PROJECT REPORT

ON

A project report submitted in partial fulfillment of the

requirements of

Master of Business Administration

By
Ronak Jain
(19121321)
MBA- 4th semester
Submitted to-
Miss. Arundhati Tiwari

Babulal Tarabai Institute of Research and

Technology
SAGAR (M.P), INDIA

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 DECLARATION

DATE- __________

I “Ronak Jain” hereby declares that the work presented herein is genuine work
done originally by me under the supervision of “Miss. Arundhati Tiwari”,
Management Department, Babulal Tarabai Institute of Research and
Technology, Sagar (M.P) and same has not been submitted for the award of any
other degree/diploma/fellowship or other similar titles or prizes.

RONAK JAIN
MBA 4th SEM
(19121321)

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 ACKNOWLEDGEMENT

It is a great opportunity for me to express my sincere thanks to Dr. Jayant

Dubey, Head, MBA Department, Babulal Tarabai Institute of Research and
Technology, Sagar, and (M.P).

I would like to pay my special gratitude to Miss. Arundhati Tiwari for

supervising my work, and for her valuable guidance and constant
encouragement throughout my project work.

I am very thankful to the all respected Faculty members of the department,

who supported me in the preparation of my project.

Finally I want to thanks My Parents, My Friends without whom the

completion of my project would not have been possible.

RONAK JAIN
MBA 4th SEM
(19121321)

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 CERTIFICATE

This is to certify that Ronak Jain has worked for her MBA 4th semester project
entitled “Mutual fund Schemes of SBI” in partial fulfillment of the degree of
Master of Business Administration. She has completed her project under my
supervision. Her work is original, satisfactory and is not submitted anywhere
else for the award of any degree.

I hereby forward this project and wish her success in future endeavor.

Signature of Supervisor Signature of HOD Signature of Examiner

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 EXECUTIVE SUMMARY

A mutual fund is a scheme in which several people invest their money for a common
financial cause. The collected money invests in the capital market and the money, which they
earned, is divided based on the number of units, which they hold. The mutual fund industry
started in India in a small way with the UTI Act creating what was effectively a small savings
division within the RBI. Over a period of 25 years this grew fairly successfully and gave
investors a good return, and therefore in 1989, as the next logical step, public sector banks
and financial institutions were allowed to float mutual funds and their success emboldened
the government to allow the private sector to foray into this area. The advantages of mutual
fund are professional management, diversification, and economies of scale, simplicity, and
liquidity. The disadvantages of mutual fund are high costs, over-diversification, possible tax
consequences, and the inability of management to guarantee a superior return. The biggest
problems with mutual funds are their costs and fees it include Purchase fee, Redemption fee,
Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads
which add to the cost of mutual fund. Load is a type of commission depending on the type of
funds. Mutual funds are easy to buy and sell you can either buy them directly from the fund
company or through a third party. Before investing in any funds one should consider some
factor like objective, risk, Fund Manager’s and scheme track record, Cost factor etc. There
are many, many types of mutual funds. You can classify funds based Structure (open-ended
& close-ended), Nature (equity, debt, balanced), Investment objective (growth, income,
money market) etc. A code of conduct and registration structure for mutual fund
intermediaries, which were subsequently mandated by SEBI. In addition, this year AMFI was
involved in a number of developments and enhancements to the regulatory framework.
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. SBI funds management Pvt. Ltd. Is one
of the leading fund houses in the country with an investor base of over 4.6 million and over
20 years of rich experience in fund management consistently delivering value to its
investor’s? SBI Funds management Pvt. Ltd. Is a joint venture between “The State Bank of
India” one of the largest banking enterprises, and society Generate asset management
(France), one of the world’s leading fund management companies that manages over USS
500billion worldwide.

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 TABLE OF CONTENTS

CHAPTER-1: INTRODUCTION TO MUTUAL FUND

1.1. Concept of mutual fund

1.2. Definition
1.3. History of mutual funds in india:
1.4. Types of mutual funds schemes in india
1.5. Mutual fund fees and expenses
1.6. Risk factors of mutual funds:
1.7. Mutual funds: structure in india
1.8. Advantages of mutual funds:
1.9. Disadvantage of investing through mutual funds
1.10. Selection parameters for mutual fund
1.11. Types of returns on mutual fund:

CHAPTER-2: CORPORATE PROFILE OF SBI MUTUAL FUNDS

2.1. Introduction to SBI mutual fund

2.2. Corporate profile of SBI
2.3. Competitors of SBI mutual fund
2.4. Awards and achievements
2.5. Our vision
2.6. SBI services

CHAPTER-3: RESEARCH METHODOLOGY

3.1. What is research…?

3.2. Title
3.3. Objectives of the study
3.4. Methods of data collection
3.5. Need of the study
3.6. Limitation of study

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CHAPTER-4: SBI MUTUAL FUND SCHEMES

4.1. Blue chip fund:

4.2. Magnum midcap fund:
4.3. Equity savings fund:
4.4. Short term debt fund:
4.5. Premier liquid fund:
4.6. Documents required for making investment:

CHAPTRR-6: FINDINGS, SUGGESTIONS AND CONCLUSION

5.1. Findings,
5.2. Suggestions
5.3. Conclusion

BIBLIOGRAPHY

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Chapter - 1
IntroduCtIon

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1.1. CONCEPT OF MUTUAL FUND

A mutual fund is a common pool of money into which investors place their contributions that
are to be invested in accordance with a stated objective. The ownership of the fund is thus
joint or “mutual”; the fund belongs to all investors. A single investor’s ownership of the fund
is in the same proportion as the amount of the contribution made by him or her bears to the
total amount of the fund. Mutual Funds are trusts, which accept savings from investors and
invest the same in diversified financial instruments in terms of objectives set out in the trusts
deed with the view to reduce the risk and maximize the income and capital appreciation for
distribution for the members. A Mutual Fund is a corporation and the fund manager’s interest
is to professionally manage the funds provided by the investors and provide a return on them
after deducting reasonable management fees. The objective sought to be achieved by Mutual
Fund is to provide an opportunity for lower income groups to acquire without much difficulty
financial assets. They cater mainly to the needs of the individual investor whose means are
small and to manage investors portfolio in a manner that provides a regular income, growth,
safety, liquidity and diversification opportunities

1.2. DEFINITION

“Mutual funds are collective savings and investment vehicles where savings of small (or
sometimes big) investors are pooled together to invest for their mutual benefit and returns
distributed proportionately”. “A mutual fund is an investment that pools your money with the
money of an unlimited number of other investors. In return, you and the other investors each
own shares of the fund. The fund’s assets are invested according to an investment objective
into the fund’s portfolio of investments. Aggressive growth funds seek long-term capital
growth by investing primarily in stocks of fast-growing smaller companies or market
segments. Aggressive growth funds are also called capital appreciation funds”.

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1.3. HISTORY 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 Reserve Bank. The history of mutual funds in
India can be broadly divided into four distinct phases.

1.3.1. 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.

1.3.2. 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 Can bank 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 December1990. At the end of 1993, the mutual fund industry had assets under
management of Rs.47, 004 crores.

1.3.3. 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. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing,
with many foreign mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. A sat 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.

1.3.4. FOURTH PHASE – SINCE FEBRUARY 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and certain
other schemes. The 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. 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 421schemes.

1.4. TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a
collection of many stocks, an investors can go for picking a mutual fund might be easy. There
are over hundreds of mutual funds scheme to choose from.

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It is easier to think of mutual funds in categories, mentioned below:

A. BY STRUCTURE

1. Open - Ended Schemes: 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.
2. Close - Ended Schemes: A closed-end fund has a stipulated maturity period which
generally ranging from 3 to 15years. 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. In 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 order repurchase
at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes
is provided to the investor.
3. Interval Schemes: Interval Schemes are that scheme, which combines the features of
open-ended and close-ended schemes. The units may be traded on the stock exchange or
may be open for sale or redemption during pre-determined intervals at NAV related
prices.

B. BY NATURE

1. Equity Fund: These funds invest a maximum part of their corpus into equities holdings.
The structure of the fund may vary different for different schemes and the fund manager’s
outlook on different stocks.

The Equity Funds are sub-classified depending upon their investment objective, as follows:
1. Diversified Equity Funds
2. Mid-Cap Funds
3. Sector Specific Funds
4. Tax Savings Funds

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 (ELSS) Equity investments are meant for a longer time horizon, thus Equity funds rank high
on the risk-return matrix.

2. Debt Funds: The objective of these Funds is to invest in debt papers. Government
authorities, private companies, banks and financial institutions are some of the major
issuers of debt papers. By investing in debt instruments, these funds ensure low risk and
provide stable income to the investors.

Debt funds are further classified as:

i. Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated
with Interest Rate risk. These schemes are safer as they invest in papers backed by
Government.
ii. Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
iii. MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
iv. Short Term Plans (STPs): Meant for investment horizon for three to six months. These
funds primarily invest in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also invested in corporate
debentures.
v. Liquid Funds: Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term instruments like
Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for
short-term cash management of corporate houses and are meant for an investment
horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are
considered to be the safest amongst all categories of mutual funds.

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3. Balanced Funds: As the name suggest they, are a mix of both equity and debt funds.
They invest in both equities and fixed income securities, which are in line with pre-
defined investment objective of the scheme. These schemes aim to provide investors with
the best of both the worlds. Equity part provides growth and the debt part provides
stability in returns. Further the mutual funds can be broadly classified on the basis of
investment parameter .Each category of funds is backed by an investment philosophy,
which is pre-defined in the objectives of the fund. The investor can align his own
investment needs with the funds objective and invest accordingly.

