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A SUMMER TRAINING PROJECT REPORT
on
PREFERENCE OF THE FINANCIAL ADVISORS OF KARVY TOWARDS MUTUAL FUND
In Allahabad
For the partial fulfillment of the degree of
BACHELOR OF BUSINESS ADMINISTRATION (HONS.)
SESSION 2013-2017
Advisor: Submitted by:
Dr. Enid Masih Mohd. Danish
Associate Professor I.d. No. 13BBAH021
JSBS(SHIATS)
Sam Higginbottom Institute of Agriculture, Technology & Sciences
(Formerly Allahabad agriculture Institute)
(Deemed To Be University)
Allahabad-211007, India
Established: 1910
INDEX
Chapters Page No.
Declaration 1
Preface 2
Acknowledgement 3
A) Part I - Profile of the company:
1. Company profile 4
2. Karvy Group 6
3. Board of Directors 10
4. Mission & Vision of Karvy 11
5. SWOT Analysis 12
6. Karvy values 15
7. Karvy Services: An Overview 16
8. Marketing Strategy 23
9. Achievements 26
10. History of Mutual Funds 27
11. Literature Review 29
12. Competitors Details 31
13. Mutual Fund 37
14. Mutual Fund Cycle 40
B) Part II - Study of Micro Research Problem:
1. Objectives and Scope of Study 45
2. Research Methodology 46
3. Research Analysis and Interpretation 48
4. Findings 57
5. Limitations 58
6. Conclusion 59
7. Recommendations 60
Glossary 61
References 62
DECLARATION
I hereby declare that this Summer Training Project Report entitled “PREFERENCE OF THE
FINANCIAL ADVISORS OF KARVY TOWARDS MUTUAL FUND” is being submitted
by me to Sam Higginbottom Institute of Agriculture, Technology & Sciences, Allahabad and is a
bonafide work undertaken by me and it is not submitted to any other university or institution for
the award of any degree/diploma/certificate.
Place: Allahabad Mohd. Danish
Date: 24/09/16 13BBAH021
PREFACE
As a student of BBA(H) one of the most reputed professional courses ,I have to undergo for the
summer training project in the starting of seventh semester .The attractive feature of the BBA(H)
degree is that along with theory we also get exposure of the practical environment.
The topic for summer training project is entitled as “PREFERENCE OF THE FINANCIAL
ADVISORS OF KARVY TOWARDS MUTUAL FUND”.
Place: Allahabad Mohd. Danish
Date: 24/09/16 13BBAH021
ACKNOWLEDGEMENT
I am really happy and excited in submitting this summer training project report before you. I
express my gratitude towards KARVY Stock Broking Ltd., Allahabad, for giving me an
opportunity to work as a trainee.
I am highly indebted to Mr. Varun Pandey, Product Head (Distribution), Karvy Stock Broking
Ltd., Allahabad who provided me the necessary information and valuable suggestions and
comments on bringing out this report in the best possible way. I am grateful to Mr. Pradeep
Tripathy, Branch coordinator, and Mr. Ritesh and all of the members of Karvy Stock Broking
Ltd., Civil Lines branch, who helped me in the successful completion of this work.
I would also like to thank my Advisor Dr. Enid Masih and my SAC members Dr. Reena Mehta
and Mr. Shoaib Siddiqui in the accomplishment of my project.
Last but not the least, I extend my sincere gratitude to all those teachers and people who
provided me information regarding Mutual Fund which helped me a lot in doing this study.
Place: Allahabad Mohd. Danish
Date: 24/09/16 13BBAH021
INTRODUCTION
COMPANY PROFILE
Karvy Consultants Limited was established in 1982 at Hyderabad. It was established by a group
of Hyderabad-based practicing Chartered Accountants. At initial stage it was very small in size.
It was started with a capital of Rs. 1,50,000.
In starting it was only offering auditing and taxation services. Later, it acts into the Registrar and
Share transfer activities and subsequently into financial services and other services like Financial
Product Distribution, Investment Advisory Services, Demat Services, Corporate Finance,
Insurance etc.
All along, Karvy’s strong work ethics and professional background leveraged with Information
Technology enabled it to deliver quality to the individual. A decade of commitment, professional
integrity and vision helped Karvy achieving a leadership position in its field when it handled
largest number of corporate and retail that proved to be a sound business synergy.
Today, Karvy has access to millions of Indian shareholders, besides companies, banks, financial
institutions and regulatory agencies. Over the past one and half decades, Karvy has evolved as a
veritable link between industry, finance and people.
In January 1998, Karvy became first Depository Participant in Andhra Pradesh. An ISO 9002
Company, Karvy’s commitment to quality and retail reach has made it an Integrated Financial
Services Company.
Today, company has 230 branch offices in 164 cities all over the India. The company adds 5 new
offices every month to the company’s ever growing national network in every nook and corner
of the country. The company service over 16 million individual investors, 180 corporate and
handle corporate disbursements that exceed Rs.2500 Crores.
WHERE KARVY STANDS IN THE MARKET?
KARVY is a legendary name in financial services, Karvy’s credit is defined by its mission to
succeed, passion for professionalism, excellent work ethics and customer centric values.
Today Karvy is well known as a premier financial services enterprise, offering a broad spectrum
of customized services to its clients, both corporate and retail. Services that Karvy constantly
upgrade and improve are because of company’s skill in leveraging technology. Being one of the
most techno-savvy organizations around helps company to deliver even more cost effective
financial solutions in the shortest possible time.
What bears ample testimony to Karvy’s success is the faith reposed in company by valued
investors and customers, all across the country. Indeed, with Karvy’s wide network touching
every corner of the country, even the most remote investor can easily access Karvy’s services
and benefit from company’s expert advice.
KARVY GROUP
a) Karvy Consultants Limited
b) Karvy Investor Services Limited
c) Karvy Stock broking Limited
d) Karvy Computer Shares Pvt. Ltd.
e) Karvy Realty (India) Pvt Ltd
f) Karvy Globle services Ltd
g) Karvy Database management services
h) Karvy Comtrade Ltd
a) Karvy Consultants Limited
As the flagship company of the KARVY Group, KARVY Consultants Limited has always
remained at the helm of organizational affairs, pioneering business policies, work ethic and
channels of progress. Having emerged as a leader in the registry business, the first of the
businesses that we ventured into, we have now transferred this business into a joint venture with
Computershare Limited of Australia, the world’s largest registrar. With the advent of
depositories in the Indian capital market and the relationships that we have created in the registry
business, we believe that we were best positioned to venture into this activity as a Depository
Participant. We were one of the early entrants registered as Depository Participant with NSDL
(National Securities Depository Limited), the first Depository in the country and then with CDSL
(Central Depository Services Limited). Today, we service over seven lakh customer accounts in
this business spread across over 540 cities/towns in India and are ranked amongst the largest
Depository Participants in the country. With a growing secondary market presence, we have
transferred this business to KARVY Stock Broking Limited (KSBL), our associate and a
member of NSE, BSE and HSE.
b) Karvy Stock Broking Limited
KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows freely
towards attaining diverse goals of the customer through varied services. It creates a plethora of
opportunities for the customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping
the customer create waves in his portfolio and empowering the investor completely is the
ultimate goal. KARVY Stock Broking Limited is a member of:
a) National Stock Exchange (NSE)
b) Bombay Stock Exchange (BSE)
c) Hyderabad Stock Exchange (HSE)
c) Karvy Investor Services Limited
Karvy Investor Services Limited Deepening of the Financial Markets and an ever-increasing
sophistication in corporate transactions, has made the role of Investment Bankers indispensable
to organizations seeking professional expertise and counselling, in raising financial resources
through capital market apart from Capital and Corporate Restructuring, Mergers & Acquisitions,
Project Advisory and the entire gamut of Financial Market activities.
Karvy Investor Services Limited (‘KISL’), a SEBI registered Merchant Banker has emerged as a
leading Investment Banking entity in the country with over a decade of experience. KISL has
built its reputation by capitalizing on its qualified professionals, who have successfully executed
a large number of complex and unique transactions.
Our quality professional team and our work-oriented dedication have propelled us to offer value-
added corporate financial services and act as a professional navigator for long term growth of our
clients, who include leading corporates, State Governments, Foreign Institutional Investors,
public and private sector companies and banks, in Indian and global markets.
