All about Mutual Funding Policies.

1. A m a z o n . c o m
[ T y p e t h e p h o n e n u m b e r ]
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2. Financial Services Industry
What is Mutual Fund?
A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other assets.
Mutual funds are operated by professional money managers, who allocate the fund's assets and
attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio is
structured and maintained to match the investment objectives stated in its prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of
equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the
gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is
usually tracked as the change in the total market cap of the fund—derived by the aggregating
performance of the underlying investments.
Mutual funds pool money from the investing public and use that money to buy other securities,
usually stocks and bonds. The value of the mutual fund company depends on the performance of
the securities it decides to buy. So, when you buy a unit or share of a mutual fund, you are buying
the performance of its portfolio or, more precisely, a part of the portfolio's value. Investing in a
share of a mutual fund is different from investing in shares of stock. Unlike stock, mutual fund
shares do not give its holders any voting rights. A share of a mutual fund represents investments
in many different stocks (or other securities) instead of just one holding.
Describe The types of Mutual Fund
Types of Mutual Funds based on structure
● Open-Ended Funds: These are funds in which units are open for purchase or redemption
through the year. All purchases/redemption of these fund units are done at prevailing NAVs.
Basically these funds will allow investors to keep invest as long as they want. There are no limits
on how much can be invested in the fund. They also tend to be actively managed which means
that there is a fund manager who picks the places where investments will be made. These funds
also charge a fee which can be higher than passively managed funds because of the active
management. They are an ideal investment for those who want investment along with liquidity
because they are not bound to any specific maturity periods. Which means that investors can
withdraw their funds at any time they want thus giving them the liquidity they need.

3. ● Close-Ended Funds: These are funds in which units can be purchased only during the initial
offer period. Units can be redeemed at a specified maturity date. To provide for liquidity, these
schemes are often listed for trade on a stock exchange. Unlike open ended mutual funds, once
the units or stocks are bought, they cannot be sold back to the mutual fund, instead they need to
be sold through the stock market at the prevailing price of the shares.
● Interval Funds: These are funds that have the features of open-ended and close-ended funds in
that they are opened for repurchase of shares at different intervals during the fund tenure. The
fund management company offers to repurchase units from existing unit holders during these
intervals. If unit holders wish to they can offload shares of the fund.
Types of Mutual Funds based on asset class
● Equity Funds: These are funds that invest in equity stocks/shares of companies. These are
considered high-risk funds but also tend to provide high returns. Equity funds can include
specialty funds like infrastructure, fast moving consumer goods and banking to name a few. They
are linked to the markets and tend to.
● Debt Funds: These are funds that invest in debt instruments e.g. company debentures,
government bonds and other fixed income assets. They are considered safe investments and
provide fixed returns. These funds do not deduct tax at source so if the earning from the
investment is more than Rs. 10,000 then the investor is liable to pay the tax on it himself.
● Money Market Funds: These are funds that invest in liquid instruments e.g. T-Bills, CPs etc.
They are considered safe investments for those looking to park surplus funds for immediate but
moderate returns. Money markets are also referred to as cash markets and come with risks in
terms of interest risk, reinvestment risk and credit risks.
● Balanced or Hybrid Funds: These are funds that invest in a mix of asset classes. In some cases,
the proportion of equity is higher than debt while in others it is the other way round. Risk and
returns are balanced out this way. An example of a hybrid fund would be Franklin India Balanced
Fund-DP (G) because in this fund, 65% to 80% of the investment is made in equities and the
remaining 20% to 35% is invested in the debt market. This is so because the debt markets offer
a lower risk than the equity market.
Types of Mutual Funds based on investment objective
● Growth funds: Under these schemes, money is invested primarily in equity stocks with the
purpose of providing capital appreciation. They are considered to be risky funds ideal for
investors with a long-term investment timeline. Since they are risky funds they are also ideal for
those who are looking for higher returns on their investments.

