LITERATURE REVIEW

Mutual funds industry is a growing at a very fast rate India. Various studies and research has
been on this industry by experts. Here are the lists of few books that have been referred to for
the purpose of the study.
Mr. M. Jaidev in his book has Investment policy and performance of Mutual Fund has studied
the Indian Public Sector Mutual Funds. In this book he has covered risk, rate of return.
Investment policy and pricing of mutual funds. In this book he has done an empirical study
covering all aspects of mutual fund investment along with the regulatory framework.
Nalini Prava Tripathy in her book Mutual Funds in India. Emerging Issues provides a detailed
evaluation of investment management which is not only helpful for influencing marketing
operations but also for securities selection, investment research and timing and resource
allocation.
Dr H. Sadak in his book Mutual Funds in India has highlighted the importance of financial
institutions in India. The basically focuses on the growth and development of mutual funds in
India. The entire gamut of the theoretical aspects of the fund management has been critically
examined in the context of the performance of mutual funds and it provides an insight into fund
management and the areas of weakness.
Study by Laukkanen (2006) explains that varied attributes present in a product or service
facilitate customers achievement of desired end-state and the indicative facts of study show
that electronic services create value for customers in service consumption.

MUTUAL FUND OVERVIEW

MUTUAL FUND AN INVESTMENT PLATFORM

Mutual fund is an investment company that pools money from small investors and invests in a variety of
securities, such as stocks, bonds and money market instruments. Most open-end Mutual funds stand ready to
buy back (redeem) its shares at their current net asset value, which depends on the total market value of the
fund's investment portfolio at the time of redemption. Most open-end Mutual funds continuously offer new
shares to investors. It is also known as an open-end investment company, to differentiate it from a closed-end
investment company.
Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual
funds stand ready to sell and redeem their shares at any time at the funds current net asset value: total fund

PROFIT/LOSS
FORM PORTFOLIO
OF INVESTMENT

INVEST IN
VARIETY OF
STOCKS/BONDS

PROFIT/LOSS FROM
INDIVIDUAL

MARKET (FLUCTUATIONS)

INVEST THEIR
MONEY

MUTUAL FUND SHEMES

INVESTOR

assets divided by shares outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer document.

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 not all stocks may move in the same direction in the
same proportion at the same time. Mutual fund issues units t o the investors in accordance with quantum
of money invested by them. Investors of Mutual fund are known as unit holders. The profits or losses are
shared by the investors in proportion to their investments. The Mutual funds normally come out with a number
of schemes with different investment objectives which are launched from time to time.
In India, A Mutual fund is required to be registered with Securities and Exchange Boa rd of India (SEBI)
which regulates securities markets before it can collect funds from the public.
In Short , a Mutual fund is a common pool of money in to which investors with common investment
objective place their contributions that are to be invested in accordance with the state d investment objective
of the scheme. The investment manager would invest the money collected from the investor in to assets that
are defined/ permitted by the stated objective

of the scheme. For example, a n equity fund would

invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc.
Mutual fund is a suitable investment for the common ma n a s it offers an Oporto unity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.

ADVANTAGES OF MUTUAL FUND

S.
No Advantage
.

Particulars

1.

Portfolio
Diversification

Mutual Funds invest in a well-diversified portfolio of securities which

enables investor to hold a diversified investment portfolio (whether the
amount of investment is big or small).

2.

Professional
Management

Fund manager undergoes through various research works and has better
investment management skills which ensure higher returns to the investor
than what he can manage on his own.

3.

Less Risk

Investors acquire a diversified portfolio of securities even with a small

investment in a Mutual Fund. The risk in a diversified portfolio is lesser than
investing in merely 2 or 3 securities.

4.

Low
Transaction
Costs

Due to the economies of scale (benefits of larger volumes), mutual funds

pay lesser transaction costs. These benefits are passed on to the investors.

5.

Liquidity

An investor may not be able to sell some of the shares held by him very
easily and quickly, whereas units of a mutual fund are far more liquid.

6.

7.

8.

9.

Choice
Schemes

Mutual funds provide investors with various schemes with different

of investment objectives. Investors have the option of investing in a scheme
having a correlation between its investment objectives and their own
financial goals. These schemes further have different plans/options

Transparency

Funds provide investors with updated information pertaining to the markets

and the schemes. All material facts are disclosed to investors as required by
the regulator.

Flexibility

Investors also benefit from the convenience and flexibility offered by

Mutual Funds. Investors can switch their holdings from a debt scheme to an
equity scheme and vice-versa. Option of systematic (at regular intervals)
investment and withdrawal is also offered to the investors in most open-end
schemes.

Safety

Mutual Fund industry is part of a well-regulated investment environment

where the interests of the investors are protected by the regulator. All funds
are registered with SEBI and complete transparency is forced.

DISADVANTAGE OF INVESTING THROUGH MUTUAL FUNDS

S.
Disadvantage
No.

Particulars

1.

Costs Control
Investor has to pay investment management fees and fund distribution
Not
in
the
costs as a percentage of the value of his investments (as long as he holds
Hands of an
the units), irrespective of the performance of the fund.
Investor

2.

The portfolio of securities in which a fund invests is a decision taken by

No Customized the fund manager. Investors have no right to interfere in the decision
Portfolios
making process of a fund manager, which some investors find as a
constraint in achieving their financial objectives.

3.

Difficulty
in Many investors find it difficult to select one option from the plethora of
Selecting
a funds/schemes/plans available. For this, they may have to take advice
Suitable Fund from financial planners in order to invest in the right fund to achieve their
Scheme
objectives.

HISTORY OF MUTUAL FUND

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. The history of mutual funds in India can be broadly divided into
four distinct phases: -

First Phase 1964-87

An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India
and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was
de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6, 700 crores. Of assets under management.

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 Can bank Mutual Fund (Dec 87), Punjab National
Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004
crores.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the
Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund
Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in
India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there
were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of
assets under management was way ahead of other mutual funds.

Fourth Phase since February 2003

7

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,
835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and
functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private
sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end
of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
The graph indicates the growth of assets over the years.

CATEGORIES OF MUTUAL FUND

2. BASED ON INVESTMENT OBJECTIVE

EQUITY FUNDS

INDEX FUNDS

BALANCE
D FUNDS

DEBT FUNDS

LEQUID
DEBT
GUILT FUNDS

DEVIDEND
EQUITY

INCOME

EQUITY
THEMANTIC

FMPS FUNDS

SECTOR FUND

FLOATING

ELSS

ARBITAGE
Mutual funds can be classified as follow:
9

Based on their structure:

Open-end Fund

Available for sale and repurchase at all times based on the net asset value (NAV) per unit.
Unit capital of the fund is not fixed but variable.
Fund size and its total investment go up if more new subscriptions come in than redemptions and vice-versa.

Closed-end Fund
One time sale of fixed number of units.
Investors are not allowed to buy or redeem the units directly from the funds. Some funds offer
repurchase after a fixed period. For example, UTI MIP offers a repurchase after 3 years.
Listed on stock exchange and investors can buy or sell units through the exchange.
Units maybe traded at a discount or premium to NAV based on investors perception about the funds
future performance and other market factors.

Based on their investment objective:

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:
1. Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their

portfolio

mirrors the benchmark index in terms of both composition and individual stock weight ages.
2. Equity diversified funds- 100% of the capital is invested in equities spreading across different sectors and
stocks.
3. Dividend yield funds- it is similar to the equity-diversified funds except that they invest in companies
offering high dividend yields.
4. 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.
5. Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in
banking stocks.
6. ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

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:
1

Debt-oriented funds -Investment below 65% in equities.

10

Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

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.
1.

Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in
call money market.

2. Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills.
3.

Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments, which have
variable coupon rate.

4.

Arbitrage fund- They generate income through arbitrage opportunities due to miss-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.

5. Gilt funds LT- They invest 100% of their portfolio in long-term government securities.
6.

Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term debt
papers.

7.

MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to
equities.

8.

FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.

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.

ORGANISATION OF MUTUAL FUND:

11

THE STRUCTURE CONSISTS OF:

SPONSOR
Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual
fund. Sponsor must contribute at least 40% of the net worth of the Investment managed and meet the eligibility
criteria prescribed under the Securities and Exchange Board of India (Mutual Fund) Regulations, 1996. The
sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond
the initial contribution made by it towards setting up of the Mutual Fund.