We have also emerged as a trailblazer in the arena of relationships, both at the customer and
trade levels because of our unshakable integrity, seamless service and innovative solutions that
are tuned to meet varied needs. Our team of committed industry specialists, having extensive
experience in capital markets, further nurtures this relationship.
Credentials
a) Emerging as a leading Investment Banker with a strong support from its Group entities in
Research, Stock Broking, Institutional Sales and Retail Distribution.
b) Strong team of more than 25 qualified professionals operating from six cities; Hyderabad,
Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two overseas offices at New
York (USA) and Dubai.
c) One of the largest retail distribution networks with over 584 branches in over 389
cities/towns.
d) Excellent Institutional Sales D
d) Karvy Computer Shares Pvt. Ltd.
Karvy Computershare Private Limited is a joint venture between Computershare, Australia and
Karvy Consultants Limited, India in the registry management services industry.
Computershare, Australia is the world’s largest and only global share registry providing financial
market services and technology to the global securities industry.
e) Karvy Realty (India) pvt ltd
Karvy Realty (India) Limited (KRIL) is promoted by the Karvy Group, India’s largest financial
services group. The group carries forward its legacy of trust and excellence in investor and
customer services delivered with passion and the highest level of quality that align with global
standards.
Karvy Realty (India) Limited is engaged in the business of real estate and property services
offering:
a) Buying/ selling/ renting of properties
b) Identifying valuable investments opportunities in the real estate sector
c) Facilitating financial support for real estate and investments in properties
d) Real estate portfolio advisory services.
KRIL is your personal real estate advisor guiding and hand holding you through real estate
transactions and offering valuable investment opportunities.
Building on the KARVY brand as a leading industry benchmark for world class customer
servicing and quality standards, KRIL brings to investors a reputation of reliability,
dependability and honesty. Our understanding of the needs and preferences of our clients and our
teams of qualified realty professionals help us to establish fruitful relationships with buyers and
sellers of properties alike.
A single stop shop for realty services offering:
a) Transacting Options: Choose to buy, sell or rent properties (residential and commercial)
b) Investing Options: Give your investments a good opportunity with properties marketed
by KRIL.
c) Financing Options: Get unmatched deals for financing your investment
d) Research Options: We undertake valuation and feasibility studies, area analysis and
customized analysis on behalf of clients.
KRIL has ongoing relations with builders and developers across the country which will help you
place your investments in the most genuine properties for a good value appreciation at the right
place and at the right price.
KRIL is committed to the guiding principles of quality, timely service delivery, fair pricing,
transparency and integrity.
f) Karvy Globle services Ltd
Karvy Globle is pioneering the creative business solutions approach to transform information
into insight aimed to address the business, marketing and operational intelligence needs of global
companies
g) Karvy Database management services
KDMSL is emerging as a leading service provider in the areas of E-governance processing,
insurance back office processing, record keeping, back office for BFSI clientele and is in pursuit
to establish credentials in the areas of Telecom processing, Data management requirements of
large corporates. KDMSL is striving to achieve leadership position by tapping the Indian retail
sector boom, through a combination of our extensive branch network and proprietary IT
backbone. Needless to say, KDMSL is run as an independent outfit with seasoned professionals
on board, who have decades of expertise in the industry. KDMSL is a fully owned subsidiary of
Karvy Stock Broking Limited (KSBL), incorporated in April 2008 and is head quartered at
Hyderabad.
h) Karvy Comtrade Ltd
Commodities market, contrary to the beliefs of many people, has been in existence in India
through the ages. However the recent attempt by the Government to permit Multi-commodity
National levels exchanges has indeed given it, a shot in the arm. As a result two exchanges Multi
Commodity Exchange (MCX) and National Commodity and derivatives Exchange (NCDEX)
have come into being. These exchanges, by virtue of their high profile promoters and
stakeholders, bundle in themselves, online trading facilities, robust surveillance measures and a
hassle-free settlement system. The futures contracts available on a wide spectrum of
commodities like Gold, Silver, Cotton, Steel, Soya oil, Soya beans, Wheat, Sugar, Chana etc.,
provide excellent opportunities for hedging the risks of the farmers, importers, exporters, traders
and large scale consumers. They also make open an avenue for quality investments in precious
metals. The commodities market, as it is not affected by the movements of the stock market or
debt market provides tremendous opportunities for better diversification of risk. Realizing this
fact, even mutual funds are contemplating of entering into this market.
Karvy Comtrade Limited is another venture of the prestigious Karvy group. With our well
established presence in the multifarious facets of the modern Financial services industry from
stock broking to registry services, it is indeed a pleasure for us to make foray into the
commodities derivatives market which opens yet another door for us to deliver our service to our
beloved customers and the investor public at large.
With the high quality infrastructure already in place and a committed Government providing
continuous impetus, it is the responsibility of us, the intermediaries to deliver these benefits at
the door-steps of our esteemed customers. With our expertise in financial services, existence
across the lengths and breadths of the country and an enviable technological edge, we are all set
to bring to you, the pleasure of investing in this burgeoning market, which can touch upon the
lives of a vast majority of the population from the farmer to the corporate alike. We are confident
that the commodity futures can be a good value addition to your portfolio.The company provides
investment, advisory and brokerage services in Indian Commodities Markets. And most
importantly, we offer a wide reach through our branch network of over 225 branches located
across 180 cities.
Board of Directors
1) Parthasarathy C
2) Yugandhar M
3) Ramakrishna M S
4) Prasad V Potluri
5) Robert Gibson
6) Sanjay Kumar Dhir
7) R Shyamsunder
Karvy Investor Services Limited
1) Parthasarathy C
2) Yugandhar M
3) Ramakrishna M S
Karvy Securities Limited
1) Parthasarathy C
2) Yugandhar M
3) Ramakrishna M S
4) Ajay Kumar K
5) William Samuel
Mission Statement of ‘Karvy’
An organization exists to accomplish something or achieve something. The mission statement
indicates what an organization wants to achieve. The mission statement may be changed
periodically to take advantage of new opportunities or respond to new market conditions.
Karvy’s mission statement is “To Bring Industry, Finance and People together.”
Karvy is work as intermediary between industry and people. Karvy work as investment advisor
and helps people to invest their money same way Karvy helps industry in achieving finance from
people by issuing shares, debentures, bonds, mutual funds, fixed deposits etc.
Company’s mission statement is clear and thoughtful which guide geographically dispersed
employees to work independently yet collectively towards achieving the organization’s goals.
Vision of Karvy
Company’s vision is crystal clear and mind frame very directed. “To be pioneering financial
services company. And continue to grow at a healthy pace, year after year, decade after decade.”
Company’s foray into IT-enabled services and internet business has provided an opportunity to
explore new frontiers and business solutions. To build a corporate that sets benchmarks for
others to follow.
SWOT ANALYSIS OF KARVY
Strengths:
a) Employees are highly empowered.
b) Strong Communication Network.
c) Good co-operation between employees.
d) Number 1 Registrar and Transfer agent in India.
e) Number 1 dealer of Investment Products in India.
Weaknesses:
a) High Employee Turnover.
Opportunity:
a) Growth rate of mutual fund industry is 40 to 50% during last year and it expected
that this rate will be maintained in future also.
b) Marketing at rural and semi-urban areas.
Threats:
a) Increasing number of local players.
b) Past image of Mutual Fund.
Behind the Picture: What Customers matter for KARVY?
The underlying picture forming answer for above question is given below.
Every year with this picture keeping in mind ‘Karvy accelerate with Recovery, Revival and
Reappearance.’
Karvy has started 2004 on a strong note with the realization to signal some of the challenges it
faced previous year. In a competitive market and a branded business, Karvy need to carefully
manage itself to avoid down trading or brand shifts by consumers.
For Karvy, Allahabad branch was truly exhilarating because of:
a) Successful implementation of a carefully crafted strategy.
b) Excellence in execution.
c) Immense learning enabling to set up a launch pad for revitalizing itself.
Some competitive advantages are long lasting. These are intangible, difficult to replicate and
thus more sustainable. Karvy has focused on some of these to gain competitive advantages.
