Summer internship report on sbimf

7/23/2019 Summer internship report on sbimf

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CHAPTER-1

INRODUCTION

1



1 9 6 4 • U n i t T r u s t o f I n d i a , s i n g l e M F e n t i t y i n I n d i a

1 9 8 7 - 1 9 9 3 • E i g t n e ! f u n d s e s t a " l i s e d " y " a n # s , $ I % a n d & I % '

• T o t a l n u ( " e r o f s ) e ( e s u * t o 1 6 7 '

1 9 8 8 • + s s e t s u n d e r M a n a g e ( e n t + U M g r o ! s t o . s ' 6 , 7 / / % r '

1 9 9 3 • + U M s o o t s u * t o . s ' 6 1 , / / / ) r o r e • 0 r i a t e a n d f o r e i g n s e ) t o r * l a y e r s e n t e r t e i n d u s t r y • 2 o t a r i * i o n e e r M u t u a l F u n d r s t e n t r a n t

1 9 9 6 • E 5 I f o r ( u l a t e s M u t u a l F u n d . e g u l a t i o n , a ) o ( * r e e n s i e

r e g u l a t o r y f r a ( e ! o r #

/ 1 • 4 4 ( u t u a l f u n d o r g a n i s a t i o n s • + U M n e a r l y . s ' 1 l a # ) r o r e '

1.1 INCEPTION

The first introduction of a mutual fund in India occurred in 1963, when the

Government of India launched Unit Trust of India (UTI). Until 198, UTI en!o"ed a

mono#ol" in the Indian mutual fund mar$et. Then a host of other %overnment&

controlled Indian financial com#anies came u# with their own funds. These included

'tate an$ of India, anara an$, and *un!a+ ational an$. This mar$et was made

o#en to #rivate #la"ers in 1993, as a result of the historic constitutional amendments

+rou%ht forward +" the then on%ress&led %overnment under the e-istin% re%ime of

i+erali/ation, *rivati/ation and Glo+ali/ation (*G). The first #rivate sector fund to

o#erate in India was 0othari *ioneer, which later mer%ed with ran$lin Tem#leton. In

1996, '2I formulated the utual und 4e%ulation which is a com#rehensive

re%ulator" framewor$.



1.2 WHAT ARE MUTUAL FUNDS?

5 utual und is a trust that #ools the savin%s of a num+er of investors who share a

common financial %oal. The mone" thus collected is invested +" the fund mana%er in

different t"#es of securities de#endin% u#on the o+!ective of the scheme. These could

ran%e from shares to de+entures to mone" mar$et instruments. The income earned in

these investments and the ca#ital a##reciation reali/ed +" the scheme is shared +" its

unit holders in #ro#ortion to the num+er of units owned +" them. Thus a utual und

is the most suita+le investment for the common man as it offers an o##ortunit" to

invest in a diversified, #rofessionall" mana%ed #ortfolio at a relativel" low cost.

5n"+od" with an investa+le sur#lus of a few thousand ru#ees can invest in utual

unds. 2ach utual und scheme has a defined investment o+!ective and strate%".

5 mutual fund is the ideal investment vehicle for toda"s com#le- and modern

financial scenario. ar$ets for e7uit" shares, +onds and other fi-ed income

instruments, real estate, derivatives and other assets have +ecome mature and

information driven. *rice chan%es in these assets are driven +" %lo+al events

occurrin% in farawa" #laces. 5 t"#ical individual is unli$el" to have the $nowled%e,

s$ills, inclination and time to $ee# trac$ of events, understand their im#lications and

act s#eedil".

5 mutual fund is answer to all these situations. It a##oints #rofessionall" 7ualified and

e-#erienced staff that mana%es each of these functions on a fulltime +asis. The lar%e

#ool of mone" collected in the fund allows it to hire such staff at a ver" low cost to

each investor. In fact, the mutual fund vehicle e-#loits economies of scale in all three

areas research, investment and transaction #rocessin%.

3



5 draft offer document is to +e #re#ared at the time of launchin% the fund. T"#icall", it

#re s#ecifies the investment o+!ective of the fund, the ris$ associated, the cost

involved in the #rocess and the +road rules for entr" into and e-it from the fund and

other areas of o#eration. In India, as in most countries, these s#onsors need a##roval

from a re%ulator, '2I in our case. '2I loo$s at trac$ records of the s#onsor and its

financial stren%th in %rantin% a##roval to the fund for commencin% o#erations.

5 s#onsor then hires an asset mana%ement com#an" to invest the funds accordin% to

the investment o+!ective. It also hires another entit" to +e the custodian of the assets

of the fund and #erha#s a third one to handle re%istr" wor$ for the unit holders of the

fund. In the Indian conte-t, the s#onsors #romote the 5sset ana%ement om#an"

also, in which it holds a ma!orit" sta$e. In man" cases a s#onsor can hold a 1:

sta$e in the 5sset ana%ement om#an" (5). 2.%. irla Glo+al inance is the

s#onsor of the irla 'un ife 5sset ana%ement om#an" td., which has floated

different mutual funds schemes and also acts as an asset mana%er for the funds

collected under the schemes.

5s #er '2I re%ulations, mutual funds can offer %uaranteed returns for a ma-imum

#eriod of one "ear. In case returns are %uaranteed, the name of the %uarantor and how

the %uarantee would +e honoured is re7uired to +e disclosed in the offer document.

Investments in securities are s#read across a wide cross&section of industries and

sectors and thus the ris$ is reduced. ;iversification reduces the ris$ +ecause all stoc$s

ma" not move in the same direction in the same #ro#ortion at the same time. utual

fund issues units to the investors in accordance with 7uantum of mone" invested +"

them. Investors of mutual funds are $nown as unit holders.

4



1.3 HOW MUTUAL FUNDS OPERATE

CHART 1.1

rom the a+ove chart, it can +e o+served that how the mone" from the investors flow

and the" %et returns out of it. <ith a small amount of fund, investors #ool their mone"

with the fund mana%ers. Ta$in% into consideration the mar$et strate%" the fund

mana%ers invest this #ool of mone" into relia+le securities. <ith u#s and downs in

mar$et returns are %enerated and the" are #assed on to the investors. The a+ove c"cle

should +e ver" clear and also effective.

The fund mana%er while investin% on +ehalf of investors ta$es into consideration

various factors li$e time, ris$, return, etc. so that he can ma$e #ro#er investment

decision.

1.4 DISTRIBUTION CHANNELS

Traditional Distribution Channels

Individual



=istoricall", individual a%ents would distri+ute units of Unit Trust of India and

insurance #olicies of ife Insurance or#oration. The" would also facilitate

investments in Governments 'mall 'avin%s 'chemes. urther, the" would sell

i-ed ;e#osits and *u+lic Issues of shares of com#anies, either directl", or as

a su+&+ro$er of some lar%e +ro$er.

UTI, I or other issuer of the investment #roduct (often referred to in the

mar$et as >#roduct manufacturers?) would advertise throu%h the mass media,

while an all&India field force of a%ents would a##roach investors to %et

a##lication forms si%ned and collect their che7ues. The a%ents $new the

investors families #ersonall" the a%ent would often +e viewed as an

e-tension of the famil".

Institutional Channels

The chan%in% com#etitive conte-t led to the emer%ence of institutional

channels of distri+ution for a wide s#ectrum of financial #roducts. This

com#rised@

ro$era%e firms and other securities distri+ution com#anies, who widened

their offerin% +e"ond com#an" i-ed ;e#osits and #u+lic issue of shares.

an$s, who started viewin% distri+ution of financial #roducts as a $e"

avenue to earn fee +ased income, while addressin% the investment needs of

their customers.

The institutional channels started attractin% a%ents as su+&+ro$ers. an"

individual a%ents o#ted to associate with the institutional channels, so that the"

6



could %ive their customers the +enefit of newer technolo%ies and services

(which the a%ents found too costl" to offer on their own).

Thus, the distri+ution setu# has %ot re&ali%ned towards a mi- of@

Inde#endent inancial 5dvisors (I5s), who are individuals. The +i%%er

I5s o#erate with su##ort staff who handles +ac$&office wor$, while the"

themselves focus on sales and client relationshi#s.

on&+an$ distri+utors, such as +ro$era%es, securities distri+ution

com#anies and non+an$in% finance com#anies

an$ distri+utors

Newer Distribution Channels

Internet

The internet %ave an o##ortunit" to mutual funds to esta+lish direct contact

with investors. ;irect transactions afforded sco#e to o#timi/e on the

commission costs involved in distri+ution.

Investors, on their #art, have found a lot of convenience in doin% transactions

instantaneousl" throu%h the internet, rather than %et +o%%ed down with #a#er

wor$ and havin% to de#end on a distri+utor to do transactions. This has #ut a

7uestion mar$ on the e-istence of intermediaries who focus on #ushin% #a#er,

+ut add no other value to investors.

5 few #rofessional distri+utors have ri%htl" ta$en the #ath of value added

advice and e-cellent service level to hold on to their customers and develo#

7



new customer relationshi#s. an" of them offer transaction su##ort throu%h

their own we+sites.

5 lar%e mass of investors in the mar$et need advice. The future of

intermediaries lies in caterin% to their needs, #ersonall" and A or throu%h a

team and A or with su##ort of technolo%".

Stock Exchanges

The institutional channels have had their limitations in reachin% out dee# into

the hinterland of the countr". 5 dis#ro#ortionate share of mutual fund

collections has tended to come from cor#orate and institutional investors,

rather than retail individuals for whose +enefit the mutual fund industr" e-ists.

'toc$ e-chan%es, on the other hand, have mana%ed to ride on the e7uit" cult in

the countr" and the #ower of communication networ$s to esta+lish a cost&

effective all&India networ$ of +ro$ers and tradin% terminals. This has +een a

successful initiative in the hi%h&volume low mar%in model of doin% +usiness,

which is more a##ro#riate and +eneficial for the countr". Bver the last few

months, '2I has facilitated +u"in% and sellin% of mutual fund units throu%h

the stoc$ e-chan%es. oth '2 and '2 have develo#ed mutual fund

transaction en%ines for the #ur#ose. The low cost and dee#er reach of the

stoc$ e-chan%e networ$ can increase the role of retail investors in mutual

funds, and ta$e the mutual fund industr" into its ne-t wave of %rowth.

ontri+ution of und Inflow from channels

8



GRAPH 1.1

1.5 ADVANTAGES & DISADVANTAGES OF MUTUAL FUNDS

ADVANTAGES

• *rofessional mana%ement

• *ortfolio ;iversification

• 4eduction A ;iversification of 4is$

• i7uidit"

•le-i+ilit" C onvenience

• 4eduction in Transaction cost

• 'afet" of re%ulated environment

• hoice of schemes

• Trans#arenc"

DISADVANTAGES

• o control over ost in the =ands of an Investor

• o tailor&made *ortfolios

• ana%in% a *ortfolio unds• ;ifficult" in selectin% a 'uita+le und 'cheme

CHART 1.2

9



1.6 CATEGORIES OF MUTUAL FUNDS

CHART 1.3

M!"# $%' ("% )* (#"''+$+* "' $,##,

B"'* ,% !/*+0 '!0(!0*

• O*%-*%* $%' Investors can +u" and sell the units from the fund, at an"

#oint of time.

• C#,'*-*%* $%' These funds raise mone" from investors onl" once.

Therefore, after the offer #eriod, fresh investments cannot +e made into the

fund. If the fund is listed on a stoc$s e-chan%e the units can +e traded li$e

stoc$s (2.%., 'I ;ual 5dvanta%e 'eries). 4ecentl", most of the ew und

1/



Bffers of close&ended funds #rovided li7uidit" window on a #eriodic +asis

such as monthl" or wee$l". 4edem#tion of units can +e made durin% s#ecified

intervals. Therefore, such funds have relativel" low li7uidit".

B"'* ,% !/*+0 +%*'!*%! ,)*(!+*

+ E+!7 $%'@ These funds invest in e7uities and e7uit" related instruments. <ith

fluctuatin% share #rices, such funds show volatile #erformance, even losses.

=owever, short term fluctuations in the mar$et, %enerall" smoothens out in the

lon% term, there+" offerin% hi%her returns at relativel" lower volatilit". 5t the

same time, such funds can "ield %reat ca#ital a##reciation as, historicall", e7uities

have out#erformed all asset classes in the lon% term. =ence, investment in e7uit"

funds should +e considered for a #eriod of at least 3&D "ears. It can +e further

classified as@

+ I%*8 $%'& In this case a $e" stoc$ mar$et inde-, li$e '2 'ense- or ift"

is trac$ed. Their #ortfolio mirrors the +enchmar$ inde- +oth in terms of

com#osition and individual stoc$ wei%hta%es.

++ E+!7 +*0'+$+* $%'- 1: of the ca#ital is invested in e7uities s#readin%

across different sectors and stoc$s.

+++ D++*% 7+*# $%'- it is similar to the e7uit" diversified funds e-ce#t that

the" invest in com#anies offerin% hi%h dividend "ields.

+ T/*"!+( $%'- Invest 1: of the assets in sectors which are related

throu%h some theme.

e.%. &5n infrastructure fund invests in #ower, construction, cements sectors

etc.

S*(!,0 $%'- Invest 1: of the ca#ital in a s#ecific sector. e.%. & 5 +an$in%

sector fund will invest in +an$in% stoc$s.

+ ELSS& 27uit" in$ed 'avin% 'cheme #rovides ta- +enefit to the investors.

++ B"#"%(* $% Their investment #ortfolio includes +oth de+t and e7uit". 5s a result,

on the ris$&return ladder, the" fall +etween e7uit" and de+t funds. alanced funds

11



are the ideal mutual funds vehicle for investors who #refer s#readin% their ris$

across various instruments. ollowin% are +alanced funds classes@

"D*)!-,0+*%!* $%' -Investment +elow 6D: in e7uities.

)E+!7-,0+*%!* $%' -Invest at least 6D: in e7uities, remainin% in de+t.

+++ D*)! $% The" invest onl" in de+t instruments, and are a %ood o#tion for

investors averse to idea of ta$in% ris$ associated with e7uities. Therefore, the"

invest e-clusivel" in fi-ed&income instruments li$e +onds, de+entures,

Government of India securitiesE and mone" mar$et instruments such as

certificates of de#osit (;), commercial #a#er (*) and call mone". *ut "our

mone" into an" of these de+t funds de#endin% on "our investment hori/on and

needs.

L++ $%'- These funds invest 1: in mone" mar$et instruments, a lar%e

#ortion +ein% invested in call mone" mar$et.

G+#! $%' ST- The" invest 1: of their #ortfolio in %overnment securities of

and T&+ills.

F#,"!+%9 0"!* $%' - Invest in short&term de+t #a#ers. loaters invest in de+t

instruments which have varia+le cou#on rate.

A0)+!0"9* $%- The" %enerate income throu%h ar+itra%e o##ortunities due to

mis&#ricin% +etween cash mar$et and derivatives mar$et. unds are allocated to

e7uities, derivatives and mone" mar$ets. =i%her #ro#ortion (around D:) is #ut in

mone" mar$ets, in the a+sence of ar+itra%e o##ortunities.

G+#! $%' LT- The" invest 1: of their #ortfolio in lon%&term %overnment

securities.

I%(,* $%' LT- T"#icall", such funds invest a ma!or #ortion of the #ortfolio in

lon%&term de+t #a#ers.

1



MIP'- onthl" Income *lans have an e-#osure of :&9: to de+t and an

e-#osure of 1:&3: to e7uities.

FMP'- fi-ed monthl" #lans invest in de+t #a#ers whose maturit" is in line with

that of the fund.

1.: CURRENT SCENARIO OF MUTUAL FUNDS IN INDIA

;es#ite +ein% availa+le in the mar$et less than 1: of Indian households have

invested in mutual funds. 5 recent re#ort on utual und Investments in India

#u+lished +" research and anal"tics firm, oston 5nal"tics, su%%ests investors are

holdin% +ac$ from #uttin% their mone" into mutual funds due to their #erceived hi%h

ris$ and a lac$ of information on how mutual funds wor$. There are DF utual unds

as of ul" H1D.

13



CHART 1.4

1.;

GROWTH DRIVERS OF THE INDUSTR<

• olatilit"

*erformance of the ca#ital mar$ets

G;* Growth

Inflation

Interest 4ate

1.= INVESTMENT STRATEGIES

1. S7'!*"!+( I%*'!*%! P#"% under this a fi-ed sum is invested each month on a

fi-ed date of a month. *a"ment is made throu%h #ostdated che7ues or direct de+it

facilities. The investor %ets fewer units when the 5 is hi%h and more units when

the 5 is low. This is called as the +enefit of 4u#ee ost 5vera%in% (45)

14



2. S7'!*"!+( T0"%'$*0 P#"% under this an investor invest in de+t oriented fund and

%ive instructions to transfer a fi-ed sum, at a fi-ed interval, to an e7uit" scheme of the

same mutual fund.

3. S7'!*"!+( W+!/0""# P#"% if someone wishes to withdraw from a mutual fund

then he can withdraw a fi-ed amount each month.

1.1> NEED FOR MUTUAL FUNDS

utual funds offer +enefits, which are too si%nificant to miss out. 5n" investment has

to +e !ud%ed on the "ardstic$ of return, li7uidit" and safet". onvenience and ta-

efficienc" are the other +enchmar$s relevant in mutual fund investment. In the

wonderful %ame of financial safet" and returns are the tows o##osite %oals and

investors cannot +e nearer to +oth at the same time. The cru- of mutual fund investin%

is avera%in% the ris$.

an" investors #ossi+l" dont $now that considerin% returns alone, man" mutual

funds have out#erformed a host of other investment #roducts. utual funds have

historicall" delivered "ields avera%in% within 9: to HD: over a medium to lon% time

frame. The duration is im#ortant +ecause li$ewise, mutual funds return taste +itter

with the #assa%e of time. Investors should +e #re#ared to loc$ in their investments

#refera+l" for 3 "ears in an income fund and D "ears in an e7uit" funds. i7uid funds

of course, %enerate returns even in a short term.

1.11 RIS INVOLVED IN MUTUAL FUNDS

utual funds face ris$s +ased on the investments the" hold. or e-am#le, a +ond fund

faces interest rate ris$ and income ris$. ond values are inversel" related to interest

1



rates. If interest rates %o u#, +ond values will %o down and vice versa. ond income is

also affected +" the chan%es in interest rates. ond "ields are directl" related to

interest rates fallin% as interest rates fall and risin% as interest rates.

'imilarl", a sector stoc$ fund is at ris$ that its #rice will decline due to develo#ments

in its industr". 5 stoc$ fund that invests across man" industries is more sheltered from

this ris$ defined as industr" ris$.

ollowin%s are %lossar" of some ris$s to consider when investin% in mutual funds@&

" COUNTR< RIS -

The #ossi+ilit" that #olitical events (a war, national election), financial #ro+lems

(risin% inflation, %overnment default), or natural disasters will wea$en a countr"s

econom" and cause investments in that countr" to decline.

) INCOME RIS -

The #ossi+ilit" that #olitical events (a war, national election), financial #ro+lems

(risin% inflation, %overnment default), or natural disasters will wea$en a countr"s

econom" and cause investments in that countr" to decline.

( MARET RIS - The #ossi+ilit" that stoc$ fund or +ond fund #rices overall will

decline over short or even e-tended #eriods. 'toc$ and +ond mar$ets tend to move in

c"cles, with #eriods when #rices rise and other #eriods when #rices fall.

RIS RETURN REWARD IN MUTUAL FUND

GRAPH 1.2

16



This %ra#h shows ris$ and return im#act on various mutual funds. There is a direct

relationshi# +etween ris$s and return, i.e. schemes with hi%her ris$ also have #otential

to #rovide hi%her returns.

1.12 REGULATOR< BODIES OF MUTUAL FUNDS

ASSOCIATION OF MUTUAL FUNDS IN INDIA @AMFI

The 5ssociation of utual unds in India (5I) is dedicated to develo#in% the

Indian utual und Industr" on #rofessional, health" and ethical lines and to enhance

and maintain standards in all areas with a view to #rotectin% and #romotin% the

interests of mutual funds and their unit holders.

5I, the association of '2I re%istered mutual funds in India of all the re%istered

5sset ana%ement om#anies, was incor#orated on 5u%ust HH, 199D, as a non&#rofit

or%anisation. 5s of now, all the FF 5sset ana%ement om#anies that are re%istered

with '2I, are its mem+ers.

OBECTIVES

To define and maintain hi%h #rofessional and ethical standards in all areas of

o#eration of mutual fund industr".

To recommend and #romote +est +usiness #ractices and code of conduct to +e

followed +" mem+ers and others en%a%ed in the activities of mutual fund and

asset mana%ement includin% a%encies connected or involved in the field of

ca#ital mar$ets and financial services.

To interact with the 'ecurities and 2-chan%e oard of India ('2I) and to

re#resent to '2I on all matters concernin% the mutual fund industr".

To re#resent to the Government, 4eserve an$ of India and other +odies on all

matters relatin% to the utual und Industr".

To underta$e nation wide investor awareness #ro%ramme so as to #romote

#ro#er understandin% of the conce#t and wor$in% of mutual funds.

17



To disseminate information on utual und Industr" and to underta$e studies

and research directl" andAor in association with other +odies.

To ta$e re%ulate conduct of distri+utors includin% disci#linar" actions

(cancellation of 54) for violations of ode of onduct. To #rotect the interest of investorsAunit holders.

SECURITIES ECHANGE BOARD OF INDIA @SEBI

It was esta+lished +" on 1H 5#ril 1988 and %iven statutor" #owers in 199H with '2I

5ct 199H +ein% #assed +" the Indian *arliament. '2I has its head7uarters at the

+usiness district of andra 0urla om#le- in um+ai, and has orthern, 2astern,

'outhern and <estern 4e%ional Bffices in ew

;elhi, 0ol$ata, hennai and 5hmeda+ad res#ectivel". It has o#ened local offices at

ai#ur and an%alore and is #lannin% to o#en offices at Guwahati, hu+aneshwar,

*atna, 0ochi and handi%arh in inancial Jear H13 & H1F.

ontroller of a#ital Issues was the re%ulator" authorit" +efore '2I came into

e-istenceE it derived authorit" from the a#ital Issues (ontrol) 5ct, 19F.

FUNCTIONS

The *ream+le of the 'ecurities and 2-chan%e oard of India descri+es the +asic

functions of the 'ecurities and 2-chan%e oard of India as K...to #rotect the interests

of investors in securities and to #romote the develo#ment of, and to re%ulate the

securities mar$et and for matters connected therewith or incidental theretoK.

'2I has to +e res#onsive to the needs of three %rou#s, which constitute the mar$et@

18

https://en.wikipedia.org/wiki/Parliament_of_India



https://en.wikipedia.org/wiki/Bandra_Kurla_Complex


https://en.wikipedia.org/wiki/Mumbai



https://en.wikipedia.org/wiki/New_Delhi


https://en.wikipedia.org/wiki/Kolkata

https://en.wikipedia.org/wiki/Chennai

https://en.wikipedia.org/wiki/Ahmedabad





https://en.wikipedia.org/wiki/Kolkata

https://en.wikipedia.org/wiki/Chennai

https://en.wikipedia.org/wiki/Ahmedabad




the issuers of securities

the investors

the mar$et intermediaries.

'2I has three functions rolled into one +od"@ 7uasi&le%islative, 7uasi&!udicial and

7uasi&e-ecutive. It drafts re%ulations in its le%islative ca#acit", it conducts

investi%ation and enforcement action in its e-ecutive function and it #asses rulin%s

and orders in its !udicial ca#acit". Thou%h this ma$es it ver" #owerful, there is an

a##eal #rocess to create accounta+ilit". There is a 'ecurities 5##ellate Tri+unal which

is a three&mem+er tri+unal and is headed +" r. ustice * ;evadhar, a former !ud%e

of the om+a" =i%h ourt. 5 second a##eal lies directl" to the 'u#reme ourt. '2I

has ta$en a ver" #roactive role in streamlinin% disclosure re7uirements to

international standards.

POWERS

or the dischar%e of its functions efficientl", '2I has +een vested with the followin%

#owers@

1. to a##rove +"Llaws of stoc$ e-chan%es.

H. to re7uire the stoc$ e-chan%e to amend their +"Llaws.

3. ins#ect the +oo$s of accounts and call for #eriodical returns from reco%ni/ed

stoc$ e-chan%es.

F. ins#ect the +oo$s of accounts of a financial intermediaries.

19

https://en.wikipedia.org/wiki/Quasi-legislative

https://en.wikipedia.org/wiki/Quasi-judicial

https://en.wikipedia.org/wiki/Supreme_Court_of_India


https://en.wikipedia.org/wiki/Quasi-legislative

https://en.wikipedia.org/wiki/Quasi-judicial




5. com#el certain com#anies to list their shares in one or more stoc$ e-chan%es.

1.13 FINANCIAL ASPECTS OF MUTUAL FUNDS

NAV @N*! A''*! V"#*

In the mar$et, when #eo#le tal$ of 5, the" refer to the value of each unit of the

scheme. This is e7uivalent to@

Unit&holders unds in the 'cheme M o. of Units

General ormula for calculation of 5.

5 N (alue of stoc$s O alue of +onds O alue of mone" mar$et instruments O

;ividend accrued +ut not received O Interest accrued +ut not received ees #a"a+le)

A o. of outstandin% units

T0"%'"(!+,% C/"09*'

In order to cater to #eo#le with small savin% #otential and to increase reach of mutual

fund #roducts in ur+an areas and smaller towns, '2I has allowed a transaction

char%e #er su+scri#tion of 4s. 1,A& and a+ove to +e #aid to distri+utors of the

utual und #roducts. =owever, there shall +e no transaction char%es on direct

investments. The transaction char%e, if an", is deducted +" the 5 from the

su+scri#tion amount and #aid to the distri+utorE and the +alance shall +e invested.

T"#e of Investor Transaction har%es (4s.)

(or #urchaseAsu+scri#tion of 4s. 1, and

a+ove)

irst time mutual fund investor 4s. 1DA&Investor other than first time mutual fund 4s. 1A&

/



investor

=owever, Transaction har%e(s) will not +e deducted for the followin%@ &

P *urchaseA'u+scri#tion su+mitted +" investor at the desi%nated collection centres or

throu%h 5s we+site and which are not routed throu%h an" distri+utor.

P *urchaseA 'u+scri#tion throu%h a distri+utor for an amount less than 4s. 1,E

P Transactions such as 'witches, 'T* i.e. all such transactions wherein there is no

additional cash flow at a mutual fund level similar to *urchaseA'u+scri#tion.

P *urchaseA'u+scri#tions throu%h an" stoc$ e-chan%e.

E8*%'*'

Two $inds of e-#enses come u#@

" I%+!+"# I''* E8*%'*'

These are one&time e-#enses that come u# when the scheme is offered for the first

time (B). These need to +e +orne +" the 5.

Investors who review the financial statements of old schemes ma" find an item called

>Issue e-#enses not written off?. The +ac$%round to this is that earlier, schemes could

char%e initial issue e-#enses to the scheme, u# to 6: of the amount mo+ili/ed in the

B. Thus, if an B mo+ili/ed 4sDcrore, 4s3crore could +e char%ed to the

scheme as initial issue e-#enses, #rovided such e-#enditure was actuall" incurred.

If the entire amount were treated as an e-#ense, then, the 5 would %o down to that

e-tent Qfollows from the #rofita+ilit" metric discussed earlierR. Thus, a scheme whose

units have a face value of 4s1 would need to start with an 5 of 4s1 less 6: i.e.

1



4s9.F, if the entire issue e-#enses were treated as an immediate e-#ense (in

accountin% terminolo%", the e-#ensin% is called >writin% off?S.In order to #revent

initial issue e-#enses from causin% a drastic fall in 5, the %uidelines #ermitted an

accountin% treatment called >deferred load?.

;eferred load o#erated on the #rinci#le that if the scheme were to last for F "ears,

then the initial issue e-#enses relate to mone" that will +e in the scheme for F "ears.

'o the initial issue e-#enses could +e written off over F "ears. That #art of the initial

issue e-#ense that related to #eriods that have #assed would +e written off (which will

reduce the 5)E the #art that related to a future time #eriod, was treated as an asset

of the scheme, called >Issue e-#enses not written off?. The followin% ta+le illustrates

the #oint, assumin% a F "ear scheme incurred initial issue e-#enses of 4s8rore.

2nd of Jear Issue 2-#enses <ritten Bff

(which reduces the 5)

Issue 2-#enses not <ritten Bff

(shown as asset in 'cheme

alance 'heet)

1 4s. Hcr 4s. 8cr less 4s. Hcr i.e. 4s. 6cr

H 4s. Hcr 4s. 6cr less 4s. Hcr i.e. 4s. Fcr

3 4s. Hcr 4s. Fcr less 4s. Hcr i.e. 4s. Hcr

F 4s. Hcr 4s. Hcr less 4s. Hcr i.e. 4s. Hcr

5s mentioned earlier, 5s need to +ear the initial issue e-#enses now. 'o, deferred

load is not a##lica+le for newer schemes.

4ecurrin% 2-#enses These can +e char%ed to the scheme. 'ince the recurrin%

e-#enses dra% down the 5, '2I has laid down the e-#enses, which can +e

char%ed to the scheme. 5n indicative list is as follows@



ees of various service #roviders, such as Trustees, 5, 4e%istrar C

Transfer 5%ents, ustodian, C 5uditor

'ellin% e-#enses includin% scheme advertisin% and commission to the

distri+utors 2-#enses on investor communication, account statements, dividend A

redem#tion che7ues A warrants

istin% fees and ;e#ositor" fees

'ervice ta-

ro$era%e and transaction cost incurred for the #ur#ose of e-ecution of trade ma" +e

ca#itali/ed to the e-tent of .1H: for cash mar$et transactions and .D: for

derivatives transactions res#ectivel". 5n" #a"ment towards +ro$era%e and transaction

cost, over and a+ove the said #ercenta%e ma" +e char%ed to the scheme within the

ma-imum limit of Total 2-#ense 4atio (T24). 2-#enditure in e-cess of the said

#rescri+ed total e-#ense ratio limit

(Includin% +ro$era%e and transaction cost, if an") has to +e +orne +" the 5 or +"

the trustee or s#onsors.

Bther #rovisions with res#ect to service ta- are as follows@

utual funds A5s ma" char%e service ta- on investment and advisor"

fees to the scheme in addition to the ma-imum limit of total e-#ense

allowed for the scheme 'ervice ta- on e-#enses other than investment and advisor" fees, if an", is

to +e +orne +" the scheme within the ma-imum limit of total e-#ense

allowed for the scheme.

'ervice ta- on +ro$era%e and transaction cost #aid for e-ecution of trade, if

an", must +e within the #rescri+ed total e-#ense limit for the scheme, as

discussed earlier.

3



The followin% e-#enses cannot +e char%ed to the scheme@

• *enalties and fines for infraction of laws.

• Interest on dela"ed #a"ment to the unit holders.

• e%al, mar$etin%, #u+lication and other %eneral e-#enses not attri+uta+le

to an" scheme(s).

• und 5ccountin% ees.

• 2-#enses on investment mana%ementA%eneral mana%ement.

• 2-#enses on %eneral administration, cor#orate advertisin% and

infrastructure costs.

• ;e#reciation on fi-ed assets and software develo#ment e-#enses.

R*(00+%9 E8*%'* L++!'

'2I has sti#ulated the followin% annual limits on recurrin% e-#enses (includin%

mana%ement fees) for schemes other than inde- schemes@

et 5ssets (4s crore) 27uit" 'chemes ;e+t 'chemesU# to 4s 1 crore H.D: H.HD:

e-t 4s 3 crore H.HD: H.:

e-t 4s 3 crore H.: 1.D:

2-cess over 4s crore 1.D: 1.D:

The a+ove #ercenta%es are to +e calculated on the avera%e dail" net assets of the

scheme.

4



1.14 COMPAN< PROFILE

'I utual und is Indias lar%est +an$ s#onsored mutual fund and has an envia+letrac$ record in !udicious investments and consistent wealth creation.

The fund traces its linea%e to 'I & Indias lar%est +an$in% enter#rise. The institution

has %rown immensel" since its ince#tion and toda" it is Indias lar%est +an$,

#atroni/ed +" over 8: of the to# cor#orate houses of the countr". It has +een HD

"ears since 'I utual funds came into e-istence. It is a oint enture +etween 'tate

an$ of India ('I) Indias lar%est +an$ and 5U;I a rance +ased com#an"

ran$ed no. in 2uro#e and is in the field of asset mana%ement.



4i%ht now 'I has over HHH *B5 (#oint of acce#tance) across India and ri%ht

now runnin% 3 schemes

5 total of over 6.8 million investors have re#osed their faith in the wealth %eneration

e-#ertise of the utual und. 'chemes of the utual fund have consistentl"

out#erformed +enchmar$ indices and have emer%ed as the #referred investment for

millions of investors and =Is.

Toda", the fund mana%es over 4s. 6F,16 crores of assets and has a diverse #rofile of

investors activel" #ar$in% their investments across 3 active schemes.

'I utual is the first +an$&s#onsored fund to launch an offshore fund 4esur%ent

India B##ortunities und.

• '#onsor@ 'tate an$ of India

• Trustee@ 'I utual und Trustee om#an" *rivate imited

• Investment ana%er@ 'I unds ana%ement *rivate imited 'tatutor"

;etails@ 'I utual und ('I)E constituted as a Trust with 'IT*

as the Trustee under the #rovisions of Indian Trusts 5ct, 188H, and re%istered

with '2I.

1.15 PRODUCTS OF SBI MUTUAL FUNDS

E+!7 '(/**'

The investments of these schemes will #redominantl" +e in the stoc$ mar$ets and

endeavor will +e to #rovide investors the o##ortunit" to +enefit from the hi%her

returns which stoc$ mar$ets can #rovide. =owever the" are also e-#osed to the

volatilit" and attendant ris$s of stoc$ mar$ets and hence should +e chosen onl" +"

6



such investors who have hi%h ris$ ta$in% ca#acities and are willin% to thin$ lon%

term. 27uit" unds include diversified 27uit" unds, 'ectorial unds and Inde-

unds. ;iversified 27uit" unds invest in various stoc$s across different sectors

while sectorial funds which are s#eciali/ed 27uit" unds restrict their investments

onl" to shares of a #articular sector and hence, are ris$ier than ;iversified 27uit"

unds. Inde- unds invest #assivel" onl" in the stoc$s of a #articular inde- and the

#erformance of such funds move with the movements of the inde-.

• a%num B5 und

• a%num 27uit" und

• a%num Glo+al und

• a%num Inde- und

• a%num idca# und

• a%num ultica# und

• a%num ulti#lier #lus 1993

• a%num 'ectorial unds Um+rella

• 2mer%in% usiness und

• IT und

• *harma und

• ontra und

• G und

7



• 'I 5r+itra%e B##ortunities und

• 'I lue chi# und

• 'I Infrastructure und & 'eries I

• 'I a%num Ta- %ain 'cheme 1993

• 'I B2 India und

D*)! '(/**'

;e+t unds invest onl" in de+t instruments such as or#orate onds, Government

'ecurities and one" ar$et instruments either com#letel" avoidin% an"

investments in the stoc$ mar$ets as in Income unds or Gilt unds or havin% a

small e-#osure to e7uities as in onthl" Income *lans or hildrens *lan. =ence

the" are safer than e7uit" funds. 5t the same time the e-#ected returns from de+t

funds would +e lower. 'uch investments are advisa+le for the ris$&averse investor

and as a #art of the investment #ortfolio for other investors.

1 a%num hildrens +enefit *lan

H a%num Gilt und

3 a%num Income und

F a%num Insta ash und

D a%num Income und& loatin% 4ate *lan

6 a%num Income *lus und

a%num Insta ash und &i7uid loater *lan

8



8 a%num onthl" Income *lan

9 a%num onthl" Income *lan & loater

1 a%num 4I Investment und

11 'I *remier i7uid und

B"#"%(* S(/**'

a%num alanced und invests in a mi- of e7uit" and de+t investments. =ence

the" are less ris$" than e7uit" funds, +ut at the same time #rovide commensuratel"

lower returns. The" #rovide a %ood investment o##ortunit" to investors who do not

wish to +e com#letel" e-#osed to e7uit" mar$ets, +ut is loo$in% for hi%her returns

than those #rovided +" de+t funds.

• a%num alanced und

FOCUSSED SCHEMES

1. SBI B#*C/+ F%

Investment Objective

To #rovide investors with o##ortunities for lon% term %rowth in ca#ital

throu%h an active mana%ement of investments in a diversified +as$et of

e7uit" stoc$s of com#anies whose mar$et ca#itali/ation of at least e7ual to or

more than the least mar$et ca#itali/ed stoc$ of 'C* '2 1 Inde-.

Date of Inception

9



1FAHAH6

Exit Load

or e-it within 1 "ear from the date of allotment 1:E for e-it after 1 "ear

from the date of allotment I

SI onthl" & inimum 1 C in multi#les of 1 thereafter for minimum si-

months (or) minimum D C in multi#les of 1 thereafter for minimum one

"ear

uarterl" & inimum 1D C in multi#les of 1 thereafter for minimum one

"ear

!uantitative Data

'tandard ;eviation@ 13.H

eta@ .8

4& '7uared@ .9

'har#e 4atio@ 1.HF

*ortfolio Turnover@ .63

2. SBI M"9% B"#"%(* F%


To #rovide investors lon% term ca#ital a##reciation alon% with the li7uidit" of

an o#en&ended scheme +" investin% in a mi- of de+t and e7uit". This scheme

will invest in a diversified #ortfolio of e7uities of hi%h %rowth com#anies and

+alance the ris$ throu%h investin% the rest in a relativel" safe #ortfolio of de+t.

Date of Inception

31A1HA199D

Exit Load

or e-it within 1H months from the date of allotment 1:E for e-it after 1H

months from the date of allotment I (w.e.f a" 18, H1D)

SI

onthl" & inimum 1 C in multi#les of 1 thereafter for minimum si-


"ear


"ear !uantitative Data

3/



'tandard ;eviation @ 1.69:

eta @ .88

4& '7uared@ .6

'har#e 4atio@ 1.FD


Total 2-#ense 4atio

4e%ular@ H.1H:

;irect@ 1.FH:

3. SBI M"9% M+C" F%


To #rovide investors with o##ortunities for lon%&term %rowth in ca#ital alon%

with the li7uidit" of an o#en&ended scheme +" investin% #redominantl" in a

well&diversified +as$et of e7uit" stoc$s of ida# com#anies. Date of Inception

H9A3AHD

Exit Load

or e-it within 1H months from the date of allotment 1:E for e-it after 1H

months from the date of allotment I (w.e.f a" 18, H1D)

SI

onthl" & inimum 1 C in multi#les of 1 thereafter for minimum si-


"ear


"ear

!uantitative Data

i 'tandard ;eviation @ 1D.96:

ii eta @ .3

iii 4& '7uared@ .8

iv 'har#e 4atio@ 1.D

v *ortfolio Turnover@ .F3vi Total 2-#ense 4atio

•4e%ular@ H.H6:

•;irect@ 1.D1:

F. SBI M"9% T"8 9"+% S(/**


The #rime o+!ective of this scheme is to deliver the +enefit of investment in a

#ortfolio of e7uit" shares, while offerin% deduction on such investments

31



made in the scheme under 'ection 8 of the Income Ta- 5ct, 1961. It also

see$s to distri+ute income #eriodicall" de#endin% on distri+uta+le sur#lus.

Date of Inception

31A3A1993

Exit Load I

SI

D C in multi#les of D

!uantitative Data

'tandard ;eviation @ 1F.FD:

eta @ .89

4& '7uared@ .9

'har#e 4atio@ 1.


1 Total 2-#ense 4atioo 4e%ular@ H.1:

o ;irect@ 1.D3:

1.16 COMPETITORS

'ome of the main com#etitors of 'I utual und are as ollows@

a. III utual und

+. 4eliance utual und

c. UTI utual und

d. irla 'un ife utual und

e. 0ota$ utual und

f. =; utual und

%. 'undaram utual und

h. I utual und

3



i. *rinci#al

!. ran$lin Tem#leton

1.1: NEED OF THE STUD<

1 The stud" was underta$en to understand the customers +ehaviour towards

mutual funds and the awareness amon%st them a+out various mutual fund

#roducts.

H The need of the stud" aimed to $now the awareness in the #u+lic a+out the

various #roducts and services #rovided +" '..I&utual und.

3 5 stud" was also conducted to measure the #erformance of various funds on

the +asis of various #erformance measurin% ratios such as 'har#e ratio,

returns, standard deviation, eta.

33



F The stud" was +asicall" underta$en to understand the financial needs of the

customer and to #rovide or su%%est them #roducts and services accordin% to

their financial needs.

1.1; SCOPE OF THE STUD<

G*,90"/+("# '(,*-

The %eo%ra#hical sco#e of the stud" is not limited. This stud" can +e im#lemented in

an" #art of the countr"E thou%h the sam#les ta$en were from HDFC B"% +ranch at

M,/"* A#+ R," B0"%(/ .

F%(!+,%"# '(,*-

This stud" can +e used to understand the +ehavioral as#ect of #eo#le who invest, what

is their investment #otential and how much ris$ can the" ta$e. The stud" throws some

li%ht on four focused schemes of '..I&utual und.

34



1.1= OBECTIVES OF THE STUD<

To $now the awareness of mutual funds amon% #eo#le.

To see the interest of #eo#le in investin% in mutual funds.

To $now the investment +ehaviour of investors in mutual fund accordin% to

different a%e %rou#.

To ascertain the #ercenta%e of income the investors invest in mutual fund.

To $now the different attitudes of #eo#le re%ardin% ris$, rate of return, #eriod

of investment.

To $now the investors #referred financial #roduct for investment

CHAPTER-2

RESEARCH METHODOLOG<

3



2.1 RESEARCH DESIGN

This *ro!ect 4e#ort is #re#are +" ta$in% into consideration +oth #rimar" as well as

secondar" data..

P0+"07 "!" (,##*(!+,%

In dealin% with real life #ro+lems it is often found that data in hand is inade7uate, and

hence, it +ecomes necessar" to collect data that is a##ro#riate. There are several wa"s

of collectin% the a##ro#riate data which differ considera+l" in conte-t of mone" costs,

time and other resources at the dis#osal of the researcher.

rimar" data can be collected either throu#h experiment or throu#h surve"$

The data collection for this study was done in the following manner:

Throu#h personal interviews%&

5 ri%id #rocedure was followed and I was see$in% answers to man" #re&conceived

7uestions throu%h #ersonal interviews.

Throu#h 'uestionnaire%&

36



Information to find out the investment #otential and %oal was found out throu%h

7uestionnaires.

S*(,%"07 D"!" C,##*(!+,%

e)ondary data in)ludes infor(ation regarding *resent (ar#et s)enario,

Infor(ation regarding Mutual Funds and )o(*etitors are )olle)ted "y

internet, Magaines and e!s*a*er and "oo#s'

2.2 T<PES OF DATA

PRIMAR< DATA

The sam#lin% method chosen is (rea Samplin# . 5s the #rimar" sam#lin% unit

re#resents a cluster of units +ased on %eo%ra#hic area. The %eo%ra#hical area chosen

for individual customers was at =; an$ (ohammed 5li 4oad ranch.)

It is +asicall" a non&#ro+a+ilit" sam#lin% #rocedure which does not afford an" +asis

for estimatin% the #ro+a+ilit" that each item in the #o#ulation has of +ein% included in

the sam#le.

Under non&#ro+a+ilit" sam#lin% the or%ani/ers of the en7uir" #ur#osivel" choose the

#articular units of the universe for constitutin% a sam#le on the +asis that the small

mass that the" so select out of a hu%e one will +e t"#ical or re#resentative of the

whole.

.

SECONDAR< DATA

'econdar" research %athers e-istin% information throu%h availa+le sources.

37



;ata collection was done throu%h reco%ni/ed sources and then com#ared..

2.3 SAMPLE DESIGN

The sam#le com#rised of 1 res#ondents.

The stud" is +ased on a surve" of 1 res#ondents throu%h a 7uestionnaire coverin%

different %rou#s of investors +ut I could collect 9 com#lete 7uestionnaire from

investors out of which 9 were ta$en as an effective sam#le and the data o+tained

were anal"/ed +" usin%, actor anal"sis and ;iscriminant anal"sis. The 7uestionnaire

has +een attached in the 5nne-ure.

2.3.1 P,#"!+,%

5 #o#ulation is the total of all the individuals who have certain characteristics and are

of interest to a researcher. " surve" com#rises of individuals from various classes of

societ" such as colle%e students, investors, individual, +usinessman, self&em#lo"ed

#eo#le is +een considered in #o#ulations.

2.3.2 S"#* S+*-

'am#le si/e is limited to 1 onl" thus sam#le si/e does not ade7uatel" re#resent the

national mar$et.

This stud" has not +een conducted over half month #eriod in which most of the time

it was slum# and fluctuations in the mar$et. Thus the res#onses of the investors are

li$el" to +e influenced +" the mar$et conditions

2.3.3 S"#+%9 M*!/,-

*ro+a+ilit" sam#lin% is a sam#lin% techni7ue wherein the sam#les are %athered in a

#rocess that %ives all the individuals in the #o#ulation e7ual chances of +ein%

selected.

38



2.4. METHOD OF DATA COLLECTION

'urve" method has +een used while collectin% data from num+er of sam#le si/e or

res#ondents on the +asis of 7uestionnaire desi%ned.

2.4.1 I%'!0*%!' $,0 D"!" C,##*(!+,%-

*rinted uestionnaire was the instrument used for data collection on the +asis of

closed ended 7uestionnaire were +een as$ed to res#ondent.

2.4.2 D0"$!+%9 ,$ " *'!+,%%"+0*

<hile desi%nin% the 7uestionnaire the followin% ste#s were ta$en into consideration

which are follows@

D*(+'+,% R*9"0+%9 *'!+,%' The e-act data re7uirement was anal"sed and

7uestionnaire was then formed to #ut the 7uestions in the most suita+le manner..

T7*' ,$ *'!+,%' e-t ste# of draftin% the 7uestionnaire is to decide a+out the

wa" in which 7uestions have to +e as$edV uestions would +e on o#en or close

ended.

Simple Alternative Questions@ These 7uestions ma" +e answered +etween two

alternatives.

ultiple Choice Questions: ulti#le 7uestions can +e answered in a num+er of wa"s.

Specific Information Questions@ 'uch 7uestions are as$ed to o+tain some s#ecific

information

2.4.4 T*'!+%9 ,$ *'!+,%%"+0* P+#,! '0*7

39



In order to chec$ the relia+ilit" and validit" of the data, some similar $ind of varia+les

in the 7uestionnaire li$e fund #erformance and fund mana%er #erformance as well as

securit" and attitude towards ris$ were $e#t. In order to increase the relia+ilit" and

validit", we have e-cluded the 7uestionnaires filled +" those res#ondents who had a

varied o#inion

The anal"sis methods are used for the followin% reasons@

1) )actor anal"sis is used to classif" similar varia+les under a +road headin%, as the

num+ers of inde#endent varia+les are ver" hi%h.

H) !iscriminant anal"sis is used to hi%hli%ht varia+les which effect the decision of

#eo#le investin% for less than a "ear and #eo#le who are investin% for more than a

"ear.

<e are %oin% to see how these selected factors affect the investment +ehaviour of the

e-istin% C #otential investors. 5+ove mentioned statistical tools have +een used to

anal"se this thin%. 5s we use actor anal"sis we can reduce the num+er of factors to

draw some clear #icture for the investors who are loo$in% to invest irres#ective of

mar$et conditions. actor anal"sis will reco%ni/e similar factors C clu+ them into one

%enerali/ed factor and this will hel# an" researcher to o+serve the most im#ortant

factors that contri+ute most to the investment +ehaviour of the investors.

.

2.5 DATA ANAL<SIS TECHNIUES

ethodolo%" 5do#ted for #rimar" ;ata 5nal"sis

*rimar" ;ata is anal"/ed +" usin%

;escri#tive <ei%hted actor ountin% ethod

4/



actor 5nal"sis

5nal"sis of ;emo%ra#hics of the investors

Throu%h #ie hcarts, +ar %ra#hs. etc.

ethodolo%" 5do#ted for 'econdar" ;ata 5nal"sis

or the first #art of anal"sis i.e. fund returns, I have ta$en five to# funds of same

cate%or" of different fund houses and com#ared their returns for 3 months, 6 months,

1"ear, H "ears 3 "ears and D "ears.

or the second #art of anl"sis i.e. ris$ #rofile, I have com#ared these five funds with

res#ect to their standard deviation, shar#e ratio, +eta, al#ha and r& s7uared..

The com#arison of the funds is done usin% the +ar charts and thus arrivin% at a

conclusion after anal"/in% those charts

'econdar" data is anal"/ed +" usin% the returns nta+les and %ra#hs.etc.

H.6 LIMITATIONS

There is a #ossi+ilit" of investors +ein% +iased

The surve" was conducted durin% a #eriod of half month when the mar$et was

slu%%ish.

The sam#le si/e was 7uite low to ta$e re#resentative sam#les from various sections of

the societ".

The surve" was conducted in um+ai where #eo#le are more aware of the financial

tools li$e mutual funds. =woever the scenario #an India ma" +e different.

41



CHAPTER - 3

DATA ANAL<SIS & INTERPRETATION

4



DESCRIPTIVE WEIGHTED FACTOR COUNTING METHOD

<e have ran$ed the inde#endent varia+les affectin% the +u"in% +ehavior of consumers

+" addin% the wei%hted factors. irstl", we have counted the res#onses under each

scale. 'econdl", we have assi%ned wei%hts to each of the scale %ivin% least wei%ht to 1

and ma-imum wei%ht to D. inall", we have added all the wei%hted res#onses and

ran$ed accordin%l" i.e. in descendin% order.

4an$in% were %iven after addin% all the wei%hts.

or. 2%

=istorical *erformance N .(1-H)O (H-F)O (3-9)O (F-FH)O (D-3D) N 39

RAN

INDEPENDENT VARIABLES 1 2 3 4 5

1 =istorical *erformance H F 9 FH 3D

H und 4eturn Bver ar$et 4eturn 3 D 1H 31 F1

3 5dvisor Influence H D HD 3D HD

F Ta- enefit 6 11 13 H9 33

D oc$ In *eriod 1 D 31 3H H3D 4e#utation 3 D H9 H8 H

43



'ecurit" D D H F1 H1

8 T"#e Bf 'cheme F 6 HF 3D H3

9 4e%ular Income 8 1 1D 3H H

1 5um 3 H9 36 1

11 onvenience F 6 3 3D 11H 5ttitude Towards 4is$ 3 1 3H 3 1

13 ees 6 1H H3 31 H

13 5 6 11 HD 3 H

1D luctuation In 27uit" ar$et F 18 18 3F 18

16 *ersonal 5ttention F 1 3D 3H 11

1 *rior 2-#erience 11 11 HD H9 16

18 *ros#ectus 1 H HF HD 13

19 amil" 4ecommendation 1D H H HF 6

H und 4atin% HF H8 13 1D 1HH1 Internet 1D 3 H 11 9

HH *romotional am#ai%n HH HD H6 1F D

H3 ot 'i/e H 3 HD 1

HF *erformance Bf und ana%er HD 3 H6 6 D

HD 2conomic Car$et onditions HF 3D H1 8 F

H6 Trans#arenc" 33 3F 18 D H

TABLE 1.1

FACTOR ANAL<SIS

44



5s the num+ers of inde#endent varia+les are ver" hi%h, we have tried to classif"

similar varia+les under a +road headin% throu%h factor anal"sis . These factors can +e

+roadl" classified as under@

VARIABLES FACTORS

*erformance of fund mana%er

T*(/%+("# $"(!,0'5U

5

T"#e of scheme

P'7(/,#,9+("# $"(!,0'*ersonal attention

*rior e-#erience

5dvisor influenceP0,,!+,%amil" recommendation

*romotional cam#ai%n

2conomic C ar$et condition

M"0*! (,%+!+,%luctuation in e7uit" mar$et

5ttitude towards ris$

TABLE 1.2

There are other factors also which consists of other varia+les +ut the" cannot +e

classified under a+road headin%s.

ive road factors have +een descri+ed in the followin% manner@&

" F+%"%(+"# F"(!,0' -This factor has 3 su+&factors namel" #erformance of the fund

mana%er, 5U, 5. Thus this factor tells us more of the technical side of an" %iven

fund under consideration. Investor who ran$s this factor or these su+&factors as the

most im#ortant is definitel" loo$in% for ver" %ood returns C %oin% to invest after

much research as he will definitel" loo$in% for a fund havin% a %ood #erformance and

decent returns o##ortunit".

4



) C'!,*0 O0+*%!* F"(!,0' T"#e of scheme, #ersonal attention and #rior

e-#erience are the su+&factors that ma$e this +roader cate%or" to%ether. In this

cate%or" an investor is loo$in% for the different schemes under an" #articular fund.

Investor is also loo$in% for #ersonal attention +ein% %iven to his #ortfolio or

investments, he wants #ersonal attention in the sense that new investment

o##ortunities should +e informed to him or #ro#er entr" C e-it #oints should +e

recommended to him and the li$es.

( M"0*!+%9 F"(!,0' Investors who are %oin% to rate this +road cate%or" as the

most im#ortant for them are more inclined to the factors li$e advisor influence, famil"

recommendation and #romotional cam#ai%n. These $inds of investors are not much

e-#erienced as far as these investments are concerned.

E(,%,+( F"(!,0' This factor includes factors li$e mar$et condition,

fluctuations in the mar$et and attitude towards ris$. Investors who are more

concerned a+out these factors are ris$ averse investors. These investors wait for the

ri%ht moment to enter or to start investin% in funds. or these #eo#le ris$ is at the to#

most #riorit" and if returns are not that much then also its fine with these investors.

* S*(0+!7 F"(!,0' It includes ta- +enefits, #ros#ectus and securit" as far as their

ca#ital investment is concerned.

46



DISCRIMINANT ANAL<SIS

Throu%h ;iscriminant anal"sis I have tried to hi%hli%ht varia+les which effect the

decision of a #eo#le investin% for less than a "ear and #eo#le who are investin% for

more than a "ear. The term 1 consists of the #eo#le who are investin% for less than a

"ear whereas term H consists of the #eo#le who are investin% for 1 to D "ears.

Throu%h %rou# statistics in +oth the terms standard deviation is 7uite hi%h and mean is

7uite low as seen in 5##endi-. Therefore, there is no difference in the factors

affectin% the +u"in% +ehavior +etween term 1 and term H #eo#le.

DEMOGRAPHIC FACTORS

47



13:

/:1/:

7:

AGE

5E$;< 3/ 31-4/ 41-/ +5;=E /

CHART 2.1 AGE PROFILE

rom a+ove chart it can +e easil" inferred that #eo#le a%ed +etween 31&F #referred

mutual funds most +ecause of man" factors mainl" due to sta+ilit" in their earnin%s

and e-#osure to mar$ets.

/:

47:

33:

ACADEMIC QUALIFICATION

&.+>U+TI; 0;T &.+>U+TI; 0.;FFEI;+$

CHART 2.2 - ACADEMIC UALIFICATION

48



8/:

/:

MARITAL STATUS

M+..IE> UM+..IE>

CHART 2.3 - MARITAL STATUS

6:

17:

/:

7:

OCCUPATION

0.;FEI;+$ +$+.IE> 5UIE

.ETI.E> ;T?E.

CHART 2.4 - OCCUPATION PROFILE

49



1:

/:

1:

/:

ANNUAL INCOME

$E T?+ '//,/// ,//,//1-,//,///

,//,//1-1/,//,/// +5;=E 1/,//,///

CHART 2.5 ANNUAL INCOME RANGE

rom a+ove charts it can +e easil" inferred that@

• a!orit" of res#ondents are #ost&%raduates, therefore it remains to +e seen that

to what e-tent %raduates and #rofessionals have interest in mutual funds.

• a!orit" of res#ondents are married (8:), therefore it remains to +e seen that

how man" "oun% and unmarried investors have #reference towards mutual

funds.

• a!orit" of res#ondents have their occu#ation as a #rofessional +e it

4elationshi# an%ers, Insurance a%ents, Inde#endent inancial 5dvisors

(I5s), 5s etc. mainl" due to their hi%h level of awareness a+out financial

#roducts.

• rom a+ove chart it can +e easil" inferred that ma!orit" of res#ondents are

from the aove 1,, ran%e, due to their a+undanc" of mone" after

fulfillin% their +asic needs. 'o here lies the o##ortunit" for 5s to %enerate

hu%e volumes +" offerin% innovative funds throu%h 'I*s to lower income

%rou#s .

/



FINANCIAL BEHAVIOUR OF THE RESPONDENTS

INVESTMENT OBECTIVES 5mon% %iven o#tions includin% >others? cate%or"

ma!orit" of res#ondents #refer 9,, 0*!0% as their #rimar" o+!ective of investment.

6:7:

7/:

17:

INVESTMENT OBJECTIVE

+FET@ T+A 5EEFIT $IBUI>IT@

&;;> .ETU. %+0IT+$ +00.E%I+TI;

CHART 2.6 INVESTMENT OBECTIVE

CHANNELS USED B< RESPONDENTS FOR INVESTING rom the stud" it

can easil" +e inferred that ma!orit" of res#ondents@:> now invest directl" in

mutual funds es#eciall" after '2I %uidelines came recentl" that sa"s there will not

+e an" 2T4J B5; for investors investin% in mutual fund schemes directl".

INVESTMENT HORION rom stud" it can +e concluded that ma!orit" of

res#ondents invest in mutual funds from JM,0* !/"% !/0** 7*"0K #ers#ective (D3:),

1



thats means once a investor comes to "our service he will +e there for at least three

"ears, therefore it is ver" essential toda" that 5s and es#eciall" 'I should focus

on innovative wa"s to serve the customers li$e %ivin% %ood 7ualit" service and

assistance.

INVESTMENT AMOUNT rom #ilot stud" it can +e concluded that ma!orit" of

res#ondents (F6:) have investments in mutual funds in a ran%e of >ore than 1,

,? cate%or" which im#lies that over a #eriod of time if an investor see that his

ca#ital is %rowin% than the #ro+a+ilit" of his su+se7uent investment +ecomes ver"

stron%.

SCHEME PREFERENCES

ON THE BASIS OF ASSET CLASS

4/:

8:

18:

8: 6:

SCHEME PREFERENCES

EBUIT@ >E5T 5+$+%E> FM0 ;T?E.

CHART 2.: SCHEME PREFERENCES@A''*! C#"''



<hen it comes to scheme #references ma!orit" of retail investors #refer E+!7

S(/**' @4> followed +" ;e+t 'chemes (H8:) with !ust 8: retail investor

#referrin% de+t or fi-ed income instruments li$e i-ed aturit" *lans (*s). It

shows that there is a hu%e #otential for de+t instruments in the mar$et which is

unearthed +" retail investors due to its com#le-it", low awareness etc.

PREFERABLE ROUTE FOR INVESTMENT IN MUTUAL FUNDS

1:

7:

1/:

7:

:

PREFERABLE ROUTE

F.IE>C U&&ETI; E$F >E%II; 5.;2E.D+&ET

E<0+0E.D M+&+IE TE$E=II; ;T?E.

CHART 2.; PREFERABLE ROUTE

5s a+ove chart clearl" e-#lains that ma!orit" of res#ondents (D:) ta$e self decision

once the" start investin% in mutual funds. Bnl" 1 : of res#ondents ta$e hel# of

ro$ersA5dvisors when it comes to final decision of investin%. Therefore, it shows

3



that 5s in %eneral and 'I in #articular have to +e more informative so that the"

can #rovide +est material, service and information to facilitate su+se7uent investment

of retail investors.

SCHEME PREFERENCES

ON THE BASIS OF STRUCTURE

87:

13:

SCHEME PREFERENCES- STRUCTURE

;0E E>E> %$;E E>E> ITE.=+$

CHART 2.= SCHEME PREFERENCES - STRUCTURE

<hen it comes to scheme #reference on the +asis of its structure, ma!orit" of retail

investors #refer >B#en 2nded 'cheme > #rimaril" due to fle-i+ilit" of redem#tions,

investments, %ood return and li7uidit". one of the investors #refer >Interval

'cheme?, in fact some of the retail investors were confused a+out the ver" name of

>Interval 'chemes.?

4



SAVING HABITS

<hen it comes to 'avin% =a+its of retail investors it comes out that ma!orit" of

res#ondents saves +etween 1D:&H: #.a. +asis followed +" >a+ove HD:? cate%or"

(H:), therefore at this sta%e it is ver" difficult to sa" an"thin% a+out savin%

#references a+out retail investors. Bthers cate%ories li$e 1&1D and H&HD are e7uall"

#referred +" res#ondents +ut it was a #ositive clue that onl" : of res#ondents save

+elow D:.

6:13:

17:

7:

17:

/:

SAVING HABBITS

5E$;< : -1/: 1/-1: 1-/: /-: +5;=E :

CHART 2.1> - SAVING HABBITS



SBI AND OTHERS

M,'! P,#"0 F% $0, SBI@ U# till this sta%e the winner is >'I 552;

U;? which is #referred +" ma!orit" of res#ondents @6>, due to

1 ;iversification in investment +etween e7uit" C de+t

H) Good return with lesser ris$ involvement

3) a#ital 5##reciation

F) *ortfolio held

SATISFACTION LEVEL WITH SBI

17:

47:

33:

3:

SATISFACTION LEVEL

?I&?$@ +TIFIE> .E+;+5$@ +TIFIE> %;I>E.+5$@ +TIFIE>

U+TIFIE> ?I&?$@ U+TIFIE>

CHART 2.11 SATISFACTION LEVEL

6



orm a+ove chart it can +e inferred that u# to this sta%e ma!orit" of res#ondents

(F:) are reasona+l" satisfied when the" were as$ed a+out overall e-#erience with

'I utual unds includin% funds, returns, services etc., +ut it remains to +e seen that

which cate%or" leads with the com#letion of surve" +ecause second +est cate%ories

#referred +" investors is JC,%'+*0")#7 S"!+'$+*K which means that there is more to

do on 'I +ehalf for C'!,*0 S"!+'$"(!+,%.

MOST POPULAR FUND HOUSE IN TERMS OF HIGHEST INVESTMENT%

7:

1:

7:

1/:

14:

1/:

POPULAR FUND HOUSE

5I .E$I+%E ?>F% I%I%I 5I.$+ ;T?E.

CHART 2.12 MOST POPULAR FUND HOUSE

<hen as$ed a+out hi%hest investment in an 5 ma!orit" of Investors (H:) %ave

the name of 'I which is followed +" 4eliance (H3:), III (H:), and rest in

>others? which is lead +" UTI. 'o there is a stiff com#etition in the mar$et and it

remains to +e seen that which fund house ta$e the leads with the com#letion of the

#ro!ect.

7



INTER-FIRM COMPARISON

The main o+!ective of doin% Inter irm 5nal"sis is to !ud%e where 'I UTU5

U;' stands in com#arison to other 5sset ana%ement om#anies @AMC' as #er

different criterion which are e-#lained as follows.

I have chosen F different cate%or" unds@

*$ E!+IT, & -L+EC.I /0I1(0IL, L(02E C( )+NDS3

4$ E!+IT, & 1ID 5 S1(LL C(

6$ -(L(NCED /CO10ISIN2 -OT. E!+IT, 5 DE-T3

=. T(7 S(8IN2 SC.E1ES

The com#arative anal"sis of cate%ories mentioned a+ove is shown as follows "' ,%

22->:-15@

The followin% two #arameters are considered for com#arative anal"sis@

1 unds 4eturns

H 4is$ *rofile

A%"#7'+' ,$ !/* $%' ,% !/* B"'+' ,$ "0+,' 0"!+,'.

To understand this #ortion lets +rea$ it u# In two #arts, irst +ein% the #art where we

discuss a+out the financial tools that we will use as a #arameter and second where we

8



com#are ma!or mutual funds of each cate%or" and see how are 'Is #roducts as

com#ared to its com#etitors.

*art I There are D #rinci#al ris$ measures@ 5l#ha, eta, sortino, standard deviation

and the 'har#e ratio. 2ach ris$ measure is uni7ue in how it measures ris$. <hen

com#arin% two or more #otential investments, an investor should alwa"s com#are the

same ris$ measures to each different investment in order to %et a relative #erformance

#ers#ective.

S!"%"0 D*+"!+,%

'tandard ;eviation is a##lied to the annual rate of return of an investment to measure

the investments volatilit". 'tandard deviation is also $nown as historical volatilit"

and is used +" investors as a %au%e for the amount of e-#ected volatilit".

'tandard deviation is a statistical measurement that sheds li%ht on historical volatilit".

or e-am#le, a volatile stoc$ will have a hi%h standard deviation while the deviation

of a sta+le +lue chi# stoc$ will +e lower. 5 lar%e dis#ersion tells us how much the

return on the fund is deviatin% from the e-#ected normal returns.

B*!"

5 measure of the volatilit", or s"stematic ris$ of a securit" or a #ortfolio in

com#arison to the mar$et as whole. 5 +eta +elow 1 can indicate an investment with

lower volatilit" than the mar$et.

9



5 eta of 1 indicates that the securit"s #rice will move with the mar$et. 5 eta of

less than 1 means that the securit" will +e less volatile in com#arison to the mar$et. 5

eta of %reater than 1 indicates that the securit"s #rice will +e more volatile than the

mar$et. or e-am#le, if a stoc$s +eta is 1.H, it is theoreticall" H: more volatile

than the mar$et.

S/"0* R"!+,

The 'har#e ratio uses 'tandard deviation to measure a funds ris$ ad!usted returns.

The hi%her a funds 'har#e ratio, the +etter fund return have +een relative to the ris$ it

has ta$en on, +ecause it uses standard deviation. The 'har#e ratio can +e used to

com#are ris$ ad!usted return across all fund cate%ories.

The 'har#e ratio tells us whether a #ortfolios return are due to smart investment

decisions or a result of e-cess ris$. This measurement is ver" useful +ecause althou%h

one #ortfolio or fund can rea# hi%her returns than its #eers, it is onl" a %ood

investment if those hi%her returns do not come with too much additional ris$. The

%reater a #ortfolios 'har#e ratio, the +etter its ris$ ad!usted #erformance has +een. 5

ne%ative 'har#e ratio indicates that a ris$&less asset would #erform +etter than the

securit" +ein% anal"/ed.

S,0!+%,

The 'ortino su+tracts the ris$ free rate of return from the #ortfolios return and then

divides that +" the downward deviation. 5 hi%h 'ortino ratio indicates there is a low

6/



#ro+a+ilit" of a lar%e loss. 'ortino is +etter than when anal"/in% hi%hl" volatile

#ortfolios. 'har#e ratio is +etter for anal"/in% #ortfolio that has lower volatilit".

A#/"

5 measure of #erformance on a ris$ ad!usted #erformance to a +enchmar$ inde-. The

e-cess return of the fund relative to the return of the +enchmar$ inde- is a funds

al#ha. 5 #ositive al#ha of 1. means the fund has out#erformed its +enchmar$ inde-

+" 1:. orres#ondin%, a similar ne%ative al#ha would indicate an under#erformance

of 1:.

SBI BLUECHIP FUND

In com#arison with

1) III *rudential ocussed luechi# und

61



H) ran$lin India B##ortunities und

3) CT 27uit" und

F) irla 'unife rontline 27uit"

RETURNS

S(/*

*

SBI

B#*(/+

ICICI F,('*

B#*(/+

F0"%#+% @I

O,0!.

L&T

E+!7

B+0#" SL

F0,%!#+%*

E+!7

3nths D.D: F.F: D.: 3.9: F.8:

6nths 6.3: &.3: 3.: .9: 1.F:

1 Jear H.9: 1.D: 3F.3: HF.D: H.6:

H Jears 33.D: H.: 3.D: 3H.3: 3.H:

3 Jears & HF.1: & & H.1:

D Jears & 1F.8: & & 1F.:

TABLE 3.1

Source :www"moneycontrol"com

The returns %iven +" 'I luechi# und has %iven the hi%hest returns in the #ast

3months i.e D.D:, 6 months i.e 6.3:. Its returns in the 1 "ear and H "ears cate%or"

are also %ood and there is not much difference in terms of returns from the to#

#erformer

RIS PROFILE

ar%e a# und ea

n

'tandard

;eviatio

n

'har#

e

4atio

'ortino eta 5l#ha

'I luehi# und HF.11 13.H 1.33 H.H8 .8F 9.6D

III ocus luehi# H.1 1F.D .9D 1.9 .9F F.8ran$lin Tem#leton 1.91 1F.H9 .8 1.6F .9F H.D3

6

http://www.moneycontrol.com/mutual-funds/nav/sbi-blue-chip-fund-direct/MSB532


http://www.moneycontrol.com/mutual-funds/nav/icici-pru-focused-bluechip-eqty/MPI392


http://www.moneycontrol.com/mutual-funds/nav/franklin-i-opport-direct/MTE319


http://www.moneycontrol.com/mutual-funds/nav/l-t-equity-fund-direct/MCC309


http://www.moneycontrol.com/mutual-funds/nav/birla-sl-frontline-equity/MAC031
















CT 27uit" H.93 1F.8H .96 1.68 .96 D.3

irla rontline HH.9 1D.18 1. H.16 1.1 6.9H

TABLE 3.2

S,0(e : www"moneycontrol"com

5nal"/in% the status of 'Is luechi# und loo$in% at each of the financial tool we

can see that 'I has maintain to #erform +est amon% all #arameters.

SBI MAGNUM MIDCAP FUND

In com#arison with

1) =; ida# B##ortunities undH) ran$lin *rima *lus und

3) irla 'unife idca# und

4 III *rudential idca# und

63

S(/** SBI

M+("

HDFC

M+C"

F0"%#+%

P0+"

B+0#" SL

M+("

ICICI

M+C"

3nths 8.F: 3.D: D.F: 8.: 6.1:

6nths 1H.3: 3.H: 3.9: 3.D: F.:

1 Jear FH.9: 3H.F: 3H.8: 6.D: 31.D:

H Jears D6.3: F8.8: 36.8: & D9.F:

3 Jears F1.: & H9.: & &

D Jears H1.1: & 1.1: & &

http://www.moneycontrol.com/mutual-funds/nav/sbi-magnum-midcap-fund/MSB065


http://www.moneycontrol.com/mutual-funds/nav/hdfc-midcap-opport-direct/MHD1161


http://www.moneycontrol.com/mutual-funds/nav/franklin-india-prima-plus/MKP003


http://www.moneycontrol.com/mutual-funds/nav/birla-sl-midcap-fund-direct/MIN365


http://www.moneycontrol.com/mutual-funds/nav/icici-pru-midcap-fund-direct/MPI1150














RETURNS

TABLE 3.3


The returns %iven +" 'I a%num id a# und has %iven the hi%hest returns in the

#ast 3months i.e 8.F:. , 3 "ears i.e F1.:, D "ears i.e H1.1:. Its returns in the

months, 1 "ear and H "ears cate%or" are also %ood and there is not much difference in

terms of returns from the to# #erformer.

id a# ean 'tandard

;eviatio

n

'har#

e

4atio

'ortino eta 5l#ha

'I a%num id a# 3D.FD 1D.96 1.D H.1 .8H H.8

=; id a# H.8 16.6 1.31 H.FD .88 1H.9F

ran$lin *rima 3.9F 1D.98 1.D1 H.D8 .9 1D.9

III ;iscover" H8.9 16.3D 1.3D H.33 .91 13.6irla id a# HD.36 1.D 1.6 1.D .96 9.8

RIS PROFILE

TABLE 3.4


5nal"/in% the status of 'Is a%num ida# und loo$in% at each of the financial

tool we can see that 'I has maintain to #erform +est amon% all #arameters.

64



SBI BALANCED FUND

In com#arison with

1) =; alanced und

H) III *rudential alanced und

3) T5T5 alanced und

F) CT India *rudence und

RETURNS

S(/** SBI

B"#"%(*

HDFC

B"#"%(*

ICICI

B"#"%(*

T"!"

B"#"%(*

L&T I%+"

P0*%(*

3nths 1.: 1.9: 3.D: 3.: 3.3:

6nths H.F: .8: 1.1: F.9: F.:

1 Jear HH.6: H.: H.8: H.: H6.1:

H Jears 3.: 3F.: 3.F: 33.H: 3H.9:

3 Jears & & & H6.: &

D Jears & & & 16.: &

TABLE 3.5


Its returns have +een consistent and there is not much difference in terms of returns

from the to# #erformer in the cate%or".

6

http://www.moneycontrol.com/mutual-funds/nav/sbi-balanced-fund-direct/MSB516


http://www.moneycontrol.com/mutual-funds/nav/hdfc-balanced-fund-direct/MHD1173


http://www.moneycontrol.com/mutual-funds/nav/icici-pru-balanced-fund-direct/MPI1136


http://www.moneycontrol.com/mutual-funds/nav/tata-balanced-fund-regular/MTA001


http://www.moneycontrol.com/mutual-funds/nav/l-t-india-prudence-fund-direct/MCC266














RIS PROFILE

alanced und ean 'tandard

;eviation

'har#e

4atio

'ortino eta 5l#ha

'I alanced und H3.3 1.69 1.DD H.3F .83 1.86

CT India *rudence H1.99 11.H 1.38 H.F3 .89 9.F

III alanced und H1. 11.18 1.H H.HD .9H .8F

=; alanced und H.FH 1H.F 1.13 H.HF .9H .HD

T5T5 alanced und HH.9F 1H.1H 1.3F H.36 .98 9.39 TABLE 3.6


5nal"/in% the status of 'Is alanced und loo$in% at each of the financial tool we

can see that 'I has maintained to #erform +est amon% all #arameters e-ce#t 'ortino,

+ut onl" .9 is the difference so that is not that +ad.

SBI MAGNUM TAGAIN SCHEME

In com#arison with

1) irla 'un ife Ta- 'avin%s und

66



H) =; Ta- 'aver und

3) Tata Ta- 'avin% und

F) 4eliance Ta- 'aver und

RETURNS

TABLE 3.:


The returns %iven +" 'I Ta- Gain scheme has %iven the hi%hest returns in the #ast

3months i.e 6.6:. Its returns in the 6 months, 1 "ear and H "ears cate%or" are also

%ood and there is not much difference in terms of returns from the to# #erformer in

the cate%or".

RIS PROFILE

ar%e a# und ean 'tandard

;eviatio

n

'har#

e

4atio

'I a%num Ta- Gain H3.D 13.8 1.H1

irla Ta- 'avin%s H.8 1F.1H .99

=; Ta- 'aver H.1 1F.D .9D

Tata Ta- 'avin% und HH.DF 1H.1 .9

4eliance Ta- 'aver H.93 1F.8H .96

67

S(/** SBI T"8

G"+%

B+0#" T"8

S"+%9'

HDFC

T"8 S"*0

T"!" T"8

S"+%9

R*#+"%(*

T"8 S"*0

3nths 6.6: H.6: 1.6: D.1: .9:

6nths 3.6: 3.3: &3.6: D.F: &1.D:

1 Jear H3.6: H.9: 13.1: & HF.1:

H Jears 3F.9: 31.: 3F.: & F9.D:

3 Jears & HF.F: & & &

D Jears & 1H.H: & & &

http://www.moneycontrol.com/

http://www.moneycontrol.com/mutual-funds/nav/sbi-magnum-tax-gain-direct/MSB499


http://www.moneycontrol.com/mutual-funds/nav/birla-sl-tax-savings/MIN039


http://www.moneycontrol.com/mutual-funds/nav/hdfc-tax-saver-direct/MHD1167


http://www.moneycontrol.com/mutual-funds/nav/tata-tax-saving-fund-direct/MTA1114


http://www.moneycontrol.com/mutual-funds/nav/reliance-tax-saver-elss-direct/MRC938















(2'')

TABLE 3.;


5nal"/in% the status of 'Is alanced und loo$in% at each of the financial tool we

can see that 'I has maintain to #erform +est amon% all #arameters e-ce#t 'tandard

;eviation.

PERFORMANCE ANAL<SIS OF SOME OF THE E< STOCS HELD B<

SBI MUTUAL FUNDS

HDFC B"%

a!orit" of 'I utual und #roducts have hi%h share of holdin%s of =; an$ in

their #ortfolio

68



GRAPH 3.1


=; an$ has +een an out#erformer in the mar$et. rom the %ra#h it can +e seen

that it is consistent and "ielded some %reat returns. a!orit" of 'I utual und

#roducts have hi%h holdin%s of =; an$ in their #ortfolio.

SUN PHARMA

5fter =; an$, 'un *harma is one of the +i%%est holdin%s held +" 'I *roducts in

their #ortfolio

69



GRAPH 3.2


It can +e seen from the chart that 'U *harma has consistentl" +een movin% u#ward.

Thou%h it has seen a shar# downfall in the recent times. The stoc$ is e-#ected to start

recoverin% due to #ositive indicators for the #harma industr".

SWOT ANAL<SIS

5 t"#e of fundamental anal"sis of the health of a com#an" +" e-aminin% its

stren%ths('), wea$ness (<), +usiness o##ortunit" (B), and an" threat (T) or dan%ers it

mi%ht +e e-#osed to.

7/



STRENGTHS

• rand strate%"@ as o##osed to some of its com#etitors 'I o#erates a multi&

+rand strate%". The com#an" o#erates under numerous well&$nown +rand

names, which allows the com#an" to a##eal to man" different se%ments of the

mar$et.

• ;istri+ution channel strate%"@ 'I is continuousl" im#rovin% the distri+ution

of its #roducts. Its online and Internet&+ased access offers a com+ination of

e-cellent %rowth #ros#ects and its retail direct +usiness also saw immense

%rowth in the recent decade.

• arious sources of income@ 'I has man" sources of income throu%hout the

%rou#, and this diversit" within the %rou# ma$es the com#an" more fle-i+le

and resistant to economic and environmental chan%es.

• 2-#erienced mana%ers for lar%e num+er of Generics.

• ar%e #ool of s$illed and $nowled%ea+le man#ower.

• 5n increasin% li+erali/ation of %overnment #olicies.

WEANESS

• 2mer%in% mar$ets@ There is more investment demand in the United 'tates,

a#an and the rest of 5sia, 'I has limited e-#osure to these %lo+al mar$ets.

• utual funds are li$e man" other investments without a %uaranteed return@

there is alwa"s the #ossi+ilit" that the value of "our mutual fund will

71



de#reciate. Unli$e fi-ed&income #roducts, such as +onds and Treasur" +ills,

mutual funds e-#erience #rice fluctuations alon% with the stoc$s that ma$e u#

the fund. <hen decidin% on a #articular fund to +u", "ou need to research the

ris$s involved !ust +ecause a #rofessional mana%er is loo$in% after the fund,

that doesnt mean the #erformance will +e stellar.

OPPORTUNITIES

• *otential mar$ets@ The Indian rural mar$et has %reat #otential. 5ll the ma!or

mar$et leaders consider the se%ments and real mar$ets for their #roducts. 5

senior official in a one of the leadin% com#an" sa"s fora" into rural India

alread" started and there has +een reali/ation that the rural mar$et is +oth #rice

and 7uantit" conscious.

THREATS

• =ed%e funds@ sometimes referred to as as hot mone", are also causin% a threat

for mutual funds have %ained worldwide notoriet" for +rin%in% the mar$ets

down. e it a crash in the currenc", 5 stoc$ or 5 +ond mar$et, 5 usuall" a

hed%e fund #rominentl" fi%ures somewhere in the #icture.

7



CHAPTER 4

FINDINGS

0e#ardin# )unds%&

<hile dealin% with them I have o+served that the #erformance of the schemes of

'I are 7uite %ood and the demand for those schemes is also %ood. I came to

$now that 'I luechi# und C 'I alanced und are the most #o#ular funds

73



amon% individual investors. 5ccordin% to them the 3"r and D"r returns of the funds

are ver" %ood. Bne of the reason for %reat demands of 5s fund is the rand alue

of 'I, as it is the lar%est +an$ of countr".

5t the same time the" we also o+served that unli$e other 5s li$e 4eliance,

=; etc. 'I is not ver" a%%ressive in mar$etin% of its funds.

0e#ardin# services%&

5#art from fund #erformance o+servations are also made re%ardin% the services of

'I, after anal"/in% the feed+ac$ of distri+utors I found that the services of

'I are not as %ood as other 5s and some of the field in which the" are

lac$in%

1. om#laints related to not deliverin% the account statements and +ro$era%e on

time.

H. *ro+lems related to material, li$e unavaila+ilit" of forms, fact sheets and other

#romotional matters, also there are some #ro+lems related to courier services.

3. The" have also com#lained that 5 do not #rovide an" frin%e +enefits on

%ood #erformance.

74



CHAPTER - 5

CONCLUSION

The future of #rimar" mar$et is %rowin% at a ver" hi%h #ace. Ta$in% this thin% into

consideration, there are lots of o##ortunities for the 'I utual unds to ta# the

%olden o##ortunities from the Indian mar$et.

'I has emer%ed a ver" stron% #la"er in the mar$et and is %ivin% stiff com#etition

to all the #la"ers in the mar$et includin% the +an$s. It is e-#andin% its area of

+usiness, if the #ro%ress of 'I %oes in the same wa", than I can sa" that there is

7



+ri%ht future for 'I in comin% "ears. The" have much #otential to e-#and their

distri+ution *an India.

The com#an" is currentl" followin% hu%e investment and %rowth strate%ies. 5#art

from the mar$et %rowth rate the distri+ution industr" doesnt seem so attractive.

=ence the firm should +e selective usin% %rowth strate%ies. This is not to undermine

the +ri%ht future of 'I , !ust a chec$ to +e a cautious.

There is little awareness a+out mutual fund in IndiaE #eo#le have acce#ted it as a one

of the ma!or investment avenue. utual funds will +ecome one of the sou%ht after

investment avenues. 5s far as the other investment #roducts mar$eted +" 'I are

concerned, the" have a read" mar$et. The onl" thin%, which it needs to focus on, is

that the" should have a stron% networ$ so that #rom#t services and availa+ilit" of

forms is made availa+le to the investor at a short notice, and if it $ee#s the traditional

+ase for mar$etin% in India, which is a #rice sensitive mar$et, we can sa" that 'I

has a %reat future ahead.

CO1(0ISON O) 1+T+(L )+NDS

(2(INST OT.E0 IN8EST1ENT (8EN+ES%

PRODUCT SAFET<CON LIUIDIT< RETURN VOLATILIT<

76



VINENCE

27uit" ow =i%hAlow =i%h&od. =i%h

I onds =i%h oderate od.&=i%h oderate

;e+entures oderate ow od.&ow oderate

or#. ; ow ow oderate ow

an$ ;e#osit =i%h =i%h ow&=i%h ow

** =i%h oderate oderate ow

ife Ins. =i%h ow ow&od ow

Gold =i%h oderate od.&ow oderate

4eal 2state oderate ow =i%h&ow =i%h

=i%h =i%h =i%h oderate

77



CHAPTER - 6

SUGGESTIONS & RECOMMENDATIONS

A THE GROUND RULES OF MUTUAL FUND INVESTING

The followin% are the 1 commandments that were to +e followed till eternit".

The world of investments too has several %round rules meant for investors

who are novices in their own ri%ht and wish to enter the m"riad world of

investments. These come in hand" for there is ever" #ossi+ilit" of losin% what

one has if due care is not ta$en.

A''*'' 7,0'*#$ 'elf&assessment of ones needsE e-#ectations and ris$ #rofile

is of #rime im#ortance failin% whichE one will ma$e more mista$es in #uttin%

78



mone" in ri%ht #laces than otherwise. Irrational e-#ectations will onl" +rin%

#ain.

T07 !, %*0'!"% /*0* !/* ,%*7 +' 9,+%9 Bne can lose su+stantiall" if

one #ic$s the wron% $ind of mutual fund. In order to avoid an" confusion it is

+etter to %o throu%h the literature such as offer document and fact sheets that

mutual fund com#anies #rovide on their funds.

D,%! 0'/ +% +(+%9 $%' !/+% $+0'! one first has to decide what he

wants the mone" for and it is this investment %oal that should +e the %uidin%

li%ht for all investments done. It is thus im#ortant to $now the ris$s associated

with the fund and ali%n it with the 7uantum of ris$ one is willin% to ta$e. Bne

should ta$e a loo$ at the #ortfolio of the funds for the #ur#ose. 2-cessive

e-#osure to an" s#ecific sector should +e avoided, as it will onl" add to the

ris$ of the entire #ortfolio.

I%*'!. D,%! '*(#"!* 5 common investor is limited in the de%ree of ris$

that he is willin% to ta$e. It is thus of $e" im#ortance that there is thou%ht

%iven to the #rocess of investment and to the time hori/on of the intended

investment. Bne should a+stain from s#eculatin% which in other words would

mean %ettin% out of one fund and investin% in another with the intention of

ma$in% 7uic$ mone"

D,%! ! "## !/* *99' +% ,%* )"'*! This old a%e ada%e is of utmost

im#ortance. o matter what the ris$ #rofile of a #erson is, it is alwa"s

advisa+le to diversif" the ris$s associated. 'o #uttin% ones mone" in different

79



asset classes is %enerall" the +est o#tion as it avera%es the ris$s in each

cate%or".

B* 0*9#"0 Investin% should +e a ha+it and not an e-ercise underta$en at

ones wishes, if one has to reall" +enefit from them. 5s we said earlier, since it

is e-tremel" difficult to $now when to enter or e-it the mar$et, it is im#ortant

to +eat the mar$et +" +ein% s"stematic. The 'I*s ('"stematic Investment

*lans) offered +" all funds hel#s in +ein% s"stematic. 5ll that one needs to do

is to %ive #ost&dated che7ues to the fund and thereafter one will not +e harried

later.

D, 7,0 /,*,0 It is im#ortant for all investors to research the avenues

availa+le to them irres#ective of the investor cate%or" the" +elon% to. This is

im#ortant +ecause an informed investor is in a +etter decision to ma$e ri%ht

decisions. =avin% identified the ris$s associated with the investment is

im#ortant and so one should tr" to $now all as#ects associated with it. 5s$in%

the intermediaries is one of the wa"s to ta$e care of the #ro+lem.

F+% !/* 0+9/! $%' indin% funds that do not char%e much fees is of

im#ortance, as the fee char%ed ultimatel" %oes from the #oc$et of the investor.

This is even more im#ortant for de+t funds as the returns from these funds are

not much. unds that char%e more will reduce the "ield to the investor.

indin% the ri%ht funds is im#ortant and one should also use these funds for

ta- efficienc".

8/



** !0"( ,$ 7,0 +%*'!*%!' indin% the ri%ht fund is im#ortant +ut even

more im#ortant is to $ee# trac$ of the wa" the" are #erformin% in the mar$et.

If the mar$et is +e%innin% to enter a +earish #hase, then investors of e7uit" too

will +enefit +" switchin% to de+t funds as the losses can +e minimi/ed. Bne

can alwa"s switch +ac$ to e7uit" if the e7uit" mar$et starts to show some

+uo"anc".

%, /*% !, '*## 7,0 !"# $%' 0nowin% when to e-it a fund too is

of utmost im#ortance. Bne should +oo$ #rofits immediatel" when enou%h has

+een earned i.e. the initial e-#ectation from the fund has +een met with. Bther

factors li$e non&#erformance, hi$e in fee char%ed and chan%e in an" +asic

attri+ute of the fund etc. are some of the reasons for to e-it.

B WHEN TO SELL <OUR MUTUAL FUND

While there are man" investment consultants, some +" #rofession, some self&

#rofessed, who su%%est on when to invest in a #articular avenue, there is a certain

#aucit" of #eo#le who tal$ of when to e-it. =ere are some situations when the

investor should consider withdrawin% their investments from the funds.

• F% +' %,! *0$,0+%9

This reason for sellin%, althou%h valid in certain conditions, is where most

investors ma$e a mista$e. <hen calculatin% #erformance one shouldnt loo$ at

too short a #eriod and ma$e a mista$e +" com#arin% a##les to oran%es. Bne

should com#are the returns #osted +" his fund with that of the #eers across

various hori/ons such as 1&"ear, 3&"ear and a+ove. 5 short&term view can

often lead to committin% hara&$iri, as it doesnt #resent the full #icture. If it

81



has under#erformed the avera%e of its #eers in all cases, then it sure is one of

the +etter reasons to e-it from the fund.

A (/"%9* +% #+$* '!"9*

Investments are done with a certain o+!ective in mind and life sta%es are often

a determinin% factor of what a #erson needs. 5 "oun% man can afford to ta$e

more ris$s than a #erson nearin% his retirement can. In such cases, it #a"s to

withdraw mone" from the e7uit" investments made earlier and #ut them in

safer, more conservative de+t funds that offer sta+le returns without

com#romisin% on ris$. 'o a chan%e in life sta%es would +e one such reason to

consider switchin% into a fund that matches with ones needs.

• A ",0 (/"%9* +% "%7 )"'+( "!!0+)!* ,$ !/* $%

<hen the fund chan%es an" +asic attri+ute as mentioned +" it in its offer

documents, the investors have a choice of %ettin% out of it. 2ven '2I has

#rovided for an e-it route +ein% made availa+le to the investors. han%es li$e

a chan%e in 5sset ana%ement om#an" or in investment st"le of fund or

chan%e of structure sa" from closed&end to o#en&end etc. are %ood enou%h

reasons for an investor to consider switchin% or e-itin% from it as the" are

certainl" li$el" to affect the fund in a ma!or wa".

• F% ,*'%! (,#7 +!/ +!' ,)*(!+*

Bne of the im#ortant #arameters in the selection of the fund is ali%nment of

the ris$ #rofiles of the investor and fund. The o+!ective of the fund sa"s a lot

8



a+out how the fund #lans to invest. If the o+!ective is not +ein% com#lied with,

it is one of the e-it #oints worth considerin%.

• T/* F%' E8*%'* R"!+, R+'*'

5 small rise in an e-#ense ratio is not a +i% deal, however a si%nificant rise can

result in su+stantial reduction of "ields and so it would +e +etter to e-it the

fund. In the case of +ond funds or mone" mar$et funds, it is hi%hl" unli$el"

that the fund can increase its returns enou%h to !ustif" an increase in the funds

e-#enses.

• T/* F% M"%"9*0 /"' (/"%9*

5 sim#le chan%e of fund mana%ers, in itself, is not enou%h reason to sell a

fund on a short&term +asis. If it is a #assivel" mana%ed fund (inde- fund),

then one has little to no reason to worr". =owever, if it is an activel" mana%ed

fund, then has to $ee# the e"es o#en on the new mana%er.

• E%,9/ /"' )**% *"0%*

=owever, nothin% is as im#ortant as to rein the horses in time. The #rimar"

#rinci#le +ehind safet" of investment is to ta$e ris$s that can +e tolerated. The

#rinci#le also is s#ecific on the e-#ectations that the investor must have from

an" investment. ust as it is im#ortant to set realistic tar%ets that one ho#es to

achieve from the investment, it is also im#ortant to e-it when tar%et as

e-#ected has +een achieved irres#ective of the fact that it mi%ht +e %eneratin%

83



+etter returns in a short&term. <aitin% lon%er mi%ht not #rove +eneficial, as

one need not +e luc$" all the time.The a+ove list is certainl" not e-haustive

and individuals will have other +etter reasons to 7uit as well. Its !ust that most

dont $now when to a##l" thou%ht and so these would come in hand".

-I-LIO20(.,

oo$s C a%a/ines referred

W 'ecurit" 5nal"sis and *ortfolio ana%ement @ ;onald 2 ischer, 4onald ordan

W Butloo$ one"

W utual unds 4eview

W one" ife

W =ow to rate mana%ement of mutual funds @ =arvard usiness review

W 5ssociation of mutual funds in India (5I) *u+lications and 7uarterl" re#orts

W 'ecurities and 2-chan%e oard of India

W utual und *erformance @ <. 'har#eW ar$et Timin%, 'electivit", and utual und *erformance@ 5n 2m#irical

Investi%ation

W act sheets of different fund houses

<e+sites referred@

W www.mutualfundsindia.com

W www.amfiindia.com

W www.valueresearchonline.com

W www.s+imf.com

W www.+seindia.com

W www.nseindia.com

W www.%oo%le.com

84

http://www.mutualfundsindia.com/

http://www.amfiindia.com/

http://www.valueresearchonline.com/

http://www.sbimf.com/

http://www.bseindia.com/

http://www.nseindia.com/

http://www.google.com/

http://www.mutualfundsindia.com/

http://www.amfiindia.com/

http://www.valueresearchonline.com/

http://www.sbimf.com/

http://www.bseindia.com/

http://www.nseindia.com/

http://www.google.com/



W www.wi$i#edia.com

W www.mone"control.com

(NNE7+0E

Q#ESTI$%%AI&E' (

(B4 I;II;U5 I2'TB4')

EEP INVESTING AND EEP SMILING

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H. AGE@ elow 3 31&F F1&D 5+ove D

3. ACADEMIC UALIFICATION@ Graduate *ost Graduate *rofessional

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F. M"0+!"# S!"!'@ arried Unmarried

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http://www.wikipedia.com/


http://www.wikipedia.com/




.1. W/7 , 7, +%*'! +% !"# $%'? @T+( !/* O!+,%)

a)'afet" +) Good 4eturn c) Ta- enefit d) a#ital 5##reciation e) i7uidit"

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.4 H, (/ +' 7,0 +%*'!*%! /,0+,%? @T+( !/* ,!+,%

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(a) ot at all (+) 'omewhat (c) ;efinitel"

.:.W/"! +' 7,0 0+' 0*$*0*%(*?

a) =i%h ris$ and hi%h return +) oderate ris$ and oderate return c) ow ris$ and

low return

86



.;.H, '"!+'$+* 7, "0* +!/ 7,0 *8*0+*%(* ,$ +%*'!+%9 +% SBI M!"#

F%'?

=i%hl" 'atisfied onsidera+l" 'atisfied 4easona+l" 'atisfied Unsatisfied

=i%hl" Unsatisfied

.=. W/+(/ F% H,'* /"' #"09*'! '/"0* +% 7,0 I%*'!*%! P,0!$,#+, @M*%!+,%

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a) 27uit" +) ;e+t c) alanced d) i-ed aturit" *lan (*s) e) Bthers (*lease

'#ecif"&&&&&&&&&&&&&&&&&&&&&&&&&&&&)

.11 S"+%9 P0*$*0*%(* @#*"'* 0"% !/*

(a)ife Insurance

(+)*ension and * 'chemes

(c)an$ ;e#osit

(d)'hares and ;e+entures

(e)Units of s li$e 'I

(f)GoldAeweler

(f)Bthers (*lease '#ecif"&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&)

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ro$ersA5%ents (f) others (*lease '#ecif"&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&)

87



.13.<, P0*$*0@

(a)B#en 2nded 'cheme (+) lose 2nded 'cheme (c) Interval 'cheme

.14.H, (/ ,$ 7,0 +%(,* 7, ")#* !, '"*@

elow D: D&1: 1&1D: 1D&H: H&HD: 5B2 HD

. 15.R"% $,##,+%9 $"(!,0' !/"! 7, (,%'+*0 /+#* '*#*(!+%9 " '(/**

a) 'cheme ualities li$e trac$ record, fund si/e, entr" load etc.

+) und ana%er 2-#erience

c) Investor 'ervices li$e disclosure of 5, 5A statements.

d) ar$etin% of funds throu%h +ill +oards, relatives, friends, +ro$ers etc.

.16.A%7 S99*'!+,% $,0 SBI M!"# F%' @P#*"'* *%!+,% +!

.1:. 4ate the followin% factors which influences "our investment in mutual funds on

the im#ortance scale where 1 +' #*"'! +,0!"%! 3 +' %*!0"# 5 +' ,'! +,0!"%!.

F"(!,0' 1 H 3 F D=istorical #erformance of fund

88



unds returns over mar$et return

*erformance of und mana%er

urrent 2conomic and ar$et conditions

T"#e of schemes (%rowth, income, +alanced C others)

2-#ected ;ividend %oin% to +e deliver +" the fund

5dvisor or +ro$er or a%ent influence

onvenience in investin% in the fund

Trans#arenc" maintained +" the fund house

inimum investment or lot si/e

oc$ in #eriod in a fund

5sset under mana%ement

und ratin%

und #ros#ectus or offer document

Internet i.e. <e+site influence

*rior e-#erience with the fund house

luctuation in e7uit" mar$etsees ,load and e-#enses

4e#utation of fund house

'ecurit" #rovided +" the fund in terms of return

Ta- +enefit derivin% from investment in the fund

5 or #rice of funds unit

5ttitude towards ris$

riendAfamil" recommendation

*romotional cam#ai%n of the fund

Q#ESTI$%%AI&E')

(or an$ers)

1) what is the a%e %rou# of the investorsV• Under HD "rs

• HD to FD "rs

• FD to 6D "rs

• Bver 6D "rs

H) <hich are the +est #erformin% schemes in the mar$etV

• 'I utual und

• 4eliance utual und

• 0ota$ ahindra utual und

89



• irla 'unife utual und

• ran$lin utual und

• =; utual und

• III utual und

•

Bthers (*lease s#ecif")

3) ;o the" want an" chan%es in the e-istin% or future schemesV

• 'ervices

• ;ividends

• *ortfolio

• Bthers(#lease s#ecif")

F) 'u%%est a #ortfolio for a dream schemeV

• IT sector

• G sector

• *harma sector

• Infrastructure

• ommodities

• 5utomo+ile

• 2ner%"

• Telecom

• inancial services

• edia C 2ntertainment

• Bthers(*lease s#ecif")

D) <hat is the a##ro-imate sales of the +est seller schemeV

• ess than 1 la$h

• 1 to H la$h

• H to 3 la$h

• ore than 3 la$h

6) <hat are the facilities that other an$sAutual und houses are #rovidin%V

• 'ervice

• ommission

• *roduct related information

• Bthers (*lease '#ecif")

) <hat are "our %rievances, if an"V

9/



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8) <hat is the e-#ected return in that scheme (an" s#ecific scheme)V

'cheme name@ [[[[[[[[[[[[[[[[[[[

• ess than 1:

• 1&1D:

• 1D&H:

• H&HD:

• Bver HD:

9) 'u%%est wa"s +" which we can im#rove u#on our relationshi#.

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Date post:	13-Apr-2018
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