Marketing of Mutual Funds Offered

MARKETING OF MUTUAL FUNDS OFFEREDBY SBI MUTUAL FUND

FACULTY GUIDE COMPANY GUIDEProf. PRAKASH C KARLAPUDY Mr. D.S.PRASHANTH RAO (PGDM, MBA (USA)) (CHIEF MANAGER) Charted finance analyst SBI MUTUAL FUND

Submitted By:Vivek KumarClass Of 2008

01006010700865

INTERIM REPORTON

MARKETING OF MUTUAL FUNDS OFFERED

BY SBI MUTUAL FUND

Submitted By: Vivek kumar

Class Of 20080100601070086

SBI MUTUAL FUNDASSET MANAGEMENT COMPANY

Table of Contents

Abstract

1. Introduction 1

1.1 What are Mutual Funds 1

1.2 Constitution of Mutual Funds 2

2. History and Development of Mutual Fund 3

3. Structure of Indian Mutual Fund Industry 6

4. AMC’s currently operating in India 7

ii

5. Recent trends in Mutual Fund Industry 8

6. Mutual Funds Vs Commercial Banks 10

7. Types of Mutual Funds 12

7.1 Mutual Funds by portfolio classification 13

7.1.1 Equity Funds 13

7.1.2 Debt Funds 16

7.1.3 Balanced Funds 17

7.2 Mutual Funds by Structure 17

7.2.1 Open-ended Funds 17

7.2.2 Closed-ended Funds 18

7.2.3 Interval Funds 18

8. Advantages of Mutual Fund 19

9. Disadvantages of Mutual Fund 21

10. Risks in Mutual Fund Investment 23

11. Regulations of Mutual Funds in India 24

11.1 Securities and Exchange Board of India 24

11.2 Association of Mutual Funds in India 25

12. Marketing of Mutual funds 26

12.1 Product Form 26

12.2 Customer Ownership Focus 27

12.3 Specialized Product and Service Focus 27

13. Challenges and opportunities in Marketing 28

iii

13.1 Marketing Channels 29

13.1.1 Direct Marketing 29

13.1.2 Selling through Intermediaries 29

13.2 Distributors 29

13.3 Advantages of tie-ups with Banks 30

14. Details of the Sale made during the Project 31

15. SURVEY 32

15.1 Introduction 32

15.2 Data Collection 33

15.3 Details of the sample population

15.3.1 In person, one to one survey 33

15.3.2 Online/Telephonic survey 34

15.4 Data Analysis 36

15.5 Graphical Analysis 40

15.5.1 List of Parameters 40

15.5.2 Ranking of Mutual Funds 40

16. Conclusion 55

17. Findings from the project 56

18. Recommendations 58

19. Appendix 59

19.1 QUESTIONNAIRE 59

20. References 62

iv

21. Glossary 63

v

ABSTRACTThe mutual fund industry is a lot like the film star of the finance business. Though it is

perhaps a small segment of the industry, it is also the most glamorous – in that it is a

young industry where there are changes in the rules of the game everyday, and there are

constant shifts and upheavals.

The mutual fund is structured around a fairly simple concept, the mitigation of risk

through the spreading of investments across multiple entities, which is achieved by the

pooling of a number of small investments into a large bucket. Yet it has been the subject of

perhaps the most elaborate and prolonged regulatory effort in the history of the country. In

this project report we try to bring out the hidden facts of this industry and its

development over the years. We would be studying the structure of Mutual Funds industry

in India and recent trends followed by it. We also intend to explain the type of Mutual

funds operating in the country and the risk associated with the various schemes with

particular consideration to the development and working of SBI Mutual Funds. The

advantages and disadvantages of Mutual funds would be analyzed as well and the future

prospects of the AMC would be suggested.

The major attraction of the report is the Survey conducted to find out the investment

behavior of the consumers and the general perception of people about the Mutual

Fund Industry. The survey has been conducted on a sample of 100 people who are

either regular investors or are prospective investors of Mutual Funds. Through the

statistical and graphical analysis of the data collected during the survey, some important

findings and results have been drawn which would be helpful to SBI Mutual Funds to

improve their market position.

The results illustrate the investment behavior of the consumers, their objectives of

investment, the kind of returns expected and the present market position of the top

performing Funds in the industry. These findings would be helpful to SBI Mutual

Funds in making new marketing strategies to gain and sustain the market position in

the Mutual funds Industry.

INTRODUCTIONWhat are Mutual Funds?A mutual fund is a form of collective investment that pools money from many investors

and invests the money in stocks, bonds, short-term money-market instruments, and/or

other securities. The portfolio manager trades the fund's underlying securities, realizing a

gain or loss, and collects the dividend or interest income. The investment proceeds are

then passed along to the individual investors.

‘Mutual Fund’ is the investment vehicle that is gaining momentum in the Indian market.

Institutions known as Asset Management Companies regulate mutual funds in India.

Money from the common man is pooled in and is diversified into other investment

opportunities. Financial institutions or companies manage these mutual funds.

Professionals are hired into these companies to evaluate the Balance Sheet and Profit and

Loss accounts of companies to know which of them are performing and will succeed in the

near future. Thus bringing high returns to the investment.

Apart from investments in equities, debentures which are directly linked to the bullish and

bearish trends in the market, mutual funds are invested in more subtle companies that have

a steady growth rate and thus are not much affected by the share market. This is the

advantage of mutual funds over banks and other investment options, as they allow

investors to invest in safe, low risk and high-risk companies. The investors can invest in

different schemes of one fund or in different mutual funds altogether and build up their

investment portfolio.

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

1

CONSTITUTION OF THE MUTUAL FUNDThough there are many differences among various Mutual Funds, all Mutual Funds

comprise of following four components. They are:

Sponsor: The sponsor initiates the idea to set up a mutual fund. It could be a

registered company, scheduled bank or financial institution. A sponsor has to

satisfy certain conditions, such as on capital, track record (at least five years'

operation in financial services), default-free dealings and a general reputation of

fairness, has to be ascertained. The sponsor appoints the trustees, AMC and

custodian. Once the AMC is formed, the sponsor is just a stakeholder

Trust/Board of Trustees: Trustees hold a fiduciary responsibility towards unit

holders by protecting their interests. Sometimes, as with Canara Bank, the trustee

and the sponsor are the same. For others, like SBI Funds Management, State

Bank of India is the sponsor and SBI Capital Markets the trustee . Trustees

float and market schemes; and also they secure necessary approvals. They check

whether the investments of the AMC are within defined limits, whether the fund's

assets are protected, and also whether the unit holders get their due returns.

Fund Managers/AMC: They are the ones who manage the investor’s money. An

AMC takes investment decisions, compensates investors through dividends,

maintains proper accounting and information for pricing of units, calculates the

NAV, and provides information on listed schemes and secondary market unit

transactions. It also exercises due diligence on investments, and submits quarterly

reports to the trustees. The fund manager is a very important person for the

successful working of the various schemes of the fund. It is he who decides the

portfolio of companies in which the money is to be invested. This portfolio is

selected according to the investment objectives of the AMC as well as the

investment strategies for that particular scheme.

Custodian: It is often an independent organization, and it takes custody of

securities and other assets of a mutual fund. Among public sector mutual funds,

the sponsor or trustee generally also acts as the custodian.

2

History and Development of Mutual Funds in India

Sponsors

Board of Trustees Asset Management Company

Custodians

3

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 the Reserve Bank of India. The

history of mutual funds in India can be broadly divided into four distinct phases.

First Phase – 1964-87 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

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 1993, the mutual fund industry had assets under

management of Rs.47,004 crores.

Third Phase – 1993-2003 (Entry of Private Sector Funds) 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 Regulations came into being, under which

all mutual funds, except UTI were to be registered and governed. 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. The number of mutual fund houses went on increasing, with

4

many foreign mutual funds setting up funds in India and also the industry has

witnessed several mergers and acquisitions. As at the end of January 2003, there were

33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India

with Rs.44,541 crores of assets under management was way ahead of other mutual

funds.

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.

o One was 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 Specified Undertaking of Unit Trust of India, functioning

under an administrator and under the rules framed by Government of India and

does not come under the purview of the Mutual Fund Regulations.

o 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. As at the end of September, 2004, there were 29

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

The growth of assets can be seen in the graph:

5

Structure of the Indian Mutual Fund IndustryThe Indian mutual fund industry is dominated by the Unit Trust of India which has a total

corpus of Rs700bn collected from more than 20 million investors. The UTI has many

funds/schemes in all categories ie equity, balanced, income etc with some being open-

ended and some being closed-ended. The Unit Scheme 1964 commonly referred to as US

64, which is a balanced fund, is the biggest scheme with a corpus of about Rs200bn. UTI

was floated by financial institutions and is governed by a special act of Parliament. The

second largest category of mutual funds is the ones floated by nationalized banks.

Canbank Asset Management floated by Canara Bank and SBI Funds Management floated

by the State Bank of India are the largest of these. GIC AMC floated by General Insurance

Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other

prominent ones. The aggregate corpus of funds managed by this category of AMCs is

about Rs150bn.

The third largest category of mutual funds is the ones floated by the private sector and by

foreign asset management companies. The largest of these are Prudential ICICI AMC and

6

Birla Sun Life AMC. The aggregate corpus of assets managed by this category of AMCs is

in excess of Rs250bn.

