IDBI Basic of MF & SBI Product

A joint venture between SBI and Société Genéralé Asset Management
SBI MUTUAL FUND

CONCEPT AND ROLE OF A
MUTUAL FUND

How Mutual Fund works?
A vehicle for investing in portfolio of stocks and bonds

Mutual Fund
Mutual fund is a vehicle to mobilize
moneys from investors, to invest
in different markets and securities,
in line with the investment
objectives agreed upon, between
the mutual fund and the investors.

Schemes Earnings
• Investments can be said to have been
handled profitably, if the following profitability
metric is positive:
(A) +Interest income
(B) + Dividend income
(C) + Realized capital gains
(D) + Valuation gains
(E) – Realized capital losses
(F) – Valuation losses
(G) – Scheme expenses

How do Mutual Fund Schemes Operate?
• The relative size of mutual fund companies is assessed
by their assets under management (AUM).
• When a scheme is first launched, assets under
management would be the amount mobilized from
investors.
6

New Fund Offer
• When a scheme is first made available for
investment, it is called a ‘New Fund Offer’
(NFO).
• During the NFO, investors may have the
chance of buying the units at their face
value.
• Post- NFO, when they buy into a scheme,
they need to pay a price that is linked to its
NAV.

Asset Under Management
• The relative size of mutual fund companies is
assessed by their assets under management (AUM).
• When a scheme is first launched, assets under
management would be the amount mobilized from
investors. Thereafter, if the scheme has a positive
profitability metric, its AUM goes up; a negative
profitability metric will pull it down.
• Further, if the scheme is open to receiving money from
investors even post-NFO, then such contributions from
investors boost the AUM.
• Conversely, if the scheme pays any money to the
investors, either as dividend or as consideration for
buying back the units of investors, the AUM falls.

Advantages of Mutual Funds
for Investors
• Professional Management
• Affordable Portfolio Diversification
• Liquidity
• Tax Deferral
• Tax benefits
• Convenient Options
• Investment Comfort
• Regulatory Comfort

Limitations of a Mutual Fund
• Lack of portfolio customization
• Choice overload
• No control over costs

Types of Mutual Funds…
Mutual Funds
Equity Funds Debt Funds Balanced Funds
Diversified Mid Cap
Large
Cap
ELSS
Gift Funds Income
Funds
MIPS Short Term
Plans Funds
Liquid Funds

Debt, Equity and Hybrid
Funds
• A scheme might have an investment objective to
invest largely in equity shares and equity related
investments like convertible debentures. Such
schemes are called equity schemes.
• Schemes with an investment objective that limits
them to investments in debt securities like
Treasury Bills, Government Securities, Bonds and
Debentures are called debt funds.
• Hybrid funds have an investment charter that
provides for investment in both debt and equity. Of
late, there have been funds that also invest in
Gold along with either debt or equity or both.

Open-Ended Funds
• Open-ended funds are open for
investors to enter or exit at any time,
even after the NFO.
• When existing investors buy additional
units or new investors buy units of the
open-ended scheme, it is called a
purchase transaction. It happens at a sale
price, which is equal to the NAV.

Close-Ended Funds
• Close-ended funds have a fixed maturity. Investors can buy
units of a close-ended scheme, from the fund, only during
its NFO.
• The fund makes arrangements for the units to be traded, post-
NFO in a stock exchange. This is done through a listing of the
scheme in a stock exchange. Such listing is compulsory for
close-ended schemes.
• After the NFO, investors who want to buy Units will have to find
a seller for those units in the stock exchange. Similarly, investors
who want to sell Units will have to find a buyer for those units in
the stock exchange.
• Since post-NFO, sale and purchase of units happen to or from a
counter-party in the stock exchange – and not to or from the
mutual fund – the unit capital of the scheme remains stable.

Interval Funds
• Interval funds combine features of both open-
ended and close-ended schemes.
• They are largely close-ended, but become open-
ended at pre-specified intervals.
• between these intervals, the Units have to be
compulsorily listed on stock exchanges to allow
investors an exit route.
• The periods when an interval scheme becomes open-
ended, are called ‘transaction periods’;
• The period between the close of a transaction period,
and the opening of the next transaction period is called
‘interval period minimum duration of interval period is
15 days

Actively Managed Funds
• Actively managed funds are funds where
the fund manager has the flexibility to
choose the investment portfolio, within
the broad parameters of the investment
objective of the scheme.
• Since this increases the role of the fund
manager, the expenses for running the fund
turn out to be higher.
• Investors expect actively managed funds to
perform better than the market.

