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=Impact of recession=

**//Falling Stocks and Slumping Dividends//** As declining revenues show up on its [|quarterly earnings report], the manufacturer's stock price may decline. [|Dividends] may also slump, or disappear entirely. [|Shareholders] may become upset. They and the board of directors (B of D) may call for a new CEO and/or an entirely new senior management team. The manufacturer's advertising agency may be dumped and a new agency hired. The internal advertising and marketing departments may also face a personnel shakeup. When the manufacturer's stock falls and the dividends decline or stop, [|institutional investors] who hold that stock may sell and reinvest the proceeds into better-performing stocks. This will further depress the cAlso impacted by the recession is the [|accounts receivable] (AR). The customers of the company that owe it money may pay slowly, late, partially or not at all. Then, with reduced revenues, the affected company will pay its own bills more slowly, late, or in smaller increments than the original [|credit agreement] required. Late or [|delinquent] payments will reduce the [|valuation] of the corporation's [|debt], bonds and ability to obtain financing. The company's ability to service its debt (pay interest on the money it has borrowed) may also be impaired, eventuating in defaults on bonds and other debt, further damaging the firm's credit rating and preventing further borrowingompany's stock price. (Learn how understanding the business cycle and your own investment style can help you cope with an economic decline in // [|Recession:] //Also impacted by the recession is the [|accounts receivable] (AR). The customers of the company that owe it money may pay slowly, late, partially or not at all. Then, with reduced revenues, the affected company will pay its own bills more slowly, late, or in smaller increments than the original [|credit agreement] required. Late or [|delinquent] payments will reduce the [|valuation] of the corporation's [|debt], bonds and ability to obtain financing. The company's ability to service its debt (pay interest on the money it has borrowed) may also be impaired, eventuating in defaults on bonds and other debt, further damaging the firm's credit rating and preventing further borrowing

While bond funds and similarly conservative investments have shown their value as safe havens during tough times, investing like a [|lemming] isn't the right strategy for investors seeking long-term growth. Trying to time the market by selling your stock funds before they lose money and using the proceeds to buy bond funds or other conservative investments and then doing the reverse just in time to capture the profits when the stock market rises is a risky game to play. The odds of making the right move are stacked against you. Even if you achieve success once, the odds of repeating that win over and over again throughout a lifetime of investing simply aren't in your favor. A far better strategy is to build a diversified mutual fund portfolio. A properly constructed portfolio, including a mix of both stock and bonds funds, provides an opportunity to participate in stock market growth and cushions your portfolio when the stock market is in decline. Such a portfolio can be constructed by purchasing individual funds in proportions that match your desired asset allocation. Alternatively, you can do the entire job with a single fund by purchasing a mutual fund that has "growth and income" or "balanced" in its name. (To learn more, read // [|//Managing A Portfolio Of Mutual Funds//] //.) **Conclusion** Regardless of where you put your money, if you have a long-term time frame, look at a down market as an opportunity to buy. Instead of selling when the price is low, look at is an opportunity to build your portfolio at a discount. When retirement becomes a near-term possibility, make a permanent move in a conservative direction. Do it because you have enough money to meet your needs and want to remove some of the risk from your portfolio for good, not because you plan to jump back in when you think the markets will rise again.

As the economy continues to head south, many investors grow more and more fearful as they watch the values of their portfolios slide relentlessly. Everyone seems to have different advice on the matter, from "just buckle down and ride it out" to "get out of the stock market and buy gold". Without knowing just how low stocks can go, it can be difficult to know whether you should be buying anything right now. The problem becomes more confusing when you look at mutual funds. Mutual funds come in all sizes and flavors. Some are based on industries, some on ethics, and some on broader market indices. They all have different fee structures and expense profiles. So how can you tell if you should be investing in mutual funds during the recession? And, if so, which ones? For the casual investor who does not have the time or inclination to actively manage his or her own portfolio, mutual funds reduce the time and effort needed. That stays true even in a recession. The trick is finding mutual funds that do well in tough economic times. There are certain industries that weather recession better than others and the best mutual funds will be sector funds which are based on a specific industry. Industries that do well during economic downturn include utilities (everyone still needs to keep the lights on), oil and gas (still need to drive to work), and staple consumer goods (babies still need diapers and kids still need clothes). Mutual funds in recession-proof sectors can still be volatile and under-perform if the fund manager buys and sells constantly or the fund charges a high management fee. Review the fee structures for the funds you are considering and choose one with a high historical return and low fee. Mutual funds can still be the foundation of your investment portfolio if you choose carefully and understand the basics. There are bargains to be had in the current economic climate. All stocks, and therefore all mutual funds, are being punished because of the rampant fear and lack of confidence in the markets. Those mutual funds that contain good quality, recession-proof stocks will weather the storm and provide solid returns.

