Download - MF in India
-
8/14/2019 MF in India
1/36
Mutual Funds In India
T.Sita Ramaiah
Center head
INC - Guntur
SIP PRESENTATION
-
8/14/2019 MF in India
2/36
Dont run after money, make it
come to youBirla sun life equity fund (an open ended
growth scheme)
Rs. I lac invested on Aug 27,1998 inBirla Sun Life equity fund is worth Rs.
24.03 lacs as on September 30,2007.
A similar investment in the benchmark
BSE 200 would have been worth Rs.
6.82 lacs.
-
8/14/2019 MF in India
3/36
Introduction
The mutual funds industry is still not as mature and
developed as it is in USA, UK and Japan
The entry of the private sector and foreign institutions in
1993, provided a boost to the Indian Mutual FundsIndustry
GOI took initiative of developing the mutual funds
industry by offering various tax sops in the budget
-
8/14/2019 MF in India
4/36
Types of Mutual Funds
Term of fund :Open - ended and close - end
Investment objective : Growth funds, income funds, balanced
funds, specialized funds
Types of investors : Offshore funds, pension funds etc.,
Management Style : Managed funds, Index funds
Load : Load funds, No-load funds
-
8/14/2019 MF in India
5/36
Classification Based on the Term of
the Fund:
An opened-ended fund remains open for issue and redemption ofits share throughout its unlimited duration.
Ex. Alliance-95, Birla Advantage, Unit Scheme 64
A close-end fund can issue shares of mutual fund only in thebeginning, and cannot redeem them till the end of their fixedduration
Ex. UTI Master Equity Plan 98, Reliance FTS dividend, Canpep-9S, ICICI Power etc.,
-
8/14/2019 MF in India
6/36
SEBI Guidelines: A close-ended scheme as any scheme in which the period
maturity of the scheme is specified
An open-ended scheme is defined as a scheme which offers
units for sale without specifying any duration for redemption
Every close-ended scheme is required to be listed on
recognized stock exchange within six months from the closure
of subscription
A close-ended fund may redeem its shares and reissue them
at its choice
-
8/14/2019 MF in India
7/36
A close-ended scheme may be converted into an open-
ended scheme
A close-ended scheme is allowed to be rolled over at
the end of the maturity period
Both funds are not allowed to borrow , except fortemporary liquidity requirements for the redemption of
units or payment of interest or dividend to the unit
holders.
Borrowing capacity is limited to 20% of the NAV
-
8/14/2019 MF in India
8/36
Classification based on Investment
Objectives
Growth Fund:
This scheme is to provide capital appreciation over themedium to long-term
Major portion of funds in equities and are willing to bear shorttem decline in value
This scheme is suitable for investor in their prime earning
years or investors seeking growth over the long-term
Ex: Alliance Basic Industries, Reliance Growth, Tata GSF-G
-
8/14/2019 MF in India
9/36
Income Fund:
Objective of fund is to provide regular andsteady income to investors
Funds generally invest in fixed income such asbonds and corporate debentures
Capital appreciation may be limited
Birla Income Plus-D, Chola Freedom Income-D,HDFC Income etc.,
-
8/14/2019 MF in India
10/36
Balance Fund:
To provide both growth and income by periodically
distributing a part of the income and capital
appreciation to the investors or reinvesting to
enhance the NAV
They invest in both shares and fixed income
securities
HDFC Balanced-G, JM Balance-G etc
-
8/14/2019 MF in India
11/36
Specialized Fund:
Sectoral Fund
Money Market Funds
Gilt Fund Real Estate Funds
Offshore funds
Tax Saving Fund
-
8/14/2019 MF in India
12/36
Gilt fund
These funds invest in different
types of long and medium term
government securities and highlyrated corporate debt, and money
market instruments. Gilt funds stick
to high quality low risk debt,invest mainly in government
securities.
-
8/14/2019 MF in India
13/36
Offshore funds
Funds that invest solely in foreign
markets are referred to as international
funds ( offshore). Funds that invest bothin domestic markets and international
markets are referred to as Global funds
-
8/14/2019 MF in India
14/36
Classification based on Types ofInvestors
Some categories of funds are different fromother funds because of their investor profile.
Ex Pension Funds
These funds manage the pension moneys oftheir clients.
Ex: Kothari Pioneer Pension Plan Fund
-
8/14/2019 MF in India
15/36
Classification based on Management
Style
The corpus of the fund may be managed either
actively or passively
Active management of funds involves gathering
of security specific information, analyzing it, and
selecting securities.
Passive management of funds involves
selection of a market index.
-
8/14/2019 MF in India
16/36
Classification on the basis of Load
A fund incurs two types of costs:
Marketing cost
Operating cost
On the basis of chargeability of marketing costs to
the scheme, funds can be classified into:
Load funds
Non-Load funds
-
8/14/2019 MF in India
17/36
Load funds charge the marketing costs to thescheme, while the no-load funds do not
The no-load funds recover the marketing costsas part of the management fee
Load funds are of two types:
Front Load: The load is charged at the time theinvestor invest in the fund.
