Executive Summary

The Banking Sector is one of the fastest growing sectors in India today.
The upcoming sectors which are really showing the graph towards upwards are -
Telecom, Banking Insurance. These sectors really have a lot of responsibility
towards the economy Mutual fund industry has seen a lot of changes in past few
years with multinational companies coming into the country, bringing in their
professional expertise in managing funds worldwide. In the past few months there
has been a consolidation phase going on in the mutual fund industry in India.
Now investors have a wide range of Schemes to choose from depending on
their individual profiles.
This is the report regarding the diverse services provided by Mutual fund.
It starts with an introduction and history of mutual fund. It gives a briefing about
all the services by different companies.
The report shows an internal architecture of the Mutual fund. It gives a
detail about the mutual fund and what is the risk involved in that and how much
returns they are providing to investors. Also it discusses the vision, mission and
policies of the organization along with their competitors at national level. There
are also some suggestions/recommendations for the business.

Need of the study

Mutual fund is booming sector now a days and it has lot of scope to
generate income and providing return to the investor. The impressive growth of
mutual funds in India has attracted the attention of Indian researchers, individuals
and institutional investors. The need of the Research work is to evaluate the
performance of different mutual funds in India available in the selected banks and
keep the mutual fund investors fully aware of it. Thus, there is the need to
investigate how efficiently the hard earned money of the investors and scarce
resources of the economy are efficiently utilized.

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 OBJECTIVE OF THE STUDY
The objectives of the study imposed which of the criteria researcher
believed to require research.
1) To evaluate the growth of mutual funds
2) To examine the return from selected MF
3) To documents investments on selected assets allocation trends of mutual funds
4) To minimize risk and remove the unsystematic risk
5) To identified systematic risk
6) To identified return variance
7) To identified capital market return with security market return.
8) To evaluate the overall performance of mutual funds

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 INTRODUCTION OF MUTUAL FUND

There are a lot of investment avenues available today in the financial

market for an investor with an investable surplus. He can invest in Bank deposits,
corporate debenture, and bonds where there is low risk but low return. He may
invest in stock of companies where the risk is high and the returns are also
proportionately high. The recent trends in the stock market have shown that an
average retail investor always lost with periodic bearish tends. People began
opting for portfolio managers with expertise in stock markets who would invest
on their behalf. Thus we had wealth management services provided by many
institutions. However they proved too costly for a small investor. These investors
have found a good shelter with the mutual funds.

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 What is 'Mutual Fund'

Mutual fund is the pool of the money, based on the trust who invests the
savings of a number of investors who shares a common financial goal, like the
capital appreciation and dividend earning. The money thus collect is then invested
in capital market instruments such as shares, debenture, and foreign market.
Investors invest money and get the units as per the unit value which we called as
NAV (net assets value). Mutual fund is the most suitable investment for the
common man as it offers an opportunity to invest in diversified portfolio
management, good research team, professionally managed Indian stock as well as
the foreign market, the main aim of the fund manager is to taking the scrip that
have under value and future will rising, then fund manager sell out the stock.
Fund manager concentration on risk – return trade off, where minimize the risk
and maximize the return through diversification of the portfolio. The most
common features of the mutual fund unit are low cost. The below I mention the
how the transactions will done or working with mutual fund.

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 Concept of Mutual Fund

A mutual fund is a common pool of money into which investors place their
contributions that are to be invested in accordance with a stated objective. The
ownership of the fund is thus joint or "mutual"; the fund belongs to all investors.
A single investor's ownership of the fund is in the same proportion as the amount
of the contribution made by him or her bears to the total amount of the fund.
Mutual funds are trusts, which accept savings from investors and invest the
same in diversified financial instruments in terms of objectives set out in the
trusts deed with the view to reduce the risk and maximize the income and capital
appreciation for distribution for the members. A mutual fund is a corporation and
the fund manager's interest is to professionally manage the funds provided by the
investors and provide a return on them after deducting reasonable management
fees. The objective sought to be achieved by mutual fund is to provide an
opportunity for lower income groups to acquire without much difficulty financial
assets. They cater mainly to the needs of the individual investor whose means are
small and to manage investors portfolio in a manner that provides a regular
income, growth, safety, liquidity and diversification opportunities.

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 Why Choose Mutual Funds?

Mutual funds are investment vehicles, and you can use them to invest in
asset classes such as equities or fixed income. Money control recommends that
you use the mutual fund investment route rather than invest yourself, unless you
have the required temperament, aptitude and technical knowledge. If you would
like to familiarize yourself with the basic concepts and workings of a mutual
fund, Understanding Mutual Funds would be a good place to start.

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 Ten tools for analyzing mutual funds to invest smartly

1. Credit Rating (Debt schemes only)

what it indicates
All debt papers that the fund invests in are rated by agencies according to their
risk profile. While government securities are totally risk free, corporate papers are
rated from AAA (highest safety) to D (default).
How is it calculated?
Agencies use their own methodology to rate a fund. The ratings are usually
provided in the fund’s fact sheet.
Implications for investors
High rating indicates that the fund is taking lower credit risk. Since investors go
for debt investment to reduce risk, they should avoid schemes with too many low
quality papers.
2. Sharpe Ratio
what it indicates
This ratio shows the return per unit of the total risk taken by the scheme.
How is it calculated
(Return – risk free return) ÷ standard deviation
Implications for investors
Compare only within categories. Higher than category average Sharpe ratio
indicates that the fund manager was able to generate higher return per unit of total
risk.
3. Average Maturity or Maturity Profile (Debt schemes only)
What it indicates
Debt funds invest in papers with varying maturities. The maturity profile
indicates the average maturity of all debt securities in a fund.
How is it calculated
This is usually given in the fund’s fact sheet.

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Implications for investors
Market prices of long-duration papers are more sensitive to movements in interest
rates. Investors should avoid funds with long maturity if interest rates are likely to
rise. If rates are likely to fall, such schemes can give higher returns.
4. Expense Ratio
What it indicates
This ratio represents the annual expense the fund will charge the investor. It
ranges between 0.1% (for fixed maturity plans) to 3.25% (for small-sized equity
funds).
How is it calculated
Total expenses charged by the fund/average assets under management of the
fund.
Implications for investors
The lower the expense ratio, the better it is for the investor. Since most debt funds
generate similar .gross returns, expense ratio becomes more important for debt
funds. Direct plans have lower expense ratios.
5. Portfolio Concentration Ratio
What it indicates
This ratio shows where and how much the fund have invested.
How is it calculated?
This is usually a percentage of the fund’s top five stocks or sectors.
Implications for investors
Normal range is 30%-40% for top five stocks and 30%-60% for top five sectors
for diversified funds. Investors go to mutual funds for diversification, any undue
concentration in its portfolio defeats this goal.
6. Exit Load
What it indicates
This is the penalty charged by a mutual fund for leaving a scheme early.

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How is it calculated?
Exit load normally ranges between 0% (for liquid funds) and 1% (up to 1 year of
holding in an equity scheme).
Implications for investors
Invest in schemes with lower exit load. Please note that the exit load will be
charged based on the load structure applicable at the time of investment and not at
the time of redemption
7. Standard Deviation
What it indicates
This is a measure of the volatility in a fund’s returns and, therefore, indicates the
risk in a fund’s portfolio.
How is it calculated?
First, calculate the average of daily returns. Deduct this average from each daily
return and square the difference. The sum of all these squared values is then
divided by the number of days to get the variance. And the square root of the
variance is standard deviation.
Implications for investors
lower the deviation, the better it is. However, one needs to compare it only within
categories. The range can be below 1% for liquid funds and 20%-40% for equity
funds.
8. Portfolio Turnover Ratio
What it indicates
This ratio captures how frequently a scheme trades (buys or sells) in its portfolio.
While it will be low for passively managed schemes, it can go up to 500% for
actively managed equity schemes.
How is it calculated?
Total value of securities sold or bought over 12 months/average assets under
management of the fund.

