CHAPTER-1

INRODUCTION

1.1 INCEPTION

The first introduction of a mutual fund in India occurred in 1963, when the
Government of India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a
monopoly in the Indian mutual fund market. Then a host of other governmentcontrolled Indian financial companies came up with their own funds. These included
State Bank of India, Canara Bank, and Punjab National Bank. This market was made
open to private players in 1993, as a result of the historic constitutional amendments
brought forward by the then Congress-led government under the existing regime of
Liberalization, Privatization and Globalization (LPG). The first private sector fund to
operate in India was Kothari Pioneer, which later merged with Franklin Templeton. In
1996, SEBI formulated the Mutual Fund Regulation which is a comprehensive
regulatory framework.
Unit Trust of India, single MF entity in India

1964

Eight new funds established by banks, LIC and GIC.

Total number of schemes up to 167.
Assets under Management (AUM) grows to Rs. 6,700 Cr.
AUM shoots up to Rs. 61,000 crore
Private and foreign sector players enter the industry
Kothari pioneer Mutual Fund frst entrant
SEBI formulates Mutual Fund Regulation, a comprehensive
regulatory framework
44 mutual fund organisations
AUM nearly Rs. 12 lakh crore.

19871993
1988
1993
1996
2015

1.2 WHAT ARE MUTUAL FUNDS?

A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income earned in
these investments and the capital appreciation realized by the scheme is shared by its
unit holders in proportion to the number of units owned by them. Thus a Mutual Fund
is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed portfolio at a relatively low cost.
Anybody with an investable surplus of a few thousand rupees can invest in Mutual
Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

A mutual fund is the ideal investment vehicle for todays complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
act speedily.
A mutual fund is answer to all these situations. It appoints professionally qualified and
experienced staff that manages each of these functions on a fulltime basis. The large
pool of money collected in the fund allows it to hire such staff at a very low cost to
each investor. In fact, the mutual fund vehicle exploits economies of scale in all three
areas research, investment and transaction processing.
3

A draft offer document is to be prepared at the time of launching the fund. Typically, it
pre specifies the investment objective of the fund, the risk associated, the cost
involved in the process and the broad rules for entry into and exit from the fund and
other areas of operation. In India, as in most countries, these sponsors need approval
from a regulator, SEBI in our case. SEBI looks at track records of the sponsor and its
financial strength in granting approval to the fund for commencing operations.
A sponsor then hires an asset management company to invest the funds according to
the investment objective. It also hires another entity to be the custodian of the assets
of the fund and perhaps a third one to handle registry work for the unit holders of the
fund. In the Indian context, the sponsors promote the Asset Management Company
also, in which it holds a majority stake. In many cases a sponsor can hold a 100%
stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the
sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated
different mutual funds schemes and also acts as an asset manager for the funds
collected under the schemes.
As per SEBI regulations, mutual funds can offer guaranteed returns for a maximum
period of one year. In case returns are guaranteed, the name of the guarantor and how
the guarantee would be honoured is required to be disclosed in the offer document.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual
fund issues units to the investors in accordance with quantum of money invested by
them. Investors of mutual funds are known as unit holders.

1.3 HOW MUTUAL FUNDS OPERATE

CHART 1.1
From the above chart, it can be observed that how the money from the investors flow
and they get returns out of it. With a small amount of fund, investors pool their money
with the fund managers. Taking into consideration the market strategy the fund
managers invest this pool of money into reliable securities. With ups and downs in
market returns are generated and they are passed on to the investors. The above cycle
should be very clear and also effective.
The fund manager while investing on behalf of investors takes into consideration
various factors like time, risk, return, etc. so that he can make proper investment
decision.
1.4 DISTRIBUTION CHANNELS

Traditional Distribution Channels

Individual

Historically, individual agents would distribute units of Unit Trust of India and
insurance policies of Life Insurance Corporation. They would also facilitate
investments in Governments Small Savings Schemes. Further, they would sell
Fixed Deposits and Public Issues of shares of companies, either directly, or as
a sub-broker of some large broker.
UTI, LIC or other issuer of the investment product (often referred to in the
market as product manufacturers) would advertise through the mass media,
while an all-India field force of agents would approach investors to get
application forms signed and collect their cheques. The agents knew the
investors families personally the agent would often be viewed as an
extension of the family.

Institutional Channels
The changing competitive context led to the emergence of institutional
channels of distribution for a wide spectrum of financial products.

This

comprised:
Brokerage firms and other securities distribution companies, who widened
their offering beyond company Fixed Deposits and public issue of shares.
Banks, who started viewing distribution of financial products as a key
avenue to earn fee based income, while addressing the investment needs of
their customers.
The institutional channels started attracting agents as sub-brokers.

Many

individual agents opted to associate with the institutional channels, so that they

could give their customers the benefit of newer technologies and services
(which the agents found too costly to offer on their own).
Thus, the distribution setup has got re-aligned towards a mix of:
Independent Financial Advisors (IFAs), who are individuals. The bigger
IFAs operate with support staff who handles back-office work, while they
themselves focus on sales and client relationships.
Non-bank distributors, such as brokerages, securities distribution
companies and nonbanking finance companies
Bank distributors

Newer Distribution Channels

Internet
The internet gave an opportunity to mutual funds to establish direct contact
with investors.

Direct transactions afforded scope to optimize on the

commission costs involved in distribution.

Investors, on their part, have found a lot of convenience in doing transactions
instantaneously through the internet, rather than get bogged down with paper
work and having to depend on a distributor to do transactions. This has put a
question mark on the existence of intermediaries who focus on pushing paper,
but add no other value to investors.
A few professional distributors have rightly taken the path of value added
advice and excellent service level to hold on to their customers and develop

new customer relationships. Many of them offer transaction support through

their own websites.
A large mass of investors in the market need advice.

The future of

intermediaries lies in catering to their needs, personally and / or through a

team and / or with support of technology.

Stock Exchanges
The institutional channels have had their limitations in reaching out deep into
the hinterland of the country.

A disproportionate share of mutual fund

collections has tended to come from corporate and institutional investors,

rather than retail individuals for whose benefit the mutual fund industry exists.
Stock exchanges, on the other hand, have managed to ride on the equity cult in
the country and the power of communication networks to establish a costeffective all-India network of brokers and trading terminals. This has been a
successful initiative in the high-volume low margin model of doing business,
which is more appropriate and beneficial for the country. Over the last few
months, SEBI has facilitated buying and selling of mutual fund units through
the stock exchanges. Both NSE and BSE have developed mutual fund
transaction engines for the purpose. The low cost and deeper reach of the
stock exchange network can increase the role of retail investors in mutual
funds, and take the mutual fund industry into its next wave of growth.
Contribution of Fund Inflow from channels

GRAPH 1.1

1.5 ADVANTAGES & DISADVANTAGES OF MUTUAL FUNDS

ADVANTAGES
Professional management
Portfolio Diversification
Reduction / Diversification of Risk
Liquidity
Flexibility & Convenience
Reduction in Transaction cost
Safety of regulated environment
Choice of schemes
Transparency
DISADVANTAGES
No control over Cost in the Hands of an Investor
No tailor-made Portfolios
Managing a Portfolio Funds
Difficulty in selecting a Suitable Fund Scheme

CHART 1.2
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1.6 CATEGORIES OF MUTUAL FUNDS

CHART 1.3
Mutual funds can be classified as follow:
Based on their structure:

Open-ended funds: Investors can buy and sell the units from the fund, at any
point of

time.

Close-ended funds: These funds raise money from investors only once.
Therefore, after the offer period, fresh investments cannot be made into the
fund. If the fund is listed on a stocks exchange the units can be traded like
stocks (E.g., SBI Dual Advantage Series). Recently, most of the New Fund
10

Offers of close-ended funds provided liquidity window on a periodic basis

such as monthly or weekly. Redemption of units can be made during specified
intervals. Therefore, such funds have relatively low liquidity.
Based on their investment objective:
i) Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses.
However, short term fluctuations in the market, generally smoothens out in the
long term, thereby offering higher returns at relatively lower volatility. At the
same time, such funds can yield great capital appreciation as, historically, equities
have outperformed all asset classes in the long term. Hence, investment in equity
funds should be considered for a period of at least 3-5 years. It can be further
classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty
is tracked. Their portfolio mirrors the benchmark index both in terms of
composition and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks.
iii) Dividend yield funds- it is similar to the equity diversified funds except that
they invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related
through some

theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors

etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking
sector fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
ii) Balanced fund: Their investment portfolio includes both debt and equity. As a result,
on the risk-return ladder, they fall between equity and debt funds. Balanced funds
11

are the ideal mutual funds vehicle for investors who prefer spreading their risk
across various instruments. Following are balanced funds classes:
a)Debt-oriented funds -Investment below 65% in equities.
b)Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

iii)

Debt fund: They invest only in debt instruments, and are a good option for
investors averse to idea of taking risk associated with equities. Therefore, they
invest exclusively in fixed-income instruments like bonds, debentures,
Government of India securities; and money market instruments such as
certificates of deposit (CD), commercial paper (CP) and call money. Put your
money into any of these debt funds depending on your investment horizon and
needs.
Liquid funds- These funds invest 100% in money market instruments, a large
portion being invested in call money market.
Gilt funds ST- They invest 100% of their portfolio in government securities of
and T-bills.
Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.
Arbitrage fund- They generate income through arbitrage opportunities due to
mis-pricing between cash market and derivatives market. Funds are allocated to
equities, derivatives and money markets. Higher proportion (around 75%) is put in
money markets, in the absence of arbitrage opportunities.
Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.

