The first introduction of a mutual fund in India occurred in 1963, when the Government of India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian mutual fund market. Then a host of other government-controlled Indian financial companies came up with their own funds. These included State Bank of India, Canara Bank, and Punjab National Bank. This market was made open to private players in 1993, as a result of the historic constitutional amendments brought forward by the then Congress-led government under the existing regime of Liberalization, Privatization and Globalization (LPG) The first private sector fund to operate in India was Kothari Pioneer, which later merged with Franklin Templeton.
ABOUT MUTUAL FUND
A mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities. While there is no legal definition of the term "mutual fund", the term is most commonly applied only to those collective investment vehicles (i.e. investment companies) that are regulated and available to the general public for purchase. More often than not, a 'fund' is open-ended in nature, meaning investors can buy or sell shares from/to the fund. A closed-end fund is one where the shares once sold by the fund to the public, trade on exchanges among investors, something like regular stocks do. Hedge funds are loosely considered a type of mutual fund.
Mutual funds have both advantages and disadvantages compared to direct investing in individual securities. Mutual funds are often classified by their principal investments relative to their investment objective. The four largest categories of funds are money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds may also be categorized as index or actively managed.
Investors in a mutual fund incur the fund’s expenses, which reduce the fund's returns/performance. Many parties are interested in the level of these expenses - investors, boards, investment advisors and regulators. A single mutual fund may give investors a choice of different combinations of expenses (and potentially commissions or loads) by offering several different types of share classes.
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