A Mutual Fund is the ideal investment vehicle for today's complex and modern financial scenario. Markets for equity shares, bonds, and other fixed instruments. Price changes in these are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.
A Mutual Fund is the answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the Mutual Fund gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of Mutual Fund with different investment objectives. Today Mutual Fund collectively manages almost as much as or more money as compared to Banks.
[...] The period 1986-1993 can be termed as the period of public sector Mutual Funds (PMF's). From one player in 1985 the number increased to 8 in 1993. The party did not last long. When Private sector made its debut in 1993-94, the stock market was booming. The opening up of Asset Management business to public sector in 1993 saw international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and capital international along with the host of domestic players join the party. [...]
[...] AUTOMATIC REINVESTMENT : A service offered by most mutual funds where by income dividence and capital gained distributions or automatically invested into the fund additional shares and thus building up holdings through the effects of compounding. BALANCED FUND: A mutual fund that maintains a balanced portfolio generally 60% bonds or preferred stocks and 40% common stocks. BID OR SELL PRICE: The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or redemption price means the current net asset value per share, less any redemption fee or back-end load. [...]
[...] After the amount raised is invested, the total funds under the control of the Mutual Fund increases or decreases depending upon the fluctuation in the market value of the investments. As a result, this Rs.10 per unit becomes higher or lower. This is the NAV or the market value of each unit of the scheme. This is explained with an example: Initial amount collected by the Mutual Fund Rs.100 crores Number of initial units issued, taking Rs.10 Rs.10 crores per unit as the initial value per unit This initial amount is now invested and the Rs.110 crores market value goes up to Taking the initial number of units (i.e. [...]
[...] Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme. How to invest in a scheme of a mutual fund? Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. [...]
[...] Kotak Mahindra Mutual Fund (KMMF) is managed by Kotak Mahindra Asset Management Company Ltd., a wholly owned subsidiary of Kotak Mahindra Bank Ltd. Kotak Mahindra Mutual Fund launched its Schemes in December 1998 and today manages assets over and above Rs cr. contributed by more than 1,99,818 investors in various schemes. KMMF has to its credit the launching of innovative schemes and plans like Kotak Gilt and Free Life Insurance with Kotak Bond Deposit Plan. The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. [...]
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