A study of customer satisfaction towards mutual funds at karevy stock

A study of Customer Satisfaction towards Mutual Funds

EXECUTIVE SUMMARY

Karvy, the FINAPOLIS Ltd. is a stock Broking Company that deals in shares. Apart

from security broking Karvy is in to Demat services, Mutual fund and Insurance services. It offers

a wide range of financial services in order to meet different individuals financial planning.

The project emphasizes on “Customer satisfaction towards depository participants”

Objectives of the Study:

Main Objective is to find the level of satisfaction of customers. To find the factors which are responsible for slow growth. To find out the preference people give to various options available. To know the kind of benefit people expected from their service. Origination Study. Mutual Fund study.

Research Methodology:

Data source:

Primary Data :Through Questionnaire

Secondary Data : Karvy’s Record & Report, Magazine & Websites. Sample size: 100 customers of Karvy Stock Broking Ltd.

Area Covered for research: Only in Belgaum city.

Sampling Procedure: Random sampling method from available database.

In the present scenario the service industry has given an utmost importance of doing a particular

task at a fastest time in order to satisfy the customer and to attract new customer. In this project we

can find out the customer of Karvy Consultant have satisfied with Mutual Fund service.

Findings:

BABASAB PATIL MARKETING PROJECT REPORT Page No 1

http://www.karvy.com/bottom.asp

A study of Customer Satisfaction towards Mutual Funds 1.I have carried out this exercise on Mutual Funds. With So in my studies I have tried to see whether the customer have satisfied with the services given by the Karvy consultants Ltd.

2. .It is also came to know that new customer are not aware of the schemes available in mutual funds 3. I have also seen that 37% awareness of new service given by Karvy Stock Broking Ltd is

from mainly through Agents.

4. It is also find that more than46% customers are satisfied and 355 of customers are mostly

satisfied with the service of mutual funds given by Karvy consultant’s ltd.

5. Nearly 16% of the respondents are neither satisfied or un satisfied because of the lack of attention given to them for their enquires.

6. 3% of customers are mostly unsatisfied with the service because the reason is that lack of updated information. 7. 36% of respondents prefer Karvy consultants Ltd because of their Quality services given by them .

8.62% of the respondents opinion is that mutual fund scheme is Extremely Good.

9. Majority of the respondents are very happy with the services

Introduction

India has two hundred years old tradition in Securities. Infact that first India stock exchange

established in Bombay is the oldest in Asia. The earliest security dealings were Transactions in

loan securities of East India Company, the dominant institution of those days. Corporate Shares

came into the picture by 1830’s and assumed significance with the Companies Act of 1956. In

1887 the broker community gave birth to the “Native share and stock brokers Association” which

is now known as the Bombay Stock Exchange.



A study of Customer Satisfaction towards Mutual Funds The Indian Capital grew at a very moderate rate from 1951 to 1980. However it registered an

impressive growth in 1980s. the process of liberalization and the transparency in operation has

raised the interest of foreign investors in India. Till 1978 there were only 8 recognized exchanges

in India. Initially the exchange operated on an outcry system i.e. manual system of trading Due to

increase in the trading volumes, the number of issuer increased substantially ,and the birth of

NSES highly transparent automated system come into existence Even then there was an increase

in paper work causing a gridlock at every stage in the stock market This delays the clearance and

settlement of traders , registration of securities in the shareholder name and due this it increased

the back office paper work intermediaries These outdated systems have increased settlement risks

and have rendered the implementation of a delivery of a versus payment system impossible

Design of the StudyTitle of the project: “To Know the Customer Satisfaction towards Mutual Funds”.

Statement of the Problem: KARVY STOCK BROKING Ltd is providing the Demat service. Hence in this report an attempt is made to know the present customer satisfaction towards Mutual Funds.

RESEARCH OBJECTIVES: Main Objective is to find the level of satisfaction of customers. To find the factors which are responsible for slow growth. To find out the preference people give to various options available. To know the kind of benefit people expected from their service. Origination Study. Mutual Fund study

Methods &Methodology: Sampling Design:

Sampling since segment wise investors in KARVY STOCK BROKING Ltd are not

available the overall customers were considered for the study. Hundred Percent coverage




was difficult within the limited period of time. Hence random sampling survey method was

adopted for the purpose of the study.

Sampling Size: A sample of 100 was chosen for the purpose of the study. Sample

consisted of small investor, large investors and traders of KARVY STOCK BROKING

Ltd.

Sampling Procedure: From large number of customer of KARVY STOCK BROKING

Ltd. Were randomly selected from the available customer database.

Field Study: Directly approached respondents

DATA COLLECTION METHOD:

1. PRIMARY DATA: For a study of this nature of the data is primary data it is collected through by making survey, which is systematic collection of information directly from the respondents. (Questionnaire & telephonic interview).

2.SECOUNDARY DATA: This is been is collected through KARVY’S

RECORD & REPORT, MAGAZINE & WEBSITES.

MEASUREMENT TECHNIQUE / STATISTICAL TOOLS:

For this purpose measurement technique used for survey is questionnaire & telephonic interview to collect information from the respondent

ANALYTICAL TECHNIQUE:

Statistical technique used for measuring the response is in terms of percentage.




BACKGROUND

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.

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,

equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant

Banking & 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.

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



A study of Customer Satisfaction towards Mutual Funds provide new ones, to innovate, diversify and in the process, evolved Karvy as one of India’s

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

inserviceandfinally…totalityinservice.

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.

Over the years we have ensured that the trust of our customers is our biggest returns.

Factors such as our success in the Electronic custody business has helped build on our tradition of

trust even more. Consequentially our retail client base expanded very fast. 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.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.

In 1982, a group of Hyderabad-based practising Chartered Accountants started Karvy



A study of Customer Satisfaction towards Mutual Funds Computers hare Private Ltd., with a capital of Rs.1,50,000 offering auditing and taxation

services initially. Later, it forayed into the Registrar and Share Transfer activities and

subsequently into financial services. All along, Karvy's strong work ethic and professional

background leveraged with Information Technology enabled it to deliver quality to the

individual.

A decade of commitment, professional integrity and vision helped Karvy achieve a

leadership position in its field when it handled the largest number of issues ever handled in the

history of the Indian stock market in a year. Thereafter, Karvy made inroads into a host of

capital-market services, - corporate and retail - which proved to be a sound business synergy.

Today, Karvy has access to millions of Indian shareholders, besides companies, banks,

financial institutions and regulatory agencies. Over the past one and half decades, Karvy has

evolved as a veritable link between industry, finance and people. In January 1998, Karvy

became the first Depository Participant in Andhra Pradesh. An ISO 9002 company, Karvy's

commitment to quality and retail reach has made it an Integrated financial services company.

GROUP OF COMPANIES

KARVY SECURITY LTD

Deals in distribution of various investment products, viz, equities,

Mutual fund, bounds debenture fixed deposits, insurance policies & other financial roducts.

Member –Hyderabad stock Exchange (HSF)

KARVY STOCK BROKING LTD.

Deals in buying & selling equity shares & debenture &on the national stock exchange

(NSE), the Hyderabad stock exchange & over the counter exchange of India (OTCEI)

Member-national stock exchange (NSE)




KARVY CONSULTANTS LTD

Transfer agency services for corporate & mutual funds

Registrar for IPO\book building

Depositary participant services

Registered with both NSDL/CDSL

It enable services –MT/call center /data classification

Karvy .com comprehensive financial advisory site

KARVY INVESTER SERVICES LTD.

Deals in issue management, investor banking & merchant banking of fixed income

& other financial products.

Trading through BSE

DEPOSITARY SEVICES

Registered as DP both with NSDL & CDSL

Serving over 2 lac investors

Online connectivity at Hyderabad, Lucknow &Bangalore

Ranked among the top 5 DPS in the country

High synergy with registry & broking activities for higher services levels to the

customer information

Web based customer information

Provision of service in over 75 locations

IT SERVICES GROUP

1.Medical transcription

First strategic initiative into global processing

Among the top MT companies in India



A study of Customer Satisfaction towards Mutual Funds 2.E-BUSINESS GROUP

Strategic intent: to develop a comprehensive financial services portal which

includes

Investor servicing: mutual funds, corporate shareholders & depository clients.

Distribution of financial products

Net trading

Insurance distribution

1. Call center

Started with a 30 agent e-call center

MISSION:

Our mission is to be a leading, 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.

QUALITY POLICY:

To achieve and retain leadership, Karvy shall aim for complete

customers 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.

QUALITY OBJECTIVES:

As per the Quality Policy, Karvy will:

1. Build in- house process that will ensure transparent and harmonious relationship

with its clients and investors to provide high quality of services.

2. Establish a partner relationship with its investor service agents and vendors that

will help in keeping up its commitments to the customers.




3. Provide high quality of work life for all its employees and equip them with

adequate knowledge &skills so as to respond to customer’s need.

4. Continue to uphold the values of honesty & integrity and strive to establish

unparalleled standards in business ethics.

5. Use state –of – the art information technology in developing new and innovative

financial products and services to meet the changing needs of investors and

clients.

6. Strive to be a reliable source of value-added financial products and services and

constantly guide the individuals and institutions in making a judicious choice of

it.

7. Strive to keep all stake- holders (shareholders, clients, investors, employees,

suppliers and regulatory authorities) proud and satisfied.

Achievements:

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents

Among the to top 3 Depository Participants

Largest Network of Branches & Business Associates

ISO 9002 certified operations by DNV

Among top 10 Investment bankers

Largest Distributor of Financial Products



A study of Customer Satisfaction towards Mutual Funds Adjudged as one of the top 50 IT uses in India by MIS Asia

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

Strategic tie-up with Jardine Fleming India Securities Ltd.

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. Major issues managed as arrangers Kerala State Electricity Board.

Power Finance Corporation

A.P. Water Resources Development Corporation.

A.P. Roads Development Corporation.

A.P. State Electricity Board.

Haldia Petrochemicals Ltd.

Major issues managed as Co-Managers IndusInd Bank Ltd

ICICI Bonds – March 97

ICICI Bonds – Dec 97

ICICI Safety Bonds March 98



A study of Customer Satisfaction towards Mutual Funds ICICI Safety Bonds – April 98. July 98, Oct 98, Dec 98, Jan 99.

The Jammu and Kashmir Bank Ltd Major issue handled as Registrars to Issues IDBI Equity

Morgan Stanley Mutual Fund

Bank of Baroda

Bank of Punjab Ltd

Corporation Bank

IndusInd Bank Ltd

Housing and Urban Development Corporation (HUDCO) Ltd

Madras Refineries Ltd

Tamil Nadu Newsprint & Paper Ltd

BPL Ltd

Birla 3M Ltd

Essar Shipping Ltd

Essar Steels Ltd.

Hindustan Petroleum Corporation Ltd.

Infosys Technologies Ltd.

Jindal Vijayanagar Steels Ltd.

Nagarjuna Fertilizers & Chemicals Ltd.

Rajshree Polyfil Ltd.

Karvy Securities Ltd.

