Project Mf - Kuldeep Singh
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Transcript of Project Mf - Kuldeep Singh
A PROJECT REPORTON
“MUTUAL FUNDS AS BETTER INVESTMENT PLAN”
Submitted in Partial Fulfillment of
MASTER OF BUSINESS ADMINISTRATION
Two Year program of
KURUKSHETRA UNIVERSITYKURUKSHETRA
Batch 2008-10
Submitted By: - Under Guidance: -KULDEEP SINGH Mr. KULDEEPAK KATYALRoll No. 03 Senior ManagerMBA (General) SBI Mutual Fund
LHO Chandigarh
UNIVERSITY SCHOOL OF MANAGEMENTKURUKSHETRA UNIVERSITY
KURUKSHETRA
SBI Mutual Fund
ACKNOWLEDGEMENT
With regard to my Project with Mutual Fund I would like to thank each and every one
who offered help, guideline and support whenever required.
First and foremost I would like to express gratitude to Mr. Kuldeepak Katyal, Senior
Manager SBI Chandigarh and other staffs for their support and guidance in the
Project work
I would also like to extend my thanks to my members and friends for their support
specially.
KULDEEP SINGH
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SBI Mutual Fund
DECLERATION
I hereby declare that this Project Report entitled “THE MUTUAL FUND AS
BETTER INVESTMENT PLAN in SBI Mutual Fund submitted in the partial
fulfillment of the requirement of Master of Business Administration (MBA) of
KURUKSHETRA UNIVERSITY, KURUKSHETRA is based on primary &
secondary data found by me in various departments, books, magazines and websites
& Collected by me in under guidance of Mr. Kuldeepak Katyal.
DATE: 11-08-2009 KULDEEP SINGH
MBA (Two Years)
Roll No. 03
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SBI Mutual Fund
EXECUTIVE SUMMARY
In few years Mutual Fund has emerged as a tool for ensuring one’s financial well
being. Mutual Funds have not only contributed to the India growth story but have
also helped families tap into the success of Indian Industry. As information and
awareness is rising more and more people are enjoying the benefits of investing in
mutual funds. The main reason the number of retail mutual fund investors remains
small is that nine in ten people with incomes in India do not know that mutual funds
exist. But once people are aware of mutual fund investment opportunities, the number
who decide to invest in mutual funds increases to as many as one in five people. The
trick for converting a person with no knowledge of mutual funds to a new Mutual
Fund customer is to understand which of the potential investors are more likely to
buy mutual funds and to use the right arguments in the sales process that customers
will accept as important and relevant to their decision.
This Project gave me a great learning experience and at the same time it gave me
enough scope to implement my analytical ability. The analysis and advice presented
in this Project Report is based on market research on the saving and investment
practices of the investors and preferences of the investors for investment in Mutual
Funds. This Report will help to know about the investors’ Preferences in Mutual
Fund means Are they prefer any particular Asset Management Company (AMC),
Which type of Product they prefer, Which Option (Growth or Dividend) they prefer
or Which Investment Strategy they follow (Systematic Investment Plan or One time
Plan). This Project as a whole can be divided into two parts.
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SBI Mutual Fund
The first part gives an insight about Mutual Fund and its various aspects, the
Company Profile, Objectives of the study, Research Methodology. One can have a
brief knowledge about Mutual Fund and its basics through the Project.
The second part of the Project consists of data and its analysis collected through
survey done on 200 people. For the collection of Primary data I made a questionnaire
and surveyed of 200 people. I also taken interview of many People those who were
coming at the SBI Branch where I done my Project. I visited other AMCs in
Chandigarh to get some knowledge related to my topic. I studied about the products
and strategies of other AMCs in Chandigarh to know why people prefer to invest in
those AMCs. This Project covers the topic “THE MUTUAL FUND AS BETTER
INVESTMENT PLAN.” The data collected has been well organized and presented. I
hope the research findings and conclusion will be of use.
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SBI Mutual Fund
CONTENTS
Acknowledgement
Declaration
Executive Summary
Chapter - 1 INTRODUCTION
Chapter - 2 COMPANY PROFILE
Chapter - 3 OBJECTIVES AND SCOPE
Chapter - 4 RESEARCH METHODOLOGY
Chapter - 5 DATA ANALYSIS AND INTERPRETATION
Chapter - 6 FINDINGS AND CONCLUSIONS
Chapter - 7 SUGGESTIONS & RECOMMENDATIONS
BIBLIOGRAPHY
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SBI Mutual Fund
Chapter - 1
Introduction
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SBI Mutual Fund
INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS
ASPECTS.
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.
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SBI Mutual Fund
Concept of Mutual Funds
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciation realised are shared by its unit
holders in proportion to 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.
The flow chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
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SBI Mutual Fund
Organisation of Mutual Fund
There are many entities involved and the diagram below illustrates the organisational
set up of a mutual fund:
ADVANTAGES OF MUTUAL FUND
1. Professional Management - The basic advantage of funds is that, they are professional
managed, by well qualified professional. Investors purchase funds because they do not have
the time or the expertise to manage their own portfolio. A mutual fund is considered to be
relatively less expensive way to make and monitor their investments.
2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks
or bonds, the investors risk is spread out and minimized up to certain extent. The idea
behind diversification is to invest in a large number of assets so that a loss in any particular
investment is minimized by gains in others.
3. Tax Advantage - There are certain schemes of mutual funds which provide tax advantage under the Income Tax Act. Thus the tax liability of an investor is also reduced when he invest in these schemes of mutual fund.
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SBI Mutual Fund
Capital Gain EQUITY DEBT
LTCG NIL 10% or 20% without indexation
STCG 10% Added in the total income and then assessed to tax
4. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time,
thus help to reducing transaction costs, and help to bring down the average cost of the unit
for their investors.
5. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate
their holdings as and when they want.
6. Flexibility & Convenience - Investments in mutual fund is considered to be easy,
compare to other available instruments in the market, and the minimum investment is
small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000,
where SIP start with just Rs.100 per month basis.
7. Safety of regulated environment - All mutual funds are registered with SEBI and
they function within the provisions of strict regulations designed to protect the
interest of investors. The operation of mutual fund is regulatory monitored by SEBI.
9. Transparency - The investor gets regular information on the value of his investment in addition to disclosure on the specific investment made by the fund, the proportion invested in each class of assets and the fund manager’s investment strategy and outlook.
DISADVANTAGE OF MUTUAL FUND
1. Professional Management- Some funds doesn’t perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus
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SBI Mutual Fund
many investors debate over whether or not the so-called professionals are any better than
mutual fund or investor himself, for picking up stocks.
2. Costs – The biggest source of AMC income, is generally from the entry & exit load
which they charge from an investors, at the time of purchase. The mutual fund industries
are thus charging extra cost under layers of jargon. There is no control over Cost in the
Hands of invester.
3. Dilution - Because funds have small holdings across different companies, high returns
from a few investments often don't make much difference on the overall return. Dilution is
also the result of a successful fund getting too big. When money pours into funds that have
had strong success, the manager often has trouble finding a good investment for all the new
money.
4. Taxes - when making decisions about your money, fund managers don't 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 might have been
more advantageous for the individual to defer the capital gains liability.
5. Difficulty in selecting a Suitable Fund Scheme – There are multiples Schemes floats in
the market of various Asset Management companies and most of them seems similar to the
investor.
It might confuse Investor to select right Scheme for proper utilization of his money.
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the
growth was slow, but it accelerated from the year 1987 when non-UTI players
entered the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The
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SBI Mutual Fund
private sector entry to the fund family raised the Aum to Rs. 470 billion in March
1993 and till April 2004; it reached the height if Rs. 1540 billion.
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 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 Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual
fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end
of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
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SBI Mutual Fund
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. 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 Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI
and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI
Mutual Fund Regulations, and with recent mergers taking place among different
private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. The graph indicates the growth of assets over the years -
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SBI Mutual Fund
CATEGORIES OF MUTUAL FUND:
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SBI Mutual Fund
Mutual funds can be classified as follow :
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
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SBI Mutual Fund
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 weightages.
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.
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SBI Mutual Fund
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 ST- 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.
17
SBI Mutual Fund
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
vi) Income funds LT- 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.
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SBI Mutual Fund
RISK V/S. RETURN:
19
SBI Mutual Fund
Chapter – 2
Company Profile
INTRODUCTION TO SBI MUTUAL FUND
20
SBI Mutual Fund
SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the
country with an investor base of over 5.4 million and over 20 years of rich
experience in fund management consistently delivering value to its investors.
SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of
India' one of India's largest banking enterprises, and Société Générale Asset
Management (France), one of the world's leading fund management companies
that manages over US$ 500 Billion worldwide.
Today the fund house manages over Rs 28,076.63 crores of assets and has a
diverse profile of investors actively parking their investments across 36 active
schemes. In 20 years of operation, the fund has launched 38 schemes and
successfully redeemed 15 of them, and in the process, has rewarded our
investors with consistent returns. Schemes of the Mutual Fund have time after
time outperformed benchmark indices, honored us with 15 awards of
performance and have emerged as the preferred investment for millions of
investors.
SBI Funds Management Pvt. Ltd. serves its vast family of investors through a
network of over 130 points of acceptance, 28 Investor Service Centres, 46
Investor Service Desks and 56 District Organizers.SBI Mutual is the first bank-
sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund.
Growth through innovation and stable investment policies is the SBI MF credo.
Details of Company:
Name of the Mutual Fund:
SBI Mutual Fund Date of Setup of Mutual Fund: June 29, 1987
21
SBI Mutual Fund
Name of Sponsor: State Bank of India Name of Trustee Company:
SBI Mutual Fund Trustee Company Private Limited
Ownership Pattern: Domestic-63% (State Bank of India) Foreign - 37% (Société Générale Asset Management, France)
Name of the Asset Management Company:
SBI Funds Management Private Limited Date of Incorporation of AMC:
February 7, 1992
Registrar:
Computer Age Management Services (Private) Ltd., Chennai
About SBI Mutual Fund
Key Personals:
22
SBI Mutual Fund
Chairman: Mr. O.P. Bhatt
Managing Director & CEO: Mr. Achal K. Gupta
Chief Operating Officer: Mr. Ashwini K. Jain
Dy. Chief Executive Officer: Mr. Didier Turpin
Chief Investment Officer: Mr. Navneet Munot
Name of Trustees Dr. Arvind Virmani – Chairman
Mr. Raj Nair
Mr. S. K. Hariharan
Prof. S. K. Barua
PRODUCTS OF SBI MUTUAL FUND
Equity schemes
The investments of these schemes will predominantly be in the stock markets
and endeavor will be to provide investors the opportunity to benefit from the
higher returns which stock markets can provide. However they are also
exposed to the volatility and attendant risks of stock markets and hence should
be chosen only by such investors who have high risk taking capacities and are
willing to think long term. Equity Funds include diversified Equity Funds,
Sectoral Funds and Index Funds. Diversified Equity Funds invest in various
stocks across different sectors while sectoral funds which are specialized
Equity Funds restrict their investments only to shares of a particular sector
and hence, are riskier than Diversified Equity Funds. Index Funds invest
passively only in the stocks of a particular index and the performance of such
funds move with the movements of the index.
Magnum COMMA Fund
Magnum Equity Fund
23
SBI Mutual Fund
Magnum Global Fund
Magnum Index Fund
Magnum Midcap Fund
Magnum Multicap Fund
Magnum Multiplier plus 1993
Magnum Sectoral Funds Umbrella
MSFU- Emerging Business Fund
MSFU- IT Fund
MSFU- Pharma Fund
MSFU- Contra Fund
MSFU- FMCG Fund
SBI Arbitrage Opportunities Fund
SBI Blue chip Fund
SBI Infrastructure Fund - Series I
SBI Magnum Taxgain Scheme 1993
SBI ONE India Fund
SBI TAX ADVANTAGE FUND - SERIES I
Debt schemes
Debt Funds invest only in debt instruments such as Corporate Bonds,
Government Securities and Money Market instruments either completely
avoiding any investments in the stock markets as in Income Funds or Gilt
24
SBI Mutual Fund
Funds or having a small exposure to equities as in Monthly Income Plans or
Children's Plan. Hence they are safer than equity funds. At the same time the
expected returns from debt funds would be lower. Such investments are
advisable for the risk-averse investor and as a part of the investment portfolio
for other investors.
Magnum Children’s benefit Plan
Magnum Gilt Fund
Magnum Income Fund
Magnum Insta Cash Fund
Magnum Income Fund- Floating Rate Plan
Magnum Income Plus Fund
Magnum Insta Cash Fund -Liquid Floater Plan
Magnum Monthly Income Plan
Magnum Monthly Income Plan - Floater
Magnum NRI Investment Fund
SBI Premier Liquid Fund
BALANCED SCHEMES
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SBI Mutual Fund
Magnum Balanced Fund invests in a mix of equity and debt investments.
Hence they are less risky than equity funds, but at the same time provide
commensurately lower returns. They provide a good investment opportunity to
investors who do not wish to be completely exposed to equity markets, but is
looking for higher returns than those provided by debt funds.
Magnum Balanced Fund
Top 15 Mutual Funds in India:
Assets Under Management (AUM) as at the end of JUL-2009 (Rs in Lakhs)
Sr. No Mutual Fund Name
Average AUM For The Month
Excluding Fund of Fund Of Funds -
Funds - Domestic but Domestic
including Fund of Funds - Overseas
1. Birla Sun Life Mutual Fund 5733178.38 1781.192. Deutsche Mutual Fund 1430882.92 03. DSP Black Rock Mutual Fund 1726245.01 04. Franklin Templeton Mutual Fund 2763009.83 21548.365. HDFC Mutual Fund 8336610.28 06. ICICI Prudential Mutual Fund 7332855.79 2751.167. IDFC Mutual Fund 2270876.85 1279.438. Kotak Mahindra Mutual Fund 3124639.8 15674.939. LIC Mutual Fund 3509369.28 010.
Reliance Mutual Fund 10833438.02 011.
Religare Mutual Fund 1223954.32 012.
SBI Mutual Fund 3415791.97 013.
Sundaram BNP Paribas Mutual Fund 1334677.03 014.
Tata Mutual Fund 2059359.02 015.
UTI Mutual Fund 6725189.19 0 Grand Total 68994612.41 73328.38
26
SBI Mutual Fund
0
2000000
4000000
6000000
8000000
10000000
12000000
1
Asse
t Und
er M
anag
emen
t
Birla Sun Life MutualFund
Deutsche Mutual Fund
DSP BlackRock MutualFund
Franklin TempletonMutual Fund
HDFC Mutual Fund
ICICI Prudential MutualFund
IDFC Mutual Fund
Kotak Mahindra MutualFund
LIC Mutual Fund
Reliance Mutual Fund
Religare Mutual Fund
SBI Mutual Fund
Sundaram BNP ParibasMutual Fund
Tata Mutual Fund
UTI Mutual Fund
COMPETITORS OF SBI MUTUAL FUND
Some of the main competitors of SBI Mutual Fund in Dehradoon are as
Follows:
i. ICICI Mutual Fund
ii. Reliance Mutual Fund
iii. UTI Mutual Fund
27
SBI Mutual Fund
iv. Birla Sun Life Mutual Fund
v. Kotak Mutual Fund
vi. HDFC Mutual Fund
vii. Sundaram Mutual Fund
viii. LIC Mutual Fund
ix. Principal
x. Franklin Templeton
28
SBI Mutual Fund
AWARDS AND ACHIEVEMENTS
SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award -
8 times, CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year
2005-2006) and most recently with the CNBC TV - 18 Crisil Mutual Fund of the
Year Award 2007 and 5 Awards for our schemes.
2009
2008
2007
29
SBI Mutual Fund
2006
2005
30
SBI Mutual Fund
Chapter - 3
Objectives and scope
31
SBI Mutual Fund
OBJECTIVES OF THE STUDY
1. To find out the Preferences of the investors for Asset Management
Company.
2. To know the Preferences for the portfolios.
3. To know why one has invested or not invested in SBI Mutual fund
4. To find out the most preferred channel.
5. To find out what should do to boost Mutual Fund Industry.
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SBI Mutual Fund
Scope of the study
A big boom has been witnessed in Mutual Fund Industry in resent times. A large
number of new players have entered the market and trying to gain market share in
this rapidly improving market.
The research was carried on in Dehradoon. I had been sent at one of the branch of
State Bank of India Dehradoon where I completed my Project work. I surveyed on
my Project Topic “A study of preferences of the Investors for investment in Mutual
Fund” on the visiting customers of the SBI Boring Canal Road Branch.
The study will help to know the preferences of the customers, which company,
portfolio, mode of investment, option for getting return and so on they prefer. This
project report may help the company to make further planning and strategy.
33
SBI Mutual Fund
Chapter – 4
Research
Methodology
34
SBI Mutual Fund
RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude
studies. One of the most important users of research methodology is that it helps in
identifying the problem, collecting, analyzing the required information data and
providing an alternative solution to the problem .It also helps in collecting the vital
information that is required by the top management to assist them for the better
decision making both day to day decision and critical ones.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has
been collected by interacting with various people. The secondary data has been
collected through various journals and websites.
Duration of Study:
The study was carried out for a period of two months, from 30 th May to 30th July
2008.
Sampling:
Sampling procedure:
The sample was selected of them who are the customers/visitors of State Bank if
India, Bank Square, Sector-17, Chandigarh, irrespective of them being investors or
not or availing the services or not. It was also collected through personal visits to
persons, by formal and informal talks and through filling up the questionnaire
prepared. The data has been analyzed by using mathematical/Statistical tool.
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SBI Mutual Fund
Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120
people had invested in Mutual Fund. Other 80 people did not have invested in Mutual
Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation:
Some of the persons were not so responsive.
Possibility of error in data collection because many of investors may have not given
actual answers of my questionnaire.
Sample size is limited to 200 visitors of State Bank of India, Bank Square, Sector-17,
Chandigarh, out of these only 120 had invested in Mutual Fund. The sample size may
not adequately represent the whole market.
Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
The research is confined to a certain part of Chandigarh.
36
SBI Mutual Fund
Chapter – 5
Data Analysis &
Interpretation
37
SBI Mutual Fund
ANALYSIS & INTERPRETATION OF THE DATA
1. (a) Age distribution of the Investors of Chandigarh
Age
Group
<= 30
31-35
36-40
41-45
46-50
>50
No. of
Investo
rs
16 20 30 24 18 12
Interpretation:
According to this chart out of 120 Mutual Fund investors of Chandigarh the most are
in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group
of 41-45yrs i.e. 20% and the least investors are in the age group of above 50 yrs.
38
SBI Mutual Fund
(b). Educational Qualification of investors of Chandigarh
Educational Qualification
Number of Investors
Graduate/ Post Graduate
88
Under Graduate 20
Others 12
Total 120
Interpretation:
Out of 120 Mutual Fund investors 73% of the investors in Chandigarh are
Graduate/Post Graduate, 17% are Under Graduate and 10% are others.
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SBI Mutual Fund
c). Occupation of the investors of Chandigarh
Interpretation:
In Occupation group out of 120 investors, 25% are Govt. Employees, 30%
are Pvt. Employees, 37.5% are Businessman, 3% are in Agriculture and 4%
are in others.
(d). Monthly Family Income of the Investors of Chandigarh.
Income Group No. of Investors
<=10,000 5
10,001-15,000 12
Occupation No. of Investors
Govt. Service 30
Pvt. Service 36
Business 45
Agriculture 4
Others 5
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SBI Mutual Fund
15,001-20,000 28
20,001-30,000 43
>30,000 32
Interpretation:
In the Income Group of the investors of Chandigarh, out of 120 investors,
43% investors that is the maximum investors are in the monthly income
group Rs. 20,001 to Rs. 30,000, Second one i.e. 32% investors are in the
monthly income group of more than Rs. 30,000 and the minimum
investors i.e. 5% are in the monthly income group of below Rs. 10,000
(2) Investors invested in different kind of investments.
Kind of Investments No. of Respondents
Saving A/C 195
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SBI Mutual Fund
Fixed deposits 134Insurance 152Mutual Fund 120Post office (NSC) 53Shares/Debentures 72Gold/Silver 125 Real Estate 107
Interpretation: From the above graph it can be inferred that out of 200 people,
97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,
60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in
Gold/Silver and 32.5% in Real Estate.
3. Preference of factors while investing
Factors (a) (b) Low (c) High (d)
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SBI Mutual Fund
Liquidit
y
Risk Return Trust
No. of
Respondent
s
40 60 64 36
Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return, 30%
prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer
Trust.
4. Awareness about Mutual Fund and its Operations
Response Yes No
No. of Respondents 135 65
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SBI Mutual Fund
Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Fund and its
operations and 33% are not aware of Mutual Fund and its operations.
5. Source of information for customers about Mutual Fund
Source of information No. of Respondents
Advertisement 18
44
SBI Mutual Fund
Peer Group 25
Bank 30
Financial Advisors 62
Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 135 Respondents, 46%
know about Mutual fund Through Financial Advisor, 22% through Bank, 19%
through Peer Group and 13% through Advertisement.
6. Investors invested in Mutual Fund
Response No. of Respondents
45
SBI Mutual Fund
YES 120
NO 80
Total 200
Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested
in Mutual Fund.
7. Reason for not invested in Mutual Fund
Reason No. of
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SBI Mutual Fund
Respondents
Not Aware 65
Higher Risk 5
Not any Specific
Reason
10
Interpretation:
Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of
Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any
specific reason.
8. Investors invested in different Assets Management Co. (AMC)
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SBI Mutual Fund
Name of AMC No. of InvestorsSBIMF 53
UTI 70HDFC 30
Reliance 85ICICI Prudential 56
Kotak 40Others 70
Interpretation:
In Chandigarh most of the Investors preferred Reliance Mutual Fund and UTI. Out of
120 Investors 71% have invested in Reliance, 58% have invested in UTI, only 44%
have invested in SBIMF, 47% in ICICI Prudential, 33% in Kotak and 30% in HDFC.
9. Reason for invested in SBIMF
Reason No. of
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SBI Mutual Fund
Respondents
Associated with SBI 23
Better Return 15
Agents Advice 15
Interpretation:
Out of 53 investors of SBIMF 44% have invested because of its association with
Brand SBI, 28% invested on Agent’s Advice, 28% invested because of better return.
10. Reason for not invested in SBIMF
Reason No. of
Respondents
49
SBI Mutual Fund
Not Aware 25
Less Return 18
Agent’s Advice 22
Interpretation:
Out of 65 people who have not invested in SBIMF, 38% were not aware with
SBIMF, 28% do not have invested due to less return and 34% due to Agent’s Advice.
11. Preference of Investors for future investment in Mutual Fund
Name of AMC No. of InvestorsSBIMF 76
UTI 45
50
SBI Mutual Fund
HDFC 35Reliance 82
ICICI Prudential 71Kotak 60Others 75
Interpretation:
Out of 120 investors, 68% prefer to invest in Reliance, 59% in ICICI Prudential, 63%
in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual
Fund.
12. Channel Preferred by the Investors for Mutual Fund Investment
Channel Financial
Advisor
Bank AMC
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SBI Mutual Fund
No. of
Respondents
72 18 30
Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25%
through AMC and 15% through Bank.
13. Mode of Investment Preferred by the Investors
Mode of
Investment
One time
Investment
Systematic Investment Plan
(SIP)
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SBI Mutual Fund
No. of
Respondents
78 42
Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through
Systematic Investment Plan.
14. Preferred Portfolios by the Investors
Portfolio No. of InvestorsEquity 56
Debt 20
53
SBI Mutual Fund
Balanced 44
Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and
17% preferred Debt portfolio
15. Option for getting Return Preferred by the Investors
Option Dividend
Payout
Dividend
Reinvestmen
t
Gr
ow
th
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SBI Mutual Fund
No. of
Respondents
25 10 8
5
Interpretation:
From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout
and 8% preferred Dividend Reinvestment Option.
16. Preference of Investors whether to invest in Sectoral Funds
Response No. of Respondents
Yes 25
No 95
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SBI Mutual Fund
Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because
there is maximum risk and 21% prefer to invest in Sectoral Fund.
Chapter – 6
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SBI Mutual Fund
Findings and
Conclusion
Findings
In Chandigarh in the Age Group of 36-40 years were more in numbers.
The second most Investors were in the age group of 41-45 years and the
least were in the age group of above 50 years.
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SBI Mutual Fund
In Chandigarh most of the Investors were Graduate or Post Graduate and
below HSC there were very few in numbers.
In Occupation group most of the Investors were Businessman, the second
most Investors were Private employees, third were Govt. employees and
the least were associated with Agriculture.
In family Income group, between Rs. 20,001- 30,000 were more in
numbers, the second most were in the Income group of more than
Rs.30,000 and the least were in the group of below Rs. 10,000.
About all the Respondents had a Saving A/c in Bank, 67% Invested in
Fixed Deposits, Only 60% Respondents invested in Mutual fund.
Mostly Respondents preferred High Return while investment, the second
most preferred Low Risk then liquidity and the least preferred Trust.
Only 67% Respondents were aware about Mutual fund and its operations
and 33% were not.
Among 200 Respondents only 60% had invested in Mutual Fund and
40% did not have invested in Mutual fund.
Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told
there is not any specific reason for not invested in Mutual Fund and 6%
told there is likely to be higher risk in Mutual Fund.
Most of the Investors had invested in Reliance or UTI Mutual Fund,
ICICI Prudential has also good Brand Position among investors, SBIMF
places after ICICI Prudential according to the Respondents.
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SBI Mutual Fund
Out of 53 investors of SBIMF 44% have invested due to its association
with the Brand SBI, 28% Invested because of Advisor’s Advice and 28%
due to better return.
Most of the investors who did not invested in SBIMF due to not Aware
of SBIMF, the secondly due to Agent’s advice and Less Return.
For Future investment the maximum Respondents preferred Reliance
Mutual Fund, the second most preferred SBI Mutual Fund, ICICI
Prudential has been preferred after them.
60% Investors preferred to Invest through Financial Advisors, 25%
through AMC (means Direct Investment) and 15% through Bank.
65% preferred One Time Investment and 35% preferred SIP out of both
type of Mode of Investment.
The most preferred Portfolio was Equity, the second most was Balance
(mixture of both equity and debt), and the least preferred Portfolio was
Debt portfolio.
Maximum Number of Investors Preferred Growth Option for returns, the
second most preferred Dividend Payout and then Dividend Reinvestment.
Most of the Investors did not want to invest in Sectoral Fund, only 21%
wanted to invest in Sectoral Fund.
Conclusion
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SBI Mutual Fund
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 the
preferences of Brand (AMC), Products, Channels etc. 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 of people do not have invested in mutual
fund due to lack of awareness although they have money to invest. As the
awareness and income is growing the number of mutual fund investors
are also growing.
“Brand” plays important role for the investment. People invest in those
Companies where they have faith or they are well known with them.
There are many AMCs in Chandigarh but only some are performing well
due to Brand awareness. Some AMCs are not performing well although
some of the schemes of them are giving good return because of not
awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc.
they are well known Brand, they are performing well and their Assets
Under Management is larger than others whose Brand name are not well
known like Principle, Sunderam, etc.
Distribution channels are also important for the investment in mutual
fund. Financial Advisors are the most preferred channel for the
investment in mutual fund. They can change investors’ mind from one
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SBI Mutual Fund
investment option to others. Many of investors directly invest their
money through AMC because they do not have to pay entry load. Only
those people invest directly who know well about mutual fund and its
operations and those have time.
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SBI Mutual Fund
Chapter – 7
Suggestions
And
Recommendations
Suggestions and Recommendations
The most vital problem spotted is of ignorance. Investors should be
made aware of the benefits. Nobody will invest until and unless he is
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SBI Mutual Fund
fully convinced. 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.
Mutual Fund Company needs to give the training of the Individual
Financial Advisors about the Fund/Scheme and its objective, because
they are the main source to influence the investors.
Before making any investment Financial Advisors should first
enquire about the risk tolerance of the investors/customers, their need and
time (how long they want to invest). By considering these three things
they can take the customers into consideration.
Younger people aged under 35 will be a key new customer group into
the future, so making greater efforts with younger customers who show
some interest in investing should pay off.
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SBI Mutual Fund
Customers with graduate level education are easier to sell to and there is
a large untapped market there. To succeed however, advisors must
provide sound advice and high quality.
Systematic Investment Plan (SIP) is one the innovative products
launched by Assets Management companies very recently in the industry.
SIP is easy for monthly salaried person as it provides the facility of do
the investment in EMI. Though most of the prospects and potential
investors are not aware about the SIP. There is a large scope for the
companies to tap the salaried persons.
BIBLIOGRAPHY
NEWS PAPERS
64
SBI Mutual Fund
OUTLOOK MONEY
TELEVISION CHANNEL (CNBC AAWAJ)
MUTUAL FUND HAND BOOK
FACT SHEET AND STATEMENT
WWW.SBIMF.COM
WWW.MONEYCONTROL.COM
WWW.AMFIINDIA.COM
WWW.ONLINERESEARCHONLINE.COM
WWW. MUTUALFUNDSINDIA.COM
QUESTIONNAIRE
65
SBI Mutual Fund
A study of preferences of the investors for investment in mutual
funds.
1. Personal Details:
Name Contact No.Age
Address
Qualification: Please tick (√)
Occupation: Please tick (√)
Govt.
Ser
Pvt. Ser Business Agriculture Others
What is your monthly family income approximately? Please tick (√)
Up to Rs.10,000
Rs. 10,001 to 15000
Rs. 15,001 to 20,000
Rs. 20,001 to 30,000
Rs. 30,001 and above
2. What kind of investments you have made so far? Please tick (√) All applicable.
1. Saving
account
2. Fixed
deposits
3.
Insuranc
e
4. Mutual
Fund
5. Post Office-
NSC, etc
6.
Shares/Debent
ures
7. Gold/
Silver
8. Real
Estate
3. While investing your money, which factors will you prefer?
(a) Liquidity (b) Low Risk (c) High
Return
(d) Trust
Graduation/PG Under Graduate Others
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SBI Mutual Fund
4. Are you aware about Mutual Funds and their operations? Please tick (√). Yes No 5. If yes, how did you know about Mutual Fund? Please tick (√).
a).
Advertisemen
t
b). Peer
Group
c). Banks d). Financial
Advisors
6. Have you ever invested in Mutual Fund? Yes No 7. If not invested in Mutual Fund then why? Please tick (√).
A). Not aware of
MF
B). Higher Risk C). Not Any Specific
Reason
8. If yes, in which Mutual Fund you have invested? Please tick (√) All applicable.
a).
SBIM
F
b).
UT
I
c).
HDF
C
d).
Relianc
e
e).
Kota
k
f). Other. specify
9. If invested in SBIMF, you do so because (Please tick (√), all applicable).
a). SBIMF is associated with State Bank of India.
b). They have a record of giving good returns year after year.
c). Agent’ Advice
10. If NOT invested in SBIMF, you do so because (Please tick (√) all applicable).
a). You are not aware of SBIMF.
b). SBIMF gives less return compared to the others.
c). Agent’ Advice
11. When you plan to invest your money in asset management co. which AMC will you prefer?
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SBI Mutual Fund
ASSET MANAGEMENT COMPANY (√)
a). SBIMF
b). UTI
c). Reliance
d). HDFC
e). Kotak
f). ICICI
g). other
Suggested
12. Which Channel will you prefer while investing in Mutual Fund? Please tick (√)
a). Financial Advisor b). Bank c). AMC
13. When you invest in Mutual Funds which mode of investment will you prefer? Please tick (√)
a). One Time Investment b). Systematic Investment Plan (SIP)
14. When you want to invest which type of funds would you choose?
a). Having Only Debt Portfolio
b). Having Debt & Equity Portfolio
c). Only Equity Portfolio.
15. How would you like to receive the returns every year? Please tick (√)
a). Dividend
payout
b). Dividend re-
investment
c). Growth in NAV
16. Instead of general Mutual Funds, would you like to invest in sectorial funds? Please tick (√). Yes No
68