MUTUAL FUND

 Mutual Fund
 Used Concept
 History of Mutual Fund
 Types of Mutual Fund
 Advantages of Mutual Funds
 Organisation of a Mutual Fund
 Types of Mutual Fund Schemes
 Frequently Used Terms
Gagan
Pratik
Arpan
Anamica
Akhilesh
Yudhjit
WHAT IS MUTUAL FUND?
Mutual Fund is a trust that pools the savings of a
number of investors who share a common
financial goal. Each scheme of a mutual fund
have different character and objectives. Mutual
funds issue units to the investors, which
represent an equitable right in the assets of the
mutual fund.
 CONCEPT
 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 realised are 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
 HISTORY OF MUTUAL FUND

1-History of Mutual Funds has evolved over the years and it is sure to appear as
something very interesting for all the investors of the world. In present world, mutual
funds have become a main form of investment because of its diversified and liquid
features. Not only in the developed world, but in the developing countries also
different types of mutual funds are gaining popularity very fast in a tremendous way.
But, there was a time when the concept of Mutual Funds were not present in the
economy
2-There is an ambiguity about the fact that when and where the Mutual Fund Concept
was introduced for the first time. According to some historians, the mutual funds
were first introduced in Netherlands in 1822. But according to some other belief, the
idea of Mutual Fund first came from a Dutch Merchant ling back in 1774. In 1822,
that idea was further developed. In 1822, the concept of Investment Diversification
was properly incorporated in the mutual funds. In fact, the Investment
Diversification is the main attraction of mutual funds as the small investors
are also able to allocate their little Funds in a diversified way to lower Risks.
 HISTORY……………………..

3-After 1822 in Netherlands, the Mutual Funds Concept came in

Switzerland in 1849 and thereafter in Scotland in the 1880s. After
being popular in Great Britain and France, Mutual fund concept
traveled to U.S.A in the 1890s. In 1920s and 1930s, the Mutual Fund
popularity reached a new high. There was record investment done in
mutual funds. But, before 1920s,the mutual funds were not like the
modern day mutual funds.
4-The modern day mutual funds came into existence in 1924, in Boston.
Massachusetts Investors Trust introduced the Modern Mutual Funds
and the funds were available from 1928. At present this
Massachusetts Investors Trust is known as MFS Investment
Management Company. After the glorious year of 1928, Mutual fund
ideas expanded to different levels and different regulations came for
well functioning of the funds.
 MUTUAL FUNDS IN INDIA
Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen
down and are generally below the inflation rate. Therefore, keeping large amounts of
money in bank is not a wise option, as in real terms the value of money decreases
over a period of time.
One of the options is to invest the money in stock market. But a common investor is
not informed and competent enough to understand the intricacies of stock market.
This is where mutual funds come to the rescue.
A mutual fund is a group of investors operating through a fund manager to purchase
a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very
easy to invest in. By pooling money together in a mutual fund, investors can
purchase stocks or bonds with much lower trading costs than if they tried to do it on
their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the
biggest advantage of mutual funds is diversification.
Diversification means spreading out money across many different types of
investments. When one investment is down another might be up. Diversification of
investment holdings reduces the risk tremendously.
Types of Mutual Fund Schemes
– By Structure
● Open Ended Schemes
● Close Ended Schemes
● Interval Schemes
– By Investment Objectives
● Growth Schemes
● Income Schemes
● Balance Schemes
● Money Market Schemes
– Other Schemes
● Tax Saving Schemes
– Special Schemes
● Index Schemes
● Sector Specific Schemes
Advantages
 of Mutual Funds
Professional Management
 Diversification
 Convenient Administration
 Return Potential
 Low Costs
 Liquidity
 Transparency
 Flexibility
 Choice of schemes
 Tax benefits
 Well regulated
Mutual Fund Operation Flow Chart
Organisation of a Mutual Fund
 Types of Investment
1- Lump sum. You can invest any amount you want at one time, as long as you
meet the minimum requirements of that fund. Some funds have no minimum for opening an
account or no minimum for additional share purchases, while others do.

2- Automatic investment. Most funds offer plans that allow you to transfer
set amounts on a regular basis automatically from your bank account or paycheck. This is a
great way to save money on a routine basis.

