Professional Documents
Culture Documents
MR.SHIVANAND TIWARI
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Acknowledgment
I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organizations. I would like to extend my sincere thanks to all of them. I am highly indebted to MR.SHIVANAD TIWARI for their guidance and constant supervision as well as for providing necessary information regarding the project & also for their support in completing the project. I would like to express my gratitude towards my parents & member of State Bank of India mutual fund for their kind co-operation and encouragement which help me in completion of this project. I would like to express my special gratitude and thanks to industry persons for giving me such attention and time. My thanks and appreciations also go to my colleague in developing the project and people who have willingly helped me out with their abilities
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DECLARATION
I hereby declare that the project work entitled MARKETING Submitted to PIMR, is a record of an original work done by me under the guidance of MR. SHIVANAND TIWARI faculty member and this project work has not performed the basis for award of any Degree.
AKSHAY SINGH RAJPUT
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Contents
Executive Summary Introduction ADVANTAGES OF MUTUAL FUND Disadvantage of Investing Through Mutual Funds TYPES OF MUTUAL FUND SCHEMES: Company profile SBI- MUTUAL FUND PRODUCTS: EQUITY SCHEMES: DEBT SCHEMES: BALANCED SCHEMES CHANNELS OF SELLING MUTUAL FUNDS Learnings from the internship Analysis Recommendations LIMITATIONS CONCLUSION BIBLIOGRAPHY
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Executive Summary
Objective
1. To study and work in all branch of SBI mutual fund. 2. To identify various factors that influences the decision of investors while investing in mutual fund. 3. To compare the popular schemes of SBI mutual Fund with the most popular schemes in the same segment.
Methodology
1. Study all about mutual fund and various schemes. 2. Sell mutual fund through various channels. 3. Identify various factors that influence the investors decision while investing in mutual fund. 4. Listing down of all the factors identified. 5. Take a survey through various distribution channels and also among internal customers of the company. 6. Make recommendations based on findings.
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Introduction
Mutual funds:
When you invest in a mutual fund you are not alone. There are several other likeminded investor like you who want their money to work harder for them But at the same time, want a professional to do it for them. When you invest in MF, your money is collected in a common pool along with the money of other investor who shares a common investment goal like you. The MF or Fund Manager then invest this pool of money, also known as corpus ,in securities ranging from share, debenture to money market instrument. The income earned through investment by these is then shared by means of dividend or capital appreciation By the investor in proportion to the investment made by them. Thus a MF provides you an opportunity to invest in a diversified professionally managed basket of investment opportunities at a relatively low cost. Mutual fund as an investment company combines or collects money of its shareholders and invests those funds in variety of stocks, bonds, and money market instruments. The latter include securities, commercial papers, certificates of deposits, etc. Mutual funds provide the investor with professional management of funds and diversification of investment. It also depends on the fund manager expertise knowledge. It is also seen that people invest in particular funds depending on who the fund manager is.
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A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the schemes are shared by its unit holders in proportion to the number of units owned by them.
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Regulatory oversight: Mutual funds are subject to many government regulations that
protect investors from fraud
Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a call, and
you've got the cash.
Convenience: You can usually buy mutual fund shares by mail, phone, or over the
Internet.
Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment.
Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index
Disadvantages
No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money
Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
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By Structure o Open-ended schemes o Close-ended schemes o Interval schemes By Investment Objective o Growth schemes o Income schemes o Balance schemes o Money Market schemes Other types of schemes o Tax Saving schemes o Special schemes o Index schemes
o Sector specific schemes
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Interval scheme
Interval funds combine the features of open-ended & closed ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
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Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.
These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.
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Other Schemes
Gilt Fund
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.
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Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc these schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.
R e
MIPs
t u r n
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Floaters Money Market Funds
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Company profile: STATE BANK OF INDIA - MUTUAL FUND - A partner for life
SBI mutual fund was setup on June 29th, 1987 and incorporated on February 7th, 1992. It is a result of joint venture between State Bank of India and Society General Asset Management of France. This is a bank sponsored mutual fund and has a base of 3.5 million investors (approx). Over the years it has carved a niche for itself through prudent investment decisions and consistent wealth creation for its customers. They offer Mutual Fund products in Equity Funds, Index Funds, Balanced Funds, Debt Funds, etc.
The assets under management are Rs 33,727.90 cores as of June, 30, 2010.
Investment Yogi analyses the best performing SBI mutual funds in the Balanced Fund, Equity Fund and Equity Linked Savings Scheme (ELSS) categories.
