Summer Internship Project Report

On

A Study on Investors’ Preference towards Mutual Funds

Completed At

SBI Funds Management Pvt. Ltd.

By

Vaibhav Singhal

FIB1860

Under Joint Supervision of

Faculty Guide Ms. Shabnam

Industry Guide Mrs. Nidhi Mishra

Presented in Partial Fulfillment of the Requirements of

Post Graduate Diploma in Management

3, Institutional Area, Rohini, Sector 5,

New Delhi – 110085 India

1
 SBI Funds Management Pvt. Ltd.
Ansal's Vikasdeep Building, 2nd Floor, 208, Nirman Vihar, Delhi 110092

CERTIFICATE

Certified that the summer internship project report on “ A Study on Investors’

Preference towards Mutual Funds” is the bonafide work of “Vaibhav Singhal,
Roll No: FIB1860”, pursuing PGDM-IB Batch (2018-20) of Jagan Institute
of Management Studies, 3, Institutional Area, Rohini, Sector 5, New Delhi -
110085. The work has been done under my supervision during 01/05/2019 –
30/06/2019.

Date:
Mrs. Nidhi Mishra
BRANCH HEAD
SBI Funds Management Pvt. Ltd.
Ansal's Vikasdeep Building, 2nd Floor, 208, Nirman Vihar, Delhi 110092

2
 CERTIFICATE

This is to certify that the summer internship project report on “ A Study on

Investors’ Preference towards Mutual Funds” is a bonafide work of “Vaibhav
Singhal, Roll No: FIB1860”, pursuing PGDM-IB, Batch (2018-20) of Jagan
Institute of Management Studies, 3, Institutional Area, Sec-5, Rohini, New
Delhi – 110085. The report was prepared under my supervision during
01/05/2019 – 30/06/2019.

Date:
Ms. Shabnam
Faculty Guide
JIMS, Rohini, Sector 5, New Delhi - 85

3
 STUDENT’S DECLARATION

I declare that the Report on “ A Study on Investors’ Preference towards Mutual

Funds” is an original work done by me in accordance with the guidelines
prescribed by the Dean’s office for preparation of Summer Internship Project
Report and the work has not been submitted anywhere else for review.

I understand that if the content of the work is found to be plagiarized at any

time of its evaluation, my report can be rejected and disciplinary action may
be initiated against me.

Vaibhav Singhal
FIB1860
PGDM-IB (2018-20)

4
 Acknowledgement

I am using this opportunity to express my gratitude to everyone who supported me throughout

the course of this Summer Internship project. I am thankful for their aspiring guidance,
invaluably constructive criticism and friendly advice during the project work. I am sincerely
grateful to them for sharing their truthful and illuminating views on a number of issues related to
the project.

I express my warm thanks to Mr. Ankit Dixit and Ms. Himani Chugh for their support and
guidance at SBI Funds Management Pvt. Ltd.

I would also like to thank my industry guide Mrs. Nidhi Mishra from SBI Funds Management
Pvt. Ltd. and my faculty guide Ms. Shabnam and all the people who provided me with the
facilities being required and conductive conditions for my Summer Internship project.

Thank you

Vaibhav Singhal

5
 List of Figures

S.No. Particulars Page No.

1. Figure 1.3.1 17
2. Figure 1.3.2 18
3. Figure 1.3.3 20
4. Figure 4.1.1 a & b - 4.1.5 a & b 26-27
5. Figure 4.1.1 – 4.1.18 28-36

6
 List of Notations and Symbols Used

SBI MF – SBI Mutual Funds

AMC – Asset Management Company
SEBI – Securities and Exchange Board of India
SIP – Systematic Investment Plan
UTI – Unit Trust of India
ETF – Exchange Traded Funds
ESG – Environmental Social Government
NAV – Net Asset Value
AUM – Asset Under Management

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 Table of Contents
Page No.
Certificate (from the organization) 2
Certificate (from the faculty mentor) 3
Author’s Declaration 4
Acknowledgement 5
List of Figures 6
List of Notations and Symbols Used 7
Executive Summary 9
Chapter 1: Overview 10
1.1 Introduction 10
1.2 Overview of the company 11
1.3 Overview of the industry 13
Chapter 2: Research Methodology 19
2.1 Objectives 19
2.2 Scope 19
2.3 Research design 19
2.4 Sources of data collection 20
2.5 Data analysis - tools/techniques 20
2.6 Sampling design 20
2.7 Limitations of the study 20
Chapter 3: Conceptual Background 21
Chapter 4: Data Analysis and Findings 25
Chapter 5: Discussion and Conclusion 36
Chapter 6: Recommendations 37
Bibliography 38
Annexure 39

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 Executive Summary

The main objective of this report is to analyze the investors’ preference towards
Mutual Funds. While investing their money, which Mutual Fund company they
prefer. For this primary data has been collected with the help of simple random
sampling from 100 respondents through Google Forms.

