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INTRODUCTION
The Indian financial system based on four basic components like
Financial Market, Financial Institutions, Financial Service, Financial Instruments.
All are play important role for smooth activities for the transfer of the funds and
allocation of the funds. The main aim of the Indian financial system is that
providing the efficiently services to the capital market. The Indian capital market
has been increasing tremendously during the second generation reforms. The first
generation reforms started in 1991 the concept of LPG. (Liberalization,
privatization, Globalization)
Then after 1997 second generation reforms was started, still the it’s
going on, its include reforms of industrial investment, reforms of fiscal policy,
reforms of ex- imp policy, reforms of public sector, reforms of financial sector,
reforms of foreign investment through the institutional investors, reforms banking
sectors. The economic development model adopted by India in the post-
independence era has been characterized by mixed economy with the public sector
playing a dominating role and the activities in private industrial sector control
measures emaciated form time to time. The last two decades have been a
phenomenal expansion in the geographical coverage and the financial spread of our
financial system.
[1]
The spared of the banking system has been a major factor in
promoting financial intermediation in the economy and in the growth of financial
savings with progressive liberalization of economic policies, there has been a rapid
growth of capital market, money market and financial services industry including
merchant banking, leasing and venture capital, leasing, hire purchasing. Consistent
with the growth of financial sector and second generation reforms its need to
fruition of the financial sector. Its also need to providing the efficient service to the
investor mostly if the investors are supply small amount, in that point of view the
Mutual fund play vital for better service to the small investors. The main vision for
the analysis for this study is to scrutinize the performance of five star rated mutual
funds, given the weight of risk, return, and assets under management, net assets
value, book value and price earnings ratio.
[2]
NEED FOR THE STUDY:
The main purpose of doing this project was to know about the mutual
fund and its functioning.
This help to know in detail about the mutual fund industry rights from its
inception stage, growth and future prospects
It also helps in understanding different schemes of mutual funds. Because
my study depends upon the prominent fund in India and their schemes
like equity, income, balance as well as the return associated with those
schemes.
To know the risk and return associated with the mutual fund
To choose the best company for mutual fund investment between the SBI
& RELIANCE.
[3]
OBJECTIVE OF THE STIDY:
To give a brief idea about the benefits available from mutual fund
investment.
To give an idea of the types of the schemes available.
To analysis which provides the better returns from SBI & RELIANCE.
To know how many people are satisfied by their investment (in SBI &
RELIANCE).
To know people behavior regarding the risk factor involved in mutual
fund.
Explore the recent developments in the Mutual funds in India.
To give an idea about the regulations of mutual funds.
[4]
SCOPE OF THE STUDY:
To make people aware about the concept of mutual fund.
To provide information regarding the advantages and dis advantages of
mutual fund.
To advice where to invest or not to invest.
To provide information regarding the type of mutual fund which is
beneficial for whom.
[5]
RESEARCH METHODOLOGY:
Researchrefers to search for the knowledge. One can also define research as a
scientific and systematic search for the pertinent information on a specific topic.
It is an art of scientific investigation
Research methodology:-
It is the way to systematically solve a problem. The methodology
adopted in this study is explained below:-
Research design:
1. Problem defining: In a competitive situation with multiple mutual
funds operating in Indian market, it is necessary to know about the
performance of different mutual funds as the performance of mutual
fund decides about the future mutual fund company. In this study my
focus is upon performance of the investors regarding SBI &
RELIANCE. This is my problem to be studied for research.
2. Literature Survey: I have used newspapers, magazines related to
business & finance apart from the websites.
3. Types of research: The research is qualitative & descriptive in nature.
Qualitative research is that talk about the quality about the subject to
be researched and Descriptive research is one that describes things as
exists in present.
4. Data collection design:
[6]
Sources of data:
Primary Sources-I have used questionnaire as primary source
for collecting data for my study.
Secondary Sources-I had collected my secondary data from
websites and journals.
5. Sampling=It represents whole population, It is the processes of
choosing a sample from whole population. I have choose a sample of
high class & middle class people who have invested in Mutual funds
as a sample.
6. Tools= I have used some charts like- Pie charts, column chart etc.
7. Sampling size= It represents that how many candidates you have
chosen to be filled of your questionnaire or candidates upon whom
you can study. I had chosen sample of 100 candidates.
8. Data Interpretation= data interpretation is that in which we analysis
the whole collected data & tries to give it in simple words to be
understandable
[7]
LIMITATIONS OF THE STUDY:
The lack of information sources for the analysis part.
Though I tried to collect some primary data but they were too inadequate
for the purposes of the study.
Time and money are the critical factors limiting this study.
The data provided by the prospectus may not be 100% correct as they too
have their limitations
.
The study is limited to select the mutual schemes.
[8]
COMPANY PROFILEAbout Bonanza
Bonanza, A leading financial service & Brokerage house working diligently since
1994 can be described in a single word as a “FINANCIAL POWERHOUSE”. With
acknowledged industry leadership in execution and clearing services on Exchange
Trade Derivatives and cash market products. Bonanza has spread its trustworthy
tentacles all over the country with more than 1784 outlets spread across560 cities.