4. ● Income funds: Under these schemes, money is invested primarily in fixed-income instruments
e.g. bonds, debentures etc. with the purpose of providing capital protection and regular income
to investors.
● Liquid funds: Under these schemes, money is invested primarily in short-term or very short-
term instruments e.g. T-Bills, CPs etc. with the purpose of providing liquidity. They are
considered to be low on risk with moderate returns and are ideal for investors with short-term
investment timelines.
● Tax-Saving Funds (ELSS): These are funds that invest primarily in equity shares. Investments
made in these funds qualify for deductions under the Income Tax Act. They are considered high
on risk but also offer high returns if the fund performs well.
● Capital Protection Funds: These are funds where funds are are split between investment in
fixed income instruments and equity markets. This is done to ensure protection of the principal
that has been invested.
● Fixed Maturity Funds: Fixed maturity funds are those in which the assets are invested in debt
and money market instruments where the maturity date is either the same as that of the fund or
earlier than it.
● Pension Funds: Pension funds are mutual funds that are invested in with a really long term goal
in mind. They are primarily meant to provide regular returns around the time that the investor is
ready to retire. The investments in such a fund may be split between equities and debt markets
where equities act as the risky part of the investment providing higher return and debt markets
balance the risk and provide lower but steady returns. The returns from these funds can be taken
in lump sums, as a pension or a combination of the two.
Types of Mutual Funds based on risk
● Low risk: These are the mutual funds where the investments made are by those who do not want
to take a risk with their money. The investment in such cases are made in places like the debt
market and tend to be long term investments. As a result of them being low risk, the returns on
these investments is also low. One example of a low risk fund would be gilt funds where
investments are made in government securities.
● Medium risk: These are the investments that come with a medium amount of risk to the investor.
They are ideal for those who are willing to take some risk with the investment and tends to offer
higher returns. These funds can be used as an investment to build wealth over a longer period of
time.
● High risk: These are those mutual funds that are ideal for those who are willing to take higher
risks with their money and are looking to build their wealth. One example of high risk funds

5. would be inverse mutual funds. Even though the risks are high with these funds, they also offer
higher returns.
Discuss about the Expenses of Mutual Fund
Mutual fund fees and expenses are charges that may be incurred by investors who hold mutual
funds. Operating a mutual fund involves costs, including shareholder
transaction costs, investment advisory fees, and marketing and distribution expenses. Funds pass
along these costs to investors in several ways.
Some funds impose "shareholder fees" directly on investors whenever they buy or sell shares. In
addition, every fund has regular, recurring, fund-wide "operating expenses". Funds typically pay
their operating expenses out of fund assets—which means that investors indirectly pay these costs.
Although they may seem negligible, fees and expenses can substantially reduce an investor's
earnings when the investment is held for a long period of time.
For the reasons cited above, it is important for a prospective investor to compare the fees of the
various funds under consideration. Investors should also compare fees against industry
benchmarks and averages. There are many different types of fees, as discussed below. To facilitate
the comparison of funds, it is helpful to compare the total expense ratio.
WHY MUTUAL FUNDS COST MONEYFUNDS COST MONEY
When you buy stock in a single company, you must pay a stock broker a commission to execute
the transaction. Then, you own the stock, and there are no more expenses to hold that stock until
you sell it, at which time you pay another commission.
Mutual funds, however, have other fees.
Remember that mutual funds are collections of stocks, bonds, and other securities. Often times,
they are actively managed, meaning a team of people are doing research and making trades daily
to ensure the fund performs according to its investment objectives. Even in a fund that’s not
actively managed, trades are executed to keep the fund’s portfolio balanced as money flows in and
out of the fund.
These trades—and the management and research in an actively managed fund—cost money. And
these costs are passed along to the mutual fund investor. That’s OK, but a key to smart mutual
fund investing is to identify the funds with the lowest cost for your investing objective.
MUTUAL FUND COSTS
What you need to know about any mutual fund are its expense ratio and sales load.

