Professional Documents
Culture Documents
REPORT ON
“COMPARITIVE ANALYSIS OF
MUTUAL FUNDS”
WITH SPECIAL REFERENCE
TO
SBI MUTUAL FUND
MRINAL MANISH
ENR. NO.:4108078078
2008 – 2010
COMPANY GUIDE: MR. KAPIL MALIK
(H.O.D.- RETAIL)
A report submitted in partial fulfilment for the requirement of MBF program
ACKNOWLEDGEMENT
I would like to pay my regards and sincere thanks to my in charge Mr. Sumit Mahajan
for
Stimulating suggestions and encouragement helped me in all the time of my internship.
Last but not the least; I also would like to thank the entire staff of SBI Mutual Fund and
all my friends and colleagues who helped whenever I faced any difficult situation.
I hope this report, reflecting my learning in the past fourteen weeks, is as beneficial to
the organization as it had been to me.
- MRINAL MANISH
CERTIFICATE
I declare that the form and contents of the above mentioned project are
original and have not been submitted in part or full, for any other degree or
diploma of this or any other Organization / Institute/ University.
Signature: --------------------
MBF (2008-2010)
Finance & its functions are the part of economic activity. Finance is very essentially
needed for all types of organizations viz; small, medium, large-scale industries &
service sector. Hence the role of finance manager & the subject finance accounting
gained maximum importance. Liberalization, globalization & privatization created new
challengers to entrepreneur & corporate in carrying they’re day to day activities. So,
“finance is regarded as the life blood of a business organization.”
The goal of the Summer Training is to give a corporate exposure to the students as well
as to give them an opportunity to apply theory into the practice. The real business
problems are drastically different from class-room case solving. Summer Project aims to
providing little insight into working of an organization to a management trainee.
Among every stage of knowledge being inculcated in students, practical training in the
corporate world plays a significant role in exhibiting and pruning their capabilities.
The purpose behind writing a report is to put in to works the practical training that is
imparted into me that gives a better and a clear understanding of the experience I got.
While preparing this project report I got the knowledge about various aspects regarding
financial decisions made in organisation like “SBI Mutual Fund Pvt. Ltd.” the business
world.
I. INTRODUCTION…………………………………………………………15-62
1. WHY COMPARATIVE ANALYSIS OF MUTUAL FUNDS?............15
2. INTRODUCTION TO MUTUAL FUNDS…………………………….17
3. INDUSTRY PROFILE…………………………………………………40
4. COMPANY PROFILE………………………………………………....46
5. NEW FUND OFFER (SBI GETS)...................................................61
6. OTHER WORK EXPERIENCE AND LEARNINGS DURING THE
PROJECT
....................................................................................................62
2. TERMINOLOGY……………………………………………….....79
6. INVESTMENT BEHAVIOUR……….……………………..........102
FACTOR ANALYSIS...................................................107
DISCRIMINANT ANALYSIS.......................................109
MRINAL MANISH (4108078078)
1. INTRODUCTION....................................................................122
• NAV..............................................................122
• BETA.......................................................124
• STANDARD DEVIATION.........................124
• SHARPE RATIO.......................................125
• TREYNOR RATIO....................................125
SWOT ANALYSIS............................................................................181
CONCLUSIONS………………………………………………………......184
MRINAL MANISH (4108078078)
LIMITATIONS………………………………………………….………...192
GLOSSARY……………………………………………..........................103
REFERENCES..................................................................................205
ANNEXURE......................................................................................207
TABLE INDEX
2. NATIONAL DISTRIBUTORS..........................................................................59
6. FACTOR ANALYSIS.......................................................................................106
1. PRODUCT PORTFOLIO.............................................................57
6. INVESTMENT OBJECTIVES........................................................94
7. RISK PREFERENCES...................................................................94
.................................................................................................160
OBJECTIVE:
SCOPE:
FII’s are taking care by head office in MUMBAI. I am under section of National
distributors and Individual financial advisors. To maintain relationships with them and
make them aware about the new offerings and sort out their existing problems. My area
of scope is DELHI region. There are around 250 ND’s and IFA’s in this region.
METHODOLOGY FOLLOWED:
Methodology basically means the selection of the various methods and techniques in the
research-conducted. The various steps includes: -
1. Selection of a representative sample from the general population, which depicts the
characteristics of the complete
population.
2. Application of various tools and techniques to obtain relevant information related to a
case.
3. Collection of relevant data.
4. Analysis and interpretation of the data.
5. Generation of a final report.
RESEARCH DESIGN
DATA COLLECTION
The primary data collection was the most important part of the project. This includes
collecting the information through field research. For collecting information, a personal
interview was conducted with the help of questionnaire and the required information
was collected for the respondents.
DATA ANALYSIS
After collecting the data, data is to be analyzed. The findings and the analysis have been
mentioned further in the report.
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
has almost overtaken bank deposits and total assets of insurance funds.
The mutual fund industry in India is regulated by Association of Mutual Funds in India
(AMFI). The mutual fund industry in India is of 493,287 crores approx. SBI Mutual
Fund is India’s largest bank sponsored mutual fund and has an enviable track record in
judicious investments and consistent wealth creation.
SBI with its extensive network of over 9000 branches has vast clientele and extends
service not only on commercial basis but also on the basis of social considerations. The
Bank is also on its way to introduce and absorb technology extensively at a rapid speed
not only to remain customer-friendly and efficient for existing business but also to
manage new business and services in an increasingly dynamic and global environment.
The project entitled “Comparison of Mutual Fund with special reference to SBI
Mutual Fund” gives me an opportunity to enhance my knowledge of mutual funds
industry and gives me an insight of business processes of different types of client.
Mutual fund is a buzz in the market these days. The mutual fund industry is burgeoning,
it is completely untapped market. Only 5% of total potential of this industry has been
grabbed. Hence this industry has a lot of opportunities in it. That’s why it is so much
interactive.
As Indian economy is growing at the rate of 8% per annum, we can see its effect in all
areas. The Indian stock market and companies have become lucrative for foreign
investors. More and more fund is pouring in our country. This is increasing liquidity in
the market and hence increasing the money in the hands of people and thus investment.
As the future prospects for Indian companies are bright, they have lots of opportunities
to expand their business worldwide, the investment in Indian companies.
A mutual fund is the ideal investment vehicle for today’s complex and modern financial
scenario. Markets for equity shares, bonds and other fixed income instruments, real
estate, derivatives and other assets have become mature and information driven. Price
changes in these assets are driven by global events occurring in faraway places. A
typical individual is unlikely to have the knowledge, skills, inclination and time to keep
track of events, understand their implications and act speedily. An individual also finds
it difficult to keep track of ownership of his assets, investments, brokerage dues and
bank transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally qualified
and experienced staff that manages each of these functions on a full time basis. The
large pool of money collected in the fund allows it to hire such staff at a very low cost to
each investor. In effect, the mutual fund vehicle exploits economies of scale in all three
areas - research, investments and transaction processing. While the concept of
individuals coming together to invest money collectively is not new, the mutual fund in
its present form is a 20th century phenomenon. In fact, mutual funds gained popularity
only after the Second World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different investment objectives. Today, mutual funds
collectively manage almost as much as or more money as compared to banks.
A sponsor then hires an asset management company to invest the funds according to the
investment objective. It also hires another entity to be the custodian of the assets of the
fund and perhaps a third one to handle registry work for the unit holders (subscribers) of
the fund.
In the Indian context, the sponsors promote the Asset Management Company also, in
which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the
Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the
Birla Sun Life Asset Management Company Ltd., which has floated different mutual
funds schemes and also acts as an asset manager for the funds collected under the
schemes.
Future Scenario
The asset base will continue to grow at an annual rate of about 30 to 35 % over the next
few years as investor’s shift their assets from banks and other traditional avenues. Some
of the older public and private sector players will either close shop or be taken over.
Out of ten public sector players five will sell out, close down or merge with stronger
players in three to four years. In the private sector this trend has already started with two
But this does not mean there is no room for other players. The market will witness a
flurry of new players entering the arena. There will be a large number of offers from
various asset management companies in the time to come. Some big names like Fidelity,
Principal, and Old Mutual etc. are looking at Indian market seriously. One important
reason for it is that most major players already have presence here and hence these big
names would hardly like to get left behind.
The mutual fund industry is awaiting the introduction of derivatives in India as this
would enable it to hedge its risk and this in turn would be reflected in it’s Net Asset
Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to trade in
derivatives. Importantly, many market players have called on the Regulator to initiate
the process immediately, so that the mutual funds can implement the changes that are
required to trade in Derivatives.
Market Trends
A lone UTI with just one scheme in 1964 now competes with as many as 400 odd
products and 34 players in the market. In spite of the stiff competition and losing market
share, UTI still remains a formidable force to reckon with.
Last six years have been the most turbulent as well as exiting ones for the industry. New
players have come in, while others have decided to close shop by either selling off or
merging with others. Product innovation is now passé with the game shifting to
performance delivery in fund management as well as service. Those directly associated
with the fund management industry like distributors, registrars and transfer agents, and
even the regulators have become more mature and responsible.
Funds have shifted their focus to the recession free sectors like pharmaceuticals, FMCG
and technology sector. Funds performances are improving. Funds collection, which
averaged at less than Rs100bn per annum over five-year period spanning 1993-98
doubled to Rs210bn in 1998-99. In the current year mobilization till now have exceeded
Rs300bn. Total collection for the current financial year ending March 2000 is expected
to reach Rs450bn.
What is particularly noteworthy is that bulk of the mobilization has been by the private
sector mutual funds rather than public sector mutual fundsMutual funds are now also
competing with commercial banks in the race for retail investor’s savings and corporate
float money. The power shift towards mutual funds has become obvious. The coming
few years will show that the traditional saving avenues are losing out in the current
scenario. Many investors are realizing that investments in savings accounts are as good
as locking up their deposits in a closet. The fund mobilization trend by mutual funds in
the current year indicates that money is going to mutual funds in a big way.
India is at the first stage of a revolution that has already peaked in the U.S. The U.S.
boasts of an Asset base that is much higher than its bank deposits. In India, mutual fund
assets are not even 10% of the bank deposits, but this trend is beginning to change.
Recent figures indicate that in the first quarter of the current fiscal year mutual fund
assets went up by 115% whereas bank deposits rose by only 17%. (Source: Think-tank,
the Financial Express September, 99) This is forcing a large number of banks to adopt
the concept of narrow banking wherein the deposits are kept in Gilts and some other
assets which improves liquidity and reduces risk. The basic fact lies that banks cannot
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. It offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost. The flow chart below describes
broadly the working of a mutual fund:
Investors
Fund managers
Invest in
Passed back to
Returns
“Mutual Funds are popular among all income levels. With a mutual fund, we get a
diversified basket of stocks managed by professionals”
These Trusts are run by experienced Investment Managers who use their knowledge and
expertise to select individual securities, which are classified to form portfolios that meet
predetermined objectives and criteria.
Portfolio Diversification
Marketability: A new financial asset is created that may be more easily
marketable than the underlying securities in the portfolio.
A mutual fund 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.
By Structure:
Open-ended Funds:
An open-end fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset
Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can
invest in the scheme at the time of the initial public issue and thereafter they can buy or
sell the units of the scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor. .
Interval Funds:
Interval funds combine the features of open-ended and close-ended schemes. They are
open for sale or redemption during pre-determined intervals at NAV related prices
By Investment Objective
Growth Funds:
Income Funds:
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures
and Government securities. Income Funds are ideal for capital stability and regular
income.
Balanced Fund:
The aim of balanced funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed
income securities in the proportion indicated in their offer documents. In a rising stock
market, the NAV of these schemes may not normally keep pace, or fall equally when the
market falls. These are ideal for investors looking for a combination of income and
moderate growth.