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Implications for investors
This ratio needs to be compared within category. Active investors can opt for
schemes with a high turnover ratio, while passive, long-term buy and hold
investors can go for low turnover ratio scheme.
9. Treynor’s Ratio
What it indicates
This ratio indicates the return per unit market risk—also known as systemic
risk—taken by the scheme.
How is it calculated?
(Return – risk free return) ÷ beta
Implications for investors
Compare only within categories. Higher than category average Treynor’s ratio
indicates that the fund manager was able to generate higher return per unit of
systemic or market risk.
10. Beta
What it indicates?
It measures the fund’s performance compared to the market.
How is it calculated?
The variance of market index is calculated as explained for Standard Deviation.
To calculate co-variance between market index and the scheme, the difference
between daily returns of the scheme and the index is first squared. The sum of all
these squared values is divided by the number of days to get the covariance.
Finally, beta is calculated by dividing the covariance between market index and
the scheme with the variance of market index.
Implications for investors
A beta value of one means the fund’s NAV moves with the market. Less than one
means the fund is less volatile than the market, and above one indicates it is more
volatile than the market.

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 ORIGIN OF MUTUAL FUND IN INDIA

The history of mutual funds dates backs to 19th century when it was
introduced in Europe, in particular, Great Britain. Robert Fleming set up in 1968
the first investment trust called Foreign and Colonial Investment Trust which
promised to manage the finances of the moneyed classes of Scotland by spreading
the investment over a number of different stocks. This investment trust and other
investments trusts which were subsequently set up in Britain and the US,
resembled today’s close – ended mutual funds. The first mutual in the U.S.,
Massachustsettes investor’s Trust, was set up in March 1924. This was the open –
ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of
the Second World War slackened the pace of mutual fund industry, innovations in
products and services increased the popularity of mutual funds in the 1990s and
1960s. The first international stock mutual fund was introduced in the U.S. in
1940. In 1976, the first tax – exempt municipal bond funds emerged and in 1979,
the first money market mutual funds were created. The latest additions are the
international bond fund in 1986 and arm funds in 1990. This industry witnessed
substantial growth in the eighties and nineties when there was a significant
increase in the number of mutual funds, schemes, assets, and shareholders. In the
US, the mutual fund industry registered a ten – fold growth the eighties. Since
1996, mutual fund assets have exceeded bank deposits. The mutual fund industry
and the banking industry virtually rival each other in size.

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 REGULATORY OF MUTUAL FUND IN INDIA

• SEBI
The capital market regulates the mutual funds in India. SEBI requires all mutual
funds to be registered with them. SEBI issues guidelines for all mutual funds
operations-investment, accounts, expenses etc. Recently, it has been decided that
Money Market Mutual Funds of registered mutual funds will be regulated by
SEBI through (Mutual Fund) Regulations 1996.
• RBI
RBI, a supervisor of the Banks owned Mutual Funds-As banks in India come
under the regulatory Jurisdiction of RBI, banks owned funds to be under
supervision of RBI and SEBI. RBI has supervisory responsibility over all entities
that operate in the money markets.
• Ministry of finance (MOF)
Ministry of Finance ultimately supervises both the RBI and the SEBI and plays
the role of apex authority for any major disputes over SEBI guidelines.
• Company low board
Registrar of companies is called Company Low Board. AMCs of Mutual Funds
are companies registered under the companies Act 1956 and therefore answerable
to regulatory authorities empowered by the Companies Act.
• Office of the public trustee
Mutual Fund being public trust is governed y the Indian Trust Act 1882. The
Board of trustee or the Trustees Company is accountable to the office of public
trustee, which in turn reports to the Charity commission

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 SEBI Guideline of Mutual Fund

SEBI Regulation Act 1996

Establishment of a Mutual Fund:
In India mutual fund play the role as investment with trust, some of the
formalities laid down by the SEBI to be establishment for setting up a mutual
fund. As the part of trustee sponsor the mutual fund, under the Indian Trust Act,
1882, under the trustee company are represented by a board of directors. Board of
Directors is appoints the AMC and custodians. The board of trustees made
relevant agreement with AMC and custodian. The launch of each scheme
involves inviting the public to invest in it, through an offer documents.
Depending on the particular objective of scheme, it may open for further sale and
repurchase of units, again in accordance with the particular of the scheme, the
scheme may be wound up after the particular time period.
1. The sponsor has to register the mutual fund with SEBI
2. To be eligible to be a sponsor, the body corporate should have a sound track
record and a general reputation of fairness and integrity in all his business
transactions.
Means of Sound Track Records
- The body corporate being in the financial services business for at least
five years
- Having a positive net worth in the five years immediately preceding the
application of registration.
-Net worth in the immediately preceding year more than its contribution to the
capital of the AMC.
- Earning a profit in the three out of the five preceding years, including the fifth
year.
3. The sponsor should hold at least 40% of the net worth of the AMC.
4. A party which is not eligible to be a sponsor shall not hold 40% or more of the
net worth of the AMC.
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5. The sponsor has to appoint the trustees, the AMC and the custodian.
6. The trust deed and the appointment of the trustees have to be approved by
SEBI.
7. An AMC or its officers or employees can't be appointed as trustees of the
mutual fund
8. At least two thirds of the business should be independent of the sponsor.
9. Only an independent trustee can be appointed as a trustee of more than one
mutual fund, such appointment can be made only with the prior approval of the
fund of which the person is already acting as a trustees.
LAUNCHING OF A SCHEMES
Before its launch, a scheme has to be approved by the trustees and a copy of its
offer documents filed with the SEBI.
1. Every application form for units of a scheme is to be accompanies by a
memorandum containing key information about the scheme.
2. The offer document needs to contain adequate information to enable the
investors to make informed investments decisions.
3. All advertisements for a scheme have to be submitted to SEBI within seven
days from the issue date.
4. The advertisements for a scheme have to disclose its investment objective.
5. The offer documents and advertisements should not contain any misleading
information or any incorrect statement or opinion.
6. The initial offering period for any mutual fund schemes should not exceed 45
days, the only exception being the equity linked saving schemes.
7. No advertisements can contain information whose accuracy is dependent on
assumption.
8. An advertisement cannot carry a comparison between two schemes unless the
schemes are comparable and all the relevant information about the schemes is
given.
9. All advertisements need to carry the name of the sponsor, the trustees, the
AMC of the fund.
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10. All advertisements need to disclose the risk factors.
11. All advertisements shall clarify that investment in mutual funds is subject to
market risk and the achievement of the fund’s objectives can't be assured.
12. When a scheme is open for subscription, no advertisement can be issued
stating that the scheme has been subscribed or over subscription.

History of mutual funds in India

The mutual fund industry in India started in 1963 with the formation of
Unit Trust of India, at the initiative of the Government of India and Reserve Bank
of India. The history of mutual funds in India can be broadly divided into four
distinct phases
First Phase - 1964-1987
Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched
by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 cores of
assets under management.
Second Phase - 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non-UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI
Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.

