Mutual Fund- An Introduction

Securities Exchange Board of India (SEBI) is the regulatory body for all the
mutual funds. All the mutual funds must get registered with SEBI. A mutual
fund is a professionally managed type of collective investment scheme that
pools money from many investors and invests it in stocks, bonds, shortterm money market instruments, and/or other securities. The mutual fund will
have a fund manager that trades the pooled money on a regular basis. The net
proceeds or losses are then typically distributed to the investors annually.
Since 1940, there have been three basic types of investment companies in
the United States: open-end funds, also known in the U.S. as mutual
funds; unit investment trusts (UITs); and closed-end funds. Similar funds also
operate in Canada. However, in the rest of the world, mutual fund is used as a
generic term for various types of collective investment vehicles, such as unit
trusts, open-ended investment companies (OEICs), unitized insurance funds,
and undertakings for collective investments in transferable securities (UCITS).
A mutual fund may be either an open-end or a closed-end fund. An
open-end mutual fund does not have a set number of shares; it may be
considered as a fluid capital stock. The number of shares changes as investors
buys or sell their shares. Investors are able to buy and sell their shares of the
company at any time for a market price. However the open-end market price is
influenced greatly by the fund managers. On the other hand, closed-end
mutual fund has a fixed number of shares and the value of the shares
fluctuates with the market. But with close-end funds, the fund manager has
less influence because the price of the underlining owned securities has greater
influence.

Mutual Fund Global Overview

1

Mutual fund assets worldwide decreased 12.1 percent to $21.66 trillion at the
end of the third quarter of 2008. Net cash flow to all funds was negative in the
third quarter with $218 billion in outflows, the first worldwide outflow
recorded since the third quarter of 2002. The decline in assets reported in U.S.
dollars was exacerbated by strengthening of the dollar. Long-term funds had
net outflows of $246 billion in the third quarter, after registering net inflows of
$73 billion in the second quarter. All categories of long-term funds
experienced outflows. Year-to-date, equity funds have had $254 billion in
outflows, bond funds have had $39 billion in outflows, and balanced/mixed
funds have had $24 billion in outflows. Money market funds experienced net
inflows of $28 billion in the third quarter, compared with outflows of $70
billion in the second quarter of 2008. Year-to-date money market funds have
had $444 billion of net inflows. MFs records Rs. 83081 crore net inflow in FY
2009-10.
Investment Philosophy
UTI Mutual Funds investment philosophy is to deliver consistent and stable
returns in the medium to long term with a fairly lower volatility of fund
returns compared to the broad market. It believes in having a balanced and
well-diversified portfolio for all the funds and a rigorous in-house research
based approach to all its investments. It is committed to adopt and maintain
good fund management practices and a process based investment
management.
UTI Mutual Fund follows an investment approach of giving as equal an
importance to asset allocation and sartorial allocation, as is given to security
selection while managing any fund. It combines top-down and bottom-up
approaches to enable the portfolios/funds to adapt to different market
conditions so as to prevent missing an investment opportunity.

History
2

The formation of Unit Trust of India marked the evolution of the Indian mutual
fund industry in the year 1963. The primary objective at that time was to attract
the small investors and it was made possible through the collective efforts of the
Government of India and the Reserve Bank of India. Unit Trust of India
enjoyed complete monopoly when it was established in the year 1963 by an act
of Parliament. UTI was set up by the Reserve Bank of India and it continued to
operate under the regulatory control of the RBI until the two were de-linked in
1978 and the entire control was transferred in the hands of Industrial
Development Bank of India (IDBI). UTI launched its first scheme in 1964,
named as Unit Scheme 1964 (US-64), which attracted the largest number of
investors in any single investment scheme over the years.
The history of mutual fund industry in India can be better understood divided
into following phases:
Phase 1. Establishment and Growth of Unit Trust of India - 1964-87
Unit Trust of India enjoyed complete monopoly when it was established in the
year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of
India and it continued to operate under the regulatory control of the RBI until
the two were de-linked in 1978 and the entire control was transferred in the
hands of Industrial Development Bank of India (IDBI). UTI launched its first
scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the
largest number of investors in any single investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of
different investors. It launched ULIP in 1971, six more schemes between
1981-84, Children's Gift Growth Fund and India Fund (India's first offshore
fund) in 1986, Mastershare (Indias first equity diversified scheme) in 1987
and Monthly Income Schemes (offering assured returns) during 1990s. By the
end of 1987, UTI's assets under management grew ten times to Rs 6700
crores.
Phase II. Entry of
Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public sector players
entering the market in the year 1987. In November 1987, SBI Mutual Fund
from the State Bank of India became the first non-UTI mutual fund in India.
SBI Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual
Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual
3

Fund and PNB Mutual Fund. By 1993, the assets under management of the
industry increased seven times to Rs. 47,004 crores. However, UTI remained
to be the leader with about 80% market share.

