PROJECT ON

“INVESTOR PERCEPTION ABOUT INVESTMENT IN

MUTUAL FUND”

SUBMITTED FOR THE

PARTIAL FULFILLMENT OF TWO YEARS FULL TIME
COURSE

SUBMITTED TO

INTERNAL GUIDE: EXTERNAL GUIDE:

N.N PANDAY Mr. ABHINAV CHOUDHRY
IMS Unison University SBI Mutual fund pvt. Ltd.

SUBMITTED BY:Ayushee Singh :

Page | 1
 DECLARATION

We hereby declare that the project work entitled “INVESTOR PERCEPTION

ABOUT INVESTMENT IN MUTUAL FUND”

A SPECIAL REFERENCE TO SBI MUTUAL FUND PVT. LTD. submitted

to the “IMS UNISON UNIVERSITY”, is a record of an original work done by
us under the guidance of Prof. N.N. Panday, Faculty Member, MBA and this
project work has not performed the basis for the award of any Degree and
similar project if any.

Ayushee Singh

Page | 2
 ACKNOWLEDGEMENT

Preservation, inspiration and motivation have always played a key role in the success of any
venture. In the present world of cutthroat competition project is likely a bridge between
theoretical and practical working, willingly we have prepared this particular project.
First of all, I would like to thank the supreme power, the almighty god who is obviously the
one who has always directed us to work on the right path of our life. With this grace this
grace this project could become a reality.
We feel highly delighted with the way our dissertation report on topic “ INVESTOR’S
PERCEPTION ABOUT INVESTMENT” IN MUTUAL FUND: WITH SPECIAL
REFERENCE TO SBI MUTUAL FUND PVT. LTD. DEHRADUN” has been completed.
We would like to thanks Prof. N.N.Panday to provide us the fruitful guidance to complete the
project
.
Finally, I would like to thanks all the faculty members and others people who helped us in
completing this project.

Page | 3
 INTERNAL GUIDE CERTIFICATE

I have the pleasure in certifying that Mr. AKSHAY TYAGI is a bonafide student of 3rd
Semester of the Master’s Degree in Business Administration (Batch 2013-15), of IMS,
Unison University, Dehradun, Roll No 13 MBA 068.

He has completed his/her project work entitled “investor’s perception towards investment in
mutual fund: a special reference to SBI Mutual fund management. Pvt. Ltd. dehradun” under
my guidance.

I certify that this is his/her original effort & has not been copied from any other source. This
project has also not been submitted in any other Institute / University for the purpose of
award of any Degree.

This project fulfils the requirement of the curriculum prescribed by this Institute for the said
course. I recommend this project work for evaluation & consideration for the award of
Degree to the student.

Signature : ……………………………………
Name of the Guide : ……………………………………
Designation : ……………………………………
Date : ……………………………………

Page | 4
 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.

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.

Page | 5
The second part of the Project consists of data and its analysis collected through survey done on
100 people. For the collection of Primary data I made a questionnaire and surveyed of 100

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 Dehradun to get some knowledge related to my

topic. I studied about the products and strategies of other AMCs in Dehradun to know why

people prefer to invest in those AMCs. This Project covers the topic “INVESTORS

PERCEPTION ABOUT INVESTMENT IN MUTUAL FUND.” The data collected has been

well organized and presented. I hope the research findings and conclusion will be of use.

Page | 6
 CONTENTS
Sr. no. Chapter Page. No.

DECLERATION 2

ACKNOWLEDGMENT 3
INTERNAL GUIDE CERTIFICATE 4

EXECUTIVE SUMMARY 5

COMPANY CERTIFICATE 6

CHAPTER-01

1. INTRODUCTION 9

2. HISTORY OF MUTUALFUND 12

3. INTRODUCTION TO ORGANISATION 14
4. SBI MUTUAL FUND PRODUCT 17
5. COMPETITORS 26

6. TYPE OF MUTUAL FUND SCHEMES 28

7. MERITS & DEMERITS OF MUTUAL FUND 42

CHAPTER-02

1. RESEARCH METHODOLOGY 51

CHAPTER-03
1. OBJECTIVE & SCOPE OF STUDY 55

CHAPTER-04

1. ANALYSIS & INTERPRETATION OF THE DATA 58

FINDINGD 71

CONCLUSION 73

RECOMMENDATIONS AND SUGGESTIONS 75

BIBLIOGRAPHY 77

ANNEXURE-QUESTIONNAIRE 78

Page | 7
CHAPTER - 01

INTRODUCTION

Page | 8
 1. INTRODUCTION TO THE INDUSTRY

A mutual fund is a professionally-managed form of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities. In a mutual fund, the fund manager, who is also known as
the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses,
and collects the dividend or interest income. The investment proceeds are then passed along to
the individual investors. The value of a share of the mutual fund, known as the net asset value
per share (NAV) is calculated daily based on the total value of the fund divided by the number
of shares currently issued and outstanding.
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.

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)
Page | 9
 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.

GROWTH OF MUTUAL FUNDS IN INDIA

The Indian Mutual Fund has passed through three phases. The first phase was between 1964
and 1987 and the only player was the Unit Trust of India, which had a total asset of Rs. 6,700
crores at the end of 1988. The second phase is between 1987 and 1993 during which period 8
Funds were established (6 by banks and one each by LIC and GIC). The total assets under
management had grown to 61,028 crores at the end of 1994 and the number of schemes was
167.
The third phase began with the entry of private and foreign sectors in the Mutual Fund
industry in 1993. Kothari Pioneer Mutual Fund was the first Fund to be established by the
private sector in association with a foreign Fund. As at the end of financial year 2000(31st
march) 32 Funds were functioning with Rs. 1, 13,005 crores as total assets under management.
As on august end 2000, there were 33 Funds with 391 schemes and assets under management
with Rs 1, 02,849 crores.
The securities and Exchange Board of India (SEBI) came out with comprehensive
regulation in 1993 which defined the structure of Mutual Fund and Asset Management
Companies for the first time. Several private sectors Mutual Funds were launched in 1993 and
1994. The share of the private players has risen rapidly since then. Currently there are 34
Mutual Fund organizations in India managing 1,02,000 crores.

Page | 10
 VALUATION OF MUTUAL FUND

The net asset value of the Fund is the cumulative market value of the assets Fund net of its
liabilities. In other words, if the Fund is dissolved or liquidated, by selling off all the assets in
the Fund, this is the amount that the shareholders would collectively own. This gives rise to
the concept of net asset value per unit, which is the value, represented by the ownership of
one unit in the Fund. It is calculated simply by dividing the net asset value of the Fund by the
number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring
the “per unit”. We also abide by the same convention.

Calculation of NAV
The most important part of the calculation is the valuation of the assets owned by the
Fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of
units outstanding. The detailed methodology for the calculation of the net asset value is given
below. The net asset value is the actual value of a unit on any business day. NAV is the
barometer of the performance of the scheme. The net asset value is the market value of the
assets of the scheme minus its liabilities and expenses. The per unit NAV is the net asset value
of the scheme divided by the number of the units outstanding on the valuation date.

Page | 11
 HISTORY OF MUTUAL FUND INDUSTRY IN INDIA

The origin of Mutual Fund industry in India is with the introduction of the concept of
mutual fund by UTI in the year 1963. 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 dramatic improvements, both quality wise as well as quantity wise.
Before, the Monopoly of the Market had seen an ending phase; the Assets Under
Management (AUM) was Rs. 67bn. The private sector entry to the fund family raised the
AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less
than the deposits of SBI alone, constitute less than 11% of the total deposits held by the
Indian banking industry. The main reason of its poor growth is that the Mutual Fund industry
in India is new in the country. Large sections of Indian investors are yet to be intellectuated
with the concept. Hence, it is the prime responsibility of all mutual fund companies, to
market the product correctly abreast of selling. 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)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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 in 1989
and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.

Page | 12
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

This phase brought bitter experience for UTI. It was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835
crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does not
come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund
Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under
the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place
among different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29 funds, which
manage assets of Rs.153108 crores under 421 schemes.

Page | 13
 INTRODUCTION TO THE ORGANIZATION
SBI Mutual Fund

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the country with
an investor base of over 4.6 million. With over 20 years of rich experience in fund
management, SBI MF brings forward its expertise in consistently delivering valu e to its
investors.

Proven Skills in wealth generation:

SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track
record in judicious investments and consistent wealth creation.

The fund traces its lineage to SBI - India’s largest banking enterprise. The institution has
grown immensely since its inception and today it is India's largest bank, patronized by
over 80% of the top corporate houses of the country.

SBI Mutual Fund is a joint venture between the State Bank of India an d Société General
Asset Management, one of the world’s leading fund management companies that manages
over US$ 500 Billion worldwide.

Page | 14
 History of SBI Mutual Funds

 SBI mutual fund was setup on June 29th, 1987 and incorporated on February 7th,
1992. It is a result of joint venture between State Bank of India and Society Generale
Asset Management of France. This is a bank sponsored mutual fund and has a base of
3.5 million investors (approx). Over the years it has carved a niche for itself through
prudent investment decisions and consistent wealth creation for its customers. They
offer Mutual Fund products in Equity Funds, Index Funds, Balanced Funds, Debt
Funds, etc.
 The assets under management are Rs 33,727.90 crores as of June, 30, 2010.
 Investment Yogi analyses the best performing SBI mutual fund in the Balanced Fund,
Equity Fund and Equity Linked Savings Scheme (ELSS) categories.

SBI Mutual Fund operates under State Bank of India and Society Generale Asset
Management of France and has asset management experience of more than 25 years. SBI
Mutual Fund offers different kinds of products like growth based products, income based
products and balanced funds.

The SBI Mutual Fund operates under State Bank of India and Société Générale Asset
Management of France. With over twenty years of experience in asset management, the
company has grown immensely since its establishment. SBI Mutual Funds offer innovative
mutual fund products to its wide pool of customers and its products are available across India.
It has a wide portfolio of products that meet the requirements of different types of investors.
The SBI Mutual Fund is headed by Mr Syed Shahabuddin, Managing Director of the
company.

Page | 15
 KEY INFORMATION OF SBI MUTUAL FUNDS

Setup date Jun-29-1987

Incorporation date Feb-07-1992

Sponsor State Bank of India

Trustee SBI Mutual Fund Trustee Company

Private Limited

Chairman Ms.Arundhati Bhattacharya

CEO / MD Mr. Dinesh Kumar Khara

CIO Mr. Navneet Munot

Compliance Officer Ms. Vinaya Datar

Investor Service Officer Mr. C A Santosh

Assets Managed Rs.47184.11 crore (Jun-30-2012)

Custodians Computer Age management Services

Pvt.Ltd, Computeronics Financial Services
Ltd, Datamatics Financial Software
Services Ltd.

Corporate Office SBI Funds Management Pvt Ltd.

A joint venture between SBI and
AMUNDI
191, maker Tower „E‟,Cuffe Parade,
Mumbai - 400 005.
Toll Free No. 1800 425 5425

Page | 16
 SBI- MUTUAL FUND PRODUCTS

 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 t o 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.

A. Magnum Equity Fund

B. Magnum Global Fund
C. Magnum Index Fund
D. Magnum Midcap Fund
E. Magnum Multicap Fund
F. Magnum Sector Funds Umbrella
MSFU - FMCG Fund
MSFU - Emerging Businesses Fund
MSFU - IT Fund
MSFU - Pharma Fund
MSFU - Contra Fund
G. SBI Blue chip Fund
H. SBI Magnum Taxgain Scheme 1993

Page | 17
  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 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.

A. Magnum Children’s Benefit Plan

B. Magnum Gilt Fund
Magnum Gilt Fund (Long Term)
Magnum Gilt Fund (Short Term)
C. Magnum Income Plus Fund
Magnum Income plus Fund (Saving Plan)
Magnum Income plus Fund (Investment Plan)
D. Magnum Insta Cash Fund
E. SBI Debt Fund Series
SDFS 15 Months Fund
SDFS 90 Days Fund
SDFS 13 Months Fund
SDFS 18 Months Fund
SDFS 24 Months Fund
SDFS 30 DAYS
SDFS 30 DAYS
SDFS 60 Days Fund
SDFS 180 Days Fund
SDFS 30 DAYS
F. SBI Premier Liquid Fund

Page | 18
  BALANCED SCHEMES

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
 Magnum NRI Investment Fund - Flexi Asset Plan

Page | 19
CONCEPT OF MUTUAL FUND

Page | 20
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.

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
appreciations realized 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. Page | 21
 MUTUAL FUND
There are many entities involved and the diagram below illustrates the organizational set up
of a mutual fund:

THREE-TIER STRUCTURE OF MUTUAL FUNDS

The structure of Mutual Funds in India is governed by the SEBI (Mutual Fund)
Regulations, 1996 (hereinafter referred to as SEBI Regulations). These
regulations make it mandatory for Mutual Funds to have a Three-tier Structure
of Sponsor Trustee- Asset Management Company (AMC).

Sponsor
The sponsor is the promoter of the mutual fund. The sponsor establishes the
mutual fund and registers same with SEBI. It appoints the trustees, Custodians
and the AMC with prior approval of SEBI, and in accordance with SEBI
Regulations. Sponsor is required to contribute at least 40% of the capital of the
AMC.

Trustees
The Mutual Fund, which is a trust, is managed by a Trust Company or a Board
of Trustees. Board of trustees and trust companies are governed by the
provisions of the Indian Trust Act. The appointment of all the trustees has to be
done with the prior approval of SEBI. There Page | 22
must be at least 4 members in the board of Trustees and at
least 213 of the members of the board of trustees must be
independent. One of the major tasks of the Trustees is to
appoint AMC, in consultation with the Sponsor and SEBI
regulations.

Asset Management Company (AMC)

Asset Management Company, registered with SEBI, can be
appointed as investment managers of mutual funds. AMC
must have a minimum net worth of 10 crore at all times. An
AMC cannot be an AMC or Trustee of another Mutual Fund.
AMC appoints the Fund Managers in consultation with
trustees.

Page | 23
 CATEGORIES OF 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 weekly. Redemption of units can be made during specified
intervals. Therefore, such funds have relatively low liquidity.

Page | 24
 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.

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:

Page | 25
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.

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.

Page | 26
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.

Page | 27
 TYPES OF MUTUAL FUND SCHEMES

Wide varieties of Mutual Fund Schemes exist to cater to the needs such as financial position,
risk tolerance and return expectations etc. Since the needs and aspirations of different
individuals vary from person to person, there are absolutely different kinds of mutual funds
for investment. There could be various categories of mutual funds in India. The governing
body for these funds being the Securities Exchange Board of India (SEBI). All varieties of
mutual funds are governed by it in an all-pervasive manner.

Schemes can be differentiated by two broad parameters:

(a) Their constitution or structure.

(b) Their stated investment objective.

Differentiation on the basis of structure of schemes

Schemes are classified as Close-ended or Open-ended depending upon whether they give the
investor the option to redeem at any time (open-ended) or whether the investor has to wait till
maturity of the scheme.

Open-Ended-Schemes

The units offered by these schemes are available for sale and repurchase on any business day
at NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such
schemes thus offer very high liquidity to investors and are becoming increasingly popular in
India. Please note that an open-ended fund is not obliged to keep selling/issuing new units at
all times, and may stop issuing further subscription to new investors. On the other hand, an
open-ended fund rarely denies to its investor the facility to redeem existing units.

Close-Ended-Schemes

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number
of units. These schemes are launched with an initial public offer (IPO) with a stated maturity
period after which the units are fully redeemed at NAV linked prices. In the interim, investors
can buy or sell units on the stock exchanges where they are generally listed. Unlike open-
ended schemes, the unit capital in Close-ended schemes usually remains unchanged. After an
initial closed period, the scheme may offer direct compared to open-ended schemes and
hence trade at a discount to the NAV. This discount tends towards the NAV closer to the
maturity date of the scheme.

Page | 28
Interval-Schemes
These schemes combine the features of Open-ended and Close-ended schemes. They may be
traded on the stock exchange or may be open for sale or redemption during pre-determined
intervals at NAV based prices.

Differentiation on the basis of investment objectives

Schemes can be classified by way of their stated investment objective such as Growth Fund,
Balanced Fund, Income Fund etc.

Equity/Growth Schemes

These schemes, also commonly called Growth Schemes, seek to invest a majority of their
funds in equities and a small portion in money market instruments. Such schemes have the
potential to deliver superior returns over the long term. However, because they invest in
equities, these schemes are exposed to fluctuations in value especially in the short term.
Equity schemes are hence not suitable for investors seeking regular income or needing to use
their investments in the short-term. They are ideal for investors who have a long-term
investment horizon. The NAV prices of equity fund fluctuates with market value of the
underlying stock which are influenced by external factors such as social, political as well as
economic. HDFC Equity Fund and HDFC Top200 Fund are examples of equity schemes.

Page | 29
Income/Debt-Schemes

These schemes invest in money markets, bonds and debentures of corporate companies with
medium and long-term maturities. These schemes primarily target current income instead of
capital appreciation. Hence, a substantial part of the distributable surplus is given back to the
investor by way of dividend distribution. These schemes usually declare quarterly dividends
and are suitable for conservative investors who have medium to long term investment horizon
and are looking for regular income through dividend or steady capital appreciation.

These schemes, also commonly known as Income Schemes, invest in debt securities such as
corporate bonds, debentures and government securities. The prices of these schemes tend to
be more stable compared with equity schemes and most of the returns to the investors are
generated through dividends or steady capital appreciation. These schemes are ideal for
conservative investors or those who are not in a position to take higher equity risks. However,
as compared to the money market schemes they do have a higher price fluctuation risk and
compared to a Gilt fund they have a higher credit risk. HDFC Income Fund is an example of
bond schemes.

Page | 30
Hybrid/Balanced Schemes

These schemes are also commonly called balanced schemes. These invest in both equities as
well as debt. By investing in a mix of this nature, balanced schemes seek to attain the
objective of income and moderate capital appreciation. Such schemes are ideal for investors
with a conservative, long-term orientation. HDFC Prudence Fund and HDFC Balance Fund
are perfect examples of such hybrid schemes.

Other Schemes:

Tax-Saving-Schemes

Investors (individuals and Hindu Undivided Families ("HUFs")) are being encouraged to
invest in equity markets through Equity Linked Savings Scheme ("ELSS") by offering them a
tax rebate. Units purchased cannot be assigned / transferred/ pledged / redeemed / switched -
out until completion of 3 years from the date of allotment of the respective Units. The
Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations,
1996 and the notifications issued by the Ministry of Finance (Department of Economic
Affairs), Government of India regarding ELSS. Subject to such conditions and limitations, as
prescribed under Section 88 of the Income-tax Act, 1961, subscriptions to the Units not
exceeding Rs.10, 000 would be eligible to a deduction, from income tax, of an amount equal
to 20% of the amount subscribed.

Page | 31
Special Schemes:

Sector-Specific-Equity-Schemes

These schemes restrict their investing to one or more pre-defined sectors, e.g. technology
sector. They depend upon the performance of these select sectors only and are hence
inherently more risky than general purpose equity schemes. These schemes are ideally suited
for informed investors who wish to take a risk on the concerned sector.

Index-Schemes

An Index is too used as a measure of the performance of the market as a whole, or a specific
sector of the market. It also serves as a relevant benchmark to evaluate the performance of
mutual funds. Some investors are interested in investing in the market in general rather than
investing in any specific fund. Such investors are happy to receive the returns posted by the
markets. As it is not practical to invest in each and every stock in the market in proportion to
its size, these investors are comfortable investing in a fund that they believe is a good
representative of the entire market. Index Funds are launched and managed for such
investors.

Page | 32
 RISK V/S. RETURN

RISK RETURN ANALYSIS OF THE SCHEMES

A rational investor before investing his or her money in any stock analyses the risk
associated with the particular stock. The actual return he receives from a stock may vary
from the expected one and thus a investor is always cautious about the rate of risk
associated with the particular stock. Hence it becomes very essential on the part of
investors to know the risk as the hard earned money is being invested with the view to
earn good return on the investment.

Risk mainly consists of two components

Systematic risk

Unsystematic risk

Page | 33
Systematic risk

The systematic risk affects the entire market. The economic conditional, political
situations, sociological changes affect the entire market in turn affecting the company and
even the stock market. These situations are uncontrollable by the corporate and investor.

Unsystematic risk

The unsystematic risk is unique to industries. It differs from industry to industry.

Unsystematic risk stems from managerial inefficiency, technological change in the
production process, availability of raw materials, changes in the consumer preference,
and labour problems. The nature and magnitude of above mentioned factors differ from
industry to industry and company to company.

In a general view, the risk for any investor would be the probable loss for investing
money in any mutual fund. But when we look at the technical side of it , we can’t just say
that these schemes/fund carry risk without any proof. They are certain set of formulas to
say the percentage of risk associated with it.

There are certain tools or formulas used to calculate the risk associated with the
schemes. These tools help us to understand the risk associated with the schemes. These
schemes are compared with the benchmark BSE 100.

Page | 34
Page | 35
 COMPETITORS OF SBI MUTUAL FUND

Name of Mutual Fund Company/AMC Website

Axis Asset Management Company Ltd. www.axismf.com

Birla Sun Life Asset Management Company Ltd www.birlasunlife.com

HDFC Asset Management Company Ltd www.hdfcfund.com

ICICI Prudential Asset Management Company Ltd www.icicipruamc.com

IDBI Asset Management Ltd. www.idbimutual.co.in

L&T Investment Management Ltd. www.lntmf.com

Reliance Capital Asset Management Ltd. www.reliancemutual.com

Sundaram Asset Management Company Ltd www.sundarammutual.com

UTI Asset Management Company Ltd www.utimf.com

Tata Asset Management Ltd www.tatamutualfund.com

NG Investment Management (India) Pvt. Ltd. www.ingim.co.in

Indiabulls Asset Management Company Ltd. www.indiabullsmf.com

Edelweiss Asset Management Ltd www.edelweissmf.com

Kotak Mahindra Asset Management Company Ltd. www.kotakmutual.com

Page | 36
 FACTORS TO BE CONSIDERED BEFORE SELECTING A
MUTUAL FUND

1. Making Risk- adjusted returns comparison. By doing this the investor will know whether
the returns generated by the scheme have been adequately compensated for the extra risk
undertaken by the scheme.
2. The investor depending upon his risk appetite and preferences should sub-classify the
schemes on the basis of the characteristics of the schemes, which may be defensive or
aggressive in nature.

3. Portfolio concentration is also an important factor to be considered. It is always advisable

to choose a scheme, which has a well-diversified portfolio rather than a concentrated
portfolio, as it carries lesser risk.

4. Liquidity of the portfolio is also one of the critical parameters.

5. The corpus size of the scheme is also of importance. A large corpus size firstly denotes
investor’s confidence in the scheme and its fund manger abilities over the years and,
secondly it allows the fund manager to diversify the portfolio, which reduces the overall
market risk.

6. Other factors like turnover rates, low expense ratio, load structure etc of the schemes etc
should also be considered before finally zeroing down on a scheme of your choice.

7. The rankings undertaken by ICRA are an initiative to inform the investors- who does not
have the time or the expertise to undertake the analysis on their own- about the relative
performance of the schemes. It considers all important parameters to arrive at a
comprehensive rank with a view to help investors decide the scheme which may suit their
investment profile.

8. Although much neglected, the due diligence in selection of the right mutual fund scheme
is of utmost importance as an investor cannot move in and out of a particular scheme on a
regular basis, because of the high costs involved, and investments made into a particular
scheme should be looked on a long-term basis as a wealth creation tool.

Page | 37
 5 EASY STEPS TO INVEST IN MUTUAL FUNDS

Where to look for if you want to begin savings in Mutual Funds

Mutual funds are much like any other product, in that there are manufacturers who provide
the product and there are dealers who sell them.
Large banks to organized brokerage houses to Individual Financial agents get empanelled
with Mutual Funds to provide advice and assistance to customers who want to buy units.
Mutual funds units can now also be bought over the Internet.
Contacting an Investment advisor in a bank or a brokerage house or an Independent Financial
Advisor is the first step to gathering information.

1. Evaluation: choosing the right mutual fund for you

Each Mutual fund offers a variety of schemes to suit differing needs of investors. The
Bank/ Brokerage house/ Individual Financial Advisor help you make the choice based
on your needs. As an investor one may:
a) For the short term or long term want to invest.
b) Want regular income or growth.
c) Want to target lower risk or higher returns.
d) Be convinced of a particular sector and want to invest in it.

Page | 38
 Remember, just like a salesman in a gift shop, your investment advisor can help you
the most if he knows what you are looking for.

2. Purchase
After you have decided to save, you may have to decide among the various
investment and withdrawal options that any fund offers to its investors.
Most of these schemes also offer various options to customize your operation of the
fund to your needs:

Systematic Investment Plan (SIP): Allows you to save a part of your income regularly.
It is also used to reduce risk when investing in schemes targeting aggressive growth.

Systematic Withdrawal Plan (SWP): Allows you to withdraw a part of your

investment regularly. Used when you want to withdraw your investment for a specific
regular payment, like insurance premium payments of monthly/quarterly frequency.

Automatic debit: Saves the hassle of writing a cheque when making an investment.
Your account is debited automatically for the amount invested.

Automatic credit: The reverse of Automatic Debit. It saves the hassle of enchasing a
cheque when withdrawing an investment. Your account is credited automatically with
the amount withdrawn.

Dividend plan: Allows you to get Tax-free dividends from your investment. (As per
current Tax laws).

Growth plan: Allows the income generated from investment to be ploughed back into
the scheme. Used by investor targeting growth in their investment.

Some funds carry an entry load, which is a percentage fee deducted from the amount
invested before investment. Thus a 2.5% entry load will mean that if you invest Rs. 1
lakh in a Rs. 10 per unit IPO, instead of getting 10,000 units, you will be allotted
9,750 units. Check for presence of such loads and other conditions before investing.

Page | 39
 After deciding the choice of mutual fund, investment and withdrawal, you are ready
to begin your savings. You need to now fill up an application form and attach a
cheque of the value of your investment or mention your account number to have it
automatically debited from your account.

3. Post Purchase Monitoring

Once you have invested in an ongoing fund, expect a period of two to three days
before you receive an account statement on the address mentioned by you in your
application form.
Your account statement indicates your current holding in the scheme that you have
invested. Please ensure that all your details have been correctly captured in account
statement. Please point out any discrepancies to your nearest CAMS investor Service
Centre or the Mutual Fund office. You can request an account statement any time by
calling up your nearest CAMS/ Mutual fund offices usually mentioned on the back of
the account statement.
The transaction slip at the end of the account statement can be used for additional
purchases, redemptions or to intimate the mutual fund on any change in bank
mandates/address. The NAVs of all the open-ended schemes are published at the
fund's website, financial newspapers and
AMFI (Association of Mutual Funds) web-site www.amfiindia.com.

4. Exit
While you should periodically monitor the performance of your investments, we
recommend you do not get swayed by short term considerations in deciding your exit.
If you have invested in a long term fund, you can spare yourself undue worries by not
monitoring the NAV every day or week. Checking the performance once in a while
along with your advisor should be fine. Most mutual funds will provide you with a
toll free number that works from 9 am to 5 am and a website. For specific assistance
you can also use your financial advisors help.

5. Redemption/ Withdrawal
Just submit your completed transaction within the transacted time for the scheme that
you are invested in and deposit the same at the nearest CAMS Investor Service Centre
or the office of the fund. You can either get a direct credit to your bank account or

Page | 40
you can generally collect the cheque at the CAMS Investor Service Centre/ AMC
offices. If you fail to do so then the cheque is couriered to the address mentioned in
your account statement. Most funds take 1-3 days to credit your account with your
redemption proceeds.
In case an exit load is applicable to your withdrawal and you have redeemed a fixed
amount, an additional number of units equivalent to the exit load amount will be
liquidated from your investment. You can check this amount with the mentioned exit
load when you get the account statement using a simple calculator.

Page | 41
 Merits and Demerits of mutual funds

Merits of Mutual Funds

1. Professional Investment Management.

By pooling the funds of thousands of investors, mutual funds provide full-time, high-level
professional management that few individual investors can afford to obtain independently.
Such management is vital to achieving results in today's complex markets. Your fund
managers' interests are tied to yours, because their compensation is based not on sales
commissions, but on how well the fund performs. These managers have instantaneous access
to crucial market information and are able to execute trades on the largest and most cost-
effective scale. In short, managing investments is a full-time job for professionals.

2.Diversification.
Mutual funds invest in a broad range of securities. This limits investment risk by reducing the
effect of a possible decline in the value of any one security. Mutual fund shareowners can
benefit from diversification techniques usually available only to investors wealthy enough to
buy significant positions in a wide variety of securities.

3.LowCost.
If you tried to create your own diversified portfolio of 50 stocks, you'd need at least $100,000
and you'd pay thousands of dollars in commissions to assemble your portfolio. A mutual fund
lets you participate in a diversified portfolio for as little as $1,000, and sometimes less. And if
you buy a no-load fund, you pay no sales charges to own them.

4. Convenience and Flexibility.

You own just one security rather than many, yet enjoy the benefits of a diversified portfolio
and a wide range of services. Fund managers decide what securities to trade, clip the bond
coupons, collect the interest payments and see that your dividends on portfolio securities are
received and your rights exercised. It's easy to purchase and redeem mutual fund shares,
either directly online or with a phone call.
5. Quick, Personalized Service.

Page | 42
Most funds now offer extensive websites with a host of shareholder services for immediate
access to information about your fund account. Or a phone call puts you in touch with a
trained investment specialist at a mutual fund company who can provide information you can
use to make your own investment choices, assist you with buying and selling your fund
shares, and answer questions about your account status.

6. Ease of Investing
You may open or add to your account and conduct transactions or business with the fund by
mail, telephone or bank wire. You can even arrange for automatic monthly investments by
authorizing electronic fund transfers from your checking account in any amount and on a date
you choose. Also, many of the companies featured at this site allow account transactions
online.

7. Total Liquidity, Easy Withdrawal

You can easily redeem your shares anytime you need cash by letter, telephone, bank wire or
check, depending on the fund. Your proceeds are usually available within a day or two.

8. Life Cycle Planning

With no-load mutual funds, you can link your investment plans to future individual and
family needs -- and make changes as your life cycles change. You can invest in growth funds
for future college tuition needs, then move to income funds for retirement, and adjust your
investments as your needs change throughout your life. With no-load funds, there are no
commissions to pay when you change your investments.

9. Market Cycle Planning

For investors who understand how to actively manage their portfolio, mutual fund
investments can be moved as market conditions change. You can place your funds in equities
when the market is on the upswing and move into money market funds on the downswing or
take any number of steps to ensure that your investments are meeting your needs in changing
market climates. A word of caution: since it is impossible to predict what the market will do
at any point in time, staying on course with a long-term, diversified investment view is
recommended for most investors.

Page | 43
10. Investor Information
Shareholders receive regular reports from the funds, including details of transactions on a
year-to-date basis. The current net asset value of your shares (the price at which you may
purchase or redeem them) appears in the mutual fund price listings of daily newspapers. You
can also obtain pricing and performance results for the all mutual funds at this site, or it can
be obtained by phone from the fund.

11. Periodic Withdrawals

If you want steady monthly income, many funds allow you to arrange for monthly fixed
checks to be sent to you, first by distributing some or all of the income and then, if necessary,
by dipping into your principal.

12. Dividend Options

You can receive all dividend payments in cash. Or you can have them reinvested in the fund
free of charge, in which case the dividends are automatically compounded. This can make a
significant contribution to your long-term investment results. With some funds you can elect
to have your dividends from income paid in cash and your capital gains distributions
reinvested.

13. Automatic Direct Deposit

You can usually arrange to have regular, third-party payments -- such as Social Security or
pension checks -- deposited directly into your fund account. This puts your money to work
immediately, without waiting to clear your checking account, and it saves you from worrying
about checks being lost in the mail.

14. Recordkeeping Service

With your own portfolio of stocks and bonds, you would have to do your own recordkeeping
of purchases, sales, dividends, interest, short-term and long-term gains and losses. Mutual
funds provide confirmation of your transactions and necessary tax forms to help you keep
track of your investments and tax reporting.

Page | 44
15. Safekeeping
When you own shares in a mutual fund, you own securities in many companies without
having to worry about keeping stock certificates in safe deposit boxes or sending them by
registered mail. You don't even have to worry about handling the mutual fund stock
certificates; the fund maintains your account on its books and sends you periodic statements
keeping track of all your transactions.

16. Retirement and College Plans

Mutual funds are well suited to Individual Retirement Accounts and most funds offer IRA-
approved prototype and master plans for individual retirement accounts (IRAs) and Keogh,
403(b), SEP-IRA and 401(k) retirement plans. Funds also make it easy to invest -- for
college, children or other long-term goals. Many offer special investment products or
programs tailored specifically for investments for children and college.

17. Online Services

The internet provides a fast, convenient way for investors to access financial information. A
host of services are available to the online investor including direct access to no-load
companies.

18. Sweep Accounts

With many funds, if you choose not to reinvest your stock or bond fund dividends, you can
arrange to have them swept into your money market fund automatically. You get all the
advantages of both accounts with no extra effort.

19. Asset Management Accounts

These master accounts, available from many of the larger fund groups, enable you to manage
all your financial service needs under a single umbrella from unlimited check writing and
automatic bill paying to discount brokerage and credit card accounts.

20. Margin
Some mutual fund shares are marginable. You may buy them on margin or use them as
collateral to borrow money from your bank or broker. Call your fund company for details.
Page | 45
 Demerits of Mutual Funds

1. Professional Management.
Did you notice how we qualified the advantage of professional management with the word
"theoretically"? Many investors debate whether or not the so-called professionals are any
better than you or I at picking stocks. Management is by no means infallible, and, even if the
fund loses money, the manager still takes his/her cut. We'll talk about this in detail in a later
section.

2. Costs.
Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. The
mutual fund industry is masterful at burying costs under layers of jargon. These costs are so
complicated that in this tutorial we have devoted an entire section to the subject.

3. Dilution.
It's possible to have too much diversification. Because funds have small holdings in so many
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-gains 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.

Page | 46
 Systematic Investment Plan
What is an SIP?
SIP, also known as Regular Savings Plan (RSP) in some countries, allows you to invest a
fixed amount at pre defined frequencies in mutual funds. A bank / post office recurring
deposit is the only other investment option that is similar to SIP. There are basically two
options that an investor could take when they are making investments, one would be to invest
lump sum into mutual funds and the other would be to invest using an SIP. The following are
some of the benefits associated with investing in an SIP: SIP is actually a Systematic
Investment Plan of investing in Mutual Fund. It is specially designed for those who aim to
build wealth over a long period and want a better future for him and their dependants. The
investment in a Mutual fund can be done in two ways. First way is one time payment i.e.
making payment to a fund at once and gets the units of the fund as per the Net Asset Value
(NAV) of the fund on that day. A person wishes to invest in a fund Rs. 24,000/- . On the day
of Investment, the NAV of the fund was Rs. 10/-. He gets 2400 units @ Rs. 10/- per unit. The
other way of investment is making payment to the fund periodically, which is termed as
Mutual Fund SIP. When you commit to invest a fixed amount monthly in a fund, it is called
as Systematic Investment. It is actually beneficial for those investors who wish to invest a
large amount in a fund and wishes to create a large chunk of wealth for long term but due to
financial constraints are able to do so. The SIP provides them a way to invest in the fund of
their choice in installments. Eg. A person wishes to invest Rs. 24000/- in a fund but due to
other obligations, it is not possible for him to invest such an amount in a fund. He takes the
SIP route and contributes to the fund Rs. 2000/- monthly for a year. At the end of the year,
he’ll have invested Rs. 24,000/- in the fund. When the NAV is high, he will get the fewer
units and when the NAV is low, he’ll get the more units. So, he’ll get the benefit of averaging
through the SIP route. The NAV in the first month was Rs. 10/-, he’ll get 200 units in the first
month. The NAV in the second month was Rs. 9.50/-, he’ll get 210.52 units in second month
The NAV for the following month was Rs. 10, he’ll get 200 units in the next month So, at the
end of the year he may get more units as compared to the units he’ll get through single
investment. Systematic investment plans are a systematic and disciplined approach to
investment and wealth creation. Instead of making a large investment at one time, in SIP you
can invest small sums at regular intervals thus creating a habit of regular savings. If you are a
big spender and find your expenditures are more than your earnings then go for SIP mutual
funds. This will force you to spend at least some part of your earnings every month. Mutual

Page | 47
funds are a very safe way of investing money and SIP mutual funds are even better. These are
perfect solutions to most of us who cannot afford to make a large investment at one go. This
is a good way to save for your child's education, marriage or comfortable retirement for you
and your spouse. The lowest start up investment amount is 500 rupees per month which is
affordable by most people.
State Bank of India is one of the most trusted public sector banks in India. If you are a
beginner in investment then SBI SIP plans may be good option for you. Here are some SBI
SIP mutual funds available. Magnum Equity Fund - Minimum application of thousand rupees
is needed and SIP is Rs. 500/month for 12 months.
Magnum Tax Gain - Minimum application amount is Rs 500 and minimum SIP amount is
Rs.500/month for12 months Magnum Index Fund - Minimum SIP amount is Rs.500/month
for12 months Magnum Sector Funds Umbrella - Minimum investment amount is Rs. 2000
per sector and minimum SIP amount is Rs.500/month for12 months Magnum Global Fund -
Minimum SIP amount is Rs.500/month for12 months Magnum Midcap Fund - Minimum SIP
amount is Rs.500/month for12 months Magnum Mutlicap Fund - Minimum SIP amount is
Rs.500/month for12 months Blue Chip Fund - Minimum investment - Rs. 5000 and in
multiples of Rs. 1000.

SBI mutual funds, has launched equity-based Micro Systematic Investment Plan (Micro SIP)
aimed at getting in low income households in rural and semi-urban areas to benefit from the
long-term investment in ‘Equity’ as an asset class. This plan will be called SBI Chota SIP.

For monthly investment as low as Rs. 100, investors from low-income group as well as
investors who intend to invest small portion of their savings would now be able to participate
in capital markets and be a part of India growth story.

Micro SIP facility will be available in respect of four equity diversified schemes of SBI
Mutual fund with effect from April 15, 2009. They are Magnum Balanced Fund, Magnum
Multiplier Plus Scheme 93, Magnum Sector Funds Umbrella-Contra fund, and SBI Blue Chip
fund.

The minimum investment amount will be Rs.100 and multiples of Rs.50/- thereof. The
minimum redemption amount will be Rs.500/-. Minimum tenure of SIP will be 5 years.

Page | 48
Systematic Investment Plan is the best option for retail investors to invest in Mutual Funds.
SBI Mutual Fund is one of the best performing mutual fund company in India. The investors
feel more comfortable in SBI SIP plan. You can make a SIP plans comparison and find the
best SBI SIP fund.

There are many reasons for the investors feeling that SBI SIP fund is the best systematic
investment plan in india. Most of the schemes under SBI Systematic investment plan has
been generating returns more consistently. If you check the returns for most of the SIP plans,
they are generating consistent returns for the past 6 months, 1 year and 3 years. This would
prove that the SBI schemes are performing well than the funds launched by the other
companies.

The minimum amount that has to be paid every month is Rs 500. Recently SBI has launched
another fund "SBI Chotta SIP Scheme" in which the minimum investment amount is Rs 100.
This scheme was introduced to encourage more retail participation. The low income people
will be more benefited from this scheme as this type of investment is similar to investing in a
recurring deposit and they can get the benefits of the stock markets.

SBI Chota SIP:

Recently SBI has launched micro systematic investment plan called "SBI Chota SIP", where
you can make a minimum payment of Rs 100 every month. This helps the low income people
in the rural areas to invest their money in the equity. There is also SIP auto debit facility for
this plan. If you have opted for this option, then your monthly installment will be withdrawn
automatically from your bank savings account each month. You can get the sip application
form from the various SBI Mutual fund offices available all over India or in the designated
state bank of india branches.

You have to fill the form and submit a PAN Card copy along with the application form. If you
apply for a sip auto debit facility, you should also fill a authorization form for the banks.
Once the application form is processed, you will get a statement indicating the number of
units allotted for you and also the price at which it is allotted. This statement you will get
every month when the monthly payments are sent from the bank and credited to the fund
account. The price at which the new units are allotted will change depending on the latest
NAV.

Page | 49
 CHAPTER - 02

RESEARCH METHODOLOGY

Page | 50
 RESEARCH METHODOLOGY

A Market Research was performed to find out the actuality from the investors about what
they think about the various Investment Options. It was done to find out the investment
patterns and behavior of the people i.e. how much they invest, what are the reasons behind
their investments, and where they invest.
Thus a questionnaire was devised to fetch the above mentioned information from the
investors. Most of the questions in the questionnaires were objective in nature which helped
the people to fill it with utmost ease. The sample size for the research was 100, which
included all the classes of people aged 18 and above. The questionnaire devised for the
market research is attached to the report as Annexure I.
Each question of the questionnaire is discussed on a separate page and the results are
explained with the help of graphs.

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 and some special publications of SBI .

Page | 51
Sampling:

 Sampling procedure:

The sample is selected in a random way, irrespective of them being investor or not or
availing the services or not. It was collected through mails and personal visits to the
known persons, by formal and informal talks and through filling up the questionnaire
prepared. The data has been analyzed by using the measures of central tendencies like
mean, median, mode. The group has been selected and the analysis has been done on
the basis statistical tools available.
 Sample size:

The sample size of my project is limited to 100 only. Out of which only 75 people
attempted all the questions. Other 25 not investing in MFs attempted only 2 questions.

 Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.

 Limitation of the study:

 Time limitation.

 Research has been done only at southern Jaipur.

 Some of the persons were not so responsive.

 Possibility of error in data collection.

 Possibility of error in analysis of data due to small sample size.

Page | 52
 RESEARCH METHODOLOGY TABLE

Universe DEHRADUN. Rajpur Road,

cantt Area

Sample size 100 customer

Sample unit Customers visiting at SBI

bank

Sampling technique Technique Convenience sampling

Research design Descriptive

Collection of data Primary data through

Questionnaires and interaction
with customers

Secondary data Internet.

Duration 60 Days

Page | 53
 CHAPTER – 03

Objective & Scope of Study

Page | 54
 Objective & Scope of Study

Objective of research:

1. To find out the Preference of the investors for Asset Management of

company.
2. To know the preference of the portfolios.
3. To know why one has invested in SBI Mutual Funds.
4. To find out the most preference channel.
5.To find out investors interest regarding SBI mutual fund.
6. To analyze the comparative study between other leading mutual funds in the

present market

Scope of the study:

A large number of new player have entered in the market and trying to gain market share in
this rapidly improving market.

The research was carried on in Dehradun city. I have been send at one branch of SBI (State
bank of India) where I completed my project work. I surveyed on my Project Topic
“INVESTORS PERCEPTION ABOUT INVESTMENT IN MUTUAL FUND” on the
visiting to individual & business man.

The study will help to know the interest & preferences of the customers, regarding portfolio,
mode of investment, option, getting return they prefer.

Page | 55
 CHAPTER – 04

ANALYSIS & INTERPRETATION

OF THE DATA

Page | 56
ANALYSIS & INTERPRETATION
OF THE DATA

1.Investor age distribution

Age Distribution

15%

40% Below 30
30-40
40 Above
45%

FINDINGS
Out of 100 investors 15% investors are below the age of 30 years, 45% investors are between
30-40 years 40% investors are above the age of 40 years.

2. Investor Qualification
Graduation/PG 60
Under Graduate 15
Others 45

Page | 57
 Qualification

25%
Graduation
Under Graduation
60% Other
15%

FINDINGS:
Out of 100 investors 60% are graduate, 15% are under graduate & 15% are others.

3. Occupations of investor
Govt. Ser 40
Pvt. Ser 20
Business 20
Agriculture 4
Others 16

Occupation

40
35
30
25
20 40
Occupation
15
10 20 20
16
5
4
0
Govt. Pvt. Sec Business Agriculture Other
Service

Page | 58
FINDINGS:
Out of 100 investor 40 are in Govt. sector ,20 are in Pvt sector, 20 are in own business, 4
from agriculture ,16 investor are from various sectors

4. Income distribution of investor

Below 100,000 10
100,000-500,000 48
500,000-10,00,000 32
Above 10,00,000 10

Monthly Salary
100%
80%
60%
40%
20%
0%
Below 100,000- 500,000- Above
100,000 500,000 10,00,000 10,00,000
Monthly Salary 10 48 32 10

FINDINGS:
Out of 100 investor the income of 10 investor is below 100,000 , 48 investor’s income is
between 100,000-500,000 , 32 investor income is between 500,000-10,00,000 , & 10 investor
has their income greater than .

5. Customer preference about type of investment

Fixed Deposit 25
Insurance 15
Mutual Funds 30
Post Office/NSE 3
Share/Debenture 5
Gold/Silver 7
Real Estate 15

Page | 59
 Kind Of Investment
Post Office/NSE
3%

Mutual Funds
Real Estate
30%
Other 15%
Insurance 27%
15% Gold/Silver
7%
FD
25% Share/Debentur
es
5%

FINDINGS:
Out of 100 investor 30% are investing in Mutual funds, 15% are investing in Insurance 25%
are investing in Fixed deposits, 7% are in investing in gold,15% are investing in real estate
,5% investing in share and debenture, & other are investing in other instruments.

6. Factor affecting while investing

Liquidity 15
Low Risk 20
High Return 60
Trust 5

Page | 60
 Factor Affecting Investment

5%
15%

Liquidity
Low Risk
20%
High Return
Trust
60%

FINDINGS:
Out of 100 investor 60% are investing due to high return, 20% are invest due to low risk,
15% are investing due to liquidity,& 5% due to Trust in SBI.

7. Awareness regarding mutual funds

Aware 70
Not Aware 30

Awareness
Aware Not aware

30%

70%

Page | 61
FINDINGS:
Out of 100 investor 70% are aware towards mutual funds, 30% are not aware.

8. Medium to know about mutual funds

Advertisement 15
Peer Group 10
Banks 35
Financial Advisors 10

Medium to know about M.F

Advertisment Peer Group Banks Financial Advisor

14% 22%
14%
50%

FINDINGS
Out of those who invest in mutual funds( i.e 70 investor), 50% are know about mutual funds
through banks, 14% are from financial advisor, 22% are know through advertisement, & 14%
from peer groups

Page | 62
 9. Invested in Mutual Fund

Invested 30
Not Invested 45

Investment

40% Invested
Not invested
60%

FINDINGS:
Out of 70 investor 60% are investing & 40% are not investing.

10.Reason for not investment in mutual funds

Not Aware of MF 30
High Risk 15
Not any specific reason 0

Reason for not investment in

30 MF
20

10 Reason for
not
0 investment
Not aware High risk NinotMaFn,y0
specific
reason
Axis Title

Page | 63
FINDINGS:
Out of those who don’t invest in MF 30 investor are not aware of mutual funds,15 are not
investing due to high market risk

11.Which mutual fund select while investing

SBI Mutual Funds 15

UTI 4
HDFC 6
Reliance 2
Kotak 3
Other 0

In which MF you invested

10% 0%
SBI MF
7%
UTI
HDFC
50%
20% Reliance
Kotak
Other
13%

FINDINGS:
Out of 30 investor 50% investor are investing in SBI MF, 20% investor are investing in
HDFC, 13% are in UTI, 7% are in reliance,10% are in kota

Page | 64
 12.If invested in SBIMF, you do so because

SBIMF is associated with State Bank of India. 6

They have a record of giving good returns year after year. 7
Agent’ Advice 2

If invested in SBI MF Because

Because of SBI Name Give high return Agent advice

47%

13%
13%

40%

FINDINGS:
Out of those who investing in SBI MF (i.e 15 investor) 40% are investing in sbi due to high
return,47% are investing due to the name of sbi & 13% are investing from agent advice.

13.NOT invested in SBIMF, you do so because

You are not aware of SBIMF. 8

SBIMF gives less return compared to the others. 4
Agent’ Advice 3

Page | 65
 If Not invested why?

Less return
27% Agent
advice
Other 20%
20%
Not aware
53%

FINDINGS:
Out of 15 investor 53% investor are not aware, 27% investor are investing due to less return
& 20% are other not specific reason.

14.to invest your money in asset management co. which AMC will you
prefer?

Assets Management Co.

SBIMF 30
UTI 10
Reliance 15
HDFC 10
Kotak 12
ICICI 3

Page | 66
 AMC Preference
40

30

20

10

0
SBI MF UTI Reliance HDFC Kotak ICICI
AMC Preference 30 10 15 10 12 3

FINDINGS:
Out of 80 investor 30 investor are preference sbi AMC, 10 are prefer UTI, 15 are prefer
reliance, 10 are preference hdfc, 12 investor prefer Kodak & 3 are prefer ICICI.

15.Which Channel will you prefer while investing in Mutual Fund

Financial Advisor 15
Banks 40
AMC 15

Channel for investing in MF

Financial Advisor Bank AMC

21% 22%

57%

FINDINGS:
Out of 70 investor 57% investor are investing through banks, 21% are from AMC, & 22% are
from financial adviser.

Page | 67
 16.mode of investment will you prefer

One Time Investment 30

Systematic Investment Plan (SIP) 40

Mode
One time investment SIP

57%

43% 57%

FINDINGS:
Out of 70 investor 57% investor are investing in SIP, & 43% investor are investing one time.

17.type of funds would choose

Having only debt portfolio 15

Having debt & equity portfolio. 20
Only equity portfolio 35

Page | 68
 Type of funds
Debt portfolio Hybread fund Equity portfolio

29%
50% 50%

21%

FINDINGS:
Out of 70 investor 50% investor are investing in debt& equity portfolio, 29% are investing in
hybrid fund, 21% investor are investing in dept portfolio

18.like to receive the returns every year

Dividend payout 10
Dividend re-investment 15
Growth in NAV 45

50
40
30
20 45
10 10 15
0

Divident payout
Divident re-
investment Growth in NAV

Series1

FINDINGS:
Out of 70 investor 45 investor are like to receive return on growth in NAV, 15 investors like
to receive dividend re-investment, & 10 investors like to receive dividend payout.

Page | 69
CHAPTER – 05

FINDINGS

Page | 70
 FINDINGS
1. According to my survey in Dehradun maximum numbers of investors falls in

the age group of 30-40 years. The second most Investors were in the age group

of above 40 years and the least were in the age group of below 30 years.

2. According to my research in Dehradun most of the Investors were Graduate or

Post Graduate and below HSC there were very few in numbers.

3. In annual Income group, between 100,000-500,000 were more in numbers

invested in mutual fund, the second most were in the Income group between

Rs.5-10lakh and the least were in the group of below Rs. 1lakh.

4. Deposits, Only 60% Respondents invested in Mutual fund.

5. Mostly Respondents preferred High Return while investment, the second most

preferred Low Risk then liquidity and the least preferred Trust.

6. Among 100 Respondents only 60% had invested in Mutual Fund and 40% did

not have invested in Mutual fund.

7. Most of the investors did not invested in SBIMF due to unawareness of SBIMF,

the second most due to Agent’s advice and rest due to Less Return.

8. Out of 70 people, 43% preferred One Time Investment and 57% preferred SIP

out of both type of Mode of Investment.

9. 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.

10. Maximum Number of Investors Preferred Growth Option for returns, the second

most preferred Dividend Payout and then Dividend Reinvestment.

Page | 71
CHAPTER – 06

CONCLUSION

Page | 72
 CONCLUSION

The project that I undertook in my MUTUAL FUND provided me a good experience of

Investment Avenues like Mutual Funds, Insurance, Fixed Deposits and related activities. It
was a good experience for me as it helped me enhance my knowledge as well as gave a good
industry exposure for the period which would definitely prove to be very useful at the time of
placements. The complete project helped me gain knowledge and at the same time it was very
beneficial for the company.

The study performed using the historical data will help the company in two ways. Firstly, it
would let the company know which of the funds under the given category works well and
which does not. It can design certain strategies for the funds which are still underperforming
and are in their nascent stages. Secondly, it would help the organization, the financial
consultants and the marketing team to provide a strategy for the investors who can now easily
decide where to invest and where not to.

The Market Research performed gave an insight of the actual investors, their investment
behavior and their investment trends which would again help the company to make correct
strategies to attract more customers and provide them with what they are comfortable with.

Summing up, I am thankful to the Company and the Project that gave me an opportunity
where I could learn new things, enhance my knowledge, gain some industry exposure and at
the same time, do something that could be beneficial for the company and the investors.

Page | 73
 RECOMMENDATIONS AND SUGGESTIONS

a. To regulate entry and exit loads effectively as it creates a lot of confusion during
actual settlement of costs and bills.
b. To better operations management so as to reduce the time lag and improve customer
feedback.
c. To improve market penetration by targeting not only metros but mini-metros and
smaller towns more effectively.
d. To come up with more innovative schemes and products so as to expand over the
largest customer base as possible.
e. 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.
Investors should be made to realize that ignorance is no longer bliss and what
they are losing by not investing.
f. 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.
g. 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.
h. 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.
i. 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.

Page | 74
j. 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.
k. 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.

Page | 75
 BIBLIOGRAPHY

Consulting various reference points on the aforementioned topics became pertinent. A list of
such references is provided as follows:

References:

a. direct interaction with bank customers

b. Brochures of product offerings of SBI MUTUL FUND.
c. www.SBIMF.com
d. www.mutualfundsindia.com
e. www.bseindia.com
f. www.nseindia.com
g. www.investopedia.com

Page | 76