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A Project Report on ³Need for financial advisors for mutual fund investors´
Submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION In Visvesvaraya Technological University, Belgaum
Submitted By
Under the Guidance of
Internal Guide
Mr. G.P.Nagesh
External Guide
Mr. Venkat Ganesh Kumar E.S.
P.G. Department of Management Studies PES INSTITUTE OF TECHNOLOGY AND MANAGEMENT NH ± 206, Sager Road, Shivamogga ± 577204 April, 2010
P G Dept of Management Studies, PESITM, Shivamogga
Karvy Stock Broking Limited
I, the undersigned, hereby declare that the project report entitled ³Need for financial advisors for mutual fund investors´ has been prepared by me under the supervision and guidance of Mr. G.P.Nagesh Faculty member, P.G Department of Management Studies, PES Institute of Technology and Management , Shivamogga and now being submitted to VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELGAUM in partial fulfillment of the University regulations for the award of the degree of MBA. I further declare that this report is based on the original project study undertaken by me and has not formed a basis for the award of any Degree/Diploma of V.T.U or any other University.
Place: Shivamogga Date:
P G Dept of Management Studies, PESITM, Shivamogga
Karvy Stock Broking Limited
This is to certify that the Project Report entitled ³Need for financial advisors for mutual fund investors´ Is an individual work of Mr. LAKSHMINARAYAN. 3 semesters MBA, P.G. Department of Management Studies, PESITM, Shivamogga submitted in partial fulfillment of requirement for the award of the degree of master of Business Administration in Visvesvaraya Technological University, Belgaum under our Supervision a nd Guidance. We further certify that the work is original and has not been submitted to any other University wholly or in part for any other degree or diploma or any other programme.
Mr. G.P.Nagesh Faculty Member & Internal Guide
Dr.R.Nagaraja Prof & HOD, PGDMS
Dr.Vishwanth .P.Baligar Principal ± PESITM
P G Dept of Management Studies, PESITM, Shivamogga
Karvy Stock Broking Limited
I take this opportunity to sincerely thank Mr. G.P.Nagesh who guided me through out the project through his valuable
suggestions, without which the project would not have been successful. I thank Mr. Venkat Ganesh Kumar E.S., Branch Manager in KARVY STOCK BROKING LIMITED Davangere for guiding me in doing this Project report. I thank Mr. Sridhar, Regional Manager in KARVY STOCK
BROKING LIMITED for guiding me in doing this Project report. My sincere thanks to my parents and friends who out of hard sweat were able to help me at all time and given encouragement for successful completion of this project.
Yours truly LAKSHMINARAYAN
P G Dept of Management Studies, PESITM, Shivamogga
1 SWOT ANALYSIS OF KARVY. 3.5 FUNCTIONS OF DEPARTMENTS. 7.6 SYSTEMS.1 METHODOLOGY OF DATA COLLECTION LIST OF CONTACTS PAGE NUMBER 1-8 9-13 14-22 23-30 31 32 33-54 55-56 P G Dept of Management Studies. 3. 1.2 SUPER-ORDINATE GOALS. 2.3 STRATEGY. Shivamogga 5 . 1.Karvy Stock Broking Limited SERIAL NUMBER 1.1 MCKINSEY 7-S FRAMEWORK 3.4 SCOPE OF THE STUDY. 3. PESITM.8 QUALITY POLICY 1. 1.2 ORIGIN. DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY. 3.4 LEADING COMPETITORS IN THE INDUSTRY.6 ORGANIZATION STRUCTURE OF KARVY.4 SUCCESS SUTRAS OF KARVY. 3. 3. 2.4 OPERATIONAL DEFINITIONS AND CONCEPTS. 1. 3.2 KARVY SERVICES.9 SKILLS.3 EVOLUTION OF KARVY. LEARNING EXPERIENCE METHODOLOGY OF RESEARCH 7.3 OBJECTIVE OF RESEARCH.1 6. 3. 1. 7. 4.7 STYLE. 7.5 THE SUCCESS LADDER.1 INTRODUCTION 1. 1.7 ACHIEVEMENTS. 8.1 7. 5. 2.1 PRODUCT PROFILE 4.1 INDUSTRIAL BACKGROUND 2.3 GROWTH.8 STAFF.2 COMPANY OVERVIEW.4 ORGANIZATION STRUCTURE.9 DEVELOPMENT & PRESENT STATUS OF THE INDUSTRY.2 NEED OF THE STUDY.
2 QUESTIONNAIRE 12. 57-69 70-72 11.1 RECOMMENDATIONS. SUGGESTION AND CONCLUSIONS 8. 7.0 1 2 3 4 5 6 7 Table Name Analysis and Interpretation of Data Analysis on the basis of gender.Karvy Stock Broking Limited 6. 6. Analysis on the basis of Education. Analysis on the basis of Occupation. 9. Shivamogga 6 . PESITM.1 10. 6.1 12.3 WEEKLY PROGRESS REPORT 73 74-79 LIST OF TABLES: Table. Where from do you purchase mutual funds? According to you which is the most suitable stage to invest in mutual funds? Which feature of the mutual funds influence you most? Where do you find yourself as a mutual fund investor? Are you availing the services of personal financial advisors? PAGE NUMBER 53 53 54 55 56 57 58 59 8 9 10 60 61 62 P G Dept of Management Studies.4 INSTRUMENTATION TECHNIQUE. No. Analysis on the basis of Income (yr).3 SAMPLING PLAN.1 BIBLIOGRAPHY APPENDIX / ANNEXURE 12. Analysis on the basis of Age.2 SOURCES OF DATA.1 ANALYSIS AND INTERPRETATION OF DATA RESEARCH FINDINGS .
Karvy Stock Broking Limited 11 12 13 Which expertise of the personal financial advisor is demanded most? What is the major reason for using financial advisors? What is the major reason for not using financial advisor? 63 64 65 P G Dept of Management Studies. PESITM. Shivamogga 7 .
The data collected has been well organized and presented. Some of the most interesting questions regarding mutual funds have been covered. The language has been kept simple so that even a layman could understand. This part consists of dates and their analysis. This project as a whole can be divided into two parts: The first part gives an overall details about Karvy Stock Brokin g Limited that is Vision and Mission. PESITM.Karvy Stock Broking Limited Executive summary This project has been a great learning experience for me.Organization structure of Karvy. The success ladder of Karvy . at the same time it gave me enough scope to implement my analytical ability. All the topics have been covered in a very systemat ic way. Leading competitors in the industry and SWOT analysis of Karvy. It has also covered why people don¶t want to go for financial adviso rs? The advisors can take further steps to approach more and more people and indulge them for taking their advices. Growth. Hope the research findings and conclusions will be of use. The Second part gives an insight about the mutual funds and its various aspects. All the dates have been well analyzed with the help of charts and graphs. Development & Present status of the industry. Shivamogga 8 . It is purely based on whatever I learned at Karvy. and there Achievements and the industrial background of Stock Brokers. collected through a survey done on 50 people. McKinsey 7-S framework as been clearly explained about the organization study of departmental of KSBL and Services provided by KSBL. Other than that the real savings come when one moves ahead. It covers the topic ³Need for financial advisors for mutual fund investors´. One can have a brief knowledge about mutual funds and all its basics through the project. P G Dept of Management Studies. Some of them are: why has it become one of the largest financial intermediaries? How investors do chose between funds? Performance Measures of Mutual Funds.
Later on it diversified into financial and accounting service s during the year 1981-82 with a capital of rs.´ If we look for examples to prove this quote then we can find many but there is none like that of Karvy. It added the feather of stock broking into its cap. Karvy which already enjoyed a wide network through its investor service centers. One year more and Karvy was now dealing into mutual fund services too in the year 1994 but it didn¶t stopped there. Back in the year 1981. the largest financial service prov ider of India. five people created history by establishing Karvy and company which is today known as Karvy.Karvy Stock Broking Limited 1.2 Company overview: Karvy was established as Karvy and company by five chartered accountants during the year 1979 -80. Shivamogga 9 . 1.e. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar. 1. PESITM. Karvy¶s strategy has always been being the first entrant in the market. At the same time it became the member of Hyderabad Stock Exchange through associate firm Karvy securities ltd and then Karvy never looked back it went on adding services one after another. stock broking. Under this section we will see that how this ³Karvy and company´ of 1980 became ³Karvy´ of 2008. it stepped into corporate finance and investment banking in the year 1995. entered into financial product distribution services in the year 1993.. not a destination. and then its work was confined to audit and taxation only.1 Introduction: ³Success is a journey. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. it achieved its first milestone after its first investment in technology. Karvy investor service centers were set up in the year 1992. The turning point came in the year 1989 when it decided to enter into one of the not only emerging rather potential field too i.150000. Karvy again hit the limelight by becoming the first registrar in the countr y to be awarded P G Dept of Management Studies. it entered into retail stock broking in the year 1990.3 Evolution of KARVY: It is well said that success is a journey not a destination and we can see it being proved by Karvy.
Then it entered into insurance services in the year 2001 with the launch of its retail arm ³Karvy. by combining its human and technological resources. it commenced secondary debt and WDM trading. enterprise.and maintain their portfolio and provides them with other financial services.karvy. PESITM. commitment. empathy and humility.e. to provide world class quality services. hard work and team play. PCG group of Hong Kong acquired 25% stake at KSBL. In the year 2003. dedication. Karvy entered into one of the hottest sector of present time i. IT enabled services by establishing its own BPO units and at a gap of just 1 year it took the path of e-Business through its website www. integrity.the year 2004 also saw Karvy entering into commodities marketing through Karvy Comtrade. hence. Karvy launched ³Karvy global services limited´ after entering into a joint venture with Computershare. Karvy shall aim for complete customer satisfaction. P G Dept of Management Studies.Karvy Stock Broking Limited ISO 9002 in the year 1997. Then in the year 2002 it launched its PCG (Private Client Group) which looks after its High Networth Individuals .the Finapolis: your personal finance advisor´. real estate through Karvy realty& services (India) ltd..e. In the year 2006. after being impressed with the rapid growth of Karvy stock broking limited. Then it stepped into the other most happening sector i. These are the values that bind success with Karvy. It was a decade which saw many Indian companies going global so why the largest financial service provider of India should lag behind? Hence. Vision of Karvy: To achieve & sustain market leadership. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards. Shivamogga 10 . Australia in the year 2004. Year 2005 saw Karvy establishing a separate branch for its insurance services under the head ³Karvy insurance broking ltd´ and in the same year. we can see now Karvy being established as the largest financial service provider of the country.com . 1.4 Success sutras of Karvy: The success story of Karvy is driven by 8 success sutras adopted by it namely trust. learning and innovation.
´ 1. P G Dept of Management Studies. The award of being µMost Admired¶ Registrar is one among many of the acknowledgements we received for our customer friendly and competent services. : The first securities registry to receive ISO 9002 certification in India. : karvy stock broking ltd. is Number 1 Registrar in the Country. advisory services and private client goups. PESITM. 2. distribution of financial products. Shivamogga 11 . enterprising . Consists of five units namely stock broking servics. and technology driven organization which will set the highest standards of service and business ethics. advisory services.Karvy Stock Broking Limited Mission statement: ³Our mission is to be a leading and preferred service provider to our customers. Registered with SEBI as Category I Registrar. and we aim to achieve this leadership position by building an innovative.5 The success ladder: Now Karvy group consists of 8 highly renowned entities which are as follow: 1. depository participant.
