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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1 SWOT ANALYSIS OF KARVY.8 STAFF. PESITM.4 SCOPE OF THE STUDY.3 GROWTH. 7. DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY. 3. 5.4 OPERATIONAL DEFINITIONS AND CONCEPTS.4 LEADING COMPETITORS IN THE INDUSTRY.5 FUNCTIONS OF DEPARTMENTS.2 ORIGIN. 3.4 ORGANIZATION STRUCTURE. 2.8 QUALITY POLICY 1. 7.1 PRODUCT PROFILE 4.2 COMPANY OVERVIEW. 1. 1. 2. 4.1 7.9 SKILLS.2 SUPER-ORDINATE GOALS.1 INTRODUCTION 1.5 THE SUCCESS LADDER. Shivamogga 5 .3 OBJECTIVE OF RESEARCH.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.3 EVOLUTION OF KARVY. 3.6 ORGANIZATION STRUCTURE OF KARVY.2 KARVY SERVICES. 1.1 6.6 SYSTEMS. 8. 7.4 SUCCESS SUTRAS OF KARVY.2 NEED OF THE STUDY. LEARNING EXPERIENCE METHODOLOGY OF RESEARCH 7. 3.9 DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY.1 INDUSTRIAL BACKGROUND 2. 1.Karvy Stock Broking Limited SERIAL NUMBER 1. 3.3 STRATEGY. 3. 1.1 MCKINSEY 7-S FRAMEWORK 3. 2.7 STYLE. 3. 3.7 ACHIEVEMENTS. 1.

Analysis on the basis of Occupation.Karvy Stock Broking Limited 6.4 INSTRUMENTATION TECHNIQUE. No.3 SAMPLING PLAN. 6. 6.0 1 2 3 4 5 6 7 Table Name Analysis and Interpretation of Data Analysis on the basis of gender. Shivamogga 6 .2 SOURCES OF DATA.3 WEEKLY PROGRESS REPORT 73 74-79 LIST OF TABLES: Table. 57-69 70-72 11. PESITM.1 RECOMMENDATIONS.1 BIBLIOGRAPHY APPENDIX / ANNEXURE 12. 9.1 ANALYSIS AND INTERPRETATION OF DATA RESEARCH FINDINGS . 7. Analysis on the basis of Education.1 10. Analysis on the basis of Age.1 12. SUGGESTION AND CONCLUSIONS 8. 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 Income (yr).2 QUESTIONNAIRE 12.

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. Shivamogga 7 . PESITM.

Shivamogga 8 . The data collected has been well organized and presented. McKinsey 7-S framework as been clearly explained about the organization study of departmental of KSBL and Services provided by KSBL. Other than that the real savings come when one moves ahead.  The Second part gives an insight about the mutual funds and its various aspects. Some of the most interesting questions regarding mutual funds have been covered. Growth. 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. Leading competitors in the industry and SWOT analysis of Karvy. One can have a brief knowledge about mutual funds and all its basics through the project. PESITM. The language has been kept simple so that even a layman could understand. P G Dept of Management Studies. 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 covers the topic ³Need for financial advisors for mutual fund investors´. All the dates have been well analyzed with the help of charts and graphs. The success ladder of Karvy .Organization structure of Karvy. This part consists of dates and their analysis. Hope the research findings and conclusions will be of use. at the same time it gave me enough scope to implement my analytical ability. Development & Present status of the industry.Karvy Stock Broking Limited Executive summary This project has been a great learning experience for me. and there Achievements and the industrial background of Stock Brokers. All the topics have been covered in a very systemat ic way. 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. It is purely based on whatever I learned at Karvy. collected through a survey done on 50 people.

