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What is the history of Mutual Funds in India and role of SEBI in mutual funds industry?
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 and to regulate the 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 from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. It may be mentioned here that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).
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Can a mutual fund change the asset allocation while deploying funds of investors?
Considering the market trends, any prudent fund managers can change the asset allocation i.e. he can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document. It can be done on a short term basis on defensive considerations i.e. to protect the NAV. Hence the fund managers are allowed certain flexibility in altering the asset allocation considering the interest of the investors. In case the mutual fund wants to change the asset allocation on a permanent basis, they are required to inform the unit holders and giving them option to exit the scheme at prevailing NAV without any load.
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When will the investor get certificate or statement of account after investing in a mutual fund?
Mutual funds are required to dispatch certificates or statements of accounts within six weeks from the date of closure of the initial subscription of the scheme. In case of closeended schemes, the investors would get either a demat account statement or unit certificates as these are traded in the stock exchanges. In case of open-ended schemes, a statement of account is issued by the mutual fund within 30 days from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document.
Is there any difference between investing in a mutual fund and in an initial public offering (IPO) of a company?
Yes, there is a difference. IPOs of companies may open at lower or higher price than the issue price depending on market sentiment and perception of investors. However, in the case of mutual funds, the par value of the units may not rise or fall immediately after allotment. A mutual fund scheme takes some time to make investment in securities. NAV of the scheme depends on the value of securities in which the funds have been deployed.
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Are the companies having names like mutual benefit the same as mutual funds schemes?
Investors should not assume some companies having the name "mutual benefit" as mutual funds. These companies do not come under the purview of SEBI. On the other hand, mutual funds can mobilise funds from the investors by launching schemes only after getting registered with SEBI as mutual funds.
Is the higher net worth of the sponsor a guarantee for better returns?
In the offer document of any mutual fund scheme, financial performance including the net worth of the sponsor for a period of three years is required to be given. The only purpose is that the investors should know the track record of the company which has sponsored the mutual fund. However, higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the NAV falls.
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There are a number of other web sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard.
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All mutual funds are variations of these three asset classes. For example, while equity funds that invest in fast-growing companies are known as growth funds, equity funds that invest only in companies of the same sector or region are known as specialty funds. Let's go over the many different flavors of funds. We'll start with the safest and then work through to the more risky. Money Market Funds The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe place to park your money. You won't get great returns, but you won't have to worry about losing your principal. A typical return is twice the amount you would earn in a regular checking/savings account and a little less than the average certificate of deposit (CD). Bond/Income Funds Income funds are named appropriately: their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees. Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds aren't without risk. Because there are many different types of bonds, bond funds can vary dramatically depending on where they invest. For example, a fund specializing in high-yield junk bonds is much more risky than a fund that invests in government securities. Furthermore, nearly all bond funds are subject to interest rate risk, which means that if rates go up the value of the fund goes down.
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Investors Trend in Mutual Fund at SBI Balanced Funds The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income. The weighting might also be restricted to a specified maximum or minimum for each asset class. A similar type of fund is known as an asset allocation fund. Objectives are similar to those of a balanced fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class. The portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves through the business cycle. Equity Funds Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income. There are, however, many different types of equity funds because there are many different types of equities. A great way to understand the universe of equity funds is to use a style box, an example of which is below.
