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