Functional Project

On
“Investment Perception about Investment in
Mutual Fund with Reference to SBI MF”

Submitted in partial fulfillment for the award of the degree of

Master of Management Studies (MMS)
(Under University of Mumbai)

Submitted By
Prajkta Prakash Deshmukh

Finance
(Roll No. 171332)

Under The Guidance of

Prof. Mamta Nair

Pillai Institute of Management Studies and Research

New Panvel, Navi Mumbai – 410206
2017-19

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 .

CERTIFICATE OF APPROVAL

This is to certify that the project titled Investor perception about investment in mutual fund
with reference to SBI MF is successfully completed by Miss. Prajkta Prakash Deshmukh
during Semester IV, in partial fulfillment of the Master’s Degree in Management Studies
recognized by University of Mumbai for the Academic 2017-19 through Pillai Institute of
Management Studies and Research.

This project work is original and not submitted earlier for the award of any degree / diploma or
associate ship of any other University / Institution.

Prof. Mamta Nair ___________________

Date- Signature

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 Declaration

I, Prajkta Deshmukh hereby declare that this project report titled “Investor perception about
investment in mutual fund with reference to SBI MF” is a bonafide work undertaken by me
and it is not submitted to any other University or Institution for the award of any degree
diploma/ certificate or published any time before.

Date: ___________________
Place: Prajkta Deshmukh

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 Acknowledgement

The satisfaction of the successful completion of any task wouldn’t be complete without the
expression of gratitude to the people who made it possible.

I am very thankful to Prof. Mamta Nair Faculty, Pillai Institute of Management Studies &
Research (PIMSR), for the guidance and interest evinced throughout the preparation of this
project.

I also extend my heartfelt gratitude and thanks to Director, Pillai Institute of Management
Studies & Research (PIMSR)

I take this opportunity, also to express my love and sincere thanks to my family members and
friends for their support and advice during various stage of work.

I also extend my gratitude to the respondents of my survey for their kind co-operation.

But last not the least I thank God almighty for giving me the support for the completion of the
task.

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 Executive Summary

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well-being. Mutual
Funds have not only contributed to the India growth story but have also helped families tap into
the success of Indian Industry. As information and awareness is rising more and more people are
enjoying the benefits of investing in mutual funds. The main reason the number of retail mutual
fund investor’s remains small incomes in India do not know that mutual funds exist. But once
people are aware of mutual fund investment opportunities, the number who decide to invest in
mutual funds increases to as many as people. The trick for converting a person with no
knowledge of mutual funds to a new Mutual Fund customer is to understand which of the
potential investors are more likely to buy mutual funds and to use the right arguments in the sales
process that customers will accept as important and relevant to their decision.The trend is
moving towards the online share trading but still it has a lot to cover. Target the youth as they are
the most potential customers of the stock market as their interest towards stock trading is
increasing. The stock broking should educate the investors by giving them timely help in the
form of reports and tips.

A Market Research was done to find out the investment patterns and behavior of the people i.e.
how much they invest, what are the reasons behind their investments, and where they invest.
Thus a questionnaire was devised to fetch the above mentioned information from the investors.
Most ofthe questions in the questionnaires were objective in nature which helped the people to
fill it with utmost ease. The sample size for the research was 100, which included all the classes
of people aged 18 and above. The questionnaire devised for the market research is attached to the
report as Annexure. Each question of the questionnaire is discussed on a separate page and the
results are explained with the help of graphs.