4. It has its sales and business development office in New York.Karvy Stock Broking Limited 3. Shivamogga . At Karvy Insurance Broking Limited both life and non-life insurance products are provided to retail individuals. 6. : The company provides investment. media . foreign institutional investors. Its clientele includesinclude leading corporate. public and private sector companies and banks. telecom and technology. : Karvy Global is a leading business and knowledge process outsourcing Services Company offering creative business solutions to clients globally. USA and the offshore global delivery center in Hyderabad. : karvy insurance broking ltd is also a part of karvy stock broking ltd. inurance. PESITM. : Karvy Realty (India) Limited is engaged in the business of real estate and property services offering: y y Buying/ selling/ renting of properties Identifying valuable investments opportunities in the real estate sector 12 P G Dept of Management Studies. healthcare and pharmaceuticals. it offer a wide reach through our branch network of over 225 branches located across 180 cities. advisory and brokerage services in Indian Commodities Markets. : it is registered with SEBI as a category 1 merchant banker. India 7. It operates in banking and financial services. State Governments. 5. And most importantly. in Indian and global markets. high net -worth clients and corporates.
Mr. Parthasarthy. is a premier integrated financial services provider.Ajay Kumar.: V.. Shivamogga 13 . Yugandhar. M. group human resources.Mr. R. KARVY.Mr. V. and provides investor services to over 300 corporate. Ramakrishna. technology services and corporate quality.Mr. karvy computershares limited. finance & accounting. 1.6 Organization structure of karvy: Talking about the organization structure of karvy.Yugandhar as the managing director.Mr. PESITM. Karvy group being the flagship company looks after the functional departments such as corporate affairs.Mr. karvy comtrade. Kutumba Rao A. India in the registry management services industry. karvy investors services ltd. The letters K. and karvy global se rvices ltd.S.S. we have the board of directors as the supreme governing body. the chairman being Mr.Karvy Stock Broking Limited y y Facilitating financial support for real estate and investments in properties Real estate portfolio advisory services 8.: K.. and ranked among the top five in the country in all its business segments. training & development.The board of diretors head the karvy group. R.: Vikram Singh Y. M. comprising the who is who of Corporate India. Australia an d Karvy Consultants Limited. C.Ramakrishna as directors. A.: M. : it is a joint venture between Computershare. Mr. KARVY P G Dept of Management Studies. V and Y stands for 5 directors names K.: M. karvy stock broking ltd. services over 16 million individual investors in various capacities.
share registry and issue registry whereas merchant banking is looked after by karvy investor services ltd. among others. Karvy has a professional management team and ranks among the best in technology. Karvy stock broking ltd heads its another branch too ie. Commodities Broking. Summarizing it in a diagram. Karvy insurance broking ltd. Karvy computershare private limited facilitates mutual fund services. Distribution of financial products . distribution. Personal Finance Advisory Services. Merchant Banking & Corporate Finance. The services offered by KSBL are: stock broking. placement of equity. And finally the BPO services are managed by karvy global services ltd. research. Insurance Broking. it can be presented as: Source: Organization structure of karvy P G Dept of Management Studies. bonds. operations and research of various industrial segments. IPOs. Shivamogga 14 .mutual funds.Karvy Stock Broking Limited covers the entire spectrum of financial services such as Stock broking. personal client group and institutional desk. depository. Depository Participants. equities. PESITM. fixed deposit.
Quality Objectives As per the Quality Policy.8 Quality Policy: To achieve and retain leadership. PESITM. y Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs. by combining its human and technological resources. Shivamogga 15 . Karvy will strive to exceed Customer's expectations.7 Achievements: y y y y y y y y Among the top 5 stock brokers in India (4% of NSE volumes) India's No. y Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. Karvy shall aim for complete c ustomer satisfaction. to provide superior quality financial services. y Continue to uphold the values of honesty & integrity and strive to establis h unparalleled standards in business ethics.Karvy Stock Broking Limited 1. P G Dept of Management Studies. Karvy will: y Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. y Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. In the process. 1 Registrar & Securities Transfer Agents Among the top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV among top 10 Investment bankers Largest Distributor of Financial Products Adjudged as one of the top 50 IT uses in India by MIS Asia Full Fledged IT driven operations 1.
Karvy Global offers niche off shoring services to clients in the US.000 crores under management. 5. clients. Karvy Stock Brokers Limited. registered with NSDL and CDSL. has quickly established itself as a broker who adds value. suppliers and regulatory authorities) proud and satisfied. Karvy Comtrade. With over 6.9 Development & present status of the industry Karvy ranks among the top player in almost all the fields it operates. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Karvy Realty Services. Karvy is also among the top Mutual Fund mobilize with over Rs. Registered with AMFI as a corporate Agent. Karvy Computershare Limited is India¶s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate. P G Dept of Management Studies. member of National Stock Exchange of India and the Bombay Stock Exchange. 1.000 highly qualified pe ople staff Karvy. it ranks among the top 5 Depositary Participant in India.Karvy Stock Broking Limited y Strive to be a reliable source of value -added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same. which started in 2006. investors. employees. in the realty sector. Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. y Strive to keep all stake-holders (shareholders. ranks among the top 5 stock brokers in India. 00. managing over 2 crore accounts. Over 9. PESITM. Shivamogga 16 .000 active accounts. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York.
2. became the hub of brokerage activities.1 INDUSTRIAL BACKGROUND INTRODUCTION A stock broker is someone who buys and sells stocks on the behalf of others for a predetermined commission. The stock broker basically works as an agent coordinating the activities of the buyers and sellers on the stock exchange. The Amsterdam Stock Exchange was involved in buying and selling of shares for the Dutch East India Company.Karvy Stock Broking Limited 2. With the advent of automated stock broking systems on the Internet the client often has no personal contact with his/her stock broking firm. Today. stock broking became very easy. Discount brokers (such as E-Trade. mutual funds. Shivamogga 17 . but later most of them joined hands to form instit utes and organizations. Scottrade. Later with the advent of the Internet. Later it was the New York stock exchange which saw a rise in its popularity. the price tag on stock brokers lowered considerably and their services became available even to the common man. PESITM. as it was called. Stock broking firms have also been allowed to be market makers as long as the appropriate Chinese walls are put in place. many stock brokers indulge in giving advice to the clients as to which stocks. Wall Street. most of the once well-known corporate brand names including mid-sized firms such as Smith Barney have been swallowed up by global financial conglomerates.2 ORIGIN: The history of stock brokers can be traced back to the origins of the first stock exchange in 1602 at Amsterdam. Along with the trading of stocks. Till the 1980's stock broking services were used only by the wealthy class who could afford them. and Ameritrade) P G Dept of Management Studies. Earlier stock brokers were largely unorganized. Thus. to buy or sell. Even before that brokers are said to have existed in France dealing with government securities. The stockbroker's system performs all the stock broking functions: it obtains the best price from the market and executes and settles the trade. debentures etc. However. the first real stock exchange came up in Philadelphia in the United States during the late 18 th century.
The system was copied by brokerage firms across the world. The stocks improved the size of companies and became the standard bearer for the modern financial system. expanding the importance of the firms. the Dutch East India Company became the first publicly traded company in which shareholders could own a portion of the business. Various firms like Morgan Stanley and Merrill Lynch were created to assist in the brokering of stocks and securities. Venetian brokers began to trade in government securities. In the 1300s. Shivamogga 18 . 2. stock brokerage firms began to move in a direction of market makers. houses began to be set up in major cities like Flanders and Amsterdam in which commodity traders would hold meetings. They adopted the policy of quoting both the buying and selling price of a security.3 Growth. Stage 3: Considerations During the 1900s. which was the center of American finance during the first forty years of the new United States. enabling individuals to purchase stocks from a variety of organizations. In 1602. They formally founded the London Stock Exchange in 1801 and created regulations and memberships. Stage 2 Significance The earliest brokerage firms were established in London coffee houses. most notably on Chestnut Street in Philadelphia. Soon. Development & Present status of the industry: Stage 1 Beginning: During the 11th century. the US exchange was moved to New York City and for more than one hundred and fifty years Wall Street has been synonymous with the stock brokerage business. Soon. but the companies do not offer investment advice in return all they do is execute orders. The firms limited themselves to researching and trading stocks for investment groups and individuals. the French began regulating and trading agricultural debts on behalf of the banking community.Karvy Stock Broking Limited have taken a large share of the business by offering highly discounted commissions. This allows a firm to make a profit from establishing the P G Dept of Management Studies. creating the first brokerage system. PESITM.
deposit growth slowed as more people invested in equity shares and mutual funds. many banks (through the non bank affiliates of their bank holding companies) began aggressively offering brokerage services. Beginning in the 1980s. Trillions of P G Dept of Management Studies. commercial banks didn¶t emphasize their brokerage powers or solicit business. Regulators have enforced a system called Chinese Walls to prevent communication between different departments within the brokerage company. sold. held. The conflict with brokerage firms setting prices creates the concern that insider trading can result from the sharing of information. insured and invested in securities. Shivamogga 19 . more than 2000 banks are providing active brokerage services to their customers. creating massive financial institutions that valued. whereby the bank purchases broker services from an established securies firm and markets the services under the name of the bank. Until the 1980s. To date. Working with hundreds of billions of dollars. however. Rather than allowing depositors to withdraw their funds and invest them elsewhere. commercial banks began to offer trading services to retail customers. In the 1980s and 1990s. PESITM. Stage 4: Effects The creation of high valued brokerage firms like Goldman Sachs and Bear Sterns created a system of consolidation. This conglomeration of the financial sector created an environment of volatility that caused a chain reaction when other firms like Bear Sterns and Lehman Brothers filed for bankruptcy. Some banks started their own brokerage operations from scratch and others entered onto joint -venture arrangements. Since the 1980s stock-broking firms have also been allowed to be market makers as long as the appropriate Chinese walls are put in place.Karvy Stock Broking Limited immediate sale and purchase price to an investor. Firms like Smith Barney were acquired by Citigroup and other investment banks. except to serve a few large accounts in their trust departments. This has resulted in increased profits and greater interconnection within the financial industry. banks were able to generate non-interest fee income to help offset some of the increased interest costs of relying on borrowed funds o finance their growth. In this way. the larger firms began to merge and take over smaller firms in the last half of the 20th century.
they hire telephone clerks to take customers¶ orders. like TD Ameritrade. most discount brokerage firms do not have a highly paid research staff producing research reports or account executives soliciting business based on the firm¶s current recommendations to buy and sell. to fulfill contractual obligations. In addition the fact that the online resources offer up to the minute pricing and immediate trades makes their format appealing to the modern user as SEC deregulated the brokerage industry and made negotiated commissions available to individual investors around May 1975. Discount brokers. PTI Securities & Futures and E -Trade. a new type if brokerage firms has emerged ± the so called discount broker. Instead. The added convenience and personal attention paid to the small investor has resulted in a large influx of activity. usually against payment. such as those arising under securities trades. They offer fewer brokerage services and pass the savings on to the investors. With the advent of automated stock-broking systems on the Internet. Stage 5: Features A large share of the brokerage firms has moved to an online format. The stockbroker's system performs all the stockbroking functions: it obtains the best price from the market and executes and settles the trade. and work for modest salaries. P G Dept of Management Studies. TD Ameritrade and Charles Schwab have taken control of most individual investors accounts. the client often has no personal contact with his/her stock-broking firm. do not offer any investment advice. Smaller brokers such as E*Trade. Shivamogga 20 .Karvy Stock Broking Limited dollars of assets were tied together in different companies and resulted in a large economic collapse in late 2008. Specially. Beginner investors may turn away from discounted brokers because of the advanced systems and terms. and instead go to traditional brokers. PESITM. These clerks do not sell. which is why they appeal most to frequent and active traders. Settlement (of securities) is the process where by securities or interests in securities are delivered. These and other savings are passed along to the investor in the form of low commissions. also provide advanced trading systems.
