Professional Documents
Culture Documents
Mutual Funds
Module 5.1
Hemchand J
Investors
Profits/Losses of fund/plan are shared
by investors in proportion to their
investments.
A mutual fund is required to be
registered with SEBI.
SEBI formulates policies and
regulates the mutual funds to protect
the interest of the investors.
Management of Mutual
Funds
A mutual fund is set up in the form of
a trust, which has sponsors, trustees,
Asset Management Companies and
Custodians.
The trust is established by one or
more sponsors.
A sponsor is like promoter of a
company.
The trustees hold the property of the
mutual fund for the benefit of the
AMCs
An AMC approved by SEBI manages the funds by
making investment in various types of securities.
A custodian, registered with SEBI, holds
securities of various schemes in its custody.
The performance of a mutual funds is denoted
by the Net Asset Value (NAV) of the fund. NAV
per unit is the market value of securities of the
scheme, less expenses incurred by the scheme ,
divided by the total number of units. NAV has to
be disclosed on a regular basis daily or weekly.
Other Funds
Repurchase of Redemption
price
It is the price at which and open ended
scheme purchases units from unit holders.
If there is an exit load specified , the investor
gets an amount equal to NAV less exit load.
Assured return schemes assure a specific
return to the unit holder irrespective of the
performance of the scheme.
A scheme cannot promise returns unless such
returns are fully guaranteed by the sponsor or
AMC and is disclosed in the offer document.