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

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


Karvy Stock Broking Limited


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:


P G Dept of Management Studies, PESITM, Shivamogga


Karvy Stock Broking Limited

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








P G Dept of Management Studies, PESITM, Shivamogga


Karvy Stock Broking Limited


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.


P G Dept of Management Studies, PESITM, Shivamogga



1 BIBLIOGRAPHY APPENDIX / ANNEXURE 12. 57-69 70-72 11.1 ANALYSIS AND INTERPRETATION OF DATA RESEARCH FINDINGS .3 WEEKLY PROGRESS REPORT 73 74-79 LIST OF TABLES: Table.4 INSTRUMENTATION TECHNIQUE.Karvy Stock Broking Limited 6. No. PESITM. 7. Where from do you purchase mutual funds? According to you which is the most suitable stage to invest in mutual funds? Which feature of the mutual funds influence you most? Where do you find yourself as a mutual fund investor? Are you availing the services of personal financial advisors? PAGE NUMBER 53 53 54 55 56 57 58 59 8 9 10 60 61 62 P G Dept of Management Studies. Analysis on the basis of Age. Shivamogga 6 . Analysis on the basis of Income (yr). 6.2 SOURCES OF DATA.3 SAMPLING PLAN.1 12. SUGGESTION AND CONCLUSIONS 8. Analysis on the basis of Occupation. 9.1 RECOMMENDATIONS. 6. Analysis on the basis of Education.0 1 2 3 4 5 6 7 Table Name Analysis and Interpretation of Data Analysis on the basis of gender.2 QUESTIONNAIRE 12.1 10.

PESITM. Shivamogga 7 .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.

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

it achieved its first milestone after its first investment in technology. It added the feather of stock broking into its cap. Karvy which already enjoyed a wide network through its investor service centers. 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. 1. Back in the year 1981. entered into financial product distribution services in the year 1993. Under this section we will see that how this ³Karvy and company´ of 1980 became ³Karvy´ of 2008. Karvy investor service centers were set up in the year 1992. stock broking. and then its work was confined to audit and taxation only. the largest financial service prov ider of India. 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.150000.2 Company overview: Karvy was established as Karvy and company by five chartered accountants during the year 1979 -80. it entered into retail stock broking in the year 1990.e.Karvy Stock Broking Limited 1..1 Introduction: ³Success is a journey. Karvy¶s strategy has always been being the first entrant in the market. One year more and Karvy was now dealing into mutual fund services too in the year 1994 but it didn¶t stopped there. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. it stepped into corporate finance and investment banking in the year 1995. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar. five people created history by establishing Karvy and company which is today known as Karvy. not a destination. 1. Later on it diversified into financial and accounting service s during the year 1981-82 with a capital of rs. PESITM. Shivamogga 9 .´ If we look for examples to prove this quote then we can find many but there is none like that of Karvy.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.

In the year 2006.4 Success sutras of Karvy: The success story of Karvy is driven by 8 success sutras adopted by it namely trust. after being impressed with the rapid growth of Karvy stock broking limited.Karvy Stock Broking Limited ISO 9002 in the year 1997.the Finapolis: your personal finance advisor´. PESITM. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards. In the year 2003.com . It was a decade which saw many Indian companies going global so why the largest financial service provider of India should lag behind? Hence. 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. to provide world class quality services. Then it entered into insurance services in the year 2001 with the launch of its retail arm ³Karvy. 1. it commenced secondary debt and WDM trading. hard work and team play. empathy and humility.. Shivamogga 10 . Year 2005 saw Karvy establishing a separate branch for its insurance services under the head ³Karvy insurance broking ltd´ and in the same year. we can see now Karvy being established as the largest financial service provider of the country. Vision of Karvy: To achieve & sustain market leadership. integrity. dedication.e.and maintain their portfolio and provides them with other financial services. commitment.e. Then in the year 2002 it launched its PCG (Private Client Group) which looks after its High Networth Individuals . real estate through Karvy realty& services (India) ltd. Australia in the year 2004.the year 2004 also saw Karvy entering into commodities marketing through Karvy Comtrade. enterprise. learning and innovation. Karvy shall aim for complete customer satisfaction. by combining its human and technological resources.karvy. hence. Karvy launched ³Karvy global services limited´ after entering into a joint venture with Computershare. P G Dept of Management Studies. Then it stepped into the other most happening sector i. Karvy entered into one of the hottest sector of present time i. PCG group of Hong Kong acquired 25% stake at KSBL. These are the values that bind success with Karvy.

