A STUDY ON MUTUAL FUNDS OF CUSTOMER PREFERENCE

WITH SPECIAL REFERENCES IN TRICHY CITY”

A Project Report Submitted in Partial Fulfilment of the award of the Degree of

MASTER OF COMMERCE

By

Y.MD SHOAIB

REGISTER NO:1913182083110

Under the guidance of

Mr. T. Mohammed Taher Khan

M.com., NET(Commerce).,

Assistant Professor

POST GRADUATE AND RESEARCH

DEPARTMENT OF COMMERCE

NEW COLLEGE (AUTONOMOUS)

CHENNAI-600014

APRIL – 2021
 THE NEW COLLEGE (AUTONOMOUS)
PG AND RESEARCH DEPARTMENT OF COMMERCE

CERTIFICATE

This is to certify that the project entitled “A STUDY ON MUTUAL FUNDS OF

CUSTOMER PREFERENCE WITH SPECIAL REFERENCES IN TRICHY CITY”

submitted is a bonafide record of the research work done by Y.MD SHOAIB

(Register No.1913182083110) in partial fulfilment of requirement for the award

of Master‟s Degree in Commerce, University of Madras. This is a bonafide work

carried out by him, under my supervision and guidance.

HEAD OF THE DEPARTMENT SIGNATURE OF THE GUIDE

The viva voice Examination held on ---------------------------------

EXAMINERS

Date: 1.

Place: 2.
 DECLARATION

I Y MD SHOAIB, hereby declare that the project work entitled “A

STUDY ON MUTUAL FUNDS OF CUSTOMER PREFERENCE WITH

SPECIAL REFERENCES IN TRICHY CITY” submitted by

me for the award of the degree of master of Commerce is the record of

independent research work carried out by me during the period of my study, under

the supervisor of Mr. T. Mohammed Taher Khan M.com., NET(Commerce).,

Assistant professor and that this project work has not previously formed the basis

for the award of any degree, diploma, Associateship, Fellowship or other similar

title in this or any other similar institution of higher learning.

Place: Signature of Candidate

Date: ( Y.MD SHOAIB)

 1

ACKOWLEDGEMENT

First of all, my thanks and praise to the lord almighty ALLAH, who gave me strength,
faith and blessings to complete my project successfully.

I wholeheartly thank the magnanimous management for providing me an

opportunity to complete this project work.

My earnest thanks are due to Dr. S. BASHEER AHAMED., M.sc.,M.phil.,B.Ed.,Ph.D.,

,principal The New College (Autonomous) Chennai for permitting me to carry out the
research work, for the continuous encouragement and for the infrastructure facilities
provided. My sincere thanks due to the members of managing committee, The New
College (Autonomous) Chennai, for admitting me in this esteemed institution to pursue
my project work in M.Com Course

I am also thankful to Dr. S. SYED RAFIQ

AHAMED,M.COM.,M.Phil.,Ph.D.,B.Ed.,PG DIP,Journalism., HOD Of Commerce,
The New College (Autonomous), Dr. S. TAMEEM SHARIEF
M.com.,M.Phil.,Ph.D.,M.B.A., M.A., M.C.A., HOD I/C (SHIFT 2) Chennai and all the
dedicated faculty members of the department for their constant support and help
extended to complete this project work.

I express my profound gratitude to research advisor Mr. T. Mohammed Taher

Khan., M.Com.,NET(Commerce)., Post Graduate and Research Department of
Commerce, The New College (Autonomous) Chennai, for his valuable guidance and
moral support rendered at every phase of my study. I acknowledge his constant
motivation and dynamic approach, which helped me in completing the study in a
successful manner.
 2

EXECUTIVE SUMMARY

Mutual funds pool money from different investors and invest in different
investment sources like stocks, shares, bonds etc. A professional fund manager
manages these and returns are paid in form of dividends. Some schemes assured
fixed returns that are less in risk and some offer dividends based on the market
fluctuations and prices. Mutual funds have to be subscribed in units and the
purchase or sale is dependent on NAV (Net Asset Value), taking into consideration
the exit and entry load factors into account.

This project is involved in study of mutual fund s of customer preference with

reference in Trichy City. Regard to mutual funds that is the schemes they prefer,
the plans they are opting, the reasons behind such selections and also this project
deal with different investment options, which people prefer along with and apart
from mutual funds In Trichy City. Like postal saving schemes, recurring deposits,
bonds, and shares. The findings from this project is that most of the people are
hesitant in going for new age investments like mutual funds and prefer to avert
risks by investing in less riskier investment options like recurring deposits and so.
Also people going for investment in mutual funds are not going for high-risk
portfolios and schemes but want to go for medium risk elements. And another
finding is that most of the working women does not prefer this type of
investments.
 3

SI NO TABLE OF PAGE
CONTENTS NO
EXECUTIVE 5
SUMMARY
1. INTRODUCTION 12-24
1.1
1.1.1 Concept Of Mutual Fund
1.1.2 Advantages Of Mutual Fund
1.1.3 Disadvantages Of Mutual Fund
1.1.4 Hypothesis Of Mutual Fund
1.1.5 Scope Of Mutual Fund
1.1.6 Present Structure Of Mutual Fund
1.1.7 History Of Mutual Fund Industry
1.1.8 Investment Strategies
1.1.9 Portfolio Investors
1.1.10 Portfolio for conservative Investors
1.1.11 Portfolio For Moderate Investors
1.1.12 Portfolio For Aggressive Investors
1.1.13 Categories Of Mutual Funds
1.2 Research Design 24-27
1.2.1 Statement Of The Problem
1.2.2 Need For The Study
1.2.3 Data Sources
1.2.4 Objective Of the Study
1.2.5 Research Methodology
1.2.6 Steps For Research Design
1.2.7 Data Collections
1.2.8 Limitations Of the Study
2. Review Of 29-37
Literature
2.1 Introduction About The Topic
2.1.1 What is Mutual Fund
2.1.2 Mutual Fund is The Subject To Mark List
2.1.3 Introduction to Mutual Funds and its Various Aspects
2.1.4 Categories Of Mutual Fund
2.1.5 Mutual Funds can be Classified as Follows
 4

2.1.6 Review Of Literature

3. Company Profile 39-47
3.1.
3.1.1 Introduction to SBI Mutual Fund
3.1.2 Products of SBI Mutual Fund
3.1.3 Debt Schemes
3.1.4 Balanced Schemes
3.1.5 Competitors of State Bank Of India
3.1.6 Foundation Of SBI
3.1.7 SWOT Analysis of State Bank Of India
3.1.8 Board Of Directors
3.1.9 Equity Mutual Funds
4. Data Analysis and Interpretation 49-69
4.1.
4.1.1 Age Distribution Of The Investors
4.1.2 Investors Invested in Different Kind Of Investments
4.1.3 Preference Of Factors While Investing
4.1.4 Awareness About Mutual Fund And Its Operetions
4.1.5 Source Of Information For Customer About Mutual Fund
4.1.6 Investors Invested in Mutual Funds
4.1.7 Return For no Invested in Mutual Fund
4.1.8 Investments Invested in Different Assets Mgt co. (AMC)
4.1.9 Reasons For Invested in SBI MF
4.1.10 Reasons For Not Invested In SBI MF
4.1.11 Preference Of Investors for Future Investment in Mutual
Funds
4.1.12 Channel Preferred by The Investors For Mutual Fund
Investment
4.1.13 Mode of Investment Preferred By the Investors
4.1.14 Preferred Portfolio By the Investors
4.1.15 Option for Getting Return Preferred By The Investors
4.1.1 Preference Of Investors Whether to Invest In Sector Funds
6
5. Findings, Suggestions and Conclusions 71-74
5.1.1 Findings
5.1.2 Suggestions
5.1.3 Conclusion
BIBILOGRAPHY 75-76
ANNEXURE: PROFIT & LOSS 77-79
: BALANCE SHEET
: CASH FLOW STATEMENT
QUESTIONAIRE OF MUTUAL FUNDS 80-84
 5

