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State Bank of India was born on 1st July,1955 based on the recommendations of All India Rural Credit Survey Committee(1954) headed by Shri A.D Gorwala, through an Act of Parliament. The main objective of SBI is “Extension of Banking facilities on a large scale, more particularly in rural and semi-urban areas, and for diverse other public purposes and to transfer to it the undertaking of the Imperial Bank of India and provide for other matters connected thereto or incidental thereto.”SBI is the oldest, the largest and the highest profit making bank in India. Its evolution is not only intimately interwoven with the economic development of modern India but also with our nation building process to an extent perhaps unparalleled in the world. Moving like colossuses on the Indian financial turf, it has become a symbol of national pride and economic development. SBI with its extensive network of over 9000 branches has vast clientele and extends service not only on commercial basis but also on the basis of social considerations. The Bank is also on its way to introduce and absorb technology extensively at a rapid speed not only to remain customerfriendly and efficient for existing business but also to manage new business and services in an increasingly dynamic and global environment.

Operating Profit

Net Profit (Rs. In billions)



SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - India’s largest banking enterprise. The institution has grown immensely since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint venture between the State Bank of India and Société Générale Asset Management, one of the world’s leading fund management companies that manages over US$ 500 Billion worldwide. At SBI Mutual Fund, resources are considerably devoted to gain, maintain and sustain profitable insights into market movements. The trust reposed on SBI-MF by over 5.8 million investors is a genuine tribute to its expertise in Fund Management. SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. Thus SBI-MF believes in • • Proven skills in wealth maximization Exploiting expertise, compounding growth

In eighteen years of operation, the fund has launched thirty-eight schemes and successfully redeemed fifteen of them. In the process it has rewarded it’s investors handsomely with consistently high returns. A total of over 5.8 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund. Schemes of the Mutual fund have consistently outperformed benchmark indices and have emerged as the preferred investment for millions of investors and HNI’s. Today, the fund manages over Rs. 42000crores of assets and has a diverse profile of investors actively parking their 2

investments across 38 active schemes. The fund serves this vast family of investors by reaching out to them through network of 130 points of acceptance, 29 investor service centers, 59 investor service desks and 6 investor service point.

Products offered by SBI-Mutual Fund:
S.BI Mutual Fund






Magnum Balance

Magnum N.R.I

Magnum Equity Magnum Comma Magnum Tax Gain

F.M.C.G I.T Pharma Fund Contra Fund Emerging Business

• • • •

Magnum MidCap Magnum Multiplier Plus S.B.I Blue Chip Magnum MultiCap Magnum Global

 The above chart shows the various schemes offered by S.B.IMutual Fund but analysis is made on the three best performing schemes of S.B.I-M.F which are as follows: • Magnum Tax Gain Scheme 3

SBI Magnum TaxGain performance continues to be impressive and it remains at the top of the charts among the tax-saving funds over one. there would be moderate Credit risk and moderate to Low Interest rate/Price risk. almost matching the returns of its diversified counterparts such as Magnum Multiplier Plus and Magnum Global.and three-year periods.S.F. Over the past year. increased its allocation to large-cap stocks. as have other funds in the Magnum fold. From being a largely mid-cap fund. Magnum TaxGain appears to have a flexible investment strategy. Since some portion of the portfolio may be invested in Debt and Money market securities. It now sports a blend of large.• • Magnum Global Fund M. it has delivered a return of 110 per cent.U-Contra Fund The details of the above three schemes are as follows: Magnum Tax Gain Scheme 1993 Structure: An Open Ended Equity Linked Saving Scheme Date of Allotment: March31. 1993 The portfolio of Magnum Tax Gain will comprise predominantly of Equity and Equity Related instruments and there would be Moderate to High risk on account of Price Fluctuations and Volatility.and mid-cap stocks and bears a risk 4 . it has over the year.

Manuf acturing Media & Ent. be subject to a three-year lock-in period. Misc ellaneous Pharma Telecom Cash Cons truc tion Energy Financ ial Serv ices 2% 3% 34% 6% I. Asset Allocation: MTGS 35% 30% 25% 20% 15% 10% 5% 0% Large Cap Mid Cap 2% 32% 32% 34% Small Cap Other Current Assets Sectoral Breakdown: 1% 2% A utomobile 8% 4% 2% cement Consumer Goods Fertiliz ers & Pes tic ides Indus..profile akin to that of a typical diversified fund.T Metals Paper 0% 3% 1 % 3% 1% 0% 11 % 6% 3% 9% Serv ices Textiles Chemic als 5 . however. Investments in the fund will.

1961.500 Options: Growth.Investments in this scheme would be subject to a statutory lock in of 3 years from the date of investment to avail section 80C benefits. while offering tax rebate on such investments made in the scheme under section 80 C of the Income-tax Act.500 per month – 12 months Rs.1500 per quarter – 12 months 6 .Investment Objective: The prime objective of scheme is to deliver the benefit of investment in a portfolio of equity shares. Jayesh Shroff Systematic Investment Plan Rs. 500 Additional Purchase: Multiples of Rs. Entry Load Not applicable Exit Load . Dividend Payout & Dividend Re-investment options Fund Manager: Mr.Nil Minimum Investment: Rs.1000 per month – 6 months Rs. It also seeks to distribute income periodically depending on distributable surplus.

Software & Education with 11. The top three sectors are Computers . The schemes corpus of Rs. Electrical & Electrical Equipments with 11.57%.Performance: SBI Magnum Tax Gain Scheme 93 has exhibited a phenomenal performance since last few years. as per the latest portfolio of September 2005. The scheme has a lower volatility and lower systematic risk as measured by the standard deviation and beta. 7 . the return generated by the scheme in the three year period was more than twice the benchmark. The scheme has given lesser negative returns than its peer group as indicated from the downside probability.76% of the net assets.24% in the 1 year period.57% and 55.5% compared to its last quarter.237.43% respectively.11% exposure. The portfolio of the scheme is adequately diversified across 30 stocks.BSE 100 index as well as the peer group average was way behind at 42. The schemes benchmark .94 crore has gone up by 48. when compared with that of its peer group. Similarly. The top ten holdings constitute 50.08% and Engineering & Industrial Machinery with 9. The scheme has generated an exceptional return of 123.

