Scribd
Upload
14 views

Enhanced Study of Mutual Funds in India With Images

This document provides a comprehensive overview of mutual funds in India, covering their structure, history, types, major players, benefits, risks, investment methods, taxation, and growth trends. It highlights the regulatory framework established by SEBI and the increasing participation of retail investors, along with challenges faced in the sector. The presentation serves as an educational resource for MBA Finance students to understand mutual funds as effective investment vehicles.

Uploaded by

pearldaswani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
14 views

Enhanced Study of Mutual Funds in India With Images

This document provides a comprehensive overview of mutual funds in India, covering their structure, history, types, major players, benefits, risks, investment methods, taxation, and growth trends. It highlights the regulatory framework established by SEBI and the increasing participation of retail investors, along with challenges faced in the sector. The presentation serves as an educational resource for MBA Finance students to understand mutual funds as effective investment vehicles.

Uploaded by

pearldaswani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 20

Study of Mutual Funds in India

• This presentation explores the concept of mutual funds in India, examining their structure,
evolution, types, key players, investment methods, taxation, recent growth, and challenges. It
provides a comprehensive overview suitable for MBA Finance students and will help in
understanding how mutual funds function as investment vehicles.
Introduction

• Mutual Funds are investment schemes that pool money from numerous investors and invest
it in diversified asset classes such as equities, bonds, or money market instruments. Managed
by professional fund managers, mutual funds offer benefits like risk diversification, liquidity,
and affordability. These are regulated by SEBI in India and are suitable for individuals seeking
passive investment options with professional oversight.
History of Mutual Funds in India

• Mutual Funds began in India with the establishment of Unit Trust of India (UTI) in 1963. This
marked the beginning of organized fund management in India. The 1980s saw public sector
banks entering the market. Post-liberalization in 1993, private sector mutual funds were
allowed, leading to competition and product innovation. In 1996, SEBI introduced regulatory
norms, ensuring transparency and investor protection. Since 2000, with technology and
awareness, the industry has grown exponentially.
Structure of Mutual Funds in India

• Mutual Funds in India operate as trusts under the Indian Trusts Act. The Sponsor initiates the
fund, while Trustees ensure compliance. The Asset Management Company (AMC) manages
investments on behalf of investors. A Custodian is appointed to hold fund assets safely. This
structure, regulated by SEBI, ensures that investor interests are safeguarded while enabling
professional management of funds.
Types of Mutual Funds

• Based on investment objective, mutual funds include:


• Equity Funds: Invest in stocks, offer high returns with high risk.
• Debt Funds: Invest in fixed income instruments like bonds, suitable for conservative
investors.
• Hybrid Funds: Combine equity and debt to balance risk and return.
• Index Funds: Track a specific market index.
• ELSS: Provide tax benefits under Section 80C.
• Sector Funds: Invest in specific industries such as IT, Pharma, etc.
Based on Structure

• Mutual Funds can also be categorized structurally:


• Open-Ended Funds: Available for purchase/redemption any time based on NAV.
• Close-Ended Funds: Have a fixed maturity period, traded on stock exchanges.
• Interval Funds: Operate like a hybrid, allowing transactions at specific intervals. Each
structure caters to different investment strategies and liquidity preferences.
Major MF Players in India

• Some of the largest mutual fund companies in India include:


• SBI Mutual Fund: Public sector giant with diverse offerings.
• HDFC Mutual Fund: Known for strong equity funds.
• ICICI Prudential MF: Offers innovative hybrid and debt schemes.
• Nippon India MF: Among the top in digital outreach.
• Aditya Birla Sun Life MF: Well-regarded for balanced and debt funds.
Benefits of Mutual Funds

• Key benefits of investing in mutual funds include:


• Professional management by experts.
• Diversification to reduce risk.
• High liquidity for most schemes.
• Transparent operations with regular updates.
• Small ticket size investment options.
• Tax-saving schemes such as ELSS under Section 80C.
Risks in Mutual Funds

• Investors should be aware of the following risks:


• Market Risk: Fund value may drop due to market fluctuations.
• Credit Risk: Possibility of issuer default in debt funds.
• Interest Rate Risk: Affects bond values as interest rates fluctuate.
• Liquidity Risk: Difficulty in selling assets quickly.
• Fund Manager Risk: Performance can vary with management quality.
How to Invest

• Investments in mutual funds can be made:


• Online via AMC websites or apps like Zerodha, Groww.
• Offline through banks and authorized agents.
Modes of investment include:
• SIP (Systematic Investment Plan): Regular, fixed investments.
• Lump Sum: One-time investment.
Choose between Direct Plans (lower cost) and Regular Plans (via intermediaries).
SIP vs Lump Sum

• SIP allows investors to invest a fixed amount regularly, helping them average costs and build
discipline. It's ideal for salaried individuals. Lump Sum investments are suitable for those with
large capital at hand. SIPs reduce the impact of market volatility, while Lump Sum can yield
higher returns if invested during market dips.
Taxation

• Tax implications vary by fund type:


• Equity Funds: Short-Term Capital Gains (STCG) taxed at 15%; Long-Term (LTCG) taxed at 10%
on gains exceeding ₹1 lakh.
• Debt Funds (after 2023): All gains taxed as per investor’s income slab.
• ELSS Funds offer tax deductions under Section 80C with a 3-year lock-in.
Regulation

• Mutual Funds are regulated by SEBI (Securities and Exchange Board of India). SEBI ensures
transparency, fair practices, and investor protection. AMFI (Association of Mutual Funds in
India) promotes investor education and standard practices. These regulatory bodies enhance
investor confidence in the mutual fund ecosystem.
Growth of MFs

• Mutual Funds in India have grown rapidly. AUM rose from ₹1.13 lakh crore in 2000 to over
₹50 lakh crore in 2024. Monthly SIP inflows exceed ₹19,000 crore. Improved digital access,
financial literacy, and regulatory reforms have played major roles in this growth. Retail
investor participation is at an all-time high.
Recent Trends

• Trends shaping the mutual fund space include:


• Rise in passive investing via index and ETF funds.
• Surge in SIP contributions.
• Popularity of ESG (Environmental, Social, Governance) focused funds.
• Digital platforms facilitating direct fund access.
Campaigns like 'Mutual Funds Sahi Hai' are boosting investor awareness.
MFs vs Other Investments

• Comparison:
• Mutual Funds: Balanced risk-return, expert-managed.
• Fixed Deposits: Stable, low-risk but fixed return.
• Stocks: High-return potential but requires market knowledge.
Mutual funds are more accessible and less risky than direct stock investing.
SIP Case Study

• Investing ₹5,000/month for 10 years equals ₹6 lakh total investment. Assuming 12% annual
returns (CAGR), final corpus becomes ₹11.6 lakh. This illustrates the power of compounding
and disciplined investing. SIPs are ideal for long-term wealth accumulation.
Challenges

• Challenges facing mutual fund adoption:


• Limited awareness in rural areas.
• Fear of market volatility.
• Overwhelming choice of schemes.
• Mis-selling by intermediaries.
Educating investors and simplifying options can address these barriers.
Conclusion

• Mutual Funds are a powerful tool for wealth creation. They offer flexibility, professional
management, and diversification. Backed by strong regulation, they are suitable for all
investors, from beginners to experts. With increasing digital access and awareness, the future
of mutual funds in India looks promising.
Viva Q&A

• Sample Questions:
• What is a Mutual Fund?
• What does SEBI do in MF regulation?
• How does SIP benefit investors?
• How is mutual fund income taxed?
• Which fund is ideal for a beginner investor?

You might also like