This action might not be possible to undo. Are you sure you want to continue?
A STUDY ON MUTUAL FUND – INVESTOR’S POINT OF VIEW AT KARVY INVESTOR SERVICES LTD. HYDERABAD
SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION
ST.PAUL’S PG. COLLEGE HYDERABAD. OSMANIA UNIVERSITY, HYDERABAD.
Date:O7.01.2008 To K. RAJA REDDY SR.MANAGER – HR
This is to certify that Ms. G. ROJA was a project trainee with us from January 07,2008 to Feb 20, 2008 in the Karvy Investors Services ltd. Department. she has successfully completed the project, “‘Project on Mutual Fund from Investors point of view’ We wish her all the very best for her future.
For KARVY INVESTORS SERVICES LIMITED
K. RAJA REDDY SR.MANAGER – HR
I hereby declare that the Project report entitled “ Study on Mutual Fund – Investor’s Point of View ” at Karvy Investors Services Limited is a bonafide work, which I have executed for the Master of Business Administration in St.Paul’s P.G. College (Affiliated to Osmania University) during the academic year 2008. I also declare that it has been compiled and completed by me and has not been reproduced from any where and has not been submitted to any other institutions, or published either in part or in whole at any time before.
ROJA (098-060-150) 4 . as it was an experience of its own. G. Hyderabad for accepting my candidature and giving me the privilege for doing the project to be carried out in this prestigious at KARVY. valuable guidance. co-operation and total support from time to time.Anita for her patience. Hyderabad. I would like to thank Mrs. Karvy.SUSHMA PATRICK for giving me this opportunity.ACKNOWLEDGEMENT I would like to take this opportunity to thank all the people who have helped in the completion of this project. I highly indebted to Shri A. Shastri. Manager. I would like to thank Mrs.R. without which this project would not have been possible.
TABLE OF CONTENTS Chapters Chapter – I Description Introduction of the study Objectives of study Methodology Limitations Industry Profile History Structure Company Profile Company Back ground Mutual Funds Literature survey Overview Case Study Questionnaires Interpretation Conclusion Bibliography Pg.No. Chapter – II Chapter – III Chapter – IV Chapter – V 5 .
CHAPTER – 1 INTRODUCTION 6 .
has a long and successful history. In developed Financial Markets. This fast growing industry is regulated by the SEBI.10. in the US alone there are over 5. In India Mutual Fund Industry started with the setting up of UTI in 1964. Today. As on date.100 lakh crores. Mutual Funds have almost overtaken bank deposits and total assets of insurance funds. The popularity of the Mutual Fund has increased manifold.A Globally Proven Investment Worldwide. The Private Sector and Foreign Institutions were allowed to set up Mutual Funds in 1993.000 Mutual Funds with total assets of over Rs. 7 . like the United States.000 Crores. Public Sector Banks and Financial Institutions began to establish Mutual Funds in 1987.INTRODUCTION TO THE STUDY MUTUAL FUND. Mutual Funds or the Unit Trust as it is called in some parts of the world. there are over 29 Mutual Funds and over 300 Schemes with total assets of approximately Rs.
OBJECTIVES OF THE STUDY To study about Mutual Fund Industry in India. To understand the various types of Mutual Fund available to the investor. 8 . To understand the performance and benefits of Mutual Funds. To conduct a Market study & find the fund preference and awareness of full schemes of AMC & dividend option .
Secondary data: The data had been collected from text books. Data analysis tools used for analysis of data is percentage analysis. and Internet. bar charts and piecharts.METHODOLOGY OF STUDY The data had been collected through primary and secondary source. Journals. Sampling Methodology: The sample is selected by random sampling method and sample size taken for study is 100 respondents. Primary data: The data had been collected from investors using questionnaire which consists of 17 questions. 9 . News papers.
10 . Survey is conducted only in hyderabad city. 3. In collection of data from the investors. 2.SCOPE: • • • It is limited to KARVY. LIMITATIONS OF THE PROJECT 1. This Study is mainly based on the secondary data taken from the annual reports of the mutual fund company. Sample size restricted to hundred investors. The Project has been conducted in limited geographical area in Hyderabad. personal basis may be present.
CHAPTER -2 GENERAL INTRODUCTION ABOUT MUTUAL FUND 11 .
Since then. At the end of 1988 UTI had Rs.175 2. The mutual Funds Industry in India not only started with UTI.COMPANY PROFILE History of the Indian Mutual Fund Industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. For the period of 1987-88 Table No: 1 Source: Secondary Data Amount Mobilized UTI Total (Rs.Crores) 6. but still count UTI as its largest Player with the largest corpus of investible funds among all Mutual Funds currently opening in India.The objective then is to attract the small investors and introduce them to market investments.175 Assets Under Management ( Rs. First Phase – 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. 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. the history of mutual funds in India can be broadly divided into four distinct phases.700 6. The first scheme launched by UTI was Unit Scheme 1964. at the initiative of the Government of India and Reserve Bank .6.Crores) 2.700 crores of assets under management. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India.700 Second Phase – 1987-1993 (Entry of Public Sector Funds): 12 .
The number of mutual fund houses went on increasing.004 Third Phase – 1993-2003 (Entry of Private Sector Funds): With the entry of private sector funds in 1993. the mutual fund industry had assets under management of Rs.Crores) 38.541 crores of assets under management was way ahead of other mutual funds. Punjab National Bank Mutual Fund (Aug 89). SBI Mutual Fund was the first non.UTI.44.057 1.21.004 crores. under which all mutual funds.964 13. Fourth Phase – since February 2003: 13 . LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. there were 33 mutual funds with total assets of Rs. the fund industry expanded nearly seven times in terms of Assets under Management. Bank of Baroda Mutual Fund (Oct 92). From 1987to 1992-93. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions.247 8.Crores) 11. The Unit Trust of India with Rs.757 47. Bank of India (Jun 90). public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).1987 marked the entry of non. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.021 Assets Under Management ( Rs. 1. giving the Indian investors a wider choice of fund families. At the end of 1993. as seen in the following figures: For the period of 1992-93 Table No: 2 Secondary Data UTI Public Sector Total Amount Mobilized (Rs.47. Indian Bank Mutual Fund (Nov 89).805 crores. As at the end of January 2003. Also. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. a new era started in the Indian mutual fund industry. 1993 was the year in which the first Mutual Fund Regulations came into being.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. except UTI were to be registered and governed.UTI Mutual Fund established in June 1987 followed by Mutual Fund (Dec 87).
2003. The Specified Undertaking of Unit Trust of India. BOB and LIC. As at the end of October 31. PNB. The second is the UTI Mutual Fund Ltd. representing broadly.In February 2003. conforming to the SEBI Mutual Fund Regulations.29. the assets of US 64 scheme.000 crores of assets under management and with the setting up of a UTI Mutual Fund.126726 crores under 386 schemes. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. Fig: 1.GROWTH IN ASSETS UNDER MANAGEMENT Unit holding pattern of mutual funds industry as on March 31. It is registered with SEBI and functions under the Mutual Fund Regulations. 2003 14 . the mutual fund industry has entered its current phase of consolidation and growth. assured return and certain other schemes.835 crores as at the end of January 2003. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. and with recent mergers taking place among different private sector funds. functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. there were 31 funds. sponsored by SBI. The graph indicates the growth of assets over the years. which manage assets of Rs.