Passive Funds
• Passive funds invest on the basis of a
specified index, whose performance it seeks
to track.
• They are not designed to perform better than the
market. Such schemes are also called index
schemes.
• Since the portfolio is determined by the index
itself, the fund manager has no role in deciding
on investments.
• Therefore, these schemes have low running
costs.

Low
Risk
High
Risk

FINANCIAL PLANNING

Financial Planning
• Financial planning is a planned and
systematic approach to provide for the
financial goals that will help people realise
their needs and aspirations, and be happy.

Assessment of Financial
Goals
• An estimate of these future expenses (the financial goals)
requires the following inputs:
– How much would be the expense, if it were incurred today?
– How many years down the line, the expense will be incurred?
– During this period, how much will the expense rise on account of
inflation?
– If any of these expenses are to be incurred in foreign currency,
then how would changes in exchange rate affect the financial
commitment?
• This is done using the formula A = P X (1 + i)n
– A = Rupee requirement in future, where,
– P = Cost in today’s terms
– i = inflation
– n = Number of years into the future, when the expense will be
incurred.

Assessing the Fund
Requirement
• This can be calculated using a variation of
the formula used earlier i.e. P = A ÷ (1 + r)
n
– P, A and n have the same meaning as in the
earlier formula, where:
– r represents the return expected out of the
investment portfolio.

INVESTMENT SERVICES

Investment Services
• Systematic Investment Plan (SIP)
• Systematic Withdrawal Plan
• Systematic Transfer Plan
• Nomination
• Pledge

SIP
• A systematic investment plan (SIP)
is an option where you invest a fixed
amount in a mutual fund at pre-
defined regular intervals. It is a
disciplined investment plan and cost
averaging helps reduce impact of
market volatility
SBI MUTUAL FUND

RECOMMENDING MODEL
PORTFOLIOS

Risk Profiling
• Risk profiling is an approach to
understand the risk appetite of investors -
an essential prerequisite to advise
investors on their investments.
• The investment advice is dependent on
understanding both aspects of risk:
– Risk appetite of the investor
– Risk level of the investment options being
considered.

Factors that Influence the
Investor’s Risk Profile

Model Portfolios

Selection of Fund/ Scheme

Selection of Fund/ Scheme
• Within a category the right scheme can be selected based on criteria such
as
– Past performance of the scheme,
– Comparison with peer set
– Benchmark
– Scheme size,
– Expense ratio of the scheme etc

SBI MF PRODUCTS- EQUITY
SCHEMES
Equity/ Growth Funds
• SBI Magnum Equity fund
• SBI BlueChip Fund
• SBI Magnum Multicap Fund
• SBI Magnum Multiplier Plus
1993
• SBI Magnum Global Fund
• SBI Small and Midcap Fund
• SBI Midcap Fund
Sectoral Funds
• SBI Emerging Business Fund
• SBI Contra Fund
• SBI FMCG Fund
• SBI IT Fund
• SBI Pharma Fund
Hybrid Fund
•SBI Magnum Balanced Fund
•SBI EDGE Fund
Thematic Funds
•SBI Magnum COMMA Fund
•SBI Infrastructure Fund
•SBI PSU Fund
ELSS Funds
•SBI Magnum TaxGain
Scheme 1993
------------------------------
•SBI Arbitrage
opportunities Fund

SBI BlueChip Fund:A largecap fund with upto
20% flexibility to invest in midcaps
• Positioning:
• Pre-dominantly large cap, up to 20% flexibility to invest
into mid caps
• SBI Bluechip fund is higher on risk and potential return
than any pure large cap fund as it may take an
opportunistic exposure of to midcap stocks;
• We don’t take active cash calls. Cash is maintained at a
max of 10% for liquidity and portfolio rebalance
purposes.
• Investment perspective – medium to long term, 3-5 years
• Benchmark: S&P BSE 100

