Professional Documents
Culture Documents
Summer Training Project Report of Saurabh
Summer Training Project Report of Saurabh
ON
remain incomplete without a word of gratitude for the people without whose
cooperation the achievement would have remained a distant dream. So I would like
to extend my immense indebt ness to all of them who have guided and motivated
valuable contribution without which this project report would have not reached its
goals.
Chairman Mrs. Veena Mathura, Executive Director Genral Dr. Manish Sharma ,
Director Dr. Neeraj Saxena, Course Coordinator Mr. Abhijeet Das , external guide
Mr.Gaurav Dixit, all faculty members, library staff and lab staff whose support,
Above all I praise “GOD” the most beneficial, the most merciful that I have been
This project report has been prepared towards the partial fulfillment of the degree
Mutual Funds are fast becoming a preferred investment option for the investors.
Mutual Funds offer several features that make them a powerful and convenient
wealth creation vehicle worthy of consideration. An investor can invest his money
savings etc.
The Indian Mutual Fund industry has started opening many of the exciting
opportunities to the investors. Investors are now looking towards equity linked
investment options.
Thus a Mutual Fund is the most suitable investment for the common man as it
1. Objective
2. Mutual Funds
4. Research Methodology
9. Conclusion
10. Recommendation
12. Annexure
OBJECTIVE
The main objectives of the project undertaken were:
avenues available.
d) To know about the top performing funds under different schemes such as
e) To create awareness about Mutual Funds and to know the preference pattern
of the investors.
World today has become a small village with the borders no longer dividing the
nations in the true sense as people can now move freely between various countries
products and suggest the various products after analyzing the need of the investors.
With the busy schedule of the people it is not practically possible to keep the track
of the investments on a daily basis and hence the need for a professional service
arises.
Mutual funds are one such avenue for investments where there is a lot of flexibility
available with the professional services of the experts who work in the capacity of
the fund managers. In today’s dynamic scenario where the interest rates on the
small savings are reducing and the market linked instruments have become the
main theme of any investment vehicle, mutual funds serve the most of the
investors needs. Globally mutual funds have been preferred route of investments in
the capital markets. The ordinary investor does not have time or the required
Mutual funds are investment vehicles, and you can use them to invest in asset
classes such as equities or fixed income. The investor should compare the risks and
decisions. The investors may seek advice from experts and consultants including
decisions.
SBI Mutual Fund:
SBI Mutual Fund, a joint venture between State Bank of India and Society General
The Equity schemes of SBI Mutual Fund have performed exceedingly well and
have scored over the respective benchmark indices. SBI Mutual Fund has won 12
awards this year including “CNBC TV-18 Crisil Mutual Fund of the Year 2007”, 3
ICRA Awards for Magnum Taxgain Scheme 1993 and Magnum Global Fund and
MSFU – IT, 3 Lipper Awards for – Magnum Global Fund, MSFU – IT, Magnum
Balanced Fund. SBI Mutual Fund has also won the CNBC Awaaz Consumer
SBI Mutual Fund has an investor base of over 35 Lacs spread over 40 schemes.
With a large network over 26 Investor Service Centers, 28 Investor Service Desks
and 52 District Organizers covering over 100 points of acceptance, the fund house
It is a fully owned subsidiary of the State Bank of India, India's premier and highly
investor’s money in the money family to have a full control upon the risks
Bottom up approaches are followed. Top down for sector allocation and the latter
for stock selection. While determining the investment universe, SBI Mutual Fund
employees a multi-stage filtering process. The first level looks at liquidity, the
second at management quality. The third level is for the competitive position and
the last for the share price valuation. In the debt sector it always aims at the "risk
adjusted returns" based on the investors risk tolerance. The following four steps are
Continuous monitoring.