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KEY PERSONNELS
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Mr. Deepak Kumar Chatterjee brings with him experience of over 32 years in State Bank of India in various areas such as Credit Administration, Investment Banking, International Banking Operations and Branch Management. In his previous assignment, Mr. Chatterjee was General Manger (Financial Institutions Group), International Business Group in SBI where he was handling fund raising for SBI outside India, Country Risk and Bank exposures
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AWARDS
At SBI Funds Management, we devote considerable resources to gain, maintain and sustain our profitable insights into market movements. The trust reposed on us by millions of investors is a genuine tribute to our expertise in Fund Management and dedication to our singular focus. And this has resulted in various awards and accolades for us from the fund industry, motivating us to do better. Some of the awards won by us are listed below.
2011
Readers Digest Awards 2011 For Trusted Brand in Fund Management Category ICRA Mutual Fund Awards 2011 For Magnum Income Fund - Floating Rate Plan - Long Term Plan
2010
ICRA Mutual Fund Awards 2010 For Magnum Global Fund
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2009
ICRA Mutual Funds Awards 2009 For Magnum Tax Gain Scheme 1993 The Lipper India Fund Awards 2009 For Various Schemes
2008
Outlook Money NDTV Profit Awards 2008 The Lipper India Fund Awards 2008 For Magnum Balanced Fund Dividend ICRA Mutual Fund Awards 2008 For Various Schemes
2007
Outlook Money NDTV Profit Awards 2007 CNBC Awaaz Consumer Awards 2007 The Lipper India Fund Awards 2007 For Various Schemes ICRA Mutual Funds Awards 2007 For Various Schemes CNBC TV18 - CRISIL Mutual Fund of the Year Award 2007 For Various Schemes
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DEBT SCHEMES:
Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns from debt funds would be lower. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors. Magnum Childrens Benefit Plan Magnum Gilt Fund Magnum Gilt Fund (Long Term) Magnum Gilt Fund (Short Term) Magnum Income Fund Magnum Income Plus Fund Magnum Income plus Fund (Saving Plan) Magnum Income plus Fund (Investment Plan) Magnum Insta Cash Fund Magnum InstaCash Fund -Liquid Floater Plan Magnum Institutional Income Fund Magnum Monthly Income Plan Magnum Monthly Income Plan Floater Magnum NRI Investment Fund SBI Capital Protection Oriented Fund - Series I
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SBI Debt Fund Series SDFS 15 Months Fund SDFS 90 Days Fund SDFS 13 Months Fund SDFS 18 Months Fund SDFS 24 Months Fund SDFS 30 DAYS SDFS 30 DAYS SDFS 60 Days Fund SDFS 180 Days Fund SDFS 30 DAYS SBI Premier Liquid Fund SBI Short Horizon Fund SBI Short Horizon Fund - Liquid Plus Fund SBI Short Horizon Fund - Short Term Fund
BALANCED SCHEMES:
Magnum Balanced Fund invests in a mix of equity and debt investments. Hence they are less risky than equity funds, but at the same time provide commensurately lower returns. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but is looking for higher returns than those provided by debt funds. Magnum Balanced Fund Magnum NRI Investment Fund - Flexi Asset Plan
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Fund Ratings
As on : May 2010
Equity Diversified Birla SL Dividend Yield (G) Birla SL Long Term Adv.-Sr1(G) Birla SL Pure Value Fund (G) DSP-BR Micro Cap Fund - RP (G) DSP-BR Small & Mid Cap -RP (G) ICICI Pru Discovery Fund (G) ICICI Pru Emerging S.T.A.R.(G) IDFC Premier Equity - A (G) IDFC Small&Midcap Eqty -G Principal LT Equity 3yr Sr2(G) Reliance Equity Oppor - RP (G) Reliance RSF - Equity (G) SBI Magnum Emerging Busi (G) Sundaram S.M.I.L.E Fund (G) Sundaram Select Small Cap (G) UTI Dividend Yield Fund (G) UTI Master Value Fund (G) UTI Mid Cap (G)
Above is the 5 star rating given to various funds by www.moneycontrol.com. ICICI prudential discovery fund growth, Reliance RSF equity growth and SBI Magnum emerging Business fund Growth have been rated 5 star. Though HDFC top 200 has been rated 4 star and SBI magnum Contra fund has been rated 1 star. But at the same time value research has rated Magnum contra fund with 4 stars.
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Mutual funds are emerging as an important financial intermediary for the investing public in India. Conceptually and operationally they are different. The investors need to understand the working of a mutual fund and the increasingly diverse and complex investment options brought to them by a large number of mutual funds. The key channel in bringing the mutual funds to a large number of investors all over the country is the network of INTERMEDIARIES/DISTRIBUTORS. In this industry we have five different channels through which mutual fund are sold: Mutual Fund Company National Distributors (NDs) & Intermediaries Banks Individual Financial Advisors (IFAs) Internet Each one has its own customer base. Their way of dealing with them is totally different from other. Every one attracts in their own way. How they attract we will study. There are many industries here. The urgency to keep increasing in size has led mutual funds to use marketing hooks to draw investors. As we rely only on channel partners, our relation with them really is going to play a vital role. How different companies lure the partners, well study that. As to start with we will first study about the intermediaries in brief by describing who they are and how they help a direct investor.
