chepter two mutual fund final
TRANSCRIPT
-
8/4/2019 Chepter Two Mutual Fund Final
1/38
(CHAPTER TWO) INTRODUCTION TO MUTUAL FUND
2.1 MUTUAL FUND
2.2 DEFINATION OF MUTUAL FUND
2.3 HISTORY OF MUTUAL FUND
2.4 TYPES OF MUTUAL FUND
2.5 SEBIS REGULATIONS FOR MUTUAL FUND INDUSTRY
2.6 ADVANTAGES OF MUTUAL FUND
2.7 DROWBACK OF MUTUAL FUND
2.1 MUTUAL FUND
Mutual funds are dynamic financial institutions which play a crucial role in
an economy. It mobilizes the savings and invests them in the capital market.
Thus, it acts as a vehicle between savings and capital market. It is an
institution that invests the pooled funds of public to create a diversified
portfolio of securities. Pooling is the key to mutual fund investing.Thus a Mutual Fund is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with an investible surplus of as
little as a few thousand rupees can invest in Mutual Funds. Each Mutual
Fund scheme has a defined investment objective and strategy.
1
-
8/4/2019 Chepter Two Mutual Fund Final
2/38
Operating Cycle of Mutual Fund
Trans- Investor
Invest Money
ferred To OPERATING
CYCLE
OF
MUTUAL Portfolio
Returns FUND Management
Company
Give Various
Reinvest with
Investment
Avenues
Here, is a chart which depicts the circular flow of mutual fund. It begins
with investors and ends with investor. Here, an investor invests the money
with portfolio Management Company, which divert or re invest money in
various avenues available in the market. Over a period of time, these
investments give the returns to the investors. That returns are again diverted
in investment by the investor, which continues forever. So, to conclude
mutual fund is cyclical in nature.
The Asset Management Companies (AMCs) manage different types of
mutual fund schemes. Mutual funds have become a hot favourite of millionsof people all over the world. People prefer mutual fund to bank deposits, life
insurance and even bonds because with a little money, they can get into the
investments game.
2
-
8/4/2019 Chepter Two Mutual Fund Final
3/38
2.2 DEFINITIONS
1. Frank Reilly defines mutual fund as, intermediaries that bring a wide
variety of securities within the reach of the most modest investors.
2. The Security Exchange Board of India (SEBI) defines mutual fund as,
a fund established in the form of a trust by a sponsor, to raise monies
by the trustees through the sale of units to public, under one or more
schemes, for investing in securities in accordance with these
regulations.
2.3 HISTORY OF MUTUAL FUNDThe history of mutual fund dates back to 1830 when William I established
first such fund in Belgium. Almost 40 years later, foreign and colonial
government trust was established in England in 1868 followed by
Massachusetts Investors Trust in Boston, USA in 1924. Mutual funds
origined in Belgium, where, in 1882, a company was started to finance
investments in national industries associated with high risks under the name
of Societe Generale de Belgiue. In the 1860s, this movement spread to
England.
In 1868, the Foreign and Colonial Government Trust was formed to spread
risks for investors over a large number of securities. The history of mutual
fund started in the USA from the beginning of the 20th century.In recent
years, mutual fund in Japan and Far East have been showing good
performance, probably as a result of growth and performance of the
economies of these countries and their capital markets. Mauritius and the
Netherlands are emerging as tax havens for offshore mutual fund. Mutual
funds are thus a global financial culture now.
3
-
8/4/2019 Chepter Two Mutual Fund Final
4/38
In India, Mutual Fund business was established by Unit Trust of India in
1964.Mutual fund Industry in India received a boost when it was thrown
open to private sector in 1994. A mutual fund is a collective investment
vehicle that pools money from various investors and invests it in debt, equity
and money market instruments, based on a stated set of objectives. These
objectives define the mutual fund and are stated in the offer document.
The origin of the mutual funds industry goes back to the time when mutual
fund was introduced by UTI in the year 1963. Though the growth has been
relatively slow, it accelerated since 1987 when there were players outside
the UTI, who entered the industry. In the past decade, Indian mutual find
industry had seen a remarkable improvement both quality wise and quantity
wise. Before the end of the monopoly in market, the Assets Under
Management (AUM) was Rs.67 bn.
