Indian Mutual Fund | Dhanashri Academy

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An Overview Of Indian Mutual Funds Provide by
. Dhanashri Academy
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Introduction
Mutual Funds have gained a lot of popularity over
the last few years. People favor MFs to bank
deposits, life insurance and even bonds for the
reason that with a little money, they can get
into the investment game.
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Introduction
Moreover, the generally accepted goals of the
small investors - the protection of principal,
the maintenance of income and appreciation of
principal are achieved when their savings are
invested in MFs. One can possess a string of blue
chips like ITC, TISCO, Reliance etc., through
them.
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Introduction
MFs basically act as an intermediary between the
investor and capital markets. The business of MF
is to re-invest in any scrip in the market, and
prove their performance through returns to
investors. Hence, they are useful in spreading
risks and optimizing returns.
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History of Mutual Funds
The formal origin of MFs can be traced to Belgium
where Society Generale de Belgique, was
established in 1822 as an investment company to
finance investments in national industries with
high associated risks. But the real credit of
introducing the modern day concept of MFs goes to
the Foreign and Colonial Government Trust of
London established in 1868.
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History of Mutual Funds
The idea of MFs in India was born out of the
far-sighted vision of Sri T. Krishnamachari, the
then Finance Minister. MFs began to take shape in
India with the establishment of Unit Trust of
India (UTI) in the year 1963. UTI had twin
objectives of mobilizing household savings and
investing the funds in the capital market for
industrial growth. The first scheme launched by
UTI was Unit-64.
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History of Mutual Funds
The year 1987 marked the entry of non-UTI, public
sector MFs. SBI MF was the first non-UTI MF
established in 1987.
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History of Mutual Funds
In the year 1993, the MF industry was opened to
the private domestic and foreign players. The
Modis, Birlas, Mahindras, Tatas, among others
jumped on to the fund wagon. Other players like
Jardine Fleming, George Soros, and Capital
International also joined the party and the
number of MF houses went on increasing. The
Kothari Pioneer MF (now merged with Franklin
Templeton) was the first private sector MF
registered in July 1993.
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History of Mutual Funds
The second half of the 1990s saw the commencement
of numerous new types of schemes in India,
particularly by the private sector funds. UTI In
1994 launched the First retirement benefit plan,
and Kothari Pioneer MF (KMPF) launched the first
pension plan in 1996. During 1997-2000, several
gilt funds, government securities funds and
liquid funds were launched.
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History of Mutual Funds
SEBI notified regulations for the MFs in 1993
under which all MFs (except UTI) were to be
registered and governed. The regulations were
fully revised in 1996 and have been amended
thereafter from time to time to protect the
interests of investors.
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What is Mutual Fund?
Securities and Exchange Board of India (Mutual
Funds) Regulations, 1996 define 'mutual fund' as
"a fund established in the form of a trust to
raise monies 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".
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What is Mutual Fund?
A MF is an entity that consolidates the savings
of a number of investors who share a common
investment objective by issuing 'units' to them
and then professionally managing investments on
their behalf.
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What is Mutual Fund?
The collected funds are invested in capital
market instruments such as shares, debentures,
bonds and other securities in accordance with the
objectives as disclosed in the offer document.
This diversified investment pattern ensures
investors a triple benefit of steady return and
capital appreciation along with low risk.
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What is Mutual Fund?
The 'unit-holder' gets a proportional share of
the fund's gains, losses, income and expenses.
Thus, a MF is the most suitable investment for
the small and middle-income groups as it offers
an opportunity to invest in a diversified,
professionally managed basket of securities at a
relatively low cost.
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What is Mutual Fund?
At this point in time, one should not confuse a
MF investment on units with that of an investment
on equity shares. Investment on equity shares
represents investment in a particular company
alone. On the other hand, investment on a unit of
a fund represents investment in the parts of
shares of a large number of companies.
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