PROJECT REPORT ON THE STUDY OF PORTFOLIO

MANAGEMENT OF MUTUAL FUND AT SBI

An internship project report submitted in partial fulfillment of requirements

Of

Integrated Master of Business Administration (IMBA)

Under the supervision of

Mr .Pradeep singh kala
ISD HEAD
SBI MUTUAL FUND
( J & K)
SUBMITTED BY

AFRAH ALTAF

ROLL NO 12037100255

IMBA 10th SEMESTER

MANAGEMENT OF BUSINESS STUDIES

KASHMIR UNIVERSITY
Batch 2012-2017

1
Certificate

This is to certify that the survey entitled, Project Report On The Study Of Portfolio Management Of
Mutual Fund At SBI submitted in partial fulfillment of the requirement for the award of degree of
Integrated Masters of Business Administration (IMBA) from Kashmir university is a bonafide internship
project work carried out by AFRAH ALTAF under my supervision and guidance and to the best of my
knowledge and information, no part of project work has been submitted for any other degree.

MR. PRADEEP SINGH KALA

ISD HEAD

SBI MUTUAL FUND

SRINAGAR J&K

2
 DECLARATION

I AFRAH ALTAF, here by declare that, I am the sole author of the project titled PROJECT

REPORT ON THE STUDY OF PORTFOLIO MANAGEMENT OF MUTUAL FUNDS AT SBI

Submitted to the school of business studies, KASHMIR UNIVERSITY in fulfillment of the

requirements for the award of the degree Integrated Master of Business Administration in the school

of Business Studies. That it is an original research work carried out by me. This project contains no

material previously published or written by another person except where due reference is made.

DATED AFRAH ALTAF

3
Acknowledgement
Concentration, dedication, hard work and application are essential but not the only factor to
achieve the desired goals. These must be supplemented by guidance of people to make it a success.

Many people have given their previous ideas and invaluable time to enable me to complete this
project report.

I offer sincere thanks and deep gratitude to Mr. PRADEEP SINGH , ISD HEAD for their
meaningful guidance encouragement and supervision.

I am indeed indebted to Mr. PRADEEP SINGH , ISD HEAD for his affectionate attitude and
cooperative nature which made, my work over here a memorable one.

I am also grateful to MRS SHAZIA KHAN (CSO) , who was always there to give my spirits a
boost.

Last but not the least; I would like to thank the Almighty God for his blessings showered on me
during the project report.

AFRAH ALTAF

4
 PREFACE

As apart of the imba curriculum and in order to gain practical knowledge I n the field of
management . I am making a report of portfolio management of mutal funds in SBI
in this project report e have included the various concepts and effects and implications regarding
investment in mutual funds

doing this project report helped us to enhance our knowledge about investing in mutual funds
and the various benefits and risks associated with it
the successful completion of this project was a unique experience for me as I gained a lot of
practical experience and knowledge through our ongoing work and customer interaction.
This project is being submitted which contains detailed analysis of the research undertaken by
me .
I hope that this research proves to be helpful in future.

5
TABLE OF CONTENT

Sr. No. CONTENTS Pg. No.

EXECUTIVE SUMMARY
1 1

COMPANY PROFILE
2 2

THEREOTICAL BACKGROUND
3 21

THEREOTICAL BACKGROUND
REVIEW OF LITERATURE
4 30

RESEARCH METHODOLOGY
5 33

DATA ANALYSIS AND INTERPETRATION 36

7

FINDINGS AND CONCULUSION 45

8

SUGGESSION AND RECOMMENDATION 47

9

BIBLIOGRAPHY 48
10

6
PROJECT REPORT ON THE
STUDY OF PORTFOLIO
MANAGEMENT OF
MUTUAL FUND AT SBI

7
 EXECUTIVE SUMMARY

COMPANY: SBI MUTUAL FUND AND SECURITIES LTD.

The project on Portfolio Management and mutual fund analysis was carried out in SBI GROUP
Residency road Srinagar. The intention behind taking over this project with SBI Group was to
primarily understand the role of banks in providing investment solutions and advices to its
customers. The project was carried out for the period of 45 days i.e. from Jan 16, 2015 to feb 28,
2015. The project was done by analyzing the different investment options available and to compare
them with the mutual fund investments. For the purpose of analyzing the Investment pattern
and selecting effective and beneficial schemes of mutual funds different available schemes
were thoroughly analyzed and then an ideal portfolio of those investment options available was made.

Finally the ideal portfolio was created to understand the importance of portfolio management
and to ease the selection of different mutual fund schemes and the weight age to be given to
them.

The project study focused on increasing brand awareness at retail level clients and various activities
that result in brand awareness among the same. This project also consists of generating and getting
clients, generating database and after sales services to retain client and make them happy investor.

While analyzing trend, I tried to map how Asset Under Management (AUM) varied over the period
with BSE-Sensex to facilitate feature projections. It has been done separately for Equity Schemes,
Income Schemes, Balanced Schemes and Liquid Schemes.

8
 COMPANY PROFILE

A PARTNER FOR LIFE

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the country with an
investor base of over 4.5 million. With over 20 years of rich experience in fund
management, SBI MF brings forward its expertise in consistently delivering value to its
investors.

PROVEN SKILLS IN WEALTH GENERATION:

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

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

SBI Mutual Fund is a joint venture between the State Bank of India and Socit General
Asset Management, one of the worlds leading fund management companies that manages over
US$ 500 Billion worldwide.

EXPLOITING EXPERTISE, COMPOUNDING GROWTH:

In twenty years of operation, the fund has launched 38 schemes and successfully redeemed fifteen of
them. In the process it has rewarded its investors handsomely with consistently high returns

A total of over 5.4 million investors have reposed their faith in the wealth generation expertise of the
Mutual Fund.

Schemes of the Mutual fund have consistently outperformed benchmark indices and
have emerged as the preferred investment for millions of investors and HNIs.

Today, the fund manages over Rs. 51,461 crores of assets and has a diverse profile
of investors actively parking their investments across 36 active schemes.

9
The fund serves this vast family of investors by reaching out to them through network of over 130
points of acceptance, 28 investor service centers, 46 investor service desks and 56 district organizers.

SBI Mutual is the first bank-sponsored fund to launch an offshore fund Resurgen India
Opportunities Fund.

