EXECUTIVE SUMMARY

In a few years Mutual Fund has emerged as a tool for ensuring one’s financial well
being. Mutual Funds have not only contributed to the India growth story but have also
helped families tap into the success of Indian Industry. As information and awareness
is rising more and more people are enjoying the benefits of investing in mutual funds.
The main reason the number of retail mutual fund investors remains small is that nine
in ten people with incomes in India do not know that mutual funds exist. But once
people are aware of mutual fund investment opportunities, the number who decide to
invest in mutual funds increases to as many as one in five people. The trick for
converting a person with no knowledge of mutual funds to a new Mutual Fund
customer is to understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that customers will
accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me
enough scope to implement my analytical ability. The analysis and advice presented in
this Project Report is based on market research on the saving and investment practices
of the investors and preferences of the investors for investment in Mutual Funds. This
Report will help to know about the investors’ Preferences in Mutual Fund means Are
they prefer any particular Asset Management Company (AMC), Which type of Product
they prefer, Which Option (Growth or Dividend) they prefer or Which Investment
Strategy they follow (Systematic Investment Plan or One-time Plan). This Project as a
whole can be divided into two parts.

The first part gives an insight about Mutual Fund and its various aspects, the Company
Profile, Objectives of the study, Research Methodology. One can have a brief
knowledge about Mutual Fund and its basics through the Project.

The second part of the Project consists of data and its analysis collected through survey
done on 200 people. For the collection of Primary data, I made a questionnaire and
surveyed 200 people. I have also taken interview of many People those who were
coming at the SBI Branch. I studied about the products and strategies of other AMCs
to know why people prefer to invest in those AMCs. This Project covers the topic
“THE MUTUAL FUND IS BETTER INVESTMENT PLAN.” The data collected has
been well organized and presented. I hope the research findings and conclusion will be
of use.
 CONTENTS

Executive Summary

-1 INTRODUCTION

-2 COMPANY PROFILE

-3 OBJECTIVES AND SCOPE

-4 RESEARCH METHODOLOGY

-5 DATA ANALYSIS AND INTERPRETATION

-6 FINDINGS AND CONCLUSIONS

-7 SUGGESTIONS & RECOMMENDATIONS

BIBLIOGRAPHY
 1

Introduction
 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 the capital appreciations realized are shared by its unit holders in
proportion the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. A
Mutual Fund is an investment tool that allows small investors access to a well-
diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The funds Net Asset value (NAV) is determined each day.

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

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual
fund issues units to the investors in accordance with quantum of money invested by
them. Investors of mutual funds are known as unit holders.
When an investor subscribes for the units of a mutual fund, he becomes part owner of
the assets of the fund in the same proportion as his contribution amount put up with the
corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual
fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such
as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.
NAV is defined as the market value of the Mutual Fund scheme's assets net of its
liabilities. NAV of a scheme is calculated by dividing the market value of scheme's
assets by the total number of units issued to the investors.
ADVANTAGES OF MUTUAL FUND

1. Professional Management - The basic advantage of funds is that, they are professional
managed, by well qualified professional. Investors purchase funds because they do not have
the time or the expertise to manage their own portfolio. A mutual fund is considered to be
relatively less expensive way to make and monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or

bonds, the investors risk is spread out and minimized up to certain extent. The idea behind
diversification is to invest in a large number of assets so that a loss in any particular
investment is minimized by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus
help to reducing transaction costs, and help to bring down the average cost of the unit for their
investors.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate
their holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare to other

available instruments in the market, and the minimum investment is small. Most AMC also
have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50
per month basis.

DISADVANTAGE OF MUTUAL FUND

1. Professional Management- Some funds don’t perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus
many investors debate over whether or not the so-called professionals are any better than
mutual fund or investor himself, for picking up stocks.
 2. Costs – The biggest source of AMC income, is generally from the entry & exit load which
they charge from an investors, at the time of purchase. The mutual fund industries are thus
charging extra cost under layers of jargon.

3. Dilution - Because funds have small holdings across different companies, high returns from
a few investments often don't make much difference on the overall return. Dilution is also the
result of a successful fund getting too big. When money pours into funds that have had strong
success, the manager often has trouble finding a good investment for all the new money.

4. Taxes - when making decisions about your money, fund managers don't consider your
personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is
triggered, which affects how profitable the individual is from the sale. It might have been
more advantageous for the individual to defer the capital gains liability.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund
by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987
when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvements, both quality
wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the
Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose
the AUM to Rs. 470 in in March 1993 and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than
the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian
banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in the country.
Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the
 prime responsibility of all mutual fund companies, to market the product correctly abreast of
selling.

