CONTENTS

Chapter - 1 Industry Overview

INTRODUCTION

COMPANY PROFILE Chapter - 2 Objectives Scope Research Design Data Collection RESEARCH METHODOLOGY

Chapter - 4 Chapter - 5 Chapter - 6

DATA ANALYSIS AND INTERPRETATION FINDINGS AND CONCLUSIONS SUGGESTIONS & RECOMMENDATIONS BIBLIOGRAPHY

CHAPTER- 1: INTRODUCTION

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY 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. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under
3

Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was delinked 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 management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank 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
4

1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 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. consolidation and growth. As at the end of September, 2004,
5

there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

INVESTMENT STRATEGIES 1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

WHY INVESTOR NEEDS MUTUAL FUND :Mutual funds offer benefits, which are too significant to miss out. Any investment has to be judged on the yardstick of return, liquidity and safety. Convenience and tax efficiency are the other benchmarks relevant in mutual fund investment. In the wonderful game of financial safety and returns are the tows opposite goals and investors cannot be nearer to both at the same time. The crux of mutual fund investing is averaging the risk. Many investors possibly dont know that considering returns alone, many mutual funds have outperformed a host of other investment products. Mutual funds have historically delivered yields averaging between 9% to 25% over a medium to long time frame. The duration is important because like wise, mutual funds return taste bitter with the passage of time. Investors should be prepared to lock in their investments preferably for 3 years in an income fund and 5 years in an equity funds. Liquid funds of course, generate returns even in a short term. MUTUAL FUND RISK:Mutual funds face risks based on the investments they hold. For example, a bond fund faces interest rate risk and income risk. Bond values are inversely related to interest rates. If interest rates go up, bond values
7

will go down and vice versa. Bond income is also affected by the changes in interest rates. Bond yields are directly related to interest rates falling as interest rates fall and rising as interest rates. Similarly, a sector stock fund is at risk that its price will decline due to developments in its industry. A stock fund that invests across many industries is more sheltered from this risk defined as industry risk. Followings are glossary of some risks to consider when investing in mutual funds: COUNTRY RISK :The possibility that political events (a war, national election), financial problems (rising inflation, government default), or natural disasters will weaken a countrys economy and cause investments in that country to decline. INCOME RISK :The possibility that political events (a war, national election), financial problems (rising inflation, government default), or natural disasters will weaken a countrys economy and cause investments in that country to decline. MARKET RISK :The possibility that stock fund or bond fund prices overall will decline over short or even extended periods. Stock and bond markets tend to move in cycles, with periods when prices rise and other periods when prices fall.

RISK RETURN REWRAD IN MUTUAL FUND

Equity Fund Balance Fund MIP Income Fund

Short Term Fund Liquid Fund

This graph shows risk and return impact on various mutual funds. There is a direct relationship between risks and return, i.e. schemes with higher risk also have potential to provide higher returns.

INTRODUCTION TO 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 in these investments and
9

the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an invest able surplus of a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy. A mutual fund is the ideal investment vehicle for todays 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. A mutual fund is answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a fulltime 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 fact, the mutual fund vehicle exploits economies of scale in all three areas research, investment and transaction processing. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objective of the fund, the risk associated, the cost involved in the process and the broad
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rules for entry into and exit from the fund and other areas of operation. In

India, as in most countries, these sponsors need approval from a regulator, SEBI in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. 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 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.

As per SEBI regulations, mutual funds can offer guaranteed returns for a maximum period of one year. In case returns are guaranteed, the name of the guarantor and how the guarantee would be honored is required to be disclosed in the offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.
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THE CONCEPT OF MUTUAL FUND IN DETAIL

A mutual fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. Thus, an equity fund would buy equity assets ordinary shares, preference shares, warrants etc. A bond fund would buy debt instruments such as debentures, bonds or government securities. It is these assets which are owned by the investors in the same proportion as their contribution bears to the total contributions of all investors put together.

Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the
12

Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day.

13

When an investor subscribes to a mutual fund, he or she buys a part of the assets or the pool of funds that are outstanding at that time. It is no different from buying shares of joint stock Company, in which case the purchase makes the investor a part owner of the company and its assets. However, whether the investor gets fund shares or units is only a matter of legal distinction. 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 realized is shared by its unit holders in proportion to the number of units owned by them. Thus Mutual fund is most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

14

MUTUAL FUND OPERATION FLOW CHART

15

From the above chart , it can be observed that how the money from the investors flow and they get returns out of it. With a small amount of fund, investors pool their money with the funds managers. Taking into consideration the market strategy the funds managers invest this pool of money into reliable securities. With ups and downs in market returns are generated and they are passed on to the investors. The above cycle should be very clear and also effective. The fund manager while investing on behalf of investors takes into consideration various factors like time, risk, return, etc. so that he can make proper investment decision.

