Rupali Project

MUTUAL FUND INVESTMENT IN INDIA 2018-19
MUTUAL FUND
INVESTMENT IN
INDIA
1
CHAPTER 1
INTRODUCTION OF THE
STUDY
CONTENTS
1.1 INTRODUCTION
1.2 HISTORY
1.3 DEFINITION
1.4 CHARACTERISTICS
2
1.1 INTRODUCTION
Mutual fund is a trust that pools the savings of a number of investors who share
a common financial goal. This pool of money is invested in accordance with a stated
objective. The joint ownership of the fund is thus ―Mutual‖, i.e. the fund belongs to
all investors. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciations realized are shared by its
unit holders in proportion the number of units owned by them. Thus a Mutual Fund
is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively
low cost. A Mutual Fund is an investment tool that allows small investors access to
a well-diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The funds Net Asset value (NAV) is determined each day.
Investments in securities are spread across a wide cross-section of industries

and sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same direction in the same proportion at the same time.
Mutual fund issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual funds are known as unit holders.
3
1.2 HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

 The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank.
Though the growth was slow, but it accelerated from the year 1987 when non-UTI
players entered the Industry.
 In the past decade, Indian mutual fund industry had seen a dramatic
improvement, both qualities wise as well as quantity wise. Before, the monopoly of
the market had seen an ending phase; the Assets Under Management (AUM) was
Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470
billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion.
 The Mutual Fund Industry is obviously growing at a tremendous space with
the mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
First Phase – 1964-87
 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by

the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and
the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
 1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
4
December 1990.At the end of 1993, the mutual fund industry had assets under
management of Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
 The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
Fourth Phase – since February 2003
 In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit
 Trust of India with assets under management of Rs.29,835 crores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB
and LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations.
5
1.3 DEFINITION
A mutual fund is a type of financial vehicle made up of a pool of

money collected from many investors to invest in securities such as stocks, bonds,
money market instruments, and other assets. Mutual funds are operated by
professional money managers, who allocate the fund's assets and attempt to
produce capital gains or income for the fund's investors. A mutual
fund's portfolio is structured and maintained to match the investment objectives
stated in its prospectus.
Mutual funds give small or individual investors access to professionally

managed portfolios of equities, bonds and other securities. Each shareholder,
therefore, participates proportionally in the gains or losses of the fund. Mutual
funds invest in a vast number of securities, and performance is usually tracked as
the change in the total market cap of the fund—derived by the aggregating
performance of the underlying investments.
The Basics of a Mutual Fund

Mutual funds pool money from the investing public and use that money to buy
other securities, usually stocks and bonds. The value of the mutual fund company
depends on the performance of the securities it decides to buy. So, when you buy a
unit or share of a mutual fund, you are buying the performance of its portfolio or
more precisely, a part of the portfolio's value.
6
When an investor subscribes for the units of a mutual fund, he becomes part
owner of the assets of the fund in the same proportion as his contribution amount
put up with the corpus (the total amount of the fund). Mutual Fund investor is also
known as a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market
instruments (such as shares, debentures etc) is reflected in the Net Asset Value
(NAV) of the scheme. NAV is defined as the market value of the Mutual Fund
7
scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the
market value of scheme's assets by the total number of units issued to the investors.
When an investor subscribes for the units of a mutual fund, he becomes part
owner of the assets of the fund in the same proportion as his contribution amount
put up with the corpus (the total amount of the fund). Mutual Fund investor is also
known as a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market
instruments (such as shares, debentures etc) is reflected in the Net Asset Value
(NAV) of the scheme. NAV is defined as the market value of the Mutual Fund
scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the
market value of scheme's assets by the total number of units issued to the investors.
A diversified portfolio of high-performing mutual funds can provide an

investor with an excellent vehicle for accumulating wealth. However, with
thousands of possibilities to choose from, selecting the proper funds to invest in
can be an overwhelming task. Fortunately, there are certain characteristics the best-
performing funds seem to share. Using a list of basic characteristics as a way of
filtering, or paring down, the massive list of all possible funds available for
consideration can greatly simplify the task of fund selection, as well as increase the
probability an investor's choices become profitable.
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1.4 CHARACTERISTICS
1) Low Fees or Expenses
Mutual funds with relatively low expense ratios are generally always
desirable, and low expenses do not mean low performance. In fact, it is very often
the case that the best-performing funds in a given category are among those that
offer expense ratios below the category average.
There are some funds that charge substantially higher-than-average fees and justify
the higher fees by pointing to the fund's performance. But the truth is there is very
little genuine justification for any mutual fund having an expense ratio much over
1%.
2) Consistently Good Performance
Most investors utilize investing in mutual funds as part of their retirement

planning. Therefore, investors should select a fund based on its long-term
performance, not on the fact that it had one really great year. Consistent
performance by the fund's manager, or managers, over a long period of time
indicates the fund will likely pay off well for an investor in the long-run. A fund's
average return on investment (ROI) over a period of 20 years is more important
than its one-year or three-year performance. The best funds may not produce the
highest returns in any one year but consistently produce good, solid returns over
time. It helps if a fund has been around long enough for investors to see how well it
manages during bear market cycles. The best funds are able to minimize losses
during difficult economic periods or cyclical industry downturns.
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3) Sticking to a Solid Strategy
The best-performing funds perform well because they are directed by a good
investment strategy. Investors should be clearly aware of the fund's investment
objective and the strategy the fund manager uses to achieve that objective.
Be wary of what is commonly called "portfolio drift." This occurs when the fund
manager drifts off course from the fund's stated investment goals and strategy in
such a way that the composition of the fund's portfolio changes significantly from
its original goals; for example, it may shift from being a fund that invests in large-
cap stocks that pay above-average dividends to being a fund mainly invested in
small-cap stocks that offer little or no dividends at all. If a fund's investing strategy
changes, the change and the reason for it should be clearly explained to fund
shareholders by the fund manager.
4) Trustworthy, With Solid Reputations

The best funds are perennially developed by well-established, trustworthy names in
the mutual fund business, such as Fidelity, T. Rowe Price and Company, and the
Vanguard Group. With all the unfortunate investing scandals over the past 20
years, investors are well-advised to do business only with firms in which they have
the utmost confidence in regard to honesty and fiscal responsibility. The best
mutual funds are invariably offered by companies that are transparent and upfront
about their fees and operations, and they do not try to hide information from
potential investors or in any way mislead them.
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CHAPTER 2
RESEARCH METHODOLOGY
CONTENTS:-
2.1 OBJECTIVES OF THE STUDY

