Performance Evaluation of Sectoral Funds (With Reference To SBI Funds Management Private Limited, Visakhapatnam)

A Study
On
Performance Evaluation of Sectoral Funds

(with reference to SBI Funds Management Private Limited, Visakhapatnam)
A project report submitted to the JNTU, Kakinada
In partial fulfillment of the requirement for the Award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted By
THAMMINENI NAVYA,
17B81E0052.
Under the Esteemed Guidance of

Sri V. SANDEEP,
Asst. Professor,
Department of Management Studies.
Department of Management Studies,

SIR C R REDDY COLLEGE OF ENGINEERING,
ELURU – 534007, WEST GODAVARI DISTRICT, A.P., INDIA,
(APPROVED BY AICTE, NEW DELHI, AFFILIATED TO JNTUK, KAKINADA)
(2017-2019)
DECLARATION
I, hereby declare that this project report “A Study on Performance Evaluation

of Sectoral Funds” is a bonafide work done and submitted to the JNTU,
KAKINADA, DEPARTMENT OF MANAGEMENT STUDIES,
SIR.C.R.REDDY COLLEGE OF ENGINEERING is an original work carried-out
by me and is not to submitted to any other purpose are published any time before. The
information and findings of this report are based upon the information collected by me
during the study period.
PLACE : ELURU THAMMINENI NAVYA
DATE : Regd. No. 17B81E0052

CERTIFICATE
This is to certify that the project report entitled “ A Study on

Performance evaluation of sectoral funds private limited” with reference to SBI
Funds Management Private Limited, Visakhapatnam is being submitted by
T.Navya, in partial fulfillment of the requirement for the award of the Degree in
Master of Business Administration to Jawaharlal Nehru Technological
University, Kakinada. It is bonafide work carried by him under my guidance and
supervision.
Dr. K.K. CHOWDARY, MBA, Ph.D. Sri V. SANDEEP, M.B.A

Head of the Department Asst. Professor & Project Guide
PLACE : ELURU
DATE :
ACKNOWLEDGEMENT
I sincerely express my humble thanks to Dr. G. SAMBASIVA RAO,

Principal, Sir C.R. Reddy College of Engineering, for his blessing and
encouragement.
I express my sincere gratitude and thanks to Dr. K. KRISHNAIAH

CHOUDARY, HOD, Department of Management Studies, Sir C.R. Reddy College of
Engineering, Eluru, for his encouragement, continuous support and timely, valuable
suggestions.
I would like to extend my sincere thanks to Sri V. SANDEEP, Department of

MBA in Sir C.R. Reddy College of Engineering for his cooperation and completion of
this project work.
I express my sincere thanks to Sri. BVS KIRAN (Manager) for his

cooperation and valuable guidance in accomplishing the study and also to the staff of
with reference to on SBI FUNDS MANAGEMENT PRIVATE LIMITED.
T. NAVYA
Regd. No.17B81E0052
CONTENTS
Chapters Contents Page No.

CHAPTER-1 INTRODUCTION 1-12
&
RESEARCH METHODOLOGY
CHAPTER-2 INDUSTRY PROFILE & 13-34
COMPANY PROFILE
CHAPTER-3 DATA ANALYSIS 35-93

&
INTERPRETATION
CHAPTER-4 FINDINGS 94-99
&
SUGGESTIONS
BIBLIOGRAPHY 100
A STUDY ON PERFORMANCE EVALUATION OF SECTORAL FUNDS
CHAPTER – 1
INTRODUCTION
&
RESEARCH METHODOLOGY
1
INTRODUCTION
Mutual Funds is a vehicle to mobilize money from investors, to invest in different

markets and securities, in line with the investments objectives agreed up on, between the Mutual
fund and the investors. Mutual funds are financial instruments. These funds are collective
investments which gather money from different investors to invest in stocks, short-term
short money
market instruments, bonds and other securities and distribute the proceeds as dividends.
First and foremost, Mutual funds grant investors variety access to a wide variety of
instruments that they otherwise may not carry in their portfolio as individual securities. Since
Mutual funds invest in a diverse range of securities and investment options, one Mutual Funds
share represents proportionate ownership in each and every investment in the Mutual funds
portfolio.
Mutual funds are one of the mostly highly utilized investment options among average
investors and financial professionals alike. Their primary role is to assist investors in earning an
income or building theirr wealth, by participating in the opportunities available in various
securities and markets. The money that is raised from investors, ultimately benefits government,
companies and other entities, directly or indirectly, to raise money for investing in various
vari
projects or paying for various expenses.
Mutual funds offer different kinds of schemes to cater to the needs of diverse investors.
In the industry, the words ‘Fund and scheme’ are used inter
inter-changeably.
changeably. Various Categories of
schemes are called “Funds”.
The Mutual funds in India are handled by fund managers, also referred as the portfolio
managers and the Mutual fund in India is regulated by the Securities and Exchange board of
India (SEBI).
The unit value of the Mutual funds in India is known as Net Ass
Asset
et Value (NAV). The
NAV is calculated on the total amount of the Mutual funds in India, by dividing it with the
number of units issued and outstanding on daily basis.
2
Mutual funds, as they are called in India, originated in the USA and moved to the UK in
nineteen thirties. The popularity of mutual funds has increased manifold in developed financial
markets like the United States where mutual funds have almost overtaken bank deposits and
total assets of insurance funds.
In India, the mutual fund industry ha

hadd its origin with the establishment of Unit Trust of
India in 1964. Public Sector banks and financial institutions began to establish mutual funds in
1987. The private sector and foreign institutions were allowed to set up mutual funds in 1993.
They have all

ll come forward with a variety of schemes to cater to the varying needs of
saving populace. The Mutual funds have in all 882 schemes and the total assets under
management, was about Rs. 6522 billion by the end of 2010
2010-11. The fast-growing
growing industry is
regulated
ated by the Securities and Exchange Board of India.
This chapter is devoted to trace the origin and growth of Mutual funds Industry in the
developed financial markets like those in the United States, U.K. and Japan and also in India
right from the setting
ng up of Unit Trust of India in 1964. This chapter is divided into two
sessions. Section 1 presents an overview of Mutual Fund Industry abroad prefacing with the
explanation of the concept of mutual funds. Section 2 traces the origin and growth of mutual
fund industry in India.
Meaning
eaning of Mutual Funds
A Mutual fund is an Investment Vehicle made up of a pool of moneys collected from

many investors for the purpose of Investing in securities such as stocks, bonds, money market
instruments and other assets. Mutual funds are operated by professional money managers, who
allocate the fund’s Investments and attempt to produce capital gains and or income for the
fund’s investors. A Mutual funds portfolio is structured and maintained to match the investment
objectives
ves stated in its prospectus.
Mutual funds pool money from the investing public and use that money to buy other
securities, usually stocks and bonds.
3
Importance of Mutual Funds
The numerous benefits of Mutual funds make them the first and best choice of
investments for the do-it- are yourself crowd.
If you are a beginner and want to know why mutual funds are a good fit for your
investment needs or if you are aan
n advanced investor and need a reminder of why mutual funds
are best-suited
suited for your financial goals and lifestyle, here are some of the many benefits you
need to know.
Selection:
You can choose from hundreds of mutual funds offered by dozens of mutual
fund companies. This wide selection gives you the flexibility to pick mutual funds that
suit your financial objectives and risk tolerance.
For Example: Equity and growth funds are suitable for aggressive investors who
can tolerate periods of market volati
volatility.
lity. Balanced funds could be suitable for a more
moderate investor looking for both capital gains and income, while bond funds would
suit conservative investors who want preservation of capital and regular income.
Diversification:
Mutual funds are a cost

cost-effective
effective way to diversify your portfolio across
different asset categories and industry sectors. Instead of buying and monitoring
potentially dozens of stocks, you could buy a few mutual funds to achieve broad
diversification at a fraction of the cost.
For Example: Equity funds offer an indirect way to invest in dozens of

companies in different industry sectors, while balanced funds offer exposure to both
stocks and bonds.
4
Expertise:
Professional money management expertise at a reasonable cost is another

important attribute of mutual funds. Fund managers typically have postgraduate finance
degrees, and several years of stock analysis and investment management experience
Tax Saving:
It is useful for the purpose of saving tax to the investor because the government
of the country permitted tax exemption.
Safety:
The investor feels safety because mutual funds operation and management are
closely observed by the stock exchange centre.
Professional Investment management:
The Mutual fund industry is managed by professionals and qualified investment

fund management teams with inputs from solid research backed by experience.
Transparent and Regulated Industry:
Above all, the mutual ffund

und industry is regulated by the securities and exchange
board of India (SEBI) which ensures a smooth and transparent functioning of the mutual
fund industry. Mutual funds are a one
one-stop
stop shop for all your investment needs. Needs can
range from wanting to ppurchase
urchase a car in the next one or two years to saving for your
child’s future and education in the next 10 years, saving up for your retirement or saving
tax on your regular income.
5
STRUCTURE OF MUTUAL FUNDS IN INDIA
In India, the mutual fund industry is highly regulated with a view to imparting
operational transparency and protecting the investor's interest. The structure of a mutual fund is
determined by SEBI regulations. These regulations require a fund to be establ
established
ished in the form of
a trust under the Indian Trust Act, 1882. A mutual fund is typically externally managed. It is now
an operating company with employees in the traditional sense.
Instead, a fund relies upon third parties that are either affili
affiliated
ated organizations or
independent contractors to carry out its business activities such as investing in securities. A
mutual fund operates through a four
four-tier
tier structure. The four parties that are required to be
involved are a sponsor, Board of Trustees, an asset management company and a custodian.
Sponsor:
A sponsor is a body corporate who establishes a mutual fund. It may be one

person acting alone or together with another corporate body. Additionally, the sponsor is
expected to contribute att least 40% to the net worth of the AMC. However, if any person holds
40% or more of the net worth of an AMC, he shall be deemed to be a sponsor and will be
required to fulfill the eligibility criteria specified in the mutual fund regulation.
Board of Trustees:
A mutual fund house must have an independent Board of Trustees, where two-
two
thirds of the trustees are independent persons who are not associated with the sponsor in any
manner. The Board of Trustees of the trustee company hold
holdss the property of the mutual fund in
trust for the benefit of the unit--holders.
holders. They are responsible for protecting the unit holder’s
interest.
6
Asset Management Company:
The role of an AMC is highly significant in the mutual fund operation. They are
the fund managers i.e. they invest investors' money in various securities (equity, debt and money
market instruments) after
fter proper research of market conditions and the financial performance of
individual companies and specific securities in the eeffort
ffort to meet or beat average market return
and analysis. They also look after the administrative functions of a mutual fund for which they
charge management fee.
Custodian:
The mutual fund is required by law to protect their portfolio securities by placing
them with a custodian. Nearly all mutual funds use qualified bank custodians. Only a registered
custodian under the SEBI regulation can act as a custodian to a mutual fund.
Over the years, with the involvement of the RBI and SEBI, the mutual fund
industry has evolved in a big way giving investors an opportunity to make the most of this
investment avenue. With a proper structure in place, the industry has been able to cater
cat to more
number of investors. With the increase in awareness about mutual funds several new players
have joined the bandwagon.
7
Types of Mutual Funds
8
NEED AND SIGNIFICANCE OF THE STUDY
Mutual fund industry saw its assets base jump to over Rs.22 lakh crore in 2017,
adding more than Rs.5.4 lakh crore to the kitty, on strong participation from retail investors and
investor awareness initiatives.
Moreover, fund houses are expecting simi

similar 'healthy' growth
th in AUM to continue in
the new year too as the penetration levels of mutual funds are still very low in the country.
Total AUM of all the fund houses put together soared by over Rs.5.4 lakh crore, or 32
per cent, to Rs.22.35 lakh crore
re at the end of December 2017 from Rs.16.93 lakh crore in
December-end
end 2016, latest update with Association of Mutual Funds in India (AMFI) noted.
This was the fifth consecutive yearly rise in the industry AUM, after a drop in the assets
base for two preceding years.
The spike in bank deposits and consequent decline in interest rates following
demonetization on November 8, 2016 have helped mutual funds.
Besides, AMFI Chairman a Balasubramanian attributed the impressive surge in assets

base to 'aggressive'
ive' investor awareness campaign both at the individual players' level as well as
at an industry level.
"The 'Mutual Fund Sahi Hai' campaign has created huge impact in building confidence
among investors. Mutual fund distributors too have played a key ro
role
le in connecting with their
existing and new customers. It is also believed that investors are no more interested in buying
into traditional asset classes such as real estate and gold thus moving to financial asset class," he
added.
9
OBJECTIVES OF THE S
STUDY
The major objective of the present study is to know about the performance of
Thematic Funds in the Mutual funds. An attempt was made.
1. To analyze the trends of selected mutual funds.