There are 4 phases in the Indian Mutual Funds industry:
First Phase - 1964-87
Second Phase - 1987-1993 (Entry of Public Sector Funds)
Third Phase - 1993-2003 (Entry of Private Sector Funds)
Fourth Phase - since February 2003
4
-
8/4/2019 Chepter Two Mutual Fund Final
5/38
MILESTONES OF MUTUAL FUND INDUSTRY IN INDIA
1964: A concept arrives in the market with first mutual fund product US64.
1987: End of UTIs monopoly as SBI and Canara Bank entered the market.
1989: Launch of LIC Mutual Fund.
1993: Industry opens to private sector with Kotharis regulations on Mutual
Fund.
1994: Morgan Mania, Foreign Mutual Fund arrives.
1998: Funds started underperforming with US 64 flop shows.
2000: Shake out imminent.
2001: US-64 redeemed as per pre-determined rate scheme.
Performance Appraisal by SEBI and AMFI for debt schemes.
2002: SEBI to control UTI also.
2003: Fund of Funds floated
2004: Mutual Funds allowed investing in overseas securities.
2.4 TYPES OF MUTUAL FUND
1. Open ended scheme
When a fund is accepted and liquidated on a continuous basis by a
mutual fund manager, it is called open ended scheme.
In an open ended mutual fund, one can buy and sell units at any
time, so they are more convenient at net asset value.
Main objective is income generation.
5
-
8/4/2019 Chepter Two Mutual Fund Final
6/38
They are not listed on stock market.
2. Close ended scheme
In these funds, one can buy units from the fund house only during the
New Fund Offering period.
Most of these funds have restricted exit option for investors, usually at
a pre determined interval.
These funds have fixed tenure.
Main objective is capital appreciation.
3.Income fund
The investors who need regular returns can go for this scheme.
The scheme offers the maximum current income, whereby the income
earned by units is distributed periodically.
Main objective is to declare regular dividend.
It is for short run.
It is best suited to old and retired people.
4. Growth fund
The aim of growth funds is to provide capital appreciation over the
medium to long- term.
6
-
8/4/2019 Chepter Two Mutual Fund Final
7/38
Such schemes normally invest a major part of their corpus in equities.
Such funds have comparatively high risks.
It is also known as nest eggs or long haul investments.
This type of fund is best suited to salaried and business people.
5. Balance fund
The aim of balanced funds is to provide both growth and regular
income.
Such invest both in equities and fixed income securities in the
proportion indicated in their offer documents.
These are appropriate for investors looking for moderate growth.
They generally invest 40-60% in equity and debt instruments.
6. Specialized fund
Basically this mutual funds units are for meeting the specific needs of
specific categories of people such as pensioner, children, widow etc.
these funds open the door for foreign investors.
7. Money Market Mutual Fund
They are open ended funds but they invest in highly liquid and safesecurities. They pay money market rate of interest. MMMF can invest
only in short term instruments such as CPs, CD, Treasury bills etc.
7
-
8/4/2019 Chepter Two Mutual Fund Final
8/38
The repurchase could be subject to minimum lock in period of 3
months.
RBI has fixed minimum amount of Rs. 100000 as a investment for
investing in MMMF.
8. Taxation fund
Certain mutual fund schemes offer tax rebate on investments made in
equity shares, under Section 88 of the Income Tax Act 1961.
Suitable to salaried people who want to enjoy tax rebates in the month
of February and March.
9. Index fund
They are linked to a specific index of share prices.
It means that the funds mobilized under such scheme are invested
principally in the securities of companies whose securities are
included in the index concerned and in the same weight age.
10. Gilt funds
These funds invest exclusively in government securities.
Government securities have no default risk.
NAVs of these schemes also fluctuate due to change in interest rates
and other economic factors as is the case with income or debt oriented
schemes.
8
-
8/4/2019 Chepter Two Mutual Fund Final
9/38
11. Leverage fund
These funds are also called as borrowed fund since they are used
primarily to increase the size of the value of portfolio of the mutual
fund.
The value increases the earning capacity of the fund increases.
The gains are distributed to the unit holders.
Options mainly call option are used by these funds.
12. Fund to Fund
Here funds of one mutual fund are invested in the units of the other
mutual funds.
There are number of funds that direct investment into a specified
sector of the economy.
These makes diversified and yet intensive investments of funds
possible.
13. Sectoral fund
9
-
8/4/2019 Chepter Two Mutual Fund Final
10/38
When the manager of mutual funds invest the amount collected from a
wide variety of small investors directly in various specific sectors of
the economy, such funds are called as sectoral mutual fund.
