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KARVY STOCK BROKING LTD. A Study of Awareness of Mutual Fund Submitted in partial fulfillment For the Award of degree of Bachelor of Business Administration
DECLARATION
I Sandeep Yadav declares that the project report titled AWARENESS OF MUTUL FUND is based on my project study. This project report is my original work and this has not been used for any other purpose anywhere.
PREFACE
For management student theoretical knowledge as well as practical knowledge is must. Management of modern business requires an appreciation of multidisciplinary concept and in depth knowledge of specific analytical tools, geared to the solution of real life problems. No doubt every situation is unique but a set of theoretical tool of knowledge, itself based on empirical foundation, can help in developing the mechanism for handling such situation. Therefore, the MBA curriculum has been designed to provide practical exposure to the future manager. The project study is necessary for the fulfillment of MBA curriculum, it provide an opportunity to the researcher to understand industry with special emphasis on the development of skills in analysis, interpretation of practical problem through application of management.
ACKNOWLEDGEMENT
I express my sincere thanks to my project guide, Mr. ASHISH SINGH, RESIONAL HEAD [CAT] Karvy Fortune for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge him for extending his valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project. I would also like to thanks the supporting staff MANGAL SINGH Department for their help and cooperation throughout our project.
Sandeep Yadav
EXECUTIVE SUMMARY
The project titled A Study of AWARNESS OF MUTUAL FUND being carried out for KARVY STOCK BROKING LTD. Karvy operates in various financial products and services like Consultancy, Stock Broking, Mutual Funds, Insurance, Registrar and Transfer Agent, Research, Map in etc. The evaluation of financing planning has been increased through decades, which is best seen in customer rise. Now a days investment of saving has assumed great importance. According to the study of the Market, it is being observed that markets are doing well in investments like, Mutual funds, Shares etc. In near future a proper financial planning is required to invest money in all type of financial product because there is good potential in market to invest. The main objective of this project is to know the current scenario of investment and the peoples awareness of various instruments available for Tax planning and Personal Financial Advising facility provided by the KARVY STOCK BROKING LTD. IT and Retail sector have been given more emphasis for the study of the project because it is the only sector where all types of age group, Income class and different level of people are represented.
TABLE OF CONTENTS
S.
Descriptions
NO. 1. Introduction to the industry 2. Introduction to the Organization 3. Research Methodology 1. Title of the Study 2. Duration of the Project 3. Objective of the Study 4. Types of Research 5. Collection Method and Sample Size 6. Scope of Study 7. Limitation of Study 4. Facts and Findings 5. Data Analysis and Interpretation 6. Swot Analysis 7. Conclusion 8. Recommendation and Suggestion 9. Appendix 10. BIBLIOGRAPHY
services, banking, insurance and real estate sectors rose by 9.7 per cent in 2009-10. Overall, the US$28 billion Indian financial sector has grown at around 15 percent and has displayed stability for the last several years, even when other markets in the Asian region were facing a crisis, according to Ministry of External Affairs, Government of India. This stability was ensured through the resilience that has been built into the system over time. The financial sector has kept pace with the growing needs of corporate and other borrowers. Banks, capital market participants and insurers have developed a wide range of products and services to suit varied customer requirements. The Reserve Bank of India (RBI) has successfully introduced a regime where interest rates are more in line with market forces. Indias financial services sector will enjoy generally strong growth during coming years, driven by rising personal incomes, corporate restructuring, financial sector liberalization and the growth of a more consumer-oriented, credit-oriented culture. This should lead to increasing demand for financial products, including consumer loans (especially for cars and homes), as well as for insurance and pension products. According to data from Bloomberg, India's market cap as a percentage of world market cap was 2.8 per cent as on December 31, 2009. In 2009, there were 21 IPOs that raised US$ 4.18 billion as compared to 36 IPOs in 2008 that raised US$ 3.62 billion. Further, according to ICICI Securities, Indian companies are likely to raise up to US$ 42.43 billion from the primary market over the next three years. According to Madhabi Puri-Buch, Managing Director and CEO, ICICI Securities' nearly US$ 20 billion will be raised from the initial public offer (IPO) market this fiscal (2010-11), of which around US$ 8.49 billion would be from the public sector and an equal amount from private companies. Moreover, on the back of an increase in the participation of agriculture and other commodities, the 23 commodity exchanges posted 50 per cent year-on-year growth in turnover in the April-February period of 2009-10, to touch US$ 1.53 8
trillion, according to the commodity markets regulator, Forward Markets Commission (FMC). The average assets under management of the mutual fund industry stood at US$ 170.46 billion for the month of May 2010, as compared to US$ 135.58 billion in May 2009, according to the data released by Association of Mutual Funds in India (AMFI).
