A Project Report On

Need of financial advisors for mutual fund investors
(With special reference to KARVY)
Interim report SUBMITTED BY:

Roll no. - pgpm/07-09/23

Under the guidance of:
Mr. Rohit vyas prof. p. mahapatra

Product head( MF), Eastern region, faculty,ASBM,Bhubaneswar KARVY, Kolkata





serial no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Topic certificate by organization certificate by faculty guide Acknowledgement executive summary company overview karvy at eastern zone mutual funds basics concept of benchmarking financial planning for investors why has it becomethe largest financial intermediary? how investors choose between funds? most popular stocks among fund managers most lucrative sectors among fund managers Systematic Investment Plan (in details) does fund ranking and performance persist? portfolio analysis tools research report

Page no. 4 5 6 7 8—17 17—20 21--31 31 32 32-34 34-36 37 38-39 39-41 42-43 44-49 50



I, Ms. JyotiVerma do hereby declare that the project report titled “NEED OF FINANCIAL ADVISORS FOR MUTUAL FUND INVETORS” is a genuine research work undertaken by me and it has not been published anywhere earlier.

Date: Place: Jyoti Verma ASBM, Bhubaneswar


” To the best of my knowledge this is an original piece of work. Eastern zone. 5 . pursuing PGPM at Asian School of Business Management.Mr. Bhubaneswar has worked under my supervision and guidance on her dissertation entitled “Need of financial advisors for Mutual Fund investors” at Karvy Stock Broking Limited. KARVY Certificate by the organization: This is to certify that Ms. Kolkata from April 10th 2008 to June 4th 2008. Rohit Vyas Product Head (MF). Jyoti verma.

Bhubaneswar Certificate by the faculty guide: This is to certify that the project report entitled “Need of financial advisors for Mutual Fund Investors” at Karvy Stock Broking Limited is a bonafide record of work done by Jyoti Verma. P. 6 .Mahapatra Asian School of Business Management. Bhubaneswar.Prof. and submitted in partial fulfillment of the requirements of PGPM program of Asian School of Business Management.

Alok Chaturvedi (Head.Acknowledgement Sometimes words fall short to show gratitude. 7 . The immense help and support received from Karvy stock broking limited overwhelmed me during the project. My sincere gratitude to Mr.. Nidhi dhingra. whose constant support and blessings helped me throughout this project. I am highly indebted to Mr. Debarati dey. Dhirendra Pradhan (branch head. P. special mention of Ms. who have helped me in the successful completion of this project. I am grateful to Mr. karvy) and Dr. Rohit Vyas. Biswajeet Pattanaik (Director. Mr. Mahapatra. Bhubaneswar who has sincerely supported me with the valuable insights into the completion of this project. eastern zone. who has provided me with the necessary information and his valuable suggestion and comments on bringing out this report in the best possible way. eastern region. faculty guide. JDR) and all of the members of Rashbehari Avenue branch. ASBM. Ms. the same happened with me during this project. my heartfelt love for my parents. I also thank Prof. Jyotirmoyee Bhattacharjee. Bhubaneswar). Debasish panda and Mr. Karvy. Last but not the least. product head ( MF). ASBM. for providing me with an opportunity to work with karvy stock broking limited. karvy and company project guide.

a special report on Systematic Investment Plan. This project as a whole can be divided into two parts:  The first part gives an insight about the mutual funds and its various aspects. Some of them are: why has it become one of the largest financial intermediaries? How investors do chose between funds? Most popular stocks among fund managers. Some of the most interesting questions regarding mutual funds have been covered. 8 . All the topics have been covered in a very systematic way. most lucrative sectors for fund managers. It is purely based on whatever I learned at karvy.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. All the datas have been well analyzed with the help of charts and graphs. One can have a brief knowledge about mutual funds and all its basics through the project. does fund performance persists and the topping of all the servings in the form of portfolio analysis tool and its application. Other than that the real servings come when one moves ahead. The language has been kept simple so that even a layman could understand.

Organization overview 9 . collected through a survey done on 200 people. 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. The data collected has been well organized and presented. The second part consists of datas and their analysis. It covers the topic” need of financial advisors for mutual fund investors”. Hope the research findings and conclusions will be of use.

Vision of karvy: To achieve & sustain market leadership.” If we look for examples to prove this quote then we can find many but there is none like that of karvy. to provide world class quality services. by combining its human and technological resources. not a destination. Success sutras of karvy: The success story of karvy is driven by 8 success sutras adopted by it namely trust. Karvy shall aim for complete customer satisfaction. dedication. empathy and humility. enterprise.Introduction: “Success is a journey. 10 . the largest financial service provider of India. Back in the year 1981. commitment. These are the values that bind success with karvy. hard work and team play. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards. integrity. learning and innovation. five people created history by establishing karvy and company which is today known as karvy.

enterprising . and we aim to achieve this leadership position by building an innovative.” The success ladder: Company overview: 11 .Mission statement: “Our mission is to be a leading and preferred service provider to our customers. and technology driven organization which will set the highest standards of service and business ethics.