In the first chapter, the overview of the company and the mutual fund industry has
been discussed. The key milestones of the company and the growth of mutual of
fund industry in India and since inception, are explained.

In the second chapter, research methodology has been defined. Primary and
secondary data has been collected from different sources and the analysis and the
interpretation has been done with the help of MS Excel using pie charts and
diagrams. Limitations of the study has also been written.

In the third chapter, the conceptual background of the mutual fund industry has
been explained. Various phases of mutual fund industry in India has been discussed
and different terms and concepts are explained.

In the fourth chapter, data analysis and interpretation has been done. Interpretation
has been written under each pie chart and diagram.

In the fifth chapter, the discussions and conclusions has been derived from the data
that has been analyzed. In the sixth chapter, recommendations has been suggested
to the company in order to increase awareness towards SBI Mutual Funds.

9
 Chapter 1: Overview

1.1 Introduction

The Indian financial system based on four basic components like Financial Market, Financial
Institutions, Financial Service, Financial Instruments. All are play important role for smooth
activities for the transfer of the funds and allocation of the funds. The main aim of the Indian
financial system is that providing the efficiently services to the capital market. The Indian capital
market has been increasing tremendously during the second generation reforms. The first
generation reforms started in 1991 the concept of LPG. (Liberalization, privatization,
Globalization).

Then after 1997 second generation reforms was started, still the it’s going on, its include reforms
of industrial investment, reforms of fiscal policy, reforms of ex-imp policy, reforms of public
sector, reforms of financial sector, reforms of foreign investment through the institutional
investors, reforms banking sectors. The economic development model adopted by India in the
post-independence era has been characterized by mixed economy with the public sector playing
a dominating role and the activities in private industrial sector control measures emaciated form
time to time. The last two decades have been a phenomenal expansion in the geographical
coverage and the financial spread of our financial system.

The spared of the banking system has been a major factor in promoting financial intermediation
in the economy and in the growth of financial savings with progressive liberalization of
economic policies, there has been a rapid growth of capital market, money market and financial
services industry including merchant banking, leasing and venture capital, leasing, hire
purchasing. Consistent with the growth of financial sector and second generation reforms its
need to fruition of the financial sector. It is also need to providing the efficient service to the
investor mostly if the investors are supply small amount, in that point of view the mutual fund
play vital for better service to the small investors. The main vision for the analysis for this study
is to scrutinize the performance of five star rated mutual funds, given the weight of risk, return,
and assets under management, net assets value, book value and price earnings ratio.

10
1.2 Overview of the company

SBI Mutual Fund (SBI MF) is a bank sponsored fund house with its corporate headquarters in
Mumbai, India. It is a joint venture between the State Bank of India, an Indian multinational,
Public Sector banking and financial services company and Amundi, a European AMC with 1425
billion euros of AUM. SBI MF is one of the largest mutual funds in the country with an investor
base of over 4.6 million. With 30 years of rich experience in fund management, SBI MF brings
forward its expertise in consistently delivering value to its investors.

SBI MF is India’s largest 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.

1.2.1 History of SBI Mutual Fund

The mutual fund industry in India originally began in 1963 with the Unit Trust of India (UTI) as
a Government of India and the Reserve Bank of India initiative. Launched in 1987, SBI Mutual
Fund became the first non-UTI mutual fund in India. In July 2004, State Bank of India decided
to divest 37 per cent of its holding in its mutual fund arm, SBI Funds Management Pvt. Ltd, to
Societe Generale Asset Management, for an amount in excess of $35 million. Post-divestment,
State Bank of India's stake in the mutual fund arm came down to 67%. In May 2011, Amundi
picked up 37% stake in SBI Funds Management that was held by Societe Generale Asset
Management, as part of a global move to merge its asset management business with Crédit
Agricole.

11
As of Sept 2015, the fund house claims to serve around 5.8 million investors through 130 points
of acceptance, 29 investor service centers, 59 investor service desks and 6 Investor Service
Points. As of August 2018, assets under management of SBI Mutual Fund are valued at
Rs.2,33,114 crore ($32.1 billion).

