Advantages of Mutual Funds

1. Simplicity: Mutual Funds Are Easy to Understand

Anything can be made into something more complex than it needs to be and mutual funds are
no exception to this truth. However, mutual funds require no experience or knowledge of
economics, financial statements, or financial markets to be a successful investor.

For beginners, here is a simple definition of mutual fund: A mutual fund is an investment
security type that enables investors to pool their money together into one professionally
managed investment. Mutual funds can invest in stocks, bonds, cash and/or other assets. These
underlying security types, called holdings combine to form one mutual fund, also called a
portfolio.

In different words, Mutual funds can be considered baskets of investments. Each basket holds
dozens or hundreds of security types, such as stocks or bonds. Therefore, when an investor buys
a mutual fund, they are buying a basket of investment securities.

Simple!

Yes, there are many things to know about mutual funds but compared to the broad world of
financial products, mutual funds are quite easy to use and understand.

2. Accessibility: Mutual Funds Are Easy to Buy

Mutual funds are offered at brokerage firms, discount brokers online, mutual fund companies,
banks, and insurance companies.

Even beginning investors can easily open an account at a no-load mutual fund company, such as
Vanguard Investments, and open an account within minutes.

3. Professional Management: Mutual Funds Have a Team of Professionals Researching and

Analyzing Investments So You Don't Have To!
Perhaps the greatest benefit of all is that investors can save countless hours of time, energy and
frustration involved with the research and analysis required to find quality investments to hold in
a portfolio. That's not to speak of the skill, desire and patience required to do a job well in any
professional pursuit. Mutual funds enable investors to do more of the things in life they enjoy
rather than spending time and energy on investment matters.

4. Diversity: Mutual Funds Have Broad Market Exposure

One mutual fund can invest in dozens, hundreds, or even thousands of different investment
securities, making it possible to achieve diversification by investing in just one fund. However, it
is smart to diversify into several different mutual funds.

5. Variety: Mutual Funds Come In Many Different Categories and Types

As you grow your portfolio of mutual funds, you will want to diversify into various mutual fund
categories and types. You can invest in mutual funds that cover the main asset classes (stocks,
bonds, cash) and various sub-categories or you can even venture into specialized areas, such as
sector funds or precious metals funds.

6. Affordability: Mutual Funds Have Low Minimums

Most mutual funds have minimum initial investment requirements of $3,000 or less. In many
cases, if the investor initiates a systematic investment program, where they have a fixed dollar
amount or fixed number of shares purchased once per month, the initial investment can be as
low as $1,000.

7. Frugality: Mutual Funds Cost Less to Manage Than Other Portfolio Types

Costs as a percentage of assets in the portfolio are usually lower for an actively-managed mutual
fund when compared to an actively-managed portfolio of individual securities.

When you add up transaction costs, annual fees paid to a brokerage firm, and the cost for
research tools or investment advice, mutual funds are less expensive than the typical portfolio of
stocks. Other variables influence the cost of managing a portfolio, such as the amount of trading
activity, the size of transaction, and taxes.

8. Flexibility: Mutual Funds Have Several Uses and Applications

All of the above benefits of mutual funds overlap into simplicity and flexibility. You can invest in
just one fund or invest in a wide variety. Automatic deposit, systematic withdrawal, 401(k) plans,
annuity sub-accounts, dividends, short-term savings, long-term savings, and nearly limitless
investment strategies make mutual funds the best overall investment type for both beginners
and advanced investors.

9. Liquidity

Another advantage of mutual funds is the ability to get in and out with relative ease. In general,
you are able to sell your mutual funds in a short period of time without there being much
difference between the sale price and the most current market value. However, it is important to
watch out for any fees associated with selling, including back-end load fees. Also, unlike stocks
and exchange-traded funds (ETFs), which trade any time during market hours, mutual funds
transact only once per day after the fund's net asset value (NAV) is calculated.