The mutual fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.

The major players in the Indian Mutual Fund Industry are:

Major Players of Mutual Funds In India

Rank Scheme Name Date NAV (Rs.)

1 Axis Bluechip Fund- Growth  Dec 01, 2020 35.77
2 ICICI Prudential Equity and  Dec 01, 2020 154.28
Debt Fund - Growth 
3 Mirae Asset Hybrid Equity Fund Dec 01, 2020 17.10
- Growth
4 Kotak Standard Multicap fund - Dec 01, 2020 39.92
Growth
5 ICICI Prudential Bluechip Fund Dec 01, 2020 50.63
– Direct plan - Growth
6 L&T Midcap Fund - Growth Dec 01, 2020 152.21
7 DSP Midcap Fund - Growth Dec 01, 2020 69.46
8 L&T Conservative Hybrid Fund Dec 01, 2020 39.21
- Growth
9 HDFC Small Cap Fund - Growth Dec 01, 2020 43.23
10 Motilal Oswal Multicap 35 Fund Dec 01, 2020

A mutual fund is a professionally-managed firm of collective investments that pools money from
many investors and invests it in stocks, bonds, short-term money market instruments, and/or other
securities.in other words we can say that A Mutual Fund is a trust registered with the Securities and
Exchange Board of India (SEBI), which pools up the money from individual / corporate investors and
invests the same on behalf of the investors /unit holders, in equity shares, Government securities,
Bonds, Call money markets etc., and distributes the profits.
The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly calculated
daily based on the total value of the fund divided by the number of shares currently issued and
outstanding. The value of all the securities in the portfolio in calculated daily. From this, all expenses
are deducted and the resultant value divided by the number of units in the fund is the fund’s NAV.

NAV = Total value of the fund……………….

No. of shares currently issued and outstanding

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the growth
was slow, but it accelerated from the year 1987 when non-UTI players entered the
Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both
qualities wise as well as quantity wise. Before, the monopoly of the market had seen an
ending phase; the Assets Under Management (AUM) was Rs67 billion. The private
sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till
April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual
fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.

 First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the
Reserve Bank of India and functioned under the Regulatory and administrative control
of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in
June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual
Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC
had set up its mutual fund in December 1990.At the end of 1993, the mutual fund
industry had assets under management of Rs.47,004 crores.

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

1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January
2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. consolidation
and growth. As at the end of September, 2004, there were 29 funds, which manage
assets of Rs.153108 crores under 421 schemes.

CATEGORIES OF MUTUAL FUND:

 Mutual funds can be classified as follow:

 Based on their structure:

 Open-ended funds: An open-end fund is one that is available for subscription all
through the year. These do not have a fixed maturity. Investors can conveniently buy
and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end
schemes is liquidity.
 Close-ended funds: A closed-end fund has a stipulated maturity period which
generally ranging from 3 to 15 years. The fund is open for subscription only during a
specified period. Investors can invest in the scheme at the time of the initial public issue
and thereafter they can buy or sell the units of the scheme on the stock exchanges where
they are listed. In order to provide an exit route to the investors, some close-ended funds
give an option of selling back the units to the Mutual Fund through periodic repurchase
at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes
is provided to the investor.

 Based on their nature:

Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term, thereby
offering higher returns at relatively lower volatility. At the same time, such funds can
yield great capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be considered for a
period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition
and individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they
invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related through
some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector
fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on
the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal
mutual funds vehicle for investors who prefer spreading their risk across various instruments.
Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest exclusively
in fixed-income instruments like bonds, debentures, Government of India securities;
and money market instruments such as certificates of deposit (CD), commercial paper
(CP) and call money. Put your money into any of these debt funds depending on your
investment horizon and needs.

i) Liquid funds- Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term instruments
like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are
meant for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix
and are considered to be the safest amongst all categories of mutual funds.

These funds invest 100% in money market instruments, a large portion being invested
in call money market.
 ii) Gilt funds ST- Invest their corpus in securities issued by Government, popularly
known as Government of India debt papers. These Funds carry zero Default risk but
are associated with Interest Rate risk. These schemes are safer as they invest in papers
backed by Government.

They invest 100% of their portfolio in government securities of and T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-
pricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.

vi) Income funds LT- Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities.