MoneyMarketFunds:
The aim of money market funds is to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer short-term instruments such
as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
Returns on these schemes may fluctuate depending upon the interest rates prevailing in
the market. These are ideal for Corporate and individual investors as a means to park
their surplus funds for short periods.
These schemes offer tax rebates to the investors under specific provisions of the Indian
Income Tax laws as the Government offers tax incentives for investment in specified
avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension
Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also
provides opportunities to investors to save capital gains u/s 54EA and 54EB by
investing in Mutual Funds.
Special Schemes
Industry Specific Schemes invest only in the industries specified in the offer document.
The investment of these funds is limited to specific industries like InfoTech, FMCG, and
Pharmaceuticals etc.
• Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50
• Sectoral Schemes
Sectoral Funds are those which invest exclusively in a specified sector. This could be an
industry or a group of industries or various segments such as 'A' Group shares or initial
public offerings
Diversification
Affordability Transparency
Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a
dedicated investment research team that analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.
Diversification
Affordability
A mutual fund invests in a portfolio of assets, i.e. bonds, shares etc. depending upon the
investment objective of the scheme. An investor can buy into a portfolio of equities,
which would otherwise be extremely expensive.
Tax Benefits
Any income distributed after March 31, 2002 will be subject to tax in the assessment of
all unit-holders. However, as a measure of concession to Unit holders of open – ended
and equity – oriented funds, income distributions for the year ending March 31, 2003,
will be taxed at a concessional rate of 10%.
Return Potential
Over a medium to long – term, mutual funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
Low Costs
Investing in the capital markets because the benefits of scale in brokerage, mutual funds
are a relatively less expensive way to invest compared to directly custodial and other
fees translate into lower costs for investors.
Liquidity
Transparency
You get regular information on the value of your investment in addition to disclosure on
the specific investments made by your scheme, the proportion invested in each class of
assets and the fund manager’s investment strategy and outlook.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds according
to your needs and convenience.
Well Regulated
All mutual funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors.
Tax breaks
Last but not the least, mutual funds offer significant tax advantages. Dividends
distributed by them are tax-free in the hands of the investor.
What’s more, tax-saving schemes and pension schemes give you the added advantage of
benefits under Section 88. You can avail of a 20 per cent tax exemption on an
investment of up to Rs 10,000 in the scheme in a year
If you are planning to go with a mutual fund, this must be your mantra: mutual funds do
not offer assured returns and carry risk. For instance, unlike bank deposits, your
investment in a mutual fund can fall in value. In addition, mutual funds are not insured
or guaranteed by any government body (unlike a bank deposit, where up to Rs 1 lakh
per bank is insured by the Deposit and Credit Insurance Corporation, a subsidiary of the
Reserve Bank of India).
There are strict norms for any fund that assures returns and it is now compulsory for
funds to establish that they have resources to back such assurances. This is because most
closed-end funds that assured returns in the early-nineties failed to stick to their
assurances made at the time of launch, resulting in losses to investors.
Restrictive gains
In our earlier example, say, Reliance appreciated 50 per cent. A direct investment in the
stock would appreciate by 50 per cent. But your investment in the mutual fund, which
had invested 10 per cent of its corpus in Reliance, will see only a 5 per cent
appreciation.
Credit Political
inflation
RISKS
Liquidity
Market
The most important relationship to understand is the risk-return trade off. Higher the risk
greater the returns/loss and lower the risk lesser the returns/loss. Hence it is up to you,
the investor to decide how much risk you are willing to take. In order to do this you
Market Risk
Sometimes prices and yields of all securities rise and fall. Broad outside influences
affecting the market lead to this. This is true, may it be big corporations or smaller mid-
sized companies. This is known as Market Risk. A Systematic Investment Plan (SIP)
that works
on the concept of Rupee Cost Averaging (RCA) might help mitigate the risk.
Credit Risk
The debt servicing ability of a company through its cash flows determines the Credit
Risk faced by you. This credit risk is measured by independent rating agencies like
CRISIL who rate companies and their paper. A ‘AAA’ rating is considered the safest
whereas a ‘D’ rating is considered poor credit quality. A well – diversified portfolio
might help mitigate this risk.
Inflation Risk
Inflation is the loss of purchasing power over a time. A lot of times people make
conservative investment decisions to protect their capital but end up with a sum of
money that can buy less than what the principal could, at the time of investment. A
well–diversified portfolio with some investment in equities might help mitigate this risk.
In a free market economy interest rates are difficult and not impossible to predict.
Changes in interest rates affect the prices of bonds as well as equities. If interest rates
Political Risk
Changes in government policy and political decision can change the investment
environment. They can create a favourable environment for investment or vice versa.
Liquidity Risk
Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. It can be partly mitigated by diversification, staggering of maturities as well
as internal risk controls that lean towards purchase of liquid securities. It simply means
that you must spread your investment across different securities (stocks, bonds, money
market instruments, real estate, fixed deposits etc.). This kind of a diversification may
add to the stability of your returns, for example, during one period of time equities
might under perform but bonds and money market instruments might do well enough to
offset the effect of a slump in the equity
Markets.
There are certainly some benefits to mutual fund investing, but you should also be aware
of the drawbacks associated with mutual funds.
3. Fees and Expenses: Most mutual funds charge management and operating fees
that pay for the fund's management expenses (usually around 1.0% to 1.5% per
year). In addition, some mutual funds charge high sales commissions, 12b-1
fees, and redemption fees. And some funds buy and trade shares so often that the
transaction costs add up significantly. Some of these expenses are charged on an
ongoing basis, unlike stock investments, for which a commission is paid only
when you buy and sell .
4. Poor Performance: Returns on a mutual fund are by no means guaranteed. In
fact, on average, around 75% of all mutual funds fail to beat the major market
indexes, like the S&P 500, and a growing number of critics now question
whether or not professional money managers have better stock-picking
capabilities than the average investor.
7. Size: Some mutual funds are too big to find enough good investments. This is
especially true of funds that focus on small companies, given that there are strict
rules about how much of a single company a fund may own. If a mutual fund has
$5 billion to invest and is only able to invest an average of $50 million in each,
then it needs to find at least 100 such companies to invest in; as a result, the fund
might be forced to lower its standards when selecting companies to invest in.
Net Asset Value (NAV)Open-end mutual funds price their shares in terms of a Net
Asset Value (NAV) (note that you can calculate NAV for a closed-end fund too, but it
will not necessarily be the price at which you buy or sell closed-end shares). NAV is
calculated by adding up the market value of all the fund's underlying securities,
subtracting all of the fund's liabilities, and then dividing by the number of outstanding
shares in the fund. The resulting NAV per share is the price at which shares in the fund
are bought and sold (plus or minus any sales fees). Mutual funds only calculate their
NAVs once per trading day, at the close of the trading session.
1986: UTI Master share, India’s first true ‘mutual fund’ scheme, launched.
1992: The Harshad Mehta-fuelled bull market arouses middle-class interest in shares
and mutual funds.
1993: Private sector and foreign players allowed; Kothari Pioneer first private fund
house to start operations; SEBI set up to regulate industry.
1996: Sebi’s mutual fund rules and regulations, which forms the basis of most current
laws, come into force.
1998: UTI Master Index Fund is the country’s first index fund.
1999: The takeover of 20th Century AMC by Zurich Mutual Fund is the first acquisition
in the mutual fund industry.
2002: UTI bifurcated, comes under SEBI purview; mutual fund distributors banned from
giving commissions to investors; floating rate funds and Foreign debt funds debut.
2003: AMFI certification made compulsory for new agents; fund of funds launched.
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 in India can be broadly divided into four distinct phases.
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 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under the
management.
1987 marked the entry of non – UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC). SBI Mutual Fund was the first non – UTI Mutual Fund established in
June1987 followed by Can Bank Mutual Fund (Dec ‘87), Punjab National Bank Mutual
Fund (Aug ‘89), Indian Bank Mutual Fund (Nov ‘89), Bank of India (Jun ‘90), Bank of
Baroda Mutual Fund (Oct ‘92). LIC established its mutual fund in June 1989 while GIC
had set up its mutual fund in December 1990. At the end of 1993, the mutual fund
industry had assets under management of Rs.47, 004 crores.
With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund came into being, under which all mutual
funds, except UTI, were to be registered and governed. The erstwhile Kothari Pioneer
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January
2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With
the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and
growth
‘Sponsor’ is defined under SEBI Regulations as any person who, acting alone or in
combination with another body corporate establishes a mutual fund. The sponsor of a
fund is akin to the promoter of companies he gets the fund registered with SEBI. The
Mutual Fund in India is constituted in the form of a Public Trust under the Indian Trust
Act 1882. The fund invites investors to contribute their money in the common pool by
subscribing to units issued by various schemes established by the Trust as evidence of
their beneficial interest in the fund. The Trust or Fund has no legal capacity itself rather
it is the Trustee(s) who have legal capacity and therefore the trustees take all acts in
relation to the Trust itself.
Trustees
Right of Trustees
The role of an Asset Management Company (AMC) is to act as the investment manager
of the trust under the Board supervision.
Transfer Agents
Transfer Agents are responsible for issuing and redeeming units of the mutual fund and
provide other related services such as preparation of transfer documents updating
investor’s records. A fund may choose to opt this activity in-house or by an outside
transfer agent.
Distributors
AMCs usually appoint distributors or brokers, who sell units on behalf of the fund.
Some funds require that all transactions to be routed through such brokers.
Bankers
A fund’s activities involved dealing with the money on a continuous basis primarily
with respect to buying and selling units, paying for investment made, receiving the
proceeds from sale of investment and discharging its obligations towards operative
expenses. A fund’s banker therefore plays a crucial role with respect to its financial
dealings.
With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non profit organisation. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August, 1995.
AMFI is a apex body of all Asset Management Companies (AMC) which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund
schemes are its members. It functions under the supervision and guidelines of its Board
of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry
to a professional and healthy market with ethical lines enhancing and maintaining
standards. It follows the principle of both protecting and promoting the interests of
mutual funds as well as their unit holder.
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:
This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.
MRINAL MANISH (4108078078)
SBI Mutual Fund is India’s largest bank sponsored mutual fund. 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. SBI Mutual Fund is a joint venture between the
State Bank of India and Société Générale Asset Management, one of the world’s
leading fund management companies that manages over US$ 500 Billion worldwide. In
twenty years of operation, the fund has launched 38 schemes and successfully redeemed
fifteen of them.
A total of over 4.6 million investors have reposed their faith in the wealth generation
expertise of the Mutual Fund. The fund serves this vast family of investors by reaching
out to them through network of over 130 points of acceptance, 28 investor service
centers, 46 investor service desks and 56 district organizers. Today, the fund manages
over Rs. 28500crores of assets and has a diverse profile of investors actively parking
their investments across 36 active schemes. SBI Mutual is the first bank-sponsored fund
to launch an offshore fund – Resurgent India Opportunities Fund. Growth through
innovation and stable investment policies is the SBI MF credo.
Consistency
Flexibility
Offers investors a broad range of managed investment products in various asset classes
and risk parameters, within the at most operational flexibility to suit their investment
needs.
Stability
Our commitment to the highest quality of service and integrity are the foundation upon
which clients can build their trust with us
Origin
The origin of the Indian mutual funds industry dates back to 1963 when the Unit Trust
of India (UTI) came into existence at the initiative of the Government of India and the
Reserve Bank of India. Since then the mutual funds sector remained the sole fiefdom of
UTI till 1987 when a slew of non-UTI, public sector mutual funds were set up by
nationalized banks and life insurance companies.
