Mf Project

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SUMMER PROJECT ON

“MUTUAL FUNDS ANALYSIS(HISTORY & FUTURE

TREND)&

MARKETING RESEARCH”

SUBMITTED AS SUMMER PROJECT AT

Karvy Stock Broking Ltd.

Submitted to: Mr. Omkar Riswad (Area Manager)

Karvy Stock Broking Ltd., Pune.

Submitted by: Jay Alhuwalia

PGDM-Dual (IT & MARKETING)REG.NO:-5000

Indian Institute Of Planning Management(IIPM),PUNE2006-2008

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ACKNOWLEDGEMENT

I wish to Give my deep sense of gratitude to Karvy Stock Broking

Ltd. for providing me an opportunity to take up this project andgiving me a platform which is the first step of my professionalcareer..

I take the opportunity to express my gratitude and thanks to mycompany guide Mr. omkar riswad, Area Manager, Karvy StockBroking Ltd. Pune; for providing expert guidance andencouragement in accomplishing the project.

I am indebted to my Project Guide Ms sheetal panara, KarvyPune, for extending her untiring guidance to me, by constantlydiscussing the project matter and helping me in clarifying mythinking in several pertinent issues and providing a meaning fullinsight into the subject.

I convey my sincere thanks to Prof. sANTOSH mukhERJEE,Faculty IIpM Pune, without his valuable guidance, help andencouragement this project could not have been successfully

finished.

At Last I would specially like to thank to my respected Prof.Latashri, Executive Director IIpM; Ms mamta ketkar (karvy Pune),My friends and all my well wisher for their invaluable guidance,keen interest, cooperation, and of course moral support through outmy project session.

Jay AlhuwaliaIIPM, Pune .

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CONTENTSPage no.

1. Executive summary……………………..…………........ 4

2. Company Profile…………………………..…………… 5Overview…………………………...…………… 6Karvy wings…….………………...…………….. 8Karvy stock broking ltd…………………………. 11Competitor………………………………………. 15

3. Introduction to mutual funds……………..…………….. 16What is Mutual Funds……………..…………….. 17Mutual fund industry……………...…………….. 18Types of MF……………………..……………… 19Constituents of Mutual funds…...……………….. 24History of Mutual Funds……..…………………. 26

4. Advantage of Mutual funds………..…………………... 305. Drawbacks of Mutual funds.…….…………………….. 326. Research proposal…………...…………………………. 387. Questionnaire……………………………………..……. 418. Analysis & Output……………………………………... 43

Cluster analysis……….…………………………. 44

9. Secondary data findings……………………………….. 48

Top 10 mutual funds…………………………….. 49Top 5 ELSS Funds……………………………… . 49Risk return grid…………………………………. ..50Perception regarding financial products……….. .. 51Performance snapshot………………………….. ...52

10. Conclusion………………………………………………. 5411. Recommendation………………………………………... 5412. Learning…………………………………………………..5613. Bibliography…………………………………………….. 58

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EXECUTIVE SUMMARY

This report will give an insight of the summer project done in the KARVY

STOCK BROKING LTD. PUNE.

In my summer internship program at Karvy, I have worked as a Businessdeveloper. My key responsibility was to look for prospective clients, guidethem how to manage their portfolio, where to invest and finally closure of the sales. I have also worked on a research work for understandinginvestor’s buying patterns towards Mutual Funds.

I was required to understand the necessity of the client and then suggestaccordingly the best product which can maximize his return on investment(ROI). I was keeping a view on investment details of different individualsand suggesting them the right investment avenues after understanding their need and the kind of portfolio they look for reaping good returns.

In market research work I found 4 types of target audience who feel 1)Mutual funds Features like low risk, better returns, 2) Freedom of investment and 3) safe investment and 4) advertisement also influence the

customers. Investors have dissonance reducing buying behavior. Finally Igot Investors have very good perception about Mutual funds investment.

The time spent with Karvy made me to learn how to work under pressureand at same time it helped me to gain knowledge of various financialinstruments and its current trend in the market. Karvy has given me thefeeling of being in the corporate world.

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PART:-A

OVERVIEW:

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KARVY, is a premier integrated financial services provider, and ranked amongthe top 3 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 coversthe entire spectrum of financial services such as Stock broking, DepositoryParticipants, Distribution of financial products like mutual funds, bonds, fixeddeposit, Merchant Banking & Corporate Finance, Insurance Broking,Commodities Broking, Personal Finance Advisory Services, placement of equity, IPO’s, among others. Karvy has a professional management team andranks among the best in technology, operations, and more importantly, inresearch of various industrial segments

The business of Karvy includes:o Equity services

o Mutual Funds Services

o Insurance advisory

o Tax Advisory

Personal Portfolio Managemento Bonds and Fixed deposits

Karvy caters to both the individuals and the corporate clients.

Group Mission :

“To serve as a veritable link between people, finances and industry.”

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BACKGROUND…

In 1982, a group of Hyderabad-based practicing Chartered Accountantsstarted Karvy Consultants Limited with a capital of Rs.1, 50,000 offeringauditing 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 withInformation Technology enabled it to deliver quality to the individual.

A decade of commitment, professional integrity and vision helped Karvyachieve 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

, besides companies, banks, financial institutions and regulatory agencies.Over the past two decades, Karvy has evolved as a veritable link between

industry, finance and people.

KARVY GROUP OF COMPANIES:

KARVY CONSULTANTS LIMITED.

KARVY STOCK BROKING LIMITED.

KARVY INVESTORS SERVICES LIMITED.

KARVY COMPUTERSHARE PVT.LIMITED.

KARVY GLOBAL SERVICES LIMITED.

KARVY COMTRADE LIMITED.

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KARVY WINGS

As discussed earlier, KARVY offers a single platform servicing multiple

financial instruments in its bid to offer complete financial solutions to the

varying needs of both corporate and retail investors. The range of products and

services are provided by the following wings.

This is the flagship company of Karvy Group and it controls the organizational

affairs, channels of progress, work affairs and pioneering business policies.

This was the first business the KARVY group ventured into, but now they have

transferred it into a joint venture with computer share limited of Australia, the

world’s largest registrar. This company services around 6 lakh customer

accounts in a spread of 250 cities/towns in India.