Partnership firms, corporate and even trusts & societies, duly registered under the
pool their money together with a predetermined investment objective. The mutual
fund will have a fund manager who is responsible for investing the pooled money
into specific securities (usually stocks or bonds). When you invest in a mutual
fund, you are buying shares (or portions) of the mutual fund and become a
Thus it is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities (such as share, debentures etc.) in accordance with
sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same proportion at the same time. Mutual Fund issues
Investors of mutual funds are known as unit holders. The profit or losses are shared
The mutual funds normally come out with a number of schemes with different
investment objectives which are launched from time to time. A mutual fund is
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
The origin of mutual fund industry in India is with the introduction of the concept
of mutual fund by UTI in the year 1963.The objective then was to attract the small
investors and introduce them to market investment. Though the growth was slow,
but it accelerated from the year 1987 when non-UTI players entered the industry
In the past decade, Indian mutual fund industry had seen dramatic improvements,
both quality wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase,: the Assets under Management (AUM) were Rs. 67bn. The
private sector entry to the fund family raised the AUM to Rs. 470 bn in March
1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the
Indian Mutual Funds Industry into comparison, the total of it is less than the
deposits of SBI alone, constitute less than 11% of the total deposits held by the
The main reason of its poor growth is that the mutual fund industry in India is new
in the country. Large sections of Indian investors are yet to be intellectuated with
the concept. Hence, it is the prime responsibility of all mutual fund companies, to
market the product correctly abreast of selling. The mutual fund industry can be
broadly put into four phases according to the development of the sector. Each
Unit Trust of India enjoyed complete monopoly when it was established in the year
1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it
continued to operate under the regulatory control of the RBI until the two were de-
linked in 1978 and the entire control was tranferred in the hands of Industrial
Development Bank of India (IDBI). UTI launched its first scheme in 1964, named
as Unit Scheme 1964 (US-64), which attracted the largest number of investors in
UTI launched more innovative schemes in 1970s and 80s to suit the needs of
different investors. It launched ULIP in 1971, six more schemes between 1981-84,
Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986,
Master share (India’s first equity diversified scheme) in 1987 and Monthly Income
Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets
entering the market in the year 1987. In November 1987, SBI Mutual Fund from
the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual
Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank
Muatual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual
Fund. By 1993, the assets under management of the industry increased seven times
to Rs. 47,004 crores. However, UTI remained to be the leader with about 80%
market share.
Mobilisatio
Assets
Amount n as % of
Under
Mobilise gross
Manageme
d Domestic
nt
Savings
UTI 11,057 38,247 5.2%
Publi
c
1,964 8,757 0.9%
Secto
r
Total 13,021 47,004 6.1%
Phase III. Emergence of Private Sector Funds - 1993-96
The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to
enter the mutual fund industry in 1993, provided a wide range of choice to
The mutual fund industry witnessed robust growth and stricter regulation from the
SEBI after the year 1996. The mobilisation of funds and the number of players
operating in the industry reached new heights as investors started showing more
Inventors' interests were safeguarded by SEBI and the Government offered tax
Regulations, 1996 was introduced by SEBI that set uniform standards for all
mutual funds in India. The Union Budget in 1999 exempted all dividend incomes
objective to educate investors and make them informed about the mutual fund
industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special
behind this was to bring all mutual fund players on the same level. UTI was re-
organized into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI Mutual Fund and its
past schemes (like US-64, Assured Return Schemes) are being gradually wound
up. However, UTI Mutual Fund is still the largest player in the industry. In 1999,
there was a significant growth in mobilisation of funds from investors and assets
98 99
01- 31-
99 00
01- 31-
00 01
01- 31-
01 02
01-
31-Jan-
April- 5,505 22,923 2,20,551 2,48,979
03
02
31-
01-
March- * 7,259* 58,435 65,694
Feb.-03
03
01- 31-
03 04
01- 31-
04 05
01- 31-
05 06
ASSETS UNDER MANAGEMENT (RS.
CRORES)
PUBLIC PRIVATE TOTA
AS ON UTI
SECTOR SECTOR L
31-
53,32
March- 8,292 6,860 68,472
0
99
The industry has also witnessed several mergers and acquisitions recently,
Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund.
Simultaneously, more international mutual fund players have entered India like
Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end
Mutual funds have a unique structure not shared with other entities such as
the special nature of this structure, because it determines the rights and
India has a legal framework within which mutual funds must6 be constituted. In
India open and close ended funds operate under the same regulatory structure, and
A mutual fund in India is allowed to issue open and close ended schemes under a
common legal structure. Mutual funds in India are laid down under SEBI
regulations, 1996.
There are many entities involved and the diagram below illustrates the
1. Sponsor
Sponsor of the mutual fund is just like the entrepreneur who takes the risk of
organization. There are three criteria for the sponsors, which are as follows:
c) 40 % of the net worth of the mutual funds should come from the sponsor.
