mayank jain-sip (2)

Summer Internship Project

On

“Study on Investor’s insight and Comparative analysis of large cap Mutual fund schemes”

Submitted in partial fulfillment of PGDM program2011-13

Submitted byMayank Jain

PGDM/19/100

Company Mentor Faculty MentorMr.Amit kapil Ms.Manisha BachhetiSenior Sales Manager ProfessorSBI-Mutual fund ASM, DwarkaChandigarh

Apeejay School of ManagementNew Delhi

July 2012

1 Apeejay School of Management, Dwarka, New Delhi

CERTIFICATE

(COLLEGE GUIDE)

This is to certify that the project work done on “Study on investor’s insight and

Comparative analysis of Large cap Mutual funds” Submitted to Apeejay School of

Management, Dwarka by Mayank Jain in partial fulfillment of the requirement for

the award of PG Diploma in Business Management, is a bonafide work carried out by

him/her under my supervision and guidance. This work has not been submitted

anywhere else for any other degree/diploma. The original work was carried out during

23rd April 2012 to 23rd June 2012 in (SBI- Mutual fund, Chandigarh.)

Date: Ms. (Dr.) Manisha Bachheti

Professor (Academic mentor)

ASM, Dwarka

Seal/Stamp of the Organization New Delhi-110077


DECLARATION

I, the undersigned, hereby declare that Project Report entitled “Study on Investor’s

insight and Comparative analysis of Large cap Mutual funds” written and

submitted by me to Apeejay School of Management, Dwarka, New Delhi in partial

fulfillment of the requirements for the award of Post Graduate Diploma in

Management under the guidance of Manisha Bachheti (Academic Mentor) and

Amit Kapil (Corporate mentor) is my original work and the conclusions drawn

therein are based on the material collected by myself.

DATE: SIGNATURE

PLACE: MAYANK JAIN

PGDM 1-C

19/100


ACKNOWLEDGMENT

In the course of this project I got an insight into the mutual fund industry, came to

know a lot about the basic working of an asset management company, understood

how the mutual funds of different fund houses are compared, learnt various

computations and overall got a preview of what a job in the mutual fund industry

would entail.

First and foremost I am very proud to be a student of Apeejay School of Management,

Dwarka and am most grateful for having been given the chance to work with a

reputed company like SBI- Mutual fund.

I would fail to do my duty if I didn’t take this opportunity to thank my faculty guide,

Prof. Manisha Bachheti Maam for her timely help and guidance. I would like to

thank her whole heartedly for making me work harder so as to gain a more in depth

knowledge of the subject which I am sure will help me a lot in the long run as well. I

would say that this project wouldn’t have been the same without her support,

guidance, encouragement and constant demand for improvement.

My company guide, Mr. Amit Kapil, Manager is another person who has played a

key role in the development of me as a person, in the completion of this project and in

being educated about the mutual fund industry in general. Without the knowledge,

attention and time that he has bestowed on me, this project would simply have been

impossible. He is truly an inspiration for me and drove me towards working harder

than my expectations which simply made me more ready for the corporate life. He

truly gave me the corporate exposure I had thought of.

I am also highly indebted to our dean Dr.Deepankar Chakrabarti who gave me with

this opportunity to learn about the corporate world.

Lastly, I would express my grateful thanks to my family members and my friends

who inspired me to put in my best efforts for the preparation of the Project Report.

MAYANK JAIN


TABLE OF CONTENTS

EXECUTIVE SUMMERY ……………………………………………………10

CHAPTER -1 INTRODUCTION TO THE TOPIC………………………..10

Mutual fund…………………………………………………………..11

Mutual fund for whom?............................................................11

Mutual fund industry in India…………………………………………..12 History and growth of mutual fund…………………………………….12

Mutual fund structure……………………………………...........13 Types of mutual funds…………………………………………...13 ELSS advantage………………………………………………….16 Benefits of mutual fund…………………………………………..17 Drawbacks of mutual fund………………………………………..18

CHAPTER-2 STATE BANK OF INDIA……………………………………..19

SBI funds management private ltd………………………………………20

Services offered………………………………………………….20

SBI mutual fund…………………………………………………………21

Vision & mission………………………………………….........21 Profile …………………………………………………………..21 Company details…………………………………….................22 Organizational structure………………………………………..24 Services offered…………………………………………….......24 Marketing strategies……………………………………………26 Taxation policy…………………………………………….......27 Competitors…………………………………………………….28 Achievements………………………………………………......29

CHAPTER-3 PROJECT DESCRIPTION………………………………….30

CHAPTER-4 LITERATURE REVIEW………………………………….31-34

Irwin, Brown, FE (1965) Treynor (1965) Sharpe, William F (1966) Jensen (1968) Fama (1972) Indian Mutual Fund Industry (2009) Indian MF industry has immense growth potential


Gupta Ramesh (1989) Shashikant Uma (1993) Sahadevan S and Thiripalraju M (1997) Sanjay Kant Khare (2007) India’s Mutual Fund Industry (2007) The Fall and Rise of Mutual Funds in India (2007) India’s Capital Markets: Unlocking the door to future growth (2007) Downside Risk Analysis of Indian Equity Mutual Funds: A Value at

Risk(2009) Making Mutual Fund Work for You (2008)

Risk and reward relationship…………………………………………34

What is risk…………………………………………………….34 Risk and return two sides of coin………………………………35 Types of risk………………………………………………35-38 Net asset value………………………………………………..38

Ways to measure risk…………………………………………39

Standard deviation………………………………………....39 Alpha ………………………………………………………39 Beta…………………………………………………….…..39 Sharpe ratio………………………………………………..40 Tryenor ratio……………………………………………....40 Comparison between Sharpe and tryenor ratio……….…..40 R-squared ratio…………………………………………....41

Downside risk probability………………………………………….41 Ways to safeguard………………………………………………….41

CHAPTER-5 INVESTOR’S INSIGHT-a primary research

Research objectives………………………………………………..43 Type of research…………………………………………………...43 Data source………………………………………………………...44 Research instrument……………………………………………….44 Sampling unit………………………………………………………44 Sampling size………………………………………………………44 Findings and Analysis………………………………………….45-53

Different investment options vs. ELSS……………………54 Return, safety, volatality, liquidity of different investment

options…………………….................................................55

CHAPTER-6 COMPARITIVE ANALYSIS OF LARGE CAP MUTUAL FUNDS


Why comparative analysis?............................................................56-57 SBI mutual fund……………………………………….………..…….57

SBI magnum equity fund…………………………….…….58 SBI bluechip india fund…………………………….……...60

Birla sunlife mutual fund ………………………………….………..62

BSL top 100 fund…………………………………..………..62

ICICI prudential mutual fund……………………………..…………65

ICICI pru top 100 fund……………………………………….66

UTI mutual fund………………………………………………………70

UTI opportunities fund…………………………….………….71

Franklin Templeton investment ltd………………………..…………..71

Franklin bluechip India fund…………………………..………72

CHAPTER-7 DATA ANALYSIS AND INTERPRETATION…………..74-79

CHAPTER-8

CORPORATE LEARNING……………………………………………….80 LIMITATIONS OF THE STUDY………………………………………...82 CONCLUSION ……………………………………………………………83

CHAPTER-9 RECOMMENDATIONS………………………………..…..86-88

CHAPTER-10 BIBLOGRAPHY………………………………………………...90

CHAPTER-11 ANNEXURE…………………………………………………….92


EXECUTIVE SUMMARY

SBI Mutual Fund is India’s 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 - India’s 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.

All over the world, mutual fund is one of the most popular instruments for investment.

Its popularity with consumer has dramatically increased over the last couple of years

worldwide; the mutual fund has a long and successful history. The popularity of

mutual fund has increased manifold. In developed financial market like United

States, mutual fund has almost overtaken bank deposits and total assets of insurance

funds

The significant outcome of the government policy of liberalization in industrial and

financial sector has been the development of new financial instruments. These new

instruments are expected to impart greater competitiveness flexibility and efficiency

to the financial sector. Growth and development of various mutual fund products in

Indian capital market has proved to be one of the most catalytic instruments in

generating momentous investment growth in the capital market. There is a substantial

growth in the mutual fund market due to a high level of precision in the design and

marketing of variety of mutual fund products by banks and other financial institution

providing growth, liquidity and return.

There are various parameters which an investor should consider before investing in

mutual funds. The comparative analysis between mutual funds will help the investor

to take appropriate decision before investing in mutual funds.


INTRODUCTION TO THE TOPIC:

Wealth creation over the years has changed its avenues and area of interest for the

investors in India. The time when the investment was made in the post offices and

banks through savings and fixed deposits have changed and with the awareness of

finance, Mutual fund has became an excellent route to create wealth for the public at

large.

All over the world, mutual fund is one of the most popular instruments for investment.

Its popularity with consumer has increased over the last couple of years worldwide;

the mutual fund has a long and successful history. In developed countries like United

States, mutual fund is preferred over other avenues of investment by the people.

With the coming up of liberalization in industrial and financial sector has lead to

development of new financial instruments. These new instruments are expected to

impart greater competitiveness flexibility and efficiency to the financial sector.

Mutual funds in India have outgrown other investment options and the assets have

been increasing significantly with more awareness among the general public. There

has been increase in the investment in the capital market with the coming up of the

mutual funds in India. There is a substantial growth in the mutual fund industry due to

marketing of variety of mutual fund products by banks and other financial institution

providing growth, liquidity and return.

With the decline in the interest rates of the bank and increasing inflation and adverse

market conditions, mutual funds have become strongest and most preferred instrument

in the capital market. Moreover, the attitude of Indian small investors to avoid risk, it

is important on the part of fund managers to monitor the fund closely and come up

with various elements of liquidity, return and security. All these characterstics have

made the mutual fund a better investment option.

There are various parameters which an investor should consider before investing in

mutual funds. The comparative analysis between mutual funds will help the investor to

take appropriate decision before investing in mutual funds.


MUTUAL FUND

Mutual funds go back to the times of the Egyptians and Phoenicians when they

sold shares in caravans and vessels to spread the risk of these ventures. The

foreign and colonial government Trust of London of 1868 is considered to be

the fore-runner of the modern concept of mutual funds. The USA is, however,

considered to be the Mecca of modern mutual funds. (Source: amfi website)

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 then invested in

capital market instruments such as shares, debentures and other securities. The

income earned through these investments and the capital appreciation realised

are shared by its unit holders in proportion to the number of units owned by

them. The flow chart below describes broadly the working of a mutual fund:

Source: amfi website

MUTUAL FUND FOR WHOM?

Mutual funds can survive and thrive only if they can live up to the

hopes and trusts of their investors. These hopes and trusts echo the

peculiarities which support the emergence and growth of such insecurity of such

investors who come to the rescue of such investors who face following

constraints while making direct investments:

(a) Limited resources in the hands of investors quite often take them away

from stock market transactions.

(b) Due to Lack of funds, to have a balanced and diversified portfolio becomes

difficult.


(c) Lack of professional knowledge associated with investment. Small

investors can hardly afford to have ex-pensive investment consultations.

(d) To buy and sell shares, investors have to engage share brokers to whom

investors have to pay brokerage.

(e) Lack of access to market information.

(f) It is difficult to know the development taking place in share market

and corporate sector.

MUTUAL FUND INDUSTRY IN INDIA


HISTORY & GROWTH OF MUTUAL FUNDS

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank. The history of

mutual funds is mainly divided to 4 phases namely:

First phase (1964-1987): Unit Trust of India (UTI) was established on 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


UTIForeign Mfs

1964. At the end of 1988 UTI had Rs.6,700 crores of assets under

management.

Second phase (1987-1993) Entry of public sector fund houses.

Third phase (1993-2003) Entry of private sector players.

Fourth phase (2004 onwards) Division of Unit Trust of India

1) Unit Trust of India- Mutual fund, sponsored by SBI, PNB, BOB, LIC with

76000 crores of assets under management by 2003. It is registered with

SEBI and functions under the Mutual Fund Regulations.

2) Unit Trust of India representing broadly, the assets of US 64 scheme,

assured return and certain other schemes with Rs. 29,835 crore assets under

management by 2003. ( source: amfi website)


Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed.

The objectives of SEBI are – to protect the interest of investors in securities and to

promote the development of and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulates the

mutual funds to protect the interest of the investors. SEBI notified regulations for


the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector

entities were allowed to enter the capital market. The regulations were fully revised

in 1996 and have been amended thereafter from time to time. SEBI has also issued

guidelines to the mutual funds from time to time to protect the interests of

investors. (source: sebi website)

MUTUAL FUND STRUCTURE

A mutual fund in India is set up in the form of a trust, which has sponsor,

trustees, Asset Management Company (AMC) and custodian. The trust is

established by a sponsor or more than one sponsor who is like promoter of a

company. The trustees of the mutual fund hold its property for the benefit of

the unit holders. Asset Management Company (AMC) approved by SEBI

manages the funds by making investments in various types of securities.

Custodian, who is registered with SEBI, holds the securities of various

schemes of the fund in its custody. The trustees are vested with the general

power of superintendence and direction over AMC. They monitor the

performance and compliance of SEBI Regulations by the mutual fund.