16

Advantages and disadvantages of mutual funds : ADVANTAGES OF MUTUAL FUND Professional management Portfolio Divercification Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency

DISADVANTAGE OF MUTUAL FUND No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme

REGULATORY BODY FOR MUTUAL FUNDS

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Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual funds mentioned above. All the mutual funds must get registered with SEBl. The only exception is the UTI, since it is a corporation formed under a separate Act of Parliament.

Broad Guidelines Issued by SEBI for a MF: -

SEBI is the regulatory authority of Mutual Funds. SEBl has the following broad guidelines pertaining to mutual funds:

Mutual Funds should be formed as a Trust under Indian Trust Act

and should be operated by Asset Management Companies (AMCs).

Mutual Funds need to set up a Board of Trustees and Trustee

Companies. They should also have their Board of Directors.

The net worth of the AMCs should be at least Rs.5 crore.

AMCs and Trustees of a Mutual Fund should be two separate and

18

distinct legal entities

The AMC or any of its companies cannot act as managers for any

other fund

AMCs have to get the approval of SEBI for its Articles and

Memorandum of Association

All Mutual Funds schemes should be registered with SEBI.

Mutual Funds should distribute minimum of 90% of their profits

among the investors

There are other guidelines also that govern investment strategy, disclosure norms and advertising code for mutual funds.

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COMPANY PROFILE

INTRODUCTION TO SBI MUTUAL FUND

SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with an investor base of over 4.6 million and over 20 years of rich experience in fund management consistently delivering value to its investors. SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Bank of India' one of India's largest banking enterprises, and Socit Gnrale Asset Management (France), one of the world's leading fund management companies that manages over US$ 500 Billion worldwide. Today the fund house manages over Rs 28500 crores of assets and has a diverse profile of investors actively parking their investments across 36
20

active schemes. In 20 years of operation, the fund has launched 38 schemes and successfully redeemed 15 of them, and in the process, has rewarded our investors with consistent returns. Schemes of the Mutual Fund have time after time outperformed benchmark indices, honored us with 15 awards of performance and have emerged as the preferred investment for millions of investors. The trust reposed on us by over 4.6 million investors is a genuine tribute to our expertise in fund management. SBI Funds Management Pvt. Ltd. serves its vast family of investors through a network of over 130 points of acceptance, 28 Investor Service Centres, 46 Investor Service Desks and 56 District Organizers.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.

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PRODUCTS OF SBI MUTUAL FUND: 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. Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index. Magnum COMMA Fund Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum Midcap Fund Magnum Multicap Fund Magnum Multiplier plus 1993 Magnum Sectoral Funds Umbrella MSFU- Emerging Business Fund MSFU- IT Fund
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 MSFU- Pharma Fund MSFU- Contra Fund MSFU- FMCG Fund SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Taxgain Scheme 1993 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 Income Fund Magnum Insta Cash Fund Magnum Income Fund- Floating Rate Plan
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Magnum Income Plus Fund Magnum Insta Cash Fund -Liquid Floater Plan Magnum Monthly Income Plan Magnum Monthly Income Plan- Floater Magnum NRI Investment Fund SBI Premier Liquid 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

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COMPETITORS OF SBI MUTUAL FUND Some of the main competitors of SBI Mutual Fund in Patna are as Follows: i. ICICI Mutual Fund ii. Reliance Mutual Fund iii. UTI Mutual Fund iv. Birla Sun Life Mutual Fund v. Kotak Mutual Fund vi. HDFC Mutual Fund vii. Sundaram Mutual Fund viii. LIC Mutual Fund ix. Principal x. Franklin Templeton

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AWARDS AND ACHIEVEMENTS SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award - 8 times, CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005-2006) and most recently with the CNBC TV - 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.

26

27

Chapter - 2 Research Methodology

RESEARCH METHODOLOGY
28

RESEARCH METHODOLOGY:Research methodology is a way to systematically show the research problem. It may be understood as a science of studying how research is done scientifically. It is necessary for the researcher to know not only the research methods but also the methodology. This Section includes the methodology which includes. The research design, objectives of study, scope of study along with research methodology and limitations of study etc.