C. BY INVESTMENT OBJECTIVE

1. Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes
normally invest a major part of their fund in equities and are willing to bear short-term
decline in value for possible future appreciation.
2. Income Schemes: Income Schemes are also known as debt schemes. The aim of these
schemes is to provide regular and steady income to investors. These schemes generally
invest in fixed income securities such as bonds and corporate debentures. Capital
appreciation in such schemes may be limited.
3. Balanced Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing apart of the income and capital gains they earn. These schemes
invest in both shares and fixed income securities, in the proportion indicated in their offer
documents (normally 50:50).
4. Money Market Schemes: Money Market Schemes aim to provide easy liquidity,
preservation of capital and moderate income. These schemes generally invest in safer,
short-term instruments, such as treasury bills, certificates of deposit, commercial paper
and inter-bank call money.
5. Load Funds: A Load Fund is one that charges a commission for entry or exit. That is,
each time you buy or sell units in the fund, a commission will be payable. Typically entry
and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a
good performance history. No-Load Funds: A No-Load Fund is one that does not charge
a commission for entry or exit. That is, no commission is payable on purchase or sale of
units in the fund. The advantage of a no load fund is that the entire corpus is put to work.

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D. OTHER SCHEMES

1. Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax
laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions
made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate.

2. Index Schemes: Index schemes attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE NIFTY 50. The portfolio of these schemes will
consist of only those stocks that constitute the index. The percentage of each stock to the
total holding will be identical to the stocks index weight age. And hence, the returns from
such schemes would be more or less equivalent to those of the Index.

3. Sector Specific Schemes: These are the funds/schemes which invest in the securities of
only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals,
Software, Fast Moving Consumer Goods(FMCG), Petroleum stocks, etc. The returns in
these funds are dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they are more risky compared to diversified funds.
Investors need to keep a watch on the performance of those sectors/industries and must
exit at an appropriate time.

1.5. MUTUAL FUND FEES AND EXPENSES

Mutual fund fees and expenses are charges that may be incurred by investors who hold
mutual funds. Running a mutual fund involves costs, including shareholder transaction costs,
investment advisory fees, and marketing and distribution expenses.
Funds pass along these costs to investors in a number of ways

1. TRANSACTION FEES

 Purchase fee: It is a type of fee that some funds charge their shareholders when they
buy shares. Unlike a front-end sales load, a purchase fee is paid to the fund (not to a
broker) and is typically imposed to defray some of the funds costs associated with the
purchase.

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 Redemption fee: It is another type of fee that some funds charge their shareholders
when they sell or redeem shares. Unlike a deferred sales load, a redemption fee is paid to
the fund (not to a broker) and is typically used to defray fund costs associated with
shareholders redemption.
 Exchange fee: Exchange fee that some funds impose on shareholders if they exchange
(transfer) to another fund within the same fund group or "family of funds."

2. PERIODIC FEES

 Management fee: Management fees are fees that are paid out of fund assets to the
fund’s investment adviser for investment portfolio management, any other management
fees payable to the fund’s investment adviser or its affiliates, and administrative fees
payable to the investment adviser that are not included in the "Other Expenses"
category. They are also called maintenance fees.
 Account fee: Account fees are fees that some funds separately impose on investors in
connection with the maintenance of their accounts. For example, some funds impose an
account maintenance fee on accounts whose value is less than a certain dollar amount.

1.6. RISK FACTORS OF MUTUAL FUNDS:

 Market risk: Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be big
corporations or smaller mid-sized companies. This is known as Market Risk. A
Systematic Investment Plan (“SIP”) that works on the concept of Rupee Cost Averaging
(“RCA”) might help mitigate this risk.
 Credit risk: The debt servicing ability (May it be interest payments or repayment of
principal) of a company through its cash flows determines the Credit Risk faced by you.
This credit risk is measured by independent rating agencies like CRISIL who rate
companies and their paper. An ‘AAA’ rating is considered the safest whereas a ‘D’ rating
is considered poor credit quality. A well-diversified portfolio might help mitigate this
risk.

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 Inflation risk: Things you hear people talk about:"Rs. 100 today is worth more than Rs.
100 tomorrow.""Remember the time when a bus ride costed 50 paisa?""Mehangai Ka
Jamana Hai."The root cause, Inflation. Inflation is the loss of purchasing power over time.
A lot of times people make conservative investment decisions to protect their capital but
end up with a sum of money that can buy less than what the principal could at the time of
the investment. This happens when inflation grows faster than the return on your
investment. A well-diversified portfolio with some investment in equities might help
mitigate this risk.
 Interest rate risk: In a free market economy interest rates are difficult if not impossible
to predict. Changes in interest rates affect the prices of bonds as well as equities. If
interest rates rise the prices of bonds fall and vice versa. Equity might be negatively
affected as well in a rising interest rate environment. A well-diversified portfolio might
help mitigate this risk
 Political / government policy risk: Changes in government policy and political
decision can change the investment environment. They can create a favorable
environment for investment or vice versa.
 Liquidity risk: Liquidity risk arises when it becomes difficult to sell the securities that
one has purchased. Liquidity Risk can be partly mitigated by diversification, staggering of
maturities as well as internal risk controls that lean towards purchase of liquid securities.

