MUTUAL

FUNDS
Here starts the BY- RISHABH SANGARI
lesson! NITIN KUMAR
 INTRODUCTION
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 give small or individual investors access to diversified,

professionally managed portfolios at a low price

Mutual funds are divided into several kinds of categories, representing

the kinds of securities they invest in, their investment objectives, and the
type of returns they seek
Understanding
Mutual funds
Working

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.
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.
01 Note
The price of a mutual fund share is
referred to as the net asset value (NAV) per
share, sometimes expressed as NAVPS.

A fund's NAV is derived by dividing the

total value of the securities in the portfolio
by the total amount of shares outstanding
Types of Mutual funds
Mutual funds are divided into several
kinds of categories, representing the
kinds of securities they have targeted
for their portfolios and the type of
returns they seek
Equity Funds:- As the name implies, this sort
of fund invests principally in stocks. Within this
group are various subcategories. Some equity
funds are named for the size of the companies
they invest in: small, mid, or large-cap.
Fixed-Income Funds
A fixed-income mutual fund focuses on
investments that pay a set rate of return, such as
government bonds, corporate bonds, or other debt
instruments. The idea is that the fund portfolio
generates interest income, which it then passes on
to the shareholders.
Index Funds:This strategy requires less research
from analysts and advisors, so there are fewer expenses
to eat up returns before they are passed on to
shareholders. These funds are often designed with cost-
sensitive investors in mind
Eg-the index fund manager buys stocks that correspond
with a major market index such as the S&P 500
Balanced Funds:-Balanced funds invest in a Money Market Funds:-
The money market consists of safe (risk-free),
hybrid of asset classes, whether stocks, bonds,
short-term debt instruments, mostly government
money market instruments, or alternative Treasury bills. This is a safe place to park your
money. You won't get substantial returns, but you
investments. The objective is to reduce the risk of
won't have to worry about losing your principal. A
exposure across asset classes.This kind of fund typical return is a little more than the amount you
would earn in a regular checking or savings
is also known as an asset allocation fund
account and a little less than the average
certificate of deposit (CD)
Income Funds:-They provide current
income on a steady basis. These funds invest
International/Global Funds:-
primarily in government and high-quality
Invests only in assets located outside your home
corporate debt, holding these bonds until maturity
country.It’s tough to classify these funds as
in order to provide interest streams. While fund
either riskier or safer than domestic investments,
holdings may appreciate in value, the primary
but they have tended to be more volatile and
objective of these funds is to provide steady cash
have unique country and political risks.
flow​
 PROS CONS
High fees, commissions, and other
Liquidity expenses

Diversification Difficulty in comparing funds

Minimal investment requirements No FDIC coverage

Variety of offerings
Role of Mutual Funds 02
In Capital Market
The Indian Mutual Fund segment is one
of the fastest expanding segments of our
Economy. During the last ten year period
the industry has grown at nearly 22 per
cent CAGR. With assets of US $ 125
billion, India ranks 19th and one of the
rapid growing countries of the world.
Mutual fund as a source
of household sector
savings mobilization
Mutual fund industry has come a long
way to assist the transfer of savings to
the real sector of the economy. Total
AUM of the mutual fund industry
clocked a CAGR of 12.4 per cent over
FY 08-19. That shows how mutual
funds have played pivotal role in
mobilising retail investors’ savings into
capital market in last 10 years in India
Mutual Fund as Financial
service or Intermediary
The financial services sector is the
second-largest component after
trade, hotels, transport and
communication all combined
together, and contributes around 15
per cent to India’s GDP. With the
rapid growth, mutual funds have
become increasingly important
suppliers of debt and equity funds
 Mutual funds popularity
among small investors:
Mutual funds have come as a great help to all
retail investors. It is a special type of institutional
mechanism or an investment method through
which the small as well as large investors pool
their savings which are invested under the advice
of a team of professionals in large variety of
portfolios of corporate securities Safety with good
return on investment is the outcome of these
professional investment in mutual funds. It forms
a significant part of the capital market, providing
the advantage of a well-diversified portfolio and
expert fund manager to a large number,
particularly retail investors
Mutual Funds as part of financial
inclusion policy of Govt. of India
Now SEBI is motivating mutual funds
to spread in smaller cities and in
rural India to attract small savings
and making rural people aware of
new investment avenue like mutual
fund providing good returns at low
risk. So Govt. of India policy of
financial inclusion to mobilise
savings of unbanked people of India
is being supported actively by
mutual funds now
Summary:-
A mutual fund is a financial intermediary in
capital market that pools collective investments
in form of units from retail and corporate
investors and maintain a portfolio of various
schemes which invest that collective investments
in equity and debt instruments on behalf of
investors
 NON-BANKING
FINANCIAL
COMPANIES
Here starts the
lesson!
Nonbank financial companies (NBFCs), also known as nonbank
financial institutions (NBFIs) are entities that provide certain bank-like
and financial services but do not hold a banking license.

