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PROJECT REPORT

ON FINANCIAL PLANNING IN MUTUAL FUND

AT

SBI MUTUAL FUND PVT LTD .

In the partial fulfillment for the award of degree of Master of Business Administration (2013-2015)

INTERNAL GUIDE EXTERNAL GUIDE

DR. H.S.GREWAL Mr.ABHINAV CHOUDHRY IMS Unison University Asst. Relationship Manager

DEHRADUN SBI mutual fund pvt. Ltd. Roorkee

SUBMITTED BY

NADEEM

SUBMITTED TO

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ACKNOWLEDGEMENT

"Gratitude is not a thing of expression; it is more matter of feeling."

There is always a sense of gratitude which one express towards others for their help and supervision in achieving the goals. This formal piece of acknowledgement is an attempt to

express the feeling of gratitude towards people who helpful me in successfully completing of my training.

I would like to express my deep gratitude to Mr.ABHINAV CHOUDHRY (Uttarakhand Regional Head, SBI mutual fund pvt. Ltd) my training coordinator for their constant co-

operation. He was always there with his competent guidance and valuable suggestion throughout the pursuance of this research project. Special thanks to Mr.VIKAAS RANA who guided me to

work honestly and to give valuable suggestion for improving my work, Last but not least I would also like to place of appreciation to all the respondents whose responses were of utmost importance for the project.

My sincere thanks to DR. H.S.GREWAL (IMS Unison university Dehradun), who’s continuous

help and enthusiasm has helped me to complete project successfully. I also wish to thank IMS Unison university, Dehradun for making this experience of summer

training in an esteemed organization like SBI mutual fund pvt. Ltd.. The learning from this experience has been immense and would be cherished throughout life.

Above all no words can express my feelings to my parents, friends all those persons who supported me during my project. I am also thankful to all the respondents whose cooperation &

support has helped me a lot in collecting necessary information.

I would also like to thank almighty God for his blessings showered on me during the completion of project report.

NADEEM

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DECLARATION

This is to certify that I have completed the Project titled A STUDY OF “FINANCIAL PLANNING

IN MUTUAL FUND” :- A SPECIAL REFERENCE TO “ SBI MUTUAL FUND PVT.

LTD.ROORKEE” Under the guidance of “Mr.ABHINAV CHOUDHRY” in the partial fulfillment

of the requirement for the award of the Degree of “MBA” from “IMS UNISON UNIVERSITY”

Dehradun. This is an original work and I have not submitted it earlier elsewhere.

NADEEM

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INTERNAL GUIDE CERTIFICATE

I have the pleasure in certifying that Mr. .NADEEM .is a bonafide student of 4th

trimester of the Master’s Degree in Business Administration (Batch 2013-15), of IMS,

Unison University, Dehradun,

He has completed his/her project work entitled A CRITIAL “ FINANCIAL PLANNING IN

MUTUAL FUND ”. under my guidance.

I certify that this is his original effort & has not been copied from any other source. This

project has also not been submitted in any other Institute / University for the purpose of

award of any Degree.

This project fulfils the requirement of the curriculum prescribed by this Institute for the

said course. I recommend this project work for evaluation & consideration for the award

of Degree to the student.

Signature : ……………………………………

Name of the Guide : DR. H.S.GREWAL

Designation : PROFESSOR

Date : ……………………………………

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CERIFICATE

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Executive summary

A mutual fund is a scheme in which several people invest their money for a common goal . the collected money invest in capital marker , money market and debt. Which they earned is dividned based on the no. of unit , which they hold.

The topic of project is ‘financial planning in mutual fund ‘ the mutual fund industry has dramatic in quantity as well as quality of product and service offering in recent year . along with

the project also touches on the aspect of systametic investment plan and steps how to invest in mutual funds .

An effort has been made to work on the concept that have been tought in class along with otherusefull parameters so that better study can be done .

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TABLE OF CONTENTS PAGE NO.

Acknowledgement..………………………..........................….2 Declaration………………………………..……………….....3

Certificate from guide………………...……….…….………4 Executive Summary……………....…………............….…....5 CHAPTER 1: INTRODUCTION-

1.1 Introduction to mutual fund……………………………...............7

1.2 Advantages of mutual fund………………………………….……8

1.3 Disadvantages of mutual fund……………………….…………..10

1.4 Concept of mutual fund……………………………….…………11

CHAPTER 2: OBJECTIVES OF THE STUDY

2.1 Purpose of the Study………………………………........................13

2.2 Scope of the Study……………………………………………........14

CHAPTER 4: INDUSTRY PROFILE 3.1 The History of Indian mutual fund…….………….….…….15

3.2 mutual fund procedure in India…………….….….…....….18 3.3 Types of mutual fund scheme …..…………….…..….........20

3.4 Sbi mutual fund …..……………………….…......…..…….28 3.5 SWOT Analysis …………………………………..……………….…….32

CHAPTER 3 REVIEW OF LITERATURE………………………...………38

CHAPTER 4: RESEARCH METHODOLOGY

4.1 Research Design…………………………………………..………..35

4.2 Data collection…………………………………………..…….........35

4.3 Sample size………………………………………………….………36

4.4 Sampling Technique………………………………………………..37

CHAPTER 6: ANALYSIS & INTERPRETATION ………………..…...…..45

CHAPTER 7: FINDINGS………………………………………….…………..53

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TABLE OF CONTENTS PAGE NO.

CHAPTER 9: RECOMMENDATIONS ………….……………………………..55

CHAPTER 10: CONCLUSION…………….….…….……………………......….56

CHAPTER 11: BIBLIOGRAPHY …………………………………………....…57

CHAPTER 12 QUESTIONNAIRE……………………………………….

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CHAPTER 1

1.1 INTRODUCTION

As you probably know, mutual funds have become extremely popular over the last 20 years.

