Management Education & Research Institute, New Delhi


I hereby declare that the project work entitled “Performance and awareness of mutual fund” submitted to the Management Education & Research Institute, New Delhi, is a record of an original work done by me under the guidance Mr. Ranjit Kumar Rawat (Cluster Head, Karvy Stock Broking Ltd.)) , Mr. Ashutosh Chaturvedi (Zonal Head, Karvy Stock Broking Ltd.), Mr. Kamlesh Kumar Yadav (Relationship Manager, Karvy Stock Broking Ltd.) and Mr. K. K. Sharma (Placement Coordinator, Management Education & Research Institute) and this project work has not performed the basis for the award of any Degree or diploma/ associate ship/fellowship and similar project if any.

Name: Lokesh Jain Roll No. : 109219 PGDM (2009-11)

Management Education & Research Institute, New Delhi


Table of Contents
Acknowledgement…………………………………………………….………………………5 Executive summary ………………………………….……………………………………..…6 Introduction: Company Detail………………….…….………………………………….……8 Where Karvy stand in the market………………………………………………………….….9 Karvy Groups…………………………………………………………………………….…..10 Mission statement of Karvy………………………………………………………….……....11 Vision of Karvy …………………………………………………………………………...…11 Karvy value……………………………………………………………………………..……12 Karvy Services: An overview …………………………………………………………..…...13 Marketing strategy of Karvy ………………………………………………………………...22 HR Policy of Karvy ………………………………………………………………………....24 National level organization chart………………………………………………………..…...25 Branch level organization chart……………………………………………………….……..26 Quality policy of Karvy………………………………………………………………….…..27 Quality objective of Karvy……………………………………………………………….….27 Achievements of Karvy………………………………………………………………….…..28 SWOT analysis of Karvy………………………………………………………………..…...30 Mutual Fund Industry detail…………………………………………………………….…...30 Development of Mutual Fund in India……………………………………………………....31 Regulatory Body………………………………………………………………………….….35 Management Education & Research Institute, New Delhi Page3

Competitors detail…………………………………………………………………………....36 Product detail…………………………………………………………………………..…….40 Structure of Indian Mutual Funds……………………………………………………..……..41 Mutual Fund – A globally proven investment……………………………………….………43 Critical view about Mutual Funds……………………………………………………..……..44 Mutual Fund cycle…………………………………………………………………….……..47 Types of Mutual Fund……………………………………………………………….………48 Research objective……………………………………………………………………….…..55 Research Methodology………………………………………………………………….…...56 Research analysis and interpretation……………………………………………………..…..59 Limitations………………………………………………………………………………..….64 Glossary……………………………………………………………………………….……..65 Questionnaire…………………………………………………………………………….…..67 Bibliography…………………………………………………………………...………….…69

Management Education & Research Institute, New Delhi


I am really happy and exited in representing this summer training project report before you. I must express my gratitude towards KARVY STOCK BROKING LTD. for giving mean opportunity to work with on this report. And of course I am very much thankful to our honorable Mr. Ranjit Kumar Rawat (Cluster Head, Karvy Stock Broking Ltd.)) , Mr. Ashutosh Chaturvedi (Northern Regional Head, Karvy Stock Broking Ltd.) and Mr. Kamlesh Kumar Yadav (Relationship Manager, Karvy Stock Broking Ltd.) for giving me opportunity and his guidance helps me through out preparing this report. He has also provided me a valuable suggestions and excellence guidance about this training, which proved very helpful to me to utilize my theoretical knowledge in practical field. At last I am also thankful to my friends, to all known and unknown individuals who have given me their constructive advise, educative suggestion, encouragement, co-operation and motivation to prepare this report.

Management Education & Research Institute, New Delhi


India’s economy is highly developing. The development is taken place due to the growth in the financial system. This financial system provides the background to various investors regarding varied options to invest. Thus, development of the economy depends on how these investors invest for the well being in long run. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. Mutual Funds represent perhaps the most appropriate investment opportunity for investors. No wonder the concept of Mutual Fund was initially developed in the U.S. market, but the entry of the concept in the Indian Financial Market was in the year 1964 with the formulation of the UTI, at the initiative of the RBI and Govt. of India. For most people, money is a delicate matter and when it comes to investing they are wary. Simply because there are many investment options out there, each out promising the other. An important question facing many investors is whether to invest in Banks, National Savings, Post office, Non-banking finance companies, Fixed deposits, Shares etc. or to invest distinctively in Mutual Funds. It has been perceived that there is huge potential market in the region of New Delhi. Thus an exploratory research with the hypothesis “The region of New Delhi being progressively industrializing & developing should provide a large & wider market share for Mutual Fund” has been done. Thus the purpose of this research was to find why people do not actively invest in mutual fund in spite of various benefits like Professional management, Diversification, Convenience liquidity, Flexibility, Tax benefits etc. as well as to find out potential of business of KARVY in distribution of Mutual Fund in New Delhi. After performing the detailed exploratory research by interviewing different persons who act as investment advisor like Insurance advisor and Post office advisor etc. with the help of questionnaire, certain facts were revealed regarding the view about Mutual Funds in the mind of investors.
Management Education & Research Institute, New Delhi Page6

I have observed that approximately 60% of the people are unaware of Mutual Funds but most of them are interested to know about Mutual Funds and ready to attend seminar arranged by KARVY. They are also interested to work with KARVY if sufficient information is provided to them about Mutual Fund and KARVY. People from service class prefers safety of income plus the regular income as well as tax benefits while on the other hand Professional and Businessman focus on high return with some risk. For growth and development of the Mutual Fund Industry, the misconception regarding Mutual Fund should be removed & the awareness for the same should be made.

