assignment on mutual funds

ASSIGNMENT ON

MUTUAL FUNDS

SUBMITTED BY:-AMIT KUMAR BHANJDEEPA SHARMA DIVESH SHARMAGAGANPREET KAUR

MUTUAL FUNDSA mutual fund is a common pool of money into which investors place their contributions that are to be invested in different types of securities in accordance with the stated objective.

TYPES OF MUTUAL FUNDS

Classified under five broad categories:-

According to ownership. According to the scheme of operation. According to portfolio. According to locations

According to ownership. Public Sector mutual funds:-

Public Sector Mutual Fund means the Mutual Fund registered with and regulated by SEBI where the Government of India, its financial institutions and public sector banks holds/hold individually or collectively more than 50 per cent of equity/shares in the Asset Management Company of that Mutual Fund.

SBI-MUTUAL FUNDS•The objective of the scheme is to provide the investor with long term capital appreciation/dividends along with the liquidity of an open-ended scheme.

•The scheme will invest in a diversified portfolio of equities of high growth companies.

•Thereafter a number of public sector organisations like IND Bank-MF,CAN Bank-MF,BOI Bank-MF,PNB Bank-MF,LIC-MF etc have joined operations in MF business.

Private Sector Mutual Funds

The Govt. of India allowed the private sector corporates to join the Mutual Fund Industry. A number of private sector companies approached SEBI for permission to set up Private Mutual Funds.

ACCORDING TO SCHEME OF OPERATIONS

Open-Ended Funds

1. It offers units for sale without specifying any duration for redemption.

2. No Fixed Maturity period.3. Subscription and Redemption can be done at any time.4. These are not listed

For eg:- ULIP, Dhanraksha & Dhanvridhi of LIC Mutual fund

ULIP (unit linked insurance plans)

Top up facilitiesFund switchLiquidityRidersIncrease or decrease the level of protection.Cover continuance option.

DHANRAKSHA

Death Benefits.No Survival Benefits.Surrender Benefit.Tax Benefits.

DHANVRIDHI

Guaranteed returns.Limited Premium Payment.Riders.Rebate.Survival Benefits.

Close ended Funds

1.Period of Maturity is specified.2.Subscription is only at the time of initial

issue.3.These are listed.

For eg:- Dhanshree and Dhansamaridhi of LIC Mutual Fund, Canshare of Canara Bank , Ind Jyoti and Swaran jyoti of Indian Bank.

Interval Funds

1. Kept open for specific interval and after that operates as a close ended.

2. Recently permitted by SEBI.3. Open for sale or repurchase at fixed

predetermined intervals (disclosed in offer document).

4. Units are also traded in stock exchange.

ACCORDING TO PORTFOLIO

Income Funds:->Aims at providing maximum

current return.>Investments are made in stocks

yielding high returns.>Income is distributed periodically.>Capital appreciation is of small

importance.

Growth Funds:-

>Aims at providing capital appreciation.

>Investment in growth oriented securities ( long run).

>Concentrate on value appreciation of securities and not on regularity of income.

Balanced Funds:-

>Spend both on common stock and preferred stock.

>Ensure both appreciation in stock as well as regular income (interest and dividend).

>Also known as conservative Funds.

Bond Funds:-

>Employ resources in Bonds.>Ensure Fixed and Regular Income.>Some Funds are available at lower

than face value.( net income on Face value)

Money Market Mutual Funds:-

>Investments exclusively in Money Market Instruments.

>Instruments Include treasury bills , govt securities with an unexpired maturity of up to 1 yr, commercial paper , commercial bills & certificates of Deposits.

Taxation Funds:-

>Investors get some concession in income tax.

>lock up period.(keeping money with fund)

>Distribute the Profit among Unit Holders.

>Amount collected is used to acquire shares and interest bearing securities.

ACCORDING TO LOCATION

Domestic Funds:->Mobilise savings of people within

the country where investments are made

Off-Shore Funds:->Mobilise Funds in countries other

than where investment are to be made.

> Attracts Foreign savings.

PERFORMANCE OF MUTUAL FUNDS IN THE MARKET

PASSING THROUGH CRITICAL PHASE“LIVING DEAD” IN STOCK MARKETSLOST INVESTOR’S CONFIDENCEUTTER FAILURE IN INDIA

MUTUAL FUND MONITOR

Particulars Growth Income Balanced Total

No. of Schemes 98 28 32 158

Schemes giving -ve returns on annualised basis

50 01 02 53

Schemes giving single digit annualised returns

31 10 12 53

Schemes giving double digit annualised returns

17 17 18 52

Source: Business Today

PRODUCT DESIGNDID LITTLE TO INNOVATE WITH

INNOVATION75% SCHEMES CLOSE END WITH

POOR RETURNSINNOVATION ONLY IN OPEN END

SCHEMEDSTIME TO DESIGN SECTOR, LOCATION

BASED MFs

FUND MANAGEMENTNON-QUALIFIED, UNPROFESSIONAL FUND

MANAGERSLOOK MFs AS ANOTHER EQUITY

PRODUCTIGNORE ASSET ALLOCATION, PORTFOLIO,

TURNOVER & COSTNO QICK ASSET REALLOCATION ON TIMEDON’T INCLUDE HIGH LIQUID BLUE CHIP

STOCKSNOT BALANCING RISK RETURN

EXPECTATION OF INVESTORS

Mutual Funds are subject to market risks and there is no assurance and no guarantee that the scheme objective will be achieved. As with investment in any securities, the NAV of the units issued under the schemes may go up or down depending on the factors and forces affecting the securities markets.