What was once just another obscure financial instrument is now a part of our daily lives. More than 80 million people, or one half of the households in America, invest in mutual

funds. That means that, in the United States alone, trillions of dollars are invested in mutual

funds.

In fact, too many people, investing means buying mutual funds. After all, its common

knowledge that investing in mutual funds is (or at least should be) better than simply letting your cash waste away in a savings account, but, for most people, that's where the

understanding of funds ends. It doesn't help that mutual fund salespeople speak a strange

language that is interspersed with jargon that many investors don't understand.

Originally, mutual funds were heralded as a way for the little guy to get a piece of the market. Instead of spending all your free time buried in the financial pages of the Wall Street Journal,

all you had to do was buy a mutual fund and you'd be set on your way to financial freedom.

As you might have guessed, it's not that easy. Mutual funds are an excellent idea in theory, but, in reality, they haven't always delivered. Not all mutual funds are created equal, and

investing in mutual’s isn’t as easy as throwing your money at the first salesperson who

solicits your business.

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1.2 Advantage of mutual fund

Since their creation, mutual funds have been a popular investment vehicle for investors. Their simplicity along with other attributes provides great benefit to investors with limited knowledge, time or money. To help you decide whether mutual funds are best for you and your situation,

we are going to look at some reasons why you might want to consider investing in mutual funds.

1. Economies of Scale The easiest way to understand economies of scale are by thinking about volume discounts; in many

stores, the more of one product you buy, the cheaper that product becomes. For example, when you buy a dozen donuts, the price per donut is usually cheaper than buying a single one. This also occurs

in the purchase and sale of securities. If you buy only one security at a time, the transaction fees will be relatively large.

2. Diversification One rule of investing, for both large and small investors, is asset diversification. Diversification involves the mixing of investments within a portfolio and is used to manage risk. For example, by

choosing to buy stocks in the retail sector and offsetting them with stocks in the industrial sector, you can reduce the impact of the performance of any one security on your entire portfolio. To achieve a

truly diversified portfolio, you may have to buy stocks with different capitalizations from different

industries and bonds with varying maturities from different issuers. For the individual investor, this can be quite costly.

3. Divisibility

Many investors don't have the exact sums of money to buy round lots of securities. One to two hundred dollars is usually not enough to buy a round lot of a stock, especially after deducting

commissions. Investors can purchase mutual funds in smaller denominations, ranging from $100 to $1,000 minimums. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of

dollar-cost averaging. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. This provides an additional

advantage - liquidity. 4. Professional Management

When you buy a mutual fund, you are also choosing a professional money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully

researched. Therefore, rather than having to thoroughly research every investment before you decide to buy or sell, you have a mutual fund's money manager to handle it for you.

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1.3 DISADVANTAGE OF MUTUAL FUND

1. No Insurance: Mutual funds, although regulated by the government, are not insured against losses. The Federal Deposit Insurance Corporation (FDIC) only insures against

certain losses at banks, credit unions, and savings and loans, not mutual funds. That means that despite the risk-reducing diversification benefits provided by mutual funds, losses can

occur, and it is possible (although extremely unlikely) that you could even lose your entire investment.

2. Dilution: Although diversification reduces the amount of risk involved in investing in

mutual funds, it can also be a disadvantage due to dilution. For example, if a single security held by a mutual fund doubles in value, the mutual fund itself would not double in

value because that security is only one small part of the fund’s holdings. By holding a large number of different investments, mutual funds tend to do neither exceptionally well nor exceptionally poorly.

3. Fees and Expenses: Most mutual funds charge management and operating fees that pay for the fund’s management expenses (usually around 1.0% to 1.5% per year for actively

managed funds). In addition, some mutual funds charge high sales commissions, 12b-1 fees, and redemption fees. And some funds buy and trade shares so often that the transaction costs add up significantly. Some of these expenses are charged on an ongoing

basis, unlike stock investments, for which a commission is paid only when you buy and sell.

4. Poor Performance: Returns on a mutual fund are by no means guaranteed. In fact, on average, around 75% of all mutual funds fail to beat the major market indexes, like the S&P 500, and a growing number of critics now question whether or not professional

money managers have better stock-picking capabilities than the average investor. 5. Loss of Control: The managers of mutual funds make all of the decisions about which

securities to buy and sell and when to do so. This can make it difficult for you when trying to manage your portfolio. For example, the tax consequences of a decision by the manager to buy or sell an asset at a certain time might not be optimal for you. You also should

remember that you trust someone else with your money when you invest in a mutual fund. 6. Trading Limitations : Although mutual funds are highly liquid in general, most mutual

funds cannot be bought or sold in the middle of the trading day. You can only buy and sell them at the end of the day, after they’ve calculated the current value of their holdings

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1.4 Concept of 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 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 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 basket of securities at a

relatively low cost. The flow chart below describes broadly the working of a mutual fund:

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CHAPTER 2

2.1 OBJECTIVES OF THE STUDY

(1) To know the other preferred investment options by respondents.

(2) To know the plans preferred in mutual funds by the respondents.

(3) The information and advice before investing in mutual funds.

(4) To identify the level of risk involved in investing in various equity diversified mutual

fund schemes

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2.2 Scope of the study

In my project the scope is limited to some prominent mutual funds in the mutual fund industry. I analyzed the funds depending on their schemes like equity, income, balance.

But there is so many other schemes in mutual fund industry like specialized (banking, infrastructure, pharmacy) funds, index funds etc.