FINANCIAL MARKETS
A Financial Market can be defined as the market in which financial assets are created or transferred. As against a real transaction that involves exchange of money for real goods or services, a financial transaction involves creation or transfer of a financial asset. Financial Assets or Financial Instruments represents a claim to the payment of a sum of money sometime in the future and /or periodic payment in the form of interest or dividend. Money Market- The money market ifs a wholesale debt market for low-risk, highly-liquid, short-term instrument. Funds are available in this market for periods ranging from a single day up to a year. This market is dominated mostly by government, banks and financial institutions. Capital Market - The capital market is designed to finance the longterm investments. The transactions taking place in this market will be for periods over a year. Forex Market - The Forex market deals with the multicurrency requirements, which are met by the exchange of currencies. Depending on the exchange rate that is applicable, the transfer of funds takes place in this market. This is one of the most developed and integrated market across the globe. Credit Market- Credit market is a place where banks, FIs and NBFCs purvey short, medium and long-term loans to corporate and individuals.
FINANCIAL INTERMEDIATION
Having designed the instrument, the issuer should then ensure that these financial assets reach the ultimate investor in order to garner the requisite amount. When the borrower of funds approaches the financial market to raise funds, mere issue of securities will not suffice. Adequate information of the issue, issuer and the security should be passed on to take place. There should be a proper channel within the financial system to ensure such transfer. To serve this purpose,
financial consultants, primary dealers, satellite dealers, self regulatory organizations, etc. Though the markets are different, there may be a few intermediaries offering their services in move than one market e.g. underwriter. However, the services offered by them vary from one market to another.
without many ups and downs. By knowing risk tolerance limit of himself an investor can decide his portfolio and also choose from a variety of financial investment tools, one which suit his portfolio the most.
As you can see, the later you start, the higher will be your required rate of return, hence as your investment horizon reduces, for the same level of saving you may need to take higher risk. Alternatively, if you were not willing to take a higher risk, you would have to save a higher amount every month- Rs 9800, almost twice the original savings required to achieve your target accumulation. These three steps give a very basic idea about how to invest, when an investor is seeking investment in different financial tools. Though there are different steps of investment in each financial tool, these acts as blue print for them too.
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.
(Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996 The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996
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Fixed income funds invest in government or corporate securities which offer fixed rate of returns. Balanced fund invest in a combination of both stocks and bonds.
GROWTH FUNDS
Like aggressive growth funds, growth fund generally invests in stocks for growth rather than income. They are considered more conservative in their approach because they usually invest in established companies to achieve long-term growth. Growth fund provides low current income but the investor principal is more stable then it would be in an aggressive growth fund. While the growth potential may be less over the short term, many growth funds have superior long-term performance records. These funds are suitable for growth oriented investors but not investors who are unable to assume risk or who are dependent on maximizing current income from there investments.
investors who can assume some risk to achieve growth of capital but want to maintain a moderate level of current income.
EQUITY FUNDS
Funds that invest in stocks represent the largest category of mutual fund. Generally the investment objective of this class of fund is long-term capital growth with some income. There are however many type of equity funds.
BALANCED FUNDS
The Balanced funds aims to provide both growth and income. These funds invest in both shares and fixed income securities in the proportion indicated in their offer documents. It is an idea for investors who are looking for the combinations of income and moderate growth.
stock exchange where they are listed. The market price of the unit could vary from the NAV of the schemes due to demand and supply factor
WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY FOR SUGGESTED TIME FRAMES
Funds Sector funds Balance funds MIPs Pension Plans Income Funds Liquid Funds
Returns 22% to 25% p.a 15% to 18% p.a 12% to 15% p.a 10% to 12% p.a 7% to 9% p.a
The above-mentioned returns in the table are indicative and not assured. All investments in MUTUAL FUNDS are securities and are subject to market risk and the NAVs of the schemes may go up and down depending upon the factors and forces affecting the security market including the fluctuations in the internal rates. The past performance of the MUTUAL FUNDS is not indicative of future performance.
