A Project Report On ³ANALYSIS OF MUTUAL FUNDS AND ROLE OF ASSET MANAGEMENT COMPANY´ at ³Kotak Mahindra Asset Management Company

Ltd.´ By ³MinakshiDinkarMane´

Under the guidance of ³Prof. Rajesh Kumar Jha´

Submitted to ³University of Pune´ In partial fulfillment of the requirement for the award of the degree of Master of Business Administration (MBA)

Through

Shri.KhanderaiPratishthan¶s Dnyansagar Institute of Management and Research Pune -45.

ACKNOWLEDGEMENT

I take immense pleasure in completing this project and submitting the final project report. The last two month with KOTAK MAHINDRA ASSET

MANAGEMENT CO. LTD has full of learning and sense of contribution towards the organization. I would like to thankKOTAK MAHINDRA ASSET MANAGEMENT CO. giving me this opportunity for learning and contributing. I take this opportunity to thank all those people who made this experience a memorable one. A successful project can never be prepared by the singular effort of the person to whom project is assigned but, it also demanded the help and guardianship of some conversant person who undersigned actively or passively in the completion of a successful project. In this context as a student of Dnyansagar Institute of Management and Research, Pune I would like to thank and express my gratitude towards Mr. Rajesh Kumar (Project Guide) for assigning me such a worthwhile topic ³Analysis of Mutual Funds and Role of Asset Management Company´ to work with KOTAK MAHINDRA AMC.

Minakshi D. Mane

EXECUTIVE SUMMARY
The Project was carried out for study and analysing the investment in mutual funds to specialreference of KOTAK ASSET MANAGEMENT COMPANY. It was done to know thesatisfaction level of the customer of the bank. In this Project report I have made an analysis that what is the Investment Pattern, What is theProspect and How Mutual funds have emerged a better Investment option in India Recent Yearsgiving the Investor Higher returns, Liquidity, Safety against Traditional Investment avenues likeBank-FD, Post office Saving, Investment in Volatile Stock Market Etc. With the Growth of The Indian economy Due to various economic Factors IncludingIndustrialization, Growth of Infrastructure and service industries, increased Foreign directinvestment and foreign Institutional Investment, the Indian Companies have grown to become Global business Giant. So, the Market Capitalization of the Indian companies has grown which has resulting in a building of a strong capital market. People are also now more willing to invest and are ready totake risk. All this Development has proved to be a good atmosphere for mutual fund investmentin India.

. Risk Taking Capabilities.  To examine whether mutual funds are really having a better prospect in India. Age Etc.  To do the detail study of Mutual Funds.  To know the investment opportunities in Nationalised Banks. SCOPE OF THE STUDY The scope of the study is to Inform & guide the investor about the various mutual fund schemes & helps them to select the best scheme as per their requirement. what is the number of increase in the investor base.  To know the needs and wants of the client. OBJECTIVE OF THE STUDY  To check the popularity & growth of mutual fund  To know the functions of Asset Management Company (AMC). Investors are the customers of the different mutual fund schemes during my project with KOTAK MAHINDRA ASSET MANAGEMENT COMPANY. how they compare it with traditional investment instrument. Mutual fund offers a Widearray of Schemes to suit the Customers Different Investment Objective as per their FinancialPosition.Now a day¶s Investment is saving has assumed great importance.  To understand what investor want out of their investment in different schemes of mutual fund.

and that's when thecompany changed its name to Kotak Mahindra Finance Limited.Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986. 1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market.HISTORICAL ANDORGANISATION PROFILE OF KOTAK MAHINDRA INTRODUCTION The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. Since then it's been a steady and confident journey to growth and success. takes over FICOM. 1991 The Investment Banking Division is started. 1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting. one of India¶s largest financial retail marketing networks. 1990 The Auto Finance division is started. .

converts to a commercial bank. 2004 Launches India Growth Fund.kotaksecurities.the first Indian company to do so.. 1998 Enters the mutual fund market with the launch of Kotak Asset Management Company. Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited.1992 Enrtesthe Funds Syndication sector. 2003 Kotak Mahindra Finance Ltd. 2001 Matrix sold to Friday Corporation Launches Insurance Services. . Kotak Group realigns joint venture in Ford Credit. Investment Banking division incorporated into a separate company Kotak Mahindra Capital Company. for the Life Insurance Buisness. 2000 Kotak Mahindra ties up with Old Mutual plc. for financing Ford vehicles.com) . Kotak Securities launches its on-line broking site (www. The launch of Matrix Information Services Limited marks the Group¶s entry into information distribution. a private equity fund. 1995 Brokerage and Distribution businesses incorporated into a separate company Kotak Securities. Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. Launches a real estate fund also. Buys Kotak Mahindra Prime and sells Ford credit Kotak Mahindra. 1996 The Auto Finance Business is hived off into a separate company ± Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited).

Kotak Mahindra Finance Ltd which was established in 1985. Corporate Banking. The bank has a presence in the Commercial Vehicles. Retail Finance. Treasury and Housing Finance. Corporate Identity: Kotak Group Companies : Kotak Mahindra Bank: The Kotak Mahindra Group¶s flagship company.2006 Brought the 25% stake held by Goldmam Sachs in Kotak Mahindra Capital Company andKotak Securities. was converted into a bank ± Kotak Mahindra Bank Ltd in March 2003 becoming the first Indian company to convert into a Bank. . It¶s banking operations offers a central platform for customer relationships across the group¶s various businesses.

Kotak Securities Ltd. Kotak Securities: Kotak Securities Ltd. KMCC's core business areas include Equity Issuances. Fixed Income Securities and Principal Business.kotaksecurities. Kotak Mahindra Prime: Kotak Mahindra Prime Limited(KMP) (formerly known as Kotak Mahindra Primus Lmited) has been formed with the objective of financing the retail and wholesale trade of passenger and multi utility vehicles in India. Over the years Kotak Securities has been one of the leading investment broking houses catering to the needs of both institutional and noninstitutional investor categories with presence all over the country through franchisees and co-ordinators. Mergers & Acquisitions.com) and offline services based on well-researched expertise and financial products to the non-institutional investors. is one of India's largest brokerage and securities distribution house in India.. offers online (through www. KMP offers customers retail finance for both new as well as used cars and wholesale finance to dealers in the automobile trade. . KMP continues to be among the leading car finance.Kotak Mahindra Capital Company: Kotak Mahindra Capital Company Limited (KMCC) is India's premier Investment Bank and a Primary Dealer (PD) approved by the RBI. Structured Finance and Advisory Services.

an owned subsidiary of Kotak Mahindra Bank Limited (KMBL).3. to investment banking. franchisees. offering complete financial solutions that encompass every sphere of life. is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). London.return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities . Kotak Mahindra Bank Limited sponsors KMAMC. Kotak Mahindra Asset Management Company Limited (KMAMC). From commercial banking. the group caters to the financial needs of individuals and corporate. KMAMC now offer in various products with many services. to mutual funds. to stock broking. representative offices and satellite offices across 300 cities and towns in India and offices in New York. a wholly owned subsidiary of KMBL. KMMF offers schemes catering to investors with varying risk .Kotak Mahindra Asset Management Company: Kotak Mahindra Asset Management Company Limited (KMAMC).800 employees across its various businesses servicing around 2. KMAMC started operations in December 1998 and has over 4 Lac investors in various schemes. Mauritius and Singapore. The group has a net worth of around Rs. Dubai. KMAMC started operation in December 1998 and has over 4 Lac investors in various schemes. to life insurance. Which is the one of India¶s fastest growing banks? KMAMC made a beginning in the mutual fund with the launch of first scheme in December 1998. Kotak Mahindra is one of India's leading financial institutions.200 crores and employs around 10.6 million customer accounts through a distribution network of branches.