1.2.2 Key milestones of SBI Mutual Fund

 1987 - Establishment of SBI Mutual Fund

 1991 - Launch of SBI Magnum Equity Fund
 1999 - Launch of sector funds, India's first contra fund: SBI Contra Fund
 2004 - Joint Venture with Societe General Asset Management
 2006 - Became the first bank-sponsored fund to launch an offshore fund – SBI Resurgent
India Opportunities Fund
 2011 - Stake Transfer from SGAM to Amundi Asset Management
 2013 - Acquisition of Daiwa Mutual Fund, part of the Tokyo-based Daiwa Securities
Group
 2013 - Launch of SBI Fund Guru, an investor education initiative
 2015 - Employees' Provident Fund Organization decided to invest in the equity market
for the first time by investing Rs. 5,000 crore in the Nifty and Sensex ETFs (Exchange
Traded Fund) of SBI Mutual Fund
 2018 - First AMC in India to launch an Environment, Social and Governance (ESG) fund
viz Magnum Equity ESG Fund
 2018 - Signatory to the United Nations Principles for Responsible Investment (UN-PRI)

12
1.3 Overview of the industry

1.3.1 Concept of Mutual Fund

A mutual fund is a common pool of money into which investors place their contributions that are
to be invested in accordance with a stated objective. The ownership of the fund is thus joint of
“mutual”; the fund belongs to all investors. A single investor’s ownership of the fund is in the
same proportion as the amount of the contribution made by him or her bears to the total amount
of the fund.

Mutual funds are trusts, which accepts savings from investors and invest the same in diversified
financial instruments in terms of objectives set out in the trusts deed with the view to reduce the
risk and maximize the income and capital appreciation for distribution for the members. A
Mutual Fund is a corporation and the fund manager’s interest is to professionally manage the
funds provided by the investors and provide a return on them after deduction reasonable
management fees.

The objective sought to be achieved by Mutual Fund is to provide an opportunity for lower
income groups to acquire without much difficulty financial assets. They cater mainly to the needs
of the individual investor whose means are small and to manage investors portfolio in a manner
that provides a regular income, growth, safety, liquidity and diversification opportunities.

1.3.2 Growth of Mutual Fund Industry

th
The history of mutual funds dates support to 19 century when it was introduced in Europe, in
particular, Great Britain. Robert Fleming set up in 1868 the first investment trust called Foreign
and colonial investment trust which promised to manage the finances of the moneyed classes of
Scotland by scattering the investment over a number of different stocks. This investment trust
and other investment trusts which were afterward set up in Britain and the U.S., resembled

13
today’s close – ended mutual funds. The first mutual fund in the U.S., Massachusetts investor’s
trust, was set up in March 1924. This was the open – ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of the Second World
War slackened the pace of growth of the mutual fund industry. Innovations in products and
services increased the popularity of mutual funds in the 1950s and 1960s. The first international
stock mutual fund was introduced in the US in 1940. In 1976, the first tax exempt municipal
bond funds emerged and in 1979, the first money market mutual funds 3 were created. The latest
additions are the international bond fund in 1986 arm funds in 1990. This industry witnessed
substantial growth in the eighties and nineties when there was a significant increase in the
number of mutual funds, schemes, assets, and shareholders. In the US the mutual fund industry
registered s ten – fold growth the eighties. Since 1996, mutual fund assets have exceeds bank
deposits. The mutual fund industry and the banking industry virtually rival each other in size.

A Mutual fund is type of Investment Company that gathers assets form investors and collectively
invests in stocks, bonds, or money market instruments. The investment company concepts date to
Europe in the late 1700s, according to K. Geert Rouwenhost in the Origins Mutual Funds, when
“a Dutch Merchant and Broker Invited subscriptions from investor with limited means.” The
materialization of “investment Pooling” in England in the 1800s brought the concept closer to
U.S. shores. The enactment of two British Laws, the Joint Stock Companies Acts of 1862 and
1867, permitted investors to share in the profits of an investment enterprise, and limited investor
liability to the amount of investment capital devoted to the enterprise.

May be more outstandingly, the British fund model established a direct link with U.S. Securities
markets, serving finance the development of the post – Civil War U.S. economy. The Scottish
American Investment Trust, Formed on February1, 1873 by fund pioneer Robert Fleming,
invested in the economic potential of the United States, Chiefly through American railroad
bonds. Many other trusts followed that not only targeted investment in America, but led to the
introduction of the fund investing concept on U.S. shores in the late 1800 and early 1900s.