SBI BLUE CHIP FUND
• Investment Process:
• The portfolio follows a bottom- up strategy combined with a focus on
change in sector dynamics, that leads to sector overweight /
underweight decision.
• Focus on generating alpha by better stock selection within a sector
Stock selection is done based on the below parameters:
- Management who tend to consistently perform in terms of growth and
efficient capital allocation
- Valuations: relative to own history and change in growth profile
- Change in leadership which can impact significantly positively or
negatively.
- Monitoring key strategic decisions by the management which will
drive the growth in next 3-5years
• Midcap allocation is with a view of better growth outlook and
valuation gap vis-à-vis large cap peers.

Top 10 Holding
Stock Name (%) Of Total AUM
HDFC BANK LIMITED 7.97%
TATA CONSULTANCY SERVICES LTD. 4.23%
HCL TECHNOLOGIES LIMITED 3.94%
MARUTI SUZUKI INDIA LIMITED 3.73%
TATA MOTORS LTD 3.54%
LARSEN & TOUBRO LIMITED 3.42%
MOTHERSON SUMI SYSTEMS LIMITED 3.41%
STATE BANK OF INDIA 3.18%
INFOSYS LIMITED 3.17%
ICICI BANK LTD 3.15%
TOTAL 39.74%

Performance: Lumpsum
As on
09/04/2015
6 Months 1 Year 3 Years 5 Years
SBI Bluechip Fund 21.1 51.6 28.8 15.4
S&P BSE 100 11.1 30.8 19.1 10.1
SBI Magnum Bluechip Fund
SIP Investments
1 Year
SIP
3 Year
SIP
5 Year SIP 7 Year SIP Since Inception (14 - Feb, 2006)
Total Amount
Invested
12,000 36,000 60,000 84,000 108,000
Market Value as on
Jan 30, 2015
15,360 58,872 106,518 171,353 229,491
Returns (%
Annualized)
55.85 34.74 23.17 20.02 16.27
S&P BSE 100 Ret (%
Annualized)
39.77 25.72 16.78 15.29 13.20
S&P BSE Sensex Ret
(% Annualized)
36.16 24.94 16.55 15.04 12.95

SBI MAGNUM BALANCED FUND
Positioning:
• Invests in a mix of equity & debt securities
• Exposure in equity is at least 50% and exposure
in debt & money market securities can be upto
50%
• Equity portion is invested in a diversified portfolio
of large & mid caps
• Debt portion is invested in investment grade
securities with active duration management
Benchmark: CRISIL Balanced Index

Investment Process:
• The Equity allocation of the fund is divided into two
buckets; 40% large cap and 60% concentrated high
conviction bets (likely mid-and-small caps)
• The fund targets a benchmark coverage of 25%
• The fund will maintain max 10% cash (of the entire
portfolio, including debt)
• Investment perspective - medium term, 3-5 years

As on
09/04/2015
SBIMagnum Balanced Fund
18.4 45.8 27.5 14.7
Crisil Balanced Fund Index 11.6 33.1 16.0 9.7
SBI Magnum Balanced Fund
SIP Investments 1 Year SIP 3 Year SIP 5 Year SIP 7 Year SIP 10 Year SIP 15 Year SIP
Since Inception
(9 - Oct, 1995)
Total Amount
Invested
12,000 36,000 60,000 84,000 120,000 180,000 229,000
Market Value as on
Jan 30, 2015
15,373 58,864 106,127 169,107 288,977 902,310 1,814,396
Returns (%
Annualized)
56.06 34.73 23.02 19.64 16.75 19.35 18.84
Crisil Balanced Fund
Ret (% Annualized)
33.27 20.92 14.81 13.48 12.28 13.18 11.69
S&P BSE Sensex Ret
(% Annualized)
36.16 24.94 16.55 15.04 13.57 16.25 14.41

SBI MAGNUM GLOBAL FUND
• Positioning:
• SBI Magnum Global Fund is a midcap biased fund which
can invest up to 25% of its assets in large caps.
• Large cap investments in the lower bracket of large cap
capitalization, which makes it quasi-mid cap.
• SBI Magnum Global Fund follows a “Quality” philosophy of
investing.
• over 3-5 year period, SMGF should outperform peers and
benchmark.
• Benchmark: S&P BSE Midcap Index