com ICICIDirect P G Dept of Management Studies.4 Leading competitors in the industry: y y y y y y y y y y y Reliance Money Kotak Securities ICICIDirect 5Paisa. Shivamogga 21 . PESITM.com Advani Share Brokers Gandhi Securities Invest smart India Moneypore Stock Holding Corporation of India StockMarkit.Karvy Stock Broking Limited 2.
although structure is a significant variable in the management of change . structure.Again it is not a simple relationship between strategy and structure. 3. systems.1 McKinsey 7-S framework: According to waterman organizational change is not simply a matter of structure. Shivamogga 22 . super ordinate goals are the fundamental P G Dept of Management Studies. Source: McKinsey 7-S framework The framework suggests that there is a multiplicity of factors that influence the organizations ability to change and its proper mode of change.2 Super-ordinate goals: In 7s framework there is one variable termed as ³super ordinate goals´ refer to a set of values and aspirations that goes beyond the conventional format statement of corporate objectives. staff and subordinate goals. skills. Because of in connectedness of the variables it would be difficult to make significant progress in one area without making progress in the others as well. style.Karvy Stock Broking Limited 3. although strategy is a critical aspect. PESITM. In their view effective organizational change may be understood to be a complex relationship between strategy.
which is healthy from the industry standard. Shivamogga 23 . objectives. Today KARVY is providing services to over 100000 customers all over the country with a leadership position in over all distribution business. 3. A company of Karvy¶s stature cannot afford to work without objectives. goals and major action plans and policies of the company. After diversifying into various services providing activities it has become KARVY¶S prerogative to be leader in the business. To strive for excellence in management and othe r long range activities to ensure leadership. Karvy updates itself to the surroundings competition and b ring out changes are services and related products to be in competition. An overall group objective is already set and all the employees are driven towards Karvy¶s believes that µno individual is big as the organizational itself. P G Dept of Management Studies. has been effectively overcoming competition. In the distribution business KARVY enjoys 40% market. mission. They are its main values. y y To reach the greatest heights in their fields.Karvy Stock Broking Limited ideas around which a business is built. Super ordinate goals are: y y To open up franchisee (branches) all over India. Rendering activity more transparent and providing better services which can inspire investor¶s confidence in mutual funds. They are the broad nations of future direction. Survival of the company as well as the growth of the company over the past 22years. I depository participant and registry department KARVY has maintained a very competitive pricing structure in the line with contemporary markets. KARVY has a network of 150 branches across the country and over 2500 employees. PESITM.3 Strategy: The strategy in 7s framework includes purposes. The following are the some of the strategies adopted by the organization: PRICE: KARVY caters to marketing service products and there is no pricing involved.¶ Competition is the key to survival and for giving diversification for the given product as such competition is always good.
PESITM. Each product is headed by a skilled manager and also made as a separate profit center.Karvy Stock Broking Limited PRODUCT DIFFERENTIATION: KARVY caters to various financial products like DP. Stock broking services 2. Shivamogga 24 . 3. Depository participation section 3. MARKETING STRATERGY: Being sales oriented organization regular sales promotion events are conducted with various principles agencies and time to time advertising releases are done depending upon the requirements.4 Organization structure: In Karvy. Registry. Stock Broking. KARVY relies mostly on word of mouth publicity than advertising which is worked wonders from them. Mutual fund section Branch Manager Stock broking Depository participation Tax Information Network Mutual Funds Dealing Back Office Front Office Marketing Executive Source: Organization structure at KSBL in Davangere P G Dept of Management Studies. for the purpose of smooth flow of its function it is divided into four sections: 1. Tin section 4. Insurance and Mutual funds products.
DEPOSITORY PARTICIPANT SERVISES FRONT OFFICE: In front office the following services are done. advice on the existing holdings and analysis of funds And one marketing executive who undertakes mutual fund activities is guided by mutual fund section and to turn branch manager supervisor this section.it includes providing post budget strategies for effective tax planning. PESITM. Account opening. back office. 3. Giving intimation related to the due of AMC¶s to their account holders.Karvy Stock Broking Limited In stock broking section. Transformations of shares from Demat to trading account etc.5 FUNCTIONS OF DEPARTMENTS: 1. BACK OFFICE: Maintenance of all Demat account with KSBL. P G Dept of Management Studies. This mutual fund section provides advisory services for investors it includes investment advice for new investors. Shivamogga 25 . He is responsible for maintaining investor¶s securities account and the manager supervises operating that account under investors written instructions and Depository participant tax information network section provides tax advisory services . Holding enquiries. Sends quarterly information to the holders related to the holdings. salary structuring. recommending attractive tax planning investment option. the accounting and other manual work take place and in dealing buying and selling of shares and debenture activities takes place in this section is supervised and headed by manager Depository participant acts as an agent of the depository and interacts with investor. focus on mutual fund portfolio. Transfer of physical shares to Demat form. Transfer of Demat shares to physical form. This section is guided and supervised by branch manager In front office online trading activities takes place and this is headed by mutual fund section.
TDS return (filling) quarterl. KSBL tries to give the services regarding taxation like 2. tax planning etc. RIS This is emerging department of KSBL BACK OFFICE: Here all the records of investors are to be maintained and kept confidentially and identifies the customer¶s requirements and the department members tries to full their Needs. In these function executives sells the almost all the AMCs schemes Executives. Shivamogga 26 . this is recently introduced by the RIS Department in this service. marketing executives are Seeks for prospective customers. TIN. 1. equity tips. ADVISORY SERVICES This is the main function done by the ris department kcl gives every financial advisory services to investors for ex: portfolio management. MAPIN openings Etc. MUTUAL FUNDS MARKETING: KSBL has mainly under taken the distribution of financial products at commission basis. 3.Karvy Stock Broking Limited MARKETING: In this department where the Demat account is marketed. Tax information network services. market the mutual fund schemes by 1 direct selling 2. PESITM. yearly 4. PAN opening 3. they help in opening of an account and also these executives collects AMCs and provide other door to door services 2. Telemarketing P G Dept of Management Studies. part of this mutual fund marketing is also one of the functions.
PESITM. KSBL maintains the transaction of schemes of AMC 2. Payments and receipts 6. Tele marketing BACK OFFICE: in this department it maintains the necessary records of the clients insurance which are taken by the KSBL 5. 1. DATES etc) to schemes existing investors 4 INSURANCE MARKETING: as already stated KSBL also markets all companies¶ life insurances products Such as ICICI. TATA AIG. BIRLA. and performance records etc P G Dept of Management Studies. KSBL markets the NFO schemes 3. Shivamogga 27 . Maintaining the purchases stores department 2.Karvy Stock Broking Limited REGISTER SERVICES: KSBL also gives register service to AMC in this service it provide the following benefits to AMC: such as INGVYSAY. Internal auditing 3. bonus. HR & ADMINISTRATION PAY ROLL MAINTAINANCE: maintenance of employee details like salary incentives. LIC etc. UTI. It gives the information related to AMC shames (like NAV. Etc. It maintains all the paper work of AMC 5. BIRLA SUNLIFE. SBI. ACCOUNTS 1. Direct marketing 2. executives market the insurance products by 1. It maintains the resumption and repurchase of the schemes 4. ICICI.
It follows specific entry and exit timing for its employees.6 Systems: Systems in 7s framework refer to rules. which is headed by a regional manager. Accepting problems of the workers and helps in solving them. Identifying the de-motivate employees and providing the necessary motivation 3. regulations. And with this company has its own corporate culture and every employee has to follow it. Karvy has received ISO9002 certification . The company has its regional office in Bangalore. Each employee has to follow a specific dress code depending on his line or work or duty. This is duly processed at the end of each month. The respective departmental heads holds the HR would dispatch interviews and the appointment from the head office. All branch heads and various dept heads will report to him on regular basis. But the local regional manager would sign all cheques and such instruments. both formal and informal that complement the organization structure. Shivamogga 28 . Finance operations are centralized at the head office level and excess funds are regularly transferred to the head office account. and procedures of the international standardization for organization (ISO). Periodic fund requirement at the regional level will be se nt as and when required. Requirement of fresher¶s incumbents are made at local office at the regional level depending upon the manpower requirement. Maintain good relationship with the employees 2. Usually the employee will be on one-year probation and P G Dept of Management Studies. The organization follows strict rules and regulations for the employee. regulations and procedures.Karvy Stock Broking Limited RECRUITMENT DEPARTMENT: this department helps in assessing the needs of Labour force and recruiting the needs of Labour and giving the orientation programmed to new employees HUMAN RESOURCES DEPORTMENT: 1. 3. PESITM. All junior staff member will have to report to the designated senior staff member daily attendance register to the human resource department.So the employees are following the rules.
Managers are responsible and accountable for their decisions and subsequent imple mentations. At all over the branches across the country Regional Manager has been appointed. The chairman will take decision related to the group as such.he should have a two wheeler for communicating purpose. the term ³staff´ has a specific connotation. 3. For fresher due training will be given and then will be put on the jobs. Shivamogga 29 . The chairman who sits at the head office in Hyderabad heads the organization. Operation of company is monitored by the chairman of the company and various others senior managers.7 Style: Style is one of the seven levers. Each incumbent should have a specific academic qualification to match the position he is going to hold and also necessary skills to execute the assignment. Which top managers can use to bring about organizational change each organization differs from others in their styles of working reporting relationships will convey the style of organization.8 Staff: In the McKinsey 7s framework. PESITM. Top management follows formal relationship with their subordinates and participative leadership is followed. Marketing/sales people should posses at least a degree and a management degree is preferred and should necessary posses good communication skill and flair for sales . 3. All back end employees should have atleas graduation with exposure to necessary skills. Their potentials will be monitored on a regular basis a nd P G Dept of Management Studies. operations at the junior level is largely centralized with division heads making key decisions. organizations introduce young recruitments into the main stream of their services and in the manner in which they manage their careers as the new entrants develop into future managers. By and large decision making are decentralized for day to day affair. The company is ISO certified and follows strict register of quality maintenance with high standards of process and systems. According to Waterman and his colleagues the term: staff: refers to the way.Karvy Stock Broking Limited after successful completion he will be made permanent employee. All other decisions related to the relevant to the region and regional heads will take their line of work.
which most people uses to describe a company. He will be responsible to identify for the right job and get the work done effectively.9 Skills: Waterman considers ³skills´ as one of the most critical attributes or capabilities of an organization. Min wastages and maximum utilization of available resources is the key organizational behavior and culture is thought to the fellow employees and potential employees are suitable nurtured. Annual increments are also given based on the performance predominant.Karvy Stock Broking Limited will be suitable guidance from time to time. A manager is viewed as a skilled person who has the ability to manage people and resources and at times finance also. P G Dept of Management Studies. 3. Shivamogga 30 . PESITM. The term skills include those characters.
