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UNIT 6:
Role & Functions Of Mutual Funds
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1. Mutual Fund: Is a Mechanism for pooling resources from Public by issuing
Units to them and investing the funds
3.. Mutual Fund ia required to be registered with SEBI, a mutual fund is set up
in the form of a trust, which has sponsors, trustee, Asset Management
Companies (AMC) and Customers
(II) Close Ended Scheme/Plan: has a Fixed Maturity Period of 2 to 10 years. NAV disclosed on weekly basis.
(VII) Gilt Fund: Invest exclusively in Government Securities, have No Default Risk
(VIII) Index Fund: Replicate the portfolio of a particular index such as BSE 30, NSE 50 index.
(IX) Sector Specific Funds: Funds/Schemes which invest in the securities of only sectors or industries as
specified like pharmaceutical, software, FMCG, Petrolieum
(X) Tax Saving Schemes: Offer Tax Rebates to investor under specific provision of Income Tax Act 1961.
Example ELSS [Equity Linked Saving Scheme], Pension Schemes
(XI) FoFs(Fund of Funds): Invests primarily in other schemes of the same or other Mutual Funds.
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9. Rajiv Gandhi Equity Saving Scheme [RGESS]: Is a New Tax Equity Tax Advantage Saving Scheme with the objective of encouraging the saving of small
investors in the Domestic Capital Market. It was introduced a new section 80 CCG as per Union budget 2012-13. Tax Benefit upto Rs 50000 whose
gross total annual income is less than or equal to Rs 12 lakhs.
10. New Fund Offer (NFO) Period: NFP should open for 15 days in case of Open Ended and Close Ended Schemes.
12. SIP [Systematic investment plan]: Is not any Scheme but a way of spending money in mutual fund monthly /quarterly basis.
14: IRDA: in year 2000, IRDA was set up to regulate & develop the business of Insurance as per IRDA [Insurance Regulatory & development Authority], Act
1999
17. Whole Life insurance: Provided Protection Over One's Entire Lifetime.
18. Endowment Scheme: Not only it pays life policy Face Amount in the event of the death of the
insured during a Fixed term Of Years, but also to pay the Full face Amount at the end of the term.
19. ULIP [Unit Linked investment Plan]: Offers a combination of Investment and protection and allow
insured the flexibility and choice on hoe/his premium are invested.
(i) ULIP performance depends on the fund performance
(ii) ULIP has varying degree of risk