MARKETING OF MUTUAL FUNDS OFFERED BY SBI MUTUAL FUND

FACULTY GUIDE Prof. PRAKASH C KARLAPUDY (PGDM, MBA (USA)) Charted finance analyst

COMPANY GUIDE Mr. D.S.PRASHANTH RAO (CHIEF MANAGER) SBI MUTUAL FUND

Submitted By:
Vivek Kumar Class Of 2008 01006010700865

INTERIM REPORT

ON MARKETING OF MUTUAL FUNDS OFFERED BY SBI MUTUAL FUND

Submitted By:
Vivek kumar Class Of 2008 0100601070086

SBI MUTUAL FUND

ASSET MANAGEMENT COMPANY

Table of Contents
Abstract
1.

Introduction 1.1 What are Mutual Funds 1.2 Constitution of Mutual Funds

1 1 2 3

2.

History and Development of Mutual Fund

ii

3. 4. 5. 6. 7.

Structure of Indian Mutual Fund Industry AMCs currently operating in India Recent trends in Mutual Fund Industry Mutual Funds Vs Commercial Banks Types of Mutual Funds 7.1 Mutual Funds by portfolio classification 7.1.1 Equity Funds 7.1.2 Debt Funds 7.1.3 Balanced Funds 7.2 Mutual Funds by Structure 7.2.1 Open-ended Funds 7.2.2 Closed-ended Funds 7.2.3 Interval Funds

6 7 8 10 12 13 13 16 17 17 17 18 18 19 21 23 24 24 25 26 26

8. 9. 10. 11.

Advantages of Mutual Fund Disadvantages of Mutual Fund Risks in Mutual Fund Investment Regulations of Mutual Funds in India 11.1 Securities and Exchange Board of India 11.2 Association of Mutual Funds in India

12.

Marketing of Mutual funds 12.1 Product Form

iii

12.2 Customer Ownership Focus 12.3 Specialized Product and Service Focus 13. Challenges and opportunities in Marketing 13.1 Marketing Channels 13.1.1 Direct Marketing 13.1.2 Selling through Intermediaries 13.2 Distributors 13.3 Advantages of tie-ups with Banks 14. 15. Details of the Sale made during the Project SURVEY 15.1 Introduction 15.2 Data Collection 15.3 Details of the sample population 15.3.1 In person, one to one survey 15.3.2 Online/Telephonic survey 15.4 Data Analysis 15.5 Graphical Analysis 15.5.1 List of Parameters 15.5.2 Ranking of Mutual Funds 16. 17. 18. Conclusion Findings from the project Recommendations

27 27 28 29 29 29 29 30 31 32 32 33 33 34 36 40 40 40 55 56 58

iv

19.

Appendix 19.1 QUESTIONNAIRE

59 59 62 63

20. 21.

References Glossary

ABSTRACT
The 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.

INTRODUCTION What 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:

CONSTITUTION OF THE MUTUAL FUND

Though 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 investors 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.

Sponsors

Board of Trustees

Asset Management Company

Custodians

History and Development of Mutual Funds in India

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

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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 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.

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The growth of assets can be seen in the graph:

Structure of the Indian Mutual Fund Industry

The 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 openended 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.

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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 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 Alliance Capital Asset Management (I) Private Limited Birla Sun Life Asset Management Company Limited Bank of Baroda Asset Management Company Limited Bank of India Asset Management Company Limited Canbank Investment Management Services Limited Cholamandalam Cazenove Asset Management Company Limited Dundee Asset Management Company Limited DSP Merrill Lynch Asset Management Company Limited Escorts Asset Management Limited First India Asset Management Limited GIC Asset Management Company Limited IDBI Investment Management Company Limited Indfund Management Limited ING Investment Asset Management Company Private Limited J M Capital Management Limited Jardine Fleming (I) Asset Management Limited Kotak Mahindra Asset Management Company Limited Kothari Pioneer Asset Management Company Limited Jeevan Bima Sahayog Asset Management Company Limited Morgan Stanley Asset Management Company Private Limited Punjab National Bank Asset Management Company Limited Reliance Capital Asset Management Company Limited State Bank of India Funds Management Limited Shriram Asset Management Company Limited Sun F and C Asset Management (I) Private Limited Sundaram Newton Asset Management Company Limited Tata Asset Management Company Limited Credit Capital Asset Management Company Limited Templeton Asset Management (India) Private Limited Unit Trust of India Zurich Asset Management Company (I) Limited Nature of ownership Private foreign Private Indian Banks Banks Banks Private foreign Private foreign Private foreign Private Indian Private Indian Institutions Institutions Banks Private foreign Private Indian Private foreign Private Indian Private Indian Institutions Private foreign Banks Private Indian Banks Private Indian Private foreign Private foreign Private Indian Private Indian Private foreign Institutions Private foreign

13

Recent Trends in the Mutual Fund Industry

The 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 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.

