A Project Report on Investors Trend in Mutual Fund at SBI by Babasab Patil

Investors Trend in Mutual Fund at SBI

INDUSTRY PROFILE

Introduction of Mutual Fund Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions.

What is Mutual Fund? A mutual fund is not an alternative investment option to stocks and bonds; rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities. Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the fundâ&#x20AC;&#x2122;s gains, losses, income and expenses.

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Investors Trend in Mutual Fund at SBI

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 â&#x20AC;&#x201C; 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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Investors Trend in Mutual Fund at SBI

How is a mutual fund set up? A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unitholders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002).

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Investors Trend in Mutual Fund at SBI

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.

How to invest in a scheme of a mutual fund? Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now a day, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in distribution of mutual funds schemes to the investors. Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decisions. Babasabpatilfreepptmba.com

Investors Trend in Mutual Fund at SBI

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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Investors Trend in Mutual Fund at SBI

How to choose a scheme for investment from a number of schemes available? As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track record of performance of the scheme or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decision. In case of debt oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts.

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Investors Trend in Mutual Fund at SBI

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.

Where can an investor look out for information on mutual funds? Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web site of Association of mutual funds in India (AMFI) www.amfiindia.com. AMFI has also published useful literature for the investors. Investors can log on to the web site of SEBI www.sebi.gov.in and go to "Mutual Funds" section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web site, a lot of information on mutual funds is given. Babasabpatilfreepptmba.com

Investors Trend in Mutual Fund at SBI

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.

If mutual fund scheme is wound up, what happens to money invested? In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unit holders are entitled to receive a report on winding up from the mutual funds which gives all necessary details

Mutual Funds: Different Types of Funds No matter what type of investor you are, there is bound to be a mutual fund that fits your style. According to the last count there are more than 10,000 mutual funds in North America! That means there are more mutual funds than stocks. It's important to understand that each mutual fund has different risks and rewards. In general, the higher the potential return, the higher the risk of loss. Although some funds are less risky than others, all funds have some level of risk - it's never possible to diversify away all risk. This is a fact for all investments. Each fund has a predetermined investment objective that tailors the fund's assets, regions of investments and investment strategies. At the fundamental level, there are three varieties of mutual funds: 1) Equity funds (stocks) 2) Fixed-income funds (bonds)

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Investors Trend in Mutual Fund at SBI 3) Money market funds

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,

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Investors Trend in Mutual Fund at SBI which means that if rates go up the value of the fund goes down.

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.

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Investors Trend in Mutual Fund at SBI 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 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 Babasabpatilfreepptmba.com

Investors Trend in Mutual Fund at SBI concentrate on a certain segment of the economy. Sector funds are targeted at specific sectors of the economy such as financial, technology, 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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Investors Trend in Mutual Fund at SBI

Each mutual fund has a specific stated objective The fundâ&#x20AC;&#x2122;s objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its history, its officers and its performance. Some popular objectives of a mutual fund are -

Fund Objective

What the fund will invest in

Equity (Growth)

Only in stocks

Debt (Income)

Only in fixed-income securities

Money Market (including Gilt) Balanced

In short-term money market instruments (including government securities) Partly in stocks and partly in fixed-income securities, in order to maintain a 'balance' in returns and risk

Managed by an Asset Management Company (AMC) The company that puts together a mutual fund is called an AMC. An AMC may have several mutual fund schemes with similar or varied investment objectives. The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objectiveAll AMCs Regulated by SEBI, Funds governed by Board of Directors.The Securities and Exchange Board of India (SEBI) mutual fund regulations require that the fundâ&#x20AC;&#x2122;s objectives are clearly spelt out in the prospectus.

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Investors Trend in Mutual Fund at SBI In addition, every mutual fund has a board of directors that is supposed to represent the shareholders' interests, rather than the AMCâ&#x20AC;&#x2122;s.

The Basics of Mutual Funds Net Asset Value or NAV NAV is the total asset value (net of expenses) per unit of the fund and is calculated by the AMC at the end of every business day. How is NAV calculated? The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the fundâ&#x20AC;&#x2122;s NAV. Expense Ratio AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges

Rs1.50

for

every

Rs100

assets

under

management.

A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio Load Some AMCs have sales charges, or loads, on their funds (entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called no-load funds.

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Investors Trend in Mutual Fund at SBI

Open- and Close-Ended Funds â&#x20AC;˘

Open-Ended At any time during the scheme period, investors can enter and exit the fund scheme (by buying/ selling fund units) at its NAV (net of any load charge). Increasingly, AMCs are issuing mostly open-ended funds.

â&#x20AC;˘

Close-Ended Redemption can take place only after the period of the scheme is over. However, close-ended funds are listed on the stock exchanges and investors can buy/ sell units in the secondary market (there is no load).