They are taken through a well-designed HR program. the Code of Conduct. All personnel atKMMFC ltd. making proper and adequate disclosures.Management: The management at Kotak Mahindra Mutual Fund Company Limited. is to identify issues considered sensitive by global corporate standards. The Kotak Mahindra Mutual Fund Company Limited Board is a professional body. which includes transparency and timely dissemination of information to its investors and unit holders. is committed to good Corporate Governance. It has a clearly defined prohibition on insider trading policy and regulations. conducted to impart work ethics. are made aware of the dos and don¶ts as part of the Dealing policy laid down by the Securities and Exchange Board of India (SEBI). and implement Policies/guidelines in conformity with the best practices as an ongoing process. One of the core objectives of Kotak Mahindra Mutual Fund Company Ltd. The management believes in the principles of propriety and utmost care is taken while handling public money. Internet and e-mail usage and a host of other issues. Kotak . has a preset code of conduct for all its officers. Employees: Kotak Mahindra Mutual Fund Company Limited. including well-experienced and knowledgeable Independent Directors. information security. Regular Audit Committee meetings are conducted to review the operations and performance of the company.

FD. Post office saving. gives top priority to compliance in true letter and spirit. The traditional investment option like. Government bond¶sand investment in the share are no longer very attractive. Bank.Mahindra Mutual Fund Company Ltd. fully understanding its fiduciary responsibilities INTRODUCTION: We can study the growth of Mutual Fund in broadly Two part¶s 1. because . Indian Scenario 1. Global Scenario Mutual funds have emerged as relatively new attraction option for the investment World wide in recent years. Global Scenario 2.

A. So. Despite the expected continuing growth in the industry. INDIAN SCENARIO: The Mutual fund industry has opened up many exciting opportunities to Indian investor. Mutual fund now represents the most appropriate investment opportunity for small investor. The popularity of mutual fund can be imagined from the fact the Birth place of Mutual fund . and how they function Differently from other financial intermediaries such as Bank¶s. Mutual fund is still a new financial intermediary in India.Govt.S. . with more money under mutual fund management than Deposited with banks. all this has resulted into the emergence of mutual funds which gives comparatively higher returns with safety. A new phenomenon has started under which more saving now being entrusted to the funds. Hence. Deposit¶s give lesser return and stock market is very much volatile which makes the investment risky. what they can do for investor and what they cannot. The fund industry has already overtaken the banking industry. As financial market become more sophisticated and complex. investor needs a financial intermediary who provides the required knowledge and professional expertise on successful investing. Financial planner. it is important that the investor .The U. the mutual fund agent/ Distributor. investment advisor and even the fund employee acquire the better knowledge of what mutual fund are.

selecting the securities with growth and income potential from the capital market involved careful research and monitoring of the market. . Besides. you are buying shares (or portions) of the mutual fund and become a shareholder of the fund. which was not possible for all investor. When you invest in a mutual fund. CONCEPT OF MUTUAL FUNDS A Mutual Fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. besides the conventional mode of bank deposit. With greater volatility in the stock market¶s many investor who brought highly price share lost money and withdrew from the market together.Place of Mutual Fund In Financial Market: Indian household started allocating more of their saving to the capital market in 1980¶s with investment flowing into Equity and Debt instrument. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). Even those investor who continued as direct investor in the stock market realized that the key to successful.

A Mutual Fund is trust that pools the saving of a number of investments who share a common financial goal. investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Mutual Fund Operation Flow Chart . professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund. debentures and other securities. By pooling money together in a mutual fund. But the biggest advantage to mutual funds is diversification.Mutual Funds are one of the best investment ever created because they very cost efficient and very easy to invest in (you don¶t have to figure out which stock or bonds to buy). Thus a Mutual Fund is the most suitable instrument for the capital man as it offers an opportunity to invest in a diversified. The income earned though these investment and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. The money thus collected is then invested in capital market instrument such as shares.

STRUCTURE OF MUTUAL FUND There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund: How is a mutual fund set up? .

Custodian who is registered with SEBI holds the securities of various schemes of the fund in its custody. which has sponsor. accounting and other functions pertaining to the fund. The trust is established by a sponsor or more than one sponsor who is like promoter of company.A mutual fund is set up in the form of trust. AMC approved by SEBI manages the funds by making investments in various types of securities. marketing. trustee. A) MUTUAL FUND SPONSERS: The Mutual fund itself is a trust registered under the Indian Trust Act. The sponsor is the person who acts alone or with another corporate to establish a mutual fund. Role of Sponsor:  Sponsor is a person who sets up a Mutual Fund  Sponsor settles the Trust and executes Trust Deed  Sponsor contributes to the initial capital of the Trust  Sponsor appoints the Board of Trustees  Sponsor appoints Asset Management Company  Sponsor contributes minimum 40% of net worth of AMC Who can be a Sponsor? . The trustees of mutual fund hold its property for the benefit of the unit holders. and is initiated by a sponsor. Asset management Company and custodian. The sponsor then appoints an AMC to manage the investment.

They monitor the performance and compliance of SEBI regulations by the mutual fund. SEBI regulations require that at least two third of the directors of trustee company or board of trustee must be independent i. Also. Criteria of a Sponsor are: y Positive net worth y Minimum 5 years¶ track record y History of positive After Tax Profit for 3out of 5 years including fifth year y Net Worth more than Contribution for AMC y µFit and Proper¶ person B) MUTUAL FUND TRUSTEES: The trustees are vested with the general power of superintendent and direction over AMC.e. they should not be associated with the sponsor. Board of Trustees & Role:  Trustees appointed by the Sponsor with SEBI approval  At least two third Trustees must be Independent  The Trustees have a FIDUCIARY responsibility towards unit holders  Trustees not liable for acts done in good faith and if they have exercised adequate due diligence  Trustees oversee the functioning of AMC  Trustees approve each MF scheme floated by AMC  The investments in MF¶s are held by the Trustees  Trustees receive fees for their services. 50 per cent of the directions of AMC must be independent. .  Obligation to undertake General & specific due diligence.

A mutual fund¶s custodian may act as mutual funds transfer agent. maintaining records of shareholders transactions and balances. Also referred to as ³Mutual Fund Corporation´. Director. bank or similar financial institution responsible for holding and safeguarding the securities owned within a mutual find.Registered with SEBI . it requires a third-party custodian to hold and safeguard the securities that are mutually owned by all the fund¶s investors.g. C) MUTIAL FUND CUSTODIAN: A trust company. This structure mitigates the risk of dishonest activity by separating the fund manager from the physical securities and investor records. Custodian / Depository Participant:  Custodian / DP: y Appointed by Board of Trustees y Keep record & account of Securities / Investments y Collects benefits under Securities. Since a mutual fund is essentially a large pool of funds from many different investors. Employee or Officer of AMC  One can be Trustee of two MF¶s if approved by Board of Trustees of both the Mutual Funds.Who can be a Trustee? Eligibility Conditions:  Person of high repute and integrity  Not guilty of moral turpitude  Not convicted for economic offence under securities laws  Not a part of AMC e.