2.2 HYPOTHESIS
2.3 SCOPE OF THE STUDY
2.4 LIMITATIONS OF THE STUDY
2.5 SIGNIFICANCE OF THE STUDY
2.6 METHOD OF COLLECTION OF DATA
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2.1 OBJECTIVES OF THE STUDY
1. The objective of the research is to study and analyze the awareness level of
investors of mutual funds.
2. To measure the satisfaction level of investors regarding mutual funds.
3. An attempt has been made to measure various variable’s playing in the minds
of investors in terms of safety, liquidity, service, returns, and tax saving.
4. To get insight knowledge about mutual funds
5. Understanding the different ratios & portfolios so as to tell the distributors

about these terms, by this, managing the relationship with the distributors
6. To know the mutual funds performance levels in the present market
7. To analyze the comparative study between other leading mutual funds in the
present market.
8. To know the awareness of mutual funds among different groups of investors.
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2.2 HYPOTHESIS
Small investors face lot o f problems while investing in the share market due
to lack o f professional know-how, limited money, lack o f information etc. Mutual
funds have come as a much needed help to these investors. It is a special type o f
investment instrument through which the investor’s savings are pooled and
invested by expert fund managers in a wide variety of portfolios consisting o f
equity shares and debt instruments in such a way that the risk is minimized and
safety o f the investment is ensured.
Monthly Income Plans (MIPs ) invests maximum o f their total corpus in
debt instruments while they take minimum exposure in equities. It gets benefit o f
both equity and debt market. The primary objective is generation o f regular return
beating the inflation, through investment in Debt and Money Market Schemes.
Secondary objective is generation of long term capital appreciation by investing a
portion o f funds in Equity market. These funds have long term time horizon and
are more tax efficient as compared to fixed deposits.
MIP schemes rank slightly high on the risk-retum matrix when compared
with other debt schemes. Since MIPs are market-linked, to the extent o f their
equity portfolio which is generally o f the order o f 15 -20% , they are less risky
than balanced funds where they usually have a 60 -70% exposure to equities, but
riskier than pure debt funds. One cannot accurately forecast how the equity and
debt markets will behave over any reasonable period. It raises the risk o f capital
erosion and non-payment o f dividend for investors. Most MIP fund managers have
been aggressive in the past for increasing their equity exposure to up to 30% when
they were bullish about the stock market. While this may boost the overall returns
o f the fund during a bull market, the fund N A V may take a beating during market
fall. However, the fund manager’s skill.
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2.3 SCOPE OF THE STUDY
A big boom has been witnessed in Mutual Fund Industry in resent times. A large
number of new players have entered the market and trying to gain market share
in this rapidly improving market.
The research was carried on in Dehradoon. I had been sent at one of the branch
of State Bank of India Dehradoon where I completed my Project work. I
surveyed on my Project Topic ―A study of preferences of the Investors for
investment in Mutual Fund‖ on the visiting customers of the SBI Boring Canal
Road Branch.
The study will help to know the preferences of the customers, which company,
portfolio, mode of investment, option for getting return and so on they prefer.
This project report may help the company to make further planning and strategy.
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2.4 LIMITATIONS OF THE STUDY
 Some of the persons were not so responsive.
Possibility of error in data collection because many of investors may have not given
actual answers of my questionnaire.
 Sample size is limited to 200 visitors of State Bank of India , Boring Canal Road
Branch, Dehradoon out of these only 120 had invested in Mutual Fund. The sample.
size may not adequately represent the whole market.
 Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
 The research is confined to a certain part of project.
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2,5 SIGNIFICANCE OF THE STUDY
The mutual fund is managed by a professional investment manager who buys and
sells securities for the most effective growth of the fund. As a mutual fund investor,
you become a ―shareholder‖ of the mutual fund company. When there are profits you
will earn dividends. When there are losses, your shares will decrease in value.
Mutual funds are, by definition, diversified, meaning they are made up a lot of
different investments. That tends to lower your risk (avoiding the old ―all of your eggs
in one basket‖ problem).
Because someone else manages them, you don’t have to worry about diversifying
individual investments yourself or doing your own record keeping. That makes it
easier to just buy them and forget about them. That’s not always the best strategy,
however — your money is in someone else’s hands, after all.
Since the fund manager’s compensation is based on how well the fund performs, you
can be assured they will work diligently to make sure the fund performs well.
Managing their fund is their full-time job!
Mutual funds can be open-ended or closed-ended. But many people consider all
mutual funds to be open-ended, while putting closed-ended funds in another category.
―Open-ended‖ means that shares are issued in the fund (or sold back to the fund)
whenever anyone wants them. With closed-ended funds, only a certain number of
shares can be issued for a particular fund, and they can only be sold back to the fund
when the fund itself terminates. (You can sell closed-ended funds to other investors on
the secondary market, though.)
Load refers to the sales charges added to a mutual fund when you purchase it. The
load charge goes to the fund salesperson as a commission and payment for their
research services. Load charges can be up to 8.5 percent of the selling price and can be
figured in as a front-end load (meaning you pay it when you buy the mutual fund) or a
back-end load (meaning you pay when you sell the mutual fund).
Many mutual funds are no-load funds. Yes, that means there is no sales fee charged
and the fund is direct-marketed so you can buy it without the help of a salesperson.
With the wealth of information on the Internet today, it is certainly easier to make
smart choices yourself to save money.
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2.6 METHOD OF COLLECTION OF DATA
RESEARCH DESIGN
Research design is the arrangement of condition for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with the economy in
procedure. It is the blueprints for collection, measurement and analysis of data.
Type of Research: Analytical Research
Under the analytical research, the researcher has to use facts or information already
available and analyze the facts and information to make a critical evaluation of the
material. The research is designed to study the performance of insurance companies in
the post-liberalization era.
The methodology followed for research is as following:
1. Survey of concerned literature
2. Collecting data:
 Quantitative
 Qualitative
3. After the collection of data the raw data is processed through editing, loading,
classification and tabulation to make analysis of the data of information
DATA COLLECTION
1. PRIMARY DATA
These include the survey or questionnaire method, telephonic interview as
well as the personal interview methods of data collection
2. SECONDARY DATA
The secondary data as it has always been important for the completion of
any report provides a reliable, suitable, adequate and specific knowledge.
The standard cost reports, working sheets provide the knowledge and
information regarding the relevant subjects.
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CHAPTER 3
LITERATURE REVIEW
18
LITERATURE REVIEW
Mutual funds attracted the interests of academicians, researchers and financial

analysts mostly since 1986. A number of articles have been published in financial
dailies like economic times, business line and financial express, periodicals like capital
market, Business India etc., and in professional and research journals. Literature
Review on performance evaluation of mutual fund is enormous. Various studies have
been carried out in India and abroad to evaluate the performance of mutual funds
schemes from time to time. A few research studies that have influenced substantially
in preparing the thesis are discussed below in this chapter.
Jack Treynor (1965) developed a methodology for performance evaluation of a

mutual fund that is referred to as reward to volatility measure, which is defined as
average excess return on the portfolio. This is followed by Sharpe (1966) reward to
variability measure, which is average excess return on the portfolio divided by the
standard deviation of the portfolio.
Sharpe (1966) developed a composite measure of performance evaluation and

imported superior performance of 11 funds out of 34 during the period 1944-63.
Michael C. Jensen (1967) conducted an empirical study of mutual funds in the period
of 1954-64 for 115 mutual funds. The results indicate that these funds are not able to
predict security prices well enough to
Outperform a buy the market and hold policy. The study ignored the gross
management expenses to be free. There was very little evidence that any individual
fund was able to do significantly better than which investors expected from mere
random chance.
Jensen (1968) developed a classic study; an absolute measure of performance

based upon the Capital Asset Pricing Model and reported that mutual funds did not
appear to achieve abnormal performance when transaction costs were taken into
account.
Carlsen (1970) evaluated the risk-adjusted performance and emphasized that the
conclusions drawn from calculations of return depend on the time period, type of fund
19
and the choice of benchmark. Carlsen essentially recalculated the Jensen and Shape
results using annual data for 82 common stock funds over the 1948-67 periods. The
results contradicted both Sharpe and Jensen measures.
Fama (1972) developed a methodology for evaluating investment performance of

managed portfolios and suggested that the overall performance could be broken down
into several components.
John McDonald (1974) examined the relationship between the stated fund
objectives and their risks and return attributes. The study concludes that, on an average
the fund managers appeared to keep their portfolios within the stated risk. Some funds
in the lower risk group possessed higher risk than funds in the most risky group.
increase in stock price index.
20
CHAPTER 4
DATA ANALYSIS,
INTERPRETATION AND
PRESENTATION
CONTENTS:-
4.1 DATA ANALYSIS