The idea is to classify funds based on both the size of the companies invested in and the investment style of the manager. The term value refers to a style of investing that looks for high quality companies that are out of favor with the market. These companies are Babasabpatilfreepptmba.com 10
Investors Trend in Mutual Fund at SBI characterized by low P/E and price-to-book ratios and high dividend yields. The opposite of value is growth, which refers to companies that have had (and are expected to continue to have) strong growth in earnings, sales and cash flow. A compromise between value and growth is blend, which simply refers to companies that are neither value nor growth stocks and are classified as being somewhere in the middle. For example, a mutual fund that invests in large-cap companies that are in strong financial shape but have recently seen their share prices fall would be placed in the upper left quadrant of the style box (large and value). The opposite of this would be a fund that invests in startup technology companies with excellent growth prospects. Such a mutual fund would reside in the bottom right quadrant (small and growth). Global/International Funds An international fund (or foreign fund) invests only outside your home country. Global funds invest anywhere around the world, including your home country. It's tough to classify these funds as either riskier or safer than domestic investments. They do tend to be more volatile and have unique country and/or political risks. But, on the flip side, they can, as part of a well-balanced portfolio, actually reduce risk by increasing diversification. Although the world's economies are becoming more inter-related, it is likely that another economy somewhere is outperforming the economy of your home country. Specialty Funds This classification of mutual funds is more of an all-encompassing category that consists of funds that have proved to be popular but don't necessarily belong to the categories we've described so far. This type of mutual fund forgoes broad diversification to concentrate on a certain segment of the economy. Sector funds are targeted at specific sectors of the economy such as financial, technology,
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Investors Trend in Mutual Fund at SBI health, etc. Sector funds are extremely volatile. There is a greater possibility of big gains, but you have to accept that your sector may tank. Regional funds make it easier to focus on a specific area of the world. This may mean focusing on a region (say Latin America) or an individual country (for example, only Brazil). An advantage of these funds is that they make it easier to buy stock in foreign countries, which is otherwise difficult and expensive. Just like for sector funds, you have to accept the high risk of loss, which occurs if the region goes into a bad recession. Socially-responsible funds (or ethical funds) invest only in companies that meet the criteria of certain guidelines or beliefs. Most socially responsible funds don't invest in industries such as tobacco, alcoholic beverages, weapons or nuclear power. The idea is to get a competitive performance while still maintaining a healthy conscience. Index Funds The last but certainly not the least important are index funds. This type of mutual fund replicates the performance of a broad market index such as the S&P 500 or Dow Jones Industrial Average (DJIA). An investor in an index fund figures that most managers can't beat the market. An index fund merely replicates the market return and benefits investors in the form of low fees.
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Fund Objective
Equity (Growth) Debt (Income) Money Market (including Gilt) Balanced
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Investors Trend in Mutual Fund at SBI Investing is becoming more complex There was a time when things were quite simple - the market went up with the arrival of the first monsoon showers and every year around Diwali. Since India started integrating with the world (with the start of the liberalisation process), complex factors such as an increase in short-term US interest rates, the collapse of the Brazilian currency or default on its debt by the Russian government, have started having an impact on the Indian stock market. Although it is possible for an individual investor to understand Indian companies (and investing) in such an environment, the process can become fairly time consuming. Mutual funds (whose fund managers are paid to understand these issues and whose asset Management Company invests in research) provide an option of investing without getting lost in the complexities. Mutual funds provide risk diversification Diversification of a portfolio is amongst the primary tenets of portfolio structuring (see The Need to Diversify). And a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option.
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Investors Trend in Mutual Fund at SBI Diversify Don't just zero in on one mutual fund (to avoid the risk of being overly dependent on any one fund). Pick two, preferably three mutual funds that would match your investment objective in each asset allocation category and spread your investment. We recommend a 60:40 split if you have short listed 2 funds and a 50:30:20 split if you have shortlisted 3 funds for investment. Consider Fund Costs The cost of investing through a mutual fund is not insignificant and deserves due consideration, especially when it comes to fixed income funds. Management fees, annual Expenses of the fund and sales loads can take away a significant portion of your returns. As a general rule, 1% towards management fees and 0.6% towards other annual expenses should be acceptable. Carefully examine load the fee a fund charges for getting in and out of the fund. Again, you can query on entry and exit loads under our Find-A-Fund query module.
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A fund changes its strategy A fund that alters its investment objective or approach might no longer fit your strategy. The fund's poor results persist If a fund regularly trails other funds that invest in similar securities, consider replacing it. The poor performance is more often than not a reflection on the relative expertise of the asset management company. By now you would have realized that investing in mutual funds is not just a decision but is more a process. Money controls Mutual Fund Investing Checklist can help make this process easier and more efficient.
Investors Trend in Mutual Fund at SBI Wide varieties of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
By Investment Objective
o o o o
Other Schemes
o o o o
Tax Saving Schemes Special Schemes Index Schemes Sector Specific Schemes
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Investors Trend in Mutual Fund at SBI last year and has a five-year average annual return of 42%. Telecommunications was a hot sector last year and will continue to outperform. Invesco also has a good telecommunications fund call Invesco Telecommunications Fund that has produced an average annual five-year return of over 40% and returned over 100% last year (telephone number 800-525-8085) (symbol ISWCX). Investing in a hot sector fund is not meant to replace your core investment strategy, but can be used to supplement your returns. Although many of these hot companies are increasing dramatically, there are higher levels of risk attached. However, if you have a long-term horizon, you can allocate a portion of your investment in a higher yielding mutual fund and this, coupled with your core S & P500 Index mutual fund can help bump up your overall annual returnsand higher returns is the goal.
