mf in india

8/14/2019 MF in India

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Mutual Funds In India

T.Sita Ramaiah

Center head

INC - Guntur

SIP PRESENTATION


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Dont run after money, make it

come to youBirla sun life equity fund (an open ended

growth scheme)

Rs. I lac invested on Aug 27,1998 inBirla Sun Life equity fund is worth Rs.

24.03 lacs as on September 30,2007.

A similar investment in the benchmark

BSE 200 would have been worth Rs.

6.82 lacs.


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Introduction

The mutual funds industry is still not as mature and

developed as it is in USA, UK and Japan

The entry of the private sector and foreign institutions in

1993, provided a boost to the Indian Mutual FundsIndustry

GOI took initiative of developing the mutual funds

industry by offering various tax sops in the budget


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Types of Mutual Funds

Term of fund :Open - ended and close - end

Investment objective : Growth funds, income funds, balanced

funds, specialized funds

Types of investors : Offshore funds, pension funds etc.,

Management Style : Managed funds, Index funds

Load : Load funds, No-load funds


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Classification Based on the Term of

the Fund:

An opened-ended fund remains open for issue and redemption ofits share throughout its unlimited duration.

Ex. Alliance-95, Birla Advantage, Unit Scheme 64

A close-end fund can issue shares of mutual fund only in thebeginning, and cannot redeem them till the end of their fixedduration

Ex. UTI Master Equity Plan 98, Reliance FTS dividend, Canpep-9S, ICICI Power etc.,


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SEBI Guidelines: A close-ended scheme as any scheme in which the period

maturity of the scheme is specified

An open-ended scheme is defined as a scheme which offers

units for sale without specifying any duration for redemption

Every close-ended scheme is required to be listed on

recognized stock exchange within six months from the closure

of subscription

A close-ended fund may redeem its shares and reissue them

at its choice


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A close-ended scheme may be converted into an open-

ended scheme

A close-ended scheme is allowed to be rolled over at

the end of the maturity period

Both funds are not allowed to borrow , except fortemporary liquidity requirements for the redemption of

units or payment of interest or dividend to the unit

holders.

Borrowing capacity is limited to 20% of the NAV


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Classification based on Investment

Objectives

Growth Fund:

This scheme is to provide capital appreciation over themedium to long-term

Major portion of funds in equities and are willing to bear shorttem decline in value

This scheme is suitable for investor in their prime earning

years or investors seeking growth over the long-term

Ex: Alliance Basic Industries, Reliance Growth, Tata GSF-G


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Income Fund:

Objective of fund is to provide regular andsteady income to investors

Funds generally invest in fixed income such asbonds and corporate debentures

Capital appreciation may be limited

Birla Income Plus-D, Chola Freedom Income-D,HDFC Income etc.,


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Balance Fund:

To provide both growth and income by periodically

distributing a part of the income and capital

appreciation to the investors or reinvesting to

enhance the NAV

They invest in both shares and fixed income

securities

HDFC Balanced-G, JM Balance-G etc


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Specialized Fund:

Sectoral Fund

Money Market Funds

Gilt Fund Real Estate Funds

Offshore funds

Tax Saving Fund


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Gilt fund

These funds invest in different

types of long and medium term

government securities and highlyrated corporate debt, and money

market instruments. Gilt funds stick

to high quality low risk debt,invest mainly in government

securities.


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Offshore funds

Funds that invest solely in foreign

markets are referred to as international

funds ( offshore). Funds that invest bothin domestic markets and international

markets are referred to as Global funds


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Classification based on Types ofInvestors

Some categories of funds are different fromother funds because of their investor profile.

Ex Pension Funds

These funds manage the pension moneys oftheir clients.

Ex: Kothari Pioneer Pension Plan Fund


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Classification based on Management

Style

The corpus of the fund may be managed either

actively or passively

Active management of funds involves gathering

of security specific information, analyzing it, and

selecting securities.

Passive management of funds involves

selection of a market index.


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Classification on the basis of Load

A fund incurs two types of costs:

Marketing cost

Operating cost

On the basis of chargeability of marketing costs to

the scheme, funds can be classified into:

Load funds

Non-Load funds


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Load funds charge the marketing costs to thescheme, while the no-load funds do not

The no-load funds recover the marketing costsas part of the management fee

Load funds are of two types:

Front Load: The load is charged at the time theinvestor invest in the fund.