4.2 PRODUCTS OF SBI MUTUAL FUND
4.3 AWARDS AND ACHIEVEMENTS
4.4 INTERPRETATION OF THE DATA
21
4.1 DATA ANALYSIS, INTERPRETATION AND PRESENTATION
INTRODUCTION TO SBI MUTUAL FUND
SBI Funds Management Pvt. Ltd. is one of the leading fund houses in
the country with an investor base of over 4.6 million and over 20 years of
rich experience in fund management consistently delivering value to its
investors. SBI Funds Management Pvt. Ltd. is a joint venture between
'The State Bank of India' one of India's largest banking enterprises, and
Société Générale Asset Management (France), one of the world's leading
fund management companies that manages over US$ 500 Billion
worldwide.
Today the fund house manages over Rs 28500 crores of assets and has
a diverse profile of investors actively parking their investments across 36
active schemes. In 20 years of operation, the fund has launched 38
schemes and successfully redeemed 15 of them, and in the process, has
rewarded our investors with consistent returns. Schemes of the Mutual
Fund have time after time outperformed benchmark indices, honored us
with 15 awards of performance and have emerged as the preferred
investment for millions of investors. The trust reposed on us by over 4.6
million investors is a genuine tribute to our expertise in fund management.
SBI Funds Management Pvt. Ltd. serves its vast family of investors
through a network of over 130 points of acceptance, 28 Investor Service
Centres, 46 Investor Service Desks and 56 District Organizers.SBI Mutual
is the first bank-sponsored fund to launch an offshore fund – Resurgent India
Opportunities Fund.
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4.2 PRODUCTS OF SBI MUTUAL FUND
Equity schemes
The investments of these schemes will predominantly be in the stock

markets and endeavor will be to provide investors the opportunity to
benefit from the higher returns which stock markets can provide.
However they are also exposed to the volatility and attendant risks of
stock markets and hence should be chosen only by such investors who
have high risk taking capacities and are willing to think long term. Equity
Funds include diversified Equity Funds, Sectoral Funds and Index Funds.
Diversified Equity Funds invest in various stocks across different sectors
while sectoral funds which are specialized Equity Funds restrict their
investments only to shares of a particular sector and hence, are riskier
than Diversified Equity Funds. Index Funds invest passively only in the
stocks of a particular index and the performance of such funds move with
the movements of the index.
 Magnum COMMA Fund

 Magnum Equity Fund
 Magnum Global Fund
 Magnum Index Fund
 Magnum Midcap Fund
 Magnum Multicap Fund
 Magnum Multiplier plus 1993
 Magnum Sectoral Funds Umbrella
 MSFU- Emerging Business Fund

 MSFU- IT Fund
 MSFU- Pharma Fund
 MSFU- Contra Fund
 MSFU- FMCG Fund
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 SBI Arbitrage Opportunities Fund

 SBI Blue chip Fund
 SBI Infrastructure Fund - Series I
 SBI Magnum Taxgain Scheme 1993
 SBI ONE India Fund
 SBI TAX ADVANTAGE FUND - SERIES I
DEBT SCHEMES
Debt Funds invest only in debt instruments such as Corporate Bonds,

Government Securities and Money Market instruments either completely
avoiding any investments in the stock markets as in Income Funds or Gilt
Funds or having a small exposure to equities as in Monthly Income Plans
or Children's Plan. Hence they are safer than equity funds. At the same
time the expected returns from debt funds would be lower. Such
investments are advisable for the risk-averse investor and as a part of the
investment portfolio for other investors.
 Magnum Children’s benefit Plan

 Magnum Gilt Fund
 Magnum Income Fund
 Magnum Insta Cash Fund
 Magnum Income Fund- Floating Rate Plan
 Magnum Income Plus Fund
 Magnum Insta Cash Fund -Liquid Floater Plan
 Magnum Monthly Income Plan
 Magnum Monthly Income Plan- Floater
 Magnum NRI Investment Fund
 SBI Premier Liquid Fund
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BALANCED SCHEMES
Magnum Balanced Fund invests in a mix of equity and debt

investments. Hence they are less risky than equity funds, but at the same
time provide commensurately lower returns. They provide a good
investment opportunity to investors who do not wish to be completely
exposed to equity markets, but is looking for higher returns than those
provided by debt funds.
COMPETITORS OF SBI MUTUAL FUND
Some of the main competitors of SBI Mutual Fund in Dehradoon are as Follows:
i.ICICI Mutual Fund

ii.Reliance Mutual Fund
iii.UTI Mutual Fund
iv.Birla Sun Life Mutual Fund
v.Kotak Mutual Fund
vi.HDFC Mutual Fund
vii.Sundaram Mutual Fund
viii.LIC Mutual Fund
ix.Principal
x.Franklin Templeton
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4.3 AWARDS AND ACHIEVEMENTS
SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award - 8
times, CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005-2006) and
most recently with the CNBC TV - 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards
for our schemes.
26
27
4.4 INTERPRETATION OF THE DATA
Age distribution of the Investors of Dehradoon
Age Group <= 30 31-35 36-40 41-45 46-50 >50
No. of Investors 12 18 30 24 20 16
35
Investors invested in Mutual Fund
30
25
20
15 30
24
10 18 20
16
5 12
0
<=30 31-35 36-40 41-45 46-50 >50
Age group of the Investors
Interpretation:
According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in the age
group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20%
and the least investors are in the age group of below 30 yrs.
(b). Educational Qualification of investors of Dehradoon

Educational Number of
Qualification Investors
Graduate/ Post Graduate 88
Under Graduate 25
Others 7
Total 120
28
6%
23%
71%
Graduate/Post Graduate Under Graduate Others
Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in Dehradoon are Graduate/Post
Graduate, 23% are Under Graduate and 6% are others (under HSC).
c). Occupation of the investors of Dehradoon
Occupation No. of
. Investors
Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6
29
50
No. of Investors
40
30
20 45
35 30
10
4 6
0
Govt. Pvt. Service Business Agriculture Others
Service
Occupation of the customers
Interpretation:
In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.
(d). Monthly Family Income of the Investors of Dehradoon.
Income Group No. of