Karvy has secured over Rs. 500 crore in the following debt issues. Andhra Pradesh Road Development Corporation Ltd




ICICI Bonds ( Private Placement)

ICICI Bonds – 96

ICICI Bonds – 97- I

ICICI Bonds – 97 – II

ICICI Safety Bonds March 98.

IDBI Bonds 96.

IDBI Flexi Bonds I

IDBI Flexi Bonds II

IDBI Flexi Bonds III

Kerala State Electricity Board

Krishna Bhagya Jala Nigam Ltd

Power Finance Corporation Ltd

Andhra Pradesh Water Resources Development Corporation

Andhra Pradesh State Electricity Board

Karvy’s Mutual Fund services:

Building a heritage of confidence:

Since its inception in 1982, Karvy has demonstrated a dedication coupled with dynamism that



A study of Customer Satisfaction towards Mutual Funds has inspired trust from various segments – corporate, government bodies and individuals.

Karvy has since been performing a pivotal role as the intermediary – the interface – between

these players. With Mutual Funds emerging as a distinct asset class, Karvy has made a strategic

choice to leverage the power of latest technology to provide a cutting edge to its services. We,

today, service nearly 40% of the asset management companies (AMCs) across an extensive

network of service centers with assets under service in excess of Rs.10,000 crores. Mutual fund

services have been undergoing a sea change in the Indian market place and asset management

companies are finding their niche in delivering unique products and service offerings.

Our ability to mass customize and offer a diverse range of products for a diverse range of

customers has helped mutual fund companies to uniquely position themselves in the market

place. These diverse range of services cut across multiple delivery channels – service centers,

web, mobile phones, call center – has brought home the benefits of technology to investors,

distributors, and the mutual funds.Going forward, we shall strive to create new products and services, which would address the

needs of the end customer. Our single minded focus in delivering products for customers has

given us the distinguished position of being the preferred provider of financial services in

Alliances:

Karvy has a strategic alliance with Jardine Fleming India Securities Limited (JFISL) - one of

Asia's most prestigious investment bankers - to leverage on the latter's investment banking

expertise. This would augment the retail distribution reach and provide the Indian investor

access to the best global and local insights on financial markets.

Jardine is a respected investment banker with a demonstrated track-record of delivering value

to its clients spread over 43 countries. It is ranked amongst the world's TOP 3 Foreign

Institutional Investors (FIIs).




Milestone:

ORGANISATION CHART

Managing Director

Chief Managing Director




Vice-President Vice-President Vice-President Vice-President

Karvy Karvy Karvy Karvy

Securities Ltd. Stock Broking Ltd. Consultants Ltd. Investors Services Ltd.

Deputy Deputy Deputy Deputy

General General General General

Manager Manager Manager Manager

Senior Senior Senior Senior

Manager Manager Manager Manager

Branch Manager

Number of Team Leaders

N number of Executives

INTRODUCTION

Different investment avenues are available to investors. Mutual funds also offer good investment

opportunities to the investors. Like all investments, they also carry a certain



A study of Customer Satisfaction towards Mutual Funds Risks. The investor should compare the risks and expected yields after adjustment of tax on

various instruments while taking investment decisions .The investors may seek advice from

experts and consultants including agents and distributors of mutual funds schemes while making

investment decisions.

With an objective to make the investors aware of functioning of mutual funds, an attempt has been

made to provide information in question –answer format that may help the investors in taking

investment decisions.

Mutual funds now represent perhaps the most appropriate investment opportunity for most

investors. As financial markets become more sophisticated and complex., investor need a

financial intermediary who provides the required knowledge on professional expertise on

successful investing.

CONCEPT OF 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 invested by the fund manager in

different types of securities depending upon the objective of the scheme. These could

range from shares to debentures to money market instruments. The income earned

through these investments and the capital appreciation realized by the scheme are shared

by its unit holders in proportion to the number of units owned by them (pro rata). 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 portfolio at a relatively low

cost. Anybody with an investible surplus of as little as a few thousand rupees can invest

in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and

strategy. It is is a mechanism for pooling the resources by issuing units to the investors



A study of Customer Satisfaction towards Mutual Funds And investing funds in securities in accordance with the objectives as disclosed in offer

Document. Investments in securities are spread across a wide cross-section of industries

And sectors and thus the risk ins reduced. Diversification reduces the risk because all

Stocks may not move in the same direction in the same proportion at the same time.

Investors of the mutual funds are known as the unit holders.

The mutual funds normally come out with a number of schemes with

different investment objectives, which are launched from time to time. Mutual funds

required to be registered with securities and exchange board of India (SEBI), which

regulates securities markets before it can collect funds from the public.

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

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the

Organizational set up of a mutual fund:




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. 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 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



A study of Customer Satisfaction towards Mutual Funds 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 – 1993-200 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. 3 (Entry of Private Sector Funds)

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

The number of mutual fund houses went on increasing, with many foreign mutual funds setting

up funds in India and also the industry has witnessed several mergers and acquisitions. As at

the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of

other mutual funds.

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



A study of Customer Satisfaction towards Mutual Funds 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 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. With the bifurcation of

the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual

Fund Regulations, and with recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phase of consolidation and growth. As at the

end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under

421 schemes.

The graph indicates the growth of assets over the years

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early

1990s, Government allowed public sector banks and institutions to set up mutual funds

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The

Objectives of SEBI are – to protect the interest of investors in securities and to promote

The development of and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual

funds to protect the interest of the investors. SEBI notified regulations for the mutual

funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed

to enter the capital market. The regulations were fully revised in 1996 and have been

amended thereafter from time to time. SEBI has also issued guidelines to the mutual



A study of Customer Satisfaction towards Mutual Funds funds from time to time to protect the interests of investors.

All mutual funds whether promoted by public sector or private sector entities including

those promoted by foreign entities are governed by the same set of Regulations. There is

no distinction in regulatory requirements for these mutual funds and all are subject to

monitoring and inspections by SEBI. The risks associated with the schemes launched by

the mutual funds sponsored by these entities are of similar type. It may be mentioned here

that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).

MUTUAL FUND SET-UP:

The mutual fund industry in India began with the setting up of the Unit Trust In India

(UTI) in 1964 by the Government of India. During the last 36 years, UTI has grown to be

a dominant player in the industry with assets of over Rs. 76,547 Crores as of March 31,

2000. The UTI is governed by a special legislation, the Unit Trust of India Act, 1963. In

1987 public sector banks and insurance companies were permitted to set up mutual funds

and accordingly since 1987, 6 public sector banks have set up mutual funds. Also the two

Insurance companies LIC and GIC established mutual funds. Securities Exchange Board

of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time

established a comprehensive regulatory framework for the mutual fund industry. Since

then several mutual funds have been set up by the private and joint sectors.

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

Funds hold its property for the benefit of the unit holders. Asset Management Company



A study of Customer Satisfaction towards Mutual Funds (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. However, Unit Trust

of India (UTI) is not registered with SEBI (as on January 15, 2002).

ADVANTAGES OF MUTUAL FUNDS:

The following are the major advantages offered by mutual funds to all the investors.

1. Portfolio diversification :

Mutual funds normally invest in a well –diversified portfolio or




securities. Each investor in a fund is a part of owner of all of the fund’s assets.

This enables him to hold a diversified investment portfolio even with a small

amount of investment that would otherwise require big capital.

2. Professional management:

Even if an investor has an big amount of capital available to him, he

Benefits from professional management skills brought by the fund in the

Management of the investor’s portfolio. The investments management skills

Along with a need ed research into available investment options ,ensure a much

better return than what an investor can manage on his own .

3.Reduction /diversification:

An investor in mutual fund acquires a diversified portfolio, no matter

how small his investment. Diversification reduces the risk of loss, as compared to

investing directly in one or two shares or debentures or other instruments. this

risk reduction is one of the most important benefits of a collective investment

Vehicle like the mutual fund.

4.Reduction of transaction costs:

What is true of risk is also true of the transaction costs .a direct

Investors bears all the costs of investing such as brokerage or custody of

Securities. When going through a fund, he has the benefit of economies of scale;

The funds pay lesser costs because of larger volumes, a benefit passed on to its

Investors.

5. Liquidity:

Investment in a mutual fund is more liquid .an investor can liquidate




The investment, by selling the units to the fund if open-end, or selling them in

the market if the fund is closed –end and collect funds at the end of a specified by

the mutual fund or the stock market

6. Convenience and flexibility:

Mutual fund management companies offer many investor services

that a direct market investor cannot get. Investors can easily transfer their holdings

from one scheme to the other ,get updated market information and so on.

* Drawbacks of Mutual Funds:

1) No Guarantees: No investment is risk free. If the entire stock market declines in value,

the value of mutual fund shares will go down as well, no matter how balanced the portfolio.

Investors encounter fewer risks when they invest in mutual funds than when they buy and

sell stocks on their own. However, anyone who invests through a mutual fund runs the risk

of losing money.

2) Fees and commissions: All funds charge administrative fees to cover their day-to-day

expenses. Some funds also charge sales commissions or "loads" to compensate brokers,

financial consultants, or financial planners. Even if you don't use a broker or other financial

adviser, you will pay a sales commission if you buy shares in a Load Fund.

3) Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20

to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales,

you will pay taxes on the income you receive, even if you reinvest the money you made.

4)Management risk: When you invest in a mutual fund, you depend on the fund's manager

to make the right decisions regarding the fund's portfolio. If the manager does not perform

as well as you had hoped, you might not make as much money on your investment as you




expected. Of course, if you invest in Index Funds, you forego management risk, because

these funds do not employ managers.

FREQUENTLY USED TERMS :

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The

per unit NAV is the net asset value of the scheme divided by the number of units



A study of Customer Satisfaction towards Mutual Funds Outstanding on the Valuation Date

Sale Price

Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load

Repurchase Price

Is the price at which a close-ended scheme repurchases its units and it may include a

back-end load. This is also called Bid Price.

Redemption Price

Is the price at which open-ended schemes repurchase their units and close-ended schemes

redeem their units on maturity. Such prices are NAV related

Sales Load

Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load.

Schemes that do not charge a load are called ‘No Load’ schemes.

Repurchase or ‘Back-end’ Load

Is a charge collected by a scheme when it buys back the units from the unit holders.

Sector specific funds/schemes :

These are the funds/schemes, which invest in the securities of only those sectors or industries

as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer

Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the

performance of the respective sectors/industries. While these funds may give higher returns,

they are more risky compared to diversified funds. Investors need to keep a watch on the

performance of those sectors/industries and must exit at an appropriate time. They may also

seek advice of an expert.

Tax Saving Schemes:



A study of Customer Satisfaction towards Mutual Funds These schemes offer tax rebates to the investors under specific provisions of the Income Tax

Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g.

Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also

offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities.

Their growth opportunities and risks associated are like any equity-oriented scheme.

Risks involved in investing in mutual funds.A very important risk involved in mutual fund investments is the market risk. When the market is

in doldrums, most of the equity funds will also experience a downturn. However, the company

specific risks are largely eliminated due to professional fund management.