Management Education & Research Institute, New Delhi


Karvy Consultants Limited was established in 1982 at Hydrabad. It was established by a group of Hydrabad-based practicing Chartered Accountants. At initial stage it was very small in size. It was started with a capital of Rs.1,50,000. In starting it was only offering auditing and taxation services. Later, it acts into the Registrar and Share transfer activities and subsequently into financial services and other services like Financial Product Distribution, Investment Advisory Services, Demat Services, Corporate Finance, Insurance etc. All along, Karvy’s strong work ethics and professional background leveraged with Information Technology enabled it to deliver quality to the individual. A decade of commitment, professional integrity and vision helped Karvy achieving a leadership position in its field when it handled largest number of corporate and retail that proved to be a sound business synergy. Today, Karvy has access to millions of Indian shareholders, besides companies, banks, financial institutions and regulatory agencies. Over the past one and half decades, Karvy has evolved as a veritable link between industry, finance and people. In January 1998, Karvy became first Depository Participant in Andhra Pradesh. An ISO 9002 Company, Karvy’s commitment to quality and retail reach has made it an Integrated Financial Services Company. Today, company has 230 branch offices in 164 cities all over the India. The company adds 5 new offices every month to the company’s ever growing national network in every nook and corner of the country. The company service over 16 million individual investors, 180 corporate and handle corporate disbursements that exceed Rs.2500 Crores.

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KARVY is a legendary name in financial services, Karvy’s credit is defined by its mission to succeed, passion for professionalism, excellent work ethics and customer centric values. Today KARVY is well known as a premier financial services enterprise, offering a broad spectrum of customized services to its clients, both corporate and retail. Services that KARVY constantly upgrade and improve are because of company’s skill in leveraging technology. Being one of the most techno-savvy organizations around helps company to deliver even more cost effective financial solutions in the shortest possible time. What bears ample testimony to Karvy’s success is the faith reposed in company by valued investors and customers, all across the country. Indeed, with Karvy’s wide network touching every corner of the country, even the most remote investor can easily access Karvy’s services and benefit from company’s expert advice.

Management Education & Research Institute, New Delhi


Karvy Consultants Limited Karvy Comtrade Limited Karvy Insurance Broking limited Karvy Realty (India) Limited Karvy Globle Service Limited Karvy Data Management Service Limited Karvy Financial Service Limited Karvy Investor Services Limited Karvy Stock broking Limited Karvy Computer Shares Pvt. Ltd.

Management Education & Research Institute, New Delhi


Mission Statement of ‘Karvy’
An organization exists to accomplish something or achieve something. The mission statement indicates what an organization wants to achieve. The mission statement may be changed periodically to take advantage of new opportunities or respond to new market conditions. Karvy’s mission statement is “To Bring Industry, Finance and People together.” Karvy is work as intermediary between industry and people. Karvy work as investment advisor and helps people to invest their money same way Karvy helps industry in achieving finance from people by issuing shares, debentures, bonds, mutual funds, fixed deposits etc. Company’s mission statement is clear and thoughtful which guide geographically dispersed employees to work independently yet collectively towards achieving the organization’s goals.

Vision of Karvy
Company’s vision is crystal clear and mind frame very directed. “To be pioneering financial services company. And continue to grow at a healthy pace, year after year, decade after decade.” Company’s foray into IT-enabled services and internet business has provided an opportunity to explore new frontiers and business solutions. To build a corporate that sets benchmarks for others to follow.

Management Education & Research Institute, New Delhi


Karvy Values:
Integrity Responsibility Reliability Unity Understanding Excellence Confidentiality Karvy has adequate internal control systems and procedures commensurate with the size nature of its business. These system and procedures provide reasonable assurance of maintenance of proper accounting records, reliability of financial information, protection of resources and safeguarding of assets against unauthorized use.

Management Education & Research Institute, New Delhi


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Stock broking Demat services Investment product distribution Investment advisory services Corporate finance & Merchant banking Insurance Mutual fund services IT enabled services Registrars & Transfer agents Loans


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.
Management Education & Research Institute, New Delhi Page13

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 5 (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. Company is dealer of following Fixed Deposits
PUBLIC SECTOR Sl. No. Company Name 1 HUDCO 2 Sardar Sarovar Narmada Nigam Ltd. 3 Tamilnadu Power Finance Corporation Ltd. 4 NTPC NON BANKING FINANCE COMPANIES Sl. No. Company Name 1 Ashok Leyland Finance Ltd. 2 Bajaj Auto Finance Ltd. 3 Birla Home Finance Ltd. 4 Cholamandalam Investment & Finance Co. Ltd. 5 Escorts Finance Ltd. 6 First Leasing Company of India Ltd. 7 IDBI Suvidha 8 Nicco Uco Alliance Credit Ltd.
[FD of Non Banking Finance Companies with which Karvy deals]

Management Education & Research Institute, New Delhi


HOUSING FINANCE COMPANIES Sl. No. Company Name 1 Can Fin Homes Ltd. 2 Dewan Housing Finance Corporation Ltd. 3 Gruh Finance Ltd. 4 HDFC Ltd. 5 PNB Housing Finance Ltd. 6 Sundaram Home Finance Ltd.
[FD of Housing Finance Companies with which Karvy deals]

MANUFACTURING COMPANIES Sl. No. Company Name 1 A P Paper Mills Ltd. 2 Amtek India Ltd. 3 Atul Ltd. 4 Ballarpur Industries Ltd. 5 Chambal Fertilizers & Chemicals Ltd. 6 Escort Ltd. 7 Greaves Ltd. 8 Gujarat Alkalies & Chemicals Ltd. 9 Indian Express 10 Ind-Swift Ltd. 11 JK Industries Ltd. 12 Jindal Steel & Power Ltd. 13 Sound Craft Industries Ltd. 14 Supreme Industries Ltd. 15 Zuari Industries Ltd.
[FD of Manufacturing Companies with which Karvy deals]

(b). Bonds: Karvy is dealer of following bonds • • • RBI Saving Bonds NHB REC

Management Education & Research Institute, New Delhi

(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.