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MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an

exposure of 10%-30% to equities.
FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.

1.7 CURRENT SCENARIO OF MUTUAL FUNDS IN INDIA

Despite being available in the market less than 10% of Indian households have
invested in mutual funds. A recent report on Mutual Fund Investments in India
published by research and analytics firm, Boston Analytics, suggests investors are
holding back from putting their money into mutual funds due to their perceived high
risk and a lack of information on how mutual funds work. There are 54 Mutual Funds
as of July 2015.

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CHART 1.4

1.8
GROWTH DRIVERS OF THE INDUSTRY

Volatility
Performance of the capital markets
GDP Growth
Inflation
Interest Rate

1.9 INVESTMENT STRATEGIES

1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through postdated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

14

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund
then he can withdraw a fixed amount each month.

1.10 NEED FOR MUTUAL FUNDS

Mutual funds offer benefits, which are too significant to miss out. Any investment has
to be judged on the yardstick of return, liquidity and safety. Convenience and tax
efficiency are the other benchmarks relevant in mutual fund investment. In the
wonderful game of financial safety and returns are the tows opposite goals and
investors cannot be nearer to both at the same time. The crux of mutual fund investing
is averaging the risk.
Many investors possibly dont know that considering returns alone, many mutual
funds have outperformed a host of other investment products. Mutual funds have
historically delivered yields averaging within 9% to 25% over a medium to long time
frame. The duration is important because likewise, mutual funds return taste bitter
with the passage of time. Investors should be prepared to lock in their investments
preferably for 3 years in an income fund and 5 years in an equity funds. Liquid funds
of course, generate returns even in a short term.

1.11 RISK INVOLVED IN MUTUAL FUNDS

Mutual funds face risks based on the investments they hold. For example, a bond fund
faces interest rate risk and income risk. Bond values are inversely related to interest
15

rates. If interest rates go up, bond values will go down and vice versa. Bond income is
also affected by the changes in interest rates. Bond yields are directly related to
interest rates falling as interest rates fall and rising as interest rates.
Similarly, a sector stock fund is at risk that its price will decline due to developments
in its industry. A stock fund that invests across many industries is more sheltered from
this risk defined as industry risk.
Followings are glossary of some risks to consider when investing in mutual funds:a) COUNTRY RISK :The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a countrys
economy and cause investments in that country to decline.
b) INCOME RISK :The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a countrys
economy and cause investments in that country to decline.
c) MARKET RISK :- The possibility that stock fund or bond fund prices overall will
decline over short or even extended periods. Stock and bond markets tend to move in
cycles, with periods when prices rise and other periods when prices fall.
RISK RETURN REWARD IN MUTUAL FUND
GRAPH 1.2

16

This graph shows risk and return impact on various mutual funds. There is a direct
relationship between risks and return, i.e. schemes with higher risk also have potential
to provide higher returns.
1.12 REGULATORY BODIES OF MUTUAL FUNDS
ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)
The Association of Mutual Funds in India (AMFI) is dedicated to developing the
Indian Mutual Fund Industry on professional, healthy and ethical lines and to enhance
and maintain standards in all areas with a view to protecting and promoting the
interests of mutual funds and their unit holders.
AMFI, the association of SEBI registered mutual funds in India of all the registered
Asset Management Companies, was incorporated on August 22, 1995, as a non-profit
organisation. As of now, all the 44 Asset Management Companies that are registered
with SEBI, are its members.

OBJECTIVES
To define and maintain high professional and ethical standards in all areas of
operation of mutual fund industry.
To recommend and promote best business practices and code of conduct to be
followed by members and others engaged in the activities of mutual fund and
asset management including agencies connected or involved in the field of
capital markets and financial services.
To interact with the Securities and Exchange Board of India (SEBI) and to
represent to SEBI on all matters concerning the mutual fund industry.
To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.
To undertake nation wide investor awareness programme so as to promote
proper understanding of the concept and working of mutual funds.
17

 To disseminate information on Mutual Fund Industry and to undertake studies

and research directly and/or in association with other bodies.
To take regulate conduct of distributors including disciplinary actions
(cancellation of ARN) for violations of Code of Conduct.
To protect the interest of investors/unit holders.

SECURITIES EXCHANGE BOARD OF INDIA (SEBI)

It was established by on 12 April 1988 and given statutory powers in 1992 with SEBI
Act 1992 being passed by the Indian Parliament. SEBI has its headquarters at the
business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern,
Southern

and

Western

Regional

Offices

in New

Delhi, Kolkata, Chennai and Ahmedabad respectively. It has opened local offices at
Jaipur and Bangalore and is planning to open offices at Guwahati, Bhubaneshwar,
Patna, Kochi and Chandigarh in Financial Year 2013 - 2014.
Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.

FUNCTIONS:
The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as "...to protect the interests
of investors in securities and to promote the development of, and to regulate the
securities market and for matters connected therewith or incidental thereto".
SEBI has to be responsive to the needs of three groups, which constitute the market:
18

 the issuers of securities

the investors

the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and
quasi-executive. It drafts regulations in its legislative capacity, it conducts
investigation and enforcement action in its executive function and it passes rulings
and orders in its judicial capacity. Though this makes it very powerful, there is an
appeal process to create accountability. There is a Securities Appellate Tribunal which
is a three-member tribunal and is headed by Mr. Justice J P Devadhar, a former judge
of the Bombay High Court. A second appeal lies directly to the Supreme Court. SEBI
has taken a very proactive role in streamlining disclosure requirements to
international standards.

POWERS:
For the discharge of its functions efficiently, SEBI has been vested with the following
powers:
1.

to approve bylaws of stock exchanges.

2.

to require the stock exchange to amend their bylaws.

3.

inspect the books of accounts and call for periodical returns from recognized
stock exchanges.

4.

inspect the books of accounts of a financial intermediaries.

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5.

compel certain companies to list their shares in one or more stock exchanges.

1.13 FINANCIAL ASPECTS OF MUTUAL FUNDS

NAV (Net Asset Value)
In the market, when people talk of NAV, they refer to the value of each unit of the
scheme. This is equivalent to:
Unit-holders Funds in the Scheme No. of Units
General Formula for calculation of NAV.
NAV = (Value of stocks + Value of bonds + Value of money market instruments +
Dividend accrued but not received + Interest accrued but not received Fees payable)
/ No. of outstanding units
Transaction Charges
In order to cater to people with small saving potential and to increase reach of mutual
fund products in urban areas and smaller towns, SEBI has allowed a transaction
charge per subscription of Rs. 10,000/- and above to be paid to distributors of the
Mutual Fund products. However, there shall be no transaction charges on direct
investments. The transaction charge, if any, is deducted by the AMC from the
subscription amount and paid to the distributor; and the balance shall be invested.
Type of Investor

Transaction Charges (Rs.)

(For purchase/subscription of Rs. 10,000 and

above)
First time mutual fund investor
Rs. 150/Investor other than first time mutual fund Rs. 100/20

investor

However, Transaction Charge(s) will not be deducted for the following: Purchase/Subscription submitted by investor at the designated collection centres or
through AMCs website and which are not routed through any distributor.
Purchase/ Subscription through a distributor for an amount less than Rs. 10,000;
Transactions such as Switches, STP i.e. all such transactions wherein there is no
additional cash flow at a mutual fund level similar to Purchase/Subscription.
Purchase/Subscriptions through any stock exchange.
Expenses
Two kinds of expenses come up:
a) Initial Issue Expenses
These are one-time expenses that come up when the scheme is offered for the first
time (NFO). These need to be borne by the AMC.
Investors who review the financial statements of old schemes may find an item called
Issue expenses not written off. The background to this is that earlier, schemes could
charge initial issue expenses to the scheme, up to 6% of the amount mobilized in the
NFO. Thus, if an NFO mobilized Rs500crore, Rs30crore could be charged to the
scheme as initial issue expenses, provided such expenditure was actually incurred.
If the entire amount were treated as an expense, then, the NAV would go down to that
extent [follows from the profitability metric discussed earlier]. Thus, a scheme whose
units have a face value of Rs10 would need to start with an NAV of Rs10 less 6% i.e.
21

Rs9.40, if the entire issue expenses were treated as an immediate expense (in
accounting terminology, the expensing is called writing off}.In order to prevent
initial issue expenses from causing a drastic fall in NAV, the guidelines permitted an
accounting treatment called deferred load.
Deferred load operated on the principle that if the scheme were to last for 4 years,
then the initial issue expenses relate to money that will be in the scheme for 4 years.
So the initial issue expenses could be written off over 4 years. That part of the initial
issue expense that related to periods that have passed would be written off (which will
reduce the NAV); the part that related to a future time period, was treated as an asset
of the scheme, called Issue expenses not written off. The following table illustrates
the point, assuming a 4 year scheme incurred initial issue expenses of Rs8Crore.
End of Year