Nov. 1925. All these funds were open – ended having redemption feature. Similarly, they had
almost all the features of a good modern Mutual Funds – like sound investment policies and

14
restrictions, open end ness, self – liquidating features, a publicized portfolio, simple capital
structure, excellent and professional fund management and diversification etc. and hence they are
the honored grand – parents of today’s funds. Prior to these funds all the initial investment
companies were closed – ended companies. Therefore, it can be said that although the basic
concept of diversification and professional fund management, were picked by U.S.A. from
England Investment Companies “The Mutual Fund is an American Creation.”

Because of their exclusive feature, open – ended Mutual Funds rapidly became very popular. By
1929, there were 19 open – ended Mutual Funds in USA with total assets of $140 million. But
the 1929 Stock Market crash followed by great depression of 1930 ravaged the U.S. Financial
Market as well as the Mutual Fund Industry. This necessitated stricter regulation for mutual
funds and for Financial Sectors. Hence, to protect the interest of the common investors, U.S.
Government passed various Acts, such a Securities Act 1933, Securities Exchange Act 1934 and
the Investment Companies Act 1940. A committee called the National Committee of Investment
Company (Now, Investment Company Institute), was also formed to co – operate with the
Federal Regulatory Agency and to keep informed of trends in Mutual Fund Legislation.

As a result of these measure, the Mutual Fund Industry began to develop speedily and the total
net assets of the Mutual Funds Industry has increased from $448 million in 1940 to $2.5 billion
in 1950. The number of shareholder’s accounts increased from 296000, to more than one Million
during 1940 – 1951. “As a result of renewed interest in Mutual Fund Industry they grew at 18%
annual compound rate reaching peak of their rapid growth curve in the late 1960s.”

1.3.3 Organizational Structure of Mutual Funds

Mutual funds have organization structure as per their Security Exchange Board of India
guideline, Security Exchange Board of India specified authority and responsibility of Trustee and
Asset Management Companies. The objectives is to controlling, to promoted, to regulate, to
protect the investors’ right and efficient trading of units. Operation of Mutual fund start with
investors save their money on mutual fund, than Mutual Fund manager handling the funds and
strategic investment on scrip. As per the objectives of particular scheme manager selected scrips.

15
Unit value will become high when fund manager investment policy generate the return on capital
market. Unit return depends on fund return and efficient capital market. Also affects international
capital market, liquidity and at last economic policy. Below the graph indicates how the process
was going on to investors to earn returns. Mutual fund manager having high responsibility inside
of return and how to minimize the risk. When fund provided high return with high risk, investors
attract to invest more fund for same scheme.

Operation of
Mutual Fund

Returns Investors

Fund Manager
Securities

Figure 1.3.1
The Mutual fund organization as per the SEBI formation and necessary formation is needed for
sooth activities of the companies and achieved the desire objectives. Transfer agent and
custodian play role for dematerialization of the fund and unit holders hold the account statement,
but custody of the unit is on particular Asset Management Company. Custodian holds all the fund
units on dematerialization form. Sponsor had decided the responsibility of custodian when
investor to purchase the fund and to sell the unit. Application forms, transaction slip and other
requests received by transfer agent, middle men between investors and Assets Management
Companies.

16
  TRUSTEES  UNIT
HOLDERS

THE MUTUAL SPONSORS

FUNDS

TRANSFER
CUSTODIAN
AGENT

 SEBI  AMC

Figure 1.3.2
1.3.4 Origin of Mutual Fund Industry in India

th
The history of mutual funds dates backs to 19 century when it was introduced in Europe, in
particular, Great Britain. Robert Fleming set up in 1968 the first investment trust called Foreign
and Colonial Investment Trust which promised to manage the finances of the moneyed classes of
Scotland by spreading the investment over a number of different stocks. This investment trust
and other investments trusts which were subsequently set up in Britain and the US, resembled
today’s close – ended mutual funds. The first mutual in the U.S., Massachustsettes investor’s
Trust, was set up in March 1924. This was the open – ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of the Second World
War slackened the pace of mutual fund industry, innovations in products and services increased
the popularity of mutual funds in the 1990s and 1960s. The first international stock mutual fund
was introduced in the U.S. in 1940. In 1976, the first tax – exempt municipal bond funds
emerged and in 1979, the first money market mutual funds were created. The latest additions are
the international bond fund in 1986 and arm funds in 1990. This industry witnessed substantial
growth in the eighties and nineties when there was a significant increase in the number of mutual
funds, schemes, assets, and shareholders. In the US, the mutual fund industry registered a ten –
fold growth the eighties. Since 1996, mutual fund assets have exceeded bank deposits. The
mutual fund industry and the banking industry virtually rival each other in size.