Magnum Global Fund:

Structure: An Open Ended Growth Scheme Date of Allotment: September30, 1994

The fund’s portfolio currently comprises more than 35% debt and other instruments, while the rest is in equities. Within the equity portfolio, over 93% consists of mid-cap stocks, with an emphasis on sectors like construction, engineering and technology. The fund has the BSE 100 as its benchmark. The fund is known for its aggressiveness and dynamic reshuffling between sectors to capture the opportunities in the market. It currently has assets worth Rs 1,362 crore. In our latest ET Quarterly MF Tracker, the fund house was adjudged the best equity fund house. It bagged the maximum number of ‘Platinum’ ratings for its equity funds. Recently, the portfolio strategy of the fund has undergone some changes. While on one hand, the fund is looking at newly listed mid-cap companies as an investment avenue, on the other hand, it has expanded its portfolio base from 30-35 to 50-55 stocks. While the newly listed potential companies enable the fund to capture reasonable opportunities at the right time, Mr Sinha believes that diversification of the portfolio base will help to overcome problems of low liquidity, usually associated with mid-cap stocks, especially in a turbulent market. 8

Asset Allocation:

Magnum Global

50% 40% 30% 20% 10%
6% 9% 50% 36%


Large Cap

Mid Cap

Small Cap

Other Current Assets

Sectoral Breakdown:

2% 5% 9%

cement Consumer Goods Fertilizers & Pesticides Indus. Manufacturing Media & Ent.. Miscellaneous Pharma Telecom Cash

Construction Energy
4% 3% 3% 2%


Financial Services I.T Metals

1 4% 2% 3%

Paper Services Textiles



2% 2%2% 1 %



Investment Objective SBI Magnum Global is known for its aggressiveness and dynamic reshuffling between sectors. It is a strategically oriented mid-cap fund and is likely to post healthy returns over a longer term of 3-5 years The prime objective is to provide the investors maximum growth opportunity through well researched investments in Indian equities, PCDs and FCDs from selected industries with high growth potential and Bonds. Entry Load – Not applicable Exit Load For exit within 1 year from the date of allotment -1% For exit after 1 year from the date of allotment- Nil Minimum Investment: Rs. 2000 Additional Purchase: Multiples of Rs.5,00 Options: Growth, Dividend Payout & Dividend Re-investment options Fund Manager: Mr. R.Srinivasan Systematic Investment Plan Rs.500 per month – 12 months Rs.1000 per month – 6 months Rs.1500 per quarter – 4 quarter


The top ten holdings constitute 50. respectively. The portfolio of the scheme is adequately diversified across 30 stocks.76% of the net assets.6% and 30.12. The top three sectors are Computers . as per the latest portfolio of September 2005. while for the three-year period.9% over the past one year period. Relative Performance (Fund Vs Category average) 11 .9% and 32.2% and BSE 100 – 11. Even the equity diversified category average has failed to beat this fund’s performance with 5% and 35.5% for one year and three years. ’07. Compare this with the returns of the indices: Sensex .57%.Performance: SBI Magnum Global is probably the only mid-cap-oriented fund to have found a place in this highly coveted arena. it witnessed a compounded annual growth rate(CAGR) of 65.7%. the fund gave a return of 16. As on March 31.3% returns for one-year and three-year periods.82% exposure.3% and 29.08% and Engineering & Industrial Machinery with13.Software & Education with 11.15.4%. Nifty . respectively. Electrical & Electrical Equipments with 11.

It is an open ended scheme. Reliance Industries. The fund has stuck to its investment theme of being a long term fund with most of the stocks remaining the same throughout the last one year without any bias towards a sector as has been the policy of most of SBI`s mutual fund schemes.1499. Here’s a fund that thinks differently. which may be currently out of favour but is likely to show attractive growth in the long term. Hindustan Zinc. This fund invests in undervalued scrips.10 crores Magnum Contra Fund is the flagship fund of SBI Mutual fund. 12 . 1999 Corpus as on March 31. This fund offers you a possibility to invest in growth scrips of the future. 2007: Rs. M & M. Industrial Manufacturing. goes against the grain of market thought and takes the road less traveled.MSFU . Energy and Automobiles are the top 3 sectors the fund has invested in while Praj Industries.Contra Fund: Structure: An Open Ended Growth Scheme Date of Allotment: July14. The top 3 sectors contribute to 30% of the total portfolio while the top 10 stocks comprise of 37% of the portfolio. It is ranked CPR 1 by CRISIL which indicates ‘Very good performance’ The portfolio of Magnum Contra is fairly diversified now with about 50 stocks in the portfolio as compared to 36 stocks a year back. and Jaiprakash Associates form the top five stocks that the fund has bet upon.

T Metals 1% 2% Media & Ent. Large Cap Mid Cap 1 2% Small Cap 1 0% Pharma 4% 0% 1 6% 2% 6% Other Paper Current Assets Services Textiles Telecom Cash Sectoral Breakdown: 13 . Manufacturing 12% 50% 40% 30% 20% 10% 0% Construction Energy 7% 53% 33% Financial Services I..Asset Allocation: MSFU-Contra Automobile 9% 6% 60% 1 2% 1 % 2% 2% 8% 1 % cement Consumer Goods Chemicals Indus.

1500 per quarter – 4 quarters Performance: 14 .5. Launched in July 1999. Sohini Andani Systematic Investment Plan Rs. The main objective of the fund is to provide the investors maximum growth opportunity through equity investments in growth oriented sectors. mid and small cap stocks.00 Options: Growth. 2000 Additional Purchase: Multiples of Rs. is one such fund that has fairly stuck to its investment objective and succeeded in giving good returns to the investors. Dividend Payout & Dividend Re-investment options Fund Manager: Ms.Investment Objective SBI`s Magnum Contra Fund. the SBI Contra Fund is an open ended diversified equity scheme that can invest in large.500 per month – 12 months Rs.1000 per month – 6 months Rs. Entry Load Not applicable Exit Load For exit within 1 year from the date of allotment – 1% For exit after 1 year from the date of allotment –Nil Minimum Investment: Rs. belonging to the Magnum sector funds umbrella.

93% over a 3 year period and 51. In 2004. the fund had a very low exposure to technology in 1999.85% over a 5 year period as compared to the benchmark (BSE 100 index) returns of 27. it was the third best-performing fund with a 71 per cent return (category average: 46.83% and 29.But.84 per cent).77% over a year as compared to the category medians of 4. it gave a return of 32.52 per cent in 2001.31%.31% over a 6 months period and 15. The year 2003 saw it dipping from the top-quartile position when it gave a return just above the category average. When looked at from a longer term horizon the fund has outperformed most of the funds in the equity diversified category with returns of 55. In 2005. The next year. the fund has left behind every other fund in its category by miles.74 per cent (category average: 19.49 per cent return (category average: 25. When compared with other peer funds having the same investment objective.87% respectively. it fell by just 5.07% and 7. it shot to fame as the second best-performing fund with a 64. Performance wise it has registered returns of 5.Being contrarian in nature to focus on out-of-favour stocks. So no great returns that year and in the next.70 per cent). Relative Performance (Fund Vs Category average) A brief history of mutual fund industry: 15 .43 per cent).

U.I-M.F (Phase-I) 1987 Entry of S.PERIOD DESCRIPTION 1963 Formation of Unit Trust of India 1964-87 Monopoly of U. 2003 Bifurcation of U.B.M through capturing of huge potential market shown below: GROWTH IN ASSETS UNDER MANAGEMENT 16 .I into separate entities (Phase-IV) Till now as Increase in A.I-Mutual Fund 1987-93 Entry of Public Sector Funds (Phase-II) 1993-2003 Entry of other Private Sector Funds (Phase-III) Feb.T.T.