12% of the total net assets in the mutual funds industry. Out of this total number of investors accounts.32. ii) Corporate and institutions who form only 2. contribute a sizeable amount of Rs.45. accounting for 97. 2003 there are a total number of 1.56 crore are individual investors accounts.07% of the total net assets. The details of unit holding pattern are given in the following table: 15 .6 crore investors accounts (it is likely that there may be more than one folio of an investor which might have been counted more than once and actual number of investors would be less) holding units of Rs.1440.SEBI has done an analysis of the unit holding pattern of mutual funds industry as on March 31.18crore (1.601 crore. 1. 2003.42% of the total number of investors accounts and contribute Rs. the following has been observed:- i) As on March 31. 79.470 crore which is 57.81%) of net assets.54%) and contribute Rs.04% of the total number of investors accounts in the mutual funds industry. The details are given below: A] Mutual Funds Industry Unit holding Pattern From the data collected from the mutual funds.691 crore which is 41. iii) The NRIs/OCBs and FIIs constitute a very small percentage of investors accounts (0.
979 15. 2. 27% of the total investors accounts are in private sector mutual funds whereas the 1.469.968.8% of the assets.83 57.71 B] Unit holding Pattern – Private/Public Sector Mutual Funds: From the analysis of data on unit holding pattern of Private Sector Mutual Funds and Public Sector Mutual Funds.93 lakh investors accounts i.07 1.67 NAV(Rs.42 0. (it is likely that there may be more than one folio of an investor which might have been counted more than once and therefore actual number of investors may be less) 42. UTI Mutual Fund has 97.10 0.04 100.53 79.01 32.2% of the net assets whereas the public sector mutual funds own only 28.Table No: 3 Secondary Data UNIT HOLDING PATTERN OF MUTUAL FUNDS INDUSTRY Category No.82% of the total investor’s accounts in the mutual funds industry.6 crore investors accounts in the mutual funds industry.600.00 45.12 100. the following observations are made:1.506 84.00 15.557.691.17 crore investors accounts ie. Out of a total of 1.51 561.854 2.e. Details of unit holding pattern of private sector and public sector mutual funds are: 16 . the private sector mutual funds manage 71.058 % To Total Investors A/C 97.311 2.53 0.73% are with the public sector mutual funds which includes UTI Mutual Fund.12 878. 12 lakh investors’ accounts which is 60. Of Investors A/C Individuals NRIs/OCBs FIIs Corporate/ Institutions/Othe rs TOTAL 324.Crore) %To Total NAV 41. However.
11 100.92 66.00 37465.48 723.93 Individuals NRIs/OCBs FIIs Corporate/ Institutions/ Others TOTAL 250972 4292546 5.62 22926.02 528.97 0.16 64.39 0. Of Investors A/C % To Total Investors A/C NAV(Rs.28 0.91 34.91 56673.64 155.00 RECENT TRENDS IN MUTUAL FUND INDUSTRY: 17 .63 100.91 100.665 45895 741 98.00 Table No: 5 Secondary Data UNIT HOLDING PATTERN OF PUBLIC SECTOR MFS (INCLUDING UTI MF ) Category NO.Cr ore) 17956.49 33.51 %To Total NAV 31.00 8003.23 0.Table No: 4 Secondary Data UNIT HOLDING PATTERN OF PRIVATE SECTOR MFS Category No.03 NAV(Rs.27 0.Cr ore) %To NAV Total Individuals NRIs/OCBs FIIs Corporate/ Institutions/ Others TOTAL 11.14 74007 11676308 0.555.01 14734.85 100. Of Investors A/C 4001841 38416 1317 % To Total Investors A/C 93.68 1.68 0.89 0.
Some have sold out to foreign owned companies. They can be credited with introducing many new practices such as new product innovation. which makes money in the long term and requires deep-pocketed support in the intermediate years. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. The performance of most of the schemes floated by these funds was not good. They quickly realized that the AMC business is a business. Few hired specialized staff and generally chose to transfer staff from the parent organizations. they have serious plans of continuing the activity in a major way. some have merged with others and there is general restructuring going on. float new schemes etc. 18 . barring a few exceptions. The service levels were also very bad. broker education and support etc. The experience of some of the AMCs floated by private sector Indian companies was also very similar.The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. usage of technology. Most of these AMCs have not been able to retain staff. sharp improvement in service standards and disclosure. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. and it is doubtful whether. they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these. The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. In fact.
3 COMPANY BACKGROUND 19 .CHAPTER .
Thereafter. Karvy became the first Depository Participant in Andhra Pradesh. Today.000 offering auditing and taxation services initially. An ISO 9002 company. it forayed into the Registrar and Share Transfer activities and subsequently into financial services.50. quality to the individual. Over the past one and half decades. All along. besides companies. Karvy made inroads into a host of capital-market services. Karvy’s commitment to quality and retail reach has made it an integrated Financial Services Company. professional integrity and vision helped Karvy achieve a leadership position. a group of Hyderabad –based practicing Chartered Accountants started Karvy Consultants Limited with a capital of Rs.corporate and Retail – which proved to be a sound business synergy. . A decade of commitment.. finance and people. financial institutions and regulatory agencies. Later. In January 1998. Karvy’s strong work ethic and professional background leveraged with Information Technology enabled it to deliver 20 . In its field when it handled the largest number of issues ever handled in the history of the Indian stock Market in a year. Karvy has evolved as a veritable link between Industry. 1.Yours Online personal Finance Advisor - KARVY – BACKGROUND: In 1982. Karvy has access to millions of Indian shareholders. banks.
CORE VALUES: Karvy’s adherence to its core values – integrity. • • • • • Assistance beyond service Leadership through Quality Innovation & Market Creation Relationship Building Integrity & Transparency 21 . VISION: Karvy’s aspiration of establishing itself as an integrated financial services company is propelled by a vision that is shared by its entire work force. Karvy capability has now been extended service global customers. positive performance. Towards this end. enterprise and innovation has earned it an enviable reputation amongst all the intermediaries and regulatory authorities of the capital and financial markets. The foray into global processing services began in 1999 to cater to health care industry needs. Karvy has dedicated itself to: ♦ To have a single minded focus on investor services. KARVY’S PHILOSOPHY: Karvy’s core activities provide insights into the reasons for its consistent. ♦ To establish a leadership position in all chosen areas of business. ♦ To set industry standards. ♦ To establish Karvy as a household name for financial services. The first step Medical Transcription a service then required capability in understanding a customer’s voice. conversion to text with timeliness and accuracy and completion to a legally acceptable framework will now provide its service globally.
KARVY’S COMPETITIVE EDGE: ♦Human Resources ♦Training ♦Technology ♦Software ♦Mailroom RANGE OF SERVICES Issue Servicing Corporate Shareholder Servicing Mutual Fund Investor Service Asset Financing Merchant Banking & Underwriting Services Corporate Advisory Financing & Project Financing Retail Financial Products Karvy Depositor Services Electronic Custodial Services Depository Participant Investor Services Karvy .The OTCEI Dealer Medical Transcription Financial Products Marketed Through Karvy: • • Initial Public Offerings Fixed Income Products • • Fixed Deposits Debt Instruments Bonds Mutual Funds Tax Saving Schemes Personal Banking Products 22 .