Growth through innovation and stable investment policies is the SBI MF credo:

FUND HOUSE EXPERTISE:

The investment environment is becoming increasingly complex. Innumerable parameters need to

be factored into generate a clear understanding of market movement and performance in the near
and long term future.

At SBIMF, we devote considerable resources to gain, maintain and sustain our profitable insights
into market movements. We consistently push the envelope to ensure our investors get the
maximum benefits year after year.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The Mutual Fund Industry in India stated in 1963 with the formation of Unite 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 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 asset under
management (AUM) was Rs.67 billion. the private sector entry to the 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.

10
First Phase-1964-87

United 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
unitscheme1964. At the end of 1988 UTI had Rs .6,700 crore of assets under management.

Second Phase-1987-1993(Entry of Public Sector Fund)

1987 marked the entry of non-UTI, public sector mutual fund a 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 june19876 followed by Can bank mutual fund
(Dec 87), Punjab national bank mutual fund (Aug 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 1999.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 fund)

1993 was the year in which the first mutual fund regulations came into being, under which all mutual
funds except UTI were to be registered and governed. The erstwhile Kothar 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) regulation
1996.As at the end of january2003; 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 end of January 2003, representing broadly, the assets of US64
schemes, assured return and certain other schemes.

11
The second is the mutual fund Ltd. sponsored by SBI, PNB, BOB and LIc. It is registered with SEBI
and functions under the mutual fund Regulation consolidation and growth. As the end of September,
2004, there were 29 funds, which manage assets of Rs.1,53,108 crore under 421 schemes

CLASSIFICATION OF MUTUAL FUND

BASED ON THEIR STRUCTURE

CLOSED ENDED FUNDS:

These funds raise money from investors only once. Therefore, after the offers period, fresh
investments cannot be made into the fund. If the fund is listed on a stocks exchange the units can be
traded like stocks (E.g., Morgan Stanley growth fund). Recently, most of the new fund offers of
close- ended funds provided liquidity windows 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.

OPEN ENDED FUNDS:

Investors can buy and sell the units from the fund, at any point of time.

BASED ON THEIR INVESTMENT OBJECTIVES

EQUITY FUNDS:

These funds invest in equities related instruments. With fluctuating share price, such funds show
volatile performance, even losses. However, short term fluctuation 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 assets
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:

12
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.

EQUITY DIVERSIFIED FUNDS

100% of the capital is invested in equities spreading across different sectors and stocks.

DIVIDEND YIELD FUNDS

It is similar to the equity diversified funds except that they invest in companies offering high
dividend yields.

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.

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:

1) DEBT ORIENTED FUNDS Investment below 65% in equities.

2) EQUITY ORIENTED FUNDS Invest atleast 65% in equities, remaining in debt.

13
RISK FACTORS
Mutual Funds and Securities Investments are subject to market risks and there is no assurance or
guarantee that the objective of scheme(s)/plan(s) will be achieved. As with any other investment
in securities, the NAV of the Magnums/Units issued under the scheme(s)/plan(s) can go up or down
depending on the factors and forces affecting the securities market. Past performance of the
Sponsor/AMC/Mutual Fund/Scheme(s)/Plan(s) and their affiliates do not indicate the future
performance of the scheme(s) of the Mutual Fund. Statutory details: SBI Mutual Fund has been
set up as a trust under the Indian Trusts Act, 1882. State Bank of India (SBI), the sponsor is
not responsible or liable for any loss resulting from the operation of the schemes beyond the initial
contribution made by it of an amount of Rs. 5 lakh towards setting up of the mutual fund.

Trustee Company: SBI Mutual Fund Trustee Company Pvt. Ltd. Please read the offer document
of the respective schemes carefully before investing.

14
AWARDS AND ACHIEVEMENTS

SBI- MUTUAL FUND has been performing excellently since its inception. The fund has received
lot of appreciation for its performance from the mutual fund industry. It has been awarded by
ICRA on line award 8 times, CNBC- TV 18 CRISIL 4 AWARDS, the Lipper award (year
05-06) and most recently the CNBC TV 18 Crisil Mutual Fund Award of the year 2007 and 5 award
for the schemes.

RISK MANAGEMENT TEAM

The Risk Management unit is a separate division within the organization headed by the Chief Risk
Officer (CRO). A Risk Management Committee, comprising the MD, Deputy CEO, CRO, COO,
CIO and the CMO meets on a regular basis to manage risk within the organization.

The CRO is responsible for risk management over all the functions within the organization
including Investments, Marketing, Operations, etc. Currently, the CRO is an experienced
investment professional and is assisted by a two-member team, one being an investment
Professional with an MBA in Finance and the other being an investment professional deputed from
SGAM.

PRODUCT PROFILE

CONCEPT OF MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund:

15
What are the benefits of investing in Mutual Funds?

Qualified and experienced professionals manage Mutual Funds. Generally, investors, by themselves,
may have reasonable capability, but to assess a financial instrument, a professional analytical
approach is required, in addition to access to research and information as well as time and
methodology to make sound investment decisions and to keep monitoring them.

Since Mutual Funds make investments in a number of stocks, the resultant diversification reduces
risk. They provide small investors with an opportunity to invest in a larger basket of securities.

The investor is spared the time and effort of tracking investments, collecting income, etc. from
various issuers, etc. It is possible to invest in small amounts as and when the investor has surplus
funds to invest. Mutual Funds are registered with SEBI. SEBI monitors the activities of Mutual
Funds. In case of open-ended Funds, the investment very liquid as it can be redeemed at any time with
the fund unlike direct investment in stocks / bonds.

Risk involved in investing in Mutual Funds?

Mutual Funds do not provide assured returns. Their returns are linked to their Performance. They
invest in shares, debentures and deposits. All these investments involve an element of risk. The unit
value may vary depending upon the performance of the company and companies may default in
payment of interest / principal on their debentures / bonds / deposits. Besides this, the government
may come up with new regulations, which may affect a particular industry or class of industries.

16
SBI- MUTUAL FUND PRODUCTS

EQUITY SCHEMES:

The investments of these schemes will predominantly be in the stock markets and endeavor will
be to provide investors the opportunity to benefit from the higher returns which
stock markets can provide. However they are also exposed to the volatility and
attendant risks of stock markets and hence should be chosen only by such investors
who have high risk taking capacities and are willing to think long term. Equity Funds
include diversified Equity Funds, Sectorial Funds and Index Funds. Diversified Equity
Funds invest in various stocks across different sectors while Sectorial 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.

