krchoksey project

Need of financial advisors for mutual fund investors

CHAPTER 1 –INTRODUCTION

1.1 INTRODUCTION TO PROJECT:

The basic aim of this training was to know how to work in the stock broking industry in

practice. As it is said “EXPEREINCE MAKES A MAN PERFECT”.I have made this

report on need of financial advisors for mutual fund investors. The reason for choosing

KRChoksey Shares and Securities Pvt Ltd was to understand how they operate in mutual

fund department, helping investors in choosing the right investment plan according to

their risk appetitie; time horizon, what all types of mutual funds are available with them

and what other services are being provided for clients.

Objectives:

The main objective of this project is concerned with getting the opinion of people

regarding mutual funds and what they feel about availing the services of financial

advisors.

I have tried to explore the general opinion about mutual funds. It also covers why

investors are not investing in mutual fund.

Along with it a brief introduction to India’s financial intermediary, KR

CHOKSEY has been given and it is shown that how they operate in mutual fund

department.

Scope of study:

Study of KRChoksey Private Ltd. its origin & history. Also understanding about mutual

funds, types of mutual funds, role of financial advisors and whether there is a need for

financial advisor is also researched. This study is helpful to anyone who wants to know

functions of stock broking firm and type of products and services provided by

KRChoksey and its procedures.

Limitation: Managers were sometime not ready to give answers raised by me due to

time limit, work load.

Tolani Institute of Management Studies


1.2 INTRODUCTION TO MUTUAL FUND INDUSTRY

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

common financial goal. This pool of money is invested in accordance with a stated

objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to

all investors. The money thus collected is then invested in capital market

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

through these investments and the capital appreciations realized are shared by its

unit holders in proportion the number of units owned by them. Thus a Mutual Fund

is the most suitable investment for the common man as it offers an opportunity to

invest in a diversified, professionally managed basket of securities at a relatively

low cost. A Mutual Fund is an investment tool that allows small investors access to

a well-diversified portfolio of equities, bonds and other securities. Each shareholder

participates in the gain or loss of the fund. Units are issued and can be redeemed as

needed. The funds Net Asset value (NAV) is determined each day.

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

and sectors and thus the risk is reduced. Diversification reduces the risk because all

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

Mutual fund issues units to the investors in accordance with quantum of money

invested by them. Investors of mutual funds are known as unit holders.



Many investors with common financial objectives pool their money.

Investors on a proportionate basis get the mutual fund units on the sum

contributed to the pool.

The money collected from investors is invested into shares, debentures and other

securities by the fund managers.

The fund manager realizes gains or losses and gets dividend or interest income.

Any capital gain or losses collected are passed on to the investors in proportion to the

sum invested.

When an investor subscribes for the units of a mutual fund, he becomes part owner of the

assets of the fund in the same proportion as his contribution amount put up with the

corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual

fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as

shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is

defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV

of a scheme is calculated by dividing the market value of scheme's assets by the total

number of units issued to the investors.


CONCEPT OF MUTUAL FUNDSCONCEPT OF MUTUAL FUNDS

http://www.appuonline.com/mf/knowledge/concept.html


ADVANTAGES OF MUTUAL FUND

Portfolio Diversification:

You avail of the services of experienced and skilled professionals who are backed by a

dedicated investment research team which analyses the performance and prospects of

companies and selects suitable investments to achieve the objectives of the scheme.

Diversification:

Mutual funds invest in a number of companies across a broad cross-section of industries

and sectors. This diversification reduces the risk because seldom do all stocks decline at

the same time and in the same proportion. You achieve this diversification through a

mutual fund with far less money than you can do on your own.

Convenient administration:

Investing in a mutual fund reduces paperwork and helps you avoid many problems such

as bad deliveries, delayed payments and unnecessary follow up with brokers and

companies. Mutual funds save your time and make investing easy and convenient.

Return potential:

Over a medium to long term, mutual funds have the potential to provide a higher return

as they invest in a diversified basket of selected securities.

Low costs:

Mutual funds are a relatively less expensive way to invest compared to directly investing

in the capital markets because the benefits of scale in brokerage, custodial and other fees

translate into lower costs for investors.

Liquidity:

In open-ended schemes, you can get your money back promptly at Net Asset

Value(NAV) related prices from the mutual funds itself. With open-ended schemes, you

can sell your units on a stock exchange at the prevailing market price or avail of the



facility of repurchase through mutual funds at NAV related prices which some close-

ended and interval schemes offer you periodically.

Transparency:

You get regular information on the value of your investment in addition to disclosure of

specific investments made by your scheme, the proportion invested in each class of assets

and the fund manager’s investment strategy and outlook.

Flexibility:

Through features such as Systematic Investment Plans(SIP) , Systematic Withdrawal

Plan(SWP) and Dividend reinvestment Plans, you can systematically invest or withdraw

funds according to your needs and convenience.

Choice of schemes:

Mutual funds offer a variety of schemes to suit your varying needs over a lifetime.



DISADVANTAGE OF MUTUAL FUND

Professional Management: Some funds does not perform in neither market, as

their management is not efficient enough to explore the available opportunity in the

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

are any better than the mutual fund or investors himself for picking up stocks.

Costs: The biggest source of AMC income comes from the entry and exit loads

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

industries is thus charging higher amount under the name of jargon.

Dilution: Because funds have smaller holdings across different companies, high

returns from a few investments often do not make much difference to the overall

returns.

Taxes: When making decisions about your money, fund managers do not consider

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

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

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

gain liability.



HISTORY OF MUTUAL FUND INDUSTRY

The Mutual Fund Industry is obviously growing at a tremendous space with 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.

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

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

banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation

of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June

1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund

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

Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set

up its mutual fund in December 1990.

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

crores.



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

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

fund industry, giving the Indian investors a wider choice of fund families. Also, 1993

was the year in which the first Mutual Fund Regulations came into being, under which

all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari

Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund

registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive

and revised Mutual Fund Regulations in 1996. The industry now functions under the

SEBI (Mutual Fund) Regulations 1996.

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

setting up funds in India and also the industry has witnessed several mergers and

acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets

of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under

management was way ahead of other mutual funds.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust

of India with assets under management of Rs.29, 835 crores as at the end of January

2003, representing broadly, the assets of US 64 scheme, assured return and certain other

schemes. The Specified Undertaking of Unit Trust of India, functioning under an

administrator and under the rules framed by Government of India and does not come

under the purview of the Mutual Fund Regulations.