The Asset Management Company is the core part of the mutual fund as the
Chief Investment Officer of the AMC will make all the investment decisions.
The net worth of the AMC at all the times should be Rs.10 crores. The success
or failures of the fund in generating returns for the investors depend to a very
3. Trustee:
Trustees are those individuals who are appointed by the sponsor and have credit
worthiness in the market. The trustees of the mutual fund hold its property for
the benefit of the unit holders; they do not directly manage the portfolio of
securities. For this they appoint the AMC with the prior approval of SEBI. They
see to it that the interests of the mutual fund investors are protected and that the
working of the mutual fund is done in lines with the rules and regulations of the
Rights of Trustees:
1. The trustees appoint the AMC with the prior approval of SEBI.
3. They have the right to request any necessary information from the
that the AMC is in compliance with the trust deed and the regulation.
4. The trustees may take remedial action if they believe that the fund are not
Mutual funds are in the business of buying and selling of securities in large
volumes.
accordance with its agreement with the mutual fund. The custodian should be
SEBI.
Now the Indian capital markets are moving away from having physical
the AMC, although under the overall direction and responsibility of the trustees.
5. Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the mutual
documents and updating investor records. A fund may choose to carry out this
activity in-house and charge the scheme for the service at a competitive market
rate. Where an outside transfer agent is used, the fund investor will find the
agent to be an important interface to deal with, since all of the investor services
6. Distributors:
For a fund to sell units across a wide retail base of individual investors, an
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
1 By Structure
3 Interval Schemes
2 By Investment Objective
1 Growth Schemes
2 Income Schemes
3 Balanced Schemes
3 Other Schemes
3 Index Schemes
1. Open-ended Fund/Scheme:
The units offered by these schemes are available for sale and repurchase on any
business day at NAV based prices. Hence, the unit capital of the schemes keeps
changing each day. Such schemes thus offer very high liquidity to investors and
2. Close-ended Fund/Scheme:
fixed number of units. These schemes are launched with an initial public offer
(IPO) with stated maturity period after which the units are fully redeemed at NAV
linked prices.
In the interim, investors can buy or sell units on the stock exchanges where they
are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes
usually remains unchanged. After an initial closed period, the scheme may offer
direct repurchase facility to the investors. Closed-ended schemes are usually more
NAV. This discount tends towards the NAV closer to the maturity date of the
scheme.
Schemes according to Investment objective:
follows:
The aim of growth funds is to provide capital appreciation over the medium to
equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation, etc.
The investors must indicate the option in the application form. The mutual funds
also allow the investors to change the option at a later date. Growth schemes are
good for investors having a long term outlook seeking appreciation over a period
of time.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures, government securities and money market instruments. Such funds are
less risky compared to equity schemes. These funds are not affected because of
also limited in such funds. The NAVs of such funds are affected because of change
in interest rates in the country. If the interest rates fall, NAVs of such funds are
likely to increase in the short run and vice-versa. However, long –term investors
3. Balanced Fund:
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for
moderate growth. They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAVs of such funds are likely to be less volatile compared to
These funds are also income funds and their aim is to provide easy liquidity,
commercial paper and inter-bank call money, government securities, etc. Returns
on these schemes fluctuate much less compared to other funds. These funds are
appropriate for corporate and individual investors as a means to park their surplus
6. Gilt fund:
If you are among the safe players, invest in a liquid fund. These funds invest
exclusively in government securities which have zero credit risk. The NAVs of
these schemes are determined by changes in interest rates and other economic
factors as is the case with income or debt oriented schemes. SBI mutual fund has
the magnum gilt fund.
These schemes offer tax rebates to the investors under specific provisions of the
Income Tax Act, 1961 as the government offers tax incentives for investment in
specified avenues. Eg. Equity linked savings schemes (ELSS). Pension schemes
launched by the mutual funds also offer tax benefits. These schemes are growth
Special schemes:
1. Index funds:
Index funds replicate the portfolio of a particular index such as the BSE sensitive
index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the
same weight age comprising of an index. NAVs of such schemes would rise or fall
in accordance with the rise or fall in the index, though not exactly by the same
Necessary disclosures in this regard are made in the offer document of the mutual
fund scheme.
