Need for financial advisors for mutual fund investors

Karvy Stock Broking Limited
A Project Report on
“Need for financial advisors for mutual fund investors”

Submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
In
Visvesvaraya Technological University, Belgaum
Submitted By
LAKSHMINARAYAN
4PM08MBA19
Under the Guidance of
Internal Guide External Guide
Mr. G.P.Nagesh Mr. Venkat Ganesh Kumar E.S.
P.G. Department of Management Studies
PES INSTITUTE OF TECHNOLOGY AND MANAGEMENT
NH – 206, Sager Road, Shivamogga – 577204
April, 2010
P G Dept of Management Studies, PESITM, Shivamogga 1

DECLARATION
I, the undersigned, hereby declare that the project report entitled “Need for
financial advisors for mutual fund investors” has been prepared by me under
the supervision and guidance of Mr. G.P.Nagesh
Faculty member, P.G Department of Management Studies, PES Institute of
Technology and Management , Shivamogga and now being submitted to
VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELGAUM in partial
fulfillment of the University regulations for the award of the degree of MBA.
I further declare that this report is based on the original project study undertaken
by me and has not formed a basis for the award of any Degree/Diploma of V.T.U
or any other University.
Place: Shivamogga LAKSHMINARAYAN
Date: 4PM08MBA19

Certificate
This is to certify that the Project Report entitled “Need for financial advisors for
mutual fund investors” Is an individual work of Mr. LAKSHMINARAYAN. 3
semesters MBA, P.G. Department of Management Studies, PESITM,
Shivamogga submitted in partial fulfillment of requirement for the award of the
degree of master of Business Administration in Visvesvaraya Technological
University, Belgaum under our Supervision and Guidance.
We further certify that the work is original and has not been submitted to any
other University wholly or in part for any other degree or diploma or any other
programme.
Mr. G.P.Nagesh Dr.R.Nagaraja Dr.Vishwanth .P.Baligar
Faculty Member & Prof & HOD, Principal – PESITM
Internal Guide PGDMS
EXTERNAL EXAMINERS
[1] [2]
Signature: Signature:
Name: Name:
Institution: Institution:

ACKNOWLEDGEMENT
I take this opportunity to sincerely thank Mr. G.P.Nagesh who
guided me through out the project through his valuable
suggestions, without which the project would not have been
successful.
I thank Mr. Venkat Ganesh Kumar E.S., Branch Manager in KARVY
STOCK BROKING LIMITED Davangere for guiding me in doing
this Project report.
I thank Mr. Sridhar, Regional Manager in KARVY STOCK
BROKING LIMITED for guiding me in doing this Project report.
My sincere thanks to my parents and friends who out of hard
sweat were able to help me at all time and given encouragement
for successful completion of this project.
Yours truly

LAKSHMINARAYAN
SERIAL PAGE
NUMBER LIST OF CONTACTS NUMBER
1.1 INTRODUCTION 1-8
1.2 COMPANY OVERVIEW.
1.3 EVOLUTION OF KARVY.
1.4 SUCCESS SUTRAS OF KARVY.
1.5 THE SUCCESS LADDER.
1.6 ORGANIZATION STRUCTURE OF KARVY.
1.7 ACHIEVEMENTS.
1.8 QUALITY POLICY
1.9 DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY.
2.1 INDUSTRIAL BACKGROUND 9-13
2.2 ORIGIN.
2.3 GROWTH, DEVELOPMENT & PRESENT STATUS OF THE
INDUSTRY.
2.4 LEADING COMPETITORS IN THE INDUSTRY.
3.1 MCKINSEY 7-S FRAMEWORK 14-22
3.2 SUPER-ORDINATE GOALS.
3.3 STRATEGY.
3.4 ORGANIZATION STRUCTURE.
3.5 FUNCTIONS OF DEPARTMENTS.
3.6 SYSTEMS.
3.7 STYLE.
3.8 STAFF.
3.9 SKILLS.
4.1 PRODUCT PROFILE 23-30
4.2 KARVY SERVICES.
5.1 SWOT ANALYSIS OF KARVY. 31
6.1 LEARNING EXPERIENCE 32
7.1 METHODOLOGY OF RESEARCH 33-54
7.2 NEED OF THE STUDY.
7.3 OBJECTIVE OF RESEARCH.
7.4 SCOPE OF THE STUDY.

7.4 OPERATIONAL DEFINITIONS AND CONCEPTS.

8.1 METHODOLOGY OF DATA COLLECTION 55-56
6.2 SOURCES OF DATA.
6.3 SAMPLING PLAN.
6.4 INSTRUMENTATION TECHNIQUE.
9.1 ANALYSIS AND INTERPRETATION OF DATA 57-69
10.1 RESEARCH FINDINGS , SUGGESTION AND CONCLUSIONS 70-72
8.1 RECOMMENDATIONS.
11.1 BIBLIOGRAPHY 73
12.1 APPENDIX / ANNEXURE 74-79
12.2 QUESTIONNAIRE
12.3 WEEKLY PROGRESS REPORT
LIST OF TABLES:
Table. No. Table Name PAGE

NUMBER
7.0 Analysis and Interpretation of Data 53
1 Analysis on the basis of gender. 53
2 Analysis on the basis of Age. 54
3 Analysis on the basis of Occupation. 55
4 Analysis on the basis of Education. 56
5 Analysis on the basis of Income (yr). 57
6 Where from do you purchase mutual funds? 58
7 According to you which is the most suitable stage to invest 59

in mutual funds?
8 Which feature of the mutual funds influence you most? 60
9 Where do you find yourself as a mutual fund investor? 61
10 Are you availing the services of personal financial 62

advisors?

11 Which expertise of the personal financial advisor is 63

demanded most?
12 What is the major reason for using financial advisors? 64
13 What is the major reason for not using financial advisor? 65

Executive summary
This project has been a great learning experience for me; at the same time it
gave me enough scope to implement my analytical ability. This project as a whole
can be divided into two parts:
 The first part gives an overall details about Karvy Stock Broking Limited that is
Vision and Mission, The success ladder of Karvy ,Organization structure of
Karvy, and there Achievements and the industrial background of Stock
Brokers, Growth, Development & Present status of the industry, Leading
competitors in the industry and SWOT analysis of Karvy. McKinsey 7-S
framework as been clearly explained about the organization study of
departmental of KSBL and Services provided by KSBL.
 The Second part gives an insight about the mutual funds and its various
aspects. It is purely based on whatever I learned at Karvy. One can have a
brief knowledge about mutual funds and all its basics through the project.
Other than that the real savings come when one moves ahead. Some of the
most interesting questions regarding mutual funds have been covered. Some
of them are: why has it become one of the largest financial intermediaries?
How investors do chose between funds? Performance Measures of Mutual
Funds, All the topics have been covered in a very systematic way. The
language has been kept simple so that even a layman could understand. All
the dates have been well analyzed with the help of charts and graphs. This
part consists of dates and their analysis, collected through a survey done on
50 people. It covers the topic “Need for financial advisors for mutual fund
investors”. The data collected has been well organized and presented. Hope
the research findings and conclusions will be of use. It has also covered why
people don’t want to go for financial advisors? The advisors can take further
steps to approach more and more people and indulge them for taking their
advices.

1.1 Introduction:
“Success is a journey, not a destination.” If we look for examples to

prove this quote then we can find many but there is none like that of Karvy. Back
in the year 1981, five people created history by establishing Karvy and company
which is today known as Karvy, the largest financial service provider of India.
1.2 Company overview:
Karvy was established as Karvy and company by five chartered

accountants during the year 1979-80, and then its work was confined to audit and
taxation only. Later on it diversified into financial and accounting services during
the year 1981-82 with a capital of rs.150000. it achieved its first milestone after its
first investment in technology. Karvy became a known name during the year
1985-86 when it forayed into capital market as registrar.
1.3 Evolution of KARVY:
It is well said that success is a journey not a destination and we can see it
being proved by Karvy. Under this section we will see that how this “Karvy and
company” of 1980 became “Karvy” of 2008. Karvy blossomed with the setting up
of its first branch at Mumbai during the year 1987-88. The turning point came in
the year 1989 when it decided to enter into one of the not only emerging rather
potential field too i.e.; stock broking. It added the feather of stock broking into its
cap. At the same time it became the member of Hyderabad Stock Exchange
through associate firm Karvy securities ltd and then Karvy never looked back it
went on adding services one after another, it entered into retail stock broking in
the year 1990. Karvy investor service centers were set up in the year 1992. Karvy
which already enjoyed a wide network through its investor service centers,
entered into financial product distribution services in the year 1993. One year
more and Karvy was now dealing into mutual fund services too in the year 1994
but it didn’t stopped there, it stepped into corporate finance and investment
banking in the year 1995.

Karvy’s strategy has always been being the first entrant in the market. Karvy
again hit the limelight by becoming the first registrar in the country to be awarded
ISO 9002 in the year 1997. Then it stepped into the other most happening sector
i.e.; IT enabled services by establishing its own BPO units and at a gap of just 1
year it took the path of e-Business through its website www.karvy.com . Then it
entered into insurance services in the year 2001 with the launch of its retail arm
“Karvy- the Finapolis: your personal finance advisor”. Then in the year 2002 it
launched its PCG (Private Client Group) which looks after its High Networth
Individuals .and maintain their portfolio and provides them with other financial
services. In the year 2003, it commenced secondary debt and WDM trading.
It was a decade which saw many Indian companies going global so why
the largest financial service provider of India should lag behind? Hence, Karvy
launched “Karvy global services limited” after entering into a joint venture with
Computershare, Australia in the year 2004.the year 2004 also saw Karvy entering
into commodities marketing through Karvy Comtrade.
Year 2005 saw Karvy establishing a separate branch for its insurance
services under the head “Karvy insurance broking ltd” and in the same year, after
being impressed with the rapid growth of Karvy stock broking limited, PCG group
of Hong Kong acquired 25% stake at KSBL. In the year 2006, Karvy entered into
one of the hottest sector of present time i.e. real estate through Karvy realty&
services (India) ltd. hence, we can see now Karvy being established as the
largest financial service provider of the country.
1.4 Success sutras of Karvy:
The success story of Karvy is driven by 8 success sutras adopted by it

namely trust, integrity, dedication, commitment, enterprise, hard work and team
play, learning and innovation, empathy and humility. These are the values that
bind success with Karvy.
Vision of Karvy:

To achieve & sustain market leadership, Karvy shall aim for complete
customer satisfaction, by combining its human and technological resources, to
provide world class quality services. In the process Karvy shall strive to meet and
exceed customer's satisfaction and set industry standards.
Mission statement:
“Our mission is to be a leading and preferred service provider to our

customers, and we aim to achieve this leadership position by building an
innovative, enterprising , and technology driven organization which will set the
highest standards of service and business ethics.”
1.5 The success ladder:

Karvy Realty & Services

(India) Limited
Now Karvy group consists of 8 highly renowned entities which are as follow:
1. :
The first securities registry to receive ISO 9002 certification in India.

Registered with SEBI as Category I Registrar, is Number 1 Registrar in the
Country. The award of being ‘Most Admired’ Registrar is one among many of the
acknowledgements we received for our customer friendly and competent
services.

