Professional Documents
Culture Documents
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 funds investors.
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
Advantages
Professional management
Portfolio diversification
Reduction in transaction cost
Liquidity
Tax benefits
Transparency
Stability to the stock market
Equity research
Convenience
Flexibility
Protection of interest of investors
Promoting, industrial development of
the country
Organization of a
mutual fund
The Sponsor
The Mutual Fund trust
The Asset Management Company
Other Administrative Entities
Sponsor
The sponsor is similar to the
promoter of a company as he gets
the fund registered with the SEBI.
Criterias required are
Sound track and general reputation
for minimum 5 years
Not have been found of guilty of
fraud
A mutual fund is
sponsored by
Banks
Financial institutions
Companies(Indian or
foreign or joint
venture)
4 by bank
1 by LIC
16 by Indian entities
5 by foreign entities
Remaining are joint ventures
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
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
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.
FIXEDD DEPOSITS
Low returns
High returns
Investmen
t
classificati
on
Portfolio
classificati
on
Geographi
cal
Other
Openended
schemes
Equity fund
Income
Domestic
P/E ratio
fund
Closeended
schemes
Debt fund
Growth
Off shore
Exchange
traded funds
Interval
schemes
Gold
exchange
traded funds
Real estate
mutual
funds
Functional classification
Open-ended schemes
Close-ended schemes
Interval schemes
Portfolio classification
Income funds
Growth funds
Balanced funds
Geographical classification
Domestic funds
Off shore funds
Investment classification
Equity fund
Debt fund
Hybrid fund
Investment classification
Equity fund
Diversified
Value
Special
Sectoral
Derivatives arbritage
Tax savings
Debt funds
Money market mutual funds
Short term bond
Long term
Gilt
Floating maturity plans
Fixed maturity plans
Capital protection Schemes
Other classification
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.
Bibliography
Info: THE INDIAN FINANCIAL SYSTEM
by Bharati V Pathak
Images: Google
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