TRUST
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the
Sponsor. The trust deed is registered under the Indian Registration Act, 1908.

TRUSTEE
Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main
responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the AMC functions in
the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At
least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any
manner.

Rights of Trustees:
Approve each of the schemes floated by the AMC.

12

The right to request any necessary information from the AMC.

May take corrective action if they believe that the conduct of the fund's business is not in accordance
with SEBI Regulations.
Have the right to dismiss the AMC,
Ensure that, any shortfall in net worth of the AMC is made up.

Obligations of the Trustees:

Enter into an investment management agreement with the AMC

Ensure that the fund's transactions are in accordance with the Trust Deed.
Furnish to SEBI on a half-yearly basis, a report on the fund's activities
Ensure that no change in the fundamental attributes of any scheme or the trust or any other change
which would affect the interest of unit holders is happens without informing the unit holders.
Review the investor complaints received and the redressed of the same by the AMC.

ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to
be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of
the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated
with the Sponsor in any manner. The AMC must have a net worth of at least 10 cores at all times.

Obligation of Asset Management Company:

Float investment schemes only after receiving prior approval from the Trustees and
SEBI.
Send quarterly reports to Trustees.
Make the required disclosures to the investors in areas such as calculation of NAV
and repurchase price.
Must maintain a net worth of at least Rs. 10 crores at all times.
Will not purchase or sell securities through any broker, which is average of 5% or
more of the aggregate purchases and sale of securities made by the mutual fund in all its
schemes.
AMC cannot act as a trustee of any other mutual fund.
Do not undertake any other activity conflicting with managing the fund.

Custodian
o Has the responsibility of physical handling and safe keeping of the securities.
o Should be independent of the sponsors and registered with SEBI.

Depositories
13

 Indian capital markets are moving away from physical certificates for securities to
dematerialized form with a Depository.
Will hold the dematerialized security holdings of the Mutual Fund.

REGISTRAR AND TRANSFER AGENT

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The
Registrar processes the application form, redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with investors and updates investor
records.
ASSET UNDER MANAGEMENT:
ASSET UNDER MANAGEMENT OF TOP AMC,S
as on Jun 30, 2009
Mutual Fund No.

of Corpus

Name

schemes

Crores)

Reliance

263

108,332.36

(Rs.

Mutual Fund
HDFC Mutual 202

78,197.90

Fund
ICICI

325

70,169.46

Mutual 207

67,978.19

Birla Sun Life 283

56,282.87

Prudential
Mutual Fund
UTI
Fund

Mutual Fund
SBI

Mutual 130

34,061.04

Fund

WHAT IS THE PROCEDURE FOR REGISTERING A MUTUAL FUND WITH SEBI?

An applicant proposing to sponsor a Mutual fund in India must submit an application in Form A along with a
fee of Rs.25, 000. The application is examined and once the sponsor satisfies certain conditions such as being in
14

the financial services business and possessing positive net worth for the last five years, having net profit in three
out of the last five years and possessing the general reputation of fairness and integrity in all business
transactions, it is required to complete the remaining formalities for setting up a Mutual fund. These include
inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board
of trustees comprising two- thirds independent trustees, incorporating the asset management company (AMC),
contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these
conditions, the registration certificate is issued subject to the payment of registration fees of Rs.25.00 lacs for
details; see the SEBI (Mutual funds) Regulations, 1996.

EVALUATING PORTFOLIO PERFORMANCE

It is important to evaluate the performance of the portfolio on an ongoing basis. The following factors are
important in this process: Consider long-term track record rather than short-term performance. It is important
because long-term track record moderates the effects which unusually good or bad short-term performance can
have on a fund's track record. Besides, longer-term track record compensates for the effects of a fund manager's
particular investment style. Evaluate the track record against similar funds. Success in managing a small or in a
fund focusing on a particular segment of the market cannot be relied upon as an evidence of anticipated
performance in managing a large or a broad based fund. Discipline in investment approach is an important
factor as the pressure to perform can make a fund manager susceptible to have an urge to change tracks in terms
of stock selection as well as investment strategy.
The objective should be to differentiate investment skill of the fund manager from luck and to identify those
funds with the greatest potential of future success.

INVESTORS FINANCIAL PLANNING AND ITS RESULTS.

Planning for long term objectives
Many people get overwhelmed by the thought of retirement and they think how they will ever save the huge
money that is required to lead a peaceful and happy retired life. However, the fact is that if we save and invest
regularly over a period of time, even a small sum of money can be adequate.
It is a proven fact that the real power of compounding comes with time. Albert Einstein called compounding
"the eighth wonder of the world" because of its amazing abilities. Essentially, compounding is the idea that one
can make money on the money one has already earned. That's why, the earlier one starts saving, the more time
money gets to grow.
Through Mutual funds, one can set up an investment programme to build capital for retirement years. Besides, it
is an ideal vehicle to practice asset allocation and rebalancing thereby maintaining the right level of risk at all
times.
15

It is important to know that determination and maintaining the right level of risk tolerance can go a long way in
ensuring the success of an investment plan. Besides, it helps in customizing fund category allocations and
suitable fund selections. There are certain broad guidelines to determine the risk tolerance.
These are:
Be realistic with regard to volatility. One needs to seriously consider the effect of potential downside loss as
well as potential upside gain. Determine a "comfort level" i.e. if one is not confident with a particular level of
risk tolerance, and then select a different level.
Regardless of the level of risk tolerance, one should adhere to the principles of effective diversification i.e. the
allocation of investment assets among different fund categories to achieve a variety of distinct risk/reward
objectives and a reduction in overall portfolio risk.
It helps to reassess risk tolerance every year. The risk tolerance may change due to either major adjustment in
return objectives or to a realization that an existing risk tolerance is inappropriate for one's current situation.
Market cap of a company signifies its market value, which is equal to the total number of shares outstanding
multiplied by the current stock price.
The market cap has a role to play in the kind of returns the stock might deliver and the risk or volatility that one
may have to encounter while achieving those returns. For example, large companies are usually more stable
during the turbulent periods and the mid cap and small cap companies are more vulnerable.
As regards the allocation to each segment, there cannot be a standard combination applicable to all kinds of
investors. Each one of us has different risk profile, time horizon and investment objectives.
Besides, while deciding on the allocation, one has to keep in mind the fact whether the allocation is being done
for an existing investor or for a new investor. While for an existing investor, the allocation that already exists
has to be considered, for a new investor the right way to begin is by considering funds that invest predominantly
in large cap stocks. The exposure to mid and small caps can be enhanced over a period of time.

7 INVESTMENT TIPS TO IMPROVE YOUR RETURNS

1. Know your risk profile
Before you take a decision to invest in equity funds, it is important to assess your risk tolerance. Risk tolerance
depends on certain factors like emotional temperament, attitude and investment experience. Remember, while
ascertaining the risk tolerance, it is crucial to consider one's desire to assume risk as the capacity to assume the
risk. It helps to understand different categories of overall risk tolerance, i.e. Conservative, moderate or
16

aggressive. While a conservative investor will accept lower returns to minimise price volatility, a moderate
investor would be all right with greater price volatility than conservative risk tolerances to pursue higher
returns. An aggressive investor wouldn't mind large swings in the NAVs to seek the highest returns. Though
identifying the desire for risk is a tough job, it can be made easy by defining one's comfort zone.

2. Don't have too many schemes in your portfolio

While it is true that diversification helps in earning better returns with a lower level of fluctuations, it becomes
counterproductive when one has too many funds in the portfolio. For example, if you have 15 funds in your
portfolio, it does not necessarily mean that your portfolio is adequately diversified. To determine the right level
of diversification, one has to consider factors like size of the portfolio, type of funds and allocation to different
asset classes. Therefore, it is possible that a portfolio having 5 schemes may be adequately diversified whereas
another one with 10 schemes may have very little diversification. Remember, to have a well-balanced equity
portfolio, it is important to have the right level of exposure to different segments of the equity market like large
cap, mid-cap and small cap. In addition, for a decent portfolio size, it is all right to have some exposure in the
sector and specialty funds.

3. Longer time horizon provides protection from volatility

As an equity fund investor, you need to understand that volatility is an integral part of the stock market.
However, if you remain focused on the long-term objectives and follow a disciplined approach to investing, you
can not only handle volatility properly but also turn it to your advantage.

