SUMMER TRAINING REPORT On

NEED OF FINANCIAL ADVISORS FOR MUTUAL FUND INVESTORS

AT

KARVY STOCK BROKING LIMITED SUBMITTED IN THE PARTIAL FULFILMENT OF THE REQUIREMENT FOR AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (MBA)

TO MAHARSHI DAYANAND UNIVERSITY, ROHTAK

Submitted to:by:
Ms. Vasudha Dhingra
Faculty, AMITY BUSINESS SCHOOL MANESAR

Submitted
Parul Ghai
Roll No: - 2829 MBA (3rd Semester)

DECLARATION

AMITY BUSINESS SCHOOL, MANESAR (2008-10)

DECLARATION

I, Parul Ghai, Roll No. 2829 Class MBA(3rd Semester) of the AMITY BUSINESS SCHOOL, MANESAR, here by declare that Summer Training Report entitled 'Need of Financial Advisors For Mutual Fund Investors - (With Special Reference to KARVY) is an original work and the same has not been submitted to any other institute for the award of any other degree. A seminar presentation of the Training Report was made on .. and the suggestions by the faculty were duly incorporated.

Ms. Vasudha Dhingra Candidate Faculty (Presentation In charge)

Signature of the

Countersigned Director of the Institute [Dr. (Prof.) R.C.Sharma]

ACKNOWLEDGEMENT

Sometimes words fall short to show gratitude, the same happened with me during this project. The immense help and support received from KARVY stock broking limited overwhelmed me during the project. My sincere gratitude to Mr.Ashutosh Chaturvedi (Branch Head , NCR Region, KARVY) and Dr. (Prof.)R.C.Sharma (Director, ABSM), for providing me with an opportunity to work with KARVY STOCK BROKING LIMITED. I am highly indebted to Mr. Rajat Khare., Product Head ( MF), Sector 14, KARVY, Gurgaon Branch and Company Project Guide, who has provided me with the necessary information and his valuable suggestion and comments on bringing out this report in the best possible way. I also thank Ms. Vasudha Dhingra, (Faculty Guide), ABSM, who has sincerely supported me with the valuable insights into the completion of this project. I cannot forget the contribution of the staff of KARVY. As I troubled them through my queries at every stage of their work and I really appreciate the patience with which they resolved my doubts amidst their busy schedule, I express my sincere thanks to all of them. Last but not the least; my heartfelt love for my parents, whose constant support and blessings helped me throughout this project.

CONTENTS
Serial No 1. 2. 3. 4. 5. 6. 1. 2. 1. 2. 1. 1. 2. 3. Topic CHAPTER 1 Introduction Significance Of The Study Conceptualization Focus of the study Objectives Limitations CHAPTER 2 Industry Profile Company Profile CHAPTER 3 Review of Existing Literature Research Methodology CHAPTER 4 Analysis and Interpretation CHAPTER 5 Findings Recommendations Conclusion Bibliography Appendix Page No

INTRODUCTION
INTRODUCTION TO MUTUALFUND

Mutual funds are financial intermediaries which pool the savings of numerous individuals and invest the money thus raised in a diversified portfolio of securities, including equity, bonds, debentures and other instruments, thus spreading and reducing risk. The object is to maximize the return to the investor who participates in equity indirectly through mutual funds. Actually, it is a pool of money collected from investors and is invested according to stated investment objectives. Mutual Fund investors are like shareholders and they own the fund. They are not lenders or deposit holders in a mutual fund. Everybody else associated with a mutual fund is a service provider, who earns a fee. The money in the mutual fund belongs to the investors and nobody else. Mutual funds invest in marketable securities according to the investment objective. The value of the investments can go up or down, changing the value of the investors holdings. NAV of a mutual fund fluctuates with market price movements. The market value of the investors fund is also called as net assets. Investors hold a proportionate share of the fund in the mutual fund. New investors come in and old investors can exit, at prices related to net asset value per unit. A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Prices changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc. A mutual fund is the answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas- researches, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20th century phenomenon. In fact, mutual funds gained popularity
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only after the Second World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with different investment objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investments objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the funds and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund. In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). This project has been a great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. This project as a whole can be divided into two parts:
The first part gives an insight about the mutual funds and its various aspects. It is

purely based on whatever I learned at KARVY. One can have a brief knowledge about mutual funds and all its basics through the project. Other than that the real servings come when one moves ahead. Some of the most interesting questions regarding mutual funds have been covered. Some of them are: Why has it become one of the largest financial intermediaries? How investors do chose between funds? Most popular stocks among fund managers, most lucrative sectors for fund managers, a special report on Systematic Investment Plan, does fund performance persists and the topping of all the servings in the form of portfolio analysis tool and its application.
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All the topics have been covered in a very systematic way. The language has been kept simple so that even a layman could understand. All the datas have been well analyzed with the help of charts and graphs.

The second part consists of datas and their analysis, collected through a survey

done on 200 people. It covers the topic Need of Financial Advisors for Mutual Fund Investors. The data collected has been well organized and presented. Hope the research findings and conclusions will be of use. It has also covered why people dont want to go for financial advisors? The advisors can take further steps to approach more and more people and indulge them for taking their advices.

SIGNIFICANCE OF THE STUDY

This research work has an applied basis in nature, which can be used for further analysis and study. It has great practical implications in investment decisions. According to this study, an investment portfolio can be suggested by the financial advisors. Persons interested in investing in capital market can use the result of this study to make a comparison between investments with the advise of the financial advisors and that of without the advisors regarding risks and returns offered by various mutual funds and to find out suitable avenues for investments in capital market. Mutual fund industry is increasing day by day so aspect of risk & return concerned to various schemes of mutual fund become so important. There are various schemes available in market. There is big problem that what scheme should be chosen and which not. This study give proper attention on the advise of the financial advisors about risk & return of various schemes. This study has great significance because there are many type of investors. Some investors have risky attitude whereas some want to play safe game .On the basis of standard deviation & beta, these advisors can find out the risky situation of various schemes and accordingly give advise to the investors.. This study is highly concerned to risk & return of various fund which will be helpful in establish overview in relation to various mutual funds schemes as per the advise of the financial advisors. The company would be, with the help of this study, able to know about its strong points because of which the investors are availing their services as well as points in which it is lacking in satisfying the needs of the investors.

