Working of Mutual Funds in India

8/2/2019 Working of Mutual Funds in India

1/47

1

WORKING OF MUTUAL FUNDS IN

INDIA

A PROJECT REPORT

Submitted by

PRADEEP KUMAR

In partial fulfillment for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION (MBA)

In

FINANCE

DOON BUSINESS SCHOOL

UTTRAKHAND TECHNICAL UNIVERSITY,

DEHRADUN (UK)

15 JUNE30 JULY 2011


2/47

2

DECLARATION

I, hereby, declare that the Project titled Working of Mutual Funds in India is original to

best to my knowledge & has not published elsewhere. This is for the purpose of partial

fulfillment of Uttrakhand Technical University requirement for the award of the degree of

Master of BusinessAdministration.

PRADEEP KUMAR


3/47

3

UTTRAKHAND TECHNICAL UNIVERSITY

DEHRADUN

BONAFIDE CERTIFICATE

Certified that this project report WORKING OF MUTUAL FUNDS IN INDIAis the

bonafide work ofPARDEEP KUMAR. Who carried out the project work under my

supervision.

DR. ANIRUDH TOMAR MR. RAVINDER KUMAR

DIRECTOR TEAM LEADER

DOON BUSINESS SCHOOL KARVY STOCK BROKING LTD.

DEHRADUN GURGAON, HARYANA


4/47

4

ACKNOWLEDGEMENT

It is my proud privilege to release the feelings of my gratitude to several persons who helped

me directly or indirectly to conduct this project work. I express my heart full intentness and

owe a deep sense of gratitude to my teachers and to my corporate guides MR. NITIN

SAXENA(Branch Manager, GURGAON), MR. RAVINDER KUMAR( Team Leader,

Gurgaon Branch), MR.BISHNU PRASAD (personal finance executive) for his sincere

guidance and inspiration to complete this project.

I am extremely thankful to the Director, Dean, Chairman and faculties of the DOON

BUSINESS SCHOOL for their coordination and cooperation.

I am also extremely thankful to all those persons who have positively helped me and

customers who responded my questionnaire, around whom the whole project cycle revolves.

I also thank my family and all my friends who have more or less contributed to the

preparation of this project report. I will be always indebted to them.

PRADEEP KUMAR


5/47

5

EXECUTIVE SUMMARY

As a part of my study curriculum it is necessary to conduct a grand project. It provides us an

opportunity to understand the particular topic in depth and which leads to through to that

topic. My topic for the grand project is titled as Working ofmutual funds in India in which

emphasis given to the study of different mutual funds in respect to the risk and return

involved in it.

Since mutual funds are a relatively recent phenomenon in India, general public or investors

dont have clarity about this concept. As we have started witnessing the concept of more

saving now being entrusted to the funds than to keeping it in banks. So it is very important to

manage investors portfolio efficiently. By efficient we mean which reduces the risk of

investor and increases return on the other hand.

This project is all about what actually a mutual fund is and how to invest in mutual fund to

get maximum return, How to diversify the investments into different schemes of funds. To

manage clients portfolio efficiently we first need to understand the industry, current

economic condition of the economy, investors behavior, their objective, riskapatite.

This report has covered Introduction of mutual funds, Indian mutual fund industry,

Investment options available with individuals and at last techniques of managing a clients

portfolio in mutual funds.


6/47

6

TABLE OF CONTENTS

Sr. No. Title Page No.

1. ABOUT THE COMPANY 7-92. INTRODUCTION TO MUTUAL FUND 10 -253. RATIONAL OF THE STUDY 264. OBJECTIVE OF THE STUDY 275. APPLIED RESEARCH METHODOLOGY 286. DATA ANALYSIS & INTERPRETATION 29-367. CONCLUSION 378.

RECOMENDATION 38-39

9. LEARNING FROM PROJECT 4010. LIMITATION OF THE STUDY 4111. REFERENCE 42-4312. SAMPLE QUESTIONAIRE 44-47


7/47

7

ABOUT THE COMPANY

INTRODUCTION:

The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top

player in almost all the fields it operates. Karvy Computershare Limited is Indias largest

Registrar and Transfer Agent with a client base of nearly 500 blue chip corporates, managing

over 2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of

India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With

over 6,00,000 active accounts, it ranks among the top 5 Depositary Participant in India,

registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and MCX ranks

among the top 3 commodity brokers in the country.