Personal Loans & insurance
GROUP COMPANIES & DIVISIONS:
KARVY CONSULTANTS LIMITED: Deals in Registrar and Investment
KARVY SECURITIES LIMITED: Deals in distribution of various
investment products, viz., equities, mutual funds, bonds and debentures, Fixed deposits, insurance policies for the investor
KARVY INVESTOR SERVICES LIMITED: Deals in Issue management,
Investment Banking and Merchant Banking,
KARVY STOCK BROKING LIMITED: Deals in buying and selling equity
shares and debentures on the National Stock Exchange (NSE), the Hyderabad Stock Exchange (HSE) and the Over-The-Counter Exchange of India (OTCEI),
Karvy has a strategic alliance with Jardine Fleming India Securities Limited (JFISL) – one of Asia’s most prestigious investment bankers – to leverage on the latter’s investment banking expertise. This would augment the retail distribution reach and provide the Indian access to the best global and local insights on financial markets. Jardine is a respected investment banker with a demonstrated track-record of delivering value to its clients spread over 43 countries. It is ranked amongst the world’s TOP 3 Foreign Institutional Investors (FIIs).
To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy will strive to exceed Customer’s expectations.
As per the Quality Policy, Karvy will: Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer’s needs. Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in the business ethics. Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same. Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and regulatory authorities) proud and satisfied.
Board of Directors – Karvy Consultants Limited C. Parthasarathy - Chairman And Managing Director M. Yugandhar - Managing Director M.S. Ramakrishna - Director Prasad V Potluri - Director Dr. P.V.S. Jaganmohan Rao – Company Secretary Price Water House, Hyderabad – Auditors Bankers: UCO Bank, Bank Of Baroda, HDFC Bank, Standard Chartered Grindlays Bank. Registered Office: “Karvy House”,46, Avenue 4, Street No.1, Banjara Hills, Hyderabad, Andhra Pradesh, India.
KARVY MUTUAL FUND SERVICES (MFS DIVISION)
building a heritage of confidence – There is a wide range of mutual fund services available at KARVY MUTUAL FUND SERVICES to the various categories like Asset Management Companies, Investors, Distributors and General Users. We can use mutual fund services through web also, the web site is karvymfs.com, with a click of the mouse we can enter into the karvy mutual fund services, this provides Interactive Fund Service to query for account related details and register specific services requests. Since its inception in 1982, Karvy has demonstrated a dedication coupled with dynamism that has inspired trust for various segments – corporate, government bodies and individuals. Karvy has since been performing a pivotal role as the intermediary – the interface – between these players. With Mutual Funds emerging as a distinct asset class, Karvy has made a strategic choice to leverage the power of latest technology to provide a cutting edge to its services. This, today, service nearly 40% of the asset management companies (AMCs) across an extensive network of service centers with assets under service in excess of Rs.10,000 crores. Karvy’s ability to mass customize and offer a diverse range of products for diverse range of customers has helped mutual fund companies to uniquely position themselves in the market place. These diverse range of services cut across multiple delivery channels – service centers, web, mobile phones, call center – has brought hone the benefits of technology to investors, distributors, and the mutual funds. Going forward, it shall strive to create new products and services, which would address the needs of the end customer. Its single-minded focus in delivering products for customers has given the distinguished position of being the preferred provider of financial services in the country. These services can be broadly categorized as below: ♦ Investor Services ♦ Distributor Services ♦ AMC Services ♦ General Services or Information Services
com in the investor services with the web site. but he plays a pivotal role. Karvy has engineered several initiatives for the distributors and for the benefit of his clients. etc. any visitor from the web site has the option to know Mutual Fund Concepts. To utilize these web services the investor has to first register himself with the karvymfs. b) DISTRIBUTOR SERVICES: .. There is a wide range of investor services provided by karvy mutual fund services to the investors and also Mutual Fund Investors have the convenience of logging on to the web site and utilize various account related services. with a click of the mouse he can gets the services. in the Mutual Fund transaction chain.Re-defining service Karvy recognizes the distributor. Keeping this in mind. obtain dividend information. without investor we cannot imagine the mutual funds.. check out the latest NAVs of his/her favorite Mutual Funds. He placed in the bottom of the structure. get the latest load structure information etc.Keeping ahead with the changing investor expectations Investor is a person who invests in the mutual funds in the mutual funds concept. without authorized ID and Password he cannot get the services. AMC SERVICES: 26 . The major online services for investors can be categorized as below: View their account statements online Get a snapshot of all their investment serviced by Karvy: Portfolio Valuation Services NAV Broadcast Services NAV Alert Services Receive Account statements by email Apart from the afore-mentioned services.com gives authorized ID and Password to the registered user. as on invaluable customer. the karvymfs.
Net Assets Under Management Report 3. Online Services: 1. Transaction Reports 2.The AMC can now viewing investor information and requesting various reports related to the investor..your partners in progress There is wide range of AMC Services provided by Karvy Mutual Fund Services to the registered Asset Management Company’s (AMCs). just by the click of the mouse. Special Products 5. Status-wise holdings report c) GENERAL/INFORMATION SERVICES: In addition to the afore-mentioned services Karvy mfs provides general or information services to the users. Fund Information 3. Mutual Fund AMCs must enter into agreement with Karvy Consultants Limited. Query on investors’ name Mail-Back Services: 1. Karvy Network 27 . These services can be broadly classified as below: 1. Asset Movement Report 4. Slab Report 5. whereby users are assigned a User ID and Password at the fund level. AMC may use this ID and Password to access all the site services. It provides registered AMCs can check out various ONLINE and MAIL-BACK services and gets an update on the investments of its investors. Investor Account Statements 2. In order to use the respective AMC services on the site. Load Structures 4. Dividend History 2. Query on application number 3. is possible through the web site also.
The following are the various mutual fund AMCs for which Karvy acts as a Registrar.MUTUAL FUNDS AT KARVY The Mutual Fund umbrella of Karvy consists both Open-ended and Close-ended Mutual Funds. 1) BOB Mutual Fund 2) BOI Mutual Fund 3) DEUTSCHE Mutual Fund 4) GIC Mutual Fund 5) IDBI Mutual Fund 6) IL & FS Mutual Fund 7) MORGAN STANLEY Growth Fund 8) PNB Mutual Fund 9) RELIANCE Capital Mutual Fund 10) SBI Mutual Fund 11) UTI Mutual Fund 28 .
CHAPTER – 4 THEROTICAL PERSPECTIVE OF MUTUAL FUNDS 29 .
