Mutual Funds
DefinationMutual fund is a kind of collective investment that pools money from different investors to invest in the stocks, bonds, debt and other money market instruments and securities. The governing body for mutual funds is Association of Mutual funds in India (AMFI) which is a non- profit organisation and is registered with the Security and Exchange Board of India (SEBI). The companies which deals with the pooled funds are known Asset Management Companies (AMC).
Structure of MF-
Sponsors
Sponsors are basically the promoter of the fund like Kotak mahindra, HDFC, UTI bank, DSP black rock etc which raises the money from the public and in return they become the fund shareholders.
Trustees
Trustees are the professionals who look after the activities of the AMC. They are legally appointed by the SEBI to safeguard the interest of the investors.
Custodian
A custodian keeps the a safe custody of the investment, which is registered with the SEBI. It can also provide fund accouting services and tranfers agent services.
Tranfer agents
Tranfer agent company is a interface with the customer, which issues a fund units and also help to redeeming those units.
Operations of MF-
The money collected from the public is invested in different funds offered by the companies in the form of Stocks and are calculated on the Net Asset Value (NAV) NAV=Market Value of the investment- Management expenses Total No. of shares
MF companies and houses in IndiaAIG Global Investment Group Mutual Fund Bharti AXA Mutual Fund Birla Sun Life Mutual Fund Canara Robeco Mutual Fund DBS Chola Mutual Fund DSP BlackRock Mutual Fund DWS Mutual Fund Edelweiss Mutual Fund Escort Mutual Fund Fidelity Mutual Fund Fortis Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund
HSBC Mutual Fund ICICI Prudential Mutual Fund IDFC Mutual Fund ING Mutual Fund JM Financial Mutual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Lotus India Mutual Fund Mirae Asset Mutual Fund Principal Mutual Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund Taurus Mutual Fund UTI Mutual Fund
Types of MFBy Structure 1. Open-ended scheme- open throughout a year, no fixed maturity, can be bought and sold anytime on NAV related prices. 2. Close-ended sheme-Specific maturity period, 2 options are provided
either to tranfer to stock exchange where they are listed or periodic purch at NAV 3. Interval Scheme- combination of both open and close ended By nature 1. Equity Fund- maximum part in equity. Diversify equity fund Mid-cap fund
Sector specific fund Tax saving fund 2. Debt fund- Investment in debt papers, low risk and provide stable income to investors. Financial inst, banks, govt authorities and pvt co. Deals in it. Gilt fund- invt in securities issued by govt knw as govt of india debt paper. Income fund-bonds, corp debt and govt securities MIP- Max of debt instrument and min in equity. Short term plans(STP)- invst for 3-6months like certificate of deposit n commercial papers. Liquid fund-short term invst 3. Balanced fund- inclides both debt and equities. By investment objective1. Growth scheme- also knwn as equity scheme. Major part in equity, mid and long term prospetives 2. Income scheme-Alo knwn as debt sceme, regular and steady inome 3. Balanced scheme-Balanced in both equity n debt in 1:1 ratio 4. money market schem-Provide liquidity, safer n short term securities. ETF(exchange traded fund) Gold ETF- The money is invested in gold ETF in the form of Units. This ETF also require some percentage of entry load which depends upon the company. Cost involved in MFExpense Ratio The cost of monitoring and regulating the fund involve the cost of the company which is covered under the expense ratio. It is also referred as mgt exp ratio (MER).
Fund Mgt charges- MF is take care by the fund managers who invest
the money in different securities to generate returns and this involves some charges which is b/w 0.5% and 1% of assets on an average. Administration Cost- It includes postage, record keeping, customer service and carriage charges. Entry load and exit load- Entry load is free in MF whereas exit load depends upon the time period. If the duration is less than 1 year then there is some charges attached to it and if the withdrawal is after 1yr then it is free.