There are:
a) Winning culture and a desire to excel in everything Karvy do.
b) Strong meaningful relationships with Customers along with Strategic Partners in which
Karvy operate and above all, its own staff.
Market
Power
Brand
Preference
Customer
Value
RELATIONSHIPS
OUR COMPETITIVE ADVANTAGE
c) Karvy value and carefully nurture relationships with customers. Karvy truly believe that
more than technological prowess and business process innovations, it is the ‘focus on
relationships’ which has been the corner stone of satisfying and successful presence in
India over many years.
d) This has been possible with deep insight of consumer behavior as well as market demand
drivers, understanding of the arena where to operate and quality execution – all thanks to
a ‘greater team’ that makes this happen.
e) Karvy’s customers consider themselves part of Karvy family and share their experiences
and dreams with other customers and thus Karvy becomes successful not only in relating
customers but also gains new customers from satisfied prevailing customers.
f) Karvy want to create a strong emotional bond with new customers promoted by
prevailing customers.
Karvy Values:
1) Integrity
2) Responsibility
3) Reliability
4) Unity
5) Understanding
6) Excellence
7) Confidentiality
Karvy has adequate internal control systems and procedures commensurate with the size nature
of its business. These system and procedures provide reasonable assurance of maintenance of
proper accounting records, reliability of financial information, protection of resources and
safeguarding of assets against unauthorized use.
KARVY SERVICES – AN OVERVIEW
1) Stock broking
2) Demat services
3) Investment product distribution
4) Investment advisory services
5) Corporate finance & Merchant banking
6) Insurance
7) Mutual fund services
8) IT enabled services
9) Registrars & Transfer agents
10) Loans
1) Stock Broking:
KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by SEBI
[Stock-brokers and Sub-brokers] Regulations, 1992. The stockbroker is a member of the stock
exchange. Stockbrokers are the intermediaries who are allowed to trade in securities on the
exchange of which they are members. They buy and sell on their own behalf as well as on behalf
of their clients.
Stockbrokers expand their business by engaging sub-broker. Sub-brokers mean “any person not
being a member of a stock exchange who acts on behalf of a stock broker as an agent or
otherwise for assisting the investors in buying, selling or dealing in securities through such
stock-brokers.”
2) Demat Services:
Karvy is a depository participant with the National Securities Depository Limited (NSDL) for
trading and settlement of dematerialized shares.
Depository Participants (DPs) are described as an agent of the depository. They are
intermediaries between the depository and the investors. The relationship between the DPs and
the depository is governed by an agreement made between the two under Depositories Act.
A DP can offer depository-related services only after obtaining a certificate of registration from
SEBI.
Since Karvy is also in the broking business, investors who use Karvy’s depository services get a
dual benefit. They can use Karvy’s brokerage services to execute transactions and Karvy’s
depository services to settle them.
3) Investment Products Distribution:
Company is also concern with the distribution of investment products like
a) Fixed Deposit
b) Bonds
c) IPO
d) Fixed Deposit:
KARVY is dealer of 34 fixed deposits of various types which includes fixed deposits of Public
Sector, Non-Banking Finance Companies, Housing Finance Companies and Manufacturing
Companies.
Company is dealer of following Fixed Deposits
PUBLIC SECTOR
Sl. No. Company Name
1) HUDCO
2) Sardar Sarovar Narmada Nigam Ltd.
3) Tamilnadu Power Finance Corporation Ltd.
4) NTPC
NON BANKING FINANCE COMPANIES
Sl. No. Company Name
1) Ashok Leyland Finance Ltd.
2) Bajaj Auto Finance Ltd.
3) Birla Home Finance Ltd.
4) Cholamandalam Investment & Finance Co. Ltd.
5) Escorts Finance Ltd.
6) First Leasing Company of India Ltd.
7) IDBI Suvidha
8) Nicco Uco Alliance Credit Ltd.
HOUSING FINANCE COMPANIES
Sl. No. Company Name
1) Can Fin Homes Ltd.
2) Dewan Housing Finance Corporation Ltd.
3) Gruh Finance Ltd.
4) HDFC Ltd.
5) PNB Housing Finance Ltd.
6) Sundaram Home Finance Ltd.
MANUFACTURING COMPANIES
Sl. No. Company Name
1) A P Paper Mills Ltd.
2) Amtek India Ltd.
3) Atul Ltd.
4) Ballarpur Industries Ltd.
5) Chambal Fertilizers & Chemicals Ltd.
6) Escort Ltd.
7) Greaves Ltd.
8) Gujarat Alkalies & Chemicals Ltd.
9) Indian Express
10) Ind-Swift Ltd.
11) JK Industries Ltd.
12) Jindal Steel & Power Ltd.
13) Sound Craft Industries Ltd.
14) Supreme Industries Ltd.
15) Zuari Industries Ltd.
(b). Bonds:
Karvy is dealer of following bonds
a) RBI Saving Bonds
b) NHB
c) REC
(c). IPO:
Company is also provides services related to Initial Public Offer of company. Company provides
stationary at the time of IPO as well as provides information to investors regarding IPO and
solves their queries.
4) Investment Advisory Services:
This division provides portfolio management services to high net-worth individuals and
corporate. The expertise of Karvy in research and stock broking gives it the right perspective to
provide investment advisory services. Company provides advisory services to its clients.
Financial goal of each individual investor varies according to his dream, ambition and family
size and future financial planning for the children & old age pension for self and wife so does the
pathway to achieve it. Karvy apply the principles of Financial Planning as both science & art, it
understands the time horizon, risk bearing capacity and investment goals of investors keeping in
mind their psyche and financial needs. Based upon this Karvy helps individual investors to plan
their entire life up to retirement, Taxes, Insurance needs and other important personal financial
goals. It designs portfolio for investor to invest their saving in various financial products like
shares, bonds, debentures, mutual funds, fixed deposits, insurance etc., Company design
portfolio by considering following factors.
a) Investor’s requirement of getting money back,
b) Investor’s willingness to take risk,
c) Investor’s tax planning etc.
5) Corporate finance & Merchant banking:
Corporate finance is the financial activity of corporation. It deals with the firm's operations with
regard to investing and financing. It concerned with how firms raise capital and the
consequences of alternative methods of raising capital. Firm’s capital can be raised by raising
loans, issuing shares, and acquiring or merging with other businesses by public or private
companies.
Merchant banking is a financial intermediation that matches entities that need capital and those
that have capital. Hence they facilitate the flow of capital in the market.
Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy offers the full
spectrum of Merchant Banking Services, beginning from identifying the best time for an issue to
final stage of marketing it, to harvest unparalleled success.
As a merchant banker Karvy offer following services:
a) Issue management
b) Instrument designing
c) Pricing of the issue
d) Registration process for the issue of shares
e) Marketing efforts
f) Final allotment to investors
g) Listing details on stock exchanges
6) Insurance:
Karvy is also dealer of many private life insurance companies. At Jamnagar branch, company is
associated with dealing of following companies.
a) ICICI Prudential Life Insurance
b) HDFC Life Insurance
c) TATA AIG Life Insurance
7) Mutual Fund Services:
Since its inception in 1982, Karvy has demonstrated a dedication coupled with dynamism that
has inspired trust from various segments – corporate, government bodies and individuals. Karvy
has since been performing a pivotal role as the intermediary – the interface – between these
players.
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. Karvy, today,
service nearly 80% 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 a 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 home the benefits of technology to investors,
distributors, and the mutual funds.
Going forward, Karvy shall strive to create new products and services, which would address the
needs of the end customer. Company’s single minded focus in delivering products for customers
has given it the distinguished position of being the preferred provider of financial services in the
country.
List of Mutual Fund Clients of KARVY:
1) Alliance Mutual Fund
2) Birla Mutual Fund
3) Bank of Baroda Mutual Fund
4) Can Bank Mutual Fund
5) Chola Mutual Fund
6) Deutsche Mutual Fund
7) DSP Merrill Lynch Mutual Fund
8) Franklin Templeton Investments
9) GIC Mutual Fund
10) HDFC Mutual Fund
11) HSBC Mutual Fund
12) IL & FS Mutual Fund
13) JM Mutual Fund
14) Kotak Mutual Fund
15) LIC Mutual Fund
16) Punjab National Bank Mutual Fund
17) Prudential ICICI Mutual Fund
18) Principal Mutual Fund
19) Reliance Mutual Fund
20) State Bank of India Mutual Fund
21) Standard Chartered Mutual Fund
22) Sundaram Mutual Fund
23) SUN F&C Mutual Fund
24) Tata Mutual Fund
8) Income Tax enabled services:
Karvy has been started this service since March, 2004. Karvy is work as TIN Facilitation Centre
it provides following IT enabled services.
a) Distribution of PAN Card.
b) Distribution of TAN Card.
c) Services related to e-TDS.
