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offered help, guideline and support whenever required. First and foremost I would like to express gratitude to Manager SBI kanwali Road Dehradoon and other staffs for their support and guidance in the Project work.. I am extremely grateful to my guide, CA Sharad Chauhan for their valuable guidance and timely suggestions. I would like to thank all faculty members of Uttam Sugar Mills Limited for the valuable guidance& support. I would also like to extend my thanks to my members and friends for their support specially .MCA Anuj Panday officer I.T.Uttam Sugar Mills Limited Sharanpur & Mr. Rajeev Goyal consultant, Sales tax, income tax .And lastly, I would like to express my gratefulness to the parent’s for seeing me through it all.
I hereby declare that this Project Report entitled “THE MUTUAL FUND IS BETTER INVESTMENT PLAN in SBI Mutual Fund submitted in the partial fulfillment of the requirement of Master of Business Administration (MBA) of INSTITUTE OF MANAGEMET TECHNOLOGY, GHAZIABAD is based on primary & secondary data found by me in various departments, books, magazines and websites & Collected by me in under guidance of C.A. Sharad Chauhan.
In 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 of 200 people. I also taken interview of many People those who were coming at the SBI Branch where I done my Project. I visited other
AMCs in Dehradoon to get some knowledge related to my topic. I studied about the products and strategies of other AMCs in Dehradoon 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.
Chapter - 1 Chapter - 2 Chapter - 3 Chapter - 4 Chapter - 5 Chapter - 6 Chapter - 7
INTRODUCTION COMPANY PROFILE OBJECTIVES AND SCOPE RESEARCH METHODOLOGY DATA ANALYSIS AND INTERPRETATION FINDINGS AND CONCLUSIONS SUGGESTIONS & RECOMMENDATIONS BIBLIOGRAPHY
Stocks : Stocks represent shares of ownership in a public company. professionally managed basket of securities at a relatively low cost. it’s very important to know the area in which mutual funds works. but the majority of mutual funds invest in stocks and/or bonds. and started its operations in 1964 with the issue of units under the scheme US-64. and precious metals). Bonds are considered to be the most common lending investment traded on the market. Unit Trust of India is the first Mutual Fund set up under a separate act. and in return you can receive interest on your invested amount. Bonds : Bonds are basically the money which you lend to the government or a company. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in. investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. which is back over predetermined amounts of time. But the biggest advantage to mutual funds is diversification. by minimizing risk & maximizing returns. real estate. you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. When you invest in a mutual fund. the basic understanding of stocks and bonds. The flow chart below describes broadly the working of a mutual fund Before we understand what is mutual fund. Examples of public companies include Reliance.What Is Mutual Fund A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. There are many other types of investments other than stocks and bonds (including annuities. thus by pooling money together in a mutual fund. ONGC and Infosys. Stocks are considered to be the most common owned investment traded on the market. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. . The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). UTI Act in 1963.
The table below gives an overview into the existing types of schemes in the Industry. Investors can invest in . Close Ended Schemes A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.Overview of existing schemes existed in mutual fund category Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. These do not have a fixed maturity. risk tolerance and return expectations etc. The key feature of open-end schemes is liquidity. The fund is open for subscription only during a specified period. Type of Mutual Fund Schemes BY STRUCTURE Open Ended Schemes An open-end fund is one that is available for subscription all through the year.
banks and financial institutions are some of the major issuers of debt papers.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. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. as follows: • • • • Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon. By investing in debt instruments. BY NATURE 1. The structure of the fund may vary different for different schemes and the fund manager’s outlook on different stocks. some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. popularly known as Government of India debt papers. 2. which combines the features of open-ended and closeended schemes. Government authorities. In order to provide an exit route to the investors. Debt funds are further classified as: • Gilt Funds: Invest their corpus in securities issued by Government. private companies. Equity fund: These funds invest a maximum part of their corpus into equities holdings. Debt funds: The objective of these Funds is to invest in debt papers. These Funds carry zero Default risk but are associated . Interval Schemes Interval Schemes are that scheme. these funds ensure low risk and provide stable income to the investors. The Equity Funds are sub-classified depending upon their investment objective. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices. thus Equity funds rank high on the risk-return matrix.
