Cbi 01 MFS PPT1

CZ PATEL COLLEGE OF
BUSSINESS AND MANAGEMENT
S U B M I T E D B Y- A B H I S H E K M O M AYA
ROLL NO- 01
C L A S S - S . Y. B C O M ( C B I )
S U B J E C T- M A N A G E M E N T A N D F I N A N C E S E R V I C E
TOPIC-MUTUAL FUNDS
D AT E - 5 / 1 2 / 2 0 2 1
S U B M I T E D T O - N I K U N J PAT E L
MUTUAL FUNDS
INTRODUCTION
A mutual fund is an investment where many investors pool their money
to earn returns on their capital over a period.
This corpus of funds is managed by an investment professional known

as a fund manager or portfolio manager.
It is his/her job to invest the corpus in different securities such as bonds,

stocks, gold and other assets and seek to provide potential returns.
The gains (or losses) on the investment are shared collectively by the
investors in proportion to their contribution to the fund.
History of Mutual Funds
 Phase I – 1964-1987: In 1963, UTI was set up by
Parliament under UTI act and given a monopoly. The
first equity fund was launched in 1986.
 Unit Scheme 1964 (US ’64) was the first scheme
launched by UTI. At the end of

1988, UTI had ₹ 6,700 croets
Under Management (AUM).
Phase II 1987-1993 - The year 1987 marked the entry of

public sector mutual funds set up by Public Sector banks and Life
Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first ‘non-
UTI’ mutual fund established in June 1987, followed by Canbank
Mutual Fund (Dec. 1987), Punjab National Bank Mutual Fund
(Aug. 1989), Indian Bank Mutual Fund (Nov 1989), Bank of
India (Jun 1990), Bank of Baroda Mutual Fund (Oct. 1992).
 LIC established its mutual fund in June 1989, while GIC had set
up its mutual fund in December 1990. At the end of 1993, the MF
industry had assets under management of ₹47,004 crores.
Phase III – 1993 – 96: Introducing private sector funds. As well as

open-end funds.
In the year 1993, the first set of SEBI Mutual Fund Regulations came
into being for all mutual funds, except UTI. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton MF) was the first
private sector MF registered in July 1993.
The number of MFs increased over the years, with many foreign
sponsors setting up mutual funds in India. Also the MF industry
witnessed several mergers and acquisitions during this phase. As at the
end of January 2003, there were 33 MFs with total AUM of ₹1,21,805
crores, out of which UTI alone had AUM of ₹44,541 crores.
Phase IV 2003-2014-In February 2003, following the repeal

of the Unit Trust of India Act 1963, UTI was bifurcated into two
separate entities, viz., the Specified Undertaking of the Unit Trust
of India (SUUTI) and UTI Mutual Fund which functions under
the SEBI MF Regulations.
 Following the global melt-down in the year 2009, securities
markets all over the world had tanked and so was the case in
India. Most investors who had entered the capital market during
the peak, had lost money and their faith in MF products was
shaken greatly.
(Current) Phase V - Taking cognisance of the lack of

penetration of MFs, especially in tier II and tier III
cities, and the need for greater alignment of the interest
of various stakeholders, SEBI introduced several
progressive measures in September 2012 to "re-
energize" the Indian Mutual Fund industry and increase
MFs’ penetration.
Since May 2014, the Industry has witnessed steady
inflows and increase in the AUM as well as the number
of investor folios (accounts).
The graph indicates the growth of assets over the years.
TYPES OF MUTUAL FUNDS
Types of funds based on asset class
 Debt funds
Debt funds (also known as fixed income funds) invest in assets like government
securities and corporate bonds.
 Equity funds
In contrast to debt funds, equity funds invest your money in stocks. Capital
appreciation is an important objective for these funds.
 Hybrid funds
Hybrid funds invest in a mix of both equity and fixed income securities. Based
on the allocation between equity and debt
Types funds based on structure
 Open-ended mutual funds

Open-ended funds are mutual funds where an investor can invest on any
business day. These funds are bought and sold at their Net Asset Value (NAV)
. Open-ended funds are highly liquid because you can redeem your units from
the fund on any business day at your convenience.
 Close-ended mutual funds