Back in the year 1981. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. 1. PESITM. Karvy¶s strategy has always been being the first entrant in the market. five people created history by establishing Karvy and company which is today known as Karvy. entered into financial product distribution services in the year 1993. Shivamogga 9 .150000. 1. One year more and Karvy was now dealing into mutual fund services too in the year 1994 but it didn¶t stopped there. the largest financial service prov ider of India. and then its work was confined to audit and taxation only. Karvy which already enjoyed a wide network through its investor service centers. stock broking. Karvy again hit the limelight by becoming the first registrar in the countr y to be awarded P G Dept of Management Studies. 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.´ If we look for examples to prove this quote then we can find many but there is none like that of Karvy. it stepped into corporate finance and investment banking in the year 1995.3 Evolution of KARVY: It is well said that success is a journey not a destination and we can see it being proved by Karvy.e. it achieved its first milestone after its first investment in technology. Karvy investor service centers were set up in the year 1992. 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. Under this section we will see that how this ³Karvy and company´ of 1980 became ³Karvy´ of 2008.. Later on it diversified into financial and accounting service s during the year 1981-82 with a capital of rs. not a destination. it entered into retail stock broking in the year 1990. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar.Karvy Stock Broking Limited 1.2 Company overview: Karvy was established as Karvy and company by five chartered accountants during the year 1979 -80. It added the feather of stock broking into its cap.1 Introduction: ³Success is a journey.

real estate through Karvy realty& services (India) ltd. learning and innovation. Then it entered into insurance services in the year 2001 with the launch of its retail arm ³Karvy.the Finapolis: your personal finance advisor´. 1. It was a decade which saw many Indian companies going global so why the largest financial service provider of India should lag behind? Hence. Year 2005 saw Karvy establishing a separate branch for its insurance services under the head ³Karvy insurance broking ltd´ and in the same year.com . Then in the year 2002 it launched its PCG (Private Client Group) which looks after its High Networth Individuals .e. P G Dept of Management Studies. we can see now Karvy being established as the largest financial service provider of the country. PCG group of Hong Kong acquired 25% stake at KSBL. 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. Australia in the year 2004. In the year 2006.the year 2004 also saw Karvy entering into commodities marketing through Karvy Comtrade. Shivamogga 10 . after being impressed with the rapid growth of Karvy stock broking limited.. dedication. These are the values that bind success with Karvy. hard work and team play.4 Success sutras of Karvy: The success story of Karvy is driven by 8 success sutras adopted by it namely trust. by combining its human and technological resources.karvy. Karvy entered into one of the hottest sector of present time i. Then it stepped into the other most happening sector i. empathy and humility. commitment. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards.and maintain their portfolio and provides them with other financial services. it commenced secondary debt and WDM trading. PESITM. Karvy shall aim for complete customer satisfaction.Karvy Stock Broking Limited ISO 9002 in the year 1997. to provide world class quality services. Vision of Karvy: To achieve & sustain market leadership.e. integrity. enterprise. hence. In the year 2003. Karvy launched ³Karvy global services limited´ after entering into a joint venture with Computershare.

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

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

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

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

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.Karvy Stock Broking Limited 1. 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. P G Dept of Management Studies. Quality Objectives As per the Quality Policy. Karvy will strive to exceed Customer's expectations. In the process. Karvy shall aim for complete c ustomer satisfaction. PESITM. y Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.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. to provide superior quality financial services. 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. 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. Shivamogga 15 .

Shivamogga 16 . Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York.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. employees. 00. 5. ranks among the top 5 stock brokers in India. has quickly established itself as a broker who adds value.000 active accounts. Registered with AMFI as a corporate Agent. With over 6. Karvy Global offers niche off shoring services to clients in the US.000 highly qualified pe ople staff Karvy. it ranks among the top 5 Depositary Participant in India. in the realty sector. registered with NSDL and CDSL. which started in 2006. member of National Stock Exchange of India and the Bombay Stock Exchange. Karvy Comtrade. Karvy Stock Brokers Limited.000 crores under management. Karvy Computershare Limited is India¶s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate. managing over 2 crore accounts. Karvy is also among the top Mutual Fund mobilize with over Rs. 1.9 Development & present status of the industry Karvy ranks among the top player in almost all the fields it operates. clients. investors. suppliers and regulatory authorities) proud and satisfied. Over 9. y Strive to keep all stake-holders (shareholders. PESITM. Karvy Realty Services. P G Dept of Management Studies. Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country.