1992-93

Amount
Mobilised

Assets Under
Management

Mobilisation as
%
of
gross
Domestic
Savings

UTI

11,057

38,247

5.2%

Public
Sector

1,964

8,757

0.9%

Total

13,021

47,004

6.1%

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund
management companies (most of them entering through joint ventures with
Indian promoters) to enter the mutual fund industry in 1993, provided a wide
range of choice to investors and more competition in the industry. Private
funds introduced innovative products, investment techniques and investorservicing technology. By 1994-95, about 11 private sector funds had launched
their schemes.

Phase
IV.
Growth
and
SEBI
Regulation
1996-2004
The mutual fund industry witnessed robust growth and stricter regulation from
the SEBI after the year 1996. The mobilisation of funds and the number of
players operating in the industry reached new heights as investors started
showing
more
interest
in
mutual
funds.
Investors' interests were safeguarded by SEBI and the Government offered tax
benefits to the investors in order to encourage them. SEBI (Mutual Funds)
Regulations, 1996 was introduced by SEBI that set uniform standards for all
4

mutual funds in India. The Union Budget in 1999 exempted all dividend
incomes in the hands of investors from income tax. Various Investor
Awareness Programmes were launched during this phase, both by SEBI and
AMFI.
In February 2003, the UTI Act was repealed and UTI was stripped of its
Special legal status as a trust formed by an Act of Parliament. The primary
objective behind this was to bring all mutual fund players on the same level.
UTI was re-organised into two parts:
1. The Specified Undertaking,
2. The UTI Mutual Fund Presently Unit Trust of India operates under the
name of UTI Mutual Fund and its past schemes (like US-64, Assured Return
Schemes) are being gradually wound up. However, UTI Mutual Fund is still
the largest player in the industry. In 1999, there was a significant growth in
mobilisation of funds from investors and assets under management which is
supported by the following data:

GROSS FUND MOBILISATION (RS. CRORES)

FRO
M

TO

01April98

31March99

UTI

PUBLIC
SECTO
R

PRIVAT
E
SECTOR

TOTAL

11,67
9

1,732

7,966

21,377

01April99

31March00

13,53
6

4,039

42,173

59,748

01April00

31March01

12,41
3

6,192

74,352

92,957

01April01

31March02

4,643

13,613

1,46,267

1,64,523

01April02

31-Jan03

5,505

22,923

2,20,551

2,48,979

01Feb.03

31March03

7,259*

58,435

65,694

01April03

31March04

68,558

5,21,632

5,90,190

01April04

31March05

1,03,246

7,36,416

8,39,662

01April0
5

31March0
6

1,83,446

9,14,712

10,98,15
8

ASSETS UNDER
CRORES)

MANAGEMENT

(RS.

AS ON

UTI

PUBLI
C
SECT
OR

31Mar
ch99

53,3
20

8,292

PRIVAT
E
SECTO
R

TOTA
L

6,860

68,472

Phase
V.
Growth
and
Consolidation
2004
Onwards
The industry has also witnessed several mergers and acquisitions recently,
examples of which are acquisition of schemes of Alliance Mutual Fund by
Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal
Mutual Fund. Simultaneously, more international mutual fund players have
entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were
29 funds as at the end of March 2006. This is a continuing phase of growth of
the industry through consolidation and entry of new international and private
sector players.

I)

Global Scenario

Some basic facts:

In US, every third household is a mutual fund investor.
In US, the MF Industry size is about 67% of the US GDP whereas the Indian
MF Industry is just 6% of our GDP.
In US, MF assets are 1.5 times the bank deposit.
In India the bank deposits are about 10.50 times the MF assets.
In India for the past 3 years it has been seen that nearly 2,500 crore is being
transferred from bank deposits to Mutual funds on a yearly basis.
75% of the core customer bases of mutual funds in the top 50-broking firms in
the U.S. are expected to trade on-line by 2004.
On- line trading is a great idea to reduce management expenses from the
current 2 % of total assets to about 0.75 % of the total assets and as we start
using advanced technology in this industry this cost will further cut down the
administration cost.
8