It provides an extensive range of services in equity, commodities, currency
derivatives, wealth management, distribution of third party products, etc.
Being at per with the modern tech-savvy world, Bonanza makes an integrated and an
innovative use o technology. It also enables its clients to trade online as well as of line
and the strategic tie ups with the technology partners has earned Bonanza a
prestigious place as one of the top brokerage houses in the country.
Client focused philosophy backed by memberships of all principal Indian stock and
commodity exchanges makes bonanza stand apart from competitors as a preferred
service provider in the industry for value based services.
Group of companies
Bonanza portfolio Ltd.
Bonanza commodity brokers (p) Ltd.
Bonanza Insurance brokers (p) Ltd.
[9]
Bonanza Global DMCC, Dubai
Sunglow Fin invest Pvt.Ltd.
Bonanza corporate solutions Pvt.
VISION
To be one of the most trusted and globally reputed financial distribution companies.
VALUES
CUSTOMER CENTRIC APPROACH
At Bonanza ,customers come first. And their satisfaction is not just it’s top
priority but also the driving force for it ,every single day.
TRANSPARENCY
Honesty is it’s forte. Bonanza believe in dealing on thoroughly ethical grounds,
being fair & transparent with it’s customers.
MERITOCRACY
Bonanza recognize and appreciate the efforts put in by its employees. And it as
a matter of fact, reward and distinguish each one of them, ceaselessly.
SOLIDARITY
It believe in sharing a forthright and respectful relationship with our business
partners & employees. It consider them both as its team associates, who work
together .succeed together.
[10]
STRENGTHS
Bonanza has over1784 outlets in more than 560 cities in India.
Bonanza has more than 2,64,500 clients comprising of corporate financial
institutions & investors, mutual funds, high net –worth individuals & retail
investors.
Bonanza has a young dynamic team of 1900 professionals.
Strong infrastructure supporting over 3000 trading terminals supporting more
than 350 VSAT’s to support geographic reach & service capabilities.
24*7 service & support via federal support system.
Products & services
Bonanza offers an array of services encompassing varied means of wealth creation,
finance management and accretion.
Brokerage services
Equity
Commodity
Currency
derivatives
Distribution
[11]
Insurance
Mutual funds
IPO
Fixed deposits
Custody services
depository
Institutional broking
Asset management
PMS
Advisory
MANAGEMENT TEAM
Meet the masterminds behind the success of Bonanza – the Directors who are leading
the gigantic force.
Mr.S.P.Gole
The Founder Director of Bonanza who has been instrumental in chartering critical and
strategic initiatives. With an experience of 25 years in the finance business, Mr. Goel
has also been appointed as the director of the OTC Exchange of India. He represents
[12]
NSEIL for the SEBI constituted Dr. J.R. Verma Advisory committee for the
development of the derivatives market in India.
He started his career as a CA in 1987 and soon after he embodied several prominent
committees on settlement issues (COSI), a policy generating body at the NSE of India
Ltd and Dispute Resolution Committee (DRC) of National Stock Exchange Clearing
Corporation Limited (NSCCL).
Mr.ShivkumarGoel
Being the Founder Director of Bonanza, he has been handling IT & risk initiatives
since inception. Formerly, designated as the CEO of SRF Finance Limited, Delhi; Mr.
ShivkumarGoel had also spearheaded the IT committee of the DELHI Stock
Exchange.A CA & CS with more than 30 years of experience, he recently was
nominated as the executive committee member of Depository Participants Association
of India. He is currently a functional member with Association of National Exchanges
Members of India – NR.
[13]
Mr.S.K.Goel
has been Bonanza’s Founder Director and a prominent CA for more than 35 years
now. Mr. S.K. Goel has been mainly heading Bonanza’s Northern and Eastern zone.
He was formerly with the Modi’s&Oswal’s – leading manufacturing companies.
Mr.VishnuKumarGole
The Founder Director of Bonanza with over 30 years of experience, Mr. Vishnu has
proficiently taken charge of Administration, Real Estate Investments and Initiatives
for all the group companies of Bonanza.
[14]
Mr.AnandPrakashGoel
has been playing a pivotal role as Bonanza’s Founder Director by resourcefully
managing Taxation, Compliance and DP. A qualified CA with more than 30 years of
experience in his stride, he has undertaken audits for leading banks across India.
Affiliations:
Equity
National stock exchange of India limited(NSEIL)
The Bombay stock exchange limited(BSE)
OTC Exchange of India limited(OTCEIL)
Commodities
Multi commodity exchange(MCX)
National commodity & derivatives exchange limited(NCDEX)
Dubai gold commodities exchange(DGCX)
National multi commodities exchange(NMCE)
Currency
[15]
National stock exchange of India limited(NSEIL)
The Bombay stock exchange limited(BSE)
MCX-SX Ltd.
