A study into mutual funds
- Characteristics of mutual funds
- Advantages of mutual funds
- Disadvantages of mutual funds
- Structure of mutual funds
- Classification of mutual funds
- Frequently used terms
- An overview of traditional life
- Features of traditional life
- Working of ULIP's
- Key features of ULIP's
- Hurdles of ULIP's
- Comparison between ULIP's and mutual funds
- Alternative options
The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous ? in that it is a young industry where there are changes in the rules of the game everyday, and there are constant shifts and upheavals.
The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket.
Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country.
Mutual funds provide the services of experienced and skilled professionals, assisted by investment research team that analysis the performance and prospects of companies and select the suitable investments to achieve the objectives of the scheme.
[...] Each of the policy holder contributes his contribution (premium) into the common large fund is managed by the company on behalf of the policy holders. Administration of that common fund in the interest of everybody was entrusted to the insurance company .It was the responsibility of the company to administer schemes for benefit of the policyholders. Policyholders played a very passive roll . In the course of time , the same concept of sharing and a common fund was extended to different areas like saving , investment etc. [...]
[...] Close Ended Funds A close ended fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the same time of the initial public issue and thereafter they can buy and sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. [...]
[...] There are others that charge a multiple of this amount and that too grows COMPARISON BETWEEN ULIPS AND MUTUAL FUNDS: Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. [...]