Karvy work as an intermediary between NSDL and IT payers. Karvy provides various form for
different IT enabled services and guide people to fill that forms. It also solves queries of the tax
payers. It also distributes PAN and TAN card to the tax payers.
9) Registrars & Transfer agents:
In 1985, Karvy entered the Registrar and Share Transfer Business to create a market niche in the
competitive field of financial services. In 1994-95, it reached a milestone when it processed 104
Public Issues constituting 46 per cent market share. Now in its second decade of existence,
Karvy is the leader in the industry: In an opinion poll conducted by an independent market
research agency - MARG, Karvy has been rated as India’s Most Admired Registrar on various
parameters: -
a) Overall Excellence.
b) Handling of Volumes
c) Timely Dispatch
d) Quality Management and Technological Up gradation.
A SEBI Category 1 Registrar, So far, Karvy has handled over 675 ISSUES as Registrars to
public issues processed over 52 million applications and is servicing over 16 million investors
from various locations spread over 205 clients.
10) Loan:
Karvy has recently started this service at selected branches of metro cities. This service has not
been started in Saurashtra-Kucch region. Karvy provides loans for following.Vehicle Loan
a) Home Loan
b) Personal Loan
MARKETING STRATEGY OF KARVY
1) Market Positioning:
Market positioning statements of Karvy are “At Karvy we give you single window service” and
“We also ensure your comfort”.
So, Karvy focus on the consumers who prefer almost all investment activities at same place by
providing number of various financial services. At Karvy a person can purchase or sell shares,
debentures etc. and at the same place also demat it. Karvy also provides other investment option
to the same person at same place like Mutual Fund, Insurance, Fixed Deposit, and Bonds etc. and
help the person in designing his portfolio. By this way Karvy provides comfort to its customers.
2) Target Market:
Karvy uses demographic segmentation strategy and segment people based on their occupation.
Karvy uses selective specialization strategy for market targeting. Target person for the Karvy
Stock Broking and Karvy Investment Service are persons who can work as sub-broker for the
companies.
3) Marketing channel System:
Karvy uses one level marketing channel for investment product distribution. Sub-brokers work
as intermediary between consumer and company. Company has both forward and backward flow
of activity through channel. The sub-brokers send filled forms, queries, amount of investment etc.
back to the company.
4) Training Channel Members:
Karvy provides training to the sub-brokers because they will be viewed as the company by the
investors. The executives of Karvy explain various new schemes of investment to the sub-
brokers with its objective, risk factors and expected return. Company also periodically arrange
seminar to guide sub-brokers.
5) Advertising and Promotion:
The objective of advertising of Karvy is to create awareness about services of Karvy among
investors and sub-brokers and increase sub-brokers of Karvy. Company doesn’t give
advertisement in media like TV, Newspapers, and Magazines etc. Karvy’s advertisement is made
indirectly by the companies associate with it. Karvy is R & T agent of around 700 companies.
They publish name, address and logo of Karvy on their annual report. Karvy also publish its
weekly Stock Market Newsletter ‘Karvy Bazaar Baatein’ and monthly magazine ‘The Finapolis’
to guide investors and sub-brokers about market.
HR POLICY OF KARVY
Karvy’s HR Department is located at Hyderabad.
1) Recruitment and Selection Policy:
The upper level members like zonal managers, regional managers, branch managers and senior
executives are recruited by publishing recruitment advertisement in leading national level
newspaper. The qualified applicant are then called for interview and selected.
The regional manager has authority to select lower level employee like peon, marketing
executives, accountant etc. by approval of zonal manager.
2) Training and Development:
Continuous training and upgrading technical, behavioral and managerial skills is a way of life in
Karvy. Karvy encourages employees to hone their skills regularly to enable them to face the
challenges of the changing requirements of customers that fit market up and down.
Training needs analysis is done on a regular basis and systematic methodologies are ensured that
skills and capabilities of all employees are constantly upgraded to enable them to perform in the
challenging work environment.
New employee has given training under experienced employee. The new employee work under
experience employee and observe his all activities. When company employs new technology or
there is any change in the working of company the training program is arranged.
3) Employee Motivation:
Karvy’s employees are highly empowered. They don’t have to report any person of the same
branch but they report upper level branch. I.e. Marketing executive of Jamnagar branch directly
reports Senior Marketing executive of Baroda zonal office.
If particular branch earn certain profit then Karvy gives them special incentives. E.g. last year
Karvy had arranged two days tour of Div. for their employees of Rajkot, Jamnagar, Junagadh
and Bhavnagar branch which was totally free of cost. This also helps in maintaining co-operation
between employees.
Quality Policy Of Karvy:
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.
Quality Objectives of Karvy
a) Build in-house processes that will ensure transparent and harmonious relationships with
its clients and investors to provide high quality of services.
b) Establish a partner relationship with its investor service agents and vendors that will help
in keeping up its commitments to the customers.
c) 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.
d) Continue to uphold the values of honesty & integrity and strive to establish unparalleled
standards in business ethics.
e) 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.
f) 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.
g) Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and
regulatory authorities) proud and satisfied.
ACHIEVEMENTS OF KARVY
1) Largest mobilizer of funds as per PRIME DATABASE
2) First ISO - 9002 Certified Registrar in India
3) A Category- I Merchant banker
4) A Category- I Registrar to Public Issues
5) Ranked as "The Most Admired Registrar” by MARG
6) Handled the largest- ever Public Issue - IDBI
7) Strategic tie-up with Jardine Fleming India Securities Ltd
8) Handled over 500 Public issues as Registrars
9) Handling the Reliance Account which accounts for nearly 10 million account holders
10) First Depository Participant from Andhra Pradesh
HISTORY OF MUTUAL FUND
Development of Mutual Funds in India
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can
be broadly divided into four distinct phases
FirstPhase-1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. 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
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
Crores of assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established
its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end
of 1993, the mutual fund industry had assets under management of Rs.47,004 Crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 Crores. The
Unit Trust of India with Rs.44,541 Crores of assets under management was way ahead of other
mutual funds.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 Crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
Unit Trust of India, 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.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 Crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 Crores under 421
schemes.
LITERATURE REVIEW
1) Cai(1996)evaluated the performance of Japanese open-type equity funds from 1981 to 1992.
For this purpose a sample of 800 open-type mutual funds run by 9 management companies was
taken. Two benchmarks (value-weighted single-index benchmark and three-factor benchmark)
were used in the analysis. This research used Jensen Measure, Positive Period Weighting (PPW)
Measure and Conditional Jensen Measure in order to evaluate the performance of these funds.
The results showed that value-weighted and equal-weighted portfolios of 800 mutual funds
underperform the single-index benchmark by approximately 7.0% and 6.0%. The results also
showed that most of the funds were inclined to invest more in large stocks.
2) Otten and Dennis(1999)analyzed the performance of European mutual funds from 1991
through December 1998. Study also investigated the performance of fund managers along with
the influence of fund characteristics on risk-adjusted performance. For this purpose a sample of
506 funds was taken and 4-factor model was used. The results indicated that the European
mutual funds especially small cap funds were able to add value and 4 out of 5 countries exhibit
significant outperformance at an aggregate level. The results also revealed positive relation
between risk-adjusted return and fund size and negative relation between risk-adjusted and funds’
expense ratio.
3) Redman(2000)analyzed the risk adjusted returns for five portfolios of international mutual
funds. The study was conducted for three periods: 1985-1994, 1985-1989, and 1990-1994. The
performance was measured by using Treynor (1965) Index Sharpe (1966)’s Index and Jensen’s
Alpha and comparison was made with the U. S. market. Results showed that under Sharpe
(1966)’s and Treynor (1965) indices the performance of portfolios of international mutual funds
was higher than the U. S. market from 1985-1994 and 1985-1989. On the other hand
performance of U.S equity portfolio and the market index was higher than global portfolios from
1990-1994.
