Advantages of Mutual Funds
Schemes according to Maturity Period
Schemes according Investment Objective
Systematic Investment Plan
Value average Investment Plan
Net Asset Value
Assets Management Company
3. Introduction of Mutual Fund
Mutual fund is a mechanism for pooling the resources by issuing
units to the investors and investing funds in securities in
accordance with objectives as disclosed in offer document.
Diversification reduces the risk because all stocks may not
move in the same direction in the same proportion at the same
Mutual fund issues units to the investors in accordance with
quantum of money invested by them.
Investors of mutual funds are known as unitholders.
The profits or losses are shared by the investors in proportion
to their investments.
A mutual fund is required to be registered with SEBI which
regulates securities markets, before it can not collect funds
4. The small investors who generally lack expertise to invest on their
own in the securities market have reinforced the saying “Put not your
trust in money, put your money in trust”.
Experiment with MFs in India began in 1964 with the establishment of
Unit Trust of India (UTI). UTI lost its monopoly status in 1987 with
the entry of other public sector MFs promoted by public sector banks
and insurance companies.
Household savings play an important role in domestic capital formation.
Only a small part of the household savings in India is channelised to
the capital market. As a traditional investment vehicle, the mutual
funds pool resources from the households and allocate them to various
5. Advantages of Mutual Funds
Professional Management:- It avails the experienced
services & skilled professionals who analyses the performance
and prospects of companies & selects suitable investments to
achieve the objectives of the scheme.
Diversification:- It invest in number of companies across a
broad cross-section of industries & sectors.
Convenient Administration:- Mutual funds save
investors time and make investing easy and convenient (avoid
bad deliveries, delayed payments & unnecessary follow up with
brokers & companies).
Return Potential:- Mutual funds have the potential to provide
a higher return as they invest in diversified basket over a medium to
6. Advantages of Mutual Funds
Low Costs:- Mutual funds are a relatively less expensive way
to invest compared to directly investing in capital markets.
(Brokerage, custodial, & other fees).
Liquidity:- In open ended scheme, investors can get their
money back promptly at Net Asset Value related prices from the
mutual fund itself. With close ended schemes, investors can sell
their units on a stock exchange at the prevailing market price.
Transparency:- Investors get regular information on the
value of their investment in addition to disclosure on the specific
investments made by scheme.
7. Schemes According to MATURITY PERIOD
Open ended mutual funds:- An open ended mutual
funds is a fund with a non-fixed number of
outstanding share/units, that stands ready at any time
to redeem them on demand. It provides high
Close ended mutual funds:- It is the fund where
mutual fund management sells a limited number of
shares and does not stand ready to redeem them.
8. Schemes According to INVESTMENT OBJECTIVE
Income oriented Scheme:- The funds primarily offer
fixed income to investors. Like Bonds, Debentures.
Growth Oriented Scheme:- It seeks to invest a
majority of their funds in (Capital market) equities
and a small portion in money market instruments, (i)
high source of income (dividend) , (ii) rapid capital
Hybrid schemes (balanced funds):- These funds
include both the prospective investors- fixed income
as well as growth orientation.
9. Schemes According to INVESTMENT OBJECTIVE
Real Estate Funds:- These are close ended mutual
funds which invest predominantly in real estate and
Off-shore Funds:- Such funds invest in securities of
foreign companies with RBI permission.
New Direction Funds:- invest in companies engaged
in scientific and technological research. (anti
10. Investment Strategies
Bottom up Investing:- first looks at the industry scenario
to assess the potential performance of a company than
takes a view on the economy.
Top down Investing:- First takes a view on the economy
& then looks at the industry scenario to assess the
potential performance of a company.
Equity Funds:- higher capitalisation in long term
Balanced Funds:- such funds invest both in bonds & blue
Money Market Funds:- is high liquidity oriented as
investors attach more value for safety and liquidity.
11. Systematic Investment Plan
A Systematic Investment Plan (SIP) helps you in
A Systematic Investment Plan or SIP is a smart and
hassle free mode for investing money in mutual
funds. SIP allows you to invest a certain pre-
determined amount at a regular interval (weekly,
monthly, quarterly, etc.). A SIP is a planned
approach towards investments and helps you
inculcate the habit of saving and building wealth for
the future. In simple terms…
13. Value averaging Investment Plan
A Value averaging Investment Plan (VIP) is an
investment strategy that works like an SIP – you
invest on a pre determined date, into a fixed mutual
fund scheme, achieving the purpose of disciplined
But while in an SIP the amount is fixed and units may
change, in a VIP you have a target value of your
portfolio, which increases by say Rs. x,000 per
month, and you invest the difference between the
current value of your portfolio, and the targeted
portfolio investment value.
14. Net Asset Value
NAV is the total asset value per unit of the fund and is
calculated by the Asset Management Company
(AMC) at the end of every business day. Net asset
value on a particular date reflects the realisable
value that the investor will get for each unit that he
is holding if the scheme is liquidated on that date.
[(Market Value of Securities + Cash and Equivalent Holdings) - Fund
Total Fund Shares Outstanding
15. Assets Management Company
The AMC should be approved by SEBI & should enter
into an agreement with the trustees of the mutual
fund to formulate schemes, raise money against
units, invest the funds in securities and after meeting
the permissible costs as per norms, distribute income
to the share holders of the funds.
Every mutual fund is required to have an Asset
Management Company (AMC) incorporated in
accordance with the Companies Act, 1956 to
manage the funds of mutual fund.
16. Category 1st Rank MFs ROI NAV
Large Cap SBI Blue Chip Fund 8.4% 55.90
Can Robeco Emerg-Equities 19.4% 61.29
Diversified UTI MNC Fund 25.2% 154.52
Category 2st Rank MFs ROI NAV
Large Cap Birla SL Frontile Equity 5.1% 160.62
Birla Sun Life MNC Fund 34.6% 585.34
Diversified Franklin India Prima Plus 12.1% 443.19
Category 3st Rank MFs ROI NAV
Large Cap Franklin India Bluechip 6.4% 354.15
Franklin India Prima Fund 15.4% 666.56
Diversified Reliance Growth Fund 6.4% 795.06
Rank given by CRISIL on the base of last 1 year returns
Quarter ended September 2015
17. The success of such SIP MFs is based on picking up top MFs
portfolio which is suitable for long term investors. Based on-
Highest returns received in the last 5 years.
Rated by CRISIL which indicates top performance across
various market cycles(Large Cap, Mid/Small Cap/
1st Rank- ICICI Pru Focused Blue Chip Fund
2nd Rank- UTI Equity Mutual Fund
3rd Rank- HDFC Top 200 Fund
4th Rank- HDFC Midcap Opportunities Fund
5th Rank- Franklin India Smaller Companies Fund
6th Rank- UTI Mid Cap Fund
7th Rank- Reliance Equity Opportunities Fund
8th Rank- Franklin High Growth Cos Fund
9th Rank- HDFC Balanced Fund
Notas do Editor
Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held by a government. The shares of these banks are listed on stock exchanges. There are a total of 27 PSBs in India [21 Nationalized banks + 6 State bank group (SBI + 5 associates) ].
In 2011 IDBI bank and in 2014 Bharatiya Mahila Bank were nationalized with a minimum capital of Rs 500 cr.
Open-end funds always trade at NAV, but usually do not deliver a high yield to investors because they typically focus on capital gains, not income.