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.com .. Under this section we will see that how this “karvy and company” of 1980 became “karvy” of 2008.e. Then it stepped into the other most happening sector i. and then its work was confined to audit and taxation only. At the same time it became the member of Hyderabad Stock Exchange through associate firm karvy securities ltd and then karvy never looked back…….Karvy was established as karvy and company by five chartered accountants during the year 1979-80.150000. entered into financial product distribution services in the year 1993. Then it entered into insurance services in the year 2001 with the launch of its retail arm “karvy. Karvy which already enjoyed a wide network through its investor service centers. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. Karvy investor service centers were set up in the year 1992. Evolution of KARVY: It is well said that success is a journey not a destination and we can see it being proved by karvy.the finapolis: your personal finance advisor”.it went on adding services one after another. it entered into retail stock broking in the year 1990. Karvy’s strategy has always been being the first entrant in the market. 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. It added the feather of stock broking into its cap.e. 12 .and maintain their portfolio and provides them with other financial services. it commenced secondary debt and WDM trading. it achieved its first milestone after its first investment in technology. One year more and karvy was now dealing into mutual fund services too in the year 1994 but it didn’t stopped there. Later on it diversified into financial and accounting services during the year 1981-82 with a capital of rs. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar. Karvy again hit the limelight by becoming the first registrar in the country to be awarded ISO 9002 in the year 1997. it stepped into corporate finance and investment banking in the year 1995.karvy. In the year 2003. stock broking. Then in the year 2002 it launched its PCG(Private Client Group) which looks after its High Networth Individuals .

2. 13 . foreign institutional investors. advisory services.It was a decade which saw many Indian companies going global…. State Governments. In the year 2006. : karvy stock broking ltd. after being impressed with the rapid growth of karvy stock broking limited. public and private sector companies and banks. hence . karvy entered into one of the hottest sector of present time i. PCG group of Hong Kong acquired 25% stake at KSBL. Year 2005 saw karvy establishing a separate branch for its insurance services under the head “ karvy insurance broking ltd” and in the same year.e real estate through Karvy realty& services (India) ltd. depository participant.the year 2004 also saw karvy entering into commodities marketing through karvy comtrade.so why the largest financial service provider of India should lag behind? Hence. 3. distribution of financial products. Australia in the year 2004. Registered with SEBI as Category I Registrar. is Number 1 Registrar in the Country. : it is registered with SEBI as a category 1 merchant banker. Consists of five units namely stock broking servics. in Indian and global markets. advisory services and private client goups. Now karvy group consists of 8 highly renowned entities which are as follow: 1. Its clientele includesinclude leading corporates. karvy launched “karvy global services limited” after entering into a joint venture with Computershare. : The first securities registry to receive ISO 9002 certification in India. we can see now karvy being established as the lagest financial service provider of 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.

India 7. : it is a joint venture between Computershare. 5. media . inurance. it offer a wide reach through our branch network of over 225 branches located across 180 cities. advisory and brokerage services in Indian Commodities Markets. And most importantly. At Karvy Insurance Broking Limited both life and non-life insurance products are provided to retail individuals. USA and the offshore global delivery center in Hyderabad. : The company provides investment. : Karvy Global is a leading business and knowledge process outsourcing Services Company offering creative business solutions to clients globally. : 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. : karvy insurance broking ltd is also a part of karvy stock broking ltd. high net-worth clients and corporates. 6. It operates in banking and financial services. telecom and technology. It has its sales and business development office in New York. Organization structure of karvy: 14 . Australia and Karvy Consultants Limited.4. healthcare and pharmaceuticals. India in the registry management services industry.

The board of diretors head the karvy group. the chairman being Mr. karvy computershares limited. The services offered by KSBL are: stock broking. technology services and corporate quality.talking about the organization structure of karvy. training & development. share registry and issue registry whereas merchant banking is looked after by karvy investor services ltd. mr m s ramakrishna andmr. C parthasarthy. karvy stock broking ltd. group human resources. and karvy global services ltd. Prasad v. mr. karvy comtrade. distribution. depository. Karvy group being the flagship company looks after the functional departments such as corporate affairs. potluri as directors. Karvy insurance broking ltd. finance & accounting. Summarizing it in a diagram. And finally the BPO services are managed by karvy global services ltd. research.. we have the board of directors as the supreme governing body . karvy investors services ltd. it can be presented as: 15 . Karvy stock broking ltd heads its another branch too ie. m yugandhar as the managing director. Karvy computershare private limited facilitates mutual fund services. personal client group and institutional desk..