The investor can align his own investment needs with the funds objective and invest accordingly. which is pre-defined in the objectives of the fund. inter-bank call money market. These schemes aim to provide investors with the best of both the worlds. are a mix of both equity and debt funds. corporate debentures and Government securities. These funds provides easy liquidity and preservation of capital. 3. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. They invest in both equities and fixed income securities. These schemes are safer as they invest in papers backed by Government. CPs and CDs. It gets benefit of both equity and debt market. Each category of funds is backed by an investment philosophy. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes. • Liquid Funds: Also known as Money Market Schemes. which are in line with pre-defined investment objective of the scheme. • Income Funds: Invest a major portion into various debt instruments such as bonds. • MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. These schemes invest in short-term instruments like Treasury Bills. Balanced funds: As the name suggest they. • Short Term Plans (STPs): Meant for investment horizon for three to six months. Some portion of the corpus is also invested in corporate debentures. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs).with Interest Rate risk. Further the mutual funds can be broadly classified on the basis of investment parameter viz. Equity part provide growth and the debt part provides stability in returns. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. .
2000.Some funds doesn’t perform in neither the market. 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. Liquidity . Investors purchase funds because they do not have the time or the expertise to manage their own portfolio.Mutual fund buy and sell large amounts of securities at a time. 2. the investors risk is spread out and minimized up to certain extent. where SIP start with just Rs. they are professional managed. 4. and the minimum investment is small. Costs – The biggest source of AMC income.Just like an individual stock. thus help to reducing transaction costs.Investments in mutual fund is considered to be easy. Most AMC also have automatic purchase plans whereby as little as Rs.The basic advantage of funds is that. 2. Disadvantages of Investing Mutual Funds: 1. Diversification . The mutual fund industries are thus charging extra cost under layers of jargon. 5. is generally from the entry & exit load which they charge from an investors.Advantages of Investing Mutual Funds: 1. mutual fund also allows investors to liquidate their holdings as and when they want. at the time of purchase. and help to bring down the average cost of the unit for their investors. compare to other available instruments in the market.Purchasing units in a mutual fund instead of buying individual stocks or bonds. as their management is not dynamic enough to explore the available opportunity in the market. by well qualified professional. Economies of Scale . Professional Management . Simplicity . . thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself.50 per month basis. A mutual fund is considered to be relatively less expensive way to make and monitor their investments. Professional Management. 3. for picking up stocks.
Dilution . debentures and other securities.3. The money thus collected is then invested in capital market instruments such as shares. the fund belongs to all investors. when a fund manager sells a security.when making decisions about your money. The joint ownership of the fund is thus “Mutual”. MUTUAL FUND AND ITS VARIOUS ASPECTS. Taxes . Mutual fund issues units to the investors in accordance with quantum of money invested by them. Each shareholder participates in the gain or loss of the fund. fund managers don't consider your personal tax situation. . For example. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities. Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. a capital-gain tax is triggered. 4. which affects how profitable the individual is from the sale. 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. When money pours into funds that have had strong success. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. high returns from a few investments often don't make much difference on the overall return. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. the manager often has trouble finding a good investment for all the new money. bonds and other securities. Dilution is also the result of a successful fund getting too big. Units are issued and can be redeemed as needed. Investors of mutual funds are known as unit holders. It might have been more advantageous for the individual to defer the capital gains liability.e. The funds Net Asset value (NAV) is determined each day. This pool of money is invested in accordance with a stated objective.Because funds have small holdings across different companies. professionally managed basket of securities at a relatively low cost. i.
Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. 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). debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.When an investor subscribes for the units of a mutual fund. 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. . Any change in the value of the investments made into capital market instruments (such as shares.