4) Stehle & Olaf(2001)conducted a research to evaluate the open-ended mutual funds risk-
adjusted performance. Study used a data set that included all German funds sold to the public in
1972. The research analyzed covers the time period of 1973 to 1998. DAX, which included the
30 largest German stocks and DAX100, which included the 100 largest German stocks were
used as benchmarks for comparison. First of all researchers examined the rates of return of
individual funds with the help of Sharpe (1966) and Jensen measures and then applied the same
measures to evaluate the unweighted average rates of return of all funds. In case of the rates of
return of individual funds, results showed that the funds underperform the appropriate
benchmarks by approximately 1.5 % per year. On the other hand underperformance was reduced
by 40 % in case of unweighted average rates of return. Study also concluded that the large
German stock mutual funds, on the average, performed better than the small ones.
5) Noulas, John & John(2005)evaluated the risk adjusted performance of Greek equity funds
during the period 1997-2000. This study is based on weekly data for equity mutual funds and
includes 23 equity funds that existed for the whole period under consideration. Mutual funds
were ranked on the techniques used by Treynor (1965), Sharpe (1966) and Jensen. Results
showed positive returns of the stock market for the first three years and negative returns for the
fourth year. The results also indicated that the beta of all funds is smaller than 1 for four-year
period. The authors concluded that the equity funds have neither the same risk nor the same
return. The investor needs to know the long-term behavior of mutual funds in order to make the
right investment decision.
6) Leite & Cortez(2006)conducted a research to analyze the impact of using conditioning
information in evaluating the performance of mutual funds. For this purpose two different
samples of Portuguese-owned open end equity funds were built, over the period of June 2000 to
June 2004. The first sample contained surviving 24 funds (10 National funds and 14 European
Union funds) at the end of June 2004. While the second sample included all surviving and 20
non-surviving funds during the sample period. Both conditional and unconditional models were
used to evaluate the performance. The results of unconditional model indicated that the
performance of National funds was neutral while the performance of European Union funds was
negative. On the other hand conditional models suggested that conditional betas (but not alphas)
are time-varying and dependent on the dividend yield variable.
7) Boudreaux & Suzanne(2007)conducted a study to examine the risk adjusted returns of
international mutual funds for the period of 2000-2006. For this purpose a sample of ten
portfolios of international mutual fund was taken and risk-adjusted performance was calculated
by using Sharpe (1966)’s Index of Reward to Variability ratio. US market of mutual funds was
taken as the benchmark. The results showed that the performance of nine out of ten of the
international mutual fund was higher than the U.S. market. Those portfolios which contained
only U.S stock mutual funds underperform on a risk adjusted the funds that contained all
international mutual funds. The authors concluded that Investors may not fully take advantage of
possible portfolio risk reduction and higher returns if international mutual funds were excluded.
8) Arugaslan & Ajay(2008)examined the risk-adjusted performance of US-based international
equity funds from 1994-2003. The analysis was done for five-year period 1999-2003 and ten-
year period 1994-2003. For this a sample of 50 large US-based international equity funds was
taken and a new method of measurement Modigliani and Modigliani (M squared) was applied.
The performance was compared with both domestic and international benchmark indices. The
results showed that the risk has great impact on the attractiveness of Funds. Higher return funds
may loose attractiveness due to higher risk while the lower return funds may be attractive to
investors due to the lower risk.
9) Dietze, Oliver & Macro(2009)conducted a research to evaluate the risk-adjusted performance
of European investment grade corporate bond mutual funds. Sample of 19 investment-grade
corporate bond funds was used for the period of 5 years (July 2000 – June 2005). Funds were
evaluated on the basis of single-index model and several multi-index and asset-class-factor
models. Both maturity-based indices and rating based indices were used to account for the risk
and return characteristics of investment grade corporate bond funds.
COMPETITORS DETAILS
1) Bajaj Capital
It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument ‘Companies
Fixed Deposits’ and becomes the first company to raise Fixed Deposits. The objective of
company is to provide professional guidance to investors on where, when and how to invest and
to assist the corporate sector in its resource raising activities. Bajaj Capital became the first
company to set up ‘Investment Centers’ all over India for this purpose. Today, Bajaj Capital has
90 offices in over 40 important Indian Cities and has a team of around 500 employees
nationwide.
Services provided
a) Merchant banking
b) Buying and Selling of Money Market Investments
c) Distribution of financial products
d) Investment Advisory Service
e) Company fixed deposits
f) Bonds
g) Mutual funds
h) Life insurance
i) General insurance
j) Pension schemes
k) Post office schemes
l) Tax saving schemes
m) Insurance linked investment schemes
n) Initial public offerings
o) Housing loans
p) NRI schemes
q) Car insurance
Financial Planning
a) Investment planning
b) Retirement planning
c) Insurance planning
d) Children's future planning
e) Tax planning
f) Short-term cash flow planning
2) MCS Ltd.
It is established in 1985 in Delhi. It is one of the largest Data Processing House employing more
than 600 people.
MCS Ltd. has 8 branches all over India.
Volumes Handled
a) Share registry activities for over 100 corporate servicing over 10 million investors.
b) Mutual fund operations for 25 funds, servicing over 4.5 million investors.
c) Billing & settlement plan for Indian operations of IATA Geneva for 1.2 million tickets
per annum covering (26 airlines & over 1200 agents).
Services Offered:
a) Registrars and Transfer Agents
b) Registrars to IPO’s /Right Issues
c) Registrars to Open Offers
d) Registrars to Mutual Funds
e) Data Processing for Airlines
f) Print Shop Services
MCS is a major player in these activities in the Country with a market share of about 25%. MCS
today provides these services to over 140 Corporate and Mutual Funds for a total investor base of
15 million.
3) ICICI Securities Ltd.
ICICI Securities Limited (i-SEC) is a wholly owned investment-banking subsidiary of ICICI
Limited. ICICI is the only non-Japanese Asian financial institution to be listed on the New York
Stock Exchange (NYSE). ICICI Securities was formed on 22nd Feb. 1993, when ICICI's
Merchant Banking Division was spun off into a new company, ICICI Securities today is India's
leading Investment Bank and one of the most significant players in the Indian capital markets.
ICICI Brokerage Services Limited (IBSL) set up in March 1995, IBSL is a 100% subsidiary of i-
SEC. It commenced its securities brokerage activities in February 1996 and is registered with the
National Stock Exchange of India Limited and The Stock Exchange, Mumbai.
ICICI has started a website ICICIdirect.com which is the most comprehensive website, which
allows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other
financial products. ICICI has a large network of branches all over India.
Services offered:
a) Merchant Banking
b) Demat Service
c) Stock Broking
4) HDFC
HDFC is the leading financial company in India. IT has large network of branches all over India.
HDFC Securities which is fully subsidiary of HDFC provides demat service.
HDFC and its subsidiary provides following services.
a) Demat Service
b) Life Insurance
c) Banking Service
d) Housing Finance
e) Vehicle Finance
f) Education Loan
g) Personal Loan
h) Mutual Fund
5) Kotak Securities Ltd.
Kotak Securities needs no introduction as one of the largest stock broking houses in the country
and a leading distributor of primary market offerings. Kotak Securities limited is a joint venture
between Kotak Mahindra Bank and Goldman Sachs, the international investment banking and
brokerage firm.
Kotak Securities is a corporate member of both the BSE and the NSE. It is also a depository
participant with the National Securities Depository Limited (NSDL) for trading and settlement of
dematerialized shares.
Services offered:
a) Stock Broking
b) Financial Product Distribution
c) Demat Services
d) Investment Advisory Services
6) Motilal Oswal Securities Ltd.
Motilal Oswal Securities Ltd (MOSt) is one of the leading equity research and broking houses of
India. MOSt has a 20-member research team, which is engaged round the clock in analyzing the
Indian economy and corporate sectors to identify equity investment ideas. Asia Money Broker's
Poll 2002 has rated MOSt as one of the best Indian broking house, for research, for the second
time since 2000.