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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 pass 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. 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)

UTI 100% 195,320 80% 60% 40% 20% 0% Dec 99 Dec 00 Dec 01 Dec 02 672,070 102,890 280,360 70,510 83,850 123,930 642,390 511,810 458,990 143,450 190,590 Dec-03 422,560 643,080 1,066,890 Bank/Institution Sponsered Pvt Sector

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Mutual Funds Vs Commercial Banks

Mutual funds are now also competing with commercial banks in the race for retail investors 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 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

16

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: MUTUAL FUNDS Low Better High Low Low Moderate Less More High penetration Low but improving At a cost Better Not transparent Transparent Minimum balance between 10th. & 30th. of Everyday every month Maximum Rs.1 lakh on deposits None BANKS

Returns Administrative exp. Risk Investment options Network Liquidity Quality of assets Interest calculation Guarantee

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

Au stralia USA B raz il UK S outh K orea India Japan 6% 5% 23% 21% 30% 72%

87%

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Types of Mutual Funds

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:

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Mutual Funds by portfolio classification

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 dont need fund managers, as there is no stock selection involved. Investing through index funds is a passive investment strategy, as a funds performance will invariably mimic the index concerned, barring a minor "tracking error". Usually, theres 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

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(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 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 SENSEX BSE TECk INDEX BSE-100 BSE-200 BSE-500 Open High Low Last Price Prv Close Chg %Chg 11,325.96 11,356.95 11,231.16 11,279.96 11,307.04 -27.08 -0.24% 2,737.03 2,743.10 2,702.96 2,713.12 2,734.64 -21.52 -0.79% 5,907.97 5,943.32 5,870.54 1,410.56 1,419.85 1,402.71 4,504.61 4,537.76 4,482.73 5,904.17 1,412.62 4,516.73 5,897.24 1,407.76 4,495.69 6.93 0.12% 4.86 0.35% 21.04 0.47%

BSE IT INDEX BSE CD INDEX BSE FMCG INDEX BSE HEALTHCARE CAPITAL GOODS

4,072.28 4,084.89 4,021.39 3,147.73 3,242.44 3,147.73 2,224.95 2,234.72 2,191.58 3,861.69 3,881.04 3,832.48 8,069.41 8,218.15 8,031.15

4,030.29 3,212.33 2,211.45 3,858.10 8,170.56

4,069.11 -38.82 -0.95% 3,135.88 76.45 2.44% 2,224.79 -13.34 -0.60% 3,843.14 14.96 0.39%

8,060.11 110.45 1.37%

BSE PSU INDEX DOLLEX BANKEX BSE Auto BSE Metal

6,112.84 6,162.56 6,062.04 527.21 527.21 527.21 5,261.69 5,315.55 5,235.56 5,249.05 5,350.64 5,247.73 8,760.08 8,934.18 8,748.99

6,114.88 527.21 5,265.24 5,322.73 8,869.91

6,094.77

20.11 0.33% 0.53% 0.25% 1.71% 1.50%

524.45 2.76 5,251.94 13.30 5,233.08 89.65 8,738.40 131.51

BSE Oil & Gas DOLLEX-30 BSE-MIDCAP

4,940.25 2,075.96 5,265.03 6,526.76

4,964.71 2,075.96 5,361.16 6,622.23

4,881.30 2,075.96 5,258.77 6,526.76

4,918.98 2,075.96 5,348.62 6,591.66

4,924.12 2,077.22 5,249.36 6,515.85

-5.14 -1.26 99.26 75.81

-0.10% -0.06% 1.89% 1.16%

2. Diversified funds
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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 managers 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 managers 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 wont 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 funds NAV will zoom if the sector performs well; however, if the sector languishes, the schemes 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 cyclesget in when the sector is poised for an upswing and exit before it slips back. Therefore, unless one

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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 defaulta 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-billsinstruments on which repayment of principal and periodic payment of interest is assured by the government. So, unlike income funds, they dont 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.