Issue Expenses Written Off

Issue Expenses not Written Off

(which reduces the NAV)

(shown as asset in Scheme

Rs. 2cr

Balance Sheet)
Rs. 8cr less Rs. 2cr i.e. Rs. 6cr

2
3
4

Rs. 2cr
Rs. 2cr
Rs. 2cr

Rs. 6cr less Rs. 2cr i.e. Rs. 4cr

Rs. 4cr less Rs. 2cr i.e. Rs. 2cr
Rs. 2cr less Rs. 2cr i.e. Rs. 2cr

As mentioned earlier, AMCs need to bear the initial issue expenses now. So, deferred
load is not applicable for newer schemes.
Recurring Expenses These can be charged to the scheme. Since the recurring
expenses drag down the NAV, SEBI has laid down the expenses, which can be
charged to the scheme. An indicative list is as follows:

22

Fees of various service providers, such as Trustees, AMC, Registrar &

Transfer Agents, Custodian, & Auditor

Selling expenses including scheme advertising and commission to the

distributors
Expenses on investor communication, account statements, dividend /

redemption cheques / warrants

Listing fees and Depository fees
Service tax

Brokerage and transaction cost incurred for the purpose of execution of trade may be
capitalized to the extent of 0.12% for cash market transactions and 0.05% for
derivatives transactions respectively. Any payment towards brokerage and transaction
cost, over and above the said percentage may be charged to the scheme within the
maximum limit of Total Expense Ratio (TER). Expenditure in excess of the said
prescribed total expense ratio limit
(Including brokerage and transaction cost, if any) has to be borne by the AMC or by
the trustee or sponsors.
Other provisions with respect to service tax are as follows:
Mutual funds /AMCs may charge service tax on investment and advisory
fees to the scheme in addition to the maximum limit of total expense
allowed for the scheme
Service tax on expenses other than investment and advisory fees, if any, is
to be borne by the scheme within the maximum limit of total expense
allowed for the scheme.
Service tax on brokerage and transaction cost paid for execution of trade, if
any, must be within the prescribed total expense limit for the scheme, as
discussed earlier.

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The following expenses cannot be charged to the scheme:

Penalties and fines for infraction of laws.

Interest on delayed payment to the unit holders.
Legal, marketing, publication and other general expenses not attributable

to any scheme(s).
Fund Accounting Fees.
Expenses on investment management/general management.
Expenses on general administration, corporate advertising

infrastructure costs.
Depreciation on fixed assets and software development expenses.

and

Recurring Expense Limits

SEBI has stipulated the following annual limits on recurring expenses (including
management fees) for schemes other than index schemes:
Net Assets (Rs crore)
Up to Rs 100 crore
Next Rs 300 crore
Next Rs 300 crore
Excess over Rs 700 crore

Equity Schemes
2.50%
2.25%
2.00%
1.75%

Debt Schemes
2.25%
2.00%
1.75%
1.50%

The above percentages are to be calculated on the average daily net assets of the
scheme.

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1.14 COMPANY PROFILE

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. It has been 25
years since SBI Mutual funds came into existence. It is a Joint Venture between State
Bank of India (SBI) Indias largest bank and AMUNDI a France based company
ranked no. in Europe and is in the field of asset management.

25

Right now SBI MF has over 222 POA (point of acceptance) across India and right
now running 37 schemes
A total of over 6.8 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. 64,106 crores of assets and has a diverse profile of
investors actively parking their investments across 37 active schemes.
SBI Mutual is the first bank-sponsored fund to launch an offshore fund Resurgent
India Opportunities Fund.

Sponsor: State Bank of India

Trustee: SBI Mutual Fund Trustee Company Private Limited
Investment Manager: SBI Funds Management Private Limited Statutory
Details: SBI Mutual Fund (SBIMF); constituted as a Trust with SBIMFTCPL
as the Trustee under the provisions of Indian Trusts Act, 1882, and registered
with SEBI.

1.15 PRODUCTS OF SBI MUTUAL FUNDS

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

26

such investors who have high risk taking capacities and are willing to think long
term. Equity Funds include diversified Equity Funds, Sectorial Funds and Index
Funds. Diversified Equity Funds invest in various stocks across different sectors
while sectorial funds which are specialized Equity Funds restrict their investments
only to shares of a particular sector and hence, are riskier than Diversified Equity
Funds. Index Funds invest passively only in the stocks of a particular index and the
performance of such funds move with the movements of the index.

Magnum COMMA Fund

Magnum Equity Fund

Magnum Global Fund

Magnum Index Fund

Magnum Midcap Fund

Magnum Multicap Fund

Magnum Multiplier plus 1993

Magnum Sectorial Funds Umbrella

Emerging Business Fund

IT Fund

Pharma Fund

Contra Fund

FMCG Fund
27

SBI Arbitrage Opportunities Fund

SBI Blue chip Fund

SBI Infrastructure Fund - Series I

SBI Magnum Tax gain Scheme 1993

SBI ONE India Fund

Debt schemes
Debt Funds invest only in debt instruments such as Corporate Bonds, Government
Securities and Money Market instruments either completely avoiding any
investments in the stock markets as in Income Funds or Gilt Funds or having a
small exposure to equities as in Monthly Income Plans or Children's Plan. Hence
they are safer than equity funds. At the same time the expected returns from debt
funds would be lower. Such investments are advisable for the risk-averse investor
and as a part of the investment portfolio for other investors.
1

Magnum Childrens benefit Plan

Magnum Gilt Fund

Magnum Income Fund

Magnum Insta Cash Fund

Magnum Income Fund- Floating Rate Plan

Magnum Income Plus Fund

Magnum Insta Cash Fund -Liquid Floater Plan

28

Magnum Monthly Income Plan

Magnum Monthly Income Plan - Floater

10 Magnum NRI Investment Fund

11 SBI Premier Liquid Fund

Balanced Schemes
Magnum Balanced Fund invests in a mix of equity and debt investments. Hence
they are less risky than equity funds, but at the same time provide commensurately
lower returns. They provide a good investment opportunity to investors who do not
wish to be completely exposed to equity markets, but is looking for higher returns
than those provided by debt funds.

Magnum Balanced Fund

FOCUSSED SCHEMES
1.

SBI BlueChip Fund

Investment Objective
To provide investors with opportunities for long term growth in capital
through an active management of investments in a diversified basket of
equity stocks of companies whose market capitalization of at least equal to or

more than the least market capitalized stock of S&P BSE 100 Index.
Date of Inception
29

14/02/2006
Exit Load
For exit within 1 year from the date of allotment 1%; for exit after 1 year

from the date of allotment NIL

SIP
Monthly - Minimum 1000 & in multiples of 1 thereafter for minimum six
months (or) minimum 500 & in multiples of 1 thereafter for minimum one
year
Quarterly - Minimum 1500 & in multiples of 1 thereafter for minimum one

year
Quantitative Data
Standard Deviation: 13.02
Beta: 0.80
R- Squared: 0.9
Sharpe Ratio: 1.24
Portfolio Turnover: 0.63
2.

SBI Magnum 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. This 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.
Date of Inception
31/12/1995
Exit Load
For exit within 12 months from the date of allotment 1%; for exit after 12
months from the date of allotment NIL (w.e.f May 18, 2015)
SIP
Monthly - Minimum 1000 & in multiples of 1 thereafter for minimum six
months (or) minimum 500 & in multiples of 1 thereafter for minimum one
year
Quarterly - Minimum 1500 & in multiples of 1 thereafter for minimum one

year
Quantitative Data
30

Standard Deviation : 10.69%

Beta : 0.88
R- Squared: 0.76
Sharpe Ratio: 1.45
Portfolio Turnover: 0.37
Total Expense Ratio
Regular: 2.12%
Direct: 1.42%
3. SBI Magnum MidCap Fund

Investment Objective
To provide investors with opportunities for long-term growth in capital along
with the liquidity of an open-ended scheme by investing predominantly in a

well-diversified basket of equity stocks of MidCap companies.

Date of Inception
29/03/2005
Exit Load
For exit within 12 months from the date of allotment 1%; for exit after 12

months from the date of allotment NIL (w.e.f May 18, 2015)
SIP
Monthly - Minimum 1000 & in multiples of 1 thereafter for minimum six
months (or) minimum 500 & in multiples of 1 thereafter for minimum one
year
Quarterly - Minimum 1500 & in multiples of 1 thereafter for minimum one

year
Quantitative Data
i Standard Deviation : 15.96%
ii Beta : 0.73
iii R- Squared: 0.80
iv Sharpe Ratio: 1.57
v Portfolio Turnover: 0.43
vi Total Expense Ratio
Regular: 2.26%
Direct: 1.51%
4.
SBI Magnum Tax gain Scheme

Investment Objective
The prime objective of this scheme is to deliver the benefit of investment in a
portfolio of equity shares, while offering deduction on such investments

31

made in the scheme under Section 80C of the Income Tax Act, 1961. It also

seeks to distribute income periodically depending on distributable surplus.

