A Mutual Fund pools the savings of a number of investors who share a common financial goal.

The money thus collected is then invested in capital market instruments such as shares,
debentures and other securities.

Types of Equity Schemes

Multi Cap Fund: An open ended equity scheme investing across large cap, mid cap, small cap stocks. 8
The minimum investment in equity and equity related instruments shall be 65 percent of total
assets.

Large Cap Fund: An open ended equity scheme predominantly investing in large cap stocks. The
minimum investment in equity and equity related instruments of large cap companies shall be 80
percent of total assets.
Large and Mid Cap Fund: An open ended equity scheme investing in both large cap and mid cap
stocks. The minimum investment in equity and equity related instruments of large cap companies
shall be 35 percent of total assets. The minimum investment in equity and equity related
instruments of mid cap stocks shall be 35 percent of total assets.
Mid Cap Fund: An open ended equity scheme predominantly investing in mid cap stocks. The
minimum investment in equity and equity related instruments of mid cap companies shall be 65
percent of total assets.
Small cap Fund: An open ended equity scheme predominantly investing in small cap stocks.
Minimum investment in equity and equity related instruments of small cap companies shall be 65
percent of total assets.

Equity Linked Savings Scheme (ELSS): An open ended equity linked saving scheme with a statutory
lock in of 3 years and tax benefit. The minimum investment in equity and equity related instruments
shall be 80 percent of total assets (in accordance with Equity Linked Saving Scheme, 2005 notified by
the Ministry of Finance).

SEBI regulations permit exit load upto 7% of NAV. In practice, the load is much lower

STT-page50

Mutual fund offering process-: 55

The AMC decides on a scheme to launch in the market. This is decided on the basis of inputs
from the Chief Investment Officer (CIO) on investment objectives that would benefit investors,
and inputs from the Chief Marketing Officer (CMO) on the interest in the market for such
investment objectives.

 AMC prepares the Offer Document for the NFO. This needs to be approved by the trustees and
the Board of Directors of the AMC.
 The documents are filed with SEBI

NFOs other than ELSS can remain open for a maximum of 15 days. Allotment of units or refund
of moneys, as the case may be, should be done within 5 business days of closure of the NFO.
Further, open-end schemes have to re-open for sale / re-purchase within 5 business days of the
allotment.

Types-:

SIP Investor invests a fixed amount at regular

intervals. For example, Aamir invests Rs.
5,000 every month.

SWP Investor withdraws a fixed amount at regular

intervals. This amount is credited in his bank
account. For example Aamir withdraws Rs.
5,000 every month.

STP Investor transfers a fixed amount from one

mutual fund scheme to another. For example,
Aamir initiates a STP of Rs. 5,000 from a debt
scheme to an equity scheme.

Trigger Investor specifies a target return on the

investment. Once the target is achieved, the
money is transferred from equity scheme to
debt scheme or vice versa. For example,
Aamir gave an instruction stating, if equity
scheme generates 20% returns then the
returns need to be transferred to debt
scheme.

Equity is a growth asset. Investment in equity shares of a company represents an exposure to

the future profits and performance of the company.

Debt is an income asset. A greater proportion of the income from debt comes in the form of
interest income.
Debt is considered safer than equity because most debt securities have a maturity date on
which the principal will be redeemed .example-deposits, post office deposits, PPF, NSC and debt
mutual fund schemes