SI LIST OF Page No
NO TABLES
1 Portfolio for conservative Investors 21
2 Portfolio For Moderate Investors 21

3 Portfolio For Aggressive Investors 21

4 Equity Mutual Funds 23

5 Board Of Directors 45
6 Equity Mutual Funds 46
7 Age Distribution Of The Investors 49
8 Educational Qualification of Investors 50
9 Occupation Of The Investors 51
10 Monthly Family Income Of The Investors 52
11 Investors Invested in Different Kind Of Investments 53
12 Preference Of Factors While Investing 54
13 Awareness About Mutual Fund And Its Operetions 55
14 Source Of Information For Customer About Mutual Fund 56
15 Investors Invested in Mutual Funds 57
16 Return For no Invested in Mutual Fund 58
17 Investments Invested in Different Assets Mgt co. (AMC) 59
18 Reasons For Invested in SBI MF 60
19 Reasons For Not Invested In SBI MF 61
20 Preference Of Investors for Future Investment in Mutual 62
Funds
21 Channel Preferred by The Investors For Mutual Fund 63
Investment
22 Mode of Investment Preferred By the Investors 64
23 Preferred Portfolio By the Investors 65

24 Option for Getting Return Preferred By The Investors 67

25 Preference Of Investors Whether to Invest In Sector 68
Funds
26 ANNEXURE: PROFIT & LOSS 77
27 ANNEXURE : BALANCE SHEET 78
28 ANNEXURE : CASH FLOW STATEMENT 79
 6

SI LIST OF CHARTS & GRAPHS PAGE

NO NO
1 Present Structure Of Mutual Fund 16

2 Assets Over The Years 19

3 Categories Of Mutual Funds 23

4 Age Distribution Of The Investors 49

5 Educational Qualification of Investors 50

6 Occupation Of The Investors 51

7 Monthly Family Income Of The Investors 52

8 Investors Invested in Different Kind Of Investments 53

9 Preference Of Factors While Investing 54

10 Awareness About Mutual Fund And Its Operetions 55

11 Source Of Information For Customer About Mutual Fund 56

12 Investors Invested in Mutual Funds 57

13 Return For no Invested in Mutual Fund 58

14 Investments Invested in Different Assets Mgt co. (AMC) 59

15 Reasons For Invested in SBI MF 60

16 Reasons For Not Invested In SBI MF 61

17 Preference Of Investors for Future Investment in Mutual 62

Funds
18 Channel Preferred by The Investors For Mutual Fund 63
Investment
19 Mode of Investment Preferred By the Investors 64

20 Preferred Portfolio By the Investors 65

21 Option for Getting Return Preferred By The Investors 66

22 Preference Of Investors Whether to Invest In Sector 67

Funds
 7

CHAPTER-1

INTRODUCTION
 8

1.1 INTRODUCTION:

A Mutual Fund is promoted by a sponsor and run by a trust that pools the savings
of a number of retail investors who share a common financial goal. The money
collected by selling units of mutual funds is invested by the fund manager in
different types of securities depending according to the objective of the scheme.
These could range from shares to debentures to money market instruments. For an
individual investors a Mutual Fund offers diversified, professionally managed
portfolio at a relatively low cost. Anybody with an investible surplus of as little as
a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has
a defined investment objective and strategy. From its inception the growth of
Indian mutual funds industry was very slow and it took really long years to evolve
the modern day mutual funds. Primary motive behind mutual fund investments is
to deliver a form of diversified investment solution. Over the years the idea
developed and people received more and more choices of diversified investment
portfolio through the mutual funds. The credit goes to unit trust of India (UTI) for
introducing the first mutual fund in India. Recent years, Indian money and capital
market has shown tremendous growth and expanded its reach to wider
geographical limits.

Indian regulators in money and capital market have actively participated in

framing regulations which gives confidence to both individual and institutional
Institutions for participation. Progressive reforms have taken place with the
initiative of Security Exchange Board of India (SEBI), capital market regulator in
India which facilitates savings. As a financial intermediary mutual fund has played
a significant role in the development and growth of capital markets in India.
According to the various surveys, conducted in India by SEBI, National Council
of Applied Economic Research (NCAER) and asset management companies
(AMCs), small salaried investors generally goes for bank deposits, government
sponsored small savings schemes or endowment life policies for tax saving
purpose, which do not provide hedge against inflation and often land up earning
negative real returns. With the passage of time, India has witnessed many new
and innovative
 9

mutual funds. However, there has been a paradigm shift in the methods and ways
of selling these funds also changed with time. It is continuing to evolve to a better
future, where the investors will get newer opportunities. In this era of globalization
and competition, the success of this industry is determined by the market
performance of its stock. During the period of this study, performance of mutual
fund industry was not as per the expectation, because of the underperformance of
the secondary market and imposition of ceiling on the expense ratio and entry load
charges by capital market regulator. With regenerated combined efforts of the
brokerage houses and the fund managers and with the backing of market
regulators, and extensive awareness program for investors, investments in mutual
funds schemes bound to get boost.

CONCEPT OF MUTUAL FUND:

• Many investors with common financial objectives pool their money

• Investors on a proportionate basis , get mutual fund units
for the sum contributed to the pool
• The money collected from investors is invested into
shares. Debentures and other securities by the fund
manager
• The fund manager realizes gains or losses , and collects
dividend or interest income
• Any capital gains or losses from such investments are
passed on to the investors in proportion of the number of
units held them

ADVANTAGES OF MUTUAL FUND:

➢ Portfolio Diversification
➢ Professional Management
➢ Reduction / Diversification of Risk
➢ Liquidity
➢ Flexibility & Convenience
➢ Reduction in Transaction Cost
 10

➢ Safety of regulated environment

➢ Choice of schemes
➢ Transparency

DISADVANTAGES OF MUTUAL FUND:

➢ No control over Cost in the Hands of Investor

➢ No tailor-made Portfolios
➢ Managing a Portfolio Funds
➢ Difficulty in selecting a suitable fund scheme
 11

SCOPE OF MUTUAL FUNDS:

The scope has grown enormously over the years. In the first age of mutual funds,
when the investment management companies started to offer mutual funds,
choices were few. Even though people invested their money in mutual funds as
these funds offered them diversified investment option for the first time. By
investing in these funds they were able to diversify their investment in common
stocks, preferred stocks, bonds and other financial securities. At the same time
they also enjoyed the advantage of liquidity. With Mutual Funds, they got the
scope of easy access to their invested funds on requirement.
But, in today‟s world, Scope of Mutual Funds has become so wide, that people
sometimes take long time to decide the mutual fund type, they are going to invest
in. Several Investment Management Companies have emerged over the years
who offer various types of Mutual Funds, each type carrying unique
characteristics and different beneficial features.