Date of Inception
31/03/1993
Exit Load
NIL
SIP
500 & in multiples of 500
Quantitative Data
Standard Deviation : 14.45%
Beta : 0.89
R- Squared: 0.90
Sharpe Ratio: 1.00
Portfolio Turnover: 0.19
1 Total Expense Ratio
o Regular: 2.01%
o Direct: 1.53%

1.16 COMPETITORS

Some of the main competitors of SBI Mutual Fund are as Follows:

a. ICICI Mutual Fund
b. Reliance Mutual Fund
c. UTI Mutual Fund
d. Birla Sun Life Mutual Fund
e. Kotak Mutual Fund
f. HDFC Mutual Fund
g. Sundaram Mutual Fund
h. LIC Mutual Fund
32

i. Principal
j. Franklin Templeton

1.17 NEED OF THE STUDY

The study was undertaken to understand the customers behaviour towards

mutual funds and the awareness amongst them about various mutual fund
products.

The need of the study aimed to know the awareness in the public about the
various products and services provided by S.B.I-Mutual Fund.

A study was also conducted to measure the performance of various funds on

the basis of various performance measuring ratios such as Sharpe ratio,
returns, standard deviation, Beta.

33

The study was basically undertaken to understand the financial needs of the
customer and to provide or suggest them products and services according to
their financial needs.

1.18 SCOPE OF THE STUDY

Geographical scope-

The geographical scope of the study is not limited. This study can be implemented in
any part of the country; though the samples taken were from HDFC Bank branch at
Mohammed Ali Road Branch .

Functional scope-

This study can be used to understand the behavioral aspect of people who invest, what
is their investment potential and how much risk can they take. The study throws some
light on four focused schemes of S.B.I-Mutual Fund.

34

1.19 OBJECTIVES OF THE STUDY

To know the awareness of mutual funds among people.

To see the interest of people in investing in mutual funds.
To know the investment behaviour of investors in mutual fund according to
different age group.
To ascertain the percentage of income the investors invest in mutual fund.
To know the different attitudes of people regarding risk, rate of return, period
of investment.
To know the investors preferred financial product for investment

CHAPTER-2
RESEARCH METHODOLOGY

35

2.1 RESEARCH DESIGN

This Project Report is prepare by taking into consideration both primary as well as
secondary data..
Primary data collection:
In dealing with real life problems it is often found that data in hand is inadequate, and
hence, it becomes necessary to collect data that is appropriate. There are several ways
of collecting the appropriate data which differ considerably in context of money costs,
time and other resources at the disposal of the researcher.
Primary data can be collected either through experiment or through survey.
The data collection for this study was done in the following manner:

Through personal interviews:A rigid procedure was followed and I was seeking answers to many pre-conceived
questions through personal interviews.

Through questionnaire:36

Information to find out the investment potential and goal was found out through
questionnaires.

Secondary Data Collection:

Secondary data includes information regarding present market scenario,
Information regarding Mutual Funds and competitors are collected by
internet, Magazines and Newspaper and books .

2.2 TYPES OF DATA

PRIMARY DATA

The sampling method chosen is Area Sampling. As the primary sampling unit
represents a cluster of units based on geographic area. The geographical area chosen
for individual customers was at HDFC Bank (Mohammed Ali Road Branch.)
It is basically a non-probability sampling procedure which does not afford any basis
for estimating the probability that each item in the population has of being included in
the sample.
Under non-probability sampling the organizers of the enquiry purposively choose the
particular units of the universe for constituting a sample on the basis that the small
mass that they so select out of a huge one will be typical or representative of the
whole.
.
SECONDARY DATA
:
Secondary research gathers existing information through available sources.
37

Data collection was done through recognized sources and then compared..

2.3 SAMPLE DESIGN

The sample comprised of 100 respondents.
The study is based on a survey of 100 respondents through a questionnaire covering
different groups of investors but I could collect 97 complete questionnaire from
investors out of which 90 were taken as an effective sample and the data obtained
were analyzed by using, Factor analysis and Discriminant analysis. The questionnaire
has been attached in the Annexure.

2.3.1 Population:
A population is the total of all the individuals who have certain characteristics and are
of interest to a researcher. My survey comprises of individuals from various classes of
society such as college students, investors, individual, businessman, self-employed
people is been considered in populations.

2.3.2 Sample Size:Sample size is limited to 100 only thus sample size does not adequately represent the
national market.
This study has not been conducted over half month period in which most of the time
it was slump and fluctuations in the market. Thus the responses of the investors are
likely to be influenced by the market conditions

2.3.3 Sampling Method:Probability sampling is a sampling technique wherein the samples are gathered in a
process that gives all the individuals in the population equal chances of being
selected.

38

2.4. METHOD OF DATA COLLECTION

Survey method has been used while collecting data from number of sample size or
respondents on the basis of questionnaire designed.

2.4.1 Instruments for Data Collection:Printed Questionnaire was the instrument used for data collection on the basis of
closed ended questionnaire were been asked to respondent.

2.4.2 Drafting of a Questionnaire:

While designing the questionnaire the following steps were taken into consideration
which are follows:
Decision Regarding Questions: The exact data requirement was analysed and
questionnaire was then formed to put the questions in the most suitable manner..

Types of Questions: Next step of drafting the questionnaire is to decide about the
way in which questions have to be asked? Questions would be on open or close
ended.
Simple Alternative Questions: These questions may be answered between two
alternatives.
Multiple Choice Questions: Multiple questions can be answered in a number of ways.
Specific Information Questions: Such questions are asked to obtain some specific
information

2.4.4 Testing of Questionnaire / Pilot survey:

39

In order to check the reliability and validity of the data, some similar kind of variables
in the questionnaire like fund performance and fund manager performance as well as
security and attitude towards risk were kept. In order to increase the reliability and
validity, we have excluded the questionnaires filled by those respondents who had a
varied opinion
The analysis methods are used for the following reasons:
1) Factor analysis is used to classify similar variables under a broad heading, as the
numbers of independent variables are very high.
2) Discriminant analysis is used to highlight variables which effect the decision of
people investing for less than a year and people who are investing for more than a
year.
We are going to see how these selected factors affect the investment behaviour of the
existing & potential investors. Above mentioned statistical tools have been used to
analyse this thing. As we use Factor analysis we can reduce the number of factors to
draw some clear picture for the investors who are looking to invest irrespective of
market conditions. Factor analysis will recognize similar factors & club them into one
generalized factor and this will help any researcher to observe the most important
factors that contribute most to the investment behaviour of the investors.

.
2.5 DATA ANALYSIS TECHNIQUES
Methodology Adopted for primary Data Analysis

Primary Data is analyzed by using

Descriptive Weighted Factor Counting Method
40

Factor Analysis
Analysis of Demographics of the investors
Through pie hcarts, bar graphs. etc.

Methodology Adopted for Secondary Data Analysis

For the first part of analysis i.e. fund returns, I have taken five top funds of same
category of different fund houses and compared their returns for 3 months, 6 months,
1year, 2 years 3 years and 5 years.
For the second part of anlysis i.e. risk profile, I have compared these five funds with
respect to their standard deviation, sharpe ratio, beta, alpha and r- squared..
The comparison of the funds is done using the bar charts and thus arriving at a
conclusion after analyzing those charts
Secondary data is analyzed by using the returns ntables and graphs.etc.

2.6 LIMITATIONS

There is a possibility of investors being biased

The survey was conducted during a period of half month when the market was
sluggish.
The sample size was quite low to take representative samples from various sections of
the society.
The survey was conducted in Mumbai where people are more aware of the financial
tools like mutual funds. Hwoever the scenario pan India may be different.

41

CHAPTER - 3
DATA ANALYSIS & INTERPRETATION
42

DESCRIPTIVE WEIGHTED FACTOR COUNTING METHOD:

We have ranked the independent variables affecting the buying behavior of consumers
by adding the weighted factors. Firstly, we have counted the responses under each
scale. Secondly, we have assigned weights to each of the scale giving least weight to 1
and maximum weight to 5. Finally, we have added all the weighted responses and
ranked accordingly i.e. in descending order.
Ranking were given after adding all the weights.
For. Eg
Historical Performance = .(1x2)+ (2x4)+ (3x9)+ (4x42)+ (5x35) = 390

RAN
K
1
2
3
4
5
5

INDEPENDENT VARIABLES

Historical Performance
Fund Return Over Market Return
Advisor Influence
Tax Benefit
Lock In Period
Reputation

2
3
2
6
1
3

4
5
5
11
5
5

9
12
25
13
31
29

42
31
35
29
32
28

35
41
25
33
23
27

43

7
8
9
10
11
12
13
13
15
16
17
18
19
20
21
22
23
24
25
26

Security
Type Of Scheme
Regular Income
Aum
Convenience
Attitude Towards Risk
Fees
NAV
Fluctuation In Equity Market
Personal Attention
Prior Experience
Prospectus
Family Recommendation
Fund Rating
Internet
Promotional Campaign
Lot Size
Performance Of Fund Manager
Economic &Market Conditions
Transparency

5
4
8
3
4
3
6
6
4
4
11
10
15
24
15
22
20
25
24
33

TABLE 1.1

FACTOR ANALYSIS

44

5
6
10
7
6
10
12
11
18
10
11
20
20
28
30
25
30
30
35
34

20
24
15
29
30
32
23
25
18
35
25
24
27
13
27
26
25
26
21
18

41
35
32
36
35
30
31
30
34
32
29
25
24
15
11
14
10
6
8
5

21
23
27
17
17
17
20
20
18
11
16
13
6
12
9
5
7
5
4
2

As the numbers of independent variables are very high, we have tried to classify
similar variables under a broad heading through factor analysis. These factors can be
broadly classified as under:

VARIABLES
Performance of fund manager
AUM
NAV
Type of scheme
Personal attention
Prior experience
Advisor influence
Family recommendation
Promotional campaign
Economic & Market condition
Fluctuation in equity market
Attitude towards risk

FACTORS
Technical factors

Psychological factors

Promotion

Market condition

TABLE 1.2

There are other factors also which consists of other variables but they cannot be
classified under abroad headings.
Five Broad factors have been described in the following manner:a) Financial Factors -This factor has 3 sub-factors namely performance of the fund
manager, AUM, NAV. Thus this factor tells us more of the technical side of any given
fund under consideration. Investor who ranks this factor or these sub-factors as the
most important is definitely looking for very good returns & going to invest after
much research as he will definitely looking for a fund having a good performance and
decent returns opportunity.