14. Bond fund
It is a type of mutual fund whose strength is derived from bond based
investments. Advantage of the fund is secure and steady income.
It carries risk and has little or no capital appreciation.
15. Other funds
In addition to the above schemes, following are some other
schemes mentioned below:
a) Load funds: Where mutual fund managers charge a fee over
and above the NAV from purchaser.
b) No load funds: Where no load fee is charged because very
little effort is made to promote the sale of the funds unit, except
through direct advertising.
c) Offshore mutual fund: Where the funds are mobilized from
abroad for deployment in the Indian market.
d) Other funds: Such as property funds, art funds, commodity
funds, energy funds, etc.
2.5 SEBIS Regulations for Mutual Fund Industry
10
-
8/4/2019 Chepter Two Mutual Fund Final
11/38
There was no uniform regulation of the mutual funds industry till a few
years ago. The UTI was regulated by a special Act of Parliament while funds
promoted by public sector banks were subject to RBI Guidelines of July
1989. The Securities & Exchange Board of India (SEBI) was formed in 1993
as a capital market regulator. One of its responsibilities was to regulate the
mutual fund industry and it came up with comprehensive regulations for the
industry in 1993. The rules for the formation, administration and
management of mutual funds in India were clearly laid down. Regulations
also prescribed disclosure requirements.
The regulations were thoroughly reviewed and re-notified in December
1996. The revised guidelines tighten the accounting and disclosure
requirements in line with recommendations of The Expert Committee on
Accounting Policies, Net Asset Values and Pricing of Mutual Funds. The
SEBI (Mutual Funds) Regulations, 1996 have been further amended in 1997,1998 and 1999. Today, all mutual funds are regulated by SEBI. Efforts have
been made to bring UTI schemes under SEBI's ambit with the result that all
schemes, with the exception of Unit 64, are now regulated by the capital
market regulator.
Regulatory Aspects
Schemes of a Mutual Fund The asset management company shall launch no scheme unless the
trustees approve such scheme and a copy of the offer document has
been filed with the Board.
Every mutual fund shall along with the offer document of each
scheme pay filing fees.
The offer document shall contain disclosures which are adequate in
order to enable the investors to make informed investment decision
including the disclosure on maximum investments proposed to be
made by the scheme in the listed securities of the group companies of
the sponsor A close-ended scheme shall be fully redeemed at the endof the maturity period. "Unless a majority of the unit holders
otherwise decide for its rollover by passing a resolution".
The mutual fund and asset management company shall be liable to
refund the application money to the applicants,-
(i) If the mutual fund fails to receive the minimum subscription
amount referred to in clause (a) of sub-regulation (1);
11
-
8/4/2019 Chepter Two Mutual Fund Final
12/38
(ii) If the moneys received from the applicants for units are in
excess of subscription as referred to in clause (b) of sub-
regulation(1).
Rules Regarding Advertisement
The offer document and advertisement materials shall not be
misleading or contain any statement or opinion, which are incorrect or
false.
Investment Objectives and Valuation Policies The price at which the units may be subscribed or sold and the price at
which such units may at any time be repurchased by the mutual fundshall be made available to the investors.
General Obligations Every asset management company for each scheme shall keep and
maintain proper books of accounts, records and documents, for each
scheme so as to explain its transactions and to disclose at any point of
time the financial position of each scheme and in particular give a true
and fair view of the state of affairs of the fund and intimate to the
Board the place where such books of accounts, records and documentsare maintained.
The financial year for all the schemes shall end as of March 31 of
each year. Every mutual fund or the asset management company shall
prepare in respect of each financial year an annual report and annual
statement of accounts of the schemes and the fund as specified in
Eleventh Schedule.
Every mutual fund shall have the annual statement of accounts audited
by an auditor who is not in any way associated with the auditor of the
asset management company.
Procedure for Action In Case Of Default: On and from the date of the suspension of the certificate or the
approval, as the case may be, the mutual fund, trustees or asset
12
-
8/4/2019 Chepter Two Mutual Fund Final
13/38
management company, shall cease to carry on any activity as a mutual
fund, trustee or asset management company, during the period of
suspension, and shall be subject to the directions of the Board with
regard to any records, documents, or securities that may be in its
custody or control, relating to its activities as mutual fund, trustees or
asset management company.
