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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
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. Bonds are considered to be the most common lending investment traded on the market. and in return you can receive interest on your invested amount. which is back over predetermined amounts of time. it’s very important to know the area in which mutual funds works. The flow chart below describes broadly the working of a mutual fund Before we understand what is mutual fund.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. But the biggest advantage to mutual funds is diversification. but the majority of mutual funds invest in stocks and/or bonds. There are many other types of investments other than stocks and bonds (including annuities. Stocks are considered to be the most common owned investment traded on the market. investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. When you invest in a mutual fund. . by minimizing risk & maximizing returns. and started its operations in 1964 with the issue of units under the scheme US-64. you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. the basic understanding of stocks and bonds. thus by pooling money together in a mutual fund. professionally managed basket of securities at a relatively low cost. UTI Act in 1963. Stocks : Stocks represent shares of ownership in a public company. and precious metals). The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). real estate. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. ONGC and Infosys. Unit Trust of India is the first Mutual Fund set up under a separate act. Examples of public companies include Reliance. Bonds : Bonds are basically the money which you lend to the government or a company.
Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. 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. risk tolerance and return expectations etc. Investors can invest in . These do not have a fixed maturity.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. The fund is open for subscription only during a specified period. The table below gives an overview into the existing types of schemes in the Industry. Close Ended Schemes A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.
Equity fund: These funds invest a maximum part of their corpus into equities holdings. these funds ensure low risk and provide stable income to the investors. popularly known as Government of India debt papers. Debt funds: The objective of these Funds is to invest in debt papers. The Equity Funds are sub-classified depending upon their investment objective. as follows: • • • • Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon. thus Equity funds rank high on the risk-return matrix. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. private companies. The structure of the fund may vary different for different schemes and the fund manager’s outlook on different stocks. 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. By investing in debt instruments. some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. Debt funds are further classified as: • Gilt Funds: Invest their corpus in securities issued by Government. which combines the features of open-ended and closeended schemes.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. 2. Interval Schemes Interval Schemes are that scheme. banks and financial institutions are some of the major issuers of debt papers. These Funds carry zero Default risk but are associated . BY NATURE 1. In order to provide an exit route to the investors. Government authorities.
Balanced funds: As the name suggest they. 3. . Further the mutual funds can be broadly classified on the basis of investment parameter viz. are a mix of both equity and debt funds. which are in line with pre-defined investment objective of the scheme. which is pre-defined in the objectives of the fund. These schemes are safer as they invest in papers backed by Government. • Liquid Funds: Also known as Money Market Schemes. CPs and CDs. Some portion of the corpus is also invested in corporate debentures. The investor can align his own investment needs with the funds objective and invest accordingly. • Short Term Plans (STPs): Meant for investment horizon for three to six months. These schemes invest in short-term instruments like Treasury Bills. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. Each category of funds is backed by an investment philosophy. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. inter-bank call money market. It gets benefit of both equity and debt market. • Income Funds: Invest a major portion into various debt instruments such as bonds. These funds provides easy liquidity and preservation of capital. Equity part provide growth and the debt part provides stability in returns.with Interest Rate risk. • MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. They invest in both equities and fixed income securities. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes. corporate debentures and Government securities. These schemes aim to provide investors with the best of both the worlds. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs).
4.Investments in mutual fund is considered to be easy. Liquidity . compare to other available instruments in the market. Disadvantages of Investing Mutual Funds: 1. Costs – The biggest source of AMC income.Some funds doesn’t perform in neither the market. where SIP start with just Rs. Simplicity . Most AMC also have automatic purchase plans whereby as little as Rs. A mutual fund is considered to be relatively less expensive way to make and monitor their investments. and help to bring down the average cost of the unit for their investors. Diversification . 2000.Purchasing units in a mutual fund instead of buying individual stocks or bonds. thus help to reducing transaction costs. The mutual fund industries are thus charging extra cost under layers of jargon. by well qualified professional. the investors risk is spread out and minimized up to certain extent. Professional Management. as their management is not dynamic enough to explore the available opportunity in the market. 3.50 per month basis.The basic advantage of funds is that.Just like an individual stock. 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. thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself. for picking up stocks. Professional Management . and the minimum investment is small. is generally from the entry & exit load which they charge from an investors. 5. . mutual fund also allows investors to liquidate their holdings as and when they want.Mutual fund buy and sell large amounts of securities at a time. 2. they are professional managed. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. at the time of purchase. 2. Economies of Scale .Advantages of Investing Mutual Funds: 1.