Insurance Broking. Insurance 7. The Stockbrokers are the intermediaries who are allowed to trade in se curities on the exchange of which P G Dept of Management Studies. and more importantly. 1992. and provides investor services to over 300 Corporate. Shivamogga 31 . Tin 1.2 KARVY SERVICES 1. 4. in research of various industrial segments. Registrars & Transfer agents 10. Merchant Banking & Corporate Finance.1 PRODUCT PROFILE Introduction KARVY is a premier integrated financial services provider. placement of equity. Commodities Broking. Stock Broking: KARVY is working as Capital Market Intermediaries. Corporate finance & Merchant banking 6. stockbroker is a member of the stock exchange. Mutual fund services 8. Stockbrokers are regulated by SEBI [Stock-brokers and Sub-brokers] Regulations.Karvy Stock Broking Limited 4. Stock broking 2. Personal Finance Advisory Services. IPOs. among others. Depository Participants. Loans 11. Distribution of financial products like mutual funds. Investment advisory services 5. services over 20 million individual investors in various capacities. Demat services 3. Realty Services. IT enabled services 9. Investment product distribution 4. comprising the who's who of Corporate India. fixed deposit. Karvy has a professional management team and ranks among the best in technology. and ranked among the top five in the country in all its business segments. bonds. KARVY covers the entire spectrum of financial services such as Stock broking. operations. PESITM.
PESITM. They can use Karvy¶s brokerage services to execute transactions and Karvy¶s depository services to settle them. investors who use Karvy¶s depository services get a dual benefit. selling or dealing in securities through such stock -brokers. 3. Sub-brokers mean ³any person not being a member of a stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying. They are intermediaries between the depository and the investors. P G Dept of Management Studies. Demat Services: Karvy is a depository participant with the National Securities Deposit ory Limited (NSDL) for trading and settlement of dematerialized shares. A DP can offer depository -related services only after obtaining a certificate of registration from SEBI. Investment Products Distribution: Company is also concern with the distribution of investment products like: (A) (B) (c) Fixed Deposit Bonds IPO (A) Fixed Deposit: KARVY is dealer of 34 fixed deposits of various types which includes fixed deposits of Public Sector. Depository Participants (DPs) are described as an agent of the depository. They buy and sell on their own behalf as well as on behalf of their clients. The relationship between the DPs and the depository is governed by an agreement made between the two under Depositories Act. Non Banking Finance Companies.Karvy Stock Broking Limited they are members. Shivamogga 32 . Housing Finance Companies and Manufacturing Companies. Stockbrokers expand their business by engaging sub -broker. Since Karvy is also in the broking business.´ 2.
Company provides advisory services to its clients. fixed deposits. debentures. insuranc e etc. Company provides stationary at the time of IPO as well as provides information to investors regarding IPO and solves their queries. Investment Advisory Services: This division provides portfolio management services to high net-worth individuals and corporate. mutual funds. Investor¶s requirement of getting money back. PESITM. it understands the time horizon. Shivamogga 33 .Karvy Stock Broking Limited (B) Bonds: Karvy is dealer of following bonds RBI Saving Bonds NHB REC (C) IPO: Company is also provides services related to Initial Public Offer of company. P G Dept of Management Studies. Investor¶s willingness to take risk. Karvy apply the principles of Financial Planning as both science & art. risk bearing capacity and investment goals of investors keeping in mind their psyche and financial needs. The expertise of Karvy in research and stock broking gives it the right perspective to provide investment advisory services. Taxes. Based upon this Karvy it helps individual investors to plan their entire life up to retirement. Company design portfolio by considering following factors. 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. Insurance needs and other important personal financial goals. bonds. It designs portfolio for investor to invest their saving in various financial products like shares.. Financial goal of each individual investor varies according to his dream. 4. Investor¶s tax planning etc.
and acquiring or merging with other businesses by public or private companies. beginning from identifying the best time for an issue to final stage of marketing it. to harvest unparalleled success. Shivamogga 34 . It concerned with how firms raise capital and the consequences of alternative methods of raising capital. Merchant banking is a financial intermediation that matches entities that need capital and those that have capital. Hence they f acilitate the flow of capital in the market.Karvy Stock Broking Limited 5. issuing shares. PESITM. 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. Firm¶s capital can be raised by raising loans. Karvy offers the full spectrum of Merchant Banking Services. As a merchant banker Karvy offer following services: Issue management Instrument designing Pricing of the issue Registration process for the issue of shares Marketing efforts Final allotment to investors Listing details on stock exchanges Loan syndication Lease financing Corporate advisory services Underwriting Portfolio management P G Dept of Management Studies. Karvy enjoys SEBI category (I) authorization for Merchant Banking.
2004. Karvy has made a strategic choice to leverage the power of latest technology to provide a cutting edge to its services. ICICI Prudential Life Insurance HDFC Life Insurance TATA AIG Life Insurance 1. Karvy shall strive to create new products and services. Karvy has since been performing a pivotal role as the intermediary ± the interface ± between these players. company is associated with dealing of following companies. PESITM. Income Tax enabled services: Karvy has been started this service since March. At Jamnagar branch. Karvy has demonstrated a dedication coupled with dynamism that has inspired trust from various segments ± corporate.Karvy Stock Broking Limited 6. Shivamogga 35 . call center ± has brought home the benefits of technology to investors. Mutual Fund Services: Since its inception in 1982. 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. web. Going forward. Insurance: Karvy is also dealer of many private life insurance companies. service nearly 80% of the asset management companies (AMCs) across an extensive network of service centers with assets under service in excess of Rs. and the mutual funds. mobile phones. Karvy today. Karvy's ability to mass customize and offer a diverse range of products for a diverse range of customers has helped mutual fund companies to uniquely position themselves in the market place. P G Dept of Management Studies. These diverse range of services cut across multiple delivery channels ± service centers. which would address the needs of the end customer. 000 crores.10. With Mutual Funds emerging as a distinct asset class. Karvy is work as TIN Facilitation Centre it provides following IT enabled services. government bodies and individuals. distributors. 8.
Karvy has been rated as India¶s Most Admired Registrar on various parameters: Overall Excellence. 9. Now in its second decade of existence. It also distributes PAN and TAN card to the tax payers. Karvy is the leader in the industry: In an opinion poll conducted by an independent market research agency MARG. Karvy has handled over 675 ISSUES as Registrars to public issues processed over 52 million applications and is servicing over 16 million investors from various locations spread over 205 clien ts. In 1994 -95. This service has not been started in Saurashtra-Kucch region. Karvy entered the Registrar and Share Transfer Business to create a market niche in the competitive field of financial services. Karvy work as an intermediary between NSDL and IT payers. It also solves queries of the tax payers. 10. Distribution of TAN Card.Karvy Stock Broking Limited y y y Distribution of PAN Card. Shivamogga 36 . it reached a milestone when it processed 104 Public Issues constituting 46 per cent market share. So far. Vehicle Loan P G Dept of Management Studies. PESITM. Services related to e-TDS. Loan: Karvy has recently started this service at selected branches of metro cities. Handling of Volumes Timely Dispatch Quality Management and Technological Up gradation. A SEBI Category 1 Registrar. Karvy provides loans for following. Registrars & Transfer agents: In 1985. Karvy provides various form for different IT enabled services and guide people to fill that forms.
Karvy Stock Broking Limited
Home Loan Personal Loan 11. TIN National Securities Depository Ltd. (NSDL) has established a nationwide Tax Information Network (TIN) on behalf of the Income Tax Department (ITD). This is designed to make the tax administration more effective, furnishing of returns convenient, reduce compliance cost and bri ng greater transparency. While NSDL will be the primary agency responsible for the design, implementation and maintenance of TIN as per the requirements of ITD, other agencies will also play key roles in the TIN system. Karvy has established infrastructure required to provide IT enabled services so, Karvy provides TIN facilitation centers all over India on behalf of NSDL. Besides Karvy following companies can also work as intermediary between NSDL and customers. Alankit Assignments Ltd. Integrated Enterprise (I) Ltd. Shell Tran source Ltd.
Source: Tax Information Network 37
P G Dept of Management Studies, PESITM, Shivamogga
Karvy Stock Broking Limited
The banking system, being the agency that collects the money on behalf of the ITD against tax obligations from the tax payers will be linked to the TIN central system to provide accounting information on tax paid by various entities under various heads. As banks are relatively technology-enabled entities, they will directly be linked electronically to the TIN central system enabling online tax accounting.
P G Dept of Management Studies, PESITM, Shivamogga
Karvy Stock Broking Limited
5.1 SWOT ANALYSIS OF KARVY: Strengths: y y y y y Employees are highly empowered. Strong Communication Network. Good co-operation between employees. Number 1 Registrar and Transfer agent in India. Number 1 dealer of Investment Products in India.
Weaknesses: y High Employee Turnover.
Opportunity: y Growth rate of mutual fund industry is 40 to 50% during last year and it expected that this rate will be maintained in future also. y Marketing at rural and semi-urban areas.
Threats: y y Increasing number of local players. Past image of Mutual Fund.
P G Dept of Management Studies, PESITM, Shivamogga
Karvy Stock Broking Limited
6.1 LEARNING EXPERIENCE: It was a great experience at Karvy Stock Broking Limited., where I got an opportunity to learn the functions of the company in accordance with the present trends. The interaction with the company gave me an insight and very good experience of the company¶s scenario in the competitive environment. It gave an opportunity to study the human behavior and also made to face different situations, which normally would come across while on work in office environment. The project gave me an insight on the practicali ty of some of the academic knowledge gained during the first three semesters of the MBA course. 1. Understand the various functional departments in the organization and the workflow. 2. It gave a practical knowledge about how the labour force is managed. 3. It gave an exposure to the various day to day problems faced by the managers of various departments and the way they tackle the complaints and the problems of the customer. Practical Exposure: Practical study of the organization regarding planning, organizing, s taffing, co-coordinating and controlling of all the departments helped me to improve my decision making skills. Company Exposure: The study gave an exposure to the real life situation in the company, future growth possibilities and its contribution to the economy. Presentation Skills: The study helped in improving my presentation skills, as I need to talk to different people in the organization.