Restrictions on Investments A mutual fund scheme shall not invest more than 15% of its NAV in
debt instruments issued by a single issuer, which are rated not below
investment grade by a credit rating agency authorized to carry out
such activity under the Act. Such investment limit may be extended to
20% of the NAV of the scheme with the prior approval of the Board
of Trustees and the Board of asset Management Company.
A mutual fund scheme shall not invest more than 10% of its NAV in
unrated debt instruments issued by a single issuer and the total
investment in such instruments shall not exceed 25% of the NAV of
the scheme. All such investments shall be made with the prior
approval of the Board of Trustees and the Board of asset Management
Company.
No mutual fund under all its schemes should own more than ten per
cent of any company's paid up capital carrying voting rights.
Such transfers are done at the prevailing market price for quoted
instruments on spot basis. The securities so transferred shall be inconformity with the investment objective of the scheme to which such
transfer has been made.
A scheme may invest in another scheme under the same asset
management company or any other mutual fund without charging any
fees, provided that aggregate inter scheme investment made by all
schemes under the same management or in schemes under the
management of any other asset management company shall not
exceed 5% of the net asset value of the mutual fund.
The initial issue expenses in respect of any scheme may not exceed
six per cent of the funds raised under that scheme.
Every mutual fund shall buy and sell securities on the basis of
deliveries and shall in all cases of purchases, take delivery of relative
securities and in all cases of sale, deliver the securities and shall in no
case put itself in a position whereby it
13
-
8/4/2019 Chepter Two Mutual Fund Final
14/38
has to make short sale or carry forward transaction or engage in badla
finance.
Every mutual fund shall, get the securities purchased or transferred in
the name of the mutual fund on account of the concerned scheme,
wherever investments are intended to be of long-term nature. Pending deployment of funds of a scheme in securities in terms of
investment objectives of the scheme a mutual fund can invest the
funds of the scheme in short term deposits of scheduled commercial
banks.
No mutual fund scheme shall make any investment in;
i. Any unlisted security of an associate or group company of the
sponsor; or Any security issued by way of private placement by
an associate or group company of the sponsor; or The listed
securities of group companies of the sponsor which is inexcess of 30% of the net assets [of all the schemes of a mutual
fund]
No mutual fund scheme shall invest more than 10 per cent of its NAV
in the equity shares or equity related instruments of any company.
Provided that, the limit of 10 per cent shall not be applicable for
investments in index fund or sector or industry specific scheme.
A mutual fund scheme shall not invest more than 5% of its NAV in
the equity shares or equity related investments in case of open-ended
scheme and 10% of its NAV in case of close-ended scheme.
2.6 ADAVNTAGE OF INVESTING IN MUTUAL FUND
Diversification: The best mutual funds design their portfolios so
individual investments will react differently to the same economic
conditions. For example, economic conditions like a rise in interest
rates may cause certain securities in a diversified portfolio to decrease
in value. Other securities in the portfolio will respond to the same
economic conditions by increasing in value. When a portfolio is
balanced in this way, the value of the overall portfolio should
gradually increase over time, even if some securities lose value.
14
-
8/4/2019 Chepter Two Mutual Fund Final
15/38
Professional Management: Most mutual funds pay topflight
professionals to manage their investments. These managers decide
what securities the fund will buy and sell.
Regulatory oversight: Mutual funds are subject to many government
regulations that protect investors from fraud.
Liquidity: It's easy to get your money out of a mutual fund. Write a
check, make a call, and you've got the cash.
Convenience: You can usually buy mutual fund shares by mail,
phone, or over the Internet.
Low cost: Mutual fund expenses are often no more than 1.5 percent of
your investment. Expenses for Index Funds are less than that, because
index funds are not actively managed. Instead, they automatically buystock in companies that are listed on a specific index
Transparency
Flexibility
Choice of schemes
15
-
8/4/2019 Chepter Two Mutual Fund Final
16/38
2.7 DRAWBACKS OF MUTUAL FUND
No control over
cost
Lack of
transparency at
initial stage
Too much
dependent on
out agencies
Absence of
sales force staff
No proper
formula for
NAV
calculation
Disparities
between NAV
and listed price
Poor investor
servicing
Investors
psychology
DRAWBACKSOF MUTUAL
FUND
16
-
8/4/2019 Chepter Two Mutual Fund Final
17/38
Disparity between NAV and listed prices
Small investors are having lack of knowledge about pricing for their units.
NAV is used to rate the performance of mutual fund. Due to disparity
investors are not able to dispose off their units in the market.
