend Option 46.5493 12-Oct-2009
Tata Balanced Fund – Growth 69.4270 12-Oct-2009
Tata Young Citizen [After 7 years] 18.3031 12-Oct-2009
Tata Young Citizen Fund [>3 years up to 7 years] 18.3031 12-Oct-2009
Tata Young Citizen Fund [Upton 3 years] 18.3031 12-Oct-2009
Tata Liquidity Management Fund - Daily Div 1002.6089 12-Oct-2009
Tata Liquidity Management Fund – Growth 1241.6300 12-Oct-2009
Tata Liquidity Management Fund - Weekly Div 1005.9272 12-Oct-2009
Tata Tax Saving Fund 44.1759 12-Oct-2009
Tata Floater Fund Growth 13.4440 12-Oct-2009
Tata Floater Fund Daily Dividend 10.0356 12-Oct-2009
Tata Floater Fund Weekly Dividend 10.0875 12-Oct-2009
Tata Treasury Manager Fund High Investment Plan Daily 1009.4394 12-Oct-2009
Dividend
Tata Treasury Manager Fund High Investment Plan Growth 1196.5787 12-Oct-2009
Tata Treasury Manager Fund High Investment Plan 1002.9604 12-Oct-2009
Monthly Dividend
Tata Treasury Manager Fund High Investment Plan 1011.5036 12-Oct-2009
Weekly Dividend
Tata Treasury Manager Fund Retail Investment Plan 1195.8886 12-Oct-2009
Growth
Tata Treasury Manager Fund Retail Investment Plan 1003.4309 12-Oct-2009
Monthly Dividend
Tata Treasury Manager Fund Super High Investment Plan 1010.3171 12-Oct-2009
Daily Dividend
Tata Treasury Manager Fund Super High Investment Plan 1024.8944 12-Oct-2009
Growth
Tata Treasury Manager Fund Super High Investment Plan 1923.7273 09-Jul-2009
Monthly Dividend
Tata Treasury Manager Fund Super High Investment Plan 1000.7935 12-Oct-2009
Weekly Dividend
Tata Capital Builder Fund – Div 13.2355 12-Oct-2009
Tata Capital Builder Fund – Growth 13.1874 12-Oct-2009
Tata Equity Management Fund – Div 9.3424 12-Sep-
2008
Tata Equity Management Fund – Growth 10.0726 12-Sep-
2008
Tata SIP Fund - Scheme I – Dividend 11.8813 07-Oct-2009
Tata SIP Fund - Scheme I – Growth 11.8811 07-Oct-2009
Tata Tax Advantage Fund -1 13.3597 12-Oct-2009
Tata SIP Fund - Scheme II – Dividend 11.9521 07-Oct-2009
Tata SIP Fund - Scheme II – Growth 11.9655 07-Oct-2009
There is also the problem of implementation. Such incentives are normally paid out in cash,
for which no records exist. To circumvent this problem, Sebi has put the onus on mutual
funds to ensure that their distributors do not resort to such unhealthy practices. But mutual
funds have expressed their inability to monitor their distributors, due to their large number
and geographical spread. Again, the regulator needs to find ways to translate its intent into
action at the ground level.
IMPACT
The mutual funds houses has to pay an incentive of 2 % on the sale of the mutual fund to the
distributor which was charged from the money which is invested by the investor according to
this incentive scheme, the distributor gains at the expense of the investor but now Sebi has
taken a step for this as rebates often led to a misallocation of funds by investors–in favor of
high-incentive paying schemes SEBI has put a ban on the incentive scheme of 2% which was
given to the distributor. This has effected TATA mutual funds in a averse manner because
most of the investment in Tata mutual fund was done with the help these distributors and now
with the ban in the incentive scheme the investment level in the Tata mutual fund has fallen
down so this changed regulation has affected the Tata mutual funds in a negative manner as
explained but this is good for the investor because whatever the investor will invest he will
get the return on the whole amount. So this regulation has got a positive impact on the
investor and negative on the company.
NOTE-To enable the Mutual Funds to tap a larger investible stock overseas, Reserve bank of
India has announced on 8th June 2007, that they may also invest in
I) Overseas mutual funds that make nominal investments (say to the extent of 10% of net
asset value) in unlisted overseas securities;
IMPACT
SEBI has enhanced the limit of the investment which the mutual fund company can invest in
the securities outside the country firstly the limit of the investment was around USD 5 billion
now it has been enhanced to the level USD 7 billion this is really a good news for the mutual
fund companies because now these companies can invest money in the foreign investments
and can diversify the risk and can help investors in earning more returns. With this changed
regulation from the Sebi has also played a role in Tata mutual funds because with this
increased limit Tata mutual funds have started with some new plans which specifically deal
with the foreign investments. In these plans whatever money is invested by the individuals
the whole amount of the money will be invested in the foreign securities and the return will
be distributed accordingly. This change has also increased the level of foreign investment by
Tata mutual funds.
On a broad scale, the benefits to the customers are positive, to the distributors they are
seemingly negative and the AMCs would be affected in terms of paper work but not much in
terms of earnings. Let's look at what the new norms have in store for us.
ENTRY LOAD
The new Sebi norms have directed the mutual funds companies to stop charging any entry
load on new fund investments. These new norms are applicable on all the new mutual funds
launched after August 1, 2009 and on all SIPs to be launched after the same date. But, if you
already are investing in an SIP before that date, the old charges would continue to apply.
What that means is that if you want to save on the entry load component, you will need to
redeem the existing units and reinvest them.
IMPACT
The change in the entry and the exit load made by the Sebi has really helped to bring the
investor interest in investing in the mutual funds now whatever money will be invested by the
investor in mutual fund will directly be invested there will be no deduction made in that
amount as entry load as that has been changed to 0% now earlier it was 2.25% this percentage
of money was earlier deducted from the amount invested by the investor as the entry load.
The schemes, however, can continue to invest up to 15% or 20% of net assets, as the case
may be, in other investment grade debt instruments. These limits will not cover investments
in government securities, treasury bills and certain other debt instruments. The board also
approved proposals to enable mutual funds and foreign institutional investors to invest in
Indian depository receipts (IDRs) to Foreign Exchange Management Act, demat holding of
IDRs and issue of depository receipts by custodians on behalf of issuers.
Impact
This changed regulation of Sebi will again work in favor for protecting the investor interest in
the investing in the mutual funds now with this changed regulation the mutual fund
companies will be able to invest more in the money market which is a short term market and
the companies will be able to provide more return to their investors. Tata mutual funds with
this changed regulation has invested in the short term market firstly the company not use to
invest in the money market because the limit was very low now with increase in the limit of
making the investment is increased so the company has also started to invest funds in the
money market.
BIBLIOGRAPHY
➢ www.rediff.com/money/2007/apr/16sebi
➢ www.dws-india.com/EN/showpage.aspx
➢ mutualfunds.headlinesindia.com/Tata
➢ www.banknetindia.com/finance
➢ www.tatamutualfund.com