• Sensex78248.13-450.94(-0.57%)
  • Nifty23644.9-168.5(-0.71%)
  • USDINR85.270.08(0.08%)
Online tarding Partner With Us
BSE Prices delayed by 5 minutes ! Prices as on   Dec 30, 2024 - 3:59PM   ABB India 6721.05 [ -1.99% ]ACC 2065.55 [ -0.05% ]Ambuja Cements 545.25 [ -0.55% ]Asian Paints Ltd. 2286.45 [ 0.68% ]Axis Bank Ltd. 1069.6 [ -0.73% ]Bajaj Auto 8782.7 [ -1.69% ]Bank of Baroda 240.55 [ -1.82% ]Bharti Airtel 1588.7 [ -0.64% ]Bharat Heavy Ele 225.85 [ -4.08% ]Bharat Petroleum 293.25 [ -0.07% ]Britannia Ind. 4797.6 [ 0.65% ]Cipla 1518 [ 0.79% ]Coal India 378.3 [ -0.62% ]Colgate Palm. 2754.8 [ 1.06% ]Dabur India 506 [ -0.27% ]DLF Ltd. 822.15 [ -1.54% ]Dr. Reddy's Labs 1377.55 [ -0.85% ]GAIL (India) 188.8 [ -1.95% ]Grasim Inds. 2449.55 [ -1.22% ]HCL Technologies 1929 [ 1.97% ]HDFC Bank 1778.7 [ -1.07% ]Hero MotoCorp 4188.15 [ -1.21% ]Hindustan Unilever L 2343.2 [ 0.13% ]Hindalco Indus. 604.95 [ -1.97% ]ICICI Bank 1293.9 [ -1.01% ]IDFC L 108 [ -1.77% ]Indian Hotels Co 888.75 [ 3.25% ]IndusInd Bank 963.9 [ 1.09% ]Infosys L 1898 [ -0.97% ]ITC Ltd. 477.1 [ -0.38% ]Jindal St & Pwr 922.2 [ -0.15% ]Kotak Mahindra Bank 1742.9 [ -0.94% ]L&T 3582.35 [ -0.72% ]Lupin Ltd. 2309.65 [ 3.66% ]Mahi. & Mahi 3002.8 [ -1.55% ]Maruti Suzuki India 10819.65 [ -1.08% ]MTNL 48.69 [ -2.87% ]Nestle India 2163.9 [ -0.07% ]NIIT Ltd. 184.9 [ -4.27% ]NMDC Ltd. 66.95 [ -3.46% ]NTPC 331.3 [ -1.10% ]ONGC 233.35 [ -1.48% ]Punj. NationlBak 101.75 [ 0.20% ]Power Grid Corpo 308.35 [ -0.39% ]Reliance Inds. 1210.9 [ -0.82% ]SBI 788.3 [ -1.41% ]Vedanta 440.4 [ -2.37% ]Shipping Corpn. 204.6 [ -2.08% ]Sun Pharma. 1882.2 [ 1.10% ]Tata Chemicals 1031.15 [ -1.50% ]Tata Consumer Produc 906.1 [ -0.14% ]Tata Motors 733.75 [ -2.24% ]Tata Steel 136.9 [ -1.48% ]Tata Power Co. 390.3 [ -2.20% ]Tata Consultancy 4158.95 [ -0.22% ]Tech Mahindra 1746.65 [ 2.04% ]UltraTech Cement 11323.95 [ -0.67% ]United Spirits 1612 [ 2.04% ]Wipro 303.65 [ -1.76% ]Zee Entertainment En 122.15 [ -2.12% ]
BSE

MARKETS

Mutual Fund

MUTUAL FUND CONCEPT

1. CONCEPT 

2. ORGANISATION OF A MUTUAL FUND 

3. ADVANTAGES OF MUTUAL FUNDS 

4. TYPES OF MUTUAL FUND SCHEMES 

5. FREQUENTLY USED TERMS 

 
 
CONCEPT 

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. The flow chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
 
Top 
 
ORGANISATION OF A MUTUAL FUND 

There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund:
Organisation of a Mutual Fund
 
Top 
 
ADVANTAGES OF MUTUAL FUNDS 

The advantages of investing in a Mutual Fund are:
  • Professional Management
  • Diversification
  • Convenient Administration
  • Return Potential
  • Low Costs
  • Liquidity
  • Transparency
  • Flexibility
  • Choice of schemes
  • Tax benefits
  • Well regulated
    •  
    Top 
     
    TYPES OF MUTUAL FUND SCHEMES 

    Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
    Top 
     
    FREQUENTLY USED TERMS 
     
    Net Asset Value (NAV)

    Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.
     
    Sale Price

    Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.
     
    Repurchase Price
    Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
     
    Redemption Price
    Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
     
    Sales Load
    Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’ schemes.
     
    Repurchase or ‘Back-end’Load
    Is a charge collected by a scheme when it buys back the units from the unitholders.
     
    Top