Consumer Preferences for SBI Mutual Fund

8/6/2019 Consumer Preferences for SBI Mutual Fund

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PROJECT REPORT ON

CONSUMER PREFERENCES FOR SBIMUTUAL FUND

Undertaken At

Submitted in partial fulfilment of the requirementsFor the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF: SUBMITTED BY:MS. PREETI SEHGAL KARNI MAAN SINGHLECTURER Roll No.: 81005320087

CHANDIGARH BUSINESS SCHOOLAffiliated to

PUNJAB TECHNICAL UNIVERSITY 2008-2011

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DECLARATION

I hereby declare that this Project Report entitled

CONSUMER PREFERENCES FOR SBI MUTUAL FUND submitted by

me to the PTU, is a bonafide work undertaken and it is not submitted to

any other University or Institution for the award of any degree certificate

or published any time before.

Name : Signature of theStudent :

Date :

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ACKNOWLEDGEMENT

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First of all, I express my profound gratitude to the management of

CONSUMER PREFERENCES FOR SBI MUTUAL FUND for giving me

the opportunity to do my project training at their esteemed organization. I

am highly obliged to Mr. MUNISH SABARWAL (H.O.D.) CHANDIGARH,

who provided me such a training, which made me able to gain knowledge

about the field of paints and without his encouraging and helping attitude

this project could not have attained its present shape. It was only due to

his support & guidance that I am able to gain maximum knowledge that

helps me to deliver the best.

Lastly I would like to thank all the respondents who offered their opinions

and suggestions through the survey that was conducted by me. Finally

the support and encouragement to accomplish a major piece of work

comes from friends and family. To them I am indebted beyond words.

KARNI MAAN SINGH

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CONTENTS

CERTIFICATE

ACKNOWLEGEMENTS

DECLARATION

PREFACE

LIST OF TABLES

CHAPTER -1: INTRODUCTION

What is Mutual Fund

Advantages and Disadvantages

Why to invest in Mutual Fund

Other Investment Options

CHAPTER -2: COMPANY PROFILE

Profile Of SBI Mutual Fund

Products Of SBI Mutual Fund

Main Schemes Of SBI Mutual Fund

Competitors Of SBI Mutual Fund

CHAPTER 3: OBJECTIVES AND RESEARCH METHODOLGY

Objectives Of Study Research Methodology Limitations Of Study Respondents Profile

CHAPTER -4: DATA ANALYSIS AND INTERPRETATION

CHAPTER-5: FINDINGS AND CONCLUSIONS

CHAPTER-6: SUGGESTIONS

BIBILIOGRAPHY

ANNEXURE

QUESTIONNARIE

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CHAPTER 1INTRODUCTION

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INTRODUCTION TO MUTUAL FUND

Mutual funds, as the name indicates is the fund where in numerous investors come together to invest in various schemes of mutual fund.

Mutual funds are dynamic institution, which plays a crucial role in an economy bymobilizing savings and investing them in the capital market, thus establishing a link betweensavings and the capital market.

A mutual fund is an institution that invests the pooled funds of public to create a diversified

portfolio of securities. Pooling is the key to mutual fund investing. Each mutual fund has aspecific investment objective and tries to meet that objective through active portfoliomanagement.

Mutual fund as an investment company combines or collects money of its shareholders andinvests those funds in variety of stocks, bonds, and money market instruments. The latter include securities, commercial papers, certificates of deposits, etc. Mutual funds provide theinvestor with professional management of funds and diversification of investment.

Investors who invest in mutual funds are provided with units to participate in stock markets.These units are investment vehicle that provide a means of participation in the stock marketfor people who have neither the time, nor the money, nor perhaps the expertise to undertakethe direct investment in equities. On the other hand they also provide a route into specialistmarkets where direct investment often demands both more time and more knowledge than aninvestor may possess.

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Mutual fund is a trust that pools the savings of a number of investors who share a commonfinancial goal. This pool of money is invested in accordance with a stated objective. The jointownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thuscollected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciationsrealized are shared by its unit holders in proportion the number of units owned by them. Thusa Mutual Fund is the most suitable investment for the common man as it offers anopportunity to invest in a diversified, professionally managed basket of securities at arelatively low cost. A Mutual Fund is an investment tool that allows small investors access toa 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 sectorsand thus the risk is reduced. Diversification reduces the risk because all stocks may not movein the same direction in the same proportion at the same time. Mutual fund issues units to theinvestors in accordance with quantum of money invested by them. Investors of mutual fundsare known as unit holders.

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

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PASSEDBACK TO

POOL THEIR MONEY WITH

GENERATES INVEST IN


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corpus (the total amount of the fund). Mutual Fund investor is also known as a mutualfund shareholder or a unit holder. Any change in the value of the investments made intocapital 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'sassets 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.

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ADVANTAGES OF MUTUAL FUND

The advantages of investing in mutual fund are:

Professional Management-

The primary advantage of funds (at least theoretically) is the professionalmanagement of your money.