Motilal Oswal is member of NSDL and CDSIL for DP. It has wide network of branches. It has
158 branches all over India.
Services Offered:
a) Demat Services
b) Stock Broking
c) Investment Advisory Service
PRODUCT DETAILS
Mutual funds serve as a link between the saving people and the capital market in that they
mobilize saving from investors and bring them to borrowers in the capital markets. In short, it is
a common pool of money into which investors place their contribution that is to be invested in
accordance with a stated objective.
A mutual fund uses the money collected from the investors to buy those assets, which are
specially permitted by its stated investment objective. When an investor subscribes to a mutual
fund, he/she buys a part of asset or the pool of funds that are outstanding at that time.
A mutual fund is constituted as an investment company and an investor buys into the fund,
means he buys the share of the fund and is known as a unit holder. Since each unit holder is a
part of owner of a mutual fund, it is necessary to establish the value of his part. Since the unit
held by an investor evidences the ownership of the fund’s assets, the value of the total asset of
the fund when divided by the total number of units issued by the mutual fund gives us the value
of one unit. This is called as Net Asset Value (NAV).
STRUCTURE OF INDIAN MUTUAL FUNDS
Mutual fund industry is highly regulated by the government keeping in view of the protection of
investor’s interest as well as to maintain operational transparency.
In India SEBI Regulations Act, 1996, guides the formation and operation of Mutual Funds. A
Mutual Fund comprises of 4 separate entities.
1) Sponsor
2) Board of Trusties
3) Asset Management Company
4) Custodian and Depositories
5) Distributors
1) Sponsor:“Sponsor” is defined under SEBI regulation as any person who, acting alone or in
combination with another body corporate, establishes a mutual fund. The sponsor gets the fund
registered with SEBI. The sponsors form a trust and appoint a Board of Trustees.
a) The sponsor must contribute at least 40% of the net worth of the AMC.
b) The sponsor must posses a sound financial track record over 5 years prior to registration.
2) Board of Trustees:
a) Mutual funds are managed by Board of Trustees. Trust is created by a document
called the Trust Deed that is executed by fund sponsor in favour of trustees.
b) The trustees appoint the AMC and custodian with the prior approval of SEBI.
c) They also approve all the schemes floated by the AMC.
d) They have right to dismiss the AMC, with the approval of SEBI.
e) Half of the trustees should be independent persons. Neither the AMC, nor its
employees can act as trustee.
f) A trustee can not be appointed as a trustee of two or more mutual funds until and
unless he is an independent person or has permission from the Mutual Fund where he
is trustee.
g) Trustees can be removed only by prior approval of SEBI.
3) Asset Management Company:The role of an AMC is to act as the investment manager of the
Trust under the Board supervision and direction of the Trustees.
a) The AMC is required to be approved and registered with SEBI.
b) The AMC of a Mutual Fund must have a net worth of at least Rs. 10 Crore at all time.
c) The AMC can not act as a trustee of any other Mutual Fund.
d) They will float schemes only after obtaining the prior approval of the Trustees and
SEBI.
e) The director of AMC should be a person of reputed of high standing and at least have
five years experience in relevant field.
f) AMC can be terminated with 75% unit holders or majority of trustees.
4) Custodian and Depositories:As per SEBI Regulations Mutual Funds shall have a custodian
who is not any way associated with the AMC. It carry outs the activity of safe keeping the
securities or participating, in any clearing system. The custodian should be independent from
sponsors and AMC and should have a sound track record and adequate relevant experience.
As Indian capital markets are moving away from having physical certificates to ownership of
these securities in “dematerialized” form with Depository. Mutual Fund’s “dematerialized”
securities are hold by depository participant.
5) Distributors:For a fund to sell units across a wide retail base of individual investors, an
established network of distribution agents is essential. AMCs usually appoint Distributors or
Brokers, who sell units on behalf of the fund. A broker usually acts on behalf of several mutual
funds simultaneously and may have several sub-brokers under him for the purpose of distribution
of units.
MUTUAL FUND – A GLOBALLY PROVEN INVESTMENT
Worldwide, the mutual fund has a long and successful history. The popularity of mutual fund has
increased manifold. In developed financial market, like US mutual funds have almost overtaken
bank deposits and total assets of over US $ 3 trillion.
In India, Mutual Fund industry started with the setting up of UTI in 1964. Public sector banks
and financial institution began to establish Mutual Funds in 1987. The private sector and foreign
institutions were allowed to set up Mutual Fund in 1993.
WHAT IS A MUTUAL FUND?
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized is shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost.
Critical View About Mutual Fund
Advantage
1) Portfolio Diversification:
Each investor in a fund is a part owner of all the funds assets, thus enabling investor to hold a
diversified investment portfolio even with a small amount of investment, which would otherwise
require big capital.
2) Professional Management:
Mutual Funds provide the services of experienced and skilled professionals, backed by a
dedicated investment research team that analyze the performance and prospect of companies and
selects suitable investments to achieve the objectives of the scheme.
3) Diversification:
Mutual Fund invests in a number of companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because all stock can not go through a downtrend at
the same time and in the same proportion. You achieve this diversification through a mutual fund
with powerless money that you can do on your own.
4) Reduction of Transaction Cost:
The investors bear all the cost of investing such as brokerage or custody of securities. When
going through the fund investor has the benefit of economies of scale; the funds pay lesser cost
because of larger volumes, a benefit passed on to its investors.
5) Liquidity:
By investing in Mutual Funds the investors can cash their investment by selling their units to the
fund if open-ended, or selling them in the stock market if the fund is close ended.
6) Convenience & Flexibility:
Mutual Funds Companies offer investor to transfer their holding from one scheme to other.
7) Tax Benefits:
The investors are totally exempt from paying any tax on the income they receive from the
Mutual Funds.
Investment up to 10000 in ELSS qualifies for tax rebate of 20%.
8) Regulatory oversight:
Mutual funds are subject to many government regulations that protect investors from fraud.
9) Convenience:
You can usually buy mutual fund shares by mail, phone, or over the Internet.
Limitations:
1) No Control over Costs:
An investor in a mutual fund has no control over the overall cost of investing. He/she has to pay
investment management fees as long as he/she remains with the fund. Fees are payable even
while the value of the investment may be declining.
2) No Tailor made Portfolios:
Investors who invest on their own can build their own portfolios of shares and bonds and other
securities. Investing through fund means he/she delegates this decision to the fund managers.
3) Managing a Portfolio of Funds:
Availability of a large number of funds can actually mean too much choice for the investor.
He/she may again need advice on how to select a fund to achieve his/her objectives, quite similar
to the situation when he/she has to select individual shares or bonds to invest in.
4) Entry and Exit Cost:
When large bodies like a fund invest in shares, the concentrated buying or selling often result in
adverse price movements i.e. at the time of buying, fund has to pay high and vise-versa.
5) 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.
MUTUAL FUND CYCLE
From the shown cycle, it can be observed clearly that how the money from the investors flow
and they get returns out of it. With a very small amount of fund, investors pool their money with
fund managers.
After studying the market, the fund manager invests money of the investors in various securities
like shares, bonds, debentures, government securities etc. to achieve goal of the investors.
With ups and downs in the market returns are generated and they are passed on to the investors
in form of dividend or capital gain or lost. The above cycle is very clear and also very effective.
The fund manager while investing on behalf of investors takes into consideration various factors
like time, risk; amount etc. so that he/she can make proper investment decision.
Investors
Securities
Returns Fund Manager
Types of Mutual Fund
1) By objective:
Investment goals vary from person to person. While somebody wants security, others might give
more weightage to returns alone. Somebody else might want to plan for his child’s education
while somebody might be saving for the proverbial rainy day or even life after retirement. With
objectives defying any range, it is obvious that the products required will vary as well. So,
Mutual funds can be classified based on the objectives of the investor.
(a) Equity Fund:Equity funds invest a major portion of their corpus in equity shares issued by
companies. NAV of equity funds are fluctuated by fluctuation in price of shares that it holds. So
there is a high risk as well as high return in equity fund. Potential to earn in such funds is higher
when they are invested for long term.
The leading example of such funds are
a) Prudential ICICI Growth Plan,
b) Tata Pure Equity Fund,
c) Reliance Vision,
d) Franklin India Prima Fund etc.
