mutual fund industry an overview. collects money from the investors money invested in various...

Mutual Fund Industry

An Overview

Collects money from the investors

Money invested in

various schemes

Income generated in pass on to the

investors in proportion to their

investment

Def : The mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket

History• Phase I (1964 – 87)

• UTI established- 1963 by an Act of Parliament; set up by RBI & functioned under the Regulatory and administrative control of the RBI• 1978 : Delinked from RBI & IDBI took over regulatory and

administrative control

• Phase II (1987 -1993)• Entry of Public Sector Funds by banks, LIC, GIC

• Phase III (1993 – 2003)• Entry of PVT Sector Funds• 1993 was the year in which the first Mutual Fund

Regulations: except UTI all MF were to be registered and governed

• Phase IV ( since Feb 2003)• UTI was bifurcated into two separate entities.• One : Specified Undertaking of the UTI• Second : UTI MF , sponsored by SBI, PNB, BOB & LIC• Recent mergers : consolidation and growth phase

Various types of schemes• Open-ended funds : offers liquidity• Close-ended funds : stipulated maturity period• Interval Funds : are open for sale and repurchase at a predetermined

period• Growth Funds :capital appreciation over the medium-to-long term.• Income Funds :capital stability and regular income.• Balanced Funds :income and moderate growth• Money market funds :easy liquidity, preservation of capital and modest

income ideal for short term• Tax Saving schemes : exploit tax rebates as well as growth in

investments• Special Schemes : industry specific as mentioned in the offer document

Eg : InfoTech funds, FMCG funds, pharma funds,• Index Funds : invetsed in specified index such as BSE Sensex, NSE index• Sector Specific : invest in a particular sector Eg: A group shares

Features of MF

• Affordability• Professional management• Diversification• Convenience• Liquidity• Tax breaks• Transparency

Reasons for not Investing in MF

Future Outlook