With automatic investing, you get the benefits of dollar cost averaging. That is, when you
make regular investments in a mutual fund, such as investing $100 every month, you can
take advantage of both the ups and downs of the market. When the market is down, your
monthly investment typically buys you more shares of the fund, helping to increase your
ownership in the fund. When the market is up, your monthly investment typically buys you
fewer shares of the fund, helping you avoid buying too many shares at higher prices. Over a
long period of time, the end result is that the average cost of your fund shares is lower than
the average price of the fund shares during the same period.
HDFC MUTUAL FUND
 1- H.D.F.C GROWTH FUND
 Objective:
To generate long term capital appreciation from a portfolio that
is invested predominantly in equity and equity related instruments.
 Investment Information
 Type of Scheme Open Ended
 Nature of Scheme Equity
 Launch 11-09-2000
 Face Value(Rs./unit) 10
 Fund size(Rs. In lakhs) 87867.92 march 31,
2008
 Plans Growth
2-H.D.F.C EQUITY FUND

Objective:
 To achieve capital appreciation.
 Investment Information
 Type of Scheme Open Ended
 Nature of Scheme Equity
 Launch 01-01-1995
 Face Value(Rs./unit) 10
 Fund size(Rs. In lakhs) 394439.11 march 31, 2008
 Plans Growth
3-H.D.F.C TOP 200 FUND

Objective :
To generate long term capital appreciation from a portfolio of
equity and equity linked instruments primarily drawn from companies in
BSE 200 index.
 Investment Information
 Type of Scheme Open Ended
 Nature of Scheme Equity
 Launch 11-10-1996
 Face Value(Rs./unit) 10
 Fund size(Rs. In lakhs) 210243.97 march 31,
2008
 Plans Growth
4-H.D.F.C CAPITAL BUILDER FUND

Objective:
 To achieve capital appreciation in the long term.
 Investment Information
 Type of Scheme Open Ended
 Nature of Scheme Equity
 Launch 01-02-1994
 Face Value(Rs./unit) 10
 Fund size(Rs. In lakhs) 64571.81 march 31, 2008
 Plans Growth
5-H.D.F.C CORE & SATELLITE FUND

 Objective:
To generate capital appreciation through equity investment in
companies whose shares are quoting at prices below their true value.

 Investment Information

 Type of Scheme Open Ended
 Nature of Scheme Equity
 Launch 17-09-2004
 Face Value(Rs./unit) 10
 Fund size(Rs. In lakhs) 42974.98 march 31 2008
 Plans Growth
RANKING OF FUNDS BASED ON 12 MONTHS
RETURN AS ON 31st MARCH, 2008

 NAME OF FUND  12 MONTH RETURN%

1- H.D.F.C GROWTH FUND ………..36.48%
…………25.82%
2- H.D.F.C CAPITAL BUILDER
FUND …………25.72%
3- H.D.F.C TOP 200 FUND …………16.16%
………….14.26%
4- H.D.F.C EQUITY FUND

5- H.D.F.C CORE & SATELLITE

FUND
 A Comparison of mutual fund with other Investment
options:
Investment in Real estate
In general, property is considered a fairly low-risk investment, and can be less
volatile than shares (although, this is not always the case). Some of the advantages
of investing in property include:
 Tax benefits – a number of deductions can be claimed on your tax return, such
as interest paid on the loan, repairs and maintenance, rates and taxes, insurance,
agent's fees, travel to and from the property to facilitate repairs, and buildings
depreciation.
 Negative gearing – tax deductions can also be claimed as a result of negative
gearing, where the costs of keeping the investment property exceed the income
gained from it.
 Long-term investment – many people like the idea of an investment that can
fund them in their retirement. Rental housing is one sector that rarely decreases in
price, making it a good potential option for long-term investments
 .
Positive asset base – there are many benefits from having an investment
property when deciding to take out another loan or invest in something else.
Showing your potential lender that you have the ability to maintain a loan without
defaulting will be highly regarded. The property can also be useful as security when
taking out another home, car or personal loan.
 Safety aspect – Low-risk investments are always popular with untrained "mum
and dad" investors. Property fits this criteria with returns in some country areas
reaching 10% per year. Housing in metropolitan areas is constantly in demand with
the high purchase price being offset by substantial rental income and a yearly
return of between 6% and 9%.
 High leverage possibilities – investment properties can be purchased at
80% LVR (loan to valuation ratio), or up to 90% LVR with mortgage insurance. The
LVR is calculated by taking the amount of the loan and dividing it by the value of
the property, as determined by the lender. This high leverage capacity results in a
higher return for the investor at a lower risk due to having less personal finances
ties up in the property (80% of the purchase price was provided by the mortgagee).
Frequently Used Terms

 Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net asset
value of the scheme divided by the number of units
outstanding on the Valuation Date.

 Sale Price
Is the price you pay when you invest in a scheme. Also called
Offer Price. It may include a sales load.

 Repurchase Price
Is the price at which a close-ended scheme repurchases its
units and it may include a back-end load. This is also called Bid
Price.
 Contd…
Frequently Used Terms

 Redemption Price
Is the price at which open-ended schemes repurchase their
units and close-ended schemes redeem their units on maturity.
Such prices are NAV related.

 Sales Load
Is a charge collected by a scheme when it sells the units. Also
called, ‘Front-end’ load. Schemes that do not charge a load are
called ‘No Load’ schemes.

 Repurchase or ‘Back-end’ Load

Is a charge collected by a scheme when it buys back the units
from the unit holders.
Which fund is most trustable?