"Mutual Funds": Hitesh Motwani (23) J. Rashmiranjan Ray

“Mutual Funds”
Hitesh Motwani (23)
J. Rashmiranjan Ray (24)

Overview
 Mutual funds are a vehicle to mobilize moneys from investors, to
invest in different markets and securities.

 The primary role of mutual funds is to assist investors in earning an
income or building their wealth, by participating in the opportunities
available in the securities markets.
 In order to accommodate investor preferences, mutual funds

mobilize different pools of money. Each such pool of money is
called a mutual fund scheme.
 The money mobilized from investors is invested by the scheme as per the
investment objective committed. Profits or losses, as the case might be,
belong to the investors. The investor does not however bear a loss higher than
the amount invested by him.
 The investment that an investor makes in a scheme is translated into a certain

number of ‘Units’ in the scheme. The number of units multiplied by its face value
(Rs10) is the capital of the scheme – its Unit Capital.
 The relative size of mutual fund companies is assessed by their assets
under management (AUM). The AUM captures the impact of the profitability
metric and the flow of unit-holder money to or from the scheme.
Merits and Demerits
 Professional management  Lack of portfolio customization
 Portfolio diversification
 An overload of schemes and scheme
 Economies of scale variants.
 Liquidity, tax deferral
Tax benefits
 Convenient options
Investment comfort
Regulatory comfort
Systematic approach to investing.

Types of Funds
 Open-ended Funds  Real Estate Funds
 Closed-ended Funds  Commodity Funds
 Interval Funds  International Funds
 Actively Managed Funds  Fund of Funds
 Passive Funds  Exchange Traded Funds
Gilt Funds
 Diversified Debt Funds
 Junk Bond Schemes
 Fixed Maturity Plans
 Floating Rate Funds
 Money Market schemes
 Diversified Equity Funds
 Sector Funds
 Thematic Funds
 Equity Linked Savings Schemes (ELSS)
 Equity Income Schemes
 Monthly Income Plans
 Capital Protected Schemes
 Gold Funds
Structure of Mutual Funds
 Mutual funds are constituted as

Trusts. The mutual fund trust is created
by one or more Sponsors, who are the
main persons behind the mutual fund
operation.
 Every trust has beneficiaries. The

beneficiaries, in the case of a
mutual fund trust, are the investors
who invest in various schemes
of the mutual fund.
 In order to perform the trusteeship

role, either individuals may be
appointed as trustees or a Trustee
company may be appointed.
Structure of Mutual Funds
 Day to day management of the schemes is handled by an AMC. The AMC is appointed
by the sponsor or the Trustees.

 Although the AMC manages the schemes, custody of the assets of the scheme
(securities, gold, gold-related instruments & real estate assets) is with a Custodian,
who is appointed by the Trustees.
 Investors invest in various schemes of the mutual fund. The record of investors and
their unit-holding may be maintained by the AMC itself, or it can appoint a Registrar
& Transfer Agent (RTA).
 The sponsor needs to have a minimum 40% share holding in the capital of the AMC.
 The sponsor has to appoint at least 4 trustees – at least two-thirds of them need to be
independent. Prior approval of SEBI needs to be taken, before a person is appointed as
Trustee.
 AMC should have net worth of at least Rs10crore. At least 50% of the directors should be
independent directors. Prior approval of the trustees is required, before a person is
appointed as director on the board of the AMC.
Role of Regulators in India
 SEBI (Securities and Exchange Board of India) regulates mutual funds,
depositories, custodians and registrars & transfer agents in the country.

AMFI is an industry body, but not a self regulatory organization.

The AMFI Code of Ethics sets out the standards of good practices to
be followed by the Asset Management Companies in their operations
and in their dealings with investors, intermediaries and the public.

AMFI has framed AGNI, a set of guidelines and code of conduct for
intermediaries, consisting of individual agents, brokers, distribution houses and
banks engaged in selling of mutual fund products.
Thank You !

"Mutual Funds": Hitesh Motwani (23) J. Rashmiranjan Ray

Uploaded by

Copyright:

Available Formats

"Mutual Funds": Hitesh Motwani (23) J. Rashmiranjan Ray

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

"Mutual Funds": Hitesh Motwani (23) J. Rashmiranjan Ray

Uploaded by

Copyright:

Available Formats

“Mutual Funds”

Hitesh Motwani (23)

J. Rashmiranjan Ray (24)

 In order to accommodate investor preferences, mutual funds

 The investment that an investor makes in a scheme is translated into a certain

 Professional management  Lack of portfolio customization

 Liquidity, tax deferral

Systematic approach to investing.

 Mutual funds are constituted as

 Every trust has beneficiaries. The

 In order to perform the trusteeship

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.