final mutual fund

8/2/2019 Final Mutual Fund

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C O N C E P T, O R G A N I Z AT I O N S T R U C T U R E , A D VA N TA G E S A N D T Y P E S

MUTUAL FUND


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ConceptOrganisation of a Mutual Fund Advantages of Mutual Funds

Types of Mutual Fund SchemesFrequently Used Terms


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Concept

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.

The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities.

The income earned through these investments and the capitalappreciation realised are shared by its unit holders inproportion to the number of units owned by them.

Thus a Mutual Fund is the most suitable investment for thecommon man as it offers an opportunity to invest in adiversified, professionally managed basket of securities at arelatively low cost.


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LEGAL STRUCTURE

FUND SPONSPOR/SETTLOR

TRUSTEE INVESTMENTMANAGER &

ADVISOR

UNITHOLDERS

Contd

TRUST


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LEGAL STRUCTURE

INVESTMENT MANAGER & ADVISOR

APPOINTS

CUSTODIANS

REGISTRARS

BANKS

DISTRIBUTORS


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Mutual Fund OperationFlow Chart


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Advantages of Mutual Funds

Professional ManagementDiversificationConvenient AdministrationReturn PotentialLow CostsLiquidity Transparency Flexibility Choice of schemesTax benefits Well regulated


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Types of Mutual Fund Schemes

Wide variety of Mutual Fund Schemes exist to caterto the needs such as financial position, risk toleranceand return expectations etc.

The figure in the next slide gives an overview into theexisting types of schemes in the Industry.


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TYPES OF MUTUAL FUNDS

Type ofMutual Fund

Schemes

Structure Investment

Objective

SpecialSchemes

Open EndedFunds

Close EndedFunds

Interval Funds

Growth Funds

Income Funds

Balanced Funds

Money MarketFunds

Industry SpecificSchemes

IndexSchemesSectoralSchemes


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WHY INVEST IN MUTUAL FUNDS? SAVE THROUGH MUTUAL FUNDS INVEST THROUGH MUTUAL

FUNDSPark surpluses

Short term investment

Easy liquidity

Tax benefits

Have a long term objective

Profile your risk

Select appropriate MFscheme, based on risk return

requirement

Mix of equity and debt

Invest regularly/withflexibility


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RIGHTS AS A MUTUAL FUNDUNITHOLDER

Receive statement of accounts within 6 weeks from the date yourrequest is received by the Mutual Fund

Receive information about the investment policies, objectives,financial position and general affairs of the scheme

Receive dividend within 30 days of their declaration, receiveredemption proceeds within 10 days from the date of the validredemption

Vote in accordance with the Regulations to:- change the Asset Management Company

- wind up the schemes.

To receive communication from the Trustee about change in the

fundamental attributes of any scheme


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Frequently Used Terms

Net Asset Value (NAV) Net Asset Val ue is the market value of the assets of thescheme minus its liabilities. The per unit NAV is the netasset value of the scheme divided by the number of unitsoutstanding on the Valuation Date.

Sale PriceIs the price you pay when you invest in a scheme. Alsocalled Offer Price. It may include a sales load.

Repurchase PriceIs the price at which a close-ended scheme repurchasesits units and it may include a back-end load. This is alsocalled Bid Price.

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