the manager often has trouble finding a good investment for all the new money. the fund belongs to all investors. Taxes . a capital-gain tax is triggered. Each shareholder participates in the gain or loss of the fund. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. The money thus collected is then invested in capital market instruments such as shares. which affects how profitable the individual is from the sale. Units are issued and can be redeemed as needed. i. MUTUAL FUND AND ITS VARIOUS ASPECTS. . The joint ownership of the fund is thus “Mutual”. bonds and other securities. professionally managed basket of securities at a relatively low cost. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. The funds Net Asset value (NAV) is determined each day. 4.Because funds have small holdings across different companies. For example. high returns from a few investments often don't make much difference on the overall return. when a fund manager sells a security. debentures and other securities.3. When money pours into funds that have had strong success. Dilution is also the result of a successful fund getting too big. It might have been more advantageous for the individual to defer the capital gains liability. This pool of money is invested in accordance with a stated objective.e. Investors of mutual funds are known as unit holders.when making decisions about your money. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Dilution . 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. fund managers don't consider your personal tax situation. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. 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.
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. Mutual Fund investor is also known as a mutual fund shareholder or a unit holder.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. Any change in the value of the investments made into capital market instruments (such as shares. debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. 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).
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. Though the growth was slow. it reached the height if Rs. 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. . The private sector entry to the fund family raised the Aum to Rs. Each phase is briefly described as under. the Assets Under Management (AUM) was Rs67 billion. but it accelerated from the year 1987 when non-UTI players entered the Industry. both qualities wise as well as quantity wise. 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. SBI Mutual Fund was the first non. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. The first scheme launched by UTI was Unit Scheme 1964. 470 billion in March 1993 and till April 2004. Bank of Baroda Mutual Fund (Oct 92). Indian mutual fund industry had seen a dramatic improvement.47.004 crores. 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.At the end of 1993.UTI. Punjab National Bank Mutual Fund (Aug 89).UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). at the initiative of the Government of India and Reserve Bank. At the end of 1988 UTI had Rs.6. Bank of India (Jun 90).700 crores of assets under management. 1540 billion. Before. the monopoly of the market had seen an ending phase. 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. Indian Bank Mutual Fund (Nov 89). In the past decade. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
835 crores as at the end of January 2003. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. sponsored by SBI. which manage assets of Rs. PNB. Fourth Phase – since February 2003 In February 2003. consolidation and growth. As at the end of September.29. BOB and LIC. the assets of US 64 scheme. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. It is registered with SEBI and functions under the Mutual Fund Regulations.21.805 crores. under which all mutual funds. RETURN: . there were 33 mutual funds with total assets of Rs. 1. RISK V/S. As at the end of January 2003. except UTI were to be registered and governed. The second is the UTI Mutual Fund Ltd. there were 29 funds. representing broadly. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities.153108 crores under 421 schemes. assured return and certain other schemes. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being. 2004.
has rewarded our investors with consistent returns. In 20 years of operation. SBI Funds Management Pvt. honored us with 15 awards of performance and have emerged as the preferred investment for millions of investors. the fund has launched 38 schemes and successfully redeemed 15 of them. 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. Ltd. is one of the leading fund houses in the country with an investor base of over 4. and in the process. and Société Générale Asset Management (France). 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. Ltd.INTRODUCTION TO SBI MUTUAL FUND SBI Funds Management Pvt. SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund. serves its vast family of investors through a network of over 130 points of acceptance. 46 Investor Service Desks and 56 District Organizers. Schemes of the Mutual Fund have time after time outperformed benchmark indices.6 million and over 20 years of rich experience in fund management consistently delivering value to its investors. The trust reposed on us by over 4. Ltd. 28 Investor Service Centers. Growth through innovation and stable investment policies is the SBI MF credo. SBI Funds Management Pvt.6 million investors is a genuine tribute to our expertise in fund management.