Depository participant with CDSL & NSDL
Technology
Single VAST connectivity for NSE/BSE/F&O/NCDEX/MCX/MCX-SX
through virtual private network (VPN) other connectivity links to branches
through leased lines, radio frequency, ISDN &broadband.
High speed and streaming live quote access via internet for
NCDEX/MCX/MCX-SX for branches & retail clients.
Internet based depository access to offer DP services to retail investors.
24*7 online access to a centralized support structure for all products offerings.
Bonanza infrastructure
It have one regional office in every state & having not less than 15
offices in each state with the carpet area of more than 400sq ft for
smaller locations & 10,000+ sqft in the rest.
Using the best technology it have min. 3-5 computers in smaller outlets
which is mandatory for business development. Bigger outlets have
roughly more than 500 computers.
New innovations
[16]
Setting up of new dept ”Bonanza synergy” which would be working as a
support to the sub-brokers & franchisees.
Talisman CRM software
This tracks all the interaction between customer & customer care
executive.
Automatically escalate the clients issue to superior if not attended
with in 24hrs.
Escalations is upto the company’s chairman.
Introduction of bonanza’s fund-of-fund under the PMS umbrella
which helps clients in investing in a portfolio of mutual funds which
are cherry picked by in-house research team to suit changing market &
economic scenario.
BONANZA’S GROWHTH
Growing market share Bonanza has been capturing the market
scenario & growing rapidly to make sure we offer more to our clients,
again & again
[17]
ACHIVEMENTS5th largest in terms of no. of offices for the year 2010-2011*.
Top Equity Broking House in terms of branch expansion for 2008*.
4th in terms of Trading terminals for the year 2010 - 2011*.
6th in terms of Sub Brokers for the year 2010-2011*.
Nominated among the Top 3 for the "Best Financial Advisor Awards 08" in the category of National Distributors – Retail instituted by CNBC-TV18 and OptiMix.
Nominated among the Top 3 for the "Best Financial Advisor Awards 09" in the category of National Distributors – Retail instituted by CNBC-TV18 and OptiMix.
Awarded by BSE Major Volume Driver 04-05,06-07,07-08 .
Ranked 2nd by UTI MF & CNBC TV 18 Financial Awards 2009 in the category Best Financial Advisor- Retail.
Top 4 in Commodity Segment in Bloomberg UTV
India's No. 1 Valuable Financial Advisory & Stock Broking Company - as per Business Leadership Award 2012 organized by the India Leadership Conclave and Indian Affairs Magazines.
WHAT IS MUTUAL FUND
A Mutual Fund is a trust that pools together the savings of a number of investors who
share a common financial goal. The collected money is then invested in capital market
instruments such as shares, debentures and other securities. Each mutual fund has a
[18]
pre-defined objective, so you can choose a fund that is more suitable to your
requirements.
The income earned through these investments and the capital appreciation realized is
shared by its unit holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most appropriate investment option for the common man as it
offers an opportunity to invest in a diversified and professionally managed basket of
securities at a relatively low cost.
CONCEPT OF MUTUAL FUND[19]
MUTUAL FUND
Mutual fund are trusts, which aspect savings from investers and invest the
same in the diversified financial instrument in the terms of objectives set out in
trusts deed in the veiw to reduce the risk and maximize the income and capital
appreciation for distribution for the member.A Mutual fund is a corporation and
the fund managers interest is to professionally manage the funds provided by the
investors and provied a return on them after deducting reasonable management
fees.
The objectives sought to be achieved by the Mutual Fund is to provide an
opportunity for lower income groups to acquire much difficulty financial assets.
They cater mainly to the need of the individual investor whose means are small
and to manage the investor portfolio in manager that provides a regular income,
growth, safety liquidity and diversification opportunities.
Why Select Mutual Fund?[20]
The risk return trade-off indicates that if the investor willing to take
higher risk then corresponding he can expect higher return and vice versa if he
pertains to lower risk instrument, which would be satisfied the lower returns. For
example, if an investors opt for bank FD, which provide a moderate return with
minimum risk. But as he moves ahead to invest in capital protected funds and the
profit-bond that give out more return which is slightly higher as a compare to the
bank deposit but the risk involved also increase in the same proportion .
Thus the investor choose mutual fund as their primary means of investing,
as mutual fund provide professional management, diversification, convenience and
liquidity. That doesn’t mean mutual fund investments are risk free.
This is because the money that is pooled in are not invested only in debts
fund which are les risker but are also invested in the stock market which involves a
higher risk but can expect higher returns. Hedge fund involves a very high risk
since it is mostly traded in the derivatives market which is consider very volatile.
[21]
HIGHER RISK MODERATE RETURN
HIGHERRISKHIGHERRETURN
LOWER RISK LOWER RETURN
LOWERRISKLOWERRETURN
RETURN RISK MATRIX
TYPES OF MUTUAL FUND[22]
VETURE CAPITAL
MUTUAL FUNDBANK FD & POSTAL SAVING
EIQUITY
There are number of mutual fund to suit the need and preference of the investors.