and we aim to achieve this leadership position by building an innovative. distribution of financial products. Registered with SEBI as Category I Registrar. enterprising . The award of being µMost Admired¶ Registrar is one among many of the acknowledgements we received for our customer friendly and competent services. and technology driven organization which will set the highest standards of service and business ethics. advisory services and private client goups. depository participant. advisory services. : The first securities registry to receive ISO 9002 certification in India.´ 1.Karvy Stock Broking Limited Mission statement: ³Our mission is to be a leading and preferred service provider to our customers. : karvy stock broking ltd. Shivamogga 11 . PESITM. is Number 1 Registrar in the Country. 2.5 The success ladder: Now Karvy group consists of 8 highly renowned entities which are as follow: 1. P G Dept of Management Studies. Consists of five units namely stock broking servics.

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

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

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

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. P G Dept of Management Studies.8 Quality Policy: To achieve and retain leadership. Quality Objectives As per the Quality Policy. Shivamogga 15 . by combining its human and technological resources.Karvy Stock Broking Limited 1. In the process. y Continue to uphold the values of honesty & integrity and strive to establis h unparalleled standards in business ethics. 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. Karvy will strive to exceed Customer's expectations. to provide superior quality financial services. 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. PESITM. Karvy shall aim for complete c ustomer satisfaction. y Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs. y Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. y Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.

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

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

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

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

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

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

systems. Shivamogga 22 . structure. super ordinate goals are the fundamental P G Dept of Management Studies. PESITM.1 McKinsey 7-S framework: According to waterman organizational change is not simply a matter of structure. although strategy is a critical aspect. staff and subordinate goals.Again it is not a simple relationship between strategy and structure.Karvy Stock Broking Limited 3. 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. style. skills.2 Super-ordinate goals: In 7s framework there is one variable termed as ³super ordinate goals´ refer to a set of values and aspirations that goes beyond the conventional format statement of corporate objectives. 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. 3. although structure is a significant variable in the management of change . In their view effective organizational change may be understood to be a complex relationship between strategy.

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

PESITM. for the purpose of smooth flow of its function it is divided into four sections: 1. Tin section 4. KARVY relies mostly on word of mouth publicity than advertising which is worked wonders from them. Stock Broking. Insurance and Mutual funds products. Depository participation section 3.Karvy Stock Broking Limited PRODUCT DIFFERENTIATION: KARVY caters to various financial products like DP. Registry. 3.4 Organization structure: In Karvy. Shivamogga 24 . Stock broking services 2. 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. Each product is headed by a skilled manager and also made as a separate profit center. MARKETING STRATERGY: Being sales oriented organization regular sales promotion events are conducted with various principles agencies and time to time advertising releases are done depending upon the requirements.

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

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

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

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

3. According to Waterman and his colleagues the term: staff: refers to the way. 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 . All other decisions related to the relevant to the region and regional heads will take their line of work. The chairman who sits at the head office in Hyderabad heads the organization.Karvy Stock Broking Limited after successful completion he will be made permanent employee.8 Staff: In the McKinsey 7s framework. Managers are responsible and accountable for their decisions and subsequent imple mentations. 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. 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 back end employees should have atleas graduation with exposure to necessary skills. 3.7 Style: Style is one of the seven levers. The chairman will take decision related to the group as such. Their potentials will be monitored on a regular basis a nd P G Dept of Management Studies. PESITM. Operation of company is monitored by the chairman of the company and various others senior managers. At all over the branches across the country Regional Manager has been appointed. Each incumbent should have a specific academic qualification to match the position he is going to hold and also necessary skills to execute the assignment. the term ³staff´ has a specific connotation.he should have a two wheeler for communicating purpose. The company is ISO certified and follows strict register of quality maintenance with high standards of process and systems. Top management follows formal relationship with their subordinates and participative leadership is followed. By and large decision making are decentralized for day to day affair. For fresher due training will be given and then will be put on the jobs. Shivamogga 29 . operations at the junior level is largely centralized with division heads making key decisions.

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

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

Since Karvy is also in the broking business. Depository Participants (DPs) are described as an agent of the depository. 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.Karvy Stock Broking Limited they are members. PESITM. Shivamogga 32 . They are intermediaries between the depository and the investors. Housing Finance Companies and Manufacturing Companies. selling or dealing in securities through such stock -brokers. Stockbrokers expand their business by engaging sub -broker. 3. Demat Services: Karvy is a depository participant with the National Securities Deposit ory Limited (NSDL) for trading and settlement of dematerialized shares.´ 2. P G Dept of Management Studies. Non Banking Finance Companies. The relationship between the DPs and the depository is governed by an agreement made between the two under Depositories Act. 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. They can use Karvy¶s brokerage services to execute transactions and Karvy¶s depository services to settle them. 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. They buy and sell on their own behalf as well as on behalf of their clients.