Microsoft. Ford. Coco-Cola. You can receive interest and your principle back over predetermined amount of time. Stocks are the most common ownership investment traded on the market. . and General Mills. Examples of public companies include IBM. redeems. Where Do Mutual Funds Invest?  Stock Stocks represent shares of ownership in a public company.  Bonds Bonds are basically a chance for you to lend your money to the government or a company.y Sponsor & Custodian / DP cannot be the same entity Registrar & Transfer Agent:  Registrar & Transfer Agent: y Issues. Bonds are the most common lending instrument traded on the market. transfers units of MF schemes y Keeps Unit Holders A/c¶s up to date y Registered with SEBI OBJECTIVE OF MUTUAL FUND  To Mobilise saving from public  To invest them to earn a good return  To achieve long term capital appreciation  To provide investment expertise for the benefits of the investor  To assist in the process of capital formation and industrial development of the country.

The most basic level of diversification is to buy multiple stocks rather than just one stock. 2. international small companies). .e. Diversification Diversification is the idea of spreading out your money across many different types of instruments. then adding bonds then international. and precious metals). Choosing to diversify your investment holding reduce your risk tremendously. Beyond that. Investing isn¶t a game. Your financial future depends on where you hard earned dollars and it shouldn¶t be taken lightly. you can diversify even more by purchasing different kinds of stocks. However. real estate. It could take you week to buy all these investments but if you purchased a few mutual funds you could be done in few hours because mutual funds automatically diversify in a predetermined category of investments (i. it is important for people to focus on making money. Get Focused Investing in individual stock can be fun because each company has a unique story.There are many other type of investments other than stocks and bonds (including annuities. but the majority of mutual funds in stocks and/or bonds. When one investment is down another might be up. MUTUAL FUND ADVANTAGE 1. and so on. Mutual funds are set up to buy many stocks (even hundreds or thousands). low-grade corporate bonds. ±growth companies.

These managers have been around the industry for long time and have the academic credentials to a back it up. Even if some of us are better at picking stocks than a professional and their support staff. research and trade the market on a daily basis. mutual fund companies can take advantage of economies of scale. With large sums of money to invest. Saying you could outperform a mutual fund manager is similar to a football fan sitting on their couch saying ³I could have made that catch´ ±possible. Ease of use .3. Efficiency By pooling investor¶s monies together. they often trade commission-free and have personal contacts at the brokerage firms 5. but not likely. 4. It would be a bit cocky to think that you know more than mutual fund manager. you are essentially hiring a professional manager at an especially inexpensive price. Professional Management By purchasing mutual funds. most of us would not want to spend the amount of time it takes to watch.

Cost Mutual funds are excellent for the new investors because you can invest small amounts of money and you can invest at regular intervals with no trading costs. CD¶s offer no liquidity (not without a hefty fee) and bonds can be difficult. their investment is automatically down 15 percent every time they invest. mutual funds are highly liquid. Stock investing. or are short on time. Liquidity If you find yourself in need of money in a short amount of time. however. Simply put in your order during the day and when the market closes a check will be sent to you or you can have it wired to a bank account. similar to your checking account at the bank. That is not good way to start off! . carries high transaction fees making it difficult for the small investors to make money.Can you imagine keeping track of portfolio consisting of hundreds of stocks? The bookkeeping duties involved with stocks are much more complicated than owning a mutual fund. which means you can actually write checks from the account. 6. too. If an investor wanted to put in 1000 a month into stocks and the broker charged 150 per transaction. Some mutual funds also carry check writing privileges. If you are doing your own taxes. 7. this can be a big deal. Stocks can be much more difficult depending on what kinds of stocks you are investing in.

but mutual funds are non-discriminatory. one worry is that the company you are investing in goes bankrupt. that chance is next to nil. mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy.just because a . With mutual funds. It doesn¶t matter whether you have 50 or 500. Fluctuating Returns Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. such as bonds and Treasury bills. all of the companies that it holds would have to go bankrupt. the same account access and the same investment.Wealthy stock investors get special treatment from brokers and wealthy bank account holders get special treatment from banks. DISADVANTAGES 1. mutual funds carry much lower risk than stocks. Since mutual funds typically hold anywhere from 25-5000 companies. but you have to go out of your way to find them.000 you are getting the exact same manager. Certain mutual funds can be riskier than individual stocks. This is primarily due to diversification (as mentioned above). you need to research the risks involved . Unlike fixedincome products. 8. Risk In general. With stocks. but I hope you see the advantages of using mutual funds and make the right choice for the money that you really care about. I won¶t argue that you shouldn¶t ever invest in individual stocks.

Having ample cash is great for liquidity. The annual fund operating fees are . 3. that doesn't mean the performance will be stellar. funds typically have to keep a large portion of their portfolios as cash. but money sitting around as cash is not working for you and thus is not very advantageous.S. The shareholder fees.professional manager is looking after the fund. you won't get anything back. To maintain liquidity and the capacity to accommodate withdrawals. Funds will typically have a range of different fees that reduce the overall payout. This is especially important for investors in money market funds. In mutual funds. read Are My Investments Insured Against Loss? 2. a mutual fund will not be insured by the Federal Deposit Insurance Corporation (FDIC). government. Cash and More Cash As you know already. but it comes at a cost. (For more on this. Another important thing to know is that mutual funds are not guaranteed by the U. Unlike a bank deposit. the fees are classified into two categories: shareholder fees and annual operating fees. so in the case of dissolution. mutual funds pool money from thousands of investors. Costs Mutual funds provide investors with professional management. so everyday investors are putting money into the fund as well as withdrawing investments. Cash. in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds.

sales growth. The Securities and Exchange Commission (SEC) requires that funds have at least 80% of assets in the particular type of investment implied in their names. read Stop Paying High Fees. How the remaining assets are invested is up to the fund manager.charged as an annual percentage . these fees only magnify losses. earnings per share. A fund can therefore manipulate prospective investors by using names that are attractive and misleading. in years when the fund doesn't make money. etc. These fees are assessed to mutual fund investors regardless of the performance of the fund. while others are classified as small cap or income funds. Or. Instead of labelling itself a small cap.) 4. Unlike stocks. mutual funds do not offer investors the opportunity to compare the P/E ratio. the "Congo High-Tech Fund" could be sold with the title "International High-Tech Fund". EvaluatingFunds Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Some funds may be incorrectly labelled as growth funds. A mutual fund's net asset value gives investors the total value . Misleading Advertisements The misleading advertisements of different funds can guide investors down the wrong path. (For more on this topic. the different categories that qualify for the required 80% of the assets may be vague and wide-ranging. a fund may be sold as a "growth fund". As you can imagine.usually ranging from 1-3%. 5. However.

of the fund's portfolio less liabilities, but how do you know if o ne fund is better than another? Furthermore, advertisements, rankings and ratings issued by fund companies only describe past performance. Always note that mutual fund descriptions/advertisements always include the tagline "past results are not indicative of future returns". Be sure not to pick funds only because they have performed well in the past - yesterday's big winners may be today's big losers

Discover the Origin of Mutual Fund Investing

When three Boston securities executives pooled their money together in 1924 to create the first mutual fund, they had no idea how popular mutual funds would become. The idea of pooling money together for investing purpose started in Europe in the mid-1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was called the Massachusetts Investors Trust After one year, the

Massachusetts Investors trust grew from $50,000 in asset in 1924 to $392,000 in assets (with around 200 shareholders). In contrast, there are over 10,000 mutual funds in the U.S. today totalling around $7 trillion (with approximately 83 million individual investors) according to the Investment Company Institute.

History of Mutual Fund in India
In India the setting up of Unit Trust of India (UTI) in 1963 marked the advent of mutual fund industry. Unit Trust of India was set up by an Act of Parliament. The Purpose of establishing of Unit Trust of India was to give a fillip to the equity market. However, in the initial years, the emphasis in UTI was on income product. Master Share launched in 1986 ushered in the equity-oriented schemes in India. Unit Trust of India launched a variety of innovative products suited to meet diverse need of investors, virtually the complete life cycle of investors.