Disadvantages of Mutual Funds

Management Fees. Mutual fund companies have to pay salaries and marketing expenses and
they always get paid FIRST before the investors/owners get paid! Management fees are one of
the key metrics to watch out for as an investor because they can quickly and devilishly eat into
your profits over time. Do higher management fees correlate to higher returns and better
performance? As it turns out, the answer is NO. In fact, many studies have been done that show
higher fees generally correlate to lower performance.

Locked in Clause. There are two different mutual fund structures - one allows you to go in and
out at any time. The other one is locked in for 5-7 years. With this one, if you try to take your
money out earlier, you’ll get charged for it. Make sure to ask your financial advisor which type
you are investing in.
 Mutual Fund Charges.

Mutual funds charge fees when you redeem your money. There are also “operating expense”
fees. This is a percentage of what it costs to run the fund. Let’s say you invested $10,000, and the
operating fees are 2%. This means that you are effectively paying $200 every year in operating
charges.

Impersonal connection:

When investing in a mutual fund, you do not usually have easy access to the one making the
investment decisions. There may be quarterly investor calls and updates, but there will be a
significant lack of interpersonal communication with the main folks in charge of the fund.

NAV
http://www.moneycontrol.com/mutual-funds/amc-details/HD

Scheme Name Crisil

Ranking Category Latest

NAV 1 year

Return (%) AUM

(Rs. cr.)

Dec 17

HDFC Balanced Fund (G) Rank 1

Balanced 147.63 16.7 14,890.17 N.A.

HDFC Balanced Fund - Direct (G)Rank 2

Balanced 154.54 18.0 2,667.94 N.A.

HDFC Equity Fund (G) Rank 3

Diversified Equity 606.72 16.5 15,459.56 Download-A-Form

HDFC Equity Fund - Direct (G) Rank 3

Diversified Equity 631.95 17.6 5,874.63 N.A.

HDFC Corporate Debt Opp. -Dir (G) Rank 4

Credit Opportunities Funds 14.76 7.3 2,506.90 N.A.

HDFC Corporate Debt Opp. -Reg (G) Rank 4

Credit Opportunities Funds 14.25 6.3 11,090.06 N.A.

HDFC Liquid - Premium Plan (G) Not Ranked

Liquid 3,462.71 6.7 40.30 Download-A-Form

HDFC Liquid - Premium Plus (G) Not Ranked

Liquid 10.00 -- 167.61 Download-A-Form

http://www.moneycontrol.com/mutual-funds/amc-details/KM

Kotak Balance - Direct Plan (G) Rank 3

Balanced 25.63 12.6 64.58 N.A.

Kotak Balance - Regular Plan (G) Not Ranked

Balanced 24.05 10.9 2,124.22 Download-A-Form

Kotak Equity Arbitrage - Direct (G) Not Ranked

Arbitrage & Arbitrage Plus 25.40 6.7 2,506.65 N.A.

Kotak Equity Arbitrage - Regular (G) Not Ranked

Arbitrage & Arbitrage Plus 24.76 6.2 4,253.93 Download-A-Form

Kotak Flexi Debt - Plan A - Direct (G) Rank 1

Debt Short Term 22.80 7.1 416.20 N.A.

Kotak Flexi Debt - Plan A - Regular (G) Rank 1

Debt Short Term 22.09 6.6 933.86 Download-A-Form

Kotak Liquid - Plan A - Direct (G) Rank 3

 Liquid 3,506.16 6.8 8,134.14 N.A.

Kotak Liquid - Plan A - Regular (G) Rank 3

Liquid 3,497.23 6.7 4,600.13 Download-A-Form

HISTORY and Achivements OF MUTUAL

FUNDS
http://www.hdfcfund.com/aboutus/

HDFC Asset Management Company Limited (AMC)

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956,
on December 10, 1999, and was approved to act as an Asset Management Company for the
HDFC Mutual Fund by Securities and Exchange Board of India (SEBI) vide its letter dated July 3,
2000.

The registered office of the AMC is situated at “HDFC House”, 2nd Floor, H. T. Parekh Marg, 165-
166, Backbay Reclamation, Churchgate, Mumbai - 400 020. The Company Identification
Number(CIN) is U65991MH1999PLC123027. .

