Zenith Seekers – Mutual Funds– 10 Ankush Rupela (A), 72 Jyoti Sharma (B), 137 Komal Marwaha (C)

INTRODUCTION

‘Mutual Fund’ is an investment vehicle for investors who pool their savings for investing in diversified portfolio of securities with the aim of attractive returns, capital appreciation and a low risk. The origin of ‘Mutual Funds’ was established in Belgium where ‘Society Generate de Belgique’, was established in 1822 as an investment company. In India, it was started in 1963.

TYPES:

Ø According to Ownership:

i. Public Sector MF was started by UTI (Unit Trust of India) in India since 1963-1964. And after 23 years, in 1987 the ‘SBI’ i.e. 2^nd MF in India was established. Thereafter a number of public sector org like IND bank-MF, CAN Bank-MF, BOI-MF, etc have joined MF business.

ii. Private Sector MF was started after seeing the growth of MF in India. On Feb 14, 1992 Govt of India allowed private sector corporate to join MF.

Ø According to Schemes:

i. Open-Ended schemes, which offers units for sale without specifying any duration of redemption. Investor can directly purchase/sell unites under this, these are not listed.

ii. Close-Ended schemes, in which the period of maturity of scheme is specified. Investor can buy/sell the units of the scheme in the secondary market i.e. stock exchanges where these are listed.

iii. Interval Schemes is kept open for a specific interval and after that it operates as a close scheme.

(By Komal Marwaha)

DISCUSSION:

Objectives

ü The specific objectives of mutual funds vary from company to company. The most common objectives include income, as derived from interest payments on bonds and dividend payments on shares of stock; short-term or long-term growth in the total market value of the mutual fund portfolio; and a hybrid combination of growth and income.

Managers design portfolios bearing in mind the needs and risk preferences of investors. Companies detail the objectives of a given fund in a mutual fund prospectus.

Functions

ü Mutual funds are one of the most commonly held investments for the passive investor. They are great for the individual investor who wants the risk and return profile, which only professional investors can create. In addition, fees involved in purchasing and/or redeeming mutual funds like front-end load, redemption fees, management fees and account fees.

Advantages

ü The greatest advantage is that it allows small investors to benefit from a portfolio to experience significant gains from even small movements in market prices while minimizing potential losses. The variety of mutual funds offered by mutual fund companies provide investors with tools which help them to meet their financial objectives in ways that investing in individual stocks and bonds may not.

(By Jyoti Sharma)

CONCLUSION:

ü After studying the introduction and discussion I concluded that, Mutual fund become very popular worldwide because of its advantages. It enhances diversification i.e. it ensures regular returns & capital appreciation at reduced risks as all the eggs are not put in one basket. There are also certain schemes of mutual funds which provide tax advantages. Mutual Fund is expected to provide high returns as compare to direct investment. And investment made in Mutual Fund schemes can be converted back into cash promptly without heavy expenditure on brokerage, delays etc. At last I would say that investing in Mutual Fund is better choice as it provides better protection to the investors.

(By Ankush Rupela)