nowadays we can find karvy offices at remote areas too. 16 .e. it deals in both closed ended funds as well as open ended too. Along with these. Being registered with both the depositories i. Talking about the mutual fund services offered by karvy. karvy can have access to both. if we avail the services of karvy then we can get the information about all the AMCs and their products at a single place along with expert recommendations whereas at an AMC we can get information about the products of that specific AMC only.Spectrum of services offered by karvy: Karvy being the top registrar and transfer agent. Its wide network also facilitates it in distribution of retail financial products. karvy is very well handling the role of depository participant. functions as registrar in most of the issues in the country. Now one must be thinking why to get the mutual funds from karvy instead of getting it directly from AMCs???we have great reasons for it: the first one being .. NSDL (national securities depository ltd) and CDSL (central depository services ltd). And the second being wide network of karvy…. we can get the products of 33 AMCs over here.

Other than it.com .and here at karvy everybody tries their best to offer excellent services to its clientele through its offerings maintaining the karvy culture which includes: 1.Karvy believes in being updated always. 4. Large volume processing capability: being the largest financial service provider in the country. it has the unique distinction of operating its activities on a large scale which benefits all the parties cordially.karvy. 3. Expertise in coordinating multi-location responses: karvy has got a wide network and hence one can find its branches at most of the places in India. 2. Tata group pooling its resources to acquire Corus. post-office etc.cutting techniques and minimization of avoidable costs. whenever needed. so it can easily pool up its resources for accomplishment of its goals. 5. Pooling of group resources: karvy group consists of eight subsidiaries. we cant ignore any of the aspects of our business…. Thus it enjoys its presence everywhere and coordinates among itself in solving the queries and in responding to any situation.so there’s a offering for everybody…everyone’s welcome at karvy. 6. it also provides its various services through SMSes. 17 . It offers e-business through internet through its website: www. Controlled and low cost service culture: karvy is there to serve its client at the minimum possible cost. it is very well aware of the fact that in this era of neck to neck competition. it controls cost by its various cost. and even in the case when they have huge targets just as we saw few years back. so the karvy people establishes good coordination with independent entities too. Adherence to strict time schedule: karvy knows that time is money and tries it best to finish the task within the stipulated time schedule.Expertise in managing independent entities such as banks. The groups can help each other whenever there are peaks and lows. Karvy’s services are not limited to its investors only rather its offerings are for its corporate clients and distributors too. Why should investors choose for karvy? Excellence is next to nothing….: the work culture of karvy and the ethics followed inside karvy makes its workforce compatible with everybody. So it is always ready to use latest technologies so that its clients always be in touch with the latest happenings along with karvy.

5. 5. named as karvy and company turned into today’s karvy group.1 registrar & securities transfer agent. accounting and audit systems. The following culture adopted by karvy makes it all time favorite among its clientele: 1. Professionally managed by qualified and trained manpower.How karvy achieved it? The core competency of karvy lies in the following points due to which it enjoys a competitive edge over its competitors. 2. 9. Clientele of karvy: 18 . In the previous pages.Amongst top 10 investment bankers. How Achievements sounds synonymous to karvy: The landmarks achieved by karvy very well define its success story.fledged IT driven operation.amongst the top 5 stock broker.adjudged as one of the top 50 IT users in India by MIS south Asia.ISO 9002 certified operations by DNV.India’s no. Strong secretarial.largest independent distributor for financial products. 4. the hard work and dedication of its workforce made it what it is today…gradually it achieved the following landmarks and now it has became what we call the karvy group. 6. 7. Unmatched network spreading all over India. 8. now it is: 1.among the top 3 depository participants. Unique work culture of working 7 days a week in 3 shifts.largest network of branches & business associates. 2. 4. Uniquely structured in-house software and hardware department 3.full. 3. But success didn’t came to karvy at a flow. we learnt how a company started by five chartered accountants. 6. Query handling within 48 hrs. the largest financial intermediary of India.