6. Expense Ratios
A mutual fund’s expense ratio is the percentage of a fund’s assets that go purely to running the
fund. It encompasses many things, including:
● investment advisory fee or management fee
● administrative costs
● 12b-1 distribution fee (advertising)
Basically, all the funds costs are rolled up into the expense ratio, which is expressed as a percentage
like 0.20% (on the low end) or 1.60% (on the higher end).
Why do these fees matter?
Mutual fund fees are sneaky, because you never feel them come directly out of your wallet.
When you invest $2,000 in a mutual fund, for example, you pay $2,000, not $2,000 plus $20 for
expenses. But over time, the mutual fund company takes its expenses out of the fund’s total
assets, and any investment returns you earned are reduced by the amount of the fund’s expenses.
For example, if you invested $10,000 in a mutual fund that gets an 8% average annual return for
30 years, here’s how mutual fund expenses can impact your return:
In a fund with a 1% expense ratio, you’ll have $76,122 in 30 years. Invest that same money in a
fund with the same return but a 2% ratio, and you’ll only have $57,435 after 30 years. That’s a
difference of $18,687 on just a $10,000 investment. The more you invest, the more fees eat away
at returns.

7. Sales Loads
Mutual fund expenses are a necessary evil—mutual funds cost money to administer. If you want
the convenience of investing in these funds, you have to pay the expenses. But there’s another far
more sinister fee that some funds charge known as a load.
A load is simply a fancy name for a sales charge or commission.
Fortunately, mutual funds are grouped into load funds and no-load funds, so it’s often easy to
search only funds that don’t have this added cost. Note, however, that if a broker or financial
advisor is recommending funds for you to invest in, these may be load funds. That person will
likely get the load as a commission for helping you pick a fund.
Sales Charge (Load) on Purchases – Front-End Loads
The category "Sales Charge (Load) on Purchases" in the fee table includes sales loads that
investors pay when they purchase fund shares (also known as front-end sales loads). The key
point to keep in mind about a front-end sales load is it reduces the amount available to purchase
fund shares. For example, if an investor writes a $10,000 check to a fund for the purchase of
fund shares, and the fund has a 5% front-end sales load, the total amount of the sales load will be
$500. The $500 sales load is first deducted from the $10,000 check (and typically paid to a
selling broker), and assuming no other front-end fees, the remaining $9,500 is used to purchase
fund shares for the investor.
Deferred Sales Charge (Load) – Back-End Loads
The category "Deferred Sales Charge (Load)" in the fee table refers to a sales load that investors
pay when they redeem fund shares (that is, sell their shares back to the fund). You may also see
this referred to as a deferred or back-end sales load. When an investor purchases shares that are
subject to a back-end sales load rather than a front-end sales load, no sales load is deducted at
purchase, and all of the investors’ money is immediately used to purchase fund shares (assuming
that no other fees or charges apply at the time of purchase). For example, if an investor invests
$10,000 in a fund with a 5% back-end sales load, and if there are no other "purchase fees," the
entire $10,000 will be used to purchase fund shares, and the 5% sales load is not deducted until
the investor redeems his or her shares, at which point the fee is deducted from the redemption
proceeds.
Typically, a fund calculates the amount of a back-end sales load based on the lesser of the value
of the shareholder’s initial investment or the value of the shareholder’s investment at redemption.
For example, if the shareholder initially invests $10,000, and at redemption the investment has
appreciated to $12,000, a back-end sales load calculated in this manner would be based on the
value of the initial investment—$10,000—not on the value of the investment at redemption.
Investors should carefully read a fund’s prospectus to determine whether the fund calculates its
back-end sales load in this manner.