P G Dept of Management Studies, PESITM, Shivamogga
P G Dept of Management Studies. research process. I also have learnt on how to conduct research. PESITM.Karvy Stock Broking Limited Research: I got an excellent opportunity to meet the clients of KSBL Davangere districts. data collection. data analysis and preparation of a research report. Shivamogga 41 .
averages. It is the glue that holds all of the elements in a research project together. Although this research i s highly accurate. such as observations. Shivamogga 42 .1 Methodology of research Research design It is framework that plans the action for the research project. Descriptive research is mainly done when a researcher wants to gain a better understanding of a topic for example. The idea behind this type of research is to study frequencies. selfreports.Karvy Stock Broking Limited 7. It specifies pattern of framework for controlling the collection of dada accurately and economically and specifies methods and procedures. it does not gather the causes behind a situation. and other statistical calculations. This type of research is also a grouping that includes many particular research methodologies and procedures. Research methods The goal of the research process is to produce new knowledge. It is quantitative and uses surveys and panels and also the use of probability sampling. which takes three main forms. It is a master plan contain everything how to start and how to finish effectively. We often describe a design using a concise notation that enables us to summarize a complex design structure efficiently. y y y Exploratory research Descriptive research Causal / Experimental research Descriptive research Descriptive research is also called statistical research. a frozen ready meals company learns that there is a growing demand for fresh ready meals but doesn¶t know much about the area of fresh food and so has to carry out research in order to gain a better understanding. It is frame work for action. The main goal of this type of research is to describe the data and characteristics about what is being studied. and tests. PESITM. The four parameters of research will help us understand how P G Dept of Management Studies. surveys.
have visited people randomly nearby locality. In other P G Dept of Management Studies.5 Operational definitions and concepts: It¶s all about mutual funds Mutual funds: A mutual fund is a professionally-managed firm of collective investments that pools money from many investors and invests it in stocks. bonds. Since the purpose is to gather information regarding specific questions the research must be designed to ensure accuracy of the findings. 7. PESITM.3 Objective of the study: The main objective of this project is to collect the opinion of people regarding mutual funds.4 Scope of the study: The research was carried on in Davangere. Objective is to know from where the investors purchase mutual funds. Shivamogga 43 . The information was gathered from the questionnaires that were filled by the investors in Davangere. small brokers etc. Objective is to know the opinion of the investors about the services of financial advisors. I have tried to explore the general opinion about mutual funds. collection data on a few factors from of a number of cases at one point of time.Karvy Stock Broking Limited descriptive research in general is similar to. and different from. To know the most suitable stage to invest in mutual funds 7. short-term money market instruments. 7. i. Exploratory research often makes use of survey research design which consists of a cross sectional research design. and/or other securities. It also covers why/ why not investors are availing the services of financial advisors.e.2 Need of the study: To know the current opinion of investors regarding financial advisers for Mutual funds. other types of research. 7.
No. and distributes the profits. is mostly calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. From this. Ability to take advantage of the stock market which has generally outperformed other investment in the long run. Fund management fees may be unreasonable for the services rendered. Government securities. The fund manager may not pass transaction savings to the investor. PESITM. Shivamogga . Ability to add funds at set amounts and smaller quantities such as $100 per month.. all expenses are deducted and the resultant value divided by the number of units in the fund is the fund¶s NAV. Advantages of mutual funds y y Professional management and research to select quality securities. of shares currently issued and outstanding 1. The value of all the securities in the portfolio in calculated daily. The value of each unit of the mutual fund. Fund manager are able to buy securities in large quantities thus reducing brokerage fees. which pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders.Karvy Stock Broking Limited words we can say that A Mutual Fund is a trust registered with the Securities and Exchange Board of India (SEBI). Call money markets etc. Bonds. in equity shares. Disadvantages of mutual funds y y y The investor must rely on the integrity of the professional fund manager. known as the net asset value (NAV). NAV = Total value of the fund««««««. 44 P G Dept of Management Studies. y y y 2. The investor is not putting all his eggs in one basket. Spreading risk over a larger quantity of stock whereas the investor has limited to buy only a hand full of stocks.
PESITM. Bank of Baroda Mutual Fund (Oct 92). Bank of India (Jun 90). The first scheme launched by UTI was Unit Scheme 1964. Indian Bank Mutual Fund (Nov 89). P G Dept of Management Studies. 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. Second Phase ± 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. Punjab National Bank Mutual Fund (Aug 89). at the initiative of the Government of India and Reserve Bank.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). Prospectus and Annual report are hard to understand. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.700 crores of assets under management.6. Shivamogga 45 . 004 crores. There may be too many transactions in the fund resulting in higher fee/cost to the investor . y y y y 3. Investor may feel a loss of control of his investment dollars. There may be restrictions on when and how an investor sells/redeems his mutual fund shares.Karvy Stock Broking Limited y The fund manager is not liable for poor judgment when the investor's fund loses value. First Phase ± 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). At the end of 1988 UTI had Rs.This is sometimes call "Churn and Earn".At the end of 1993.UTI.47. the mutual fund industry had assets under management of Rs. SBI Mutual Fund was the first non . The history of mutual funds in India can be broadly divided into four distinct phases. History of the Indian mutual fund industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.
the assets of US 64 scheme. 1. some invest only in Blue Chip companies that are more established and are relatively low risk.29. sponsored by SBI. PESITM. some focus on high-risk start up companies that have the potential for double and triple digit growth. P G Dept of Management Studies. BOB and LIC. representing broadly.153108 crores under 421 schemes. PNB. 4. On the other hand. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. Shivamogga 46 . The industry now functions under the SEBI (Mutual Fund) Regulations 1996. It is registered with SEBI and functions under the Mutual Fund Regulations consolidation and growth. under which all mutual funds. except UTI were to be registered and governed. there were 33 mutual funds with total assets of Rs. Types of mutual funds Most funds have a particular strategy they focus on when investing. As at the end of January 2003.805 crores. For instance. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. 21. assured return and certain other schemes The second is the UTI Mutual Fund Ltd. there were 29 funds. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. As at the end of September. 2004. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. which manage assets of Rs. 835 crores as at the end of January 2003.Karvy Stock Broking Limited Third Phase ± 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being. Finding a mutual fund that fits your investment criteria and style is important. Fourth Phase ± since February 2003 In February 2003.
If the fund is listed on a stocks exchange the units can be traded like stocks (E. at any point of time.. Redemption of units can be made during specified intervals. such funds have relatively low liquidity.g. Recently. y Close-ended funds: These funds raise money from investors only once.Karvy Stock Broking Limited Categories of mutual funds: Source: Types of mutual funds Mutual funds can be classified as follows: Based on their structure: y Open-ended funds: Investors can buy and sell the units from the fund. fresh investments cannot be made into the fund. Therefore. Therefore. PESITM. after the offer period. P G Dept of Management Studies. Shivamogga 47 . Morgan Stanley Growth Fund). most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly.
like BSE Sensex or Nifty is tracked. At the same time. . e. y ELSS. equities have outperformed all asset classes in the long term. remaining in debt. However.Karvy Stock Broking Limited Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. PESITM. Following are balanced funds classes: y Debt-oriented funds -Investment below 65% in equities. y Dividend yield funds. P G Dept of Management Studies. y Thematic funds. thereby offering higher returns at r elatively lower volatility. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weight age. y Equity-oriented funds -Invest at least 65% in equities. generally smoothens out in the long term.Invest 100% of the assets in sectors which are related through some theme. such funds can yield great capital appreciation as.it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. y Sector funds.Equity Linked Saving Scheme provides tax benefit to the investors. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments.g. historically. With fluctuating share prices. -An infrastructure fund invests in power. y Equity diversified funds. short term fluctuations in the market.Invest 100% of the capital in a specific sector. It can be further classified as: y Index funds.100% of the capital is invested in equities spreading across different sectors and stocks. e. Hence. on the risk-return ladder.g. investment in equity funds should be considered for a period of at least 3-5 years. Balanced fund: Their investment portfolio includes both debt and equity. construction. cements sectors etc. they fall between equity and debt funds.A banking sector fund will invest in banking stocks. such funds show volatile performance.In this case a key stock market index. even losses. As a result. Shivamogga 48 .
Investment strategies: 1. This is called as the benefit of Rupee Cost Averaging (RCA) P G Dept of Management Studies. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Put your money into any of these debt funds depending on your investment horizon and needs. Government of India securities.Karvy Stock Broking Limited Debt fund: They invest only in debt instruments. derivatives and money markets. commercial paper (CP) and call money.These funds invest 100% in money market instruments. y MIPs.They invest 100% of their portfolio in long -term government securities. The investor gets fewer units when the NAV is high and more units when the NAV is low. PESITM. and are a good option for investors averse to idea of taking risk associated with equities. Payment is made through post dated cheques or direct debit facilities. a large portion being invested in call money market.fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.They generate income through arbitrage opportunities due to miss-pricing between cash market and derivatives market.They invest 100% of their portfolio in government securities of and T-bills.Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. Funds are allocated to equities. they invest exclusively in fixed-income instruments like bonds. debentures. y Floating rate funds . y Gilt funds LT.Typically such funds invest a major portion of the portfolio in long-term debt papers. 5. y FMPs. y Gilt funds ST. y Income funds LT. Floaters invest in debt instruments which have variable coupon rate. y Arbitrage fund. y Liquid funds. Shivamogga 49 . in the absence of arbitrage opportunities. Therefore. and money market instruments such as certificates of deposit (CD). Higher proportion (around 75%) is put in money markets.Invest in short-term debt papers.
Risk v/s. return: 7. at a fixed interval. 6. Working of a Mutual fund: P G Dept of Management Studies. Shivamogga 50 . Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum. 3. to an equity scheme of the same mutual fund.Karvy Stock Broking Limited 2. PESITM. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.
According to SEBI Regulations. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. SEBI form ulates policies and regulates the mutual funds. Shivamogga 51 . latest Demat account statement. The return generated from the investments is passed on to the investors or reinvested as mentioned in the offer document. Regulatory Authorities: To protect the interest of the investors. rent agreement. Custodian. 8. handover their savings to the AMCs under various schemes. disclosure. PESITM. driving license. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. In case of non-photo PAN card in addition to copy of PAN card any one of the following: driving license/passport copy/ voter id/ bank photo pass book. P G Dept of Management Studies. AMFI also is engaged in upgrading professi onal standards and in promoting best industry practices in diverse areas such as valuation. latest bank passbook/bank account statement. Passport. known as unit holders. registered with SEBI. Proof of address (any of the following): latest telephone bill. Its objective is to increase public awareness of the mutual fund industry. voter id. two thirds of the directors of Trustee Company or board of trustees must be independent. 2. The investors. transparency etc. holds the securities of various schemes of the fund in its custody. Documents required (PAN mandatory): Proof of identity: 1. latest electricity bill. ration card.Karvy Stock Broking Limited The entire mutual fund industry operates in a very organized way. The AMCs further invest the funds into various securities according to the investment objective. Photo PAN Card. The objective of the investment should match with the objective of the fund to best suit the investors¶ needs.
Key Information Memorandum: A key information memorandum. And thus every investor gets to read it. year. Performance of the scheme (scheme return v/s. Expenses of the scheme: load structure. is attached along with the mutual fund form.wise return for the last 5 financial years. of units 7. 2. recurring expenses 11. Name of the fund.Karvy Stock Broking Limited Offer document: An offer document is issued when the AMCs make New Fund Offer (NFO). P G Dept of Management Studies. Benchmark index 8. PESITM. Risk profile of the scheme 5. Minimum application amount/ no. 4. benchmark return) 12. Investment objective 3. Dividend policy 9. An offer document consists of the following: Standard Offer Document for Mutual Funds (SEBI Format) o Summary Information o Glossary of Defined Terms o Risk Disclosures o Legal and Regulatory Compliance o Expenses o Condensed Financial Information of Schemes o Constitution of the Mutual Fund o Investment Objectives and Policies o Management of the Fund o Offer Related Information. Name of the fund manager(s) 10. Shivamogga 52 . Plans & options 6. Asset allocation pattern of the scheme. popularly known as KIM. Its contents are: 1. It¶s advisable to every investor to ask for the offer document and read it before investing.
whichever he finds convenient for him. So it is always advisable to go for MF advisors. Lotus India.eg: KARVY being the top financial intermediary of India has the greatest network.e.banking financial corporations too. Sundaram. ICICI. Franklin Templeton. HDFC. Then the investors sort out the funds whose investment objective matches with that of the investor¶s. SBI magnum. Fidelity. The va rious parties involved in distribution of mutual funds are: y Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. AMCs can enjoy the advantage of large network of these brokers and sub brokers. Canara Robeco. Reliance . it¶s a very tough job for the investors to choose the best fund for them. they may carry on the further process themselves or can go for advisors like KARVY. whereas foreign AMCs include: Standard Chartered. LIC. some of the top AMCs of India are. Now the tough task for investors start. How do investors choose between funds? When the market is flooded with mutual funds. Shivamogga 53 . UTI etc. HSBC. Mira Assets. y Individual agents. independent brokers. DSP Merrill Lynch. PESITM. Banks.Birla Sunlife. Of course the investors can save their money by going the direct route i. etc. Some of the basic tools which an investor may ignore but an mf advisor will always look for are as follow: P G Dept of Management Studies. banks and several non . he must look at the investment objective of the fund. through the AMCs directly but it will only save 1-2.Karvy Stock Broking Limited Distribution channels: Mutual funds posses a very strong distribution channel so that the ultimate customers doesn¶t face any difficulty in the final procurement. Kotak Mahindra. JP Morgan. The investors can approach to the AMCs for the forms. Tata. y Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. Whenever an investor thinks of investing in mutual funds. S o the AMCs dealing through KARVY has access to most of the investors. NBFC: investors can procure the funds through individual agents.25% (entry load) but could cost the investors in terms of returns if the investor is not an expert. The mf advisors¶ thoughts go beyond just investment objectives and rate of return. 9.