The choice of the fund is linked to the demand of the investor. Does he expect a
stable low earning, risky higher earnings, capital appreciation, etc. ?The objective
of the earing helps in deciding the type of fund where investment is made. To
achieve the different objective of the investor mutual fund adopt different
strategies and accordingly offer different schemes of investment.
TYPES OF MUTUAL FUND
A). BY STRUCTURE
1. Open - Ended Schemes:
[23]
OPEN-ENDED SCHEMESCLOSE-ENDED SCHEMESINTERVAL SCHEMES
An Open ended scheme means a scheme of mutual funds which offer units for sale
without specifying any duration of redemption. These scheme do not have a fixed
maturity and entry to the fund is always open to the investors who can subscribed it
at any time and also they get their holding at any time. The funds redeemed and
repurchase the units/share at periodically announced rate which are based open the
Net Asset Value (NAV) of the fund. Thus open-ended schemes provide better
liquidity to the investors. For ex-Dhanaraksha and Dhanavirdhi of LIC mutual fund
are the open ended schemes.
2. Close - Ended Schemes:
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. 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. For ex-Canshare of Canara
bank, Dhanashree of LIC mutual fund are some of the close-ended schemes.
[24]
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:
• Diversified Equity Funds
• Mid-Cap Funds
• Sector Specific Funds
• Tax Savings Funds (ELSS).
2. Debt Funds:
[25]
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:
• 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.
• Income Funds: Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities.
• 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.
• 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
[26]
for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months..
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 viz,
C). BY INVESTMENT OBJECTIVE:
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.
Income Schemes:[27]
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.
Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically
distributing a part 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).
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.
Load Funds:
[28]
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.
OTHER SCHEMES:
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.
Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as
the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only
[29]
those stocks that constitute the index. The percentage of each stock to the total
holding will be identical to the stocks index weight age.
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.
[30]
ADVANTAGES OF MUTUAL FUND1. Management:
One of the biggest advantage is that in very low cost the investor gets his
investment managed by experts. If they want to get the services solely for
their investment, it can be very expensive but by investing in MF they can
take advantage of the scale.
2. Scale Advantage:
The transaction costs of a single individual is very less because mutual
funds buy and sell in big volumes.
3. Diversification:
With mutual fund investment your money gets diversified in a lot of
things, which helps in minimizing the risk factor. Also if one particular
sector doesn’t perform well the loss can be compensated with profits
made in other sectors.
4. Liquidity and SimplicityYou can sell or buy mutual funds anytime. So mutual funds are good if
you want to invest in something which you can liquidate easily. Also MF
are very simple to buy and sell
5. Reduced risk:
As mutual fund invest in large number of companies and are managed
professionally, the risk factor of the investor is reduced.
[31]
6. Tax Advantages:-There are certain schemes of mutual fund which provides tax advantages
under the Income Tax Act. Thus, the tax liability of the investor is also
reduced when he invest in these schemes of mutual funds.
7. Flexibility:
Mutual fund provide flexible investment plan to its subscribers such
as ,regular investment plan, regular withdrawal plan and dividend
reinvestment plans etc. Thus an investor can invest or withdraw fund
according to his own requirements.
8. Investor protection:
Mutual funds are regulated and monitored by the Securities and Exchange
Board of India (SEBI) provide better protection to the investors, impart a
greater degree of flexibility and facility competition.
[32]
DISADVANTAGES OF MUTUAL FUND:-
1. Risks and Cost:-
Changing market conditions can create fluctuations in the value of a
mutual fund investment. Also there are fees and expenses associated with
investing in mutual funds that do not usually occur when purchasing
individual securities directly.
2. No Guarantees:
As Mutual funds invest in debt as well equities, there are no sure returns.
Returns depends on the market conditions.
3. No Control:-
Investor does not have control on investment, all the decisions are taken
by the fund manager. Investor can just join or leave the show.
[33]
MUTUAL FUNDS IN INDIA
In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India
invited investors or rather to those who believed in savings, to park their money in
UTI Mutual Fund.
For 30 years it goaled without a single second player. Though the 1988 year saw
some new mutual fund companies, but UTI remained in a monopoly position.
The performance of mutual funds in India in the initial phase was not even closer
to satisfactory level. People rarely understood, and of course investing was out of
question. But yes, some 24 million shareholders were accustomed with guaranteed
high returns by the beginning of liberalization of the industry in 1992. This good
record of UTI became marketing tool for new entrants. The expectations of
investors touched the sky in profitability factor. However, people were miles away
from the preparedness of risks factor after the liberalization.
[34]
The net asset value (NAV) of mutual funds in India declined when stock prices
started falling in the year 1992. Those days, the market regulations did not allow
portfolio shifts into alternative investments. There was rather no choice apart from
holding the cash or to further continue investing in shares. One more thing to be
noted, since only closed-end funds were floated in the market, the investors
disinvested by selling at a loss in the secondary market.