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 CONTENTS
Chapter Page no.
CHAPTER-1 Introduction 8
Objective and Limitation of the study 9
History of mutual fund 10-11
Importance of mutual fund 12
Valuation of mutual fund 12-13
Merits and Demerits of mutual fund 13-15
SWOT of mutual fund 16-17
CHAPTER-2 Introduction to organization 19-20
History of SBI mutual fund 20
Structure of SBI mutual fund 21-22
Types of SBI mutual fund 23-25
SBI mutual fund products 26-27
5 Step for selecting the best mutual fund 28-29
CHAPTER-3 Research methodology 31-32
CHAPTER-4 Finding and Analysis of data 34-41
Conclusion 42
Questionnaire 43-44
Reference 45

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CHAPTER – 1

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INTRODUCTION

Mutual fund
A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors for the purpose of investing in securities such as stocks, bonds, money market
instruments, and other assets. Mutual funds are operated by professional money managers, who
allocate the fund's assets and attempt to produce capital gains and income for the fund's
investors. A mutual fund's portfolio is structured and maintained to match the investment
objectives stated in its prospectus.

Mutual funds give small or individual investors access to professionally managed portfolios of
equities, bonds and other securities. Each shareholder, therefore, participates proportionally in
the gains or losses of the fund. Mutual funds invest in a wide amount of securities, and
performance is usually tracked as the change in the total market cap of the fund, derived by the
aggregating performance of the underlying investments

Mutual funds pool money from the investing public and use that money to buy other securities,
usually stocks and bonds.

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Objective of the study
1. To identify the investor perception about mutual fund investing through SBI mutual
fund.
2. To known the customer preference about type of investment.
3. Understand the preference of schemes of SBI mutual fund.

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History of mutual funds in India

Unit trust of India was the first mutual fund set up in India in the year 1963. In early 1990s,
government allowed public sector banks and institutions to set up mutual funds. In the year 1992,
Securities and Exchange Board of India (SEBI) act was passed. The objectives of SEBI are to
protect the interest of investors in securities and to promote the development of securities
market. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual
funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in
1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the
capital market. The regulations were fully revised in 1996 and have been amended thereafter
from time to time. SEBI has also issued guidelines to the mutual funds, called SEBI (Mutual
Fund) Regulations 1993.

Indian scenario of MF industry:

Mutual fund industry in India has emerged out with the introduction of the concept of mutual
fund by unit trust of India (UTI) in the year 1963. Though the growth was slow initially, it
accelerated with the entrance of non-UTI players in MF industry since 1987. The development
of MF industry can be broadly divided into four phases as mentioned below.

(a) First phase (1964 -1987 : Monopoly of UTI MF

1 .Unit trust of India (UTI) was set up by reserve bank of India through an act of
parliament in 1963. RBI basically regulated and controlled the functioning of UTI.

2. In 1987 UTI was delinked from the RBI and the IDBI took over regulatory and
administrative control in the place of RBI. UTI unit scheme 1964 was the first Scheme
launched by UTI.

(b) Second phase (1987 – 1993): Entry of public sector MFs –

(1) In the second phase, there was an entry of public sector funds which are mostly non-UTI
mutual funds.

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(2) SBI Mutual Fund (A partner for life) was the first public sector fund established in June
1987. This was followed by Canbank Mutual Fund in December 1987, PNB MF in
August 1989, Indian Bank Mutual Fund in November 1989, Bank of India in June 1990,
Bank of Baroda MF in October 1992, LIC MF (LICMF) in 1989, and General Insurance
Company MF (GICMF) in 1990.

(c) Third phase (1993-2003) : Entry of private sector MFs –

(1) In the third phase, mutual fund industry in India was opened up to private sector mutual
funds in 1993.
(2) It basically provided the Indian investors with a wide range of MF schemes. There was a
remarkable event in 1993 when the first Mutual fund regulations was enacted for
regulating all mutual funds except UTI MF.
(3) The SEBI (Mutual Fund) Regulations 1993 were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996 which governs all Mutual Fund
Schemes/Industry currently.
(4) During this phase, many foreign mutual funds were set up in India and there were several
mergers and acquisitions in MF industry. Hence MF companies was increasing in
number.

