Upload
homeworkping6
View
83
Download
3
Embed Size (px)
Citation preview
Get Homework/Assignment Done Homeworkping.comHomework Help https://www.homeworkping.com/
Research Paper helphttps://www.homeworkping.com/
Online Tutoringhttps://www.homeworkping.com/
click here for freelancing tutoring sites
A
PROJECT REPORT
ON
“A STUDY OF SBI MUTUAL FUNDS”
A detailed study done in
SBI
Submitted in partial fulfillment of the requirement for the award of degree of Bachelor in Business Administration (BBA) under Bharati Vidyapeeth University-
Pune1
Submitted bySNEHALCHAVAN
ROLL NO: 10BATCH: 2007-2010
Under the guidance ofDR. GOVIND P. SHINDE
Bharati Vidyapeeth’s Institute of Management & Entrepreneurship Development, Sector 8, CBD-Belapur, Navi Mumbai –400614
ACKNOWLEDGEMENT
The opportunity to get practical training in a reputed organization fulfills the felt gap
between the theory and practical. In the case of a student of finance & control, this
aspect assumes an additional dimension.
I hereby acknowledge SBI mutual funds providing the constant guidance for
encouragement which helped me a lot to be successful in my efforts. This formal
acknowledgement will hardly be sufficient to express my deep sense of gratitude to
all of them. It was a memorable experience while doing my winter training project on
a study of SBI Mutual Funds.
2
I would also like to thanks Dr. D.Y.PATIL director of BVIMED,NAVI MUMBAI
and PROF.G.SHINDE my faculty guide without whom this project report could not
be successfully completed.
Above all, I would like to thank almighty God, who helped me in successfully
completing my winter training project.
SNEHAL CHAVAN
DECLARATION
This is to certify that Winter Training Report entitled “A Study of SBI Mutual Fund”.
Which is submitted by me in partial fulfillment of the requirement for the award of
degree Bachelor of Business Administration (BBA), at BHARTI VIDYAPEETH
INSTITUTION OF ENTERPRENURSHIP DEVELOPMENT, NAVI MUMBAI
comprises only my original work and due acknowledgement has been made in the
text to all other material used.
Snehal chavan
3
EXECUTIVE SUMMARY
In few years Mutual Fund has emerged as a tool for ensuring one’s financial well
being. Mutual Funds have not only contributed to the India growth story but have also
helped families tap into the success of Indian Industry. As information and awareness
is rising more and more people are enjoying the benefits of investing in mutual funds.
The main reason the number of retail mutual fund investors remains small is that nine
in ten people with incomes in India do not know that mutual funds exist. But once
people are aware of mutual fund investment opportunities, the number who decide to
invest in mutual funds increases to as many as one in five people. The trick for
converting a person with no knowledge of mutual funds to a new Mutual Fund
customer is to understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that customers will
accept as important and relevant to their decision.
4
This Project gave me a great learning experience and at the same time it gave me
enough scope to implement my analytical ability. The analysis and advice presented in
this Project Report is based on market research on the saving and investment practices
of the investors and preferences of the investors for investment in Mutual Funds. This
Report will help to know about the investors’ Preferences in Mutual Fund means Are
they prefer any particular Asset Management Company (AMC), Which type of
Product they prefer, Which Option (Growth or Dividend) they prefer or Which
Investment Strategy they follow (Systematic Investment Plan or One time Plan). This
Project as a whole can be divided into two parts.
The first part gives an insight about Mutual Fund and its various aspects, the
Company Profile, Objectives of the study, Research Methodology. One can have a
brief knowledge about Mutual Fund and its basics through the Project.
The second part of the Project consists of data and its analysis collected through
survey done on 200 people. For the collection of Primary data I made a questionnaire
and surveyed of 200 people. I also taken interview of many People those who were
coming at the SBI Branch where I done my Project. I visited other AMCs in Mumbai
to get some knowledge related to my topic. I studied about the products and
strategies of other AMCs in mumbai to know why people prefer to invest in those
AMCs. This Project covers the topic “A STUDY OF PREFERENCES OF THE
INVESTERS FOR THE INVESTMENT IN MUTUAL FUND.” The data collected
has been well organized and presented. I hope the research findings and conclusion
will be of use.
