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SUMMER TRAINING PROJECT REPORT ON MARKETING AT SBI MUTUAL FUND PVT LTD

Submitted in partial fulfillment of the requirement of


BACHELOR OF BUSINESS ADMINISTRATION SESSION (2011-2012)

UNDER THE GUIDANCE OF: PROF.MANISH JOSHI

UNDER THE SUPERVISION OF

MR.SHIVANAND TIWARI

SUBMITTED BY AKSHAY SINGH RAJPUT 2011-2012

PRESITGE INSTITUTE OF MANAGEMENT AND RESEARCH

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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.

Scope of the project


The project can prove to be very useful to the company as it can help to identify the most important factors that influence the decision of investor while investing in mutual fund and working on these factors to improve sales and also communicating these factors to the sales force so that they can focus on them while convincing the customers. This project will also help the company to get information about the performance of schemes of its competitors 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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The following diagram shows the working of mutual fund

This diagram signifies the importance of Mutual Fund.

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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Advantages of Mutual Funds


Professional Management: Most mutual funds pay topflight professionals to manage
their investments. These managers decide what securities the fund will buy and sell.

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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TYPES OF MUTUAL FUND SCHEMES:

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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Schemes according to maturity period:


A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

Open-ended Fund / Scheme


Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day.

Close-ended Fund / Scheme


Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-end Funds. The corpus of a Closed-end Fund remains unchanged at all times. After the closure of the offer, buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors with two avenues to liquidate their positions.

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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Schemes according to Investment Objective:


A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Schemes


The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme


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, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

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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.

Money Market or Liquid Fund

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

Tax Saving Schemes


These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

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.

Sector specific funds / schemes


These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

R e
MIPs

Diversified Equity Funds Balanced Funds

t u r n

Gilt Funds Income Funds

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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

Mr. Pratip Chaudhuri


CHAIRMAN & ASSOCIATE DIRECTOR Qualifications : B.Sc. (Hons), MBA Mr. Pratip Chaudhuri joined State Bank of India as Probationary Officer in 1974. He took over charge as Chairman of State Bank of India on 7th April, 2011. Immediately prior to taking over as Chairman, Mr. Chaudhuri was Dy. Managing Director & Group Executive (International Banking), Mumbai. During his illustrious career spanning 36 years in State Bank of India, he held several important positions like Chief General Manager (Foreign Offices) at Corporate Centre, Mumbai, Managing Director, State Bank of Saurashtra, Chief General Manager, Chennai Circle etc.

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Mr. Deepak Kumar Chatterjee


MANAGING DIRECTOR
Qualifications : M.Sc., MBA

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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SBI- MUTUAL FUND PRODUCTS:


EQUITY SCHEMES:
The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Magnum COMMA Fund Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum MidCap Fund Magnum Multicap Fund Magnum Multiplier Plus 1993 Magnum Sector Funds Umbrella MSFU - FMCG Fund MSFU - Emerging Businesses Fund MSFU - IT Fund MSFU - Pharma Fund MSFU - Contra Fund SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Taxgain Scheme 1993
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SBI ONE India Fund SBI TAX ADVANTAGE FUND - SERIES I

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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CHANNELS OF SELLING MUTUAL FUNDS

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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Learnings from the internship


I was put into the distribution channel of SBI mutual Fund. Most of the time was spent selling and promoting SBI mutual fund in branch of SBI at Indore. Since only small investors visit that bank so I was asked to focus mainly on three schemes of equity diversified segment of SBI mutual fund SBI MSFU Emerging Business Fund, Magnum Global Fund, Magnum Equity Fund. Emerging Business Fund has also been rated five stars by moneycontrol.com. Magnum Equity Fund is most famous funds of SBI mutual fund. Most of the investors I came across had already heard about Magnum Equity Fund and Emerging Business Fund. I gained a good knowledge of Mutual fund and also a nice experience of selling mutual funds through this internship. After spending some weeks in SBI banks I visited branch of SBI. I have shortlisted some schemes in the same segment i.e. equity diversified scheme to compare with Magnum Equity Fund and MSFU emerging business fund. Key concepts learnt during the period of the internship can be enumerated as follows: 1. Improved my communication skills 2. Gained knowledge about share market 3. Working together in groups 4. Gained knowledge about office work 5. Talking to different customers

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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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BIBLIOGRAPHY Websites Referred:

1. www.wikipedia.com 2. www.sbimf.com 3. www.mutualfundsindia.com 4. www.amfiindia.com 5. www.moneycontrol.com 6. www.investopedia.com 7. www.economictimes.com 8. www.valueresearchonline.com 9. www.allenandunwin.com/spss.htm

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