Bilal Projects

8/8/2019 Bilal Projects

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A

Summer Training Report

on

MUTUAL FUNDS AND THEIR COMAPARATIVEANAYLIS

Submitted to Punjab Technical University in partial fulfillment of

the requirement for the degree of

BACHELOR OF BUSINESS ADMINISTRATION

By

BILAL AHMED BHATT

80906320013

SWAMI VIVEKANAND INSTITUTE OF MANAGEMENT AND

TECHNOLOGY

BANUR, PATIALA

2010


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Certificate I

This is to certify that this research project entitled Mutual funds andtheir Comparative analysis submitted for the partial fulfillment of

requirements for the degree of Bachelor of Business Administration at Swami

Vivekanand Institute of Management and Technology, affiliated to Punjab

Technical University, Jalandhar is a bonafide research work carried out by

Bilal Ahmed Bhatt, of BBA, University Roll No. 80906320013, under my

supervision and that no part of this project has been submitted for any other

degree.

The assistance and help received during the course of this project have been

fully acknowledged.

Major Advisor

..


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ACKNOWLEDGEMENT

No work is considered complete unless due acknowledgement is given to those who made itpossible. Therefore, I am very thankful to the entire team of SBI BANK for their cooperation,

without which completion of this project would not have been possible.

Words at my command are inadequate both in form and spirit to express my sincere and

profound gratitude to Mr. M. Sharma (branch manager)ofSBI for having confidence in my

abilities and giving me all the liberties to perform. Sirs meticulous guidance, keen supervision

and whole hearted help has made me capable to complete this project. I would also like to thank

Mr. Hitesh Mehta and Mr.Dinesh (Advisor- Mutual Funds) for sharing with me all the details

of the project and providing me with valuable insights about the product. I would also like to

thankMs. Meenu (Advisor credit cards), Mr.Deepak bajaj(personal banker) for the patience

shown by them and being of such a great help to all my queries and above all making the

environment more comfortable for me.

Last but not the least I would like to thank my co-trainees Ms sheetal and

Ms rachna, they have been a great support in preparing this report as well as in discussing about

the related data and creating a cozy environment for my research work.

.

(BILAL AHMED BHATT)


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CONTENTS

S. No. Particulars Page

no.

1 Abstract

2. Overview of banking industry

3. Introduction to the mutual funds4. Profile and history of SBI

5. Performance and financial structure of SBI

6. Review of literature

7. Research methodology

8. Data presentation,analysis and interpretation

9. Summary,conclusion &recommendations

Appendix

Bibliography

ABSTRACT

In todays world where people are more concerned about protecting their future, they need to

plan out their investments in a judicious manner. Investment goals vary from person to person.

While somebody wants security, others might give more weight age to returns alone. Somebody


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else might want to plan for his childs education while somebody might be saving for life after

retirement.

With different objectives their main aim is that they want their money to grow in a safe and

secure manner. but there is a phrase which states that Higher the Risk Higher is the Return

everyone is not that strong that he could risk his earning but they do want to earn at minimum

possible risk

This project basically concentrates on the study of Mutual Funds as investment avenues, which

are currently attracting investors from all walks of life. This project also enhanced my

knowledge about the subject and enabled me to understand the terms more easily by knowing the

funds behind the name and its implications. This project aims at understanding the customer

knowledge and satisfaction towards mutual funds.

Lastly Enough work has not been done on this subject hence I have chosen this project for

further research to guide .This Analysis can help in relating the availability of investment

avenues and satisfaction of people about them.

Objectives of the research:

To gain knowledge about MUTUAL FUNDS as it has wider scope.

For the fruitful results to the organisation by making public aware about the mutual funds

provided by the SBI limited.

To know the public perception towards mutual funds such as level of usage, factors influencing

the investment in mutual funds, benefits accruing to the investors in mutual funds, problems

encountered etc.


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CHAPTER 1

INTRODUCTION STATE BANK OF INDIA


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Introduction to STATE BANK OF INDIA

Profile:

State Bank of India (SBI) is a Public Sector Banking Organisation (PSB), in which theGovernment of India is the biggest shareholder. It is the largest bank in India and is ranked at

380 in 2008 Fortune Global 500 list, and ranked 219 in 2008 Forbes Global 2000. Measured by

the number of branch offices, SBI is the second largest bank in the world. SBI traces its ancestry

back to the Bank of Calcutta, which was established in 1806; this makes SBI the oldest

commercial bank in the Indian subcontinent. SBI provides various domestic, international and

NRI products and services, through its vast network in India and overseas. With an asset base of

$126 billion and its reach, it is a regional banking behemoth.

In recent years the bank has focused on four priorities, first, reducing its huge staff through the

Golden Handshake scheme known as the Voluntary Retirement Scheme, second, computerizing

its operations, third, implementation of Business Process Re-Engineering(BPR), and fourth,

trying to change the rude attitude of its staff through a program aptly named 'Parivartan' or

'change'. On the whole, the Bank has been successful in the first three initiatives but has failed in

Parivartan.

After a 20 year hiatus, the Bank is recruiting 20000 clerks and 3500 officers. The pick of the

universities aspire to join the Bank and more than 2.5 million applications have been received.

History

Offices of the Bank of Bengal

1806: On June 2, the Bank of Calcutta was established.

1809: On January 2, the Bank of Calcutta changed its name to the Bank of Bengal.

1840: On April 15, the Bank of Bombay was established.

1843: On July 1, the Bank of Madras was established.


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These three banks Bank of Bengal, Bank of Bombay, and Bank of Madras were known as

Presidency banks, were the result of royal charters, and were incorporated as joint stock

companies.

1861: The government passed the Paper Currency Act, limiting the right to issue paper

currency to the three Presidency banks, .

1921: On January 27, the government amalgamated the three Presidency banks to form

the Imperial Bank of India. The Imperial Bank of India continued as a joint stock

company. Until the establishment of a central bank in India, the Imperial Bank and its

early predecessors served as India's central bank, at least with respect to the issuing of

currency.

1955: On30 April, theParliament of Indiaenacted the State Bank of India Actauthorizing the Reserve Bank of India (RBI), which is thecentral bank, to acquire a

controlling interest in the Imperial Bank of India. The RBI then took a 60% ownership

stake. On July 1, Imperial Bank of India became State Bank of India.

1959: theGovernment of Indiapassed the State Bank of India (Subsidiary Banks) Act,

which enabled SBI to take over eight former State-associated banks as its subsidiaries.

1980s When Bank of Cochin in Keralafaced a financial crisis, the government merged it

with State Bank of India.

2007: OnJune 29, the Government of India acquired the entire Reserve Bank of India

(RBI) shareholding in State Bank of India (SBI), consisting of over 314 million equity

shares, with a market value of over 355 billion rupees.