No uniformity in calculation of NAV
Their is no standard formula for calculation of NAV. Different company
used different formulas. Hence comparison of fund is not possible.
Lack of transparency
Mutual fund in India are not providing adequate information and materials
to the investors. It was expected that they would provide detail pattern of
their various schemes.
Too much dependents on outside agencies
In India most of the funds depends upon outside agencies to collect data and
to do research. One should not rely on borrowed return. In practice company
have to pay more on borrowed research still they cannot fully rely upon
unless they setup their own research department they wont succeed.
Absence of qualified sales forces staff
Efficient management of fund requires expertise knowledge in portfoliomanagement and skill in execution of idea. Unfortunately such professionals
are very rare and the industry has to suffer.
17
-
8/4/2019 Chepter Two Mutual Fund Final
18/38
Poor services to investors
Mutual fund failed to build up investors confidence by rendering poor
services, transfer problems, non receipt of dividends and mutual fund
statements on time are various problems faced by the industry.
Investors psychology
Investors often compare units with shares and they respect high listing
prices. They do not realize that units are the parts of shares. Hence units are
not popular among the public.
18
-
8/4/2019 Chepter Two Mutual Fund Final
19/38
1. State Bank of India Mutual Fund
A fully owned subsidiary of the State Bank of India, the State
Bank of India Mutual Fund offers its services to partnership
firms, trusts and societies, individuals and corporates in India.
The State Bank of India Mutual Fund follows effective credit
management policies to minimise the investor's risks.
Awards
The State Bank of India Mutual Fund has received several
prestigious awards. Some of the important awards received by the
mutual fund company has been listed below.
ICRA Mutual Fund Awards- 2007
Lipper Award- 2007
CNBC TV 18 and CRISIL Mutual Fund of the Year Award-
2007
State Bank of India Mutual Fund Schemes
The State Bank of India Mutual Fund offers several products to its
customers. Some of the major mutual fund schemes offered
through SBI Mutual Fund has been listed below.
SBI Arbitrage Opportunities Fund
SBI Magnum Balanced Fund
19
-
8/4/2019 Chepter Two Mutual Fund Final
20/38
SBI Magnum Income Fund
SBI Magnum Global Fund
SBI Magnum Index Fund
SBI Premier Liquid Fund
SBI One India Fund
2.2 PROCESS OF INVESTING IN MUTUAL FUNDS
Mutual funds are not magic institutions which can bring treasure to
the millions of their investors within short span of time. All funds
are equal to start with. But, in due course of time, some are getting
importance. Now days investors are very careful about the
selection of Investment Avenue and scheme of mutual fund.
Generally, following steps are followed to invest the funds in
mutual fund and its various schemes:1. Checking the aim of fund: As an investor, one must find out the
aim or objectives of the scheme of mutual fund. The objectives are
generally, capital appreciation, income at routine intervals or
growth or pension fund at retirement. So, as per the need the
investor should go ahead.
2. Checking the performance of fund as routine matter: Mutual
fund is always associated with stock market performance.
Generally, it tends to give good returns after long years. Stability
and consistency in the performance are very crucial for the
20
-
8/4/2019 Chepter Two Mutual Fund Final
21/38
investor. The investor will prefer only those funds with steady
growth. So, all the time checking the performance is very helpful
for the investor.
3. To see the background of the company: Currently there are
number of public and private sector companies prevailing in the
market. The success of any company depends upon proper
portfolio management. A good background, history and experience
will definitely perform good and better results. That has to be
carefully watched by the investors before investing.
4. Find out the cost of operation: Cost of operation includes
Servicing charges, administrative charges charged by mutual fund
companies. The lesser the charges, more the investment and
returns in the hands of investor. So, to earn best returns the
investor must check the cost of operation of mutual fund.
5. To see the other facilities provided to investors by the fund:
Mutual fund companies and their field force staff are providing
new and innovative techniques to grab the investors. So, an
investor must check the schemes and accordingly can invest in the
best one.
6. To check out the transparency of company: The success of thefund depends upon transparency of the fund management. The
companies need to publish the records regarding the operation and
21
-
8/4/2019 Chepter Two Mutual Fund Final
22/38
working of the funds. So, here investor must see the publications
before investing.
7. Select the best one among alternatives: As there are wide range
of mutual fund companies, products and schemes investor should
be conscious. He has to check the performance, service quality,
operation cost of the scheme, and must opt for the best suited
amongst available.
