Sbi Final Project

8/9/2019 Sbi Final Project

1/56

Summer Training ProjectSummer Training Project

Report OnReport On

Submitted by:-

AshutoshAshutoshSutharSuthar


2/56

BBA 2nd

year

Sekhawati College OfManagement and IT

SIKAR(RAJ.)

Executive summary

A mutual fund is a fund in which an investor's money is

combined with the money of many other investors. The total

amount of money is invested by a professional manager

according to the specific mutual fund's investment objective.

Each investor holds a share of the total fund, and is entitled to a

portion of the profits of the fund (and, of course, would share in

any investment losses).

Life is full of surprises, some pleasant and some not so pleasant.

Our families and we have to live with these uncertainties.

Preparing for the uncertainties of life is what Insurance is all

about. Why waste precious moments contemplating tomorrow,

when we have to live today? Insurance is a tool, a solution fordelegating the worries concerning tomorrow onto a trustworthy

institution so that you can start living today.

My project aims to the understanding Market Study Of SBI

Mutual Fund as compare to Unit Linked Plan of Life Insurance

and how are Mutual Funds products different from Unit Linked

Life Insurance.


3/56

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 ourtask 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 mymorale 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 heartful

thanks 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 IT

for giving me an opportunity.


4/56

Ashutosh Suthar

SCMIT

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 schemesin the jaipur.

After the analysis of collected data, the main findings of this

study and suggestion are presented in the report.


5/56

DEDICATED

TO MY FATHER , RESPECTEDTEACHERS

AND MY CLOSET FRIENDS


6/56

MUTUAL FUND

INTRODUCTIONMutual Fund are a pool of savings collected from a number

of small investors, sharing a common financial goal. Themoney thus collected is invested by experiencedprofessionals called fund managers, according to the pre-decided objectives in diverse types of securities likeGovernment sponsored Debentures and Bonds, shares ofpublic and private sector companies, bank guaranteedinstruments.

Thus a Mutual Fund is the mostsuitable investment for the common man as it offers anopportunity to invest in a diversified, professionally managedportfolio at a relatively low cost. Anybody with an investiblesurplus of as little as a few thousand rupees can invest inMutual Funds. Each Mutual Fund scheme has a definedinvestment objective and strategy.

A Mutual Fund is the idealinvestment vehicle for todays complex and modern financialscenario. Markets for equity shares, bonds and other fixed

income instruments, real estate, derivatives and other assetshave become mature and information driven. Price changesin these assets are driven by global events occurring infaraway places. A typical individual is unlikely to have theknowledge, skills, inclination and time to keep track ofevents, understand their implication and speedily. Anindividual also finds it difficult to keep track of ownership of


7/56

his assets, investment, brokerage dues and bank transactionetc.

A mutual fund is the answer to allthese situations.It appoints professionally qualifiedexperience staff that manages each of these functions on a

full time basis. The large pool of money collected in the fundallows it to hire such staff at a very low cost to each investor.

What are the different types of Mutual Funds?

On the basis of the objective, mutual funds can be dividedinto Growth, Income and Balanced Funds.Growth or Equity Schemes aim at capital appreciation overthe medium to long term period. Typically these funds wouldinvest a majority of their corpus in shares or equity ofcompanies.Income or Debt Schemes aim at providing a steady andregular income and hence would invest in fixed interest

securities issued by the Government, corporate bonds anddebentures and money market instruments.Balanced or Hybrid Funds, invest in a combination of Equityand Debt Instruments in varying proportions. These aremostly funds with about 60% invested in Equity andremaining 40% in Debt.

MUTUAL FUND

STRUCTURE INVESTMENT OTHER SCHEMES

*OPEN-ENDED *GROWTH *TAX SAVING*CLOSE-ENDED *INCOME *SPECIAL SCHEME*INTERVAL *BALANCED *INDEX


8/56

*MONEY MARKET

BY STRUCTURE CLASSIFICATION:- Open ended fund: An open ended fund is one that is

available for subscription all through the year. These

dont have a fixed maturity. Investors can convenientlybuy and sell units at Net Asset Value (NAV) relatedprices. The key feature of open ended schemes isliquidity.

Close ended fund: A close end has a stipulated

maturity period which generally ranging from 3 to 15years. The fund is open for subscription only during aspecified period. Investors can invest public issue andthereafter they can buy or sell the units of the schemeon the stock exchanges where they listed. In order toprovide an exit route to the investors, some close-ended funds give an option of selling back the units tothe Mutual Funds through periodic repurchase at NAV

related prices. SEBI regulations stipulate that at leastone of the two exit routes is provided to the investors.

What is the difference between an open ended and close ended scheme?

Open ended funds can issue and redeem units any time during the life of thescheme while close ended funds can not issue new units except in case of bonus orrights issue. Hence, unit capital of open ended funds can fluctuate on daily basiswhile that is not the case for close ended schemes. Other way of explaining thedifference is that new investors can join the scheme by directly applying to themutual fund at applicable net asset value related prices in case of open endedschemes while that is not the case in case of close ended schemes. New investorscan buy the units from secondary market only.

Interval funds: interval Funds combine the features ofopen-ended & close-ended schemes. They are openfor sale or redemption during predetermined interval atNAV related prices.

BY INVESMENT OBJECTIVES/PORTFILIO CLASSIFICATION


9/56

GROWTH FUNDS (Equity Funds or Stock):- The aim ofgrowth funds is to provide capital appreciation over themedium to long term. Such scheme normally invests amajority of corpus in equities. It has been proven thatreturns from stocks have outperformed most other kind

of investment held over the long term. Growth schemeare ideal for investors having a longterm outlookseeking growth over a period of time.

Money is invested in the stocks of corporations.Long-

term investment returns range from moderate to high,depending on the types of stocks held in the fund.Investment returns result from stock dividends as wellas the growth in value of the stock itself. For example,emerging growth companies may issue no dividendsbut may show a large increase in the value of the stockitself.

INCOME FUNDS :- The aim of income fund is toprovide regular and steady income to investors. Suchschemes generally invest in fixed income securitiessuch as bonds, corporate debenture and governmentsecurities. Income Funds are ideal for capital stabilityand regular income.

