Jsn Mutual Fund Power Point

8/2/2019 Jsn Mutual Fund Power Point

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Mutual fund is a fund managed by investmentcompany with an financial objective ofgenerating high rate of returns.

These investment companies combines thefunds of many individual investors havingsimilar investment objective.

These companies collects money frominvestors and invests those money indifferent stocks, bonds and other financialsecurities in a diversified manner.


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Before investing they carryout thorough

research and detailed analysis on themarket conditions and market trends of

stock and bond prices.

The entire income/profits aredistributed to the investors in

proportion to their investments.


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The phases as follows..

The foundation for the mutualfund operation in India was

laid by parliament in 1963with an enactment of UTI.


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+UTI was setup by RBI & functioned undercontrol of RBI.

+In 1978 UTI was delinked by RBI, IDBI took

over the regulatory and control of UTI.


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Broadening of industry :

Entry of Commercial banks & public sector financialinstitutions.

SBI Mutual Funds is a first Non- UTI Mutualfund Established in June 1987


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NAME OF THE COMMERCIAL

BANK/INSTITUTION

YEAR

SBICanara Bank

LICGICIndian Bank

Bank of IndiaP.N.B

19871987

19891991199019901990

NOTE:-

TOTAL ASSETS OF INDUSTRY GREW ABOUT 61,000 crores.


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Kothari pioneer was the first private sectormutual fund which was established in July1993.

International players like MORAGALSTANLEY ,J.P.MORGAN ,CAPITALINTERNATIONAL etc., followed.

The total assets is worth 1,21,805 crores.


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UTI Act 1963 bifurcated into two separateentities in Feb 2003 .

+ One is specified undertaking of UTI with the

assets of rupees 29,835 crores.- functioned under rules framed by

Govt.of.India.

-Does not comes under mutual fundregulations.


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+ The second is the UTI Mutual fund Ltd with

the assets of 76000 crores.

- Sponsored by SBI,PNB,BOB & LIC.

- Registered with SEBI.

- Functions under mutual fund Regulations.


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The graph indicates the growth of assets over the years:


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Sponsor is basically a promoter of the fund. For e.g., BOB,PNB,SBI,LIC are the sponsors of

UTI Mutual Funds.

HDFC & Standard Life Investments Limited are

the sponsors of HDFC mutual funds. The fund sponsor raises money from public, who become

fund shareholders.

The pooled money is invested in the securities.

Sponsor appoints trustees.

SPONSOR


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Two third of the trustees are independent professionals

who own the fund and supervises the activities of the

AMC.

It has the authority to sack AMC employees for non-

adherence to the rules of the regulator.

It safeguards the interests of the investors.

They are legally appointed i.e. approved by SEBI


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Asset Management Company (AMC) is a set of

financial professionals who manage the fund.

It takes decisions on when and where to invest the

money. It doesnt own the money.

AMC is only a fee-for-service provider.

NOTE:The above 3 tier structure of Indian mutual funds is

very strong and virtually no chance for fraud.


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A Custodian keeps safe custody of the investments (related

documents of securities invested).

A custodian should be a registered entity with SEBI.

If the promoter holds 50% voting rights in the custodian

company it cant be appointed as custodian for the fund.

This is to avoid influence of the promoter on the custodian.

It may also provide fund accounting services and transfer

agent services.

JP Morgan Chase is one of the leading custodians.


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Transfer Agent Company interfaces with the customers,

issue a funds units, help investors while redeeming

units.

Provides balance statements and fund performance

fact sheets to the investors.

CAMS is a leading Transfer Agent in India.


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CLASSIFICAITON OF MUTUAL

FUNDS

OPERATIONAL CLASSIFICATION

PORTFOLIO CLASSIFICATION

GEOGRAPGICAL CLASSIFICATION

STRUCTURAL CLASSIFICATION


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OPERATIONAL CLASSIFICATION

oOpen-End Mutual Funds

oClose-End Mutual Funds

oInterval Funds


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PORTFOLIO CLASSIFICATIONGrowth Oriented Funds/Equity Oriented Funds

Income / Debt-Oriented Funds

Balanced Funds/ Income and Growth Oriented

FundsBond Funds

Stock Funds

Index FundsIndustry Funds

Tax Relief Funds

Leveraged Funds

Cont


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Real Estate FundsMoney Market Mutual Funds

Asset Management Mutual Funds

Liquid Funds

Gilt Funds

Load / Non-Load Fund

Systematic Investment Plan (SIP)

Retirement Pension Plan

Insurance Plan


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GEOGRAPHICAL CLASSIFICATION

DOMESTIC MUTUAL FUNDS

OFF-SHORE MUTUAL FUNDS


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ADVANTAGES OF MUTUAL FUNDS:

Professional Management

Diversification

Convenience

Return Potential

Tax Benefits

Govt.Regulations


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Other Advantages Of Mutual Funds

Low cost

LiquiditySafety

Transparency


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DISADVANTAGES OF MUTUAL

FUNDS

No control over costsNo tailor-made portfolios

Managing a portfolio of funds

Delay in redemption


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MARKET RISKS

NON-MARKETINFG RISKS

INTERST RATE RISK

CREDIT RISK


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- Markets fall on account of macro economicfactors.

MARKET RISK:

NON-MARKET RISK:

- Bad news about an individual company can pull down

its stock price.INTERST RATE RISK:

-when the interest rate falls bond prices falls this effectsthe NAV Negatively

CREDIT RISK:-when funds invested the bonds there is a risk of the

corporate defaulting on their interest payments and principlepayments obligations.

C C O


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EFFICIENCY OF MUTUAL

FUNDS

Efficiency of a mutual funds can be judged bythe following

Stability

Liquidity

Growth

Credibility of issuer

returns

Management Approach


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Documents

Jsn Mutual Fund Power Point