Mutual Funds are one of the best investment solutions that generate better interest. This presentation points out Mutual Funds types, growth, role, challenges and their scope in coming years. To get more details go through the presentation.

1. Mutual Fund
Trends
Mutual Funds are one of the important
investment options, which is highly popular in
general public. They are famous coz they have
various options including Risk takers to the safe
players. Have a look on some of the Mutual Fund
trends in Indian market.

2. Top Mutual Fund Trends
•
1. Types of MF in Indian Market
•
2.MF growth in India
•
3. MF role in Savings
1. Types of MF in Indian Market
• TYPE OF INVESTMENTS
• TIME OF CLOSURE OF THE SCHEME
• TIME OF PAYOUT
• TAX INCENTIVE SCHEMES
2.MF growth in India
• First Phase 1964-87
• Second Phase 1987-1993( Entry of Public Sector
Funds)
• Third Phase-1993-2003(Entry of Private Sector
Funds
• Fourth Phase – since February 2003
3. MF role in Savings:
• Returns on Investment
• Ease of use to Money
• Security of Assets
• Helps in Saving Taxes
• Verdict

3. •
4. Challenges
•
5.Scope of MFs in coming years
•
6.Educating your investor
4. Challenges
• Distribution network
• Low retail participation
• Lack of Investor Education
• Cost pressures
5.Scope of MFs in coming years
• Regulation for MF Distributors
• Recommendations to re-visit the eligibility
norms of AMCs
• Real Estate Mutual Funds
• Technology as a Game Changer
6.Educating your investor
• Investor awareness: What is being done
differently today?

4. 1. Types of MF in Indian Market
• EQUITY FUNDS / SCHEMES
• DEBT FUNDS / SCHEMES
(also called Income Funds)
• (c ) DIVERSIFIED FUNDS /
SCHEMES (Also called
Balanced Funds)
• GILT FUNDS / SCHEMES
• MONEY MARKET FUNDS /
• SCHEMES
• SECTOR SPECIFIC FUNDS
• INDEX FUNDS
• Open Ended Schemes
• Close Ended Schemes
TAX
INCENTIVE
TYPE OF
SCHEMES
INVESTMENT
S
TIME OF
PAYOUT
• Dividend Paying
Schemes
• Reinvestment Schemes
TIME OF
CLOSURE OF
THE SCHEME
TAX
INCENTIVE
SCHEMES
• TAX SAVING FUNDS
• NOT TAX SAVING
FUNDS / OTHER
FUNDS

5. 2.MF growth in India
First Phase
1964-87
Second Phase
1987-1993(
Entry of Public
Sector Funds)
Third Phase19932003(Entry of
Private Sector
Funds
• Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. At the end of 1988 UTI had Rs.6,700
crores of assets under management
• SBI MF marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance
Corporation (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual
Fund established in June 1987. At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores
• 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund registered in July 1993. As at the end of January 2003, there
were 33 mutual funds with total assets of Rs. 1,21,805 crores.
• There have been several amalgamation of mutual funds. The MF have also become popular among retail investors.
There were 28 mutual funds operating in India in April,2005.
Fourth Phase –
since February
2003

6. Below graph shows the growth of Mutual Funds in India since 2001 till 2013. Mutual
fund industry is growing except year 2009, when it fell down by 20%
Growth of Mutual Funds
1,000,000
There was a
dip of around
20% in 2009
900,000
AUM in Crores
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

7. 3. MF role in Savings
Mutual fund is a better savings account as it provides all the facilities that you get from
your saving account with better returns, have a look on below pointers:
Returns on Investment:
•
A savings account might give you anywhere from 1% to 1.7% whereas mutual funds
have a range of 1 to 3%. It doesn't mean that you will get 3% returns, but it does mean
your chances of receiving up to 3% returns are higher than with a savings account.
As with bonds, the performance of money market funds is strictly tied to the interest
rates set by the Fed. Hence when rates in the market are at very low levels, as they
were from 2002 to 2004 and 2007 to 2009, these types of funds generate returns on
lower range similar to savings account. So it’s important to be aware of current interest
rate environment and how it compares to your savings account rate before you invest
your money into funds.