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

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

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

like TD Ameritrade. to fulfill contractual obligations. These clerks do not sell. Stage 5: Features A large share of the brokerage firms has moved to an online format. Discount brokers. which is why they appeal most to frequent and active traders. With the advent of automated stock-broking systems on the Internet. Settlement (of securities) is the process where by securities or interests in securities are delivered. The added convenience and personal attention paid to the small investor has resulted in a large influx of activity. They offer fewer brokerage services and pass the savings on to the investors. do not offer any investment advice. 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. also provide advanced trading systems. 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. the client often has no personal contact with his/her stock-broking firm. usually against payment. Specially. These and other savings are passed along to the investor in the form of low commissions. TD Ameritrade and Charles Schwab have taken control of most individual investors accounts. P G Dept of Management Studies. such as those arising under securities trades.Karvy Stock Broking Limited dollars of assets were tied together in different companies and resulted in a large economic collapse in late 2008. Smaller brokers such as E*Trade. 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. and instead go to traditional brokers. and work for modest salaries. PTI Securities & Futures and E -Trade. they hire telephone clerks to take customers¶ orders. Instead. Beginner investors may turn away from discounted brokers because of the advanced systems and terms. a new type if brokerage firms has emerged ± the so called discount broker.

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

although strategy is a critical aspect. In their view effective organizational change may be understood to be a complex relationship between strategy. 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. although structure is a significant variable in the management of change .1 McKinsey 7-S framework: According to waterman organizational change is not simply a matter of structure.Again it is not a simple relationship between strategy and structure. style.Karvy Stock Broking Limited 3.2 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. super ordinate goals are the fundamental P G Dept of Management Studies. systems. 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. structure. staff and subordinate goals. skills. Shivamogga 22 .

goals and major action plans and policies of the company. Survival of the company as well as the growth of the company over the past 22years.¶ Competition is the key to survival and for giving diversification for the given product as such competition is always good. Super ordinate goals are: y y To open up franchisee (branches) all over India. Karvy updates itself to the surroundings competition and b ring out changes are services and related products to be in competition. KARVY has a network of 150 branches across the country and over 2500 employees. They are its main values. In the distribution business KARVY enjoys 40% market. Today KARVY is providing services to over 100000 customers all over the country with a leadership position in over all distribution business. 3. mission.Karvy Stock Broking Limited ideas around which a business is built. objectives. To strive for excellence in management and othe r long range activities to ensure leadership. A company of Karvy¶s stature cannot afford to work without objectives. An overall group objective is already set and all the employees are driven towards Karvy¶s believes that µno individual is big as the organizational itself. I depository participant and registry department KARVY has maintained a very competitive pricing structure in the line with contemporary markets. has been effectively overcoming competition. Shivamogga 23 . PESITM. They are the broad nations of future direction. which is healthy from the industry standard. Rendering activity more transparent and providing better services which can inspire investor¶s confidence in mutual funds. 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. y y To reach the greatest heights in their fields. After diversifying into various services providing activities it has become KARVY¶S prerogative to be leader in the business.3 Strategy: The strategy in 7s framework includes purposes.

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

focus on mutual fund portfolio.it includes providing post budget strategies for effective tax planning. Sends quarterly information to the holders related to the holdings. back office. Transfer of Demat shares to physical form. Transfer of physical shares to Demat form. recommending attractive tax planning investment option. Giving intimation related to the due of AMC¶s to their account holders. Transformations of shares from Demat to trading account etc.      Account opening. Holding enquiries. 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 . 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. P G Dept of Management Studies. 3. salary structuring. 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. This section is guided and supervised by branch manager In front office online trading activities takes place and this is headed by mutual fund section. This mutual fund section provides advisory services for investors it includes investment advice for new investors. Shivamogga 25 . DEPOSITORY PARTICIPANT SERVISES FRONT OFFICE: In front office the following services are done. PESITM.5 FUNCTIONS OF DEPARTMENTS: 1. BACK OFFICE:    Maintenance of all Demat account with KSBL.Karvy Stock Broking Limited In stock broking section.

