Karvy Stock Broking Limited

A Project Report on ³Need for financial advisors for mutual fund investors´
Submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION In Visvesvaraya Technological University, Belgaum

Submitted By

LAKSHMINARAYAN 4PM08MBA19
Under the Guidance of

Internal Guide
Mr. G.P.Nagesh

External Guide
Mr. Venkat Ganesh Kumar E.S.

P.G. Department of Management Studies PES INSTITUTE OF TECHNOLOGY AND MANAGEMENT NH ± 206, Sager Road, Shivamogga ± 577204 April, 2010

P G Dept of Management Studies, PESITM, Shivamogga

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Karvy Stock Broking Limited

DECLARATION

I, the undersigned, hereby declare that the project report entitled ³Need for financial advisors for mutual fund investors´ has been prepared by me under the supervision and guidance of Mr. G.P.Nagesh Faculty member, P.G Department of Management Studies, PES Institute of Technology and Management , Shivamogga and now being submitted to VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELGAUM in partial fulfillment of the University regulations for the award of the degree of MBA. I further declare that this report is based on the original project study undertaken by me and has not formed a basis for the award of any Degree/Diploma of V.T.U or any other University.

Place: Shivamogga Date:

LAKSHMINARAYAN 4PM08MBA19

P G Dept of Management Studies, PESITM, Shivamogga

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Karvy Stock Broking Limited

Certificate
This is to certify that the Project Report entitled ³Need for financial advisors for mutual fund investors´ Is an individual work of Mr. LAKSHMINARAYAN. 3 semesters MBA, P.G. Department of Management Studies, PESITM, Shivamogga submitted in partial fulfillment of requirement for the award of the degree of master of Business Administration in Visvesvaraya Technological University, Belgaum under our Supervision a nd Guidance. We further certify that the work is original and has not been submitted to any other University wholly or in part for any other degree or diploma or any other programme.

Mr. G.P.Nagesh Faculty Member & Internal Guide

Dr.R.Nagaraja Prof & HOD, PGDMS

Dr.Vishwanth .P.Baligar Principal ± PESITM

EXTERNAL EXAMINERS [1] [2]

Signature:

Signature:

Name:

Name:

Institution:

Institution:

P G Dept of Management Studies, PESITM, Shivamogga

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Karvy Stock Broking Limited

ACKNOWLEDGEMENT

I take this opportunity to sincerely thank Mr. G.P.Nagesh who guided me through out the project through his valuable

suggestions, without which the project would not have been successful. I thank Mr. Venkat Ganesh Kumar E.S., Branch Manager in KARVY STOCK BROKING LIMITED Davangere for guiding me in doing this Project report. I thank Mr. Sridhar, Regional Manager in KARVY STOCK

BROKING LIMITED for guiding me in doing this Project report. My sincere thanks to my parents and friends who out of hard sweat were able to help me at all time and given encouragement for successful completion of this project.

Yours truly LAKSHMINARAYAN

P G Dept of Management Studies, PESITM, Shivamogga

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2 ORIGIN.1 SWOT ANALYSIS OF KARVY. 2. 7.9 DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY.2 NEED OF THE STUDY.8 QUALITY POLICY 1.1 MCKINSEY 7-S FRAMEWORK 3.5 THE SUCCESS LADDER.3 STRATEGY.2 SUPER-ORDINATE GOALS.4 ORGANIZATION STRUCTURE.3 EVOLUTION OF KARVY.4 SCOPE OF THE STUDY.1 INDUSTRIAL BACKGROUND 2. 1.3 OBJECTIVE OF RESEARCH. 3. Shivamogga 5 .7 ACHIEVEMENTS. 1.6 ORGANIZATION STRUCTURE OF KARVY.7 STYLE.4 LEADING COMPETITORS IN THE INDUSTRY.8 STAFF.2 COMPANY OVERVIEW.1 INTRODUCTION 1. 3. 1. 1. 8.1 METHODOLOGY OF DATA COLLECTION LIST OF CONTACTS PAGE NUMBER 1-8 9-13 14-22 23-30 31 32 33-54 55-56 P G Dept of Management Studies.1 6.9 SKILLS. 5. 3.1 7. 1. 3. LEARNING EXPERIENCE METHODOLOGY OF RESEARCH 7. 3.4 SUCCESS SUTRAS OF KARVY. 4. 2.5 FUNCTIONS OF DEPARTMENTS.4 OPERATIONAL DEFINITIONS AND CONCEPTS.Karvy Stock Broking Limited SERIAL NUMBER 1.6 SYSTEMS. DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY. 3. 3. 7. PESITM.2 KARVY SERVICES. 3. 2.1 PRODUCT PROFILE 4. 1. 7.3 GROWTH.

1 ANALYSIS AND INTERPRETATION OF DATA RESEARCH FINDINGS .2 SOURCES OF DATA. 6.1 RECOMMENDATIONS. 57-69 70-72 11. Analysis on the basis of Education. No. SUGGESTION AND CONCLUSIONS 8.Karvy Stock Broking Limited 6.2 QUESTIONNAIRE 12. Shivamogga 6 . 7. Where from do you purchase mutual funds? According to you which is the most suitable stage to invest in mutual funds? Which feature of the mutual funds influence you most? Where do you find yourself as a mutual fund investor? Are you availing the services of personal financial advisors? PAGE NUMBER 53 53 54 55 56 57 58 59 8 9 10 60 61 62 P G Dept of Management Studies. Analysis on the basis of Age. Analysis on the basis of Occupation.1 12.3 WEEKLY PROGRESS REPORT 73 74-79 LIST OF TABLES: Table.1 BIBLIOGRAPHY APPENDIX / ANNEXURE 12.0 1 2 3 4 5 6 7 Table Name Analysis and Interpretation of Data Analysis on the basis of gender. Analysis on the basis of Income (yr).4 INSTRUMENTATION TECHNIQUE.3 SAMPLING PLAN. 6. 9. PESITM.1 10.

Shivamogga 7 . PESITM.Karvy Stock Broking Limited 11 12 13 Which expertise of the personal financial advisor is demanded most? What is the major reason for using financial advisors? What is the major reason for not using financial advisor? 63 64 65 P G Dept of Management Studies.

It covers the topic ³Need for financial advisors for mutual fund investors´. The data collected has been well organized and presented. Other than that the real savings come when one moves ahead. Growth. It is purely based on whatever I learned at Karvy. All the topics have been covered in a very systemat ic way. and there Achievements and the industrial background of Stock Brokers.  The Second part gives an insight about the mutual funds and its various aspects. This project as a whole can be divided into two parts:  The first part gives an overall details about Karvy Stock Brokin g Limited that is Vision and Mission. All the dates have been well analyzed with the help of charts and graphs. P G Dept of Management Studies. Hope the research findings and conclusions will be of use. This part consists of dates and their analysis. PESITM. Development & Present status of the industry. Some of them are: why has it become one of the largest financial intermediaries? How investors do chose between funds? Performance Measures of Mutual Funds. It has also covered why people don¶t want to go for financial adviso rs? The advisors can take further steps to approach more and more people and indulge them for taking their advices. The language has been kept simple so that even a layman could understand. McKinsey 7-S framework as been clearly explained about the organization study of departmental of KSBL and Services provided by KSBL.Karvy Stock Broking Limited Executive summary This project has been a great learning experience for me.Organization structure of Karvy. The success ladder of Karvy . collected through a survey done on 50 people. at the same time it gave me enough scope to implement my analytical ability. Leading competitors in the industry and SWOT analysis of Karvy. Some of the most interesting questions regarding mutual funds have been covered. One can have a brief knowledge about mutual funds and all its basics through the project. Shivamogga 8 .

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.Karvy Stock Broking Limited 1. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar.3 Evolution of KARVY: It is well said that success is a journey not a destination and we can see it being proved by Karvy. Later on it diversified into financial and accounting service s during the year 1981-82 with a capital of rs. Karvy which already enjoyed a wide network through its investor service centers. the largest financial service prov ider of India.. it entered into retail stock broking in the year 1990.e.2 Company overview: Karvy was established as Karvy and company by five chartered accountants during the year 1979 -80. it stepped into corporate finance and investment banking in the year 1995. Back in the year 1981. It added the feather of stock broking into its cap. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. PESITM.150000. 1. 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. Shivamogga 9 . At the same time it became the member of Hyderabad Stock Exchange through associate firm Karvy securities ltd and then Karvy never looked back it went on adding services one after another. five people created history by establishing Karvy and company which is today known as Karvy. 1. Karvy investor service centers were set up in the year 1992. Karvy again hit the limelight by becoming the first registrar in the countr y to be awarded P G Dept of Management Studies. and then its work was confined to audit and taxation only. not a destination. Karvy¶s strategy has always been being the first entrant in the market.´ If we look for examples to prove this quote then we can find many but there is none like that of Karvy.1 Introduction: ³Success is a journey. entered into financial product distribution services in the year 1993. stock broking. Under this section we will see that how this ³Karvy and company´ of 1980 became ³Karvy´ of 2008.

enterprise..e. Karvy launched ³Karvy global services limited´ after entering into a joint venture with Computershare. It was a decade which saw many Indian companies going global so why the largest financial service provider of India should lag behind? Hence. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards. P G Dept of Management Studies. In the year 2006. Year 2005 saw Karvy establishing a separate branch for its insurance services under the head ³Karvy insurance broking ltd´ and in the same year. Then it entered into insurance services in the year 2001 with the launch of its retail arm ³Karvy. PCG group of Hong Kong acquired 25% stake at KSBL.and maintain their portfolio and provides them with other financial services. Karvy shall aim for complete customer satisfaction. Australia in the year 2004. empathy and humility. by combining its human and technological resources.the year 2004 also saw Karvy entering into commodities marketing through Karvy Comtrade. real estate through Karvy realty& services (India) ltd.the Finapolis: your personal finance advisor´.e. learning and innovation. dedication. Shivamogga 10 . 1.4 Success sutras of Karvy: The success story of Karvy is driven by 8 success sutras adopted by it namely trust. we can see now Karvy being established as the largest financial service provider of the country. Karvy entered into one of the hottest sector of present time i. Vision of Karvy: To achieve & sustain market leadership. commitment. hence.com . Then in the year 2002 it launched its PCG (Private Client Group) which looks after its High Networth Individuals . hard work and team play. Then it stepped into the other most happening sector i.karvy. it commenced secondary debt and WDM trading. These are the values that bind success with Karvy. after being impressed with the rapid growth of Karvy stock broking limited. PESITM. In the year 2003. to provide world class quality services. 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. integrity.Karvy Stock Broking Limited ISO 9002 in the year 1997.