17
1.3.5 Growth of Mutual Funds in India

By the year 1970, the industry had 361 Funds with combined total assets of 47.6 billion dollars
in 10.7 million shareholder’s account. However, from 1970 and on wards rising interest rates,
stock market stagnation, inflation and investors some other reservations about the profitability of
Mutual Funds, Adversely affected the growth of mutual funds. Hence Mutual Funds realized the
need to introduce new types of Mutual Funds, which were in tune with changing requirements
and interests of the investors. The 1970’s saw a new kind of fund innovation; Funds with no sales
commissions called “no load” funds. The largest and most successful no load family of funds is
the Vanguard Funds, created by John Bogle in 1977.

In the series of new product, the First Money Market Mutual Fund (MMMF) i.g. The Reserve
Fund” was started in November 1971. This new concept signaled a dramatic change in Mutual
Fund Industry. Most importantly, it attracted new small and individual investors to mutual fund
concept and sparked a surge of creativity in the industry.

1.3.6 Types of Mutual Fund

Figure 1.3.3

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 Chapter 2: Research Methodology

2.1 Objectives

 To estimate the returns/NAV of various schemes of SBI Mutual Funds

 To know investors’ preference towards SBI Mutual Funds
 To study the competitiveness of SBI Mutual Funds, HDFC Mutual Funds, Sundaram
Mutual and IDBI Mutual.

2.2 Scope

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

2.3 Research design

An exploratory style has been adopted for this report. An exploratory research is a research
conducted for a problem that has not been studies more clearly, intended to establish priorities,
develop operational definitions and improve the final research design. Exploratory research helps
determine the best research design, data-collection method and selection of subjects.

19
2.4 Sources of data collection

The data has been collected from primary and secondary sources. Primary data has been
collected with the help of Google Forms. Overview of industry has been collected from websites
and overview of the company has been collected from company’s website.

2.5 Data Analysis - Tools/Techniques

Data are process with the help of MS Excel using bar diagrams and pie charts and interpretation
has been given after every diagram and chart.

2.6 Sampling Design

A simple random sampling has been opted and data has been collected from 100 respondents.

2.7 Limitations of the study

 This study is limited to only three primary competitors of SBI Mutual Funds.
 This study is limited to the time period of 2 months only.

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 Chapter 3: Conceptual Background

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 invested in capital market instruments such as shares,
debentures, and other securities. The income earned through these investments is 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.

Investments in securities are spread across a wide cross section of industries and sectors and
thereby reduce the risk. Asset Management Companies (AMCs) normally come out with a
number of schemes with different investment objectives from time to time. A mutual fund is
required to be registered with the Securities and Exchange Board of India (SEBI), which
regulates securities markets before it can collect funds from the public.

3.1 The Mutual Fund Industry in India:

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India
(UTI) at the initiative of the Reserve Bank of India (RBI) and the Government of India. The
objective then was to attract small investors and introduce them to market investments. Since
then, the history of mutual funds in India can be broadly divided into six distinct phases.

Phase I (1964-87): Growth Of UTI:

In 1963, UTI was established by an Act of Parliament. As it was the only entity offering mutual
funds in India, it had a monopoly. Operationally, UTI was set up by the Reserve Bank of India
(RBI), but was later delinked from the RBI. The first scheme, and for long one of the largest
launched by UTI, was Unit Scheme 1964.

Later in the 1970s and 80s, UTI started innovating and offering different schemes to suit the
needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in 1971.
The first Indian offshore fund, India Fund was launched in August 1986. In absolute terms, the

21
investible funds corpus of UTI was about Rs.600 crores in 1984. By 1987-88, the assets under
management (AUM) of UTI had grown 10 times to Rs.6,700 crores.

Phase II (1987-93): Entry of Public Sector Funds:

The year 1987 marked the entry of other public sector mutual funds. With the opening up of the
economy, many public sector banks and institutions were allowed to establish mutual funds. The
State Bank of India established the first non-UTI Mutual Fund, SBI Mutual Fund in November
1987. This was followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual
Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. From 1987-88 to
1992-93, the AUM increased from Rs.6,700 crores to Rs.47,004 crores, nearly seven times.
During this period, investors showed a marked interest in mutual funds, allocating a larger part of
their savings to investments in the funds.