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Investors Trend in Mutual Fund at SBI toward the end of the year, you did not participate in the appreciation of the fund's net asset value (NAV) during the year. But unfortunately, you did pay taxes on the reported capital gains. The cold hard facts are you essentially paid extra money for the mutual fund an extra $300. Yes, maybe unfair, but that is the way mutual funds work. Your best defense against paying extra taxes is to buy a mutual fund right after they distribute the capital gains. Although, this may not always be the best time, because of the performance of the mutual fund at that moment, you should at least be aware of the capital gains distribution date and try to work around it. Whenever you call the mutual fund to get a copy of the prospectus and annual report, ask the
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Mutual funds are widely diversified. Market timing in mutual funds is not recommended. Mutual funds are long term investments.
Mutual funds are widely diversified. The diversification offered by mutual funds is one of the top reasons to invest in this type of financial vehicle. Mutual funds have many stocks in their portfolio of investments and all these stocks perform differently at different times. Some will be up, some will be down and some will be up more and some will be down more. What this means is that mutual funds will probably absorb unstable market conditions better than investing directly into stocks. Market timing in mutual funds is not recommended. Many studies have shown that investors who have stayed invested during the roughest times of the market have experienced the greatest growth when the markets turned around. These same studies have also shown that mutual fund investors aren't able to time the market well enough to produce any improvement in their overall portfolio. In fact, by selling and trying to time the stock market when you are invested in mutual funds, you are likely to decrease your overall return because you will probably miss some of the early run up while trying to decide if the time is right for you to reenter. Market timing is more for the stock investor and not for the mutual fund investor. You are paying the mutual fund managers, the professionals, to determine when to enter or exit certain positions. Don't try to second-guess them.
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Investors Trend in Mutual Fund at SBI Mutual funds are long term investments. When the markets turn excessively rough, mutual fund investors should take comfort in knowing that they are invested for the long term. Many mutual fund managers create positions in stocks that they plan to hold for years and they continue to add to these positions over the long term. In fact, many times after a market bottom, mutual fund managers are buying and adding to their long-term positions at the new lower prices. Thistype of investing will create significantly greater returns for those savvy investors who stayed invested and didn't sell their shares at the first sign of market trouble. So when would you consider selling your mutual fund shares? If any of these three things occur: your investment strategy has changed, the fund's overall investment philosophy has changed or the fund manager has changed. Remember one of the secrets to successful mutual fund investing is holding for the longterm. Stick to your sound investment strategies and don't let the market gyrations scare you out.
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Investors Trend in Mutual Fund at SBI 2. The Mutual Fund Philosophy Changes - Although a rare occurrence, some mutual funds may decide to change their investing strategy. For example a conservative mutual fund looking for higher returns may decide to invest in high-risk derivatives. This approach may not fit into your risk profile. If you are not comfortable with the added volatility you may want to switch to a more conservative fund. Changes in investing strategies are always mentioned in the quarterly or annual mutual fund reports. 3. The Specialized Fund is Either Under Performing the Market or Does Not Fit Your Risk Profile - Investing in a specialized mutual fund is riskier than investing in a welldiversified fund such as an Index fund and requires much more research and upkeep. You may find that the sector you selected, such as the Internet, maybe too volatile for you because your heart pounds every time you check the price. This may not be the fund for you. You may also be in a sector that consistently under performs the S & P 500 Index. Surprisingly, only 20% of all funds outperform the S & P 500 Index. So why go through the brain damage just invest in an Index fund. 4. Reduced Diversity - If you are also investing in individual stocks, you may discover that the mutual fund you selected is also heavily invested in the same stocks. Investing in a mutual fund where the top ten holdings looks like your own stock account may increase your risk. I believe a good strategy is to use mutual funds as a way to diversify your investments outside of your individual stocks. Although we all hope to pick winning stocks every time, the reality is you'll pick some good ones and you'll pick some bad ones. A welldiversified, well-managed mutual fund can help balance out your risk and can help increase your overall returns if by chance you made any bad individual stock choices. Review the mutual fund's top ten holdings periodically to evaluate the risk of any duplicate investments. If you take the time in the beginning to carefully select the right mutual fund for you, then all you need to do is sit tight, relax, enjoy life and let the magic of compounding work for you.