There are many entities involved and the diagram below illustrates the

organisational set up of a mutual fund:

Like other countries, India has a legal framework within which mutual funds must

be constituted. In India, open and close – end funds operate under the same

regulatory structure, i.e. in India, all mutual funds are constituted along one unique

structure – as unit trust. A mutual fund in India is allowed to issue open – end and

close – end schemes under a common legal structure. The structure, which is

required to be followed by mutual funds in India, laid down under SEBI (Mutual

Fund) Regulations, 1996.


TYPES OF MUTUAL FUND SCHEMES

Mutual funds can be classified on various grounds:

By Structure:

Open ended schemes: The size of the scheme is not specified or pre

determined. Entry and exit to the fund can be made at any time. It means that the

assets under management for a scheme keeps on changing as buying and selling

can be made at any time. Open ended funds have comparatively better liquidity.

Close ended schemes: This type of funds have a defined period during

which no selling and buying of units take place. The assets under management

remains same and do not change as in the open ended scheme. The scheme is

traded on stock markets.

Interval schemes: Intervals are set when the buying and selling of the

units is done. These combine the features of open-ended and close-ended schemes.

They may be traded on the stock exchange or may be open for sale or redemption

during predetermined intervals at NAV related prices.

By investment objective:

Growth scheme: Funds aim to achieve increase the underlying value of

investment through capital appreciation. Such funds invest in growth oriented

securities which can appreciate through the expansion production facilities in the

long run. An investor who chooses this type of security should assume higher than

the normal degree of risk.

Income scheme: The objective of this scheme is to maximize income of

the investor. Funds distribute returns earned periodically. The funds can further be

divided into categories:

Those that stress constant income at relatively low risk and

Those that attempt to achieve maximum income possible with

use of leverage.

Money market schemes: Money market funds aim to invest in money


market instruments, which are fixed income securities with a very short time to

maturity and high credit quality. These funds are not government insured, like

bank savings accounts.

Balanced scheme: These schemes have reasonable mix of equity

and bonds, are known as balanced funds. Such funds put more emphasis on equity

share investments when the conditions are bright and will tend to switch to

debentures when market conditions are dull.

Other schemes:

Tax saving schemes:

Special schemes:

1) Index schemes: Index schemes use nifty sensex as their bases. Fund tries

to match the index by selecting stock from it. For example: BSE 500, S&P CNX ,

NIFTY.

2) Sector specific schemes: This types of funds concentrate on a particular

sector, like FMCG sector, IT sector, etc. that of the economy. These type of funds

are aggressive in nature with more risk associated with them. These funds are

characterized by high viability, hence more risky. (Source: amfi website and SBI

handbook)

ELSS Advantage

Tax Savings is a very important part of financial planning. Post tax return is what

really matters at the end of the day as the real income from investments comes

from what you earn after paying all taxes. Equity Linked Savings Schemes (ELSS)

is an ideal way to save on tax as well as staying invested in equity mutual funds.

ELSS schemes have been introduced in India to promote investments in equity

markets by giving tax concessions to the investors. ELSS is basically equity-

diversified scheme and has a lock in period of three-years. (source: SEBI

handbook)

BENEFITS OF MUTUAL FUND


Mutual funds are becoming a very popular form of investment characterized by

many advantages that they share with other forms of investments. Mutual fund

route offer several important advantages.

Diversification: Diversification refers to dividing the investment amount into

various and different stocks. By investing in many companies the mutual fund can

protect themselves from unexpected loss in the value of the some shares. Mutual

funds put together money of large no. of investors into different basket of shares of

different companies. Diversification is the major strength of mutual funds.

Expert supervision: Making investment in stock market is tedious and time

consuming task. People with lack or low knowledge in this area require expert

supervision to invest. Mutual funds provide supervision of who have knowledge

and experience in the share market managing his money.

Liquidity of investment: Liquidity refers to conversion of stock into liquid form,

i.e. cash. SEBI guidelines also provides mutual fund to ensure liquidity. Mutual

funds can be converted in to cash easily without any hassle like with other

investment options at the NAV value of the fund.

For equity fund : Transaction day+3 days

For debt funds : Transaction day +2 days

For liquid fund : Transaction day +1 day

Risk reduction: The diversification in the mutual funds leads to reduction in the

risk of returns and provide a comfortable situation for investors. Investors are safe

and secure as mutual funds provide expert supervision safeguarding from the

market up and downs.

Security of investment: Mutual funds provide safety of investment. SEBI

provides for the safety of investment for the investors. SEBI act as a watchdog and

attempts whole heartedly to protect the interest of the investors.

Tax saving: The dividends for the both equity as well as the debt schemes are tax

free in the hands of the investors, as per the union budget 2003. But capital


appreciation is taxable in the hands of the investors.

DRAWBACKS OF MUTUAL FUNDS:

Mutual funds also have few disadvantages/ drawbacks which are as follows:

1) No Insurance: Mutual funds 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. Losses can

still be there with the benefit of risk reduction as market conditions are not

known in advance. It is also possible that one can even lose the entire

investment.

2) Dilution: The amount of risk can be reduced with the help of

diversification but dilution can still exist. If the value of one holding increases

100% and holding other increases negatively by 50%, therefore it will not mean

the fund will double in value but there will be change in NAV.

3) Fees and Expenses: Entry load and exit load leads to reduction in the

profits in the hand of the investors. However the entry load was abolished to

regulated the mutual fund in India. However, the exit load still exist which

varies from fund house to another fund house, which adds to trading cost for

the investor.

4) 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.

5) Trading Limitations: The units hold by the investor can be sold and

bought only at the end of the date when its NAV has been calculated. No

mid day buying and selling of units is allowed. (Source: SBI MF handbook)

STATE BANK OF INDIA


The origin of the State Bank of India goes back to the first decade of the nineteenth

century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.

Three years later the bank received its charter and was re-designed as the Bank of

Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of

British India sponsored by the Government of Bengal. The Bank of Bombay (15 April

1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These

three banks remained at the apex of modern banking in India till their amalgamation as

the Imperial Bank of India on 27 January 1921.

With the First Five Year Plan in 1951, development of rural India being the priority.

The commercial banks of the country including the Imperial Bank of India had till

then confined their operations to the urban sector and were not equipped to respond to

the emergent needs of economic regeneration of the rural areas. Therefore, to serve

the economy in general and the rural sector in particular, the All India Rural Credit

Survey Committee recommended the creation of a state-partnered and state-sponsored

bank by taking over the Imperial Bank of India, and integrating with it, the former

state-owned or state-associate banks. An act was accordingly passed in Parliament in

May 1955 and the State Bank of India was constituted on 1 July 1955. More than a

quarter of the resources of the Indian banking system thus passed under the direct

control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed

in 1959, enabling the State Bank of India to take over eight former State-associated

banks as its subsidiaries (later named Associates). (Source: Wikipedia)

The State Bank of India was thus born with a new sense of social purpose aided by the

480 offices comprising branches, sub offices and three Local Head Offices inherited

from the Imperial Bank.

SBI also has the following non-banking subsidiaries:

SBI Capital Markets Ltd

SBI Funds Management Pvt. Ltd

SBI Factors & Commercial Services Pvt. Ltd

SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

SBI DFHI Ltd

SBI Life Insurance Company Ltd.


http://en.wikipedia.org/wiki/SBI_Capital_Markets

SBI General Insurance

SBI FUND MANAGEMENT PRIVATE LTD.

SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with

an investor base of over 5.8 million and over 20 years of rich experience in fund

management consistently delivering value to its investors.

SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of India'

one of India's largest banking enterprises, and AMUNDI, one of the world's leading

fund management companies.

SERVICES OFFERED:

Mutual Funds

Investors are our priority. Our mission has been to establish Mutual Funds as a viable

investment option to the masses in the country. Working towards it, we developed

innovative, need-specific products and educated the investors about the added benefits

of investing in capital markets via Mutual Funds.

Portfolio Management and Advisory Services

SBI Funds Management has emerged as one of the largest player in India advising

various financial institutions, pension funds, and local and international asset

management companies.

Offshore Funds

SBI Funds Management has been successfully managing and advising 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' with an objective to provide our investors with

opportunities for long-term growth in capital, through well-researched investments in

a diversified basket of stocks of Indian Companies. (Source: www.sbimf.com)

SBI- MUTUAL FUNDS


VISION:

“To be the most preferred and the largest fund house for all asset classes, with a

consistent track record of excellent returns and best standards in customer service,

product innovation, technology and HR practices.”

MISSION:

Attain high standards of efficiency and professionalism and core institutional

values comparable to the best in the field.

Possess world-class standards of efficiency and professionalism rooted in the

core institutional values of the State Bank Group.

To provide a satisfying work environment with opportunities for learning, self-

development and self-actualization.

PROFILE:

SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with

an investor base of over 5.8 million and over 25 years of rich experience in fund

management consistently delivering value to its investors.

SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of India',

and AMUNDI, one of the world's leading fund management companies.

With over 222 points of acceptance, managing over Rs 42,041 crores of assets and has

a diverse profile of investors actively parking their investments across 36 active

schemes. Schemes of the Mutual Fund have time after time outperformed benchmark

indices, honoured us with 15 awards of performance including ICRA Mutual Fund

Awards continuously for 4 years for Various Schemes, Readers Digest Awards 2011

For Trusted Brand in Fund Management Category, The Lipper India Fund Awards in

2008 and 2009 For Various Schemes, CNBC TV18 - CRISIL Mutual Fund of the Year

Award 2007 For Various Schemes.

But above all it is trust of 5.8 million investors that eggs us on deliver innovative and

stable investment services, day after day. It is the driving force for our team

of investment experts to develop arid deliver products that help investors like you

achieve their financial objectives. (Source: www.sbimf.com)


COMPANY DETAILS:

Name of the Mutual Fund SBI Mutual Fund

Date of setup of Mutual Fund June 29, 1987

Name(s) of Sponsor State Bank of India

Name of Trustee CompanySBI Mutual Fund Trustee Company Private Limited

Name of Trustees

Mr. C. M. Dixit - DirectorMr. Krishnamurthy Vijayan - DirectorMr. Shriniwas Y. Joshi - DirectorMr. T L Palani Kumar - DirectorMs. Sandra Martyres - DirectorSmt. Bharati Rao – Director

Name of the Asset Management Co.SBI Funds Management Private Limited

Date of Incorporation of AMC February 7, 1992

Name(s) of Director

Dr. H. SadhakDr. HK PradhanMr. Fathi JerfelMr. Jayesh GandhiMr. Shishir JoshipuraMr. Shyamal AcharyaMr. Thierry MequilletMrs. Madhu Dubhashi

Name of Chairman Mr. Pratip Chaudhuri

Name of Head Equity Mr. Rama Iyer Srinivasan

Name of Head-Fixed Income Mr. Rajeev Radhakrishnan

Name of Sales Head Mr. D. P. Singh

Name of Chief Investment Officer Mr. Navneet Munot

Name(s) of Chief Operating Officer Mr. K T Ravindran

Name(s) of Fund Manager Mr. Ajit DangeMr. Anup UpadhyayMr. Dinesh AhujaMr. Jayesh ShroffMr. R. ArunMr. Richard D'souzaMr. Ruchit Mehta


Mr. Saurabh PantMr. Tanmaya DesaiMs. Nidhi ChawlaMs. Sohini AndaniMs. Suchita Shah

Name of Compliance Officer & Company Secretary

Ms. Vinaya Datar

Name of Investor Service Officer Mr. C A Santosh

Name(s) of Managing Director Mr. Deepak Kumar Chatterjee

Address of AMC191 Maker Tower E, Cuffe Parade Mumbai 400005

Website www.sbimf.com

Email [email protected]

Name(s) of AuditorsHaribhakti & CoM/S. Chandabhoy & Jassoobhoy

Name(s) of Custodian

Bank of Nova ScotiaCiti BankHDFC Bank Ltd.Stock Holding Corporation of India

Name(s) of Registrar and Transfer Agent

Computer Age Management Services Pvt. LtdComputronics Financial Services India LtdDatamatics Financial Software Services Ltd

Source: amfi members list

ORGANISATIONAL STRUCTURE:


Source: sbi mutual fund website

SERVICES OFFERED:

At SBI Mutual Fund we know that every investor has unique financial goals and

requires a different set of products. Which is why, we have a wide range of schemes

that fulfil every kind of investors’ requirements. Each scheme is managed by

devising a different strategy which is reflective of the investors profile and carries


Fund managerTrustAsset management companyCheif executive officerInvestmentChief investment officerResearch analystIndustry analystcompany researchTechnicalsCompany visitsFund managersub brokerCustodianFund accountantMarketingMarketing strategyAdvertisingPubic relationProduct dev.Product mgmt.CommunicationSales (Branch/ HO)Broker/ AgentCustomerCustomer ServiceOperation/ Transaction Processing

with it different risks and rewards.

Equity Schemes

The primary objective of the equity asset class is to provide capital growth /

appreciation by investing in the equity and equity related instruments of companies

over medium to long term.

