Mutual funds

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Details regarding project
Content Prepared by:
1.What are mutual funds? Vishal Borse
2.History of mutual funds
Vinay Dayma
3.Types of mutual funds
4.Process of investing in mutual
Bhavesh Jariwala
funds Krishna Kapadia
5.Risk involved in mutual funds
6.Details regarding the top 5 SUBMITTED TO:
mutual funds companies in
India Mayur Patel
7.Recent development in (Stock Exchange and
mutual funds Portfolio Management)
What are mutual
funds?
•A mutual fund is a group of
investors operating through
a fund manager to purchase
a diverse portfolio of stocks
or bonds.
• Mutual funds are highly
cost efficient and very easy
to invest in.
• By pooling money together
in a mutual fund, investors
can purchase stocks or
bonds with much lower
trading costs than if they
tried to do it on their own.
History of mutual funds in India
The first mutual fund to be introduced in India was way back in 1963
when the Government of India launched Unit Trust of India (UTI).
 UTI enjoyed a monopoly in the Indian mutual fund market till 1987
when a host of other government controlled Indian financial
companies came up with their own funds.
 These included State Bank of India, Canara Bank, Punjab National
Bank etc. This market was made open to private players in 1993 after
the historic constitutional amendments brought forward by the then
Congress led government under the existing regime of
Liberalization, Privatization and Globalization (LPG).
The first private sector fund to operate in India was Kothari Pioneer
which was later merged with Franklin Templeton.
Types of mutual funds schemes
1. Closed-end fund
A closed-end mutual fund has a set number of shares
issued to the public through an initial public offering.
2.Open-end funds
Open end funds are operated by a mutual fund house
which raises money from shareholders and invests in a
group of assets.

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Fund Manager: The individual responsible for
making portfolio decision for a mutual fund
3.Large cap funds
Large cap funds are those mutual funds, which seek
capital appreciation by investing primarily in stocks of
large blue chip companies.
4.Mid-cap funds
Mid cap funds are those mutual funds, which invest in
small / medium sized companies. As there is no
standard definition classifying companies.

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Portfolio Manager: A professional hired by the mutual fund
advisor to make investment decisions concerning the purchase
and sale of securities for the mutual fund portfolio in accordance
with the fund's
5.Equity funds
Equity mutual funds are also known as stock mutual funds. Equity mutual
funds invest pooled amounts of money in the stocks of public
companies.
 6.Balanced funds
Balanced fund is also known as hybrid fund. It is a type of mutual fund
that buys a combination of common stock, preferred stock, bonds, and
short-term bonds
7.Growth funds
Growth funds are those mutual funds that aim to achieve capital
appreciation by investing in growth stocks.

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Asset Management Company (AMC): A Company
registered with SEBI, which takes
investment/divestment decisions for the mutual
fund, and manages the assets of the mutual fund
8.No load funds
Mutual funds can be classified into two types - Load mutual funds and
No-Load mutual funds.
9.Exchange traded funds
Exchange Traded Funds (ETFs) represent a basket of securities that is
traded on an exchange, similar to a stock. Hence, unlike conventional
mutual funds
10.Value funds
Value funds are those mutual funds that tend to focus on safety rather
than growth, and often choose investments providing dividends as well
as capital appreciation.

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Hedge Fund: A fund that may employ a variety of
techniques to enhance returns
11.Money market funds
A money market fund is a mutual fund that invests solely in money
market instruments. Money market instruments are forms of debt
that mature in less than one year and are very liquid.
12.International mutual funds
International mutual funds are those funds that invest in non-
domestic securities markets throughout the world.
13.Regional mutual funds
Regional mutual fund is a mutual fund that confines itself to
investments in securities from a specified geographical area,
usually, the fund's local region.
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Bluechip Fund: Mutual fund that invests in blue
chip stocks. Typically a growth fund
14.Sector funds
Sector mutual funds are those mutual funds that restrict their
investments to a particular segment or sector of the economy.
15.Index funds
An index fund is a a mutual fund or exchange-traded fund) that
aims to replicate the movements of an index of a specific financial
market.  
16.Fund of funds
A fund of funds (FoF) is an investment fund that holds a portfolio of
other investment funds rather than investing directly in shares,
bonds or other securities.
Gain from our perspective
Process of mutual funds in pictorial
representation
Process of mutual fund Form of reliance mutual fund
Process of investing in Mutual funds
Where can you purchase mutual funds - banks,
brokerage houses, third party distributors
Fill out form - you will need your PAN number for that
Get receipt/acknowledgment as proof that you have
invested in the fund
Fund House will send you regular statements on your
status and NAV of your units.

One client at a time

“An investment in knowledge always pays the best interest” Benjamin
Franklin
You can choose to invest through a SIP scheme -
Systematic Investment Plan. Allows you to invest small amounts of
money at regular intervals. Helps you avoid market timing and you
can enter the market with a small amount of capital rather than a
lump sum. You can also set up an electronic transfer directly from
your bank through the ECS transfer facility, so you don't have to
write a cheque every month
How can you educate yourself about MF's - read personal finance
magazines like Outlook Money or Money Today or the personal
finance sections of business newspapers; may newspapers like
Hindu or Business Standard also carry weekly
reports on the mutual funds
Unearthing opportunites
Measuring mutual fund
performance
Net Asset Value (NAV)
The NAV is the share price of the fund, obtained by dividing the value
of the fund's holdings by the number of outstanding shares. The
share price is what you would have to pay to buy into the mutual
fund, plus any fees. The change in NAV, reported at the end of every
market day, reflects the increase or decrease in the value per share.
Nav=value of funds/no of shares
For eg nav=`100000000/`10000000
`10per shares