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Reliance Vision SBI Magnum Contra SBI Magnum Global 94 Sundaram BNP Paribas Leadership Sundaram BNP Paribas Select Midcap
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Investors Trend in Mutual Fund at SBI The total risk of a given fund is sum of these two and is measured in terms of slandered deviation of returns of the fund. Systematic risk, on the other hand, is measured in terms of Beta, which represents fluctuations in the NAV of the fund via-a-vis market. The more responsive the NAV of a mutual fund is to the changes in the market; higher will be its Beta. Beta is calculated by relating the return on a mutual fund with the returns in the market. While unsystematic risk can be
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COMPANY PROFILE
SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - Indias largest banking enterprise. The institution has grown immensely since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint venture between the State Bank of India and Socit Gnrale Asset Management, one of the worlds leading fund management companies that manages over US$ 330 Billion worldwide. In eighteen years of operation, the fund has launched thirty-two schemes and successfully redeemed fifteen of them. In the process it has rewarded its investors handsomely with consistently high returns. A total of over 3.8 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund. Schemes of the Mutual fund have consistently outperformed benchmark indices and have emerged as the preferred investment for millions of investors and HNIs. Today, the fund manages over Rs. 20000 crores of assets and has a diverse profile of investors actively parking their investments across 40 active schemes.
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Investors Trend in Mutual Fund at SBI The fund serves this vast family of investors by reaching out to them through network of over 100 points of acceptance, 26 investor service centers, 33 investor service desks and 52 district organizers. SBI Mutual is the first bank-sponsored fund to launch an offshore fund Resurgent India Opportunities Fund. Growth through innovation and stable investment policies is the SBI MF credo.
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KEY PERSONNEL Mr. Syed Shahabuddin Mr. G.S. Subramanian Mr. Didier Turpin Mr. G. Kandasubramanian Managing Director SR. Vice President Cross Selling Dy. Chief Executive Officer Asst. Vice President - Customer Service Mr. Achal K. Gupta Mr. Ganti N. Murthy Mr. Sanjay Sinha Ms. Aparna Nirgude Mr. R. S. Srinivas Jain Chief Operating Officer Fund Manager - Debt Chief Investment Officer Chief Risk Officer Chief Marketing Officer
1)
2)
ICRA MUTUAL FUND AWARD -2007
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CNBC TV 18 - CRISIL MUTUAL FUND OF YEAR AWARD -2007
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CNBC AWAAZ CONSUMER AWARD 2006
5)
LIPPER AWARD- lipper India fund award -2006
6)
CNBC TV 18 - CRISIL MUTUAL FUND OF YEAR AWARD -2006
7)
ICRA MUTUAL FUND AWARD -2006
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Schemes
Debt, Equity, Balanced these are the three major schemes in SBI Mutual Fund. Babasabpatilfreepptmba.com 38
Investors Trend in Mutual Fund at SBI DEBT SCHEMES Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns from debt funds would be lower. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors.
Magnum Childrens Benefit Plan Magnum Gilt Fund Magnum Gilt Fund (Long Term) Magnum Gilt Fund (Short Term) Magnum Income Fund Magnum Income Plus Fund Magnum Income Plus Fund (Saving Plan) Magnum Income Plus Fund (Investment Plan) Magnum Insta Cash Fund Magnum InstaCash Fund -Liquid Floater Plan Magnum Institutional Income Fund Magnum Monthly Income Plan Magnum Monthly Income Plan Floater Magnum NRI Investment Fund SBI Capital Protection Oriented Fund - Series I SBI Debt Fund Series SDFS 15 Months Fund SDFS 90 Days Fund SDFS 13 Months Fund SDFS 18 Months Fund SDFS 24 Months Fund SDFS 60 Days Fund SDFS 180 Days Fund SBI Premier Liquid Fund SBI Short Horizon Fund SBI Short Horizon Fund Liquid Plus Fund SBI Short Horizon Fund - Short Term Fund
EQUITY SCHEMES
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Investors Trend in Mutual Fund at SBI The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index
Magnum COMMA Fund Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum MidCap Fund Magnum Multicap Fund Magnum Multiplier Plus 1993 Magnum Sector Funds Umbrella MSFU - FMCG Fund MSFU - Emerging Businesses Fund MSFU - IT Fund MSFU - Pharma Fund MSFU - Contra Fund SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Taxgain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUND - SERIES
BALANCED SCHEMES
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Investors Trend in Mutual Fund at SBI 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.