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.

17
ADVANTAGES OF MUTUAL FUND

1. portfolio diversification
2. Professional management
3. Reduction / diversification of risk
4. Liquidity
5. Flexibility &convenience
6. Reduction in transaction cost
7. Safety of regulated environment
8. Choice of schemes
9. Transparency

DISADVANTAGES OF MUTUAL FUND

1. No control over cost in the hands of an investor

2. No tailor-made portfolios
3. Managing a portfolio funds
4. Difficulty in selecting a suitable fund scheme

18
ASSET ALLOCATION AND SECTORIAL BREAKDOWN OF SOME
IMPORTANT FUNDS

EQUITY SCHEMES

1. BLUE CHIP

5.84%

17.08% large cap

Mid cap

cash & other

77.08% currents assets

SECTORIAL BREAKDOWN (%)

automobiles
Cement & cement Products
Chemicals
2
Construction
Consumer Goods
Energy
Fertilizers & Pesticides
10.69 Financial Services
4.86
0.85 Industrial Manufacturing
3.42
8.54
1.95 IT
1 0.65
Media & Entertainment
9.21
14.49 Metals
0.76
0.47 Pharma
10.72
2.39 telecom
0 5 10 15 20 25 30

19
 2. GLOBAL FUND

4.29%
8.36%

large cap
Midcap
22.54%
small cap
64.81% cash & other current assets

SECTORIAL BREAKDOWN (IN %)

Automobile

Chemicals

2 construction

consumers Goods

Fertilisers & Pesticides

13.74
4.58 IT
2.89
15.93 Media & enterainment
1 2.14
2.08
2.09 Pharama
1.86
8.02 Services
4.8
Textiles
0 5 10 15 20

20
3. EQUITY FUND

1.46%

Large Cap
other current assets

98.54%

SECTORIAL BREAKDOWN (IN %)

3 Series10
Series9
Series8
14.32 Series7
2.06
3.05
2 5.67 Series6
6.44
35.96
17.85 Series5
3.25
9.94 Series4

0 Series3
0
0 Series2
1 0
0
0 Series1
0
0
0

0 5 10 15 20 25 30 35 40

21
 4. SMALL & MIDCAP FUND

6.25%

32.14%
Mid Cap
Other current Assets
Small Cap
Large Cap
53.28%
8.33%

ASSET CLASS BREAKDOWNS ( IN%)

Automobile

2 Cement & Cement Products

Chemicals
Construction
Consumer Goods
Financial Services
14.16
2.09 Industrial Manufacturing
9.03
3.36 IT
8.81
1 10.16 Pharma
15.12
8.34 Services
4.96 Textile
4.33
11.3

0 5 10 15 20

22
 KEY PERSONNEL OF SBI MUTUAL FUND

Mr. Dinesh kumar khara Managing Director & CEO

Mr. Philippe batchevitch Dy. CEO

Mr. Arun agarwal Chief Operating Officer

Mr. Navneet munot Chief Investment Officer

Mr. D .P .Singh Chief Marketing Officer

Mr. C A Santosh Chief Manager - Customer Service

Ms. Aparna Nirgude Chief Risk Officer

Ms. Vinaya Datar Company Secretary & Compliance Office

Mr. C.A.Santosh Head Customer service.

23
INVESTMENT OPTIONS

Savings form an important part of the economy of any nation. With the savings invested in various
options available to the people, the money acts as the driver for growth of the country. Indian
financial scene too presents a plethora of avenues to the investors. Though certainly not the best or
deepest of markets in the world, it has reasonable options for an ordinary man to invest his
savings. Let us examine several of them.

BANKS

Considered as the safest of all options, banks have been the roots of the financial systems in India.
Promoted as the means to social development, banks in India have indeed played an important role
in the rural up liftment. For an ordinary person though, they have acted as the safest investment
avenue where in a person deposits money and earn interest on it.

The two main modes of investment in banks, savings accounts and fixed deposits have been
effectively used by one and all. However, today the interest rate structure in the country is headed
southwards, keeping in line with global trends. With the banks offering little above 9 percent in
their fixed deposits for one year, the yields have come down substantially in recent times. Add to
this, the inflationary pressures in economy and you have a position where the savings are not
earning. The inflation is creeping up, to almost 8 percent at times, and this means that the value
of money saved goes down instead of going up. This effectively mars any chance of gaining
from the investments in banks.

POSTOFFICE SCHEMES

Just like banks, post offices in India have a wide network. Spread across the nation, they offer
financial assistance as well as serving the basic requirements of communication.

Among all saving options, Post office schemes have been offering the highest rates. Added to it is
the fact that the investments are safe with the department being a Government of India entity.

24
So, the two basic and most sought for features, those of return safety and quantum of returns were
being handsomely taken care of. Though certainly not the most efficient systems in terms of
service standards and liquidity, these have still managed to attract the attention of small, retail
investors. However, with the government announcing its intention of reducing the interest rates in
small savings options, this avenue is expected to lose some of the investors. Public
Provident Funds act as options to save for the post retirement period for most people and have been
considered good option largely due to the fact that returns were higher than most other options and
also helped people gain from tax benefits under various sections

COMPANY FIXED DEPOSITS

Another oft-used route to invest has been the fixed deposit schemes floated by companies.
Companies have used fixed deposit schemes as a means of mobilizing funds for their operations
and have paid interest on them. The safer a company is rated, the lesser the return offered has
been the thumb rule. However, there are several potential roadblocks in these.

First of all, the danger of financial position of the company not being understood by the investor
lurks. The investors rely on intermediaries who more often than not, don t reveal the entire truth.

Secondly, liquidity is a major problem with the amount being received months after the due dates.
Premature redemption is generally not entertained without cuts in the returns offered and though
they present a reasonable option to counter interest rate risk (especially when the economy is
headed for a low interest regime), the safety of principal amount has been found lacking. Many
cases like the Kuber Group and DCM Group fiascoes have resulted in low confidence in this option.