Some of the AMCs Currently Operating in India are:

Name of the AMC Nature of ownership

Alliance Capital Asset Management (I) Private Limited Private foreign

Birla Sun Life Asset Management Company Limited Private Indian

Bank of Baroda Asset Management Company Limited Banks

Bank of India Asset Management Company Limited Banks

Canbank Investment Management Services Limited Banks

Cholamandalam Cazenove Asset Management Company Limited Private foreign

Dundee Asset Management Company Limited Private foreign

DSP Merrill Lynch Asset Management Company Limited Private foreign

Escorts Asset Management Limited Private Indian

First India Asset Management Limited Private Indian

GIC Asset Management Company Limited Institutions

IDBI Investment Management Company Limited Institutions

Indfund Management Limited Banks

ING Investment Asset Management Company Private Limited Private foreign

J M Capital Management Limited Private Indian

Jardine Fleming (I) Asset Management Limited Private foreign

Kotak Mahindra Asset Management Company Limited Private Indian

Kothari Pioneer Asset Management Company Limited Private Indian

7

Jeevan Bima Sahayog Asset Management Company Limited Institutions

Morgan Stanley Asset Management Company Private Limited Private foreign

Punjab National Bank Asset Management Company Limited Banks

Reliance Capital Asset Management Company Limited Private Indian

State Bank of India Funds Management Limited Banks

Shriram Asset Management Company Limited Private Indian

Sun F and C Asset Management (I) Private Limited Private foreign

Sundaram Newton Asset Management Company Limited Private foreign

Tata Asset Management Company Limited Private Indian

Credit Capital Asset Management Company Limited Private Indian

Templeton Asset Management (India) Private Limited Private foreign

Unit Trust of India Institutions

Zurich Asset Management Company (I) Limited Private foreign

Recent Trends in the Mutual Fund IndustryThe most important trend in the mutual fund industry is the aggressive expansion of the

foreign owned mutual fund companies and the decline of the companies floated by

nationalized banks and smaller private sector players.

Many nationalized banks got into the mutual fund business in the early nineties and got off

to a good start due to the stock market boom prevailing then. These banks did not really

understand the mutual fund business and they just viewed it as another kind of banking

activity. Few hired specialized staff and generally chose to transfer staff from the parent

organizations. The performance of most of the schemes floated by these funds was not

good. Some schemes had offered guaranteed returns and their parent organizations had to

bail out these AMCs by paying large amounts of money as the difference between the

8

guaranteed and actual returns. The service levels were also very bad. Most of these AMCs

have not been able to retain staff, float new schemes etc. and it is doubtful whether,

barring a few exceptions, they have serious plans of continuing the activity in a major way.

The experience of some of the AMCs floated by private sector Indian companies was also

very similar. They quickly realized that the AMC business is a business, which makes

money in the long term and requires deep-pocketed support in the intermediate years.

Some have sold out to foreign owned companies, some have merged with others and there

is general restructuring going on.

The foreign owned companies having deep pockets came here with the expectation of a

long haul. They have been credited with introducing many new practices such as new

product innovation, sharp improvement in service standards and disclosure, usage of

technology, broker education and support etc. In fact, they have forced the industry to

upgrade itself and service levels of organizations like UTI have improved dramatically in

the last few years in response to the competition provided by these.

A lone UTI with just one scheme in “1964” now competes with as many as 400 odd

products and 32 players in the market. In spite of the stiff competition and losing market

share, UTI still remains a formidable force in the mutual fund market.

Period between 1994 and 2000 had been a turbulent time even for the existing players in

the industry. New players had come in, while others had decided to close shop by either

selling off or merging with others. Product innovation had become a 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 had become more mature and responsible.

The industry is also having a profound impact on financial markets. While UTI has always

been a dominant player on the bourses as well as the debt markets, the new generations of

private funds which have also gained substantial mass. Fund managers, by their selection

criteria for stocks have forced corporate governance on the industry. By rewarding honest

and transparent management with higher valuations, a system of risk-reward has been

created where the corporate sector is more transparent then before.

9

During the last 6 years the Funds shifted their focus to the recession free sectors like

Pharmaceuticals, FMCG and the Technology Sector. Funds performances improved the

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 year 2000 mobilization exceeded

Rs300bn. Total collection for the financial year ending March 2000 reached Rs450bn.

What is particularly noteworthy is that bulk of the mobilization had been by the private

sector mutual funds rather than public sector mutual funds. Indeed private Mutual Funds

saw a net inflow of Rs. 7819.34 crore during the first nine months of the year as against a

net inflow of Rs.604.40 crore in the case of public sector funds.

Mutual Fund Industry 1999 - 2003 (Rupees mn)

Mutual Funds Vs Commercial Banks

Mutual 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 had already peaked in the U.S. The U.S.

boasts of an Asset base that is much higher than its bank deposits. If we look at the

672,070 642,390511,810

458,990190,590

102,890

195,320 280,360422,560

643,0801,066,890

143,450

123,93083,850

70,510

0%

20%

40%

60%

80%

100%

Dec 99 Dec 00 Dec 01 Dec 02 Dec-03

UTI Bank/Institution Sponsered Pvt Sector

10

statistics for the year 2000 in India, mutual fund assets were not even 10% of the bank

deposits. But this trend has started to change. In the same year mutual fund assets went up

by 115% whereas bank deposits rose by only 17%. If we look at the investment patterns in

other nations we see that India lags considerably behind. In India, Mutual funds

investment just represents 24% on the total Savings while this is very high in countries like

Australia, US. So there is a long way to go for the Indian Mutual Funds industry as there is

huge market to be tapped.

The Mutual Fund industry as percentage of Savings

Decrease in the level of bank investments and competition from Mutual funds has forced 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 be ignored and they will not close down completely. Their role

as intermediaries cannot be ignored. It is just that Mutual Funds are going to change the

way banks do business in the future. We can compare the investment opportunities,

benefits and risk in the banking sector and the Mutual Funds industry from the

following table:

    BANKS MUTUAL FUNDS

Returns Low Better

Administrative exp. High Low

Risk Low Moderate

17%

24%

68%

156%

186%

398%

455%

0% 100%

200%

300%

400%

500%

Japan

India

South Korea

UK

Brazil

USA

Australia

11

Investment options Less More

Network High penetration Low but improving

Liquidity At a cost Better

Quality of assets Not transparent Transparent

Interest calculation Minimum balance between 10th. & 30th. of every month

Everyday

Guarantee Maximum Rs.1 lakh on deposits None

If we look at the present contribution of Mutual funds industry towards the GDP of the

country, we see that it forms only 6% of the entire GDP. So there are big future prospects

of this industry in the Indian scenario.

The Mutual Fund Industry as a percentage of GDP

23%

30%

72%

87%

21%

6%

5%Japan

India

South Korea

UK

Brazil

USA

Australia

Types of Mutual Funds

12

Mutual funds usually invest in stocks, bonds, and depending on the conservativeness of the

fund's goal, may also utilize investments like certificates of deposit, money market

accounts, and so on.

Mutual funds are categorized by their goal: while some funds are designed to take

risks in order to achieve the greatest potential growth, others are designed to

maintain value while yet others invest heavily into dividend-yielding stocks in order

to provide a source of income for mutual fund participants. While the individual

investor must ultimately decide what his or her investment profile is, it is generally

advised that younger investors take greater risks in order to attempt more dramatic growth,

while older investors should invest more conservatively in order to protect their assets.

Aggressive growth mutual funds are thus more popular with younger generations, and

have a high level of risk with the potential for higher rates of growth. Asset allocation

funds are designed to be as diverse as possible, having holdings in different asset classes

and in different types of securities. Due to their diversity, asset allocation funds are usually

lower-risk. Money market funds invest only in money markets, such as Treasury bills,

certificates of deposit, and commercial paper. Money market funds are also low-risk,

unlike capital appreciation funds which seek maximum growth by taking on very high

levels of risk.

Yet other types of mutual funds are balanced funds, bond funds, international funds,

growth funds, stock funds, sector funds, regional funds, and income funds. Each of these

types of funds has a different goal and a different investment style, and any mutual fund

manager will be able to explain the differences and advise investors on which most closely

meets their needs.

Every scheme is bound by the investment objectives outlined by it in its prospectus, which

determine the classes of securities it can invest in. Based on the asset classes, the different

Mutual Funds that operate in Indian can be categorized as follows:

Mutual Funds by portfolio classification

13

Equity funds

These are the highest rung on the mutual fund risk ladder; such funds invest only in

stocks. Most equity funds are general in nature, and can invest in the entire basket of

stocks available in the market. There are also ‘specialized’ equity funds, such as index

funds and sector funds, which invest only in specific categories of stocks. Some of the

equity schemes offered by SBI Mutual Fund are Magnum Multicap Fund,

Magnum Equity Fund. They also offer sectorial schemes like Contra Fund,

FMCG Fund, IT Fund etc. With share prices fluctuating daily, such funds show

volatile performance, even losses. However, these funds can yield great capital

appreciation as, historically, equities have outperformed all asset classes. At present,

there are four types of equity funds available in the market. In the increasing order of

risk, these are:

1. Index funds

These funds track a key stock market index, like the BSE (Bombay Stock

Exchange) Sensex or the NSE (National Stock Exchange) S&P CNX Nifty. Hence,

their portfolio mirrors the index they track, both in terms of composition and the

individual stock weight ages. For instance, an index fund like Magnum Index

Fund of SBI MF that tracks the Sensex will invest only in the Sensex stocks .