2008: 9 March2008State Bank of India on Sunday became the second bank in the world

to have 10,000 branches when Union Finance Minister P Chidambaram inaugurated its

latest branch at his native place Puduvayal.
http://en.wikipedia.org/wiki/April_30http://en.wikipedia.org/wiki/April_30http://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/July_1http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/June_29http://en.wikipedia.org/wiki/June_29http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/March_9http://en.wikipedia.org/wiki/March_9http://en.wikipedia.org/wiki/2008http://en.wikipedia.org/wiki/2008http://en.wikipedia.org/wiki/Puduvayalhttp://en.wikipedia.org/wiki/April_30http://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/July_1http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/June_29http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/March_9http://en.wikipedia.org/wiki/2008http://en.wikipedia.org/wiki/Puduvayal


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Associate banks

There are seven other associate banks that fall under SBI. They all use the "State Bank of" namefollowed by the regional headquarters' name. These were originally banks belonging toprincely

statesbefore the government nationalized them in 1959. In tune with the first Five Year Plan,

emphasizing the development of rural India, the government integrated these banks with the

State Bank of India to expand its rural outreach. The State Bank group refers to the seven

associates and the parent bank. All the banks use the same logo of a blue keyhole. Currently, the

group is merging all the associate banks into SBI, which will create a "mega bank", and one

hopes, streamline operations and unlock value.

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Indore

State Bank of Mysore

State Bank of Patiala

State Bank of Saurashtra

State Bank of Travancore

Foreign Offices

State Bank of India is present in 32 countries, where it has 84 offices serving the international

needs of the bank's foreign customers, and in some cases conducts retail operations. The focus of

these offices is India-related business.

Growth

State Bank of India has often acted as guarantor to theIndian Government, most notably during

Chandra Shekhar's tenure asPrime Minister of India. With 10,000 branches and a further 4000+
http://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/State_Bank_of_Bikaner_%26_Jaipurhttp://en.wikipedia.org/wiki/State_Bank_of_Hyderabadhttp://en.wikipedia.org/wiki/State_Bank_of_Indorehttp://en.wikipedia.org/wiki/State_Bank_of_Mysorehttp://en.wikipedia.org/wiki/State_Bank_of_Patialahttp://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/State_Bank_of_Travancorehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Chandra_Shekharhttp://en.wikipedia.org/wiki/Chandra_Shekharhttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/State_Bank_of_Bikaner_%26_Jaipurhttp://en.wikipedia.org/wiki/State_Bank_of_Hyderabadhttp://en.wikipedia.org/wiki/State_Bank_of_Indorehttp://en.wikipedia.org/wiki/State_Bank_of_Mysorehttp://en.wikipedia.org/wiki/State_Bank_of_Patialahttp://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/State_Bank_of_Travancorehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Chandra_Shekharhttp://en.wikipedia.org/wiki/Prime_Minister_of_India


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associate bank branches, the SBI has extensive coverage. Following its arch-rival ICICI Bank,

State Bank of India has electronically networked all of its metropolitan, urban and semi-urban

branches under its Core Banking System(CBS), with over 10800+ branches being incorporated.

With this, 'SBI has become the largest bank in the world, covering 10800+ offices on a single

core banking platform. The bank has the largest ATM network in the country having more than

8000+ ATMs. The State Bank of India has had steady growth over its history, though the

Harshad Mehtascam in 1992 marred its image.

In recent years, the bank has sought to expand its overseas operations by buying foreign banks. It

is the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating

and various other rankings. According to the Forbes 2000 listing it tops all Indian companies.

Fortune Global 500 Ranking - 2008

In 2008 SBI was ranked 380 from a rank of 495 in 2007. As per fortune 500-2008 following are

the data for SBI in $ million.

Revenues: 22,402.2

Profits: 2,225.0

Assets: 255,854.9

Stockholders' Equity: 15,263.3

ITInitiatives

According to PM Network (December 2006, Vol. 20, No. 12), State Bank of India launched a

project in 2002 to network more than 14,000 domestic and 70 foreign offices and branches. Thefirst and the second phases of the project have already been completed and the third phase is still

in progress. As of December 2006, over 10,000 branches have been covered.

The new infrastructure serves as the bank's backbone, carrying all applications, such as the IP

telephone network,ATM network,Internet banking and internale-mail. The new infrastructure
http://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/Automatic_Teller_Machinehttp://en.wikipedia.org/wiki/Harshad_Mehtahttp://en.wikipedia.org/wiki/Harshad_Mehtahttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Voice_over_IPhttp://en.wikipedia.org/wiki/Automated_banking_machinehttp://en.wikipedia.org/wiki/Automated_banking_machinehttp://en.wikipedia.org/wiki/Internet_bankinghttp://en.wikipedia.org/wiki/Internet_bankinghttp://en.wikipedia.org/wiki/E-mailhttp://en.wikipedia.org/wiki/E-mailhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/Automatic_Teller_Machinehttp://en.wikipedia.org/wiki/Harshad_Mehtahttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Voice_over_IPhttp://en.wikipedia.org/wiki/Automated_banking_machinehttp://en.wikipedia.org/wiki/Internet_bankinghttp://en.wikipedia.org/wiki/E-mail


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has enabled the bank to further grow its ATM network with plans to add another 3,000 by the

end of 2007 raising the total number to 8,600. As of September 20, 2007 SBI has 7236 ATMs.

SBI MUTUAL FUND

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the country with an

investor base of over 5.4 million. With over 20 years of rich experience in fund

management, SBI MF brings forward its expertise in consistently delivering value to its

investors.

SBI MF draws its strength from India's Largest Bank State Bank of India and Socit

Gnrale Asset Management, France

SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an enviable

track record in judicious investments and consistent wealth creation.

The fund traces its lineage to SBI - Indias largest banking enterprise. The institution

has grown immensely since its inception and today it is India's largest bank, patronized

by over 80% of the top corporate houses of the country.

SBI Mutual Fund is a joint venture between the State Bank of India and Socit

Gnrale Asset Management, one of the worlds leading fund management

companies that manages over US$ 500 Billion worldwide.

Exploiting expertise, compounding growth

In twenty years of operation, the fund has launched 38 schemes and successfully

redeemed fifteen of them. In the process it has rewarded its investors handsomely with

consistently high returns.

A total of over 5.4 million investors have reposed their faith in the wealth generation

expertise of the Mutual Fund.
http://en.wikipedia.org/wiki/Automated_banking_machinehttp://www.statebankofindia.com/http://en.wikipedia.org/wiki/Automated_banking_machinehttp://www.statebankofindia.com/


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Schemes of the Mutual fund have consistently outperformed benchmark indices and have

emerged as the preferred investment for millions of investors and HNIs.

Today, the fund manages over Rs. 31,794 crores of assets and has a diverse profile of

investors actively parking their investments across 36 active schemes.

The fund serves this vast family of investors by reaching out to them through network of

over 130 points of acceptance, 28 investor service centers, 46 investor service desks and

56 district organisers.

SBI Mutual is the first bank-sponsored fund to launch an offshore fund Resurgent

India Opportunities Fund.

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

REVIEW OF LITERATURE

A s ur vey o f Invest or per cept ion by Mar ch Mar ke ti ng Consu lt ancy and

Research at tempts to know the mutual funds investor better . I t examines some

interest ing choices of the inves tor including the reason behind inves ting in

mutual funds and the inves tors knowledge about mutual funds . I t s object ive

was to measure the investor sensi tivi ty to manage the port fo l io to achieve

objective l ike tax incentives, capital gain, t ime horizon of investment and r isk,

return expectat ions. Knowing the perception of the customers is very important

in any indust ry . This provides ins ights in to the cus tomer behavior and his

expec ta ti ons f rom t he i ndus tr y p laye rs . A p roper under st andi ng o f t he

perceptions would definitely benefits the players.