PESITM.´ 1. 2. Consists of five units namely stock broking servics. and we aim to achieve this leadership position by building an innovative. advisory services. P G Dept of Management Studies. and technology driven organization which will set the highest standards of service and business ethics. : The first securities registry to receive ISO 9002 certification in India. Registered with SEBI as Category I Registrar. The award of being µMost Admired¶ Registrar is one among many of the acknowledgements we received for our customer friendly and competent services. : karvy stock broking ltd. depository participant.Karvy Stock Broking Limited Mission statement: ³Our mission is to be a leading and preferred service provider to our customers. enterprising . Shivamogga 11 . is Number 1 Registrar in the Country. distribution of financial products. advisory services and private client goups.5 The success ladder: Now Karvy group consists of 8 highly renowned entities which are as follow: 1.

advisory and brokerage services in Indian Commodities Markets. in Indian and global markets. media . India 7. : Karvy Realty (India) Limited is engaged in the business of real estate and property services offering: y y Buying/ selling/ renting of properties Identifying valuable investments opportunities in the real estate sector 12 P G Dept of Management Studies. : Karvy Global is a leading business and knowledge process outsourcing Services Company offering creative business solutions to clients globally. : karvy insurance broking ltd is also a part of karvy stock broking ltd. 6. Shivamogga . It operates in banking and financial services. Its clientele includesinclude leading corporate. telecom and technology. healthcare and pharmaceuticals. 4. State Governments. foreign institutional investors. public and private sector companies and banks. And most importantly. high net -worth clients and corporates. USA and the offshore global delivery center in Hyderabad.Karvy Stock Broking Limited 3. : The company provides investment. PESITM. : it is registered with SEBI as a category 1 merchant banker. it offer a wide reach through our branch network of over 225 branches located across 180 cities. inurance. At Karvy Insurance Broking Limited both life and non-life insurance products are provided to retail individuals. 5. It has its sales and business development office in New York.

finance & accounting. Ramakrishna. Mr. is a premier integrated financial services provider. KARVY P G Dept of Management Studies.Mr. we have the board of directors as the supreme governing body.6 Organization structure of karvy: Talking about the organization structure of karvy. M. PESITM.: K. Shivamogga 13 .: V. India in the registry management services industry.Yugandhar as the managing director..Mr. 1. karvy investors services ltd. Mr. : it is a joint venture between Computershare. R. C. V and Y stands for 5 directors names K.. V. Kutumba Rao A. Parthasarthy. services over 16 million individual investors in various capacities.Karvy Stock Broking Limited y y Facilitating financial support for real estate and investments in properties Real estate portfolio advisory services 8.Mr. M.: Vikram Singh Y. and karvy global se rvices ltd. karvy stock broking ltd.: M. and provides investor services to over 300 corporate.Mr.The board of diretors head the karvy group. Yugandhar.Mr.: M. group human resources. the chairman being Mr. Karvy group being the flagship company looks after the functional departments such as corporate affairs. A. R. comprising the who is who of Corporate India. technology services and corporate quality. karvy comtrade.Ajay Kumar. and ranked among the top five in the country in all its business segments. The letters K. Australia an d Karvy Consultants Limited. KARVY. training & development. karvy computershares limited.S.Ramakrishna as directors.S.

Insurance Broking. Depository Participants.mutual funds. among others. PESITM. personal client group and institutional desk. bonds. Merchant Banking & Corporate Finance. Distribution of financial products . Commodities Broking.Karvy Stock Broking Limited covers the entire spectrum of financial services such as Stock broking. placement of equity. Personal Finance Advisory Services. distribution. operations and research of various industrial segments. And finally the BPO services are managed by karvy global services ltd. depository. fixed deposit. Karvy computershare private limited facilitates mutual fund services. research. IPOs. it can be presented as: Source: Organization structure of karvy P G Dept of Management Studies. Karvy insurance broking ltd. Karvy stock broking ltd heads its another branch too ie. The services offered by KSBL are: stock broking. equities. Karvy has a professional management team and ranks among the best in technology. share registry and issue registry whereas merchant banking is looked after by karvy investor services ltd. Shivamogga 14 . Summarizing it in a diagram.

P G Dept of Management Studies. Karvy shall aim for complete c ustomer satisfaction. y 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. y 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.Karvy Stock Broking Limited 1. 1 Registrar & Securities Transfer Agents Among the top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV among top 10 Investment bankers Largest Distributor of Financial Products Adjudged as one of the top 50 IT uses in India by MIS Asia Full Fledged IT driven operations 1.7 Achievements: y y y y y y y y Among the top 5 stock brokers in India (4% of NSE volumes) India's No. Karvy will: y Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. Quality Objectives As per the Quality Policy. by combining its human and technological resources.8 Quality Policy: To achieve and retain leadership. y Continue to uphold the values of honesty & integrity and strive to establis h unparalleled standards in business ethics. PESITM. Shivamogga 15 . to provide superior quality financial services. In the process. Karvy will strive to exceed Customer's expectations. y Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.

With over 6. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Karvy Realty Services. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. has quickly established itself as a broker who adds value. 5. Registered with AMFI as a corporate Agent. Karvy Stock Brokers Limited. 1. it ranks among the top 5 Depositary Participant in India. Karvy Comtrade. 00. investors. Karvy is also among the top Mutual Fund mobilize with over Rs. in the realty sector. PESITM.Karvy Stock Broking Limited y 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. Karvy Computershare Limited is India¶s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate. Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. employees. managing over 2 crore accounts. P G Dept of Management Studies. ranks among the top 5 stock brokers in India. Shivamogga 16 . which started in 2006. member of National Stock Exchange of India and the Bombay Stock Exchange.000 active accounts.000 crores under management. Karvy Global offers niche off shoring services to clients in the US. clients. Over 9. y Strive to keep all stake-holders (shareholders.9 Development & present status of the industry Karvy ranks among the top player in almost all the fields it operates. suppliers and regulatory authorities) proud and satisfied.000 highly qualified pe ople staff Karvy. registered with NSDL and CDSL.

Thus. debentures etc. The stockbroker's system performs all the stock broking functions: it obtains the best price from the market and executes and settles the trade. Later with the advent of the Internet. most of the once well-known corporate brand names including mid-sized firms such as Smith Barney have been swallowed up by global financial conglomerates. stock broking became very easy.1 INDUSTRIAL BACKGROUND INTRODUCTION A stock broker is someone who buys and sells stocks on the behalf of others for a predetermined commission. Wall Street. The stock broker basically works as an agent coordinating the activities of the buyers and sellers on the stock exchange. the price tag on stock brokers lowered considerably and their services became available even to the common man. 2. With the advent of automated stock broking systems on the Internet the client often has no personal contact with his/her stock broking firm. Scottrade. However. The Amsterdam Stock Exchange was involved in buying and selling of shares for the Dutch East India Company. became the hub of brokerage activities. PESITM. Shivamogga 17 . Stock broking firms have also been allowed to be market makers as long as the appropriate Chinese walls are put in place.2 ORIGIN: The history of stock brokers can be traced back to the origins of the first stock exchange in 1602 at Amsterdam. Discount brokers (such as E-Trade. but later most of them joined hands to form instit utes and organizations. as it was called. and Ameritrade) P G Dept of Management Studies. Earlier stock brokers were largely unorganized. Later it was the New York stock exchange which saw a rise in its popularity. Even before that brokers are said to have existed in France dealing with government securities.Karvy Stock Broking Limited 2. to buy or sell. Today. mutual funds. Along with the trading of stocks. Till the 1980's stock broking services were used only by the wealthy class who could afford them. many stock brokers indulge in giving advice to the clients as to which stocks. the first real stock exchange came up in Philadelphia in the United States during the late 18 th century.

expanding the importance of the firms. They formally founded the London Stock Exchange in 1801 and created regulations and memberships.3 Growth. the French began regulating and trading agricultural debts on behalf of the banking community. PESITM. Development & Present status of the industry: Stage 1 Beginning: During the 11th century. In the 1300s. enabling individuals to purchase stocks from a variety of organizations. most notably on Chestnut Street in Philadelphia. They adopted the policy of quoting both the buying and selling price of a security. Various firms like Morgan Stanley and Merrill Lynch were created to assist in the brokering of stocks and securities. Soon. The stocks improved the size of companies and became the standard bearer for the modern financial system. the US exchange was moved to New York City and for more than one hundred and fifty years Wall Street has been synonymous with the stock brokerage business. creating the first brokerage system. Venetian brokers began to trade in government securities. the Dutch East India Company became the first publicly traded company in which shareholders could own a portion of the business. Stage 3: Considerations During the 1900s. Stage 2 Significance The earliest brokerage firms were established in London coffee houses. stock brokerage firms began to move in a direction of market makers. This allows a firm to make a profit from establishing the P G Dept of Management Studies. which was the center of American finance during the first forty years of the new United States. In 1602.Karvy Stock Broking Limited have taken a large share of the business by offering highly discounted commissions. 2. Shivamogga 18 . The firms limited themselves to researching and trading stocks for investment groups and individuals. houses began to be set up in major cities like Flanders and Amsterdam in which commodity traders would hold meetings. but the companies do not offer investment advice in return all they do is execute orders. Soon. The system was copied by brokerage firms across the world.

whereby the bank purchases broker services from an established securies firm and markets the services under the name of the bank. Rather than allowing depositors to withdraw their funds and invest them elsewhere. insured and invested in securities. Working with hundreds of billions of dollars. Shivamogga 19 . To date. This has resulted in increased profits and greater interconnection within the financial industry. held. Firms like Smith Barney were acquired by Citigroup and other investment banks. Stage 4: Effects The creation of high valued brokerage firms like Goldman Sachs and Bear Sterns created a system of consolidation. Since the 1980s stock-broking firms have also been allowed to be market makers as long as the appropriate Chinese walls are put in place. commercial banks began to offer trading services to retail customers.Karvy Stock Broking Limited immediate sale and purchase price to an investor. In this way. The conflict with brokerage firms setting prices creates the concern that insider trading can result from the sharing of information. creating massive financial institutions that valued. Beginning in the 1980s. Until the 1980s. PESITM. banks were able to generate non-interest fee income to help offset some of the increased interest costs of relying on borrowed funds o finance their growth. however. Regulators have enforced a system called Chinese Walls to prevent communication between different departments within the brokerage company. Some banks started their own brokerage operations from scratch and others entered onto joint -venture arrangements. many banks (through the non bank affiliates of their bank holding companies) began aggressively offering brokerage services. Trillions of P G Dept of Management Studies. more than 2000 banks are providing active brokerage services to their customers. commercial banks didn¶t emphasize their brokerage powers or solicit business. sold. This conglomeration of the financial sector created an environment of volatility that caused a chain reaction when other firms like Bear Sterns and Lehman Brothers filed for bankruptcy. except to serve a few large accounts in their trust departments. In the 1980s and 1990s. the larger firms began to merge and take over smaller firms in the last half of the 20th century. deposit growth slowed as more people invested in equity shares and mutual funds.

usually against payment. Smaller brokers such as E*Trade. Stage 5: Features A large share of the brokerage firms has moved to an online format. Specially. With the advent of automated stock-broking systems on the Internet. They offer fewer brokerage services and pass the savings on to the investors. These and other savings are passed along to the investor in the form of low commissions. they hire telephone clerks to take customers¶ orders. In addition the fact that the online resources offer up to the minute pricing and immediate trades makes their format appealing to the modern user as SEC deregulated the brokerage industry and made negotiated commissions available to individual investors around May 1975. PESITM.Karvy Stock Broking Limited dollars of assets were tied together in different companies and resulted in a large economic collapse in late 2008. Settlement (of securities) is the process where by securities or interests in securities are delivered. PTI Securities & Futures and E -Trade. and work for modest salaries. Instead. Beginner investors may turn away from discounted brokers because of the advanced systems and terms. also provide advanced trading systems. like TD Ameritrade. which is why they appeal most to frequent and active traders. to fulfill contractual obligations. do not offer any investment advice. and instead go to traditional brokers. such as those arising under securities trades. These clerks do not sell. a new type if brokerage firms has emerged ± the so called discount broker. The added convenience and personal attention paid to the small investor has resulted in a large influx of activity. the client often has no personal contact with his/her stock-broking firm. Shivamogga 20 . The stockbroker's system performs all the stockbroking functions: it obtains the best price from the market and executes and settles the trade. P G Dept of Management Studies. most discount brokerage firms do not have a highly paid research staff producing research reports or account executives soliciting business based on the firm¶s current recommendations to buy and sell. TD Ameritrade and Charles Schwab have taken control of most individual investors accounts. Discount brokers.

