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Unit 12: Mutual Fund

was equally successful: within a few months of the initial launch, over 30 members of the Notes
JH Funds marketing and product management organizations were creating and editing
site content.
Question
What are the goals of JH Funds?

Source: http://www.nevo.com/our-knowledge/casestudies/JHFundsPopup.asp?ID=1

12.8 Summary

A mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money, thus, collected is then invested in capital market
instruments such as shares, debentures and other securities.

The income earned through these investments and the capital appreciation realised are
shared by its unit holders in proportion to the number of units owned by them.
Thus, a mutual fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost.

Mutual funds have proved to be an attractive investment for many investors, the world
over, since they provide them a mixture of liquidity, return and safety in accordance with
their performance.

Further, the investor obtains these benefits without having to directly a diversified
portfolio, which is handled by specialists.

The interests of various investors are generally protected through mutual funds. As
individual investors, they may not hold much clout in companies whose shares they hold,
but by being part of institutional investors like mutual funds, their bargaining power is
enhanced.
The portfolio of a mutual fund depends on the objectives of each scheme/fund floated by
mutual fund. For example, the objective of an income-oriented scheme is to provide
regular monthly income to its shareholders.

The portfolio of such a fund should consist of fixed income bearing securities so that the
fund can achieve its objective.

12.9 Keywords

Close-ended Funds: These funds are fixed in size as regards the corpus of the fund and the
number of shares.
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.
Income-oriented Funds: These funds offer a return much higher than the bank deposits but with
less capital appreciation.
NAV: NAV is the market value of the fund’s assets divided by the number of outstanding
shares/units of the fund.

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