investment opportunities in mutual funds

8/8/2019 Investment Opportunities in Mutual Funds

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An old Axiom :

It is not wise to put all eggs

into one basket

was probably in the minds of

those who formed the first mutual fund.


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Presented by:

Utkarsh Sethi

Neeru Rawat

INVESTMENT OPPORTUNITIES IN MUTUAL FUNDSINVESTMENT OPPORTUNITIES IN MUTUAL FUNDS


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What is a Mutual FundWhat is a Mutual Fund

A Mutual Fund is a trust.A Mutual Fund is a trust.

Pools the savings of a number of investors.Pools the savings of a number of investors.

Share a common financial goal.Share a common financial goal.

A diversified portfolio of financial instruments.A diversified portfolio of financial instruments.

equities, debentures / bonds or other instruments.equities, debentures / bonds or other instruments.

The fund is then deployed in investmentThe fund is then deployed in investment

alternatives.alternatives. Income is shared by unit holders.Income is shared by unit holders.

In proportion to their investment.In proportion to their investment.


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Important characteristics ofaImportant characteristics ofa

Mutual FundMutual Fund The ownership is in the hands of the investors who have

pooled in their funds.

It is managed by a team of investment professionals and

other service providers.

The pool of funds is invested in a portfolio of marketableinvestments.

The investors share is denominated by units whose value iscalled as Net Asset Value (NAV) which changes everyday.

The investment portfolio is created according to the statedinvestment objectives of the fund.


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1

2

Mutual Fund

Operation Flowchart


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Advantages ofMutual Funds toAdvantages ofMutual Funds to

InvestorsInvestors Portfolio diversification

Professional Management

Return Potential Reduction in Transaction costs

Liquidity

Convenience and Flexibility

Transparency

Safety Well regulated by SEBI


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How are funds different in terms

oftheirrisk profile?Equity FundsEquity Funds High level of return butHigh level of return but

has a high level of riskhas a high level of risk

as wellas well

Debt FundsDebt Funds Returns comparativelyReturns comparatively

less risky than equityless risky than equity

fundsfunds

Liquid andLiquid and

Money MarketMoney Market

FundsFunds

Provide stable but lowProvide stable but low

level of returnlevel of return


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INSTRUMENTS OFINSTRUMENTS OF

INVESTMENTINVESTMENT

EQUITYEQUITY

CONVERTIBLE DEBENTURESCONVERTIBLE DEBENTURES

FIXED INCOME SECURITIESFIXED INCOME SECURITIES

SHORT TERM SECURITIESSHORT TERM SECURITIES


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Facilities Provided by Mutual FundsFacilities Provided by Mutual Funds

to the Investorsto the Investors Systematic Investment Plan (SIP)Systematic Investment Plan (SIP)

Systematic Withdrawal Plan (SWP)Systematic Withdrawal Plan (SWP)

Systematic Transfer Plan (STP)Systematic Transfer Plan (STP)

Dividend Transfer Plan (DTP)Dividend Transfer Plan (DTP)

Auto debit facility and Electronic ClearingAuto debit facility and Electronic Clearing

Service (ECS)Service (ECS)

SwitchingSwitching


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AMFI Classification ofMF

schemes

Growth & IncomeGrowth & Income High Risk & High ReturnHigh Risk & High Return

BalancedBalanced Moderate Risk & ReturnModerate Risk & Return

Liquid & Money MarketLiquid & Money Market Fixed ReturnFixed Return

GiltGilt Zero RiskZero Risk

ELSSELSS Tax SavingTax Saving

Fund of fundsFund of funds Additional diversificationAdditional diversification


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Wealth cycle for investorsWealth cycle for investors

Stage

Stage Financial needsFinancial needs

Investment preferencesInvestment preferences

Accumulation stageAccumulation stage Investing for long term identifedInvesting for long term identifed Growth options and long termGrowth options and long term

financial goalsfinancial goals products.High risk appetiteproducts.High risk appetite

Transition StageTransition Stage Near term needs for funds asNear term needs for funds as Liquid and medium term investments.Liquid and medium term investments.

prepre--specified needs draw closerspecified needs draw closer Lower risk appetiteLower risk appetite

Reaping StageReaping Stage Higher liquidity requirementsHigher liquidity requirements Liquid and medium term investments.Liquid and medium term investments.

Preference for income and debt productsPreference for income and debt products

InterG

enerationalInterG

enerational

Long term investment ofLong term investment of

inheritanceinheritance Low liquidity needs.Low liquidity needs.

transfertransferAbility to take risk and invest for the longAbility to take risk and invest for the long

termterm

Sudden wealth surgeSudden wealth surge Medium to long termMedium to long term Wealth preservation.Wealth preservation.

Preference for low risk productsPreference for low risk products


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Risks involved in Mutual FundsRisks involved in Mutual Funds

Market RiskMarket Risk

Inflation RiskInflation Risk Credit RiskCredit Risk

Investment RiskInvestment Risk Liquidity RiskLiquidity Risk


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RestrictionsRestrictions

ON INVESTMENTON INVESTMENT Invest only in marketable securities.Invest only in marketable securities.

Issue expenses shall not exceed 6% of the fund.Issue expenses shall not exceed 6% of the fund.

MF cannot hold more than 10% of the paid up capital of a company.MF cannot hold more than 10% of the paid up capital of a company.

MF scheme can invest max. 10% of its NAV in a single company.(MF scheme can invest max. 10% of its NAV in a single company.(ExceptionException Index and Sectoral funds).Index and Sectoral funds).

Debt fundsDebt funds -- single issuer not more than 15% of NAV, can be relaxed tosingle issuer not more than 15% of NAV, can be relaxed to20% with approval of trustees and AMC.20% with approval of trustees and AMC.

Funds of 1 scheme can be invested in any other MF ( Max 5% of NetFunds of 1 scheme can be invested in any other MF ( Max 5% of NetAssets).Assets).

No investment in unlisted associate company.No investment in unlisted associate company.

ON BUSINESS ACTIVITIESON BUSINESS ACTIVITIES No activity other than management of the scheme.No activity other than management of the scheme.

Shall not act as trustee of any scheme.Shall not act as trustee of any scheme.

Shall not invest in any of the schemes floated by it unless disclosed inShall not invest in any of the schemes floated by it unless disclosed inthe offer document.the offer document.


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CONCLUSIONCONCLUSION

Best option consider by the investorsBest option consider by the investorswhen it comes to investing their money inwhen it comes to investing their money inMutual Funds.Mutual Funds.

This industry is growing at a good pace.This industry is growing at a good pace.

Money Invested in Mutual Funds is safe.Money Invested in Mutual Funds is safe.

Investors who are looking for very highInvestors who are looking for very high

instant returns, mutual funds are notinstant returns, mutual funds are notrecommended; they are meant forrecommended; they are meant forinvestors committed to patient investing.investors committed to patient investing.


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THANKYOU..!!THANKYOU..!!

investment opportunities in mutual funds

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