Different types of plans that any mutual fund scheme offers

It depends on your investment object, which again depends on your income, age, financial

responsibilities, risk taking capacity and tax status. For example a retired government employee is

most likely to opt for monthly income plan while a high-income youngster is most likely to opt for growth plan.

DIFFERENT TYPES OF MUTUAL FUNDS SCHEMES:

Open-ended Fund /Scheme:

An open-ended fund or scheme is one that is available for subscription and repurchase



A study of Customer Satisfaction towards Mutual Funds on a continuous basis. These schemes do not have a fixed maturity period. investors can

Conveniently buy and sell units at Net Asset Value (NAV) related prices which are

declared on a daily basis. The key feature of open –ended schemes is liquidity. The” unit

capital” of an open-ended mutual fund is not fixed but variable. The fund size and its

total investment amount go up if more new subscription come in from new investors than

redemption by existing investors ; the fund shrinks when redemption of units exceed

fresh subscriptions.

Closed-ended Fund/scheme:

A closed –ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund

is open for subscription only during a specified period at the time of launch of the

schemes. Investor can invest in the scheme at the time of the initial public issues and

thereafter they can buy and sell the units of the scheme on the stock exchanges where the

units are listed. In order to provide an exit route to the investors, some close-ended funds

give an option of selling back the units to the mutual fund through periodic repurchase at

NAV related prices. SEBI regulations stipulate that at least one of the two exit routes is

provided to the investor i.e. either repurchases facility or trough listing on stock

exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

Load and No-load funds.

Marketing of a new mutual fund schemes involves initial expenses . these expenses

may be recovered from the investors in different times. Three usual way’s in which a



A study of Customer Satisfaction towards Mutual Funds Fund’s sales expenses may be recovered from the investor from the investors are:

1. At the time of investor’s entry into the fund/ scheme, by deducting a specific amount from his initial contribution.

2. By charging the fund /scheme with a fixed amount each year ,during the stated number of years ,or

3. At the time of the investor’s exit from the fund/scheme, by deducting a specified amount from the redemption proceeds payable to the investors.

A load is one that charges a percentage of NAV for entry or exit. 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 units

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 affect their yields /returns .

However, the investors should also consider the performance track record and

service standards of the mutual fund which are more important .Effective funds may

give higher returns in spite of loads.

A no-load fund is one that does not charge or exit .It means the investors can

enter the funds/scheme at NAV and no additional charges are payable on purchase

or sales of units.

These charges made by the fund managers to the investors to cover

distribution/ sales/ marketing expenses are often called “loads” . The load charged to

the investor at the time of his entry into a scheme is called a “front –end or entry

load”. The load charged to the scheme over a period of time is called a “deferred

load” . the load that the investor pays at the time of his exit is called a “back-end




or exit load”.

Tax –exempt Vs. Non –Tax –exempt Funds

Generally , when a fund invests in tax-exempt securities , it is called

a tax –exempt fund .In the U S A,for ex ,municipal bonds pay interest that is tax-

free, while interest on corporate and other bonds is taxable. In India ,after the 1999

Union Government Budget ,all of the dividend income received from any of the

mutual funds is tax – free in the hands of the investor. However ,funds other than

Equity funds have to pay a distribution tax, before distributing income to investors .

While Indian mutual funds currently offer tax-free income, any capital gains

arising out of sale of fund units are taxable .All these tax consideration are important

in the decision on where to invest as the tax- exemptions or concessions alter the

returns obtained from these investments.

MUTUAL FUND TYPES:

a) Broad Fund Types by Nature of investments:

Mutual funds may invest in equities, bonds or other fixed income securities, or

short- term money market securities .So we have Euity,Bond and Money Market

Funds. All of them investment in financial assets .But there invest in physical assets.

For ex. We may have Gold or other precious Metals funds or Real Estate Funds.

b) Broad Fund Types by investment Objective:

Investors and hence the mutual funds pursue different objective while

investing. Thus Growth Funds invest for medium to long term capital apperception.




Value funds invest in equities that are considered under –valued today , whose

value will be unlocked in the future.

c) Broad fund Types by Risk Profile:

The nature of a fund’s portfolio and investment objective imply

different levels of risk undertaken . Funds are therefore often grouped in order of

risk . Thus, Equity Funds have a greater a risk of capital loss than a debt fund that

seeks to protect the capital while looking for income. Money Market Funds are

exposed to less than even the Bonds funds ,since they invest in short- term fixed

income securities, as compared to longer –term portfolios of Bond Funds.

Money Market Funds:

Often considered to be at the lowest rung in the order of risk level, Money

Market Funds invest in securities of short-term nature, which generally means

securities of less than one- year maturity .The typical, short-term ,interest –bearing

instruments these funds invest in include Treasury Bills issued by

governments,certifactes of Deposit issued by banks and Commercial Paper issued by

companies.In India,Money Market Mutual Funds also invest in the inter-bank call money market.

Gift Funds:

Gifts are government securities with medium to long- term maturities, typically

of over one year .in India, we have now seen the emergence of Government securities

or gift funds that invest in government in government paper called dated securities.

since the issuer is the governments/s of India/states these funds have little risk of

default and hence offer better protection of principles .

Debt Funds (Income Funds):




Debt funds invest in debt instruments issued not only by governments,

but also by private companies, banks and financial institutions and other entities such

as infrastructure companies/utilities. By investing in debt ,these funds target low risk

and stable income for the investor as their key objectives. Debt funds are largely

considered as Income funds as they do not target capital appreciation, look for

high current income, and therefore distribute a substantial part of their surplus to

investors. Income funds that target returns substantially above market levels can

face more risks.

a) Diversified Debt Funds:

A debt fund that invest in all available types of debt securities, issued

by entities across all industries and sectors is a properly diversified debt fund.

While debt offer high income and less risk than equity funds, investors need to

recognize that debt securities are subject to risk of default by the issuer on

payment of interest or principal .A diversified debt fund has the benefit of risk

reduction through diversification and sharing of any default losses by a larger

number of investors. Hence a diversified debt fund isles risky than a narrow –focus

fund that invest in debt securities of a particular sector or industry.

b) Focused Debt Funds:

Some debt funds have a narrow focus ,with less diversification in its

Investments.Ex include sector ,specialized and offshore debt funds. These are




similar to the funds described later in the equity category except that debt funds

have a substantial part their portfolio invested in debt instruments and are

Therefore more income oriented and inherently less risky than equity funds. That

debt funds should be automatically considered to be less risky than equity

funds.

c) High Yield Debt Funds:

Usually ,debt funds control the borrower default risk by investing in

Securities issued by borrowers who are rated by credit rating agencies and are

considered to be of “investment grade “.There are High Yield debt funds that

seek to obtain higher interest returns by investing in debt instruments that are

considered “bellow investment grade”.Cleraly ,these funds are exposed to higher

risk.

d) Assured Return Funds-an Indian Variant:

Fundamentally ,mutual funds hold assets in trust for investors. All

returns and risks are for account of the investor .The role of the fund manager is

to provide the professional management service and to ensure the highest

possible return consistent with the investment objective of the fund .The fund

manager or the trustees or the sponsors do not give any guarantee on the

minimum return to the investors.

e) Fixed Term Plan Series-Another Indian Variant:

A mutual fund scheme would normally be either open-end or

close-end .However ,In India, mutual funds have evolved an innovative middle




option the two, in response to investor needs. If a scheme is open-end ,the fund

issues new units and redeems them at any time. The fund does not have a stated

maturity or fixed term of investment as such. Fixed Term Plan series offer a

combination of both these features to investors ,as a series of plans are offered

and units are issued at frequent intervals for short plan durations.

Equity Funds:

Equity funds invest a major portion of their corpus in equity

shares issued by companies, acquired directly in initial public offerings or

through the secondary market .Equity funds would be exposed to the equity

price fluctuation risk at the market level, at the industry or sector level and at

the company- specific level. Equity Funds Net asset Values fluctuate with all

these price movements. they are generally considered at the higher end of the

risk spectrum among all funds available in the market.

a) Aggressive Growth Funds:

As the name suggests , aggressive growth funds target maximum

capital appreciation, invest in less researched or speculative shares and may adopt

speculative investment strategies to attain their objective of high returns for the

investor .consequently ,they tend to be more volatile and riskier than other funds.

b) Growth Funds: Growth fund invest in companies whose earnings are expected to

rise at an above average rate. These companies may be operating in sectors like

technology considered to have a growth potential ,but not entirely unproven and

speculative .the primary objective of growth fund is capital appreciation over a




three to five year span . growth funds are therefore less volatile than funds that

target aggressive growth.

C) Specialty Funds:

These funds have a narrow portfolio orientation and invest in only

companies that meet pre- defined criteria. for EX. At the height of the South

African regime, many funds in the U.S.offered plans that promised not to invest in

south African companies. Funds that invest in particular regions such as the

Middle East or ASEAN countries are also an example of specialty funds.

C) I . Sector Funds: Sector fund’s Portfolios consist of investment in only one

industry or sector of the the market such as Information Technology , Pharmaceuticals or

Fast Moving Consumer goods that have recently been launched in India.

Since sector funds do not diversify into multiple sectors ,they carry a higher level of

sector and company specific risk than diversified equity funds.

C) II. Offshore Funds

These funds invest in equities in one or more foreign countries thereby

achieving diversification across the country’s borders. However they also have additional

risks-such as the foreign exchange rate risk-and their performance depends on the

economic conditions of the countries they invest in. Offshore Equity funds may invest

in a single country or many countries.

C) III. Small-Cap Equity Funds

These funds invest in shares of companies with relatively lower market

capitalization than that of big ,blue chip companies. They may thus be more volatile than

other funds ,as smaller companies ‘shares are not very liquid in the markets.




We can think of these funds as a segment of specialty funds. Int terms of risk

characteristics, small company funds may be aggressive –growth type .

D) Diversified Equity Funds

A fund that seeks to invest only in equities , except for a very small

portion in liquid money market securities ,but is not focused to all equity price risks

,diversified equity funds seek to reduce the sector or stock specific risks through

diversification .They have mainly market risk exposure. Such general purpose but

diversified funds are clearly at the lower risk level than growth funds.

D) i. Equity Linked Savings Schemes:

In India the investor’s have given tax concessions to encourage them to

invest in equity markets through these special schemes. Investment in these schemes

entitles the investor to claim an income tax rebate ,but usually has a lock- in period

before the end of which funds cannot be withdrawn. These funds are subject to the

general SEBI investment guidelines for all “equity” funds, and would be in the

diversified Equity Fund category.

E) Equity Index funds:

An index fund track the performance of a specific stock market index.

The objective is to match the performance of the stock market by tracking an index that

represents the overall market. The fund invests in shares that constitute the index and

in the same proportion as the index . since they generally invest in a diversified market

index portfolio, these funds take only the overall market risk ,while reducing the sector

and stock specific risks through diversification.