The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. NAV of a scheme also varies on day-to-day basis. 10 each to 18 . an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds. In simple words. Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day. gilts etc. For example. debentures. Basics of Mutual Funds: Net Asset Value (NAV) of a scheme Net Asset Value (NAV) denotes the performance of a particular scheme of a mutual fund. if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. Mutual funds invest the money collected from the investors in securities markets. For example.Definition: A mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme.

then the NAV per unit of the fund is Rs. 1996  Asset Management Company: the Trustee as the Investment Manager of the Mutual Fund appoints The AMC.  Trustees: Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).  Trust: The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations. The Registrar 19 . 1882 by the Sponsor. The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter alia ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations.the investors.20. NAV is required to be disclosed by the mutual funds on a regular basis . 1908. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund  Registrar and Transfer Agent: The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund.daily or weekly Mutual Fund Structure The mutual fund structure consists of the following parties:  Sponsor: Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. 1996. The trust deed is registered under the Indian Registration Act.

the sponsor or the trustee generally also acts as an custodian. Among public sector mutual funds. redemption requests and dispatches account statements to the unit holders. and it takes custody of securities and other assets of a mutual fund. The Registrar and Transfer agent also handles communications with investors and updates investor records. Figure 1: Structure of Mutual Fund Benefits of Mutual Funds: 20 .  Custodian: It is often an independent organization.processes the application form.

It simply means that you must spread your investment across different securities (stocks. Similarly. which are unmatched by most other investment avenues. fixed deposits etc. This amount today would get you less than quarter of an Infosys share! Thus. an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs. An investor can buy in to a portfolio of equities. depending upon the investment objective of the scheme. etc. money market instruments. textile. for example during one period.500/-.There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer. it offers different types of schemes to investors with different needs and risk appetites. bonds. equities might under perform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets.). it offers an opportunity to an investor to invest sums across a variety of schemes. it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Diversification: The nuclear weapon in your arsenal for your fight against Risk. Variety: Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first. For example. The benefits have been broadly split into universal benefits available to the investors:  Affordability: A mutual fund invests in a portfolio of assets. information technology etc.e. which would otherwise be extremely expensive. real estate. secondly. bonds. the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. i. 21   . This kind of a diversification may add to the stability of your returns. shares.) and different sectors (auto. both debt and equity.

Low Transaction Costs: The transactions of a mutual fund are generally very large. as compared to the smaller volumes of the transactions entered into by the individual investors. you are handing your money to an investment professional that has experience in making investment decisions. given the fund's stated investment objectives. Professional Management: Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. Also. which govern mutual funds.    Regulations: Securities Exchange Board of India (“SEBI”). the mutual funds regulator has clearly defined rules. Tax Benefits: Investment in mutual funds also enjoys several tax advantages. as and when required. administration. It is the Fund Manager's job to (a) find the best securities for the fund. capital gain accrued from mutual funds investments for period of over one year is treated as long term capital appreciation and is taxed at a lower rate of 10% without benefit of indexation or 20% with benefit of indexation. Such a high level of regulation seeks to protect the interest of investors 22 . When you buy in to a mutual fund. and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio. These large volumes attract lower brokerage commissions and other costs. and management of mutual funds and also prescribe disclosure and accounting requirements. These rules relate to the formation. Dividends from Mutual Funds are tax-free in the hands of the investor (This however depends upon changes in Finance Act).

most debt funds do not face this problem. The problem of impracticability of quick investments is likely to be reduced to some extent with the introduction of index futures. this under performance is largely the result of limitations inherent in the concept of mutual funds. excluding a few stocks. if it blindly invests in the same stocks as those in the Sensex and in the same proportion. there is simply no way that a fund can beat the Sensex or any other index. there is the added problem of perpetually keeping some money in liquid assets to meet redemption. let alone stocks in the NSE 50 or the CRISIL 500. So. given the large size of the debt market. These limitations are as follows: Entry and exit costs: Mutual funds are a victim of their own success. For open-ended funds. This ensures that the fund under performs the index. the concentrated buying or selling often results in adverse price movements ie at the time of buying. this problem is even more severe for funds investing in small capitalization stocks. However. For obvious reasons. where. the fund ends up paying a higher price and while selling it  realizes a lower price. excluding UTI. most mutual funds receive money when markets are in a boom phase and investors are willing to try out mutual funds. Further. there is some money waiting to be invested. Since it is difficult to invest all funds in one day. Wait time before investment: It takes time for a mutual fund to invest money.Limitations of Mutual Funds: It is not true that the fund managers are dumb. When a large body like a fund invests in shares.  23 . there may be a time lag before investment opportunities are identified. This problem is especially severe in emerging markets like India. Unfortunately. even the stocks in the Sensex are not liquid.

whether the fund constantly receives fresh subscriptions and redemptions. There is an inherent survivorship bias in this process. This includes marketing and initial costs deducted at the time of entry itself. Another reason for change index composition is Mergers & Acquisitions. with each change being quite substantial. Tendency to take conformist decisions: From the above points. the fund manager has to take a strong view and invest in some uncommon or unfenced investment options. The weightage of the shares of a particular company in the index changes if it acquires a large company not a part of the index. much more than the index. Then there is the annual asset management fee and expenses. Most people are unwilling to do that. Cost of churn: The portfolio of a fund does not remain constant. together called the expense ratio. It is also dependent on the volatility of the fund size i. registration fees etc. In order to obtain such exceptional returns. called "load". while the latter is. Fund management costs: The costs of the fund management process are deducted from the fund. The extent to which the portfolio change is a function of the style of the individual fund manager ie whether he is a buy and holds type of manager or one who aggressively churns the fund. it is quite clear that the only way a fund can beat the index is through investment of some part of its portfolio in some shares where it gets excellent returns. the fund manager underperforms the benchmark index by an equal amount.e. the former is not counted while measuring performance. They follow the principle "No fund manager ever got fired for investing in 24    . custody fees. This will pull up the overall average return. the indices keep changing to reflect changing market conditions. Change of index composition: World over. This is a severe problem in India with the Sensex having been changed twice in the last 5 years. with the bad stocks weeded out and replaced by emerging blue chips. A standard 2% expense ratio means that. that lowers the portfolio return commensurately. Usually. Such portfolio changes have associated costs of brokerage. everything else being equal.

the fund manager will be questioned but if anything goes wrong with the blue chip. if something goes wrong with an unusual investment. chances are that he will produce average results. which leads to over all growth of the economy. Presently. But if no such view is taken. The mutual funds are emerging as a strong financial intermediary and playing a very important role in bringing stability to the financial system and efficiency to resource allocation. History of Indian mutual funds industry : 25 .Hindustan Lever" i. there are more than 31 mutual fund houses operating in India and actively managing 451 funds. there is absolutely no chance that the fund will outperform the index.e. then you can always blame it on the "environment" or "uncontrollable factors" knowing fully well that there are many other fund managers who have made the same decision. The Indian mutual fund industry is poised to become one of the largest and dominating constituents of the Indian financial service sector in future. it will result in poor fund performance. The total asset under management of Indian mutual fund is about 152000 crores as on 31 March 2005. Mutual funds help corporate in raising funds for their financial needs and provide an avenue of investment to investors by parking their savings. Unfortunately. This does not mean that if a fund manager takes "active" views and invests in heavily researched "uncommon" idea the fund will necessarily outperform the index. MUTUAL FUND INDUSTRY Mutual Funds play a significant role in the development of the financial market and this has been proved in the developed countries like United States. United Kingdom and Japan. if the fund manager does the same thing as several others of his class. If the idea does not work.