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, Karvy is also

among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management. Karvy

Realty Services, which started in 2006, has quickly established itself as a broker who adds

value, in the realty sector. Karvy Global offers niche off shoring services to clients in the US.

Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York.

Over 9,000 highly qualified people staff Karvy.


8/47

8

Organization:

Karvy was started by a group of five chartered accountants in 1979. The partners decided to

offer, other than the audit services, value added services like corporate advisory services to

their clients. The first firm in the group, Karvy Consultants Limited was incorporated on 23rd

July, 1983. In a very short period, it became the largest Registrar and Transfer Agent in India.

This business was spun off to form a separate joint venture with Computershare of Australia,

in 2005. Karvys foray into stock broking began with marketing IPOs, in 1993. Within a few

years, Karvy began topping the IPO procurement league tables and it has consistently

maintained its position among the top 5. Karvy was among the first few members of National

Stock Exchange, in 1994 and became a member of The Stock Exchange, Mumbai in 2001.

Dematerialization of shares gathered pace in mid-90s and Karvy was in the forefront

educating investors on the advantages of dematerializing their shares.

Today Karvy is among the top 5 Depositary Participant in India. While the registry business

is a 50:50 Joint Venture with Computershare ofAustralia, we have equity participation by

ICICI Ventures Limited and Barings Asia Limited, in Karvy Stock Broking Limited.

Karvy has always believed in adding value to services it offers to clients. A top-notch

research team based in Mumbai and Hyderabad supports its employees to advise clients on

their investment needs. With the information overload today, Karvys team of analysts help

investors make the right calls, be it equities, mf, insurance.


9/47

9

On a typical working day Karvy:

Has more than 25,000 investors visiting our 575 offices Publishes / broadcasts at least 50 buy / sell calls Attends to 10,000+ telephone calls Mails 25,000 envelopes, containing Annual Reports, dividend cheques / advises,

allotment / refund advises

Executes 150,000+ trades on NSE / BSE Executes 50,000 debit / credit in the depositary accounts Advises 3,000+ clients on the investments in mutual funds


10/47

10

CONCEPT OF MUTUAL FUNDS

A Mutual Fund is a body corporate that pools the savings of a number of investors and

invests the same in a variety of different financial instruments, or securities. The income

earned through these investments and the capital appreciations realized by the scheme are

shared by its unit holders in proportion to the number of units owned by them. Mutual funds

can thus be considered as financial intermediaries in the investment business that collect

Portfolio Management In Mutual Fund from the public and invest on behalf of the investors.

The losses and gains accrue to the investors only. The Investment objectives outlined by a

Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment

objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in

various asset classes like equity, bonds, debentures, commercial paper and government

securities.

Mutual funds are commonly categorized by their general investment objectives. Equity funds

consist mainly of common stocks and are organized primarily to achieve capital appreciation,

or growth, rather than periodic distribution of income. Bond funds, on the other hand, are

composed predominantly of corporate, Government, or municipal bonds and emphasize

regular income rather than growth. Income funds have the same objective as bond funds but

include Government National Mortgage Association securities, Government securities, and

common and preferred stocks as well as bonds. Money market mutual funds consist of short-

term instruments, such as Government securities, bank CDs, and commercial paper. Short-


11/47

11

term municipal bond funds are composed predominantly of tax-exempt, short-term municipal

securities.

Types of Mutual Funds

Mutual Fund schemes may be classified on the basis of its structure and its investments.

By Structure:-Open-End Funds:

o Available for sale and repurchase at all times based on the net asset valueso Unit capital of the fund is not fixedo Fund size and its total investment go up if more new subscriptions come in

than redemptions and vice versa.

Close-End Funds:

o One time sale of fixed number of units.o Investors are not allowed to buy or redeem the units directly from the funds.

Some funds offer repurchase after a fixed period.

o Listed on stock exchange and investors can buy or sell units throughexchange. May be traded at a discount or premium to NAV based on

investors perception about the funds future performance and other market

factors.