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Analysis
1. Risk it matters most to the investor as he/she is investing his/her hard earned money 2. Returns returns from the scheme matters most to the investor so SBI MF should try to increase returns as much as possible. 3. Brand Name brand name also matters a lot to the investor, since SBI itself has a good brand name so it was a plus point for the company. 4. No. of times dividend declared. for investors who want to invest in dividend option, no. of times dividend declared in the past is very important, so SBI MF should try to maximize its dividend declaration. 5. Tax saving is also very important for investors, many of them keep this on their first priority. 6. Awareness of the financial product (Mutual Fund) is very important. Investors having account in a particular bank is one of the major factors so SBI MF should try to tap the existing customers of SBI. 7. Type of organization is also very important as investors have a perception that if they are investing in PSU then their money wont go anywhere. 8. Type of job of the investor is also important as businessmen are more risk taking and govt. employees are risk averse. 9. Age of the investor is important as young investors are risk takers so they invest more in mutual funds and old age investors are risk averse and they usually invest in FDs 10. Risk is a very important factor as investors always look for schemes with least risk eg. Schemes which have been giving consistent returns. 11. Investor investing for the first time wont invest a high amount as they are not sure about it. 12. Savings is a very important factor higher the savings higher will be the investment as no one wants to keep his/her savings without any growth. 13. Past performance of the scheme is also very important as it gives a sense of security and confidence while investing if the scheme has performed well. 14. Tax saving is also a major factor as most of the investors invests to save tax. 15. Date of inception is important as older the scheme more reliable it will be for the investor. 16. Promotion of the brand and popularity of the scheme is important as it also gives a sense of security to the investor.
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Recommendations
1. Convincing ability of the salesperson. since IFAs have a great convincing ability so SBI mutual fund should keep s good relationship with them by increasing brokerage and by having regular meetings with them. 2. Spreading awareness about Mutual fund is required, there is a large customer base of SBI who have no idea about mutual funds, and they need to be tapped. This can be done through advertisements, road shows etc. 3. Returns from scheme offered by SBI are very low compared to its competitors, so fund managers should try to increase the returns by changing portfolio. 4. Most of the customers of SBI MF are not satisfied with its service, so organization should focus on its operations and provide better service to its customers by sending regular statements and should train its employees to give first preference to customer satisfaction. 5. HNI segment usually ask for latest NAVs while investing so CREs or sales executive should be regularly updated with latest NAVs of all the schemes. 6. People who come to SBI bank for investment in FDs, TDS etc should be convinced to invest in mutual funds as they give more returns comparatively. 7. Young customers having account with SBI should be convinced to invest in MF as they are risk taking. 8. Schemes like child benefit plan can be promoted to newly married couples or customers with small children. 9. HNI investors usually invest in dividend option so SBI MF should try to increase no. of times dividend declared and be at par with the competitors. 10. Schemes which have performed well in past should be advertised and promoted as it gives a confidence to investors.
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LIMITATIONS
1. Research is limited to only Gurgaon Region. 2. Since questionnaire can only be understood by investors who invest in mutual find so sample mostly consisted of existing customers, internal customers and IFAs. 3. This project focuses only on Mutual Funds and not on other financial products. 4. This project has mostly catered to the customers of SBI MF and not of other Mutual Fund companies. 5. Project has covered only well educated people with good knowledge of financial products.
CONCLUSION
Mutual fund is very good for people who have less knowledge of stock market or who dont have enough time to keep a regular check on the market. Mutual Funds are managed by professionals, so investor doesnt need to take any tension about his/her money. Selling MF is a tough task as the product is intangible and the investor doesnt get anything tangible for the money he pays except an acknowledgement. Though Mutual Funds are popular but still there is a large number market who have no idea of mutual funds because awareness of mutual fund is less compared to life insurance and FDs. Mutual Fund is a service industry so it is very important for the company to provide good service and make sure it is at par with its competitors. Eg. easy process of investment and redemption, keeping investors updated with NAVs through email or statements etc. SBI MF has a good name in the mutual Fund industry because of the name SBI attached to it, since SBI is one of the oldest and biggest banks of India so it has a big hand in spreading awareness of SBI MF. SBI MF also has a strong distribution network with effective employees. In fact SBI MF Gurgaon has been awarded best investor desk for increasing the market share of SBI MF up to 33% in NCR. Mutual Fund is a good industry to work with because of its transparency and it also with growing literacy rate in India it has a good future.
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