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

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

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

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

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


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


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


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

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

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

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

UTI. Bank of Baroda Mutual Fund (Oct 92). the mutual fund industry had assets under management of Rs. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). 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. History of the Indian mutual fund industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. The history of mutual funds in India can be broadly divided into four distinct phases. There may be restrictions on when and how an investor sells/redeems his mutual fund shares.6. 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. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. Prospectus and Annual report are hard to understand.Karvy Stock Broking Limited y The fund manager is not liable for poor judgment when the investor's fund loses value. There may be too many transactions in the fund resulting in higher fee/cost to the investor . Shivamogga 45 . Investor may feel a loss of control of his investment dollars. SBI Mutual Fund was the first non .700 crores of assets under management.47. Bank of India (Jun 90). Indian Bank Mutual Fund (Nov 89). The first scheme launched by UTI was Unit Scheme 1964. P G Dept of Management Studies. Punjab National Bank Mutual Fund (Aug 89). at the initiative of the Government of India and Reserve Bank. y y y y 3.This is sometimes call "Churn and Earn".UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87).At the end of 1993. PESITM. 004 crores. At the end of 1988 UTI had Rs. Second Phase ± 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non.

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

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

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

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

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

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

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

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

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

50 per cent (plus surcharge and education class) on dividends paid out. the investor may enjoy it afterwards also through dividend transfer option. This is because investors can redeem units using the SWP where they will have to pay 10 per cent as long-term capital gains tax against the 12. 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. This gives the investor a small exposure to a new asset class without risk to the principal amount. Tax efficiency: Tax factor acts as the ³x-factor´ for mutual funds. simplicity and affordability. equities. corporate debentures. 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. All the tools discussed over here are used by all the advisors and have helped investors in reducing risk. In case of mutual funds. Debt funds have to pay a dividend distribution tax of 12. If the capital gain is long-term (where the investment has been held for more than one year). P G Dept of Management Studies. Investors in higher tax brackets will end up paying a higher rate as short -term capital gains and should choose the dividend option. Tax efficiency affects the final decision of any investor before investing. 4.50 per cent DDT paid by the MF on dividends. the dividends from debt funds may be transferred to equity schemes. 10. Shivamogga 55 . PESITM. tax implications and minimum applicable investment amounts before committing to a s ervice. depending on the MF's policy. The investors gain through either dividends or capital appreciation but if they haven¶t considered the tax factor then they may end loosing. the dividend is reinvested not into the same scheme but into another scheme of the investor's choice.Karvy Stock Broking Limited Diversification involves investing the amount into different options. then the SWP is suitable only for investors in the 10-per-cent-tax bracket. Under this. For example. If it is short -term. the growth option is more tax efficient for all investors. fixed income bonds. Even then an investor needs to examine costs. SWP implies capital gains for the investor. Such transfers may be done with or without entry loads.

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

it scores low on return .Karvy Stock Broking Limited Now looking at bank deposits. 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. Just by investing in it. Straightforward.e. But mutual funds have definitely sorted out this problem. there exists no single option which can fit to the need of everybody. y Dispense the shortcomings of the other options: every other investment option has more or less some shortcomings. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. Such as if some are good at return then they are not safe. Now everybody can choose their fund according to their investment objectives. if some are safe then either they have low liquidity or low safety or both likewise. even the liquidity and convenience involved are too low. 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. we can say that mutual fund emerges as a clear winner among all the options available. 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. y Flexibility of invested amount: Other then the above mentioned reasons. 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. Its principle of diversification allows the investors to taste all the fruits in one plate. The other option offering high return is real estate but that even comes with high volatility and moderate safety level. Although it ensures high safety but the returns generated and liquidity are moderate. Shivamogga 57 . PESITM. 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. it scores better than equities at all fronts but lags badly in the parameter of utmost important i. the investor can enjoy the best investment option as per the investment objective. so it¶s not an happening option for person who can afford to take risks for higher return.

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

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

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

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

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

 Sample design: Data has been presented with the help of bar graph. and primary data has been collected by filling a required format.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. Research has been done by primary data collection. It was collected through personal visits to the known and unknown persons. Shivamogga 63 .1 Methodology of data collection: 8.2 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.3 Sampling plan:  Area of study: Need for financial advisors for mutual fund investors.  Sample size: The sample size of my project is limited to 50 only. irrespective of them being investor or not or availing the services or not.Karvy Stock Broking Limited 8. PESITM. The secondary data has been collected through various journals and websites. 8. line graphs etc. 8.  Sampling procedure: The sample is selected in a random way. pie charts. by formal and informal talks and through filling up the questionn aire prepared.