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15

years. The fund is open for subscription only during a specified period. Investors can invest


12/47

12

in the scheme at the time of the initial public issue and thereafter they can buy or sell the

units of the scheme on the stock exchanges where they are listed. In order to provide an exit

route to the investors, some close-ended funds give an option of selling back the units to the

Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate

that at least one of the two exit routes is provided to the investor.

Interval Funds:

Interval funds combine the features of open-ended and close-ended schemes. They are open

for sale or redemption during pre-determined intervals at NAV related prices.

By Investment Objective:-Debt/Income Funds:

Investment in debt instruments issued not only by Government but alsoby private companies, banks and financial institution and other entities such as

infrastructure companies.

Target low risk and stable income for investors. Have higher price fluctuation as compared to money market funds due

to interest rate fluctuation.

Have higher risk of default by borrowers as compared to Gilt funds. Debt funds can be categorized further based on their risk profiles. Carry both credit risk and interest rate risk.


13/47

13

Equity Funds:

Invest a major portion of their surplus in equity shares issued by cost,acquired directly in initial public offering or through secondary market

and keep a part in cash to take care of redemption.

Risk is very high than debt funds but offer very high growth potentialfor the capital.

It can be further categorized based on investment strategy. It must have a long term objectives.

Balanced Funds:

Has a portfolio of debt instrument, convertible securities andpreference and equity shares.

Almost equal proportion of debt/money market securities andequities. Normally funds maintain a ratio of 55:45 or 60:40 some

funds allocate a flexible proportion based on market conditions.

Aim is to gain income, capital appreciation and preservation ofcapital.

Ideal for investors for a conservative and long term orientation.

Further the mutual funds can be broadly classified on the basis of investment

parameter viz,


14/47

14

Each category of funds is backed by an investment philosophy, which is pre-defined in the

objectives of the fund. The investor can align his own investment needs with the funds

objective and invest accordingly.

BY INVESTMENT OBJECTIVE

o Growth Schemes: Growth Schemes are also known as equity schemes. Theaim of these schemes is to provide capital appreciation over medium to long term. These

schemes normally invest a major part of their fund in equities and are willing to bear short-

term decline in value for possible future appreciation.

o Income Schemes: Income Schemes are also known as debt schemes. The aimof these schemes is to provide regular and steady income to investors. These schemes

generally invest in fixed income securities such as bonds and corporate debentures. Capital

appreciation in such schemes may be limited.

o Balanced Schemes: Balanced Schemes aim to provide both growth andincome by periodically distributing a part of the income and capital gains they earn. These

schemes invest in both shares and fixed income securities, in the proportion indicated in their

offer documents (normally 50:50).


15/47

15

Other Schemes:-

Tax saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Indian

Income Tax laws as the Government offers tax incentives for investment in specified

avenues. Investments made in Equity Linked Savings Schemes (ELSS) and pension Schemes

are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides

opportunities to investors to save capital gains u/s 54EA by investing in Mutual Funds,

provided the capital asset has been sold prior to April 1, 2000 and the amount is invested

before September 30, 2000.

Special Schemes:-

Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer document. The

investment of these funds is limited to specific industries like InfoTech, FMCG and

Pharmaceuticals etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the BSE Sense

or the NSE 50


16/47

16

Sector Schemes

Sector Funds are those, which invest exclusively in a specified industry or a group of

industries or various segments such as 'A' Group shares or initial public offerings.

Process of Mutual Fund

In the above graphs shows how Mutual Fund works and how investor earns money by

investing in the Mutual Fund. Investors put their saving as an investment in Mutual Fund.

The Fund Manager who is a person who takes the decisions where the money should be

invested in securities according to the schemes objective. Securities include Equities,


17/47

17

Debentures, Govt. Securities, Bonds, and Commercial Paper etc. These Securities generates

returns to the Fund Manager. The Fund Manager passes back return to the investor.

NET ASSET VALUE (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its

liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in

the fund, this is the amount that the shareholders would collectively own. This gives rise to

the concept of net asset value per unit, which is the value, represented by the ownership of

one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the

number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring

the "per unit". We also abide by the same convention.