Hybrid Schemes

These schemes invest in a mixture of debt and equity securities in different

proportions as prescribed in the Scheme Information Document.

Debt / Income Schemes

The schemes in this asset class generally invest in fixed income securities such as

bonds, corporate debentures, government securities (gilts), money market

instruments, etc. and provide regular and steady income to investors.

Liquid Schemes

The strategy for liquid funds include investments in short investment horizon, which

includes 'cash' assets such as treasury bills, certificates of deposit and commercial

paper.

Fixed Maturity Plans

These are closed ended debt schemes with a fixed maturity date and they invest in

debt & money market instruments maturing on or before the date of the maturity of

the scheme.

EXCHANGE TRADED SCHEMES

ETFs are nothing but a basket of securities that are traded on the stock exchange.

Apart from this SBI- Mutual funds offers value added services which are,

SIP-systematic investment plan: Regular investment of fixed amount periodically.

ARP- Automatic reinvestment plan: Reinvestment of dividend at Ex-dividend

NAV.

SWP- Systematic withdrawal plan: Regular withdrawals at periodical intervals.

STP- Systematic transfer plan: Selling units of one scheme & buying units of


another scheme at regular periodical interval of the same AMC.

MARKETING STRATEGIES

Personalised Service

We believe in providing personalised service and individual attention to each client

to ensure that we understand their investment goals and help them achieve it.

Professional Advice

We offer expert advice on equity and debt portfolios with an objective to provide

consistent long-term return while taking calculated market risks. Our approach helps

our clients build a proper mix of products, and not concentrate on just one individual

product. Hence, serving their long-term objectives in the best way.

Long-term Relationship

We believe that long-term vision is the only means to steady wealth creation.

However to achieve this one also needs to take advantage of short-term market

opportunities while not losing sight of long-term objectives. Hence we partner all

our clients in realising their long-term vision.

Access to Research Reports

We provide our clients with access to the expert opinion of economists and analysts

from CRISIL, one of the leading financial research and rating companies of India.

This is because; we believe that unbiased research is the key to providing sound

advice in making informed investment decisions.

Transparency and Confidentiality

Our clients receive regular portfolio statements from us via email. They can also

view the detailed performance of their investment portfolio on the web, the access to

which is restricted to the client only. Moreover, our monitoring system enables us to

detect any unauthorised access to the portfolio.

Flexibility

To facilitate smooth dealing and consistent attention, all our clients are serviced by


their individual Relationship Executives. Relationship Executives provide you with

completely hassle-free, customised services taking care of all the administrative

aspects of your investments. This includes submission of application forms to fund

houses and a monthly report on the overall performance of your investment portfolio.

Hassle-free investment

We want to ensure that the process of investing remains hassle-free. We also want to

offer complete customised service to our clients. It is for these reasons that our

Relationship Executives take care of all the administrative aspects of investments

like helping them to submit the application forms to fund houses and other such

formalities like monthly reports on the overall state of investments of the clients and

performance of portfolios. Clients are also provided with:

Information updates on a daily basis through email

Ease of viewing their portfolio on the internet

Investment advice at their convenience

Weekly, fortnightly and monthly reports sent to them via email, on request

The freedom to contact us, anywhere in India

Access to the multiple products offered by SBI Finance through their

Relationship Executive. (Source: SBI handbook)

TAXATION POLICY:

Finance act, 1999 radically changed taxation of dividends received by investors.

Mutual funds were exempt from tax as mutual fund is an entity and passes through

an entity so no tax is charged on mutual fund (section 10(23d) of the INCOMETAX

act.

Finance act also made income (dividends) from units totally exempt from tax u/s

10(33) in the hands of all investors.

LTCG in equity fund (more than 1 year) = nil

STCG for equity fund (less than 1 year) = 15%


LTCG in debt funds = 10% or 20% with indexation

STCG in debt funds = income bracket of the client

DDT=13.51%

STT=.25%

In addition there are various schemes floated by the mutual fund houses to save tax

ELSS schemes. Like, magnum tax saving scheme by sbi mutual fund under which up

to 1 lac is exempted as per section 80 c of the INCOME TAX act.

COMPETITORS:

Mutual fund industry is currently into its stage of growth and consolidation, more

and new entrants are entering into the marketplace with a view to earn a markets

share for themselves. With 44 mutual fund houses already in the economy. Recently,

Bank of India in joint venture with AXA has entered into the mutual fund industry.

Some of the others players are as follows:

Franklin Templeton asset management private limited.

Baroda Pioneer Asset Management Company Limited

IDBI Asset Management Ltd.

UTI Asset Management Company Ltd

LIC NOMURA Mutual Fund Asset Mgmt Company Ltd

Axis Asset Management Company Ltd.

Prudential ICICI mutual fund company ltd.

Edelweiss Asset Management Limited

Apart from the above stated companies there are many other prominent players

in the mutual fund industry.(Source: amfi members list)

ACHIEVEMENTS:


SBI- mutual funds despite being one of the biggest fund houses in the country. It has

also various awards and achievements into its basket. Some of the recent

achievements of the fund house are as follows;

2012

ICRA Mutual Fund Awards 2012 For Various Schemes

2011

Readers Digest Awards 2011 For Trusted Brand in Fund Management Category

ICRA Mutual Fund Awards 2011 For Magnum Income Fund - Floating Rate Plan - Long Term Plan

2010ICRA Mutual Fund Awards 2010 For Magnum Global Fund

2009ICRA Mutual Funds Awards 2009 For Magnum Tax Gain Scheme 1993

The Lipper India Fund Awards 2009 For Various Schemes

2008Outlook Money NDTV Profit Awards 2008

The Lipper India Fund Awards 2008 For Magnum Balanced Fund – Dividend

ICRA Mutual Fund Awards 2008 For Various Schemes

2007Outlook Money NDTV Profit Awards 2007

CNBC Awaaz Consumer Awards 2007

The Lipper India Fund Awards 2007 For Various Schemes

CNBC TV18 - CRISIL Mutual Fund of the Year Award 2007 For Various Schemes.(Source: www.sbimf.com)


PROJECT DESCRIPTION

The project undertaken in the company was largely driven in analysis about the

Investors insight towards the mutual fund and measuring performances of various

large cap Mutual fund schemes with those of the SBI Large cap funds. The

responsibilities during my tenure in the organization included:

Meeting with client and discuss about product, its performance and

convincing them to invest in the product.

Market visit, to have a real look of the market.

Arranging the client meet for the benefit of company. From these meets

we acquired lot of information, which is very helpful for the project.

To know the awareness of mutual funds among people.

To learn about functioning of mutual funds vis-a vis other investment

tools.

To know why mutual funds are better investment option than other

investment instruments.

Analyze and compare the various mutual fund schemes on various

parameters.


LITERATURE REVIEW:

The literature review refers to the research work or analysis done in past by authors

on the topic. Large no. of studies has been conducted on the growth and

performance of mutual funds in the past. The articles discussed herein explores on

the various important facts of the mutual fund industry on the whole, like: risk-

reward relationship, risk measuring methods, importance of mutual funds,

consumer’s attitude etc.

Irwin, Brown, FE (1965) analyzed the issues regarding investment policy, portfolio

turnover rate, performance of mutual funds and its impact on the stock markets. The

research identified that funds had a notable impact on the price movement in the

stock market. It was concluded that, on an average, funds did not perform well than

the markets and there was no persistent relationship between portfolio turnover and

fund performance.

Treynor (1965) used ‘characteristic line’ for relating expected rate of return of fund

with the rate of return of a suitable market average. He coined a fund performance

measure taking investment risk into account. He later evaluated evaluated

performance of no. of fund managers and found that the fund managers were not

successfully in outguessing the market.

Sharpe, William F (1966) developed a composite measure of return and risk. He

evaluated several open-end mutual funds for a period of 19 years. The results

depicted that good performance was associated with low expense ratio and not with

the size.

Jensen (1968) came up with a composite portfolio evaluation technique concerning

risk-adjusted returns. The research evaluated the ability of several fund managers in

selecting securities. Findings indicated that most of the funds yield abnormal and

poor returns.

Fama (1972) in his research developed methods to distinguish observed return with


the ability to pick up the best securities at a given level of risk with predictions of

price movements in the market. His contributions combined the concepts from

modern theories of portfolio selection and capital market equilibrium with more

traditional concepts of good Portfolio management.

Indian Mutual Fund Industry (2009)

The research highlighted on the low customer awareness levels and financial literacy

poses the biggest challenge to channelizing household savings into mutual funds.

The study highlighted that fund houses have shown limited focus on increasing retail

penetration and building retail AUM. There is a need for planning, financing and

executing initiatives to increase the awareness among the investors to increase

mutual fund penetration in the economy. Investors have shown low interest in

mutual funds continuously due to fee and expenses in the form of entry and exit load.

The mutual fund industry aim to increase the focus on consumer, cost management

and with low government involvement enabling the industry to achieve

sustained, profitable growth.

Indian MF industry has immense growth potential (2012)

The article focused on the rough patch the mutual fund industry is undergoing

through. It furthers explain the difficult conditions prevailing for the various fund

house to exist in the industry. The ET officials explain what steps are needed for the

industry to strive and sustain by asking questions to the industry veterans.

Gupta Ramesh (1989) evaluated fund performance comparing the returns earned by

different schemes having similar risk. He developed a risk-return relationship to

make compare funds with different risk levels. His study decomposed total return

into return from investors risk, return from managers’ risk and target risk.

Shashikant Uma (1993) research examined that rationale and relevance of mutual

fund operations in Indian Money Market. The research pointed out that money

market mutual funds with low-risk and low return offered conservative investors

with a better short-term investment option.

Sahadevan S and Thiripalraju M (1997) stated that, mutual funds provide


opportunity for the middle and lower income groups to acquire shares. The study

also identified shift in the preference from physical assets to financial assets and shift

in savings from bank deposits to mutual funds was also noticed.

Sanjay Kant Khare (2007) that investors could purchase stocks or bonds with much

lower trading costs through mutual funds and enjoy the advantages of diversification

and lower risk. The research revealed that savings in mutual fund is increasing and

preference for mutual fund has increased with the individuals. The research also

evaluated various schemes of different fund house on the parameters established by

other authors.

India’s Mutual Fund Industry (2007)

The mutual fund industry has shown impressive growth with increase in total assets

under management. The research shows increase in the no. of investors from the

middle class and to double by 2020. The mutual fund market has bright future and

prospect ahead. The research provides an overview of the assets managed by the

fund houses. The research explains the legal framework in which mutual fund

industry works. It also discusses the current as well as the recent trends in the near

future.

The Fall and Rise of Mutual Funds in India (2007)

The article focuses on the entire journey of mutual fund industry in India, its origin,

its fall & rise. It also predicts what the future may hold for the mutual fund investors

in the long run.

India’s Capital Markets: Unlocking the door to future growth (2007)

The article focuses on the analysis of supply of bonds, equities and derivatives and

demand conditions (household and institutional investors) in India’s capital markets.

The research on the class of investors in Indian market and risk and return objectives

of the investors. The research concludes with the link between economic growth and

capital markets.

Downside Risk Analysis of Indian Equity Mutual Funds: A Value at Risk


Approach (2009)

The research highlights on the importance of VaR as a measure of ‘downside risk

‘for Indian equity mutual funds, which is completely ignored in the performance

measurement of the mutual funds. The study focused on three parametric models

and one non parametric model and weekly returns of a sample of equity mutual fund

schemes in India, to know their weekly VaR.

Making Mutual Fund Work for You (2008)

The research work focuses on the concept, operations and advantages of mutual

funds and the rights of mutual fund unit holders to promote financial literacy among

public regarding Indian Mutual fund Industry. It focuses on the concept of mutual

fund, its advantages and risks associated with the mutual funds, spread awareness

among investors regarding their rights as mutual fund unit holders.

As the mutual fund industry has a significant role, there is a great need to study the

performance of mutual fund industry along with the performance of the schemes.

The mentioned studies indicate that the evaluation of mutual funds has been a matter

of concern in India for the researchers, Academicians, fund managers and financial

analysts. Some of the important facts and terminology from the studies are discussed

below ;

Risk and Reward Relationship

Risk and reward go hand in hand. Most investments involve some element of risk. Risk refers to the uncertainty about the potential performance that can sometimes cause concern. But, risk can be managed and minimised both at the same time. Most of the investors invest money to get returns for on their investment with the best suited level of risk. If one wants to enjoy higher returns for the investment, then he has to take more risk in comparison to lower returns with low level of risk. That is why, understanding the Risk profile is important.

What is risk?

To begin with, let us understand the concept of risk on an investment. Consider the

returns generated by two equity stocks, A and B, over a 5-year period.


Stock A: 25%, 12%, 4%, 22%, and 7%.

Stock B: 16%, 13%, 11%, 17% and 13%.

Both Stock A and Stock B have provided average returns of 14% during the 5-year

period. However, it is clearly evident that Stock A is a riskier investment because its

returns have fluctuated more widely than that of Stock B. In other words, higher the

volatility (variability) of the returns, greater will be the risk of the investment.

