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FREQUENTLY USED TERMS:
Net Asset Value (NAV):
Net Asset value is the market value of the assets of the scheme minus its liabilities.The per unit NAV is the net aset value of the scheme divided by the number of units outstanding on the valuation date.
Sale Price:
Is the price you pay when you invest in a scheme also called Offer Price.It may include a sales load.
Repurchase Price:
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load.This is also called Bid price.
Redumption Price:
Is the price at which open-endes schems repurchase their units and close-endes schems redeem their units on maturity.Such prices are NAV related.
Sales Load:
Is a charge collected by a scheme when it sells the units.Also called,"Front-end" load.Schemes that do not charge a load are called "No Load" schemes.
Repurchase or 'Back-end'Load:
Is a charge collected by a scheme when it buys back the units from the unit holders.
Mutual Fund Schemes:
TYPES OF MUTUAL FUND SCHEMES
Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position,risk tolerance and return expectations etc.The table below gives an overview in the existing types of schemes in the Industry.
By Structure:
- Open - Endes Schems
- Close - Endes Schems
- Interval Schems
By Investment Obective:
- Growth Schemes
- Income Schems
- Balanced Schems
- Money Market Schems
Other Schemes:
- Tax Saving Schemes
- Special Schemes
- Index Schemes
- Sector Specific Schemes
What is Mutual Fund?
A mutual fund is a professionally Managed financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The money collected from the investors is used to buy and trade in those assets, which are specifically permitted by its stated investment objective.Thus a growth fund would buy mainly equity assets while an income fund would mainly buy debt instruments.
The investors own the funds assets in the same proportion as their contribution bears to the total contributions of all investors put together.
The value of a share of the mutual fund, known as the net asset value (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification.
Mutual Funds in India:
Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time.
One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue.A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification.Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously.On the basis of their structure and objective, Mutual Funds can be classified into following major types:
□ Closed - End Funds
□ Open - End Funds
□ Large Cap Funds
□ Mid - Cap Funds
□ Equity Funds
□ Balanced Funds
□ Growth Funds
□ No Load Funds
□ Exchange Traded Funds
□ Value Funds
□ Money Market Funds
□ International Mutual Funds
□ Regional Mutual Funds
□ Sector Funds
□ Index Funds
National Stock Exchange (NSE):
The National Stock Exchange of India Limited was created on the basis of the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions to provide access to investors from all across the country on an equal footing.
In 1992, NSE was incorporated as a tax-paying company unlike other stock exchanges in the country. In April 1993, NSE was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956 and it commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment were started in June 2000.In October 1995, National Stock Exchange became the largest stock exchange in the country. NSE launched S&P CNX Nifty in April 1996. NSE is one of the largest interactive VSAT based stock exchanges in the world. Presently, it supports more than 3000 VSATs. The NSE- network is the largest private wide area network in India and the first extended C- Band VSAT network in the world.
Bombay Stock Exchange (BSE):
BSE 100 Index │ BSE 200 Index │BSE 500 Index │BSE Bankex │ BSE PSU Index │
BSE TECK Index │ Sensex
Bombay Stock Exchange Limited is the oldest stock exchange in Asia. Popularly known as BSE it was established as "The Native Share & Stock Brokers Association" in 1875.
It is the first stock exchange in India to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.Bombay Stock Exchange played a pivotal role in the development of the Indian capital market and its index, SENSEX, is tracked worldwide. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives.
It is the first stock exchange in India to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.Bombay Stock Exchange played a pivotal role in the development of the Indian capital market and its index, SENSEX, is tracked worldwide. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives.
Private Banks in India:
All the banks in India were earlier private banks. They were founded in the pre-independence era to cater to the banking needs of the people. But after nationalisation of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a filip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalisation of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector.Private banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive.
Major private banks in India :
Bank of Rajasthan
Bharat Overseas Bank
Catholic Syrian Bank
Centurion Bank of Punjab
Dhanalakshmi Bank
Federal Bank
HDFC Bank
ICICI Bank
IDBI Bank
IndusInd bank
ING Vysya Bank
Jammu & Kashmir Bank
Karnataka Bank
Karur Vysya Bank
Kotak Mahindra Bank
SBI Commercial and International Bank
South Indian Bank
United Western Bank
UTI Bank
Nationalized Banks in India:
Banking System in India is dominated by nationalized banks. The nationalisation of banks in India took place in 1969 by Mrs.Indira Gandhi the then prime minister. The major objective behind nationalisation was to spread banking infrastructure in rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. These Banks were
Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of nationalisation of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores.
Banking System in India is dominated by nationalized banks. The nationalisation of banks in India took place in 1969 by Mrs.Indira Gandhi the then prime minister. The major objective behind nationalisation was to spread banking infrastructure in rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. These Banks were
Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of nationalisation of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores.
List of Public Sector Banks in India is as follows:
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank
Indian Overseas Bank
Oriental bank of Commerce
Punjab and Sind Bank
Punjab National Bank
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of India (SBI)
State bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank
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