8. The most common type of back-end sales load is the "contingent deferred sales load," also
referred to as a "CDSC," or "CDSL." The amount of this type of load will depend on how long
the investor holds his or her shares and typically decreases to zero if the investor holds his or her
shares long enough. For example, a contingent deferred sales load might be 5% if an investor
holds his or her shares for one year, 4% if the investor holds his or her shares for two years, and
so on until the load goes away completely. The rate at which this fee will decline will be
disclosed in the fund’s prospectus.
A Word About No-Load Funds
Some funds call themselves no-load. As the name implies, this means that the fund does not charge
any type of sales load. As described above, however, not every type of shareholder fee is a sales
load, and a no-load fund may charge fees that are not sales loads. For example, a no-load fund is
permitted to charge purchase fees, redemption fees, exchange fees, and account fees, none of which
is considered to be a sales load.
Redemption Fee
A redemption fee is another type of fee that some funds charge their shareholders when the
shareholders redeem their shares. Although a redemption fee is deducted from redemption
proceeds just like a deferred sales load, it is not considered to be a sales load. Unlike a sales load,
which is used to pay brokers, a redemption fee is typically used to defray fund costs associated
with a shareholder’s redemption and is paid directly to the fund, not to a broker. The SEC limits
redemption fees to 2%.
Exchange Fee
An exchange fee is a fee that some funds impose on shareholders if they exchange (transfer) to
another fund within the same fund group.
Account Fee
An account fee is a fee that some funds separately impose on investors in connection with the
maintenance of their accounts. For example, some funds impose an account maintenance fee on
accounts whose value is less than a certain dollar amount.
Purchase Fee
A purchase fee is another type of fee that some funds charge their shareholders when the
shareholders purchase their shares. A purchase fee differs from, and is not considered to be, a
front-end sales load because a purchase fee is paid to the fund (not to a broker) and is typically
imposed to defray some of the fund’s costs associated with the purchase.

9. Annual Fund Operating Expenses
Management Fees
Management fees are fees that are paid out of fund assets to the fund’s investment adviser (or its
affiliates) for managing the fund’s investment portfolio and for administrative fees payable to the
investment adviser that are not included in the "Other Expenses" category.
Distribution [and/or Service] (12b-1) Fees
This category identifies so-called "12b-1 fees," which are fees paid by the fund out of fund assets
to cover distribution expenses and sometimes shareholder service expenses. 12b-1 fees get their
name from the SEC rule that authorizes a fund to pay them. The rule permits a fund to pay
distribution fees out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing
their payment.
“Distribution fees" include fees paid for marketing and selling fund shares, such as compensating
brokers and others who sell fund shares, and paying for advertising, the printing and mailing of
prospectuses to new investors, and the printing and mailing of sales literature.
Some 12b-1 plans also authorize and include "shareholder service fees," which are fees paid to
persons to respond to investor inquiries and provide investors with information about their
investments. A fund may pay shareholder service fees without adopting a 12b-1 plan. If
shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in this category
of the fee table. If shareholder service fees are paid outside a 12b-1 plan, then they will be included
in the "Other Expenses" category.
Capital Appreciation
What Is Capital Appreciation?
Capital appreciation is a rise in an investment's market price. Capital appreciation is the difference
between the purchase price and the selling price of an investment. If an investor buys a stock for
$10 per share, for example, and the stock price rises to $12, the investor has earned $2 in capital
appreciation. When the investor sells the stock, the $2 earned becomes a capital gain.
KEY TAKEAWAYS
● Capital appreciation is a rise in an investment's market price.
● Capital appreciation is the difference between the purchase price and the selling price of
an investment.
● Investments designed for capital appreciation include real estate, mutual funds, ETFs or
exchange-traded funds, stocks, and commodities.