The options discussed above are essentially for the risk-averse, people who think of safety and then
quantum of return, in that order. For the brave, it is dabbling in the stock market. Stock markets
provide an option to invest in a high risk, high return game. While the potential return is much more
than 10-11 percent any of the options discussed above can generally generate, the risk is
undoubtedly of the highest order. But then, the general principle of encountering greater risks and
uncertainty when one seeks higher returns holds true. However, as enticing as it might appear,
people generally are clueless as to how the stock market functions and in the process can endanger
the hard-earned money. For those who are not adept at understanding the stock market, the task of
generating superior returns at similar levels of risk is arduous to say the least. This is where Mutual
Funds come into picture.

25
MUTUAL FUNDS

Mutual funds are essentially investment vehicles where people with similar investment objective
come together to pool their and then invest accordingly. Each unit of any scheme represents the
proportion of pool owned by the unit holder (investor). Appreciation or reduction in value of
investments is reflected in net asset value (NAV) of the concerned scheme, which is declared by the
fund from time to time. Mutual fund schemes are by respective Asset Management Companies.

THORITICAL BACKGROUND

HOW MUTUAL FUND WORKS

For retail investor who does not have the time and expertise to analyze and invest in stocks and
bonds, mutual funds offer a viable investment alternative.

One can purchase shares in some mutual funds by contacting the fund directly or other mutual fund
shares are sold mainly through brokers, banks, financial planners, or insurance agents. All mutual
funds will redeem (buy back) the shares on any business day and must send the payment within
seven days. One can invest by approaching a registered broker of Mutual funds or the respective
offices of the Mutual funds in that particular town/city. An application form has to be filled up
giving all the particulars along with the cheque or Demand Draft for the amount to be invested.

The mutual fund issues shares of stock and bonds (just like any other corporation) to investors in
exchange for cash. It is interesting to note that funds do not issue a pre-determined amount of stock,
as do most corporations; new shares are issued as each new investment is made. Investors thus
become part owners of the fund itself, and thereby the assets of the fund. The fund, in turn, uses
investors cash to purchase securities, such as stocks and bonds. The primary assets of a fund are
the securities it invests in (other assets, such as equipment, are a relatively small part of the total
assets of a fund).

26
Following are the various descriptions needed for the working of mutual fund:

PRICING AND VALUATION DESCRIPTION

The value of the shares of an open-end mutual fund is readily determined Each day, the accounting
staff of a fund simply adds up the value of all the securities in the portfolio, adds in other assets,
deducts liabilities, and comes up with a net overall value. It is then a simple matter to divide the net
assets by the number of shares outstanding. This is called the net asset value, and is the price at
which investors buy and sell shares from the fund. The net asset value is listed in the financial
section of many major newspapers.

LOAD AND NO-LOAD FUNDS DESCRIPTION

A load, or loaded, fund is one that has a sales charge. A no-load fund has no sales charge. As noted
above, not all funds have sales charges. Those that do simply add them on to the net asset value of
the fund, thus coming up with a new, higher offering price per share It is important to note that the
underlying value of the funds shares do not change, and further, that an investor selling shares will
still receive only the net asset value A no-load fund is simpler. The net asset value is used for both
the purchase price and the selling price. Therefore, the two prices are always identical. In the case of
a load fund, the broker usually takes care of the details for you. In the case of a no-load fund,
investors usually deal directly with the fund in question.

BUYING AND SELLING FUND SHARES DESCRIPTION

When you buy shares, you pay the current NAV per share plus any fee the fund assesses at the time
of purchase, such as a purchase sales load or other type of purchase fee. When you sell your shares,
the fund will pay you the NAV minus any fee the fund assesses at the time of redemption, such as a
deferred (or back-end) sales load or redemption fee. A funds NAV goes up or down daily as its
holdings change in value.

27
HOW MUTUAL FUNDS CAN EARN MONEY

A mutual fund can earn money in three different ways Dividend Payments A fund may earn
income in the form of dividends and interest on the securities in its portfolio. The fund then pays its
shareholders nearly all of the income (minus disclosed expenses) it has earned in the form of
dividends.

Capital Gains Distributions they are paid from any profits the fund realizes from selling
investments. The price of the securities a fund owns may, increase. When a fund sells a security that
has increased in price, the fund has a capital gain. At the end of the year, most funds distribute these
capital gains DISTRIBUTIONS (minus any capital losses) to investors.

Increased NAV If the market value of a funds portfolio increases after deduction of expenses
and liabilities, then the value (NAV) of the fund and its shares increases. The higher NAV reflects
the higher value of your investment.
With respect to dividend payments and capital gains distributions, funds usually will give a choice:
the fund can send a check or other form of payment, or the dividends or distributions reinvested in
the fund to buy more shares (often without paying an additional sales load.

PROFESSIONAL MANAGEMENT

Mutual Funds employ the services of skilled professionals who have years of experience to back
them up. They use intensive research techniques to analyze each investment option for the potential
of returns along with their risk levels to come up with the figures for performance that determine the
suitability of any potential investment.

POTENTIAL OF RETURNS

Returns in the mutual funds are generally better than any other option in any other avenue over a
reasonable period of time. People can pick their investment horizon and stay put in the chosen fund
for the duration. Equity funds can outperform most other investments over long periods by placing
long-term calls on fundamentally good stocks. The debt funds too will outperform other options
such as banks. Though they are affected by the interest rate risk in general, the returns generated are
more as they pick securities with different duration that have different yields and so are able to
increase the overall returns from the portfolio.
28
LIQUIDITY
Fixed deposits with companies or in banks are usually not withdrawn premature because there is a
penal clause attached to it. The investors can withdraw or redeem money at the Net Asset Value
related prices in the open-end schemes. In closed-end schemes, the units can be transacted at
the prevailing market price on a stock exchange. Mutual funds also provide the facility of direct
repurchase at NAV related prices. The market prices of these schemes are dependent on the NAV of
funds and may trade at more than NAV (known as Premium) or less than NAV (known as
Discount) depending on the expected future trend of NAV which in turn is linked to general market
conditions. Bullish market may result in schemes trading at Premium while in bearish markets the
funds usually trade at Discount. This means that the money can be withdrawn anytime, without
much reduction in yield. Some mutual funds however, charge exit loads for withdrawal within a
period. Besides these important features, mutual funds also offer several other key traits. Important
among them are:

WELL REGULATED
Unlike the company fixed deposits, where there is little control with the investment being
considered as unsecured debt from the legal point of view, the Mutual Fund industry is very well
regulated. All investments have to be accounted for, decisions judiciously taken. SEBI acts as a true
watchdog in this case and can impose penalties on the AMCs at fault. The regulations, designed to
protect the investors interests are also implemented effectively.

