There are many different Investment avenues available for investors and Mutual fund is one of them.mutual fund gives good investments opportunities to investor's.mutual fund also have certain risk like other investments.The investor should compare the risk and expected yields after adjustment of tax on various instruments while taking investment decisions.Diversification reduces the risk becuase all the stocks don't move in same direction ,same proportion at the same time.mutual funds normally come out with a number of schemes with different Investment objectives which are launched from time to time.Mutual fund is registered under SEBI regulation 1993.
WHAT IS MUTUAL FUND ?
* A Trust That Raises Money Through Sale Of Units.
* Investors Get Access To Proffesional Management.
* A key Participant In The Capital Market.
* Source For Corporates To Raise Money.
* Exposure To Different Segment Of Market.
LIST OF ALL STAKEHOLDERS IN INDIAN MUTUAL FUND INDUSTRY :-
* RBI
* SEBI
* AMFI
* MINISTRY OF FINANCE
* SROs(in general)
* INCOME TAX REGULATIONS
* INVESTOR'S ASSOCIATION
STRUCTURE OF A MUTUAL FUND
It is set up in form of trust.which has sponsor,trustee,asset management company and custodian.it is established by more than one sponsor who is like a promoter of company.A trusty of mutual fund hold its property for the unit-holder.
TYPES OF MUTUAL FUNDS.
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OPEN ENDED CLOSE ENDED
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1) It can be purchased 1)It can be purchased
on any transaction day. Only during NFO(new
2) It can be redeemed fund offering).
On any transaction day. 2)It can be redeemed
3)High liquidity. Only at maturity.
3) low on liquidity.
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REGULAR PLANS DIRECT PLAN
1)It is sold through 1)It is sold directly by
Distributor. By the AMC
2)It is higher expense 2)lower expense ratio
Ratio(due to commision (No commision paid
Paid to distributor). To distributor).
3)It Potentially has lower 3) potentially higher
Returns to the investor Returns.(due to lowe
(Due to higher expenses). r expenses).
SCHEMES ACCORDING TO INVESTMENT OBJECTIVE.
1)INCOME ORIENTED SCHEMES:- This scheme offers a fixed income to investor.investments are made in main securities fixed income yielding ones like Bond, Corporate debenture, Government securities & money market instruments,etc.
2)GROWTH ORIENTED SCHEMES:- This scheme offers growth potential associate with investment in capital market - highly source of income by way of divided & rapid capital appreciation both from holding good quality scrips.this satisfy the investors growth needs.primarily concerntrate on the low risk and high income.
3)HYBRID SCHEME:-This funds are also known as ‘BALANCED FUNDS'. This scheme cater both the investment needs of the prospective investors namely fixed income as well as growth orientation.hybrid schemes have target of these mutual funds are judicious mix fixed income securities like Bonds and Debentures also sound equity scrips.This fund utilize the balanced investment management .
4)REAL ESTATE FUNDS :-These are close ended mutual funds which invest predominantly in real estate and Properties.
5)OFF-SHORE FUNDS :- These funds invest in securities of foreign companies with RBI permission.
6)FUND OF FUNDS :-This funds invest only in units of other mutual funds.such funds do not operate at present in india.
7)HEDGE FUNDS :- This funds employ their funds for speculative trading.i.e for buying shares whose prices are likely to rise & for selling shares whose prices are likely to fall.
8)NEW DIRECTION FUNDS :- This scheme invest in companies engaged in scientific and technological research such as birth control, anti-pollution, oceanography etc.
9)TAX SAVING SCHEMES :-These scheme offer tax rebates to the investors under tax law as prescribed from time to time.This is made possible because the government offers tax incentive for Investment in specified avenues. i.e equity linked saving schemes(ELSS) & pension scheme.
10)CAPITAL PROTECTION ORIENTED SCHEME :- This is a scheme which protects the capital invested in the mutual fund through suitable oreintation of is portfolio structure.
11)SPECIAL SCHEMES :-This schemes includes index scheme that attempt to replicate the performance of particular index such as BSE,Sensex or the NSE-50 or industry specific schemes, Sectoral schemes.Index fund schemes are ideal for investors who are satisfied with a return approximately equal to that of an index.sectoral fund scheme are ideal for investor who have already decided to invest in particular sector or segment.
12)LEVERAGE FUND :-These scheme is also known as BORROWED FUND,increase the size and value of portfolio and offer benefits to members from out of the excess of gains over cost of borrowed funds.
13)EXCHANGE TRADE FUNDS (ETFs):-This schemes are new variety of mutual funds that introduced in 1993.it is sometimes described as mere ‘tax efficient' than traditional equity mutual funds.some large ETFs have made smaller distribution of realised and taxable capital gains than most mutual funds
14)MONEY MARKET MUTUAL FUNDS:-These scheme funds invest in short term debt securities in the money market like certificate of deposits,commercial papers, goverment treasury bill etc.owing to their large size,the funds normally get a higher yield on such short term investment than an individual investor.
15) INFRASTRUCTURE DEBT FUND :-This scheme funds invest primarily in the debt securities or securitized debt Investment of infrastructure companies.
ADVANTAGES OF MUTUAL FUNDS
1)PROFESSIONAL MANAGEMENT.
2) DIVERSIFICATION.
3)CONVENIENT ADMINISTRATION.
4)RETURN POTENTIAL.
5)LOW COSTS.
6) LIQUIDITY.
7) TRANSPARENCY.
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MUTUAL FUND IS A TRUST THAT COLLECTS MONEY FROM NUMBER OF INVESTORS WHO SHARE A COMMON INVESTMENT OBJECTIVE AND INVEST THE SAME IN EQUITIES,BONDS,MONEY MARKET INSTRUMENTS AND OTHER SECURITIES.
MUTUAL FUNDS ARE REGULATED BY SEBI REGULATION ,1996.
MUTUAL FUND SCHEME COULD BE ‘OPEN ENDED' OR ‘CLOSE ENDED’ AND ACTIVELY MANAGED OR PASSIVELY MANAGED.
THERE ARE FIVE PRINCIPAL CONSTITUENTS AND THREE MARKET INTERMEDIARIES IN THE FORMATION AND FUNCTIONING OF MUTUAL FUNDS.
THE NAVs OF ALL MUTUAL FUND SCHEMES ARE DECLARED AT THE END OF TRADING DAY AFTER MARKETS ARE CLOSED ,IN ACCORDANCE WITH SEBI MUTUAL FUND REGULATION.
HOLDING PERIOD RETURN IS CALCULATED ON THE BASIS OF TOTAL RETURNS FROM THE ASSET OR PORTFOLIO.i.e.INCOME PLUS CHANGES IN VALUES.
SEBI (LODR) REGULATION,2015 IS APPLICABLE TO THE AMC MANAGING THE MUTUAL FUND SCHEME WHOSE UNITS ARE LISTED ON THE RECOGNISED STOCK EXCHANGE.
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