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At the end of 1993, the mutual fund industry had assets under management of Rs.
47,004 cores.
Third Phase - 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual
funds with total assets of Rs. 1, 21,805 cores. The Unit Trust of India with Rs.
44,541 cores of assets under management was way ahead of other mutual funds

Fourth Phase - since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs. 29,835 cores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund, 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
cores of assets under management and with the setting up of a UTI Mutual Fund,
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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

ORGANIZATION OF MUTUAL FUND:

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THE STRUCTURE CONSISTS OF:
 Sponsor
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the
net worth of the Investment managed and meet the eligibility criteria prescribed
under the Securities and Exchange Board of India (Mutual Fund) Regulations,
1996. The sponsor is not responsible or liable for any loss or shortfall resulting
from the operation of the Schemes beyond the initial contribution made by it
towards setting up of the Mutual Fund.
 Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of
the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the
Indian Registration Act, 1908.
 Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of
the unit holders and ensure that the AMC functions in the interest of investors and
in accordance with the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of
rd
the respective Schemes. At least 2/3 directors of the Trustee are independent
directors who are not associated with the Sponsor in any manner.
 Asset Management Company (AMC)
The AMC is appointed by the Trustee as the Investment Manager of the Mutual
Fund. The AMC is required to be approved by the Securities and Exchange Board
of India (SEBI) to act as an asset management company of the Mutual Fund. At
least 50% of the directors of the AMC are independent directors who are not
associated with the Sponsor in any manner. The AMC must have a net worth of at
least 10 cores at all times

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 Registrar and transfer agent
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form,
redemption requests and dispatches account statements to the unit holders. The
Registrar and Transfer agent also handles communications with investors and
updates investor records.

PROCESS OF MUTUAL FUND

In the above graph shows how Mutual Fund works and how investor earns
money by investing in the Mutual Fund. Investors put their saving as an
investment in Mutual Fund. A fund manager is a person who takes the decisions
where the money should be invested in securities according to the scheme’s
objective. Securities include Equities, Debentures, Govt. Securities, Bonds, and
Commercial Paper etc. These Securities generates returns to the Fund Manager.
The Fund Manager passes back return to the investor.

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 Advantages of Mutual Funds

1. Diversification
To diversify is to reduce risk. For example, let’s say you buy milk from one
milkman. If someday he falls ill, you won’t have any milk to drink! On the other
hand, let’s say you buy milk from two milkmen. If one milkman falls ill, you’ll
still have milk from the other milkman. The chance of both the milkmen falling
ill at the same time is very low. This is why diversification is so important in
investing.
Investing requires in depth research and analysis which usually takes a long
period of time. Often, people do not have so much time. Mutual funds are
managed by fund managers who invest money in a manner that allows
diversification.
The advantage of mutual funds is that diversification is automatically done.
Instead of buying shares, bonds, and other investments on your own, you
outsource the task to an expert. Thus, your investments are diversified without
you having spent too much time and effort.
2. Professional Management
Investing is obviously not an easy task. Investing, be it in shares, real estate,
gold, bonds, and so on depends on a multitude of factors that constantly need to
be studied and understood. Many people often think they can understand the
markets. A great percentage of these people end up making losses.
The advantage of mutual funds is that they are managed by qualified and
professional experts. Thus, to ensure your money is invested in the right places,
you only have to choose the right mutual fund. That is much easier than
constantly monitoring investments.
Once invested in a mutual fund, you can relax with the knowledge that an expert
will make necessary changes to the portfolio whenever required.

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 This isn’t to say that you shouldn’t review your investments in mutual funds.
You definitely should, but not too often. If you’ve chosen your mutual fund
carefully, reviewing it once a year is usually enough.
3. Simplicity
When investing, the availability of information and data is particularly time-
consuming. If all information would be easily available, investing would be much
simpler.
Investing in mutual funds is much easier and simpler. The research and
information collection is done by the mutual funds themselves. All you have to do
then is analyze the performance of mutual funds.
Mutual fund dealers allow you to compare the funds based on metrics such as
level of risk, return, and price. Because the information is easily accessible, you,
the investor, is able to make wise decisions.
4. Liquidity
Of all others, one of the advantages of mutual funds that are often overlooked is
liquidity. In financial jargon, liquidity basically refers to the ability of being able
to convert your assets to cash with relative ease.
Consider this: if you own a house and need cash, how long would it take for you
to sell the house and get cash in hand? It could take anywhere from a few weeks
to a few months.
Mutual funds are considered liquid assets since there is high demand for many of
the funds in the marketplace. Since this is the case, you can retrieve money from a
mutual fund very quickly.
5. Costs
Mutual funds are one of the best investment options considering the costs
involved. If you hire a portfolio management service, you’ll typically be charged
2% to 3% of your total investments per year. They will also take a share from
your profits.
Mutual funds are relatively cheaper with 1% to 2% of expense ratios. Debts funds
have an even lesser expense.
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6. Tax Efficiency
Mutual funds are relatively more tax-efficient than other types of investments.
Long-term capital gain tax on equity mutual funds is zero. That means if you sell
your investments one year after purchase, you pay no tax.
For debt funds, long-term capital gains apply when you hold them for 3 years.
Understand tax on mutual funds
Apart from this, there are certain classes of funds, called ELSS funds that are
exempt under section 80c up to a limit of Rs 1.5L. Some important features of tax
saving funds:
 Surrogate route to direct stock markets
 Minimum investment is Rs 500 per month
 Only 3-year lock-in period
 Tax benefits under 80C up to 1.5L.
 The returns are tax-free too
 Highest expected returns.
7. Selection of Mutual Funds
Mutual Funds come with different types – this allows investors to invest in
particular type depending on your goals. Depending on your goals, you can
choose the appropriate category to invest in. Here are some examples
 For parking money for very short term, you can invest in liquid funds
like Kotak Floater Short Term
 For investing for short-term duration like 1 to 3 years, you can invest in Ultra
Short Term Funds (example – Franklin India Low Duration Fund) or Short Term
Funds (example – HDFC Short Term Opportunities Fund)
 For Tax saving, there is tax saving funds as we discussed in the previous
section.
 For Long-term investing there are equity funds. In equity funds also, one can
choose from high-risk funds like mid cap and small cap funds to relatively less
risky funds like large cap and diversified funds

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 For people who want to take a middle approach, there are balanced funds.
Example – HDFC Balanced Fund.
8. You can start with very small amounts
Unlike other investments like real estate or investing directly in stocks, mutual
funds allow you to start as small as Rs 500. One can start with mutual funds with
as low as Rs 500 or Rs 1000. Some funds, like Reliance Small Cap Fund allow
you to start with just Rs 100.
To check all the funds that start with Rs 500, check out this – Mutual funds to
start with Rs 500
To check all the funds that start with Rs 1000, check out this – Mutual funds to
start with Rs 1000
9. Safe and transparent
Investing in mutual funds is very transparent. All mutual funds companies come
under the purview of SEBI and they need to make necessary disclosures. All the
stocks they hold are known to you. The historical performance is all out in public.
Fund managers qualification and track record are known. The NAV (net asset
value) of the fund is updated every day.
Mutual funds investments are also very safe as the transaction happens in a very
transparent way. Also when you redeem, money goes directly into your bank
account, hence no chance of someone hacking into your account.
10. Safety
Mutual Fund industry is part of a well-regulated investment environment where
the interests of the investors are protected by the regulator. All funds are
registered with SEBI and complete transparency is forced.

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 Disadvantages of Mutual Funds
1. No Insurance
Mutual funds, although regulated by the government, are not insured against
losses. The Federal Deposit Insurance Corporation (FDIC) only insures against
certain losses at banks, credit unions, and savings and loans, not mutual funds.
That means that despite the risk-reducing diversification benefits provided by
mutual funds, losses can occur, and it is possible (although extremely unlikely)
that you could even lose your entire investment.
2. Dilution
Although diversification reduces the amount of risk involved in investing in
mutual funds, it can also be a disadvantage due to dilution. For example, if a
single security held by a mutual fund doubles in value, the mutual fund itself
would not double in value because that security is only one small part of the
fund's holdings. By holding a large number of different investments, mutual funds
tend to do neither exceptionally well nor exceptionally poorly.
3. Loss of Control
The managers of mutual funds make all of the decisions about which securities
to buy and sell and when to do so. This can make it difficult for you when trying
to manage your portfolio. For example, the tax consequences of a decision by the
manager to buy or sell an asset at a certain time might not be optimal for you.
You also should remember that you trust someone else with your money when
you invest in a mutual fund.
4. No Customized Portfolios
The portfolio of securities in which a fund invests is a decision taken by the fund
manager. Investors have no right to interfere in the decision making process of a
fund manager, which some investors find as a constraint in achieving their
financial objectives.