Can I get fixed monthly income by investing in mutual fund units?Yes, there are a number of mutual fund schemes which give you fixed monthlyincome. Further, you can also get monthly income by making a single investment

in an open ended scheme and redeeming fix value of units at regular intervals.

BALANCED FUNDS(Mix of stocks & Bonds):-

Money is invested in a combination of stocks andbonds. Balanced investment funds differ in theproportion and types of stocks and bonds they hold.Balanced investment funds are considered to have


10/56

moderate risk due primarily to short-term changes instock and bond values. Since bonds are generally lessvolatile then stocks, they help to moderate the changesin stock values.

Investment returns result from dividendand interest income, as well as change in the marketvalue of the stocks and bonds. This type of investmentis generally considered to have moderate to highpotential long-term investment returns.

MONEY MARKET FUNDS:-The aim of money marketfunds is to provide easy liquidity, preservation of capitaland moderate income. These schemes generally investin safer short-term instruments such as treasury bills,certificates of deposits, commercial paper and inter-bank call money. Returns on these schemes mayfluctuate depending upon the interest rates prevailing in

the markets. These are ideals for corporate andindividual investors as a means to park their surplus forshort periods.

Load funds: - A load fund is one that charges acommission for entry or exit. That is, each time you buyor sell units in the fund, a commission will be payable.Typically entry and exit loads range from 1% to 2.25%.

It could be worth paying the load, if the fund has a goodperformance history.

No load fund: - A no load fund is one that dose notcharge a commission is payable on purchase or sale ofunits in the fund. The advantage of a no load fund isthat the entire corpus is put to work.

OTHER SCHEMES


11/56

TAX SAVING SCHEMES:-

What are the tax benefits for investing in mutual fund units?

These schemes offer tax rebates to the investors under

specific provisions of the Indian Income Tax laws as thegovernment as the government offers tax incentives forinvestment made in equity linked savings schemes(ELSS) and pension schemes are allowed as deductionU/S 88 of the income tax Act, 1961.

The act also provides opportunities to investors to savecapital gains U/S 54 EA and 54 EB by investing inmutual funds, provided the capital asset has been soldprior to April 1, 2006 and the amount is invested beforeSeptember 30, 2006.

SPECIAL SCHEMES:-

INDUSTRY SPECIFIC SCHEMES:-Industry specific scheme invest only in the industriesspecified in the offer document. The investment ofthese funds is limited to specific industries likeInfoTech, FMCG, and Pharmaceuticals etc.

SECTORIAL SCHEMES:- Sectorial funds are those, which invest exclusively in a

specified industry or a group of industries or varioussegments such as A group shares or initial publicofferings.

INDEX SCHEMES:-


12/56

Index funds attempt to replicate the performance of aparticular index such as the BSE sensex or the NSE50.

What is BSE & NSE?BSE is an abbreviation of the Bombay Stock Exchange. Of the 22 stock exchangesin India, Bombay Stock Exchange is the largest with over 6,000 stocks listed. TheBSE accounts for over two thirds of the total trading volume in the country.Established in 1875, the exchange is also the oldest in Asia. It was the first one tobe recognised by the Government of India under the Securities Contracts(Regulation) Act, 1956 and it is the only one that had the privilege of gettingpermanent recognition ab-initio. The market capitalization of the BSE is Rs.5trillion. The BSE `Sensex' is a widely used market index for the BSE.The Exchange provides an efficient and transparent market for trading in equity,debt instruments and derivatives. It aims to promote, develop and maintain awell-regulated market for dealing in securities and to safeguard the interest ofmembers and the investing public having dealings on the Exchange.

HISTORY OF INDIAN MUTUAL FUNDThe origin of mutual fund industry in India is with theintroduction of the concept of mutual fund by UTI in the year1963. Though the growth was slow, but it accelerated fromthe year 1987 when non-UTI player entered the industry. Inthe past decade, Indian mutual fund industry had seen

dramatic improvements, both quality wise as well as quantitywise. Before, the monopoly of the market had seen anending phase; the Assets under Management (AUM) wereRs. 67bn.

FUNDS INDUSTRY:The private sector entry to the fund family raised AUM toRs. 470 bn in March 1993 and till April 2004; it reached the

height of 1,540 bn.Putting the AUM of the Indian MutualFunds Industry into comparison, the total of it is less than thedeposits of SBI alone, constitute less than 11% of the totaldeposits held by the Indian banking industry.The main reason of its poor growth is that the mutual fundindustry in India is new in the country. Large sections ofIndian investors are yet to be intellectuated with the concept.Hence, it is the prime responsibility of all mutual fund


13/56

companies, to market the product . Each phase is brieflydescribed as under.

First Phase(1964-87) :-Unit Trust of India (UTI) wasestablished on 1963 by an Act of Parliament. It was set up

by the Reserve Bank of India and functioned under theRegulatory and administrative control of the Reserve Bankof India. In 1978 UTI was de-linked from the RBI and theIndustrial Development Bank of India (IDBI) took over theregulatory and administrative control in place of RBI. Thefirst scheme launched by UTI was Unit Scheme 1964. At theend of 1988 UTI had Rs.6,700 crores of assets undermanagement.

Second Phase1987-1993(Entry of Public Sector Funds):-

Entry of non-UTI mutual funds. SBI Mutual Fund was thefirst followed by Can bank Mutual Fund (Dec 87), PunjabNational Bank Mutual Fund (Aug 89), Indian Bank Mutual

Fund (Nov 89), Bank of India (Jun 90), Bank of BarodaMutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The endof 1993 marked Rs.47, 004 as assets under management.

Third Phase1993-2003(Entry of Private Sector Funds):-

With the entry of private sector funds in 1993, a new erastarted in the Indian mutual fund industry, giving the Indian

investors a wider choice of fund families. Also, 1993 was theyear in which the first Mutual Fund Regulations came intobeing, under which all mutual funds, except UTI were to beregistered and governed. The erstwhile Kothari Pioneer(now merged with Franklin Templeton) was the first privatesector mutual fund registered in July 1993.The 1993 SEBI(Mutual Fund) Regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in


14/56

1996. The industry now functions under the SEBI (MutualFund) Regulations 1996.

The number of mutual fund houseswent on increasing, with many foreign mutual funds settingup funds in India and also the industry has witnessed

several mergers and acquisitions. As at the end of January2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541 croresof assets under management was way ahead of othermutual funds.