45

b) Customer Oriented Factors Type of scheme, personal attention and prior

experience are the sub-factors that make this broader category together. In this
category an investor is looking for the different schemes under any particular fund.
Investor is also looking for personal attention being given to his portfolio or
investments, he wants personal attention in the sense that new investment
opportunities should be informed to him or proper entry & exit points should be
recommended to him and the likes.

c) Marketing Factors Investors who are going to rate this broad category as the
most important for them are more inclined to the factors like advisor influence, family
recommendation and promotional campaign. These kinds of investors are not much
experienced as far as these investments are concerned.

d) Economic Factors This factor includes factors like market condition,

fluctuations in the market and attitude towards risk. Investors who are more
concerned about these factors are risk averse investors. These investors wait for the
right moment to enter or to start investing in funds. For these people risk is at the top
most priority and if returns are not that much then also its fine with these investors.

e) Security Factors It includes tax benefits, prospectus and security as far as their
capital investment is concerned.

46

DISCRIMINANT ANALYSIS
Through Discriminant analysis I have tried to highlight variables which effect the
decision of a people investing for less than a year and people who are investing for
more than a year. The term 1 consists of the people who are investing for less than a
year whereas term 2 consists of the people who are investing for 1 to 5 years.
Through group statistics in both the terms standard deviation is quite high and mean is
quite low as seen in Appendix. Therefore, there is no difference in the factors
affecting the buying behavior between term 1 and term 2 people.

DEMOGRAPHIC FACTORS

47

AGE
13%

27%

10%
50%

BELOW 30

31-40

41-50

ABOVE 50

CHART 2.1 AGE PROFILE

From above chart it can be easily inferred that people aged between 31-40 preferred
mutual funds most because of many factors mainly due to stability in their earnings
and exposure to markets.

ACADEMIC QUALIFICATION

20%

33%

47%

GRADUATION

POST GRADUATION

PROFFESSIONAL

CHART 2.2 - ACADEMIC QUALIFICATION

48

MARITAL STATUS

20%

80%

MARRIED

UNMARRIED

CHART 2.3 - MARITAL STATUS

OCCUPATION
7%
20%
56%
17%

PROFESSIONAL

SALARIED

RETIRED

OTHERS

BUSINESS

CHART 2.4 - OCCUPATION PROFILE

49

ANNUAL INCOME
15%
50%

20%
15%

LESS THAN 2.00,000

2,00,001-5,00,000

5,00,001-10,00,000

ABOVE 10,00,000

CHART 2.5 ANNUAL INCOME RANGE

From above charts it can be easily inferred that:

Majority of respondents are post-graduates, therefore it remains to be seen that

to what extent graduates and professionals have interest in mutual funds.

Majority of respondents are married (80%), therefore it remains to be seen that
how many young and unmarried investors have preference towards mutual

funds.
Majority of respondents have their occupation as a professional be it
Relationship Mangers, Insurance agents, Independent Financial Advisors
(IFAs), MBAs etc. mainly due to their high level of awareness about financial

products.
From above chart it can be easily inferred that majority of respondents are
from the aove 10,00,000 range, due to their abundancy of money after
fulfilling their basic needs. So here lies the opportunity for AMCs to generate
huge volumes by offering innovative funds through SIPs to lower income
groups .

50

FINANCIAL BEHAVIOUR OF THE RESPONDENTS

INVESTMENT OBJECTIVES: Among given options including others category
majority of respondents prefer good return as their primary objective of investment.

INVESTMENT OBJECTIVE
6%

17%

7%

70%

SAFETY

TAX BENEFIT

GOOD RETURN

CAPITAL APPRECIATION

LIQUIDITY

CHART 2.6 INVESTMENT OBJECTIVE

CHANNELS USED BY RESPONDENTS FOR INVESTING: From the study it

can easily be inferred that majority of respondents(70%) now invest directly in
mutual funds especially after SEBI guidelines came recently that says there will not
be any ENTRY LOAD for investors investing in mutual fund schemes directly.

INVESTMENT HORIZON: From study it can be concluded that majority of

respondents invest in mutual funds from More than three year perspective (53%),
51

thats means once a investor comes to your service he will be there for at least three
years, therefore it is very essential today that AMCs and especially SBI should focus
on innovative ways to serve the customers like giving good quality service and
assistance.

INVESTMENT AMOUNT: From pilot study it can be concluded that majority of

respondents (46%) have investments in mutual funds in a range of More than 1,
00,000 category which implies that over a period of time if an investor see that his
capital is growing than the probability of his subsequent investment becomes very
strong.

SCHEME PREFERENCES:
ON THE BASIS OF ASSET CLASS:

SCHEME PREFERENCES
8%

6%
40%

18%

28%

EQUITY

DEBT

BALANCED

FMP

OTHERS

CHART 2.7 SCHEME PREFERENCES(Asset Class)

52

When it comes to scheme preferences majority of retail investors prefer Equity

Schemes (40%), followed by Debt Schemes (28%) with just 8% retail investor
preferring debt or fixed income instruments like Fixed Maturity Plans (FMPs). It
shows that there is a huge potential for debt instruments in the market which is
unearthed by retail investors due to its complexity, low awareness etc.

PREFERABLE ROUTE FOR INVESTMENT IN MUTUAL FUNDS

PREFERABLE ROUTE
5% 1%
27%
57%
10%

FRIEND'S SUGGESTION

SELF DECISION

BROKERS/AGENTS

NEWSPAPERS/ MAGAZINES

TELEVISION

OTHERS

CHART 2.8 PREFERABLE ROUTE

As above chart clearly explains that majority of respondents (57%) take self decision
once they start investing in mutual funds. Only 10 % of respondents take help of
Brokers/Advisors when it comes to final decision of investing. Therefore, it shows
53

that AMCs in general and SBI in particular have to be more informative so that they
can provide best material, service and information to facilitate subsequent investment
of retail investors.

SCHEME PREFERENCES:
ON THE BASIS OF STRUCTURE:

SCHEME PREFERENCES- STRUCTURE

13%

87%

OPEN ENDED

CLOSE ENDED

INTERVAL

CHART 2.9 SCHEME PREFERENCES - STRUCTURE

When it comes to scheme preference on the basis of its structure, majority of retail
investors prefer Open Ended Scheme primarily due to flexibility of redemptions,
investments, good return and liquidity. None of the investors prefer Interval
Scheme, in fact some of the retail investors were confused about the very name of
Interval Schemes.

54

SAVING HABITS:
When it comes to Saving Habits of retail investors it comes out that majority of
respondents saves between 15%-20% p.a. basis followed by above 25% category
(20%), therefore at this stage it is very difficult to say anything about saving
preferences about retail investors. Others categories like 10-15 and 20-25 are equally
preferred by respondents but it was a positive clue that only 7% of respondents save
below 5%.

SAVING HABBITS
6%

20%

13%
17%

17%

27%

BELOW 5%

5-10%

10-15%

15-20%

20-25%

CHART 2.10 - SAVING HABBITS

55

ABOVE 25%

SBI AND OTHERS:

Most Popular Fund from SBI: Up till this stage the winner is SBI BALANCED
FUND which is preferred by majority of respondents (60%), due to
1)
2)
3)
4)

Diversification in investment between equity & debt

Good return with lesser risk involvement
Capital Appreciation
Portfolio held

SATISFACTION LEVEL WITH SBI:

SATISFACTION LEVEL
3%

17%

33%

47%

HIGHLY SATISFIED

REASONABLY SATISFIED

UNSATISFIED

HIGHLY UNSATISFIED

CONSIDERABLY SATISFIED

CHART 2.11 SATISFACTION LEVEL

56

Form above chart it can be inferred that up to this stage majority of respondents
(47%) are reasonably satisfied when they were asked about overall experience with
SBI Mutual Funds including funds, returns, services etc., but it remains to be seen that
which category leads with the completion of survey because second best categories
preferred by investors is Considerably Satisfied which means that there is more to
do on SBI behalf for Customer Satisfaction.
MOST POPULAR FUND HOUSE IN TERMS OF HIGHEST INVESTMENT:

POPULAR FUND HOUSE

10%

27%

14%
10%

12%
27%

SBI

RELIANCE

HDFC

ICICI

BIRLA

OTHERS

CHART 2.12 MOST POPULAR FUND HOUSE

When asked about highest investment in an AMC majority of Investors (27%) gave
the name of SBI which is followed by Reliance (23%), ICICI (20%), and rest in
others which is lead by UTI. So there is a stiff competition in the market and it
remains to be seen that which fund house take the leads with the completion of the
project.