10. Understanding Capital Appreciation
Capital appreciation refers to the portion of an investment where the gains in the market price
exceed the original investment's purchase price or cost basis. Capital appreciation can occur for
many different reasons in different markets and asset classes. Some of the financial assets that
are invested in for capital appreciation include:
● Real estate holdings
● Mutual funds or funds containing a pool of money invested in various securities
● ETFs or exchange-traded funds or securities that track an index such as the S&P 500
● Commodities such as oil or copper
● Stocks or equities
Capital appreciation isn't taxed until an investment is sold, and the gain is realized, which is
when it becomes a capital gain. Tax rates on capital gains vary depending on whether the
investment was a short-term or long-term holding.
However, capital appreciation isn't the only source of investment returns. Dividends and interest
income are two other key sources of income for investors. Dividends are typically cash payments
from companies to shareholders as a reward for investing in the company's stock. Interest income
can be earned through interest-bearing bank accounts such as certificates of deposits. Interest
income can also come from investing in bonds, which are debt instruments issued by
governments and corporations. Bonds usually pay a yield or a fixed interest rate. The
combination of capital appreciation with dividend or interest returns is referred to as the total
return.
Causes of Capital Appreciation
The value of assets can increase for several reasons. There can be a general trend for asset values
to increase including macroeconomics factors such as strong economic growth or Federal
Reserve policy such as lowering interest rates, which stimulates loan growth, injecting money
into the economy.
On a more granular level, a stock price can increase because the underlying company is growing
faster than competitor companies within its industry or at a faster rate than market participants had
expected. The value of real estate such as a house can increase because of proximity to new
developments such as schools or shopping centers. A strong economy can lead to increases in
housing demand since people have stable jobs and income.
Investing for Capital Appreciation
Capital appreciation is often a stated investment goal of many mutual funds. These funds look for
investments that will rise in value based on increased earnings or other fundamental metrics.
Investments targeted for capital appreciation tend to have more risk than assets chosen for capital
preservation or income generation, such as government bonds, municipal bonds, or dividend-
paying stocks. As a result, capital appreciation funds are considered most appropriate for risk-

11. tolerant investors. Growth funds are customarily characterized as capital appreciation funds since
they invest in the stocks of companies that are growing quickly and increasing their value. Capital
appreciation is employed as an investment strategy to satisfy the financial goals of investors.
Capital Appreciation Bond
Capital appreciation bonds are backed by local government agencies and are therefore known as
municipal securities. These bonds work by compounding interest until maturity, which is when
the investor receives a lump sum that includes the value of the bond and the total accrued interest.
Appreciation bonds differ from traditional bonds, which typically pay interest payments each year.
Example of Capital Appreciation
An investor purchases a stock for $10, and the stock pays an annual dividend of $1, equating to a
dividend yield of 10%. A year later, the stock is trading at $15 per share, and the investor has
received a dividend of $1. The investor has a return of $5 from capital appreciation as the price of
the stock went from the purchase price or cost basis of $10 to a current market value of $15 per
share. In percentage terms, the rise in the stock price led to a 50% return from capital appreciation.
The dividend income return is $1, equating to a return of 10% in line with the original dividend
yield. The return from capital appreciation combined with the return from the dividend leads to
a total return on the stock of $6 or 60%.
Financial services
Financial Services is a term used to refer to the services provided by the finance market. Financial
Services is also the term used to describe organizations that deal with the management of money.
Examples are the Banks, investment banks, insurance companies, credit card companies and stock
brokerages.
These are the types of firms comprising the market, that provide a variety of money and investment
related services. Financial services are the largest market resource within the world, in terms of
earnings.
Defining Financial Services can also be termed as, any service or product of a financial nature that
is the area under discussion to, or is governed by a measure maintained by a Party or by a public
body that exercises regulatory or supervisory authority delegated by law.
Understanding Financial Services
Financial Services are generally not limited to the field of deposit-taking, loan and investment
services, but is also present in the fields of insurance, estate, trust and agency services, securities,
and all forms of financial or market intermediation including the distribution of financial products.
Aligned with a background of sharp risk, market and regulatory pressures, Financial Services
organizations are striving to grow and enhance their shareholder values.
Businesses that have differing needs and the diversity and range of the financial services market
has several selections available to better suit them all.
What Is the Financial Services Industry?

