ACKNOWLEDGEMENT In pursuit of an MBA degree, summer internship is a critical component of the entire process. SBI FUNDS MANAGEMENT PVT.

LTD. has given me the opportunity togain invaluable experience under the guidance of Mr. Gaurav Vatsayan (V.P.-Sales,Delhi Region) & Mr. Kapil Mallik (Head- Retail channel). Their continuous supportand valuable in hand experience provided me with the conceptual understanding and practical approach needed to work efficiently for this project. The entire SBI MutualFunds staff is praiseworthy.I would like to pay my regards and sincere thanks to my in charge Mr. Sumit Mahajanfor Stimulating suggestions and encouragement helped me in all the time of my internship.Last but not the least; I also would like to thank the entire staff of SBI Mutual Fund andall my friends and colleagues who helped whenever I faced any difficult situation.I hope this report, reflecting my learning in the past fourteen weeks, is as beneficial tothe organization as it had been to me.Again, I sincerely thank all of them. -MRINAL MANISH M

PREFACE Finance & its functions are the part of economic activity. Finance is very essentiallyneeded for all types of organizations viz; small, medium, large-scale industries &service sector. Hence the role of finance manager & the subject finance accountinggained maximum importance. Liberalization, globalization & privatization created newchallengers to entrepreneur & corporate in carrying theyre day to day activities. So, finance is regarded as the life blood of a business organization. Master of business administrator is professional course which develop a new body of knowledge & skill set & make as available for those seeking challenging carriers in theof liberalization & globalization.The goal of the Summer Training is to give a corporate exposure to the students as wellas to give them an opportunity to apply theory into the practice. The real business problems are drastically different from class-room case solving. Summer Project aims to providing little insight into working of an organization to a management trainee.Among every stage of knowledge being inculcated in students, practical

training in thecorporate world plays a significant role in exhibiting and pruning their capabilities.The purpose behind writing a report is to put in to works the practical training that isimparted into me that gives a better and a clear understanding of the experience I got. COMPARATIVE ANALYSIS OF MUTUAL FUNDS WITH SPECIAL REFERENCE TO SBI MUTUAL FUND MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 4

being a very important aspect of SBI Mutual Fund Pvt. Ltd., I have tried toexplore many areas of the subject in my project report.While preparing this project report I got the knowledge about various aspects regardingfinancial decisions made in organisation like SBI Mutual Fund Pvt. Ltd. the businessworld.My project is divided into 5 chapters & they are given as under. 1. Chapter 1 is an introduction of the mutual fund industry and the company.2.Chapter 2 deals with review of literature.3.Chapter 3 states the methodology being used in the project. 4. Chapter 4 basically states the Analysis of the Mutual Funds 5. Chapter 5 deals with the use of findings, conclusion. suggestions and limitations. MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 5

CONTENTS Chapter Page no. I. INTRODUCTION15-62 1. WHY COMPARATIVE ANALYSIS OF MUTUAL FUNDS?............15 2.

INTRODUCTION TO MUTUAL FUNDS.17 3. INDUSTRY PROFILE40 4. COMPANY PROFILE....46 5. NEW FUND OFFER (SBI GETS)...................................................616.OTHER WORK EXPERIENCE AND LEARNINGS DURING THEPROJECT....................................................................................................62RINAL II. REVIEW OF LITERATURE....64-74 III. RESEARCH METHODOLOGY.......................................................75-119 1. NEED OF THE STUDY........................78 2. TERMINOLOGY.....79 3. DATA COLLECTION METHOD.........................85 4. ANALYSIS OF THE INDIVIDUAL INVESTOR..86 5. MOST POPULAR FUNDS OF SBI MUTUAL FUND................100 6. INVESTMENT BEHAVIOUR...........102

FACTOR ANALYSIS...................................................107

DISCRIMINANT ANALYSIS.......................................109 MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 6

7. MOST POPULAR FUND HOUSE IN TERMS OFHIGHESTINVESTMENT........................................................................119 IV. COMAPARRATIVE ANALYSIS...........121-176 1. INTRODUCTION....................................................................122 NAV..............................................................122 BETA.......................................................124 STANDARD DEVIATION.........................124 SHARPE RATIO.......................................125 TREYNOR RATIO....................................125 2. INTER FIRM COMPARISION....................................127 EQUITY DIVERSIFIED FUNDS................129

 EQUITY LINKED SAVING SCHEMES.....138 EQUITY LARGE CAP FUNDS..................147 EQUITY SMALL AND MID CAP FUNDS.155 EQUITY THEMATIC FUNDS...................165 V. EXPECTATION OF THE INDUSTRY FROM BUDGET 2009-10....176SWOT ANALYSIS............................................................................181CONCLUSIONS ......184 MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 7

SUGGESTIONSAND RECOMMENDATIONS.........186

LIMITATIONS....192GLOSSARY............. .............103REFERENCES..................................................................................205ANNEXURE....................... ...............................................................207 TABLE INDEX Ta

There are four divisions in SBI MF for the purpose of marketing and sales. They givespecial attention for the retention of customers i.e. investors, distributors and brokers.Four divisions are:1. National distributors.2. Banking.3. Individual financial advisors.4. FIIs.FIIs are taking care by head office in MUMBAI. I am under section of Nationaldistributors and Individual financial advisors. To maintain relationships with them andmake them aware about the new offerings and sort out their existing problems. My areaof scope is DELHI region. There are around 250 NDs and IFAs in this region.