Evolution of Mutual Fund in India

First Phase ± 1964-87: Unit Trust of India (UTI) was established on 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 700crores 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.

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. As at the end of January 2003, there were 33

Emergence of large & uniform industry.44.29. Assured Return Schemes of UTI taken over by a special undertaking administered by GOI. Unit Trust of India was set up by an Act of Parliament. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. PNB. However. the emphasis in UTI was on income product. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities.835 crores as at the end of January 2003. representing broadly. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. Phase 5 (1999-2004): UTI Act 1963 repealed in Feb 2003. It is registered with SEBI and functions under the Mutual Fund Regulations. UTI Mutual Fund becomes SEBI compliant.mutual funds with total assets of Rs. 1.805 crores. 000 crores of assets In India the setting up of Unit Trust of India (UTI) in 1963 marked the advent of mutual fund industry. virtually the complete life cycle of investors. The Unit Trust of India with Rs. . The Purpose of establishing of Unit Trust of India was to give a fillip to the equity market. 541 crores of assets under management was way ahead of other mutual funds Fourth Phase ± since February 2003: In February 2003. 21. in the initial years. the assets of US 64 scheme. Unit Trust of India launched a variety of innovative products suited to meet diverse need of investors. sponsored by SBI. Master Share launched in 1986 ushered in the equity-oriented schemes in India. The second is the UTI Mutual Fund Ltd.76. BOB and LIC.

The graph indicates the growth of assets over the years. GROWTH IN ASSETS UNDER MANAGEMENT Industry Profile: .

By Structure  Open. risk tolerance and return expectations etc.Industry Structure UTI Public Sector MF¶s Private Sector MFs Indian Private Sector Funds JV with Foreign Funds Foreign MFs TYPES OF MUTUAL FUND SCHEMES Wide varieties of Mutual Fund Schemes exist to cater to the needs such as financial position. The table below gives an overview into the existing types of schemes in the Industry.Ended Schemes  Close-ended Schemes  Interval Schemes By.Investment Objective  Growth Scheme  Income Scheme  Balanced Scheme  Money Market Scheme .

there is no cap on the amount you can buy from the unit capital keep growing. Such funds can issue and redeem units any time during the life of schemes. The advantages of open ended schemes are:1. 2. After that such . 2) CLOSE ENDED SCHEME:Close-ended schemes have fixed maturity periods. Hence unit capital of open-ended funds can fluctuate on a daily basis. Any time enter option. Index Scheme 2. Investors can buy into these funds during the period when these funds are open in the initial issue. open-ended schemes do not have a fixed maturity. These schemes have unlimited capitalization. These funds are not generally listed on any exchange. Any time exit option. Investors can buy or sell units at NAV-related prices from and to the mutual fund on any business day.Other Scheme  Tax Saving Scheme  Special Schemes 1. These funds are not generally listed on any exchange. Sector Special Scheme 1) OPEN ENDED SCHEME:Open-ended Schemes do not have a fixed maturity period. Open ended Schemes are preferred for their liquidity.

3) AGGRESSIVE GROWTH FUND:These funds seek to provide maximum growth of capital with secondary emphasis on dividend or interest income. While the growth potential may be less over the short term. . However after the initial issue you can buy or sell units of the schemes on the stock exchange where they are listed. They invest in common stock with a high potential for rapid growth and capital appreciation. They are considered more conservative in their approach because they usually invest in established companies to achieve long-term growth. many growth funds have superior long-term performance records. Growth fund provides low current income but the investor principal is more stable then it would be in an aggressive growth fund. Aggressive growth funds are suitable for those investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. The market price of the unit could vary from the NAV of the schemes due to demand and supply factor. 4) GROWTH FUNDS:Like aggressive growth fund generally invests in stocks for growth rather than income.scheme cannot issue new units expect in case of bonus or right issue. They are not suitable for investors who must conserve their principal or who must maximize their current income.

Fixed income funds are suitable for investors who wants to maximize current income and who can assume a degree of risk in order to do so. 6) FIXED INCOME FUNDS:The goal of fixed income funds is to provide high current income consistent with the level of capital. The investments strategies use to reach these goals vary among funds. Growth and income funds have low to moderate stability of principal and moderate potential for current income and growth. 5) GROWTH AND INCOME FUNDS:Growth and income funds seek long-term growth of capital as well as current income. Growth of capital is of secondary importance. They are suitable for investors who can assume some risk to achieve growth of capital but want to maintain a moderate level of current income. but a lower stability of principal. 7) EQUITY FUNDS:- . Fixed income funds offer a higher level of current income than money market funds.These funds are suitable for growth oriented investors but not investors who are unable to assume risk or who are dependent on maximizing current income from their investments.

There are however many type of equity funds. banks and corporation and treasury bills. utilities or precious metals. technology. leisure.Funds that invest in stock represent the largest category of mutual fund. 10) SPECIALITY/SECTRAL FUNDS:These funds invest in securities of a specific industry or sector of the economy such as health care. money market mutual funds are able to keep a virtually constant unit price. The funds enable . Generally the investment objective of this class of fund is long-term capital growth with some income. Because of their short-term investments. short-term debt securities of agencies of the Indian government. 9) MONEY MARKET FUNDS/ LIQUID FUNDS:For the caution investors these funds provide a very high stability of principal while seeking a moderate to high current income. These funds invest in both shares and fixed income securities in the proportion indicated in their offer documents. virtually risk free. only the yield fluctuates. 8) BALANCED FUNDS:The Balanced funds aims to provide both growth and income. It is an idea for investors who are looking for the combinations of income and moderate growth. They invest in highly liquid.

but to get desired returns positive time frame is required are Funds Equity Funds Balanced Funds MIP¶s Income Funds Liquid Funds Time Period 3 Years (plus) 18 months to 3 Years 1 Year (plus) 6 months to 1 year Few days to 6 months SUGGESTED TIME FRAMES: Funds Sector Funds Returns 22% to 25% p. other speciality funds such as index funds gives investors a broadly diversified portfolio and attempt to mirror the performance of various market averages.a . a more conservative approach than investing directly in one particular company. How Long To Keep Investment To Get Maximum Returns : Technically open-ended funds you can withdraw your investment even within a week. Sector funds offer an opportunity for sharp capital gain in cases where the fund¶s industry is ³in favour´ but also entail the risk of capital losses when the industry is out of favour.investor to diversify holding among many companies within an industry. While sectors funds restrict holdings to a particular industry.

Balanced Funds MIP¶s Pension Plans Income Funds Liquid Funds 15% to 18% p.a 12% to 15% p. Liquid Funds are less Risky and also generate less Returns where as Sector Funds are more Income Funds Balanced Funds . The past performance of the MUTUAL FUNDS is not indicative of future performance. RISK RETURNS GRAPHS FOR VARIOUS FUNDS:- Sector Funds R E Equity Funds T U R N S Liquid Funds RISKS The above Graph shows the Risk and Returns generated by different Funds.a 7% to 9% p.a The above-mentioned returns in the table are indicative and not assured. All investments in MUTUAL FUNDS are securities and are subject to market risk and the NAVs of the schemes may go up and down depending upon the factors and forces affecting the security market including the fluctuations in the internal rates.a 10% to 12% p.

