Comparative Analysis of Mutual Funds Schemes

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A Project Report On

Comparative Analysis Of Mutual Funds Schemes

AT

KARVY STOCK BROCKING LIMITED

Project submitted i !"rti"# $u#$i##met $or t%e "&"rd o$ t%e De'ree o$

MASTER OF BUSINESS ADMINISTRATION

By

V.P. SHALINI JAISWAL

Reg.No. 10EH1E0003

Under the esteemed guidance of

Mr. M. Dowlath AhammadMBA, M.Phil, Ph.!"

DEPARTMENT O( B)SINESS MANAGEMENT

KOTTAM COLLEGE OF ENGINEERING

A!!"l"at#d to JNT$ A%a%ta&'r(

Ch"%%at#)'r' V(* Kall'r M(* K'r%ool D"+t

,-- / ,-,


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KOTTAM COLL! OF "!#"R#"!$Approved %y A#CT and Affiliated to &"T'A(Anantapur)

Chinnate*ur $v)( KALL'R $M)( K'R"OOL $+#ST) , -./0./

De!t*o$ Busiess M""'emet

CERTIFICATE

This is to certify that the Project Report titled COMPARATIVE ANALYSIS O

M!T!AL !N" SC#EMES$ %as carried o&t 'y V(P S#ALINI )AIS*AL of Re+d(No

,-E#,E---. This is s&'/itted i0 partial f&lfil/e0t for the a%ard of the "e+ree of

Master of 1&si0ess Ad/i0istratio0 2M1A3 of )a%aharlal Nehr& Tech0olo+ical

!0i4ersity5 A0a0tap&r d&ri0+ the acade/ic year 6-,, 7 6-,6(

Si+0at&re of the S&per4isor Si+0at&re of the

#O"

Si1nature of 2ternal 2aminerDate:

Place: Chinnatekuru

DECLARATION


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I hereby declare that this Project Report titled Comparative nalysis Of Mutual FundsSchemes submitted by me to the Department of Business Management, Kottam College ofEngineering, is a bonafide work undertaken by me and it is not submitted to any other University or

Institution for the award of any degree/diploma/certificate or published any time before.

Name and Address of the Student Signature of the Student

34P4 Shalini &ais5al(

64"o7 89.:/;0(

Santhosh "a1ar(

Kurnool4

Date:


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CERTI(ICATE

This is to certify that the Project Report titled Comparative Analysis Of

Mutual Fund Schemes submitted in partial fulfillment for the award of the

Degree of Master of Business Administration (MBA)was carried out by V.P.

Shalini Jaiswal under my guidance. This has not been submitted to any other

ni!ersity or "nstitution for the award of any degree#diploma#certificate.

Signature of the Super!isor

Date:

Place: Chinnatekuru.


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ABSTRACT

This Project e2amines the relationship %et5een performance and ris* e2posure for

mutual funds4 #t aims to find out the performance of mutual funds and to ma*e ri1ht

investment decision for ma2imi


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ACKNO+LEDGEMENT

# 5ould li*e to than* KARVY STOCK BROKING LIMITED( for 1ivin1 me

the opportunity to underta*e project 5or* in their or1ani


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C1APTER 23

#ntroduction

"eed of the Study @

O%jectives of the Study @

Research Methodolo1y .:

Limitations of the Study .0

C1APTER 24

Revie5 of Literature .

C1APTER 25

#ndustry Profile .B

Company Profile 0-

C1APTER 26

+ata Analysis and #nterpretation 8

C1APTER 27

Findin1s -B

Su11estions -/

Conclusions -@

BIBLIOGRAP1Y .


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CHAPTER 1

INTRODUCTION


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INTROD)CTION O( M)T)AL ()ND

A mutual fund is a form of collective investment4 #t is a pool of money collected

from various investors 5hich is invested accordin1 to the stated investment

o%jective4 The fund mana1er is the person 5ho invests the money in different

types of securities accordin1 to the predetermined o%jectives4 The portfolio of a

mutual fund is decided ta*in1 into consideration this investment o%jective4 Mutual

fund investors are li*e shareholders and they o5n the fund4 The income earned

throu1h these investments and the capital appreciation reali


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Characteristics of a Mutual Fund

#nvestors purchase mutual funds shares from the fund itself $or throu1h a

%ro*er)(%ut are not a%le to purchase the shares from other investors on a

secondary mar*et4

Professional mana1ers mana1e the affairs for a fee4

The funds are invested in a portfolio of mar*eta%le

Securities( reflectin1 the investment o%jective4

The investment portfolios of mutual fund typically mana1ed %y separate entities

*no5n as #nvestment AdvisersG4

The o5nership is in the hands of the investors 5ho have pooled in their funds4

ADVANTAGES O( M)T)AL ()ND

Pro$essio"# M""'emet

Mutual Funds provide the services of e2perienced and s*illed professionals(

%ac*ed %y a dedicated investment research team that analyses the performance and

prospects of companies and selects suita%le investments to achieve the o%jectives of the

scheme4

Di,ersi$ic"tio

Mutual Funds invest in a num%er of companies across a %road cross9section of

industries and sectors4 This diversification reduces the ris* %ecause seldom do all stoc*s

decline at the same time and in the same proportion4


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Hou achieve this diversification throu1h a Mutual Fund 5ith far less money than

you can do on your o5n4

Co,eiet Admiistr"tio

#nvestin1 in a Mutual Fund reduces paper5or* and helps you avoid many

pro%lems such as %ad deliveries( delayed payments and follo5 up 5ith %ro*ers and

companies4 Mutual Funds save your time and ma*e investin1 easy and convenient4

Retur Poteti"#

Over a medium to lon19term( Mutual Funds have the potential to provide a hi1her

return as they invest in a diversified %as*et of selected securities4

Lo& Costs

Mutual Funds are a relatively less e2pensive 5ay to invest compared to directly

investin1 in the capital mar*ets %ecause the %enefits of scale in %ro*era1e( custodial and

other fees translate into lo5er costs for investors4

Li9uidit.

#n open9end schemes( the investor 1ets the money %ac* promptly at net asset

value related prices from the Mutual Fund4 #n closed9end schemes( the units can %e sold

on a stoc* e2chan1e at the prevailin1 mar*et price or the investor can avail of the facility

of direct repurchase at "A3 related prices %y the Mutual Fund4

Tr"s!"rec.

Hou 1et re1ular information on the value of your investment in addition to disclosure on

the specific investments made %y your scheme( the proportion invested in each class of

assets and the fund mana1erIs investment strate1y and outloo*4


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(#e:ibi#it.

Throu1h features such as re1ular investment plans( re1ular 5ithdra5al plans and

dividend reinvestment plans( you can systematically invest or 5ithdra5 funds accordin1

to your needs and convenience4

A$$ord"bi#it.

#nvestors individually may lac* sufficient funds to invest in hi1h91rade stoc*s4 A mutual

fund %ecause of its lar1e corpus allo5s even a small investor to ta*e the %enefit of its

investment strate1y4

C%oice o$ Sc%emes

Mutual Funds offer a family of schemes to suit your varyin1 needs over a lifetime4

+e## Re'u#"ted

All Mutual Funds are re1istered 5ith S?# and they function 5ithin the provisions of

strict re1ulations desi1ned to protect the interests of investors4 The operations of Mutual

Funds are re1ularly monitored %y S?#4

DISADVANTAGES O( M)T)AL ()ND

Costs Des!ite Ne'"ti,e Returs

#nvestors must pay sales char1es( annual fees( and other e2penses $5hich 5eIll

discuss %elo5) re1ardless of ho5 the fund performs4 And( dependin1 on the timin1 of

their investment( investors may also have to pay ta2es on any capital 1ains distri%ution

they receive even if the fund 5ent on to perform poorly after they %ou1ht shares4


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L"c; o$ Cotro#

#nvestors typically cannot ascertain the e2act ma*e9up of a fundIs portfolio at any

1iven time( nor can they directly influence 5hich securities the fund mana1er %uys and

sells or the timin1 of those trades4

Price )cert"it.

=ith an individual stoc*( you can o%tain real9time $or close to real9time) pricin1

information 5ith relative ease %y chec*in1 financial 5e%sites or %y callin1 your %ro*er4

Hou can also monitor ho5 a stoc*Is price chan1es from hour to hour or even second to

second4 ?y contrast( 5ith a mutual fund( the price at 5hich you purchase or redeem

shares 5ill typically depend on the fundIs "Ay( 5hich the fund mi1ht not calculate until

many hours after youIve placed your order4 #n 1eneral( mutual funds must calculate their

"A3 at least once every %usiness day( typically after the major '4S4 e2chan1es close4


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ORGANIZATION OF A MUTUAL FUND

There are many entities involved and the dia1ram %elo5 illustrates the

or1ani


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The Asset Mana1ement Company is appointed to act as the investment mana1er of the

trust under the ?oard supervision and direction of the Trustees4 The sponsor appoints the

AMC 5hich 5ould in the name of the Trust( float and then marria1e the different

investment scheme as per S?# 1uidelines4

)it 1o#der8

The individual 5ho invest money in the mutual fund 5ith an aim of 1ettin1

returns4 The Mutual fund allots him num%er of units %ased on his investment and the

value of the unit4

S!osor8

A Sponsor means any%ody corporate 5ho( actin1 alone or in com%ination 5ith

another %ody corporate( esta%lished a mutual fund after completin1 the formalities

prescri%ed in the S?#Is Mutual Funds Re1ulations4 The Sponsor should have a sound

trac* record and 1eneral reputation of fairness and inte1rity in all his %usiness

transactions4

Trustee8

Trustee means the ?oard of Trustees or the Trustee Company 5ho hold the

property of the Mutual Fund in trust for the %enefit of the unit holder4

Asset M""'emet Com!".8

A Company formed and re1istered under the Companies Act( .@- and 5hich has

o%tained the approval of S?# to function as an Asset Mana1ement Company may %e

appointed %y the sponsor of the mutual fund as such4


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Custodi" "d De!ositories8

Custodian is a person appointed for safe *eepin1 of the securities4 Mutual Funds

deals in %uyin1 and sellin1 of lar1e num%er of securities4 AMC appoints a custodian for

safe *eepin1 of these securities and for participatin1 in clearin1 system on its %ehalf4 #n

case of demateriali


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OB


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RESEARC1 MET1ODOLOGY

D"t" co##ectio8

Prim"r. D"t"8

The primary data study of this study is interaction 5ith the %ranch inchar1e of

the company4

Secod"r. d"t"