Risk refers to the fluctuation or variability in returns and the chance that your

investment will make a loss in the principal amount, or return less than you expect

from the investment, or the investment does not even keep up with inflation making

it is worth less over time. So risk has two sides: it causes change in the value of

investments, but it is also the reason that one can expect to earn higher returns.

RISK AND RETURN TWO SIDES OF COIN

Risk and Returns go hand in hand. Different categories have different level of risk.

Higher the risk taken higher is the chance of good and aggressive returns and vice-

versa. Mutual Funds offer a range of schemes that cover different levels of Risks Vs

Returns.

Types of risk:

Mutual funds also have an element of risk. Mutual funds depend on the working of

market; therefore risk is inherent to them. No one can wholly remove the risk from


mutual fund but it can be minimised through diversification. Mutual fund schemes

have varying degrees of risk, depending upon the fund’s management style and its

objective; it’s important that one should know the different types of risk involved:

Volatility: As the instruments that the funds invest in are marked to market (tradable

at a certain price in the market), their NAVs are automatically subject to the price

movements of these securities. Which means the NAV may move down just as

surely as it moves up. Neither the principal nor the returns are assured: in fact, SEBI

does not allow it.

Scrip Concentration: Although one of the key benefits of mutual funds is that

investments are diversified across many instruments, schemes sometimes concentrate

on a few scrip’s. This is risky, as the NAV movement will then depend largely on

the performance of these few securities. A rise in even a few of these scrip’s can

push up the NAV considerably; a fall in even one pulls it down as sharply.

Sector concentration: The fund needs to diversify across sectors as well–unless

otherwise mandated, as in a sector fund. This ensures that its fortunes do not ride on

a few sectors alone. For example: IT boom in 2000, based on phenomenal gains

made by InfoTech companies during this period, many equity-diversified funds went

overboard on IT. All went well till the sector crashed, NAVs came tumbling down

and investors incurred huge losses. Avoid funds that chase hot sectors.

Large individual holding: It’s important for a fund to have a diversified investor

base. This ensures that the fund’s investment and management policies are not

skewed towards a few select investors.

Exchange risk: Exchange rates of foreign currency sometimes lead to risk as now

days a large no. of companies are earning revenue in the form of foreign currencies.

Changes in exchange rates may have a positive or negative impact on companies

which in turn would have an effect on the investment of the fund.

Strategy risk: This refers to the balanced fund dividing its corpus between equity

and debt. Although SEBI doesn’t stipulate the debt-equity proportion for balanced

funds, most balanced funds are equity-oriented and, therefore, invest between 40


and 60 per cent in equity instruments and the balance in debt. It is okay if the fund

breaches these limits once in a while, but if it does so regularly, avoids it.

Continuous breaching of set limits is a warning, as the deviation from mandate can

give returns inconsistent with expectations

Market Risk: The risk associated with the share market. The funds have an

impact on price due to ups and downs of the share market. The change in price of

NAV of a fund is known as "market risk". It is also known as systematic risk.

Interest Rate Risk: The rate of return or interest depends on the performance of the

company which affects the rate of return of the scheme. A diversified portfolio can

help in offsetting these changes.

Credit Risk: Credit risk is when the fund to which he has lend the company fails to

give the amount or returns on time and as required. If the company is not doing well

and is going through a rough patch, the company may not be able to repay the

principal amount to the fund back.

Liquidity Risk: Liquidity risk arises when the holding held by the fund does not

convert into cash or the stock is difficult to sell in the market. Therefore, it is always

advisable to have some liquid securities in the portfolio so that risk can be mitigated.

Diversification also helps in mitigating the liquidity risk.

Inflation Risk: Inflation means rise in the price of the goods and services in the

country which leads to "loss of purchasing power" with the consumer. Inflation

risk also occurs when prices rise faster than your returns.

Changes in the Government Policy: Changes in Government policy especially in

regard to the tax benefits may impact the business prospects of the companies

leading to an impact on the investments made by the fund.

Loss of key professionals and inability to adapt rapid changes: An industry key

asset is often the personnel who run the business i.e. intellectual properties of the key

employees of the respective companies. Given the ever-changing complexion of few

industries and the high obsolescence levels, availability of qualified, trained and


motivated personnel is very critical for the success of industries in few sectors.

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities.

The per unit NAV is the net asset value of the scheme divided by the number of units

outstanding on the Valuation Date.

Net assets = Assets – Liabilities

Assets = Market Value of investment + receivables + Accrued income +

Other Assets

Liabilities = Accrued expenses + Payables + Liabilities

NAV of a Unit = Net assets of the scheme / No. of units outstanding

Factors affecting NAV:

Variation in portfolio:

Variation in the investment portfolio also causes change in the NAV of the fund,

which may affect the overall value of the fund. Securities in the fund play an

important role depends on the performance of the stock choosen by the fund manager

in the portfolio.

Sale and purchase of units:

Sale and repurchase of units also leads to change in the overall NAV of the fund.

For example, security X is priced at Rs100 and we sell this security and after one

week when the price of the security comes to Rs80 we buy back it, keeping all other

investments intact, then the NAV of the portfolio will come down, which in turn will

result in better valuation for the fund.

Valuations of assets:

The value of the underlying asset, whose portfolio the fund has managed or is

managing, with the change in the value of asset, the overall NAV of the fund can

also change.

Cost associated with the Fund

The cost also leads to fluctuation in the NAV of the fund. The charges which are


charged during the selling of a security are known as Sales charges. Different funds

have different charge. Funds having low expense ratios are preferred as they

decrease the cost.

Ways to Measure Risk

Modern portfolio theory states five main indicators of investment risk that are used

for the analysis of stocks, bonds and mutual fund portfolios. These are alpha, beta, r-

squared, standard deviation and the Sharpe ratio. These are statistical measures and

historical predictors of volatility. It is standard financial and academic methodology

which is used for assessing the performance of equity, fixed-income and mutual fund

investments by comparing it with market indexes or benchmarks.

These five risk measurements help investors determine the risk-reward parameters of

their investments.

Standard deviation

It measures the variability i.e. how much the returns will deviate from the average.

The greater the standard deviation, the greater the variability in the returns i.e. higher

the risk.

Alpha:

Alpha is a measure of an investment's performance on a risk-adjusted basis. It takes

the volatility (price risk) of a security or fund portfolio and compares its risk-adjusted

performance to a benchmark index. The excess return of the investment relative to

the return of the benchmark index is its "alpha." A positive alpha of 1.0 means the

fund has outperformed its benchmark index by 1%. %.

Beta

It is a widely used measure of risk. It is the true relationship between returns given

by a security and the benchmark index. If the beta ratio for a stock is 1.4 then that

stock can rise or fall 1.4 times the market, i.e. it is more volatile

Sharpe ratios

This ratio measures how much return a security has given per unit of risk, where risk


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is measured by Standard Deviation. It measures the risk adjusted performance of any

security against a risk-free asset like cash.

The formula is SR (x) = | R - r| / Std Dev (R)

x is amount of investment

R is the average annual rate of return of x

r is the best available rate of return of a risk-free like cash

Std Dev(R) is the standard deviation of R

The higher the Sharpe ratio, the better the risk / reward relationship of the investment

Treynor Ratio

This Index is a ratio of return generated by the fund over and above risk free rate of

return during a given period and systematic risk associated with it (beta).

Symbolically, it can be represented as:

Treynor's Index (Ti) = (Ri - Rf)/Bi.

Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the

fund.

All risk-averse investors would like to maximize this value. While a high and

positive Treynor's Index shows a superior risk-adjusted performance of a fund.

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk

premium by a numerical risk measure. The total risk is appropriate when we are

evaluating the risk return relationship for well-diversified portfolios.

On the other hand, the systematic risk is the relevant measure of risk when we are

evaluating less than fully diversified portfolios or individual stocks. For a well-

diversified portfolio the total risk is equal to systematic risk. Rankings based on total

risk (Sharpe measure) and systematic risk (Treynor measure) should be identical for

a well-diversified portfolio, as the total risk is reduced to systematic risk. Therefore,


a poorly diversified fund that ranks higher on Treynor measure, compared with

another fund that is highly diversified, will rank lower on Sharpe Measure.

R-squared ratio:

It is a statistical measure that represents the percentage of a fund portfolio's or

security's movements that can be explained by movements in a benchmark index.

For fixed-income securities and their corresponding mutual funds, the benchmark is

the Govt. Treasury Bill, and, likewise with equities and equity funds, the benchmark

is the S&P500 Index.

R-squared values range from 0 to 1. Higher the R-squared, lower the risk of the fund

and better diversified

Lower R-square indicates, higher the risk.

Fama ratio:

The fama ratio is the extension of Jensen’s alpha. This model compares the

performance, measured in terms of returns, of a fund with the required return

commensurate with the total risk associated with it.

Higher value of fama ratio indicates that fund manager has earned returns well above

the return commensurate with the level of risk taken by him.

Manage Asset Allocation:

One can reduce risks, by having a proper asset allocation plan. It is not a 100%

guaranteed way of removing all kinds of risks, but it is a way by which One can

protect Oneself from market fluctuations by considering them and balancing his

investment portfolio. Proper asset allocation takes all kinds of securities into

consideration and uses them effectively to achieve higher returns at a given level of

risk

WAYS TO SAFEGUARD:

Regular Investment: One can protect oneself against market fluctuations over a


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long period of time by investing regularly.

Understand the Risk profile: It is important for one to understand your risk profile.

Risk profile depends on two things:

Risk capacity: Risk capacity depends on One’s financial situation and how

much risk you can take.

Risk tolerance: It depends on how much risk one can take psychologically.

Set the investment objectives: Work out how much return will make one happy and

meet One’s needs. What are the future goals and what kind of investments can help

achieve these goals?

Know the timeframe: The amount of time available to invest is also critical in

determining which investments may suit One’s needs and in managing investment

risks. The longer one has to invest, generally the more risks one can take with your

investments, as there is more time for one to ride out the peaks and troughs of

investment performance.

Diversify the investments: By spreading investments around, one is not as affected

by (or “exposed to”) the movements of just one market, some of which may rise,

while others may fall.

THE INVESTOR INSIGHT – A Primary Research


The Mutual Funds Industry is relatively new in India. The purpose of the research

was to understand the Investors awareness and viewpoint of Mutual funds as an

investment alternative.

1. OBJECTIVES OF THE STUDY

I. To know the awareness of MUTUAL FUND among people.

II. To see the interest of people in investing in MUTUAL FUNDS.

III. To know the investment behaviour of investors in MUTUAL FUND according to different age group.

IV. To ascertain the percentage of income the investors invest in MUTUAL FUND

V. To know the different attitudes of people regarding risk, rate of return, period of investment.

VI. To know the investors preferred financial product for investment.

VII. Why ELSS scheme is better investment option than other instruments.

2.TYPE OF RESEARCH

Descriptive Research: The study falls under the category of Descriptive research.

Descriptive research includes survey and fact finding inquiries of different kind. It is

the description of the state of affair as it exists at present. The main characteristics of

this method are that the researcher has no control over the variables; he can only

report what has happened or what is happening. The method of research used in this

research was survey method.

The research assignment under focus is aimed at gathering some vital information of

the investor’s investment pattern which could be through a structured questionnaire

which covers aspects like individual role in customer investment decisions etc.


3. DATA SOURCEThe primary data collection was the most important part of the project. The include

collecting the information through field research for collecting information, a personal

interview was conducted with the help of questionnaire the required information was

collected for the respondents.

4. RESEARCH INSTRUMENT

The questionnaire is the most common instrument used to collect the primary date. A

questionnaire consists of set of questions presented to the respondents for the answers.

In marketing research careful choice of the questions and their form wording and their

sequence is important.

5. SAMPLING UNIT

This research was carried in only Chandigarh.

For this research, target respondent were,

Retail

High Net worth

Corporate

The reason for selecting this sampling unit was to find out the consumer behaviour of

mutual fund amongst the retail and corporate investors. It was presumed that the

sampling unit’s states above only fall in this category.

6. SAMPLING SIZE

The Sample size of the Study is 74 people.

7.FINDINGS AND ANALYSIS


AWARENESS OF MUTUAL FUND OUT OF 74 PEOPLE

93%

7%

Awareness of Mutual Funds Out of 74 people

Yes

No

CHART I

In chart I the awareness of mutual fund is determined in the percentage terms only 7%

of the total population are not aware of MUTUAL FUNDS, the mutual funds are very

common with the public. Housewives were the majority who were unaware of the

mutual funds.

ANALYSIS AS PER AGE:

AGE NO. OF PEOPLE PERCENTAGE OF PEOPLE

Less than 35 yrs. 10 14%

35- 50 yrs. 40 58%

Above 50 yrs. 19 28%

10

40

19

NO. OF PEOPLE

Less than 35 yrs.35- 50 yrs.Above 50 yrs.

CHART II

As per the above analysis, only 14% of respondents who are below 35 years are

interested to invest in MF. The reasons being that there are more needs to be fulfilled


for this age group viz. education, entertainment etc. and therefore these people do not

have surplus funds to invest in saving schemes or Mutual Funds etc.

• The persons within the age group of 35-50 years only 58% of respondents are

interested to invest in MF. These persons have more investing potential than their

counterparts and they want to increase their income through investing in Mutual

Funds.