Contra Fund MSFU. are riskier than Diversified Equity Funds.FMCG Fund SBI Arbitrage Opportunities Fund . 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.IT 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. 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. Sectoral Funds and Index Funds. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds.Pharma Fund MSFU.Emerging Business Fund MSFU. 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.
Floating Rate Plan Magnum Income Plus Fund Magnum Insta Cash Fund -Liquid Floater Plan Magnum Monthly Income Plan Magnum Monthly Income Plan . but at the same time provide . At the same time the expected returns from debt funds would be lower. Hence they are less risky than equity funds. Hence they are safer than equity funds.SERIES I DEBT SCHEMES Debt Funds invest only in debt instruments such as Corporate Bonds.Floater Magnum NRI Investment Fund SBI Premier Liquid Fund BALANCED SCHEMES Magnum Balanced Fund invests in a mix of equity and debt investments. SBI Blue chip Fund SBI Infrastructure Fund . 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. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors. • • • • • • • • • • • Magnum Children’s benefit Plan Magnum Gilt Fund Magnum Income Fund Magnum Insta Cash Fund Magnum Income Fund.Series I SBI Magnum Taxgain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUND .
x. v.commensurately lower returns. 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 . ii. iv. • Magnum Balanced Fund COMPETITORS OF SBI MUTUAL FUND Some of the main competitors of SBI Mutual Fund in Pathankot are as Follows: i. vi. iii. but is looking for higher returns than those provided by debt funds. ix. vii. viii. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets.
AWARDS AND ACHIEVEMENTS SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award .18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.4 Awards. The Lipper Award (Year 2005-2006) and most recently with the CNBC TV . CNBC TV .18 Crisil Award 2006 . .8 times.
rent agreement. Proof of address (any of the following ) :latest telephone bill. latest Demat account statement. Custodian. AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation. An offer document consists of the following: Standard Offer Document for Mutual Funds (SEBI Format) Summary Information Glossary of Defined Terms Risk Disclosures . transparency etc. ration card. Photo PAN Card 2. driving license. According to SEBI Regulations. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. registered with SEBI. 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. two thirds of the directors of Trustee Company or board of trustees must be independent. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. SEBI formulates policies and regulates the mutual funds. Passport. latest bank passbook/bank account statement. Its advisable to every investor to ask for the offer document and read it before investing. Documents required (PAN mandatory): Proof of identity: 1. Offer document: An offer document is issued when the AMCs make New Fund Offer(NFO). voter id. holds the securities of various schemes of the fund in its custody. disclosure.Guidelines of the SEBI for Mutual Fund Companies: To protect the interest of the investors. 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. latest electricity bill. Its objective is to increase public awareness of the mutual fund industry.
UTI etc. Sundaram. Dividend policy 9. of units 7. is attached along with the mutual fund form. SBI magnum. Canara Robeco. JP Morgan. The various parties involved in distribution of mutual funds are: 1. Franklin Templeton. 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. Minimum application amount/ no. Tata. Reliance . Its contents are: 1 Name of the fund. LIC. recurring expenses 11.Birla Sunlife. Risk profile of the scheme 5. whereas foreign AMCs include: Standard Chartered. HSBC. Kotak Mahindra. Performance of the scheme (scheme return v/s. Name of the fund manager(s) 10 . Expenses of the scheme: load structure. . Key Information Memorandum: a key information memorandum. 4. Aset allocation pattern of the scheme. ICICI.wise return for the last 5 financial year. HDFC. Distribution channels: Mutual funds posses a very strong distribution channel so that the ultimate customers doesn’t face any difficulty in the final procurement. Year. benchmark return) 12. popularly known as KIM. Iestment objective 3. Plans & options 6. 2. Mirae Assets. some of the top AMCs of India are. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. Benchmark index 8. Lotus India. And thus every investor get to read it. Fidelity. The investors can approach to the AMCs for the forms. DSP Merill Lynch. etc.