5
CONTENTS
Acknowledgement
Declaration
Executive Summary
Chapter - 1 INTRODUCTION
Chapter - 2 COMPANY PROFILE
Chapter - 3 OBJECTIVES AND SCOPE
Chapter - 4 RESEARCH METHODOLOGY
Chapter - 5 DATA ANALYSIS AND INTERPRETATION6
Chapter - 6 FINDINGS AND CONCLUSIONS
Chapter - 7 SUGGESTIONS & RECOMMENDATIONS
ANNEXURE BIBLIOGRAPHY
QUESTIONNAIRE
CHAPTER- 1
INTRODUCTION
7
INTRODUCTION TO MUTUAL FUND
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme.These could
range from shares to debentures to money market instruments. The income earned in
these investments and the capital appreciation realized by the scheme is shared by its
unit holders in proportion to the number of units owned by them. Thus a Mutual Fund
is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed portfolio at a relatively low cost.
Anybody with an invest able surplus of a few thousand rupees can invest in Mutual
Funds. Each Mutual Fund scheme has a defined investment objective and strategy.
8
A mutual fund is the ideal investment vehicle for today’s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
act speedily.
A mutual fund is answer to all these situations. It appoints professionally qualified
and experienced staff that manages each of these functions on a fulltime basis. The
large pool of money collected in the fund allows it to hire such staff at a very low cost
to each investor. In fact, the mutual fund vehicle exploits economies of scale in all
three areas –research, investment and transaction processing.
A draft offer document is to be prepared at the time of launching the fund. Typically,
it pre specifies the investment objective of the fund, the risk associated, the
cost involved in the process and the broad rules for entry into and exit from the fund
and other areas of operation. In India, as in most countries, these sponsors need
approval from a regulator, SEBI in our case. SEBI looks at track records of the
sponsor and its financial strength in granting approval to the fund for commencing
operations.
A sponsor then hires an asset management company to invest the funds according to
the investment objective. It also hires another entity to be the custodian of the assets
of the fund and perhaps a third one to handle registry work for the unit holders of the
fund.In the Indian context, the sponsors promote the Asset Management Company
also,in which it holds a majority stake. In many cases a sponsor can hold a 100%
stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the
sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated
9
different mutual funds schemes and also acts as an asset manager for the funds
collected under the schemes.
As per SEBI regulations, mutual funds can offer guaranteed returns for a maximum
period of one year. In case returns are guaranteed, the name of the guarantor and how
the guarantee would be honored is required to be disclosed in the offer document.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual
fund issues units to the investors in accordance with quantum of money invested by
them. Investors of mutual funds are known as unit holders.
1.1 THE CONCEPT OF MUTUAL FUND IN DETAIL
10
A mutual fund uses the money collected from investors to buy those assets
which are specifically permitted by its stated investment objective. Thus, an equity
fund would buy equity assets – ordinary shares, preference shares, warrants etc. A
bond fund would buy debt instruments such as debentures, bonds or government
securities. It is these assets which are owned by the investors in the same proportion as
their contribution bears to the total contributions of all investors put together.
Any change in the value of the investments made into capital market
instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV)
of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets
net of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.
A Mutual Fund is an investment tool that allows small investors access to a
well-diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The funds Net Asset value (NAV) is determined each day.
11
When an investor subscribes to a mutual fund, he or she buys a part of the
assets or the pool of funds that are outstanding at that time. It is no different from
buying “shares” of joint stock Company, in which case the purchase makes the
investor a part owner of the company and its assets. However, whether the investor
gets fund shares or units is only a matter of legal distinction.
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciation realized is shared by its unit
12
holders in proportion to the number of units owned by them. Thus Mutual fund is most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.
1.1 MUTUAL FUND OPERATION FLOW CHART
CHART 1.2
From the above chart , it can be observed that how the money from the
investors flow and they get returns out of it. With a small amount of fund, investors
pool their money with the funds managers. Taking into consideration the market
strategy the funds managers invest this pool of money into reliable securities. With ups
and downs in market returns are generated and they are passed on to the investors. The
above cycle should be very clear and also effective.
The fund manager while investing on behalf of investors takes into
consideration various factors like time, risk, return, etc. so that he can make proper
investment decision.