HOW TO INVEST IN MUTUAL FUNDS

One can invest in Mutual Funds by following ways:

1. Lump sum2. SIP(systematic investment plan)3. MIP(monthly investment plan)4. FMP(fix maturity plan)


18/47

18

1. LUMPSUM:In Lumpsum you have to make one time investment at the time of filling the application

form. Minimum amount of investment in Lum sum is Rs. 5,000.

2. SIP(systematic investment plan):SIP stands for systematic investment plan. In SIP you have to invest monthly. Four dates

selected in a month to pay the installment. Installment is automatically deducted from

unit holders bank account.

Minimum amount needed to invest in SIP is Rs. 1,000 per installment.

3. MIP(monthly income plan):As the name indicates this plan gives a monthly income. In MIP dividend is declared

every month.

This plan gives approximately 8 to 10% return.

In last 3 years HDFC gave handsome return in MIP about 6% pm.

4. FMP(fix maturity plan):In this plan time and return both are fixed in mutual funds. This plan gives approximately

9.5% return.

This plan is useful in tax deduction also.

a) If you invest your money in this plan for 365 or more days than tax deducted 10%.b) If investment made for less than 365 days than tax deducted 33%.


19/47

19

INVESTMENT IN MUTUAL FUND WITH TAX SAVING PURPOSE:

ELSS (Equity Link Saving Scheme):

In this scheme time period in fix to 3 years. It is very useful in tax saving.

If you invest in this scheme you will get tax saving UNDER 80 C (up to Rs. 10,000).

NOTE:

Every company has at least 1 ELSS fund. HDFC has 4 ELSS fund and SBI has 2 ELSS

fund.

Up to Rs. 10,000 you will have tax saving in ELSS Fund, under 80, C and from 10,000 to

Rs. 1, 20,000 you will have tax saving in INFRASTRUCTURE BOND, under 80, CCF.

NECESSATIY FOR INVESTING IN MUTUAL FUNDS

1.PAN CARD2.KYC( know your customer) FORM3.ADDRESS PROOF

NOTE:

Address proof and pan card must be notaries otherwise bring original while come to

submit the form.

KYC is must to invest in MUTUAL FUNDS.


20/47

20

BEST MUTUAL FUNDS

EQUITY FUNDS:

o HDFC TOP 200o HDFC EQUITY FUNDo DSP TOP 100o FIDILITY EQUITY FUNDo RELIANCE EQUITY OPPORTUNITY FUND

BALANCE:

o HDFC PRUDENCE FUNDo RELIANCE BALANCE FUND

GOLD:

o RELIANCE GOLD FUNDo KOTAK GOLD FUND

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept of mutual

fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year

1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund

industry had seen dramatic improvements, both quality wise as well as quantity wise.


21/47

21

Before, the monopoly of the market had seen an ending phase; the Assets Under Management

(AUM) was Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470

in March 1993 and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less

than the deposits of SBI alone, constitute less than 11% of the total deposits held by the

Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in the

country. Large sections of Indian investors are yet to be intellectualized with the concept.

Hence, it is the prime responsibility of all mutual fund companies, to market the product

correctly abreast of selling.

Mutual Fund Companies in India

ABN AMRO Mutual Fund | Birla Sun Life Mutual Fund | Bank of Baroda Mutual

Fund (BOB Mutual Fund) | HDFC Mutual Fund | HSBC Mutual Fund | ING Vysya

Mutual Fund | Prudential ICICI Mutual Fund | Sahara Mutual Fund | State Bank of

India Mutual Fund (SBI) | Tata Mutual Fund

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and

1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets


22/47

22

under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By

the end of the 80s decade, few other mutual fund companies in India took their position in

mutual fund market. The new entries of mutual fund companies in India were SBI Mutual

Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund,

Bank of India Mutual Fund.