PRESENT STRUCTURE OF MUTUAL FUNDS:

 12

HISTORY OF 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 of India.
The history of mutual funds in India can be broadly divided into four distinct
phases
First Phase - 1964-1987

Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was
set up 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
December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.
47,004 crores.
 13

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

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 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.
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.
44,541 crores of assets under management was way ahead of other mutual funds.

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 Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth.
 14

The graph indicates the growth of assets over the years:

INVESTMENT STRATEGIES:

1. Systematic Investment Plan : 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.
 15

The investor gets few units when NAV is a 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.

PORTFOLIO INVESTORS:

That is why we launched these SIP portfolios. ETMutualFunds.com best mutual

fund SIP portfolios are meant for three different individual risk profiles:
conservative, moderate and aggressive. We have also considered three SIP baskets
– between Rs 2,000-5,000, between Rs 5,000-10,000 and above Rs 10,000
– while creating these portfolios. Take a look at our recommended portfolios.

A word about the underperformance of Aditya Birla Sun Life Regular Savings
Fund, a conservative hybrid fund,that is part of our recommended list. Aditya Birla
Sun Life Regular Savings Fund has been in the fourth quartile for the last six
months. The scheme was in the third quartile two months before that.

Motilal Oswal Multi cap 35 Fund, a multi cap scheme that is part of these
portfolios, is in the last quartile this month. It has been in the third quartile for the
last three months; the scheme was in fourth quartile for two months before that.

PORTFOLIO FOR CONSERVATIVE INVESTORS:

 16

SIP Amount Scheme Name Percentage (%)

Rs 2,000 to 5,000 Axis Blue Chip Fund 50
ICICI Prudential Regular Savings 50
Rs 5,000 to 10,000 Axis Mutual Fund 30
ICICI Prudential Blue chip Fund 20

Aditya Birla Sun life Regular Savings Fund 50

Above Rs 10,000 Axis Blue Chip fund 25
ICICI Prudential Blue chip Fund 15
Motilal Oswal Multi cap 35 Fund 10
Aditya Birla Sun life Regular Savings Fund 50

PORTFOLIO FOR MODERATE INVESTORS:

SIP Amount Scheme Name Percentage (%)

Rs 2,000 to 5,000 Axis Blue chip Fund 65

ICICI Prudential Regular Fund 35
Rs 5,000 to 10,000 Axis Blue chip Fund 40
Motilal Oswal Multi cap 35 Fund 25
ICICI Prudential Regular Savings 35

Above Rs 10,000 ICICI Prudential Blue chip Fund 30

Axis Blue chip Fund 15
Motilal Oswal Multi cap Fund 20
ICICI Prudential Regular Savings Fund 35

PORTFOLIO FOR AGGRESSIVE INVESTORS:

SIP Amount Scheme Name Percentage (%)

Rs 2,000 to 5,000 SBI Magnum Multi cap 50

 17

ICICI Prudential Blue chip Fund 50

Rs 5,000 to 10,000 Motilal Oswal Multi cap 35 Fund 30

Axis Blue chip Fund 20

ICICI Prudential Equity and Debt Fund 15

Mirae Asset Emerging Blue chip Fund Regular 35

Plan
Above Rs 10,000 ICICI Prudential Blue chip Fund 35

SBI Magnum Multi cap 10

Mirae Asset Emerging Blue chip Fund Regular 30

Plan
ICICI Prudential Equity and Debt Fund 10

TATA Equity PE Fund 15

Note: We have assumed that the investor is investing with an investment.

 18

CATEGORIES OF MUTUAL FUND:

EQUITY MUTUAL FUNDS:

Fund Category Risk 1 Year Rating Fund size

Returns (in cr)
ICICI Prudential Fund Equity Moderately 50.7% 5star RS.692
High
SBI Banking & Equity High -1.3% 5star RS.1,495
Financial Services Fund
Axis Blue chip Fund Equity High 9.3% 5star RS.17,270
 19

Mirae Asset Emerging Equity Moderately 13.3% 5star RS.4,270

Blue chip Fund High
Nippon India Pharma Equity High 56% 5star 3,911
Fund

RESEARCH DESIGN

STATEMENT OF THE PROBLEM :

➢ To find out the Preferences of the investors or Asset Management.

➢ To know the Preferences for the portfolios.
➢ To know why one has invested or not invested in SBI Mutual Fund.
➢ To find out the most preferred channel.
➢ To find out what should do to boost Mutual Fund Industry.

NEED FOR THE STUDY:

Mutual fund companies have prospered because of a continuing bull market, which
means that investors may be able to share their fund company's gains even if their
stock funds have done poorly in 2000. Mutual fund companies have done so well
largely because they levy a fixed charge on the assets they manage, and the more
assets they manage, the more money they make. Investment Company Institute
statistics indicate that investors poured $212 billion into stock funds in 1st half
2000 alone. The industry is collecting management fees on $7.1 trillion in assets.
To understand the performance and benefits of mutual funds The mutual fund
industry has to now take the more difficult but long-term sustainable route of
gathering assets from individual investors by providing them value added,
financial planning services and ensuring that mutual funds are an integral part of
their overall portfolio.
DATA SOURCES:

Research is totally based on primary data. Secondary data can be used only for
the reference. Research has been done by primary data collection, and primary
 20

data has been collected by interacting with various people. The secondary data
has been collected through journals and websites.

OBJECTIVES OF THE STUDY:

The study has been conducted with the following objective:

➢ To explore the preferred investment avenue of retail investors.

➢ To determine the investor’s preference for different mutual fund schemes.
➢ To evaluate fund qualities that affects the selection of mutual funds.

RESEARCH METHODOLOGY:

This report is based on primary as well secondary data, however primary data
collection was given more important since The scope has grown enormously over
the years. In the first age of mutual funds, when the investment management
companies started to offer mutual funds, choices were few. Even though people
invested their money in mutual funds as these funds offered them diversified
investment option for the first time. By investing in these funds they were able to
diversify their investment in common stocks, preferred stocks, bonds and other
financial securities. At the same time they also enjoyed the advantage of liquidity.
With Mutual Funds, they got the scope of easy access to their invested funds on
requirement.
But, in today‟s world, Scope of Mutual Funds has become so wide, that people
sometimes take long time to decide the mutual fund type, they are going to invest
in. Several Investment Management Companies have emerged over the years who
offer various types of Mutual Funds, each type carrying unique characteristics and
different beneficial featuresit is overhearing factor in attitude studies. One of the
most important users of research methodology is that it help in identifying the
problem, collection, analyzing the required information data and providing an
alternative solution to the problem. It also help in collecting the vital information
that is required by the top management to asset them for the better decision making
both day to day decision and critical ones.

STEPS FOR RESEARCH DESIGN:

 21

1. Define the information needed: This first step states that what the
information that is actually required is. Information in this case we require
is that what is the approach of investors while investing their money in
mutual funds and tulips e.g. what do they consider while deciding as to
invest in which of the two i.e. Mutual funds or tulips. Also, it studies the
extent to which the investors are aware of the various costs that one bears
while making any investment. So, the information sought and information
generated is only possible after defining the information needed.