(d) Fourth phase (since February 2003) :

(1) Under this phase UTI was bifurcated into two separate entities. First entity was the
specified undertaking of the UTI with the Asset under Management (AUM) of Rs 29,835
crores as on 31st January 2003.
(2) The functioning of specified undertaking of the UTI was made under the rules framed by
the government of India and it does not come under the preview of the mutual fund
Regulations of SEBI.

On the other hand, the second entity was the UTI Mutual Fund Limited (a registered MF
Company) sponsored by SBI, PNB, BOB and LIC. It was registered with SEBI and
functions under the SEBI regulations for Mutual Funds 1996

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Importance of mutual funds:

The mutual fund industry has grown at a phenomenal rate in the recent past. We can witness a
revolution in the mutual fund industry in view of its importance to the investors in general and
the country’s economy at large. The following are the importance of Mutual Funds:

 Channelizing savings from house-hold and others for investment.

 Offering wide portfolio investments.
 Providing better yields / return.
 Rendering expertise investment service at low cost.
 Providing research service.
 Offering tax benefits.
 Introducing flexible investment schedule.

Valuation of mutual fund

Net Asset Value (NAV) is the value of a mutual fund scheme’s assets minus the value of its
liabilities per unit. It is the price at which you buy the unit of a scheme. It may also be the price
at which you would sell the unit.

NAV reflects the composite prices of all the securities held along with the liquid cash. It is
calculated on a unit basis after deducting all liabilities.
In simple words, NAV is the price which you pay to buy a unit of mutual fund scheme when you
invest.
In order to calculate the NAV there are two formula as given below.

Formula:

1. NAV = [Fair market value of scheme’s investments + Receivables + Accrued Income + other
Assets (-) Accrued expenses (-) payables (-) other liabilities / (No. of units outstanding in the
books)

2. NAV = (Total Current Assets - Total current liabilities) / No. of outstanding units

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The NAV of a mutual fund is always calculated at the end of the market day. This is because the
market value of securities changes on a daily basis. Hence, the NAV of a mutual fund also
changes daily.

Merits and demerits of mutual funds

Merits of mutual funds

1. Professional investment management.

By pooling the funds of thousands of investors, mutual funds provide full-time, high-level
professional management that few individual investors can afford to obtain independently. Such
management is vital to achieving results in today's complex markets. Your fund managers'
interests are tied to yours, because their compensation is based not on sales commissions, but on
how well the fund performs. These managers have instantaneous access to crucial market
information and are able to execute trades on the largest and most cost effective scale. In short,
managing investments is a full-time job for professionals.

2 .Diversification

Mutual funds invest in a broad range of securities. This limits investment risk by reducing the
effect of a possible decline in the value of any one security. Mutual fund shareowners can benefit
from diversification techniques usually available only to investors wealthy enough to buy
significant positions in a wide variety of securities.

3. Ease of investing

Investor may open or add to account and conduct transactions or business with the fund by mail,
telephone or bank wire. Investor can even arrange for automatic monthly investments by
authorizing electronic fund transfers from checking account in any amount and on a choose date.
Also, many of the companies featured at this site allow account transactions online.

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4. Total Liquidity

Easy Withdrawal investor can easily redeem shares at any time need cash by letter, telephone,
bank wire or check, depending on the fund.

5. Safety

There is a general notion that mutual funds are not as safe as bank products. This is a myth as
fund houses are strictly under the purview of statutory government bodies like SEBI . One can
easily verify the credentials of the fund house and the asset manager from SEBI. They also have
an impartial grievance redressal platform that work in the interest of investors.

6. Systematic or one-time investment

You can plan your mutual fund investment as per your budget and convenience. For instance,
starting an SIP (Systematic Investment Plan) on a monthly or quarterly basis suits investors with
less money. On the other hand, if you have surplus amount, go for a one-time lump sum
investment.

Demerits of mutual funds

1. Costs to manage the mutual fund

The salary of the market analysts and fund manager basically comes from the investors. Total
fund management charge is one of the main parameters to consider when choosing a mutual
fund. Greater management fees do not guarantee better fund performance.

