We are AMFI Registered Mutual Fund Distributor. Mutual Fund Investments are subject to market risk. Read all scheme related documents carefully.
What are Mutual Funds?
- Mutual Funds are a Trust Registered with the Securities And Exchange Board Of India (SEBI)
- It pools money from Individual / Corporate Investors and invests the same on behalf of Investors with a pre-determined Investment objective
- Investments are done in Equity, Shares, Government Securities, Bonds, Money Market, etc.
History of Mutual Funds:
- Unit Trust Of India was the first Mutual Fund set up in India in the year 1963
- In 1992, SEBI Act was passed
- Objectives of SEBI are to protect the interest of Investors and promote the Development of and to regulate the securities market
Mutual Fund Set up in India:
The market’s long-term trajectory is upward, which is the only direction the market can go over a long period.
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Sponsors:
Company that sets up MF as per provisions laid down by SEBI
AMC:
- It is an Asset Management Company
- It manages various schemes
- Large number of Employees – Professionals for Investments, Research, Servicing
- AMC comes out with new schemes periodically
- Operates under the supervision of Trustees
- AMC earns from the management fees it is charged to manage scheme
- Fees is calculated as per Net Asset managed
Trustees:
- Responsible for ensuring the Investors interest in scheme is taken care properly
- Constant monitoring of the operations of the various schemes
- They are paid Trustee Fees, which are normally charged to the scheme
Distributors:
- Earn commission for bringing Investors into the schemes of a Mutual Fund
- The commission is an expense for the scheme
There are mainly 3 Types of Distributors:
TIER-I: They have their own or Franchised network to reach out to Investors across country
TIER-II: They are Regional Players with some reach within their Regions
TIER-III: They are small and marginal players with limited reach
Registrars:
- An Investors holding in MF schemes is typically tracked by Registrar and Transfer Agent (R & T)
- Some AMCs do not appoint R & T
- Investments / Redemption are managed and processed by R & T agent
Custodians / Depository:
- Maintain custody of the securities in which the scheme invests
- Follow-up on Corporate actions such as Rights, Bonus and Dividends declared by Investee companies
Investors:
- An Individual / Entity who commits capital with the expectation of receiving financial returns
- They have varying Risk Tolerances, Capital Preference and Time Frame
- They build Portfolios either with an Active Orientation that tries to beat the benchmark Index or a Passive strategy
- Oriented towards Growth or value strategies
- Distinct from Traders
Structure of Mutual Funds:
Open Ended Funds:
- Available for subscription anytime
- No Fixed Maturity
- Investors can buy or sell units at NAV related prices
- Liquid in Nature
Closed-Ended Funds:
- Comes with a maturity period of 3 to 15 years
- Open for subscription only for a specified period
- Investors can invest at the time of Initial public issue
- Later buy or sell the units of scheme on the stock exchange where they are listed
- Some funds give an option to sell back units to the Mutual Fund through periodic repurchase at NAV related prices
Interval Funds:
- It combines the features of both open as well as closed ended funds
- Open for sale or redemption during pre-determined intervals at NAV related prices
Types of Mutual Funds as per Investment Objective of an Investor:
- Equity / Growth Funds
- Debt / Income / Bond Funds
- Balanced / Hybrid Funds
- Money Market / Liquid Funds