• The persons having the age equal to or above 50 years, only 28% of respondents are

interested to invest in MF. The reasons being that these persons are more inclined to

age-old principals and want to invest in schemes giving fixed returns as compared to

investing in Mutual Fund.

PERCENTAGE OF TOTAL INCOME INVESTED

Percentage of the total

income invested

No of people Percentage of people

Over 50% 1 1%

30-50% 4 5%

10-30% 38 56%

Less than 10% 26 38%

1 4

38

26

No of people

Over 50%30-50%10-30%Less than 10%

Chart III

a. From the above table it is seen that majority of the sample invest between 10%

to 30% of their income because of many other needs to be fulfilled like child’s

education, demands and daily spending.

b. There are very few people who invest above 50% of their income and majority

of them having business.


c. Many people invest below 10% of their income which include students and

individuals who have just started earning.

ON THE BASIS OF PROFESSION:

INVESTORS CATEGORY No. of people in %

IT SECTOR 35%

DOCTOR 20%

STUDENT 7%

JEWELLERS 3%

REAL ESTATE AGENTS 6%

HOUSEWIFES 25%

RETIRED 9%

35%

20%7%3%

6%

25%

9%

No.of people in %

IT SECTORDOCTORSTUDENTJEWELLERSREAL ESTATE AGENTSHOUSEWIFESRETIRED

Chart IV

In this Pie chart it is clear that professional people are more intended to invest in

comparison of business people though they are highly risk taker. Business people

are more inclined towards investing in real estate, land etc.

The majority of housewives in the sample study were influenced to invest in the

mutual funds by their husbands, as they influence the decisions of their wives.

PERCEPTION ABOUT MUTUAL FUND: PERCEPTION NO. OF PEOPLE %AGE OF PEOPLE


SAFE 25 36%RISKY 30 44%OTHERS 14 20%

25

30

14

NO. OF PEOPLE

SAFERISKYOTHERS

CHART V.

a. In chart V it is being determined that more people prefer mutual funds as a

risky option to invest in comparison to other instruments.

b. In the study it was found that 25 people out of 69 were interested in safe

options than the risky option.

c. Rest of the people preferred other option stating reason as risk n safe go hand

RISK TAKEN BY DIFFERENT AGE GROUP

AGE GROUPHIGH RISK MEDIUM RISK

LOW RISK

Less than 35 years 5 3 2

35- 50 years 13 17 10

Above 50 years 5 7 7

HIGH RISK MEDIUM RISK LOW RISK0

2

4

6

8

10

12

14

16

18

Less than 35 years35- 50 yearsAbove 50 years

Chart VI


a) In chart VI the risk taking ability of younger is highest with 50% willing to take

risk. This is due to people of this age group having lesser responsibilities.

b) The age group from 35 to 50 yrs. Are willing to take medium risk and high risk.

c) An interesting fact about Above 50 years is that they are also willing to invest in

risky options. However they opt more in monthly income and regular income

schemes.

RETURN EXPECTATION:INCOME

INVESTED

HIGH RETURNS MODERATE

RETURNS

LOW RETURNS

Over 50% - 1 -

30-50% 1 3 -

10-30% 14 19 5

Less than 10% 14 8 4

Over 50% 30-50% 10-30% Less than 10%0

2

4

6

8

10

12

14

16

18

20

HIGH RETURNSMODERATE RETURNSLOW RETURNS

CHART VII

As we can see in the chart, investors who invest more than 50% expect moderate

returns as risk and return are directly related to each other.

High returns are liked by people who invest less amount of money, i.e. less than 10% ,

whereas moderate are preferred by people investing between 10 to 30%.

Low returns are least expected and this is due to loss they have suffer in past.


SCHEME PREFRENCE:They are various schemes in mutual fund:

SCHEMES NO. OF PEOPLE %AGE OF PEOPLE

GROWTH 12 17%

INCOME 22 32%

BALANCED 14 20%

MONEY MKT. 8 12%

TAX SAVING 10 14%

GILT 3 5%

12

22

14

8

10

3

NO. OF PEOPLE

GROWTHINCOMEBALANCEDMONEY MKT.TAX SAVINGGILT

Chart VIII

Above chart clearly shows that more no. of investors are interested in regular income

from the mutual fund so as to fulfill their needs and demands on regular basis. Money

market are preferred as they are easy to convert into cash and are less risky.

INVESTMENT IN FINANCIAL PRODUCTS

FINANCIAL INSTRUMENTS % OF INVESTMENT

BANK 40%

INSURANCE 10%

STOCK MARKET 15%

BONDS & DEBENTURE 3%

PPF 7%

NSC 5%

POST OFFICE SAVING SCHEMES 8%


REALESTATE 2%

GOLD 5%

CHIT FUND 5%

40%

10%15%

3%

7%

5%

8%

2% 5%5%

% OF INVESTMENT

BANKINSURANCESTOCK MARKETBONDS & DEBENTUREPPFNSCPOST OFFICE SAVING SCHEMESREALESTATEGOLDCHIT FUND

Chart IX

a. In this chart it is clear that people mainly invest and keep their money in

banks. Stock market came into existence only from early 90s that’s why the

percentage investment in stocks is low as compared to banks.

b. People generally invest in Risk free financial product like PPF, NSC etc.

c. Investment in Insurance is also preferred by people because it is not a risky

instrument.

INVESTMENT OBJECTIVE:It can be seen from the following graph that the main investment objective of most

of the investors is good returns and capital appreciation.

Objective No. of people Percentage of people

Safety 17 24%

Good return 25 37%

Tax benefit 4 6%

Capital appreciation 10 14%

Liquidity 13 19%


17

25

4

10

13

No. of people

Safety Good returnTax benefitCapital apprecitaionLiquidity

Chart X

As the above chart clearly explains that good return are preferred by most of the

people if they invest in mutual funds. It was also observed people had more

requirements, so they wanted to have good return.

CHANNEL THROUGH WHICH DECISION IS MADE:

Channel No. of people Percentage of people

Newspaper/magazine 8 12%

Friend’s suggestion 5 7%

Self decision 27 38%

Broker/agent 18 26%

Television 5 8%

Others 6 9%

8 5

27

18

56

No. of people

Newspaper/magazineFriend’s suggestionSelf decisionBroker/agentTelevision Others

Chart XI

As above chart clearly explains that majority of respondents take self decision ones

they start investing in mutual funds. Whereas 26% of respondents take help

of Brokers/Advisors when it comes to final decision of investing. Therefore, it shows


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 investors.

DECISION ABOUT SELECTING FUND HOUSE:

No. of people %age of people

BRAND NAME 22 32%

GOOD SERVICE 17 25%

HIGH YIELD 13 19%

ADVERTISEMENT 10 14%

OTHERS 7 10%

22

17

13

10

7

No. of people

BRAND NAMEGOOD SERVICEHIGH YIELDADVERTISEMENTOTHERS

Chart XII

The pie chart above clearly depicts the basis on which the consumer takes decision

regarding the fund house, it was found that people preferred brand name more than

services and high yield, whereas younger generation was willing to take risk with high

yield as there basis on decision. Others take decision where they have there relative or

some trusted person working or on friends decision.

DIFFERENT INVESTMENT OPTIONS Vs. ELSS SCHEME


On the basis of the findings, we can compare the mutual funds with other investment

options available in the economy.

Parameters P.P.F P.O.T.D NSC P.O.M.IS Bank

deposit

(F.D)

Company

Deposit

ELSS

Scheme

Other

mutual

fund

schemes

Interest rate 8.80% 8.50% 8.60% 8.50% 9.00% 7-12% 47% 20-25%

annualise

d over

long

period.

Interest /

returns receipt

On

maturity

Annually On

maturity

Monthly On

maturity

On

maturity

Depends

on

performa

nce

Depends

on

performa

nce

Tenure 15 yrs 1-5 yrs 6 yrs 6 yrs 6

months

to 10

yrs

1 to 5 yrs Min. 3

yrs

Open

ended or

close

ended

Tax Benefits Under

80 c

Nil Under

Sec. 80

c

Nil Nil Nil Tax free

(both

capital

gains and

dividend)

Dividend

s- exempt

STCG/

LTCG

exists

Diversificatio

n of funds

No No No No No No Yes Yes

Capital

appreciation

No No No No No No High

probabilit

y of

capital

appreciati

on

High

probabilit

y of

capital

appreciati

on


Minimum

investment

INR

500

INR 200 INR

100

INR 1500 INR

1000

INR 5000 500 500

Maximum

investment

1 lac Nil Upto

10000

4.5 Lac

(individual

)

Nil Nil 1 lac P.A 1 lac p.a

RETURN, SAFETY, VOLATILITY, LIQUIDITY OF DIFFRENT INVESTMENT

OPTIONS:

Investment Option Return Safety Volatility Liquidity

Equity High Low High High

FI Bonds Moderate High Moderate Moderate

Bank Deposits,

PPF

Moderate High Low High

Life Insurance Low High Low Low

Gold Low High Moderate Moderate

Real Estate High Moderate High Low

Mutual Funds High High Moderate High

COMPARATIVE ANALYSIS OF LARGE CAP FUNDS OF

SBI WITH OTHER FUND HOUSES:


Under this chapter we will study the analysis of different large cap mutual funds

schemes floated by SBI (state bank of India) and other premiere financial institutions

in India, such as Franklin, JP Morgan, HDFC mutual fund, ICICI etc.

WHY COMPARITIVE ANALYSIS?

Return alone should not be considered as the basis of measurement of the

performance for a mutual fund scheme, it should also include the risk taken by the

fund manager because different funds will have different levels of risk attached to

them. Risk associated with a fund, in a general, can be defined as variability or

fluctuations in the returns generated by it. The higher the fluctuations in the returns of

a fund during a given period, higher will be the risk associated with it. These

fluctuations in the returns generated by a fund are resultant of two guiding forces.

First, general market fluctuations, which affect all the securities, present in the

market, called market risk or systematic risk and second, fluctuations due to specific

securities present in the portfolio of the fund, called unsystematic risk. The Total

Risk of a given fund is sum of these two and is measured in terms of standard

deviation of returns of the fund. In order to determine the risk-adjusted returns of

investment portfolios, several eminent authors have worked since 1960s to develop

composite performance indices to evaluate portfolio by comparing alternative

portfolios within a particular risk class. But before that we need to understand all the

components that are used to explain the ratios like Beta, Treynor, Sharpe, and Jensen

etc. the components are as follows:

The funds will be studied on the following parameters:

Investment Objective.

Fund Manager.

Top 10 holdings.

Top 5 Sectors.

Net Asset Value.

Inception Date.

Entry & Exit Load Structure.

Investment Details.

AAUM (Average assets under management)

Benchmark Index.


Statistical Ratios:

P/E & P/Bv (Price to Book Value)

Dividend Yield.

Market Capitalization.

Performance & Rank of fund in comparison to other funds in same

category by CRISIL, rating institution.

CAPITALISATION:

Market Capitalisation refers to the no. of outstanding shares of the company into stock

price per share.

No. of outstanding shares* share price

LARGE CAP FUNDS:

Large cap companies are the big Kahunas of the financial world. These are the top

100 companies on the share market having market capitalisation more than 2000

crores. Like SBI, Wal-Mart, HDFC bank, TCS.

SBI MUTUAL FUND

SBI was the first non UTI mutual fund company in India incorporated on June 29,

1987. SBI MUTUAL FUND is one of the dominant players in the mutual fund space.

The SBI mutual funds are handled by SBI funds management pvt. Ltd.

Trustee: SBI Mutual Fund Trustee Company Private Limited

Chairman: Mr. Pratip chaudhari

Chief Executive officer: Mr. Deepak kumar chaterjee

Chief Investment Officer: Mr. Navneet munot

Compliance Officer: Ms. Vinaya Datar

Investor service officer: Mr. C.A Santosh

As of 31st March, 2012 the fund has Assets Of Rs. 42041 crores under management.


SBI MAGNUM EQUITY FUND:

SCHEME CATEGORY: An open ended equity scheme

INVESTMENT OBJECTIVE: To provide the investor long-term capital

appreciation by investing in high growth companies along with the liquidity of an

open-ended scheme through investments primarily in equities and the balance in debt

and money market instruments.

ASSET ALLOCATION:

EQUITY 90.78%

DEBT -

MONEY MARKET INSTRUMENT 9.22%

CASH/ CALL -

TOP 5 SECTORS

SECTORS % TO NAV

AUTOMOBILE 9.85%

ENERGY 12.26%

FINANCIAL SERVICES 24.60%

PHARMA 10.53%

IT 12.97%

TOP 10 HOLDINGS:

EQUITY SECTOR ASSET %

ICICI BANK BANKING/FINANCE 9.71

INFOSYS TECHNOLOGY 7.14

ITC TOBACCO 6.64

BHARTI AIRTEL TELECOM 5.40

SBI BANKING/FINANCE 5.37

DR REDDYS LABS PHARMACEUTICALS 4.76

HDFC BANK BANKING/FINANCE 4.61

RELIANCE OIL & GAS 4.18

TCS TECHNOLOGY 4.09

TATA MOTORS AUTOMOTIVE 3.53


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FUND INFORMATION:

FUND MANAGER MR. R. SRINIVASAN

INCEPTION DATE 01/01/1991

BENCHMARK INDEX S&P CNX NIFTY INDEX

RANKING 2nd

INVESTMENT DETAILS

ENTRY LOAD N.A.