A study of Customer Satisfaction towards Mutual Funds F) Value Funds :

Value Funds have the equity market price fluctuations risks ,but stand often at a

lower end of the risk spectrum in comparison with the Growth Funds. Value stocks

may be from a large number of sectors and therefore diversified. However ,value

stocks may be from a cyclical industries. In the long-term ,value funds ought to be

less risky than growth funds or even Equity Diversified Funds.

G) Equity Income Funds:

There are equity funds that can designed to give the investor a high

level of current income along with some steady capital appreciation, investing

mainly in shares of companies with high dividend yields. These equity funds should

therefore be less volatile and less risky than nearly all other equity funds.

Hybrid Funds –Quasi Equity/Quasi debt

There are funds that, however, seek to hold a relatively balanced

holdings of debt and equity securities in their portfolios. Such funds are termed

“hybrid funds” as they have a dual equity /bond focus. Some of the funds in this

category are described below.

a) Balanced Funds:

A balanced fund is one that is one that has a portfolio comprising debt

instruments , convertible securities , preference and equity shares. Their assets

are generally held in more or less equal proportion s between debt/money

market securities and equities . By investing in a mix of this nature ,balanced

funds seek to attain the objectives of income ,moderate capital appreciation and

preservation of capital and are ideal for investors with a conservative and long-




term orientation.b) Growth-and-Income Funds:

Unlike income –focused or growth –focused funds, these funds seek to

strike a balance between capital appreciation and income for the investor . their

portfolios are a mix between companies with good dividend paying records and

those with potential for capital appreciation these funds would be less risky than pure

growth funds, though more risky than income funds.

C) Asset Allocation Funds:

Normally ,an Equity fund would have its primary portfolio in equities most of the

time .similarly a debt fund would not have major equity holdings .In other words

,their “asset allocation “is predetermined within certain parameters. However there

do exist funds that follow variable asset allocation policies and move in and out of

an asset class. depending upon their outlook for specific markets.

Commodity Funds:

Commodity funds specialize in investing in different commodities directly or

through shares of commodity companies or commodity futures contracts. Specialized

funds may invest in a single commodity or a commodity group such as edible oils

or grains ,while diversified commodity funds will spread their assets over many commodities.

Real Estate Funds:

Specialized Real estate Funds would invest in Real Estate directly, or may

fund real estate developers, or lend to them ,or buy shares of housing finance

companies or many even buy their securitised assets. The funds may have a growth

orientation or seek to give investors regular income. There has recently been an

initiative to offer such an income fund by the HDFC.



A study of Customer Satisfaction towards Mutual Funds Regulatory Aspects of Mutual Funds

Schemes of a Mutual Fund

The asset management company shall launch no scheme unless the trustees approve

such scheme and a copy of the offer document has been filed with the Board.

Every mutual fund shall along with the offer document of each scheme pay filing fees.

The offer document shall contain disclosures which are adequate in order to enable the

investors to make informed investment decision including the disclosure on maximum

investments proposed to be made by the scheme in the listed securities of the group

companies of the sponsor

The mutual fund and asset management company shall be liable to refund the

application money to the applicants,-

(i) If the mutual fund fails to receive the minimum subscription

amount referred to in clause (a) of sub-regulation (1);

(ii) If the moneys received from the applicants for units are in

excess of subscription as referred to in clause (b) of sub-

regulation (1).

The asset management company shall issue to the applicant whose application has been

accepted, unit certificates or a statement of accounts specifying the number of units

allotted to the applicant as soon as possible but not later than six weeks from the date of

closure of the initial subscription list and or from the date of receipt of the request from

the unit holders in any open ended scheme.

Rules Regarding Advertisement:




The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false.

Investment Objectives And Valuation Policies:

The price at which the units may be subscribed or sold and the price at which such units may at any time be repurchased by the mutual fund shall be made available to the investors.

General Obligations:

Every asset management company for each scheme shall keep and maintain proper

books of accounts, records and documents, for each scheme so as to explain its transactions

and to disclose at any point of time the financial position of each scheme and in particular

give a true and fair view of the state of affairs of the fund and intimate to the Board the

place where such books of accounts, records and documents are maintained.

The financial year for all the schemes shall end as of March 31 of each year.

Every mutual fund shall have the annual statement of accounts audited by an auditor

who is not in any way associated with the auditor of the asset management company.

Procedure For Action In Case Of Default:

On and from the date of the suspension of the certificate or the approval, as the case

may be, the mutual fund, trustees or asset management company, shall cease to carry on

any activity as a mutual fund, trustee or asset management company, during the period

of suspension, and shall be subject to the directions of the Board with regard to any

records, documents, or securities that may be in its custody or control, relating to its

activities as mutual fund, trustees or asset management company.

Restrictions On Investments:

A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments

issued by a single issuer, which are rated not below investment grade by a credit rating




agency authorized to carry out such activity under the Act. Such investment limit may be

extended to 20% of the NAV of the scheme with the prior approval of the Board of

Trustees and the Board of asset management company.

A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt

instruments issued by a single issuer and the total investment in such instruments shall

not exceed 25% of the NAV of the scheme. All such investments shall be made with

the prior approval of the Board of Trustees and the Board of asset management company.

No mutual fund under all its schemes should own more than ten per cent of any

company's paid up capital carrying voting rights.

Such transfers are done at the prevailing market price for quoted instruments on spot basis.

The securities so transferred shall be in conformity with the investment objective of the

scheme to which such transfer has been made.

A scheme may invest in another scheme under the same asset management company or

any other mutual fund without charging any fees, provided that aggregate interscheme

investment made by all schemes under the same management or in schemes under the

management of any other asset management company shall not exceed 5% of the net

asset value of the mutual fund.

The initial issue expenses in respect of any scheme may not exceed six per cent of the

funds raised under that scheme.

Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all

cases of purchases, take delivery of relative securities and in all cases of sale, deliver

the securities and shall in no case put itself in a position whereby it has to make short

sale or carry forward transaction or engage in badla finance.




Every mutual fund shall, get the securities purchased or transferred in the name of the

mutual fund on account of the concerned scheme, wherever investments are intended to

be of long-term nature.

Pending deployment of funds of a scheme in securities in terms of investment

objectives of the scheme a mutual fund can invest the funds of the scheme in short term

deposits of scheduled commercial banks.

No mutual fund scheme shall make any investment in;

i. Any unlisted security of an associate or group company of the sponsor; or

ii Any security issued by way of private placement by an associate or

group company of the sponsor; or The listed securities of group companies of the

sponsor which is in excess of 30% of the net assets [of all the schemes of a mutual fund]

No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity

shares or equity related instruments of any company. Provided that, the limit of 10 per

cent shall not be applicable for investments in index fund or sector or industry specific

scheme.

A mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or

equity related investments in case of open-ended scheme and 10% of its NAV in case

of close-ended scheme.

ON-LINE PROCEDURE:


IIL / 5p Users

Registered Users New User

Registration form

5p investor can use their trading ID & Fund Transfer (Ledger) password for availing online Equity IPO & Mutual Funds.

Thank you



Growth of the Mutual Fund Industry in India :

The mutual fund industry has seen various phases in India and has evolved over

the last 10 years in a big way. It started in India in 1963 with the setting up of


Login ID

Password

POA Confirmation

Product

s

IPOMF

Company

Scheme Select

Transaction Report

Confirmation Report

Reminder for Documents

Redirect to Payment Gateway

DP Details

No of Shares

Investor has to accept POA terms & conditions & also need to send physical copy of POA by courier or post ASAP

Investor has to select his/her correct DP Name from list & input DP ID & Beneficiary account. Allotment proceeds will be credited to this DP Account

PAN Card is compulsory, for investments greater than or equal to Rs. 50000.


A study of Customer Satisfaction towards Mutual Funds Unit Trust of India. Its total Assets under Management (AUM) reached a level of

Rs 67 billion by the end of 1988. In 1987 some Public Sector Banks and Insurance

Companies started their own mutual funds and kicked off the second phase in the

mutual fund industry. SBI Mutual Fund, LIC Mutual Fund etc. were few among

them.

The mutual fund industry registered a major milestone in 1993 with the beginning

of first private sector mutual fund. The erstwhile Kothari Pioneer Mutual Fund

(now merged with Franklin Templeton Mutual Fund) was the first private sector

mutual fund registered in July 1993. After that several mutual funds have started

in India, including many international players. The industry has also seen a spate

of mergers and acquisitions, most recently being the acquisition of the schemes of

Alliance Mutual by Birla Sun Life and Sun F&C by Principal Mutual.

The latest phase in the evolution of the industry started when Unit Trust of India

(UTI) was bifurcated into two separate entities. The first one is the specified

undertaking of UTI and covers mainly the AUM of US-64 (the first mutual fund

scheme in India) and other assured return schemes. The second is the UTI Mutual

Fund, which manages about 40 schemes and AUM worth Rs 209.76 billion as of

December 2004.While the Indian mutual fund industry has grown in size by about

320% from March, 1993 (Rs 470 billion) to December, 2004 (Rs 1505 billion) in

terms of AUM, the AUM of the sector excluding UTI has grown over 8 times from

Rs.152 billion in March 1999 to Rs.1295 billion as at December 2004 (See Chart 1).




1




SECURITIES AND EXCHANGE BOARD OF INDIA

INVESTMENT MANAGEMENT DEPARTMENT

Equity (Rs in Crores) Debt (Rs in Crores)

Gross Purchase

Gross Sales

Net Purchase/ Sales

Gross Purchase

Gross Sales

Net Purchase/ Sales

Jan 2000-March 2000. 11070.54 11492.19 -421.65 2764.72 1864.29 900.43April 2000 -March 2001. 17375.78 20142.76 -2766.98 13512.17 8488.68 5023.49April 2001-March 2002. 12098.11 15893.99 -3795.88 33583.64 22624.42 10959.22April 2002-March 2003 14520.89 16587.59 -2066.70 46663.83 34059.41 12604.42April 2003-March 2004 36663.58 35355.67 1307.91 63169.93 40469.18 22700.75April 2004. 3675.30 3894.64 -219.34 6105.57 3653.81 2451.76May 2004. 4857.15 3852.06 1005.09 4311.55 3684.39 627.16June 2004. 2130.11 2389.96 -259.85 4066.64 5338.14 -1271.50July 2004. 2678.86 3149.27 -470.41 4356.85 4006.42 350.43August 2004 2822.05 2919.88 -97.83 4582.91 3228.22 1354.69September 2004. 3530.42 3759.18 -228.76 4620.8 3411.59 1209.21October 2004. 2861.36 3283.24 -421.88 2354.67 2819.14 -464.47November 2004. 3589.34 4284.71 -695.37 3709.49 2527.27 1182.22December 2004. 4795.59 5151.50 -355.91 6573.29 3872.69 2700.60January 2005. 3767.54 3219.83 547.71 5817.59 3137.39 2680.20February 2005 (upto 19th) 2545.81 2716.85 -171.04 5868.19 3726.59 2141.60Total (April '04 - Feb. 37253.53 38621.12 -1367.59 52367.55 39405.65

12961.90




'05)

Trends in Transactions on Stock Exchanges by Mutual Funds

(since January 2000)