The year 1993 saw sweeping changes being introduced in the mutual fund industry with
private sector fund houses making their debut and the laying down of comprehensive
mutual fund regulations. Over the years, the Indian mutual funds industry has witnessed
an exponential growth riding piggyback on a booming economy and the arrival of a
horde of international fund houses.
“Mutual fund is vehicle that enables a number of investors to pool their money and
have it jointly managed by a professional money manager.”
A Mutual Fund is a pool of money, collected from investors, and is invested according
to certain investment objectives.
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.
Mutual Fund companies are known as asset management companies. They offer a
variety of diversified schemes. Mutual Fund acts as investment companies. They pool
the savings of investors and invest them in a well-diversified portfolio of sound
investments.
Mutual funds can be broken down into two basic categories: equity and bond funds.
Equity funds invest primarily in common stocks, while bond funds invest mainly in
various debt instruments.
Within each of these sectors, investors have a myriad of choices to consider, including:
international or domestic, active or indexed, and value or growth, just to name a few.
I will cover these topics shortly. First, however, I am going to focus my attention on the
“nuts and bolts” of how mutual funds operate.
Mutual funds
Mutual fund is vehicle that enables a number of investors to pool their money and have
it jointly managed by a professional money manager
Sponsor
Trustee
The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund.
At least 50% of the directors of the AMC are independent directors who are not
associated with the Sponsor in any manner. The AMC must have a net worth of at least
10 crores at all times.
Transfer Agent
The AMC if so authorised by the Trust Deed appoints the Registrar and Transfer Agent
to the Mutual Fund. The Registrar processes the application form, redemption requests
OPERATION
In eighteen years of operation, the fund has launched thirty-two schemes and
successfully redeemed fifteen of them. In the process it has rewarded its investors
handsomely with consistently high returns. A total of over 20, 00,000 investors have
reposed their faith in the wealth generation expertise of the Mutual Fund. Schemes of
the Mutual fund have consistently outperformed benchmark indices and have emerged
as the preferred investment for millions of investors and HNI’s. Today, the fund
manages over Rs. 13,000 crores of assets and has a diverse profile of investors actively
BOARD OF DIRECTORS
SanjaySinha
Mr. Sanjay Sinha has taken over as Chief Investment Officer with effect from June
1, 2007. Mr. Sinha joined SBI Mutual Fund as the Head of Equities in November
2005 and has managed the largest number of funds in SBI MF covering the entire
spectrum of equity funds – from index funds, diversified equity funds to sector
funds.
He has over 18 years of experience in the Mutual Fund Industry. Prior to joining
SBI MF, Mr. Sinha worked as Senior Fund Manager with UTI Mutual Fund and
was managing a corpus of over Rs 28 billion (over US$600 million). A Post
Graduate from IIM Kolkatta, Mr. Sanjay Sinha has a rich experience in managing
funds.
ThierryNardozi
NipaLadiwala
After obtaining a post graduate degree in Business Management and Law, Nipa
worked as an equity analyst, and dealer for the offshore Funds of UTI.
Subsequently she was appointed as Fund Manager for India Growth Fund, which
was listed on NYSE. She was head of Research at UTI Securities before joining
SBI Funds Management Pvt. Ltd. as Head of PMS. Nipa has 6 years experience as
Fund Manager. She has a total of 15 years experience and has been with SBI Funds
Management Pvt. Ltd since October 2005.
Equity :
Prior to joining SBI Funds Management, he has worked with Kotak Mahindra
Asset Management, Deutsche Asset Management - part of Deutsche Bank Group,
and TATA TD Waterhouse Securities - a joint venture between the TATA Group,
India and TD Bank Financial Group, Canada. At Deutsche Asset Management, he
was responsible for advising the offshore fund Deutsche India Equity Fund, Japan
and MetLife Insurance.
Parijat has done his B.E (ECE) and PGDM (IIM Bangalore). He has got 12 years
experience in capital markets in areas like research, dealing and fund management.
Parijat is associated with SBI Funds Management Pvt. Ltd. since July 2006.
Prior to joining SBI Funds Management Pvt. Ltd., he was with State Bank of
Mauritius Limited, Mumbai as Head – Treasury.
Mr. Murthy did his B.Sc (Hons) from Osmania University and his Masters in
Financial Management from Jamnalal Bajaj Institute of Management Studies,
Mumbai. He has over 12 years experience in the Mutual Fund Industry, 9 years in
Unit Trust of India and 3 years in Cholamandalam AMC Ltd. Prior to joining SBI
Funds Management Pvt. Ltd., he was with Cholamandalam Mutual Fund as Fund
Manager – Debt.
OffshoreFunds
Anand Gupta
Anand holds charter from CFA Institute, USA and Institute of Chartered
Accountants of India. Before joining SBI Funds Management in October 2005,
Anand has worked with HSBC securities and domestic brokerage house as equity
research analyst for 3 years. Anand has 5 years of experience in capital markets
and 3 years of experience in Audit & Business consulting.
SBI asset management company mainly emphasize on relationship building with its
customers like distributors, Banks, individual investors etc. The distribution channel of
SBIMF is as follows
The alternative distribution channels that are available are selling, or using lead
managers and brokers along with sub-brokers, for selling units. To be successful in this
mission, the industry will have to ensure that only those agents that have conviction
about mutual funds being the most versatile and an ideal investment vehicle for
investors are encouraged. This is because, there is a sense of loyalty amongst agents, in
In such a system, one achieves brand loyalty through continuous interaction between
agents and investors. Building a team of agents and other distribution network such as
distribution and collecting agents and franchise offices, will provide the investor the
opportunity of having continuous interaction and contact with the mutual fund.
Therefore, retail distribution through the agents is a preferred alternative for distributing
mutual fund products.
INFORMATION SHARING:
• Apart from meeting the distributors the other way to keep in touch with them is
to keep updating them about the latest information like NAVs, new products,
best performing funds, initiatives like organizing Refresher Courses etc. All this
information sharing is done by calling them personally.
OPERATIONAL SERVICE:
• All AMCs in India uses CAMS a software package to provide services to its
customers.
• Recording and updating: After meeting the distributors I use to update their
records in our database like changing of address, telephone no. etc.
During this internship of three months, apart from project I have learnt several important
skills and gained knowledge which is very important, and according to me is the best
learning during the Summer Internship Project, some of them are covered below:
1) INTERPERSONAL SKILLS:
While visiting the distributors with I have learnt the way of pitching a customer,
how to represent the funds, how to handle various queries from them and several
others.
2) COMMUNICATION SKILLS:
During this tenure of three months they have provided me various opportunities to
improve my communications skills. It includes presentations on various topics like
BUDGET’ 08-09, ADR & GDR etc. and group discussions.
3) KNOWLEDGE ENHANCEMENT:
With practices like NEWS submission on regular basis, assignments and daily
sensex watch helped me to improve my knowledge regarding both stock market and
economic development of the country.
4) TEAM BUILDING:
While working with retail team in SBIMF I have learnt the art of team building and
working in a group, the way they work and move ahead as a team helps them in
increasing the AUM of the company and achieving their targets.
Another important skill that I have learnt during the project is application of
knowledge to real life situations such as handling the investors who have
knowledge about the industry, use of EXCEL to make SIP calculators and NAV
trackers to attract the customers.
2.REVIEW OF LITERATURE
J
un
e
20
09
This was one of the best months for stocks and commodities in a
long time. Sensex posted a gain of 28% as both foreign and domestic
investors poured money. It is up a whopping 79% from the low
witnessed on March 9 this year. The scale and speed of stock market
gain has taken most investors by surprise and ‘left out feeling’ is
leading to massive buying in high-beta names. Markets caught fire
after the announcement of election results and further fuel was added by positive
The barrage of liquidity is finally finding its way into riskier assets across markets.
Credit spreads collapsed, high yield currencies gained against safe heavens and bond
yields rose as investors migrate from defensives to risk-assets. Volatility and risk
premiums are touching multi-month low as confidence is coming back into financial
markets. Incremental economic data is less negative, pile of cash is humongous and
policy remains extremely supportive. As we have been writing that the scale,
magnitude and synchronized nature of policy response this time is simply
unprecedented in history. Fundamental problems of global imbalances that led to this
crisis can’t get resolved so easily and one might argue that the policy response so far
is something like treating a ‘hangover’ with more alcohol. But the fact remains, that
in the short term, the sheer power of liquidity can take prices of risk assets to levels
far beyond what fundamentals may justify.
Commodity prices have also shot up with Reuters CRB index posting one of the
biggest monthly gain since 1974. Normally, commodities perform during the late
stage of the bull market, however, investors seem to be playing a paper currency
debasement play through investment in real assets. While central bankers are still
maintaining probably the most accommodative policy ever to combat deflation,
market wisdom as reflected in prices seem to be getting worried about onset of
inflation.
Indian equities were one of the best performing market this month as investors
jumped in after the decisive verdict in favor of UPA government. Foreign
Institutional Investors invested over $ 4 billion in the month of May and their year-
to-date investment has also crossed $ 4 billion. Investors draw comfort from the fact
that a major victory for UPA means greater ability to carry out critical reforms.
Immediate priority for the government would be to provide adequate fiscal stimulus
in order to cushion the economy against headwinds from the global downturn. The
finance minister would have to balance between keeping the fiscal deficit under
This election is a game changer. At a time when the global economy is faced with
severe challenges, the world is looking for new engines of economic growth. India
with its demographic advantage, high savings rate and a domestic consumption and
investment oriented economy has the potential to de-couple from the rest of the world
and deliver higher growth rate on a sustained basis. At this time, we needed a pro-
reforms and stable government which can push structural reforms to unleash the full
potential of Indian economy and corporate sector. People of India have delivered that
decisive mandate.
Our sectoral bets and stock picks in equity funds are rightly positioned to take
advantage of the upturn in equity market. We have been focussing on investing in
companies leveraged on domestic consumption and infrastructure build up. While one
can expect liquidity inflows from domestic and foreign investors, several corporates
are likely to use the opportunity to raise equity. We will continue to keep a close
watch on evolving economic scenario, policy announcements and valuation.
Over the last several months, we have consistently been advising investors to focus
on long term growth potential of Indian economy and take advantage of the downturn
to build exposure to equities. The recent rally in equity markets further highlights the
importance of discipline in asset allocation in investor’s portfolios.
Regards,
Navneet Munot
Chief Investment Officer
SBI Funds Management Pvt. Ltd
ABSTRACT (1)
Investments goals vary from person to person. While somebody wants security, others might
give more weightage to returns alone. Somebody else might want to plan for his child's
education while somebody might be saving for the proverbial rainy day or even life after
retirement. With objectives defying any range, it is obvious that the products required will
vary as well.
Indian Mutual Funds industry offers a plethora of schemes and serves broadly all types of
investors. The range of products includes equity funds, debt, liquid, gilt and balanced funds.
There are also funds meant exclusively for young and old, small and large investors.
Moreover, the setup of a legal structure, which has enough teeth to safeguard investors’
Investors of all categories could choose to invest on their own in multiple options but opt for
Mutual Funds for the sole reason that all benefits come in a package. The Mutual Fund
industry is having its hands full to cater to various needs of the investors by coming up with
new plans, schemes and options with respect to rate of returns, dividend frequency and
liquidity.
In view of the growing competition in the Mutual Funds industry, it was felt necessary to
understand the working of mutual funds industry in India, its merits and demerits, various
types of schemes available in the Indian market and the investor’s orientation towards Mutual
Funds i.e. their pattern of risk appetite and preferences in various schemes and plans. Apart
from this the report also includes the details of the work that I have learnt during the project,
which according to me is the best part of the project as it provided me a practical exposure to
the Mutual fund industry and the working of an AMC.