2. :
karvy stock broking ltd. Consists of five units namely stock broking
servics, depository participant, advisory services, distribution of financial
products, advisory services and private client goups.
3. :
it is registered with SEBI as a category 1 merchant banker. Its clientele

includesinclude leading corporate, State Governments, foreign institutional
investors, public and private sector companies and banks, in Indian and global
markets.
4. :
karvy insurance broking ltd is also a part of karvy stock broking ltd. At
Karvy Insurance Broking Limited both life and non-life insurance products are
provided to retail individuals, high net-worth clients and corporates.
5. :
The company provides investment, advisory and brokerage services in

Indian Commodities Markets. And most importantly, it offer a wide reach through
our branch network of over 225 branches located across 180 cities.
6. :
Karvy Global is a leading business and knowledge process outsourcing

Services Company offering creative business solutions to clients globally. It
operates in banking and financial services, inurance, healthcare and
pharmaceuticals, media , telecom and technology. It has its sales and business
development office in New York, USA and the offshore global delivery center in
Hyderabad, India

7. :
Karvy Realty (India) Limited is engaged in the business of real estate and
property services offering:
 Buying/ selling/ renting of properties

 Identifying valuable investments opportunities in the real estate sector
 Facilitating financial support for real estate and investments in properties
 Real estate portfolio advisory services
8. :
it is a joint venture between Computershare, Australia and Karvy

Consultants Limited, India in the registry management services industry.
1.6 Organization structure of karvy:
Talking about the organization structure of karvy, we have the board of

directors as the supreme governing body, the chairman being Mr. C.
Parthasarthy, Mr. M.Yugandhar as the managing director, Mr.
M.S.Ramakrishna as directors.The board of diretors head the karvy group, karvy
computershares limited, karvy investors services ltd., karvy comtrade, karvy stock
broking ltd., and karvy global services ltd. Karvy group being the flagship
company looks after the functional departments such as corporate affairs, group
human resources, finance & accounting, training & development, technology
services and corporate quality.
The letters K, A, R, V and Y stands for 5 directors names
K- Mr.: V. Kutumba Rao
A- Mr.: K.Ajay Kumar.

R- Mr.: M.S. Ramakrishna.
V- Mr.: Vikram Singh
Y- Mr.: M. Yugandhar.
KARVY, is a premier integrated financial services provider, and ranked

among the top five in the country in all its business segments, services over 16
million individual investors in various capacities, and provides investor services to
over 300 corporate, comprising the who is who of Corporate India. KARVY
covers the entire spectrum of financial services such as Stock broking,
Depository Participants, Distribution of financial products - mutual funds, bonds,
fixed deposit, equities, Insurance Broking, Commodities Broking, Personal
Finance Advisory Services, Merchant Banking & Corporate Finance, placement
of equity, IPOs, among others. Karvy has a professional management team and
ranks among the best in technology, operations and research of various industrial
segments. Karvy computershare private limited facilitates mutual fund services,
share registry and issue registry whereas merchant banking is looked after by
karvy investor services ltd. Karvy stock broking ltd heads its another branch too
ie. Karvy insurance broking ltd. The services offered by KSBL are: stock broking,
depository, research, distribution, personal client group and institutional desk.
And finally the BPO services are managed by karvy global services ltd.
Summarizing it in a diagram, it can be presented as:
CORPORATE AFFAIRS GROUP HR FINANCE &ACCOUNTS TRG&

DEV TECHNOLOGY SERVICES CORP.QUALITY
Source: Organization structure of karvy
1.7 Achievements:
 Among the top 5 stock brokers in India (4% of NSE volumes)

 India's No. 1 Registrar & Securities Transfer Agents
 Among the top 3 Depository Participants
 Largest Network of Branches & Business Associates
 ISO 9002 certified operations by DNV among top 10 Investment bankers
 Largest Distributor of Financial Products
 Adjudged as one of the top 50 IT uses in India by MIS Asia
 Full Fledged IT driven operations
1.8 Quality Policy:
To achieve and retain leadership, Karvy shall aim for complete customer
satisfaction, by combining its human and technological resources, to provide
superior quality financial services. In the process, Karvy will strive to exceed
Customer's expectations.
Quality Objectives
As per the Quality Policy, Karvy will:
 Build in-house processes that will ensure transparent and harmonious

relationships with its clients and investors to provide high quality of
services.
 Establish a partner relationship with its investor service agents and
vendors that will help in keeping up its commitments to the customers.
 Provide high quality of work life for all its employees and equip them with
adequate knowledge & skills so as to respond to customer's needs.
 Continue to uphold the values of honesty & integrity and strive to establish
unparalleled standards in business ethics.
 Use state-of-the art information technology in developing new and
innovative financial products and services to meet the changing needs of
investors and clients.

 Strive to be a reliable source of value-added financial products and

services and constantly guide the individuals and institutions in making a
judicious choice of same.
 Strive to keep all stake-holders (shareholders, clients, investors,
employees, suppliers and regulatory authorities) proud and satisfied.
1.9 Development & present status of the industry
Karvy ranks among the top player in almost all the fields it operates. Karvy
Computershare Limited is India’s largest Registrar and Transfer Agent with a
client base of nearly 500 blue chip corporate, managing over 2 crore accounts.
Karvy Stock Brokers Limited, member of National Stock Exchange of India and
the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With
over 6, 00,000 active accounts, it ranks among the top 5 Depositary Participant in
India, registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and
MCX ranks among the top 3 commodity brokers in the country. Karvy Insurance
Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance
agent in the country. Registered with AMFI as a corporate Agent, Karvy is also
among the top Mutual Fund mobilize with over Rs. 5,000 crores under
management. Karvy Realty Services, which started in 2006, has quickly
established itself as a broker who adds value, in the realty sector. Karvy Global
offers niche off shoring services to clients in the US. Karvy has 575 offices over
375 locations across India and overseas at Dubai and New York. Over 9,000
highly qualified people staff Karvy.

2.1 INDUSTRIAL BACKGROUND
INTRODUCTION
A stock broker is someone who buys and sells stocks on the behalf of
others for a predetermined commission. The stock broker basically works as an
agent coordinating the activities of the buyers and sellers on the stock exchange.
Along with the trading of stocks, many stock brokers indulge in giving advice to
the clients as to which stocks, mutual funds, debentures etc. to buy or sell.
2.2 ORIGIN:
The history of stock brokers can be traced back to the origins of the first
stock exchange in 1602 at Amsterdam. Even before that brokers are said to have
existed in France dealing with government securities. The Amsterdam Stock
Exchange was involved in buying and selling of shares for the Dutch East India
Company.
However, the first real stock exchange came up in Philadelphia in the

United States during the late 18 th century. Later it was the New York stock
exchange which saw a rise in its popularity. Wall Street, as it was called, became
the hub of brokerage activities. Earlier stock brokers were largely unorganized,
but later most of them joined hands to form institutes and organizations.
Till the 1980's stock broking services were used only by the wealthy class
who could afford them. Later with the advent of the Internet, stock broking
became very easy. Thus, the price tag on stock brokers lowered considerably
and their services became available even to the common man. Stock broking
firms have also been allowed to be market makers as long as the appropriate
Chinese walls are put in place. With the advent of automated stock broking
systems on the Internet the client often has no personal contact with his/her stock
broking firm. The stockbroker's system performs all the stock broking functions: it
obtains the best price from the market and executes and settles the trade. Today,
most of the once well-known corporate brand names including mid-sized firms

such as Smith Barney have been swallowed up by global financial

conglomerates. Discount brokers (such as E-Trade, Scottrade, and Ameritrade)
have taken a large share of the business by offering highly discounted
commissions, but the companies do not offer investment advice in return all they
do is execute orders.
2.3 Growth, Development & Present status of the industry:
Stage 1 Beginning:
During the 11th century, the French began regulating and trading
agricultural debts on behalf of the banking community, creating the first
brokerage system. In the 1300s, houses began to be set up in major cities like
Flanders and Amsterdam in which commodity traders would hold meetings.
Soon, Venetian brokers began to trade in government securities, expanding the
importance of the firms. In 1602, the Dutch East India Company became the first
publicly traded company in which shareholders could own a portion of the
business. The stocks improved the size of companies and became the standard
bearer for the modern financial system.
Stage 2 Significance
The earliest brokerage firms were established in London coffee houses,

enabling individuals to purchase stocks from a variety of organizations. They
formally founded the London Stock Exchange in 1801 and created regulations
and memberships. The system was copied by brokerage firms across the world,
most notably on Chestnut Street in Philadelphia, which was the center of
American finance during the first forty years of the new United States. Soon, the
US exchange was moved to New York City and for more than one hundred and
fifty years Wall Street has been synonymous with the stock brokerage business.
Various firms like Morgan Stanley and Merrill Lynch were created to assist in the
brokering of stocks and securities. The firms limited themselves to researching
and trading stocks for investment groups and individuals.
Stage 3: Considerations

During the 1900s, stock brokerage firms began to move in a direction of

market makers. They adopted the policy of quoting both the buying and selling
price of a security. This allows a firm to make a profit from establishing the
immediate sale and purchase price to an investor. The conflict with brokerage
firms setting prices creates the concern that insider trading can result from the
sharing of information. Regulators have enforced a system called Chinese Walls
to prevent communication between different departments within the brokerage
company. Since the 1980s stock-broking firms have also been allowed to be
market makers as long as the appropriate Chinese walls are put in place. This
has resulted in increased profits and greater interconnection within the financial
industry.
In the 1980s and 1990s, deposit growth slowed as more people invested
in equity shares and mutual funds. Rather than allowing depositors to withdraw
their funds and invest them elsewhere, however, many banks (through the non-
bank affiliates of their bank holding companies) began aggressively offering
brokerage services. In this way, banks were able to generate non-interest fee
income to help offset some of the increased interest costs of relying on borrowed
funds o finance their growth. Until the 1980s, commercial banks didn’t emphasize
their brokerage powers or solicit business, except to serve a few large accounts
in their trust departments. Beginning in the 1980s, commercial banks began to
offer trading services to retail customers. Some banks started their own
brokerage operations from scratch and others entered onto joint-venture
arrangements, whereby the bank purchases broker services from an established
securies firm and markets the services under the name of the bank. To date,
more than 2000 banks are providing active brokerage services to their
customers.
Stage 4: Effects
The creation of high valued brokerage firms like Goldman Sachs and Bear
Sterns created a system of consolidation. Working with hundreds of billions of
dollars, the larger firms began to merge and take over smaller firms in the last
half of the 20th century. Firms like Smith Barney were acquired by Citigroup and

other investment banks, creating massive financial institutions that valued, held,
sold, insured and invested in securities. This conglomeration of the financial
sector created an environment of volatility that caused a chain reaction when
other firms like Bear Sterns and Lehman Brothers filed for bankruptcy. Trillions of
dollars of assets were tied together in different companies and resulted in a large
economic collapse in late 2008.
Stage 5: Features
A large share of the brokerage firms has moved to an online format.