Fourth Phase (February2003):- This phase had bitterexperience for UTI. It was bifurcated into two separateentities. One is the Specified Undertaking of the Unit Trust ofIndia with AUM of Rs.29, 835 crores (as on January 2003).

The Specified Undertaking of Unit Trustof India, functioning under an administrator and under therules framed by Government of India and does not comeunder the purview of the Mutual Fund Regulations.

The second is the UTI Mutual FundLtd, sponsored by SBI, PNB, BOB and LIC. It is registered

with SEBI and functions under the Mutual Fund Regulations.

With the bifurcation of the erstwhileUTI which had in March 2000 more than Rs.76,000 crores ofAUM and with the setting up of a UTI Mutual Fund,conforming to the SEBI Mutual Fund Regulations, and withrecent mergers taking place among different private sectorfunds, the mutual fund industry has entered its current phaseof consolidation and growth. As at the end of September,


15/56

2004, there were 29 funds, which manage assets ofRs.153108 crores under 421 schemes.

CONSTITUENTS OF THE MUTUAL FUND

An attempt was made for first time in SEBI GUIDELINES,1992 to spell out for managing the affairs of mutual fundsensuring arms length distance between the sponsor and thefund. The four constituents are the sponsoring company, thefund, the custodians and the asset management company.

Moreover in reality, pooled funds of small investors werebeing put to use for the advantage of the sponsors. Fourconstituents for the management of mutual funds are shownin below chart:


16/56

Sponsors:It refers to anybody corporate which initiates thelaunching of a mutual fund. It is this agency which of its ownor in collaboration with other body corporate comply the

formalities of establishing a mutual fund. The sponsor shouldhave a sound track record and expertise in the relevant fieldof financial services for a minimum period of say five years.SEBI ensure that sponsors should have professionalcompetence, financial soundness and general; reputation offairness and integrity in the business transactions. Sponsorsis normally not responsible for any loss or shortfall resulting

Asset

Management

company(Managing the

investment of fund)

Asset

Management

company(Managing the

investment of fund)

Sponsors(Promoters)

Sponsors(Promoters)

Custodians(Safe custody of fund

securities etc.)

Custodians(Safe custody of fund

securities etc.)

Trustees(Holding property of

fund)

Trustees(Holding property of

fund)

Mutual Fund(A Trust)

Mutual Fund(A Trust)


17/56

from the operations of any scheme of the fund beyond itsinitial contribution towards the constitution of the trust fund.

TRUSTEES: A trustee is a person who holds the propertyof the mutual fund in trust for the benefits of the units

holders. A company is appointed as a trustee to manage themutual. To ensure fair dealings, mutual fund regulationrequire that one cannot be a trustee or a director of a trusteecompany in more than one mutual fund.

Further at least fifty percent of the trustees are to beindependent of the sponsors. Asset management companyor its directors or employee shall not act as trustee if anymutual fund. It is the duty of the trustee to provide

information to units holders as well as to SEBI about the MFschemes. Trustees are to appoint AMC to investmentmanagement agreement to be entered into with AMC. It istrustees duty to observe and ensure that AMC is managingschemes in accordance with the trust deed. Trustee candismiss the appointed AMC. It is the responsibility of thetrustees to supervise the collection of any income due to bepaid to the scheme. Trustees for their services are paidtrusteeship fee, which is to be specified in the trust deed.

CUSTODIANS: In a mutual fund depending on its size there issubstantial work involved for managing the scrip bought from themarket.

Their safe study custody and ready availability is to be

ensured. SEBI requires that each MF shall have a custodianwho is not in any way associated with the AMC. Suchcustodian cannot act as sponsor or trustee of any mutualfund. Further custodian is not permitted to act as a custodianof more than one mutual fund without the prior approval ofSEBI.Custodians main assignment is safekeeping of thesecurities or participation in any clearing system on behalf of


18/56

the client to effect deliveries of the securities. Custodian,depending on the terms of the agreement, also collectsincome/ dividends on the securities. Some of otherassociated assignments of custodians are:

Ensuring delivery of scrips only on receipt of payment

and payment only upon receipt of scrips. Regular reconciliation of assets to accounting records. Timely resolution on discrepancies and failures. Securities are properly registered or recorded.

Depending on the volume there can be co- custodian for amutual fund. These custodians are entitled to receivecustodianship fee based on the average weekly value of net

assets or sale and purchase of securities along with percertificate custody charges.ASSET MANAGEMENT COMPANY (INVESTMENTMANAGER):-Assets Management Company as the name implies is to bea body corporate whose memorandum and article ofassociation are to be approved by SEBI. The sponsors ofthe trustees appoint AMC to manage the affairs of themutual fund. It is the AMC, which operates all the schemesof the fund. Any Assets Management CompanyCannot act as a trustee of any other mutual fund. AssetsManagement Company can act as AMC of only one mutualfund.

To ensure efficient management SEBI desires that existingAssets Management Company should have a sound trackrecord ( good net worth, dividend paying capacity andprofitability etc.), general reputation and fairness and intransaction. The directors of the AMC should be expert inrelevant fields like portfolio management, investmentanalysis and financial administration because any AMC isbasically involved in these three activities. An AMC isexpected to operate independently. Regulation requires that


19/56

at least fifty percent of the direction should be such who donot have any association with the sponsors or the trustees.

Working Of An Asset Management Company: It is not requiredthat AMC performs all its functions of its own. It can hire

services of outside agencies as per its requirement orperform all function of its own. The main agencies, servicesof which an AMC may require are depicted in the chart.

Registrar and Transfer agents are assigned the jobs of receiving processing the application forms ofinvestors, issuing units certificates, sending refund orders,according all transfers of units, redemption of units, issuingdividend or income warrants.

