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
Determine the term- Time Value of Money If an individual behaves rationally, then he wouldn't equate money in hand today with same value a year from now. As a matter of fact, h


Disadvantages of IFRS 8 Reconciliations may be time consuming. Less comparable with other organisations, as every entity has a different way of running their business.

In 2005, Mr. Gordon Brown's brought up a plan of action to help reduce poverty and boost economic development in Africa. The three essential elements of the 2005 development plan

DEFINITION OF FINANCIAL MANAGEMENT Financial Management is a stream concerned with the generation and allotment of scarce resources (generally funds) to the most proficient use

Macro-Economic Analysis Measuring the Level of Economic Activity Gross National Product (GNP) and the Gross Domestic Product (GDP) are the two most widely used aggregates

Using Southwest Airlines as an example, please identify the largest potential threat, the strategy employed, and what types of capital budgeting projects would be used to operation

•What categories and in what amounts should Jenny allocate her funds to reflect a balanced monthly budget? Include the main categories as well as examples of other categories.

Q. Show Social and Regulatory Factors? Regulatory climate and legislation against the environmental degradation may impair the profitability of the industry. Price control, vol

Assessment of in individual strengths and weaknesses Before finalizing career plan for an individual and placing him on career path, it is necessary to access his strengths and