Back Load : The load is charged at the time ofexiting from the fund
-
8/14/2019 MF in India
18/36
Other Pooled Investments
Hedge fund
Fund of funds
Exchange Traded Fund
-
8/14/2019 MF in India
19/36
-
8/14/2019 MF in India
20/36
The difference between MF / HF
The difference between the two are
2. Regulatory requirements
3. Fees
4. Leveraging practices
5. Pricing and liquidity
6. Investor characteristics
-
8/14/2019 MF in India
21/36
Fund of Funds:
It is a mutual fund that does not invest directly
into equity or debt market; instead it invests in
other mutual funds.
A fund of funds which allocates the fund in a
debt and equity mix is called a balance fund.
Two players
Franklin Templeton Mutual Fund
Prudential ICICI Mutual Fund
Birla Mutual Fund
-
8/14/2019 MF in India
22/36
Exchange Traded Fund {ETF}
It is a type of investment company whoseinvestment objective is to achieve the samereturn as a particular market index.
It is an index fund in that it will primarily investin the securities of companies that areincluded in a selected market index.
It will invest in either all of the securities or arepresentative same of the securities includedin the index
-
8/14/2019 MF in India
23/36
-
8/14/2019 MF in India
24/36
Intermediaries
They act as a link between the mutual
fund companies and the investors. They
include brokers, sub-brokers, investmenthouses like Bajaj Capital, not only help in
the subscription of units but also provide
guidance to the investors.
The other intermediaries are Registrarsand transfer agents.
-
8/14/2019 MF in India
25/36
The Structure of Mutual Funds
In India, the structure of a mutual fund is
determined by SEBI regulations.
These regulations require a fund to beestablished in the form of a trust under the
Indian Trusts Act,1882 to raise money.
The money can be raised by the sale of a units,either to the public in general or a particular
section of the public.
-
8/14/2019 MF in India
26/36
Structure of Mutual Fund, an
exampleSponsor : JM Financials Ltd
Name of the Fund: JM Equity Fund
Trustee : JM Financial Trustee Company AMC : JM Financial A.M Pvt Ltd
Registrars & Custodians: Karvy Pvt Ltd
-
8/14/2019 MF in India
27/36
Custodians
The custodians are appointed by the sponsors
and registered under the SEBI Act to look after
the transfer and storage of securities. The
functions of custodians are 1. safe keeping ofsecurities bid settlements, 2. transfer
agent,3.fund accounting, 4.cash management
and 5.other similar functions like daily
settlements of purchase and redemption ofunits, collect the data from the Distributors,
looking after the switch-ins and switch-outs
-
8/14/2019 MF in India
28/36
Key Information Memorandum
Rs.5000/-Min application amount
Dividend and growthPlans and options
Subject to market risksRisk profile of the scheme
80% in Equity
20% in debt money market
Asset allocation pattern of
the scheme
To provide optimum capital
growth and appreciation
Investment objective
Open ended, growth schemeType of the scheme
JM Equity FundName of the scheme
-
8/14/2019 MF in India
29/36
Key Information Memorandum
Entry load 2.25% of NAV
Exit load 0.5% of NAV
Expenses of the scheme
JM equity 50.79 (5Years)
BSE sensex 43.10(5Years)
Performance of the fund
Sandip SabharwalName of the fund manager
BSE sensexBench mark index
In multiples of Rs1/-Additional purchases
Rs.10, minimum 50 unitsFace value of the unit
-
8/14/2019 MF in India
30/36
Key Information Memorandum
01-04-1995Date of inception
By the SEBI CircularNo entry load will be charged
for direct applications
received by the AMC
-
8/14/2019 MF in India
31/36
Taxable securities transaction
Seller0.25%Sale of a unit of an equity
oriented fund to the mutual
fund itself
Seller0.125%Sale of a unit of an equity
oriented fund
Purchaser0.125%Purchase of a unit of an equity
oriented fund
Payable byRatesTaxable securities transaction
-
8/14/2019 MF in India
32/36
Risk factors
Mutual funds and securities investments are
subject to market risks and there can be no
assurance or guarantee that the objectives of
the scheme will be achieved. As with any
money markets. Past performance of the
sponsors / investment manages / mutual
funds does not indicate the futureperformance of the scheme and may not
necessarily provide a basis of comparison
with other investments
-
8/14/2019 MF in India
33/36
Risk factors
The name of the scheme does not , in
any manner indicate either the quality of
the scheme or their future prospects orreturns. Unit holders in the scheme are
not being offered any guarantee,
assured returns. Investors should read
their offer document / key informationMemorandum available at investor
service centers.
-
8/14/2019 MF in India
34/36
Top Equity funds & Fund
Managers
0.1564Swathi KulkarniUTI dividend
0.1568Gopal AgarwalSBI Magnum0.1596Ravuri Srinivas raoHDFC growth
0.1597
(Sharpe
ratio)
R. SrinivasanPrincipal
Resurgent India
0.1651Mihir voraHSBC midcap
0.1742Jayesh GandhiBirla mid cap
0.1840Sandeep kothariFidelity equity
-
8/14/2019 MF in India
35/36
Top Holdings of Fidelity Equity
Reliance industries Bharati Air Tel BHEL
SBI Infosys L&T ICICI Bank
TCS Grasim HDFC Bank Cipla
SANDEEP KOTHARI
FUND MANAGER OF THE YEAR
FIDELITY FUND MANAGEMENTAUM Rs 4,100 CR
1 YEAR RETURNS 44 %
-
8/14/2019 MF in India
36/36
Thank You