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Mutual Funds


... and credit to bank account. Automatic paperless SIP/SWP ... Online updation of portfolio of unit holdings at latest NAV. Few Mutual Funds NRIs can consider ... – PowerPoint PPT presentation

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Title: Mutual Funds

Mutual Funds
  • By
  • Mrs.Lalitha PPM

What is Mutual Fund?
  • A Mutual Fund is an investment vehicle that pools
    the money of several investors and invests it in
    different securities.

Organisation of Mutual Fund
Some Concepts Clarified..
  • NAV - Net asset value is the market value of a
    unit of a scheme after accounting for all
    expenses on any given business day.
  • Load

  • Charged directly to the investor
  • Includes Agents commission, Marketing and
    Selling expenses
  • Front end Load and Back end Load
  • Entry loads vary between 1.00 and 2.5.
  • Exit loads vary between 0.25 and 3.00.
  • Regulations do not allow either front-end load or
    back-end load in any combination to be higher
    than 6.

.Some Concepts Clarified
  • Purchase price is the price paid by a customer to
    purchase a unit of the fund.
  • Redemption price is the price received by the
    customer on selling units of an open-ended scheme
    to the fund.
  • Repurchase price is different from redemption
    price and refers to the price at which a
    close-ended scheme repurchases its units.
  • Expense ratio

Expense Ratio
  • Operating Expenses paid out of the funds
  • Includes advisory fees paid to investment
    managers, audit fees, custodial fees, transfer
    agent fees, trustee fees etc.
  • Advisory fees range from 1 to 1.5 of the corpus
  • Limits mandated by SEBI
  • First Rs. 100 crores 2.50 2.25
  • Next Rs. 300 crores 2.25 2.00
  • Next Rs. 300 crores 2.00 1.75
  • On the balance of assets 1.75 1.50
  • The annual expense expressed a percentage of the
    fund's average daily net assets.

Exploding a Myth-A Fund with lower NAV is cheaper
than that with higher NAV
  • A Mutual Fund with lower NAV will give better
    returns !!!!!!

Classification Of Mutual Fund
  • By Asset Class
  • By Investment Sector
  • By Liquidity
  • By Trading Strategy
  • By Investment Strategy
  • By Security Selection
  • By Load Charged / Cost
  • By Place of origin

WHY Choose Mutual Funds?
  • Professional Management
  • Lower Risk
  • A better portfolio for less Money
  • Lower Transaction Cost
  • Liquidity
  • Transparency
  • Affordability
  • Choice of Schemes
  • Well Regulated

Ground Rules of Mutual Fund Investing
  • Define your Investment Objectives
  • Draw up your Asset Allocation

.Ground Rules of Mutual Fund Investing
  • Identify Funds with matching Investment
  • Evaluate Past Performance, look for Consistency
  • Diversify
  • Consider Fund Costs
  • Factor Tax Implications

Tax Implications on Dividend
Tax Implications on Capital Gains
Which Option to Choose?
.Ground Rules of Mutual Fund Investing
  • Look for Size and Credentials
  • Customer Service
  • Monitor regularly and Review
  • Invest Regularly

When To Sell Mutual Funds?
  • The Fund Manager leaves
  • Below par performance for the last 2 years
  • Size of the corpus increases too fast
  • The Promoter of Mutual Fund is going through
    financial difficulties
  • The scheme changes its investment objectives
  • You change your plan
  • Enough has been earned

Systematic Investment Plan(SIP)
  • Advantages
  • Disciplined investing
  • Convenience
  • Avoiding market prediction
  • Rupee Cost Averaging

Rupee Cost Averaging

Advantages of Early Investing
Mutual Fund Investing by NRIs
  • Power of Active Funds Management
  • Online trading simplifies procedure
  • Some online trading sites

ICICIDirect one up on others.
  • No Application forms to be filled up
  • Automatic debit from and credit to bank account
  • Automatic paperless SIP/SWP
  • Online order confirmations and status tracking
  • Online dividend payout / reinvestment facility
  • Online updation of portfolio of unit holdings at
    latest NAV

Few Mutual Funds NRIs can consider
  • For Conservative investors
  • HDFC Top 200 Fund
  • Sundaram Growth
  • HDFC Prudence
  • Principal MIP
  • For Aggressive investors
  • HSBC Equity Fund
  • Franklin India Bluechip
  • FT India Balanced Fund
  • FT India MIP

Product Innovations
  • Fund Of Funds is a fund that invests in other
    funds instead of securities.
  • Super SIP isn't a fund but a way of buying funds
    that combines long-term SIP with term insurance.
  • ETF is a hybrid financial product, a cross
    between a stock and a mutual fund .