1.7. MUTUAL FUNDS: STRUCTURE IN INDIA

Mutual Funds in India follow a 3-tier structure. There is a Sponsor (the First tier), who
thinks of starting a mutual fund. The Sponsor approaches the Securities & Exchange Board of
India (SEBI), which are the market regulator and also the regulator for mutual funds. Not
everyone can start a mutual fund. SEBI checks whether the person is of integrity, whether he
has enough experience in the financial sector, his net worth etc. Once SEBI is convinced, the
sponsor creates a Public Trust (the Second tier) as per the Indian Trusts Act, 1882. Trusts
have no legal identity in India and cannot enter into contracts, hence the Trustees are the
people authorized to act on behalf of the Trust. Contracts are entered into in the name of the
Trustees. Once the Trust is created, it is registered with SEBI after which this trust is
known as the mutual fund.

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 The Trustees role is not to manage the money. Their job is only to see, whether the money is
being managed as per stated objectives. Trustees may be seen as the internal regulators of a
mutual fund.

Who manages investor’s money?

This is the role of the Asset Management Company (the Third tier). Trustees appoint the
Asset Management Company (AMC), to manage investor’s money. The AMC in return
charges a fee for the services provided and this fee is borne by the investors as it is deducted
from the money collected from them. The AMC’s Board of Directors must have at least 50%
of Directors who are independent directors. The AMC has to be approved by SEBI. The
AMC functions under the supervision of its Board of Directors, and also under the direction
of the Trustees and SEBI. It is the AMC, which in the name of the Trust, floats new schemes
and manages these schemes by buying and selling securities. In order to do this the AMC
needs to follow all rules and regulations prescribed by SEBI and as per the Investment
Management Agreement it signs with the Trustees.

1.8. ADVANTAGES OF MUTUAL FUNDS:

If mutual funds are emerging as the favorite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the
investor who has limited resources available in terms of capital and the ability to carry out
detailed research and market monitoring.
The following are the major advantages offered by mutual funds to all investors:

i. Portfolio diversification: Each investor in the fund is a part owner of all the fund’s
assets, thus enabling him to hold a diversified investment portfolio even with a small
amount of investment that would otherwise require big capital.
ii. Professional management: Even if an investor has a big amount of capital available
to him, he benefits from the professional management skills brought in by the fund in the
management of the investor’s portfolio. The investment management skills, along with
the needed research into available investment options, ensure a much better return than
what an investor can manage on his own. Few investors have the skill and resources of
their own to succeed in today’s fast moving, global and sophisticated markets.

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 iii. Reduction/diversification of risk: When an investor invests directly, all the risk of
potential loss is his own, whether he places a deposit with a company or a bank, or he
buys a share or debenture on his own or in any other from. While investing in the pool of
funds with investors, the potential losses are also shared with other investors. The risk
reduction is one of the most important benefits of a collective investment vehicle like the
mutual fund.
iv. Reduction of transaction costs: What is true of risk as also true of the transaction
costs. The investor bears all the costs of investing such as brokerage or custody of
securities. When going through a fund, he has the benefit of economies of scale; the
funds pay lesser costs because of larger volumes, a benefit passed on to its investors.
v. Liquidity: Often, investors hold shares or bonds they cannot directly, easily and
quickly sell. When they invest in the units of a fund, they can generally cash their
investments any time, by selling their units to the fund if open-ended, or selling them in
the market if the fund is close-end. Liquidity of investment is clearly a big benefit.
vi. Convenience and flexibility: Mutual fund management companies offer many
investor services that a direct market investor cannot get. Investors can easily transfer
their holding from one scheme to the other; get updated market information and so on.
vii. Tax benefits: Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit holders of
open-ended equity-oriented funds, income distributions for the year ending March 31,
2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu
Undivided Families a deduction up to Rs. 9,000 from the Total Income will be
admissible in respect of income from investments specified in Section 80L,including
income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-
Tax and Gift-Tax.
viii. Choice of schemes: Mutual Funds offer a family of schemes to suit your varying needs
over a lifetime.
ix. 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.
x. Transparency: You get regular information on the value of your investment in
addition to disclosure on the specific investments made by your scheme, the proportion
invested in each class of assets and the fund managers investment strategy and outlook.

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 1.9. DISADVANTAGE OF INVESTING THROUGH MUTUAL FUNDS

i. No control over costs: An investor in a mutual fund has any control of the overall
costs of investing. The investor pays investment management fees as long as he remains
with the fund, albeit in return for the professional management and research. Fees are
payable even if the value of his investments is declining. A mutual fund investor also
pays fund distribution costs, which he would not incur indirect investing. However, this
shortcoming only means that there is a cost to obtain the mutual fund services.
ii. No tailor-made portfolio: Investors who invest on their own can build their own
portfolios of shares and bonds and other securities. Investing through fund means he
delegates this decision to the fund managers. The very-high-net-worth individuals or
large corporate investors may find this to be a constraint in achieving their objectives.
However, most mutual fund managers help investors overcome this constraint by
offering families of funds- a large number of different schemes- within their own
management company. An investor can choose from different investment plans and
constructs a portfolio to his choice.
iii. Managing a portfolio of funds: Availability of a large number of funds can actually
mean too much choice for the investor. He may again need advice on how to select a
fund to achieve his objectives, quite similar to the situation when he has individual
shares or bonds to select.
iv. No control: Unlike picking your own individual stocks, a mutual fund puts you in the
passenger seat of somebody else’s car
v. Dilution: Mutual funds generally have such small holdings of so many different stocks
that insanely great performance by a fund’s top holdings still doesn’t make much of a
difference in a mutual funds total performance.