EXIT LOAD WITHIN 1 YEAR-1%

AFTER 1 YEAR- NIL

MINIMUM APPLICATION AMOUNT RS. 1000

INVESTMENT PLAN / OPTIONS GROWTH

DIVIDEND

LOCK IN PERIOD NIL

REDEMTION PROCEEDS WITHIN 3 DAYS

AAUM 491.37 CRORES

NAV – GROWTH 42.63

NAV – DIVIDEND 28.64

STATISTICS:

STANDARD DEVIATION 25.45%

BETA 0.90

R-SQUARED 0.95

SHARPE RATIO 0.73

TYENORS RATIO 0.24

FAMA RATIO 0.11

P/E RATIO 20.87

P/BV RATIO 4.19

DIVIDEND YIELD RATIO 1.26

EXPENSE RATIO 2.50

MARKET CAPITALISATION 92933.30 CRORES


1. As beta is less than 1 the securities price will be less volatile than market.

2. The Sharpe’s ratio which is .73 in this case which is high, so it means it has

adjusted the risk quiet well.

3. R-squared ration of 0.95 indicated near perfect correlation.

4. Dividend yield stands at 1.26 which is above average.

5. Tyenor ratio of 0.24 indicates comparatively less risk which directly relates to more

returns.

6. Fama ratio of 0.11 which indicates selection of fund by fund managers are not

performing well.

SBI BLUE CHIP FUND:SCHEME CATEGORY: An open ended growth scheme.

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 is at least equal to

or more than the least market capitalized stock of BSE 100 Index.

ASSET ALLOCATION:

EQUITY 93.18%

DEBT -

MONEY MARKET INSTRUMENT -

CASH/ CALL 6.82%

TOP 5 SECTORS

SECTORS % TO NAV

AUTOMOBILE 10.73%

ENERGY 13.87%

FINANCIAL SERVICES 20.91%

CONSUMER GOODS 10.06%

PHARMA 11.16%


TOP 10 HOLDINGS:



TATA MOTORS AUTOMOTIVE 5.60




YES BANK BANKING/FINANCE 3.87

TCS TECHNOLOGY 3.80

DIVIS LABS PHARMACEUTICAL

S

3.76

DR REDDYS LABS PHARMACEUTICAL

S

3.25

HDFC BANKING/FINANCE 3.22

FUND INFORMATION:

FUND MANAGER MS. SOHINI ADNANI


BENCHMARK INDEX BSE 100 INDEX

RANKING 3rd

INVESTMENT DETAILS

ENTRY LOAD N.A.

EXIT LOAD NIL



DIVIDEND

LOCK IN PERIOD NIL


AAUM 706.80 CRORES




STATISTICS:


BETA 0.94

R-SQUARED 0.98

SHARPE RATIO 0.52

TYENORS RATIO 0.15

FAMA RATIO 0.01

P/E RATIO 26.870

P/BV RATIO 3.57


EXPENSE RATIO 2.50



2. The Sharpe’s ratio which is .52 in this case is quiet moderate as compared to its peers, so it means it has adjusted the risk quiet well.



5. Tyenor ratio of 0.15 indicates more risk which directly relates to more returns.

6. Fama ratio of 0.01 is very low which indicates very low returns compared to risk associated with it.

BIRLA SUNLIFE

Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment

managers of Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla

Group and the Sun Life Financial Services Inc. of Canada. The joint venture brings

together the Aditya Birla Group's experience in the Indian market and Sun Life's

global experience. Since its inception in 1994, Birla Sun Life Mutual fund has

emerged as one of India's leading Mutual Funds managing assets of a large investor

base..


Trustee: Birla Sun Life Trustee Company Private Limited

Chairman: Mr. Donald Stewart

Chief Executive officer: Mr. Anil Kumar

Chief Investment Officer: Mr. A. Balasubramaniam

Compliance Officer: Mr. Rajiv Joshi

Investor service officer: Mrs. Molly Kapoor

As of 31st March, 2012 the fund has Assets Of Rs. 61142.50 crores under

management.

BIRLA SUNLIFE TOP 100 (G)

SCHEME CATEGORY: An open ended scheme.

INVESTMENT OBJECTIVE: An open-ended growth scheme with the objective to

provide medium to long term capital appreciation, by investing predominantly in a

diversified portfolio of equity and equity related securities of top 100 companies as

measured by market capitalization.

ASSET ALLOCATION:

EQUITY 98.3%

DEBT -


CASH/ CALL 1.7%

TOP 5 SECTORS:

SECTOR %

BANKING/FINANCE 22.57

TECHNOLOGY 9.70

PHARMACEUTICALS 8.52

AUTOMOTIVE 7.91

OIL & GAS 7.55


ENGINEERING 7.29

FUND INFORMATION:

FUND MANAGER MR. MAHISH PATIL


BENCHMARK INDEX S&P CNX NIFTY

RANKING 2nd

INVESTMENT DETAILS

ENTRY LOAD N.A.

EXIT LOAD 1% WITHIN 365 DAYS



DIVIDEND

LOCK IN PERIOD NIL


AAUM 290.11 CRORES



STATISTICS:


BETA 0.84

R-SQUARED 0.96

SHARPE RATIO 0.06

TYENORS RATIO 0.25

FAMA RATIO 0.11

P/E RATIO 19.08

P/BV RATIO 4.51

DIVIDEND YIELD 1.47

EXPENSE RATIO 0.93




2. The Sharpe’s ratio which is .06 in this case which means it has not adjusted for the risk.

3. R-squared ration of 0.986indicated near perfect correlation.

4. Dividend yield stands at 1.47 which is above average as more risk is associated with the fund.


6. Fama ratio of 0.01

ICICI MUTUAL FUNDSICICI Prudential Asset Management Company Ltd. is a joint venture between ICICI

Bank, India’s second largest commercial bank & a well-known and trusted name in

the financial services in India, & Prudential Plc, one of the United Kingdom’s largest

players in the financial services sectors.

In a span of over 18 years since inception and just over 13 years of the Joint Venture,

the company has forged a position of preeminence as one of the largest Asset

Management Company’s in the country, contributing significantly towards the growth

of the Indian mutual fund industry.

Trustee: ICICI prudential trust Limited

Chairman: Ms. Chanda kochar

Chief Executive officer: Mr. Nimish shah

Chief Investment Officer: Mr. S. naren

Compliance Officer: Ms. Supriya sapre

Investor service officer: Ms. Kamaljeet saini

As of 31st March, 2012 the fund has Assets Of Rs 68718.49 crores under

management.

ICICI PRUDENTIAL TOP 100 FUND

SCHEME CATEGORY: An open ended equity fund scheme


INVESTMENT OBJECTIVE: The investment objective of the Scheme is to

generate long-term capital appreciation from a diversified portfolio of predominantly

equity and equity-related securities including equity derivatives, in the Indian

markets. The Scheme could also additionally invest in Foreign Securities in

international markets.

ASSET ALLOCATION:

EQUITY 88.68%

OTHERS 5.56%

DEBT -


CASH/ CALL 5.77%

TOP 5 SECTORS:

Sector %

TECHNOLOGY 19.31


OIL & GAS 14.57


METALS & MINING 12.40

TOP 10 HOLDINGS:






SUN PHARMA PHARMACEUTICALS 6.76

CIPLA PHARMACEUTICALS 6.20

STANCHART IDR BANKING/FINANCE 4.74

STERLITE IND METALS & MINING 4.64

WIPRO TECHNOLOGY 4.49

COAL INDIA METALS & MINING 4.23

FUND INFORMATION:


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FUND MANAGER MR. SANKARAN NAREN


BENCHMARK INDEX S&P CNX NIFTY

RANKING 3rd

INVESTMENT DETAILS

ENTRY LOAD N.A.

EXIT LOAD 1% WITHIN 15 MONTHS



DIVIDEND

LOCK IN PERIOD NIL


AAUM 325.06 CRORES



STATISTICS:


BETA 0.91

R-SQUARED 0.97

SHARPE RATIO 0.11

TYENORS RATIO 0.17

FAMA RATIO 0.05

P/E RATIO 15.59

P/BV RATIO 2.78


EXPENSE RATIO 2.27

MARKET CAPITALISATION 93,994.65 CRORES


2. The Sharpe’s ratio which is .11, indicating more risk with the fund.



4. Dividend yield stands at 1.58 which is above average as more risk is there with the funds.


6. Fama ratio of 0.05 represents stock selected have not performed well as compared to risk associated.

UTI MUTUAL FUND

Unit trust of India marked the beginning of the mutual fund industry in India. Later in

2003, with the bifurcation of the Unit trust of India, uti- mutual fund was formed

taking care of the mutual funds schemes solely wounding up various schemes earlier

offered. Uti mutual fund is the oldest fund house of the country and still the largest

player in the mutual fund industry.

Trustee: UTI Trustee Company Pvt. Ltd

Chairman: Mr. Imtaiyazur rahman

Chief executive officer: Mr. Anoop bhaskar (head equity)

Chief Investment Officer: Mr. S L Pandian

Compliance Officer: Mr. S C Dikshit

Investor service officer: Mr. G S Arora


management.

UTI OPPURTUNITIES FUND

SCHEME CATEGORY:

INVESTMENT OBJECTIVE: This scheme seeks to generate capital appreciation

and/or income distribution by investing the funds of the scheme in equity shares and

equity-related instruments. The main focus of this scheme is to capitalize on

opportunities arising in the market by responding to the dynamically changing Indian

economy by moving its investments amongst different sectors as prevailing trends

change.


ASSET ALLOCATION:

EQUITY 88.64

OTHERS 0.24

DEBT 2.57

MONEY MARKET 0.00

CASH / CALL 8.56

TOP 5 SECTORS:

SECTOR %


TECHNOLOGY 8.15

AUTOMOTIVE 8.01

OIL & GAS 7.87

MISCELLANEOUS 7.57

TOBACCO 6.58



ITC TOBACCO 6.58


CRISIL MISCELLANEOUS 4.70



SBI BANKING/FINANCE 4.17

HDFC BANKING/FINANCE 3.93

TCS TECHNOLOGY 3.65

CAIRN INDIA OIL & GAS 3.57

AMBUJA CEMENTS CEMENT 3.04

FUND INFORMATION:

FUND MANAGER MR. ANOOP BHASKAR


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BENCHMARK INDEX BSE 100

RANKING 1st

INVESTMENT DETAILS:

ENTRY LOAD N.A.




DIVIDEND

LOCK IN PERIOD NIL


AAUM 2729.86 CRORES



STATISTICS:


BETA 0.76

R-SQUARED 0.95

SHARPE RATIO 0.10

TYENORS RATIO 0.43

FAMA RATIO 0.22

P/E RATIO 22.89

P/BV RATIO 7.49


EXPENSE RATIO 1.87



2. The Sharpe’s ratio which is .10 indicating instability and more risk with the fund.




5. Tyenor ratio of 0.43 indicates less risk as compared to other funds.

6. Fama ratio of 0.22 represents better performance of the stocks selected by the fund manager.

FRANKLIN TEMPELETON MUTUAL FUND:

Franklin Templeton's association with India dates back to more than a decade as an

investor. As part of the group's major thrust on investing in markets around the

world, the India office was set up in 1996 as Templeton Asset Management India Pvt.

Limited. It flagged off the mutual fund business with the launch of Templeton India

Growth Fund in September 1996, and since then the business has grown at a steady

pace. Since starting its operations in India, Franklin Templeton has invested a

considerable amount of time, effort and resources towards investor and distributor

education, the belief being - to be successful in the long term.

Trustee: Franklin Templeton Trustee Services Pvt. Ltd.

Chairman: Mr. Charles B. Johnson

Chief Executive officer: Mr. Gregory E. Johnson

Chief Investment Officer: Mr. R. Sukumar

Mr. Santosh kamath

Compliance Officer: Ms. Shilpa shetty

Investor service officer: Ms. Sheela kartik


management.

FRANKLIN INDIA BLUE CHIP:

SCHEME CATEGORY: An open ended equity fund scheme.


INVESTMENT OBJECTIVE: An open-end growth scheme with an objective

primarily to provide medium to long-term capital appreciation.