Trends in Transactions on Stock Exchanges by Mutual Funds

(Provisional and subject to revision) February 2005

Equity (Rs in crores) Debt (Rs in crores)

Transaction Date

Gross Purchases

Gross Sales

Net Purchases / Sales

Gross Purchases

Gross Sales

Net Purchases/ Sales

01.02.05 159.50 272.45 -112.95 366.45 254.61 111.8402.02.05 290.22 246.23 43.99 793.07 525.92 267.1503.02.05 195.62 211.86 -16.24 767.85 280.55 487.3004.02.05 131.16 113.52 17.64 409.49 343.13 66.3605.02.05 0.00 0.00 0.00 261.26 71.35 189.9107.02.05 109.64 195.16 -85.52 378.63 191.39 187.2408.02.05 199.20 169.55 29.65 486.78 406.32 80.4609.02.05 193.60 141.26 52.34 597.15 213.70 383.4510.02.05 198.31 148.58 49.73 350.41 449.75 -99.3411.02.05 229.54 167.90 61.64 260.32 218.11 42.2112.02.05 0.00 0.00 0.00 40.20 59.81 -19.6114.02.05 240.43 195.25 45.18 174.22 46.83 127.3915.02.05 107.62 239.60 -131.98 261.86 189.49 72.3716.02.05 179.72 157.57 22.15 237.29 154.00 83.2917.02.05 108.62 205.94 -97.32 318.27 193.74 124.5318.02.05 202.63 251.98 -49.35 124.81 87.80 37.0119.02.05 0.00 0.00 0.00 40.13 40.09 0.04

Total 2545.81 2716.85 -171.04 5868.19 3726.592141.60




ANALYSIS OF CUSTOMER SATISFACTION:

The Sample size selected for the survey was 100 .The respondents are the customers of KARVY

CONSULTANT STOCK BROCKING LTD. were available for the survey,& their opinion was

taken to know the customer satisfaction towards Mutual Funds.

Q NO .1 Do you believe in savings?

YES NO

100% 0%

Interpretation:

According to the survey we came to know that 100%respondents are believe in savings.

from the selected sample all respondents save their earnings in investing in mutual




funds.So they believe in savings.

Q NO .2 What is the minimum amount you save per month/quarterly/ half- yearly/yearly?

0-500 500-1000 1000-2000 2000-5000 5000 above

8 17 26 25 24

8% 17% 26% 25% 24%

Interpretation:

By conducting survey we came to know about the minimum amount of savings made by

the Respondents 8% of respondents save between 0-500, 17%respondents save

between 500-1000, & 26%of respondents save between 1000-2000, & 25% of the

respondents save between 2000-5000& 24% of respondents save above 5000.So



A study of Customer Satisfaction towards Mutual Funds here maximum Respondents are fall in the category 1000-2000.

3 Q No : As customers while investing in Mutual Funds what factors do you see?

[A]

1 2 3 4 5 6

60 20 10 6 3 1

60% 20% 10% 6% 3% 1%

Interpretation:

According to the survey we know that 60% of respondents have given first

preference to safety,20% of respondents are given second preference,10%

respondents are given third preference ,6% of respondents are given fourth

preference, as like 5% respondents given fifth ,1% respondents given sixth

preference.




3 [B]

Interpretation:

According to the survey we came to know that 28% of the respondents have given first

preference to rate of return, 34 % respondents have given second preference

,20% respondents have given third ,14% respondents have given fourth ,4% have

given fifth.


1 2 3 4 5 6

28 34 20 14 4 0

28% 34% 20% 14% 4% 0%



3 [C ]

1 2 3 4 5 6

2 20 18 44 15 1

2% 20% 18% 44% 15% 1%

Interpretation:

According to the survey we came to know that 2% respondents have given first

preference,20%have Given second, 18% have given third,44%have fourth,15%have given

fifth,1%have given as six.




3 [D]

1 2 3 4 5 6

6 16 37 14 25 2

6% 16% 37% 14% 25% 2%

Interpretation:

According to the survey we came to know that 6% of respondents have given first,16%have given

Second,37%have given third,14%have given fourth ,25% have given fifth,2%have

given six preference.




3 [E]

1 2 3 4 5 6

3 8 13 18 48 10

3% 8% 13% 18% 48% 10%

Interpretation:

According to the survey we came to know that 3% of respondents have given first preference, 85

have given Second,13% have given third,18%have given fourth 48% have given fifth

,10% have given six preference.




3 [F]

1 2 3 4 5 6

1 2 2 4 5 86

1% 2% 2% 4% 5% 86%

Interpretation:

According to the survey we came to know that 1% of respondents have given first preference, 2%

have given second, 2%have given third,4% have given fourth ,55have given fifth ,86%

have given six preference.




Q No 4 : In which scheme are your holding your Mutual Fund? [ I]

Equity 63 63%

Debt 5 5%

Balanced 30 30%

Interpretation:

Here the majority of respondents i,e,63% , have chosen Equity

scheme for investing their savings in mutual funds &remaining 5%for debt

& 30%for balanced scheme.




Q No 5 : How do you justify your performance of your service provider for over Mutual Fund distribution?

Qty services 36 36%

Steady 16 16%

Reach 13 13%

Safety 28 28%

Nothing in particular 7 7%

Interpretation:

For measuring the performance of Service provider 36% of respondents have

chosen quality service ,as it indicates that the service provider will give more

quality service to the public.& 16% have chosen steady,13%have chosen reach,28%




have chosen safety ,7% have chosen nothing in particular.

Q No 6: If you are aware of new services, then how do you come to know

Abou t these services?

Friends 1212%

News papers &Magazines 2222%

Brokers 2626%

Agents 3737%

Others 33%

Interpretation:

According to the survey we came to know that the awareness of new service through

Agents is very high because 37% of respondents are aware through agents,26%are

through Brokers,22%are through News papers & Magazines ,12%through



A study of Customer Satisfaction towards Mutual Funds Friends,3% through others. so the majority of the respondents are aware from

agents. Q No 7: Overall, How would you rate Mutual Fund scheme?

Interpretation:

According to the survey we came to know that overall rating of mutual fund scheme is that

62% of the respondents have chosen Extremely good ,29%have chosen very good

,8% have chosen Neither good / Bad ,1% have chosen very bad.

So finally the Majority of the respondents say that this mutual fund scheme is


Extremely good62

62%

Very good 2929%

Neither good/bad 88%

Very bad 11%

Extremely bad 00%



Extremely good.

Q No 8 : Overall how do you Rate the services of Your Financial

Service Provider?

0% 0 0%

20% 6 6%

40% 24 24%

60% 45 45%

80% 21 21%

100% 4 4%

Interpretation:

From this survey we can see that overall rating the Services of Financial Service

Provider in terms of Percentage is that, 40% of respondents are chosen 60%because

They are satisfied up to 60%,24% respondents have satisfied 40%,21% respondents



A study of Customer Satisfaction towards Mutual Funds Have satisfied 80%,6%respondents have satisfied 20%,4%respondents have

Satisfied 100% respectively.

Q NO 9: Express your level of satisfaction about the following schems/services.

[I]

S MS NE S/US MUS US

46 35 16 3 0

46% 35% 16% 3% 0%

Interpretation:

From this we will see that about M UTUAL FUND scheme the level of satisfaction of the

respondents is that 46% of respondents are satisfied,35% respondents are Mostly

satisfied, 16% respondents are Neither satisfied/unsatisfied,3%respondents are



A study of Customer Satisfaction towards Mutual Funds Mostly unsatisfied. Hence the majority of the respondents is satisfied with the scheme.

[II]

S MS NE S/US MUS US

40 12 46 2 0

40% 12% 46% 2% 0%

Interpretation:

From this we will see that about TAX scheme, Most of the respondents arei,e,46%

are Neither satisfied/unsatisfied about the scheme, 40% are satified,12% are

Mostly satified,2%are Mostly satisfied .so the majority of the respondents have

Chosen they are Neither satisfied or un satisfied about the scheme




[III]

S MS NE S/US MUS US

33 15 50 2 0

33% 15% 50% 2% 0%

From this survey it is clear that about INSURANCE Scheme 50%of the respondents

are neither satisfied or unsatisfied about the scheme,33% of respondents are

satisfied,15%are Mostly satisfied,2% are Mostly satisfied. Finally we will see that

majority is 50%.




[IV]

S MS NE S/US MUS US

38 10 45 5 2

38% 10% 45% 5% 2%

Interpretation:

From this it is clear that the level of satisfaction about BONDS is that

45%respondents are Neither satisfied or un satisfied,38%are satisfied, 10%are

Mostly satisfied,5%are Mostly unsatisfied,2% unsatisfied about the bond schemes.




[V]

S MS NE S/US MUS US

62 12 25 1 0

62% 12% 25% 1% 0%

Interpretation:

From this we know that the level of satisfaction about the Equity IPO is that 62% of

the respondents are satisfied about the scheme,12% are Mostly satisfied, 25%are

Neither satisfied or unsatisfied,1% are Mostly unsatisfied. So finally the majority of




respondents are satisfied about the schemes .

Code sheet Customer Response

S NO Q1 Q2a Q3a Q3b Q3c Q3d Q3eQ3f Q4 Q5 Q6 Q7 Q8 Q9a Q9b Q9c Q9d Q9e

1 1 5 1 2 3 3 4 6 1 1 3 2 4 1 2 3 1 2

2 1 2 1 1 3 5 6 4 1 5 1 3 3 1 1 2 1 1

3 1 3 6 1 2 3 5 4 3 1 4 2 4 2 1 3 4 34 1 3 1 2 5 3 6 5 1 2 3 1 4 2 1 1 1 15 1 1 1 2 2 3 4 6 1 1 3 1 3 1 1 4 3 26 1 3 1 4 2 5 5 6 3 1 2 2 5 1 3 2 2 27 1 4 1 1 5 4 6 2 1 4 4 1 4 2 1 1 3 18 1 5 1 2 4 5 6 3 1 2 4 1 3 4 1 2 1 39 1 3 5 1 4 2 4 3 1 2 1 3 3 3 1 3 3 110 1 5 1 2 5 3 5 6 1 1 2 1 5 1 2 2 1 111 1 5 1 3 3 5 4 6 1 1 3 2 5 2 1 3 3 112 1 3 1 3 4 5 2 6 1 4 1 1 3 2 3 1 5 213 1 4 1 2 4 3 3 6 1 2 2 1 3 1 1 2 1 114 1 3 2 1 4 3 5 6 3 3 1 2 4 2 3 3 3 115 1 5 1 1 4 3 6 6 1 1 4 1 4 2 1 3 3 116 1 4 1 2 3 4 5 6 2 4 1 1 4 1 3 3 3 117 1 5 1 2 5 3 4 6 1 1 2 1 4 2 2 2 3 318 1 4 1 3 5 2 4 4 2 3 3 2 5 2 3 3 4 119 1 3 1 3 5 2 4 6 1 1 4 2 4 1 1 1 2 220 1 5 2 1 4 3 6 6 1 2 2 1 2 1 1 2 3 121 1 2 1 2 4 3 5 6 1 1 4 2 4 1 3 3 3 122 1 2 1 4 4 5 2 6 1 1 2 1 3 3 3 1 3 323 1 2 2 1 4 3 5 6 3 2 4 2 4 2 3 3 3 124 1 5 2 3 4 3 5 6 1 3 2 2 5 1 3 3 3 325 1 4 1 5 2 3 5 6 1 1 4 1 4 1 3 2 3 326 1 4 5 1 4 3 2 6 3 2 1 4 3 4 3 3 4 427 1 3 2 1 4 3 5 6 1 3 4 1 5 3 3 3 3 328 1 5 1 5 2 4 3 6 1 2 2 2 5 2 2 2 2 229 1 3 1 3 4 2 5 6 3 1 4 1 3 1 3 3 3 130 1 5 1 2 5 4 3 6 1 3 4 2 4 1 3 3 3 331 1 4 2 1 4 5 3 6 1 1 3 1 4 2 3 3 3 132 1 3 1 2 4 3 5 6 3 1 2 1 4 1 3 1 1 133 1 4 1 3 2 5 4 6 1 3 4 2 4 2 1 1 3 134 1 3 2 1 4 5 3 6 1 1 2 1 4 2 1 3 3 135 1 5 1 4 5 3 2 6 2 2 2 1 2 3 2 2 2 236 1 3 2 1 4 3 5 6 1 4 4 1 4 3 2 1 1 137 1 5 1 2 4 6 4 5 1 3 3 6 3 3 3 3 138 1 4 1 5 3 5 2 6 1 2 4 2 5 2 3 3 1 1




