Introduction

Introduction Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when nonUTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General
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Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),0 Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores Third Phase 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund

Regulations. Consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

Concept of Mutual Fund

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

Mutual Funds Before we understand what is mutual fund, its very important to know the area in which mutual funds works, the basic understanding of stocks and bonds. Stocks: - Stocks represent shares of ownership in a public company. Examples of public companies include Reliance, ONGC and Infosys. Stocks are considered to be the most common owned investment traded on the market. Bonds: - Bonds are basically the money which you lend to the government or a company, and in return you can receive interest on your invested amount, which is back over predetermined amounts of time. Bonds are considered to be the most common lending investment traded on the market. There are many other types of investments other than stocks and bonds (including annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or bonds. 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. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. 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, thus by pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But

the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns. How does mutual fund work?

Types of returns: There are three ways, where the total returns provided by mutual funds can be enjoyed by investors: Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly allincome it receives over the year to fund owners in the form of a distribution. If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to
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receive a check for distributions or to reinvest the earnings and get more shares. ADVANTAGES OF MUTUAL FUND Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Choice of schemes Transparency

DISADVANTAGE OF MUTUAL FUND No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme

Guidelines of the SEBI for Mutual Fund Companies: To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of the fund in its custody.
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According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be independent. 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. Its objective is to increase public awareness of the mutual fund industry. AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation, disclosure, transparency etc.

Distribution channels: Mutual funds possess a very strong distribution channel so that the ultimate customers dont face any difficulty in the final procurement. The various parties involved in distribution of mutual funds are: 1. Direct marketing by the AMCs: -the forms could be obtained from the AMCs directly. The investors can approach to the AMCs for the forms. some of the top AMCs of India are; Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: Standard Chartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc. 2. Broker/ sub broker arrangements: - the AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can enjoy the advantage of large network of these brokers and sub brokers.eg: SBI being the top financial intermediary of India has the greatest network. So the AMCs dealing through SBI has access to most of the investors.

3. Individual agents:-Banks, NBFC: investors can procure the funds through individual agents, independent brokers, banks and several non- banking financial corporations too, 4. whichever he finds convenient for him.

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. Therefore its very necessary to continuously evaluate the funds performance with the help of factsheets and newsletters, websites, newspapers and professional advisors like SBI mutual fund services. If the investors ignore the evaluation of funds performance then he can lose hold of it any time. In this ever-changing industry, he can face any of the following problems: 1. Variation in the funds performance due to change in its management/ objective. 2. The funds performance can slip in comparison to similar funds. 3. There may be an increase in the various costs associated with the fund. 4. Beta, a technical measure of the risk associated may also surge. 5. The funds ratings may go down in the various lists published by independent rating agencies. 6. It can merge into another fund or could be acquired by another fund house.

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Performance measures : Equity funds: the performance of equity funds can be measured on the basis of: NAV Growth, Total Return; Total Return with Reinvestment at NAV, Annualized Returns and Distributions, Computing Total Return (Per Share Income and Expenses, Per Share Capital Changes, Ratios, Shares Outstanding), the Expense Ratio, Portfolio Turnover Rate, Fund Size, Transaction Costs, Cash Flow, Leverage. Debt fund: Likewise the performance of debt funds can be measured on the basis of: Peer Group Comparisons, The Income Ratio, Industry Exposures and Concentrations, NPAs, besides NAV Growth, Total Return and Expense Ratio. Liquid funds: The performance of the highly volatile liquid funds can be measured on the basis of: Fund Yield, besides NAV Growth, Total Return and Expense Ratio.

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Why has it become one of the largest financial instruments? If we take a look at the recent scenario in the Indian financial market then we can find the market flooded with a variety of investment options which includes mutual funds, equities, fixed income bonds, corporate debentures, company fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc. All these investment options could be judged on the basis of various parameters such asreturn, safety convenience, volatility and liquidity. Measuring these investment options on the basis of the mentioned parameters, we get this in a tabular

