Download - Assignment on Mutual Funds
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ASSIGNMENT ON
MUTUAL FUNDS
SUBMITTED BY:-AMIT KUMAR BHANJDEEPA SHARMA DIVESH SHARMAGAGANPREET KAUR
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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.
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TYPES OF MUTUAL FUNDS
Classified under five broad categories:-
According to ownership. According to the scheme of operation. According to portfolio. According to locations
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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.
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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.
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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.
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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
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ULIP (unit linked insurance plans)
Top up facilitiesFund switchLiquidityRidersIncrease or decrease the level of protection.Cover continuance option.
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DHANRAKSHA
Death Benefits.No Survival Benefits.Surrender Benefit.Tax Benefits.
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DHANVRIDHI
Guaranteed returns.Limited Premium Payment.Riders.Rebate.Survival Benefits.
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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.
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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.
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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.
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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.
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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.
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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)
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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.
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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.
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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.
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PERFORMANCE OF MUTUAL FUNDS IN THE MARKET
PASSING THROUGH CRITICAL PHASE“LIVING DEAD” IN STOCK MARKETSLOST INVESTOR’S CONFIDENCEUTTER FAILURE IN INDIA
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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
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PRODUCT DESIGNDID LITTLE TO INNOVATE WITH
INNOVATION75% SCHEMES CLOSE END WITH
POOR RETURNSINNOVATION ONLY IN OPEN END
SCHEMEDSTIME TO DESIGN SECTOR, LOCATION
BASED MFs
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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
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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.