The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the

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

of assets under management and with the setting up of a UTI Mutual Fund, conforming

to the SEBI Mutual Fund Regulations, and with recent mergers taking place among

different private sector funds, the mutual fund industry has entered its current phase of

consolidation and growth.



CATEGORY OF MUTUAL FUNDS

FIG: 1.0



MUTUAL FUND CLASSIFICATION

BASED ON THEIR STRUCTURE:

Open-ended funds : Investors can buy and sell the units from the fund, at

any point of time.

Close-ended funds: These funds raise money from investors only once.

Therefore, after the offer period, fresh investments can not be made into the

fund. If the fund is listed on a stocks exchange the units can be traded like

stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New

Fund Offers of close-ended funds provided liquidity window on a periodic

basis such as monthly or weekly. Redemption of units can be made during

specified intervals. Therefore, such funds have relatively low liquidity.

BASED ON THEIR INVESTMENT OBJECTIVE:

Equity funds: These funds invest in equities and equity related

instruments. With fluctuating share prices, such funds show volatile

performance, even losses. However, short term fluctuations in the market,

generally smoothens out in the long term, thereby offering higher returns

at relatively lower volatility. At the same time, such funds can yield great

capital appreciation as, historically, equities have outperformed all asset

classes in the long term. Hence, investment in equity funds should be

considered for a period of at least 3-5 years. It can be further classified as:



i. Index funds- In this case a key stock market index, like BSE Sensex or

Nifty is tracked. Their portfolio mirrors the benchmark index both in terms

of composition and individual stock weight ages.

ii. Equity diversified funds- 100% of the capital is invested in equities

spreading across different sectors and stocks.

iii Dividend yield funds- it is similar to the equity diversified funds

except that they invest in companies offering high dividend yields.

iv. Thematic funds- Invest 100% of the assets in sectors which are related

through some theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors

etc.

v. Sector funds- Invest 100% of the capital in a specific sector. e.g. - A

banking sector fund will invest in banking stocks.

vi.ELSS- Equity Linked Saving Scheme provides tax benefit to the

investors.

Balanced fund: Their investment portfolio includes both debt and equity.

As a result, on the risk-return ladder, they fall between equity and debt

funds. Balanced funds are the ideal mutual funds vehicle for investors who

prefer spreading their risk across various instruments. Following are

balanced funds classes:

i. Debt-oriented funds -Investment below 65% in equities.



ii. Equity-oriented funds -Invest at least 65% in equities, remaining in

debt.

Debt fund: They invest only in debt instruments, and are a good option

for investors averse to idea of taking risk associated with equities.

Therefore, they invest exclusively in fixed-income instruments like bonds,

debentures, Government of India securities; and money market

instruments such as certificates of deposit (CD), commercial paper (CP)

and call money. Put your money into any of these debt funds depending on

your investment horizon and needs.

i. Liquid funds- These funds invest 100% in money market instruments, a

large portion being invested in call money market.

ii. Gilt funds Short Term- They invest 100% of their portfolio in

government securities of and T-bills.

iii. Floating rate funds - Invest in short-term debt papers. Floaters invest

in debt instruments which have variable coupon rate.

iv. Arbitrage fund- They generate income through arbitrage opportunities

due to mis-pricing between cash market and derivatives market. Funds are

allocated to equities, derivatives and money markets. Higher proportion

(around 75%) is put in money markets, in the absence of arbitrage

opportunities.

v. Gilt funds Long Term- They invest 100% of their portfolio in long-

term government securities.

vi. Income funds Long Term- Typically; such funds invest a major

portion of the portfolio in long-term debt papers.



vii. MIPs- Monthly Income Plans have an exposure of 70%-90% to debt

and an exposure of 10%-30% to equities.

viii. FMPs- fixed monthly plans invest in debt papers whose maturity is in

line with that of the fund.

INVESTMENT STRATEGIES

1. Systematic Investment Plan: Under this a fixed sum is invested each

month on a fixed date of a month. Payment is made through post dated

cheques or direct debit facilities. The investor gets fewer units when the

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

benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: Under this an investor invest in debt

oriented fund and give instructions to transfer a fixed sum, at a fixed

interval, to an equity scheme of the same mutual fund.

3. Systematic Withdrawal Plan: If someone wishes to withdraw from a

mutual fund then he can withdraw a fixed amount each month.



MAJOR FUND HOUSES IN INDIA BY AUM (IN LAKHS)

The below is the list of top 10 mutual fund houses in India by Assets under Management

(AUM). Having a high AUM doesn’t necessarily mean that the AMC/FUND HOUSE is a

top performing one in the industry. This gives information that which fund houses are

ahead of the others in pooling the money from investors either by their reputation (brand

name) or by advertising techniques. The AUM given is average for the period October-

December 2010.

RANK AMC AUM(In

LAKH)

1 RELIANCE MUTUAL FUND 10206621.91

2 HDFC MUTUAL FUND 8788309.11

3 ICICI PRUDENTIAL MUTUAL FUND 6584087.84

4 UTI MUTUAL FUND 6538724.42

5 BIRLA MUTUAL FUND 57688946.91

6 SBI MUTUAL FUND 4149785.56

7 FRANKLIN TEMPLETON MUTUAL FUND 3944260.39

8 DSP BLACK ROCK MUTUAL FUND 2766779.46

9 KOTAK MAHINDRA MUTUAL FUND 2756536.86

10 TATA MUTUAL FUND 2085484.83



Source: AMFI

TABLE: 1.0

GROWTH IN ASSET UNDER MANAGEMENT

The Indian mutual fund industry has evolved from a single player monopoly in 1964 to a

fast growing, competitive market on the back of a strong regulatory framework.

AUM GROWTH

Source: AMFI FIG: 1.1

The Indian Mutual fund industry has witnessed considerable growth since its inception in

1963. The assets under management (AUM) have surged to Rs 4,173 billion in Mar-09



from just Rs 250 million in Mar-65. In a span of 10 years (from 1999 to 2009), the

industry has registered a CAGR of 22.3%, albeit encompassing some shortfalls in AUM

due to business cycles

STOCKS ATTRACTING FUND MANAGERS

Top stocks held by mutual funds in March 2011

STOCKS MARKET

VALUE(Rs.Cr)

ICICI Bank 8715.49

Reliance Industries 7933.87

Infosys Technologies 7639.46

State Bank of India 7059.40

Tata Consultancy Services 5172.82

Oil and Natural gas Corporation 4905.47

Bharti Airtel 4411.65

HDFC Bank 4377.05

ITC 3755.63

Larsen and Toubro 3579.46

TABLE: 1.1



RULES FOR INVESTMENT IN MUTUAL FUND

Mutual Funds are increasingly being touted as the retail investors' investment vehicle.

