Professional Documents
Culture Documents
Mutual Funds
May 25,2011
Points to Cover
What is Mutual Fund Investing? Basic of Mutual Fund Benefits of Investment in Mutual Fund
Table of Contents
Index:
What is a Mutual Fund Structure of Mutual Funds Benefits of Mutual Funds Structure of Mutual Funds Open Ended & Close Ended Categories of Funds Equity, Debt & Money Market Risk & Return Chart Concepts in Mutual Funds
AMC Investments
SEBI Sponsor Management Company Trustee Company Asset Management Company Custodian
SEBI
Transfer Agent
Trustee Company Safeguards the interest of the Unit holders Ensures that the AMC functions in accordance to the regulations laid down by SEBI
Custodian Responsible for the safe keeping of investments of the funds and receipt of all benefits due to the fund
Transfer Agent Responsible for unit holders record maintenance and servicing including purchase, repurchase and transfer of units
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Mutual Funds
Open Ended Can enter and exit the fund scheme at its NAV These funds charge an exit load Continuously selling and buying back fund shares, these funds provide investors with a very useful and convenient investing vehicle
Close Ended Applications to funds restricted to only NFO period These funds charge heavy exit load during the
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Large Cap Funds Mid Cap Funds Opportunity Funds Thematic Funds Value Funds Sector Funds Tax Planning Funds Index Funds Fund of Funds International Funds Arbitrage Funds Balanced Funds
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Income Funds
Income Funds STP Floating Rate Funds LT Liquid Plus Funds Fixed Maturity Plans
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investments on the debt side. These funds tend to be risky from a short term perspective Income Funds STP This variant of income funds belong to shorter period of investments (approx. 6-9 Mths)
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R E T U R N S
RISK
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Concepts in MFs (1 of 3)
NAV or Net Asset Value of the fund is the cumulative market value of the assets of the
fund net of its liabilities The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the funds NAV The Formula for NAV is as follows,
Market value of the Funds Investments + Receivables + Accrued Income - Liabilities - Accrued Expenses Number of Outstanding units
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Concepts in MFs (2 of 3)
Load is a charge, which the AMC may collect on entry/exit from a fund. A load is charged to
cover the up front cost incurred by the AMC for selling the fund Load is the adjustment to the NAV, to arrive at price Load that is charged when investor buys units is the entry load or sale load. Entry load increases the price of the units for the investor
Load that is charged when investor redeems units is the exit load or repurchase load. Exit load
reduces the proceeds to the investor
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Concepts in MFs (3 of 3)
Investment Options Mutual Fund Schemes offer two options to investors viz., Dividend & Growth Dividend - provides inflow of income at intervals as declared by the Fund Manager. provide additional options like Dividend Reinvestment & Dividend Payout Growth provides growth of capital to investors who want to earn returns at the end of period of investments Type of Transactions SIP, STP, SWP, Redemption, Switch, Additional Purchase Systematic Investment plan (SIP) - Regular Investment of fixed amount periodically (Rupee Cost Averaging Advantage) Switch Shift of units from One scheme to another within a fund house Systematic Withdrawal plans (SWP) - Systematic withdrawals on periodic basis Systematic Transfer Plans (STP) - Transferring a specific amount on periodic basis from one scheme to another of the same fund family by Selling units of one scheme & buying units of another scheme
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They
Tax Implication
Time Period
Equity Funds
Debt Funds Individuals - 14.16% (DDT) Corporate - 22.66% (DDT) Individuals - 14.16% (DDT)
Money Market Funds Individuals - 28.33% (DDT) Corporate - 28.33% (DDT) Individuals - 28.33% (DDT) Corporate - 28.33% (DDT) DIVIDEND OPTION GROWTH OPTION
Nil
Nil
Time Period
Equity Funds
Debt Funds
15% (STCG)
Nil
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negative impact on companies which in turn would have an effect on the investment of the fund Investment Risks - The sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities Changes in the Government Policy - Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund
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Hassel free as is eliminates documentation/ paper work to a large extent Fungible limits Clients can track Mutual Funds investment in My Edelweiss Section Easy entry and exit as Mutual fund units are in demat form
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Login to trading account Click on Mutual Fund Go to Purchase for subscription or Redeem for Redemption Select AMC Select Category
Equity: Equity Mutual Funds Debt : Debt Mutual Funds Balanced: Balanced Mutual Funds Liquid: Liquid Mutual Funds Debt(T+1): Ultra Short Term Debt Funds
Select Series
Fresh Additional
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Enter Amount in case of Subscription & Enter Units in case of Redemption Click Buy/Sell
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Points to Remember
Possible reason for order rejection: Exchange not enable for account. This occur of client has not given consent for MFSS (For giving consent, link is available on website) Clients 16 digit DP details do not appear in the subscription/ Redemption box. Insufficient Funds: This occurs when client does not have sufficient due credit. Credit received for unsettled trades will not be considered for MFSS
Other Details
Cut-off time for MF orders is 3:00 PM Currently facility is only in Demat form. Both offline & online option is available for the client. Try clicking on Refresh DP Details in case the DP details of clients is not Reflecting Settlement period in case of redemption
Equity & Debt Scheme: T+2 Day Liquid Scheme: T+1 Day
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Disclaimer
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