ASSET ALLOCATION:

EQUITY 93.11

OTHERS 0.00

DEBT 0.02

MONEY MARKET 0.00

CASH / CALL 6.87

TOP 5 SECTORS:

SECTORS %


OIL & GAS 10.34

TECHNOLOGY 8.99

TELECOM 8.58


TOP 10 HOLDINGS:

EQUITY SECTOR ASSET %INFOSYS TECHNOLOGY 7.50





GRASIM CONGLOMERATES 3.89

POWER GRID CORP UTILITIES 3.06

KOTAK MAHINDRA BANKING/FINANCE 2.93

DR REDDYS LABS PHARMACEUTICALS 2.92

INDUSIND BANK BANKING/FINANCE 2.68

FUND INFORMATION:

FUND MANAGER MR. ANAND RADHAKRISHNAN

AND

MR. ANAND VASUDEVAN


http://www.moneycontrol.com/india/stockpricequote/banks%20-%20private%20sector/indusind%20bank/IIB&flag=MC

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/dr%20reddys%20laboratories/DRL&flag=MC

http://www.moneycontrol.com/india/stockpricequote/banks%20-%20private%20sector/kotak%20mahindra%20bank/KMB&flag=MC

http://www.moneycontrol.com/india/stockpricequote/power%20-%20generation/distribution/power%20grid%20corporation%20of%20india/PGC&flag=MC

http://www.moneycontrol.com/india/stockpricequote/diversified/grasim%20industries/GI01&flag=MC







BENCHMARK INDEX BSE SENSEX

RANKING 2nd

INVESTMENT DETAILS

ENTRY LOAD N.A.




DIVIDEND

LOCK IN PERIOD NIL


AAUM 4516.35 CRORES



STATISTICS:


BETA 0.80

R-SQUARED 0.96

SHARPE RATIO 0.58

TYENORS RATIO 0.31

FAMA RATIO 0.15

P/E RATIO 18.48

P/BV RATIO 3.45


EXPENSE RATIO 2.22



2. The Sharpe’s ratio which is .58 in this case is quiet moderate as compared to its peers, so it means it has adjusted the risk quiet well.

3. R-squared ration of 0.96 indicated near perfect correlation between the fund and the equities.


4. Dividend yield stands at 1.50 which is a good indicator for the investors.

5. Tyenor ratio of 0.31 indicates less risk which as compared to other funds in this category.

6. Fama ratio of 0.15 represents funds selected have not performed well.

ANALYSIS & FINDINGS

SBI equity fund

SBI bluechip fund

ICICI pru top 100 fund

Birla sunlife top 100 fund

UTI oppurtunities fund

Franklin bluechip india

BETA 0.90 0.94 0.84 0.91 0.76 0.80ALPHA 4.59 0.20 5.17 4.14 7.60 5.72STANDARD DEVIATION

25.45% 27.30% 33.57% 18.97% 32.5% 31.93%

TYENOR RATIO

0.24 0.15 0.25 0.17 0.43 0.31

SHARPE RATIO

0.73 0.52 0.06 0.11 0.10 0.58

R-SQUARED

0.95 0.98 0.96 0.97 0.95 0.96

FAMA 0.11 0.01 0.05 0.11 0.22 0.15P/E RATIO 20.87 26.87 19.80 15.59 22.89 18.48DIVIDEND YIELD RATIO

1.26 1.53 1.47 1.58 1.53 1.50

EXPENSE RATIO

2.50 2.50 0.93 2.27 1.87 2.22

PORTFOLIO TURNOVER RATIO

1.28 0.94 1.12 1.76 .56 .70


SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI

oppurt

unities

fund

Fran

klin0

0.10.20.30.40.50.60.70.80.9

1

Beta

Beta

1) The beta for UTI opportunities fund is 0.76 which is the lowest in this

category implying lesser risk as compared to SBI- bluechip fund with 0.94

times indicating more risk directly meaning more returns to the investors of

this fund. Beta for both the large cap funds of the SBI is higher in comparison

to other funds.

SBI e

quity

fund

SBI b

luec

hip fund

ICIC

I

Birla

sunlif

e

UTI

opp

urt

uniti

es fund

Fran

klin0

12345678

alpha

alpha

2) The alpha for the SBI equity fund is comparatively high and SBI blue chip

fund is the lowest representing fund has not performed well as predicted by the

fund manager. Better choices in the form of stock should be made to increase

the returns for the investors.

SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI o

ppurtuniti

es fu

nd

Fran

klin

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%

Standard deviation

Standard deviation

3) Since Standard Deviation is the measure which shows variability in the returns

from the mean return, therefore it is considered to be the direct and primary

measure of risk. Standard deviation for Birla sun life top 100 funds is 18.97%


is the lowest in this category indicating less deviation or change in the returns

than the historical returns, whereas S.D. for ICICI pru top 100 fund is the

highest with 33.57% implying change in returns more than the historical

pattern of the returns. Both the SBI MF have average standard deviation

which is considered good.

SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI o

ppurtuniti

es fu

nd

Fran

klin

00.10.20.30.40.50.60.70.8

Sharpe ratio

Sharpe ratio

4) The sharpe ratio which means returns per unit of risk that a fund is able to

generate. ICICI pru top 100 fund is 0.06 indicating poor relationship between

risk and reward whereas there is a good and strong relationship between risk

and reward for SBI equity fund with 0.73 and SBI blue chip fund also has

good sharpe ratio indicating strong relation between two prime factors.

SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI

oppurt

unities

fund

Fran

klin0

0.050.1

0.150.2

0.250.3

0.350.4

0.450.5

Tyenor ratio

Tyenor ratio

5) Tyenor ratio for all the funds is positive showing superior risk adjusted

performance of funds.

SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI o

ppurtuniti

es fu

nd

Fran

klin

0.9350.94

0.9450.95

0.9550.96

0.9650.97

0.9750.98

0.985

R-squared

R-squared


6) R-squared ratio indicates the correlation between the stocks and the market

indexes with SBI bluechip with value of 0.98 shows high influence with the

indices whereas UTI opportunities fund show less influence in comparison to

other funds in this category. However, SBI equity fund has low R-squared

ratio which is matter of concern for the fund manager.

SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI

oppurt

unities

fund

Fran

klin0

5

10

15

20

25

30

P/E ratio

P/E ratio

7) P/E ratio indicates what investors are expecting returns from the fund knowing

the historical patterns which are higher for the SBI blue chip with 26.87 and

lowest for the ICICI pru top 100 fund with 15.59 higher the P/E ratio is higher

the confidence investors have in the fund performance.

Investors have faith in both the schemes of the SBI MF in the large cap

category.

SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI o

ppurtuniti

es fu

nd

Fran

klin

00.20.40.60.8

11.21.41.61.8

Dividend yield ratio

Dividend yield ratio

8) Dividend yield ratio explains payout of dividend by the company with ICICI

pru top 100 fund paying highest with 1.58 and lowest with 1.26 for SBI

magnum equity fund. SBI MF paying lower dividend means retaining more

profit and capitalizing it for future.


SBI e

quity fu

nd

SBI b

luec

hip fu

nd

ICIC

I

Birla

sunlif

e

UTI o

ppurtuniti

es fu

nd

Fran

klin

0

0.5

1

1.5

2

2.5

3

EXPENSE RATIOPORTFOLIO TURNOVER RATIO

9) Operating cost of the mutual fund have direct impact on the earnings with

ICICI pru top 100 fund with lowest 0.93 indicating more earnings for the

investors and SBI with 2. 50 with the highest indicating low earnings.

10) Higher Portfolio turnover ratio indicates change in stock holding more

frequent, here we can see Birla sunlife top 100 fund with the highest rate of

portfolio turnover indicating more frequent change in the stock holding by the

company indicating less return to the investors.

FUNDS RETURN:

SBI equity fund

SBI bluechip fund

ICICI pru top 100 fund

Birla sunlife top 100 fund

Uti oppurtunities fund

Franklin india bluechip fund

6 months

13.4 13.9 16.7 13.4 11.4 10.6

1 year -0.6 -1.2 4.4 -1.8 5.1 -2.23 year 10 5.6 11.2 10.1 6.4 11.05 year 7.0 2.4 6.2 5.1 13.7 8.0


SBI e

quity

fund

SBI b

luec

hip fu

nd

ICIC

I pru

top 1

00 fun

d

Birla s

unlif

e top

100 f

und

Uti opp

urtu

nities

fund

Fran

klin

india

blue

chip

fund

-5

0

5

10

15

20

6 months1 year3 year5 year

1) In six month category both the schemes of the SBI (Equity fund and Blue chip

fund) has performed very well, it is preceded only by ICICI pru top 100 fund

when compared to other similar large capital funds like BSL top 100 fund,

UTI opportunities and Franklin fund.

2) In one year category, both funds has performed averagely well than other

funds like BSL top 100 fund and Franklin giving negative returns more than

the SBI funds.

3) Last but not the least, it is good news that funds have performed averagely in

Three Year and Five Year Category giving returns of 10.0% and 7.0% for the

SBI- equity fund and 5.6% and 2.4% for the SBI blue chip fund respectively

with ICICI and fidelity doing better in the 3 year category indicating more

better investment options chosen by the fund manager.


CORPORATE LEARNING:

Having had the experience of working with SBI- Mutual fund, I have begun to see the

level of commitment and responsibility needed while working in the corporate world.

Before starting the training at SBI MF, lot of questions related to mutual funds came

to my mind and were answered during my training at the SBI MF. I also learned the

entire functioning of the organization and many of the questions got answered during

the tenure at SBI MF.

I have been lucky to get an opportunity to work with the SBI mutual funds in the

finance department. During my training period, I got guidance from both the sides, i.e.

corporate as well as academic. I was provided requisite training and instructions from

time to time from the mentors who helped me to perform better and achieve my

targets.

Summer Training was like an eye opener. In other words internship is a trailer of real

corporate world. During internship I learnt that punctuality and hard work is required

for sustaining in the market. Apart from this, at the college, the theoretical concepts

were more like dictionary with lots of words but after Summer Training, the words

have their practical use in corporate life. The things are not exactly done according to

the theories in the book, there are certain modifications done according to the

requirements of the industry.

When i joined the organisation, I faced a lot of problems as to

How should I initiate How should I get the business for the company Whom to target for my product How to convince the customer

So, towards the end of my project after cracking 43 applications, I had a lot of exposure & experience of how practical world works.

Apart from the above, SBI MF provided me with lot of other learning’s,

Practical exposure of how mutual funds work.

Building relationship with other members of the organization.

How to work in a team to achieve the targets.

Time management by handling 2-3 customers at a time.


The tenure of 2 months spent at the SBI- Mutual fund gave me true knowledge about

the working of the mutual fund industry and the work culture of the SBI MF.


LIMITATIONS OF THE STUDY:

It is well known fact that constraint and limitations are bound to be present in any

study do this also has some limitation as:-

1) The consumer perception about mutual funds on national basis cannot be

inferred only on the basis of sample collected from Chandigarh region only.

2) The sample of 74 is not very large for making inference.

3) Consumers were hesitant to provide information, due to lack of knowledge.

4) In the comparative analysis, the unavailable data was picked from different

mutual funds site which use different formulas to calculate.

5) Another problem was of the risk free return rate, which is different for fund

houses.

6) Since I have not undertaken the AMFI exam, which is a mandatory condition

to work, I was not able to understand some of the common terms of the mutual

funds industry but later I learnt them.


CONCLUSION

The State bank of India was the first public sector bank to start mutual fund business

with the permission of the government. SBI was granted permission in 1987. SBI

mutual fund started its first scheme with a view to help small investors who had lack

of knowledge, experience, and time to look into the details of Share market. Soon SBI

became one of the biggest fund houses in the country with total assets under

management of more than 10 billion. Investment in mutual fund instrument provides

diversification, professionalism, and ease of purchase and sale.

The future of mutual fund industry is very bright and has immense growth potential, if

proper awareness and technological advancements are provided. Currently, Mutual

fund industry is going through a rough patch due to political instability, state of

capital market, and adverse international development leading to poor and slow

development of mutual funds industry in India.

SBI mutual funds with a huge no. of schemes matching the requirements of each and

every investor. Schemes are also attractive to the people because of the brand name

and image the State bank of India have with the people. It is in this background the

study on investors insight and comparative analysis of mutual fund assumes

relevance;

The study has been conducted with the major objectives which are reiterated as

follows:

To study consumers insight towards mutual funds,

Why mutual funds is better option than other investment instruments,

Analysis of large cap mutual funds with SBI large cap funds,

To recommend

The study on investor’s insight revealed that awareness of mutual fund is well with

the people of Chandigarh, but lack of awareness exists in the rural areas, as well as the

housewives who are dependent on their husbands or some other source for

information. Age group of 35 to 50 are more interested to invest in the mutual funds

schemes as they have more requirements than other age groups like Childs education,


marriage, planning for retirement. Whereas the young people in the age group of 25 to

35 years were more risk taker than the other age groups as they had few

responsibilities in comparison to other age groups. It was also noticed people were

interested in income schemes which can fulfil their needs and demands on regular

basis and at the same time provide less risk in comparison to other schemes.

The awareness can also be seen with channel they prefer to invest with majority

taking self decision to invest in the instrument which shows the awareness level is

quite high in the region. The brand name was one of the major factors why people

preferred SBI mutual fund over other fund houses in the country.

There are various instruments available with the investors that will assure them right

mix of liquidity, regular income, growth and safety. The different saving instruments

available are post office saving , post office time deposit, P.O. recurring deposit,

National saving certificate, public provident fund, bank deposits, etc.

