Project on Mutual Funds &Ulips

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CHAPTER -1

INTRODUCTION

INTRODUCTION:

Mutual fund is the pool up savings of small investors to raise funds called mutual funds. Mutual funds are invested in diversified portfolio to spread risk. While it opens an investment channel to small investors, it reduces risks, improves liquidity and results in stable returns and better capital appreciation in the long run.

CONCEPT
A 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 then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objective of a mutual fund scheme generally forms the basis for an investor's decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time.

Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own. UNIT LINKED INSURANCE PLANS

Unit Linked Insurance (ULIP) plans are designed to help you meet your financial goals by ensuring you the value of your investments, or your nominee sum assured, which is the life cover of your policy. To make sure that your ULIP is truly working to assure your goal, you should choose a life cover that provides your family with adequate finances and hence security even in your absence, so that important life goals of your family are always secured.  

Let us take the example of a 35-year-old man with 2 young children. He could begin with a sum assured of Rs 5 lakh. As the children grow and thereby the financial liabilities increase, he might want to increase the level of protection, which can be done by increasing his sum assured.

When you decide the amount of premium to be paid and the amount of life cover you want from the ULIP, the insurer deducts some portion of the ULIP premium upfront. This portion is known as the Premium Allocation charge, and varies from product to product. The rest of the premium is invested in the fund or mixture of funds chosen by you. Mortality charges and ULIP administration charges are thereafter deducted on a periodic (mostly monthly) basis by cancellation of units, whereas the ULIP fund management charges are adjusted from NAV on a daily basis.  

Since the fund of your choice has an underlying investment – either in equity or debt or a combination of the two – your fund value will reflect the performance of the underlying asset classes. At the time of maturity of your plan, you are entitled to receive the fund value as at the time of maturity

NEED AND IMPORTENCE OF THE STUDY:
1. Mutual funds are dynamic financial intuitions which play crucial role in an economy by mobilizing savings and investing them in the capital market. 2. The activities of mutual funds have both short and long term impact on the savings in the capital market and the national economy. 3. Mutual funds, trust, assist the process of financial deepening & intermediation. 4. To banking at the same time they also compete with banks and other financial intuitions. 5. India is one of the few countries to day maintain a study...
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