Mutual Funds investments for Educational Institute

This query is : Resolved

philip (Querist)
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06 February 2008 Dear Sir,
Our Institute is an Educational Institute, running engineering degree courses. Accounts are audited and submitted to Charity Commissioner. We have two institutes in one campus and accounts are maintained separately and audited separately. Second institute is providing technical trades to students. Both are registered under Public Trust. Due to lot of developments taking place and by introducing new courses, we are in need of funds.
In fixed deposits the rate of interest is 10%. I would like to know whether we can invest in mutual funds to get more returns. If yes, which mutual fund as per Charity Commissioner. Also please tell us which are the mutual funds approved by charity commissioner. If we invest, for what minimum and maximum period we have to invest.
Thanks

R.V.RAO

R.V.RAO (Expert)
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06 February 2008
SECTION 11 OF INCOME TAX ACT ALLOWS INV. IN MUTUAL FUNDS .RULE 17 C SPECIFIES ONE OF THE MODES OF INVESTMENT IS IN MUTUAL FUNDS UNITS UNDER ANY SCHEME OF M.F REFERRED IN SEC 10(23D).
YOU NEED TO ENSURE THAT SUCH INVEST. ARE ALLOWED IN YOUR PUBLIC TRUST BYE LAWS.
DETAILS OF HOW TO CHOOSE INV. IN M.F ARE GIVEN BELOW AS ALSO WHERE TO FIND THE DETAILS.
AFTER THE TRUSTEES DECIDE TO INVEST IN M.F YOU MAY INFORM CHARITY COMMISSIONER OR YOU MAY NOW ASK ABOUT APPROVED M.F DETAILS FROM HIM.

How to choose a scheme for investment from a number of schemes available?

As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track record of performance of the scheme or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decision. In case of debt oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts.

Where can an investor look out for information on mutual funds?

Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web site of Association of mutual funds in India (AMFI) http://www.amfiindia.com/. AMFI has also published use full it literature for the investors. Investors can log on to the web site of SEBI http://www.sebi.gov.in/ and go to "Mutual Funds" section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web site, a lot of information on mutual funds is given. There are a number of other web sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard.
R.V.RAO