Important documents Two key documents that highlight the fund's strategy and performance are 1) the prospectus (legal document) and the shareholder reports (normally quarterly).

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Investors Trend in Mutual Fund at SBI

Benefits of Investing Through Mutual Funds Professional Money Management Fund managers are responsible for implementing a consistent investment strategy that reflects the goals of the fund. Fund managers monitor market and economic trends and analyze securities in order to make informed investment decisions. Diversification Diversification is one of the best ways to reduce risk (to understand why, read The need to Diversify). Mutual funds offer investors an opportunity to diversify across assets depending on their investment needs. Liquidity Investors can sell their mutual fund units on any business day and receive the current market value on their investments within a short time period (normally three- to fivedays). Affordability The minimum initial investment for a mutual fund is fairly low for most funds (as low as Rs500 for some schemes). Convenience Most private sector funds provide you the convenience of periodic purchase plans, automatic withdrawal plans and the automatic reinvestment of interest and dividends. Mutual funds also provide you with detailed reports and statements that make recordkeeping simple. You can easily monitor the performance of your mutual funds simply by reviewing the business pages of most newspapers or by using our Mutual Funds section in Investorâ&#x20AC;&#x2122;s Mall. Flexibility and variety You can pick from conservative, blue-chip stock funds, sectoral funds, funds that aim to provide income with modest growth or those that take big risks in the search for returns. You can even buy balanced funds, or those that combine stocks and bonds in the same fund.

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Investors Trend in Mutual Fund at SBI

Tax benefits on Investment in Mutual Funds •

100% Income Tax exemption on all Mutual Fund dividends

•

Capital Gains Tax to be lower of 10% on the capital gains without factoring indexation benefit and 20% on the capital gains after factoring indexation benefit.

•

Open-end funds with equity exposure of more than 50% are exempt from the payment of dividend tax for a period of 3 years from 1999-2000.

Why Choose Mutual Funds? Mutual funds are investment vehicles, and you can use them to invest in asset classes such as equities or fixed income. Money control recommends that you use the mutual fund investment route rather than invest yourself, unless you have the required temperament, aptitude and technical knowledge (take our Investment IQ Quiz to evaluate how

you

score

each

these

parameters).

In this article we discuss why and how you should choose mutual funds. If you would like to familiarize yourself with the basic concepts and workings of a mutual fund, Understanding Mutual Funds would be a good place to start. We are not all investment professionals We go to a doctor when we need medical advice or a lawyer for legal guidance. Similarly, mutual funds are investment vehicles managed by professional fund managers. And unless you rate highly on the Investment IQ Quiz, we recommend you use this option for investing. Mutual funds are like professional money managers, however a key Babasabpatilfreepptmba.com

Investors Trend in Mutual Fund at SBI factor in their favors is that they are more regulated and hence offer investors the ability to analyses and evaluate their track record. 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

Selecting a mutual fund What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best performing fund? The answer is no. Mutual fund investing requires as much strategic input as any other investment option. But the advantage is that the strategy here is a natural extension of your asset allocation plan (use our Asset Allocates to understand what your optimum asset allocation plan should be, based on your personal risk profile). Money control recommends the following process: Identify funds whose investment objectives match your asset allocation needs Just as you would buy a computer that fits your needs and budget, you should choose a mutual fund that meets your risk tolerance (need) and your risk capacity (budget) levels (i.e. has similar investment objectives as your own). Typical investment objectives of mutual funds include fixed income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds, long-term or short-term liquidity focus. You can use money controlâ&#x20AC;&#x2122;s Find-A-Fund query module to find funds whose investment objectives match yours Evaluate past performance, look for consistency Although past performance is no guarantee for the future, it is a useful way of assessing how well or badly a fund has performed in comparison to its stated objectives and peer group. A good way to do this would be to identify the five best performing funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus demonstrated their ability to be not only good but also, consistent performers. You can engage in such research through moneycontrol's Find-A-Fund query module.

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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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Investors Trend in Mutual Fund at SBI

Invest, monitor and review Having made an investment in a mutual fund, you should monitor it to see whether its management and performance is in line with stated objectives and also whether its performance exceeds or lags your expectations. Unlike individual stocks and bonds, mutual fund reviews are required less frequently, once in a quarter should be sufficient. A review of the fund’s performance should be carried out with the objective of holding or selling your investment in the mutual fund. You might need to sell your investment in a mutual fund if any of the events below apply – You change your investment plan For example, as you grow older you might adopt a more conservative investment approach, pruning some of your riskier (equity-oriented) funds.

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 control’s Mutual Fund Investing Checklist can help make this process easier and more efficient.