ABSTRACT (2)
ABSTRACT (3)
Peter Tufano and Mathew Sevick of Harvard Business School, Boston and Monitor
Company, Inc., Cambridge respectively discussed in this paper about “Board structure and
fee-setting in the U.S. mutual fund industry”. This study uses a new database to describe
the composition and compensation of boards of directors of U.S. open-end mutual funds.
They use these data to examine the relation between board structure and the fees charged by a
fund to its shareholders. They find that shareholder fees are lower when fund boards are
smaller, have a greater fraction of independent directors, and are composed of directors who
sit on a large fraction of the fund sponsor's other boards. They find some evidence that funds
whose independent directors are paid relatively higher directors' fees approve higher
shareholder fees.
• The need of the study aimed to know the awareness in the public about the
various products and services provided by S.B.I-Mutual Fund.
• A study was also conducted to measure the performance of various funds on the
basis of various performance measuring ratios such as Sharpe ratio, total expense
ratio, standard deviation, Beta and R-squared.
• The study was basically undertaken to understand the financial needs of the
customer and to provide or suggest them products and services according to their
financial needs.
• The study was undertaken to find out the Banking channel at SBI Mutual Fund.
PERFORMANCE EVALUATION
Mutual Fund industry today, with about 34 players and more than five hundred
schemes, is one of the most preferred investment avenues in India. However, with a
Worldwide, good mutual fund companies over are known by their AMCs and this fame
is directly linked to their superior stock selection skills. For mutual funds to grow,
AMCs must be held accountable for their selection of stocks. In other words, there must
be some performance indicator that will reveal the quality of stock selection of various
AMCs.
Return alone should not be considered as the basis of measurement of the performance
of a mutual fund scheme, it should also include the risk taken by the fund manager
because different funds will have different levels of risk attached to them. Risk
associated with a fund, in a general, can be defined as variability or fluctuations in the
returns generated by it. The higher the fluctuations in the returns of a fund during a
given period, higher will be the risk associated with it. These fluctuations in the returns
generated by a fund are resultant of two guiding forces. First, general market
fluctuations, which affect all the securities, present in the market, called market risk or
systematic risk and second, fluctuations due to specific securities present in the portfolio
of the fund, called unsystematic risk. The Total Risk of a given fund is sum of these
two and is measured in terms of standard deviation of returns of the fund. Systematic
risk, on the other hand, is measured in terms of Beta, which represents fluctuations in
the NAV of the fund vis-à-vis market. The more responsive the NAV of a mutual fund
is to the changes in the market; higher will be its beta. Beta is calculated by relating the
returns on a mutual fund with the returns in the market. While unsystematic risk can be
diversified through investments in a number of instruments, systematic risk cannot. By
using the risk return relationship, we try to assess the competitive strength of the mutual
funds vis-à-vis one another in a better way.
Developed by Jack Treynor, this performance measure evaluates funds on the basis of
Treynor's Index. This Index is a ratio of return generated by the fund over and above
risk free rate of return (generally taken to be the return on securities backed by the
government, as there is no credit risk associated), during a given period and systematic
risk associated with it (beta). Symbolically, it can be represented as:
Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the
fund.
All risk-averse investors would like to maximize this value. While a high and positive
Treynor's Index shows a superior risk-adjusted performance of a fund, a low and
negative Treynor's Index is an indication of unfavorable performance.
In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is
a ratio of returns generated by the fund over and above risk free rate of return and the
total risk associated with it. According to Sharpe, it is the total risk of the fund that the
investors are concerned about. So, the model evaluates funds on the basis of reward per
unit of total risk. Symbolically, it can be written as:
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a
fund, a low and negative Sharpe Ratio is an indication of unfavorable performance.
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
TERMINOLOGY:
ALPHA - The alpha ratio illustrates the effect of the portfolio manager’s choice on the
fund's return. The greater the alpha, the better a return has the investment yielded
compared with other investment objects with the same market risk. Alpha is an
annualized return measure of how much better or worse a fund’s performance is relative
to an index of funds in the same category, after allowing for differences in risk.
BETA – A ratio that measures the market risk of securities or a fund. If the beta ratio
exceeds one, the fund is more sensitive than funds in general to the fluctuations of the
stock market. The beta may also be negative, which means that the value of the fund
will, on average, move to the opposite direction than the general market development.
Beta measures the sensitivity of rates of return on a fund to general market movements.
Beta measures the volatility of the fund, as compared to that of the overall market. The
Market's beta is set at 1.00; a beta higher than 1.00 is considered to be more volatile than
the market, while a beta lower than 1.00 is considered to be less volatile.
Beta measures the volatility of the fund’s value relative to the volatility of the fund’s
benchmark value. The Beta coefficient indicates the percentage change of the fund’s
value when the benchmark value changes by one percentage point.
The Beta coefficient is a key parameter in the capital asset pricing model (CAPM). It
measures the part of the asset's statistical variance that cannot be mitigated by the
diversification provided by the portfolio of many risky assets, because it is correlated
with the return of the other assets that are in the portfolio.
Beta is also referred to as financial elasticity or correlated relative volatility, and can be
referred to as a measure of the asset's sensitivity of the asset's returns to market returns,
its non-diversifiable risk, its systematic risk or market risk. On an individual asset level,
measuring beta can give clues to volatility and liquidity in the marketplace. On a
portfolio level, measuring beta is thought to separate a manager's skill from his or her
willingness to take risk.
The beta movement should be distinguished from the actual returns of the stocks.
STANDARD DEVIATION
CORRELATION
IT shows the linear dependency between fund returns and the returns of the benchmark
index. Correlation may vary between -1 and 1. The dependency is complete if the fund’s
correlation to the benchmark index is 1. If the correlation is zero, there is no
dependency.
CONCLUSION:
From the above table we can clearly see the comparison between various funds of SBI
Mutual Fund. In this higher the value of Sharpe and Treynor, better is the fund.
• Magnum Taxgain
• Magnum Multiplier and
• Magnum Contra
are having beta values of 0.88, 0.86 and 0.91 respectively which means that these funds
are more sensitive and will give more returns than market when market are in good
phase but give negative returns more intensely than market when market in bad phase.
High and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a
low and negative Sharpe Ratio is an indication of unfavorable performance. If the
Sharpe figure is positive, the risk taken has paid off, and if the figure is negative, the
returns are lower than the risk-free rate.
Magnum Taxgain,
Magnum Contra and
Magnum Multiplier
Are the three funds which are best among all in terms of risk adjusted returns.
A scheme with high Treynor ratio such as Equity scheme will enjoy a premium when
the markets are bullish and will be affected negatively when the markets are bearish.
So in the bullish market Magnum Global and Magnum Multiplier are the best funds to
opt for getting better returns.
Geographical scope-
The geographical scope of the study is not limited. This study can be implemented in
any part of the country; though the samples taken were from SBI Mutual Fund branch
office at Barakhamba Road, and various banks in the west Delhi region were visited to
know their response.
Functional scope-
This study can be used to understand the behavioral aspect of people who invest, what is
their investment potential and how much risk can they take. The study throws some light
on seven best performing schemes of S.B.I-Mutual Fund.
• Geographical locations.
• Unawareness among investors is next in the line. The investor does not
want to invest in Mutual Funds because of the myth that investment in these
• The investor also does not want to invest because of the greater risk
attached with equity. Rather, he wants to invest in a fixed instrument from where
he may be able to get secured returns instead of having unasserted returns.
In dealing with real life problem it is often found that data at hand are inadequate, and
hence, it becomes necessary to collect data that is appropriate. There are several ways of
collecting the appropriate data which differ considerably in context of money costs, time
and other resources at the disposal of the researcher.
The data collection for this study was done in the following manner:
A rigid procedure was followed and we were seeking answers to many pre-conceived
questions through personal interviews.
Information to find out the investment potential and goal was found out through
questionnaires.
The sampling method chosen is Area Sampling. As the primary sampling unit
represents a cluster of units based on geographic area. The geographical area chosen for
individual customers was at SBI Mutual Fund main office at Barakhamba Road.
It is basically a non-probability sampling procedure which does not afford any basis for
estimating the probability that each item in the population has of being included in the
sample.
Under non-probability sampling the organizers of the enquiry purposively choose the
particular units of the universe for constituting a sample on the basis that the small mass
that they so select out of a huge one will be typical or representative of the whole.
DATA ANALYSIS
POPULATION:-
According to the data collection method adopted, the size of the population is 100.
Thus, N=100
After collecting the data the following facts were found out:-
Out of the 100 people the following percentage composition were interested in the
following products:-
• SHARE/BONDS- 23%
• LIFE INSURANCE-7%
• REAL ESTATE-6%
• COMMODITIES-8%
• OTHERS-2%
The data collected above shows that approximately 65% of people are aware of the
market in general and 44% are aware of Mutual Funds in particular. Thus further
analysis is made on the basis of data collected; which categories of people are more
Findings:
• The persons within the age group of 35-50 years only 58% of respondents are
interested to invest in SBI-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 SBI-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.
Findings:
• The above analysis shows that Low income category is less interested to invest
in SBI-MF as compared to high income category. The reason being that these
people have to fulfill their basic needs as first. The other reason is that low
income category people are having more consumption as compared to their
savings.
• Among High income category people, only 48% of the respondents want to
invest in SBI-MF because these people have enough resources for their well
being and it does not hurt them to invest a large chunk of their resources in
Mutual Funds.
Findings:
23
46
servicemen
businessman
41 professional
39
44
servicemen
businessman
frofessional
17
The above graph shoes us that people purchase funds, when the price of the fund
suddenly increases. This is because of their expectation for the fund to rise more
in the future.
Next are the investors who invest when the price (NAV) of the fund is slowly but
steadily increasing. They do this, thinking that the fund will further raise in the
future at the same pace.
24 % of the investors invest their money when the price of the fund suddenly decreases.
They do this in order to take benefit of the decreased cost, in anticipation that they may
sell it in the future for a higher price.
INVESTMENT OBJECTIVES:
It can be seen from the following graph that the main investment objective of most of
the investors is good returns and capital appreciation.
RISK PREFERENCES : The following chart explains that majority of investors (57%)
were ready to take moderate level of risk by investing in mutual funds and also rest of
the respondents(43%) go for “High Risk and High Return” category. Not a single
respondent opt for Low risk and low return category that again proved that it is a myth
that Indian Investors are more risk averse when it comes to investment in Stock Markets
or Mutual Funds.
SCHEME PREFERENCES:
SCHEME PREFERENCES:
When it come to scheme preference on the basis of its structure, majority of retail
investors prefer “Open Ended Scheme “ primarily due to flexibility of redemptions,
investments, good return and liquidity. None of the investors prefer “Interval Scheme”;
in fact some of the retail investors were confused about the very name of “Interval
Schemes.”
When it comes to Saving Habits of investors it can be seen that majority of respondents
saves between 15%-20% p.a. basis followed by “above 25%” category (20%).Others
categories like 10-15 and 20-25 are equally preferred by respondents but it was a
positive clue that only 7% of respondents save below 5%.
Most Popular Fund from SBI: Up till this stage the winner is “MAGNUM TAX
GAIN” which is preferred by majority of respondents (60%), due to its three in one
benefits which are as follows:
Good Return
Capital Appreciation
Apart from maintaining relationship with the distributors I have also deal with the
customers who are coming directly to the AMC for investment which provided me an
exposure to selling. It also helped me in learning how to deal with different type of
customers, how to insist them for making investments etc. while dealing with them I
have done following tasks:-
a) Explain them various funds/schemes according to their objective.
b) Helping them in filling the forms.
c) Solving their problems related to statement, redemption etc.
d) Insisting them to invest in Systematic Investment Plans (SIP).
While interacting with them I have tried to find out various factors effecting their
investments in mutual funds, for this I have carried out a survey by requesting them to
fill a questionnaire a sample of which I have attached in the annexure. On the basis of
that that questionnaire I have analyzed various points which are discussed below.