Internationally, on-line investing continues its meteoric rise. Many have

debated about the success of e- commerce and its breakthroughs, but it is true
that this aspect of technology could and will change the way financial sectors
function. However, mutual funds cannot be left far behind. They have realized
the potential of the Internet and are equipping themselves to perform better.
In fact in advanced countries like the U.S.A, mutual funds buy- sell
transactions have already begun on the net, while in India the Net is used as a
source of Information and also net is used for transaction purpose is on the
initial stage but is catching up quickly with all dealing in this industry as it
helps in reducing administrative cost.
Such changes could facilitate easy access, lower intermediation costs and
better services for all. A research agency that specializes in internet technology
estimates that over the next four years Mutual Fund Assets traded on- line will
grow ten folds from $ 128 billion to $ 1,227 billion; whereas equity assets
traded on-line will increase during the period from $ 246 billion to $ 1,561
billion. This will increase the share of mutual funds from 34% to 40% during
the period.
Such increases in volumes are expected to bring about large changes in the
way Mutual Funds conduct their business.
Here are some of the basic changes that have taken place since the advent of
the Net.
Lower Costs: Distribution of funds will fall in the online trading regime by
2003. Mutual funds could bring down their administrative costs to 0.75% if
trading is done on- line. As per SEBI regulations, bond funds can charge a
maximum of 2.25% and equity funds can charge 2.5% as administrative fees.
Therefore if the administrative costs are low, the benefits are passed down and
hence Mutual Funds are able to attract more investors and increase their asset
base.
Better advice: Mutual funds could provide better advice to their investors
through the Net rather than through the traditional investment routes where
there is an additional channel to deal with the Brokers. Direct dealing with the
fund could help the investor with their financial planning.
In India, brokers could get more Net savvy than investors and could help the
investors with the knowledge through get from the Net.
New investors would prefer online: Mutual funds can target investors who are
young individuals and who are Net savvy, since servicing them would be
easier on the Net.
India has around 1.6 million net users who are prime target for these funds and
this could just be the beginning. The Internet users are going to increase
9

dramatically and mutual funds are going to be the best beneficiary. With
smaller administrative costs more funds would be mobilized .A fund manager
must be ready to tackle the volatility and will have to maintain sufficient
amount of investments which are high liquidity and low yielding investments
to honour redemption.
Net based advertisements: There will be more sites involved in ads and
promotion of mutual funds. In the U.S. sites like AOL offer detailed research
and financial details about the functioning of different funds and their
performance statistics a is witnessing a genesis in this area.

Future Scenario:
The asset base will continue to grow at an annual rate of about 30 to 35 %
over the next few years as investors shift their assets from banks and other
traditional avenues. Some of the older public and private sector players will
either close shop or be taken over.
Out of ten public sector players five will sell out, close down or merge with
stronger players in three to four years. In the private sector this trend has
already started with two mergers and one takeover. Here too some of them will
down their shutters in the near future to come.
But this does not mean there is no room for other players. The market will
witness a flurry of new players entering the arena. There will be a large
number of offers from various asset management companies in the time to
come. Some big names like Fidelity, Principal, Old Mutual etc. are looking at
Indian market seriously. One important reason for it is that most major players
already have presence here and hence these big names would hardly like to get
left behind.
In the U.S. most mutual funds concentrate only on financial funds like equity
and debt. Some like real estate funds and commodity funds also take an
exposure to physical assets. The latter type of funds are preferred by
Corporates who want to hedge their exposure to the commodities they deal
with.
For instance, a cable manufacturer who needs 100 tons of Copper in the month
of January could buy an equivalent amount of copper by investing in a copper
fund. For Example, Permanent Portfolio Fund, a conservative U.S. based fund
10

invests a fixed percentage of its corpus in Gold, Silver, Swiss francs, specific
stocks on various bourses around the world, short term and long-term U.S.
treasuries etc.
In U.S.A. apart from bullion funds there are copper funds, precious metal
funds and real estate funds (investing in real estate and other related assets as
well.).In India, the Canada based Dundee mutual fund is planning to launch
gold and a real estate fund before the year-end.
In developed countries like the U.S.A there are funds to satisfy everybodys
requirement, but in India only the tip of the iceberg has been explored. In the
near future India too will concentrate on financial as well as physical funds.
The mutual fund industry is awaiting the introduction of DERIVATIVES in
the country as this would enable it to hedge its risk and this in turn would be
reflected in its Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes
to trade in Derivatives. Importantly, many market players have called on the
Regulator to initiate the process immediately, so that the mutual funds can
implement the changes that are required to trade in Derivatives.
Assets Under Management:
UTIAMC presently manages a corpus of over Rs.78, 617 Crores* as on 31st
May 2010. UTI Mutual Fund has a track record of managing a variety of
schemes catering to the needs of every class of citizens. It has a nationwide
network consisting 143 UTI Financial Centres (UFCs) and UTI International
offices in London, Dubai and Bahrain.