The study compared various investment options on various parameters and found

every option has its own strength and weakness. No doubt, mutual funds provide

better returns but risk associated with it is much higher than other investment options

i.e.; PPF, NSC, time deposit etc. It was also found the rate of interest and inflation

rate when evaluated leads to loss of investment.

Bank deposits provide high liquidity and safety but low returns. However, insurance

provides low safety, returns but high liquidity. Mutual funds provide with higher

returns and safety of investment when compared with other investment options.

Hence, a better and preferred investment option over other instruments.

Further, the study compares various large cap mutual fund schemes on various

financial parameters like beta, alpha, Sharpe, price-earnings ratio, dividend yield ratio,

r- squared ratio, etc; to evaluate the fund’s performance.

Beta measures the systematic risk, which is less than 1 for all schemes indicating

prices are less volatile than the market. The alpha for the Blue chip fund was the

lowest which represents that the fund has not performed well. Standard deviation

shows the deviation of returns from the historical pattern. The Sharpe ratio indicates


good relation between the risk and reward for both the funds. The r-squared ratio

focuses on the correlation between stock and market indices like BSE, NIFTY etc.

SBI equity fund with the lowest is a matter of concern for the fund manager to choose

better stocks for the fund. P/E ratio states what investors expect from the fund which

are higher for both the funds in the large cap categories. Dividend yield for SBI

Equity fund is low explaining returns are being reinvested by the manager. Expense

and portfolio turnover ratio links directly with the earnings of the fund with SBI

having highest expense ratio.

What really matters to the investors are the returns, so for this purpose historical

pattern of the returns was studied to know about the fund’s performance in the past

with SBI performing well in the 6 months category and low in the 1 year due to

political instability and adverse market conditions having direct impact on the returns.

The funds have also performed well in the 3 and 5 year category overall which is

good for the investors in the long run.

The future of mutual fund industry has bright prospects in the coming future with new

reforms and


RECOMMENDATIONS:

Recommendations play a very important and pivotal role to help anyone strive its

goals and missions more efficiently and effectively. I have made suggestions both for

the SBI- Mutual fund and investors, which are as follows;

Recommendation for the SBI-MF

Rural market:

There is a lot of potential in the rural market. SBI MF should come up with innovative

schemes to attract rural customers. Special focus on the needs and demands of the

rural areas should be taken care of.

Diverse Range of Products

There is a need to come out with innovative products that cater to the ever changing

customer requirements. In US, MFs provide products that cater to the entire life cycle

of the investors. Diversified products will keep the present momentum going for the

industry in a more competitive and efficient manner.

More wise fund selection:

Fund managers of the schemes should make decision about the securities in the

portfolio wisely. More careful study can help the fund managers as well as the scheme

to generate good returns for the investors.

Motivation for the staff:

During my tenure as an intern in the SBI MF. I came across there’s lack of motivation

to the star performers. The employees should be motivated to tap more customers and

to do business more effectively and efficiently.

More expenditure on sales and promotion:

There is lack of promotional expenses on the mutual fund. There should be more

amount of money spent to increase the awareness about the mutual funds and its

benefits over time to the customers which would directly increase the business for the


fund house. Advertisements in newspaper, magazines etc can help in increase of

business for the SBI mutual fund.

Special training to the employees:

Special and regular training to the employees should be given in order to understand

the working of the mutual funds and the impact of the market and indices on the

mutual funds. Regular updates about mutual fund industry would help employees to

convince the customer more easily and effectively.

More aggressive fund manager:

Fund manager who manages the mutual fund scheme need to be more aggresive and

wise in choosing the stock of the funds so as to yield more profit for the investors.

Like UTI and Franklin fund managers are comparatively more aggressive in the

selection.

Every branch to have seperate mutual fund department:

During my tenure i came across there is hardly any separate department for the mutual

fund which creates a felling of insecurity in the mind of the customer. A separate area

specially designated for the mutual fund would help clients to be more confident.

Up gradation of customer care number:

However SBI MF provides its customer with toll free number for any complaints

regarding mutual fund. SBI should take effort to provide information to the customer

regarding latest NAV and risk profile about the funds to the customer. So that

customers are at convenience to get latest information about mutual funds.

Awareness drives:

SBI MF should take steps to increase awareness about the mutual fund with the

general public. The Fund house can tap on the customers from oung generation by

making them more aware about the mutual funds. This can be done with the help of

drives in college, market places etc.


Some of the recommendations for the investors:Investors at their ends should also do some homework before investing their hard

earned income/ savings, some points to keep in mind while investing are as follows;

Self assessment:

Self-assessment of one’s needs; expectations and risk profile is of prime importance

failing which; one will make more mistakes in putting money in right places than

otherwise. Irrational expectations will only bring pain.

Regularity:

Investing should be a habit and not an exercise undertaken at one’s 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

house.

Don’t consider NAV only:

Never judge a fund on the basis of its NAV. Also have a look at the Standard

Deviation, Beta, Alpha, R Squared, Treynor & Sharpe Ratios & also its performance

in the bear and the bull phase, and then invest in it. Only judging a fund by its NAV,

is irrelevant.

Diversify:

One should diversify the investments between a few funds (the actual number

depends entirely on the amount of investment). This strategy ensures that the portfolio

is not dependent on the performance of one single fund. However, one needs to avoid

over-diversification as that would achieve nothing.

Track 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.


BIBLOGRAPHY

Books referred:

Mark mobius, Mutual funds- An introduction to core concepts, john wiley & sons, 2007

pg 1 to 4 and 19 to 24 and 143 to 147.

Fact sheets of different fund houses.(SBI MF, ICICI prudential MF, UTI MF, BSL MF)

Christine benz, Morning star guide to Mutual funds- a five star strategies guide, john

wiley & sons, 2005( 2nd edition), pg 27 to 34 and 161-163 and 197 -200.

Mutual fund handbook by SBI- mutual fund.

Sanjay Kant Khare, 2007, “Mutual Funds: A Refuge for Small Investors”, Southern Economist, pp.21-24.

A guide to mutual funds by SEBI (securities and exchange board of India).

Internet:

http://en.wikipedia.org/wiki/Mutual_fund assessed. in 9th june

http://www.icicipruamc.com/AboutUs/CorporateProfile.aspx assessed on 17th june.

http://www.franklintempletonindia.com/india/jsp_cm/aboutus/wwprofile.asp assessed

on 16th june.

http://mutualfund.birlasunlife.com/Pages/Individual/Home.aspx assessed on 17th june.

http://www.utimf.com/aboutus/Pages/overview.aspx assessed on 17th june.

http://www.indiapost.gov.in/Pdf%5CSB_Orders_2012.pdf assessed on 14th june.

www.valueresearch.com

http://www.sbifunds.com/ assessed on 9th june.

http://www.sebi.gov.in/sebiweb/stpages/about_sebi.jsp assessed on 12th june.

http://www.amfiindia.com/showhtml.aspx?page=mfconcept assessed on 9th june.

http://www.amfiindia.com/amfimembers.aspx assessed on 9th june.

http://www.amfiindia.com/AUMReport_Rpt_Po.aspx?dtAUM=01-Jan-

2012&qt=January%20-%20March%202012&rpt=fwise assessed on 9th and 14th june.

Magazines/ Journals/ Articles:

Jimmy A patel, 21st may 2012, Economics time

Mutual fund insight-15th june to 14th july vol.IX, number-10


http://www.amfiindia.com/AUMReport_Rpt_Po.aspx?dtAUM=01-Jan-2012&qt=January%20-%20March%202012&rpt=fwise

http://www.amfiindia.com/AUMReport_Rpt_Po.aspx?dtAUM=01-Jan-2012&qt=January%20-%20March%202012&rpt=fwise

http://www.amfiindia.com/amfimembers.aspx

http://www.amfiindia.com/showhtml.aspx?page=mfconcept

http://www.sebi.gov.in/sebiweb/stpages/about_sebi.jsp

http://www.sbifunds.com/

http://www.valueresearch.com/

http://www.indiapost.gov.in/Pdf%5CSB_Orders_2012.pdf

http://www.utimf.com/aboutus/Pages/overview.aspx

http://mutualfund.birlasunlife.com/Pages/Individual/Home.aspx

http://www.franklintempletonindia.com/india/jsp_cm/aboutus/wwprofile.asp

http://www.icicipruamc.com/AboutUs/CorporateProfile.aspx

http://en.wikipedia.org/wiki/Mutual_fund

AMFI in association with Price Waterhouse, 2008, The investors concise guide- making

mutual fund work for you, 3rd edition

KPMG & CII, june 2009, Indian Mutual Fund Industry – The Future in a Dynamic Environment

Tetsuya Kamiyama, 2007, Nomura Capital Market Review India’s Mutual Fund Industry, Vol. 10,

No. 4

Kaushal Shah & Associates, 2007, The Fall and Rise of Mutual Funds in India

Sharpe, William F, 1966, “Mutual Fund Performance”, The Journal of Business, Vol.

39(1), pp.119-138.

Soumya Guha Deb & Ashok Banerjee (2009), Downside Risk Analysis of Indian

Equity Mutual Funds: A Value at Risk Approach, International Research Journal

of Finance &Economics, issue-23

Deutsche Bank Research, Feb 2007, India’s Capital Markets: Unlocking the door to future growth

Treynor. 1965 How to Rate Management of Investment Funds. Harvard Business

Review, 43(1): 63-75.

Fama. 1972. Components of Investment Performance, Journal of Finance, 27: 551-567.

Sarkar AK. 1991. Mutual Funds in India-Emerging Trends. The Management

Accountant, 26 (3):171-174.

Sahadevan S and Thiripalraju M, 1997, Mutual Funds: Data, Interpretation and

Analysis, Prentice Hall of India Private Limited, New Delhi.

Irwin, Brown, 1965, “A Study of Mutual Funds: Investment Policy and Investment

Company Performance” Elements of Investments, New York: Holt, Renchart and

Winston, pp.371-385.


APPENDIX

QUESTIONNAIRE

I intern at the SBI MF is conducting a survey on behalf of the company to know the

awareness level about mutual fund in the Chandigarh region. Please fill up the

following questions. Your identity would not be revealed and will be used only for

official purposes.

GENERAL INFORMATION:

NAME:

AGE:

PROFESSION:

GENDER:

2) ARE YOU AWARE OF MUTUAL FUNDS?

a) Yesb) No

3) WHAT IS YOUR PERCEPTION ABOUT MUTUAL FUNDS?a) Safeb) Riskyc) Others

3) WHAT PERCENTAGE OF INCOME DO YOU INVEST?

a) OVER 50%b) 30% TO 50%c) 10% TO 30%d) Below 10%

4. WHAT IS YOUR RISK PREFERENCE?

a) High riskb) Moderate riskc) Low risk

5. WHAT TYPE OF RETURNS DO YOU EXPECT?

a) High return

b) Moderate return


c) Low return

6. WHAT ARE THE VARIOUS INSTUMENTS IN WHICH YOU INVEST?

d) Banke) Insurancef) Stock Marketg) Bonds and Debentureh) PPF (Public provident Funds)i) NSC (National saving certificate)j) Post office saving schemesk) Real Estate l) Goldm) Chit Funds

7. WHAT ARE YOUR REASON/ OBJECTIVE BEHIND INVESTMENT?a) Safetyb) Good returnc) Tax benefitd) Capital appreciatione) Liquidity

8. WHAT ARE THE BREAK UP IN PERCENTAGE TERMS TO YOUR INVESTMENT?

TYPE OF INVESTMENTPERCENTAGE

BANK

INSURANCE

STOCK MARKET

BONDS & DEBENTURE

PPF

NSC

POST OFFICE SAVING SCHEMES

REAL ESTATE

GOLD

CHIT FUNDS

9. WHAT ARE DIFFERENT TYPES OF MUTUAL FUNDS ARE YOU AWARE OF?

a) Growth schemes. (Provide appreciation of capital over medium to long term)


b) Income schemes. (Provide regular and continuous income to investor)

c) Balance schemes. (Provide both growth and income)

d) Money market and Liquid Schemes. (Provide easy liquidity preservation of capital and moderate income).

e) Tax saving schemes.(offer tax rebates under tax laws)

f) Gilt funds (generating returns by investing in securities created and issued by a central government or state government)

10. WHICH OF THEM DO YOU PREFER?

a) Growth schemes

b) Income schemes

c) Balance schemes

d) Money Market and Liquid schemes

e) Tax saving schemes

f) Guilt Funds

11. HOW DO YOU CHOOSE A MUTUAL FUND COMPANY?

a) Brand Name

b) Good Service

c) High Yield

d) Advertisement

e) Any Other Reason……………………………...........................................

12. PREFERABLE ROUTE TO MUTUAL FUND INVESTING?

a) Friends suggestion

b) Newspaper

c) Self decision

d) Television

13. RANK THE FOLLOWING FACTORS THAT YOU CONSIDER WHILE SELECTING A SCHEME:a) Scheme Qualities like track record, fund size, entry load etc. b) Fund Manager Experiencec) Investor Services like disclosure of NAV, A/C statements.d) Marketing of funds through bill boards, relatives, friends, brokers etc

14. ANY SUGGESTION/ RECOMMENDATION FOR SBI MUTUAL FUND


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