The securities and Exchange Board of India (SEBI) came out with comprehensive
regulation in 1993 which defined the structure of Mutual Fund and Asset
Management Companies for the first time. Several private sectors Mutual Funds
were launched in 1993 and 1994. The share of the private players has risen rapidly
since then. Currently there are 34 Mutual Fund organizations in India managing 1,
02,000 crores.
At last to mention, as long as mutual fund companies are performing with lower
risks and higher profitability within a short span of time, more and more people
will be inclined to invest until and unless they are fully educated with the dos and
don’ts of mutual funds.
[35]
Major Mutual fund Companies in India:
ABN AMRO Mutual Fund
Reliance Mutual Fund
HDFC Mutual Fund
HSBC Mutual Fund
ING Vysya Mutual Fund
Prudential ICICI Mutual Fund
SBI Mutual Fund
TATA Mutual Fund
UTI Mutual Fund
Standard Chartered Mutual fund
Morgan Stanley Mutual Fund
LIC Mutual Fund
GIC Mutual Fund
[36]
Association of Mutual fund in India (AMFI)With the increase in mutual fund players in India, a need for mutual fund
association in India was generated to function as a non-profit organization.
Association of Mutual Funds in India (AMFI) was incorporated on 22nd August,
1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has
been registered with SEBI. Till date all the AMCs are that have launched mutual
fund schemes are its members. Association of Mutual Funds India has brought
down the Indian Mutual Fund Industry to a professional and healthy market with
ethical lines enhancing and maintaining standards. It follows the principle of both
protecting and promoting the interests of mutual funds as well as their unit holders.
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its
Board of Directors. The objectives are as follows:
This mutual fund association of India maintains a high professional and
ethical standards in all areas of operation of the industry.
It also recommends and promotes the top class business practices and code
of conduct which is followed by members and related people engaged in the
[37]
activities of mutual fund and asset management. The agencies who are by
any means connected or involved in the field of capital markets and financial
services also involved in this code of conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in the
mutual fund industry.
Association of Mutual Fund of India do represent the Government of India,
the Reserve Bank of India and other related bodies on matters relating to the
Mutual Fund Industry.
It develops a team of well qualified and trained Agent distributors. It
implements a programme of training and certification for all intermediaries
and other engaged in the mutual fund industry.
AMFI undertakes all India awareness programme for investors in order to
promote proper understanding of the concept and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate
information’s on Mutual Fund Industry and undertakes studies and research
either directly or in association with other bodies.
[38]
SEBI GUDIELINE FOR MTUAL FUND
SEBI Regulation Act 1996
Establishment of a Mutual Fund:
In India mutual fund play the role as investment with trust, some of the formalities
laid down by the SEBI to be establishment for setting up a mutual fund. As the part
of trustee sponsor the mutual fund, under the Indian Trust Act, 1882, under the
trustee company are represented by a board of directors. Board of Directors is
appoints the AMC and custodians. The board of trustees made relevant agreement
with AMC and custodian. The launch of each scheme involves inviting the public
to invest in it, through an offer documents
Depending on the particular objective of scheme, it may open for further sale and
repurchase of units, again in accordance with the particular of the scheme, the
scheme may be wound up after the particular time period.
1. The sponsor has to register the mutual fund with SEBI
[39]
2. To be eligible to be a sponsor, the body corporate should have a sound track
record and a general reputation of fairness and integrity in all his business
transactions.
Means of Sound Track Records
The body corporate being in the financial services business for at least five years
Having a positive net worth in the five years immediately preceding the
application of registration.
Net worth in the immediately preceding year more than its contribution to the
capital of the AMC.
Earning a profit in the three out of the five preceding years, including the fift
3. The sponsor should hold at least 40% of the net worth of the AMC.
4. A party which is not eligible to be a sponsor shall not hold 40% or more of the
net worth of the AMC.
5. The sponsor has to appoint the trustees, the AMC and the custodian.
[40]
6. The trust deed and the appointment of the trustees have to be approved by SEBI.
7. An AMC or its officers or employees can not be appointed as trustees of the
mutual fund.
8. At least two thirds of the business should be independent of the sponsor.
9. Only an independent trustee can be appointed as a trustee of more than one
mutual fund, such appointment can be made only with the prior approval of the
fund of which the person is already acting as a trustees.
LAUNCHING OF A SCHEMES
Before its launch, a scheme has to be approved by the trustees and a copy of its
offer documents filed with the SEBI.
1. Every application form for units of a scheme is to be accompanies by a
memorandum containing key information about the scheme.
2. The offer document needs to contain adequate information to enable the
investors to make informed investments decisions.
3. All advertisements for a scheme have to be submitted to SEBI within seven days
from the issue date. [41]
4. The advertisements for a scheme have to disclose its investment objective.
5. The offer documents and advertisements should not contain any misleading
information or any incorrect statement or opinion.
6. The initial offering period for any mutual fund schemes should not exceed 45
days, the only exception being the equity linked saving schemes.
7. No advertisements can contain information whose accuracy is dependent on
assumption.
8. An advertisement cannot carry a comparison between two schemes unless the
schemes are comparable and all the relevant information about the schemes is
given.