The idea is to replicate the performance of the benchmarked index to near

accuracy. Index funds don’t need fund managers, as there is no stock selection

involved. Investing through index funds is a passive investment strategy, as a

fund’s performance will invariably mimic the index concerned, barring a minor

"tracking error". Usually, there’s a difference between the total returns given by a

stock index and those given by index funds benchmarked to it. Termed as tracking

error, it arises because the index fund charges management fees, marketing

expenses and transaction costs (impact cost and brokerage) to its unit holders.

Therefore, if the Sensex appreciates 10 per cent during a particular period while an

index fund mirroring the Sensex rises 9 per cent, the fund is said to have a tracking

error of 1 per cent. To illustrate with an example, assume you invested Rs 1,000 in

an index fund based on the Sensex on 1 April 1978, when the index was launched

(base: 100). In August, when the Sensex was at 3.457, your investment would be

worth Rs 34,570, which works out to an annualized return of 17.2 per cent. A

14

tracking error of 1 per cent would bring down your annualized return to 16.2 per

cent. Obviously, the lower the tracking error, the better the Index Fund.

The latest tracking as on 31st March 2006 of the BSE and NSE indices can been

seen in the following diagram:

BSE  

 Index Open High Low Last Price  Prv Close Chg %ChgSENSEX 11,325.96 11,356.95 11,231.16 11,279.96 11,307.04 -27.08 -0.24%BSE TECk INDEX

2,737.03 2,743.10 2,702.96 2,713.12 2,734.64 -21.52 -0.79%

BSE-100 5,907.97 5,943.32 5,870.54 5,904.17 5,897.24 6.93 0.12%BSE-200 1,410.56 1,419.85 1,402.71 1,412.62 1,407.76 4.86 0.35%BSE-500 4,504.61 4,537.76 4,482.73 4,516.73 4,495.69 21.04 0.47%

BSE IT INDEX 4,072.28 4,084.89 4,021.39 4,030.29 4,069.11 -38.82 -0.95%BSE CD INDEX 3,147.73 3,242.44 3,147.73 3,212.33 3,135.88 76.45 2.44%BSE FMCG INDEX

2,224.95 2,234.72 2,191.58 2,211.45 2,224.79 -13.34 -0.60%

BSE HEALTHCARE

3,861.69 3,881.04 3,832.48 3,858.10 3,843.14 14.96 0.39%

CAPITAL GOODS

8,069.41 8,218.15 8,031.15 8,170.56 8,060.11 110.45 1.37%

BSE PSU INDEX

6,112.84 6,162.56 6,062.04 6,114.88 6,094.77 20.11 0.33%

DOLLEX 527.21 527.21 527.21 527.21 524.45 2.76 0.53%BANKEX 5,261.69 5,315.55 5,235.56 5,265.24 5,251.94 13.30 0.25%BSE Auto 5,249.05 5,350.64 5,247.73 5,322.73 5,233.08 89.65 1.71%BSE Metal 8,760.08 8,934.18 8,748.99 8,869.91 8,738.40 131.51 1.50%

BSE Oil & Gas 4,940.25 4,964.71 4,881.30 4,918.98 4,924.12 -5.14 -0.10%DOLLEX-30 2,075.96 2,075.96 2,075.96 2,075.96 2,077.22 -1.26 -0.06%BSE-MIDCAP 5,265.03 5,361.16 5,258.77 5,348.62 5,249.36 99.26 1.89%

6,526.76 6,622.23 6,526.76 6,591.66 6,515.85 75.81 1.16%

2. Diversified funds

15

Such funds have the mandate to invest in the entire universe of stocks, example

Magnum Multicap Fund of SBIMF. Although by definition, such funds are

meant to have a diversified portfolio (spread across industries and companies), the

stock selection is entirely the prerogative of the fund manager. This discretionary

power in the hands of the fund manager can work both ways for an equity fund. On

the one hand, astute stock-picking by a fund manager can enable the fund to deliver

market-beating returns; on the other hand, if the fund manager’s picks languish, the

returns will be far lower. The crux of the matter is that the returns from a

diversified fund depend a lot on the fund manager’s capabilities to make the right

investment decisions.

3. Tax-saving funds

Also known as ELSS or equity-linked savings schemes, these funds offer benefits

under Section 88 of the Income-Tax Act. So, on an investment of up to Rs 10,000 a

year in an ELSS, one can claim a tax exemption of 20 per cent from his/her taxable

income, as in Magnum Tax gain Scheme of SBI MF. One can invest more than

Rs 10,000, but won’t get the Section 88 benefits for the amount in excess of Rs

10,000. The only drawback to ELSS is that the investor is locked into the scheme

for three years. In terms of investment profile, tax-saving funds are like diversified

funds. The one difference is that because of the three year lock-in clause, tax-

saving funds get more time to reap the benefits from their stock picks, unlike plain

diversified funds, whose portfolios sometimes tend to get dictated by redemption

compulsions.

4. Sector funds

The riskiest among equity funds, sector funds invest only in stocks of a specific

industry, say IT or FMCG like Magnum Contra fund, Magnum FMCG Fund,

Magnum IT Fund. A sector fund’s NAV will zoom if the sector performs well;

however, if the sector languishes, the scheme’s NAV too will stay depressed.

Barring a few defensive, evergreen sectors like FMCG and Pharma most other

industries alternate between periods of strong growth and bouts of slowdowns. The

way to make money from sector funds is to catch these cycles–get in when the

sector is poised for an upswing and exit before it slips back. Therefore, unless one

16

understands a sector well enough to make such calls, and get them right, sector

funds should be avoided.

Debt funds Such funds invest only in debt instruments, and are a good option for investors averse

to taking on the risk associated with equities. Here too, there are specialized schemes,

namely liquid funds and gilt funds. While the former invests predominantly in money

market instruments such as certificates of deposit (CD), commercial paper (CP) and

call money, gilt funds do so in securities issued by the central and state governments.

Debt funds are of three types. They are:

1) Income funds

By definition, such funds can invest in the entire range of debt instruments. Most

income funds park a major part of their corpus in corporate bonds and debentures,

as the returns there are the higher than those available on government-backed

paper. But there is also the risk of default–a company could fail to service its debt

obligations. Example, Magnum Income Fund offered by SBI Mutual Fund.

2) Gilt funds

They invest only in government securities and T-bills–instruments on which

repayment of principal and periodic payment of interest is assured by the

government. So, unlike income funds, they don’t face the specter of default on

their investments. This element of safety is why, in normal market conditions, gilt

funds tend to give marginally lower returns than income funds. Example,

Magnum Gilt Fund as offered by SBIMF.

3) Liquid funds

They invest in money market instruments (duration of up to one year) such as

treasury bills, call money, CPs and CDs. Among debt funds, liquid funds are the

least volatile. They are ideal for investors seeking low-risk investment avenues to

park their short-term surpluses. Example, Magnum Floating rate plan offered by

SBIMF.

17

Balanced funds

Lastly, there are balanced funds, whose investment portfolio includes both debt and

equity. They invest in a pre-determined proportion in equity and debt–normally 60:40

in favor of equity. As a result, on the risk ladder, they fall somewhere between equity

and debt funds depending on the fund’s debt-equity spilt–the higher the equity holding,

the higher the risk. Balanced funds are the ideal mutual funds vehicle for investors who

prefer spreading their risk across various instruments. For example, Hybrid Schemes

offered by SBIMF. Some of the popular schemes are Magnum Balanced Fund,

Magnum Children’s Benefit plan and Magnum Monthly Income plan.

Mutual Funds 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.

It implies that the capitalization of the fund is constantly changing as investors sell or

buy their shares. Further, the shares or units are normally not traded on the stock

exchange but are repurchased by the fund at announced rates. Open-ended schemes

have comparatively better liquidity despite the fact that these are not listed. The reason

is that investor can approach mutual fund for sale of such units, at any time. No

intermediaries are required. Moreover, the realizable amount is certain, since

repurchase is at a price, based on declared net asset value (NAV).

The portfolio mix of such schemes has to be investments, which are actively traded in

the market. Otherwise, it will not be possible to calculate NAV. This is the reason that

generally open-ended schemes are equity based. Moreover, desiring frequently traded

securities, open-ended schemes hardly have in their portfolio shares of comparatively

new and smaller companies since these are not generally traded. In such funds, option

to reinvest its dividend is also available. Since there is always a possibility of

withdrawals, the management of such funds becomes more tedious as managers have

to work from crisis to crisis. Crisis may be on two fronts, one is, that unexpected

withdrawals require funds to maintain a high level of cash available every time

implying thereby idle cash. Fund managers have to face questions like ‘what to sell’.

18

He could very well have to sell his most liquid assets. Second, by virtue of this

situation such funds may fail to grab favorable opportunities. Further, to match quick

cash payments, funds cannot have matching realization from their portfolio due to

intricacies of the stock market. Thus, success of the open-ended schemes to a great

extent depends on the efficiency of the capital market. As a matter of fact all the

schemes that SBI mutual funds offer are open ended in nature.

Closed-ended Funds

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. Their

price is determined on the basis of demand and supply in the market. Their liquidity

depends on the efficiency and understanding of the broker entrusted with. Their price

is free to deviate from NAV, i.e., there is every possibility that the market price may

be above or below its NAV. If one takes into account the issue expenses, conceptually

close ended fund units cannot be traded at a premium or over NAV because the price

of a package of investments, i.e., cannot exceed the sum of the prices of the

investments constituting the package. Whatever premium exists that may exist only on

account of speculative activities. 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.