(b) Debt Fund:Debt funds invest in debt instruments debt instruments issued by governments,
private companies, banks and financial institutions. By investing in debt, these funds target low
risk and stable income investors. These funds are low risk low return funds.
The leading examples are
a) Birla Income Plus,
b) Principal Income Fund,
c) HDFC Income Fund,
d) UTI Bond Fund etc.
(c) Balanced Fund:A balanced fund is one that has a portfolio comprising debt instruments as
well as preference and equity shares. The idea is to reduce volatility of funds, while providing
some upside for capital appreciation. They are best suitable for the people looking for a
combination for capital appreciation and regular income and best time spend for such investment
is more than 3 years.
The leading examples are
a) Prudential ICICI Balanced Fund,
b) Birla Balance Fund,
c) Franklin India Balance Fund,
d) Sundaram Balance Fund etc.
(d) Money Market Fund:Money market funds invest in securities of a short-term nature, which
generally means securities of less than one-year maturity such as Treasury Bills issued by
governments, Certificates of deposit issued by banks and Commercial paper issued by companies.
The major strength of money market funds are the liquidity and safety of principal that the
investors can normally expect from short term investments.
The leading examples are
a) Prudential ICICI Liquid Plan,
b) Templeton India Liquid Fund,
c) Grindlays Cash Fund etc.
(e) Gilt Fund:These funds are sort of government funds wherein the investments are made in
debt instrument of government, which carry no risk of non payment of interest as the RBI
manages the payment of interest and principal on the investments. These funds are best suited for
regular income and long term investment objectives.
The leading examples are
a) Prudential ICICI Gilt Fund,
b) Tata Gilt Securities Fund,
c) Templton India Government Securities Fund etc.
2. By Duration:
(a) Open-ended Fund:An open ended fund is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors
can conveniently buy and sell units at NAV related prices which are declared daily basis. The
key feature of this fund is liquidity.
(b). Close-ended Fund:A close ended fund has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time of launch of the scheme.
Investors can invest in the scheme at the time of initial public issue and thereafter they can buy
or sell units on stock exchange where the units are listed at NAV. These mutual fund schemes
disclose NAV generally on weekly basis.
(c). Interval Fund: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.
3) By Load:
(a) Load Fund:Marketing of new mutual fund scheme involves initial expenses. These initial
expenses may be recovered from the investors by entry or exit load.
a) Entry Load or Front-end Load:If initial expenses recovered from investors at the time of
investor’s entry into the fund, by deducting a specific amount from his initial contribution
it is called Entry Load.Exit Load or Back-end Load:
b) If initial expenses recovered at the time of the investor’s exit from the scheme, by
deducting a specified amount from the redemption proceeds payable to the investor it is
called exit load.
c) Deferred Load:The load amount charged to the scheme over a period of time is called a
deferred load.
(b) No Load Fund:
a) Funds that don’t charge entry, exit, or deferred load or any other charges for sales
expenses are called no load funds.
b) Now, generally all Mutual Fund companies charge 2 to 2.5% entry load on equity fund.
c) Generally there is no exit load on equity and sectoral funds to maintain liquidity of that
funds.
PROBLEM FORMULATION
Marketing Research being a logical process definitely follows our predetermined sequence or
steps in order to obtain the desired results or outcomes. Though the entire process of Marketing
Research is quite complex and requires a considerable degree of knowledge and skill, the step of
the Problem Formulation is the most challenging and critical one for the researcher as well as the
research. It is rightly said that a problem, well defined is half solved.
In today’s competitive world companies can not afford to reactive, instead the trend is toward
proactive. It is due to the increasing competition that the companies can not afford to undertake
research until something goes wrong. This can curtail the future growth or even affect the very
existence of the organization seeing to the trend of being proactive in the future; companies are
allocating more resources to the disciplines of research. In such case it becomes a duty of
researcher to ensure that the organization gets an optimum return on the resources it has invested.
Thus, Problem Formulation assumes great importance in Marketing Research.
The Marketing Research project undertaken by me for the ‘Karvy Securities Limited’
encompasses within its scope, the study of “The Mutual Fund and to find out market potential of
KARVY Investor Service Ltd. with special reference to distribution of Mutual Fund in Aligarh
City. Company wants to increase it’s sub-brokers who can work as intermediary between
company and the investors.”
OBJECTIVES
Any activity done without an objective in a mind cannot turn fruitful. An objective provides a
specific direction to an activity. Objectives may range from very general to very specific, but
they should be clear enough to point out with reasonable accuracy what researcher wants to
achieve through the study and how it will be helpful to the decision maker in solving the problem.
The objective of any research is basically divided into two categories.
Primary Objective:
a) To map market potential of Karvy Investor Service Ltd.
Secondary Objectives:
Following are secondary objectives.
b) To assess an awareness of mutual funds in Allahabad City.
c) To find out level of awareness of mutual funds in Allahabad City.
d) To find out how many investment advisors are interested in dealing of mutual fund.
e) To find out how many investment advisors are willing to work with Karvy.
f) To do SWOT analysis.
RESEARCH METHODOLOGY
1) Research Design:
A research design is a pattern or an outline of a research project’s working. It is a statement of
only the essential elements of a study, those that provide the basic guidelines for the details of
the project. It comprises a series of prior decision that taken together provide master plans for
executing a research projects.
A research design serves as a bridge between what has been established i.e., the research
objectives and what is to be done, in conduct of the study to relish those objectives. If there were
no research design, the research would have only foggy notions as about what is to be done.
I have used ‘Cross-Sectional Research ’ of ‘Exploratory Research ’. The research is of both
qualitative as well as quantitative type.
2) Unit of Analysis:
Mutual Fund Advisors.
Characteristics of interest:
a) Advisor’s knowledge about Mutual Fund
b) Advisor’s knowledge about Karvy
c) Advisor’s interest in getting knowledge of Mutual Fund
d) Advisor’s willingness to deal in Mutual Fund with Karvy
e) Advisor’s preference in selecting tax saving instrument of investment
f) Advisor’s preference in selecting dealer
3) Sources of Data:
a) Primary Source:The primary data is collected using sampling method and by survey
using questionnaire.
b) Secondary Source: Secondary data includes information regarding present market
scenario, Information regarding Mutual Funds and competitors are collected by Internet,
Magazines and News papers and books.
4) Sample Planning:
Sample Size: 100 units
Sample Extent: Allahabad City
Sampling Design:
A Sample Design is a definite plan for obtaining a sample from a given population. It refers to
the technique or method the researcher would adopt in selecting items for the sample.
I have used both ‘Convenience Sampling Method’
5) Data Collection Method:
I have used ‘Survey Method’ to collect data. I have collected data using questionnaire.
Questionnaire Plan
I have used ‘Structured Questionnaire’ for gathering the required data through contacting
respondent personally.
Type of Information:
I have collected Fact, Awareness, Attitude, Future action plan and reason using questionnaire.
Type of Questions:
‘Close-ended questions’ or ‘Dichotomous’ and ‘Multiple Choice’ type are asked in the
questionnaire for data collection.
6) Data Analysis & Interpretation:
Data Analysis is based on the data collected by way of Questionnaires. From the collected data
findings are extracted. The data is tabulated and frequency distribution chart is prepared.
RESEARCH ANALYSIS AND INTERPRETATION
QUESTIONNAIRE
The study is being done for the requirement of BBAH 7th semester degree. The information
collected will be used only for the educational purpose.
Q.1 ) As a financial investment adviser which investment options you suggest to your customers?
a) Shares
b) Mutual Fund
c) Insurance
d) Others
Interpretation- Advisors are suggesting to their customer as 60% Insurance and 10% Mutual
Fund.
5%
10%
60%
25%
As a financial investment adviser which investment options you suggest to your
customers?
Share
Mutual Fund
Insurance
Others
Q.2) Please indicate reason for choosing above.
a) Tax Returns
b) Risk Safety
c) Tax Benefits
Timely Brokerage
Interpretation-40%of advisors are selecting Insurance due to safety and 5% are selecting their
benefits
25%
5%
40%
30%
Please indicate reason for choosing above.