UTI mutual fund etc. North east. CRISIL. 40 billion Assets Under Management.LIC. Talking about the zonal offices. The distribution services has access to more than Rs. Alok Chaturvedi is heading the eastern zone.everybody is heading towards karvy for their wealth maximization. karvy stock broking ltd. If we took a look at some of the top corporate houses availing the services of karvy then we have: Reliance. 3M.TATA consultancy services. north Bengal. Infosys Technologies. Presently Mr..Karvy’s culture has helped karvy in achieving such a distinct position in the market where it can boast of its huge client base. more than 290000 accounts are maintained and commands over 3. Thus in total karvy serves over 16 million investors and 300 corporates. it is managing over 16 million portfolios as registrar. south Bengal. IOC. Infotech. KARVY at eastern zone: Karvy stock Broking Ltd was started 11 yrs ago i. Wipro. Kotak Mahindra Bank. manages more than 700000 accounts from more than 380 locations. so there is a special reference to working of karvy at eastern zone and mutual funds in particular. Hindustan Unilever. 500 in a SIP in Reliance mutual fund or be it the largest corporate house of the country: Reliance industries.e. Yogokawa. Talking about the registry services. IPCL. Orissa and Chhattisgarh. it manages over 750 public/ right issues. Operates through more than 12000 terminals. Now. Each zonal office has got its own zonal heads. Marico Industries. Patni Computers. Duetsche Mutual Fund. 19 . Morgan Stanley. Principal Mutual Fund. Bharti Televenture. Bombay Stock Exchange (BSE) and Hyderabad Stock Exchange (HSE). IDBI. during the year 1996 at Jatin Das road which was later on established as the regional head office. Karvy being a depository participant with both NSDL and CDSL. as the project was carried on in Kolkata. Bihar. Be it a retail investor investing Rs. Jharkhand. Glenmark. Karvy is a member of three stock exchanges of India: National Stock Exchange (NSE). Karvy has zonal offices at Kolkata. lets have a look at the clientele of karvy : According to the datas published in year 2007.at the same time.14% market share of NSE.

20 . under whom the various zonal heads operate and under these zonal heads. who acts as the facilitator between the different heads. 2. Karvy at Kolkata: Now if we look at karvy’s branch offices at Kolkata. It can be easily depicted from the diagram that the regional head (presently Mr. there exists a coordinator. Alok Chaturvedi) is the supreme in the eastern region. which are as follow: 1.Hierarchical Structure in diagram: The above diagram shows the hierarchy of Karvy stock broking ltd. the branch heads operate. Burra bazaar. Between each level o the hierarchy. Lake Town. then there exist ten branches of karvy at Kolkata.

3. Shyam bazaar. 9. Howrah. 5. Jatin Das Road.ba nking PMS KARVY Mutual Fund Services: 21 . 8. Dalhousie. New Alipore. 10. Salt Lake. Phoolbagan. 4. 6. Behala. 7. Structure according to the Products offered by Karvy: REGIONAL HEADS PRODUC T Debt divisio n Realty Mutua l funds KA Insura nce brokin g comm odities Stock brokin g Deposi tory partici pant Merch ant & inv.

Whichever type of investor you are. The payout is decided according to the procurement done by them. All the work of mutual funds is regulated from Rashbehari avenue branch. Its offerings includes: products of all the 33 major AMCs. it not only design the portfolios rather it offers continuous portfolio revision too depending on changing market outlook and evolving trends. the franchisees have to pay a certain amount every month. After the procurement of forms from various AMCs. Also. which is mentioned on every form. The amount offered may vary from AMC to AMC. Recruitment: 22 . It can be said that karvy is dedicated towards providing quality service to all these three facets of the investment process. associates and its excellent pool of own direct employees. Thus karvy with its various offerings makes the investor feel safe in this dynamic environment of the Indian financial market. KARVY has got the registration no [ARN 0018] for mutual funds.brokers and associates get certain commission. Karvy being an intermediary is well registered with the Association of Mutual Funds of India (AMFI). the forms are passed on to its various zonal and branch offices (as per their requirements) and then further processing is done either directly or through sub-brokers. Karvy operates through its sub. But investing in mutual funds is no child’s play therefore karvy mutual fund advisory services is there to guide in each and every step of investment in mutual funds so that the dream of wealth creation doesn’t turns into nightmares. it further gives access to its online consolidated portfolio statement. customized mutual fund portfolios designed for individual as well as institutional customers. an extension of the JDR branch. Karvy Computershare mutual fund services offers investors services. The employees are offered salary by karvy whereas the sub.brokers. distributor services and client services. Now karvy also pay a certain amount to the sub brokers and associates known as pay-out.Mutual funds have servings for everybody. you will surely get a mutual fund meeting your requirements. research report about all the existing funds as well as NFOs. Karvy has 70 branches and 3 franchisees in the eastern region. The main source of earning for KARVY is the brokerage offered by the various AMCs known as pay-in.

Karvy has an enviable pool of dynamic employees. AMCs etc. it is mostly done through campus recruitment from reputed B. Its people power has a great contribution in making it the No. The recruitment process is at par with the industry standards. Other than that. Karvy never compromises with quality that’s the reason it is excelling by providing quality services to all the investors.schools. associated with it. 23 . All the employees of karvy dealing in mutual funds have to go through AMFI test. it also recruits through direct interviews and GDs as per their requirement. 1 financial intermediary. clients.

Mutual funds 24 .