1.10. SELECTION PARAMETERS FOR MUTUAL FUND

i. Your objective: The first point to note before investing in a fund is to find out
whether your objective matches with the scheme. It is necessary, as any conflict
would directly affect your prospective returns. Similarly, you should pick schemes
that meet your specific needs. Examples: pension plans, children’s plans, sector-
specific schemes, etc.

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 ii. Your risk capacity and capability: This dictates the choice of schemes. Those
with no risk tolerance should go for debt schemes, as they are relatively safer.
Aggressive investors can go for equity investments. Investors that are even more
aggressive can try schemes that invest in specific industry or sectors.
iii. Fund manager’s and scheme track record: Since you are giving your hard
earned money to someone to manage it, it is imperative that he manages it well. It is
also essential that the fund house you choose has excellent track record. It also should
be professional and maintain high transparency in operations. Look at the
performance of the scheme against relevant market benchmarks and its competitors.
Look at the performance of a longer period, as it will give you how the scheme fared
in different market conditions.
iv. Cost factor: Though the AMC fee is regulated, you should look at the expense ratio
of the fund before investing. This is because the money is deducted from your
investments. A higher entry load or exit load also will eat into your returns. A higher
expense ratio can be justified only by superlative returns. It is very crucial in a debt
fund, as it will devour a few percentages from your modest returns.

1.11. TYPES OF RETURNS ON MUTUAL FUND:

There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:
i. Income is earned from dividends on stocks and interest on bonds. A fund pays out
nearly all income it receives over the year to fund owners in the form of a distribution.
ii. If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
iii. If fund holdings increase in price but are not sold by the fund manager, the fund’s
shares increase in price. You can then sell your mutual fund shares for a profit. Funds
will also usually give you a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.

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 Chapter 2
Corporate proFILe oF
SBI MutuaL FundS

22
2.1. INTRODUCTION TO SBI MUTUAL FUND

UTI ruled more than two decades over mutual fund industry; in 1987 SBI mutual fund
became the first non UTI public sector mutual fund in India & in the 1990’s a new era for the
mutual fund industry was began by the entry of private companies. SBI Mutual Fund, India's
largest bank sponsored mutual fund, is a joint venture between the State Bank of India and
Society General Asset Management, one of the world's top-notch fund management
companies. Over the years, SBI Mutual Fund has carved a niche for itself through prudent
investment decisions and consistent wealth creation. Since its inception, SBI Funds
Management Private Ltd. has launched thirty-two schemes and successfully redeemed fifteen
of them. Throughout this journey, SBI Mutual Fund has profusely rewarded the 20, 00,000
investors who have reposed their faith in it. Today, the SBI fund boasts of an expertise of
managing assets over Rs. 13,000 crores and has a diverse profile of investors actively parking
their investments across 28 active schemes. A vast network of 82 collection branches, 26
investor service centers, 21 investor service desks and 21 district organizers helps the SBI
Mutual Fund to reach out to their investors.

2.2. CORPORATE PROFILE OF SBI

With 25 years of rich experience in fund management, SBI Funds Management Pvt. Ltd.
bring forward their expertise by consistently delivering value to their investors. SBI have a
strong and proud lineage that traces back to the State Bank of India (SBI) - India's largest
bank. It had a Joint Venture between SBI and AMUNDI (France), one of the world's leading
fund management companies. With the network of over 222 points of acceptance across
India, it delivers value and nurture the trust of vast and varied family of investors. Excellence
has no substitute. And to ensure excellence right from the first stage of product development
to the post-investment stage, SBI MF are ably guided by philosophy of ‘Growth Through
Innovation’ and stable investment policies. This dedication is what helps customers to
achieve their financial objectives.

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2.3 COMPETITIORS OF SBI MUTUAL FUND

Some of the main competitors of SBI Mutual Fund are as follows:

1. ICICI Mutual Fund

2. Reliance Mutual Fund

3. UTI Mutual Fund

4. Birla Sun Life Mutual Fund

5. Kotak Mutual Fund

6. HDFC Mutual Fund

7. LIC Mutual Fund

8. Sundaram Mutual Fund

2.4 AWARDS AND ACHIEVEMENTS

SBI Mutual Fund has been the proud recipient of the ICRA Online Award-8 times, CNBC
TV18
CRISIL AWARD 2006- 4 Awards, The Lipper Award (year 2005-2006) and most recently
with the CNBC TV-18 CRISIL Mutual Fund of the year Award 2007 and 5 Awards for its
schemes.