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We can very well see that mutual funds outperform every other investment option. On three parameters it scores high whereas its moderate at one. comparing it with the other options, we find that equities gives us high returns with high liquidity but its volatility too is high with low safety which doesnt makes it favourite among persons who have low risk- appetite. Even the convenience involved with investing in equities is just moderate. Now looking at bank deposits, it scores better than equities at all fronts but lags badly in the parameter of utmost important i.e.; it scores low on return , so its not an happening option for person who can afford to take risks for higher return. The other option offering high return is real estate but that even comes
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with high volatility and moderate safety level, even the liquidity and convenience involved are too low. Gold have always been a favorite among Indians but when we look at it as an investment option then it definitely doesnt gives a very bright picture. Although it ensures high safety but the returns generated and liquidity are moderate. Similarly the other investment options are not at par with mutual funds and serve the needs of only a specific customer group. Straightforward, we can say that mutual fund emerges as a clear winner among all the options available. The reasons for this being: I. Mutual funds combine the advantage of each of the investment products: mutual fund is one such option which can invest in all other investment options. Its principle of diversification allows the investors to taste all the fruits in one plate. Just by investing in it, the investor canenjoy the best investment option as per the investment objective. II. Dispense the shortcomings of the other options: every other investment option has more or less some shortcomings. Such as if some are good at return then they are not safe, if some are safe then either they have low liquidity or low safety or both.likewise, there exists no single option which can fit to the need of everybody. But mutual funds have definitely sorted out this problem. Now everybody can choose their fund according to their investment objectives. III. Returns get adjusted for the market movements: as the mutual funds are managed by experts so they are ready to switch to the profitable option along with the market movement. Suppose they predict that market is going to fall then they can sell some of their shares and book profit and can reinvest the amount again in money market instruments. IV. Flexibility of invested amount: Other than the above mentioned reasons, there exists one more reason which has established mutual funds as one
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of the largest financial intermediary and that is the flexibility that mutual funds offer regarding the investment amount. One can start investing in mutual funds with amount as low as Rs. 500 through SIPs and even Rs. 100 in some cases. How do investors choose between funds? When the market is flooded with mutual funds, its a very tough job for the investors to choose the best fund for them. Whenever an investor thinks of investing in mutual funds, he must look at the investment objective of the fund. Then the investors sort out the funds whose investment objective matches with that of the investors. Now the tough task for investors start, they may carry on the further process themselves or can go for advisors like SBI. Of course the investors can save their money by going the direct route i.e. through the AMCs directly but it will only save 1-2.25% (entry load) but could cost the investors in terms of returns if the investor is not an expert. So it is always advisable to go for MF advisors. The mf advisors thoughts go beyond just investment objectives and rate of return. Some of the basic tools which an investor may ignore but an mf advisor will always look for are as follow:

1. Rupee cost averaging: The investors going for Systematic Investment Plans (SIP) and Systematic Transfer Plans (STP) may enjoy the benefits of RCA (Rupee Cost Averaging). Rupee cost averaging allows an investor to bring down the average cost of buying a scheme by making a fixed investment periodically, like Rs 5,000 a month and nowadays even as low as Rs. 500 or Rs. 100. In this case, the investor is always at a profit, even if the market falls. In case if the NAV of fund falls, the investors can get more number of units and vice-versa. This
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results in the average cost per unit for the investor being lower than the average price per unit over time. The investor needs to decide on the investment amount and the frequency. More frequent the investment interval, greater the chances of benefiting from lower prices. Investors can also benefit by increasing the SIP amount during market downturns, which will result in reducing the average cost and enhancing returns. Whereas STP allows investors who have lump sums to park the funds in a low-risk fund like liquid funds and make periodic transfers to another fund to take advantage of rupee cost averaging. 2. Rebalancing: Rebalancing involves booking profit in the fund class that has gone up and investing in the asset class that is down. Trigger and switching are tools that can be used to rebalance a portfolio. Trigger facilities allow automatic redemption or switch if a specified event occurs. The trigger could be the value of the investment, the net asset value of the scheme, level of capital appreciation, level of the market indices or even a date. The funds redeemed can be switched to other specified schemes within the same fund house. Some fund houses allow such switches without charging an entry load. To use the trigger and switch facility, the investor needs to specify the event, the amount or the number of units to be redeemed and the scheme into which the switch has to be made. This ensures that the investor books some profits and maintains the asset allocation in the portfolio. 3. Diversification: Diversification involves investing the amount into different options. In case of mutual funds, the investor may enjoy it afterwards also through dividend transfer option. Under this, the dividend is reinvested not into the same scheme but into another scheme of the investor's choice.