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Investors Trend in Mutual Fund at SBI

Types of Mutual Funds Schemes in India 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.

•

TYPES OF MUTUAL FUND SCHEMES

•

By Structure

•

Open - Ended Schemes

Close - Ended Schemes

Interval Schemes

By Investment Objective o

Growth Schemes

Income Schemes

Balanced Schemes

Money Market Schemes

Other Schemes o

Tax Saving Schemes

Special Schemes

Index Schemes

Sector Specific Schemes

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Investors Trend in Mutual Fund at SBI

Multiply Your Returns with Multiple Mutual Funds You're currently invested in an S & P 500 Index mutual fund and you've been satisfied with its consistent 20% - 28% average annual return year after year, but now you feel like you're missing out on all those hot stocks generating "mega" returns. However, the uncertainty of knowing which companies are good and the fear of loss have kept you out of those flashy momentum stocks. Consider allocating a portion of your investment portfolio in a mutual fund that specializes in a hot sector such as high tech or the Internet. Why would you invest in a sector or specialty fund? Because specialty funds offer you the opportunity to participate in a hot sector while lowering your risk through diversification. As with an S & P 500 Index fund, your monies are invested in several different stocks and your investment is managed by professionals that specialize in that particular sector. These fund managers spend hours researching all the cutting edge technology and hunting out the next explosive trend. They talk to CEOs of potential powerhouse companies and look deep into management. They become your "Sherlock Holmes" uncovering the next best thing since sliced breadâ&#x20AC;Ś.or Microsoft before it became the number one technology company. They go where no average investor can go! All this for a reasonable management fee. If you are looking to increase your overall annual return, have a long term investment horizon and are willing to stomach some volatility, divide your investment portfolio between an S & P 500 Index mutual fund and either one or two sector funds that you believe have potential for tremendous growth. The S & P 500 Index should represent about 80% of your portfolio and the remaining 20% can be allocated between one or two hot sector funds. For a no load S & P 500 Index fund with a low minimum initial investment ($250) try Munder Index 500 Class B (telephone number 800-438-5789) (symbol MUXKX). It has

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Investors Trend in Mutual Fund at SBI consistently generated a 20% average annual return. A good high tech fund with a $1,000 minimum initial investment would be Invesco Technology II . The fund returned 133%

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 returns…and higher returns is the goal.

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Investors Trend in Mutual Fund at SBI

Maximize Returns - Avoid Fund Distributions Although MsFiscallyFit.com promotes long-term investing and believes it is difficult to time the market's "ups and downs", there is one timing issue that is very important when you buy mutual funds. Before you buy a mutual fund, find out when the fund is going to make their next distribution of capital gains. Why is this important? If you are not careful, you can end up paying taxes on income you never received (that is good for Uncle Sam, but bad for you). As you are aware, a mutual fund is a pool of different investments and the fund manager decides when to buy and sell an investment. You, as one of the mutual fund shareholders, participate in the net gains and losses of the fund. Throughout the year all the long-term and short-term net capital gains are accumulated and distributed to all the shareholders. Capital gain distributions are usually made once a year – typically near the end of the calendar year in December. Here's the catch – all accumulated annual capital gains are distributed to the existing shareholders at the time of distribution, no matter how long you've been in the mutual fund – the gains are NOT prorated based on how long you've been in the fund. So even if you weren't around long enough to participate in all the profits generated throughout the year, you will have to pay taxes on whatever capital gains are distributed to you -- ugh, more taxes! Here's an example of what could happen to you if you purchase a mutual fund right before they distribute capital gains: Let's say on December 1st you invested $5,000 into a stock mutual fund that has performed extremely well during the year, but has a very high turnover rate. Throughout the year, the fund has taken a lot of profits by selling stocks and has generated short–term profits representing 20% of the value of the mutual fund. On December 15 th the mutual fund distributes those profits to its existing shareholders, who in turn must pay taxes on the reported capital gains. So in this example, you would be required to pay taxes on a

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Investors Trend in Mutual Fund at SBI $1,000 gain ($5,000 x 20%). If your taxable rate is 30%, you could pay an extra $300 ($1,000 x 30%) on gains you never received. Because you invested in the mutual fund

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 â&#x20AC;&#x201C; 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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Investors Trend in Mutual Fund at SBI

Don't Try Market Timing with Mutual Funds You're not thinking of selling your mutual fund now when the stock market is performing poorly, is you? Don't even think about pushing the "sell" button on your screen. Consider these 3 points about staying invested in your mutual funds during the wild swings of the stock market: o

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. Babasabpatilfreepptmba.com

Investors Trend in Mutual Fund at SBI 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. 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