Mutual funds: The Advantages

19

If we are talking about the rapid growth of the Mutual funds industry and the competition

it is giving to the other investment opportunities, we need to analyze the advantages of

Mutual fund investments. Some of the advantages have been discussed in this section.

Professional management

It is very difficult for a new investor to analyze equities. Most of us have neither the

skill to find good stocks that suit our risk and returns profile nor the time to track our

investments–but still want the returns that can be had from equities. That is where

mutual funds come in. When investments are made in mutual funds, the fund manager

takes care of the investments. A fund manager is an investment specialist, who brings

to the table an in-depth understanding of the financial markets. By virtue of being in

the market, the fund manager is ideally placed to research various investment options,

and invest accordingly for the investor.

Small investments

Today, if we want to buy government securities, we would have to invest a minimum

amount of Rs 25,000. Much the same is the case if we want to build a decent-sized

portfolio of shares of blue-chips. Now, that might be too large an amount for many

small investors. A mutual fund, however, gives us an ownership of the same

investment pie– at an outlay of Rs 1,000-5,000. That is because a mutual fund pools

the monies of several investors, and invests the resultant large sum in a number of

securities. Therefore, on a small outlay, we get to participate in the investment

prospects of a number of securities.

Diversified portfolio

One of the most-mentioned tenets of portfolio management is: diversify. In other

words, don’t put all your eggs in one basket. The rationale for this is that even if one

pick in the portfolio turns bad, the others can check the erosion in the portfolio value.

For example– Say, an investor has Rs 10,000 invested in one stock, Reliance. Now, for

some reason, the stock drops 50 per cent. The value of the investment will halve to Rs

5,000. Now, say if he had invested the same amount in a mutual fund, which had

parked 10 per cent of its corpus in the Reliance stock. Assuming prices of other stocks

20

in its portfolio stay the same, the depreciation in the fund’s portfolio– and hence, the

investment–will be 5 per cent. That’s one of the greatest merits of diversification.

Liquidity

There is a freedom to take the money out of open-ended mutual funds whenever one

wants, no questions asked. Most open-ended funds mail the redemption proceeds,

which are linked to the fund’s prevailing NAV (net asset value), within three to five

working days of putting in the request to withdraw.

Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly

investing in the capital markets because the benefits of scale in brokerage, custodial

and other fees translate into lower costs for investors.

Transparency The investor gets regular information on the value of the investment made in addition

to disclosure on the specific investments made under the 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, one can systematically invest or withdraw funds

according to the 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. The operations of

Mutual Funds are regularly monitored by SEBI.

Tax breaks

21

Last but not the least, mutual funds offer significant tax advantages. Dividends

distributed by them are tax-free in the hands of the investor. They also give the

advantages of capital gains taxation. For holding units beyond one year, one gets the

benefits of indexation. Simply put, indexation benefits increase the purchase cost by a

certain portion, depending upon the yearly cost-inflation index (which is calculated to

account for rising inflation), thereby reducing the gap between the actual purchase cost

and selling price. This reduces tax liability. What’s more, tax-saving schemes and

pension schemes give added advantage of benefits under Section 88. One can avail of a

20 per cent tax exemption on an investment of up to Rs 10,000 in the scheme in a year.

Disadvantages of Mutual FundsMutual funds are good investment vehicles to navigate the complex and unpredictable

world of investments. However, even mutual funds have some inherent drawbacks.

No assured returns and no protection of capital

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

Diversification helps, if risk minimization is the objective. However, the lack of

investment focus also means that we gain less than if we had invested directly in a

single security. In the earlier example, say, Reliance appreciated 50 per cent. A direct

investment in the stock would appreciate by 50 per cent. But the investment in the

mutual fund, which had invested 10 per cent of its corpus in Reliance, will see only a 5

per cent appreciation

22

Fees and Commissions

All funds charge administrative fees to cover their day-to-day expenses. Some funds

also charge sales commissions or "loads" to compensate brokers, financial consultants,

or financial planners. Even if you don't use a broker or other financial adviser, you will

pay a sales commission if you buy shares in a Load Fund. The loads are of two types:

Entry Load- Commission paid while purchasing Units of a particular fund.

Exit Load- Commission paid while selling back the Units.

Taxes

During a typical year, most actively managed mutual funds sell anywhere from 20 to

70 percent of the securities in their portfolios. If a fund makes a profit on its sales, one

who has invested in it will pay taxes on the income he/she receives, even if he/she

reinvests the money he has made.

Management Risk

When one invests in a mutual fund, he/she depends on the fund's manager to make the

right decisions regarding the fund's portfolio. If the manager does not perform as well

as he had hoped, investor might not make as much money on his investment as he had

expected. Of course, if one had invested in Index Funds, he/she foregoes management

risk, because these funds do not employ managers.

Risks in Mutual Fund

23

Time Period

Regulation of Mutual Funds in India

HighRisk

Risk Low

Few Days FewMonths

1–3 yrs 3-7 yrs 7-15yrs

MMMF

Treasury

Dated Government Securities

Corporate Debt

Balanced

Index

Equity

Sector

24

Securities and Exchange Board of India(SEBI)As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual

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

in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to

enter the capital market. The regulations were fully revised in 1996 and have been

amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds

from time to time to protect the interests of investors.

Every mutual fund must be registered with SEBI and registration is granted only

where SEBI is satisfied with the background of the fund.

SEBI (Mutual Funds) Regulations, 1996 lays down the provisions for the

appointment of the trustees and their obligations. The Regulations have also laid

down the provisions for the approval of the AMC and the custodian.

Every new scheme launched by a mutual fund needs to be filed with SEBI and

SEBI reviews the document in regard to the disclosures contained in such

documents.

SEBI has also laid down advertisement code to be followed by a mutual fund in

making any publicity regarding a scheme and its performance.

SEBI has the authority to inspect the books of accounts, records and documents

of a mutual fund, its trustees, AMC and custodian where it deems it necessary.

SEBI also has the authority to initiate penal actions against an erring MF.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

The mutual fund industry has a trade association called Association of Mutual Funds in

India (AMFI) modeled on the lines of a Self Regulating Organization (SRO) with a view

to 'promoting and protecting the interest of mutual funds and their unit-holders, increasing

public awareness of mutual funds, and serving the investor’s interest by defining and

maintaining high ethical and professional standards in the mutual funds industry'. AMFI

plays an important role in disciplining members and assist the regulatory authority in

protecting investors' interest.

25

AMFI works through a number of committees, some of which are standing committees to

address areas where there is a need for constant vigil and improvements and other which

are adhoc committees constituted to address specific issues. These committees consist of

industry professionals from among the member mutual funds. AMFI has now decided to

become a self-regulatory organization since it has worked very effectively as an industry

body.

26

MARKETING OF MUTUAL FUNDS

The financial services sector has undergone the most dramatic transformation in the post-

liberalization era of the nineties, and in particular, the mutual fund industry has passed

through four phases of development over this one and a half decade. There has been a

paradigm change in the quality and quantity of product and service offerings. After being

serviced by monopoly players for decades with hardly any choice in product offerings, the

Indian consumer today has a wide variety of choice that was unimaginable a decade back.

In this backdrop, what strategic marketing choices do mutual fund companies have,

to survive and thrive in this highly promising industry in the face of such cutthroat

competition? This is the most important question that needs to be answered and through

this project we aim to answer some of them.

The changing marketing trends in the mutual fund industry in India can be easily linked

and traced to its history of growth. The changes in marketing strategies can be

characterized by different stages, which have evolved along with the growth and evolution

of the industry.

Marketing today has various options to offer and no doubt in the case of investment

business also marketing plays an important role since it starts from tracing a potential

customer who will buy into the scheme and ends when the scheme is finally sold to him.

Product FocusIn the beginning the only focus of the marketing strategy was different product offerings.

As the concept was new, so the companies made things a little simple for the investors so

the categorization was primarily based on two factors:

One was the way the schemes were traded and

The other through different composition of debt and equity securities

in the scheme.

In the Product Focus stage, the aim of the mutual fund companies was to introduce a wide

variety of products and the only way in which a fund used to outperform other fund was:

The performance of the fund in giving returns to its investors.

The way in which that particular fund was marketed.

27

Customer Ownership FocusIn this stage, Mutual Fund companies began to segment big and small investors with equal

focus. The target segment was broadly divided into:

Institutional segment and

Individual investor segment.

The institutional segment consisted of treasury departments of Corporate and Trusts etc.,

and suitable products such as Institutional Income schemes and Money Market schemes

were targeted at them.

The individual investor was in turn divided into various segments such as Young

Families with small or no children, Middle-aged People saving for retirement and

Retired People looking for steady income. Suitable products such as Growth and

Balanced schemes for young families and Income schemes for retired people were

marketed.

Specialized Product & Service FocusHere the product is actually offered according to the needs of the individual. As

awareness levels of individual investors go up, focus is on identifying one's investment

needs depending on one's financial goals, ability to handle risks, the time horizon

individual is ready to be invested. Investors chose companies, which help them in the

above through specialized products and services.