4 Leading competitors in the industry: y y y y y y y y y y y Reliance Money Kotak Securities ICICIDirect 5Paisa.Karvy Stock Broking Limited 2. Shivamogga 21 .com ICICIDirect P G Dept of Management Studies. PESITM.com Advani Share Brokers Gandhi Securities Invest smart India Moneypore Stock Holding Corporation of India StockMarkit.

skills.2 Super-ordinate goals: In 7s framework there is one variable termed as ³super ordinate goals´ refer to a set of values and aspirations that goes beyond the conventional format statement of corporate objectives.1 McKinsey 7-S framework: According to waterman organizational change is not simply a matter of structure. 3. structure. Source: McKinsey 7-S framework The framework suggests that there is a multiplicity of factors that influence the organizations ability to change and its proper mode of change. style. Shivamogga 22 .Again it is not a simple relationship between strategy and structure. In their view effective organizational change may be understood to be a complex relationship between strategy. systems. staff and subordinate goals.Karvy Stock Broking Limited 3. PESITM. Because of in connectedness of the variables it would be difficult to make significant progress in one area without making progress in the others as well. although strategy is a critical aspect. super ordinate goals are the fundamental P G Dept of Management Studies. although structure is a significant variable in the management of change .

Karvy Stock Broking Limited ideas around which a business is built. Shivamogga 23 . They are the broad nations of future direction. In the distribution business KARVY enjoys 40% market. They are its main values. 3. Survival of the company as well as the growth of the company over the past 22years. Karvy updates itself to the surroundings competition and b ring out changes are services and related products to be in competition. After diversifying into various services providing activities it has become KARVY¶S prerogative to be leader in the business. An overall group objective is already set and all the employees are driven towards Karvy¶s believes that µno individual is big as the organizational itself. goals and major action plans and policies of the company. has been effectively overcoming competition. P G Dept of Management Studies. The following are the some of the strategies adopted by the organization: PRICE: KARVY caters to marketing service products and there is no pricing involved. KARVY has a network of 150 branches across the country and over 2500 employees. objectives.¶ Competition is the key to survival and for giving diversification for the given product as such competition is always good. A company of Karvy¶s stature cannot afford to work without objectives. Rendering activity more transparent and providing better services which can inspire investor¶s confidence in mutual funds. Super ordinate goals are: y y To open up franchisee (branches) all over India. y y To reach the greatest heights in their fields. I depository participant and registry department KARVY has maintained a very competitive pricing structure in the line with contemporary markets. PESITM. To strive for excellence in management and othe r long range activities to ensure leadership.3 Strategy: The strategy in 7s framework includes purposes. mission. which is healthy from the industry standard. Today KARVY is providing services to over 100000 customers all over the country with a leadership position in over all distribution business.

Karvy Stock Broking Limited PRODUCT DIFFERENTIATION: KARVY caters to various financial products like DP. Insurance and Mutual funds products. Tin section 4. KARVY relies mostly on word of mouth publicity than advertising which is worked wonders from them. PESITM. Stock broking services 2.4 Organization structure: In Karvy. Mutual fund section Branch Manager Stock broking Depository participation Tax Information Network Mutual Funds Dealing Back Office Front Office Marketing Executive Source: Organization structure at KSBL in Davangere P G Dept of Management Studies. Depository participation section 3. Registry. Each product is headed by a skilled manager and also made as a separate profit center. MARKETING STRATERGY: Being sales oriented organization regular sales promotion events are conducted with various principles agencies and time to time advertising releases are done depending upon the requirements. for the purpose of smooth flow of its function it is divided into four sections: 1. 3. Shivamogga 24 . Stock Broking.

5 FUNCTIONS OF DEPARTMENTS: 1. PESITM. DEPOSITORY PARTICIPANT SERVISES FRONT OFFICE: In front office the following services are done. recommending attractive tax planning investment option. the accounting and other manual work take place and in dealing buying and selling of shares and debenture activities takes place in this section is supervised and headed by manager Depository participant acts as an agent of the depository and interacts with investor. Transformations of shares from Demat to trading account etc. Holding enquiries.it includes providing post budget strategies for effective tax planning.      Account opening. He is responsible for maintaining investor¶s securities account and the manager supervises operating that account under investors written instructions and Depository participant tax information network section provides tax advisory services . focus on mutual fund portfolio. This mutual fund section provides advisory services for investors it includes investment advice for new investors. Transfer of Demat shares to physical form. Giving intimation related to the due of AMC¶s to their account holders. salary structuring. Sends quarterly information to the holders related to the holdings. Shivamogga 25 . P G Dept of Management Studies. back office. Transfer of physical shares to Demat form. BACK OFFICE:    Maintenance of all Demat account with KSBL. 3. This section is guided and supervised by branch manager In front office online trading activities takes place and this is headed by mutual fund section.Karvy Stock Broking Limited In stock broking section. advice on the existing holdings and analysis of funds And one marketing executive who undertakes mutual fund activities is guided by mutual fund section and to turn branch manager supervisor this section.

ADVISORY SERVICES This is the main function done by the ris department kcl gives every financial advisory services to investors for ex: portfolio management. this is recently introduced by the RIS Department in this service. MAPIN openings Etc. TDS return (filling) quarterl. tax planning etc. equity tips. market the mutual fund schemes by 1 direct selling 2. 3. RIS This is emerging department of KSBL BACK OFFICE: Here all the records of investors are to be maintained and kept confidentially and identifies the customer¶s requirements and the department members tries to full their Needs. Shivamogga 26 . marketing executives are Seeks for prospective customers. 1. MUTUAL FUNDS MARKETING: KSBL has mainly under taken the distribution of financial products at commission basis. yearly 4. TIN. Tax information network services. KSBL tries to give the services regarding taxation like 2. part of this mutual fund marketing is also one of the functions. they help in opening of an account and also these executives collects AMCs and provide other door to door services 2. Telemarketing P G Dept of Management Studies. In these function executives sells the almost all the AMCs schemes Executives.Karvy Stock Broking Limited MARKETING: In this department where the Demat account is marketed. PAN opening 3. PESITM.

Etc. KSBL maintains the transaction of schemes of AMC 2. BIRLA SUNLIFE. Direct marketing 2. It maintains all the paper work of AMC 5. PESITM. ACCOUNTS 1. Tele marketing BACK OFFICE: in this department it maintains the necessary records of the clients insurance which are taken by the KSBL 5. HR & ADMINISTRATION PAY ROLL MAINTAINANCE: maintenance of employee details like salary incentives. Internal auditing 3. BIRLA. Maintaining the purchases stores department 2. KSBL markets the NFO schemes 3. executives market the insurance products by 1. ICICI. LIC etc. It maintains the resumption and repurchase of the schemes 4. bonus. UTI. DATES etc) to schemes existing investors 4 INSURANCE MARKETING: as already stated KSBL also markets all companies¶ life insurances products Such as ICICI.Karvy Stock Broking Limited REGISTER SERVICES: KSBL also gives register service to AMC in this service it provide the following benefits to AMC: such as INGVYSAY. It gives the information related to AMC shames (like NAV. TATA AIG. 1. Shivamogga 27 . and performance records etc P G Dept of Management Studies. Payments and receipts 6. SBI.

The company has its regional office in Bangalore. But the local regional manager would sign all cheques and such instruments. Accepting problems of the workers and helps in solving them. 3. and procedures of the international standardization for organization (ISO). regulations.Karvy Stock Broking Limited RECRUITMENT DEPARTMENT: this department helps in assessing the needs of Labour force and recruiting the needs of Labour and giving the orientation programmed to new employees HUMAN RESOURCES DEPORTMENT: 1. Each employee has to follow a specific dress code depending on his line or work or duty. Requirement of fresher¶s incumbents are made at local office at the regional level depending upon the manpower requirement. Karvy has received ISO9002 certification . All junior staff member will have to report to the designated senior staff member daily attendance register to the human resource department. Shivamogga 28 . It follows specific entry and exit timing for its employees. Finance operations are centralized at the head office level and excess funds are regularly transferred to the head office account. both formal and informal that complement the organization structure. which is headed by a regional manager. And with this company has its own corporate culture and every employee has to follow it. The organization follows strict rules and regulations for the employee. Maintain good relationship with the employees 2.So the employees are following the rules.6 Systems: Systems in 7s framework refer to rules. PESITM. Usually the employee will be on one-year probation and P G Dept of Management Studies. This is duly processed at the end of each month. Identifying the de-motivate employees and providing the necessary motivation 3. regulations and procedures. All branch heads and various dept heads will report to him on regular basis. The respective departmental heads holds the HR would dispatch interviews and the appointment from the head office. Periodic fund requirement at the regional level will be se nt as and when required.

At all over the branches across the country Regional Manager has been appointed.he should have a two wheeler for communicating purpose. The chairman will take decision related to the group as such. operations at the junior level is largely centralized with division heads making key decisions. 3. organizations introduce young recruitments into the main stream of their services and in the manner in which they manage their careers as the new entrants develop into future managers. 3. Shivamogga 29 .7 Style: Style is one of the seven levers. The company is ISO certified and follows strict register of quality maintenance with high standards of process and systems. Managers are responsible and accountable for their decisions and subsequent imple mentations. All other decisions related to the relevant to the region and regional heads will take their line of work. Each incumbent should have a specific academic qualification to match the position he is going to hold and also necessary skills to execute the assignment. The chairman who sits at the head office in Hyderabad heads the organization. For fresher due training will be given and then will be put on the jobs. PESITM. According to Waterman and his colleagues the term: staff: refers to the way. the term ³staff´ has a specific connotation. Marketing/sales people should posses at least a degree and a management degree is preferred and should necessary posses good communication skill and flair for sales . Operation of company is monitored by the chairman of the company and various others senior managers.8 Staff: In the McKinsey 7s framework. All back end employees should have atleas graduation with exposure to necessary skills. Top management follows formal relationship with their subordinates and participative leadership is followed. Their potentials will be monitored on a regular basis a nd P G Dept of Management Studies.Karvy Stock Broking Limited after successful completion he will be made permanent employee. By and large decision making are decentralized for day to day affair. Which top managers can use to bring about organizational change each organization differs from others in their styles of working reporting relationships will convey the style of organization.