12. You might think of banks, brokers and mortgage lenders as all entirely separate entities. While
they do provide different services, they’re all part of the financial services industry. In fact, the
industry includes more than those three sectors. It also involves insurance companies, securities
traders, investors, financial advisors, Wall Street and more.
Plus, the financial services industry doesn’t just serve individuals like yourself. It also provides
small businesses, large companies, nonprofits and even the government with the necessary
financial services.
Sectors of the Financial Services Industry
Let’s start with the well-known sector of banking. Even if you don’t have a savings or checking
account, you’ve probably passed by a bank or two. This sector is where you get your bank
accounts, credit cards, loans and increasingly much more. Credit unions also offer many of the
same accounts as banks, often with even more favorable interest rates. The main difference
between credit unions and banks is the community and ownership that comes with being a credit
union member versus being a bank customer.
Credit unions, financial advisors, discount brokerages and investment banks are also a part of this
financial sector. Financial advisors range from accountants to retirement planners to tax preparers
and more. Investment banks are tailored for more wealthy consumers. Here, you can find wealth
management, tax advice and company guidance.
Financial advisors, discount brokerages and investment banks are also part of the banking financia l
sector. Financial advisors can specialize in accounting, tax preparation, debt repayment and a range
of other financial needs. A financial planner is a type of financial advisor who specializes in
creating long-term financial plans like saving for retirement. Investment banks are tailored for
more wealthy consumers. Here, you can find wealth management, tax advice and company
guidance.
The next financial services industry sector involves asset management. This is where pensions,
insurance assets, hedge funds, mutual funds, etc. are handled. It’s important to note that nowadays,
a certain financial product isn’t limited to just one financial sector. For example, both an asset
management firm and an insurance company will have to manage insurance assets at some point,
even though they are two different sectors.
The insurance sector provides, you guessed it, insurance policies. Of course this also encompasses
a wide range of insurance needs from auto insurance to life insurance to health insurance. The
insurance sector provides the underwriting and funding you need for all your insurance needs.
Then there is the private equity sector, which you may not be quite as familiar with. Private equity
and venture capital funds provide companies with capital. In exchange, the private equity investors
gain ownership stakes or a cut of the company’s profits. This is largely an entrepreneurial
investment sector.
To be sure, these sectors don’t quite encompass the vastness of the financial services industry.
There are tax filing services and companies, currency exchange services, electronic transfer

13. companies and credit cards. These offerings are just as much a part of the financial services
industry as investment banks or asset management firms.
11 Types of Financial Services and Industry
The term “financial services” comprises many different things. There are a plethora of
opportunities in the financial sector for candidates to find the right fit. From banking to investments
and beyond, the options are vast and varied.
So if you are considering a career in financial services, you first need to get an idea of the industry’s
scope in order to decide which path best suits you and your skills.
Here are the main types of financial services for you to consider:
1. Banking
Banking includes handing deposits into checking and savings accounts, as well as lending money
to customers. About 10% of the money deposited into banks must stay on hand, as dictated by
the Federal Deposit Insurance Corporation’s (FDIC) reserve requirement. The other 90% is
available for loans. Some of the interest the bank earns from these loans is given to the customers
who have deposited money into the bank.
2. Advisory
Expert advisory services help both people and organizations with a variety of tasks. Financial
advisors can help with due diligence on investments, provide valuation services for businesses, aid
in real estate endeavors, and more. In each case, advisors help to guide people in the right direction
when making financial decisions.
3. Wealth Management
This type of financial service helps people to save money intelligently, and receive a return on
their investment when possible. If you have a 401K program through your employer, that is one
type of wealth management.
4. Mutual Funds
Mutual funds institutions offer a type of investment that multiple parties share in. These
investments are managed by a professional, not the investors themselves. The buy-in for a mutual
fund is not quite as large as some traditional investments in bonds, the stock market, or the like,
so they are a popular option for people who are a little hesitant with their finances. The investments
are also diversified, which helps to mitigate risk.
5. Insurance
Most people have some understanding of insurance; it is a system that you pay into monthly or
annually which acts as a safety net and covers costs of some large expenditures which are often
unforeseen. There are many kinds of insurance: health, auto, home, renters, and life insurance, just
to name a few.

14. If you want to work in this industry, you need to research and understand not only the different
kinds of financial services, but also the different kinds of financial services institutions. Below are
just a few kinds of institutions that offer the aforementioned services.
6. Commercial Banks (Banking)
7. Investment Banks (Wealth management)
8. Insurance Companies (Insurance)
9. Brokerage Firms (Advisory)
10. Planning Firms (Wealth management, Advisory)
11. CPA Firms (Wealth management, Advisory)
If you’d like to further explore a career in financial services, take a look at our job listings. If you
choose to apply, one of our expert recruitment consultants will be in touch with relevant
opportunities.