2.5 OUR VISION

“To be the most preferred and the largest fund house for all asset classes, with a consistent
track record of excellent returns and best standards in customer service, product innovation,
technology and HR practices.”

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2.6. SBI SERVICES

A. MUTUAL FUNDS

Investors are our priority. Our mission has been to establish Mutual Funds as a viable
investment option to the masses in the country. Working towards it, we developed innovative,
need-specific products and educated the investors about the added benefits of investing in
capital markets via Mutual Funds.

Today, we have been actively managing our investor's assets not only through our investment
expertise in domestic mutual funds, but also offshore funds and portfolio management
advisory services for institutional investors.This makes us one of the largest investment
management firms in India, managing investment mandates of over 5.4 million investors.

B. PORTFOLIO MANAGEMENT & ADVISORY SERVICES

SBI Funds Management has emerged as one of the largest player in India advising various
financial institutions, pension funds, and local and international asset management
companies.

We have excelled by understanding our investor's requirements and terms of risk / return
expectations, based on which we suggest customized asset portfolio recommendations. We
also provide an integrated end-to-end customized asset management solution for institutions
in terms of advisory service, discretionary and non-discretionary portfolio management
services.

OFFSHORE FUNDS

SBI Funds Management has been successfully managing and advising India's dedicated
offshore funds since 1988. SBI Funds Management was the 1st bank sponsored asset
management company fund to launch an offshore fund called 'SBI Resurgent India
Opportunities Fund' with an objective to provide our investors with opportunities for long-
term growth in capital, through well-researched investments in a diversified basket of stocks
of Indian Companies.

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C. ALTERNATIVE INVESTMENT FUNDS (AIF)

As part of the various asset management bouquets of products offered by the SBI Funds
Management Private Limited, we additionally offer alternate asset investment products
through Alternative Investment Funds. We launched our first alternative investment fund in
2015 and more funds are on the anvil as the space is still nascent and a lot of opportunities
exist. With a defined regulatory framework in place, we see AIFs growing faster and boosting
investments in the country with participation from domestic as well as foreign investors.

26
 Chapter 3
reSearCh MethodoLoGY

27
3.1 WHAT IS RESEARCH…?

Research is defined as human activity based on intellectual application in the

investigation of matter. The primary purpose for applied research is discovering,
interpreting, and the development of methods and systems for the advancement of
human knowledge on a wide variety of scientific matters of our world and the
universe. The term research is also used to describe an entire collection of information about
a particular subject.
Methodology is the method followed while conducting the study on a particular
project. Through this methodology a systematic study is conducted on the basis of
which the basis of a report is produced.

3.2. TITLE
The title of this report is “Mutual Funds of SBI”

3.3. OBJECTIVES OF THE STUDY

 Explore the recent developments in the mutual funds in India.

 Observe the fund management process of mutual funds.

 To study SBI mutual fund company and their funds.

 To study some of the mutual fund schemes.

 To discuss about the market trends of Mutual Fund investment.

 To give an idea of the types of schemes available.

 To give a brief idea about the benefits available from Mutual Fund investment.

3.4. TYPE OF RESEARCH

This study is Descriptive in nature. It helps in discovering of investment trends and insights.

28
3.5. METHODS OF DATA COLLECTION

There are two methods of data collection. The data collection methods used here is secondary
which has been collected through the various internet sites by surfing on Internet and
from the records available with the factsheets.

Secondary Data: Articles on Mutual Funds taken from journals, research paper, different
websites and from factsheets published from time to time.

3.6. NEED OF THE STUDY

 The main purpose of doing this project was to know about mutual fund and its
functioning.
 This helps to know in details about mutual fund industry right from its inception stage,
growth and future prospects.
 It also helps in understanding different schemes of mutual funds. Because my study
depends upon prominent funds in India and their schemes like equity, income, balance as
well as the returns associated with those schemes.
 The project study was done to ascertain the asset allocation, entry load, exit load,
associated with the mutual funds.
Ultimately this would help in understanding the benefits of mutual funds to investors.

3.7. LIMITATION OF STUDY

Every research is conducted under some constraints and this research is not an
exception. Limitations of this study are as follows:-

 Limited information through secondary research report is basic hindrance in finding

out true results relating to mutual fund schemes.
 Limited time was another constraint.
 Sudden change in the investment practices during the course of research can affect the
results.

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 Chapter 4

SBI MutuaL Fund SCheMeS

30
1) BLUE CHIP FUND:

Investment objective:

To provide investors with opportunities for long-term growth in capital through an active
management of investments in a diversified basket of equity stocks of companies whose
market capitalization is at least equal to or more than the least market capitalized stock of
S&P BSE 100 Index.