2. Lock-in periods

Many mutual funds have long-term lock-in periods, ranging from 5 to 8 years. Exiting such
funds before maturity can be an expensive affair. A certain portion of the fund is always kept in
cash to pay out an investor who wants to exit the fund. This portion in cash cannot earn interest
for investors.

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3. Dilution

While diversification averages your risks of loss, it can also dilute your profits. Hence, investor
should not invest in more than 7-9 mutual funds at a time.

4. Fluctuating returns

Mutual funds do not offer fixed guaranteed returns in that you should always be prepared for
any eventuality including depreciation in the value of your mutual fund. In other words, mutual
funds entail a wide range of price fluctuations.

5. Trading Limitations

Although mutual funds are highly liquid in general, most mutual funds (called open-ended funds)
cannot be bought or sold in the middle of the trading day. You can only buy and sell them at the
end of the day, after they've calculated the current value of their holdings.

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Mutual fund SWOT Analysis
Mutual funds are among the financial products that benefit from conducting a SWOT analysis.
By reviewing their strengths, weaknesses, opportunities and threats, an individual investor can be
better informed on where to invest their money, and be positioned to shift gears along with the
market.

Strengths

The most critical strength for a mutual fund is its performance. If a fund is outperforming the
market, and particularly if it is at the top of its benchmark, that is a big selling point. If the fund
is part of a well-established company with a track record of success and a family of high-
performing products, that brand name and historical record may also be a strength. A best-in-
class research department or methodology that has a track record of picking winners is a huge
asset as well. Different financial metrics may be key depending on your investment style and the
fund involved dividend yield may be the key for one investor, total return over a 10-year period
for another.

Weaknesses

A high expense ratio is a weakness even if it pays for an active management currently beating
the market with its returns. Even in good times, expenses are a drag on investor return, and they
will be more difficult to accept if the performance declines. Size can be a weakness as well, since
bigger isn’t always better. As a small-cap fund gets bigger, for example, it will have a hard time
finding growth opportunities for all of its assets and may have to close or expand outside of its
stated objective. Risk may be a weakness for some investors looking for a smaller beta or
standard deviation.

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Opportunities

It's not enough to look at the current numbers when evaluating prospective mutual funds. You
also need to look at the overall market and consider whether the fund is best positioned to take
advantage of trends. A lagging fund may offer the best opportunity for growth if the combination
of a management change and economic trends prove beneficial. A change in the government
regulatory environment not only affects different industries, but the funds that concentrate in
those sectors as well.

Threats

To some extent, many funds move along with general economic news. Some types of funds do
better in a recession while others track well in boom times -- those funds are particularly
threatened by a sudden change in the unemployment rate that undermines consumer confidence
or a stimulus plan that gets people spending again. In addition, if a fund is dependent on a
superstar manager, make sure you have a plan in place if that manager suddenly decides to leave.

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CHAPTER-2

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INTRODUCTION TO THE ORGANIZATION

SBI Mutual Fund

SBI mutual fund is a bank sponsored fund house with its corporate headquarters in
Mumbai, India.

SBI Mutual Fund is a joint venture (JV) between the State Bank of India (SBI) and an
international fund management company called Amundi a European Asset Management
Company.

SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record
in judicious investments and consistent wealth creation.

The SBI Funds Management is also one of the first banks to come up with an offshore fund. The
aim of the SBIMF is to offer its investors the opportunity for long-term growth in a diverse array
of stock of Indian companies.
The dedicated fund house is known for its enterprising approach to risk-management backed by a
highly experienced risk management team and financial experts. The SBI mutual funds are
constructed with the help of extensive investment research to outperform the industry
benchmarks.

The SBI Funds Management has comprehensive experience and expertise and is one of the major
advisers to pension funds, financial institutions and asset management companies

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SBI Mutual Fund offers an entire range of investment solutions covering investors’ across risk
profiles. It provides mutual fund across categories including equity, debt, tax-saving, hybrid and
fund-of-funds.

