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OVERVIEW What is Investment? Need for Investment. Who can be an Investor? About Mutual Funds About SIP Conclusion.

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Presentation on theme: "OVERVIEW What is Investment? Need for Investment. Who can be an Investor? About Mutual Funds About SIP Conclusion."— Presentation transcript:

1 OVERVIEW What is Investment? Need for Investment. Who can be an Investor? About Mutual Funds About SIP Conclusion

2 What is Investment? – Putting your hard earned money to generate Wealth for long Term. Need for Investment. – it can help you to meet your financial goals like Buying a New House or Car, Paying for higher educations of your child, Enjoying a comfortable retirement, Any Future Financial Requirements Who can be an Investor? – Anyone, you need not to be wealthy – Investing even a small amount can generate high values in long run. But you need to be regular.


4 ABOUT MUTUAL FUNDS The idea of Mutual Funds first came from a Dutch Merchant in 1774. In 1822, the concept of Investment Diversification was properly incorporated in the mutual funds. In India, the mutual fund industry started with the setting up of the Unit Trust of India in 1964. As at the end of March 2006, in the US alone there were 8,002 mutual funds with total assets of over US$ 9.36 trillion (Rs.427Iakh crores) As at the end of March 2006, in India there were 29 mutual funds, which managed assets of Rs. 2,31,862 crores ( US $ 52 Billion) under 592 schemes Regulated by the Securities andExchange Boardof India(SEBI). The Association of Mutual Funds in India (AMFI) is dedicated to develop the India Mutual Fund Industry on Professional, Healthy and Ethical Lines and to enhance and maintain standards in all areas with a view to protecting and promoting the interests of mutual funds and their unit holders.

5 WHAT ARE MUTUAL FUNDS Is a trust that pools the savings of a number of investors who share a common financial goal Investors buy units of a particular Mutual Fund scheme that has a defined investment objective and strategy Money collected is invested by the fund manager in different types of securities which range from shares to debentures to money market instruments, depending upon the scheme's stated objectives. The income earned through these investments and the capital appreciation realised by the scheme are shared by its unit holders in proportion to the number of units owned by them.

6 ORGANISATION OF A MUTUAL FUND There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund:

7 ADVANTAGES OF MUTUAL FUNDS Professional Management Diversification Convenient Administration Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Well regulated

8 TYPES OF MUTUAL FUNDS By Structure: – Open-ended Funds – Closed-ended Funds – Interval Funds By Investment Objective: – Growth Funds – Income Funds – Balanced Funds – Money Market Funds OTHER SCHEMES: – Tax Saving Schemes – Special Schemes Index Schemes Sectoral Schemes

9 HOW TO INVEST IN MUTUAL FUNDS Step One - Identify your investment needs – What are my investment objectives and needs? – How much risk am I willing to take? – What are my cash flow requirements? Step Two - Choose the right Mutual Fund. Step Three - Select the ideal mix of Schemes. Step Four- Invest regularly Step Five - Keep your taxes in mind Step Six- Start early Step Seven -The final step

10 WAYS TO INVEST IN A MUTUAL FUND A one-time outright payment – If you invest directly in the fund, you just hand over the cheque and you get your fund units depending on the value of the units on that particular day. Periodic investments – This is referred to as a SIP. That means that, every month, you commit to investing

11 SYSTEMATIC INVESTMENT PLAN (SIP) What is SIP, its approach an its advantages – SIP can be your daily, monthly, quarterly investments. – Lowers the average purchase cost (Rupee Cost Averaging) – Induces disciplined investing – Lighter on the wallet – Makes market timing irrelevant

12 Rupee Cost Averaging Say you have opted for Reliance Systematic Investment Plan, investing ` 1000 every month from March 2009 to Feb 2010 in a diversified equity fund. Now check the average purchase cost per unit of your investments. It would be lower than the average NAV of your investment over 12 months. DATE NAV( ` ) UNITS AMOUNT ( ` ) 2/03/09190.475.251000.00 13/04/09233.324.291000.00 11/05/09252.503.961000.00 10/06/09339.272.951000.00 10/07/09307.213.261000.00 10/08/09343.022.921000.00 10/09/09375.562.661000.00 12/10/09392.462.551000.00 10/11/09392.762.551000.00 10/12/09416.482.401000.00 11/01/10439.792.271000.00 10/02/10412.212.431000.00 TOTAL4095.0437.4712000.00

13 Rupee Cost Averaging Average Cost = Total Cash Outflow / Total Number of units = ` 12,000 / 37.47 = ` 320.24/- Average Price = sum of all NAVs at which you have invested/Number of months of investment = ` 4,095.04 / 12 = ` 341.25/- Average Cost < Average Price Note: The above table considers the actual NAV of Reliance Growth Fund to explain the concept of Rupee Cost Averaging. The NAV do not in any manner indicate the future NAVs of the any of the schemes of Reliance Mutual Fund. Past performance may or may not be sustained in future.

14 PERFORMANCE OF VARIOUS FUNDS Fund House: FRANKLIN TEMPLETON Scheme Name: FT INDIA BLUECHIP FUND SIP INVESTMENT1 Yr3 Yrs5 YrsSince Inception JAN '97 Total Amount Invested (Rs.)12,00036,00060,0001,69,000 Market Value as on Jan 31, 2011 (Rs.)12,33950,03689,53815,10,544 Returns (Annualised)*(%)5.26%22.58%16.01%27.75% Benchmark Returns (Annualised)(%)#1.36%15.46%10.67%15.89% Market Value of SIP in Benchmark#12,08845,27378,470572,007 # - BSE SENSEX Inception Date: December 1, 1993

15 PERFORMANCE OF VARIOUS FUNDS Fund House: HDFC MUTUAL FUND Scheme Name: HDFC TOP 200 FUND SIP INVESTMENT1 Yr3 Yrs5 YrsSince Inception Total Amount Invested (Rs.)12,00036,00060,0001,72,000 Market Value as on August 31, 2010 (Rs.)12,39552,41997,92815,35,925 Returns (Annualised)*(%)6.14%25.98%19.67%27.20% Benchmark Returns (Annualised)(%)#-2.67%16.32%11.21%17.06% Market Value of SIP in Benchmark#11,82645,835 79,5276,56,962 # - BSE 200 Inception Date: October 11, 1996

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