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 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 debtnormally 60:40 in favor of equity. As a result, on the risk ladder, they fall somewhere between equity and debt funds depending on the funds debt-equity spiltthe 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 Childrens 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. Openended 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

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

24

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 investmentsbut 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, dont 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

25

in its portfolio stay the same, the depreciation in the funds portfolio and hence, the investmentwill be 5 per cent. Thats 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 funds 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

26

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. Whats 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 Funds

Mutual 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

27

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

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.

28

Risks in Mutual Fund

High Risk

Sector

Equity

Index

Balanced

Corporate Debt

Dated Government Securities

Treasury Risk Low

MMMF Few Months 13 yrs 3-7 yrs 7-15yrs

Few Days

Time Period

29

Regulation of Mutual Funds in India

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 investors interest by defining and maintaining high ethical and professional standards in the mutual funds industry'. AMFI

30

plays an important role in disciplining members and assist the regulatory authority in protecting investors' interest. 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.

31

MARKETING OF MUTUAL FUNDS

The financial services sector has undergone the most dramatic transformation in the postliberalization 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 Focus In 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.

32

 The way in which that particular fund was marketed.

Customer Ownership Focus In 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 Focus Here 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

33

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. 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.

34

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.

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 doesnt have the requisite knowledge invests as the intermediary says. The intermediary network at SBI Mutual Funds is composed of: Banks

35

 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 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 AMCs 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

36

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 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

APPLICATION NUMBER 2040421 2038069 2040423 2038070 AMOUNT (Rs) 10,000 60,000 10,000 20,000

SR NO. 1 2 3 4

NAME Mr. S.V.S. Chaladathi Rao Mr. Pratti Pati Venkata Chalam Mr. Lakshmi Narayan Mr. G.V. Ramprasad

SCHEME NAME Magnum Taxgain Magnum Taxgain Magnum Taxgain Magnum Taxgain

37

5 6 7 8 9 10

Mr. R.S. Suresh Mr. S.K. Krishna Kumar Mr. Alivenu Mr. Mannepalli Mr. Devvlapalli Sriramamur Mr. C Gajraj

3999103 2038068 2740546 2040416 2039834 3934577

10,000 10,000 10,000 20,000 20,000 25,000 25,000

Magnum Taxgain Magnum Taxgain Magnum Taxgain Magnum Taxgain Magnum Taxgain Magnum Contra Fund Multicap Fund Magnum Contra Fund

11

Mr. Sudhakar

5,000

SURVEY
Introduction
The 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 Funds 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

38

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 Ps of service marketing, that is:

Product Price 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 30th 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

39

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Dr.S.Venkata Seshaiah Mr.Abhishek Khanna Mr.Abhishek Roy Mr.Akhtar Mr.Anand Mr.Anil Agarwal Mr.Anish Kumar Barnwal Mr.Ankit Desai Mr.Arun Chopra Mr.Gaurav Gupta Mr.Gopinath LN Mr.Harish Agarwal Mr.K Tresh Mr.K.L.N Rao Mr.KVS Kumar Mr.Manik Tyagi Mr.Nitin Srivastava Mr.P.Subrahmanyum Mr.Pawan Tamolia Mr.Priyanshu Gupta Mr.Rohit Gupta Mr.S.Netaji babu Mr.S.P.R Vittal Mr.Sagar Jhalani Mr.Sanjay Agarwal Mr.Satish Kumar Mr.Satyabrata Das Mr.Subhasis Ray Mr.T Swamy Mr.Tamiz Sheikh Mr.Tapasvi Likhi Mr.Y.Sreecharan Mrs. Vijaya lakshmi Mrs.A.Usha Reddy Mrs.Y.Malini Reddy Ms Archana J Vallurri Ms Richa Kappoor Ms.Anushree Kumar Ms.Richa Chandra Ms.Shilpi Singh

svs_icfai@rediffmail.com khetriabhishek82@gmail.com Duttasaab@gmail.com luvakhtar@rediffmail.com anand_dream3@yahoo.co.in anish_barnwal@yahoo.com ankit_d@alsc.com arunchopra81@hotmail.com gaurav_411114@yahoo.co.in gopinathln@yahoo.com ckotresh@sify.com ecosir@gmail.com kumar.kvsatish@gmail.com mailmanik_16@yahoo.com Tonitinsrivastava@yahoo.com psm_gco@yahoo.com