Mutual Funds -To Sell or Not to Sell. That is the Question Many investors make the mistake of jumping from mutual fund to mutual fund -searching for the next hottest fund. Every time their mutual fund has a bad year or their friends rave about another "hot mutual fund tip", these so called long-term investors abandon ship and move on to the next fund -- many times missing out on significant gains. The key to successful mutual fund investing is to buy a top-performing diversified growth fund and stick with it! When you invest in a solid mutual fund for ten to fifteen years and roll your dividends and gains back into your account you'll benefit from the tremendous power of compounding -- allowing larger sums of money to work for you. As with all things in life, your mutual fund will have some "down" years, but a well-managed, well-diversified growth fund will recover over time. Take for example S & P 500 Index funds. This year they are barely breaking even (through September 2000), but the five-year and ten-year annualized return for most Index funds is 25% and 18%, respectively. So if you jump out now while the fund is down, you'll miss out on future returns. However, if you sit tight through the inevitable "ups" and "downs" of the stock market, you'll be handsomely rewarded for your long-term commitment. If you are invested in any specialized funds such as a small-cap or biotech mutual fund, there are certain situations where switching funds are a smart move. 1. The Fund Manager Changes - A mutual fund is a professionally managed portfolio of investments where the decision to buy or sell an investment is made by the fund manager. Therefore, whether you make or lose money is in the hands of the fund manager. A top-performing mutual fund may lose its "magic" if the fund manager leaves. Always read your quarterly and annual mutual fund reports for any changes in management. Although a new fund manager does not always lead to decreased performance, you should carefully watch the results for any signs of weakness.

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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 well-diversified 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 well-diversified, 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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Investors Trend in Mutual Fund at SBI

10 Top Mutual Funds 10 Top Mutual Funds* DSP ML Opportunities Fund Franklin India Flexi Cap HDFC Equity Fund HDFC Top 200 Prudential ICICI Dynamic Fund

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

Mutual Fund Industry Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the most preferred investment avenues in India. However, with a plethora of schemes to choose from, the retail investor faces problems in selecting funds. Factors such as investment strategy and management style are qualitative, but the funds record is an important indicator too. Though past performance alone cannot be indicative of future performance, it is, frankly the only quantitative way to judge how good a fund is at present. Therefore, there is a need to correctly assess the past performance of different Mutual Funds. Worldwide, good Mutual Fund companies over are known by their AMCs and this fame is directly linked to their superior stock selection skills. For Mutual Funds to grow, AMCs must be held accountable for their selection of stocks. In other words, there must be some performance indicator that will reveal the quality of stock selection of various AMCs. Return alone should not be considered as the basis of measurement of the performance of a Mutual Fund schemes, it should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. Risk associated with a fund, in a general, can be defined as variability or fluctuations in the returns generated by it. The higher the fluctuations in the returns of a fund during a given period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are resultant of two guided force. First, general market fluctuations, which affect all the securities, present in the market, called market risk or systematic risk and second, fluctuations due to specific securities present in the portfolio of the fund, called unsystematic risk.

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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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Investors Trend in Mutual Fund at SBI

COMPANY PROFILE

SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - India’s 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 Société Générale Asset Management, one of the world’s 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 HNI’s.

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Investors Trend in Mutual Fund at SBI 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.

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 â&#x20AC;&#x201C; Resurgent India Opportunities Fund. Growth through innovation and stable investment policies is the SBI MF credo.

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Investors Trend in Mutual Fund at SBI

KEY PERSONNEL Mr. Syed Shahabuddin

Managing Director

Mr. G.S. Subramanian

SR. Vice President Cross Selling

Mr. Didier Turpin

Dy. Chief Executive Officer

Mr. G. Kandasubramanian

Asst. Vice President - Customer Service

Mr. Achal K. Gupta

Chief Operating Officer

Mr. Ganti N. Murthy

Fund Manager - Debt

Mr. Sanjay Sinha

Chief Investment Officer

Ms. Aparna Nirgude

Chief Risk Officer

Mr. R. S. Srinivas Jain

Chief

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Marketing

Officer

Investors Trend in Mutual Fund at SBI

AWARDS AND ACHIEVEMENTS 1)

LIPPER AWARD- lipper India fund award –2007

2) ICRA MUTUAL FUND AWARD -2007

3) CNBC TV 18 - CRISIL MUTUAL FUND OF YEAR AWARD -2007

4) CNBC AWAAZ CONSUMER AWARD – 2006

5) LIPPER AWARD- lipper India fund award -2006

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Investors Trend in Mutual Fund at SBI CNBC TV 18 - CRISIL MUTUAL FUND OF YEAR -2006