The history of mutual funds in India can be broadly divided into four distinct phases. of shares currently issued and outstanding Advantages of a MF – – – – Mutual Funds provide the benefit of cheap access to expensive stocks Mutual funds diversify the risk of the investor by investing in a basket of assets A team of professional fund managers manages them with in-depth research inputs from investment analysts. The value of all the securities in the portfolio in calculated daily. in equity shares.. mutual funds have access to crucial corporate information. bonds. Government securities. is mostly calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. which pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders.in other words we can say that A Mutual Fund is a trust registered with the Securities and Exchange Board of India (SEBI). Bonds. and distributes the profits. short-term money market instruments. Being institutions with good bargaining power in markets. and/or other securities. all expenses are deducted and the resultant value divided by the number of units in the fund is the fund’s NAV.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. known as the net asset value (NAV). 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 25 . No. The value of each unit of the mutual fund. at the initiative of the Government of India and Reserve Bank. History of the Indian mutual fund industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. From this. Call money markets etc. NAV = Total value of the fund………………. which individual investors cannot access.

As at 26 . LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. PNB. sponsored by SBI.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87).21. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. 1. As at the end of January 2003. representing broadly. SBI Mutual Fund was the first non. there were 33 mutual funds with total assets of Rs. 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. At the end of 1988 UTI had Rs. The first scheme launched by UTI was Unit Scheme 1964.UTI. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. BOB and LIC.29. Bank of Baroda Mutual Fund (Oct 92). assured return and certain other schemes The second is the UTI Mutual Fund Ltd. Indian Bank Mutual Fund (Nov 89). except UTI were to be registered and governed. It is registered with SEBI and functions under the Mutual Fund Regulations. the mutual fund industry had assets under management of Rs. Bank of India (Jun 90). Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. the assets of US 64 scheme.835 crores as at the end of January 2003.700 crores of assets under management.India.At the end of 1993.004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.805 crores. under which all mutual funds. consolidation and growth.6. Fourth Phase – since February 2003 In February 2003.47. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). Punjab National Bank Mutual Fund (Aug 89). The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

Categories of mutual funds: Mutual funds can be classified as follow:  Based on their structure: • Open-ended funds: Investors can buy and sell the units from the fund. there were 29 funds. Close-ended funds: These funds raise money from investors only once. after the offer period. If the fund is listed on 27 • .the end of September. 2004. fresh investments can not be made into the fund.153108 crores under 421 schemes. at any point of time. which manage assets of Rs. Therefore.

equities have outperformed all asset classes in the long term. -An infrastructure fund invests in power.A banking sector fund will invest in banking stocks.  Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments.it is similar to the equity diversified funds except that they invest in companies offering high dividend yields.Invest 100% of the capital in a specific sector. even losses. vi) ELSS.. short term fluctuations in the market. Hence. v) Sector funds. cements sectors etc. on the risk-return ladder. Morgan Stanley Growth Fund).Equity Linked Saving Scheme provides tax benefit to the investors. generally smoothens out in the long term. Redemption of units can be made during specified intervals. With fluctuating share prices.Invest 100% of the assets in sectors which are related through some theme. such funds have relatively low liquidity. remaining in debt. Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities. iv) Thematic funds. e. Therefore. they fall between equity and debt funds. . like BSE Sensex or Nifty is tracked.In this case a key stock market index. Recently. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightages. It can be further classified as: i) Index funds. construction. such funds show volatile performance. At the same time. As a result.g. thereby offering higher returns at relatively lower volatility. e. However. iii|) Dividend yield funds.g. ii) Equity diversified funds. such funds can yield great capital appreciation as. investment in equity funds should be considered for a period of at least 3-5 years.100% of the capital is invested in equities spreading across different sectors and stocks. most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. 28 . Balanced fund: Their investment portfolio includes both debt and equity.a stocks exchange the units can be traded like stocks (E. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. historically.g.

at a fixed interval. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum.Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. vii) MIPs.They invest 100% of their portfolio in government securities of and T-bills. such funds invest a major portion of the portfolio in long-term debt papers. Payment is made through post dated cheques or direct debit facilities. vi) Income funds LT. iii)Floating rate funds . ii)Gilt funds ST.They generate income through arbitrage opportunities due to mis-pricing between cash market and derivatives market.fixed monthly plans invest in debt papers whose maturity is in line with that of the fund. viii)FMPs. This is called as the benefit of Rupee Cost Averaging (RCA) 2. derivatives and money markets. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Higher proportion (around 75%) is put in money markets. Government of India securities. debentures.Debt fund: They invest only in debt instruments. Funds are allocated to equities. 29 . Investment strategies: 1. in the absence of arbitrage opportunities. The investor gets fewer units when the NAV is high and more units when the NAV is low. iv)Arbitrage fund.Invest in short-term debt papers.They invest 100% of their portfolio in long-term government securities. to an equity scheme of the same mutual fund. v)Gilt funds LT. and money market instruments such as certificates of deposit (CD).Typically. commercial paper (CP) and call money. and are a good option for investors averse to idea of taking risk associated with equities. Floaters invest in debt instruments which have variable coupon rate. i) Liquid funds. Put your money into any of these debt funds depending on your investment horizon and needs. Therefore. they invest exclusively in fixed-income instruments like bonds.These funds invest 100% in money market instruments. a large portion being invested in call money market.

return: 30 . Risk v/s.3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

Working of a Mutual fund: 31 .

AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation. SEBI formulates policies and regulates the mutual funds. According to SEBI Regulations. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. ration card. Documents required (PAN mandatory): Proof of identity :1. latest Demat account statement. Regulatory Authorities: To protect the interest of the investors. known as unit holders. two thirds of the directors of Trustee Company or board of trustees must be independent. Proof of address (any of the following ) :latest telephone bill. 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. An offer document consists of the following: Standard Offer Document for Mutual Funds (SEBI Format) Summary Information Glossary of Defined Terms 32 . The return generated from the investments is passed on to the investors or reinvested as mentioned in the offer document.handover their savings to the AMCs under various schemes. Custodian. driving license. voter id.photo PAN card 2. disclosure. Offer document: an offer document is issued when the AMCs make New Fund Offer(NFO). latest electricity bill. holds the securities of various schemes of the fund in its custody. Its objective is to increase public awareness of the mutual fund industry. The investors. rent agreement. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. 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. Passport. The objective of the investment should match with the objective of the fund to best suit the investors’ needs. latest bank passbook/bank account statement. transparency etc. Its advisable to every investor to ask for the offer document and read it before investing.The entire mutual fund industry operates in a very organized way. registered with SEBI. The AMCs further invest the funds into various securities according to the investment objective.

LIC. etc. Tata. Mirae Assets. DSP Merill Lynch. Kotak Mahindra. Canara Robeco. Franklin Templeton.broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to 33 . is attached along with the mutual fund form.name of the fund. Fidelity.risk profile of the scheme 5. benchmark return) 12.year. UTI etc. Sundaram. Key Information Memorandum: a key information memorandum. 4.name of the fund manager(s) 10.dividend policy 9. HSBC.Birla Sunlife. The various parties involved in distribution of mutual funds are: 1. The investors can approach to the AMCs for the forms. Reliance .Risk Disclosures Legal and Regulatory Compliance Expenses Condensed Financial Information of Schemes Constitution of the Mutual Fund Investment Objectives and Policies Management of the Fund Offer Related Information. SBI magnum. Its contents are: 1. of units 7. Distribution channels: mutual funds posses a very strong distribution channel so that the ultimate customers doesn’t face any difficulty in the final procurement. popularly known as KIM. Lotus India.expenses of the scheme: load structure.wise return for the last 5 financial year. HDFC.Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. ICICI.minimum application amount/ no. 2. And thus every investor get to read it. some of the top AMCs of India are.performance of the scheme (scheme return v/s. 2. recurring expenses 11.benchmark index 8.asset allocation pattern of the scheme.investment objective 3. JP Morgan.plans & options 6. whereas foreign AMCs include: Standard Chartered.

It may reduce to zero with increase in holding period. salaries. the more assets in the fund.50 for every Rs100 in assets under management. Therefore it’s very necessary to continuously evaluate the funds’ performance with the help of factsheets and newsletters. A fund's expense ratio is typically to the size of the funds under management and not to the returns earned.25%). Banks. 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. Costs associated: Expenses: AMCs charge an annual fee. advertising expenses.25%). etc. If the investors ignore the evaluation of funds’ performance then he can loose hold of it any time.25-2.Individual agents.5% expense ratio means the AMC charges Rs1.so. So the AMCs dealing through KARVY has access to most of the investors. Measuring and evaluating mutual funds performance: Every investor investing in the mutual funds is driven by the motto of either wealth creation or wealth increment or both. he can 34 . newspapers and professional advisors like karvy mutual fund services.End Load (0. whichever he finds convenient for him. Exit Load/Back. brokerage fee. In this ever-changing industry. it is imposed to discourage withdrawals.it is the commission or charged paid when an investor exits from a mutual fund. or expense ratio that covers administrative expenses.its the commission charged at the time of buying the fund to cover the cost of selling. the costs of running a fund grow slower than the growth in the fund size .banking financial corporations too. Normally. banks and several non. 3. processing etc. websites. the lower should be its expense ratio Loads: Entry Load/Front-End Load (0-2. NBFC: investors can procure the funds through individual agents.popularize their funds. A 1. independent brokers.