11

Benefits of investing in Mutual Funds:

There are several benefits from investing in a Mutual Fund:
Small investments: Mutual funds help you to reap the benefit of returns
by a portfolio spread across a wide spectrum of companies with small
investments.
Professional Fund Management: Professionals having considerable
expertise, experience and resources manage the pool of money collected
by a mutual fund. They thoroughly analyse the markets and economy to
pick good investment opportunities.
Spreading Risk: An investor with limited funds might be able to invest
in only one or two stocks/bonds, thus increasing his or her risk. However,
a mutual fund will spread its risk by investing a number of sound stocks
or bonds. A fund normally invests in companies across a wide range of
industries, so the risk is diversified.
Transparency: Mutual Funds regularly provide investors with
information on the value of their investments. Mutual Funds also provide
complete portfolio disclosure of the investments made by various
schemes and also the proportion invested in each asset type.
Choice: The large amount of Mutual Funds offer the investor a wide
variety to choose from. An investor can pick up a scheme depending upon
his risk/ return profile.
Regulations: All the mutual funds are registered with SEBI and they
function within the provisions of strict regulation designed to protect the
interests of the investor.
12

 Flexibility: Through features such as Systematic Investment Plans (SIP),

Systematic Withdrawal Plans (SWP) and dividend reinvestment plans,
you can systematically invest or withdraw funds according to your needs
and convenience.
Return Potential: Over a medium to long term, Mutual Funds have the
potential to provide a higher return as they invest in a diversified basket
of selected securities.
Diversification: Mutual Funds invest in a number of companies across a
broad cross section of industries and sectors. This diversification reduces
the risk because seldom do all stocks decline at the same time and in the
same proportion. You achieve this diversification through a Mutual Fund
with far less money than you can do on your own.

Limitation of Mutual Fund:

Entry and exit costs: Mutual Funds are a victim of their own success.
When a large body like a fund invests in shares, the concentrated buying
or selling often results in adverse price movements i.e. at the time of
buying, the fund ends up paying a higher price and while selling it
realizes a lower price. For obvious reasons, this problem is even more
severe for funds investing in small capitalization stocks. However, given
the large size of the debt market, excluding UTI, most debt funds do not
face this problem.
Waiting time before investment: It takes time for a Mutual Fund to
invest money. Since it is difficult to invest all funds in one day, there is
dome money waiting to be invested. Further, there may be a time lag
before investment opportunities are identified. This ensures that the fund
under performs the index. For open-ended funds, there is the added
problem of perpetually keeping some money in liquid assets to meet
redemption. The problem of impracticability of quick investments is
likely to be reduced to some extent with the introduction of index futures.

13

 Fund management costs: The costs of the fund management process are
deducted from the fund. This includes marketing and initial costs
deducted at the time of entry itself, called load. Then there is the
annual asset management fee and expenses, together called the expense
ratio. Usually, the former is not counted while measuring performance,
while the later is. A standard 2% expense ratio means that, everything
else being equal, the Fund manager under performs the benchmark index
by an equal amount.
Cost of churning: The portfolio of a fund does not remain constant. The
extent to which the portfolio changes is a function of the style of the
individual fund manager. It is also dependent on the volatility of the fund
size i.e. whether the fund constantly receives fresh subscriptions and
redemption. Such portfolio changes have associated costs of brokerage,
custody fees, and registration fees etc. that lowers the portfolio return
commensurately.
Change of index composition: The indices keep changing over the
world to reflect changing market conditions. There is an inherent
survivorship bias in this process, with the bad stocks weeded out and
replaced by emerging blue chips. This is a severe problem in India with
the Sensex having been changes twice in the last five years, with each
change being quite substantial. Another reasons for change index
composition is Mergers & Acquisitions. The weight age of the shares of a
particular company in the index changes if it acquires a large company
not a part of the index.

14

Rights of Unit holders:

As a unitholder in a Mutual Fund scheme coming under the SEBI (Mutual
Funds) Regulations, you are entitled to:
Receive unit certificates or statements of accounts confirming your title
within 30 days from the date of closure of the subscription under openended schemes or within 6 weeks from the date your request for a unit
certificate is received by the Mutual Fund.
Receive information about the investment policies, investment objectives,
financial position and general affairs of the scheme.
Receive dividend within 30 days of their declaration and receive the
redemption or repurchase proceeds within 10 working days from the date
of redemption or repurchase.
Vote in accordance with the Regulations to:
Change the Asset Management Company.
Wind up the schemes.
Receive communication from the Trustees about change in the
fundamental attributes of any scheme or any other changes which would
modify the scheme and affect the interest of the unitholders and to have
option to exit at prevailing Net Asset Value without any exit load in such
cases.
Inspect the documents of the Mutual Funds specified in the schemes
offer document.
In addition to your rights, you can expect the following from Mutual Funds:
To publish their NAV, in accordance with the regulations: daily, in case of
open-ended schemes and once a week, in case of close-ended schemes.
To disclose your schemes entire portfolio twice a year, unaudited
financial results half yearly and audited annual accounts once a year. In
addition many mutual funds send out newsletters periodically.
To adhere to a Code of Ethics which require that investment decisions are
taken in the best interest of the unitholders.
15

Mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
Management Company (AMC) and a custodian.
The trust is established by a sponsor or more than one sponsor who is like a
promoter of a company. A mutual fund in India is constituted in the form of a
public Trust created under the Indian Trusts Act, 1882. The sponsor forms the
Trust and registers it with SEBI. The fund sponsor acts as the settler of the
Trust, contributing to its initial capital and appoints a trustee to hold the assets
of the Trust for the benefit of the unit holders, who are the beneficiaries of
the Trust. The fund then invites investors to contribute their money in the
common pool, by subscribing to units issued by various schemes established
by the Trust as evidence of their beneficial interest in the fund. Thus, a mutual
fund is just a pass through vehicle. Most of the funds in India are managed
by the Board of Trustees, which is an independent body and acts as protector
of the unit holders interests. At least, 50 per cent of the trustees shall be
independent trustees (who are not associated with an associate, subsidiary, or
sponsor in any manner). The trustees shall be accountable for and be the
custodian of funds/property of respective scheme.
The trustees of the mutual fund hold its property for the benefit of the unitholders. The AMC, approved by SEBI, manages the funds by making
investments in various types of securities.
The custodian, who is registered with SEBI, holds the securities of various
schemes of the fund in its custody.
The trustees are vested with the general power of superintendence and
direction over AMC. They monitor the performance and compliance of SEBI
Regulations by the mutual fund.
The sponsor is required, under the provisions of the Mutual Fund Regulations,
to have a sound track record, a reputation of fairness and integrity in all his
business transactions. Additionally, the sponsor should contribute at least 40%
to the net worth of the AMC. However, if any person holds 40% or more of
the net worth of an AMC shall be deemed to be a sponsor and will be required
to fulfil the eligibility criteria specified in the Mutual Fund Regulations

Executive Summary
16

UTI Mutual Fund is among one of the largest financial Institution. It is doing its
business by continuously delivering a differentiated product and services that
provide high business value in return.

The main objectives are

To know the awareness of mutual fund amongst the investor
To know the investors knowledge and perceptions about mutual fund.
To know the investor priority level between different criteria of
investment like safety level, returns, liquidity, tax benefits and maturity
etc. of investment.
Find out reason for choice of mutual fund as an investment avenue.
Savings form an important part of the economy of any nation. With savings
invested in various Assets available to the people like Gold, Debt market,
Insurance, Mutual funds, Equity, Bank deposit etc the money acts as the driver
for growth of the country. Indian financial sector avails multiple avenues to the
investors. A basic principle of investing is that the investment avenue must
match the investor's risk profile. Young investors have an edge over others on
account of their age. In other words, a young age investor has a big ratio of
disposable income. Now, India is seen as one of the best and deepest of markets
in the world. It has huge potential growth rate in mutual fund and different
financial instruments to provide reasonable options for an ordinary man to
invest his savings and diversify the risk.

17

This report will seek to cover all the fundamental aspects relating to various
investments Asset classes which are available for the investors in India. This
report will also tell us the customer perception about different investment
instruments which are available. In this report, Researcher comparing the
various investment options with their growth, returns, risks etc.

UTI Mutual Fund- An Introduction

UTI AMC is one of the best Asset Management Company in India.
Recently, Mr. U. K. Sinha has awarded as a best CEO of the year 2009 and Mr.
Jaideep Bhattacharya has awarded as best Marketing Personality of the year
2009.
UTI AMC is a company incorporated under companies act 1956. In
UTI AMC the investment agreement is executed between UTI Trustee Company
Ltd and UTI AMC on December 9 2002 UTI AMC was registered by SEBI to
act as Asset Management Company for UTI Mutual Fund vide its letter of
January 2003.
The paid up capital of UTI AMC has been subscribed equally by four sponsors:
State Bank of India, Life Insurance Corporation of India, Bank of Baroda and
Punjab National Bank. UTIAMC, apart from managing the schemes of UTI
Mutual Fund, also manages the schemes transferred/migrated from the erstwhile
Unit Trust of India, in accordance with the provisions of the Investment
Management Agreement, the Trust Deed, and the SEBI (Mutual Funds)
Regulations.

18

Corporate Profile

UTI Mutual Fund has a track record of managing a variety of schemes catering
to the needs of every class of citizens. It has a nationwide network consisting
114 UTI Financial Centers (UFCs) and UTI International offices in London,
Dubai and Bahrain. With a view to reach to common investors at district level, 1
satellite office has also been opened.