= // fdi // =

//india mutual fund companies and foreign institutional investors (FII) appear to be betting in opposite directions for most of the recent Sensex growth.// //Data highlights this trend:// //1. When Sensex jumped from 14,000 to 15,000, FII sold shares (net sales) worth 2372.10 crores while Indian mutual fund companies bought shares worth Rs 2891 crores (Rs 1 crore = Rs 10 million; US$ 1 = Rs 39.3)// //2. Between 15000 and 16000, FII bought shares worth Rs 7307 while Indian mutual funds bought only Rs 667 crores// //3. When Sensex moved from 16000 to 18000, FII bought shares worth Rs 24,372.3 crores while mutual fund companies sold (net sales) Rs 2182.21 crores// //4. Between 18000 and 19000, FII bought Rs 7378.2 worth shares while mutual funds sold (net sales) Rs 966.2 crores worth of shares 5. Finally, when Sensex jumped from 19000 to 20 000, FII sold (net sales) Rs 1281.1 worth of shares while Indian mutual funds bought shares worth Rs 1515 crores.// //Question arises as to why two groups of well researched/informed institutional investors have bet on opposite sides in a stock market that has grown to dizzying heights in a matter of months. It appears, that mutual funds companies in India expected a correction in Sensex when the US sub-prime crisis hit in August - therefore they preferred to lower exposure. While some market commentators expected FII money running away from the US sub-prime mess to come to emerging markets, the relative deluge in to India surprised many a mutual fund pundit ! Domestic mutual funds, who were cashed up, now appear to want to get into the market so as to meet performance hurdles. Interestingly, FII money in the latest run up, seems to be going the other way.// //All said and done, while an investor may be able to make some money purely playing momentum, longer term players would be better off considering fundamentals of the company closely while trying to leverage momentum plays. However, if leading institutional investors see fundamentals of blue chips in India so differently, what chance does a retail investor have?//

=**//Stratigies in mutual funds//**=

**The "Wing-It" Strategy** This is the most common mutual-fund strategy. Basically, if your portfolio does not have a plan or a structure, then it is likely that you are employing a wing-it strategy. If you are adding money to your portfolio today, how do you decide what to invest in? Are you one that searches for a new investment because you do not like the ones you already have? A little of this and a little of that? If you already have a plan or structure, then adding money to the portfolio should be really easy. Most experts would agree that this strategy will have the least success because there is little to no consistency.

**Market-Timing Strategy** The market timing strategy implies the ability to get into and out of sectors or assets or markets at the right time. The ability to market time means that you will forever buy low and sell high. Unfortunately few investors buy low and sell high because investor behavior is usually driven by emotions instead of logic. The reality is most investors tend to do exactly the opposite – buy high and sell low. This leads many to believe that market timing does not work in practice. No one can accurately predict the future with any consistency.