Fund Details:

 Type: An open- ended growth scheme

 Date of allotment: 14/02/2006

 Report as on: 30/04/2018

 AAUM for the month of April 2018: ₹ 18576.37 crores

 AAUM as on April 30, 2018: ₹ 19106.24 crores

 Fund Manager: Ms. Sohini Andani

 Managing since: Sep- 2010

 Benchmark: S&P BSE 100 Index

 Exit Load: For exit within 1 year from the date of allotment- 1%; for exit after 1 year
from the date of allotment- Nil

 Plans available: Regular, Direct

 Options: Growth, Dividend

 Minimum investment: ₹5000 & in multiples of ₹1

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2) MAGNUM MIDCAP FUND:

Investment objective:

To provide investors with opportunities for long-term growth in capital along with the
liquidity of an open- ended scheme by investing predominantly in a well diversified basket of
equity stocks of Midcap Companies.

Fund Details:

 Type: An open- ended growth scheme

 Date of allotment: 29/03/2005

 Report as on: 30/04/2018

 AAUM for the month of April 2018: ₹ 3967.01 crores

 AAUM as on April 30, 2018: ₹ 4038.84 crores

 Fund Manager: Ms. Sohini Andani

 Managing since: July- 2010

 Benchmark: Nifty Midsmallcap 400 Index

 Exit Load: For exit within 1 year from the date of allotment- 1%; for exit after 1 year
from the date of allotment- Nil

 Plans available: Regular, Direct

 Options: Growth, Dividend

 Minimum investment: ₹5000 & in multiples of ₹1

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3) EQUITY SAVINGS FUND:

Investment Objectives:

The scheme aims to generate income by investing in arbitrage opportunities in the cash and
derivatives segment of the equity market, and capital appreciation through a moderate
exposure in equity.

Fund Details:

 Type: An open- ended growth scheme

 Date of allotment: 30/05/2015

 Report as on: 30/04/2018

 AAUM for the month of April 2018: ₹ 2017.24 crores

 AAUM as on April 30, 2018: ₹ 2084.51 crores

 Fund Manager: Arbitrage portion- Mr. Neeraj Kumar

Equity, Dept- Mr. Ruchit Mehta

 Managing since: May- 2015

 Benchmark: 30% Nifty 50+70% CRISIL Liquid Fund Index

 Exit Load: For exit within 1 year from the date of allotment- ;
-For 9% of the investments – nil

-For remaining investments – 1.00%

For exit after 1 year from the date of allotment- Nil

 Plans available: Regular, Direct

 Options: Growth, Dividend

 Minimum investment: ₹1000 & in multiples of ₹1

33
4) SHORT TERM DEBT FUND:

Investment Objective:

To provide investors with an opportunity to generate regular income through investments in

a portfolio comprising of debt instruments which are rated not below investment grade by a
credit rating agency, and money market instruments.

Fund Details:

 Type: An open- ended income scheme

 Date of allotment: 27/07/2007

 Report as on: 30/04/2018

 AAUM for the month of April 2018: ₹ 7873.53 crores

 AAUM as on April 30, 2018: ₹ 7884.89 crores

 Fund Manager: Mr. Rajeev Radhakrishnan

 Managing since: June- 2008

 Benchmark: CRISIL short term bond Fund Index

 Exit Load: Nil

 Plans available: Regular, Direct

 Options: Growth, Dividend

 Minimum investment: ₹5000 & in multiples of ₹1

34
5) PREMIER LIQUID FUND:

Investment Objective:

To provide attractive returns to the Magnum/Unit holders either through periodic dividends
or through capital appreciation through an actively managed portfolio of debt and money
market instruments. Income may be generated through the receipt of coupon payments, the
amortization of the discount on the debt instruments, receipt of dividends or purchase and
sale of securities in the underlying portfolio.

Fund Details:

 Type: An open- ended liquid scheme

 Date of allotment: 24/11/2003

 Report as on: 30/04/2018

 AAUM for the month of April 2018: ₹ 30950.77 crores

 AAUM as on April 30, 2018: ₹ 32770.41 crores

 Fund Manager: Mr. Rajeev Radhakrishnan

 Managing since: May- 2010

 Benchmark: CRISIL Liquid Fund Index

 Exit Load: Nil

 Plans available: Regular, Direct

 Options: Growth, Dividend

 Minimum investment: ₹50000 & in multiples of ₹1

35
DOCUMENTS REQIURED FOR MAKING INVESTMENT:

Buying a mutual fund is very easy – you could even do it online within a few minutes.
However, like any other financial transaction, it is not devoid of documentation. Providing
the right documents is important because that helps prevent fraudulent deals, averts tax
irregularities and builds people’s trust in you. In this article we will discuss the documents
you would require if you have decided to buy a mutual fund.

 Application form: You may need to fill in more than 1 application form to get a mutual
fund. One would be to open a mutual fund account, another form would be required if
you opt for a SIP plan within the fund, and if you are going for an electronic transfer from
your bank account, an ECS form will also need to be filled. Some Asset Management
Companies may ask for other forms such as a Risk Profile form.