In this case. level of capital appreciation. level of the market indices or even a date. This ensures that the investor books some profits and maintains the asset allocation in the port folio. Rupee cost averaging: The investors going for Systematic Investment Plans (SIP) and Systematic Transfer Plans (STP) may enjoy the benefits of RCA (Rupee Cost Averaging). Rebalancing: Rebalancing involves booking profit in the fund class that has gone up and investing in the asset class that is down. the investors can get more number of units and vice-versa. Investors can also benefit by increasing the SIP amount during market downturns. 2. Rupee cost averaging allows an investor to bring down the average cost of buying a scheme by making a fixed investment periodically. Some fund houses allow such switches without charging an entry load. In case if the NAV of fund falls. 3. Trigger facilities allow automatic redemption or switch if a specified event occurs. This results in the average cost per unit for the investor being lower than the average price per unit over time. 500 or Rs. Shivamogga 54 . Trigger and switching are tools that can be used to rebalance a portfolio. the investor needs to specify the event.000 a month and nowadays even as low as Rs. like Rs 5. The investor needs to decide on the investment amount and the frequency. More frequent the investment interval. the investor is always at a profit.Karvy Stock Broking Limited 1. greater the chances of benefiting from lower prices. the net asset value of the scheme. the amount or the number of units to be redeemed and the scheme into which the switch has to be made. To use the trigger and switch facility. Whereas STP allows investors who have lump sums to park the funds in a lowrisk fund like liquid funds and make periodic transfers to another fund to take advantage of rupee cost averaging. 100. PESITM. which will result in reducing the average cost and enhancing returns. Diversification: P G Dept of Management Studies. The trigger could be the value of the investment. even if the market falls. The funds redeemed can be switched to other specified schemes within the same fund house.
simplicity and affordability. If it is short -term. In case of mutual funds. the dividend is reinvested not into the same scheme but into another scheme of the investor's choice. then the SWP is suitable only for investors in the 10-per-cent-tax bracket. Shivamogga 55 . equities. Debt funds have to pay a dividend distribution tax of 12. Even then an investor needs to examine costs.50 per cent DDT paid by the MF on dividends. Tax efficiency affects the final decision of any investor before investing. This gives the investor a small exposure to a new asset class without risk to the principal amount. All the tools discussed over here are used by all the advisors and have helped investors in reducing risk. depending on the MF's policy. Such transfers may be done with or without entry loads. 4. P G Dept of Management Studies. the investor may enjoy it afterwards also through dividend transfer option. Investors who need a regular stream of income have to choose between the dividend option and a systematic withdrawal plan that allows them to redeem units periodically.50 per cent (plus surcharge and education class) on dividends paid out. tax implications and minimum applicable investment amounts before committing to a s ervice. fixed income bonds. PESITM. 10. Under this. Why has it become one of the largest financial instruments? If we take a look at the recent scenario in the Indian financial market then we can find the market flooded with a variety of investment options which includes mutual funds. If the capital gain is long-term (where the investment has been held for more than one year). the dividends from debt funds may be transferred to equity schemes. This is because investors can redeem units using the SWP where they will have to pay 10 per cent as long-term capital gains tax against the 12. The investors gain through either dividends or capital appreciation but if they haven¶t considered the tax factor then they may end loosing. SWP implies capital gains for the investor. the growth option is more tax efficient for all investors. For example. Tax efficiency: Tax factor acts as the ³x-factor´ for mutual funds.Karvy Stock Broking Limited Diversification involves investing the amount into different options. corporate debentures. Investors in higher tax brackets will end up paying a higher rate as short -term capital gains and should choose the dividend option.
gold. real estate etc. bank deposits. volatility an d liquidity. . High High Moderate High High Moderate High High Moderate Moderate High Moderate Low Gold Low Moderate Low High High Low Low Moderate Low High Moderate Moderate Low Low High Low Low Low High Moderate High High Moderate Moderate Low High Moderate High Moderate Moderate High Moderate Low Moderate High Low P G Dept of Management Studies. comparing it with the other options. life insurance. we find that equities gives us high returns with high liquidity but its volatility too is high with low safety which doesn¶t makes it favorite among persons who have low risk.return. Shivamogga 56 . PESITM. FDs Bank Deposits PPF Life Insurance Gold Real Estate Mutual Funds Source: Performance of mutual funds We can very well see that mutual funds outperform every other investment option. we get this in a tabular form: Return Safety Volatility Liquidity Convenie nce Equity Bonds Co. Even the convenience involved with investing in equities is just moderate.Karvy Stock Broking Limited company fixed deposits. safety convenience.appetite. all these investment options could be judged on the basis of various parameters such as. PPF. Debenture s Co. On three parameters it scores high whereas it¶s moderate at one. Measuring these investment options on the basis of the mentioned parameters.
we can say that mutual fund emerges as a clear winner among all the options available. it scores better than equities at all fronts but lags badly in the parameter of utmost important i. even the liquidity and convenience involved are too low. the investor can enjoy the best investment option as per the investment objective. y Dispense the shortcomings of the other options: every other investment option has more or less some shortcomings. Just by investing in it. Straightforward. The other option offering high return is real estate but that even comes with high volatility and moderate safety level.Karvy Stock Broking Limited Now looking at bank deposits. PESITM.e. Although it ensures high safety but the returns generated and liquidity are moderate. Shivamogga 57 . it scores low on return . there exists one more reason which has established mutual funds as one of the largest financial intermediary and that is the flexibility P G Dept of Management Studies. But mutual funds have definitely sorted out this problem. y Flexibility of invested amount: Other then the above mentioned reasons. Now everybody can choose their fund according to their investment objectives. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. if some are safe then either they have low liquidity or low safety or both likewise. so it¶s not an happening option for person who can afford to take risks for higher return. y Returns get adjusted for the market movements: as the mutual funds are managed by experts so they are ready to switch to the profitable option along with the market movement. Gold have always been a favorite among Indians but when we look at it as an investment option then it definitely doesn¶t gives a very bright picture. Such as if some are good at return then they are not safe. Suppose they predict that market is going to fall then they can sell some of their shares and book profit and can reinvest the amount again in money market instruments. Its principle of diversification allows the investors to taste all the fruits in one plate. there exists no single option which can fit to the need of everybody. The reasons for this being: y Mutual funds combine the advantage of each of the investment products: mutual fund is one such option which can invest in all other investment options.
with a plethora of schemes to choose from. it is. Facto rs such as investment strategy and management style are qualitative. called market risk or systematic risk and second. present in the market. called unsystematic risk. Shivamogga 58 .6 Performance Measures of Mutual Funds: Mutual Fund industry today. 500 through SIPs and even Rs. These fluctuations in the returns generated by a fund are resultant of two guiding forces. good mutual fund companies over are known by their AMCs and this fame is directly linked to their superior stock selection skill s. Therefore. frankly. 100 in some cases. which affect all the securities. is P G Dept of Management Studies. One can start investing in mutual funds with amount as low as Rs. the only quantitative way to judge how good a fund is at present. Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme. higher will be the risk associated with it. on the other hand. Worldwide. First. Though past performance alone cannot be indicative of future performance. it should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. there must be some performance indicator that will reveal the quality of stock selection of various AMCs. general market fluctuations. The higher the fluctuations in the returns of a fund during a given period. PESITM. there is a need to correctly assess the past performance of different mutual funds. However. in a general. the retail investor faces problems in selecting funds. AMCs must be held accountable for their selection of stocks. 7.Karvy Stock Broking Limited that mutual funds offer regarding the investmen t amount. can be defined as variability or fluctuations in the returns generated by it. but the funds record is an important indicator too. with about 34 players and more than five hundred schemes. In other words. Risk associated with a fund. For mutual funds to grow. is one of the most preferred investment avenues in India. The Total Risk of a given fund is sum of these two and is measured in terms of standard deviation of returns of the fund. fluctuations due to specific securities present in the portfolio of the fund. Systematic risk.
While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund. this performance measure evaluates funds on the basis of Treynor's Index. Beta is calculated by relating the returns on a mutual fund with the returns in the market. The most important and widely used measures of performance are: The Treynor Measure The Sharpe Measure Jenson Model Fama Model 1. as there is no credit risk associated). we try to assess the competitive strength of the mutual funds vis-à-vis one another in a better way. 2. While unsystematic risk can be diversified through investments in a number of instruments. This Index is a ratio of return generated by the fu nd over and above risk free rate of return (generally taken to be the return on securities backed by the government.Rf)/Bi Where. By using the risk return relationship. Shivamogga 59 .Karvy Stock Broking Limited measured in terms of Beta. PESITM. Ri represents return on fund. several eminent authors have worked since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative portfolios within a particular risk class. All risk-averse investors would like to maximize this value. during a given period and systematic risk associated with it (beta). systematic risk cannot. The Sharpe Measure: P G Dept of Management Studies. Symbolically. The more responsive the NAV of a mutual fund is to the changes in the market. The Treynor Measure Developed by Jack Treynor. which represents fluctuations in the NAV of the fund vis-à-vis market. it can be represented as: Treynor's Index (Ti) = (Ri . a low and negative Treynor's Index is an indication of unfavorable performance. Rf is risk free rate of return and Bi is beta of the fund. In order to determine the risk-adjusted returns of investment portfolios. higher will be its beta.
alpha can be obtained by subtracting required return from the actual return of the fund. performance of a fund is evaluated on the basis of Sharpe Ratio. After calculating it. a low and negative Sharpe Ratio is an indication of unfavorable performance. Limitation of this model is that it considers only systematic risk not the entire risk associated with the fund and an ordinary investor cannot mitigate unsystematic risk. as his knowledge of market is primitive. PESITM. P G Dept of Management Studies. The surplus between the two returns is called Alpha.Rf)/Si Where. Rm is average market return during the given period. This measure was developed by Michael Jenson and is sometimes referred to as the Differential Return Method.Karvy Stock Broking Limited In this model. Higher alpha represents superior performance of the fund and vice versa. Shivamogga 60 . This measure involves evaluation of the returns that the fund has generated vs. it is the total risk of the fund that the investors are concerned about. Si is standard deviation of the fund. Jenson Model: Jenson's model proposes another risk adjusted performance measure. the model evaluates funds on the basis of reward per unit of total risk. it can be written as: Sharpe Index (Si) = (Ri . Required return of a fund at a given level of risk (Bi) can be calculated as: Ri = Rf + Bi (Rm . While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund. According to Sharpe. So. the returns actually expected out of the fund given the level of its systematic risk. which measures the performance of a fund compared with the actual returns over the period. 3. Symbolically.Rf) Where. which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it.