The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of

1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started

penetrating the fund families. In the same year the first Mutual Fund Regulations came into

existence with re-registering all mutual funds except UTI. The regulations were further given

a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now

merged with Franklin Templeton. Just after ten years with private sector players penetration,

the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

OTHER MUTUAL FUND COMPANIES IN INDIA

1. Fidelity Mutual Fund2. IL&FS Mutual Fund3. DSP Merill lynch Mutual Fund4. Sundaram Mutual Fund5. Principal Mutual Fund6. Taurus Mutual Fund7. Deutsche Mutual fund


23/47

23

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India

was generated to function as a non-profit organization. Association of Mutual Funds in India

(AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are

its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a

professional and healthy market with ethical lines enhancing and maintaining standards. It

follows the principle of both protecting and promoting the interests of mutual funds as well as

their unit holders.

Advantages of Mutual Funds

The advantages of investing in a Mutual Fund are:

Diversification: The best mutual funds design their portfolios so individual investments

will react differently to the same economic conditions. For example, economic conditions

like a rise in interest rates may cause certain securities in a diversified portfolio to decrease

in value. Other securities in the portfolio will respond to the same economic conditions by


24/47

24

increasing in value. When a portfolio is balanced in this way, the value of the overall

portfolio should gradually increase over time, even if some securities lose value.

Professional Management: Most mutual funds pay topflight professionals to manage

their investments. These managers decide what securities the fund will buy and sell.

Regulatory oversight: Mutual funds are subject to many government regulations that

protect investors from fraud.

Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a call,

and you've got the cash.

Convenience: You can usually buy mutual fund shares by mail, phone, or over the

Internet.

Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment.

Expenses for Index Funds are less than that, because index funds are not actively

managed. Instead, they automatically buy stock in companies that are listed on a specific

index

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated


25/47

25

Drawbacks of Mutual Funds

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees:No investment is risk free. If the entire stock market declines in value,

the value of mutual fund shares will go down as well, no matter how balanced the portfolio.

Investors encounter fewer risks when they invest in mutual funds than when they buy and

sell stocks on their own. However, anyone who invests through a mutual fund runs the risk

of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day

expenses. Some funds also charge sales commissions or "loads" to compensate brokers,

financial consultants, or financial planners. Even if you don't use a broker or other financial

adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20

to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you

will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager does not

perform as well as you had hoped, you might not make as much money on your investment as

you expected. Of course, if you invest in Index Funds, you forego management risk, because

these funds do not employ managers.


26/47

26

RATIONAL OF THE STUDY

Investing money where the risk is less has always been risky to decide. The first factor, which

an investor would like to see before investing, is risk factor. Diversification of risk gave birth

to the phenomenon called Mutual Fund.

We are preparing comprehensive report of Mutual Fund industry in India. The basic idea of

assignment of this project is to augment our knowledge about the industry in its totality and

appreciate the use of an integrated loom. It is concerned the environmental issues and

tribulations. This makes us more conscious about Industry and its pose and makes us capable

of analyzing Industrys position in the competitive market. This may also enhance our logical

abilities. The Mutual Fund Industry is in the growing stage in India, which is evident from

the flood of mutual funds offered by the Banks, Financial Institutes & Private Financial

Companies. There are various aspects, which have been studied in detail in the project and

have been added to this project report. Hope this report would help one understand the mutual

Industry of India in detail.


27/47

27

NEED/OBJECTIVE OF THE STUDY

The main purpose of doing this project was to know about mutual fund and its functioning.

This helps to know in details about mutual fund industry right from its inception stage,

growth and future prospects.

It also helps in understanding different schemes of mutual funds. Because my study depends

upon prominent funds in India and their schemes like equity, income, balance as well as the

returns associated with those schemes.

The project study was done to ascertain the asset allocation, entry load, exit load, associated

with the mutual funds. Ultimately this would help in understanding the benefits of mutual

funds to investors.

SCOPE OF THE STUDY

In my project the scope is limited to some prominent mutual funds in the mutual fund

industry. I analyzed the funds depending on their schemes like equity, income, balance. But

there is so many other schemes in mutual fund industry like specialized (banking,

infrastructure, pharmacy) funds, index funds etc.


28/47

28

OBJECTIVE:

To give a brief idea about the benefits available from Mutual Fund investment

To give an idea of the types of schemes available.

To discuss about the market trends of Mutual Fund investment.