2. To understand the functions of an Asset Management company.
3. To understand the Performance of various schemes using various tools to measure the
performances.
4. To measure and compare the performance of selected schemes of SBI Mutual Funds.
10
METHODOLOGY OF THE STUDY
Methodology adopted is collection of information in a systematic manner to

analyze and verify a phenomenon. This information is collected through Primary and
Secondary sources during the study. That Information was utilized for computing the Net Asset
value(NAV)
ue(NAV) and Moving Average of the NAV’s after the Analysis of which interpretation was
made.
There are two types of data classification:
• Primary data
• Secondary data
PRIMARY DATA:
The Primary data is the first

first-hand
hand information collected afresh. It deals with the
original information. The Primary data for this is collected through personal interviews and
discussions with the concerned personnel of the organization, mainly from the Finance
Fi
Department.
SECONDARY DATA:
Secondary data is that which already exists. It is collected from the secondary sources
viz, Annual Reports, Factsheets, Published Records which were compiled and scrutinized
relevant to the study, from the various bo
books.
The Primary and Secondary data thus collected is used to know about the company and
how to interpret the movement of NET ASSET VALUE (NAV) to evaluate the performance of
the SBI MUTUAL FUNDS.
11
LIMITATIONS OF THE STUDY
Although every effort has been made to study the “PERFORMANCE OF

THEMATIC FUNDS” in detail, in an organization of SBI Mutual funds, it is not possible to
make an exhaustive study in a limited duration of 1 month.
Some people though they invested in mutual funds did not possess any knowledge of
mutual funds; they were totally dependent on the SBI Mutual fund investment Advisor or their
friends and family advice.
Over 526 Mutual fund schemes offered by the SBI Mutual funds
funds-along
along with the multiple
within them
hem makes it difficult choice for the investors.
Costs incurred for managing the scheme are shared by all the Unit
Unit-Holders
Holders in proportion
to their holding of Units in the scheme. Therefore, an Individual Investor has no control over the
costs in a scheme.
12
CHAPTER – 2
INDUSTRY & COMPANY PROFILE
13
INDUSTRY PROFILE
The History of Mutual Funds
The mutual fund was born from a financial crisis that staggered Europe in the early
1770s. The British East India Company had borrowed heavily during the preceding boom years
to support its ambitious colonial interests, particularly in North America where unrest would
culminate in revolution in a few short years.
As expenses increased and revenue from colonial advent

adventures
ures fell, the East India
Company sought a bailout in 1772 from the already
already-stressed
stressed British treasury. It was the “original
“
too big to fail corporation”” and the repercussions were felt across the continent and indeed
around the world.
At the same time, the Dutch were facing their own challenges, expanding and exploring
like the British and taking “copy
“copy-cat risks” in a pattern that hass drawn parallels to the banking
crisis of 2008.
The first mutual fund
Against this backdrop, a Dutch merchant, Adriaan van Ketwich, had the foresight to pool
money from a number of subscribers to form an investment trust – the world’s first mutual fund
– in 1774. The financial risk to the mainly small investors was spread by diversifying across a
number of European countries and the American colonies, where investments were backed by
income from plantations, an early version of today’s mortgage
mortgage-backed securities.
urities.
14
Subscription to the closed

closed-end
end fund, which Van Ketwich called “Eendragt Maakt Magt”
(“unity creates strength”), was available to the public until all 2,000 units were purchased. After
that, participation in the fund was available only by buyi
buying
ng shares from existing shareholders in
the open market. The fund’s prospectus required an annual accounting, which investors could
view if they requested. Two subsequent funds set up in the Netherlands increased the emphasis
on diversification to reduce risk,
isk, escalating their appeal to even smaller investors with minimal
capital.
Van Ketwich’s fund survived until 1824 but the vehicle he created is still a hallmark of
personal investing more than two centuries later with an estimated $27.86 trillion US in global
assets in July 2013. In Canada alone, mutual funds represent $1.43 trillion.
The early mutual funds spread were of the closed

closed-end
end variety, issuing a fixed number of
shares. They spread from the Netherlands to England and France before heading to the
th U.S. in
the 1890s.
The first modern-day

day mutual fund
fund,, Massachusetts Investors Trust, was created on March
21, 1924. It was the first mutual fund with an open
open-end capitalization,
apitalization, allowing for the
continuous issue and redemption of shares by the investment company. After just one year, the
fund grew to $392,000 in assets from $50,000. The fund went public in 1928 and eventually
became known as MFS Investment Managemen
Management.
The growth of Canadian mutual funds
Four years later, in 1932, the first Canadian fund, Canadian Investment Fund Ltd. (CIF),
was established and by 1951 had assets of $51 million. It changed its name to Spectrum United
Canadian Investment Fund in Novem
November
ber 1996 and to CI Canadian Investment Fund in August
2002.
15
The growth of mutual funds and their impact on investing in general was nothing short
of revolutionary. For the first time, ordinary investors with minimal capital could pool their
resources in a professionally managed, diversified basket of investments, rather than going the
more expensive route of buying individual stocks of varying risks. This was considered a giant
step in the democratization of investments for the average person.
The first
st major sign of growth and popularity of mutual funds in Canada took place in
the early 1960s when total assets doubled from $540 million in 1960 to more than $1 billion by
the end of 1963. But the largest influx into mutual funds in Canada came during the
th 1990s when
double-digit
digit interest rates that had lured Canadian savers into GICs tumbled and investors moved
into investments with the potential for higher returns.
Interest rates and mutual fund sales had a direct correlation in the 1990s. In May 1990,
the Bank of Canada rate, on which financial institutions base their interest rates, stood at one of
its highest levels ever – 14.05 per cent. From that point, the rate began a steady decline, hitting
6.81 per cent at the beginning of 1993 and 4.11 per cent at the end of the year.
As the bank rate fell, mutual fund sales surged, jumping 140 per cent from the end of
1992 to the end of 1993 as strong markets sent assets climbing to almost $114.6 billion. The
Bank rate dropped to 3.25 per cent in January 1997 before slowly climbing to five per cent in
January 2000.
Mutual funds clearly represented the fastest

fastest-growing
growing segment of the Canadian financial
services industry during the 1990s and through the turn of the century with the value of assets
under management increasing by 1,700 per cent – from $25 billion in December 1990 to $426
billion by December 2001. These assets were managed in about 1,800 different mutual funds
held in more than 50 million unit holder accounts.
16
In 2008, global markets wer

weree rocked by a financial crisis, triggered by an over-extended
over
U.S. housing market and marked by financial sector collapses and bailouts similar to the
European crisis that spawned the original mutual fund.
Canada escaped largely unscathed compared to othe

otherr countries, particularly the U.S.,
thanks to tighter mortgage rules and a regulated banking system. Canadian mutual funds
survived, too, and after a brief downturn continue to thrive as a popular and valued savings
device for Canadian investors.
17
The mutual fund advantage
Mutual funds offer Canadians a superior means of accumulating wealth through access
to a broad range of personalized investment solutions based on sound investing principles.
Mutual funds include:
 Professional portfolio management

 Streamlined and convenient administration
 Risk management through diversification
 Innovative solutions that meet a range of investment objectives and evolving investor
needs
 Opportunities for foreign and domestic investment that may not otherwise be directly
direct
accessible to investors
 Liquidity, enabling investors to respond to changes in their personal circumstances
 Access to investing for all types of people, including those who prefer to invest small
amounts at regular intervals
 Choice of purchase methods and fee structures, including full service, fee-for-service
fee and
do-it-yourself
 Accountability and fairness to investors through industry regulation and transparency
The growth of the industry & IFIC
To meet the growing regulatory and trade needs of the mu

mutual
tual fund industry, the
Canadian Mutual Funds Association (CMFA) was established in 1962. Original members of the
CMFA were individual mutual funds themselves, not fund management companies as is the case
today.
18
In April 1963, the CMFA published a Code of Ethics and Regulation for its members.
Ten years later, it formally incorporated with a mandate to engage in and support activities
conducive to high ethical standards and efficiency of administration and operations within the
Canadian mutual funds industry. In 1976, the CMFA changed its name to The Investment Funds
Institute of Canada (IFIC).
Since then, IFIC has played an integral role in the regulatory development of the mutual
funds industry in Canada, proactively influencing and advancing indust
industry
ry issues within the
regulatory framework, while increasing members’ efficiencies, knowledge and proficiency. IFIC
provides a consistently high level of service to enable dealer and manager members to work
together in a co-operative
operative forum to enhance the in
integrity
tegrity and growth of the industry and
strengthen investor confidence.
History of Mutual Funds in India
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 B
Bank
ank of India. The history of
mutual funds in India can be broadly divided into four distinct phases
phases.
First Phase - 1964-1987
Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de
de-linked
linked from the RBI and the
th 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.
19
Second Phase - 1987-1993

1993 (Entry of Public Sector Funds)
1987 marked the entry of non

non-UTI,
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
non-UTI Mutual Fund established
lished in June 1987 followed
by Canara 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
blished 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

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) Re
Regulations
gulations 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 und
under
er management was way
ahead of other mutual funds.
20
Fourth Phase - since February 2003
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
Uni 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 unde
underr 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, 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
ent mergers taking place among different private sector funds,
the mutual fund industry has entered its current phase of consolidation and growth.
Mutual Fund Company’s in India

There are 44 companies that deal in Mutual Funds in India. Each company has a number
of mutual funds in which customers can invest their money according to their portfolios and
their needs, and also the risk they are willing to take.
Axis Asset Management Company Ltd.
Baroda Pioneer Asset Management Company Ltd.
Birla Sun Life Asset Management Company Ltd.
BNP Paribas Asset Management Company India Pvt. Ltd.
BOI AXA Investment Managers Pvt. Ltd.
Canara Robeco Asset Management Company Ltd.
Daiwa Asset Management (India) Pvt. Ltd.
Deutsche Asset Management (India) Pvt. Ltd.
21
DSP BlackRock Investment Managers Pvt. Ltd.
Edelweiss Asset Management Ltd.
Escorts Asset Management Ltd.
FIL Fund Management Pvt. Ltd.
Franklin Templeton Asset Management (India) Pvt. Ltd.
Goldman Sachs Asset Management (India) Pvt. Ltd.
HDFC Asset Management Company Ltd.
HSBC Asset Management (India) Pvt. Ltd.
ICICI Prudential Asset Management Company Ltd.
IDBI Asset Management Ltd.
IDFC Asset Management Company Ltd.
India Infoline Asset Management Co. Ltd.
Indiabulls Asset Management Company Ltd.
ING Investment
ent Management (India) Pvt. Ltd.
JM Financial Asset Management Pvt. Ltd.
JPMorgan Asset Management India Pvt. Ltd.
Kotak Mahindra Asset Management Company Ltd.
L&T Investment Management Ltd.
LIC NOMURA Mutual Fund Asset Management Company Ltd.
Mirae Asset Global Investments (India) Pvt. Ltd.
Morgan Stanley Investment Management Pvt. Ltd.
Motilal Oswal Asset Management Company Ltd.
Peerless Funds Management Co. Ltd.
Pine Bridge Investments Asset Management Company (India) Pvt. Ltd.
22
Pramerica Asset Managers

nagers Pvt. Ltd.
Principal PNB Asset Management Co. Pvt. Ltd.
Quantum Asset Management Co. Pvt. Ltd.
Reliance Capital Asset Management Ltd.
Religare Asset Management Co. Pvt. Ltd.
Sahara Asset Management Co. Pvt. Ltd.
SBI Funds Management Pvt. Ltd.
Sundaram
m Asset Management Co. Ltd.
Tata Asset Management Ltd.
Taurus Asset Management Co. Ltd.
Union KBC Asset Management Co. Pvt. Ltd.
UTI Asset Management Co. Ltd.
23
COMPANY PROFILE
Historical Background of SBI Mutual Funds
OUR IDENTITY:
With 30years of rich experience in fund management, we at SBI Funds Management

Pvt. Ltd. bring forward our expertise by consistently delivering value to our investors. We have
a strong and proud lineage that traces back to the State Bank of India (SBI) - India's largest
bank. We are a Joint Venture between SBI and AMUNDI (France), one of the world's leading
fund management companies.
With our network of over 222 points of acceptance across India, we deliver value and
nurture the trust of our vast and var
varied family of investors.
Excellence has no substitute. And to ensure excellence right from the first stage of
product development to the post
post-investment
investment stage, we are ably guided by our philosophy of
‘growth through innovation’ and our stable investment policies. This dedication is what helps
our customers achieve their financial objectives.
OUR VISION:
“To be the most preferred and the largest fund house for all asset classes, with a consistent track
record of excellent returns and best standards in customer service, product innovation,
technology and HR practices.”
24
OUR SERVICES:
Mutual Funds:
Investors are our priority. Our mission has been to establish Mutual Funds as a viable
investment option to the masses in the country. Working towards it, we developed innovative,
need-specific
specific products and educated the investors about the added benefits of
o investing in
capital markets via Mutual Funds.
Portfolio Management and Advisory Services:
SBI Funds Management has emerged as one of the largest player in India advising
various financial institutions, pension funds, and local and international asset management
companies. We have excelled by understanding our investor's requirements and terms of risk /
return expectations, based on which we suggest customized asset portfolio recommendations.
We also provide an integrate end
end-to-end customized asset management
nagement solution for institutions
in terms of advisory service, discretionary and non
non-discretionary
discretionary portfolio management services.
Offshore Funds:
SBI Funds Management has been successfully managing and advising India's dedicated
offshore funds since 1988.
988. SBI Funds Management was the 1st bank sponsored asset
management company fund to launch an offshore fund called 'SBI Resurgent India
Opportunities Fund' with an objective to provide our investors with opportunities for long-term
long
growth in capital, through
ough well
well-researched
researched investments in a diversified basket of stocks of
Indian Companies.
25
Alternative Investment Funds (AIF):
As part of the various asset management bouquets of products offered by the SBI Funds
Management Private Limited, we additionally offer alternate asset investment products through
Alternative Investment Funds. We launched our first alternative investment fund in 2015 and
more funds are on the anvil as the space is still nascent and a lot of opportunities exist. With a
defined
fined regulatory framework in place, we see AIFs growing faster and boosting investments in
the country with participation from domestic as well as foreign investors.
Fund House Expertise