ASSEST MANAGEMENTCOMPANY


20/56

REGISTRAR INVESTMENTAND TRANSFER ADVISORSAGENT

FUND LEGALACCOUNTINGADVISORS

LEND FUND

MANAGERS MANAGER

AUDITORS

Fund accounting again depending on the size of the fund, itsage and number of expected transactions may be assignedto specialized agencies. All accounting transaction arerecorded and maintained by such agencies.Lead managers select and co-ordinate activities ofintermediaries such as advertising agency, printers,collection centers and marketing the services. They getcollection centers and marketing the services. They get fees


21/56

on the basis of funds mobilized they are normally engagedby AMC for extensive campaign about the scheme to attractthe investors. They are also called marketing associates.They assist AMC in approach potential investors throughpersonal promotion (meeting, exhibition, contacts) as well as

through impersonal promotion (adverting, publicity, salespromotion).Investment advertising may be

appointed by AMC if it cannot afford to cope up with theworkload of its own. Investment advisors analysis the marketand strategies on a continuous basis. Majority of Indianmutual funds have their own market analyses who designtheir own investment strategies.Legal advisors are also sometimes appointed to get legal

guidance about planning and execution of differentschemes. A group of advocates and solicitors may beappointed as legal advisors. Assets Management Companyis also required to have an auditor who is not auditor of themutual fund, to undertake independent inspection andverification of its accounting of its accounting activities.Assets management companies may also appoint aseparate fund manager for each scheme. His basic function

is to produce investment securities from the market and alsoto dispose them off at appropriate time. Such assetsmanager adheres to the guidelines evolved by AMC of itsown or designed through investment advisors.

FUNCTIONS OF AMC:-The major strength of any AMC lies in its investment function.Investment function is specialized function which, depending onoperational strategies of AMCs, can further be divided intospecialized categories. The investment department may be classifiedin four segments. These can be

1. Fund manager2. Research and Planning cell3. Dealer


22/56

4. Underwriter

FUND MANAGER:-

Asset Management Company manages the investment offund through a fund manager. AMC may evolve its owncriterion for number off fund managers. His basic function isto decide about which, when, how much and at what ratesecurities are to be sold or bought. To a great extent thesuccess of any scheme depends on the caliber of the fundmanager.Many mutual funds especially in bank sponsored funds; theentire investment exercise is not left to one individual. Theyhave created committees to handle their investments. Onesuch mutual fund has created two committees. First is

investment committee which is broad based committeehaving even nominees of the sponsor? It collectively decidesabout the primary market investment. This committee intimes to come has a prominent role to play in the success ofmutual funds especially in light of institutionalization of publicissues. Another line which mutual funds are curiouslylooking to is fund participation in a venture even before itgoes public. Another line participation in a venture even

before it goes public. The intense competition in securing bidfor good new issue, has also led mutual funds to finance thecompanies at embryonic stage. The second is MARKETOPERATION COMMITTEE having the assignment ofdisinvestment and interacting with secondary market.

It is normally an in-house committee. These committees alsomake their judgment on the basis of data provided by theresearch wing.

RESEARCH AND PLANNING CELL:-

This department plays a crucial role. It performs a verysensitive and technical assignment. Depending again on theoperational policies, such unit can be borrowed. The


23/56

research can be with respect of securities as well asperspective investors. The fund manager can co0ntribute tothe bottom line of mutual fund by spotting significantchanges insecurities ahead of the crowd. Mutual funds maynot appreciate the presumptions made by outside research

agency while analysis data, selecting securities to be boughtor sold, this section also assists planning new schemes anddesigning innovations in schemes.

DEALER :-

To execute the sale and purchase transaction in capital ormoney market, a separate section may be created under thecharge of a person called dealer having deep understandingof stock market operations. Sometimes, this division is

under the charge of marketing division of AMC. Dealer is tocomply with all formalities of sale and purchase throughbrokers. Such brokers are to be approved by board ofdirectors of AMC.

UNDERWRITER:-Recently mutual funds have been permitted by SEBI to go infor understanding of public issues to generate additional

income for their schemes. Activity will be subject to thefollowing understanding restrictions:

For the purpose of the SEBI underwriters regulations,the capital adequacy of the mutual fund shall be theoriginal corpus of any of the schemes and theundistributed gains lying to the credit of the schemes.

The total underwriting obligations of the scheme shallnot exceed the total value of the corpus of any scheme


24/56

together with undistributed profits lying to the credit ofthe scheme.

No understanding commitment may be undertaken inrespect of the scheme during the period of six monthsprior to the date of redemption of any scheme.

Underwriter studies the potentials of the issue vis--vispreference of public. Decreased limit of minimum offer topublic at large to 25 percent of the issue has madeunderwriting a comparatively comfortable assignment. Buton the other hand to get underwriting business is goingtough since almost every public issue is beingoversubscribed these days.

UNIT LINKED INSURANCE PLAN(ULIP)

INTRODUCTION

What is ULIP?


25/56

Unit linked life insurance plan provides you the opportunityto participate in market linked returns while enjoying thevaluable benefits of life insurance.This plan enables you toprotect your loved ones, while making your money grow.Your premiums are invested in units of the investment fund

(equity, debt, money market, security bonds etc.)of yourchoice, based on the prevailing unit price.On maturity youreceive the value of your units.On death you receive thegreater of the value of your units and your selected basicsum assured.A policy,which provides for life insurancewhere the policy value at any time varies according to the

value of the underlying assets at thetime.

Funds of ULIP

Equity based funds Money Market based funds Debt Funds Balanced Fund

What are unit-linked life insurance products?Unit-linked life insurance products are those where thebenefits are expressed in terms of number of units and unitprice. They can be viewed as a combination of insurancecustomer and mutual funds. The number of units, which the


26/56

would get would depend on the unit price when he pays hispremium. The daily unit price is based on the market valueof the underlying assets (equities, bonds, governmentsecurities etc.) and computed from the net asset value.

How do unit-linked products work?

The unit-linked plans work as under:

The premium paid by the client, less any charges to bededucted, is used to buy units in the fund selected by theclient at that day's unit price. So more units are added tothe client's account each time he pays a premium. If the

unit price on that day is relatively high the client gets lessnumber of units and if the unit price is relatively low then hegets more number of units.

In order to pay the regular monthly costs an equivalentnumbers of units are cancelled and are computed as costto be deducted divided by unit price on that day.