UTIAMC has a well-qualified, professional fund management team, which has

been fully empowered to manage funds with greater efficiency and
accountability in the sole interest of the unit holders. The fund managers are
ably supported by a strong in-house securities research department. To ensure
investors interests, a risk management department is also in operation.

19

Types of Mutual Fund:

The objectives of Mutual Funds are to provide continues liquidity and higher
yields with high degree of safety to investor. Based on these objectives,
different types of Mutual Fund schemes have evolved.

Open Ended Schemes:

Open-ended schemes do not have a fixed maturity period. Investors can buy or
sell units at NAV-related prices from and to the mutual fund on any business
day. These schemes have unlimited capitalization, open-ended schemes do not
have a fixed maturity, there is no cap on the amount investors can buy from the
fund and the unit capital can keep growing. These funds are not generally listed
on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue and
redeem units any time during the life of a scheme. Hence, unit capital of openended funds can fluctuate on a daily basis.
The advantages of open-ended funds over close-ended are as follows:
Any time exit option, the issuing company directly takes the responsibility of
providing an entry and an exit. This provides ready liquidity to the investors and
avoids reliance on transfer deeds, signature verifications and bad deliveries. Any
time entry option, an open-ended fund allows one to enter the fund at any time
and even to invest at regular intervals.

Close Ended Schemes:

Close-ended schemes have fixed maturity periods. Investors can buy into these
funds during the period when these funds are open in the initial issue. After that
such scheme cannot issue new units except in case of bonus or rights issue.
However, after the initial issue, investors can buy or sell units of the scheme on
the stock exchanges where they are listed. The market price of the units could
vary from the NAV of the scheme due to demand and supply factors, investors
expectations and other market factors.

20

Interval Scheme:
Interval Scheme combines the features of open-ended and close-ended schemes.
They are open for sale or redemption during predetermined intervals at NAVrelated prices.

Portfolio Classification:
Income/ Debt Funds
These funds are low risk-low return funds, where in the investments are made in
income bearing instruments such as bonds, debentures, government securities,
commercial papers etc. The share prices of these funds tend to be more stable
in value and are best suitable for regular income investment goals, provided
minimum investment period is more than one year. The leading examples are
monthly income funds of UTI, Prudential ICICI Income Plan, JM Income,
Alliance Liquid Fund etc.
Growth/Equity Funds
These funds are high risk-high return funds, wherein major chunk of investment
goes in equity shares of companies. The NAV of such funds keep fluctuating,
but the potential to earn in such funds is higher provided they are invested with
long-term (more than 5 years) financial goals. The leading examples of such
funds are, Kothari Pioneer Prima Fund, Prudential ICICI Equity Fund, Birla Sun
Life Fund, etc.
Balanced Funds
These funds invest in both, equity shares and income bearing instruments. The
idea is to reduce volatility of fund, while providing some upside for capital
appreciation. In all, it is a combination of income and growth funds more return
more risk than income funds and less return less risk than growth funds.
They are best suited for people looking for a combination for capital
appreciation and regular income and best time span for such investments is
more than 3 years. The examples are PRUICICI Balanced Fund, IDBIPRINCIPAL Balanced Fund, and IDBI-PRINCIPAL Child Benefit Fund etc.

21

Money Market Mutual Funds

These funds invest in highly liquid instruments such as certificate of deposits
and short-term bonds. They have emerged as an alternative for savings and
short-term fixed deposit accounts. They are best suited for capital preservation
investment objectives, where time-span is least.

Geographical Classification
Domestic Funds
Funds which mobilize resources from a particular geographical locality like a
country or region are domestic funds. The market is limited and confined to the
boundaries of a nation in which the fund operates. They can invest only in the
securities which are issued and traded in the domestic financial markets.
OTHER CLASSIFICATION
Sector Funds
Sector funds primarily invest in companies of a particular sector/ industry such
as information technology, pharmaceuticals, FMCGs etc. These types of funds
are subject to more risk as the performance of funds depends on the
performance of the industry as a whole and also because the diversification of
risk is reduced. Also with the new rule of government not allowing investing
more than 10% in a particular company, is a big problem as the number of
companies are not very large and at the same time all of them are not very
successful. It is best suited to people willing to take high risk.

Tax Saving Funds (ELSS)

These funds offer tax rebate to the investor along wit capital growth and steady
returns. An Equity United Savings Scheme is available wherein investments are
made primarily in stocks. The investment can be made any time, but it gets
lock-in for a period of 3 years and in return tax rebate @ 20% is obtained if
investments exceed Rs.1, 00,000. Another such scheme is pension scheme,
wherein tax rebate @ 20% can be obtained for investment up to Rs.60, 000.

22

Special Funds
Special purpose funds are those funds that target a specific customer segments,
such as children, women, retired people etc. Making their fund oriented
towards the need of the group they are targeting.

