MUTUAL FUND

INTRODUCTION:
Mutual fund is an investment option to invest in a diversified,professionally managed basket of securities at a relatively low cost. A mutual fund is a trust that pools the savings of a number of investors with common financial goals. The collected money is invested in various instruments like debentures,shares etc. The income generated from these instruments and the capital appreciation is shared by the investors in proportion to the number of units owned by them. The investment are divided into units and the value of the units will be reflected in the NET ASSET VALUE (NAV) of the unit. NAV 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. Mutual fund companies provide daily net asset value of their schemes to the investors. NAV is important as it will determine the price at which one buy or redeem the units of a scheme. NAV= Market value of asset Liability NAV/unit= Net asset value/No of units outstanding on the valuation date.

*ALL MUTUAL FUND FUNCTION UNDER SEBI. *Performance of mutual fund is reflected in its net asset value. *Net asset value is disclosed on daily basis in open ended scheme and on weekely basis in close ended scheme.

CURRENT MARKET SCENERIO:

1. Mutual funds lose 1.5 million equity folios in first half of 2012. According to SEBI ,the number of equity folios stood at 36.9 million against 38.4 million in December last year. Moreover in June the decline continued as the sector lost another 234,000 equity folios amid persistent volatile equity markets. During the month investors withdrew equity investment worth Rs 286 crores. Industry executives say that as long as interest rates remain high on debt and fixed income products and uncertainty in equity market continues, its hard to attract funds into equities. These losses are happening at a time when acquisition of retail clients has become expensive. As on June 30, the average assets under management of the industry stood at Rs 6.92 lakh crore. 2. Expense ratio(it is the amount expressed in percentage of total investments, the fund house charges, operating expenses, other charges) is capped by the regulators at 2.25% for equity funds. This is proposed to be increased by 0.25%. In other words funds are going to be 11% more expensive. 3. One reason for fewer new accounts is the lack of new fund offers(NFOs).Between 2003 to 2008 NFOs ruled the Mutual Fund market. Hundreds of NFOs hit the market and collected thousands of crores. According to the Mckinsey study, industry assets grew at a whopping 45% compounded annually during this period.

OPPORTUNITIES:
Nowadays direct investment in Indian equity market is risky as investors are facing a lot of market swings, whether its domestic catalyst or international issues like Greek crisis or the macro economic problems in Europe. As per research work investment in following sector is better1).MF Large Cap-Fidelity Equity Fund 2).MF Small and mid Cap-Birla 3).MF Commodity-Quantum Gold Savings Fund 4).MF FMCG- SBI Mangnum FMCG Fund

CONCLUSION:

1. Mutual

Fund is an investment option and mutual find industry has a great potential to grow upto many folds to its current size. Now a days equity market is not going so well in mutual fund but one has the option to invest in other diversified fields of mutual fund. Mutual funds units minimize the risk related to share market and offer good returns specially in balance fund. Main thing avoiding investors to take part in mutual fund is lack of awareness. diversification and professional money management.

2. Mutual funds offer the best in terms of variety, liquidity, tax efficiency, flexibility, 3. For
a beginner, it makes sense to begin with the diversified funds and gradually have some exposure to sector and specialty funds. Mutual Fund offers variety of schemes to match any investment objective.