Smaller brokers such as E*Trade, TD Ameritrade and Charles Schwab have
taken control of most individual investors accounts. With the advent of automated
stock-broking systems on the Internet, the client often has no personal contact
with his/her stock-broking firm. The stockbroker's system performs all the stock-
broking functions: it obtains the best price from the market and executes and
settles the trade. Settlement (of securities) is the process whereby securities or
interests in securities are delivered, usually against payment, to fulfill contractual
obligations, such as those arising under securities trades. The added
convenience and personal attention paid to the small investor has resulted in a
large influx of activity. In addition the fact that the online resources offer up to the
minute pricing and immediate trades makes their format appealing to the modern
user as SEC deregulated the brokerage industry and made negotiated
commissions available to individual investors around May 1975, a new type if
brokerage firms has emerged – the so called discount broker. They offer fewer
brokerage services and pass the savings on to the investors. Specially, most
discount brokerage firms do not have a highly paid research staff producing
research reports or account executives soliciting business based on the firm’s
current recommendations to buy and sell. Instead, they hire telephone clerks to
take customers’ orders. These clerks do not sell, do not offer any investment
advice, and work for modest salaries. These and other savings are passed along
to the investor in the form of low commissions. Discount brokers, like TD
Ameritrade, PTI Securities & Futures and E-Trade, also provide advanced trading
systems, which is why they appeal most to frequent and active traders. Beginner

investors may turn away from discounted brokers because of the advanced
systems and terms, and instead go to traditional brokers.
2.4 Leading competitors in the industry:

 Reliance Money
 Kotak Securities
 ICICIDirect
 5Paisa.com
 Advani Share Brokers
 Gandhi Securities
 Invest smart India
 Moneypore
 Stock Holding Corporation of India
 StockMarkit.com
 ICICIDirect

3.1 McKinsey 7-S framework:
According to waterman organizational change is not simply a matter of

structure, although structure is a significant variable in the management of
change .Again it is not a simple relationship between strategy and structure,
although strategy is a critical aspect. In their view effective organizational change
may be understood to be a complex relationship between strategy, structure,
systems, style, skills, staff and subordinate goals.
Source: McKinsey 7-S framework

The framework suggests that there is a multiplicity of factors that influence the
organizations ability to change and its proper mode of change. Because of in
connectedness of the variables it would be difficult to make significant progress in
one area without making progress in the others as well.
3.2 Super-ordinate goals:
In 7s framework there is one variable termed as “super ordinate goals”

refer to a set of values and aspirations that goes beyond the conventional format
statement of corporate objectives, super ordinate goals are the fundamental
ideas around which a business is built. They are its main values. They are the
broad nations of future direction.
Super ordinate goals are:
 To open up franchisee (branches) all over India.
 To strive for excellence in management and other long range activities to

ensure leadership.
 To reach the greatest heights in their fields.
 Rendering activity more transparent and providing better services which

can inspire investor’s confidence in mutual funds.
3.3 Strategy:
The strategy in 7s framework includes purposes, mission, objectives,

goals and major action plans and policies of the company. A company of Karvy’s
stature cannot afford to work without objectives. An overall group objective is
already set and all the employees are driven towards Karvy’s believes that ‘no
individual is big as the organizational itself.’ Competition is the key to survival and
for giving diversification for the given product as such competition is always good.
Karvy updates itself to the surroundings competition and bring out changes are
services and related products to be in competition. In the distribution business
KARVY enjoys 40% market, which is healthy from the industry standard. Survival
of the company as well as the growth of the company over the past 22years, has

been effectively overcoming competition. After diversifying into various services

providing activities it has become KARVY’S prerogative to be leader in the
business. KARVY has a network of 150 branches across the country and over
2500 employees. Today KARVY is providing services to over 100000 customers
all over the country with a leadership position in over all distribution business.
The following are the some of the strategies adopted by the organization:
PRICE: KARVY caters to marketing service products and there is no pricing

involved. I depository participant and registry department KARVY has maintained
a very competitive pricing structure in the line with contemporary markets.
PRODUCT DIFFERENTIATION: KARVY caters to various financial products like

DP, Registry, Stock Broking, Insurance and Mutual funds products. Each product
is headed by a skilled manager and also made as a separate profit center.
MARKETING STRATERGY: Being sales oriented organization regular sales

promotion events are conducted with various principles agencies and time to time
advertising releases are done depending upon the requirements. KARVY relies
mostly on word of mouth publicity than advertising which is worked wonders from
them.
3.4 Organization structure:
In Karvy, for the purpose of smooth flow of its function it is divided into four
sections:
1. Stock broking services
2. Depository participation section
3. Tin section
4. Mutual fund section

Branch Manager
Stock broking Depository Tax Information Mutual

participation Network Funds
Dealing Back Office Front Office Marketing Executive
Source: Organization structure at KSBL in Davangere
In stock broking section, back office, the accounting and other manual
work take place and in dealing buying and selling of shares and debenture
activities takes place in this section is supervised and headed by manager
Depository participant acts as an agent of the depository and interacts with

investor. He is responsible for maintaining investor’s securities account and the
manager supervises operating that account under investors written instructions
and Depository participant tax information network section provides tax advisory
services .it includes providing post budget strategies for effective tax planning,
salary structuring, recommending attractive tax planning investment option. This
section is guided and supervised by branch manager
In front office online trading activities takes place and this is headed by
mutual fund section. This mutual fund section provides advisory services for
investors it includes investment advice for new investors, focus on mutual fund
portfolio, advice on the existing holdings and analysis of funds And one marketing
executive who undertakes mutual fund activities is guided by mutual fund section
and to turn branch manager supervisor this section.
3.5 FUNCTIONS OF DEPARTMENTS:

1. DEPOSITORY PARTICIPANT SERVISES
FRONT OFFICE: In front office the following services are done.
 Account opening.
 Holding enquiries.
 Transfer of physical shares to Demat form.
 Transfer of Demat shares to physical form.
 Transformations of shares from Demat to trading account etc.
BACK OFFICE:
 Maintenance of all Demat account with KSBL.

 Giving intimation related to the due of AMC’s to their account holders.
 Sends quarterly information to the holders related to the holdings.
MARKETING:
In this department where the Demat account is marketed, marketing

executives are Seeks for prospective customers; they help in opening of an
account and also these executives collects AMCs and provide other door to door
services
2. RIS This is emerging department of KSBL
BACK OFFICE:
Here all the records of investors are to be maintained and kept

confidentially and identifies the customer’s requirements and the department
members tries to full their Needs.
1. TIN. Tax information network services, this is recently introduced by the RIS
Department in this service, KSBL tries to give the services regarding taxation like
2. PAN opening
3. TDS return (filling) quarterl, yearly

4. MAPIN openings Etc.
ADVISORY SERVICES
This is the main function done by the ris department kcl gives every
financial advisory services to investors for ex: portfolio management, equity tips,
tax planning etc.
3. MUTUAL FUNDS
MARKETING: KSBL has mainly under taken the distribution of financial

products at commission basis; part of this mutual fund marketing is also one of
the functions. In these function executives sells the almost all the AMCs schemes
Executives, market the mutual fund schemes by
1 direct selling
2. Telemarketing
REGISTER SERVICES:
KSBL also gives register service to AMC in this service it provide the
following benefits to AMC: such as INGVYSAY, SBI, UTI, ICICI, BIRLA, Etc.
1. KSBL maintains the transaction of schemes of AMC
2. KSBL markets the NFO schemes
3. It maintains the resumption and repurchase of the schemes
4. It maintains all the paper work of AMC
5. It gives the information related to AMC shames (like NAV, DATES etc) to
schemes existing investors
4 INSURANCE

MARKETING: as already stated KSBL also markets all companies’ life

insurances products Such as ICICI, BIRLA SUNLIFE, TATA AIG, LIC etc.
executives market the insurance products by
1. Direct marketing
2. Tele marketing
BACK OFFICE: in this department it maintains the necessary records of the

clients insurance which are taken by the KSBL
5. ACCOUNTS
1. Maintaining the purchases stores department
2. Internal auditing
3. Payments and receipts
6. HR & ADMINISTRATION
PAY ROLL MAINTAINANCE: maintenance of employee details like salary

incentives, bonus, and performance records etc
RECRUITMENT DEPARTMENT: this department helps in assessing the needs

of Labour force and recruiting the needs of Labour and giving the orientation
programmed to new employees
HUMAN RESOURCES DEPORTMENT:
1. Maintain good relationship with the employees
2. Identifying the de-motivate employees and providing the necessary motivation
3. Accepting problems of the workers and helps in solving them.
3.6 Systems:
Systems in 7s framework refer to rules, regulations and procedures, both

formal and informal that complement the organization structure. Karvy has

received ISO9002 certification .So the employees are following the rules,
regulations, and procedures of the international standardization for organization
(ISO). And with this company has its own corporate culture and every employee
has to follow it.
The organization follows strict rules and regulations for the employee. It
follows specific entry and exit timing for its employees. Each employee has to
follow a specific dress code depending on his line or work or duty. All junior staff
member will have to report to the designated senior staff member daily
attendance register to the human resource department. This is duly processed at
the end of each month. The company has its regional office in Bangalore, which
is headed by a regional manager. All branch heads and various dept heads will
report to him on regular basis. Finance operations are centralized at the head
office level and excess funds are regularly transferred to the head office account.
Periodic fund requirement at the regional level will be sent as and when required.
But the local regional manager would sign all cheques and such instruments.
Requirement of fresher’s incumbents are made at local office at the

regional level depending upon the manpower requirement. The respective
departmental heads holds the HR would dispatch interviews and the appointment
from the head office. Usually the employee will be on one-year probation and
after successful completion he will be made permanent employee. Operation of
company is monitored by the chairman of the company and various others senior
managers, operations at the junior level is largely centralized with division heads
making key decisions. The company is ISO certified and follows strict register of
quality maintenance with high standards of process and systems.
3.7 Style:
Style is one of the seven levers. Which top managers can use to bring
about organizational change each organization differs from others in their styles
of working reporting relationships will convey the style of organization. Top
management follows formal relationship with their subordinates and participative
leadership is followed. The chairman who sits at the head office in Hyderabad

heads the organization. At all over the branches across the country Regional
Manager has been appointed. The chairman will take decision related to the
group as such. All other decisions related to the relevant to the region and
regional heads will take their line of work. Managers are responsible and
accountable for their decisions and subsequent implementations. By and large
decision making are decentralized for day to day affair.
3.8 Staff:
In the McKinsey 7s framework, the term “staff” has a specific connotation.

According to Waterman and his colleagues the term: staff: refers to the way,
organizations introduce young recruitments into the main stream of their services
and in the manner in which they manage their careers as the new entrants
develop into future managers. Each incumbent should have a specific academic
qualification to match the position he is going to hold and also necessary skills to
execute the assignment. Marketing/sales people should posses at least a degree
and a management degree is preferred and should necessary posses good
communication skill and flair for sales .he should have a two wheeler for
communicating purpose. All back end employees should have atleas graduation
with exposure to necessary skills. For fresher due training will be given and then
will be put on the jobs. Their potentials will be monitored on a regular basis and
will be suitable guidance from time to time. Annual increments are also given
based on the performance predominant.
3.9 Skills:
Waterman considers “skills” as one of the most critical attributes or

capabilities of an organization. The term skills include those characters, which
most people uses to describe a company.
A manager is viewed as a skilled person who has the ability to manage

people and resources and at times finance also. He will be responsible to identify
for the right job and get the work done effectively. Min wastages and maximum
utilization of available resources is the key organizational behavior and culture is
thought to the fellow employees and potential employees are suitable nurtured.