The secondary data includes 7

Pu%lished material and annual reports of mutual fund companies

Other pu%lished material of mutual funds4

Research %ased online portals4

'npu%lished sources also4

S"m!#e Pro$i#e8

The sample re>uired for the study has %een selected throu1h random samplin1 method

from the availa%le list of mutual fund schemes in the mar*et4 ?roadly the sample of

mutual fund schemes includes e>uity funds( de%t funds and %alanced funds4

The study has ta*en three %road cate1ories of funds

>uity Funds

+e%t funds

?alanced fund


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E9uit. (uds8

.4?#RLA S'" L#F J'#TH F'"+

04'T# J'#TH F'"+

Debt (uds8

.4S?# MA!"'M #"COM F'"+

046+FC 6#!6 #"TRST F'"+

B"#"ced (uds8

.4KOTAK ?AL"C+ F'"+

04#C#C# PR'+"T#AL ?ALA"C+ F'"+


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Limit"tios o$ t%e Stud.8

The present study has the follo5in1 limitations

The study has %een restricted to only a fe5 schemes4 $>uity(de%t(%alanced)

The data is analy


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CHAPTER 2REVIEW OF

LITERATURE


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LITERAT)RE REVIE+

Literature on mutual fund performance evaluation is enormous4 A fe5 research

studies that have influenced the preparation of this paper su%stantially are discussed in

this section4 Sharpe( =illiam F4 $.@) su11ested a measure for the evaluation of

portfolio performance4 +ra5in1 on results o%tained in the field of portfolio analysis(

economist &ac* L4 Treynor has su11ested a ne5 predictor of mutual fund performance(

one that differs from virtually all those used previously %y incorporatin1 the volatility of

a funds return in a simple yet meanin1ful manner4

Michael C4 &ensen $.@B) derived a ris*9adjusted measure of portfolio

performance $&ensenIs alpha) that estimates ho5 much a mana1erIs forecastin1 a%ility

contri%utes to fundIs returns4 As indicated %y Statman $0:::)( the e S+AR of a fund

portfolio is the e2cess return of the portfolio over the return of the %enchmar* inde2(

5here the portfolio is levera1ed to have the %enchmar* inde2Is standard deviation4

S4"arayan Rao ( et4 al4( evaluated performance of #ndian mutual funds in a %ear mar*et

throu1h relative performance inde2( ris*9return analysis( TreynorIs ratio( SharpeIs ratio(

SharpeIs measure ( &ensenIs measure( and FamaIs measure4 The study used 0@ open9

ended schemes $out of total schemes of 88) for computin1 relative performance inde24

Then after e2cludin1 funds 5hose returns are less than ris*9free returns( -/ schemes are

finally used for further analysis4 The results of performance measures su11est that most

of mutual fund schemes in the sample of -/ 5ere a%le to satisfy investorIs e2pectations

%y 1ivin1 e2cess returns over e2pected returns %ased on %oth premium for systematic ris*and total ris*4

?ijan Roy( et4 al4( conducted an empirical study on conditional performance of

#ndian mutual funds4 This paper uses a techni>ue called conditional performance

evaluation on a sample of ei1hty9nine #ndian mutual fund schemes 4This paper measures


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the performance of various mutual funds 5ith %oth unconditional and conditional form of

CAPM( Treynor9 Mauity mutual funds4 The

methodolo1y is %ased on the com%ination of discrete and continuous multi9criteria

decision aid methods for mutual fund selection and composition4 'TA+#S multi9criteria

decision aid method is employed in order to develop mutual fundIs performance models4

!oal pro1rammin1 model is employed to determine proportion of selected mutual funds

in the final portfolios4

?ro5n and !oetuity mutual fund data and found clear

evidence of relative ris*9adjusted performance persistence ho5ever( the persistence 5as

mostly due to funds that la1 the SP -::( depends upon the time period o%served and is

correlated across mana1ers


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Sharpe $.@) loo*ed at the performance of open9end mutual funds and found that to a

major e2tent the capital mar*et is hi1hly efficient( %ut there is some evidence of

persistence in performance4 &ensen $.@/) evaluated the performance of mutual funds in

the period .@-,.@ and found no evidence of mana1er s*ill4

CHAPTER 3

INDUSTRYCOMPANY PROFILE


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IND)STRY PRO(ILE8 M)T)AL ()NDS8

Mutual funds 1o %ac* to the times of the 1yptians and Phoenicians 5hen they sold

shares in caravans and vessels to spread the ris* of these ventures4 The forei1n and

colonial 1overnment Trust of London of .// is considered to %e the fore9runner of themodern concept of mutual funds4 The 'SA is( ho5ever( considered to %e the Mecca of

modern mutual funds4 ?y the early 9 .@8:s >uite a lar1e num%er of close 9 ended mutual

funds 5ere in operation in the '4S4A4 Much latter in .@-( the committee on finance for

the private sector recommended mo%ili


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canaliuirements for the Trust4

One thin1 is certain , the fund industry is here to stay4 The industry 5as one9

entity sho5 till .@/ 5hen the 'T# monopoly 5as %ro*en 5hen S?# and Can %an*

mutual fund entered the arena4 This 5as follo5ed %y the entry of others li*e ?O#( L#C(

!#C( etc4 sponsored %y pu%lic sector %an*s4 Startin1 5ith an asset %ase of Rs4 0- crore in

.@ the industry has 1ro5n at a compounded avera1e 1ro5th rate of 0B to its current

siuity funds( the period of .@@9@ 5as one of the 5orst in the history of #ndian

Mutual Funds4

3=== > YEAR O( T1E ()NDS

Mutual funds have %een around for a lon1 period of time to %e precise for 8 yrs

%ut the year .@@@ sa5 immense future potential and developments in this sector4 This

year si1naled the year of resur1ence of mutual funds and the re1ainin1 of investor

confidence in these MFIs4 This time around all the participants are involved in the revival

of the funds the AMCIs( the unit holders( the other related parties4 6o5ever the sole


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factor that 1ave lifer to the revival of the funds 5as the 'nion ?ud1et4 The %ud1et

%rou1ht a%out a lar1e num%er of chan1es in one stro*e4 An insi1ht of the 'nion ?ud1et

on mutual funds ta2ation %enefits is provided later4

#t provided centre sta1e to the mutual funds( made them more attractive andprovides accepta%ility amon1 the investors4 The 'nion ?ud1et e2empted mutual fund

dividend 1iven out %y e>uity9oriented schemes from ta2( %oth at the hands of the investor

as 5ell as the mutual fund4 "o lon1er 5ere the mutual funds interested in sellin1 the

concept of mutual funds they 5anted to tal* %usiness 5hich 5ould mean to increase asset

%ase( and to 1et asset %ase and investor %ase they had to %e fully armed 5ith a 5hole lot

of schemes for every investor 4So ne5 schemes for ne5 #POIs 5ere inevita%le4 The >uest

to attract investors e2tended %eyond just ne5 schemes4 The funds started to re1ulate

themselves and 5ere all out on 5innin1 the trust and confidence of the investors under

the ae1is of the Association of Mutual Funds of #ndia $AMF#)

(irst P%"se > 3=?62@8

'nit Trust of #ndia $'T#) 5as esta%lished on .@8 %y an Act of Parliament4 #t 5as

set up %y the Reserve ?an* of #ndia and functioned under the Re1ulatory and

administrative control of the Reserve ?an* of #ndia4 #n .@B/ 'T# 5as de9lin*ed from the

R?# and the #ndustrial +evelopment ?an* of #ndia $#+?#) too* over the re1ulatory and

administrative control in place of R?#4 The first scheme launched %y 'T# 5as 'nit

Scheme .@4 At the end of .@// 'T# had Rs4(B:: crores of assets under mana1ement4

Secod P%"se > 3=@23==5 Etr. o$ Pub#ic Sector (uds8

.@/B mar*ed the entry of non9 'T#( pu%lic sector mutual funds set up %y pu%lic

sector %an*s and Life #nsurance Corporation of #ndia $L#C) and !eneral #nsurance

Corporation of #ndia $!#C)4 S?# Mutual Fund 5as the first non9 'T# Mutual Fund

esta%lished in &une .@/B follo5ed %y Can%an* Mutual Fund $+ec /B)( Punja% "ational

?an* Mutual Fund $Au1 /@)( #ndian ?an* Mutual Fund $"ov /@)( ?an* of #ndia $&un @:)(

?an* of ?aroda Mutual Fund $Oct @0)4 L#C esta%lished its mutual fund in &une .@/@

5hile !#C had set up its mutual fund in +ecem%er .@@:


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At the end of .@@8( the mutual fund industry had assets under mana1ement of Rs4B( ::

crores4

T%ird P%"se > 3==5245 Etr. o$ Pri,"te Sector (uds8

=ith the entry of private sector funds in .@@8( a ne5 era started in the #ndian

mutual fund industry( 1ivin1 the #ndian investors a 5ider choice of fund families4 Also(

.@@8 5as the year in 5hich the first Mutual Fund Re1ulations came into %ein1( under

5hich all mutual funds( e2cept 'T# 5ere to %e re1istered and 1overned4 The erst5hile

Kothari Pioneer $no5 mer1ed 5ith Fran*lin Templeton) 5as the first private sector

mutual fund re1istered in &uly .@@84 The .@@8 S?# $Mutual Fund) Re1ulations 5ere

su%stituted %y a more comprehensive and revised Mutual Fund Re1ulations in .@@4 The

industry no5 functions under the S?# $Mutual Fund) Re1ulations .@@4 The num%er of

mutual fund houses 5ent on increasin1( 5ith many forei1n mutual funds settin1 up funds

in #ndia and also the industry has 5itnessed several mer1ers and ac>uisitions4 As at the

end of &anuary 0::8( there 5ere 88 mutual funds 5ith total assets of Rs4 .(0.(/:- crores4