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 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.


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.
Management Education & Research Institute, New Delhi Page16

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



Karvy is also dealer of many private life insurance companies. At New Delhi, Motinagar branch, company is associated with dealing of following companies. • • • ICICI Prudential Life Insurance HDFC Life Insurance TATA AIG Life Insurance


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.

Management Education & Research Institute, New Delhi


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.

Management Education & Research Institute, New Delhi


List of Mutual Fund Clients of KARVY:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Alliance Mutual Fund Birla Mutual Fund Bank of Baroda Mutual Fund Can Bank Mutual Fund Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Franklin Templeton Investments GIC Mutual Fund HDFC Mutual Fund HSBC Mutual Fund IL & FS Mutual Fund JM Mutual Fund Kotak Mutual Fund LIC Mutual Fund Punjab National Bank Mutual Fund Prudential ICICI Mutual Fund Principal Mutual Fund Reliance Mutual Fund State Bank of India Mutual Fund Standard Chartered Mutual Fund Sundaram Mutual Fund SUN F&C Mutual Fund Tata Mutual Fund
[List of MF Companies with which Karvy deals]

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. a. Distribution of PAN Card. b. Distribution of TAN Card. c. 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
Management Education & Research Institute, New Delhi Page19

forms. It also solves queries of the tax payers. It also distributes PAN and TAN card to the tax payers. TIN Overview 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.

Management Education & Research Institute, New Delhi



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

Management Education & Research Institute, New Delhi


Market Positioning:
Market positioning statements of Karvy are “At Karvy we give you single window service” and “We also ensure your comfort”. So, Karvy focus on the consumers who prefer almost all investment activities at same place by providing number of various financial services. At Karvy a person can purchase or sell shares, debentures etc. and at the same place also demat it. Karvy also provides other investment option to the same person at same place like Mutual Fund, Insurance, Fixed Deposit, and Bonds etc. and help the person in designing his portfolio. By this way Karvy provides comfort to its customers. Karvy is also positioned according to Ries and Trout. Karvy is promoted as a no. 1 investment product distributor and R & T agent of India.

Target Market:
Karvy uses demographic segmentation strategy and segment people based on their occupation. Karvy uses selective specialization strategy for market targeting. Target person for the Karvy Stock Broking and Karvy Investment Service are persons who can work as sub-broker for the companies. Companies focus on Advisors of Insurance and post office, Tax consultants and CAs for making sub-broker.

Management Education & Research Institute, New Delhi


Marketing channel System:
Karvy uses one level marketing channel for investment product distribution. Sub-brokers work as intermediary between consumer and company. Company has both forward and backward flow of activity through channel. Company distributes stationery, brokerage, and information forward to its sub-broker. The sub-brokers send filled forms, queries, amount of investment etc. back to the company.

Training Channel Members:
Karvy provides training to the sub-brokers because they will be viewed as the company by the investors. The executives of Karvy explain various new schemes of investment to the sub-brokers with its objective, risk factors and expected return. Company also periodically arrange seminar to guide subbrokers.

Advertising and Promotion:
The objective of advertising of Karvy is to create awareness about services of Karvy among investors and sub-brokers and increase sub-brokers of Karvy. Company doesn’t give advertisement in media like TV, Newspapers, and Magazines etc. Karvy’s advertisement is made indirectly by the companies associate with it. Karvy is R & T agent of around 700 companies. They publish name, address and logo of Karvy on their annual report. Karvy also publish its weekly Stock Market Newsletter ‘Karvy Bazaar Baatein’ and monthly magazine ‘The Finapolis’ to guide investors and sub-brokers about market.

Management Education & Research Institute, New Delhi


Karvy’s HR Department is located at Hyderabad.

Recruitment and Selection Policy:
The upper level members like zonal managers, regional managers, branch managers and senior executives are recruited by publishing recruitment advertisement in leading national level newspaper. The qualified applicant are then called for interview and selected. The regional manager has authority to select lower level employee like peon, marketing executives, accountant etc. by approval of zonal manager.

Training and Development:
Continuous training and upgrading technical, behavioral and managerial skills is a way of life in Karvy. Karvy encourages employees to hone their skills regularly to enable them to face the challenges of the changing requirements of customers that fit market up and down. Training needs analysis is done on a regular basis and systematic methodologies are ensured that skills and capabilities of all employees are constantly upgraded to enable them to perform in the challenging work environment. New employee has given training under experienced employee. The new employee work under experience employee and observe his all activities. When company employs new technology or there is any change in the working of company the training program is arranged.

Employee Motivation:
Karvy’s employees are highly empowered. They don’t have to report any person of the same branch but they report upper level branch. If particular branch earn certain profit then Karvy gives them special incentives. This also helps in maintaining co-operation between employees.

Management Education & Research Institute, New Delhi


CM & MD (Hyderabad) GM (Marketing) GM (Finance) Zonal Manager GM (HRM)

Regional Manager

Branch Mgr.

Branch Mgr.

Branch Mgr.


Sr. Executives Executives

[National Level Organization Chart of Karvy]

Management Education & Research Institute, New Delhi



Branch Manager

Sr. Executive (Investment)

Executives (SB - 4)

Executive (IT)

Marketing Executives-3 Executive (Demat)





[Branch Level Structure of Karvy]

Management Education & Research Institute, New Delhi


Quality Policy Of Karvy:
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 of Karvy
• 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.