3. A manager is viewed as a skilled person who has the ability to manage people and resources and at times finance also.9 Skills: Waterman considers ³skills´ as one of the most critical attributes or capabilities of an organization. PESITM.Karvy Stock Broking Limited will be suitable guidance from time to time. P G Dept of Management Studies. Min wastages and maximum utilization of available resources is the key organizational behavior and culture is thought to the fellow employees and potential employees are suitable nurtured. He will be responsible to identify for the right job and get the work done effectively. The term skills include those characters. which most people uses to describe a company. Shivamogga 30 . Annual increments are also given based on the performance predominant.

Registrars & Transfer agents 10. Merchant Banking & Corporate Finance.Karvy Stock Broking Limited 4. PESITM. and ranked among the top five in the country in all its business segments. Insurance Broking. 1992. services over 20 million individual investors in various capacities. Mutual fund services 8. bonds. Depository Participants. placement of equity. Stock broking 2. Investment product distribution 4. Realty Services. IPOs. stockbroker is a member of the stock exchange. fixed deposit. 4. and more importantly. Corporate finance & Merchant banking 6. and provides investor services to over 300 Corporate. Insurance 7. Investment advisory services 5. comprising the who's who of Corporate India. Commodities Broking. KARVY covers the entire spectrum of financial services such as Stock broking. The Stockbrokers are the intermediaries who are allowed to trade in se curities on the exchange of which P G Dept of Management Studies. Karvy has a professional management team and ranks among the best in technology. Stockbrokers are regulated by SEBI [Stock-brokers and Sub-brokers] Regulations. Shivamogga 31 . Stock Broking: KARVY is working as Capital Market Intermediaries.2 KARVY SERVICES 1. in research of various industrial segments. IT enabled services 9. Personal Finance Advisory Services.1 PRODUCT PROFILE Introduction KARVY is a premier integrated financial services provider. Tin 1. Demat services 3. Distribution of financial products like mutual funds. Loans 11. among others. operations.

Non Banking Finance Companies. Housing Finance Companies and Manufacturing Companies. The relationship between the DPs and the depository is governed by an agreement made between the two under Depositories Act.´ 2. A DP can offer depository -related services only after obtaining a certificate of registration from SEBI. Shivamogga 32 . Investment Products Distribution: Company is also concern with the distribution of investment products like: (A) (B) (c) Fixed Deposit Bonds IPO (A) Fixed Deposit: KARVY is dealer of 34 fixed deposits of various types which includes fixed deposits of Public Sector. investors who use Karvy¶s depository services get a dual benefit.Karvy Stock Broking Limited they are members. P G Dept of Management Studies. Sub-brokers mean ³any 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. PESITM. selling or dealing in securities through such stock -brokers. They can use Karvy¶s brokerage services to execute transactions and Karvy¶s depository services to settle them. They buy and sell on their own behalf as well as on behalf of their clients. Since Karvy is also in the broking business. Demat Services: Karvy is a depository participant with the National Securities Deposit ory Limited (NSDL) for trading and settlement of dematerialized shares. 3. Depository Participants (DPs) are described as an agent of the depository. They are intermediaries between the depository and the investors. Stockbrokers expand their business by engaging sub -broker.

Karvy Stock Broking Limited (B) Bonds: Karvy is dealer of following bonds RBI Saving Bonds NHB REC (C) IPO: Company is also provides services related to Initial Public Offer of company. 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. Taxes. fixed deposits. 4. Based upon this Karvy it helps individual investors to plan their entire life up to retirement. Company provides advisory services to its clients. mutual funds. Insurance needs and other important personal financial goals. it understands the time horizon. Investor¶s willingness to take risk. Financial goal of each individual investor varies according to his dream. Company provides stationary at the time of IPO as well as provides information to investors regarding IPO and solves their queries. Investor¶s tax planning etc. Investor¶s requirement of getting money back. insuranc e etc. bonds. PESITM. 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.. risk bearing capacity and investment goals of investors keeping in mind their psyche and financial needs. Karvy apply the principles of Financial Planning as both science & art. Company design portfolio by considering following factors. Shivamogga 33 . debentures. It designs portfolio for investor to invest their saving in various financial products like shares. P G Dept of Management Studies.

Karvy enjoys SEBI category (I) authorization for Merchant Banking. PESITM. It concerned with how firms raise capital and the consequences of alternative methods of raising capital. 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 P G Dept of Management Studies. Karvy offers the full spectrum of Merchant Banking Services.Karvy Stock Broking Limited 5. beginning from identifying the best time for an issue to final stage of marketing it. and acquiring or merging with other businesses by public or private companies. to harvest unparalleled success. It deals with the firm's operations with regard to investing and financing. Shivamogga 34 . Firm¶s capital can be raised by raising loans. Hence they f acilitate the flow of capital in the market. Corporate finance & Merchant banking: Corporate finance is the financial activity of corporation. issuing shares. Merchant banking is a financial intermediation that matches entities that need capital and those that have capital.

Karvy today. Karvy has demonstrated a dedication coupled with dynamism that has inspired trust from various segments ± corporate. government bodies and individuals. company is associated with dealing of following companies. call center ± has brought home the benefits of technology to investors. Karvy shall strive to create new products and services. P G Dept of Management Studies. Shivamogga 35 . 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. With Mutual Funds emerging as a distinct asset class. Karvy is work as TIN Facilitation Centre it provides following IT enabled services.10. web. which would address the needs of the end customer. 2004.  ICICI Prudential Life Insurance  HDFC Life Insurance  TATA AIG Life Insurance 1. Mutual Fund Services: Since its inception in 1982. service nearly 80% of the asset management companies (AMCs) across an extensive network of service centers with assets under service in excess of Rs. Income Tax enabled services: Karvy has been started this service since March. Going forward. 000 crores. 8. mobile phones. Insurance: Karvy is also dealer of many private life insurance companies. At Jamnagar branch. distributors. and the mutual funds. Karvy has made a strategic choice to leverage the power of latest technology to provide a cutting edge to its services. PESITM.Karvy Stock Broking Limited 6. Karvy has since been performing a pivotal role as the intermediary ± the interface ± between these players. These diverse range of services cut across multiple delivery channels ± service centers. 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.

9. Karvy has been rated as India¶s Most Admired Registrar on various parameters: Overall Excellence. In 1994 -95. Shivamogga 36 . 10. PESITM. Now in its second decade of existence. Loan: Karvy has recently started this service at selected branches of metro cities. Karvy work as an intermediary between NSDL and IT payers. Karvy provides various form for different IT enabled services and guide people to fill that forms. Registrars & Transfer agents: In 1985. A SEBI Category 1 Registrar. Vehicle Loan P G Dept of Management Studies. Handling of Volumes Timely Dispatch Quality Management and Technological Up gradation. it reached a milestone when it processed 104 Public Issues constituting 46 per cent market share. Karvy entered the Registrar and Share Transfer Business to create a market niche in the competitive field of financial services.Karvy Stock Broking Limited y y y Distribution of PAN Card. It also distributes PAN and TAN card to the tax payers. 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 clien ts. Karvy is the leader in the industry: In an opinion poll conducted by an independent market research agency MARG. Karvy provides loans for following. It also solves queries of the tax payers. Services related to e-TDS. Distribution of TAN Card. This service has not been started in Saurashtra-Kucch region. So far.

Karvy Stock Broking Limited

Home Loan Personal Loan 11. TIN National Securities Depository Ltd. (NSDL) has established a nationwide Tax Information Network (TIN) on behalf of the Income Tax Department (ITD). This is designed to make the tax administration more effective, furnishing of returns convenient, reduce compliance cost and bri ng greater transparency. While NSDL will be the primary agency responsible for the design, implementation and maintenance of TIN as per the requirements of ITD, other agencies will also play key roles in the TIN system. Karvy has established infrastructure required to provide IT enabled services so, Karvy provides TIN facilitation centers all over India on behalf of NSDL. Besides Karvy following companies can also work as intermediary between NSDL and customers. Alankit Assignments Ltd. Integrated Enterprise (I) Ltd. Shell Tran source Ltd.

Source: Tax Information Network 37

P G Dept of Management Studies, PESITM, Shivamogga

Karvy Stock Broking Limited

The banking system, being the agency that collects the money on behalf of the ITD against tax obligations from the tax payers will be linked to the TIN central system to provide accounting information on tax paid by various entities under various heads. As banks are relatively technology-enabled entities, they will directly be linked electronically to the TIN central system enabling online tax accounting.

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Karvy Stock Broking Limited

5.1 SWOT ANALYSIS OF KARVY: Strengths: y y y y y Employees are highly empowered. Strong Communication Network. Good co-operation between employees. Number 1 Registrar and Transfer agent in India. Number 1 dealer of Investment Products in India.

Weaknesses: y High Employee Turnover.

Opportunity: y 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. y Marketing at rural and semi-urban areas.

Threats: y y Increasing number of local players. Past image of Mutual Fund.

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Karvy Stock Broking Limited

6.1 LEARNING EXPERIENCE: It was a great experience at Karvy Stock Broking Limited., where I got an opportunity to learn the functions of the company in accordance with the present trends. The interaction with the company gave me an insight and very good experience of the company¶s scenario in the competitive environment. It gave an opportunity to study the human behavior and also made to face different situations, which normally would come across while on work in office environment. The project gave me an insight on the practicali ty of some of the academic knowledge gained during the first three semesters of the MBA course. 1. Understand the various functional departments in the organization and the workflow. 2. It gave a practical knowledge about how the labour force is managed. 3. It gave an exposure to the various day to day problems faced by the managers of various departments and the way they tackle the complaints and the problems of the customer. Practical Exposure: Practical study of the organization regarding planning, organizing, s taffing, co-coordinating and controlling of all the departments helped me to improve my decision making skills. Company Exposure: The study gave an exposure to the real life situation in the company, future growth possibilities and its contribution to the economy. Presentation Skills: The study helped in improving my presentation skills, as I need to talk to different people in the organization.

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research process. Shivamogga 41 . data analysis and preparation of a research report. P G Dept of Management Studies. I also have learnt on how to conduct research.Karvy Stock Broking Limited Research: I got an excellent opportunity to meet the clients of KSBL Davangere districts. data collection. PESITM.

averages. Shivamogga 42 . y y y Exploratory research Descriptive research Causal / Experimental research Descriptive research Descriptive research is also called statistical research. such as observations. The main goal of this type of research is to describe the data and characteristics about what is being studied. surveys. and tests. It is a master plan contain everything how to start and how to finish effectively. it does not gather the causes behind a situation. Although this research i s highly accurate. and other statistical calculations. Descriptive research is mainly done when a researcher wants to gain a better understanding of a topic for example. We often describe a design using a concise notation that enables us to summarize a complex design structure efficiently. selfreports. It is quantitative and uses surveys and panels and also the use of probability sampling.1 Methodology of research Research design It is framework that plans the action for the research project.Karvy Stock Broking Limited 7. The idea behind this type of research is to study frequencies. It is the glue that holds all of the elements in a research project together. which takes three main forms. It specifies pattern of framework for controlling the collection of dada accurately and economically and specifies methods and procedures. This type of research is also a grouping that includes many particular research methodologies and procedures. It is frame work for action. PESITM. a frozen ready meals company learns that there is a growing demand for fresh ready meals but doesn¶t know much about the area of fresh food and so has to carry out research in order to gain a better understanding. Research methods The goal of the research process is to produce new knowledge. The four parameters of research will help us understand how P G Dept of Management Studies.

bonds. Since the purpose is to gather information regarding specific questions the research must be designed to ensure accuracy of the findings. small brokers etc.5 Operational definitions and concepts: It¶s all about mutual funds Mutual funds: A mutual fund is a professionally-managed firm of collective investments that pools money from many investors and invests it in stocks. Shivamogga 43 . It also covers why/ why not investors are availing the services of financial advisors.3 Objective of the study:  The main objective of this project is to collect the opinion of people regarding mutual funds. other types of research. 7.e.  Objective is to know from where the investors purchase mutual funds. The information was gathered from the questionnaires that were filled by the investors in Davangere.  I have tried to explore the general opinion about mutual funds. collection data on a few factors from of a number of cases at one point of time.  Objective is to know the opinion of the investors about the services of financial advisors. i. and/or other securities. have visited people randomly nearby locality.  To know the most suitable stage to invest in mutual funds 7. In other P G Dept of Management Studies. 7. and different from.2 Need of the study: To know the current opinion of investors regarding financial advisers for Mutual funds. short-term money market instruments. PESITM. Exploratory research often makes use of survey research design which consists of a cross sectional research design.Karvy Stock Broking Limited descriptive research in general is similar to.4 Scope of the study: The research was carried on in Davangere. 7.

