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Unit 12: Mutual Fund

The succeeding decade saw a new horizon in the Indian mutual fund industry. By the end of 1993, Notes
the total AUM of the industry was ` 470.04 bn. The private sector funds began penetrating the
fund families. In the same year, the first mutual fund regulations came into existence with re-
registering all mutual funds except UTI. The regulations were further given a revised shape in
1996.
Kothari Pioneer was the first private sector mutual fund company in India, which has now
merged with Franklin Templeton. Just after ten years since the penetration of private sector
players began, their total assets rose up to ` 1218.05 bn. Today there are 33 mutual fund companies
in India.

12.4.1 Types of Mutual Fund Schemes in India

Depending on their objectives, pattern of investment and returns etc., mutual fund schemes in
India can be classified into five broad categories:
1. Growth Funds
2. Income Funds

3. Growth and Income Funds
4. Tax Planning Schemes
5. Other Schemes

Let us take a quick view of the important features of these schemes as follows:
Growth Funds
(i) Objective: Generating substantial capital appreciation.
(ii) Investment Pattern: Nearly all in equity shares.
(iii) Duration: Seven years

(iv) Investment Risk: High risk in reinvestment schemes or normal risks of equity investment
for periodic capital gains schemes.
(v) Returns: No assured return but high returns are expected.

(vi) Liquidity: No repurchase facility except at the end of the scheme.
(vii) Listing on stock exchanges after certain lock in period from the date of allotment.
(viii) Transfer of units is allowed.

(ix) Target Investors: Individuals in higher tax brackets interested in getting higher gains to
beat taxation.
Some examples of Growth Schemes

Scheme Issued by
(a) Master Share, Master Share Plus, Master Gain, UGS-200 Unit Trust of India
(b) Magnum Express, Magnum Multiplier SBI Mutual Fund
(c) Canshare, Canstar Cap, Cangrowth, Canbonus Canbank Mutual Fund
(d) Ind Ratna, Ind Sagar, Ind Moti Indbank Mutual Fund

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