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m The driving force of mutal fund->safety of

principal guarenteed +Capital

Appreciation+Income earned with interest or
m Why people preferring MF than Bank deposit
or LIC?
Bcoz with a little money ,they can get into the
investment game
Thus MF acts as a gateway between companies
& investors with his small investment.
V As per SEBI definition,µA fund established in
the form of a trust by a sponsor,to raise money
by the trustees thru the sale of units to the
public,under one or more schemes ,for
investing in securities in accordance with the
sebi regulations.µ
V In simple words,µa mutual fund collects the
savings from the small investors,invest them in
Govt or corporate securities & earn income
thru interest or dividend ,besides capital gainµ
m Investment in equity share represents
investments in a particular company alone.But
in MF investment refers to parts of shares of a
large number of companies.
m If a particular company fails ,then share holder
will suffer a lot,ButMF holders are able to
withstand that risk by means of their
diversified companies.
m Equity investment is a vehicle for
speculators,But MF is a vehicle for genuine &
conseravtive investor.
V rrofessional Management
V Diversifications
V Convenience
V Return potential
V Low costs
V Liquidity
V Transparency
V Flexibility
V Choice of schemes
V Tax benefits
V Governemnt regulation
V Shareholders services
V Safety from loss due to unethical practices
V rroduct structure
V Market value of each unit of a particular scheme in
relation to all the assets of the scheme.
V Otherwise called as intrinsic value
V True indicator of the performance of the fund.
V If Nav> face value->the fund is appreciated
V NAV=Total funds in a scheme/no of units
V Eg:If the scheme size is 100crores,value of one unit
is Rs.10,current market value of the scheme is 200
crors,then NAV(now)=200/100*value of one unit
V i.e RS.20
m On the basis of Operation ->
1. Open ended
2. closed ended
3. Interval funds
m On the basis of Geographical->
1. Offshore MF
2. Domestic MF
m On the basis of Structure
1. Capital Market
2. Money market
4 Sponsor->The company which sets that MF is
called sponsor.
2 rustees->Safeguarding the interest of
investors.They monitor the operations of various
schemes they can even dismiss the AMC with the
approval of SEBI
Success of mF depends upon the performance of
Manages the funds of various schemes.
They submits quarterly report on the functioning
of MF to the trustees who will guide & control the
V Investment objective
V rast performance
V Equity research
V Global linkages(Fund manager·s expertise in
global markets)
V Transparency in fund accounting(should
disclose NAV periodically & fact sheet)
V Investor services
V Stability
V Liquidity
V Growth
V Credibility of the issuer
V Returns
V Management approach
m Equity Diversified Funds
m Hybrid Funds
m Gilt Funds
m Income Funds
m Liquid Funds
m Liquid rlus Funds
m Money Market funds
m Arbitrage Funds
m Index Funds
m Exchange Traded Funds
m Equity Linked Savings Scheme
 Association of Mutual Funds in India (AMFI)
incorporated in Aug 1995 is the Umbrella body of all
the mutual fund registered with SEBI.
 It is non profit organization committed to developed
the Indian mutual fund industry on professional,
healthy & ethical lines & to enhance and maintain
standards in all areas with a view to protecting &
promoting the interests of Mutual Funds and their
unit holders.
 AMFI is an industry association,not an SRO, so it can
just issue guidelines to members. It cannot enforce
 Objectives of  :-
m To promote the interests of mutual funds and unit holders.
m To set ethical, commercial and professional standards in
the industry.
m To increase public awareness of the mutual fund industry.
 AMFI is governed by a board of directors elected from
mutual funds and is headed by a full time chairman.
 AMFI has therefore prepared guidelines for intermediaries
called AMFI Guidelines & Norms for Intermediaries
V Should be managed by AMC
V Money markets schemes regulated by RBI &
capital markets schemes regulated by SEBI
V 50% of Board of directors must be independent
directors (no connection with sponsoring
V Directors should have atleast 10years of experience
in financial services industry
V Minimum AMC networth should be RS.10 crores
V SEBI has the power to withdraw the powers of
AMC if they fail to keep the interest of investors
V An AMC can not act as a AMC for other MF
V AMCs are allowed to do other business such as
management services to offshore funds,venture
capital funds & Insurance companies
V Minimum amount to be raised with open ended
scheme Rs.50 crores & closed ended scheme Rs.20
V Each scheme should be registered with SEBI
before floating in the market
V Initial issue expenses should not exceed 6% of the
funds raised
V For violating laws SEBI can impose penalty