1 .Sampling Plan: Sampling can be defined as the section of some part of an aggregate or totality on the basis of which the judgment or an inference about aggregate or totality is made The sampling plan helps in decision making in the following areas: 2 .Sampling units- The population that was targeted consists of businessmen, service class, students, housewives etc. 3 .Sample size- The sample size for my study was -120. 4. Sampling procedure- Random sampling method was used.

OBJECTIVES OF THE STUDY

29

a. To find out the Preference of the investors for Asset Management of company. b. To know the preference of the portfolios. c. To know why one has invested in SBI Mutual Funds. d. To find out the most preference channel. e. To find out what should do to boost Mutual F und Industry.

Scope of the study A big boom has been witnessed in Mutual Fund Industry in resent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The study will help to know the preferences of the customers, which company, portfolio, mode of investment, option for getting return and so on they prefer. This project report may help the company to make further planning and strategy.

Limitation: This study also includes some limitations which have been discussed as follows:

30

Though every one used to be very co-operative but every detail was unable to be disclosed to me as the officials has to maintain secrets of the company.

only.

It is difficult to cover all the function of the company.

Because of the limited time period, the survey work was conducted in the Mumbai region and the sample size was taken as 200 respondents Some of the persons were not so responsive. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire.

31

32

Chapter 4 Data Analysis & Interpretation

ANALYSIS & INTERPRETATION OF THE DATA

33

c). Occupation of the investors of india Occupation Govt. Service Pvt. Service Business Agriculture Others . No. of Investors 30 45 35 4 6

50 No. of Investors 40 30 20 10 0 Govt. Service Pvt. Service Business 35 45 30 4 Agriculture 6 Others

Occupation of the customers

34

Interpretation: In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.

(d). Monthly Family Income of the Investors of india Income Group <=10,000 10,001-15,000 15,001-20,000 20,001-30,000 >30,000 No. of Investors 5 12 28 43 32

50 No. of Investors 40 30 20 10 0 5 <=10 28 12 10-15 15-20 20-30 >30 43 32

Income Group of the Investorsn (Rs. in Th.)

Interpretation:
35

In the Income Group of the investors of Mumbai out of 120 investors, 36% investors that is the maximum investors are in the monthly income group Rs. 20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly income group of more than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group of below Rs. 10,000 (2) Investors invested in different kind of investments. Kind of Investments Saving A/C Fixed deposits Insurance Mutual Fund Post office (NSC) Shares/Debentures Gold/Silver Real Estate No. of Respondents 195 148 152 120 75 50 30 65

R eal Es tate K inds of Inves tm ent Gold/S ilver S hares /D ebentures Pos t Office(NS C ) Mutual F und Ins urance F ix ed D epos its S aving A/c 0 50 30

65

50 75 120 152 148 195 100 150 200 250

No.of R es pondents

36

Interpretation: From the above graph it can be inferred that out of 200 people, 97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate. 3. Preference of factors while investing Factors No. (a) Liquidity of 40 Respondents (b) Risk 60 Low (c) Return 64 High (d) Trust 36

18%

20%

32%

30%

Liquidity

Low Ris k

H ig hR eturn 37

Trus t

Interpretation: Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its Operations

Response No. of Respondents

Yes 135

No 65

33%

67%

Y es

No

38

Interpretation: From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations and 33% are not aware of Mutual Fund and its operations.

5. Source of information for customers about Mutual Fund Source of information Advertisement Peer Group Bank Financial Advisors No. of Respondents 18 25 30 62

70 60 50 40 30 20 10 0

No. of R es pondents

62 18 25 30 B ank F inancial Advis ors

Advertis em ent Peer G roup

S ource of Inform ation

Interpretation:
39

From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund Response YES NO Total No. of Respondents 120 80 200

No 40%

Yes 60%

Interpretation:
40

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in Mutual Fund.

7. Reason for not invested in Mutual Fund Reason Not Aware Higher Risk Not any Specific Reason No. of Respondents 65 5 10

13%

6%

81%
Not Aware H ig her R is k Not Any

Interpretation: Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any specific reason.

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8. Investors invested in different Assets Management Co. (AMC) Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others
Others HDFC Name of AMC Kotak SBIMF ICICI Reliance UTI 0 20 40 No. of Investors 60 30 45 55 56 75 75 80

No. of Investors 55 75 30 75 56 45 70

70

Interpretation: In Patna most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120 Investors 62.5% have invested in each of them, only 46% have invested in SBIMF, 47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

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9. Reason for invested in SBIMF Reason Associated with SBI Better Return Agents Advice No. of Respondents 35 5 15

27%

9%

64%

As s ociated with S BI

Better R eturn

Ag ents Advice

Interpretation: Out of 55 investors of SBIMF 64% have invested because of its association with Brand SBI, 27% invested on Agents Advice, 9% invested because of better return.

