mutualfunds ppt anurag

8/12/2019 MutualFunds PPT Anurag

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BY: Anurag Tripathi



Impact of inflation on monthly

expenses of Rs. 30,000 today

Value of Rs. 100,000 over time

At inflation of 7.55%(may 2012)

Investors need to beat inflation

30,000

43169

89387

89787

Today 5 years 15 years 20 years

100,000

67536

30804

20803

Today 5 years 15 years 20 years



• A Mutual Fund is a trust that pools the savings of a

number of investors who share a common financial goal.

It is not an alternative investment option to stocks

and bonds, rather it pools the money of several

investors and invests this in stocks, bonds, money

market instruments and other types of securities.

• Anybody with an investible surplus can invest in Mutual

Funds.

• These investors buy units of a particular Mutual Fundscheme that has a defined investment objective andstrategy.



• First Phase – 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. At the end of

1988 UTI had Rs.6,700 crores of assets under management.

• Second Phase-1987-1993 (Entry of Public Sector Funds) marked the entry of non- UTI, 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. At the end of 1993,

the mutual fund industry had assets under management of Rs.47,004 crores.

Third Phase-1993-2003(Entry of Private Sector Funds)1993 was the year in which the first Mutual Fund Regulations came into being, under

which all mutual funds, except UTI were to be registered and governed. The erstwhile KothariPioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered inJuly 1993. As at the end of January 2003, there were 33 mutual funds with total assets of Rs.

1,21,805 crores.

• Fourth Phase – since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963. UTI Mutual

Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under theSEBI Mutual Fund Regulations



• Asset Allocation• Diversifying investments in different assets such as stocks, bonds, real estate,

cash in order to optimize risk.

• Fund Manager• The individual responsible for making portfolio decision for a mutual fund, in

line with fund’s objective.

• Fund Offer Document• Document with investment objectives, risk factors, expenses summary, how to

invest etc.

• Dividend• Profits given to the investor from time to time.

• Growth

• Profits ploughed back into scheme. This causes the NAV to rise.



• NAV • Market value of assets of scheme minus its liabilities.

• Per unit NAV = Net Asset Value

No. of Units Outstanding on Valuation date

• Entry Load/Front-End Load (0-2.25%)• The commission charged at the time of buying the fund.

• To cover costs for selling, processing

• Exit Load/Back- End Load (0.25-2.25%)• The commission or charge paid when an investor exits from a mutual fund. Imposed to discourage

withdrawals

• May reduce to zero as holding period increases.

• Sale Price/ Offer Price• Price you pay to invest in a scheme. May include a sales load. (In this case, sale price is higher than

NAV)

• Re-Purchase Price/ Bid Price• Price at which close-ended scheme repurchases its units

• Redemption Price• Price at which open-ended scheme



Type of

Mutual FundSchemes

StructureInvestment

Objective

Special

Schemes

Open Ended

Funds

Close Ended

Funds

Interval Funds

Growth Funds

Income Funds

Balanced Funds

Money Market

Funds

Industry Specific

Schemes

Index

Schemes

Sectoral

Schemes



• By Structure

• Open-Ended – anytime enter/exit

• Close-Ended Schemes – listed on exchange, redemption after period ofscheme is over.

• By Investment Objective

•

Equity (Growth) – only in Stocks – Long Term (3 years or more)• Debt (Income) – only in Fixed Income Securities (3-10 months)

• Liquid/Money Market (including gilt) – Short-term Money Market(Govt.)

• Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)

• Other Schemes• Tax Saving Schemes

• Special Schemes

• ULIP



•

Expert on your side: When you invest in a mutual fund,you buy into the experience and skills of a fund managerand an army of professional analysts.

• Limited risk: Mutual funds are diversification in actionand hence do not rely on the performance of a single

entity.• More for less: For the price of one blue chip stock for

instance, you could get yourself a number of units acrossa number of companies and industries when you invest ina fund!

•

Convenience: You can invest directly with a fund house,or through your bank or financial adviser, or even overthe internet.

• Transparency: As an investor, you get updates on thevalue of your units, information on specific investmentsmade by the mutual fund and the fund manager'sstrategy and outlook.



[email protected]

TAXATION

• All dividends declared by debt / equity oriented schemes are tax

free in the hands of the investor• Dividend distribution tax @ 14.1625% for individuals and 22.66%

for corporates under debt oriented schemes

• No DDT under equity schemes

• Long term capital gain in equity schemes – exempt from tax

• Indexation benefit available for long term non equity schemes

• Equity short term capital gain @10%

• STCG in Debt funds – Rates applicable for the investor

• Deduction of Rs. 1 lac under section 80C



• 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 units

when the share prices are low. Average cost price tends tofall below the average NAV.

• Systematic Transfer Plan (STP)

•

Invest in debt oriented fund and give instructions to transfera fixed sum, at a fixed interval, to an equity scheme of thesame mutual fund.

• Systematic Withdrawal Plan (SWP)



An investment plan to invest a

fixed amount regularly at a

specified frequency say,

monthly or quarterly.

SIP is a simp le method of invest ing used

across the wo r ld as a means to c reat ing wealth



Benefits of SIP

• Regular

• Investments happen every month unfailingly

• Power Of Compounding

• Rupee Cost Averaging

• Forced saving

•

Helps you overpower the temptation to spend fully• Helps you build for the future

• Automated

• Completely automated process

• No hassles of writing cheque every month

• Light on the wallet

• Investment amount can be so small that you do not even feel the pinchof it being directly deducted, yet the small amount is powerfully workingtowards your financial security



Investing at Peak – SIP is the way



• Diversified equity funds

• Index funds

• Opportunity funds

•

Mid-cap funds• Equity-linked savings schemes

• Sector funds like Auto, Health Care, FMCG etc

• Dividend Yield Funds

• Others (Exchange traded, Theme, Contra etc)



• Errors

• Invest in only top performing funds

• These cannot go wrong

• Replicate past performance in future

•

Appropriate way• Right Mix of equity MFs (Top 3-4 funds, may all be mid-cap funds)

• Have variety of funds like diversified funds, mid-cap funds and sector funds – in right proportion.

• Beginner- it makes sense to begin with a diversified fund

•

Gradual exposure to sector and specialty funds.

• Look at performance of various funds with similar objectives forat least 3-5 years (managed well and provides consistent returns)

Investing in Equity Funds



•

Extra Cash in savings A/c?? Consider Cash Funds

• Liquidity: Savings account wins• b/w a savings account and a fixed deposit, no ATM (Now-

Rel Regular Savings Fund)

• Safety: Savings account wins• All mutual funds are subject to market risks

• Returns: Cash funds win • Upto about 17.5% return

• Performance: Cash funds win• Interest rate fluctuations covered by quick maturation

• Invest when surplus money in savings a/c based on

expense ratio



• Contacting the Asset Management Company directly

• Web Site• Request for agent

• Agents/Brokers• Locate one on AMFI site

• Financial planners• Bajaj Capital etc.

•

Insurance agents• Banks

• Net-Banking

• Phone-Banking

• ATMs

• Online Trading Account•

ICICI Direct• Motilal Oswal, Indiabulls- Send agents



• 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

• Websites

• Newspapers

• Professional advisor



• Fund's management changes

• Performance slips compared to similar funds.

• Fund's expense ratios climb

• Beta, a technical measure of risk, also climbs.

• Independent rating services reduce their ratings of the

fund.

• It merges into another fund.• Change in management style or a change in the

objective of the fund.

mutualfunds ppt anurag

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