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5. Difficulty in Selecting a Suitable Fund Scheme
Many investors find it difficult to select one option from the plethora of
funds/schemes/plans available. For this, they may have to take advice from
financial planners in order to invest in the right fund to achieve their objectives.
6. Trading Limitations
Although mutual funds are highly liquid in general, most mutual funds (called
open-ended funds) cannot be bought or sold in the middle of the trading day. One
can only buy and sell them at the end of the day.
7. Inefficiency of Cash Reserves
Mutual funds usually maintain large cash reserves as protection against a large
number of simultaneous withdrawals. Although this provides investors with
liquidity, it means that some of the fund’s money is invested in cash instead of
assets, which tends to lower the investors’ potential return.

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 Types of mutual funds

 BY STRUCTURE
1. Open-Ended Schemes
Open-ended schemes are mutual funds that can issue and redeem their shares at
any time. Open-ended funds do not have restriction on the amount of shares the
fund will issue. They offer units for sale without specifying any duration for
redemption. If demand is high enough, the fund will continue to issue shares, no
matter how many investors are there. Open-ended funds also buy back shares
when investors wish to sell. Investors can conveniently buy and sell units of
open-ended funds directly from the fund house at the prevalent Net Asset Value
(NAV) prices. One of the key features of open-end schemes is the liquidity that
these funds offer to investors.
2. Close-Ended Schemes
Close-ended schemes are mutual funds with a fixed number of shares (or units).
Unlike open-ended funds, new shares/units are not created by managers to meet
demand from investors but the shares can only be purchased (and sold) in the
secondary market.
26
Close-ended funds raise a fixed amount of capital through a New Fund Offer
(NFO). The fund is then structured, listed and traded like a stock, on a stock
exchange. The price per share is determined by the market and is usually different
from the underlying value or net asset value (NAV) per share of the investments
held by the fund. The price is said to be at a discount or premium to the NAV
when it is below or above the NAV, respectively. A premium might be due to the
market's confidence in the investment manager’s ability to produce above-market
returns. A discount might reflect the charges to be deducted from the fund in
future by the fund managers.
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, that is,
either repurchase facility or through listing on stock exchanges. These mutual
funds schemes disclose NAV generally on weekly basis.
3. Interval Schemes
Interval schemes are those that combine the features of both open-ended and
close-ended schemes. The units may be traded on the stock exchange or may be
open for sale or redemption during pre-determined intervals at NAV-related
prices.

 BY NATURE
1. Equity funds
Equities are a popular mutual fund category amongst retail investors. Although
it could be a high-risk investment in the short term, investors can expect capital
appreciation in the long run. If you are at your prime earning stage and looking
for long-term benefits, growth schemes could be an ideal investment.
2. Debt funds
The objective of these funds is to invest in debt papers. Government authorities,
private companies, banks and financial institutions are some of the major issuers

27
of debt papers. By investing in debt instruments, these funds insure low risk and
provide stable income to the investors. Debt funds are further classified as:
 Gilt funds: These funds invest exclusively in Government Securities. NAVs of
these schemes also fluctuate due to change in interest rates and other economic
factors as is the case with income or debt-oriented schemes.
 Income funds: Invest a major portion into various debt instruments such as
bonds, corporate debentures and government securities.
 MIPs: invests maximum of their total corpus in debt instruments while they
take minimum exposure in equities. It gets benefit of both debt and equity market.
These schemes ranks slightly high on the risk-return matrix when compared with
other debt schemes
 Short terms plan (STPs): Meant for investment horizon for three to six
months. These funds primarily invest in short term papers like Certificate of
deposits (CDs) and commercial papers (CPs). Some portion of the corpus is also
invested in corporate debentures.
3. Balanced funds
This scheme allows investors to enjoy growth and income at regular intervals.
Funds are invested in both equities and fixed income securities; the proportion is
pre-determined and disclosed in the scheme related offer document. These are
ideal for the cautiously aggressive investors.

 BY INVESTMENT OBJECTIVE
1. Growth or Equity-Oriented Schemes
The aim of growth funds is to provide capital appreciation over medium to long-
term. These schemes normally invest a major part of their portfolio in equities
and have comparatively high risks. They provide different options to the investors
like dividend option, capital appreciation, etc. and investors may choose one
depending on their preferences. 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.

28
It can be further classified into following depending upon objective:
 Large-Cap Funds: These funds invest in companies from different sectors.
However, they put a restriction in terms of the market capitalization of a
company, i.e., they invest largely in BSE 100 and BSE 200 Stocks.
 Mid-Cap Funds: These funds invest in companies from different sectors.
However, they put a restriction in terms of the market capitalization of a
company, i.e., they invest largely in BSE Mid Cap Stocks.
 Sector Specific Funds: These are schemes that invest in a particular sector, for
example, IT.
 Thematic: These schemes invest in various sectors but restrict themselves to a
particular theme e.g., services, exports, consumerism, infrastructure etc.
 Diversified Equity Funds: All non-theme and non-sector funds can be classified
as equity diversified funds.
 Tax Savings Funds (ELSS): Investments in these funds are exempt from income
tax at the time of investment, up to a limit of Rs 1 lakh.
2. Income or Debt oriented Schemes
The aim of income funds is to provide regular and steady income to investors.
These schemes generally invest in fixed-income securities such as bonds,
corporate debentures, Government Securities and money-market instruments and
are less risky compared to equity schemes. However, opportunities of capital
appreciation are limited in such funds. The NAVs of such funds are impacted
because of change in interest rates in the economy. If the interest rates fall, NAVs
of such funds are likely to increase in the short run and vice versa. However,
long-term investors do not bother about these fluctuations.
3. Balanced Schemes
The aim of the balanced funds is to provide both growth and regular income as
such schemes invest both in equities and fixed income instruments in the
proportion indicated in their offer documents. These are appropriate for investors
looking for moderate growth. They generally invest between 65% and 75% in
equity and the rest in debt instruments. They are impacted because of fluctuation
29
in stock markets but NAVs of such funds are less volatile compared to pure
equity funds
4. Money Market or Liquid Funds
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 Deposits,
Commercial Paper and inter-bank call money, Government Securities, etc.
Returns of these schemes fluctuate much less than other funds. These are
appropriate for investors as a means of short-term investments.

 OTHER SCHEMES
1. Tax-saving schemes
These schemes offer tax rebates to the investors under specific provisions of the
Income Tax Act, 1961 as the Government offers tax incentives for investment in
specified avenues like Equity Linked Savings Schemes (ELSS). ELSS is a type of
diversified equity mutual fund, which is qualified for tax exemption under
Section 80C of the Income Tax Act, and offers the twin-advantage of capital
appreciation and tax benefits. It comes with a lock-in period of three years.
The Rajiv Gandhi Equity Savings scheme (RGESS), which was revised in the
Union Budget 2013-14, would provide a 50% tax deduction on investments up to
Rs. 50,000 to first time investors in equity whose annual taxable income is below
Rs. 12 lakh.
2. Index Schemes
Index funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. 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". Necessary
disclosures in this regard are made in the offer document of the scheme. There are
also exchange traded index funds launched by the mutual funds which are traded
on the stock exchanges.

30
 3. Sector Specific schemes
These are the funds which invest in the securities of only those sectors or
industries as specified in the offer documents like Pharmaceuticals, Software,
FMCG, Petroleum stocks etc. The returns of these funds are dependent on the
performance of the respective sectors/industries. While these funds may give
higher returns, they are more risky compared to diversified funds. Investors need
to keep a watch on the performance of those sectors/industries and must exit at an
appropriate time.