AWARD

7) ICRA MUTUAL FUND AWARD -2006

Fund House Expertise The investment environment is becoming increasingly complex. Innumerable parameters need to be factored in to generate a clear understanding of market movement and performance in the near and long term future. At SBIMF, we devote considerable resources to gain, maintain and sustain our profitable insights into market movements. We consistently push the envelope to ensure our investors get the maximum benefits year after year. Our expert team of experienced and market savvy researchers prepare comprehensive analytical and informative reports on diverse sectors and identify stocks that promise high performance in the future. This team works in tandem with a compliance and risk-monitoring department, which ensures minimization of operational risks while protecting the interests of the investors. Quite naturally many of our equity funds have delivered consistent returns to investors and have repeatedly out performed benchmark indices by wide margins. â&#x20AC;˘

Fund managers

â&#x20AC;˘

Risk management teams

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Investors Trend in Mutual Fund at SBI

Schemes Debt, Equity, Balanced these are the three major schemes in SBI Mutual Fund. â&#x20AC;˘

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 Childrenâ&#x20AC;&#x2122;s 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

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Investors Trend in Mutual Fund at SBI SDFS 24 Months Fund SDFS 60 Days Fund SDFS 180 Days Fund SBI Premier Liquid Fund SBI Short Horizon Fund SBI Short Horizon Fund â&#x20AC;&#x201C; Liquid Plus Fund SBI Short Horizon Fund - Short Term Fund

â&#x20AC;˘

EQUITY SCHEMES

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

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Investors Trend in Mutual Fund at SBI SBI Infrastructure Fund - Series I SBI Magnum Taxgain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUND - SERIES

â&#x20AC;˘

BALANCED SCHEMES

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

Magnum Balanced Fund Magnum NRI Investment Fund - FlexiAsset Plan

This is all about schemes in SBI Mutual Fund.

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Investors Trend in Mutual Fund at SBI

SBIMF's TaxGain 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 investorâ&#x20AC;&#x2122;s 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.

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Investors Trend in Mutual Fund at SBI 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. 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

Latest News in SBIMF Date: 31/03/2008

Mutual funds: Should you bet on growth or dividend? With a new financial year round the corner, hopefully, many salaried persons will start making tax-saving investments from the beginning itself rather than run around again in March 2009. A good option for this is a systematic investment plan (SIP) in ELSS (EquityLinked Saving Schemes) mutual funds. Though, it’s often seen that the biggest challenge for a fresh mutual fund investor is not choosing a fund, but finalizing between the ‘dividend’ and ‘growth’ options. As the names suggest, the dividend option gives an income in the form of dividend payouts while, in the growth option, the dividend is reinvested back into the fund’s units. As a result of this, due to the regular payouts, a dividend-linked fund’s value plummets in comparison to the growth option one immediately after the payout.

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Investors Trend in Mutual Fund at SBI And therein lays the confusion. This difference in price of the net asset value (NAV) of a dividend plan after payments, in comparison with the growth option, gives rise to a false feeling of comfort for an investor. He believes that he is getting more units for the same amount when he is investing in a dividend plan, and the payouts too! On the other hand, in the case of growth mutual funds, whatever wonderful growth is perceived on one day can vanish on another when the market falls.

Shift from growth to dividend? When you compare the performance of dividend plans vis--vis growth, there is a very thin line of difference. Also, the performance of a fund needs to be measured 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.

So which option to choose? What should actually determine the choice from these two options is your own need. If you are an investor who prefers cash flow at regular intervals, look at dividend plans as most give payouts at least once a year. But if you are investing in a fund for a long-term need, like an asset acquisition, growth would be a better option as it would help you to build a corpus. In any event, while making investments, donâ&#x20AC;&#x2122;t get perturbed by the NAV of the fund because it is the annual returns which matters rather than the price of the unit.

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Investors Trend in Mutual Fund at SBI Source: Mumbai Mirror Date: 31/03/2008

Realty MFS income to be out of Tax net The uncertainty over the tax-treatment of real estate mutual funds is set to end soon. The government will exempt from tax the income generated by mutual funds 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. â&#x20AC;&#x153;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,â&#x20AC;? 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.

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Investors Trend in Mutual Fund at SBI 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 Date: 31/03/2008

SBI MF, Dhanalakshmi Bank tie up for product distribution SBI Mutual Fund has formalized its tie up with the Kerala-based Dhanalakshmi Bank for distribution of its investment products through the bank. The tie-up would qualitatively enhance SBIMFâ&#x20AC;&#x2122;s reach in the category of mutual fund investors across the country, especially in the South, said Syed Shahabuddin, Managing Director, SBIMF. The tie-up with Dhanalakshmi Bank would further enhance the reach of the fund house to investors looking to invest in mutual funds, he added. Shahabuddin, who was here in connection with MoU signing ceremony, told

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Investors Trend in Mutual Fund at SBI Business Line that SBIMF is now concentrating more in rural and semi-urban areas with the objective to make the capital market reach countrywide. Currently, it has four million investors, which would be increased to seven million by the end of next year. SBIMF, Shahabuddin said, is also encouraging Systematic Investment Plan (SIP) investments by adding 60,000-70,000 people every month in rural areas.