SEBI (Securities Exchange Board of India) in our case.. professionally managed portfolio at a relatively low cost. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. the risk associated. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd. in which it holds a majority stake. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. it pre specifies the investment objectives of the fund. In India. Each Mutual Fund scheme has a defined investment objective and strategy. the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). A draft offer document is to be prepared at the time of launching the fund. In the Indian context. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). these sponsors need approval from a regulator.g. as in most countries. which has floated different 30 . the sponsors promote the Asset Management Company also. A sponsor then hires an asset management company to invest the funds according to the investment objective. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. E.LITERATURE SURVEY MUTUAL FUNDS – AN OVERVIEW A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial Goal. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund. Typically.
and based on it. managing. it also handles the administrative chores. (e) the Unit holders. (b)the Board of Trustees (BOT) or Trust Company. (c) Asset Management Company (AMC). It is responsible for floating. in turn. The flow chart below describes broadly the working of a mutual fund: Fig: 2 Working of Mutual Funds ORGANISATION OF MUTUAL FUNDS There are many entities involved and the diagram below illustrates the organization set up of a mutual fund.mutual funds schemes and also acts as an asset manager for the funds collected under the schemes. redeeming the schemes. It receives the fees for 31 . hires or contracts a separate AMC which is run by professional managers. manages the fund or portfolio. They are (a) the sponsor(s). Fig: 3 Organization of a Mutual Fund: Mutual funds have a typical organization in which five key parties or players or special bodies are involved. which. The AMC conducts the necessary research. They are usually formed by an investment adviser or manager or sponsor who selects and appoints a BOT. (d) the custodian.
The UTI. The custodian is responsible for co-ordination with brokers. 1956). 1882 (and not as a company under the Companies Act. All MFs have to be registered with the SEBI. IMPORTANT PARTICIPANTS IN MUTUAL FUNDS: 32 . the actual transfer and storage of stocks. As per the current regulations in force in India. every MF proposed by a sponsor has to be set up as a trust under the Indian Trust Act.the services rendered by it. It is required that the first four constituents of the MF should maintain an arm’s length relationship among themselves in order to reduce conflict or interests. and to safeguard the interests of the investors. He is answerable to the AMC. 1963. however. Mutual funds can sell their units directly to the investors or they may employ the sales force of brokers and agents for that purpose. and handling the property of the trust. was set up under a special UTI Act.
The legal structure and organization of Mutual Funds as laid down by SEBI guidelines is as follows: Sponsor Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. / SALES INVESTOR Trust The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act. Fig: 4 LEGAL STUCTURE OF MUTUAL FUNDS SEBI TRUSTEE SPONSOR OPERATIONS AMC FUND MANAGER MUTUAL FUND DISTRIBUTOR SCHEME MKT. 1996. 1882 by the Sponsor. 33 ./ SALES MKT. The trust deed is registered under the Indian Registration Act. Sponsor must contribute at least 40% of the networth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations. 1908.
Trustee Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. Open. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. MUTUAL FUND CLASSIFICATIONS: There are many types of Mutual Funds available to the investor. The AMC must have a net worth of at least 10 crore at all times. 1. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. Registrar and Transfer Agent The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form. However. 1996. the provisions of the Trust Deed and the Offer Documents of the respective Schemes. The Registrar and Transfer agent also handles communications with investors and updates investor records. The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter-alia ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations. Asset Management Company (AMC) The Trustee as the Investment Manager of the Mutual Fund appoints the AMC. From the investor’s perspective there are three basic classifications of mutual funds. redemption requests and dispatches account statements to the unit holders.Ended Funds: 34 .Ended Vs Closed. these different types can be grouped into certain classifications for better understanding.
On the other hand. On the other hand.ended fund does not vary on account of trading in the fund’s units at the stock exchange.ended funds. to provide the much needed liquidity to investors. the unit capital of a closed.ended fund investors.Ended Funds: An Open. 2. the Mutual Fund actually reduces the number of units outstanding with investors.Ended Funds: Unlike an open. the unit capital of the schemes keeps changing each day. an open. Note that the number of outstanding units of a closed. Later on.ended fund is not obliged to keep selling/issuing new units at all times. funds often do offer “buy-back of fund shares/units”. Trading through a stock exchange enables the investors to buy or sell units of a closed. thus offering another avenue for liquidity to close.ended funds do not allow investors to buy or redeem units directly from the funds.ended Mutual Fund from each other. many closeended funds get themselves listed on a stock exchange(s). subject to certain obvious conditions.ended fund. The units offered by these schemes are available for sale and repurchase on any business day at NAV based prices. Hence.load funds: 35 .ended fund is fixed. However. unlike open. Note that an open. An investor can buy or redeem units from the fund itself at a price based on the Net Assets Value (NAV) per unit. The funds units may be traded at a discount or premium to NAV based on investor’s perceptions about the funds performance and other market factors affecting the demand for or supply of the fund’s units. In this case. Load and no.Ended Fund is one that has units available for sale and repurchase at all times.Open. as it makes a one. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. in the same fashion as buying or selling shares of a company. close. Closed. and many successful funds stop issuing further subscriptions from new investors after they reach a certain size and think they cannot change a larger fund without adversely affecting profitability.time sale of a fixed number of units.ended fund rarely denies to its investors the facility to redeem existing units. through a stockbroker.
when a fund invests in tax.. That is.exempt securities. In India. it is called a taxexempt fund. we are ready to discuss more specific types of funds.A. Tax. after 1999 union budget.S. In the U. MUTUAL FUNDS TYPES All Mutual Funds would be either Close. These Classifications are general. Once we have reviewed the fund classes. In other words. equity Mutual Fund Schemes are tax. The fund Types are generally distinguished from each other by their investment objectives and types of securities they invest in. no commission is payable on purchase of sale of units in the fund.Load Funds: A Load Fund is one that charges a commission for entry or exit.free in the hands of the investors. each time you buy or sell units in the fund. before distributing income to investors. all of the dividend income received from any of the Mutual Fund is Tax.free. The advantage of a no load fund is that the entire corpus is put to work. However. and either load or un-load. 36 . No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. That is. municipal bonds pay interest that is tax. funds other than Equity Funds have to pay a distribution tax. Typically entry and exit loads range from 1% to 2%. while interest on corporate and other bonds is taxable. It could be worth paying the load.exempt investment avenues. a commission will be payable. If the fund has a good performance history. 3. while other funds are taxable for distributable income. for example.ended or Open-ended.Exempt: Generally.Tax.exempt Vs non.
seek to invest a majority of their funds in equities and a small portion in money market instruments. invest in . They are ideal for investors who have a long-term investment horizon. arranged in order of higher to lower risk level.less research or speculative shares and may not adopt speculative investment strategies to attain their objective of high 37 . because they invest in equities. also commonly called Growth Schemes. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social.Fig: 5 Types Of Mutual Fund Schemes Investment Objective Types of Schemes Constitution Equity Oriented Debt Based Hybrid Open Ended Closed Ended Interval Investment Objective: Schemes can be classified by way of their stated investment objective such as Growth Fund. Balanced Fund. However. HDFC Growth Fund. Equity Oriented Schemes: These schemes. these schemes are exposed to fluctuations in value especially in the short term. a) Aggressive Growth Funds: As the name suggests aggressive growth funds target maximum capital appreciation. Income Fund etc. Discussed below are the major types of equity funds. political as well as economic. Such schemes have the potential to deliver superior returns over the long term. Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity schemes.
