Mutual Fund and Insurance Selling
Mutual Fund and Insurance Selling
Mutual Fund and Insurance Selling
Financial Products
Basics of Investments:
• Wide Choice to suit risk-return profile: Investors can chose the fund based on
their risk tolerance and expected returns.
Mutual Funds Vs. Other Investments
Product Return Safety Liquidity Tax Benefit Conven-
ience
Trustees
Asset Management
Company
Depository Agent
Custodian
Mutual Fund Types
• Broad fund types by Nature of Investments: Mutual funds may
invest in equities, bonds or fixed income securities, or short-term
money market securities. So, we have Equity, Bond and Money
Market Funds.
Growth Funds:
• Objective is capital appreciation over a long time, 7 - 10 years
span.
• Invest in companies whose earnings are expected to rise at an
above average rate.
• These companies will be considered to have growth potential, but
not entirely unproven and speculative.
• Less volatile than aggressive growth funds.
Equity Funds
Specialty Funds
• Thematic funds that have a theme for investments.
• Narrow portfolio orientation and invest only in companies that meet
pre-defined criteria.
• Diversification is limited to one type of investment.
• More volatile than diversified funds.
• Specialty funds are further sub-categorized based on their
investments.
Offshore Funds:
• Invest in equities in one or more foreign countries.
• Sensitive to foreign exchange rate risk and economic conditions of the
countries they invest in.
Value Funds:
• Invest in fundamentally sound companies whose shares are currently
under-priced in the market.
• Have lower risk as compared to Growth Funds and take a long term
approach.
• Often invested in cyclical industries.
• Example: Templeton India Growth fund that has shares of
Cement/Aluminum and other cyclical industries.
Hybrid Funds
Growth & Income Funds:
• Strike a balance between capital appreciation and income for the
investor.
• Portfolio is a mix between companies with good dividend paying
records and those with potential for capital appreciation.
• Less risky than growth funds but more risky than income funds.
Risk Aversion
Pros Cons
1) Lowest Risk Possible 1) Interest rates change. (12% to
8%)
2) Tax Rebate (20% under Section 88) 2) Lengthy lock-in period. (15
yrs/16)
3) Great Returns (8% compounded) 3) Interest calculated on
lowest balance. (5 to last date)
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