In the present deregulated competitive environment, Banks are facing difficulties in retaining/improving the profits on account of increased pressure on Net Interest Margin (NIM) besides steep increase in operating expenditure. In the above back drop, banks are focusing attention on ancillary services to augment other income by entering into Mutual Funds business either through subsidiary route or acting as corporate agent. Mutual Funds are associations or trusts of public members who wish to make investments in the financial instruments or assets of the business/corporate sector for the mutual benefit of its members. Mutual Funds are beneficial to their members in reducing risks and maximizing income by proper selection of financial instruments, which will bring income flow in the form of dividends as well as capital appreciation. Mutual Funds are launching various schemes with different investment objectives from time to time to suit the requirement of the investors.
i) Equity-oriented hybrid funds invest minimum 65% of corpus in equity and balance amount in debt. These schemes are relatively less volatile and provide reasonable appreciation and suitable for new stock investors and very conservative equity investors.
ii) Largecap funds invest mostly in big companies. Funds identify these companies by their market capitalization. These companies are considered safe to invest because they are likely to be well-established players and leaders in their respective filed. This is the reason why largecap funds are considered suitable for conservative equity investors. These funds are likely to offer modest returns as they carry relatively less risk.