• •

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Achievements of Karvy:
• • • • • • • • • Largest mobilizer of funds as per PRIME DATABASE First ISO - 9002 Certified Registrar in India A Category- I Merchant banker A Category- I Registrar to Public Issues Ranked as "The Most Admired Registrar” by MARG Handled the largest- ever Public Issue - IDBI Strategic tie-up with Jardine Fleming India Securities Ltd Handled over 500 Public issues as Registrars Handling the Reliance Account which accounts for nearly 10 million account holders • First Depository Participant from Andhra Pradesh

Management Education & Research Institute, New Delhi


• • • • • 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.


High Employee Turnover.

• • 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.

• • Increasing number of local players. Past image of Mutual Fund.

Management Education & Research Institute, New Delhi


Following are list of Mutual Fund companies in India. Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Mutual Fund Name Alliance Mutual Fund Benchmark Mutual Fund Birla Mutual Fund Bank of Baroda Mutual Fund Can Bank Mutual Fund Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutual Fund Franklin Templeton Investments GIC Mutual Fund HDFC Mutual Fund HSBC Mutual Fund IL & FS Mutual Fund ING Vysya Mutual Fund JM Mutual Fund Kotak Mutual Fund LIC Mutual Fund Morgan Stanley Mutual Fund Punjab National Bank Mutual Fund Prudential ICICI Mutual Fund Principal Mutual Fund Reliance Mutual Fund Sahara Mutual Fund State Bank of India Mutual Fund Standard Chartered Mutual Fund Sundaram Mutual Fund SUN F&C Mutual Fund Tata TD Mutual Fund Taurus Mutual Fund Unit Trust of India UTI Mutual Fund No. of Schemes 36 5 74 17 25 45 40 40 15 130 5 79 32 43 55 55 56 35 1 4 124 68 74 12 59 100 52 1 100 9 42 66

Development of Mutual Funds in India
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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. The history of mutual funds in India can be broadly divided into four distinct phases FirstPhase-1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was delinked 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) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 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.
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The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. 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 Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. 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. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. The graph indicates the growth of assets over the years.

Management Education & Research Institute, New Delhi


180000 160000 140000 Rs. In Crores 120000 100000 80000 60000 40000 20000 0 25 4564 Mar-87 Mar-93 Jan-03 Years Mar-03 Sep-03 May-04 47000 79464 121805 121778 154018


[Growth in Assets Under Management]
[Source: www.amfiindia.com]

Mutual Funds – Organisation There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

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45% 40% 35% 30% 25% 20% 15% 10% 5%

42% 36%

14% 4% Money Market Gilt

3% Income Growth Balanced

Fund Type

[Assets Under Management By Fund Type] [Source: www.amfiindia.com]

40% 35% 30% 25% 20% 15% 10% 5% Bank 0% 5% 17%





21% 19%




Fund Type Under Management By AMC] [Source: www.amfiindia.com]

Management Education & Research Institute, New Delhi



Financial System is basically responsible for the major up and downs in the economy. So, there are some regulatory bodies on it which ensures effectiveness in the management of fund of the investors and transparency in the transactions. Ministry of Finance

SEBI Stock Brokers R & T Agent Mutual Fund

RBI Commercial Banks NBF Co.

Dept. of IT PAN TAN e-TDS

[Regulatory bodies]

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1. Bajaj Capital
It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument ‘Companies Fixed Deposits’ and becomes the first company to raise Fixed Deposits. The objective of company is to provide professional guidance to investors on where, when and how to invest and to assist the corporate sector in its resource raising activities. Bajaj Capital became the first company to set up ‘Investment Centers’ all over India for this purpose. Today, Bajaj Capital has 90 offices in over 40 important Indian Cities and has a team of around 500 employees nationwide. Services provided • • • Merchant banking Buying and Selling of Money Market Investments Distribution of financial products Investment Advisory Service » Company fixed deposits » Bonds » Mutual funds » Life insurance » General insurance » Pension schemes » Post office schemes » Tax saving schemes » Insurance linked investment schemes » Initial public offerings » Housing loans » NRI schemes » Car insurance

Financial Planning » Investment planning » Retirement planning
Management Education & Research Institute, New Delhi Page36

» Insurance planning » Children's future planning » Tax planning » Short-term cash flow planning

2.MCS Ltd.
It is established in 1985 in Delhi. It is one of the largest Data Processing House employing more than 600 people. MCS Ltd. has 8 branches all over India. Volumes Handled • • • Share registry activities for over 100 corporate servicing over 10 million investors. Mutual fund operations for 25 funds, servicing over 4.5 million investors. Billing & settlement plan for Indian operations of IATA Geneva for 1.2 million tickets per annum covering (26 airlines & over 1200 agents). Services Offered: • • • • • • Registrars and Transfer Agents Registrars to IPO’s /Right Issues Registrars to Open Offers Registrars to Mutual Funds Data Processing for Airlines Print Shop Services MCS is a major player in these activities in the Country with a market share of about 25%. MCS today provides these services to over 140 Corporate and Mutual Funds for a total investor base of 15 million.

