Mutual Funds
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MUTUAL FUNDS
Financial Intermediaries
“Don’t put all your eggs in one basket”
Benefits • • • • •
Professional management Diversification Low cost Transparency Variety
• The first mutual funds of the world “The Massachusetts investors trust” was launched in Boston, USA in 1924. • In India it began with the setting up of the Unit Trust of India in 1964 by the Government of India.
• In 1987 public sector banks and insurance companies were permitted to set up mutual funds. • Private sector made its debut in the mutual funds industry in 1993.
Structure of Indian Mutual Funds • Sponsor can be any person, acting alone or in a combination with another body corporate who establishes the mutual funds.
• The board of trustees who manages a mutual fund and the sponsor executes the trust deeds
• Asset Management Company is appointed by the trustees to float the schemes and manage the funds raised by selling units under the scheme
• Custodian who carry outs the activity of safekeeping the securities or participating in any clearing system.
Types of Mutual Funds
Investment objectives • • • • • •
Growth funds / Equity funds Income / Debt funds Balanced funds Money market funds Gilt funds International funds
By duration • Open-ended funds • Close-ended funds • Interval funds
By entry / exit charges • Load funds • No-load funds
Others • • • • • •
Tax saving funds Index funds Sector funds Special purpose funds Retirement pension funds Insurance funds
Frequently used terms • Net Asset value is the market value of the assets of the scheme minus its liabilities.
• Sale Price is the price you pay when you invest in a scheme. It may include a sales load.
• Repurchase Price is the price at which a close-ended scheme repurchases its units. This is also called Bid Price. •
Redemption Price is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity.
• Sales Load is a charge collected by a scheme when it sells the units.
• Repurchase or ‘Back-end' Load is a charge collected by a scheme when it buys back the units from the unit holders.
Financial Intermediaries
“Don’t put all your eggs in one basket”
Benefits • • • • •
Professional management Diversification Low cost Transparency Variety
• The first mutual funds of the world “The Massachusetts investors trust” was launched in Boston, USA in 1924. • In India it began with the setting up of the Unit Trust of India in 1964 by the Government of India.
• In 1987 public sector banks and insurance companies were permitted to set up mutual funds. • Private sector made its debut in the mutual funds industry in 1993.
Structure of Indian Mutual Funds • Sponsor can be any person, acting alone or in a combination with another body corporate who establishes the mutual funds.
• The board of trustees who manages a mutual fund and the sponsor executes the trust deeds
• Asset Management Company is appointed by the trustees to float the schemes and manage the funds raised by selling units under the scheme
• Custodian who carry outs the activity of safekeeping the securities or participating in any clearing system.
Types of Mutual Funds
Investment objectives • • • • • •
Growth funds / Equity funds Income / Debt funds Balanced funds Money market funds Gilt funds International funds
By duration • Open-ended funds • Close-ended funds • Interval funds
By entry / exit charges • Load funds • No-load funds
Others • • • • • •
Tax saving funds Index funds Sector funds Special purpose funds Retirement pension funds Insurance funds
Frequently used terms • Net Asset value is the market value of the assets of the scheme minus its liabilities.
• Sale Price is the price you pay when you invest in a scheme. It may include a sales load.
• Repurchase Price is the price at which a close-ended scheme repurchases its units. This is also called Bid Price. •
Redemption Price is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity.
• Sales Load is a charge collected by a scheme when it sells the units.
• Repurchase or ‘Back-end' Load is a charge collected by a scheme when it buys back the units from the unit holders.
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