Karvy Insurance Broking Pvt. Ltd., provides both life and non-life insurance

products to retail individuals, high net-worth clients and corporates. With the

opening up of the insurance sector and entry of a large number of private

players in the business, it is in a position to provide tailor made policies for

different segments of customers

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This wing of Karvy is registered with SEBI as a category 1 merchant banker

and is also recognized as a leading merchant banker of the country. It has built

its reputation by capitalizing the opportunities as and when it comes, be it in

corporate consolidations, mergers and acquisitions or corporate restructuring.

Involvement in raising resources for corporate or government undertaking

successfully over the past two decades has given it a tremendous confidence

boost

Karvy Computershare Private Limited is a 50:50 joint venture of Karvy

Consultants Limited and Computershare Limited, Australia. Computershare

Limited is world's largest -- and only global -- share registry, and a leading

financial market services provider to the global securities industry.

The joint venture with Computershare, reckoned as the largest registrar in the

world, servicing over 60 million shareholder accounts for over 7,000

corporations across eleven countries spread across five continents.

Computershare manages more than 70 million shareholder accounts for over

13,000 corporations around the world.

Karvy Computershare Private Limited, today, is India's largest Registrar and

Share Transfer Agent servicing over 300 corporate and mutual funds and 16

million investors.

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This is a specialist Business Process Outsourcing unit of the Karvy Group. The

legacy of experience in financial services of Karvy Group acts as a big support

for entering the global arena with confidence of delivering the best. This wing

offers several models on the understanding of business needs that are unique

and therefore only a customized service could possibly fit the bill. Their service

matrix has permutations and combinations that create several options to choose

from. Its Services meet the most stringent International standards, be it re-

engineering and managing processes or delivering new efficiencies.

Karvy Commodities focuses on taking commodities trading to new dimensions

of reliability and profitability. They have made commodities trading, an

essentially age-old practice, into a sophisticated and scientific investment

option. It helps in enabling trade in all goods and products of agricultural and

mineral origin that include lucrative commodities like gold and silver and

popular items like oil, pulses and cotton through a well-systematized trading

platform.

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Karvy Stock Broking Limited

Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice,flows freely towards attaining diverse goals of the customer through variedservices .Creating a plethora of opportunities for the customer by openingup investment vistas backed by research-based advisory services. Here,growth knows no limits and success recognizes no boundaries. Helping thecustomer create waves in his portfolio and empowering the investor completely is the ultimate goal.

Various services provided by company:

Stock Broking Services Distribution of Financial Productshttp://www.karvy.com/aboutUs/ksbl.htm -

SBS Depository Participants Advisory Serviceshttp://www.karvy.com/aboutUs/ksbl.htm - SBS

Research Private Client Group

Stock Broking services

It is an undisputed fact that the stock market is unpredictable and yet enjoys ahigh success rate as a wealth management and wealth accumulation option. Thedifference between unpredictability and a safety anchor in the market is

provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one’s options with care. This is

what KARVY provide in its Stock Broking services.

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http://www.karvy.com/aboutUs/ksbl.htm#DFP

http://www.karvy.com/aboutUs/ksbl.htm#SBS


http://www.karvy.com/aboutUs/ksbl.htm#DP

http://www.karvy.com/aboutUs/ksbl.htm#AS


http://www.karvy.com/aboutUs/ksbl.htm#Research

http://www.karvy.com/aboutUs/ksbl.htm#PCG

http://www.karvy.com/aboutUs/ksbl.htm#DFP



http://www.karvy.com/aboutUs/ksbl.htm#DP

http://www.karvy.com/aboutUs/ksbl.htm#AS


http://www.karvy.com/aboutUs/ksbl.htm#Research

http://www.karvy.com/aboutUs/ksbl.htm#PCG

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Financial Products Distribution

There is paradigm shift in market perception by an investor with an ongoingtransition to a customer. With a variety of financial products available in the

market today and better awareness amongst the potential customer segment,Karvy has positioned itself as the ultimate service provider by its retail arm – KARVY- THE FINAPOLIS. This gives complete focus to the retail segmentgiving all financial services and products under one roof. The unique facet of these services is not only offering a choice within a product but also evaluatingthe same in the light of customer’s need. Karvy is supported in this endeavor byits vast network of customer service centers spread nationwide.

With the emergence of private insurance sector, Karvy has taken another step

forward into its distribution network by tying up with private insurancecompanies.. Karvy has made inroads into retail market segment offering a

plethora of financial products viz. Personal loans, Housing loans, Car Loans,Investment opportunities in bonds, mutual finds, equity and fixed deposits andtax advisory services.

Karvy has a specialized team in place along with a widespread network of sub brokers that ensures the distribution of various IPOs and fixed deposits to everycorner of the country. Karvy has the added advantage of an extensive network on branches and investor centers, which entails better; reach thereby increasingthe mobilization of funds.

Apart from a comprehensive database, Karvy launches various methods likemailers, participation in exhibitions, and investor conferencing to increase thespread of potential customers. Today, Karvy is looking at telemarketing as anadditional tool to enhance its reach and retain its position among the top fivemobilizers in the country.

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KARVY CREDO

Following are the system of principles or beliefs followed by Karvy Group.

“Our Clients, Our Focus”

“Clients are the reason for our being”

Personalized service, professional care; pro-activeness are the values that helps KARVY

nurture enduring relationships with their clients.

Teamwork

”None of us is more important than all of us”

Each team member is the face of Karvy. Together they offer diverse services with speed,

accuracy and quality to deliver only one product: excellence. Transparency, co-operation,

invaluable individual contribution for a collective goal, and respect for individual uniqueness

within a corporate whole, is what KARVY aims at.

Responsible Citizenship

“A social balance sheet is as rewarding as a business one.”

As a responsible corporate citizen, KARVY believes that its duty is to foster a better

environment in the society where they live and work. To abide by its norms, and to behave

in a responsible manner towards the environment, are some of its growing initiatives

towards realizing this.

Integrity

”Everything else is secondary”

Professional and personal ethics are Karvy’s bedrocks. They take pride in building an

environment that encourages honesty and opportunity to learn from failures than

camouflage them. They insist on consistency between work and actions.