But the key challenge is to choose the right fund. But it's simple. It only requires a bit of

discipline and little time - hardly a cost for a secure financial future. Following are some

rules to help invest better attain your financial goals.

Know yourself: The first step towards achieving your goals is that you must know

yourself. Try to get an idea of how much risk you can handle. Do a tolerance test for

yourself. If your Rs 10,000 investment turning into Rs 6,000 upsets you--even though it

could subsequently bounce back—an aggressive equity fund is not for you.

Reality check: What are your goals? If you need to turn Rs 10,000 into Rs 50,000 in two

years, a medium term bond fund may not be the right answer. Work on setting realistic

expectations for both your goals and your funds.

Know what you are buying: Once you discovered yourself, spend some time for a close

understanding of the funds. The stated objective of a fund as given in a prospectus is

often incomplete and does not reveal much. Based on the readily available portfolio and

fund manager's commentary, you can broadly understand the style and strategy followed

by a fund. This will help you meaningfully diversify your portfolio. This will also help



you assess potential risks. In general, large-cap value funds are less risky than small-cap

growth funds.

Examine sector weightings: You must know that funds with large stakes in just one or

two sectors will likely be more volatile than the more evenly diversified funds. Looking

at a fund's sectoral history will help you gain a good perspective. Does the manager move

in and out of sectors frequently and dramatically? If so, the fund might get hurt, if the

manager is ever caught on the wrong foot.

Check out the fund's concentration: A portfolio with just 20 or 30 stocks or one that

puts most of its assets in just a few stocks will likely be more volatile than a fund that's

spread among hundreds of stocks. But there could be rewards of concentration. A

concentrated portfolio will also get more bangs for its buck if its stocks work out. You

may want to add a concentrated fund, one that owns fewer stocks or puts most of its

assets in the top 10 or 20 stocks to your portfolio.

But largely, your core funds should probably be well a diversified and more predictable.

Though a small allocation to a sector-oriented fund, more-flexible fund, or a more-

concentrated fund could boost your returns.

Assess performance appropriately: Past performance is no indicator of future results.

Investors should commit this statutory quote from mutual fund prospectus,

advertisements and any other literature to memory. It should be recalled more readily

than your bank account number. It should be repeated anytime you consider sending

money to any fund with a 100 per cent three-month gain.

Know your portfolio: Look for areas that are over-represented and for those that are

lacking. For example, will your portfolio be overly concentrated in the large-cap equities

or too much in highly rewarding but wildly volatile InfoTech stocks? Will you be missing

investments in small cap stocks?



Be a disciplined investor: After you've chosen some funds, stick with them. Don't be

afraid to go aga.

REGULATORY FOR MUTUAL FUND

The Indian mutual fund industry in terms of regulatory framework is believed to match

up to the most developed markets globally. The regulator Securities and Exchange Board

of India (SEBI), has consistently introduced several regulatory measures and

amendments aimed at protecting the interests of the small investor that augurs well for

the long term growth of the industry. The implementation of Prevention of Money

Laundering (PMLA) Rules, the latest guidelines issued in December 2008, as part of the

risk Management practices and procedure is expected to gain further momentum. The

current Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT)

measures cover two main aspects of Know Your Customer (KYC) and suspicious

transaction monitoring and reporting. The regulatory and compliance ambit seeks to

dwell on a range of issues including the financial capability of the players to ensure

resilience and sustainability through increase in minimum net worth and capital

adequacy, investor protection and education through disclosure norms for more

information to investors, distribution related regulations aimed at introducing more

transparency in the distribution system by reducing the information gap between

investors and distributors, and by improving the mechanism for distributor remuneration.

The success of the relatively nascent mutual fund industry in India, in its march forward

will be contingent on further evolving a robust regulatory and compliance framework that



in supporting the growth needs of the Industry ensures that only the fittest and the most

prudent players survive.

WHY IT HAS BECOME ONE OF THE LARGEST

INTERMEDIARY?

If we take a look at the recent scenario in the Indian financial market then we can find the

market flooded with a variety of investment options which includes mutual funds,

equities, fixed income bonds, corporate debentures, company fixed deposits, bank

deposits, PPF, life insurance, gold, real estate etc. All these investment options could be

judged on the basis of various parameters such as- return, safety convenience, volatility

and liquidity.

Return Safety Volatility Liquidity Convenience

Equity High Low High High Moderate

Bonds Moderate High Moderate Moderate High

Co.

Debentures

Moderate Moderate Moderate Low Low

Co. FDs Moderate Low Low Low Moderate

Bank

Deposits

Low High Low High High



PPF Moderate High Low Moderate High

Life

Insurance

Low High Low Low Moderate

Gold Moderate High Moderate Moderate Gold

Real Estate High Moderate High Low Low

Mutual

Funds

High High Moderate High High

TABLE: 1.2

We can very well see that mutual funds outperform every other investment option. On

four parameters it scores high whereas it’s moderate at one comparing it with the other

options, we find that equities gives us high returns with high liquidity but its volatility too

is high with low safety which doesn’t makes it favorite among persons who have low

risk- appetite. Even the convenience involved with investing in equities is just moderate.

Now looking at bank deposits, it scores better than equities at all fronts but lags badly in

the parameter of utmost important i.e.; it scores low on return , so it’s not an happening

option for person who can afford to take risks for higher return. The other option offering

high return is real estate but that even comes with high volatility and moderate safety

level, even the liquidity and convenience involved are too low. Gold have always been a

favorite among Indians but when we look at it as an investment option then it definitely

doesn’t gives a very bright picture. Although it ensures high safety but the returns

generated and liquidity are moderate. Similarly the other investment options are not at par

with mutual funds and serve the needs of only a specific customer group.

Straightforward, we can say that mutual fund emerges as a clear winner among all the

options available.

The reasons for this being:

i) Mutual funds combine the advantage of each of the investment products: Mutual

fund is one such option which can invest in all other investment options. Its principle of



diversification allows the investors to taste all the fruits in one plate just by investing in

it; the investor can enjoy the best investment option as per the investment objective.

ii) Dispense the shortcomings of the other options: Every other investment option has

more or less some shortcomings. Such as if some are good at return then they are not

safe, if some are safe then either they have low liquidity or low safety or both likewise,

there exists no single option which can fit to the need of everybody. But mutual funds

have definitely sorted out this problem. Now everybody can choose their fund according

to their investment objectives.

iii) Returns get adjusted for the market movements: As the mutual funds are managed

by experts so they are ready to switch to the profitable option along with the market

movement. Suppose they predict that market is going to fall then they can sell some of

their shares and book profit and can reinvest the amount again in money market

instruments.

iv)Flexibility of invested amount: Other than the above mentioned reasons; there exists

one more reason which has established mutual funds as one of the largest financial

Intermediary and that is the flexibility that mutual funds offer regarding the investment

amount. One can start investing in mutual funds with amount as low as Rs. 500 through

SIPs and even Rs. 100 in some cases.



FINANCIAL ADVISOR

The reason for consulting a financial advisor is investor’s time is valuable. In areas where

you do not know what you are doing, it is going to take you much longer to make

decisions. Again, things change quickly in the financial world. If you’re not on top of

your game, you may sell too late or too early, or feel unsettled with your decisions,

because you lack 100% knowledge of the industry. Instead of spending every spare

minute to try to make sense of these funds and research, learn the big picture, and hire a

financial advisor you can trust. He or she can spend their time finding the best deals for

you with the highest dividends, and you can go about your business—seeing to the other

important parts of your life.

Good financial advisors typically have a financial education in business and finance, and

each of them must be certified to practice in the industry. They study the financial trends

on a daily basis. They research the various funds out there and options for retirement,

budgets, financial planning, etc. Financial Advisors often possess a wealth of knowledge

in this area and they educate / advise people on a regular basis, concerning financial

matters.



If financial advisors require primarily a percentage of the gains, they theoretically put

investors interests first, because without your success, they receive no pay. Just be careful

to find out exactly how they are paid and try to avoid any conflicts of interest. If you’re

struggling to know which option is the best for you and your family’s retirement, and you

have already started educating yourself about the industry (your number one priority),

consider consulting a financial advisor. The benefits are numerous. An advisor’s advice

can greatly improve the outlook of your future and keep you on track.

HOW TO EVALUATE THE FINANCIAL ADVISOR?

Before you entrust your money and financial future to an unknown entity - you

have to validate their credibility. Ratings, reviews, affiliations and word-of-mouth

are basic research tools to consider.

The biggest cost component you need to consider is - how is the advisor getting

paid? Think about it - if he is being paid by the mutual fund company or someone

else - where is his allegiance? Fee based is usually a better option and as always

the price needs to be commensurate with expertise/value provided.

A financial advisor should provide a holistic perspective of your financial life.

Financial life is not limited to investing some money in the stock market.

Financial life should encompass your cash flow, saving goals, retirement goals,

education objectives, pre/post tax investment strategies, diversification across

asset classes, insurance, taxes, mortgage management and time horizons.

What is the advisor doing with your money, why is he doing it and when is he

making those decisions should also be visible to you. Visibility comes via regular



reporting at a detailed level that makes sense to you. A monthly or quarterly

meeting may be merited to review and assess progress of your portfolio.

It should be in writing. Expectations, roles, reporting and the scope of the services

provided should be documented and formalized. Even a plumber who fixes your

faucet gives you a written estimate of services proposed - you should expect more

from a mutual fund advisor.

1.3 INTRODUCTION TO K RCHOKSEY, THE COMPANY

Kissan Ratilal Choksey Shares and Securities PVT LTD (KRC), was incorporated in the year 1979. The company is one of the leading broking firms in the country serving to clients in India and overseas.

KRC is a family owned professionally run organization operating with no outside funds-(neither debt nor equity) with net worth in excess of $10 million. With its impressive track record in terms of services to its broad base of clientele, the key ingredient for the company’s success has been its customer centric approach and capital growth through structured counseling and focus.

AREAS OF EXPERTISE:

KRC is one of the few broking houses in India which offer full services to cross-section of investors, serving:

Domestic financial institutions (DFIs)

Domestic mutual funds (DMFs)

Foreign institutional investors (FIIs)

Non –Resident Indians (NRIs)



Private client groups (PCG) including High net worth individuals (HNIs) and corporate families.

MARKETS AND NETWORK:

KRC has memberships in NSE and BSE in avenues like equity trading and derivative trading. It also has commodities trading membership in NCDEX and MCX. KRC employs more than 200 people, more than 100 network partners, more than 400 trading terminals and over 150 branches spread across 60 cities. Moreover it has full scale presence on the web for serving customers for their on-line requirements in managing wealth under various financial products. KRC also serves its NRI community for broking and portfolio management services through its presence in UAE and other gulf countries.

PERFORMANCE:

CNBC has rated KRChoksey as one of the top broking houses in Asia. As per the opinion poll conducted 80-90% of the viewers follow the recommendations made by KRC.

Asia Money (Singapore) selected KRC as the best broking house in Asia.

Thomson Financial, Bloomberg, Multex and Fascet distribute KRC research reports to more than 8000 clients all across the world.

Birla Sun life Insurance awarded KRC with the regional sales championship for the best corporate agent in Western India.

Among ten broking houses in India-Asia Money Poll.

VISION AND GOALS

To be the most respected and admired wealth creators with innovative best practices to generate maximum stakeholder satisfaction.



CORE STRENGHTS

Customers interest ahead of own

Successfully leveraging products with advisory services by use of technology

platforms

Enhanced competiveness due to distinguished productized approach catering to

all client classes; increasing investor reach

Proven wealth creation track record backed by ability to identify winning

investment ideas at nascent stage.

Professionally managed; family owned setup

OWNERSHIP STRUCTURE


PROMOTERS PROMOTERS

KRChoksey and CoKRChoksey and Co

KRChoksey Holding companyKRChoksey Holding company

KRChoksey shares & securities

KRChoksey shares & securities

KRChoksey commodityKRChoksey commodity

KRChoksey InsuranceKRChoksey Insurance


FIG: 1.2

BUSINESS MODEL:


BUSINESS MODEL

ADVISORY PRODUCTS

COMMISSION PRODUCTS

Equity Advisory

ManagedFunds

Advisory Portfolio

Financial Planning

Equity

Mutual Funds

Equity derivatives

Insurance


FIG: 1.3

PRODUCTS AND SERVICES:


CAPITAL MARKETCAPITAL MARKET

PERSONAL FINANCEPERSONAL FINANCE

WEALTH MGMT WEALTH MGMT

ON-LINE RESEARCHON-LINE RESEARCH

Bonds/debt

Brokerage (equity, derivatives)

Depository services

On-line trading

Life Insurance

General Insurance

Mutual Funds

Equity IPO’s

NRI Services

Financial Planning

Portfolio Management service

Portfolio advisory service

NP Care

Equity

Derivatives

Mutual funds

Long term investments

Short term trading


FIG: 1.4

1. CAPITAL MARKET

i. BROKERAGE SERVICES:

KRC provides Trading as well as clearing services to its clients in both the Equity & Derivatives segments on BSE & NSE.KRChoksey's presence is in more than 70 cities & 150 locations all around India, through structured stock-selection, entry-pricing, margin of safety and the timing of exit.

ii. DEPOSITORY SERVICES:

KRChoksey was the first brokerage house to offer Demat Trading as early as

1999. KRC Share Bank Division provides the benefits and expertise of an

experienced depository and the convenience of availing the composite services

provided by the organization as a full service Broking House; a one stop-Shop

offering customized solutions for all your financial needs.