To study some of the mutual fund schemes and analyse them

Observe the fund management process of mutual funds

Explore the recent developments in the mutual funds in India

To give an idea about the regulations of mutual funds

RESEARCH METHODOLOGY

Primary Objectives

The main objective of this study is doing an In-depth analysis of working of Mutual Fund by

taking sample of funds.

Secondary objectives

To understand the portfolio management process in mutual fund

To know the effects of political, economical, social and technological

factors on Mutual Fund Industry in India.

Evaluating fund performance


29/47

29

Collection of data

For the complete study I required data of Mutual Fund and I got data from both sources

primary as well as from secondary sources.

I conducted a market survey with an questionnaire for getting primary data and the

sources of the secondary data collection were,

(1) Internet

(2) Various magazines/bulletins

(3) News papers

(4) Related books

DATA ANALYSIS:

Sampling technique has been taken into account to apply research methodology in this report.

A questionnaire has been used and it had been getting filled by customers. No. of samples

have been taken are 50. There are different parameters have been used to analyze the result.

No. of Sample= 50

Objective= to know the attitude of common people towards investment especially in mutual

funds.


30/47

30

I. Do you have any investment?

TOTAL NO. OF SAMPLE = 50

II. In which instrument have you invested?

0

5

10

1520

25

30

35

40

45

50

no. of

investors

yes

no

EQUITY

19%

MUTUAL FUNDS

17%

DEBT

2%

ANY OTHER62%

INVESTMENT INSTRUMENTS

From this graph we can see that

there are 46 people who have

investment & on the other hand

4 people dont have any

investment. From this study wecome to know that the ratio of

investors is very high then the

people who dont have any

investment.

From the above graph it is very clear that No. of investors in Equity is 9, in Mutual Fund 8, in Debt 1 and

in any other instruments like FDs, Gold and insurance 30.

Among 50 people only 8 people have invested in mutual funds.


31/47

31

III. Which instrument is best to invest?

14%

14%

4%60%

8%

BEST INVESTMENT INSTRUMENT

EQUITY MUTUAL FUND

DEBT ANY OTHER( FD, GOLD, INSURANCE)

CAN'T SAY

In the above pie chart we come to know about peoples opinions about best

investment instrument in respect of both risk as well as return. After going throughthe pie chart we can see that mostly people consider other options like FDs, Gold and

insurance as a best investment option. (In %)

Equity 14% Mutual Fund 14%

Debt 4% Any Other 60%

Cant Say 8%


32/47

32

IV. Do you know about mutual fund?

V. Why didnt you invest in mutual funds?

0

5

10

15

20

25

30

35

knowledge about mutual fund

yesno

lack of money

24%

not interested

47%

Lack of

knowledge

29%

Reasons of not investing in mutual funds

The above graph indicates that the no. of people who know about mutual funds is veryless than the people who dont know about mutual funds.


33/47

33

VI. Would you like to invest in mutual funds in future?

0

5

10

15

20

25

30

35

interested in mutual funds in future

yes

no

From the above graph we come to know that there are several reasons of not

investing in mutual funds but the major reason is lack of interested because they are

interested in other options like FDs and LIC.

The above graph indicates that people who are willing to invest in mutual funds

in future are more than others.


34/47

34

C. Having Mutual Fund:-

I. Which facility are you using in mutual fund?

II. How do you invest?

0

2

4

6

8

10

12

14

Mode of Investment

SIP

LUMPSUM

Direct

Investmen

t

Through

CA

11%

Through

Certified

Financial

Advisor

17%

How to invest

The above graph shows that among those people who have mutual funds in there

investment portfolio, most of them prefer SIP.


35/47

35

III. Do you agree that there is low risk in mutual funds?

0

5

10

15

20

mutual funds bear low risk

yes

no

Mostly people used to invest directly without help of CA and other

Financial Advisors.

From the above graph it is very clear that mostly people consider mutual funds as a

instrument of low risk.


36/47

36

IV. Have you heard about Karvy?

IV. How do you rank the services provided by Karvy?

0

5

10

15

20

25

30

Know about Karvy

yes

no

0

1

2

3

4

5

6

7

8

9

ranking of services provided by Karvy

poor

average

good

best

Above graph indicates that Karvy is not so popular among common people. So it must

work on marketing especially on advertisement.