Scope of Mutual Funds has grown enormously over the years. In the first age of mutual

funds, when the investment management companies started to offer mutual funds, choices were few. Even though people invested their money in mutual funds as these

funds offered them diversified investment option for the first time. By investing in these funds they were able to diversify their investment in common stocks, preferred stocks, bonds and other financial securities. At the same time they also enjoyed the advantage of

liquidity. With Mutual Funds, they got the scope of easy access to their invested funds on requirement

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CHAPTER 3

INDUSTRY PROFILE

3.1 HISTORY OF MUTUAL FUND

The mutual fund industry started in India in 1963 with the formation of unit Trust of India, at the initiative of the government of India and reserve bank of the India. The history of mutual fund

can be broadly divided in to four phases.

FIRST PHASE 1967-87 Unit trust of India was established in 1963 by an act of parliament. It was set up by reserve bank of India and functioned under the regulatory and admistrative control of reserve bank of India. In 1978 UTI was declined from RBI and industrial development bank of India took over the

regulatory and admistrative control place of RBI. The first scheme launched by UTI had rupees 6700 corers of asset and management.

SECOND PHASE 1987- 1993 (ENTRY OF PUBLIC SECTOR FUND)

1987 marked the entry of non UTI, public sector funds set up by public sector banks and life

insurance Corporation of India and general Insurance Corporation of India (GIC). SBI mutual fund was a first non-UTI Mutual fund established in June 1987followed by CAN BANK

MUTUAL FUND at Dec. 87. Punjab national Mutual Fund (Aug. 89). Indian Bank Mutual Fund (Nov.89), Bank of India (jun 90 ). Bank f 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

the 1993, the mutual fund industry had asset under management of Rs. 47007 crores .

Third phase 1993-2003 (entry of private sector fund) With the entry of private sector fund in 1993. a new era started in 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 regulation came in to being, under which all mutual fund,

except UTI were to be registered and governed the earth while Kothari pioneer ( now merged with Franklin Templeton was the first private sector mutual fund registered in July 1993

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The 1993 SEBI mutual fund regulation were substituted by a more comprehensive and revised mutual fund regulation in 1996 the industry now function under the SEBI .

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 merger and acquisition as at end of

January 2003, there were 33 mutual funds with total asset of Rs. 121,805 Crores. The unit trust of India with Rs.44,541crores of asset under management was way ahead of others mutual funds.

Forth phase - since February 2003

In February 2003 following the repeal of Unit trust of India act 1963 UTI was bifurcated into

separates entities. one is the specified undertaking of the unit trust of India with assets under

management of Rs. 29,835 crores at the end of the 2003, representing broadly , the asset of

US 64 scheme assured return and certain other scheme . The specified undertaking of the unit trust of India , functioning under an administrator .

3.2 mutual fund procedure in India

REGISTRATION OF MUTUAL FUND:

Application for registration

1. An application for registration of a mutual fund shall be made to the Board in Form A by the

sponsor.

Application fee to accompany the application

2. Every application for registration under regulation 3 shall be accompanied by nonrefundable

application fee as specified in the Second Schedule.

Application to conform to the requirements

3. An application which is not complete in all respects shall be liable to be rejected:

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Provided that, before rejecting any such application, the applicant shall be given an opportunity

to complete such formalities within such time as may be specified by the Board.

Furnishing information

4. The Board may require the sponsor to furnish such further information or clarification as may

be required by it.

Eligibility criteria

5. For the purpose of grant of a certificate of registration, the applicant has to fulfill the following,

namely:—

(a) The sponsor should have a sound track record and general reputation of fairness and

integrity in all his business transactions.

Explanation: For the purposes of this clause “sound track record” shall mean the

Sponsor should,—

(i) Be carrying on business in financial services for a period of not less than five years; and

(ii) The net worth is positive in all the immediately preceding five years; and

(iii) The net worth in the immediately preceding year is more than the capital

Contribution of the sponsor in the asset management company;

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3.3 TYPES OF MUTUAL FUND SCHEMES

There are mainly three types of mutual fund. (1) Equity fund

(2) Debt fund (3) Hybrid fund

By Constitution

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

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

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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.

Close-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.

Interval Schemes

These combine the features of open-ended and close-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during predetermined intervals at NAV

related prices.

By Investment Objective

Schemes can be classified by way of their stated investment objective such as Growth Fund, Balanced Fund, Income Fund etc.

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Growth Schemes

These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities, these

schemes are exposed to fluctuations in value especially in the short term.

Equity schemes are hence not suitable for investors seeking regular income or needing to use

their investments in the short-term. They are ideal for investors who have a long-term investment horizon. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social, political as well as economic.

General Purpose The investment objectives of general-purpose equity schemes do not restrict them to invest in

specific industries or sectors. They thus have a diversified portfolio of companies across a large spectrum of industries. While they are exposed to equity price risks, diversified general-purpose equity funds seek to reduce the sector or stock specific risks through diversification. They mainly

have market risk exposure. These schemes restrict their investing to one or more pre-defined sectors, e.g. technology sector.

Since they depend upon the performance of select sectors only, these schemes are inherently more risky than general-purpose schemes. They are suited for informed investors who wish to take a view and risk on the concerned sector.

Special Schemes

a. Index schemes

The primary purpose of an Index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested in investing in the

market in general rather than investing in any specific fund. Such investors are happy to receive the returns posted by the markets. As it is not practical to invest in each and every stock in the

market in proportion to its size, these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Index Funds are launched and managed for such investors.

b. Tax saving schemes

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Investors (individuals and Hindu Undivided Families (“HUFs”)) are being encouraged to invest in equity markets through Equity Linked Savings Scheme (“ELSS”) by offering them a tax

rebate. Units purchased cannot be assigned / transferred/ pledged / redeemed / switched – out until completion of 3 years from the date of allotment of the respective Units.

The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations,

1996 and the notifications issued by the Ministry of Finance (Department of Economic Affairs), Government of India regarding ELSS.