Phase III (1993-96): Emergence of Private Funds:

A new era in the mutual fund industry began in 1993 with the permission granted for the entry of
private sector funds. This gave the Indian investors a broader choice of 'fund families' and
increasing competition to the existing public sector funds. Quite significantly foreign fund
management companies were also allowed to operate mutual funds, most of them coming into
India through their joint ventures with Indian promoters.

The private funds have brought in with them latest product innovations, investment management
techniques and investor-servicing technologies. During the year 1993-94, five private sector fund
houses launched their schemes followed by six others in 1994-95.

22
Phase IV (1996-99): Growth and SEBI Regulation:

Since 1996, the mutual fund industry scaled newer heights in terms of mobilization of funds and
number of players. Deregulation and liberalization of the Indian economy had introduced
competition and provided impetus to the growth of the industry.

A comprehensive set of regulations for all mutual funds operating in India was introduced with
SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all funds.
Erstwhile UTI voluntarily adopted SEBI guidelines for its new schemes. Similarly, the budget of
the Union government in 1999 took a big step in exempting all mutual fund dividends from
income tax in the hands of the investors. During this phase, both SEBI and Association of Mutual
Funds of India (AMFI) launched Investor Awareness Programme aimed at educating the
investors about investing through MFs.

Phase V (1999-2004): Emergence of a Large and Uniform Industry:

The year 1999 marked the beginning of a new phase in the history of the mutual fund industry in
India, a phase of significant growth in terms of both amount mobilized from investors and assets
under management. In February 2003, the UTI Act was repealed. UTI no longer has a special
legal status as a trust established by an act of Parliament. Instead it has adopted the same
structure as any other fund in India - a trust and an AMC.

UTI Mutual Fund is the present name of the erstwhile Unit Trust of India (UTI). While UTI
functioned under a separate law of the Indian Parliament earlier, UTI Mutual Fund is now under
the SEBI's (Mutual Funds) Regulations, 1996 like all other mutual funds in India.
The emergence of a uniform industry with the same structure, operations and regulations make it
easier for distributors and investors to deal with any fund house. Between 1999 and 2005 the size
of the industry has doubled in terms of AUM which have gone from above Rs.68,000 crores to
over Rs.1,50,000 crores.

Phase VI (From 2004 Onwards): Consolidation and Growth:

The industry has lately witnessed a spate of mergers and acquisitions, most recent ones being the
acquisition of schemes of Allianz Mutual Fund by Birla Sun Life, PNB Mutual Fund by
Principal, among others. At the same time, more international players continue to enter India
including Fidelity, one of the largest funds in the world.
23
3.2 Advantages of Mutual Funds:

3.2.1 Diversification Benefits:

Diversified investment improves the risk return profile of the portfolio. Optimal diversification
has limitations due to low liquidity among small investors. The large corpus of a mutual fund as
compared to individual investments makes optimal diversification possible.

3.2.2 Low Transaction Costs:

Mutual fund transactions are generally very large. These large volumes attract lower brokerage
commissions and other costs as compared to smaller volumes of the transactions that individual
investors enter into. The brokers quote a lower rate of commission due to two reasons. The first
is competition for the institutional investor business and the second is that the overhead cost
executing a trade does not differ much for large and small orders.

3.2.3 Availability of Various Schemes:

There are four basic types of mutual funds: equity, bond, hybrid and money market. Equity funds
concentrate their investments in stocks. Similarly bond funds primarily invest in bonds and other
securities. Equity, bond and hybrid funds are referred to as short-term funds because they invest
in securities that generally mature in about one year or less.

24
 Chapter 4: Data Analysis and Findings

4.1 Analysis of NAVs of various SBI Mutual Fund Schemes for the month of
May and June 2019

4.1.1 SBI Blue Chip Fund NAV:

May 2019 June 2019

Figure 4.1.1 a Figure 4.1.1 b

Finding: There is an increase of Rs.1 (approx.) in the NAV of SBI Blue Chip Fund in the month
of June 2019 as compared to the month of May 2019.

4.1.2 SBI Small Cap Fund NAV:

May 2019 June 2019

Figure 4.1.2 a Figure 4.1.2 b

Finding: There is an increase of Rs.1 (approx.) in the NAV of SBI Small Cap Fund in the month
of June 2019 as compared to the month of May 2019.

25
4.1.3 SBI Large & Midcap Fund NAV:
May 2019 June 2019

Figure 4.1.3 a Figure 4.1.3 b

Finding: There is an increase of Rs.1 (approx.) in the NAV of SBI Large & Midcap Fund in the
month of June 2019 as compared to the month of May 2019.