3. N.J.India Investments Pvt. Ltd.
NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to cater to the growing financial services sector. NJ India Invest evolved out as a client focused need based investment advisory firm. NJ regards mutual fund as one of the best investment avenue available to satisfy any kind of investment need.
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4. ICICI Securities Ltd.
ICICI Securities Limited (i-SEC) is a wholly owned investment-banking subsidiary of ICICI Limited. ICICI is the only non-Japanese Asian financial institution to be listed on the New York Stock Exchange (NYSE). ICICI Securities was formed on 22nd Feb. 1993, when ICICI's Merchant Banking Division was spun off into a new company; ICICI Securities today is India's leading Investment Bank and one of the most significant players in the Indian capital markets. ICICI Brokerage Services Limited (IBSL) set up in March 1995, IBSL is a 100% subsidiary of i-SEC. It commenced its securities brokerage activities in February 1996 and is registered with the National Stock Exchange of India Limited and The Stock Exchange, Mumbai. ICICI has started a website ICICIdirect.com which is the most comprehensive website, which allows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other financial products. ICICI has a large network of branches all over India. Services offered: • • • Merchant Banking Demat Service Stock Broking

HDFC is the leading financial company in India. IT has large network of branches all over India. HDFC Securities which is fully subsidiary of HDFC provides demat service. HDFC and its subsidiary provides following services. • • • • • • Demat Service Life Insurance Banking Service Housing Finance Vehicle Finance Education Loan
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• •

Personal Loan Mutual Fund

6. Kotak Securities Ltd.
Kotak Securities needs no introduction as one of the largest stock broking houses in the country and a leading distributor of primary market offerings. Kotak Securities limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs, the international investment banking and brokerage firm. Kotak Securities is a corporate member of both the BSE and the NSE. It is also a depository participant with the National Securities Depository Limited (NSDL) for trading and settlement of dematerialized shares. Services offered: • • • • Stock Broking Financial Product Distribution Demat Services Investment Advisory Services

7. Motilal Oswal Securities Ltd.
Motilal Oswal Securities Ltd (MOSt) is one of the leading equity research and broking houses of India. MOSt has a 20-member research team, which is engaged round the clock in analyzing the Indian economy and corporate sectors to identify equity investment ideas. Asia Money Broker's Poll 2002 has rated MOSt as one of the best Indian broking house, for research, for the second time since 2000. Motilal Oswal is member of NSDL and CDSIL for DP. It has wide network of branches. It has 158 branches all over India. Services Offered: • • • Demat Services Stock Broking Investment Advisory Service
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Mutual funds serve as a link between the saving people and the capital market in that they mobilize saving from investors and bring them to borrowers in the capital markets. In short, it is a common pool of money into which investors place their contribution that is to be invested in accordance with a stated objective. A mutual fund uses the money collected from the investors to buy those assets, which are specially permitted by its stated investment objective. When an investor subscribes to a mutual fund, he/she buys a part of asset or the pool of funds that are outstanding at that time. A mutual fund is constituted as an investment company and an investor buys into the fund, means he buys the share of the fund and is known as a unit holder. Since each unit holder is a part of owner of a mutual fund, it is necessary to establish the value of his part. Since the unit held by an investor evidences the ownership of the fund’s assets, the value of the total asset of the fund when divided by the total number of units issued by the mutual fund gives us the value of one unit. This is called as Net Asset Value (NAV).

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Mutual fund industry is highly regulated by the government keeping in view of the protection of investor’s interest as well as to maintain operational transparency. In India SEBI Regulations Act, 1996, guides the formation and operation of Mutual Funds. A Mutual Fund comprises of 4 separate entities. 1. 2. 3. 4. 5. Sponsor Board of Trusties Asset Management Company Custodian and Depositories Distributors


“Sponsor” is defined under SEBI regulation as any person who, acting alone or in combination with another body corporate, establishes a mutual fund. The sponsor gets the fund registered with SEBI. The sponsors form a trust and appoint a Board of Trustees.

• •

The sponsor must contribute at least 40% of the net worth of the AMC. The sponsor must posses a sound financial track record over 5 years prior to registration.

2. Board of Trustees:
Mutual funds are managed by Board of Trustees. Trust is created by a document called the Trust Deed that is executed by fund sponsor in favour of trustees. • • • • The trustees appoint the AMC and custodian with the prior approval of SEBI. They also approve all the schemes floated by the AMC. They have right to dismiss the AMC, with the approval of SEBI. Half of the trustees should be independent persons. Neither the AMC, nor its employees can act as trustee.
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• •

A trustee can not be appointed as a trustee of two or more mutual funds until and unless he is an independent person or has permission from the Mutual Fund where he is trustee. Trustees can be removed only by prior approval of SEBI. 3. Asset Management Company: The role of an AMC is to act as the investment manager of the Trust under the Board supervision and direction of the Trustees. The AMC is required to be approved and registered with SEBI.

• • • • •

The AMC of a Mutual Fund must have a net worth of at least Rs. 10 crore at all time. The AMC can not act as a trustee of any other Mutual Fund. They will float schemes only after obtaining the prior approval of the Trustees and SEBI. The director of AMC should be a person of reputed of high standing and at least have five years experience in relevant field. AMC can be terminated with 75% unit holders or majority of trustees.

4. Custodian and Depositories:
As per SEBI Regulations Mutual Funds shall have a custodian who is not any way associated with the AMC. It carry outs the activity of safe keeping the securities or participating, in any clearing system. The custodian should be independent from sponsors and AMC and should have a sound track record and adequate relevant experience. As Indian capital markets are moving away from having physical certificates to ownership of these securities in “dematerialized” form with Depository. Mutual Fund’s “dematerialized” securities are hold by depository participant.