13
1.4 Advantages and disadvantages of mutual funds :
ADVANTAGES OF MUTUAL FUND
Professional management
Portfolio Divercification
Reduction / Diversification of Risk
Liquidity
Flexibility & Convenience
Reduction in Transaction cost
Safety of regulated environment
Choice of schemes
Transparency
DISADVANTAGE OF MUTUAL FUND
No control over Cost in the Hands of an Investor
No tailor-made Portfolios
Managing a Portfolio Funds
Difficulty in selecting a Suitable Fund Scheme
14
1.5 HISTORY OF THE INDIAN MUTUAL FUND
INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the growth
was slow, but it accelerated from the year 1987 when 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 Rs67 billion. The private
sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till
April 2004; it reached the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the mutual
fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve
Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
15
place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6,700 crores of assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up
its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets
under management of Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805 crores.
Fourth Phase – since February 200316
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. consolidation and
growth. As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.
17
1.6 CATEGORIES OF MUTUAL FUND:
Mutual funds can be classified as follow:
Based on their structure:
Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.
18
Close-ended funds: These funds raise money from investors only once. Therefore,
after the offer period, fresh investments can not be made into the fund. If the fund is
listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley
Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided
liquidity window on a periodic basis such as monthly or weekly. Redemption of units
can be made during specified intervals. Therefore, such funds have relatively low
liquidity.
Based on their investment objective:
A) Equity funds: These funds invest in equities and equity related instruments.
With fluctuating share prices, such funds show volatile performance, even losses.
However, short term fluctuations in the market, generally smoothens out in the long
term, thereby offering higher returns at relatively lower volatility. At the same time,
such funds can yield great capital appreciation as, historically, equities have
outperformed all asset classes in the long term. Hence, investment in equity funds
should be considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or
Nifty is tracked. Their portfolio mirrors the benchmark index both in terms
of composition and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities
spreading across different sectors and stocks.
19
iii|) Dividend yield funds- it is similar to the equity diversified funds except
that they invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related
through some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A
banking sector fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
B) Balanced fund: Their investment portfolio includes both debt and equity. As a
result, on the risk-return ladder, they fall between equity and debt funds. Balanced
funds are the ideal mutual funds vehicle for investors who prefer spreading their risk
across various instruments. Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
C) Debt fund: They invest only in debt instruments, and are a good option for
investors averse to idea of taking risk associated with equities. Therefore, they invest
exclusively in fixed-income instruments like bonds, debentures, Government of India
securities; and money market instruments such as certificates of deposit (CD),
commercial paper (CP) and call money. Put your money into any of these debt funds
depending on your investment horizon and needs.
20
i) Liquid funds- These funds invest 100% in money market instruments, a
large portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government
securities of and T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in
debt instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due
to mis-pricing between cash market and derivatives market. Funds are
allocated to equities, derivatives and money markets. Higher proportion
(around 75%) is put in money markets, in the absence of arbitrage
opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term
government securities.
vi) Income funds LT- Typically, such funds invest a major portion of the
portfolio in long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and
an exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line
with that of the fund.
21
1.7 INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund
then he can withdraw a fixed amount each month.
1.8 WHY INVESTOR NEEDS MUTUAL FUND :-
Mutual funds offer benefits, which are too significant to miss out. Any investment
has to be judged on the yardstick of return, liquidity and safety. Convenience and tax
efficiency are the other benchmarks relevant in mutual fund investment. In the wonderful
game of financial safety and returns are the tows opposite goals and investors cannot be
nearer to both at the same time. The crux of mutual fund investing is averaging the risk.
Many investors possibly don’t know that considering returns alone, many mutual
funds have outperformed a host of other investment products. Mutual funds have
historically delivered yields averaging between 9% to 25% over a medium to long time
frame. The duration is important because like wise, mutual funds return taste bitter
with the passage of time. Investors should be prepared to lock in their investments 22
preferably for 3 years in an income fund and 5 years in an equity funds. Liquid funds
of course, generate returns even in a short term.
MUTUAL FUND RISK:-
Mutual funds face risks based on the investments they hold. For example, a bond
fund faces interest rate risk and income risk. Bond values are inversely related to
interest rates. If interest rates go up, bond values will go down and vice versa. Bond
income is also affected by the changes in interest rates. Bond yields are directly related
to interest rates falling as interest rates fall and rising as interest rates.