i) Sector Funds: Sector fund’s portfolio consist of investments in only one industry or sector of the market such as Information technology. since diversification is limited to one type of investment. most specialty funds tend to be concentrated funds. While Options are 38 .Cap Equity Funds: These funds invest in shares of companies with relatively lower market capitalization than that of big. Clearly concentrated specialty funds tend to be more volatile than diversified funds. but Option Income Funds write options on a significant part of their portfolio. iv) Option Income Funds: These funds do not exist in India. they carry a higher level of sector and company specific risk than diversified equity funds. Consequently. ii) Offshore funds: These funds invest in equities in one or more foreign countries thereby achieving diversification across country borders. Pharmaceuticals or FMCGs. The primary objective of the growth Funds is capital appreciation over a three to five years span. Growth funds are therefore less volatile than funds that target aggressive growth. However. They may thus be more volatile than other funds. These funds may invest in a single country ( hence riskier) or many countries ( hence diversified). b) Growth Funds: Growth funds invest in companies whose earnings are expected to rise at an above average rate. as smaller companies’ shares are not very liquid in the market.returns for the investor. c) Specialty Funds: These funds have a narrow portfolio orientation and invest only in companies that meet pre-defined criteria. they tend to be more volatile and riskier than other funds. Since Sector funds do not diversify into multiple sectors. blue chip companies. iii) Small.
debentures and government securities. The objective is to match the performance of the stock market by tracking an index that represents the overall market. Debt Based Schemes: These schemes. except for a very small portion in liquid money market securities. diversified equity funds seek to reduce the sector or stock specific risk through diversification. These schemes are ideal for conservative investors or those not in a position to take 39 . d) Diversified Equity Funds: A Fund that seeks to invest only in equities. They have mainly market risk exposure. they may actually help to control volatility. may be termed a diversified equity fund. The prices of these schemes tend to be more stable compared with equity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. invest in debt securities such as corporate bonds. Such general purpose but diversified funds are clearly at the lower risk level than growth funds. also commonly called Income Schemes. investing mainly in shares of companies with high dividend yields. While exposed to all equity price risks. but stand often at a lower end of the risk spectrum in comparison with the growth funds. e) Equity Index Funds: An index fund tracks the performance of a specific stock market index. if properly used. f) Value Funds: These funds try to seek out fundamentally sound companies whose shares are currently under priced in the market. Value funds have the equity market price fluctuation risk. g) Equity Income funds: These are equity funds that can be designed to give the investor a high level of current income along with some steady capital appreciation. These funds are therefore less volatile and less risky than other equity funds. but is not focused on any one or few sectors or shares.viewed as risky instruments.
as compared to all other debt or equity funds. However. with less diversification in its investments. specialized and offshore funds. Let us see Debt funds in this light: • Diversified Debt Funds: A debt fund that invests in all available types of debt securities. except that debt funds have a substantial part of their portfolio invested in debt instruments and therefore more income oriented and inherently less risky than equity funds. They certainly reduce the risk level considerably. although they may earn higher returns as a result of the higher risks taken. issued by entities across all industries and sectors is a properly diversified debt fund. Examples include sector. • High Yield Debt Funds These funds seeks to obtain higher interest returns by investing in debt instruments that are considered below investment grade. such as retired individuals. • Fixed Term Plan Series: 40 . Debt funds are largely considered as Income funds as they do not target capital appreciation. as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk. • Focused Debt Funds: Some debt funds have a narrower focus. They are less risky than a narrow.higher equity risks.focus fund that invests in debt securities of a particular sector or industry. These funds tend to be more volatile than other debt funds. • Assured Return Funds Assured Return or Guaranteed Monthly Income Plans are essentially Debt/ Income Funds. These funds are similar to the funds described in equity funds.
in that the Mutual Fund AMC issues a fixed number of units for each series only once and closes the issue after an initial offering period. By investing in a mix of this nature. like a closed end scheme offering. Hence the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free. Many Mutual funds mix these different types of securities in their portfolios. these funds seek to strike a balance between capital appreciation and income for 41 . Money Market Schemes: These schemes invest in short term instruments such as commercial paper (“CP”). treasury bills (“T-Bill”) and overnight money (“Call”). there are three major mutual fund types: Money Market. Such funds are termed “hybrid funds” as they have a dual equity/bond focus. balanced funds seeks to attain objectives of income. b) Growth and Income Funds: Unlike Income-focused or growth focused funds. Debt and Equity. convertible securities. a) Balanced Funds: A balanced fund is one that has a portfolio comprising debt instruments. moderate capital appreciation and preservation of capital.Fixed Term Plans are essentially closed-end in nature. The schemes are the least volatile of all the types of schemes because of their investments in money market instrument with short-term maturities and have become popular with institutional investors and high net worth individuals having short-term surplus funds. Gilt Funds: This scheme primarily invests in Government Debt. Hybrid Funds: We have seen that in terms of nature of financial securities held. certificates of deposit (“CD”). and are ideal for investors with a conservative and long-term orientation. preference and equity shares.
the investor. Real Estate Funds: Specialized real estate funds would invest in real estates directly. c) Asset allocation Funds: Normally. An Index also serves as a relevant benchmark to evaluate the performance of mutual funds. 42 . or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securitized assets. an equity fund would have its primary portfolio in equities most of the time. their asset allocation is predetermined within certain parameters. a debt fund would not have major equity holdings. BENEFITS OF MUTUAL FUNDS There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer. which are unmatched by most other investment avenues. or a specific sector of the market. Asset Allocation Funds that follow more stable allocation policies are more like balanced funds. Index schemes: The primary purpose of an Index is to serve as a measure of the performance of the market as a whole. Similarly. though more risky than income finds. In other words. These funds would be less risky than pure growth funds.
c) Variety Mutual funds offer a tremendous variety of schemes. For example. b) Diversification The nuclear weapon in your arsenal for your fight against Risk. i. information technology etc. money market instruments. This kind of a diversification may add to the stability of your returns. applicable to all schemes and benefits applicable specifically to open-ended schemes. it offers different types of schemes to investors with different needs and risk appetites. which would otherwise be extremely expensive. it offers an opportunity to an investor to invest sums across a variety of schemes. textile. It simply means that you must spread your investment across different securities (stocks. fixed deposits etc.The benefits have been broadly split into universal benefits. real estate. an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending 43 .500/-.) and different sectors (auto.). Universal Benefits a) Affordability A mutual fund invests in a portfolio of assets. An investor can buy in to a portfolio of equities. depending upon the investment objective of the scheme. both debt and equity. shares. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. etc. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs. secondly. bonds. for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. This variety is beneficial in two ways: first. bonds.e.
e) Tax Benefits Any income distributed after March 31. These rules relate to the formation. 44 . as and when required. administration and management of mutual funds and also prescribe disclosure and accounting requirements. including income from Units of the Mutual Fund. In case of Individuals and Hindu Undivided Families a deduction upto Rs. income distributions for the year ending March 31. Benefits of Open-ended Schemes a) Liquidity In open-ended mutual funds. 2003. 9.5%. you can redeem all or part of your units any time you wish. 2002 will be subject to tax in the assessment of all Unit holders. which govern mutual funds.on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. you are handing your money to an investment professional who has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax. Such a high level of regulation seeks to protect the interest of investors. and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio. will be taxed at a concessional rate of 10. as a measure of concession to Unit holders of open-ended equity-oriented funds. f) Regulations Securities Exchange Board of India (“SEBI”). d) Professional Management Qualified investment professionals who seek to maximise returns and minimise risk monitor investor's money. However.000 from the Total Income will be admissible in respect of income from investments specified in Section 80L. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. given the fund's stated investment objectives. When you buy in to a mutual fund. the mutual funds regulator has clearly defined rules.
