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MIM (2009-12)
BY: Prashant Gavade (13) Varun Gupta (14) Shailesh Hinge (15) Pallavi Jadhav (16) Ravishankar Jaiswal (17) Dinesh Kale (18)
Contents
Basic Information History Relevance of REMF Facts & Figures Future Aspects-Pros & Cons Case Study Conclusion
Basic Information
What is Mutual Fund? What it means
Investors
Contribute money
Receive dividend/capital
appreciation
Markets
(volatile, has fluctuation)
Basic Information
Type Of Mutual Fund:
By Structure
Open-Ended anytime enter/exit Close-Ended Schemes listed on exchange, redemption after period of scheme 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
REMF
REMF
Like mutual funds, real estate funds (or Real Estate Investment Trusts REITs as they are commonly referred to in the US) are founded by a group of real estate professionals/experts to manage property/real estate for the investor. REMF Objective: Raise funds for the expansion of the retail businesses by means of real estate development. The introduction of REMF would provide required capital for the development of retail infrastructure. The Real Estate Mutual Funds is expected to enhance the quality of the housing projects.
REMF
3 Different ways to invest in Real estate: Owning Real Estate - this strategy involves the investor selecting and purchasing individual real estate properties themselves. There are many experts that can help investors to get started in this area. Real Estate Investment Trusts - companies established as trusts that invest in real estate, mortgages, or a combination of each. Real estate investment trusts are often referred to as REITs. Real Estate Mutual Funds - funds composed of real estate companies, companies supplying services to the real estate market and real estate investment trusts. Real Estate Mutual Funds - Prominent Players
HDFC Property Fund Kshitij Venture Capital Fund (A group venture of Pantaloon Retail India Ltd) DHFL Venture Capital Fund Kotak Mahindra Realty Fund India Advantage Fund (ICICI)
HISTORY
Birthplace of Mutual Funds USA History in India: 1964-1987 (Phase I) Growth of Unit Trust of India 1987-1993 (Phase II) Entry of Public Sector Funds 1993-1996 (Phase III) Emergence of Private Funds 1996-1999 (Phase IV) Growth and SEBI Regulation 1999-2004 (Phase V) Emergence of large & uniform Industry 2004 onwards (Phase VI) Consolidation and Growth.
RELEVANCE
As of now, the real estate window is open only to high net worth individuals (HNIs), institutional investors and global investors. HDFC Property Fund (Rs 7.5 bn) are among the first off the block with their real estate products. Pantaloon Group (Kshitij Venture Capital Fund) Kodak Group are some of the other names that plan to roll out real estate funds soon. Not surprisingly, overseas investors have also taken note of the opportunities in the Indian real estate segment. Tishman Speyer Properties, a US real estate company, has already outlined plans for the Indian property market in association with ICICI Ventures. Others are also expected to make a move towards Indian shores.
Kotak Mahindra Realty Fund is the pioneer in the field of real estate equity funds in India. Kotak Mahindra Realty Fund was promoted by the Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of Kotak Mahindra Bank Limited (KMBL), and became functional in May, 2005. Some important features of Kotak Mahindra Realty Fund are Functions as a venture capital fund The schemes are strictly adherent to the SEBI Venture Capital Fund Regulations, 1996 in India The corpus funding has been done by leading banks, domestic corporates, family offices and high net worth individuals Are close ended funds and has a life of seven years Funds are invested according to Investment Formats Asset Class Geographical Locations Kotak Mahindra Realty Fund schemes adhere strictly to the rules and guidelines of Securities and Exchange Board of India or SEBI. Kotak Mahindra Realty Fund investments are subject to income tax exemptions. For claiming any of these exemptions, it is necessary to furnish documents which show that the said income falls under the purview of tax rebate.
Conclusion
REMFs provide better alternative for the real-estate companies to raise money from the capital markets for their requirements. As the investment is monitored by SEBI therefore, it will be structured. REMFs are just like any other mutual fund, they provide the benefits generally provided by the mutual funds, like pooling of resources for greater benefit, tax liability on investors which is moderate. REMFs are sector specific funds which inherently have their own share of risks as the returns are dependent on the rise and fall in the sector. However, with the realestate sector showing commendable growth, the investments are secure. The investment options for the investors have been made broad based as it includes right from investing directly in property to securities of real-estate companies dealing in which will mean lower risk for the investors as it will ensure diverse investment opportunities thereby reducing the chance of losses. Therefore, the REMFs provide the investors an opportunity to be the part of real-estate boom in India.