Moreover. Required return can be calculated as: Ri = Rf + Si/Sm*(Rm . These models are suitable for large investors like institutional investors with high risk taking capacities as they do not face paucity of funds and can invest in a number of options to dilute some risks. measured in terms of returns. Treynor measure and Jenson model use systematic risk based on the premise that the unsystematic risk is diversifiable. the selection of the fund on the basis of superior stock selection ability of the fund manager will also help in safeguarding the money invested to a great extent. Shivamogga 61 . of a fund with the required return commensurate with the total risk associated with it.Karvy Stock Broking Limited 4.Rf) Where. as it is the excess return over and above the return required to compensate for the total risk taken by the fund manager. The net selectivity represents the stock selection skill of the fund manager. a portfolio can be spread across a number of stocks and sectors. two models namely. as the ordinary investor lacks the necessary skill and resources to diversified. This model compares the performance. The difference between these two is taken as a measure of the performance of the fund and is called net selectivity. Higher value of which indicates that fund manager has earned returns well above the return commensurate with the level of risk taken by him. F or them. The investment in funds that have generated big returns at higher levels of risks leaves the money all the more prone to risks of all kinds that may exceed the individual investors' risk appetite. The net selectivity is then calculated by subtracting this required return from the actual return of the fund. Among the above performance measures. Sharpe measure and Fama model that consider the entire risk associated with fund are suitable for small investors. P G Dept of Management Studies. PESITM. Fama Model: The Eugene Fama model is an extension of Jenson model. However. Sm is standard deviation of market returns.
Shivamogga 62 .7 Limitation of research: Time and resource limitation. PESITM. Research has been done only at Davangere ( Districts).Karvy Stock Broking Limited 7. Some of the persons were not so responsive. P G Dept of Management Studies. Possibility of error in data collection.
line graphs etc. PESITM. Sample size: The sample size of my project is limited to 50 only. irrespective of them being investor or not or availing the services or not. The secondary data has been collected through various journals and websites. 8. It was collected through personal visits to the known and unknown persons.3 Sampling plan: Area of study: Need for financial advisors for mutual fund investors. pie charts.2 Sources of Data: y y Primary data Secondary data Research is totally based on primary data and Secondary data can be used only for the reference. Shivamogga 63 . Sampling procedure: The sample is selected in a random way. 8.Karvy Stock Broking Limited 8. Research has been done by primary data collection. by formal and informal talks and through filling up the questionn aire prepared. Sample design: Data has been presented with the help of bar graph.4 Instrumentation Technique: Tools and Techniques of data collection The questionnaire serves as a useful guide for the communication process and may be used with survey research in any form whether the questions are P G Dept of Management Studies. and primary data has been collected by filling a required format.1 Methodology of data collection: 8.
Without a questionnaire the interview has no structure. charts and tables.Karvy Stock Broking Limited in written or verbal form. PESITM. Shivamogga 64 . Research tool: Sample statistical tool is this analyzed and expresses in terms of percentage. Conclusion and interpretation of this study would then be made using various tools like graphs. The information gathered from the primary source would be analyzed by tabulating all information received. P G Dept of Management Studies.
PESITM. Shivamogga 65 .Karvy Stock Broking Limited 9. Gender Number of Male Female TOTAL Source: primary data Respondents 46 04 50 Percentage % 92% 8% 100% CLASSIFICATION ON THE BASIS OF GENDER 8% Male Female 92% Source: Table no. P G Dept of Management Studies. 1 Analysis: From the above table it is evident that 92% are male and 8% are female respondents.1 Analysis and Interpretation of Data Table no.1 : Analysis on the basis of gender.
Shivamogga ¤ ¤ SSIFI TIO O THE SIS OF % ¦ ¦£ ¥ £ £¡ ¢ £ ¡ E ROUP Below 20 20 30 30 40 40 & Above 0% 66 . Age group Below 20 20 ± 30 30 ± 40 40 & Above TOTAL Source: primary data Number of Respondents 00 46 04 00 50 Percentage % 0% 92% 8% 0% 100% 100% 90% 80% 70% 92% 60% 50% 40% 30% 20% 10% 0% 0% Source: Table no. 2 Analysis: From the above table it is evident that were 92% responders were between 20 to 30 years. 8% responders were between 3 0 to 40 years P G Dept of Management Studies.Karvy Stock Broking Limited Table no. PESITM.2 : Analysis on the basis of Age.
Shivamogga § 20% % SSIFI TIO O THE SIS OF O UP TIO ¨¨ ¨ © ¨ 67 . 4% of responders were student and 8% of responders were others. Occupation Businessman Employee student others TOTAL Source: primary data Number of Respondents 18 26 02 04 50 Percentage % 36% 52% 4% 8% 100% 52% 60% 50% 40% 30% 4% 36% 10% 0% Businessman Employee student others Source: Table no. PESITM.3 : Analysis on the basis of Occupation. 52% of responders were Employee. P G Dept of Management Studies.Karvy Stock Broking Limited Table no. 3 Analysis: From the above table it is evident that 36% of responders were Businessman.
4 Analysis: From the above table it is observed that 76% of responders are Post Graduate holders.Karvy Stock Broking Limited Table no. Shivamogga 68 . Education Post Graduate Graduate PUC Below SSLC TOTAL Source: primary data CLASSIFICATION ON THE BASIS OF EDUCATION QUALIFICATION Number of Respondents 38 08 02 02 50 Percentage % 76% 16% 4% 4% 100% 4% 4% Post Graduate Graduate 16% 76% PUC Below SSLC 0% 20% 40% 60% 80% Source: Table no. 4% of responders are PUC holders and 4% of responders are Below SSLC.4 : Analysis on the basis of Education. 16% of responders are Graduate holders. PESITM. P G Dept of Management Studies.
Shivamogga 15% 69 .5 : Analysis on the basis of Income (yr). 26 % of responders were having 50000 -100000 income.Karvy Stock Broking Limited Table no. Income (yr) Below 50000 50000-100000 100000-500000 above500000 TOTAL Source: primary data C A 35% 30% 5% 0% 32% 26% Number of Respondents 16 13 19 02 50 Percentage % 32% 26% 4% 8% 100% CA N N H BA NC Bel w 50000 50000-100000 100000-500000 % ab ve500000 10% 4% 5% 0% Source: Table no. 4% of responders were having 100000-500000 income and 8% of responders were having above500000 income. P G Dept of Management Studies. PESITM. 5 Analysis: From the above table it is clear that 32% of responders were having below 50000 income.
Shivamogga ! ! # ! ! ! $# " 70 . 46% of responders were purchase mutual funds from Brokers only. 24% of responders were purchase mutual funds from Brokers/ sub-brokers and 6% of responders were purchase mutual funds from other sources. PESITM.Karvy Stock Broking Limited Table no.6 : Where from do you purchase mutual funds? Particulars Directly from the AMCs Brokers only Brokers/ sub-brokers Other sources TOTAL Source: primary data Number of respondents 12 23 12 03 50 Percentage % 24% 46% 24% 6% 100% METHOD OF PURCHASE OF MUTUAL FUNDS 50% 45% 40% 35% 30% 25% 20% 15% 46% Direc ly fr m he M 24% 24% Br ker nly Br ker / ub-br ker O her 6% urce 10% 5% 0% Source: Table no. 6 Analysis: From the above table it is evident that 24% of responders were purchase mutual funds from directly from the AMCs. P G Dept of Management Studies.
2% of responders said that suitable stage to invest in mutual funds is at Pre-retirement stage and 2% of responders said th at suitable stage to invest in mutual funds is at Old age stage. P G Dept of Management Studies. 7 Analysis: From the above table it is evident that 78% of responders said that suitable stage to invest in mutual funds is at Young unmarried stage. 18% of responders said that suitable stage to invest in mutual funds is at Young Married with children stage. PESITM. Shivamogga '& % '& % ' '& ' % '& ' % 2% age 2% age 18% 78% 71 .Karvy Stock Broking Limited Table no.7 : According to you which is the most suitable stage to invest in mutual funds? Particulars Young unmarried stage Young Married with children stage Pre-retirement stage Old age stage TOTAL Source: primary data Number of respondents 39 09 Percentage % 78% 18% 01 01 50 2% 2% 100% DIAGRAM SHOWING AGE GROUP FOR INVESTMENT Ol age age Pre-re iremen Young Marrie wi h chil ren Young unmarrie age Source: Table no.
Shivamogga ) ) ) ) 0) ) ) ) ) ) ) ( ) ( 0 22% 38% 0% 10% 20% 30% 40% 72 .8 : Which feature of the mutual funds influence you most? Particulars Diversification Professional management Reduction in risk and transaction cost Helps in achieving long term goals TOTAL Source: primary data Number of respondents 19 11 08 12 Percentage % 38% 22% 16% 24% 50 100% FEATURES OF THE MUTUAL FUNDS INFLUENCE THE INVESTOR Helps i achievi g lo g term goals Re uctio i risk a tra sactio cost 16% 24% Pro essio al ma ageme t Diversi icatio Source: Table no. 16% of responders said that the feature of the mutual funds influence most is Reduction in risk and transaction cost. P G Dept of Management Studies. 22% of responders said that the feature of the mutual funds influence most is Professional management. PESITM. and 24% of responders said that the feature of the mutual funds influence most is helps in achieving long term goals. 8 Analysis: From the above table it is clear that 38% of responders said that the feature of the mutual funds influence most is Diversification.Karvy Stock Broking Limited Table no.
P G Dept of Management Studies. Shivamogga 3 Fully awar 1 21 14% Awar only of any p cific ch m in which you inv t d 1 2 1 1 1 1 2 1 2 73 . 9 Analysis: From the above table it is evident that 10% of responders said that they find themselves as a mutual fund investor as totally ignorant. PESITM. 42% of responders said that they find themselves as a mutual fund investor have Partial knowledge of mutual funds.9 : Where do you find yourself as a mutual fund investor? Particulars Totally ignorant Partial knowledge of mutual funds Aware only of any specific scheme in which you invested Fully aware TOTAL Source: primary data Number of respondents 05 21 17 07 50 Percentage % 10% 42% 34% 14% 100% DIAGRAM SHOWS INVESTOR AWARENESS 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10% 42% 34% Totally ignorant Partial knowl dg of mutual fund Source: Table no.Karvy Stock Broking Limited Table no. 34% of responders said that they find themselves as a mutual fund investor have Aware only of any specific scheme in which you invested and 14% of responders said that they find themselves as a mutual fund investor have fully aware.
P G Dept of Management Studies. 10 Analysis: From the above table it is evident that 82% of responders said Yes and 18% of responders said No to avail the services of personal financial advisors. Shivamogga 4 Yes No 82% 74 .10 : Are you availing the services of personal financial advisors? Particulars Yes No TOTAL Source: primary data Number of respondents 41 09 50 Percentage % 82% 18% 100% NEED OF PERSONAL FINANCIAL ADVISORS 8% Source: Table no.Karvy Stock Broking Limited Table no. PESITM.
