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Presented by:Mohd. Saleem AnsariMohd. Sabir KamalPankaj palNehaNikhil NigamPulak GuptaRanjuRajendraRandheer.
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A Mutual Fund is a trust that pools the savings of a number ofinvestors who share a common financial goal.
The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities.
The income earned through these investments and the capitalappreciation realized are shared by its unit holders inproportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for thecommon man as it offers an opportunity to invest in adiversified, professionally managed basket of securities at arelatively low cost
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SAVE THROUGH MUTUAL FUNDS
Park surpluses
Short term investment
Easy liquidity
Tax benefits
INVEST THROUGH MUTUAL FUNDS
Have a long term objective
Profile your risk
Select appropriate MF scheme,based on risk return
requirement
Mix of equity and debt
Invest regularly/with flexibility
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Net Asset Value (NAV)et Asset Value is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net assetvalue of the scheme divided by the number of unitsoutstanding on the Valuation Date.
Sale PriceIs the price you pay when you invest in a scheme. Also calledOfferPrice. It may include a sales load.
Repurchase PriceIs the price at which a close-ended scheme repurchases itsunits and it may include a back-end load. This is also calledBid Price.
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Redemption PriceIs the price at which open-ended schemes repurchase theirunits and close-ended schemes redeem their units on maturity.Such prices are NAV related.
Sales LoadIs a charge collected by a scheme when it sells the units. Alsocalled, Front-end load. Schemes that do not charge a load arecalled No Load schemes.
Repurchase or Back-end LoadIs a charge collected by a scheme when it buys back the unitsfrom the unit holders.
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Type of
Mutual Fund
Schemes
Structure InvestmentObjective
Special
Schemes
Open Ended
Funds
Close EndedFunds
Interval Funds
Growth Funds
Income Funds
Balanced Funds
Money Market
Funds
Industry Specific
Schemes
IndexSchemes
Sectoral
Schemes
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OPEN FOR FIXED PERIOD
MIN SUBS AMT 20CR
DURATION (5TO7 YEARS)
REFUNDED IF MIN AMT NOTACHIEVED
MAY BE REPURCHASED (AFTER 2 TO 3 YRS)
REDEMPTION SPECIFIED & DONE AT NAV - SERVICE CHARGE
LISTED AT STOCK EX
DIVID MAY/MAY NOT BE
SWITCHOVER ALLOWED
AMT 20CR
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A fund that combines the features of open-ended and closed-
ended schemes, making the fund open for sale or redemption
during pre-determined intervals.
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A mutual fund whose aim is to achieve capital appreciation by
investing in growth stock. They focus on companies that are
experiencing significant earnings or revenue growth, rather
than companies that pay out dividends. The hope is that theserapidly growing companies will continue to increase in value,
thereby allowing the fund to reap the benefits of large capital
gains. In general, growth funds are more volatile than other
types of funds, rising more than other funds in bull markets
and falling more in bear markets.
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An income fund is a mutual fund structured to providemaximum income. To achieve this goal, an income fundselects investments that typically provide dividends or
interest. These investments include bonds, especially high-yield bonds; and preferred stocks, which guarantee dividends.Blue-chip stocks often provide income as well, since they arethe stocks of large companies that can afford to pay dividends.An income fund is popular among risk-averse investors,
including the retired, who want to preserve as much of theirassets as possible. An income fund does not grow in value asmuch as a growth fund; this is the trade-off for the currentearnings of the income fund. An income fund typically investsin low-growth sectors of the economy.
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A mutual fund that buys a combination of common stock,
preferred stock, bonds, and short-term bonds, to provide both
income and capital appreciation while avoiding excessive risk.
The purpose of balanced funds (also sometimes called hybridfunds) is to provide investors with a single mutual fund that
combines both growth and income objectives, by investing in
both stocks (for growth) and bonds (for income). Such
diversified holdings ensure that these funds will manage
downturns in the stock market without too much of a loss; the
flip side, of course, is that balanced funds will usually
increase less than an all-stock fund during a bull market.
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An open-end mutual fund which invests only in money
markets. These funds invest in short term (one day to one
year) debt obligations such as Treasury bills, certificates
ofdeposit, and commercial paper. The main goal is the
preservation ofprincipal, accompanied by modest
dividends. The fund's Net Asset Value remains a constant
$1 per share to simplify accounting, but the interest rate
does fluctuate. Money market funds are very liquidinvestments, and therefore are often used by financial
institutions to store money that is not currently invested.