Thus the investor is in the know of the quality of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager. This flexibility gives the investor a convenient way to change the mix of his portfolio over time. through a broker or a financial planner.b) Convenience An investor can purchase or sell fund units directly from a fund. The investor may opt for a Systematic Investment Plan (“SIP”) or a Systematic Withdrawal Advantage Plan (“SWAP”). where the investor himself sees the underlying assets bought with his money. is unmatched by any other financial instrument. This level of transparency. c) Flexibility Mutual Funds offering multiple schemes allow investors to switch easily between various schemes. In addition to this an investor receives account statements and portfolios of the schemes. d) Transparency Open-ended mutual funds disclose their Net Asset Value (“NAV”) daily and the entire portfolio monthly. RISK HIREARCHY OF MUTUAL FUND Fig: 6 Data R I S K L E V E L Money Market Funds Gilt Funds Debt Funds Hybrid Funds Aggressive Growth Funds Money Market Funds Source: Secondary Equity Funds 45 Gilt Funds Flexible Asset Equity High Yield DebtAllocation and Diversified Diversified Focused Growth Income Funds Funds Debt Income EquityFunds TYPE OF FUND Funds Balanced Funds Growth Funds Index Funds Value Funds Funds .
Date Ownership 30/12/94 Foreign JV Private 30/10/92 Public 15/12/87 Public 03/01/97Private 28/10/02 Foreign 16/12/96 Foreign JV 15/04/96 Private 18/07/96 Foreign JV 10/12/90Foreign JV 30/06/00 Private 07/02/02Foreign JV 01/01/98Private 11/02/98Foreign JV 15/09/94 Private 23/06/98 Private 19/06/89 Public 05/11/93Foreign JV 08/08/89Public 25/11/94 Private 25/08/93 Foreign JV 30/06/95 Private 29/06/87 Public 13/03/00 Foreign JV 24/08/96 Private 30/06/95 Foreign JV 20/08/93 Private 19/02/96 01/02/64 01/02/03 Foreign JV Private Private T. Cr)Fund 2425.07 1 374.98 3 5415.52 6 68.21 2 152.43 8 6361.22 5 15892.83 2 1717.34 4 3779.42 4 4091.25 0 4044.FUND FAMILY SCAN OF THE AMC’S IN INDIA Table:10 Fund Family Scan Alliance Capital MF BenchMark AMC BOB Mutual Fund Can Bank MF CholaMandalam MF Deutsche MF DSP ML MF Escorts MF First india MF GIC MF HDFC MF HSBC MF IL&FS MF ING Vysya MF JM MF Kotak MF LIC MF Morgan Stanley MF PNB MF Principal MF Pru ICICI MF Reliance MF SBI MF S Chartered MF Sundaram MF Tata TD MF Taurus MF Templeton India MF UTI MF UTI Mutual Fund Incorp.77 2 3036.45 15 0 24 Primary Data S-T Dt.18 5 1457.A(Rs inEq.61 2 428. Fund Fund 3 5 0 1 3 2 2 2 5 5 6 3 4 4 2 0 2 2 2 1 9 15 6 6 5 7 5 2 9 6 12 6 5 3 0 0 1 0 8 6 9 9 5 6 15 7 10 7 7 3 10 7 2 0 10 0 4 9 0 6 Hyrd.75 0 2676.04 9 8075.33 1 5458.76 9 148.79 2 2431.37 6 1355. Fund 1 0 1 4 0 1 1 3 0 1 4 0 1 1 2 1 2 1 1 2 10 0 4 0 1 2 0 13 0 10 46 .32 4 133.64 4 15713.98 0 19770.79 3 5209.45 4 1961.86 3 15437.54 0 117.5 9 4279.66 4 4345.
45 crores is the largest AMC in India. In that 5 Public Sector owned AMCs and 13 Private Sector owned AMCs and 11 Foreign Joint Ventures and one Foreign Owned Asset Management companies are playing in the Indian Mutual Fund industry.75 Crores of Total Assets with more than 17 Schemes. Prudential ICICI with 15892. It has got more than 44 schemes invested in more diversified Mutual fund Industry.98 crores of assets with more than 47 Schemes. Templeton India Mutual fund a Foreign JV holds the third total assets holdings rank with 15713.Interpretation: From the above given table it is clear that.43 crores of total assets is the second largest AMC in India in Total Assets basis with More than 36 schemes in its hand. The fourth largest asset holding AMC is HDFC Mutual Fund with 15437. The fifth Biggest AMC is Standard Chartered Mutual Fund with 8075. then comes the Hybrid Funds and the Short Term Funds. Equity Funds and debt funds are the most common Mutual Fund Types in Indian Mutual Fund Industry . Among this UTI Mutual Fund with Total asset of 19770. 47 . in Indian Mutual Fund Industry there are 31 Asset Management Companies.5 Crores of Total asset holding with more than 38 a Schemes in hand. with more than 500 schemes in general.
Bank Sponsored AMCs holds the fourth position in sales with 28370 Crores in the fourth quarter Jan-March 2007. Next comes the Predominantly Indian AMCs with higher sales of 40759 Crores in the fourth quarter Jan-March 2007.MARCH 2007 SALES Secondary data Category Bank Sponsored Institutions Private Sector-Indian JV Predominantly Indian JV Predominantly Foreign Interpretation: The above given table shows the sales figure of the Mutual Fund Companies for a period of four quarters (fiscal 2006 -’07) starting from April 2006 to March 2007. Private Sector–Indian Firms have the next position for the highest sales with 63063 Crores in the second quarter July-September 2006. 1st Qtr. Predominantly Foreign AMCs have the highest Sales for the last one year with 89568 Crores during the second quarter July-September 2006. 18901 6879 60429 39973 79249 22668 3107 63063 39961 89568 18303 2281 57419 36305 80628 28370 3744 61423 40759 87664 REDEMPTION Year 48 .CASE STUDY ANALYSIS ANALYSIS OF QUARTERLY PERFORMANCE OF MUTUAL FUNDS FOR FISCAL YEAR APRIL 2006 . 3rd Qtr. 4th Qtr. Institutions AMCs comes in the Fifth position with 6879 Crores of sales in the first quarter April-June 2006. 2nd Qtr.
2nd Qtr. Then succeeded by Bank Sponsored AMCs with 27136 Crores in the fourth quarter Jan-March 2007 and next come Institutional AMCs with 6041 Crores of Redemption Figure in the first quarter April-June 2006 Quarterly sales analysis from April 2006 to March 2007 49 . 18911 6041 53617 36152 69594 24335 3808 65940 43321 89562 19918 3529 58580 38072 83091 27136 4965 58823 38753 93360 Interpretation: The above table depicts the redemption value for the different category of AMCs in India. succeeded by Private sector .Secondary Data Category Bank Sponsored Institutions Private Sector-Indian JV Predominantly Indian JV Predominantly Foreign 1st Qtr. 4th Qtr. It states the highest rate of redemption occurs for the Predominantly Foreign JV AMCs with 93360 Crores in the fourth quarter Jan-March 2007 . 3rd Qtr.Indian with 65940 Crores in the second quarter June-September 2006 then by Predominantly Indian JV AMCs with 43321 Crores in the second quarter June-September 2006.