Back Load : The load is charged at the time ofexiting from the fund


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Other Pooled Investments

Hedge fund

Fund of funds

Exchange Traded Fund


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The difference between MF / HF

The difference between the two are

2. Regulatory requirements

3. Fees

4. Leveraging practices

5. Pricing and liquidity

6. Investor characteristics


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Fund of Funds:

It is a mutual fund that does not invest directly

into equity or debt market; instead it invests in

other mutual funds.

A fund of funds which allocates the fund in a

debt and equity mix is called a balance fund.

Two players

Franklin Templeton Mutual Fund

Prudential ICICI Mutual Fund

Birla Mutual Fund


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Exchange Traded Fund {ETF}

It is a type of investment company whoseinvestment objective is to achieve the samereturn as a particular market index.

It is an index fund in that it will primarily investin the securities of companies that areincluded in a selected market index.

It will invest in either all of the securities or arepresentative same of the securities includedin the index


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Intermediaries

They act as a link between the mutual

fund companies and the investors. They

include brokers, sub-brokers, investmenthouses like Bajaj Capital, not only help in

the subscription of units but also provide

guidance to the investors.

The other intermediaries are Registrarsand transfer agents.


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The Structure of Mutual Funds

In India, the structure of a mutual fund is

determined by SEBI regulations.

These regulations require a fund to beestablished in the form of a trust under the

Indian Trusts Act,1882 to raise money.

The money can be raised by the sale of a units,either to the public in general or a particular

section of the public.


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Structure of Mutual Fund, an

exampleSponsor : JM Financials Ltd

Name of the Fund: JM Equity Fund

Trustee : JM Financial Trustee Company AMC : JM Financial A.M Pvt Ltd

Registrars & Custodians: Karvy Pvt Ltd


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Custodians

The custodians are appointed by the sponsors

and registered under the SEBI Act to look after

the transfer and storage of securities. The

functions of custodians are 1. safe keeping ofsecurities bid settlements, 2. transfer

agent,3.fund accounting, 4.cash management

and 5.other similar functions like daily

settlements of purchase and redemption ofunits, collect the data from the Distributors,

looking after the switch-ins and switch-outs


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Key Information Memorandum

Rs.5000/-Min application amount

Dividend and growthPlans and options

Subject to market risksRisk profile of the scheme

80% in Equity

20% in debt money market

Asset allocation pattern of

the scheme

To provide optimum capital

growth and appreciation

Investment objective

Open ended, growth schemeType of the scheme

JM Equity FundName of the scheme


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Entry load 2.25% of NAV

Exit load 0.5% of NAV

Expenses of the scheme

JM equity 50.79 (5Years)

BSE sensex 43.10(5Years)

Performance of the fund

Sandip SabharwalName of the fund manager

BSE sensexBench mark index

In multiples of Rs1/-Additional purchases

Rs.10, minimum 50 unitsFace value of the unit


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01-04-1995Date of inception

By the SEBI CircularNo entry load will be charged

for direct applications

received by the AMC


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Taxable securities transaction

Seller0.25%Sale of a unit of an equity

oriented fund to the mutual

fund itself

Seller0.125%Sale of a unit of an equity

oriented fund

Purchaser0.125%Purchase of a unit of an equity

oriented fund

Payable byRatesTaxable securities transaction


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Risk factors

Mutual funds and securities investments are

subject to market risks and there can be no

assurance or guarantee that the objectives of

the scheme will be achieved. As with any

money markets. Past performance of the

sponsors / investment manages / mutual

funds does not indicate the futureperformance of the scheme and may not

necessarily provide a basis of comparison

with other investments


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Risk factors

The name of the scheme does not , in

any manner indicate either the quality of

the scheme or their future prospects orreturns. Unit holders in the scheme are

not being offered any guarantee,

assured returns. Investors should read

their offer document / key informationMemorandum available at investor

service centers.


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Top Equity funds & Fund

Managers

0.1564Swathi KulkarniUTI dividend

0.1568Gopal AgarwalSBI Magnum0.1596Ravuri Srinivas raoHDFC growth

0.1597

(Sharpe

ratio)

R. SrinivasanPrincipal

Resurgent India

0.1651Mihir voraHSBC midcap

0.1742Jayesh GandhiBirla mid cap

0.1840Sandeep kothariFidelity equity


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Top Holdings of Fidelity Equity

Reliance industries Bharati Air Tel BHEL

SBI Infosys L&T ICICI Bank

TCS Grasim HDFC Bank Cipla

SANDEEP KOTHARI

FUND MANAGER OF THE YEAR

FIDELITY FUND MANAGEMENTAUM Rs 4,100 CR

1 YEAR RETURNS 44 %


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Thank You

mf in india

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