Researchers have attempted to study various need expectations of small investors from
different types of mutual funds available in Indian market and identify the risk return
perception with the purchase of mutual funds. Various multivariate techniques are
applied to identify important characteristics being considered by the Indian investors in
the purchase decision.
The liberalization of the financial sector has sent signals to a wave of changes in savings
and investment behavior adding a new dimension to the growth of financial sector. The
Indian financial system in general and the mutual fund industry in particular continue to
The investors do not evaluate all possible product attributes while making a choice, but
the marketer’s search is for identification of “The key buying criteria” or “The key
choice criteria” which are defined as certain features of a product offering that are
closely associated with preferences. This study aims at tracking investor’s preferences
and priorities towards different types of mutual fund products. An attempt has also been
made to differentiate between the factors which have been considered by the investors
who have been investing for less than a year and the ones who have been investing for
more than a year.
1) Sample size is limited to 100 only thus sample size does not adequately represent
the national market.
2) Most of the investors were those who came to SBIMF directly, thus there may be
a chance of biasness towards SBIMF’s funds.
3) This study has not been conducted over half month period in which most of the
time it was slump and fluctuations in the market. Thus the responses of the
investors are likely to be influenced by the market conditions
METHODOLOGY:
In order to check the reliability and validity of the data, we had kept some similar kind
of variables in the questionnaire like fund performance and fund manager performance
as well as security and attitude towards risk. In order to increase the reliability and
validity, we have excluded the questionnaires filled by those respondents who had a
varied opinion
These analysis methods are used for the following reasons:
1) Factor analysis is used to classify similar variables under a broad heading, as the
numbers of independent variables are very high.
We are going to see how these selected factors affect the investment behaviour of the
existing & potential investors. Above mentioned statistical tools have been used to
analyze this thing.As we use Factor analysis we can reduce the number of factors to
draw some clear picture for the investors who are looking to invest irrespective of
MRINAL MANISH (4108078078)
We have ranked the independent variables affecting the buying behavior of consumers
by adding the weighted factors. Firstly, we have counted the responses under each scale.
Secondly, we have assigned weights to each of the scale giving least weight to 1 and
maximum weight to 5. Finally, we have added all the weighted responses and ranked
accordingly i.e. in descending order.
FACTOR ANALYSIS:
As the numbers of independent variables are very high, we have tried to classify similar
variables under a broad heading through factor analysis. In KMO adequacy level is 50%
with 100% significance which makes the model satisfactory. We can increase the
VARIABLES FACTORS
Performance of fund manager
AUM Technical factors
NAV
Type of scheme
Personal attention Psychological factors
Prior experience
Advisor influence
Family recommendation Promotion
Promotional campaign
Economic & Market condition
Fluctuation in equity market Market condition
Attitude towards risk
There are other factors also which consists of other variables but they cannot be
classified under abroad headings.
We can see in the rotated component matrix in factor analysis table that above factors
have been recognised as sub-factors and generalized in 5 broad categories. All this
selection has been made by the modal on the basis of factor loadings which we can see
in one of the tables of factor analysis.
Marketing Factors – Investors who are going to rate this broad category as the
most important for them are more inclined to the factors like advisor influence,
family recommendation and promotional campaign. These kinds of investors are
not much experienced as far as these investments are concerned.
Through Discriminant analysis I have tried to highlight variables which effect the
decision of a people investing for less than a year and people who are investing for more
than a year. The term 1 consists of the people who are investing for less than a year
whereas term 2 consists of the people who are investing for 1 to 5 years. I have found
that Eigen value is less than 1 and Wilks’ Lambda is more than 0.5 as well as the
significance level is quite high which shows that the model is not applicable. Through
group statistics in both the terms standard deviation is quite high and mean is quite low
as seen in Appendix. Therefore, there is no difference in the factors affecting the buying
behavior between term 1 and term 2 people.
DEMOGRAPHIC FACTORS:
• SEX PROFILE:
• AGE PROFILE:
ACADEMIC QUALIFICATION:
OCCUPTION PROFILE:
From above chart it can be easily inferred that majority of respondents are from
2,00,000-5,00,000 range, therefore its remain to be seen that how many are from less
than two lakh category because here lies the opportunity for AMCs to generate huge
volumes by offering innovative funds.
SCHEME PREFERENCES:
As above chart clearly explains that majority of respondents (57%) take self decision
once they start investing in mutual funds. Only 10 % of respondents take help of
Brokers/Advisors when it comes to final decision of investing. Therefore, it shows that
AMCs in general and SBI in particular have to be more informative so that they can
provide best material, service and information to facilitate subsequent investment of
retail investors.
MRINAL MANISH (4108078078)
When it come to scheme preference on the basis of its structure, majority of retail
investors prefer “Open Ended Scheme “ primarily due to flexibility of redemptions,
investments, good return and liquidity. None of the investors prefer “Interval Scheme”,
in fact some of the retail investors were confused about the very name of “Interval
Schemes.”
SAVING HABITS:
When it comes to Saving Habits of retail investors it comes out that majority of
respondents saves between 15%-20% p.a. basis followed by “above 25%” category
(20%), therefore at this stage it is very difficult to say anything about saving preferences
about retail investors. Others categories like 10-15 and 20-25 are equally preferred by
Most Popular Fund from SBI: Up till this stage the winner is “MAGNUM TAX
GAIN” which is preferred by majority of respondents (60%), due to its three in one
benefits which are as follows:
Tax Benefit
Good Return
Capital Appreciation
Form above chart it can be inferred that up to this stage majority of respondents (47%)
are considerably satisfied when they were asked about overall experience with SBI
Mutual Funds including funds, returns, services etc., but it remains to be seen that which
category leads with the completion of survey because second best categories preferred
by investors is “Reasonably Satisfied” which means that there is more to do on SBI
behalf for Customer Satisfaction.
Return alone should not be considered as the basis of measurement of the performance
of a mutual fund scheme, it should also include the risk taken by the fund manager
because different funds will have different levels of risk attached to them.
Risk associated with a fund, in a general, can be defined as variability or fluctuations in
the returns generated by 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
a 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:
NAV:
Net Asset Value, or NAV, is the sum total of the market value of all the shares held in
the portfolio including cash, less the liabilities divided by the total number of units
outstanding. Thus, NAV of a mutual fund unit is nothing but the 'book value'.
Sale and repurchase of any unit that we have in our portfolio changes the overall NAV
of the fund. For example, we have a portfolio in which the security A is priced at Rs
100. We sell this security and after one week when the price of the security becomes Rs
80 we buy 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. Therefore, sale and
repurchase also affects the NAV of the fund.
Valuations of assets
The value that the underlying asset has, whose portfolio the fund has managed or is
managing, if the value of that asset changes, it can change the overall NAV of the fund.
The cost associated with the fund also affects the NAV of the fund. All the charges
accumulated during the selling of a security are known as Sales charges. Funds with low
expense ratios are always preferred as they decrease the overall cost of the security.
It is a ratio that measures the market risk of securities or a fund. If the beta ratio exceeds
one, the fund is more sensitive than funds in general to the fluctuations of the stock
market. The beta may also be negative, which means that the value of the fund will, on
average, move to the opposite direction than the general market development.
Beta measures the sensitivity of rates of return on a fund to general market movements.
It also measures the volatility of the fund, as compared to that of the overall market. The
Market's beta is set at 1.00; a beta higher than 1.00 is considered to be more volatile than
the market, while a beta lower than 1.00 is considered to be less volatile.
Beta measures the volatility of the fund’s value relative to the volatility of the fund’s
benchmark value. The Beta coefficient indicates the percentage change of the fund’s
value when the benchmark value changes by one percentage point.
STANDARD DEVIATION:
It measures the tendency of data to be spread out. Accountants can make important
inferences from past data with this measure. The standard deviation, denoted with S and
read as sigma, is defined as follows:
Sharpe (1966) developed a composite index which is very similar to the Treynor
measure which will be discussed on a later stage. The only difference being the use of
standard deviation instead of beta, to measure the portfolio risk, in other words except it
uses the total risk of the portfolio rather than just the systematic risk.
R −R
P f
Sharpe =
σP
R
P= Return of the portfolio.
R
f = Risk free rate.
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a
fund, a low and negative Sharpe Ratio is an indication of unfavorable performance. If
the Sharpe figure is positive, the risk taken has paid off, and if the figure is negative, the
returns are lower than the risk-free rate.
TREYNOR RATIO:
Treynor (1965) was the first researcher developing a composite measure of portfolio
performance. It measures portfolio risk with beta, and calculates portfolio’s market risk
premium relative to its beta. This ratio rewards volatility because it shows risk adjusted
returns per unit of market risk for that particular scheme. When the markets are more
volatile, schemes with high Treynor ratio are highly affected and vice versa. A scheme
R −R
P f
Treynor =
βP
All risk-averse investors would like to maximize this value. While a high and positive
Treynor Index shows a superior risk-adjusted performance of a fund, a low and negative
Treynor Index is an indication of unfavorable performance.
The trouble with both Sharpe and Treynor ratios for evaluating "risk-adjusted" returns is
that they equate risk with short-term volatility. Therefore these measures may not be
applicable in evaluating the relative merits of long-term investments.
The main objective of doing Inter Firm Analysis is to judge where SBI EQUITY
FUNDS stands in comparison to other Asset Management Companies (AMCs) as per
different criterion which are explained as follows.
I have taken the help of recently done OUTLOOK MONEY SURVEY, to select the
categories and top performing funds in those categories.
The following are those five categories:
LIMITATIONS:
METHODOLOGY
For the first part of analysis i.e. fund returns, I have taken five top funds of same
category of different fund houses and compared their returns for 6 months,
1year, 3 years and 5 years.
For the second part of anlysis i.e. risk profile, I have compared these five funds
with respect to their standard deviation, sharpe ratio, beta, alpha and r- squared.
For the third part of anlysis i.e. portfolio analysis, I have compared these five
funds with respect to their P/E ratio, fund size(in Rs. cr.), portfolio turnover(in
%), top 5 holdings.
The comparison of the funds is done using the bar charts and thus arriving at a
conclusion after analyzing those charts.
• Meaning: These are the funds in the market which have investment across the
sectors, asset classes and financial instruments to provide optimal benefit of
diversification of portfolio to investors.
The following are the top five funds in the market in this category as per the recently
held survey:
ANALYSIS:
FUNDS RETURNS:
As per this criterion funds are compared from past six month duration to five years time.
Latest returns are shown in the analysis. Returns of less than one year are on absolute
basis and for more than one year are on compounded basis.
• Since two funds from SBI brand are in top five funds, that’s shows how well the
portfolios are managed by the concerned Fund Managers.
• Magnum Contra has performed very well in last six months which shows the
funds’ ability to withstand ups and downs in the market which is the case since
December 2008.It has increased by only (53.64)% when compared to HSBC Equity
which has fallen by (34.56)%.
• Last, but not the least from three and five years perspective, the horizon which is
considered to be very important from investors point of view, both funds from SBI,
especially Magnum Contra outperformed in the category. It is giving highest return
of 16.29% and 29.48% return in both time periods.
RISK PROFILE:
• Since Standard Deviation is the measure which shows variability in the returns
from the mean return, therefore it is considered to be the direct measure of risk.
As Both SBI funds have higher Standard Deviation, it shows that these funds are
more aggressive in nature than other funds.
• Sharpe ratio, which means returns per unit of risk that a fund is able to
generate. Therefore, higher the ratio the better it is. Accordingly, Magnum
Contra is not a winner as per this criterion.
• Alpha, which measure the excess return over and above the market return is a
measure of risk. A high positive alpha is good sign for fund. e.g. if a fund has
alpha of positive 10 it
means fund is giving a return of more than 10 percent when compared to its
benchmark or Market. Accordingly, HSBC Equity is winner in this category
which is generating a highest positive alpha in the category which is 1.50%.