Investors
<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32
30
50
45
40
No. of Investors
35
30
25
20 43
15 32
28
10
5 12
5
0
<=10 10-15 15-20 20-30 >30
Income Group of the Investorsn (Rs. in Th.)
Interpretation:
In the Income Group of the investors of Dehradoon, out of 120 investors, 36% investors that is the
maximum investors are in the monthly income group Rs. 20,001 to Rs. 30,000, Second one i.e. 27%
investors are in the monthly income group of more than Rs. 30,000 and the minimum investors i.e. 4%
are in the monthly income group of below Rs. 10,000
(2) Investors invested in different kind of investments.
Kind of No. of
Investments Respondents
Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
Post office (NSC) 75
Shares/Debentures 50
Gold/Silver 30
31
Real Estate 65
Kinds of Investment 65
30
r
50
ve
NS /Sil
75
d
ol
C)
120
G
152
ce(
ffi
ce
148
O
an
st
195
ur
Po
c
In
A/
0 50 100 150 200 250

g n
vi
Sa
No.of Respondents
Interpretation: From the above graph it can be inferred that out of 200 people,
97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,
60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in
Gold/Silver and 32.5% in Real Estate.
3. Preference of factors while investing
Factors (a) (b) (c) (d)

Liquidit Lo High Trus
y w Retur t
Ris n
k
No. of 40 60 64 36
Respondent
s
32
18% 20%
32% 30%
Liquidity Low Risk High Return Trust
Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest
where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust
4. Awareness about Mutual Fund and its Operations
Response Yes No
No. of Respondents 135 65
33
33%
67%
Yes No
Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations
and 33% are not aware of Mutual Fund and its operations.
5. Source of information for customers about Mutual Fund
Source of information No. of Respondents

Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62
34
70
No. of Respondents
60
50
40
30 62
20
25 30
10 18
0
Advertisement Peer Group Bank Financial
Advisors
Source of Information
Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most important source of
information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund
Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through
Advertisement.
6. Investors invested in
Mutual Fund
Response No. of
Respondents
YES 120
NO 80
Total 200
35
No
40%
Yes
60%
Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in Mutual
Fund.
36
ADVANTAGES OF MUTUAL FUND
Economies of Scale
The easiest way to understand economies of scale is by thinking about volume
discounts; in many stores, the more of one product you buy, the cheaper that product
becomes. For example, when you buy a dozen donuts, the price per donut is usually
cheaper than buying a single one. This also occurs in the purchase and sale of
securities. If you buy only one security at a time, the transaction fees will be relatively
large.
Mutual funds are able to take advantage of their buying and selling volume to
reduce transaction costs for investors. When you buy a mutual fund, you are able to
diversify without the numerous commission charges. Imagine if you had to buy each
of the 10-20 stocks needed for diversification. The commission charges alone would
eat up a good chunk of your investment. Take into account additional transaction fees
for every time you want to modify your portfolio and as you can see the costs start to
add up. With mutual funds, you can make transactions on a much larger scale for less
money.
Divisibility
Many investors don't have the exact sums of money to buy round lots of
securities. One or two hundred dollars is usually not enough to buy a round lot of a
stock, especially after deducting commissions. Investors can purchase mutual funds in
smaller denominations, usually ranging from $100 to $1,000 minimums, although
some funds will have a $2,500 minimum. Smaller denominations of mutual funds give
investors the ability to make periodic investments through monthly purchase plans
while taking advantage of dollar-cost averaging. So, rather than having to wait until
you have enough money to buy higher-cost investments, you can get in right away
with mutual funds. This provides an additional advantage: liquidity.
37
Liquidity
Another advantage of mutual funds is that you can get in and out with relative
ease. In general, you are able to sell your mutual funds in a short period of time
without there being much difference between the sale price and the most current
market value. However, it is important to watch out for any fees associated with
selling, including back-end load fees. Also, unlike stocks and exchange-traded
funds (ETFs), which trade any time during market hours, mutual funds transact only
once per day after the fund's net asset value (NAV) is calculated.
Professional Management
When you buy a mutual fund, you are also choosing a professional money
manager. This manager will use the money that you invest to buy and sell stocks that
he or she has carefully researched. Therefore, rather than having to thoroughly
research every investment before you decide to buy or sell, you have a mutual fund's
money manager to handle it for you.
The Bottom Line

As with any investment, there are risks involved in buying mutual funds. These
investment vehicles can experience market fluctuations and sometimes provide returns
below the overall market. Also, the advantages gained from mutual funds are not free:
Many of them carry loads, annual expense fees and penalties for early withdrawal
38
CATEGORIES OF MUTUAL FUND:

MUTUAL FUNDS CAN BE CLASSIFIED AS FOLLOW :
 Based on their structure:
 Open-ended funds: Investors can buy and sell the units from the fund, at any point
of time.
 Close-ended funds: These funds raise money from investors only once. Therefore,
after the offer period, fresh investments can not be made into the fund. If the fund is listed on a
stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund).
Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a
periodic basis such as monthly or weekly. Redemption of units can be made during specified
intervals. Therefore, such funds have relatively low liquidity.
 Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments.
With fluctuating share prices, such funds show volatile performance, even
losses. However, short term fluctuations in the market, generally smoothens out
in the long term, thereby offering higher returns at relatively lower volatility. At
the same time, such funds can yield great capital appreciation as, historically,
equities have outperformed all asset classes in the long term. Hence, investment
in equity funds should be considered for a period of at least 3-5 years. It can be
further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.
Their portfolio mirrors the benchmark index both in terms of composition and individual stock
weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.
iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in
companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
39
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will
invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund: Their investment portfolio includes both debt and equity. As a
result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds
are the ideal mutual funds vehicle for investors who prefer spreading their risk across
various instruments. Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund: They invest only in debt instruments, and are a good option for investors averse
to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income
instruments like bonds, debentures, Government of India securities; and money market
instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put
your money into any of these debt funds depending on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large portion being
invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments
which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-pricing
between cash market and derivatives market. Funds are allocated to equities, derivatives and
money markets. Higher proportion (around 75%) is put in money markets, in the absence of
arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term
debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of
10%-30% to equities.viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in
line with that of the fund.
40
INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of
a month. Payment is made through post dated cheques or direct debit facilities. The investor gets
fewer units when the NAV is high and more units when the NAV is low. This is called as the
benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual
fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he
can withdraw a fixed amount each month.
RISK V/S. RETURN:
41
INTRODUCTION TO SBI MUTUAL FUND
SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the
country with an investor base of over 4.6 million and over 20 years of rich
experience in fund management consistently delivering value to its
investors. SBI Funds Management Pvt. Ltd. is a joint venture between 'The
State Bank of India' one of India's largest banking enterprises, and Société
Générale Asset Management (France), one of the world's leading fund
management companies that manages over US$ 500 Billion worldwide.
Today the fund house manages over Rs 28500 crores of assets and has a
diverse profile of investors actively parking their investments across 36
active schemes. In 20 years of operation, the fund has launched 38 schemes
and successfully redeemed 15 of them, and in the process, has rewarded our
investors with consistent returns. Schemes of the Mutual Fund have time
after time outperformed benchmark indices, honored us with 15 awards of
performance and have emerged as the preferred investment for millions of
investors. The trust reposed on us by over 4.6 million investors is a genuine
tribute to our expertise in fund management.
SBI Funds Management Pvt. Ltd. serves its vast family of investors through
a network of over 130 points of acceptance, 28 Investor Service Centres, 46
Investor Service Desks and 56 District Organizers.SBI Mutual is the first
bank-sponsored fund to launch an offshore fund – Resurgent India Opportunities
Fund.
Growth through innovation and stable investment policies is the SBI MF credo.
42
What is a Mutual fund?
Mutual fund is an investment company that pools money from shareholders and invests
in a variety of securities, such as stocks, bonds and money market instruments. Most
open-end Mutual funds stand ready to buy back (redeem) its shares at their current net
asset value, which depends on the total market value of the fund's investment portfolio at
the time of redemption. Most open-end Mutual funds continuously offer new shares to
investors. Also known as an open-end investment company, to differentiate it from a
closed-end investment company. Mutual funds invest pooled cash of many investors to
meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem
their shares at any time at the fund's current net
asset value: total fund assets divided by shares outstanding.
In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units
to the investors and investing funds in securities in accordance with objectives as
disclosed in offer document. Investments in securities are spread across a wide cross-
section of industries and sectors and thus the risk is reduced. Diversification reduces the
risk because all stocks may not move in the same direction in the same proportion at the
same time. Mutual fund issues units to the investors in accordance with quantum of
money invested by them. Investors of Mutual funds are known as unit holders. The
profits or losses are shared by the investors in proportion to their investments. The
43
Mutual funds normally come out with a number of schemes with different investment
objectives which are launched from time to time. In India, A Mutual fund is required to
be registered with
Securities and Exchange Board of India (SEBI) which regulates securities markets
before it can collect funds from the public. In Short, a Mutual fund is a common pool of
money in to which investors with common investment objective place their
contributions that are to be invested in accordance with the stated investment objective
of the scheme. The investment manager would invest the money collected from the
investor in to assets that are defined/ permitted by the stated objective of the scheme. For
example, an equity fund would invest equity and equity related instruments and a debt
fund would invest in bonds, debentures, gilts etc. Mutual fund is a 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.
ADVANTAGES OF MUTUAL FUNDS
44
DISADVANTAGES OF MUTUAL FUNDS:
 Professional Management- Did you notice how we qualified the advantage of