09885476054 39101853 09440829361 09849077028 09885694124

09866850388 09885366454 09849137383 27100247 09440498616 09985151170 09848063267 09866612068

rohit_gupta@alsc.com netajibabu23@yahoo.com sprvi@gmail.com Sagarjhalani19@gmail.com venisetti@rediffmail.com satyabratabas1@gmail.com sr1220@indiatimes.com tamiz.sheikh@gmail.com tapasvilikhi@gmail.com

09885764342 09849045793 09396543676 09347541021 09849954910 23430415 09849551145 23430453-213 09985219800 09885363393

achuthausha@rediffmail.com malinireddyicfai@yahoo.com archanav@infoline.com Rich.Kappoor@infosys.com moonlight.ak@yahoo.com chandraricha@yahoo.co.in

23430453 23548655 09849660887 09980454317 09347407810 09849078807 09885732746

40

41

Ms.Swati Prakash

09849724916

Online/Telephonic Survey
Sr.Num 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NAME EMAIL Phone

Mr.Aashish Kohli Mr.Ajay Jindal Mr.Ajay Kumar Misra Mr.Ajay Thomas Mr.Amit Diwan Mr.Anirban paul Mr.Ashish Haridas Mr.Baldev Singh Mr.Bhasker Paliwal Mr.Bhavin Dedhia Mr.Charanjeet Gulati Mr.Dipendra Ku Gupta Mr.H. Pramod Mr.Ishwar Gupta Mr.Jitendra Chotrani Mr.Kishan Ku Aindala Mr.L.R.Chotrani Mr.Nagachandu Talluri Mr.Navdeep Mr.Navneet Kaulgud Mr.Nitin Mittal Mr.Pradeep Gudla Mr.R.S Gupta Mr.Rakesh Sharma Mr.Ravi Mr.Ravi Chandra Ivvala Mr.Ravinder Goel Mr.Ritesh Agarwal Mr.Rohit Kelkar Mr.Romi Rimesh Mr.Samarthya Kumar Mr.Shashi Ranjan Mr.Shubendu Goswami Mr.Siddharth Ghildyal

kohli.Aashish@gmail.com ajaykm@techmahindra.com nuzu007@gmail.com anirban_paul@satyam.com ashish.haridas@saband.com baldev.singh@rediffmail.com maryland274@yahoo.com b.dedhia@gmail.com cgulati@hotmail.com pramod.warrier@gmail.com jeets2002@yahoo.com kishankumara@in.ibm.com Nagachandu.Talluri@symphonysv.com

09839133425 09845823403

0981824432 09890350059 09860873636 (562)2882010 09321027186 09819161647 0996193011 09881066506 09830043650

07552640192 08051331572 09849865806 09885472850 09881060962 09331017519

pkgudla@yahoo.com

ravichandra.ivvala@symphonysv.com ritesh.a@gmail.com rohit.kelkar@gmail.com romi_rimesh_2000@yahoo.com mailto:go2shashi@gmail.com coolguyshubh@yahoo.com siddharth.ghildyal@gmail.com

09886164531 09831078505 09818646342 09881066503 09867253568 09838273880 09810997825

41

35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59

Mr.Sony Sebastian Mr.Sudhir Gattu Mr.Sumedh N Meshram Mr.Sumit Pawar Mrs.Anu Antony Mr.P.K. Guha Mrs.Kiran Awargaonkar Mr.Bijay Kumar Gupta Mrs.Monami Ghosh Mr.Manoj Chowdary Mrs.Namita Batra Mr.Mukesh Agarwal Mrs.Poorva Pantane Mr.Bhagwan Khandelwal Mrs.Shaminoo Kapoor Mr.Ravinder Garg Mrs.Sunita Jindal Mr.Tinku Singh Ms.Chanchal Gupta Mr.Dinesh Kumar Bhora Ms.Medha Raikar Mr.Ram Babu Sahu Ms.Neha Johri Ms.Neha Kamat Ms.Pinky Gupta

sony.sebastian@ustri.com sudhir.gattu@gmail.com sumedh_nm@hotmail.com Sumit.Pawar@cognizant.com anu.antony@hotmail.com kiran.awargaonkar@gmail.ocm monamighosh@rediffmail.com

09847435216 09886382254

03324663176 09820012289

09331051552 09830439005 09324239435 06782262344 shaminoo_k@yahoo.com 03326663251 09845828051 09830448077 09831218632 Medha.Raikar@cognizant.com 06788221187 30214133 09850995679 09830198006

poorva_pantane@yahoo.com

nehakamat@yahoo.com pinky_g2002@yahoo.co.in

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.