3rd Qtr. 26079 7179 30141 32022 60424 28148 4555 28514 30167 61724 28358 3288 28041 29344 61506 29103 3010 30750 30885 55852 Quarterly AUM Analysis from April 2006 to March 2007 70000 60000 50000 40000 30000 20000 10000 0 Category 1 Category 2 Category 3 Category 4 BankSponsored Institutions Private Sector-Indian JV Predominantly Indian JV Predominantly Foreign ANALYSIS FROM QUETIONNAIRE 50 .Quarterly Redemption Analysis from April 2006 to march 2007 100000 80000 60000 40000 20000 0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Bank sponsored Institutions Private sector-india JV Predom inantly india JV Predom inantly Foreign ASSETS UNDER MANAGEMENT (AUM) Secondary Data Category Bank Sponsored Institutions Private Sector-Indian JV Predominantly Indian JV Predominantly Foreign 1 Qtr. st 2nd Qtr. 4th Qtr.
majority of respondents are New Investors in the Mutual Fund. Whereas the no. of Existing Investors in the Mutual Fund is less. Their Percentage is 69. which is of 31 per cent.STATUS OF INVESTOR Primary Data Type of investor New Investor Existing Investor Total No: of Respondents 69 31 100 Interpretation: Out of the 100 respondents answered. as compared with New Investors. 60% 51 .
Friends have influenced 21% of respondents. Second Majority respondents got knowledge regarding mutual funds from News.MODE OF KNOWLEDGE ABOUT MUTUAL FUNDS Primary Data Mode Of knowledge News Advertisement Friends Relatives Others Total No: of Respondents 23 36 21 11 9 100 Investor Knowledge About AMC 40 30 20 10 0 1 23 36 News 21 11 9 Advertisement Friends Relatives Others Interpretation: From the analysis. most of the respondents come to know about Mutual Funds by the way of Advertisement. 36%. Relatives and others have only least influence in the respondents knowledge. 52 . they are 11% and 9% respectively.
Those who have a very little knowledge about it are only 33%. Here the percentage of respondents those who don’t have complete knowledge about the Mutual Fund Schemes in India is 67.INVESTOR’S COMPLETE KNOWLEDGE ON AMCs IN INDIA Primary Data Attribute Yes No Total No: of Respondents 33 67 100 Interpretation: From analysis it is clear that the no: of respondents having complete knowledge regarding all the Mutual Fund Schemes in India are less. 53 .
FUND PREFERENCE FOR INVESTMENT Primary Data Type Of Funds Open-ended Funds Close-ended Funds Total No: of Respondents 76 24 100 Interpretation: On the available major division of the Mutual Funds. 54 . where only 24% show there investment interest. majority of 76% respondents prefer to invest their money in the Open-ended Funds than Close-ended Funds.
majority of respondents of 33% prefer to put their money in the Income Funds. Respondents of 18% and 13% prefer liquid Funds and Balanced Funds respectively. The respondents are less preferring gilt Funds. which is of 9%.FUND AVAIL Primary Data Fund Sub-category Income Funds Debt Funds Balanced Funds Liquid Funds Gilt Funds Total No: of Respondents 33 27 13 18 9 100 F undAvail Option 9% 18% 33% Incom fund e Debt fund 13% 27% Balanced fund Liquid fund Gilt fund Interpretation: Among the various Sub-category Funds. 27% of respondents chose Debt Funds for their investment. 55 .
which they have opted for investing their money. 56 .AWARENESS OF FULL SCHEMES OF THE AMC Primary Data Attributes Yes No Total No: of Respondents 47 53 100 Interpretation: From the analysis only 47% of respondents have complete awareness on the full schemes offered by the AMC. A majority of 53% respondents have only little knowledge on the Full Schemes offered by their AMC.
which is of 11 and 9 percentage respectively. secondly Joint Venture AMC is selected by 23% of respondents. DIVIDEND OPTION OF INVESTOR 57 . Institutional and Private Sector Foreign are selected as the choice of investment by a less percent of respondents.CATEGORY OF AMC CHOSEN BY INVESTOR Primary Data Category of AMC Bank Sponsored Institution Pvt Sector-Indian Pvt Sector-Foreign Joint Venture Total No: of Respondents 38 11 19 9 23 100 Categ of AMCChosen B Investor ory y Bank Sponsored Institution 40 35 30 25 20 15 10 5 0 38 23 9 Pvt Sector-Indian Pvt Sector-Foreign 19 11 Joint Venture 1 Interpretation: Out of the 100 respondents. Private SectorIndian AMC is preferred by 19% of respondents. a majority of 38% has selected Bank Sponsored AMC.
Interpretation: From The analysis it is clear that majority of 55% respondents chose for Dividend Payout Option.Primary Data Dividend Option Dividend Payment Dividend Reinvestment. Total No: of Respondents 55 45 100 D ividendOption Of Investor 45% 55% Dividend Payout Dividend Re-invmt. 58 . than Dividend Re-investment. which is being opted by less percent of respondents. of 45 in number.
respondents are Unsatisfied with the dividend rate of the AMC. Only 5% respondents are highly satisfied with the dividend rate of the AMC. A least percentage of 2%. Zero respondents are highly unsatisfied with the dividend rates.LEVEL OF SATISFACTION ON DIVIDEND RATE Primary Data Level of satisfaction Highly Satisfied Satisfied Unsatisfied Highly Unsatisfied No Comment Total No: of Respondents 5 58 2 0 35 100 L e of S ev l atisfactiononD ide R iv nd ate 70 60 50 40 30 20 10 0 1 5 2 0 35 58 Highly Satisfied Satisfied Unsatisfied Highly Unsatisfied Interpretation: From the analysis majority of 58% respondents are satisfied with the Dividend Rate of the AMC. 59 . 35% respondents have no comment on it.
91% of respondents have no intention of going for Shift/ Switch of their Fund Holdings. 60 . only 9% have the intention of going for shift/switch of their fund holdings.INVESTOR PREFERANCE FOR SHIFT/SWITCH OF THE FUND HOLDINGS Primary Data Attributes Yes No Total No: Of Respondents 9 91 100 Interpretation: Out of the total respondents.
OPINION ON COMPETITIVE AMC AND THEIR SCHEMES 61 .REDEMPTION/RE-PURCHASE APPROACH Primary Data Times Of Approach 0-1 Times 2 Times 3 Times 4 Times More Total No: of Respondents 69 24 7 0 0 100 Redem ption/Repurchas Approach e 7% 24% 0-1 Times 2 Tim e 69% 3 Tim e 4 Tim e More Interpretation: From the Analysis it is clear that. majority of 69% respondents have 0-1-time approach for redemption/re-purchase. 24% respondents have approached AMC for 2 times for redemption/repurchase. Only 7% respondents approached the AMC for 3 times and more than zero respondents make 4 times approach.