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

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

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

Operation of company is monitored by the chairman of the company and various others senior managers.7 Style: Style is one of the seven levers. 3. By and large decision making are decentralized for day to day affair. PESITM.Karvy Stock Broking Limited after successful completion he will be made permanent employee. Their potentials will be monitored on a regular basis a nd P G Dept of Management Studies. 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. At all over the branches across the country Regional Manager has been appointed. The chairman will take decision related to the group as such. Top management follows formal relationship with their subordinates and participative leadership is followed. 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 . The chairman who sits at the head office in Hyderabad heads the organization. 3. Managers are responsible and accountable for their decisions and subsequent imple mentations. The company is ISO certified and follows strict register of quality maintenance with high standards of process and systems. 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.8 Staff: In the McKinsey 7s framework. 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. All other decisions related to the relevant to the region and regional heads will take their line of work. All back end employees should have atleas graduation with exposure to necessary skills. For fresher due training will be given and then will be put on the jobs.he should have a two wheeler for communicating purpose. Shivamogga 29 . According to Waterman and his colleagues the term: staff: refers to the way. operations at the junior level is largely centralized with division heads making key decisions.

which most people uses to describe a company. 3. PESITM.9 Skills: Waterman considers ³skills´ as one of the most critical attributes or capabilities of an organization. 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. A manager is viewed as a skilled person who has the ability to manage people and resources and at times finance also. Annual increments are also given based on the performance predominant. P G Dept of Management Studies. Shivamogga 30 .Karvy Stock Broking Limited will be suitable guidance from time to time. The term skills include those characters.

and more importantly. Depository Participants. Demat services 3.2 KARVY SERVICES 1. KARVY covers the entire spectrum of financial services such as Stock broking. Investment advisory services 5. IT enabled services 9. services over 20 million individual investors in various capacities. Shivamogga 31 . Merchant Banking & Corporate Finance. Stockbrokers are regulated by SEBI [Stock-brokers and Sub-brokers] Regulations. comprising the who's who of Corporate India. stockbroker is a member of the stock exchange. operations. Realty Services. Corporate finance & Merchant banking 6. Distribution of financial products like mutual funds. Insurance 7. Loans 11. and ranked among the top five in the country in all its business segments. 1992. bonds. 4.Karvy Stock Broking Limited 4. Commodities Broking. Tin 1. The Stockbrokers are the intermediaries who are allowed to trade in se curities on the exchange of which P G Dept of Management Studies. Insurance Broking. Stock broking 2. Mutual fund services 8. among others. IPOs. Registrars & Transfer agents 10. and provides investor services to over 300 Corporate. Personal Finance Advisory Services. Investment product distribution 4. fixed deposit. Karvy has a professional management team and ranks among the best in technology. in research of various industrial segments.1 PRODUCT PROFILE Introduction KARVY is a premier integrated financial services provider. PESITM. placement of equity. Stock Broking: KARVY is working as Capital Market Intermediaries.

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. A DP can offer depository -related services only after obtaining a certificate of registration from SEBI. investors who use Karvy¶s depository services get a dual benefit. Depository Participants (DPs) are described as an agent of the depository. Stockbrokers expand their business by engaging sub -broker. Since Karvy is also in the broking business. They buy and sell on their own behalf as well as on behalf of their clients. PESITM.Karvy Stock Broking Limited they are members. They can use Karvy¶s brokerage services to execute transactions and Karvy¶s depository services to settle them. 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. 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. selling or dealing in securities through such stock -brokers. They are intermediaries between the depository and the investors.´ 2. 3. Non Banking Finance Companies. Demat Services: Karvy is a depository participant with the National Securities Deposit ory Limited (NSDL) for trading and settlement of dematerialized shares. Shivamogga 32 . P G Dept of Management Studies.

Based upon this Karvy it helps individual investors to plan their entire life up to retirement. insuranc e etc. Company design portfolio by considering following factors.. Financial goal of each individual investor varies according to his dream. It designs portfolio for investor to invest their saving in various financial products like shares. fixed deposits. The expertise of Karvy in research and stock broking gives it the right perspective to provide investment advisory services. Karvy apply the principles of Financial Planning as both science & art. Company provides stationary at the time of IPO as well as provides information to investors regarding IPO and solves their queries. Taxes. Investor¶s requirement of getting money back. risk bearing capacity and investment goals of investors keeping in mind their psyche and financial needs. PESITM. Investment Advisory Services: This division provides portfolio management services to high net-worth individuals and corporate. 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. bonds. Company provides advisory services to its clients. Investor¶s tax planning etc. debentures. Insurance needs and other important personal financial goals. Investor¶s willingness to take risk. 4. Shivamogga 33 . P G Dept of Management Studies.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. mutual funds. it understands the time horizon.