Gilt Funds
These funds are sort of government funds wherein the investments are made in
debt instruments of the government, which carry no risk of non-payment of
interest as the RBI manages the payment of interest and principal on the
instruments. These funds are best suited to the regular income and long-term
investment objectives. The time-span matters a lot as there are chances of price
volatility, which may lead to possibility of loss of principal invested, if invested
for short-term. Examples are PRUICICI Gilt Fund, IDBI-PRINCIPAL
Government Securities Fund etc.

Index Funds
Index funds invest only in stocks of a particular index such as BSE, S&P CNX
500 etc. The principle is to duplicate performance of these widely followed
indexes while keeping trading and other costs to a minimum. The returns in
case of such funds depend on the indexs performance. It is best suited to the
investors who are satisfied with the returns of an index.

23

SBI Mutual Funds has been considered as one of the most advantageous & the most profitable investment
option nowadays. With a huge investor base of around 4.5 million, the unit has been working with a mission to
establish Mutual Funds as a feasible investment option for individuals and families. Since its origin, SBI Mutual
Fund unit has brought drastic changes in its operations by developing innovative, need-specific plans/schemes
with an objective of providing investors with numerous opportunities of attaining growth in capital via wellresearched
bundle
of
persistent
performing
Indian
stocks.
SBI Mutual Funds Management Pvt. Ltd. is a joint venture between SBI, the largest bank of India and AMUNDI,
one of the worlds reputed fund management companies. Since 1988, SBI Mutual Funds Management has
consistently and successfully managed and advised the countrys offshore funds. It has been recognized as the
1st bank sponsored company to launch an offshore fund called 'SBI Resurgent India Opportunities Fund'. SBI
Fund managers like Jayesh Shroff are well-versed & qualified with funds technicalities with a working philosophy
of attaining growth through innovation whose advice helps investors in finalizing investment decision.
Sbi mutual fund scheme
SBI Mutual Fund Unit offers investors with various schemes with an option to choose scheme suitable to them.
Various Mutual Fund Schemes are designed on the basis of maturity period, open-ended/close-ended scheme,
schemes according to investment objective, money market or liquid fund schemes, Index funds, Public sector
(PSU) funds etc. Following are the option of schemes, which the Mutual Funds Unit of SBI holds and offers to
their investors:

Equity Schemes

Debt/Income
Schemes

Hybrid
Schemes

Fixed Maturity Plans (FMP)

Liquid
Schemes

Magnum Multiplier
Plus 1993

Magnum Childrens
Benefit Plan

Magnum
SBI Debt Fund Series 13 Months
Balanced Fund 11

SBI Premier
Liquid Fund

Magnum Equity
Fund

Magnum Income
Plus Fund-Saving
Plan

Magnum NRI
Investment
Fund-Flexi
Asset Plan

SBI Debt Fund Series 15 Months

6,7,8

Magnum
InstaCash
Fund

Magnum Multicap
Fund

Magnum Income
Fund Floating Rate
Plan-Saving Plus
Bond Plan

Magnum
Income Plus
FundInvestment
Plan

SBI Debt Fund Series 18 Months

4,5,6,7,8,9

Magnum
InstaCash
Fund-Liquid
Floater

SBI One India Fund

Magnum Income
Fund Floating Rate
Plan-Long Term

Magnum
SBI Debt Fund Series 180 Days
Monthly Income
21,22,23
Plan

Magnum Midcap
Fund

SBI Dynamic Bond

Fund

Magnum
SBI Debt Fund Series 24 Months
Monthly Income
2
Plan-Floater

Magnum Sector
Funds Umbrella
(MSFU)-Emerging
Businesses Funds

Magnum Gilt FundShort Term Plan

SBI Capital
Protection
Oriented Fund
Series-I

SBI Debt Fund Series 36 Months

1

Magnum Sector
Magnum Gilt FundFunds Umbrella
Long Term Plan
(MSFU)-Contra Fund

SBI Capital
Protection
Oriented Fund
Series-II

SBI Debt Fund Series 367 Days

1,2,3,4,5,6,7,8,9,10,11,12,13,14

24

SBI Capital
Protection
Oriented Fund
Series-III

SBI Tax Advantage

Fund-Series I

SBI Short Horizon

Debt Fund-Short
Term Fund

SBI Tax Advantage

Fund-Series II

SBI Short Horizon

Debt Fund-Ultra
Short Term Fund

SBI Debt Fund Series 60 Months

1

Magnum Taxgain
Scheme 1993
(Under 80c)

