KARVY STOCK BROKING LTD

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1. COMPANY PROFILE Karvy Group was formed in 1983 at hydrabad ,india . Karvy ranks among the top player in almost all the fields it operates. KarvyGroup is an Indian multinational corporation. It has 400 branches across India , Dubai and New York and with an additional 300+ franchisees across the country. The company has a range of services which include - stock broking , IPO marketing , registry and transfer of shares, depository participants, insurance broking , mutual fund distribution and commodity broking. 1

Transcript of KARVY STOCK BROKING LTD

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1. COMPANY PROFILE

Karvy Group was formed in 1983 at hydrabad ,india .Karvy ranks among

the top p layer in a lmost a l l the f ie lds i t opera tes . KarvyGroup  is

an Indian multinational corporation. It has 400 branches

across India, Dubai and New York and with an additional 300+ franchisees

across the country. The company has a range of services which include - stock

broking, IPO marketing, registry and transfer of shares, depository participants,

insurance broking, mutual fund distribution and commodity broking.

Karvy is India’s largest registrar and transfer Agent , servicing over 500 +

corporate and managing over 70,000,000 accounts making it the market leader .

ranked among the top five stock brokers in india , Karvy stock brokers limited

is a member of the national stock exchange of india and the Bombay stock

exchange . With over 6,00,000 active accounts , it ranks among the top five

depositry participant in india,registered with NSDL and CSDL . Karvy is also

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among the top Mutual fund mobilizers with over Rs. 5000 crores under

management .Karvy Realty services which started in 2006 , has quickly

established itself as a broker who adds value , in the realty sector .Karvy Global

offers niche off shoring services to its a US clients. Karvy has 575 offices over

375 locations acrossindia and overseas at dubai and new york .over 10,000

highly qualified people work of Karvy.

While the registry is a 50:50 joint venture with computer share of Australia, we

have equity participation by ICCI ventures limited and Baring Asia limited , in

Karvy stock Broking limited. Karvy , as a market leader , has always believed

in adding value to services it offers to clients . A top –notch research team based

in Mumbai and Hyderabad advise clients on their investment needs. With the

information overload today, Karvy ‘s team of analysis help investors make the

right calls , be it rquities or mutual funds.

Karvy offers services that are beyond just a medium for buying and selling

stocks and shares . It provides services Which are multi dimensional and multi

focused in their scope.There are several advantages in utilizing our stock

broking services , which are the reasons why it is one of the best in the country .

Karvy prides at making trading safe to the maximum possibleextent , by

accounting for several risk factors and planning accordingly .Karvy is assinted

in this task though support from in-depth research , constant feedback and

sound advisory facilities.

A highly skilled research team, comprising of technical analystas well as

fundamental specialists , secure result –oriented information on market trends ,

markets analysis and market daily reports delivered thrice daily:

1.The pre-session report , where maret scenario for the day is predicted,

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2. The mid –session report , timed to arrive during lunch break , where the

market forecast for the rest of the day is given ,

3. The post-session report , the final report for the day , where the market and

the report itself itself is reviewed.

Karvy stock broking services are widely networked across India, with the number of trading terminals providing retail stock broking facilities . The firm’s services have increasingly offered customers oriented convenience, providing to a spectrum of investors, high –net worth or otherwise , with equal dedication and competence.It also operates inthe debt and currency futures segments. Its offerings cover stock broking,demat services, distribution of financial products, investment banking and advisory services. It also has a specialized private client group that caters to HNI’s and institutional clients and offers financial planning and management. The Karvy Group comprises of KarvyComtrade Ltd, member of NCDEX and MCX; Karvy Insurance Broking Ltd, IRDA registered insurance broker; Karvy Investor Services Ltd, SEBI registered Merchant banker and underwriter and many more entities operating in realty, financial services, data processing and other areas of business. As on Dec31, 2009, KarvyStockBroking had 785 offices in 642 location across the

country

REACH & ACCESS (as on dec31 , 2009)

No .of employees : 3,051

No. of offices : 785

No. of sub _brokers : 490

No. of terminals with sub-brokers: 286

MARKET SEGMENTS

Equity cash

Equity Derivatives

Debt

Currency futures

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PRODUCTS AND SERVICES

Trading (Equities, Derivatives)

Investment banking

Distribution of financial products

Demat services

Margin Financing

PMS

Others

NUMBERS OF TERMINALS (as on dec 31, 2009)

Total 2,992

TERMINALS IN MAJOR CITIES

Mumabi 47

Delhi 16

Kolkata 19

Ahemdabad 16

Vadodara 46

Hydrabad 176

Bengaluru 19

Chennai 11

Jaipur 2

Pune 13

Others 2,627

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1.1 PROMOTERS & MANAGEMENT TEAM

Mr. C. ParthasarathyChairman & Managing Director

Mr. C. Parthasarathy is the Chairman and Managing Director of the diversified financial services Karvy group. C Parthasarathy (CP as he is better known in the Industry), has the uncanny knack of staying ahead of the curve and the foresight to spot opportunities that seem invisible on the horizon for the others.  Karvy’s entire history is a case study of turning adversity into opportunity. CP is a chartered accountant by qualification, whose entrepreneurial energy drove him to co-found Karvy in 1983 with a less-than-modest capital of Rs 150,000.

Over the years CP’s vision and leadership skills have helped the group navigate through the turbulent times with a strong sense of purpose and clarity of thought.

CP is one of the pioneers of financial inclusion. Under his leadership Karvy has won numerous industry awards and accolades. He also is an independent Director in many listed companies.

Mr. M. YugandharManaging Director

Mr. M Yugandhar, Managing Director is a founder member of the KARVY Group. He is a Fellow Member of the Institute of Chartered Accountants of India and has varied experience in the field of financial services spanning over 30 odd years.Yugandhar has helped position and build a strong brand for the group in the registry and other financial services businesses. The registry business of Karvy is one of its flagship businesses and with the collaboration with Computershare has grown to become the largest registrar in India for over two decades. Yugandhar has played a key role in building strong relationships with public sector banks and other PSUs which has helped Karvywin  some important mandates from some of India’s renowned companies.

Karvy under his guidance has helped create the equity cult and substantially built retail investor wealth. He is an Independent Director on the board of several reputed companies.  

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Mr. M. S. RamakrishnaDirector

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

Mr. Ramakrishna was a member of the Hyderabad Stock Exchange and has more than 30 years of experience in the financial services arena.  He has helped KARVY diversify into the field of medical transcription leveraging on the company's core competency of transaction processing.  

He is an Independent Director on the board of several reputed companies.

 

 MANAGEMENT TEAM

Mr.V.MaheshManaging Director – Karvy Data Management

Mr. V Mahesh, is the Managing Director of Karvy Data Management and has work experience spanning over 2 decades with in depth exposure to operations on most financial services businesses. Commencing his professional stint with the Registry business where he has to his credit managing over 300 IPOs and other forms of offerings, he was amongst the first few to work closely on the Book Building process initiated by SEBI in 1995. After initially working with MCS as an Assistant Vice President, he moved to Karvy.  He was also responsible to initiate the process of setting up the Depository participant business in Karvy and was responsible for both the operations and the marketing of the business. He has been nominated by the NSDL to various committees which addressed key changes to the overall processes and policies for the Demat business.

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Nurturing the passion for understanding and interpreting technology and processes, he was responsible to create and set up the centralized broking platform, centralized back office operations for all financial products and creating a network of over 500 branches covering over 300 locations for Karvy. He is also instrumental in creating and launching the Online platform of Karvy Stock Broking Limited.

 He is a Post Graduate in Commerce from University of Madras (M.Com). and also completed Post Graduate Diploma in Computer Applications.

Mr. V. GaneshCEO – Karvy Computershare

Mr. V Ganesh is a Chartered and Cost Accountant by profession and has over 14 years of experience in the financial services space. Before joining KARVY, he was associated with ITC’s risk management and financial audit services department. Earlier he was associated with Proctor and Gamble and was responsible for product pricing and financial support functions for P&G’s soaps and health care businesses. Presently, he oversees the Sales and Marketing initiatives at KARVY Computershare and also heads MF services business. He was instrumental in setting up the mutual fund registry business for Karvy. His experience in KARVY, spread over 13 years, is across the techno commercial space with responsibilities for setting up a PAN India branch network, back office processing, interfaces with other intermediaries, call center, web initiatives, online trading, and other activities in the transfer agency business.

Mr.Amit SaxenaCEO &Wholetime Director - Karvy Finance

AmitSaxena is the CEO &Wholetime Director, Karvy Financial Services Ltd. He started Karvy Finance, a NBFC in the challenging times of 2009 and has successfully built the company in a short period as a leader in Micro &Small Business Loan Segment with a multi product suite, a differentiated and direct neighbourhood business loan lending model and a pan India branch network.

Prior to establishing Karvy Finance, AmitSaxena worked with Citigroup Consumer Finance across leadership roles in Auto Finance, Mortgages and Consumer Finance. AmitSaxena with his keen knowledge of MSME & Consumer Finance industry since its inception in mid-nineties in India, has been instrumental in establishing new

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geographies, new products &start up ventures across India throughout his career. Conceptualisation, innovation and execution being the key elements defining his success in every venture.

Mr.AmitSaxena is an alumnus of Harvard Business School, IIM Lucknow and BITS-Pilani. He is an avid speaker at various forums like Wharton India Economic Forum, Harvard India Conference & ASSOCHAM MSME Mudra Bank Summit championing the cause and highlighting the vast potential of MSME segment and Indian entrepreneurs.

Mr.Sushil SinhaWholetime Director - KarvyComtrade

Mr.SushilSinha, the Country Head of KarvyComtrade Ltd, has successfully made KarvyComtrade a force to reckon with in the marketplace. With over 10 years of expertise in the broking sector, he is a well-known face today in the electronic and print media. Under his aegis, the company has won numerous honours and awards nationwide, including the UTV Bloomberg Leadership Award 2011 and India’s Best Market Analyst Award—for two consecutive years—by Zee Business.

Having joined KarvyComtrade in December 2005 as Senior Manager (Business Development), he has steadily climbed up the organizational ladder to head the business now. Before joining KCTL, he worked in Geojit Financial Securities for two years. Prior to that, he had worked with the Agriculture department in the Government of Jharkhand under various capacities for four years.

A science graduate, Mr.Sinha has completed two MBAs, one majoring in Personnel Management & Industrial Relations from Patna University and the other in Agri Business Management from IIPM, Bangalore, a Ministry of Commerce, Government of India institution.

Mr. P. B. RamapriyanVice President & Head - Financial Product Distribution

Mr.Ramapriyan is working with Karvy for over 2 decades, He has strength of sorts in the distribution of Financial products including  Equity, Bonds, Fixed Deposits and Auto Finance.  He has successfully marketed several financial products for large number of

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corporate of various sizes. He is also responsible for managing the Pan India Network of brokers and sub-brokers. He has been instrumental in Karvy’s success in distribution of debt products.

Mr. Rajiv R. SinghVice President & Business Head - Karvy Stock Broking Limited

Mr. Rajiv R. Singh is the Vice President & Business Head of the Equity Broking business. He has been associated with Karvy for more than a decade. He joined Karvy in 2001 and moved up the corporate ladder with his sheer dedication, commitment and hard work.

Rajiv, with an enormous experience in finance industry leads the responsibility of all aspects of Karvy’s equity broking business which includes strategy, revenue generation, business development and overall customer satisfaction. Rajiv is widely regarded as a results-driven leader who plays a key role in building the stock broking business of KSBL and make it one of the largest stock broking houses in the country. Rajiv also plays a key role in identifying skills and motivating staff in providing outstanding client service.

Rajiv is a Certified Management Accountant–CMA.

Mr.SwapnilPawarManaging Director & CEO - Karvy Capital Limited

Mr.SwapnilPawar heads Karvy Capital Ltd. He is an MBA from IIM Ahmedabad and a B.Tech in Aerospace Engineering from IIT Bombay. He was one of the co-founders of PARK Financial Advisors, and brings with him unique capabilities of product management to Karvy. Swapnil also worked with The Boston Consulting Group (BCG), Mumbai, across various industries including Banking, Technology and Engineering prior to starting PARK. Swapnil’s areas of interest include quantitative finance, macroeconomics and investment strategies. He has also published a book on global financial crisis titled Anatomy of Froth - Demystifying the Global Financial Crises and Lessons to Learn.

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Mr. J. RamaswamyGroup Head - Corporate Affairs

Mr.Ramaswamy, the Group Head for Corporate Affairs, is the official spokesperson for the Karvy Group. Mr.Ramaswamy has more than 25 years of experience in various spheres of the financial services industry, of which 10 years has been in the Legal and Secretarial division of Reliance, handling various public issues, mergers, monitoring performance of various departments, liaising with regulatory bodies and outside agencies (viz., the stock exchange, SEBI, DCA and others), and coordinating all the board meetings.

The Corporate Affairs Division is involved in integration and strategic planning of all the business divisions of Karvy. Mr.Ramaswamy’s job responsibility encompasses monitoring the performance of all divisions through regular reviews, initiating and implementing new business initiatives, corporate communication and media relations, acting as official spokesperson for the entire Group, conceptualizing various policies and procedures to improve the internal work environment, and working on a parallel platform with the HR department to develop models for raising productivity and cost-effectiveness. He oversees the international business of Karvy Global Services.

Mr. Deepak GuptaGroup Head - HR

Mr. Deepak Gupta brings with him over 20 years of experience in HR, spanning financial services, ITes and manufacturing. Prior to joining Karvy, he was Chief People Officer, Human Resources, with Bajaj Finance Limited, a Rahul Bajaj Group Company, based at Pune. He has also had a successful career with a few prominent corporate, including SREI, Enam, CRISIL, CEAT Financial Services and Reliance Industries.

Deepak holds a Master’s degree in Human Resources Development from Jamnalal Bajaj Institute of Management and a diploma in Business Management and Industrial Relations.

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Mr. G. Krishna HariGroup Head - Finance

Mr. G. Krishna Hari holds a Bachelors degree in Commerce and is associate member of the Institute of Chartered Accountants of India (ICAI). He has over 27 years of experience in the areas of finance and accounts functions encompassing fund raising, financial reporting, management accounting, working capital management, taxation, budgeting and forecasting and financial due diligence reviews for mergers & acquisitions and investment proposals.

He has been associated with the Karvy Group for the past 15 years and is currently designated as the Vice President- Finance & Accounts at Karvy Stock Broking Limited. Prior to joining Karvy, he was the head of finance & accounts division in Asia Pacific Investment Trust Limited, Hyderabad (Formerly Nagarjuna Investment Trust Limited) an NBFC Company.

AWARDS & ACCOLADES

Mr.RajatParthasarathy, Director, Karvy Group and Mr. Rajiv Ranjan Singh, Vice-President & Business Head - Stock Broking receiving awards from India’s premier stock exchange BSE - the SKOCH – BSE Order of Merit award and the SKOCH – BSE Aspiring Nation award - in recognition of its efforts to educate, empower and help create an enlightened corps of financial market investors.

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Mr.Sudhendoo Gandhi, GM, KSBL, receiving the "NSDL Star Performer Award 2014” for Highest Asset Value

Mr.SushilSinha, Business Head, KCTL &Mr. Suresh Raval, General Manager, KCTL receiving the ‘Broker with Best Corporate Desk for Commodity Broking’ award from Hon’ble Finance Minister then - Sri PranabMukerjee at the Bloomberg UTV Financial Leadership Awards 2011

Mr. C Parthasarathy, Chairman, Karvy Group, receiving the ‘Largest E-Broking House in India’ award at the Dun & Bradstreet – BSE Equity Broking Awards 2010

1.2 Karvy Stock Broking Limited

2014Won the prestigious "NSDL Star Performer Award 2014 for Highest Asset Value". Organized by the National Securities Depository, the NSDL Star Performers Awards recognize the best performers in the securities and depositories space. The award ceremony was organized on Saturday, December 20, 2014, at TajCoromadel, Chennai. Karvy has won this award consecutively for last two years. 

2010"Largest E-Broking House in India" at BSE Equity Broking Awards 2010  by Dun & Bradstreet held in ITC Grand Maratha, Mumbai. This award is based on the study carried out by the world’s leading provider of business information, knowledge and insight, Dun & Bradstreet in association with the oldest stock exchange in India, the Bombay Stock Exchange. 

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The BSE-D&B Equity Broking Awards recognizes the brokerage firms based on the number of online accounts, volume of online trade, and service delivery of their online trading platform. Karvy Stock Broking Limited has won this prestigious award for its state of the art, in-house developed KarvyOnline, a comprehensive online investment platform that enables investors to invest, anytime from anywhere.

2007Bagged ace award by receiving the coveted Annual Award for 2006 for "Best CEO, Initiating HR Practices”, by, the Uttar Pradesh Chapter of National Institute of Personnel Management (NIPM). The Award has been conferred to Mr. C Parthasarathy, CMD, Karvy Group, for his contribution to HR practices in Lucknow, organized by UP chapter of NIPM.

2007"Amity Corporate Excellence" award at the 9th International Business Summit and Research Conference-INBUSH (International  Business Horizon) which was held at a glittering function in Noida. This award was conferred by Amity International Business School, Noida.

2006ISTD – "Vivekananda National Award" for Excellence in HRD & Training

2004"Best Depository Participant in the country" award

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2. INTRODUCTION OF THE TOPIC

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 collected from the investors is then

invested in capital market instruments such as shares, debentures and other

securities. The income earned through these investments and the appreciation of

capital is hence shared by the unit holders in proportion to the number of units

owned by them.

A mutual fund is the most suitable and appreciated investments instruments

for a comman man, as it offers an opportunity to invest in a

diversified ,professionally managed basket of securities at a relatively lower

cost .The figure below represents the operation process of mutual fund.

Every mutual fund portfolio has its individual clearly stated investment objective and strategy . In today’s complex and modern financial environment,

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mutual funds have emerged as an ideal investment. Markets for mutual funds have become mature and informationdriven .Prices of such instruments fluctuate with global events.

ORGANIZATION OF MUTUAL FUNDS

In India, mutual funds have organisation structure as per the guidelines framed by the security and exchange board of India (SEBI). The guidelines prescribed SEBI list the authority and responsibility of trustee and asset management companies . The primary objective are control , promote , effectively regulate , abd to protect the investor’s right and to ensure efficient trading of units.

Operation of mutual fund initiate investing their fund money on mutual fund schemes followed with the mutual fund managers handling and smartly invesing the investor’s funds . Smart and strategic investments by the funds managers will increase the NET ASSET VALUE (NAV) or Unit value of funds. Fund’s NAV or nit value becomes high wen fund manager nvestment policy generates desired return on capital market . Fund’s Unit Return depends on fund performance , portfolio asset allocation , fund return and efficient capital market. Also factors such as international capital markt, liquidity and economic policy play an mportant role in determining returns.

The organisational setup of mutual funds can be represented with the following figure:

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A mutual fund is organized in the form of trust . The major stake holders to a mutual funds are:

Sponsor Trustees Asset Management companies (AMC) Custodian

The trust is organised and established by a sponsor or a group of sponsars who act as the company’s promoters. For maximum investors return and benefit, the property of mutual funds is held by the trustee. This s done to boost investor confidence and minimize risk . Asset management companies are responsible for managing the funds by making investment in various types of securities . These asset management companies are approved by security and exchange board of india (SEBI) . Custodians are responsible for holding in custodians are registered with sebi . The trustees have the general power .they are vested with the authority to closely and regularly track perfortmance and compliance of SEBI regulatons by mutual funds.

According to SEBI’S regulations , at least Two third of the directors of trustee company should not be associated with sponsors , hence they should be independent . another regulations is that 50% of the directors of asset management companies should be independent . it is mandatory for all mutual funds to be registered with SEBI before initiating their schemes.

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HISTORY OF MUTUAL FUNDS

The origin of pooled investing concept dates back to the late 1700s in Europe, when "a Dutch merchant and broker invited subscriptions from investors to form a trust to provide an opportunity to diversify for small investors with limited means." The emergence of "investment pooling" in England in the 1800s brought the concept closer to the US shores. The enactment of two British laws, the Joint Stock Companies Acts of 1862 and 1867, permitted investors to share in the profits of an investment enterprise and limited investor liability to the amount of investment capital devoted to the enterprise. Shortly thereafter, in 1868, the Foreign and Colonial Government Trust was formed in London. It resembled the US fund model in basic structure, providing "the investor of moderate means the same advantages as the large capitalists by spreading the investment over a number of different stocks." More importantly, the British fund model established a direct link with the US securities markets, helping finance the development of the post-Civil War US economy. The Scottish American Investment Trust, formed in February 1873, by fund pioneer Robert Fleming, invested in the economic potential of the US, chiefly through American railroad bonds. Many other trusts followed them, who not only targeted investment in America, but led to the introduction of the fund investing concept on the US shores in the late 1800s and the early 1900s. The first mutual or 'open-ended' fund was introduced in Boston in March 1924. The Massachusetts Investors Trust, which was formed as a common law trust, introduced important innovations to the investment company concept by establishing a simplified capital structure, continuous offering of shares, and the ability to redeem shares rather than holding them until dissolution of the fund and a set of clear investment restrictions as well as policies. The stock market crash of 1929 and the Great Depression that followed greatly hampered the growth of pooled investments until a succession of landmark securities laws, beginning with the Securities Act, 1933 and concluded with the Investment Company Act, 1940, reinvigorated investor confidence. Renewed investor confidence and many innovations led to relatively steady growth in industry assets and number of accounts.

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Mutual funds really captured the public's attention in the 1980s and '90s when mutual fund investment hit record highs and investors saw incredible returns. However, the idea of pooling assets for investment purposes has been around for a long time. Here we look at the evolution of this investment vehicle, from its beginnings in the Netherlands in the 18th century to its present status as a growing, international industry with fund holdings accounting for trillions of dollars in the United States alone.

In the Beginning Historians are uncertain of the origins of investment funds; some cite the closed-end investment companies launched in the Netherlands in 1822 by King William I as the first mutual funds, while others point to a Dutch merchant named Adriaan van Ketwich whose investment trust created in 1774 may have given the king the idea. Ketwich probably theorized that diversification would increase the appeal of investments to smaller investors with minimal capital. The name of Ketwich's fund, EendragtMaaktMagt, translates to "unity creates strength". The next wave of near-mutual funds included an investment trust launched in Switzerland in 1849, followed by similar vehicles created in Scotland in the 1880s.

The idea of pooling resources and spreading risk using closed-end investments soon took root in Great Britain and France, making its way to the United States in the 1890s. The Boston Personal Property Trust, formed in 1893, was the first closed-end fund in the U.S. The creation of the Alexander Fund in Philadelphia in 1907 was an important step in the evolution toward what we know as the modern mutual fund. The Alexander Fund featured semi-annual issues and allowed investors to make withdrawals on demand.

The Arrival of the Modern Fund The creation of the Massachusetts Investors' Trust in Boston, Massachusetts, heralded the arrival of the modern mutual fund in 1924. The fund went public in 1928, eventually spawning the mutual fund firm known today as MFS Investment Management. State Street Investors' Trust was the custodian of the Massachusetts Investors' Trust. Later, State Street Investors started its own fund in 1924 with Richard Paine, Richard Saltonstall and Paul Cabot at the helm. Saltonstall was also affiliated with Scudder, Stevens and Clark, an outfit that would launch the first no-load fund in 1928. A momentous year in the history of the mutual fund, 1928 also saw the launch of the Wellington Fund, which was the first mutual fund to include stocks and bonds, as opposed to direct merchant bank style of investments in business and trade.

Regulation and Expansion By 1929, there were 19 open-ended mutual funds competing with nearly 700 closed-end funds. With the stock market crash of 1929, the dynamic began to change as highly-leveraged closed-end funds were wiped out and small open-end funds managed to survive.

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Government regulators also began to take notice of the fledgling mutual fund industry. The creation of the Securities and Exchange Commission (SEC), the passage of the Securities Act of 1933 and the enactment of the Securities Exchange Act of 1934 put in place safeguards to protect investors: mutual funds were required to register with the SEC and to provide disclosure in the form of a prospectus. The Investment Company Act of 1940 put in place additional regulations that required more disclosures and sought to minimize conflicts of interest. (For further reading, see Policing The Securities Market: An Overview Of The SEC.)

The mutual fund industry continued to expand. At the beginning of the 1950s, the number of open-end funds topped 100. In 1954, the financial markets overcame their 1929 peak, and the mutual fund industry began to grow in earnest, adding some 50 new funds over the course of the decade. The 1960s saw the rise of aggressive growth funds, with more than 100 new funds established and billions of dollars in new asset inflows.

Hundreds of new funds were launched throughout the 1960s until the bear market of 1969 cooled the public appetite for mutual funds. Money flowed out of mutual funds as quickly as investors could redeem their shares, but the industry's growth later resumed. 

Recent Developments In 1971, William Fouse and John McQuown of Wells Fargo Bank established the first index fund, a concept that John Bogle would use as a foundation on which to build The Vanguard Group, a mutual fund powerhouse renowned for low-cost index funds. The 1970s also saw the rise of the no-load fund. This new way of doing business had an enormous impact on the way mutual funds were sold and would make a major contribution to the industry's success.

With the 1980s and '90s came bull market mania and previously obscure fund managers became superstars; Max Heine, Michael Price and Peter Lynch, the mutual fund industry's top gunslingers, became household names and money poured into the retail investment industry at a stunning pace. More recently, the burst of the tech bubble and a spate of scandals involving big names in the industry took much of the shine off of the industry's reputation. Shady dealings at major fund companies demonstrated that mutual funds aren't always benign investments managed by folks who have their shareholders' best interests in mind.

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THE MUTUAL FUND INDUSTRY IN INDIA

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India (UTI) at the initiative of the Reserve Bank of India (RBI) and the Government of India. The objective then was to attract small investors and introduce them to market investments. Since then, the history of mutual funds in India can be broadly divided into six distinct phases. Phase I (1964-87): Growth Of UTI: In 1963, UTI was established by an Act of Parliament. As it was the only entity offering mutual funds in India, it had a monopoly. Operationally, UTI was set up by the Reserve Bank of India (RBI), but was later delinked from the RBI. The first scheme, and for long one of the largest launched by UTI, was Unit Scheme 1964. Later in the 1970s and 80s, UTI started innovating and offering different schemes to suit the needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in 1971. The first Indian offshore fund, India Fund was launched in August 1986. In absolute terms, the investible funds corpus of UTI was about Rs 600 crores in 1984. By 1987-88, the assets under management (AUM) of UTI had grown 10 times to Rs 6,700 crores. Phase II (1987-93): Entry of Public Sector Funds: The year 1987 marked the entry of other public sector mutual funds. With the opening up of the economy, many public sector banks and institutions were allowed to establish mutual funds. The State Bank of India established the first non-UTI Mutual Fund, SBI Mutual Fund in November 1987. This was followed by Canbank Mutual Fund,LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. From 1987-88 to 1992-93, the AUM increased from Rs 6,700 crores to Rs 47,004 crores, nearly seven times. During this period, investors showed a marked interest in mutual funds, allocating a larger part of their savings to investments in the funds. Phase III (1993-96): Emergence of Private Funds: A new era in the mutual fund industry began in 1993 with the permission granted for the entry of private sector funds. This gave the Indian investors a broader choice of 'fund families' and increasing competition to the existing public sector funds. Quite significantly foreign fund management companies were also allowed to operate mutual funds, most of them coming into India through their joint ventures with Indian promoters. The private funds have brought in with them latest product innovations, investment management techniques and investor-servicing technologies. During the year 1993-94, five private sector fund houses launched their schemes followed by six

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others in 1994-95. Phase IV (1996-99): Growth And SEBI Regulation: Since 1996, the mutual fund industry scaled newer heights in terms of mobilization of funds and number of players. Deregulation and liberalization of the Indian economy had introduced competition and provided impetus to the growth of the industry. A comprehensive set of regulations for all mutual funds operating in India was introduced with SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all funds. Erstwhile UTI voluntarily adopted SEBI guidelines for its new schemes. Similarly, the budget of the Union government in 1999 took a big step in exempting all mutual fund dividends from income tax in the hands of the investors. During this phase, both SEBI and Association of Mutual Funds of India (AMFI) launched Investor Awareness Programme aimed at educating the investors about investing through MFs. Phase V (1999-2004): Emergence of a Large and Uniform Industry: The year 1999 marked the beginning of a new phase in the history of the mutual fund industry in India, a phase of significant growth in terms of both amount mobilized from investors and assets under management. In February 2003, the UTI Act was repealed. UTI no longer has a special legal status as a trust established by an act of Parliament. Instead it has adopted the same structure as any other fund in India - a trust and an AMC. UTI Mutual Fund is the present name of the erstwhile Unit Trust of India (UTI). While UTI functioned under a separate law of the Indian Parliament earlier, UTI Mutual Fund is now under the SEBI's (Mutual Funds) Regulations, 1996 like all other mutual funds in India. The emergence of a uniform industry with the same structure, operations and regulations make it easier for distributors and investors to deal with any fund house. Between 1999 and 2005 the size of the industry has doubled in terms of AUM which have gone from above Rs 68,000 crores to over Rs 1,50,000crores. Phase VI (From 2004 Onwards): Consolidation and Growth: The industry has lately witnessed a spate of mergers and acquisitions, most recent ones being the acquisition of schemes of Allianz Mutual Fund by Birla Sun Life, PNB Mutual Fund by Principal, among others. At the same time, more international players continue to enter India including Fidelity, one of the largest funds in the world.

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Understanding Equities

Understanding market capitalisation and allocation between large cap, mid cap and small cap stocks.

Differences between Large caps, Mid caps and Small caps 

When understanding how to allocate funds for investing in equities, it is important to understand both your expectation of return (a function of your financial goals) and also your risk appetite. Once you are clear on these, it will be a lot easier for you to allocate money between the various categories of stocks. 

In the first article, we understood the basic fact that investing is essential for achieving your financial goals. Now, let us step forward and understand the three categories one has to pick from for one's portfolio. 

Understanding 'Market capitalisation' 

There are three main classifications when it comes to stocks -

1. Large Cap stocks; 

2. Mid Cap stocks; and 

3. Small Cap stocks.

Here, the term 'cap' simply refers to the 'market capitalisation' of the stock. 

And what is market capitalisation? 

It is the value of the stock that you arrive at by multiplying the stock price by the company's outstanding number of equity shares. 

Market Capitalisation = Current Stock Price x Number of Shares outstanding

For a better understanding, let us see an example: 

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Company XYZ has 10,000,000 shares outstanding and its current share price is Rs 8. Based on the above formula, we can calculate that Company XYZ's market capitalisation is Rs 80 million, or 10,000,000 shares x Rs 8 per share. 

Large cap stocks 

As we mentioned above, the first category based on market capitalisation is that of 'large cap stocks'. 

One can look at the BSE-Sensex or BSE-100 Index as a reference point for large cap stocks. Market capitalisation for stocks in the BSE-100 Index, for instance, ranges from Rs 200 bn to Rs 3,500 bn. 

These are stocks of usually large and well-established companies that have a strong market presence and are generally considered as safe investments. One important fact about large caps is that information regarding these companies is readily available in newspapers and magazines. Most of the large cap companies have good disclosures and therefore there is no dearth of information for an investor looking into them. 

Large companies such as Infosys, TCS, and Wipro are classified as large cap stocks. These companies have been around in the industry long enough and have firmly established themselves as leading players. Their stocks are publicly traded and have large market capitalisations. 

Mid cap stocks 

Mid caps lie between large cap stocks and small cap stocks. Mid cap stocks are those that generally have a market capitalisation within the range of Rs 50 bn and Rs 200 bn.These represent mid-sized companies that are relatively more risky than large cap as investment options yet, they are not considered as risky as small cap companies. They rank between the two extremes on all the important parameters like size, revenues, employee and client base. 

When one invests in mid caps for the long term, he may be investing in companies that could become tomorrow's runaway success stories. Generally speaking, mid cap stocks as an investment can bring you higher returns in 3 to 5

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years as opposed to their big brother large cap stocks that can bring you moderate (yet safer) returns during this timeframe. 

Small cap stocks 

Lying at the lowest end of market capitalisation, Small cap stocks are generally viewed under the misconception of being hazardous or 'quick rich' stocks. However, both these labels are untrue. 

Small cap companies have smaller revenue and client bases, and usually include the start-ups or companies in the early stage of development. Small cap stocks are potentially big gainers as they are yet to be discovered within the sector and can show growth potential in large numbers once unfurled in the market. However, as these enterprises are small ventures, these should be researched properly. This is considering that a lot of small companies do not have the financial strength to survive bad times and some of them might be mismanaged businesses run by greedy promoters. Hence it is essential, especially in the case of small caps investments that one does a thorough research regarding the promoters' credentials, management strength and track record, and long and short term growth plans of the company before investing. 

Small caps are often stated to be a platform to make big returns in a short span of time. However, we would state that small caps can prove to be a very wise 'long term' investments especially if the chosen companies are good businesses and are well-managed. 

Have a look at the table below to get a better idea about the return potential of small cap stocks over a 10 year period. Small cap wonders Change in share prices over the past 10 years 

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Different Types of Mutual Funds

The mutual fund industry of India is continuously evolving. Along the way, several industry bodies are also investing towards investor education. Yet, according to a report by Boston Analytics, less than 10% of our households consider mutual funds as an investment avenue. It is still considered as a high-risk option.In fact, a basic inquiry about the types of mutual funds reveals that these are perhaps one of the most flexible, comprehensive and hassle free modes of investments that can accommodate various types of investor needs.Various types of mutual funds categories are designed to allow investors to choose a scheme based on the risk they are willing to take, the investment term etc.

Let us have a look at some important mutual fund schemes under the following three categories based on maturity period of investment:

I. Open-Ended - This scheme allows investors to buy or sell units at any point in time. This does not have a fixed maturity date.

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1. Debt/ Income - In a debt/income scheme, a major part of the investable fund are channelized towards debentures, government securities, and other debt instruments. Although capital appreciation is low (compared to the equity mutual funds), this is a relatively low risk-low return investment avenue which is ideal for investors seeing a steady income.

2. Money Market/ Liquid - This is ideal for investors looking to utilize their surplus funds in short term instruments while awaiting better options. These schemes invest in short-term debt instruments and seek to provide reasonable returns for the investors.

3. Equity/ Growth - Equities are a popular mutual fund category amongst retail investors. Although it could be a high-risk investment in the short term, investors can expect capital appreciation in the long run. If you are at your prime earning stage and looking for long-term benefits, growth schemes could be an ideal investment.

3.i. Index Scheme - Index schemes is a widely popular concept in the west. These follow a passive investment strategy where your investments replicate the movements of benchmark indices like Nifty, Sensex, etc.

3.ii. Sectoral Scheme - Sectoral funds are invested in a specific sector like infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This scheme provides a relatively high risk-high return opportunity within the equity space.

3.iii. Tax Saving - As the name suggests, this scheme offers tax benefits to its investors. The funds are invested in equities thereby offering long-term growth opportunities. Tax saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period.

4. Balanced - This scheme allows investors to enjoy growth and income at regular intervals. Funds are invested in both equities and fixed income securities; the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive

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investors.

II. Closed-Ended - In India, this type of scheme has a stipulated maturity period and investors can invest only during the initial launch period known as the NFO (New Fund Offer) period.

1. Capital Protection - The primary objective of this scheme is to safeguard the principal amount while trying to deliver reasonable returns. These invest in high-quality fixed income securities with marginal exposure to equities and mature along with the maturity period of the scheme.

2. Fixed Maturity Plans (FMPs) - FMPs, as the name suggests, are mutual fund schemes with a defined maturity period. These schemes normally comprise of debt instruments which mature in line with the maturity of the scheme, thereby earning through the interest component (also called coupons) of the securities in the portfolio. FMPs are normally passively managed, i.e. there is no active trading of debt instruments in the portfolio. The expenses which are charged to the scheme, are hence, generally lower than actively managed schemes.

III. Interval - Operating as a combination of open and closed ended schemes, it allows investors to trade units at pre-defined intervals.le amount, their goals, the investment term, etc.

WHY SHOULD INVESTORS INVEST IN MUTUAL FUND?

An investor avails of the service of experienced and skilled professionals who are backed by a dedicate of companies and selects suitable investments to achive the objectives of the schemes.

Mutual funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all the stocks decline at the

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same ans in the same proportion .The investors achieve this diversification through a mutual fund with far less money than you can do on our own.

Investing in a mutual fund reduces paperwork and helos an investor avoid many problems such as bad deliveries delayed payments and unnecessary follow.

EMERGING ISSUES IN MUTUAL FUNDS

Rating of mutual fund schemes:Total returns has been the criteria for measuring the performance of mutual fund. Therefore,CRISIL has development a composite performance ranking which measures performance for each of the open-ended schemes . According to CRISIL , this measure is applicable only to those schemes , which are at least two years old and disclose 100% of their portfolios.

Changes in mutual fund due to the Advent of net: As per SEBI regulations ,bond funds and equity funds can charge a maximum of 2.25% and 2.5 as a administrative fees, respectively . Mutual funds could bring down their administrative costs to 0.75% , if trading is done online and consequently improves the return potential of their scheme . Mutual funds could provide better advise or servise to their investors through the Net.

New Norms on NPA classification: The Malegann committee has made important recommendations regarding norms on classification of NPAs in debt securities and norms for valuation of liquid scurities in a mutual fund schemes.The committee has recommended that debt securities held by mutual fund in their portfolio can be classified as

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NPA, if mutual funds will have to disclose the NPAs to unit holders in a half –yearly basis.

INFLUENCE OF TECHNOLOGY:A majority of the mutual fund have their own websites providing basic information relating to the schemes. Mutual fund have begun to use electronic fund transfer method top remit their dividends and redemption proceeds. However , the most significant influence of technology is seen in serving investors. So technology can bridge the gap between investor education and products positioning.

PRODUCT INNOVATION :Product innovation is an emerging feature in the mutual fund industry in Inddia. Most of the products offered by mutual fund can be divided among three classes pf cash 34 funds ,income funds and equity funds. The year 2002 was different in that the products offered were far more innovative. Templetionindia launched a debt fund that would invest predominantly in floating rate bonds.

INDICES FOR MUTUAL FUNDS: The AMFI has recently launched four indces for gilt funds and another set of indices for balanced funds, bonds funds, monthly income plans and liquid funds. The indices, which have been developed and will be maintain by icici securities and finance compained and cCRISIL.com , respectively , will be mandated for use by mutual funds to enable the comparison of performance.

FUNDS OF FUNDS:The SEBI may soon permit mutual funds to float a new category of funds called “funds of funds”,which will

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invest in other mutual fund schemes . These schemes will enable people to invest in differnetmutual fundsschems through a single find.

LIQUIDITY :This has again and again highlighted , for it the basic premise that most investors invest in muual fund only because of the high level of liquidity . There has to be a good market development for your issue, so that there is a ready market avalaible for them.

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COMPARATIVE STUDY OF MUTUAL FUNDS ON THE BASIS OF ALPHA,BETA,AND STANDARD DEVIATION

ALPHA :37 Measures how much if any of the extra risk helped the fund outperform its corresponding benchmark. Using beta, alpha’s computation compares the fund’s performance to that of the benchmark’s risk –adjusted returns and establishes if the fund’s returns outperformed the market’s , given the same amount of risk . For example ,if a fund has an alpha of 1,it means that the fund out performed the benchmark by 1%. Negative alphas are bad in that they indicate that the fund underperformed for the amount of extra, fund –specific risk that the fund’s iveestors under took.

BETA:Beta is useful statistical measure , which determines the volatility , or risk , of a fund in comparision to that of its index or benchmark . A fund wwith a beta very close to 1 mean the fund’s performance closely matches the index or benchmark . A beta greater than 1 indicaates greater volatility than the overall market , and a beta less than 1 indicates less volatility than the benchmark.

STANDARD DEVIATION :The standard deviation essentially reports a fund’s volatility, which indicates the tendency of the returns to arise or fall drastically in a short period of time . A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment.The standard deviation of a fund measure this risk by measuring the degree to which the fund fluctuates in relation to its mean return.

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ADVANTAGES OF MUTUAL FUND

Diversification: A single mutual fund can hold securities from hundreds or even thousands of issuers. This diversification considerably reduces the risk of a serious monetary loss due to problems in a particular company or industry.

Affordability: You can begin buying units or shares with a relatively small amount of money (e.g., $500 for the initial purchase). Some mutual funds also permits you to buy more units on a regular basis with even smaller installments (e.g., $50 per month).

Professional Management: Many investors do not have the time or expertise to manage their personal investments every day, to efficiently reinvest interest or dividend income, or to investigate the thousands of securities available in the financial markets. Mutual funds are managed by professionals who are experienced in investing money and who have the education, skills and resources to research diverse investment opportunities.

Liquidity: Units or shares in a mutual fund can be bought and sold any business day (that the market is open), thus, providing investors with easy access to their money.

Flexibility: Many mutual fund companies manage several different funds (e.g., money market, fixed-income, growth, balanced, sector, index and global funds) and allow you to switch between these funds at little or no charge. This enables you to change your portfolio balance as and when

your personal needs, financial goals or market conditions change.

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DISADVANTAGES OF MUTUAL FUNDS

1.High Expense Ratios and Sales ChargesIf you're not paying attention to mutual fund expense ratios and sales charges, they can get out of hand. Be very cautious when investing in funds with expense ratios higher than 1.20%, as they will be considered on the higher cost end. Be weary of 12b-1 advertising fees and sales charges in general. There are several good fund companies out there that have no sales charges. Fees reduce overall investment returns.

2.Management AbusesChurning, turnover and window dressing may happen if your manager is abusing his or her authority. This includes unnecessary trading, excessive replacement and selling the losers prior to quarter-end to fix the books.

3.Tax InefficiencyLike it or not, investors do not have a choice when it comes to capital gain payouts in mutual funds. Due to the turnover, redemptions, gains and losses in security holdings throughout the year, investors typically receive distributions from the fund that are an uncontrollable tax event.

4.Poor Trade ExecutionIf you place your mutual fund trade anytime before the cut-off time for same-day NAV, you'll receive the same closing price NAV for your buy or sell on the mutual fund. For investors looking for faster execution times, maybe because of short investment horizons, day trading, or timing the market, mutual funds provide a weak execution strategy.

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Objective of the study

To main objective of this project report is to know about different mutual funds and the market position of different mutual fund.

To find the awareness among the investor about the mutual fund

To study the scope of mutual fund industry in the future.

To find out the market position of different funds.

To find the awareness among the investor about the mutual fund.

STUDY OF THE TOPIC

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MUTUAL FUND :

“ A mutual fund is a type of professionally managed investment fund that pools money from many investors to purchase securities”

Mutual funds are money-managing institutions set up to professionally invest the money pooled in from the public. These schemes are managed by Asset Management Companies (AMC), which are sponsored by different financial institutions or companies. Each unit of these schemes reflects the share of investor in the respective fund and its appreciation is judged by the Net Asset Value (NAV) of the scheme. The NAV is directly linked to the bullish and bearish trends of the markets as the pooled money is invested either inequity shares or in debentures or treasury bills.

It is divided into two parts :-

1. KYC (KNOW YOUR CUSTOMER)

2. APPLICATION FORM

1. KYC FORM :Know your customer (KYC) is the process of a business verifying the identity of its clients. The term is also used to refer to the bank regulation which governs these activities. Know your customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed agents', consultants' or distributors' anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.

Know your customer policies are becoming much more important globally to prevent identity theft, financial fraud, money laundering and terrorist financing.

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KYC form is divided in to two parts :-

Fresh KYC :In FRESH KYC need to attach foto ,PAN CARD , ID PROOF.

Cheque KYC : In CHEQUE KYC no need to attach foto , need only PAN CARD, ID PROOF.

WWW.CVIKRA.COM ( with the help of this site we can easily do KYC inquiry )

2. APPLICATION FORM:application form (often simply called an application) is a form or collection of forms that an individual seeking employment, called an applicant, must fill out as part of the process of informing an employer of the applicant's availability and desire to be employed, and persuading the employer to offer the applicant employment.

It is divided into two parts :(a) Lumpsum (5000 minimum)(b) SIP (1000 minimum)

(A) LUMPSUM : A single payment made at a particular time, as opposed to a number of smaller payments or instalments.A contract under which a principal (customer or owner)

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agrees to pay a contractor a specified amount for completing work without requiring a cost breakdown.A lump sum is a single payment of money, as opposed to a series of payments made over time.

In this form we need : Common form KYC form

And this form is free from tax.

2.“SYSTEMATIC INVESTMENT PLAN”

A RUPEE A DAY , KEEPS WORRIES AWAY

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A systematic investment plan (SIP) is good tool that retail investors can utilize to optimize their investment strategy. SIP is nothing but a simple method of investing a fixed sum of money in a specific investment scheme, on a regular basis, for a pre determined period of time. SIP requires you o invest a particular amount in a specific mutual fund scheme . in comparison , it functions muh like a recurring deposite . you can plan scheme for yourself and commit a particular sum of money each month on a date to the scheme . you can begin with as low as rs 500 in ELSS( equity linked saving scheme) scheme an move on to rs 1000 a month for other diversified schemes SIP follows a simple mantra- buy when high and sell when low. Simple way to win in the stock markets. If you are a disciplined investor however , and are intrested in mutual funds , then the equity systematic investment plan (IP ) would work well for you. Putting in a sum of money each month will ensure that you have something in when the market is high , and when it is low securing your position in an unstable market.Geojit BNP Paribas recently launched SIP for stock investment where in investors with a reghular monthly income can invest their monthly avings in stock of their choice or a basket of stocks. Geojit BNP Paribas provides this service on internet which makes it easy for investors to plan their savings and investment at reghularintervals.SIP is very useful for a time horizon of 10-15 years. SIP imparts discipline to savings on giving a post dated cheques or ECS instruction to any fund saving and investing appens automatically.

A lump sum is a single payment of money, as opposed to a series of payments made over time . It is just like a recurring deposite with the post office or bank where you put in a small amount every month. The difference here is that the amount is invested in a mutual fund.

SIP mainly helps us to get addicted to an investment principle-

Income - savings = expenditure , instead of following the principle of –

Income - expenditure = savings

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SIP can be used in any type of mutual fund, equity or fixed income. this strategy is best used in an equity fund where an investor can capture the volatility in the equity markets to reduce the cost of investment. The NAV of any fund is determined by the market price of the stocks the fund has invested in. A very important aspect to kept in mind is the entry and exit load charged by all mutual funds. In a normal investment most funds either charge entry load or exit load. But in a SIP along with an entry load charged for each instalment , an exit load is charged if program is with drawn before a specified period . This period could vary from six months to two years.

Working of SIP :-Let us take an example to understand how SIP works . suppose ‘X’ decides to invest in a mutual fund though SIP. He commits making a monthly investment of rs 1000 for a period of twelve months (starting 1st

January 2006) in a fund named ‘ABC’. The payment cn be done by issuing twelve post –dated cheques of rs 1000 each or though ECS facility ( if available)

DATE MONTHLY INVESTMENT (a)

NAV

(b)

NUMBER OF UNITS (a)/(b)

1- jan Rs 1000 46.29 21.603 1-feb Rs 1000 48.08 20.799 1-march RS 1000 52.78 18.947 1-apr RS 1000 56.36 17.743 1-may Rs 1000 58.42 17.117 1-jun Rs 1000 56.42 17.724 1-jul Rs 1000 62.14 16.093 1-aug Rs 1000 67.58 14.797 1-sep Rs 1000 71.7 13.9471-oct Rs 1000 76.19 13.125 1-nov Rs 1000 83.97 11.909 1.dec Rs 1000 89.92 11.121

Brief Summary

Monthly Investment : RS 1000

Period of investment : 12 months (1stjan 2006 to 1stdec 2006)

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Total amount invested: RS 12,000

Total number of units credited to ‘X’ : 194.925

Average costunit :Rs 61.5621

NOTE: Entry and exit oads are applicaple while invsting through SIP option also. However ,in this example , load has not been taken into consideration for the purpose of simplification.

Bnifits to ‘X’

Convenience and affordability investing as he /she is compelled to fulfil his /her commitment of making a finxedpayement every month

Rupee cost average benefit- By investing though the SIP route , ‘X’ receive 194.925 units at an average cost of rs 61.5621. however , had ‘X’ invested the whole of rs 12000 at one go, he would have received a different number of units . suppose ‘X’ had invested rs 12000 on:

1stjan 2006- he would have received 259.24 units

1stjul 2006 – he would have received 193.11 units

1stdec 2006- he would have received 133.45 units

Since , it is not so simple for anybody to perfectly time the market ; it makes a more sensible approach to invest through SIP option (For long ter, say 3 to 5 years) It actually makes the volatility in the stoc markets work for investors . this example helps us to understand how SIP allows ‘X’ to take benefit of all the highs and lows of the market duing this twelve months ‘time period.

Flexibility to redeem units at any time or making a change in the monthly investment amount

FEATURES OF SIP

1. Affordable to small investors: it is affordable to pay a small amount reghularly than paying a large amount as a whole . moreover, many asset management companies (from whom you

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purchase mutual funds shares) charge very less to no entry loads for SIP when compared to other one time investments.

2. Low market risk through rupee cost averaging: This the best feature in this policy . success in stock markets depends on pure

Timing .Highest profits can be gained when you invest in the right stocks at the right time i.e when the markets are on a high.

3. Easy liquidity : You can have the liberty to exit at any time even before the agree time period . but some exit load shall be charged.

4. Compounding effect: It means the early you invest the better you gain . Let’s say you planned for SIP for 10 years investing rs 1000 monthly you stopped after 10 years. Then your friend nvested the same amount for 20 years. But due to compound effect, at the end of 20 years, you will get higher outcome than your friend

Benefits of SIP

Investments are consistent and steady.

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Power of compounding : more the length of investment, more the earnings (early bird advantage)

Power of rupee cost averaging: Market’s volatility shall work wonders for you.

It is an entirely mechanized process and involves no complications.

It enables to overcome spending and encourage savings , thereby securing future.

It will not cause strain on one’s budget as investment amount can be so less than one does not realize its being withheld.

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DISADVANTAGES OF SIP

No downside protection – Investors should remember that despite of all advantages that SIPS have , They are subject to market risk and d not protect investors from making a loss or ensure the profits in falling markets.

Portfolio risk remains- Sip’s are also subject to security risk. Mutual fund schemes investing in portfolios that turns out to generate negative returns are bound to make investors incure a loss even if the investments is made through SIPs

Matching periodcity to fund flows: SIPs are available in monthly and quartly options. Investors should opt for option that is in tandem with the periodicity of cash inflows.

Ignore the maket swings: In the short term, sentiments drive the movements in the market .therefore , investors should not let a short term correction of fall in the markets to bother them . as long as the long term prospects are intact, the investments are safe.

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NET ASSET VALUE

The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities . In other words, If the fund is dissolved or liquidated , by selling off all the assets in the fund , this is the amount that the shareholders would collectively own . this gives rise to the concept of net asset value per unit, which is the value , represently by the ownership of one unit in the fund it is calculated simply by diciding the net asset value of the fund by the number of units . however , most people refer loosely to the NAV per unit as NAV , ignoring the “per unit” . we also abide by the same convention.

Calculation of NAV

The most important part of the calculatin is the valuation of the assets owned by the fund .once it is calculated,the NAV is simply the net value of assets divided by the number of units outstanding . The detailed methodology for the calculations of the assetvaalue is given below.

Asset value =

Sum of market value of share/debenture

+ liquid assets/intrest accrued

+dividends due on unpaid assets expenses accrued but not paid

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Formula of calculated NAV:

NAV = Fair market value of Scheme’s Investments + Receivables + Accrued income +Other assets - Accrued expenses - Payables - Other liabilities

Number of units outstanding

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DISCRIPTION OF SYSTAMATIC INVESTMENT PLAN

 Investing in SIP enables an investor to take part in the stock markets without actively timing them and he/she can benefit by buying more units when the price falls and less units when the price rises. This scheme helps reduce the average cost per unit of investment through a method called Rupee Cost Averaging.

Month Investment Current NAV Units purchased

3rdjan , 2011 1000 10 1002ndfeb , 2011 1000 5 2002nd march 2011 1000 15 671stapril 2011 1000 14 712nd may 2011 1000 15 671stjune 2011 1000 20 501stjuly 2011 1000 22 451st august 2011 1000 25 401st September 2011

1000 27 37

3rdoctuber 2011 1000 29 34total 10,000 711

Average NAV =(10+5+15+14+15+20+22+25+27+29)/10=18.2

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For Example: A person invests Rs 1000 for ten months in SIP. We will find out that the actual average purchase cost of asset would be lower than the average NAV of his investment over 10 months, which is the key benefit of Rupee Cost Averaging.Actual average purchase cost as per SIP = (1000X10)/ (100+200+67+71+67+50+45+40+37+34) = 14.06

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Comparative study of different SIPs

HDFC TOP 200 FUND (G)

NAV :340.752

RETURN (NAV as on 29 july 2015)

PERIOD RETURN (%)1 year 10.02 year 30.53 year 20.25 year 11.3

0

5

10

15

20

25

30

35

1 year 2 year 3 year 5 year

Series1

Series2

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SBI EMERGING BUSINESS FUND (G)

NAV : 90.825

Return (NAV as on 29 july 2015)

PERIOD RETURN (%)1 year 19.92 year 33.93 year 24.05 year 18.3

0

5

10

15

20

25

30

35

1 year 2 year 3 year 5 year

Series1

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SUNDARAM SMILE FUND (G)

NAV: 72.780RETURN (NAV as on 29 july 2015)

PERIOD RETURN (%)1 year 46.52 year 68.33 year 36.35 year 16.2

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HDFC MID-CAP OPPORTUNITIES FUND (G)

NAV :38.294Return ( NAV as on 29 july 2015)

PERIOD RETURN (%)1 year 32.32 year 52.23 year 33.25 year 21.0

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RELIANCE PHARMA FUND (G)

NAV :738.080Return (NAV AS ON 29 JULY 2015)

PERIOD RETURN(%)1 year 36.32 year 40.43 year 31.85 year 21.4

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RELIANCE BANKING FUND

NAV: 180.297Return (NAV as on 29 july 2015)

Period Return 1 year 20.42 year 39.43 year 23.25 year 13.7

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RETURN CALCULTIONS IN SIPs

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Table of Contents1. COMPANY PROFILE........................................................................................................................1

1.1 PROMOTERS & MANAGEMENT TEAM.........................................................................................5

Mr. C. Parthasarathy Chairman & Managing Director.........................................................5

Mr. M. Yugandhar Managing Director....................................................................................5

Mr. M. S. Ramakrishna Director..............................................................................................6

MANAGEMENT TEAM................................................................................................................6

Mr.V.Mahesh Managing Director – Karvy Data Management.............................................6

Mr. V. Ganesh CEO – Karvy Computershare........................................................................7

Mr.Amit Saxena CEO &Wholetime Director - Karvy Finance..............................................7

Mr.Sushil Sinha Wholetime Director - KarvyComtrade........................................................8

Mr. P. B. Ramapriyan Vice President & Head - Financial Product Distribution................8

Mr. Rajiv R. Singh Vice President & Business Head - Karvy Stock Broking Limited.......9

Mr.SwapnilPawar Managing Director & CEO - Karvy Capital Limited...............................9

Mr. J. Ramaswamy Group Head - Corporate Affairs..........................................................10

Mr. Deepak Gupta Group Head - HR....................................................................................10

Mr. G. Krishna Hari Group Head - Finance.........................................................................11

AWARDS & ACCOLADES.........................................................................................................11

1.2 Karvy Stock Broking Limited......................................................................................................12

2. INTRODUCTION OF THE TOPIC....................................................................................................14

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