TRANSPARENCY
Being under a regulatory framework, mutual funds have to disclose their holdings, investment
pattern and all the information that can be considered as material, before all investors. This means
that the investment strategy, outlooks of the market and scheme related details are disclosed with
reasonable frequency to ensure that transparency exists in the system. This is unlike any other
investment option in India where the investor knows nothing as nothing is disclosed.

29
FLEXIBLE, AFFORDABLE AND A LOW COST
AFFAIR

Mutual Funds offer a relatively less expensive way to invest when compared to other avenues such
as capital market operations. The fee in terms of brokerages, custodial fees and other management
fees are substantially lower than other options and are directly linked to the performance of the
scheme. Investment in mutual funds also offers a lot of flexibility with features such as regular
investment plans, regular withdrawal plans and dividend reinvestment plans enabling systematic
investment or withdrawal of funds. Even the investors, who could otherwise not enter stock markets
with low inventible funds, can benefit from a portfolio comprising of high-priced stocks because
they are purchased from pooled funds.

As has been discussed, mutual funds offer several benefits that are unmatched by other
investment options. Post liberalization, the industry has been growing at a rapid pace and has
crossed Rs. 100000 crore size in terms of its assets under management. However, due to the low
key investor awareness, the inflow under the industry is yet to overtake the inflows in banks. Rising
inflation, falling interest rates and a volatile equity market make a deadly cocktail for the investor
for whom mutual funds offer a route out of the impasse.

The investments in mutual funds are not without risks because the same forces such as regulatory
frameworks, government policies, interest rate structures, performance of companies etc. that rattle
the equity and debt markets, act on mutual funds too. But it is the skill of the managing risks that
investment managers seek to implement in order to strive and generate superior returns than
otherwise possible that makes them a better option than many others.

What is Portfolio Management?

An investor considering in securities is faced with the problem of choosing from among a large
number of securities. His choice depends upon the risk return characteristics of individual securities.
He would attempt to choose the most desirable securities and like to allocate his funds over this
group of securities. Again he is faced with problem of deciding which securities to hold and how
much to invest in each. The investor faces an infinite number of possible portfolios or groups of
securities. The risk and return characteristics of portfolios differ from those of individual
securities combining to form a portfolio. The investor tries to choose the optimal portfolio
taking into consideration the risk return characteristics of all possible portfolios.
30
SECURITY ANALYSIS

(a) Fundamental analysis:

This analysis concentrates on the fundamental factors affecting the company such as EPS (Earning
per share) of the company, the dividend payout ratio, competition faced by the company, market
share, quality of management etc.

(b) Technical analysis:

The past movement in the prices of shares is studied to identify trends and patterns and then
tries to predict the future price movement. Current market price is compared with the future
predicted price to determine the misprision. Technical analysis concentrates on price movements
and ignores the fundamentals of the shares.

(c) Efficient market hypothesis:

This is comparatively more recent approach. This approach holds that market prices
instantaneously and fully reflect all relevant available information. It means that the market prices
will always be equal to the intrinsic value.

Portfolio Analysis
A portfolio is a group of securities held together as investment. It is an attempt to spread the risk
allover. The return & risk of each portfolio has to be calculated mathematically and expressed
quantitatively. Portfolio analysis phase of portfolio management consists of identifying the
range of possible portfolios that can be constituted from a given set of securities and calculating
their risk for further analysis.

Portfolio Selection
The goal of portfolio construction is to generate a portfolio that provides the highest returns at a
given level of risk. Harry Markowitzh portfolio theory provides both the conceptual framework and
the analytical tools for determining the optimal portfolio in a disciplined and objective way.

31
Portfolio Revision
The investor/portfolio manager has to constantly monitor the portfolio to ensure that it continues to
be optimal. As the economy and financial markets are highly volatile dynamic changes take place
almost daily. As time passes securities which were once attractive may cease to be so. New
securities with anticipation of high returns and low risk may emerge.

Portfolio Evaluation
Portfolio evaluation is the process, which is concerned with assessing the performance of the
portfolio over a selected period of time in terms of return & risk. The evaluation provides the
necessary feedback for better designing of portfolio the next time around.

Measurement of risk
Risk refers to the possibility that the actual outcome of an investment will differ from the expected
outcome. In other words we can say that risk refers to variability or dispersion. If any investment is
said to invariable it means that it is totally risk free. Whenever we calculate the mean returns of an
investment we also need to calculate
the variability in the returns.

Variance and Standard Deviation

The most commonly used measures of risk in finance are variance or its square root the standard
deviation. The variance and the standard deviation of a historical return series is defined as follows:
n 1.

Beta
A measure of risk commonly advocated is beta. The beta of a portfolio is computed the way beta
of an individual security is computed. To calculate the beta of a portfolio, regress the rate of
return of the portfolio on the rate of return of a market index. The slope of this regression line is the
portfolio beta. It reflects the systematic risk of the portfolio.

32
Performance Measures Of Mutual Funds

Mutual Fund industry today, with about 34 players and more than five hundred schemes, is
one of the most preferred investment avenues in India. However, with a plethora of schemes to
choose from, the retail investor faces problems in selecting funds. Factors such as investment
strategy and management style are qualitative, but the funds record is an important indicator too.
Though past performance alone can not be indicative of future performance, it is, frankly, the only
quantitative way to judge how good a fund is at present.