9. All advertisements need to carry the name of the sponsor, the trustees, the AMC
of the fund.
10. All advertisements need to disclose the risk factors.
11. All advertisements shall clarify that investment in mutual funds is subject to
market risk and the achievement of the fund’s objectives can not be assured.
[42]
12. When a scheme is open for subscription, no advertisement can be issued stating
that the scheme has been subscribed or over subscription.
[43]
REVIEW OF LITERATUR
Mutual Fund
SBI MUTUAL FUND
SBI Mutual Fund
Setup Date Jun-29-1987
Incorporation Date Feb-07-1992
Sponsor State Bank of India
Trustee SBI Mutual Fund Trustee Company Private Limited
Chairman Mr. Pratip Chaudhry
CEO / MD Mr. Deepak Kumar Chatterjee
CIO Mr. Navneet Munot
Compliance Officer Ms. Vinaya Datar
Investor Service Officer Mr. C A Santosh
Assets Managed Rs. 59163.19 crore (Jun-30-2013)Other DetailsAuditors Haribhakti & Co / M/S. Chandabhoy & Jassoobhoy
Custodians Bank of Nova Scotia / Citi Bank / HDFC Bank / Stock Holding Corporation of India
Registrars Computer Age Management Services Pvt. Ltd, Computronics Financial Services (I) Ltd, Datamatics
[44]
Financial Software Services Ltd
Address 191 Maker Tower E, Cuffe Parade, Mumbai - 400005.
Telephone Nos. 022 - 22180221-27
Fax Nos. 022 � 22189663
E-mail [email protected]
Products Available in SBI Mutual Fund Schemes:-
There are six basic asset classes, which we manage, and variations of these six
asset classes form various products:
Equity Schemes
Hybrid Schemes
Debt Income Schemes
Fixed Maturity Plans
Liquid Schemes
Exchange Trading Funds
Equity Schemes – The primary objective of the equity asset class is to provide
capital growth / appreciation by investing in the equity and equity related
instruments of companies over medium to long term.
Hybrid Schemes – These schemes invest in a mixture of debt and equity securities
in different proportions as prescribed in the Scheme Information Document.
[45]
Debt Income Schemes – These schemes generally invest in fixed income
securities such as bonds, corporate debentures, government securities (gilts) and
also money market instruments.
Liquid Schemes – The strategy for liquid funds include investments in short
investment horizon, which includes ‘cash’ assets such as treasury bills, certificates
of deposit and commercial paper.
Fixed Maturity Plans – These are closed ended debt schemes with a fixed
maturity date and they invest in debt & money market instruments maturing on or
before the date of the maturity of the scheme.
Exchange Trading Funds – An Exchange Traded Fund (ETF) is a basket of
securities that is traded on the stock exchange, similar to a stock. The units of ETFs
can be bought and sold directly on the exchange, through a stockbroker during the
trading hours.
RELIANCE MUTUAL FUND Reliance mutual fund (RMC) was established as trust under Indian Trusts
Act, 1882. The sponsor of RMF is Reliance Capital limited and Reliance Capital
Trustee Co. limited is the Trustee. It was registered on June 30, 1995 as Mutual
capital Mutual fund which was change on March 11, 2004. RMF was formed for
[46]
launching of various schemes under which units are issued to the public with a
view to contribute to the capital market and to provide investors to the
opportunities to make investments in diversified securities.
RMF is one of the India’s leading Mutual funds, with Average Assets
Under Management(AAUM) of Rs. 88,388 crs (AAUM for 30 th Apr 09) and an
investor of over 71.53 lacs.Reliance Mutual Fund , a part of Reliance company, is
one of the fastest growing mutual fund in the country. RMF offers investors a well-
rounded portfolio of products to meet varying investor requirements and has
presence in 118 cities across the country.
Reliance Mutual Fund constantly endeavors to launch innovative
products and customer service intimates to increase value to investors.” RMF
schemes are managed by Reliance Capital asset Management Limited., a
subsidiary of Reliance Capital Limited.
Sponsor: Reliance Capital Limited.
Trustee: Reliance Capital Trustee Co. Limited.
1. DO YOU INVEST IN MUTUAL FUND?
[47]
YESNO
0
20
40
60
80
100
High
Interpretation:- All the candidates who are asked to fill the questionnaire have invested in mutual fund.
2. With which company do you have invest in Mutual fund?
[48]
YES 100
NO 0
SBI 60
RELIANCE 30
OTHERS 10
0
10
20
30
40
50
60
60
30
10
SBI RELIANCE OTHERS Series4 Series5 Series6Axis Title
Axis
Titl
e
Interpretation:
Out of 100 candidates up to 60 have invest in Mutual Fund with SBI & 30 have invested with Reliance. 10 have invested in others mutual funds.
3. How many number of investors are investing in the following group?
[49]
Age Investors
15-25 8
25-35 12
35-45 60
More than 45 20
0
10
20
30
40
50
60
812
60
20
15-25 25-35 35-45 More than 45Axis Title
Axis
Titl
e
Interpretation:
60 investors are of age between 35-45.20 are of age more than 45. 12 are of between of 25-35. 8 are of 15-25. This data shows that many investors are of middle age & there are less investors of young age in mutual fund.