31
 SEBI REGISTERED MUTUAL FUND

1. FORTIS Mutual fund

2. Alliance Capital Mutual fund,
3. AIG Global Investment Group Mutual fund
4. Benchmark Mutual fund,
5. Baroda Pioneer Mutual fund
6. Birla Mutual fund
7. Bharti AXA Mutual fund
8. CanaraRobeco Mutual fund
9. CRB Mutual fund (Suspended)
10. DBS Chola Mutual fund,
11. Deutsche Mutual fund
12. DSP Blackrock Mutual fund,
13. Edelweiss Mutual fund
14. Escorts Mutual fund,
15. Franklin Templeton Mutual fund
16. Fidelity Mutual fund
17. Goldman Sachs Mutual fund
18. HDFC Mutual fund,
19. HSBC Mutual fund,
20. ICICI Securities Fund,
21. IL & FS Mutual fund,
22. ING Mutual fund,
23. ICICI Prudential Mutual fund
24. IDFC Mutual fund,
25. JM Financial Mutual fund
26. JP Morgan Mutual fund
27. Kotak Mahindra Mutual fund,
29. LIC Mutual fund
31. Morgan Stanley Mutual fund
32. Mirae Asset Mutual fund
33. Principal Mutual fund
34. Quantum Mutual fund,
35. Reliance Mutual fund
36. Religare AEGON Mutual fund
37. Sahara Mutual fund,
38. SBI Mutual fund

32
39. Shriram Mutual fund
40. Sundaram BNP Paribas Mutual fund,
41. Taurus Mutual fund
42. Tata Mutual fund,
43. UTI Mutual fund

HOW TO INVEST IN MUTUAL FUND?

Mutual funds normally come out with an advertisement in newspapers
publishing the date of launch of the new schemes. Investors can also contact the
agents and distributors of mutual funds who are spread all over the country for
necessary information and application forms. Forms can be deposited with mutual
funds through the agents and distributors who provide such services. Now days,
the post offices and banks also distribute the units of mutual funds. However, the
investors may please note that the mutual funds schemes being marketed by
banks and post offices should not be taken as their own schemes and no assurance
of returns is given by them. The only role of banks and post offices is to help in.
distribution of mutual funds schemes to the investors. Investors should not be
carried away by commission/gifts given by agents/distributors for investing in a
particular scheme. On the other hand they must consider the track record of the
mutual fund and should take objective decision.
• One time investment
The amount that has to be invested in onetime is known as Onetime Investment.
The investor has to pay the whole amount at once. The minimum amount is Rs.
5000 and maximum is as per the investor’s Choice. This investment is generally
preferred for the business man who is able to pay at one time.
• Systematic investment plan (SIP)
The amount that has to be invested through same monthly installment is known
as Systematic Investment Plan. The investor has to pay the minimum amount
Rs.1000 monthly for all equity and balanced schemes like that for 6months. And
Rs.500 monthly for Tax Saver scheme like that for 12 months. The minimum

33
amount that the investor has to invest is Rs6000 and maximum as per their
choice. This type of investment is generally preferred for the salaried people.
What is a Systematic Investment Plan?
A Systematic Investment Plan or SIP is a smart and hassle free mode for
investing money in mutual funds. SIP allows you to invest a certain pre-
determined amount at a regular interval (weekly, monthly, quarterly, etc.). A SIP
is a planned approach towards investments and helps you inculcate the habit of
saving and building wealth for the future.
How does it work?
A SIP is a flexible and easy investment plan. Your money is auto-debited from
your bank account and invested into a specific mutual fund scheme. You are
allocated certain number of units based on the ongoing market rate (called NAV
or net asset value) for the day.
Every time you invest money, additional units of the scheme are purchased at the
market rate and added to your account. Hence, units are bought at different rates
and investors benefit from Rupee-Cost Averaging and the Power of
Compounding.
Rupee-Cost averaging
with volatile markets, most investors remain skeptical about the best time to
invest and try to ‘time’ their entry into the market. Rupee-cost averaging allows
you to opt out of the guessing game. Since you are a regular investor, your money
fetches more units when the price is low and lesser when the price is high. During
volatile period, it may allow you to achieve a lower average cost per unit.
Power of Compounding
Albert Einstein once said, “Compound interest is the eighth wonder of the
world. He, who understands it, earns it... he who doesn't... pay it.” The rule for
compounding is simple - the sooner you start investing, the more time your
money has to grow.

34
 Example
If you started investing Rs. 10000 a month on your 40th birthday, in 20 years
time you would have put aside Rs. 24 lakh. If that investment grew by an average
of 7% a year, it would be worth Rs. 52.4 lakh when you reach 60.
However, if you started investing 10 years earlier, your Rs. 10000 each month
would add up to Rs. 36 lakh over 30 years. Assuming the same average annual
growth of 7%, you would have Rs. 1.22 Cr on your 60 th birthday – more than
double the amount you would have received if you had started ten years later!
Other Benefits of Systematic Investment Plans
 Disciplined Saving – Discipline is the key to successful investments. When
you invest through SIP, you commit yourself to save regularly. Every investment
is a step towards attaining your financial objectives.
 Flexibility – While it is advisable to continue SIP investments with a long-term
perspective, there is no compulsion. Investors can discontinue the plan at any
time. One can also increase/ decrease the amount being invested.
 Long-Term Gains – Due to rupee-cost averaging and the power of
compounding SIPs have the potential to deliver attractive returns over a long
investment horizon.
 Convenience – SIP is a hassle-free mode of investment. You can issue a
standing instruction to your bank to facilitate auto-debits from your bank account

35
 SBI MUTUAL FUND

SBI Mutual Fund

A PARTNER FOR LIFE

Type Private company

Industry Mutual Fund

Founded 1987

Headquarters Mumbai, India

Area served India

Key people Mr. Rajnish Kumar (Chairman), Anuradha

Rao (CEO & MD), Mr. Navneet Munot
(Executive Director & Chief Investment
Officer)

Products Mutual Fund

AUM Rs. 1,82,916 crore ($28.4 billion)

(July 2017)

Number 500-1000

of employees

Website www.sbimf.com

36
 SBI mutual fund is a bank sponsored fund house with its corporate headquarters
in Mumbai, India. It is a joint venture between the State Bank of India, an Indian
multinational, Public Sector banking and financial services company and
Amundi, a European asset management company.
History
The mutual fund industry in India originally began in 1963 with the Unit Trust
of India (UTI) as a Government of India and the Reserve Bank of India initiative.
Launched in 1987, SBI Mutual Fund became the first non-UTI mutual fund in
India. In July 2004, State Bank of India decided to divest 37 per cent of its
holding in its mutual fund arm, SBI Funds Management Pvt Ltd, to Society
General Asset Management, for an amount in excess of $35 million. Post-
divestment, State Bank of India's stake in the mutual fund arm came down to
67%. In May 2011, Amundi picked up 37% stake in SBI Funds Management, that
was held by Society General Asset Management, as part of a global move to
merge its asset management business with Credit Agricola.
As of Sept 2015, the fund house claims to serve around 5.8 million investors
through 130 points of acceptance, 29 investor service centers, 59 investor service
desks and 6 Investor Service Points. As of July 2017, assets under management of
SBI Mutual Fund are valued at Rs. 1, 82,916 crore ($28.4 billion).
Key Milestones
1987 - Establishment of SBI Mutual Fund
1991 - Launch of SBI Magnum Equity Fund
1999 - Launch of sector funds, India's first contra fund
2004 - Joint Venture with SGAM
2006 - Became the first bank-sponsored fund to launch an offshore fund – 'SBI
Resurgent India Opportunities Fund'
2011 - Stake Transfer from SGAM to AMUNDI
2013 - Acquisition of Daiwa Mutual Fund, part of the Tokyo-based Daiwa
Securities Group
2013 - Launch of SBI Fund Guru, an investor education initiative
37
2015 - Employees' Provident Fund Organization decided to invest in the equity
market for the first time by investing Rs. 5,000 crore in the Nifty and Sensex
ETFs (Exchange Traded Fund) of SBI Mutual Fund
Products & Services
SBI Mutual Fund offers mutual fund schemes such as Debt Schemes, Equity
Schemes, Hybrid Schemes, Exchange-traded fund, Liquid Schemes and Fixed
Maturity Plans. It also offers Portfolio Management and Advisory Services to
financial institutions and asset management companies.
Board of Directors
Ms. Anuradha Rao, Managing Director & Chief Executive Officer
Mr. Dinesh Kumar Khara, Associate Director
Mr. Fathi Jerfel, Associate Director
Mr. Jashvant Raval, Independent Director
Mr. Om Prakash Gahrotra, Independent Director
Mr. Mr. Jean-Yves Glain, Associate Director
Mr. C. N. Ram, Independent Director
Mr. Nicolas Simon, Alternate Director to Mr. Jerfel
Dr. Prafulla Agnihotri, Independent Director
Major competitors
Some of the major competitors for SBI Mutual Fund in the mutual fund sector are
Birla Sun Life Mutual Fund,
HDFC Mutual Fund,
ICICI Prudential Mutual Fund,
Reliance Mutual Fund &
UTI Mutual Fund.

