Mutual Fund Industry

An Overview

Collects money from the investors

Money invested in

various schemes

Income generated in pass on to the

investors in proportion to their

investment

Def : The mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket

History• Phase I (1964 – 87)

• UTI established- 1963 by an Act of Parliament; set up by RBI & functioned under the Regulatory and administrative control of the RBI• 1978 : Delinked from RBI & IDBI took over regulatory and

administrative control

• Phase II (1987 -1993)• Entry of Public Sector Funds by banks, LIC, GIC

• Phase III (1993 – 2003)• Entry of PVT Sector Funds• 1993 was the year in which the first Mutual Fund

Regulations: except UTI all MF were to be registered and governed

• Phase IV ( since Feb 2003)• UTI was bifurcated into two separate entities.• One : Specified Undertaking of the UTI• Second : UTI MF , sponsored by SBI, PNB, BOB & LIC• Recent mergers : consolidation and growth phase

Various types of schemes• Open-ended funds : offers liquidity• Close-ended funds : stipulated maturity period• Interval Funds : are open for sale and repurchase at a predetermined

period• Growth Funds :capital appreciation over the medium-to-long term.• Income Funds :capital stability and regular income.• Balanced Funds :income and moderate growth• Money market funds :easy liquidity, preservation of capital and modest

income ideal for short term• Tax Saving schemes : exploit tax rebates as well as growth in

investments• Special Schemes : industry specific as mentioned in the offer document

Eg : InfoTech funds, FMCG funds, pharma funds,• Index Funds : invetsed in specified index such as BSE Sensex, NSE index• Sector Specific : invest in a particular sector Eg: A group shares

Features of MF

• Affordability• Professional management• Diversification• Convenience• Liquidity• Tax breaks• Transparency

Reasons for not Investing in MF

Future Outlook