Performance measures: Equity funds: the performance of equity funds can be measured on the basis of: NAV Growth. Per Share Capital Changes. If the fund generates a greater return than the benchmark then it is said that the fund has outperformed benchmark . 3. 4. Computing Total Return (Per Share Income and Expenses. NPAs. Total Return and Expense Ratio. Portfolio Turnover Rate. Cash Flow.it can merge into another fund or could be acquired by another fund house.equity funds: market indices such as S&P CNX nifty. BSE 500 35 . The Income Ratio. Total Return with Reinvestment at NAV. BSE-PSU. BSE200. 2. And if in case the return is lower than the benchmark then the fund is said to be underperformed. some of the benchmarks are: 1. Shares Outstanding). if it is equal to benchmark then the correlation between them is exactly 1.the funds’ performance can slip in comparison to similar funds. Liquid funds: the performance of the highly volatile liquid funds can be measured on the basis of: Fund Yield.face any of the following problems: 1. The funds performance is measured in comparison with the benchmark. Transaction Costs. the Expense Ratio. 5. besides NAV Growth. BSE100. Leverage. besides NAV Growth. Fund Size. Ratios. Concept of benchmarking for performance evaluation: Every fund sets its benchmark according to its investment objective.variation in the funds’ performance due to change in its management/ objective.beta. Industry Exposures and Concentrations. Debt fund: likewise the performance of debt funds can be measured on the basis of: Peer Group Comparisons. Annualized Returns and Distributions. a technical measure of the risk associated may also surge. Total Return.the funds’ ratings may go down in the various lists published by independent rating agencies. Total Return and Expense Ratio. 6. there may be an increase in the various costs associated with the fund.

A fund manager has to closely follow the objectives stated in the offer document. JPM T-Bill Index Post-Tax Returns on Bank Deposits versus Debt Funds. company fixed deposits. It is more than mere tax planning. 3. BSE bankex. leaving the actual allocation of securities and their management to fund managers. equities. to mutual funds): Investors are required to go for financial planning before making investments in any mutual fund. 2. ii)funds from the same peer group. Studying the features of a scheme.index. I-Bex Total Return Index. PPF. bank deposits. Selection of fund. life 36 . liquid funds: Short Term Government Instruments’ Interest Rates as Benchmarks. fixed income bonds. Steps in financial planning are: Asset allocation. In case of mutual funds. financial planning is concerned only with broad asset allocation. The objective of financial planning is to ensure that the right amount of money is available at the right time to the investor to be able to meet his financial goals. because financial plans of users are chosen using these objectives. 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. and other sectoral indices. Financial planning for investors( ref.debt funds: Interest Rates on Alternative Investments as Benchmarks. corporate debentures. JPM TBill Index To measure the fund’s performance. the comparisons are usually done with: I)with a market index. iii)other similar products in which investors invest their funds.

volatility and liquidity. we get this in a tabular 37 .insurance. gold. safety convenience. measuring these form investment options on the basis of the mentioned parameters.return. real estate etc. all these investment options could be judged on the basis of various parameters such as.

FDs Moderate Low Low Low 38 . Debentures Moderate Moderate Moderate Low Low Co.Return Safety Volatility Liquidity Convenience Equity High Low High High Moderate Bonds Moderate High Moderate Moderate High Co.

 Which feature of the mutual funds allure you most? Diversification 42 Professional management 29  According to you which is the most suitable stage to invest in mutual funds? Young unmarried stage Young Married with children stage 39 55 32 .

Married with older children stage Pre retirement stage 21 27  Are you availing the services of personal financial advisors? Yes No 87 48 40 .

 Which expertise of the personal financial advisor is demanded most? Portfolio review & investment recommendation Planning to achieve specific financial goals Managing assets in retirement Access to specialists in areas such as tax planning 43 35 30 27  What is the major reason for using financial advisors? 41 .

Want help with asset allocation Don’t have enough time to make own decision To explain various investment options Want to have surety about financial goals 42 23 37 33  What is the major reason for not using financial advisor? Have access to all resources needed Believe advisors are too expensive Unsure how to find a trustworthy advisor Want to be in control of own investments 18 53 21 43 42 .

Research findings and conclusions:  At the survey conducted upon 200 people. 34% people are aware of only the schemes in which they have invested. 43 . even the AMCs should follow it. only 18% have sound knowledge of MFs. 28 from brokers only. the benefits arousing from these investments were not enough to drive them for investment in MFs and 12 people expressed no trust over the fund managers’ decision. then most of the people held their ignorance responsible for that. when those 65 people were asked about the reason of not investing in mutual funds.  Now.  33 participants buy forms directly from the AMCs.  Out of the 135 persons who already have invested in mutual funds/ are interested to invest. 27% possess partial knowledge whereas 21% stands nowhere in knowledge about MFs. Again the financial advisors can tap upon these people by educating them about mutual funds. So there is enough scope for the advisors to convert those 65 participants into investors through their convincing power and great communication skills. They lacked knowledge and information about the mutual funds. The brokers and sub brokers have the maximum reach so they should try to make those investors aware f the happenings. Whereas just 10 people enjoyed investing in other option. 135 are already mutual fund investors or are interested to invest in future and the remaining 65 are not interested in it. For 18 people. 55 from brokers and sub-brokers even then 15 people buy from other sources.