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

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

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

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.

P G Dept of Management Studies, PESITM, Shivamogga

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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.

P G Dept of Management Studies, PESITM, Shivamogga

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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.

P G Dept of Management Studies, PESITM, Shivamogga

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

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

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

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

There may be too many transactions in the fund resulting in higher fee/cost to the investor .This is sometimes call "Churn and Earn". 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.At the end of 1993. the mutual fund industry had assets under management of Rs. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI.700 crores of assets under management. 004 crores. P G Dept of Management Studies. Bank of India (Jun 90). At the end of 1988 UTI had Rs. Bank of Baroda Mutual Fund (Oct 92). 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 history of mutual funds in India can be broadly divided into four distinct phases. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. Investor may feel a loss of control of his investment dollars. Second Phase ± 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. Punjab National Bank Mutual Fund (Aug 89). y y y y 3. SBI Mutual Fund was the first non . The first scheme launched by UTI was Unit Scheme 1964. Indian Bank Mutual Fund (Nov 89). There may be restrictions on when and how an investor sells/redeems his mutual fund shares.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). PESITM. at the initiative of the Government of India and Reserve Bank.Karvy Stock Broking Limited y The fund manager is not liable for poor judgment when the investor's fund loses value.6.47. History of the Indian mutual fund industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. Prospectus and Annual report are hard to understand. Shivamogga 45 .UTI.

Shivamogga 46 . PESITM. some invest only in Blue Chip companies that are more established and are relatively low risk.29. As at the end of January 2003. 21. the assets of US 64 scheme.153108 crores under 421 schemes. 4. there were 33 mutual funds with total assets of Rs. there were 29 funds. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. Fourth Phase ± since February 2003 In February 2003. As at the end of September.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. 1. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. except UTI were to be registered and governed. sponsored by SBI. assured return and certain other schemes The second is the UTI Mutual Fund Ltd. P G Dept of Management Studies. under which all mutual funds. which manage assets of Rs. representing broadly. For instance. On the other hand. It is registered with SEBI and functions under the Mutual Fund Regulations consolidation and growth. 2004. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. 835 crores as at the end of January 2003. some focus on high-risk start up companies that have the potential for double and triple digit growth.805 crores. Types of mutual funds Most funds have a particular strategy they focus on when investing. Finding a mutual fund that fits your investment criteria and style is important. BOB and LIC. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. PNB.

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

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

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

Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month. Shivamogga 50 . 3. to an equity scheme of the same mutual fund. return: 7. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum. PESITM. at a fixed interval.Karvy Stock Broking Limited 2. Working of a Mutual fund: P G Dept of Management Studies. 6. Risk v/s.

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

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

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

In case if the NAV of fund falls. Diversification: P G Dept of Management Studies. Rupee cost averaging allows an investor to bring down the average cost of buying a scheme by making a fixed investment periodically. PESITM. The investor needs to decide on the investment amount and the frequency. More frequent the investment interval. 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. 3. 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). 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. Rebalancing: Rebalancing involves booking profit in the fund class that has gone up and investing in the asset class that is down. 100. the investor needs to specify the event.000 a month and nowadays even as low as Rs. greater the chances of benefiting from lower prices. Shivamogga 54 . level of capital appreciation. the investor is always at a profit. the net asset value of the scheme. The funds redeemed can be switched to other specified schemes within the same fund house.Karvy Stock Broking Limited 1. the investors can get more number of units and vice-versa. like Rs 5. 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. Some fund houses allow such switches without charging an entry load. 500 or Rs. which will result in reducing the average cost and enhancing returns. Investors can also benefit by increasing the SIP amount during market downturns. The trigger could be the value of the investment. 2. This results in the average cost per unit for the investor being lower than the average price per unit over time. To use the trigger and switch facility. Trigger and switching are tools that can be used to rebalance a portfolio. In this case.