Now a day Mutual fund investments are the good source of investments and it is more useful for
the salary class people for getting tax benefit. SBI Mutual fund industries are gaining importance
because the salaried class people and the middle income people prefer their investment
preferable avenue for their investment destination.

History of SBI mutual funds

The mutual fund industry in India originally began in 1963 with the unit trust of India (UTI) as
a government of India and the Reserve Bank of India initiative. Launched in 1987, SBI Mutual
Fund became the first non-UTI mutual fund in India.In July 2004, State Bank of India decided to
divest 37 per cent of its holding in its mutual fund arm, SBI funds management private limited to
Societe Generale asset management, for an amount in excess of $35 million. Post-divestment,
state bank of India's stake in the mutual fund arm came down to 67%. In May 2011, Amundi
picked up 37% stake in SBI funds management, that was held by Societe Generale asset
management, as part of a global move to merge its asset management business with Credit
Agricole.

As of Sept 2015, the fund house claims to serve around 5.8 million investors through 130 points
of acceptance, 29 investor service centers, 59 investor service desks and 6 Investor Service
Points. As of august 2018, assets under management of SBI mutual fund are valued at Rs.
2,33,114 crore.

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Structure of SBI mutual fund (SBI MF):
The structure of SBI MF consists of the following constituents:

1. Sponsor:

A company established under the Companies Act 2013 forms a mutual fund. Banks are
also permitted by SEBI to be the sponsor for mutual fund .Example: state bank of India
(bank)

2. Trustees:

The trust is headed by the board of trustees. The trustee holds the property of the mutual
fund in trust for the benefit of investors and looks into the level requirements of
operating and functioning of the mutual fund. Example: (SBI mutual Fund trustee
company private limited).

3. Mutual fund (MF):

A mutual fund has to be as either as a trustee company or a trust, under the Indian trust
act to raise money through the sale of units to the public for investing in the capital
market, debt market, money market and other financial markets. The mutual fund
company has to be registered with securities and exchange board of India (SEBI).
Example: SBI Mutual Fund.

4. Asset management company (AMC):

AMC is an entity registered under the companies act to manage the money invested in
the mutual fund and to operate the schemes of the mutual fund as per SEBI regulations.
It carries the responsibility framing various mutual fund schemes, issuing the schemes to
public subscription, investing the funds received from the investors and managing the
investor’s money. AMC is also known as investment manager. Example: SBI Funds
management private limited.

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5. Unit holders (Investors):

A person/entity holding an undivided units (shares) in the assets of the mutual funds
schemes. They are also known as investors.

6. Custodian:

A custodian is a person who has been granted a certificate of registration to conduct the
business of custodial services under the SEBI (custodian of securities) regulations 1996.
Mutual funds require custodians so that AMC can concentrate on areas such as
investment and management of money. Example: SBI-SG global securities services
limited, Stock Holding Corporation of India Ltd.

7. Registrar or transfer agents:

A transfer agent is a person or entity who has been granted certificate of registration to
conduct the business of transfer agent under SEBI (Registrars to issue and share transfer
agents) regulations act 1993. Example: Karvy Computer share private limited – mutual
fund services division.

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Types of SBI mutual fund schemes.

Differentiation on the basis of structure of schemes

Schemes are classified as close-ended or open-ended depending upon whether they give the
investor the option to redeem at any time (open-ended) or whether the investor has to wait till
maturity of the scheme.

Open-Ended-Schemes

The units offered by these schemes are available for sale and repurchase on any business day at
NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such
schemes thus offer very high liquidity to investors and are becoming increasingly popular in
India.

Close-Ended-Schemes

Close-ended mutual fund schemes have a stipulated maturity period wherein the investor can
invest directly in the scheme at the time of the initial issue and thereafter units of the scheme can
be bought or sold on the stock exchanges where the scheme is listed.