Even 32 persons were ready to invest at a stage of young married with children but person with older children avoid investing due to increased expenses. Nobody will invest until and unless he is fully convinced. While just 23 gave the reason. about 53 of them pointed the advisors as expensive. 37 of them needed them to explain them the various investment options available. managing assets in retirement and access to specialists in area such as tax planning. So the advisors should try to change their mindsets. helps in achieving long term goals and helps in achieving long term goals respectively.lack of time.  Out of them 87 were already availing the services of financial advisors whereas 48 didn’t.21 of them said that they find it difficult to get trustworthy advisors. When asked about the most alluring feature of MFs. Mutual funds offer a lot of benefit which no other single option could offer. followed by planning to achieve long term goals. Whereas 18 of them said they have access to all the necessary resources required. most of them opted for diversification. 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. The advisors should 44 . But again the number rose to 27 at pre-retirement stage.33 of them wanted to make sure that they were saving enough to meet their financial goals. followed by reduction in risk.  When asked about one reason for not availing the services of financial advisors. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.  Most of the investor preferred to invest at a young unmarried stage. When asked about the expertise of financial advisors which they liked most? 43 of them favored portfolio review and investment recommendation. Recommendations: The most vital problem spotted is of ignorance. 43 of them wished to be in control of their own assets.  42 participants regarded asset allocation as the major reason for going for financial advisors. Investors should be made aware of the benefits.

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.what is the most important reason for not investing in mutual funds? Lack of knowledge about mutual funds Enjoys investing in other options [ ] [ ] Its benefits are not enough to drive you for investment [ ] 45 . But if not possible then they could go for offering more services and benefits at the existing rate. and systematic transfer plan. The advisors should try to charge a nominal fee at the beginning. rupee cost averaging. The advisors may try to highlight some of the value added benefits of MFs such as tax benefit.have you invested /are you interested to invest in mutual funds? Yes [ ] question) No [ ] (plz. Exhibit 1 Questionnaire:  . Investors could also try to increase the spectrum of services offered. Now the most important reason for not availing the services of advisors was spotted was being expensive. rebalancing etc. these benefits are not offered by other options singlehandedly. They should also maintain their decency and follow the 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.target for more and more young investors. attempt the next  . So these are enough to drive the investors towards mutual funds.

where from you purchase mutual funds? Directly from the AMCs [ ] Brokers only Brokers/ sub-brokers Other sources [ ] [ ] [ ]  .where do you find yourself as a mutual fund investor? Totally ignorant Partial knowledge of mutual funds [ ] [ ] Aware only of any specific scheme in which you invested [ ] Fully aware [ ]  .which feature of the mutual funds allure you most? Diversification Professional management [ ] [ ] Reduction in risk and transaction cost [ ] Helps in achieving long term goals [ ]  . According to you which is the most suitable stage to invest in mutual funds? Young unmarried stage [ ] Young Married with children stage [ ] Married with older children stage [ ] Pre-retirement stage 46 [ ] .No trust over the fund managers [ ]  .

what is the major reason for not using financial advisor? Have access to all resources needed to invest on own [ ] Believe advisors are too expensive Unsure how to find a trustworthy advisor Want to be in control of own investment [ ] [ ] [ ] Bibliography: Websites: 47 . .what is the major reason for using financial advisors? Want help with asset allocation [ ] Don’t have time to make my own investment decision [ ] To explain various investment options [ ] Want to make sure I am investing enough to meet my financial goals [ ]  . are you availing the services of personal financial advisors? YES [ ] most? Portfolio review & investment recommendation [ ] Planning to achieve specific financial goals Managing assets in retirement Access to specialist in areas such as tax planning [ ] [ ] [ ] NO [ ]  .which expertise of the personal financial advisor is demanded  .

com www.com www.investopedia.theeconomictimes.com www.yahoofinance.com www.com www.com journals & other references: Karvy –the finapolis Karvy.com www.com www.valueresearchonline.com www.business associates manual The Economic Times Business Standard The Telegraph Business India Fact sheet and statements of various fund houses.bseindia.com www.moneycontrol.com www.com www. 48 .the-finapolis.rediffmoney.karvy.nseindia.morningstar.mutualfundsindia.www.

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