 KYC Compliance: Your PAN has to be verified by under the Know Your Customer
(KYC) norms of the Government of India to be able to invest in mutual funds. You can
check your KYC compliance or register yourself for KYC through the website of CDSL
Ventures Limited (CVL). If you are already KYC-compliant, you need to submit the
KYC acknowledgement letter or copy of the KYC-compliance page. If you are not KYC-
compliant, keep the following documents handy:

i. KYC individual form

ii. Passport-sized photograph

 Proof of identity: Any of the following documents are acceptable as proof of identity:
i. PAN with photograph
ii. Aadhaar
iii. Passport
iv. Voter’s ID card
v. Driving license
 Identity card/document with applicant’s photo, issued by any of the following:
Central/State Government and its Departments, Statutory/Regulatory Authorities, Public
Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions,
Colleges affiliated to Universities.

36
 Proof of address: Any of the following documents can be submitted as proof of identity:
i. Aadhaar
ii. Driving licence
iii. Passport
iv. Voter’s ID card
v. Ration card
vi. Registered lease/sale agreement of residence
vii. Flat maintenance bill
viii. Insurance copy
ix. Utility bills such as landline telephone bill, electricity bill or gas bill, less than 3
months old
x. Bank account statement/passbook, less than 3 months old
xi. Self-declaration by High Court and Supreme Court judges, giving the new address in
respect of their own account
xii. Proof of address issued by Bank Managers of Scheduled Commercial
Banks/Multinational Foreign Banks/Gazetted Officer/Notary Public/Elected
Representatives to the Legislative Assembly or Parliament/a document issued by any
Government or Statutory Authority
xiii. Identity card/document with address, issued by any of the following: Central/State
Government and its Departments. Statutory/Regulatory Authorities, Public Sector
Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges
affiliated to Universities and Professional Bodies such ICAI, ICWAI, ICSI, Bar
Council etc. to their Members
xiv. Proof of address in the name of the spouse is also acceptable.

 Cheque for SIP or lump sum amount, as per your choice. If the cheque doesn’t have your
name on it, then bank statement for the ongoing month also has to be submitted. Blank
cheques are not mandatory any more. Cheques are also not required if you are starting the
mutual fund account online.
 Third party declaration for minors: If the investor is a minor, parents are allowed to
invest on behalf of them. For this, you need to fill out a third party declaration form. For
non-individuals – that is, companies, trusts, partnership firms, Hindu United Families
(HUF), etc. – the following documents are required, apart from or instead of the ones
listed above:

37
 i. Certificate of registration/incorporation
ii. Memorandum and Article of Association
iii. Address proofs
iv. Resolution of the Board of Directors to open an account for investment in Mutual
Funds Schemes
v. List and signature/s of authorized person/s
vi. Deed of declaration of HUF
vii. Bank Statement
viii. Trust deeds (for Trusts)
ix. Power of Attorney (for Trust)
x. Certificate of registration with SEBI (for FIIs)
xi. Self-certification on letterhead (for banks, institutional investors, regulatory bodies,
army organizations and government bodies

Once you have the required documents ready, you are ready to open a mutual fund account
and choose a fund that suits your risk appetite and monetary goals.

38
 Chapter -5
FIndInGS, SuGGeStIonS
and ConCLuSIon

39
 5.1 FINDINGS

 Investors bears the burden of market risk while investing in Mutual Funds.

 Mutual funds are better than share market investment but time bounded.

 It helps in meeting financial goals of the investors.

 Investment for short run can also be done and can enjoy return on that too through
SIPs.

 Difficulty posses in evaluating the good funds or schemes available.

 No prediction of future performance can be done.

 Long term investments are fruitful.

 No fixed regular earning in most of the funds so as people have to choose upon banks
and post office deposits.

 Huge market risk.

 Benefits of everyday return through SIPs.

40
 5.2- SUGGESTIONS

 Investors must be aware of all transactions and its effect.

 Transaction cost should be removed to attract investors.

 Can feature schemes online with few helpful features to attract huge investors group.

 There should be provision of making portfolio of investor’s choice by themselves.

 It requires being more liquid.

41
 5.3- CONCLUSION

Running a successful Mutual Fund requires complete understanding of the peculiarities of the
Indian Stock Market and also the psyche of the small investors. This study has made an
attempt to understand the financial behavior of Mutual Fund investors in connection with the
preferences of Brand (AMC), Products, Channels etc. I observed that many of people have
fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need
the knowledge of Mutual Fund and its related terms. Many of people do not have invested in
mutual fund due to lack of awareness although they have money to invest. As the awareness
and income is growing the number of mutual fund investors are also growing.

After studying & analyzing different mutual fund schemes the following conclusions can be
made:

 Diversified stock portfolios have offered superior long term inflation protection

 Portfolio managers have done a fairly good job in generating positive returns

 Those who want to eliminate the risk element should invest in MF

 The Performance of SBIMF is good, and there is more prospect chances.

42
 BIBLIOGRAPHY

 News papers

 Mutual fund hand book

 www.sbimf.com

 www.moneycontrol.com

 www.amfiindia.com

 www.onlineresearchonline.com

 Www. Mutualfundsindia.com

43