57

INTER-FIRM COMPARISON
The main objective of doing Inter Firm Analysis is to judge where SBI MUTUAL
FUNDS stands in comparison to other Asset Management Companies (AMCs) as per
different criterion which are explained as follows.

I have chosen 4 different category Funds:

6.
7.
8.
9.

EQUITY - BLUECHIP (PRIMARILY LARGE CAP FUNDS)

EQUITY - MID & SMALL CAP
BALANCED (COMPRISING BOTH EQUITY & DEBT)
TAX SAVING SCHEMES

The comparative analysis of categories mentioned above is shown as follows as on

22-07-15:
The following two parameters are considered for comparative analysis:
1
2

Funds Returns
Risk Profile

Analysis of the funds on the Basis of various ratios.

To understand this portion lets break it up In two parts, First being the part where we
discuss about the financial tools that we will use as a parameter and second where we
58

compare major mutual funds of each category and see how are SBIs products as
compared to its competitors.
Part I There are 5 principal risk measures: Alpha, Beta, sortino, standard deviation
and the Sharpe ratio. Each risk measure is unique in how it measures risk. When
comparing two or more potential investments, an investor should always compare the
same risk measures to each different investment in order to get a relative performance
perspective.

Standard Deviation
Standard Deviation is applied to the annual rate of return of an investment to measure
the investments volatility. Standard deviation is also known as historical volatility
and is used by investors as a gauge for the amount of expected volatility.
Standard deviation is a statistical measurement that sheds light on historical volatility.
For example, a volatile stock will have a high standard deviation while the deviation
of a stable blue chip stock will be lower. A large dispersion tells us how much the
return on the fund is deviating from the expected normal returns.

Beta
A measure of the volatility, or systematic risk of a security or a portfolio in
comparison to the market as whole. A beta below 1 can indicate an investment with
lower volatility than the market.

59

A Beta of 1 indicates that the securitys price will move with the market. A Beta of
less than 1 means that the security will be less volatile in comparison to the market. A
Beta of greater than 1 indicates that the securitys price will be more volatile than the
market. For example, if a stocks beta is 1.20, it is theoretically 20% more volatile
than the market.

Sharpe Ratio
The Sharpe ratio uses Standard deviation to measure a funds risk adjusted returns.
The higher a funds Sharpe ratio, the better fund return have been relative to the risk it
has taken on, because it uses standard deviation. The Sharpe ratio can be used to
compare risk adjusted return across all fund categories.
The Sharpe ratio tells us whether a portfolios return are due to smart investment
decisions or a result of excess risk. This measurement is very useful because although
one portfolio or fund can reap higher returns than its peers, it is only a good
investment if those higher returns do not come with too much additional risk. The
greater a portfolios Sharpe ratio, the better its risk adjusted performance has been. A
negative Sharpe ratio indicates that a risk-less asset would perform better than the
security being analyzed.

Sortino
The Sortino subtracts the risk free rate of return from the portfolios return and then
divides that by the downward deviation. A high Sortino ratio indicates there is a low

60

probability of a large loss. Sortino is better than when analyzing highly volatile
portfolios. Sharpe ratio is better for analyzing portfolio that has lower volatility.

Alpha
A measure of performance on a risk adjusted performance to a benchmark index. The
excess return of the fund relative to the return of the benchmark index is a funds
alpha. A positive alpha of 1.0 means the fund has outperformed its benchmark index
by 1%. Corresponding, a similar negative alpha would indicate an underperformance
of 1%.

SBI BLUECHIP FUND

In comparison with
1) ICICI Prudential Focussed Bluechip Fund
61

2) Franklin India Opportunities Fund

3) L&T Equity Fund
4) Birla SunLife Frontline Equity
RETURNS

Schem

SBI

ICICI Focused

Franklin (I)

L&T

Birla

SL

Bluechip

Bluechip

Opport.

Equity

Frontline
Equity

3Mnths

5.5%

4.4%

5.0%

3.9%

4.8%

6Mnths

6.3%

-0.3%

3.7%

0.9%

1.4%

1 Year

27.9%

17.5%

34.3%

24.5%

20.6%

2 Years

33.5%

27.0%

37.5%

32.3%

30.2%

3 Years

24.1%

27.1%

5 Years

14.8%

14.7%

TABLE 3.1
Source :www.moneycontrol.com

The returns given by SBI Bluechip Fund has given the highest returns in the past
3months i.e 5.5%, 6 months i.e 6.3%. Its returns in the 1 year and 2 years category
are also good and there is not much difference in terms of returns from the top
performer

RISK PROFILE

Large Cap Fund

SBI BlueChip Fund

ICICI Focus BlueChip
Franklin Templeton

Mea

Standard

Sharp

Deviatio

n
24.11 13.02
20.17 14.05
17.91 14.29
62

Ratio
1.33
0.95
0.78

Sortino

Beta

Alpha

2.28
1.97
1.64

0.84
0.94
0.94

9.65
4.80
2.53

L&T Equity
Birla Frontline

20.93 14.82
22.97 15.18

0.96
1.07

1.68
2.16

0.96
1.01

5.37
6.92

TABLE 3.2
Source : www.moneycontrol.com

Analyzing the status of SBIs Bluechip Fund looking at each of the financial tool we
can see that SBI has maintain to perform best among all parameters.

SBI MAGNUM MIDCAP FUND

In comparison with
1)
2)
3)
4)

HDFC MidCap Opportunities Fund

Franklin Prima Plus Fund
Birla SunLife Midcap Fund
ICICI Prudential Midcap Fund

Scheme

SBI

HDFC

Franklin

Birla

SL

ICICI

Midcap

MidCap

Prima

Midcap

MidCap

3Mnths

8.4%

3.5%

5.4%

8.0%

6.1%

6Mnths

12.3%

3.2%

3.9%

30.5%

4.0%

1 Year

42.9%

32.4%

32.8%

67.5%

31.5%

2 Years

56.3%

48.8%

63
36.8%

59.4%

3 Years

41.7%

29.0%

5 Years

21.1%

17.1%

RETURNS

TABLE 3.3
Source : www.moneycontrol.com

The returns given by SBI Magnum Mid Cap Fund has given the highest returns in the
past 3months i.e 8.4%. , 3 years i.e 41.7%, 5 years i.e 21.1%. Its returns in the
months, 1 year and 2 years category are also good and there is not much difference in
terms of returns from the top performer.

Mid Cap

SBI Magnum Mid Cap

HDFC Mid Cap
Franklin Prima
ICICI Discovery
Birla Mid Cap
RISK PROFILE

Mean

35.45
27.78
30.94
28.90
25.36

Standard

Sharp

Deviatio

n
15.96
16.06
15.98
16.35
17.50

Ratio
1.57
1.31
1.51
1.35
1.06

Sortino

Beta

Alpha

2.71
2.45
2.58
2.33
1.75

0.82
0.88
0.90
0.91
0.96

20.87
12.94
15.9
13.76
9.80

TABLE 3.4
Source : www.moneycontrol.com

Analyzing the status of SBIs Magnum MidCap Fund looking at each of the financial
tool we can see that SBI has maintain to perform best among all parameters.

64

SBI BALANCED FUND

In comparison with
1)
2)
3)
4)

HDFC Balanced Fund

ICICI Prudential Balanced Fund
TATA Balanced Fund
L&T India Prudence Fund

RETURNS

Scheme

SBI

HDFC

ICICI

Tata

L&T India

Balanced

Balanced

Balanced

Balanced

Prudence

3Mnths

1.7%

1.9%

3.5%

3.0%

3.3%

6Mnths

2.4%

0.8%

1.1%

4.9%

4.0%

1 Year

22.6%

20.7%

20.8%

27.0%

26.1%

2 Years

30.7%

34.7%

30.4%

33.2%

32.9%

3 Years

26.0%

5 Years

16.7%

TABLE 3.5
Source : www.moneycontrol.com

Its returns have been consistent and there is not much difference in terms of returns
from the top performer in the category.

65

RISK PROFILE

Balanced Fund
SBI Balanced Fund
L&T India Prudence
ICICI Balanced Fund
HDFC Balanced Fund
TATA Balanced Fund

Mean

Standard

Sharpe

23.37
21.99
21.00
20.42
22.94

Deviation Ratio
10.69
1.55
11.02
1.38
11.18
1.27
12.04
1.13
12.12
1.34
TABLE 3.6

Sortino

Beta

Alpha

2.34
2.43
2.25
2.24
2.36

0.83
0.89
0.92
0.92
0.98

10.86
9.04
7.84
7.25
9.39

Source : www.moneycontrol.com

Analyzing the status of SBIs Balanced Fund looking at each of the financial tool we
can see that SBI has maintained to perform best among all parameters except Sortino,
but only 0.09 is the difference so that is not that bad.