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

PESITM. On three parameters it scores high whereas it¶s moderate at one. real estate etc. comparing it with the other options.appetite.Karvy Stock Broking Limited company fixed deposits. gold. PPF. Even the convenience involved with investing in equities is just moderate. 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. 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. Shivamogga 56 . life insurance. bank deposits. volatility an d liquidity. all these investment options could be judged on the basis of various parameters such as. safety convenience. Debenture s Co.return. . we get this in a tabular form: Return Safety Volatility Liquidity Convenie nce Equity Bonds Co. Measuring these investment options on the basis of the mentioned parameters. 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.

Such as if some are good at return then they are not safe. PESITM. But mutual funds have definitely sorted out this problem. 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. Its principle of diversification allows the investors to taste all the fruits in one plate. Just by investing in it. it scores low on return . 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. the investor can enjoy the best investment option as per the investment objective. 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. y Flexibility of invested amount: Other then the above mentioned reasons. it scores better than equities at all fronts but lags badly in the parameter of utmost important i. Straightforward.Karvy Stock Broking Limited Now looking at bank deposits. even the liquidity and convenience involved are too low. The other option offering high return is real estate but that even comes with high volatility and moderate safety level.e. 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. so it¶s not an happening option for person who can afford to take risks for higher return. Although it ensures high safety but the returns generated and liquidity are moderate. if some are safe then either they have low liquidity or low safety or both likewise. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. Now everybody can choose their fund according to their investment objectives. we can say that mutual fund emerges as a clear winner among all the options available. Shivamogga 57 . 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.

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

higher will be its beta. 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. PESITM. 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. we try to assess the competitive strength of the mutual funds vis-à-vis one another in a better way. a low and negative Treynor's Index is an indication of unfavorable performance. which represents fluctuations in the NAV of the fund vis-à-vis market. The Treynor Measure Developed by Jack Treynor. Beta is calculated by relating the returns on a mutual fund with the returns in the market. systematic risk cannot. as there is no credit risk associated). While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund.Karvy Stock Broking Limited measured in terms of Beta.Rf)/Bi Where. By using the risk return relationship. 2. Symbolically. The Sharpe Measure: P G Dept of Management Studies. Rf is risk free rate of return and Bi is beta of the fund. during a given period and systematic risk associated with it (beta). Shivamogga 59 . 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. All risk-averse investors would like to maximize this value. Ri represents return on fund. In order to determine the risk-adjusted returns of investment portfolios. it can be represented as: Treynor's Index (Ti) = (Ri . this performance measure evaluates funds on the basis of Treynor's Index. While unsystematic risk can be diversified through investments in a number of instruments.

According to Sharpe. the model evaluates funds on the basis of reward per unit of total risk. 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. PESITM. which measures the performance of a fund compared with the actual returns over the period.Rf)/Si Where. Required return of a fund at a given level of risk (Bi) can be calculated as: Ri = Rf + Bi (Rm . P G Dept of Management Studies. Si is standard deviation of the fund. The surplus between the two returns is called Alpha. 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. Rm is average market return during the given period. This measure involves evaluation of the returns that the fund has generated vs. as his knowledge of market is primitive. performance of a fund is evaluated on the basis of Sharpe Ratio. it is the total risk of the fund that the investors are concerned about. Higher alpha represents superior performance of the fund and vice versa. it can be written as: Sharpe Index (Si) = (Ri .Karvy Stock Broking Limited In this model. a low and negative Sharpe Ratio is an indication of unfavorable performance. Jenson Model: Jenson's model proposes another risk adjusted performance measure. Shivamogga 60 . This measure was developed by Michael Jenson and is sometimes referred to as the Differential Return Method. While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund.Rf) Where. alpha can be obtained by subtracting required return from the actual return of the fund. the returns actually expected out of the fund given the level of its systematic risk. 3. Symbolically. So. After calculating it.