42

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 Less than 30 Between 30 and 50 Above 50 Occupation Government Service Self Employed Private Enterprise Others Annual Income 100000-300000 300000-500000 500000-700000 Above 700000 Investment Option Yes No Investment Objectives Short Term Dividend Gain Long Term Capital Gain Security Liquidity Investment Avenues Property/Real Estate Stocks Mutual Funds Fixed Deposits/Savings Any Other Returns Expected Less than 6% Between 6%-10% Between 10%-15% Between 15%-20% Greater than 20% 1 6 17 40 31 17 37 71 25 0 33 59 26 16 93 7 40 37 16 4 1 17 72 9 Number of Votes 68 22 10

43

Company Knowledge

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

Number of Votes 44 54 24 25 3

Involvment Required Very High High Indifferent Low Very Low Entry/Exit Load Yes No Tax Benefit Measure Provident Fund LIC premium ELSS of Mutual Funds NSC Loan Repayment Channel Preference Sales Person Brokerage Firm Direct AMC Banks Online Company Contact Method Personal Contact Telephonic Online Letters/Mails 25 6 33 44 26 4 42 22 27 15 51 45 22 9 4 90 12 64 6 7 1

Portfolio Manager

Parameter Share Broker Fund Manager Friends Advice On Own

Number of Votes 4 63 10 22

44

Company Image Effect Yes No Satisfaction Level Completely Satisfied Somewhat Satisfied Satisfied Dissatisfied Completely Dissatisfied 32 37 16 1 0 45 46

GRAPHICAL ANALYSIS
The 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:

45

1) Age group to which the sample population belongs

A g e (y e a rs ) P a tte rn o f th e S a m p le P o p u la tio n
A b o ve 5 0 , 1 0 , 1 0 % B e tw e e n 3 0 a n d 5 0 , 22, 22%

L e s s th a n 3 0 , 6 8 , 68 % L e s s t h a n 3 0 e t w e e n 3 0 a n d 5 0b o ve 5 0 B A

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

46

Occupation Pattern of the sample Population

Others, 9, 9% Government Service, 1, 1% Self Employed, 17, 17%

Private Enterprise, 72, 73%

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
Income Patterns of the Sample Population
40 40 30 Sample Number 20 10 0 16 4 100000-300000 300000-500000 500000-700000 Above 700000 Above 700000 37

100000-300000

300000-500000

500000-700000

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

47

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
Investment Option of the Sample Population

Number of People

No

7 Yes No

Yes

93

20

40

60

80

100

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
Liquidity, 16, 12% Short Term Dividend Gain, 33, 25%

Security, 26, 19%

Long Term Capital Gain, 59, 44% 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

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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

Inv e stme nt Av e nue s into C onside ration

A ny O ther, 0, 0% F ix ed D epos its /S avings , 25, 17% P roperty /R eal E s tate, 17, 11%

S toc k s , 37, 25%

M utual F unds , 71, 47% P roperty /R eal E s tate toc k s M utual F unds F ix ed Depos its /S avings ny O ther S A

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 todays 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

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Percentage Of Returns expected by the sample population

Less than 6% Between 6%-10% 1 16 17 40 31 Between 10%-15% Between 15%-20% Greater than 20%

0%

20%

40%

60%

80%

100%

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/Co mmercials, 25, 17%

Friends, 44, 29%

TV Shows, 24, 16% News Paper, 54, 36% 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

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see 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
Percentage of Involvement in Investing is Mutual Funds

Very High 1 12 64 6 7 1 High Indifferent Low Very Low 0% 20% 40% 60% 80% 100%

Sample

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
Sam viewabout existence of Entry ple /Exit Loads on Mutual Funds
Yes, 4, 4%

N 90, 96% o,

Yes

N o

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

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TAX Benefit Measure availed by Investors In the Sample Population

60 50 40 Number pf people 30 20 10 0 Provident Fund ELSS of Mutual Funds Methods 15 22 9 Loan Repayment 51