2. Design the research: A research design is a framework or blueprint for

conducting the research project. It details the procedures necessary for
obtaining the information needed to solve research problems. In this
project, the research design is explorative in nature.

3. Specify the scaling procedures: Scaling involves creating a continuum

on which measured objects are located. Both nominal and interval scales
have been used for this purpose.

4. Construct and pretest a questionnaire: A questionnaire is a formalized

set of questions for obtaining information from respondents. Where as
protesting refers to the testing of the questionnaire on a small sample of
respondents in order to identify and eliminate potential problems.

5. Population: All the clients of State bank of India and State bank of
Hyderabad who are investing money in mutual funds and tulips, both.

6.sampling design: The Sample size taken for the purpose of this study was 200. The
Method of sampling adopted for the purpose of this study was convenience sampling.

DATA COLLECTION:

Data has been collected both from primary as well as secondary sources as
described below:
Primary sources: Primary data was obtained through questionnaires filled by
people and through direct communication with respondents in the form of
Interview.

Secondary sources: The secondary sources of data were taken from the various
websites, books, journals reports, articles etc. This mainly provided information
about the mutual fund and tulips industry in India. Plan for data analysis: Analysis
 22

of data is planned with the help of mean, chi-square technique and analysis of
variance.

LIMITATINS OF THE STUDY:

No study is free from limitations. The limitations of this study can be:
• Sample size taken is small and may not be sufficient to predict the results
with 100% accuracy.
• The result is based on primary and secondary data that has its own
limitations.
• The study is limited to the area of Trichy and may not be applicable to any other area.
 23

CHAPTER-2

REVIEW OF LITERATURE
 24

INTRODUCTION ABOUT THE TOPIC

WHAT IS MUTUAL FUND

MEANING OF MUTUAL FUND:

An open-ended fund operated by an investment company which raises money

from shareholders and invests in a group of assets, in accordance with a stated
set of objectives.

MUTUAL FUND DEFINITION:

„„A mutual fund is an investment security type that enables investors to pool their
money together into one professionally managed investment.
Mutual funds can invest in stocks, bonds, cash and/or other assets. These
underlying security types, called holdings combine to form one mutual fund, also
called a portfolio.‟‟

MUTUAL FUND I S SUBJECT TO MARKET RISK

This is the standard disclosure of the Mutual Fund. Which means Mutual Fund is
totally based on the current market position.

The Mutual Fund Investors invests money in the mutual fund at market risk.

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS .

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 capital 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
 25

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 the
securities are spread across a wide cross-section of industries and sectors and thus
the risk it 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 fund are known as unit holders.

CATEGORIES OF MUTUAL FUND

(i). BASED ON THEIR STRUCTURE:

1) Open-ended funds
2) Close-ended funds

(ii). BASED ON INVESTMENT OBJECTIVES:

1) Equity funds
2) Balanced funds
3) Debt funds

MUTUAL FUNDS CAN BE CLASSIFIED AS FOLLOW :

(i). BASED ON THEIR STRUCTURE:

• OPEN-ENDED FUNDS:- Investment 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.

(ii).BASED ON THEIR INVESTMENTS OBJECTIVE:

 26

1) 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 fluctuation in the market .
Generally smoothens out in the long term, thereby offering higher returns
at relatively lower volatility

i)Index funds- In this case a key stock 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 asset in sectors which are related
through some theme.
e.g.- An infrastructure fund invest in power , construction , cements sectors etc.

V) Sectors 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.

iii) DEBT FUND: they invest only debt instruments, and are a good option
averse idea taking risk associated with equities. they invest exclusively in fixed-
income instruments like bonds. Debentures Govt. of India securities; and market
instruments such as certificates of deposits (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 instrument ,

a large portion being invested in call money market.
 27

ii) Gilt funds ST – they invest 100% of their portfolio in govt. 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 mispricing between cash market and derivatives
market. Funds are allocated to equities derivatives and money market.
Higher i) liquid funds – these funds invest 100% in money market
instrument, a large portion being invested in call money market. proportion
is put in money markets. In the absence of arbitrage opportunities.

v) Gift funds LT-They invest 100% of their portfolio in long term

government securities.

vi) Income funds - Typically, such funds invest a major portion of the
portfolio in long term debt papers

vii) MIP’s – 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 whose maturity is in line
with that of the fund.

2) 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- Investment at least 65 % in equities, remaining in debt.

 28

REVIEW OF LITERATURE

1. Bala Ramasamy' and Matthew C.H Yeung (2003) in their paper titled
“Evaluating mutual funds in an emerging market: factors that matter to financial
advisors” have tried to identify the attributes which financial advisors consider
relatively important in a mutual fund. Through a survey o f previous literature they
identified factors that contribute to the performance o f a mutual fund. The study
employed conjoint analysis to design the questionnaire and evaluates the
perception o f the financial advisors in Malaysia. N o one factor has received as
much attention in previous literature as past performance because it is seen to be
the simplest and most direct method to gauge the performance o f a mutual fund.
To what extent the role o f past performance influences the choice o f funds,
relative to other determining factors, is taken up in their survey. Still, there seem to
be some doubts as to whether previous performance is a good indicator o f future
performance. They found past performance, the size o f funds and cost o f
transaction to be the three most important factors in a mutual fund. Financial
advisors are looking for consistent growth o f funds over the long term . They also
prefer managers who are aggressive, experienced and professionally qualified. As
for funds, there is greater affinity for funds which are large and linked to a
government agency. The fund management company should also provide a variety
o f funds at lower transaction costs.

2. Narayanan Jayaraman, Ajay Khorana, Edward Nelling (2002 ) in

their paper titled “An Analysis o f the Determinants and Shareholder
Wealth Effects o f
Mutual Fund Mergers” examined the determinants o f mutual fund mergers and
their subsequent wealth impact on shareholders o f target and acquiring funds.
Results indicate significant improvements in post merger performance and a
reduction in expense ratios for target fund shareholders. In contrast, acquiring
fund shareholders experience a significant deterioration in post merger
performance. The net asset flows continue to remain negative for the combined
 29

fund in the year following the merger. The likelihood o f a fund merger is inversely
related to fund size for both within and across family mutual fund mergers.
However, poor past performance is a significant determinant for only within
family mergers.

3. S.P. Kothari , Jerold B . Warner (2001 ) in their paper titled “Evaluating

Mutual Fund Performance” have studied standard mutual fund
performance measures using the simulated funds whose characteristics
mimic actual funds. It was found that performance measures used in
previous mutual fund research have little ability to detect economically
large magnitudes o f abnormal fund performance, particularly if a fund’s
style characteristics differ from those o f the value weighted market
portfolio. Power can be substantially improved, however, using event-
study procedures that analyze a fund’s stock trades. These procedures
are feasible using time series data on mutual fund portfolio holdings.

4. Andrea (2011)- in his dissertation for Ph.D titled “The Effect o f the
Business Cycle on the Performance o f Socially Responsible Equity Mutual
Funds”, applied a two state switching regression model to examine the
behavior o f a hypothetical portfolio o f ten socially responsible (SR I)
equity mutual funds during the expansion and contraction phases o f US
business cycles between April 1991 and June 2009, based on the Car hart
four-factor model, using monthly data. The model identified a business
cycle effect on the performance o f SRI equity mutual funds. Fund returns
were less volatile during expansion/peaks than during contraction/troughs,
as indicated by the standard deviation o f returns.