• As usual funds from SBI brands have largest Assets under Management (in cr.)
this shows the Brand SBI has no problem when it comes to raising funds. Like
Magnum Contra has second highest AUM in the category only preceded by
Reliance Growth.
• Portfolio Turnover which measures the extent to which the fund is active in
terms of its dealings in the markets. However, high turnover also implies that
high transaction cost are charged to fund. Since Sbi Magnum Equity of the funds
from SBI have very low turnover, it means that funds were not required to be
changed in recent period which ultimately results in greater efficiency. On the
FUND NAV
After considering all three parameters mentioned above it can be concluded that
MAGNUM CONTRA is the best fund in the category because unlike a typical
contrarian fund that focus on out of flavor stocks, this fund considers the underlying
company’s valuations and compares that with what it believes the company’s true
valuations should be and then decide whether to invest in it or not. According to its
Fund Manager Pankaj Gupta “if the market expects a stock to grow by 20%, but we it
to grow by 30%, the scrip is contrarian for us.”
These are the open ended saving schemes which generally have lock-in-period of three
years which means that once you have invested certain amount in your fund, you can’t
withdraw any amount from your account. These scheme are most popular among retail
investors(also see in Appendices) due to its three-in-one feature which means these
Tax Benefit
Good Return
Capital Appreciation
The following are the top five performing funds in ELSS category:
ANALYSIS:
FUNDS’ RETURN:
Fund Returns(in SBI Magnum Principal Tax Birla Sunlife Sundaram BNP Kotak Tax
‘000 cr.) Tax Gain Savings Tax Relief 96 Paribas Tax Saver
6 48.39 30.32 55.49 Saver 41.78 43.98
Months
1 Year 8.81 -16.51 9.34 16.48 2.73
• In six month category Magnum Tax gain has performed very well, it is
preceeded only by Birla Sunlife Tax Relief when compared to other similar
funds like Sundaram Tax Saver, Principal Tax saving and HDFC Long term
advantage.
• In one year category, fund has performed averagely well than other funds like
Principal Tax saving, and Kotak Tax Saver. Fund has given only 8.81% return
against the best of Sunadaram BNP Paribas Tax Saver’s 16.48%.
• Last but not the least, it is good news that fund has outperformed all other funds
in Three Year and Five Year Category giving returns of 13.01% and 40.02%
respectively because this is the most preferred Investment Horizon among retail
investors. In the 3 years category only Sundaram BNP Paribas Tax Saver shown
higher returns of 19.11% than Magnum Taxgain’s.
RISK PROFILE:
FINDINGS:
• 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. In case of Magnum Tax Gain, it has the lowest standard
deviation in the category which means that the fund has not much risky portfolio.
• Sharpe ratio, which means returns per unit of risk that a fund is able to
generate. Therefore, higher the ratio the better it is. Accordingly, Magnum Tax
MRINAL MANISH (4108078078)
• Beta, which shows the co-movement of funds return with Market rate of returns,
is again measure of volatility or risk. Magnum TAX Gain which is having one of
the lowest beta in the category and also less than 1(.9) shows that the fund is
actually very less sensitive to stock market movement.
• Alpha, which measure the excess return over and above the market return is a
measure of risk. A high positive alpha is good sign for fund. e.g. if a fund has
alpha of positive 10 it means fund is giving a return of more than 10 percent
when compared to its benchmark or Market. As per this criterion Sundaram BNP
Tax Saver is leading the category having lowest negative alpha of -0.28%.
Magnum Taxgain is at the 2nd position with negative alpha of -2.78%.
PORTFOLIO ANALYSIS:
FINDINGS:
• Again Magnum Tax gain has largest Assets under Management (AUM), as a
result of strong distribution network, strong brand, and the message of faith that
SBI name itself give to masses of investors. Therefore, SBI Mutual Funds in
particular should build on strength of its Sponsor.
• Portfolio Turnover which measures the extent to which the fund is active in
terms of its dealings in the markets. However, high turnover also implies that
high transaction cost are charged to fund. As it is clearly visible from the table
that Magnum Tax Gain(24.91) from SBI has lower ratio compared to Sundaram
BNP Paribas Tax Saver(30.20) in the category it can be concluded that portfolio
was changed least number of time which again resulted in greater efficiency.
• Concentration Level: As it is clearly visible from the table that Kotak Tax
Saver is most diversified fund as it is having lowest holdings in Top five
holdings while Tax gain from SBI has 2nd lowest level of concentration level
which means it is better diversified than other two funds in the same category.
FUND NAV
After considering all the three parameter mentioned above, it can be concluded that
MAGNUM TAX GAIN tops the chart. Though shift towards Large-Cap stocks did not
help in 2007 therefore Fund manager Jayesh Shroff has been forced to cut holdings in
small and medium companies from 86% in mid-2005 to around 25% now. Also, since
ELSS has more of Retail money Mr.Shroff decided to play less aggressive strategy.
After all large cap stocks are less volatile and schemes investing them have low
downside risk. Principal Tax Saving fund is the second best fund and also most
consistent fund in the category.The fund also invested in under-researched companies
like Adhunik Metaliks, Madhukon Projects, Essen Rea Roll which helped in generating
more returns. The fund has no sectoral bias and invested in stocks across market
capitalization.
These are the equity funds which invest primarily in mid cap and small cap stocks, the
stocks which have growth potentials and also have high risk when compared to large
cap.
OBJECTIVE: The main objective of such funds is to provide long term growth in
capital along with liquidity, by investing predominantly in a well diversified basket of
equity stocks of companies whose market capitalization is less than Rs 2000 crore.
The following are the top five performing funds in this category as on date:
ANALYSIS:
FUNDS’ RETURN:
FINDINGS:
• Since two funds from SBI brand are in top five funds, that’s shows how well the
portfolios are managed by the concerned Fund Managers.
• In Three month category, Magnum Global is the winner since it has fallen by
minimum value, while both funds Reliance Growth and Multipier Plus 93 have
fallen by maximum value. It means these funds were not able to withstand Ups
• In three year category which is one of the preferred choice of a retail investor
Magnum Multiplier Plus 93 is 2nd highest giving the return of 10.30% while
Reliance Growth is at 1st position giving 11.95% return.
• In five year category, again Reliance Growth is the winner giving a handsome
return of 35.20%, while Multiplier plus is giving a return of 33.32% at Second
Position and Magnum Global is giving a return of 31.21% which is not a bad
return.
RISK ANALYSIS:
FINDINGS:
• The primary measure of risk i.e. Standard Deviation is highest for ICICI Pru
Emerging Star which means it is the most risky fund in the category. Second is
Magnum Global having Standard Deviation of 37.22%.Fund having lowest
• All funds in this category are showing negative ratio which indicates that funds are
not able to justify well whatever it hac investments in risky assets. Now, 2nd highest
return per unit of risk in the category is from SBI, Multiplier Plus is having a
Sharpe Ratio of -0.08 which justify its risk. ICICI Pru Emerging STAR is having
lowest ratio(-0.40) again indicating its aggressive nature.
• ICICI Pru Emerging Star is having a highest Beta of 1.07 in the category, which
means it is the most highly sensitive fund to the market in the category.
Magnum Multiplier Plus is having lowest Beta of 0.90 which means that it is less
sensitive to the market and hence less risky.
• Last, but not the least all funds in this category have good R-Squared value,
because all R-Square values are near about .7 or less than that which means all
funds are taking the benefit of Professional Management, since a major part is
being played by other facors.But three funds ICICI Pru Emerging
Star(0.82),Magnum Global(0.83) and Reliance Growth(0.88) are having best R-
Squared value in the category.
PORTFOLIO ANALYSIS:
FINDINGS:
• Portfolio Turnover which measures the extent to which the fund is active in
terms of its dealings in the markets. However, high turnover also implies that
high transaction cost are charged to fund. As it is clearly visible from the table
that Magnum Multiplier Plus is having lowest turnover ratio of 47% compared to
highest of 91.61% in case of ICICI Pru Emerging Star and 90.72% in case of
Magnum Global 94, it shows that the fund is well managed and is having a
lowest transaction costs. Also Reliance Growth is having moderate value of
59.69% implying less transaction cost being charged to the fund.
• Fund Size, as visible from table itself that, Reliance with its Brand Name and
effective Marketing Strategy has no problem when it comes to raising fund from
public. Reliance Growth is having a largest Fund Size of Rs.3597.92 Crore in the
category, followed by Magnum Global 94 (Rs.746.87 Cr)and SBIs Magnum
Multiplier Plus (Rs.687.15 Cr) which shows popularity of these funds in the
market.
FUND NAV
After considering all three parameters discussed above it can be concluded that
MAGNUM MULTIPLIER PLUS FUND is the best fund in the category followed by
Reliance Growth.
These are the funds which have investments predominantly in large cap stock. These are
the stocks which has a solid track record and sound fundamentals. These are the less
risky stocks and hence generally have low growth rates when compared to small and
mid-cap stocks.
In this category fund from SBI, Magnum Equity have been taken, since it has significant
exposure to large cap stocks (92.16%).
ANALYSIS:
FUNDS’ RETURN:
FINDINGS:
• In past three months, Sundaram BNP Paribas S.M.I.L.E. Reg is the winner, since
it has fallen to only (80.89%) compared to highest fall in Kotak 30(45.96). Also,
Magnum Equity from SBI was not able to withstand ups and downs in the
market witnessed in last three months since it is fallen to 51.79% which is
second highest fall.
• Hit by the mammoth of recession in one year category, Magnum Equity top the
charts, giving the highest return of 10.81%, when compared to the lowest of
-12.42% given by Kotak 30.
• In Five year category Birla Sun Life Frontline Equity top the charts giving a
4TH
return of 29.29% while Magnum Equity stands at only position giving the
return of 22.95%.
RISK PROFILE:
FINDINGS:
• The return per unit of risk is highest in case of Birla Sun Life Frontline
Equity(0.41) which is also having lowest risk in the category while RELIANCE
VISION is having one of the lowest Sharpe Ratio(-0.11) in the category
indicating that fund is not able to generate enough return compared to the risk its
taking while investing.
• As per Alpha measure of risk, Birla Sun Life Frontline Equity is again the best
fund in the category, giving the highest excess returns than the market
(4.60%).On the other hand RELIANCE VISION is not able to generate Alpha
Returns and it is one of the lowest alpha generating fund in the category (-
2.95%).
• All funds in the category are having higher R-Squared Value. Among the funds
Birla Sun Life Frontline Equity is having highest value of .96 which tells us that
All funds are significantly influenced by Market and thus not taking help of
Professional Management at its optimum.
Portfolio
17.45 10.83 26.31 32.29 17.02
Turnover(in
Fund%)
Size(in 481.14(30- 130.26(30- 688.14(30- 241.91(30- 2589.02(30-
Rs.cr.) 04-09) 04-09) 04-09) 04-09) 04-09)
Top 5
28.46% 20.93% 32.11% 31.52% 26.21%
Holdings
AS ON 29-05-09 Source: Value Research
Online
• As per P/E Ratio Magnum Equity is the winner in the category, it is having
highest ratio of 21.71 i.e. Investors are really confident about the fund and they
are paying much higher than the earnings. While Sundaram BNP S.M.I.L.E. Reg
is having lowest P/E Ratio of 14.67 which means investors are not much
confident about the fund.