8. Ease of use to Money
•
Mutual funds are comparable to savings accounts as far as the availability of liquid
assets to a market goes. There are usually free check-writing, automated electronic
exchange services and telephone exchange and redemption. If you are confident that
the money will be sitting inactive for more than three months, funds bills or CDs are
assured option, but they come with fines and fees for early redemption.
•
Both the mutual fund account and a savings account are for people who need access to
the money.

9. Security of Assets:
•
The main reason of saving money in banks isn't because of the profitable returns from
interest rates - it is because the bricks, sensors and a tempered steel safe put across a
sense of security that a sock drawer can’t match.
•
On the other hand, mutual funds are safe in different ways. There is no backing from
the federal government. Companies generally invest only in financially trustworthy
securities and all the investments must have an average maturity of less than 120 days.
This results in a lot of government issues (municipal, state, federal) - which are the
safest debt instruments - that have a lower capitulate than the average market, but a
better rate than your savings account.

10. Helps in Saving Taxes
•
Mutual Funds help in saving tax amount on larger basis as we get variety of plans to
invest in with higher returns whereas savings account has minimal options in Tax
saving schemes and offer low returns on investment.

11. Verdict
•
Changing from a savings account to a mutual fund account is more of a psychological
leap than it is a change in actual mechanics. Now with a mutual fund, you can still write
checks and transfer money into your checking account when you need it, but it is no
longer a savings account - it is an investment.
•
The returns are better, the security is equivalent, and taxes and access are simply
handled. Despite this, people believe that a savings account is somehow more firm. If
you can get around that type of thinking, you will find that a mutual fund account will
help you to see some returns from the money you are keeping in savings account.
Resource:
http://www.investopedia.com/articles/mutualfund/07/money_market_savings.asp
http://www.icifactbook.org/2006/06_fb_sec7.html
http://www.ici.org/pdf/ppr_ret_role_of_funds.pdf

12. 4. Challenges
Challenges which continue to persist are …
There are continuing concerns that the industry has been grappling with over a
considerable period of time.

Distribution network – Inaccessibility to smaller towns and cities due to lack of
distribution network

Low retail participation – Retail investor percentage is just 26% while
corporate/institutional investors accounts for 51% of total.

Lack of Investor Education – Most of the investors are not aware of how to invest and
where to invest.

Cost pressures – Cost pressure is originating as systems & processes are inefficient.
•

13. 5. Scope of MFs in coming years
Recommend
ations to revisit the
eligibility
norms of
AMCs
Regulation
for MF
Distributors
Vast Range
of Products
Scope of the
Mutual Fund
in Coming
Years
Real Estate
Mutual
Funds
Technology
as a game
changer

14. A) Regulation for MF Distributors
•
Mis-selling of Mutual Fund Products happen on larger scale as there is no separate
authority in India which operates distributors of different Mutual Fund Schemes
•
MFs need distributors who are able to inform the investors about the efficiency of
the product for a particular risk profile and stage in their life cycle. As the
prosperity of Indians increase, the range of financial products to meet people’s
need will increase and with it the need for professional financial advice from the
MF distributors will increase.

15. B) Recommendations to re-visit the eligibility norms of AMCs
•
SEBI had represented the “Committee on Review of Eligibility Norms” (CORE) to revisit the eligibility norms and other functional aspects approved for various
intermediaries.
•
The key recommendations are:
• Increase in the minimum net worth of AMCs from the existing Rs. 10 crores to Rs.
50 crores
• Change in the definition of net worth
• Sponsor to be a regulated entity
• Change in definition of control
•
Main objective of these recommendations is to permit only serious players to enter/
remain in the market. These changes can lead to a better governance of the MF players,
thereby increasing investor’s confidence in the industry.

16. C) Real Estate Mutual Funds
•
Real Estate Mutual Funds could be the next big product for the mutual fund industry
provided the regulators bring in more transparency on the tax and regulatory
characteristics.

17. D) Technology as a Game Changer

The power of mobile banking
•
Mobile banking is one of the best plans to tap rural market and to bring mass under the
umbrella of financial services. Mobile banking can reach un-banked population in rural
areas with no change in infrastructure or other technology.
•
Additionally, new mode of cash transactions needs to be searched beyond the POS and
ATM networks of banks. SMS based investing could be more helpful instead of
application based service as in this case user won’t be requiring Smartphone or high
internet connectivity.