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

vii) MIPs- Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These scheme
ranks slightly high on the risk-return matrix when compared with other debt schemes.

Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-
30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.

 Based on their Investment objective:

 Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes normally
invest a major part of their fund in equities and are willing to bear short-term decline in value
for possible future appreciation.

 Income Schemes: Income Schemes are also known as debt schemes. The aim of these
schemes is to provide regular and steady income to investors. These schemes generally invest
in fixed income securities such as bonds and corporate debentures. Capital appreciation in
such schemes may be limited.

 Balanced Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing a part of the income and capital gains they earn. These schemes
invest in both shares and fixed income securities, in the proportion indicated in their offer
documents (normally 50:50).

 Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation
of capital and moderate income. These schemes generally invest in safer, short-term
instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank
call money.

 OTHER SCHEMES

 Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any
Equity Linked Savings Scheme (ELSS) are eligible for rebate.

 Index Schemes: Index schemes attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only
those stocks that constitute the index. The percentage of each stock to the total holding will be
 identical to the stocks index weightage. And hence, the returns from such schemes would be
more or less equivalent to those of the Index.

 Sector Specific Schemes: These are the funds/schemes which invest in the securities of only
those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software,
Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
dependent on the performance of the respective sectors/industries. While these funds may give
higher returns, they are more risky compared to diversified funds. Investors need to keep a
watch on the performance of those sectors/industries and must exit at an appropriate time.

INVESTMENT STRATEGIES

1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when the
NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.
RISK V/S. RETURN:
Types of returns

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

 Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
income it receives over the year to fund owners in the form of a distribution.
 If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.
 If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit. Funds will also
usually give you a choice either to receive a check for distributions or to reinvest the earnings
and get more shares.
 2

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 largest banking enterprises, and Société Générale Asset
Management (France), one of the world's leading fund management companies
that manages over US$ 500 Billion worldwide.
Today the fund house manages over Rs 28500 crores of assets and has a diverse
profile of investors actively parking their investments across 36 active schemes.
In 20 years of operation, the fund has launched 38 schemes and successfully
redeemed 15 of them, and in the process, has rewarded our investors with
consistent returns. Schemes of the Mutual Fund have time after time
outperformed benchmark indices, honored us with 15 awards of performance
and have emerged as the preferred investment for millions of investors. The
trust reposed on us by over 4.6 million investors is a genuine tribute to our
expertise in fund management.

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

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

PRODUCTS OF SBI MUTUAL FUND

Equity schemes:

The investments of these schemes will predominantly be in the stock markets

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

 Magnum COMMA Fund

 Magnum Equity Fund
 Magnum Global Fund
 Magnum Index Fund
 Magnum Midcap Fund
 Magnum Multicap Fund
 Magnum Multiplier plus 1993
 Magnum Sectoral Funds Umbrella

 MSFU- Emerging Business Fund

 MSFU- IT Fund
 MSFU- Pharma Fund
 MSFU- Contra Fund
 MSFU- FMCG Fund

 SBI Arbitrage Opportunities Fund

 SBI Blue chip Fund
 SBI Infrastructure Fund - Series I
 SBI Magnum Taxgain Scheme 1993
 SBI ONE India Fund
 SBI TAX ADVANTAGE FUND - SERIES I

Debt schemes:

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

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

 Magnum Children’s benefit Plan

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

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.

 Magnum Balanced Fund

COMPETITORS OF SBI MUTUAL FUND

Some of the main competitors of SBI Mutual Fund are as Follows:

i. ICICI Mutual Fund

ii. Reliance Mutual Fund
iii. UTI Mutual Fund
iv. Birla Sun Life Mutual Fund
v. Kotak Mutual Fund
vi. HDFC Mutual Fund
vii. Sundaram Mutual Fund
viii. LIC Mutual Fund
ix. Principal
x. Franklin Templeton

AWARDS AND ACHIEVEMENTS

SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award - 8
times, CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005-
2006) and most recently with the CNBC TV - 18 Crisil Mutual Fund of the Year
Award 2007 and 5 Awards for our schemes.
 3

Objectives and scope

OBJECTIVES OF THE STUDY

1. To find out the Preferences of the investors for Asset Management

Company.
2. To know the Preferences for the portfolios.
3. To know why one has invested or not invested in SBI Mutual fund
4. To find out the most preferred channel.
5. To find out what should do to boost Mutual Fund Industry.
 Scope of the study

A big boom has been witnessed in Mutual Fund Industry in resent times. A large
number of new players have entered the market and trying to gain market share in this
rapidly improving market.