38
Fund List
Scheme Name Category Latest Annual
NAV Returns

SBI FMCG Fund SIP/Lump 123.51 33.9

Direct-Growth sum

SBI Magnum SIP/Lump 40.84 17.34

COMMA Fund sum
Direct-Growth

SBI Magnum SIP/Lump 48.35 18.93

MultiCap Fund sum
Direct-Growth

SBI Emerging SIP/Lump 136.27 27.46

Businesses Direct sum
Plan-Growth

SBI Magnum Mid SIP/Lump 83.5 13.84

Cap Direct Plan- sum
Growth

SBI Blue-chip SIP/Lump 39.3 15.53

Direct Plan- sum
Growth

SBI Magnum SIP/Lump 129.44 16.69

Balanced Direct sum
Plan-Growth

SBI Magnum SIP/Lump 26.76 8.71

Monthly Income sum
Plan Floater

39
 Direct-Growth

SBI Infrastructure SIP/Lump 15.85 17.26

Fund Direct- sum
Growth

SBI Regular SIP/Lump 31.15 8.05

Savings Fund sum
Direct -Growth

SBI Corporate SIP/Lump 28.54 7.48

Bond Fund Direct- sum
Growth

SBI Magnum Gilt SIP/Lump 37.16 6.12

Fund Short-term sum
Direct-Growth

SBI Magnum SIP/Lump 39.44 6.24

Monthly Income sum
Plan Direct-
Growth

SBI Magnum SIP/Lump 177.06 22.5

Global Direct Plan- sum
Growth

SBI Savings Fund SIP/Lump 27.66 7.04

Direct-Growth sum

SBI Contra Direct SIP/Lump 118.63 19.66

Plan-Growth sum

SBI Magnum SIP/Lump 43.16 6.84

Income Direct sum

40
 Plan-Growth

SBI Short Term SIP/Lump 20.36 6.56

Debt Fund Direct- sum
Growth

SBI Magnum Gilt SIP/Lump 38.39 4.04

Fund Long-term sum
Direct-Growth

SBI Ultra Short SIP/Lump 2239.4 6.65

Term Debt Direct sum 4
Plan-Growth

SBI Dynamic SIP/Lump 21.78 4.13

Bond Direct Plan- sum
Growth

SBI Magnum SIP/Lump 3825.9 6.74

InstaCash Fund sum
Direct-Growth

SBI Magnum SIP/Lump 98.19 13.38

Equity Direct Plan- sum
Growth

SBI Premier SIP/Lump 2712.2 6.64

Liquid Direct Plan- sum 3
Growth

SBI Arbitrage SIP/Lump 23.17 6.6

Opportunities Fund sum
Direct-Growth

SBI Magnum SIP/Lump 2897.6 5.88

InstaCash Liquid
41
 Floater Plan sum
Direct-Growth

SBI Magnum Tax SIP/Lump 144.24 14.45

gain Direct Plan- sum
Growth

SBI Nifty Index SIP/Lump 90.7 15.52

Direct Plan- sum
Growth

SBI PSU Direct SIP/Lump 11.59 -0.51

Plan-Growth sum

SBI IT Fund SIP/Lump 59.65 24.51

Direct-Growth sum

SBI Gold Direct SIP/Lump 9.9 4.75

Plan-Growth sum

SBI Pharma Direct SIP/Lump 126.56 -10.45

Plan-Growth sum

SBI Mutual Fund: Overview

SBI Funds Management Pvt. Ltd was formed as a joint venture between the SBI
and AMUNDI (France), one of the world's leading fund management companies.
SBI Funds Management Pvt. has a vast experience of 28 years in fund
management with a strong ancestry linked to India's largest bank –State Bank of
India (SBI).
Currently, SBI MF has a wide network of over 222 service points across India
and entrusted to deliver value and cultivate the trust of investors. With a strong
and rich pedigree of the State Bank of India (SBI) group, SBI Funds Management
Pvt. Ltd. has been catering to millions of investors through their expertise and

42
consistently delivered the optimum value to its investors. SBI Funds Management
Company has come up as one of the key players in the Indian mutual fund
industry with a bouquet of funds in multiple sectors such as financial institutions,
local and international asset management companies, pension funds, etc. SBI MF
also unified end-to-end customized asset management products for institutions,
discretionary and non-discretionary portfolio management services.
SBI Funds Management has been effectively managing and guiding India's
dedicated offshore funds since 1988. SBI Funds Management is renowned as the
first bank to come up with an offshore fund called 'SBI Resurgent India
Opportunities Fund'. The objective for these funds was to provide investors with
never-before opportunities in long-term growth in capital in a variety of stocks of
Indian companies.
The salient features of SBI mutual fund products are:
 At SBI Mutual Funds, investors are the top priority. The key impetus is always
to bring excellence right from the very beginning of product development till the
time investors put their money. The philosophy of SBI mutual fund products have
been ‘growth through innovation’ backed by SBI’s stable investment policies.
 The prime mission at SBI has been to establish Mutual Funds as a viable
investment option for the masses. In order to do so, SBI has customized
innovative need-based products and educated its investors about the added
benefits of investing in capital markets via Mutual Funds.
 SBI has also been actively managing its investors’ assets not only through its
investment expertise in domestic mutual funds, but also various offshore funds
and portfolio management advisory services for its institutional investors.
 This makes SBI asset management company one of the largest investment
management firms in India, which is currently managing investment mandates of
over 5.4 million investors.
 Long-term capital appreciation for the investor is ensured by a team of expert
fund managers. The view and research is not simply driven by any momentum

43
play but by the key objective of generating consistent performance for the
investor.
 SBI mutual funds are known to be ahead of the rest of the industry in terms of
identifying new ideas and opportunities and finally resulting in superior stock
selection.
 The investment team doesn’t replicate the index composition with the fund
portfolio and the performance of all the funds is benchmarked against a specific
index.