The 'nit Trust of #ndia 5ith Rs4(-. crores of assets under mana1ement 5as 5ay

ahead of other mutual funds4

(ourt% P%"se > sice (ebru"r. 45 I (ebru"r. 458

Follo5in1 the repeal of the 'nit Trust of #ndia Act .@8 'T# 5as %ifurcated into

t5o separate entities4 One is the Specified 'nderta*in1 of the 'nit Trust of #ndia 5ith

assets under mana1ement of Rs40@( /8- crores as at the end of &anuary 0::8( representin1

%roadly( the assets of 'S scheme( assured return and certain other schemes4 The

Specified 'nderta*in1 of 'nit Trust of #ndia( functionin1 under an administrator and

under the rules framed %y !overnment of #ndia and does not come under the purvie5 of

the Mutual Fund Re1ulations4 The second is the 'T# Mutual Fund Ltd( sponsored %y

S?#( P"?( ?O? and L#C4 #t is re1istered 5ith S?# and functions under the Mutual Fund

Re1ulations4 =ith the %ifurcation of the erst5hile 'T# 5hich had in March 0::: more

than Rs4B(::: crores of assets under mana1ement and 5ith the settin1 up of a 'T#


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Mutual Fund( conformin1 to the S?# Mutual Fund Re1ulations( and 5ith recent mer1ers

ta*in1 place amon1 different private sector funds( the mutual fund industry has entered its

current phase of consolidation and 1ro5th4 As at the end of Septem%er( 0::( there 5ere

0@ funds( 5hich mana1e assets of Rs4.-8.:/ crores under 0. schemes4

T.!es o$ Mutu"# (uds8

Mutual fund schemes may %e classified on the %asis of its structure and its investment

o%jective4

B. Structure8

O!e2ed (uds7

An open9end fund is one that is availa%le for su%scription all throu1h the year4

These do not have a fi2ed maturity4 #nvestors can conveniently %uy and sell units at "et

Asset 3alue $N"A3N) related prices4 The *ey feature of open9end schemes is li>uidity4

C#osed2ed (uds7

A closed9end fund has a stipulated maturity period 5hich 1enerally ran1in1 from

8 to .- years4 The fund is open for su%scription only durin1 a specified period4 #nvestors

can invest in the scheme at the time of the initial pu%lic issue and thereafter they can %uyor sell the units of the scheme on the stoc* e2chan1es 5here they are listed4 #n order to

provide an e2it route to the investors( some close9ended funds 1ive an option of sellin1

%ac* the units to the Mutual Fund throu1h periodic repurchase at "A3 related prices4

S?# Re1ulations stipulate that at least one of the t5o e2it routes is provided to the

investor4

Iter,"# (uds7

#nterval funds com%ine the features of open9ended and close9ended schemes4

They are open for sale or redemption durin1 pre9determined intervals at "A3 related

prices4

B. I,estmet Objecti,e8

Gro&t% (uds7


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The aim of 1ro5th funds is to provide capital appreciation over the medium to

lon1 term4 Such schemes normally invest a majority of their corpus in e>uities4 #t has

%een proved that returns from stoc*s( have outperformed most other *ind of investments

held over the lon1 term4 !ro5th schemes are ideal for investors havin1 a lon19term

outloo* see*in1 1ro5th over a period of time4

Icome (uds8

The aim of income funds is to provide re1ular and steady income to investors4

Such schemes 1enerally invest in fi2ed income securities such as %onds( corporate

de%entures and !overnment securities4 #ncome Funds are ideal for capital sta%ility and

re1ular income4

B"#"ced (uds7

The aim of %alanced funds is to provide %oth 1ro5th and re1ular income4 Such

schemes periodically distri%ute a part of their earnin1 and invest %oth in e>uities and

fi2ed income securities in the proportion indicated in their offer documents4 #n a risin1

stoc* mar*et( the "A3 of these schemes may not normally *eep pace( or fall e>ually

5hen the mar*et falls4 These are ideal for investors loo*in1 for a com%ination of income

and moderate 1ro5th4

Moe. M"r;et (uds7

The aim of money mar*et funds is to provide easy li>uidity( preservation of

capital and moderate income4 These schemes 1enerally invest in safer short9term

instruments such as treasury %ills( certificates of deposit( commercial paper and inter9

%an* call money4 Returns on these schemes may fluctuate dependin1 upon the interest

rates prevailin1 in the mar*et4

These are ideal for Corporate and individual investors as a means to par* their surplus

funds for short periods4

Ot%er Sc%emes8

T": S",i' Sc%emes7

These schemes offer ta2 re%ates to the investors under specific provisions of the

#ndian #ncome Ta2 la5s as the !overnment offers ta2 incentives for investment in


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specified avenues4 #nvestments made in >uity Lin*ed Savin1s Schemes $LSS) and

Pension Schemes are allo5ed as deduction u;s // of the #ncome Ta2 Act( [email protected] The Act

also provides opportunities to investors to save capital 1ains u;s -A and -? %y

investin1 in Mutual Funds4

Idustr. S!eci$ic Sc%emes7

#ndustry Specific Schemes invest only in the industries specified in the offer

document4 The investment of these funds is limited to specific industries li*e #nfotech(

FMC!( and Pharmaceuticals etc4

Ide: Sc%emes8

#nde2 Funds attempt to replicate the performance of a particular inde2 such as the

?S Sense2 or the "S -:

Sector"# Sc%emes8

Sectoral Funds are those( 5hich invest( e2clusively in a specified sector4 This

could %e an industry or a 1roup of industries or various se1ments such as A !roup

shares or initial pu%lic offerin1s4

RISKS ASSOCIATED +IT1 M)T)AL ()NDS

#nvestin1 in mutual funds( as 5ith any security( does not come 5ithout ris*4 One

of the most %asic economic principles is that ris* and re5ard are directly correlated4 #n

other 5ords( the 1reater the potential ris* the 1reater the potential return4 The types of

ris* commonly associated 5ith mutual funds are7

M"r;et ris;8

Mar*et ris* relates to the mar*et value of a security in the future4 Mar*et prices

fluctuate and are suscepti%le to economic and financial trends( supply and demand( and

many other factors that cannot %e precisely predicted or controlled4

Po#itic"# ris;8


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Chan1es in the ta2 la5s( trade re1ulations( administrated prices( etc are some of

the many political factors that create mar*et ris*4 Althou1h collectively( as citiuity resultin1 in proportionate fall in the "A3 of the mutual

fund scheme( 5hich has invested in the e>uity of such a company4

Ecoomic ris;8

conomic ris* involves uncertainty in the economy( 5hich( in turn( can have an

adverse effect on a companyIs %usiness4 For instance( if monsoons fail in a year( e>uity

stoc*s of a1riculture , %ased companies 5ill fall and "A3Is of mutual funds( 5hich have

invested in such stoc*s( 5ill fall proportionately.


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COMPANY PRO(ILE

INTROD)CTION ABO)T KARVY

The term -KARVY/is derived from the initial letters of its founders ,

K 2 Mr* Kuttumb" R"o

A 2 Mr* Aj". Kum"r

R 2 Mr* R"m";ris%"

V 2 Mr* V"id.""t%"

Y 2 Mr* Yu'"d%"r

These five ener1etic and dynamic Chartered Accountants started Karvy in .@B- as Karvy

and Company4 Audit and Ta2ation activity 5as underta*en4#nitial Cash #nflo5 of Rs4

8:(:::;9 each 5as contri%uted as Capital of the Company4


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T1 E KARVY CREDO

OUR CLIENTS.OUR FOCUS.

Clients are the reason for our %ein14

Personali


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Continue to uphold the values of honesty inte1rity and strive to esta%lish

unparalleled standards in %usiness ethics4

Strive to %e a relia%le source of value9added financial products and services

and constantly 1uide the individuals and institutions in ma*in1 a judiciouschoice of same4

Strive to *eep all sta*e9holders $shareholders( clients( investors( employees(

suppliers and re1ulatory authorities) proud and satisfied4

AC1IEVEMENTS

Amon1 the top - stoc* %ro*ers in #ndia $ of "S volumes)

#ndias "o4 . Re1istrar Securities Transfer A1ents

Amon1 the to top 8 +epository Participants

Lar1est "et5or* of ?ranches ?usiness Associates

#SO @::0 certified operations %y +"3

Amon1 top .: #nvestment %an*ers

Lar1est +istri%utor of Financial Products

Adjud1ed as one of the top -: #T uses in #ndia %y M#S Asia

Full Fled1ed #T driven operations

3#S#O" 0:.:

0ra%1h#+

Plan for ta*in1 the net5or* to B-: %ranches %y &une 0::@

Stoc* ?ro*in1

.: share in cash mar*ets


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F O dou%le the cash volumes $around )

Activate ?S so as to reach - share

+epository services

To reach the "o4. position

Loo* at over .0 lace accounts %y 0:.:

Mutual Fund distri%ution

To achieve over 0-:(::: applications per month

Achieve over Rs4 .:(::: cr of e>uity assets under advise

volve into 1ettin1 trail revenues to cover %ranch %asic costs

#nstitutional des*

Reach top .: institutional %ro*ers in the country

Ma2imi


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Commodities

To reach at least - mar*et share

Provide from all %ranches

sta%lish speciali


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Commence 8 ne5 %usiness lines as part of diversification strate1y

Mi#estoes


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KARVY M)T)AL ()ND SERVICES

Mutual funds have servin1s for every%ody4 =hichever type of investor you are( you 5ill

surely 1et a mutual fund meetin1 your re>uirements4 ?ut investin1 in mutual funds is no

childIs play therefore *arvy mutual fund advisory services is there to 1uide in each and

every step of investment in mutual funds so that the dream of 5ealth creation doesnIt


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turns into ni1htmares4 #ts offerin1s includes7 products of all the 88 major AMCs( research

report a%out all the e2istin1 funds as 5ell as "FOs( customiualityservice

to all these three facets of the investment process4 Karvy %ein1 an intermediary is 5ell

re1istered 5ith the Association of Mutual Funds of #ndia $AMF#)4 KAR3H has 1ot the

re1istration no DAR" ::./E for mutual funds( 5hich is mentionedon every form4 After

the procurement of forms from various AMCs( the forms are passed on to its various

uirements) and then further processin1 is done

either directly or throu1h su%9%ro*ers4

Karvy operates throu1h its su%9 %ro*ers( associates and its e2cellent pool of o5n direct

employees4 The employees are offered salary %y *arvy 5hereas the su%9 %ro*ers and

associates 1et certain commission4 Karvy has B: %ranches and 8 franchisees in the eastern

re1ion4 All the 5or* of mutual funds is re1ulated from Rash%ehari avenue %ranch( an

e2tension of the &+R %ranch4 The main source of earnin1 for KAR3H is the %ro*era1e

offered %y the various AMCs *no5n as pay9in4 The amount offered may vary from AMC

to AMC4 Also( the franchisees have to pay a certain amount every month4 "o5 *arvy

also pay a certain amount to the su% %ro*ers and associates *no5n as pay9out4 The payout

is decided accordin1 to the procurement done %y them4

Products "d Ser,ices

?ac*ed %y a predominantly service oriented culture and also capitalisin1 on its

e2perience of handlin1 a variety of customers( they offer a plethora of financial products

throu1h their retail arm , KAR3H9T6 F#"APOL#S4 The %usiness of distri%ution of

financial products includes Pu%lic #ssue of %onds( e>uity shares( fi2ed deposits of

corporate( distri%ution of units of various Mutual Funds( a %as*et of lia%ility products


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comprisin1 personal loans( car loans( housin1 loans and loans a1ainst shares and as the

sunrise mar*et of #nsurance products4 Apart from these products( NThe FinapolisN also

offers personal ta2 plannin1 advice( share %ro*in1 and demat services4 All these products

reach the ultimate customer throu1h their 5ide spread net5or* of %ranches and retail

outlets4

CHAPTER 4DATA ANALYSIS

ANDINTERPRETATION


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TOOLS )SED (OR DATA ANALYSIS

Too#s F Met%ods8

Retur

A return is a measurement of ho5 much an investment has increased or decreased

in value over any 1iven time period4 #n particular( an annual return is the percenta1e %y

5hich it increased or decreased over any t5elve9month period4

(ormu#"7

$P.9p:)

P:

St"d"rd De,i"tio8

The de1ree that a sin1le value in a 1roup of values varies from the mean $avera1e)

of the distri%ution4 Standard deviation is a statistical measure that uses past performance

of an investment or portfolio to determine the potential ran1e of future performance and

assess the pro%a%ility of that performance4 Standard deviations can %e calculated for an

individual security or for the entire portfolio


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Bet"8

#t descri%es the relationship %et5een the stoc*Is return and the inde2 returns4 The %eta

value may %e interpreted in the follo5in1 manner( Qa . chan1e in "ifty inde2 5ould

cause a .4:0 $%eta) chan1e in the particular fund4 #t is the slope of characteristic

re1ression line4

#t si1nifies that a fund 5ith a %eta of more than . 5ill rise more than the mar*et and also

fall more than mar*et4 Thus( if one li*es to %eat the mar*et on the upside( it is %est to

invest in a hi1h9%eta fund4 ?ut one must *eep in mind that such a fund 5ill also fall more

than the mar*et on the 5ay do5n4 So( over an entire cycle( returns may not %e much

hi1her than the mar*et4

Similarly( a lo59%eta fund 5ill rise less than the mar*et on the 5ay up and lose less on

the 5ay do5n4 =hen safety of investment is important( a fund 5ith a %eta of less than

one is a %etter option4 Such a fund may not 1ain more than the mar*et on the upside( %ut

it 5ill protect returns %etter 5hen mar*et falls

= nxy (x)( y)

nx2 (x)2

=here(

n , "um%er of days

2 , Returns of the inde2

y , Returns of the fund

Tre.ors R"tio8


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The Treynor Ratio( named after &ac* L4 Treynor( one of the fathers of modern

portfolio theory( helps analy


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the portfolios %eta and the avera1e mar*et return4 This is the portfolios alpha4 #n fact( the

concept is sometimes referred to as N&ensens alpha4N

&ensen Ratio $&R) 99999999999999999

(

CALC)LATION O( NAV

The most important part of the calculation is the valuation of the assets o5ned %y

the fund4 Once its is calculated( the "A3 is simply the net value of assets divided %y the

num%er of units outstandin14 The detailed methodolo1y for the calculation of the asset

value is 1iven %elo54

Asset value Sum of mar*et value of shares;de%entures

li>uid assets;cash held( if any

dividend;interest accrued

Amount due on unpaid assets 2penses accrued %ut not paid

Det"i#s o t%e "bo,e items8

For li>uid shares;de%entures( valuation is done on the %asis of the last or closin1

mar*et price on the principal e2chan1e 5here the security is traded4

For li>uid and unlisted and;or thinly traded shares;de%entures( the value has to %e

estimated4 For shares( this could %e the %oo* value per share or an estimated mar*et price4

#f suita%le %enchmar*s are availa%le4 Fore de%entures and %onds( value is estimated on

the %asis of yields of compara%le li>uid securities after adjustin1 for illi>uidity4

The value of fi2ed interest %earin1 securities moves in a direction opposite to

interest rate chan1es valuation of de%entures and %onds is a %i1 pro%lem since most of

them are unlisted and thinly traded4 This 1ives considera%le lee5ay to the AMCIs on

valuation and some of the AMCIs are %elieved to ta*e advanta1e of this and adopt

fle2i%le valuation policies dependin1 on the situation4


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#nterest is paya%le on de%entures;%onds on periodic %asis say every months4 ?ut(

5ith every passin1 day( interest is said to %e accrued( at the daily interest rate( 5hich is

calculated %y dividin1 the periodic interest payment 5ith the num%er of days in each

period4

Thus( accrued interest on a particular day is e>ual to the daily interest rate

multiplied %y the num%er of days since the last interest payment date4

'sually( dividends are proposed at the time of annual 1eneral meetin1 and

%ecome due on the record date4 There is a 1ap %et5een the dates on 5hich it %ecomes due

and the actual payment date4 #n the immediate period( it is deemed to %e AccruedG4

2penses includin1 mana1ement fees( custody char1es etc4 are calculated on daily %asis4

E9uit. (uds8

BIRLA S)N LI(E E)ITY ()ND8

I,estmet Objecti,e8

An open9ended 1ro5th scheme 5ith the o%jective of lon1 term 1ro5th of capital( throu1h

a portfolio 5ith a tar1et allocation of @: e>uity and .: de%t and money mar*et

securities4

ASSET ALLOCATION

E)ITY =7*?

DEBT 6*55

MONEY MARKET 2

I,estmet I$orm"tio

Fund type Open9nded

#nvestment Plan !ro5th

Asset Si


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Min 4#nvestment Rs -(:::

Last +ividend "4A4

#nception +ate A'! 0B(.@@/

Bir#" Su #i$e E9uit. (ud > Gro&t%

Dat# SFP

CNH

NI(TY

R#t'r%

2(

23 R#t'r%

4(

43 24 4546 4546(3

01)!ec)

0*

+*+.-

01)an)

0-

3033./

13.0 10.+ 13./ 1-.- 1.0*/ 3.++3 10.3*

01)A2r)

0-

300.3

0.** 0.*/ ) /- ).+0+ )

1.1

+-.0/-

03)No)

0-

/3.- /-.13 +/13.

. 1.3

31/.++ ./+

3

/+*0.1

*

0/)an)

10

+3+.+ 1/./3 +1/./1

1 + +3/.+** .*+

3

33.-0

01)A2r)

10

+-0. 1.11/ 1.+/ 0. 0.+ 0. )-. -3.//

01)No)

10

11.

1.3+ +//.3

-

1. ++.+ +.-+ .3+3 3-.--

03)an)

11

1. 0./ 0./+ )3.+ 10.+/ )+.0-+ )

13.3

1*.*//


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01)A2r)

11

*+.0

).3*/ +*.-* )-.- -*.01 3.3 )

+0.0

/03.*0

01)No)

11

+.-

)-.1 -.0*+ )10.3 10.0- 100./3 )

+0./

/1-.30

4otal -.-- 31-.

-1. *.

/+*.+

3

/./*

1

CALC)LATION O( ABOVE TABLE

Bet" A#$" St"d"rd

De,i"tio

S%"r!e r"tio SR Tre.or

R"tio

TR

Gro&t%8

#nvestin1 at least /: of its funds in e>uity and e>uity related instrument 5ith

medium to hi1h ris* profile and up to 0: in de%t and money mar*et instruments 5ith

lo5 to medium ris* profile4

ASSET ALLOCATION

E)ITY @

DEBT 4

MONEY MARKET 2


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I,estmet I$orm"tio

Fund type Open9nded


Asset Si


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:.9Apr9

.:

-0@:4- .4.. .40 9.40 .4 9.488 9..4-8 .804

:.9"ov9

.:

..B4-- .-480 048-@ 0.4. -40. 80@4/8 .:4BB ..-4

:89&an9

..

.-B4 :4- :40B :40 :4: :4.8:/ 9.:4.8 .:04

:.9Apr9

..

-/04:- 9-48/ 0/4@/B 9-4/ 884 84.00B 9.4.8 0:4.

:.9"ov9

..

-0-B4@- 9@4B-. @-4:/0 9-4. 04:. @4B8 9.-4 08/4:

Total B@4@@ 8.@4B @8 .:40 8@48- 88@40


Bet" A#$" St"d"rd

De,i"tio


R"tio

TR


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Debt (ud

SBI M"'um Icome (ud8

I,estmet Objecti,e8

To provide the investors an opportunity to earn( in accordance 5ith their

re>uirements throu1h capital 1ains or throu1h re1ular dividends( returns that 5ould %e

hi1her than the returns offered %y compara%le investment avenues throu1h investment in

de%t money mar*et securities4

ASSET ALLOCATION

E)ITY ?*

DEBT 4*3

MONEY MARKET 4*74

I,estmet I$orm"tio

Fund type Open9nded


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Asset Si


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+0./

4otal -.-- 31-.

-1. *.

/+*.+3


Bet" A#$" St"d"rd

De,i"tio


R"tio

TR


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1D(C 1IG1 INTEREST ()ND8

I,estmet Objecti,e8

To 1enerate income %y investin1 in a ran1e of de%t and money mar*et instruments

of various maturity dates 5ith a vie5 to ma2imiuidity

ASSET ALLOCATION

E)ITY 2

DEBT @4*57

MONEY MARKET ?*=5

I,estmet I$orm"tio

Fund type Open9nded


Asset Si


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Last +ividend "4A4

#nception +ate MARC60B(.@@B

Dat# SFP

CNH

NI(TY

R#t'r%2( 23 R#t'r%

4(

43 24 4546 454

01)!ec)0* +*+.-

01)an)0- 3033./

13.0 10.+ 3./ 11. //./+/ 0.-

01)A2r)0- 300.3

0.** 0.*/ 1+. 1.+ 11.0 10.0 10

03)No)0- /3.- /-.13 +/13.

).- 3/.*1 )+*-.* )*.333

0/)an)10 +3+.+ 1/./3 +1/./1

3./ 11. /-.*+ 0.-

01)A2r)10 +-0. 1.11/ 1.+/ 0.- 0.*1 1.00+ )1.33

01)No)10 11.

1.3+ +//.3

-

3.1 -.1 /*./ 0.

03)an)11 1. 0./ 0./+ 1.3 1.- 0.*0 )1.133

01)A2r)11 *+.0

).3*/ +*.-* 1. +.*- )-.1+ )0.33

01)No)11 +.-

)-.1 -.0*+ 1. +.+ )1/.+ )0.-33

4otal -.-- 31-. +1.- +31./3 )1*.0+ 1


58/145


Bet" A#$" St"d"rd

De,i"tio


R"tio

TR


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BALANCED ()ND

KOTAK BALANCED ()ND8

I,estmet Objecti,e8

To achieve 1ro5th %y investin1 in e>uity e>uity related instruments( %alanced

5ith income 1eneration %y investin1 in de%t money #nvestment mar*et instruments4

ASSET ALLO ATION

E)ITY ??*7@

DEBT 35*6

MONEY MARKET 2

I,estmet I$orm"tio

Fund type Open9nded


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Asset Si


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1/.++

4otal -.-- 31-.

+13./

*

3/+3./0 1*-


Bet" A#$" St"d"rd

De,i"tio


R"tio

TR


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ICICI PR)DENTIAL BALANCED ()ND8

#nvestin1 at least @48/ of its funds in e>uity and e>uity related instrument 5ith

medium to hi1h ris* profile and up to 0B4B- in de%t and money mar*et instruments 5ith

lo5 to medium ris* profile.

ASSET ALLOCATION

E)ITY ?=*5@

DEBT 4*7

MONEY MARKET 2

I,estmet I$orm"tio

Fund type Open9nded


Asset Si


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Last +ividend "4A4

#nception +ate OCT B(.@@@

ICICI PR)DENTIAL BALANCED ()ND8

Dat# SFP

CNH

NI(TY

R#t'r%2( 23 R#t'r%

4(

43 24 4546 4546(3

01)!ec)0* +*+.-

01)an)0- 3033./

13.0 10.+ 1+./ 13. 1+0.1*/ /.+/ 1*.0+0

01)A2r)0- 300.3

0.** 0.*/ )1.* 3.+/ )1.-/ )-.- --.10+

03)No)0- /3.- /-.13 +/13.

3.* 13/.+

/

1*0.-*/ +*./ *+0.3

0/)an)10 +3+.+ 1/./3 +1/./1

10. 110.+ 13.1 +.3/ ./--

01)A2r)10 +-0. 1.11/ 1.+/ 3.3 10.*- 3. )/.* +3.1

01)No)10 11.

1.3+ +//.3

-

1/. +10.+ ++./ .3/ /0.+-

03)an)11 1. 0./ 0./+ )0.1 0.01 )0.0/ )*.+ *.1/

01)A2r)11 *+.0

).3*/ +*.-* )+./ . 1+.-+1 )

10.

111./0*

01)No)11 +.- )-.1 -.0*+ 0.+ 0.0/ )1.-0 ).- 3.+*+


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4otal -.-- 31-.

3./ 1*/*./

/

3*+1.0 1+/-.*+

+


Bet" A#$" St"d"rd

De,i"tio


R"tio

TR


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COMPARISION ON OVERALL SIH M)T)AL ()NDS

F'"+ "AM Sharpe

Ratio

Ran* &ensen

Ratio

Ran* Treynor

Ratio

Ran*

?irla Sun Life >uity

Fund

:4:0 0

904.B

:4/ 0

'T# >uity Fund :4:0 .

9:4:0 8

:4B. .

S?# Ma1num #ncome Fund 904:B

0B4:: .

9.04:.

6+FC 6i1h #nterest Fund 9.4-@. -

-4-: 0

9@4/.- -

KOTAK ?alanced Fund 9:4.. 8

904--- -

94:

#C#C# Prudential ?alanced 9:4080 984-8 904B- 8


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Fund

I$ereces

For all the si2 funds(three types of ratios are calculated and ran*ed accordin1ly4

Accordin1 to Sharpe Ratio and Treynors Ratio 'T# J'#TH F'"+ is ran*ed

first and ?#RLA S'" L#F J'#TH F'"+ is ran*ed second4

#n &ensen Ratio S?# MA!"'M #"COM F'"+ ran*ed first and 6+FC 6#!6

#"TRST F'"+ ran*ed second4

CHAPTER 5

FINDINGS SUGGESTIONS CONCLUSION


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(INDINGS

There is more volatility in the "#FTH #"+U4

J'#TH fund sho5ed a 1ood performance and 1ave ma2imum return 5ith

minimum ris*4

+?T F'"+ and ?ALA"C+ F'"+ sho5ed a poor performance durin1 the

previous years4

Comparin1 the overall returns and ris* of all the funds 'T# J'#TH F'"+ and

?#RLA S'" L#F J'#TH F'"+ are favora%le to invest4

#n case of ?ALA"C+ Fund( the mar*et is not performin1 sound %alanced

schemes also 1ave ne1ative returns4All the funds sho5n poor performance due to

the overall mar*et indices4

Mutual funds provide the various %enefits to the investor( such as Li>udity(

3ariety of schemes( fle2i%ility of s5itchin1 and ta2 savin1s4


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S)GGESTIONS

The study has made an attempt to prove that mere returns of a fund or the past

performance is not 1ood enou1h to ma*e a sound decision on future investments4

There is a need to understand various availa%le tools of comparative analysis and

their si1nificance in ma*in1 an investment decision4

The tools help in analy


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CONCL)SION

The project says that the investment has to ta*e to those funds 5hich are doin1

5ell in the mar*et4 The fund returns should %e hi1h 5hen compared to the other other

fund and inde2 returns4 The investor has to *no5 the o%jective of the investment( so

accordin1 to it he has to 1o for the investment4

Some companies 1ive more returns 5ith more ris* and some other funds 5ill

1ive moderate returns 5ith moderate ris*4 The investor has to *eep the funds for a lon1

period of time( and also the investor has to *no5 the restriction over the AMF# re1ulation

on the funds( the e2penditure ratio and the ta2es 5hich are loaded on the funds4


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BIBLIOGRAP1Y

BOOK RE(ERENCE

Security Analysis and Portfolio Mana1ement ( Punithavathy Pandian( p1 7.-:(.04

Financial Mana1ement (Prasanna Chandra ( TATA MC !ra5 6ill( -thedition ( p17

.0@(.(.0(.(-804

Fundamentals of #nvestment ( !ordon( Ale2ander ( =illiam F4 Sharpe(8rdedition (p17

-@/(-@@

?er*( &4 ?4 and !reen( R4 C4 $0::)( Mutual fund flo5s and performance in rational

mar*ets( &ournal of Political

conomy ..0$)( .0@,.0@-

Websites

5554mutualfundsindia4com

5554moneycontrol4com

5554AMF#india4com

5554s%imf4com
http://www.mutualfundsindia.com/http://www.moneycontrol.com/http://www.amfiindia.com/http://www.sbimf.com/http://www.mutualfundsindia.com/http://www.moneycontrol.com/http://www.amfiindia.com/http://www.sbimf.com/


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CERTI(ICATE

This is to certify that the Project Report titled Comparative Analysis Of

Mutual Fund Schemes submitted in partial fulfillment for the award of the

Degree of Master of Business Administration (MBA)was carried out by V.P.

Shalini Jaiswal under my guidance. This has not been submitted to any other

ni!ersity or "nstitution for the award of any degree#diploma#certificate.

Signature of the Super!isor

Date:

Place: Chinnatekuru.


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ABSTRACT

This Project e2amines the relationship %et5een performance and ris* e2posure formutual funds4 #t aims to find out the performance of mutual funds and to ma*e ri1ht

investment decision for ma2imi


76/145

ACKNO+LEDGEMENT

# 5ould li*e to than* KARVY STOCK BROKING LIMITED( for 1ivin1 me

the opportunity to underta*e project 5or* in their or1ani


77/145


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C1APTER 27

Findin1s -B

Su11estions -/

Conclusions -@

BIBLIOGRAP1Y .

CHAPTER 1

INTRODUCTION


79/145


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Source7 5554amfiindia4com

The investment in securities throu1h mutual funds is spread across 5ide ran1e of

industries and sectors and thus the ris* is reduced4 +iversification reduces the ris*

%ecause all stoc*s may not move in the same direction at the same time4 3arious fund

houses issue units to the investors in accordance 5ith the >uantum of money invested %y

them4 #nvestors of mutual funds are *no5n as unit holders4

#n #ndia a mutual fund is re>uired to %e re1istered 5ith Securities 2chan1e ?oardof #ndia DS?#E 5hich re1ulates the securities mar*et4

MEANING8

Mutual fund is an in investment that pools to1ether funds from investors and

invest the money in stoc*s( %onds( short ,term money9mar*et instruments( or other

securities4An investor can participate in the mutual funds %y %uyin1 the units of the fund4

A diversified pool of assets( 5here the funds have %een invested ( %ac*s each unit4

Securities 1ive small investors access to a 5ell diversified portfolio of e>uities(

%onds and other securities4 The main appeal of mutual fund is that smaller investors can

receive the same e2pertise and purchasin1 po5er as the lar1e institutions4 #nvestors 5ho

%uy Mutual fund need only %e concerned 5ith the >uality and lon1 term performance of

the fund4
http://var/www/apps/conversion/tmp/scratch_1/www.amfiindia.comhttp://var/www/apps/conversion/tmp/scratch_1/www.amfiindia.com


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DE(INITIONS8

The S?#( .@@0 defines a Mutual Fund as 7 A fund esta%lished in the form of a

Trust %y a sponsor to raise monies %y the trustees throu1h the sale of units to the pu%lic

under one to more schemes9for investin1 in securities in accordance 5ith these

re1ulations4G

Accordin1 to the a%ove definition( a mutual fund in #ndia can raise resources

throu1h sale of units to the pu%lic4 #t can %e set up in the form of a Trust under the #ndian

Trust Act4

Characteristics of a Mutual Fund

#nvestors purchase mutual funds shares from the fund itself $or throu1h a

%ro*er)(%ut are not a%le to purchase the shares from other investors on a

secondary mar*et4

Professional mana1ers mana1e the affairs for a fee4

The funds are invested in a portfolio of mar*eta%le

Securities( reflectin1 the investment o%jective4

The investment portfolios of mutual fund typically mana1ed %y separate entities

*no5n as #nvestment AdvisersG4

The o5nership is in the hands of the investors 5ho have pooled in their funds4


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ADVANTAGES O( M)T)AL ()ND

Pro$essio"# M""'emet

Mutual Funds provide the services of e2perienced and s*illed professionals(

%ac*ed %y a dedicated investment research team that analyses the performance and

prospects of companies and selects suita%le investments to achieve the o%jectives of the

scheme4

Di,ersi$ic"tio

Mutual Funds invest in a num%er of companies across a %road cross9section of

industries and sectors4 This diversification reduces the ris* %ecause seldom do all stoc*s


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decline at the same time and in the same proportion4 Hou achieve this diversification

throu1h a Mutual Fund 5ith far less money than you can do on your o5n4

Co,eiet Admiistr"tio

#nvestin1 in a Mutual Fund reduces paper5or* and helps you avoid many

pro%lems such as %ad deliveries( delayed payments and follo5 up 5ith %ro*ers and

companies4 Mutual Funds save your time and ma*e investin1 easy and convenient4

Retur Poteti"#

Over a medium to lon19term( Mutual Funds have the potential to provide a hi1her

return as they invest in a diversified %as*et of selected securities4

Lo& Costs

Mutual Funds are a relatively less e2pensive 5ay to invest compared to directly

investin1 in the capital mar*ets %ecause the %enefits of scale in %ro*era1e( custodial and

other fees translate into lo5er costs for investors4

Li9uidit.

#n open9end schemes( the investor 1ets the money %ac* promptly at net asset

value related prices from the Mutual Fund4 #n closed9end schemes( the units can %e sold

on a stoc* e2chan1e at the prevailin1 mar*et price or the investor can avail of the facility

of direct repurchase at "A3 related prices %y the Mutual Fund4

Tr"s!"rec.

Hou 1et re1ular information on the value of your investment in addition to disclosure on

the specific investments made %y your scheme( the proportion invested in each class of

assets and the fund mana1erIs investment strate1y and outloo*4


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(#e:ibi#it.

Throu1h features such as re1ular investment plans( re1ular 5ithdra5al plans and

dividend reinvestment plans( you can systematically invest or 5ithdra5 funds accordin1

to your needs and convenience4

A$$ord"bi#it.

#nvestors individually may lac* sufficient funds to invest in hi1h91rade stoc*s4 A mutual

fund %ecause of its lar1e corpus allo5s even a small investor to ta*e the %enefit of its

investment strate1y4

C%oice o$ Sc%emes

Mutual Funds offer a family of schemes to suit your varyin1 needs over a lifetime4

+e## Re'u#"ted

All Mutual Funds are re1istered 5ith S?# and they function 5ithin the provisions of

strict re1ulations desi1ned to protect the interests of investors4 The operations of Mutual

Funds are re1ularly monitored %y S?#4

DISADVANTAGES O( M)T)AL ()ND

Costs Des!ite Ne'"ti,e Returs

#nvestors must pay sales char1es( annual fees( and other e2penses $5hich 5eIll

discuss %elo5) re1ardless of ho5 the fund performs4 And( dependin1 on the timin1 of

their investment( investors may also have to pay ta2es on any capital 1ains distri%ution

they receive even if the fund 5ent on to perform poorly after they %ou1ht shares4


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L"c; o$ Cotro#

#nvestors typically cannot ascertain the e2act ma*e9up of a fundIs portfolio at any

1iven time( nor can they directly influence 5hich securities the fund mana1er %uys and

sells or the timin1 of those trades4

Price )cert"it.

=ith an individual stoc*( you can o%tain real9time $or close to real9time) pricin1

information 5ith relative ease %y chec*in1 financial 5e%sites or %y callin1 your %ro*er4

Hou can also monitor ho5 a stoc*Is price chan1es from hour to hour or even second to

second4 ?y contrast( 5ith a mutual fund( the price at 5hich you purchase or redeem

shares 5ill typically depend on the fundIs "Ay( 5hich the fund mi1ht not calculate until

many hours after youIve placed your order4 #n 1eneral( mutual funds must calculate their

"A3 at least once every %usiness day( typically after the major '4S4 e2chan1es close4

ORGANIZATION OF A MUTUAL FUND


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There are many entities involved and the dia1ram %elo5 illustrates the

or1ani


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5hich 5ould in the name of the Trust( float and then marria1e the different investment

scheme as per S?# 1uidelines4

)it 1o#der8

The individual 5ho invest money in the mutual fund 5ith an aim of 1ettin1

returns4 The Mutual fund allots him num%er of units %ased on his investment and the

value of the unit4

S!osor8

A Sponsor means any%ody corporate 5ho( actin1 alone or in com%ination 5ith

another %ody corporate( esta%lished a mutual fund after completin1 the formalities

prescri%ed in the S?#Is Mutual Funds Re1ulations4 The Sponsor should have a sound

trac* record and 1eneral reputation of fairness and inte1rity in all his %usiness

transactions4

Trustee8

Trustee means the ?oard of Trustees or the Trustee Company 5ho hold the

property of the Mutual Fund in trust for the %enefit of the unit holder4

Asset M""'emet Com!".8

A Company formed and re1istered under the Companies Act( .@- and 5hich has

o%tained the approval of S?# to function as an Asset Mana1ement Company may %e

appointed %y the sponsor of the mutual fund as such4

Custodi" "d De!ositories8

Custodian is a person appointed for safe *eepin1 of the securities4 Mutual Funds

deals in %uyin1 and sellin1 of lar1e num%er of securities4 AMC appoints a custodian for

safe *eepin1 of these securities and for participatin1 in clearin1 system on its %ehalf4 #n

case of demateriali


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6e is responsi%le for issuin1 and redeemin1 units of mutual funds4 6e prepares

transfer documents and update investor records4

SEBI8

Securities and 2chan1e ?oard of #ndia is the re1ulator 5hich is responsi%le for

re1ulatin1 the 5or*in1 of different %odies or individual dealin1 in Securities mar*et and

projectin1 the interest of #nvestors4

NEED (OR T1E ST)DY8

The study first tries to understand the composition of the selected funds 5hich

determines the scope of performance for the funds( follo5ed %y use of ratios that are

relevant in >uantifyin1 and understandin1 the ris* and return relationships for each

mutual fund scheme under consideration4 Then a comparative analysis of the mutual fund

schemes is done to see 5hich fund has performed the %est4

This study is si1nificant to the company as it loo*s into the minute details that

differentiate the performances of funds of different companies 5ith same theme or sector

under similar mar*et conditions4 This 5ould help the company to develop4


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OB


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RESEARC1 MET1ODOLOGY

D"t" co##ectio8

Prim"r. D"t"8

The primary data study of this study is interaction 5ith the %ranch inchar1e of

the company4

Secod"r. d"t"

The secondary data includes 7

Pu%lished material and annual reports of mutual fund companies

Other pu%lished material of mutual funds4

Research %ased online portals4

'npu%lished sources also4

S"m!#e Pro$i#e8

The sample re>uired for the study has %een selected throu1h random samplin1 method

from the availa%le list of mutual fund schemes in the mar*et4 ?roadly the sample of

mutual fund schemes includes e>uity funds( de%t funds and %alanced funds4

The study has ta*en three %road cate1ories of funds

>uity Funds

+e%t funds

?alanced fund


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E9uit. (uds8

.4?#RLA S'" L#F J'#TH F'"+

04'T# J'#TH F'"+

Debt (uds8

.4S?# MA!"'M #"COM F'"+

046+FC 6#!6 #"TRST F'"+

B"#"ced (uds8

.4KOTAK ?AL"C+ F'"+

04#C#C# PR'+"T#AL ?ALA"C+ F'"+


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Limit"tios o$ t%e Stud.8

The present study has the follo5in1 limitations

The study has %een restricted to only a fe5 schemes4 $>uity(de%t(%alanced)

The data is analy


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CHAPTER 2

REVIEW OFLITERATURE


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LITERAT)RE REVIE+

Literature on mutual fund performance evaluation is enormous4 A fe5 research

studies that have influenced the preparation of this paper su%stantially are discussed in

this section4 Sharpe( =illiam F4 $.@) su11ested a measure for the evaluation of

portfolio performance4 +ra5in1 on results o%tained in the field of portfolio analysis(

economist &ac* L4 Treynor has su11ested a ne5 predictor of mutual fund performance(

one that differs from virtually all those used previously %y incorporatin1 the volatility of

a funds return in a simple yet meanin1ful manner4

Michael C4 &ensen $.@B) derived a ris*9adjusted measure of portfolio

performance $&ensenIs alpha) that estimates ho5 much a mana1erIs forecastin1 a%ility

contri%utes to fundIs returns4 As indicated %y Statman $0:::)( the e S+AR of a fund

portfolio is the e2cess return of the portfolio over the return of the %enchmar* inde2(

5here the portfolio is levera1ed to have the %enchmar* inde2Is standard deviation4

S4"arayan Rao ( et4 al4( evaluated performance of #ndian mutual funds in a %ear

mar*et throu1h relative performance inde2( ris*9return analysis( TreynorIs ratio( SharpeIs

ratio( SharpeIs measure ( &ensenIs measure( and FamaIs measure4 The study used 0@


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open9ended schemes $out of total schemes of 88) for computin1 relative performance

inde24 Then after e2cludin1 funds 5hose returns are less than ris*9free returns( -/

schemes are finally used for further analysis4 The results of performance measures

su11est that most of mutual fund schemes in the sample of -/ 5ere a%le to satisfy

investorIs e2pectations %y 1ivin1 e2cess returns over e2pected returns %ased on %oth

premium for systematic ris* and total ris*4

?ijan Roy( et4 al4( conducted an empirical study on conditional performance of

#ndian mutual funds4 This paper uses a techni>ue called conditional performance

evaluation on a sample of ei1hty9nine #ndian mutual fund schemes 4This paper measures

the performance of various mutual funds 5ith %oth unconditional and conditional form of

CAPM( Treynor9 Mauity mutual funds4 The

methodolo1y is %ased on the com%ination of discrete and continuous multi9criteria

decision aid methods for mutual fund selection and composition4 'TA+#S multi9criteria

decision aid method is employed in order to develop mutual fundIs performance models4


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!oal pro1rammin1 model is employed to determine proportion of selected mutual funds

in the final portfolios4

?ro5n and !oetuity mutual fund data and found clear

evidence of relative ris*9adjusted performance persistence ho5ever( the persistence 5as

mostly due to funds that la1 the SP -::( depends upon the time period o%served and is

correlated across mana1ers

Sharpe $.@) loo*ed at the performance of open9end mutual funds and found that to a

major e2tent the capital mar*et is hi1hly efficient( %ut there is some evidence of

persistence in performance4 &ensen $.@/) evaluated the performance of mutual funds in

the period .@-,.@ and found no evidence of mana1er s*ill

CHAPTER 3


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INDUSTRY

COMPANY PROFILE

IND)STRY PRO(ILE8 M)T)AL ()NDS8

Mutual funds 1o %ac* to the times of the 1yptians and Phoenicians 5hen they sold

shares in caravans and vessels to spread the ris* of these ventures4 The forei1n and

colonial 1overnment Trust of London of .// is considered to %e the fore9runner of the

modern concept of mutual funds4 The 'SA is( ho5ever( considered to %e the Mecca of

modern mutual funds4 ?y the early 9 .@8:s >uite a lar1e num%er of close 9 ended mutual

funds 5ere in operation in the '4S4A4 Much latter in .@-( the committee on finance for

the private sector recommended mo%ili


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INDIAN M)T)AL ()ND IND)STRY

The end of millennium mar*s 8 years of e2istence of mutual funds in this

country4 The ride throu1h these 8 years is not %een smooth4 #nvestor opinion is stilldivided4 =hile some are for mutual funds others are a1ainst it4

'T# commenced its operations from &uly .@ 4The impetus for esta%lishin1 a

formal institution came from the desire to increase the propensity of the middle and lo5er

1roups to save and to invest4 'T# came into e2istence durin1 a period mar*ed %y 1reat

political and economic uncertainty in #ndia4 =ith 5ar on the %orders and economic

turmoil that depressed the financial mar*et( entrepreneurs 5ere hesitant to enter capital

mar*et4

The already e2istin1 companies found it difficult to raise fresh capital( as

investors did not respond ade>uately to ne5 issues4 arnest efforts 5ere re>uired to

canaliuirements for the Trust4

One thin1 is certain , the fund industry is here to stay4 The industry 5as one9

entity sho5 till .@/ 5hen the 'T# monopoly 5as %ro*en 5hen S?# and Can %an*

mutual fund entered the arena4 This 5as follo5ed %y the entry of others li*e ?O#( L#C(

!#C( etc4 sponsored %y pu%lic sector %an*s4 Startin1 5ith an asset %ase of Rs4 0- crore in

.@ the industry has 1ro5n at a compounded avera1e 1ro5th rate of 0B to its current

si


99/145

last lon14 =hen the private sector made its de%ut in .@@89@( the stoc* mar*et 5as

%oomin14

The openin1s up of asset mana1ement %usiness to private sector in .@@8 sa5

international players li*e Mor1an Stanley( &ardine Flemin1( &P Mor1an( !eor1e Soros

and Capital #nternational alon1 5ith the host of domestic players join the party4 ?ut for

the e>uity funds( the period of .@@9@ 5as one of the 5orst in the history of #ndian

Mutual Funds4

3=== > YEAR O( T1E ()NDS

Mutual funds have %een around for a lon1 period of time to %e precise for 8 yrs

%ut the year .@@@ sa5 immense future potential and developments in this sector4 This

year si1naled the year of resur1ence of mutual funds and the re1ainin1 of investor

confidence in these MFIs4 This time around all the participants are involved in the revival

of the funds the AMCIs( the unit holders( the other related parties4 6o5ever the sole

factor that 1ave lifer to the revival of the funds 5as the 'nion ?ud1et4 The %ud1et

%rou1ht a%out a lar1e num%er of chan1es in one stro*e4 An insi1ht of the 'nion ?ud1et

on mutual funds ta2ation %enefits is provided later4

#t provided centre sta1e to the mutual funds( made them more attractive and

provides accepta%ility amon1 the investors4 The 'nion ?ud1et e2empted mutual fund

dividend 1iven out %y e>uity9oriented schemes from ta2( %oth at the hands of the investor

as 5ell as the mutual fund4 "o lon1er 5ere the mutual funds interested in sellin1 the

concept of mutual funds they 5anted to tal* %usiness 5hich 5ould mean to increase asset

%ase( and to 1et asset %ase and investor %ase they had to %e fully armed 5ith a 5hole lot


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of schemes for every investor 4So ne5 schemes for ne5 #POIs 5ere inevita%le4 The >uest

to attract investors e2tended %eyond just ne5 schemes4 The funds started to re1ulate

themselves and 5ere all out on 5innin1 the trust and confidence of the investors under

the ae1is of the Association of Mutual Funds of #ndia $AMF#)

(irst P%"se > 3=?62@8

'nit Trust of #ndia $'T#) 5as esta%lished on .@8 %y an Act of Parliament4 #t 5as

set up %y the Reserve ?an* of #ndia and functioned under the Re1ulatory and

administrative control of the Reserve ?an* of #ndia4 #n .@B/ 'T# 5as de9lin*ed from the

R?# and the #ndustrial +evelopment ?an* of #ndia $#+?#) too* over the re1ulatory and

administrative control in place of R?#4 The first scheme launched %y 'T# 5as 'nit

Scheme .@4 At the end of .@// 'T# had Rs4(B:: crores of assets under mana1ement4

Secod P%"se > 3=@23==5 Etr. o$ Pub#ic Sector (uds8

.@/B mar*ed the entry of non9 'T#( pu%lic sector mutual funds set up %y pu%lic

sector %an*s and Life #nsurance Corporation of #ndia $L#C) and !eneral #nsurance

Corporation of #ndia $!#C)4 S?# Mutual Fund 5as the first non9 'T# Mutual Fund

esta%lished in &une .@/B follo5ed %y Can%an* Mutual Fund $+ec /B)( Punja% "ational

?an* Mutual Fund $Au1 /@)( #ndian ?an* Mutual Fund $"ov /@)( ?an* of #ndia $&un @:)(

?an* of ?aroda Mutual Fund $Oct @0)4 L#C esta%lished its mutual fund in &une .@/@

5hile !#C had set up its mutual fund in +ecem%er .@@:

At the end of .@@8( the mutual fund industry had assets under mana1ement of Rs4B( ::

crores4

T%ird P%"se > 3==5245 Etr. o$ Pri,"te Sector (uds8

=ith the entry of private sector funds in .@@8( a ne5 era started in the #ndian

mutual fund industry( 1ivin1 the #ndian investors a 5ider choice of fund families4 Also(

.@@8 5as the year in 5hich the first Mutual Fund Re1ulations came into %ein1( under

5hich all mutual funds( e2cept 'T# 5ere to %e re1istered and 1overned4 The erst5hile

Kothari Pioneer $no5 mer1ed 5ith Fran*lin Templeton) 5as the first private sector


101/145

mutual fund re1istered in &uly .@@84 The .@@8 S?# $Mutual Fund) Re1ulations 5ere

su%stituted %y a more comprehensive and revised Mutual Fund Re1ulations in .@@4 The

industry no5 functions under the S?# $Mutual Fund) Re1ulations .@@4 The num%er of

mutual fund houses 5ent on increasin1( 5ith many forei1n mutual funds settin1 up funds

in #ndia and also the industry has 5itnessed several mer1ers and ac>uisitions4 As at the

end of &anuary 0::8( there 5ere 88 mutual funds 5ith total assets of Rs4 .(0.(/:- crores4

The 'nit Trust of #ndia 5ith Rs4(-. crores of assets under mana1ement 5as 5ay

ahead of other mutual funds4

(ourt% P%"se > sice (ebru"r. 45 I (ebru"r. 458

Follo5in1 the repeal of the 'nit Trust of #ndia Act .@8 'T# 5as %ifurcated into

t5o separate entities4 One is the Specified 'nderta*in1 of the 'nit Trust of #ndia 5ith

assets under mana1ement of Rs40@( /8- crores as at the end of &anuary 0::8( representin1

%roadly( the assets of 'S scheme( assured return and certain other schemes4 The

Specified 'nderta*in1 of 'nit Trust of #ndia( functionin1 under an administrator andunder the rules framed %y !overnment of #ndia and does not come under the purvie5 of

the Mutual Fund Re1ulations4 The second is the 'T# Mutual Fund Ltd( sponsored %y

S?#( P"?( ?O? and L#C4 #t is re1istered 5ith S?# and functions under the Mutual Fund

Re1ulations4 =ith the %ifurcation of the erst5hile 'T# 5hich had in March 0::: more

than Rs4B(::: crores of assets under mana1ement and 5ith the settin1 up of a 'T#

Mutual Fund( conformin1 to the S?# Mutual Fund Re1ulations( and 5ith recent mer1ers

ta*in1 place amon1 different private sector funds( the mutual fund industry has entered its

current phase of consolidation and 1ro5th4 As at the end of Septem%er( 0::( there 5ere

0@ funds( 5hich mana1e assets of Rs4.-8.:/ crores under 0. schemes4


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T.!es o$ Mutu"# (uds8

Mutual fund schemes may %e classified on the %asis of its structure and its investment

o%jective4

B. Structure8

O!e2ed (uds7

An open9end fund is one that is availa%le for su%scription all throu1h the year4

These do not have a fi2ed maturity4 #nvestors can conveniently %uy and sell units at "et

Asset 3alue $N"A3N) related prices4 The *ey feature of open9end schemes is li>uidity4

C#osed2ed (uds7

A closed9end fund has a stipulated maturity period 5hich 1enerally ran1in1 from

8 to .- years4 The fund is open for su%scription only durin1 a specified period4 #nvestors

can invest in the scheme at the time of the initial pu%lic issue and thereafter they can %uy

or sell the units of the scheme on the stoc* e2chan1es 5here they are listed4 #n order to

provide an e2it route to the investors( some close9ended funds 1ive an option of sellin1

%ac* the units to the Mutual Fund throu1h periodic repurchase at "A3 related prices4

S?# Re1ulations stipulate that at least one of the t5o e2it routes is provided to the

investor4

Iter,"# (uds7


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#nterval funds com%ine the features of open9ended and close9ended schemes4

They are open for sale or redemption durin1 pre9determined intervals at "A3 related

prices4

B. I,estmet Objecti,e8

Gro&t% (uds7

The aim of 1ro5th funds is to provide capital appreciation over the medium to

lon1 term4 Such schemes normally invest a majority of their corpus in e>uities4 #t has%een proved that returns from stoc*s( have outperformed most other *ind of investments

held over the lon1 term4 !ro5th schemes are ideal for investors havin1 a lon19term

outloo* see*in1 1ro5th over a period of time4

Icome (uds8

The aim of income funds is to provide re1ular and steady income to investors4

Such schemes 1enerally invest in fi2ed income securities such as %onds( corporate

de%entures and !overnment securities4 #ncome Funds are ideal for capital sta%ility and

re1ular income4

B"#"ced (uds7

The aim of %alanced funds is to provide %oth 1ro5th and re1ular income4 Such

schemes periodically distri%ute a part of their earnin1 and invest %oth in e>uities and

fi2ed income securities in the proportion indicated in their offer documents4 #n a risin1

stoc* mar*et( the "A3 of these schemes may not normally *eep pace( or fall e>ually

5hen the mar*et falls4 These are ideal for investors loo*in1 for a com%ination of income

and moderate 1ro5th4

Moe. M"r;et (uds7

The aim of money mar*et funds is to provide easy li>uidity( preservation of

capital and moderate income4 These schemes 1enerally invest in safer short9term


104/145

instruments such as treasury %ills( certificates of deposit( commercial paper and inter9

%an* call money4 Returns on these schemes may fluctuate dependin1 upon the interest

rates prevailin1 in the mar*et4

These are ideal for Corporate and individual investors as a means to par* their surplus

funds for short periods4

Ot%er Sc%emes8

T": S",i' Sc%emes7

These schemes offer ta2 re%ates to the investors under specific provisions of the

#ndian #ncome Ta2 la5s as the !overnment offers ta2 incentives for investment in

specified avenues4 #nvestments made in >uity Lin*ed Savin1s Schemes $LSS) and

Pension Schemes are allo5ed as deduction u;s // of the #ncome Ta2 Act( [email protected] The Act

also provides opportunities to investors to save capital 1ains u;s -A and -? %y

investin1 in Mutual Funds4

Idustr. S!eci$ic Sc%emes7

#ndustry Specific Schemes invest only in the industries specified in the offer

document4 The investment of these funds is limited to specific industries li*e #nfotech(

FMC!( and Pharmaceuticals etc4

Ide: Sc%emes8

#nde2 Funds attempt to replicate the performance of a particular inde2 such as the

?S Sense2 or the "S -:

Sector"# Sc%emes8

Sectoral Funds are those( 5hich invest( e2clusively in a specified sector4 This

could %e an industry or a 1roup of industries or various se1ments such as A !roup

shares or initial pu%lic offerin1s4

RISKS ASSOCIATED +IT1 M)T)AL ()NDS


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#nvestin1 in mutual funds( as 5ith any security( does not come 5ithout ris*4 One

of the most %asic economic principles is that ris* and re5ard are directly correlated4 #n

other 5ords( the 1reater the potential ris* the 1reater the potential return4 The types of

ris* commonly associated 5ith mutual funds are7

M"r;et ris;8

Mar*et ris* relates to the mar*et value of a security in the future4 Mar*et prices

fluctuate and are suscepti%le to economic and financial trends( supply and demand( and

many other factors that cannot %e precisely predicted or controlled4

Po#itic"# ris;8

Chan1es in the ta2 la5s( trade re1ulations( administrated prices( etc are some of

the many political factors that create mar*et ris*4 Althou1h collectively( as citiuity resultin1 in proportionate fall in the "A3 of the mutual

fund scheme( 5hich has invested in the e>uity of such a company4

Ecoomic ris;8


106/145

conomic ris* involves uncertainty in the economy( 5hich( in turn( can have an

adverse effect on a companyIs %usiness4 For instance( if monsoons fail in a year( e>uity

stoc*s of a1riculture , %ased companies 5ill fall and "A3Is of mutual funds( 5hich have

invested in such stoc*s( 5ill fall proportionately.

COMPANY PRO(ILE

INTROD)CTION ABO)T KARVY


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The term -KARVY/is derived from the initial letters of its founders ,

K 2 Mr* Kuttumb" R"o

A 2 Mr* Aj". Kum"r

R 2 Mr* R"m";ris%"

V 2 Mr* V"id.""t%"

Y 2 Mr* Yu'"d%"r

These five ener1etic and dynamic Chartered Accountants started Karvy in .@B- as Karvy

and Company4 Audit and Ta2ation activity 5as underta*en4#nitial Cash #nflo5 of Rs4

8:(:::;9 each 5as contri%uted as Capital of the Company4

T1 E KARVY CREDO

OUR CLIENTS.OUR FOCUS.

Clients are the reason for our %ein14


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Personali


109/145

comprisin1 the 5ho is 5ho of Corporate #ndia4 KAR3H covers the entire spectrum of

financial services such as Stoc* %ro*in1( +epository Participants( +istri%ution of

financial products 9 mutual funds( %onds( fi2ed deposit( e>uities( #nsurance ?ro*in1(

Commodities ?ro*in1( Personal Finance Advisory Services( Merchant ?an*in1

Corporate Finance( placement of e>uity( #POIs( amon1 others4 Karvy has a professional

mana1ement team and ran*s amon1 the %est in technolo1y( operations and research of

various industrial se1ments4

Our Stoc* ?ro*in1 services are 5idely net5or*ed across #ndia( 5ith the num%er

of our tradin1 terminals providin1 retail stoc* %ro*in1 facilities4 Our services have

increasin1ly offered customer oriented convenience( 5hich 5e provide to a spectrum of

investors( hi1h net 5orth or other5ise( 5ith e>ual dedication and competence4 =e offer

tradin1 on a vast platform "ational Stoc* 2chan1e( ?om%ay Stoc* 2chan1e and

6ydera%ad Stoc* 2chan1e4 More importantly( 5e ma*e tradin1 safe to the ma2imum

possi%le e2tent( %y accountin1 for several ris* factors and plannin1 accordin1ly4 =e offer

services that are %eyond just a medium for %uyin1 and sellin1 stoc*s and shares4 #nstead

5e provide services( 5hich are multi dimensional and multi9focused in their scope4

)ALITY POLICY

To achieve and retain leadership( Karvy shall aim for complete customer satisfaction( %y

com%inin1 its human and technolo1ical resources( to provide superior >uality financial

services4 #n the process( Karvy 5ill strive to e2ceed Customers e2pectations4

)ALITY OBuality of services4


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sta%lish a partner relationship 5ith its investor service a1ents and vendors

that 5ill help in *eepin1 up its commitments to the customers4

Provide hi1h >uality of 5or* life for all its employees and e>uip them 5ith

ade>uate *no5led1e s*ills so as to respond to customers needs4

Continue to uphold the values of honesty inte1rity and strive to esta%lish

unparalleled standards in %usiness ethics4

Strive to %e a relia%le source of value9added financial products and services

and constantly 1uide the individuals and institutions in ma*in1 a judicious

choice of same4

Strive to *eep all sta*e9holders $shareholders( clients( investors( employees(

suppliers and re1ulatory authorities) proud and satisfied4

AC1IEVEMENTS

Amon1 the top - stoc* %ro*ers in #ndia $ of "S volumes)

#ndias "o4 . Re1istrar Securities Transfer A1ents

Amon1 the to top 8 +epository Participants

Lar1est "et5or* of ?ranches ?usiness Associates

#SO @::0 certified operations %y +"3

Amon1 top .: #nvestment %an*ers

Lar1est +istri%utor of Financial Products

Adjud1ed as one of the top -: #T uses in #ndia %y M#S Asia

Full Fled1ed #T driven operations

3#S#O" 0:.:


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0ra%1h#+

Plan for ta*in1 the net5or* to B-: %ranches %y &une 0::@

Stoc* ?ro*in1

.: share in cash mar*ets

F O dou%le the cash volumes $around )

Activate ?S so as to reach - share

+epository services

To reach the "o4. position

Loo* at over .0 lace accounts %y 0:.:

Mutual Fund distri%ution

Comparative Analysis of Mutual Funds Schemes

Documents