12% respondents have Below Average opinion on the Competitive AMC. 27% of respondents have Above Average Opinion.Primary Data Type of Opinion Above Average Average Below Average Total No: of Respondents 27 61 12 100 OpinionOn Com petitiveAMC 12% 27% Above Average Average Below Average 61% Interpretation: Majority of 61% respondents have Average level opinion on the Competitive AMC and their Schemes. OPINION ON BENEFITS PROVIDED BY COMPETITIVE AMC Primary Data 62 .
74% says that the competitive AMCs are not providing any Special or additional benefit on the same investment amount as compared with their AMC. Only 26% have opinion that the benefits of competitive AMCs are more compared with their AMC. AGE OF INVESTOR Primary Data 63 .Attributes Yes No Total No: of Respondents 26 74 100 OpinionOn B enefits providedby 0% Competitive 26% 74% Yes No Interpretation: Out of the 100 respondents.
Age Level Minor Between 18&40 Between 40&60 Above 60 Total No: of Respondents 0 45 37 18 100 Interpretation: From the analysis. it is clear that. respondents of above 60 are of 18% and minors are of Zero percent. 64 . majority of 45% respondents comes under the age limit of between 18&40. whereas 37% respondents are between 40&60.
65 . majority of the respondents are male. whereas Female respondents are of only 34%. they are of 66% of total respondents.SEX OF INVESTORS Primary Data Sex Male Female Total No: Of Respondents 66 34 100 S Of Investor ex 34% 66% Male Fem ale Interpretation: Out of the respondents.
66 . 30% are Business Persons. 25% respondents are other occupation holders and only 12% respondents are students.OCCUPATION OF INVESTORS Primary Data Occupation Business Profession Student Others Total No: Of Respondents 30 33 12 25 100 OccupationOf The Investor 40 30 20 10 0 1 12 30 33 25 Business Profession Student Others Interpretation: Majority of respondents of 33% are Professionals.
FINDINGS 67 .
• Majority of investors have average level opinion on the benefits provided by AMC’s on their schemes. Majority of the Investors have no intention of going for Swift/Switch of their fund holding. • • Majority of the Investors choose for dividend rate of AMC’s. • • From the study it is found that investors prefer Open-End funds. 68 . • From the study we find that majority of the investors have “less than two time” approach for redemption / re-purchased.FINDINGS • From the Market study it is found that most of the respondents are new male investors and whose age limit is between 18-40 years and the gained their knowledge to invest through advertisement. • • Most of the Investors are Professionals. Most of the respondents don’t have complete knowledge about Mutual Fund Scheme in India. But are satisfied portfolio allocation pattern of AMC’s. From the study it is found the majority of the investors prefer income funds and the like to choose Bank sponsored AMC’s.
SUGGESTIONS 69 .
(2) The record of performance and the standards of service are the twin strengths of MF industry and on these strengths. the industry needs to build its household clientele. (b) Explain and position this service in such a way that clients recognize it as a specialized and value added service. institutional or individual. receives the exact level of service they choose and correct advice based on clear and concrete facts and figures.SUGGESTIONS (1) There is an intense need take up extensive awareness and promotional campaigns to reach out to more and more households and to make the households invest their savings in Mutual Fund Schemes. (4) The Mutual Fund industry has to now take the more difficult but long-term sustainable route of gathering assets from individual investors by providing them value added. financial planning services and ensuring that Mutual Funds are an integral part of their overall portfolio. (c) Convince investors that the transaction and intermediation cost they are paying is justified in lieu of the long-term benefits accruing from such counseling and guidance. particularly equity schemes. 70 . (a) Each investor. a task which may be difficult to accomplish on their own. it is proposed that AMCs and the intermediary community focus more on individual investors and take every effort to: a) Provide high quality advice and product information to such customers. (3) While institutions can continue to be serviced by AMCs and intermediaries.
transparency are the benefits of mutual funds.. the benefits have been broadly split in to universal benefits applicable to all schemes. CONCLUSIONS: The mutual fund industry in India started in 1963. individual agents and financial planners. transparency and ability to take informed decisions. The industry should safeguard the investor’s right towards correct description of the product. diversification. liquidity. from the investor perspective there are three basic classifications of mutual funds. these different types can be grouped in to certain classification for better understanding. regulation. tax benefit. variety of schemes offered. (c) There is comprehensive knowledge and understanding of Mutual Funds amongst all individuals instrumental in selling the Mutual Fund schemes to investors including employees of intermediaries. flexibility. And there are so many types of mutually sub classified from the above are available to investors There are numerous benefits of investing in mutual funds &one of the key reason for its phenomenal success in the developed markets like US &UK is the range of benefits they offer. There are many types of mutual funds available to the investor. professional mgt. with the formation of UNIT TRUST OF INDIA at the initiative of government of INDIA & RESERVE BANK.Correspondingly. they are. (b) Mutual Funds are accurately represented and appropriately positioned to investors. 1) OPEN ENDED FUNDS VS CLOSE ENDED FUNDS. convenience. whichever channel or mode they choose to invest in. the intermediation and transaction cost investors incur should reflect the value of the service and advice they receive. 2) LOAD& NO LOAD FUNDS. 3) TAX EXEMPT & NO TAX EXEMT. good service. Affordability. the study of mutual fund industry divided in to four distinct phases. The main objective is to attract the small investors & to introduce them to market investments. 71 . The benefits are.
9. How do you know about Mutual Fund? (a) Advertisement (b) Friends (c) Relatives 3. Are you a new or Existing Investor? (a) New Investor (b) Existing Investor 2.QUESTIONNAIRE 1. Which type of fund to you prefer? (a) Open ended-Fund (b) Close-ended fund 5. What are the categories of AMC’s chosen by You? (a) Bank sponsored (b) Institutions (c) Private Sector Indian (d) Private Sector Foreign 8. What are the various choices on Sub-category of Funds? (a) Income fund (b) Debt fund (c) Balance fund (d) Liquid fund (e) Gilt fund 6. What is your dividend option? (a) Dividend payment (b) Dividend Re-investment. What are the levels of satisfaction you have on Dividend rate? 72 . Do you have full awareness on all types of schemes of AMC’s? (a) Yes (b) No 7. (d) Others Do you have complete knowledge on AMC’s in India? (a) Yes (b) No 4.
(a) Highly satisfied (c) unsatisfied 10.1 (c) 3 times (b) 2 times (d) 4 times 12. What is opinion on benefits provided by competitive AMC? (a) Yes (b) No 14. What are the various age levels of Investors? (a) Minor (b) Between 18 to 40 (c) Between 40 to 60 (d) Above 60 15. What is your option on competitive AMC? (a) Above average (b) Average (c) Below average 13. What are the categories of investors? (a) Male (b) Female 16. (b) Satisfied (d) No comment Is there any preference for swift/switch of fund building? (a) Yes (b) No 11. What is your occupation? (a) Business (c) Student (b) Profession (d) Others 73 . What is the redemption approach? (a) 0.
BIBLIOGRAPHY 74 .
com http://www.BIBLIOGRAPHY Security Analysis and Portfolio Management Fischer & Jordan Investment.indiainfoline.com (Association of Mutual Funds in India) http://www.amfiindia. Bhole Investment Management (SAPM) Preeti Singh http://www.gov.com http://www.in 75 . Analysis and Management Francis Financial Markets and Institutions L.M.hdfcfund.sebi.