the mutual fund industry had assets under management of Rs.  Second Phase – (1987-1993) “Entry of Public Sector Funds” 1987 marked the entry of non.  Fourth Phase – since February 2003 26 . public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). there were 33 mutual funds with total assets of Rs. 004 crores.  Third Phase – 1993-2003 “Entry of Private Sector Funds” With the entry of private sector funds in 1993. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions.The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). As at the end of January 2003. Indian Bank Mutual Fund (Nov 89). The first scheme launched by UTI was Unit Scheme 1964. The number of mutual fund houses went on increasing. a new era started in the Indian mutual fund industry. Bank of Baroda Mutual Fund (Oct 92).47. 21. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. at the initiative of the Government of India and Reserve Bank the.UTI. giving the Indian investors a wider choice of fund families. Punjab National Bank Mutual Fund (Aug 89). The history of mutual funds in India can be broadly divided into four distinct phases. At the end of 1993. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.1. 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. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.805 crores.  First Phase – (1964-87) An Act of Parliament established Unit Trust of India (UTI) in 1963. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. SBI Mutual Fund was the first non. Bank of India (Jun 90).

the assets of US 64 scheme.In February 2003. This leads to over all growth of the economy. The major chunk of household saving in India. representing broadly.76.29. The total asset under management of Indian mutual fund is about 152000 crores as on 31 March 2005. and mutual funds play an active role in promoting an active healthy market. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. 835 crores as at the end of January 2003. functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. which earlier went to bank deposit are now being taken by mutual funds. A developed financial market is critical to overall economic development. there are more than 31 mutual fund houses operating in India and actively managing 451 funds. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. conforming to the SEBI Mutual Fund Regulations. It is registered with SEBI and functions under the Mutual Fund Regulations. The Specified Undertaking of Unit Trust of India. the mutual fund industry has entered its current phase of consolidation and growth. Presently. sponsored by SBI. PNB. Mutual funds increase liquidity in the money market. The assets holding pattern of mutual fund in India indicates the dominant role of mutual fund in the 27 . and with recent mergers taking place among different private sector funds. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. assured return and certain other schemes. BOB and LIC. The active involvement of mutual funds in promoting economic development can be seen not only in terms of their participation in the saving market but also in their dominant presence in the money market and capital market. Mutual funds help corporate in raising funds for their financial needs and provide an avenue of investment to investors by parking their savings. 000 crores of assets under management and with the setting up of a UTI Mutual Fund. The second is the UTI Mutual Fund Ltd. INDUSTRY PERFORMANCE The mutual funds in India have emerged as strong financial intermediaries and are playing stability to the financial system and efficiency to resource allocation.

which has increased from Rs97.093crore at the end of 2003. 2004 3% 35% 26% 36% Equity Money Market Bond “Mutual Funds have the potential for organic growth. Participants in Balanced must this markets become the opportunity seeking missiles exploring path breaking initiatives to lead the revolution” These eight steps will take mutual fund industry to Nirvana: Migrate from ‘Industry’ to ‘Opportunity Zone’ Revisit MF’s Core Competence Lead through Innovation Rebuild Investors’ Confidence Manage Risks through Derivatives Widen Geographical Spread Strategically 28       . The asset growth of Indian mutual fund industry. Continued interest rate cuts by RBI and down turn of equity market for last two years had forced mutual funds to invest in debt market to generate above normal return. Indian MF by type of Fund. was primarily driven by bond funds. 028 crore at the end of 1999 to Rs1. market and capital market.

 Open-ended Fund/ Scheme: An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. For making the mutual funds successful investor education has to be at the top priority. The fund is open for subscription only during a specified period at the time of launch of the scheme. Proper marketing and customer relationship strategies will play a great role in the development of the mutual fund industry in India. It is too early to say whether the asset management companies will be successful in making the mutual funds popular in India. 5-7 years.  Educate Investors Aggressively Treat investors like Customers The Indian mutual fund industry is in the development and consolidation stage. It is only time that will depict whether the mutual funds will be on the winner’s platform. which remains untapped in India. Not only the regulators but also the asset management companies should take a step further in this regard. 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 the units are listed. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices.g. Having the wide variety of mutual fund schemes the only thing the funds need to do is to catch the discerning customers.  Close-ended Fund/ Scheme: A close-ended fund or scheme has a stipulated maturity period e. The mutual funds should think of widening their reach to the rural segment. Types Of Mutual Funds Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. These mutual funds schemes disclose NAV generally on weekly basis. The key feature of open-end schemes is liquidity. which are declared on a daily basis. 29 .

NAVs of such funds are likely to increase in the short run and vice versa.term. income scheme. Such schemes normally invest a major part of their corpus in equities.  Balanced Fund: The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the 30 .  Income / Debt Oriented Scheme: The aim of income funds is to provide regular and steady income to investors. These schemes provide different options to the investors like dividend option. corporate debentures. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. capital appreciation. They are open for sale or redemption during pre-determined intervals at NAV prices Schemes according to Investment Objective: A scheme can also be classified as growth scheme. and the investors may choose an option depending on their preference. If the interest rates fall. The NAVs of such funds are affected because of change in interest rates in the country. Interval Funds: Interval funds combine the features of open-ended and close ended Schemes. Such schemes may be open-ended or close-ended. etc. Such schemes generally invest in fixed income securities such as bonds. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Government securities and money market instruments. or balanced scheme considering its investment objective. Such funds have comparatively high risks. Such schemes may be classified mainly as follows:  Growth / Equity Oriented Scheme: The aim of growth funds is to provide capital appreciation over the medium to long.

Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. which invest in the securities of only those sectors or industries as specified in the offer documents. 31 . While these funds may give higher returns. Fast Moving Consumer Goods (FMCG). though not exactly by the same percentage due to some factors known as "tracking error" in technical terms  Sectoral funds: These are the funds/schemes. S&P NSE 50 index (Nifty).  Index Funds: Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. etc. preservation of capital and moderate income. e. etc These schemes invest in the securities in the same weightage comprising of an index. These schemes invest exclusively in safer short-term instruments such as treasury bills. they are more risky compared to diversified funds. The returns in these funds are dependent on the performance of the respective sectors/industries. However.  Gilt Fund: These funds invest exclusively in government securities.  Money Market or Liquid Fund: These funds are also income funds and their aim is to provide easy liquidity. Returns on these schemes fluctuate much less compared to other funds. Pharmaceuticals. government securities. Petroleum stocks. certificates of deposit. Government securities have no default risk. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index. etc. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as are the case with income or debt oriented schemes. These are appropriate for investors looking for moderate growth. commercial paper and inter-bank call money. These funds are also affected because of fluctuations in share prices in the stock markets. NAVs of such funds are likely to be less volatile compared to pure equity funds. Software.proportion indicated in their offer documents. They generally invest 40-60% in equity and debt instruments.g. They may also seek advice of an expert.