2.3 RIGHTS OR POWERS OF MUTUAL FUND
INVESTORS
Unit holders of the Scheme have a proportionate right in the
beneficial ownership of the assets of the Scheme.
When the Mutual Fund declares a dividend under the
Scheme/ Plan, the dividend warrants shall be dispatched
within 30 days of the declaration of the dividend. Provided if a unit holder so desires the Mutual Fund shall
issue a unit certificate (non- transferable) within 30 days of
the receipt of request for the certificate.
An investor is entitled to get the unit certificate transferred
within a period of 30 days from the date of lodgement of the
certificates along with the relevant transfer form.
The First Unit holder shall receive the account statements, all
notices and correspondence with respect to the account, as
22
-
8/4/2019 Chepter Two Mutual Fund Final
23/38
well as the proceeds of any redemption requests or dividends
or other distributions.
As per SEBI (MF) Regulations, the Mutual Fund shall
dispatch redemption proceeds within 10 business days of
receiving the redemption request.
A penal interest of 15% or such other rate as may be
prescribed by SEBI from time to time will be paid in case the
Redemption proceeds are not made within 10 Business Days
of the date of redemption request.
The Trustee is bound to make such disclosures to the unit
holders in order to keep them informed which may have
adverse effect on their investment.
The appointment of the AMC for the Mutual Fund can be
terminated by majority of the directors of the Trustee or by
75% of the unit holders of the scheme.
75% of the Unit holders of a scheme can pass a resolution to
wind-up a scheme.
In specific circumstances, where the approval of unit holders
is sought on any matter, the same shall be obtained by way of
a postal ballot or such other means as may be approved bySEBI.
The Trustee shall ensure that no change in the fundamental
attributes of any Scheme or the trust or fees and expenses
23
http://www.sebi.gov.in/http://www.sebi.gov.in/ -
8/4/2019 Chepter Two Mutual Fund Final
24/38
payable or any other change which would modify the Scheme
and affects the interest of Unit holders, shall be carried out
unless :
o a written communication about the proposed change is
sent to each Unit holder and an advertisement is given
in one English newspaper having nationwide circulation
as well as in a newspaper published in the language of
the region where the head office of the Mutual Fund is
situated
o the Unit holders are given an option to exit at the
prevailing Net Asset Value without any Exit Load
The Trustee shall obtain the consent of the Unit holders:
o whenever required to do so by SEBI, in the interest of
the unit holders
o whenever required to do so on the requisition made by
three-fourths of the unit holders of the Scheme.
o when the Trustee decides to wind up the Scheme or
prematurely redeem the units.
2.4 LIMITATION TO THE MUTUAL FUND INVESTORS
1. Unit holders can not sue the trust but they can initiate
proceedings against the trustees, if they feel that they are being
cheated.
24
-
8/4/2019 Chepter Two Mutual Fund Final
25/38
2. Except in certain circumstances AMC can not assure a specified
level of return to the investors. AMC can not be sued to make good
any shortfall in such scheme.
2.5OBLIGATIONS OF THE MUTUAL FUND INVESTORS
1. An investor should carefully study the risk factors and other
information provided in the offer documents .Failure to study will
not entitled him for any rights thereafter.
2. It is the responsibility of the investor to monitor his scheme by
studying the reports and other financial statement of the fund.
So before investing everybody should take necessary action to
familiar with the scheme.
.
2.7 ROLE OF INTERMEDIARIES IN MUTUAL FUND
Intermediaries play a pivotal role in promoting sale of mutual fund
schemes. AMFI has therefore taken the initiative of developing a
cadre of trained professional intermediaries. As the first step AMFI
launched the certification programme in association with NSE's
Certification in Financial Markets (NCFM) in July 2000 and SEBI
has made AMFI Certification compulsory in a phased manner.
25
-
8/4/2019 Chepter Two Mutual Fund Final
26/38
Intermediaries consisting of individual agents, brokers, distribution
houses and banks engaged in selling of mutual fund products as of
now do not have any guidelines or regulatory framework relating
to the business of selling Mutual Funds. It is important and
necessary that these intermediaries follow professional and healthy
practices. AMFI has therefore taken the initiative of framing a
broad set of guidelines along with a code of conduct.
1. The mutual fund industry in India started in 1964 with the
formation of the Unit Trust of India (UTI). In 1987, other
public sector institutions entered this business, and it was in
1993 that the first of the private sector participants
commenced its operations.