4. Understand and analyse 'Good Performance'

'Good performance' is a subjective thing. Ideally, to analyse performance, one should consider returns as well as
the risk taken to achieve those returns. Besides, consistency in terms of performance as well as portfolio
selection is another factor that should play an important part
While analyzing the performance. Therefore, if an investment in a Mutual fund scheme takes you past your risk
tolerance while providing you decent returns; it cannot always be termed as good performance. In fact, at times
to ensure that your investment remains within the parameters defined in the investment plan, you may to be
forced to exit from that scheme. In other words, you need to assess as to how much risk did the fund manger
subject you to, and did he give you an adequate reward for taking that risk. Besides, you also need to consider
whether own risk profile allows you to accept the revised level of risk

5. Sell your fund, if you need to

There is no standard formula to determine the right time to sell an investment in Mutual fund or for that matter
any investment. However, you can definitely benefit by following certain guidelines while deciding to sell an
investment in a Mutual fund scheme. Here are some of them:
You may consider selling a fund when your investment plan calls for a sale rather than doing so for emotional
reasons. You need to hold a fund long enough to evaluate its performance over

17

A complete market cycle, i.e. around three years or so. Many of us make the mistake of either holding on to
funds for too long or exit in a hurry. It is important to do a thorough analysis before taking a decision to sell. In
other words, if you take a wrong decision, there is always a risk of missing out on good rallies in the market or
getting out too early thus missing out on
Potential gains. You should consider coming out of a fund if its performance has consistently lagged its peers
for a period of one year or so. It doesn't make sense to hold a fund when it no longer meets your needs. If you
have made a proper selection, you would generally be required
To make changes only if the fund changes its objective or investment style, or if your needs change.

6. Diversified vs. Concentrated Portfolio

The choice between funds that have a diversified and a concentrated portfolio largely depends upon your risk
profile. As discussed earlier, a well - diversified portfolio helps in spreading the investments across different
sectors and segments of the market. The idea is that if one or more stocks do badly, the portfolio won't be
affected as much. At the same time, if one stock does very well, the portfolio won't reap all the benefits. A
diversified fund, therefore, is an ideal choice for someone who is looking for steady returns over the longer
term. A concentrated portfolio works exactly in the opposite manner. While a fund with a concentrated portfolio
has a better chance of providing higher returns, it also increases your chances of underperforming or losing a
large portion of your portfolio in a market downturn. Thus, a concentrated portfolio is ideally suited for those
investors who have the capacity to shoulder higher risk in order to improve the chances of getting better returns.

7. Review your portfolio periodically

It is always a good idea to review your portfolio periodically. For example, you may begin reviewing your
portfolio on a half-yearly basis. Besides, you may be required to review your portfolio in greater detail when
your investments goals or financial circumstances change.

DISTRIBUTION CHANNELS:
Mutual funds posses a very strong distribution channel so that the ultimate customers doesnt face any difficulty
in the final procurement. The various parties involved in distribution of mutual funds are:
Agents

Is a broker between the fund and the investor and acts on behalf of the principal?
18

He is not exclusive to the fund and also sells other financial services. This in a way
helps him to act as a financial advisor.
Distribution Companies
Is a company which sells mutual funds on behalf of the fund?
It has several employees or sub-broker under it.
It manages distribution for several funds and receives commission for its services.
Banks and NBFCs

Several banks, particularly private and foreign banks are involved in a fund
distribution by providing similar services like that of distribution companies.
They work on commission basis.
Direct Marketing

Mutual funds sell their own products through their sales officers and employees of
the AMC.
This channel is normally used to mobilize funds from high net worth individuals
and institutional investors.
Sales Practices: Agent Commissions

No rules prescribed for governing the maximum or minimum commissions

payable by a fund to its agents.
As per SEBI regulations, 1996 all initial expenses including brokerage charges
paid to agents cannot exceed 6% of resources raised under the scheme.
Excess distribution charges have to be borne by the AMC.

Basis for analyzing the performance of Mutual Fund

Net Asset Value (NAV) is the best parameter on which the performance of a mutual fund can be studied. We
have studied the performance of the NAV based on the compounded annual return of the Scheme in terms of
appreciation of NAV, dividend and bonus issues. WE have compared the Annual returns of various schemes to
get an idea about their relative standings.
VALUATION OF MUTUAL FUND
The net asset value of the Fund is the cumulative market value of the assets Fund net of its liabilities. In
other words, if the Fund is dissolved or liquidated, by selling off all the assets in the Fund, this is the
amount that the shareholders would collectively own. This gives rise to the concept of net asset value
per unit, which is the value, represented by the ownership of one unit in the Fund. It is calculated simply
by dividing the net asset value of the Fund by the number of units. However, most people refer loosely
to the NAV per unit as NAV, ignoring the per unit. We also abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the Fund. Once it is
calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The
19

detailed methodology for the calculation of the net asset value is given below.
The net asset value is the actual value of a unit on any business day. NAV is the barometer of the
performance of the scheme.
The net asset value is the market value of the assets of the scheme minus its liabilities and expenses. The
per unit NAV is the net asset value of the scheme divided by the number of the units outstanding on the
valuation date.

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

Number of outstanding units

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

SEBI regulations for NAV

The day on which NAV is calculated by a fund is called valuation date.

NAV of all schemes must be calculated and published at least weekly.
This is applicable to both open-end and closed-end fund.
Some closed end funds (Monthly Income Schemes) that are not listed on stock exchange may publish it
monthly quarterly.

SEBI Guidelines for Pricing of Units:

The mutual fund shall ensure that the re-purchase price is not lower than 93% of the NAV.
The sale price is not higher than 107% of the NAV. Repurchase price of closed end scheme shall not be
lower than 95% of the NAV.
The difference between the repurchase price and the sale price of the units shall not exceed 7% of the
sale price.

Investment Management Fees and Advisory Fees:

1.25% of the first Rs.100 crores of weekly average net assets outstanding in the accounting year.
1% weekly average net assets in excess of Rs. 100 crores.
A no load scheme can charge an additional management fee up to 1% of weekly average net assets
outstanding in the accounting year.

Taxation in the Hands of the Fund

Income earned by any mutual fund registered with SEBI or set up by a public sector bank/Financial
Institution or authorized by RBI is exempt from tax.

20

 Income distributed to unit holders by a closed-end or debt fund has to pay a distribution tax of 10%
plus surcharge of 1% i.e. a tax of 11%. This tax is also applicable to distributions made by open-end
funds which have less than 50% allocation to equity.
The Impact on the Fund and the Investor
Due to the tax payment by the fund, the NAV and the value of the investors investment will come
down.
The tax bears no relationship to the investors tax bracket.
This tax makes the income schemes less attractive than growth schemes.
The fund cannot avoid tax even if the investor chooses to reinvest the distribution back into the fund.
Tax Rebate available on Subscriptions to Mutual Funds (In accordance with Section 88 of Income Tax
Act)
Investments up to Rs. 60,000 in units of any specified mutual fund qualifies for tax rebate to the extent
of 20% of such investment.
In case of Infrastructure Bonds, investments up to Rs. 70,000 is eligible for 20% tax rebate.
Total investment eligible for tax rebate cannot exceed Rs. 60,000.
Investment up to Rs. 10,000 in an equity linked saving scheme (ELSS) qualifies for tax rebate of 20%.

Dividend

Tax:

The tax paid by the investor on receiving dividends from a mutual fund. There is no dividend tax to be paid at
the investors end.
There is no dividend tax deduction from NAV in all funds which are open- end and with over 50%
allocation of investment to equities.
Tax of 10.2% is deducted from the NAV by the fund in the following cases:
All closed end funds including equity.
All open end funds with less than 50% allocation in equity.

FINANCIAL PLANNING FOR INVESTORS REFERRING TO MUTUAL FUNDS:

Investors are required to go for financial planning before making investments in any mutual fund. The objective
of financial planning is to ensure that the right amount of money is available at the right time to the investor to
be able to meet his financial goals. It is more than mere tax planning.
Steps in financial planning are:

Asset allocation.
Selection of fund.
Studying the features of a scheme.