25%). If the investors ignore the evaluation of funds’ performance then he can loose hold of it any time. he can face any of the following problems: . newspapers and professional advisors like SBI mutual fund services. AMCs can enjoy the advantage of large network of these brokers and sub brokers. it is imposed to discourage withdrawals. advertising expenses.so. processing etc. the more assets in the fund.25-2. etc. So the AMCs dealing through SBI has access to most of the investors. websites.it is the commission or charged paid when an investor exits from a mutual fund.5% expense ratio means the AMC charges Rs1. A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. banks and several non. the costs of running a fund grow slower than the growth in the fund size . Exit Load/Back. In this ever-changing industry. salaries.eg: SBI being the top financial intermediary of India has the greatest network. the lower should be its expense ratio Loads: Entry Load/Front-End Load (0-2. Individual agents. brokerage fee. independent brokers.Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. It may reduce to zero with increase in holding period.50 for every Rs100 in assets under management. 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. whichever he finds convenient for him. or expense ratio that covers administrative expenses. 3.End Load (0. Normally.banking financial corporations too.its the commission charged at the time of buying the fund to cover the cost of selling. Banks. Costs associated: Expenses: AMCs charge an annual fee. Therefore it’s very necessary to continuously evaluate the funds’ performance with the help of fact sheets and newsletters.2 . NBFC: investors can procure the funds through individual agents.25%). A 1.
The funds’ performance can slip in comparison to similar funds.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. There may be an increase in the various costs associated with the fund. 5. 4 . 3. 6 . a technical measure of the risk associated may also surge. 2.Beta.1. . Variation in the funds’ performance due to change in its management/ objective.
To find out the most preferred channel. To find out the Preferences of the investors for Asset Management Company.OBJECTIVES OF THE STUDY 1. To know the Preferences for the portfolios. To know why one has invested or not invested in SBI Mutual fund 4. 2. 3. To find out what should do to boost Mutual Fund Industry. . 5.
RESEARCH METHODOLOGY This report is based on primary as well secondary data. Duration of Study: . analyzing the required information data and providing an alternative solution to the problem . 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. portfolio.SCOPE OF THE STUDY A big boom has been witnessed in Mutual Fund Industry in resent times. I had been sent at one of the branch of State Bank of India Pathankot where I completed my Project work. Data sources: Research is totally based on primary data. collecting. 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. This project report may help the company to make further planning and strategy. Secondary data can be used only for the reference. and option for getting return and so on they prefer. however primary data collection was given more importance since it is overhearing factor in attitude studies. The research was carried on in Pathankot. mode of investment. The secondary data has been collected through various journals and websites.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. The study will help to know the preferences of the customers. which company. and primary data has been collected by interacting with various people. Research has been done by primary data collection.
Boring Canal Road Branch. pie charts. irrespective of them being investors or not or availing the services or not. Sample design: Data has been presented with the help of bar graph. Out of which only 120 people had invested in Mutual Fund.The study was carried out for a period of two months. line graphs etc. Sample size: The sample size of my project is limited to 200 people only. It was also collected through personal visits to persons. Other 80 people did not have invested in Mutual Fund. by formal and informal talks and through filling up the questionnaire prepared. from 30th May to 30th July 2008. The data has been analyzed by using mathematical/Statistical tool. Sampling: Sampling procedure: The sample was selected of them who are the customers/visitors of State Bank if India. .
Data Analysis Data analysis: Have you ever invested/ interested to invest in mutual funds? YES NO 135 65 .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 .
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 .
e. (a) Age distribution of the Investors of Pathankot.ANALYSIS & INTERPRETATION OF THE DATA 1.e. 25%. i. (b). 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. 20% and the least investors are in the age group of below 30 yrs. Educational Qualification of investors of Dehradoon . Age Group No. the second most investors are in the age group of 41-45yrs i.
c). 23% are Under Graduate and 6% are others (under HSC). 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.
Occupation Govt. No. Employees.000 No.001-20.001-30. Monthly Family Income of the Investors of Dehradoon. Service Pvt. Service Business 35 45 30 4 Agriculture 6 Others Occupation of the customers Interpretation: In Occupation group out of 120 investors. Employees. (d). of Investors 30 45 35 4 6 50 No.000 15. of Investors 40 30 20 10 0 Govt.000 10.000 20.000 >30.001-15. 3% are in Agriculture and 5% are in others. Service Business Agriculture Others . 38% are Pvt. 25% are Businessman. Service Pvt. of Investors 5 12 28 43 32 . Income Group <=10. 29% are Govt.
000. 30.50 45 40 35 30 25 20 15 10 5 0 No. Second one i.e. out of 120 investors.) Interpretation: In the Income Group of the investors of Dehradoon.000 (2) Investors invested in different kind of investments. 27% investors are in the monthly income group of more than Rs. Kind of Investments Saving A/C Fixed deposits Insurance Mutual Fund Post office (NSC) Shares/Debentures Gold/Silver No.e. 4% are in the monthly income group of below Rs. of Respondents 195 148 152 120 75 50 30 . in Th. 20.001 to Rs. of Investors 43 28 5 <=10 12 10-15 15-20 20-30 >30 32 Income Group of the Investorsn (Rs. 30. 36% investors that is the maximum investors are in the monthly income group Rs.000 and the minimum investors i. 10.
15% in Gold/Silver and 32. 60% in Mutual Fund. Preference of factors while investing Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust No.5% people have invested in Saving A/c. 97.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.5% in Post Office. 25% in Shares or Debentures. 76% in Insurance.5% in Real Estate. 3.of Respondents Interpretation: From the above graph it can be inferred that out of 200 people. of Respondents 40 60 64 36 . 37. 74% in Fixed Deposits.
32% People prefer to invest where there is High Return. 20% prefer easy Liquidity and 18% prefer Trust 4. Awareness about Mutual Fund and its Operations .18% 20% 32% 30% L iquidity L Ris ow k Hig R h eturn Trus t Interpretation: Out of 200 People. 30% prefer to invest where there is Low Risk.
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. 5. Source of information for customers about Mutual Fund Source of information Advertisement Peer Group Bank Financial Advisors No.Response No. of Respondents 18 25 30 62 .
7 0 6 0 5 0 4 0 3 0 2 0 2 5 1 0 1 8 0 Advertisem entPeer Group No. Investors invested in Mutual Fund Response No. 7. Out of 135 Respondents. 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. of Respondents YES NO Total 120 80 200 Interpretation: Out of 200 People. 19% through Peer Group and 13% through Advertisement. 60% have invested in Mutual Fund and 40% do not have invested in Mutual Fund. 22% through Bank. of Respondents 65 5 10 . Reason for not invested in Mutual Fund Reason Not Aware Higher Risk Not any Specific Reason No. 46% know about Mutual fund Through Financial Advisor. 6.
of Investors 55 75 30 75 56 45 70 . 81% are not aware of Mutual Fund. 13% said there is likely to be higher risk and 6% do not have any specific reason.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. 8. who have not invested in Mutual Fund.
of Investors 60 30 45 55 56 70 75 75 80 Interpretation: In Pathankot most of the Investors preferred UTI and Reliance Mutual Fund. only 46% have invested in SBIMF. 47% in ICICI Prudential. Reason for invested in SBIMF Reason Associated with SBI Better Return Agents Advice No.5% have invested in each of them. of Respondents 35 5 15 . 9.Others HDFC Name of AMC Kotak SBIMF ICICI Reliance UTI 0 20 40 No.5% in Kotak and 25% in HDFC. Out of 120 Investors 62. 37.
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. 10. 9% invested because of better return. Reason for not invested in SBIMF Reason Not Aware Less Return Agent’s Advice No. 27% invested on Agent’s Advice. of Respondents 25 18 22 34% 38% 28% Not Aware L Return ess Ag ent's Advice .
63% in SBIMF. Preference of Investors for future investment in Mutual Fund Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others No.Interpretation: Out of 65 people who have not invested in SBIMF. 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. 50% in Kotak.5% in Others. 62. 38% were not aware with SBIMF. . 28% do not have invested due to less return and 34% due to Agent’s Advice. of Inves tors Interpretation: Out of 120 investors. 68% prefer to invest in Reliance. 67% in ICICI Prudential. 11. 37.5% in UTI and 29% in HDFC Mutual Fund.
of Respondents One time Investment 78 Systematic Investment Plan (SIP) 42 .12. 25% through AMC and 15% through Bank. Mode of Investment Preferred by the Investors Mode of Investment No. Channel Preferred by the Investors for Mutual Fund Investment Channel No. 13. 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.
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 Investors 56 20 44 . Preferred Portfolios by the Investors Portfolio Equity Debt Balanced No.
of Respondents Dividend Payout 25 Dividend Reinvestment 10 85 Growth . 37% preferred Balance and 17% preferred Debt portfolio 15.37% 46% 17% Equity Debt B alance Interpretation: From the above graph 46% preferred Equity Portfolio. Option for getting Return Preferred by the Investors Option No.
21% 8% 71% Dividend Payout Dividend R einves ent tm Growth Interpretation: From the above graph 71% preferred Growth Option. 16. 21% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option. Preference of Investors whether to invest in Sectoral Funds Response Yes No No. of Respondents 25 95 21% 79% Y es No Interpretation: .
the below HSC there were very few in numbers. . second most Investors were Private employees and the least were associated with Agriculture. employees. Findings In Pathankot in the Age Group of 36-40 years were more in numbers. In Pathankot most of the Investors were Graduate or Post Graduate and In Occupation group most of the Investors were Govt. 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. 79% investors do not prefer to invest in Sectoral Fund because there is maximum risk and 21% prefer to invest in Sectoral Fund.Out of 120 investors.
40% did not have invested in Mutual fund. the second most due to Agent’s advice and rest due to Less Return. In family Income group.000 were more in numbers. SBIMF places after ICICI Prudential according to the Respondents. Out of 55 investors of SBIMF 64% have invested due to its association with the Brand SBI. About all the Respondents had a Saving A/c in Bank. operations and 33% were not. 20. . 10. between Rs. ICICI Prudential has also good Brand Position among investors. Most of the Investors had invested in Reliance or UTI Mutual Fund. For Future investment the maximum Respondents preferred Reliance Mutual Fund. SBIMF has been preferred after them. 13% told Fixed Deposits.30. 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. 76% Invested in Mostly Respondents preferred High Return while investment.000 and the least were in the group of below Rs.001. the second most preferred ICICI Prudential. 60% Investors preferred to Invest through Financial Advisors. Only 60% Respondents invested in Mutual fund.30. 27% Invested because of Advisor’s Advice and 9% due to better return. second most preferred Low Risk then liquidity and the least preferred Trust. 25% through AMC (means Direct Investment) and 15% through Bank. 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. the second most were in the Income group of more than Rs. Most of the investors who did not invested in SBIMF due to not Aware of SBIMF.000.
. Most of the Investors did not want to invest in Sectoral Fund. 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. Pathankot out of these only 120 had invested in Mutual Fund. 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode of Investment. the second most was Balance (mixture of both equity and debt). The sample. The most preferred Portfolio was Equity. Boring Canal Road Branch. Maximum Number of Investors Preferred Growth Option for returns. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. Limitation: Some of the persons were not so responsive. Sample size is limited to 200 visitors of State Bank of India . wanted to invest in Sectoral Fund. size may not adequately represent the whole market. The research is confined to a certain part of Pathankot. and the least preferred Portfolio was Debt portfolio.
Channels etc. They need the knowledge of Mutual Fund and its related terms. People invest in those Companies where they have faith or they are well known with . As the awareness and income is growing the number of mutual fund investors are also growing. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest.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. Products. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC). They think their money will not be secure in Mutual Fund. “Brand” plays important role for the investment. I observed that many of people have fear of Mutual Fund.
because they are the main source to influence the investors. Distribution channels are also important for the investment in mutual fund. There are many AMCs in Pathankot but only some are performing well due to Brand awareness. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective.. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. UTI. Only those people invest directly who know well about mutual fund and its operations and those have time.them. Reliance. 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. Suggestions and Recommendations The most vital problem spotted is of ignorance. 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. Nobody will invest until and unless he is fully convinced. SBIMF. So the advisors should try to change their mindsets. Investors should be made aware of the benefits. Many of investors directly invest their money through AMC because they do not have to pay entry load. The advisors should target for more and more young investors. ICICI Prudential etc. Financial Advisors are the most preferred channel for the investment in mutual fund. . 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. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.
Younger people aged under 35 will be a key new customer group into the future. so making greater efforts with younger customers who show some interest in investing should pay off. Though most of the prospects and potential investors are not aware about the SIP. Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. To succeed however. There is a large scope for the companies to tap the salaried persons. their need and time (how long they want to invest). Customers with graduate level education are easier to sell to and there is a large untapped market there. advisors must provide sound advice and high quality. By considering these three things they can take the customers into consideration. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers. . SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI.
001 to 20. Add: (c). Ser Pvt. Name:(b). Insurance g. a. Pl tick (√) Govt. Fixed deposits f.000 Rs. 10. All applicable.001 to 30. Shares/Debentures c. 15. Post Office-NSC. Age:(d). Gold/ Silver d.001 to 15000 Rs.001 and above 2. Up to Rs. Occupation. 1. Mutual Fund h. 30. etc b.000 Rs. Saving account e. What is your monthly family income approximately? Pl tick (√). Personal Details: (a).QUESTIONNAIRE A study of preferences of the investors for investment in mutual funds. What kind of investments you have made so far? Pl tick (√). Qualification:Graduation/PG Under Graduate Others Phone:- (e).000 Rs. Ser Business Agriculture Others (g). 20. Real Estate .10.
If yes. c. all applicable). UTI c. ICICI . Yes No 5. Have you ever invested in Mutual Fund? Pl tick (√). Other. Peer Group c. SBIMF b. Kotak f. how did you know about Mutual Fund? a. Financial Advisors Yes No 6. All applicable. SBIMF gives less return compared to the others. SBIMF is associated with State Bank of India. specify 9. tick (√). Advertisement b. b. a. Agent’ Advice 11. If NOT invested in SBIMF. b. HDFC e. you do so because (Pl. UTI c. SBIMF b. Reliance e. You are not aware of SBIMF. a. Are you aware about Mutual Funds and their operations? Pl tick (√). Kotak f. which factor will you prefer? . When you plan to invest your money in asset management co.3. a. If not invested in Mutual Fund then why? (a) Not aware of MF (b) Higher risk (c) Not any specific reason 8. If yes. tick (√) all applicable). 7. a. If invested in SBIMF. tick (√). you do so because (Pl. While investing your money. Banks d. (a) Liquidity (b) Low Risk (c) High Return (d) Trust 4. Agent’ Advice 10. which AMC will you prefer? Assets Management Co. in which Mutual Fund you have invested? Pl. HDFC d. Reliance d. c. They have a record of giving good returns year after year.
Yes No .12. Dividend re-investment c. c. would you like to invest in sectorial funds? Please tick (√). When you invest in Mutual Funds which mode of investment will you prefer? Pl. How would you like to receive the returns every year? Pl. tick (√). Growth in NAV 16. Having only debt portfolio b. Only equity portfolio. tick (√). Having debt & equity portfolio. When you want to invest which type of funds would you choose? a. a. Dividend payout b. One Time Investment b. Which Channel will you prefer while investing in Mutual Fund? (a) Financial Advisor (b) Bank (c) AMC 13. Systematic Investment Plan (SIP) 14. Instead of general Mutual Funds. 15. a.
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