Moreover. Sm is standard deviation of market returns. Sharpe measure and Fama model that consider the entire risk associated with fund are suitable for small investors. The difference between these two is taken as a measure of the performance of the fund and is called net selectivity.Karvy Stock Broking Limited 4. P G Dept of Management Studies. This model compares the performance. of a fund with the required return commensurate with the total risk associated with it. The net selectivity represents the stock selection skill of the fund manager. 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. F or them. 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. a portfolio can be spread across a number of stocks and sectors. Fama Model: The Eugene Fama model is an extension of Jenson model. two models namely. as the ordinary investor lacks the necessary skill and resources to diversified. However. Higher value of which indicates that fund manager has earned returns well above the return commensurate with the level of risk taken by him. Shivamogga 61 . PESITM. Treynor measure and Jenson model use systematic risk based on the premise that the unsystematic risk is diversifiable. Required return can be calculated as: Ri = Rf + Si/Sm*(Rm . Among the above performance measures.Rf) Where. measured in terms of 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. 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.

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

3 Sampling plan:  Area of study: Need for financial advisors for mutual fund investors.1 Methodology of data collection: 8. Research has been done by primary data collection. by formal and informal talks and through filling up the questionn aire prepared.  Sample design: Data has been presented with the help of bar graph. and primary data has been collected by filling a required format. 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.  Sample size: The sample size of my project is limited to 50 only. line graphs etc. The secondary data has been collected through various journals and websites. 8. pie charts. 8. PESITM. irrespective of them being investor or not or availing the services or not. It was collected through personal visits to the known and unknown persons.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.  Sampling procedure: The sample is selected in a random way.Karvy Stock Broking Limited 8.

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

1 : Analysis on the basis of gender. Shivamogga 65 .Karvy Stock Broking Limited 9. 1 Analysis: From the above table it is evident that 92% are male and 8% are female respondents. 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. PESITM.1 Analysis and Interpretation of Data Table no. P G Dept of Management Studies.

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. 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.2 : Analysis on the basis of Age. 8% responders were between 3 0 to 40 years P G Dept of Management Studies.Karvy Stock Broking Limited Table no. PESITM.

P G Dept of Management Studies. 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. 52% of responders were Employee. 3 Analysis: From the above table it is evident that 36% of responders were Businessman.Karvy Stock Broking Limited Table no. PESITM. 4% of responders were student and 8% of responders were others.3 : Analysis on the basis of Occupation.

Karvy Stock Broking Limited Table no. 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. P G Dept of Management Studies. 16% of responders are Graduate holders. PESITM. 4% of responders are PUC holders and 4% of responders are Below SSLC.4 : Analysis on the basis of Education. 4 Analysis: From the above table it is observed that 76% of responders are Post Graduate holders. Shivamogga 68 .

4% of responders were having 100000-500000 income and 8% of responders were having above500000 income. 26 % of responders were having 50000 -100000 income. PESITM. 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. 5 Analysis: From the above table it is clear that 32% of responders were having below 50000 income. Shivamogga  15%     69 . P G Dept of Management Studies.5 : Analysis on the basis of Income (yr).Karvy Stock Broking Limited Table no.

P G Dept of Management Studies. PESITM. 6 Analysis: From the above table it is evident that 24% of responders were purchase mutual funds from directly from the AMCs. 24% of responders were purchase mutual funds from Brokers/ sub-brokers and 6% of responders were purchase mutual funds from other sources.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. 46% of responders were purchase mutual funds from Brokers only.Karvy Stock Broking Limited Table no. Shivamogga ! !     # ! ! ! $#    " 70 .

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.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. Shivamogga '& % '& % ' '& ' % '& ' % 2% age 2% age 18% 78% 71 . PESITM. 7 Analysis: From the above table it is evident that 78% of responders said that suitable stage to invest in mutual funds is at Young unmarried stage. 18% of responders said that suitable stage to invest in mutual funds is at Young Married with children stage.Karvy Stock Broking Limited Table no.

16% of responders said that the feature of the mutual funds influence most is Reduction in risk and transaction cost. and 24% of responders said that the feature of the mutual funds influence most is helps in achieving long term goals. P G Dept of Management Studies. 8 Analysis: From the above table it is clear that 38% of responders said that the feature of the mutual funds influence most is Diversification. 22% of responders said that the feature of the mutual funds influence most is Professional management. PESITM.Karvy Stock Broking Limited Table no. Shivamogga ) ) ) ) 0) ) ) ) ) ) ) ( ) ( 0 22% 38% 0% 10% 20% 30% 40% 72 .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.