Funds are more Risky but generate more Returns by the example of above two Funds it is clear that Risk and Returns are directly proportional to each other. Other Funds like Equity Funds, Balanced Funds and Income Funds are also gives the same percentage of Returns as the Risk involved.
REGULATORY ASPECTS
SCHEMES OF MUTUAL FNDS
The Asset management company shall launch no schemes unless the trustees approve such scheme and a copy of the offer has been filed with the Board.
Every mutual fund shall along with the offer documents of each scheme pay filing fees. The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision including the disclosure non maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor. A close-ended scheme shall be fully redeemed at the end of the maturity period. Unless a majority of the unit holders otherwise decide for its rollover by passing a resolution.
The mutual fund and asset management company shall be liable to refund the application money to the applicants:-
If the mutual fund fails to receive the minimum subscription amount referred to in clause (i) of sub- regulation.
If the moneys received from the applicants for units are in excess of subscription as referred to in clause (ii) of sub-regulation.
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Specifying the number of units allotted to the applicant as soon as possible But not later than six weeks from the date of closure of the initial Subscription list and or from the date of receipt of the request from the unit Holders in any open ended scheme.
GENERAL OBLIGATION
Every asset management company for each scheme shall keep and maintain proper book of accounts, records and document, for each scheme so as to explain its transaction and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the fund and intimate to the board 22
the place where such books of accounts, records and documents are maintained.
The financial year for all the scheme shall end as of March 31 of each year. Every mutual fund or the asset management company shall prepare in respect of each financial year an annual report and annual statement of accounts of the schemes and the fund as specified in Eleventh Schedule.
Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in any way associated with the auditor of the asset management comp
RESTRICTIONS ON INVESTMENTS
A mutual fund scheme shall not invest more than 15% of its NAV in debt instrument issued by a single issuer, which are rated not below investment grade by a credit rating agency authorize to carry out such activity under the act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company.
A mutual fund Scheme shall not invest more than 10% of its NAV in unrated debt instrument issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the Board of Trustees and the Board of Asset management. 23
No mutual funds under all its schemes should own more than 10% of any companys paid up capital carrying voting rights.
Such transfers are done at the prevailing market price for quoted instrument on spot basis.
The securities so transferred shall be in conformity with the investment objectives of the scheme to which such transfer has been made.
A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that aggregated intercourse inter scheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund.
100% growth in the last 6 years. Number of foreign AMCs is in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.
Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required. We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products. SEBI allowing the MF's to launch commodity mutual funds.
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BACKGROUND
The flagship company, Karvy Consultants Limited was found with the vision and enterprise of a group of practicing Chartered Accountants on a modest scale in 1981 in Hyderabad, where it now has 13 branches.The name KARVY is actually the Initials of their names.
K - Mr. Kutumb Rao A- Mr Ajay Kumar R- Mr. Ramaswamy V-Mr. Venkat Naidu Y-Mr. Yugandhar
It initiated with just one activity and later carved roads into fields of registry and share accounting as well. From then there was no stopping at all. A decade of commitment, professional integrity and vision helped Karvy achieve a leadership position in its field. It is known to handle the largest number of issues ever in the history of the Indian stock market in a particular year. Thereafter, Karvy made inroads into a host of capital market services, corporate and retail which proved to be a sound business synergy. Today Karvy has access to millions of Indian shareholders, besides companies, banks, financial institutions and regulatory agencies. Over the past one and half decades, Karvy has involved as a veritable link between industry, finance and people. An ISO 9002 company, Karvys commitment to quality and retail reach has made it an integrated financial services company. A SEBI category 1 registrar, so far Karvy has handled over 675 issues as Registrars to public issues, processed over 52 million applications and is servicing over 16 million investors from various locations spread over 205 cities.
Karvys Mission
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Our mission is to be a leading and preferred service provider to our customers, and we aim to achieve this leadership position by building an innovative, enterprising, and technology driven organization which will set the highest standards of service and business ethics .
Vision of Karvy
To achieve & sustain market leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide world class quality services. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards.
KARVY MILESTONES
Karvy has travelled a success route over the past 20 years and positioned itself as an emerging financial service giant in which embeds the confidence and support of enviable patrons across the financial world. Patrons are also of diversified fields which includes over 16 million individual investors in various capacities and 300 corporate comprising the best out of the whole lot .Years of experience of holistic financial services and expertise in this industry has helped it gain the status it enjoys and cherishes today. Continued.