I had been sent at one of the branches of State Bank of India where I completed my
Project work. I surveyed on my Project Topic “A study of preferences of the Investors
for investment in Mutual Fund” on the visiting customers of the SBI Boring Canal
Road Branch.

The study will help to know the preferences of the customers, which company,
portfolio, mode of investment, option for getting return and so on they prefer. This
project report may help the company to make further planning and strategy.
 4

Research Methodology

RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude studies.
One of the most important users of research methodology is that it helps in identifying
the problem, collecting, analyzing the required information data and providing an
alternative solution to the problem .It also helps in collecting the vital information that
is required by the top management to assist them for the better decision making both
day to day decision and critical ones.
 Objective of research;

 The main objective of this project is concerned with getting the opinion of people regarding
mutual funds and what they feel about availing the services of financial advisors.
 I have tried to explore the general opinion about mutual funds. It also covers why/ why not
investors are availing the services of financial advisors.
 Along with it a brief introduction to India’s largest financial intermediary, SBI has been
given and it is shown that how they operate in mutual fund department.

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

Sampling:

 Sampling procedure:

The sample is selected in a random way, irrespective of them being investor or not or
availing the services or not. It was collected through mails and personal visits to the known
persons, by formal and informal talks and through filling up the questionnaire prepared. The
data has been analyzed by using the measures of central tendencies like mean, median, mode.
The group has been selected and the analysis has been done on the basis statistical tools
available.

 Sample size:

The sample size of my project is limited to 200 people only. Out of which only 120
people had invested in Mutual Fund. Other 80 people did not have invested in Mutual
Fund.

 Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.

 Limitation:

 Some of the persons were not so responsive.

 Possibility of error in data collection because many of investors may have not

given actual answers of my questionnaire.

 Sample size is limited to 200 visitors of State Bank of India,

out of these only 120 had invested in Mutual Fund. The sample.

size may not adequately represent the whole market.

 Some respondents were reluctant to divulge personal information which can

affect the validity of all responses.

 Time limitation.

 Research has been done only in a single city area.

 Possibility of error in analysis of data due to small sample size.

 5

Data Analysis
&
Interpretation

ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors

 Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of 12 18 30 24 20 16
Investors

35
Investors invested in Mutual Fund

30

25

20

15 30
24
10 18 20
16
5 12

0
<=30 31-35 36-40 41-45 46-50 >50
Age group of the Investors

Interpretation:
According to this chart out of 120 Mutual Fund investors, the most are in the age
group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-
45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors:

Educational Qualification Number of Investors

 Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120

6%
23%

71%

Graduate/Post Graduate Under Graduate Others

Interpretation:

Out of 120 Mutual Fund investors 71% of the investors are Graduate/Post Graduate,
23% are Under Graduate and 6% are others (under HSC).
 c). Occupation of the investors

Occupation No. of Investors

Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6
.

50
No. of Investors

40
30
20 45
35 30
10
4 6
0
Govt. Pvt. Business Agriculture Others
Service Service
Occupation of the customers

Interpretation:

In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in
others.
(d). Monthly Family Income of the Investors of.

Income Group No. of Investors

<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32

50
45
40
No. of Investors

35
30
25
20 43
15 32
28
10
5 12
5
0
<=10 10-15 15-20 20-30 >30
Income Group of the Investorsn (Rs. in Th.)

Interpretation:

In the Income Group of the investors, out of 120 investors, 36% investors that
is the maximum investors are in the monthly income group Rs. 20,001 to Rs.
30,000, Second one i.e., 27% investors are in the monthly income group of
 more than Rs. 30,000 and the minimum investors i.e., 4% are in the monthly
income group of below Rs. 10,000

(2) Investors invested in different kind of investments.

Kind of Investments No. of Respondents

Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
Post office (NSC) 75
Shares/Debentures 50
Gold/Silver 30
Real Estate 65

65
Kinds of Investment

30
er 50
ilvS
l d/ 75
G
o
S C) 120
N
ce( 152
ffi ce 148
O n
ost ur
a
195
P s c
In A/ 0 50 100 150 200 250
g
vin
Sa

No.of Respondents

Interpretation: From the above graph it can be inferred that out of 200 people, 97.5%
people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual
Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in
Real Estate.
3. Preference of factors while investing

Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of 40 60 64 36
Respondents

18% 20%

32% 30%

Liquidity Low Risk High Return Trust

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer
to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its Operations

Response Yes No
No. of Respondents 135 65
 33%

67%

Yes No

Interpretation:

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

5. Source of information for customers about Mutual Fund

Source of information No. of Respondents

Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62
 70
60
Respondents 50
40
No. of

30 62
20
25 30
10 18
0
Advertisement Peer Group Bank Financial
Advisors
Source of Information

Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 135 Respondents, 46%
know about Mutual fund Through Financial Advisor, 22% through Bank, 19%
through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Response No. of Respondents

YES 120
NO 80
Total 200
 No
40%

Yes
60%

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested
in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason No. of Respondents

Not Aware 65
Higher Risk 5
Not any Specific Reason 10
 6%
13%

81%
Not Aware Higher Risk Not Any

Interpretation:

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

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

Name of AMC No. of Investors

SBIMF 55
UTI 75
HDFC 30
Reliance 75
ICICI Prudential 56
Kotak 45
Others 70
 Others
70
HDFC
30
Name of AMC

Kotak 45
SBIMF
55
ICICI
56
Reliance
75
UTI 75

0 20 40 60 80
No. of Investors

Interpretation:

Most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120 Investors
62.5% have invested in each of them, only 46% have invested in SBIMF, 47% in
ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

9. Reason for invested in SBIMF

Reason No. of Respondents

Associated with SBI 35
Better Return 5
Agents Advice 15
 27%

9% 64%

Associated with SBI Better Return Agents Advice

Interpretation:

Out of 55 investors of SBIMF 64% have invested because of its association with
Brand SBI, 27% invested on Agent’s Advice, 9% invested because of better return.

10. Reason for not invested in SBIMF

Reason No. of Respondents

Not Aware 25
Less Return 18
Agent’s Advice 22
 34%
38%

28%
Not Aware Less Return Agent's Advice

Interpretation:

Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF,
28% do not have invested due to less return and 34% due to Agent’s Advice.

11. Preference of Investors for future investment in Mutual Fund

Name of AMC No. of Investors

SBIMF 76
UTI 45
HDFC 35
Reliance 82
ICICI Prudential 80
Kotak 60
Others 75
 Others 75

Kotak 60
Name of AMC

ICICI Prudential 80

Reliance 82

HDFC 35

UTI 45

SBIMF 76

0 20 40 60 80 100

No. of Investors

Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63%
in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual
Fund.

12. Channel Preferred by the Investors for Mutual Fund Investment

Channel Financial Advisor Bank AMC

No. of Respondents 72 18 30
 25%

60%
15%

Financial Advisor Bank AMC

Interpretation:

Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through
AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors

Mode of Investment One time Investment Systematic Investment Plan (SIP)

No. of Respondents 78 42

35%

65%

One time Investment SIP

Interpretation:

Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through
Systematic Investment Plan.

14. Preferred Portfolios by the Investors

Portfolio No. of Investors

Equity 56
Debt 20
Balanced 44

37%
46%

17%

Equity Debt Balance

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%
preferred Debt portfolio

15. Option for getting Return Preferred by the Investors

 Option Dividend Payout Dividend Growth
Reinvestment
No. of Respondents 25 10 85

21%

8%

71%

Dividend Payout Dividend Reinvestment Growth

Interpretation:

From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout
and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds

 Response No. of Respondents
Yes 25
No 95

21%

79%
Yes No

Interpretation:

Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because
there is maximum risk and 21% prefer to invest in Sectoral Fund.
 6

Findings and
Conclusion
 Findings

 In the Age Group of 36-40 years were more in numbers. The second
most Investors were in the age group of 41-45 years and the least
were in the age group of below 30 years.
 Most of the Investors were Graduate or Post Graduate and below
HSC there were very few in numbers.
 In Occupation group most of the Investors were Govt. employees, the
second most Investors were Private employees and the least were
associated with Agriculture.
 In family Income group, between Rs. 20,001- 30,000 were more in
numbers, the second most were in the Income group of more than
Rs.30,000 and the least were in the group of below Rs. 10,000.
 About all the Respondents had a Saving A/c in Bank, 76% Invested
in Fixed Deposits, Only 60% Respondents invested in Mutual fund.
 Mostly Respondents preferred High Return while investment, the
second most preferred Low Risk then liquidity and the least preferred
Trust.
 Only 67% Respondents were aware about Mutual fund and its
operations and 33% were not.
 Among 200 Respondents only 60% had invested in Mutual Fund and
40% did not have invested in Mutual fund.
 Out of 80 Respondents 81% were not aware of Mutual Fund, 13%
told there is not any specific reason for not invested in Mutual Fund
and 6% told there is likely to be higher risk in Mutual Fund.
 Most of the Investors had invested in Reliance or UTI Mutual Fund,
ICICI Prudential has also good Brand Position among investors,
SBIMF places after ICICI Prudential according to the Respondents.
 Out of 55 investors of SBIMF 64% have invested due to its
association with the Brand SBI, 27% Invested because of Advisor’s
Advice and 9% due to better return.
 Most of the investors who did not invested in SBIMF due to not
Aware of SBIMF, the second most due to Agent’s advice and rest
due to Less Return.
 For Future investment the maximum Respondents preferred
Reliance Mutual Fund, the second most preferred ICICI Prudential,
SBIMF has been preferred after them.
 60% Investors preferred to Invest through Financial Advisors, 25%
through AMC (means Direct Investment) and 15% through Bank.
 65% 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 (mixture of both equity and debt), and the least preferred
Portfolio was Debt portfolio.
 Maximum Number of Investors Preferred Growth Option for returns,
the second most preferred Dividend Payout and then Dividend
Reinvestment.
 Most of the Investors did not want to invest in Sectoral Fund, only
21% wanted to invest in Sectoral Fund.
 Conclusion

Running a successful Mutual Fund requires complete understanding of the

peculiarities of the Indian Stock Market and also the psyche of the small
investors. This study has made an attempt to understand the financial
behavior of Mutual Fund investors in connection with the preferences of
Brand (AMC), Products, Channels etc. I observed that many of people
have fear of Mutual Fund. They think their money will not be secure in
Mutual Fund. They need the knowledge of Mutual Fund and its related
terms. Many of people do not have invested in mutual fund due to lack of
awareness although they have money to invest. As the awareness and
income is growing the number of mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those
Companies where they have faith or they are well known with them. There
are many AMCs but only some are performing well due to Brand
awareness. Some AMCs are not performing well although some of the
schemes of them are giving good return because of not awareness about
Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known
Brand, they are performing well and their Assets Under Management is
larger than others whose Brand name are not well known like Principle,
Sunderam, etc.
Distribution channels are also important for the investment in mutual fund.
Financial Advisors are the most preferred channel for the investment in
mutual fund. They can change investors’ mind from one investment option
to others. Many of investors directly invest their money through AMC
because they do not have to pay entry load. Only those people invest
directly who know well about mutual fund and its operations and those
have time.
 7

Suggestions

And

Recommendations
 Suggestions and Recommendations

 The most vital problem spotted is of ignorance. Investors should be

made aware of the benefits. Nobody will invest until and unless he
is fully convinced. Investors should be made to realize that
ignorance is no longer bliss and what they are losing by not
investing.
 Mutual funds offer a lot of benefit which no other single option
could offer. But most of the people are not even aware of what
actually a mutual fund is? They only see it as just another
investment option. So the advisors should try to change their
mindsets. The advisors should target for more and more young
investors. Young investors as well as persons at the height of their
career would like to go for advisors due to lack of expertise and
time.
 Mutual Fund Company needs to give the training of the Individual
Financial Advisors about the Fund/Scheme and its objective,
because they are the main source to influence the investors.

 Before making any investment Financial Advisors should first

enquire about the risk tolerance of the investors/customers, their need
and time (how long they want to invest). By considering these three
things they can take the customers into consideration.
 Younger people aged under 35 will be a key new customer group
into the future, so making greater efforts with younger customers
who show some interest in investing should pay off.
 Customers with graduate level education are easier to sell to and
there is a large untapped market there. To succeed however,
advisors must provide sound advice and high quality.
 Systematic Investment Plan (SIP) is one the innovative products
launched by Assets Management companies very recently in the
industry. SIP is easy for monthly salaried person as it provides the
facility of do the investment in EMI. Though most of the prospects
and potential investors are not aware about the SIP. There is a large
scope for the companies to tap the salaried persons.
 BIBLIOGRAPHY

 NEWS PAPERS

 OUTLOOK MONEY

 TELEVISION CHANNEL (CNBC AAWAJ)

 MUTUAL FUND HAND BOOK

 FACT SHEET AND STATEMENT

 WWW.SBIMF.COM

 WWW.MONEYCONTROL.COM

 WWW.AMFIINDIA.COM

 WWW.ONLINERESEARCHONLINE.COM

 WWW. MUTUALFUNDSINDIA.COM