Bonds. NAV = Total value of the fund««««««. and distributes the profits. From this. Ability to take advantage of the stock market which has generally outperformed other investment in the long run. 44 P G Dept of Management Studies. The fund manager may not pass transaction savings to the investor. The investor is not putting all his eggs in one basket.. The value of all the securities in the portfolio in calculated daily. Ability to add funds at set amounts and smaller quantities such as $100 per month. Advantages of mutual funds y y Professional management and research to select quality securities. No. Call money markets etc. Shivamogga . PESITM. Disadvantages of mutual funds y y y The investor must rely on the integrity of the professional fund manager. Fund management fees may be unreasonable for the services rendered.Karvy Stock Broking Limited words we can say that A Mutual Fund is a trust registered with the Securities and Exchange Board of India (SEBI). in equity shares. of shares currently issued and outstanding 1. Government securities. known as the net asset value (NAV). is mostly calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. Fund manager are able to buy securities in large quantities thus reducing brokerage fees. y y y 2. which pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders. all expenses are deducted and the resultant value divided by the number of units in the fund is the fund¶s NAV. Spreading risk over a larger quantity of stock whereas the investor has limited to buy only a hand full of stocks. The value of each unit of the mutual fund.

PESITM. Shivamogga 45 .6. SBI Mutual Fund was the first non . 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.Karvy Stock Broking Limited y The fund manager is not liable for poor judgment when the investor's fund loses value. There may be restrictions on when and how an investor sells/redeems his mutual fund shares. At the end of 1988 UTI had Rs. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. the mutual fund industry had assets under management of Rs. Bank of India (Jun 90). Indian Bank Mutual Fund (Nov 89). public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). The first scheme launched by UTI was Unit Scheme 1964.This is sometimes call "Churn and Earn". History of the Indian mutual fund industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. y y y y 3. First Phase ± 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. Bank of Baroda Mutual Fund (Oct 92). at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases.At the end of 1993.700 crores of assets under management. P G Dept of Management Studies. Prospectus and Annual report are hard to understand. Second Phase ± 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non.47.UTI. Punjab National Bank Mutual Fund (Aug 89). There may be too many transactions in the fund resulting in higher fee/cost to the investor .UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). 004 crores. Investor may feel a loss of control of his investment dollars.

1. some invest only in Blue Chip companies that are more established and are relatively low risk. P G Dept of Management Studies. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. some focus on high-risk start up companies that have the potential for double and triple digit growth. Fourth Phase ± since February 2003 In February 2003. It is registered with SEBI and functions under the Mutual Fund Regulations consolidation and growth. sponsored by SBI. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.153108 crores under 421 schemes.29. As at the end of September. under which all mutual funds. As at the end of January 2003. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. which manage assets of Rs. assured return and certain other schemes The second is the UTI Mutual Fund Ltd. there were 33 mutual funds with total assets of Rs. PNB. the assets of US 64 scheme. For instance. except UTI were to be registered and governed. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. Shivamogga 46 . there were 29 funds.805 crores. PESITM. BOB and LIC. 4. On the other hand. 2004. 21. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. Finding a mutual fund that fits your investment criteria and style is important.Karvy Stock Broking Limited Third Phase ± 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being. Types of mutual funds Most funds have a particular strategy they focus on when investing. 835 crores as at the end of January 2003. representing broadly.

y Close-ended funds: These funds raise money from investors only once. Shivamogga 47 . fresh investments cannot be made into the fund. after the offer period. most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Recently. Therefore. Therefore. such funds have relatively low liquidity.Karvy Stock Broking Limited Categories of mutual funds: Source: Types of mutual funds Mutual funds can be classified as follows:  Based on their structure: y Open-ended funds: Investors can buy and sell the units from the fund. Redemption of units can be made during specified intervals. P G Dept of Management Studies. Morgan Stanley Growth Fund).g.. PESITM. If the fund is listed on a stocks exchange the units can be traded like stocks (E. at any point of time.

PESITM.Invest 100% of the capital in a specific sector.  Balanced fund: Their investment portfolio includes both debt and equity. short term fluctuations in the market. y Equity-oriented funds -Invest at least 65% in equities.100% of the capital is invested in equities spreading across different sectors and stocks. However.g. It can be further classified as: y Index funds. historically. y Dividend yield funds. such funds can yield great capital appreciation as. With fluctuating share prices. remaining in debt. equities have outperformed all asset classes in the long term. even losses. y Equity diversified funds. cements sectors etc. thereby offering higher returns at r elatively lower volatility. Hence. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. construction. investment in equity funds should be considered for a period of at least 3-5 years. y ELSS. e. generally smoothens out in the long term. such funds show volatile performance. P G Dept of Management Studies. Shivamogga 48 .Karvy Stock Broking Limited  Based on their investment objective:  Equity funds: These funds invest in equities and equity related instruments.Invest 100% of the assets in sectors which are related through some theme. As a result.g. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weight age. on the risk-return ladder. Following are balanced funds classes: y Debt-oriented funds -Investment below 65% in equities. . they fall between equity and debt funds. y Sector funds. like BSE Sensex or Nifty is tracked. At the same time.In this case a key stock market index.A banking sector fund will invest in banking stocks.Equity Linked Saving Scheme provides tax benefit to the investors.it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. -An infrastructure fund invests in power. y Thematic funds. e.

Floaters invest in debt instruments which have variable coupon rate.They invest 100% of their portfolio in long -term government securities.Karvy Stock Broking Limited  Debt fund: They invest only in debt instruments. PESITM. y FMPs. y Floating rate funds .These funds invest 100% in money market instruments. Funds are allocated to equities. Higher proportion (around 75%) is put in money markets. Government of India securities. y Liquid funds. y Gilt funds LT. Put your money into any of these debt funds depending on your investment horizon and needs. a large portion being invested in call money market. in the absence of arbitrage opportunities. Therefore. The investor gets fewer units when the NAV is high and more units when the NAV is low. y Arbitrage fund. Payment is made through post dated cheques or direct debit facilities. y Gilt funds ST.They invest 100% of their portfolio in government securities of and T-bills.Typically such funds invest a major portion of the portfolio in long-term debt papers. y Income funds LT.fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.Invest in short-term debt papers. 5. This is called as the benefit of Rupee Cost Averaging (RCA) P G Dept of Management Studies. Shivamogga 49 . Investment strategies: 1.Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. they invest exclusively in fixed-income instruments like bonds. and are a good option for investors averse to idea of taking risk associated with equities.They generate income through arbitrage opportunities due to miss-pricing between cash market and derivatives market. commercial paper (CP) and call money. and money market instruments such as certificates of deposit (CD). derivatives and money markets. y MIPs. debentures. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month.

to an equity scheme of the same mutual fund. Risk v/s. at a fixed interval. Shivamogga 50 . 6. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum. return: 7. 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: P G Dept of Management Studies. PESITM.Karvy Stock Broking Limited 2. 3.

Passport. registered with SEBI. Its objective is to increase public awareness of the mutual fund industry. The investors. Documents required (PAN mandatory): Proof of identity: 1. 2. Proof of address (any of the following): latest telephone bill. latest bank passbook/bank account statement. disclosure. P G Dept of Management Studies. driving license. PESITM. According to SEBI Regulations. The return generated from the investments is passed on to the investors or reinvested as mentioned in the offer document. Photo PAN Card. SEBI form ulates policies and regulates the mutual funds. 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. 8. holds the securities of various schemes of the fund in its custody. latest Demat account statement. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. latest electricity bill. Custodian. known as unit holders. voter id. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. transparency etc. 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.Karvy Stock Broking Limited The entire mutual fund industry operates in a very organized way. two thirds of the directors of Trustee Company or board of trustees must be independent. The objective of the investment should match with the objective of the fund to best suit the investors¶ needs. rent agreement. ration card. Regulatory Authorities: To protect the interest of the investors. handover their savings to the AMCs under various schemes. AMFI also is engaged in upgrading professi onal standards and in promoting best industry practices in diverse areas such as valuation. Shivamogga 51 . The AMCs further invest the funds into various securities according to the investment objective.

of units 7. Risk profile of the scheme 5. Minimum application amount/ no. Benchmark index 8. 4. P G Dept of Management Studies. recurring expenses 11. Shivamogga 52 . Asset allocation pattern of the scheme. Dividend policy 9. Expenses of the scheme: load structure. Investment objective 3. An offer document consists of the following: Standard Offer Document for Mutual Funds (SEBI Format) o Summary Information o Glossary of Defined Terms o Risk Disclosures o Legal and Regulatory Compliance o Expenses o Condensed Financial Information of Schemes o Constitution of the Mutual Fund o Investment Objectives and Policies o Management of the Fund o Offer Related Information. year. Key Information Memorandum: A key information memorandum. Its contents are: 1. 2. benchmark return) 12.wise return for the last 5 financial years. Name of the fund. popularly known as KIM. Name of the fund manager(s) 10. PESITM.Karvy Stock Broking Limited Offer document: An offer document is issued when the AMCs make New Fund Offer (NFO). And thus every investor gets to read it. Performance of the scheme (scheme return v/s. is attached along with the mutual fund form. Plans & options 6. It¶s advisable to every investor to ask for the offer document and read it before investing.

whichever he finds convenient for him. etc. it¶s a very tough job for the investors to choose the best fund for them. HSBC.banking financial corporations too. UTI etc. Whenever an investor thinks of investing in mutual funds. The mf advisors¶ thoughts go beyond just investment objectives and rate of return. PESITM. Fidelity. Shivamogga 53 . Banks.eg: KARVY being the top financial intermediary of India has the greatest network. HDFC.Karvy Stock Broking Limited Distribution channels: Mutual funds posses a very strong distribution channel so that the ultimate customers doesn¶t face any difficulty in the final procurement. The investors can approach to the AMCs for the forms. DSP Merrill Lynch. Reliance . Now the tough task for investors start. JP Morgan. they may carry on the further process themselves or can go for advisors like KARVY. ICICI. he must look at the investment objective of the fund. Mira Assets. LIC. Sundaram. So it is always advisable to go for MF advisors. AMCs can enjoy the advantage of large network of these brokers and sub brokers. Then the investors sort out the funds whose investment objective matches with that of the investor¶s. How do investors choose between funds? When the market is flooded with mutual funds. The va rious parties involved in distribution of mutual funds are: y Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. Canara Robeco. Kotak Mahindra. independent brokers. 9. y Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. banks and several non .e. y Individual agents.25% (entry load) but could cost the investors in terms of returns if the investor is not an expert. whereas foreign AMCs include: Standard Chartered. S o the AMCs dealing through KARVY has access to most of the investors. Franklin Templeton. SBI magnum. Lotus India.Birla Sunlife. Some of the basic tools which an investor may ignore but an mf advisor will always look for are as follow: P G Dept of Management Studies. NBFC: investors can procure the funds through individual agents. some of the top AMCs of India are. Tata. Of course the investors can save their money by going the direct route i. through the AMCs directly but it will only save 1-2.