As discussed earlier, KARVY offers a single platform servicing multiple financial instruments in its bid to offer complete financial solutions to the varying needs of both corporate and retail investors. The range of products and services are provided by the following wings.
This is the flagship company of Karvy Group and it controls the organizational affairs, channels of progress, work affairs and pioneering business policies. This was the first business the KARVY group ventured into, but now they have transferred it into a joint venture with computer share limited of Australia, the worlds largest registrar. This company services around 6 lakh customer accounts in a spread of 250 cities/towns in India.
It is undisputable fact that the stock market is unpredictable and volatile, but despite this KSBL enjoys a high success rate as a wealth management option. Karvy Stock Broking Limited offers services that 28
are much beyond serving just as a medium for buying and selling stocks and shares. Instead it provides multi dimensional and multi focused services. It offers trading facilities for National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange and tries to make trading safe to maximum possible extent. For this they are assisted by their in depth research team for constant feedback and sound advices. The Finapolis is the monthly magazine that is published by this wing. It analyzes the latest stock market trends and takes a close look at the various investment options and products available in the market. A weekly report, called Karvy Bazaar Baatein, keeps people informed on the immediate trends in the stock market. In addition, the specific industry reports give more comprehensive information on various industries. It also offers special portfolio analysis packages that provide daily technical advice on scrips for successful portfolio management. It provides customized advisory services to help the client make right financial moves which specifically suits their portfolios.
Karvy Computershare Limited This wing of Karvy has traversed wide spaces to tie up with the worlds largest transfer agent, the leading Australian company Computershare Limited. This company services more than 75 million shareholders across 7000 clients and makes its presence felt in over 12 countries across 5 continents. It has also entered into a 50-50 joint venture with Karvy. After transferring completely to this new entity it 29
has tried to enrich the financial services industry as a whole. The worldwide network of Computershare helps it to adapt to the international standards in addition to leveraging the best technologies from all over the world.
Karvy Commodities focuses on taking commodities trading to new dimensions commodities of reliability an and profitability. They have made into a trading, essentially age-old practice,
sophisticated and scientific investment option. It helps in enabling trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil, pulses and cotton through a well-systematized trading platform.
Karvy Insurance Broking Pvt. Ltd., provides both life and non-life insurance products to retail individuals, high net-worth clients and corporates. With the opening up of the insurance sector and entry of a large number of private players in the business, it is in a position to provide tailor made policies for different segments of customers. 30
This wing of Karvy is registered with SEBI as a category 1 merchant banker and is also recognized as a leading merchant banker of the country. It has built its reputation by capitalizing the opportunities as and when it comes, be it in corporate consolidations, mergers and acquisitions or corporate restructuring. Involvement in raising resources for corporate or government undertaking successfully over the past two decades has given it a tremendous confidence boost.
Karvy Data Management Services is the domestic BPO arm of the Karvy Group and services corporate across various industry verticals and business horizons. KDMSL is emerging as a leading service provider in the areas of E-governance processing, insurance back office processing, record keeping, back office for BFSI clientele and is in pursuit to establish credentials in the areas of Telecom processing, Data management requirements of large corporates. KDMSL is striving to achieve leadership position by tapping the Indian retail sector boom, through a combination of our extensive branch network and proprietary IT backbone. Needless to say, KDMSL is run 31
as an independent outfit with seasoned professionals on board, who have decades of expertise in the industry. KDMSL is a fully owned subsidiary of Karvy Stock Broking Limited (KSBL), incorporated in April 2008 and is head quartered at Hyderabad.
Karvy Global Services is a knowledge services company. It provides specialist resources to extend in house analyst teams in driving clear business results. It serves investment banks, insurance providers, brokerages, hedge funds, research agencies, and life settlement providers across the United States, Middle East, and Europe. Their areas of focus include equity and industry research, commodity research, credit analytics, technology-based workflow solutions, insurance policy and portfolio valuation, and other specialized services.Incorporated in 2004, The Company is backed by over 25 years of experience through Indias largest financial services company, the Karvy Group. It is located in New York and have primary global delivery centre in Hyderabad, India.
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7) Karvy Finance:
Karvy Financial Services Ltd. is a wholly owned subsidiary of Karvy Stock Broking Ltd .It was established in the year 2009.KARVY Group, a pioneer in financial services in India, has forayed into retail finance space with its Non Banking Financial Corporation (NBFC) Karvy Financial Services Ltd or Karvy Finance. Karvy Finance has a vision to be the Category Champion for Retail Finance in India. Karvy Finance aims to offer a complete bouquet of financial services products to its customers with secured and unsecured lending products (such as loans against securities, loans against property and personal/business loans).