11 : Which expertise of the personal financial advisor is demanded most? Particulars Portfolio review & investment recommendation Planning to achieve specific financial goals Managing assets in retirement Access to specialist in areas such as tax planning TOTAL Source: primary data EXPERTISE OF THE PERSONAL FINANCIAL ADVISOR IS DEMANDED MOST Portfolio review & investment recommendation Planning to achieve specific financial goals 40% 14% 0% 10% 20% 30% 40% Number of respondents 07 Percentage % 14% 20 04 19 40% 8% 38% 50 100% 38% 8% Managing assets in retirement Access to specialist in areas such as tax planning Source: Table no. 75 P G Dept of Management Studies. PESITM. and 38% of responders said that expertise of the personal financial advisor is demanded most is Access to specialist in areas such as tax planning. 11 Analysis: From the above table it is evident that 14% of responders said that expertise of the personal financial advisor is demanded most is Portfolio review & investment recommendation.Karvy Stock Broking Limited Table no. 40% of responders said that expertise of the personal financial advisor is demanded most is planning to achieve specific financial goals. Shivamogga . 8% of responders said that expertise of the personal financial advisor is demanded most is Managing assets in retirement.
Karvy Stock Broking Limited Table no. 12 Analysis: From the above table it is clear that 24% of responders said that the major reason for using financial advisors is that they Want help with asset allocation .12 : What is the major reason for using financial advisors? Particulars Want help with asset allocation Don¶t have time to make my own investment decision To explain various investment options Want to make sure I am investing enough to meet my financial goals TOTAL Source: primary data MAJOR REASON FOR USING FINANCIAL ADVISORS 34% 5% 0% Number of respondents 12 08 Percentage % 24% 16% 13 26% 17 34% 50 100% 25% 15% 10% 5% 0% To explain various investment options Source: Table no. PESITM. 26% of responders said that the major reason for using financial advisors is that they want to explain various investment options and 34% of responders said that the major reason for using financial advisors is that they want to make sure I am investing enough to meet my financial goals. 16% of responders said that the major reason for using financial advisors is that they Don¶t have time to make my own investment decision. P G Dept of Management Studies. Shivamogga 6 20% 5 5 Want help with asset allocation 24% 6% 26% Don t have time to make my own investment decision 76 .
Shivamogga F 10% Want to e in control of own investment A @ 15% Un ure how o fin a rustworthy a visor E D 0% 18% 9 @ 9 9 AB C 24% 24% Have acce o all re ource nee e o inve on own 9 9 @9 @ 99 35% @A A 7 8 77 . P G Dept of Management Studies. 18% of responders said that the major reason for not using financial advisors is that Unsure how to find a trustworthy advisor and 24% of responders said that the major reason for not using financial advisors is that want to be in control of own investment.Karvy Stock Broking Limited Table no.13: What is the major reason for not using financial advisor? Particulars Have access to all resources needed to invest on own Advisors are too expensive Unsure how to find a trustworthy advisor Want to be in control of own investment TOTAL Source: primary data MAJOR REASON FOR NOT USING FINANCIAL ADVISOR 34% 30% 5% Number of respondents 12 Percentage % 24% 17 09 12 34% 18% 24% 50 100% vi or are oo expen ive 5% 0% Source: Table no. 34% of responders said that the major reason for not using financial advisors is that believe advisors are too expe nsive. PESITM. 13 Analysis: From the above table it is clear that 24% of responders said that the major reason for not using financial advisors is that they have access to all resources needed to invest on own.
most of them opted for diversification. Even 18% persons were ready to invest a t a stage of young married with children. 46% from brokers only. person with older age investing due to profit there grandson. Method of purchase of mutual funds: 24% participants buy forms directly from the AMCs. Availing the services of financial advisors: Out of 50 responders. The brokers have the maximum reach so they should try to make those investors aware of the happenings. even the AMCs should follow it. Factors that influence investors go for mutual funds: When asked about the most alluring feature of MFs. 5. 34% people are aware of only the schemes in which they have invested. Shivamogga 78 . 42% possess partial knowledge whereas 10% stands nowhere in knowledge about MF s. Most preferred time of investors to invest in mutual fund: Most of the investor preferred to invest at a young unmarried stage. The major reason for availing the service of financial advisors: 24% participants regarded asset allocation as the major reason for going for financial advisors.34% of them wanted to make sure P G Dept of Management Studies. So there is enough scope for the advisors. all are already mutual fund investors. 26% of them needed them to explain them the various investment options available. 7. followed by reduction in risk. 82% were already availing the services of financial advisors whereas 18% do not availing the services of financial advisors. 24% from brokers and sub-brokers even then 6% people buy from other sources.1 Research findings: 1.Karvy Stock Broking Limited 10. helps in achieving long term goals and helps in achieving long term goals respectively. 4. PESITM. But again the number rise to 2% at pre -retirement stage. 2. 6. 3. Investors knowledge about various mutual funds schemes: Out of the 50 persons who already have invested in mutual funds/ are interested to invest. only 14% have sound knowledge of MFs. Survy of investors: At the survey conducted upon 50 people.
34% of them pointed the advisors as expensive. rebalancing etc. Value added benefits: The advisors may try to highlight some of the value added benefits of MFs such as tax benefit. 2. rupee cost averaging. Preferences to young investors: The advisors should try to change their mindsets.lack of time.Karvy Stock Broking Limited that they were saving enough to meet their fin ancial goals. Whereas 24% of them said they have access to all the necessary resources required. 24% of them wished to be in control of their own assets.18% of them said that they find it difficult to get trustworthy advisors. these benefits are not offered by other options singlehandedly. Investors should be made to realize that ignorance is no longer and what they are losing by not investing. The major reason investors are not availing the service of financial advisors: When asked about one reason for not availing the services of financial advisors. So these are enough to drive the investors towards mutual funds. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. 10. 1. Shivamogga 79 . Mutual funds offer a lot of benefit which no other single option could offer. While just 16% gave the reason. 8. PESITM. Investors could also try to increase the spectrum of services offered. P G Dept of Management Studies. Nobody will invest until and unless he is fully convinced.2 Suggestions: The most vital problem spotted is of ignorance. and systematic transfer plan. Investors should be made aware of the benefits. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option.
They should also maintain their code of ethics so that the investors could trust upon them. P G Dept of Management Studies. Thus the advisors should try to attract more and more persons and turn them into investors and finally their clients. But if not possible then they could go for offering more services and benefits at the existing rate. The advisors should try to charge a nominal fee at the beginning. PESITM.Karvy Stock Broking Limited 3. Shivamogga 80 . Reduce cost of service charges: Now the most important reason for not availing the services of advisors was spotted was being expensive.
fixed income bonds. company fixed deposits. Mutual Fund Advisors give emphasis on mutual funds than other investment options. it is one of the most preferred investment avenues in India. with about 34 players and more than five hundred schemes. Shivamogga 81 . with more and more funds flooding the market. Investment is the stepping stone to achieving one's financial dreams. However.Karvy Stock Broking Limited Conclusion: If we take a look at the recent scenario in the Indian financial market then we can find the market flooded with a variety of investment options which includes mutual funds. After Giving advice to the customers the Advisers should communicate with the clients so there will be better relationship between the Company and the Clients. Mutual Fund industry today. The financial advisors can tap upon these people by educating them about mutual funds. Mutual Fund Advisory Service at Karvy guides you through this network and ensures that your investments are backed by their quality research. Mutual funds offer an opportune way to longterm wealth creation. the task of selecting the most suitable scheme gets even more complicated.. PESITM. corporate debentures. bank deposits and etc. equities. P G Dept of Management Studies.
karvy. Karvy business associates manual. Economic Times Newspaper.com www. PESITM. P G Dept of Management Studies.com Journals & other references: Karvy the Finapolis. The Economic Times.com Business Line Newspaper.thefinapolis.Karvy Stock Broking Limited 11.mutualfundsindia.1 BIBLIOGRAPHY www. Shivamogga 82 .mutualfundindia.com www. KARVY BAZAAR BAATEINA (Weekly Investment Newsletter from KARVY). www. Business India.
. Sex: a) Male 4.. «««««««««««««««««««««««««.0 APPENDIX / ANNEXURE 10. Age: a) Below 20 c) 40 ± 60 5. 5..«««««. PESITM.1 QUESTIONNAIRE 1. Shivamogga 83 . Phone number: «««««««. Address: «««««««««««««««««««««««««. Education: a) Post Graduate c) PUC 6. Maritial Status: a) Married 8. 3.Karvy Stock Broking Limited 10. If no what is the most important reason for not investing in mutual funds? a) Lack of knowledge about mutual funds b) Enjoys investing in other options d) No trust over the fund managers [ [ [ ] ] ] ] c) Its benefits are not enough to drive you for investment [ P G Dept of Management Studies. Have you invested /are you interested to invest in mutual funds? a) Yes [ ] b) No [ ] 10. Occupation: a) Businessman c) student 7.. Name: ««««««««««««««««««. Income (yr): a) Below 50000 [ ] b) 50000 -100000 [ [ ] ] c) 100000-500000 [ ] d) above500000 [ ] b) Unmarried [ ] [ [ ] ] b) Employee [ ] d) others «««««««« [ [ ] ] b) Under Graduate [ d) Below SSLC [ ] ] [ [ ] ] b) 20 ± 40 [ ] ] d) 60 & Above[ [ ] b) Female [ ] 9.
Which feature of the mutual funds influence you most? c) Reduction in risk and transaction cost [ 14. Where from do you purchase mutual funds? a) Directly from the AMCs b) Brokers only c) Brokers/ sub-brokers d) Other sources a) Young unmarried stage c) Pre-retirement stage d) Old age stage a) Diversification b) Professional management d) Helps in achieving long term goals a) Totally ignorant b) Partial knowledge of mutual funds c) Aware only of any specific scheme in which you invested d) Fully aware 15. Which expertise of the personal financial advisor is demande d most? a) Portfolio review & investment recommendation b) Planning to achieve specific financial goals c) Managing assets in retirement d) Access to specialist in areas such as tax planning 17. Where do you find yourself as a mutual fund investor? [ [ [ ] ] ] ] 84 . PESITM.Karvy Stock Broking Limited 11. What is the major reason for using financial advisors? a) Want help with asset allocation b) Don¶t have time to make my own investment decision c) To explain various investment options d) Want to make sure I am investing enough to meet my financial goals [ P G Dept of Management Studies. Shivamogga [ [ [ [ ] ] ] ] [ [ [ [ [ [ ] ] ] ] ] ] ] ] [ [ [ [ ] ] ] ] 12. According to you which is the most suitable stage to invest in mutual funds? b) Young Married with children stage [ 13. Are you availing the services of personal financial advisors? a) Yes [ ] b) No [ ] [ [ [ [ ] ] ] ] 16.
If any. [ [ [ ] ] ] ] P G Dept of Management Studies.Karvy Stock Broking Limited 18. Shivamogga 85 . PESITM. Your suggestion for improvement. What is the major reason for not using financial advisor? a) Have access to all resources needed to invest on own [ b) Believe advisors are too expensive c) Unsure how to find a trustworthy advisor d) Want to be in control of own investment 19. -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------.
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