Once NAV is determined. in the scheme and the price at which such units may at any time be repurchased by the mutual fund. This price may be termed as µoffer price¶ or µpurchase price¶ and µbid price¶ or µsale price¶ respectively. The net asset value (NAV) is the actual value of shear or unit on any business day. It is computed as follows: Market value of the funds¶ investments + Receivables + Accrued . To decide these prices NAV is the base. KEY FINANCIAL TERMS As a participant in a mutual fund scheme. once µInitial Public Offer¶ is over. repurchase price and reissue price 3) Discount 4) Rate of return 5) Initial expenses 6) Recurring expenses 1) Net Asset Value SEBI Regulations permit mutual funds to provide for the price at which the units may be subscribed or sold to the independent participants. offer price and bid price are determined by adjusting NAV.Risky but generate more Returns by the example of above two Funds it is clear that Risk and Returns are directly proportional to each other. we should understand the following terms: 1) Net asset values 2) Market price.

5-0. Name of the scheme Size of the scheme Face value of the shear Number of outstanding shears Market value of the funds¶ investments Receivables Accrued income Liabilities Accrued expenses NAV= (180+1+1-0. as follows. 0. 0. 18. Generally. 180 crore : Rs. 1 crore : Rs.1 2) Market Price.Liabilities .5 crore : Rs. 100 crore : Rs. 10 : 10 crore : Rs. the scheme is said to be selling at a discount: if it is higher than scheme is said .5) : ABC : Rs.Accrued expenses NAV = __________________________________________________________ Number of shares or units outstanding The calculation of NAV may be illustrated with the help of a simple example. the market price of the closed end scheme trend to be lower than its NAV. If the market price is lower than the NAV.Income . 1 crore : Rs. and Reissue Price A closed-end scheme has to necessarily listed on a recognized stock exchange to ensure that its participants enjoy liquidity.5 crore 10 = Rs. Repurchase Price.

one year or any other) rate of return on a mutual fund scheme is calculated as follows: Rate of return for the period = NAV at the end of the period + NAV at the beginning of the period ± Dividend paid during the period . The repurchase and reissue prices are. The repurchase price is usually linked to the NAV. The small and naive investors are allured towards the open-end schemes as they are sold more aggressively: the large and sophisticated investors may find mutual funds. not very appealing. In additional to listing. the mutual fund has to stand-ready to repurchase and reissue of its units or shears on a continuing basis. They are perhaps not well suited for any important group of investors. in general. the reason lies in the structure. 3) Discount Most of the closed-end schemes sell at a discount. an open-end scheme is not listed on ordinarily listed on the stock exchange. Unlike a close-end scheme. 4) Rate of Return The periodic (the period may be one month. one quarter. closely linked to the NAV. Hence. According to Benjamin Graham. of course. The speculators also have little interest in the ordinary closed-end scheme as it lacks the excitement of specific scrip. not the performance. of such schemes. the mutual fund may also the offer the facility of re-purchase.to selling at a premium. which may sometimes be very steep.

administration. advertisements. since the date of issue. it reflects the return generated by the fund manager on NAV. Typically. it is assumed that the dividend is reinvested at 12 per cent per annum. The fund has to give a breakup of these expenses in the prospectus. However. On NAV basis. These relate to printing and mailing. certain expenses are incurred. and so on. On price basis.NAV at the beginning of the period To illustrate the calculation of rate of return. It is calculated on NAV basis or price basis. considered the following data: NAV (beginning) = Rs. commissions to agents. SEBI has prescribed a ceiling of 6 per cent on overall initial expenses. the breakup is as follows: . 17 = Rs. they are linked to the corpus of the scheme. it reflects the return to investors by way of market or repurchase price. In these calculations it is assumed that the dividend is reinvested at the NAV prevailing on the day it is paid. in the mutual funds scoreboard prepared by the Economic Times every Monday. stamp duty. 1 Rate of return is = (17 . brokerage.16) + 1 / 16 = 12 The compound annual total return (express as percent per annum) on a mutual fund scheme represents the returns to investors from a scheme. marketing. Known as initial or per-operating expenses. In includes investments of dividends and makes adjustment for bonus and rights. In this calculation. it is assumed that the dividend is reinvested at the prevailing market or repurchase price. 5) Initial Expenses When a mutual fund scheme is launched. 16 NAV (ending) Dividend paid = Rs.

recurring expenses in a year cannot exceed 3 per cent of the average net assets in that year.6% 2. It is just to discourage exit from the scheme.Printing and mailing Stamp duty and listing Brokerage and agents Advertising Marketing Administrative 1. which is charged when units are subsequently sold to public. registrars¶ fees. under regulation 46(3) permits wider margins as it states that µwhile determining the purchase price and sale price of the unit in any scheme. and custodial fees. mutual funds incur recurring expenses every year.  Loads on investments In Indian SEBI. Mutual fund shall ensure that the difference between these two prices does not exceeds seven per cent of the sale price¶. it is the sale charge. Loads can be of two types.0% 1. These consist of items like the asset management fees.0% 0. . which is deducted from the investment when investor sells his shear such load is small as compared to front-end load. Back end load: Which refers to redemption fee.4% 6) Recurring Expenses Apart from the initial expenses. It gives the range for load which can be charge from those who purchase scheme after its initial issue.5% 0. Front end load: also known as sales load. According to SEBI guidelines.5% 0.

Investors preferring liquidity may also prefer open-ended schemes.e. which provides returns during slack seasons. income-oriented. . To calculate these prices there can be many alternatives.A. All funds are now treated as no load fund. industry specific scheme may be launched.V. One is as following: Offer price = N. per unit . should it be growthoriented.V. many aspects need to be viewed viz. per unit + Load charges (Front end load) Bid price = N.Realisation (Back end load) W.These loads are adjusted to NAV to calculate the offer price and bid price. 1st August 2009 SEBI has decided that there will be no entry load and no exit load will charge to the investors.f. 1) Investors Preference: Investors not interesting in transacting at stock exchange may prefer open-ended scheme. Should it be open ended or close ended? Further. balanced or industry specific scheme? To decide about all these. 2) Expertise available with AMC: Open-ended scheme require fund managers to operate in crisis-to-crisis situation.A. 4) Untouched segments of society: Rural investors need a special attention while launching schemes. 3) Security market position: If great potential for a particular industry.  Designing a Scheme The most importantdecision any mutual fund is to make is about the type of scheme to be floated.

8) Legal formalities. All such factors may be viewed differently buy different mutual funds. etc. 5) Age of scheme: For aggressive investors design a short-term scheme like µTaurus Genshare¶ is with maturity period of 2 years only launched in contrast to a 15 years scheme by Morgan Stanley for investors with patience. Innovations may be as to: 1) Administration of the scheme: Transfer assured within 48 hours. that is why at one time different types of schemes may emerge in the market from different mutual funds. 3) Switching over facilities: Launching schemes where investors may have inbuilt option to move within these schemes.  Launching a scheme . A complete groundwork need to be done to evolve peculiarities of the scheme. close -ended schemes are to be listed on stock exchange where as open-ended are not required to be listed. 2) Financial feature: Only index-linked share to constitute the portfolio or arranging to loans against units issued. 4) Redemption: Assuring redemption at NAV without any discount or buy back. tastes. investors. To evolve of scheme similar to one which exists is simple but adding innovative feature is the real effort made by visualizing its implications.5) Potential expansion of markets related to income. and preferences. 7) Risk return pattern of existing avenues: Bank deposits are no longer attractive as the interest rate is on fall. growth of household sector. return. 6) Assessing strength and weakness of competitors to penetrate their segments.

To avoid unnecessary delay on part of SEBI. Yet some of the main contents of an offer documents are as under: What is an Offer Document?  Offer Document of a MF scheme is like a Prospectus issued by AMC inviting Public to subscribe to units of MF scheme  Discloses adequate information for investors to take informed investment decisions Offer Document & KIM  Offer Document y y y y y y y A Legal document Issued by AMC on behalf of Trustees Offer Document describes the Product/Scheme Very important document for prospective investor First time investors must read OD before deciding to invest For Close Ended Fund issued at the time of launching a scheme For Open Ended Fund revised every 2 years  KIM y y y A abridged version of Offer Document A part of the Application Form To be in the format as prescribed by SEBI .AMC can announce any scheme of mutual fund only after getting a nod from SEBI to whom the particulars of the scheme. Although no specified format of prospectus or letter of offer is laid down. prospectus/letter of offer and material relevant to scheme are submitted.

Board of Trustees. lead managers. asset Management Company. duration of the scheme. policies and limitations. Thereafter fresh OD to be filled with SEBI Contents of Offer Documents of a Mutual Fund Scheme  Name and addresses of the mutual fund.  Details about the rates of spread.Offer Document y y y y y y Offer Document prepared and issued by AMC Offer Document to be approved by Trustees Offer Document filed with SEBI with fees of Rs. accounting and administration of the scheme. solicitors and custodian. listing and transfer of the units. custodian. marketable lots. auditors. 25000/Modifications if any advised by SEBI within 21 days of its filing SEBI neither approves nor disapproves an OD Offer Document valid for 6 months for launching of scheme from the date of receipt of by AMC of SEBI letter containing observations. Duties and power of the board. date of opening and closing. minimum subscription.  Investment objectives. registrar and transfer agents. basis of allotment. asset Management Company. registrars and transfer agents.  Declaration of associated risk as required by SEBI. .  Details of management and administration: Sponsor.  Target amount. issue price. dividend policies. availability of forms and offer documents.

10 crores for AMC Minimum contribution of sponsor: 40% of share capital of AMC At least 50% of Directors of AMC to be independent AMC can do only the following businesses y y y Asset Management Services Portfolio Management Services Portfolio Advisory Services  AMC can be terminated/changed with the consent of y y Majority of Trustees or At least 75% majority of Unit holders Role of AMC  AMC is the Fund Manager for managing Mutual Fund Assets  AMC floats different MF schemes . and professional service that are normally available to individual investors. liquidity. Details of issue expenses and other expenses. For a fee. ASSET MANAGEMENT COMPANY A firm that invest the pooled funds of retail investors in securities in line with the statedinvestment objectives. the investment company provides more diversification. Asset Management Company is:      Constituted as a Company under the Indian Companies Act Minimum Net worth of Rs.

Registrars and Transfers Agents are assigned the job of receiving and processing the application forms of investors.holders and numbers of transaction etc. Working of Asset Management Company: It is not required that AMC performs all its function of its own. according all transfers of units and maintaining all such records. Such fee is charged by AMC from the mutual fund and is paid to the agents. It can hire service of outside agencies as per its requirements or performs all function of its own. . Issuing divided or income warrants. repurchasing the units. Tata mutual fund proposes to pay of 0. redemption of units. issuing units certificate.  All Security transactions with a Sponsor and his associates to be disclosed  Disclosure of transactions with a company which has invested more than 5% of NAV in any scheme.  Asset Management Agreement between AMC and Trustee Obligations of AMC  Limit of 5% of aggregate purchase and sales of Securities under all its scheme per broker per quarter  As far as possible AMC to avoid services of its sponsor. For such service they are entitled to a fee. AMC accountable to the Trustees  AMC charges Asset Management Fees subject to ceiling prescribed by SEBI. In India almost all AMC engage such agents. which is in proportion to numbers of units . sending refunds orders.60 percent of schemes weekly net assets for this service.

when.  Fund Manager:Asset Management companies manage the investment of fund through a fund manager. how much securities are to be sold or . It is so because size of schemes is not to big. such as under. Individual fund manager¶s capacity varies between individuals. One¶s expertise and experience in investment handling decided the size of total corpus one can handle. A single fund manager handles many schemes simultaneously. depending on operational strategies.A. It is desirable to have independent fund manager for each scheme handled by it and this is the practice in U.Asset Management company Registrar & Transfer Agent Lead Manager Legal Advisors Advisors Fund Accounting Investment Advisors Fund Manager FUNCTIONS OF ASSET MANAGEMENT COMPANY There are two main functions of AMC (a) Investment: The major strength of any AMC lies its investment functions is a specialized function which. Each AMC may evolve its own criterion for number of fund managers.S. But in India the practice is otherwise. His basic function is to decide about which.

It is B. Dealers are to comply with all formalities of sale and purchase through brokers. Research and Planning Cell This department plays a crucial role. which lays down the guidelines for allocation of business to different brokers. This section also assists planning new schemes and designing innovations in schemes.D. Such outsiders need not be technical analyst. The research can be with respect of securities as well as positive investment. a separate section may be created in under the charge of a person called dealer having deep understanding of a stock market operations.. . such units can be created by AMC of its own or research finding can be borrowed. Depending again on the operational policies. The fund manager can contribute to the bottom line of mutual fund by spotting significant changes in securities ahead of the crowed.bought. But there are mutual fund following the philosophy ³your expertise is your original research´. To a great extent the success of any scheme depends on the calibre of the fund manager. Sometimes this division is under the charge of marketing division of AMC. Many big mutual funds have their own dealing rooms. It performs a very sensitive and technical assignment. Such brokers are to be approved by Board Of Directors of AMC. Such strategy saves a lot of funds to be invested in small corpus can hardly afford to have their own database. In India at present many funds depends on outsiders.  Dealers:- To execute the sale and purchase transactions in capital or money market. Even brokers provide tips to mutual fund.O.

customers with diversified profile viz. Post issue services play an important role in customer¶s satisfaction. a sensitive commodity and only service is involved in selling the product. The main challenge of marketing to mutual fund is that with same product. Mutual funds deals with small investors¶ hard earn money.  Underwriter:Mutual fund have been permitted by SEBI to go in for underwriting of public issues to generate additional income for their schemes. Mutual fund have to make an application to SEBI for registration under SEBI (underwriters) Rules and Regulations 1993. Any underwriting decision by any scheme shall be in conformity with the provisions of the SEBI of India (mutual fund) Regulation. Demographics. life style and psychographics are to be served. An underwriting commitment by the Mutual Fund will be made as if the Mutual Fund is actually investing the amount under any scheme. . Since mutual funds are to interact with lacks of investors who are likely to be associated for a longer tenure. (b) Marketing:Marketing is a big challenge in business especially for mutual fund.For making sales or purchase at different stock exchanges. dealer may have his staff deputed at such centres. socio-economic background.

Appointment of solicitors. stationery for unit certificates.e. This stationery is to be distributed at appropriate time to the concerned agencies. refund order etc. Gazette notification of scheme is also its assignment. Marketing division has to evaluate the market potentials. Reserve Bank of India. strength and weakness. commission cheques. offer documents. Merger of two AMC¶s: Merger of 2 AMC¶s: y y y y Approval of Trustees of both AMC¶s required SEBI approval required Approval of High Court also required Unit holders are informed and given option to exit without load Take Over of AMC / Scheme of AMC  Take over of AMC by new Sponsor . Marketing division is to pursue the appointment of Registrar to the issue. The most crucial ³marketing strategy¶ is evolved to the best advantage of the fund Advertisement strategy is also designed by it. For each scheme. Ones a scheme is approved. To identify which section of society is under serviced. a new scheme. banker statement forms. the related printing of application forms. It seeks permission from agencies like Ministry Of Finance. Marketing people also evolve a target amount of a scheme. is another important assignment of marketing division. Securities and Exchange Board of India etc.It is the marketing division which complies with the formulates to market the product i. custodians and transfer agents is also looked after by this division. Auditors. what is its market shear is very crucial question to design its future strategies.

It is an endeavour to arrive at answers to intellectual and practical problem by the application of scientific method. It is a purposive investigation. It is the application of scientific method to add to the present pool of knowledge. corrects or verifies knowledge The meaning of research is any systematic activity carried out in the pursuit of truth. It is a way of finding a new way of looking at familiar things in order to explore ways of .´ The soul of research work is methodology.y y y Trustees approval required SEBI clearance required Unit holder to be informed  Merger of two schemes of different AMC¶s  Scheme of one Mutual Fund taken over by another Mutual Fund Trustees approval required SEBI¶s approval required Unit holders to be informed RESEARCH METHOLOGY According to Clover and Balsely: Research is ³the process of systematically obtaining accurate answers to significant and pertinent questions by the use of the scientific method of gathering and interpreting informati on. Research methodology is an activity that extends.

Research involves gathering new data from primary or first hand sources or using existing data for a new purpose. designed and carried out to provide information for solving significant and pertinent problems. Research demands accurate observation and description. Characteristics of Research 1) 2) 3) 4) Research is directly towards the solution of a problem. hypothesis formulation organizing and evaluating data. Research as a process involves defying and redefining problems. inferences and conclusions after careful testing. which involves:  Defining a problem  Laying the objectives of the research  Sources of data  Methods of data collection  Data analysis & processing  Conclusions & Recommendations Research inculcates scientific and inductive thinking and it promotes the development of logical habits of thinking and organization. Research is based upon observable experience or empirical evidence. Research methodology is a very organized and systematic way through which a particular case or problem can be solved efficiently. It is a step-by-step logical process.changing it. . It is an organized inquiry. deriving deductions.

skill necessary to carry out investigation. i. b) Careful and critical.e. Research is contribution of knowledge. 6) 7) 8) Research involves the quest for answer to unsolved problem. diligent investigation in order to ascertain something.5) Research requires expertise. PROCESS AND STEPS OF RESEARCH SEARCH PROCESS IN FLOW CHART . Research means a careful inquiry or examination in seeking facts or principles. 9) Situation pregnant with problem = Research. c) Facts or principles. search the related literature and to understand and analyse the data gathered. a) It is an inquiry. Research is carefully recorded and reported.

SBI is the only Indian bank which is among the top 200 banks in the world and top 20 in Asia. real estate. Large amount of deposits are collected and utilized. A small part of deposits are used as an investment and advances. Financial investment means an exchange of financial claims stocks and bonds (collectively termed security). Large numbers of people in India saves their money in State Bank of India because it is the oldest bank and that don¶t have any doubt regarding this bank. (F) = Feed Back (FF) = Feed Forward Need and Purpose Investing in various assets is an interesting activity. Today investment is the employment of present value for uncertain future return. Mortgage etc. . As we all know that SBI is the largest bank in termed of products and services and area of approach.FF Review concepts and theories Define research problem I I I I Formulate hypothesis III Research Design (including Sample Design) IV Collect data (execution) V Review previous Research finding II Analyse data (test hypothesis If any ) VI Interpret and report VII F Where.

1) Primary data 2) Secondary data .There are several factors which may result in making the Problem complicated hence the research problem undertaken for study must be carefully selected. Data Collection Once the research problem is formulated the next task is data collection. the researcher should keep in mind two types of data. Thus a research Problem is one which requires researcher to find out the best solution for the given Problem i. refers to some difficulty which researcher experiences in the context of either a theoretical or practical situation and wants to obtain a solution for the same.Research Problem A research Problem in general. in general. past and present saving as bases for study and analysis. While deciding about the method of data collection to be used for the study. to find out by which course of action the objective can be attained optimally in the context of a given environment . figures and other relevant materials. refers to some difficulty which a researcher experiences in the context of either a theoretical practical situation and wants to obtain a solution for the same.e. Statement of Problem A research problem. The main problem under study is to analytical study of the investment pattern of SBI. Data are facts.

journals. observation is the primary data. magazines. 2) Secondary data : Secondary data may be defined as data that has been collected earlier for some purpose other than the purpose of the present study. The impact of inflation over bank rates fully required secondary data hence there is no need of primary data. In our study data was collected from books. news papers. and modern trend of information like internet.1) Primary data: The data which is collected first time through questionnaire. The analytical study of bank investment fully required secondary data hence there is no need of primary data. Area of Research y Kotak Mahindra Asset Management Company Ltd. .

Philippines. Beta etc from the secondary data from the websites such as www.Methodology Used Descriptive Analytical Research  Under this type the researcher has to use the facts and information already available and analyse them to make evaluation of the market. and analyse these to make the critical evaluation data of the material. US.valueresearchonline.  In analytical research the researcher has to use the facts already available. In fact sheet past returns were given of different funds. Sun Life Financial is a global organization evolved in 1871 and is being represented in CANADA.  Data also included value of risk measuring instruments like Standard Deviation.com Major Mutual Fund Companies 1. Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the Joint Venture of ³Aditya Birla Group´ and ³Sun Life Financial´. Japan. Indonesia. and Bermuda .  Data has been collected from the Fact sheet of the various mutual fund schemes and used those data¶s for the research.

and the AMC is ICICI Prudential Assets Management Company Limited Incorporated on 22nd June 1993. and ICICI Ltd.68. ICICI Prudential Mutual Fund was set up on 13th October 1993 with Two Sponsors. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment.Apart from India. The trustee company formed is ICICI Prudential Trust Ltd. 000 Cores.10.628 Crores.742Crores. The Indian Magnum fund with a corpus of Rs. . Of America. ICICI Prudential Mutual Fund The Mutual Fund of ICICI is a Joint Venture with Prudential Plc. HDFC Mutual Fund HDFC Mutual Fund was set up on 30th June 2000 with TWO Sponsors NamelyµHousing Development Finance Corporation Limited¶ and µStandard Life Investment Limited¶. 4. Recently it crossed Asset Under Management [AUM] of Rs. One of the Largest Insurance Company in United State of America. Prudential Plc. 2. The total Asset Under Management of ICICI Prudential Mutual Fund is Rs. 3. SBI Mutual Fund State Bank of India Mutual Fund Is the First bank Sponsored Mutual fund to Launch Offshore Fund. It presently have 2200 investors of Mutual Funds. 225 Cr. It presently have 1250 investors of Mutual Funds. The total Asset UnderManagement of HDFC up to last month is 84.

20. State Bank of India (SBI) and Life Insurance Corporation of India (LIC). KMAMC Started its Operation in December 1998. Kotak Mahindra Mutual Fund Offers Schemes Catering To Investor with Varying risk-returns Profile. UTI Mutual Fund UTI assets Management Company Private Limited is established in 14th January 2003. 6. It is presently having more than 1. The Sponsor of UTI Mutual funds are Bank of Baroda (BOB).Approximately. 99. State bank of India mutual fund has Rs. The Schemes of UTI mutual fund are Liquid funds.818 Investors in its various Schemes. Today it is a largest bank Sponsored mutual fund in India. Now it has an Investor Base of over 8 Lakh Spread over 18 Schemes. Kotak Mahindra Mutual Fund Kotak Mahindra Assets Management Company is a Subsidiary of KMBL. They have already Launched 35 Schemes Out of which 15 have already yielded handsome returns to Investor. 38.782 Crores as AUM.000 Corer. Punjab National Bank (PNB). It was the First Company to launch dedicated gilt Schemes investing only in Government Securities. UTI Assets Management Company Presently Manage a Corpus of Over Rs. 5. . Managed the UTI Mutual fund with the support of UTI Trustee Company Private Limited.

As the Investment Manager for LIC Mutual Fund. 1882. Index Funds. and Reliance Capital Trustee Co.Income funds. Equity Funds and Balanced funds. 8. LIC Mutual Fund Was Constituted as a Trust in Accordance with the provision of the Indian Trust Act. 2 Crores towards the Corpus of Fund. Q1) How old are you? 65 and over 35 to 44 45 to 64 25 to 34 . Ltd. Assets Management funds. LIC Mutual Fund Life Insurance Corporation of India Set up LIC Mutual Fund On 19th June 1989. Reliance Mutual Fund Reliance Mutual Fund (RMF) was Established as trust under Indian Trust act. The Company Starts its Business on 19 th April 1994. Reliance Mutual fund was formed for Launching of Various Schemes under which units are issue to the public With a view to Contribute to the capital market and to provide Investor the Opportunities to Make Investments in Diversified Securities. It Contributed Rs. The Trustees of LIC Mutual Fund Have Appointed Jeevan Bema Sahayog Assets Management Company Ltd. The Sponsor of RMF is Reliance Capital Ltd. It was Registered on 30th June 1995 As Reliance Capital Mutual Fund which was changed on 11th March 2004. 1882. 7.

2) What is your primary objective for your investment? ¦ ¥¢¡¨ ¢¡  £§ ¦¥¤£ ¡  ¢ 64 44 34 £§ £§ . Q. whereas 11% of the investors are from the age group of 35-44 and remaining 4% of the investor are from the age group of 65 and over. Finding: Age groups 65 45 35 25 24 Percentage 4% 25% 11% 60% 0% 70% 60% 60% 50% 40% 30% 20% 11% 10% 0% 65 and over 45 to 64 35 to 44 25 to 34 24 and under 4% 0% 25% Description: The above study shows that 60% of the investors are belonging to age group of 25-34 and 25% of the investors are from the age group of 45-64.24 and under The above analysis was to know the age group of the investor.

Preservation of principal Income Conservative Growth Growth & Income Aggressive Growth Current The above analysis was done to know the basic objective of the investor behind investing in different mutual Funds schemes. 6% having Conservative Growth and remaining 4% having an objective of Aggressive Growth. whereas there is no investor with an objective of Preservation of Principal. whereas 9% investors have an objective of Current Income.   9%  90% ©      8 % % % . Finding: Primary objective Preservation of rincipal Growth & ncome onservative Growth ressive Growth rrent ncome Percentage 0% 9% 81% 6% 4% 80% 70% 60% 50% 40% 30% 20% 10% 0% Preservation of Current Income principal 0% Growth & Income Conservative Growth Aggressive Growth Description: The above study shows that the primary objective of 81% investors for investment is Growth & Income.

3) How do you expect your current income to change? Decrease slightly Remain about the same Increase with the pace of inflation Increase dramatically The above analysis was done to know the expectation of investors about their current income to change. Finding: Change In Income Decrease slightly emain same Percentage 0% 27% 69% 4% Description: The above study shows that 69% of investors expect their current income will increase with the pace of inflation and 27% of investors are expect their current income will remain about the same. whereas 4% of investors expect their income will " ! !    ncrease with pace of inflation ncrease ramatically 80% 70% 60% 50% 40% 30% 20% 10% 0% 69% 27% 0% Decrease slightly Remain same Increase with pace o in lation 4% Increase ramatically .Q.

increase dramatically and there is no investor who expects his current income will decrease slightly Q. . 80% 70% 76% 60% 50% 40% 30% 24% 20% 10% 0% Yes No Description: The above study shows that 76% of investors are presently satisfied with their life from financial point of view. Finding: Financial Satisfaction Yes No Percentage 76% 24% .4) Are you presently satisfied with your life from a financial point of view? YES NO The above analysis was done to know the investor¶s satisfaction about his life from a financial point of view. whereas 24% of investors are presently not satisfied with their life from financial point of view.

Financial Advisor Advertisement Finding: Source of Information Internet Magazine riends inancial dvisor dvertisement Percentage 21% 4% 8% 61% 6% 70% 60% 50% 40% 30% 20% 10% 0% I t r t 4% Description: %&4& ) &2 3 )2 1')0%'%) % &) &%) '(' &% & % $ $ # # 61% 21% 8% 6% M z Fr ds F Ad s r Ad rt s t .5) What is your source of information while investing in mutual funds? Internet Magazine Friends The above analysis was done to know the source of information of investor while investing in Mutual Funds.Q.

Q. whereas 8% investors are gets informationfrom Friends and 8% get information from Advertisement and remaining 4% of investors are gets information from Magazine.6) You are as an investor Regular New The above analysis was done to know that whether the investor is regular or new in Mutual Funds.The above study shows that the source of information of 61% investor is Financial Advisor and 21% investors are gets information from Internet. Finding: Investor Regular New Percentage 50% 50% 60% 50% 50% 40% 30% 20% 10% 0% Regular New 50% Description: .

7) Which type of fund you prefer the most? Regular Income Debt ELSS [Tax Saving] The above analysis was done to know type of fund mostly preferred by the investors. Q.The above study shows that the 50% of investors are Regular and 50% investors are New in Mutual Fund Investment. Diversified Sector Fund Finding: Preference To Fund Regular Income und Debt und Diversified und ector und [Tax aving] percentage 44% 3% 21% 4% 28% 6 66 EL 5 5 5 5 6 .

which of the above feature is more important by the investor¶s point of view.50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Regular Income Fund Debt Fund Diversified Fund Sector Fund ELSS [Tax Saving] 3% 4% 21% 2 % 44% Description: The above study shows that the 44% of the investors are prefer Regular Income Fund most and 28% of the investors are prefer ELSS [Tax Saving] Fund most. Safety Diversification Finding: View Important To investor Return Principal afety Percentage 44% 8% 18% 7 8 . Q. whereas both Debt Fund and Sector Fund are prefer by 4% of investors respectively.8) What is most important to you in investing your money? Return Principal Liquidity The above analysis was done to know that while investing in Mutual Funds. 20% of investors are preferDiversified Fund most.

9) What type of return you expect? Monthly Quarterly Half yearly Annually Finding: Expected type of return Monthly Quarterly Half yearly nnually Percentage 10% 32% 18% 40% B A Return rincipal Safety Diversification 9 9 9 8 9 9 18 6 6 Liqui ity 9 @ 9 @ 9 9 9 9 9 9 9 50 45 40 35 30 25 20 15 10 5 0 44 C . whereas 6% investors are think for Diversification and 6% think for Liquidity and remaining 8% of investors are think that Principal is the most important thing in investing their money in Mutual Funds. Q.Diversification Liquidity 6% 6% Description: The above study shows that the 44% of investors thinks that Return is the most important thing in investing their money in Mutual Funds. 18% of investors thinks that Safety is the most important thing in investing their money.

45% 40% 40% 35% 30% 25% 20% 15% 10% 10% 5% 18% 32% 0% Monthly Quarterly Half yearly Annually Description: The above study shows that 40% investors are expect Annually return. also the 10% investors expect Monthly return. whereas 18% investors are like to get Half yearly return.10) What are your return expectations on your investment? Up to 8% Between 8 to 18% Above 18% Finding Return on investment up to 8% Percentage 0% . Q. 32% investors expect Quarterly.

D 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% up to 8% Between 8 to 18% Above18% 22% 78% .Between 8 to 18% bove18% 78% 22% Description: The above study shows that 78% business man are like to get 8 to 18% return on their investment. and 22% are like to get above 18% return on their investment.

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