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For example, the dividends from debt funds may be transferred to equity schemes. This gives the investor a small exposure to a new asset class without risk to the principal amount. Such transfers may be done with or without entry loads, depending on the MF's policy. 4. Tax efficiency: Tax factor acts as the x-factor for mutual funds. Tax efficiency affects the final decision of any investor before investing. The investors gain through either dividends or capital appreciation but if they havent considered the tax factor then they may end loosing. Debt funds have to pay a dividend distribution tax of 12.50 per cent (plus surcharge and education cess) on dividends paid out. Investors who need a regular stream of income have to choose between the dividend option and a systematic withdrawal plan that allows them to redeem units periodically. SWP implies capital gains for the investor. If it is short-term, then the SWP is suitable only for investors in the 10-per-cent-tax bracket. Investors in higher tax brackets will end up paying a higher rate as short-term capital gains and should choose the dividend option. If the capital gain is longterm (where the investment has been held for more than one year), the growth option is more tax efficient for all investors. This is because investors can redeem units using the SWP where they will have to pay 10 per cent as longterm capital gains tax against the 12.50 per cent DDT paid by the MF on dividends. All the tools discussed over here are used by all the advisors and have helped investors in reducing risk, simplicity and affordability. Even then an investor needs to examine costs, tax implications and minimum applicable investment amounts before committing to a service.

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What are the most lucrative sectors for mutual fund managers? This is a question of utmost interest for all the investors even for those who dont invest in mutual funds. Because the investments done by the MFs acts as trendsetters. The investments made by the fund managers are used for prediction. Huge investments assure liquidity and reflects appositive picture whereas tight investment policy reflects crunch and investors may look forward for a gloomy picture. Their investments show that which sector is hot? And will set the market trends. The expert management of the funds will always look for profitable and high paying sectors. So we can have a look at most lucrative sectors to know about the recent trends:

From the above data collected we can say that engineering & capital goods sector has emerged as the hottest as most of the funds are betting on it. We can
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say that this sector is on boom and presents a bright picture. Other than it other sectors on height are oil & gas, telecom, metals & mining and information technology. Sectors performing average are automotive, cement & construction, chemicals, media & entertainment, manufacturing, miscellaneous, pharmaceuticals and utility. The sectors which are not so favorite are banking & financial services, conglomerates, consumer non- durables, food & beverages, services and tobacco. And the sector which failed to attract the fund managers is consumer durables with just 51 funds betting on it. Thus this analysis not only gives a picture of the mindset of fund managers rather it also reflects the liquidity existing in each of the sectors. It is not only useful for investors of mutual funds rather the investors of equity and debt too could take a hint from it. Asset allocation by fund managers are based on several researches carried on so, it is always advisable for other investors to take a look on it. It can be further presented in the form of a graph as follow:

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CATEGORIES OF MUTUAL FUND

Mutual funds can be classified as follow 1. Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments cannot be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be

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made during specified intervals. Therefore, such funds have relatively low liquidity.

2. Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightages. Equity diversified funds-100% of the capital is invested in equities spreading across different sectors and stocks. Dividend yield funds-it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. Thematic funds-Invest 100% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc. Sector funds-Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

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 Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: Debt-oriented funds -Investment below 65% in equities. Equity-oriented funds-Invest at least 65% in equities, remaining in debt. Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market. Gilt funds ST-They invest 100% of their portfolio in government securities of and T-bills. Floating rate funds -Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. Arbitrage fund-They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. Gilt funds LT-They invest 100% of their portfolio in long-term government securities.
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 Income funds LT-Typically; such funds invest a major portion of the portfolio in Monthly Income Plans- MIPs have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

INVESTMENT STRATEGIES 1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through postdated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA). 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

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RISKV/S. RETURN

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COMPANY PROFILE

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INTRODUCTION TO SBI MUTUAL FUND SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with an investor base of over 5.4 million and over 25 years of rich experience in fund management consistently delivering value to its investors. SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of India' one of India's largest banking enterprises, and Societies Generals Asset Management (France), one of the world's leading fund management companies that manages over US$ 500 Billion worldwide. Today the fund house manages over Rs 28500 crores of assets and has a diverse profile of investors actively parking their investments across 36 active schemes. In 25 years of operation, the fund has launched 38 schemes and successfully redeemed 15 of them, and in the process, has rewarded our investors with consistent returns. Schemes of the Mutual Fund have time after time outperformed benchmark indices, honored us with 15 awards of performance and have emerged as the preferred investment for millions of investors. The trust reposed on us by over 5.2 million investors is a genuine tribute to our expertise in fund management. SBI Funds Management Pvt. Ltd. serves its vast family of investors through a network of over 130 points of acceptance, 28 Investor Service Centers, 46 Investor Service Desks and 56 District Organizers. SBI Mutual is the first banksponsored fund to launch an offshore fund Resurgent India Opportunities Fund. Growth through innovation and stable investment policies is the SBI MF credo.

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PRODUCTS OF SBI MUTUAL FUND 1. Equity schemes The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds, Sectorial Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectorial funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index. Magnum COMMA Fund Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum Midcap Fund Magnum Multicap Fund Magnum Multiplier plus 1993 Magnum Sectorial Funds Umbrella MSFU- Emerging Business Fund MSFU- IT Fund MSFU- Pharma Fund MSFU- Contra Fund MSFU- FMCG Fund
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 SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Tax gain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUND - SERIES I SBI GOLD

2. Debt schemes Debt Funds invests only in debt instruments such as Corporate Bonds, Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns from debt funds would be lower. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors. Magnum Childrens benefit Plan Magnum Gilt Fund Magnum Income Fund Magnum Insta Cash Fund Magnum Income Fund- Floating Rate Plan Magnum Income Plus Fund Magnum Insta Cash Fund-Liquid Floater Plan Magnum Monthly Income Plan Magnum Monthly Income Plan-Floater
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 Magnum NRI Investment Fund SBI Premier Liquid Fund

3. BALANCED SCHEMES Magnum Balanced Fund invests in a mix of equity and debt investments. Hence they are less risky than equity funds, but at the same time provide commensurately lower returns. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but is looking for higher returns than those provided by debt funds. Magnum Balanced Fund COMPETITORS OF SBI MUTUAL FUND Some of the main competitors of SBI Mutual Fund in Patiala are as Follows: I. II. III. IV. V. VI. VII. VIII. IX. X. 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

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AWARDS AND ACHIEVEMENTS SBI Mutual Fund (SBIMF) Management, we devote considerable resources to gain, maintain and sustain our profitable insights into market movements. The trust responds on us by millions of investors is genuine tribute to expertise in fund Management and dedication to our singular focus, and this has resulted in various awards and accolades for us from the fund industry. ICRA Mutual fund Awards 2012 for various schemes. Readers Digest Awards 2011 For Trusted Brand in Fund Management category. ICRA mutual Fund Awards 2011 For Magnum Income fundFloating rate plan- long term plan. ICRA Mutual Fund Awards 2010 For Magnum Global Fund. ICRA Mutual Fund Awards 2009 For magnum Tax Gain Scheme 1993. The Lipper India Fund Awards 2009 For Various schemes. Outlook Money NDTV Profit Awards 2007 CNBC Awaaz Consumer Awards 2007 Lipper India Fund Awards 2007 For Various Schemes CNBC TV18- CRISIL Mutual Fund Of Year Award 2007 for various schemes

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KEY PERSONNEL OF SBI MUTUAL FUND

Mr. Dinesh Kumar Khara MD & CEO Mr. K. T. Ravindran Executive Director & Chief Operating Officer Mr. R. S. Srinivas Jain Executive Director & Chief Marketing Officer (Strategy and International Business) Ms. Aparna Nirgude Chief Risk Officer

Mr. Philippe Batchevitch Deputy CEO Mr. Navneet Munot Executive Director & Chief Investment Officer Mr. D. P. Singh Executive Director & Chief Marketing Officer (Domestic Business) Mr. Rakesh Kaushik Senior President (Accounts Administration) Mr. C. A. Santosh Head - Customer Service

Vice &

Ms. Vinaya Datar CS & Compliance Officer

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OBJECTIVES OF THE STUDY

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OBJECTIVES OF THE STUDY 1. To find out the Preferences of the investors for Asset Management Company. 2. To know the Preferences for the portfolios. 3. To know why one has invested or not invested in SBI Mutual fund

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LITERATURE REVIEW

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LITERATURE REVIEW Ippolito (1992) stats that investor is ready to invest in those fund or schemes which have resulted good rewards and most investors is attracted by those funds or schemes that are performing better over the worst. Goetzman (1997) opined that investors psychology affects mutual fund selection for investment in and to withdraw from fund. De Bondt and Thaler (1985) submitted that mean reversion in prices of stock is backed by investors retrogression which is based upon investors psychology to overvalue firms resent performance in forming future expected results which is also known as endowment effect. Gupta (1994) surveyed household investor for the objective to find investors preferences to invest in mutual funds and other available financial assets. The findings of the study were more relevant, at that time, to the policy makers and mutual funds to design the financial products for the future. Kulshreshta (1994) in his study suggested some guidelines to the investors that can help them to select needed mutual fund schemes. Shanmugham (2000) worked a survey of individual investors with the object to study on what information source does investor depends. The results explained that they are an economical, sociological and psychological factor which controls investment decisions. Madhusudhan V Jambodekar (1996) conducted his study to size-up the direction of mutual funds in investors and to identify factors influence mutual fund investment decision. The study tells that open-ended scheme is most favored among other things that income schemes and open-ended schemes and income schemes are preferred over closed- ended and growth schemes.
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Newspapers are used as information source, safety of principal amount and investor services are priority points for investing in mutual funds. Sujit Sikidar and Amrit Pal Singh (1996) conducted a survey to peep in to the behavioral aspects of the investors of the North-Eastern region in direction of equity and mutual fund investment. The survey resulted that because of tax benefits mutual funds are preferred by the salaried and self-employed individuals. UTI and SBI schemes were catch on in that region of the country over any other fund and the other fund had been proved archaic during the time of survey. Syama Sunder (1998) conducted a survey with an objective to get an in-depth view into the operations of private sector mutual fund with special reference to Kothari Pioneer. The survey tells that knowledge about mutual fund concept was unsatisfactory during that time in small cities like Visakapatanam. It also suggested that agents can help to catalyse mutual fund culture, open-ended options are much popular than any other schemes, asset management companys brand is chief consideration to invest in mutual fund. Anjan Chakarabarti and Harsh Rungta (2000) emphasized to the importance of brand in ascertaining competence of asset management companies.

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

Type of Research Design :

Conclusive Research Design

Source of Data Research Equipment Sampling Technique

: : :

A Primary Data(survey method) Questionnaire Non-Probability Technique- Convenience Sampling Method.

Sample Size Area of Research

: :

100 Samples Moradabad

Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various websites. Sampling: Sampling procedure: The sample was selected of them who are the customers/visitors of State Bank of India, Moradabad, irrespective of them being investors or not or availing the services or not. It was also collected through personal visits to persons, by

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formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical / Statistical tool. Sample size: The sample size of my project is limited to 100 people only. Out of which only 60 people had invested in Mutual Fund. Other 40 people did not have invested in Mutual Fund. Sample design: Data has been presented with the help of bar graph, pie charts, line graphs etc.

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DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION Table 1: Age Distribution of Investors of Moradabad

Age Group No. of Investors Percentage <= 30 06 10.00% 31-35 09 15.00% 36-40 15 25.00% 41-45 12 20.00% 46-50 10 16.67% >50 08 13.33%

Age group of the Investors

16

Investors invested in Mutual

14 12 10 8 6 4 2 0 <= 30 31-35 36-40 41-45 46-50 >50

Age group of the Investors

FIG. 1 Age Distribution of Investors of Moradabad

Interpretation: According to this chart out of 60 Mutual Fund investors of Moradabad the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

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Table 2:- Preference of factors while investing

Factors No. of Respondents Percentage

Liquidity 12

Low Risk 18

High Return 21

Trust 09

20%

30%

35%

15%

15% 20%
Liquidity Low Risk

35%

30%

High Return Trust

FIG 2:- Preference of factors while investing Interpretation: Out of 60 People, 35% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 15% prefer Trust.

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Table 3:- investor who invest in mutual funds.

Factor

Invest in mutual funds(Yes)

Doesnt invest in mutual funds(No) 40 40%

No. of Respondent Percentage

60 60%

No 40% Yes 60%

Yes

No

FIG. 3: investor who invest in mutual funds. Interpretation: Out of 100 respondent 60% people invest in Mutual Funds and remaining other 40% doesnt invest in mutual fund.

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Table 4:- Source of information for customers about Mutual Fund

Source of information Advertisement Peer Group Bank Financial Advisors

No. of Respondents 08 09 12 31

Percentage

13.33% 15.00% 20.00% 51.67%

No. of R e s p o n d e n t s

12 10 8 6 4 2 0 Advertisement Peer Group Bank Financial Advisors

Source of Information

FIG 4:- Source of information for customers about Mutual Fund

Interpretation: From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. Out of 60 Respondents, 51.67% know about Mutual fund Through Financial Advisor, 20% through Bank, 15% through Peer Group and 13.33% through Advertisement.
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Table.5:- Reason for not invested in Mutual Fund

Reason Not Aware Higher Risk Not any Specific Reason

No. of Respondents 32 2 6

Percentage 80% 05% 15%

19% 5%
Not Aware

76%

Higher Risk Not any Specific Reason

FIG 5:- Reason for not invested in Mutual Fund

Interpretation: Out of 40 people, who have not invested in Mutual Fund, 76% are not aware of Mutual Fund, 19% said there is likely to be higher risk and 5% do not have any specific reason.
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Table 6:- Reason for invested in SBIMF

Reason

No. of Respondents

Percentage

Associated with SBI Better Return Agents Advice

35

58%

8 17

13% 28%

Associated with SBI

Better Return

Agents Advice

FIG.6:- Reason for invested in SBIMF

Interpretation: Out of 60 investors of SBIMF 58% have invested because of its association with Brand SBI 28% invested on Agents Advice, 13% invested because of better return.
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Table 7:- Reason for not invested in SBIMF

Reason

No. of Respondents

Percentage

Not Aware Less Return Agents Advice

17 8 15

43% 20% 38%

Agents Advice 38%

Not Aware 42%

Less Return 20% Not Aware Less Return Agents Advice

FIG.7:- Reason for not invested in SBIMF Interpretation: Out of 40 people who have not invested in SBIMF, 43% were not aware with SBIMF, 20% do not have invested due to less return and 38% due to Agents Advice.

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Table 8: Preference of Investors for future investment in Mutual Fund Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others
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No. of Investors 20 12 6 5 4 3 10

Percentage 33.33% 20.00% 10.00% 08.33% 06.67% 05.00% 16.67%

Name of AMC

20 20 15 10 5 0 SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others 12

11 6

No. of Investors

FIG.8:- Preference of Investors for future investment in Mutual Fund Interpretation: Out of 60 investors, 8.33% prefer to invest in Reliance, 6.67% in ICICI Prudential, 33.33% in SBIMF, 16.67% in others, 5% in Kotak, 20% in UTI and 10% in HDFC Mutual Fund.

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Table 9:- Mode of Investment Preferred by the Investors

Mode of Investment

One time Investment

Systematic Investment Plan (SIP)

No. of Respondents Percentage

39 65%

21 35 %

35% 65%

One time Investment

Systematic Investment Plan (SIP)

FIG.9:- Mode of Investment Preferred by the Investors

Interpretation: Out of 60 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan.

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Table 10:- Preferred Portfolios by the Investors

PORTFOLIO

NO. OF INVESTORS

PERCENTAGE

EQUITY DEBT BALANCED

28 10 22

46% 17% 37%

37% 46%
Equity Debt Balanced

17%

FIG.10:- Preferred Portfolios by the Investors

Interpretation: From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17% preferred Debt portfolio.
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Table 11:- Option for getting Return Preferred by the Investors

Option Dividend No. of Respondents Percentage

Payout Dividend 12 20%

Reinvestment 5 08%

Growth 43 72%

Payout Dividend 20%

Reinvestment 8%

Growth 72%

FIG.11:- Option for getting Return Preferred by the Investors

Interpretation: From the above graph 72% preferred Growth Option, 20% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option.

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Table 12:- Preference of Investors whether to invest in Sectorial Funds

RESPONSE YES NO

NO. OF RESPONDENTS PERCENTAGE 13 47 22% 78%

Yes 22%

No 78%

FIG.12:- Preference of Investors whether to invest in sectorial Funds

Interpretation: Out of 120 investors, 78% investors do not prefer to invest in sectorial Fund because there is maximum risk and 22% prefer to invest in sectorial Fund.
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Findings/ Conclusion

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Findings In Moradabad in the Age Group of 36-40 years were more in numbers. The second most Investors i.e. 25% were in the age group of 41-45 years and the least i.e. 10% were in the age group of below 30 years Among 100 Respondents only 60% had invested in Mutual Fund and 40% did not have invested in Mutual fund Out of 60 People, 35% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 15% prefer Trust. The Financial Advisor is the most important source of information about Mutual Fund. Out of 60 Respondents, 51.67% know about Mutual fund Through Financial Advisor, 20% through Bank, 15% through Peer Group and 13.33% through Advertisement Out of 40 Respondents 76% were not aware of Mutual Fund, 19% told there is not any specific reason for not invested in Mutual Fund and 5% told there is likely to be higher risk in Mutual Fund. Out of 60 investors of SBIMF 79% have invested due to its association with the Brand SBI, 18% Invested because of Advisors Advice and 3% due to better return SBIMF is the first choice of investors around 33.33% respondent wants to invest in SBIMF, 20% in UTI, 10% in HDFC, 8.33% in Reliance, 6.67% in ICICI Prudential, 5% in Kotak and 16.67% in Others. Out of 60 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan. 46% respondent preferred Equity Portfolio, 37% preferred Balance and 17% preferred Debt portfolio. 72% respondent preferred Growth Option, 20% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option.
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Out of 120 investors, 78% investors do not prefer to invest in sectorial Fund because there is maximum risk and 22% prefer to invest in sectorial Fund

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Conclusion Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products, and Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Moradabad but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sunderam, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load.

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Suggestions & Limitation

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Suggestions

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration. Younger people aged fewer than 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off. Customers with graduate level education are easier to sell to and there is a large untapped market there. To succeed however, advisors must provide sound advice and high quality. Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is

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easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most prospects.

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LIMITATIONS

This research reflects on individual customer in Moradabad only. So findings and suggestions given on the basis of this research cannot be extrapolated to the entire population. Sample size is 100 which is very small that is not enough to study the awareness of consumers of the country. The lack of information sources for the analysis part. Though I tried to collect some primary data but they were too inadequate for the purposes of the study. Time and money are critical factors limiting this study.

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BIBLIOGRAPHY

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BIBLIOGRAPHY
WWW.SBIMF.COM WWW.MONEYCONTROL.COM WWW.AMFIINDIA.COM WWW.ONLINERESEARCHONLINE.COM WWW. MUTUALFUNDSINDIA.COM

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AnnexureQuestionnaire

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Questionnaire Market survey report on preferences of the investors for investment in mutual funds (particularly in SBI Mutual fund)
NAME AGE. SEX: MALE/FEMALE

ADDRESS.. CONTACT NO.

1. a. c. e. g.

.What kind of investments you have made so far? Saving account b. Fixed deposits Insurance d. Mutual Fund Post Office-NSC, etc. f. Shares/Debentures Gold/ Silver h. Real Estate

2. While investing your money, which factor will you prefer? a. Liquidity b. Low Risk c. High Return d. Trust 3. Do you invest Mutual funds? a. Yes

b. No

4. If yes, how did you know about Mutual Fund? a. Advertisement b. Peer Group c. Banks d. Financial Advisors 5. If not invested in Mutual Fund then why? a. Not aware of MF b. Higher risk c. Not any specific reason 6. Do you invested in SBIMF, you do so becausea. SBIMF is associated with b. They have a record of giving State Bank of India. good returns year after year. c. Agent Advice 7. If NOT invested in SBIMF, you do so becausea. You are not aware of SBIMF b. SBIMF gives less return compared to the others c. Agent Advice

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8. When you plan to invest your money in asset management co. which AMC will you prefer? a. SBIMF b. UTI c. Reliance d. HDFC e. Kotak f. ICICI 9. When you invest in Mutual Funds which mode of investment will you prefer? a. One Time Investment b. Systematic Investment Plan (SIP) 10.When you want to invest which type of funds would you choose? a. Having only debt portfolio b. Having debt & equity portfolio c. Only equity portfolio. 11.How would you like to receive the returns every year? a. Dividend payout b. Dividend re-investment c. Growth in NAV 12.Instead of general Mutual Funds, would you like to invest in sectorial funds? a. Yes b. No

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