500 can be invested every month. Pension schemes launched by the mutual funds also offer tax benefits.  Systematic Withdrawal Plan (SWP). With SWP. SWP or Automatic Withdrawal Plan enables investors to receive regular amount from their mutual fund investment portfolio at fixed intervals without the need to contact the mutual fund each time. investors have the facility of receiving a regular cheque on a monthly. Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act.  Systematic Investment Plan (SIP). 1961 as the Government offers tax incentives for investment in specified avenues. even as little as Rs. quarterly or half-yearly basis. Here you are required to give at least 6 post-dated cheques (in case of monthly SIP) and 4 post-dated cheques (in case of quarterly SIP). These schemes are growth oriented and invest pre-dominantly in equities.g. E. 32 . SIP or Automatic Investment Plan automatically enables you to invest a pre-set amount of money into the fund of your choice at regular intervals. the investor himself can decide the frequency of SWP. However. Equity Linked Savings Schemes (ELSS). Their growth opportunities and risks associated are like any equity-oriented scheme. You can decide on how often to invest and how much to invest.

F. which we did by organizing Investor Service Camp and Investor Service Desk at important places during the N. My work involved coordinating with marketing strategies for publicity.O. creating awareness among retail investors and coordinating with various branches. Firstly understanding what are the prerequisites and legalities involved in the launch of mutual fund.Introduction of Project Purpose of the project: The project is an integration of learning both in the area of finance and marketing which. The project also involved creating awareness regarding mutual funds among retail investors. Scope of the project: The project involved managing various issues related to launch of Classic equity Fund N. It included visiting prospective investors in the various areas of the city explaining about technicalities of the new issue. focuses on two most critical aspects related to fund management in India.O and we were successful in educating investors about mutual fund as an investment option. advertisement & promotion and distribution strategies for effective penetration. which were cross-selling mutual fund schemes.F. 33 . Secondly Management of New Fund Offer of a scheme by a mutual fund company and various issues related to its management like educating investors.

This chapter gives as the research design. Research Methodology: Introduction The present study was undertaken “TO REVIEW THE LAUNCH OF EQUITY MUTUAL FUND IN LUDHIANA”. fieldwork carried out. whenever need arouse various 34 . data collection methods. Research Design The research design is the pattern or an outline of a research project working.  To make a comparison of various promotional tools used for promoting the product.F. analysis and interpretation. limitations inherent in the project and finally coverage of the research work. taking into consideration the availability of the time and other resources. It is a statement of only the essentials of a study being conducts follows a descriptive search design.The primary data was collected by personally interviewing the investors and employees. Personal interview method was adopted. sampling techniques.OBJECTIVE OF STUDY: The main objective of this project is:  To study marketing strategies involved during the launch of fund during an N.O (New Fund Offer) by a mutual fund company. Type of Data Collection Method 1.

supplementary questions were also asked to gain maximum information from the respondents. Published data was collected from books. Sample Unit An investor who is investing in equity and in mutual funds is a resident of Ludhiana. Population All the investors who are investing in equity and mutual funds and are residents of Ludhiana. 35 . 2. Universe All the investors who are investing in equity and mutual funds. It is collected through published data. Questionnaire was prepared to study the role of promotional tools in launch its and impact on investors. The questionnaire contained both open-ended and close-ended questions. Sampling Technique For conducting the study. magazines. convenience-sampling method was adopted because the respondent investors were chosen from those who already invested in mutual funds and in equity. The respondents were interviewed with help of a structured questionnaire. A survey was conducted keeping in view the objective of the study.The secondary data means data that is already available. Sampling Plan Sampling is an effective step in collection of primary data and has a great influence on the quality of results. reports and publications. The sampling plan includes the population. Data was also collected from various Internet. sample size and sampling design.

which has shifted to service gaining more momentum. were analyzed by taking percentage. In case of open-end questions. The Indian economy happens to be the tenth largest economy in the world in terms of absolute GDP size that is growing above 6%. From this it is very clear that services have been the major driver in the economic momentum of the country. We have seen a drastic shift from India as an agrarian economy where the cycle was Agrarian manufacturing service sector. So the new trend seen now is: Service Manufacturing Agriculture 36 . strong legal framework which happens to be best in Asia. the general suggestions were summarized and presented with the help of bar diagrams.C Deveshwar forecast setting its eyes on growth more than 8 %. CII figures denoted a growth of 8. This rapid growth has been made possible by reform minded government. The questions. Review of launch Why launch now? “ India climbs into top 10 economies” written in bold in one of the leading business newspaper dated 13th July.1% for the manufacturing and 3% for agriculture sector.Sample Size The sample size for research was 100 investors. Services sector constitute a major 56% of the economy. as opposed to very small percentage years back. abundant technical and managerial talent to start with as one of the few reasons India being closely watched as an investment destination. It is official now that India has arrived on the global scene. Even CII president Y. which had alternative choices.3% for service. Data Analysis and Interpretation For the purpose of analyzing. It is also one of the few markets in the world that offers high prospects for growth and earning potential in practically all areas of business. 8. raw data was summarized into different tables and from these tables the results were derived.

And fortunately its working population will continue to increase for next two decades at least while in case of china it is now beginning to decline. middle-income level to affluent income level. There has been a significant change-taking place in the demographic profile of the country.In the past few years consumer demands has picked up significantly due to low interest regime and growing average per capita income which has enabled the consumers to take personal and home loans at lower level. So it is making more money available at the hands of the consumer coupled with the fact that interest rates are also half from last five years.6bn people even leaving behind consumption of PC’s and TV’s The rising influx of money in India from last 2 years has been attributed mainly to the foreign institutional investors (FII’s). On the basis of income we have seen that there has been large-scale migration from low level to middle income level. It was quite evident from firm figures despite family feud of India’s leading industrial house. middle-income level. The pool of money invested by FII’s has been 37 . as there is positive correlation between longterm growth rates and low dependency associated with youthful population. This consuming class creates a great opportunity for the banks and will drive financial services for some years to come. So while talking of technology there has been a spur in mobile phone sales that will exceed one billion handsets a year by 2009 this device is set to gain ground with a base of 2. In today’s global economy demographics drive growth. Retail credit has been growing at 30 to 40percent. In addition there are an increasing number of affluent Indian consumers with the disposable incomes needed to make India itself more of an attractive marketplace.The economy is on a sound platform even if there is failure of monsoons or any unrest the Sensex seems unjittered which shows that market is being driven more on the sound fundamentals than driven on the basis of emotions. which happens to be the backbone of Indian economy. The sectors which have been benefited from this has been the consumer non-durable such as electronics. which makes India as one of the youngest countries in the world. 70% of the Indians are less than 35 years of age. Recent figures showed that there are expected to be six million household classed rich by 2005-06 up from three million households. Gone are the days when government toppled the Sensex fallen badly.