4.1 PRODUCT PROFILE
Introduction
KARVY is a premier integrated financial services provider, and ranked

among the top five in the country in all its business segments, services over 20
million individual investors in various capacities, and provides investor services to
over 300 Corporate, comprising the who's who of Corporate India. KARVY covers
the entire spectrum of financial services such as Stock broking, Depository
Participants, Distribution of financial products like mutual funds, bonds, fixed
deposit, Merchant Banking & Corporate Finance, Insurance Broking,
Commodities Broking, Realty Services, Personal Finance Advisory Services,

placement of equity, IPOs, among others. Karvy has a professional management

team and ranks among the best in technology, operations, and more importantly,
in research of various industrial segments.
4.2 KARVY SERVICES
1. Stock broking
2. Demat services
3. Investment product distribution
4. Investment advisory services
5. Corporate finance & Merchant banking
6. Insurance
7. Mutual fund services
8. IT enabled services
9. Registrars & Transfer agents
10. Loans
11. Tin
1. Stock Broking:
KARVY is working as Capital Market Intermediaries. Stockbrokers are

regulated by SEBI [Stock-brokers and Sub-brokers] Regulations, 1992. The
stockbroker is a member of the stock exchange. Stockbrokers are the
intermediaries who are allowed to trade in securities on the exchange of which
they are members. They buy and sell on their own behalf as well as on behalf of
their clients.
Stockbrokers expand their business by engaging sub-broker. Sub-brokers mean

“any person not being a member of a stock exchange who acts on behalf of a
stock broker as an agent or otherwise for assisting the investors in buying, selling
or dealing in securities through such stock-brokers.”
2. Demat Services:

Karvy is a depository participant with the National Securities Depository

Limited (NSDL) for trading and settlement of dematerialized shares.
Depository Participants (DPs) are described as an agent of the depository. They

are intermediaries between the depository and the investors. The relationship
between the DPs and the depository is governed by an agreement made
between the two under Depositories Act. A DP can offer depository-related
services only after obtaining a certificate of registration from SEBI.
Since Karvy is also in the broking business, investors who use Karvy’s depository
services get a dual benefit. They can use Karvy’s brokerage services to execute
transactions and Karvy’s depository services to settle them.
3. Investment Products Distribution:
Company is also concern with the distribution of investment products like:
(A) Fixed Deposit
(B) Bonds
(c) IPO
(A) Fixed Deposit:
KARVY is dealer of 34 fixed deposits of various types which includes fixed

deposits of Public Sector, Non Banking Finance Companies, Housing Finance
Companies and Manufacturing Companies.
(B) Bonds:
Karvy is dealer of following bonds
RBI Saving Bonds
NHB
REC

(C) IPO:
Company is also provides services related to Initial Public Offer of

company. Company provides stationary at the time of IPO as well as provides
information to investors regarding IPO and solves their queries.
4. Investment Advisory Services:
This division provides portfolio management services to high net-worth

individuals and corporate. The expertise of Karvy in research and stock broking
gives it the right perspective to provide investment advisory services. Company
provides advisory services to its clients. Financial goal of each individual investor
varies according to his dream, ambition and family size and future financial
planning for the children & old age pension for self and wife so does the pathway
to achieve it. Karvy apply the principles of Financial Planning as both science &
art, it understands the time horizon, risk bearing capacity and investment goals of
investors keeping in mind their psyche and financial needs. Based upon this
Karvy it helps individual investors to plan their entire life up to retirement, Taxes,
Insurance needs and other important personal financial goals. It designs portfolio
for investor to invest their saving in various financial products like shares, bonds,
debentures, mutual funds, fixed deposits, insurance etc., Company design
portfolio by considering following factors.
Investor’s requirement of getting money back,
Investor’s willingness to take risk,
Investor’s tax planning etc.
5. Corporate finance & Merchant banking:
Corporate finance is the financial activity of corporation. It deals with the

firm's operations with regard to investing and financing. It concerned with how
firms raise capital and the consequences of alternative methods of raising
capital. Firm’s capital can be raised by raising loans, issuing shares, and
acquiring or merging with other businesses by public or private companies.

Merchant banking is a financial intermediation that matches entities that need

capital and those that have capital. Hence they facilitate the flow of capital in the
market.
Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy
offers the full spectrum of Merchant Banking Services, beginning from identifying
the best time for an issue to final stage of marketing it, to harvest unparalleled
success.
As a merchant banker Karvy offer following services:
Issue management
Instrument designing
Pricing of the issue
Registration process for the issue of shares
Marketing efforts
Final allotment to investors
Listing details on stock exchanges
Loan syndication
Lease financing
Corporate advisory services
Underwriting
Portfolio management
6. Insurance:
Karvy is also dealer of many private life insurance companies. At

Jamnagar branch, company is associated with dealing of following companies.
 ICICI Prudential Life Insurance

 HDFC Life Insurance
 TATA AIG Life Insurance
1. Mutual Fund Services:
Since its inception in 1982, Karvy has demonstrated a dedication coupled

with dynamism that has inspired trust from various segments – corporate,
government bodies and individuals. Karvy has since been performing a pivotal
role as the intermediary – the interface – between these players. With Mutual
Funds emerging as a distinct asset class, Karvy has made a strategic choice to
leverage the power of latest technology to provide a cutting edge to its services.
Karvy today, service nearly 80% of the asset management companies (AMCs)
across an extensive network of service centers with assets under service in
excess of Rs.10, 000 crores.
Karvy's ability to mass customize and offer a diverse range of products for
a diverse range of customers has helped mutual fund companies to uniquely
position themselves in the market place. These diverse range of services cut
across multiple delivery channels – service centers, web, mobile phones, call
center – has brought home the benefits of technology to investors, distributors,
and the mutual funds. Going forward, Karvy shall strive to create new products
and services, which would address the needs of the end customer. Company’s
single minded focus in delivering products for customers has given it the
distinguished position of being the preferred provider of financial services in the
country.
8. Income Tax enabled services:
Karvy has been started this service since March, 2004. Karvy is work as TIN
Facilitation Centre it provides following IT enabled services.
 Distribution of PAN Card.
 Distribution of TAN Card.
 Services related to e-TDS.

Karvy work as an intermediary between NSDL and IT payers. Karvy provides

various form for different IT enabled services and guide people to fill that forms. It
also solves queries of the tax payers. It also distributes PAN and TAN card to the
tax payers.
9. Registrars & Transfer agents:
In 1985, Karvy entered the Registrar and Share Transfer Business to create

a market niche in the competitive field of financial services. In 1994-95, it reached
a milestone when it processed 104 Public Issues constituting 46 per cent market
share. Now in its second decade of existence, Karvy is the leader in the industry:
In an opinion poll conducted by an independent market research agency -
MARG, Karvy has been rated as India’s Most Admired Registrar on various
parameters: -
Overall Excellence.
Handling of Volumes
Timely Dispatch
Quality Management and Technological Up gradation.
A SEBI Category 1 Registrar, So far, Karvy has handled over 675 ISSUES as

Registrars to public issues processed over 52 million applications and is servicing
over 16 million investors from various locations spread over 205 clients.
10. Loan:
Karvy has recently started this service at selected branches of metro cities.
This service has not been started in Saurashtra-Kucch region. Karvy provides
loans for following.
Vehicle Loan
Home Loan
Personal Loan

11. TIN
National Securities Depository Ltd. (NSDL) has established a nationwide

Tax Information Network (TIN) on behalf of the Income Tax Department (ITD).
This is designed to make the tax administration more effective, furnishing of
returns convenient, reduce compliance cost and bring greater transparency.
While NSDL will be the primary agency responsible for the design,
implementation and maintenance of TIN as per the requirements of ITD, other
agencies will also play key roles in the TIN system.
Karvy has established infrastructure required to provide IT enabled

services so, Karvy provides TIN facilitation centers all over India on behalf of
NSDL. Besides Karvy following companies can also work as intermediary
between NSDL and customers.
Alankit Assignments Ltd.
Integrated Enterprise (I) Ltd.
Shell Tran source Ltd.
Source: Tax Information Network
The banking system, being the agency that collects the money on behalf
of the ITD against tax obligations from the tax payers will be linked to the TIN
central system to provide accounting information on tax paid by various entities

under various heads. As banks are relatively technology-enabled entities, they

will directly be linked electronically to the TIN central system enabling online tax
accounting.
5.1 SWOT ANALYSIS OF KARVY:

Strengths:
 Employees are highly empowered.
 Strong Communication Network.
 Good co-operation between employees.
 Number 1 Registrar and Transfer agent in India.
 Number 1 dealer of Investment Products in India.
Weaknesses:
 High Employee Turnover.
Opportunity:
 Growth rate of mutual fund industry is 40 to 50% during last year and it
expected that this rate will be maintained in future also.
 Marketing at rural and semi-urban areas.
Threats:
 Increasing number of local players.
 Past image of Mutual Fund.

6.1 LEARNING EXPERIENCE:
It was a great experience at Karvy Stock Broking Limited., where I got an

opportunity to learn the functions of the company in accordance with the present
trends. The interaction with the company gave me an insight and very good
experience of the company’s scenario in the competitive environment. It gave an
opportunity to study the human behavior and also made to face different
situations, which normally would come across while on work in office
environment.
The project gave me an insight on the practicality of some of the academic

knowledge gained during the first three semesters of the MBA course.
1. Understand the various functional departments in the organization and the

workflow.
2. It gave a practical knowledge about how the labour force is managed.
3. It gave an exposure to the various day to day problems faced by the

managers of various departments and the way they tackle the complaints and
the problems of the customer.
Practical Exposure:
Practical study of the organization regarding planning, organizing, staffing,

co-coordinating and controlling of all the departments helped me to improve my
decision making skills.
Company Exposure:
The study gave an exposure to the real life situation in the company, future
growth possibilities and its contribution to the economy.
Presentation Skills:
The study helped in improving my presentation skills, as I need to talk to

different people in the organization.

Research:
I got an excellent opportunity to meet the clients of KSBL Davangere

districts. I also have learnt on how to conduct research, research process, data
collection, data analysis and preparation of a research report.

