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BY: MANJUNATHA

MUTUAL FUNDS
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases.
First Phase 1964-87 Established Unit Trust of India (UTI) . Second Phase 1987-1993 Entry of Public Sector Funds

Third Phase 1993-2003

Entry of Private Sector Funds Fourth Phase since February 2003 consolidation and growth.

GLOBAL MUTUAL FUND .

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities.

Global Mutual fund that can invest in stocks and bonds throughout the world. Such funds typically have a portion of their assets in American markets as well as Europe, Asia, and developing countries. Global funds differ from international mutual funds, which invest only in non-U.S. securities.

ORGANISATION OF A MUTUAL FUND

Advantages of GlobalMutual Funds


Diversification

Professional management
Liquidity Convenience

Ease of process
Well Regulated

Drawbacks of Global Mutual Funds


Taxes

Fees and commission

Risk management

Association of Mutual Funds in India


Association of Mutual Funds ( Established in 1995) in India is an

important organ of all Asset Management Companies that are registered with Securities and Exchange Board of India. Till today, all the Asset Management Companies with Mutual Fund schemes are the members of Association of Mutual Funds in India.
Association of Mutual Funds India, also referred to as AMFI, has

helped the Indian Mutual Fund Industry to enter into a healthy and professional market, maintaining the market ethics and standards. It attempts to promote the interests of both Mutual Funds and unit holders

Aims of Association of Mutual Funds in India

Association of Mutual Funds endeavors to maintain high

standards in all fields of operation within the industry.


Association of Mutual Funds maintains an interaction with

Securities and Exchange Board of India, and functions in accordance with the guidelines established by SEBI.
Association of Mutual Funds in India takes up all India

awareness program on behalf of the investors.


At last but not the least association of mutual fund of India also

circulate information related to Mutual Fund Industry.

TYPES OF MUTUAL FUNDS


By Structure
Open-Ended anytime enter/exit Close-Ended Schemes listed on exchange, redemption after period of

scheme is over.

By Investment Objective

Equity (Growth) only in Stocks Long Term (3 years or more) Debt (Income) only in Fixed Income Securities (3-10 months) Liquid/Money Market (including gilt) Short-term Money Market (Govt.) Balanced/Hybrid Stocks + Fixed Income Securities (1-3 years)

Other Schemes
Tax Saving Schemes Special Schemes

ULIP

Steps involved in investing Global Mutual fund


Step 1- Undestand the Global Mutual funds
Step2 Recognizing the fifference between a

gobal & an international fund Step 3- Identify your investment needs. Step4 - Choose the right Mutual Fund.(risk analysis) Step5 - Select the ideal mix of Schemes. Step 6 - Invest regularly Step 7 - Keep your taxes in mind Step 8 - Start early Step 9- The final step

CURRENT MARKET NEWS ABOUT MUTUAL FUNDS


FMPs: Upset with mutual funds, investors shy away (4NOV.) This was attributed to the fact that many of Fixed Maturity Plans (FMPs) of mutual funds had invested significantly in commercial papers (CPs) , bonds of real estate companies and non-banking financial institutions (NBFCs), pass through certificates (PTCs) and only a small portion in bank CDs

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Investors pull out Rs 47k cr (NOV. 13) Mutual fund investors pulled out as much as Rs

47,000 crore in October the highest redemption from MF schemes in a month so far this finanicial year triggered by the meltdown in equity markets. The combined assets under management of the mutual fund industry saw an 18 per cent fall in October, dipping below the Rs 5 trillion mark for the first time this year.

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Mutual funds see value erosion of Rs 76k crore in seven months (15 Nov.) The mutual fund industry has witnessed a value erosion of Rs 75,966 crore in equity-related schemes in the first seven months of the current financial year. This is primarily because of the slide in the equity market on account of the global financial turmoil.

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Funds book Rs 3,858-cr loss in FY09 first half (19 NOV.)

29 fund houses, which published their unaudited financial results for the first half ended September 30, 2008, 22 mutual funds have posted a combined net loss of Rs 4,466 crore, while the remaining seven fund houses have reported an aggregate net

profit of Rs 608 crore in the first six months of 2008-09. The fund houses had made a profit of Rs 18,528 crore in the second half of 2007-08.

What are the risks and disadvantages of investing in Global Funds?

The biggest risk is related to the advantage discussed above. What if your local market investments is stable but the overseas countries where your Global funds have invested has a problem. You will take a hit on that note - take example of Libya, Egypt, unrest going on now causing a hit on Crude Oil prices. Then, there is currency risks - investments overseas has the implicit risk of forex charges and forex exchange rate risk. Even if your investments are going good outside, your net return might become low because of exchange rate changes
High Charges - Since overseas investments involve lot of money transfers and forex exchanges with various kinds of charges and stamp duties to be paid as per the country or market specific requirements, the fund management charges for Global Funds are usually high. So weigh your pros and cons, and then decide to invest in Global Funds

What are the benefits and advantages of investing in Global Funds?


The biggest advantage is that you get opportunities to invest at a global level. Say, there may be problems in your local market like India - political unstability, high gap in demand and supply, etc. which might hurt the returns from this local market. Hence, having some investments in overseas companies and funds help you mitigate this effect. Suppose things are well and stable in USA and UK, then even though your domestic returns are taking a hit, your investments in global companies through these global funds will not get hit because of these local problems. Global funds also offer diversification - across sectors, across countries, across geographies, etc. which again is an advantage of global funds.

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