Meaning Of Mutual Funds

1
Mutual Funds - MyMoneyStore

• Meaning of Mutual Fund
• History of Mutual Fund
• Flow chart of Mutual Fund
• Types of Mutual Funds
• Advantages of Mutual Fund

2
Meaning Of Mutual Funds

• A mutual fund can be defined as a pool that
  brings together investments from different to
  channelize towards one financial objective. The
  money gathered can be put into several capital
  market instruments like shares, debentures,
  hybrid stocks etc.

3

• The mutual fund domain started in the 1963 along
  with the creation of the Unit Trust of India, at
  the directive of the Government of India and RBI.
  The history of mutual funds can be distributed
  into 4 different stages

History Of Indian Mutual Funds
4
Stages of Mutual Funds

• First Stage (1964-87)
• The Unit Trust of India (UTI) was established on
  1963 by an Act of Parliament. It was set up by
  RBI and regulated by the Regulatory and
  administrative control of RBI. This was
  introduced by UTI in the year 1964. Towards the
  end of 1988, UTI had assets worth 6,700 crores
  under its management.
• Second Stage (1987-1993)
• This is the stage where public sectors funds were
  introduced. Marked by the entry of Public Sector
  Funds, these non- UTI funds were launched in
  collaboration with LIC and General Insurance
  Corporation of India (GIC). SBI came out with
  its very first non UTI mutual fund in June 1987.

5
Stages of Mutual Funds

• Third Stage (1993-2003)
• During this phase, many private sector mutual
  funds entered the market in the year 1993. This
  stage has been counted quite significant with its
  wide spectrum of fund families. The first Mutual
  Fund Regulations came into existence under which
  all mutual fund schemes were registered and
  regulated, excluding UTI.
• Fourth Stage (Since Feb 2003)
• After the repeal of UTI Act 1963, UTI funds were
  segregated into 2 categories. One is the
  Specified Undertaking of UTI with assets worth
  29,835 crores under its management towards end of
  January 2003. The second is the UTI Mutual Fund
  Ltd, launched by SBI, PNB, BOB and LIC. It is
  directly governed by the Mutual Fund Regulations
  and registered under SEBI.

6
GROWTH IN ASSETS UNDER MANAGEMENT The flow
chart briefly describes the working of a mutual
fund
7
Types of Mutual Funds
8
Mutual Funds - MyMoneyStore

• A mutual fund can be broadly termed as open-ended
  or close-ended, depending on the maturity period.
  Schemes can be divided basis the maturity period
  as listed below
• Open-ended Fund An open-ended mutual fund
  scheme can be subscribed and reinvested on an
  uninterrupted basis. They do not have any defined
  maturity period.
• Close-ended Fund A close-ended mutual fund
  scheme has a fixed maturity period between 5-7
  years. The funds are available only during a
  specific time period at the time of introduction.
  
• Fund aimed at Investment Objective this is a
  mutual fund scheme which focuses on growth,
  income and balanced fund focusing on the
  investment objective.
• Equity Oriented Scheme The purpose of equity
  oriented scheme is to grow capital appreciation
  during the medium and long term. These mutual
  funds have high risks and equally high rewards.
  They provide perks like dividends, capital
  appreciation, etc.

9
Mutual Funds - MyMoneyStore

• Debt Oriented Scheme The purpose of debt
  oriented scheme is to provide regular income at
  specified periods. These investments are mostly
  focused on bonds, debentures, securities and
  money market securities. These are slightly less
  risky.
• Hybrid Fund Hybrid funds are a right mix of
  equity and debt funds for a balanced approach in
  investments. A proportionate amount is invested
  into both high risk and low risk securities. This
  is apt for moderate growth in the market.
• Money Market Money market investments are mostly
  income funds. They aim to provide quick
  liquidity, capital appreciation and steady
  income. These schemes basically invest into a
  pool of short term securities like treasury
  bills, commercial papers, government securities,
  etc. Corporates and giant companies find these
  investments appropriate over durations. Its a
  good way to allocate idle funds into appropriate
  channels over short spans.
• Gilt Funds Gilt funds are pooled purely into
  government securities, without a default risk.
• Index Funds This scheme puts money into equal
  weightage consisting of an index. This completely
  depends on the fall and rise of the index.

10
Advantages of Mutual Funds

• Systematic Management
• Risk Minimization
• Earning Potential
• Easy Liquidity
• Wide range of Schemes
• Tax advantages

11
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.
• The Mutual Fund Industry is growing tremendously.
  Mutual Fund schemes include an extensive range
  of Investment Options. Therefore, invest today!

12
Informative Blogs on Financial and Wealth
Management - MyMoneyStore