Types Of Mutual Funds

Submitted to: Click to edit Master Prof K.N.Badhani subtitle style Submitted By: Himanshu Porwal
8/22/12

Types of Schemes

By Structure

Open Ended Schemes Close Ended Schemes Interval Schemes Growth Schemes Income Schemes Balance Schemes Money Market Schemes Tax Saving Schemes

By Investment Objectives

Other Schemes

Special Schemes

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Open Ended Schemes

Available for subscription all through the year Buy and sell shares back to the fund itself Do not have a fixed maturity No limit on the number of shares the fund can issue Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices Key feature-liquidity 8/22/12

Close Ended Schemes

Pre-specified maturity period Fixed number of shares outstanding Invest directly in the scheme at the time of the initial issue Two exit options available to an investor after the initial offer period closes

-Investors can transact (buy or sell) the units of the scheme on the stock 8/22/12 exchanges where they are listed

Interval Schemes

Combines the features of openended and close-ended schemes. Units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices

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Growth Schemes

Also known as equity schemes Aim of these schemes is to provide capital appreciation over medium to long term Normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation
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Income Schemes

Income Schemes are also known as debt schemes Aim of these schemes is to provide regular and steady income to investors These schemes generally invest in fixed income securities such as bonds and corporate debentures Capital appreciation in such schemes 8/22/12 may be limited

Balanced Schemes

Aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50)
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Money Market Schemes

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and interbank call money
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Tax Saving Schemes

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time Under Sec 88 of the Income Tax Act contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate

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Index Schemes

Attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50 Portfolio of these schemes will consist of only those stocks that constitute the index The percentage of each stock to the total holding will be identical to the stocks index weight age
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Returns from such schemes would be

Sector Specific Schemes

Schemes which invest in the securities of only those sectors or industries as specified in the offer documents Returns in these funds are dependent on the performance of the respective sectors/industries These funds may give higher returns, they are more risky compared to 8/22/12 diversified funds

Bond or Debt funds

Include bonds issued by the Government and other institutions in their fund portfolio. The portfolio of the mutual fund may include investments in a mix of Government securities, corporate bonds, Public Sector Unit (PSU) bonds as also securitised debt Ideal for those investors looking for 8/22/12 risk, high stability and regular low

Load and No-Load Funds

Load fund: a mutual fund that charges a commission when shares are bought

Typically sold through a broker

No-load fund: a mutual fund that does not charge a commission when shares are bought.

Typically sold directly to investor by mutual fund Cost savings tend to give investors a head start in achieving superior rates of return

Low-load fund: a mutual fund that charges 8/22/12