By N. Manikandan
&K. Priyadharshini
SafetyYou get yourmoney back
Liquidity
You get your money back when you want it
Plus Convenience
How easy is it to invest, disinvest
and adjust to your needs? Post-tax Returns
How much is really left for you post tax?
A mutual fund is the trust that pools the savings of a number of
investors who share a common financial goal.
A mutual fund is just the connecting bridge or a financial
intermediary that allows a group of investors to pool their money
together with a predetermined investment objective.
The mutual fund will have a fund manager who is responsible for
investing the gathered money into specific securities (stocks or
bonds).
It gives the market returns and not assured returns.
MF diversify their risks?
No. Mutual fund investments are not totally risk free.
According to basis financial theory, which states that an
investor can reduce his total risk by holding a portfolio of
assets instead of only one asset.
This is because by holding all your money in just one asset, the
entire fortunes of your portfolio depend on this one asset.
By creating a portfolio of a variety of assets, this risk is
substantially reduced.
MF offer tax benefit
Yes. If the capital gains earned by you during a
financial year are invested in specified mutual funds then such capital gains are exempt from capital gains tax under Section 54EA and Section 54EB of the
Income Tax Act.
Growth of Mutual Funds
Mutual funds are opened in India 1963 by Unit Trust of India.
U.T.I is Monopoly in MF up to 1986‐87
In July 1987 SBI MF was stared followed by Canara Bank in 1987 and
other Major banks also.
1987‐
Public Sector banks, Insurance Companies
SBI, Canbank, PNB LIC, GIC
1993‐
Private Sector
Kothari Pioneer ( later merged with Franklin Templeton), J P Morgan,
Morgan Stanley, George Soros and Capital International
Phases of Mutual Fund
First phase‐
1964‐87
Second Phase ‐
1987‐1993
Third Phase ‐
1993‐2003
Fourth Phase ‐
since Feb 2003
Growth of Mutual Funds in India
The size of Indian mutual fund industry has grown in
recent few years.
The total AUM has increased from Rs.1, 01, 565 crores
in January 2000 to Rs.5, 67, 601.98 crores in April 2008.
As on august end 2000, there were 33 Funds with 391
schemes and assets under management with Rs 1, 02,849 crores.
There are 34 Mutual Fund organizations in India
managing 1,02,000 crores.
Growth of this industry
According to the AMFI, the growth of this industry has been
exceptional.
One of the major factors contributing to the growth of this
industry has been the booming stock market with an optimistic
domestic economy.
Second most important reason for this growth is a favorable
regulatory regime which has been enforced by SEBI.
This regulatory board has improved the market surveillance to
protect the investor’s interest.
Mutual Fund Companies in India
Kotak Mahindra Mutual Fund
Unit Trust of India Mutual Fund
Reliance Mutual Fund
Standard Chartered Mutual Fund
Franklin Templeton India Mutual Fund
Morgan Stanley Mutual Fund India
Canbank Mutual Fund
LIC Mutual Fund
GIC Mutual Fund
ICICI Mutual Fund
Future of Mutual Funds in India
By end of 2010, the mutual fund industry of India will
reach Rs 40,90,000 crore.
It was based on the December 2004 asset value of Rs
1,50,537 crore.
In the coming 10 years the annual composite growth
rate is expected to go up by 13.4%.
Since the last 5 years, the growth rate was recorded as
9% annually.
Facts for the Growth of MF
Several asset management companies which are
foreign based are now entering the Indian markets, with over US$1trillion assets under
management worldwide.
Our saving rate is over 23%, highest in the world.
Only channelizing these savings in mutual funds sector is required.
We have approximately 29 mutual funds which is
much less than US having more than 800. There is a big scope for expansion.
Growth Of It.,
In the future, there lies a big scope for the Indian Mutual Funds
industry to expand.
A number of commodity Mutual Funds will be introduced in
the future. The SEBI has granted the permission for the same.
There is also enough scope for the Indian Mutual funds to enter
into the semi‐urban and rural areas.
Financial planners will play a major role in the Mutual Funds
market by providing people with proper financial planning.
Deadly Mutual Fund Myths Deadly Mutual Fund Myths ––Recent TimesRecent Times
The Conventional Wisdom Myth
The Momentum Myth
The Five Star Myth
The New Fund Myth
Keeping Track…
Filling up an application form and writing out a
cheque= end of the story…NO!Periodically evaluate performance of your
funds
Fact sheets and Newsletters
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