Investment Expertise
The best investment strategies put together bby

y the best minds, our Fund Managers. With
a sharp eye to monitor, gauge and understand the changes in the market, our fund managers and
analysts gear up to meet new challenging environments. Their ability to capture the growth
potential of Indian securitiess and manage complex portfolios as well as the drive to deliver
optimum results is their forte. With superior securities selection, incisive research, intensive
coverage including internal forecasts, active monitoring and regular tracking, our dedicated team
te
ensures minimization of risks while protecting our investor's interest. Always.
Investment Philosophy
Growth through innovation.
Our expert team of experienced and market savvy researchers prepare comprehensive
analytical and informative reports on ddiverse
iverse sectors and identify stocks that promise high
performance in the future.
26
What is innovation? Innovation is the process of turning ideas into concrete plans for
progressive growth. We always seek to provide our investors with opportunities for progressive
growth through our innovative products, superior stock selection and active portfolio
management. Accordingly, we also enhance and optimize asset allocation and stock selection
based on internal and external research. Derivatives are used to he
hedge
dge and rebalance portfolios to
keep the risk factors at reasonable levels,
The three main phrases, which act as a guiding force for the investment performance, are
as follows:
 term capital appreciation for the investor: Our fund manager's view is not guided
Long-term
by any momentum play but by the objective of generating sustainable performance for
the investor.
 Superior stock selection: Our team is encouraged to be ahead of the rest of the industry in
terms of identifying new ideas & opportunities.
 Active fund management: While the performance of all the funds is benchmarked against
a specific index, we do not encourage our investment team to replicate the index
composition with the fund portfolio.
Optimal Risk Management
Risk Management is an in
inherent
herent part of any business. As one of the core focus areas,
each of our strategies is subject to close scrutiny on a continuous basis. Regulatory agencies
around the world are placing increasing pressure on institutions to measure and manage risk
better. At SBI Funds Management, we follow enterprise wide approach to risk management with
a dedicated, experienced and professional risk management team covering significant functions
of the organization. Risk Management focuses on:
27
 Identifying actual and potential

tential areas of risk
 Assessing the adequacy of internal controls
 Proposing risk mitigating measures and
 Safeguarding investor interest through ongoing analysis and monitoring
Investment Objective
Setting benchmarks time and again. For our investors.
Our objective is to endeavor to outperform our benchmarks through well researched

investments in Indian equities. This is achieved by implementing an active management style
based on fundamental analysis, leading to the construction of a portfolio. It could be blended,
large cap, mid cap, or specific sector oriented - which aims at capturing the growth potential of
Indian equities.
Products and Services offered by SBI Mutual Funds
SBI Magnum Balanced Fund:
Asset allocation is vital for shielding an investor’s portfolio from wide market swings of
euphoria & panic. Balanced funds, as the name suggests, are hybrid funds which invest in equity
& debt instruments. They provide diversification to an investor’s por
portfolio
tfolio by blending the
growth capability of equity with the relative stability of debt.
SBI Magnum Balanced Fund aims to provide investors long term capital appreciation,
along with the liquidity of an open
open-ended
ended scheme by investing in a mix of debt and equity. The
scheme will invest in a diversified portfolio of equities of high growth companies and balance
the risk through investing the rest in a rel
relatively safe portfolio of debt. The fund provides a
suitable investment opportunity for those who wish to benefit from the growth potential of equity
without being completely exposed to equity markets.
28
SBI Magnum mid Cap Fund:
Midcap companies are those which have successfully navigated the start-up
start years but
are yet to reach the mature stage of the bu
business
siness growth cycle. They are usually in niche or
emerging sectors of the economy & have a high growth potential. They are more volatile than
large caps & typically fall more during downtrends but are beneficial in bringing a slight boost to
an equity portfolio.
SBI Magnum Midcap Fund aims to provide investors with opportunities for long-term
long
growth in capital along with the liquidity of an open
open-ended
ended scheme by investing predominantly
in a well-diversified
diversified basket of equity stocks of Midcap companies. The fund can invest 65% -
100 % of its assets in midcap stocks. It also selectively invests in small cap stocks to generate
alpha and in large cap stocks from liquidity perspective. A bottom
bottom-up
up strategy is followed for
stock selection rather than sector calls.
SBI Magnum Multicap Fund:

Midcap companies are those which have successfully navigated the start-up
start years but
are yet to reach the mature stage of the business growth cycle. They are usually in niche or
emerging sectors of the economy & have a high growth potential. They are more volatile than
large caps & typically fall more during downtrends but are beneficial in bringing a slight boost to
an equity portfolio.
SBI Magnum Midcap Fund aims to provide investors with opportunities for long-term
long
growth in capital along with the liquidity of an open
open-ended
ended scheme by investing predominantly
in a well-diversified
diversified basket of equity stocks of Midcap companies. The fund can invest 65% -
100 % of its assets in midcap stocks. It also selectively invests in small cap stocks to generate
alpha and in large cap stocks from liquidity perspective. A bottom
bottom-up
up strategy is followed for
stock selection rather than sector calls.
29
The fund is suitable for investors looking for capital appreciation with a long term
investment horizon. Blue chip companies are typically large businesses, with substantial market
share & leadership in their respective industries. They historically have shown
show successful
growth, high visibility and reach, good credit ratings and greater brand equity amongst the
public. Investing in such companies brings relative consistency to a portfolio.
SBI BLUE CHIP FUND:
SBI Blue chip Fund aims to provide investors wi

with
th opportunities for long-term
long growth
in capital through an active management of investments in a diversified basket of equity stocks
of companies whose market capitalization is at least equal to or more than the least market
capitalised stock of S&P BSE 1100
00 Index. Currently, the fund is predominantly large cap with
opportunistic allocations to high conviction midcaps (up to 20%). The fund is suitable for
investors who want exposure to blue chip Indian companies from a medium to long term
perspective.
SBI MAGNUM TAX GAIN SCHEME:
Tax planning is an essential but challenging process to undertake. In the sea of tax
saving instruments available for investors, mutual funds through equity linked savings scheme
(ELSS) provide an option to gain from the growth potential of equity markets while getting tax
benefits. ELSS investments are eligible for tax deduction up to Rs. 1,50,000 per year from gross
total income under Section 80C of Income Tax Act, 1961.
SBI Magnum Tax Gain Scheme aims to deliver the benef

benefit
it of investment in a portfolio of
equity shares, while offering tax deduction on such investments made in the scheme under
section 80C of the Income-tax
tax Act, 1961. It also seeks to distribute income periodically
depending on availability of distributable surplus. Investments in this scheme would be subject to
a statutory lock-in
in of 3 years from the date of investment to avail benefit of Section 80C of
Income Tax Act.
30
Investors looking at dual advantage of saving taxes along with exposure to equity
markets may invest in this fund. This portfolio is ideal for investors who would like to invest for
long-term capital appreciation.
SBI FMCG FUND:
Fast moving consumer ggoods

oods (FMCG) are products which are used in our daily lives.
India has one of the biggest & rapidly growing FMCG markets in the world. The fast
urbanization is working as the catalyst for the growth of the industry. FMCG companies have
been expanding rapidly
y in the Indian market and are set to grow to the next level as India’s
middle class expands. The strong signs in the economy are proving beneficial for the FMCG
companies in India and many of them are diversifying their base to cater to the larger section of
consumers.
SBI FMCG fund provide investors an opportunity to invest in an actively managed

portfolio of FMCG stocks, and potentially benefit from one of the key sectors in the Indian
growth story. The fund is suitable for high
high-risk appetite investors
rs who are bullish on the
prospects of the FMCG sector & are looking to add a sector fund to their core portfolio in
i order
to boost overall returns.
SBI IT Fund:
Information Technology (IT) is one of the most robust industries in the world. The IT
sectorr has emerged as a major global source of both growth and employment. The Indian IT
industry has played a major role in putting the country on the international map. The industry has
helped India transform from a rural and agriculture
agriculture-based
based economy to a knowledge-based
kn
economy.
SBI IT Fund provides investors an opportunity to invest in an actively managed portfolio

of IT stocks, and potentially benefit from one of the key sectors in the Indian growth story.
31
The fund is suitable for high

high-risk
risk appetite investors who are bullish on the prospects of
the infrastructure sector & are looking to add a sector fund to their core portfolio in order to
boost overall returns.
SBI PHARMA FUND:
ocial & economic asset & improving global health has been a long
Health is a crucial social
term priority. Pharmaceutical industry is responsible for providing medicines & health care
facilities to prevent & cure diseases. In the 21st century, with the shift of healthcare from
treatment
ment to prevention, the significance of the industry has grown manifold. The Indian
pharmaceutical industry, in this context, is one of the largest in the world & has fast emerging
centre for research & manufacturing.
SBI Pharma Fund provides investors an opportunity to invest in an actively managed

portfolio of pharma stocks, and potentially benefit from one of the key sectors in the Indian
growth story.
The fund is suitable for high

high-risk
risk appetite investors who are bullish on the prospects of
the pharma sector & are looking to add a sector fund to their core portfolio in order to boost
overall returns.
SBI INFRASTRUCTURE FUND:

Infrastructure is a key driver in propelling India’s economic development.
Infrastructure connects products to the m
markets,
arkets, workers to industries, people to services and the
individuals in rural areas to urban growth centres. It also lowers costs, enlarges markets and
facilitates trade. This sector has an important role of fostering growth & development of a
country.
SBI Infrastructure Fund aims to provide investors with opportunities for long-term
long
growth in capital through an active management of investments in a diversified basket of equity
stocks of companies directly or indirectly involved in the infrastructure growth in the Indian
economy and in debt & money market instruments. The scheme covers the following sectors/
32
areas of the economy – Airports, Banks, Financial Institutions & Term lending Institutions,
Cement & Cement Products, Coal, Construction, Electr
Electrical
ical & Electronic components
engineering, Energy including Coal, Oil & Gas, Petroleum & Pipelines, Industrial Capital Goods
& Products, Metals & Minerals, Ports, Power and Power equipment, Road & Railway initiatives,
Telecommunication, Transportation, Urban Infrastructure including Housing & Commercial

Infrastructure.
Managing Directors of SBI Mutual Funds
DESIGNATION NAME
MD & CEO Mrs. Anuradha Rao
ED & CIO Mr. Navneet Munot
ED & CMO (Domestic Business) Mr. D.P.Singh
Auditors
Sudit K Paresh & Co.
Chartered Accountants
Ballard House, 2nd Floor,
Adi Marzvan Path
Ballard Pier, Fort, Mumbai – 400 001
Bankers
State Bank of India
33
Registered Office
9th Floor, Crescenzo, C

C-38 & 39
G Block, Bandra--Kurla Complex,
Bandra (East), Mumbai – 400 051
Tel: +91 22 61793000
Fax: +91 22 67425687
Website: www.sbimf.com
34
CHAPTER – 3
DATA ANALYSIS & INTERPRETATION
35
CONCEPTUAL APPROACH OF INVESMTENT IN MUTUAL FUNDS
Conceptually, a mutual fund is a single large professionally managed

investment organization that combines the money of many individual investors having
similar investment objectives. It invests this money in a wide variety of securities and
individual investors
estors share its income and expenses, its profits and losses, its capital
appreciation and growth in proportion to their shareholdings. In other words, a mutual fund is
a type of Investment institutions, which mobilizes savings of individuals and institutions
instituti and
channelizes these savings in corporate securities to provide investors a steady stream of
returns and capital appreciation. It is worthwhile that in India in terms of Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996 a mutual fund means “a fund
established in the form of trust to raise movies through the sale of units to the public or a
section of the public under one or more schemes for investing in securities, including money
market instruments”.
The mutual fund iindustry

ndustry is a lot like the film star of the finance business.
Though it is perhaps the smallest segment of the industry, it is also the most glamorous in
that it is a young industry where there are changes in the rules of the game every day, and
there are constant
onstant shifts and upheavals. The mutual fund is structured around a feisty simple
concept, the mitigation of risk through the spreading of investments across multiple entities,
which is achieved by the pooling of a number of small investments into a large bucket. Yet is
has been the subject of perhaps the most elaborate and prolonged regulatory effort in the
history of the country.
The primary objective of all mutual funds is to provide better returns to investor
by minimizing the risk associated with capital market investment10. Hence mutual funds
investment are made in a manner as to ensure its investors a triple benefit of steady return
and capital appreciation along with low risk 11. By pooling their assets through mutual funds
investors achieve economies of scale.
36
Asset allocation:
The first thing here is to understand what kind of portfolio you need. Your funds will
need to be divided between different asset classes to achieve the returns that you want. This
is known as asset allocation. The ideal asset allocation route would help you to invest in a
number of funds that are based on your risk profile. Your risk profile will aalso
lso help determine
the extent to which you should invest in each asset segment such as equity and debt.
Your asset allocation should have a healthy mix of high

high-risk and low--risk components.
The usual rule is that the percentage of funds you allocate to low-risk
risk debt instruments
should be equal to your age. For instance, if you are a 30 year old, then 30% of your fund
allocation should go toward debt instruments. This will cushion you against any downturns
due to investments in high-risk
risk assets. This m
might
ight be true when you are young but as you
grow older, you must reduce your high
high-risk
risk investments. A golden rule here is that the
younger you are, the more you can invest in equities and other high
high-risk
risk Mutual Funds. Up to
a certain age, your risk profile can be moderately high as you have certain flexibilities to
invest in high-risk, high-return
return funds without getting too worried about potential losses.
Short listing fund types:

Short listing and zeroing in on the right funds represent
representss the most important part
of investing in Mutual Funds. Once you are done with the asset allocation that best reflects
your needs, the next step is to look for and compare different Mutual Funds on the basis of
their past performance and investment philoso
philosophy.
phy. For this, you should refer to the
shareholder reports and prospectuses provided by AMCs. The prospectus will detail the
information related to the Mutual Fund from a legal perspective while the shareholder report
can help you understand the past perfo
performance and consistency of returns.
Before investing in a fund, you should first be certain about what your ultimate
financial goals are. Are you investing to substitute your current income or planning for
retirement or are you looking to ssave for child’s marriage? Next, you need to determine what
the horizon for these goals will be. The more money you need, the more risk you might need
37
to take if you don’t have much time. You can afford to take lower risks if your goal is a long-
long
term one. However, understand that when you invest in high risk funds for the long term, the
risks will become considerably lower as your goal nears. You should choose your Mutual
Funds accordingly.
Some Mutual Funds are open

open-ended while others are close-ended.
ended. In case of the
latter, you won’t be able to liquidate the funds until the fund has matured. Therefore, you
need to be careful about the time frame you’re investing for. In general, the shorter the period
of investment, the lower the risks that you should take, while a higher time frame will help
you overcome downturns in case of high
high-risk instruments.
Finally, ensure that your risk profile is right. This may seem daunting but once
onc
you have charted out your future requirements and the time frame, you can find out what
kind of risk profile you are comfortable with. Are you comfortable with the dynamics of the
stock market and can you accept both ups and downs? Or are you looking for safe and
assured bets that will meet your needs and still keep you safe? These depend on your
personal outlook. If you aren’t comfortable with an asset class even though it’s aligned
directly with your goals, you should drop that option.
Association of Mutual
utual funds in India (AMFI)
Introduction:
The Association of Mutual Funds in India (AMFI) is dedicated to developing the

Indian Mutual Fund Industry on professional, healthy and ethical lines and to enhance and
maintain standards in all areas wi
with
th a view to protecting and promoting the interests of mutual
funds and their unit holders.
38
AMFI, the association of SEBI registered mutual funds in India of all the registered Asset
Management Companies, was incorporated on August 22, 199
1995, as a non-profit
profit organization. As
of now, all the 42 Asset Management Companies that are registered with SEBI are its members.
Objectives:
• To define and maintain high professional and ethical standards in all areas of operation of
mutual fund industry.
• To recommend and promote best business practices and code of conduct to be followed by
members and others engaged in the activities of mutual fund and asset management
including agencies connected or involved in the field of capital markets and financial
financia
services.
• To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI
on all matters concerning the mutual fund industry.
• To represent to the Government, Reserve Bank of India and other bodies on all matters
relating to the Mutual Fund Industry.
• To undertake nationwide investor awareness programme so as to promote proper
understanding of the concept and working of mutual fun
funds.
• To disseminate information on Mutual Fund Industry and to undertake studies and research
directly and/or in association with other bodies.
• To take regulate conduct of distributors including disciplinary actions (cancellation of ARN)
for violations of Code of Conduct.
• To protect the interest of investors/unit holders.
Types of Mutual Funds
I. Mutual Funds Based on Structure:
• Open-Ended
Ended Funds: These are funds in which units are open for purchase or
redemption through the year. All purchases/ redemption of these fund units are done
at prevailing NAV’s. Basically these funds will allow investors to keep invest as long
as they want. They also tend to be actively managed which means that there is a fund
39
manager who picks the places where investments will be made. These funds also
charge a fee which can be higher than passively managed funds because of the active
management. They are in ideal inves
investment
tment for those who want investment along with
liquidity because they are not bound to any specific maturity periods. This means that
investors can withdraw their funds at any time they want thus giving them the
liquidity they need.
• Close-Ended
Ended Funds: These are funds in which units can be purchased only during
the initial offer period. Units can be redeemed at a specified maturity date. To provide
for liquidity, these schemes are often listed for trade on a stock exchange; unlike
open-ended
ended mutual funds
funds,, once they need to be sold back to the mutual fund, instead
they need to be sold through the stock market at the prevailing price of the shares.
• Interval Funds: These are funds that have the features of open
open-ended
ended and closed
ended funds in that they are opened for repurchase of shares at different intervals
during the fund tenure. The fund management company offers o re-purchase
re units
from existing unit holders during these intervals. If unit holders wish to they can
offload shares
hares in favor of the fund.
II. Types of Mutual Funds Based on Asset Class:
• Equity funds: These are funds that invest in equity stocks/shares of companies. These are
considered high-risk
risk funds but also tend to provide high returns. Equity funds can include
in
specialty funds like infrastructure, fast moving consumer goods and banking to name a
few. They are linked
inked to the markets.
40
• Debt Funds: These are funds that invest in debt instruments e.g. company debentures,
government bonds and other fixed income assets. They are considered safe investments
and provide fixed returns. These funds do not deduct tax at source so if the earning from
the investment
stment is more than Rs. 10,000 then the investor is liable to pay the tax on it
himself.
• Money Market Funds: These are funds that invest in liquid instruments e.g. T-Bills,
T CPs
etc. They are considered safe investments for those looking to park surplus funds for
immediate but moderate returns. Money markets are also referred to as cash markets and
come with risks in terms of interest risk, reinvestment risk and credit risks.
• Balanced or Hybrid Funds: These are funds that invest in a mix of asset classes.
class In some
cases, the proportion of equity is higher than debt while in others it is the other way round.
Risk and returns are balanced out this way. An example of a hybrid fund would be
Franklin India Balanced Fund
Fund-DP (G) because in this fund, 65% to 80% of the investment
is made in equities and the remaining 20% to 35% is invested in the debt market. This is so
because the debt markets offer a lower risk than the equity market.
III. Types of Mutual Funds based on investment objective:
• Growth funds: Under these schemes, money is invested primarily in equity stocks
with the purpose of providing capital appreciation. They are considered to be risky
funds ideal for investors with a long
long-term
term investment timeline. Since they are risky
funds they are also ideal for those who are looking for higher returns on their
investments.
41
• Income funds: Under these schemes, money is invested primarily in fixed-income

fixed
instruments e.g. bonds, debentures etc. with the purpose of providing capital
protection and regular income to investors.
• Liquid funds: Under these schemes, money is invested primarily in short-term

short or
very short-term
term instruments e.g. T
T-Bills,
Bills, CPs etc. with the purpose of providing
liquidity. They are considered to be low on risk with moderate returns and are ideal
for investors with short
short-term investment timelines.
• Tax-Saving
Saving Funds (ELSS): These are funds that invest primarily in equity shares.
Investments made in these funds qualify for deductions under the Income Tax Act.
They are considered high on risk but also offer high returns if the fund performs well.
• Capital Protection Funds: These are funds where funds are are split between
investment
nt in fixed income instruments and equity markets. This is done to ensure
protection of the principal that has been invested.
• Fixed Maturity Funds: Fixed maturity funds are those in which the assets are
invested in debt and money market instruments where the maturity date is either the
same as that of the fund or earlier than it.
• Pension Funds: Pension funds are mutual funds that are invested in with a really long
term goal in mind. They are primarily meant to provide regular returns around the
time that the investor is ready to retire. The investments in such a fund may be split
between equities and debt markets where equities act as the risky part
pa of the
investment providing higher return and debt markets balance the risk and provide
lower but steady returns. The returns from these funds can be taken in lump sums, as
a pension or a combination of the two.
42
IV. Types of Mutual Funds based on specialty:
 Sector Funds: These are funds that invest in a particular sector of the market e.g.
Infrastructure funds invest only in those instruments or companies that relate to the
infrastructure sector. Returns are tied to the performance of the chosen sector. The risk
involved in these schemes depends on the nature of the sector.
 Index Funds: These are funds that invest in instruments that represent a particular index
on an exchange so as to mirror the movement and returns of the index e.g. buying shares
representative of the BSE Sensex.
 Fund of funds: These are funds that invest in other mutual funds and returns depend on
the performance of the target fund. These funds can also be referred to as multi manager
funds. These investments can be considered relatively safe because the funds that
investors invest in actually hold other funds under them thereby adjusting for risk from
any one fund.
 Emerging market funds: These are funds where investments are made in developing
countries
untries that show good prospects for the future. They do come with higher risks as a
result of the dynamic political and economic situations prevailing in the country.
 International funds: These are also known as foreign funds and offer investments in
companies
panies located in other parts of the world. These companies could also be located in
emerging economies. The only companies that won’t be invested in will be those located
in the investor’s own country.
 Global funds: These are funds where the investment m

made
ade by the fund can be in a
company in any part of the world. They are different from international/foreign funds
because in global funds, investments can be made even the investor's own country.
 Real estate funds: These are the funds that invest in companies that operate in the real
estate sectors. These funds can invest in realtors

realtors,, builders, property management
companies and even in companies providing loans. The investment in the real estate
esta can be made
43
at any stage, including projects that are in the planning phase, partially completed and are
actually completed.
 Commodity focused stock funds: These funds don’t invest directly in the commodities.
They invest in companies that are working in the commodities market, such as mining
companies or producers of commodities. These funds can, at times, perform the same
way the commodity is as a result ooff their association with their production.
 Market neutral funds: The reason that these funds are called market neutral is that they
don’t invest in the markets directly. They invest in treasury bills, ETFs and securities and
try to target a fixed and stea
steady growth.
 Inverse/leveraged funds: These are funds that operate unlike traditional mutual funds.
The earnings from these funds happen when the markets fall and when markets do well
these funds tend to go into loss. These are generally meant only for those
thos who are
willing to incur massive losses but at the same time can provide huge returns as well, as
a result of the higher risk they carry.
 Asset allocation funds: The asset allocation fund comes in two variants, the target date
fund and the target alloca
allocation
tion funds. In these funds, the portfolio managers can adjust the
allocated assets to achieve results. These funds split the invested amounts and invest it in
various instruments like bonds and equity.
 Gift Funds: Gift funds are mutual funds where the fun
funds
ds are invested in government
securities for a long term. Since they are invested in government securities, they are
virtually risk free and can be the ideal investment to those who don’t want to take risks.
 Exchange traded funds: These are funds that are a mix of both open and close ended
mutual funds and are traded on the stock markets. These funds are not actively managed;
they are managed passively and can offer a lot of liquidity. As a result of their being
managed passively, they tend to have lower se
service
rvice charges (entry/exit load) associated
with them.
44
V. Types of Mutual Funds based on risk:
 Low risk: These are the mutual funds where the investments made are by those who do
not want to take a risk with their money. The investments in such cases are made in
places like the debt market and tend to be long term investments. As a result of them
being low risk, the return on these investments is also low. One example of a low risk
fund would be gift funds where investments are made in government securities.
secur
 Medium risk: These are the investments that come with a medium amount of risk to the
investor. They are ideal for that who are willing to take some risk with the investment
and tends to offer higher returns. These funds can be used as an investment to build
wealth over a longer period of time.
 High risk: These are those mutual funds that are ideal for those who are willing to take
higher risks with their money and are looking to build their wealth. One example of high
risk funds would be inverse mutual funds. Even though the risks are high with these
funds,, they also offer higher returns.
Benefits’
its’ of Mutual funds Investment
Diversification:
One rule of investing, for both large and small investors, is asset diversification.
Diversification involves the mixing of different types of investments wit
within
hin a portfolio and is
used to manage risk. For example, choosing to buy stocks in the retail sector and offsetting them
with stocks in the industrial sector 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.
45
By purchasing mutual fu
funds,
nds, you are provided with the immediate benefit of instant
diversification and asset allocation without the large amounts of cash needed to create individual
portfolios. One caveat, however, is that simply purchasing one mutual fund might not give you
adequate
quate diversification. It's important to check if the fund is sector
sector- or industry-specific.
industry For
example, investing only in an oil and energy mutual fund might spread your money over fifty
companies, but if energy prices fall, your portfolio will likely suf
suffer.
Economies of Scale:
The easiest way to understand economies of scale is 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. Mutual funds are able to take advantage of
their buying and selling volume to reduce trans
transaction
action costs for investors. When you buy a
mutual fund, you are able to diversify without the numerous commission charges. Imagine if
you had to buy each of the 10--20
20 stocks needed for diversification. The commission charges
alone would eat up a good chunk of your investment. Take into account additional transaction
fees for every time you want to modify your portfolio, and as you can see the costs start to add
up. With mutual funds, you can make transactions on a much larger scale for less money.
Divisibility:
Many investors don't have the exact sums of money to buy round lots of
securities. One or 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
dollar-cost
cost averaging. So,
rather
ther than having to wait until you have enough money to buy higher-cost
cost investments,
46
you can get in right away with mutual funds. This provides an additional advantage -
liquidity.
Liquidity:
Another advantage of mutual funds is the ability to ge

gett in and out with relative ease.
In general, you are able to sell your mutual funds in a short period of time without there being
much difference between the sale price and the most current market value. However, it is
important to watch out for any fees aassociated with selling, including back-end
end load fees. Also,
unlike stocks and exchange-traded
traded funds (ETFs), which trade any time during market hours,
mutual funds transact only once per day after the fund's net asset value (NAV) is calculated.
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 rresearch
esearch every investment
before you decide to buy or sell, you have a mutual fund's money manager to handle it for you.
you
Simplicity:
Anything can be made into something more complex than it needs to be and mutual
funds are no exception to this trut
truth.
h. However, mutual funds require no experience or knowledge
of economics, financial statements, or financial markets to be a successful investor.
For beginners, here is a simple definition of mutual fund: A mutual fund is an

investment security type that enables investors to pool their money together into one
professionally managed investment. Mutual funds can invest in stocks, bonds, cash and/or other
ot
assets. These underlying security types, called holdings combine to form one mutual fund, also
called a portfolio.
47
In different words, Mutual funds can be considered baskets of investments. Each

basket holds dozens or hundreds of security types, such as stocks or bonds. Therefore, when an
investor buys a mutual fund, they are buying a basket of investment securities.
Accessibility:
Mutual funds are offered at brokerage firms, discount brokers online, mutual fund
companies, banks, and insurance companies. Even beginning investors can easily open an
account at a no-load
load mutual fund company, such as Vanguard In
Investments,
vestments, and open an account
within minutes.
Diversity:
One mutual fund can invest in dozens, hundreds, or even thousands of different
investment securities, making it possible to achieve diversification by investing in just one fund.
However, it is smart to diversify into several different mutual funds.
Variety:
As you grow your portfolio of mutual funds, you will want to diversify into various
mutual fund categories and types. You can invest in mutual funds that cover the main asset
classes (stocks, bonds, Cash) and various sub
sub-categories
categories or you can even venture into
specialized areas, such as sector funds or precious metals funds.
Affordability:
Most mutual funds have minimum initial investment requirements of Rs.3000 or

less.
s. In many cases, if the investor initiates a systematic investment program, where they have a
fixed dollar amount or fixed number of shares purchased once per month, the initial investment
can be as low as Rs.1000.
48
Frugality:
Costs as a percentage of assets in the portfolio are usually lower for an actively-
actively
managed mutual fund when compared to an actively
actively-managed
managed portfolio of individual securities.
When you add up transaction costs, annual fees paid to a brokerage firm, and the cost for
research tools or investment advice, mutual funds are less expensive than the typical portfolio of
stocks. Other variables influence the cost of managing a portfolio, such as the amount of trading
activity, the size of transaction, and taxes.
Professional Management:
Perhaps the greatest benefit of all is that investors can save countless hours of time,
energy and frustration involved with the research and analysis required to find quality
investments to hold in a portfolio. That's not to speak of the skill, desire and patience required to
do a job well in any professional pursuit. Mutual funds enable investors to do more of the things
in life they enjoy rather than spending time and energy on investment matters.
Flexibility:
All off the above benefits of mutual funds overlap into simplicity and flexibility. You
can invest in just one fund or invest in a wide variety. Automatic deposit, systematic
withdrawal, plans, dividends, short
short-term savings, long-term
term savings, and nearly limitless
limitle
investment strategies make mutual funds the best overall investment type for both beginners and
advanced investors.
What is a Systematic Investment Plan?
A Systematic Investment Plan or SIP is a smart and hassle free mode for investing
money in mutual
utual funds. SIP allows you to invest a certain pre
pre-determined
determined amount at a regular
interval (weekly, monthly, quarterly, etc.). A SIP is a planned approach towards investments and
helps you inculcate the habit of saving and building wealth for the future.
49
How does it work?

A SIP is a flexible and easy investment plan. Your money is auto
auto-debited
debited from your
bank account and invested into a specific mutual fund scheme. You are allocated certain number
of units based on the ongoing market rate (called NAV or net asset value) for the day.
Every time you invest money, additional units of the scheme are purchased at the market rate
and added to your account. Hence, units are bought at different rates and investors benefit from
Rupee-Cost
Cost Averaging and the Power of Compounding.
Rupee-Cost averaging:
with volatile markets, most investors remain skeptical about the best time to invest and
try to ‘time’ their entry into the market.+ Rupee
Rupee-cost
cost averaging allows you to opt out of the
guessing game. Since you are a regular investor, your money fetches more units when the price
is low and lesser when the price is high. During volatile period, it may allow you to achieve a
lower average cost per unit.
Power of Compounding:
Albert Einstein once said, “Compound interest is the eighth wonder of the world.
worl He
who understands it, earns it... he who doesn't... pays it.” The rule for compounding is simple -
the sooner you start investing, the more time your money has to grow.
Example:
If you started investing Rs. 10000 a month on your 40 th birthday, in 20 years time you
would have put aside Rs. 24 lakhs. If that investment grew by an average of 7% a year, it would
be worth Rs. 52.4 lakhs when you reach 60.
However, if you started investing 10 years earlier, your Rs. 10000 each month would
wou
add up to Rs. 36 lakh over 30 years. Assuming the same average annual growth of 7%, you
would have Rs. 1.22 Cr on your 60 th birthday – more than double the amount you would have
received if you had started ten years later
later.
50
ematic Investment Plans

Other Benefits of Systematic Plans:
Disciplined Saving – Discipline is the key to successful investments. When
you invest through SIP, you commit yourself to save regularly. Every investment is a
step towards attaining your financial objectives.
Flexibility – While it is advisable to continue SIP investments with a long

long-term
term perspective,
there is no compulsion. Investors can discontinue the plan at any time. One can also increase/
decrease the amount being invested.
Long-Term Gains – Due to rupee

rupee-cost averaging
ging and the power of compounding
SIPs have the potential to deliver attractive returns over a long investment horizon.
Convenience – SIP is a hassle-free

free mode of investment. You can issue a standing
instruction to your bank to facilitate auto
auto-debits from your bank account.
SIPs have proved to be an idea

ideal mode of investment for retail
investors who do not have the resources to pu
pursue active investments.
Net Asset Value:
Definition: Net asset value(NAV) is the value of a fund’s asset less the value of its
liabilities per unit.
NAV = (Value of Assets

Assets-Value of Liabilities)/number of units outstanding
Description: NAV is often associated with mutual funds, and helps an investor determine if the
fund is overvalued or undervalued. When we talk of open
open-end
end funds, NAV is crucial. NAV gives
the fund’s value that an investor will be entitled to at the time of withdrawal of
o investment. In
case of a close-end
end fund, which is a mutual fund with fixed number of units, price per unit is
determined by market and is either below or above the NAV.
51
Calculation of NAV:
Mutual fund assets usually fall under two categories – securities & cash. Securities, here, include
both bonds and stocks. Therefore, the total asset value of a fund will include its stocks, cash and
bonds at market value. Dividends and interest accrued an
andd liquid assets are also included in total
assets.
Also, liabilities like money owed to creditors, and other expenses accrued are also included. Now
the formula is:
Net Asset Value (NAV) = (Assets – Debts) / (Number of Outstanding units) Here:
Assets = Market value of mutual fund investments + Receivables + Accrued Income
Debts = Liabilities + Expenses (accrued)
The market value of the stocks & debentures is usually the closing price on the stock exchange
where these are listed.
Some points to note:
The mutual fund itself and/or certain accounting firms calculate the
NAV of a mutual fund. Since, mutual funds depend on stock markets, they are
usually declared after the closing hours of the exchange. All Mutual Funds are
required to publish their NAV
AV at every business day as per SEBI guidelines.
Also, NAV is obtained after subtracting the expense ratio of a fund. This
expense ratio is the total of all expenses made by the mutual fund annually,
including the operating expenses and the management fees, distribution and
marketing fees, transfer agent fees, custodian fees and audit fees.
52
Sectoral Funds
The Sectoral Funds are a kind of mutual funds that invests across the
sectors related to the common theme. This means, if the fund is built on an
infrastructure theme might invest equities in construction companies, cement
companies, steel companies and the other comp
companies
anies that are related to the
infrastructure sector.
Unlike sector funds, the thematic funds are more diversified as the
investments are concentrated in several sectors and not in a single sector. Both the
sector funds are volatile and riskier than tthe
he broad market as their performance is
solely based on the performance of the sector or sectors in which they are
investing. The objective of thematic funds is to offer the investors an opportunity
to invest in the theme related sectors that have a strong growth potential due to the
boom in the industry.
A Thematic fund is one where the funds objective is to deliver

optimal returns by investing in stocks which qualify to belong within the
particular theme that is considered the theme could vary from mult
multi-sector,
sector,
international exposure, commodity exposure etc, unlike a sector fund, thematic
funds have a broader spectrum to operate in. Theme based funds are often
mistaken to be sector funds. Although one could draw some broad comparisons,
the scope of a theme
eme fund is typically wider.
Risks of investing in Sector and thematic funds:
While higher growth in the chosen sector represents good news for the
investor, a downturn in the sector represents heavy losses. The reason behind this
is the lack of diversification in holdings.
Investing in a sector fund is equivalent to putting all ooff one’s eggs in one
basket; if the basket were to fall, the eggs would all break.
53
Thematic funds, although more diversified than sector funds, are also dependant
entirely on one particular theme.
Things to bear in mind before investing in sector and th

thematic funds
Before investing in sector or thematic funds, it is recommended that you keep the
following points in mind:
• It is advisable to own a diversified portfolio comprising of regular funds before

going ahead with sector or thematic funds. Sector and thematic funds are
known for their higher risk and volatility, which means investing more than
10% is a huge risk for any investor
• Sector and thematic funds are suitable for those who have an understanding
and in-depth
depth knowledge of that particular se
sector or theme
• Be aware of exit timing especially while investing in sector funds, because
sector funds are cyclical in nature
• Don’t go by past returns when you invest in a sector or thematic fund. Rather,
take a good look at the opportunities ahead for that sector or theme
When you go for shopping in a super market there are number of items
accessible which you know and use frequently. There are also numerous items
which you have never utilized and such items are added in your shopping baskets
at times. Until you know which item is good fit for you, your shopping spree can
turn into a hit and miss proposition costing you higher, may be even for the things
which you never needed.
Likewise, the mutual funds industry has number of schemes on offering.

While some are traditional equity schemes which retail investors are aware of and
some are very specific like sectorial and thematic so understanding and selecting
54
the right sort of Mutual fund scheme which suits your risk profile objective is
vital or else this could result in a hit and miss proposition as well.
A large number of funds are launching on reg

regular
ular basis by Indian fund
houses including a number of unique schemes, typically timing it to suit certain
economic conditions. These unique schemes `are famously known as ‘Thematic
fund’.
A Thematic fund is the one where the fund’s go

goal
al is to deliver
optimal returns by putting resources into stocks which qualify to belong within
the particular theme. Basically, thematic mutual funds are growth oriented
schemes which aim to achieve capital appreciation by investing in a set of stocks
that
at are closely related to a particular theme. Various patterns have been utilized
to shape a Thematic Fund. For instance, following the time when country’s Prime
Minister Narendra Modi has pitched to industry ‘Make in India’ theme, the
markets have gained excitement and many such schemes are launched to help
investors to take the advantage of the ‘Make in India’ theme. Aside from ‘Make in
India’, there are few other schemes which have utilized pattern to form thematic
funds like ‘Digital India’ and ‘Rural IIndia’.
ndia’. In general, it is considered to be a top-
top
down investment approach with a focus on broader, macroeconomic themes that a
fund manager can use to identify strong companies.
Where do these funds invest?
Thematic funds’ underlined investments revo

revolve
lve around companies
which directly or indirectly benefit from the theme. Some thematic funds restrict
themselves to investing in companies which will benefit directly from it while
some of the schemes have a broader mandate where they invest in companies
which will benefit being a participant at some stage. Take the example of
infrastructure theme. Here many schemes invested majorly in stocks of
construction companies because they were the direct beneficiary of infrastructure
55
development.. Contrary to this some infrastructure fund invested more broadly in

stocks of companies which were not direct beneficiary but were related to the
sector such as banking, metals. Similarly Birla Manufacturing Fund aiming to
benefit from Make in India theme has mandate to invest in equity or equity related
securities of companies engaged in manufacturing. Contrary to this, Sundaram
MF had a closed ended fund for Make In India theme which invests in stocks of
companies engaged in export and manufacturing.
Nuances of Thematic funds:
As stated earlier, they have a broader spectrum when compared to sector funds, but is
limited when compared to Diversified equity mutual funds. Thematic funds by nature are more
prone to risk and volatility. The performance of these funds is dependent on the performance of a
particular set sector or a theme, unlike a diversified fund which moves in line with the broader
markets. Thematic funds could have themes ranging from Multi
Multi-Sector,
Sector, International / Multi -
Economy, Commodity,
dity, particular style of investing etc. Thematic funds are suited for investors
who are well versed with market trends and are hence in a better position to take thematic calls.
Holdings and cost
Thematic funds operate within their own spectrum and hence

benchmarking them to an index may not give a definite picture. However, to get a
picture of how they are doing with respect to the market, they are often
benchmarked against broader indices such as BSE 200 or BSE 500. The
underlying instruments
ruments may vary as per the theme that the individual fund deals
with; here is an overview of few funds and their underlying holding
holding.
56
The risk
Thematic funds carry their own risk. Since they focus on a specific
theme the return expectations are much higher than a diversified equity fund. But
the risk of it going out of fashion will always be there simply because the themes
are generally cyclical in nature. We all have seen this in infrastructure funds
where the themes did performed initially but got crippled with many issues and
became underperforming theme. The cycle may turn again in its favor but
investors have already seen a long period of und
underperformance
erperformance from this theme as
compared to their expectations.
The 5 years returns are not something one would expect from such funds.
The following characteristics are common to the thematic funds:
• Focus on stocks of different sectors, but are related to the common theme.
• More volatile and riskier than the broad market, but relatively less risky than the
sectorial funds.
• Invested across the different sectors that are woven around the specific theme.
theme
Some of the sector-specific

specific funds are mentioned below:
Banking funds: These are sector

sector-specific
specific mutual funds having a portfolio
comprising mainly of equities of different banks. So if in general the banking
sector is performing well, one can expect go
good returns.
Pharma funds: These are sector

sector-specific
specific mutual funds which have a portfolio comparing
mainly of different pharmaceutical companies.
Technology funds: Sector-specific

specific mutual funds which have a portfolio comprising
mainly of IT Companies.
57
FMCG funds: Sector-specific

specific mutual funds catering to the investments in the fast moving
commodity goods stock.
Literature overview:
Thematic funds have high risk return characteristics. In the past such
types of funds has delivered good returns in the short term but in the long term
have underperformed. For any investor taking a bet on these funds means taking
the highest risk. Such types of funds are good for those investors who are well
informed of the underlying theme and so can time their entry exit wisely. As for
other investors, it is good to stay out of them and focus on well diversified equity
funds with proven track record. If at all you want to have an exposure them
keeping the ratio lower such as 5% will do well for your investments portfo
portfolio.
lio.
Thematic funds are growth-oriented
oriented equity schemes that aim at capital
appreciation by investing in a set of say 33-4
4 sectors that are closely related to one
particular
Tax Benefits on Equity Mutual funds:
Investments in Equity Linked Savings Scheme (ELSS) qualify for tax

deduction of up to Rs,1.5 lakh under Section 80C of the Income Tax Act. No
other equity funds qualify for tax deduction under Section 80C. However, equity
funds offer you other tax benefits, too. For example, you can get tax
tax-free
ree
dividends from equity mutual funds. If you sell your equity mutual funds after a
year, the returns will qualify for long
long-term capital gains tax. Long-term
term capital
gains tax is nil on equity. If you sell your equity mutual funds before a year, you
will have to pay short-term
term capital gains tax of 15 per cent on your returns.
58
Things to note about Equity linked savings scheme:
Tax-efficiency
efficiency is a simple matter of keeping tax costs to a minimum,
which, incidentally, is also a key aspect of achieving superior long-term
term returns.
Because when you keep more of your money, you are enabled to build wealth
more effectively. In 3 smart tax--planning moves, we wrote about taking a holistic
approach to investing. And why the consequences of tax
tax-saving products should
be considered in the entire portfolio construct.
Here we will look at the basics of ELSS.
The product:
An ELSS is an acronym for Equity Linked Savings Scheme, which is a

diversified equity mutual fund.
This implies various features:
This is an equity fund which means that a minimum of 65% of the

fund’s assets will be invested in the stock market.
Unlike a thematic fund (such as pharma or banking) or a sector fund (such as auto or
FMCG), this is a diversified fund that will inv
invest across sectors and industries.
The fund manager will decide predominantly which market cap to

invest in. Depending on whether he focuses on large stocks or smaller fare, the
fund will take a large-cap
cap tilt or a mid
mid-cap tilt. It could also be a flexi-cap
cap fund if
the complexion of the market cap exposure keeps changing.
59
The Tax benefit:
An ELSS has an equity exposure but also provides a tax benefit under
Section 80C of the Income Tax Act. Under this section, designated investments
are eligible for a tax deduction.
There is no maximum investment limit to your investment in the ELSS,

however, only amounts up to Rs 1.50 lakh are eligible for a tax break. Having said
that, bear in mind that this limit also encompasses other investments and
deductions.
As with any equity investment, it has the potential for wealth creation.
Combined with the tax break, it makes for an excellent investment. However,
exercise caution. You need to choose your fund wisely as there are numerous
options available
ailable in the market and not all good.
The lock-in period:
All tax-saving
saving investments have a lock
lock-in
in period. The Public Provident
Fund (PPF) has the longest lock
lock-in
in period of 15 years, while National Savings
Certificate (NSC) is much shorter at 5 years.
In the case of ELSS, it is 36 months or 3 years. You cannot sell your

units before the completion of this period.
If you do a Systematic Investment Plan (SIP), it will be 3 years from the

date of investment. Basically, every instalment will hhave a 3-year lock--in
commencing from the date of that specific instalment. After the lock-in
in period,
you can access your money any time since it is an openended fund. So, for the SIP
done on, say, March 1, 2018, the lock
lock-in period will be 3 years starting from
March. For the instalment made on December 1, 2018, the lock
lock-in
in period will
commence for 3 years from then.
60
The combination of equity and tax saving:
An ELSS helps investors save on tax, and a good ELSS will help them
further in wealth creation by beating inflation.
Whether it ebbs or gallops, inflation will always be present. Ensure that

your investment beats inflation by a substantial margin. A grouse against ELSS is
that the returns are not guaranteed. That is no doubt true, but the returns in ELSS
are higher than fixed-return
return instruments; the 33-year annualized category average
was 14.45% as on December 31, 2017. In the case of instruments likee NSC, not
only does it have the task of beating inflation, but the tax impact on interest
earned makes it lose its edge. However, do note that according to the latest Union
Budget, investors in equity mutual funds will have to pay a long
long-term
term capital gain
(LTCG) tax of 10%, if the longterm capital gains for that financial year are above
Rs 1 lakh.
If investors avoid equity, they could face a major shortfall risk. This is
the risk that an investment’s actual return (post inflation and taxes) will not be
sufficient to generate the money needed to meet one’s investment goals.
If investors invested all their money in fixed return investments, there

is a very high probability that they would certainly not save sufficiently for goals
such as retirementt or child’s education.
Moreover, we have seen interest rates fall over the years. Tax
Tax-saving
saving
instruments have not been spared. PPF is a prime example. From 12% p.a. it
began descending to now stand at 7.6%. Such instruments offer the assurance of
fixed returns, but do little to help in wealth creation. (Read 5 questions on PPF
answered). That is why equity is so crucial in an investor’s portfolio because good
equity investments over the long term do provide returns which outpace inflation
and assist in wealth creation.
61
SBI MUTUAL FUNDS - SECTORAL FUNDS
A sectoral fund is one where the funds objective is to deli

deliver
ver optimal returns
by investing in stocks which qualify to belong within the particular theme that is
considered the theme could vary from multi
multi- sector, international exposure, commodity
exposure etc., unlike a sector fund, theme funds have a broader spe
spectrum
ctrum to operate in.
Theme based funds are often mistaken to be sector funds. Although one could draw some
broad comparisons, the scope of a theme fund is typically wider.
The selected 6 sectoral fund schemes are as follows:
 SBI Health Care Opportunities F

Fund.
und. (Previously known as SBI Pharma Fund)
 SBI Banking and Financial Services Fund.
 SBI Infrastructure Fund.
 SBI Consumption Opportunities Fund. (Previously known as SBI FMCG Fund)
 SBI Technology Opportunities Fund. (Previously known as SBI IT Fund)
 SBI PSU Fund.
The above are the 6 schemes in the sectoral funds which are advisable to small, medium,
and long-term
term investors. This chapter initially includes the NAV’S, Portfolio classification by
Industry Allocation, Portfolio Classification by Asset Allocation and Portfolio Allocation of a
specific fund Sectorr wise, of the above
above-mentioned
mentioned schemes in the thematic Funds and followed
by their Graphical representations from 30th June 2017 to 30th June2018.
Sector funds and thematic funds belong to category of equity mutual funds. These
funds are stark contrastt to diversified equity funds. Sector funds focus on specific sectors or
industry like banking, pharma, information technology, real estate, energy, etc.
sectoral funds, on the other hand, invest in stocks which are well
well-defined
defined around a
particular opportunity.
nity. These might look similar to sector funds but may consist of several
sectors. You may perceive these to be much more diversified than sector funds.
62
SBI HEALTH CARE OPPORTUNITIES FUND
(Previously known as Pharma Fund)

Investment Objective:
To provide the investors with the opportunity of long

long-term
term capital appreciation by
investing in a diversified portfolio of equity and equity related securities in Healthcare space.
Fund Details:
S.NO PARTICULARS DETAILS
1. Type of scheme An open-ended Equity scheme investing

in health care sector.
2. Date of Allotment 05/07/1999
3. AAUM for the month of May 2019 ₹954.11 Crores
4. AUM as on May 31, 2018 ₹914.00 Crores
5. Fund Manager Mr. Tanmaya Desai
6. Managing Since June 2011
7. Total Experience Over 12 years
8. Benchmark S&P BSE HEALTH CARE index
9. Exit Load For exit within 15 days from the date of

allotment is 0.50%.
For exit after 15 days from the date of

allotment is Nil.
10. Entry Load N. A
63
11. Plans Available Regular and Direct
13. Options Growth and Dividend
14. Minimum Investment ₹5000 & in multiples of ₹1
15. Additional Investment ₹1000 & in multiples of ₹1.
Quantitative Data: (as on 31st May 2018)
1 Standard Deviation 15.39%
2 Beta 0.87
3 Sharpe Ratio (0.83)
4 Portfolio Turnover 0.49
5 Risk Free rate 6.00%
Graphical Representation of Asset Allocation of SBI Health Care Opportunities Fund:
ASSET ALLOCATION
60
% OF PORTFOLIO
50
40
30
20
10
0
MONTHS
LARGE CAP MID CAP SMALL CAP CASH AND OTHER ASSETS
64
Tabular Representation of Industry Allocation Portfolio of SBI Health Care

Opportunities Fund:
MONTH PHARMA HEALTH CARE OTHERS

SERVICES
30-06-2017 81.07 13.05
31-07-2017 83.93 12.42 5.55
31-08-2017 77.76 13.17 9.06
30-09-2017 79.98 13.25 6.76
31-10-2017 83.33 12.72 3.95
30-11-2017 85.34 12.16 2.5
31-12-2017 78.06 12.16 9.78
31-01-2018 84.25 12.13 3.62
28-02-2018 85.45 10.99 3.56
31-03-2018 82.66 12.7 4.64
30-04-2018 81.6 12.6 5.8
31-05-2018 82.28 12.23 5.49
30-06-2018 85.01 12.97 2.02
65
Graphical Representation of Industry Allocation Portfolio of SBI Health Care

Opportunities Fund:
INDUSTRY ALLOCATION
100
% OF PORTFOLIO
80
60
40
20
0
MONTHS
PHARMA HEALTH CARE SERVICES OTHERS
Tabular Representation of Net Asset Value of SBI Health Care Opportunities Fund:
MONTH NAV
30-06-2017
2017 125.7266
31-07-2017
2017 131.5627
31-08-2017
2017 133.4578
30-09-2017
2017 126.0432
31-10-2017
2017 127.6371
30-11-2017
2017 132.9313
31-12-2017
2017 134.1131
31-01-2018
2018 139.6007
28-02-2018
2018 135.7022
31-03-2018
2018 131.509
30-04-2018
2018 124.3401
31-05-2018
2018 131.7373
30-06-2018
2018 118.3084
66
Graphical Representation of Net Asset Value of SBI Health Care Opportunities Fund:
NAV OF SBI HEALTH CARE OPPORTUNITIES

FUND
145
NET ASSET VALUE
140
135
130
125
NAV
120
115
MONTHS
INTERPRETATION:
From the above data we can observe, the Net Asset Value of SBI Health care
opportunities Fund as on 30th June of 2017 is 125.7266. And for few months there is no drastic
change in NAV. Where on 30th June of 2018 the NAV has fall down to 118.3084 due to changes
in the market.
67
SBI BANKING & FINANCIAL SERVICES FUND
The investment objective of the scheme is to generate long

long-term
term capital appreciation to
unit holders from a portfolio that is invested predominantly in equity and equity related securities
of companies engaged in banking and financial services. However, there can be no assurance that
the investment objective of the Scheme will be realized.
Fund Details:
1. Type of scheme An open-ended

ended Equity Scheme
investing in
Banking and Financial Services sector.
4. AUM as on May 31, 2018 ₹ 513.14 Crores
5. Fund Manager Ms. Sohini Andani
6. Managing Since Feb-2015
8. Benchmark Nifty Financial Services
9. Exit Load For exit within 12 months from the date

of
allotment - 1.00%;
For exit after 12 months from the date
of
68
allotment - Nil
10. Entry Load N.A.
11. Plans Available Regular, Direct
13. Options Growth, Dividend
15. Additional Investment ₹ 1000 & in multiples of ₹1
2 Beta 0.88
3 Sharpe Ratio 0.73
5 Risk Free rate 6.00
69
Graphical Representation of Asset Allocation SBI Banking & Financial Services Fund:
ASSET ALLOCATION
100
90
80
% OF PORTFOLIO
70
60
50
40
30
20
10
0
Jun-17 Jul-17 Aug-17 Sep
Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18
Apr May-18 Jun-18
MONTHS
Tabular Representation of Industry Allocation Portfolio of SBI Banking & Financial

Services Fund:
MONTH FINANCIAL OTHERS

SERVICES
30-06-2017 96.2 0
31-07-2017 93.43 6.57
31-08-2017 94.2 5.8
30-09-2017 94.86 5.14
31-10-2017 92.41 7.59
30-11-2017 90.52 9.4
31-12-2017 90.02 9.98
31-01-2018 97.43 2.57
28-02-2018 96.29 3.71
70
31-03-2018 94.37 5.63

30-04-2018 97.01 2.99
31-05-2018 87.55 12.45
30-06-2018 91.84 8.16
Graphical Representation of Industry Allocation Portfolio of SBI Banking & Financial

Services Fund:
INDUSTRY ALLOCATION
120
% OF PORTFOLIO
100
80
60
40
20
0
Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
18 Apr-18 May-18 Jun-18
MONTHS
FINANCIAL SERVICES OTHERS
Tabular Representation of Net Asset Value Portfolio of SBI Banking & Financial Services
Fund:
MONTH NAV
30-06
06-2017 13.932
31-07
07-2017 14.0447
31-08
08-2017 15.3176
30-09
09-2017 15.0718
31-10
10-2017 14.7737
30-11
11-2017 15.0714
31-12
12-2017 15.3508
31-01
01-2018 15.561
71
28-02
02-2018 15.9573
31-03
03-2018 15.2527
30-04
04-2018 15.1179
31-05
05-2018 16.2579
30-06
06-2018 15.1179
Graphical Representation of Net Asset Value Portfolio of SBI Banking & Financial
Services Fund:
NAV OF SBI BANKING & FINANCIAL SERVICES

FUND
16.5
NET ASSET VALUE
16
15.5
15
14.5
14 NAV
13.5
13
MONTHS
INTERPRETATION:
From the above data we can observe that, the NAV is 13.932 as on 30 th June of 2017 and
it has a steady growth up to April of 2018. And later in the mo
months
nths of May and June the NAV
has increased to 16% due to positive impact in the market of Banking sector. The NAV of SBI
Banking &Financial Services Fund is 15.1179.
72
SBI INFRASTRUCTURE FUND
To provide investors with opportunities for long-term

term growth in capital through an active
management of investments in a diversified basket of equity stocks of companies directly or
indirectly involved in the infrastructure growth in the Indian economy and in debt & money
market instruments.
Fund Details:

ended Equity Scheme
investing in
infrastructure and allied sectors.
4. AUM as on May 31, 2018 ₹580.36 Crores
5. Fund Manager Mr. Richard D’Souza
6. Managing Since Aug-2014
8. Benchmark Nifty Infrastructure Index
9. Exit Load For exit within 1 year from the date of

allotment - 1 %;
For exit after 1 year from the date of
allotment – Nil
73
10. Entry Load N.A.
15. Additional Investment ₹1000 & in multiples of ₹1
2 Beta 0.82
3 Sharpe Ratio 0.35
Graphical Representation of Asset Allocation of SBI Infrastructure Fund:
ASSET ALLOCATION
70
% OF PORTFOLIO
60
50
40
30
20
10
0
Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18
Apr May-18 Jun-18
MONTHS
74
Tabular Representation of Industry Allocation Portfolio of SBI Infrastructure Fund:
MONT CON INDUSTR ENE SER TEL CEM AUTO FINA ME OT

H STRU IAL RGY VIC ECO ENT MOBIL NCIA TA HE
CTIO MANUFA ES M AND E L LS RS
N CTURIN CEM SERV
G ENT ICES
PRO
DUC
TS
30-06-
2017 29.53 18.93 16.1 10.4 9.77 4.75 3.49
9 7
31-07-
2017 27.53 19.56 18.2 12.4 13.08 3.16 2.66 3.3
6 5
31-08-
2017 26.21 20.04 18.8 11.1 8.71 3.17 2.64 2.07 2.05 5.16
1 5
30-09-
2017 25.77 19.68 21.7 7.46 11.38 3.23 2.52 2.28 5.92
6
31-10-
2017 27.32 18.39 20.6 9.15 10.56 3.21 2.48 2.4 5.79
9
30-11-
2017 30.06 10.85 18.2 5.61 12.35 2.2 2.48 5.98 2.35 9.92
1
31-12-
2017 36.8 11.75 15.8 5.14 11.81 0.54 2.38 9.87 1.99 3.93
75
31-01-
2018 40.62 12.25 10.5 5.04 12 2.14 2.56 6.82 2.09 5.9
9
28-02-
2018 42.4 12.59 11.6 2.53 11.46 3.57 2.43 7.03 2.25 4.1
4
31-03-
2018 38.3 14.66 12.5 2.39 11.45 3.74 2.46 4.84 2.28 7.32
6
30-04-
2018 41.77 14.81 14.5 3.13 8.65 3.69 5.92 5.84 1.65
3
31-05-
2018 40.99 15.01 13.6 3.2 8.35 3.95 6.18 7.4 1.29
3
30-06-
2018 37.49 15.54 12.8 8.05 4.26 6 9.51 6.35
1
Graphical Representation of Industry Allocation Portfolio of SBI Infrastructure Fund:
INDUSTRY ALLOCATION
60
% OF PORTFOLIO
50
40
30
20
10
0
Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
18 Apr-18 May-18 Jun-18
MONTHS
CONSTRUCTION INDUSTRIAL MANUFACTURING

ENERGY SERVICES
TELECOM CEMENT AND CEMENT PRODUCTS
AUTOMOBILE FINANCIAL SERVICES
76
Tabular Representation of Net Asset Value of SBI Infrastructure Fund:
MONTH NAV
30-06
06-2017 14.6174
31-07
07-2017 14.6807
31-08
08-2017 15.1649
30-09
09-2017 15.1688
31-10
10-2017 14.8620
30-11
11-2017 16.1380
31-12
12-2017 16.9090
31-01
01-2018 17.8644
28-02
02-2018 17.1185
31-03
03-2018 16.4278
30-04
04-2018 15.7299
31-05
05-2018 16.8832
30-06
06-2018 16.1337
77
Graphical Representation of Net Asset Value of SBI Infrastructure Fund:
NAV OF SBI INFRASTRUCTURE FUND

19
18
NET ASSET VALUE
17
16
15
14 NAV
13
12
MONTHS
Interpretation:
From the above data it is observed that, the NAV of SBI Infrastructure Fund as on 30 th
June 2017 is 14.6174. Fund Manager Mr. Richard D’Souza has invested vast number of Industry
Allocations which thus, resulted fluctuations in the NAV. It has reached its highest point in the
months of January and February of 2018 with 17.8644 and 17.1185 respectively. NAV of SBI
Infrastructure as on 30th June 2018 is 16.1337.
78
SBI CONSUMPTION OPPORTUNITIES FUND
(Previously Known as SBI FMCG Fund)
To provide the investor with the opportunity of long

long-term
investing in a diversified portfolio of equity and equ
equity
ity related securities in Consumption space.
Fund Details:

ended Equity Scheme
following
consumption theme.
3. AAUM for the month of May 2019 ₹ 609.10 Crores
5. Fund Manager Mr. Saurabh Pant
6. Managing Since Jun-2011
8. Benchmark Nifty India Consumption (w.e.f

May 16,2018)
9. Exit Load For exit w0ithin 15 Days from the date

of
allotment - 0.50%;
For exit after 15 Days from the date of
79
allotment - Nil.
10. Entry Load Nil
14. Minimum Investment ₹ 5000 & in multiples of ₹1
15. Additional Investment ₹ 1000 & in multiples of ₹1
2 Beta 0.84
3 Sharpe Ratio 0.83
80
Graphical Representation of Asset Allocation SBI Consumption Opportunities Fund:
ASSET ALLOCATION
70
% OF PORTFOLIO
60
50
40
30
20
10
0
Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18
MONTHS
Tabular Representation of Industry Allocation Portfolio of SBI Consumption

Opportunities Fund:
MONTH CONSUMER TEXTILES OTHERS

GOODS
30-06-2017 92.08 4.86
31-07-2017 94.4 4.69 1.03
31-08-2017 92.24 3.31 4.44
30-09-2017 96.41 3.00 0.59
31-10-2017 93.12 3.19 3.69
30-11-2017 94.99 3.10 1.91
31-12-2017 94.00 2.63 3.37
31-01-2018 94.02 2.53 3.45
28-02-2018 95.51 2.25 2.24
31-03-2018 91.28 2.11 6.62
81
30-04-2018 89.87 3.42 6.72

31-05-2018 90.06 3.23 6.71
30-06-2018 81.40 5.33 13.26
Graphical Representation of Industry Allocation Portfolio of SBI Consumption

Opportunities Fund:
INDUSTRY ALLOCATION
100
% OF PORTFOLIO
90
80
70
60
50
40
30
20
10
0
MONTHS
CONSUMER GOODS TEXTILES OTHERS
Tabular Representation of Net Asset Value of SBI Consumption Opportunities Fund:
MONTH NAV
30-06--2017 101.5587
31-07--2017 104.8348
31-08--2017 103.2700
30-09--2017 105.8320
31-10--2017 105.1161
30-11--2017 111.0175
31-12--2017 120.5002
31-01--2018 124.5813
82
28-02--2018 125.5687
31-03--2018 123.5719
30-04--2018 121.2390
31-05--2018 130.5228
30-06--2018 126.9229
Graphical Representation of Net Asset Value of SBI Consumption Opportunities Fund:
NAV OF SBI CONSUMPTION OPPORTUNITIES FUND

135
130
NET ASSET VALUE
125
120
115
110 NAV
105
100
MONTHS
Interpretation:
The importance for Fast Moving Consumer Goods is increasing day to day. It is observed
that, the NAV is 101.5587 as on 30 th June 2017 and there is no drastic change till 31st October of
2017 with 105.1161. From the month of November, it started increasing and reached maximum
i.e., 130.5228 as on 31st May of 2018 and fell down to 126.9229 in June of 2018.
83
SBI TECHNOLOGY OPP

OPPORTUNITIES FUND
(Previously Known as SBI IT Fund)
To provide the investor with the opportunity of long

long-term
investing in a diversified portfolio of equity and equity related securities in technology and
technology related companies.
Fund Details:

ended Equity Scheme investing in
technology and technology related sectors.
5. Fund Manager Mr. Anup Upadhyay
6. Managing Since Jun-2011
8. Benchmark S&P BSE Teck

(w.e.f May 16,2018)
9. Exit Load For exit within 15 days from the

date of allotment - 0.50%;
For exit after 15 days from the date of
allotment - Nil.
84
10. Entry Load N. A
2 Beta 0.87
3 Sharpe Ratio 0.27
Graphical Representation of Asset Allocation SBI Technology Opportunities Fund:
ASSET ALLOCATION
70
% OF PORTFOLIO
60
50
40
30
20
10
0
MONTHS
85
Tabular Representation of Industry Allocation Portfolio of SBI Technology Opportunities

Fund:
MONTH IT OTHERS
30-06-2017 94.70
31-07-2017 97.09 2.86
31-08-2017 97.17 2.83
30-09-2017 93.66 6.34
31-10-2017 94.87 5.13
30-11-2017 87.63 12.37
31-12-2017 95.96 4.04
31-01-2018 90.30 9.70
30-03-1900 94.16 5.84
31-03-2018 95.40 4.60
30-04-2018 95.25 4.75
31-05-2018 96.27 3.73
30-06-2018 89.88 10.12
Graphical Representation of Industry Allocation Portfolio of SBI Technology

Opportunities Fund:
INDUSTRY ALLOCATION
120
% OF PORTFOLIO
100
80
60
40
20
0
MONTHS
IT OTHERS
86
Tabular Representation of Net Asset Value of SBI Technology Opportunities Fund:
MONTH NAV
30-06
06-2017 125.7266
31-07
07-2017 131.5627
31-08
08-2017 133.4578
30-09
09-2017 126.0432
31-10
10-2017 127.6371
30-11
11-2017 132.9313
31-12
12-2017 134.1131
31-01
01-2018 139.6007
28-02
02-2018 135.7022
31-03
03-2018 131.509
30-04
04-2018 124.3401
31-05
05-2018 131.7373
30-06
06-2018 118.3084
Graphical Representation of Net Asset Value of SBI Technology Opportunities Fund:
NAV OF SBI TECHNOLOGY OPPORTUNITIES FUND

145
NET ASSET VALUE
140
135
130
125
120 NAV
115
110
MONTHS
87
Interpretation:
The NAV of SBI Technology Opportunities Fund has a decent since its inspection. It has
NAV of 125.7266 as on 30th June 2017 and increased by 7.7312% in just two months. It has
reached maximum
ximum in the month of January,2018 with 139.6007 of NAV and started declining by
the very next month. The NAV of SBI Technologies Opportunities Fund as on 30 th June 2018 is
118.3084.
SBI PSU FUND
To provide investors with opportunities for long-term

term growth in capital along with the
liquidity of an open-ended
ended scheme through an active management of investments in a diversified
basket of equity stocks of domestic Public Sector Undertakings (and their subsidiaries) and in
debt and money market instruments issued by PSUs and others.
Fund Details:

ended Equity Scheme
investing in
PSU/PSU subsidiaries.
5. Fund Manager Mr. Richard D’Souza
88
6. Managing Since Aug 2014
8. Benchmark S&P BSE PSU INDEX
9. Exit Load For exit within 1 year from the date of

allotment - 1%;
For exit after 1 year from the date of
allotment - Nil
10. Entry Load N. A
2 Beta 0.84
3 Sharpe Ratio (0.02)
89
Graphical Representation of Asset Allocation of SBI PSU Fund:
ASSET ALLOCATION
80
% OF PORTFOLIO
70
60
50
40
30
20
10
0
MONTHS
Tabular Representation of Asset Allocation of SBI PSU Fund:
MON ENER FINANCIAL CONSTRUC INDUSTRIAL SERVICES METAL OT

TH GY SERVICES TION MANUFACTU S HE
RING RS
30-06-
2017 48.32 23.26 5.93 5.33 4.18 3.4
31-07-
2017 50.29 23.17 6.04 5.23 4.33 3.42 7.5
2
31-08-
2017 47.11 26.02 5.98 7.68 4.14 3.53 5.5
4
30-09-
90
2017 51.6 15.07 5.79 10.07 4.72 6.84 5.9

1
31-10-
2017 46.57 8.95 7.56 9.54 4.87 9.58 12.
92
30-11-
2017 37.79 23.84 9.81 14.28 4.64 5.51 4.1
3
31-12-
2017 36.98 24 10.14 14.37 4.49 4.82 5.2
1
31-01-
2018 38.26 22.77 10.12 13.76 4.63 4.95 5.5
1
28-02-
2018 35.59 28.49 9.47 15.93 4.86 4.51 1.1
5
31-03-
2018 39.36 21.24 9.97 13.82 5.1 4.59 5.9
2
30-04-
2018 40.37 22.6 9.1 13.54 5.21 4.77 4.4
2
31-05-
2018 40.53 18.99 9.36 11.99 5.42 5.74 7.9
6
30-06-
2018 44.69 19.38 8.13 11.43 5.89 5.16 5.3
3
91
Graphical Representation of Asset Allocation SBI PSU Fund:
INDUSTRY ALLOCATION
60
% OF PORTFOLIO
50
40
30
20
10
0
Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
18 Apr-18 May-18 Jun-18
MONTHS
ENERGY FINANCIAL SERVICES

CONSTRUCTION INDUSTRIAL MANUFACTURING
SERVICES METALS
OTHERS
Tabular Representation of Net Asset Value of SBI PSU Fund:
MONTH NAV
30-06--2017 12.2124
31-07--2017 11.6238
31-08--2017 12.2744
30-09--2017 12.3435
31-10--2017 12.4325
30-11--2017 13.5384
31-12--2017 13.1743
31-01--2018 13.2104
28-02--2018 12.8013
31-03--2018 11.9845
30-04--2018 11.3703
31-05--2018 11.5937
30-06--2018 11.2430
92
Graphical Representation of Net Asset Value of SBI PSU Fund:
NAV OF SBI PSU FUND

14
NET ASSET VALUE
13.5
13
12.5
12
11.5
NAV
11
10.5
10
MONTHS
Interpretation:
From the above data we can observe that, the NAV of SBI PSU Fund has a steady growth
rate till a particular time period. It has 12.2124 of NAV as on 30 th June 2017 and has its
maximum value i.e., 13.5384 on 30 th November 2017 and started to declining by the very next
month due to the changes in the market. NAV of SBI PSU Fund as on 30 th June 2018 is 11.2430.
93
CHAPTER-4
FINDINGS & SUGGESTIONS
94
SUMMARY
The Mission of the UTI focuses attention on Investor’s need and safety. It is stated; “To
meet investor’s diverse income and liquidity needs by creating of appropriate Schemes; to act as
his one window investment institution offer best possible re
returns
turns on his investment, and render
him prompt and efficient service, beyond normal customer expectations. To keep the common
man into sharper focus; to encourage saving and investment habits among them to bring to the
common man the prosperity of the capi
capital
tal market at minimum risk, through the habit of investing
in units.
With 30years of rich experience in fund management, we at SBI Funds Management Pvt.
Ltd. bring forward our expertise by consistently delivering value to our investors. We have a
strong andd proud lineage that traces back to the State Bank of India (SBI) - India's largest bank.
We are a Joint Venture between SBI and AMUNDI (France), one of the world's leading fund
management companies. SBI Funds Management has emerged as one of the largest players p in
India advising various financial institutions, pension funds, and local and international asset
management companies. SBI Funds Management has been successfully managing and advising
India's dedicated offshore funds since 1988. SBI Funds Manageme
Management nt was the 1st bank sponsored
asset management company fund to launch an offshore fund called 'SBI Resurgent India
Opportunities Fund' with an objective to provide our investors with opportunities for long-term
long
growth in capital, through well-researched
researched in
investments
vestments in a diversified basket of stocks of Indian
Companies.
In India, the mutual fund industry had its origin with the establishment of Unit Trust of
India in 1964. Public Sector Banks and financial institutions began to establish mutual funds in
1987.
7. The Private sector and foreign institutions were allowed to set up mutual funds in 1993.
The total asset under management in Mutual funds was about Rs. 23.17 lakh Crore by the end of
28th February, 2018.
95
FINDINGS
There are three main classifications

ions when it comes to stocks
 Large Cap
 Mid Cap
 Small Cap
Here, the term 'cap' simply refers to the 'market capitalization' of the stock.
It is the value of the stock that you arrive at by multiplying the stock price by the company's
outstanding number of equity shares.
 As Large Cap involves high risk, in order to reduce the concentration of risk Fund
Manager Mr. Tanmaya Desai choose to invest in large portion in Mid Cap.
 When coming to Industry Portfolio, high portion was invested in Pharma Sector followed
by Health Care Services.
 During the period of Nov

Nov-2017 to Jan-2018,
2018, there is a positive trend in the market of
Pharma Sector. Later on, due to changes in the market, NAV of SBI Health Care
Opportunities Fund fall down to 118.3084.
 The risk
sk associated with SBI Banking & Financial Services Fund is little high when
compared to SBI Health Care Opportunities Fund. As large portion of Asset Allocation is
concentrated in Large Cap.
 From the period June-17

17 to April
April-18, the market conditions aree stable in Banking and
Financial Sector.
 Fund Manager Ms. Sohini Andani invested large portion of Industry Allocation in
Financial Services which resulted in increase of NAV in the months of May and June.
 SBI Infrastructure Fund is invested with an aim to provide investors with opportunities
for long-term
term growth in capital through an active management of investments in a
diversified basket of equity stocks of companies directly or indirectly involved in the
infrastructure growth in the India economy and in debt & money market instruments.
instruments
96
 Fund Manager Mr. Richard D’Souza diversified Asset Allocation with both Large and
Mid-cap equally.
 Market conditions in construction sector are positive during the months of jan-18
jan and
feb-18.
18. Later due to the fluct
fluctuations
uations in the market resulted in the downfall of NAV to
16.1337.
 Risk associated with SBI Consumption Opportunities Fund is very less when compared
to other Sector or Thematic Funds.
 In SBI Consumption Opportunities Fund large portion of Industry Allocation

Alloca is
concentrated in Consumer Goods. Due to positive market impact in this sector, NAV of
SBI Consumption Opportunities FUND has a sustainable growth rate.
 Investing in Companies shares like ITC Ltd. 21.85; Colgate Palmolive (India) Ltd. 9.12;
Jubilant Food works Ltd. 7.27; Nestle India Ltd. 6.99 which reflected a greater impact on
the performance of SBI Consumption Opportunities Fund during the selected time period.
 No doubt, technology plays a very crucial role in this modern era. It often considered as
an indicator for the development of the country. SBI Technology Opportunities Fund has
a steady growth. Fund Manager Mr. Anup Upadhyay allocated major part in IT and
investing in Infosys Ltd. 30.36; Tata Consultancy Services Ltd. 9.35 resulted in the
successful
uccessful raise in NAV in the selected time period.
 Risk associated with SBI PSU Fund is riskier due to concentration of larger portion in
Large Cap. Fund Manager Mr. Richard D’Souza invested large portion in Large Cap and
due to unstable market conditi
conditions
ons in ONGC market shares resulted in the downfall of
NAV.
97
SUGGESTIONS
 To increase the inflow of funds into the industry the governing body has to look into
investor awareness and investor protection and moreover increase the investments
through retail investors.
 The investment by institutional investors can create huge volatility when there are
tremendous redemptions by these investors which again create panic in the minds of the
investors.
 Investors Awareness is a major area of concern for the mutual fund industry in India.
However, it is dealt with in multiple ways. To have sustainable growth, it is crucial that
the investor has to be given a clear picture about the product, the scheme objectives and
the expenses, etc. which are associ
associated
ated with the funds. SEBI is conducting investor
awareness programme but the industry has 1a long way to go to increase the investor’s
literacy on mutual funds.
 Time bound compliant Redressal system can increase the confidence of the investor’s.
Hence, the AMCs have to consider the grievances and provide timely help.
 The Sector funds usually have low diversification and are concentrated in one particular
sector, the investors from these funds can get higher benefits or substantial losses. These
funds are suggested to the investors who are willing to accept high risk.
 The investors those who have the ability to pick the right sector are only suggested to
invest in sector specific funds whereas normal investor with minimal knowledge of
mutual funds shall opt diversified equity for having a balance in their portfolio.
 As it is observed from the data analysis that majority of the investors preferred to invest
in growth Schemes it is suggested ththat
at the investor has to follow certain basic principles
while investing in any kind of the funds. No matter what the risk profile of a person, it is
advisable to diversify the risk. So, investing the money in a diversified portfolio is
suggested.
98
 This type of investment is also suggested as all fund managers do not have the same
acumen of fund management and identification of best fund manager is a difficult task.
The risk shall be reduced and the returns can be averaged if the investments are done in
diversified schemes.
99
BIBLIOGRAPHY
WEBSITES:
www.amfiindia.com
www.sbimf.com
www.mutualfundsinida.org
www.moneycontrol.com
www.investopedia.com
www.paisabazar.com
JOURNALS:
Economic Times
The Hindu Business Line
The Right Way to Invest in Mutual Funds
Basics of Financial Markets
100

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A Study

Performance Evaluation of Sectoral Funds

A project report submitted to the JNTU, Kakinada

In partial fulfillment of the requirement for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Under the Esteemed Guidance of

Department of Management Studies,

I, hereby declare that this project report “A Study on Performance Evaluation

PLACE : ELURU THAMMINENI NAVYA

DATE : Regd. No. 17B81E0052

This is to certify that the project report entitled “ A Study on

Dr. K.K. CHOWDARY, MBA, Ph.D. Sri V. SANDEEP, M.B.A

I sincerely express my humble thanks to Dr. G. SAMBASIVA RAO,

I express my sincere gratitude and thanks to Dr. K. KRISHNAIAH

I would like to extend my sincere thanks to Sri V. SANDEEP, Department of

I express my sincere thanks to Sri. BVS KIRAN (Manager) for his

Chapters Contents Page No.

CHAPTER-3 DATA ANALYSIS 35-93

Mutual Funds is a vehicle to mobilize money from investors, to invest in different

In India, the mutual fund industry ha

They have all

A Mutual fund is an Investment Vehicle made up of a pool of moneys collected from

Importance of Mutual Funds

Mutual funds are a cost

For Example: Equity funds offer an indirect way to invest in dozens of

Professional money management expertise at a reasonable cost is another

Professional Investment management:

The Mutual fund industry is managed by professionals and qualified investment

Transparent and Regulated Industry:

Above all, the mutual ffund

STRUCTURE OF MUTUAL FUNDS IN INDIA

A sponsor is a body corporate who establishes a mutual fund. It may be one

Asset Management Company:

Types of Mutual Funds

NEED AND SIGNIFICANCE OF THE STUDY

Moreover, fund houses are expecting simi

Besides, AMFI Chairman a Balasubramanian attributed the impressive surge in assets

1. To analyze the trends of selected mutual funds.

METHODOLOGY OF THE STUDY

Methodology adopted is collection of information in a systematic manner to

There are two types of data classification:

The Primary data is the first

LIMITATIONS OF THE STUDY

Although every effort has been made to study the “PERFORMANCE OF

The History of Mutual Funds

As expenses increased and revenue from colonial advent

The first mutual fund

Subscription to the closed

The early mutual funds spread were of the closed

The first modern-day

The growth of Canadian mutual funds

Mutual funds clearly represented the fastest

In 2008, global markets wer

Canada escaped largely unscathed compared to othe

The mutual fund advantage

Mutual funds include:

 Professional portfolio management

The growth of the industry & IFIC

To meet the growing regulatory and trade needs of the mu

History of Mutual Funds in India

First Phase - 1964-1987

Second Phase - 1987-1993

1987 marked the entry of non

Third Phase - 1993-2003

Fourth Phase - since February 2003

Mutual Fund Company’s in India