Mutual Fund Benefits

Financial Services


Mutual Fund is basically the funded money which is collected by the savings of group of people or investors who want to achieve the same kind of financial benefits.

  • Thus, a Mutual Fund is the most profitable investment for the people as it offers brilliant prospects to invest in an expanded and professionally managed scenario of markets at a relatively low cost.
  • The money thus, pooled in is then invested in capital market tools for example shares, debentures and other securities.
  • The revenue benefited through these investments and the appreciations of capital are distributed amongst all the members mutually agreed to investment and it is directly proportional to the quantity of units they have purchased.

The flow chart here can describe the working of the funded money by the investors to give a better understanding:


In India the governing body for the mutual funds is the SEBI (Mutual Fund) Regulations 1996. It keeps amended from time to time.


There are many entities involved in the organizational set up of a mutual fund: the diagram would help to understand.


Organization of a Mutual Fund

Past story of the Mutual Fund Industry, Indian

  • The mutual fund industry was the scheme of the Government of India and the Reserve Bank.
  • It was first launched in 1963 with the setup of Unit Trust of India.
  • The evolution of mutual funds in India might be categorized into four stages

Stage one between the years of 1964 and 1987

  • Unit Trust of India (UTI) was most organized establishment of stage one in the year 1963.
  • The first scheme launched by UTI was Unit Scheme 1964. It was set up by the Reserve Bank of India.
  • It used to work under the Regulatory and secretarial control of the Reserve Bank of India.
  • During the last of 1988, under management UTI had Rs.6, 700 crores of possessions.

Stage two between the years of 1987 and 1993

  • The stage was marked by launch of Public Sector Fund.
  • In the year 1987, the public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) established non- UTI, public sector mutual funds.
  • SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987.
  • The mutual fund industry had possessions of Rs.47, 004 crores, during the last portion of 1993.

Stage three between the year of 1993 and 2003

  • This stage was marked by the launch of Private Sector Funds with the onset of private sector funds during the time of 1993, a new epoch started in the Indian mutual fund industry.
  • It gifted the investors of India a broader choice of units in the fund family.
  • The former Kothari Pioneer was the first private sector mutual fund listed in July 1993.
  • The number of mutual fund units increased in large number as many foreign mutual funds locating their funds in India.
  • So, the industry went through several mergers and achievements.
  • As last part of January in the year 2003, there used to be 33 mutual funds along lined up with total summation of assets of Rs. 1, 21,805 crores.

Stage four ongoing since February 2003

  • In February 2003, the Unit Trust of India Act 1963 was abolished.
  • UTI was then branch off into two different units.
    • First One- the Individual Undertaking of the Unit Trust of India.
    • The second one - UTI Mutual Fund Ltd, which is sponsored by SBI, PNB, BOB and LIC.

The graph shows the consecutive asset-growth of all the stages till now



The advantages of investing in a Mutual Fund are:

  • Convenient Administration
  • Return Potential
  • Professional Management
  • Diversification
  • Low Costs
  • Liquidity
  • Tax benefits
  • Well regulated
  • Transparency
  • Flexibility
  • Choice of schemes


Wide variety of Mutual Fund Schemes exists to meet the demands such as financial position, risk endurance and return prospect etc.

It is broadly divided in to two portions:

By Structure

  • Open-ended Schemes
  • Close-Ended Schemes
  • Interval Schemes

By Investment Objective:

  • Growth Schemes
  • Income Schemes
  • Balanced Schemes
  • Money Market Schemes

Other Schemes

  • Tax saving schemes
  • Special Schemes
    • Index Schemes
    • Sector Specific Schemes