The value of the fund depends on the unit price, which inturn is determined from the market value of the underlying

assets as seen earlier. Thus, Fund Value = Unit Price xNumber of Units

MF Vs ULIP

Mutual funds are essentially short to medium term products.The liquidity that these products offer is valuable forinvestors. ULIPs, in contrast, are now positioned as long-term products and going ahead, there will be separate


27/56

playing fields for ULIPS and MFs, with the productdifferentiation between them becoming more pronounced.ULIPs do not seek to replace mutual funds, they offerprotection against the risk of dying too early, and also helppeople save for retirement. Insurance has to be an integral

part of one's wealth management portfolio. Further,exposure of Indian households to capital markets is limited.ULIPs and mutual funds are, therefore, not likely tocannibalise each other in the long run. While ULIPs as aninvestment avenue is closest to mutual funds in terms oftheir functioning and structure, the first and foremostpurpose of insurance is and will always be 'protection'. Thevalue that it provides cannot be downplayed orunderestimated

As per IRDA's new guidelines, whichcame into effect on July 1, there has to be a minimum lock-inperiod of three years for ULIPs, a minimum term of atleastfive years and the death benefit payable or sum assuredunder the single-premium product has to be at least 125 percent of the single premium paid, among other major policychanges. The new guidelines will stop ULIPs beingpositioned as short term investments products, and they will

look less like mutual funds and more like insurance policies.New ULIPs now come with a minimum term value of fiveyears, whereas in mutual funds ELSS there is a lock-inperiod of just three years. If an investor decides to withdrawmoney from ULIP after three years, the amount depends onthe surrender value given by the company.

Are ULIPs similar to MUTUAL FUND?

In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a better option if you have afive-year horizon.


28/56

Main differences between ULIP and ordinary mutual funds isvariation in expenses administrative charges, mortalitycharges and, of course, fund management fees. We aregoing to compare the two products to suggest that, over alongish period, ULIP's expenses work out to be lower than

that of an equity mutual fund, and so you end up gettingmore of your money to work for you.

For instance:- ULIP and a mutual fund, giving the same return of 20% perannum. The insurance company charges 40% of the first year's premium asselling expenses and 5% of premium every year as administrative charges.A person buys a unit-linked policy for 20 years, with a life coverage of Rs 20lakh, and pays a premium of Rs 1 lakh per annum.In first year, Rs 40,000 will be deducted from his premium as commission, andRs 5,000 as administrative charge. If the person's age is 30, the mortalitycharge of Rs 2,763 will also be deducted.

But when his investment in Mutual Fund thenhe pays only 2.25% as entry load.

When to choose investing in MF?

If you don't need insurance, ULIP is not the best bet.


29/56

ULIPs are hybrid products. that means, they have insurance

and investment component.

You have to invest for atleast 3 years in ULIP, but MFs are

not like that

ULIPs have lock-in period of 3 years where as MFs are not

(except tax saving MFs)

ULIPs may or may not disclose the holding portfolio but

mutual funds have to disclose where they are investing.

MFs generally have low expense ratio than ULIPs.

ULIPs have additional charges called "Allocation charges".

And other charges like Administrative charges, Mortalitycharges, Fund Management Charge.

Why Mutual Funds?

Mutual funds are a smart, convenient avenue for investingyour capital. Review the benefits:

Professional financial management. Your investment inmutual funds is monitored by portfolio managers who study


30/56

the market for a living. By specializing in specific areas,these individuals can take the time to really get to knowcompanies and assess their investment potential beforeinvesting--something that's often harder for the individualinvestor to do.

Your choice of investment strategies. Because mutualfunds are managed along a range of investment strategies,you can select a fund that matches your investment goals.Leave it to the portfolio manager to select the blend ofsecurities that is most likely to meet those goals.

Easy tracking. You'll find current prices and historical totalreturn figures for major mutual funds listed in the business

section of most newspapers.

Easy to do business with. You can complete mosttransactions by phone or mail and receive clear, easy-to-read confirmation statements a few days later.

Diversification for balanced investing. Most funds ownanywhere from 20 to 50 different securities, which cushionsyour investment from sudden swings in a single security's

value. You can further diversify by buying shares in severalmutual funds that own different types of securities.Diversification is designed to reduce market risk and doesnot assure against market loss.

Structure of the Indian mutual fund industry:-


31/56

FIRST CATEGORY

The Indian mutual fund industry is dominated by the UNITTRUSTOF INDIA which has a total corpus of is 700 bncollected from more than 20 million investors. The UTI hasmany funds/ scheme in all categories i.e. equity, balanced,income etc. with some being open-ended and some beingclose-ended. UTI was floated by financial institutions and isgoverned by a special act of parliament. Most of its investorsbelieve that the UTI is government owned and controlled,which, while legally incorrect, is true for all practicalpurposes.

SECOND CATEGORY

The second categories of mutual funds are the ones floatedby nationalized banks. Can bank assets managementfloated by Canara bank and SBI funds management floated

STRUCTURE OF

MUTUAL FUND

FIRST

CATEGORYSECOND

CATEGORY

THIRD

CATEGORY


32/56

by the state bank of India are the largest of these. GIC AMCfloated by general insurance corporation and Jeeven BimaSahayog AMC floated by the LIC are some of the otherprominent ones. The aggregate corpus of funds managed bythis category of AMCs is about Rs 150 bn.

THIRD CATEGORY

The third largest categories of mutual funds are the onesfloated by the private sector and by foreign assetmanagement companies. The largest of these are PrudentialICICI AMCs, UTI AMCs etc. The aggregate corpus ofassets managed by this category of AMCs is in excess of

Rs.250 bn.

Future Scenario of Mutual Fund Industry:-

The asset base will continue to grow at an annual rate ofabout 30 to 35 % over the next few years as investors shifttheir assets from banks and other traditional avenues. Someof the older public and private sector players will either close

shop or be taken over.

Out of ten public sector players five will sell out, close downor merge with stronger players in three to four years. In theprivate sector this trend has already started with twomergers and one takeover. Here too some of them will downtheir shutters in the near future to come.

But this does not mean there is no room for other players.The market will witness a flurry of new players entering thearena. There will be a large number of offers from variousasset management companies in the time to come. Somebig names like Fidelity, Principal, and Old Mutual etc. are


33/56

looking at Indian market seriously. One important reason forit is that most major players already have presence here andhence these big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction ofderivatives in India as this would enable it to hedge its risk

and this in turn would be reflected in its Net Asset Value(NAV).