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 pipeline awaiting approval from the SEBI, he said. Source: The Hindu Business Line Date: 31/03/2008

Magnum Equity Fund: Energy retains charge Magnum Equity is a fund that invests mainly in large-cap (Rs 10,000 crore) stocks. The investment in mid and small-cap stocks is at insignificant levels. The stocks in the portfolio indicate that the fund invests in highly liquid stocks. The fund has bettered the returns of its benchmark, BSE 100, over three- and five-year periods but under-performed it during the last one year. During the period September 2007 to February 2008, the fundâ&#x20AC;&#x2122;s corpus grew 19.5 per cent to Rs 377 crore, while the NAV per unit has grown 13.9 per cent to Rs 36.9. An analysis of the fund during this period indicates that the portfolio is minimally churned in terms of stocks.

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Investors Trend in Mutual Fund at SBI Sector Moves: Energy (19.8 per cent), the top sector held, has seen exposures increased over two-fold over the September-February period. Substantial hike in exposures is also seen in the Industrial manufacturing and construction sectors. Financial services exposures have been mildly reduced. The metals sector has seen increased exposure. All of these sectors had a good year and also had to face maximum heat during broader market correction in the last couple of months. In a contrarian move, the Pharmacy sector exposure has been hiked. However, InfoTech and automobiles, the other sectors out of favor over the last year, have seen exposures pared. Media and consumer goods sectors have also seen exposures trimmed and so has cement. Source: The Hindu Business Line

Management Problem: “Investors Trend in Mutual Fund”. Research Problem “To understand the preference of investors towards mutual fund as an investment option” Objectives •

To study the factors considered while investing.

•

To study the nature of investment.

•

To understand since how long they have been investing.

•

To study whether investors are satisfied with the investment in SBI Mutual Fund.

•

Comparative study between SBI Mutual Fund with HDFC, ICICI PRU, Reliance mutual fund.

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Investors Trend in Mutual Fund at SBI

METHODOLOGY Types of Data Both primary and secondary data will be collected.

Data collection method Primary Data •

Primary data will be collecting through questionnaire.

Secondary Data • Business Magazines, old project report, company annual report. • Websites – mainly sbimf.com, valueresearchonline.com

Sampling Design • Sampling Method: Non-probability, Convenience sampling Method (Non probability sampling is a subjective procedure in which the probability of selection for the population units cannot be determined. Convenience sampling, a researcher’s convenience forms the basis for selecting a sample of unit.)

• Sampling Size

: 100

• Sampling Plan

: Questionnaires

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Investors Trend in Mutual Fund at SBI

•

Sampling Area

: Hubli city

1) Which of the following investment option would you prefer? (1 is most preferable 5 is least preferable)

Investment Option 450

389

400

366

Total num

350

286

300 250

238

221

200 150 100 50 0 Bank Fixed Deposits

Postal Savings

Mutual Fund

Real Estate

Stock Market

Nam e

• 1st rank to Bank Fixed Deposits -221 •

2nd rank to Mutual Fund – 238

•

3rd rank to Stock Market – 286

•

4th rank to Real Estate – 366

•

5th rank to Postal Savings - 389

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Investors Trend in Mutual Fund at SBI

2) Have you ever invested in Mutual Funds?

No 30.0%

Yes 70.0%

â&#x20AC;˘ 70% of respondents invested in Mutual Fund â&#x20AC;˘

30% of respondents not Invested in Mutual Fund

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Investors Trend in Mutual Fund at SBI

3) Would you like to invest in Mutual Fund?

No 3.3%

Yes 96.7%

â&#x20AC;˘ 96.7% of respondents have interest to invest in Mutual Fund â&#x20AC;˘

3.3% of respondents not interest to invest in Mutual Fund

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Investors Trend in Mutual Fund at SBI

4) In which Mutual Fund would you like to go for Investment? 60 57 50

Percent

18 10 8

ICICI Pru

HDFC

0 Reliance

SBI

Other

In which Mutual Fund would you like to go for investment?

• 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

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Investors Trend in Mutual Fund at SBI

•

57% of the investor invested their money in SBI MF

5) Nature of Investment Balanced 19.2%

Debt 10.1%

Equity 70.7%

• 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

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Investors Trend in Mutual Fund at SBI

6) What factors do you consider while investing in Mutual Fund? 50 45 40 36 30

Percent

20 15 10

0 High Risk-High Retur

Saf ety

Low Risk-Low Returns

Closed-ended Open-ended

What factors do you consider while investing in above Mutual Funds?