SBI MAGNUM TAXGAIN SCHEME

In comparison with
1) Birla Sun Life Tax Savings Fund
66

2) HDFC Tax Saver Fund

3) Tata Tax Saving Fund
4) Reliance Tax Saver Fund
RETURNS
Scheme

SBI Tax

Birla

Gain
3Mnths

Tax

HDFC

Tata Tax

Reliance

Savings

Tax Saver

Saving

Tax Saver

6.6%

2.6%

1.6%

5.1%

0.9%

6Mnths

3.6%

3.3%

-3.6%

5.4%

-1.5%

1 Year

23.6%

27.9%

13.1%

24.1%

2 Years

34.9%

31.7%

34.7%

49.5%

3 Years

24.4%

5 Years

12.2%

TABLE 3.7
Source : www.moneycontrol.com

The returns given by SBI Tax Gain scheme has given the highest returns in the past
3months i.e 6.6%. Its returns in the 6 months, 1 year and 2 years category are also
good and there is not much difference in terms of returns from the top performer in
the category.

RISK PROFILE
Large Cap Fund

Mean

Standard

Sharp

Deviatio

23.57
20.78
20.17
22.54

n
13.87
14.12
14.05
12.71

Ratio
1.21
0.99
0.95
0.97

Saver 20.93

14.82

0.96

SBI Magnum Tax Gain

Birla Tax Savings
HDFC Tax Saver
Tata Tax Saving Fund
Reliance

Tax

67

(ELSS)
TABLE 3.8
Source : www.moneycontrol.com

Analyzing the status of SBIs Balanced Fund looking at each of the financial tool we
can see that SBI has maintain to perform best among all parameters except Standard
Deviation.

PERFORMANCE ANALYSIS OF SOME OF THE KEY STOCKS HELD BY

SBI MUTUAL FUNDS

HDFC Bank
Majority of SBI Mutual Fund products have high share of holdings of HDFC Bank in
their portfolio

68

GRAPH 3.1
Source : www.moneycontrol.com

HDFC Bank has been an outperformer in the market. From the graph it can be seen
that it is consistent and yielded some great returns. Majority of SBI Mutual Fund
products have high holdings of HDFC Bank in their portfolio.

SUN PHARMA

After HDFC Bank, Sun Pharma is one of the biggest holdings held by SBI Products in
their portfolio

69

GRAPH 3.2
Source : www.moneycontrol.com

It can be seen from the chart that SUN Pharma has consistently been moving upward.
Though it has seen a sharp downfall in the recent times. The stock is expected to start
recovering due to positive indicators for the pharma industry.

SWOT ANALYSIS
A type of fundamental analysis of the health of a company by examining its
strengths(S), weakness (W), business opportunity (O), and any threat (T) or dangers it
might be exposed to.

70

STRENGTHS

Brand strategy: as opposed to some of its competitors SBI operates a multibrand strategy. The company operates under numerous well-known brand
names, which allows the company to appeal to many different segments of the
market.

Distribution channel strategy: SBI is continuously improving the distribution

of its products. Its online and Internet-based access offers a combination of
excellent growth prospects and its retail direct business also saw immense
growth in the recent decade.

Various sources of income: SBI has many sources of income throughout the
group, and this diversity within the group makes the company more flexible
and resistant to economic and environmental changes.

Experienced managers for large number of Generics.

Large pool of skilled and knowledgeable manpower.

An increasing liberalization of government policies.

WEAKNESS

Emerging markets: There is more investment demand in the United States,

Japan and the rest of Asia, SBI has limited exposure to these global markets.

Mutual funds are like many other investments without a guaranteed return:
there is always the possibility that the value of your mutual fund will
71

depreciate. Unlike fixed-income products, such as bonds and Treasury bills,

mutual funds experience price fluctuations along with the stocks that make up
the fund. When deciding on a particular fund to buy, you need to research the
risks involved just because a professional manager is looking after the fund,
that doesnt mean the performance will be stellar.

OPPORTUNITIES

Potential markets: The Indian rural market has great potential. All the major
market leaders consider the segments and real markets for their products. A
senior official in a one of the leading company says foray into rural India
already started and there has been realization that the rural market is both price
and quantity conscious.

THREATS

Hedge funds: sometimes referred to as as hot money, are also causing a threat
for mutual funds have gained worldwide notoriety for bringing the markets
down. Be it a crash in the currency, A stock or A bond market, A usually a
hedge fund prominently figures somewhere in the picture.

72

CHAPTER 4
FINDINGS

Regarding Funds:While dealing with them I have observed that the performance of the schemes of
SBIMF are quite good and the demand for those schemes is also good. I came to
know that SBI Bluechip Fund & SBI Balanced Fund are the most popular funds
73

among individual investors. According to them the 3yr and 5yr returns of the funds
are very good. One of the reason for great demands of AMCs fund is the Brand Value
of SBI, as it is the largest bank of country.
At the same time they we also observed that unlike other AMCs like Reliance,
HDFC etc. SBIMF is not very aggressive in marketing of its funds.

Regarding services:Apart from fund performance observations are also made regarding the services of
SBIMF, after analyzing the feedback of distributors I found that the services of
SBIMF are not as good as other AMCs and some of the field in which they are
lacking

1. Complaints related to not delivering the account statements and brokerage on

time.
2. Problems related to material, like unavailability of forms, fact sheets and other
promotional matters, also there are some problems related to courier services.
3. They have also complained that AMC do not provide any fringe benefits on
good performance.

74

CHAPTER - 5
CONCLUSION

The future of primary market is growing at a very high pace. Taking this thing into
consideration, there are lots of opportunities for the SBI Mutual Funds to tap the
golden opportunities from the Indian market.

SBI MF has emerged a very strong player in the market and is giving stiff competition
to all the players in the market including the banks. It is expanding its area of
business, if the progress of SBI MF goes in the same way, than I can say that there is
75

bright future for SBI MF in coming years. They have much potential to expand their
distribution Pan India.

The company is currently following huge investment and growth strategies. Apart
from the market growth rate the distribution industry doesnt seem so attractive.
Hence the firm should be selective using growth strategies. This is not to undermine
the bright future of SBI MF, just a check to be a cautious.

There is little awareness about mutual fund in India; people have accepted it as a one
of the major investment avenue. Mutual funds will become one of the sought after
investment avenues. As far as the other investment products marketed by SBI MF are
concerned, they have a ready market. The only thing, which it needs to focus on, is
that they should have a strong network so that prompt services and availability of
forms is made available to the investor at a short notice, and if it keeps the traditional
base for marketing in India, which is a price sensitive market, we can say that SBI MF
has a great future ahead.

COMPARISON

OF

MUTUAL

FUNDS

AGAINST OTHER INVESTMENT AVENUES:

PRODUCT

SAFETY/CON

LIQUIDITY

76

RETURN

VOLATILITY

VINENCE
Equity

Low

High/low

High-Mod.

High

FI Bonds

High

Moderate

Mod.-High

Moderate

Debentures

Moderate

Low

Mod.-Low

Moderate

Corp. FD

Low

Low

Moderate

Low

Bank Deposit

High

High

Low-High

Low

PPF

High

Moderate

Moderate

Low

Life Ins.

High

Low

Low-Mod

Low

Gold

High

Moderate

Mod.-Low

Moderate

Real Estate

Moderate

Low

High-Low

High

MF

High

High

High

Moderate

77

CHAPTER - 6
SUGGESTIONS & RECOMMENDATIONS

A) THE GROUND RULES OF MUTUAL FUND INVESTING

The following are the 10 commandments that were to be followed till eternity.
The world of investments too has several ground rules meant for investors
who are novices in their own right and wish to enter the myriad world of
investments. These come in handy for there is every possibility of losing what
one has if due care is not taken.
Assess yourself: Self-assessment of ones needs; expectations and risk profile
is of prime importance failing which; one will make more mistakes in putting

78

money in right places than otherwise. Irrational expectations will only bring
pain.
Try to understand where the money is going: 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.
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 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
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

79

asset classes is generally the best option as it averages the risks in each
category.
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 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.
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 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.
Finding the right funds is important and one should also use these funds for
tax efficiency.

80

 Keep track of your investments: Finding the right fund is important but even
more important is to keep track of the way they are performing in the market.
If the market is beginning to enter a bearish phase, then investors of equity too
will benefit by switching to debt funds as the losses can be minimized. One
can always switch back to equity if the equity market starts to show some
buoyancy.
Know when to sell your mutual funds: Knowing when to exit a fund too is

of utmost importance. One should book profits immediately when enough has
been earned i.e. the initial expectation from the fund has been met with. Other
factors like non-performance, hike in fee charged and change in any basic
attribute of the fund etc. are some of the reasons for to exit.
B) WHEN TO SELL YOUR MUTUAL FUND
While there are many investment consultants, some by profession, some selfprofessed, who suggest on when to invest in a particular avenue, there is a certain
paucity of people who talk of when to exit. Here are some situations when the
investor should consider withdrawing their investments from the funds.