1540 billion. Indian mutual fund industry had seen a dramatic improvement.47. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. the mutual fund industry had assets under management of Rs.004 crores. it reached the height if Rs.At the end of 1993. SBI Mutual Fund was the first non. Punjab National Bank Mutual Fund (Aug 89). Though the growth was slow. . the monopoly of the market had seen an ending phase.6. Indian Bank Mutual Fund (Nov 89). 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. the Assets Under Management (AUM) was Rs67 billion. Each phase is briefly described as under. Bank of India (Jun 90). At the end of 1988 UTI had Rs. Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. Bank of Baroda Mutual Fund (Oct 92). The private sector entry to the fund family raised the Aum to Rs. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. Before. 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.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87).700 crores of assets under management. at the initiative of the Government of India and Reserve Bank.UTI. 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. In the past decade. The first scheme launched by UTI was Unit Scheme 1964. both qualities wise as well as quantity wise. 470 billion in March 1993 and till April 2004. but it accelerated from the year 1987 when non-UTI players entered the Industry.
Fourth Phase – since February 2003 In February 2003. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. representing broadly. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. 2004.153108 crores under 421 schemes. under which all mutual funds. sponsored by SBI. As at the end of January 2003. the assets of US 64 scheme. The second is the UTI Mutual Fund Ltd. which manage assets of Rs. there were 29 funds. It is registered with SEBI and functions under the Mutual Fund Regulations.Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being.21. BOB and LIC. except UTI were to be registered and governed. consolidation and growth. 1. RETURN: . PNB.805 crores.835 crores as at the end of January 2003. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. As at the end of September. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. RISK V/S. assured return and certain other schemes. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.29. there were 33 mutual funds with total assets of Rs.
INTRODUCTION TO SBI MUTUAL FUND SBI Funds Management Pvt. and in the process. is one of the leading fund houses in the country with an investor base of over 4. 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. . honored us with 15 awards of performance and have emerged as the preferred investment for millions of investors. Ltd. 46 Investor Service Desks and 56 District Organizers. The trust reposed on us by over 4. serves its vast family of investors through a network of over 130 points of acceptance. is a joint venture between 'The State Bank of India' one of India's largest banking enterprises. one of the world's leading fund management companies that manages over US$ 500 Billion worldwide. Schemes of the Mutual Fund have time after time outperformed benchmark indices. has rewarded our investors with consistent returns. and Société Générale Asset Management (France). Ltd. SBI Funds Management Pvt. SBI Funds Management Pvt.6 million investors is a genuine tribute to our expertise in fund management. 28 Investor Service Centers. In 20 years of operation.6 million and over 20 years of rich experience in fund management consistently delivering value to its investors. Ltd. the fund has launched 38 schemes and successfully redeemed 15 of them. Growth through innovation and stable investment policies is the SBI MF credo. SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund.
Pharma Fund MSFU. 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. 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.IT Fund MSFU. are riskier than Diversified Equity Funds. Sectoral Funds and Index Funds. 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.FMCG Fund SBI Arbitrage Opportunities Fund . Equity Funds include diversified Equity 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.Emerging Business Fund MSFU.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.Contra Fund MSFU.
but at the same time provide . Hence they are less risky than equity funds. • • • • • • • • • • • 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 .SERIES I DEBT SCHEMES Debt Funds invest only in debt instruments such as Corporate Bonds.Series I SBI Magnum Taxgain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUND . At the same time the expected returns from debt funds would be lower.Floater Magnum NRI Investment Fund SBI Premier Liquid Fund BALANCED SCHEMES Magnum Balanced Fund invests in a mix of equity and debt investments. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors. Hence they are safer than equity funds. 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. SBI Blue chip Fund SBI Infrastructure Fund .
iii. viii. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets. ICICI Mutual Fund Reliance Mutual Fund UTI Mutual Fund Birla Sun Life Mutual Fund Kotak Mutual Fund HDFC Mutual Fund Sundaram Mutual Fund LIC Mutual Fund Principal Franklin Templeton . • Magnum Balanced Fund COMPETITORS OF SBI MUTUAL FUND Some of the main competitors of SBI Mutual Fund in Pathankot are as Follows: i. x.commensurately lower returns. v. ii. but is looking for higher returns than those provided by debt funds. vi. ix. vii. iv.
8 times.4 Awards.18 Crisil Award 2006 .18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.AWARDS AND ACHIEVEMENTS SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award . . CNBC TV . The Lipper Award (Year 2005-2006) and most recently with the CNBC TV .
