About Mutual Funds-At a Glance
Mutual funds are financial instruments offered to the public by the finance corporations.These funds are resourcefully managed collective investments,
which pools money from a number of investors and use that money as investment in various stocks, short-term money market financial instruments, bonds, and other securities to earn interest and distribute it as dividends.
About Mutual Funds-Functioning
The Fund Manager pertaining to the Mutual Funds, also referred as the portfolio manager trades, realizes the capital losses and gains, and collects the income in form of interest. The proceeds from the investments are then distributed to the individual investors. The share value of the mutual funds is known as net asset value per share (NAV). It is calculated on a day-to-day basis on the total worth of the mutual fund, which is divided by the total sum of issued and outstanding shares.
Overview of Mutual Funds in India
- In India, the largest mutual fund is UTI, which was established in the year 1964 in order to encourage the small investors to invest in the equity market.
- The Unit Trust of India has nearly 35, 000 agents in the country.
- The Securities Exchange Board of India (SEBI) regulates the functioning of the mutual funds.
- The Mutual funds should be set up as trusts under the guidelines of the Indian Trusts Act.
- Activity pertaining to the management of fund should be directed by an asset management company.
- The money market dealings of the mutual funds are to be registered with the Reserve Bank of India.
- Various schemes floated by the mutual funds have to be registered under Securities Exchange Board of India (SEBI).
- The RBI, in the year 1995, allowed the private players to establish Money Market Mutual Funds.
About Mutual Funds-Types of mutual funds
- Open-end fund
- Exchange-traded funds
- Equity funds
- Bond funds
- Money market funds
- Funds of funds
- Hedge funds
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