In case of mutual funds, financial planning is concerned only with broad asset allocation, leaving the actual
allocation of securities and their management to fund managers. A fund manager has to closely follow the
objectives stated in the offer document, because financial plans of users are chosen using these objectives.

WHY HAS IT BECOME ONE OF THE LARGEST FINANCIAL INSTRUMENTS?

21

If we take a look at the recent scenario in the Indian financial market then we can find the market flooded with a
variety of investment options which includes mutual funds, equities, fixed income bonds, corporate debentures,
company fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc. All these investment options
could be judged on the basis of various parameters such as- return, safety convenience, volatility and liquidity.
We get this in a tabular form
Return

Safety

Volatility

Liquidity

Convenienc
e

Equity

High

Low

High

High

Moderate

Co.
Moderate
Debent
ures

Moderate

Moderate

Low

Low

Co.
FDs

Moderate

Low

Low

Low

Moderate

Bank
Deposi
ts

Low

High

Low

High

High

PPF

Moderate

High

Low

Moderate

High

Life
Insura
nce

Low

High

Low

Low

Moderate

Gold

Moderate

High

Moderate

Moderate

Gold

Real
Estate

High

Moderate

High

Low

Low

High

Moderate

High

High

Mutual High
Funds

We can very well see that mutual funds outperform every other investment option. On three parameters, it
scores high whereas its moderate at one. comparing it with the other options, we find that equities gives us high
22

returns with high liquidity but its volatility too is high with low safety which doesnt makes it favourite among
persons who have low risk- appetite. Even the convenience involved with investing in equities is just moderate.
Now looking at bank deposits, it scores better than equities at all fronts but lags badly in the
parameter of utmost important i.e.; it scores low on return , so its not an happening option for person who can
afford to take risks for higher return. The other option offering high return is real estate but that even comes
with high volatility and moderate safety level, even the liquidity and convenience involved are too low. Gold
have always been a favourite among Indians but when we look at it as an investment option then it definitely
doesnt gives a very bright picture. Although it ensures high safety but the returns generated and liquidity are
moderate. Similarly, the other investment options are not at par with mutual funds and serve the needs of only a
specific customer group. Straightforward, we can say that mutual fund emerges as a clear winner among all the
options available.
The reasons for this being:
I) Mutual funds combine the advantage of each of the investment products: mutual fund is one such option
which can invest in all other investment options. Its principle of diversification allows the investors to taste all
the fruits in one plate. Just by investing in it, the investor can enjoy the best investment option as per the
investment objective.
II) Dispense the shortcomings of the other options: every other investment option has more or less some
shortcomings. Such as if some are good at return then they are not safe, if some are safe then either they have
low liquidity or low safety or both.likewise, there exists no single option which can fit to the need of
everybody. But mutual funds have definitely sorted out this problem. Now everybody can choose their fund
according to their investment objectives.
III) Returns get adjusted for the market movements: as the mutual funds are managed by experts so they are
ready to switch to the profitable option along with the market movement. Suppose they predict that market is
going to fall then they can sell some of their shares and book profit and can reinvest the amount again in money
market instruments.
IV) Flexibility of invested amount: Other then the above mentioned reasons, there exists one more reason
which has established mutual funds as one of the largest financial intermediary and that is the flexibility that
mutual funds offer regarding the investment amount.

Not all award-winning funds may be suitable for everyone

23

Many investors feel that a simple way to invest in Mutual funds is to just keep investing in award winning
funds. First of all, it is important to understand that more than the awards; it is the methodology to
choose winners t at is more relevant.
A rating firm generally elaborates on the criteria for deciding the winners i.e. consistent performance,
risk adjusted returns, total returns and protection of capital. Each of these factors is very important and has its
significance for different categories of funds.
Besides, each of these factors has varying degree of significance for different kinds of investors. For example,
consistent return re ally focuses on risk. If someone is afraid of negative returns, consistency will be a
more import ant measure than tot al ret urn i.e. Growth in NAV as well as dividend received.
A fund can have very impressive total ret urns overtime, but can be very volatile and tough for a risk adverse
investor. Therefore, all the ward winning funds in different categories may not be suitable for everyone.
Typically, when one has to select funds, the first step should be to consider personal goals and objectives. Invest
ors need to decide which element they value the most and the n prioritize the other criteria
Once one knows what one is looking for, one should go about selecting the funds according to the asset
allocation. Most investors need just a few funds, carefully picked, watched and managed over period of time.

WHY TO INVEST IN MUTUAL FUNDS:

A proven principle of sound investment is do not put all eggs in one basket. Investment in mutual funds is
beneficial due to following reasons.
They help in pooling of funds and investing in large basket of shares of different companies. Thus by investing
in diverse companies, mutual funds can protect against unexpected fall in value of investment. An average
investor does not have enough time and resources to develop professional attitude towards their investment.
Here professional fund managers engaged by mutual funds take desirable investment decision on behalf of
investors so as to make better utilization of resources.
Investment in mutual funds is comparatively more liquid because investor can sell the units in open market or
can approach mutual fund to repurchase the units at net asset value depending upon the type of scheme.
Investors can avail tax rebates by investing in different tax saving schemes floated by these funds, approved by
the government.
Operating cost is minimized per head because of large size of investible funds, there by realizing more net
income of investors.

OTHER INVESTMENT OPTIONS

24

Options Available to the Investor

Mutual Funds VS. Other Investments
Product

Return

Safety

Liquidity

Tax
Benefit

Convenie
nce

Bank Deposit

Low

High

High

No

High

Equity Instruments

High

Low

High or

No

Moderate

Low
Debentures

Moderate

Moderate

Low

No

Low

Fixed Deposits by

Moderate

Low

Low

No

Moderate

Bonds

Moderate

Moderate

Moderate

Yes

Moderate

RBI Relief Bonds

Moderate

High

Low

Yes

Moderate

PPF

Moderate

High

Low

Yes

Moderate

Moderate

High

Low

Yes

Moderate

Companies

National
Certificate

Saving

National
Scheme

Saving

Moderate

High

Low

Yes

Moderate

Monthly
Scheme

Income

Moderate

High

Low

Yes

Moderate

Life Insurance

Moderate

High

Low

Yes

Moderate

Mutual Funds

Moderate

Moderate

High

No

High

Moderate

Moderate

High

Yes

High

(Open-end)
Mutual Funds

25

HOW TO REDUCE RISK WHILE INVESTING:

Any kind of investment we make is subject to risk. In fact we get return on our
investment purely and solely because at the very beginning we take the risk of parting
with our funds, for getting higher value back at a later date. Partition itself is a risk.
Well known economist and Nobel Prize recipient William Sharpe tried to segregate the
total risk faced in any kind of investment into two parts - systematic (Systemic) risk and
unsystematic (Unsystematic) risk.
Systematic risk is that risk which exists in the system. Some of the biggest examples of
systematic risk are inflation, recession, war, political situation etc.
Inflation erodes returns generated from all investments e.g. If return from fixed deposit is
8 per cent and if inflation is 6 per cent then real rate of return from fixed deposit is
reduced by 6 per cent.
Similarly if returns generated from equity market is 18 per cent and inflation is still 6 per
cent then equity returns will be lesser by the rate of inflation. Since inflation exists in the
system there is no way one can stay away from the risk of inflation.
Economic cycles, war and political situations have effects on all forms of investments.
Also these exist in the system and there is no way to stay away from them. It is like
learning to walk.
Anyone who wants to learn to walk has to first fall; you cannot learn to walk without
falling. Similarly anyone who wants to invest has to first face systematic risk; there can
never make any kind of investment without systematic risk.
Another form of risk is unsystematic risk. This risk does not exist in the system and
hence is not applicable to all forms of investment. Unsystematic risk is associated with
particular form of investment.
Suppose we invest in stock market and the market falls, then only our investment in
equity gets affected OR if we have placed a fixed deposit in particular bank and bank
goes bankrupt, than we only lose money placed in that bank.
While there is no way to keep away from risk, we can always reduce the impact of risk.
Diversification helps in reducing the impact of unsystematic risk. If our investment is
distributed across various asset classes the impact of unsystematic risk is reduced.
If we have placed fixed deposit in several banks, then even if one of the banks goes
bankrupt our entire fixed deposit investment is not lost.

SBI MUTUAL FUND

SBI Mutual Fund, India's largest bank sponsored mutual fund, is a joint venture between the
State Bank of India and Societal Generals Asset Management (France), one of the world's topnotch fund management companies. Over the years, SBI Mutual Fund has carved a niche for
itself through prudent investment decisions and consistent wealth creation.
Since its inception, SBI Funds Management Private Ltd. has launched thirty-two schemes and
successfully redeemed fifteen of them. Throughout this journey, SBI Mutual Fund has profusely
rewarded the 2, 00,000 investors who have reposed their faith in it.
SBI Mutual Fund, one of the country's premier fund houses, with over 20 years of rich
experience in fund management, is a joint venture between the State Bank of India, Indias
largest bank and Societe Generale Asset Management, one of the world's leading fund
management companies. Today, SBI Mutual Fund is one of the largest AMCs in the country,
managing assets over Rs. 39,826.34 crores (as on April 30th, 2010.). The fund house serves its
vast family of over 5.5 million investors (Calculated on the basis of live folios as on 30/04/2010)
by reaching out to them through a network of over 200 points of contact.
Today, the SBI fund boasts of an expertise of managing assets over Rs. 13,000 crores and has a
diverse profile of investors actively parking their investments across 28 active schemes. A vast
network of 82 collection branches, 26 investor service centres, 21 investor service desks and 21
district organizers helps the SBI Mutual Fund to reach out to their investors.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.

SBI- MUTUAL FUND PRODUCTS:

EQUITY SCHEMES:
The investments of these schemes will predominantly be in the stock markets and Endeavour
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, sartorial Funds and Index Funds. Diversified
Equity Funds invest in various stocks across different sectors while Sectorial 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
Magnum Multiplier Plus 1993
Magnum Sector Funds Umbrella
o MSFU FMCG
o MSFU - Emerging Businesses Fun
o MSFU - IT Fund
o MSFU - Pharma Fund
o MSFU - Contra Fund
SBI Arbitrage Opportunities Fund
SBI Blue chip Fund
SBI Infrastructure Fund - Series I
SBI Magnum Tax gain Scheme 1993

SBI ONE India Fund

SBI Tax Advantage Fund Series 1

DEBT SCHEMES:
Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities
and Money Market instruments either 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 Childrens Benefit Plan

Magnum Gilt Fund
Magnum Gilt Fund (Long Term)
Magnum Gilt Fund (Short Term)
Magnum Income Fund
Magnum Income Plus Fund
Magnum Income plus Fund (Saving Plan)
Magnum Income plus Fund (Investment Plan)
Magnum Insta Cash Fund
Magnum InstaCash Fund -Liquid Floater Plan
Magnum Institutional Income Fund
Magnum Monthly Income Plan
Magnum Monthly Income Plan Floater
Magnum NRI Investment Fund
SBI Capital Protection Oriented Fund - Series I
SBI Debt Fund Series
o SDFS 15 Months Fund
o SDFS 90 Days Fund
o SDFS 13 Months Fund
o SDFS 18 Months Fund
o SDFS 24 Months Fund
o SDFS 30 DAYS
o SDFS 30 DAYS
o SDFS 60 Days Fund
o SDFS 180 Days Fund
o SDFS 30 DAYS
SBI Premier Liquid Fund
SBI Short Horizon Fund
SBI Short Horizon Fund - Liquid Plus Fund
SBI Short Horizon Fund - Short Term Fund

BALANCED SCHEMES:
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

Magnum NRI Investment Fund - Flexi Asset Plan

MAIN SCHEMES OF SBI MUTUAL FUND

SBI MAGNUM TAXGAIN SCHEME
Magnum Tax Gain Scheme is an Equity Linked Savings Scheme (ELSS) from SBI Mutual Fund
which offers investors tax benefits on an investment up to Rs 1 Lakh under Section 80C of
Indian Income Tax Act 1961. The fund was launched in the year 1993 and is one of the top
performers in the ELSS category.SBI Magnum tax gain Scheme 1993 ranks No.1 offering
29.98% 5-year returns as on December 31, 2009.Magnum tax gain is No. 1 in terms of AUMs at
Rs. 5,386 crores, and in terms of investors - at over 17 lakh investors (as on 31/12/2009). The
objective of the scheme is "to deliver the benefit of investment in a portfolio of equity shares,
while offering deduction on such investments made in the scheme under Section 80 C of the
Income-tax Act, 1961. It also seeks to distribute income periodically depending on distributable
surplus." The fund invests 80-100% in equity & equity related securities and remaining 0-20% in
money market instrument.
"The sole focus of the fund for the last 15 years has been on generating consistent returns. The
investment philosophy of the fund is aligned to the fact that most of the investor's are retail
investors and that there is lock in for investment. Thus the strategy is to take long term calls in
stocks and sectors which will minimize the volatility and risk in the fund. At this point in time,
the focus is on bottom up stock picking irrespective of the stock being a large cap or a mid cap
name which have a proven track record and better visibility going ahead.", says Jayesh Shroff,
fund manager, Magnum Tax gain Scheme.
SBI Mutual Fund which manages Magnum tax gain Scheme has fund management expertise of
over 20 years managing assets worth Rs.37,900crore.(as on 31.12. 2009).
Some Important features of this scheme are as follows:
Entry Load Investments below Rs. 5crores then entry load is 2.25%, Investments of
Rs.5crores and above then entry load is nil.
Exit Load: NIL
SIP: Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter
4 Quarters
STP: Minimum amount Rs.1000/- month - 6 months, Rs.3000/ Quarter - 6 months

Asset Allocation 80-100% in Equity, partly convertible debentures and fully convertible
debentures and bonds & 0 20% in Money market instruments.
Minimum Application Amount Rs 500 for purchase & Multiples of Rs 500 for additional
purchase.
Plans & Options Dividend option with payout and reinvestment facility.
The total asset based in the scheme is 5000 cr. It is the biggest tax saving scheme.
BSE 100 is the index.
There is lock in period of 3 years.
Enter Section 8OC
Section 88 was scrapped in Finance Bill 2005. Instead, Section 80C has been introduced. All
avenues that were eligible for tax benefits under Section 88 were brought under the Section 80C
fold. However, instead of offering tax rebates, investments (up to Rs 100,000) under Section 80C
qualify for deduction from gross total income. Hence a new system of claiming tax benefits is
now in place.
How have Equities performed as compared to other asset classes?
Track record of the last 15 years shows that equity investments give better returns over the long
term. Other asset classes such as Fixed Deposits & Gold have given returns of 5.7% & 10.3%
respectively as compared to 15.6% provided by equities (BSE Sensex). (Cumulative annualized
returns from 1984to 2004). We believe that a 3 year horizon is ideal for getting a reasonable
return from equity.
Investment strategy of Magnum tax gain scheme
Magnum Tax Gain Scheme follows the bottom up investment strategy. We have also kept the
portfolio size limited to about 35 stocks in all. While we believe that India is a growth story, we
feel that our strength lies in our ability to identify promising stocks and take them in the
portfolio. This strategy has worked in favor of the funds in the last couple of years and we intend
to pursue this strategy in future also.
Awards & Achievements:
Magnum tax Gain Scheme has been ranked CPR 1 by CRISIL which indicates very good
performance It has recently bagged 2 gold awards in the 1 year & 3 year category for
performance in the ICRA Online Awards. Magnum tax Gain Scheme has consistently given
dividends and the last dividend given was 102% in June 2005.

SBI MAGNUM CONTRA FUND

It is under the Magnum sector funds umbrella. And there are 5 high growth sectors which are as
follows.
I.T Fund
FMCG Fund
Pharma Fund
Contra Fund
Emerging Businesses Fund

Investment Objective:
To provide the investors maximum growth opportunity through equity investments in stock of
growth-oriented sectors of the economy .Contra derives from Contrarian which means that
investment is made when the stocks are currently out of favor of market for short term but it
doesnt consider bad debts.
SBI MUTUAL FUND is the first one who launched the Contra fund. And it gives the spectacular
performance. It is the one of the best scheme. And the total asset based in this scheme are3500 cr.
It is an open ended scheme.
Some Important features of this scheme are as follows:
Launched on 14 August 1999
Minimum investment required is Rs.2000 and additional purchase can be made in multiples of
one.
Benchmark is BSE 100.
Entry Load Investments below Rs. 5 crores then entry load is 2.25%, Investments of Rs.5
crores and above then entry load is nil.
Exit Load
For exit within 1 year from the date of allotment -1%
For exit after 1 year from the date of allotment NIL
SIP: Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter
4 Quarters
There is no Lock in period.
The objective of the Fund is to invest in undervalued scrips, which may be currently out of favor
but are likely to show attractive growth in the long term. Thus, this fund provides an alternative
to investors for investing in the growth scrips of the future. The funds collected under this
scheme will be invested in the equities of: Companies that are fundamentally sound, but generally are undervalued at the time of
investment due to lack of investor interest.
Companies that have embarked on the path of turnaround by restructuring of operations,
hiving off unrelated business, etc. And where the results of the turnaround are likely to
accrue in the long term.
Companies with strong management, but operating in commodities where there are signs
of bottoming out of the business cycle.

Magnum Multiplier Plus 1993

Investment Objective:
Magnum Multiplier Plus is an open-ended diversified equity fund and the investment objective
of the scheme is to provide investors long term capital appreciation along with the liquidity of an
open-ended scheme. The scheme will invest in a diversified portfolio of equities of high growth
companies.
ASSET ALLOCATION
Instrument
Equity and related
instruments
Debt
Instruments(including
Securitized debt) and
govt securities
Money market
instruments

% of portfolio of plan
A and B
Not less than 70%

Risk profile

Not more than 30%

Low to medium

Balance

Low

Medium to High

Scheme Highlights:
1. An open-ended equity scheme aiming for aggressive growth from investments in equities.
2. Scheme opens for Resident Indians, Trusts, and Indian Corporate and on a fully
reportable basis for NRIs, FIIs & Overseas Corporate Bodies.
3. Facility to reinvest dividend proceeds into the scheme at NAV.
4. Easy entry and exit on the basis of sales and repurchase prices determined daily.NAV will be
declared on every business day.
5. Nomination facility available for individuals applying on their behalf either singly or jointly
up to three.

PUBLIC SECTOR UNDERTAKING (PSU) FUND

SBI Mutual Fund has launched of its SBI PSU Fund. It is an open-ended equity fund. The fund
will mainly invest in a basket of stocks of Public Sector Undertakings (PSUs) and a small portion
in debt instruments issued by PSUs. While it will invest up to 100 per cent in equities of PSU, it
may also allocate up to 35 per cent in debt.
Through this fund, the fund house aims at capitalizing on stored value through
disinvestment. Disinvestment tends to improve price discovery, valuation and liquidity of such
stocks. The fund will cherry pick PSUs that are likely to emerge as more robust and vibrant
players in different industries of the economy as the disinvestment process takes place.
The new fund offer opened on May 17, 2010 and closed on June 14, 2010. The
net asset value (NAV) would be disclosed on every business day. Speaking at the launch, Achal

Kumar Gupta, MD and CEO, SBI Mutual Fund, said: Public sector undertakings play a very
important role in the economic development of our country. They have helped in creating a
diversified industrial base for the country, with their strong fundamentals and sound financials,
they offer good investment avenue. Added to this is the divestment opportunity to unlock the
value of the PSUs. We believe that SBI MFs PSU fund will help our investors in creating wealth
for them.
The industries where PSUs have a strong presence are infrastructure,
exploration and exploitation of oil and natural resources, technology development and capital
goods
The reasons why one could look at an NFO based on PSUs are as follows:
PSUs have strong fundamentals, are generally a leading players in their industries and in many
cases are near monopolies. These companies also showed greater resilience than their private
Sector counterparts during the economic downturn. Hence the PSU investment theme looks
promising.
SBI PSU Fund will be managed by Rama Iyer Srinivasan, who holds 16 years of experience in
the area of financial services, apart from holding an M.Com and MFM degree. Presently
Srinivasan is also the fund manager of Magnum Equity Fund, Magnum Global Fund Magnum
Sector Funds Umbrella - Emerging Business Fund and SBI Infrastructure Fund - Series I.
Market Dominance
Top 18 PSUs total Income is equal to 15% of Indias GDP.
PSUs paid over 35% of net profits as dividend in 2008.
Big Players
NTPC accounts for 30% of power generation
ONGC and OIL manage 90% of oil production
PSU bank accounts for about 73% for entire banking system assets. (Source: RBI)
BHEL is the market leader in Power equipments.
INVESTMENT OBJECTIVE
The objective of the scheme would be to provide investors with opportunities for long term
growth in capital along with the liquidity of an open ended scheme through an active
management of investment in a diversified basket of equity stocks of domestic Public Sector
Undertakings and in debt and money market instruments issued by PSUs and others.
ASSET ALLOCATION:
Instrument
Equity and equity related instruments
covered under the universe of PSU
companies including derivatives
Debt and Money Market Securities

% of Portfolio of
Plan A & B

Risk Profile

65%-100%

Medium to High

0% - 35%

Low to Medium

BENCHMARK - BSE PSU index

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

Entry Load - NIL

Exit Load
Exit within 3 years from the date of the allotment-1%
Exit after 3 years from the date of the allotment-NIL
Minimum investment size is Rs.5000 and in the multiples of Re.1.Additional Purchase: Rs.1000
and in the multiples of Re.1
Plans and Options
There are 2 plans which are as follows.
Growth Option
Dividend Option
Under the dividend option, facility for payout and reinvestment is also available.
Why should I invest in SBI PSU Fund?
PSU are the wealth creators of the nation, with strong fundamentals, and moreover they are
available at attractive valuations compared to broader markets. There may arise several
disinvestment opportunities too, which will lead to unlocking of the value in these companies.
Wealth Creators:
Out of the 30 companies which constitute the BSE Sensex, 4 companies with a combined weight
age of 13.54% are from the PSU space (BHEL, NTPC, ONGC and SBI). The BSE PSU index
outperforms the BSE Sensex index over the years by a substantial margin.
Disinvestment Opportunity:
Disinvestment is high on the governments agenda to increase the threshold limit for nonpromoter public shareholding for the private sector as well as public sector companies.PSU
companies, other than the listed ones lined up for disinvestment could be Coal India, LIC India,
BSNL, Nuclear Power Corporation etc. SBI PSU Fund would also identify investment
opportunities in IPOs of these companies. Privatization has brought out significant value
unlocking and greater efficiencies in the past, which lead to re-rating of those companies and
eventually leading to wealth creation.
Strong Dividends Payouts:
While the Growth potential clearly exists, there is another aspect that adds to the need to look at
the PSU companies closely; that is they have a strong dividend payout history.

Main Competitors of SBI Mutual Fund

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

RELIANCE Mutual Fund

KOTAK Mutual Fund
ICICI Mutual Fund
UTI Mutual Fund
BIRLA SUN LIFE Mutual Fund
HDFC Mutual Fund
LIC Mutual Fund
Alliance Capital Mutual fund,
AIG Global Investment Group Mutual fund
Benchmark Mutual fund,
Baroda Pioneer Mutual fund
Birla Mutual fund
HDFC Mutual fund,
HSBC Mutual fund,
ICICI Securities Fund,
IL & FS Mutual fund,
ING Mutual fund,
ICICI Prudential Mutual fund

Objectives of the Study

This study has been conducted with a variety of important objectives in mind. The
following provides us with the chief objectives that have tried to achieve through
the study. The extent to which these objectives have been met could judge from the
conclusions and suggestions, which appear in the later of this study.
The Chief Objectives of this study are:
The objective of the research is to study and analyze the awareness level of
investors of mutual funds.
1. To find out the Preferences of the customers or investors for Asset Management
Company.
2. To know the Preferences for the portfolios and to get insight knowledge about
mutual fund
3. To know why one has invested or not invested in SBI Mutual fund. An attempt
has been made to measure various variables playing in the minds of investors in
terms of safety, liquidity, service, returns, and tax saving.
4. To find out the most preferred channel.
5. To find out what should be done to boost Mutual Fund Industry.

RESEARCH METHODOLOGY

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

Research Plan
The research was descriptive in nature and the goal was to gather preliminary data to
shed light on the real nature of problems and to suggest possible solutions or new ideas. It
involved getting a feel of the situation and lays emphasis on the discovery of ideas and possible
insights.

Sample Size
The sample size of my project is limited to 100 people only. They were the regular customers
and employees of State Bank of India Malout.

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

Sampling technique
For the study we use NON PROBABILITY/ NON RANDOM - CONVENIENCE Sampling
method. Here we chose random members from the population to respond to our instrument hence
its the term Convenience.

SCALING TECHNIQUES
The scaling technique used in the questionnaire was closed ended questions. The data type
collected was not interval in nature. Each and every main attribute was divided into a host of
indicators and were given direct options to each questions. The technique was chosen as it elicits
reliable, quick, voluminous and easily testable data.

Data Sources

The research calls for gathering secondary data, primary data or both. Secondary data is
the data that is collected for another purpose and already exists somewhere. Primary data is
gathered for a specific purpose and is collected by the researcher himself.

Primary Data
Primary data was collected from the existing customers of the MFs. The primary information
was collected through Questionnaire and interviews presented to the investors. It was collected
through personal visit to persons, by formal and informal talks and through filling up the
questionnaire prepared. The data has been analyzed by using Averages and Percentages Methods.

Secondary data
Secondary Data was collected from:
a

Print articles on Mutual Funds.

From the websites and books.

Product and Service Brochures of the Mutual Funds.

Data Collection
For the purpose of this project, a questionnaire was designed to collect data. The questionnaire
was non-disguised because the objective and purpose was conveyed to the respondents before
asking for their responses. The questions were structured open for general information and
closed for collecting specific information.
Data Analysis Tools

Simple averages

Tabulation

Percentage

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

LIMITATIONS OF STUDY

 Time and resource constraints: The survey was conducted in selective areas because of
constraints of time and resources. Therefore, the findings cannot be generalized or
claimed until further research has been carried out.
Dynamic industries: As this is one of the dynamic industries today in India and many
changes are taking place in quick times. It is very important to keep an eye on this
industry very regularly. There are a lot of schemes with various objectives, so the basic
objective is used in making this report.
Sample size: The sample size taken was 100, which may not reflect a true picture of the
consumers mind. Because of these constraints, the analysis may not be accurate and may
vary, when tested in different places and time.
Some of the persons were not so responsive. Some of the respondents did not respond
properly due to their busy schedule.
Possibility of error in data collection because many of investors may have not given
actual answers of my questionnaire.
The study was conducted for a short period of time.
Information received from the respondents may not be true as they may not have had
taken much care to fill in the responses pertaining to all the queries with the same level of
dexterity.
It was difficult to correlate two different customers/respondents perceptions.

ANAYLSIS AND INTERPRETAION OF DATA

Age distribution of the investors of Malout.

Age
group

20-30

30-40

40-50

>50

No. of
investor
s

35

30

25

10

Interpretation:
According to this chart out of 100 Mutual Fund investors the most are in the age
group of 20-30 yrs. i.e. 35%, the second most investors are in the age group of 3040 yrs i.e. 20% and the least investors are in the age group of above 50 years.

Occupation of the investors

Occupation

No. of investors

Government Service

36

Private Service

33

Business

21

Agriculture

Others

Interpretation:
In occupation group out of 100 investors, 33 are private employees, 21 are
Businessman, 36 are Government employees, 4 agriculture and 6 are in others. So
the major portion of investment is done by govt. employees

Monthly family income of the investors

Income Group

No. of investors

below10000

30

10000-30000

43

30000-50000

21

Above 50000

Interpretation:
In the income group of the investors, out of 100 investors, 43
investors that is the maximum investors are in the monthly
income group Rs.10000 to Rs.30,000, Second one i.e. 30 investors are in the
monthly income group of below Rs.10, 000 and the minimum investors i.e. 6 are
in the monthly income group of above Rs.50, 000.

Investment needs
Retirement
Education/marriage
Medical
Family safety/Creation of wealth
All above
Total

37
18
9
24
18
100

Interpretation:
From the above graph it is clear that there are many people who have participated
in the survey and the major portion of the survey indicates that the people are
interested in investing in mutual funds for the sake their family financial security
and all above. From the above graph it also reveals that the minor portion of the
graph that is to build a corpus for medical does not play a major role in the
investment decisions.

Investors invested in different kind of investments.

Kinds of
Investments

No. of Respondents

Saving A/C

37

Fixed Deposits

22

Insurance

25

Mutual Fund

12

Shares/Debentures

13

Gold/Silver

20

Real estate

post office

15

Interpretation:
As per given graph maximum investment is made in saving account, insurance and
fixed deposits.

1. Influential factor among the consumer.

Factors

a)Liquidity

b) safety

c) Higher Return d) Tax benefit

No. of
Respondents

26

29

33

12

Interpretation
As per information collected most influential factor is safety, then returns and tax
benefit and at last liquidity is preferred.

2. Awareness of Mutual fund

Response

No. of Respondents

Yes

65

No

35

Total

100

Interpretation

Out of the respondents most of investors (65%) are aware of mutual funds.

3. Investors invested in Mutual Fund.

Response

No. of Respondents

Yes

75

No

25

Total

100

Interpretation:
Out of 100 people, 75% have invested in Mutual Fund and 25% do not have
invested in Mutual Fund.

3(a).Money invested in Mutual fund by investors

Option

Below 1000

1000-5000

Above5000

No. of Respondents

25

22

28

Interpretation:
From the above graph 33% invested less than 1000, 29% invested between 1000 to
5000 and 37%invested more than 5000 rs.

3(b). Timing for investing in Mutual funds

Option

Below 6 months

6 month-1 year

Above 1 year

No. of Respondents

19

34

22

Interpretation
From the above graph 25% invested from below 6 months, 45% invested between
6 month to 1 year and 30% invested from more than 1 year.

3(c) Investors having knowledge of Tax benefits.

Response

No. of Respondents

Yes

63

No

12

Total

75

Interpretation:

Out of 75 people, 84% are having knowledge of tax benefits and 16% are not
aware about it.

3(d) Awareness of SEBI/RBI guidelines.

Response

No. of Respondents

Yes

51

No

24

Total

75

Interpretation
Out of 75 people, 68% are having knowledge of SEBI/RBI guidelines and 32% are
not aware about it.

3(e) Preferred scheme by investors for investing in Mutual fund

Response
Open ended
Close ended

No. of Respondents
58
17

Total

75

Interpretation
Out of 75 people, 77% are preferring open ended and 33% preferred close ended
schemes.

4. Source of Information for customers about Mutual Fund.

Source of Information

No. of Respondents

Advertisement

Peer Group

16

Banks

26

Financial Advisors

27

Interpretation:
From the above chart it can be inferred that banks is the most important source of
information of Mutual Fund. After that financial advisor and at last advertisement
is preferred.

5. Investors invested in different Asset Management Company

(AMC).

Name of AMC

No. of Investors

SBIMF

30

UTI

17

HDFC

RELIANCE

OTHERS

14

Interpretation:
In Malout city most of the investors preferred UTI and SBI Mutual Fund. In case
of others AMC icici and kotak is preferred.

6. Reason for invested in SBIMF.

Reason

No. of Respondents

Associated with SBI

14

Better Return

Agents Advice

Interpretation:
Out of 30 investors of SBIMF, 14 persons have invested because of its association
with the brand name of State Bank of India, 7 have invested on agents advice, and
9 have invested because of better return. Out of 30 investors of SBIMF 47% have
invested due to its association with the Brand SBI, 30% Invested because of
Advisors Advice and 23% due to better return.

7. Option for Getting Return Preferred by the Investors.

Option

Dividend Payout

Dividend Re-invest

Growth in NAV

No. of Respondents

26

15

34

Interpretation:
From the above graph 45% preferred Growth option, 20% preferred Dividend
Payout and 35% preferred Dividend Reinvestment Option.

8. Mode of investment preferred by the Investor.

Mode of Investment

One Time Investment

Systematic Investment Plan

No. of Respondents

47

28

Interpretation:
Out of 75 investors, 63% preferred One Time Investment and 37% preferred
through Systematic Investment Plan.

9.

Reasons for not invested Mutual Fund.

Reason

No. of Respondents

Not Aware

Higher Risk

Not any specific reason

10

Interpretation:
According to graph 7 people are not interested due to high risk, 8 persons are not
aware and 10 persons are having no reason

10.

Reason for not invested in SBIMF.

Reason

No. of Respondents

Lack of awareness

Less return

12

Prefer govt securities

19

Others

Interpretation:

Out of 70 people who have not invested in SBIMF, 29% were not aware with
SBIMF, 27% do not invested due to less return, and 42% due to agents advice.

Findings
In Malout city Investors in the age group of 20-30 years were more in numbers. The second
most Investors were in the age group of 30-40 years and the least were in the age group of
above 50 years in case of mutual funds.
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.10, 000- 30,000 were more in numbers, the second
most were in the Income group of less than Rs 10,000 and the least were in the group of
above Rs.50, 000.

 Mostly all the Respondents had a Saving A/c in Bank then Invested in Fixed Deposits, Only
15% Respondents invested in Mutual fund.
Mostly Respondents preferred High Return while investment, the second most preferred
Low Risk means safety then liquidity and the least preferred tax benefit.
Only 65% Respondents were aware about Mutual fund and its operations and 35%
were not.
Among 100 Respondents only 75% had invested in Mutual Fund and 25% did not have
invested in Mutual fund.
Most of the Investors had invested in SBI or UTI Mutual Fund ICICI Prudential has also
good Brand Position among investors,
Out of 30 investors of SBIMF 47% have invested due to its association with the Brand SBI,
30% Invested because of Advisors Advice and 23% 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 Agents 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.
36% Investors preferred to Invest through Financial Advisors, 21%

through peer group

and 35% through Bank.

63% preferred One Time Investment and 37% preferred SIP out of both type of Mode
Investment.

of

Maximum Number of Investors Preferred Growth Option for returns, the

second most preferred Dividend Payout and then Dividend reinvestment

CONCLUSION
Running a successful Mutual Fund requires complete understanding of the peculiarities of the
Indian Stock Market and also the psyche of the small investors. This study has made an attempt
to understand the financial behaviour of Mutual Fund investors in connection with the
preferences of Brand (AMC), Products, and 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 Malout 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 Prudential etc. they are well known Brand, they are performing
well and their Assets Under Management is larger than others whose Brand name are not well
known like Principle, Sunder am, 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 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.

Suggestions
The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be
made to realize that ignorance is no longer bliss and what they are losing by not
investing.
Mutual Fund offers a lot of benefits 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 mind sets. The
advisors should target for more and more young investors as well as old 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 objectives, 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.
Younger people aged fewer than 35 will be a key new customer group into the future, so
making greater efforts with younger customers who show some interest in investing
should pay off.
.
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.
Customer education of the salaried class individuals is far below standard. Thus Asset
Management Companys need to create awareness so that the salaried class people
become the prospective customer of the future.

 Early and mid-earners bring most of the business for the Asset Management Companys.
Asset Management Companys thus needed to educate and develop schemes for the
persons who are at the late earning or retirement stage to gain the market share.
Returns record must be focused by the sales executives while explaining the schemes to
the customer. Pointing out the brand name of the company repeatedly may not too fruitful.
The target market of salaried class individual has a lot of scope to gain business, as they
are more fascinated to Mutual Funds than the self-employed.
Schemes with high equity level need to be targeted towards self-employed and
professionals as they require high returns and are ready to bear risk.
Salary class individuals are risk averse and thus they must be assured of the advantage of
risk diversification in Mutual Funds.
There should be given more time & concentration on the Tier-3 distributors.
The resolution of the queries should be fast enough to satisfy the distributors
Time to time presentation/training classes about the products should be there.
There should be more number of Relationship Managers in different Regions because one
RM can handle a maximum of 125 distributors efficiently and also to cover untapped
market.
Regular activities like canopy should be done so as to get more interaction with the
distributors.

BIBLIOGRAPHY
Books:
1. Security Analysis and Portfolio Management (sixth Edition 1995) by Donald E.
Fisher and Ronald J. Jordan. Publication: Pearson education.
2. Security Analysis and Portfolio Management by Khan and Jain
3. Kothari, C.R., Research Methodology, 2007
Magazines:

Money Outlook (May &June 2009)

Business world (May & June 2009)

During the research process, several books and various websites were referred for the collection
of relevant information.
Websites and Links
www.amfiindia.com
www.sbimu.com
www.nseindia.com
www.moneycontrol.com
www.mutualfundsindia.com
Other handbooks, reports and research paper used:
Mutual Fund Handbook
Factsheet and Statement
Tripathy Nalini Prava Mutual Funds in India. Emerging Issues Vol - 1 (2007),
123-158.

Panwar Sharad and Madhumathi R Characteristics and Performa nce of

selected mutual funds in India.,(2005)

 Riter, Jay, R1998, The buying and selling behavior of individual investors at
the turn of the year, journal of finance 43, 701-717.

ANNEXTURE

QUESTIONNAIRE FOR INVESTOR ATTITUDE TOWARDS MUTUAL FUND INVESTMENT

IN SBI
Dear respondent please fill this Questionnaire to complete my project report for getting the investor
attitude mutual fund of STATE BANK OF INDIA.

Name of the customer ________________________

Address /Contact
________________________
Occupation
_________________________
1

What is the age group you fall in?

A) 20-30 [ ]

b) 30-40 [ ] c) 40-50 [ ]

d) above 50 [ ]

What is the per month income of your family?

A) Less than 10,000 [ ]
c) 30,000-50,000 [ ]

b) 10,000-30,000 [ ]
d) Above 50,000 [ ]

3) Of the following what at present are your investment needs?

A. To build a corpus for retirement
B. To save for children education/ marriage
C. To provide for medical emergencies
D. To provide for family financial security
E. To create wealth
f. All of the above

[ ]
[ ]
[ ]
[ ]
[ ]
[ ]

4) What kind of investments you prefer most? Pl tick (). All applicable
Saving account

[ ]

Fixed deposit

[ ]

Insurance

[ ]

Mutual fund

[ ]

Post office-NSC

[ ]

Share/debentures

[ ]

Gold/silver

[ ]

PPF

[ ]

5) While

Real estate
PF

[ ]
[ ]

investing money which factor will prefer you most? Pl tick ()

a) Liquidity

[ ]

c) Tax benefit

[ ]

b) Return
d) Safety

[ ]

[ ]

6) Are you aware of the Mutual Funds?

Yes [ ]

No

[ ]

7) Have you ever invested in Mutual Funds?

Yes [ ]

No [ ]

If yes, then please attempt next question else go to question no.16

8) How much money you are invested in mutual fund? Pl tick ()
a) Below 1000 [ ]

b) 1000-5000 [ ]

c) more than 5000 [ ]

I) since how long you are in mutual fund scheme?

Below 6 months [ ]

6 month-1year [ ]

more than 1 year [ ]

ii) Do you have any knowledge of the tax benefits?

YES

[ ]

NO [ ]

iii) Are you aware of the SEBI/RBI guidelines?

YES

[ ]

NO [ ]

iv) Which type of scheme is preferred by you?

Open ended [ ]
9)

Close ended [ ]

How do you come to know about Mutual Fund? Pl tick ()

Advertisement

[ ]

Peer group

[ ]

Banks

[ ]

Financial advisor

[ ]

10) Which Asset

management company will you prefer to invest? Pl tick ()

a. SBIMF

[ ]

b. UTI

[ ]

C. Reliance

[ ]

d. HDFC

[ ]

If other please specify_____________________________________________

11) What are the reasons for invested in state bank of India mutual fund? Pl

tick ()
Associated with SBI

[ ]

Agent advice

[ ]

Better return

[ ]

12) Where from you purchase mutual funds? Pl tick ()

Directly from the AMCs [ ]

Brokers only

[]

Brokers/ sub-brokers

other sources

[]

[]

13) How would you like to receive the returns every year? Pl tick ()
Dividend payout

[ ]

Growth in NAV

[ ]

Dividend reinvestment

[ ]

14) When you invest in Mutual Funds which mode of investment will you

prefer? Pl tick ()
One time saving

[ ]

Systematic investment plan

[ ]

I) if not invested in Mutual Fund then why? Pl tick ()

Not aware

[ ]

High risk

[ ]

No reason

[ ]

ii) What are the reasons for not invested in SBIMF? Pl tick ()
a) Lack of awareness [ ]

b) imperfect knowledge

[ ]

c) Finds government securities/bonds better [ ]

d) Other reasons [ ]

Signature of respondent