Offer document: An offer document is issued when the AMCs make New Fund Offer(NFO). rent agreement. disclosure. ration card. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. In case of non-photo PAN card in addition to copy of PAN card any one of the following: driving license/passport copy/ voter id/ bank photo pass book. registered with SEBI. holds the securities of various schemes of the fund in its custody. SEBI formulates policies and regulates the mutual funds. Its objective is to increase public awareness of the mutual fund industry. Its advisable to every investor to ask for the offer document and read it before investing. transparency etc. AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation. latest electricity bill. latest bank passbook/bank account statement. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. voter id. latest Demat account statement. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time.Guidelines of the SEBI for Mutual Fund Companies: To protect the interest of the investors. Proof of address (any of the following ) :latest telephone bill. According to SEBI Regulations. Custodian. Photo PAN Card 2. Documents required (PAN mandatory): Proof of identity: 1. An offer document consists of the following: Standard Offer Document for Mutual Funds (SEBI Format) Summary Information Glossary of Defined Terms Risk Disclosures . two thirds of the directors of Trustee Company or board of trustees must be independent. driving license. Passport.
JP Morgan. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. of units 7. Kotak Mahindra. Its contents are: 1 Name of the fund. Minimum application amount/ no. LIC. Tata. Canara Robeco. recurring expenses 11. Mirae Assets. The investors can approach to the AMCs for the forms. Lotus India. HDFC. Fidelity.Birla Sunlife. Franklin Templeton. Iestment objective 3. Expenses of the scheme: load structure. some of the top AMCs of India are. Dividend policy 9. popularly known as KIM. Risk profile of the scheme 5. Distribution channels: Mutual funds posses a very strong distribution channel so that the ultimate customers doesn’t face any difficulty in the final procurement. And thus every investor get to read it. Sundaram.wise return for the last 5 financial year. UTI etc. 2. HSBC. 4. benchmark return) 12. DSP Merill Lynch. Reliance . ICICI. Aset allocation pattern of the scheme. Year. Name of the fund manager(s) 10 . The various parties involved in distribution of mutual funds are: 1. is attached along with the mutual fund form. Benchmark index 8. Performance of the scheme (scheme return v/s. whereas foreign AMCs include: Standard Chartered. Key Information Memorandum: a key information memorandum. Plans & options 6. etc. SBI magnum. . Legal and Regulatory Compliance Expenses Condensed Financial Information of Schemes Constitution of the Mutual Fund Investment Objectives and Policies Management of the Fund Offer Related Information.
its the commission charged at the time of buying the fund to cover the cost of selling.Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. websites. banks and several non.5% expense ratio means the AMC charges Rs1. or expense ratio that covers administrative expenses.it is the commission or charged paid when an investor exits from a mutual fund. So the AMCs dealing through SBI has access to most of the investors. Measuring and evaluating mutual funds performance: Every investor investing in the mutual funds is driven by the motto of either wealth creation or wealth increment or both. etc. whichever he finds convenient for him. Costs associated: Expenses: AMCs charge an annual fee. 3. If the investors ignore the evaluation of funds’ performance then he can loose hold of it any time. AMCs can enjoy the advantage of large network of these brokers and sub brokers. Normally. A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. advertising expenses.End Load (0. it is imposed to discourage withdrawals. he can face any of the following problems: . salaries. the more assets in the fund.so. Exit Load/Back.eg: SBI being the top financial intermediary of India has the greatest network.25%). It may reduce to zero with increase in holding period. Banks.2 .banking financial corporations too. Therefore it’s very necessary to continuously evaluate the funds’ performance with the help of fact sheets and newsletters.25%).25-2. independent brokers. Individual agents. NBFC: investors can procure the funds through individual agents.50 for every Rs100 in assets under management. A 1. the costs of running a fund grow slower than the growth in the fund size . processing etc. brokerage fee. the lower should be its expense ratio Loads: Entry Load/Front-End Load (0-2. newspapers and professional advisors like SBI mutual fund services. In this ever-changing industry.
6 . 5.It can merge into another fund or could be acquired by another fund house. The funds’ ratings may go down in the various lists published by independent rating agencies. . 3. The funds’ performance can slip in comparison to similar funds. a technical measure of the risk associated may also surge.1. 2. 4 . There may be an increase in the various costs associated with the fund. Variation in the funds’ performance due to change in its management/ objective.Beta.
To find out the most preferred channel. To know the Preferences for the portfolios. . To know why one has invested or not invested in SBI Mutual fund 4. To find out what should do to boost Mutual Fund Industry. To find out the Preferences of the investors for Asset Management Company. 5.OBJECTIVES OF THE STUDY 1. 3. 2.
The secondary data has been collected through various journals and websites. Data sources: Research is totally based on primary data. The study will help to know the preferences of the customers. This project report may help the company to make further planning and strategy. The research was carried on in Pathankot. Research has been done by primary data collection. 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. Duration of Study: . analyzing the required information data and providing an alternative solution to the problem . and option for getting return and so on they prefer. which company. mode of investment. One of the most important users of research methodology is that it helps in identifying the problem. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. collecting. and primary data has been collected by interacting with various people. Secondary data can be used only for the reference. however primary data collection was given more importance since it is overhearing factor in attitude studies. portfolio.SCOPE OF THE STUDY A big boom has been witnessed in Mutual Fund Industry in resent times.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. I had been sent at one of the branch of State Bank of India Pathankot where I completed my Project work. RESEARCH METHODOLOGY This report is based on primary as well secondary data.
Out of which only 120 people had invested in Mutual Fund. Sample size: The sample size of my project is limited to 200 people only. Other 80 people did not have invested in Mutual Fund. It was also collected through personal visits to persons. pie charts. from 30th May to 30th July 2008. Boring Canal Road Branch. by formal and informal talks and through filling up the questionnaire prepared. . irrespective of them being investors or not or availing the services or not. Sampling: Sampling procedure: The sample was selected of them who are the customers/visitors of State Bank if India. line graphs etc. The data has been analyzed by using mathematical/Statistical tool.The study was carried out for a period of two months. Sample design: Data has been presented with the help of bar graph.
what is the most important reason for not investing in mutual funds? (only for above 65 participants) Lack of knowledge about mutual funds 25 Enjoys investing in other options 10 Its benefits are not enough to drive you 18 for investment No trust over the fund managers 12 .Data Analysis Data analysis: Have you ever invested/ interested to invest in mutual funds? YES NO 135 65 .
where do you find yourself as a mutual fund investor? Totally ignorant Partial knowledge of MFs Aware of only scheme in which invested Good knowledge of MFs 28 37 46 24 • • . .
• where from you purchases mutual funds? 33 28 59 15 Directly from the AMCs Brokers only ( large intermediaries) Broker/ sub-brokers Other sources .
i. 25%.e. of Investors <= 30 12 31-35 18 36-40 30 41-45 24 46-50 20 >50 16 Investors invested in Mutual Fund 35 30 25 20 15 10 5 0 <=30 31-35 36-40 41-45 46-50 >50 Age group of the Investors 12 18 30 24 20 16 Interpretation: According to this chart out of 120 Mutual Fund investors of Dehradoon the most are in the age group of 36-40 yrs. (a) Age distribution of the Investors of Pathankot.ANALYSIS & INTERPRETATION OF THE DATA 1. Educational Qualification of investors of Dehradoon . Age Group No. the second most investors are in the age group of 41-45yrs i. (b).e. 20% and the least investors are in the age group of below 30 yrs.
23% are Under Graduate and 6% are others (under HSC). c). Occupation of the investors of Dehradoon .Educational Qualification Graduate/ Post Graduate Under Graduate Others Total Number of Investors 88 25 7 120 6% 23% 71% Graduate/Post Graduate Under Graduate Others Interpretation: Out of 120 Mutual Fund investors 71% of the investors in Dehradoon are Graduate/Post Graduate.
3% are in Agriculture and 5% are in others. 29% are Govt.000 15. Service Business Agriculture Others . Income Group <=10.000 No. Monthly Family Income of the Investors of Dehradoon.001-30.000 >30. 25% are Businessman. Employees. Service Business 35 45 30 4 Agriculture 6 Others Occupation of the customers Interpretation: In Occupation group out of 120 investors. of Investors 30 45 35 4 6 50 No. Employees. of Investors 40 30 20 10 0 Govt. Service Pvt.000 10.001-20. 38% are Pvt. (d).Occupation Govt. Service Pvt.001-15. No. of Investors 5 12 28 43 32 .000 20.
Kind of Investments Saving A/C Fixed deposits Insurance Mutual Fund Post office (NSC) Shares/Debentures Gold/Silver No.000 (2) Investors invested in different kind of investments. 36% investors that is the maximum investors are in the monthly income group Rs. in Th.) Interpretation: In the Income Group of the investors of Dehradoon. 10.001 to Rs. 27% investors are in the monthly income group of more than Rs. Second one i. of Respondents 195 148 152 120 75 50 30 .000 and the minimum investors i. 4% are in the monthly income group of below Rs. out of 120 investors.000.e. 30. 30. 20.e.50 45 40 35 30 25 20 15 10 5 0 No. of Investors 43 28 5 <=10 12 10-15 15-20 20-30 >30 32 Income Group of the Investorsn (Rs.
5% people have invested in Saving A/c. 74% in Fixed Deposits. 97. 60% in Mutual Fund. 37.5% in Real Estate.5% in Post Office. of Respondents 40 60 64 36 .of Respondents Interpretation: From the above graph it can be inferred that out of 200 people.Real Estate 65 Kinds of Investment O G ffi ce ol d ur /S (N g an SC ilv A/ ce er c ) 65 30 50 75 120 152 148 195 0 50 100 150 200 250 Sa vi n In s Po st No. 15% in Gold/Silver and 32. 3. 76% in Insurance. Preference of factors while investing Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust No. 25% in Shares or Debentures.
18% 20% 32% 30% L iquidity L Ris ow k Hig R h eturn Trus t Interpretation: Out of 200 People. 20% prefer easy Liquidity and 18% prefer Trust 4. 30% prefer to invest where there is Low Risk. Awareness about Mutual Fund and its Operations . 32% People prefer to invest where there is High Return.
Response No. of Respondents Yes 135 No 65 33% 67% Y es 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. of Respondents 18 25 30 62 . Source of information for customers about Mutual Fund Source of information Advertisement Peer Group Bank Financial Advisors No. 5.
7 0 6 0 5 0 4 0 3 0 2 0 2 5 1 0 1 8 0 Advertisem entPeer Group No. 6. of Respondents YES NO Total 120 80 200 Interpretation: Out of 200 People. Out of 135 Respondents. Investors invested in Mutual Fund Response No. of R espondents 6 2 3 0 B ank F ncia ina l Advisors S ource of Inform ation Interpretation: From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. 60% have invested in Mutual Fund and 40% do not have invested in Mutual Fund. of Respondents 65 5 10 . 22% through Bank. 19% through Peer Group and 13% through Advertisement. 7. 46% know about Mutual fund Through Financial Advisor. Reason for not invested in Mutual Fund Reason Not Aware Higher Risk Not any Specific Reason No.
81% are not aware of Mutual Fund. 13% said there is likely to be higher risk and 6% do not have any specific reason. who have not invested in Mutual Fund. 8. of Investors 55 75 30 75 56 45 70 .13% 6% 81% Not Aware H her R k ig is Not Any Interpretation: Out of 80 people. Investors invested in different Assets Management Co. (AMC) Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others No.
of Investors 60 30 45 55 56 70 75 75 80 Interpretation: In Pathankot most of the Investors preferred UTI and Reliance Mutual Fund. 47% in ICICI Prudential. of Respondents 35 5 15 . only 46% have invested in SBIMF.Others HDFC Name of AMC Kotak SBIMF ICICI Reliance UTI 0 20 40 No. Out of 120 Investors 62. 9. 37. Reason for invested in SBIMF Reason Associated with SBI Better Return Agents Advice No.5% have invested in each of them.5% in Kotak and 25% in HDFC.
Reason for not invested in SBIMF Reason Not Aware Less Return Agent’s Advice No. 27% invested on Agent’s Advice.27% 9% 64% As ociated with S s BI B etter R eturn Ag ents Advice Interpretation: Out of 55 investors of SBIMF 64% have invested because of its association with Brand SBI. 9% invested because of better return. of Respondents 25 18 22 34% 38% 28% Not Aware L Return ess Ag ent's Advice . 10.
63% in SBIMF. 67% in ICICI Prudential.Interpretation: Out of 65 people who have not invested in SBIMF. 11. . 37.5% in UTI and 29% in HDFC Mutual Fund. of Inves tors Interpretation: Out of 120 investors. of Investors 76 45 35 82 80 60 75 Others K otak Nam of AMC e IC I Prudential IC Reliance H F DC UTI S BIMF 0 20 35 45 60 75 80 82 76 40 60 80 100 No. 68% prefer to invest in Reliance. 38% were not aware with SBIMF.5% in Others. Preference of Investors for future investment in Mutual Fund Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others No. 62. 50% in Kotak. 28% do not have invested due to less return and 34% due to Agent’s Advice.
13. Mode of Investment Preferred by the Investors Mode of Investment No. Channel Preferred by the Investors for Mutual Fund Investment Channel No. 25% through AMC and 15% through Bank. of Respondents One time Investment 78 Systematic Investment Plan (SIP) 42 . of Respondents Financial Advisor 72 Bank 18 AMC 30 25% 15% F ncia Advisor ina l B nk a AMC 60% Interpretation: Out of 120 Investors 60% preferred to invest through Financial Advisors.12.
Preferred Portfolios by the Investors Portfolio Equity Debt Balanced No. of Investors 56 20 44 . 14.35% 65% One tim Inves ent e tm S IP Interpretation: Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan.
of Respondents Dividend Payout 25 Dividend Reinvestment 10 85 Growth .37% 46% 17% Equity Debt B alance 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 No.
Preference of Investors whether to invest in Sectoral Funds Response Yes No No. 21% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option. of Respondents 25 95 21% 79% Y es No Interpretation: .21% 8% 71% Dividend Payout Dividend R einves ent tm Growth Interpretation: From the above graph 71% preferred Growth Option. 16.
second most Investors were Private employees and the least were associated with Agriculture. Findings In Pathankot 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. employees. the below HSC there were very few in numbers.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. In Pathankot most of the Investors were Graduate or Post Graduate and In Occupation group most of the Investors were Govt. .
Most of the investors who did not invested in SBIMF due to not Aware of SBIMF. SBIMF has been preferred after them.30. 13% told Fixed Deposits. between Rs. In family Income group. the second most preferred ICICI Prudential. ICICI Prudential has also good Brand Position among investors. the second most due to Agent’s advice and rest due to Less Return.000 were more in numbers. second most preferred Low Risk then liquidity and the least preferred Trust. 20. 25% through AMC (means Direct Investment) and 15% through Bank. 60% Investors preferred to Invest through Financial Advisors. About all the Respondents had a Saving A/c in Bank. operations and 33% were not. 27% Invested because of Advisor’s Advice and 9% due to better return. Out of 55 investors of SBIMF 64% have invested due to its association with the Brand SBI. the Only 67% Respondents were aware about Mutual fund and its Among 200 Respondents only 60% had invested in Mutual Fund and Out of 80 Respondents 81% were not aware of Mutual Fund. For Future investment the maximum Respondents preferred Reliance Mutual Fund. SBIMF places after ICICI Prudential according to the Respondents.000. . 10. 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.000 and the least were in the group of below Rs.001.30. Most of the Investors had invested in Reliance or UTI Mutual Fund. 40% did not have invested in Mutual fund. 76% Invested in Mostly Respondents preferred High Return while investment. the second most were in the Income group of more than Rs. Only 60% Respondents invested in Mutual fund.
The most preferred Portfolio was Equity. 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode of Investment. Limitation: Some of the persons were not so responsive. Maximum Number of Investors Preferred Growth Option for returns. wanted to invest in Sectoral Fund. The sample. Pathankot out of these only 120 had invested in Mutual Fund. and the least preferred Portfolio was Debt portfolio. size may not adequately represent the whole market. . the second most was Balance (mixture of both equity and debt). Sample size is limited to 200 visitors of State Bank of India . Boring Canal Road Branch. Most of the Investors did not want to invest in Sectoral Fund. The research is confined to a certain part of Pathankot. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire. only 21% the second most preferred Dividend Payout and then Dividend Reinvestment. Some respondents were reluctant to divulge personal information which can affect the validity of all responses.
They think their money will not be secure in Mutual 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. They need the knowledge of Mutual Fund and its related terms. Channels etc. “Brand” plays important role for the investment. Products. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC). As the awareness and income is growing the number of mutual fund investors are also growing. People invest in those Companies where they have faith or they are well known with . I observed that many of people have fear of Mutual Fund.
Suggestions and Recommendations The most vital problem spotted is of ignorance.them. UTI. Distribution channels are also important for the investment in mutual fund. They can change investors’ mind from one investment option to others. Mutual funds offer a lot of benefit which no other single option could offer. Only those people invest directly who know well about mutual fund and its operations and those have time. So the advisors should try to change their mindsets. because they are the main source to influence the investors. Nobody will invest until and unless he is fully convinced. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand.. Reliance. . Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. 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. SBIMF. Many of investors directly invest their money through AMC because they do not have to pay entry load. 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. Investors should be made aware of the benefits. Financial Advisors are the most preferred channel for the investment in mutual fund. The advisors should target for more and more young investors. There are many AMCs in Pathankot but only some are performing well due to Brand awareness. ICICI Prudential etc. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective.
Customers with graduate level education are easier to sell to and there is a large untapped market there. Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. Though most of the prospects and potential investors are not aware about the SIP. . To succeed however. their need and time (how long they want to invest). so making greater efforts with younger customers who show some interest in investing should pay off. advisors must provide sound advice and high quality. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers. There is a large scope for the companies to tap the salaried persons. 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. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI.
001 to 15000 Rs. Ser Pvt. 10. Insurance g. Gold/ Silver d. Qualification:Graduation/PG Under Graduate Others Phone:- (e). Up to Rs.000 Rs. All applicable. 20. Personal Details: (a). Age:(d). Shares/Debentures c.10.001 to 20. 15. 1.000 Rs. Post Office-NSC.QUESTIONNAIRE A study of preferences of the investors for investment in mutual funds. Real Estate . What is your monthly family income approximately? Pl tick (√). Add: (c). 30. Pl tick (√) Govt. Saving account e. Ser Business Agriculture Others (g).001 to 30.000 Rs. Name:(b). Occupation. What kind of investments you have made so far? Pl tick (√). etc b. Fixed deposits f. a.001 and above 2. Mutual Fund h.
If yes. Banks d. a. Reliance e. which factor will you prefer? .3. a. UTI c. SBIMF is associated with State Bank of India. in which Mutual Fund you have invested? Pl. When you plan to invest your money in asset management co. you do so because (Pl. you do so because (Pl. You are not aware of SBIMF. b. HDFC e. how did you know about Mutual Fund? a. specify 9. (a) Liquidity (b) Low Risk (c) High Return (d) Trust 4. a. a. 7. ICICI . If invested in SBIMF. Reliance d. Advertisement b. c. Kotak f. Have you ever invested in Mutual Fund? Pl tick (√). all applicable). If not invested in Mutual Fund then why? (a) Not aware of MF (b) Higher risk (c) Not any specific reason 8. Agent’ Advice 10. Kotak f. Are you aware about Mutual Funds and their operations? Pl tick (√). Peer Group c. They have a record of giving good returns year after year. All applicable. Agent’ Advice 11. If yes. Yes No 5. tick (√). SBIMF gives less return compared to the others. Financial Advisors Yes No 6. b. UTI c. If NOT invested in SBIMF. HDFC d. tick (√). which AMC will you prefer? Assets Management Co. Other. tick (√) all applicable). c. While investing your money. SBIMF b. SBIMF b.
When you invest in Mutual Funds which mode of investment will you prefer? Pl. 15. tick (√). Systematic Investment Plan (SIP) 14. One Time Investment b. Having only debt portfolio b. When you want to invest which type of funds would you choose? a. How would you like to receive the returns every year? Pl. Growth in NAV 16. tick (√). a. a. would you like to invest in sectorial funds? Please tick (√). Having debt & equity portfolio. c. Only equity portfolio. Which Channel will you prefer while investing in Mutual Fund? (a) Financial Advisor (b) Bank (c) AMC 13. Yes No .12. Dividend re-investment c. Instead of general Mutual Funds. Dividend payout b.
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