39 1 2 1 2 4 3 5 6 1 1 3 1 4 2 3 3 3 140 1 2 1 4 2 3 5 6 3 1 4 1 3 1 3 3 3 341 1 4 3 1 2 4 5 6 1 4 3 2 4 2 3 3 3 142 1 4 4 1 2 5 3 6 1 2 4 1 5 2 1 1 1 143 1 4 3 2 4 5 2 6 1 1 3 2 5 2 3 3 3 144 1 3 2 1 4 3 5 6 1 1 3 1 3 3 4 3 3 145 1 3 1 4 3 2 5 6 1 4 3 1 2 1 3 3 3 346 1 3 3 1 4 2 5 6 1 2 3 1 3 3 3 3 3 147 1 3 1 4 2 4 5 6 2 1 4 1 4 1 3 3 3 148 1 4 2 1 4 3 5 6 1 1 3 2 4 1 3 3 3 149 1 3 2 1 3 5 4 6 1 4 3 1 4 2 3 3 3 150 1 5 2 5 6 3 1 2 3 1 1 2 5 1 3 1 1 351 1 4 1 3 2 4 5 6 1 3 5 1 2 1 3 3 3 152 1 2 1 3 4 2 5 6 3 4 2 1 4 2 2 3 3 253 1 4 1 3 2 5 4 6 1 4 4 1 2 1 3 3 3 354 1 2 1 2 3 4 5 6 1 2 2 3 2 1 1 1 1 155 1 4 2 1 4 5 3 6 1 1 2 1 3 1 3 3 3 356 1 3 1 2 5 3 4 6 1 3 2 2 5 1 1 1 1 157 1 2 1 2 4 5 3 6 1 2 3 1 4 2 2 2 2 258 1 5 2 4 3 5 6 1 1 5 2 2 4 1 1 1 1 159 1 5 1 2 3 4 5 6 1 5 2 2 4 2 1 1 1 160 1 4 3 4 5 1 2 6 1 2 2 1 4 1 2 2 1 161 1 4 2 1 4 3 5 6 3 4 1 1 3 1 2 3 3 362 1 4 2 1 4 5 3 6 1 3 1 3 3 3 3 3 3 163 1 1 2 3 1 4 5 6 1 4 1 2 4 1 3 3 3 264 1 5 1 2 5 4 3 6 3 4 4 1 5 2 3 3 3 365 1 4 1 2 3 4 5 6 1 4 4 2 4 1 1 1 1 166 1 4 1 2 4 3 5 6 1 3 3 1 4 1 1 1 1 167 1 4 1 2 4 3 5 6 1 4 3 1 6 2 1 1 1 168 1 5 1 2 4 3 5 6 1 4 4 2 5 2 1 1 1 169 1 1 1 3 4 2 5 6 1 3 3 1 2 1 3 1 1 170 1 4 2 1 4 5 3 6 3 4 3 2 4 1 2 2 2 171 1 5 1 2 4 3 5 6 1 4 4 1 5 2 1 1 3 372 1 3 1 2 3 5 4 6 3 1 2 1 5 2 3 3 3 373 1 2 4 2 1 3 5 6 1 2 4 2 4 1 3 3 3 374 1 3 3 4 2 1 5 6 3 1 1 1 5 2 3 3 1 175 1 2 4 1 3 2 5 6 1 3 3 1 6 2 1 1 1 176 1 5 1 2 4 3 5 6 1 1 4 1 2 1 3 3 3 377 1 5 1 2 4 3 5 6 1 1 4 1 5 2 1 1 1 178 1 2 3 1 2 4 5 6 2 5 5 3 3 1 3 3 1 179 1 1 4 3 5 2 3 6 1 4 3 1 3 1 1 1 1 180 3 2 1 4 3 6 5 1 3 3 3 3 3 3 3 3 181 1 3 1 3 2 4 5 6 2 1 2 1 5 2 1 3 3 382 1 2 1 3 4 2 5 6 1 2 3 3 3 3 1 1 1 183 1 2 1 4 5 3 2 6 1 1 1 2 4 1 3 3 3 384 1 1 3 1 5 2 4 6 3 1 3 3 3 1 1 1 1 185 1 5 1 3 2 5 4 6 1 1 3 1 6 2 1 1 1 186 3 1 3 4 2 5 6 1 1 5 2 2 4 1 1 1 387 1 1 1 2 4 3 5 6 3 1 3 1 3 1 1 1 1 188 1 3 3 4 2 1 5 6 1 3 2 1 3 3 3 3 3 389 1 1 1 4 3 2 5 6 3 3 1 3 2 3 3 3 3 3




90 1 5 4 2 3 1 5 6 1 1 3 2 4 1 3 4 4 191 1 4 1 3 2 5 4 6 2 2 3 3 3 1 4 3 3 392 1 3 5 4 2 3 1 6 1 2 4 2 5 2 1 1 1 193 1 3 3 4 2 1 5 6 1 4 4 1 4 2 1 1 1 194 1 4 1 3 4 2 5 6 1 1 2 3 2 3 3 2 3 195 1 5 3 2 5 1 4 6 2 1 1 1 5 2 3 3 1 196 1 2 4 1 3 2 6 5 1 2 2 2 3 1 3 1 1 197 1 1 2 3 4 5 1 6 1 4 1 2 4 2 1 1 5 298 1 2 1 2 4 6 3 5 2 2 2 3 3 1 1 3 3 399 1 5 1 2 3 5 4 6 1 1 3 1 4 1 2 3 1 2100 1 2 1 2 3 5 6 4 1 1 3 3 1 1 2 1 1

Recommendations

Findings & suggestions:

1.I have carried out this exercise on Mutual Funds. With So in my studies I have tried to see whether the customer have satisfied with the services given by the Karvy consultants Ltd.






6. 3% of customers are mostly unsatisfied with the service because the reason is that lack of updated information. 7. 36% of respondents prefer Karvy consultants Ltd because of their Quality services given by them .


9. Majority of the respondents are very happy with the services given by Karvy agents.

Suggestions:




QUESTIONNAIRE

NAME :

ADDRESS :

E-MAIL :

MOBILE NO : PH NO: AGE : 18-25 26-50 50 &Above

ANUUAL INCOME : 1 lack –5lack 5lack-8 lack 8 lack & above 1) Do you believe in savings?

Yes No

2) What is the minimum amount you save per month/quarterly/half-yearly/yearly?




0-500 500-1000 1000-2000 2000-5000 5000 above

3) As customers while investing in Mutual Funds what factors do you see?

(Rank them No 1 for Preferred and No 6 for Least Preferred )

Safety

Rate of Return Liquidity Tax Liability Flexibility Others if any

4) In which scheme are your holding your Mutual Fund?

Equity Debt Balanced

5) How do you justify your performance of your service provider for over Mutual Fund distribution?

Qty services Steady Reach Safety Nothing in Particular

6) If you are aware of new services, then how do you came to know about these services?

Friends News Papers& Magazines

Brokers Agents Others

7) Overall, How would you rate Mutual Fund scheme?

Extremely good

Very good Neither good/bad

Very bad Extermely bad

8) Overall how do you Rate the services of Your Financial Service Provider?




0% 20% 40% 60% 80% 100%

9) Express your level of satisfaction about the following schems/services.pleaseTick ( ) the following.

Satisfied Mostly un Satisfied

Neither satisfied/Un satisfied

Mostly Un Satisfied

Unsatisfied

Mutual FundTax

Insurance

Bonds

Equity IPO

10) Any Suggestion for Your Financial Advisory Services. -------------------------------------------------------------- -------------------------------------------------------------- Thank you.

Recommendations

Findings & suggestions:

1.I have carried out this exercise on Mutual Funds. With So in my studies I have tried to see whether the customer have satisfied with the services given by the Karvy consultants Ltd.






6. 3% of customers are mostly unsatisfied with the service because the reason is that



A study of Customer Satisfaction towards Mutual Funds lack of updated information. 7. 36% of respondents prefer Karvy consultants Ltd because of their Quality services given by them .


9. Majority of the respondents are very happy with the services given by Karvy agents.

Suggestions:

Glossary on Mutual Funds:

Account Statement A physical document, similar to a bank account statement, representing the mutual fund units owned. Issued to the unitholder every time he/she carries out a transaction.

Annual Report Unabridged financial results that comprise historical per unit statistics and complete portfolio of schemes of a mutual fund for a certain period. It is sent to unit holders once in a year.

Appreciation An increase in an investment’s value.

Asset Allocation The process of diversifying investments among different types of assets like stocks, bonds and cash in order to optimize risk / return tradeoff based on a person’s financial situation and goals.

Asset Class Different types of investments such as stocks, bonds, real estate and cash.

Asset Management Company A firm that invests the pooled funds of retail investors in securities in line with the stated



A study of Customer Satisfaction towards Mutual Funds investment objectives. For a fee, the investment company provides more diversification, liquidity, and professional management service than is normally available to individual investors.

Asset-Backed Security A debt instrument backed by loan paper or accounts receivable from banks, companies or other providers of credit.

Assets An item of value owned by an individual or an organization. It could be stocks, cash, house or a car.

Automatic Investment Plan Periodic investment of a fixed amount by a unitholder, either directly from his bank account or by issuing post-dated cheques, in his mutual fund account. It allows the investor to benefit from rupee cost averaging.

Automatic Withdrawal Plan Allows an investor to receive periodic payments of fixed amount or units from his investment in a mutual fund scheme. Retirees who want a regular income supplement often choose this.