• Portfolio Turnover which measures the extent to which the fund is active in
terms of its dealings in the markets. However, high turnover also implies that
high transaction cost are charged to fund. In this category, SUNDARAM BNP
PARIBAS S.M.I.L.E. Reg is having lowest Portfolio Turnover Ratio (10.83)
suggesting that Fund Manager is managing the fund without much change in the
portfolio and thus saving the Transaction cost. On the other hand, Magnum
Equity is having the highest Portfolio Turnover Ratio of (32.29),thus incurring
the highest transaction cost.
• As per the Fund Size, Reliance Vision managing the largest fund (2589.02 Cr)
in the category, indicating its Brand Name, Brand Penetration in the market.
While Magnum Equity is having the 2nd minimum Fund Size indicating the not
much popularity of the fund in the market.
• Concentration Level: As per this criterion, Kotak 30 and Magnum Equity are
having highest Top Five Holdings in the category (32.11%) and (31.52%)
respectively, indicating that it is the least diversified fund in the category. While
SUNDARAM BNP PARIBAS S.M.I.L.E. Reg is having lowest (20.93%) top
FUND NAV
CONCLUSION:
After considering all three parameters discussed above it can be concluded that BIRLA
SUN LIFE FRONTLINE EQUITY tops the category due to following reasons:
• A.Balasubramanian who earlier used to head Fixed Income Team, now heads
overall Investment team, he gave a lot of freedom to its analyst and research
team to present new stock ideas. He also sharpened the internal processes,
stressing on small and
medium companies that are usually under-researched.
• Fund Manager Mahesh Patil’s stock and sector selection ability was also the key
to fund’s success.It did well to identify potential winner in public sector banks,
as also companies like Crompton Greaves, Hindustan Dorr-Oliver and Thermax
in 2007.
• Fund also didn’t take high exposure to any single stock, therefore Downside risk
was also lowest of this fund in the category.
These are the funds which invest in particular sector or particular group of companies to
take advantage of that group. These funds are generally higher in risk profile and thus
provide high return also.
The following are the top performing funds which have been taken for comparison with
SBIs thematic fund in the category:
ANALYSIS:
FUNDS’ RETURNS:
FINDINGS:
• In one year category, Birla Sunlife Basic Industries is the winner showing a fall
of-8.76% followed by UTI Infrastructure(-9.12).The 2nd lowest return was given
by SBIs Magnum Emerging Business Fund (-24.67%).
• In Five Year category data is not available since all the above listed funds are
new and have a track record of only three years except UTI Infrastructure giving
a return of 33.64% which is a quite good return.
RISK PROFILE:
FINDINGS:
• As per Beta measure of risk, JM Basic is the most sensitive to the market, sine it
is having highest Beta in the category of 1.36. All the funds in this category have
Beta greater or equal to 1 which show that they are highly sensitive to market
sentiments.
• All the funds in this category have negative alpha 1 which show that they are
giving negative returns. As per Alpha Measure of risk, Tata Infrastructure and
Magnum Emerging Business Fund are showing smallest negative figures of
-0.11 and -0.34 in ths category which suggests that they have given minimum
loss to the investors compared to other funds. On the other fund, JM Basic was
looser generating a highest negative alpha of (-9.58%).
• As per R-Squared Value, JM Basic is having the best value as per MORNING
STAR, because it is having a moderate value of .88 i.e. it is taking the benefit of
diversification.
PORTFOLIO ANALYSIS:
FINDINGS:
• Portfolio Turnover which measures the extent to which the fund is active in
terms of its dealings in the markets. However, high turnover also implies that
high transaction cost are charged to fund. In the above category, JM Basic and
SBI is the winner since both funds are having lowest Portfolio Turnover ratio
which are 8.80 and 6.13 respectively. However, UTI Infrastructure is having a
highest ratio of 51.81 implying that Fund manager is churning the Portfolio very
quickly.
• As per Fund Size, Tata Infrastructure is the winner in the category having
largest Fund Size of 1598.09 crores and this was possible only due to its sound
track record since inception because the fund has not have Strong Brand name
when compared to other fund house like Reliance, Birla, SBI etc. UTI
Infrastructure is also having a large corpus of 1294.02 Crores building on its
Brand and performance also.
• Concentration Level: As per this criterion, Birla Sun Life Basic Industries is
the most diversified fund in the category because it is having a lowest holding in
top five stock in terms of percentages( 24.36). On the other hand JM Basic and
Magnum Emerging Business Fund are the least diversified fund in the category
having 30.24% and 27.86% holding in top 5 Stock respectively.
FUND NAV
JM Basic 16.57
AS ON 29-05-09 Source:
www.nseindia.com
After considering all three parameters discussed above it can be concluded that
Infrastructure was the dominant theme in 2008.Though SBI came up with its
infrastructure a bit late in 2007 therefore Magnum Emerging Business fund from SBI
has been taken due to its available track record. However, among the funds mentioned
above TATA INFRASTRUCTURE tops the category due to following reasons:
FINDINGS:
From above table it can be interpreted that Mutual Funds give high return, are safe in
nature, gives high liquidity when compared to other investment avenues. Also, Mutual
funds are Moderate in volatility compared to some high volatile avenues like equity and
real estate. Therefore, features mentioned here make Mutual Funds an attractive
investment instrument for all investors.
The Budget 2008-09 was expected to be a populist budget presented by the Finance
Minister Mr. P. Chidambaram as it was the last budget by the UPA govt. before the
general election in 2009. The mutual fund industry had the following items in its wish
list before the announcement of the budget 2009-10:
Bring Equity Fund of Funds, International Equity Funds, and Gold ETFs
under the definition of Equity Mutual Fund.
Dividend Distribution Tax on Corporate for Non Equity and Non Liquid
Mutual Funds should be reduced to 10% from 20% at present.
Overseas Investment Limit for individuals and international funds both should be
lifted completely.
Differential tax incentive (on the lines of equity long term savings) to lure
investor’s
Level playing field for MFs vis-à-vis alternative competing instruments, which
vie for intermediation into India’s equity and debt markets.
The Economy
Saving rate and investment rate estimated to be 35.6 per cent and 36.3 per cent,
respectively, by the end of 2007-08; between April- December 2007-2008. FDI
amounted to US$ 12.7 billion and FII to US$ 18 billion.
FINANCIAL SECTOR
Financial Inclusion
Exchange-traded currency and interest rate futures to be launched and transparent credit
derivatives market to be developed with appropriate safeguards; Tradability of domestic
convertible bonds to be enhanced through the mechanism of enabling investors to
separate the embedded equity option from the convertible bond, and trade it separately;
Development of a market-based system for classifying financial instruments based on
their complexity and implicit risks to be encouraged.
Service tax
Four services brought under service tax net namely, asset management service
provided under ULIP, services provided by stock/commodity exchanges and
clearing houses; right to use goods, in cases where VAT is not payable; and
customized software, to bring it on par with packaged software and other IT
services.
Direct Taxes
Threshold limit of exemption from personal income tax in the case of all
assesses increased to Rs.150, 000. The slabs and rates of tax are :
Senior Citizen Saving Scheme 2004 and the Post Office Time Deposit Account
added to the basket of saving instruments under Section 80C of the Income Tax
Act.
Rate of tax on short term capital gains under Section 111A & Section 115AD
increased to 15 per cent.
STT paid to be treated like any other deductible expenditure against business
income; Levy of STT, in the case of options to be only on premium, where the
option is not exercised; liability to be on the seller; where the option is exercised,
levy to be on the settlement price and the liability on the buyer; no change in the
present rates.
STRENGTH
• Being the 7th biggest AMC,SBI Mutual Fund has a cutting edge over other
AMC’s
• SBI Mutual Fund is one of the oldest AMC’s in private sector and schemes
which are matured enough pull new investors because of high returns.
• Wide variety of funds,ranging from debt funds to equity and a mixture of both in
various proportions,give ample amount of choice to customers.
• SBI Mutual Fund offers clear and non overlapping positioning of different funds.
WEAKNESS
THREATS
FUTURE SCENARIO
Mutual funds are the fastest growing segment of the financial services sector in India.
Owing to the impact of global financial crisis the average AUM of the Indian Mutual
Fund industry fell by 1.53% and stood at rs. 493,287 crores. The average AUM of SBI
Mutual Fund for the month of March 2009 was Rs. 26,383 crores. There is little
awareness about mutual fund in India; people have accepted it as a one of the major
MRINAL MANISH (4108078078)
In future, Out of ten public sector players five will sell out, close down or merge with
stronger players in three to four years. In the private sector this trend has already started
with two mergers and one takeover. But this does not mean there is no room for other
players. The market will witness a flurry of new players entering the arena. There will
be a large number of offers from various asset management companies in the time to
come. Some big names like Fidelity, JP Morgan, etc. have entered the Indian market.
One important reason for it is that most major players already have presence here and
hence these big names would hardly like to get left behind.
The mutual fund industry is witnessing the introduction of derivatives in the country.
This enables it to hedge its risk and this in turn would be reflected in its Net Asset Value
(NAV).
I personally visualize a minimum annual growth of between 30 and 35 per cent, since
we are on a growth phase (a real take off, if I may venture to say) as penetration into
semi-urban and rural areas is steadily increasing since more and more households are
opting for mutual funds.
I feel that this industry has a very interesting past, an encouraging present
and a very bright future.
FINDINGS:
1) Regarding Funds:-
While dealing with them I have observed that the performance of the schemes of SBIMF
is quite good and the demand for those schemes is also good. I came to know that SBI
MRINAL MANISH (4108078078)
2) Regarding services:-
Apart from fund performance observations are also made regarding the services of
SBIMF, after analyzing the feedback of distributors I found that the services of SBIMF
is not as good as other AMCs and some of the field in which they are lacking
CONCLUSION
The future of primary market is growing at a very high pace. Taking this thing into
consideration, there are lots of opportunities for the SBI Munds Management Pvt Ltd to
tap the golden opportunities from the Indian market.
The company is currently following huge investment and growth strategies. Apart from
the market growth rate the distribution industry doesn’t seem so attractive. Hence the
firm should be selective using growth strategies. This is not to undermine the bright
future of SBI MF, just a check to be a cautious.
There is little awareness about mutual fund in India; people have accepted it as a one of
the major investment avenue. Mutual funds will become one of the sought after
investment avenues. As far as the other investment products marketed by SBI MF are
concerned, they have a ready market. The only thing, which it needs to focus on, is that
they should have a strong network so that prompt services and availability of forms is
made available to the investor at a short notice, and if it keeps the traditional base for
marketing in India, which is a price sensitive market, we can say that SBI MF has a
great future ahead.
The following are the 10 commandments that were to be followed till eternity. The
world of investments too has several ground rules meant for investors who are novices
in their own right and wish to enter the myriad world of investments. These come in
handy for there is every possibility of losing what one has if due care is not taken.
2. Try to understand where the money is going: One can lose substantially if one
picks the wrong kind of mutual fund. In order to avoid any confusion it is better
to go through the literature such as offer document and fact sheets that mutual
fund companies provide on their funds.
3. Don't rush in picking funds, think first: one first has to decide what he wants
the money for and it is this investment goal that should be the guiding light for
all investments done. It is thus important to know the risks associated with the
fund and align it with the quantum of risk one is willing to take. One should take
a look at the portfolio of the funds for the purpose. Excessive exposure to any
specific sector should be avoided, as it will only add to the risk of the entire
portfolio.
5. Don’t put all the eggs in one basket: This old age adage is of utmost
importance. No matter what the risk profile of a person is, it is always advisable
to diversify the risks associated. So putting one’s money in different asset classes
is generally the best option as it averages the risks in each category.
8. Find the right funds: Finding funds that do not charge much fees is of
importance, as the fee charged ultimately goes from the pocket of the investor.
This is even more important for debt funds as the returns from these funds are
not much. Funds that charge more will reduce the yield to the investor. Finding
the right funds is important and one should also use these funds for tax
efficiency.