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

PESITM. P G Dept of Management Studies.1 : Analysis on the basis of gender.Karvy Stock Broking Limited 9. Shivamogga 65 . 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.1 Analysis and Interpretation of Data 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.Karvy Stock Broking Limited Table no. PESITM. 8% responders were between 3 0 to 40 years 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.

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. 4% of responders were student and 8% of responders were others. 52% of responders were Employee. 3 Analysis: From the above table it is evident that 36% of responders were Businessman.3 : Analysis on the basis of Occupation. Shivamogga § 20%  %   SSIFI TIO O THE SIS OF O UP TIO  ¨¨   ¨ ©  ¨ 67 .Karvy Stock Broking Limited Table no. P G Dept of Management Studies. PESITM.

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. 4% of responders are PUC holders and 4% of responders are Below SSLC.4 : Analysis on the basis of Education. 16% of responders are Graduate holders. PESITM. P G Dept of Management Studies. Shivamogga 68 . 4 Analysis: From the above table it is observed that 76% of responders are Post Graduate holders.

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

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

P G Dept of Management Studies.Karvy Stock Broking Limited Table no. 18% of responders said that suitable stage to invest in mutual funds is at Young Married with children stage. 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.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. 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. Shivamogga '& % '& % ' '& ' % '& ' % 2% age 2% age 18% 78% 71 .

Karvy Stock Broking Limited Table no. Shivamogga ) ) ) ) 0) ) ) ) ) ) ) ( ) ( 0 22% 38% 0% 10% 20% 30% 40% 72 . 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.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. P G Dept of Management Studies. 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. 22% of responders said that the feature of the mutual funds influence most is Professional management. PESITM.

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

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. Shivamogga 4 Yes No 82% 74 . P G Dept of Management Studies. 10 Analysis: From the above table it is evident that 82% of responders said Yes and 18% of responders said No to avail the services of personal financial advisors. PESITM.Karvy Stock Broking Limited Table no.

PESITM. Shivamogga . 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. 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. 40% of responders said that expertise of the personal financial advisor is demanded most is planning to achieve specific financial goals.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.

P G Dept of Management Studies. 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. 16% of responders said that the major reason for using financial advisors is that they Don¶t have time to make my own investment decision.Karvy Stock Broking Limited Table no. 12 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 . Shivamogga 6 20% 5 5 Want help with asset allocation 24% 6% 26% Don t have time to make my own investment decision 76 .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. PESITM.

P G Dept of Management Studies.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. 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.Karvy Stock Broking Limited Table no. 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. PESITM. 34% of responders said that the major reason for not using financial advisors is that believe advisors are too expe nsive.

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

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

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

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

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

.«««««. Have you invested /are you interested to invest in mutual funds? a) Yes [ ] b) No [ ] 10. Occupation: a) Businessman c) student 7. «««««««««««««««««««««««««. Name: ««««««««««««««««««. Maritial Status: a) Married 8.1 QUESTIONNAIRE 1. Age: a) Below 20 c) 40 ± 60 5.Karvy Stock Broking Limited 10. If no what is the most important reason for not investing in mutual funds? a) Lack of knowledge about mutual funds b) Enjoys investing in other options d) No trust over the fund managers [ [ [ ] ] ] ] c) Its benefits are not enough to drive you for investment [ P G Dept of Management Studies. 3. Education: a) Post Graduate c) PUC 6. Sex: a) Male 4. Shivamogga 83 . PESITM. 5.0 APPENDIX / ANNEXURE 10. Address: «««««««««««««««««««««««««... Phone number: «««««««. 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..

According to you which is the most suitable stage to invest in mutual funds? b) Young Married with children stage [ 13. 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. 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. Are you availing the services of personal financial advisors? a) Yes [ ] b) No [ ] [ [ [ [ ] ] ] ] 16. 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. Which feature of the mutual funds influence you most? c) Reduction in risk and transaction cost [ 14.Karvy Stock Broking Limited 11. Shivamogga [ [ [ [ ] ] ] ] [ [ [ [ [ [ ] ] ] ] ] ] ] ] [ [ [ [ ] ] ] ] 12. PESITM. Where do you find yourself as a mutual fund investor? [ [ [ ] ] ] ] 84 .

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

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