In addition, there is a need for specialized services that help investors assess their risk

taking ability and chose products accordingly. Accordingly different products are being

offered like:

For Example, In SBI Mutual Funds with the expansion of scale of operations and

offerings to the investors the company recognizes the need to pay even greater

attention to the performance of the schemes and the quality of service offered to the

investors. Today there is a need to continuously offer innovative products to the Investors

with different risk appetites. Intrinsic to filling these expectations is the SBI Blue Chip

Fund, which was launched on 23rd December 2005. The scheme would invest in the

stocks of companies that have a large business presence, good reputation and possibly

market leader in their Industry. These companies generally have relatively less uncertainty

in terms of growth of sales and profits and have good credit ratings and greater brand

equity among the public. The New Fund Offer (NFO) closed on 20th January 2006.

28

MARKETING OF MUTUAL FUNDS -- CHALLENGES AND OPPORTUNITIES:

When we say marketing of mutual funds, it means, includes and encompasses the

following aspects:

   Assessing of investors needs and market research;

     Responding to investors needs;

     Studying the macro environment;

     Choosing the distribution network;

      Finalizing strategies for publicity and advertisement;

      Preparing offer documents and other literature;

      Getting feedback about sales;

      Studying performance indicators about fund performance like NAV;

      Sending certificates in time and other after sales activities;

      Honoring the commitments made for redemptions and repurchase;

      Paying dividends and other entitlements;

     Creating positive image about the fund.

At SBI Mutual Fund we take care of the above aspects and see to it that if any

further improvements can be done. This in turn gives business to the AMC.

Now let us look upon as to what are the strategies of SBI Mutual Fund in its marketing

programme. The present marketing strategies of SBI mutual funds can be divided into two

main headings:

  Direct marketing

    Selling through intermediaries.

29

Direct Marketing:  

Some of the important tools used in this type of selling are:

Personal Selling: In this Asst Sales Manager Mr. Venkata Vinod takes appointment from

a Corporate. Once the appointment is fixed, she then meets the prospect and gives him all

details about the various schemes being offered. Advertisements in newspapers and

magazines: The fund regularly advertises in business newspapers and magazines besides

in leading national dailies. The purpose is to keep investors aware about the schemes

offered by the fund and their performance in recent past.

Hoardings and Banners: In this case the hoardings and banners of the fund are put at

important locations of the city where the movement of the people is very high. The

hoarding and banner generally contains information either about one particular scheme or

brief information about all schemes of fund.

Intermediaries form a major chunk of the mutual fund sales and these play a very

important part in educating the customer. The role of intermediaries can be judged from

the fact that sometimes an investor who doesn’t have the requisite knowledge invests as

the intermediary says. The intermediary network at SBI Mutual Funds is composed of:

Banks

Distributors.

DISTRIBUTORS

An individual or a corporation serving as principal underwriter of a mutual fund's shares,

buying shares directly from the fund and reselling them to other investors are called

30

distributors. Distributors for an Asset Management Company can be broadly classified as

follows:

National Distributors

National level distributors are those who distribute their products across the country and

have centers in major cities of the country. They have widespread distribution coverage.

They usually cover all asset management companies and have a much-formalized structure

of decision-making.

Regional Distributors

Regional level distributors cater to one specific region. They generally give preferences to

the choice of the customers of that region. For example: Cholamandalam Finance is

preferred in South.

Local Distributors

Local level distributors cater to the needs of customers in one specific city. Their branches

functions within the geographical boundaries of that specific city.

Agents

Agents are the most extensive form of distribution system. They work on commission

basis that is fixed on particular number of applications and increases as number of

applications increases. They work as a link between AMC’s and the potential customers

that may be individual or corporate. All agents are required to be AMFI-certified. SEBI

has made it mandatory for people to qualify for AMFI before they go for mutual fund

promotion.

ADVANTAGES OF TIE UP WITH BANKS

1. TRUST OF CUSTOMERS: Banks maintain a relationship of trust and

acknowledgement with the customers as these customers remain invested with

banks for a longer period of time. The customers are always in search of better

investment avenues and thereby they feel that banks can provide them with the

requisite advice. For example when I was handling relationships with the STATE

BANK OF HYDERABAD the branch managers themselves explained to the

31

customers that by investing in mutual funds they can generate a much better

returns.

2. PERMANENT CONTACTS: If a customer has invested through a bank than it

means that the concerned customer is a sort of perm ant customer of the bank

already with this a kind of perm ant contact is maintained with the customer and

the customer can be contacted easily through the bank any time in future.

3. WORKING ON TARGETS: A tie up is done either at the national level or at the

regional level for instance if a tie up with a bank is done at the regional level then a

target is given to the concerned officer who is in charge of all the branches and he

has the responsibility to achieve that target. The main advantage of this is that then

these officers are always at their toes to complete their targets.

4. EASY TO MARKET: A product becomes easy to market when it is done through

a channel like this as certain high net worth individuals consider the saying of bank

managers and asst. managers in their investing decisions.

DETAILS OF THE SALES DONE DURING THE PROJECT

SR NO. NAME APPLICATION NUMBER

AMOUNT (Rs) SCHEME NAME

1 Mr. S.V.S. Chaladathi Rao 2040421 10,000 Magnum Taxgain

2Mr. Pratti Pati Venkata Chalam 2038069 60,000 Magnum Taxgain

3 Mr. Lakshmi Narayan 2040423 10,000 Magnum Taxgain

4 Mr. G.V. Ramprasad 2038070 20,000 Magnum Taxgain

5 Mr. R.S. Suresh 3999103 10,000 Magnum Taxgain

6 Mr. S.K. Krishna Kumar 2038068 10,000 Magnum Taxgain

7 Mr. Alivenu 2740546 10,000 Magnum Taxgain

8 Mr. Mannepalli 2040416 20,000 Magnum Taxgain

9 Mr. Devvlapalli Sriramamur 2039834 20,000 Magnum Taxgain

32

10 Mr. C Gajraj 3934577 25,000 Magnum Contra Fund

      25,000 Multicap Fund

11 Mr. Sudhakar   5,000 Magnum Contra Fund

SURVEYIntroductionThe process of generating, capturing, qualifying and converting business opportunities is

critical to the success of companies across every industry and geographic market, but it's a

process that is not easy. We need to study the attitudes, perceptions and concerns of

consumers in generating prospects, sustaining deal flow and closing business. We

have to gain more knowledge about our customers and sales prospects, knowledge that can

be used to improve our marketing and sales targeting, knowledge that can supercharge our

efforts and dramatically improve our success.

While marketing SBI Mutual Fund’s products the same need was felt and there was a need

to study consumer awareness, perception and preference of the various products offered by

different Asset Management Companies.

In order to gain the market insight and consumer awareness and perception it was decided

to conduct a market survey about Mutual Funds. Questionnaire was the tool selected to

conduct this survey. So, a questionnaire of 20 questions was prepared to carry out the

process. The questionnaire was prepared as a mix of both open ended and close ended

questions to gather as much information as possible in a short span of time. It was

necessary to design the questionnaire simple and easy so that the consumers can easily

give their view points in a matter of 5-10 minutes.

The survey questionnaire was designed considering all the seven P’s of service marketing,

that is:

Product

Price

33

Promotion

Place

People

Process

Physical Evidence

DATA COLLECTION

For the survey a sample of 100 consumers was selected who were either regular

investors or were prospective investors. The survey was conducted through two

channels:

In person, one to one and

Online/Telephonic

The entire survey was conducted over a period of 5 days from 30 th March 2006 to 4th

April 2006. Hence forth the data collected was organized and studied in detail. The data

was then analyzed through graphical methods and results were drawn. These results were

then used to draw inferences so that recommendations and suggestions could be

documented.

The details of the people who participated in the survey are:

In Person, One to One Survey

Sr.Num NAME EMAIL PHONE

1 Dr.S.Venkata Seshaiah [email protected]  

2 Mr.Abhishek Khanna [email protected]  

3 Mr.Abhishek Roy [email protected] 09885476054

4 Mr.Akhtar [email protected] 39101853

5 Mr.Anand [email protected] 09440829361

6 Mr.Anil Agarwal   09849077028

7 Mr.Anish Kumar Barnwal [email protected] 09885694124

8 Mr.Ankit Desai [email protected]  

9 Mr.Arun Chopra [email protected]  

10 Mr.Gaurav Gupta [email protected] 09866850388

34

11 Mr.Gopinath LN [email protected] 09885366454

12 Mr.Harish Agarwal   09849137383

13 Mr.K Tresh [email protected]  

14 Mr.K.L.N Rao [email protected] 27100247®

15 Mr.KVS Kumar [email protected]  

16 Mr.Manik Tyagi [email protected] 09440498616

17 Mr.Nitin Srivastava [email protected] 09985151170

18 Mr.P.Subrahmanyum [email protected]  

19 Mr.Pawan Tamolia   09848063267

20 Mr.Priyanshu Gupta   09866612068

21 Mr.Rohit Gupta [email protected]  

22 Mr.S.Netaji babu [email protected] 09885764342

23 Mr.S.P.R Vittal [email protected]  

24 Mr.Sagar Jhalani [email protected] 09849045793

25 Mr.Sanjay Agarwal   09396543676

26 Mr.Satish Kumar [email protected] 09347541021

27 Mr.Satyabrata Das [email protected] 09849954910

28 Mr.Subhasis Ray [email protected] 23430415

29 Mr.T Swamy   09849551145

30 Mr.Tamiz Sheikh [email protected] 23430453-213

31 Mr.Tapasvi Likhi [email protected] 09985219800

32 Mr.Y.Sreecharan   09885363393

33 Mrs. Vijaya lakshmi    

34 Mrs.A.Usha Reddy [email protected] 23430453

35 Mrs.Y.Malini Reddy [email protected] 23548655

36 Ms Archana J Vallurri [email protected] 09849660887

37 Ms Richa Kappoor [email protected] 09980454317

38 Ms.Anushree Kumar [email protected] 09347407810

39 Ms.Richa Chandra [email protected] 09849078807

40 Ms.Shilpi Singh   09885732746

41 Ms.Swati Prakash   09849724916

Online/Telephonic Survey

Sr.Num NAME EMAIL Phone

1 Mr.Aashish Kohli [email protected] 098391334252 Mr.Ajay Jindal   098458234033 Mr.Ajay Kumar Misra [email protected]  

4 Mr.Ajay Thomas [email protected]  

35

5 Mr.Amit Diwan    

6 Mr.Anirban paul [email protected] 09818244327 Mr.Ashish Haridas [email protected] 098903500598 Mr.Baldev Singh [email protected] 098608736369 Mr.Bhasker Paliwal [email protected] (562)2882010