10. Reason for not invested in SBIMF Reason

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No. of Respondents

Not Aware Less Return Agents Advice

25 18 22

34%

38%

28%
Not A ware L ess Return Ag ent's A dvice

Interpretation: Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF, 28% do not have invested due to less return and 34% due to Agents Advice.

11. Preference of Investors for future investment in Mutual Fund Name of AMC SBIMF UTI HDFC Reliance ICICI Prudential
44

No. of Investors 76 45 35 82 80

Kotak Others

60 75

Others K otak Nam e of AMC IC IC I Prudential R eliance H D F C UTI S BIMF 0 20 35 45 60

75

80 82

76 40 60 80 100

No. of Inves tors

Interpretation: Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund. 12. Channel Preferred by the Investors for Mutual Fund Investment Channel No. Respondents Financial Advisor of 72 Bank 18 AMC 30

45

25%

15%
F ina ncia l Advisor B a nk AMC

60%

Interpretation: Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors Mode Investment No. Respondents of One Investment of 78 time Systematic Plan (SIP) 42 Investment

46

35%

65%

One tim e Inves tm ent

S IP

Interpretation: Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan.

14. Preferred Portfolios by the Investors Portfolio Equity Debt Balanced No. of Investors 56 20 44

47

37%

46%

17%

Equity

D ebt

B alance

Interpretation: From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17% preferred Debt portfolio

15. Option for getting Return Preferred by the Investors Option No. Respondents Dividend Payout Dividend of 25 Reinvestment 10 Growth 85

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21%

8% 71%
D ividend Payout Dividend R einves tm ent Growth

Interpretation: From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds Response Yes No No. of Respondents 25 95

49

21%

79%

Y es

No

Interpretation: Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there is maximum risk and 21% prefer to invest in Sectoral Fund.

Chapter 5 Findings and Conclusion

50

Findings In Mumbai in the Age Group of 36-40 years were more in numbers. The second most Investors were in the age group of 41-45 years and the least were in the age group of below 30 years. In Mumbai most of the Investors were Graduate or Post Graduate and below HSC there were very few in numbers. In Occupation group most of the Investors were Govt. employees, the second most Investors were Private employees and the least were associated with Agriculture.

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In family Income group, between Rs. 20,001- 30,000 were more in numbers, the second most were in the Income group of more than Rs.30,000 and the least were in the group of below Rs. 10,000.

fund. Trust.

About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits, Only 60% Respondents invested in Mutual Mostly Respondents preferred High Return while investment, the second most preferred Low Risk then liquidity and the least preferred Only 67% Respondents were aware about Mutual fund and its operations and 33% were not. Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have invested in Mutual fund. Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any specific reason for not invested in Mutual Fund and 6% told there is likely to be higher risk in Mutual Fund.

Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI Prudential has also good Brand Position among investors, SBIMF places after ICICI Prudential according to the Respondents.

Out of 55 investors of SBIMF 64% have invested due to its association with the Brand SBI, 27% Invested because of Advisors Advice and 9% due to better return.

Most of the investors who did not invested in SBIMF due to not Aware of SBIMF, the second most due to Agents advice and rest due to Less Return.

52

For Future investment the maximum Respondents preferred Reliance Mutual Fund, the second most preferred ICICI Prudential, SBIMF has been preferred after them.

60% Investors preferred to Invest through Financial Advisors, 25% through AMC (means Direct Investment) and 15% through Bank. 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode of Investment. The most preferred Portfolio was Equity, the second most was Balance (mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio.

Maximum Number of Investors Preferred Growth Option for returns, the second most preferred Dividend Payout and then Dividend Reinvestment.

Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to invest in Sectoral Fund.

Conclusion Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of
53

Brand (AMC), Products, Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Mumbai but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI etc. they are well known Brand, and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sunderam, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.

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Chapter 7 Suggestions And Recommendations

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Suggestions and Recommendations The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors. Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration. Younger people aged under 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off.
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Customers with graduate level education are easier to sell to and there is a large untapped market there. To succeed however, advisors must provide sound advice and high quality.

Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.

BIBLIOGRAPHY
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NEWS PAPERS

OUTLOOK MONEY

TELEVISION CHANNEL (CNBC AAWAJ)

MUTUAL FUND HAND BOOK

FACT SHEET AND STATEMENT

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