Tax Returns
Risk Safety
Tax Benefits
Timely Brokerage
Q.3) Approximately how many customers you have?
a) 0 to 100
b) 101 to 200
c) 201 to 300
d) Above 301
Interpretation-15% of advisors have 0 to 100 client and 40% of the advisors have 201 to 300
clients
15%
25%
40%
20%
Approximately how many customers you have?
0 to 100
101 to 200
201 to 300
Above 301
Q.4) If a service person who pays Income Tax wants to invest, generally which option do you
suggest for investment?
a) Insurance
b) Pension Plan
c) ELLS Scheme
d) Other
Interpretation- Advisors are generally advising their client to make Insurance Policy for saving
Income Tax
45%
15%
18%
22%
If a service person who pays Income Tax wants to invest, generally which option do
you suggest for investment?
Insurance
Pension Plan
ELLS Scheme
Others
Q.5) Are you interested to deal in Mutual Fund?
a) Yes
b) No
Interpretation- 60% of the advisors are interested in dealing in Mutual Fund whereas 40% are
still not interested in dealing in Mutual Fund
60%
40%
Are you interested to deal in Mutual Fund?
Yes
No
Q.6) Do you know about MF services provided by Karvy’s Allahabad Branch?
a) Yes
b) No
Interpretation-65% financial advisor are aware about Mutual Fund service provided by Karvy
and 35% are not aware about this.
65%
35%
Do you know about MF services provided by Karvy’s Allahabad Branch?
Yes
No
Q.7) In future will you attend seminar arranged by Karvy to guide investors about MF?
a) Yes
b) No
Interpretation-73% of advisors says that they will attend the seminar conducted by Karvy in
future and 27% says that they will not going to attend the seminar.
73%
27%
In future will you attend seminar arranged by Karvy to guide investors about MF?
Yes
No
Q.8) Would you like to work with Karvy Securities Ltd for dealing in mutual fund?
a) Yes
b) No
Interpretation-60% financial advisor are ready to work with Karvy and 40% advisors are not to
work with Karvy in future.
60%
40%
Would you like to work with Karvy Securities Ltd for dealing in mutual fund?
Yes
No
Q.9) If a service person who pays Income Tax wants to invest, generally which option do you
suggest for investment?
a) Insurance
b) Mutual Funds
c) PPF
d) Tax Bond
e) Fixed Deposits
Interpretation-35% suggested for Insurance and 5% suggested for Tax Bond.
MOHD. DANISH
13BBAH021
Thank You
35%
25%
20%
5%15%
If a service person who pays Income Tax wants to invest, generally which option do
you suggest for investment?
Insurance
Mutual Funds
PPF
Tax Bond
Fixed Deposits
FINDINGS
a) Karvy as an investment option in Mutual Fund does not posses much proficiency and
potential customers in Allahabad city. Though the financial advisors advise their clients
to go for Mutual Fund as an investment option. About 42% of advisors advise their
clients to invest in Mutual Funds, followed by investing in Insurance sector.
b) The Advisors after having a deep thought say that it is the Returns that make them
convince their clients to go for investment in mutual funds. 36% of Advisors said that it
is the Returns which make a person to invest in Mutual Fund, followed by Risk which is
quite lesser in other investment options.
c) A huge lot of Advisors showed a positive response in dealing of for Mutual Fund. About
60% of them said that they are interested in dealing for Mutual Funds, because that
results in higher brokerage.
d) As far as Karvy is concerned about 91% of the Advisors said that they are not aware of
the services provided by Karvy, including Mutual Fund.
e) When asked, 53% of Advisors said that they are not interested to work with Karvy
Securities, to the contrary with they don’t have any such expansion plans and they have
little knowledge about Karvy.
f) In Allahabad city, Advisors don’t have an appropriate knowledge about Karvy as an
Investment hub.
LIMITATIONS
a) Due to limitation of time and cost constrains a sample size of only 100 respondents was
chosen.
b) Data Analysis and interpretation done may not be that strong due to small sample and
‘Convenience Sampling Method’.
c) The sample extent for research is only Allahabad City.
d) Some of the respondents may be biased in giving responses.
e) My inexperience in research area might have affected results.
CONCLUSION
Mutual Fund Advisors give emphasis on mutual funds than other investment options.
Mutual Funds have given a new direction to the flow of personal saving and enable small and
medium investors in remote rural and semi urban areas to reap the benefits of the stock market
investment. Indian Mutual Funds are thus playing a very important developmental role in
allocation of scare resources in the emerging economy.
Karvy is not able to provide sufficient services to the investors due to unawareness among
advisors regarding services. Very few advisors are knowing about services provided by Karvy.
RECOMMENDATIONS
There is high potential market for Mutual Fund Advisors in Allahabad city, but this market needs
to be explored as investors are still hesitated to invest their money in Mutual Funds. In Allahabad
investors have inadequate knowledge about Mutual Funds, So proper Marketing of various
schemes is required, company should arranges more and more seminars on Mutual Funds.
Awareness of MF services provided by Karvy is also very low so company needs proper
marketing of their all services by advertising, distribution of pamphlet, arranging seminars etc.
Most of advisors are not interested in dealing of Mutual Funds because they don’t want to
expand their services due to lack of time, so company should provide them knowledge about
single window services by which investor can get all financial services from one place.
Company should also provide knowledge about the growth rate and the expected growth rate of
Mutual Fund industry in India. Most of people aware of life insurance, NSC and PPF for tax
saving so, company should market various tax saving schemes of Mutual Funds and their
benefits. The interface among the investors and the Mutual Fund Companies is the agents, so the
agents should have proper knowledge about Mutual Funds as well as market so that they can
help investors in their investment decisions. The quality of agents performance and investors
trust on them can be improved only if they are permanent in nature.
GLOSSARY
Corporate advisory services: Merchant bankers offer customised solutions to solve the
financial problems of their clients. Merchant bankers study the working capital practices that
exist within the company and suggest alternative policies. They also advise the company on
rehabilitation and turnaround strategies, which would help companies to recover from their
current position. They also provide advice on appropriate risk management strategies.
Loan syndication: Arrangement of loans for clients, by analysing their cash flow pattern, so
that the terms of borrowing meet the client’s cash requirements and offer assistance in loan
documentation procedures.
Portfolio : Total number of all holdings held by a company is called portfolio. The portfolio mix
is aimed at spreading the risk over different sectors. It consists of all assets of company.
NAV: Net Asset Value is the current market worth of the mutual fund shares. It is calculated
daily by taking the funds total asset securities, cash and any accrued earning deducting liabilities,
and dividing the reminder by the number of shares outstanding.
Depository: The principal function of a depository is to dematerialize securities and enable their
transactions in book-entry form. A depository established under the Depositories Act can provide
any service connected with recording of allotment of securities or transfer of ownership of
securities in the record of a depository.
Capital gain: The profit made from selling shares, mutual funds etc.
IPO: Abbreviation for initial public offering. Generally associated with admission to listing of
the share capital on the stock exchange.
REFERENCES
1) Cai,(1997)The performance of Japanese mutual funds, The Review of Financial Studies,
10, 2, 237-273.
2) Otten & Dennis,(1999)European mutual fund performance, European Financial
Management, 8, 1, 75-101.
3) Redman,(2000)the Performance of Global and International Mutual Funds, Journal of
Financial and Strategic Decisions 13, 1, 75-85.
4) Stehle & Olaf,(2001)The Long-Run Performance of German Stock Mutual Funds,
Working Paper, Humboldt-Universität zu Berlin.
5) Noulas, John & John,(2005)Performance of Mutual Funds. Managerial Finance, 31, 2,
101-112.
6) Leite and Cortez,(2006)“Conditional Performance Evaluation: Evidence from the
Portuguese Mutual Fund Market”, Working Paper, University of Minho,9,11-18
7) Boudreaux & Suzanne,(2007)Empirical Analysis of International Mutual Fund
Performance, International Business & Economics Research Journal, 6, 19-22
8) Arugaslan, & Ajay,(2007)Evaluating large US-based equity mutual funds using risk-
adjusted performance measures, International Journal of Commerce and Management,
17, 1/2, 6-24.
9) Dietze, Oliver & Macro,(2009)The Performance of Investment Grade Corporate Bond
Funds: Evidence from the European Market, The European Journal of Finance, 15, 2,
191-209.