Magnum Income
Fund

SBI Debt Fund Series 90 Days

51,52,53,54

SBI Debt Fund Series 370 Days

9,10,11,12,13,14,15

SBI Blue Chip Fund

Magnum Global
Fund
SBI Infrastructure
Fund-Series I
In addition to the above mentioned types of schemes, SBI Mutual Fund unveils two more Schemes which are
Exchange Traded Scheme and Fund of Fund Scheme comprising of SBI Gold Exchange Traded Scheme and
SBI Gold ETF respectively. SBI Mutual Funds are selected taking in consideration quantitative parameters like:

Volatility

Risk-Adjusted Returns

FAMA Model

Consistent Return with perfect analysis of fund performance

SBI Mutual Fund NAV

Net Asset Value (NAV) represents a Mutual Funds market value of each share at which investors buy and sell
fund shares to a fund company. It is calculated by dividing the total value of all the securities in a funds portfolio
by the number of outstanding shares. NAV computation is undertaken on a daily basis by taking closing market
prices of the portfolios securities. For investors convenience, we are providing current NAVs for some of the
popular mutual fund schemes of SBI.
Mutual Fund Scheme

Net Asset Value (NAV)

SBI Debt Fund Series-Dividend

Rs.10.2409

SBI Debt Fund Series-Growth

Rs.10.2409

SBI Arbitrage Opportunities Fund

Rs.12.46

SBI Magnum Multiplier Plus Scheme

Rs.75.60

SBI Dynamic Bond Fund

Rs.13.07

SBI Short Horizon Debt Fund

Rs.13.70

SBI Magnum Income Fund-Growth

Rs.25.58

SBI Gold Exchange Traded Scheme

Rs.2743.5256

SBI Gold Fund-Dividend

Rs.9.9699

25

SBI Gold Fund-Growth

Rs.9.9687

SBI Mutual Fund Online

SBI Mutual Fund gives investor the benefit of availing mutual fund related services online while sitting at the
convenient place. Demo video will guide you the steps to be followed for online registration. Investors can
undertake various activities online after login to their respective account such as:
1.

Investor can download e-brochure to read complete details about a particular fund and can also buy
mutual fund online.

2.

Investors can download account statement or annual report of their respective portfolio online.

3.

One can track the status of the transaction slip or folio by entering the folio number.

4.

They can report non-delivery of warrant status.

5.

From the quick link option available on the website, investors can download factsheets and portfolios for
previous months.

6.

Tools & Calculator link helps investor by providing the facility of computing approximate returns from
various schemes. Interesting tools like Kab Banogey Crorepati, Retirement & Wedding Calculator
provides investor the ease to plan the future uncertain expenditure. Branch locator helps investor to
locate nearby funds services branch.

Also SBI Mutual Fund Unit allows the prospective investors to go for email-id registration to get regular updates
or advices from expert panel related to Mutual Funds quotes regularly on their email-id. For more details about
plans like Gold Systematic Investment Plan (SIP), investor can visit the specialised website www.sbimf.com.
Investors, please note that, currently only purchase SBI schemes can be done online and
redemption/cancellation or switching is possible only by filling respective forms and sending the same at any
branch office.

SBI Mutual Fund Customer Care

SBI Mutual Fund customer care comprises of efficient and qualified executives who are always ready to give
investor solutions for their respective queries. In case of any enquiry/problem, they can chat with customer care
representatives by dialing toll-free helpline number 1800-425-5425 or can sms SBIMF to 56161. They can also
send an email regarding their question at customer.delight@sbimf.com. The table below will provide the contact
number of various states service centre numbers:
States

Regions

Contact Number

Jammu

0191-2474975, 09906909643

Srinagar

0194-2474864, 09906909642

Amritsar

0183-2221755, 09855008415

Jalandhar

0181-2238415, 09855669498

Ludhiana

0161-2449859, 2449849

Bathinda

09914208415

Shimla

0177-2807608, 09418008799

Dharamshala

09805344257

Chandigarh

Chandigarh

0172-2711869, 2709728

Haryana

Panchkula

09592008415

Panipat

09896152400

Hissar

01662-238415, 09729008415

Gurgaon

0124-4081769, 4200828

Jammu & Kashmir

Punjab

Himachal Pradesh

26

Uttarakhand

Uttar Pradesh

Delhi

Faridabad

0129-4030661

Dehradun

0135-2651719, 09412992892

Moradabad

0591-2411411, 09719004343

Meerut

09927239025

Bareilly

07830111140

Ghaziabad

0120-2797582, 09958448124

Noida

0120-4232214, 09999029356

Agra

0562-3255061, 4008091, 09319124365

Lucknow

0522-2286741/2286742

Kanpur

0512-2331631

Gorakhpur

0551-2203378, 09918001822

Jhansi

0510-2330298, 09838476959

Varanasi

0542-2222492, 09984507831

Allahabad

09838070470

New Delhi

011-23466666, 23751974, 26224606, 9999029353, 9999029354

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