METHODOLOGY FOLLOWED: Methodology basically means the selection of the various methods and techniques in theresearchconducted. The various steps includes: -1. Selection of a representative sample from the general population, which depicts thecharacteristics of the complete population.2. Application of various tools and techniques to obtain relevant information related to acase.3. Collection of relevant data.4. Analysis and interpretation of the data.5. Generation of a final report. RESEARCH DESIGN MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 13

There are 34 fund houses currently operating in India of which four have been in existence for less than three years. Whereas till 2004, hardly a few equityschemes were launched each year, that number has grown by 8-10 times now.For the purpose of the research, I have selected 5 fund houses as mentioned under:

SBI Mutual Fund

Birla

Reliance

Prudential ICICI

Franklin TempletonThe following methodology is adopted for ComparisonStep1: Selection of few wellperforming Funds of Big Fund Houses of India.Step2: Collection of data (against various parameters) for comparison of Funds.Step3: Analyses of the parameters and their relevance in comparing the funds.Step4: Comparing and Ranking these funds on the basis of inputs from executives andtherating agencies.Step5: Generation of a project report. DATA COLLECTION

The primary data collection was the most important part of the project. This includescollecting the information through field research. For collecting information, a personalinterview was conducted with the help of questionnaire and the required informationwas collected for the respondents. DATA ANALYSIS After collecting the data, data is to be analyzed. The findings and the analysis have beenmentioned further in the report. MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 14

1. INTRODUCTION WHY COMAPARATIVE ANALYSIS OF MUTUAL FUNDS? All over the world, mutual fund is one of the most popular instruments for investment.Its popularity with consumer has dramatically increased over the last couple of yearsworldwide; the mutual fund has a long and successful history. The popularity of mutualfund hasincreased manifold. In developed financial market like United States, mutualhas almostovertaken bank deposits and total assets of insurance funds.The mutual fund industry in India is regulated by Association of Mutual Funds in India(AMFI). The mutual fund industry in India is of 493,287 crores approx. SBI MutualFund is Indias largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEble Name PageMANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 2

mergers and one takeover. Here too some of them will down their shuttersin the near future to come.But this does not mean there is no room for other players. The market will witness aflurry of new players entering the arena. There will be a large number of offers fromvarious asset management companies in the time to come. Some big names like Fidelity,Principal, and Old Mutual etc. are looking at Indian market seriously. One importantreason for it is that most major players already have presence here and hence these bignames would hardly like to get left behind.The mutual fund industry is awaiting the introduction of derivatives in India as thiswould enable it to hedge its risk and this in turn would be reflected in its Net AssetValue (NAV).SEBI is working out the norms for enabling the existing mutual fund schemes to trade inderivatives. Importantly, many market players have called on the Regulator to

initiatethe process immediately, so that the mutual funds can implement the changes that arerequired to trade in Derivatives. Market Trends A lone UTI with just one scheme in 1964 now competes with as many as 400 odd products and 34 players in the market. In spite of the stiff competition and losing marketshare, UTI still remains a formidable force to reckon with.Last six years have been the most turbulent as well as exiting ones for the industry. New players have come in, while others have decided to close shop by either selling off or merging with others. Product innovation is now pass with the game shifting to performance delivery in fund management as well as service. Those directly associatedwith the fund management industry like distributors, registrars and transfer agents, andeven the regulators have become more mature and responsible. MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 20

The industry is also having a profound impact on financial markets. WhileUTI has always been a dominant player on the bourses as well as the debt markets, thenew generations of private funds which have gained substantial mass are now seenflexing their muscles. Fund managers, by their selection criteria for stocks have forcedcorporate governance on the industry. By rewarding honest and transparent managementwith higher valuations, a system of risk-reward has been created where the corporatesector is more transparent then before.Funds have shifted their focus to the recession free sectors like pharmaceuticals, FMCGand technology sector. Funds performances are improving. Funds collection, whichaveraged at less than Rs100bn per annum over five-year period spanning 199398doubled to Rs210bn in 1998-99. In the current year mobilization till now have exceededRs300bn. Total collection for the current financial year ending March 2000 is expectedto reach Rs450bn.What is particularly noteworthy is that bulk of the mobilization has been by the privatesector mutual funds rather than public sector mutual fundsMutual funds are now alsocompeting with commercial banks in the race for retail investors savings and corporatefloat money. The power shift towards mutual funds has become obvious. The comingfew years will show that the traditional saving avenues are losing out in the currentscenario. Many investors are realizing that investments in savings accounts are as goodas locking up their deposits in a closet. The fund mobilization trend by mutual funds inthe current year indicates that money is going to mutual funds in a big way.India is at the first stage of a revolution that has already peaked in the U.S. The U.S. boasts of an Asset base that is much higher than its bank deposits. In India, mutual fundassets are not even 10% of the bank deposits, but this trend is beginning to change.Recent figures indicate that in the first quarter of the current fiscal year mutual fundassets went up by 115% whereas bank deposits rose by only 17%. (Source: Think-tank,the Financial Express September, 99) This is forcing a large number of banks to adoptthe 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

MRINAL MANISH (4108078078)INDIAN INSTITUTE OF FINANCEPage 21

be ignored and they will not close down completely. Their role asintermediaries cannot be ignored. It is just that Mutual Funds are going to change theway banks do business in the future. WHAT IS A MUTUAL FUND? A Mutual Fund is a trust that pools the savings of a number of investors who share acommon financial goal. It offers an opportunity to invest in a diversified, professionallymanaged basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund: Mutual Funds are popular among all income levels. With a mutual fund, we get adiversified basket of stocks managed by professionals These Trusts are run by experienced Investment Managers who use their knowledge andexpertise to select individual securities, which are classified to form portfolios that meet predetermined objectives and criteria.