10 Mr.Bhavin Dedhia [email protected] 0932102718611 Mr.Charanjeet Gulati [email protected] 0981916164712 Mr.Dipendra Ku Gupta   099619301113 Mr.H. Pramod [email protected] 0988106650614 Mr.Ishwar Gupta   0983004365015 Mr.Jitendra Chotrani [email protected]  

16 Mr.Kishan Ku Aindala [email protected]  

17 Mr.L.R.Chotrani   0755264019218 Mr.Nagachandu Talluri [email protected] 0805133157219 Mr.Navdeep   0984986580620 Mr.Navneet Kaulgud    

21 Mr.Nitin Mittal   0988547285022 Mr.Pradeep Gudla [email protected] 0988106096223 Mr.R.S Gupta   0933101751924 Mr.Rakesh Sharma    

25 Mr.Ravi    

26 Mr.Ravi Chandra Ivvala [email protected] 0988616453127 Mr.Ravinder Goel   0983107850528 Mr.Ritesh Agarwal [email protected] 0981864634229 Mr.Rohit Kelkar [email protected] 0988106650330 Mr.Romi Rimesh [email protected] 0986725356831 Mr.Samarthya Kumar   0983827388032 Mr.Shashi Ranjan mailto:[email protected] 0981099782533 Mr.Shubendu Goswami [email protected]  

34 Mr.Siddharth Ghildyal [email protected]  

35 Mr.Sony Sebastian [email protected] 0984743521636 Mr.Sudhir Gattu [email protected] 0988638225437 Mr.Sumedh N Meshram [email protected]  

38 Mr.Sumit Pawar [email protected]  

39 Mrs.Anu Antony [email protected]  

40 Mr.P.K. Guha   0332466317641 Mrs.Kiran Awargaonkar [email protected] 0982001228942 Mr.Bijay Kumar Gupta    43 Mrs.Monami Ghosh [email protected]  

44 Mr.Manoj Chowdary   09331051552

36

45 Mrs.Namita Batra    

46 Mr.Mukesh Agarwal   0983043900547 Mrs.Poorva Pantane [email protected] 0932423943548 Mr.Bhagwan Khandelwal   0678226234449 Mrs.Shaminoo Kapoor [email protected]  

50 Mr.Ravinder Garg   0332666325151 Mrs.Sunita Jindal   0984582805152 Mr.Tinku Singh   0983044807753 Ms.Chanchal Gupta   0983121863254 Mr.Dinesh Kumar Bhora    55 Ms.Medha Raikar [email protected]  

56 Mr.Ram Babu Sahu   0678822118757 Ms.Neha Johri   3021413358 Ms.Neha Kamat [email protected] 0985099567959 Ms.Pinky Gupta [email protected] 09830198006

DATA ANALYSIS

All the raw data collected is not useful in its original form to carry out analysis and obtain

results. The data has to be organized and filtered before it can be used for carrying out

analysis and obtaining results. The data colleted during the questionnaire was organized

and some parameters were selected which would be used in carrying out the analysis.

Graphical method of analysis seemed to be the most suitable method of carrying out the

analysis. With the help of Pie Charts, Column Graphs and Bar Graphs the data has

been studied and inferences drawn.

Only close ended questions have been taken into the analysis as they fit suitably in the

graphical method of data analysis. Also, rankings have been obtained for top seven

performing Mutual Funds based on Investor perception and experience.

The parameters selected for Data Analysis have been listed below:

Age(years) Parameter Number of Votes

Less than 30 68Between 30 and 50 22Above 50 10

37

OccupationGovernment Service 1Self Employed 17Private Enterprise 72Others 9

Annual Income100000-300000 40300000-500000 37500000-700000 16Above 700000 4

Investment OptionYes 93No 7

Investment ObjectivesShort Term Dividend Gain 33Long Term Capital Gain 59Security 26Liquidity 16

Investment AvenuesProperty/Real Estate 17Stocks 37Mutual Funds 71Fixed Deposits/Savings 25Any Other 0

Returns ExpectedLess than 6% 1Between 6%-10% 6Between 10%-15% 17Between 15%-20% 40Greater than 20% 31

Company Knowledge Parameter Number of Votes

Friends 44News Paper 54TV Shows 24Advertisements/Commercials 25Road Shows/Campaign 3

Involvment RequiredVery High 12High 64Indifferent 6

38

Low 7Very Low 1

Entry/Exit LoadYes 4No 90

Tax Benefit MeasureProvident Fund 15LIC premium 51ELSS of Mutual Funds 45NSC 22Loan Repayment 9

Channel PreferenceSales Person 26Brokerage Firm 4Direct AMC 42Banks 22Online 27

Company Contact MethodPersonal Contact 25Telephonic 6Online 33Letters/Mails 44

Portfolio Manager Parameter Number of Votes

Share Broker 4Fund Manager 63Friends Advice 10On Own 22

Company Image EffectYes 45No 46

Satisfaction LevelCompletely Satisfied 32Somewhat Satisfied 37Satisfied 16Dissatisfied 1Completely Dissatisfied 0

39

GRAPHICAL ANALYSISThe parameters listed above have been separately converted into graphs either Pie chart or

Bar graph depending on the suitability of the data. The patterns derived from these graphs

are then used individually to derive inferences about that particular parameter.

The Analysis is as follows:

1) Age group to which the sample population belongs

40

Age(years) Pattern of the Sample PopulationAbove 50 , 10, 10%

Between 30 and 50, 22, 22%

Less than 30, 68, 68%

Less than 30 Between 30 and 50 Above 50

The above graph shows that 68% of the sample population belongs to the age group less

than 30 years, 22% of the sample population belongs to the age group of 30 years to 50

years and 10% of the sample population belongs to the age group of above 50 years.

Hence, as a result of this survey we would be basically concentrating on the investment

behavior of investors in the age group of less than 30 years.

2) Occupation pattern of the sample population

41

Occupation Pattern of the sample Population

Government Service, 1, 1%Others, 9, 9%

Private Enterprise, 72, 73%

Self Employed, 17, 17%

Government Service Self Employed Private Enterprise Others

The above graph show that 73% of the sample population is working in Private

Enterprise. Next larger group comprises of Self Employed people (17%) however it is

much less than the first group of private enterprise. Government service group is only 1%

of the sample population. As a result of this we would be basically studying the investment

behavior, perception and awareness of people working in private enterprises.

3) Annual Income pattern of sample population

4037

16

4

0

10

20

30

40

Sample Number

100000-300000 300000-500000 500000-700000 Above 700000

Income Patterns of the Sample Population

100000-300000 300000-500000 500000-700000 Above 700000

If we closely study the annual income patterns of the sample population we see that

number of people in the income range of Rs.1,00,000 to Rs.3,00,000 (40) and Rs.3,00,000

to Rs.5,00,000 (37) is almost similar. So, our study would be concentrating on the

investment behavior of these two groups. The income group of the range Rs.5,00,000 to

42

Rs.7,00,000 comprises of 16 people whereas the group of people with income more than

Rs.7,00,000 is very small consisting of only 4 people.

4) View regarding Investments by the sample Population

93

7

0 20 40 60 80 100

Yes

No

Num

ber o

f Peo

ple

Investment Option of the Sample Population

Yes

No

The analysis of this graph is very clear from the diagram itself. We see that out of 100

people in the sample 93 people are interested in investments and only 7 people are not

interested with investments.

5) Investment objectives of the sample population

Investment Objectives of the Sample Population

Short Term Dividend Gain, 33, 25%

Long Term Capital Gain, 59, 44%

Security, 26, 19%

Liquidity, 16, 12%

Short Term Dividend Gain Long Term Capital Gain Security Liquidity

The analysis of this graph is quite interesting and complex as well. In this graph we see

that an investor might be looking for more than one objective while considering an

investment option. For example an investor putting his/her money in Mutual Funds might

be looking for Long term capital gains as well as security. The graph shows that 44% of

43

the sample population looks for Long term capital gains while investing, 25% look for

short term dividend gains, 19% look for security of investment and 12% look for

liquidity.