4.1.4 SBI Focused Equity Fund NAV:

May 2019 June 2019

Figure 4.1.4 a Figure 4.1.4 b

Finding: There is an increase of Rs.1 (approx.) in the NAV of SBI Focused Equity Fund in the
month of June 2019 as compared to the month of May 2019.

4.1.5 SBI Magnum Multicap Fund NAV:

May 2019 June 2019

Figure 4.1.5 a Figure 4.1.5 b

Finding: There is an increase of Rs.1 (approx.) in the NAV of SBI Magnum Multicap Fund in the
month of June 2019 as compared to the month of May 2019.
26
4.2 Analysis of Investors’ preference towards SBI Mutual Funds

4.2.1 Investors Age Distribution

Figure 4.2.1

Inference: Out of 100 investors, 12% investors are below the age of 25 years, 63% investors are
between 25-50 years and 25% investors are above the age of 40 years.

4.2.2 Investors Qualification:

Figure 4.2.2
Inference: Out of 100 investors 63% are graduate, 13% are under graduate and 24% are others.

27
4.2.3 Investors Occupations

Figure 4.2.3
Inference: Out of 100 investors 37 are in Govt. Sector, 22 are in Private Sector, 17 are in own
Business, 5 from agriculture and 19 are from various other sectors.

4.2.4 Investors Income Distribution

Figure 4.2.4
Inference: Out of 100 investors, the income of 12 investors is below Rs.1,00,000, 45 investors’
income is between Rs.1,00,000-5,00,000, 34 investors’ income is between Rs.5,00,000-
10,00,000 and 9 investors has their income greater than Rs.10,00,000.

28
4.2.5 Investors preference towards type of Investment

Figure 4.2.5
Inference: Out of 100 investors 36% are investing in Mutual Funds, 13% are investing in
Insurance, 20% are investing in FDs, 7% are investing Gold, 13% are investing in real estate, 8%
are investing in share and debenture and other investing instruments.

4.2.6 Factors affecting while investing

Figure 4.2.6
Inference: Out of 100 investors, 65% are investing due to high return, 18% are investing due to
low risk, 13% are investing due to liquidity and 4% are due to trust in SBIMF.

29
4.2.7 Awareness regarding Mutual Funds

Figure 4.2.7
Inference: Out of 100 investors 73% are aware of Mutual Funds and 27% are not aware.

4.2.8 Medium to know about Mutual Funds

Figure 4.2.8
Inference: Out of those who invest in Mutual Funds (i.e. 73 investors), 55% know about Mutual
Funds through banks, 11% are from Financial Advisor, 18% know through advertisement and
16% from peer group.

4.2.9 Invested in Mutual Funds

30
 Figure 4.2.9
Inference: Out of 73 investors, only 33% are investing and 67% are not investing.

4.2.10 Resong for not investing in Mutual Funds

Figure 4.2.10
Inference: Out of those who do not invest in Mutual Funds (49 investors) 33 are not aware of
mutual funds, 13 are not investing due high risk and 3 have no specific reason.
4.2.11 Preference towards Mutual Fund while investing

31
 Figure 4.2.11
Inference: Out of 24 investors, 50% are investing in SBIMF, 13% are investing in HDFC, 25%
are investing in Sundaram, 8% are investing in IDBI and 4% are investing in other Mutual Funds

4.2.12 If SBIMF, why

Figure 4.2.12
Inference: Out of those who is investing in SBI MF (i.e. 12 investors) 25% are investing in SBI
MF due to high return, 58% are investing due to the name of SBI /MF and 17% are investing
from Agent’s Advice.
4.2.13 If not SBI MF, why
32
 Figure 4.2.13
Inference: Out of 12 investors, 50% investors are not aware, 33% investors are not investing due
to low return and 17% are from agent’s advice.

4.2.14 Which Asset Management Co. will you prefer to invest money?

Figure 4.2.14
Inference: Out of 70 investors, 28 prefer SBI AMC, 15 prefer HDFC, 10 prefer Sundaram and
17 prefer IDBI.
*
4.2.15 Which channel will you prefer while investing in Mutual Fund?
33
 Figure 4.2.15
Inference: Out of 60 investors, 54% are investing through Banks, 23% from AMC and 23%
from Financial Adviser.

4.2.16 Mode of Investment

Figure 4.2.16
Inference: Out of 60 investors, 58% are investing in SIP and 42% are invesing in one time.

4.2.17 Type of Fund

34
 Figure 4.2.17
Inference: Out of 60 investors, 53% are investing in equity funds, 30% are investing hybrid
funds and 17% are investing debt funds.

4.2.18 Like to receive the returns every year

Figure 4.2.18
Inference: Out of 60 investors, 35 like to receive return on growth in NAV, 15 like to receive
divident payout and 10 like to receive dividend payout.

35
 Chapter 5: Discussion and Conclusion

1. According to my survey in Delhi, maximum numbers of investors fall in the age

group of 25-50 years. The second most investors were in the age group of above
50 years and the least were in the age group of below 25 years.
2. According to my survey in Delhi, most of the investors were graduate and post
graduate and below HSC there were very few in numbers.
3. In annual Income group, between Rs.1,00,000-5,00,000 were more in numbers
who invested in mutual fund, the second most were in the Income group
between Rs.5 Lakh and the least were in the group of above Rs.10 Lakh.
4. Only 33% respondents invested in Mutual Fund.
5. Mostly respondents preferred High Return while investing, the second most
preferred Low Risk then liquidity and the least preferred Trust.
6. Among 100 respondents, 33% invested in mutual funds and 67% did not
invested in mutual funds.
7. Most of the investors did not invested in SBI MF due to unawareness of SBI
MF, the second most due to less return and the rest due to agent’s advice.
8. Out of 60 investors, 43% preferred one time investment and 58% preferred SIP
out of both type of mode of investment.
9. The most preferred portfolio was equity, the second most was hybrid (mixture
of equity and debt, and the least preferred was debt.
10.Maximum number of investors preferred growth option for returns, the second
most preferred dividend payout and then dividend reinvestment.

36
 Chapter 6: Recommendations

a. To regulate entry and exit loads effectively as it create a lot of confusion during
actual settlement of costs and bills.
b. To better operations management so as to reduce the time lag and improve
customer feedback.
c. To improve market penetration by targeting not only metros but mini-metros
and smaller towns more effectively.
d. To come up with more innovative schemes and products so as to expand over
the largest customer base as possible.
e. The most vital problem spotted is of ignorance. Investors should be made aware
of the benefits. Nobody will invest until and unless he is fully convinced.
Investors should be made to realize that ignorance is no longer bliss and what
they are losing by not investing.
f. Mutual 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.
g. Before making any investment Financial Advisors should first enquire about the
risk tolerance of the investors/customers, their need and time (how long they
want to invest). By considering these three things can take the customers into
consideration.

37
 Bibliography

“A right way to invest in SBI Mutual Funds” by SBI Mutual Funds

www.google.com
www.sbimf.com
www.moneycontrol.com

38
 Annexure

Investors' Preference towards Mutual Funds

Investor's Age
 Below 25
 25-45
 Above 45

Investor's Qualification
 Graduate/PG
 Undergraduate
 Others

Investor's Occupation
 Govt. Sector
 Private Sector
 Business
 Agriculture
 Others

Investor's Income
 Below Rs.1,00,000
 1,00,000-5,00,000
 5,00,000-10,00,000
 Above 10,00,000

Investor's Preference about Type of Investment

 Fixed Deposit
 Insurance
 Mutual Funds
39
  Post Office/NSE
 Shares/Debentures
 Gold/Silver
 Real Estate

Factors affecting while Investing

 Liquidity
 Low Risk
 High Return
 Trust

Awareness regarding Mutual Funds

 Aware
 Not Aware

Medium to know about Mutual Funds

 Advertisement
 Peer Group
 Banks
 Financial Advisor

Invested in Mutual Funds

 Invested
 Not Invested

Reason for not investing in Mutual Funds

 Not aware of MF
 High Risk
 No specific reason
40
Preference towards Mutual Funds
 SBI
 HDFC
 Sundaram
 IDBI
 Others

If SBIMF, why?
 Because of SBI Name
 Give high return
 Agent's Advice

If not SBI MF, why?

 Not aware
 Less Return
 Agent's Advice

Which Asset Management Co. will you prefer to invest money? *

 SBIMF
 HDFC
 Sundaram
 IDBI

Which channel will you prefer while investing in Mutual Fund? *

 Financial Advisor
 Banks
 AMC

Mode of Investment

41
  One Time Investment
 SIP

Type of Fund
 Equity
 Hybrid
 Debt

Like to receive the returns every year

 Growth
 Dividend Payout
 Dividend Re-investment

42