Investors can also benefit by increasing the SIP amount during market downturns. 3. The trigger could be the value of the investment. 500 or Rs. To use the trigger and switch facility. The funds redeemed can be switched to other specified schemes within the same fund house. which will result in reducing the average cost and enhancing returns. In case if the NAV of fund falls. level of capital appreciation. Shivamogga 54 . Rebalancing: Rebalancing involves booking profit in the fund class that has gone up and investing in the asset class that is down. the investors can get more number of units and vice-versa. Rupee cost averaging: The investors going for Systematic Investment Plans (SIP) and Systematic Transfer Plans (STP) may enjoy the benefits of RCA (Rupee Cost Averaging). level of the market indices or even a date. This ensures that the investor books some profits and maintains the asset allocation in the port folio.Karvy Stock Broking Limited 1. like Rs 5. 2.000 a month and nowadays even as low as Rs. Trigger facilities allow automatic redemption or switch if a specified event occurs. the amount or the number of units to be redeemed and the scheme into which the switch has to be made. the investor is always at a profit. Rupee cost averaging allows an investor to bring down the average cost of buying a scheme by making a fixed investment periodically. This results in the average cost per unit for the investor being lower than the average price per unit over time. the investor needs to specify the event. Trigger and switching are tools that can be used to rebalance a portfolio. PESITM. greater the chances of benefiting from lower prices. even if the market falls. Whereas STP allows investors who have lump sums to park the funds in a lowrisk fund like liquid funds and make periodic transfers to another fund to take advantage of rupee cost averaging. Some fund houses allow such switches without charging an entry load. the net asset value of the scheme. 100. In this case. More frequent the investment interval. Diversification: P G Dept of Management Studies. The investor needs to decide on the investment amount and the frequency.

If it is short -term.50 per cent DDT paid by the MF on dividends. the dividends from debt funds may be transferred to equity schemes. Investors in higher tax brackets will end up paying a higher rate as short -term capital gains and should choose the dividend option. equities. SWP implies capital gains for the investor. For example. The investors gain through either dividends or capital appreciation but if they haven¶t considered the tax factor then they may end loosing. PESITM. Shivamogga 55 . Such transfers may be done with or without entry loads.Karvy Stock Broking Limited Diversification involves investing the amount into different options. Under this. simplicity and affordability. corporate debentures. fixed income bonds. In case of mutual funds. 4. If the capital gain is long-term (where the investment has been held for more than one year). This gives the investor a small exposure to a new asset class without risk to the principal amount. the investor may enjoy it afterwards also through dividend transfer option. This is because investors can redeem units using the SWP where they will have to pay 10 per cent as long-term capital gains tax against the 12. Tax efficiency affects the final decision of any investor before investing. Even then an investor needs to examine costs. All the tools discussed over here are used by all the advisors and have helped investors in reducing risk. the growth option is more tax efficient for all investors. P G Dept of Management Studies. then the SWP is suitable only for investors in the 10-per-cent-tax bracket. the dividend is reinvested not into the same scheme but into another scheme of the investor's choice. Investors who need a regular stream of income have to choose between the dividend option and a systematic withdrawal plan that allows them to redeem units periodically. 10. Tax efficiency: Tax factor acts as the ³x-factor´ for mutual funds. tax implications and minimum applicable investment amounts before committing to a s ervice.50 per cent (plus surcharge and education class) on dividends paid out. 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. Debt funds have to pay a dividend distribution tax of 12. depending on the MF's policy.

gold.return. . bank deposits. Debenture s Co. PESITM. we find that equities gives us high returns with high liquidity but its volatility too is high with low safety which doesn¶t makes it favorite among persons who have low risk. FDs Bank Deposits PPF Life Insurance Gold Real Estate Mutual Funds Source: Performance of mutual funds We can very well see that mutual funds outperform every other investment option. all these investment options could be judged on the basis of various parameters such as. we get this in a tabular form: Return Safety Volatility Liquidity Convenie nce Equity Bonds Co.appetite. Measuring these investment options on the basis of the mentioned parameters.Karvy Stock Broking Limited company fixed deposits. life insurance. volatility an d liquidity. safety convenience. PPF. High High Moderate High High Moderate High High Moderate Moderate High Moderate Low Gold Low Moderate Low High High Low Low Moderate Low High Moderate Moderate Low Low High Low Low Low High Moderate High High Moderate Moderate Low High Moderate High Moderate Moderate High Moderate Low Moderate High Low P G Dept of Management Studies. real estate etc. comparing it with the other options. On three parameters it scores high whereas it¶s moderate at one. Shivamogga 56 . Even the convenience involved with investing in equities is just moderate.

Shivamogga 57 . if some are safe then either they have low liquidity or low safety or both likewise. it scores low on return . it scores better than equities at all fronts but lags badly in the parameter of utmost important i. so it¶s not an happening option for person who can afford to take risks for higher return. PESITM. Now everybody can choose their fund according to their investment objectives. The reasons for this being: y Mutual funds combine the advantage of each of the investment products: mutual fund is one such option which can invest in all other investment options. y Returns get adjusted for the market movements: as the mutual funds are managed by experts so they are ready to switch to the profitable option along with the market movement. The other option offering high return is real estate but that even comes with high volatility and moderate safety level. even the liquidity and convenience involved are too low. Straightforward. But mutual funds have definitely sorted out this problem. we can say that mutual fund emerges as a clear winner among all the options available.Karvy Stock Broking Limited Now looking at bank deposits. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. Gold have always been a favorite among Indians but when we look at it as an investment option then it definitely doesn¶t gives a very bright picture. y Flexibility of invested amount: Other then the above mentioned reasons.e. Just by investing in it. Its principle of diversification allows the investors to taste all the fruits in one plate. Suppose they predict that market is going to fall then they can sell some of their shares and book profit and can reinvest the amount again in money market instruments. Although it ensures high safety but the returns generated and liquidity are moderate. Such as if some are good at return then they are not safe. y Dispense the shortcomings of the other options: every other investment option has more or less some shortcomings. there exists no single option which can fit to the need of everybody. there exists one more reason which has established mutual funds as one of the largest financial intermediary and that is the flexibility P G Dept of Management Studies. the investor can enjoy the best investment option as per the investment objective.

Karvy Stock Broking Limited that mutual funds offer regarding the investmen t amount. which affect all the securities. on the other hand. The higher the fluctuations in the returns of a fund during a given period. In other words. AMCs must be held accountable for their selection of stocks. it should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. general market fluctuations. higher will be the risk associated with it. 500 through SIPs and even Rs. For mutual funds to grow. 100 in some cases. Shivamogga 58 . Risk associated with a fund. good mutual fund companies over are known by their AMCs and this fame is directly linked to their superior stock selection skill s. Worldwide. fluctuations due to specific securities present in the portfolio of the fund. frankly. PESITM. First. The Total Risk of a given fund is sum of these two and is measured in terms of standard deviation of returns of the fund. it is. Though past performance alone cannot be indicative of future performance. 7. present in the market. Facto rs such as investment strategy and management style are qualitative. but the funds record is an important indicator too. with about 34 players and more than five hundred schemes. there must be some performance indicator that will reveal the quality of stock selection of various AMCs. can be defined as variability or fluctuations in the returns generated by it.6 Performance Measures of Mutual Funds: Mutual Fund industry today. is P G Dept of Management Studies. called market risk or systematic risk and second. is one of the most preferred investment avenues in India. with a plethora of schemes to choose from. These fluctuations in the returns generated by a fund are resultant of two guiding forces. in a general. One can start investing in mutual funds with amount as low as Rs. the only quantitative way to judge how good a fund is at present. However. Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme. Therefore. Systematic risk. there is a need to correctly assess the past performance of different mutual funds. called unsystematic risk. the retail investor faces problems in selecting funds.

PESITM. The more responsive the NAV of a mutual fund is to the changes in the market. The most important and widely used measures of performance are:  The Treynor Measure  The Sharpe Measure  Jenson Model  Fama Model 1. higher will be its beta. The Treynor Measure Developed by Jack Treynor. which represents fluctuations in the NAV of the fund vis-à-vis market.Rf)/Bi Where. systematic risk cannot. Shivamogga 59 . a low and negative Treynor's Index is an indication of unfavorable performance.Karvy Stock Broking Limited measured in terms of Beta. as there is no credit risk associated). during a given period and systematic risk associated with it (beta). While unsystematic risk can be diversified through investments in a number of instruments. this performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fu nd over and above risk free rate of return (generally taken to be the return on securities backed by the government. Symbolically. In order to determine the risk-adjusted returns of investment portfolios. All risk-averse investors would like to maximize this value. Beta is calculated by relating the returns on a mutual fund with the returns in the market. By using the risk return relationship. 2. we try to assess the competitive strength of the mutual funds vis-à-vis one another in a better way. Rf is risk free rate of return and Bi is beta of the fund. Ri represents return on fund. While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund. The Sharpe Measure: P G Dept of Management Studies. it can be represented as: Treynor's Index (Ti) = (Ri . several eminent authors have worked since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative portfolios within a particular risk class.

performance of a fund is evaluated on the basis of Sharpe Ratio. According to Sharpe. This measure was developed by Michael Jenson and is sometimes referred to as the Differential Return Method.Rf)/Si Where. This measure involves evaluation of the returns that the fund has generated vs.Karvy Stock Broking Limited In this model. Jenson Model: Jenson's model proposes another risk adjusted performance measure. Si is standard deviation of the fund. Required return of a fund at a given level of risk (Bi) can be calculated as: Ri = Rf + Bi (Rm . Shivamogga 60 . While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund. it is the total risk of the fund that the investors are concerned about. After calculating it. P G Dept of Management Studies.Rf) Where. as his knowledge of market is primitive. So. which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it. Limitation of this model is that it considers only systematic risk not the entire risk associated with the fund and an ordinary investor cannot mitigate unsystematic risk. Higher alpha represents superior performance of the fund and vice versa. a low and negative Sharpe Ratio is an indication of unfavorable performance. Rm is average market return during the given period. the returns actually expected out of the fund given the level of its systematic risk. Symbolically. it can be written as: Sharpe Index (Si) = (Ri . which measures the performance of a fund compared with the actual returns over the period. alpha can be obtained by subtracting required return from the actual return of the fund. PESITM. The surplus between the two returns is called Alpha. the model evaluates funds on the basis of reward per unit of total risk. 3.

