Customer awareness @ sbi mutual fund project report mba marketing

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

TABLE OF CONTENT

S.NO PARTICULAR PAGE NO

1.EXECUTIVE SUMMARY 03

2.INTRODUCTION TO BANKING

INDUSTRIES06

3.HISTORY OF STATE BANK OF INDIA 07

4.SBI LIFE INSURANCE 12

5.INTRODUCTION TO MUTUAL FUND 25

6.ANALYSIS AND FINDINGS 45

7.FINDINGS 58

8.SUGGESTIONS 59

9.CONCLUSION 60

10.REFERENCES 61

11.ANNEXURE 62

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EXECUTIVE SUMMARY

TITLE OF THE STUDY

“OVER ALL STUDY OF SBI LIFE INSURANCE AND CUSTOMER AWARNESS LEVEL ABOUT SBI MUTUAL FUND

IN BELGAUM CITY”

INTRODUCTION

SUMMARY OF THE COMPANY

State Bank of India

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Type Public (BSE, NSE: SBI) & (LSE: SBID)

Founded Calcutta, 1806 (as Bank of Calcutta)

Headquarters Corporate Center,

Madame Cama Road,Mumbai 400 021 India

Key people Chairman OM PRAKASH BHATT

IndustryBankingInsuranceCapital Markets and allied industries

Products Loans, Credit Cards , Savings, Investment vehicles, SBI Life (Insurance) etc.

Revenue 38382.42 cror (2006 ,March )

Website www . statebankofindia . com

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http://en.wikipedia.org/wiki/Image:SBI-logo.svg

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http://www.statebankofindia.com/

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http://en.wikipedia.org/wiki/Revenue

http://en.wikipedia.org/wiki/Credit_Card

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/Capital_Markets

http://en.wikipedia.org/wiki/Insurance

http://en.wikipedia.org/wiki/Banking

http://en.wikipedia.org/wiki/Industry

http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/Bhikaiji_Cama

http://en.wikipedia.org/wiki/1806

http://en.wikipedia.org/wiki/Calcutta

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http://en.wikipedia.org/wiki/London_Stock_Exchange

http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India

http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

http://en.wikipedia.org/wiki/Public_company

http://en.wikipedia.org/wiki/Category:Types_of_companies

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Topic of the study:

“Over all study of sbi life insurance and customer awareness about sbi mutual

fund in Belgaum city”

This project was conducted so as to understand the concept of Mutual Funds and

its usage as an investment avenue. The study also aims to find out the awareness of

mutual funds and its preference over other investments. The project was undertaken at

state bank of India Belgaum”

The objectives of the study include:

To over all study about SBI life insurance and mutual fund

To find out market potential for mutual funds.

To find out the factors, which influence to investing in mutual funds.

To find out attributes investors look for while buying mutual funds.

My fieldwork involved visiting the people who have invested in mutual funds and

who have not purchased mutual funds and also chartered accountants to know whether they

have invested in mutual funds or not and also the reasons for their investment / non-

investment.

Research Methodology:

For collecting data, I used Questionnaire and interaction with people. The primary

data was collected through interaction with the people I visited, and secondary data was

collected from books, magazines, websites etc..

Sample Frame: People who have invested in mutual funds and who have not invested in

Mutual funds.

Sample size : 100 respondents

Sample Unit :

1. Bank Employees

2. Udyambag entrepreneurs

3. Government employees

4. Stock Dealers in Belgaum city

5. Businessmen.

Sampling Method : Simple random sampling technique.

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“Simple random sampling means every element is selected independently of

every other element and the sample is drawn by a random procedure from a

sampling frame.”

Tools used for the study:

Graphical Representation

SPSS Software

Other related statistical technique like factor analysis etc

The difficulty faced during the fieldwork was not getting the appointments of the

respondents since they were very busy and some were non-cooperative. Moreover, time

limitation was there. The data analysis is done by using coding sheet, SPSS software,

statistical techniques etc.

INTRODUCTION TO BANKING INDUSTRIES

State Bank of India:

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(SBI)) is the largest bank in India. If one measures by the number of branch

offices and employees, SBI is the largest bank in the world. Established in 1806 as bank

of Bengal, it is 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. The government nationalized the bank in 1955, with the Reserve bank

of India taking a 60% ownership stake. In recent years the bank has focused on two

priorities, 1), reducing its huge staff through Golden handshake schemes known as the

Voluntary Retirement Scheme, which saw many of its best and brightest defect to the

private sector, and 2), computerizing its operations.

State Bank of India (SBI) is India's largest commercial bank. SBI has a vast

domestic network of over 9000 branches (approximately 14% of all bank branches) and

commands one-fifth of deposits and loans of all scheduled commercial banks in India.

The State Bank Group includes a network of eight banking subsidiaries and several non-

banking subsidiaries offering merchant banking services, fund management, factoring

services, primary dealership in government secure credit cards and insurance.

THE EIGHT BANKING SUBSIDIARIES ARE:

1 -State Bank of Bikaner and Jaipur (SBBJ)

2 -State Bank of Hyderabad (SBH)

3 -State Bank of India (SBI)

4 -State Bank of Indore (SBIR)

5 -State Bank of Mysore (SBM)

6 -State Bank of Patiala (SBP)

7 -State Bank of Saurashtra (SBS)

8 -State Bank of Travancore (SBT)

HISTORY OF STATE BANK OF INDIA

EVOLUTION OF SBIEVOLUTION OF SBI

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http://en.wikipedia.org/wiki/Indian_Subcontinent

http://en.wikipedia.org/wiki/Bank_of_Bengal

http://en.wikipedia.org/wiki/1806

http://en.wikipedia.org/wiki/India

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The origin of SBI goes back to the first decade of the nineteenth century with the

establishment of the bank of Calcutta in Calcutta on 2 June 1806. Three year later the

bank received its charter and was redesigned as the bank of Bengal (2 January 1809). A

unique institution, it was the first joint stock bank of British India sponsored by the

government of Bengal. The bank of Bombay (15th April 1840) and the bank of madras (I

July 1843) followed by bank of Bengal. These three banks remained at the apex of

modern banking in India till their amalgamation as the imperial bank of India on 27

January 1921.

Primarily Anglo-Indian creation, the three presidency banks came into existence either as

a result of the compulsion of imperial finance or by the felt needs of local European

commerce and were not imposed from outside in an arbitrary manner to modernize

India’s economy. Their evolution was, however

Shaped by ideas culled from similar developments in Europe and England and was

influenced by changes occurring in the structure of both the local trading environment

and those in the relation of the Indian economy to the economy of Europe and the global

economy frame works

Establishments

The establishment of bank of Bengal marked the advent of limited liability, joint stock

banking in India, so was the associated in banking viz the decision to allow the bank of

Bengal to issue notes, which would be accepted goes the payments of public revenues

within a restricted geographical area, this right of note issue was very valuable not only

for the bank of Bengal but also its two siblings, he banks of Bombay and madras, it

meant an accretion to the capital of the bank, a capital on which the proprietors did not

have to pay any interest . The concept of deposit banking was also an innovation because

the practice of accepting money for safe keeping (in some cases even investment on

behalf of the clients) by the indigenous bankers had not spread as a general habit in most

parts of India, but for long time. And especially up to the time. Each charter provided for

a share capital. Four fifth of which were privately subscribed and the rest owned by the

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provincial govt the member of the broad director, which managed the affair each bank,

were mostly proprietary directors representing the large European managing agency

house of India. The rest were government nominees, invariably civil servant, one of

whom was elected as the president of the board.

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Offices of the Bank of BengalOffices of the Bank of Bengal

PROFILEPROFILE

Spreading its arms around the world, the SBI’s International Banking Group delivers

the full range of cross-border finance solutions through its four wings – the Domestic

division, the Foreign Offices division, the Foreign Department and the International

Services division.

The Domestic wing provides services like merchant banking, shipping finance and

project export finance. The Foreign Offices wing offers the entire range of international

trade and industrial finance products, while the Kolkatta-based Foreign Department

undertakes treasury and currency operations.

The International Services division renders specialized services like correspondent

banking, global link services and country and bank risk exposure monitoring. Being

India’s largest and most trusted commercial bank, the SBI offers you a network of

relationships unmatched in strength and span by any other Indian financial entity.

The bank has a network of 66 offices/branches in 29 countries spanning all time zones.

The SBI’s international presence is supplemented by a group of Overseas and NRI

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branches in India and correspondent links with over 522 leading banks of the world.

SBI’s offshore joint ventures and subsidiaries enhance its global stature.

The bank has carved a niche for itself in Euroland with branches strategically located in

Paris, Frankfurt and Antwerp. Indian banks and corporates are able to avail single-

window Euro services from SBI Frankfurt.

These strengths are reinforced by a dedicated and highly skilled team of professionals

deployed by the bank in each specific segment.

Mission Statement:

“To retain the bank position as the premier Indian Financial Service Group, with world

class standard and significant Global Business committed to excellence in customer,

shareholder and employee satisfaction to play a leading role in the expanding and

diversifying financial service sector, while continuing emphasis on its development

banking role “

Vision statement:

Premier Indian Financial Service Group with Global Perspective, world-class

Standard of efficiency and professionalism and core institutional values.

Retain its position in the country as a pioneer in development banking

Maximize shareholders values through high sustained earning per share

An institution with a culture of mutual care and commitment, a satisfying and

exciting work environment and continue learning opportunities.

Core values of the bank:

Excellence in customer service

Profit orientation

Belonging and commitment to the bank

Fairness in all dealing and relations

Risk taking and innovation

Team playing

Learning and renewal

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Integrity

Transference and discipline in policies and system

Objectives of SBI

“Improvement in profitable through better management of asset portfolio increased

employee productivity, enhanced support to country’s foreign trade as well as substantial

improvement in the system particularly in the area of training mechanization, customer

service, and internal house keeping etc. “

Comfortable capital position

SBI is adequately capitalized with a tier I capital adequacy ratio of 8.04% and a large

capital base of Rs 240.72 billion as at March 31, 2005. The bank has considerably

improved its net worth coverage for net NPAs to 4.4 times as at March 31, 2005 due to

lower slippages reflecting an improving asset quality, witnessed across the entire banking

sector. The capitalization levels of SBI are adequate to address the asset side risks and

support the business growth in the medium term.

Management strategies

In retail finance, the bank has leveraged its corporate relationships, pursued business

growth selectively, and has not competed based on interest rate. The bank has taken

initiatives like on-line tax returns filing and faster transfer of funds to protect its dominant

position in the government business. The bank also has a clear technology strategy that

will enable it to compete with the new generation private sector banks in customer

service and operational efficiency.

Asset quality to remain at average levels

The bank continues to have a high level of gross NPAs at 5.95% of gross advances as at

March 31, 2005, compared with 4.9% for all scheduled commercial banks (SCBs) taken

together. The bank is facing challenges to improve the quality of assets originated, as can

be seen in the consistently higher levels of slippages (additions to NPAs) at 2.71% in

2004-05.

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Business description

SBI along with its associate banks offer a wide range of banking products and services

across its different client markets. The bank has entered the market of term lending to

corporate and infrastructure financing, traditionally the domain of the financial

institutions. It has increased its thrust in retail assets in the last two years, and has built a

strong market position in housing loans.

SBI, through its non-banking subsidiaries, offers a host of financial services, viz.,

merchant banking, fund management, factoring, primary dealership, broking, investment

banking and credit cards. SBI has commenced its life insurance business by setting up a

subsidiary, SBI Life Insurance Company Limited, which is a joint venture with Cardiff

S.A., one of the largest insurance companies in France. SBI currently holds 74% equity in

the joint venture.

Industry prospects :

To leverage benefits such as access to low cost resources and the facility to provide a

larger gamut of services, a number of finance companies such as Kotak Mahindra

Finance Limited and HDFC Limited have promoted banks. Simultaneously, yet another

emerging trend is that of foreign banks promoting NBFCs to benefit from regulatory

flexibility available to such entities in areas like absence of statutory liquidity ratio and

cash reserve ratio requirements, priority sector requirements, and corporate exposure

limits.

SBI LIFE INSURANCE:

Our Mission:

"To emerge as the leading company offering a comprehensive range of life

insurance and pension products at competitive prices, ensuring high standards of

customer satisfaction and world class operating efficiency, and become a model life

insurance company in India in the post liberalization period".

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Our Values:

Trustworthiness

Ambition

Innovation

Dynamism

Excellence

SBI Life Insurance is a joint venture between the State bank of India and Cardif

SA of France. SBI Life Insurance is registered with an authorized capital of Rs 1000

crore and a paid up capital of Rs 500 crores. SBI owns 74% of the total capital and Cardif

the remaining 26%. State Bank of India enjoys the largest banking franchise in India.

Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500

branches across the country, arguably the largest in the world. Cardif is a wholly owned

subsidiary of BNP Paribas, which is the Euro Zone’s leading Bank. BNP Paribas is one

of the oldest foreign banks with a presence in India dating back to 1860. Cardif is ranked

2nd worldwide in creditor’s insurance offering protection to over 35 million

policyholders and net income in excess of Euro 1 billion. Cardif has also been a pioneer

in the art of selling insurance products through commercial banks in France and in 35

more countries.

SBI Life Insurance’s mission is to emerge as the leading company offering a

comprehensive range of Life Insurance and pension products at competitive prices,

ensuring high standards of customer service and world class operating efficiency. SBI

Life has a unique multi-distribution model encompassing Bancassurance, Agency and

Group Corporate. SBI Life extensively leverages the SBI Group as a platform for cross-

selling insurance products along with its numerous banking product packages such as

housing loans and personal loans. SBI’s access to over 100 million accounts across the

country provides a vibrant base for insurance penetration across every region and

economic strata in the country ensuring true financial inclusion.Agency Channel,

comprising of the most productive force of more than 25,000 Insurance Advisors, offers

door to door insurance solutions to customers.

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Why SBI life:

Customer Satisfaction - many of our customers who have bought an insurance policy

with us have bought a second one Financially sound with over a 100 years of Banking

experience, when you trusted us with your money, why would you trust somebody else

with your protection needs.

Individual product:

Unit Linked Plans: It may be difficult to understand all your needs but as your preferred

life insurance company, SBI Life definitely understands all your financial & insurance

needs. Unit linked Plans are an attempt to meet all your financial & insurance needs

through a single non participating product. What’s more you get market linked returns

which in the long term has always proved to give better returns than traditional savings

products. We offer the following plans under this category.

Horizon II

Unit Plus II

Unit Plus Child Plan

Unit Plus Elite Plan

Pension Plans: Life expectancy is improving rapidly. People live longer. You cannot

work throughout your life. You will have to retire from work. In the post retirement

period you have lot of time for yourself. You would like to do things you have not done

while you were working. You need to have a comprehensive plan to meet our post

retirement financial needs ensuring complete peace of mind.

Horizon II Pension

Unit Plus II Pension

Life Long Pension

Pure Protection Plans: There are times when everything seems to be perfect, but who can

predict future and there is always a place to make this world a better place for our loved

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ones. To ensure that these uncertainties do not shatter the dreams you have for your

family, SBI life offers you.

Shield

Swadhan

Keyman

Protection cum Savings (Endowment) Plans: SBI Life offers a variety of plans that gives

you the benefit of protection and the opportunity to save for various events like purchase

of new house, wedding, car etc. we assist your savings.

Sudarshan

Scholar II

Setubandhan

Money Back Plans: As an individual your life is fueled by dreams. You experience

different special moments in life like wedding, birth of a child, child’s education or

purchasing a new home. You have to be financially prepared for these special moments.

What you need is easy liquidity at regular intervals with life insurance protection take

Care of these special moments.

Money Back

Sanjeevan Supreme

HORIZON II

Introduction:

SBI Life’s HORIZON II is a unique, non participating Unit Linked Insurance

Plan in Indian Insurance Industry, where you need not to be a financial market expert.

This plan offers the flexibility of Unit Linked Plan along with Automatic Asset

Allocation which provides relatively higher returns on your money where as increasing

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death benefits provides higher security to your family.

Key features:

Twin benefit of insurance cover and market linked returns

Hassle-free investment management of funds from inception to maturity

Automatic Asset Allocation of funds

Automatic rebalancing of funds at yearly intervals, free of cost

Higher protection, to meet your family financial needs.

Automatic cover continuance.

Liquidity option after 3 years

Facility to top up your investment kitty.

Tax benefit as per section 80C and 10(10D) of income tax act.

15 days free look period from the date on which you receive the policy document.

No. of Units Fund(x) =Net Investment in Fund(x)

NAV of Fund(x)

Benefits:

Hassle Free Investment Management: You simply invest we will manage it for you.

Maturity Benefits: At the end of the term you will get the fund value.

Increasing Death Benefit: For all in forced policies , In case of death after completion of

age 7.

UNIT PLUS CHILD PLAN

Introduction:

Life begins afresh when you become a parent and when the child takes that first step

towards you, the moment is filled with cheer, enthusiasm never felt before. This moment

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marks a new beginning in the child’s life and there’s no looking back after that. The child

keeps growing and so are his dreams, aspirations which always aim to reach horizon and

you want your child achieve his/her dreams. But at the same time as a proud parent you

also want to secure their future against rising cost of education and other necessities. We

at SBI LIFE understand you better and hence have developed UNIT PLUS CHILD

PLAN to suit you and your needs best. This Plan is meant for parents in the age group of

18-57 having a child between the age group of 0-15 years.

Key features:

Market related returns to match increasing cost of education

Peace of Mind by giving you triple benefits.

Loyalty units to celebrate your child reaching 18 years.

New Investment Fund (Equity Optimiser Fund) in addition to existing funds.

Pay Premium for a limited period and reap benefits over a long time.

Flexible plan which adapts to your changing needs as and when you want.

UNIT PLUS ELITE:

Introduction

You set the ball rolling and have been the catalyst for transformation of the society and

your decisions have generated maximum benefits both at personal as well as society

level. Young generation aspires to be you and they get inspiration to emulate you to

achieve success. Your leadership does not settle with the normal, it deserves privileged

facilities. A plan which provides Value for “Your” money Our Preferred Customer.

PENSION PRODUCT

HORIZON II PENSION

Horizon II Pension is the most simple unit linked pension plan; all you need to do is:

Choose your retirement date, the plan option and the regular premium amount.

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Based on the plan option and the term opted, SBI Life will invest your money in

three different funds viz., Equity Pension Fund, Bond Pension Fund and Money

Market Pension Fund.

The funds are invested keeping in mind the term opted for and your money is

invested in safer funds as your policy approaches maturity.

UNIT PLUS II PENSION

Pure Pension

Pension cum Life Cover

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS

BORNE BY THE POLICYHOLDER

Introduction:

We at SBI Life understand the basic needs for pension plan and give you financial

strength to maintain your life style even after the retirement. Unit Plus II Pension plan

makes sure that you have regular income after you retire and also helps you to maintain

your standard of living. This is a unit linked pension plan wherein the policyholder

chooses an investment period from 5 to 52 years for a vesting age between 50 to 70 years.

You can choose to pay either single premium or pay regular premium for the entire

policy term. Your contributions are invested into 4 fund options as per your choice.

Key Features:

Choice to invest & control four different funds as per your risk appetite.

Flexibility to choose between two options

Pure Pension

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Pension cum Life Cover

No medical required for Pure Pension, automatic acceptance facility.

Flexibility to increase regular contribution.

Top up payments: any amount, anytime.

Customize your plan by adding riders.

15 days free look period.

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LIFE LONG PENSION:

Introduction:

Life expectancy is improving rapidly. People live longer. You cannot work throughout

your life. You will have to retire from work. In the post retirement period you have lot of

time for yourself. You would like to do things you have not done while you were

working You need to have a comprehensive plan to meet your post retirement financial

needs ensuring complete peace of mind.

Key features:

A maximum of Rs. 1,00,000 p.a. paid as a contribution on a pension plan is fully

deductible from the taxable income (within the max. ceiling Rs. 1 lakh )

Minimum Guaranteed returns of 4% p.a. (compounded annually) on your

Personal Pension Account (till 31st March 2010) + Vested bonus.

It helps you to accumulate enough savings to meet the old age needs and look for

a reliable and enduring pension payment.

It is an extremely flexible plan.

Benefits:

Tax benefit

Maturity benefit

Death benefit

Pure Protection Products:

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Swadhan

Introduction

Happiness and security for your family is what you want. However life has its

uncertainties and risks. All that you’re interested in is how best to afford a secure future

for your loved one. Have you ever wished for a low premium insurance policy that not

only provides security to your loved ones but also returns back the premium paid.

Protection at affordable premium

e cover comes to you at no cost

Tax benefit u/s 80 c and (10 D) of it act

5% rebate for female lives

Guaranteed return of basic premium paid on survival at the end of the term,

depending

Shield:

Introduction

Your family is of utmost importance to you. You want your family to have all the good

things in life and you would do everything you could to fulfill them. Life is full of

uncertainties and risk. To ensure that these uncertainties do not the shatter the dreams you

have for your family.

Key features:

It offers you life insurance cover at the lowest cost for a selected term.

It is available in 3 options to suit your requirement.

Level Premium throughout the chosen term with increasing Sum Assured,

depending on the option chosen.

Tax benefit u/s 80 C and 10 (10 D) of IT Act

Attractive rebate for Female lives.

Schlor II

Introduction

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As a caring parent you would always want your child to get the very best. Is there a way

to protect your children against life’s risks? Is there a way to make tomorrow safe for

them? Therefore this is the time when careful financial planning can help you fulfill the

aspirations that you have for your children’s. We at SBI Life can help you ensure that

your children’s future is secure and prosperous. Schlor II is designed to protect your

child’s future educational needs.

Key features

We at SBI Life can help you ensure that your children’s future is secure and

prosperous. The uncertainties if life.

We at SBI Life can help you ensure that your children’s future is secure and

prosperous. Installments.

Attractive rider option

15 days free lock period

Money back:

Introduction

As an individual your life is fueled by dreams. You experience different special moments

in life like wedding, birth of a child, child’s education or purchasing a new home. You

have to be financially prepared for these special moments. What you need is easy

liquidity at regular intervals with life insurance protection to take care of these special

moments.

Key features

The plan has a number of money back options specially suited to your needs

The cover is available at competitive premium rates.

The cover is available at competitive premium rates.

In addition to normal death cover, the plan also provides you 4 additional covers.

Attractive rider options. Convenient premium payment options: Single and

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Multiple premium payment.

15 days free lock period from the date on which you receive the policy documents

Protection cum Savings Products:

Introduction

Sudarshan is an Endowment Policy designed to provide savings and protection to you

and your family. You can save regularly for the future. Thus at the end of the plan, you

will receive a substantial amount of savings along with the accumulated bonuses

declared. At the same time, your family will be protected for death risk for the full sum

assured.

Key features:

It offers you the option of tailoring your policy according to your requirement and

needs, by opting for various extra covers (Riders) that are offered.

This is a unique product that offers you an innovative cover (plan B) which helps

you to protect your savings against 'the financial consequences of inflation' with

constant premium for the entire duration of the plan.

It gives you protection against unfortunate terminal or dreaded illness even your

own retirement - in a most flexible manner.

What is a Mutual Fund?

A vehicle for investing in stocks and bonds

A mutual fund is not an alternative investment option to stocks and bonds, rather it pools

the money of several investors and invests this in stocks, bonds, money market

instruments and other types of securities

Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual

fund unit gets a proportional share of the fund’s gains, losses, income and expenses.

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Each mutual fund has a specific stated objective

The fund’s objective is laid out in the fund's prospectus, which is the legal document that

contains information about the fund, its history, its officers and its performance.

Popular objectives of a Mutual Fund:

Fund objective What the fund will invest in

Equity (Growth) Only in stock.

Debt (Income) Only in fixed income securities.

Money market (including Gilt) In short-term money market instruments (including government securities)

Balanced Partly in stocks and partly in fixed income securities, in order to maintain a ‘balance’ in

returns and risk.

Managed by an Asset Management Company (AMC)

The company that puts together a mutual fund is called an AMC. An AMC may have

several mutual fund schemes with similar or varied investment objectives.The AMC hires

a professional money manager, who buys and sells securities in line with the fund's stated

objective.

All AMCs Regulated by SEBI, Funds governed by Board of Directors

The Securities and Exchange Board of India (SEBI) mutual fund regulations require that

the fund’s objectives are clearly spelt out in the prospectus.In addition, every mutual fund

has a board of directors that is supposed to represent the shareholders' interests, rather

than the AMC’s.

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Range of Services

Investment banking

Mutual Funds

Brokerage and distribution of equities

Dematerialization services

Trading in commodities

Life Insurance

Features and Options

Wealth management

Corporate advisory

INTRODUCTION TO MUTUAL FUND

MEANING

A mutual fund is simply a financial intermediary that allows a group of investors to pool

their money together with a predetermined investment objective. The mutual fund will

have a fund manager who is responsible for investing the pooled money into specific

securities (usually stocks or bonds). When you invest in a mutual fund, you are buying

shares (or portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost

efficient and very easy to invest in (you don't have to figure out which stocks or bonds to

buy). By pooling money together in a mutual fund, investors can purchase stocks or

bonds with much lower trading costs than if they tried to do it on their own. But the

biggest advantage to mutual funds is diversification.

One can make money from a mutual fund in three ways:

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A) Income is earned from dividends declared by mutual fund schemes from time to

time.

B) If the fund sells securities that have increased in price, the fund has a capital gain.

This is reflected in the price of each unit. When investors sell these units at prices

higher than their purchase price, they stand to make a gain.

C) If fund holdings increase in price but are not sold by the fund manager, the fund's

unit price increases. You can then sell your mutual fund units for a profit. This is

tantamount to a valuation gain.

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HISTORY

The origin of mutual fund industry in India is with the introduction of the concept

of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated

from the year 1987 when non-UTI players entered the industry

In the past decade, Indian mutual fund industry had seen a dramatic improvement,

both qualities wise as well as quantity wise. Before, the monopoly of the market had seen

an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector

entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it

reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total

of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits

held by the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is

new in the country. Large sections of Indian investors are yet to be intellectuated with the

concept. Hence, it is the prime responsibility of all mutual fund companies, to market the

product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the

development of the sector. Each phase is briefly described as under:

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. 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)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under

management.

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.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate

entities. One is the Specified Undertaking of the Unit Trust of India with AUM of

Rs.29,835 crores (as on January 2003). 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.

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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

AUM 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.

THE MUTUAL FUND STRUCTURE

The structure consists of

Sponsor - Sponsor is the person who acting alone or in combination with another body

corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net

worth of the Investment Managed and meet the eligibility criteria prescribed under the

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor

is not responsible or liable for any loss or shortfall resulting from the operation of the

Schemes beyond the initial contribution made by it towards setting up of the Mutual

Fund.

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TRUSTEE SPONSOR

AMCOPERATIONS

FUND MANGER

MUTUAL FUND

SCHEMES DISTRIBUTOR

MKT/ SALESMKT/SALES

INVESTOR

SEBI


Trust - The Mutual Fund is constituted as a trust in accordance with the provisions of the

Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian

Registration Act, 1908.

Trustee - Trustee is usually a company (corporate body) or a Board of Trustees (body of

individuals). The main responsibility of the Trustee is to safeguard the interest of the unit

holders and inter alia ensure that the AMC functions in the interest of investors and in

accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996, the provisions of the Trust Deed and the Offer Documents of the respective

Schemes. At least 2/3rd directors of the Trustee are independent directors who are not

associated with the Sponsor in any manner.

Asset Management Company (AMC) - The AMC is appointed by the Trustee as the

Investment Manager of the Mutual Fund. The AMC is required to be approved by the

Securities and Exchange Board of India (SEBI) to act as an asset management company

of the Mutual Fund. At least 50% of the directors of the AMC are independent directors

who are not associated with the Sponsor in any manner. The AMC must have a net worth

of at least 10 crore at all times.

Registrar and Transfer Agent - The AMC if so authorized by the Trust Deed appoints

the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the

application form, redemption requests and dispatches account statements to the unit

holders. The Registrar and Transfer agent also handles communications with investors

and updates investor records.

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Role of Mutual funds in Financial Market

Indian financial institution have played a dominant role in asset formation and

intermediation and contributed substantially in macroeconomic development. In this

process of development Indian Mutual Funds have emerged as a strong financial

intermediaries and are playing a very important role in bringing stability to the financial

system and efficiency to resource allocation.

Mutual Fund plays a crucial role in an economy by mobilizing savings and investing

them in the capital market, thus establishing a link between savings and the capital

market. The activities of mutual fund have both short and long term impact on the

savings and capital market, and the national economy. Mutual fund, thus, assist the

process financial intermediation. They mobilize funds in the saving market and act as

complimentary to banking, at the same time they also compete with banks and other

financial institutions. In the process stock market activities are also significant

influenced by mutual funds.

There is thus hardly any segment of the financial market, which is not influenced by

the existence and operations of mutual funds. However, the scope and efficiency of

mutual funds are influenced by overall economic fundamentals: the inter-relation

between the financial and real sector, the nature of development of the savings and

capital markets, market structure, institutional arrangements and overall policy regime.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS

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A. Professional Management - The primary advantage of funds is the professional

management 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 small investor to get a full-time manager to make and monitor

investments.

B. Diversification - By owning shares in a mutual fund instead of owning individual

stocks or bonds, the risk is spread out. The idea behind diversification is to invest in a

large number of assets so that a loss in any particular investment is minimized by

gains in others. In other words, the more stocks and bonds you own, the less any one

of them can hurt you. Large mutual funds typically own hundreds of different stocks

in many different industries. It wouldn't be possible for an investor to build this kind

of a portfolio with a small amount of money.

C. Economies of Scale - Because a mutual fund buys and sells large amounts of

securities at a time, its transaction costs are lower than you as an individual would

pay.

D. Liquidity - Open-ended mutual funds are priced daily and are always willing to buy

back units from investors. This means that investors can sell their holdings in mutual

fund investments anytime without worrying about finding a buyer at the right price.

In the case of other investment avenues such as stocks and bonds, buyers are not

necessarily available and therefore these investment avenues are less liquid compared

to open-ended schemes of mutual funds.

E. Regulations - All Mutual Funds are registered with SEBI and they function under

strict guidelines designed to protect the interests of the Investor.

F. Tax benefits Equity Funds :

Currently, dividends are tax-free in the hands of the investor. There is no

distribution tax payable by the Mutual Fund on dividends distributed. There is

no tax deduction at source on dividends as well. Investments for over 12

months qualify for long term capital gains. Moreover for resident investors

there is no TDS on redemption of the units. The recently introduced Securities

Transaction Tax is applicable to equity fund investments.

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Debt Funds :

Currently, dividends are tax-free in the hands of the investor. However, there

is distribution tax together with surcharge and education cess, as may be

applicable, payable by the Mutual Fund on dividends distributed. There is no

tax deduction at source on dividends as well. Investments for over 12 months

qualify for long term capital gains. For resident investors there is no TDS on

redemption of the units.

LIMITATIONS OF MUTUAL FUNDS

As Mutual Fund provides numerous advantages for investment it has also few

limitations that are listed below:

A) Costs Despite Negative Returns- Investors must pay sales charges, annual fees,

and other expenses regardless of how the fund performs. And, depending on the

timing of their investment, investors may also have to pay taxes on any capital

gains distribution they receive – even if the funds went on to perform poorly after

they bought shares.

B) Lack of Control- Investors typically can’t ascertain the exact make up of a fund’s

portfolio at any given time, nor can they directly influence which securities the

fund manager buys and sells or the timing of those trades.

C) Price Uncertainty- With an individual stock, you can obtain real time pricing

information with relative ease by checking financial websites or by calling your

broker. You can also monitor how a stocks price changes from hour to hour or

even seconds to seconds. By contrast, with a Mutual Fund, the price at which you

purchase or redeem shares will typically depend on the funds NAV. In general;

Mutual Funds must calculate their NAV at least once every business day,

typically after the major U.S. exchange close.

GLOBAL SCENARIO

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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.

Changes Taken Place

Lower Costs: As per SEBI regulations, bond funds can charge a maximum of

2.25% and equity funds can charge 2.5% as administrative fees. Therefore if the

administrative costs are low, the benefits are passed down and hence Mutual

Funds are able to attract mire investors and increase their asset base.

Better Advice: Mutual funds could provide better advice to their investors

through the Net rather than through the traditional investment routes. Direct

dealing with the fund could help the investor with their financial planning.

New investors would prefer online: Mutual funds can target investors who are

young individuals and who are Net savvy, since servicing them would be easier

on the Net.

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FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next

few years as investor’s shift their assets from banks and other traditional avenues. Some

of the older public and private sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with stronger

players in three to four years. In the private sector this trend has already started with two

mergers and one takeover. Here too some of them will down their shutters in the near

future to come.

But this does not mean there is no room for other players. The market will witness a

flurry of new players entering the arena. There will be a large number of offers from

various asset management companies in the time to come. Some big names like Fidelity,

Principal, Old Mutual etc. are looking at Indian market seriously. One important reason

for it is that most major players already have presence here and hence these big names

would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in India as this would

enable it to hedge its risk and this in turn would be reflected in its Net Asset Value

(NAV).

SEBI is working out the norms for enabling the existing mutual fund schemes to trade in

derivatives. Importantly, many market players have called on the Regulator to initiate the

process immediately, so that the mutual funds can implement the changes that are

required to trade in Derivatives.

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TYPES OF SCHEMES

A. Investment Objective:

Schemes can be classified by way of their stated investment objective such as Growth

Fund, Balanced Fund, and Income Fund etc.

1. Equity Oriented Schemes

The investments of these schemes will predominantly be in the stock

markets and endeavor will be to provide investors the opportunity to benefit from the

higher returns which stock markets can provide. However they are also exposed to the

volatility and attendant risks of stock markets and hence should be chosen only by

such investors who have high risk taking capacities and are willing to think long term.

Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds.

Diversified Equity Funds invest in various stocks across different sectors while

sectoral funds which are specialized Equity Funds restrict their investments only to

shares of a particular sector and hence, are riskier than Diversified Equity Funds.

Index Funds invest passively only in the stocks of a particular index and the

performance of such funds move with the movements of the index.

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Magnum COMMA Fund

Magnum Equity Fund

Magnum Global Fund

Magnum Index Fund

Magnum MidCap Fund

Magnum Multicap Fund

Magnum Multiplier Plus 1993

Magnum Sector Funds Umbrella

o MSFU - FMCG Fund

o MSFU - Emerging Businesses Fund

o MSFU - IT Fund

o MSFU - Pharma Fund

o MSFU - Contra Fund

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 I

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2. Debt Based Schemes

Debt Funds invest only in debt instruments such as Corporate Bonds, Government

Securities and Money Market instruments either completely avoiding any investments

in the stock markets as in Income funds or gilt Funds or having a small exposure to

equities as in Monthly Income Plans or Children's Plan. Hence they are safer than

equity funds. At the same time the expected returns from debt funds would be lower.

Such investments are advisable for the risk.

Magnum Children`s Benefit Plan

Magnum Gilt Fund

o Magnum Gilt Fund (Long Term)

o Magnum Gilt Fund (Short Term)

Magnum Income Fund

Magnum Income Plus Fund

o Magnum Income Plus Fund (Saving Plan)

o 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

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SBI Capital Protection Oriented Fund - Series I

SBI Debt Fund Series

o SDFS 15 Months Fund

o SDFS 90 Days Fund




o SDFS 60 Days Fund

o SDFS 180 Days Fund

SBI Premier Liquid Fund

SBI Short Horizon Fund

o SBI Short Horizon Fund - Liquid Plus Fund

o SBI Short Horizon Fund - Short Term Fund

3. Hybrid Schemes (Balanced scheme)

Magnum Balanced Fund invest in a mix of equity and debt investments.

Hence they are less risky than equity funds, but at the same time provide

commensurately lower returns. They provide a good investment opportunity to

investors who do not wish to be completely exposed to equity markets, but is

looking for higher returns than those provided by debt funds.

Magnum Balanced Fund

Magnum NRI Investment Fund - FlexiAsset Pl

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B. STRUCTURE

Schemes can be classified as Closed-ended or Open-ended depending upon

whether they give the investor the option to redeem at any time (open-ended) or whether

the investor has to wait till maturity of the scheme.

1. Open ended Schemes - The units offered by these schemes are available for sale

and repurchase on any business day at NAV based prices. Hence, the unit capital

of the schemes keeps changing each day. Such schemes thus offer very high

liquidity to investors and are becoming increasingly popular in India. Please note

that an open-ended fund is NOT obliged to keep selling/issuing new units at all

times, and may stop issuing further subscription to new investors. On the other

hand, an open-ended fund rarely denies to its investor the facility to redeem

existing units.

2. Closed ended Schemes - The unit capital of a close-ended product is fixed as it

makes a one-time sale of fixed number of units. These schemes are launched with

an initial public offer (IPO) with a stated maturity period after which the units are

fully redeemed at NAV linked prices. In the interim, investors can buy or sell

units on the stock exchanges where they are listed. Unlike open-ended schemes,

the unit capital in closed-ended schemes usually remains unchanged. After an

initial closed period, the scheme may offer direct repurchase facility to the

investors. Closed-ended schemes are usually more illiquid as compared to open-

ended schemes and hence trade at a discount to the NAV. This discount tends

towards the NAV closer to the maturity date of the scheme.

3. Interval Schemes - These schemes combine the features of open-ended and

closed-ended schemes. They may be traded on the stock exchange or may be open

for sale or redemption during pre-determined intervals at NAV based prices.

Rules prescribed to govern Mutual Funds:

1. All Mutual Funds expect the statutory ones, will have to seek the approval of the

SEBI and the scheme floated by them shall have to be registered with the SEBI.

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2. Mutual Funds shall be established in the form of trust under Indian Trust Act to

be operated by separate asset management companies (AMCs) will be authorized

by SEBI and should have minimum net worth of 5 crores.

3. SEBI will have the power to withdraw authorization to any AMC if it finds the

interest of investors, Mutual Funds or the capital market are not been served.

4. The AMC and the Trustee of a Mutual Fund should be two separate legal entities

and an AMC or its affiliate cannot act as a manager or any other fund.

5. No person should be director of more than one AMC, nor hold the position of the

trustee of director in trust company of funds operated by the same AMC.

6. Mutual Funds must distribute 90% of their profits in any given year.

7. No Mutual Funds under all its schemes shall hold more than 10% of its fund in

the shares or debentures or other instruments of a single company.

8. No Mutual Funds under all its schemes take together shall invest more than 10%

of its fund in the shares or debentures or other instruments of a single company.

9. No Mutual Funds under all its schemes taken together shall invest more than 15%

of its fund in the shares and debentures of any specific industry, expecting those

schemes which have been floated specifically for investment in one or more

specified industries and a declaration has been made in the offer letter.

10. No individual scheme of Mutual Funds shall invest more than 5% of its corpus in

any one company’s share.

11. Mutual Funds can invest only in transferable securities either in the money market

or in the capital market.

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12. Privately placed debentures, securities debt and other unquoted debt instrument

holding shall not exceed 10% in case of growth fund and 40% in case of income

funds.

13. Mutual Funds will be required to take delivery of scrip purchase and give delivery

in case of income funds.

14. Mutual Funds shall be authorized for business by SEBI and registered companies

with sound track records and good reputation could sponsor this.

15. The entire subscription shall have to be refunded to the investor if (a) The

minimum amount of Rs.20 Crores or 60% of the targeted amount which ever is

higher is not raised for closed-end scheme or (b) The minimum amount of Rs.50

Crores or 60% of the targeted amount, whichever is higher is not raised for an

open-ended scheme.

16. Mutual Funds shall provide continuous liquidity and closed-end scheme shall be

listed on exchange. For open ended schemes, Mutual Funds shall sell or purchase

units at predetermined price based on net asset value, which shall be published at

least ones a week .

NAV OF A MUTUAL FUND

Track your investments:

One easy way to keep track of your fund is to keep track of the intelligent investor

rankings of mutual funds, which are complied on a quarterly basis. These rankings allow

you to take note of your funds performance and risk profile and compare it across various

time periods as well as across its peer set,

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

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ownership of one unit in the fund. It is calculated simply by dividing the net asset value

of the fund by the number of units.

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

Liquid assets/cash held, if any

Dividends/interest accrued

Amount due on unpaid assets

Expenses accrued but not paid

Details on the above items

For liquid shares/debentures, valuation is done on the basis of the last or closing market

price on the principal exchange where the security is traded

For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be

estimated. For shares, this could be the book value per share or an estimated market price

if suitable benchmarks are available. For debentures and bonds, value is estimated on the

basis of yields of comparable liquid securities after adjusting for illiquidity. The value of

fixed interest bearing securities moves in a direction opposite to interest rate changes

Valuation of debentures and bonds is a big problem since most of them are unlisted and

thinly traded. This gives considerable leeway to the AMCs on valuation and some of the

AMCs are believed to take advantage of this and adopt flexible valuation policies

depending on the situation.

Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with

every passing day, interest is said to be accrued, at the daily interest rate, which is

calculated by dividing the periodic interest payment with the number of days in each

period. Thus, accrued interest on a particular day is equal to the daily interest rate

multiplied by the number of days since the last interest payment date. Usually, dividends

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are proposed at the time of the Annual General meeting and become due on the record

date.

How is the percentage change in NAV calculated?

Percentage change in NAV is an absolute measure of return, which finds the NAV

appreciation between two points, as a percentage. For example, if the NAV of the fund is

Rs.23.45 at the beginning of a year, and Rs. 27.65 at the end of the year, then the

percentage change in NAV is

= ( 27.65-23.45 ) / 23.45*100

= 17.91%

The general formula is (Absolute change in NAV / NAV at the beginning)* 100

What is the rate of return to an investor in mutual funds?

An investor in mutual fund earns returns from 2 sources:

Income from Dividend paid by the mutual fund.

Capital gains arising out of selling the units at a price higher than the acquisition

price.

What is Growth Option?

Investors who do not require periodic income distributions can choose the growth option,

where incomes earned are retained in the investment portfolio, and allowed to grow,

rather than being distributed to the investors.

What is Dividend Option?

Investors, who choose a dividend option on their investment, will receive dividends from

the mutual fund, as and when such dividends are declared. Dividend are paid in the form

of warrants, or directly credited to the investor bank accounts.

There are further choices in the distribution of dividends, in the normal dividend plan,

periodicity of dividend is left to Fund Manager, who may pay annually or an interim

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dividend. There are other choices where in the investor can choose their dividend payout

frequencies that can monthly, weekly, daily.

What is re-investment option?

Mutual Funds also provide another option to investors in the form of re-investment.

Investors reinvest the dividends that are declared by the mutual fund, back into the fund

itself, at NAV that is prevalent at the time of re-investment. In this option, the number of

units held by the investor will change with every re-investment. The value of the units

will be similar to that under the dividend option.

What are 1) Equity funds 2) Debt funds 3) Sector funds?

Equity Funds: These are those that invest pre-dominantly in equity shares of the

companies.

Debt Funds: These are those that pre-dominantly invest in debt securities such as bonds,

commercial papers, certificates of deposits and treasury bills.

Sector Funds: Sector funds choose to invest in one or more chosen sectors of the equity

markets. These sectors could vary depending on the investors preference than the return

risk attributes of the sector.

What is the maximum load the fund can charge?

A mutual fund is required to dispatch to the unitholders the dividend warrants within 30

days of the declaration of the dividend and the redemption or repurchase proceeds within

10 working days from the date of redemption or repurchase request made by the

unitholder.

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In case of failures to dispatch the redemption/repurchase proceeds within the stipulated

time period, Asset management Company is liable to pay interest as specified from time

to time 915% at present).

ANALYSIS AND FINDINGS

Analysis of Questionnaire

RESPONDENTS AGE

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age

32 32.0 32.0 32.0

26 26.0 26.0 58.0

21 21.0 21.0 79.0

21 21.0 21.0 100.0

100 100.0 100.0

18-30

30-40

40-50

50&above

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Interpretation: Out of 100 respondents 32% are 18 to 30 age, 26% are 30 to 40, 21% are 40 to 50 and remaining 21% are of above 50. So Mutual funds should more concentrate on young generation because they have less risk on family and they will investment more because of career development and retirement benefits.

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OCCUPATION OF THE RESPONDENTS

what is your occupation

19 19.0 19.0 19.0

39 39.0 39.0 58.0

19 19.0 19.0 77.0

23 23.0 23.0 100.0

100 100.0 100.0

serviceman

businessman

professional

other

Total


CumulativePercent

Interpretation:

The responses which I had got 19% were serviceman, 39% were businessman, 19% were professional and the remaining 23% were other people.

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MONTHLY INCOME:

what is your monthly income in rupess

8 8.0 8.0 8.0

18 18.0 18.0 26.0

17 17.0 17.0 43.0

27 27.0 27.0 70.0

15 15.0 15.0 85.0

15 15.0 15.0 100.0

100 100.0 100.0

below 5000

5000-10000

10000-15000

15000-20000

20000-25000

above 25000

Total


CumulativePercent

Interpretation: Out of 100 samples 8% are of below Rs.5,000, 18% are of above 5,000 and below Rs.10,000, 17% are of above Rs.10,000 and below Rs.15,000,27% are of above 15,000 and below Rs 20,000, 15% are of above 20,000 and below 25,000 the remaining 15% are of above Rs.25,000 monthly income.

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AWARENESS

are you aware about of sbi mutual fund

66 66.0 66.0 66.0

34 34.0 34.0 100.0

100 100.0 100.0

yes

no

Total


CumulativePercent

Interpretation: Out of 100 samples 66% are aware of SBI mutual funds i.e. 66 surveyed people know about SBI mutual funds and 34% are unaware of the SBI mutual funds. As there is a lack of awareness in this semi urban city Belgaum, the attempts should be made to create the general awareness through popular modes of communication that would reach the potential customers, like Local T.V Channels, Local Newspapers, Theatres, Hoardings and Banners in the public crowded areas.

MUTUAL FUND:

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do you want to invest your money in the following mutual fund

35 35.0 35.0 35.0

40 40.0 40.0 75.0

25 25.0 25.0 100.0

100 100.0 100.0

debt fund

equity fund

no

Total


CumulativePercent

Interpretation: Out of 100 samples 40% respondents have invested their money in equity mutual funds and the remaining 35%have invested in debt mutual funds and remaining 25% respondents are not interested.

INVESTED IN MUTUAL FUND:

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have you invested money in mutual fund

65 65.0 65.0 65.0

35 35.0 35.0 100.0

100 100.0 100.0

yes

no

Total


CumulativePercent

Interpretation: Out of 100 samples 65% respondents have invested their money in mutual funds and the remaining 35% have not invested in mutual funds. So that the potential market available for targeting is around 35%.

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INVESTMENT COMPANIES:

in which company you have invested your money

36 36.0 36.0 36.0

33 33.0 33.0 69.0

20 20.0 20.0 89.0

11 11.0 11.0 100.0

100 100.0 100.0

uti

sbi

reliance money

others

Total


CumulativePercent

Interpretation: Out of 100 samples 36% respondents have invested their money in UTI mutual funds, 33% respondents have invested their money in SBI mutual fund, 20% respondents have invested their money in reliance money and the remaining 11% respondents have invested their money in other mutual fund.

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PLANS:

which plan you have taken

35 35.0 35.0 35.0

40 40.0 40.0 75.0

25 25.0 25.0 100.0

100 100.0 100.0

debt fund

equity fund

if any other specify others

Total


CumulativePercent

Interpretation: Out of 100 samples 40% respondents have invested their money in equity scheme mutual funds, 35% respondents have invested their money in debt scheme mutual fund and the remaining 25% respondents have invested their money in other scheme

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INVESTED IN MUTUAL FUND:

which amount you are contributing to a mutual fund

31 31.0 31.0 31.0

41 41.0 41.0 72.0

22 22.0 22.0 94.0

6 6.0 6.0 100.0

100 100.0 100.0

up to 10000

10000-25000

25000-50000

50000-100000

Total


CumulativePercent

Interpretation: Out of 100 respondents 31% of them have invested up to Rs.10,000, 41% of them have invested above Rs 10,000 and below Rs 25,000, 22% of them have invested above Rs 25,000 and below Rs 50,000, and remaining 6% of them have invested above Rs.50,000 and below Rs 1,00,000. Mutual fund companies should give advertisement on T.V and other local medium to attract the customers.

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INFLUENCED TO BUY MUTUAL FUND:

what influenced your financial planning

21 21.0 21.0 21.0

45 45.0 45.0 66.0

34 34.0 34.0 100.0

100 100.0 100.0

discussion withfamily member

stock holder/agent

website

Total


CumulativePercent

Interpretation: According to respondents the influencing factor to buy mutual funds was 21% of them were influenced by Family member,45% were influenced by stock holder/agent,34% of them influenced by website. People who have invested in mutual funds they have influenced from family member, stock holder/agent, website.

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INFLUENCED TO WHILE TAKING DECISION TO INVEST IN MUTUAL FUND:

which factor you considered while taking decision to invest in mutual fund

36 36.0 36.0 36.0

20 20.0 20.0 56.0

16 16.0 16.0 72.0

28 28.0 28.0 100.0

100 100.0 100.0

returns

saving

liquidity

if any other specify

Total


CumulativePercent

Interpretation:The various attributes the investors look for while buying the mutual funds are 36% of them gives preference of Rate of Return, 20% of them gives preference of saving, 16% of them gives preference of liquidity, 28% of them gives preference of other (tax benefit) People will consider rate of return as a very high attribute while investing in mutual funds compared to other attributes like saving, liquidity, and other.

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FUTURE INVESTED IN SBI MUTUAL FUND:

in future are you interested investing money in SBI mutual fund

64 64.0 64.0 64.0

36 36.0 36.0 100.0

100 100.0 100.0

yes

no

Total


CumulativePercent

Interpretation: Out of 100 samples 64% respondents will invested their money in SBI mutual fund, and remaining 36% respondents will not invested their money in SBI mutual fund.

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if no why

28 28.0 28.0 28.0

18 18.0 18.0 46.0

10 10.0 10.0 56.0

23 23.0 23.0 79.0

21 21.0 21.0 100.0

100 100.0 100.0

risk

not much knowledgeabout the mutual fund

bad experience

returns is not fixed

all of the above

Total


CumulativePercent

Interpretation: The reason for not opting for mutual funds for those 28% respondents they feel mutual fund involves high risk, 18% respondents not much knowledge about mutual fund, 10% respondents had bad experience with mutual funds because they have lost their money in past, 23% respondents they feel mutual fund return is not fixed, 21% respondents all of the above reason.

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FINDINGS

Thus on the basis of the study conducted we can see that Mutual Fund is one of the best

options for investment as it has many advantages of diversification, professional

management, economies of scale, liquidity etc. From the survey conducted it was found

that –

Mutual fund should mainly concentrate on young generation.

Around 66% aware about SBI mutual fund.

Investors invest in Mutual Funds as a high return and (saving) security in their old

age or as retirement security. While others invest to gain access to stock market

through professional management and for higher education.

Around 30% of the investors know about the tax benefits of investing in Mutual

Funds.

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SUGGESTIONS

Awareness of mutual funds:

Investors are not very much aware of the investment opportunities, therefore they

have to be educated about this form of investment. In order to educate the

Government as well as the Non-government employees, seminars and workshops

could be conducted in these organizations and try to clear their doubts and

misconceptions about Mutual funds.

Proper benchmark is required to measure the performance of the mutual funds.

Mutual fund is a classical example of unsought goods. The nature of that the

consumer does not know about or does not normally think of buying. The

attempts should be made to create awareness through popular modes of

communication that would reach the potential customers, like Local T.V

Channels, Local Newspapers, Theatres, Hoardings and Banners in the public

crowded areas etc.

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CONCLUSION

From the above study it is seen that there is an attractive market for mutual funds in

Belgaum provided awareness should be created of the different schemes and people

should be educated with all the information of mutual funds.

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References

Company website

Magazines

www.moneycontrol.com

www.mutualfundsindia.com

www.amfi.com

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http://www.amfi.com/

http://www.mutualfundsindia.com/

http://www.moneycontrol.com/


Annexure

QUESTIONARRIE

1. Age a] 18-30 ` b] 30-40 c] 40-50

d] 50 & above

2. What is your occupation? Serviceman Businessman Professional Other

3. What is your monthly income in Rupess? Below 5,000 5,000-10,000 10,000-15,000 15,000-20,000 20,000-25,000 above 25,000

4. Are you aware about SBI Mutual fund? Yes No

5. Do you want to invest your money in the following Mutual fund? Debt fund Equity fund No

6. Have you invested money in Mutual fund? Yes No (If no go to 12th question)

7. In which company have you have invested your money? UTI SBI Reliance money Other

8. Which plan you have taken? Debt fund Equity fund If any other specify other ……………

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9. Which amount you are contributing to a Mutual fund?

Up to 10,000 10,000-25,000 25,000-50,000 50,000-1, 00,000

10. What influenced your financial Planning? Discussion with family Member Stock holder/ Agent Web site

11. Which factor you considered while taking decision to invest Mutual Fund? Returns Saving Liquidity If any other specify…………….

12In futures are you invested money in SBI Mutual fund? Yes No

13. If no why?1. Risk2. Not much knowledge about the Mutual fund 3. Bad experience4. Returns is not fixed5. All of the above

Signature of the person

Thank You for Your Kind Cooperation

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Customer awareness @ sbi mutual fund project report mba marketing

Economy & Finance

Transcript of Customer awareness @ sbi mutual fund project report mba marketing