5bn mark and following this bandwagon are Koreans too. making access to global markets easier for Indian goods and services. While over 45% of India’s total exports are having with FTA countries/region. The combined corpus is expected to be in the region of around $1. the return on every dollar spent in India is better than the return in other emerging markets such as China. So from all this we have seen that India is on the growth trajectory with increasing role of FII’s.3bn. Brazil and Mexico that have more favorable business environment. a host of players are in the process of raising dedicated India. affirmation of quality of management of Indian companies as well as opportunities they face. which happens to be one of the emerging economies. higher unemployment in European Economies. an increasing flow of money and associated good returns. That probably made standard chartered classic equity fund wake up to the world of equities and to enjoy their share of profit from Indian market Pre launch requirements: As it has already been seen that its just the beginning that India has stepped on the its growth trajectory with inflow of money into the market which is mainly attributed to rising influx of 38 . US investments in India on a historical cost basis were flat between 1999-2001 and there has been sluggish US exports to India partly reflected sluggish industrial growth due to political reasons. China and Korea funds.increasing with every single passing day. Free trade agreements are opening up new vistas for Indian business. After Blackstone. So not only us FII but also Japanese have arrived with their bag of money for claiming their share of Indian buck with the biggest investors with over$1. India expressing its shift in focus on economic component is of sheer importance to India. A combination of various factors has made India the preferred destination by FII’s fears of a slowdown in the world economy. this makes India a prime mover in FTA in south East Asia. Flowing of investments from the superpower will boost the trade and thus building a strong economy. According to a recent study by KPMG. Interestingly hearing of Australians players like common wealth bank of Australia has invested over $900m in India. Growth has been attributed to its tact in integrating with Singapore.

In place of Government Control. Proper code of conduct has to be followed which consists of filing offer document and issuance of the dates for NFO by SEBI. Thus with the rise in Mutual Fund Industry in India there needs to be a governing body so that UTI history doesn’t repeat a result of which every individual wishes to direct his surplus towards investment opportunities where they can foresee growth and their money multiplying. PO schemes. to cover both development & regulation of the market. There are over 30 AMCs currently operational in India.foreign institutional investors. rising per capita income . a statutory and autonomous regulatory board was established with defined responsibilities. mutual fund. The basic objectives of the Board were identified as:  To protect the interests of investors in securities.  To regulate the securities market.  To promote the development of Securities Market. Insurance. ABOUT SEBI In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of India through an executive resolution. In the last couple of months there has been a flood of New Fund Offers (NFO) by various asset management companies. and was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. 39 . Talking of investments.  For matters connected therewith or incidental thereto. as an option is much hyped and gaining ground due to good rate of returns over fixed deposits. In India Securities and Exchange Board Of India (SEBI) and Association Of Mutual Funds of India (AMFI) happen to be the bodies that regulate the MF Industry.

also to register and regulate the working of collective investment schemes including mutual funds. registered with SEBI. registrars to an issue. Custodian. is the duty of the Board. According to SEBI Regulations.The Securities and Exchange Board of India Act. to regulate take-over. to conduct inquiries and audits. All mutual funds are required to be registered with SEBI before they launch any scheme. two thirds of the directors of Trustee Company or board of trustees must be independent. All the stock brokers. share transfer agents. merchant bankers. sub-brokers. It notified regulations in 1993 (fully revised in 1996) and issued guidelines from time to time for MF either promoted by public or by private sector entities SEBI’s approval of an Asset Management Company (AMC) manages the funds by making investments in various types of securities. Section 11 of the SEBI Act provides that to protect the interest of investors in securities and to promote the development of and to regulate the securities market by such measures. SEBI formulates policies and regulates the mutual funds. 50% of the directors of AMC must be independent. It has given power to the Board to regulate the business in Stock Exchanges. sub-brokers. bankers to an issue. trustees of trust deeds. bankers to an issue.. investment advisers. portfolio managers. portfolio managers. share transfer agents. registrars to an issue. etc. register and regulate the working of stock brokers. underwriters. investment advisers and such other intermediary who may be associated with the Securities Markets are 40 . 1992 the SEBI Act governs all the Stock Exchanges and the Securities Transactions To protect the interest of the investors. underwriters. They should not be associated with the sponsors. to prohibit fraudulent and unfair trade practices and insider trading. holds the securities of various schemes of the fund in its custody. trustees of trust deed. merchant bankers.

all the 30 Asset Management companies that have launched mutual fund schemes are its register with the Board under the provisions of the Act. As of now. under Section 12 of the SEBI Act. the apex body of all the registered Asset Management Companies was incorporated on August 22. ABOUT ASSOCIATION OF MUTUAL FUNDS IN INDIA AMFI.  To recommend and promote best business practices and code of conduct to be followed by members and others engaged in the activities of mutual fund and asset 41 . Objectives  To define and maintain high professional and ethical standards in all areas of operation of mutual fund industry. 1995 as a non-profit organization. The Board has the power to suspend or cancel such registration.

 To undertake nation wide investor awareness programme so as to promote proper understanding of the concept and working of mutual funds. AMFI Mutual Fund Certification and Registration Programme has been put together to give the fund distributors the knowledge and insights required for them to become both better intermediaries and more informed as mutual fund including agencies connected or involved in the field of capital markets and financial services.  To develop a cadre of well-trained Agent distributors and to implement a programme of training and certification for all intermediaries and other engaged in the industry. An Investor must read offer document before making an investment 42 . healthy and ethical lines and to enhance and maintain standards in all areas with a view of protecting and promoting the interests of mutual funds and their unit holders. Even mutual fund employees need to understand the complexities of how the funds functions internally and externally “Certification is Mandatory”. The intermediaries/distributors have to take on the role of financial advisors to investors. What is an Offer Document? It is a booklet that sets forth concisely the information that a prospective investor ought to know before investing. Reserve Bank of India and other bodies on all matters relating to the Mutual Fund Industry.  To disseminate information on Mutual Fund Industry and to undertake studies and research directly and/or in association with other bodies.  To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI on all matters concerning the mutual fund industry. In case of firms and corporate the requirement of certification is applicable to persons engaged in sales and marketing. The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund Industry on professional. a role for which they need preparation.  To represent to the Government.

dividend payout or reinvestment. initial offer price which was Rs. what are the restrictions on investment schemes. trust. growth. Another most important part is a brief note on the tax benefits of investing into mutual funds. what will be the minimum redemption amount. reverse repo. loads (entry exit). developing a distribution strategy. load structure. It contains at length describing the name of the scheme. to enable the investors to make well-informed decisions regarding investment in the proposed scheme. Particulars of the scheme have to be prepared in accordance to SEBI guidelines specified in (mutual funds) regulation. What are the initial issue expenses under SEBI regulations. involved in an AMC. It gives information on what should be the minimum subscription amount to be raised like in case of SCMF it was 1crore. structure of the scheme. and Transfer agent? The document also contains definitions and terms used in mutual fund like what is an AMC. shareholding pattern of the AMC. What is the constitution of the fund that is the registrar. Repo. It briefs on the options i. This mistake significantly reduces or eliminates any potential profit the product may have and greatly increases the sales 43 . who is the fund manager. training the sales force and integrating the competitive strategy. trustees. creating a sales strategy. instructions issued by the government of India and any other competent authority have been duly complied with. Registrar. Collecting banker. targeting the customers. scheme specific risk factors. New Product Launches Many new products are launched into the marketplace with little prior Analysis of the current market scenario. what is the investment objective. Custodian. STP. details on the flexibility for shifting from one scheme to another.e.10. The certificate is granted after seeing that the disclosures made in the offer document are fair and adequate. NAV. custodian. guidelines. Finally DUE DILIGENCE CERTIFICATE is awarded after fulfilling legal requirements connected with launching. Major competitors doing appropriate segmentation. SIP.decision. Transfer Agent and Computer Age Management Service (P) Limited are registered with SEBI. and auditors? What is the role of sponsors. his qualifications and his involvement in previous projects. which are key personnel. 1996.

the vast field of competitors out there? What benefits and features we can provide that our prospective customers will value most? The bottom line is that our product or service "bundle" should be unique and meet the needs and desires of our best prospects. We have to start by taking a serious look at your competitors. can afford to buy it and have demonstrated a willingness to do so--probably by purchasing from competition. Define your marketing strategy and tactics. weaknesses. Even if one thinks that my new product or service is entirely unique and without existing competition. 2. At this stage. Many business-marketing classes teach participants how to perform a SWOT (strengths. Once our best prospects have a perceived need for what we offer. choose your sales and marketing channels. one should have a clear understanding of what he must offer in order to stand apart from the competition and who will want to take advantage of our offer. it's always easier to fill a need than to create one. brochures and websites. it’s important to review their marketing materials. Will we market online. These problems must be avoided if a company wants to survive in today's competitive marketplace. it's important to put ourselves in our prospective customers' shoes and imagine what they might buy in lieu of what we plan to offer. 3. via catalog or through dealers? Generally. multichannel 44 . in what ways we'll excel. Create a unique value proposition. Once it is decided who all are our competitors. Next. opportunities and threats) analysis. and which companies or their offerings pose the greatest threats to our success. These may be customers who are currently buying something similar and will appreciate the additional features our new product or service provides. We must evaluate how new product or service will stand up against what's already being offered. Study your competition. Make a list of the businesses that offer products or services similar to the one you plan to launch. Target the ideal customer.development time. Since it’s rightly said. But we also have to be aware as to why customers will want to buy from us vs. 4. it's essential to focus exclusively on the prospects who are most likely to purchase from us. To successfully launch a new product or service with minimum financial outlay. including their ads.

But no matter what publicity route we choose. should one proceed to the final creation of marketing tools and materials. 6. and in the first weeks and months. or distribute the product to a select group of users for testing. employ online research or mall intercept studies. Roll out your campaign. Only after testing is complete. What should you test? It's best to examine your product or service bundle plus marketing message and marketing materials. Depending on what the plan is. Test your concept and marketing approach. get coverage by allowing key press to review the product. one must decide on the market and marketing budget. we must make sure that our product or service is completely ready and available for purchase in order to maximize returns from the coverage receive. Suppose our strategy is to market a low-cost workout device to people who can't afford gym memberships or highpriced home equipment. 3. Creating a system to maximize sales leads while minimizing marketing . Public relations often play a vital role in the launch of a product or service. We might choose traditional direct marketing plus online sales as major primary channels.marketers achieve the greatest success because customers who can shop when and however they like tend to spend more and shop more often. expense. 2. One can use media relations’ tactics to place articles and win interviews. and employ tactics including direct-response TV spots and online ads and e-mail solicitations that link to your website. or use grass roots marketing to build buzz. With all the money it takes to bring a new product or service to market. hold a launch event. one can use formal focus groups (or simply host roundtable discussions with members of the target audience). Thus in nutshell 7 Ways Market Engineering Can Help Make New Product Launches More Successful 1. 5. Monitor the results from all media. be prepared to adjust your campaign to take advantage of what's working best. 45 Identifying the best customer segments for penetration. it's foolhardy to rush headlong into the launch phase prior to testing. And other marketing efforts should follow closely on the heels of your press roll out. Positioning the product successfully against competition.

11 Cr. 6. Making the team market-driven. 10 Cr. 90 Cr. 7.4. 5. Identifying optimal mix of marketing tools and distribution channels to maximize sales. Setting sales goals based on market potential. Present Scenario: Ludhiana: Major Players  Franklin Templeton  Principal Pnb  Prudential ICICI  Standard Chartered  HFDC  Kotak  Reliance  Birla Sun life  ING Vysya Market Share: Ludhiana Franklin Templeton HDFC Mutual Fund Prudential ICICI Reliance Standard Chartered Mutual Fund ING Vysya Kotak Birla Sun Life 150 Cr. 40 Cr. 46 . 40 Cr. Basing sales strategy on customer benefits rather than features. 100 Cr. 18 Cr.

Investors Guide To Mutual Fund  In this we tried to create awareness among the investors to understand the nuances of mutual fund and Investors Service camp were organized like ET Retail Investors Forum and Investors Service Desk were put up at important places so as to educate investors.Management of N. In case of mutual funds. Also investors often tend to think of fund N.F.O: Learning from Equity Fund There are various issues.O depends how effectively fund management companies handle these issues. We educated them on the fundamental differences between the two.O’s in the same vein as they do of stock IPOs.O where these issues were looked into and proper strategies were made to handle them effectively and are explained in the subsequent part of the report.F.O some of which are investor awareness. the supply of mutual fund units is unlimited and so any appreciation in the value of a 47 . a separate unit is created at the time of investment and it is destroyed at the time of redemption.F. Success of an N.F. Thus. I had the chance to work in Mutual Fund and handle their N. which needs to be analyzed while handling a mutual fund N. advertisement and publicity and distribution channels that are followed by a fund house.F.

in the case of funds. 48 . Your investment call will have to be made purely by looking at the fund manager and the AMC. A discerning investor should absorb this information carefully and invest taking into consideration all these factors.'s NAV can never be due to an increase in the demand for a fund's units. A new fund is an untested entity without any track record. your gains depend on how well the fund manager invests.

Steps In developing Effective Communication Identify Target Audience Establish Budget Select Channels Design Message Decide On Media Mix Measure The Results 49 .

of 68 or 40.24% 100% Figure 1: showing the investment options where the investors invest their surplus: 70 60 No of responses 50 40 30 20 10 0 Bank Deposits Real Estate Mutual Fund Post Office LIC Others Interpretation: From the above data collected it was found that majority of the investors invested their surplus in mutual funds with no. Out of 168 16 each are invested in post office and real estate.ANALYSIS OF DATA 1.96%. Table 1: showing the investment options where the investors invest their surplus: Options Bank Deposits Real Estate Mutual Fund Post Office LIC Others Total No of responses 32 16 68 16 22 12 166 Percentage 19.25% 7. Investment options where the investors invest their surplus.64% 13. 50 . followed by bank deposits and LIC with no.96% 9.64% 40. Rest 12 are invested in other schemes like shares.27% 9. Of 32 and 22 respectively.

People influencing the investment decision of the investors. Options Yourself Financial Advisors Business Colleagues Family Members Banking Executives Total No of responses 78 22 16 14 12 142 Percentage 54.27% 9.2.49% 11.86% 8. 80 70 No of responses 60 50 40 30 20 10 0 Yourself Financial Advisors Business Colleagues Family Members Banking Executives 51 .45% 100% Figure 2: Showing the people influencing the investment decision of the investors.93% 15. Table 2: Showing the people influencing the investment decision of the investors.

Interpretation: The data reveals that 56% of the investors took decisions on their own.V ads Sales People IFA’s Bankers Any other Total No of responses 22 26 34 2 8 52 9 14 2 169 Percentage 13% 15% 20% 1% 5% 32% 5% 8% 1% 100% Figure 3: Showing the sources of information for the investors about the mutual fund. After that 15% of them relied on their financial Advisors. 60 50 No of responses 40 30 20 10 0 Hoarding New spapers T.V ads IFA’s Any other 52 . as they are more experienced. Options Hoarding Banners Newspapers Road show T. Finally 10% and 8% by family members and banking executives resp. 11% from business colleagues. Table 3: Showing the sources of information for the investors about mutual fund.

4. 14% of the customers came to know about M.F. Types of newspaper/magazines read by the investors.76% through sales staff (32%) and just few by means of newspaper (20%) followed by the ones who were made aware through banners and hoarding accounted 15% and 13% resp.F. Table 4: Showing the types of newspaper/magazines read by the investors. Options Financial Non financial Both Total No of responses 36 12 52 100 Percentage 36% 12% 52% 100% Figure 4: Showing the types of newspaper/magazines read by the investors. employees also gave information to their customers. 9. 60 50 No of responses 40 30 20 10 0 Financial Non financial Both 53 .Interpretation: The data revealed that most of the investors came to know about M.

Commemoration of ads by the investors Table 5: Showing the Commemoration of ads by the investors Options Yes No Total Figure 5: No of responses 44 56 100 Percentage 44% 56% 100% Showing the Commemoration of ads by the investors Yes 44% No 56% Interpretation: When asked about the recalling of ads then 56% investors gave negative response and 44% gave positive response. It was observed that 36% of investors liked to read financial newspaper/magazines and only 12% likes to read non-financial newspaper/magazines.Interpretation: When asked about the investor’s preference in case of reading newspaper and magazines. and the rest remaining big chunk of 52% investors liked to read both types of newspaper/magazines. 5. 54 .

55 . 21% investors gave the answer color and brand name and as described in last answer 53% investor’s answer was no and 5% investor’s answer was message content. Table 6: Showing the Things investors can commemorate about the ads.75% 52.66% 20. 7. Options Color Message Brand name No Total No of responses 22 6 22 56 106 Percentage 20.Adequacy of the information given by the ads.75% 5.83% 100% Figure 6: Showing the Things investors can commemorate about the ads. 60 50 No of responses 40 30 20 10 0 Color Message Brand name No Interpretation: When asked about what they recalled in ads.6. Things investors can commemorate about the ads. Table 7: Showing the Adequacy of the information given by the ads.

of responses Yes No Total 62 38 100 Percentage 62% 38% 100% Figure 7: Adequacy of the information given by the ads. of investors (62%) were satisfied with information given in the ads and only 38% were not satisfied. No 38% Yes 62% Interpretation: It has been seen that the maximum no. 8. Table 8: Showing the rating of the promotional tools by the investors. 56 . Rating of the promotional tools by the investors.No.

1 2. So Sales staff with lowest mean score was given rank1 followed by T.V ads Sales staff Banner/Hoarding IFA’s Magazines Total Scores 133 123 109 210 248 192 Mean Scores 1. Magazines rank 4th . the one having lowest mean score was given ranked 1st and the highest mean score has given last rank.09 2.33 1. Newspapers were ranked 3rd .As it can be seen from the above table that mean scores were calculated of various options and then the ranking was done i.23 1.e.V ads which were ranked second.48 1.92 Rank 3 2 1 5 6 4 Interpretation: . 57 .Options Newspaper T. Banners/Hoarding rank 5th and with highest mean score last rank is to IFA’s.

In case of no. More advertisement is required in newspapers and also in TV. 4.1 rank to sales staff amongst all the promotional tools. 52% of the investors read both type of newspaper financial as well as nonfinancial. Conclusion The study was conducted to have an in-depth knowledge of the launch of mutual fund. It was found that most of investors made their investment decisions on their own.V ads were at 3rd rank along with newspaper. 58 .2 rank investors preference was T. 5. The investors gave the no. 2.V ads and again T. 2.. 6. Color and Brand name remained major features behind the recalling of the ads. The findings revealed that almost 41% of the investors invest in mutual fund. Various points and ideas came into light after the survey are that majority of the investors were aware of mutual fund and advertisement proves to be an effective promotional tool. Recommendations of the study 1. About 32% of the investors came to know about mutual fund through sales staff and 20% by newspaper. To use the promotional tools in effective way surveys and Sales staff needs more attentions because they have good influence researches are required before the launch. 3. It was found that majority of investors were satisfied with information given in the ads. A survey with the help of the questionnaire was carried out to know the role of the promotional tools in launch. 3.FINDINGS AND CONCLUSION Findings of Study 1. on investors. 7.

3. The sample taken was very small due to lack of time. As the survey was conducted at the time of trading. 5. 59 . so the brokers and employees might have not filled the questionnaire with so much attention. All the data was collected through interview and questionnaire method so some facts could have been ignored.6. 6. 2. Unwillingness of respondents to reveal the information. 4.4 Limitations 1. Inability of the respondent to answer open-ended questions. As the sampling procedure used was convenience sampling. so the error may script in. 7. Lack of sufficient time.

The Emerging www.S. Mutual Funds in www.A www.BIBLIOGRAPHY      Investment Management First Edition.equitymaster. Jaipur. www.amfiindia.sebi.sbimf. Himalya Publishing www.B.hdfcmutual. New Mutual Funds by ICMR AMFI (Advisors Module) Mutual Funds in India by H.mutualfundindia. Sadhak Websites:          60 .

Where do you invest your surplus? a) Bank Deposits b) Real Estate c) Mutual Funds d) Post Office e) LIC Schemes f) Others (Please specify) 2.ANNEXURE To Study The Role of Promotional Tools in launch of Mutual Fund in Ludhiana and its impact. How did you come to know about it? a) Hoarding b) Newspapers c) Road Show 61 . Are you aware of New Types of Mutual Fund? a) Yes b) No 4. 1. Who influences your investment decision? a) Yourself b) Financial Advisors c) Business Colleagues d) Family Members e) Banking Executives 3.

Which newspaper/magazines do you read? a) Financial b) Non Financial c) Both 6. How do you rate listed promotional tools in order of impact? a) Newspaper b) T. Do you recall any of the ads? a) Yes b) No 7. 62 .d) T.What can you recall? a) Color b) Message c) Brand Name d) No 8.V ads e) Sales People f) Bankers g) Any other 5. Profession …………….V ads c) Sales Staff d) Banners/hoarding e) IFA’s f) Magazines Name ……….

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