Mutual Fund Industries

Introduction

A mutual fund is financial intermediary that allows investors to pool their money in accordance with predetermined investment objective. The fund manager is responsible for investing the gathered money into bonds, stocks, short-term money market instruments and/or other securities. Thus Mutual fund issues units to the investors and they become a shareholder or unit holder of the fund. The main advantage to mutual funds is that Investment in securities are diversified which minimizing risk & maximizing returns. In mutual funds profits or losses are shared by the investors in proportion to their investments.

Regulatory Aspects
Regulations for mutual funds were passed in 1993 by Securities and exchange Board of India (SEBI) Act. Any person proposing to set up mutual fund industry is required to be registered with SEBI. The role of SEBI is to regulate the securities market and to protect the interest of investors. SEBI has defined rules related to their credit evaluation policy, formation and administration of mutual funds and also guidelines for calculation of Net Asset Value, disclosure requirements, accounting norms for greater transparency.

Current market scenario
• First time in past four quarters Mutual Fund industry in India has recorded growth of 4% in quarterly average assets under management.
• The rate of saving is 23 % in India.
• Foreign based asset management companies are entering in the Indian markets.
• Due to changing business and regulatory environment present scenario demands asset management companies, distributors and all service providers to re-examine their business models and to adopt initiatives in the areas of product design, revenue diversification, cost efficiency and capacity creation.

Opportunities
• Today in capital market Mutual Fund industry is playing an active role