Mutual funds in India

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Mutual funds in India

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Abstract

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of mutual funds.

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

Chapter 1.
1. Introduction.
2. Need for the study.
3. Objectives of the study.
4. Methodology.
5. Scope of the study.
6. Limitations of the study.
Chapter 2.
1. Profile of the industry.
2. Profile of the company.
Chapter 3.
1. Topic of the study.
Chapter 4.
1. Data analysis and interpretation.
Chapter 5.
1. Suggestions and conclusions.

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Extract

[...] Fund of Funds (FoF) scheme: A scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a FoF scheme. A FoF scheme enables the investors to achieve greater diversification through one scheme. It spreads risks across a greater universe. Assured return scheme: Assured return schemes are those schemes that assure a specific return to the unit holders irrespective of performance of the scheme. A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document. [...]

[...] The total invest able funds of the industry grew from Rs 24 crore in 1994 to more than Rs 1,20,000 crore in 2002 here on effort is being made to study the various tax aspects relating to mutual funds in India. Conclusion: It is known that tax rate for long term capital gains is lower than Tax on dividends. Some funds operating pure equity growth schemes have been declaring annual dividends; we should be distributed as capital appreciation, consequently put investors to great disadvantage. [...]

[...] The history of mutual funds in India can be broadly divided into four distinct phases First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. [...]

[...] Investors in India commonly do performance of closed end debt funds with a clear period of maturity however may be compared with bank deposits of comparable maturity, as. In practice, no appropriate debt index is available in India, to be used for benchmarking debt funds. Some analysts often use I-SEC'S I-BEX index, and its govt.securities sub segment can be used as benchmark to judge govt.sec.funds. in any case, any benchmark for a debt must have the same portfolio composition and the same maturity profile as the fund itself, to be comparable. [...]

[...] Mutual funds assume greater importance in a scenario of increasing inflation. With inflation hovering around to poised for greater heights, investing in avenues, which just offer breakeven returns, exposes the investment portfolio to inflation risk. Investment in equity either directly or through the mutual fund route provides an effective hedge mechanism against such a potent threat. So, investing in mutual funds is a better option for investors depending upon their objective and requirements. SUGGESIONS Since all the funds returns are beating the market returns and the funds are giving good returns, investing is [...]

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