5. Distributors:
For a fund to sell units across a wide retail base of individual investors, an established network of distribution agents is essential. AMCs usually appoint Distributors or Brokers, who sell units on behalf of the fund. A broker usually acts on behalf of several mutual funds simultaneously and may have several sub-brokers under him for the purpose of distribution of units.
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Management Education & Research Institute, New Delhi


Worldwide, the mutual fund has a long and successful history. The popularity of mutual fund has increased manifold. In developed financial market, like US mutual funds have almost overtaken bank deposits and total assets of over US $ 3 trillion. In India, Mutual Fund industry started with the setting up of UTI in 1964. Public sector banks and financial institution began to establish Mutual Funds in 1987. The private sector and foreign institutions were allowed to set up Mutual Fund in 1993. WHAT IS MUTUAL FUND? A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

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Critical View About Mutual Fund Advantages:
1. Portfolio Diversification:

Each investor in a fund is a part owner of all the funds assets, thus enabling investor to hold a diversified investment portfolio even with a small amount of investment, which would otherwise require big capital. 2. Professional Management: Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyze the performance and prospect of companies and selects suitable investments to achieve the objectives of the scheme. 3. Diversification: Mutual Fund invests in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because all stock can not go through a downtrend at the same time and in the same proportion. You achieve this diversification through a mutual fund with powerless money that you can do on your own. 4. Reduction of Transaction Cost: The investors bear all the cost of investing such as brokerage or custody of securities. When going through the fund investor has the benefit of economies of scale; the funds pay lesser cost because of larger volumes, a benefit passed on to its investors. 5. Liquidity: By investing in Mutual Funds the investors can cash their investment by selling their units to the fund if open-ended, or selling them in the stock market if the fund is close ended. 6. Convenience & Flexibility:
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Mutual Funds Companies offer investor to transfer their holding from one scheme to other. 7. Tax Benefits: The investors are totally exempt from paying any tax on the income they receive from the Mutual Funds. Investment up to 10000 in ELSS qualifies for tax rebate of 20%. 8. Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud. 9. Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet.

1. No Control over Costs:

An investor in a mutual fund has no control over the overall cost of investing. He/she has to pay investment management fees as long as he/she remains with the fund. Fees are payable even while the value of the investment may be declining. 2. No Tailor made Portfolios:

Investors who invest on their own can build their own portfolios of shares and bonds and other securities. Investing through fund means he/she delegates this decision to the fund managers. 3. Managing a Portfolio of Funds:

Availability of a large number of funds can actually mean too much choice for the investor. He/she may again need advice on how to select a fund to achieve his/her objectives, quite similar to the situation when he/she has to select individual shares or bonds to invest in.
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Entry and Exit Cost:

When large bodies like a fund invest in shares, the concentrated buying or selling often result in adverse price movements i.e. at the time of buying, fund has to pay high and vise-versa. But now SEBI has confirmed that no AMC can charge entry load on new mutual fund.


No Guarantees:

No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

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[Mutual Fund Cycle] [Source: amfiindia.com]

From above cycle, it can be observed clearly that how the money from the investors flow and they get returns out of it. With a very small amount of fund, investors pool their money with fund managers. After studying the market, the fund manager invests money of the investors in various securities like shares, bonds, debentures, government securities etc. to achieve goal of the investors. With ups and downs in the market returns are generated and they are passed on to the investors in form of dividend or capital gain or lost. The above cycle is very clear and also very effective. The fund manager while investing on behalf of investors takes into consideration various factors like time, risk; amount etc. so that he/she can make proper investment decision.

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Types of Mutual Fund

Types of Mutual Fund

By Objective

Equity Fund

Debt Fund

Balanced Fund

Money Market

Gilt Fund

By Duration

Open Ended

Close Ended


By Load

Load Fund

No Load Fund

Other Fund

Tax Saving

Index Fund

Sector Fund

Comm. Fund


[Fig.10: Types of Mutual Funds]

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By objective:

Investment goals vary from person to person. While somebody wants security, others might give more weightage to returns alone. Somebody else might want to plan for his child’s education while somebody might be saving for the proverbial rainy day or even life after retirement. With objectives defying any range, it is obvious that the products required will vary as well. So, Mutual funds can be classified based on the objectives of the investor. (a). Equity Fund: Equity funds invest a major portion of their corpus in equity shares issued by companies. NAV of equity funds are fluctuated by fluctuation in price of shares that it holds. So there is a high risk as well as high return in equity fund. Potential to earn in such funds is higher when they are invested for long term. The leading example of such funds are Prudential ICICI Growth Plan, Tata Pure Equity Fund, Reliance Vision, Franklin India Prima Fund etc. (b). Debt Fund:

Debt funds invest in debt instruments debt instruments issued by governments, private companies, banks and financial institutions. By investing in debt, these funds target low risk and stable income investors. These funds are low risk low return funds. The leading examples are: Birla Income Plus, Principal Income Fund, HDFC Income Fund, UTI Bond Fund etc. (c). Balanced Fund:

A balanced fund is one that has a portfolio comprising debt instruments as well as preference and equity shares. The idea is to reduce volatility of funds, while
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providing some upside for capital appreciation. They are best suitable for the people looking for a combination for capital appreciation and regular income and best time spend for such investment is more than 3 years. The leading examples are Prudential ICICI Balanced Fund, Birla Balance Fund, Franklin India Balance Fund, Sundaram Balance Fund etc. (d). Money Market Fund:

Money market funds invest in securities of a short-term nature, which generally means securities of less than one-year maturity such as Treasury Bills issued by governments, Certificates of deposit issued by banks and Commercial paper issued by companies. The major strength of money market funds are the liquidity and safety of principal that the investors can normally expect from short term investments. The leading examples are Prudential ICICI Liquid Plan, Templeton India Liquid Fund, Grindlays Cash Fund etc. (e). Gilt Fund:

These funds are sort of government funds wherein the investments are made in debt instrument of government, which carry no risk of non payment of interest as the RBI manages the payment of interest and principal on the investments. These funds are best suited for regular income and long term investment objectives. The leading examples are Prudential ICICI Gilt Fund, Tata Gilt Securities Fund, Templton India Government Securities Fund etc.
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2. By Duration:
(a). Open-ended Fund: An open ended fund is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at NAV related prices which are declared daily basis. The key feature of this fund is liquidity. (b). Close-ended Fund: A close ended fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of initial public issue and thereafter they can buy or sell units on stock exchange where the units are listed at NAV. These mutual fund schemes disclose NAV generally on weekly basis. (c). Interval Fund:

Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre determined intervals at NAV related prices. Risk Return Grid
Risk Tolerance/Return Expected Low Medium Focus Debt Suitable Products Benefits offered by MFs


Bank/ Company FD, Debt Liquidity, Better Postbased Funds Tax returns Partially Balanced Funds, Some Liquidity, Better PostDebt, Diversified Equity Funds Tax returns, Better Partially and some debt Funds, Mix Management, Equity of shares and Fixed Deposits Diversification Diversification, Capital Market, Equity Expertise in stock Equity Funds (Diversified as well picking, Liquidity, Tax as Sector) free dividends
[Table11: Risk Return Grid of various MF]

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3. By Load:
(a). Load Fund:

Marketing of new mutual fund scheme involves initial expenses. These initial expenses may be recovered from the investors by entry or exit load. But now SEBI has confirmed that AMC can not charge entry load on new mutual fund. (i). Entry Load or Front-end Load: If initial expenses recovered from investors at the time of investor’s entry into the fund, by deducting a specific amount from his initial contribution it is called Entry Load. But now it has been banned by SEBI. (ii). Exit Load or Back-end Load: If initial expenses recovered at the time of the investor’s exit from the scheme, by deducting a specified amount from the redemption proceeds payable to the investor it is called exit load. (iii). Deferred Load: The load amount charged to the scheme over a period of time is called a deferred load. (b). No Load Fund:

Funds that don’t charge entry, exit, or deferred load or any other charges for sales expenses are called no load funds. • • • • Now, generally all Mutual Fund companies charge 2 to 2.5% entry load on equity fund. Generally there is no exit load on equity and sectoral funds to maintain liquidity of that funds. Generally there is no entry load on gilt scheme and income fund. There is 0.25 to 1% exit load on gilt and income fund if investors exit from fund before specified time which is generally 3 to 6 months.
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Management Education & Research Institute, New Delhi


4. Other types of fund:
(a) Tax Saving Funds: These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. E.g. Equity Linked Saving Scheme (ELSS). Pension schemes also offer tax benefits. The leading examples are Prudential ICICI Tax Plan, Templeton India Pension Plan, Franklin India Taxshield etc. (b) Index Funds: Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightage comprising of an index. NAV of such funds are changed accordance with the change in the index. The leading examples are Birla Index Fund, HDFC Index Fund, Prudential ICICI Index Fund, UTI Index Fund etc. (C) Sector Funds: These are the funds which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Petroleum etc. These types of funds are more risky compared to diversified funds. The leading examples are Birla IT Fund, Pru. ICICI FMCG Fund,
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Franklin India Pharma Fund etc. (d) Commodity Funds: Commodity funds invest into the different commodities directly or through shares of commodity companies. E.g. Commodity fund invest in gold or shares of gold mines. Commodity funds have not yet developed in India. (e) Off Shore Funds: These funds invest in equities in one or more foreign countries there by achieving diversification across the country’s borders. However they also have additional risks such as the foreign exchange rate risk and their performance depends on the economic conditions of the countries they invest in.

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Any activity done without an objective in a mind cannot turn fruitful. An objective provides a specific direction to an activity. Objectives may range from very general to very specific, but they should be clear enough to point out with reasonable accuracy what researcher wants to achieve through the study and how it will be helpful to the decision maker in solving the problem. The objective of any research is basically divided into two categories. Primary Objective: To find out market potential of Karvy Investor Service Ltd. Secondary Objectives: Following are secondary objectives. • • To assess an awareness of mutual funds in Delhi. To find out how many people are interested in dealing of mutual fund.

Management Education & Research Institute, New Delhi


1. Research Design: A research design is a pattern or an outline of a research project’s working. It is a statement of only the essential elements of a study, those that provide the basic guidelines for the details of the project. It comprises a series of prior decision that taken together provide master plans for executing a research projects. A research design serves as a bridge between what has been established i.e., the research objectives and what is to be done, in conduct of the study to relish those objectives. If there were no research design, the research would have only foggy notions as about what is to be done. I have used ‘Exploratory Type’. The research is of both qualitative as well as quantitative type. 2. Unit of Analysis:

Middle class, Upper Middle class and HNIs people. Characteristics of interest: • • • • 3. People’s knowledge about Mutual Fund People’s knowledge about Karvy People’s interest in getting knowledge of Mutual Fund People’s willingness to deal in Mutual Fund with Karvy Sources of Data: a. Primary Source: The primary data is collected using sampling method and by survey using questionnaire. b. Secondary Source:

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Secondary data includes information regarding present market scenario, Information regarding Mutual Funds and competitors are collected by Internet, Magazines and News papers and books. 4. Sample Planning:

Sample Size: 50 units Sample Extent: Delhi Sampling Design: A Sample Design is a definite plan for obtaining a sample from a given population. It refers to the technique or method the researcher would adopt in selecting items for the sample. I have used both ‘Convenience Sampling Method’. 5. Data Collection Method:

I have used ‘Survey Method’ to collect data. I have collected data using questionnaire. Questionnaire Plan I have used ‘Structured Questionnaire’ for gathering the required data through contacting respondent personally. Type of Information: I have collected Fact, Awareness, Attitude, Future action plan and reason using questionnaire. Type of Questions: ‘Close-ended questions’ of ‘Dichotomous’ and ‘Multiple Choice’ type are asked in the questionnaire for data collection.


Data Analysis & Interpretation:
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Data Analysis is based on the data collected by way of Questionnaires. From the collected data findings are extracted. The data is tabulated and frequency distribution chart is prepared.

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1. Percentage of investors

Inference : Graph shows that 30% of people are investing in mutual fund. That mean it is a good opportunity for the company as they can grap the rest unaware people to being them investor in mutual fund by making them aware about mutual fund. 2. Reason for Investment

Inference : Graph shows that 50% (above among all) people are interested in investing in mutual fund. That mean company can increase investors for investing in mutual fund by giving them equity based mutual fund.

