In fact in the USA a Mutual fund is constituted as an investment company and an

In fact in the usa a mutual fund is constituted as an

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company and its assets. In fact, in the USA, a Mutual fund is constituted as an investment company and an investor “buys into the fund”, meaning he buys the shares of the fund. In India, a mutual fund is constituted as a Trust and the investor subscribes to the “units” issued by the fund, which is where the term unit Trust comes from. Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own. Institute Of Management Development And Research Page 19
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(Figure-2) When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Institute Of Management Development And Research Page 20 C o n c e p t o f M u t u a l F u n d M a n y I n v e s t o r W i t h C o m m o n F i n a n c i a l O b j e c t i v e P o o l T h e i r M o n e y I n v e s t o r s , O n A P r o p o r t i o n a t e B a s i s , G e t M u t u a l F u n d U n i t s F o r T h e S u m C o n t r i b u t e d T o T h e P o o l T h e M o n e y c o l l e c t e d F r o m I n v e s t o r I s i n v e s t e d i n t o S h a r e s , D e b e n t u r e s & O t h e r S e c u r i t i e s B y T h e F u n d M a n a g e r T h e f u n d m a n a g e r R e a l i z e G a i n s O r L o s s e s , & C o l l e c t s D i v i d e n d O r I n t e r e s t I n c o m e A n y C a p i t a l G a i n O r L o s s e s F r o m S u c h I n v e s t m e n t s A r e P a s s e d O n T o T h e I n v e s t o r s I n P r o p o r t i o n o f T h e N u m b e r o f U n i t s H e l d B y T h e m
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Any change in the value of the investments made into capital market instruments (such as shares, debentures etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors. 2.5 THE MUTUAL FUND INDUSTRY PROFILE IN INDIA The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. Though the growth was slow, but it accelerated from the year 1987 when non- UTI players entered the industry. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Asset under Management (AUM) was Rs. 6,700 cr. The private sector entry to the fund family raised the AUM to Rs. 4,700 cores in March 1993 and till March 2007; it reached the height of Rs . 62,6992cr.
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  • Fall '17
  • Mahvish ali

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