Fund is not performing

This reason for selling, although valid in certain conditions, is where most
investors make a mistake. When calculating performance one shouldnt look at
too short a period and make a mistake by comparing apples to oranges. One
should compare the returns posted by his fund with that of the peers across
various horizons such as 1-year, 3-year and above. A short-term view can
often lead to committing hara-kiri, as it doesnt present the full picture. If it
81

has underperformed the average of its peers in all cases, then it sure is one of
the better reasons to exit from the fund.

A change in life stage

Investments are done with a certain objective in mind and life stages are often
a determining factor of what a person needs. A young man can afford to take
more risks than a person nearing his retirement can. In such cases, it pays to
withdraw money from the equity investments made earlier and put them in
safer, more conservative debt funds that offer stable returns without
compromising on risk. So a change in life stages would be one such reason to
consider switching into a fund that matches with ones needs.

A major change in any basic attribute of the fund

When the fund changes any basic attribute as mentioned by it in its offer
documents, the investors have a choice of getting out of it. Even SEBI has
provided for an exit route being made available to the investors. Changes like
a change in Asset Management Company or in investment style of fund or
change of structure say from closed-end to open-end etc. are good enough
reasons for an investor to consider switching or exiting from it as they are
certainly likely to affect the fund in a major way.

Fund doesnt comply with its objective

One of the important parameters in the selection of the fund is alignment of
the risk profiles of the investor and fund. The objective of the fund says a lot

82

about how the fund plans to invest. If the objective is not being complied with,
it is one of the exit points worth considering.

The Funds Expense Ratio Rises

A small rise in an expense ratio is not a big deal, however a significant rise can
result in substantial reduction of yields and so it would be better to exit the
fund. In the case of bond funds or money market funds, it is highly unlikely
that the fund can increase its returns enough to justify an increase in the fund's
expenses.

The

Fund Manager

has

changed

A simple change of fund managers, in itself, is not enough reason to sell a

fund

on a short-term basis. If it is a passively managed fund (index fund),

then one has little to no reason to worry. However, if it is an actively managed

fund, then has to keep the eyes open on the new manager.

Enough has

been earned

However, nothing is as important as to rein the horses in time. The primary

principle behind safety of investment is to take risks that can be tolerated. The
principle also is specific on the expectations that the investor must have from
any investment. Just as it is important to set realistic targets that one hopes to
achieve from the investment, it is also important to exit when target as
expected has been achieved irrespective of the fact that it might be generating

83

better returns in a short-term. Waiting longer might not prove beneficial, as

one need not be lucky all the time.The above list is certainly not exhaustive
and individuals will have other better reasons to quit as well. Its just that most
dont know when to apply thought and so these would come in handy.

BIBLIOGRAPHY
Books & Magazines referred
Security Analysis and Portfolio Management : Donald E Fischer, Ronald J Jordan
Outlook Money
Mutual Funds Review
Money Life
How to rate management of mutual funds : Harvard Business review
Association of mutual funds in India (AMFI) Publications and quarterly reports
Securities and Exchange Board of India
Mutual Fund Performance : W. Sharpe
Market Timing, Selectivity, and Mutual Fund Performance: An Empirical
Investigation
Fact sheets of different fund houses

Websites referred:
www.mutualfundsindia.com
www.amfiindia.com
www.valueresearchonline.com
www.sbimf.com
www.bseindia.com
www.nseindia.com
www.google.com
84

 www.wikipedia.com
www.moneycontrol.com

ANNEXURE
QUESTIONNAIRE- 1
(FOR INDIVIDUAL INVESTORS)

KEEP INVESTING AND KEEP SMILING

PERSONAL DETAILS:
NAME:
1. SEX:M

TEL.NO:
F

2. AGE: Below 30

31-40

41-50

Above 50

3. ACADEMIC QUALIFICATION: Graduate

Post Graduate

Professional

Others(Please Specify---------------------------)
4. Marital Status: Married

Unmarried

5. Occupation: Professional

Salaried

Business

Retired

Others-------------------6. Annual Income: Less than 2,00,000

10,00,000

Above10lakh

7. Area: Mumbai City

Suburbs

SIGNATURE
85

2,00,001-5,00,000

5,00,001-

Q.1. Why do you invest in mutual funds? (Tick the Option)

a)Safety

b) Good Return c) Tax Benefit d) Capital Appreciation e) Liquidity

f)Others (Please Specify)

Q.2.Which fund from SBI have largest share in your PORTFOLIO.

Q.3.Through which channels do you invest in Mutual fund? (Tick the option)
a) Directly

b) Through intermediaries

Q.4 How much is your investment horizon? (Tick the option)

a) Within a year

b)Between 1 3years

c) More than 3 years

Q.5 How much amount do you invest in Mutual funds? (Tick the option)
a) < Rs.50000

b) Between Rs.50000- Rs.100000 c)>Rs. 100000

Q.6. Are you willing to tolerate decreases in the value of your account from one
month to the next? (Tick the Option)
(a) Not at all (b) Somewhat (c) Definitely

Q.7.What is your risk preference?

a) High risk and high return b) Moderate risk and Moderate return c) Low risk and
low return
86

Q.8.How satisfied you are with your experience of investing in SBI Mutual
Funds?
Highly Satisfied

Considerably Satisfied

Reasonably Satisfied

Unsatisfied

Highly Unsatisfied
Q.9. Which Fund House has largest share in your Investment Portfolio: (Mention
it)

Q. 10. Scheme Preferences: (Tick the Option)

a) Equity b) Debt c) Balanced d) Fixed Maturity Plan (FMPs) e) Others (Please
Specify----------------------------)
Q.11 Saving Preference: (please rank them):
(a)Life Insurance
(b)Pension and PF Schemes
(c)Bank Deposit
(d)Shares and Debentures
(e)Units of MFs like SBI
(f)Gold/Jeweler
(f)Others (Please Specify-------------------------------------)

Q.12. Preferable route to Mutual Fund Investing: (Tick the option)

(a)Friends Suggestion (b) Newspapers/Magazines (c) Self Decision (d) Television (e)
Brokers/Agents (f) others (Please Specify------------------------------------)

87

Q.13.You Prefer:
(a)Open Ended Scheme (b) Close Ended Scheme (c) Interval Scheme

Q.14.How much of your income you able to save:

Below 5%

5-10%

10-15%

15-20%

20-25%

ABOVE 25

Q. 15.Rank following factors that you consider while selecting a scheme:

a) Scheme Qualities like track record, fund size, entry load etc.
b) Fund Manager Experience
c) Investor Services like disclosure of NAV, A/C statements.
d) Marketing of funds through bill boards, relatives, friends, brokers etc.

Q.16.Any Suggestion for SBI Mutual Funds: (Please mention it)

Q.17. Rate the following factors which influences your investment in mutual funds on
the importance scale where 1 is least important, 3 is neutral, 5 is most important.

Factors
Historical performance of fund

88

Funds returns over market return

Performance of Fund manager
Current Economic and Market conditions
Type of schemes (growth, income, balanced & others)
Expected Dividend going to be deliver by the fund
Advisor or broker or agent influence
Convenience in investing in the fund
Transparency maintained by the fund house
Minimum investment or lot size
Lock in period in a fund
Asset under management
Fund rating
Fund prospectus or offer document
Internet i.e. Website influence
Prior experience with the fund house
Fluctuation in equity markets
Fees ,load and expenses
Reputation of fund house
Security provided by the fund in terms of return
Tax benefit deriving from investment in the fund
NAV or price of funds unit
Attitude towards risk
Friend/family recommendation
Promotional campaign of the fund

QUESTIONNAIRE-2
(For Bankers)

Q1) what is the age group of the investors?

Under 25 yrs
25 to 45 yrs
45 to 65 yrs
Over 65 yrs

Q2) Which are the best performing schemes in the market?

SBI Mutual Fund

Reliance Mutual Fund
Kotak Mahindra Mutual Fund
89

Birla SunLife Mutual Fund

Franklin Mutual Fund
HDFC Mutual Fund
ICICI Mutual Fund
Others (Please specify)

Q3) Do they want any changes in the existing or future schemes?

Services
Dividends
Portfolio
Others(please specify)

Q4) Suggest a portfolio for a dream scheme?

IT sector
FMCG sector
Pharma sector
Infrastructure
Commodities
Automobile
Energy
Telecom
Financial services
Media & Entertainment
Others(Please specify)

Q5) What is the approximate sales of the best seller scheme?

Less than 10 lakh

10 to 20 lakh
20 to 30 lakh
More than 30 lakh

Q6) What are the facilities that other Banks/Mutual Fund houses are providing?

Service
Commission
Product related information
Others (Please Specify)

Q7) What are your grievances, if any?

90

_________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
________________________________________

Q8) What is the expected return in that scheme (any specific scheme)?
Scheme name: ___________________

Less than 10%

10-15%
15-20%
20-25%
Over 25%

Q9) Suggest ways by which we can improve upon our relationship.

_________________________________________________________________
_____________________________________________________________________
____

91