professional management with the word "theoretically"? Many investors debate over
whether or not the so-called professionals are any better than you or I at picking stocks.
Management is by no means infallible, and, even if the fund loses money, the manager
still takes his/her cut. We'll talk about this in detail in a later section.
 Costs - Mutual funds don't exist solely to make your life easier--all funds are in it for
a profit. The Mutual fund industry is masterful at burying costs under layers of jargon.
These costs are so complicated that in this tutorial we have devoted an entire section to
the subject.
 Dilution - It's possible to have too much diversification (this is explained in our
article entitled "Are You Over-Diversified?"). Because funds have small holdings in so
many different companies, high returns from a few investments often don't make much
difference on the overall return. Dilution is also the result of a successful fund getting too
big. When money pours into funds that have had strong success, the manager often has
trouble finding a good investment for all the new money.
 Taxes - When making decisions about your money, fund managers don't consider
your personal tax situation. For example, when a fund manager sells a security, a capital-
gain tax is triggered, which affects how profitable the individual is from the sale. It might
have been more advantageous for the individual to defer the capital gains liability.
Equity funds, if selected in the right manner and in the right proportion, have the ability
to play an important role in achieving most long-term objectives of investors in different
segments. While the selection process becomes much easier if you get advice from
professionals, it is equally important to know certain aspects of equity investing yourself
to do justice to your hard earned money.
45
46
TYPES OF MUTUAL FUND SCHEMES
1.BY STRUCTURE
 Open – Ended Schemes.
 Close – Ended Schemes.
 Interval Schemes.
2.BY INVESTMENT OBJECTIVE

 Growth Schemes.
 Income Schemes.
 Balanced Schemes.
3.OTHER SCHEMES
 Tax Saving Schemes.
 Special Schemes.
 Index Schemes.
 Sector Specific Schemes.
1. OPEN – ENDED SCHEMES

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 are
becoming increasingly popular in India. Please note that an open-ended fund is NOT
obliged to keep selling/issuing new units at all times, and may stop issuing further
subscription to new investors. On the other hand, an open-ended fund rarely denies to
its investor the facility to redeem existing units.
2. CLOSED – ENDED SCHEMES

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed
number of units. These schemes are launched with an initial public offer (IPO) with a
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
47
unchanged. After an initial closed period, the scheme may offer direct repurchase
facility to the investors. Closed-ended schemes are usually more illiquid as compared to
open-ended schemes and hence trade at a discount to the NAV. This discount tends
towards the NAV closer to the maturity date of the scheme.
3. INTERVAL SCHEMES
These schemes combine the features of open-ended and closed-ended schemes. They
may be traded on the stock exchange or may be open for sale or redemption during pre-
determined intervals at NAV based prices.
4. GROWTH SCHEMES
These schemes, also commonly called Equity Schemes, seek to invest a majority of their
funds in equities and a small portion in money market instruments. Such schemes have
the potential to deliver superior returns over the long term. However, because they
invest in equities, these schemes are exposed to fluctuations in value especially in the
short term.
5. INCOME SCHEMES
These schemes, also commonly called Debt Schemes, invest in debt securities such as
corporate bonds, debentures and government securities. The prices of these schemes
tend to be more stable compared with equity schemes and most of the returns to the
investors are generated through dividends or steady capital appreciation. These schemes
are ideal for conservative investors or those not in a position to take higher equity risks,
such as retired individuals. However, as compared to the money market schemes they do
have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit
risk.
6. BALANCED SCHEMES
These schemes are commonly known as Hybrid schemes. These schemes invest in both
equities as well as debt. By investing in a mix of this nature, balanced schemes seek to
attain the objective of income and moderate capital appreciation and are ideal for
investors with a conservative, long-term orientation.
7. TAX SAVING SCHEMES
Investors are being encouraged to invest in equity markets through Equity Linked
Savings Scheme (―ELSS‖) by offering them a tax rebate. Units purchased cannot be
assigned / transferred/ pledged / redeemed / switched – out until completion of 3 years
from the date of allotment of the respective Units.
48
The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance (Department
of Economic Affairs), Government of India regarding ELSS.
Subject to such conditions and limitations, as prescribed under Section 88 of the
Income-tax Act, 1961.
8. INDEX SCHEMES
The primary purpose of an Index is to serve as a measure of the performance of the
market as a whole, or a specific sector of the market. An Index also serves as a relevant
benchmark to evaluate the performance of mutual funds. Some investors are interested
in investing in the market in general rather than investing in any specific fund. Such
investors are happy to receive the returns posted by the markets. As it is not practical to
invest in each and every stock in the market in proportion to its size, these investors are
comfortable investing in a fund that they believe is a good representative of the entire
market. Index Funds are launched and managed for such investors.
9. SECTOR SPECIFIC SCHEMES.
Sector Specific Schemes generally invests money in some specified sectors for
example: ―Real Estate‖ Specialized real estate funds would invest in real estates
directly, or may fund real estate developers or lend to them directly or buy shares of
housing finance companies or may even buy their securitized assets.
. 1. Bharti AXA Mutual fund

2. Canara Robeco Mutual fund
3. CRB Mutual fund (Suspended)
4. DBS Chola Mutual fund,
5. Deutsche Mutual fund
6. DSP Blackrock Mutual fund,
7. Edelweiss Mutual fund
8. Escorts Mutual fund,
9. Franklin Templeton Mutual fund
10. Fidelity Mutual fund
11. Goldman Sachs Mutual fund
49
12. HDFC Mutual fund,

13. HSBC Mutual fund,
14. ICICI Securities Fund,
15. IL & FS Mutual fund,
16. ING Mutual fund,
17. ICICI Prudential Mutual fund
18. IDFC Mutual fund,
19. JM Financial Mutual fund
20. JP Morgan Mutual fund
21. Kotak Mahindra Mutual fund,
22. LIC Mutual fund
23. Morgan Stanley Mutual fund
24. Mirae Asset Mutual fund
25. Principal Mutual fund
26. Quantum Mutual fund,
27. Reliance Mutual fund
28. Religare AEGON Mutual fund
29. Sahara Mutual fund,
50
WHAT IS THE PROCEDURE FOR REGISTERING A MUTUAL FUND WITH

SEBI?
An applicant proposing to sponsor a Mutual fund in India must submit an application

in Form A along with a fee of Rs.25, 000. The application is examined and once the
sponsor satisfies certain conditions such as being in the financial services business and
possessing positive net worth for the last five years, having net profit in three out of
the last five years and possessing the general reputation of fairness and integrity in all
business transactions, it is required to complete the remaining formalities for setting up
a Mutual fund. These include inter alia, executing the trust deed and investment
management agreement, setting up a trustee company/board of trustees comprising
two- thirds independent trustees, incorporating the asset management company
(AMC), contributing to at least 40% of the net worth of the AMC and appointing a
custodian. Upon satisfying these conditions, the registration certificate is issued
subject to the payment of registration fees of Rs.25.00 lacs for details; see the SEBI
(Mutual funds) Regulations, 1996.
EVALUATING PORTFOLIO PERFORMANCE
It is important to evaluate the performance of the portfolio on an ongoing basis. The

following factors are important in this process: Consider long-term track record rather
than short-term performance. It is important because long-term track record moderates
the effects which unusually good or bad short-term performance can have on a fund's
track record. Besides, longer-term track record compensates for the effects of a fund
manager's particular investment style. Evaluate the track record against similar funds.
Success in managing a small or in a fund focusing on a particular segment of the
market cannot be relied upon as an evidence of anticipated performance in managing a
large or a broad based fund. Discipline in investment approach is an important factor
as the pressure to perform can make a fund manager susceptible to have an urge to
change tracks in terms of stock selection as well as investment strategy.
The objective should be to differentiate investment skill of the fund
51
INVESTOR'S FINANCIAL PLANNING AND ITS RESULTS.

Planning for long term objectives
Many people get overwhelmed by the thought of retirement and they think how
they will ever save the huge money that is required to lead a peaceful and happy retired
life. However, the fact is that if we save and invest regularly over a period of time, even
a small sum of money can be adequate.
It is a proven fact that the real power of compounding comes with time. Albert Einstein
called compounding "the eighth wonder of the world" because of its amazing abilities.
Essentially, compounding is the idea that one can make money on the money one has
already earned. That's why, the earlier one starts saving, the more time money gets to
grow.
Through Mutual funds, one can set up an investment programme to build capital
for retirement years. Besides, it is an ideal vehicle to practice asset allocation and
rebalancing thereby maintaining the right level of risk at all times.
It is important to know that determination and maintaining the right level of risk
tolerance can go a long way in ensuring the success of an investment plan. Besides, it
helps in customizing fund category allocations and suitable fund selections. There are
certain broad guidelines to determine the risk tolerance.
These are:
Be realistic with regard to volatility. One needs to seriously consider the effect of
potential downside loss as well as potential upside gain. Determine a "comfort level"
i.e. If one is not confident with a particular level of risk tolerance, and then select a
different level.
Regardless of the level of risk tolerance, one should adhere to the principles of
effective diversification i.e. The allocation of investment assets among different fund
categories to achieve a variety of distinct risk/reward objectives and a reduction in
overall portfolio risk.
It helps to reassess risk tolerance every year. The risk tolerance may change due
to either major adjustment in return objectives or to a realization that an existing risk
tolerance is inappropriate for one's current situation.
Market cap of a company signifies its market value, which is equal to the total number
of shares outstanding multiplied by the current stock price.
The market cap has a role to play in the kind of returns the stock might deliver and the
risk or volatility that one may have to encounter while achieving those returns.For
52
example, large companies are usually more stable during the turbulent periods and the
mid cap and small cap companies are more vulnerable.
As regards the allocation to each segment, there cannot be a standard combination
applicable to all kinds of investors. Each one of us has different risk profile, time
horizon and investment objectives.
Besides, while deciding on the allocation, one has to keep in mind the fact
whether the allocation is being done for an existing investor or for a new investor.
While for an existing investor, the allocation that already exists has to be considered,
for a new investor the right way to begin is by
considering funds that invest predominantly in large cap stocks. The exposure to mid
and small caps can be enhanced over a period of time.
It is always advisable to take help of professionals to decide the allocation as well as
select the appropriate funds. However, investors themselves have an important role to
play in this process.
53
All award-winning funds may not be suitable for everyone

Many investors feel that a simple way to invest in Mutual funds is to just keep
investing in award winning funds. First of all, it is important to understand that more
than the awards; it is the methodology to choose winners that is more relevant.
A rating firm generally elaborates on the criteria for deciding the winner’s i.e.
consistent performance, risk adjusted returns, total returns and protection of capital.
Each of these factors is very important and has its significance for different categories
of funds.
Besides, each of these factors has varying degree of significance for different kinds of
investors. For example, consistent return really focuses on risk. If someone is afraid of
negative returns, consistency will be a more important measure than total return i.e.
Growth in NAV as well as dividend received.
A fund can have very impressive total returns overtime, but can be very volatile and
tough for a risk adverse investor. Therefore, all the award winning funds in different
categories may not be suitable for everyone. Typically, when one has to select funds,
the first step should be to consider personal goals and objectives. Investors need to
decide which element they value the most and then prioritize the other criteria.
Once one knows what one is looking for, one should go about selecting the funds
according to the asset allocation. Most investors need just a few funds, carefully
picked, watched and managed over period of time.
54
7 INVESTMENT TIPS TO IMPROVE YOUR RETURNS
1. Know your risk profile
Before you take a decision to invest in equity funds, it is important to assess your
risk tolerance. Risk tolerance depends on certain factors like emotional temperament,
attitude and investment experience. Remember, Vwhile ascertaining the risk tolerance,
it is crucial to consider one's desire to assume risk as the capacity to assume the risk. It
helps to understand different categories of overall risk tolerance, i.e. Conservative,
moderate or aggressive. While a conservative investor will accept lower returns to
minimise price volatility, a moderate investor would be all right with greater price
volatility than conservative risk tolerances to pursue higher returns. An aggressive
investor wouldn't mind large swings in the NAV’s to seek the highest returns. Though
identifying the desire for risk is a tough job, it can be made easy by defining one's
comfort zone.
2. Don't have too many schemes in your portfolio
While it is true that diversification helps in earning better returns with a lower
level of fluctuations, it becomes counterproductive when one has too many funds in
the portfolio. For example, if you have 15 funds in your portfolio, it does not
necessarily mean that your portfolio is adequately diversified. To determine the right
level of diversification, one has to consider factors like size of the portfolio, type of
funds and allocation to different asset classes. Therefore, it is possible that a portfolio
having 5 schemes may be adequately diversified whereas another one with 10 schemes
may have very little diversification. Remember, to have a well-balanced equity
portfolio, it is important to have the right level of exposure to different segments of the
equity market like large cap, mid-cap and small cap. In addition, for a decent portfolio
size, it is all right to have some exposure in the sector and specialty funds.
3. Longer time horizon provides protection from volatility
As an equity fund investor, you need to understand that volatility is an integral

part of the stock market. However, if you remain focused on the long-term objectives
and follow a disciplined approach to investing, you can not only handle volatility
properly but also turn it to your advantage.
55
4. Understand and analyze 'Good Performance'
'Good performance' is a subjective thing. Ideally, to analyze performance, one should

consider returns as well as the risk taken to achieve those returns. Besides, consistency
in terms of performance as well as portfolio selection is another factor that should play
an important part
while analyzing the performance. Therefore, if an investment in a Mutual fund scheme
takes you past your risk tolerance while providing you decent returns; it cannot always
be termed as good performance. In fact, at times to ensure that your investment
remains within the parameters defined in the investment plan, you may to be forced to
exit from that scheme. In other words, you need to assess as to how much risk did the
fund manger subject you to, and did he give you
an adequate reward for taking that risk. Besides, you also need to consider whether
own risk profile allows you to accept the revised level of risk
5. Sell your fund, if you need to
There is no standard formula to determine the right time to sell an investment in

Mutual fund or for that matter any investment. However, you can definitely benefit by
following certain guidelines while deciding to sell an investment in a Mutual fund
scheme. Here are some of them:
You may consider selling a fund when your investment plan calls for a sale rather than
doing so for emotional reasons. You need to hold a fund long enough to evaluate its
performance over
a complete market cycle, i.e. around three years or so. Many of us make the mistake of
either holding on to funds for too long or exit in a hurry. It is important to do a
thorough analysis before taking a decision to sell. In other words, if you take a wrong
decision, there is always a risk of missing out on good rallies in the market or getting
out too early thus missing out on
potential gains. You should consider coming out of a fund if its performance has
consistently lagged its peers for a period of one year or so. It doesn't make sense to
hold a fund when it no longer meets your needs. If you have made a proper selection,
you would generally be required
to make changes only if the fund changes its objective or investment style, or if your
needs change.
56
6. Diversified vs. Concentrated Portfolio
The choice between funds that have a diversified and a concentrated portfolio largely
depends upon your risk profile. As discussed earlier, a well - diversified portfolio
helps in spreading the investments across different sectors and segments of the market.
The idea is that if one or more stocks do badly, the portfolio won't be affected as
much. At the same time, if one stock does very well, the portfolio won't reap all the
benefits. A diversified fund, therefore, is an ideal choice for someone who is looking
for steady returns over the longer term. A concentrated portfolio works exactly in the
opposite manner. While a fund with a concentrated portfolio has a better chance of
providing higher returns, it also increases your chances of underperforming or losing a
large portion of your portfolio in a market downturn. Thus, a concentrated portfolio is
ideally suited for those investors who have the capacity to shoulder higher risk in order
to improve the chances of getting better returns.
7. Review your portfolio periodically
It is always a good idea to review your portfolio periodically. For example, you may
begin reviewing your portfolio on a half-yearly basis. Besides, you may be required to
review your portfolio in greater detail when your investments goals or financial
circumstances change.
57
HOW TO REDUCE RISK WHILE INVESTING:
 Any kind of investment we make is subject to risk. In fact we get return on our
investment purely and solely because at the very beginning we take the risk of parting
with our funds, for getting higher value back at a later date. Partition itself is a risk.

 Well known economist and Nobel Prize recipient William Sharpe tried to segregate
the total risk faced in any kind of investment into two parts - systematic (Systemic) risk
and unsystematic (Unsystemic) risk.
 Systematic risk is that risk which exists in the system. Some of the biggest examples
of systematic risk are inflation, recession, war, political situation etc.

 Inflation erodes returns generated from all investments e.g. If return from fixed deposit
is 8 per cent and if inflation is 6 per cent then real rate of return from fixed deposit is
reduced by 6 per cent.
 Similarly if returns generated from equity market is 18 per cent and inflation is still 6
per cent then equity returns will be lesser by the rate of inflation. Since inflation exists in
the system there is no way one can stay away from the risk of inflation.

 Economic cycles, war and political situations have effects on all forms of investments.
Also these exist in the system and there is no way to stay away from them. It is like
learning to walk.
 Anyone who wants to learn to walk has to first fall; you cannot learn to walk without
falling. Similarly anyone who wants to invest has to first face systematic risk; there can
never make any kind of investment without systematic risk.

 Another form of risk is unsystematic risk. This risk does not exist in the system and
hence is not applicable to all forms of investment. Unsystematic risk is associated with
particular form of investment.

 Suppose we invest in stock market and the market falls, then only our investment in
equity gets affected OR if we have placed a fixed deposit in particular bank and bank
goes bankrupt, than we only lose money placed in that bank.

 While there is no way to keep away from risk, we can always reduce the impact of
risk. Diversification helps in reducing the impact of unsystematic risk. If our investment
is distributed across various asset classes the impact of unsystematic risk is reduced.

 If we have placed fixed deposit in several banks, then even if one of the banks goes
bankrupt our entire fixed deposit investment is not lost.
58
 Similarly if our equity investment is in Tata Motors, HLL, Infosys, adverse news about
Infosys will only impact investment in Infosys, all other stocks will not have any impact.

 To reduce the impact of systematic risk, we should invest regularly. By investing
regularly we average out the impact of risk.

 Mutual fund, as an investment vehicle gives us benefit of both diversification and
averaging.

 Portfolio of mutual funds consists of multiple securities and hence adverse news about
single security will have nominal impact on overall portfolio.

 By systematically investing in mutual fund we get benefit of rupee cost averaging.

 Mutual fund as an investment vehicle helps reduce, both, systematic as well as
unsystematic risk.
59
COMPARISON OF FOUR MAJOR MUTUAL FUNDS
FRANKLIN TEMPLETON INDIA PRIMA PLUS

Mutual Fund Franklin Templeton Mutual Fund
Scheme Name Franklin India Prima Plus
Scheme Type Open Ended
Scheme Category Growth
Launch Date 29-Sep-1994
SBI MAGNUM GLOBAL

Mutual Fund SBI Mutual Fund
Scheme Name SBI MAGNUM GLOBAL FUND 94 - GROWTH
Objective of The Objective of the Scheme is to provide
Scheme investors with maximum growth opportunity.
Launch Date 06-Jun-2005
MinimumSubscription Amount 2000
60
TATA (GROWTH) FUND
Mutual Fund Tata Mutual Fund
Scheme Name Tata Growth Fund - Growth
The investment objective of the schemes will be
Objective to provide income distribution & / or medium to
Of long term capital gains. The scheme will invest in
Scheme equity and equity related instruments of well
researched growth oriented companies.
Minimum
Subscription Rs.5000/-
Amount
61
RELIANCE GROWTH FUND
Mutual Fund Reliance Mutual Fund
Scheme Name Reliance Growth Fund
Objective The primary investment objective is to achieve
of Scheme long term growth of capital by investing in
equity and equity related securities through a
research based investment approach
Launch Date 25-Sep-1995
Minimum
Subscription 5000
Amount
62
CHAPTER 5
FINDINGS & SUGGESTIONS
63
FINDINGS
 In Dehradoon in the Age Group of 36-40 years were more in numbers. The
second most Investors were in the age group of 41-45 years and the least were
in the age group of below 30 years.
 In Dehradoon most of the Investors were Graduate or Post Graduate and
below HSC there were very few in numbers.
 In Occupation group most of the Investors were Govt. employees, the second
most Investors were Private employees and the least were associated with
Agriculture.
 In family Income group, between Rs. 20,001- 30,000 were more in numbers,
the second most were in the Income group of more than Rs.30,000 and the
least were in the group of below Rs. 10,000.
 About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed
Deposits, Only 60% Respondents invested in Mutual fund.
 Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.
 Only 67% Respondents were aware about Mutual fund and its operations and
33% were not.
 Among 200 Respondents only 60% had invested in Mutual Fund and 40% did
not have invested in Mutual fund.
 Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there
is not any specific reason for not invested in Mutual Fund and 6% told there is
likely to be higher risk in Mutual Fund.
 Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI
Prudential has also good Brand Position among investors, SBIMF places after
ICICI Prudential according to the Respondents.
 Out of 55 investors of SBIMF 64% have invested due to its association with
the Brand SBI, 27% Invested because of Advisor’s Advice and 9% due to
better return.
 Most of the investors who did not invested in SBIMF due to not Aware of
SBIMF, the second most due to Agent’s advice and rest due to Less Return.
64
 For Future investment the maximum Respondents preferred Reliance Mutual

Fund, the second most preferred ICICI Prudential, SBIMF has been preferred
after them.
 60% Investors preferred to Invest through Financial Advisors, 25% through
AMC (means Direct Investment) and 15% through Bank.
65
SUGGESTIONS AND RECOMMENDATIONS
 The most vital problem spotted is of ignorance. Investors should be made aware
of the benefits. Nobody will invest until and unless he is fully convinced.
Investors should be made to realize that ignorance is no longer bliss and what
they are losing by not investing.
 Mutual funds offer a lot of benefit which no other single option could offer. But
most of the people are not even aware of what actually a mutual fund is? They
only see it as just another investment option. So the advisors should try to
change their mindsets. The advisors should target for more and more young
investors. Young investors as well as persons at the height of their career would
like to go for advisors due to lack of expertise and time.
 Mutual Fund Company needs to give the training of the Individual Financial
Advisors about the Fund/Scheme and its objective, because they are the main
source to influence the investors.
 Before making any investment Financial Advisors should first enquire about the
risk tolerance of the investors/customers, their need and time (how long they
want to invest). By considering these three things they can take the customers
into consideration.
 Younger people aged under 35 will be a key new customer group into the
future, so making greater efforts with younger customers who show some
interest in investing should pay off.
 Customers with graduate level education are easier to sell to and there is a large
untapped market there. To succeed however, advisors must provide sound advice
and high quality.
 Systematic Investment Plan (SIP) is one the innovative products launched by
Assets Management companies very recently in the industry. SIP is easy for
monthly salaried person as it provides the facility of do the investment in EMI.
Though most of the prospects and potential investors are not aware about the
SIP. There is a large scope for the companies to tap the salaried persons.
66
CHAPTER 6
CONCLUSION
67
5.CONCLUSION
Running a successful Mutual Fund requires complete understanding of the peculiarities

of the Indian Stock Market and also the psyche of the small investors. This study has
made an attempt to understand the financial behavior of Mutual Fund investors in
connection with the preferences of Brand (AMC), Products, Channels etc. I observed
that many of people have fear of Mutual Fund. They think their money will not be
secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms.
Many of people do not have invested in mutual fund due to lack of awareness although
they have money to invest. As the awareness and income is growing the number of
mutual fund investors are also growing.
Some AMCs are not performing well although some of the schemes of them are giving
good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI
Prudential etc. they are well known Brand, they are performing well and their Assets
Under Management is larger than others whose Brand name are not well known like
Principle, Sunderam, etc.
Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can
change investors’ mind from one investment option to others. Many of investors
directly invest their money through AMC because they do not have to pay entry load.
Only those people invest directly who know well about mutual fund and its operations
and those have time.
68
CHAPTER 7
BIBLIOGRAPHY
69
BIBLIOGRAPHY
BOOKS:
Sr. No. Name Of Book Name Of Publication

Author
1 MUTUAL FUND PRITI S. VIPUL
MANAGEMENT AGRAWAL
WEBSITES:
1 WWW.SBIMF.COM
2 WWW.MONEYCONTROL.COM
3 WWW. MUTUALFUNDSINDIA.COM
4 WWW.AMFIINDIA.COM
70

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MUTUAL FUND INVESTMENT IN INDIA 2018-19

Investments in securities are spread across a wide cross-section of industries

1.2 HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

First Phase – 1964-87

 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by

Second Phase – 1987-1993 (Entry of Public Sector Funds)

Third Phase – 1993-2003 (Entry of Private Sector Funds)

Fourth Phase – since February 2003

A mutual fund is a type of financial vehicle made up of a pool of

Mutual funds give small or individual investors access to professionally

The Basics of a Mutual Fund

A diversified portfolio of high-performing mutual funds can provide an

1) Low Fees or Expenses

2) Consistently Good Performance

Most investors utilize investing in mutual funds as part of their retirement

3) Sticking to a Solid Strategy

4) Trustworthy, With Solid Reputations

2.1 OBJECTIVES OF THE STUDY

2.1 OBJECTIVES OF THE STUDY

2. To measure the satisfaction level of investors regarding mutual funds.

4. To get insight knowledge about mutual funds

5. Understanding the different ratios & portfolios so as to tell the distributors

6. To know the mutual funds performance levels in the present market

8. To know the awareness of mutual funds among different groups of investors.

Monthly Income Plans (MIPs ) invests maximum o f their total corpus in

Secondary objective is generation of long term capital appreciation by investing a

are more tax efficient as compared to fixed deposits.

fall. However, the fund manager’s skill.

2.3 SCOPE OF THE STUDY

2.4 LIMITATIONS OF THE STUDY

 Some of the persons were not so responsive.

 Some respondents were reluctant to divulge personal information which can

affect the validity of all responses.

 The research is confined to a certain part of project.

2,5 SIGNIFICANCE OF THE STUDY

2.6 METHOD OF COLLECTION OF DATA

Mutual funds attracted the interests of academicians, researchers and financial

Jack Treynor (1965) developed a methodology for performance evaluation of a

Sharpe (1966) developed a composite measure of performance evaluation and

Jensen (1968) developed a classic study; an absolute measure of performance

Fama (1972) developed a methodology for evaluating investment performance of

increase in stock price index.

4.1 DATA ANALYSIS

4.1 DATA ANALYSIS, INTERPRETATION AND PRESENTATION

INTRODUCTION TO SBI MUTUAL FUND

4.2 PRODUCTS OF SBI MUTUAL FUND

The investments of these schemes will predominantly be in the stock

 Magnum COMMA Fund

 MSFU- Emerging Business Fund

 SBI Arbitrage Opportunities Fund

Debt Funds invest only in debt instruments such as Corporate Bonds,

 Magnum Children’s benefit Plan

Magnum Balanced Fund invests in a mix of equity and debt

COMPETITORS OF SBI MUTUAL FUND

i.ICICI Mutual Fund

4.3 AWARDS AND ACHIEVEMENTS

4.4 INTERPRETATION OF THE DATA