9. Keep track of your investments: Finding the right fund is important but even
more important is to keep track of the way they are performing in the market. If
the market is beginning to enter a bearish phase, then investors of equity too will
benefit by switching to debt funds as the losses can be minimized. One can
always switch back to equity if the equity market starts to show some buoyancy.
10. 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.
This reason for selling, although valid in certain conditions, is where most investors
make a mistake. When calculating performance one shouldn’t look at too short a
period and make a mistake by comparing apples to oranges. One should compare the
returns posted by his fund with that of the peers across various horizons such as 1-
year, 3-year and above. A short-term view can often lead to committing hara-kiri, as
it doesn’t present the full picture. If it has underperformed the average of its peers in
all cases, then it sure is one of the better reasons to exit from the fund.
Investments are done with a certain objective in mind and life stages are often a
determining factor of what a person needs. A young man can afford to take more
risks than a person nearing his retirement can. In such cases, it pays to withdraw
money from the equity investments made earlier and put them in safer, more
conservative debt funds that offer stable returns without compromising on risk.
So a change in life stages would be one such reason to consider switching into a
fund that matches with one’s needs.
When the fund changes any basic attribute as mentioned by it in its offer
documents, the investors have a choice of getting out of it. Even SEBI has
provided for an exit route being made available to the investors. Changes like a
change in Asset Management Company or in investment style of fund or change
of structure say from closed-end to open-end etc. are good enough reasons for an
investor to consider switching or exiting from it as they are certainly likely to
affect the fund in a major way.
One of the important parameters in the selection of the fund is alignment of the
risk profiles of the investor and fund. The objective of the fund says a lot about
how the fund plans to invest. If the objective is not being complied with, it is one
of the exit points worth considering.
A small rise in an expense ratio is not a big deal, however a significant rise can
result in substantial reduction of yields and so it would be better to exit the fund.
In the case of bond funds or money market funds, it is highly unlikely that the
fund can increase its returns enough to justify an increase in the fund's expenses.
a simple change of fund managers, in itself, is not enough reason to sell a fund on a
short-term basis. If it is a passively managed fund (index fund), then one has little to
no reason to worry. However, if it is an actively managed fund, then has to keep the
eyes open on the new manager.
Being a trainee, I was not given the authority to handle any transaction myself but
under the guidance of some superior.
Since I have not undertaken the AMFI exam, which is a mandatory condition to
work in the operations department, I was not able to understand some of the
common terms of the mutual funds industry but later I learnt them.
1. General Terms:
i. Bonds
A debt security issued by government or corporation, which generally pays a stated rate
of interest and to returns the principal amount of the loan on the maturity date. Unlike
stockholders, bondholders do not have ownership privileges.
The gains made on sale of securities and certain other assets (including units of mutual
funds) are called capital gains. The gains can be long-term or short-term depending on
the period of holding of the asset and are charged to tax at different rates. Gains on
mutual fund units held for a period of 12 months or more are long-term gains.
iii. Compounding
Interest earned not only on the initially invested principal but also on accumulated
interest during the period.
A measure indicating the bond issuer’s credit worthiness, or his/her ability to repay the
loan. The bonds are rated by an independent rating agency such as CRISIL, ICRA, and
CARE.
v. Equity
A debt security that pays a defined rate of return. These do not offer an investor much
potential for growth. This usually refers to government, corporate or municipal bonds,
which pay a fixed rate of interest until the bonds mature, or preferred stock, which pays
a fixed dividend. A mutual fund investing in these types of securities may also be
referred to as a fixed income investment or security.
An interest rate, which is periodically adjusted, usually based on a standard market rate
outside the control of the institution. These rates often have a specified floor and ceiling,
which limit the floating rate. The rates are pre-decided at regular intervals like half
yearly, annually based on market conditions. The opposite of having a floating rate is
having a fixed rate.
The possibility that the value of assets or income will be eroded by inflation, affecting
the purchasing power of a currency. Often mentioned in relation to fixed income Funds
as they may minimize the possibility of losing the principal.
x. Mode of holding:
When an investor makes investment only under his name, the mode of holding is termed
as ‘Single’. However, when the investor makes an application with one or more persons
as the second or third applicants, the mode of holding can be ‘Joint’ or can also be
‘Anyone or Survivor’. However, when the mode of holding is ‘Joint’, all the applicants
have to sign jointly or simultaneously for any transactions. But when the mode of
holding is ‘Anyone or Survivor’ the holder / applicants do not have to sign jointly but
can be signed by either of the holders/ applicants.
Commercial paper, treasury bills, GOI securities with an unexpired maturity up to one
year, call money, certificates of deposit and any other instrument specified by the
Reserve Bank of India.
The potential loss that is possible as a result of short-term volatility of the stock market
indicated by beta. Owning mutual funds shields an investor to some market risk that a
stockholder may be vulnerable to because of their diversification.
xiii. NRE
A Non-Resident External Rupee account that NRIs can open with any Indian bank. They
can use this account for making investments in India on a repatriable basis.
A Non-Resident Indian who is an Indian citizen or a person of Indian origin but who
resides abroad. NRIs have to follow specific rules when investing in India.
xv. NRO
An Ordinary Non-Resident Rupee account which can be opened for funds coming in
from abroad or from local funds. The amount in the account is, however, non-
repatriable.
2. Business specific:
After the investor makes an investment, he is allotted units at the ‘Applicable NAV’ &
he is given a unique account / folio number for the investments made by him.
A document similar to a bank account statement that indicates the mutual fund units
owned. A statement is issued each time the investor carries out a transaction.
Form prescribed for investors to make applications for subscribing to the units of a fund.
v. Annual Return
The percentage of change in net asset value over a year's time, assuming reinvestment of
distribution such as dividend payment and bonuses.
NAV at which a transaction is effected. A cut-off time is set by the fund house and all
investments or redemption’s are processed at that particular NAV. This NAV is relevant
if the application is received before that cut-off time on a day. A different NAV holds if
received thereafter.
The total amount of money invested by all the investors in a scheme as on a date.
Business day is defined as a day other than (I) Saturday & Sunday (ii) a day on which
BOTH the National Stock Exchange and the banks in Mumbai are closed (iii) a day on
which the Sale & Redemption of Units is suspended.
x. Balanced funds
A mutual fund scheme with an investment objective of both long-term growth and
income, through investment in stocks and bonds. Generally 60% is invested in stocks
and 40% in bonds, in order to obtain the highest returns consistent with a low risk
strategy.
A type of exit sales load which is charged when units are redeemed within a specific
time period following their purchase. These charges reduce the longer the units are held.
In a dividend reinvestment plan, the dividend is reinvested in the scheme itself. Hence
instead of receiving dividend, the unit holders receive units.
A general term for any security representing money loaned that must be repaid to the
lender at a future date. Bonds, T-notes, T-bills and money market instruments are debt
securities, but they vary in maturities.
The load on purchases after the Initial (Public) Offer, now called NFO (New Fund
Offer)
The load on redemption other than the Contingent Deferred Sales Charge (CDSC)
permitted under SEBI Regulations. A fee charged by some funds for redeeming or
buying back of units. The amount sometimes depends on how long the investment was
held, so the longer the time period, the smaller the charge.
A scheme that invests primarily in stocks while seeking to provide relatively high long-
term growth of capital.
The date following the record date for a scheme. When a fund's net asset value reduces
by an amount equal to a dividend distribution.
A mutual fund that primarily seeks current income rather than growth of capital. It will
tend to invest in stocks and bonds that normally pay high dividends and interest.
A fixed time period during which the first sale of units of a scheme are made available
to the public. The term Initial Public Offer used by mutual funds has been replaced by a
new term “New Fund Offer” effective June 2, 2005 by SEBI.
A type of mutual fund in which the portfolios are constructed to mirror a specific market
index. Index funds are expected to provide a rate of return over time that will
approximate or match, but not exceed, that of the market, which they are mirroring.
Funds investing only in short-term money market instruments including treasury bills,
commercial paper and certificates of deposit. The objective is to provide liquidity and
preserve the capital.
The smallest investment amount a scheme will accept to open a new unit holder
account.
A fund that sells its units to investors without a sales load / charge.
The amount a scheme pays to its asset management company for its services. Typically,
a certain percentage of assets under management. A fund's management fee is listed in
its offer document.
Market value of one share of a mutual fund on a given day; also known as the bid price.
Unlike the public offering price, the NAV includes no sales charges. The NAV is
calculated each day by taking the closing market value of all securities owned by a
mutual fund, plus all other assets (e.g. cash), and deducting the fund’s liabilities. This
sum is then divided by the fund’s total number of shares outstanding.
The price at which mutual fund shares are offered for sale to the public. Also known as
offering price. The public offering price represents the net asset value plus any
applicable initial sales charges.
xxxii. Portfolio
The date by which mutual fund holders are registered as unit owners to receive any
future dividend or capital gains distribution.
The price at which a fund offers to sell one unit of its scheme to investors. This NAV is
grossed up with the entry load applicable, if any.
xxxviii. Switching
A plan that allows the investor to give a mandate to the fund to periodically and
systematically transfer a certain amount from one scheme to another.
A firm employed by a mutual fund to maintain unit holder records, including purchases,
sales, and account balances.
xxxxiii. Unit
The interest of the investors in either of the Schemes, which consists of each Unit
representing one undivided, share in the assets of the Schemes.
Websites referred:
· www.mutualfundsindia.com
· www.amfiindia.com
· www.valueresearchonline.com
· Websites of the AMC’s taken in cases where data was not available on the above two
sites.
· www.bseindia.com
· www.nseindia.com
· www.google.com
· www.moneycontrol.com
· www.crisilratings.com
REFRENCES OF THEORY:
QUESTIONNAIRE- 1
(FOR INDIVIDUAL INVESTORS)
Q.3Through which channels do you invest in Mutual fund? (Tick the option)
Q.5 How much amount do you invest in Mutual funds? (Tick the option)
Q.6. Are you willing to tolerate decreases in the value of your account from one
month to the next? (Tick the Option)
a) High risk and high return b) Moderate risk and Moderate return c) Low risk and low
return
Q.8How satisfied you are with your experience of investing in SBI Mutual Funds?
Q.9 Which Fund House has largest share in your Investment Portfolio: (Mention
it)
(a)Life Insurance
(c)Bank Deposit
(f)Gold/Jeweler
(a)Friend’s Suggestion (b) Newspapers/Magazines (c) Self Decision (d) Television (e)
Brokers/Agents (f) others (Please Specify------------------------------------)
Q.13You Prefer:
(a)Open Ended Scheme (b) Close Ended Scheme (c) Interval Scheme
a) Scheme Qualities like track record, fund size, entry load etc.
Q.17. Rate the following factors which influences your investment in mutual funds on
the importance scale where 1 is least important, 3 is neutral, 5 is most important.
Factors 1 2 3 4 5
Historical performance of fund
Fund’s returns over market return
Performance of Fund manager
Current Economic and Market conditions
Type of schemes (growth, income, balanced & others)
Expected Dividend going to be deliver by the fund
Advisor or broker or agent influence
Convenience in investing in the fund
Transparency maintained by the fund house
Minimum investment or lot size
Lock in period in a fund
Asset under management
Fund rating
Fund prospectus or offer document
Internet i.e. Website influence
Prior experience with the fund house
Fluctuation in equity markets
Fees ,load and expenses
Reputation of fund house
PERSONAL DETAILS:
NAME: TEL.NO:
1. SEX:M F
QUESTIONNAIRE-2
(For Bankers)
Q6) What are the facilities that other Banks/Mutual Fund houses are providing?
• Service
• Commission
• Product related information
• Others (Please Specify)
Q8) What is the expected return in that scheme (any specific scheme)?
Scheme name: ___________________
• Less than 10%
• 10-15%
• 15-20%