CONCEPTUALIZATION
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and The capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund

WORKING OF MUTUAL FUND:

The flow chart below describes broadly the working of a mutual fund:

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Fund Managers:
Fund Managers are the people who perform the role of managing investments under an organization.

Money in Trust:
Mutual Funds are for the benefit of its investors. Each scheme has the following: o The Investment portfolio (Portfolio Statement) o Account of income and expenditure o Account of assets and liabilities (Balance Sheet)

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The gains and losses have to be borne by investors. Thus, the Mutual Fund manages the schemes money in trust for the benefit of investors. SEBI regulates the expenditure by the organization (AMC) whether as charge for management fees or as other expenses.

Who all are involved in Mutual Fund? 1. Investors

Investors are the people who put their money or invest in the Mutual Fund. Every investor, given his/her financial position and personal disposition, has a certain inclination to take risk. The more risk one is capable of taking, the more return one can expect to get, and vice versa. However, most people have neither the time nor the knowledge to directly invest in the market. Mutual Fund is a solution for investors who lack either the time or the inclination or the necessary skills to actively manage their investments in individual securities. In the scheme of a Mutual Fund, the investor may have invested in a bank or any other safe option, thus depriving them of the possibility of getting a better return.

2. Trustees:
Trustees are the people who are responsible for ensuring the proper care of the investors interest in a scheme. In return, they are paid the trustees fees.

3. Asset Management Company (AMC):

Asset Management Companies are those companies who manage the investment portfolios of the schemes such as SCMF, FI, BMF, SMF, LICMF, etc. Its income comes from the management fee that it charges for its services. The management fee is calculated as a percentage of the net asset that is managed. In some countries, the management fee is based on performance.
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An AMC has to employ people in order to bear all the establishment costs related to its activities such as premises, furniture, etc. These costs are paid from the management fee earned by it. Expenses such as trustee fees, marketing costs, etc are borne by the Mutual Fund scheme. Sometimes, due to competition, the AMC is forced to bear these costs. As long as the income is more than the expenditure, the AMC is viable. All AMCs have certain Asset Under Management (AUM), below which it is not viable. In Indian context, it is difficult for an AMC to achieve Break-Even if its AUM is below Rs. 2,000 crores. Within an AMC, the fund manager ensures that the schemes funds are invested in such a way that the objectives of the scheme in the interest of its investors are achieved. The CEO, in turn, sees that the fund manager performs his duty in a correct way.

4. Distributors:
Distributors are the people who attract or bring in the investors into the schemes of a mutual fund. They earn a commission for this. The commission is an expense for the AMC and it may choose to bear the cost wholly or partially. Depending upon the financial and physical resources at their disposal, the distributors can be classified into 3 tiers: Tier-1 Distributor: These distributors have their own or franchise network reaching out to investors all across the country. Tier-2 Distributor: These distributors are mostly regional players. Tier-3 Distributor: These are the small distributors marginal players and have limited reach.
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Distributors bring in investors for the AMC, for which they earn commission from them. But they also safeguard the financial health of the investors who dont pay them in return. In recognition of this anomaly in the distribution structure, a body of financial planner is expected to emerge in the Indian financial market. They will safeguard the investors interests in return for a fee from the investors.

5. Registrars:
Registrars and Transfer Agents (R&T) keeps track of the Mutual Fund scheme on account of the investors investments and disinvestments from the scheme. The R&T of the Mutual Fund maintains the database of investors. As a result, interest based transactions of the existing investors in the schemes of an AMC are affected through its database server. Request to invest more money into the scheme, or to redeem money against existing investment in a scheme, are procured by R&T.

6. Custodial Depository:
The Custodial Depository maintains custody of the securities in which the scheme invests. This ensures an ongoing independent record of the investment of the scheme. It also follows various corporate actions such as bonus and dividends declared by the invested companies. Its importance is growing as securities are increasingly being dematerialized.

ORGANISATION OF MUTUAL FUND A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company
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(AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. :

Organizational set up of a mutual fund

MUTUAL FUND TERMINOLOGY

1. Net Asset Value (NAV) Net Asset Value (NAV) denotes the performance of a particular scheme of a mutual fund. Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also

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varies on day-to-day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. 2. Loads or No Load Fund A load fund is one that charges a percentage of NAV of entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs. 10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these their yields/ returns. However, the investors should also consider the performance track record and service standard of the mutual fund, which are more important. Efficient funds may give higher returns in spite of loads. A no- load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase on purchase or sale of units. 3. Sale or Repurchase/ Redemption Price The price or NAV a unit holder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable. Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unit holders. It may include exit load, if applicable.

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Concept of benchmarking for performance evaluation:

Every fund sets its benchmark according to its investment objective. The funds performance is measured in comparison with the benchmark. If the fund generates a greater return than the benchmark then it is said that the fund has outperformed benchmark , if it is equal to benchmark then the correlation between them is exactly 1. And if in case the return is lower than the benchmark then the fund is said to be underperformed. To measure the funds performance, the comparisons are usually done with: i) with a market index. ii) Funds from the same peer group. iii) Other similar products in which investors invest their funds.

Financial planning for investors( ref. to mutual funds):

Investors are required to go for financial planning before making investments in any mutual fund. The objective of financial planning is to ensure that the right amount of money is available at the right time to the investor to be able to meet his financial goals. It is more than mere tax planning. Steps in financial planning are: Asset allocation. Selection of fund. Studying the features of a scheme. In case of mutual funds, financial planning is concerned only with broad asset allocation, leaving the actual allocation of securities and their management to fund managers. A fund manager has to closely follow the objectives stated in the offer document, because financial plans of users are chosen using these objectives.

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FOCUS OF THE STUDY

The present study focuses on the need of the financial advisors for the mutual funds investors about various mutual funds schemes of different AMCs, paying special consideration to the services provided by the KARVY. The study focuses on:
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Finding out the need felt by the investors for the financial advisors for the mutual funds investments and finding out the major reasons for availing and not availing the services of the financial advisors.

Due to a large number of Mutual Fund schemes in existence, it was not feasible to invest in any of the scheme without analyzing the various schemes in the market and moreover without the advise of any professional advisor. Therefore, the analysis of investment opportunities is very important and for this the need for the financial advisor is felt.