These are the funds/schemes which invest in the securities of only those sectors or
FMCG, petroleum stocks, etc. The returns in these funds are dependent on the
higher returns, they are more risky compared to diversified funds. Investors need to
A load fund is one that charges a percentage of NAV for entry or exit. That is, each
time one buys or sells units in the fund, a charge will be payable. This charge is
used by the mutual fund for marketing and distribution expenses. Suppose the
NAV per unit is Rs.10. if the entry as well as exit load charged is 1%, then the
investors who buy would be required to pay Rs.10.10 and those who offer their
units for repurchase to the mutual fund ill get only Rs.9.90 per unit. The investor
should take the loads into consideration while making investment as these affect
their yields/returns. However, the investor should also consider the performance
track record and service standards of the mutual fund which are more important.
A no-load fund is one that does not charge for entry or exit. It means the investors
can enter the fund/scheme at NAV and no additional charges are payable on
Bank of India?
Strong Heritage
SBI Mutual Fund draws strength from India's premier and highly respected bank,
the State Bank of India. Set up on July 1, 1955, the State Bank of India is today, the
into an instrument of social change. Today, it has 9034 branches in India and 51
Investment
Equity:
price whereby we invest in growth oriented stocks which are available at attractive
relative valuations.
advantage.
months.
Debt:
To maximize the "risk adjusted returns" for the investors based on their risk
tolerance.
• Continuous monitoring
investors. With investment expertise of over 15 years, SBIMF has always fulfilled
its promise to its investors and has striven to manage their funds with honestly and
integrity.
Mutual Fund?
You will have to fill in the application form, attach the cheque/draft payable at
any of the SBIMF Investor Service Centre locations or SBI's Designated
or send it to any of our Investor Service Centres. You can ask for application
through any of the following modes: •From your SBI's Designated Collection
• If you are an account holder enjoying online debit facility with HDFC Bank or
units?
The account statement cheque will be mailed to you normally within five working
Office.
scheme/plan to another?
You will have to fill up a switch-over request form, which will be sent to you
along with your statement of account. You will also have to fill in a fresh
application form for the scheme you switch-over into and send it to the nearest
holders.
representatives at the Investor Service Centres with your complaints, queries and
suggestions. You can also use the Feedback Section (Contact Us).
registered / recorded with the registrars. In addition to this Magnum holders can
obtain loans against their Magnums from SBI by getting lien registered / recorded
The price or NAV unit holding is charged while investing in open ended scheme is
called sales price. It may include sales load, if applicable. ITI repurchase or
Assured return schemes are those schemes that assure a specific return to the unit
A scheme cannot promise returns unless such returns are fully guaranteed by the
Investors should carefully read the offer document whether return is assured for the
entire period of the scheme or only for certain period. some schemes assure returns
one year at a time and they review and change it at the beginning of the next year.
Considering the market trends, any prudent fund managers can change the assets
allocation i.e. he can invest higher or lower percentage of the fund in equity or debt
a short term basis on defensive considerations i.e. to protect the NAV. hence the
fund managers are allowed certain flexibility in altering the assets allocation
considering the interest of the investors. In case the mutual fund wants to change
the assets allocation on a permanent basis, they are required to inform the unit
holders and giving them option to exit the scheme at prevailing NAV without any
load.
Yes, non resident Indians can also invest in mutual funds. Necessary details in this
respect are given in the offer documents of the scheme.
schemes?
An investor should take into account his risk taking capacity, age factor, financial
securities as disclosed in the offer documents and offer different returns and risks.
Investors may also consult financial experts before taking decisions. Agents and
scheme?
An investor must mention clearly his name, address, number of units applied for
and such other information as required in the application form. He must give his
bank account number so as to avoid any fraudulent encashment of any cheques /
draft issued by the mutual fund at a later date for the purpose of dividend or
repurchase. Any changes in the address, bank account number, etc at a later date
be given to the prospective investor by the mutual fund. The application norm for
investing in a scheme, should carefully read the offer document. Due care must be
given to portions relating to main features of the scheme, risk factors, initial issue
expenses and recurring expenses to be charged to the scheme, entry or exit loads,
mutual fund in the past, pending litigations and penalties imposed etc.
21.When will the investor get certificate or statement of
six weeks from the date of closure of the initial subscription of the schemes, the
investors would get either a demit account statement or unit certificates as these
are traded in the stock exchanges. In case of open ended schemes, a statement of
account is issued by the mutual fund within 30 days from the date of closure of
initial public offer of the scheme. The procedure of repurchase is mentioned in the
offer document.