7.1 Methodology of research
Research design
It is framework that plans the action for the research project. It is a master
plan contain everything how to start and how to finish effectively. It is frame work
for action. It specifies pattern of framework for controlling the collection of dada
accurately and economically and specifies methods and procedures. It is the glue
that holds all of the elements in a research project together. We often describe a
design using a concise notation that enables us to summarize a complex design
structure efficiently.
Research methods
The goal of the research process is to produce new knowledge, which

takes three main forms.
 Exploratory research
 Descriptive research
 Causal / Experimental research
Descriptive research
Descriptive research is also called statistical research. The main goal of

this type of research is to describe the data and characteristics about what is
being studied. The idea behind this type of research is to study frequencies,
averages, and other statistical calculations. Although this research is highly
accurate, it does not gather the causes behind a situation. Descriptive research
is mainly done when a researcher wants to gain a better understanding of a topic
for example, a frozen ready meals company learns that there is a growing
demand for fresh ready meals but doesn’t know much about the area of fresh
food and so has to carry out research in order to gain a better understanding. It is
quantitative and uses surveys and panels and also the use of probability
sampling. This type of research is also a grouping that includes many particular

research methodologies and procedures, such as observations, surveys, self-

reports, and tests. The four parameters of research will help us understand how
descriptive research in general is similar to, and different from, other types of
research.
Since the purpose is to gather information regarding specific questions the

research must be designed to ensure accuracy of the findings. Exploratory
research often makes use of survey research design which consists of a cross
sectional research design, i.e. collection data on a few factors from of a number
of cases at one point of time. The information was gathered from the
questionnaires that were filled by the investors in Davangere.
7.2 Need of the study:

To know the current opinion of investors regarding financial advisers for
Mutual funds.
7.3 Objective of the study:

 The main objective of this project is to collect the opinion of people
regarding mutual funds.
 Objective is to know the opinion of the investors about the services of
financial advisors.
 I have tried to explore the general opinion about mutual funds. It also
covers why/ why not investors are availing the services of financial
advisors.
 Objective is to know from where the investors purchase mutual funds.
 To know the most suitable stage to invest in mutual funds
7.4 Scope of the study:

The research was carried on in Davangere, have visited people randomly
nearby locality, small brokers etc.
7.5 Operational definitions and concepts:
It’s all about mutual funds

Mutual funds: A mutual fund is a professionally-managed firm of collective

investments that pools money from many investors and invests it in stocks,
bonds, short-term money market instruments, and/or other securities. In other
words we can say that A Mutual Fund is a trust registered with the Securities and
Exchange Board of India (SEBI), which pools up the money from individual /
corporate investors and invests the same on behalf of the investors /unit holders,
in equity shares, Government securities, Bonds, Call money markets etc., and
distributes the profits.
The value of each unit of the mutual fund, known as the net asset value
(NAV), is mostly calculated daily based on the total value of the fund divided by
the number of shares currently issued and outstanding. The value of all the
securities in the portfolio in calculated daily. From this, all expenses are deducted
and the resultant value divided by the number of units in the fund is the fund’s
NAV.
NAV = Total value of the fund……………….

No. of shares currently issued and outstanding
1. Advantages of mutual funds
 Professional management and research to select quality securities.

 Spreading risk over a larger quantity of stock whereas the investor has
limited to buy only a hand full of stocks. The investor is not putting all his
eggs in one basket.
 Ability to add funds at set amounts and smaller quantities such as $100
per month.
 Ability to take advantage of the stock market which has generally
outperformed other investment in the long run.
 Fund manager are able to buy securities in large quantities thus reducing
brokerage fees.
2. Disadvantages of mutual funds

 The investor must rely on the integrity of the professional fund manager.
 Fund management fees may be unreasonable for the services rendered.
 The fund manager may not pass transaction savings to the investor.
 The fund manager is not liable for poor judgment when the investor's fund
loses value.
 There may be too many transactions in the fund resulting in higher
fee/cost to the investor - This is sometimes call "Churn and Earn".
 Prospectus and Annual report are hard to understand.
 Investor may feel a loss of control of his investment dollars.
 There may be restrictions on when and how an investor sells/redeems his
mutual fund shares.
3. History of the Indian mutual fund industry:
The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank. The
history of mutual funds in India can be broadly divided into four distinct phases.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament

by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched
by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of
assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec

87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.At the end of 1993, the mutual fund industry had assets under
management of Rs.47, 004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805
crores.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs.29, 835 crores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations
consolidation and growth. As at the end of September, 2004, there were 29
funds, which manage assets of Rs.153108 crores under 421 schemes.
4. Types of mutual funds
Most funds have a particular strategy they focus on when investing. For
instance, some invest only in Blue Chip companies that are more established and

are relatively low risk. On the other hand, some focus on high-risk start up
companies that have the potential for double and triple digit growth. Finding a
mutual fund that fits your investment criteria and style is important.
Categories of mutual funds:
Source: Types of mutual funds
Mutual funds can be classified as follows:
 Based on their structure:
 Open-ended funds: Investors can buy and sell the units from the fund, at
any point of time.

 Close-ended funds: These funds raise money from investors only once.
Therefore, after the offer period, fresh investments cannot be made into
the fund. If the fund is listed on a stocks exchange the units can be traded
like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the
New Fund Offers of close-ended funds provided liquidity window on a
periodic basis such as monthly or weekly. Redemption of units can be
made during specified intervals. Therefore, such funds have relatively low
liquidity.
 Based on their investment objective:
 Equity funds: These funds invest in equities and equity related instruments.
With fluctuating share prices, such funds show volatile performance, even
losses. However, short term fluctuations in the market, generally smoothens out
in the long term, thereby offering higher returns at relatively lower volatility. At
the same time, such funds can yield great capital appreciation as, historically,
equities have outperformed all asset classes in the long term. Hence,
investment in equity funds should be considered for a period of at least 3-5
years. It can be further classified as:
 Index funds- In this case a key stock market index, like BSE Sensex or
Nifty is tracked. Their portfolio mirrors the benchmark index both in terms
of composition and individual stock weight age.
 Equity diversified funds- 100% of the capital is invested in equities
spreading across different sectors and stocks.
 Dividend yield funds- it is similar to the equity diversified funds except
that they invest in companies offering high dividend yields.
 Thematic funds- Invest 100% of the assets in sectors which are related
through some theme. e.g. -An infrastructure fund invests in power,
construction, cements sectors etc.
 Sector funds- Invest 100% of the capital in a specific sector. e.g. - A
banking sector fund will invest in banking stocks.

 ELSS- Equity Linked Saving Scheme provides tax benefit to the

investors.
 Balanced fund: Their investment portfolio includes both debt and equity. As
a result, on the risk-return ladder, they fall between equity and debt funds.
Balanced funds are the ideal mutual funds vehicle for investors who prefer
spreading their risk across various instruments. Following are balanced
funds classes:
 Debt-oriented funds -Investment below 65% in equities.
 Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
 Debt fund: They invest only in debt instruments, and are a good option for
investors averse to idea of taking risk associated with equities. Therefore,
they invest exclusively in fixed-income instruments like bonds, debentures,
Government of India securities; and money market instruments such as
certificates of deposit (CD), commercial paper (CP) and call money. Put
your money into any of these debt funds depending on your investment
horizon and needs.
 Liquid funds- These funds invest 100% in money market instruments, a
large portion being invested in call money market.
 Gilt funds ST- They invest 100% of their portfolio in government
securities of and T-bills.
 Floating rate funds - Invest in short-term debt papers. Floaters invest in
debt instruments which have variable coupon rate.
 Arbitrage fund- They generate income through arbitrage opportunities
due to miss-pricing between cash market and derivatives market. Funds
are allocated to equities, derivatives and money markets. Higher
proportion (around 75%) is put in money markets, in the absence of
arbitrage opportunities.
 Gilt funds LT- They invest 100% of their portfolio in long-term
government securities.

 Income funds LT- Typically such funds invest a major portion of the
portfolio in long-term debt papers.
 MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and
an exposure of 10%-30% to equities.
 FMPs- fixed monthly plans invest in debt papers whose maturity is in line
with that of the fund.
5. Investment strategies:
1. Systematic Investment Plan: under this a fixed sum is invested each month
on a fixed date of a month. Payment is made through post dated cheques or
direct debit facilities. The investor gets fewer units when the NAV is high and
more units when the NAV is low. This is called as the benefit of Rupee Cost
Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund
and give instructions to transfer a fixed sum, at a fixed interval, to an equity
scheme of the same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual

fund then he can withdraw a fixed amount each month.
6. Risk v/s. return:

7. Working of a Mutual fund:
The entire mutual fund industry operates in a very organized way. The
investors, known as unit holders, handover their savings to the AMCs under
various schemes. The objective of the investment should match with the objective
of the fund to best suit the investors’ needs. The AMCs further invest the funds
into various securities according to the investment objective. The return

generated from the investments is passed on to the investors or reinvested as

mentioned in the offer document.
8. Regulatory Authorities:
To protect the interest of the investors, SEBI formulates policies and

regulates the mutual funds. It notified regulations in 1993 (fully revised in 1996)
and issues guidelines from time to time. SEBI approved Asset Management
Company (AMC) manages the funds by making investments in various types of
securities. Custodian, registered with SEBI, holds the securities of various
schemes of the fund in its custody. According to SEBI Regulations, two thirds of
the directors of Trustee Company or board of trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units
of mutual funds that the mutual funds function within the strict regulatory
framework. Its objective is to increase public awareness of the mutual fund
industry. AMFI also is engaged in upgrading professional standards and in
promoting best industry practices in diverse areas such as valuation, disclosure,
transparency etc.
Documents required (PAN mandatory):

Proof of identity:
1. Photo PAN Card.
2. In case of non-photo PAN card in addition to copy of PAN card any one of the
following: driving license/passport copy/ voter id/ bank photo pass book.
Proof of address (any of the following): latest telephone bill, latest electricity bill,
Passport, latest bank passbook/bank account statement, latest Demat account
statement, voter id, driving license, ration card, rent agreement.
Offer document:
An offer document is issued when the AMCs make New Fund Offer (NFO).
It’s advisable to every investor to ask for the offer document and read it before
investing. An offer document consists of the following:

Standard Offer Document for Mutual Funds (SEBI Format)

o Summary Information
o Glossary of Defined Terms
o Risk Disclosures
o Legal and Regulatory Compliance
o Expenses
o Condensed Financial Information of Schemes
o Constitution of the Mutual Fund
o Investment Objectives and Policies
o Management of the Fund
o Offer Related Information.
Key Information Memorandum:

A key information memorandum, popularly known as KIM, is attached
along with the mutual fund form. And thus every investor gets to read it.
Its contents are:
1. Name of the fund.
2. Investment objective
3. Asset allocation pattern of the scheme.
4. Risk profile of the scheme
5. Plans & options
6. Minimum application amount/ no. of units
7. Benchmark index
8. Dividend policy
9. Name of the fund manager(s)
10. Expenses of the scheme: load structure, recurring expenses
11. Performance of the scheme (scheme return v/s. benchmark return)
12. year- wise return for the last 5 financial years.
Distribution channels:

Mutual funds posses a very strong distribution channel so that the ultimate
customers doesn’t face any difficulty in the final procurement. The various parties
involved in distribution of mutual funds are:
 Direct marketing by the AMCs: the forms could be obtained from the
AMCs directly. The investors can approach to the AMCs for the forms.
some of the top AMCs of India are; Reliance ,Birla Sunlife, Tata, SBI
magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mira Assets, Canara
Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include:
Standard Chartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP
Merrill Lynch, etc.
 Broker/ sub broker arrangements: the AMCs can simultaneously go for
broker/sub-broker to popularize their funds. AMCs can enjoy the
advantage of large network of these brokers and sub brokers.eg: KARVY
being the top financial intermediary of India has the greatest network. So
the AMCs dealing through KARVY has access to most of the investors.
 Individual agents, Banks, NBFC: investors can procure the funds through
individual agents, independent brokers, banks and several non- banking
financial corporations too, whichever he finds convenient for him.
9. How do investors choose between funds?
When the market is flooded with mutual funds, it’s a very tough job for the
investors to choose the best fund for them. Whenever an investor thinks of
investing in mutual funds, he must look at the investment objective of the fund.
Then the investors sort out the funds whose investment objective matches with
that of the investor’s. Now the tough task for investors start, they may carry on
the further process themselves or can go for advisors like KARVY. Of course the
investors can save their money by going the direct route i.e. through the AMCs
directly but it will only save 1-2.25% (entry load) but could cost the investors in
terms of returns if the investor is not an expert. So it is always advisable to go for
MF advisors. The mf advisors’ thoughts go beyond just investment objectives and
rate of return. Some of the basic tools which an investor may ignore but an mf
advisor will always look for are as follow:

1. Rupee cost averaging:
The investors going for Systematic Investment Plans (SIP) and Systematic
Transfer Plans (STP) may enjoy the benefits of RCA (Rupee Cost Averaging).
Rupee cost averaging allows an investor to bring down the average cost of
buying a scheme by making a fixed investment periodically, like Rs 5,000 a
month and nowadays even as low as Rs. 500 or Rs. 100. In this case, the
investor is always at a profit, even if the market falls. In case if the NAV of fund
falls, the investors can get more number of units and vice-versa. This results in
the average cost per unit for the investor being lower than the average price per
unit over time.
The investor needs to decide on the investment amount and the frequency. More
frequent the investment interval, greater the chances of benefiting from lower
prices. Investors can also benefit by increasing the SIP amount during market
downturns, which will result in reducing the average cost and enhancing returns.
Whereas STP allows investors who have lump sums to park the funds in a low-
risk fund like liquid funds and make periodic transfers to another fund to take
advantage of rupee cost averaging.
2. Rebalancing:
Rebalancing involves booking profit in the fund class that has gone up and
investing in the asset class that is down. Trigger and switching are tools that can
be used to rebalance a portfolio. Trigger facilities allow automatic redemption or
switch if a specified event occurs. The trigger could be the value of the
investment, the net asset value of the scheme, level of capital appreciation, level
of the market indices or even a date. The funds redeemed can be switched to
other specified schemes within the same fund house. Some fund houses allow
such switches without charging an entry load.
To use the trigger and switch facility, the investor needs to specify the event, the
amount or the number of units to be redeemed and the scheme into which the
switch has to be made. This ensures that the investor books some profits and
maintains the asset allocation in the portfolio.

3. Diversification:
Diversification involves investing the amount into different options. In case
of mutual funds, the investor may enjoy it afterwards also through dividend
transfer option. Under this, the dividend is reinvested not into the same scheme
but into another scheme of the investor's choice.
For example, the dividends from debt funds may be transferred to equity
schemes. This gives the investor a small exposure to a new asset class without
risk to the principal amount. Such transfers may be done with or without entry
loads, depending on the MF's policy.
4. Tax efficiency:
Tax factor acts as the “x-factor” for mutual funds. Tax efficiency affects the
final decision of any investor before investing. The investors gain through either
dividends or capital appreciation but if they haven’t considered the tax factor then
they may end loosing. Debt funds have to pay a dividend distribution tax of 12.50
per cent (plus surcharge and education class) on dividends paid out. Investors
who need a regular stream of income have to choose between the dividend
option and a systematic withdrawal plan that allows them to redeem units
periodically. SWP implies capital gains for the investor. If it is short-term, then the
SWP is suitable only for investors in the 10-per-cent-tax bracket. Investors in
higher tax brackets will end up paying a higher rate as short-term capital gains
and should choose the dividend option.
If the capital gain is long-term (where the investment has been held for
more than one year), the growth option is more tax efficient for all investors. This
is because investors can redeem units using the SWP where they will have to
pay 10 per cent as long-term capital gains tax against the 12.50 per cent DDT
paid by the MF on dividends. All the tools discussed over here are used by all the
advisors and have helped investors in reducing risk, simplicity and affordability.
Even then an investor needs to examine costs, tax implications and minimum
applicable investment amounts before committing to a service.
10. Why has it become one of the largest financial instruments?

If we take a look at the recent scenario in the Indian financial market then
we can find the market flooded with a variety of investment options which
includes mutual funds, equities, fixed income bonds, corporate debentures,
company fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc.,
all these investment options could be judged on the basis of various parameters
such as- return, safety convenience, volatility and liquidity. Measuring these
investment options on the basis of the mentioned parameters, we get this in a
tabular form:
Return Safety Volatility Liquidity Convenie

nce
Equity High Low High High Moderate
Bonds Moderate High Moderate Moderate High
Co. Moderate Moderate Moderate Low Low
Debenture
s
Co. FDs Moderate Low Low Low Moderate
Bank Low High Low High High
Deposits
PPF Moderate High Low Moderate High
Life Low High Low Low Moderate
Insurance
Gold Moderate High Moderate Moderate Gold
Real High Moderate High Low Low
Estate
Mutual High High Moderate High High
Funds
Source: Performance of mutual funds
We can very well see that mutual funds outperform every other investment
option. On three parameters it scores high whereas it’s moderate at one.
comparing it with the other options, we find that equities gives us high returns
with high liquidity but its volatility too is high with low safety which doesn’t makes
it favorite among persons who have low risk- appetite. Even the convenience
involved with investing in equities is just moderate.

Now looking at bank deposits, it scores better than equities at all fronts but
lags badly in the parameter of utmost important i.e. it scores low on return , so it’s
not an happening option for person who can afford to take risks for higher return.
The other option offering high return is real estate but that even comes with high
volatility and moderate safety level, even the liquidity and convenience involved
are too low. Gold have always been a favorite among Indians but when we look
at it as an investment option then it definitely doesn’t gives a very bright picture.
Although it ensures high safety but the returns generated and liquidity are
moderate. Similarly the other investment options are not at par with mutual funds
and serve the needs of only a specific customer group. Straightforward, we can
say that mutual fund emerges as a clear winner among all the options available.
The reasons for this being:
 Mutual funds combine the advantage of each of the investment

products: mutual fund is one such option which can invest in all other
investment options. Its principle of diversification allows the investors to
taste all the fruits in one plate. Just by investing in it, the investor can enjoy
the best investment option as per the investment objective.
 Dispense the shortcomings of the other options: every other
investment option has more or less some shortcomings. Such as if some
are good at return then they are not safe, if some are safe then either they
have low liquidity or low safety or both likewise, there exists no single
option which can fit to the need of everybody. But mutual funds have
definitely sorted out this problem. Now everybody can choose their fund
according to their investment objectives.
 Returns get adjusted for the market movements: as the mutual funds
are managed by experts so they are ready to switch to the profitable
option along with the market movement. Suppose they predict that market
is going to fall then they can sell some of their shares and book profit and
can reinvest the amount again in money market instruments.
 Flexibility of invested amount: Other then the above mentioned
reasons, there exists one more reason which has established mutual

funds as one of the largest financial intermediary and that is the flexibility
that mutual funds offer regarding the investment amount. One can start
investing in mutual funds with amount as low as Rs. 500 through SIPs and
even Rs. 100 in some cases.
7.6 Performance Measures of Mutual Funds:
Mutual Fund industry today, with about 34 players and more than five
hundred schemes, is one of the most preferred investment avenues in India.
However, with a plethora of schemes to choose from, the retail investor faces
problems in selecting funds. Factors such as investment strategy and
management style are qualitative, but the funds record is an important indicator
too. Though past performance alone cannot be indicative of future performance,
it is, frankly, the only quantitative way to judge how good a fund is at present.
Therefore, there is a need to correctly assess the past performance of different
mutual funds.
Worldwide, good mutual fund companies over are known by their AMCs
and this fame is directly linked to their superior stock selection skills. For mutual
funds to grow, AMCs must be held accountable for their selection of stocks. In
other words, there must be some performance indicator that will reveal the quality
of stock selection of various AMCs.
Return alone should not be considered as the basis of measurement of the

performance of a mutual fund scheme, it should also include the risk taken by the
fund manager because different funds will have different levels of risk attached to
them. Risk associated with a fund, in a general, can be defined as variability or
fluctuations in the returns generated by it. The higher the fluctuations in the
returns of a fund during a given period, higher will be the risk associated with it.
These fluctuations in the returns generated by a fund are resultant of two guiding
forces. First, general market fluctuations, which affect all the securities, present in
the market, called market risk or systematic risk and second, fluctuations due to
specific securities present in the portfolio of the fund, called unsystematic risk.

The Total Risk of a given fund is sum of these two and is measured in terms of
standard deviation of returns of the fund. Systematic risk, on the other hand, is
measured in terms of Beta, which represents fluctuations in the NAV of the fund
vis-à-vis market. The more responsive the NAV of a mutual fund is to the
changes in the market; higher will be its beta. Beta is calculated by relating the
returns on a mutual fund with the returns in the market. While unsystematic risk
can be diversified through investments in a number of instruments, systematic
risk cannot. By using the risk return relationship, we try to assess the competitive
strength of the mutual funds vis-à-vis one another in a better way.
In order to determine the risk-adjusted returns of investment portfolios,

several eminent authors have worked since 1960s to develop composite
performance indices to evaluate a portfolio by comparing alternative portfolios
within a particular risk class. The most important and widely used measures of
performance are:
 The Treynor Measure

 The Sharpe Measure
 Jenson Model
 Fama Model
1. The Treynor Measure
Developed by Jack Treynor, this performance measure evaluates funds on

the basis of Treynor's Index. This Index is a ratio of return generated by the fund
over and above risk free rate of return (generally taken to be the return on
securities backed by the government, as there is no credit risk associated),
during a given period and systematic risk associated with it (beta). Symbolically, it
can be represented as:
Treynor's Index (Ti) = (Ri - Rf)/Bi
Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of
the fund. All risk-averse investors would like to maximize this value. While a high
and positive Treynor's Index shows a superior risk-adjusted performance of a

fund, a low and negative Treynor's Index is an indication of unfavorable

performance.
2. The Sharpe Measure:
In this model, performance of a fund is evaluated on the basis of Sharpe

Ratio, which is a ratio of returns generated by the fund over and above risk free
rate of return and the total risk associated with it. According to Sharpe, it is the
total risk of the fund that the investors are concerned about. So, the model
evaluates funds on the basis of reward per unit of total risk. Symbolically, it can
be written as:
Sharpe Index (Si) = (Ri - Rf)/Si
Where, Si is standard deviation of the fund.
While a high and positive Sharpe Ratio shows a superior risk-adjusted

performance of a fund, a low and negative Sharpe Ratio is an indication of
unfavorable performance.
3. Jenson Model:
Jenson's model proposes another risk adjusted performance measure.