Therefore, there is a need to correctly assess the past performance of different mutual funds.
Worldwide, good mutual fund companies over are known by their AMCs and this fame is directly
linked to their superior stock selection skills. For mutual funds to grow, AMCs must be held
accountable for their selection of stocks. In other words, there must be some performance
indicator that will reveal the quality of stock selection of various AMCs. Return alone should
not be considered as the basis of measurement of the performance of a mutual fund scheme, it
should also include the risk taken by the fund manager because different funds will have different
levels of risk attached to them. Risk associated with a fund in a general, can be defined as
variability or fluctuations in the returns generated by it. The higher the fluctuations in the returns of
a fund during a given period, higher will be the risk associated with it. These fluctuations in the
returns generated by a fund are resultant of two guiding forces. First, general market fluctuations,
which affect all the securities, present in the market, called market risk or systematic risk and
second, fluctuations due to specific securities present in the portfolio of the fund, called
unsystematic risk. The Total Risk of a given fund is sum of these two and is measured in terms of
standard deviation of returns of the fund. Systematic risk, on the other hand, is measured in terms of
Beta, which represents fluctuations in the NAV of the fund vis--vis market. The more responsive
the NAV of a mutual fund is to the changes in the market; higher will be its beta. Beta is
calculated by relating the returns on a mutual fund with the returns in the market. While
unsystematic risk can be diversified through investments in a number of instruments, systematic
risk cannot. By using the risk return relationship, we try to assess the competitive strength of the
mutual funds vis--vis one another in a better way. In order to determine the risk-adjusted returns of
investment portfolios, several eminent authors have worked since 1960s to develop composite
performance indices to evaluate a portfolio by comparing alternative portfolios within a particular
risk class. The most important and widely used measures of performance are:

33
The Treynor Measure

Developed by Jack Trey nor, this performance measure evaluates funds on the basis of Treynors
Index. This Index is a ratio of return generated by the fund over and above risk free rate of return
(generally taken to be the return on securities backed by the government, as there is no credit
risk associated), during a given period and systematic risk associated with it (beta).
Symbolically, it can be represented as: Treynor's Index (Ti) = (Ri - Rf)/Bi.

Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the fund. All risk-
averse investors would like to maximize this value. While a high and positive Treynor's Index
shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index is an
indication of unfavorable performance.

The Sharpe Measure

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of
returns generated by the fund over and above risk free rate of return and the total risk associated
with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about.
So, the model evaluates funds on the basis of reward per unit of total risk.

Symbolically, it can be written as:

Sharpe Index (Si) = (Ri - Rf)/Si
Where, Si is standard deviation of the fund.

While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a low
and negative Sharpe Ratio is an indication of unfavorable performance.

34
JENSON MODEL

Jenson's model proposes another risk adjusted performance measure. This measure was
developed by Michael Jenson and is sometimes referred to as the Differential Return Method.

This measure involves evaluation of the returns that the fund has generated vs. the returns actually
expected out of the fund given the level of its systematic risk. The surplus between the two returns
is called Alpha, which measures the performance of a fund compared with the actual returns over
the period. Required return of a fund at a given level of risk (Bi) can be calculated as:

Ri = Rf + Bi (Rm - Rf)

Where, Rm is average market return during the given period. After calculating it, alpha can be
obtained by subtracting required return from the actual return of the fund. Higher alpha represents
superior performance of the fund and vice versa. Limitation of this model is that it considers only
systematic risk not the entire risk associated with the fund and an ordinary investor cannot mitigate
unsystematic risk, as his knowledge of market is primitive.

35
 REVIEW OF LITERATURE

THE DETERMINANTS OF MUTUAL FUND PERFORMANCE

A Cross-Country Study find that performance worsens with lagged fund size for Domestic U.S.
funds, but not for non-U.S. funds and international funds. This finding is consistent with the view that
diminishing returns to scale in the U.S. are explained by liquidity constraints due to a particular fund
style (small stocks) or geographic focus (domestic stocks). Fund age and fees are negatively related to
performance, while funds that belong to large fund families, solo-managed funds, and funds
distributed in several countries perform better. Country characteristics also help to explain fund
performance. Domestic funds located in developed countries, especially those with liquid stock
markets and strong legal institutions, display better performance.

Competition in the mutual fund Industry:

Evidence and Implications for Policy

Show higher advisory fees significantly reduce fund market shares, and so constrain fees. Fund
performance is consistent with competition exerting a strong disciplinary force on funds and fees. Our
findings lead us to reject the critics views in favor of the legal framework established by 36(b) of
the Investment Company Act and the lead case interpreting that law (the Gutenberg decision), while
suggesting Gutenberg is best interpreted to allow the introduction of evidence regarding competition
between funds.

Evaluating mutual fund

They found that that the performance measures are badly misspecified. Regardless of the performance
measure, there are indications of abnormal fund performance, including market-timing ability, when
none exists.

36
Conflicts of Interest and Competition in the mutual fund Industry

They find no evidence that investors derive any benefit from 12b-1 fees. Product differentiation
strategies are also effective in obtaining market share. Families that perform better, and start more
funds relative to the competition (a measure of innovation) have a higher market share. Innovation is
rewarded more it he new fund is more differentiated from existing offerings and is in a less crowded
objective. Finally, market share within an investment objective is driven primarily by a familys
policies within that objective, but there are important performance spillover effects from other funds
in the family. Our findings are robust to various tests for endogeneity of the explanatory variables.
Overall, this paper highlights a number of conflicts between fund families and investors.

THE DETERMINANTS OF MUTUAL FUND PERFORMANCE:

A Cross-Country Study

They find that fund performance worsens with lagged fund size for domestic U.S. funds, but not for
non-U.S. funds and international funds. This finding is consistent with the view that diminishing
returns to scale in the U.S. are explained by liquidity constraints due to a particular fund style (small
stocks) or geographic focus (domestic stocks). Fund age and fees are negatively related to
performance.

37
ESTIMATION RISK IN MUTUAL FUND RATINGS:

The Case of Morningstar

As a result, investors can be somewhat less confident that the ratings of young funds are truly what
they are estimated to be. We illustrate our point by investigating 1281 international equity mutual.
Results for bond mutual funds are similar to those for equity mutual funds but hedge funds show
better ex-post and ex-ante risk adjusted performance than do mutual funds. Sensible advice for most
investors would be to hold low cost index funds and avoid holding past active loser funds. Only
very sophisticated investors should pursue an active investment strategy of trying to pick winners

and then with much caution .The evidence suggests that ex-post, there are around 2-5% of top
performing UK and US equity mutual funds which genuinely outperform their benchmarks whereas
around 20-40% of funds have genuinely.