NBFCs are not subject to the banking regulations and oversight by

federal and state authorities adhered to by traditional banks.

Investment banks, mortgage lenders, money market funds, insurance

companies, hedge funds, private equity funds, and P2P lenders are all
examples of NBFCs.
Objective
Role of NBFCs
Boost employment: NBFC’s jointly
works with the Government to create
more employment opportunities by
investing in SME and Private sector
Render long-term credit:- NBFC’s
provide long-term credit to facilitate
Trade & Commerce industry. NBFC’s
capitalize mega and large infrastructural
projects which uplifts the economy at an
extensive level..
Mobilization of resources: NBFC’s
mobilize funds, resources and capital. Non-
Banking Financial Companies create a
balance between the distribution of assets
and intraregional income. NBFC’s prove to
be a potent lender by turning savings into
investment practices
Nurtures standard of living:
NBFC also shapes up society by uplifting
living standards. Such entities drive
foreign endowments from various
regions, countries and agencies to
support economic development
 Importance of NBFC’S

NBFC’s have been a chief contributor to the growth of (BFSI) Banking,

Financial Services and Insurance industry. Non-Banking Financial
Companies emerged as a perfect alternative for banks in terms of raising
funds for businesses. Reserve Bank of India regulates the functions of
NBFC’s considering its importance in accelerating society.

NBFC’s are incorporated under Companies Act, 2013 and cater a wide
range of financial services Non-Banking Financial Companies value
customers and emphasize on the creation of innovative products.

The role of NBFC in economic development is beyond assessment due to

its credibility in supporting infrastructural & manufacturing development
 REGIONAL
RURAL
BANKS
Here starts the
lesson!
 INTRODUCT
ION
Regional Rural Banks (RRBs) are
government owned scheduled
commercial banks of India that operate
at regional level in different states of
India. These banks are under the
ownership of Ministry of Finance ,
Government of India. They were
created to serve rural areas with basic
banking and financial services.
HISTORY
Regional Rural Banks were established
under the provisions of an ordinance passed
on 26 September 1975 and the RRB Act 1976
to provide sufficient banking and credit
facility for agriculture and other rural
sectors. As a result, five RRBs were set up on
2 October 1975 on the recommendations of
the Narasimha Committee on Rural Credit,
during the tenure of Indira Gandhi's
government. The purpose was to include
rural areas into the economic mainstream
since around 70% of the Indian population
was rural.
Objective Area of Functioning
Bridging the credit gaps in rural areas.
The Regional Rural Banks are required to
To develop such measures which could
function within a limited area for which they
restrict the outflow of rural deposits to
urban areas are established. Usually the functional area
of Each RRB is confined to a few districts of
To reduce regional imbalances and the state in which they are set up
increase rural employment generation
activities.
 THANKS
Here Ends
the lesson!