Similarly, a sector stock fund is at risk that its price will decline due to
developments in its industry. A stock fund that invests across many industries is more
sheltered from this risk defined as industry risk.
Followings are glossary of some risks to consider when investing in mutual
funds:-
COUNTRY RISK :-
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a country’s
economy and cause investments in that country to decline.
INCOME RISK :-
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a country’s
economy and cause investments in that country to decline.
MARKET RISK :-
The possibility that stock fund or bond fund prices overall will decline over short or
even extended periods. Stock and bond markets tend to move in cycles, with periods
when prices rise and other periods when prices fall.
23
GRAPH 1.3:- RISK RETURN REWRAD IN MUTUAL FUND
Liquid Fund
Short Term Fund
Income Fund
MIP
Balance Fund
Equity Fund
This graph shows risk and return impact on various mutual funds. There is a direct
relationship between risks and return, i.e. schemes with higher risk also have potential to
provide higher returns.
24
INTRODUCTION
TO
COMPANY PROFILE
25
1.1 INTRODUCTION TO SBI MUTUAL FUND
SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the
country with an investor base of over 4.6 million and over 20 years of rich
experience in fund management consistently delivering value to its investors.
SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of
India' one of India's largest banking enterprises, and Société Générale Asset
Management (France), one of the world's leading fund management companies
that manages over US$ 500 Billion worldwide.
Today the fund house manages over Rs 28500 crores of assets and has a diverse
profile of investors actively parking their investments across 36 active schemes.
In 20 years of operation, the fund has launched 38 schemes and successfully
redeemed 15 of them, and in the process, has rewarded our investors with
consistent returns. Schemes of the Mutual Fund have time after time
outperformed benchmark indices, honored us with 15 awards of performance and
have emerged as the preferred investment for millions of investors. The trust
reposed on us by over 4.6 million investors is a genuine tribute to our expertise
in fund management.
SBI Funds Management Pvt. Ltd. serves its vast family of investors through a
network of over 130 points of acceptance, 28 Investor Service Centres, 46
Investor Service Desks and 56 District Organizers.SBI Mutual is the first bank-
sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund.
26
Growth through innovation and stable investment policies is the SBI MF credo.
1.2 PRODUCTS OF SBI MUTUAL FUND:
Equity schemes
The investments of these schemes will predominantly be in the stock markets
and endeavor will be to provide investors the opportunity to benefit from the
higher returns which stock markets can provide. 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.
Magnum COMMA Fund
Magnum Equity Fund
Magnum Global Fund
Magnum Index Fund
Magnum Midcap Fund
Magnum Multicap Fund
27
Magnum Multiplier plus 1993
Magnum Sectoral Funds Umbrella
MSFU- Emerging Business Fund
MSFU- IT Fund
MSFU- Pharma Fund
MSFU- Contra Fund
MSFU- FMCG 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
Debt 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-averse investor and as a part of the investment portfolio for other investors.
Magnum Children’s benefit Plan
Magnum Gilt Fund
28
Magnum Income Fund
Magnum Insta Cash Fund
Magnum Income Fund- Floating Rate Plan
Magnum Income Plus Fund
Magnum Insta Cash Fund -Liquid Floater Plan
Magnum Monthly Income Plan
Magnum Monthly Income Plan - Floater
Magnum NRI Investment Fund
SBI Premier Liquid Fund
BALANCED SCHEMES
Magnum Balanced Fund invests in a mix of equity and debt investments.
Hence they are less risky than equity funds, but at the same time provide
commensurately lower returns. They provide a good investment opportunity to
investors who do not wish to be completely exposed to equity markets, but is
looking for higher returns than those provided by debt funds.
Magnum Balanced Fund
29
1.3 COMPETITORS OF SBI MUTUAL FUND
Some of the main competitors of SBI Mutual Fund in Patna are as Follows:
i. ICICI Mutual Fund
ii. Reliance Mutual Fund
iii. UTI Mutual Fund
iv. Birla Sun Life Mutual Fund
v. Kotak Mutual Fund
vi. HDFC Mutual Fund
vii. Sundaram Mutual Fund
viii. LIC Mutual Fund
ix. Principal
x. Franklin Templeton
30
1.4 AWARDS AND ACHIEVEMENTS
SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award -
8 times, CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year
2005-2006) and most recently with the CNBC TV - 18 Crisil Mutual Fund of the Year
Award 2007 and 5 Awards for our schemes.
31
32
Chapter - 3
Objectives and scope
33
1.1 OBJECTIVES OF THE STUDY
a. To find out the Preference of the investors for Asset Management of company.
b. To know the preference of the portfolios.
c. To know why one has invested in SBI Mutual Funds.
d. To find out the most preference channel.
e. To find out what should do to boost Mutual F und Industry.
1.2 Scope of the study
A big boom has been witnessed in Mutual Fund Industry in resent times. A large number
of new players have entered the market and trying to gain market share in this rapidly
improving market.
The study will help to know the preferences of the customers, which company, portfolio,
mode of investment, option for getting return and so on they prefer. This project report
may help the company to make further planning and strategy.
34
Chapter – 4
Research Methodology
35
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY:-
Research methodology is a way to systematically show the research problem. It
may be understood as a science of studying how research is done scientifically. It is
necessary for the researcher to know not only the research methods but also the
methodology. This Section includes the methodology which includes. The research
design, objectives of study, scope of study along with research methodology and
limitations of study etc.
Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has
been collected by interacting with various people. The secondary data has been
collected through various journals and websites.
Duration of Study:
The study was carried out for a period of two months, from 8 Dec to 8th Jan 2009.
Sampling:
Sampling procedure:
36
The sample was selected of them who are the customers/visitors of State Bank if India,
Boring Canal Road Branch, irrespective of them being investors or not or availing the
services or not. It was also collected through personal visits to persons, by formal and
informal talks and through filling up the questionnaire prepared. The data has been
analyzed by using mathematical/Statistical tool.
Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120
people had invested in Mutual Fund. Other 80 people did not have invested in Mutual
Fund.
Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
37
Limitation:
This study also includes some limitations which have been discussed as follows:
Though every one used to be very co-operative but every detail was unable to be
disclosed to me as the officials has to maintain secrets of the company.
It is difficult to cover all the function of the company.
Because of the limited time period, the survey work was conducted in the Mumbai
region and the sample size was taken as 200 respondents only.
Some of the persons were not so responsive.
Some respondents were reluctant to divulge personal information which can affect
the validity of all responses.
Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
38
Chapter – 5Data Analysis
& Interpretation
39
ANALYSIS & INTERPRETATION OF THE DATA
1. (a) Age distribution of the Investors of Mumbai
Age Group <= 30 31-35 36-40 41-45 46-50 >50
No. of
Investors
12 18 30 24 20 16
Interpretation:
According to this chart out of 120 Mutual Fund investors of Mumbai the most are in
the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group
of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.
40
(b). Educational Qualification of investors of MUMBAI
Educational Qualification Number of Investors
Graduate/ Post Graduate 88
Under Graduate 25
Others 7
Total 120
Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in Mumbai are
Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).
41
c). Occupation of the investors of Mumbai
.
Interpretation:
Occupation No. of InvestorsGovt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6
42
In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are
in others.
(d). Monthly Family Income of the Investors of Mumbai
Income Group No. of Investors<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32
Interpretation:
43
In the Income Group of the investors of Mumbai out of 120 investors, 36%
investors that is the maximum investors are in the monthly income group
Rs. 20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly
income group of more than Rs. 30,000 and the minimum investors i.e. 4%
are in the monthly income group of below Rs. 10,000
(2) Investors invested in different kind of investments.
Kind of Investments No. of RespondentsSaving A/C 195Fixed deposits 148Insurance 152Mutual Fund 120Post office (NSC) 75Shares/Debentures 50Gold/Silver 30
Real Estate 65
44
Interpretation: From the above graph it can be inferred that out of 200 people,
97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed
Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures,
15% in Gold/Silver and 32.5% in Real Estate.
3. Preference of factors while investing
Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust
No. of
Respondents
40 60 64 36
45
Interpretation: Out of 200 People, 32% People prefer to invest where there is
High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy
Liquidity and 18% prefer Trust
4. Awareness about Mutual Fund and its Operations
Response Yes No
No. of Respondents 135 65
46
Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Fund and its
operations and 33% are not aware of Mutual Fund and its operations.
5. Source of information for customers about Mutual Fund
Source of information No. of Respondents
Advertisement 18
Peer Group 2547
Bank 30
Financial Advisors 62
Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 135 Respondents, 46%
know about Mutual fund Through Financial Advisor, 22% through Bank, 19%
through Peer Group and 13% through Advertisement.
6. Investors invested in Mutual Fund
Response No. of Respondents
YES 120
NO 80
Total 200
48
Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested
in Mutual Fund.
7. Reason for not invested in Mutual Fund
Reason No. of Respondents
Not Aware 65
Higher Risk 5
Not any Specific Reason 1049
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.
8. Investors invested in different Assets Management Co. (AMC)
Name of AMC No. of InvestorsSBIMF 55
UTI 75HDFC 30
Reliance 75ICICI Prudential 56
Kotak 4550
Others 70
Interpretation:
In Patna most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120
Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,
47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.
9. Reason for invested in SBIMF
Reason No. of Respondents
Associated with SBI 35
Better Return 5
51
Agents Advice 15
Interpretation:
Out of 55 investors of SBIMF 64% have invested because of its association with
Brand SBI, 27% invested on Agent’s Advice, 9% invested because of better return.
10. Reason for not invested in SBIMF
Reason No. of Respondents
Not Aware 25
52
Less Return 18
Agent’s Advice 22
Interpretation:
Out of 65 people who have not invested in SBIMF, 38% were not aware with
SBIMF, 28% do not have invested due to less return and 34% due to Agent’s
Advice.
11. Preference of Investors for future investment in Mutual Fund
Name of AMC No. of InvestorsSBIMF 76
53
UTI 45HDFC 35
Reliance 82ICICI Prudential 80
Kotak 60Others 75
Interpretation:
Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential,
63% in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC
Mutual Fund.
12. Channel Preferred by the Investors for Mutual Fund Investment
Channel Financial Advisor Bank AMC
54
No. of Respondents 72 18 30
Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25%
through AMC and 15% through Bank.
13. Mode of Investment Preferred by the Investors
Mode of Investment One time Investment Systematic Investment Plan (SIP)
55
No. of Respondents 78 42
Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred
through Systematic Investment Plan.
14. Preferred Portfolios by the Investors
Portfolio No. of Investors
56
Equity 56
Debt 20
Balanced 44
Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and
17% preferred Debt portfolio
15. Option for getting Return Preferred by the Investors
Option Dividend Payout Dividend Growth
57
Reinvestment
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.
16. Preference of Investors whether to invest in Sectoral Funds
Response No. of Respondents
58
Yes 25
No 95
Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because
there is maximum risk and 21% prefer to invest in Sectoral Fund.
59
Chapter – 6
Findings and Conclusion
Findings
60
In Mumbai in the Age Group of 36-40 years were more in numbers. The second
most Investors were in the age group of 41-45 years and the least were in the age
group of below 30 years.
In Mumbai most of the Investors were Graduate or Post Graduate and below HSC
there were very few in numbers.
In Occupation group most of the Investors were Govt. employees, the second most
Investors were Private employees and the least were associated with Agriculture.
In family Income group, between Rs. 20,001- 30,000 were more in numbers, the
second most were in the Income group of more than Rs.30,000 and the least were in
the group of below Rs. 10,000.
About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed
Deposits, Only 60% Respondents invested in Mutual fund.
Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.
Only 67% Respondents were aware about Mutual fund and its operations and 33%
were not.
Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not
have invested in Mutual fund.
Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not
any specific reason for not invested in Mutual Fund and 6% told there is likely to be
higher risk in Mutual Fund.
Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI
Prudential has also good Brand Position among investors, SBIMF places after ICICI
Prudential according to the Respondents.61
Out of 55 investors of SBIMF 64% have invested due to its association with the
Brand SBI, 27% Invested because of Advisor’s Advice and 9% due to better return.
Most of the investors who did not invested in SBIMF due to not Aware of SBIMF,
the second most due to Agent’s advice and rest due to Less Return.
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
Mode of 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 portfolio.
Maximum 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 Sectoral Fund, only 21% wanted to
invest in Sectoral Fund.
Conclusion
62
Running a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small investors.
This study has made an attempt to understand the financial behavior of Mutual Fund
investors in connection with the preferences of Brand (AMC), Products, Channels etc.
I observed that many of people have fear of Mutual Fund. They think their money will
not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its
related terms. Many of people do not have invested in mutual fund due to lack of
awareness although they have money to invest. As the awareness and income is
growing the number of mutual fund investors are also growing.
“Brand” plays important role for the investment. People invest in those Companies
where they have faith or they are well known with them. There are many AMCs in
Mumbai but only some are performing well due to Brand awareness. Some AMCs are
not performing well although some of the schemes of them are giving good return
because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI etc. they are
well known Brand, and their Assets Under Management is larger than others whose
Brand name are not well known like Principle, Sunderam, etc.
Distribution channels are also important for the investment in mutual fund. Financial
Advisors are the most preferred channel for the investment in mutual fund. They can
change investors’ mind from one investment option to others. Many of investors
directly invest their money through AMC because they do not have to pay entry load.
Only those people invest directly who know well about mutual fund and its operations
and those have time.
63
64
Chapter – 7
Suggestions
And
Recommendations
Suggestions and Recommendations
65
The most vital problem spotted is of ignorance. Investors should be
made aware of the benefits. Nobody will invest until and unless he is fully
convinced. Investors should be made to realize that ignorance is no longer
bliss and what they are losing by not investing.
Mutual funds offer a lot of benefit which no other single option could
offer. But most of the people are not even aware of what actually a mutual
fund is? They only see it as just another investment option. So the
advisors should try to change their mindsets. The advisors should target
for more and more young investors. Young investors as well as persons at
the height of their career would like to go for advisors due to lack of
expertise and time.
Mutual Fund Company needs to give the training of the Individual
Financial Advisors about the Fund/Scheme and its objective, because they
are the main source to influence the investors.
Before making any investment Financial Advisors should first enquire
about the risk tolerance of the investors/customers, their need and time
(how long they want to invest). By considering these three things they can
take the customers into consideration.
66
Younger people aged under 35 will be a key new customer group into
the future, so making greater efforts with younger customers who show
some interest in investing should pay off.
Customers with graduate level education are easier to sell to and there
is a large untapped market there. To succeed however, advisors must
provide sound advice and high quality.
Systematic Investment Plan (SIP) is one the innovative products
launched by Assets Management companies very recently in the industry.
SIP is easy for monthly salaried person as it provides the facility of do the
investment in EMI. Though most of the prospects and potential investors
are not aware about the SIP. There is a large scope for the companies to
tap the salaried persons.
67
QUESTIONNAIRE
Dear Sir/ madam
I am Snehal Chavan doing BBA from BHARTI VIDYAPEETH,IMED. I m preparing a project on A STUDY ON MUTUAL FUND. For this I have designed a Questionniare to know your views. please fill the given as per your thinking and experiences with this. I will be thankful to you for this.
1. Personal Details:
(a). Name:- (b). Add: - Phone:- (c). Age:- (d). Qualification:-
(e). Occupation. Pl tick (√)
Govt. Ser Pvt. Ser Business Agriculture Others
(g). What is your monthly family income approximately? Pl tick (√).
Up to Rs.10,000
Rs. 10,001 to 15000
Rs. 15,001 to 20,000
Rs. 20,001 to 30,000
Rs. 30,001 and above
2. What kind of investments you have made so far? Pl tick (√). All applicable.
a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund
e. Post Office-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) High Return (d) Trust
4. Are you aware about Mutual Funds and their operations? Pl tick (√). Yes No 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 No
Graduation/PG Under Graduate Others
68
7. 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.
a. SBIMF b. UTI c. HDFC d. Reliance e. Kotak f. Other. specify
9. If invested in SBIMF, you do so because (Pl. tick (√), all applicable).
a. SBIMF is associated with State Bank of India.
b. They have a record of giving good returns year after year.
c. Agent’ 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. Agent’ Advice
11. When you plan to invest your money in asset management co. which AMC will you prefer?
Assets Management Co.
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 (√).
69
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? Please tick (√). Yes No
Thank you very much for your co-operation!
Snehal chavan
70
BIBLIOGRAPHY
NEWS PAPERS
OUTLOOK MONEY
TELEVISION CHANNEL (CNBC AAWAJ)
MUTUAL FUND HAND BOOK
FACT SHEET AND STATEMENT
71