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Industry Specific Schemes
Industry Specific Schemes invest only in the industries
specified in the offer document. The investment of these funds
is limited to specific industries like Infotech, FMCG,
Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a
particular index such as the BSE Sensex or the NSE 50
Sectoral Schemes
Sectoral Funds are those which invest exclusively in a
specified sector. This could be an industry or a group of
industries or various segments such as 'A' Group shares or
initial public offerings.
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Professional Management
Mutual Funds provide the services of experienced and skilled
professionals, backed by a dedicated investment research teamthat analyses the performance and prospects of companies and
selects suitable investments to achieve the objectives of the
scheme.
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Diversification
Mutual Funds invest in a number of companies across a broad
cross-section of industries and sectors. This diversificationreduces the risk because seldom do all stocks decline at the
same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money
than you can do on your own.
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Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you
avoid many problems such as bad deliveries, delayedpayments and follow up with brokers and companies. Mutual
Funds save your time and make investing easy and
convenient.
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Return Potential
Over a medium to long-term, Mutual Funds have the potential
to provide a higher return as they invest in a diversified basket
of selected securities.
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Low Costs
Mutual Funds are a relatively less expensive way to invest
compared to directly investing in the capital markets becausethe benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.
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Liquidity
In open-end schemes, the investor gets the money back
promptly at net asset value related prices from the MutualFund. In closed-end schemes, the units can be sold on a stock
exchange at the prevailing market price or the investor can
avail of the facility of direct repurchase at NAV related prices
by the Mutual Fund.
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Transparency
You get regular information on the value of your investment
in addition to disclosure on the specific investments made byyour scheme, the proportion invested in each class of assets
and the fund manager's investment strategy and outlook.
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Flexibility
Through features such as regular investment plans, regular
withdrawal plans and dividend reinvestment plans, you cansystematically invest or withdraw funds according to your
needs and convenience.
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Affordability
Investors individually may lack sufficient funds to invest in
high-grade stocks. A mutual fund because of its large corpusallows even a small investor to take the benefit of its
investment strategy.
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Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying
needs over a lifetime.
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Well Regulated
All Mutual Funds are registered with SEBI and they function
within the provisions of strict regulations designed to protectthe interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
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Akin to the Promoter of the company,
Contribution of minimum 40% of net worth
of AMC, Posses sound financial record over five years
period,
Establishes the Fund,
Gets it registered with the SEBI,
Forms a trust, & appoints Board of trustee.
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Holds assets on behalf of unit holders in trust, Trustees are caretaker of unit holders money,
Two third of the trustees shall be independentpersons (not associated with the sponsor), Trustees ensure that the system, processes &
personnel are in place,
Resolves unit holders GRIEVANCES, Appoint AMC & Custodian, & ensure that all
activities are accordance with the SEBIregulation.
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Holds the funds securities in safekeeping,
Settles securities transaction for the fund,
Collects interest & dividends paid onsecurities,
Records information on corporate actions.
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Floats schemes & manages according to SEBI,
Can not undertake any other business activity,
other than portfolio mgmt services, 75% of unit holders can jointly terminate
appointment of AMC,
At least 50% of independent directors,
Chairman of AMC can not be a trustee of any
MF.
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Sell units on the behalf of the fund,
It can be bank, NBFCs, individuals.
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Facilitates financial transactions,
Provides remittance facilities
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Maintains records of unit holders accounts &
transactions
Disburses & receives funds from unit holdertransactions,
Prepares & distributes a/c settlements,
Tax information, handles unit holder
communication, Provides unit holder transaction services.
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Governed by SEBI (Mutual Fund) Regulation 1996
All MFs registered with it, constituted as trusts ( under Indian TrustsAct, 1882)
Bank operated MFs supervised by RBI too
AMC registered as Companies registered under Companies Act, 1956 SEBI- Very detailed guidelines for disclosures in offer document, offer
period, investment guidelines etc.
NAV to be declared everyday for open-ended, every week for closedended
Disclose on website, AMFI, newspapers
Half-yearly results, annual reports
Select Benchmark depending on scheme and compare