Average Portfolio Maturity The average maturity of all the bonds in a bond fund’s portfolio.

Back-End/ Redemption Load One of two possible sales charge imposed by funds that charge fees. Redemption load is a charge an investor pays when units are redeemed or sold back to the fund. It sometimes depends on how long the investment is held -- generally the longer the time period, the smaller the charge.

Balanced Scheme A mutual fund scheme with an investment objective of both long-term growth and Income, through investment in stocks and bonds. Typically, the stock-bond ratio ranges around 60%-40% in an effort to obtain the highest returns consistent with a low risk strategy.

Basis Point (BP) The smallest measure used in quoting yields on fixed income securities. One basis point is one percent of one percent, or 0.01%.

Bear Market A prolonged period of falling securities prices in a stock market.

Benchmark A standard used for comparison. Usually to provide a point of reference for evaluating a fund's performance. The common benchmarks for equity-oriented funds is the BSE 200 index or the BSE Sensex.

Beta



A study of Customer Satisfaction towards Mutual Funds A measure of a fund’s volatility in relation to the stock market, as measured by a stated index. By definition, the beta of the stated index is 1; a fund with a higher beta has been more volatile than the market, and a fund with a lower beta has been less volatile than the market. Based on past historical records, a beta higher than 1.0 indicates that when the market rises, the stock will rise to a greater extent than that of the market; likewise, when the market falls, the stock will fall to a greater extent. A beta lower than 1.0 indicates that the stock will usually change to a lesser extent than that of the market. The higher the beta, the greater the investment risk.

Blue chip

Stock of a nationally known company that has a long record of profit, growth, and dividend payment, and a reputation for quality management, products, and services.

Bond A debt security, or an IOU, issued by a company or government agency. A bond investor lends money to the issuer and, in exchange, the issuer promises to repay the loan amount on a specified maturity date; the issuer usually pays the bondholder periodic interest payments over the period of the loan.

Bond Scheme

A scheme that invests primarily in bonds with the general emphasis on income over growth.

Bottom-Up An investment strategy that first seeks individual companies with attractive investment potential, then considers the economic and industry trends affecting those companies.

Bull Market A prolonged rise in the price of stocks, bonds or commodities characterized by high trading volumes.

Business Day

A Business Day is any day other than a Saturday, a Sunday or a day on which banks are not required or obligated by law or executive order to remain closed including the occasions when the functioning of the Banks/ RBI is affected due to a strike call made by a Recognized Union/ Management at any part of the country.

Call money

Money which is loaned in the call market, which can be demanded for repayment on call, which basically means immediately. The term call money is also known as money at short notice as it is repayable in 24 hours. It is also traded in the money market.

Call Risk The risk that bonds will be redeemed (or "called") before maturity. This possibility increases during periods of falling interest rates.



A study of Customer Satisfaction towards Mutual Funds Capital Appreciation An increase in the value of an investment, measured by the increase in a fund unit's value from the time of purchase to the time of redemption.

Capital Gain The amount by which an investment’s selling price exceeds its purchase price.

Capital Market A market where debt or equity securities are traded.

Certificate of Deposit (CD)

Short-term debt instrument issued by scheduled commercial banks excluding regional rural banks. They are unsecured instruments that mature between three months to one year.

Compounded Annualized Growth Return (CAGR)

When you deposit money in a bank it earns interest. When that interest also begins to earn interest the result is compound interest. Compounding occurs if bond income or dividends from stocks or mutual funds are reinvested. Because of compounding the money has potential to grow much faster.

Contingent Deferred Sales Charge (CDSC) A type of back-end sales load charged when shares are redeemed within a specific period following their purchase. Usually assessed on a sliding scale, these charges reduce, the longer the units are held.

Closed-End Scheme A mutual fund scheme that offers a limited number of units which have a lock-in period, usually of three to five years. ELSS schemes are closed-ended schemes. The units of closed-end funds are often listed on one of the major stock exchanges and traded like securities at prices which may be higher or lower than its net asset value

Commercial Paper Debt instruments issued by corporations to meet their short-term financing needs. Such instruments are unsecured and have maturities ranging from 15 to 365 days.

Commission A fee charged by a broker or distributor for his/her service in facilitating a transaction.

Compound Interest Interest earned not only on the initially invested principal but also on accumulated interest during the period.



A study of Customer Satisfaction towards Mutual Funds Consumer Price Index

The index compiled by a governmental agency which follows the cost of living by following the changes in price of basic goods and services over time. This index measures inflation.

Convertible security

Corporate security (usually preferred stock or bond) that is exchangeable for another form of security (usually common stock) at a predetermined price.

Coupon Interest rate on a debt security that the issuer promises to pay to the holder until maturity. Usually expressed as a percentage of the face value of the security.

Credit Rating A measure of a bond issuer's creditworthiness or the ability to repay the loan as rated by an independent rating agency, such as CRISIL, ICRA and CARE.

Credit Risk The possibility that a bond issuer will default, and fail to repay principal or interest as promised. Also known as "default risk."

Cumulative Quantitative Discount (CQD) Cumulative quantitative discount (CQD) is discount on sales load to investors on increasing purchase of units.

Cumulative total return

Usually calculated in the same manner as standardised average annual total return, except that these figures represent the total change in value of an investment over the stated periods and do not reflect any sales charges

Current assets

Assets that can be converted to cash within a year.

Current liabilities

Liabilities that must be paid within a year.

Currency Risk The possibility that fluctuating currency exchange rates will affect the rupee value of an investment.

Custodian The organization (usually a bank) that keeps and safeguards the custody of securities and other assets of a fund.



A study of Customer Satisfaction towards Mutual Funds Cyclical stocks

Stocks which rise and fall in price with the state of the economy, in such industries as construction, automobile, engineering or those affected by the international economy such as shipping, aviation, and tourism. Cyclical stocks are also stocks which are affected by the natural environment such as fertilizers and tea. Examples of non-cyclical stocks would be drugs, insurance, basic foodstuffs and many other consumer products.

Debentures

Instruments of debt, usually unsecured. They are also usually credit rated.

Debt funds/ securities

A general term for any security representing money loaned that must be repaid to the lender at a future date. Bonds,T-notes, T-bills and money market instruments are debt securities, but they vary in maturities.

Default

A term that denotes the failure to pay the principal or interest on a financial obligation (such as a bond).

Derivative

Financial instrument whose value is based on the value of another underlying security.

Depreciation A decline in an investment's value.

Discount

Refers to the selling price of a bond when it’s price is below its maturity value.

Distribution The payment of dividends to unit holders by a mutual fund.

Diversification The strategy of spreading investments among different securities to reduce risk. By nature, mutual funds are a diversified investment.

Dividend When companies pay part of their profits to the shareholders those profits are called dividends. A mutual fund’s dividend is money paid to shareholders from investment income the fund has earned. The amount of each share’s dividend depends on how well the company does.



A study of Customer Satisfaction towards Mutual Funds Dividend Reinvestment A unitholder service that allows dividend distributions to be reinvested automatically to purchase more fund units.

Dow Jones Industrial Average

The oldest and most quoted measure of stock market price movements, an indicator showing how the market is going. It is a price-weighted average of 30 actively traded blue chip stocks.

Earnings (per share)

The net income for a company during a specific period. It is calculated by subtracting the cost of sales, operating expenses and taxes from revenues, for a specific time period. It is the reason corporations exist and often the single most important determinant of a stock’s price.

Equity Schemes A scheme that invests primarily in stocks while seeking to provide relatively high long-term growth of capital.

Ex-Dividend Date The date following the record date for a scheme. When a fund's net asset value reduces by an amount equal to a dividend distribution.

Expense Ratio A fund's operating expenses, expressed as a percentage of its average net assets.

Face value

The value printed on the face of a stock, bond or other financial instrument or document.

Family Of Schemes A set of schemes with different investment objectives from a single asset management company usually allowing investors to switch

their investments from one scheme to another at a no charge or a nominal charge.

FCNR

A Fully Convertible Non-Rupee account that can be opened for funds coming in from abroad or from local funds. The funds in the account are held in a foreign currency.

Fixed assets

A long-term asset that will not be converted to cash within a year such as a house or a plot of land.

Fixed deposit



A study of Customer Satisfaction towards Mutual Funds An investment instrument where you invest a fixed amount of money for a fixed period of time at a fixed rate of interest.

Fixed Income Security A security that pays a fixed rate of interest such as a bond but do not offer an investor much potential for growth.

Front-End Load A one-time charge that an investor pays at the time of buying units of a scheme.

Fixed rate

A loan in which the interest rates do not change during the entire term of the loan.

Floating rate

An interest rate which is periodically adjusted, usually based on a standard market rate outside the control of the institution. These rates often have a specified floor and ceiling, which limit the floating rate. The opposite of having a floating rate is having a fixed rate.

Floor

A lower limit for a price, interest rate, or other numerical factor. The price at which a stop order is activated (an order to buy or sell at the market when a definite price is reached either above (for a buy) or below (for a sell) the price that prevailed when the order was given). Also the area of a stock exchange where active trading occurs.

Fully Invested The investment of nearly all available assets in securities as per the stated objective of the scheme and having no cash or cash equivalents in one’s portfolio.

Fund Manager The individual responsible for making portfolio decisions for a mutual fund.

Government securities

Securities that are sold to the public by the government, for example, bonds.

Growth An investment objective of equity funds which seek to provide capital gains, rather than dividend income.

Growth funds

Mutual funds with a primary investment objective of long-term growth of capital. Unlike income, which is somewhat regular and consistent in most cases, growth is much less certain. Growth



A study of Customer Satisfaction towards Mutual Funds investments, however, usually outpace the returns on income investments over the long-term (five to ten years, or longer). It invests mainly in common stocks with significant growth potential.

Growth Investing An investment style that seeks stocks with the belief they will go up in price, regardless of the stock's current price relative to its underlying value. Often discussed in contrast to value investing

Holdings

The possessions or securities in an investors portfolio.

Historical Yield Yield provided by a scheme, typically a money market fund, over a specific time period.

Inception Date The date when a scheme’s initial offering period ends and the scheme’s formation takes place.

Income /Debt Scheme A scheme that invests primarily in fixed income securities. Typically, income schemes seek to provide current income rather than growth of capital.

Index A benchmark against which the performance of a scheme is measured. Usually, equity funds use BSE 30 or BSE 200 as the benchmark. For fixed-income funds it is a bond index. The benchmark index must consist of securities similar to which the scheme invests in.

Index Fund A fund that tries to mirror the performance of an index by investing in securities making up that index. (note: it is not possible for investors to actually invest in the actual index, such as the BSE 30).

Inflation Risk The possibility that the value of assets or income will be eroded by inflation affecting the purchasing power of a currency. Often mentioned in relation to fixed income funds as while they may minimize the possibility of losing principal, they expose an investor to inflation risk.

Initial Public Offer (IPO) The first sale of units of a scheme by a mutual fund to the public. Usually, for a fixed time period.