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KARVY’S MILESTONES

Achievements

Among the top 3 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

Full Fledged IT driven operations

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C O M P E T I T O R S O F K A R V Y

KARVY serves a vast range of all financial products like advisory services,

Mutual funds, Bonds, Insurances etc, so all the companies who offer these

services are the competitors of the Karvy. There are many competitors for

KARVY on this basis and almost all of them offer the services which Karvy

offers.

Few Major competitors are:

1. India bulls

2. Motilal oswal securities

3. IL & FS investsmart Ltd.

4. SSKI Ltd. (Sharekhan)

5. Bonanza securities

6. Kotak Securities

7. CIL Securities

8. Eastern Financiers

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INTODUCTION

TOMUTUAL FUNDS

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What is a Mutual Fund?

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investmentobjective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds).When you invest in a mutual fund, you are buying shares (or portions) of themutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are verycost efficient and very easy to invest in (you don't have to figure out which

stocks or bonds to buy). By pooling money together in a mutual fund, investorscan purchase stocks or bonds with much lower trading costs than if they tried todo it on their own. But the biggest advantage to mutual funds is diversification.

A Mutual Fund is a trust that pools the savings of a number of investors whoshare a common financial goal. The money thus collected is then invested incapital market instruments such as shares, debentures and other securities. Theincome earned through these investments and the capital appreciation realizedare shared by its unit holders in proportion to the number of units owned bythem. Thus a Mutual Fund is the most suitable investment for the common manas it offers an opportunity to invest in a diversified, professionally managed

basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

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INDIAN MUTUAL FUND INDUSTRY:

The rising Indian mutual funds industry probably never had it better, as far asthe entry of individual or retail investors is concerned.As on 31 may 2007 the industry’s total AUM stood at RS 4,14,172 Cr.Total no of schemes are 756. total amount Rs 289546 Cr.The industry’s total AUM in December 2006 stood at a hefty Rs 3, 23,597crore, with a total of 2.79 crore depositor folios, of which 2.31 crore depositor folios had invested in equity schemes. The share of direct investors, on theother hand, has been dropping, stating that more retail investors see mutualfunds as a preferred route for investing in the markets.

Existing and new market players as well as Exchange Traded Funds are likelyto hit the market in the coming months with a flurry of new Mutual Fundsschemes. An action packed first quarter of 2007 was forecasted to witness atleast 20 new schemes which are waiting on the sidelines to be launched.

The study says that investors in future would prefer mutual funds for their investment destination rather than choosing to park their funds in stock markets because of safer returns and lower degree of risk as compared to other markets.

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Types of Mutual Funds Schemes in India

Wide variety of Mutual Fund Schemes exists to cater to the needs such asfinancial position, risk tolerance and return expectations etc. The table

below gives an overview into the existing types of schemes in the Industry.

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Types of Mutual

Funds

By StructureOther

SchemesBy

Investment

Objective

Interval

Schemes

Close Ended

Schemes

Open Ended

Schemes Growth

Schemes

Money

MarketSchemes

Balanced

Schemes

Income

Schemes

Tax Saving

Schemes(ELSS)

Special

Schemes

Index

Schemes

Sector

SpecificSchemes

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EXPLAINATION:

By Structure:

Open-end Funds

An open-end fund is one that is available for subscription all through the year.These do not have a fixed maturity. Investors can conveniently buy and sellunits at Net Asset Value ("NAV") related prices. The key feature of open-endschemes is liquidity.

Closed-end Funds

A closed-end fund has a stipulated maturity period which generally rangingfrom 3 to 15 years. The fund is open for subscription only during a specified

period. Investors can invest in the scheme at the time of the initial public issueand thereafter they can buy or sell the units of the scheme on the stock

exchanges where they are listed. In order to provide an exit route to theinvestors, some close-ended funds give an option of selling back the units to theMutual Fund through periodic repurchase at NAV related prices. SEBIRegulations stipulate that at least one of the two exit routes is provided to theinvestor.

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes.They are open for sale or redemption during pre-determined intervals at NAVrelated prices.

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By Investment Objective:

Growth FundsThe aim of growth funds is to provide capital appreciation over the medium tolong term. Such schemes normally invest a majority of their corpus in equities.It has been proved that returns from stocks, have outperformed most other kindof investments held over the long term. Growth schemes are ideal for investorshaving a long term outlook seeking growth over a period of time.

Income Funds

The aim of income funds is to provide regular and steady income to investors.

Such schemes generally invest in fixed income securities such as bonds,corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Suchschemes periodically distribute a part of their earning and invest both inequities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not

normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial

paper and inter-bank call money. Returns on these schemes may fluctuatedepending upon the interest rates prevailing in the market. These are ideal for

Corporate and individual investors as a means to park their surplus funds for short periods.

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Other Schemes

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of theIndian Income Tax laws as the Government offers tax incentives for investmentin specified avenues. Investments made in Equity Linked Savings Schemes(ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income

Tax Act, 1961. The Act also provides opportunities to investors to save capitalgains u/s 54EA and 54EB by investing in Mutual Funds.

Special Schemes

• Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries likeInfotech, FMCG, Pharmaceuticals etc.

• Index Schemes

Index Funds attempt to replicate the performance of a particular index such asthe BSE Sensex or the NSE 50

• Sectoral Schemes

Sectoral Funds are those which invest exclusively in a specified sector. This

could be an industry or a group of industries or various segments such as 'A'Group shares or initial public offerings.

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What is Net Asset Value (NAV) of a scheme?

The performance of a particular scheme of a mutual fund is denoted by NetAsset Value(NAV).

Mutual funds invest the money collected from the investors in securitiesmarkets. In simple words, Net Asset Value is the market value of the securitiesheld by the scheme. Since market value of securities changes every day, NAVof a scheme also varies on day to day basis. The NAV per unit is the market

value of securities of a scheme divided by the total number of units of thescheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhsunits of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20.

NAV is required to be disclosed by the mutual funds on a regular basis - dailyor weekly - depending on the type of scheme.

NAV = (M+O)-L

V

M= market value of securities or investment made

O= other assets

L= total liabilities

V= number of units outstanding

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MUTUAL FUND CONSTITUENTS

Sponsors: The sponsors initiate the idea to set up a mutual fund. It could be a

registered company, scheduled bank or financial institution. A sponsor has tosatisfy certain conditions, such as capital, record (at least five years’ operationin financial services), de-fault free dealings and general reputation of fairness.The sponsors appoint the Trustee, AMC and Custodian. Once the AMC isformed, the sponsor is just a stakeholder.

Trust/ Board of Trustees: Trustees hold a fiduciary responsibility towardsunit holders by protecting their interests. Trustees float and market schemes,and secure necessary approvals. They check if the AMC’s investments are

within well-defined limits, whether the fund’s assets are protected, and alsoensure that unit holders get their due returns. They also review any duediligence by the AMC.They submit reports every six months to SEBI; investorsget an annual report. Trustees are paid annually out of the fund’s assets – 0.5

percent of the weekly net asset value.

Fund Managers/ AMC: They are the ones who manage money of theinvestors. An AMC takes decisions, compensates investors through dividends,maintains proper accounting and information for pricing of units, calculates the

NAV, and provides information on listed schemes. It also exercises duediligence on investments, and submits quarterly reports to the trustees. A fund’sAMC can neither act for any other fund nor undertake any business other thanasset management. Its net worth should not fall below Rs. 10 crore. And, its feeshould not exceed 1.25 percent if collections are below Rs. 100 crore and 1

percent if collections are above Rs. 100 crore

Custodian: Often an independent organization, it takes custody of securitiesand other assets of mutual fund. Its responsibilities include receipt and deliveryof securities, collecting income-distributing dividends, safekeeping of the units

and segregating assets and settlements between schemes. Their charges range0.15-0.2 percent of the net value of the holding. Custodians can service morethan one fund.

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MUTUAL FUNDS:- RELATIONSHIP AMONGST THE ENTITIES INVOLVED

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SPONSORS

TRUSTEECOMPANY

ASSETMANAGEMENT

COMPANY

RESPONSIBILITYTO INVESTORS

FUNDMANAGEMENT

OPERATIONS MARKETING

DISTRIBUTIONREGISTRAR

CUSTODY

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History of Mutual Funds Industry in India

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.

In the past decade, Indian mutual fund industry had seen dramatic

improvements, both quality wise as well as quantity wise. Before, the

monopoly of the market had seen an ending phase; the Assets Under

Management (AUM) was Rs. 67bn. The private sector entry to the fund family

rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the

height of 1,540 bn.

The mutual fund industry can be broadly put into four phases according to the

development of the sector. Each phase is briefly described as under.

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.

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Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by

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

Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda

Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked

Rs.47, 004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

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

mutual fund industry. 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.

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.

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Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate

entities. One is the Specified Undertaking of the Unit Trust of India with AUM

of Rs.29, 835 crores (as on January 2003). 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 AUM 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 March 2006, there were 29 funds .

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Association of mutual fund in India (AMFI) :

AMFI is a trade body of all the mutual funds in India. It was incorporated in

August 1995 as a non-profit organisation to promote and protect the interests of

mutual funds and their unitholders, define and maintain high ethical and

professional standards and enhance public awareness of mutual funds. All

mutual funds in India are members of the association. AMFI works through

committees and working groups.

Over the years, AMFI has worked closely with SEBI in establishing standards

that match the best in the world. It has played a significant role in introducing

best practices to reinforce the growth of the industry on healthy lines and

protect the interests of the investors.

THE RISK RETURN GRAPH FOR VARIOUS FUNDS.

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Liquid Funds

Income Funds

Balanced Funds

Equity Funds

Sector Funds

RISKS

R

E

T

UR

N

S

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ADVANTAGES OF MUTUAL FUNDS

Mutual Fund Investing vs. Stock Investing

It seems strange to compare mutual funds to stocks since mutual funds are primarily composed of stocks, but it is important to distinguish the two becausethere are some notable advantages to using mutual funds.

DiversificationThere is no greater advantage to using mutual funds than diversification. Doyou honestly believe wealthy investors purchase just a couple of stocks? Of course not! If they are not using mutual funds (many do), than they are

purchasing a large number of stocks. Smart investors diversify because itgreatly reduces risk without sacrificing returns.

Professional ManagementBy purchasing mutual funds, you are essentially hiring a professional manager at an especially inexpensive price. It would be a bit cocky to think that youknow more than mutual fund manager. These managers have been around theindustry for a long time and have the academic credentials to back it up. Sayingyou could outperform a mutual fund manager is similar to a football fan sitting

on their couch saying "I could have made that catch" -possible, but not likely.Even if some of us are better at picking stocks than a professional and their support staff, most of us would not want to spend the amount of time it takes towatch, research and trade the market on a daily basis.

EfficiencyBy pooling investors' money together, mutual fund companies can takeadvantage of economies of scale. With large sums of money to invest, theyoften trade commission-free and have personal contacts at the brokerage firms.

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Ease of UseCan you imagine keeping track of a portfolio consisting of hundreds of stocks?The bookkeeping duties involved with stocks are much more complicated than

owning a mutual fund. If you are doing your own taxes, or are short on time,this can be a big deal.

LiquidityIf you find yourself in need of money in a short amount of time, mutual fundsare highly liquid. Simply put in your order during the day and when the marketcloses a check will be sent to you or you can have it wired to a bank account.Stocks can be much more difficult depending on what kinds of stocks you areinvested in. CD's offer no liquidity (not without a hefty fee) and bonds can be

difficult, too. Some mutual funds also carry check writing privileges, whichmeans you can actually write checks from the account, similar to your checkingaccount at the bank.

CostMutual funds are excellent for the new investors because you can invest smallamounts of money and you can invest at regular intervals with no trading costs.Stock investing, however, carries high transaction fees making it difficult for the small investor to make money. That is not a good way to start off!Wealthy stock investors get special treatment from brokers and wealthy bank account holders get special treatment from the banks, but mutual funds are non-discriminatory. It doesn't matter whether you have $50 or $500,000, you aregetting the exact same manager, the same account access and the sameinvestment.

Risk In general, mutual funds carry much lower risk than stocks. This is primarilydue to diversification (as mentioned above). Certain mutual funds can be riskier

than individual stocks, but you have to go out of your way to find them.With stocks, one worry is that the company you are investing in goes bankrupt.