SBIMF's TaxGain
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Investors Trend in Mutual Fund at SBI MUMBAI, NOV 16: SBI Mutual Fund's tax saving scheme, Magnum TaxGain, which has been performing well with returns of 173 per cent over the last one year - outperforming even BSE Sensex by 113 per cent - has now gone open-ended from November 11. In 1998-99 this scheme had appreciated by 58.5 per cent while its benchmark BSE National index fell by 2.70 per cent. This scheme has a track record of consistent performance giving investors annualized returns of 16.35 per cent since inception in 1993. Magnum TaxGain has been consistently ranked amongst the top performing tax saving schemes. ``Magnum TaxGain has declared a maiden dividend of 25 per cent which is taxfree in the hands of investors. All investors who invest in this scheme on or before the December 15, will be eligible for this dividend,'' according to SBI Funds Management Ltd's managing director Niamatullah. Addressing a press conference here today, he said that investments in this scheme upto Rs 10,000 qualify for a tax rebate of 20 per cent under Section 88 of the Income Tax Act. Additionally, tax exemptions are also available under Section 54 EA and EB. The scheme has an investor friendly tapering exit load structure with no exit load beyond two years. The top holdings of the scheme currently include Software Solutions, Infosys, Vikas WSP, Zee Telefimls, Ramco and Graism. Magnum LiquiBond Income Fund (MLIF) too has declared a half-yearly dividend of 5.25 per cent for the period May 1999 - October 1999. MLIF is a fully debt fund investing in high quality debt instruments of corporate and government securities. SBI Mutual Fund had recently rechristened two of its existing open ended schemes Magnum Multiplier Scheme and Magnum Open Fund as Magnum Equity Fund and
Magnum Balanced Fund respectively. ``This rechristening brings out the character of the scheme upfront and will help in communication,'' he added.
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Investors Trend in Mutual Fund at SBI The sector funds umbrella launched by SBI Mutual in July 1999 also has turned in an impressive performance with the IT fund giving the highest return of 73 per cent followed by pharmacy fund at 23.7 per cent, contra fund at 22.1 per cent and the FMCG fund at 10 per cent. SBI Mutual Fund is the country's second largest mutual fund.
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Investors Trend in Mutual Fund at SBI in terms of returns. For instance, by shifting from a growth fund to a dividend plan, the investor may be allotted more units. But it will not alter the performance of the fund as that depends on the stocks the fund has invested. Also, the investor should remember the fact that dividend is distributed out of profits made by a fund and the NAV falls correspondingly. So if a fund declares a dividend of Rs 6 per unit when its NAV is quoted at Rs 40, the NAV will fall by Rs 6 after the payment.