SEBI is working out the norms for enabling the existingmutual fund schemes to trade in derivatives. Importantly,many market players have called on the Regulator to initiatethe process immediately, so that the mutual funds canimplement the changes that are required to trade inDerivatives.

Global Scenario

Some basic facts-

The money market mutual fund segment has a totalcorpus of $ 1.48 trillion in the U.S. against a corpus of $100 million in India.

Out of the top 10 mutual funds worldwide, eight arebank- sponsored. Only Fidelity and Capital are non-

bank mutual funds in this group. In the U.S. the total number of schemes is higher than

that of the listed companies while in India we have just277 schemes

Internationally, mutual funds are allowed to go short. InIndia fund managers do not have such leeway.

In the U.S. about 9.7 million households will managetheir assets on-line by the year 2003, such a facility isnot yet of avail in India.

On- line trading is a great idea to reduce managementexpenses from the current 2 % of total assets to about0.75 % of the total assets.


34/56

72% of the core customer base of mutual funds in thetop 50-broking firms in the U.S. is expected to trade on-line by 2003.

Internationally, on- line investing continues its meteoric rise.

Many have debated about the success of e- commerce andits breakthroughs, but it is true that this aspect of technologycould and will change the way financial sectors function.However, mutual funds cannot be left far behind. They haverealized the potential of the Internet and are equippingthemselves to perform better.

In fact in advanced countries like the U.S.A, mutual fundsbuy- sell transactions have already begun on the net, whilein India the Net is used as a source of Information.

Such changes could facilitate easy access, lowerintermediation costs and better services for all. A researchagency that specializes in internet technology estimates thatover the next four years Mutual Fund Assets traded on- linewill grow ten folds from $ 128 billion to $ 1,227 billion;whereas equity assets traded on-line will increase during the

period from $ 246 billion to $ 1,561 billion. This will increasethe share of mutual funds from 34% to 40% during theperiod. Such increases in volumes are expected to bringabout large changes in the way Mutual Funds conduct theirbusiness.Here are some of the basic changes that have taken placesince the advent of the Net.

Lower Costs: Distribution of funds will fall in the onlinetrading regime by 2003. Mutual funds could ts to 0.75% iftrading is done on- line. As per SEBI regulations, bondfunds can charge a maximum of 2.25% and equity funds


35/56

can charge 2.5% as administrative fees. Therefore if theadministrative costs are low, the benefits are passed downand hence Mutual Funds are able to attract mire investorsand increase their asset base.

Better advice : Mutual funds could provide better adviceto their investors through the Net rather than through thetraditional investment routes where there is an additionalchannel to deal with the Brokers. Direct dealing with thefund could help the investor with their financial planning.

In India, brokers could get more Net savvy thaninvestors and could help the investors with the knowledgethrough get from the Net.

New investors would prefer online: Mutual funds cantarget investors who are young individuals and who are Netsavvy, since servicing them would be easier on the Net.

India has around 1.6 million net users who are primetarget for these funds and this could just be the beginning.The Internet users are going to increase dramatically andmutual funds are going to be the best beneficiary. Withsmaller administrative costs more funds would be mobilized.A fund manager must be ready to tackle the volatility andwill have to maintain sufficient amount of investmentswhich are high liquidity and low yielding investments tohonor redemption.

Net based advertisements: There will be more sitesinvolved in ads and promotion of mutual funds. In the U.S.sites like AOL offer detailed research and financial detailsabout the functioning of different funds and theirperformance statistics is witnessing a genesis in this


36/56

area .There are many sites such as indiainfoline.com andindiafn.com that are doing something similar and providingadvice to investors regarding their investments.

In the U.S. most mutual funds concentrate only on

financial funds like equity and debt. Some like real estatefunds and commodity funds also take an exposure tophysical assets. The latter type of funds are preferred bycorporate who want to hedge their exposure to thecommodities they deal with.

For instance, a cable manufacturer who needs 100 tonsof Copper in the month of January could buy an equivalentamount of copper by investing in a copper fund. ForExample, Permanent Portfolio Fund, a conservative U.S.based fund invests a fixed percentage of its corpus in Gold,Silver, Swiss francs, specific stocks on various boursesaround the world, short term and long-term U.S. treasuriesetc.In developed countries like the U.S.A there are funds tosatisfy everybodys requirement, but in India only the tip ofthe iceberg has been explored. In the near future India too

will concentrate on financial as well as physical funds.

INTRODUCTION OF SBI MUTUAL FUND

SBI mutual fund is a well known mutual fund managementcompany in government sector. It is formed by joint venture


37/56

between SBI and Societe Generale Asset ManagementCompany 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.


38/56

As like others mutual fund companies SBI mutual fundcompany also has different types of schemes and these areas 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


39/56

DIFFERENT SCHEME OF SBI MF:

OPEN-ENDED EQUITY SCHEME:1. Magnum Multicap fund2. Magnum Equity Fund

3. Magnum Index Fund4. Magnum Multiplier Plus5. Magnum SBI Blue-Chip Fund6. Magnum Tax gain scheme7. Magnum Comma Fund8. Magnum Global Fund9. Magnum MidCap Fund

10. Magnum Balanced Fund11. Arbitrage fund

CLOSE-ENDED EQUITY SCHEME:1. One India2. Infrastructure

MAGNUM SECTOR FUNDS UMBRELLA1. Contra Fund2. Emerging Business Fund

3. FMCG Fund4. IT Fund5. Pharma Fund

OPEN-ENDED DEBT SCHEME:1. Magnum Children Benefit Plan2. Magnum Monthly Income Plan3. Magnum Income Plus Fund (Investment)4. Magnum Income Plus Fund (Saving)


40/56

5. Magnum Income Fund6. Magnum NRI Investment Fund

OPEN-ENDED LIQUID FUND1. Magnum Institutional Income Fund

2. Magnum InstaCash Fund3. Magnum InstaCash Fund (Liquid floater)

ORGANISATIONAL STRUCTURE OFSBI MUTUAL FUND

SWOT ANALYSIS

CEO

NATIONAL

SALES HEAD

VICE

PRESIDENTCIO

FUND MANAGERS

EQUITY DEBT

BRANCH

MANAGERS

WESTSOUTH

NORTH EAST

DELHI U.P.