This is by far the most commonly preached investment strategy. The reason for this is that statistical probabilities are on your side. Markets generally go up 75% of the time and down 25% of the time. If you employ a buy-and-hold strategy and weather through the ups and downs of the market, you will make money 75% of the time. If you are to be more successful with other strategies to manage your portfolio, you must be right more than 75% of the time to be ahead. The other issue that makes this strategy most popular is it is easy to employ. This does not make it better or worse. It is just easy to [|buy and hold].
 * [[image:http://i.investopedia.com/inv/video/mf-article-img.jpg width="192" height="90" link="http://www.investopedia.com/video/play/introduction-mutual-funds"]] ||  ||
 * [|**Watch:** Mutual Funds] ||
 * Buy-and-Hold Strategy**

This is somewhat of a middle ground between market timing and buy and hold. With this strategy, you will revisit your portfolio mix from time to time and make some adjustments. Let's walk through an oversimplified example using real performance figures.
 * Performance-Weigthing Strategy**

Let's say that at the end of 1996, you started with an equity portfolio of four mutual funds and split the portfolio into equal weightings of 25% each.


 * [[image:http://i.investopedia.com/inv/articles/site/mutualfund/082802_1.gif width="286" height="117"]] ||

After the first year of investing, the portfolio is no longer an equal 25% weighting because some funds performed better than others.


 * [[image:http://i.investopedia.com/inv/articles/site/mutualfund/082802_2.gif width="479" height="118"]] ||

The reality is that after the first year, most investors are inclined to dump the loser (Fund D) for more of the winner (Fund A). However, the right strategy is to do the opposite to practice sell high, buy low. Performance weighting simply means that you sell some of the funds that did the best to buy some of the funds that did the worst. Your heart will go against this logic but it is the right thing to do because the one constant in investing is that everything goes in cycles.

In year four, Fund A has become the loser and Fund D has become the winner.


 * [[image:http://i.investopedia.com/inv/articles/site/mutualfund/082802_3.gif width="275" height="97"]] ||

Performance weighting this portfolio year after year means that you would have taken the profit when Fund A was doing well to buy Fund D when it was down. In fact, if you had re-balanced this portfolio at the end of every year for five years, you would be further ahead as a result of performance weighting.

It's all about discipline.

The key to portfolio management is to have a discipline that you adhere to. The most successful money managers in the world are successful because they have a discipline to manage money and they have a plan. [|Warren Buffet] said it best: "To invest successfully over a lifetime does not require a stratospheric I.Q., unusual business insight or inside information. What is needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework."

  =**__SWOT ANALYSIS__ ** =
 * 1) **I. ****__STRENGTHS__  **
 * **__Brand strategy__ ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">: **as opposed to some of its competitors (e.g. HSBC), Reliance ADAG operates a multi-brand strategy. The company operates under numerous well-known brand names, which allows the company to appeal to many different segments of the market.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Distribution channel strategy__ **: Reliance is continuously improving the distribution of its products. Its online and Internet-based access offers a combination of excellent growth prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Various sources of income__ **: Reliance has many sources of income throughout the group, and this diversity within the group makes the company more flexible and resistant to economic and environmental changes.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Large pool__ **of installed capacities.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Experienced managers__ ** for large number of Generics.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">Large pool of**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"> __skilled and knowledgeable manpower.__ **
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">Ã˜**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Increasing liberalization__ ** of government policies.
 * 1) <span style="list-style-image: initial; list-style-position: initial; list-style-type: decimal; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">II. ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__WEAKNESS__  **
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Emerging markets__ ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">: **since there is more investment demand in the United States, Japan and the rest of Asia, Reliance should concentrate on these markets, especially in view of low global interest rates.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">Mutual funds are like many other investments without a**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__guaranteed return__ **: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved – just because a professional manager is looking after the fund, that doesn’t mean the performance will be stellar.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Fees:__ **In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage – usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn’t make money, these fees only magnify losses.
 * 1) <span style="list-style-image: initial; list-style-position: initial; list-style-type: decimal; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">III. ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__OPPORTUNITIES__  **
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Potential markets__ ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">: **The Indian rural market has great potential. All the major market leaders consider the segments and real markets for their products. A senior official in a one of the leading company says foray into rural India already started and there has been realization that the rural market is both price and quantity conscious.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Entry of MNCs__ **: Due to multinationals are entering into market job opportunities are increasing day by day. Also India Mutual Fund majors are tie up with other financial institutions.
 * 1) <span style="list-style-image: initial; list-style-position: initial; list-style-type: decimal; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">//<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">IV. // ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__THREATS__  **
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Increased Competition__ ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">: **With intense competition by so many local players causing headache to the current marketers. In addition to this though multinational brands are not yet established but still they will soon hit the mark. Almost 60 to 70% of the revenue is spending on the management and services.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">__Hedge funds__ ****<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">: **sometimes referred to as â€˜hot moneyâ€™, are also causing a threat for mutual fundsÂ have gained worldwide notoriety for bringing theÂ markets down. Be it a crash in the currency,Â stock orÂ bond market,Â usually a hedge fund prominently figures somewhere in the pic