With mutual funds, that chance is next to nil. Since mutual funds typically hold

anywhere from 25-5000 companies, all of the companies that it holds would

have to go bankrupt.

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Drawbacks of Mutual Funds

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees:

No investment is risk free. If the entire stock market declines in value, thevalue 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 thanwhen they buy and sell stocks on their own. However, anyone who investsthrough a mutual fund runs the risk of losing money.

Fees and commissions:

All funds charge administrative fees to cover their day-to-day expenses. Somefunds 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 aLoad Fund.

Taxes:

During a typical year, most actively managed mutual funds sell anywhere from20 to 70 percent of the securities in their portfolios. If your fund makes a profiton its sales, you will pay taxes on the income you receive, even if you reinvestthe money you made.

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 foregomanagement risk, because these funds do not employ managers.

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The graph indicates the growth of assets under management over the

years.

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SEBI GUIDELINES

The SEBI issued a set of regulations and code of conduct of 20 January.1993 for the smooth conduct and regulation of Mutual fund. The silentfeatures of these guidelines are a s follows:

• Mutual Fund cannot deal in Option trading, short selling or carrying forwardtransactions in securities.

• Mutual fund should be formed as trusts and managed by AMC

• Restriction to ensure those investments under all schemes do not exceed15% of the funds in the shares and debentures of a single company.

• SEBI will grant registration to only those Mutual Fund which can prove anefficient and orderly conduct of business.

• The Mutual fund should have a custodian, not associated in any way with theAMC and registered with the board.

• The minimum amount to be raised with each closed ended scheme should beRs. 20 crore and for the open-ended scheme Rs. 50 crore.

• The Mutual Fund are obliged to maintain books of account.

• The minimum net worth of AMC is Rs. 5 crore of which the minimumcontribution of the sponsor should be 40%.

• The Mutual Fund should ensure adequate disclosures to the investors

• SEBI can impose suspension of registration in case of violation of the

provision of the SEBI act 1992, to the regulations.• Restrictions to ensure the investments under an individual scheme do not

exceed 5% of the corpus of any companies shares and investments under allschemes do not exceed 10% of the funds in the shares, debentures or securities of a single company.

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The best mutual fund scheme for you

Time period

The most important thing while measuring or comparing returns is to choose anappropriate time period.

The time period over which returns should be compared and evaluated has to bethe same over which that fund type is meant to be invested in.If you are comparing equity funds then you must use three to five year returns.But this is not the case of every other fund.

For instance, cash funds are known as ultra short-term bond funds or liquidfunds that invest in fixed return instruments of very short maturities. Their mainaim is to preserve the principal andearn a modest return. So the money you invest will eventually be returned toyou with a little something added.Investors invest in these funds for a very short time frame of around a fewmonths. So it is alright to compare these funds on the basis of their six monthreturns.

Market conditions

It is also important to see whether a fund's return history is long enough for it tohave seen all kinds of market conditions.

For example, at this point of time, there are equity funds that were launched oneto two years ago and have done very well. However, such funds have never seen a sustained declining market (bear market). So it is a little misleading tolook at their rate of return since launch and compare that to other funds thathave had to face bad markets.

If a fund has proved its mettle in a bear market and has not dipped as much as

its benchmark, then the fund manager deserves a pat on the back. When youreally look at things it is difficult to create wealth. Obviously some will findeasier than others, but it is all just a matter of degrees.

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http://in.rediff.com/getahead/2005/may/10fund.htm

http://in.rediff.com/getahead/2005/may/10fund.htm

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Part-B

Research proposalResearch proposal

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Research proposal

Step 1 - Define research problem

Primary research objective: To determine target market segment for mutual funds.

Secondary research objective:• To determine the number of segments from the data provided.

• To determine which respondent belongs to which segment.

• Profiling each segment based on their distinguishing character.

•

To evaluate attractiveness of Mutual funds?• Evaluate investor buying behavior

• To determine variables which are significantly important ininvestment Decisions.

Step 2- Data collection approach: 1. Secondary research: External sec. data

www.amfiindia.com

www.mutualfundsindia.com www.karvy.com

www.karvyfinapolis.com &

2. Survey research :*Personal interview: unstructured & direct.*Telephonic interview.

*Explorotary research:-open ended questions.

How to collect data? After the designing of the questionnaire, the 25 questionnaires

need to be given to the respondents. The main idea is to get aheterogeneous response from sample that could be analyzed and some

inferences can be drawn from this sample.

What controls were used in field work? IT professionals, Self-emloyed, students, retired persons with the

age group of 20-60 yrs were approached.

37

http://www.amfi.com/

http://www.mutualfundsindia.com/

http://www.karvy.com/

http://www.karvyfinapolis.com/

http://www.amfi.com/

http://www.mutualfundsindia.com/

http://www.karvy.com/

http://www.karvyfinapolis.com/

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• Step 3-Measurement technique

1. Questionnaire : Asking information directly from respondents

concerning behavior, attitude, beliefs, and their preferences.

2. Attitude scale : perceptual maps; derive the components orcharacteristics an individual uses in comparing similar objects and

provide a score for each object on each characteristic.

3. Perceptual mapping:-a)Attribute based:-cluster analysis is used to determine

market segment.

Step 4- Sample

1. Population : All persons of age group 20-60 who are workingwith different IT companies, other fmcg companies, govt.

employees, self-employed in Pune.

2. Sample frame : A list of employees working with different

companies.

3. Sampling unit : Pune.

4. Sampling method : Simple random sampling; with simplerandom sampling, each item in a population has an equal

chance of inclusion in the sample. The advantage of simple

random sampling is that it is simple and easy to apply whensmall populations are involved

5. Sample size : 25

6. Sample plan : Select employees/investors and determine that (i)

the person is sufficiently verbal, (ii) he or she is willing to

participate (only in case of personal interview)7. execution :

Step 5- Methods of analysis data. Cluster Analysis.

Step 6- Time & financial requirement Time – 1 month.

Financial requirement – not applicable.

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QUESTIONNAIRE

Q.NO:-

PLACE:- DATE:-

Dear Sir/Madam,

I am conducting this survey to ascertain the market segment or target audience for mutual funds

And to know consumer perception while investing money in mutual funds. please spend 5 minutes

with me, for this I shall be very grateful to you.

Q.1) WHICH IS YOUR PREFERRED FINANCIAL PRODUCT? [PUT A TICK MARK]

a) MUTUAL FUND --------------------

b) INSURANCE --------------------

c) TAX PLANNING ---------------------

d) STOCK BROKING ---------------------

e) BONDS & FIXED DEPOSITS --------------------

f) COMMODITIES ----------------------

Q.2) HAVE YOU EVER INVESTED MONEY IN MUTUAL FUND?

YES ------------------ NO -----------------------

Q.3) ARE YOU A REGULAR INVESTOR?

YES ------------------- NO ------------------------

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Q.4) WHAT PECENTAGE OF YOUR INCOME DO YOU INVEST IN MUTUAL FUNDS?

a) BELOW 10% --------------------------------

b) 10-30% --------------------------------

c) 30-50% --------------------------------

d) ABOVE 50% ---------------------------------

Q.5) WHAT IS YOUR MONTHLY SAVINGS?

a) BELOW 10000 ----------------------------------

b) 10000-20000 -----------------------------------

c) 20000-50000 --------------------------------------

d) ABOVE 50000 --------------------------------------

PLEASE RANK THE FOLLOWING QUESTIONS ON THE SCALE OF FIVE, WHERE

1-STRONGLY AGREE

2-AGREE

3-NEITHER AGREE NOR DISAGREE

4-DISAGREE

5-STRONGLY DISAGREE

Q.6) MUTUAL FUNDS HAVE HIGH RISK --------------------------------

Q.7) MUTUAL FUNDS GIVE BETTER RETURNS THAN BANKS -------------------------------

Q.8) MUTUAL FUND SHOULD HAVE GOOD BRAND VALUE ------------------------------

Q.9)MUTUAL FUNDS HAVE LOW MARKET RISK --------------------------------

Q.10) MUTUAL FUND IS BETTER TO INVEST THAN THE OTHER

FINANCIAL PRODUCTS -------------------------------

Q.11) MY MONEY IS SAFE IN MUTUAL FUND. -------------------------------

Q.12) INVESTING IN MUTUAL FUND IS THE BEST WAY TO

SAVE TAXES. ------------------------------

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Q.13) MUTUAL FUNDS GIVES A CONSISTENT RETURNS -----------------------

Q.14) MY SALARY ALLOW ME TO BUY MUTUAL FUNDS ------------------------

Q.15) INVESTMENT IS NECCESARY ------------------------

Q.16) I DO NOT MIND PAYING FOR MUTUAL FUNDS ------------------------

Q.17) SAVINGS IS IMPORTANT TO ME ------------------------

Q.18) I FEEL INVESTING IN THE MUTUAL FUNDS IS RISKY -----------------------

Q.19) I BELIEVE EVERY PARENT SHOULD INVEST FOR HIS/HER

CHILDREN’S FUTURE. ---------------------

Q.20) I THINK ADVERTISEMENT PLAY AN IMPORTANT ROLE IN

PURCHASING MUTUAL FUNDS. ---------------------

Q.21) MY MONEY IS SAFE BY INVESTING MONEY IN MUTUAL FUNDS. ---------------------

Q.14) DO YOU WANT TO INVEST IN MUTUAL FUND THROUGH KARVY ?

YES--------------------------------- NO ----------------------------------

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DEMOGRAPHICS

PERSONAL DETAILS:-

NAME:-

------------------------------------------------------------------------------------------------

ADDRESS:-

--------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------

------------

AGE :- ------------------------------------

CONTACT NO:-

-----------------------------------------------------------------------------------------------

E-MAIL ID:-

--------------------------------------------------------------------------------------------------

--

GENDER:- MALE----------------------- FEMALE

------------------------

OCCUPATION:-

-----------------------------------------------------------------------------------------------

MONTHLY INCOME:-

---------------------------------------------------------------------------------------

THANK YOU FOR YOUR VALUEABLE INFORMATION.

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Part-C

ANALYSIS

&

OUTPUT

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CLUSTER ANALYSIS• AFTER SEGMENTING THE GROUPS WE HAVE TO DO

CLUSTER ANALYSIS .EVEN IF WE SHOULD KNOW HOW TO

COMMUNICATE WITH PEOPLE(THROUGH

MEDIAGRAPHICS).

• IDENTIFY OF GROUPS OF TARGET CUSTUMER WHO ARE

SIMILAR IN

-BUYING BEHAVIOUR

-DEMOGRAPHICS

-PSYCOGRAPHICS

METHODS:-

-HIERARCHICAL CLUSTERING- NODAL METHODS / K-MEANS

HERE HIERARCHICAL METHOD IS USED FOR SEGMENTATION.

FOR EXAMPLE:-

1 2 3 4 5

44

stronglyagree

agree Neither agreenor disagree

disagree Stronglydisagree

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7

6 * *

5 * * * * *

4 * *

3 * *

* *

2 cluster-1 cluster-2 cluster-3

1

(0,0) 1 2 3 4 5 6 7 8 9

DATA COLLECTED FROM QUESTIONNAIRE BASED ON 5 POINT LIKERTSCALE (RANKINGS):-

SAL INV PAY SAV RISK CHILD ADS SAFE

5.00 5.00 2.00 4.00 3.00 4.00 5.00 5.002.00 3.00 3.00 2.00 1.00 2.00 4.00 2.00

3.00 2.00 4.00 4.00 2.00 4.00 2.00 3.005.00 4.00 1.00 5.00 4.00 5.00 1.00 5.001.00 2.00 2.00 1.00 2.00 1.00 3.00 1.003.00 2.00 4.00 4.00 3.00 4.00 5.00 3.004.00 4.00 4.00 2.00 1.00 2.00 4.00 4.002.00 1.00 1.00 1.00 3.00 1.00 2.00 2.001.00 2.00 3.00 2.00 3.00 2.00 1.00 1.004.00 5.00 2.00 5.00 4.00 5.00 4.00 4.003.00 2.00 5.00 1.00 2.00 1.00 5.00 3.005.00 4.00 5.00 4.00 3.00 4.00 2.00 5.003.00 3.00 2.00 2.00 1.00 2.00 3.00 3.00

4.00 5.00 4.00 5.00 4.00 5.00 1.00 4.004.00 4.00 5.00 3.00 2.00 3.00 4.00 4.002.00 1.00 4.00 5.00 1.00 5.00 5.00 2.005.00 4.00 3.00 4.00 1.00 3.00 2.00 5.001.00 2.00 1.00 1.00 5.00 5.00 2.00 1.004.00 5.00 2.00 3.00 2.00 4.00 3.00 4.003.00 1.00 2.00 1.00 5.00 1.00 4.00 3.00

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AGGLOMERATION SCHEDULE

46

Stage Cluster 1 Cluster 2 Cluster 1 Cluster 2

1 7 15 4.000 0 0 9

2 2 13 4.000 0 0 11

3 1 10 6.000 0 0 13

4 5 8 6.000 0 0 8

5 17 19 8.000 0 0 9

6 12 14 8.000 0 0 12

7 6 16 9.000 0 0 10

8 5 9 9.000 4 0 14

9 7 17 12.000 1 5 13

10 3 6 12.500 0 7 17

11 2 11 14.000 2 0 15

12 4 12 16.000 0 6 16

13 1 7 18.250 3 9 16

14 5 20 18.333 8 0 15

15 2 5 19.583 11 14 18

16 1 4 21.111 13 12 17

17 1 3 28.481 16 10 19

18 2 18 33.000 15 0 19

19 1 2 42.458 17 18 0

STAGE CLUSTERSCOMBINED COEFFICIENT STAGE CLUSTER FIRST

APPEARS NEXT STAGE

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1 2 3 4

SAL 3.20 1.60 2.67 4.57

BANK 3.20 1.60 1.67 4.57

PAYING 3.80 1.80 4.00 2.71

SAVINGS 2.00 1.20 4.33 4.29

RISKY 1.40 3.60 2.00 3.00

CHILDREN 2.00 2.00 4.33 4.29

47

CLUSTER 1 5.000

2 5.000

3 3.000

4 7.000

VALID 20.000

MISSING

CLUSTERS

FINAL CLUSTERS CENTERS Number of Cases in eachCluster

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ADS 4.00 2.40 4.00 2.57

SAFE 3.20 1.60 2.67 4.57

Cluster Membership

CaseNumber

Cluster Distance

1 4 2.669

2 1 1.929

3 3 2.134

4 4 2.850

5 2 2.209

6 3 1.599

7 1 1.4568 2 1.697

9 2 2.298

10 4 2.326

11 1 2.514

12 4 2.531

13 1 2.126

14 4 2.642

15 1 2.392

16 3 2.055

17 4 2.615

18 2 3.561

19 4 2.065

20 2 3.143

Secondary data findings:

Top 10 mutual funds -Equity as on 30 June 2007:

Compounded Annualized % (Point to point)

Scheme Name NAV LaunchDate

1 Year 3 Year 5 Year SinceInception

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Sundaram BNP

Paribas Select

Midcap-Growth

95.26 19-jul-02 36.38 64.74 -- 58.55

HSBC Equity

Fund-Growth

74.02 3-dec-02 43.53 44.40 -- 55.62

ICICI PrudentialEmerging STAR

Fund-Growth

31.27 25-sep-04 58.81 -- -- 53.98

SBI Magnum

Sector Umbrella-

Emerging

Business-Growth

32.45 17-sep-04 49.75 -- -- 53.71

Birla Mid Cap

Fund-Growth

71.54 1-oct-02 55.79 51.40 -- 52.31

ICICI Prudential

Dynamic Plan-

Growth

69.42 18-oct-02 56.35 60.88 -- 51.89

Kotak

Opportunities

fund –Growth

31.07 25-aug-04 44.47 -- -- 50.45

Tata

Infrastructure

Fund-Growth

25.84 22-dec-04 53.71 -- -- 45.63

Fidelity Equity

Fund-Growth

23.28 19-apr-05 58.77 -- -- 49.73

Sbi Magnum

MidCap Fund-

Growth

23.76 17-mar-05 54.19 -- -- 48.99

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Top 5 mutual funds-ELSS

ELSS Performance as on 30 June, 2007:

Compounded Annualized % (Point to point)

Scheme Name

NAV LaunchDate

1 Year 3 Year 5 Year SinceInception

HDFC Long

Term

Advantage

Fund-Growth

96.63 27-dec-00 36.42 47.70 49.49 42.04

Sahara

Taxgain-

Growth

21.96 31-mar-97 37.34 42.65 36.51 32.37

Tata TaxSaving Fund

46 31-mar-96 42.58 41.6 41.32 27.45

Sundaram

BNP paribas

Taxsaver-

Growth

28.32 22-nov-99 44.72 55.90 45.10 25.66

SBI Magnum

Tax Gain

Scheme 93

46.68 31-mar-93 50.64 77.20 58.01 20.68

Risk Return GridRisk

Tolerance/Return

Expected

Focus Suitable Products Benefits offered by MFs

Low DebtBank/ Company FD, Debt

based Funds

Liquidity, Better Post-Tax

returns

Medium

Partially Debt,

Partially

Equity

Balanced Funds, Some

Diversified Equity Funds and

some debt Funds, Mix of

shares and Fixed Deposits

Liquidity, Better Post-Tax

returns, Better

Management,

Diversification

High EquityCapital Market, Equity Funds

(Diversified as well as Sector)

Diversification, Expertise

in stock picking, Liquidity,

Tax free dividends

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The perception of people for various financial products are as follows:

MUTUAL FUNDS -35%

SHARE MARKET- 20%

BONDS/DEBENTURES-3%

INSURANCE-18%

REAL ESTATE-6%

COMMODITIES-8%

NSC (NATIONAL SAVING SCHEME)-8%

OTHERS-2%

MUTUAL FUNDS

SHARES

BONDS/DEBENURES

INSURANCE

REAL ESTATE

COMMODITIES

NSC

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P E R F O R M A N C E S N A P S H O T ! !!

The year 2006 scored high in terms of both returns and volatility. The rising Indian

mutual funds industry saw its best, as far as the entry of individual or retail investors

is concerned.

In 2006, out of the 159 diversified equity funds (includes diversified equity, midcap,

and equity tax saving schemes):

20 funds (13%) out-performed the Sensex

50 funds (37%) out-performed the Nifty

The best returns generated were up to 58.3% (Tata Infrastructure Fund)

and the worst being a negative 10.6%

Equity Diversified funds churned out an average 33.2% return, which comprise

of 72 fund in this category comprising of total 135 funds

Infrastructure funds stole the limelight this year with the top three performers

being Infrastructure Fund.

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Part-D

Conclusion

&Recommendations

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PROJECT CONCLUSION:

• The study says that investors in future would prefer mutual funds for their

investment destination rather than choosing to park their funds in stock markets because of safer returns and lower degree of risk as compared to other

markets. Number of people who want to invest in market but don’t have time

and knowledge to do so they are very keen towards Mutual Funds.

• With booming market and falling interest rate of bank deposits, people see

mutual funds as an attractive financial tool which provide a high return rate at

lower risk as compared to equity market.

• Young people these days are particularly more interested in mutual funds

because they see mutual fund as safe bet. Also these people have large

disposable incomes and risk taking capability too..

• In market research work I found 4 factors which influence investor’s buying

patterns are 1) Mutual funds Features like low risk, better returns, 2) Freedom

of investment 3) safe investment 4) advertisement also influence for buying

Mutual funds.

Investors have dissonance reducing buying behavior. Investors have very good

perception about Mutual funds investment.

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RECOMMENDATIONS:

• India is passing through a tremendous growth phase with an average growthrate of 7-8% per annum. With this growth phase there is growth in each andevery sector, hence there is rush to by shares and equities. It is also a very goodtime for mutual fund companies but it is advisable for them and their brokersthat they don’t just sell mutual funds but sell the right kind of scheme which iscomfortable to a person nature of taking risk and need.

• After sale service is very important as mutual funds come under dissonancereducing buying behavior.

• It has been seen that there is a major increase in the percentage of younginvestors who have large amount of disposable income with them and want to

invest, these types of prospective clients should be tapped at an early stage.

• Small towns, villages are still untapped and can also acts as a business area of very huge potential.

• There are some persons who still believe investing in government schemes is better than mutual funds for them we should arrange any informative programssothat they could come in track.

• Now even co-operative society can invest up to 10% of their capital in mutualfunds which open the door to new and very important client base.

• Prospective clients should be followed up properly.

• Mutual funds should be sold on their basic features like low risk, better returns,consistent dividend, and tax benefit.

• SIP should be encouraged because I found there are many investors who are

interested in investment on monthly/quarterly basis with small money.

Mutual fund should be promoted as safe investment scheme.

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L EARNINGS : -

Working at KARVY STOCKBROKING LIMITED was largely an overwhelmingexperience with gaining insights to a number of new things. The On-The Job

experience made it a worthwhile Internship, which gave me a great real time Industry

experience.

All is not the same in real life as we read in books and on net about the working

methods of different divisions and segments. I had to put in my own efforts and take

initiative to learn and gain maximum knowledge possible during this period.

Primarily, the description of my work as a Management Trainee was to assist the

wealth managers by understanding the needs of the individual investors and corporate

houses and expanding the customer base of Karvy- Stock Broking Ltd, Pune where I

interned. The work assigned definitely required awareness and understanding of the

all the financial products Karvy Stockbroking dealt in. It also required me to know

the procedures and documents involved in purchase of any product by the client. I

just had a basic idea of the products KARVY dealt in prior internship, thus, acquiring

knowledge about the same was very exciting.

There were training sessions held on various financial products like MF, insurance,

and bonds which helped me get more insight in these topics. Interactive session washeld by the Mutual Fund expert, which proved quite useful but still Mutual Funds is a

vast topic and it is possible to gain full knowledge about it only after practically

dealing in it.

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The whole process started with first hand data collection. For this we visited the

Software companies in Pune .We also collected data from few of our own contacts

that we thought could be useful. It was difficult to get the contact numbers of the

software employees of the IT companies, but we still managed and managed well.

The next step was tele-calling on the database collected. During telecalling, we learnt

the art of introducing ourselves and the company to the clients. It taught us how to

approach clients and suggest them various investment options. Our main aim was to

convince the prospective clients for appointment. We learnt that to understand theclient’s mood at that point of time was also important. You had to be polite and

confident. If a client wanted to be called back at a specified time, I did so without

fail. No negligence was tolerated on this part as first impression is the last impression

and I didn’t want to lose out on any prospective client and to know consumer

perception towards buying mutual funds.

The time given by the client for the meet was given utmost importance. I and my

colleague tried to reach the meeting place in time so that the client didn’t have to

wait. The entire experience of meeting the clients, explaining them the products, and

based on the questions asked by us, as well as the client, analyzing their risk taking

capability and investment capacity was a learning in itself.

After gathering above information about the clients, Based on their investment

requirement, investment objective, risk taking ability and the investment capability

we would come up with suggestions as to where they should invest and how much.

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There were investors who wanted high returns but didn’t want to take greater risk. To

such investors investments in mutual funds rather than equities was suggested.

Investors wanting to invest for taxes saving purpose were suggested to invest in Tax

Saving Mutual Funds like SBI Magnum Tax Gain, HDFC tax Benefit Scheme.

I have gone through a research work to know target market segment towards mutual

funds (in other words how many people wants to invest & they feel safe or not). I

collected data through questionnaire from the investors whom I met during project. I

applied cluster analysis technique to analyze the data collected and getting findings.

I experienced practical ground reality related to market research.

The experience and know-how gained from this internship, has left me in more

compliant form and stature in order to fare better in areas of similar interest. With anoptimistic view towards future, and with the desire to implement all the knowledge

gained, I hereby conclude my report on my Internship at KARVY

STOCKBROKING LIMITED-PUNE.

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BIBLIOGRAPHY

www.amfiindia.com

www.karvy.com

www.businessstandard.com

www.mutualfundindia.com

www.myiris.com

Karvy research desk

Text book on market research by RAJENDRA NARGUNDKAR

Text book on market research by TULL & HAWKINS

------------------------------------------------------------

http://www.amfiindia.com/

http://www.businessstandard.com/

http://www.mutualfundindia.com/

http://www.myiris.com/

http://www.amfiindia.com/

http://www.businessstandard.com/

http://www.mutualfundindia.com/

http://www.myiris.com/

Mf Project

Documents