OBJECTIVES OF THE STUDY

To find whether the investors? need the services of the financial advisors for

investing their hard core money in mutual funds or not.

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 To know why or why not investors? are availing the services of financial

advisors.
To find out whether the investors are satisfied with the services provided by the

KARVY.
To explore the concept general opinion about mutual funds.

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LIMITATIONS OF THE STUDY

Due to shortage of time I was not able to approach all the clients of KARVY as

these are thousands in number.

Study has been done in Gurgaon only but there are around 15 branches of

KARVY in NCR region. So it contains the responses and experiences of the clients of Gurgaon branch only.
Some of the persons were not so responsive as they did not show much interest

in filling the questionnaires and giving answers to my questions.

Possibility of error in analysis of data due to small sample size as one cannot

approach to a correct conclusion with the help of such a small sample.

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INDUSTRY PROFILE
History of the Indian mutual fund industry:
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases. 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. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile

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Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

Structure of the Indian Mutual Fund industry

The largest categories of Mutual Funds are the ones floated by the private sector and by Foreign Asset Management Companies. The largest of these are Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets managed by this category of AMCs is in excess of Rs.350 bn. Earlier the Indian Mutual Fund industry was dominated by the Unit Trust of India which has a total corpus of Rs.700 bn collected from more than 20 million investors. The UTI has many funds/schemes in all categories i.e. equity, balanced, income etc. with some being open-ended and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which is a balanced fund, is the biggest scheme with a corpus of about Rs.200 bn. UTI was floated by financial institutions and is governed by
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a special Act of Parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes. The second largest categories of mutual funds are the ones floated by nationalized banks. Canbank Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. GIC AMC floated by the General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. The aggregate corpus of funds managed by this category of AMCs is about Rs.200 bn.

About Mutual Funds

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund

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Saving s Unit s

AMC Trus t Return s Investment s

Unit holders

Registrar

SEBI

Trust Custodian AMC

The structure of Mutual Funds in India is governed by SEBI (Mutual Fund) Regulations, 1996.

It is mandatory to have a three tier structure of Sponsor Trustee Asset Management Company. The trust is established by a Sponsor or more than one sponsor who is like a promoter of a company. He appoints the Trustees who are responsible to the investors of the fund.

The Trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI is the business face of the mutual fund as it manages all the affairs of the fund by making investments in various types of securities.

Custodian, who is registered with SEBI, holds the securities of various schemes of the funds in its custody.

WHY MUTUAL FUNDS?

An investor normally prioritizes his investment needs before undertaking an investment. So different goals will be allocated different proportions of the total disposable amount.
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Investments for specific goals normally find their way into the debt market as risk reduction is of prime importance. This is the area for the risk-averse investors and here, mutual funds are generally the best option. The reasons are not difficult to see. One can avail of the benefits of better returns with added benefits of anytime liquidity by investing in open-ended debt funds at lower risk. Many people have burnt their fingers by investing in fixed deposits of companies who were assuring high returns but have gone bust in course of time leading to distraught investors as well as pending cases in the Company Law Board. This risk of default by any company that one has chosen to invest in, can be minimized by investing in mutual funds as the fund managers analyze the companies financials more minutely than an individual can do as they have the expertise to do so. They can manage the maturity of their portfolio by investing in instruments of varied maturity profiles. Since there is no penalty on pre-mature withdrawal, as in the cases of fixed deposits, debt funds provide enough liquidity. Moreover, mutual funds are better placed to absorb the fluctuations in the prices of the securities as a result of interest rate variation and one can benefits from any such price movement. Apart from liquidity, these funds have also provided very good post-tax returns on year to year basis. Even historically, we find that some of the debt funds have generated superior returns at relatively low level of risks. On an average debt funds have posted returns over 10 percent over one-year horizon. The best performing funds have given returns of around 14 percent in the last one-year period. In nutshell we can say that these funds have delivered more than what one expects of debt avenues such as post office schemes or bank fixed deposits. Though they are charged with a dividend distribution tax on dividend payout at 10 percent (plus a surcharge of 10 percent), the net income received is still tax free in the hands of investor and is generally much more than all other avenues, on a post tax basis. Moving up in the risk spectrum, we have people who would like to take some risk and invest in equity funds/capital market. However, since their appetite for risk is also limited, they would rather have some exposure to debt as well. For these investors,
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balanced funds provide an easy route of investment. Armed with the expertise of investment techniques, they can invest in equity as well as good quality debt thereby reducing risks and providing the investor with better returns than he could otherwise manage. Since they can reshuffle their portfolio as per market conditions, they are likely to generate moderate returns even in pessimistic market conditions. This risk of default by any company that one has chosen to invest in, can be minimized by investing in mutual funds as the fund managers analyze the companies financials more minutely than an individual can do as they have the expertise to do so. They can manage the maturity of their portfolio by investing in instruments of varied maturity profiles. Since there is no penalty on pre-mature withdrawal, as in the cases of fixed deposits, debt funds provide enough liquidity. Moreover, mutual funds are better placed to absorb the fluctuations in the prices of the securities as a result of interest rate variation and one can benefits from any such price movement. Next come the risk takers. Risk takers by their very nature, would not be averse to investing in high-risk avenues. Capital markets find their fancy more often than not, because they have historically generated better returns than any other avenue, provided, the money was judiciously invested. Though the risk associated is generally on the higher side of the spectrum, the return-potential compensates for the risk attached. Capital markets interest people, albeit not all for there are several problems associated. First issue is that of expertise. While investing directly into capital market one has to be analytical enough to judge the valuation of the stock and understand the complex undertones of the stock. One needs to judge the right valuation for exiting the stock too. It is very difficult for a small investor to keep track of the movements of the market. Entrusting the job to experts, who watch the trends of the market and analyze the valuations of the stocks will solve this problem for an investor. Mutual funds specialize in identification of stocks through dedicated experts in the field and this enables them to pick stocks at the right moment. Sector funds provide an edge and generate good returns if the particular sector is doing well.

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Next problem is that of funds/money. A single person cant invest in multiple highpriced stocks for the sole reason that his pockets are not likely to be deep enough. This limits him from diversifying his portfolio as well as benefiting from multiple investments. Here again, investing through MF route enables an investor to invest in many good stocks and reap benefits even through a small investment. This not only diversifies the portfolio and helps in generating returns from a number of sectors but reduces the risk as well. Though identification of the right fund might not be an easy task, availability of good investment consultants and counselors will help investors take informed decision.

COMPANY PROFILE
OVERVIEW ABOUT COMPANY
KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the who is who of Corporate India. KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products mutual funds, bonds, fixed deposit, equalities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking &
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Corporate Finance, placement of equity, IPOs, among others. KARVY has a professional management team and ranks among the best in technology, operations and research of various industrial segments. Banking & Corporate Finance, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, placement of equity, IPOs, among others. KARVY has a professional management team and ranks among the best in technology, operations, and more importantly, in research of various industrial segments.

History of KARVY
The birth of KARVY was on a modest scale in 1981. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company KARVY Consultants Limited. We started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 1985. Since then, we have utilized our experience and superlative expertise to go from strength to strength to better our services, to provide new ones, to innovate, diversity and in the process, evolved KARVY as one of Indias premier integrated financial service enterprise. Thus over the last 20 years KARVY has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services. And we have made this journey by taking the route of quality service, path breaking innovations in service, versatility in service and finallytotality in service. Our highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for us the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. Our values and vision of attaining total competence in our servicing has served as the building block for creating a great financial enterprise, which stands solid on our fortresses of financial strength-our various companies.

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With the experience of years of holistic financial servicing behind us and years of complete expertise in the industry to look forward to, we have now emerged as a premier integrated financial services provider. And today, we can look with pride at the fruits of our mastery and experience comprehensive financial services that are competently segregated to service and manage a diverse range of customer requirements.

MANAGEMENT TEAM
BOARD MEMBERS C Parthasarathy, Chairman & Managing Director Mr. C Parthasarathy, a leader in the financial services industry in India is responsible for building KARVY as one of India's truly integrated Financial Services Provider; he is a fellow member of the Institute of Company Secretaries of India, a Fellow Member of the Institute of Chartered Accountants of India and a graduate in law. As Chairman and Managing Director, he oversees the group's operations and renders vision and business direction. M Yugandhar, Managing Director Mr. M Yugandhar, Managing Director, founder member of KARVY Consultants Limited, has varied experience in the field of financial services spanning over 20 years. He is a Fellow Member of the Institute of Chartered Accountants of India and was involved in the statutory and branch audit of banks for 26 years. . M S Ramakrishna, Executive Director

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Mr. M S Ramakrishna, Director, founder member of KARVY Consultants Limited is the orchestrator of technology initiatives such as the call center in the service of the customer.

OTHER MEMBERS

K Sridhar V Mahesh V Ganesh S Gopichand J Ramaswamy M S Manohar S Ganapathy Subramanian

KARVY Group Cos

KARVY Depository Participant Services (NSDL & CDSL) KARVY the Finapolis KARVY Consultants Ltd. KARVY Stock Broking Ltd. (NSE & BSE) KARVY Investor Services Ltd. KARVY Computer Share Pvt. Ltd.
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KARVY Global Services Ltd. KARVY Commodities Broking Pvt. Ltd. KARVY Insurance Broking Pvt. Ltd. KARVY E-TDS Returns & PAN Application Process KARVY Reality Services

Karvy Consultants Ltd.

As the flagship company of the KARVY Group, KARVY Consultants Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress. Having emerged as a leader in the registry business, the first of the businesses that we ventured into, we have now transferred this business into a joint venture with Computershare Limited of Australia, the worlds largest registrar. With the advent of depositories in the Indian capital market and the relationships that we have created in the registry business, we believe that we were best positioned to venture into this activity as a Depository Participant. We were one of the early entrants registered as Depository Participant with NSDL (National Securities Depository Limited), the first Depository in the country and then with CDSL (Central Depository Services Limited). Today, we service over 6 lakhs customer accounts in this business spread across over 250 cities/towns in India and are ranked amongst the largest Depository Participants in the country. With a growing secondary market presence, we have transferred this business to KARVY Stock Broking Limited (KSBL), our associate and a member of NSE, BSE and HSE.

Karvy Stock Broking Ltd

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Member - National Stock Exchange (NSE), The Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE). KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows freely towards attaining diverse goals of the customer through varied services. Creating a plethora of opportunities for the customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal. It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one’s options with care. This is what we provide in our Stock Broking services.

KARVY the Finapolis

The paradigm shift from pure selling to knowledge based selling drives the business today. With our wide portfolio offerings, we occupy all segments in the retail financial services industry. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled us to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. To further tap the immense growth potential in the capital markets we enhanced the scope of our retail brand, KARVY the Finapolis , thereby providing planning and advisory services to the mass affluent. Here we understand the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will necessarily help in creating wealth. Judicious planning that is customized to meet
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the future needs of the customer deliver a service that is exemplary. The market-savvy and the ignorant investors, both find this service very satisfactory. The edge that we have over competition is our portfolio of offerings and our professional expertise. The investment planning for each customer is done with an unbiased attitude so that the service is truly customized. Our monthly magazine, Finapolis, provides up-dated market information on market trends, investment options, opinions etc. Thus empowering the investor to base every financial move on rational thought and prudent analysis and embark on the path to wealth creation.

Karvy Investor Service Limited

Recognized as a leading merchant banker in the country, we are registered with SEBI as a Category I merchant banker. This reputation was built by capitalizing on opportunities in corporate consolidations, mergers and acquisitions and corporate restructuring, which have earned us the reputation of a merchant banker. Raising resources for corporate or Government Undertaking successfully over the past two decades have given us the confidence to renew our focus in this sector.

:KARVY Computershare Pvt. Ltd.

We have traversed wide spaces to tie up with the worlds largest transfer agent, the leading Australian company, Computershare Limited. The company that services more than 75 million shareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint venture with us. With our management team completely transferred to this new entity, we will aim to enrich the financial services industry than before. The future holds new arenas of client servicing and contemporary and relevant technologies as we are geared to deliver better value and foster bigger investments in the business. The worldwide network of
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Computershare will hold us in good stead as we expect to adopt international standards in addition to leveraging the best of technologies from around the world. Excellence has to be the order of the day when two companies with such similar ideologies of growth, vision and competence, get together.

KARVY Global Services Ltd.

The specialist Business Process Outsourcing unit of the KARVY Group. The legacy of expertise and experience in financial services of the KARVY Group serves us well as we enter the global arena with the confidence of being able to deliver and deliver well. Here we offer several delivery models on the understanding that business needs are unique and therefore only a customized service could possibly fit the bill. Our service matrix has permutations and combinations that create several options to choose from. Be it in re-engineering and managing processes or delivering new efficiencies, our service meets up to the most stringent of international standards. Our outsourcing models are designed for the global customer and are backed by sound corporate and operations philosophies, and domain expertise. Providing productivity improvements, operational cost control, cost savings, improved accountability and a whole gamut of other advantages. .

KARVY Comtrade Ltd.

At KARVY Commodities, we are focused on taking commodities trading to new dimensions of reliability and profitability. We have made commodities trading, an essentially age-old practice, into a sophisticated and scientific investment option.

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Here we enable 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. Our technological and infrastructural strengths and especially our street-smart skills make us an ideal broker. Our service matrix is holistic with a gamut of advantages, the first and foremost being our legacy of human resources, technology and infrastructure that comes from being part of the KARVY Group.

KARVY Insurance Broking Pvt. Ltd.

At KARVY Insurance Broking Limited., we provide 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 with a large number of private players in the business, we are in a position to provide tailor made policies for different segments of customers. In our journey to emerge as a personal finance advisor, we will be better positioned to leverage our relationships with the product providers and place the requirements of our customers appropriately with the product providers. With Indian markets seeing a sea change, both in terms of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as an investment product. By setting up a separate entity, we would be positioned to provide the best of the products available in this business to our customers.

Karvy Reality & Service (India) Ltd.

KARVY Realty & Services (India) Limited (KRSIL) is engaged in the business of real estate and property services offering value added property services and offers individuals and establishments a myriad of options across investments, financing and advisory services in the realtysector.

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KARVY Realty & Services (India) Limited Take a Realty Byte !!! Promoted by the KARVY Group of companies, Indias largest integrated financial services company. KARVY Realty & Services India Limited carries forward its legacy of trust and excellence in investor and customer services delivered with a passion for services and the highest level of quality that align with global standards. KARVY Realty & Services (India) Limited welcomes you to take a reality check on realty options that you can be rest assured of and of course profit from.

Organization structure of KARVY:

Talking about the organization structure of karvy, we have the board of directors as the supreme governing body , the chairman being Mr. C parthasarthy, mr. m yugandhar as the managing director, mr m s ramakrishna andmr. Prasad v. potluri as directors. The board of diretors head the karvy group, karvy computershares limited, karvy investors services ltd., karvy comtrade, karvy stock broking ltd., and karvy global services ltd. Karvy group being the flagship company looks after the functional departments such as corporate affairs, group human resources, finance & accounting, training & development, technology services and corporate quality. Karvy computershare private limited facilitates mutual fund services, share registry and issue registry whereas merchant banking is looked after by karvy investor services ltd. Karvy stock broking ltd heads its another branch too ie. Karvy insurance broking ltd. The services offered by KSBL are: stock broking, depository, research, distribution, personal client group and institutional desk. And finally the BPO services are managed by karvy global services ltd. Summarizing it in a diagram, it can be presented as:

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The success ladder:

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OUR ALLIANCE
KARVY Computer share Private Limited is a 50:50 joint venture of KARVY Consultants Limited and Computershare Limited, Australia. Computereshare Limited is world's largest -- and only global -- share registry, and a leading financial market services provider to the global securities industry. The joint venture with Computershare, reckoned as the largest registrar in the world, servicing over 60 million shareholder accounts for over 7,000 corporations across eleven countries spread across five continents. Computershare manages more than 70 million shareholder accounts for over 13,000 corporations around the world. KARVY Computershare Private Limited, today, is India's largest Registrar and Share Transfer Agent servicing over 300 corporates and mutual funds and 16 million investors.

Spectrum of services offered by KARVY:

KARVY being the top registrar and transfer agent, functions as registrar in most of the issues in the country. Talking about the mutual fund services offered by KARVY, we can get the products of 33 AMCs over here. it deals in both closed ended funds as well as open ended too. Now one must be thinking why to get the mutual funds from KARVY instead of getting it directly from AMCs???we have great reasons for it: the first one being ; if we avail the services of KARVY then we can get the information about all the AMCs and their products at a single place along with expert recommendations whereas at an AMC we can get information about the products of that specific AMC only. And the second being wide network of KARVY.nowadays we can find KARVY offices at remote areas too.

Along with these, KARVY is very well handling the role of depository participant. Being registered with both the depositories i.e.; NSDL (national securities depository

40

ltd) and CDSL (central depository services ltd), KARVY can have access to both. Its wide network also facilitates it in distribution of retail financial products. KARVY believes in being updated always. So it is always ready to use latest technologies so that its clients always be in touch with the latest happenings along with KARVY. It offers e-business through internet through its website: www.karvy.com . Other than it, it also provides its various services through SMSes. Karvys services are not limited to its investors only rather its offerings are for its corporate clients and distributors too. it is very well aware of the fact that in this era of neck to neck competition, we cant ignore any of the aspects of our business.so theres a offering for everybodyeveryones welcome at KARVY.

Why should investors choose for KARVY?

Excellence is next to nothing.and here at KARVY everybody tries their best to offer excellent services to its clientele through its offerings maintaining the KARVY culture which includes: 1. Controlled and low cost service culture: KARVY is there to serve its client at the minimum possible cost. it controls cost by its various cost- cutting techniques and minimization of avoidable costs. 2. Large volume processing capability: being the largest financial service provider in the country, it has the unique distinction of operating its activities on a large scale which benefits all the parties cordially. 3. Adherence to strict time schedule: Karvy knows that time is money and tries it best to finish the task within the stipulated time schedule. 4. Expertise in coordinating multi-location responses: Karvy has got a wide network and hence one can find its branches at most of the places in India. Thus it enjoys its presence everywhere and coordinates among itself in solving the queries and in responding to any situation. 5.Expertise in managing independent entities such as banks, post-office etc.: the work culture of Karvy and the ethics followed inside Karvy makes its workforce compatible
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with everybody, so the Karvy people establishes good coordination with independent entities too.

6. Pooling of group resources: Karvy group consists of eight subsidiaries, so it can easily pool up its resources for accomplishment of its goals, whenever needed. The groups can help each other whenever there are peaks and lows, and even in the case when they have huge targets just as we saw few years back, Tata group pooling its resources to acquire Corus.

How KARVY achieved it?

The core competency of KARVY lies in the following points due to which it enjoys a competitive edge over its competitors. The following culture adopted by KARVY makes it all time favorite among its clientele: 1. Professionally managed by qualified and trained manpower 2. Uniquely structured in-house software and hardware department 3. Query handling within 48 hrs. 4. Strong secretarial, accounting and audit systems. 5. Unique work culture of working 7 days a week in 3 shifts. 6. Unmatched network spreading all over India.

How Achievements sounds synonymous to KARVY:

The landmarks achieved by KARVY very well define its success story. In the previous pages, we learnt how a company started by five chartered accountants, named as KARVY and company turned into todays KARVY group, the largest financial intermediary of India. But success didnt came to KARVY at a flow, the hard work and dedication of its workforce made it what it is todaygradually it achieved the following landmarks and now it has became what we call the KARVY group, now it is: 1. largest independent distributor for financial products. 2. amongst the top 5 stock broker.
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3. among the top 3 depository participants. 4. largest network of branches & business associates. 5. ISO 9002 certified operations by DNV. 6. Amongst top 10 investment bankers. 7. adjudged as one of the top 50 IT users in India by MIS south Asia. 8. full- fledged IT driven operation. 9. Indias no.1 registrar & securities transfer agent.

Clientele of KARVY:
KARVYs culture has helped KARVY in achieving such a distinct position in the market where it can boast of its huge client base. Be it a retail investor investing Rs. 500 in a SIP in Reliance mutual fund or be it the largest corporate house of the country: Reliance industries- everybody is heading towards KARVY for their wealth maximization, lets have a look at the clientele of KARVY : According to the data published , KARVY stock broking ltd. operates through more than 12000 terminals, more than 290000 accounts are maintained and commands over 3.14% market share of NSE. The distribution services have access to more than Rs. 40 billion Assets Under Management. KARVY being a depository participant with both NSDL and CDSL manages more than 700000 accounts from more than 380 locations. Talking about the registry services, it manages over 750 public/ right issues. at the same time, it is managing over 16 million portfolios as registrar. If we took a look at some of the top corporate houses availing the services of Karvy then we have: Reliance, IOC, IDBI,LIC, Hindustan Unilever, Principal Mutual Fund, Duetsche Mutual Fund, Yogokawa, Marico Industries, Patni Computers, Morgan Stanley, Glenmark, CRISIL, 3M, Kotak Mahindra Bank, Bharti Televenture, Infosys Technologies, Wipro, Infotech, IPCL,TATA consultancy services, UTI mutual fund etc. Thus in total karvy serves over 16 million investors and 300 corporates.

KARVY Mutual Fund Services

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Mutual funds have servings for everybody. Whichever type of investor you are, you will surely get a mutual fund meeting your requirements. But investing in mutual funds is no childs play therefore karvy mutual fund advisory services is there to guide in each and every step of investment in mutual funds so that the dream of wealth creation doesnt turns into nightmares. Its offerings includes: products of all the 33 major AMCs, research report about all the existing funds as well as NFOs, customized mutual fund portfolios designed for individual as well as institutional customers, it not only design the portfolios rather it offers continuous portfolio revision too depending on changing market outlook and evolving trends, it further gives access to its online consolidated portfolio statement. Thus karvy with its various offerings makes the investor feel safe in this dynamic environment of the Indian financial market. Karvy Computershare mutual fund services offers investors services, distributor services and client services. It can be said that karvy is dedicated towards providing quality service to all these three facets of the investment process. Karvy being an intermediary is well registered with the Association of Mutual Funds of India (AMFI). KARVY has got the registration no [ARN 0018] for mutual funds, which is mentioned on every form. After the procurement of forms from various AMCs, the forms are passed on to its various zonal and branch offices (as per their requirements) and then further processing is done either directly or through sub-brokers. Karvy operates through its sub- brokers, associates and its excellent pool of own direct employees. The employees are offered salary by karvy whereas the sub- brokers and associates get certain commission. Karvy has 70 branches and 3 franchisees in the eastern region. All the work of mutual funds is regulated from Rashbehari avenue branch, an extension of the JDR branch. The main source of earning for KARVY is the brokerage offered by the various AMCs known as pay-in. The amount offered may vary from AMC to AMC. Also, the franchisees have to pay a certain amount every month. Now karvy also pay a certain amount to the sub brokers and associates known as pay-out. The payout is decided according to the procurement done by them.

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QUALITY POLICY
To achieve and retain leadership, KARVY shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, KARVY will strive to exceed Customer's expectations.

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LITERATURE REVIEW
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, equities, fixed income bonds, corporate debentures, company fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc. all these investment options could be judged on the basis of various parameters such as- return, safety convenience, volatility and liquidity. measuring these investment options on the basis of the mentioned parameters, we get this in a tabular form
Return Equity Bonds Co. Debentures Co. FDs Bank Deposits 46 High Moderate Moderate Moderate Low Safety Low High Moderate Low High Volatility High Moderate Moderate Low Low Liquidity High Moderate Low Low High Convenience Moderate High Low Moderate High

PPF Life Insurance Gold Real Estate Mutual Funds

Moderate Low Moderate High High

High High High Moderate High

Low Low Moderate High Moderate

Moderate Low Moderate Low High

High Moderate Gold Low High

We can very well see that mutual funds outperform every other investment option. On three parameters it scores high whereas its moderate at one. comparing it with the other options, we find that equities gives us high returns with high liquidity but its volatility too is high with low safety which doesnt makes it favourite among persons who have low risk- appetite. Even the convenience involved with investing in equities is just moderate. Now looking at bank deposits, it scores better than equities at all fronts but lags badly in the parameter of utmost important ie; it scores low on return , so its not an happening option for person who can afford to take risks for higher return. The other option offering high return is real estate but that even comes with high volatility and moderate safety level, even the liquidity and convenience involved are too low. Gold have always been a favourite among Indians but when we look at it as an investment option then it definitely doesnt gives a very bright picture. Although it ensures high safety but the returns generated and liquidity are moderate. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. Straightforward, we can say that mutual fund emerges as a clear winner among all the options available. The reasons for this being:

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. Its principle of diversification allows the investors to taste all the fruits in one plate. just by investing in it, the investor can enjoy the best investment option as per the investment objective.

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Dispense the shortcomings of the other options: every other investment option has more or les some shortcomings. Such as if some are good at return then they are not safe, if some are safe then either they have low liquidity or low safety or both.likewise, there exists no single option which can fit to the need of everybody. But mutual funds have definitely sorted out this problem. Now everybody can choose their fund according to their investment objectives.

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. 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.

Flexibility of invested amount: Other then the above mentioned reasons, there exists one more reason which has established mutual funds as one of the largest financial intermediary and that is the flexibility that mutual funds offer regarding the investment amount. One can start investing in mutual funds with amount as low as Rs. 500 through SIPs and even Rs. 100 in some cases.

How do investors choose between funds? When the market is flooded with mutual funds, its a very tough job for the investors to choose the best fund for them. Whenever an investor thinks of investing in mutual funds, he must look at the investment objective of the fund. Then the investors sort out the funds whose investment objective matches with that of the investors. Now the tough task for investors start, they may carry on the further process themselves or can go for advisors like KARVY. Of course the investors can save their money by going the direct route i.e. through the AMCs directly but it will only save 1-2.25% (entry load) but could cost the investors in terms of returns if the investor is not an expert. So it is always advisable to go for MF advisors. The mf advisors thoughts go beyond just investment objectives and rate of return. Some of the basic tools which an investor may ignore but an mf advisor will always look for are as follow:
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1. 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). Rupee cost averaging allows an investor to bring down the average cost of buying a scheme by making a fixed investment periodically, like Rs 5,000 a month and nowadays even as low as Rs. 500 or Rs. 100. In this case, the investor is always at a profit, even if the market falls. In case if the NAV of fund falls, the investors can get more number of units and vice-versa. This results in the average cost per unit for the investor being lower than the average price per unit over time. The investor needs to decide on the investment amount and the frequency. More frequent the investment interval, greater the chances of benefiting from lower prices. Investors can also benefit by increasing the SIP amount during market downturns, which will result in reducing the average cost and enhancing returns. Whereas STP allows investors who have lump sums to park the funds in a low-risk fund like liquid funds and make periodic transfers to another fund to take advantage of rupee cost averaging. 2. Rebalancing: Rebalancing involves booking profit in the fund class that has gone up and investing in the asset class that is down. Trigger and switching are tools that can be used to rebalance a portfolio. Trigger facilities allow automatic redemption or switch if a specified event occurs. The trigger could be the value of the investment, the net asset value of the scheme, level of capital appreciation, level of the market indices or even a date. The funds redeemed can be switched to other specified schemes within the same fund house. Some fund houses allow such switches without charging an entry load. To use the trigger and switch facility, the investor needs to specify the event, the amount or the number of units to be redeemed and the scheme into which the switch has to be made. This ensures that the investor books some profits and maintains the asset allocation in the portfolio.

3. Diversification: Diversification involves investing the amount into different options. In case of mutual funds, the investor may enjoy it afterwards also through dividend transfer option. Under this, the dividend is reinvested not into the same scheme but into another scheme of the investor's choice.
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For example, the dividends from debt funds may be transferred to equity schemes. This gives the investor a small exposure to a new asset class without risk to the principal amount. Such transfers may be done with or without entry loads, depending on the MF's policy. 4. Tax efficiency: tax factor acts as the x-factor for mutual funds. Tax efficiency affects the final decision of any investor before investing. The investors gain through either dividends or capital appreciation but if they havent considered the tax factor then they may end loosing. Debt funds have to pay a dividend distribution tax of 12.50 per cent (plus surcharge and education cess) on dividends paid out. 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. SWP implies capital gains for the investor. If it is short-term, then the SWP is suitable only for investors in the 10-per-cent-tax bracket. Investors in higher tax brackets will end up paying a higher rate as short-term capital gains and should choose the dividend option. If the capital gain is long-term (where the investment has been held for more than one year), the growth option is more tax efficient for all investors. 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 12.50 per cent DDT paid by the MF on dividends. All the tools discussed over here are used by all the advisors and have helped investors in reducing risk, simplicity and affordability. Even then an investor needs to examine costs, tax implications and minimum applicable investment amounts before committing to a service.

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RESEARCH DESIGN
A Research Design is the framework or plan for a study, which is used as a guide in collecting and analyzing the data collected. It is the blue print that is followed in completing the study. The basic objective of research cannot be attained without a proper research design. It specifies the methods and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected, from which sources and by what methods. This chapter also includes the sub sections which are we can also say as the sub parts. This has been done in order to enhance the comfortability while understanding and reading the methodology of research.

PRESENT STUDY
A mutual fund is an investment company or trust that pools the resources of thousands of its shareholders or unit holders and invest on behalf of these diversified securities and a cross section of companies to attain the objective of the investors, which in turn achieve income or growth or both long with low risk (depending upon the securities). The present study is done to found out the need of financial advisors for tha investment in the mutual funds and also the services provided by KARVY and the satisfaction level of the investors availing these services .

Nature of the Study:

The study is both descriptive and exploratory in nature. It is descriptive as it describes the need felt by the mutual fund investors about the services provided by the financial advisors and exploratory as it explores and study the satisfaction level of the investors after availing the services of the financial advisors.

Data sources:

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Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people through personal interview, telephonic interview, questionnaire, etc. The secondary data has been collected through various journals and websites and some special publications of KARVY.

Sampling: 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.

Universe:
People who used to come to the office of KARVY whether for Mutual Funds Services or for any other service.

Sample size:
The sample size of my project is limited to 200 only. Out of which only 135 people attempted all the questions. Other 65 not investing in MFs attempted only 2 questions.

Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.-

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53

ANALYSIS AND INTERPRETATION

Data analysis:

Q1. Have you ever invested/are you interested in investing in mutual funds?

YES NO

135 65

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Q2. What is the reason for not investing in mutual funds?

Lack of knowledge about mutual funds Enjoys investing in other options Its benefits are not enough to drive you for investment No trust over the fund managers

25 10 18 12

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Q3. Where do you find yourself as a mutual fund investor?

Totally ignorant Partial knowledge of MFs Aware of only scheme in which invested Good knowledge of MFs/ Fully aware

28 37 46 24

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Q4. From where you have purchased the mutual funds?

Directly from the AMCs Brokers only ( large intermediaries) Broker/ sub-brokers Other sources

33 28 59 15

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Q5. Which feature of the mutual funds allure you most?

Diversification Professional management Reduction in risk and transaction cost Helps in achieving long term goal

42 29 34 30

58

Q6. According to you which is the most suitable stage to invest in mutual funds?

Young unmarried stage Young Married with children stage Married with older children stage Pre retirement stage

55 32 21 27

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Q7. Are you availing the services of personal financial advisors?

60

Yes No

87 48

61

Q8. Which expertise of the personal financial advisor is demanded most?

Portfolio review & investment recommendation Planning to achieve specific financial goals Managing assets in retirement Access to specialists in areas such as tax planning

43 35 30 27

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Q9. What is the major reason for using financial advisors?

Want help with asset allocation Dont have enough time to make own decision To explain various investment options Want to have surety about financial goals

42 23 37 33

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Q10. What is the major reason for not using financial advisor?

Have access to all resources needed Believe advisors are too expensive 64

18 53

Unsure how to find a trustworthy advisor Want to be in control of own investments

21 43

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Findings and Conclusions

At the survey conducted upon 200 people, 135 are already mutual fund investors or are interested to invest in future and the remaining 65 are not interested in it. So there is enough scope for the advisors to convert those 65 participants into investors through their convincing power and great communication skills. Now, when those 65 people were asked about the reason of not investing in mutual funds, then most of the people held their ignorance responsible for that. They lacked knowledge and information about the mutual funds. Whereas just 10 people enjoyed investing in other option. For 18 people, the benefits arousing from these investments were not enough to drive them for investment in MFs and 12 people expressed no trust over the fund managers decision. Again the financial advisors can trap upon these people by educating them about mutual funds. Out of the 135 persons who already have invested in mutual funds/ are interested to invest, only 18% have sound knowledge of MFs, 34% people are aware of only the schemes in which they have invested. 27% possess partial knowledge whereas 21% stands nowhere in knowledge about MFs. 33 participants buy forms directly from the AMCs, 28 from brokers only, 55 from brokers and sub-brokers even then 15 people buy from other sources. The brokers and sub brokers have the maximum reach so they should try to make those investors aware of the happenings, even the AMCs should follow it. When asked about the most alluring feature of MFs, most of them opted for diversification, followed by reduction in risk, helps in achieving long term goals and professional management respectively. Most of the investor preferred to invest at a young unmarried stage. Even 32 persons were ready to invest at a stage of young married with children but person with older children avoid investing due to increased expenses. But again the number rose to 27 at preretirement stage. Out of them 87 were already availing the services of financial advisors whereas 48 didnt. When asked about the expertise of financial advisors which they liked most? 43 of them favored portfolio review and investment recommendation, followed by planning to achieve 67

long term goals, managing assets in retirement and access to specialists in area such as tax planning. 42 participants regarded asset allocation as the major reason for going for financial advisors. 37 of them needed them to explain them the various investment options available.33 of them wanted to make sure that they were saving enough to meet their financial goals. While just 23 gave the reason- lack of time. When asked about one reason for not availing the services of financial advisors, about 53 of them pointed the advisors as expensive. 43 of them wished to be in control of their own assets.21 of them said that they find it difficult to get trustworthy advisors. Whereas 18 of them said they have access to all the necessary resources required.

Recommendations
The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. 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. So the advisors should try to change their mindsets. 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. The advisors may try to highlight some of the value added benefits of MFs such as tax benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc. these benefits are not offered by other options singlehandedly. So these are enough to drive the investors towards mutual funds. Investors could also try to increase the spectrum of services offered. Now the most important reason for not availing the services of advisors was spotted was being expensive. The advisors should try to charge a nominal fee at the beginning. But if not possible then they could go for offering more services and benefits at the existing rate. They should also maintain their decency and follow the code of ethics so that the investors could trust upon them. Thus the advisors should try to attract more and more persons and turn them into investors and finally their clients. 68

BIBLIOGRAPHY
Websites
www.the-finapolis.com www.karvy.com www.mutualfundsindia.com www.valueresearchonline.com www.moneycontrol.com www.morningstar.com www.yahoofinance.com www.theeconomictimes.com www.rediffmoney.com www.bseindia.com www.nseindia.com www.investopedia.com

Journals & Other References

KARVY The Finapolis KARVY- Business Associates Manual The Economic Times
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Business Standard Business India

APPENDIX

Questionnaire

Q1. Have you ever invested /are you interested in investing in mutual funds? a) b) Yes No [ ] [ ] (plz. attempt the next question)

Q2. What is the reason for not investing in mutual funds? a) Lack of knowledge about mutual funds b) Enjoys investing in other options c) Its benefits are not enough to drive you for investment d) No trust over the fund managers Q3. Where do you find yourself as a mutual fund investor? a) Totally ignorant b) Partial knowledge of mutual funds [ ] [ ] [ ] [ ] [ ] [ ]

c) Aware only of any specific scheme in which you have invested [ ] d) Fully aware Q4. From where you have purchased the mutual funds? a) Directly from the AMCs
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[ ]

[ ]

b) Brokers only c) Brokers/ sub-brokers d) Other sources Q5.Which feature of the mutual funds allure you most? a) Diversification b) Professional management c) Reduction in risk and transaction cost d) Helps in achieving long term goals [ ] [ ] [ ] [ ]

[ ] [ ] [ ]

Q6. According to you which is the most suitable stage to invest in mutual funds? a) Young unmarried stage b) Young Married with children stage c) Married with older children stage d) Pre-retirement stage [ ] [ ] [ ] [ ]

Q7. Are you availing the services of personal financial advisors? a) Yes
b) No [ ]

[ ]

Q8. Which expertise of the personal financial advisor is demanded 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 Q9. What is the major reason for using financial advisors? a) Want help with asset allocation b) Dont 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. [ ]

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Q10. 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 [ ] [ ] [ ] [ ]

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