=<span style="color: #111111; font-family: Georgia,'Times New Roman',Times,serif; line-height: 22px;"><span style="border-bottom-color: #cccccc; border-bottom-style: dotted; border-bottom-width: 1px; display: block; display: block; margin-bottom: 10px; margin-left: 0px; margin-right: 0px; margin-top: 10px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"> FUTURE OF MF=

The financial services landscape is an ever-changing environment. Mutual fund share classes are a case in point. Mutual funds are sold in a variety of share classes, with A-shares, B-shares and C-shares being the primary varieties. Ongoing developments in the industrysuggest that B shares and C shares may not be around five years from now. In fact, as exchange-traded funds (ETFs) become more popular with investors, the evolution away from B-shares has been realized. (For an introduction to mutual funds, please read // [|Mutual Funds: What Are They?] //) <span style="color: #000000; display: block; float: left; font: normal normal normal 13px/normal arial; margin-right: 10px;"> B-shares were once considered a hot commodity for the financial services industry. Financial advisors liked them because they generally have higher [|management expense ratios] (MER) compared to other funds within the same family, making them more profitable to sell. Investors liked them because, unlike A-shares, they were not subject to an initial front end-load. Fast forward to 2008 and the [|Financial Industry Regulatory Authority] (FINRA) issued an investor alert titled "//Class B Mutual Fund Shares: Do They Make the Grade?//"
 * Goodbye to Bs**

In its own words, FINRA issued the alert "because we are concerned that some investors may purchase Class B mutual fund shares when it would have been more cost effective for those investors to purchase a different class of shares." The alert was merely another manifestation of the long-running concern about mutual fund pricing practices. Many investors would become enticed with no up-front costs, only to realize excessive charges once they tried to cash out. Furthermore, B shares provide the advantage of using your entire investment to gain market exposure rather than paying towards upfront fees. Nonetheless, the [|back-end load] fees were judged to be excessive, given the advantages.

The phase of B-shares seems to be the next likely development. Sales of B-shares have been in decline and represented just 1% of the industry's assets at the close of 2009, down from 7% in 2000. Mutual fund firms are getting out of the business, with big names firms including Goldman Sachs, PIMCO, American Century and many other financial institutions dropping B-shares from their product lineups. The fund complexes noted that B-shares are no longer profitable, as the fund companies pay 4% upfront to brokers for selling Bs, and make their cut on the back end by selling asset-backed securities. The collapse of the asset-backed securities market turned B-shares into a significantly less valuable product from a seller's point of view.Pressure on the fund industry to reduce fees in light of poor performance, competition fromlow-cost ETFs, and pressure from FINRA add fuel to the fire.
 * [[image:http://i.investopedia.com/inv/video/mf-article-img.jpg width="192" height="90" link="http://www.investopedia.com/video/play/introduction-mutual-funds"]] ||  ||
 * [|**Watch:** Mutual Funds] ||

The future of C-shares may also be questionable, as they usually have a higher management expense ratio than other [|mutual funds] in the same fund family. This is notable because in 2009, legislators proposed the//Investor Protection Act//. The Act sought to "authorize the SECto adopt rules under the Exchange Act and the Advisers Act to provide that, when broker-dealers and investment advisers render investment advice about securities to retail customers or clients (and such other customers or clients as the SEC designates by rule), they are required to act solely in the interest of the customer or client without regard to the financial or other interest of the broker, dealer or investment adviser providing the advice." Should all financial services professional be required to act in the best interests of the clients, it would be difficult to justify selling clients expensive C-shares when less expensive shares of the same fund are available.
 * Writing on the Wall for C-Shares?**