Investors Trend in Mutual Fund at SBI which float schemes which aim to invest mainly in the stocks of realty firms. According to a senior revenue department official, real estate MFs and other MFs that invest in shares of realty companies will be spared of paying tax on all income. The dividend income of unit holders who buy these products to reap the gains of a realty boom will also be tax-free. Sebi-registered real estate mutual funds will be given a tax pass-through status if they invest the money raised from investors in shares of real estate companies. So will be the case for all mutual funds investing in shares of realty companies, said the official. Securities market regulator SEBI had approved the launch of real estate mutual funds almost two years ago. But the operational guidelines or norms are yet to be unveiled. Now, with greater clarity on valuation norms and the calculation of net asset value (NAV), the regulator may soon prepare the ground for the launch of real estate MFs, an official said. Real estate MFs are expected to be close-ended, and the units of these funds will be listed on the exchanges. Such funds invest in both listed and unlisted securities of realty firms. They offer an opportunity to investors to take an exposure to a sector which offers reasonably attractive capital gains and steady dividend income. However, the Reserve Bank of India (RBI) has not been comfortable with more investment flowing into realty given the dangers of an asset price bubble. While real estate mutual funds will stand to gain due to favorable tax treatment, Real Estate Investment Trusts (REITs) that directly buy and sell property including apartments and shopping malls could be denied such benefits, a senior revenue department official said. Source: The Economic Times
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SIP schemes are considered to be an ideal one for working class, as it could fetch a minimum return of 20-25 per cent, he claimed. SBIMF is currently holding 64 funds, majority of which are equity-oriented. Three more new schemes are in the
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Investors Trend in Mutual Fund at SBI pipeline awaiting approval from the SEBI, he said. Source: The Hindu Business Line Date: 31/03/2008
Management Problem:
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Secondary Data
Business Magazines, old project report, company annual report. Websites mainly sbimf.com, valueresearchonline.com
Sampling Design
: 100 : Questionnaires
1) Which of the following investment option would you prefer? (1 is most preferable 5 is least preferable)
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389
366 286
2nd rank to Mutual Fund 238 3rd rank to Stock Market 286 4th rank to Real Estate 366 5th rank to Postal Savings - 389
30.0%
Yes 70.0%
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70% of respondents invested in Mutual Fund 30% of respondents not Invested in Mutual Fund
N o 3 % .3
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Ye s
9 .7 6 %
96.7% of respondents have interest to invest in Mutual Fund 3.3% of respondents not interest to invest in Mutual Fund
60 57 50
40
30
Percent
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8% of the investor invested their money in Prudential ICICI MF 8% of the investor invested their money in Other MF 9% of the investor invested their money in HDFC MF 18% of the investor invested their money in Reliance MF
B alanced of the investor invested their money in SBI MF 57% 1 9.2% D bt e 1 0.1%
5) Nature of Investment
E uity q
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7 0.7%
70.7% of the respondents are invested their money in equity plans 19.2% of the respondents are invested their money in balanced plans 10.1% of the respondents are invested their money in Debt plans
5 0 4 5
4 0
Percent
1 5 1 0
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45%of the investor considers safety on their investment 35% of the investor considers open ended on their investment 15% of the investor considers high risk high return on their investment 3%of the investor considers low risk low return on their investment 1% of the investor considers closed ended on their investment
L n te (m re th n o g rm o a 1 .1 4 %
S o te (u to1 h rt rm p yr
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7 .7 1 %
71.7% of the investors are mid term investors 14.1% of the investors are long term investors 14.1% of the investors are short term investors
N o 59.6%
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40.4% of the investors invested their money in SBI Mutual Fund 59.6% of the investors not invested their money in SBI Mutual Fund
6 0
4 0
Percent
2 0
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H h s t fie i ly ais d g
75% of the investors are satisfied on the SBI Mutual Fund Returns 20% of the investors are neutral on the SBI Mutual Fund Returns 5% of the investors are highly satisfied on the SBI Mutual Fund Returns
10) How do you compare SBI Mutual Fund with ICICI Pru, HDFC and Reliance?
