21-05-2012, 12:49 PM
Channel Management- In Mutual Fund Sales
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Introduction
Different Investment Avenues are available to Investors. Mutual Funds also offer good Investment opportunities to the Investors. Like all Investments, they also carry certain risks. The Investors should compare the risks and expected yields after adjustment of tax on various instruments while taking Investment decisions. The investors may seek advice from experts and consultants including agents and distributors of Mutual Funds schemes while making Investment decisions.
Meaning of Mutual Funds
Mutual funds are investment products that operate on the principal of Strength in numbers. They collect money from large group of investments, pool it together, and invest it various securities, in line with their objective. They are an alternative to investing directly investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.
The investors in proportion to their investments share the profits or losses. The mutual funds normally come out with a number of schemes with different investment objectives, which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI), which regulates securities markets before it can collect funds from the public.
“Mutual Fund is a trust that pools the savings of a number of Investors who share a common Financial Goal. The Money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these Investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them.”
“A Mutual Fund is nothing more than a collection of stocks and/or bonds. You can think of Mutual Fund as a company that brings together a group of people and invests their money in stocks, bonds and their securities. Each investor owns units, which represent a portion of the holdings of the Fund.”
Why Mutual Funds?
A mutual fund is an entity that pools the money of many investors – its unit holders –to invest in different securities. Investments may be in shares, debt securities, money market securities or a combination of these. Those securities are professionally managed on behalf of the unit holders, and each investor holds a pro-rata share of the portfolio, i.e. entitled to any profits when the securities are sold, but subject to any losses in value as well.
Benefits of Investing through Mutual Funds:
Professional Investment Management
Mutual Funds hire full-time, high-level investment professionals. Funds are afforded to do so as they manage large pools of money. The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale.