Final Report

Introduction to the Mutual Fund Industry
KLESs Institute of Management Studies & Research, Hubli, Karnatka University, Dharwad
MUTUAL FUNDS: AN INTRODUCTION

A Mutual Fund is an investment tool that allows small investors access to a welldiversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The fund's Net Asset Value (NAV) is determined each day. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Mutual funds are financial intermediaries, which collect the savings of investors and invest them in a large and well-diversified portfolio of securities such as money market instruments, corporate and government bonds and equity shares of joint stock companies.
Mutual funds are conceived as institutions for providing small investors with avenues of investments in the capital market. Since small investors generally do not have adequate time, knowledge, experience and resources for directly accessing the capital market, they have to rely on an intermediary, which undertakes informed investment decisions and provides consequential benefits of professional expertise. The raison dtre of mutual funds is their ability to bring down the transaction costs. The advantages for the investors are reduction in risk, expert professional management, diversified portfolios, and liquidity of investment and tax benefits. By pooling their assets through mutual funds, investors achieve economies of scale. The advantage that such a investing logic offers to an individual investor is the advantage of scale. A collected corpus can be used to procure a diversified portfolio, indicating greater returns as also create economies of scale through cost reduction. This principle has been effective world-wide as more and more investors are going the mutual fund way. This portfolio diversification ensures risk minimization. The criticality of such a measure comes in when you factor in the fluctuations that characterize stock markets. The interests of the investors are protected by the SEBI, which acts as a watchdog. Mutual funds are governed by the SEBI (Mutual Funds) Regulations, 1993.
INTRODUCTION TO MUTUAL FUND INDUSTRY

The mutual fund industry in India began with the setting up of the Unit Trust In India (UTI) in 1964 by the Government of India. During the last 36 years, UTI has grown to be a dominant player in the industry with assets of over Rs.24,464 Crores as of March 31, 2000. The UTI is governed by a special legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds. Securities Exchange Board
of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. Since then several mutual funds have been set up by the private and joint sectors. Mutual funds have been a significant source of investment in both government and corporate securities. It has been for decades the monopoly of the state with UTI being the key player, with invested funds exceeding Rs.300 bn. (US$ 10 bn.). The state-owned insurance companies also hold a portfolio of stocks. Presently, numerous mutual funds exist, including private and foreign companies. Banks--- mainly state-owned too have established Mutual Funds (MFs). Foreign participation in mutual funds and asset management companies is permitted on a case by case basis. UTI, the largest mutual fund in the country was set up by the government in 1964, to encourage small investors in the equity market. UTI has an extensive marketing network of over 35, 000 agents spread over the country. The UTI scrips have performed relatively well in the market, as compared to the Sensex trend. However, the same cannot be said of all mutual funds. All MFs are allowed to apply for firm allotment in public issues. SEBI regulates the functioning of mutual funds, and it requires that all MFs should be established as trusts under the Indian Trusts Act. The actual fund management activity shall be conducted from a separate asset management company (AMC). The minimum net worth of an AMC or its affiliate must be Rs. 50 million to act as a manager in any other fund. MFs can be penalized for defaults including non-registration and failure to observe rules set by their AMCs. MFs dealing exclusively with money market instruments have to be registered with RBI. All other schemes floated by MFs are required to be registered with SEBI. In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpired maturity up to one year.
MUTUAL FUND INDUSTRY IN INDIA

The end of millennium marks 36 years of existence of mutual funds in this country. The ride through these 36 years is not been smooth. Investors opinion is still divided. While some are for mutual funds others are against it. UTI commenced its operation fom july 1964. The impetus for establishing a formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainity in India. With was on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter capital market. Though the growth was slow, But it accelerated from the year 1987, when non- UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase: the Assent under Management(AUM) was Rs.67bn. The private sector entry to the fund family raised the AUM to Rs.470bn in March 1993 and till April 2004; it reached the height of 1,540bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total depostits held by the Indian banking industry. The main reason of its poor growth is theat the mutual fund industry in India is new in the country. Large sections of Indian investrors are yet to be intellect wih the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector, Each phase is briefly described as under.
First Phase-1964-87
Unit Trust of India(UTI) was established on 1963 by Act of Parliament. It was set up by the Reserve Bank of India and functioned uned the Regulatory and admisnistrative control of the Reserve Bank f India. In 1978 UTI was de-linked from RBI and the Industrial Development Bank of India(IDBI) took ove the regulatory and admistrative control in place of RBI. The first scheme launched bye UTI was Unit Scheme 1964. At te end of 1988 UTI had Rs.6,700 crores of assets under management.
Second phase 1987-1993(entry of public sector funds)

The period 1986-1993 can be termed as the period of public sector mutual funds (PMSs). From one player in 1985 the number increased to 8 in 1993. Entry of non-UTI mutual funds. SBI mutual fund was the first followed Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Oct 90), Bank of Baroda Mutual fund (oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs. 47,000 as assets under management. The industry was one-entity show till 1986 when the UTI monopoly was broken when SBI and BOI, LIC, GIC etc. sponsored by public sector banks. Starting with an asset base of Rs. 0.25bn in 1964 the industry has grown at a compounded average growth rate of 26.34% to its current size of Rs. 1130bn.
Third phase 1990-2003 (entry of private sector funds)

When the private sector made its debut in 1993-94, the stock market was booming. 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. Other Private sector mutual funds are Morgan Sanley, Jardine Fleming, JP Morgan, George Soros and Capital International along with the host of domestic players join the party. The 1993 SEBI (Mutual Fund)
Regulations substituted by a more comprehensive and revised Mutual Find regulations 1996. But for the equity funds, the period of 1994-96 was one of the worst in the history of Indian Mutual Funds, But the year 1999 saw immense future potential and developments in this sector. This year signaled the year of resurgence of mutual funds and the regaining of investor confidence in these MFs. As at the end of January 2003, There were 33 mutual fund with total assets of Rs.1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase Since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The specified undertaking of Unit Trust of India, functioning under an adminisratior and unde the rules framed by Government of India and Does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC, It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of AUM and with the setting up of a UTI mutual fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September 2004, There were 29 fund, Which manage assets of Rs. 153108 crores under 421 Structure of Mutual Funds in India. At the end of year 2006 the AUM crossed 2,50,000 crores.
GROWTH IN ASSETS UNDER MANAGEMENT
Growth of the Mutual Fund Industry in India The mutual fund industry in India came into being in 1963 with the setting up of the Unit Trust of India (UTI). In 1987, Public Sector Banks and Insurance Companies opened their own mutual funds, thus starting the second phase in the growth of the mutual funds industry. By the end of 1988, the industry's total assets under management (AUM) reached Rs.6billion. The industry registered a major milestone in 1993 when the first private sector player, the erstwhile Kothari Pioneer Mutual Fund (now merged with Franklin Templeton), was set up. Since then, several international players have also entered the fray. The industry has also witnessed a spate of mergers and acquisitions, the most recent ones being the acquisition of Alliance Mutual by Birla Sun Life, GIC Mutual by Canbank Mutual, and Sun F&C by Principal Mutual. While the Indian mutual fund industry has grown in size by about 320% from March, 1993 (Rs 470 billion) to December, 2004 (Rs 1505 billion) in terms of AUM, the AUM of the sector excluding UTI has grown over 8 times from Rs.152 billion in March 1999 to Rs.1295 billion as at December 2004 (See Chart 1). The latest phase in the industry's evolution began with the bifurcation of UTI. The Indian mutual fund industry has grown by about 4.2 times from 1993 (Rs. 470 billion) to 2005 (Rs. 1992 billion) in terms of AUM. The private sector was allowed entry to set up asset management companies in 1993. There was a brief period of five years during which the asset growth was slow. The AUM for the mutual fund industry started to grow rapidly after 1998. Between 1998 and 2005 the AUM of the sector excluding UTI grew by over 15 times from Rs.114 billion in 1998 to Rs.1738 billion as at 2005. Though India is a minor player in the global mutual funds industry, its AUM as a proportion of the global AUM has steadily increased, doubling from 1999 levels
MUTUAL FUND A GLOBALLY PROVEN INVESTMENT AVENUE

Worldwide, Mutual Fund or Unit Trust as it is referred to in some parts of the world, has a long and.successful history. The popularity of Mutual Funds has increased manifold in developed financial markets, like the United states. As at the end of March 2006, in the US alone there were 8,002 mutual funds with total assets of over US$ 9.36 trillion (Rs.427Iakh crores).In India, the mutual fund industry started with the setting up of the Unit Trust of India In 1964. Public sector banks and financial institutions were allowed to establish
mutual funds in 1987. Since 1993, private sector and foreign institutions were permitted to set up mutual funds. In February 2003, following the repeal of the Unit Trust of India Act 1963 the erstwhile UTI was bifurcated into two separate entities viz. The Specified Undertaking of the Unit Trust of India, representing broadly, the assets of US 64 scheme, assured returns and certain other schemes and UTI Mutual Fund conforming to SEBI Mutual Fund Regulations. As at the end of March 2006, there were 29 mutual funds, which managed assets of Rs. 2,31,862 crores (US$52 Billion) under 592 schemes. This fast growing industry is regulated by the Securities and Exchange Board of India(SEBI).
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STRUCTURE OF THE INDIAN MUTUAL FUND INDUSTRY

The Indian Mutual Fund industry is dominated by the Unit Trust of India which has a total corpus of 700 Billion collected from over 20 million investors. The UTI has many funds/ schemes in all categories i.e. Equity, balanced, income etc. With some being open ended and some being closed ended. The Unit scheme 1964 commonly referred to as US 64, which is a balanced fund, is the biggest scheme with a corpus of about 200 billion. UTI was floated by financial institutions and is governed by a special act of Parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes. The second largest category of mutual funds are the ones floated by nationalized banks. Canbank asset management floated by Canara Bank and SBI Funds Management floated by State Bank of India are the largest of these. GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. The aggregate corpus of the funds managed by this category of AMCs is around Rs.150 The third largest category of mutual funds are the ones floated by the private sector and by foreign asset management companies. The largest of these are Birla Capital AMC and
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Kotak AMC . The aggregate corpus of the assets managed by this category of AMCs is about Rs. 60 billion. Organization of A Mutual Fund There are many entities involved in organization of Mutual Fund. Diagram given below illustrates the organization set-up of a mutual fund.
The structure of mutual fund in India is governed by SEBI (Mutual fund) Regulation, 1996.
The Sponsor These regulation make it mandatory to a mutual fund to have three-tier
structure of Sponsor-Trustees-Asset Management Company. is promoter of the mutual fund appoints trustees, custodians and the AMC with prior approval of SEBI. The sponsor establishes the mutual fund and registers the same with SEBI. Sponsors must contribute at least 40% of the capital of the AMC.
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Trust/ Board of Trustees: Trustees hold a fiduciary responsibility towards unit

holders by protecting their interests. Trustees float and market schemes, and secure necessary approvals. They check if the AMCs investments are within well-defined limits, whether the funds assets are protected, and also ensure that unitholders get their due returns. They also review any due diligence by the AMC. For major decisions concerning the fund, they have to take the unitholdersconsent. They submit reports every six months to SEBI; investors get an annual report. Trustees are paid annually out of the funds assets 0.5 percent of the weekly net asset value
Fund Managers/ AMC: They are the ones who manage money of the investors. An
AMC takes decisions, compensates investors through dividends, maintains proper accounting and information for pricing of units, calculates the NAV, and provides information on listed schemes. It also exercises due diligence on investments, and submits quarterly reports to the trustees. A funds AMC can neither act for any other fund nor undertake any business other than asset management. Its net worth should not fall below Rs. 10 crore. And, its fee should not exceed 1.25 percent if collections are below Rs. 100 crore and 1 percent if collections are above Rs. 100 crore. SEBI can pull up an AMC if it deviates from its prescribed role.
Custodian: Often an independent organization, it takes custody of securities and other

assets of mutual fund. Its responsibilities include receipt and delivery of securities, collecting income-distributing dividends, safekeeping of the units and segregating assets and settlements between schemes. Their charges range between 0.15-0.2 percent of the net value of the holding. Custodians can service more than one fund. Mutual Fund is managed either trust company or board of trustees. Provisions of Indian Trust Act govern board of trustees and trust. If trustee is a company , it is also subject to Indian Company Act. Trustees appoint AMC in consultation with the sponsors and according to SEBI regulation. All mutual fund scheme floated by AMC have to be
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approved by trustees. Trustees review and ensure that net worth of the company is according to stipulated norms, every quarter. Though the trust is the mutual fund, the AMC is its operational face. The AMC is the first functionary to be appointed , and is involved in appointment of all other functionaries. The AMC structures the mutual fund products, markets them and mobilizes fund, manages the funds and services the investors. It seeks the service other functionaries in carrying out these functions. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund. In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.
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Types of AMCs in Indian Context The following are the types of AMCs we have in India
AMCs owned by banks AMCs owned by financial institutions AMCs owned by the Indian private sector companies AMCs owned jointly by Indian and foreign investors.
Different AMCs Working in India are

Name of the AMC Nature of Ownership Alliance Capital Private Foreign Anagram Wellington Private Indian Apple Private Indian Birla Capital International Private Indian Bank of Baroda Banks Bank of India Banks Canbank Investment Banks Cholamandalam Cazenove Private Foreign Dundee Private Foreign DSP Merrill Lynch Private Foreign Escorts Private Indian First India Private Indian GIC Institutions IDBI Investment Institutions Indfund Management Ltd. Banks ING Investment Private Foreign ITC Threadneedle Private Foreign RELIANCE Capital ManagementPrivate Indian Ltd. Jardine Fleming Kotak Mahindra Morgan Stanley Punjab National Bank Reliance Capital State Bank of India Shriram Sun F&C Private Foreign Private Indian Private Foreign Banks Private Indian Banks Private Indian Private Foreign 15
Sundaram Newton Tata Credit Capital Templeton UTI
Private Foreign Private Indian Private Indian Private Foreign Institutions
COMPARISON OF MUTUAL FUNDS WITH THE BANKS Banks v/s Mutual Funds
Returns Administrative exp. Risk Investment options Network Liquidity Quality of assets Interest calculation Guarantee BANKS Low High Low Less High penetration At a cost Not transparent Minimum balance MUTUAL FUNDS Better Low Moderate More Low but improving Better Transparent betweenEveryday None
10th.&30th.Of every month Max Rs.1 lakh on deposits
Capital flow in the economy

MFs make it possible for investors to assume risks in the expectation of the higher returns even if the investor cannot actively manage these investments and the associated risks. This increases the level of risk capital that is available in the economy for funding enterprise. The MFs also add depth to the security markets where they invest, thus contributing to liquidity and price discovery. This again is a significant factor in channelling more money into the markets, instead of this being locked up in unproductive physical capital like gold, real estate etc.
Schemes and Units

Investment in a company is normally represented by a certain number of shares. People invest in a company by acquiring its shares; they disinvest by selling its shares. The total outstanding shares of a company multiplied by the face value of each share, constitutes the share capital of the company. What shares are for a company, units are for a mutual fund scheme. Thus investors invest in a scheme by buying its units. They disinvest by selling its units. The total outstanding
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units of a scheme multiplied by the face value of its units, constitutes the unit capital of the scheme. Every scheme has an investment objective or philosophy i.e. a promise by the AMC on how the funds would be managed. Investors in a scheme are essentially buying into this investment objective or philosophy. In reality, the distinction among some of the stock fund objectives discussed is not clearcut. The actual stocks that constitute a specific mutual fund portfolio depend on the analysis and perspective of the funds manager. Hence, a generic investment objective (e.g. growth, income) can be interpreted and executed differently by different managers. One companys aggressive growth fund may look like another companys specialty fund, which may look like another companys world fund. It is important to read the funds prospectus and review the list of its top holdings before making your final investment decision.
Company Profile
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STATE BANK OF INDIA

SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - Indias largest banking enterprise. The institution has grown immensely since its inception and today it is India's largest bank, patronised by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint venture between the State Bank of India and Society General Asset Management, one of the worlds leading fund management companies US$ 330 Billion worldwide. In eighteen years of operation, the fund has launched thirty-two schemes and successfully redeemed fifteen of them. In the process it has rewarded its investors handsomely with consistently high returns. that manages over
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A total of over 3.5 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund. Schemes of the Mutual fund have consistently outperformed benchmark indices and have emerged as the preferred investment for millions of investors and HNIs. Today, the fund manages over Rs. 20000 crores of assets and has a diverse profile of investors actively parking their investments across 40 active schemes. The fund serves this vast family of investors by reaching out to them through network of over 100 points of acceptance, 26 investor service centers, 33 investor service desks and 52 district organizers.
SBI Mutual is the first bank-sponsored fund to launch an offshore fund Resurgent India Opportunities Fund. Growth through innovation and stable investment policies is the SBI MF credo. KEY PERSONNEL
Mr. Syed Shahabuddin Managing Director
Mr. G.S. Subramanian SR. Vice President Cross Selling
Mr. Didier Turpin Dy. Chief Executive Officer
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Mr. G. Kandasubramanian Asst. Vice President - Customer Service Mr. Achal K. Gupta Chief Operating Officer Mr. Ganti N. Murthy Fund Manager - Debt
Mr. Sanjay Sinha Chief Investment Officer
Ms. Aparna Nirgude Chief Risk Officer Mr. R. S. Srinivas Jain Chief Marketing Officer
Mr. Ashutosh P Vaidya Company Secretary & Compliance Office IMPORTANCE OF SBI MUTUAL FUND
1) 2)
SBI Mutual Fund helps in introducing a high degree of professional management
and marketing concept in to banking SBI Mutual Fund creates Healthy competition on general efficiency levels in the
industry
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3)
SBI Mutual Fund is always trying to innovate the new products avenues, new
schemes, services etc.
More about SBI Mutual Fund
SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - Indias largest banking enterprise. The institution has grown immensely since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country.
SBI Mutual Fund is a joint venture between the State Bank of India and Society General Asset Management, one of the worlds leading fund management companies that manages over US$ 330 Billion worldwide.
AWARDS AND ACHIEVEMENTS 1)
LIPPER AWARD- lipper India fund award 2007
2)
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ICRA MUTUAL FUND AWARD -2007
3)
CNBC TV 18 - CRISIL MUTUAL FUND OF YEAR AWARD -2007
4)
CNBC AWAAZ CONSUMER AWARD 2006
5)
LIPPER AWARD- lipper India fund award -2006
6)
CNBC TV 18 - CRISIL MUTUAL FUND OF YEAR AWARD -2006
7)
ICRA MUTUAL FUND AWARD -2006
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Business Objectives.
The Primary Objective of SBI Mutual Fund is to Enhance the Investments in the country through the Provision of Different Mutual Fund Schemes in a systematic and Professional Manner, and to Promote the Investments In the Mutual Fund
Organizational goal
SBI Mutual Fund Main goals are to a) Develop a Close Relationship with Customer b) Transform Ideas in to Viable and Creative Solutions c) Provide Consistently high Returns to Shareholders, d) To Grow through diversification by leveraging off the existing client base.
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Business Focus
SBI Mutual Fund mission is to be world class Mutual Fund its Main aim is to build Customer Franchises across distinct business So as to be the Preferred Provider of services in the Segments That Fund Operates in and to achieve healthy growth in profitability, and consistency The SBI Mutual Fund is Committed to maintain the highest level of ethical standards, professional integrity and regulatory compliance
Subsidiaries and Associates

SBI Bank SBI Mutual Fund SBI Life insurance Company SBI Securities SBI NRI Services Other Companies co- promoted by SBI
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SBI Mutual Fund is Professionally managed organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction and Urban policy and development. The board primarily focuses on strategy Formulation, policy and control, designed to deliver increasing value to the share holders
S B I MUTUAL FUND SCHEMES 1 EQUITY SCHEMES

The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity
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Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index. Magnum COMMA Fund Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum MidCap Fund Magnum Multicap Fund Magnum Multiplier Plus 1993 Magnum Sector Funds Umbrella Businesses Fund MSFU - FMCG Fund MSFU - Emerging MSFU - IT Fund MSFU - Pharma Fund MSFU - Contra Fund
SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Taxgain Scheme 1993 SBI ONE India Fund
2 DEBT SCHEMES
Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns from debt
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funds would be lower. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors.
Magnum Children`s Benefit Plan Magnum Gilt Fund Magnum Gilt Fund (Long Term) Magnum Gilt Fund (Short Term)
Magnum Income Fund Magnum Income Plus Fund Magnum Income Plus Fund (Saving Plan) Magnum Income Plus Fund (Investment Plan)
Magnum Insta Cash Fund Magnum InstaCash Fund -Liquid Floater Plan
Magnum Institutional Income Fund Magnum Monthly Income Plan Magnum Monthly Income Plan Floater Magnum NRI Investment Fund SBI Debt Fund Series SDFS 15 Months Fund SDFS 90 Days Fund SDFS 13 Months Fund SDFS 18 Months Fund SDFS 24 Months Fund SDFS 60 Days Fund
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SDFS 180 Days Fund
SBI Premier Liquid Fund 3 BALANCED SCHEMES

Magnum Balanced Fund invest in a mix of equity and debt investments. Hence they are less risky than equity funds, but at the same time provide commensurately lower returns. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but is looking for higher returns than those provided by debt funds.
Magnum Balanced Fund Magnum NRI Investment Fund - FlexiAsset Plan
SBI EQUITY SCHEMES DETAILS MAGNUM GLOBAL FUND Investment Objective

To provide the investors maximum growth opportunity through well researched investments in Indian equities, PCDs and FCDs from selected industries with high growth potential and Bonds.
Asset Allocation
Instrument Equity, Partly Convertible Debentures, Fully %of portfolio 80-100% Risk Profile HIGH 28
Convertible Debentures and Bonds Money Market instruments 0-20% LOW
Scheme Highlights
1.An open-ended equity scheme investing in stocks from selected industries with high growth potential. 2. Minimum Investment Rs. 2000 and in multiples of Rs. 1000 with Dividend and Growth options available. ^ Money Market Instruments will include Commercial Paper, Commercial Bills, Certificate of Deposit, Treasury Bills, Bills Rediscounting, Repos, Government securities having an unexpired maturity of less than 1 year, call or notice money, usance bills and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.
Launch Date: September 30, 1994
Entry Load
Investments below Rs. 5 crores - 2.25% Investments of Rs.5 crores and above NIL
Exit Load
Investments below Rs 5 crores <= 6 months - 1.00% and NIL thereafter. Investments of Rs 5 crores and above - NIL
SBI GILT FUND DETAILS SBI MAGNUM GILT FUND KLESs Institute of Management Studies & Research, Hubli, Karnatka University, Dharwad
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Investment Objective
To provide the investors with returns generated through investments in government securities issued by the Central Government and / or a State Government
Asset Allocation
Instrument Government of India Dated Securities State Governments Dated Securities Government of India Treasury Bills %of portfolio 100% 100% 100% Risk Profile Sovereign Low Sovereign
Scheme Highlights
1. Open ended Gilt Scheme. 2. The scheme will invest in government securities only with the exception of investments made in the call money markets. Investment in Government Securities signifies no risk of default (zero credit risk) either in payment of principal or even interest on the investments made by the scheme. Long-Term Plan - for investors with a long-term investment horizon. This Plan will have two options (a) Quarterly Dividend option and (b) Growth option The Long Term Plan Dividend Plan and the Growth Plan will each have three options for investment 1. Regular Dividend / Growth Option : This option will be the existing option in this Plan wherein investments in this option would be subject to a Contingent Deferred Sales Charge (CDSC) of 0.25% for exit within 90 days from the date of investment. 2. PF (Regular) Option : This option under both the Dividend and Growth Plans would be a no-load option. 3. PF (Fixed Period) Option : This option under both the Dividend and Growth Plan provides prospective investors with an option to lock-in their investments for a period of 1 year, 2 years or 3 years from the date of their investment Facility to reinvest dividend is available under both the Plans. Both the Plans will have separate investment portfolios and separate NAVs. Under the Long-
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Term Plan, the funds will normally be managed to an average portfolio-maturity longer than three years.
Launch Date: January 1, 2003 Entry Load: Nil Exit Load: Regular Plan (Long Term) - CDSC of 0.25% for exit within 90 days
from date of investment
SBI BALANCED FUND Investment Objective

To provide investors long term capital appreciation along with the liquidity of an open-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 relatively safe portfolio of debt.
Asset Allocation
Instrument Equities %of portfolio At least 50% Risk Profile MED-HIGH
Debt Instruments like debentures, bonds,khokhas. UP TO 40%
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Securitized Debt Money Market Instruments
10% Balance
MED-HIGH Low
Scheme Highlights
1. An open-ended scheme investing in a mix of debt and equity instruments. Investors get the benefit of high expected-returns of equity investments with the safety of debt investments in one scheme. 2. On an ongoing basis, magnums will be allotted at an entry load of 2.25% to the NAV. 3. Scheme open for Resident Indians, Trusts, Indian Corporates, on a fully repatriable basis for NRIs and, Overseas Corporate Bodies. 4. Facility to reinvest dividend proceeds into the scheme at NAV available. 5. Switchover facility to any other open-ended schemes of SBI Mutual Fund at NAV related prices. 6. The scheme will declare NAV, Sale and repurchase price on a daily basis. 7. Nomination facility available for individuals applying on their behalf either singly or jointly upto three.
Launch Date: May 1, 1996 Entry Load: Investments below Rs. 5 crores - 2.25% Investments of Rs.5 crores
and above - NIL
Exit Load: Investments below Rs.5 crores < = 6 months - 1.00%, > 6 months but <
12 months - 0.50% Investments of Rs.5 crores and above - NIL
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ICICI Prudential Mutual Fund ICICI Prudential Asset Management Company enjoys the strong parentage of
Prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India. ICICI Prudential Asset Management Company, in a span of just over eight years, has forged a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with assets under management of Rs. 37,906.24 crores (as of March 31, 2007). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 68 cities in the country.
PRUDENTIAL KLESs Institute of Management Studies & Research, Hubli, Karnatka University, Dharwad
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Established in London in 1848, Prudential plc, through its businesses in the UK, US and Asia, provides retail financial services products and services to more than 21 million customers, policyholders and unit holders worldwide with over US$400 (as of 31st December, 2005) billion in funds under management. Prudential employs some 23,000 staff worldwide.
In Asia, Prudential has life insurance and funds management operations across twelve countries China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam. Prudential has championed customer-centric products and services for over 80 years, supported by an extensive network of over 145,000 staff and agents across the region
ICICI BANK
ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended March 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank has a network of about 614 branches and extension counters and over 2,200 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary has established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of market capitalisation.
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ICICI PRUDENTIAL MUTUAL FUND SCHEMES ICICI Prudential Infrastructure Fund ICICI Prudential Services Industries Fund ICICI Prudential FMCG Fund ICICI Prudential Technology Fund ICICI Prudential Discovery Fund ICICI Prudential Power ICICI Prudential Dynamic Plan ICICI Prudential Emerging S.T.A.R Fund ICICI Prudential Tax Plan ICICI Prudential Growth Plan ICICI Prudential Index Fund ICICI Prudential Spice Fund
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ICICI Prudential Child Care Plan ICICI Prudential Banlanced Fund ICICI Prudential Income Multiplier Fund ICICI Prudential Monthly Income Plan ICICI Prudential Gilt Fund-Investment Option ICICI Prudential Income Plan ICICI Prudential Flexible Income Plan ICICI Prudential Long Term Floating Rate Plan ICICI Prudential Blended Plan ICICI Prudential Short Term Plan ICICI Prudential Gilt Fund-Treasury Option ICICI Prudential Short Term Floater ICICI Prudential Liquid Plan
ICICI PRUDENTIAL PRODUCT DETAILS
EQUITY SCHEME ICICI PRUDENTIAL DYNAMIC PLAN is a diversified equity fund that
could be your ideal choice to make the most of dynamic changes in the market. It has the agility to capture upside opportunities across value and growth , large and midcap , index and non-index stocks. On the flip side it also has ability to move into cash as markets get overvalued
To generate capital appreciation by actively investing in equity / equity related securities. For defensive considerations, the Scheme may invest in debt, money market instruments, to
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the extent permitted under the Regulations. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above so as to maximize the returns.
INVESTMENT PHILOSOPHY
ICICI PRUDENTIAL DYNAMIC PLAN is a diversified equity plan that follows the growth investment philosophy to invest in a portfolio of large, mid and small-cap stocks. It has the ability to move gradually into cash as the market gets over-valued. It offers a portfolio of stocks selected through rigorous bottom-up fundamental analysis across market capitalisations on a diversified basis for long-term capital appreciation.
BENEFITS
1.Has the agility, aimed at capturing upside opportunities in the market across market capitalizations.
2.On the flip side, in case stock markets get into an over valued position, the plan has the ability to switch to cash thus seeking to limit the downside
PERFORMANCE
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Entry Load: (i) For investments of less than Rs. 5 Crores : Entry load at 2.25% of
applicable NAV. (ii)For investments of Rs. 5 crores and Above : Nil
Exit Load: Nil
ICICI PRUDENTIAL GUILT FUND Investment Objective

To generate income through investment in Gilts of various maturities. INVESTMENT PHILOSOPHY ICICI PRUDENTIAL GILT FUND is a pure debt fund that invests in short tenure Government securities (G-Secs). These securities are essentially liquid and carry no credit risk. Having said that, the portfolio's exposed to some interest rate risk as the securities are marked to market, and therefore, respond to changes in market interest rates. The portfolio seeks to limit volatility by deploying funds in short-term G-Secs, with an average maturity
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not exceeding 3 years. The objective is to closely manage the downside risks of the portfolio arising out of changes in the market rates, by actively managing the duration of the portfolio.
BENEFITS 1.Enables exposure to a pure Government security portfolio. 2.Facilitates participation in the wholesale market for Government debt, even for smaller ticket-size exposures. 3.Provides the benefits of professional management of investment portfolios.
PERFORMANCE OF THE FUND
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Entry Load:Nil Exit Load: Nil
ICICI PRUDENTIAL BALANCED FUND: Asset allocation is the key to investing success. It helps to reduce the volatility of returns. A Balanced Fund takes care of this asset allocation by investing in equity for capital appreciation and debt for stable returns. It focuses on reducing volatility of returns by increasing / decreasing equity exposure based on the market outlook and using a core debt portfolio to do the rebalancing.
To seek to generate long-term capital appreciation and current income from a portfolio that is invested in equity and equity related securities as well as in fixed income securities.
INVESTMENT PHILOSOPHY KLESs Institute of Management Studies & Research, Hubli, Karnatka University, Dharwad
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an open-ended fund that allocates to both equity and debt markets, reflects this wisdom. In a bullish market equity allocation can go upto 80%. In a bearish market equity allocation can go down to 65%. This dynamic allocation along with core debt portfolio reduces the volatility of return. BENEFITS Balanced fund brings you the twin benefits of growth from equity markets and steady income from debt markets
PERFORMANCE
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Entry Load: (i) For investments of less than Rs. 5 Crores : 2.25% of applicable NAV.
(ii) For investments of Rs. 5 crores and Above : Nil
Exit Load: Nil
Key Information
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CATEGORIES OF MUTUAL FUND SCHEMES 1.SCHEMES ACCORDING TO MATURITY PERIOD:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.
1.1OPEN-ENDED FUND/ SCHEME

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of open-end schemes is liquidity.
1.2CLOSE-ENDED FUND/ SCHEME

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the
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units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.
2.SCHEMES ACCORDING TO INVESTMENT OBJECTIVE:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:
2.1GROWTH / EQUITY ORIENTED SCHEME

The aim of growth funds is to provide capital appreciation over the medium to longterm. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
2.2INCOME / DEBT ORIENTED SCHEME

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures,
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Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long-term investors may not bother about these fluctuations.
2.3BALANCED FUND
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.
2.4MONEY MARKET OR LIQUID FUND

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.
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2.5GILT FUND
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factor as is the case with income or debt oriented schemes.
2.6INDEX FUNDS
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds, which are traded on the stock exchanges.
Other Schemes Tax Saving Schemes

These schemes offer tax rebates to the investors under tax laws as prescribed from time to time. This is made possible because the Government offers tax incentives for investment in specified avenues. For example, Equity Linked Savings Schemes (ELSS) and Pension Schemes. The details of such tax saving schemes are provided in the relevant offer documents.
Ideal for: . Investors seeking tax rebates. Special Schemes

This category includes index schemes that attempt to replicate the erformance of a particular index such as the SSE Sensex or the NSE 50, or industry specific schemes
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(which invest in specific industries) or sectoral schemes (which invest exclusively in segments such as 'IXGroup shares or initial public offerings).
Index fund schemes are ideal for investors who are satisfied with a return approximately
equal to that of an index.
Sectoral fund schemes are ideal for investors who have already decided to invest in a
particular sector or segment. Keep in mind that anyone scheme may not meet all your requirements for all time. You need to place your money judiciously in different schemes to be able to get the combination of growth, income and stability that is right for you. Remember, as always, higher the return you seek higher the risk you should be prepared to take. A few frequently used terms are explained here
FREQUENTLY USED TERMS

NET ASSET VALUE(NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is he net asset value of the scheme divided by the number of units outstanding on the Valuation date. Net Asset Value is the market value of securities of scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of the securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units at Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis- daisy or weekly- depending on the type of scheme
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Sale Price
Is the price you pay when you invest in a scheme or NAV a unit holder is charged while investing in an open-ended scheme is sale price. Also called Offer Price. It may include a Sale load, if applicable.
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales load
Is a charge collected by a scheme when it sells when it sells the units also called, Front-end load. A Load is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs. 10. If the entry as well as exit load charged were 1%, then the investors who buy would be required to pay Rs. 10.10 and those who offer their unit for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns Whether a mutual fund impose fresh load or increase the load beyond the level mentioned in the offer documents
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Mutual funds cannot increase the load beyond the leel mentioned in the offer document. Any change in the load will be applicable only to prospective investments and not to the original investments. In case of imposition of fresh loads or increase in existing loads, the mutual funds are required to amend their offer documents so that the new investors are aware of loads at the time of investments.
No load
Schemes that do not charge a load are called No Load schemes. A no load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and not additional charges are payable on purchase or sale of units.
BENEFITS OF MUTUAL FUNDS PROFESSIONAL MANAGEMENT:

Mutual Funds are backed by experienced and skilled professionals, a dedicated investment research team that analyses the performance and prospects of companies and selects investments.
CONVENIENT ADMINISTRATION:
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. This is important when you want to have a diversified portfolio through direct equity investments.
DIVERSIFICATION :
Mutual Funds always have an investment mix. The diversity in this mix spreads out the probability of profits and losses, reducing the risk of a substantial fall in the money you have invested.
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RETURN POTENTIAL :
Over a medium to long-term, Mutual Funds have the potential to provide a higher net return as they invest in a diversified basket of selected securities.
ECONOMIES:
Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.
LIQUIDITY:
In open-end schemes, the investor gets the money back promptly at net NAV pegged prices. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price. The fund also repurchases from the investors at NAV pegged prices. There is scope to speedily disinvest assets and obtain disinvestments proceeds.
FLEXIBILITY:
Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.
TRANSPARENCY:
You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.
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AFFORDABILITY:
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.
OPTIONS:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
INVESTOR SAFETY:
All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
LIMITATIONS OF MUTUAL FUND No Guarantee:

No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.
Fees and commissions:

All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or loads to compensate brokers, financial consultants, or financial planners. Even if you dont use a broker or other financial adviser, you will pay a sales commission if you buy shares in a load fund.
Taxes: KLESs Institute of Management Studies & Research, Hubli, Karnatka University, Dharwad
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During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
Management Risk:
When you invest in a mutual fund, you depend on the fund manager to make the right decisions regarding the funds portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investments as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
1. ROLE OF INTERMEDIARIES IN THE INDIAN MUTUAL FUND INDUSTRY 1.1

The mutual fund industry in India started in 1964 with the formation institutions entered of the this Unit Trust of India (UTI). In 1987, other public sector operations. 1.2 From the beginning, UTI and other mutual funds have relied extensively on
business, and it was in 1993 that the first of the private sector participants commenced its
intermediaries to market their schemes to investors. It without intermediaries, the mutual fund and breadth of coverage played a
would be accurate to say that
industry would not have achieved the depth
amongst investors that it enjoys today. Intermediaries have schemes it easy and and
pivotal and valuable role in popularizing the concept of mutual funds investors, making
across India. They make the forms available to clients, explain the provide administrative and paperwork support to convenient for the clients to invest.
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1.3
Intermediation itself has undergone a change over the past few
decades. While
individual agents provided the foundation for growth agents, distribution companies and promoting
in the early years, institutional
national brokers soon started to play an active role in to their
mutual funds. Recently, banks, finance companies, secondary market
brokers and even post offices have also begun to market mutual funds existing and potential client bases.
1.4
It is, thus clear that all types of intermediaries are required for the
growth of the will
industry, and their wellbeing, quality orientation and ways of doing business
have a significant impact on how the mutual fund industry in India evolves in the future.
HOW SAFE ARE MUTUAL FUNDS

By investing in mutual funds, the risk is not totally removed but one will have the benefits of diversification. Any mutual fund is as safe or unsafe as the assets that it invests in. NAV of growth funds mirrors the fluctuations of the share prices of its constituents. Sometimes there is permanent erosion in value too. Bond funds, in which the constituents are debt instruments, don't waver so much. Income funds seldom face permanent value erosion. Despite professional setups for both investment decisions and research, funds cannot be immune to fluctuating market health. However, funds diversify the investment portfolio substantially so that default in any single investment (in the case of an income fund) will not affect the overall performance of a fund in a significant manner. In the event of default of a part of the portfolio, an income fund is extremely unlikely to face erosion in face value. Generally, mutual funds are not guaranteed by anybody. However, in the Indian context, some of the mutual funds have floated "guaranteed" or "assured" return schemes that guarantee a certain annual return or guarantee a buyback at a specified price after some time. Examples of these include funds floated by the TI, Cannabis Mutual Fund, BSI
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Mutual Fund, etc. Many of these funds have not earned returns that they promised and the asset management companies of the respective mutual funds or their sponsors have made good their promises
Ground Rules of Mutual Fund Investing

Assess yourself: Self-assessment of ones needs; expectations and risk profile is of prime importance failing which, one will make more mistakes in putting money in right places than otherwise. One should identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments. Irrational expectations will only bring pain. Try to understand where the money is going: It is important to identify the nature of investment and to know if one is compatible with the investment. One can lose substantially if one picks the wrong kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that mutual fund companies provide on their funds. Don't rush in picking funds, think first: one first has to decide what he wants the money for and it is this investment goal that should be the guiding light for all investments done. It is thus important to know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should take a look at the portfolio of the funds for the purpose. Excessive exposure to any specific sector should be avoided, as it will only add to the risk of the entire portfolio. Mutual funds invest with a certain ideology such as the "Value Principle" or "Growth Philosophy". Both have their share of critics but both philosophies work for investors of different kinds. Identifying the proposed investment philosophy of the fund will give an insight into the kind of risks that it shall be taking in future. Invest. Dont speculate: A common investor is limited in the degree of risk that he is willing to take. It is thus of key importance that there is thought given to the process of
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investment and to the time horizon of the intended investment. One should abstain from speculating which in other words would mean getting out of one fund and investing in another with the intention of making quick money. One would do well to remember that nobody can perfectly time the market so staying invested is the best option unless there are compelling reasons to exit.
Dont put all the eggs in one basket: This old age adage is of utmost importance. No matter what the risk profile of a person is, it is always advisable to diversify the risks associated. So putting ones money in different asset classes is generally the best option as it averages the risks in each category. Thus, even investors of equity should be judicious and invest some portion of the investment in debt. Diversification even in any particular asset class (such as equity, debt) is good. Not all fund managers have the same acumen of fund management and with identification of the best man being a tough task, it is good to place money in the hands of several fund managers. This might reduce the maximum return possible, but will also reduce the risks. Be regular: Investing should be a habit and not an exercise undertaken at ones wishes, if one has to really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the market, it is important to beat the market by being systematic. The basic philosophy of Rupee cost averaging would suggest that if one invests regularly through the ups and downs of the market, he would stand a better chance of generating more returns than the market for the entire duration. The SIPs (Systematic Investment Plans) offered by all funds helps in being systematic. All that one needs to do is to give post-dated cheques to the fund and thereafter one will not be harried later. The Automatic investment Plans offered by some funds goes a step further, as the amount can be directly/electronically transferred from the account of the investor. Do your homework: It is important for all investors to research the avenues available to them irrespective of the investor category they belong to. This is important because an informed investor is in a better decision to make right decisions. Having identified the risks associated with the 55 KLESs Institute of Management Studies & Research, Hubli,
Karnatka University, Dharwad
investment is important and so one should try to know all aspects associated with it. Asking the intermediaries is one of the ways to take care of the problem. Find the right funds Finding funds that do not charge much fees is of importance, as the fee charged ultimately goes from the pocket of the investor. This is even more important for debt
funds as the returns from these funds are not much. Funds that charge more will reduce the yield to the investor
Risks involved in investing in Mutual Funds

Mutual Funds do not provide assured returns. Their returns are linked to their performance. They invest in shares, debentures, bonds etc. All these investments involve an element of risk. The unit value may vary depending upon the performance of the company and if a company defaults in payment of interest/principal on their debentures/bonds the performance of the fund may get affected. Besides incase there is a sudden downturn in an industry or the government comes up with new a regulation which affects a particular industry or company the fund can again be adversely affected. All these factors influence the performance of Mutual Funds. Some of the Risk to which Mutual Funds are exposed to is given below:
Market risk
If the overall stock or bond markets fall on account of overall economic factors, the value of stock or bond holdings in the fund's portfolio can drop, thereby impacting the fund performance. Non-market risk Bad news about an individual company can pull down its stock price, which can negatively affect fund holdings. This risk can be reduced by having a diversified portfolio that consists of a wide variety of stocks drawn from different industries.
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Interest rate risk Bond prices and interest rates move in opposite directions. When interest rates rise, bond prices fall and this decline in underlying securities affects the fund negatively.
Credit risk Bonds are debt obligations. So when the funds invest in corporate bonds, they run the risk of the corporate defaulting on their interest and principal payment obligations and when that risk crystallizes, it leads to a fall in the value of the bond causing the NAV of the fund to take a beating.
Performance Measures or Risk Measurement Of Mutual Funds

Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the most preferred investment avenues in India. However, with a plethora of schemes to choose from, the retail investor faces problems in selecting funds. Factors such as investment strategy and management style are qualitative, but the funds record is an important indicator too. Though past performance alone can not be indicative of future performance, it is, frankly, the only quantitative way to judge how good a fund is at present. Therefore, there is a need to correctly assess the past performance of different mutual funds. Worldwide, good mutual fund companies over are known by their AMCs and this fame is directly linked to their superior stock selection skills. For mutual funds to grow, AMCs must be held accountable for their selection of stocks. In other words, there must be some performance indicator that will reveal the quality of stock selection of various AMCs. Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme, it should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. Risk associated with a fund, in a general, can be defined as variability or fluctuations in the returns generated by
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it. The higher the fluctuations in the returns of a fund during a given period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are resultant of two guiding forces. First, general market fluctuations, which affect all the securities present in the market, called market risk or systematic risk and second, fluctuations due to specific securities present in the portfolio of the fund, called unsystematic risk. The Total Risk of a given fund is sum of these two and is measured in terms of standard deviation of returns of the fund. Systematic risk, on the other hand, is measured in terms of Beta, which represents fluctuations in the NAV of the fund vis--vis market. The more responsive the NAV of a mutual fund is to the changes in the market; higher will be its beta. Beta is calculated by relating the returns on a mutual fund with the returns in the market. While unsystematic risk can be diversified through investments in a number of instruments, systematic risk can not. By using the risk return relationship, we try to assess the competitive strength of the mutual funds vis--vis one another in a better way. In order to determine the risk-adjusted returns of investment portfolios, several eminent authors have worked since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative portfolios within a particular risk class.
The most important and widely used measures of performance are: The Treynor Measure The Sharpe Measure Jenson Model Fama Model The Treynor Measure
Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free rate of return (generally taken to be the return on securities backed by the government, as there is no credit risk associated), during a given period and systematic risk associated with it (beta). Symbolically, it can be represented as:
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Treynor's Index (Ti) = (Ri - Rf)/Bi. Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index is an indication of unfavorable performance.
The Sharpe Measure

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about. So, the model evaluates funds on the basis of reward per unit of total risk. Symbolically, it can be written as: Sharpe Index (Si) = (Ri - Rf)/Si Where, Si is standard deviation of the fund. While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a low and negative Sharpe Ratio is an indication of unfavorable performance.
Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk premium by a numerical risk measure. The total risk is appropriate when we are evaluating the risk return relationship for well-diversified portfolios. On the other hand, the systematic risk is the relevant measure of risk when we are evaluating less than fully diversified portfolios or individual stocks. For a well-diversified portfolio the total risk is equal to systematic risk. Rankings based on total risk (Sharpe measure) and systematic risk (Treynor measure) should be identical for a well-diversified portfolio, as the total risk is reduced to systematic
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risk. Therefore, a poorly diversified fund that ranks higher on Treynor measure, compared with another fund that is highly diversified, will rank lower on Sharpe Measure.
Jenson Model
Jenson's model proposes another risk adjusted performance measure. This measure was developed by Michael Jenson and is sometimes referred to as the Differential Return Method. This measure involves evaluation of the returns that the fund has generated vs. the returns actually expected out of the fund given the level of its systematic risk. The surplus between the two returns is called Alpha, which measures the performance of a fund compared with the actual returns over the period. Required return of a fund at agiven level of risk (Bi) can be calculated as: Ri = Rf + Bi (Rm - Rf) Where, Rm is average market return during the given period. After calculating it, alpha can be obtained by subtracting required return from the actual return of the fund. Higher alpha represents superior performance of the fund and vice versa. Limitation of this model is that it considers only systematic risk not the entire risk associated with the fund and an ordinary investor can not mitigate unsystematic risk, as his knowledge of market is primitive.
Fama Model
The Eugene Fama model is an extension of Jenson model. This model compares the performance, measured in terms of returns, of a fund with the required return commensurate with the total risk associated with it. The difference between these two is taken as a measure of the performance of the fund and is called net selectivity. The net selectivity represents the stock selection skill of the fund manager, as it is the excess return over and above the return required to compensate for the total risk taken by
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the fund manager. Higher value of which indicates that fund manager has earned returns well above the return commensurate with the level of risk taken by him. Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf) Where, Sm is standard deviation of market returns. The net selectivity is then calculated by subtracting this required return from the actual return of the fund. Among the above performance measures, two models namely, Treynor measure and Jenson model use systematic risk based on the premise that the unsystematic risk is diversifiable. These models are suitable for large investors like institutional investors with high risk taking capacities as they do not face paucity of funds and can invest in a number of options to dilute some risks. For them, a portfolio can be spread across a number of stocks and sectors. However, Sharpe measure and Fama model that consider the entire risk associated with fund are suitable for small investors, as the ordinary investor lacks the necessary skill and resources to diversified. Moreover, the selection of the fund on the basis of superior stock selection ability of the fund manager will also help in safeguarding the money invested to a great extent. The investment in funds that have generated big returns at higher levels of risks leaves the money all the more prone to risks of all kinds that may exceed the individual investors' risk appetite
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Project Details
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Main Objective
To make Comparative performance analysis of SBI Mutual Fund with ICICI Prudential Mutual Fund.
Sub-objectives
1. To study the different kinds of schemes provided by each of Mutual funds. 2. Comparative performance analysis of SBI Equity - Diversified with ICICI Prudential Equity Diversified Fund. 3. Comparative performance analysis of SBI Gilt Fund with ICICI Prudential Gilt Fund 4. Comparative performance analysis of SBI Balance Fund with ICICI Prudential Balance Fund.
The study Comprises of

1. Comparative analysis of Returns from SBI Mutual Fund and ICICI Prudential Mutual fund. 2. Comparative analysis of Risk associated with SBI and ICICI Prudential fund, with the use of Sharpe ratio, Expense ratio, Beta, Treynor Ratio and Standard deviation.. 3. To compare Mutual Fund Average Return with NIFTY Average Return 4. Comparative analysis of corpus of the funds.
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METHODOLOGY
o Information is collected from the managers of Selected firms who deal in mutual funds. o Information is collected from the officials of SBI Mutual Fund officials. o Information is also collected from the secondary sources like the offer documents, fact sheets, key information memorandum, web sites, magazines, newspapers etc. o In case of corpus size, lock in period, entry and exit load the information is collected from SBI & ICICI Prudential the offer documents. o In case of returns, minimum investment and performance (Track Records) is collected from the offer documents & fact sheets. o Extensive use of Mutual Fund Related magazines like Mutual Fund Review, Mutual Fund Insight by value researchers is being made.
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Analysis of the Data
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SOURCES OF INFORMATION PRIMERY SOURCES OF INFORMATION

Officials and sales executives of SBI Mutual fund. Official and executives of SBI Discussion about mutual funds with existing and new investors
SECONDARY SOURCES OF INFORMATION Offer documents of SBI and ICICI Prudential Mutual Funds. Mutual Fund related magazines like Mutual Fund Review, Mutual Fund Insight by value researchers, Outlook Money. Fact Sheets of SBI Mutual Fund and ICICI Prudential Mutual Fund Web sites, mainly www.mutualfundsindia.com, sbimf.com www.valueresearchersonline.com, www.indiainfoline.com. icicipruamc.com
LIMITATIONS OF THE STUDY

The analysis is done on the basis of past performance of the funds. But the past performance may not be an indicator of future performance. Performance of mutual funds is largely affected by environmental factors, which are beyond the control of investors.
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GILT FUND ANALYSIS

ABSOLUTE RETURNS 1ST YEAR 9.715344 5.36 8.09 2ND YEAR 85.20646 8.88 11.34 3RD YEAR 125.8813 13.07 16.65
NIFTY SBI ICICI PRU
ABSOLUTE RETURNS
140 120 100 80 60 40 20 0 1ST YEAR 2ND YEAR 3RD YEAR NIFTY SBI ICICI PRU
The above diagram exhibits he absolute return from Gilts funds. These are the funds, which are known for their high consistency. The consistent appraisal is assured in this type of funds. This type of fund is suitable for retired people, dependants on income from fund invested. It is clear from the diagram that the performance of ICICI Prudential is marginally higher than SBI Mutual fund at different point of time Gilt Fund.
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BETA 1ST YEAR 2ND YEAR 3RD YEAR
SBI 0.0004 -0.0001 -0.0002 -0.0002
ICICI PRU 0.00035 0.00003 -0.002 -0.001
RISK PREMIUM
SHARPE INDEX RANKING SBI -0.86 -1.51 -1.35 -0.45 ICICI PRU 0.03 -1.4 -0.91 -0.76
1ST YEAR 2ND YEAR 3RD YEAR AVERAGE
02 . 0 -. 02 -. 04 -. 06 -. 08 1 -. 12 -. 14 -. 16 SI B I I IP U C C R
1 TY A S ER 2 D ER N YA 3 D ER R YA Aea eS ap ai v r g h r Rto
Sharpe Ratio, which measures risk free return from the fund, is favorable in case of ICICI Prudential Fund when compared to SBI.Higher the Sharpe Ratio indicates higher safety. So depending on Sharpe Ratio SBI is safer than SBI.
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Standard Deviation of SBI is lower than ICICI Prudential. It indicates lower risk profile of SBI when compared to ICICI Prudential.
Beta, which measures impact of market condition on funds, is lower in case of ICICI Prudential when compared to SBI. It indicates lower risk profile of ICICI Prudential than SBI.
TREYNOR INDEX RANKING ICICI PRU 0.09 -4.99 -3.23 -2.71
SBI -2.64 -4.66 -4.15 -3.82
1 0 -1 -2 -3 -4 -5 SBI ICICI PRU 1ST YEAR 2ND YEAR 3RD YEAR Average Treynor Ratio
A measure of a portfolio's excess return per unit of risk, equal to the portfolio's rate of return minus the risk-free rate of return, divided by the portfolio's beta. ICICI Prudential Mutual Fund is having a higher Treynor ratio of -2.71% as compared to SBI Mutual Fund which is having a Treynor Ratio of -3.82%. A high Treynor Index
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indicates that we're getting a good deal in terms of the return-to-risk ratio.
ABSOLUTE RETURNS NIFTY SBI BALANCED FUND ICICI PRU BALANCED FUND
1ST YEAR 9.715344 25.96 23.16
2ND YEAR 85.20646 91.85 77.69
3RD YEAR 125.8813 172.5 148.41
BALANCED FUND ANALYSIS
200 180 160 140 120 100 80 60 40 20 0
NIFTY SBI ICICI PRU
1ST YEAR 2ND YEAR 3RD YEAR The above Diagram exhibits the absolute return of SBI and ICICI Prudential Balance Funds. Both the funds are fluctuating. But in many a point of time returns from SBI Balance Fund are higher than ICICI Prudential Balance Fund Balance funds are known for their consistent return and are suitable for the investors who can bear moderate risk and investors seeking consistent return.
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SBI BETA 1ST YEAR RISK PREMIUM 2ND YEAR 3RD YEAR 0.003 0.05 0.23 0.09
ICICI PRU -0.0003 -0.004 -0.009 -0.008
SHARPE RATIO 1ST YEAR 2ND YEAR 3RD YEAR AVG
SBI 0.91 4.23 1.72 2.29
ICICI PRU 1.01 2.42 2.13 1.85
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 SBI ICICI PRU
1ST YEAR 2ND YEAR 3RD YEAR Average Sharp Ratio
Sharpe Ratio, which measures risk free return from the fund, is favorable in case of SBI Mutual Fund when compared to ICICI Prudential Fund. Higher the Sharpe Ratio indicates higher safety. So depending on Sharpe Ratio SBI Magnum Balanced Fund is safer than ICICI Prudential Balanced Fund.
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Standard Deviation of SBI Mutual Fund is higher than ICICI Prudential . It indicates lower risk profile of ICICI Prudential Fund when compared to SBI Mutual Fund
Beta, which measures impact of market condition on funds on funds, is higher in case of SBI Mutual Fund when compared to ICICI Prudential. It indicates lower risk profile of ICICI Prudential Balanced Fund than SBI Magnum Balanced Fund.
TREYNOR INDEX RANKING SBI 17.96 83.85 34.04 34.95 ICICI PRU 15.16 36.27 31.8 27.74
90 80 70 60 50 40 30 20 10 0
1ST YEAR 2ND YEAR 3RD YEAR Average Treynor Ratio
SBI
ICICI PRU
A measure of a portfolio's excess return per unit of risk, equal to the portfolio's rate of return minus the risk-free rate of return, divided by the portfolio's beta. SBI Balanced Fund is having a higher Treynor ratio of 34.95%. As Compared to ICICI Prudential Balanced Fund having a Treynor Ratio of 27.74%. A high Treynor Index
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indicates that we're getting a good deal in terms of the return-to-risk ratio.
EQUITY FUND ANALYSIS

1.ABSOLUTE RETURNS AVERAGE RETURN NIFTY SBI MAGNUM GLOBAL FUND ICICI PRUDENTIAL DYNAMIC 1ST YEAR 9.72 17.93 43.56 2
ND
YEAR 85.21 130.42 148.63
3RD YEAR 125.88 320.76 319.79
ABSOLUTE RETURNS
400.00 RETURNS 300.00 200.00 100.00 0.00 1 2 YEAR 3 NIFTY SBI MAGNUM GLOBAL ICICI PRU DYNAMIC
The above diagram exhibits the absolute return from Equity Funds for different point of time. It is clear from the diagram that the returns from Equity Funds are very fluctuating. Only moderate risk takers invest in this fund. ICICI Prudential Magnum Global Fund comparatively has given more return compared to SBI Magnum Global Equity Fund.
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BETA 1ST YEAR 2ND YEAR 3RD YEAR
SBI 0.08 0.81 7.16 6.33
ICICI PRU 0.01 0.37 0.68 0.63
RISK PREMIUM
SHARPE RATIO SBI GLOBAL 0.07 0.58 0.51 0.387 ICICI PRU 1.4 2.58 2.4 2.127
1ST YEAR 2ND YEAR 3RD YEAR AVG SHARPE RATIO
3 2.5 2 1.5 1 0.5 0 SBI ICICI PRU 1ST YEAR 2ND YEAR 3RD YEAR Average Sharp Ratio
Sharpe Ratio, which measures risk free return from the fund, is favorable in case of ICICI Prudential Dynamic Fund when compared to SBI Magnum Global Fund. Higher the Sharpe Ratio indicates higher safety. So depending on Sharpe Ratio ICICI Prudential Dynamic Fund is safer than SBI Magnum Global Fund.
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Standard Deviation of SBI Mangnum Global Fund is higher than ICICI Prudential . It indicates lower risk profile of ICICI Prudential Dynamic Fund when compared to SBI Mutual Fund
Beta, which measures impact of market condition on funds on funds, is higher in case of SBI Magnum Global Fund when compared to ICICI Prudential Dynamic Fund. It indicates lower risk profile of ICICI Prudential Balanced Fund than SBI Magnum Balanced Fund.
TREYNOR RATIO SBI 1ST YEAR 2ND YEAR 3RD YEAR AVG 9.93 87.39 77.21 58.177 ICICI PRU 35.56 65.19 60.84 53.87
90 80 70 60 50 40 30 20 10 0 SBI ICICI PRU 1ST YEAR 2ND YEAR 3RD YEAR Average Treynor Ratio
A measure of a portfolio's excess return per unit of risk, equal to the portfolio's rate of return minus the risk-free rate of return, divided by the portfolio's beta.
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SBI Balanced Fund is having a higher Treynor ratio of 58.17%. As Compared to ICICI Prudential Balanced Fund having a Treynor Ratio of 53.87%. A high Treynor Index indicates that we're getting a good deal in terms of the return-to-risk ratio.
PORTFOLIO COMPOSITION OF SBI GILT FUND
PORTFOLIO COMPOSITION OF BALANCED FUND
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PORTFOLIO COMPOSITION OF SBI Magnum Global Equity Fund
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Findings& Recommendations
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Balanced Funds
Returns from ICICI Prudential Balanced Fund for the past one year period is 23.16% and returns from SBI Magnum Balanced Fund is higher at 25.96% for the same period SBI Magnum Balance Fund is more consistently increasing than ICICI Balanced Funds and its standard deviation is higher than ICICI Prudential Balanced Fund. SBI Magnum Balanced Fun has standard deviation of 0.20% and ICICI Prudential Balanced Fund has standard deviation of 0.15%. Sharpe Ratio is comparatively favorable in case of ICICI Prudential Balance Fund. Treynor ratio is comparatively favourable in case of SBI Magnum Balance Fund.Sharpe Ratio and Treynor Ratio of SBI Magnum Balanced fund are 0.91, 34.95 respectively. Sharpe Ratio and Treynor Ratio of ICICI Prudential Balanced Fund are 1.01, and 27.74% respectively. Beta coefficient of ICICI Prudential Balanced Fund is -0.0003, which is lower than SBI Magnum Balance Funds Beta coefficient of 0.003.
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GILT FUNDS
The present NAV of SBI Magnum Gilt and ICICI Prudential are Rs. Rs.17.26 and Rs.22.62 respectively. Returns for the past one-year period for SBI Magnum Gilt Fund is 5.36%, which is lower than ICICI Prudential Gilt Fund Returns 8.09%. SBI Magnum Gilt Funds NAV is more consistently increasing than ICICI Prudential Gilt Fund. Standard Deviation of SBI Magnum Gilt Fund and ICICI Prudential Gilt Fund is 0.35 and 0.31 respectively. Sharpe Ratio is comparatively favorable in case of SBI Magnum Gilt Fund. ICICI Prudential is having a good treynor ratio compared to SBI Magnum Fund. Sharpe Ratio and Treynor Ratio of SBI Magnum Gilt Fund are -0.45, and -3.82. Sharpe Ratio and Treynor Ratio of ICICI Prudential are -0.76 and -2.71 respectively. Beta coefficient of SBI Magnum Gilt Fund 0.0004 which is lower than ICICI Prudential Gilt Fund Beta coefficient of 0.00035 EQUITY FUND NAV of SBI Magnum global Fund is Rs.48.48, and NAV of ICICI Prudential Dynamic Fund is Rs.67.18. Returns from SBI Magnum global Fund Fund are 17.93% and ICICI Prudential Dynamic Fund returns are 43.56% for the past one year. Returns and NAV of both the funds are very much fluctuating. Sharpe Ratio and Treynor Ratio are comparatively favorable in case of ICICI Prudential Dynamic Fund. Sharpe ratio and treynor ratio of SBI Mutual fund are 0.066 and 9.93 respectively. Sharpe ratio and treynor ratio of ICICI Prudential Dynamic fund are 1.40 and 35.5 respectively
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Standard deviation of SBI Magnum Global Fund is 1.51 and ICICI Prudential has standard deviation of 0.25
SUGGESTIONS BALANCED FUNDS

It is favorable for the SBI Mutual fund to promote more of SBI Magnum Balanced Fund over ICICI Prudential Balance Fund, because SBI Magnum balanced fund is giving consistent returns since inception.
Supporting analysis for the above statement:

Returns of SBI Magnum Balanced Fund are marginally higher than ICICI Prudential Balance Fund. Returns from SBI Magnum Balanced Fund for the past one-year period were 25.96% and returns from ICICI Prudential Balanced Fund are lower at 23.16% for the same period. Even the standard deviation of SBI Magnum Balanced Fund is higher than ICICIC Prudential Balanced Funds Standard Deviation. SBI Magnum Balanced Fund has a standard deviation of 0.20 where as ICICI Prudential Balanced Fund has standard deviation of 0.15. It shows justified returns against risk in case of SBI Magnum Balance Fund, the high fluctuation, higher the returns for SBI Magnum Balance Fund. The Treynor ratio of SBI Magnum Balanced Fund is also high as compared to ICICI Prudential Balanced Fund. The Treynor Ratio of SBI Magnum Balanced Fund and ICICI Prudential Balanced Fund are 34.95 and 27.74 respectively.
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GILT FUNDS
Its better to invest more in High yield Government Securities than investing in short term Deposits with lower rate of interest

As everyone know the rate of return on short term deposits is obviously low however the only advantage is the liquidity. It would, therefore, necessary to invest higher percentage of corpus into Government Gilt Edged securities. With a view to maximize return on funds the fund may consider to invest in certificate of deposits. The Portfolio of SBI Magnum global is showing that 50% of the corpus is invested in short term deposits, the percentage should be brought down, and invest more and more in High yield government securities. EQUITY FUND As the Portfolio of the SBI Magnum Global is holding More of cash balance, The cash balance should be reduced and invest same in Mid Cap and Small Cap.

As the portfolio of SBI Magnum Global Fund is showing that lot cash is idle i.e 30% only 70% of the corpus is utilized. Portfolio composition of SBI Magnum Global is 11% in large cap, 52% in small cap, 9% in small cap and rest of the 30% is cash. To yield more the cash balance should be reduced and invest the same in mid cap and small cap which yield abnormal returns.
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BIBLIOGRAPHY
AMFI Work Book Mutual Fund review by ICICI Bank Ltd. Mutual Fund Insight by Value Researcher. Marketing Management by Philip Kotler www.mutualfundsindia.com www.indiainfoline.com www.valueresearcersonline.com www.icicidirect.com www.amfi.com www.sbimf.com
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Introduction to the Mutual Fund Industry

MUTUAL FUNDS: AN INTRODUCTION

INTRODUCTION TO MUTUAL FUND INDUSTRY

MUTUAL FUND INDUSTRY IN INDIA

Second phase 1987-1993(entry of public sector funds)

Third phase 1990-2003 (entry of private sector funds)

Fourth Phase Since February 2003

GROWTH IN ASSETS UNDER MANAGEMENT

MUTUAL FUND A GLOBALLY PROVEN INVESTMENT AVENUE

STRUCTURE OF THE INDIAN MUTUAL FUND INDUSTRY

Trust/ Board of Trustees: Trustees hold a fiduciary responsibility towards unit

Custodian: Often an independent organization, it takes custody of securities and other

Different AMCs Working in India are

Sundaram Newton Tata Credit Capital Templeton UTI

Private Foreign Private Indian Private Indian Private Foreign Institutions

10th.&30th.Of every month Max Rs.1 lakh on deposits

Capital flow in the economy

Schemes and Units

STATE BANK OF INDIA

Mr. Syed Shahabuddin Managing Director

Mr. G.S. Subramanian SR. Vice President Cross Selling

Mr. Didier Turpin Dy. Chief Executive Officer

Mr. Sanjay Sinha Chief Investment Officer

SBI Mutual Fund helps in introducing a high degree of professional management

schemes, services etc.

More about SBI Mutual Fund

AWARDS AND ACHIEVEMENTS 1)

LIPPER AWARD- lipper India fund award 2007

ICRA MUTUAL FUND AWARD -2007

Subsidiaries and Associates

S B I MUTUAL FUND SCHEMES 1 EQUITY SCHEMES

SDFS 180 Days Fund

SBI Premier Liquid Fund 3 BALANCED SCHEMES

Magnum Balanced Fund Magnum NRI Investment Fund - FlexiAsset Plan

SBI EQUITY SCHEMES DETAILS MAGNUM GLOBAL FUND Investment Objective

Convertible Debentures and Bonds Money Market instruments 0-20% LOW

Launch Date: September 30, 1994

SBI BALANCED FUND Investment Objective

Debt Instruments like debentures, bonds,khokhas. UP TO 40%

Securitized Debt Money Market Instruments

ICICI PRUDENTIAL PRODUCT DETAILS

Exit Load: Nil

ICICI PRUDENTIAL GUILT FUND Investment Objective

PERFORMANCE OF THE FUND

Entry Load:Nil Exit Load: Nil

Exit Load: Nil

CATEGORIES OF MUTUAL FUND SCHEMES 1.SCHEMES ACCORDING TO MATURITY PERIOD:

1.1OPEN-ENDED FUND/ SCHEME

1.2CLOSE-ENDED FUND/ SCHEME

2.SCHEMES ACCORDING TO INVESTMENT OBJECTIVE:

2.1GROWTH / EQUITY ORIENTED SCHEME

2.2INCOME / DEBT ORIENTED SCHEME

2.4MONEY MARKET OR LIQUID FUND

Other Schemes Tax Saving Schemes

Ideal for: . Investors seeking tax rebates. Special Schemes

FREQUENTLY USED TERMS

BENEFITS OF MUTUAL FUNDS PROFESSIONAL MANAGEMENT:

LIMITATIONS OF MUTUAL FUND No Guarantee:

Fees and commissions:

1. ROLE OF INTERMEDIARIES IN THE INDIAN MUTUAL FUND INDUSTRY 1.1

would be accurate to say that

industry would not have achieved the depth

Intermediation itself has undergone a change over the past few