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 . P G Dept of Management Studies.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. 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. 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.

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. PESITM. Shivamogga 4 Yes No 82% 74 . P G Dept of Management Studies.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.Karvy Stock Broking Limited Table no.

PESITM. 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.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. 75 P G Dept of Management Studies. 8% of responders said that expertise of the personal financial advisor is demanded most is Managing assets in retirement. 40% of responders said that expertise of the personal financial advisor is demanded most is planning to achieve specific financial goals. Shivamogga .Karvy Stock Broking Limited Table no. 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.

Karvy Stock Broking Limited Table no. 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. 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 . P G Dept of Management Studies. PESITM. 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.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. Shivamogga 6 20% 5 5 Want help with asset allocation 24% 6% 26% Don t have time to make my own investment decision 76 .

Karvy Stock Broking Limited Table no.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. PESITM. 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. P G Dept of Management Studies. 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 . 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.

Most preferred time of investors to invest in mutual fund:  Most of the investor preferred to invest at a young unmarried stage.1 Research findings: 1. most of them opted for diversification. 4. So there is enough scope for the advisors. 3. 2. 5. Shivamogga 78 . PESITM. helps in achieving long term goals and helps in achieving long term goals respectively. 34% people are aware of only the schemes in which they have invested. 42% possess partial knowledge whereas 10% stands nowhere in knowledge about MF s. Method of purchase of mutual funds:  24% participants buy forms directly from the AMCs. Factors that influence investors go for mutual funds:  When asked about the most alluring feature of MFs. 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. Investors knowledge about various mutual funds schemes:  Out of the 50 persons who already have invested in mutual funds/ are interested to invest. 26% of them needed them to explain them the various investment options available. 6. Availing the services of financial advisors:  Out of 50 responders. all are already mutual fund investors. only 14% have sound knowledge of MFs. Even 18% persons were ready to invest a t a stage of young married with children.Karvy Stock Broking Limited 10. Survy of investors:  At the survey conducted upon 50 people. 46% from brokers only. followed by reduction in risk. 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. 82% were already availing the services of financial advisors whereas 18% do not availing the services of financial advisors. The brokers have the maximum reach so they should try to make those investors aware of the happenings. person with older age investing due to profit there grandson.34% of them wanted to make sure P G Dept of Management Studies. 7.

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

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

Mutual Fund industry today. the task of selecting the most suitable scheme gets even more complicated. However. Mutual funds offer an opportune way to longterm wealth creation. bank deposits and etc. The financial advisors can tap upon these people by educating them about mutual funds. company fixed deposits. corporate debentures. with more and more funds flooding the market. fixed income bonds. Mutual Fund Advisory Service at Karvy guides you through this network and ensures that your investments are backed by their quality research. Mutual Fund Advisors give emphasis on mutual funds than other investment options.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 about 34 players and more than five hundred schemes. PESITM. equities.. it is one of the most preferred investment avenues in India. P G Dept of Management Studies. Investment is the stepping stone to achieving one's financial dreams. 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. Shivamogga 81 .

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

Shivamogga 83 .. PESITM. Education: a) Post Graduate c) PUC 6. 3. «««««««««««««««««««««««««.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..1 QUESTIONNAIRE 1. 5.Karvy Stock Broking Limited 10. Name: ««««««««««««««««««. 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. Sex: a) Male 4. Occupation: a) Businessman c) student 7. Maritial Status: a) Married 8. Address: «««««««««««««««««««««««««.«««««. 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. Phone number: «««««««...

Where do you find yourself as a mutual fund investor? [ [ [ ] ] ] ] 84 . 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. Shivamogga [ [ [ [ ] ] ] ] [ [ [ [ [ [ ] ] ] ] ] ] ] ] [ [ [ [ ] ] ] ] 12. 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 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.Karvy Stock Broking Limited 11. 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. Are you availing the services of personal financial advisors? a) Yes [ ] b) No [ ] [ [ [ [ ] ] ] ] 16.

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. 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. If any. Shivamogga 85 . PESITM.Karvy Stock Broking Limited 18. [ [ [ ] ] ] ] P G Dept of Management Studies. Your suggestion for improvement.

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