37/47

37

CONCLUSION

The performance of mutual funds in India in the initial phase was not even closer to

satisfactory level. People rarely understood, and of course investing was out of question. But

yes, some 24 million shareholders were accustomed with guaranteed high returns by the

beginning of liberalization of the industry in 1992. This good record of UTI became

marketing tool for new entrants. The expectations of investors touched the sky in profitability

factor. However, people were miles away from the preparedness of risks factor after the

liberalization.

The annual composite rate of growth is expected 13.4% during the rest of the decades. In the

last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by

year 2012, mutual fund assets will be double.

The government is also helping in boosting mutual fund industry. Government is

emphasizing a lot on infrastructure development and social spending and yet targeting a

lower fiscal deficit. FIIs continued to be positive on emerging markets in general and the

Indian markets in particular. FIIs buying have considerable portion in mutual funds buying.

Key Points:

Almost 100% growth in the last 6 years.(excepting 2008)

saving rate is over 30%, highest in the world. Only channel zing these savings in

mutual funds sector is required.


38/47

38

We have some 90 mutual funds which are much less than US having

more than 800. There is a big scope for expansion.

and 'C' class cities are growing rapidly. Today most of the mutual funds are

concentrating on the 'A' class cities. Soon they will find scope

in the growing cities.

SEBI allowing the MFs to launch commodity mutual funds.

This year budget has increased the limit of investment in overseas

market by mutual funds to 33-35%.

During last financial year investment habit of India has increased by

25 % and it is expected to grow by 30 % this year.

RECOMMENDATIONS

ABOUT MUTUAL FUND INDUSTRY:-

Studying the mutual fund industry I came to know that there are more then 700 types of funds

available in the market. What I see that most of the fund managers who are investing in

equity market are putting their funds into large cap funds which is of course more secure but

it is giving less return to the investors. i thought of preparing my own portfolio by investing

25 percent in money market and the rest of the 75 percent in mid cap equity To provide

investors with opportunities for long term growth in capital along with the liquidity of an

open ended scheme by investing predominantly in a well diversified basket of equity stocks

of companies and in debt and money market instruments..


39/47

39

ABOUT KARVY STOCK BROKING LTD.:-

I have worked with KARVY STOCK BROKING LTD. For 6 weeks. This was a good

experience to work with such a dedicated team, who continuously work for one common

goal. But when I went to market survey, I found that KARVY is not so popular in common

people. Only 40% people whom I met know about KARVY. We all know that popularity

among common people is also very important for getting success. Sometimes I found that the

work space is also not as per demand. So many customers visit KARVY for getting different

services provided by KARVY STOCK BROKING LTD. Like PAN CARD, STOCK

TRADING, MUTUAL FUNDS, TDS RETURN and other services. So after going through

my study, my suggestions to KARVY are following:

They must work in marketing area. Especially they give attention to advertisement.It will help them in enhancing business.

There are only two branches in Gurgaon. As we know Gurgaon is a big city, so as Ifelt customers feel uncomfortable in less space. It is also terrible for employees also.

So Management should think about the work space also.


40/47

40

MY LEARNING FROM PROJECT

I have learnt many things which I might not be able to learn under Class room training like

looking at the stock market terminal and analyzing the stocks and thereby deducing about

their performance and thus designing the portfolio on the basis of their performances. I want

to share some of experience or learning with you.

First and the most important I learnt about Mutual Fund Industry. Before this project Ididnt have much knowledge about Mutual funds. But now I have good knowledge

about Mutual Funds.

I learnt about marketing elements also. How the companies, banks and brokerage

houses market their products in front of customer in presence of competitors

products.

I learnt about mutual funds as well as other products like insurance, DMAT account,IPO, some of banking product and transactions and some financial services offered by

KARVY STOCK BROKING LTD.

I also learnt about the risk factor calculation of the mutual funds, how the variousbroking firms calculate the risk factors of various mutual funds.