[50]
4.What is your income? (Yearly based)
[51]
0
10
20
30
40
50
60
70
0
10
20
70
1 lakh 2-4 lakh 4-5 lakh More than 5Axis Title
Axis
Title
Interpretation:
[52]
INCOME INVESTORS
1 lakh O
2-4 lakh 10
4-5 lakh 20
More than 5 70
Up to 70 investors have income more than 5 lakh. 20have between 4-5 lakh.10 investors have income between 2-4 lakh & there is no investor who have income up 10 lakh
5. From where you come to know this company’s Mutual Fund schemes?
INCOME INVESTORS
Family & Relatives 35
Friends & Peers 40
Company Employee 15
Others 10
0
5
10
15
20
25
30
35
40 35
40
15
10
Family & Relatives Friends & Peers Company Employee OthersAxis Title
Axis
Titl
e
Interpretation:
Many investors (up to 35) have been come to know about the company to be invested by their family& relatives.40 have been known by their friends peers.15
[53]
& have been come to know by company employees & 10 by others. This means many have come to know by their friends & peers.
6.What is the time duration of your investment?
YEAR INVESTORS
0-1 year 15
1-2 year 35
2-4 year 30
More than 4 10
0
5
10
15
20
25
30
35
15
35
30
20
0-1 year 1-2 year 2-4 year more than 4Axis Title
Axis
Titl
e
Interpretation:
[54]
15 investors have time of investment less than one year. 20 have time duration of their investment between of 1-2 year. 30 have between 2-4 year & 35 have more than 4 year.So, we can say that 35 investors have more experience than others.
7.Are you satisfied by service of the company’s employees / peoples behavior?
[55]
0
5
10
15
20
25
30
35
15
35
30
15
5
Highly satisfied Satisfied Neutral Dissatisfied Highly DissatisfiedAxis Title
Axis
Title
Interpretation:
[56]
INVESTORS
Highly satisfied 15
Satisfied 35
Neutral 30
Dissatisfied 15
Highly Dissatisfied 5
Out of 100 investors 15 are highly satisfied. 35 are satisfied. 30 are neutral towards employee’s behavior of a company. 15 are dissatisfied. 5 are highly dissatisfied. We say that many people are satisfied by the employee behavior.
8.What is your risk profile?
0
10
20
30
40
50
60
70
20
65
15
Innovator Moderate Risk adverseAxis Title
Axis
Titl
e
Interpretation:[57]
Innovator 20
Moderate 65
Risk adverse 15
20% investors are innovator means they like to take risk for more returns. 15% are moderate towards risk means they are indifferent towards risk. 65% are risk adverse means they mainly try to avoid risk.
9.What you feel about the company norms, documentation & formalities?
[58]
Highly sat -isfied; 15;
15%
Satisfied; 25; 25%
Neutral; 40; 40%
Dissat -isfied;
15; 15%
Highly Dissatisfied; 5; 5%
Highly satisfiedSatisfiedNeutralDissatisfiedHighly Dissatisfied
Interpretation:
[59]
INVESTORS
Highly satisfied 15
Satisfied 25
Neutral 40
Dissatisfied 15
Highly Dissatisfied 5
15% investors are highly satisfied by company’s documentation policy (filling up the forms etc.). 25% are satisfied. 40% never cares about it or are moderate towards it, 15% are dissatisfied by it & 5% are highly dissatisfied.
Q.10Which banking mutual fund offer you good investment plan?
Company Name No of People(100) Percentage of respondent
SBI 60 60
RELIANCE 30 30
OTHERS 10 10
0
10
20
30
40
50
60
60
30
10
SBI RELIANCE OTHERSAxis Title
Axis
Titl
e
[60]
INTERPRETATION: Here 60% people choose SBI which is provide better investment plan,30% choose Reliance and rest are others.
Q.11.Which banking mutual fund offer a lot of tax saving?
Company Name No of People(1OO) Percentage of respondent
SBI 63 63
Other 7 7
RELIANCE 30 30
0
10
20
30
40
50
60
7063
7
30
SBI OTHER RELIANCEAxis Title
Axis
Titl
e
[61]
INTERPRETATION: Here 63% people choose SBI which is provide better investment plan,30% choose Reliance and rest are others.
Q.12Which banking mutual fund offers you a large number of product &
services?
Company Name No of People(100) Percentage of respondent
SBI 65 65
RELIANCE 25 25
OTHERS 10 10
[62]
0
10
20
30
40
50
60
7065
25
10
SBI RELIANCE OTHERSAxis Title
Axis
Titl
e
INTERPRETATION: Here 65% people choose SBI which is provide better investment plan,25% choose Reliance and rest are others.
Q.13Which banking mutual fund offer you a good e-mail facility?