Shivamogga 61 . Sm is standard deviation of market returns. as it is the excess return over and above the return required to compensate for the total risk taken by the fund manager. The net selectivity is then calculated by subtracting this required return from the actual return of the fund. measured in terms of returns. The net selectivity represents the stock selection skill of the fund manager. However. Sharpe measure and Fama model that consider the entire risk associated with fund are suitable for small investors. Fama Model: The Eugene Fama model is an extension of Jenson model. Higher value of which indicates that fund manager has earned returns well above the return commensurate with the level of risk taken by him. Treynor measure and Jenson model use systematic risk based on the premise that the unsystematic risk is diversifiable. of a fund with the required return commensurate with the total risk associated with it. These models are suitable for large investors like institutional investors with high risk taking capacities as they do not face paucity of funds and can invest in a number of options to dilute some risks.Rf) Where. Among the above performance measures. two models namely. PESITM. P G Dept of Management Studies. The investment in funds that have generated big returns at higher levels of risks leaves the money all the more prone to risks of all kinds that may exceed the individual investors' risk appetite. as the ordinary investor lacks the necessary skill and resources to diversified. This model compares the performance. Required return can be calculated as: Ri = Rf + Si/Sm*(Rm .Karvy Stock Broking Limited 4. a portfolio can be spread across a number of stocks and sectors. The difference between these two is taken as a measure of the performance of the fund and is called net selectivity. Moreover. F or them. the selection of the fund on the basis of superior stock selection ability of the fund manager will also help in safeguarding the money invested to a great extent.

Karvy Stock Broking Limited 7.  Possibility of error in data collection.  Research has been done only at Davangere ( Districts). P G Dept of Management Studies.  Some of the persons were not so responsive.7 Limitation of research:  Time and resource limitation. Shivamogga 62 . PESITM.

line graphs etc. irrespective of them being investor or not or availing the services or not.3 Sampling plan:  Area of study: Need for financial advisors for mutual fund investors.  Sample size: The sample size of my project is limited to 50 only. The secondary data has been collected through various journals and websites.4 Instrumentation Technique:  Tools and Techniques of data collection The questionnaire serves as a useful guide for the communication process and may be used with survey research in any form whether the questions are P G Dept of Management Studies. by formal and informal talks and through filling up the questionn aire prepared. Shivamogga 63 .2 Sources of Data: y y Primary data Secondary data Research is totally based on primary data and Secondary data can be used only for the reference. Research has been done by primary data collection.  Sampling procedure: The sample is selected in a random way.1 Methodology of data collection: 8. and primary data has been collected by filling a required format. PESITM. pie charts. 8. 8. It was collected through personal visits to the known and unknown persons.  Sample design: Data has been presented with the help of bar graph.Karvy Stock Broking Limited 8.

charts and tables. Conclusion and interpretation of this study would then be made using various tools like graphs. PESITM.Karvy Stock Broking Limited in written or verbal form.  Research tool: Sample statistical tool is this analyzed and expresses in terms of percentage. Without a questionnaire the interview has no structure. P G Dept of Management Studies. Shivamogga 64 . The information gathered from the primary source would be analyzed by tabulating all information received.

1 Analysis and Interpretation of Data Table no. 1 Analysis: From the above table it is evident that 92% are male and 8% are female respondents.Karvy Stock Broking Limited 9. P G Dept of Management Studies.1 : Analysis on the basis of gender. Gender Number of Male Female TOTAL Source: primary data Respondents 46 04 50 Percentage % 92% 8% 100% CLASSIFICATION ON THE BASIS OF GENDER 8% Male Female 92% Source: Table no. Shivamogga 65 . PESITM.

2 : Analysis on the basis of Age. 8% responders were between 3 0 to 40 years P G Dept of Management Studies. PESITM. Shivamogga   ¤ ¤ SSIFI TIO O THE SIS OF % ¦ ¦£ ¥ £ £¡ ¢ £ ¡ E ROUP Below 20 20 30 30 40 40 & Above 0% 66 . 2 Analysis: From the above table it is evident that were 92% responders were between 20 to 30 years. Age group Below 20 20 ± 30 30 ± 40 40 & Above TOTAL Source: primary data Number of Respondents 00 46 04 00 50 Percentage % 0% 92% 8% 0% 100% 100% 90% 80% 70% 92% 60% 50% 40% 30% 20% 10% 0% 0% Source: Table no.Karvy Stock Broking Limited Table no.

Karvy Stock Broking Limited Table no.3 : Analysis on the basis of Occupation. 52% of responders were Employee. PESITM. 4% of responders were student and 8% of responders were others. P G Dept of Management Studies. 3 Analysis: From the above table it is evident that 36% of responders were Businessman. Shivamogga § 20%  %   SSIFI TIO O THE SIS OF O UP TIO  ¨¨   ¨ ©  ¨ 67 . Occupation Businessman Employee student others TOTAL Source: primary data Number of Respondents 18 26 02 04 50 Percentage % 36% 52% 4% 8% 100% 52% 60% 50% 40% 30% 4% 36% 10% 0% Businessman Employee student others Source: Table no.

Shivamogga 68 . P G Dept of Management Studies.4 : Analysis on the basis of Education. 4% of responders are PUC holders and 4% of responders are Below SSLC. 4 Analysis: From the above table it is observed that 76% of responders are Post Graduate holders. Education Post Graduate Graduate PUC Below SSLC TOTAL Source: primary data CLASSIFICATION ON THE BASIS OF EDUCATION QUALIFICATION Number of Respondents 38 08 02 02 50 Percentage % 76% 16% 4% 4% 100% 4% 4% Post Graduate Graduate 16% 76% PUC Below SSLC 0% 20% 40% 60% 80% Source: Table no. PESITM.Karvy Stock Broking Limited Table no. 16% of responders are Graduate holders.

Income (yr) Below 50000 50000-100000 100000-500000 above500000 TOTAL Source: primary data C A 35% 30% 5% 0% 32% 26% Number of Respondents 16 13 19 02 50 Percentage % 32% 26% 4% 8% 100% CA N N H BA NC Bel w 50000 50000-100000 100000-500000 % ab ve500000 10% 4% 5% 0% Source: Table no. Shivamogga  15%     69 .Karvy Stock Broking Limited Table no. PESITM.5 : Analysis on the basis of Income (yr). 5 Analysis: From the above table it is clear that 32% of responders were having below 50000 income. P G Dept of Management Studies. 26 % of responders were having 50000 -100000 income. 4% of responders were having 100000-500000 income and 8% of responders were having above500000 income.

PESITM. Shivamogga ! !     # ! ! ! $#    " 70 . P G Dept of Management Studies. 46% of responders were purchase mutual funds from Brokers only. 24% of responders were purchase mutual funds from Brokers/ sub-brokers and 6% of responders were purchase mutual funds from other sources. 6 Analysis: From the above table it is evident that 24% of responders were purchase mutual funds from directly from the AMCs.6 : Where from do you purchase mutual funds? Particulars Directly from the AMCs Brokers only Brokers/ sub-brokers Other sources TOTAL Source: primary data Number of respondents 12 23 12 03 50 Percentage % 24% 46% 24% 6% 100% METHOD OF PURCHASE OF MUTUAL FUNDS 50% 45% 40% 35% 30% 25% 20% 15% 46% Direc ly fr m he M 24% 24% Br ker nly Br ker / ub-br ker O her 6% urce 10% 5% 0% Source: Table no.Karvy Stock Broking Limited Table no.

7 : According to you which is the most suitable stage to invest in mutual funds? Particulars Young unmarried stage Young Married with children stage Pre-retirement stage Old age stage TOTAL Source: primary data Number of respondents 39 09 Percentage % 78% 18% 01 01 50 2% 2% 100% DIAGRAM SHOWING AGE GROUP FOR INVESTMENT Ol age age Pre-re iremen Young Marrie wi h chil ren Young unmarrie age Source: Table no. 7 Analysis: From the above table it is evident that 78% of responders said that suitable stage to invest in mutual funds is at Young unmarried stage.Karvy Stock Broking Limited Table no. 2% of responders said that suitable stage to invest in mutual funds is at Pre-retirement stage and 2% of responders said th at suitable stage to invest in mutual funds is at Old age stage. P G Dept of Management Studies. Shivamogga '& % '& % ' '& ' % '& ' % 2% age 2% age 18% 78% 71 . PESITM. 18% of responders said that suitable stage to invest in mutual funds is at Young Married with children stage.

22% of responders said that the feature of the mutual funds influence most is Professional management.8 : Which feature of the mutual funds influence you most? Particulars Diversification Professional management Reduction in risk and transaction cost Helps in achieving long term goals TOTAL Source: primary data Number of respondents 19 11 08 12 Percentage % 38% 22% 16% 24% 50 100% FEATURES OF THE MUTUAL FUNDS INFLUENCE THE INVESTOR Helps i achievi g lo g term goals Re uctio i risk a tra sactio cost 16% 24% Pro essio al ma ageme t Diversi icatio Source: Table no.Karvy Stock Broking Limited Table no. PESITM. 16% of responders said that the feature of the mutual funds influence most is Reduction in risk and transaction cost. P G Dept of Management Studies. and 24% of responders said that the feature of the mutual funds influence most is helps in achieving long term goals. 8 Analysis: From the above table it is clear that 38% of responders said that the feature of the mutual funds influence most is Diversification. Shivamogga ) ) ) ) 0) ) ) ) ) ) ) ( ) ( 0 22% 38% 0% 10% 20% 30% 40% 72 .

9 : Where do you find yourself as a mutual fund investor? Particulars Totally ignorant Partial knowledge of mutual funds Aware only of any specific scheme in which you invested Fully aware TOTAL Source: primary data Number of respondents 05 21 17 07 50 Percentage % 10% 42% 34% 14% 100% DIAGRAM SHOWS INVESTOR AWARENESS 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10% 42% 34% Totally ignorant Partial knowl dg of mutual fund Source: Table no. 42% of responders said that they find themselves as a mutual fund investor have Partial knowledge of mutual funds.Karvy Stock Broking Limited Table no. Shivamogga 3 Fully awar 1 21 14% Awar only of any p cific ch m in which you inv t d 1 2 1 1 1 1 2 1 2 73 . 34% of responders said that they find themselves as a mutual fund investor have Aware only of any specific scheme in which you invested and 14% of responders said that they find themselves as a mutual fund investor have fully aware. PESITM. 9 Analysis: From the above table it is evident that 10% of responders said that they find themselves as a mutual fund investor as totally ignorant. P G Dept of Management Studies.

Shivamogga 4 Yes No 82% 74 .Karvy Stock Broking Limited Table no. PESITM. P G Dept of Management Studies. 10 Analysis: From the above table it is evident that 82% of responders said Yes and 18% of responders said No to avail the services of personal financial advisors.10 : Are you availing the services of personal financial advisors? Particulars Yes No TOTAL Source: primary data Number of respondents 41 09 50 Percentage % 82% 18% 100% NEED OF PERSONAL FINANCIAL ADVISORS 8% Source: Table no.