2. From the beginning, UTI and other mutual funds have relied
extensively on intermediaries to market their schemes to
investors. It would be accurate to say that without
intermediaries, the mutual fund industry would not have
achieved the depth and breadth of coverage amongst
investors that it enjoys today.
3. Intermediaries have played a pivotal and valuable role in
popularizing the concept of mutual funds across India. They
26
-
8/4/2019 Chepter Two Mutual Fund Final
27/38
make the forms available to clients, explain the schemes and
provide administrative and paperwork support to investors,
making it easy and convenient for the clients to invest.
4. Intermediation itself has undergone a change over the past
few decades. While individual agents provided the
foundation for growth in the early years, institutional agents,
distribution companies and national brokers soon started to
play an active role in promoting mutual funds. Recently,
banks, finance companies, secondary market brokers and
even post offices have also begun to market mutual funds to
their existing and potential client bases.
5. It is, thus clear that all types of intermediaries are required
for the growth of the industry, and their wellbeing, quality
orientation and ways of doing business will have a significant
impact on how the mutual fund industry in India evolves in
the future.
27
-
8/4/2019 Chepter Two Mutual Fund Final
28/38
ACKNOWLEDGEMENT
Achieving a milestone for any person is extremely difficult.
However, there are motivations, which come across the
curvaceous path like twinkling stars in the sky and make our
task much easier. It becomes my humble and foremost duty to
acknowledge all of them.
I am deeply indebted to and express my sincere appreciation
and gratitude to Mr. Sameer Saxena, Mr. Praveen Saini of
SBI mutual fund private limited and Mr. Sunil Arora of State
Bank Of India for providing their valuable guidance and
encouragement through out the summer training for keeping my
morale up and making it possible to complete and submit this
project of mine in time. In addition to allow me to study the
mutual fund sector. They provided me in depth details and
enlightened me in the preparation of the study report.
It would be unfair on my part if do not thank my heartfulthanks to my parents and colleagues for their unstinting help
without which this work could never have been accomplished
they made me realized the importance of a team, teamwork and
also the leadership skills. I am grateful to all of them for
standing with me and supporting me in this project.
Words can not be adequately expressed my sense of gratitude
and indebtedness to Sekhawati College of Management and ITfor giving me an opportunity.
28
-
8/4/2019 Chepter Two Mutual Fund Final
29/38
PREFACE
Only Theoretical knowledge stands nowhere and cannot give
positive and meaningful result unless supplemented with the
real practice of Business Environment. Summer training is the
implementation of the theory in practice that makes real
meaning to what exactly is management
The researcher was assigned to SBI mutual fund, Jaipur for
summer training, which constitute an integral part of three years
BBA program. The training period consists of 45-60 days. It
was really a great opportunity of getting practical insight into
the corporate world. The researcher contacted directly to the
customers in their Home in Jaipur city to obtain relevant
information.
The company was interested to know to assess the customer
acquisition and market position of the SBI Mutual fund schemes
in the jaipur.
29
-
8/4/2019 Chepter Two Mutual Fund Final
30/38
After the analysis of collected data, the main findings of this
study and suggestion are presented in the report.
INTRODUCTION OF SBI MUTUAL FUND
SBI mutual fund is a well known mutual fund management
company in government sector. It is formed by joint venture
between SBI and Societe Generale Asset Management Company
of France.
Investment Managers:
SBI FUNDS MANAGEMENT PRIVATE LIMITED
Name of Trustees Company:
SBI MUTUAL FUND TRUSTE COMPANY PVT. LTD.
Name and Address of registrar:
COMPUTER AGE MANAGEMENNT SERVICES PVT.
LTD.
(SEBI REGISTRATION NO. INR000002813)
178/10, KODAMBAKKAM HIGH ROAD,OPP. HOTEL
PALMGROVE,CHENNAI-600034.