According to SEBI regulations, transfer of units to be done within thirty days from
the date of lodgment of certificates within the mutual fund. As a unit holder, how
within 30 days of the declaration of the dividend and the redemption or repurchase
fundamental attributes of the scheme e.g. structure, investment pattern, etc can be
carried out unless a written communication is sent o each unit holder and an
advertisement.
Investors can compare the performance of their schemes with those of other mutual
funds under the same category. They can also compare the performance of equity
oriented schemes with the benchmarks like BSE sensitive index’s CNX Nifty, etc.
On the basis of performance of the mutual funds, the investors should decide when
The mutual funds are required to disclose full portfolios of all of their schemes on
half yearly basis, which are published in the newspapers. Some mutual fund sends
The scheme portfolio shows investment made in each security i.e. equity,
debenture, money market instruments, government securities etc and their quantity,
market value and % to NAV. These portfolio investments also required to disclose
illiquid securities in the portfolio, investment made in rated and unrated debt
Some of the mutual funds send newsletters to the unit holders on quarterly basis,
The performance of a scheme is reflected in its net asset value (NAV) which is
The mutual funds are also required to publish their performance in the form of half
yearly results which also include their returns/yields over a period of time i.e. last
six months, 1 year, 3years, 5years and since inception of the scheme.
Apart from these, many research agencies also publish research reports on
their performance.
Investors should study these reports and keep themselves informed about the
performance of various schemes of different mutual funds. They can also compare
the performance of equity oriented schemes with the benchmarks like BSE Index,
S&P CNX Nifty, etc. on the basis of performance of the mutual funds, the
investors should decide when to enter or exit from a mutual fund scheme.
than the issue price depending on market sentiency and perception of investors.
However, in the case of mutual funds, the par value of the units may rise or fall
immediately after allotment. A mutual fund scheme takes some time to make
Some of the investors have the tendency to prefer a scheme that is available at
lower NAV compared to the one available at higher NAV. Sometimes, they prefer
a new scheme which is issuing units at rs.10 whereas the existing schemes in the
same category are available at much higher NAVs. Investors may please note that
in case of mutual fund schemes, lower or higher NAVs of similar type schemes of
different mutual funds have no relevance. On the other hand, investors should
choose a scheme based on its merit considering performance track record of the
Investor has put Rs.9000 in each of two schemes. He would get 600 units
Assuming that the markets go up by 10 percent and both the schemes perform
Rs.16.50 and that of scheme B to Rs.99.thus, the market value of investment would
scheme B(100*99).The investor would get the same return of 10% on his
investment in each of the schemes. Thus, lower or higher NAV of the schemes and
Investors should not assume some companies having the name "mutual benefit" as
mutual funds. These companies do not come under the purview of SEBI. On the
other hand, mutual funds can mobilize funds from the investors by launching
schemes only after getting registered with SEBI as mutual funds.
There are number of other web sites, which give a lot of information of various
schemes of mutual funds including over a period of time. Many newspapers also
publish useful information on mutual funds on daily and weekly basis. Investors
may approach their agents and distributors to guide them in this regard.
money invested?
In case of winding up of a scheme, the mutual funds pay a sum based on prevailing
NAV after adjustment of expenses. Unit holders are entitled to receive a report on
winding up from the mutual funds which gives all necessary details.
Investors would find the name of contact person in the offer document of the
mutual fund scheme, which they may approach in case of any query, complaints or
grievances. Trustees of a mutual fund monitor the activities of the mutual fund
monitor the activities of the mutual fund. The names of the directors of Assets
Management Company and trustees are also given in the offer documents.
Investors can also approach SEBI for redressal of their complaints. On receipt of
complaints, SEBI takes up the matter with the concerned mutual fund and follows
up with them till the matter is resolved. Investors may send their complaints.
better returns?
In the offer document of any mutual fund scheme, financial performance including
the net worth of the sponsor for a period of three years is required to be given. The
only purpose is that the investor should know the track record of the company
which has sponsored the mutual fund. However, higher net worth of the sponsor
does not mean that the scheme would give better returns or the sponsor would
mutual funds?
Almost all the mutual funds have their own websites. Investor can also access the
NAVs, half yearly results and portfolios of all mutual funds at the website of
fund" section for information on SEBI regulations and guidelines, data on mutual
funds, draft offer document filled by mutual funds, addresses of mutual funds, etc.