KRC Share Bank Division functions as a single window facility that enables Day-

to-day execution of instructions slips expediting client transactions. The division’s

web-enabled process also helps the client to check his account online.



Registered with Central Depository Service (India) Ltd. (CDSL), the depository

arm of KRC would provide convenience and value added services to all our

customers.

iii. ONLINE TRADING:

KRC fast, flexible and real time trading is facilitated by KRCtrades.com mart

Trader online trading interface. The company provides a typical stock Exchange

terminal with streaming quotes, real time charting, options trading and much

more.

The Smart Trader offers customizable display with integrated trading across BSE

and NSE for both Cash and F&O on a single terminal. A variety of Decision-

making tools are built in to optimize on your trading strategy and maximize your

returns.

Clients using krctrades.com will be in a position to log in and directly place their

trades which would be settled directly by the bank and shares transferred to our

account directly through the KRC DP accounts.

Real time prices for

NSE & BSE

Cash and F&O

Live market watch with customizable overviews

Live tic by tic charting facilities

More than 30 Technical Indicators

Pre-defined as well as customizable market alert tools

Integrated trading window for lightning fast order entry

2. PERSONAL FINANCE:

i. LIFE INSURANCE:

KRC Insurance Division provides clients with customized insurance solutions.KRC

covers a wide range of insurance solutions both in life insurance as well as general



insurance such as property, health etc. The Division undertakes all the formalities needed

for policy issuance, and monitoring of insurance plans.

KRC also provides General Insurance Claim Assistance services for processing claims.

KRC Insurance advisory Covers

• Child Life Solutions (between the age

Group of 1 to18)

• Student Life Solutions (between the

Age group of 18 TO 25)

• Retirement Solution for age of 30 to 45

Years

• Single Premium for a Term Plan (Pure

Term Insurance

ii. MEDICAL INSURANCE

At KRC, they believe it is crucial for the client to gain an understanding of the yardsticks

that would help him or her to study the available health plans and narrow down the

possibilities beforehand. Therefore, instead of just giving him answers, the best thing

they could do is to make sure you would ask the right questions.

KRC Non Life Insurance section offers a multitude of Health Plans to cover and meet

your family's health needs. KRC representatives would help you to identify a suitable

health plan and execute the necessary requirements and obligations.

iii. NON-LIFE INSURANCE

KRC Insurance would provide you with customized insurance solutions for your clients

and take care of all formalities needed for policy issuance, underwriting and monitoring

of insurance plans. KRC covers a wide range of insurance solutions general insurance

such as property, health etc

General Insurance



Bajaj Allianz

TataAIG

Reliance

National

ICICI Lombard

India Assurance

IFFCO Tokio

iv. MUTUAL FUNDS

At KRC they undertake a thorough analysis of your risk profile, investment horizon and

recommend investment in varied mutual funds.

Mutual Fund Desk offers following services to the clients.

• Mutual Fund NFO (New Fund Offer) Reports.

• Mutual Fund Investment Planning and regular monitoring of portfolio.

• Mutual Fund’s Existing Portfolio Restructuring and Recommendation.

• Monthly Statement on Mutual Fund Portfolio Performance

To give you the most comprehensive coverage on mutual fund investing the company site

offers many tools and value added information viz.

• Analyze Funds

• Fund Activity Report

• Portfolio Updates

• Dividend Announcements

v. EQUITY IPO’S

Team does rigorous analysis on the quality of new issue, the company’s track record and

its business plans. More importantly, it critically evaluates the pricing of the issue and its



friendliness. Given the background and experience of KRC RESEARCH TEAM they are

able to identify the Quality issues out of a series of new issues that hit the market.

• As a syndicate member they offer bidding and collection of IPO forms at Mumbai and

several other locations in India through their franchisees.

• Research Report on IPO.

vi.NRI SERVICES:

KRChoksey provides a Non Resident Indian (NRI) client with a package of services

designed to create a constructive, creative and hassle free investment experience in India.

The company provides consultancy, execution and operational services to its NRI clients

with special attention to the administrative and legal obligations they are required to

meet.

Portfolio Investment Scheme

KRChoksey helps to execute the Portfolio Investment Schemes (PIS), which provides an

NRI client, avenues to invest in shares/ debentures of Indian companies through a

recognized stock exchange on a repatriablebasis. The capital and profits are freely

repatriableafter deduction of applicable taxes to the NRI.

Process for an NRI who wants to register for the PIS opens the following accounts

NRE Savings Account (any recognized bank)

PIS Savings Account (any recognized bank)

Trading account (with KRC)

Demat account (with KRC)

POA to a representative of KRC.

3. WEALTH MANAGEMENT:

i. FINANCIAL PLANNING



KRC provides complete financial planning services to its customers which involve

complete understanding of clients risk profile, review of present investments, investment

objectives, working out investment strategies to achieve the objectives, monitoring and

review of investments made. Financial Planning is your road-map to wealth creation and

provides answer to many questions like. Where to invest? How much should I invest?

What should be my return on investments? Reinvestments or Fresh Investments? Risk

Evaluation & Management? Monitoring Investment? That’s what they exactly do in

KRChoksey Financial Planning, creating a process for you to meet your financial

objectives considering your assets, liabilities, income, expenses & inflation & your other

financial commitments. Financial Planning includes Investment planning, Risk

Management & Insurance Planning, Retirement Planning, Tax Planning & Estate

Planning.

ii. PORTFOLIO MANAGEMENT SERVICE:

KRChoksey offers comprehensive Portfolio Management Services for HNI and PCG in

India and abroad. Over the decades, KRC Research has earned a distinguished name in

delivering superior ideas for its clientele on a consistent basis, given its conservative

approach.

KRC Portfolio Management Services would include:-

Review and Restructuring of the existing portfolio

Fresh Investments in Equity and Mutual Funds

Review and Monitoring of Portfolio Reporting and Administrative Support on

Portfolio

KRC would provide portfolio reports to the clients for their easy monitoring of

portfolios on a monthly basis and would carry out a quarterly review of the

portfolio along with the customer.

It offers PMS, with following plans to suit the needs of different types of investments:

Diversified Large Cap



Emerging Cap

Service Sector

Short Term Growth Scheme

iii. NETWORK PARTNERS: PARTNERING GROWTH

KRC Network Partners an integral part of the KRChoksey value system, a

significant member of the KRChoksey family and its strong tradition of Safe

Secure Growth. Experience has led to a rising growth graph in their services, and

their clientele and it is this growth that we seek to share with our network partners.

Their Network Partners can benefit of our expertise and the services that span the

spectrum of investments from Equity investments, Portfolio Management,

Insurance to Fixed Income Planning and Servicing. KRChoksey's back office

infrastructure and value added services provide a cost benefit advantage, which

results in higher business and lower costs of running the financial services

operations. This gives their network partners the freedom of concentrating on

enhancing customer satisfaction and ensuring business expansion. The Network

Partner's are key drivers for Business Growth; therefore there are some predefined

Major Thrust Area (MTA) for them. KRChoksey also offers a unique advantage

through its multi-product marketing, multi-purpose solutions, and expertise -an

advantage that can be utilized by our clientele and converted into monetary gain.

KRChoksey would pro-actively support the various initiatives of NP as a part of this

relationship. We would provide you cutting edge services and support to build a

successful symbiotic relationship between us. The following section describes the key

responsibilities of KRChoksey.

4. ONLINE RESEARCH:



i. EQUITY

KRC Decision Drivers furnish a rich portfolio of immediate research and analytical

reports for their Investor Clients --earning ideas that help drive investment decisions.

Time tested packages that combine savvy investing with smart trading strategies.

Reports you can avail:

Short term reports KRC Blasters Instant information and

informed ideas provided to you

on the move-SMS alerts with

daily 2-4 intraday/intraweek

calls.

Market Outlook Technical analysis and powerful

insights.

Short-term to medium

term reports

Good Evening KRC Post market analysis with calls for

tomorrow.

Cherry Picks KRC’s dealing desks expertise for

its investor clients.

Long term reports Between the lines A daily corporate analysis report.

KRC investment

ideas

Gives a basic knowledge to the

clients about the stock market and

complete outlook of the stocks.

TABLE: 1.3



ii. DERIVATIVES:

KRC Decision Drivers furnish a rich portfolio of immediate research and analytical

reports for their Investor Clients --earning ideas that help drive investment decisions.

Time tested packages that combine savvy investing with smart trading strategies.

Derivatives market

reports

Derivative strategy on

F&O

Daily guide for taking right

position in F&O

KRC technical trends A trend analysis report which

provides the daily intraday

trading range for future and

options market.

TABLE: 1.4

iii. MUTUAL FUND:

Mutual Fund Desk offers following services to the clients.

Mutual Fund NFO Reports and Recommendation

Mutual Fund Investment Planning

Mutual Fund Existing Portfolio Restructuring

Mutual Fund Investment Monitoring

Monthly Statement on Mutual Fund Portfolio Performance



To give you the most comprehensive coverage on mutual fund investing our site offers

many tools and value added information viz.

Analyze Funds

Fund Activity Report

Portfolio Updates

Dividend Announcements

ADVANTAGE: KR CHOKSEY

LEGACY

Built by the Choksey family whose association with the Capital Market dates

back 87 years.

Culture that nurtures –continually imparting knowledge and updating skills across

stakeholders

STABILITY

Professionally Managed , Family Owned, just the right personal touch to the

professional services

3 decades, 8 strategic business units, 150 locations, over

65,000 clients

ABILITY

Insight -Skill in perceiving market

trends

Skill to interpret Market

Intelligence



Incisive investment

knowledge

AWARDS AND ACHIEVEMENT:

Impeccable Reputation –87 Years Experience in Indian Capital Market

Pioneers in Equity Research & Personalized wealth creation

Rated among top ten Brokerage house in India –Asia Money Poll 2003

CNBC poll shows that 80-90% of their viewers follow KRChoksey

recommendations

KRC –Research is globally referred to by Reuters, Thomson First

call,MoneylineTelatrade,ISI Emerging Markets for their over 10,000 clients

worldwide

Awarded as the best corporate agent in Western India , by BirlaSunlifeInsurance

Awarded as the best performer in Western India by Tata-AIG General Insurance



CHAPTER 2: RESEARCH METHODOLOGY

2.1 DATA COLLECTION METHOD

SOURCES OF DATA

There are two sources of data –one is primary source and other secondary source.

PRIMARY DATA:

Questionnaire

Observation

SECONDARY DATA:

Internal data -provided by officer at the company

External data –websites



2.2 RESEARCH DESIGN:

FIG: 1.5

CONCLUSIVE REEARCH DESIGN:At the end of whole research I will come out with a proper conclusion whether there is a need for financial advisors for mutual fund investors and what all improvements needs to be taken by AMC’s /Financial advisors.


RESEARCH DESIGN

CONCLUSIVE DESIGN

DESCRIPTIVE DESIGN

LONGTIDUNAL METHOD

OMNIBUS PANEL


DESCRIPTIVE RESEARCH DESIGN:I have collected my data by filling up questionnaire from investors of KRChoksey and also by interviewing employees of the company. I have also described the data in detail and structured form.

LONGTITUNAL METHOD:I have collected the data from visitors of KRChoksey and also by personal visits to offices whether they being investors or not.

SAMPLE AND TARGET POPULATION:

Target population in my project includes visitors of KRChoksey and corporate people.60

people from target population I have selected as sample for my survey.

SECONDARY DATA:

At KRChoksey Shares and Securities Pvt Ltd, I had interacted with officers for

understanding about mutual funds, types of mutual fund and how does it work. Also I had

accessed AMFI and other websites and journals to get deeper insight about the topic.

SELECTING SAMPLING DESIGN:

FIG: 1.6

Purpose behind following the above path was just convenience of customers because

when you are demanding time of someone then at that time you need to see their

convenience. Here I distributed questionnaire on one day and collected the other day. It

was not task of one day.


NON-PROBABILITY SAMPLING

CONVINIECE SAMPLING


CHAPTER 3. DATA ANALYSIS AND INTERPRETAION:

1. Investment in Mutual Fund

Response No. of investors YES 38 NO 22

TABLE: 1.5

FIG: 1.7

Interpretation:Out of the above pie chart, It can be concluded that out of 60 surveyed 63 % of them have invested in mutual fund and 37 % have not invested in mutual funds till now. Still there is enough scope for AMC’s /financial advisors to target the 37 %.



2. Reason for not investing in Mutual Fund

Option No of investors Lack of knowledge about Mutual Funds 13Insufficient funds to invest 2Not advised by financial advisors 2Complicated product features 0Other attractive avenues 5

TABLE: 1.6

FIG: 1.8

Interpretation: From the above chart, it can be concluded that out of the 22 who have not invested in Mutual Funds ,59 % are having lack of knowledge about mutual funds, next 23 % have



claimed to have invested in other attractive avenues, and 9% of them have given the reasons as having insufficient funds to invest and not advised by financial advisors and no one gave the reason as complicated product features.

3. Preference for other investment with flexibility of liquidity:

Response No. of investors YES 36 NO 24

TABLE: 1.7

FIG: 1.9

Interpretation:

From the above chart it can be said that out of the 60 surveyed, 36 of them ie. 60 % of them prefer to invest in products with flexibility of liquidity with them and 24 of them ie. 40 % do not want to invest in such investment products.



4. Comparison of Return on Capital of other products over Mutual Funds

Response No of investors Always 20Frequently 11Seldom 1Occasionally 8Never 20

TABLE: 1.8

FIG: 2.0

Interpretation:



From the above chart it can be concluded that 34% of them always compare other return on capital with Mutual Funds before investing, 18 % frequently compare the return on capital , 2 % of them seldom do the comparison, 13 % of them do it occasionally while the next highest being 33% who never do the comparison.

5. Services of Financial Advisors:

Response No. of investorsYES 26NO 34

TABLE: 1.9

FIG: 2.1Interpretation:

From the above chart, it can be concluded that 57 % of the investors surveyed avail the services of financial advisors while 43% of them do not prefer financial advisors.



6. Miss-selling by Financial Advisors:

Response No. of investorsYES 3NO 57

TABLE: 2.0

FIG: 2.2Interpretation:

From the above chart, it can be made out that mere 3 investors ie. 5 % of them surveyed were betrayed or miss-sold by financial advisors while 57 of them ie. 95 % of investors were not miss-sold.



7. Stage preferred to seek Financial Advisors:

Age group No of investors Less than 25 years 1925-34 years 2035-44 years 645-54 years 155 years and above 0

TABLE: 2.1

FIG: 2.3

Interpretation:



From the above chart, it can be concluded that maximum number of investors prefer to invest in the age group of 25-34 years with 44% followed by less than 25 years with 41 % , while 13 % preferred to invest in the age group of 35-44 years and least with 2 % at 45-54 years and no investors for 55 years and above.

7. Age:

Age No. of investorsBelow 20 years 021-30 years 3831-40 years 1441 years and above 8

TABLE: 2.2

FIG: 2.4 Interpretation:



Out of the total investors surveyed, 64 % belong to the age group of 21-30 years, 23% come in the age group of 31-40 years while 13 % are above 41 years and above while no investors were found below 20 years.

8. Qualification:

Qualification No of investors Under graduate 4 Graduate 34Post graduate 22

TABLE: 2.3

FIG: 2.5



Interpretation:

From the above chart, we can make out that 56 % of the investors were graduate, 37% of them are post graduate while remaining 7 % are only under graduate.

9. Occupation:

Occupation No. of investorsService 46Profession 5Business 1Student 2Others 6

TABLE: 2.4

FIG: 2.6



Interpretation:

From the above chart, it can be made out that 77 % of the investors surveyed were into service, 10 % belong to others which include retired and housewife, 8 % are into profession and 2% and 3 % are into business and are students respectively.

CHAPTER 4: FINDINGS/INFERENCES

Research findings:

The survey conducted upon 60 people, 38 are already mutual fund investors and

the remaining 22 have not yet invested in mutual funds. So there is enough scope

for the advisors to convert those 22 participants into investors through their

convincing power and great communication skills.

Now, when those 22 people were asked about the reason for not investing in

mutual funds, then 13 of them held their ignorance responsible for that. They

lacked knowledge and information about the mutual funds. Whereas just 5 people

enjoyed investing in other option like LIC/Gold. For 4 of them it was financial

constraints which restricted them from investing and not being advised by

financial advisors. Again the financial advisors can tap upon these people by

educating them about mutual funds. They should not only sell those products in

which they have higher commission but think for the benefit of the investor too.

When asked about the most alluring feature of MFs, most of them opted for

diversification, followed by reduction in risk, helps in achieving long term goals

and helps in achieving long term goals respectively.



When asked whether they will prefer other investments products with flexibility

of liquidity then 36 of them agreed to it while 24 of the investors said no to it.

The survey also bought out that 20 of the investors said they always compare the

return on capital when investing while the other 20 said they never compared the

returns. The point to be highlighted is that people are not yet financially educated.

The awareness among the masses about the benefits of investing in mutual funds

is quiet low.

When asked whether they are availing the services of financial advisors, only 26

out of 60 are using the services. The financial advisors needs to be more

knowledgeable in order to advice the investors. At times the financial advisors are

not themselves updated with the current market changes which may not benefit

the investors.

Next when asked whether they were betrayed or miss-sold by financial advisors, 3

of them agreed to it out of those who availed the services. This may result into

loss of trust in the financial advisors for those who blindly follow their

recommendations.

When asked to mention few remarks about financial advisors, the survey revealed

the following and what investors expect from financial advisors. Following are

mentioned below:

A common theme found among the investors surveyed is that using

professional financial advice provides them with a level of expertise that

enhances their investment decisions.

Most investors who are availing the services of advisors want help

understanding their financial picture and allocating their assets across

various types of investments.



Many also want financial professional to explain various investment

options to them and assess whether they are saving enough for retirement.

Also the other point which came out is that maximum of them believed

that financial advisors should be thorough with all the current market

updates, the news of the scrips investors hold and what all new products

are being launched by AMC’s suiting to the investors.

Also investors feel that at times financial advisors lack the knowledge

which is very essential when it comes to handling investor’s money.

Quality and trust becomes an essential factor because most of them come

from non-financial background. So they tend to believe whatever his/her

advisors recommend them to do.

Financial advisor has been called a “misnomer” people who try to sell

products are hardly concerned about the suitability of the products to the

end user. Their sole motive is to only generate higher commission.

Also investors have pointed out that most of the financial advisors do not

carry out proper research on the companies which has resulted in poor

performance of the funds.

Out of those who were satisfied with their financial advisors mentioned

that their advisors explained to them about the various mutual funds by

comparing it with that of other AMC’s mutual fund products.

Lastly when asked at what stage of their life would they prefer to seek financial

advisors maximum number of them mentioned to be in the age group of 25-34

years with 20 followed by 19 in the age group less than 25 years. The reason for

those seeking during mid twenties is often a particular event which prompted

them to seek professional investment advice. Also the change in the makeup of

their households such as getting married, having a child trigger them to seek

financial advice. Those in the mid thirties often seek professional investment

advice to address specific financial goal rather than in response to a trigger event.



In Mumbai the maximum numbers of investors were in the age group of 21-30

years, the second most were in the age group of 31-40 years while least was seen

in the age group below 20 years and above 41 years.

In occupation, the maximum investors belong to service class followed by others

which included retired persons and housewife.

Most of the investors surveyed were graduate followed by post –graduates.

Financial awareness needs to be spread among the young investors because they

tend to be more eager and willing to take risk.

CHAPTER 5: SUGGESTIONS/RECOMMENDATIONS

Given that customer awareness is the prerequisite for the achievement of the industry

growth potential, there is a need for planning, financing and executing initiatives aimed at

increasing financial literacy and enhancing investor education across the entire country

through a sustained collaborative effort across all stakeholders.

The most vital problem spotted is of ignorance. Investors should be made aware

of the benefits. Nobody will invest until and unless he is fully convinced.

AMC’s in collaboration with AMFI and NISM should roll out customer

awareness campaigns and provide infrastructure, content and speakers for running

the campaigns on India-basis over a sustained period of time.

Social marketing firms and media companies should design effective and mass-

media campaigns in multiple languages using televisions, horadings, flyers, street

plays and other techniques to reach the masses.

Product innovations by AMC’s should be driven by need to introduce simple

products in order to attract and retain risk averse and first time investors to start

investing in mutual funds.



Focus on design of products around women and children related needs, given the

growing dominance of women in influencing investment decisions in households

across the country.

Focus on product appeal for the low income group by keeping ease of investment

and minimum thresholds within affordable limits.

Investors should be made to realize that ignorance is no longer bliss and what they

are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer. But

most of the people are not even aware of what actually a mutual fund is? They

only see it as just another investment option. So the advisors should try to change

their mindsets.

The advisors should target for more and more young investors. Young investors

as well as persons at the height of their career would like to go for advisors due to

lack of expertise and time.

The advisors may try to highlight some of the value added benefits of MFs such

as tax benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc.

These benefits are not offered by other options singlehandedly. So these are

enough to drive the investors towards mutual funds. Investors could also try to

increase the spectrum of services offered.

AMC’s should focus on growing the financial advisors channel and encourage

them to reach out and engage with customers on their mutual funds needs on an

ongoing basis pre and post completion of their investment.

The advisors should try to charge a nominal fee at the beginning. But if not

possible then they could go for offering more services and benefits at the existing

rate.

They should also maintain their decency and follow the code of ethics so that the

investors could trust upon them. Thus the advisors should try to attract more and

more persons and turn them into investors and finally their clients.



CHAPTER 6: CONCLUSION

Running a successful Mutual Fund requires complete understanding of the peculiarities

of the Indian Stock Market and also the psyche of the small investors. This study has

made an attempt to understand the financial behavior of Mutual Fund investors in

connection with financial advisors, how do they review their performance and what all

improvements need to be made. I observed that many of people have fear of Mutual

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

knowledge of Mutual Fund and its related terms. Many people have not invested in

mutual fund due to lack of awareness although they have money to invest.

AMC’s need to reorient their business towards fulfilling customer needs. As customers

seek trusted advisors, the manufacturer-distributor relationship is not based on sale of

financial products but for collectively promoting the financial success of customers

across all facets of their professional and personal lives. The mutual fund industry needs

to develop products to fulfill customer needs and help understand how its products cater

to its needs.



CHAPTER 7: APPENDIX

7.1 BIBLIOGRAGHY

INTERNET:

WWW.MONEYCONTROL.COM

WWW.AMFIINDIA.COM

WWW.VALUERESEARCHONLINE.COM

WWW.MUTUALFUNDSINDIA.COM

WWW.INVESTOPEDIA.COM

WWW.ECONOMICTIMES.COM


http://WWW.INVESTOPEDIA.COM/

http://WWW.VALUERESEARCHONLINE.COM/

http://WWW.AMFIINDIA.COM/

http://WWW.MONEYCONTROL.COM/


7.2 QUESTIONAIRE

Dear Respondents,

I, Kavita Iyer a management student of Tolani Institute of Management Studies, Adipur

have been assigned to conduct a survey on NEED OF FINANCIAL ADVISORS FOR

MUTUAL FUND INVESTORS. Please oblige to spend few minutes to answer the

following questions. This study is for academic purpose only. This data will be used for

interpretation and analysis and no information shall be disclosed anywhere.

SECTION-1 Pl tick (√)

1. Have you ever invested in Mutual Fund? Yes [ ] No [ ]

2. If not invested in Mutual Fund then why?

Lack of knowledge about Mutual funds

Insufficient funds to invest



Not advised by financial advisors

Complicated product features

Other attractive avenues

3. Do you prefer investments in other products with flexibility of liquidity compared to

mutual funds?

(E.g.: equity, gold/silver, ULIP etc) Yes [ ] No [ ]

4. Have you compared ROC (Return on capital) compared to other products over mutual

funds?

1. Always 2.Frequently 3.Seldom 4.Occasionally 5. Never

5. Are you availing the services of financial advisors? Yes [ ] No [ ]

6. Have you ever been betrayed or miss sold by your financial

advisor? Yes [ ] No [ ]

7. Please express your remarks in brief on the quality of financial advisors?

8. At which stage did you prefer to seek financial advisors?

Less than 25 years

25-34 years



35-44 years

45-54 years

54 years and above

SECTION-2

1. Personal Details:

(a). Name: (b) Phone:

(c). Age: Pl tick (√) for below questions: (d) E-mail id:

(e). Qualification:-

Under graduate

Graduate

Post graduate


Below 20 years

21-30 years

31-40 years

41 years and above


(f). Occupation.

Service

Profession

Business

Student

Others


krchoksey project

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