Page 245 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes Growth-oriented Funds
These funds do not offer fixed regular returns but provide substantial capital appreciation in the
long run. The pattern of investment in general is oriented towards shares of high growth
companies.
Balanced Funds or Income and Growth-oriented Funds
These offer a blend of immediate average returns and reasonable capital appreciation in the
long run. The investment portfolio of these kinds of funds is evenly distributed among fixed
income bearing corporate securities and common stock with growth potential.

Area Funds
These are funds that are raised in other countries for providing access to foreign investors. The
India Growth Fund and the India Fund raised in the US and the UK respectively are examples of
area funds.
Specialised Funds or Industry Funds
These funds are invested in a particular industry like cement, steel, jute, power or textile, etc.
These funds carry high risks with them as the entire fund is exposed to a particular industry.
Money market funds are another kind of specialized funds.

Tax Relief Funds
These funds are raised for providing tax relief to those investors whose income comes under
taxable limits. Equity Linked Savings Scheme, under Section 80 CCB of the Income Tax Act, 1961,
floated by SBI Mutual Fund, PNB Mutual Fund, LIC Mutual Fund and Canbank Mutual Fund in
the month of February 1991 is such kinds of funds. These funds provide direct deductions from
taxable income up to a certain limit (` 10,000 under Sec. 80 CCB of the Income Tax Act)

!

Caution Specialised Funds invest in money market instruments only.
Self Assessment

State whether the following statements are true or false:
7. A wide variety of mutual fund schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc.

8. In open-ended funds, there is no limit to the size of the funds.

12.4 Mutual Fund Companies in India

The era between 1963 and 1987 marked the existence of only one mutual fund company in India
with ` 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of
India (UTI). By the end of the 80s, a few other mutual fund companies in India took their position
in mutual fund market.

Notes The concept of mutual funds in India dates back to the year 1963.
The new mutual fund companies to enter the Indian market were SBI Mutual Fund, Canbank
Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India
Mutual Fund.

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