This measure was developed by Michael Jenson and is sometimes referred to as
the Differential Return Method. This measure involves evaluation of the returns
that the fund has generated vs. the returns actually expected out of the fund
given the level of its systematic risk. The surplus between the two returns is
called Alpha, which measures the performance of a fund compared with the
actual returns over the period. Required return of a fund at a given level of risk
(Bi) can be calculated as: Ri = Rf + Bi (Rm - Rf)
Where, Rm is average market return during the given period. After calculating it,
alpha can be obtained by subtracting required return from the actual return of the
fund.
Higher alpha represents superior performance of the fund and vice versa.
Limitation of this model is that it considers only systematic risk not the entire risk

associated with the fund and an ordinary investor cannot mitigate unsystematic
risk, as his knowledge of market is primitive.
4. Fama Model:
The Eugene Fama model is an extension of Jenson model. This model

compares the performance, measured in terms of returns, of a fund with the
required return commensurate with the total risk associated with it. The difference
between these two is taken as a measure of the performance of the fund and is
called net selectivity.
The net selectivity represents the stock selection skill of the fund manager,
as it is the excess return over and above the return required to compensate for
the total risk taken by the fund manager. Higher value of which indicates that fund
manager has earned returns well above the return commensurate with the level
of risk taken by him.
Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)
Where, Sm is standard deviation of market returns. The net selectivity is then

calculated by subtracting this required return from the actual return of the fund.
Among the above performance measures, two models namely, Treynor

measure and Jenson model use systematic risk based on the premise that the
unsystematic risk is diversifiable. These models are suitable for large investors
like institutional investors with high risk taking capacities as they do not face
paucity of funds and can invest in a number of options to dilute some risks. For
them, a portfolio can be spread across a number of stocks and sectors. However,
Sharpe measure and Fama model that consider the entire risk associated with
fund are suitable for small investors, as the ordinary investor lacks the necessary
skill and resources to diversified. Moreover, the selection of the fund on the basis
of superior stock selection ability of the fund manager will also help in

safeguarding the money invested to a great extent. The investment in funds that
have generated big returns at higher levels of risks leaves the money all the more
prone to risks of all kinds that may exceed the individual investors' risk appetite.
7.7 Limitation of research:
 Time and resource limitation.

 Research has been done only at Davangere (Districts).
 Some of the persons were not so responsive.
 Possibility of error in data collection.

8.1 Methodology of data collection:
8.2 Sources of Data:
 Primary data
 Secondary data
Research is totally based on primary data and Secondary data can be

used only for the reference. Research has been done by primary data collection,
and primary data has been collected by filling a required format. The secondary
data has been collected through various journals and websites.
8.3 Sampling plan:
 Area of study:
Need for financial advisors for mutual fund investors.
 Sampling procedure:
The sample is selected in a random way, irrespective of them being

investor or not or availing the services or not. It was collected through
personal visits to the known and unknown persons, by formal and informal
talks and through filling up the questionnaire prepared.
 Sample size:
The sample size of my project is limited to 50 only.
 Sample design:

Data has been presented with the help of bar graph, pie charts, line
graphs etc.
8.4 Instrumentation Technique:
 Tools and Techniques of data collection
The questionnaire serves as a useful guide for the communication process

and may be used with survey research in any form whether the questions are
in written or verbal form. Without a questionnaire the interview has no
structure.
 Research tool:
Sample statistical tool is this analyzed and expresses in terms of

percentage. The information gathered from the primary source would be
analyzed by tabulating all information received. Conclusion and interpretation
of this study would then be made using various tools like graphs, charts and
tables.

9.1 Analysis and Interpretation of Data
Table no.1 : Analysis on the basis of gender.
Gender Number of Respondents Percentage %

Male 46 92%
Female 04 8%
TOTAL 50 100%
Source: primary data
CLASSIFICATION ON THE BASIS OF GENDER

8%
Male
Female
92%
Source: Table no. 1
Analysis:
From the above table it is evident that 92% are male and 8% are female
respondents.

Table no.2 : Analysis on the basis of Age.
Age group Number of Respondents Percentage %
Below 20 00 0%
20 – 30 46 92%
30 – 40 04 8%
40 & Above 00 0%
TOTAL 50 100%
CLASSIFICATION ON THE BASIS OF AGE GROUP
92%
100%
90%
80%
70%
60% Percentage %
50%
40%
30%
20% 8%
10% 0% 0%
0%
Below 20 20 – 30 30 – 40 40 & Above

Source: Table no. 2
Analysis:
From the above table it is evident that were 92% responders were
between 20 to 30 years, 8% responders were between 30 to 40 years
Table no.3 : Analysis on the basis of Occupation.
Occupation Number of Percentage %

Respondents
Businessman 18 36%
Employee 26 52%
student 02 4%
others 04 8%
TOTAL 50 100%

CLASSIFICATION ON THE BASIS OF OCCUPATION
60% 52%
50%
36%
40%
30%
20%
8%
10% 4%
0%
Businessman Employee student others
Source: Table no. 3
Analysis:
From the above table it is evident that 36% of responders were

Businessman, 52% of responders were Employee, 4% of responders were
student and 8% of responders were others.
Table no.4 : Analysis on the basis of Education.
Education Number of Percentage %

Respondents
Post Graduate 38 76%
Graduate 08 16%
PUC 02 4%
Below SSLC 02 4%
TOTAL 50 100%

CLASSIFICATION ON THE BASIS OF EDUCATION QUALIFICATION
Below SSLC 4%
PUC 4%
Percentage %
Graduate 16%
Post Graduate 76%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Source: Table no. 4
Analysis:
From the above table it is observed that 76% of responders are Post
Graduate holders, 16% of responders are Graduate holders, 4% of responders
are PUC holders and 4% of responders are Below SSLC.
Table no.5 : Analysis on the basis of Income (yr).
Income (yr) Number of Respondents Percentage %
Below 50000 16 32%
50000-100000 13 26%
100000-500000 19 4%
above500000 02 8%
TOTAL 50 100%

Classification on the basis of income LEVEL

32%
35% 26%
30%
25%
20%
15% 8%
Percentage %
4%
10%
5%
0%
0 0 0 0 00
0
00 00 00 00
50 0 0
-5
0 e5
w -1 0 ov
lo 00 00 ab
Be 50
0
10
0
Source: Table no. 5
Analysis:
From the above table it is clear that 32% of responders were having below
50000 income, 26 % of responders were having 50000-100000 income, 4% of
responders were having 100000-500000 income and 8% of responders were
having above500000 income.
Table no.6 : Where from do you purchase mutual funds?
Particulars Number of respondents Percentage %
Directly from the AMCs 12 24%
Brokers only 23 46%
Brokers/ sub-brokers 12 24%
Other sources 03 6%
TOTAL 50 100%

METHOD OF purchase of mutual funds

46%
50%
40%
24% 24%
30%
20% 6%
10% Percentage %
0%
Cs
A M rs
e oke
th br es
m ly b- rc
ro on u u
tly
f
er
s /s rs
o
c rs e
re ok ok
e h
Di Br Br Ot
Source: Table no. 6
Analysis:
From the above table it is evident that 24% of responders were purchase
mutual funds from directly from the AMCs, 46% of responders were purchase
mutual funds from Brokers only, 24% of responders were purchase mutual funds
from Brokers/ sub-brokers and 6% of responders were purchase mutual funds
from other sources.
Table no.7 : According to you which is the most suitable stage to invest in mutual
funds?
Young unmarried stage 39 78%
Young Married with 09 18%

children stage
Pre-retirement stage 01 2%
Old age stage 01 2%
TOTAL 50 100%

DIAGRAM SHOWING AGE GROUP FOR INVESTment
Old age stage 2%
Pre-retirement stage 2%
Young Married with children stage 18%
Young unmarried stage 78%
Source: Table no. 7
Analysis:
From the above table it is evident that 78% of responders said that
suitable stage to invest in mutual funds is at Young unmarried stage, 18% of
responders said that suitable stage to invest in mutual funds is at Young Married
with children stage, 2% of responders said that suitable stage to invest in mutual
funds is at Pre-retirement stage and 2% of responders said that suitable stage to
invest in mutual funds is at Old age stage.
Table no.8 : Which feature of the mutual funds influence you most?
Particulars Number of Percentage %

respondents
Diversification 19 38%
Professional management 11 22%
Reduction in risk and 08 16%

transaction cost
Helps in achieving long term 12 24%

goals

TOTAL 50 100%
features of the mutual funds influence THE INVESTOR
Helps in achieving long term goals 24%
Reduction in risk and transaction cost 16%
Professional management 22%
Diversification 38%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Source: Table no. 8
Analysis:
From the above table it is clear that 38% of responders said that the feature of
the mutual funds influence most is Diversification, 22% of responders said that
the feature of the mutual funds influence most is Professional management, 16%
of responders said that the feature of the mutual funds influence most is
Reduction in risk and transaction cost, and 24% of responders said that the
feature of the mutual funds influence most is helps in achieving long term goals.
Table no.9 : Where do you find yourself as a mutual fund investor?
Totally ignorant 05 10%
Partial knowledge of mutual funds 21 42%
Aware only of any specific scheme 17 34%

in which you invested
Fully aware 07 14%
TOTAL 50 100%

DIAGRaM SHOWS Investor AWARENESS

42%
34%
40%
30% 10% 14%
20%
10%
0%
Percentage %
Source: Table no. 9
Analysis:
From the above table it is evident that 10% of responders said that they find
themselves as a mutual fund investor as totally ignorant, 42% of responders said
that they find themselves as a mutual fund investor have Partial knowledge of
mutual funds, 34% of responders said that they find themselves as a mutual fund
investor have Aware only of any specific scheme in which you invested and 14%
of responders said that they find themselves as a mutual fund investor have fully
aware.
Table no.10 : Are you availing the services of personal financial advisors?
Yes 41 82%
No 09 18%
TOTAL 50 100%

Need of personal financial advisors

18%
Yes
No
82%
Source: Table no. 10
Analysis:
From the above table it is evident that 82% of responders said Yes and 18% of
responders said No to avail the services of personal financial advisors.
Table no.11 : Which expertise of the personal financial advisor is demanded

most?

respondents
Portfolio review & investment 07 14%
recommendation
Planning to achieve specific financial goals 20 40%
Managing assets in retirement 04 8%
Access to specialist in areas such as tax 19 38%

planning
TOTAL 50 100%
expertise of the personal financial advisor is demanded most
Access to specialist in areas such as tax planning 38%
Managing assets in retirement 8%

Percentage %
Planning to achieve specific financial goals 40%
Portfolio review & investment recommendation 14%
0% 10% 20% 30% 40%
Analysis:
From the above table it is evident that 14% of responders said that
expertise of the personal financial advisor is demanded most is Portfolio review &
investment recommendation, 40% of responders said that expertise of the
personal financial advisor is demanded most is planning to achieve specific
financial goals, 8% of responders said that expertise of the personal financial
advisor is demanded most is Managing assets in retirement, and 38% of
responders said that expertise of the personal financial advisor is demanded
most is Access to specialist in areas such as tax planning.
Table no.12 : What is the major reason for using financial advisors?

respondents
Want help with asset allocation 12 24%
Don’t have time to make my own 08 16%

investment decision
To explain various investment 13 26%

options

Want to make sure I am investing 17 34%

enough to meet my financial goals
TOTAL 50 100%
major reason for using financial advisors

