Mutual Fund Rokov N Zhasa

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Nagaland UniversityLabor et Honor

School of Management Studies

Mutual Funds(MFM 108 Banking and Indian Financial System)Presenter

Rokov N. Zhasa(NU Reg. No. 111291 of 2011-2012)

[email protected]

(+91) 9402716559

May 5, 2013

M M X I I I - M M I V


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Note

This presentations covers the topic of Mutual Funds covered

under: Unit II (part 2)

MFM 108 Banking and Indian Financial System (NU MBA old

syllabus)

Where are we?

School ofManagement Studies, Nagaland University


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1.1 Evolution of MF in India

Phase I (1964-87)

The Beginning

Phase II (1987-1993)

Entry of Public Sector Funds

Phase III (1993-2003)Entry of Private Sector Funds

Phase IV (February 2003)



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1.2 Definition

a fund established in the form of a trust to

raise money through the sale of units to the

Public or a section of the public under one ormore schemes for investing in securities,

inclusing money market instruments or gold or

gold related instruments or real estate assets.

- SEBI (Mutual Funds) Regulations, 1996



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1.2 Definition Demystified

Mutual Fund

Trust that pools the savings of a number of investors

Professionally managed investment in capital market

instruments

The income earned are shared by unit holders in proportion to

the number of units owned by them

Most suitable investment for the layperson



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1.2 Definition Demystified

Mutual Fund



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1.3 Types of Mutual Funds

Mutual Fund

Functional

Close Ended

Open Ended

Interval

InvestmentPattern

Equity Funds

Debt Funds

PortfolioObjective

Income

Growth

Balanced

Geographical

Domestic

Off Shore

Others

P/E Funds

ExchangeTraded Funds

Real EstateMF



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1.4 Who can Invest in MFs?

Residents of India (High Net worth individuals andretail investor)

Indian companies

Indian Trust/ Charitable Institutions

Banks NBFCs

Insurance Companies

Provident Funds

NRIs Foreign entities (FIIs registered with SEBI) (Note:

Foreign citizens are not allowed to invest in MFs inIndia).



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1.5 Structure of Mutual Funds

Transfer AgentThe Mutual Fund

Custodian

SEBI

AMCTrustees

Sponsors

Unit Holders



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1.6 Risk



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1.7 Return

Equity-oriented Schemes

Holding period less than 12 months short termcapital gains tax of 10 per cent.

Holding period more than 12 months no long-term

capital gains tax but the securities transaction tax.Debt-oriented Schemes

Short-term capital gains added to the total income andtaxed at the applicable rate of tax for the individual.

In case of long-term capital gains, the investor has achoice of selecting the rate of 10 per cent flat withoutusing the benefit of indexation or 20 per cent afterusing the benefits of indexation



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1.8 Investment Strategies

Systematic Investment Plan (SIP) Invest a fixed sum every month. (6 months to 10 years- through

post-dated cheques or Direct Debit facilities)

Fewer units when the share prices are high, and more unitswhen the share prices are low. Average cost price tends to fallbelow the average NAV.

Systematic Transfer Plan (STP) Invest in debt oriented fund and give instructions to transfer a

fixed sum, at a fixed interval, to an equity scheme of the samemutual fund.

Systematic Withdrawal Plan (SWP) An investor redeems a fixed sum of specific number of units at

regular intervals without getting exposed to timing risk



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1.9 Regulation

Governed by SEBI (Mutual Fund) Regulation 1996

All MFs registered with it, constituted as trusts ( under Indian Trusts Act, 1882)

Bank operated MFs supervised by RBI too

AMC registered as Companies registered under Companies Act, 1956

SEBI

Very detailed guidelines for disclosures in offer document, offer period,investment guidelines etc.

NAV to be declared everyday for open-ended, every week for closed ended

Disclose on website, AMFI, newspapers Half-yearly results, annual reports

Select Benchmark depending on scheme and compare



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1.10 Advantages of Mutual Funds

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated



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1.11 Operational Efficiency of MFs

Net Asset Value (NAV)

Amount of Dividend paid

Where,

NAVx= net asset per share per share at the at the end of the year x

Dx= Total of all distributions per unit during the year x and

NAVx-1= Net asset value per share at the end of the previous year

Portfolio Yield =



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1.12 Conclusion

Facilitate the investment process

Mobilizing Agent

Offer different products/ schemes are offered to meet various needs.

NAV is the basic parameter to comment on efficiency of mutual funds.

Primarily mutual funds strive for better performance as an institutional

investor as compared to performance what one average investor can



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Reference

MS-44 Security Analysis and Portfolio Management,Block-5 Institutional and Managed Portfolio, PGDFM,

IGNOU

Pathak, Baharati V. The Indian Financial System, Third

Edition, Pearson (2011)



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End of Presentation

Thank YouAnd I am open to queries


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Mutual Fund Rokov N Zhasa