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3. Frequency of Investment

Inference: Graph shows that 40% people are investing in mutual fund once a month. So company suggests people about SIP and company suggest rest of the people about the benefits of SIP. 4. Awareness about scheme offered for Mutual Fund

Inference: Graph shows that 66% of people have few knowledge about mutual fund and 10 % of people do not know about mutual fund. That means company can make fully aware about mutual fund to people and tell them benefit associated with mutual fund so that they will invest in Mutual fund.

5. Awareness of tax advantage by Mutual Fund
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Inference: Graph shows that 38 % of people don’t know about tax benefit associated with mutual fund and 34 % of people are not sure about tax benefit through mutual fund. This is the good opportunity for company to increase investors of mutual fund by making aware them tax benefit associated with mutual fund in such schemes like ELSS.

6. External advisor for Investors

Inference: Graph shows that 38 % of people invest in mutual fund on the suggestion of their friends. So they are potential investors for the company. Company can take care of these investors by suggest them to invest on professional advisory.

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7. Types of Mutual Funds in which they invest

Inference: Graph shows that most of the people (58 %) invest in equity based mutual funds. They are risk taker. Company can take care of these investors by suggesting them balanced and debts funds. 8. Why they are not investing in mutual funds.

Inference: Graph shows that 48% of people are not investing in Mutual fund because of bitter past experience. 14% have not knowledge about mutual funds. 22 % do not believe on this service. 6 % are not able to select the best scheme for them.Company assumes that these investors have lack of advisory. So company should suggest them for investing on basis of professional advisor.

Management Education & Research Institute, New Delhi


9. People those interested to know more about mutual fund.

Inference: Graph shows that 86 % of people are interested to know more about mutual funds. This is the great opportunity for the company to increase the investors by making them aware about mutual funds and telling them benefits associated with mutual funds.

Management Education & Research Institute, New Delhi


• Due to limitation of time and cost constrains a sample size of only 50 respondents are chosen. Data Analysis and interpretation done may not be that strong due to small sample and ‘Convenience Sampling Method’. The sample extent for research is only Delhi. Some of the respondents may be biased in giving responses. My inexperience in research area might have affected results.

• •

Management Education & Research Institute, New Delhi


Corporate advisory services Merchant bankers offer customised solutions to solve the financial problems of their clients. Merchant bankers study the working capital practices that exist within the company and suggest alternative policies. They also advise the company on rehabilitation and turnaround strategies, which would help companies to recover from their current position. They also provide advice on appropriate risk management strategies. Loan syndication Arrangement of loans for clients, by analysing their cash flow pattern, so that the terms of borrowing meet the client’s cash requirements and offer assistance in loan documentation procedures. Portfolio Total number of all holdings held by a company is called portfolio. The portfolio mix is aimed at spreading the risk over different sectors. It consists of all assets of company. NAV Net Asset Value is the current market worth of the mutual fund shares. It is calculated daily by taking the funds total asset securities, cash and any accrued earning deducting liabilities, and dividing the reminder by the number of shares outstanding. Depository The principal function of a depository is to dematerialize securities and enable their transactions in book-entry form. A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository.

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Capital gain The profit made from selling shares, mutual funds etc. IPO Abbreviation for Initial Public Offering. Generally associated with admission to listing of the share capital on the stock exchange.

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1. [] [] [] [] [] Which are the investment tools you invest in? Bank Fixed Deposit RBI Bonds Mutual Funds Equities others (Please specify)

Re2. You primarily invest for (Rank according to your preference) [ ] Returns [ ] Liquidity [ ] Savings [ ] Tax Benefits 4. Rank the investments options according to you preference of Investment. [ ] Bank Fixed Deposit [ ] RBI Bonds [ ] Mutual Funds [ ] Equities [ ] Any other (Please specify) 5. [] [] [] What is the frequency of you investments? Once a Month Once in 6 Months Once a Year

6. Do you invest in Mutual Funds? [ ] Yes [ ] No 7. If the answer to question 9 is "Yes" a.)Are you aware of the various schemes offered by Mutual Funds? [ ] Yes [ ] No [ ] Few b.)Do you know that you can get Tax Advantages by investing in Mutual Funds? [ ] Yes [ ] No [] Not Sure Management Education & Research Institute, New Delhi Page69

c.)On whose external advice do you invest? [ ] Bank [ ] Distributor [ ] Agents [ ] Direct investments [ ] C.A. d.)Which types of Mutual Fund do you invest in? [ ] Debt [ ] Equities [ ] Balanced 8.If the answer to question 9 is "No" You do not invest in Mutual Fund because of (you may give multiple answers) [] [] [] [] [] Bitter past experience Lack of Knowledge Lack of confidence in service being provided Difficulty in selection of schemes In-efficient investment advisors

9. If Mutual Fund offer you Steady Returns, Tax Benefits, Liquidity, Diversification of Portfolio, Lesser Risk would consider it as an investment option in the future for you? [ ] Yes [ ] No [ ] May be 10. Would you be interested to know more about Mutual Funds? [ ] Yes [ ] No Name Age : ……………..………………. :……………………………….

Occupation:……………………………… Mobile No. :……………………………...

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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. www.mutualfundsindia.com www.amfiindia.com www.themanagementor.com www.dewb-vc.com www.karvy.com www.indiacorporateadvisor.com www.nsdl.co.in www.incometaxdelhi.nic.in www.incometaxindia.gov.in D.C.Anjaria & Dhaivat Anjaria, “AMFI Workbook”, Ed. – 2 (Association of

Mutual Funds in India)

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