PUNJABRAJASTHAN JAIPUR


41/56

STRENGTHS:-

1.) Brand Name: The biggest strength is the tag of SBI is going to be thelargest banking group of finance industries.

1. Compatible Price:Prices of different schemes of SBI Mutual Funds are muchmore compatible than others.

2. Diversified Schemes:We have diversified schemes which are an exception case ofSBI Mutual Fund.

3. Less Risk:Our debt schemes are 100% free form market risk. Even asour portfolio is that diversified so equities are also less riskythan others.

4. Easy procedures of redemption & registration too:We have open ended schemes so Mutual funds are easiredeemable.

WEAKNESS:-1. Prone to Market Risk:

Mutual Funds depend on overall macro economic condition anmarket scenario.

2. Tough Competitions:There is a very tough competition because of large number oAsset Management Companies.

OPPORTUNITIES:-1. Hoarding:


42/56

Most of the Indians have black money that too in hugeamount i.e. the do not have money in banks, so approachingthem is beneficial.

2. Indian Capital Market is Growing:

So more & more new investors are interested in investments.

3. Tailor Made Products: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 weare traping the countries having almost same type of socio-economic condition & even same culture etc.

THREATS:-

1. Tough Competition:-As there are so many mutual funcompanies having almost same kind of schemes, so its toug

to compete with.2. Unawareness: Major % of population is not aware of mutuafunds, so its hard to convince people.

3. Changing Scenario: Our market scenario is changing day bday i.e. our market is fluctuating, so this makes investor hard tinvest

Various Locations in India


43/56

SEBIS Regulations for Mutual Fund Industry


44/56

There was no uniform regulation of the mutual funds industrytill a few years ago. The UTI was regulated by a special Actof Parliament while funds promoted by public sector bankswere 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 toregulate the mutual fund industry and it came up withcomprehensive regulations for the industry in 1993. Therules for the formation, administration and management ofmutual funds in India were clearly laid down. Regulationsalso prescribed disclosure requirements.

The regulations were thoroughly reviewed and re-notified inDecember 1996. The revised guidelines tighten theaccounting and disclosure requirements in line withrecommendations of The Expert Committee on AccountingPolicies, Net Asset Values and Pricing of Mutual Funds. TheSEBI (Mutual Funds) Regulations, 1996 have been furtheramended in 1997, 1998 and 1999. Today, all mutual fundsare regulated by SEBI. Efforts have been made to bring UTIschemes under SEBI's ambit with the result that allschemes, 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 noscheme unless the trustees approve such scheme anda copy of the offer document has been filed with the

Board.

Every mutual fund shall along with the offer documentof each scheme pay filing fees.


45/56

The offer document shall contain disclosures which areadequate in order to enable the investors to makeinformed investment decision including the disclosureon maximum investments proposed to be made by thescheme in the listed securities of the group companies

of the sponsor A close-ended scheme shall be fullyredeemed at the end of the maturity period. "Unless amajority of the unit holders otherwise decide for itsrollover by passing a resolution".

The mutual fund and asset management company shallbe liable to refund the application money to theapplicants,-

(i) If the mutual fund fails to receive the minimum

subscription amount referred to in clause (a) ofsub-regulation (1);

(ii) If the moneys received from the applicants forunits are in excess of subscription as referred to inclause (b) of sub-regulation(1).

Rules Regarding Advertisement:

The offer document and advertisement materials shallnot 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 soldand the price at which such units may at any time be

repurchased by the mutual fund shall be madeavailable to the investors.

General Obligations:


46/56

Every asset management company for each schemeshall keep and maintain proper books of accounts,records and documents, for each scheme so as toexplain its transactions and to disclose at any point of

time the financial position of each scheme and inparticular give a true and fair view of the state of affairsof the fund and intimate to the Board the place wheresuch books of accounts, records and documents aremaintained.

The financial year for all the schemes shall end as of

March 31 of each year. Every mutual fund or the assetmanagement company shall prepare in respect of eachfinancial year an annual report and annual statement ofaccounts of the schemes and the fund as specified inEleventh Schedule.

Every mutual fund shall have the annual statement ofaccounts audited by an auditor who is not in any wayassociated with the auditor of the asset managementcompany.

Procedure for Action In Case Of Default:

On and from the date of the suspension of thecertificate or the approval, as the case may be, themutual fund, trustees or asset management company,shall cease to carry on any activity as a mutual fund,trustee or asset management company, during theperiod of suspension, and shall be subject to thedirections of the Board with regard to any records,

documents, or securities that may be in its custody orcontrol, relating to its activities as mutual fund, trusteesor asset management company.

Restrictions on Investments:


47/56

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 creditrating agency authorized to carry out such activity

under the Act. Such investment limit may be extendedto 20% of the NAV of the scheme with the priorapproval of the Board of Trustees and the Board ofasset Management Company.

A mutual fund scheme shall not invest more than 10%of its NAV in unrated debt instruments issued by asingle issuer and the total investment in suchinstruments shall not exceed 25% of the NAV of thescheme. All such investments shall be made with theprior approval of the Board of Trustees and the Boardof asset Management Company.

No mutual fund under all its schemes should own morethan ten per cent of any company's paid up capitalcarrying voting rights.

Such transfers are done at the prevailing market pricefor quoted instruments on spot basis. The securities sotransferred shall be in conformity with the investmentobjective of the scheme to which such transfer hasbeen made.

A scheme may invest in another scheme under thesame asset management company or any other mutualfund without charging any fees, provided thataggregate inter scheme investment made by allschemes under the same management or in schemesunder the management of any other asset management

company shall not exceed 5% of the net asset value ofthe mutual fund.

The initial issue expenses in respect of any schememay not exceed six per cent of the funds raised underthat scheme.


48/56

Every mutual fund shall buy and sell securities on thebasis of deliveries and shall in all cases of purchases,take delivery of relative securities and in all cases ofsale, deliver the securities and shall in no case put itselfin a position whereby it

has to make short sale or carry forward transaction orengage in badla finance. Every mutual fund shall, get the securities purchased or

transferred in the name of the mutual fund on accountof the concerned scheme, wherever investments areintended to be of long-term nature.

