Assets being managed by Mutual Funds are scaling new highs every month with
the total assets under management (AUM) by the 42 SEBI registered “Asset
Management Companies” in India growing at a rapid pace since 2014.
Investments in MFs have seen a robust growth of 22-28 percent per annum and at the close of the calendar year 2016, the total AUM was around Rs 17, 00, 000 crore, with the 2016 figures swelling by about Rs 4,00,000 crore, the highest since 2009.
According to industry leader AMFI, the Average Assets under Management (AAUM) in the country at the end of July 2017 was at Rs20.42 lakh crore while Assets under Management (AUM) were placed at Rs19.97 lakh crore.
AMFI is a non- profit organization committed to the growth of the mutual fund industry in India in addition to protecting the interests of mutual funds and investors alike. It is an association of all SEBI registered mutual funds in India and its members include all Asset Management Companies listed with the market regulator, SEBI.
There are a wide range of Mutual Funds that cater to the diverse requirements of investors. However, all the funds generally invest in equities, commodities, Government/ corporate debt or money market instruments with some of the funds also participating in the International equities and debt markets.
All categories of mutual funds have a pre- defined investment objective and broadly track the asset class in which they are invested. Therefore, the risks and returns from mutual fund investments also vary depending on the nature of the fund and the performance of the asset class.
Mutual funds are generally classified as active and passive funds. In an actively managed fund, the investment strategy is dynamically managed by the portfolio manager to counter any changes in the market/ industry outlook as the fund looks to outperform the benchmark.
In a passively managed fund, the investment strategy is to track the benchmark of the asset class and ensure that the returns of the fund are in line with the performance of the broader asset class. Therefore, investments in passive funds are rarely altered.
Investments in MFs have seen a robust growth of 22-28 percent per annum and at the close of the calendar year 2016, the total AUM was around Rs 17, 00, 000 crore, with the 2016 figures swelling by about Rs 4,00,000 crore, the highest since 2009.
According to industry leader AMFI, the Average Assets under Management (AAUM) in the country at the end of July 2017 was at Rs20.42 lakh crore while Assets under Management (AUM) were placed at Rs19.97 lakh crore.
AMFI is a non- profit organization committed to the growth of the mutual fund industry in India in addition to protecting the interests of mutual funds and investors alike. It is an association of all SEBI registered mutual funds in India and its members include all Asset Management Companies listed with the market regulator, SEBI.
There are a wide range of Mutual Funds that cater to the diverse requirements of investors. However, all the funds generally invest in equities, commodities, Government/ corporate debt or money market instruments with some of the funds also participating in the International equities and debt markets.
All categories of mutual funds have a pre- defined investment objective and broadly track the asset class in which they are invested. Therefore, the risks and returns from mutual fund investments also vary depending on the nature of the fund and the performance of the asset class.
Mutual funds are generally classified as active and passive funds. In an actively managed fund, the investment strategy is dynamically managed by the portfolio manager to counter any changes in the market/ industry outlook as the fund looks to outperform the benchmark.
In a passively managed fund, the investment strategy is to track the benchmark of the asset class and ensure that the returns of the fund are in line with the performance of the broader asset class. Therefore, investments in passive funds are rarely altered.
Based on the type of asset class in which they are invested,
mutual funds are broadly categorized as -
Income Funds:
These funds invest in fixed income securities like Government and corporate debt instruments, fixed deposits and other fixed income securities. The purpose is to generate steady income with the security of funds being the topmost priority.
Growth Funds:
The major investments in these funds are carried out in the high-risk equities markets with the aim to provide long-term capital growth. Due to the high volatility situation in equities, these funds are ideally suitable for investors with a reasonable risk appetite.
Hybrid or Balanced Funds-
These funds normally balance risk by investing in a combination of equities and debt. The purpose of these funds is to provide long term capital appreciation in addition to steady income.
Money Market Funds -
Money Market Funds are also called liquid funds. They typically invest in short term debt instruments with high credit rating and maturities less than 1- year, such as commercial paper, treasury bills, certificates of deposit etc. The funds have a minimum lock- in period of 15 days and are regulated by SEBI.
Fund of Funds:
The fund holds its portfolio in the investment schemes of other mutual funds rather than directly investing in the various financial instruments categorized by equities and debt.
These funds also invest a portion of their capital in schemes offered by International asset management companies of mutual funds.
Income Funds:
These funds invest in fixed income securities like Government and corporate debt instruments, fixed deposits and other fixed income securities. The purpose is to generate steady income with the security of funds being the topmost priority.
Growth Funds:
The major investments in these funds are carried out in the high-risk equities markets with the aim to provide long-term capital growth. Due to the high volatility situation in equities, these funds are ideally suitable for investors with a reasonable risk appetite.
Hybrid or Balanced Funds-
These funds normally balance risk by investing in a combination of equities and debt. The purpose of these funds is to provide long term capital appreciation in addition to steady income.
Money Market Funds -
Money Market Funds are also called liquid funds. They typically invest in short term debt instruments with high credit rating and maturities less than 1- year, such as commercial paper, treasury bills, certificates of deposit etc. The funds have a minimum lock- in period of 15 days and are regulated by SEBI.
Fund of Funds:
The fund holds its portfolio in the investment schemes of other mutual funds rather than directly investing in the various financial instruments categorized by equities and debt.
These funds also invest a portion of their capital in schemes offered by International asset management companies of mutual funds.
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