Interval schemes-

These schemes combine the features of open-ended and close-ended schemes. They may be
traded on the stock exchange or may be open for sale or redemption during pre-determined
intervals at NAV based prices.

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Differentiation on the basis of investment objectives

Schemes can be classified by way of their stated investment objective such as Growth Fund,
Balanced Fund, and Income Fund etc.

Equity/Growth Schemes

These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds
in equities and a small portion in money market instruments. Such schemes have the potential to
deliver superior returns over the long term. However, because they invest in equities, these
schemes are exposed to fluctuations in value especially in the short term. Equity schemes are
hence not suitable for investors seeking regular income or needing to use their investments in the
short-term. They are ideal for investors who have a long-term investment horizon. The NAV
prices of equity fund fluctuates with market value of the underlying stock which are influenced
by external factors such as social, political as well as economic. HDFC Equity Fund are
examples of equity schemes.

Income/Debt-Schemes

These schemes invest in money markets, bonds and debentures of corporate companies with
medium and long-term maturities. These schemes primarily target current income instead of
capital appreciation. Hence, a substantial part of the distributable surplus is given back to the
investor by way of dividend distribution. These schemes usually declare quarterly dividends and
are suitable for conservative investors who have medium to long term investment horizon and
are looking for regular income through dividend or steady capital appreciation.

These schemes, also commonly known as Income Schemes, invest in debt securities such as
corporate bonds, debentures and government securities. The prices of these schemes tend to be
more stable compared with equity schemes and most of the returns to the investors are generated
through dividends or steady capital appreciation. These schemes are ideal for conservative
investors or those who are not in a position to take higher equity risks.

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Hybrid/Balanced Schemes

These schemes are also commonly called balanced schemes. These invest in both equities as well
as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of
income and moderate capital appreciation. Such schemes are ideal for investors with a
conservative, long-term orientation. HDFC Prudence Fund and HDFC Balance Fund are perfect
examples of such hybrid schemes.

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 those stocks that constitute the
index. The percentage of each stock to the total holding will be identical to the stocks
index weightage. And hence, the returns from such schemes would be more or less equivalent
to those of the Index.

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

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SBI mutual fund product

Equity Schemes

SBI equity funds are for long-term capital appreciation through investment in extensively
researched shares and stocks of top rated companies. The funds are picked based on the
consistency of performance and are designed for generating high returns. These funds are high-
risk funds and require careful consideration before investing.

Debt Schemes

SBI Debt Funds offer a safer investment option to the more risk-averse investor. These funds
with comparatively lower return prospects come in various short-term fixed income security
options like commercial papers, government bonds, treasury bills and certificates of deposits.

Balanced Schemes

Magnum Balanced Fund invests in a mix of equity and debt investments. Hence they are less
risky than equity funds, but at the same time provide commensurately lower returns. They
provide a good investment opportunity to investors who do not wish to be completely exposed to
equity markets, but is looking for higher returns than those provided by debt funds.

SBI Magnum Multicap Fund

SBI Magnum Multicap mutual fund makes investments across various market caps and sectors.
They are not limited to one specific segment of the market instead they are flexible enough to
adapt their portfolios according to the market cycle.

SBI Blue Chip Fund

SBI Blue Chip Fund invests in stocks of blue chip companies, i.e. in stocks of companies with
market capitalization equal to or more than the least market capitalized stock .These companies
have large business presence.

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SBI Magnum Global Fund

SBI Magnum Global Fund is an open ended equity scheme which predominantly invests in mid-
cap companies & is suitable for investors who aim for long-term growth potential.

SBI Magnum Tax Gain Scheme

SBI Magnum Tax Gain Scheme is an open ended Equity Linked Savings Scheme. It seeks to
generate capital appreciation and offers various tax benefit.

SBI Magnum Children’s Benefit Fund

The scheme seeks to provide the investors an opportunity to earn regular income predominantly
through investment in debt and money market instruments and capital appreciation through an
actively managed equity portfolio.