Subject to such conditions and limitations, as prescribed under Section 88 of the Income-tax Act,

1961, subscriptions to the Units not exceeding Rs.10, 000 would be eligible to a deduction, from income tax, of an amount equal to 20% of the amount subscribed. Magnum Tax gain Scheme is such a fund.

c. Real Estate Funds

Specialized real estate funds would invest in real estates directly, or may fund real estate

developers or lend to them directly or buy shares of housing finance companies or may even buy their securitized assets.

Debt Based Schemes

These schemes, also commonly called Income Schemes, invest in debt securities such as corporate bonds, debentures and government securities. The prices of these schemes tend to be more stable compared with equity schemes and most of the returns to the investors are generated

through dividends or steady capital appreciation. These schemes are ideal for conservative investors or those not in a position to take higher equity risks, such as retired individuals.

However, as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk.

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1. Income Schemes

Income funds are named appropriately: their purpose is to provide current income on a steady

basis. When referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a

steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees.

Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds aren't without risk. Because there are many different types of bonds, bond funds can vary dramatically depending on where they invest. For example, a fund

specializing in high-yield junk bonds is much more risky than a fund that invests in government securities. Furthermore, nearly all bond funds are subject to interest rate risk, which means that if

rates go up the value of the fund goes down. Ideal for:

Retired people and others with a need for capital stability and regular income. .Investors who need some income to supplement their earnings.

2. Liquid Income Schemes

Similar to the Income scheme but with a shorter maturity than Income schemes

3. Money Market/Liquid Schemes

The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe place to park your money. You won't get great returns, but you won't have to worry about losing your principal. A typical return is twice the amount you would earn in a regular checking/savings

account and a little less than the average certificate of deposit (CD).

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Ideal for.

Corporate and individual investors as a means to park their surplus funds for short periods or awaiting a more favorable investment alternative.

4. Gilt Funds

This scheme primarily invests in Government Debt. Hence the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free.

Hybrid Schemes

These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a

conservative, long-term orientation.

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3.4 SBI Mutual Fund

Company Profile

Awards & Achievements

STATE BANK OF INDIA MUTUAL FUND

Proven Skills in Wealth Generation

SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation.

The fund traces its lineage to SBI - India’s largest banking enterprise. The institution has grown

immensely since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country.

SBI Mutual Fund is a joint venture between the State Bank of India and Society General Asset Management, one of the world’s leading fund management companies that manages over

US$ 500 Billion worldwide.

Exploiting expertise, compounding growth

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

fifteen of them. In the process it has rewarded its investors handsomely with consistently high returns.

A total of over 5.4 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund.

Schemes of the Mutual fund have consistently outperformed benchmark indices and have emerged as the preferred investment for millions of investors and HNI’s.

Today, the fund manages over Rs. 31,794 crores of assets and has a diverse profile of investors actively parking their investments across 36 active schemes.

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

130 points of acceptance, 28 investor service centers, 46 investor service desks and 56 district organizers.

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

Opportunities Fund.

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

KEY PERSONNEL:

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Mr. Achal K. Gupta

Managing Director & Chief Executive Office

Mr. C A Santosh

Chief Manager - Customer Service.

Mr. Didier Turpin Dy. Chief Executive Officer

Ms. Aparna Nirgude Chief Risk Officer

Mr. Ashwini Kumar Jain Chief Operating Officer

Mr. Ashutosh P Vaidya

Company Secretary & Compliance Officer

Mr. Sanjay Sinha Chief Investment Officer

Mr. Parijat Agrawal

Head – Fixed Income

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Awards and achievements:

SBI Mutual Fund (SBIMF) has been the proud recipient of the:

ICRA Online Award - 8 times

The Lipper Award (Year 2005-2006)

CNBC TV - 18 Crisis Mutual Fund of the Year Award 2007

CNBC AWAAZ CONSUMER AWARDS 2007

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3.5 SWOT Analysis of SBI Mutual Fund

STRENGTH:

1. Established name in the market : SBI MF is a wholly owned subsidiary of State Bank of India, which is a widely acclaimed

name in the banking sector. It has got good name and reputation in the market. It is one among the fortune 500 companies in the world. People have faith In the name of SBI, so they

do not hesitate while investing in SBI MF.

2. Good Performance History :

SBI MF has an enviable track record in judicious investment and consistent wealth creation.

Most of the schemes offered by SBI MF have done well in the past which in turn helps is creating new customers.

3. Good product line : SBI MF offers a wide range of products to the investors, enabling them to choose the product according to their own need and preferences.

4. Professional expertise : SBI MF is a joint venture between The State Bank of India and Societe Generale Asset Management (France), one of the world’s leading asset management companies that manages

over US$ 330 billion worldwide.

WEAKNESSES:

1. Poor services : The services of SBI MF are not up to the mark. Most of the investors are not satisfied with

the services provided by them. Delay in payment of amount in case of repurchase and delay in dispatch of statement are the main problem faced by the investors.

2. Lack of awareness about mutual funds : Most of the people in India do not know about mutual funds and those who know don’t think about investing in it which demands more efforts on their part.

3. Non availability of MF related services in all SBI branches : Non availability of MF services in all SBI branches is one of the weaknesses of SBI MF. Only one service desk is functioning in one city which creates problems for the investors.

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OPPORTUNITIES:

1. Opportunity to use various branches of SBI to provide better services :

SBI MF can use various branches of SBI for the betterment of its MF related services. It will be more convenient for the investors.

2. It can use already set up network of SBI to make the people aware of MF and to

convert them into investors : As the customers of SBI come to the bank on a regular basis, so, SBI MF can use the various branches for educating the customers about MF and to convert them into investors of mutual

fund.

3. Potential rural market : There is so much potential in the rural market and SBI MF can easily penetrate in this market with its (SBI) strong reputation and set up branches. It can mobilize huge amount of funds from this market through educating people about mutual fund.

THREATS: 1. Tough competition from other mutual fund organizations :

SBI MF is facing so much competition from other growing MF in the market as they are also

performing well. The entry of new MF organizations has made the competition more severe.

2. Highly volatile share market : The Indian share market is highly volatile and as we know that mutual fund invests a large part of its corpus into share market which makes the investment into mutual fund very risky.

As a result it makes the task very difficult to induce people to invest in mutual fund.

3. Competition from other investment opportunities available for

investors : AS now a days so many investment opportunities are available in the market like insurance,

investment in share market and real estate which are also attracting the investors, thereby increasing competition and posing threat to mutual fund.

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CHAPTER 5

REVIEW OF LITERATURE

1. Sharpe (1966) in order to evaluate the risk-adjusted performance of mutual funds introduced the measure known as reward-to-variability ratio (Currently Sharpe Ratio).

With the help of this ratio he evaluated the return of 34 open-end mutual funds in the period 1945-1963. The results showed that to a major extent the capital market was highly

efficient due to which majority of the sample had lower performance as compared to the Down Jones Index. Sharpe (1966) found that from 1954 to 1963 only 11 funds

outperformed the Dow-Jones Industrial Average (DJIA) while 23 funds were outperformed by the DJIA. Study concluded that the mutual funds were inferior investments during the period. Results also showed that good managers concentrate on

evaluating risk and providing diversification. Jensen (1968) developed own measure known as Jensen’s Alpha to examine the risk- portfolios’ risk-adjusted performance and

estimate the predictive ability of mutual fund managers. The measure was based on the theory of the pricing of capital assets. For this purpose a sample of 115 open end mutual funds (for which net asset and dividend information was available) was taken for the

period 1955-1964. After applying the Jensen measure he concluded that stock prices could not be forecasted accurately with the help of mutual funds therefore buy and hold

strategy could not be used to take any advantage. Similarly there is slight evidence that an individual mutual fund can achieve returns higher than a portfolio comprised of randomly selected shares.

2. Carlson (1970) conducted a research to analyze the predictive value of past results in

forecasting future performance of mutual funds for the period 1948-1667. The author also examined the efficiency of market and identified the factors related to the fund performance. First of all he constructed indices for three types of mutual funds

(Diversified common stock, Balanced, Income) and compared these indices with the market indices. In order to analyze the performance regression was used.

The results provide empirical support to the return-risk postulate of the capital asset pricing model and concluded that whether mutual funds outperform the

market depends on the selection of both the time period and market proxy. The author also concluded that past performance showed little predictive value and that the

performance was positively related to the availability of new cash resources for investment purposes.

3. Arditti (1971) criticized the reward-to-variability criterion proposed by Sharpe (1966) on the grounds that it utilized only the first two moments of the probability distribution of

30

returns. Author proposed that the third moment, a measure of the direction and size of the distribution’s tail, be included in the analysis. Arditti (1971) further argued that investors

preferred positive skewness because positive skewness implied greater probability of higher return. Therefore assets with relatively low reward-to-variability ratios would not

be inferior investments if ratios also have relatively high third moments (high positive skewness). Furthermore author reexamined the Sharpe (1966) data with this additional requirement and found that average fund performance was not inferior to Dow Jones

Industrial Average (DJIA) performance because the skewness of the Dow Jones Industrial Average (DJIA) return distribution was significantly less than fund skewness.

4. Mc. Donald (1974) conducts a research to examine the objectives and performance (risk

and return) of American Mutual Funds in the period 1960-69. Sample of 123 American

mutual funds was analyzed by using neither Trey nor (1965) and Sharpe (1966) indexes.

The results indicated that stated objectives were significantly related to

subsequent measures of systematic risk and total variability. Therefore the funds with aggressive objectives generally produced better performance. The results also showed that 67 funds perform better than the stock market average in case of Treynor’s (1965)

index while in case of Sharpe’s (1966) index only 39 mutual funds showed higher performance that the stock market average. The author concluded that Average Fund

Return increases with increase in risk.

5. Nalini and Sasikumar (1987-91) studied about the mutual funds in India. The main

objectives of the study were to analyze how the mutual fund schemes help to mobilize savings from the household sector. In their study they found out that Mutual funds have now made their presence

felt in Indian financial market by mobilizing the savings of household and corporate sectors and deploying the same in the market. The period of study was 1987 – 91. During

this period, the share of mutual funds in the household financial savings rose from 2.3%to 3.5% and estimates showed that more than 5.6% of the total financial savings of the Indian public were invested in mutual funds.

6. Madhusudhan Vs Jambodekar (1996) conducted a study to assess the awareness of

MFs among investors, to identify the information sources influencing the buying decision and the factors influencing the choice of a particular fund. In his study, he found that among the Income Schemes and Open Ended

Schemes are more preferred than Growth Schemes and Close Ended Schemes during the then prevalent market conditions. Investors look for safety of Principal, Liquidity and

Capital appreciation in the order of importance; Newspapers and Magazines are the first source of information through which investors get to know about MFs/Schemes and investor service is a major differentiating factor in the selection of Mutual Fund Schemes.

7. S.Narayan Rao (2000), evaluated performance of Indian mutual funds in a bear market

through relative performance index, risk return analysis, Treynor’s ratio, Sharpe’s ratio, Sharpe’s measure , Jensen’s measure, and Fama’s measure. The study used 269 open-

31

ended schemes (out of total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are

finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes

in the sample of 58 were able to satisfy investor’s expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk.

8. Rajarajan (2000) has attempted to identify predictors of individual investors' expected rate of return by investigating relationship of demographic variables such as age, income,

occupation, employment status and stage in life cycle with investment behavior of an individual in the paper titled, "Predictors of Expected Rate of Return by Individual

Investors". The study was conducted by administering questionnaire to a sample size of 405

investors. The investigation was made across 12 variables. Multiple regression analysis was used by the researcher to examine the relationship between expected rate of return on

investments by individual investors and their demographics. Some investment related characteristics (including risk bearing capacity of investor) were also studied. The study found that factors like investment size, portfolio choice, and risk

bearing capacity are positively related to rate of returns. The variable locus of control was inversely related to rate of return. The paper concluded that the rate of return was not

strongly related to any socio economic variable except age. The author has empirically

proved the significant relationship between expected rate of return on investments and demographic variables.

9. Stehle and Olaf (2001) conducted a research to evaluate the open-ended mutual funds risk-adjusted performance. Study used a data set that included all German funds sold to the public

in 1972. The research analyzed covers the time period of 1973 to 1998. DAX, which included the 30 largest German stocks and DAX100, which included the 100 largest German stocks

were used as benchmarks for comparison. First of all researchers examined the rates of return

of individual funds with the help of Sharpe (1966) and Jensen measures and then applied the same measures to evaluate the unweighted average rates of return of all funds. In case of the

rates of return of individual funds, results showed that the funds underperform the

appropriate benchmarks by approximately 1.5 % per year. On the other hand underperformance was reduced by 40 % in case of unweighted average rates of return. Study

also concluded that the large German stock mutual funds, on the average, performed better than the small ones

10. Crosnan and Gneezy (2004), in the research work titled "Gender Differences by Preferences" have done an exhaustive review of various studies on gender differences over a

period of time. The authors have highlighted the differences in perception on the basis of gender. The paper explains that there is vast difference as to how men or women perceive the

areas of risk taking, social behavior and competition behavior. The paper establishes that

women take less risk than men. According to the authors the various factors that might be responsible for such a difference in preference may be age, marital status, number of children

and culture. The paper further discusses that gender difference by preference is reduced when the outcome is unsure as in the case of lottery as the perceptions are made on a subjective

idea of outcome. Similarly the paper establishes the lack of difference in perception when a

population consisting of managers and professionals was studied.

32

The study disclosed that there is no significant difference in the way men or

women. Managers think of performance, risk and other fund characteristics. The authors concluded the study by stating that women are risk averse than men as far as investment

decision involving risk was concerned.

11. Leite and Cortez (2006) conducted a research to analyze the impact of using conditioning

information in evaluating the performance of mutual funds. For this purpose two different samples of Portuguese-owned open end equity funds were built, over the period of June 2000

to June 2004. The first sample contained surviving 24 funds (10 National funds and 14

European Union funds) at the end of June 2004. While the second sample included all surviving and 20 non-surviving funds during the sample period. Both conditional and

unconditional models were used to evaluate the performance.

The results of unconditional model indicated that the performance of National funds was neutral while the performance of European Union funds was negative. On the

other hand conditional models suggested that conditional betas (but not alphas) are time-varying and dependent on the dividend yield variable.

12. Boudreaux and Suzanne (2007) conducted a study to examine the risk adjusted returns of international mutual funds for the period of 2000-2006. For this purpose a sample of ten

portfolios of international mutual fund was taken and risk-adjusted performance was

calculated by using Sharpe (1966)’s Index of Reward to Variability ratio. US market of mutual funds was taken as the benchmark. The results showed that the performance of nine

out of ten of the international mutual fund was higher than the U.S. market. Those portfolios

which contained only U.S stock mutual funds underperform on a risk adjusted the funds that contained all international mutual funds. The authors concluded that Investors may not fully

take advantage of possible portfolio risk reduction and higher returns if international mutual funds were excluded.

13. Giessen and Ruenzi (2009), in his research article titled “Sex Matters: Gender Differences in the Mutual Fund Industry" have done 74 investigates gender differences between female

and male US mutual fund managers. The research is carried along three broad dimensions of:

risk taking, investment styles, and trading activity. The primary data is gathered from the CRSP Survivor Bias Free Mutual Fund Database. The data for analysis is only of actively

managed equity funds that invest more than 50% of their assets in stocks and excludes bond, money market and index funds. Performance measures of the study are obtained by using

various statistical tools like regressions, significance testing, Fame’s regression models etc.

The findings of the study are that

Female fund managers are moderately more risk averse than male fund managers

Female fund managers follow significantly less extreme investment styles as compared to

male fund managers

Female managers investment styles are more stable over a period of time

Male managers trade more than female managers. The authors conclude by elucidating that a

fund investor may prefer female manager to manage the fund.

Many researchers are studied different dimensions of investors’ socio-economic profiles of investment to mutual fund schemes. They are found out some important

factors influences their risk perception, investment decisions and savings patron of investors’ investment. Above the literature, there are taken factors are age, gander, marital status,

income and educational qualifications. In my research point of view I had taken family and

33

personal considerations of individual investors to awareness and adoption of different mutual

fund schemes.

14. Dietze, Oliver and Macro (2009) conducted a research to evaluate the risk-adjusted

performance of European investment grade corporate bond mutual funds. Sample of 19 investment-grade corporate bond funds was used for the period of 5 years (July 2000 – June

2005). Funds were evaluated on the basis of single-index model and several multi-index and asset-class-factor models. Both maturity-based indices and rating based indices were used to

account for the risk and return characteristics of investment grade corporate bond funds.

The results indicated that the corporate bond funds, on average, underperformed the benchmark portfolios and there was not a single fund exhibiting a

significant positive performance. Results also indicated that the risk-adjusted.

.

34

CHAPTER 5

RESEARCH METHODOLOGY OF THE STUDY

4.1 RESEARCH DESIGN:- 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.

This project is based on exploratory study as well descriptive study. It was an exploratory

study when the customer satisfaction level was studied to suggest new methods to improve the services of SBI MUTUAL FUND and it was descriptive study when detailed study was

made for comparison of disbursement of MUTUAL FUNDs by commercial banks and

4.2 Data collection SOURCES OF DATA :-

To fulfill the information need of the study. The data is collected from primary as well as secondary sources-

A - PRIMARY SOURCE:-

I decided primary data collection method because our study nature does not permit to apply observational method.

In survey approach we had selected a questionnaire method for taking a customer view because it is feasible from the point of view of our subject & survey purpose.

35

4.3 Sample size;- For the questionnaire I have taken the sample size of 100 customers of SBI MUTUAL FUND .

B – SECONDARY SOURCE:-

It was collected from internal sources. The secondary data was collected on the basis of organizational file, news papers, magazines, management books and website of the company.

SAMPLING:-

Sampling refers to the method of selecting a sample from a given universe with a view

to draw conclusions about that universe. A sample is a representative of the universe selected for study.

SAMPLE SIZE:-

Large sample gives reliable result than small sample. However, it is not feasible to target

entire population or even a substantial portion to achieve a reliable result. So, in this aspect selecting the sample to study is known as sample size. Hence, for my project my sample size

was 100. The Sample Size consists of both the Professional and Business class people & Real estate Agents are taken as Sample.

4.4 SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted. TOOLS OF ANALYSIS:-

Data has been presented with the help of bar graph, pie charts, line graphs etc. PLAN OF ANALYSIS:-

Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have

also been used to represent data clearly and effectively.

3.4 DATA COLLECTION INSTRUMENT DEVELOPMENT:-

The mode of collection of data will be based on Survey Method and Field Activity. Primary data collection will base on personal interview. I have prepared the questionnaire

according to the necessity of the data to be collected.

36

CHAPTER 6

ANALYSIS & INTERPRETATION

The term analysis refers to the computation of certain measures along with searching for patterns of relationship that exist among data groups. Thus, “in the process of analysis, relationships or

differences supporting or conflicting with original or new hypotheses should be subjected to statistical tests of significance to determine with what validity data can be said to indicate any

conclusions.” Interpretation refers to the task of drawing inferences from the collected facts after an analytical

and /or experimental study.

Table 1

Do you investing in Mutual Funds?

Response Frequency Percentage

Yes 62 62%

No 38 38%

Total 10 100

INTERPRETATION: 62% of the people investing in mutual funds.

62

38

y

es

n

o

37

Table 2

If not, then what other option(s) do you prefer to invest?

Options Frequency Percentages

Fixed deposits 20 52

Public provident fund 9 24

Insurance 9 24

Total 38 100%

Interpretation; around 52% people invest in fixed deposit and among rest 48% population

half go for insurance and half for public provident funds

52%

24%

24%

Frequency

Fixed deposits Public provident fund insurance

38

Table 3

what is the mode of information that you used by mutual fund companies?

a) Advertisement

b) Agents

c) Seminar

d) Workshops

Options Frequency Percentage

Advertisements 40 65

Agents 15 24

Seminar 5 8

Workshop 2 3

Total 62 100%

Interpretation: It means that all the modes of information are not the same. Advertisement

is more popular

65%

24%

8%

3%

Frequency

Advertisements Agents Seminar Workshop

39

Table 4

In which schemes do you prefer to invest your money?

Options Frequency Percentages

Debt schemes 30 48

Equity schemes 10 16

Hybrid schemes 22 36

Total 62 100%

Interpretation: it shows that majority of people prefer to invest their money in debt fund

48%

16%

36%

Frequency

Debt schemes Equity schemes Hybrid schemes

40

Table 5

At which rate do you want your investment to grow?

OFTION FREQUENCY PERCENTAGE

HIGH 30 49

AVERAGE 25 40

LOW 7 11

TOTAL 62 100%

INTERPRETATION: It shows that over half of the population want their investment to grow fast.

Table 6

49%

40%

11%

FREQUENCY

HIGH AVERAGE LOW

41

6 which factor do you consider before investing in mutual funds?

Interpretation: people prefer low risk as the most important factor before investing in

mutual funds.

16%

49%

16%

11%

8%

Frequency

Safety of principal Low risk Higher returns

Maturity period Terms and conditions

Options Frequency Percentages

Safety of principal

10 16

Low risk 30 49

Higher returns

10 16

Maturity period

7 11

Terms and conditions

5 8

Total 62 100 %

42

Table 7

Imagine that stock market drops immediately after you invest in it then what

will you do?

Options frequency Percentage

Withdraw your money 10 16

Wait and watch 40 65

Invest more in it 12 19

Total 62 100 %

Interpretation: as per the people response mostly people till the market recover from

misery state.

16%

65%

19%

frequency

Withdraw your money Wait and watch Invest more in it

43

Table 8

Do you have any other investment policy?

Options Frequency Percentages

Yes 40 65

No 22 35

Total 62 100%

Interpretation: 65% of the people had bought other investment policies.

65%

35%

Frequency

Yes No

44

Table 9

How often do you monitor your investment?

Options Frequency percentage

Daily 10 16

Monthly 40 65

Occasionally 12 19

Total 62 100%

Interpretation: It shows that most of the people .i.e. 65% prefer monitoring their

investment on monthly basis.

20% of the people monitor their investment occasionally.

16%

65%

19%

Frequency

Daily Monthly Occasionally

45

Table 10

Do you invest your money in share market?

Annual Income

Total

Below 1,50,000

1,50,000-2,50,000

2,50,000-4,00,000

Above 4,00,000

Share Market

No 10 8 4 1 23

Yes 6 8 12 13 39

Total 16 16 16 14 62

Interpretation: it states that with the rise in income, the percentage of people investing in

share market also increases.

39

23

YES

NO

46

Table 11

How long have you been investing in mutual funds?

Options Frequency Percentages

1-5 years 30 48

5-10 years 20 32

10-15 years

12 20

Total 62 100

47

Interpretation: This shows that people normally tend to invest for longer term. There’s not

much of a difference between the various time periods.

Table 12

In the past, you have invested mostly in (choose one):

Options frequency Percentages

Savings A/cs & PO schemes 20 32

Mutual funds investing in debt 10 17

Mutual funds investing in equity 10 16

Balanced mutual funds 8 13

Individual stocks & bonds 2 3

Ulips 5 8

48

32

20

1-5 years

5-10 years

10-15 years

48

Other instruments like real estate,

gold

7 11

Total 62 100%

Interpretation: In the past maximum percentage of the respondents i.e 32% of the respondents have invested in saving a/c’s and po’s.

Table 13

-Your comfort level in making investment decisions can best be described as :

Options Frequency Percentages

Low 10 16

Moderat

e

40 64

High 12 20

Total 62 100

32

1716

13

3

8

11

Savings A/cs & PO

schemes

Mutual funds investing in

debt

Mutual funds investing in

equity

Balanced mutual funds

Individual stocks & bonds

Ulips

49

INTERPRETATION: 64% of the respondents are moderately comfortable in making investment decisions.

16

64

20

Low

Moderate

High

50

FINDINGS

1. As per the data mentioned above over 62% people invest in mutual fund 2. If not in mutual fund. Than people around 52% prefer to invest in fixed deposit

3. Above data shows that all the modes of information are not the same. Advertisement is more popular

4. People invest in all type of fund but data shows that majority of people prefer to invest their money in debt fund

5. 49% of the respondents want their investments to grow fast.

6. People prefer low risk as the most important factor before investing in mutual funds.

7. 65 % of the people had bought other investment policies.

8. Data shows that most of the people .i.e. 65% prefer monitoring their investment on monthly basis.

19% of the people monitor their investment occasionally.

9. Data states that with the rise in income, the percentage of people investing in share market also increases.

10. Is is not certain what percentage of their income but people invest their income.

11. This shows that people normally tend to invest for longer term. There’s not much of a difference between the various time periods.

12. In the past maximum percentage of the respondents i.e 32% of the respondents have

invested in saving a/c’s and po’s. 13. The financial situation is moderately stable.

51

CONCLUSION

The comparative of various Hybrid funds done on the basis of various factors

such as the performance of the fund over the period of time, their portfolio characteristics and the risk associated with the scheme. By comparing various

funds I analyze that:

Magnum Balanced scheme has the wider portfolio than other schemes. It

has a mix of 45 stocks of various sectors, while all other scheme has the portfolio of stocks between 25-30 stocks. Thus Magnum Balanced

scheme has the larger portfolio and it diversify the risk accurately.

52

BIBLIOGRAPHY

BOOKS

Kothari C.R., “Research Methodology-methods and Techniques”, K.K Gupta for New

Age International private ltd, 2006.

JOURNALS

McDonald(1974), Objectives and performance of mutual funds (1960-69) Journal of

Financial and Quantitative analysis, 9 ,3, 311-333.

Boudreaux and Suzanne (2007), Empirical Analysis of International Mutual Fund

Performance, International Business & Economics Research Journal, 6, 19-22

Sharpe (1966), Mutual Fund Performance, The Journal of Business, 39, 1, 119-138.

Dietze, Oliver and Macro (2009), The Performance of Investment Grade Corporate

Bond Funds: Evidence from the European Market, The European Journal of Finance,

15, 2, 191-209.

Leite and Cortez (2006), “Conditional Performance Evaluation: Evidence from the

Portuguese Mutual Fund Market”, Working Paper, University of Minho.

Arditti (1971), Another Look at Mutual Fund Performance, Journal of Financial and

Quantitative Analysis, 6, 909-912.

WEBSITES

http://seminarprojects.com/Thread-comparative-study-of-mutual-funds-in-

india

http://www.investopedia.com/university/mutualfunds/#axzz1p39Em7Uy

http://www.investopedia.com/university/mutualfunds/#ixzz1nh8FvTre

http://vidyasagar.ac.in/Journal/Commerce/voll2/10th%20Articlepdf

http://www.amfiindia.com/

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

53

QUESTIONNAIRE

1. Do you invest mutual fund?

a) yes { } b) no { }

2. If not mutual fund, then what other option(s) do you prefer to invest?

a) Fixed deposit (b) post office schemes (c) PPF

3. What is mode of information you use for mutual fund? a) Advertisement { } b) agents { } c) seminar { } d) workshop { }

4. In which schemes do you prefer to invest?

a) Equity { } b) debt { } c) hybrid { }

5. At what speed do you want your investment to grow? a) Fast { } b) average { } c) very fast{ }

6. Which factor do you consider before investing in mutual fund? a) Safety of principal { } b) low risk { } c) higher return { } d) maturity period

7. Imagine that stock market drops immediately after you invest in it then what will you do?

a) Withdraw your money( ) b) invest more( ) watch and wait( )

8.Do you have any other investment policy?

a) Yes( ) b) no( )

9. How often do you monitor your investment?

a) Daily b) monthly c) occasionally

54

10. Do you invest your money in share market?

a) Yes ( ) b) No ( )

11. How long have you been investing in mutual fund?

a) 0-5 years ( ) b) ) 5-10 years ( )

c) 10-15 years ( )

12. In past mostly you invested in?

a) Savings a/c ( ) b) equity fund ( )

c) real state or gold ( ) d) individual bond and stocks ( )

13. Your comfort level to make investment decision?

a) Low ( )

b) High ( ) c) Moderate ( )