Improved Forecasting of Alphas and mutual fund Betas

It shows that the combined use of an OLS and Kalman filter model increases the number of funds
with predictable out of sample alphas by about 60%. Overall, a strategy that uses very modest ex-ante
filters to eliminate funds whose parameters likely derive primarily from estimation errors produces an
out of sample risk adjusted return of over 4% per annum.

Mutual fund herding and the impact on stock prices

It finds much higher levels in trades of small stocks and in trading by growth-oriented funds. Stocks
that herds buy outperform stocks that they sell by four percent during the following six months; this
return difference is much more pronounced among small stocks. Our results are consistent with
mutual fund herding speeding the price-adjustment process.

38
 RESEARCH METHODOLOGY

Research methodology is a very organized and systematic way through which a particular case
or problem can be solved efficiently.

o It is a step-by-step logical process, which involves:

o Defining a problem

o Laying the objectives of the research

o Sources of data

o Methods of data collection

o Data analysis & processing

o Conclusions & Recommendations

o Research inculcates scientific and inductive thinking and it promotes the development of
logical habits of thinking and organization.

o
METHOD USED
Descriptive Analytical Research
Under this type the researcher has to use the facts and information already available and analysis
them to make evaluation of the market.

In analytical research the researcher has to use the facts already available and analysis these to make
the critical evaluation data of the material.

Data has been collected from the Fact sheet of the various mutual fund schemes and used those data
s for the research. In fact sheet past returns were given of different funds.
39
OBJECTIVE OF STUDY
To provide investors long term capital appreciation along with the liquidity of an open-ended
scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio
of equities of high growth companies and balance the risk through investing the rest in a relatively
safe portfolio of debt.

1. Primarily, to understand the basic concepts of Portfolio management and Mutual funds and
its benefits as an investment avenue.

2. Secondly, to compare and evaluate the performance of different equity mutual fund
schemes of different companies on the basis of risk, return and volatility.

3. Thirdly, to know the preferences for the portfolios.

4. Fourthly, to find out why one has invested or not invested in SBI Mutual fund.

5. Finally, to find out the preferences of the investors for asset management company.

SCOPE OF STUDY
A big boom has been witnessed in mutual fund industry in recent 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 Srinagar. We had been sent at one of the branch of State Bank of India
in Srinagar where we completed my project work. We surveyed on my Project Topic. A study of
market of market viability of mutual fund in Kashmir on the visiting customers of the SBI main
Branch

The study will help to know the preferences of the customers, which company, portfolio, mode of
investment, and option for getting return and so on they prefer. This project report may help the
company to make further planning and strategy.

40
LIMITATIONS

Some people were reluctant to fill the questionnaire. They were not willing to disclose their
investment plans. Possibility of error in data collection because many of investors may not have
given actual answers to my questionnaire.

Some of the persons were not so responsive.

Sample size is limited to 100 visitors of state bank of India regional office, Srinagar. The sample size
may not adequately represent the whole market.

41
ANALYSIS AND INTREPRETATION OF THE DATA

Q1. Do you know about various financial institutions?

The objective of this question is to know how many people are familiar with them

Table No. 4.1 Percentage of Familiar people

RESRESPONDENTS NO. PERCENTAGE OF RESPONDENTS

YESYES 60 60.20%
NO NO 39 39.80%

Chart No.4.1 Percentage of Respondents

INTERPRETATION:
From the above data we can conclude that 60.2% people are aware of different financial institutions
while 39.8% are unaware about it.

42
Q.2 Monthly income invested.

The objective of this question is to know that how much of the monthly income people invest

Table No. 4.2 Monthly income invested

RESPONDENTS % PERCENTAGE OF RESPONDENTS

LESS THAN 5000 42 .67%

5, 5 5000-10000 30% 30%
MORE THAN 10,000 2 2 7.33%

Chart No. 4.2 Monthly income invested

27.33%

42.67% LESS THAN 5000

5000-10000
MORE THAN 10000

30%

INTERPRETATION:
From the above data we can conclude that 42.67% of people invest their monthly income less than
Rs.5, 000, 30% of people invest Rs.5,000-10,000% whereas 27.33% of people invest their monthly
income more than 10, 000.

43
Q.3 Awareness about Mutual Fund as a source of investment.

The objective of this question is to know whether people are aware about that Mutual Fund is also an
alternate source of investing their money.

Response % Age of Respondents Yes 37% No 63%.

Table No. 4.4 Awareness about Mutual Funds

RESRESPONDENTS % NPERCENTAGE OF RESPONDENTS

YES YES 37 37%

NO 63 63%

CHART NO. 4.4 Awareness about Mutual Funds

INTERPRETATION:
From the above data we can conclude that only 37 % people are aware about this fact while
remaining 63% people are unaware of this.

44
Q.4 Preferable type of mutual fund for investment.

The objective of this question is to find out the type of Mutual Fund in which the people generally
invest.

Responses % Age of Responses Open ended 87% Close ended 13%

Table No. 4 Percentage of investors in different types

RESPONDENTS % NO OF RESPONDENTS

OPEN ENDED 87
CLOSE ENDED 13

Chart No. 4 Percentage of investors in different types

0 0

13

OPEN ENDED
CLOSE ENDED

87

INTERPRETATION:
From the above data we can conclude that 87% of people invest in open-ended mutual funds whereas
only 13 % of people invest in close-ended mutual funds.

45
Q.5 a) Various factors persuade to invest in Mutual Funds.

The objective of this question is to find out the various factors that persuade the people to invest in
Mutual Funds.

Table No. 5a) Various factors persuading to invest

FACTORS % 0F RESPONDENTS

LIQUIDITY 32
TAX BENEFITS 40
LESS INVESTMENT RISKS 8
SAFETY 12
FIXED AND REGULAR INCOME 8

Chart No. 5a) Various factors persuading to invest

12 32 LIQUIDITY
TAX BENEFITS
8 LESS INVESTMENT RISKS
SAFETY
FIXED AND REGULAR INCOME

40

Interpretation:
From the above data we can conclude that 32% of people are influenced by liquidity and flexibility
factor, 40% by tax benefits, 8% by less investment risk and fixed and regular income both and12% by
safety factor.
46
Q.5b) Reasons of dissatisfaction.

The objective of this question is to know why people are not satisfied with their Mutual Fund
investment.

