--By anjulika singh

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. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them.

 Thus a Mutual Fund is the most suitable investment

for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

 1.MF is financial intermediary-

2.MF are trusts-A MF is a trust under the

Indian Trust Act. Fund Management is done by Asset Management Company.

3.Mutual fund is regulated by SEBI

4.Mutual Fund investment are subject to

market risk-

5.Return from Mutual fund is not guaranteedInvestor in the mutual fund schemes are not offered guaranteed returns.

 By Structure:-

1.Open ended Scheme

2.Close Ended Scheme 3.Interval scheme

 By Investment Objective:-

1.Growth Scheme
2.Income Scheme 3.Balanced Scheme

4.Money Market Scheme

 1.Growth schemes-These are Known as equity

schemes. Such funds are aimed at capital appreciation over the medium to long term. Usually, such funds invest a major portion of the portfolio in equities.

 2.Income schemes These scheme provide a regular income to the

investor These schemes invest primarily in fixed income instruments issued by the government, banks, financial institutions and private companies. A greater portion of the portfolio consists of debt schemes. The main objective of income schemes is preservation of capital and to provide fixed income over the medium to long term.

 3.Balanced schemes

The aim of balanced scheme is to provide both

regular income and growth in the value of investment (both income and capital appreciation over a long-term). Accordingly, the portfolio of such schemes compromises fixed income securities and equity shares in the proportion as indicated in the Offer documents.

 4.Money market schemes

Money market schemes invest in short-term debt

instruments, which earn interest and have high liquidity. Though these are considered to be the safest investment option, such funds are subject to fluctuations in the rates of interest.

 Other Schemes:-

1.Tax saving Schemes

2.Index Schemes 3.Sector Specific Scheme

4.Exchange Traded Scheme

5.Fund of-funds (FoFs) 6.Load Fund/No load Fund

 1.Tax saving schemes Such schemes are aimed at offering tax rebates to investors

under specific provisions of the Income Tax Act, 1961. For instance, investors of Equity Linked Savings Schemes (ELSS) and Pension Schemes are applicable for deduction u/s 88 of the Income Tax Act, 1961. 2.Index schemes Such funds strive to mirror the performance of specific market indices, such as the BSE SENSEX, CNX Nifty, etc which are called the base index. Investments in such funds are made in the same stocks as the base index and in similar proportion.

3.Sector-specific schemes
Such funds invest in a specific industry or sector. The investments

could be in a particular industry (Banking, Pharmaceuticals, Infrastructure, etc) or a group of industries, or various segments (like A Group shares).

4.Exchange-traded funds An ETF is a MF Scheme in which the units of the scheme are listed in stock exchange. Such funds are listed and traded on the stock exchange in a similar manner as stocks. Such funds invest in a basket of stocks and aim at replicating an index (S&P CNX Nifty, BSE Sensex) or a particular industry (banking, information technology) or commodity (gold, crude oil, petroleum). For an Example ,a gold ETF scheme means a MF scheme that invest primarily in gold/gold related instruments.

5.Fund of FundIt Means a MF scheme that invest primarily in other mutual funds. A FoF hold units of different MF Schemes .It have advantage of greater diversification but these are sometimes found that returns are lower than diversified funds.

6.Load Fund /No Load FundA load is a free charged by the MF from the investor. A load fund means a scheme that charges some fees as a percentage of the NAV for entry and exit. Each time when an investor buy sells units in a fund ,a charge will be payable by him.

 Systematic Investment Plan (SIP) Systematic Transfer Plan (STP) Systematic Withdrawal Plan (SWP)

SEBI (Mutual Funds) Regulations, 1996 ASSOCIATION OF MUTUAL FUNDS OF INDIA (AMFI)

 Certification SEBI vide its Gazette Notification dated May 31, 2010

has notified that with effect from June 1, 2010 all the distributors, agents, any persons employed or engaged or to be employed or to be engaged in the sale and/ or distribution of Mutual Fund Products shall be required to have a valid certification from the National Institute of Securities Market (NISM) by passing their certification examination 'NISM Series V-A : Mutual Fund Distributors Certification Examination'. For further details as well as for study material, which can be downloaded, please log on to the website of NISM www.nism.ac.in. It is further notified that if the said associated person possesses a valid AMFI Mutual Fund (Advisors) Module Certificate obtained before June 1, 2010, he shall be exempted from the requirement of the abovementioned NISM Certification Examination.

 Professional Management Diversification Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Well regulated