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MUTUAL FUNDS IN INDIA

MUTUAL FUNDS IN INDIA. A typical MF in India has the following constituents. Fund Sponsor Mutual Fund Trustees Asset Management Company. Fund Sponsor.

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MUTUAL FUNDS IN INDIA

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  1. MUTUAL FUNDS IN INDIA www.pptmart.com

  2. A typical MF in India has the following constituents • Fund Sponsor • Mutual Fund • Trustees • Asset Management Company www.pptmart.com

  3. Fund Sponsor • A ‘sponsor’ is a person who establishes a MF. It obtains the certificate of registration as a MF from SEBI. He is similar to the promoter of a company. • Contributes at least 40% of the net worth of AMC www.pptmart.com

  4. Mutual Fund • A MF is constituted in the form of a trust under the Indian Trust Act, 1882. • The fund invites investors to contribute their money in the common pool, by subscribing to ‘units’ issued by various schemes established by the trust. • The assets of the trust are held by the trustee for the benefit of unit holders. www.pptmart.com

  5. Trustees • The MF or trust can either be managed by the Board of Trustees, which is a body of individuals, or b a Trust Company, which is a corporate body. www.pptmart.com

  6. Asset Management Company • The AMC, appointed by the sponsor or the Trustees and approved by SEBI, acts like the investment manager of the trust. www.pptmart.com

  7. Types of Funds • Open-ended fund • Close-ended fund • Tax-exempt fund • Non-tax-exempt fund www.pptmart.com

  8. Categories of MFs • Growth/equity oriented funds • Income/ Debt oriented funds • Balanced funds • Sector funds • Index funds • MMMF • Venture capital funds • Gilt funds • Fund of funds www.pptmart.com

  9. Growth/equity oriented funds • Provide capital appreciation over the medium to long-term. • Normally invest a major part of their corpus in equities. • Good for investors having a long-term outlook seeking appreciation over a period of time www.pptmart.com

  10. Income/ Debt oriented funds • Provide regular and steady income to investors. • Generally invest in fixed income securities such as • corporate debentures, • government securities, and • money market instruments • Less risky compared to equity schemes www.pptmart.com

  11. Balanced funds • Provide both growth and regular income. • Invest both in equities and fixed income securities in the proportion indicated in their offer documents. • Suitable for risk-averse investors interested in exposure to equities and bonds. www.pptmart.com

  12. Sector funds • Investment strategy is focused on a particular sector such as pharmaceuticals, software, FMCG etc, which is likely to grow at a faster rate in the near/immediate future • Invest in the companies of such a particular sector. • The examples are • UTI Software Fund • Franklin FMCG Fund • Pru ICICI FMCG Fund www.pptmart.com

  13. Index funds • Mirror a market index, like Nifty or Sensex. • Invest in all the stocks that comprise a particular index in proportions equal to the weightage of those stocks in the index. • Passively managed funds. • Appropriate for conservative long term investors looking at moderate risk, moderate return arising out of a well-diversified portfolio. • Performance is generally similar to that of their benchmark indices. www.pptmart.com

  14. Index funds and the base index www.pptmart.com

  15. MMMF • Invest exclusively in safer short-term instruments such as T/Bs, CDs, CP and inter bank call money, government securities, etc. • Appropriate for corporate and individual investors as a means to park their surplus funds for short periods. www.pptmart.com

  16. Gilt Funds • Invest exclusively in government securities which have no default risk. • Venture capital Funds • Invest in unlisted companies, start-up business, new technologies. • Risk is very high. Return is also very high. • Provide tax benefit to the investors. www.pptmart.com

  17. Fund of Funds • Invest in other mutual funds which are performing well. • Suitable for cautious investors who want to minimize risks. • Kotak Equity Fund of Funds (FoFs), Indian’s only FoFs that invests in other AMCs’ funds. • Can invest up to 25% in its core equity fund Kotak 30, and the rest can be invested in other top performing funds. www.pptmart.com

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