Interest rate risk

The risk that a security’s value will change due to an increase or decrease in interest rates. A bond’s price will always drop as interest rates rise and when interest rates fall, a bond’s price will rise.



A study of Customer Satisfaction towards Mutual Funds Investment Grade High quality bonds that are rated AAA or higher by a rating agency. Investment grade bonds are considered safe. However, the higher the bond's rating, the lower the interest it offers.

Investment Objective A scheme’s investment goal. Say, a growth scheme typically has an investment objective of providing long-term growth of capital.

Load A one-time sales charge paid by an investor while buying or selling units of a scheme. Typically, there are two types of loads front-end charged at the time of purchase and back-end charged at the time of redemption.

Liabilities

The claims of investors who have loaned to a company. The debts of a company.

Liquidity The ease with which an investment can be converted into cash or cash equivalents. Mutual fund units are generally considered highly liquid investments as they can be sold on any business day at their current net asset value

Listed

Securities which are traded and listed in any of the approved Stock Exchanges of India will be treated as listed security.

Lock-in period

A period of time during which the investor is restricted from selling a particular investment.

Management Fee The amount a scheme pays to its asset management company for its services. Typically, a certain percentage of assets under management. A fund's management fee is listed in its offer document.

Market risk

The potential loss that is possible as a result of short-term volatility of the stock market, indicated by beta. Owning mutual fund shields an investor to some market risk that a stockholder may be vulnerable to because of their diversification.

Market Timing Attempting to time the purchase and sale of securities or mutual fund units to coincide with market conditions.

Maturity Date The date on which the principal amount of a bond is to be paid in full.



A study of Customer Satisfaction towards Mutual Funds Maturity value

The amount the issuer agrees to pay out when the bond reaches it’s maturity date.

Minimum Purchase The smallest investment amount a scheme will accept to open a new unitholder account.

Money Market Fund A fund that invests in the short-term, high-grade securities sold in the money market including government securities, treasury bills, certificates of deposit, and commercial paper.

Mutual Fund An investment company through which an investor can pool his money with other investors who have a similar objective. Professional investment managers, then invest the pool in securities which in their judgement will help investors achieve their objective. Mutual funds offer the benefits of portfolio diversification (which provides greater safety and reduced volatility), professional management, liquidity and convenience.

Net Asset Value (NAV) The market value of a mutual fund unit. It is calculated daily by taking the funds total assets, securities, cash and any accrued earnings, deducting liabilities, and dividing the remainder by the number of units outstanding.

Net Assets The net worth of a fund.

Net profit margin

A measure of a company’s profitability and efficiency calculated by dividing a measure of net profits (operating profit minus depreciation and income taxes) by sales.

Net worth

The value found by subtracting total liabilities from total assets.

No Load Fund A fund that sells its units to investors without a sales load/charge.

NRE

A Non-Resident External Rupee account that NRIs can open with any Indian bank. They can use this account for making investments in India on a repatriable basis.

NRI

A Non-Resident Indian who is an Indian citizen or a person of Indian origin but who resides abroad. NRIs have to follow specific rules when investing in India.



A study of Customer Satisfaction towards Mutual Funds NRO

An Ordinary Non-Resident Rupee account which can be opened for funds coming in from abroad or from local funds. The amount in the account is, however, non-repatriable.

Offer Document / Prospectus A legal document, that describes a mutual fund scheme. It contains information required by the Securities and Exchange Board of India explaining the offer, including the terms, issuer, objectives, historical financial statements, and other information that could help an individual decide whether the investment is appropriate for him.

Offering price

The price at which mutual fund shares are offered for sale to the public. Also known as offering price. The public offering price represents the net asset value plus any applicable initial sales charges.

Open-Ended Scheme A scheme where investors can buy and redeem their units on any business day. Its units are not listed on any stock exchange but are bought from and sold to the mutual fund.

Operating Expenses The day-today costs a mutual fund incurs in conducting business, such as for maintaining offices, staff, and equipment. These expenses are paid from the fund's assets before any earnings are distributed.

Performance A measure of how well a fund is doing. Typically, mutual fund performance measures are yield (for dividends) and total return (which measures dividends plus changes in net asset value). Increase in the Net Asset Value (NAV)

Portfolio A collection of securities owned by a mutual fund. A fund's portfolio may include a combination of stocks, bonds, and money market securities.

Portfolio Manager The individual responsible for managing a mutual fund's portfolio.

Portfolio Turnover The rate of trading activity in a fund's portfolio of investments. In other words, how often securities are bought and sold.

Preferred stock

A type of capital stock whose holders are paid dividends at a specified rate. It has preference over common stock in the payment of dividends and the liquidation of assets, but does not ordinarily carry voting rights. The benefits of owning preferred stock are realised if the company ever goes



A study of Customer Satisfaction towards Mutual Funds bankrupt. If this occurs, preferred stock shareholders receive their money first. General (also known as common) stockholders may not receive any money, if none is remaining after paying preferred stock holders.

Price-earnings ratio (P/E)

One of the benchmarks used by portfolio managers to help them value companies. It is calculated by dividing a company’s share price by its earning per share.

Principal The original amount initially invested, exclusive of earnings.

Promissory note

A document signed by the borrower in which he promises to repay a loan under agreed-upon terms.

Public Offer Price The price at which an investor can buy units of a mutual fund scheme. It includes the current net asset value plus any sales load.

Rate of return

Rate of return is calculated by subtracting the purchase value by the present value and then dividing it by the purchase value. For equities, we often include dividends with the present value.

Real Return The rate return earned on an investment after adjusting for the rate of inflation.

Record Date The date on which a unitholder must officially own a scheme's units in order to receive declared dividend.

Redeem To cash in units by selling them back to the mutual fund.

Redemption Price The price at which a mutual fund’s units are redeemed, or bought back, by the fund. It is usually the current net asset value per unit less exit load if any.

Reinstatement Privilege A facility which allows unit holders who have redeemed units, and then wish to reinvest, to reinvest without paying the sales load. There is generally a 30-day time limit for this service.



A study of Customer Satisfaction towards Mutual Funds Repatriable

The return from abroad of the financial assets of an organization or individual, and the conversion of foreign currency to Rupees.

Risk

In general, risk is the possibility of suffering loss. There are many types of risk, such as credit risk , principal risk, inflation risk, interest rate risk and investment risk. If you are prepared to accept greater risk, you have the chance of earning higher returns or profits on your money. Low-risk investments, while generally safer, do not usually produce a high return, hence the loss of potential gain.

Risk/ reward trade-off

The compromise made between high- and low-risk investments. High-risk investments generally generate more earnings, while low-risk ones generate a lower rate of return.

Risk tolerance

The willingness of an investor to tolerate the risk of losing money for the potential to make money.

Rollover A movement of funds from one investment to another, often similar, investment. Typically used when securities are maturing.

Rupee Cost Averaging An investment strategy that involves investing a fixed amount in a scheme at regular intervals - say, monthly or quarterly. As a result, more fund units are bought when prices are low than at high prices, usually bringing down an investor's average cost per share over time.

Sales charge

A charge added on to the price of a mutual fund when you buy it.

Sector Fund A fund that invests primarily in securities of companies engaged in a specific industry. Sector funds entail more risk, but may offer greater potential returns than funds that diversify their portfolios.

Securities

The holdings of a mutual fund, such as stocks or bonds. Stocks are securities representing ownership shares. Bonds are securities representing a contractual debt obligation of the issuer to repay the holder, with interest.



A study of Customer Satisfaction towards Mutual Funds Settlement Date The date by which a transaction must be settled, that is, to make the payment of funds and the delivery of securities.

Standard Deviation A measure of the degree to which a fund's return varies from the average of the scheme’s own return.

Stock Fund A fund that invests primarily in stocks.

Switching The movement of investment from one scheme to another usually within the family of schemes. An investor may switch schemes because of market conditions.

Systematic Investment Plan (SIP)

Allows an investor to periodically invest in units by issuing post-dated cheques. It allows the investor to benefit from rupee cost averaging.

Systematic Withdrawal Plan (SWP)

Permits the investor to receive regular payments of a fixed amount or capital appreciation from his investment in a mutual fund scheme on a periodic basis. Retirees in need of a regular income often opt for this.

Top Down An investment method that first defines major economic and industry trends, and then identifies specific companies that are likely to benefit from those trends.

Total Return A fund's performance that takes into account: income from dividends and unit price appreciation/depreciation over a time period.

Treasury bills (T-bills)

A short-term security with a maturity of one year or less.

Treasury bonds (T-bonds)

A long-term debt instruments with a maturity of 10 years or longer.

Treasury notes (T-notes)

A certificate representing an intermediate-term loan to the government with a maturity between two to ten years.



A study of Customer Satisfaction towards Mutual Funds Transaction costs

The costs incurred by the buying and selling of securities, including broker commissions and the difference between dealer buying and selling price.

Transfer The process of changing ownership of a unitholder account within the same scheme.

Transfer Agent A firm employed by a mutual fund to maintain unitholder records, including purchases, sales, and account balances.

Treasury Bill (T-bill) A debt security issued by the Indian government, having a maturity of less than a year.

Turnover Rate Based on the corpus, it is the number of times at which the fund buys and sells securities each year.

Unitholder An investor, owning units of a mutual fund.

Unlisted

Securities which are not traded or listed in any of the approved Stock Exchanges of India will be treated as unlisted security.

Unrealized Gain Or Loss Increase or decrease in the prices of securities held by the fund.

Value Investing The investment approach which favours buying under priced stocks that have the potential to perform well and increase in price.

Volatility The rate by which the price of a security fluctuates in changing market conditions.

Year To Date (YTD) A period in a calendar year starting January 1 of that year and ending on that date.

Yield The annual rate of return on an investment usually expressed as a percentage.

Yield Curve A graph depicting yield vis-a-vis maturity. If short-term rates are lower than long-term rates, it is a positive yield curve, if short-term rates are higher, it is a negative or inverted yield curve. If there is isn’t much difference, it is a flat yield curve.



A study of Customer Satisfaction towards Mutual Funds Yield To Maturity (YTM) The yield earned by a bond if held to maturity

Zero Coupon Bond A bond issued at a discount, which accrues interest that is paid in full at maturity. The maturity value an investor receives is equal to the principal invested plus interest earned compounded semi-annually at the original rate to maturity. Interest income from zero-coupon bonds is subject to taxes annually even though no payments will be made.




Bibliography

Web sites:

www.Karvy.com

www .Karvy mutualfunds.com

www. AmfiIndia.com

www.sharekhan.com

www. Indiamart.com

www.Indiainfoline.com

www.Equity masters.com

Books:

Company Books

Company Brochures

AMFI (work book)

SEBI (A guide to mutual funds)

Financial Institutions and Markets ( L.M. Bhole)


http://www.Equity/

http://www.Indiainfoline.com/

http://www.sharekhan.com/





A study of customer satisfaction towards mutual funds at karevy stock

Economy & Finance

study of customer satisfaction

mutual fund service

service of mutual funds

present customer satisfaction

new customer

customer of karvy consultant

india stock

mutual fundsfindings