Investors purchase funds because they do not have the time or the expertise to

manage their own portfolio. A mutual fund is a relatively inexpensive way for a smallinvestor to get a full time manager to make and monitor investments.

Diversification-

Diversification is an investing strategy that can be neatly summed up as "Don't put allyour eggs in one basket." Spreading your investments across a wide range of companies and industry sectors can help lower your risk if a company or sector fails.Some investors find it easier to achieve diversification through ownership of mutualfunds rather than through ownership of individual stocks or bonds.

Affordability

Some mutual funds accommodate investors who don't have a lot of money to invest by setting relatively low dollar amounts for initial purchases, subsequent monthly purchases, or both.

Economies of scale-

Because a mutual fund buys and sells large amount of securities at a time, itstransaction costs are lower than you as an individual would pay.

Convenient Administration-

Investing in mutual fund reduces paperwork and helps you avoid many problems suchas bad deliveries, delayed payments and follow up with the brokers and companies.Mutual funds save your time and make investing easy and convenient.

Return Potential-

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Over a medium to long term, Mutual funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

Liquidity -

Mutual fund investors can readily redeem their shares atthe current NAV plus any fees and charges assessed on redemption at anytime.

Choice of Schemes -

Mutual funds offer a family of schemes to suit your varying needs over a lifetime.

Flexibility -

Mutual Funds offering multiple schemes allow investors to switch easily betweenvarious schemes. This flexibility gives the investor a convenient way to change themix of his portfolio over time.

Transparency -

Open-ended mutual funds disclose their Net Asset Value (NAV) daily and theentire portfolio monthly. This level of transparency, where the investor himself seesthe underlying assets bought with his money, is unmatched by any other financialinstrument. Thus the investor is in the know of the quality of the portfolio and caninvest further or redeem depending on the kind of the portfolio that has beenconstructed by the investment manager.

Well Regulated

Unlike the company fixed deposits, where there is little control with the investment being considered as unsecured debt from the legal point of view, the Mutual Fundindustry is very well regulated. All investments have to be accounted for, decisions judiciously taken. SEBI acts as a true watchdog in this case and can impose penaltieson the AMCs at fault. The regulations, designed to protect the investors interests arealso implemented effectively.

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DISADVANTAGES OF MUTUAL FUNDS:

The disadvantages of investing in a Mutual Fund are:

Professional Management-

Did you notice how we qualified the advantage of professional management with the word"theoretically"? Many investors debate over whether or not the so-called professionals areany better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut.

Costs

Mutual funds don't exist solely to make your life easier--all funds are in it for a profit. Themutual fund industry is masterful at burying costs under layers of jargon.

Dilution

It's possible to have too much diversification. Because funds have small holdings in so manydifferent companies, high returns from a few investments often don't make much differenceon the overall return. Dilution is also the result of a successful fund getting too big. Whenmoney pours into funds that had strong success, the manager often has trouble finding a goodinvestment for all the new money.

Taxes

When making decisions about your money, fund managers don't consider your personal taxsituation. For example, when a fund manager sells a security, a capital-gain tax is triggered,which affects how profitable the individual is from the sale. It might have been moreadvantageous for the individual to defer the capital gains liability.

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WHY TO INVEST IN MUTUAL FUNDS:

A proven principle of sound investment is do not put all eggs in one basket. Investment inmutual funds is beneficial due to following reasons.

They help in pooling of funds and investing in large basket of shares of different

companies. Thus by investing in diverse companies, mutual funds can protect againstunexpected fall in value of investment.

An average investor does not have enough time and resources to develop professionalattitude towards their investment. Here professional fund managers engaged by mutual fundstake desirable investment decision on behalf of investors so as to make better utilization of resources.

Investment in mutual funds is comparatively more liquid because investor can sell theunits in open market or can approach mutual fund to repurchase the units at net asset valuedepending upon the type of scheme.

Investors can avail tax rebates by investing in different tax saving schemes floated bythese funds, approved by the government.

Operating cost is minimized per head because of large size of investible funds, there byrealizing more net income of investors.

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OTHER INVESTMENT OPTIONS

Bank Fixed Deposits (FD)

Fixed Deposit or FD is the most preferred investment option today. It yields up to 8.5%annual return depends on the Bank and period. Minimum period is 15 days and maximum is5 years and above. Senior citizens get special interest rates for Fixed Deposits. This isconsidered to be a safe investment because all banks operated under the guidelines of Reserve Bank of India.

National Saving Certificate (NSC)

NSC is backed by Govt. of India so it is a safe investment method. Lock in period is 6 years.Minimum amount is Rs100 and no upper limit. You get 8% interest calculated twice a year. NSC comes under Section 80C so you will get an income tax deduction up to Rs 1, 00,000.From FY 2005-'06 onwards interest accrued on NSC is taxable.

Public Provident Fund (PPF)

PPF is another form of investment backed by Govt. of India. Minimum amount is Rs500 andmaximum is Rs70, 000 in a financial year. A PPF account can be opened in a head postoffice, GPO and selected branches of nationalized banks. PPF also comes under Section 80Cso individuals could avail income tax deduction up to Rs 1, 00,000. Lock in period for PPF is15 years and interest rate is 8%. Unlike NSC, PPF interest rate is calculated annually. BothPPF and NSC considered being best investment option as it is backed by Government of

India.

Stock Market

Investing in share market is another investment option to get more returns. But share marketinvestment is volatile to market conditions. Before investing you should have a thoroughknowledge about its operation.

There are many investment options available like investing in Gold, Real Estate etc.

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Introduction to SBI Mutual Fund

SBI Mutual Fund, India's largest bank sponsored mutual fund, is a joint venture between theState Bank of India and Societe Generale Asset Management (France), one of the world'stop-notch fund management companies. Over the years, SBI Mutual Fund has carved a nichefor itself through prudent investment decisions and consistent wealth creation.

Since its inception, SBI Funds Management Private Ltd. has launchedthirty-two schemes and successfully redeemed fifteen of them. Throughout this journey, SBIMutual Fund has profusely rewarded the 2, 00,000 investors who have reposed their faith in

it.SBI Mutual Fund, one of the country's premier fund houses, with over 20

years of rich experience in fund management, is a joint venture between the State Bank of India, Indias largest bank and Societe Generale Asset Management, one of the world'sleading fund management companies. Today, SBI Mutual Fund is one of the largest AMCs inthe country, managing assets over Rs. 39,826.34 crore (as on April 30th, 2010.). The fundhouse serves its vast family of over 5.5 million investors (Calculated on the basis of live

folios as on 30/04/2010) by reaching out to them through a network of over 200 points of contact.

Today, the SBI fund boasts of an expertise of managing assets over Rs. 13,000 crores and hasa diverse profile of investors actively parking their investments across 28 active schemes. Avast network of 82 collection branches, 26 investor service centers, 21 investor service desksand 21 district organizers helps the SBI Mutual Fund to reach out to their investors.SBIMutual is the first bank- sponsored fund to launch an offshore fund Resurgent IndiaOpportunities Fund.

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

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SBI Arbitrage Opportunities Fund

SBI Blue chip Fund SBI Infrastructure Fund - Series I

SBI Magnum Taxgain Scheme 1993

SBI ONE India Fund

SBI Tax Advantage Fund Series 1

DEBT SCHEMES:

Debt Funds invest only in debt instruments such as Corporate Bonds,Government Securities and Money Market instruments either completelyavoiding 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 debtfunds would be lower. Such investments are advisable for the risk-averse investor and asa part of the investment portfolio for other investors.

Magnum Childrens Benefit Plan

Magnum Gilt Fund

Magnum Gilt Fund (Long Term)

Magnum Gilt Fund (Short Term)

Magnum Income Fund

Magnum Income Plus Fund

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Magnum Income plus Fund (Saving Plan)

Magnum Income plus Fund (Investment Plan)

Magnum Insta Cash Fund Magnum InstaCash Fund -Liquid Floater Plan Magnum Institutional Income Fund

Magnum Monthly Income Plan Magnum Monthly Income Plan Floater Magnum NRI Investment Fund

SBI Capital Protection Oriented Fund - Series I

SBI Debt Fund Series

SDFS 15 Months FundSDFS 90 Days FundSDFS 13 Months Fund

SDFS 18 Months FundSDFS 24 Months FundSDFS 30 DAYSSDFS 30 DAYSSDFS 60 Days FundSDFS 180 Days FundSDFS 30 DAYS

SBI Premier Liquid Fund

SBI Short Horizon Fund

SBI Short Horizon Fund - Liquid Plus Fund

SBI Short Horizon Fund - Short Term Fund

BALANCED SCHEMES:

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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 providecommensurately lower returns. They provide a good investment opportunity to investors whodo not wish to be completely exposed to equity markets, but is looking for higher returnsthan those provided by debt funds.

Magnum Balanced Fund

Magnum NRI Investment Fund - Flexi Asset Plan

MAIN SCHEMES OF SBI MUTUAL FUND

SBI MAGNUM TAXGAIN SCHEME

Magnum TaxGain Scheme is an Equity Linked Savings Scheme (ELSS) from SBI MutualFund which offers investors tax benefits on an investment up to Rs 1 Lakh under Section 80Cof Indian Income Tax Act 1961. The fund was launched in the year 1993 and is one of thetop performers in the ELSS category.SBI Magnum Taxgain Scheme 1993 ranks No.1offering 29.98% 5-year returns as on December 31, 2009.Magnum Taxgain is No. 1 in termsof AUMs at Rs. 5,386 crore, and in terms of investors - at over 17 lakh investors (as on31/12/2009). The objective of the scheme is "to deliver the benefit of investment in a portfolio of equity shares, while offering deduction on such investments made in the schemeunder Section 80 C of the Income-tax Act, 1961. It also seeks to distribute income periodically depending on distributable surplus." The fund invests 80-100% in equity &equity related securities and remaining 0-20% in money market instrument.

"The sole focus of the fund for the last 15 years has been on generating consistent returns.The investment philosophy of the fund is aligned to the fact that most of the investor's areretail investors and that there is lock in for investment. Thus the strategy is to take long termcalls in stocks and sectors which will minimize the volatility and risk in the fund. At this point in time, the focus is on bottom up stock picking irrespective of the stock being a large

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cap or a mid cap name which have a proven track record and better visibility going ahead.",says Jayesh Shroff, fund manager, Magnum Taxgain Scheme.

SBI Mutual Fund which manages Magnum Taxgain Scheme has fund management expertiseof over 20 years managing assets worth Rs.37,900crore.(as on 31.12. 2009).

Some Important features of this scheme are as follows:

Entry Load Investments below Rs. 5crores then entry load is 2.25%,Investments of Rs.5crores and above then entry load is nil.

Exit Load : NIL SIP : Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months,

Rs.1500/quarter 4 Quarters

STP : Minimum amount Rs.1000/- month - 6 months, Rs.3000/ Quarter - 6months

Asset Allocation 80-100% in Equity, partly convertible debentures and fullyconvertible debentures and bonds & 0 20% in Money market instruments.

Minimum Application Amount Rs 500 for purchase & Multiples of Rs 500for additional purchase.

Plans & Options Dividend option with payout and reinvestment facility.

The total asset based in the scheme is 5000 cr. It is the biggest tax savingscheme.

BSE 100 is the index.

There is lock in period of 3 years.

Enter Section 8OC

Section 88 was scrapped in Finance Bill 2005. Instead, Section 80C has beenintroduced. All avenues that were eligible for tax benefits under Section 88 were brought under the Section 80C fold. However, instead of offering tax rebates,investments (up to Rs 100,000) under Section 80C qualify for deduction fromgross total income. Hence a new system of claiming tax benefits is now in place.

How have Equities performed as compared to other asset classes?

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Track record of the last 15 years shows that equity investments give better returns over the long term. Other asset classes such as Fixed Deposits & Goldhave given returns of 5.7% & 10.3% respectively as compared to 15.6% provided by equities (BSE Sensex). (Cumulative annualized returns from 1984to2004). We believe that a 3 year horizon is ideal for getting a reasonable returnfrom equity.

Investment strategy of Magnum taxgain scheme

Magnum TaxGain Scheme follows the bottom up investment strategy. We havealso kept the portfolio size limited to about 35 stocks in all. While we believe

that India is a growth story, we feel that our strength lies in our ability to identify promising stocks and take them in the portfolio. This strategy has worked infavour of the funds in the last couple of years and we intend to pursue thisstrategy in future also.

Awards & Achievements:

Magnum TaxGain Scheme has been ranked CPR 1 by CRISIL whichindicates very good performance It has recently bagged 2 gold awards in the 1 year

& 3 year category for performance in the ICRA Online Awards. Magnum TaxGainScheme has consistently given dividends and the last dividend given was 102% inJune 2005.

SBI MAGNUM CONTRA FUND

It is under the Magnum sector funds umbrella. And there are 5 high growth sectorswhich are as follows.

I.T Fund FMCG Fund Pharma Fund Contra Fund Emerging Businesses Fund

Investment Objective:

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To provide the investors maximum growth opportunity through equity investments in stock of growth-oriented sectors of the economy .Contra derives from Contrarian which means thatinvestment is made when the stocks are currently out of favour of market for short term but itdoesnt consider bad debts.

SBI MUTUAL FUND is the first one who launched the Contra fund. And it gives thespectacular performance. It is the one of the best scheme. And the total asset based in thisscheme are3500 cr. It is an open ended scheme.

Some Important features of this scheme are as follows:

Launched on 14 August 1999

Minimum investment required is Rs.2000 and additional purchase can be madein multiples of one.

Benchmark is BSE 100.

Entry Load Investments below Rs. 5 crores then entry load is 2.25%,Investments of Rs.5 crores and above then entry load is nil.

Exit Load

For exit within 1 year from the date of allotment -1%

For exit after 1 year from the date of allotment NIL

SIP : Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months,Rs.1500/quarter 4 Quarters

There is no Lock in period.

The objective of the Fund is to invest in undervalued scrips, which may be currently out of favour but are likely to show attractive growth in the long term. Thus, this fund provides analternative to investors for investing in the growth scrips of the future. The funds collectedunder this scheme will be invested in the equities of:-

Companies that are fundamentally sound, but generally are undervalued at thetime of investment due to lack of investor interest.

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Companies that have embarked on the path of turnaround by restructuring of operations, hiving off unrelated business, etc. And where the results of theturnaround are likely to accrue in the long term.

Companies with strong management, but operating in commodities where thereare signs of bottoming out of the business cycle.

Magnum Multiplier Plus 1993

Investment Objective:

Magnum Multiplier Plus is an open-ended diversified equity fund and the investmentobjective of the scheme is to provide investors long term capital appreciation along withthe liquidity of an open-ended scheme. The scheme will invest in a diversified portfolioof equities of high growth companies.

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ASSET ALLOCATION

Instrument % of portfolio of

plan A and B

Risk profile

Equity and related

instruments

Not less than 70% Medium to High

Debt

Instruments(including

Securitized debt) and

govt securities

Not more than 30% Low to medium

Money market

instruments

Balance Low


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Scheme Highlights:

1. An open-ended equity scheme aiming for aggressive growth from investments inequities.

2. Scheme opens for Resident Indians, Trusts, and Indian Corporates and on a fullyrepatriable basis for NRIs, FIIs & Overseas Corporate Bodies.

3. Facility to reinvest dividend proceeds into the scheme at NAV.4. Easy entry and exit on the basis of sales and repurchase prices determined daily.NAVwill be declared on every business day.

5. Nomination facility available for individuals applying on their behalf either singly or jointly upto three.

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Launch Date Feburary 28,1993

Minimum Investment Rs.1000

Entry Load N.A

Exit Load For exit within 1 year from the date of the allotment-1%

For exit after 1 year from the date of the allotment-NIL

SIP Rs.500/month-12 months

Rs 1000/month- 6 months

Rs 1500/quarter-4 quarters

NAVS

PLAN LATEST NAV DATE

MAGNUM

MULTIPLIER

PLUS 1993

GROWTH

83.09 23 JULY 2010

MAGNUMMULTIPLIER

PLUS 1993

DIVIDEND

58.99 23 JULY 2010


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The reasons why one could look at an NFO based on PSUs are as follows:

PSUs have strong fundamentals, are generally a leading players in their industries and inmany cases are near monopolies. These companies also showed greater resilience than their

private sector counterparts during the economic downturn. Hence the PSU investment themelooks promising.

SBI PSU Fund will be managed by Rama Iyer Srinivasan, who holds 16 years of experiencein the area of financial services, apart from holding an M.Com and MFM degree. PresentlySrinivasan is also the fund manager of Magnum Equity Fund, Magnum Global Fund Magnum Sector Funds Umbrella - Emerging Business Fundand SBI Infrastructure Fund - Series I.

Market Dominance

Top 18 PSUs total Income is equal to 15% of Indias GDP. PSUs paid over 35% of net profits as dividend in 2008.

Big Players

NTPC accounts for 30% of power generation ONGC and OIL manage 90% of oil production PSU bank accounts for about 73% for entire banking system assets. (Source:

RBI) BHEL is the market leader in Power equipments.

INVESTMENT OBJECTIVE

The objective of the scheme would be to provide investors with opportunities for long termgrowth in capital along with the liquidity of an open ended scheme through an activemanagement of investment in a diversified basket of equity stocks of domestic Public Sector Undertakings and in debt and money market instruments issued by PSUs and others.

ASSET ALLOCATION:

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BENCHMARK - BSE PSU index

The offer of units of Rs.10 each for cash during the NFO period

Entry Load - NILExit Load

Exit within 3 years from the date of the allotment-1% Exit after 3 years from the date of the allotment-NIL

Minimum investment size is Rs.5000 and in the multiples of Re.1.AdditionalPurchase:Rs.1000 and in the multiples of Re.1

Plans And Options

There are 2 plans which are as follows.

1. Growth Option2. Dividend Option

Under the dividend option, facility for payout and reinvestment is also available.

Why should I invest in SBI PSU Fund?

PSU are the wealth creators of the nation, with strong fundamentals, and moreover they areavailable at attractive valuations compared to broader markets. There may arise severaldisinvestment opportunities too, which will lead to unlocking of the value in thesecompanies.

Wealth Creators:

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Instrument% of Portfolio of Plan A & B Risk Profile

Equity and equity related instrumentscovered under the universe of PSUcompanies including derivatives

65%-100% Medium to High

Debt and Money Market Securities 0% - 35% Low to Medium


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Out of the 30 companies which constitute the BSE sensex, 4 companies with a combinedweightage of 13.54% are from the PSU space (BHEL, NTPC, ONGC and SBI). The BSEPSU index outperforms the BSE Sensex index over the years by a substantial margin.

Disinvestment Opportunity:

Disinvestment is high on the governments agenda to increase the threshold limit for non- promoter public shareholding for the private sector as well as public sector companies.PSUcompanies, other than the listed ones lined up for disinvestment could be Coal India, LICIndia, BSNL, Nuclear Power Corporation etc. SBI PSU Fund would also identify investmentopportunities in IPOs of these companies. Privatisation has brought out significant value

unlocking and greater efficiencies in the past, which lead to re-rating of those companies andeventually leading to wealth creation.

Strong Dividends Payouts:

While the Growth potential clearly exists, there is another aspect that adds to the need to look

at the PSU companies closely; that is they have a strong dividend payout history.

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Main Competitors of SBI Mutual Fund

Some of the main competitors of SBI mutual fund are as follows:

i. RELIANCE Mutual Fundii. KOTAK Mutual Fundiii. ICICI Mutual Fundiv. UTI Mutual Fundv. BIRLA SUN LIFE Mutual Fund

vi. HDFC Mutual Fundvii. LIC Mutual Fund

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CHAPTER 3:OBJECTIVES OF

STUDY

&RESEARCHMETHODOLOGY

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OBJECTIVES OF THE STUDY

The objective of this report is to gain an in-depth knowledge about the components of a

Portfolio in Mutual Fund schemes and the gap that exists between the perceived concept andthe actuality of it, in order to market these products successfully.

1. To find out the Preferences of the customers or 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.

4. To find out the most preferred channel.

5. To find out what should be done to boost Mutual Fund Industry.

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RESEARCH METHODOLOGY

The first stage included gathering information about the SBI Mutual Fund in Indiaand getting acquainted with the working of the various Mutual Fund Schemes. The next stageinvolved determining the objective of the study, knowing the target audience and drafting aquestionnaire. The questionnaire was designed keeping in mind the target audience andobjectives of the study. It was non-disguised in nature and will include a few open-endedquestions.

Research Plan

The research was exploratory in nature and the goal was to gather preliminary data toshed light on the real nature of problems and to suggest possible solutions or new ideas. Itinvolved getting a feel of the situation and lays emphasis on the discovery of ideas and possible insights.

Sample Size

The sample size of my project is limited to 200 people only. Out of which only 120 peoplehave invested in mutual fund. Other 80 people did not have invested in mutual fund.

Sampling Plan The sampling unit comprised of the customers/visitors present in the office of StateBank of India, Attawa Chandigarh Branch, irrespective of them being investors or not or availing the services or not. The samples were chosen on the basis of convenience samplingand these respondents belonged to middle and upper class salaried and self-employed people,students, professionals and housewives who have invested in Mutual Funds.

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Data Sources

The research calls for gathering secondary data, primary data or both. Secondary data

is the data that is collected for another purpose and already exists somewhere. Primary data isgathered for a specific purpose and is collected by the researcher himself.

Primary Data

Primary data was collected from the existing customers of the MFs. The primary informationwas collected through Questionnaire and interviews presented to the investors. It was

collected through personal visit to persons, by formal and informal talks and through fillingup the questionnaire prepared. The data has been analyzed by using Averages andPercentages Methods.

Secondary data

Secondary Data was collected from:

a) Print articles on Mutual Funds.

b) From the websites and books.

c) Product and Service Brochures of the Mutual Funds.

Data Collection

For the purpose of this project, a questionnaire was designed to collect data. Thequestionnaire was non-disguised because the objective and purpose was conveyed to the

respondents before asking for their responses. The questions were structured open for generalinformation and closed for collecting specific information.

Data Analysis Tools

Simple averages

Tabulation

Data has been presented with the help of bar graphs, pie charts, line graphs etc.

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LIMITATIONS OF STUDY

Time and resource constraints: The survey was conducted in selective areas because of constraints of time and resources. Therefore, the findings cannot be generalized or claimed until further research has been carried out.

Dynamic industries: As this is one of the dynamic industries today in India and manychanges are taking place in quick times. It is very important to keep an eye on thisindustry very regularly. There are a lot of schemes with various objectives, so the basicobjective is used in making this report.

Sample size: The sample size taken was 200, which may not reflect a true picture of theconsumers mind. Because of these constraints, the analysis may not be accurate and mayvary, when tested in different places and time.

Some of the persons werenot so responsive .

Possibility of error in data collection because many of investors may have not givenactual answers of my questionnaire.

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Interpretation:

Out of 120 Mutual Fund investors 73% of the investors are Graduate/Post Graduate, 21% areUnder Graduate and 6% are others (under HSC).

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EducationalQualification

No. of investors

Graduate/PG 88

Under Graduate 25

Others 7

Total 120


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3(c).Occupation of the investors

Interpretation:

In occupation group out of 120 investors, 38% are private employees, 25% are Businessman,29% are Government employees, 3% agriculture and 5% are in others.

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Occupation No. of investors

Government Service 30

Private Service 45

Business 35

Agriculture 4

Others 6


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CHAPTER 4:

DATA ANALYSIS&

INTERPRETATION

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ANAYLSIS AND INTERPRETAION OF DATA

(4.1) Investors invested in different kind of investments.

Kinds of Investments

No. of Respondents

Saving A/C 195

Fixed Deposits 148

Insurance 152

Mutual Fund 120Post office-NSC 75

Shares/Debentures 50

Gold/Silver 30

Real Estate 65

Interpretation:

From the above graph it can be inferred that out of 200 people, 97.5% people have investedin Saving A/c, 76% in insurance, 74% in Fixed Deposits, 60% in Mutual Fund, 37.5% in postoffice-NSC, 25% in Shares and Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

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(4.2)Preference of factors while investing.

Factors a)Liquidity b) Low Risk c) Higher Return d) Trust

No. of Respondents

40 60 64 36

Interpretation:

Out of 200 people, 32% prefer to invest where there is higher return, 30% prefer to invest

where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust.

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(4.3)Awareness about Mutual Fund and its Operations.

Response Yes No

No. of Respondents 135 65

Interpretation:

From the above chart it can be inferred that 67% people are aware of Mutual Fund and itsoperations and 33% are not aware of Mutual Fund and its operations.

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through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% throughAdvertisement.

(4.5) Investors invested in Mutual Fund.

Response No. of Respondents

Yes 120

No 80

Total 200

Interpretation:

Out of 200 people, 60% have invested in Mutual Fund and 40% do not have invested inMutual Fund.

(4.6)Reasons for not invested in Mutual Fund.

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Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual Fund,13% said there is likely to be higher risk and 6% do not have any specific reason.

(4.7) Investors invested in different Asset Management

Company (AMC).

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Reason No. of Respondents

Not Aware 65Higher Risk 5

Not any specific reason 10


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Interpretation:

In Chandigarh most of the investors preferred UTI and RELIANCE Mutual Fund. Out of 120investors 62.5% have invested in each of them, only 46% have invested in SBIMF, 47% haveinvested in ICICI PRU, 37.5% in Kotak and 25% in HDFC.

(4.8) Reason for invested in SBIMF.

Reason No. of Respondents

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Name of AMC No. of Investors

SBIMF 55

UTI 75

HDFC 30

RELIANCE 75

ICICI PRU 56

KOTAK 45

OTHERS 70


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(4.10) Preference of investors for future investment in

Mutual Fund.

Name of AMC No. of Investors

SBIMF 76

UTI 45

HDFC 35

RELIANCE 82

ICICI PRUDENTIAL 80

KOTAK 60

OTHERS 75

Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% prefer to invest in ICICI PRU,63% in SBIMF, 62.5% in others, 50% in kotak, 37.5% in UTI and 29% in HDFC Mutual

Fund.

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(4.11)Channel preferred by the investors for Mutual

Fund.

Channel Financial Advisor Bank AMC

No. of Respondents 72 18 30

Interpretation:

Out of 120 investors, 60% investors prefer to invest through Financial Advisors, 25%through Bank, and 15% investors through AMC.

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(4.12)Mode of investment preferred by the Investor.

Interpretation:

Out of 120 investors, 65% preferred One Time Investment and 35% preferred throughSystematic Investment Plan.

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Mode of Investment One Time Investment Systematic Investment PlanNo. of Respondents 78 42


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(4.13) Preferred Portfolio by the Investors.

Portfolio No. of Investors

Equity 56

Debt 20

Balanced 44

Interpretation:

From the above graph 46% preferred Equity portfolio, 37% preferred Balanced and 17% preferred Debt portfolio.

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(4.14) Option for Getting Return Preferred by the

Investors.

Option Dividend Payout Dividend Re-invest Growth

No. of Respondents 25 10 85

Interpretation:

From the above graph 71% preferred Growth option, 21% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option.

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(4.15)Preference of Investors whether to invest in

Sectorial Funds.

Response No. of Respondents

Yes 25

No 95

Interpretation:

Out of 120 investors, 79% investors do not prefer to invest in Sectorial Fund because there ismaximum risk and 21% prefer to invest in Sectorial Fund.

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Basis for analyzing the performance of

Mutual Fund

Net Asset Value (NAV) is the best parameter on which the performance of a mutual fund can be studied. We have studied the performance of the NAV based on the compounded annualreturn of the Scheme in terms of appreciation of NAV, dividend and bonus issues. WE havecompared the Annual returns of various schemes to get an idea about their relative standings.

VALUATION OF MUTUAL FUND

The net asset value of the Fund is the cumulative market value of the assets Fund net of itsliabilities. In other words, if the Fund is dissolved or liquidated, by selling off all the assets inthe Fund, this is the amount that the shareholders would collectively own. This gives rise tothe concept of net asset value per unit, which is the value, represented by the ownership of one unit in the Fund. It is calculated simply by dividing the net asset value of the Fund by thenumber of units. However, most people refer loosely to the NAV per unit as NAV, ignoringthe 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 net asset value is given below.The net asset value is the actual value of a unit on any business day. NAV is the barometer of the performance of the scheme.The net asset value is the market value of the assets of the scheme minus its liabilities andexpenses. The per unit NAV is the net asset value of the scheme divided by the number of

the units outstanding on the valuation date.

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NAV= Assets (stock held)-Liabilities (Expenses incurred)

Number of outstanding units

For e.g. if the market value of the securities of a mutual fund scheme is Rs.200 lakhs and themutual fund has issued 10 lakhs units at Rs.10 to the investors, then the NAV per unit of thefund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis daily or weekly.

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CHAPTER- 5FINDINGS

ANDCONCLUSION

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For Future investment the maximum Respondents preferred Reliance Mutual Fund,the second most preferred ICICI Prudential, SBIMF has been preferred after them.60% Investors preferred to Invest through Financial Advisors, 25% through AMC

(means Direct Investment) and 15% through Bank.65% preferred One Time Investment and 35% preferred SIP out of both type of Modeof Investment.

The most preferred Portfolio was Equity, the second most was Balance (mixture of both equity and debt), and the least preferred Portfolio was Debt portfolioMaximum Number of Investors Preferred Growth Option for returns, the second most preferred Dividend Payout and then Dividend reinvestment.

Most of the Investors did not want to invest in Sectorial Fund, only 21% wanted toinvest in Sectorial Fund.

CONCLUSION

Running a successful Mutual Fund requires complete understanding of the peculiarities of the

Indian Stock Market and also the psyche of the small investors. This study has made anattempt 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 peoplehave fear of Mutual Fund. They think their money will not be secure in Mutual Fund. Theyneed the knowledge of Mutual Fund and its related terms. Many of people do not haveinvested in mutual fund due to lack of awareness although they have money to invest. As theawareness 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 wherethey have faith or they are well known with them. There are many AMCs in Chandigarh butonly some are performing well due to Brand awareness. Some AMCs are not performingwell although some of the schemes of them are giving good return because of not awarenessabout Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, theyare performing well and their Assets Under Management is larger than others whose Brandname are not well known like Principle, Sunderam, etc.

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Distribution channels are also important for the investment in mutual fund. FinancialAdvisors are the most preferred channel for the investment in mutual fund. They can changeinvestors 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. Only those people investdirectly who know well about mutual fund and its operations and those have time to others.Many of investors directly invest their money through AMC because they do not have to payentry load. Only those people invest directly who know well about mutual fund and itsoperations and those have time.

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CHAPTER 6

SUGGESTIONS

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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. Investorsshould be made to realize that ignorance is no longer bliss and what they are losing bynot investing.

Mutual Fund offers a lot of benefits which no other single option could offer. Butmost of the people are not even aware of what actually a mutual fund is? They onlysee 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. Younginvestors as well as persons at the height of their career would like to go for advisorsdue to lack of expertise and time.

Mutual Fund Company needs to give the training of the Individual Financial Advisorsabout the Fund/Scheme and its objectives, because they are the main source toinfluence 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 toinvest). By considering these three things they can take the customers intoconsideration.

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 ininvesting 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 andhigh quality.

Systematic Investment Plan (SIP) is one the innovative products launched by AssetsManagement companies very recently in the industry. SIP is easy for monthlysalaried person as it provides the facility of do the investment in EMI. Though mostof the prospects and potential investors are not aware about the SIP. There is a largescope for the companies to tap the salaried persons.

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BIBLIOGRAPHY

During the research process, several books and various

websites were referred for the collection of relevant

information.

Books Referred:

Kothari, C.R., Research Methodology, 2007

Websites and Links

www.amfiindia.com

www.sbimu.comwww.nseindia.com

www.moneycontrol.com

www.mutualfundsindia.com

Other handbooks and reports used:

Mutual Fund Handbook

Factsheet and Statement

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ANNEXURE

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QUESTIONNARIE

A study of preferences of the investors for investmentin mutual funds.

1. Personal Details:

(a) .Name:-

(b) .Add:- Phone:-

(c) Age:-(d) Qualification:-

Graduation/PG Under Graduate Others

(e) Occupation.Pl tick()

Govt. Service Pvt.Job Business Agriculture Others

(f) What is your monthly family income approximately? Pl tick ().

Up to Rs.10,000

Rs.10, 001 to15000

Rs.15, 001 to20000

Rs.20, 001 to30000

Rs.30, 001 andabove

2. What kind of investment you have made so far? Pl tick ().All applicable.

a. Saving

account

b. Fixed deposits c. Insurance d. Mutual

Funde. PostOffice. NSC etc.

f.Shares/Debentures

g. Gold/ Silver h. Real Estate

3. While investing your money, which factor will you prefer?

a. Liquidity b. Low Risk c. Higher Return d. Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (). Yes No

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5. If yes, how did you know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (). Yes No7. If not invested in Mutual Fund then why?

a. Not aware of MF b. Higher Risk c. Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl tick ().All applicable.

9. If invested in SBIMF, you do so because (Pl tick (),all applicable)

a.SBIMF is associated with SBI

b.They have a record of giving good returns year after year.

c.Agents Advice

10. If NOT invested in SBIMF, you do so because (Pl tick (), all applicable).

a.You are not aware of SBIMF

b.SBIMF gives less return compared to the others

c.Agents Advice

11. When you plan to invest your money in asset management co. which AMCwill you prefer?

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a.SBIMF b.UTI c.HDFC d.Reliance e.Kotak f.Other.specify


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a.SBIMF

b.UTI

c.RELIANCE

d.HDFC

e.KOTAK

f.ICICI

12. Which channel will you prefer while investing in Mutual Fund?

a.Financial Advisor b.Bank c.AMC

13. When you invest in Mutual Funds which mode of investment will you prefer?Pl tick ().

a.One Time Investment b.Systematic Investment Plan(SIP)

14. 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

15. How would you like to receive the returns every year? Pl tick ().

a.Dividend payout b.Dividend Re-investment c.Growth in NAV

16. Instead of general Mutual Funds, would you like to invest in sectorial funds?Pl tick (). Yes No.

Consumer Preferences for SBI Mutual Fund

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