41/47

41

LIMITATIONS OF THE STUDY

As it was a big project so I have faced some problems also at the time of market survey and

study the mutual funds. These problems/limitations are following:

Project is based on Secondary Data also so sometimes it became difficult forme to get data and analyze them.

Time Constraint. As we know mutual fund is a huge subject to study so it was reallydifficult to study the whole in 6 weeks time period.

Lack of resources. Sometimes the behavior of employees at karvy was not supportive.


42/47

42

WEBLIOGRAPHY

www.investmart.com www.icicidirect.com www.amfiindia.com www.nseindia.com www.mutualfundsindia.com www.bseindia.com www.capitalmarket.com www.equitymaster.com www.investopedia.com www.valuenotes.com www.karvyonline.com www.numa.com www.involatility.com www.pmpublishing.com

BIBILOGRAPHY

Economics times. Fischer and Jordan, Securities Analysis and Portfolio Management. John C. Hull , Options, Features & Derivatives, , Published by Pearson Education

Co, Sixth Edition.
http://www.investmart.com/http://www.investmart.com/http://www.icicidirect.com/http://www.icicidirect.com/http://www.amfiindia.com/http://www.amfiindia.com/http://www.nseindia.com/http://www.nseindia.com/http://www.mutualfundsindia.com/http://www.mutualfundsindia.com/http://www.bseindia.com/http://www.bseindia.com/http://www.capitalmarket.com/http://www.capitalmarket.com/http://www.equitymaster.com/http://www.equitymaster.com/http://www.investopedia.com/http://www.investopedia.com/http://www.valuenotes.com/http://www.valuenotes.com/http://www.karvyonline.com/http://www.karvyonline.com/http://www.numa.com/http://www.numa.com/http://www.involatility.com/http://www.involatility.com/http://www.pmpublishing.com/http://www.pmpublishing.com/http://www.pmpublishing.com/http://www.involatility.com/http://www.numa.com/http://www.karvyonline.com/http://www.valuenotes.com/http://www.investopedia.com/http://www.equitymaster.com/http://www.capitalmarket.com/http://www.bseindia.com/http://www.mutualfundsindia.com/http://www.nseindia.com/http://www.amfiindia.com/http://www.icicidirect.com/http://www.investmart.com/


43/47

43

V.K. Bhalla,, Investment Management: Security analysis and PortfolioManagement.

N.D. Vohra, B.R. Bagri, Futures & option, Published by Tata McGraw Hill. Magazine AAG by HDFC Bank, April issue. Business world


44/47

44

SAMLE QUESTIONNAIRE

(A)

Que.1 Do you have any investment?

Ans. Yes No

Que.2 In which instrument have you invested?

Ans. Equity Mutual funds

Debt Any Other

Que.3 Which instrument is best as per your opinion among the following?

Equity Mutual Funds

Debts Any Other

Que.4 What is your Annual Income?

Ans. 50,000 to 1, 00,000 1, 00,000 to 5, 00,000

5, 00,000 to 10, 00,000 10, 00,000 to above


45/47

45

Note: - If you dont have mutual funds than fill part B otherwise fill part C

(B)

Que.1 Do you know about mutual funds?

Ans. Yes No

Que.2 Why didnt you invest in mutual funds?

Ans. ___________________________________________________

Que. 3 Would you like to invest in mutual funds in future?

Ans. Yes No

(C)

Que. 1 Which facility are you using in your mutual funds?

Ans. Lum sum SIP

Que.2 How do you invest?

Ans. Direct investment Through CA

Through certified financial advisor

Que.3 Do you agree that there is low risk in mutual funds?


46/47

46

Ans. Yes NO

(D)

Que.1 Have you heard about Karvy?

Ans. Yes No

Que.2 How do you rank the services provided by Karvy?

Ans. Poor Average Good

Best Excellent

Your valuable suggestion about Karvy (if any):

______________________________________________________________________

______________________________________________________________________

(E) Personal Information:

1. Name: ___________________________________2. Age: ___________________________________3. Occupation: ___________________________________


47/47

4. Organization Name: ___________________________________5. Cont. No.: ___________________________________6. Email Id(if any): ___________________________________7. Signature: ___________________________________

Documents

Working of Mutual Funds in India