Karvy Realty (India) Limited (KRIL) is promoted by the Karvy Group, Indias largest financial services group. The group carries forward its legacy of trust and excellence in investor and customer services delivered with passion and the highest level of quality that align with global standards. Karvy Realty (India) Limited is engaged in the business of real estate and property services offering: 33
Buying/ selling/ renting of properties Identifying valuable investments opportunities in the real estate sector Facilitating financial support for real estate and investments in properties Real estate portfolio advisory services. 11) Karvy Fortune:
From the year 2007.Karvy Stock Broking Limited started offering its franchisee through Karvy Fortune, a separate vertical which would handle all the matters related to franchisees. It provided opportunities for the franchisees to join hands with the company that is ranked among top five in the country in all its business segments. Karvy Franchisees are provided with support of highly qualified and dedicated professionals. Karvy provides the complete backing of its research. Armed with these invaluable inputs, customers can take right investment decisions. Karvy Stock Broking Limited has over 1000 franchisees all over India and around 10 in Rajasthan.
QUALITY POLICY:
To achieve and retain leadership, Karvy aims for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy strives to exceed Customer's expectations.
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Achievements:
Among the top 5 stock brokers in India (4% of NSEvolumes) India's No. 1 Registrar & Securities Transfer Agents Among the top 3 Depository Participants Largest Network of Branches & Business Associates Among top 10 Investment banker
Research Methodology
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Research has its special significance in solving various operational and planning problem of business and industry. Research methodology is a way to systematically analyze the research problem.
OBJECTIVE OF STUDY
In view of the problem cited above, the study aims at analyzing the following major issues:
To know the awareness of MUTUAL FUND among people. To know the different Asset management companies involve in MUTUAL FUND. To know the different aspects of MUTUAL FUND according to different age, profession etc. To see the interest of people in investing in MUTUAL FUNDS. To know the future of MUTUAL FUNDS in India. To know the different attitudes of people regarding risk, rate of return, period of investment etc. To study the diversification of mutual fund.
TYPES OF RESEARCH
The customer research was carried out in two phases:
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a. An exploratory research was carried out to know what customer looks for in financial company and whether customers are satisfied or not with there products b. The other was a diagnostic study to identify the factors responsible for satisfactions or dissatisfaction of customer This research is descriptive and qualitative type of research which was used to collect useful data
Sample design
Data has been presented with the help of diagrammatic and pie chart etc.
Sampling procedure
The sample is selected in a random way, irrespective of them being investor or not or availing the services or not. It was collected through mails and personal visits to the known persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using the measures of central tendencies like mean, median, mode. The group has been selected and the analysis has been done on the basis statistical tools available.
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SCOPE OF STUDY
Research can be defined as a systemized effort to gain new knowledge. A research is carried out by different methodologies which have their own pros and cons. Research methodology is a way to solve research in study and solving research problems along with logic behind them are defined through research methodology. Thus while talking about research methodologies we are not only talking of research methods but also consider the logic behind the methods. We are in context of our research studies and explain why it is being used a particular method or technique and why the others are not used. So that research result is capable of being evaluated either by researcher himself or by others.
PROBLEM STATEMENT
Due to the falling Rate of Interest on Bank deposits, it is obvious that Investment in Mutual Fund will grow in year to come. However lack of Awareness of Mutual Fund is a hindering factor in expected growth of Mutual Fund Business. Under noted problems are envisaged in this area:
o o o o o o o o
Difficult in convincing people for investment. Difficult to change mind of the investor according to age and Profession. Difficult to make an approach to investors. Difficult to take an appointment with professional people. Difficult to get the documents required for formalities from investors Difficult to overcome an impassionate person who wants return in less time. Difficult to follow up the people whose names are being stored in a data. Difficult to remove the fear of risk from the minds of investors.
ASSUMPTIONS
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1. It has been assumed that sample of hundred represents the whole population 2. The information given by the customer is unbiased
LITERATURE SURVEY
The project is based on pure findings of facts
c. COLLECTION OF DATA
This research is solely based on primary research done by means of questionnaires targeted to respondents who primarily belong to the business and service sector. The sample size is 100 We have executed the project after prior discussion with our guide and structured in the following steps: a. Preparation of a questionnaire 39
b. The focal point of the designing the questionnaire was to comprehend the current investment scenario c. This questionnaire was primarily aimed to respondents who belong to the service and business class people d. The questionnaires were discussed through personal interface with the respondents
The initial issue expenses in respect of any scheme may not exceed 6% of the funds raised under that scheme.
Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall in no case put itself in a position whereby it has to make short sale or carry forward transaction or engage in Badla finance.
Every mutual fund shall get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long-term nature.
Pending deployment of funds of a scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled commercial banks.
Any security issued by way of private placement by an associate or group company of the sponsor.
The listed securities of group companies of the sponsor which is in excess of 30% of the net assets (of all the schemes of a mutual fund)
No mutual fund scheme shall invest more than 105 of its NAV in the equity shares or equity related instrument of any company. Provided 40
that, the limit of 10 percent shall not be applicable for investments in index fund or sector or industry specific schemes.
o
A Mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or equity related investments in case of open-ended schemes and 10 % of its NAV in case of close ended schemes.
Liquidity: It's easy to get your money out of a mutual fund. Write a
check, make a call, and you've got the cash.
Low cost: Mutual fund expenses are often no more than 1.5 percent of
your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index.
Flexibility: Mutual funds are flexible because they change time to time
and also if an Investor wants his money back before the maturity of the Fund He/she can easily redeem it.
No Guarantees:
No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.
Taxes:
During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
Management risk:
When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager 42
does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
This mutual fund association of India maintains high professional and ethical standards in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies that are by any means connected or involved. In the field of capital markets and financial services also involved in this code of conduct of the association.
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AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund Industry. Association of Mutual Fund in India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.
It develops a team of well qualified and trained Agent distributors. It implements a program of training and certification for all intermediaries and other engaged in the mutual fund industry.
AMFI undertakes all India awareness programmed for investors in order to promote proper understanding of the concepts and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.
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LIMITATIONS OF STUDY:
Every work has its own limitations. Limitations are extent to which the process should not exceed. The following limitations for the project are: 1. Duration of project was not enough to make our conclusion on such a vast subject. Time constraints has also become a major limitation 2. The sample size taken for drawing the conclusion was not sizeable 3. Investor ignorance was faced during discussions with respondents Research has been done only at Rajasthan Some of the persons were not so responsive. Possibility of error in data collection. Possibility of error in analysis of data due to small sample size.
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PROJECT FINDINGS:
There is great opportunity for Mutual Fund companies as there is a is a rise in number of people who want to invest in share market but dont have time and knowledge to do so, also these people want to take less risk .
With booming market and falling interest rate of bank deposits, people see mutual funds as an attractive financial tool which provide a high return rate at lower risk as compared to equity market.
Young people these days are particularly more interested in mutual funds because they see mutual fund as safe bet. Also these people have large disposable incomes and risk taking capability too.
The bad part is people are still ignorant about mutual funds and different schemes about mutual funds, hence it is very necessary to educate them about mutual funds
Advertising can also play a major part as it has been seen that people buy mutual fund looking at the brand name.
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ChartTitle
YES NO
11%
89%
It has been observed that approximately 90% of the correspondents invest in some or the other financial instrument. Though the percentage of choice of investment may vary due to different factors such as age, education, risk etc.
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Q2. Do you invest usinga. Scientific Tools Scientific Tools By Intuition Total b. By Intuition 47 53 100
ChartTitle
Scientific Tools ByIntuition
47% 53%
It has been observed that there is no major difference between the percentage of people who invest using scientific tools and those whose who believe in their intuition but it is seen that the younger generation is more leaning towards usage of scientific tools than their peers.
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ChartTitle
YES NO
23%
77%
A major chunk who have been interviewed it has been observed that almost 80% have some kind of insurance policy. It has also been observed that though LIC is a public sector undertaking, people of all ages have more faith in it as compared to other private sector companies.
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ChartTitle
YES NO
46% 54%
There is no major difference between the number of people who prefer keeping their money in fixed deposit and who dont opt for it. There is however a growing concern about the falling interest rate in banks on fixed deposit. 50
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ChartTitle
YES NO
34%
66%
It has been observed that only 34% they have invested in Bonds and Debentures AS compared to those who have not. This may be due to less knowledge about it or the time of re-demption.
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ChartTitle
YES NO
45% 55%
By the chart we observe that the percentage of people investing in equity and share market is not much but there is a going interest among people especially the younger generation to invest so as to make quick bucks with the market boom.