45 Provident Fund LIC 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 NSCs and 15 toward provident fund. 9 people avail tax benefit through repayment of loans. 12) Investment Channel preferred by investors
Channel Preference of Investors
45 40 35 30 25 Number of People 20 15 10 5 0 42 27 22

26

Sales Person Brokerage Firm Direct AMC

4 Sales Person Brokerage Firm Direct AMC Channels Banks Online

Banks Online

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

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Company Contact Methods preferred by the Investors

45 40 35 30 25 Number of People 20 15 10 5 0 44 33 25 Personal Contact Telephonic 6 Personal Contact Telephonic Online Letters/Mails Online Letters/Mails

Contact Methods

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 Portfolio Manager in view of the Investors
70 60 50 40 30 20 10 0 4 Share Broker Fund Manager 10 Friends Advice On Own 22 Share Broker Fund Manager Friends Advice On Own 63

Number of People

Manager

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 Companys Image while considering Investment

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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

Satisfaction Level of An Investor

40 35 30 25 Num be r of Pe ople20 15 10 5 0

37 32 Completely Satisfied Somewhat Satisfied 16 Satisfied Dissatisfied 1 1 0 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 its 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

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RANKS OBTAINED Asset Management Company Franklin Templeton Ranks(1-7) 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Votes in Favor 44 18 11 11 3 2 0 18 17 24 17 7 4 1 1 22 10 9 28 10 8 4 7 8 13 12 25 19

SBI Mutual Funds

DSP Merrill Lynch

HDFC Mutual Funds

ICICI Mutual Funds

1 2 3 4 5 6

4 5 10 12 16 16

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7 Reliance Mutual Funds 1 2 3 4 5 6 7 1 2 3 4 5 6 7

26 7 16 20 13 7 14 12 9 6 7 15 13 17 20

UTI Mutual Funds

Ranks given to FRANKLIN TEMPLETON by the Investors

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Ranks given to FRANKLIN TEMPLETON by the Investors

44 45 40 35 30 25 Votes in Favor 20 15 10 5 0 1st rank 2nd rank 18 11 11 3 1 RANKS(1-7) 2 0 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
Ranks given to SBI MUTUAL FUNDS by the Investors
24 18 17 17 1st rank 2nd rank 3rd rank 7 4 1 1 RANKS(1-7) 4th rank 5th rank 6th rank 7th rank

25 20 Number of Votes 15 in Favor 10 5 0

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

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Ranks given to Reliance MUTUAL FUNDS by the Investors

20 20 15 Number of Votes 10 in Favor 5 0 7 16 13 7 14 12 1st rank 2nd rank 3rd rank 4th rank 5th rank 6th rank 1 RANKS(1-7) 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 Ranks given to DSP MERRILL LYNCH FUNDS by the Investors
28 22 1st rank 2nd rank 3rd rank 10 1 1 RANKS(1-7) 9 10 8 4th rank 5th rank 6th rank 7th rank

30 25 20 Number of Votes 15 in Favor 10 5 0

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

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Ranks given to UTI MUTUAL FUNDS by the Investors

20 20 15 15 Number of Votes 10 in Favor 5 0 9 6 7 13 17 1st rank 2nd rank 3rd rank 4th rank 5th rank 6th rank 1 RANKS(1-7) 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 AMCs 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
Ranks given to HDFC MUTUAL FUNDS by the Investors
25 25 20 Number of Votes 15 in Favor 10 5 0 4 13 7 8 12 19 1st rank 2nd rank 3rd rank 4th rank 5th rank 6th rank 1 RANKS(1-7) 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

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Ranks given to ICICI MUTUAL FUNDS by the Investors

30 25 20 Number of Votes 15 in Favor 10 5 0 10 4 5 12 16 16 26 1st rank 2nd rank 3rd rank 4th rank 5th rank 6th rank 1 RANKS(1-7) 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.

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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 countrys 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.

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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.

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 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.

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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
64

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%

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8) Rank the following Mutual Funds according to your preference: (rank 1-7) Mutual Fund Company Franklin Templeton SBI Mutual Funds DSP Merrill Lynch HDFC Mutual Funds ICICI Prudential Reliance Mutual Funds UTI Mutual Funds 9) Why have you selected this company as number one? Rank

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

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

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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

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Keywords/Glossary
AMFI- Association of Mutual Funds of India. 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 companys 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. 69

Unit Trust of India- An investment Company, UTI aims at mobilizing the savings of the public and channelizes them into productive corporate investments.

70