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What is Mutual fund and Types of Mutual fund? PowerPoint Presentation
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What is Mutual fund and Types of Mutual fund?

What is Mutual fund and Types of Mutual fund?

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What is Mutual fund and Types of Mutual fund?

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  1. All About Mutual Fund Complete Guide

  2. What is Mutual Fund?  What- It is a legal common pool of money  Money from- Investors bring the money to invest  Investment in- Investment can be in Shares, Bonds, Real estate etc as per wish of investor  Units- Investors get units of mutual fund , for their investment.  Who Does Investment- Expert Fund Manager does all investments  Who Appoints Fund Manager- Investors  What About Profits from Investment- All profits from investments are given back to investors

  3. Process of Mutual Fund Investors Returns, post deducting expenses, are given to investors Pool Money and Create a Fund , called Mutual Fund Mutual Fund Returns Fund Appoints a Fund Manager and Invest money Investment pool generates return Investment

  4. Advantages of Mutual Fund  Stress -Managing direct investments in stocks or bonds can be really stressful as the markets are too volatile and it is very difficult for a layman investor to be patient with the swings in the prices of shares, etc  Professional Expert Management- No need for investors to get involved in the fund management on day to day basis. Fund manager manages the complete money  Diversification- Since mutual fund is pool of investment made by a group of investors, an expert fund manager can invest the money in a large choice of shares/ bonds or debentures etc. which reduces risk from one single asset.  Small money can be invested - Often shares or bonds of large corporations, etc trades at a very high base rate and small investor can’t invest into it due to the low investment amount. But this becomes possible for a fund manager in case of a mutual fund  Tax Benefits- In equity mutual funds, all returns are tax free if investments are held for more than 1 year. In ELSS (Equity Linked Saving Schemes), one can save taxes under section 80C of income tax act along with benefit of tax free returns.  Liquidity- Investment in Mutual funds are very liquid. Open ended mutual funds can be bought and sold any time. Small investor can plan his investments as per his need in mutual funds. Click Here for Detail

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  6. Net Asset Value- NAV NAV is the market value of each unit of mutual fund scheme , after deducting all charges and liabilities. NAV or Net Asset Value of a Mutual Fund is based on the market price of the securities held in the portfolio. It can calculated with following formula- Market price of all investments +All other assets such as cash – Expenses- All liabilities ______________________________________________________________________ Total number of units outstanding for the scheme

  7. Units of Mutual fund  Like Shares, Units are part of the ownership of a mutual fund scheme. Unit holders are investors of the fund. Total investment of a mutual fund scheme is divided into small units of a particular amount each  Unit holders get voting rights and participate in the profits earned by Mutual fund , on the basis of proportion of units allotted to them .

  8. Types of Mutual Funds

  9. Tenor of Mutual Fund Open Ended Mutual Fund Close Ended Mutual Fund In this scheme the investor , once invested will not be able to redeem any time as per his or her wish. Mutual Fund will have a lock-in period before which Investor cannot redeem from the scheme. In this scheme the investor can invest ( Buy) and redeem (Sell) mutual fund scheme at any time. There is no lock in period of investment

  10. Types of Mutual Fund Mutual Fund Specialized Funds Equity Fund Debt Fund Hybrid Fund Liquid Fund Commodity Fund Diversified Fund Income Fund Mid Cap fund ETF FMP Small Cap Fund Funds of Funds Short Term Funds Balanced Fund Sect oral Fund Arbitrage Funds Monthly Income Plan Gilt Fund Capital Tax Saving Fund Protection Funds Dynamic Fund Index Fund

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  12. Major Categories of Mutual Fund Mutual funds With primary objective to invest in Shares and Stocks are called Equity Funds. Equity Funds Debt Funds invests in Govt. Bonds or securities, Corporate bonds & Other debt securities Debt Funds Funds with mix of Debt and Equity are hybrid funds. Their proportion change as per opportunities in the market. Hybrid Funds Debt funds investing only in very short term securities like certificate of deposits, treasury bills, commercial papers and term deposits. Liquid Funds Mutual funds investing in commodities like Gold, silver etc are commodity funds Commodity Funds