Table No. 5.b Reasons of dissatisfaction

FACTORS % NO. OF RESPONDENTS

IRREGULAR INCOME 13%
OTHER ALTERNATIVES 19%
POOR SERVICE 6%
RISK 49%
ANY OTHER REASON 13%

Chart No. 5.b Reasons of dissatisfaction

13 13

IRREGULAR INCOME
OTHER ALTERNATIVES
19
POOR SERVICE
RISK

6 ANY OTHER REASON

49

INTERPRETATION:
From the above data we can conclude that 49% of people are not satisfied with their investment in
Mutual Funds because of risk involved. 19% because of other alternatives available, 6% because of
poor service and 13% because of irregular income and other reasons.

47
Q.6 Fear of risk involved in Mutual Funds

The objective of this question is to know how risky they find Mutual Funds are.

Table No. 6 Fear of risk

RESPONDENTS % NO. OF RESPONDENTS

VERY RISKY 65.33

RISKY 12

NEUTRAL 3.3
LOW RISK 2.6
NO RESPONSE 16.66

Chart No. 6 Fear of risk

16.66
2.6 VERY RISKY
3.3 RISKY
NEUTRAL
12 LOW RISK
65.33
NO RESPONSE

INTERPRETATION:
From the above data we can conclude that 65.33% people find Mutual funds very risky 12% find it
risky, 3.33% find it neutral, only'2.6% find low risk while 16.6% gave no response.

48
Q 7. Awareness regarding various tax schemes.

The objective of this question is to know the awareness level of people regarding the tax exemptions
while investing.

Table No. 7 Awareness regarding tax schemes

RESPONDENTS % NO. OF RESPONDENTS

YES 19.3
NO 80.67

Chart No. 7 Awareness regarding tax schemes

00

19.33

YES
NO

80.67

Interpretation:
From the above data we can conclude that only 19.3% people are aware of the rebates in Mutual funds
while 80.67% people do not have any knowledge. Q.10 Income generated by investing in Mutual
funds.The objective of this question is to know the awareness level of people regarding income generated
by investing in various mutual funds.

49
FINDING AND CONCULUSION

FINDINGS

I. In Kashmir, maximum numbers of the investors are of the Age group 30-40 years.

II. In Kashmir most of the Investors were Graduates And Post Graduates and below Higher
Secondary class there were very few in numbers.

III. In Occupation group most of the Investors were Government Employees, the second most
Investors were Private Employees and least number of them were associated with
Agriculture.

IV. In Family Income group, most of the investors have an annual income above 5 lacs,
followed by 3-5 lacs and least of them fall bin below 1 lacs income group.

V. About all the respondent had a saving A/c in Bank, 76% invested in fixed Deposits, only
25% respondent invested in Mutual Fund.

VI. Mostly respondent preferred high return while investment, the second most preferred Low
Risk then liquidity and the least preferred Trust.

VII. Only 67% respondents were aware about Mutual Fund and its operations and 33% were
not.

VIII. Among 100 respondents only 60% had invested in Mutual Fund and 40% did not have
invested in Mutual Fund.

IX. Out of 100 respondents 81%were not aware of Mutual Fund, 13% told there is not any
specific reason for invested in Mutual Fund and 6% told there is likely to be higher risk in
Mutual Fund.

X. Most of the Investors had invested in SBIMF, Reliance, ICICI prudential has also good
Brand position among investors, UTI Mutual Fund places after ICICI prudential according
to the respondent.

50
 XI. Out of 100 investors of SBIMF 64% have invested due to its association with the Brand
SBI, 27% invested because of Advisors Advice and 95 due to better returns.
XII. 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 to less return.

XIII. For future Investment the maximum Respondents preferred SBIMF, the second most
preferred Reliance Mutual Fund and ICICI Prudential has been preferred after them.

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 preference of
brand (AMC), products, channels etc. We observed that many 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 Kashmir 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 returns 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, etc.

Distribution channels are also important for the Investment in Mutual fund. Financial Advisors are the
most preferred channels 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.

51
SUGGESTIONS AND RECOMMENDATIONS
The most vital problems 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 benefits which no other single option could offer. But most of the people
are not even aware of what actually a Mutual Fund is ? They only see it as just another investment
option. So the advisors should try to change their mindsets. THE advisors should target for more and
more young investors. Young investors as well as persons at the height of their carrier 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 invent). By considering these three
things they can take the customers into considerations

Younger people aged under 35 will be a key new customers group into the future,, so making greater
efforts with younger customers who show some interest in investing should pay off.

Customers with graduation level education are easier to sell to and there is a large untapped market
there. To succeed however, advisors must provide sound advice and high quality.

Systematic Investment Pan (SIP) is one the innovative products launched by Asset Management
Companies very recently in the industry. SIP is easy for monthly salaried persons 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 person.

52
BIBLIOGRAPHY

www.mutualfundsindia.com

www.google.com

www.valueresearchonline.com

www.amfiindia.com

www.SBI Groupbank.com

www.investmentz.com

53
 APPENDIX

Sample Charecteristics:
Name
Grnder: Male ( ) Female ( )
Age:
Email id:
Contact no:

Answering all the questions is mandatory, please bear patience .

Q1. Do you know about the various finiancial institutions?

Yes
No

Q2. Do you know about the various schemes provided by these financial institutions?

Yes
No

Q3. Do you invest in any of the schemes provided by these financial institutions?

Monthly
Half Yearly
Annually
Never

54
Q4. How much of the monthly income do you invest in various schemes?

Less than 5000

5000-10000
More than 10000

Q5. Do you know about mutual funds as a source of investment?

Yes
No

Q5(b). What is the reason for not knowing about mutual funds?

Lack of information
Other better investment options available
Any other specify

Q6. Which type of mutual fund do you invest in?

Open ended
Close ended

Q7. What are the various reasons due to which you invest in mutual funds ?

Liquidity Benefits
Tax Benefits
Less Investment risk
Security
Fixed Rate of Return

55
Q7(a). Are you satisfied with the mutual fund investments?

Yes
No

Q7(b). if not, what are the various reasons ?

Poor Service
Risk
Other Investment Options
Irregular Returns
Any other reason specify

Q8. Do you find mutual fund risky as a source for investment?

Very Risky
Moderately risky
neutral
Less risky
No Response

Q9. Are you aware about the various tax benefits you get by investing in mutual funds?

Yes
No

56
57