Close-ended funds come with a pre-defined maturity period. Investors can
invest in the fund only when it is launched and can withdraw their money
from the fund only at the time of maturity. These funds are listed just like
shares in the stock market. However, they are not very liquid because trading
volumes are very less.
Types of funds based on investment objective
 Growth funds
The main objective of growth funds is capital appreciation. These funds put a
significant portion of the money in stocks
 Income funds
Income funds try to provide investors with a stable income. These are debt
funds that invest mostly in bonds, government securities and certificate of
deposits, etc.
 Liquid funds
Liquid funds put money in short-term money market instruments like treasury
bills, Certificate of Deposits (CDs), term deposits, commercial papers and so
on.
 Tax saving funds
Tax saving funds offer you tax benefits under Section 80C of the Income Tax
Act. When you invest in these funds, you can claim deductions up to Rs 1.5
lakh each year.
How to invest in mutual funds
1. Sign up for a mutual fund account on

franklintempletonindia.com
2. Complete your KYC formalities
3. Enter the necessary details as required
4. Identify the funds you wish to invest based on your
financial goals
5. Select the fund and transfer the required amount
6. You can also create a standing instruction with your
bank in case you invest in a SIP each month.
Advantages of Mutual Funds
 Portfolio diversification: It enables him to hold a diversified investment portfolio even

with a small amount of investment like Rs. 2000/-.
 Professional management: The investment management skills, along with the needed
research into available investment options, ensure a much better return as compared to
what an investor can manage on his own.
 Reduction/Diversification of Risks: The potential losses are also shared with other
investors.
 Reduction of transaction costs: The investor has the benefit of economies of scale; the
funds pay lesser costs because of larger volumes and it is passed on to the investors.
 Wide Choice to suit risk-return profile: Investors can chose the fund based on their
risk tolerance and expected returns.
Advantages of Mutual Funds
 Liquidity: Investors may be unable to sell shares directly, easily and quickly.
When they invest in mutual funds, they can cash their investment any time by
selling the units to the fund if it is open-ended and get the intrinsic value.
Investors can sell the units in the market if it is closed-ended fund.
 Convenience and Flexibility: Investors can easily transfer their holdings from
one scheme to other, get updated market information and so on. Funds also offer
additional benefits like regular investment and regular withdrawal options.
 Transparency: Fund gives regular information to its investors on the value of

the investments in addition to disclosure of portfolio held by their scheme, the
proportion invested in each class of assets and the fund manager's investment
strategy and outlook
Disadvantages of Mutual Funds
 No control over costs: The investor pays investment management fees as long as he
remains with the fund, even while the value of his investments are declining. He also
pays for funds distribution charges which he would not incur in direct investments.
 No tailor-made portfolios: The very high net-worth individuals or large corporate

investors may find this to be a constraint as they will not be able to build their own
portfolio of shares, bonds and other securities.
 Managing a portfolio of funds: Availability of a large number of funds can actually

mean too much choice for the investor. So, he may again need advice on how to
select a fund to achieve his objectives.
 Delay in redemption: It takes 3-6 days for redemption of the units and the money to
flow back into the investor’s account.
THANK YOU

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CZ PATEL COLLEGE OF

BUSSINESS AND MANAGEMENT

This corpus of funds is managed by an investment professional known

It is his/her job to invest the corpus in different securities such as bonds,

launched by UTI. At the end of

Phase II 1987-1993 - The year 1987 marked the entry of

Phase III – 1993 – 96: Introducing private sector funds. As well as

Phase IV 2003-2014-In February 2003, following the repeal

(Current) Phase V - Taking cognisance of the lack of

Types of funds based on asset class

 Open-ended mutual funds

 Close-ended mutual funds

1. Sign up for a mutual fund account on

 Portfolio diversification: It enables him to hold a diversified investment portfolio even

 Transparency: Fund gives regular information to its investors on the value of

 No tailor-made portfolios: The very high net-worth individuals or large corporate

 Managing a portfolio of funds: Availability of a large number of funds can actually

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