SBI Contra Fund

SBI Contra Fund is an equity mutual fund which provides investors an opportunity to invest in
an actively managed portfolio of contrarian stocks.

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 5 Steps for selecting the best mutual fund

1. Identify your investment goals and risk profile

Before investor decide to invest in mutual funds, investor should identify the investment goals.
Investor must clearly decide if he/she are looking for long-term gains or periodic returns. In
addition, it is necessary to determine if they need the money for paying educational expenses,
building a retirement corpus, funding wedding expenses, or any other purpose. Knowing specific
goals will help the investor to shortlist the schemes that meet these requirements.

2. Know the type of fund

If investor want to remain invested for a longer period and are willing to assume higher risks,
choosing equity based schemes is recommended. Such schemes invest a larger portion of the
fund corpus in equities, which provide the opportunity to earn higher returns. However, since the
stock market is volatile, such funds are risky in the short term.

3. Consider the fees and charges

Mutual fund houses levy different types of fees and charges. Some of these include entry or exit
load and management fees. The entry load is payable when invest in the scheme while the exit
load is charged at the time of redeeming mutual fund investments. In addition, the fund houses
may levy management fees for professionally managing the corpus. It is important to clearly
understand these different charges as these affect your effective rate of return. Conducting
extensive research about such fees online will help the investor to make an informed decision.

4. Analyze fund performance and history

MFs are professionally managed by experienced fund managers. They use their knowledge and
skills to make investment decisions based on the overall fund philosophy. Investor must research
the performances of different funds before investing in these products.

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5. Determine the fund size

Although the size of the fund does not affect its capability of delivering superior returns, there
are some situations when the size may be too big. In such cases, the fund may have to modify the
investment philosophy and process to accommodate the increase in the number of investors. This
may affect the performance and returns of the fund. Knowing investor financial goals and risk
profile it will help the investor to choose the best mutual fund.

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CHAPTER-3

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 Research methodology
Research methodology is way to systematically solve the research problem. Research, in
common terms refers to a search for knowledge. Research methodology consists of different
steps that are generally adopted by a researcher to study the research problem along with the
logic behind them.

Collection of data:

a)Primary data:

Primary data are information collected by a researcher specifically for a research assignment. In
other words, primary data are information that a company must gather because no one has
compiled and published the information in a forum accessible to the public. Companies generally
take the time and allocate the resources required to gather primary data only when a question,
issue or problem presents itself that is sufficiently important or unique that it warrants the
expenditure necessary to gather the primary data. Primary data are original in nature and directly
related to the issue or problem and current data. Primary data are the data which the researcher
collects through various methods like interviews, surveys, questionnaires etc.

b) Secondary Data:

The data, which is collected from the published sources i.e., not originally collected of the first
time is called secondary data. Secondary data are the data collected by a party not related to the
research study but collected these data for some other purpose and at different time in the past. If
the researcher uses these data then these become secondary data for the current users. These may
be available in written, typed or in electronic forms. A variety of secondary information sources
is available to the researcher gathering data on an industry, potential product applications and the
market place. Secondary data is also used to gain initial insight into the research problem.
Secondary data is classified in terms of its source – either internal or external. Internal, or in-
house data, is secondary information acquired within the organization where research is being
carried out. External secondary data is obtained from outside sources. Here the secondary data is
data collected from the website.

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CHAPTER-4

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Finding and analysis of the data
1. To identify the investor perception about mutual fund investing through SBI
mutual fund
Financial markets are constantly becoming more efficient by providing more promising
solutions to the investor. Being a part of financial markets although SBI mutual funds
industry is responding very fast by understanding the dynamics of investor's perception
towards rewards, still they are continuously following this race in their endeavor to
differentiate their products responding to sudden changes in the economy. Thus, it is
high time to understand and analyze investor's perception and expectations, and unveil
some extremely valuable information to support financial decision making of mutual
funds. In few years Mutual Fund has emerged as a tool for ensuring one's financial well
being. Mutual Funds have not only contributed to the India growth story but have also
helped families tap into the success of Indian Industry. As information and awareness is
rising more and more people are enjoying the benefits of investing in mutual funds. The
main reason the number of retail SBI mutual fund investors remains small is that with
incomes. Customers even who know about SBI mutual fund, are not investing their
money into it because of lack of knowledge about SBI mutual fund.