Pending deployment of funds of a scheme in securitiesin terms of investment objectives of the scheme a

mutual fund can invest the funds of the scheme in shortterm deposits of scheduled commercial banks. No mutual fund scheme shall make any investment in;

i. Any unlisted security of an associate or groupcompany of the sponsor; or Any security issued byway of private placement by an associate or groupcompany of the sponsor; or The listed securities ofgroup companies of the sponsor which is in

excess of 30% of the net assets [of all theschemes of a mutual fund]

No mutual fund scheme shall invest more than 10 percent of its NAV in the equity shares or equity relatedinstruments of any company. Provided that, the limit of10 per cent shall not be applicable for investments inindex 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 relatedinvestments in case of open-ended scheme and 10% ofits NAV in case of close-ended scheme.

Who can invest?


49/56

The following persons (subject, wherever relevant, topurchase of units being permitted under their respectiveconstitutions and relevant State Regulations) are eligible tosubscribe to the units:

Adult Resident Indian Individuals, either single or jointly(not exceeding three).

Non - resident Indians, Overseas Corporate Bodies,and persons of Indian origin residing abroad, on a fullrepatriation basis

Parents / Lawful guardians on behalf of Minors

Hindu Undivided Families (HUFs) in the name of HUFor Karta

Companies (including Public Sector Undertakings),Bodies Corporate, Trusts (through Trustees ) and Co-operative Societies

Banks (including Regional Rural Banks) and FinancialInstitutions

Religious and Charitable Trusts

Foreign Institutional Investors registered with SEBI /Special Purpose Vehicles (SPVs) approved byappropriate authority ( subject to RBI approval )

International Multilateral Agencies approved by theGovernment of India

Army/Navy/Air Force / Para Military Units and othereligible institutions

Unincorporated body of persons as may be acceptedby RCTC


50/56

Partnership Firms Provident Fund, Pension Funds,Superannuating Funds and Gratuity Funds can investonly in Reliance Gilt Securities Fund.

How to Invest In Mutual Funds? STEP ONE- Identify your investment needs.o Your financial goals will vary, based on your age,lifestyle, financial independence, family commitments,level of income and expenses among many otherfactors. Therefore, the first step is to assess yourneeds. Here you need to be very categorical in theinvestment objectives and needs. E.g. one may requireincome to finance a wedding or education of children.You need to analyze risk and the cash flowrequirements. By going through such an exercise, youwill know what you want out of your investment and canset the foundation for second mutual Fund investment

strategy.STEP TWO- Choose the right Mutual Fund

o Once you have a clear strategy in mind, you now haveto choose which Mutual Fund and scheme you want toinvest in. The offer document of the scheme tells you itsobjectives and provides supplementary details like the trackrecord of other schemes managed by the same FundManager.

STEP THREE-Select the ideal mix of schemes

o Investing in just one mutual fund scheme may notmeet all your investment needs. You may considerinvesting in a combination of scheme to achieve yourspecific goals.

STEP FOUR-Invest regularly


51/56

o For must of us, the approach that works best is toinvest a fixed amount at intervals, say every month. Byinvesting a fixed sum each month, you buy fewer unitswhen the price is higher and more units when the price islow, thus bringing down you average cost per unit.

o This is called rupee cost averaging and is adisciplined investment strategy followed by investors allover the world.

STEP FIVE- Keep your taxes in mind.

If you are in a high tax bracket and have utilizedfully the exemptions under section 80L of the Income TaxAct, investing in growth funds that do not pay dividendsmight be more tax efficient and improve your post taxreturn.

STEP SIX- Start early

It is desirable to start investing early and stick to a regularinvestment plan. If you start now, you will make more thanif you wait and invest later. The power of compounding letsyou earn income on income and your money multiplies at acompounded rate of return

STEP SEVEN- The final step

All you need to do now is to get in touch with aMutual Fund or you agent/broker or a Bank Distributor (likeIDBI Bank) and start investing.


52/56

CONCLUSION:

From the analysis of the compare of Mutual Fund and UnitLinked Insurance Plan found thatUnit-linked life insuranceproducts are those where the benefits are expressed interms of number of units and unit price. They can be viewedas a combination of insurance customer and mutual funds.Main differences between ULIP and ordinary mutual funds isvariation in expenses administrative charges, mortalitycharges and, of course, fund management fees.


53/56

LIMITATIONS:

Uncertainty of market:- Mutual Funds are securitiesinvestments are subject to market risks and there is noassurance or guarantee that the objectives of theScheme will be achieved. As with any investment insecurities, the NAV of the units issued under theScheme can go up or down depending on the factorsand forces affecting the capital markets.

Lack of awareness:- In Jaipur Mutual Fund Industry isin infantry stage so people are unaware of it. So peopleare afraid to invest & they only trust of someGovernment funds like UTI, SBI. They preferably like toinvest in Insurance specially in LIC. They generally askthat Who will give them assured returns?

High competition: Due to the existence of large numberof AMCs the competition is high. Investors areconfused that where they have to invest and where not.Other AMCs offered the same type of products/schemes which diversified the investors.

Rigid and traditional structure:- People believeinvesting in Bank FDs and Post Office saving and are


54/56

reluctant to invest in Mutual Fund. People like to securemoney in terms of lending to the people on high interestthey meant their amount is safe.

Socio-economic factor:- The standard of living is low

and people have low saving so investment in MutualFund is low. The most of the people of this country areagriculture dependent so they have less to invest.

Political factors:- Due to volatile government & theirpolicies regarding investor & investment, the stockmarket is not integrated which in turn affects the mutualfund industry.

Due to time constraint the survey was conducted onlyin jaipur.

Indifference and lack of interest disposed by a fewrespondents leading to unauthentic response

Sometimes biasness was shown by the respondents.


55/56

BIBLIOGRAPHY

BOOKS:

1. N. K. Sinha: Money Banking & Finance; BSCPublishing Co. Pvt. Ltd.

2. C.R Kothari: Research Methodology; WishvaPublication, New Delhi.

MAGAZINES:-

1 Business world.2 Money Outlook3 Business Today4 Offer Documents of Different Schemes.

NEWSPAPERS:-

1. Economic Times.


56/56

WEBSTIES:

1) WWW.AMFIINDIA.COM

2) WWW.SBIMF.COM
http://www.amfiindia.com/http://www.amfiindia.com/