Unless Wall Street suddenly becomes a benevolent environment where massive profits are passed up in the interests of doing the right thing for investors who have their life's savings at risk, the future is likely to see more attempts at legislative reform. Poor investment performance and pressure to lower prices will also work against efforts to sell expensive products when less expensive alternatives are available. Typically, Class C shares have higher annual and back-end fees than similarly structured A shares. Therefore large scale sales of Class B and C shares are being investigated due to the brokers' neglect for the clients' best interest.

A-shares are the least expensive of the traditional mutual fund share classes. They are also the least complicated. There are no back-end loads and no graduated pricing structures that reduce the cost to investors based on how long the investment is held. In addition to A-shares, ETFs offer another low-cost investment alternative that are fiercely competing with mutual funds. (If you're an investor who likes to understand how and why your investment products work, // [|An Inside Look At ETF Construction] // provides a close-up look at the popular, inexpensive portfolios, and // [|Active Vs. Passive ETF Investing] // explains how you can use these securities for more than just indexing.) <span style="color: #000000; font: normal normal normal 13px/normal arial;">**The Bottom Line** The development of ETFs and the rise and fall of B-shares highlights the dynamic nature of the financial services industry. New products are developed and old products are enhanced or eliminated backed on a mix of market-moving forces, including supply and demand, the regulatory environment, and the performance of the products and the financial markets in gen.
 * Give me an "A" or Maybe an "ETF"**

=<span style="color: #000000; font: normal normal normal 13px/normal arial;">__<span style="color: #111111; font-family: Georgia,'Times New Roman',Times,serif; line-height: 22px;">**<span style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Portfolio Management ** __ = <span style="color: #111111; font-family: Georgia,'Times New Roman',Times,serif; line-height: 22px;"> <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;"><span style="color: #00599c; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-decoration: none;"> <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;">Each and every investor has to face risk while investing. What is Risk? Risk is the uncertainty of income/capital appreciation or loss of both. Risk is classified into: Systematic risk or Market related risk and Unsystematic risk or Company related risk. <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;">1 Market risks: A variation in price sparked off due to real, social political and economical events is referred as market risks. <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;">2 Interest rate risks: Uncertainties of future market values and the size of future incomes, caused by fluctuations in the general level of interest is referred to as interest rate risk. Here price of securities tend to move inversely with the change in rate of interest. <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;">3 Inflation risks: Uncertainties in purchasing power is said to be inflation risk. <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;">1 Business risk: Business risk arises due to changes in operating conditions caused by conditions that thrust upon the firm which are beyond its control such as business cycles, government controls, etc. <span style="margin-bottom: 5px; margin-left: 0px; margin-right: 10px; margin-top: 0px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 0px; text-align: justify;">2 Internal risk: Internal risk is associated with the efficiency with which a firm conducts its operations within the broader environment imposed upon it. 3 Financial risk: Financial risk is associated with the capital structure of a firm. A firm with no debt financing has no financial risk. The extends depends upon the leverage of the firms capital structure.he products is an important part of becoming a savvy investor.
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">Systematic risk refers to that portion of variation in return caused by factors that affect the price of all securities. It cannot be avoided. It relates to economic trends with effect to the whole market. This is further divided into the following:
 * <span style="list-style-image: initial; list-style-position: initial; list-style-type: square; margin-bottom: 0px; margin-bottom: 15px; margin-left: 0px; margin-left: 30px; margin-right: 0px; margin-right: 0px; margin-top: 0px; margin-top: 0px; padding-bottom: 0px; padding-bottom: 0px; padding-left: 0px; padding-left: 0px; padding-right: 0px; padding-right: 0px; padding-top: 0px; padding-top: 0px; text-align: justify;">Unsystematic risk refers to that portion of risk that is caused due to factors related to a firm or industry. This is further divided into: