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CONTENTS
Acknowledgement
Declaration
Executive Summary
Chapter - 1 INTRODUCTION
Chapter - 2 COMPANY PROFILE
Chapter - 3 OBJECTIVES AND SCOPE
Chapter - 4 RESEARCH METHODOLOGY
Chapter - 5 DATA ANALYSIS AND INTERPRETATION
Chapter - 6 FINDINGS AND CONCLUSIONS
Chapter - 7 SUGGESTIONS & RECOMMENDATIONS
BIBLIOGRAPHY
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MUTUAL FUNDS
ALL ABOUT MUTUAL FUNDS
WHAT IS MUTUAL FUND
BY STRUCTURE
BY NATURE
EQUITY FUND
DEBT FUNDS
BY INVESTMENT OBJECTIVE
OTHER SCHEMES
PROS & CONS OF INVESTING IN MUTUAL FUNDS
ADVANTAGES OF INVESTING MUTUAL FUNDS
DISADVANTAGES OF INVESTING MUTUAL FUNDS
MUTUAL FUNDS INDUSTRY IN INDIA
MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
CATEGORIES OF MUTUAL FUNDS
INVESTMENT STRATEGIES
WORKING OF A MUTUAL FUND
GUIDELINES OF THE SEBI FOR MUTUAL FUND
COMPANIES DISTRIBUTION CHANNELS
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DOES FUND PERFORMANCE AND RANKING PERSIST?
PORTFOLIO ANALYSIS TOOLS
RESEARCH REPORT
OBJECTIVE OF RESEARCH
SCOPE OF THE STUDY
DATA SOURCES
SAMPLING
DATA ANALYSIS
QUESTIONNAIRE
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Chapter - 1
Introduction
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INTRODUCTION
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 areissued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not
move in the same direction in the same proportion at the same time. Mutual fund issues units to
the investors in accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders.
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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.
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ADVANTAGES OF MUTUAL FUND
Portfolio Diversification
Professional management
Reduction / Diversification of Risk
Liquidity
Flexibility & Convenience
Reduction in Transaction cost
Safety of regulated environment
Choice of schemes
Transparency
DISADVANTAGE OF MUTUAL FUND
No control over Cost in the Hands of an Investor
No tailor-made Portfolios
Managing a Portfolio Funds
Difficulty in selecting a Suitable Fund Scheme
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HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India,
at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it
accelerated from the year 1987 when non-UTI players entered the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement, both
qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending
phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the
fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the
height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund
industry can be broadly put into four phases according to the development of the sector. Each
phase is briefly described as under.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of
India and functioned under the Regulatory and administrative control of the Reserve Bank of India.
In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI)
took over the regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.
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Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LICestablished its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004
crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer
(now merged with Franklin Templeton) was the first private sector mutual fund registered in July
1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India
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with assets under management of Rs.29,835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes
The 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. consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
CATEGORIES OF MUTUAL FUND:
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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
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of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such
as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such
funds have relatively low liquidity.
Based on their investment objective:
Equity funds: These funds invest in equities and equity related instruments. With fluctuating
share prices, such funds show volatile performance, even losses. However, short term fluctuations
in the market, generally smoothens out in the long term, thereby offering higher returns at
relatively lower volatility. At the same time, such funds can yield great capital appreciation as,
historically, equities have outperformed all asset classes in the long term. Hence, investment in
equity funds should be considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their
portfolio mirrors the benchmark index both in terms of composition and individual stock
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.
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v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will
invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund:Their investment portfolio includes both debt and equity. As a result, on the risk-return
ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for
investors who prefer spreading their risk across various instruments. Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund:They invest only in debt instruments, and are a good option for investors averse to
idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income
instruments like bonds, debentures, Government of India securities; and money market instruments
such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into
any of these debt funds depending on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large portion being
invested in call money market.
ii) Gilt funds 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.
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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.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the
fund.
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INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a
month. Payment is made through post dated cheques or direct debit facilities. The investor gets
fewer units when the NAV is high and more units when the NAV is low. This is called as the
benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual
fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can
withdraw a fixed amount each month.
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RISK V/S. RETURN:
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Chapter 2
Company Profile
INTRODUCTION TO SBI MUTUAL FUND
SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with an
investor base of over 4.6 million and over 20 years of rich experience in fund management
consistently delivering value to its investors. SBI Funds Management Pvt. Ltd. is a joint
venture between 'The State Bank of India' one of India's largest banking enterprises, and
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Socit Gnrale Asset Management (France), one of the world's leading fund
management companies that manages over US$ 500 Billion worldwide.
Today the fund house manages over Rs 28500 crores of assets and has a diverse profile of
investors actively parking their investments across 36 active schemes. In 20 years of
operation, the fund has launched 38 schemes and successfully redeemed 15 of them, and in
the process, has rewarded our investors with consistent returns. Schemes of the Mutual
Fund have time after time outperformed benchmark indices, honored us with 15 awards of
performance and have emerged as the preferred investment for mil lions of investors. The
trust reposed on us by over 4.6 million investors is a genuine tribute to our expertise in
fund management.
SBI Funds Management Pvt. Ltd. serves its vast family of investors through a network of
over 130 points of acceptance, 28 Investor Service Centres, 46 Investor Service Desks and
56 District Organizers.SBI Mutual is the first bank-sponsored fund to launch an offshore fund
Resurgent India Opportunities Fund.
Growth through innovation and stable investment policies is the SBI MF credo.
PRODUCTS OF SBI MUTUAL FUND
Equity schemes
The investments of these schemes will predominantly be in the stock markets and
endeavor will be to provide investors the opportunity to benefit from the higher returns
which stock markets can provide. However they are also exposed to the volatility and
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attendant risks of stock markets and hence should be chosen only by such investors who
have high risk taking capacities and are willing to think long term. Equity Funds include
diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds
invest in various stocks across different sectors while sectoral funds which are specialized
Equity Funds restrict their investments only to shares of a particular sector and hence, are
riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a
particular index and the performance of such funds move with the movements of the
index.
Magnum COMMA Fund
Magnum Equity Fund
Magnum Global Fund
Magnum Index Fund
Magnum Midcap Fund
Magnum Multicap Fund
Magnum Multiplier plus 1993
Magnum Sectoral Funds Umbrella
MSFU- Emerging Business Fund
MSFU- IT Fund
MSFU- Pharma Fund
MSFU- Contra Fund
MSFU- FMCG Fund
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SBI Arbitrage Opportunities Fund
SBI Blue chip Fund
SBI Infrastructure Fund - Series I
SBI Magnum Taxgain Scheme 1993
SBI ONE India Fund
SBI TAX ADVANTAGE FUND - SERIES I
Debt schemes
Debt Funds invest only in debt instruments such as Corporate Bonds, Government
Securities and Money Market instruments either completely avoiding any investments in
the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities
as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At
the same time the expected returns from debt funds would be lower. Such investments are
advisable for the risk-averse investor and as a part of the investment portfolio for other
investors.
Magnum Childrens benefit Plan
Magnum Gilt Fund
Magnum Income Fund
Magnum Insta Cash Fund
Magnum Income Fund- Floating Rate Plan
http://www.sbimf.com/Product_Details.asp?ProductId=40&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=6&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=44&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=15&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=41&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=50&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=18&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=23&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=40&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=6&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=44&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=15&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=41&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=50&catid=1http://www.sbimf.com/Product_Details.asp?ProductId=18&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=23&catid=27/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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Magnum Income Plus Fund
Magnum Insta Cash Fund -Liquid Floater Plan
Magnum Monthly Income Plan
Magnum Monthly Income Plan- Floater
Magnum NRI Investment Fund
SBI Premier Liquid Fund
BALANCED SCHEMES
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
COMPETITORS OF SBI MUTUAL FUND
Some of the main competitors of SBI Mutual Fund in Dehradoon are as Follows:
http://www.sbimf.com/Product_Details.asp?ProductId=29&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=17&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=17&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=21&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=43&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=25&catid=3http://www.sbimf.com/Product_Details.asp?ProductId=29&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=17&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=17&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=21&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=43&catid=2http://www.sbimf.com/Product_Details.asp?ProductId=25&catid=37/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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i . ICICI Mutual Fund
ii. Reliance Mutual Fund
iii. UTI Mutual Fund
iv. Birla Sun Life Mutual Fund
v. Kotak Mutual Fund
vi. HDFC Mutual Fund
vii. Sundaram Mutual Fund
viii. LIC Mutual Fund
ix. Pr incipal
x. Franklin Templeton
AWARDS AND ACHIEVEMENTS
SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award - 8 times,
CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005-2006) and most
recently with the CNBC TV - 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for
our schemes.
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http://popup1%28%27aboutus/awards/icra_awards_2007.htm')http://popup2%28%27aboutus/awards/lipper_awards_07.htm')http://popup2%28%27aboutus/awards/awaaz_awards_2007.htm')http://popup2%28%27aboutus/awards/ndtv_awards_07.htm')http://popup1%28%27aboutus/awards/icra_awards_2008.htm')http://popup2%28%27aboutus/awards/lipper_awards_08.htm')7/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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http://popup1%28%27aboutus/awards/icra_awards.htm')http://popup1%28%27aboutus/awards/crisil_awards.htm')http://popup2%28%27aboutus/awards/lipper_awards.htm')http://popup2%28%27aboutus/awards/awaaz_awards.htm')http://popup1%28%27aboutus/awards/crisil_awards_2007.htm')7/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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Chapter - 3
Objectives and scope
OBJECTIVES OF THE STUDY
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1. To find out the Preferences of the investors for Asset Management Company.
2. To know the Preferences for the portfolios.
3. To know why one has invested or not invested in SBI Mutual fund
4. To find out the most preferred channel.
5. To find out what should do to boost Mutual Fund Industry.
Scope of the study
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A big boom has been witnessed in Mutual Fund Industry in resent times. A large number of new
players have entered the market and trying to gain market share in this rapidly improving market.
The research was carried on in Dehradoon. I had been sent at one of the branch of State Bank of
India Dehradoon where I completed my Project work. I surveyed on my Project Topic A study of
preferences of the Investors for investment in Mutual Fund on the visiting customers of the SBI
Boring Canal Road Branch.
The study will help to know the preferences of the customers, which company, portfolio, mode of
investment, option for getting return and so on they prefer. This project report may help the
company to make further planning and strategy.
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Chapter 4
Research Methodology
RESEARCH METHODOLOGY
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This report is based on primary as well secondary data, however primary data collection was
given more importance since it is overhearing factor in attitude studies. One of the most important
users of research methodology is that it helps in identifying the problem, collecting, analyzing the
required information data and providing an alternative solution to the problem .It also helps in
collecting the vital information that is required by the top management to assist them for the better
decision making both day to day decision and critical ones.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the reference.
Research has been done by primary data collection, and primary data has been collected by
interacting with various people. The secondary data has been collected through various journals
and websites.
Duration of Study:
The study was carried out for a period of two months, from 30 th May to 30th July 2008.
Sampling:
Sampling procedure:
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The sample was selected of them who are the customers/visitors of State Bank if India, Boring
Canal Road Branch, irrespective of them being investors or not or availing the services or not. It
was also collected through personal visits to persons, by formal and informal talks and through
filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical
tool.
Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120 people had
invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
Limitation:
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Some of the persons were not so responsive.
Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
Sample size is limited to 200 visitors of State Bank of India , Boring Canal Road
Branch, Dehradoon out of these only 120 had invested in Mutual Fund. The sample.
size may not adequately represent the whole market.
Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
The research is confined to a certain part of Dehradoon.
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Chapter 5
Data Analysis&
Interpretation
ANALYSIS & INTERPRETATION OF THE DATA
1. (a) Age distribution of the Investors of Dehradoon
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A
g
e
G
r
o
u
p
50
N
o.
o
f
I
n
v
e
st
o
rs
12
18
30
24
20
16
12
18
30
2420
16
0
5
10
15
20
25
30
35
50
Age group of the Investors
InvestorsinvestedinMutualFu
nd
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Interpretation:
According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in the age
group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20%
and the least investors are in the age group of below 30 yrs.
(b). Educational Qualification of investors of Dehradoon
EducationalQualification
Number ofInvestors
Graduate/ PostGraduate
88
Under Graduate 25
Others 7
Total 120
71%
23%
6%
Graduate/Post Graduate Under Graduate Others
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Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in Dehradoon are Graduate/Post Graduate,
23% are Under Graduate and 6% are others (under HSC).
c). Occupation of the investors of Dehradoon
.
35
45
30
4 60
1020
30
40
50
Govt.
Service
Pvt.
Service
Business Agriculture Others
Occupation of the customers
No.ofInvestors
Occupation No. of
InvestorsGovt. Service 30Pvt. Service 45
Business 35Agriculture 4
Others 6
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Interpretation:
In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are Businessman, 29%
are Govt. Employees, 3% are in Agriculture and 5% are in others.
(d). Monthly Family Income of the Investors of Dehradoon.
Income Group No. of
Investors30,000 32
512
2843
32
0
5
10
1520
25
30
35
40
45
50
30
Income Group of the Investorsn (Rs. in Th.)
No.o
fInvestors
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Interpretation:
In the Income Group of the investors of Dehradoon, out of 120 investors, 36% investors that is the
maximum investors are in the monthly income group Rs. 20,001 to Rs. 30,000, Second one i.e.
27% investors are in the monthly income group of more than Rs. 30,000 and the minimum
investors i.e. 4% are in the monthly income group of below Rs. 10,000
(2) Investors invested in different kind of investments.
Kind of Investments No. of Respondents
Saving A/C 195Fixed deposits 148Insurance 152Mutual Fund 120Post office (NSC) 75Shares/Debentures 50Gold/Silver 30
Real Estate 65
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195
148
152
120
75
50
30
65
0 50 100 150 200 250
Savin
gA/cIn
suranc
e
Post
Offi
ce(N
SC)
Gold
/Silv
er
KindsofInvestmen
t
No.of Respondents
Interpretation: From the above graph it can be inferred that out of 200 people, 97.5% people
have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual Fund,
37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.
3. Preference of factors while investing
Factors (a)
Liquidity
(b)
Low
Risk
(c)
High
Return
(d)
Trust
No. of
Respondents
40 60 64 36
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20%
30%32%
18%
Liquidity Low Risk High Return Trust
Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest
where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust
4. Awareness about Mutual Fund and its Operations
Response Yes NoNo. of
Respondents
135 65
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67
33
Yes No
Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations
and 33% are not aware of Mutual Fund and its operations.
5. Source of information for customers about Mutual Fund
Source of information No. of
Respondents
Advertisement 18Peer Group 25
Bank 30Financial Advisors 62
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18 2530
62
0102030405060
70
No.o
f
Respondents
AdvertisementPeer Group Bank Financial
Advisors
Source of Information
Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most important source of
information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund Through
Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.
6. Investors invested in Mutual Fund
Response No. of
Respondents
YES 120
NO 80
Total 200
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Yes
60%
No
40%
Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in Mutual
Fund.
7.Reason for not invested in Mutual Fund
Reason No. of
Respondents
Not Aware 65Higher Risk 5
Not any Specific 10
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Reason
81
136%
Not Aware Higher Risk Not Any
Interpretation:
Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual Fund, 13%
said there is likely to be higher risk and 6% do not have any specific reason.
8. Investors invested in different Assets Management Co. (AMC)
Name of AMC No. of
InvestorsSBIMF 55
UTI 75HDFC 30
Reliance 75ICICI Prudential 56
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Kotak 45Others 70
75
75
56
55
45
30
70
0 20 40 60 80
UTI
Reliance
ICICI
SBIMF
Kotak
HDFC
Others
NameofAMC
No. of Investors
Interpretation:
In Dehradoon most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120 Investors
62.5% have invested in each of them, only 46% have invested in SBIMF, 47% in ICICI Prudential,
37.5% in Kotak and 25% in HDFC.
9. Reason for invested in SBIMF
Reason No. of
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RespondentsAssociated with SBI 35
Better Return 5
Agents Advice 15
649
27
Associated with SBI Better Return Agents Advice
Interpretation:
Out of 55 investors of SBIMF 64% have invested because of its association with Brand SBI, 27%
invested on Agents Advice, 9% invested because of better return.
10. Reason for not invested in SBIMF
Reason No. of
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RespondentsNot Aware 25Less Return 18
Agents Advice 22
38%
28%
34%
Not Aware Less Return Agent's Advice
Interpretation:
Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF, 28% do not
have invested due to less return and 34% due to Agents Advice.
11. Preference of Investors for future investment in Mutual Fund
Name of
AMC
No. of
InvestorsSBIMF 76
UTI 45HDFC 35
Reliance 82
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ICICI Prudential 80Kotak 60Others 75
76
45
35
82
80
60
75
0 20 40 60 80 100
No. of Investors
SBIMF
UTI
HDFC
Reliance
ICICI Prudential
Kotak
Others
Name
ofAMC
Interpretation:
Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in SBIMF,
62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.
12. Channel Preferred by the Investors for Mutual Fund Investment
Channel Financial
Advisor
Bank AMC
No. of
Respondents
72 18 30
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60%15
25
Financial Advisor Bank AMC
Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through AMC and
15% through Bank.
13. Mode of Investment Preferred by the Investors
Mode of
Investment
One time
Investment
Systematic Investment
Plan (SIP)No. of 78 42
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Respondents
65%
35%
One time Investment SIP
Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through Systematic
Investment Plan.
14. Preferred Portfolios by the Investors
Portfolio No. of
Investors
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Equity 56Debt 20
Balanced 44
46
17%
37%
Equity Debt Balance
Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17% preferred
Debt portfolio
15. Option for getting Return Preferred by the Investors
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Option Dividen
d
Payout
Divide
nd
Reinve
stment
G
r
o
w
t
hNo. of
Respon
dents
25 10 8
5
21
8%
71
Dividend Payout Dividend Reinvestment Growth
Interpretation:
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From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and 8%
preferred Dividend Reinvestment Option.
16. Preference of Investors whether to invest in Sectoral Funds
Response No. of
RespondentsYes 25
No 95
21
79Yes No
Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there is
maximum risk and 21% prefer to invest in Sectoral Fund.
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Chapter 6
Findings and
Conclusion
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Findings
In Dehradoon in the Age Group of 36-40 years were more in numbers. The second
most Investors were in the age group of 41-45 years and the least were in the age
group of below 30 years. In Dehradoon most of the Investors were Graduate or Post Graduate and below HSC
there were very few in numbers.
In Occupation group most of the Investors were Govt. employees, the second most
Investors were Private employees and the least were associated with Agriculture.
In family Income group, between Rs. 20,001- 30,000 were more in numbers, the
second most were in the Income group of more than Rs.30,000 and the least were in
the group of below Rs. 10,000.
About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed
Deposits, Only 60% Respondents invested in Mutual fund.
Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.
Only 67% Respondents were aware about Mutual fund and its operations and 33%
were not.
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Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not
have invested in Mutual fund.
Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not
any specific reason for not invested in Mutual Fund and 6% told there is likely to be
higher risk in Mutual Fund.
Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI
Prudential has also good Brand Position among investors, SBIMF places after ICICI
Prudential according to the Respondents.
Out of 55 investors of SBIMF 64% have invested due to its association with the
Brand SBI, 27% Invested because of Advisors Advice and 9% due to better return.
Most of the investors who did not invested in SBIMF due to not Aware of SBIMF,
the second most due to Agents advice and rest due to Less Return.
For Future investment the maximum Respondents preferred Reliance Mutual Fund,
the second most preferred ICICI Prudential, SBIMF has been preferred after them.
60% Investors preferred to Invest through Financial Advisors, 25% through AMC
(means Direct Investment) and 15% through Bank.
65% preferred One Time Investment and 35% preferred SIP out of both type of
Mode of Investment.
The most preferred Portfolio was Equity, the second most was Balance (mixture of
both equity and debt), and the least preferred Portfolio was Debt portfolio.
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Maximum Number of Investors Preferred Growth Option for returns, the second
most preferred Dividend Payout and then Dividend Reinvestment.
Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to
invest in Sectoral Fund.
Conclusion
Running a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small investors.
This study has made an attempt to understand the financial behavior of Mutual Fund
investors in connection with the preferences of Brand (AMC), Products, Channels
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etc. I observed that many of people have fear of Mutual Fund. They think their
money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund
and its related terms. Many of people do not have invested in mutual fund due to
lack of awareness although they have money to invest. As the awareness and income
is growing the number of mutual fund investors are also growing.
Brand plays important role for the investment. People invest in those Companies
where they have faith or they are well known with them. There are many AMCs in
Dehradoon but only some are performing well due to Brand awareness. Some AMCs
are not performing well although some of the schemes of them are giving good
return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI
Prudential etc. they are well known Brand, they are performing well and their Assets
Under Management is larger than others whose Brand name are not well known like
Principle, Sunderam, etc.
Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can
change investors mind from one investment option to others. Many of investors
directly invest their money through AMC because they do not have to pay entry
load. Only those people invest directly who know well about mutual fund and its
operations and those have time.
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Chapter 7
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SuggestionsAnd
Recommendations
Suggestions and Recommendations
The most vital problem spotted is of ignorance. Investors should be made aware of
the benefits. Nobody will invest until and unless he is fully convinced. Investors
should be made to realize that ignorance is no longer bliss and what they are losing
by not investing.
Mutual funds offer a lot of benefit which no other single option could offer. But
most of the people are not even aware of what actually a mutual fund is? They only
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see it as just another investment option. So the advisors should try to change their
mindsets. The advisors should target for more and more young investors. Young
investors as well as persons at the height of their career would like to go for advisors
due to lack of expertise and time.
Mutual Fund Company needs to give the training of the Individual Financial
Advisors about the Fund/Scheme and its objective, because they are the main source
to influence the investors.
Before making any investment Financial Advisors should first enquire about
the risk tolerance of the investors/customers, their need and time (how long they
want to invest). By considering these three things they can take the customers into
consideration.
Younger people aged under 35 will be a key new customer group into the future, so
making greater efforts with younger customers who show some interest in investing
should pay off.
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.
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Systematic Investment Plan (SIP) is one the innovative products launched by
Assets Management companies very recently in the industry. SIP is easy for monthly
salaried person as it provides the facility of do the investment in EMI. Though most
of the prospects and potential investors are not aware about the SIP. There is a large
scope for the companies to tap the salaried persons.
BIBLIOGRAPHY
NEWS PAPERS
OUTLOOK MONEY
TELEVISION CHANNEL (CNBC AAWAJ)
MUTUAL FUND HAND BOOK
FACT SHEET AND STATEMENT
WWW.SBIMF.COM
WWW.MONEYCONTROL.COM
WWW.AMFIINDIA.COM
WWW.ONLINERESEARCHONLINE.COM
http://www.sbimf.com/http://www.moneycontrol.com/http://www.amfiindia.com/http://www.onlineresearch.com/http://www.sbimf.com/http://www.moneycontrol.com/http://www.amfiindia.com/http://www.onlineresearch.com/7/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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WWW. MUTUALFUNDSINDIA.COM
Mutual Funds
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All About Mutual FundsBefore we understand what is mutual fund, its very important to know the area in which
mutual funds works, the basic understanding of stocks and bonds.
Stocks : Stocks represent shares of ownership in a public company. Examples of public
companies include Reliance, ONGC and Infosys. Stocks are considered to be the most common
owned investment traded on the market.
Bonds : Bonds are basically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is back over predetermined
amounts of time. Bonds are considered to be the most common lending investment traded on the
market. There are many other types of investments other than stocks and bonds (including
annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or
bonds.
What Is Mutual Fund
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A mutual fund is just the connecting bridge or a financial intermediary that allows a group
of investors to pool their money together with a predetermined investment objective. The mutual
fund will have a fund manager who is responsible for investing the gathered money into specificsecurities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of
the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.
Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual
fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do
it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk &
maximizing returns.
Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a relatively
low cost. The flow chart below describes broadly the working of a mutual fund
Unit Trust of India is the first Mutual Fund set up under a separate
act, UTI Act in 1963, and started its operations in 1964 with the issueof units under the scheme US-64.
Overview of existing schemes existed in mutual fund category
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. The table below gives an overview into the
existing types of schemes in the Industry.
Type of Mutual Fund Schemes
BY STRUCTURE
Open Ended Schemes
An open-end fund is one that is available for subscription all through the year. These do not
have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")
related prices. The key feature of open-end schemes is liquidity.
Close Ended Schemes
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A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of thescheme on the stock exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of
the two exit routes is provided to the investor.
Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale orredemption during pre-determined intervals at NAV related prices.
BY NATURE
1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund managers outlook on different stocks.
The Equity Funds are sub-classified depending upon their investment objective, as follows:
Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.
2. Debt funds:
The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:
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Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly
high on the risk-return matrix when compared with other debt schemes.
Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds
primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers
(CPs). Some portion of the corpus is also invested in corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and
preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-
bank call money market, CPs and CDs. These funds are meant for short-term cash management of
corporate houses and are meant for an investment horizon of 1day to 3 months. These schemesrank low on risk-return matrix and are considered to be the safest amongst all categories of mutual
funds.
3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They
invest in both equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the worlds.
Equity part provide growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the
objectives of the fund. The investor can align his own investment needs with the funds objective
and invest accordingly.
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BY INVESTMENT OBJECTIVE
Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes normally
invest a major part of their fund in equities and are willing to bear short-term decline in value forpossible future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes
is to provide regular and steady income to investors. These schemes generally invest in fixed
income securities such as bonds and corporate debentures. Capital appreciation in such schemes
may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodicallydistributing a part of the income and capital gains they earn. These schemes invest in both shares
and fixed income securities, in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation of
capital and moderate income. These schemes generally invest in safer, short-term instruments,
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
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OTHER SCHEMES
Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any
Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Index Schemes: Index schemes attempt to replicate the performance of a particular index such as
the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks
that constitute the index. The percentage of each stock to the total holding will be identical to the
stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.
Sector Specific Schemes: These are the funds/schemes which invest in the securities of only
those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast
Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
dependent on the performance of the respective sectors/industries. While these funds may give
higher returns, they are more risky compared to diversified funds. Investors need to keep a watch
on the performance of those sectors/industries and must exit at an appropriate time.
Types of returns
There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:
Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
income it receives over the year to fund owners in the form of a distribution.
If the fund sells securities that have increased in price, the fund has a capital gain. Most fundsalso pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase
in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a
choice either to receive a check for distributions or to reinvest the earnings and get more shares.
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Pros & cons of investing in mutual funds:
For investments in mutual fund, one must keep in mind about the Pros and cons ofinvestments in mutual fund.
Advantages of Investing Mutual Funds:
1. Professional Management - The basic advantage of funds is that, they are professionalmanaged, by well qualified professional. Investors purchase funds because they do not have the
time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively
less expensive way to make and monitor their investments.
2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or
bonds, the investors risk is spread out and minimized up to certain extent. The idea behind
diversification is to invest in a large number of assets so that a loss in any particular investment isminimized by gains in others.
3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help
to reducing transaction costs, and help to bring down the average cost of the unit for their
investors.
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4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their
holdings as and when they want.
5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available
instruments in the market, and the minimum investment is small. Most AMC also have automatic
purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.
Disadvantages of Investing Mutual Funds:
1. Professional Management- Some funds doesnt perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus many
investors debate over whether or not the so-called professionals are any better than mutual fund or
investor himself, for picking up stocks.
2. Costs The biggest source of AMC income, is generally from the entry & exit load which they
charge from an investors, at the time of purchase. The mutual fund industries are thus charging
extra cost under layers of jargon.
3. Dilution - Because funds have small holdings across different companies, high returns from a
few investments often don't make much difference on the overall return. Dilution is also the result
of a successful fund getting too big. When money pours into funds that have had strong success,
the manager often has trouble finding a good investment for all the new money.
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4. Taxes - when making decisions about your money, fund managers don't consider your personal
tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered,
which affects how profitable the individual is from the sale. It might have been more advantageousfor the individual to defer the capital gains liability.
Mutual Funds 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 a 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 rose
the AUM to Rs. 470 in 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.
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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.
The major players in the Indian Mutual Fund Industry are:
Major Players of Mutual Funds In India
Period (Last 1 Week)
ank Scheme
Name
Date NAV
(Rs.)
Last
1
Week
Since
Inception
1 JM Core 11Fund - Series1 - Growth
Mar26 ,2008
8.45 5.12 -94.64
2 Tata Indo-GlobalInfrastructure Fund -Growth
Mar26 ,2008
8.26 5.05 -40.42
3 Tata CapitalBuilder Fund- Growth
Mar26 ,2008
12.44 5.03 15.35
4 Standard Mar 14.07 5 20.92
http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM263http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM263http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM263http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA183http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA183http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA183http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=AZ222http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM263http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM263http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=JM263http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA388http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA183http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA183http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA183http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=AZ2227/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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CharteredEnterpriseEquity Fund
- Growth
26 ,2008
5 DBS CholaInfrastructure Fund -Growth
Mar26 ,2008
9.01 4.65 -17.17
6 ICICIPrudentialFusion Fund- Series III -Institutional -Growth
Mar26 ,2008
10.2 4.62 23.69
7 DSP MerrillLynch MicroCap Fund -Regular -Growth
Mar26 ,2008
9.93 4.56 -0.85
8 ICICIPrudentialFusion Fund- Series III -Retail -Growth
Mar26 ,2008
10.19 4.51 22.39
9 DBS CholaSmall CapFund -Growth
Mar26 ,2008
6.36 3.75 -81.78
10 PrincipalPersonalTaxsaver
Mar25 ,2008
124.66
3.44 29.97
11 BenchmarkSplit Capital
Fund - PlanA - PreferredUnits
Mar26 ,
2008
141.51
3.14 13.71
12 ICICIPrudentialFMP - Series33 - Plan A -Growth
Mar26 ,2008
9.89 2.91 -7.88
13 Tata SIPFund - SeriesI - Growth
Mar26 ,200
10.25 2.38 2.39
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814 Sahara
R.E.A.L
Fund -Growth
Mar25 ,
2008
7.64 1.86 -49.52
15 Tata SIPFund - SeriesII - Growth
Mar26 ,2008
9.93 1.58 -0.94
A mutual fund is a professionally-managed firm 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 other words we can say that A Mutual Fund is a trust registered with the Securities
and Exchange Board of India (SEBI), which pools up the money from individual / corporate
investors and invests the same on behalf of the investors /unit holders, in equity shares,
Government securities, Bonds, Call money markets etc., and distributes the profits.
The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly
calculated daily based on the total value of the fund divided by the number of shares currently
issued and outstanding.The value of all the securities in the portfolio in calculated daily. Fromthis, all expenses are deducted and the resultant value divided by the number of units in the fund is
the funds NAV.
NAV = Total value of the fund.
No. of shares currently issued and outstanding
Advantages of a MF
Mutual Funds provide the benefit of cheap access to expensive stocks
Mutual funds diversify the risk of the investor by investing in a basket of assets
http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA306http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA306http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA306http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=FI037http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA306http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA306http://www.mutualfundsindia.com/fundfactsheet1.asp?sname=TA3067/28/2019 13246827 Project on Mutual Fund Akhilesh Mishra 120417081405 Phpapp02
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A team of professional fund managers manages them with in-depth research inputs frominvestment analysts.
Being institutions with good bargaining power in markets, mutual funds have access tocrucial corporate information, which individual investors cannot access.
History of the Indian mutual fund industry:The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can
be broadly divided into four distinct phases.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of
India and functioned under the Regulatory and administrative control of the Reserve Bank of India.
In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI)
took over the regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI
Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank
Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
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(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its
mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of
1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into being, under which all
mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised
Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)
Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of
Rs. 1,21,805 crores.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into
two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of
US 64 scheme, assured return and certain other schemes
The 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. consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
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Categories of mutual funds:
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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.
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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 NewFund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly
or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have
relatively low liquidity.
Based on their investment objective :
Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices,
such funds show volatile performance, even losses. However, short term fluctuations in the market,
generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At
the same time, such funds can yield great capital appreciation as, historically, equities have outperformed
all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at
least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Theirportfolio mirrors the benchmark index both in terms of composition and individual stockweightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading across differentsectors and stocks.
iii) Dividend yield funds- it is similar to the equity diversified funds except that they invest incompanies 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 willinvest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund:Their investment portfolio includes both debt and equity. As a result, on the risk-return
ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for
investors who prefer spreading their risk across various instruments. Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
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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 ideaof 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 beinginvested 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 whichhave 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-termdebt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.
viii)FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of thefund.
Investment strategies:
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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 thebenefit 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.
Risk v/s. return:
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Working of a Mutual fund:
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The entire mutual fund industry operates in a very organized way. The investors, known as unit
holders,handover their savings to the AMCs under various schemes. The objective of the
investment should match with the objective of the fund to best suit the investors needs. The
AMCs further invest the funds into various securities according to the investment objective. The
return generated from the investments is passed on to the investors or reinvested as mentioned inthe offer document.
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Working
Of
Mutual Fund
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Mutual Funds
Before we understand what is mutual fund, its very important to know the area in whichmutual funds works, the basic understanding of stocks and bonds.
Stocks : Stocks represent shares of ownership in a public company. Examples of public
companies include Reliance, ONGC and Infosys. Stocks are considered to be the most common
owned investment traded on the market.
Bonds : Bonds are basically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is back over predetermined
amounts of time. Bonds are considered to be the most common lending investment traded on the
market. There are many other types of investments other than stocks and bonds (including
annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or
bonds.
What Is Mutual Fund
A mutual fund is just the connecting bridge or a financial intermediary that allows a group
of investors to pool their money together with a predetermined investment objective. The mutual
fund will have a fund manager who is responsible for investing the gathered money into specific
securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of
the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.
Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual
fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do
it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk &
maximizing returns.
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Thus a Mutual Fund is the most suitable investment for the common man as it offers anopportunity to invest in a diversified, professionally managed basket of securities at a relativelylow cost. The flow chart below describes broadly the working of a mutual fund
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Overview of existing schemes existed in mutual fund category
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financialposition, risk tolerance and return expectations etc. The table below gives an overview into the
existing types of schemes in the Industry.
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Type of Mutual Fund Schemes
BY STRUCTURE
Open Ended SchemesAn open-end fund is one that is available for subscription all through the year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related
prices. The key feature of open-end schemes is liquidity.
Close Ended Schemes
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed. In order to provide an exit route to theinvestors, some close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of
the two exit routes is provided to the investor.
Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.
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BY NATURE
Under this the mutual fund is categorized on the basis of Investment Objective. By nature themutual fund is categorized as follow:
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1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund managers outlook on different stocks.
The Equity Funds are sub-classified depending upon their investment objective, as follows:
Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS)
Equity investments are