Also in the annual reports of SEBI available on the website, a lot of information on
A systematic investment plan (SIP) lets you invest in small amounts in mutual
funds on a regular basis. It gives you a lot of flexibility and is a very convenient
way of building a large corpus over a period of time. In mutual fund terminology,
SIP allows the investor to invest a fixed amount every month or quarter for
Also, your investments benefit from rupee-cost averaging. Let us explain it. If u
invest an equal amount of money every month in a mutual fund, you are engaging
in rupee cost averaging. shares price change from day to day, so the set amount of
money you invest buys different amounts of shares every time. When prices are
high, NAV is high-so you get less. And when prices are low, NAV is low-so you
get more. In the end if you were to buy all units at once you risk getting less for
your money. If you are lucky enough, you would get more. But for that you would
the chances of loosing out on an investment are spread out and thus minimized.
Let's take an example. Suppose an investor invests Rs.1000 under the systematic
investment plan on a monthly basis. Using the sip strategy the investor can reduce
his average cost per unit. The investor gets the advantage of getting more units
1 Diversification
The best mutual funds design their portfolios so individual investments will react
differently to the same economic conditions. For example, economic conditions like
decrease in value. Other securities in the portfolio will respond to the same
way, the value of the overall portfolio should gradually increase over time, even if
some securities lose value.
2 Professional Management
Most mutual funds pay topflight professionals to manage their investments. These
managers decide what securities the fund will buy and sell.
3 Regulatory oversight
Mutual funds are subject to many government regulations that protect investors
from fraud.
4 Liquidity
It's easy to get your money out of a mutual fund. Write a check, make a call, and
5 Convenience
You can usually buy mutual fund shares by mail, phone; or over the Internet.
6 Low Cost
Mutual fund expenses are often no more than 15 percent of your investment.
Expenses for Index Funds are less than that, because index funds are not actively
managed. Instead, they automatically buy stock in companies that are listed on a
specific index.
Mutual funds have their drawbacks and may not be for everyone:
1 No Guarantees
No investment is risk free. If the entire stock market declines in value, the value of
mutual fund shares will go down as well, no matter how balanced the portfolio.
Investors encounter fewer risks when they invest in mutual funds than when they
buy and sell stocks on their own. However, anyone who invests through a mutual
All funds charge administrative fees to cover their day-to-day expenses. Some
consultants, or financial planners. Even if you don't use a broker or other financial
adviser, you will pay a sales commission if you buy shares in a Load Fund.
3 Management risk
When you invest in a mutual fund, you depend on the fund's manager to make the
right decisions regarding the fund's portfolio. If the manager does not perform as
well as you had hoped, you might not make as much money on your investment as
you expected. Of course, if you invest in Index Funds, you forego management
risk, because these funds do not employ managers. Pan cards and mutual funds to
go hand in hand
What is NAV?
A mutual fund is a common investment vehicle where the assets of the fund belong
directly to the investors. Investor’s subscriptions are accounted for/by the fund not
as liabilities or deposits but as Unit capital. On the other hand, the investments
made on the behalf of the investors are reflected on the assets side and are the main
constituents of the balance sheet. The funds Net Assets are therefore defined as the
practice for mutual funds to compute the share of each investor on the basis of the
value of Net Assets per share / unit, commonly known as the Net Asset Value
(NAV).
Calculation of NAV according to SEBI:
A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
than one sponsor who is like promoter of a company. The trustees of the mutual
fund hold its property for the benefit of the unit holders. Asset management
types of securities. Custodian, who is registered with SEBI, holds the securities of
various schemes of the funds in its custody. The trustees are vested with the
general power of superintendence and direction over AMC. They monitor the
estimated that by 2010 March-end, the total assets of all scheduled commercial
The annual composite rate of growth is expected 13.4% during the rest of the
decade. In the last 5 years we have seen annual growth rate of 9%. According to
the current growth rate, by year 2010, mutual fund assets will be double.
2 Number of foreign AMC's is in the queue to enter the Indian markets like
management worldwide.
3 Our saving rate is over 23%, highest in the world. Only channelizing these
6 Mutual fund can penetrate rural like the Indian insurance industry with
simple and limited products.
The pan card and the NFO application go together now with fund houses selling
them together.