30
-
8/4/2019 Chepter Two Mutual Fund Final
31/38
As like others mutual fund companies SBI mutual fund company
also has different types of schemes and these are as shown below:
State Bank of India Socit Gnrale Asset Management
State Bank of India
SBI Mutual Fund Trustee Company Pvt. Ltd
100%
SBI Funds Management Pvt. Ltd(Asset Management Company)
37%63%
SBI Mutual Fund
31
-
8/4/2019 Chepter Two Mutual Fund Final
32/38
DIFFERENT SCHEME OF SBI MF:
OPEN-ENDED EQUITY SCHEME:
1. Magnum Multicap fund
2. Magnum Equity Fund3. Magnum Index Fund
4. Magnum Multiplier Plus
5. Magnum SBI Blue-Chip Fund
6. Magnum Tax gain scheme
7. Magnum Comma Fund
8. Magnum Global Fund
9. Magnum MidCap Fund
10. Magnum Balanced Fund11. Arbitrage fund
CLOSE-ENDED EQUITY SCHEME:
1. One India
2. Infrastructure
MAGNUM SECTOR FUNDS UMBRELLA
1. Contra Fund2. Emerging Business Fund
3. FMCG Fund
4. IT Fund
5. Pharma Fund
OPEN-ENDED DEBT SCHEME:
1. Magnum Children Benefit Plan
2. Magnum Monthly Income Plan
3. Magnum Income Plus Fund (Investment)4. Magnum Income Plus Fund (Saving)
5. Magnum Income Fund
6. Magnum NRI Investment Fund
32
-
8/4/2019 Chepter Two Mutual Fund Final
33/38
OPEN-ENDED LIQUID FUND
1. Magnum Institutional Income Fund
2. Magnum InstaCash Fund
3. Magnum InstaCash Fund (Liquid floater)
ORGANISATIONAL STRUCTURE OF
SBI MUTUAL FUND
SWOT ANALYSIS
STRENGTHS:-
1.) Brand Name:
The biggest strength is the tag of SBI is going to be the largest
banking group of finance industries.
33
-
8/4/2019 Chepter Two Mutual Fund Final
34/38
1. Compatible Price:
Prices of different schemes of SBI Mutual Funds are much more
compatible than others.
2. Diversified Schemes:We have diversified schemes which are an exception case of SBI
Mutual Fund.
3. Less Risk:
Our debt schemes are 100% free form market risk. Even as our
portfolio is that diversified so equities are also less risky than others.
4. Easy procedures of redemption & registration too:We have open ended schemes so Mutual funds are easily redeemable.
WEAKNESS:-
1. Prone to Market Risk:
Mutual Funds depend on overall macro economic condition an
market scenario.
2. Tough Competitions:There is a very tough competition because of large number of Ass
Management Companies.
OPPORTUNITIES:-
1. Hoarding:
Most of the Indians have black money that too in huge amount i.e.
the do not have money in banks, so approaching them is beneficial.
2. Indian Capital Market is Growing:
So more & more new investors are interested in investments.
3. Tailor Made Products:
34
-
8/4/2019 Chepter Two Mutual Fund Final
35/38
We have tailor made products like sector specified schemes & even
diversified schemes.
4. Branch Expansion:
Large no. of branches are opening day by day and even we aretraping the countries having almost same type of socio-economic
condition & even same culture etc.
THREATS:-
1. Tough Competition:-As there are so many mutual fund companie
having almost same kind of schemes, so its tough to compete with.
2. Unawareness: Major % of population is not aware of mutual funds, s
its hard to convince people.
3. Changing Scenario: Our market scenario is changing day by day i.
our market is fluctuating, so this makes investor hard to invest
35
-
8/4/2019 Chepter Two Mutual Fund Final
36/38
Various Locations in India
36
-
8/4/2019 Chepter Two Mutual Fund Final
37/38
CONCLUSION:
From the analysis of the compare of Mutual Fund and Unit Linked
Insurance Plan found thatUnit-linked life insurance products are
those where the benefits are expressed in terms of number of unitsand unit price. They can be viewed as a combination of insurance
customer and mutual funds. Main differences between ULIP and
ordinary mutual funds is variation in expenses administrative
charges, mortality charges and, of course, fund management fees.
BIBLIOGRAPHY
BOOKS:
1. N. K. Sinha: Money Banking & Finance; BSC Publishing
Co. Pvt. Ltd.
2. C.R Kothari: Research Methodology; Wishva Publication,
New Delhi.
MAGAZINES:-
1 Business world.
2 Money Outlook
3 Business Today
4 Offer Documents of Different Schemes.
NEWSPAPERS:-
37
-
8/4/2019 Chepter Two Mutual Fund Final
38/38
1. Economic Times.
WEBSTIES:
1) WWW.AMFIINDIA.COM
2) WWW.SBIMF.COM
http://www.amfiindia.com/http://www.amfiindia.com/