In terms of the Investment Management Agreement, the HDFC Trustee Company Ltd has
appointed the HDFC Asset Management Company Limited (AMC) to manage schemes of the
Mutual Fund. The paid up capital of the AMC is Rs. 25.241 crore as on September 30, 2013.

https://assetmanagement.kotak.com/aboutus

Kotak Mahindra MF

Established in 1985, Kotak Mahindra Group is one of India's leading financial services
conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group's flagship
company, received banking licence from the Reserve Bank of India (RBI), becoming the first
nonbanking finance company in India to convert into a bank - Kotak Mahindra Bank Ltd.
Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of
Kotak Mahindra bank Limited (KMBL), is the Asset Manager for Kotak Mahindra Mutual Fund
(KMMF). KMAMC started operations in December 1998 and has approximately 7.5 Lac investors
in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles
and was the first fund house in the country to launch a dedicated gilt scheme investing only in
government securities. The company is present in 76 cities and has 79 branches.

The consolidated net worth of the Group stands at Rs. 34,443 crore (US $ 5.1 billion; 1 US $ = Rs.
67.62) as on June 30, 2016. The Group offers a wide range of financial services that encompass
every sphere of life. From commercial banking, to stock broking, mutual funds, life insurance and
investment banking, the Group caters to the diverse financial needs of individuals and the
corporate sector. The Group has a wide distribution network through branches and franchisees
across India, an International Business Unit at GIFT city, Gujarat, and international offices in
London, New York, Dubai, Abu Dhabi, Mauritius and Singapore.

http://www.hdfcfund.com/CMT/Upload/ArticleAttachments/HDFC_AMC_Financials_FY_2016-
17.pdf

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THEORETICAL FRAMEWORK

2.1 MUTUAL FUND AS DEFINED. The global financial market has witnessed several dynamic
developments in the past three decades. One of such developments has been, the phenomenal
growth of the capital market- both domestic and international resulting in the advent of ‘ equity
cult ’ among the household sector. This has accelerated the process of disintermediation
whereby industrial security are directly issued by corporate borrowers to end investors
bypassing the banking systems .However, the household sector, being more averse to risks,
necessitates the creation of institutional shields which may act as intermediaries. One of the
most significant and popular financial intermediary has been the “mutual funds ” . Mutual Fund
Operation Flow Chart Investor Figure-A 1. A mutual fund is and institutional device through
which, small savings of investors are pooled for investment in a diversified portfolio of securities
using professional expertise. In their effort to gamer surplus resources for channelisation into
productive 23 avenues these institution lunch innovative schemes tailored to the diverse saving
motives of the investors from the investor ’ s point of view a good mutual fund shows stability,
liquidity, growth, credibility, assured returns and the ability to whether market fluctuations. 2. A
mutual fund scheme is “ a collective investment scheme designed to provide benefits of
diversified investment portfolio and expert management advice and management to a large
number of investors, through institutionalized risky pooling mechanism ” . It endeavors to offer
high yields than available on alternative investment instruments and provide relatively higher
degree of safety both for yield as well as return of capital. A very common aspect of mutual
funds is its capacity to offer different suitable schemes of investment to satisfy the diverse
income needs of investors. 2.2 GENESIS OF MUTUAL FUNDS The modem concept of mutual
funds is of recent origin but in a primitive form they have existed since long. At the very dawn of
commercial history, Egyptians and Phoenicians sold shares in Caravans and vessels so as to
spread the risk of these perilous ventures. Much later, in 1622 Society General de Belguique was
formed which embodied the modem concept of risk-sharing. The foreign and colonial
Government Trust of London (formed in 1868) was the real pioneer of modem mutual funds. By
the 1930 ’ s , a large number of closed-ended mutual funds were formed in the united states of
America. After 1930, open ended companies were also formed in the United kingdom which
later spread to many other countries in Europe, Asia, Far east , Latin America and Canada.
Investment trust companies set up on the west European model following recommendation of
central Banking Enquiry committee in the 1930 ’ s were the fore-runners 24 of Indian mutual
funds. The mutual fund industry is growing at an unprecedented rate the world over and ranks
as the sixth largest sector in the financial industry

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