This month, SEBI made a pan card, or application proof, mandatory for mutual
fund investments.
Since then, retail investments have fallen 40-50 per cent. Fund houses like
Reliance, SBI, JM Financial and others, have begun to provide customers with pan
card application forms along with mutual fund forms.
They have also tied up with SBI UTI Securities and Bajaj Capital to speed up the
process.
“The AMCs have taken the initiative to partner with us to facilitate many investors
to come to our branches wherever they are facing a query of pan card. We offer
them the entire service of filling up the applications, providing the form 49 A, the
appropriate ticket which is to be filed with the form and depositing with the
concerned authority for processing,” said Senior Vice President, Bajaj Capital,
Surajit Mishra.
It's now hiring photographers and pan card agents at no cost to the customer.
Fund houses like SBI, ICICI Prudential and HDFC have also started educating
customers on the importance of the pan card.
“We are tying up with intermediaries or companies, which are allowed to either,
facilitate or allot pan. To a great extent for this NFO we will even fund it because
the cost of applying for pan is Rs 73-74,” said Head of Sales and Marketing, JM
Financial AMC, Bhanu Katoch.
Even as fund houses set up shops for pan cards, fund houses see high expenditure
on the cards hurting their expansion plans.
Over View
SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an
enviable track record in judicious investments and consistent wealth creation.
The fund traces its lineage to SBI - India’s largest banking enterprise. The
institution has grown immensely since its inception and today it is India's largest
bank, patronized by over 80% of the top corporate houses of the country.
SBI Mutual Fund is a joint venture between the State Bank of India and Society
General Asset Management, one of the world’s leading fund management
companies that manages over US$ 500 Billion worldwide.
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.
Today, the fund manages over Rs. 31,794 crores of assets and has a diverse profile
of investors actively parking their investments across 36 active schemes.
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 organisers.
Growth through innovation and stable investment policies is the SBI MF credo.
There are various investment avenues available in the market which have different
risk and return parameters. Every investor has his own objective accordingly to
which he makes the investment. The investment options can be broadly compared
on the following aspects:
LTCG
Financial High Moderat Low Taxable Modera
institution bonds e te
Bank deposits Low Low Low Taxable High
e
NSC Low Moderat Low Tax free High
e
Mutual funds Low High High No tax High
Analysis:
The table clearly shows that the mutual funds have more benefits of investments as
compared to other instruments in all the five parameters which are considered ideal
for making any investments. Risk which is the prime concern before making any
investment is low and the returns which are the prime motive for investments are
high, at the same time there is no taxation and liquidity which means when the
investors wants he can have his money back is also there and there is safety of
capital which is also a prime concern as all the mutual funds are SEBI registered
and under its direct control.
Comparison of returns given by various financial
instruments:
Returns are the prime factor that motivates any investor to make the investments.
Ultimate objective of any investment is to generate high returns for the future so
that better standard of living can be attained. In today’s world where modernization
has changed the life style of people and standard of living has also gone up very
sharply, there is need for those instruments which generate higher returns with low
risk.
PERFORMANCE
Multiplier plus
Performance
Equity Fund
Performance
Global fund
Performance
Contra Fund
Performance
It is method adopted for collecting information for his project. The researcher
started the project by preparing questionnaires and respondents were asked to fill
it. In the project only primary data were used that was collected through a survey
conducted on customer.
scientifically. In research methodology, we not only talk about the research method
but also consider the logic behind them methods we use in the context of our
research study, and explain why we are using a particular method or the technique
and why we are not using others so that research results are capable of being
As regarding the sampling method non probability sampling technique was used:-
AREA OF RESEARCH:-MORADABAD
RESEARCH DESIGN
collected.
Provides information that helps the executive take rational decisions typically
experimenter and control are used to identify the sources of variation in subject’s
response.
DATA collection
The task of data collection begins after a research for problem is defined and
research design/plan chalked out. While deciding about research should keep in
Primary Data
The primary data are those which are collected a fresh and for the first time as
Secondary Data
The secondary data on the other hand are those which have already been passed
through statistical process. Qualitative and quantitative data are collected through
Secondary data also help the researcher to choose to whom he or she should be
contacted. Secondary data gave all relevant information about the particular subject
Survey method
Observation method
The observation method implies the collection of information by way of
Interview method
presentation of oral, verbal, stimuli and reply. In terms of oral, verbal responses.