Company Name No of People(100) Percentage of respondent
SBI 55 55
RELIANCE 40 40
OTHERS 5 5
[63]
0
10
20
30
40
50
60
SBI
RELIANCE
OTHERS
SBI; 55
RELIANCE; 40
OTHERS; 5
Chart TitleAx
is T
itle
INTERPRETATION: Here 55 people choose SBI which is provide better investment plan,40 choose Reliance and rest are others.
14.What you say which provides better returns?
[64]
SBI 68
RELIANCE 32
10
10
20
30
40
50
60
70
68
32
RELIANCEAxis Title
Axis
Title
Interpretation:
According to collected data 68 investors thinks that SBI provides better returns whereas 32 to think that RELIANCE provides better returns.
15. Would you like to exchange your investment with one another between SBI &RELIANCE?
YES 15
NO 85
[65]
0
10
20
30
40
50
60
70
80
90
15
85
Interpretation:15 Investor said that they would like to change their investment each another between SBI & RELIANCE. But 85 investor say that they are ok with their companies and they wouldn’t like to exchange their investment.
[66]
CHAPTER FINDINGS & SUGGESIONS
FINDINGS:- In my research I have founded following things:-
Investors have more faith on SBI mutual fund.
As the age increases investors are much satisfied, see more risk & become
more risk adverse.
Old peoples & Widows prefer lower risk.
Investors are not highly satisfied by company rules & employee behavior.
Investors thinks that SBI provides better returns than RELIANCE.
[67]
SUGGESSION:- RELIANCE bank should provide better returns to its investors as compare to
SBI.
Both companies should try to invest in securities for better profits.
Both should try to satisfy their customer by providing better customer
service or by improving customer relationship management.
Companies should try to make people initiatives towards risk.
Investors should be made fully aware of the concept of mutual fund & all the
terms and conditions.
It should more emphasize in advertising, as it is the most Powerful tool to
position and in the mindset of customers.
CONCLUSION:- To conclude we can say that mutual fund is very much profitable tool
for investment because of its low cost of acquiring fund, tax benefit, and
diversification of profit and reduction of risk. Many investor who have invested in
MUTUAL FUND have invested with SBI and then also think that it provides better
return than RELIANCE. There is also an effect of age on mutual fund investors
like; old people & widows want regular returns than capital appreciation.
Companies can adopt new techniques to attract more & more investors. In my
study I was supposed to do comparative analysis the mutual fund of SBI &
RELIANCE and I had found that people consider SBI better than RELIANCE
have also respondents and it can increase its investors by improving itself in some
terms.[68]
Such as:-
To conclude we can say mutual fund is a best investment vehicle for old and
widow, as well as to those who want regular returns on their investment.
Mutual fund is also better and preferable for those who want their capital
appreciation.
Both the companies are doing considerable achievements mutual fund
industry.
There are also so many competitors involved those effects on both
companies.
BIBLIOGRAPHY
REFERENCE BOOK:
FINANCIAL MARKET AND SERVICES- Gordon and Natarajan.
INVESTMENT MANAGEMENT - V.K.BHALLA
RESEARCH METHODOLOGY – KOTHARI.
WEBSITE:
www.mutualfundindia.com
www.sbimf.com
www.reliancemutual.com[69]
www.amfiindia.com
www.bonanzaonline.com
MAGAZINES:
Business Today
Business Standard
Mutual Fund Quarterly Report.
QUESTIONNAIRE
Name: _________________ Age:______
Occupation: ____________.
Q.1 Do you invest in mutual fund?
SBI
RELIANCE
OTHERS
Q.2 which banking mutual fund do you prefer for mutual Fund?
SBI
ICICI
[70]
HDFC
RELIANCE
OTHER
Q.3Which banking mutual fund offer you good investment plan?
Reliance Money
UTI
OTHER
Q.4Which banking mutual fund offer a lot of tax saving?
Reliance Money
UTI
OTHER
Q.5Which banking mutual fund offers you a large number of product &
services?
Reliance Money
UTI
OTHER
Q.6 which banking mutual fund offers you a good e-mail facility?
Reliance Money
[71]
UTI
OTHERS
Q.7 What is your Age?
15-25
25-35
35-45
Above 45
Q.8 What is your income? (Yearly based)
1 lakh
2-4 lakh
4-5 lakh
More than 5
Q.9 From where you come to know about this company’s mutual fund
schemes?
Family members & relatives
Friends & peers
Company employees
Others
Q.10 What is the time duration of your investment?[72]
0-1
1-2
2-4
More than 4
Q.11 Are you satisfied by service of the company’s employees/people’s
behavior?
Highly satisfied
Satisfied
Neutral
Dissatisfied
Highly dissatisfied
Q.12 What is your risk profile?
Innovator
Moderate
Risk adverse
Q.13 What you feel about the company norms, documentation & formalities?
Highly satisfied
Satisfied
Neutral
Dissatisfied
Highly dissatisfied
Q.14 What you say which provide better return?
[73]
SBI
RELIANCE
Q.15 Would you like to exchange your investment with one another between
SBI & RELIANCE
YES
NO
[74]