• 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

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Investors Trend in Mutual Fund at SBI

7) How long do you prefer to invest in Mutual Fund?

Long term(more than 14.1% Short term(up to 1yr 14.1%

Mid term(1-5 yrs) 71.7%

• 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

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Investors Trend in Mutual Fund at SBI

8) Have you ever invested in SBI Mutual Fund?

Yes 40.4%

No 59.6%

â&#x20AC;˘ 40.4% of the investors invested their money in SBI Mutual Fund â&#x20AC;˘

59.6% of the investors not invested their money in SBI Mutual Fund

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Investors Trend in Mutual Fund at SBI

9) Have you satisfied with SBI Mutual Fund ‘Returns’? 80

Percent

0 Very Unsatisf ied

Neutral

Satisf ied

Highly satisf ied

Satisfaction with SBI MF Returns

• 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’

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Investors Trend in Mutual Fund at SBI

10) How do you compare SBI Mutual Fund with ICICI Pru, HDFC and Reliance? 70

Percent

10 0 Neither bad nor good

Good

very good

How do you compare SBI Mutual Funds with Pru ICICI, HDFC and Reliance

• 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

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Investors Trend in Mutual Fund at SBI

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 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

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Investors Trend in Mutual Fund at SBI

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’ 31) 65% of the investor’s 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

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Investors Trend in Mutual Fund at SBI

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. 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 â&#x20AC;&#x2DC;Returnsâ&#x20AC;&#x2122; 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.

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Investors Trend in Mutual Fund at SBI

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. • 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.

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Investors Trend in Mutual Fund at SBI

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 invested in SBI Mutual Fund because itâ&#x20AC;&#x2122;s 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.

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Investors Trend in Mutual Fund at SBI

Questionnaire

NAME……………………………………………….. AGE……..…………………………………………… 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.

b) Postal Savings d) Real Estate

d) Stock Market 2) Have you ever invested in Mutual Funds? a) Yes

b) No

If ‘Yes’ go to question no 4 3) Would you like to invest in Mutual Funds?

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Investors Trend in Mutual Fund at SBI a) Yes

b) No

If No Specify……………………………

4) In which Mutual Fund would you like to go for investment? a) Pru ICICI

b) HDFC

c) Reliance

d) SBI

Other Specify………… 5) Nature of investment a) Debt

b) Equity

c) Balanced

6) What factors do you consider while investing in above Mutual Funds? a) High Risk- High Returns

b) Low Risk- Low Returns

c) Safety

d) Open-ended

d) Closed-ended 7) How long do you prefer to invest in Mutual Funds? a) Short term (up to 1yr) b) Mid term (1-5 yrs) c) Long term (more than 5yrs) 8) Have you ever invested in SBI Mutual Funds? a)

Yes

b) No

If ‘Yes’ in which scheme specify …………………………. If ‘No’ Specify……………………………………………..

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Investors Trend in Mutual Fund at SBI 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

11) Will you recommend SBI Mutual Funds to others? a) Yes

b) No

12)Suggestions….................................................................................................................. ...............................................................................................................................................

THANK YOU

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Investors Trend in Mutual Fund at SBI

BIBLIOGRAPHY Text Book Marketing Research â&#x20AC;&#x201C; A.Parasuraman

Website www.sbimf.com www.valueresearchonline.com

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Investors Trend in Mutual Fund at SBI

SPSS DATA 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23) 24) 25) 26) 27) 28) 29) 30) 31) 32) 33) 34) 35) 36) 37) 38)

Venkat.G Asha K.B.Prasad Raghavend Prakash.S Akkamma. Shivaji.G S.Chikkmat P.R.Varadk Uday.B Prashant.B Vidya.V.K Santosh.D Rashmi.K Nagaraj B Nanda.V Vishal.T Veeranna. Pavan.K Manjunath Veeresh.K Pavan.D Ashok.N Krishna.M vijay K Ramdas Vinod.U Harsha.G Vijaykumar S.H.Galgal Vijaylaksh S.V.Harlap Kusuma.P Mallikarju R.C. Umar M.K.Pramo T.H.Vinay Sanjay.M

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a b b a a c a b b a a d d b a a b a d b d d b b a b a b a b b b c b b a b a

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3 4 5 5 5 5 3 2 3 5 4 5 4 4 5 2 5 2 5 5 5 1 5 2 5 5 5 5 4 4 5 4 1 2 5 5 5 4