Products@ SBI Mutual Funds

SBI MF brings the same lineage it has from SBI group. The products are not
only designed to meet the investment requirement of common Indian customer
but also generate wealth for its investors. Even though, mutual funds are subject
to market conditions and other micro and macro circumstances in Indian and
global economy, risk mitigation is another key factor which given SBI mutual
funds an extra edge over its competitors.
Risk Management
Being one of the core focus areas, each strategy is based on close scrutiny on a
constant process. SBI Funds Management follows enterprise wide approach to
risk management with a dedicated, experienced and professional risk
management team covering significant functions of the organization.
Risk Management focuses on:
• Identifying actual as well as potential areas of risk
• Recommending risk mitigating measures
• Assessing the competence of internal controls and
• Protecting investor’s interest through ongoing analysis and continuous
monitoring
• Setting realistic Investment Objective
SBI mutual funds are designed to outperform the industry benchmarks through
well researched investments in various Indian equities. In order to achieve this, an

44
active management style is adopted based on fundamental analysis and then
construction of a portfolio is done.
SBI mutual fund schemes are as diversified as it could be. The products are
blended, large cap, mid cap, or specific sector oriented – all aimed to capture the
growth potential of Indian equities.

SBI Mutual Fund Performance

SBI Equity Funds:

SBI equity funds offer long term capital appreciation through investment equity
stocks/shares of top rated companies. SBI equity funds are known for their
consistent performance and offering high return. At the same time these are
considered to be high-risk funds.
Fund Managers- Equity
R. Srinivasan-Head - Equities
Jayesh Shroff- Fund Manager
Sohini Andani- Fund Manager
Richard D’Souza- Fund Manager
Raviprakash Sharma- Chief Dealer & Fund Manager
Ruchit Mehta- Fund Manager
Tanmay Desai- Fund Manager
Saurabh Pant- Fund Manager
Dharmendra Grover- Fund Manager
Neeraj Kumar- Dealer
Fund Name

SBI Arbitrage Opportunities Fund - Direct Plan - Dividend

SBI Banking & Financial Services Fund- Direct Plan - Dividend

SBI Blue Chip Fund - Regular Plan - Growth

45
 SBI Contra Fund

SBI Emerging Businesses Fund

SBI Long Term Advantage Fund - Series III - Regular Plan - Growth

SBI Magnum Fund

SBI Nifty Index Fund- Regular Plan - Dividend

SBI One India Fund- Dividend

SBI PSU Fund - Regular Plan – Growth

SBI Pharma Fund- Direct Plan – Dividend

SBI Small & Midcap Fund - Direct Plan – Dividend

SBI Tax Advantage Fund- Series III - Regular Plan – Growth

SBI Exchange Traded Funds:

ETF or exchange traded funds offered by SBI MF is a mix of both the open and
close ended mutual funds scheme and is traded on the recognized stock markets.
The SBI ETF is known to offer a lot of liquidity & lower service charges.

Fund Name

SBI - ETF 10 Year Gilt

SBI - ETF BSE 100

SBI - ETF GOLD

SBI - ETF Nifty

SBI - ETF Sensex

Fund of Fund

46
 SBI Gold Fund

SBI Hybrid Funds:

SBI hybrid funds invest in a variety of asset classes. The blend of equity and
debt and various proportion offers investor multiple variant of hybrid funds to
choose from .Some of such funds are:
Fund Name

SBI Capital Protection Oriented Fund

SBI Dual Advantage Fund

SBI Liquid Funds:

SBI liquid funds are of low risk category with moderate returns & best suited
for investors with the short-term investment horizon. Some of the liquid funds
offered by SBI MF are:

Fund Name

SBI Magnum Insta Cash Fund - Direct Plan - Daily Dividend

SBI Magnum Insta Cash Fund - Direct Plan – Growth

SBI Magnum Insta Cash Fund - Direct Plan -Weekly Dividend

SBI Magnum Insta Cash Fund - Regular Plan – Cash

SBI Magnum Insta Cash Fund - Regular Plan - Daily Dividend

SBI Debt Funds:

A debt fund by SBI MF is generally a safer investment option, however with a
lower return potential than other types of SBI mutual funds. The debt funds by

47
SBI invest in various short-term fixed income securities including, treasury bills,
government bonds, commercial paper and certificates of deposit.
Fund Managers - Fixed Income
• Rajeev Radhakrishnan- Head - Fixed Income
• Dinesh Ahuja- Fund Manager
• R Arun- Fund Manager
• Dinesh Balachandran- Fund Manager

Fund Name

SBI Magnum Children’s Benefit Plan

SBI Benchmark Gsec Fund

SBI Corporate Bond Fund

SBI Debt Fund Series

The Team @ SBI Mutual Fund

The performance of a fund depends on the ability of its fund managers to

capture the growth potential of Indian securities and manage complex portfolios
to deliver optimum results. At SBI the best investment strategies are put together
by their Fund Managers with a sharp eye to monitor, and understand the market
trends and changes. With advanced securities selection, insightful research,
concentrated coverage the dedicated team of fund managers at SBI, ensures
minimization of risks while shielding the investor’s interest.
Senior Management
Navneet Munot- Executive Director & Chief Investment Officer
Vincent Fravel- Vice President – Investments
Portfolio Management Services
Ajit Dange- Head PMS (Domestic Business)
Rohit Shimpi- Assistant Vice President

48
Amruth Rao- Senior Fund Manager – PMS (Debt)
Other value added services offered by SBI Asset Management Company.

Portfolio Management and Advisory Services

SBI Funds Management is one of the leading players in India advising various
financial institutions, pension funds, and local and international asset
management companies.
It has excelled over the years by understanding the investor's requirements and
terms of risk / return expectations,
Funds are suggested and customized as per the financial objective of each
individual and then the asset portfolio recommendations.
SBI also offers an integrated end-to-end customized asset management solution
for institutions in terms of advisory service, discretionary and non-discretionary
portfolio management services.
Offshore Funds
SBI Funds Management has been effectively managed India's dedicated
offshore funds since 1988.
SBI Funds Management was the 1st bank sponsored asset management company
fund to launch an offshore fund called 'SBI Resurgent India Opportunities Fund'
The key objective of the fund is to provide investors with opportunities for long-
term growth in capital, through well-researched investments in a diversified
bouquet of stocks of Indian Companies

49
 Research Methodology
The objective of the project was to undertake a study on new techniques of
mutual fund working in India with a view to know the performance of mutual
fund and awareness of mutual funds among peoples.
Data sources
An empirical study of this nature should generate sufficient data through survey
to base its findings on evaluation of data. The data collected for the present study
comprises of both primary and secondary sources.
Primary Data
It is the detailed information from respondent collected through questionnaire.
The respondent were interviewed and asked to fill the questionnaire. The first part
of questionnaire deals with questions concerning the respondents profile in terms
of their Age, Education, profession background and income.
Secondary Data
In order to lend initial direction, development of relationship and formulation of
Hypotheses, secondary data were collected from all the sources available. The
sources of secondary data pertaining to Equity, Debt and Balanced fund are
government publications, magazines, journals, Survey reports and reference
books etc.

50
DATA ANALYSIS
AND
INTERPRETATION

51
1. Are you investing?

Yes No

46 4

92% 8%

Sales

8%

Yes
No

92%

Interpretation

Out off 50 peoples 92% invest their money and rest 8% not invested.

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2. What kind of investment you prefer most?

Saving Mutual Insurance Others

A/C Funds

19 12 7 8

41% 26% 15% 18%

14%

41%
15%
Saving A/C
Fixed Deposits
Mutual Funds

26% Insurance

Interpretation

In the above graph 19 persons out of 46 were invest in saving A/C, 12 persons
invest in mutual funds and 7 persons invest in insurance and 8 persons invest in
others.

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3. While investing your money, which factor will you prefer?

Liquidity Low risk High risk Trust

8 20 10 8

18% 43% 31% 18%

18% 18%

Liquuidity

31% Low risk

High risk
43%
Trust

Interpretation

Out of 46 persons, 10 persons prefer to invest where there is high risk, 20 persons
prefer to invest where there is low risk and 8 prefer trust and 8 prefer liquidity.

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4. Are you aware about Mutual Fund and their operations?

Yes No

32 18

64% 36%

36%

Yes
64%
No

Interpretation

According to this data only 32 persons are having the knowledge of mutual funds,
18 persons having no knowledge about mutual funds.