18. 
Utilizing Social Media in Marketing Plan
•
Social media is boom. It’s no longer an option of leading finance companies but a
requirement. While it cannot replace the face to face or mobile communication, it can
enhance the overall user experience and can help user to get all the details about the
schemes and funds online.
•
It is one of the best methods to convey your message to young generation who are the
main investors. Social Media is not a emerging technology but it has arrived and will
stay here to forever.

19. 
Leveraging analytics to up-sell and cross-sell
•
Creating information management systems, Reporting systems and dashboards
through Data warehouses is the first step. These, in turn, can be used by for operational
perspective and a strategic perspective. The operational component can widely involve
streamlining and mechanizing business processes like sales, marketing and service.
•
The strategy can involve new product development for targeting new segment, crossselling to existing customers and enhancing customer relationship. The growth in
industry in completely depends on fulfilling the customer requirements. Analytics can
be leveraged to create differentiation amongst products in terms of specialization, new
features and value-additions to focus on different customer segments with different
requirements.
•
Thus applying advanced analytical techniques will maximize revenues through higher
customer retention and increased wallet share achieved by providing consistent
services and cross-selling.

20. E) Vast Range of Products
•
Indian mutual fund industry needs to come out with innovative products that could
supply the ever changing need of customers.
•
In US, MFs provide products that cater to the entire life cycle of the investor. Diversified
products will keep the present energy going for the industry in a more aggressive and
proficient manner. Further, Mutual funds have to battle with bank deposits and
government securities for their share of consumer savings.
•
Thus in order to make Mutual Fund suitable to retail investors, Mutual Fund industry
needs to offer more life cycle financial plans along with generic products.
•
Resource: http://www.pwc.in/assets/pdfs/financial-service/Towards_2015.pdf

21. 6. Educating your investor
•
Investor Contribution (As of Mar,
2010)
Corporates
26%
19%
51%
Bank/Fis
FIIs
HNI's
1%
3%
Retail
Investor awareness: What is being
done differently today?
•
Asset Management Companies have
realized that they need to invest in
financial education and awareness in
order to reap long-term benefits. That is
why campaigns to educate the customer
have picked up momentum as fund
houses try to bring novelty to the way
they connect with their target
customers. Main aims of these
campaigns are to educate the customers
and making them aware of mutual funds
as an investment option.

22. Some of the initiatives by different fund houses are:

Making the financial terms simple to understand: Simplify financial terms and
explain to the customer terminologies in an easy way. The USP is giving lessons and
videos which connect better with people. There are plans to involve investors in games
to engage their interests better.

Online Campaigns like “Myth Buster” are trying to break those myths about
investment and conveying the facts to the investors so that they can invest wisely.

23. 
Another campaign uses the tag line Janoge tabhi to maanoge, and it involves using
radio and micro-sites as a medium to reach-out to investors.

‘Invest correctly’ campaign using print, digital and outdoor media. This fund house
also has a section on its website which details investor education.

The ‘Winvestor’ initiative which is directed towards female investors, to encourage
them to plan for their future and chart their financial plans. Financial planning clinics
are held where women get a chance to discuss their financial queries with a female
advisor.

24. 7. SWOT Analysis of Mutual Funds
Strengths:
1. Large number of potential
customers are base.
2. Government support by way of
tax concession for MF investors
3. Volatility of bank interest rate.
4. Better scope for accessing
market information
5. Offer liquidity to the investors
at any time.
6. Offers variety of products to the
investors.
Opportunities:
1. Huge untapped market in semiurban and rural areas.
2. High level of savings habit
among the people
3. Liberalized business
environment.
4. Using on-line mode of trading
systems.
5. Investment opportunities
abound in the international
market.
6. Failures of non bank financial
company operations.
Weakness:
1. Poor participation of retail
investors
2. Lack of focus
3. Under performance
4. Poor service conditions
5. Distribution network confines
only to metro cities
Threats:
1. Increasing competition among
the players.
2. High level of volatility in the
stock market.
3. Possibility of more stringent
regulations by SEBI , RBI , AMFI ,
etc ., in future.