Geographical classification of mutual funds , Financial Management

Geographical Classification of Mutual Funds :

Nations' boundaries provide territorial restrictions on the sale and purchase of mutual fund units or shares as is the case in commodity trade or services. In view of this, Mutual Funds which operate within the nations' boundaries are different from those which are meant for subscription of foreigners or the country's nationals living away from its shores. This classification is broadly of two types namely,

  • Domestic Mutual Funds.
  • Offshore Mutual Funds.

DOMESTIC MUTUAL FUNDS

Domestic Mutual Funds are the saving schemes which are opened for mobilizing savings of the nationals within the country. These schemes may be of different types as discussed above under the portfolio classification and functional classification. The existing Mutual Funds namely, UTI, GIC Mutual Fund, LIC Mutual Fund, SBI Mutual Fund, Canbank Mutual Fund, BOI Mutual Fund, PNB Mutual Fund and Indbank Mutual Fund are all domestic schemes.

OFFSHORE MUTUAL FUNDS

The basic objective of opening an offshore mutual fund scheme is to attract foreign capital for investment purposes in the country of the issuing company. Offshore Mutual Funds, thus facilitate cross-border fund flow which is a direct route for getting foreign currency without political strings or domination on the issuer country. From investment point of view too, offshore Mutual Funds open up domestic capital markets to the international investors and global portfolio investments.

The major point of difference between the offshore Mutual Funds and domestic Mutual Funds is the currency and country risk for the global investors as the source of fund is from abroad. Due to the high risk, higher return in the invested funds can be expected.

Like domestic Mutual Funds, the offshore Mutual Funds could also be functionally classified into close-ended or open-ended funds.

The major offshore Mutual Funds opened so far comprised close-ended schemes providing redemption of the units for individual investors only at the end of the specified period of the scheme. UTI's India Fund 1986, India Growth Fund, SBI's India Magnum 1989, Canbank's Indo-Swiz Himalayan Fund 1990 and Commonwealth Equity Fund were all close-ended offshore funds.

 

Posted Date: 9/11/2012 1:06:44 AM | Location : United States







Related Discussions:- Geographical classification of mutual funds , Assignment Help, Ask Question on Geographical classification of mutual funds , Get Answer, Expert's Help, Geographical classification of mutual funds Discussions

Write discussion on Geographical classification of mutual funds
Your posts are moderated
Related Questions
what is the applicability of the operating cycle in a vegetaion farm in Uganda

WORKING CAPITAL MANAGEMENT Working capital relates to the capital required for daily operations of a business enterprise.  The requirement for Working Capital is omnipresent fo

You have the following limited information upon which to base your decision as to which is the better of two alternative funding arrangements: ? Alternative 1 is to arrange funding

What are the importance of leverage on a small scale firm?

Question 1: Explain clearly how the study of Public Policy making enables us to understand how Government tackles the major problems of society. Question 2: Analyse th

You are required to compute the value of both the firms using Net Income approach.

What is the decision rule for accepting or rejecting proposed projects while using internal rate of return? While the internal rate of return is greater or equal as compare to

AThe Nu-Nu Brothers Inc. (NNBI) has the following capital structure, which it considers to be optional: Debt 25% Preferred Stock 15% Common Equity 60% NNBI''''s expected net incom

Why do you think the empirical studies as regards factors influencing equity returns mainly showed that domestic factors were more significant than international factors, and, seco

Q. Define Finance Function and discuss its nature and scope Ans. Meaning of Finance: - Finance is defined as the provision of funds at the time when it is required. The role of