6) Investment Avenues into Consideration

Investment Avenues into Consideration

Property/Real Estate, 17, 11%

Any Other, 0, 0%

Stocks, 37, 25%

Mutual Funds, 71, 47%

Fixed Deposits/Savings,

25, 17%

Property/Real Estate Stocks Mutual Funds Fixed Deposits/Savings Any Other

During the course of questionnaire design 5 kinds of investment options were taken into

consideration and they are Stocks, Mutual Funds, Fixed Deposits/Savings,

Property/Real Estate and others. Survey results reveal that a large chunk of the sample

(47%) considers Mutual Funds as a good option for doing Investments. This shows bright

prospects for the Mutual funds industry. The next big investment option is stocks as

indicated by 25% of the sample population. Fixed deposits/savings are only favored by

17% of the population and property by only 11%. Mutual funds are emerging as a

prospective avenue for investment for today’s investor. Their growing popularity is the

result of the security provided by them as well as the good returns generated over the

years. Investor trust is growing for this branch of Investment.

7) Returns Expected by an Investor

44

1 6 17 40 31

0% 20% 40% 60% 80% 100%

1

Percentage Of Returns expected by the sample population

Less than 6%

Between 6%-10%

Between 10%-15%

Between 15%-20%

Greater than 20%

Returns are the driving force behind any investment option. However Risk and Returns of

an investment go hand in hand. Higher the risk associated in any investment greater are the

returns associated with it, and lower is the risk lower are the returns. Form the above graph

we can see that majority of the investors look for returns higher than 15%. Out of the

sample of 100 people 40 people expect returns in the range of 15%-20% and 31 people

expect returns higher than 20%. People expecting returns lower than 10% are very small in

number.

8) Source of Company profile and awareness

Source of Company Knowledge

Road Shows/Campaign,

3, 2%Advertisements/Commercials, 25,

17%

Friends, 44, 29%

News Paper, 54, 36%

TV Shows, 24, 16%

Friends News Paper TV Shows Advertisements/Commercials Road Shows/Campaign

This graph illustrates the source of information about a Mutual Fund Company. News

papers are the source of 36% of awareness while friends are a source of 29% of awareness.

Advertisements and commercials form 17% and TV shows 16%. Road shows and

campaign form a merge 2% of awareness as revealed by the sample population. We see

45

that friends form an important reference group while aiding in decision making while

choosing a particular Mutual Fund.

9) Percentage of Involvement in Investing is Mutual Funds

12 64 6 7 1

0% 20% 40% 60% 80% 100%

Sample

1

Percentage of Involvement in Investing is Mutual Funds

Very High

High

Indifferent

Low

Very Low

This graph shows the kind of behavior exhibited while choosing a particular Mutual Fund.

64 people out of sample of 100 consider Mutual Fund investment as a high involvement

behavior whereas 12 people consider it as a very high involvement mechanism. 6 people

are indifferent to the selection process and 7 people consider it as a low involvement

behavior.

10) Sample view about existence of Entry/Exit Loads on Mutual Funds

Sample view about existence of Entry/Exit Loads on Mutual Funds

Yes, 4, 4%

No, 90, 96%

Yes No

There is a clear majority of 96% regarding the view that there should be not Entry and Exit

fee for Mutual Fund Investment.

11) TAX Benefit Measure availed by Investors in the Sample Population

46

15

5145

22

9

0

10

2030

4050

60

Number pf people

ProvidentFund

ELSS ofMutualFunds

LoanRepayment

Methods

TAX Benefit Measure availed by Investors In the Sample Population

Provident FundLIC premium

ELSS of Mutual Funds

NSC

Loan Repayment

The graph shows that 51 people in the sample of 10 avail Tax exemption benefit through

payment of LIC premiums. 45 people avail Tax benefits through ELSS of Mutual Funds,

22 people think it worthwhile to invest in NSC’s and 15 toward provident fund. 9 people

avail tax benefit through repayment of loans.

12) Investment Channel preferred by investors

26

4

42

2227

05

1015202530354045

Number of People

SalesPerson

BrokerageFirm

DirectAMC

Banks Online

Channels

Channel Preference of Investors

Sales Person

Brokerage FirmDirect AMCBanksOnline

The above graph shows the consumer preference of the marketing channels provided by a

Mutual Fund Company. 42 people like to directly interact with the AMC, 28 people like to

invest through a sales person, 27 people prefer the online channel, 22 through banks and 4

people prefer brokerage firms while investing. In the growing period of Internet number of

people preferring online channel is likely to shoot up in comparison to traditional

channels.

13) Company Contact Methods preferred by the Investors

47

25

6

33

44

05

1015202530354045

Number of People

PersonalContact

Telephonic Online Letters/Mails

Contact Methods

Company Contact Methods preferred by the Investors

Personal ContactTelephonic

OnlineLetters/Mails

This graph shows the contact method of the company as preferred by the Investors.

Maximum people prefer to be contacted through Letters/Mails. Also the number of people

preferring the online channel is large (31). 25 people would like to be contacted

personally. Least number of people would prefer to be contacted through telephones.

14) Portfolio Manager in view of the Investors

4

63

10

22

010203040506070

Number of People

ShareBroker

FundManager

FriendsAdvice

On Own

Manager

Portfolio Manager in view of the Investors

Share Broker

Fund Manager

Friends Advice

On Own

From this graph we can analyze that majority of the investors (63) would like their

portfolio to be managed by the Fund Manager. 22 would like to self manage their portfolio

while 10 would love to do it at their friends’ advice. Only a small fraction of population

would prefer a share broker managing his/her portfolio of investment.

15) Impact of Company’s Image while considering Investment

48

Impact of Company Image(parental)

Yes, 45, 49%

No, 46, 51%

Yes No

This graph shows whether the Image and reputation of the parental organization has any

effect on the business of its subsidiary. The investors are almost 50-50 on this view. 49%

say yes whereas 51% say no.

16) Level of satisfaction with an Investment

3237

16

1 005

10152025303540

Number of People

1

Satisfaction Level of An Investor

Completely Satisfied

Somewhat Satisfied

Satisfied

Dissatisfied

Completely Dissatisfied

This graph shows the level of satisfaction investors have got through their investments. It

shows that only 32 people are completely satisfied whereas 37 are somewhat satisfied. So

it’s very important to analyze the reason for not being completely satisfied as these

investors might churn away in future. So the company should adopt measures to make

them completely satisfied.

ANALYSIS OF RANKS OBTAINED BY MUTUAL FUNDS

49

RANKS OBTAINED

Asset Management Company Ranks(1-7) Votes in Favor

Franklin Templeton 1 442 183 114 115 36 27 0

SBI Mutual Funds 1 182 173 244 175 76 47 1

DSP Merrill Lynch 1 12 223 104 95 286 107 8

HDFC Mutual Funds 1 42 73 84 135 126 257 19

ICICI Mutual Funds 1 42 53 104 125 166 16

50

7 26

Reliance Mutual Funds 1 72 163 204 135 76 147 12

UTI Mutual Funds 1 92 63 74 155 136 177 20

Ranks given to FRANKLIN TEMPLETON by the Investors

51

44

18

11 11

3 2 005

1015202530354045

Votes in Favor

1

RANKS(1-7)

Ranks given to FRANKLIN TEMPLETON by the Investors

1st rank2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

This graph shows that, maximum numbers of Investors (44) have voted Franklin

Templeton as the number one Mutual Fund. While 18 votes rank it at 2nd position and 11

votes for 3rd and 4th position none have ranked it 7th. This clearly indicates that Investors

consider Franklin Templeton as the best AMC in the Mutual Fund Industry.

Ranks given to SBI MUTUAL FUNDS by the Investors

18 17

24

17

74

1

0

5

10

15

20

25

Number of Votes in Favor

1

RANKS(1-7)

Ranks given to SBI MUTUAL FUNDS by the Investors

1st rank

2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

From the graph we can see that maximum number of votes rank SBI Mutual funds for 3 rd,

1st and 2nd position. We in infer from the investors consider SBI MF as the second best

option in the Mutual Fund Industry. Variety of schemes and good returns make it one of

the Best Mutual Fund in the industry.

Ranks given to Reliance MUTUAL FUNDS by the Investors

52

7

16

20

13

7

1412

0

5

10

15

20

Number of Votes in Favor

1

RANKS(1-7)

Ranks given to Reliance MUTUAL FUNDS by the Investors

1st rank

2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

Reliance Mutual Fund has earned maximum votes for the 3rd position. Investors have a

mixed review about Reliance Mutual Fund. We can consider it as the third best investment

option after Franklin Templeton and SBI Mutual Fund. Investors trust and faith in the

reliance Industries provides an edge to this AMC.

Ranks given to DSP MERRILL LYNCH FUNDS by the Investors

1

22

10 9

28

108

0

5

10

15

20

25

30

Number of Votes in Favor

1

RANKS(1-7)

Ranks given to DSP MERRILL LYNCH FUNDS by the Investors

1st rank

2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

DSP Merrill Lynch as well has earned a mixed response from the Investors. It is not

considered as a number one investment company; however most of the Investors rank it as

the fourth best AMC in the industry. DSP Merrill Lynch has to create more market

awareness to strengthen its position in the industry. Though the Fund is internationally

acclaimed it has yet to prove itself in Indian Market.