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5. How did you know about Mutual Funds?

Advertisement Peer group Bank Financial

advisor

8 4 10 10

31% 13% 15% 31%

31% 31%

Advertisement
Peer group
Bank

13% Financial advisor

15%

Interpretation

From the above chart it can be inferred that the financial advisor is the most
important source of information about mutual funds. Out of 32 persons 10
persons know about mutual funds through financial advisor, 10 persons through
banks, 8 persons through advertisement and 4 persons through peer group.

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6. In which Mutual Fund you have invested?

SBI Reliance UTI Others

4 3 3 2

33% 25% 25% 17%

17%
33%

SBI
25% Reliance
UTI
Others
25%

Interpretation

Out of 12 investors, 4 persons prefer to invest in SBI, 3 prefer to invest in

Reliance, 3 in UTI and 2 in others mutual funds.

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7. Which channel will you prefer while investing in Mutual Fund?

Financial advisor AMC Bank

6 3 3

50% 25% 25%

25%

50%
Financial advisor
AMC
25% Bank

Interpretation

Out of 12 investors 6 persons preferred to invest through financial advisor, 3

persons through AMC and 3 persons through banks.

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8. Which feature of Mutual Fund you prefer most?

Diversification Better return Regular income Tax benefit

1 4 3 4
9% 33% 25% 33%

9%
33%

33% Diversification
Better return
Regular income
Tax benefit
25%

Interpretation
4 persons out off 12 choose mutual fund because of better return, 4 persons
because of tax benefit, 3 choose for regular income and 1 choose for
diversification.

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9. When you invested in Mutual Fund which mode of investment will you
prefer?

One time investment Systematic investment plan (SIP)

5 7

42% 58%

42%

58% One time investment

Systematic investment plan (SIP)

Interpretation

From the above chart it can be inferred that the SIP is most popular because 7
people invest through SIP and 5 invest through one time investment.

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10.Which type of risk, you feel in Mutual Fund?
Lower In Market Low
return accessibility condition liquidity
2 1 6 3
17% 8% 50% 25%

17%
25%

8%
Lower return
In accessbility
Market condition
Low liquidity
50%

Interpretation
6 persons think that in mutual funds there is more risk in market condition, then 3
persons think low liquidity, 2 in lower return and 1 in accessibility.

61
 Findings

-In this city the Age Group of 20-30 years were more in numbers.
-The second most persons were in the age group of 30 -40 years and the
least were in the age group of below 10 years and above 40 years.
-In Occupation group most of the persons were businessman, the second most
were in private employees.
-Among 50 Persons the most of the persons are in under graduate and 40% are in
post graduate only 10% in intermediate.
-About all the persons had a Saving A/c in Bank, 15% Invested in
insurance, only 26% invested in Mutual fund and 18% in others.
-Among 50 persons only 12 had invested in Mutual Fund.
-Out of 50 persons 32 were aware about Mutual Fund, only 18 persons
don’t know about Mutual Fund.
-20 persons know about mutual funds by Bank and financial advisor, and 8
persons know about mutual funds by advertisement.
-Mostly Respondents preferred low risk while investment, the second most
preferred high Risk then trust and the least preferred Liquidity.
-Most of the Investors had invested in SBI or Reliance Mutual Fund,
UTI has also good Brand Position among investors
-50% investors preferred to invest through financial advisor, 25% through AMC
(means direct investment) and 25% through banks
-Most of the investers invest in mutual fund by systematic investment plan (SIP)
and by one time investment.

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 Suggestions

The most vital problem spotted is of ignorance. Investors should be made aware
of the benefits. Nobody will invest until and unless he is fully convinced.
Investors should be made to realize that ignorance is no longer bliss and what
they are losing by not investing.

Mutual funds offer a lot of benefits which no other single option could offer. But
most of the people are not even aware of what actually a mutual fund is? They
only see it as just another investment option. So the advisors should try to change
their mindsets. The advisor should target for and more young investor. Young
investors as well as persons at the height of their career would like to go for
advisors due to lack of expertise and time.

Mutual Fund Company needs to give the training of the individual financial
advisors about the mutual fund/scheme and its objective, because they are the
main source to influence the investors

Before making any investment financial advisors should first enquire about the
risk tolerance of the investors/customers, their need and time (how long they want
to invest). By considering these three things they can take the customers into
consideration.

Younger people aged under 30 will be key new customers grew into the future,
so making greater efforts with younger customers who show some interest in
investing should pay off.

Systematic Investment plan (SIP) is one the innovative product launched by

Assets management companies very recently in the industry. SIP is easy for
monthly salaried person as it provides the facility of do the investment in EMI.
Though most of the prospects and potential investors are not aware about the SIP.
There is a large scope for the companies to top the salaried persons.

63
 LIMITATION OF THE STUDY

• Limitation of Time Resources

The time provided was not sufficient to study and analyze the whole population.
• Limited Sample size
For the purpose of study, sample size was selected. It is a representative of
population but may not provide accurate results.
• Limitation of Skills
As practical knowledge of this type was experienced first time, there might be
some flaws in the research.
• Prevalent Biases in the respondents Replies
Respondents’ replies might be biased and so it would affect the accuracy of
results

64
 Conclusion

 A mutual fund brings together a large group of people and invests their
aggregated money in saving A/C, Fixed deposits, and in insurance.
 The advantages of mutual funds are professional management, diversification,
economies of scale, and wide range of offerings.
 The disadvantages of mutual are high costs, over-diversification, possible tax
consequences, liquidity concerns, and the inability of management to guarantee a
superior return.
 There are many, many types of mutual funds. You can classify funds based on
asset class, investing strategy, region, etc.
 Mutual funds have expenses that can be broken down generally into ongoing fees
(represented by the expense ratio) and transaction fees (loads).
 Some funds carry no broker fee, known as no-load mutual funds.
 One of the biggest problems with mutual funds are their costs and fees.
 Mutual funds are easy to buy and sell. You can either buy them directly from the
fund company or through a third party.
 Comparing fund returns across a number of metrics is important, such as over
time, compared to its benchmark, and compared to other funds in its peer group.

65
 Questionnaire

Name:-…………………………………………………….
Contact No:-…………………………….
Occupation:-……………………………………………..
Qualification:-……………………………………………
Gender:-……………… Age:-…………

1. Are you investing?

a) Yes b) No
2. What kind of investment you prefer most?
a) Saving c) Mutual Fund
b) Insurance d) Others
3. While investing your money, which factor will you prefer?
a) Liquidity c) Low risk
b) High risk d) Trust
4. Are you aware about Mutual Fund and their operations?
a) Yes b) No
5. How did you know about Mutual Funds?
a) Advertisement c) Peer group
b) Bank d) Financial advisor
6. In which Mutual Fund you have invested?
a) SBI c) Reliance
b) UTI d) Others
7. Which channel will you prefer while investing in Mutual Fund?
a) Financial advisor b) Bank c) AMC
8. Which feature of Mutual Fund you prefer most?
a) Diversification c) Better return
b) Regular income d)Tax benefits

66
9. When you invested in Mutual Fund which mode of investment will you
prefer?
a) One time investment b)systematic investment plan
10.Which type of risk, you feel in Mutual Fund?
a) Lower return c) In accessibility
b) Market condition d) Low liquidity

67
 BIBILIOGRAPHY

Book Referred

Economic Times. (2013).

L.K. (2000). Mutual fund management. Bansal.

Tripathy. Mutual fund:Emerging issues in India. N.P. (n.d.).

WEBSITE

www.investipedia.com

www.sebi.in

www.smartmoney.com

www.mfmag.com

www.mutualfund.headlinesindia.com

www.paisabazaar.com/mutual-funds

www.reliancemutual.com

www.sbimutual.com

https://en.wikipedia.org/wiki/SBI_Mutual_Fund

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