Page 135 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services Mahesh Kumar Sarva, Lovely Professional University

Notes Unit 9: Mutual Funds

CONTENTS
Objectives
Introduction

9.1 Unit Trust of India
9.2 Types of Mutual Funds
9.3 Significance of Mutual Funds

9.4 SEBI and Mutual Funds
9.4.1 Guidelines for Selling and Marketing Mutual Funds
9.4.2 Recent Developments
9.5 Performance Evaluation
9.6 Mutual Fund Companies in India

9.7 Summary
9.8 Keywords
9.9 Self Assessment

9.10 Review Questions
9.11 Further Readings

Objectives

After studying this unit, you will be able to:
State Unit Trust of India
Explain types of mutual funds

Discuss significance of mutual funds
Describe performance evaluation

Introduction

According to Chapter 1, Securities and Exchange Board of India (Mutual Funds) Regulations,
December 9, 1996, a "mutual fund" means a fund established in the form of a trust to raise money
through the sale of units to the public or a section of the public under one or more schemes for
investing in securities, including money market instruments. They raise money by selling
shares of the fund to the public, much like any other type of company can sell stock in itself to the
public. Mutual funds then take the money they receive from the sale of their shares (along with
any money made from previous investments) and use it to purchase various investment vehicles,
such as stocks, bonds and money market instruments.
In return for the money they give to the fund when purchasing shares, shareholders receive an
equity position in the fund and, in effect, in each of its underlying securities. For most mutual
funds, shareholders are free to sell their shares at any time, although the price of a share in a

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