This method can be use through personnel interview and if possible tough
telephone interview.
Questionnaire method
answer the question and return the questionnaire. It is to being adopted by private
governments.
interview.
In the project undertaken I have used the telephone and personal interview
SAMPLING
It refers to a process of learning about the population on the basis of sample drawn
from
sampling.
Probability sampling
Is choose in such a way that each number of the universe has the known chance of
being selected.
Non-probability sampling
The chance of any particular unit in the universe being selected is unknown.
Here, in the project undertaken I have used non probability sampling method. In
Thirdly, I planned my visit in different locations, fixed date and time of my visit.
After these preliminary preparations I was all set to start my work’s visited
customers talked to them and told them about the research, explained its purpose
1. Occupation:
a) Salaried
b) Retired
c) Self-employed
d) Professional
a) Savings
b) Return
c) Safety
d) Tax benefit
a) Mutual fund
b) Real estate
c) Insurance
d) Share market
a) Yes
b) No
5. Have you invested in mutual fund?
a) Yes
b) No
a) Equity Fund
b) Debt Fund
b) Sectoral fund
d) Debt fund
8. How would you rate the importance of Entry and Exit load as a factor while
a) Very Important
b) Important
c) Somewhat Important
d) Not Important
a) Yes
b) No
a) Yes
11%
salaried
45%
retired
self employed
33%
professional
11%
45% people are salaried employees, 11% people are retired, 33% people are self-
employed and 11% are professional.
20%
40% Savings
Return
Safety
15%
Tax benefit
25%
40% people had the objective of savings, 25% of returns, 15% of safety and 20%
had the objective of availing tax benefits
20%
40% Mutual fund
Real estate
Insurance
Share market
30%
10%
Findings reveal that 40% people would like to invest in mutual fund,10% in real
estate, 30% in insurance and 20% in share market.
35%
Yes
No
65%
65% people were aware of mutual fund and 35% were not aware
25%
Yes
No
75%
75% people had invested in mutual fund while 25% had not invested in mutual
fund.
20%
Equity fund
Debt fund
15% Balanced fund
65%
65% people showed interest in Equity fund, 15% in Debt fund, 20% in Balanced
fund
10%
Blue chip fund
45%
Sectoral fund
30% Tax gain fund
Debt fund
15%
45% people showed interest in blue chip fund, 15% in sectoral fund, 30% in tax
gain fund and 10% in debt fund.
8. How would you rate the importance of Entry and Exit load as a factor
while investing in Mutual Funds?
15%
Very important
Important
25% 60% Not important
Answering to this question, most (60%) of the respondents said that it is a very
important factor, while 25% respondents said that it is an important factor and 15%
did not consider it as an important factor.
45%
Yes
No
55%
55% people were aware of Sbimf while 45% were not aware.
25%
Yes
No
75%
investment instrument. The investors have the benefit of low risk, high returns,
liquidity, no taxation and the professional expertise of the fund manager. Even the
investors have received more return than the market index especially in the bull run
which helps those investors who do not have the required expertise to decide which
stock to go for. The returns given by the various mutual funds over a period of say
three years has been very high.
Thus, as an investment avenue mutual funds are very much suited for those
investors who want higher returns with low risk and who do not want to have
2 Better services
SBIMF should make efforts to provide better and improved services to the
investors. Any information regarding changes in Mutual Fund investment
should be properly and promptly communicated to the investors.
3 Promotional Activities
RECOMMENDATION
funds including the UTI. At present, mutual funds are subject to guidelines laid
down by the RBI, govt. of India and the SEBI. Further the guidelines governing the
UTI are not same. It is therefore necessary that the govt. should come out with
public sector and private sector mutual funds and the UTI.
1 So far mutual funds in India confide themselves to urban areas; leaving vast
community and by education them about the benefits of the schemes, mutual
fund can raise burgeoning resources which can be gainful employed for the
national development.
fund in order to attract more investment the times are fast approaching when
mutual fund to offer this sort of counseling which will certainly make a
3. The limited amount of outlay for the project is also a major constraint.
7. Many people give false rating because they are not interested.
BIBLIOGRAPHY
BOOKS:
WEBSITES;
1 www.amfiindia.com
2 www.sbimf.com
3 www.mutalfundsindia.com
MAGAZINES:
1 Business World
2 Dalal Street
3 The Economic Times