7 0 6 0 5 0
4 0
3 0
Percent
2 0
1 0
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v r go ey o d
Hw oy uc m r S IM u l F n sw P I I I HF a dRla c M o d o o p e B u a u d i h r C , DC n e ne u a t t u C i
65% of the investors comparisons states that good 18% of the investors comparisons states that very good 17% of the investors comparisons states that neither bad nor good
FINDINGS
1) 1st rank to Bank Fixed Deposits -221 2) 2nd rank to Mutual Fund 238 3) 3rd rank to Stock Market 286 4) 4th rank to Real Estate 366 5) 5th rank to Postal Savings - 389
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6) 70% of respondents invested in Mutual Fund 7) 30% of respondents not Invested in Mutual Fund 8) 96.7% of respondents have interest to invest in Mutual Fund 9) 3.3% of respondents not interest to invest in Mutual Fund 10) 8% of the investor invested their money in Prudential ICICI MF 11) 8% of the investor invested their money in Other MF 12) 9% of the investor invested their money in HDFC MF 13) 18% of the investor invested their money in Reliance MF 14) 57% of the investor invested their money in SBI MF 15) 70.7% of the respondents are invested their money in equity plans 16) 19.2% of the respondents are invested their money in balanced plans 17) 10.1% of the respondents are invested their money in Debt plans 18) 45%of the investor considers safety on their investment 19) 35% of the investor considers open ended on their investment 20) 15% of the investor considers high risk high return on their investment 21) 3%of the investor considers low risk low return on their investment 22) 1% of the investor considers closed ended on their investment 23) 71.7% of the investors are mid term investors 24) 14.1% of the investors are long term investors 25) 14.1% of the investors are short term investors 26) 40.4% of the investors invested their money in SBI Mutual Fund 27) 59.6% of the investors not invested their money in SBI Mutual Fund 28) 75% of the investors are satisfied on the SBI Mutual Fund Returns 29) 20% of the investors are neutral on the SBI Mutual Fund Returns 30) 5% of the investors are highly satisfied on the SBI Mutual Fund Returns
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31) 65% of the investors comparisons states that good 32) 18% of the investors comparisons states that very good 33) 17% of the investors comparisons states that neither bad nor good
RECOMMENDATIONS
1) 70% of respondents invested in Mutual Fund and 30% of the respondents have not invested in Mutual Fund. So my suggestion would be to convert that 30% of respondents to invest in SBI Mutual Fund.
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2) 71.7% of the investors are mid term investors, there is an opportunity to convince that investors shift to long term investments and get more profit. 3) 20% of the investors are neutral on the SBI Mutual Fund Returns try to bring those investors to satisfaction level. 4) 15% of the investors are ready to take high risk, it is favorable to company advice those investors to invest in Debt plans, that they may get more returns from the investment. 5) The investor who wants to invest for long term, it is favorable to company advise those investors invest in equity plans. So that they may get more returns from the investment. 6) According to survey 40.4% of the investors invested their money in SBI Mutual Fund, 59.6% of the investors not invested their money in SBI Mutual Fund. So still there is opportunity to convert those investors into SBI Mutual Fund
LIMITATIONS
The research was conducted in Hubli city only, so analysis and recommendations may not be applicable to other cities.
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Sample size was 100; I feel this small size cannot represent the whole industry. The study was conducted in Hubli city only; so all the information sought is restricted to this city only.
CONCLUSION
From the study conducted knowing the investors trend in mutual fund, through the survey it was found that most of the investors invested in mutual fund because it gave good returns to investors. Most of the investors have
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invested in SBI Mutual Fund because its a government sector fund and there is a more safety than other private sectors. Through the survey I found compared to ICICI Pru, HDFC, and Reliance; SBI Mutual Fund is in good position in market and through this study I found most of young and retired people ready to take risk and they prefer to invest in Mutual Fund. In the survey most of the investors invested in equity plan followed by the balance and debt fund. Majority of the investors are satisfied and highly satisfied on their investment and most of the investors have mid term investment.
Questionnaire
Investors Trend in Mutual Fund at SBI OCCUPATION... ADDRESS 1) Which of the following investment option would you prefer? (Rank them 1 is most preferable 5 is least preferable) a) Bank fixed Deposits. . c) Mutual Funds. d) Stock Market 2) Have you ever invested in Mutual Funds? a) Yes b) No b) Postal Savings d) Real Estate
If No Specify
4) In which Mutual Fund would you like to go for investment? a) Pru ICICI c) Reliance b) HDFC d) SBI
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Investors Trend in Mutual Fund at SBI 6) What factors do you consider while investing in above Mutual Funds? a) High Risk- High Returns c) Safety d) Closed-ended 7) How long do you prefer to invest in Mutual Funds? a) Short term (up to 1yr) b) Low Risk- Low Returns d) Open-ended
If Yes in which scheme specify . If No Specify.. 9) Are you satisfied with SBI Mutual Funds Returns? Very Unsatisfied unsatisfied Neutral Satisfied Highly satisfied
10) How do you compare SBI Mutual Funds with Pru ICICI, HDFC and Reliance Mutual Funds? a) b) c) d) e) Very bad Bad Neither bad nor good Good Very good
12)Suggestions.................................................................................................................. Babasabpatilfreepptmba.com 67
THANK YOU
Website
www.sbimf.com
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SPSS DATA
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