Ranks given to UTI MUTUAL FUNDS by the Investors

53

9

6 7

1513

17

20

0

5

10

15

20

Number of Votes in Favor

1

RANKS(1-7)

Ranks given to UTI MUTUAL FUNDS by the Investors

1st rank

2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

Though being the subsidiary of the oldest Fund of the country UTI Mutual Fund has lost

its market leadership over the years. Foreign and Institutional AMC’s have pushed UTI

much behind and snatched its market position. UTI Mutual fund can be overall ranked as

5th best Investment Company by the investors.

Ranks given to HDFC MUTUAL FUNDS by the Investors

47 8

13 12

25

19

0

5

10

15

20

25

Number of Votes in Favor

1

RANKS(1-7)

Ranks given to HDFC MUTUAL FUNDS by the Investors

1st rank

2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

HDFC Mutual Fund has been ranked overall as the 6th best Investment Company by the

Investors. Though the parent Bank has earned lot of reputation in the banking industry the

AMC is yet to prove itself in the Mutual Fund Industry. Though the Fund has good

schemes it has to earn faith and confidence of the investor to improve its market position.

Ranks given to ICICI MUTUAL FUNDS by the Investors

54

4 5

1012

16 16

26

0

5

10

15

20

25

30

Number of Votes in Favor

1

RANKS(1-7)

Ranks given to ICICI MUTUAL FUNDS by the Investors

1st rank

2nd rank

3rd rank

4th rank

5th rank

6th rank

7th rank

ICICI Bank is the largest private bank of India however ICICI Mutual Fund has not been

successful to attract investors. Most of the investors have ranked ICICI Mutual Fund as the

7th best AMC for investments. ICICI MF has to concentrate on its schemes as well as its

marketing strategies to strengthen its position.

55

Conclusion

The Indian mutual funds business is expected to grow significantly in the coming years

due to a high degree of transparency and disclosure standards comparable to anywhere in

the world, though there are many challenges that need to be addressed to increase net

mobilization of funds in this sector, as said by Mr. A.P. Kurian, Chairman of the

Association of Mutual Funds of India (AMFI).

Indian Mutual fund industry exhibited 200% growth in the last 10 yrs from Rs.470 billion

to Rs1400 billion in terms of assets under management. The Mutual Funds industry is

expected to jump sharply from its present share of 6% of GDP to 40% in the next 10yrs,

provided the country’s growth rate is consistently above 6%. The growing investor

preference for mutual funds has resulted in the assets under management of mutual funds

growing 8-folds in last 5 yrs. Number of foreign AMC's are in the queue to enter the

Indian markets like US based Fidelity Investments, with over US$1trillion assets under

management worldwide. Our saving rate is over 23%, highest in the world. Only

channeling these savings in mutual funds sector is required. There is a big scope for

expansion as we have approximately 31 mutual funds which is much less than US having

more than 800.

56

Findings from the Project

The project is not just about marketing of Mutual Funds offered by SBI Mutual Funds. It

aims to study consumer, awareness, perception and preference of the Mutual Funds

offered by various Asset Management Companies. Through the survey conducted as the

part of the project, some important findings have been obtained.

Important findings from the project are:

Consumer awareness in not uniform throughout all age groups. A major

chunk of people having knowledge of Mutual Funds belong to the age

group of less than 30 years. This group is slowly catching up in its

investment behavior as well.

People with annual income between Rs.3,00,000 to Rs.5,00,000 form the

major investor group, also the income group between Rs.1,00,000 to

Rs.3,00,000 is picking up Mutual Funds as an avenue for investment.

Majority of the Investors look for Long term capital gains and Security

while making any Investment.

Mutual Funds are gaining popularity in comparison to other methods of

Investment. Less risk and high returns are boosting Mutual Funds in the

Indian Financial Market.

Majority of Investors expect returns higher than 15% while making any

Investment.

While talking about the source of company information News papers and

friends top the chart. Role of advertisements and road shows is still

lagging behind.

Investors consider Mutual Funds investment as a high involvement buying

behavior.

LIC premiums turn out to be the most popular mechanism for availing

TAX benefits by the investors. In the present scenario ELSS of Mutual

funds is giving tough competition to LIC. It is expected to surpass LIC in

few years to come.

57

Maximum Investors prefer to invest directly through the AMC. Another

channel that is picking up is the online channel. Sales person also form an

important channel for investment.

Letters/mails seem to be preferred the most by the people while being

contacted by the Mutual fund companies. Online channel is also high on

the preference list.

Maximum people would like a fund manager to manage their investment

portfolio.

While studying the satisfaction level of the investors we find that, complete

satisfaction has not been achieved. Most of the investors are somewhat

satisfied with the investment. Lack of proper marketing strategies my

result to customer loss in such cases.

Franklin Templeton turns out to be the most preferred Investment

Company by the Investors.

SBI Mutual Funds is the Second best Investment Company as voted by the

Investors.

58

RECOMMENDATIONS

The basic aim of carrying out the survey and analysis was to find out consumer investment

behavior, product awareness, perception and level of satisfaction. After obtaining the

findings from the project these are to be used for recommendations and suggestion to the

AMC for which the project is being done (SBI MUTUAL FUND).

Some important recommendations are:

They have some good funds, but they have not been advertised sufficiently, so

new investors do not get to know about them. So more attention is to be given to

generating consumer awareness about the various schemes.

The new schemes should be launched under the Umbrella brand name SBI

MAGNUM XYZ, as it helps to associate with other successful products of SBI

Mutual Funds.

Reacting more efficiently and quickly to consumer queries and offering

solutions.

Maintaining higher level of after sales service.

Advertisings more aggressively compared to competitive Funds.

Conveying the information regarding declaration of dividends.

APPENDIX

59

QUESTIONNAIRE

NAME: ___________________________________________________ Email-Id:__________________________________________________ Phone No:_________________________________________________

1) AGE : □ less than 30; □ 30-50; □ Above 50

2) OCCUPATION: Government service. Self employed. Private enterprise. Other (please specify)………………………………………

3) ANNUAL INCOME: 100000-300000 300000-500000 500000-700000 greater than 700000

4) Are you interested in Investments? Yes No

5) What are your investment objectives? Short term Dividend gains Long term Capital Appreciation Security Liquidity

6) What is your choice of Investment Avenue? Property/Real Estate Stocks Mutual Funds Fixed deposits/Savings Any other please specify

7) What is the rate of return that you expect (annual basis) <6% 6-10% 10-15% 15-20% >20%

8) Rank the following Mutual Funds according to your preference: (rank 1-7)

60

Mutual Fund Company RankFranklin TempletonSBI Mutual FundsDSP Merrill LynchHDFC Mutual FundsICICI PrudentialReliance Mutual FundsUTI Mutual Funds

9) Why have you selected this company as number one?

10) How did you come to know about the Company? Friends News Paper TV Shows Advertisements/Commercials Road Show/Campaign

11) Do you recall any commercial for any Mutual fund? If yes please specify:

12) How much personal effort would you put in selecting a particular Fund/Scheme? Very High Involvement High involving Indifferent Low Involving Very low Involvement

13) Should there be Entry and Exit fees in Mutual Funds Investments? Yes No

14) Which of the following would you prefer as a measure to avail TAX benefit? Provident Funds

61

LIC premium ELSS of Mutual Funds National Saving Schemes Payment towards principal amount of Loans

15) Which of the following Investment channels would you prefer? Sales person Brokerage firm Direct AMC Banks Online

16) What kind of interaction from the company would you appreciate? Personal Contact Telephonic Online Letters/mails

17) Given a choice, whom would you prefer to manage your portfolio? Share broker Fund manager Advice from friends On your own

18) Does the corporate image and name of the company (parental) affect your investment behavior? Ex. Reliance, TATA, ICICI….

Yes No

19) How satisfied have you been with your mutual fund investment? Completely satisfied Somewhat satisfied Satisfied Dissatisfied Completely Dissatisfied

20) What suggestions would you give to SBI mutual funds to stand the fierce competition in the mutual fund industry?

62

References ICMR materials:-Mutual funds, Portfolio management and Mutual

funds.

http://www.wikipedia.org

http://investopedia.com

http://www.sbimf.com

http://www.amfiindia.com

http://www.mutualfundsindia.com

http://www.utimf.com

http://www.franklintempletonindia.com

http://www.indiainfoline.com

ICFAI journals (ANALYST)

Business world –“Smart Investor”

Keywords/Glossary

AMFI- Association of Mutual Funds of India.

63

Debt- Debt is that which is owed. A person or company owing debt is called a

debtor. An entity to which debt is owed is called a creditor. Debt is used to borrow

purchasing power from the future. Companies use debt as a part of their overall

corporate finance strategy.

Dividend- A dividend is the distribution or sharing of parts of profits to a

company's shareholders

Equity- In finance and accounting, ownership equity, commonly known simply as

equity, but also as risk capital or liable capital, is the difference in value between

the assets and the claims on them (liabilities), which accrues to the owner(s). In

case the owners are shareholders it is usually called shareholders' equity.

GDP- Gross Domestic Product.

Liquidity- It is a business or economics term that refers to the ability to quickly

buy or sell a particular item without causing a significant movement in the price.

Net Asset Value (NAV) - "NAV," of an investment company is the company’s

total assets minus its total liabilities. The share price of mutual funds is based on

their NAV. That is, the price that investors pay to purchase mutual fund.

Portfolio- A combination of Assets.

Risk- Risk refers to variability. It is measured in financial analysis generally by

standard deviation or by Beta coefficient.

Unit Trust of India- An investment Company, UTI aims at mobilizing the savings

of the public and channelizes them into productive corporate investments.

64