Name inspire trust

.For a mutual fund, yield is interest or dividend before
any gain or loss in the price per share.
Yield percentage is the amount of income from
dividends and interest divided by the NAV, or price per
share. A mutual fund yield can be easily compared to a
bond yield.
yeild(%)=
income distribution per shares/price per share
For eg =`60 income per share/`10 per share
Total return is the current value of shares plus all
distributions taken as cash minus the initial investment
Be good at money
Mutual fund total return formula
Current value of share + cash distribution- initial
investment=total profit or loss
For e.g.
`12000 current value of share
`3000 total cash distribution
`6000 initial investment
`12000+
`3000-6000=9000 profit
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Mutual funds risks
Disclaimer of the Mutual Fund
"Mutual fund investments are subject to market risks.
Please read the offer document carefully before
investing. There is no assurance or guarantee that all
the objectives of the fund will be achieved. Past
performance of the Sponsors/ Mutual fund/ Schemes/
Asset Management Company is not necessarily
indicative of future results. The name of the fund/
scheme does not, in any manner, indicate either the
quality of the fund, its future prospects or returns".
Types of risks
1.Investor Psychology Risk:
The investor psychology is such that most of the investors, be it Mutual
Fund Investors or Direct Capital Market Investors, behave like
reactionaries. E.g. they enter the market when the share prices starts
rising and they get panicky & exit as soon as share prices starts falling
2.Cost Risks:
Mutual Funds charge huge fees that they can get away with and that too
in the most confusing manner possible. The fund managers never
intend to make their costs clear to their clients. It would not be painful
for the investors to pay for the expenses and costs of the funds when
they derive satisfactory returns. But, the irony is that investors have to
pay for the sales charges, annual fees and many other expenses
irrespective of how the fund has performed.
 “The four most dangerous words in investing
are 'This time it's different.” Sir john Templeton
3.Prediction Risks:
Nobody can predict the capital market perfectly and can
always find good investments. Similarly, the fund manager's
predictions of future actions and outcomes are, of necessity,
subject to error.
4.jargon Risks:
The newsletters and other documents that are distributed to
the investors do report so much and that too in such a
language filled with technical jargons that it will not be very
easy for an investor to understand and follow the report.
5. Risks of changes in the Regulatory Norms:
Mutual Funds are constantly regulated by SEBI and
investors are subject to risk of the changes in the
norms for the Mutual Funds.
6.Judgement Risks:
Investors may not know more than the fund
manager about the investment strategy and whatever
judgement the investor makes will not be fool proof
Details of top 5 mutual fund companies in
India
1.HDFC Mutual Fund
Inception Date – June 30th 2000
Trustee – HDFC Trustee Company Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ HDFC Top 200 (2338 cr)
+ HDFC Equity (2759.30 cr)
+ HDFC MIP Long-term (887.90 cr)
2.Tata mutual fund
Inception Date – June 30th 1995
Trustee – Tata Trustee Company Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Tata Pure Equity (269.95 cr)
+ Tata Index Nifty (6.77 cr)
+ Tata Short-term Bond (292.08 cr)
3. SBI Mutual Fund
Inception Date – June 29th 1987
Trustee – SBI Mutual Fund Trustee Company Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Magnum Contra (1,958.50 cr)
+ Magnum Balanced (333.11 cr)
+ Magnum Multiplier Plus (687.15 cr)
4. DSP BlackRock Mutual Fund
Inception Date – December 16th 1996
Trustee – DSP Merrill Lynch Trustee Company Pvt. Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ DSPBR top 100 Equity (1167.08 cr)
+ DSPBR Equity (919.77 cr)
+ DSPBR GSF Longer Duration (425.67 cr)
5.Reliance Mutual Fund
Inception Date - June 30th 1995
Trustee – Reliance Capital Trustee Company Ltd.
Top Performing Schemes – AUM as on 30th April 09
+ Reliance MIP (168.52 cr)
+ Reliance Banking Retail (681.25 cr)
+ Reliance Diversified Power Sector Fund (3809.57 cr)
Recent development in mutual fund in
India
 There have been a lot of changes in the mutual fund industry in past
few years. Lots of multinational companies have bought their
professional expertise to manage funds worldwide. In the past few
months there has been consolidation going on in the mutual fund
industry. Mutual funds in India now offer a wide range of schemes to
choose.
 The size of Indian mutual fund industry has grown in recent few years.
India can now boast of having dominance in this industry. The total
Asset Under Management popularly known as AUM has increased
from Rs.1, 01, 565 crores in January 2000 to Rs.5, 67, 601.98 crores in
April 2008.
 AUM(The total value of assets that a mutual fund ,hedge fund,or other
prtfolio manager manages or administers for itself)
According to the Association of Mutual Funds in
India, the growth of mutual fund industry has been
exceptional. This industry has indeed come a very long
way with only 34 players in the market and more than
480 schemes.

Fueling your ambitions

 Latest NAV
Rank Scheme name Date NAV(`) Last week (%)

1. Birla sun life Feb 3 2011 15.5517 3.059

commodities
equities fund
2. Birla sun life Feb 3 2011 18.6262 2.2115
commodities
equities fund
global agri
3. Sundaram Feb 3 2011 12.1475 1.3646
global
advantage fund
growth
4. ING global real Feb 3 2011 10.5 0.7678
estate fund
growth
5. Mirea asset Feb 3 2011 13.01 0.7473
global
commodity
stocks fund
growth
Bibliography
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dia//
http://www.mutualfundsindia.com//
http://finance.indiamart.com/india_business_informa
tion/mutual_fund_companies.html