2. To known the customer preference about type of investment

The most crucial challenge faced by the investors is perhaps in the area of taking
investment decisions. Every investor differs from the others in all aspects due to various
factors like demographic factors, socio-economic background, marital status, educational
attainment level, age, gender etc. An educated person’s decision making towards
investment differs from an uneducated one. A young bachelor, for instance, prefers to
invest in risky avenues, where as a matured person with a family dependability prefers
less risky and stable income generating avenues. Similarly, rural /urban background of
individuals, availability of information, accessibility of avenues, and investment
companies/colleagues also influence individuals in developing their perceptions.
Investment behavior is the study of the decision making.

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3. Understand the preference of schemes of SBI mutual fund

A mutual fund is a kind of investment that uses money from many investors to invest in stocks,
bonds or other types of investment. A fund manager or portfolio manager decides how to invest
the money, and for this he is paid a fee, which comes from the money in the fund.

There are thousands of different kinds of mutual funds, specializing in investing in different
countries, different types of businesses, and different investment styles. There are even some
funds that only invest in other fund. A scheme can also be classified as growth scheme, income
scheme, or balanced scheme considering its investment objective. Such schemes may be open-
ended or close-ended schemes. Such schemes may be classified mainly as follows:

Equity Schemes

SBI equity funds are for long-term capital appreciation through investment in extensively
researched shares and stocks of top rated companies. The funds are picked based on the
consistency of performance and are designed for generating high returns. These funds are high-
risk funds and require careful consideration before investing.

Debt Schemes

SBI Debt Funds offer a safer investment option to the more risk-averse investor. These funds
with comparatively lower return prospects come in various short-term fixed income security
options like commercial papers, government bonds, treasury bills and certificates of deposits.

Balanced Schemes

Magnum Balanced Fund invests in a mix of equity and debt investments. Hence they are less
risky than equity funds, but at the same time provide commensurately lower returns. They
provide a good investment opportunity to investors who do not wish to be completely exposed to
equity markets, but is looking for higher returns than those provided by debt funds.

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 Findings
 Most of the customers were not fully aware with mutual fund and its advantage.
 Customers even who know about mutual fund, are not investing their money into it
because of lack of knowledge about mutual fund.
 Customers prefer to invest in other alternatives mostly in equity and Share market.
 In future, customers would like to invest in mutual fund if SBI create awareness and
provide right knowledge about mutual fund among customers.
 Most of the customers were using online mode of payment frequently.
 There was communication gap with some customers to their respective Relationship
Manager.
 Mostly customers update themselves about investment decision by their own or take
advice with family and friends.

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 Conclusion

The project that I undertook in mutual fund provided me a good experience of Investment
Avenues like Mutual Funds, Insurance, Fixed Deposits and related activities. It was a good
experience for me as it helped me enhance my knowledge as well as gave a good industry
exposure for the period which would definitely prove to be very useful at the time of placements.
The complete project helped me gain knowledge and at the same time it was very beneficial for
the company.

This is a study taken to make an attempt to understand the financial behavior and perception of
SBI mutual fund investor. I observed that many of investor has fear of Mutual Fund. Many of
investor does not invest in mutual fund due to lack of awareness although they have money to
invest. Most of customers prefer to invest in equity. Investors should be made aware of the
benefits. Nobody will invest till he/she is fully convinced of the scheme.

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Reference
 www.mutualfundsindia.com

 www.investopedia.com

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