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The survey was conducted across seven ci ties- Delhi , Mumbai , Hyderabad,

Bangalore, Chennai, Kolkata and Ahmedabad. The sample size was 200 per city.

From the micro perspective the company image of AMC acts as a major deciding

factor for buying mutual fund.

Growth scheme is the most preferred for investment.

The investors confidence level in stocks and mutual funds is almost the same.

A study conducted by Associated Chamber of Commerce and Industry of India

(Assocham) and AMFI Indicates that shift in investor preference towards mutual

funds has been faci l itated by f iscal incent ives , increas ing returns f rom debt

mutual fund investments due to the secular decline in interest rates, availabil ity

o f var ied cho ices t o i nves to rs , g radual change i n t he r is k p ro fi le o f t he

investors.


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CHAPTER 2

MUTUAL FUNDS & THEIRCOMPARATIVELY ANALYSIS


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INTRODUCTION TO THE BANKING SECTOR

Indias financial service industry is dominated by the banking sector that contributes

significantly to the revenue of this industry. To be sure, the industry has generated tremendous

employment opportunities for the large sector of the strength and flexibility of its banking

structure. In the Indian context; banking is verily the proxy and indeed the cornerstone of the

overall economic growth of the country. Before liberalization, the Indian banking structure was

largely controlled and parameters like branch size and location were given paramount

importance.

The Indian banking industry has come from a long way from being a sleepy business institution

to a highly proactive and dynamic entity. This transformation has been largely brought about by

the large dose of liberalization and economic reforms that allowed banks to explore new

business opportunities rather than generating revenues from conventional streams (i.e. borrowing

and lending). The banking industry in India is highly fragmented with 30 banking units

contributing to almost 50% of deposit and 60% of advances. Indian nationalized banks (bank

owned by the government) continue to be the major lenders in the economy due to their sheer

size and penetrative networks which assures them high deposit mobilization. The Indian banking

industry can be broadly categorized into nationalized, private banks and the specialized banking

institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and

shortcomings in the system. It is foremost monitoring body in the Indian financial sector. The

nationalized banks (i.e. government owned banks) continue to dominate Indian banking arena.

Industries estimates indicate that out of 274 commercial banks operating in India, 223 banks are

in public sector 51 are in private sector. The private sector grid also includes 24 foreign banks

that have started their operations here. Under the ambit of the nationalized banks comes the

specialized banking institution. These institutions (i.e. co-operatives, rural development, imports


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and exports etc. these banks nimble footed in approach and armed with efficient branch networks

focus primarily on high revenue, rich retail segments.

Unlike the commercial banks the co-operative do not lend on the basis of a prime-lending

structure and hence have lower overheads. This enables them to give a marginally higher

percentage on saving deposits. Many of these co-operative banks diversified in specialized areas

(catering to the vast retail audience) like car finance, housing loans, truck finance etc. In order to

banks too have invested heavily in information technology to offer high-end computerized

services to its clients.

Global Scenario

Some basic facts-

The money market mutual fund segment has a total corpus of $ 1.48 trillion in the U.S.

against a corpus of $ 100 million in India.

Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity and

Capital are non-bank mutual funds in this group.

In the U.S. the total number of schemes is higher than that of the listed companies while

in India we have just 277 schemes

Internationally, mutual funds are allowed to go short. In India fund managers do not have

such leeway.

On- line trading is a great idea to reduce management expenses from the current 2 % of

total assets to about 0.75 % of the total assets.


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ANALYTICAL STUDY OF MUTUAL FUNDS

Introduction

Different investment avenues are available to investors. Mutual funds also offer good

investment opportunities to the investors. Like all investment, they also carry certain risks. The

investors should compare the risks and expected yield after adjustment of tax on various

instruments while taking investment decisions. The investors may seek advice from experts and

consultants including agents and distributors of mutual funds schemes while making investmentdecisions.

With an objective to make the investors aware of functioning of mutual funds, an attempt has

been made to provide information in question-answer format which may help the investors in

taking investment decisions.

During the last few decades the global scenario has witnessed several significant developments,

including initiation of new and innovative financial services. The phenomenal growth of the

capital market has been accompanied by the advent of equity cult among the household sector.

The household sector does not possess the surplus funds, but psychologically it is either risk-

neutral or risk-averse. Therefore, institutional shields have been created, whose main role is to

act as intermediaries between the people, who have the ability and propensity to save, and those

who require money. This is a historical necessity, which has given rise to the concept of Mutual

Funds.

An investor normally prioritizes his investment needs before undertaking an investment. So

different goals will be allocated different proportions of the total disposable amount. Investments

for specific goals normally find their way into the debt market as risk reduction is of prime

importance. This is the area for the risk-averse investors and here, mutual funds are generally the

best option. Capital markets interest people, albeit not all for there are several problems


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associated. First issue is that of expertise. While investing directly into capital market one has to

be analytical enough to judge the valuation of the stock and understand the complex undertones

of the stock. One needs to judge the right valuation for exiting the stock too.

It is very difficult for a small investor to keep track of the movements of the market. Entrusting

the job to experts, who watch the trends of the market and analyze the valuations of the stocks

will solve this problem for an investor. Mutual funds specialize in identification of stocks

through dedicated experts in the field and this enables them to pick stocks at the right moment.

Next problem is that of funds/money. A single person cant invest in multiple high-priced stocks

for the sole reason that his pockets are not likely to be deep enough. This limits him from

diversifying his portfolio as well as benefiting from multiple investments. Here again, investing

through MF route enables an investor to invest in many good stocks and reap benefits even

through a small investment. This not only diversifies the portfolio and helps in generating returns

from a number of sectors but reduces the risk as well. Though identification of the right fund

might not be an easy task, availability of good investment consultants and counselors will help

investors take informed decision.

Why Mutual Fund ?

A Mutual Fund is an institutional arrangement which mobilizes savings of millions of investors

for investment in a diversified portfolio of securities, with a view to spread risk and to ensure

adequate and consistent return, both in the form of dividend and capital appreciation. It is, in

fact, a financial intermediary that receives money from shareholders, invest it, earn on it, and

make it grow to share it with them. These institutions are managed by professional money

managers who make portfolio investment decision on behalf of unsophisticated investors.

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and

investing funds in securities in accordance with objectives as disclosed in offer document.


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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 funds issues units to the investors in

accordance with quantum of money invested by them. Investors of Mutual funds are known as

Unit Holders.

The profits and losses are shared by the investors in proportion to their investments. Mutual

funds normally comes out with a number of schemes with different investments objectives which

are launched from time to time. A mutual fund is required to be registered with Securities and

Exchange Board of India which regulates securities markets before it can collect funds from

public.


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RISK RETURN GRID (types of funds)

Risk

Tolerance/ReturnExpected

Focus Suitable Products Benefits offered by MFs

Low DebtBank/ Company FD,Debt based Funds

Liquidity, Better Post-Tax returns

Medium

Partially

Debt,Partially

Equity

Balanced Funds, SomeDiversified Equity

Funds and some debtFunds, Mix of shares

and Fixed Deposits

Liquidity, Better Post-Tax returns,Better Management, Diversification

High Equity

Capital Market, Equity

Funds (Diversified aswell as Sector)

Diversification, Expertise in stock

picking, Liquidity, Tax freedividends

Their appeal is not just limited to these categories of investors. Specific goals like career

planning for children and retirement plans are also catered to by mutual funds. Children funds

have found their way in a big way with many of the fund houses already having launched a

children fund. Essentially debt oriented, these schemes invite investments, which are locked till

the child attains majority and requires money for higher education. You can invest today and

assure financial support to your child when he/she requires them. The schemes have given very

good returns of around 14 percent in the last one-year period. These schemes are also designed

to provide tax efficiency. The returns generated by these funds come under capital gains and

attract tax at concessional rates.

Besides this, if the objective was to save taxes, the industry offers equity linked savings

schemes as well. Equity-based funds, they can take long-term call on stocks and market

conditions without having to worry about redemption pressure as the money is locked in for

three years and provide good returns. Some of the ELSS have been exceptional performers in


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past and cater to equity investor with good performances. The industry offered tax benefits under

various sections of the IT Act. For e.g. dividend income is free in the hands of the investor while

capital gains are taxed after providing for cost inflation indexation. Hitherto, the benefits under

section 54 EA/EB were available to take benefits of the tax provisions for capital gains but have

now been removed.

The benefits listed so far have essentially been for the small retail investor but the

industry can attract investments from institutional and big investors as well. Liquid funds offer

liquidity as well as better returns than banks and so attract investors. Many funds provide

anytime withdrawal enabling a big investor to take maximum benefits.

The appeal of mutual funds cuts across investor classes. In other developed countries, mutual

funds attract much more investments as compared to the banking sector but in India the case is

reverse. We lack awareness about the benefits that are offered by these schemes. It is time that

investors irrespective of their risk capacities, made intelligent decisions to generate better returns

and mutual funds are definitely one of the ways to go about it.

HISTORY OF INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, atthe initiative of the Government of India and Reserve Bank the. The history of mutual funds in

India can be broadly divided into four distinct phases:-

First Phase 1964-87

An Act of Parliament established Unit Trust of India (UTI) on

1963. It was set up 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.


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

1987 marked the entry of non- UTI,

public sector mutual funds set up by public sector banks and Life Insurance Corporation of

India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the

first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund

(Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov

89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its

mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the

end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.

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

With the

entry of private sector funds in 1993, a new era started in the Indian mutual fund industry,

giving the Indian investors a wider choice of fund families. Also, 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. The number of mutual fund houses went

on increasing, with many foreign mutual funds setting up funds in India and also the

industry has witnessed several mergers and acquisitions.

As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805

crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way

ahead of other mutual funds.


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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 Specified Undertaking of Unit

Trust of India, functioning under an administrator and under the rules framed by

Government of India and does not come under the purview of the Mutual Fund

Regulations.

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. With the

bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of

assets under management and with the setting up of a UTI Mutual Fund, conforming to

the SEBI Mutual Fund Regulations, and with recent mergers taking place among

different private sector funds, the mutual fund industry has entered its current phase of

consolidation and growth. As at the end of September, 2004, there were 29 funds, which

manage assets of Rs.153108 crores under 421 schemes.


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MUTUAL FUND DATA FOR THE MONTH ENDED MAR 31, 2008

GROWTH IN ASSETS UNDER MANAGEMENT

DEFINITION:ACCODING TO INVESTMENT COMPANY INSTITUTE OF U.S;


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A mutual fund is a financial service organization that receives money fromshareholders , invest it , earn return on it , attempts to make it grow and agreesto pay the shareholders cash on demand for the current value to make of hisinvestment.

STRUCTURE OF A MUTUAL FUND

SOURCE : AMFI

FEATURES OF MUTUAL FUNDS

The essential features of the mutual funds distinguishing from other routes of investments are:-

The mutual fund is a trust into which many relatively small investors invest their money to

form a large pool of cash which is then invested in securities by the manager of the trust.

The price at which units can be bought and sold is governed solely by the value of the

underlying securities held by the mutual fund and dealings in units are on the basis of the net

market value of the investment per unit.

The managers of the mutual funds are obliged to redeem any units in issue on demand or on

certain specified period.


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All dividend income that the mutual fund receives on its investments is paid out to unit

holders.

MUTUAL FUND CYCLE

ADVANTAGES OF MUTUAL FUNDS

If one does not have the time, the inclination or the expertise to make and manage investments in

the complex equity or the debt market directly, should consider investing in mutual funds andreap the benefits of research and a wider range of low cost information services. A risk-averse

investor can expect above the market returns at a lower cost and lower risk. The major

advantages of investing in mutual funds are:

A. Professional Management-

Mutual funds are managed by highly skilled managers with sound knowledge of the market

and wide experience in investment.

B. Affordability (low initial investment)-

Mutual fund investments are usually very low. For egg: In Franklin Templeton schemes

you can invest minimum Rs.5000 (one time investment) or the Systematic Investment Plan

of Rs.500 every month.


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C. Portfolio Diversification and Reduction in Risk-

Individual investors have to face company-related risks and market-related risks. These risks

can be reduced through diversification of portfolios. When an investor invests in mutual fundhis portfolio automatically gets diversified and the risk tolerance capacity of a mutual fund is

much higher.

D. Convenient Record-keeping-

Record keeping is simplified in mutual funds. Bookkeeping of the investments is handled by

the fund.

E. Switching-

Mutual funds allow investors to switch from one fund to another based on their investment

objective at that particular moment.

F. Liquidity-

In case of open ended schemes investors can sell their existing units, or buy new units at any

point of time at related NAV of the fund. This gives investors a high level of liquidity on

their investments.

G. Tax Benefits-

Mutual fund investors all over the world enjoy certain tax benefits which increases the net

yield of investments.

H. Minimize Operating Costs-

Mutual funds having large investible funds at their disposal avail economies of scale. The

brokerage fee or trading commission may be reduced substantially. The reduced operating

cost obviously increases the income available for investors. Investing in securities through


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mutual funds has many advantages like option to reinvest dividends, strong possibility of

capital appreciation, regular returns, etc. Mutual funds are also relevant in national interest.

The test of their economic efficiency as financial intermediary lies in the extent to which

they are able to mobilize additional savings and channelizing to more productive sectors of

the economy.

DRAWBACKS OF MUTUAL FUNDS:

A. No Guarantees:

No mutual funds guarantee you the exact returns. If the entire stock market declines in

value the value of mutual fund shares will go down as well, no matter how balanced the

portfolio. Investors encounter fewer risks when they invest in mutual funds than when

they buy and sell stocks on their own. However, anyone who invests through a mutual

fund runs the risk of losing money.

B. Fees and Commissions:

All funds charge administrative fees to cover their day-to-day expenses. Some funds also

charge entry or exit loads to compensate brokers, financial consultants etc.

C. Management Risk:

Investment in a mutual fund depend on the funds manager capability (except in Index

Funds) to make the right decisions regarding the funds portfolio. If the manager does not

perform as well as you had hoped, you might not make as much money on your

investment as you expected. Of course, if you invest in Index Funds, you forego

management risk, because these funds do not employ managers.


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KEY CONSTITUENTS OF MUTUAL FUND INDUSTRY:

Despite the differences, all Mutual Funds comprise of four constituents: Sponsors, Trustees,Asset Management Companies (AMCs) and Custodians.

A. Sponsor:

The sponsor initiates the idea to set up a mutual fund. It could be a registered company,

scheduled bank or financial institution.

A sponsor has to satisfy certain conditions, such as on capital, track record (at least five

years' operation in financial services), default-free dealings and a general reputation of

fairness, has to be ascertained. The sponsor appoints the trustees, AMC and custodian.

Once the AMC is formed, the sponsor is just a stakeholder.


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B. Trust/Board of Trustees:

Trustees hold a fiduciary responsibility towards unit holders by protecting their interests.

Sometimes, as with Canara Bank, the trustee and the sponsor are the same. For others,

like SBI Funds Management, State Bank of India is the sponsor and SBI Capital Markets

the trustee. Trustees float and market schemes; and also they secure necessary approvals.

They check whether the investments of the AMC are within defined limits, whether the

fund's assets are protected, and also whether the unit holders get their due returns.

C Fund Managers/AMC:

They are the ones who manage the investors money. An AMC takes investment

decisions, compensates investors through dividends, maintains proper accounting and

information for pricing of units, calculates the NAV, and provides information on listed

schemes and secondary market unit transactions. It also exercises due diligence on

investments, and submits quarterly reports to the trustees.

D. Custodian

It is often an independent organization, and it takes custody of securities and other assets

of a mutual fund. Among public sector mutual funds, the sponsor or trustee generally

also acts as the custodian.

Risk Profiles

Equity Diversified Funds

Diversification - Mutual Funds reduces the risk by investing in all the sectors. Instead of putting

all your money in one sector or company it's better to invest in various good performing sectors


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as you reduces the risk of getting involved in a particular sector/company which may perform or

may not.

Who should invest - This is an ideal category for those who want to participate in stock market

& knows the risk involved in stock market but have few rupees to invest in bluechip stocks.

How they performed - Though the short term out look is volatile in long-term equity diversified

funds have outperformed other categories & stock markets will lesser amount of risk than stock

markets. The average returns of equity diversified funds are 102%.

Index Funds -

Follow the index - These are the index-based funds, which move with the likes of Sensex &

Nifty. These fund charges NIL or very low entry/exit loads.

Who should invest - if Nifty & Sensex have come down from their tops, it is a good time to

invest in Index funds with the principal of "Investing at the lower levels".

How they performed - Though the short term out look is volatile in long-term Sensex & Nifty

could do well with improving economic conditions. It has been seen that these Index funds have

outperformed the indices making them more attractive.

Sector Fund -

Sector - Sector Schemes follow particular sector.

Who should invest - You have to be selective while investing in these funds, as you need to

select particular sector, which will perform better in the future. Investing in these funds carries

some amount of risk but also give you more returns.

How they performed - Sector funds have given average returns of 73% for 1 year period. Auto,

Steel, Cement have done well the year '03 & the trend will continue in year '04 but IT, FMCG

sectors are experiencing downward trend due to $ depreciation, price war in FMCG respectively.

Though short-term trend for pharma sector looks down in long term we look forward to lot more


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action in the sector, as there exists a long-term, strong fundamental story backed by immense

growth potential for the Indian pharmaceutical companies.

Balanced Funds -

Balanced Act - Balanced funds gives you the stability with the potential to grow with the equity

help of equity investments. These funds invest in both Equity & Debt markets.

Who should invest - The balanced funds are for those, who want to enjoy the appreciation

effects of equity market but at the same time like to play safe with less volatile debt market. In

this volatile market it is good to invest in balanced funds as they carries less risk compare to

equity funds.

How they performed - In the last 12 months balanced funds have given descent returns with the

up trend in the equity markets. Balanced funds average returns are 60% for 1-year period.

Equity Linked Tax Savings Schemes (ELSS) -

Enjoy tax benefits - These schemes are becoming more popular as traditional ways of taxsaving becoming less interesting with declining interest rates.

Who should invest - Equity Linked Savings Schemes (ELSS) is an ideal way to save on tax as

well as staying invested in equity mutual funds.

How they performed - In last 1 year these funds have given above average returns to keep you

more & more interested in saving tax as well as counting returns on your investment. The

average returns for this category are 98%.

Debt Funds -

Banking on Debt Markets - Debt funds invest in the government securities, Corporate Bonds,

Treasury Bills, etc.

Who should invest - The conservative investors like to go for capital safety.


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How they performed - From Last 12 months in the declining interest rate scenario debt funds

remained flat. In 3 years debt funds have given average returns of 12%. As equity market is

looking volatile its better to invest part of your money in these funds.

Gilt Funds -

Government Sec. - Gilt funds invest in government securities.

Who should invest - The investors who like to avail the benefits of capital safety with

government security.

How they performed - From Last 6-12 months Gilt funds have given average returns. As equity

market is looking volatile its better to invest part of your money in these funds as they provide

adequate security to your investments.

MIP

Monthly Income - These schemes gives you monthly income.

Who should invest - Those who seek monthly income. In the current scenario where debt

market is very volatile it's better to invest in hybrid funds like MIP with suitable time horizon forcapital appreciation.

How they performed - In Last 6-12 months MIP's have given descent returns compare to debt

funds. The average returns of MIP's stands at 15.68%, which looks good, compared to income

funds.

STP

Short-term Plans - These schemes provides short-term saving option with more liquidity than

FD's to park your investments.

Who should invest - Those who seeking for income in short-term investments of 6-10 months

with more liquidity than Bank fixed deposit.


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How they performed - While savings accounts would give you 3.5% per anum, bank FD's

annually return up to 6.5%, Liquid funds would typically give you more than 5% and short-term

plans 6 to 6.5% per anum. In Last 6-12 months STP's have given descent returns.

Various Types of Mutual Fund Schemes

Schemes according to Maturity Period :-

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme

depending on its maturity period.

Open-Ended Fund Or Scheme :-

An open-ended scheme or fund is one that is available for subscription or repurchase on a

continuous basis. These schemes do not have a fix maturity period. Investors can conveniently

buy and sell units at net asset value related price which are declared on a daily basis. The key

feature on an open-ended scheme is liquidity.

Close-Ended Fund Or Scheme :-

A close-ended scheme of fund has a stipulated maturity period e.g. 5-7 years. The fund isopen for subscription only during a specified period at the time of launch of the scheme.

Investors can invest in the scheme at the time of the initial public issue and thereafter they can

buy and sell the units of the schemes on the stock exchanges where the units are listed. In order

to provide the exit route to the investors, Some close-ended funds give an option of selling back

the units to the mutual fund through periodic repurchase at NAV related prices. SEBI regulations


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stipulate that at least one of the two exit routes is provided to the investors i.e. either repurchase

facility or through listing on the stock exchanges. These mutual funds schemes disclose NAV

generally on weekly basis.

Schemes According ToInvestment Objective :-

Considering its investment objective, a scheme can also be classified as :-

Growth Scheme

Income Scheme

Balanced Scheme

Such schemes can be Open-ended or be Close-ended as described earlier. These schemes may

be classified mainly as follows -:

Growth Or Equity Oriented Scheme :-

The aim of the Growth fund is to provide capital appreciation over the medium to long term.

Such schemes normally invest a major part of their corpus in equities. Such funds have

comparatively high risks. These schemes provide different options to the investors like dividend

option, capital appreciation etc. and the investors may choose an option depending on their

preferences. The investor must indicate the option in the application form. Mutual funds also

allow the investors to change the options at the later date. Growth schemes are good for investors

having a long-term outlook seeking appreciation over a period of time.

Income Or Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes

generally invest in fixed income securities such as Bonds, Corporate Debentures,


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Government Securities and Money Market Instruments. Such funds are less risky compared

to equity schemes. These funds are not affected because of fluctuations in equity markets.

However opportunities of the capital appreciation are also limited in such funds.

The NAV of such funds are affected because of change in interest rates in country. If the interest

rate falls, NAVs of such funds are likely to increase in the short run or vice-versa. However,

Long-term investors may not bother about these fluctuations.

Balanced Fund

The Aim of the Balanced fund is to provide both regular income as such schemes invest both in

equities and fixed income securities in the proportion indicated in their offer documents. These

are appropriate for investors looking for moderate growth. They generally invest 40-60% in

equity and debt instruments. These funds are also affected of fluctuation in share prices in the

stock markets. However, NAVs of such funds are likely to be less volatile compared to pure

equity funds.

Money market Or Liquidity Funds

These funds are also income funds and their aim is to provide easy liquidity, preservation of the

capital and moderate income. These schemes invest exclusively in safer short-term instruments

such as Treasury Bills, Certificate of Deposit, Commercial Paper and Inter Bank Call

money, Government Securities etc. Return on these schemes fluctuates much less compared to

other funds. These funds are appropriate for corporate and individual investors as a means of

park their surplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securities have no default

risk. NAVs of these schemes also fluctuate due to change in interest rates and economic factors

as is the case with income or debt oriented schemes.


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Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE sensitive index, S&P

NSE 50 index(Nifty), etc. These schemes invest in the securities in the same weight age

comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or

fall in the index, though not exactly by the same percentage due to some factors known as

Tracking Error in technical terms. Necessary disclosure in this regard are made in the offer

document of the mutual fund scheme. There are also exchange traded index funds launched by

the mutual funds which are traded on the stock exchanges.

Sector Specific Fund or Schemes

These are the funds or schemes which invest in the securities of only those sectors or industries

as specified in the offer documents. E.g. Pharmaceuticals, software, Fast Moving Consumers

goods(FMCG), petroleum stocks, etc. the return on these funds are dependent on the

performance of the respective sector/industries. While these funds may give higher returns, they

are more risky compared to the diversified funds. Investors need to keep a watch on the

performance of these sectors/industries and must exit at an appropriate time. They may seek an

advice of an expert.

Tax Saving Schemes

These schemes offer tax rebate to the investors under the specific provisions of the Income tax

act, 1961 as the government offers tax incentives for investment in the specific avenues. E.g.

Equity Linked Saving Schemes (ELSS). Pension schemes launched by the mutual funds also

offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities.

Their growth opportunities and risk associated are like any equity-oriented scheme.

Load And No-Load Fund


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A load fund is that charges a percentage of NAV for entry or exit. That is, each time one buys or

sells units in the fund, a charge will be payable. This charge is used by the mutual fund for

marketing and distribution expenses. Suppose the NAV per unit is Rs.10.if the entry or exit load

charged is 1% then the investors who buy would be required to pay Rs.10.10 and those who

offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors

should take the loads into consideration while making investment as these affect their

yield/returns. However, the investor should also consider the performance track record and

service standards of mutual funds which are more important. Efficient funds may give higher

returns in spite of loads.

A Non-Load fund is one that does not charge for entry or exit. It means that the investors can

enter the fund/scheme at NAV and no additional charges are payable on the purchase or sale of

the units.

Procedure to be followed to Invest in a Mutual Fund Scheme

Mutual funds come out with an advertisement in newspapers publishing the launch of the new

schemes. Investors can also contact the agents and distributors of the mutual funds who are

spread all over the country for necessary information and application forms. Forms can be

deposited with mutual funds through the agents and distributors who provide such services. Now

a days, the post offices and banks also distribute the units of the mutual funds. However, the

investor should note that the mutual funds being marketed by banks and post offices should not

be taken as their own schemes and no assurance of return can be given by them. The only role

of the banks is to help in distribution of mutual funds schemes to the investors.

Investors should not be carried away by commission / gift given by agents / distributors for

investing in a particular scheme. On the other hand they must consider the track record of mutual

fund and should take objective decisions.

Provision for Non Resident Indian to Invest in Mutual Funds


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Non Resident Indians can also invest in mutual funds. Necessary details in this respect are given

in the offer documents of the schemes.

Distribution of Portfolio between Debt or Equity oriented schemes

An investor should take into account his risk taking capacity, age factor, financial position, etc.

As already mentioned, the schemes invest in different type of securities as disclosed in the offer

documents and offer different returns and risks. Investors may also consult financial experts

before taking decisions. Agents and distributors may also help in this regard.

Prospective of an Investor into an Offer document

An abridged offer document, which contains very useful information, is required to be given to

the prospective investor by the mutual fund. The application fund for subscription to a scheme is

an integral part of the offer document. SEBI has prescribed minimum disclosures in the offer

document. An investor, before investing in a scheme, should carefully read the offer document.

Due care must be given to portions relating to main features of the scheme, risk factors, initialissue expenses and recurring expenses to be charged to the scheme, entry or exit loads, sponsors

track record, educational qualification and work experience of key personnel including fund

managers, performance of other schemes launched by the mutual funds in the past, pending

litigations and penalties imposed, etc.

Dispatch of Certificate or Statement of Statement of Account to the Investor, after

Investing in a Mutual Fund

Mutual funds are required to dispatch certificates or statements of accounts within six weeks

from the date of closure of the initial subscription of the scheme. In case of close ended schemes,

the investors would get either a Demat account statement or unit certificates as they are traded

in the stock exchanges. In case of the open-ended schemes, a statement of account is issued by


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the mutual fund within 30 days from the date of closure of initial public offer of the scheme. The

procedure of repurchase is mentioned in the offer document.

Transfer of Units after Purchase from Stock Markets in case of Close Ended Schemes

According to SEBI regulations, transfer of units is required to be done within thirty days from

the date of lodgment of certificates with the mutual fund.

Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its

liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the

fund, this is the amount that the shareholders would collectively own. This gives rise to the

concept of net asset value per unit, which is the value, represented by the ownership of one unitin the fund. It is calculated simply by dividing the net asset value of the fund by the number of

units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit".

We also abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the fund. Once

it is calculated, the NAV is simply the net value of assets divided by the number of units

outstanding. The detailed methodology for the calculation of the asset value is given below.

Asset value is equal to

Sum of market value of shares/debentures


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+ Liquid assets/cash held, if any

+ Dividends/interest accrued

Amount due on unpaid assets

Expenses accrued but not paid

NAV= ASSET-LIABILITIES

NO.OF UNITS

Research Methodology

Research is common refers to the search for knowledge one can also def ine

research as a sc ienti fi c & sys temat ic search for pert inent information on a

specific topic. Research comprises defining & refining problems, formulated,

hypothesis or sugges ting solut ions , col lecting, organizing, evaluat ing data &

searching the end conclusion.

Methodology str ict ly speaking is the study & knowledge of methods but

this term is also used for a method or a set of methods. In other words i t is the

study of how we approach problems & seek answers. Research Methodology is

the a tt empt to va lida te the r a tionale behind the selec ted research design &

provide just if ication of why i t is appropriate in solving the selected research

problem. It is the process by which we produce knowledge

Objective:

1. Understanding the customers knowledge, satisfaction and perception

of Mutual Funds (MF).


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2. Understand the target customer better.

3. To understand & know the requirements of the clients

Scope of the study:

The leverage of this project l ies in unders tanding the cus tomers knowledge,

sa ti sfac tion and percept ion of Mutual Funds (MF) and Equi ty market as an

inves tment tool . I t wi l l help, know and unders tand the target cus tomer bet ter

and how t o l ur e t hem t o i nves t mor e. Thi s wou ld be done, by adopt ing a

research-based approach. I t deals with customer sat isfaction and involves direct

interviews with questionnaire method for market research. This study will help

to r eport the scope of such f inancia l ins truments as a product of sa le . The

project gives an oppor tuni ty to unders tand the changing and var ied cus tomer

needs and the strategies adopted by various banks to fulfill them. It also enables

the use of various marketing research instruments such as questionnaires and

methodologies like prototyping and articulate interviewing.

Research Purpose

1 .To know the markets awareness of SBI Mutual funds in Lucknow.

2. To know the customers knowledge & satisfaction in MF.

3. To suggest recommendations.

Research Design

This is a Descriptive Research. Research design is the basic framework, which

provides the guidelines for the research process; i t acts l ike a blueprint used to

guide a research study towards its objective.


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Data design

The data design involves different aspects like the nature of the data, the data sources, the data

frequency and the tools used for the analysis of data.

Nature of data

Both primary and secondary data has been used to achieve the objectives of the study.

Data Collection

Keeping in mind the objectives of the study, the primary data was collected from a sample of

100 respondents belonging to Lucknow by personally administering the

research schedule. A structured schedule was designed as per the objectives of the study. The

research schedule contained questions relating to different dimensions of mutual funds

preferences among the users such as level of usage, benefits accruing to the investors of mutual

funds, problems encountered etc. An attempt was also made to elicit reasons for its non usage.

The questions included in the research schedule were open-ended, dichotomous and offering

multiple choices. The data so collected was analyzed with the help of various statistical

techniques like percentages, correlation.

Data collection method

Primary data

Questionnaire

Secondary data

Visual media

Newspaper

Business magazine

Internet

Sampling method: Random Sampling


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Analysis of Data and discussion

Data so collected was tabulated and analyzed with the help of computer and interpretation has

been carried out with the help of tables and pie charts.

Limitations of the study:

1. Applicability :

The proposed study would be based on the data collected from the residents ofLUCKNOW City so, its results may not be applicable to other parts of the

country.

2. Limited sample :

Sample size to be taken may not be sufficient to predict the results with 100%accuracy.

3. Variations :

The study proposes to use certain statistical tools that may give differentresults in varying situations.

4. Personal biasness :The data collected for the purpose of carrying out this survey may contain

several types of personal biasness which leads to inaccuracy in results.


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5. False information :Sometimes respondents do not provide true information which leads to

misconceptions in result.

DATA ANALYSIS & INTERPRETATION

The study has been conducted to develop an understanding of consumers attitude and

satisfaction level about mutual funds.. The study include various aspects such as awarenessabout mutual funds, level of usage, factors influencing the investment in mutual funds, benefits

accruing to the investors of mutual funds, problems encountered etc.

For the purpose of research the sample of 100 respondents is taken. The data is collected through

structured questionnaire. The data so collected was analyzed with the help of various statistical

techniques like percentages, weighted average score and interpretation has been done with the

help of tables and pie charts. The analysis revealed the satisfaction level of mutual fund users.

Q .Do you have any Mutual fund scheme under Principle Mutual fund?

Ans

RESPONSE %AGE OF

RESPONDENTS

Yes 65%

No 35%


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65%

35%

Yes

No

Interpretation : We can conclude that 65% Respondents have purchase mutualfund & Rest 35 % Respondents say no.

Q. Why did you choose Principle Mutual Fund?

Ans The objective of this question is to know what the main reason forpurchasing Principle Mutual fund is.

Reasons %AGE OF

RESPONDENTS

As Investment 5%

As good return 50%

As Tax Saving 35%

Others 10%


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% age

0

10

20

30

40

50

60

1 2 3 4

%age

%age

% age

Interpretation : We can conclude that 5% Respondents say they purchased as asinvestment, 50% Good return, 35% say as Tax saving, others say 10%.

Q. Where do you rate Principle Mutual fund services?

Rationale:

RESPONSE %AGE OF

RESPONDENTS

Grade-I 73%

Grade-Ii 20%

Grade-III 7%


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Percenage of response

0

73

20

7

0

10

20

30

40

50

60

70

80

Response Grade-I Grade-II Grade-III

Interpretation: We can conclude that 73% respondents say Grade-I, 20% sayGrade-II, and 7% say Grade-III

Q Which type of mutual fund scheme you purchased ?

Rationale :

RESPONSE %AGE OF

RESPONDENTSLarge Cap 45%

Child Benefit 10%

Global Opportunity 5%

Tax Saving 40%


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%AGE OF RESPONDENTS

45%

10%5%

40% Large Cap

Child Benefit

Global Opportunity

Tax Saving

Interpretation : We can conclude that 45% respondents say we have purchasedLarge Cap Plane, 40% say Tax Saving, 10% says Child benefits and 5% says wehave purchased Global Opportunity.

Q. Are you satisfied with payment premium option with Principal Mutual

Fund ?

Rationale :

Response %AGE OFRESPONDENTS

Yes 95No 5


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%age of response

,

Yes, 95

No, 5

Yes No

Interpretation: We can conclude tha t 95% respondent s say Yes , they aresatisfied with premium option and 5% says No.

Q. Which premium payment option is best for you?

Rationale:

Mode of Payment %AGE OFRESPONDENTS

Cheque 85

Cash 10

Online 5


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%AGE OF RESPONDENTS

Cheques,

85

Cash, 10Online, 5

Cheques

Cash

Online

Interpretation: We can conclude that 85% respondents say by cheques becausecheque transaction are easy according to them,just 5% says by online. 10% saysthrough cash.

Q. Are you happy the services provided by Principal Mutual Fund in

Lucknow?

Ans:

Response %AGE OFRESPONDENTS

Yes 95

No 5


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%age of response

,

Yes, 95

No, 5

Yes No

Interpretation: We can conclude tha t 95% respondents say Yes, they aresatisfied with premium option and 5% says No.

Q. Are you satisfied with the employee behaviour?

Rationale

RESPONSE %AGE OF

RESPONDENTS

Satisfied 44%

Highly satisfied 50%

Not satisfied 5%

Highly Dissatisfied 1%


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%AGE OF RESPONDENTS

44%50%

5%1%

0%

10%

20%30%

40%

50%

60%

Satisfie

d

Highly

satisfie

d

Nots

atisfie

d

HighlyDi

ssatisfie

d

%AGE OF

RESPONDENTS

Interpretation:

We can conclude that 44% respondents say that they are satisfied withemployees behaviour , 50% says highly satisfied, 5% says not satisfied & 1%says high dissatisfied.

Q. Do you want any change in Mutual fund terms?

Rationale:

%AGE OF

RESPONDENTS

No 70

Yes 30


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70

30

1

2

Interpretation: We can conclude that 97% respondents say that they do notwant change in mutual fund terms. And just 3% respondents say that they wantminor change in mutual fund terms.

Findings and Suggestions

From this survey we found that 95% of the respondents have purchasedmutual fund and only 5% respondent does not have. I t means that this product is very popular among the customers .People l ike to have investin mutual fund for the purpose of get high rate of return or Tax saving.

Another impor tant fact we f ind f rom this survey that about 50% of our

respondents want to purchase mutual fund as good return & 35% due toTax Saving.

We f ind f rom this survey that 73% gives grade I & 20% gives Grade I IRest gives Grade III


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Due to high return. of LARGE CAP investors more in this fund &40% intax saving 10% in child benefit & 5% in global fund.

Transact ion mode of cheque is more convient to cus tomers . So 85%respondents purchased by this mode.10% by cash. Less awareness of

online only 5% are interested by this.

95% are sat isf ied by the services provided by Principal mutual fund& 5%are not satisfied by this.

only 50% respondents are Highly sat isfied with employee behaviors 1%are dissatisfied &40% are only satisfied b by this company

70% interested for investing in this company & others wants to change.

Mutual funds are divers i f ied inves tments , so people prefer inves t ing in

them rather than in stock market as there is less r isk in mutual funds as

compared to share market.

In o rde r to in crea se th e p rop ortion of sa tisfied inv estors it is

recommended to insist the investor to invest for the period of three years.

This wi l l minimize the r isk factor and maximize the rate of return on

investment.

SWOT ANALYSIS

STRENGTHS

Convenience in investing in mutual funds

Customer Satisfaction

Understanding Market scenario

Depend upon the kind of investor.

Returns on investment in mutual funds

Low entry Load

WEAKNESSES

Transparency.


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Risks associated in terms of professional organization through which an investor

invests as new organizations keep coming up everyday

OPPORTUNITIES

Due to more MNCs coming in , the income of people r is ing. Hence, opening up

the doors for investment in mutual funds.

THREATS

Mutual fund deals wi th market so, inves tors would prefer t rading in equi ty

market rather investing in mutual funds. Hence companies offering mutual funds

would have to come up wi th bet ter expected rate of returns as wel l as r i sks

associated to keep upt ime should be adopted to reach the potent ial inves tors .

SEBI regulate these mutual fund companies so they should play a more active

role to protect investors trust & their interest.


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CONCLUSION

Lucknow, where I done my survey. People in this area are very much aware

about the concept of mutual fund. The study shows that they shows their interest

to invest there money in mutual fund. As mutual fund has more s tabil ity,

growth, return than share market and i ts minimum investment is also low. This

attracts more and more peoples to buy the mutual fund of different companies.

Its return on investment is also good.

The pas t s tudy concludes that , mutual fund is a good source of income.

Peoples are highly sat is f ied on return of mutual fund. The percept ion of the

people regarding the mutual fund is good. Customers interest increases day by

day and they invest heavily in the mutual fund.


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Appendix:

QUESTIONNAIRE

Dear Respondent,

I am Bilal Ahmed, pursuing BBA from Swami Vivekanand Institute of Manangement andTechnology,Banur, conducting a survey on customer satisfaction towards mutual funds inChandigarh. I will appreciate your cooperation in this regard by filling up the research schedulecarefully. All the information provided by you will be kept confidential and it would be strictlyused for academic purpose only.

1 . Personal Deta il s: -

Name:- _______________________

Age:-

a) Below 25 yrs b) 25-30 yrs

c) 30-40 yrs d) 40-50 yrs

e) 50-60 yrs f) Above 60 yrs

Date of Birth:- ___/____/_______

Gender :-

a) Male b) Female

Marital status:-

a) Single b) Married

If married, number of children:- ______________Number of male children ______, age ____________(yrs)

Number of female children ______, age ____________(yrs)

Education / professional qualification:-


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a) Post graduate b) Graduate

c) Diploma d) Under Graduate

e) Degree f) Any other (specify)___________ __

Employment type:-

a) Salaried b) Self Employed

c) Retired d) Unemployed

e) Student f) Other (specify)__________ ___

Number of earning members:-

a) 1 b) 2-4 c) 4-6

Monthly income:-

a) Up to 10000 b) 20000-25000

d) 60000-80000 0 e) 90000-100000

Q1 .Do you have any Mutual fund scheme under Principle Mutual fund?

Ans

a) Yes b) No

Q2. Why did you choose Principle Mutual Fund?

Ans

a) As Investment b) As Good Return

c) As Tax Saving d) Other

Q3.Where do you rate Principal SBI Mutual fund?Ans

a) Grade-I b) Grade-IIc) Grade-III


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Q4. Which type of mutual fund scheme you have purchased?Ans

Name of mutual fund Response

Large CapChild Benefit

Global Opportunity

Tax Saving

Q5. . Are you satisfied with payment premium option with Principal Mutualfund?Ans;

a) Yes b) No

Q6 Which premium payment option is best for you?Ans

Mode of Payment RESPONSES

Cheque

Cash

Online

:

Q7. Are you happy the services provided by Principal Mutual Fund in Lucknow?

Ans

a) Yes b) No

Q8. Are you satisfied with the employees behaviour?

Ans


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RESPONSE %AGE OF

RESPONDENTS

Satisfied

Highly satisfied

Not satisfied

Highly Dissatisfied

Q9. Do you want any change in Mutual fund term?Ans

a) Yes b) No

Q10. Do you want to invest in mutual funds in future?

Ans

a) Yes b) No

Q11 Your suggestion regarding mutual fundAns

_______________________________________

Thanks

Abbreviations:

SBI-State Bank of IndiaAMC-Asset management company.NAV-Net Asset value


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MF-Mutual funds

References:

Kothari C.R. Research Methodology Method and techniques, Wishwa Prakashan 1990 New

Delhi

www.sbi.comwww.amfi.comwww.secinfo.comwww.deadpresidentblogspot.comwww.financialexpress.comwww.mutualfundindia.comwww.valueresearchonline.com
http://www.sbi.com/http://www.amfi.com/http://www.secinfo.com/http://www.deadpresidentblogspot.com/http://www.financialexpress.com/http://www.mutualfundindia.com/http://www.valueresearchonline.com/http://www.sbi.com/http://www.amfi.com/http://www.secinfo.com/http://www.deadpresidentblogspot.com/http://www.financialexpress.com/http://www.mutualfundindia.com/http://www.valueresearchonline.com/

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