Mutual Funds
Investing in mutual funds: Our online survey results

Our online survey on mutual fund investing shows that over 90% of Moneylife readers invest through mutual fund schemes and as many as 85% invest in equity diversified schemes. But there are very few takers for index schemes, the survey reveals

A survey conducted among Moneylife readers on mutual fund (MF) investing showed that over 90% of the 941 respondents use MF for investment. Most of the respondents seem to prefer diversified equity schemes (85%) while about half invest in equity-linked saving schemes. This shows that Moneylife respondents, who were equally distributed over all age groups from 20 years to 60 years, turn out to be investment savvy. As we mentioned in our Cover Story (Best Fund Houses for Equity Schemes), very few invest in index schemes, with just about 10% of the respondents having invested in such schemes. Similarly, very few have invested in multi-asset and hybrid schemes. Nearly 30% of the respondents invest in bond schemes and liquid schemes, while nearly one-third of the survey participants invest in gold exchange traded funds (ETFs).



Even though it is said that past performance is not an indicator of future results, it is the best way to judge the fund management of a scheme. Nearly 80% of the participants rate past performances as the most decisive factor for investing in a scheme. In the past, we have shown that schemes of the same fund house follow a similar investment strategy and thus display a similar performance. This survey showed that brand name of a fund house is fairly important to investors as well. Though, certain fund houses like HSBC MF and LIC MF are infamous for their poor performance. Expense ratio is an important factor to look at as well and a high expense could eat up the returns. Nearly 30% of the respondents felt that expense ratio is the most important factor to check before investment in a scheme. A significant majority feel that star ratings, research reports and studies by media houses are fairly important as well.


A large share (69%) of our respondents invest in equity schemes through a systematic investment plan, or simply SIP, which works on a rupee cost average plan. Here, the investors buy more stocks, when the prices are low and buy fewer stocks, when the prices are high. This reduces risk of large amount investing at a wrong time, at high prices. Nearly 70% of the respondents have invested in five or more mutual fund schemes, with over 15% investing in 10 schemes or more. Online investing has not caught on with investors. Majority prefer an electronic transfer through the bank or a cheque payment.



When it comes to selecting a scheme, majority of the participants rely on their own research before selecting a scheme. Nearly 40% of the participants take their advice from financial advisor or financial planners. Little over one-fourth of the participants go by media reports, while a marginally lower percentage of the respondents listen to the advice of the distributor.



Whom do investors consult while investing on mutual funds? What are key factors that influence their decision to invest in the mutual funds? We found that mutual fund distributors play a big role in creating awareness about mutual fund schemes and influencing individuals to invest in mutual funds. Probably, this is one of the main reasons fund houses pay huge upfront commissions. Nearly half the respondents were made aware of a scheme that they have invested in through a distributor. Media also plays an important role. Nearly 40% of the respondents gained knowledge about a scheme through television, print media and internet sites. Fund advertisements also have a significant influence in creating awareness among investors.




3 years ago

I have nothing good to say about my experience in investing in MFs - other than my 20 yr old investments in UTI tax saving schemes. Though I have profited from LIC's "Future plus" in recent years - all the others, regardless of their highfalutin shameless boasts, make money only for the fund houses.

I have trepidations in falling for these surveys.

Suiketu Shah

3 years ago

MF is one os the main tools to turn black money into white.Genuine investors have fled the MF product.If figures show MF's fall isnot that much its possibly because of inflow of black money being converted to white via MF route.

Wonderful article.

Anil Agashe

3 years ago

Excellent survey. Hope MF industry looks at this and learns some lessons. MFs need to be sold properly and there are many people who are still unaware of this investment option.

Greenply Q2 net profit down 13% on higher input cost, expenditure

During September quarter, Greenply Industries reported 17% decline in its net profit at Rs26.52 crore due to higher costs of imported raw material and expenditure

Greenply Industries Ltd reported a 17% lower net profit during the second quarter mainly due to higher costs of imported raw material and other expenses.

For the quarter to end-September, the plywood maker said its net profit fell to Rs26.5 crore from Rs31.9 crore while its total revenues, including sales, grew 13% to Rs583.8 crore from Rs517.2 crore, same period last year.

"We have achieved a 12% growth in topline and sustained profits during the current half-year and expect better results in the second half of the year on achieving better utilisations and value-mix,” said Saurabh Mittal, joint managing director and chief executive of Greenply.

Plywood and allied products contributed highest in the company’s net sales at 47%, followed by laminates and allied products (35%) and medium density fibre boards (18%).

However, Greenply said its total expenditure during the second quarter increased 16% to Rs535.10 crore compared with Rs459.83 crore a year ago period.

During September quarter the company has acquired land to set up manufacturing unit for setting up of the premium quality medium density fibreboard plant in Chittor, Andhra Pradesh also it has expanded its existing manufacturing unit in Behror, Rajasthan.

At 3.05pm on Friday, Greenply Industries was trading 6.4% down at Rs386 on the BSE, while the benchmark Sensex was marginally up at 20,734.


Key managerial personnel: Mismatch of definitions

Meaning of KMPs under the Companies Act 2013 has come up for interesting debate, particularly the apparent mismatch between its definitions under various sections

Key managerial personnel (KMP)
sounds like the most important person of a company.  And why not, they do have an important role to play in the success of any company. However, the meaning of KMPs under the Companies Act, 2013 (the Act) has come up for interesting debate, particularly the apparent mismatch between the definition in section 2 (51) of the Act, the requirements of section 203 of the Act, and Accounting Standards (AS) 18 on related party transactions.

Definition in Section 2 (51) of the Act

Section 203 (1) of the Act AS 18 - Related Party Transactions
“Key managerial personnel”, in relation to a company, means:
  1. the chief executive officer or the managing director or the manager;
  2. the company secretary;
  3. the whole-time director;
  4. the chief financial officer; and
  5. such other officer as may be prescribed

203. Appointment of KMP

(1) Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel:
(i) managing director, or chief executive officer or manager and in their absence, a whole-time director;

 (ii) company secretary; and

(iii) chief financial officer :

Provided that an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or chief executive officer of the company at the same time after the date of commencement of this Act unless,

(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:

Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more chief executive officers for each such business as may be notified by the central government.


10.8 Key management personnel - those persons who have the authority and responsibility for planning, directing and controlling the activities of the reporting enterprise.

Definition in Section 2 (51) of the Act defines the term; however there is no substantive provision laid by the definition section. Hence, the managing director (MD), CEO, every whole time director, CFO and CS are treated as KMPs.

Section 203(1) Act mandates only specified class of companies to have a whole time KMP.

As per draft rule 13.6 of Chapter XIII;

For the purposes of sub-section (1) of section 203, every listed company and every other company having a paid-up share capital of five crore rupees or more shall have whole-time key managerial personnel.”

Thus, a company not covered under Section 203 (1) may not be required to appoint a CFO/ CS, but it may still have a CFO/CS. It is clear that whether Section 203 applies or not, if the company has a CS, or CFO, or a whole time director, they are all KMPs.

Now the interesting conclusion from this is that every manager, whole-time director (WTD), and the MD as well as the CEO (as per Section 203, the company needs only one of these), will be treated as a KMP.

Hence, all the substantive requirements of law pertaining to KMPs apply to each WTD, and the MD. The mandatory provisions of Section 203(1) do not control the meaning of the term given in Section 2 (51).

There is no conflict between this and AS 18, as far as MD and WTDs are concerned. However, a CFO or CS is surely not KMPs as per AS 18. Hence, when it comes to disclosures of transactions with related parties in financial statements, the requirements of the AS will prevail.

As said earlier, even if a company is not required to have KMPs under Section 203, but if at all they appoint the MD, CEO, WTD, CFO and CS they automatically become KMPs. Thus, apart from the duties and responsibilities, this KMPs will attract the liability provisions of the Act as well.

Duties and Liabilities of KMP:


Pertains to

Obligations of KMPs

Fine / Penalty in case of non compliance


Statement to be annexed to the notice

 The statement concerning each item of special business to be transacted at a general meeting, annexed to the notice to include the nature of concern or interest, financial or otherwise, in respect of each items of KMP and their relatives.

Any benefit accrued to the KMP or their relatives either directly or indirectly shall be held in trust for the company and be liable to compensate the Company.

Fine which may extend to Rs50,000 or five times the amount of benefit accruing to such KMP or their relatives, whichever is more.


Prohibition on forward dealings in securities of company by director or key managerial personnel.

KMP shall not buy in the company, or in its holding, subsidiary or associate company—


  1. a right to call for delivery or a right to make delivery at a specified price and within a specified time, of a specified number of relevant shares or a specified amount of relevant debentures; or
  2. a right, as he may elect, to call for delivery or to make delivery at a specified price and within a specified time, of a specified number of relevant shares or a specified amount of relevant debentures.

Imprisonment for a term which may extend to  two years  or with fine  which shall not be less than Rs1 lakh but which may extend to Rs5 lakh or with both


Prohibition on

Insider trading of securities.

KMP of a company shall not enter into insider trading

Imprisonment for a term which may extend to  five years  or with fine  which shall not be less than Rs5 lakh but which may extend Rs25 crore or three times the amount of profits made out of insider trading, whichever is higher, or with both.


Appointment of KMP

 A whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time

Fine  which may extend  to Rs50,000 and where the contravention is continuing one with a further fine which may extend to Rs1,000 for every day after the first during which the contravention continues

  • Definition of Officers and Officers in default include Key Managerial Personnel (KMP). Hence, all obligations of Officers and Officers shall be applicable to KMPs as well
  • Further those provisions of Non-bailable offences applicable to every officers who is in default will also be applicable to KMPs


(Both  Vinita Nair and Pooja Rawal  are practicing company secretaries at Vinod Kothari & Co, and can be contacted at [email protected] and [email protected], respectively)






2 years ago

Can a single individual hold two KMP's in the same company, like CFO and CS, can it be one and the same person. At present, they are one and the same, will the incumbent have to demit one of the offices?

Nirmalya Dutta

3 years ago

What will be the penalty implication if the company do not appoint KMPs according to section 203 of Companies Act 2013?

Is there is any Provision in the new Act regarding monitoring the companies who don't appoint KMP according to Companies Act 2013?


Pooja Rawal

In Reply to Nirmalya Dutta 3 years ago

1. Penalty Provision 203(5):If a company contravenes the provisions of this section (i.e Sec 203), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director and key managerial personnel of the company who is in
default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.

2. Further there is no mechanism as such to monitor whether a Company has appointed KPM, however one can ascertain the same by viewing the annual return of that particular company, which has the details of the Paid up capital, Whether the company is listed or no and also the details KMPs.

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