Page 144 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 9: Mutual Funds

Systematic Investment Plan (SIP): An SIP is an investment strategy offered by mutual Notes
fund houses, where one invests fixed amounts at regular pre-determined intervals (monthly
or quarterly) in a mutual fund scheme. The number of units one gets each time depends on
the prevailing Net asset value at the time of the investment. The higher the NAV, the
lower the number of units and the lower the NAV the more units the investor will receive.
Mutual Funds are subject to market risk. Please read the offer document carefully before
investing. Terms and Conditions apply.

The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandals,
the losses by disinvestments and of course the lack of transparent rules in the where about
rocked confidence among the investors. Partly owing to a relatively weak stock market
performance, mutual funds have not yet recovered, with funds trading at an average discount of
1020 percent of their net asset value.
The supervisory authority adopted a set of measures to create a transparent and competitive
environment in mutual funds. Some of them were like relaxing investment restrictions into the
market, introduction of open-ended funds, and paving the gateway for mutual funds to launch
pension schemes.

The measure was taken to make mutual funds the key instrument for long-term saving. The
more the variety offered, the quantitative will be investors. At last to mention, as long as mutual
fund companies are performing with lower risks and higher profitability within a short span of
time, more and more people will be inclined to invest until and unless they are fully educated
with the dos and don'ts of mutual funds.

9.6 Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. 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 decade, few other mutual fund companies in India took their position in mutual fund
market. The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank
Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India
Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of
1993, the total AUM of the industry was 470.04 bn. The private sector funds started 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 with private sector player's penetration,
the total assets rose up to 1218.05 bn. Today there are 33 mutual fund companies in India.

The major mutual fund companies in India are being discussed below:
ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd.
as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated
on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

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