34%
24% 26%
30% 16%
20%
10%
0%
Percentage %
Analysis:
From the above table it is clear that 24% of responders said that the major
reason for using financial advisors is that they Want help with asset allocation
, 16% of responders said that the major reason for using financial advisors is that
they Don’t have time to make my own investment decision, 26% of responders
said that the major reason for using financial advisors is that they want to explain
various investment options and 34% of responders said that the major reason for
using financial advisors is that they want to make sure I am investing enough to
meet my financial goals.
Table no.13: What is the major reason for not using financial advisor?
Have access to all resources 12 24%

needed to invest on own
Advisors are too expensive 17 34%
Unsure how to find a 09 18%

trustworthy advisor
Want to be in control of own 12 24%

investment
TOTAL 50 100%
major reason for not using financial advisor

34%
24% 24%
30% 18%
20%
10%
0%
Percentage %
Analysis:
From the above table it is clear that 24% of responders said that the major
reason for not using financial advisors is that they have access to all resources
needed to invest on own, 34% of responders said that the major reason for not
using financial advisors is that believe advisors are too expensive, 18% of
responders said that the major reason for not using financial advisors is that
Unsure how to find a trustworthy advisor and 24% of responders said that the
major reason for not using financial advisors is that want to be in control of own
investment.
10.1 Research findings:
1. Survy of investors:
 At the survey conducted upon 50 people, all are already mutual fund
investors. So there is enough scope for the advisors.
2. Investors knowledge about various mutual funds schemes:

 Out of the 50 persons who already have invested in mutual funds/ are
interested to invest, only 14% have sound knowledge of MFs, 34% people
are aware of only the schemes in which they have invested. 42% possess
partial knowledge whereas 10% stands nowhere in knowledge about MFs.
3. Method of purchase of mutual funds:
 24% participants buy forms directly from the AMCs, 46% from brokers
only, 24% from brokers and sub-brokers even then 6% people buy from
other sources. The brokers have the maximum reach so they should try to
make those investors aware of the happenings, even the AMCs should
follow it.
4. Factors that influence investors go for mutual funds:
 When asked about the most alluring feature of MFs, most of them opted
for diversification, followed by reduction in risk, helps in achieving long
term goals and helps in achieving long term goals respectively.
5. Most preferred time of investors to invest in mutual fund:
 Most of the investor preferred to invest at a young unmarried stage. Even
18% persons were ready to invest at a stage of young married with
children, person with older age investing due to profit there grandson. But
again the number rise to 2% at pre-retirement stage.
6. Availing the services of financial advisors:
 Out of 50 responders, 82% were already availing the services of financial
advisors whereas 18% do not availing the services of financial advisors.
7. The major reason for availing the service of financial advisors:
 24% participants regarded asset allocation as the major reason for going
for financial advisors. 26% of them needed them to explain them the
various investment options available.34% of them wanted to make sure
that they were saving enough to meet their financial goals. While just 16%
gave the reason- lack of time.
8. The major reason investors are not availing the service of financial
advisors:
 When asked about one reason for not availing the services of financial
advisors, 34% of them pointed the advisors as expensive. 24% of them

wished to be in control of their own assets.18% of them said that they find
it difficult to get trustworthy advisors. Whereas 24% of them said they have
access to all the necessary resources required.
10.2 Suggestions:
The most vital problem spotted is of ignorance. Investors should be made aware
of the benefits. Nobody will invest until and unless he is fully convinced. Investors
should be made to realize that ignorance is no longer and what they are losing by
not investing. Mutual funds offer a lot of benefit which no other single option could
offer. But most of the people are not even aware of what actually a mutual fund
is? They only see it as just another investment option.
1. Preferences to young investors:

 The advisors should try to change their mindsets. The advisors should
target for more and more young investors. Young investors as well as
persons at the height of their career would like to go for advisors due to
lack of expertise and time.
2. Value added benefits:

 The advisors may try to highlight some of the value added benefits of MFs
such as tax benefit, rupee cost averaging, and systematic transfer plan,
rebalancing etc. these benefits are not offered by other options
singlehandedly. So these are enough to drive the investors towards mutual
funds. Investors could also try to increase the spectrum of services
offered.
3. Reduce cost of service charges:

 Now the most important reason for not availing the services of advisors
was spotted was being expensive. The advisors should try to charge a
nominal fee at the beginning. But if not possible then they could go for

offering more services and benefits at the existing rate. They should also
maintain their code of ethics so that the investors could trust upon them.
Thus the advisors should try to attract more and more persons and turn them into
investors and finally their clients.
Conclusion:

If we take a look at the recent scenario in the Indian financial market then
we can find the market flooded with a variety of investment options which
includes mutual funds, equities, fixed income bonds, corporate debentures,
company fixed deposits, bank deposits and etc., Mutual Fund industry today, with
about 34 players and more than five hundred schemes, it is one of the most
preferred investment avenues in India. Mutual Fund Advisors give emphasis on
mutual funds than other investment options. Investment is the stepping stone to
achieving one's financial dreams. Mutual funds offer an opportune way to long-
term wealth creation. However, with more and more funds flooding the market,
the task of selecting the most suitable scheme gets even more complicated.
Mutual Fund Advisory Service at Karvy guides you through this network
and ensures that your investments are backed by their quality research. The
financial advisors can tap upon these people by educating them about mutual
funds. After Giving advice to the customers the Advisers should communicate
with the clients so there will be better relationship between the Company and the
Clients.
11.1 BIBLIOGRAPHY

 www.mutualfundindia.com
 Business Line Newspaper.
 Economic Times Newspaper.
 www.thefinapolis.com
 www.karvy.com
 www.mutualfundsindia.com
Journals & other references:
 Karvy the Finapolis.

 Karvy business associates manual.
 The Economic Times.
 Business India.
 KARVY BAZAAR BAATEINA (Weekly Investment Newsletter from
KARVY).

10.0 APPENDIX / ANNEXURE
10.1 QUESTIONNAIRE
1. Name: ……………………………………………….
5. Address: …………………………………………………………………..
…………………………………………………………………....
Phone number: ………………….…………….
3. Sex:
a) Male [ ] b) Female [ ]
4. Age:
a) Below 20 [ ] b) 20 – 40 [ ]
c) 40 – 60 [ ] d) 60 & Above[ ]
5. Education:
a) Post Graduate [ ] b) Under Graduate [ ]
c) PUC [ ] d) Below SSLC [ ]
6. Occupation:
a) Businessman [ ] b) Employee [ ]
c) student [ ] d) others ……………………
7. Maritial Status:
a) Married [ ] b) Unmarried [ ]
8. Income (yr):
a) Below 50000 [ ] b) 50000-100000 [ ]
c) 100000-500000 [ ] d) above500000 [ ]
9. Have you invested /are you interested to invest in mutual funds?

a) Yes [ ] b) No [ ]
10. If no what is the most important reason for not investing in mutual funds?
a) Lack of knowledge about mutual funds [ ]
b) Enjoys investing in other options [ ]
c) Its benefits are not enough to drive you for investment [ ]
d) No trust over the fund managers [ ]

11. Where from do you purchase mutual funds?

a) Directly from the AMCs [ ]
b) Brokers only [ ]
c) Brokers/ sub-brokers [ ]
d) Other sources [ ]
12. According to you which is the most suitable stage to invest in mutual funds?
a) Young unmarried stage [ ]
b) Young Married with children stage [ ]
c) Pre-retirement stage [ ]
d) Old age stage [ ]
13. Which feature of the mutual funds influence you most?
a) Diversification [ ]
b) Professional management [ ]
c) Reduction in risk and transaction cost [ ]
d) Helps in achieving long term goals [ ]
14. Where do you find yourself as a mutual fund investor?
a) Totally ignorant [ ]
b) Partial knowledge of mutual funds [ ]
c) Aware only of any specific scheme in which you invested [ ]
d) Fully aware [ ]
15. Are you availing the services of personal financial advisors?
a) Yes [ ] b) No [ ]
16. Which expertise of the personal financial advisor is demanded most?
a) Portfolio review & investment recommendation [ ]
b) Planning to achieve specific financial goals [ ]
c) Managing assets in retirement [ ]
d) Access to specialist in areas such as tax planning [ ]
17. What is the major reason for using financial advisors?

a) Want help with asset allocation [ ]
b) Don’t have time to make my own investment decision [ ]

c) To explain various investment options [ ]

d) Want to make sure I am investing enough to meet my financial goals [ ]
18. What is the major reason for not using financial advisor?
a) Have access to all resources needed to invest on own [ ]
b) Believe advisors are too expensive [ ]
c) Unsure how to find a trustworthy advisor [ ]
d) Want to be in control of own investment [ ]
19. Your suggestion for improvement. If any,

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Karvy Stock Broking Limited

“Need for financial advisors for mutual fund investors”

MASTER OF BUSINESS ADMINISTRATION

Visvesvaraya Technological University, Belgaum

Under the Guidance of

Internal Guide External Guide

Mr. G.P.Nagesh Mr. Venkat Ganesh Kumar E.S.

P.G. Department of Management Studies

PES INSTITUTE OF TECHNOLOGY AND MANAGEMENT

NH – 206, Sager Road, Shivamogga – 577204

P G Dept of Management Studies, PESITM, Shivamogga 1

Place: Shivamogga LAKSHMINARAYAN

P G Dept of Management Studies, PESITM, Shivamogga 2

Mr. G.P.Nagesh Dr.R.Nagaraja Dr.Vishwanth .P.Baligar

Faculty Member & Prof & HOD, Principal – PESITM

Internal Guide PGDMS

P G Dept of Management Studies, PESITM, Shivamogga 3

I take this opportunity to sincerely thank Mr. G.P.Nagesh who

guided me through out the project through his valuable

suggestions, without which the project would not have been

I thank Mr. Venkat Ganesh Kumar E.S., Branch Manager in KARVY

STOCK BROKING LIMITED Davangere for guiding me in doing

this Project report.

I thank Mr. Sridhar, Regional Manager in KARVY STOCK

BROKING LIMITED for guiding me in doing this Project report.

My sincere thanks to my parents and friends who out of hard

sweat were able to help me at all time and given encouragement

for successful completion of this project.

P G Dept of Management Studies, PESITM, Shivamogga 4

P G Dept of Management Studies, PESITM, Shivamogga 5

7.4 OPERATIONAL DEFINITIONS AND CONCEPTS.

Table. No. Table Name PAGE

1 Analysis on the basis of gender. 53

2 Analysis on the basis of Age. 54

3 Analysis on the basis of Occupation. 55

4 Analysis on the basis of Education. 56

5 Analysis on the basis of Income (yr). 57

6 Where from do you purchase mutual funds? 58

7 According to you which is the most suitable stage to invest 59

8 Which feature of the mutual funds influence you most? 60

9 Where do you find yourself as a mutual fund investor? 61

10 Are you availing the services of personal financial 62

P G Dept of Management Studies, PESITM, Shivamogga 6

11 Which expertise of the personal financial advisor is 63

12 What is the major reason for using financial advisors? 64

13 What is the major reason for not using financial advisor? 65

P G Dept of Management Studies, PESITM, Shivamogga 7

P G Dept of Management Studies, PESITM, Shivamogga 8

“Success is a journey, not a destination.” If we look for examples to

1.2 Company overview:

Karvy was established as Karvy and company by five chartered

1.3 Evolution of KARVY:

P G Dept of Management Studies, PESITM, Shivamogga 9

1.4 Success sutras of Karvy:

The success story of Karvy is driven by 8 success sutras adopted by it

P G Dept of Management Studies, PESITM, Shivamogga 10

“Our mission is to be a leading and preferred service provider to our

1.5 The success ladder:

P G Dept of Management Studies, PESITM, Shivamogga 11

Karvy Realty & Services

The first securities registry to receive ISO 9002 certification in India.

P G Dept of Management Studies, PESITM, Shivamogga 12