4 3 2 3 2 3 4 4 2 4 3 2 2 3 2 3 1 4 2 3 1 4 1 1 3 1 2 2 3 2 4 1 3 3 1 1 2 3

5 5 3 4 3 4 5 5 5 2 5 3 5 5 4 5 4 3 4 4 3 5 4 5 4 2 4 4 1 3 2 5 5 5 4 4 4 1

2 2 1 2 4 2 2 3 4 3 2 1 1 2 3 4 2 5 1 2 2 3 2 3 2 4 3 1 2 1 3 3 4 4 2 3 3 2

Investors Trend in Mutual Fund at SBI 39) 40) 41) 42) 43) 44) 45) 46) 47) 48) 49) 50) 51) 52) 53) 54) 55) 56) 57) 58) 59) 60) 61) 62) 63) 64) 65) 66) 67) 68) 69) 70) 71) 72) 73) 74) 75) 76) 77) 78) 79) 80) 81) 82) 83) 84) 85) 86) 87)

Deepak Vijaylaksh Sharanaba Venkat R Vinuta.J sudhir.C.S Sanjeesh. M.V.Gurupr Shankar.C Anand.B Govind.A Champaka Sundhram Anand.K Praveen.K Sumangala shobha.J Rajendra Shivaprasa Basavaraj Mohan.B Kusuma sunita Geeta.H N.S.dhops S.C.patil Prashanth. Murali S.V.Shivan Purushotha Eshwar Kannapa Jayashree Manjunath. Anuradha S.Puri swapna Vinay.U Rajeswari Shankar.P Shashikala E.Veeresh E.Ramu E.venkates Kavita.S Hemavati Prema.P Veerangod preeti.H

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b d c b b b b b b b a b b b d c b a d b b c c c b b b b b b b a c a b b b d c b b a a a d d e e b

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Navana Navana vidya na Navana hosur hosur lingraj Keshva old hub old hub vidya na lingraj Sainaga old hub Keshva old hub lingraj Hosur h unkal unkal cr old hub gokul ro vidya na unkal Hosur h vidya na vidya na vidya na old hub Hosur h Keshva old hub old hub kashvap unkal cr unkal cr vidya na vidya na vidya na vidya na hosur h hosur h hosur h hosur h vidya na vidya na navanag gokul ro navanag

3 4 1 1 5 2 4 1 4 3 4 1 2 1 1 1 3 1 5 3 5 1 1 2 2 2 2 1 5 3 5 1 4 5 1 1 1 1 1 5 1 4 5 3 1 1 1 1 2

5 1 5 2 4 3 5 4 5 4 5 5 5 4 4 4 5 2 4 5 3 5 4 4 3 5 3 5 4 2 1 5 2 1 2 3 2 2 5 3 3 5 4 5 2 5 5 4 4

1 2 3 4 2 1 2 2 1 1 1 2 1 2 3 3 1 3 3 2 1 3 3 1 1 4 1 3 1 1 3 4 1 2 3 4 4 3 3 2 4 2 2 1 4 4 2 2 1

4 5 4 5 1 4 1 3 2 5 2 3 4 5 2 5 4 4 2 4 4 4 5 5 4 1 4 4 3 4 2 2 5 4 5 2 3 5 4 4 2 1 3 4 5 2 3 5 5

2 3 2 3 3 5 3 5 3 2 3 4 3 3 5 2 2 5 1 1 2 2 2 3 5 3 5 2 2 5 4 3 3 3 4 5 5 4 2 1 5 3 1 2 3 3 4 3 3

Investors Trend in Mutual Fund at SBI 88) 89) 90) 91) 92) 93) 94) 95) 96) 97) 98) 99) 100)

Prem.H Deepa.V Annapoorn Pandu.D Govindraj. Rukmini.M L.G.shetty Venkatesh. Linmoorti Raghavend Lalita.E Radha.D Veena.K

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Navana vidya na navanag lingraj lingraj lingraj navanag unkal cr unkal cr vidya na vidya na gokul ro navanag

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4 4 3 3 4 5 5 5 2 5 5 5 4

5 1 4 2 1 2 3 1 3 4 4 2 2

2 5 5 4 5 1 2 4 5 2 2 3 5

3 2 1 5 2 3 4 2 4 3 3 4 3

Investors Trend in Mutual Fund at SBI

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Investors Trend in Mutual Fund at SBI a a a a a a a a a a a a a a a a a a a a a a a a b b b b b b b b a a a a a a a b a a a a b b b b a

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d d d d d d d d c c c d c d d d a d d d d d d d

d d d d d d e e d d d d c d e d e d d d d d d e

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0

Investors Trend in Mutual Fund at SBI b a a b b a a b

a a

d e e d d d d d

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d d c c d d d b

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