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YES NO
Only 12% of correspondent said they dont know any thing about mutual fund and 88% said they know about mutual funds but what we found that they have just a primary or very negligible knowledge about mutual funds and not really aware of the concept called MUTUAL FUND.
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ChartTitle
SAFE RISKY OTHERS TOTAL
The percentage of person who say that mutual fund is safe is 5%, an those who say it is risky is 25% but a major percentage of corresponds opt as other which is about 60%. These are people who say that mutual funds are high risk and high gain or even people who have no opinion.
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35 26 15 12 12 100
ChartTitle
BRAND NAME HIGH NAV HIGH RETURNS ADVERTISING OTHERS
It has been observed that brand name does matter when people are choosing a mutual fund as 35% said brand name. The next is NAV at about 26%. These two factors play a major role during selection of mutual funds.
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Weaknesses:
High Employee Turnover Low advertisements High Cost structure
Opportunity:
1. 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. 2. Marketing at rural and semi-urban areas. 3. Potential Market for investors 4. Tapping those people who are not satisfied with their existing business. 5. More aware people intending to invest in markets with right companies 57
Threats:
1. Increasing number of local players. 2. Past image of Mutual Fund. 3. Growing competition in this sector
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7. CONCLUSION:
After conducting the research work, and analyzing it carefully, it was seen that there are many other broking firms besides Karvy which are giving good competition to the company.. We came to certain conclusion after the study which is as follows: 1] The plan of Karvy is good provided the cost is reduced according to
what is prevailing in the market. Few services like cheque punching facility, loan against Mutual funds, Marginal funding is not provided by everyone in the market 1) There is tough competition in the market and hence the company needs to make flexible plan rather than a fixed policy to sustain in the market and retain the existing clients. 2) It was also noticed that few people still know Karvy as registrar and transfer agent and not aware of its Equity business. The company needs to create awareness in the market for the same.. . Response was very good from the customer regarding financial product because in this time every one wants more return on less investment I concluded by this that research that services and returns got more importance than goodwill. I also conclude that many financial services at one place is the another reason of its popularity
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India is passing through a tremendous growth phase with an average growth rate of 7-8% per annum. With this growth phase there is growth in each and every sector, hence there is rush to by shares and equities. It is also a very good time for mutual fund companies but it is advisable for them and their brokers that they dont just sell mutual funds but sell the right kind of scheme which is comfortable to a person nature of taking risk and need,
There is a general ignorance and questions about, what are mutual funds? What are different schemes of mutual funds? How to invest in a mutual? And many more. This thing should be handled by mutual fund companies and their brokers to provide knowledge to their clients.
It has been seen that there is a major increase in the percentage of young investors who have large amount of disposable income with them and want to invest, these type of prospective clients should be tapped at an early stage.
Small towns, villages are still untapped and can also acts as an business area of very huge potential.
Now even co-operative society can invest up to 10% of their capital in mutual funds which open the door to new and very important client base.
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APPENDIX
1. Are you a regular investor? a. Yes b. No 2. Do you invest using a. Scientific Tools b. By Intuition 3. What are your preferred investment priorities? Name of Investment Insurance Bank Bonds & Debentures Equities & Share Market PPF (Public Provident Fund) NSC (National Saving Schemes) Post Office Saving Schemes Real Estate Gold Others
4. What percentage of your income do you invest? a. Below 10% b. 10% - 30% c. d. 30% - 50% Above 50%
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6. What is your perception about Mutual Funds? a. Safe b. Risky c. Others 7. Have you invested in some Mutual Funds? a. Yes b. No
8. Do you know different type of Mutual Fund scheme present in the market? a. Yes b. No
9. How do you select and choose Mutual Funds? a. Brand Name c. High Dividends e. Others b. High NAV d. Advertisement
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BIBLIOGRAPHY
Books:
1. Kotler Philip , Marketing Management (2009), 2. Marketing Management, The McGraw.Hill Edition) 3. Berman, Berry and Joel r Evans (Oct- 1997) Retail Management: A strategic (Thirteenth Edition)
approach 8th edition Englewood cliffs NJ printcehall 4. Country analysis 1997 A framework to identify and evaluate the business environment national
MAGAZINE
A) OUTLOOK BUSINESS (FEB, 2009) B) BUSINESS STANDARD (April-July 2009) C) 4PS OF BUSINESS AND MARKETING (June 2009)
WEB: