INTRODUCTION

What Is Mutual Fund ?

A Mutual Fund is a trust that pools the savings of a number of investors who share

a common financial goal. The money thus collected is then invested in capital

market instruments such as shares, debentures and other securities. The income

earned through these investments and the capital appreciations realized are 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.

1.Bombay Stock Exchange established In 9th July 18752. BSE is Asia first exchange3. BSE is the world 11th largest stock exchange4.more than 5500 companies are listed on the BSE.

NSE- National stock exchange1. Established in 1992.2. transaction systems fully automatically.3. NSE is 12th largest stock exchange

Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread among a wide cross-section of industries and sectors thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at same time. Investors of mutual funds are known as unit holders

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. 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. It was set up by the

Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve

Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India

(IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched

by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crore of assets under

management.

SECOND PHASE – 1987-1993

(Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and

Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI

Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank

Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund

(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its

mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crore.

THIRD PHASE – 1993-2003

(Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund families.

Also, 1993 was the year in which the first Mutual Fund Regulations came into

being, under which all mutual funds, except UTI were to be registered and

governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)

was the first private sector mutual fund registered in July 1993.

FORTH 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 crore as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations

The Association of Mutual Funds in India (AMFI) reassures the

investors in units of mutual funds that the mutual funds function

within the strict regulatory framework. Its objective is to

increase public awareness of the mutual fund industry. AMFI

also is engaged in upgrading professional standards and in

promoting best industry practices in diverse areas such as

valuation, disclosure, transparency etc.

Documents required (PAN mandatory):

 

Proof of identity :

1. Photo PAN card

2. In case of non-photo PAN card in addition to copy of PAN card any one of the

following: driving license/passport copy/ voter id/ bank photo pass book.

Proof of address (any of the following ) :latest telephone bill, latest electricity bill,

Passport, latest bank passbook/bank account statement, latest Demat account

statement, voter id, driving license, ration card, rent agreement.

Offer document:

An offer document is issued when the AMCs make New Fund Offer(NFO). Its

advisable to every investor to ask for the offer document and read it before

investing. An offer document consists of the following:

Standard Offer Document for Mutual Funds (SEBI Format)

Key Information Memorandum:

a key information memorandum, popularly known as KIM, is attached along with

the mutual fund form. And thus every investor get to read it. Its contents are:

1 Name of the fund.

2. Iestment objective

3. Aset allocation pattern of the scheme.

4. Risk profile of the scheme

5. Plans & options

6. Minimum application amount/ no. of units

7. Benchmark index

8. Dividend policy

9. Name of the fund manager(s)

10 . Expenses of the scheme: load structure, recurring expenses

11. Performance of the scheme (scheme return v/s. benchmark return)

12. Year- wise return for the last 5 financial year

BASIS OF DIFFERENCE BANKS MUTUAL FUNDS

Returns Low Better

Administrative exp. High Low

Risk Low Moderate

Investment options Less More

Network High penetration Low but improving

Liquidity At a cost Better

Quality of assets Not transparent Transparent

Interest calculation Minimum balance between 10th. & 30th. Of every month

Everyday

Guarantee Maximum Rs.1 lakh on deposits None

MUTUAL FUNDS V/S BANKS

ADVANTAGES OF MUTUAL FUNDS 

The advantages of investing in a Mutual Fund are:

• Flexibility – Mutual funds offer a variety of schemes that will suit your needs over a

lifetime. When you enter a new stage in your life, all you need to do is sit down with your

financial advisor who will help you to rearrange your portfolio to suit your altered lifestyle.

• Affordability – As a small investor, you may find that it is not possible to buy shares of

larger corporations. Mutual funds generally buy and sell securities in large volumes which allow

investors to benefit from lower trading costs. The smallest investor can get started on mutual

funds because of the minimal investment requirements. You can invest with a minimum of Rs.500

in a Systematic Investment Plan on a regular basis.

• Liquidity - In open-ended schemes, you have the option of withdrawing or redeeming

your money at any point of time at the current NAV.

 

• Diversification – Risk is lowered with Mutual Fund as they invest across different

industries stocks.

 

• Professional Management – Qualified professionals manage your money, but they are

not alone. They have a research team that continuously analyses the performance and prospects of

companies. They also select suitable investments to achieve the objectives of the scheme. It is a

continuous process that takes time and expertise which will add value to your investment. Fund

managers are in a better position to manage your investments and get higher returns.

DISADVANTAGES OF INVESTING THROUGH MUTUAL FUND

1. Professional Management- Some funds doesn’t perform in neither the market,

as their management is not dynamic enough to explore the available opportunity in

the market, thus many investors debate over whether or not the so-called

professionals are any better than mutual fund or investor himself, for picking up

stocks.

2. Costs – The biggest source of AMC income, is generally from the entry & exit

load which they charge from an investors, at the time of purchase. The mutual fund

industries are thus charging extra cost under layers of jargon.

3. Dilution - Because funds have small holdings across different companies, high

returns from a few investments often don't make much difference on the overall

return. Dilution is also the result of a successful fund getting too big. When money

pours into funds that have had strong success, the manager often has trouble finding

a good investment for all the new money.

4. Taxes - when making decisions about your money, fund managers don't consider

your personal tax situation. For example, when a fund manager sells a security, a

capital-gain tax is triggered, which affects how profitable the individual is from the

sale. It might have been more advantageous for the individual to defer the capital

gains liability.

INVESTMENT STRATEGIES

 

1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of

a month. Payment is made through post dated cheques or direct debit facilities. The investor gets

fewer units when the NAV is high and more units when the NAV is low. This is called as the

benefit of Rupee Cost Averaging (RCA)

 

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give

instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual

fund.

 

3. Systematic Withdrawal Plan: if someone wishes to

withdraw from a mutual fund then he can withdraw a fixed

amount each month.

COMPANY PROFILE

INTRODUCTION

“Success is a journey, not a destination.”

If we look for examples to prove this quote then we can find many but there is none like that of

karvy. Back in the year 1981, five people created history by establishing karvy and company

which is today known as karvy, the largest financial service provider of India.

 

Success sutras of karvy:

The success story of karvy is driven by 8 success sutras adopted by it namely trust, integrity,

dedication, commitment, enterprise, hard work and team play, learning and innovation,

empathy and humility. These are the values that bind success with karvy.

Karvy was started by a group of five chartered accountants in 1979. The partners decided to offer, other than the audit services, value added services like corporate advisory services to their clients. The first firm in the group, Karvy Consultants Limited was incorporated on 23rd July, 1983. In a very short period, it became the largest Registrar and Transfer Agent in India

VISION

 

Karvy Financial Planning, Your Ambition Our Profession.

After having fortified our position across the personal finance spectrum, we are

now commencing a "comprehensive personal financial planning service" which

is in line with our ambition of emerging as a personal finance advisor.

Our vision is:To cater to the unique needs and requirements of the mass affluent by providing

complete financial solutions and thereby transform their dreams into reality to bring a better tomorrow

MISSION STATEMENT

 

“Our mission is to be a leading and preferred service provider to our

customers, and we aim to achieve this leadership position by building an

innovative, enterprising , and technology driven organization which will

set the highest standards of service and business ethics.”

 

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.

COMPETITORS OF KARVY MUTUAL FUND

Some of the main competitors of Karvy Mutual Fund in Lucknow are as Follows:

1. Reliance Mutual Fund

2. UTI Mutual Fund

3. Birla Sun Life Mutual Fund

4. HDFC Mutual Fund

5. Sundaram Mutual Fund

6. LIC Mutual Fund

7. Sherekhan

8. Franklin Templeton

AWARDS AND ACHIEVEMENTS

Largest mobiliser of funds as per PRIME DATABASE

First ISO - 9002 Certified Registrar in India

A Category- I -Merchant banker.

A Category- I -Registrar to Public Issues.

Ranked as " The Most Admired Registrar"  by MARG.

Handled the largest- ever Public Issue - IDBI

Handled over 500 Public issues as Registrars.

Handling the Reliance Account  which accounts for nearly 10 million account holders

First Depository Participant  from Andhra Pradesh.

 

RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude

studies. One of the most important users of research methodology is that it helps in

identifying the problem, collecting, analyzing the required information data and

providing an alternative solution to the problem .It also helps in collecting the vital

information that is required by the top management to assist them for the better

decision making both day to day decision and critical ones.

DATA SOURCES:

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. The secondary data has been

collected through various journals and websites.

DURATION OF STUDY:

The study was carried out for a period of two months, from 30rd may to 25rd June

2016

SAMPLING

The sample was selected of them who are the customers/visitors of Karvy of India,

Lucknow Branch, irrespective of them being investors or not or availing the

services or not. It was also collected through personal visits to persons, by formal

and informal talks and through filling up the questionnaire prepared. The data has

been analyzed by using mathematical/Statistical tool.

SAMPLE SIZE:

The sample size of my project is limited to 200 people only. .

ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors of Lucknow:

Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of Investors 12 18 30 24 20 16

1218

3024

2016

0

5

10

15

20

25

30

35

<=30 31-35 36-40 41-45 46-50 >50

Age group of the Investors

Inve

stor

s in

vest

ed in

Mut

ual F

und

According to this chart out of 120 Mutual Fund investors of Lucknow

the most are in the age group of 36-40 yrs. i.e. 25%, the second most

investors are in the age group of 41-45yrs i.e. 20% and the least

investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Lucknow:

Educational Qualification Number of Investors

Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120

71%

23%6%

Graduate/Post Graduate Under Graduate Others

Interpretation:

Out of 120 Mutual Fund investors 71% of the investors in Lucknow are

Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

CONCLUSION

Running a successful Mutual Fund requires complete understanding of the

peculiarities of the Indian Stock Market and also the psyche of the small investors.

This study has made an attempt to understand the financial behavior of Mutual

Fund investors in connection with the preferences of Brand (AMC), Products,

Channels etc. I observed that many of people have fear of Mutual Fund. They think

their money will not be secure in Mutual Fund. They need the knowledge of Mutual

Fund and its related terms. Many of people do not have invested in mutual fund due

to lack of awareness although they have money to invest. As the awareness and

income is growing the number of mutual fund investors are also growing.

QUESTIONNAIRE

A study of preferences of the investors for investment in mutual funds.

1. Personal Details:

 

(a). Name:-

(b). Address: - Phone:-

(c). Age:-

 

(d). Qualification:-

Up to Rs.10,000

Rs. 10,001 to 15000

Rs. 15,001 to 20,000

Rs. 20,001 to 30,000

Rs. 30,001 and above

.

(g). What is your monthly family income approximately? Pl tick (√)

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, etc. f. Shares/Debentures g. Gold/ Silver h. Real Estate

2. What kind of investments you have made so far? Pl tick (√). All applicable.

. (a) Liquidity (b) Low Risk (c) High Return (d) Trust

3. While investing your money, which factor will you prefer?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

4. Are you aware about Mutual Funds and their operations? . Pl tick (√) Yes No 5. If yes, how did you know about Mutual Fund?

6. Have you ever invested in Mutual Fund? Pl tick (√). Yes

No

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

BIBLIOGRAPHY

 

News papers

Outlook Money

Television Channel (Cnbc aawaj)

Mutual fund Hand Book

Fact Sheet and Statement

 

WEBSITE

www.sbimf.com

www.moneycontrol.com

www.amfiindia.com

www.onlineresearchonline.com