  13. Types Equity Fund Diversified Equity Funds Mid Cap Equity Funds Small Cap Equity Funds Sectoral Equity Funds Tax Saving Equity Funds Index fund Equity Funds Fund investing in equities concentration on a particular sector or size of company. It can invest share as per wish of fund manager Equity investing in share of mid sized listed company. sized company can be valuation between Rs 500 cr- Rs 2000 cr fund Equity investing shares of small sized company. sized company can be valuation Rs 500 cr funds Funds investing in shares particular industry or sector. Example, Pharmacy invest only shares of pharmaceutical companies These diversified equity funds, investor gets tax benefit u/s 80C of income tax act. These are called Equity saving schemes) are Equity which performance specific market index like BSE Sensex, NSE nifty. These are passive funds and invest with right proportion to shares Index. funds match without in of a where of Mid listed Small stock of funds or in any of also ELSS( Linked below in

  14. Types of debt funds Debt Funds invests in Govt. Bonds or securities, Corporate bonds & Other debt securities with long term maturity beyond 3 years. The offer long term returns and tracks returns of bonds and Govt. securities Income/ Bond Funds Close ended debt funds, with debt securities which have maturity similar to the closure of the fund. Post closure Mutual fund give back all money to investor. These fund generally offer an expected returns to investors FMP Funds Debt funds with less risk, invest in Debt securities, having maturity up to 1 to 3 years . These are generally preferred for short to medium term investments . Short term Funds Mutual funds investing in all kind of Government securities. Primarily these funds invest in long term Govt. Securities with small component invested in short term securities. Gilt Funds

  15. Types of Hybrid Fund Balanced Funds Monthly income plan Dynamic Fund/Asset Allocation Funds Balanced Funds Invest in mix of Shares and Debt securities higher return minimum capital Generally least 65% funds in equity to get tax benefits of equity funds Objective is to reward investors with regular income & moderate capital appreciation along with minimum risk of capital, though don’t guarantee any return. invest 80% of funds in debt securities. Funds with variable asset strategy flexibility from Equity to Debt or vice-a-versa , any time depending outlook of the market. allocation that to switch for and of has risk erosion. invest of at on the total Generally

  16. Exchange Traded Funds( ETF) Exchange traded funds are index funds, which tracks the composition and performance of Equity, Commodity, or Debt indices, like BSE Sensex or NSE nifty . They are tradable on stock exchange like any other shares. About ETFs unlike other mutual funds, are traded on stock exchange and tracks real time composition and performance of equity indices. One can buy and sell them any time during market hours of stock exchange and their price change as per index Tradable 1) Equity ETF- Invest in equity based Indices 2) Gold ETF- Invest in Gold as an asset class 3) Debt ETF- Invest in Debt indices Types of ETFs a) b) Goldman Sachs Gold BeEs- This ETF tracks Gold Price on real time Other are Reliance banking ETFs, Motilal Midcap ETF Goldman Sachs Nifty BeEs- This ETF tracks NSE nifty index Popular ETFs

  17. Funds of Funds ( FOF) Funds of funds can invest across different mutual fund schemes available in market. A FOF can divide money, freely in Diversified equity fund, Small cap fund , Mid cap fund or debt funds, as per mandate of the fund. About Investor who wishes to invest in multiple mutual funds with a small amount can invest in FOF .Fund manager can switch between debt funds & equity funds as per opportunity in the markets Benefit a) b) Quantum equity fund of funds Kotak Asset allocator fund Popular FOFs

  18. Capital protection oriented funds Close ended funds , offering near capital protection to investors, which invest maximum funds in Fixed income securities.Small portion is invested in shares or derivatives to give extra returns. Generally 85% goes in debt and 15% in equity About a) Maturity is fixed and investor looking for a investment for time period can choose to invest in this. b) Offers near capital guarantee and also chance to get higher than FD interest return Benefit • • Capital Protection oriented funds are close ended However they are listed on stock exchanges Liquidity

  19. Investing Options Growth Scheme Dividend Option In Dividend scheme , all profits generated from buying and selling of the investments in the fund, gets accumulated and then at the wish of fund manager, gets distributed to all investors. There are two versions of this option- In Growth scheme , all profits generated from buying and selling of the investments in the fund, gets accumulated. Profits get added to NAV of the mutual fund and investor looking to en-cash the profits can sell mutual fund units . a) Dividend payout Option- Here dividends are actually paid to investors. Dividend Reinvestment option- Here dividends distributed are not handed to the investors, but invested back to the fund and investor is allotted more units of the fund for the dividend amount. This is best scheme , for investor looking for capital and profit accumulation over long period as profits are not distributed to investors. b)

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