40% of responders said that expertise of the personal financial advisor is demanded most is planning to achieve specific financial goals. 11 Analysis: From the above table it is evident that 14% of responders said that expertise of the personal financial advisor is demanded most is Portfolio review & investment recommendation. PESITM. 75 P G Dept of Management Studies. Shivamogga . 8% of responders said that expertise of the personal financial advisor is demanded most is Managing assets in retirement.Karvy Stock Broking Limited Table no.11 : Which expertise of the personal financial advisor is demanded most? Particulars Portfolio review & investment recommendation Planning to achieve specific financial goals Managing assets in retirement Access to specialist in areas such as tax planning TOTAL Source: primary data EXPERTISE OF THE PERSONAL FINANCIAL ADVISOR IS DEMANDED MOST Portfolio review & investment recommendation Planning to achieve specific financial goals 40% 14% 0% 10% 20% 30% 40% Number of respondents 07 Percentage % 14% 20 04 19 40% 8% 38% 50 100% 38% 8% Managing assets in retirement Access to specialist in areas such as tax planning Source: Table no. and 38% of responders said that expertise of the personal financial advisor is demanded most is Access to specialist in areas such as tax planning.

P G Dept of Management Studies. Shivamogga 6 20% 5 5 Want help with asset allocation 24% 6% 26% Don t have time to make my own investment decision 76 . PESITM. 12 Analysis: From the above table it is clear that 24% of responders said that the major reason for using financial advisors is that they Want help with asset allocation . 16% of responders said that the major reason for using financial advisors is that they Don¶t have time to make my own investment decision.Karvy Stock Broking Limited Table no.12 : What is the major reason for using financial advisors? Particulars 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 TOTAL Source: primary data MAJOR REASON FOR USING FINANCIAL ADVISORS 34% 5% 0% Number of respondents 12 08 Percentage % 24% 16% 13 26% 17 34% 50 100% 25% 15% 10% 5% 0% To explain various investment options Source: Table no. 26% of responders said that the major reason for using financial advisors is that they want to explain various investment options and 34% of responders said that the major reason for using financial advisors is that they want to make sure I am investing enough to meet my financial goals.

13: What is the major reason for not using financial advisor? Particulars Have access to all resources needed to invest on own Advisors are too expensive Unsure how to find a trustworthy advisor Want to be in control of own investment TOTAL Source: primary data MAJOR REASON FOR NOT USING FINANCIAL ADVISOR 34% 30% 5% Number of respondents 12 Percentage % 24% 17 09 12 34% 18% 24% 50 100% vi or are oo expen ive 5% 0% Source: Table no. 34% of responders said that the major reason for not using financial advisors is that believe advisors are too expe nsive. 13 Analysis: From the above table it is clear that 24% of responders said that the major reason for not using financial advisors is that they have access to all resources needed to invest on own. Shivamogga F 10% Want to e in control of own investment A @ 15% Un ure how o fin a rustworthy a visor E D 0% 18% 9 @ 9 9 AB C 24% 24% Have acce o all re ource nee e o inve on own 9 9 @9 @ 99 35% @A A 7 8 77 .Karvy Stock Broking Limited Table no. 18% of responders said that the major reason for not using financial advisors is that Unsure how to find a trustworthy advisor and 24% of responders said that the major reason for not using financial advisors is that want to be in control of own investment. PESITM. P G Dept of Management Studies.

1 Research findings: 1. 26% of them needed them to explain them the various investment options available. all are already mutual fund investors. Investors knowledge about various mutual funds schemes:  Out of the 50 persons who already have invested in mutual funds/ are interested to invest. person with older age investing due to profit there grandson. Most preferred time of investors to invest in mutual fund:  Most of the investor preferred to invest at a young unmarried stage. The major reason for availing the service of financial advisors:  24% participants regarded asset allocation as the major reason for going for financial advisors. even the AMCs should follow it. So there is enough scope for the advisors. Availing the services of financial advisors:  Out of 50 responders. Even 18% persons were ready to invest a t a stage of young married with children. 7. followed by reduction in risk. Shivamogga 78 . 82% were already availing the services of financial advisors whereas 18% do not availing the services of financial advisors. 42% possess partial knowledge whereas 10% stands nowhere in knowledge about MF s. Factors that influence investors go for mutual funds:  When asked about the most alluring feature of MFs. only 14% have sound knowledge of MFs. Survy of investors:  At the survey conducted upon 50 people. 3. 24% from brokers and sub-brokers even then 6% people buy from other sources. But again the number rise to 2% at pre -retirement stage. 46% from brokers only. Method of purchase of mutual funds:  24% participants buy forms directly from the AMCs. 5. 34% people are aware of only the schemes in which they have invested. The brokers have the maximum reach so they should try to make those investors aware of the happenings. helps in achieving long term goals and helps in achieving long term goals respectively. 2. 4.34% of them wanted to make sure P G Dept of Management Studies. most of them opted for diversification. PESITM. 6.Karvy Stock Broking Limited 10.

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 major reason investors are not availing the service of financial advisors:  When asked about one reason for not availing the services of financial advisors. P G Dept of Management Studies. So these are enough to drive the investors towards mutual funds. Investors should be made aware of the benefits. 24% of them wished to be in control of their own assets. rupee cost averaging. Investors could also try to increase the spectrum of services offered. The advisors should target for more and more young investors. Investors should be made to realize that ignorance is no longer and what they are losing by not investing. rebalancing etc. 10. 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. Whereas 24% of them said they have access to all the necessary resources required. 34% of them pointed the advisors as expensive. 8. While just 16% gave the reason.18% of them said that they find it difficult to get trustworthy advisors.lack of time. and systematic transfer plan. Shivamogga 79 . Nobody will invest until and unless he is fully convinced. Preferences to young investors:  The advisors should try to change their mindsets.Karvy Stock Broking Limited that they were saving enough to meet their fin ancial goals.2 Suggestions: The most vital problem spotted is of ignorance. Mutual funds offer a lot of benefit which no other single option could offer. PESITM. 2. 1. these benefits are not offered by other options singlehandedly. Value added benefits:  The advisors may try to highlight some of the value added benefits of MFs such as tax benefit.

Shivamogga 80 . But if not possible then they could go for offering more services and benefits at the existing rate. Thus the advisors should try to attract more and more persons and turn them into investors and finally their clients. They should also maintain their code of ethics so that the investors could trust upon them. The advisors should try to charge a nominal fee at the beginning. Reduce cost of service charges:  Now the most important reason for not availing the services of advisors was spotted was being expensive.Karvy Stock Broking Limited 3. P G Dept of Management Studies. PESITM.

After Giving advice to the customers the Advisers should communicate with the clients so there will be better relationship between the Company and the Clients. the task of selecting the most suitable scheme gets even more complicated. Mutual Fund Advisory Service at Karvy guides you through this network and ensures that your investments are backed by their quality research. bank deposits and etc. with about 34 players and more than five hundred schemes. fixed income bonds. equities.. However. corporate debentures. Mutual Fund Advisors give emphasis on mutual funds than other investment options. Mutual funds offer an opportune way to longterm wealth creation. Investment is the stepping stone to achieving one's financial dreams. Mutual Fund industry today. PESITM. P G Dept of Management Studies. it is one of the most preferred investment avenues in India. The financial advisors can tap upon these people by educating them about mutual funds. company fixed deposits. Shivamogga 81 .Karvy Stock Broking Limited Conclusion: If we take a look at the recent scenario in the Indian financial market then we can find the market flooded with a variety of investment options which includes mutual funds. with more and more funds flooding the market.

Business India.  Economic Times Newspaper. KARVY BAZAAR BAATEINA (Weekly Investment Newsletter from KARVY).  www.thefinapolis. The Economic Times.Karvy Stock Broking Limited 11.karvy.mutualfundindia.com Journals & other references:      Karvy the Finapolis. PESITM.com  Business Line Newspaper.com  www. Shivamogga 82 . Karvy business associates manual.mutualfundsindia. P G Dept of Management Studies.com  www.1 BIBLIOGRAPHY  www.

Income (yr): a) Below 50000 [ ] b) 50000 -100000 [ [ ] ] c) 100000-500000 [ ] d) above500000 [ ] b) Unmarried [ ] [ [ ] ] b) Employee [ ] d) others «««««««« [ [ ] ] b) Under Graduate [ d) Below SSLC [ ] ] [ [ ] ] b) 20 ± 40 [ ] ] d) 60 & Above[ [ ] b) Female [ ] 9. Phone number: «««««««. If no what is the most important reason for not investing in mutual funds? a) Lack of knowledge about mutual funds b) Enjoys investing in other options d) No trust over the fund managers [ [ [ ] ] ] ] c) Its benefits are not enough to drive you for investment [ P G Dept of Management Studies. PESITM. Maritial Status: a) Married 8. «««««««««««««««««««««««««. 5..Karvy Stock Broking Limited 10. Occupation: a) Businessman c) student 7.«««««.0 APPENDIX / ANNEXURE 10. Have you invested /are you interested to invest in mutual funds? a) Yes [ ] b) No [ ] 10. Age: a) Below 20 c) 40 ± 60 5. 3... Education: a) Post Graduate c) PUC 6.. Shivamogga 83 .1 QUESTIONNAIRE 1. Sex: a) Male 4. Address: «««««««««««««««««««««««««. Name: ««««««««««««««««««.

Which expertise of the personal financial advisor is demande d most? a) Portfolio review & investment recommendation b) Planning to achieve specific financial goals c) Managing assets in retirement d) Access to specialist in areas such as tax planning 17. What is the major reason for using financial advisors? a) Want help with asset allocation b) Don¶t have time to make my own investment decision c) To explain various investment options d) Want to make sure I am investing enough to meet my financial goals [ P G Dept of Management Studies. PESITM. Which feature of the mutual funds influence you most? c) Reduction in risk and transaction cost [ 14. According to you which is the most suitable stage to invest in mutual funds? b) Young Married with children stage [ 13.Karvy Stock Broking Limited 11. Are you availing the services of personal financial advisors? a) Yes [ ] b) No [ ] [ [ [ [ ] ] ] ] 16. Where from do you purchase mutual funds? a) Directly from the AMCs b) Brokers only c) Brokers/ sub-brokers d) Other sources a) Young unmarried stage c) Pre-retirement stage d) Old age stage a) Diversification b) Professional management d) Helps in achieving long term goals a) Totally ignorant b) Partial knowledge of mutual funds c) Aware only of any specific scheme in which you invested d) Fully aware 15. Where do you find yourself as a mutual fund investor? [ [ [ ] ] ] ] 84 . Shivamogga [ [ [ [ ] ] ] ] [ [ [ [ [ [ ] ] ] ] ] ] ] ] [ [ [ [ ] ] ] ] 12.

If any. What is the major reason for not using financial advisor? a) Have access to all resources needed to invest on own [ b) Believe advisors are too expensive c) Unsure how to find a trustworthy advisor d) Want to be in control of own investment 19. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. Your suggestion for improvement. [ [ [ ] ] ] ] P G Dept of Management Studies.Karvy Stock Broking Limited 18. Shivamogga 85 . PESITM.

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