5. Gayathri, S., Karthika, S. & Kumar, Gajendran L. (2010): reviewed

on Mutual Funds in India are financial instruments. A mutual fund is
not
an alternative investment option to stocks and bonds; rather it pools the
money of several investors and invests this in stocks, bonds, money market
instr ument s and other types of securiti es. T he owner
 30

of a mutual fund unit get s a proportional share of the fund‟s gains, losses,
income and expenses. Mutual Fund is vehicle for investment in stocks
and Bonds. about the fund, its history, its officers and its performance. Some
popular objectives of a mutual fund are: Fund Objective - What the fund will
invest in; Equity (Growth) - Only in stocks; Debt (Income); Only in fixed-
income securities; Money Market (including Gilt) – In short-term money
market instruments (including government securities); Balanced - Partly
in stocks and partly in fixed-income securities, in order to maintain a 'balance' in
returns and risk. The share value of the Mutual Funds in India is known as net
asset value per share (NAV). The NAV is calculated on the total amount of
the Mutual Funds in India, by dividing it with the number of shares issued
and outstanding shares on daily basis. The company that puts together a mutual
fund is called an AMC. An AMC may have several mutual fund schemes with
similar or varied investment objectives. The AMC hires a professional money
manager, who buys and sells securities in line with the fund' s stated
objective. The Securities and Exchange Board of India(SEBI) mutual fund
regulations require that the fund‟s objectives are clearly spelt
out in the prospectus. In addition, every mutual fund has a board of directors that
is supposed to represent the shareholders' interests, rather than the AMC‟s

6. Agarwal, R K. et al. (2010) : has reviewed since long the

performance of mutual funds has been receiving a great deal of
attention from both
practitioners and academics. With an aggregate investment of trillion dollars
in India, the investing public‟s interest in identifying successful fund
managers is understandable. From an academic perspective, the goal of identifying
superior fund managers is interesting as it encourages development and
application of new models and theories. The idea behind performance evaluation
is to find the returns provided by the individual schemes especially growth funds
and the risk levels at which they are delivered in comparison with t he market and
the r i sk f ree rates. I t i s also our
 31

aim to identify the out - performers for healthy investments. We have also ranked
the investment opportunities for better evaluation
of these funds based on various adjusted ratios like Sharpe ratio, Jensen Measure,
Famaratio, Sortino ratio, Treynor‟s ratio and few others.
Financial literature has very little studies which concentrate on multiple measures
of mutual fund performance evaluation. Therefore, an attempt has been made to
capture the critical measures of performance evaluation of mutual funds.

7. Rich Fortin and Stuart Michelson (1995)12 studied 1,326 load funds
and 1,161 no load funds and identified that, no-load funds had lower
expense ratio and so was suitable for six years and load funds had higher
expense ratio and so had fifteen years of average holding period. No-load
funds offered superior results in nineteen out of twenty-four schemes. He
concluded that, a mutual fund investor had to remain invested in a
particular fund for very long periods to recover the initial front-end charge
and achieve investment results similar to that of no-load funds.

8. Lehmann & Modest- (1987)while comparing the mutual funds

performance with benchmarks found that the Jensen measure & the
Treynor appraisal ratios of individual mutual funds were quite sensitive to
the methods to construct Arbitrage Price Theory benchmarks. This study
suggested the importance of knowing the appropriate model for risk and
return.

9. Sarkar A K (1991)32 critically examined mutual fund evaluation

methodology and pointed out that Sharpe and Treynor performance
measures ranked mutual funds alike in spite of their differences in terms
of risk. The Sharpe and Treynor index could be used to rank performance
of portfolios with different risk levels.

10. Gupta and Sehgal (1998)36 evaluated performance of 80 mutual

fund schemes over four years (1992-96). The study tested the proposition
relating to fund diversification, consistency of performance, parameter of
performance and
 32

risk-return relationship. The study noticed the existence of inadequate portfolio

diversification and consistency in performance among the sample schemes.
 33

CHAPTER-3

COMPANY PROFILE
 34

Company Profile
INTRODUCTION TO SBI MUTUAL FUND

SBI Funds Management Pvt. Ltd. Is one of the leading fund houses in the country
with an investor base of over 4.6 million and over 20 years of rich experience in
fund management consistently delivering value to its investors. SBI Funds
Management Pvt. Ltd. Is a joint venture between „The State Bank of India‟ one of
India‟s banking enterprises, and Society generate 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 asset 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 out performed
benchmark indices, honored us with 15 awards of performance and have emerged
as the preferred investment for millions is a genuine tribute to our expertise in fund
management

SBI Funds Management Pvt. Ltd. Serves its vast family of investors a network of
over 130 points of acceptance, 28 Investor Service Centers, 46 Investor Service
Desks and 56 District Organizers. SBI Mutual is the first bank- sponsored fund to
launch an offshore fund- Resurgent India Opportunities Fund.

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

PRODUCTS OF SBI MUTUAL FUND

 35

Equity schemes

The investment of these schemes will predominantly be in the stock markets and
endeavor will be to provide investors the opportunity to benefit from the highest
returns which stocks market can provide. However they 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 invest in various stocks across different Equity Funds invest in
various stock across different sectors while funds which 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 Multi cap Fund
• Magnum Multiplier Plus 1993
• Magnum Sector Funds Umbrella

• MSFU-Emerging Business Fund

• MSFU-IT Fund
• MSFU-Contra Fund
• MSFU-FMCG fund

➢ SBI Arbitrage Opportunities

➢ SBI Blue Chip Fund
➢ SBI Infrastructure Fund – Series 1
➢ SBI Magnum Tax gain Scheme 1993
➢ SBI One India Fund
 36

➢ SBI TAX ADVANTAGE FUND - SERIES 1

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 the Income Funds or Gilt Funds or having a
small exposure to equities as in Monthly Income Plans or Children‟s Plan
Expected returns from debt funds would have be lower. Such investments are
advisable for the risk-averse and as a part of the investment portfolio for other
investors.

• Magnum Children’s benefit Olan

• Magnum Gilt Fund
• Magnum Income Fund
• Magnum Cash Fund
• Magnum Income Fund-Floating Rate Plan
• Magnum Income Plus Fund
• Magnum Monthly Income Plan
• Magnum Monthly Income Plan-Floater
• Magnum NRI Investment Fund
• SBI Premier Liquid Fund

BALANCED SCHEMES

Magnum Balanced Fund Invests in a mix of equity and debt investments. Hence they
are less risky than equity funds, but at the same time provide commensurately lower
returns. They provide a good investment opportunity to investors who do not wish
to be completely exposed to equity markets, but is looking for higher returns than
those provided by debt funds.

COMPETITORS OF STATE BANK OF INDIA

 37

Top Performing Public Sectors Banks:

• Andhra Bank
• Allahabad Bank
• Punjab National Bank
• Dena Bank

Top Performing Private Sectors Bank:

• HDFC Bank
• ICICI Bank
• AXIS Bank
• Kotak Mahindra Bank
• Centurion Bank of Punjab

Top Performing Foreign Banks:

• Citibank
• Standard Chartered HSBC Bank
• ABN AMRO Bank American Express

FOUNDATION OF SBI

The foundation of Bank of Bengal has the low or minimum liability in India
as joint stock Banking. Bank of Bengal has the decision to issue notes and
accepted by public for payment revenues within restricted in the graphical
area. This note issue might not only for Bank of Bengal but also for the
remaining 2 banks i.e. Bank of Bombay and Bank of Madras. It means
gathering to the capital of Banks on which proprietor has belongs to pay any
interest.
 38

This concept of deposit banking was also an innovation being accepting

money for safeguarding by local bankers had not spread as a general habit as
in the most parts of the India. But for a long time 3 presidency banks have
the right to issue the notes. Bank notes and govt. balance made up the bulk
of huge investible resources of the banks.

SWOT ANALYSIS OF STATE BANK OF INDIA

STRENGTHS:

• Better domestic position

• It has the very large network in India
• Very strong Capital position
• It has the better goodwill in the market
• Itself it has the separate act. And special Privacy
• Strong economic growth would generate higher demand for funds
• It provides a wide variety of services to their customers

includes, investment banking, online banking, stoke broking

and rural banking

• It has the strong brand name among customers

• Strong backing from the government
WEAKNESS:

• Lack of modernization
• It has the high margin of non-performing assets, repayment
of loan issues
• Compared to other private banks and foreign banks the customer
 39

waiting period is long

• Loss of market shares, because of delay in technology up-gradation

• Bad debts is the main problem of unable to resolve bad

debts and non-repayment of loans

OPPORTUNITIES:

• Global expansion in that especially in rural areas

• Reduce transaction cost by merging with associated banks
• Restructuring with the challenges of the new financial environment
• Growth of per capita income and indicates a growing economy
• Borrowing capacity of the customer is increasing

• Through the help of technologies that is mobiles,

internet, computers the services of online banking is

increasing

• Banks become more relevant with demonetisation and

digitization, it increase the no. of banks accounts and credit

card usage
THREATS:

• Threats of cyber will effect on bank image and information

theft &security
• Reduce in market shares of SBI, If the consolidation among
private banks
• Effect on operation when giving licenses by SBI for new banks
• Foreign banks that have advanced product in their business
 40

BOARD OF DIRECTORS

UNDER
SI.NO NAME DESIGNATION SECTION OF
SBI ACT 1995
1 Sri Rajnish kumar Chairman 19(b)

2 Sri P.K Gupta Managing Director 19(b)

3 Shri Arjit Basu Managing Director 19(b)

4 Smt Anushula kant Managing Director 19(b)

5 Shri Bhaskar Pramanik Managing Director 19(b)

6 Shri Basant Seth Directo 19(b)

r
7 Shri B. Venugopal Directo 19(b)
r
8 Shri Sanjiv Malhotra Directo 19(b)
r
9 Shri Bhaskar Pramanik Directo 19(b)
r
10 Shri Girish K Ahuja Directo 19(b)
r
11 Dr. Pushpendra Rai Directo 19(b)
r
12 Dr. Purnima Gupta Directo 19(b)
r
13 Shri Ranjiv Kumar Directo 19(b)
r
14 Shri Chandan Sinha Directo 19(b)
r

AWARDS AND ACHEIVEMENTS

SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online

Award Times, CNBC TV - 18 Crisil Award 2006 4 Awards The Lipper Award

(Year 2005-
 41

2006) and most recently with the CNBC TV-18 Crisil Mutual Fund of the
year Award 2007 and 5 Awards For our schemes

SI NAME OF THE AWARDS

NO
LIPPER AWARD
1 The Lipper Indian Fund awards
2008

ICRA
2 Mutual Fund Awards 2008

Outlook Money
3 NDTV Profit
Awards

CNBC
4 Awaaz Consumer Awards 2007

Lipper Award
5 The Lipper India b Fund Awards
2007

ICRA
6 MUTUAL FUND AWARDS 2007

CNBC TV18 – CRISIL

7 Mutual fund of the year Award
2007

CNBC
8 Awaaz Consumer Awards 2006
 42

Lipper Award
9 The Lipper India Fund Awards
2006

CNBC TV18 – CRISIL

10 Mutual Fund Of The Year Award
2006

ICRA
11 MUTUAL FUND AWARDS 2005
 43

CHAPTER-4
DATA ANALYSIS AND INTREPRETATION
 44

DATA ANALYSIS AND INTREPRETATION

1. (A) Age distribution of the Investors:

Age Group <=30 31 – 36 - 40 41 - 46 - > 50

35 45 50
No. of 28 31 48 37 35 21
Investors.

No. of Investors.
60

50

40

30

20

10

0
<=30 31 – 36 - 40 41 - 46 - > 50

No. of Investors.

Interpretation:
 45

According to this collected data out of 120 Mutual Fund investors of the most are
in the age group of 31 – 35 yrs. i.e. 7%, the second most investors are in the age
group of below 30 yrs. i.e. 5% and the least investors are in the age of 46 – 50 yrs.

(B). Educational qualification of investors:

Educational No. of
qualification investors
Graduate/postgradu 142
ate
Under graduate 46
Others 12
Total 200
 46

Interpretation:
Out of 200 Mutual Fund investors 55% of the are Graduate / Post
Graduate, 30% are Under Graduate and 15% are others.

(C) Occupation of the investors:

OCCUPATION INVESTO
RS
GOVT 60
SERVICE
PRIVATE 110
SERVICE
BUSINESS 20
AGRICULTUR 0
E
OTHERS 10
 47

Chart Title

120

100

80

60

40

20

0
GOVT PRIVATE BUSINESS AGRICULTUR OTHERS
SERVICE SERVICE E

Interpretation:
Out of 200 Mutual Fund investors 60 are of Govt. sector in service, 110 are
in Pvt. Service, 20 in Business and 10 in others.

(D) Monthly Family Income of the Investors:

Income group No of Investors

10,000-20,000 10
20,000-30,000 30
30,000-40,000 40
40,000-50,000 70
More than 50
50,000
 48

Chart Title

Category 4

Category 3

Category 2

Category 1

0 1 2 3 4 5 6

Series 3 Series 2 Series 1

Interpretation:
Most and more 35% of investors who invested in Mutual Fund are the income
group of 40,000 – 50,000; second one i.e., 20% investors are in the monthly
income group of more than 50,000 and minimum investors 5% are in the monthly
income group of 10,000 – 20,000

Investors invested in different kind of investments:

Kind of Investments No of
Respondents
Savings A/C 195
Fixed Deposits 145
Insurance 152
Mutual Fund 120
Post Office (NSC) 75
Shares of Debentures 50
Gold 30
Silver
Real 65
Estate
 49

Interpretation:
From the above graph it can be inferred that out of 200 people, 97.5% people
have invested in Savings A/C, 76% in Insurance, 74% in Fixed Deposits, 60% in
Mutual Fund, in Post Office, 25% in Shares of Debenture, 15% in Gold/Silver
and 32.5% in Real Estate.

Preference of Factors while Investing:

Factors (a) Liquidity (b) Low Risk (c) High (d) Trust
Return
No of 40 60 64 36
Responden
ts
 50

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.

Awareness about Mutual Fund and its Operations:

Yes No
No of 135 65
Respondents
 51

Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Funds
and Its Operations and 33% are not aware of Mutual Fund and its operations.

Source of information for customers about mutual fund:

Source of No of
Information Respondents
Advertisement 32
Peer Group 52
Bank 47
Financial Advisors 69
 52

No of Respondents
No of Respondents

80
70 69
60
50 52
47
40
30 32

20
10
0
Advertisement Peer Group Bank Financial Advisors

Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most
important source of the information about Mutual Funds. Out of 200
Respondents, 46% know about Mutual Fund through Financial Advisor, 22%
through Bank, 19% through Peer Group and 13% through Advertisement.

Investors Invested in Mutual Funds:

Respon No of
se Respondents
Yes 120
No 80
Total 200
 53

Interpretation:
Out of 200 Peoples, 60% have invested in mutual fund 40% do not have invested
in mutual fund.

Return for no invested in mutual fund:

Reason No of
Respondents
Not Aware 65
Higher Risk 5
Not any Specific 10
Reason
 54

Interpretation:
Out of 80 people, who have not invested in mutual funds , 81% are not aware of
Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any
specific reason.

Investors invested in different Assets Management Co. (AMC):

Name of No of
AMC Investors
SBI MF 55
UTI 75
HDFC 30
Reliance 75
ICICI 56
Prudential
Kotak 45
Others 70
 55

Interpretation:

In Trichy most of the investors preferred UTI and Reliance Mutual Fund. Out of
200 Investors 62.5% have invested in each of them, only 46% invested in SBI MF
47% in ICICI Prudential, In kotak and 25% in HDFC

Reason for not Investing in Mutual Funds:

Reason No of
Respondents
Associated with 51
SBI
Better Return 7
Agents Advice 22
 56

Interpretation:

Out of 80 investors of SBI MF 64% have invested because of its association with
Brand SBI, 27% invested on Agent‟s Advice. 9% invested became of better return.
 57

Reason for not invested in SBI MF:

Reason No of
Respondents
Not Aware 30
 58

Less Returns 22
Agent’s 27
Advice

Interpretation:
Out of 80 people who have not invested in SBI MF, 38% were not aware with SBI
MF, 28% do not have invested due to less return and 34% due to agent‟s Advice.
 59

Channel Preferred by the investors for Mutual Funds Investment:

 60

Channel Financial Bank AMC

Advisor
No of 120 30 50
Responden
ts

Interpretation:
Out of 200 investors 60% preferred to invest through Financial Advisors, 25%
through AMC and 15% through Bank.

Mode of Investment Preferred by the Investors:

Mode of One time Systematic

Investment investment Investment
Plan (SIP)
No of 130 70
Respondents
 61

Interpretation:
Out of 200 Investors 65% preferred One Time Investment and 35% Preferred
through Systematic Investment Plan.

Preferred Portfolio By the Investors:

 62

Portfolio No of
Investors
Equity 92

Debt 74

Balanced 34

Interpretation:
From the above graph 46% preferred Equity Portfolio. 37% preferred Balance and
17% preferred Debt Portfolio.
 63

Option for Getting Return Preferred by the investors:

Option Dividend Payout Dividend Growt

Reinvestme h
Nt
No of 42 16 142
Responden
Ts

Interpretation:

From the above graph 74% preferred Growth Option, 21% preferred Dividend
Payout and 8% preferred Dividend Reinvestment Option.
 64

Preference of Investors whether to invest in Sector Funds:

Respon No of
se Respondents
Yes 158
No 42
 65

Interpretation:

Out of 200 investors, 79% investors do not prefer to invest in Sector Funds
because there in maximum risk and 21% prefer to invest in Sector Fund.
 66

CHAPTER-5
FINDINGS, SUGESSTIONS CONCLUSION
 67

5.1 FINDING, SUGGESTIONS AND CONCLUSION

Finding:

➢ To invest in Sector Fund, only 21% wanted to Invest in

Sector Fund In the Age Group of 38-40 years where
most 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.

➢ Most of the investors were to Graduate or Post

Graduate and below HSC there were few in numbers.

➢ 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 Savings A/C in Bank

76% invested in Fixed Deposits, only 60% Respondents
invested to Mutual Fund.

➢ Frequently, 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.
 68

➢ Out of 200 Respondents 81% were not aware of

Mutual Fund, 13% told there is not any specific reason
for not invested to Mutual Fund and 6% told there is
likely to be higher risk in Mutual Fund.

➢ For Future investment the maximum Respondents

preferred Reliance Mutual Fund, the second most
preferred ICICI Prudential, SBI MF has been preferred
after them.

➢ 60% Investors preferred to invest through Financial

Advisors, 25% through AMC (means Direct Investment)
and 15% through Bank.

➢ 65% preferred One Time Investment and 35%

preferred SIP out of both type of Mode of Investment.

➢ The most preferred Portfolio was Equity, the second

most was Balance (mistake of both Eqity and debt), and
the least preferred Portfolio was Debt Portfolio.

➢ Maximum number of Investors Preferred Growth

Option for Returns, the Second most preferred
Dividend Payment and then Dividend Re-investment.

➢ Most of the investors did not want.

Suggestions;

• The Most vital problem spotted is of ignorance. Investors should be

made aware of the benefits. Nobody will invest until and unless be
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 as
 69

persons at the height 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 are can take the customers into consideration.

• Younger people aged under35 will be a key new customer group

into the future, so making greater efforts with the younger customers
who show some interest in investing should pay off.

• Customers with graduate level education are easier in 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 innovation products

launched by Asset management companies very recently in the
industry, SIP is easy for monthly salaried person as it provides the
facility of the investment are not aware about SIP. There in a large
scope for the companies to tap the salaried persons.

Conclusion:

Running a Successful Mutual Fund requires complete understanding of the

peculiarities of the Indian Stock Market and also 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 need
the knowledge of Mutual Fund. 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.
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“Brand” plays Important role for the investment, People invest in those Companies
where they have faith or they are well known with them. Some AMCs are not
performing well all through 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, Sundharam, 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 loaded only.

BIBILOGRAPHY
 71

Reference:

1. Atmaramani (1996), “Restoring Investor Confidence”, The Hindu

Survey of Indian Industry, 435- 437.

2. Bhatt, M. Narayana (1993), “Setting standards for investor services”,

Economic Times, 27 Dec.

3. Bharma, S (2007), “Myths Of Systematic Investment Plan”, Mutual

Funds In India (ed.by Dutta Abhijit), Wisdom Publications, New Delhi,
pp.91-92.

4. Chalam , G.V (2003) , “Investors Behavioral Pattern of Investment

and their Preferences of Mutual Funds” Southern Economist 41(19) 1
Feb 2003 pp 13-1

5. Festinger (1957), L., “A Theory of Cognitive Dissonance”, Stanford

University Press, Stanford CA.

6. Goetzman, W.N !993), “Cognitive Dissonance and Mutual Fund Investors”,

Working Paper, Columbia Business School.

7. Gupta, L.C (1994), Mutual Funds and Asset Preference, Society

for Capital Market Research and Development, Delhi.

8. Kahneman, Daniel and Amos Tversky (1979), "Prospect Theory: An

Analysis of Decision Making Under Risk," Econometrica.

9. Kahneman, Daniel and Mark Riepe (1998), “Aspects of Investor Psychology”,

Journal of Portfolio Management Summer.

10. Madhusudan V. Jambodekar (1996),“Marketing Strategies of Mutual

Funds – Current Practices and Future Directions Working Paper, UTI –
IIMB Centre for Capital Markets Education and Research, Bangalore.

11. Shahbaz Nasir and Mahmood Khalid (2004), “Saving-investment

behaviour in Pakistan: An Empirical Investigation”, The Pakistan
Development Review, vol. 43, issue 4, pages 665-682
12. Raja Rajan V (1997), “Investment size based segmentation of
individual investors” Management Researcher, 1997b, 21-28;
 72

13. Rajeshwari T.R and Rama Moorthy V.E (2002),“Performance

Evaluation Of selected Mutual Funds and Investor Behaviour”, PhD
Thesis, Sri Sathya Sai Institute of Higher Learning, Prasanthinilayam.

14. Ranganathan, Kavitha (2006), “A Study of Fund Selection

Behaviour of Individual Investors towards Mutual Funds - with
Reference to Mumbai City”. Indian Institute of Capital Markets 9th
Capital Markets Conference Paper.

15. Sujit Sikidar and Amrit Pal Singh, (1996), “Financial Services:
Investment in Equity and Mutual Funds – A Behaviour Study”, (in Bhatia
B.S., and Batra G.S., ed.), Management of
Financial Services, Deep and Deep Publications, New Delhi, Chapter 10, 136-145.

16. Syama Sundar, P.V., (1998),“Growth Prospects of Mutual Funds and

Investor perception with special reference to Kothari Pioneer Mutual
Fund”, Project Report, Sri Srinivas Vidya Parishad, Andhra University,
Visakhapatnam.

17. SEBI – NCAER, Survey of Indian Investors, SEBI, Mumbai, 2000.

Web Series:

➢ WWW.SBIMF.COM

➢ WWW.MONEYCONTROL.COM

➢ WWW.AMFINDIA.COM

➢ WWW.ONLINERESEARCHONLINE.COM

➢ WWW.MUTUALFUNDSINDIA.COM
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ANNEXURE

SBI FUNDS MANAGEMENT PRIVATE LIMITED

PROFIT AND LOSS:

 74

BALANCE SHEET:
 75

CASH FLOW STATEMENT:

 76

QUESTIONAIRE OF MUTUAL FUNDS:

1) Name (Optional):

2) Sex: Male B Female B

3) Age in completed years: A. Below 30 years B 31 – 45

years C 46 – 60 years D. Above 61 years

4) Marital Status: Married B Unmarried B

5) Occupation: A. Self Employed Professional B. Entrepreneurs C.

Salaried Employees

6) How much percentage of your investible fund you invest in mutual

funds per year:
%
a) Less than 5% b) 6 % to 10% c) 11% to 15%
d) 16 to 20 %% e) More than 21%

7) Please rank your current preference of Savings Avenue, giving rank

(1) to the least
preferred investment and rank (10) the most preferred
Investment Options Rank

1. Secured Deposits (Fixed

Deposits etc)
2. Mutual funds / ULIP / ELSS
3. LIC Policies 7. Bullion (gold, silver, ornaments)
4. Public Provident fund /
EPF / Pension schemes
5. Real Estate
6. Bonds / Debentures 9. Postal savings schemes
7. Equity Shares 10. Others (please specify)

8) Do you prefer investment in Mutual funds as an avenue for savings for

wealth creation?
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Please tick any one option.

a) Yes\ b) No\

9) Please tick one or more than one of the following mutual funds
schemes mentioned below you have opted for investment.
a) Growth schemes \ b) Income Schemes (FMP, debt schemes) \
c) Balanced Schemes \ d) Money Market (short term debt) Schemes \
e) Tax saving Schemes (ELSS, ULIP) \ f) Index Schemes \

10) Which following scheme of mutual fund suits you most for
making investment? Please tick any one of the following option.
a) Open ended Schemes \ b) Close Ended Schemes \ c) Interval Schemes \

11) When do you expect to need to withdraw a significant portion (1/3 or

more) of the money in your investment portfolio?

i. Less than 1 year

ii. 1-3 years
iii. 4-6 years
iv. 7-9 years
v. 10 years or more

12) Which statement best describes your knowledge of investments?

i. I have very little knowledge of investments and financial markets.

ii. I have a moderate level of knowledge of investments and financial markets.
iii. I have extensive investment knowledge; understand different
investment products and follow financial markets closely.

13) What is your primary goal for this Portfolio:

i. I want to keep the money I have invested safe from short-term

losses or readily available for short-term needs. (Safety –
Investments that will satisfy this objective include GICs and
money market funds)
ii. I want to generate a steady stream of income from my investments
and I am less concerned about growing the value of my investments.
(Income – Investments that will satisfy this objective include fixed
income investments such as funds that invest in bonds)
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iii. I want to generate some income with some opportunity for the
investments to grow in value. (Balanced – A balanced fund or a
portfolio that includes at least 40% in fixed income investments
and no more than 60% in equity funds will satisfy this objective)
iv. I want to generate long-term growth from my investments. (Growth –
A portfolio with a relatively high proportion of funds that invest in
equities will satisfy this objective if you also have a long time horizon
and are willing and able to accept more risk)

14) Your current and future income sources are:

i. Stable (8 points)
ii. Somewhat stable (4 points)
iii. Unstable (1 points)

15) How would you classify your overall financial situation?

i. No savings and significant debt (0 points)

ii. Little savings and a fair amount of debt (2 points)
iii. Some savings and some debt (5 points)
iv. Some savings and little or no debt (7 points)
v. Significant savings and little or no debt (10 points)

16) This investment account represents approximately what percentage

of your total savings and investments. (Total savings and investments
include all the money you have in cash savings, GICs, savings bonds,
mutual funds, stocks and bonds)?

i. Less than 25% (10 points)

ii. 25%-50% (5 points)
iii. 51%-75% (4 points)
iv. More than 75% (2 points)

17) What is your age group? (Your age is an important consideration when
constructing an investment portfolio. Younger investors may have portfolios
that are primarily invested in equities to maximize potential growth if they
also have a higher risk tolerance and long investment time horizon.
Investors who are retired or near retirement are often less able to withstand
losses and may have portfolios that are invested to maximize income and
capital preservation)

i. Under 35 (20 points)

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ii. 35-54 (8 points)

iii. 55-64 (3 points)
iv. 65 or older (1 point)

18) In making financial and investment decisions you are:

i. Very conservative and try to minimize risk and avoid the possibility
of any loss (0 points)
ii. Conservative but willing to accept a small amount of risk (4 points)
iii. Willing to accept a moderate level of risk and tolerate losses to
achieve potentially higher returns (6 points)
iv. Aggressive and typically take on significant risk and are willing to
tolerate large losses for the potential of achieving higher returns
(10 points)
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19) When you are faced with a major financial decision, are you more
concerned about the possible losses or the possible gains?

i. Always the possible losses (0 points)

ii. Usually the possible losses (3 points)
iii. Usually the possible gains (6 points)
iv. Always the possible gains (10 points)

20) From September 2008 through November 2008, North American

stock markets lost over 30%. If you currently owned an investment that
lost over 30% in 3 months you would:

i. Sell all of the remaining investment to avoid further losses (0 points)

ii. Sell a portion of the remaining investment to protect some of your
capital (3 points)
iii. Hold onto the investment and not sell any of the investment in the
hopes of higher future returns (5 points)
iv. Buy more of the investment now that prices are lower (10 points)
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