SBI MAGNUM GLOBAL FUND
As on
09/04/2015
SBIMagnum Global Fund 25.1 70.4 33.9 21.9
S&P BSE Midcap 15.4 51.7 20.1 9.3
SBI Magnum Global Fund
SIP Investments
1 Year
SIP
3 Year
SIP
5 Year SIP 7 Year SIP
10 Year
SIP
15 Year SIP
Since
Inception (30 -
Sep, 1994)
Total Amount
Invested
12,000 36,000 60,000 84,000 120,000 180,000 245,000
Market Value as on
Jan 30, 2015
16,649 67,271 125,671 221,517 375,092 1,690,019 3,361,820
Returns (%
Annualized)
79.07 45.19 30.10 27.27 21.58 26.42 21.92
S&P BSE MidCap (%
Annualized)
55.25 31.68 18.07 16.08 12.48 18.24 16.04
S&P BSE Sensex Ret
(% Annualized)
36.16 24.94 16.55 15.04 13.57 16.25 13.89

SBI MAGNUM MID CAP FUND
• Positioning:
• SBI Magnum Midcap fund can invest 65% - 100 % of its
assets in midcap stocks.
• The fund can have opportunistic exposure to large cap to
a maximum of 20%
• It also selectively invests in small cap stocks to generate
alpha and in large cap stocks from liquidity perspective
• The fund follows a bottom up strategy and focuses on
generating absolute returns with a three years
perspective.
• The fund is sector agnostic
• Benchmark: S&P BSE Midcap Index

SBI MAGNUM MIDCAP FUND
SBIMagnum Global
Fund
25.9 72.0 40.1 21.0
S&P BSE Midcap 15.4 51.7 20.1 9.3
SBI Magnum Midcap Fund
SIP Investments 1 Year SIP 3 Year SIP 5 Year SIP 7 Year SIP Since Inception (15- Apr, 2005)
Total Amount
Invested
12,000 36,000 60,000 84,000 118,000
Market Value as on
Jan 30, 2015
16,254 70,877 130,110 212,934 317,634
Returns (%
Annualized)
71.86 49.41 31.58 26.15 19.29
S&P BSE Mid Cap
(% Annualized)
55.25 31.68 18.07 16.08 12.44
S&P BSE Sensex
Ret (% Annualized)
36.16 24.94 16.55 15.04 13.48

SBI MAGNUM TAX GAIN SCHEME
• Positioning:
• Pre-dominantly large cap fund with minimum 70% in
large caps, large caps defined as the top 100 companies
in terms of market cap rank
• We don’t take active cash calls. Cash is maintained at a
max of 10% for liquidity and portfolio rebalancing
• purposes.
• Investment perspective – medium to long term, 3-5 years
• Investment in SMTGS is eligible for deduction under
section 80C up to amount of INR 150,000/-
• Benchmark: BSE 100 Index

SBI MAGNUM TAX GAIN SCHEME
• Investment Philosophy and Process:
• MTGS usually operates with market cap based allocation
of 75%-80% large cap and 20%-25% mid cap.
• The fund takes sector allocation calls on very few
sectors and decides to go overweight / underweight the
sectors. The sector deviation is usually maintained
between 2% - 5%.
• Considering the size of the Fund of more than 5,000
crores, liquidity is an important criteria for stock selection

SBI MAGNUMTAX GAIN SCHEME
As on
09/04/2015
SBI Magnum Taxgain Scheme 17.2 50.0 26.4 14.9
S&P BSE 100 11.1 30.8 19.1 10.1
SBI Magnum Taxgain Scheme
SIP Investments 1 Year SIP 3 Year SIP
5 Year
SIP
7 Year SIP 10 Year SIP
15 Year
SIP
Since
Inception (31 -
Mar, 1993)
Total Amount
Invested
12,000 36,000 60,000 84,000 120,000 180,000 263,000
Market Value as
on Jan 30, 2015
15,475 59,639 106,952 172,418 299,172 1,456,104 4,029,550
Returns (%
Annualized)
57.87 35.74 23.34 20.19 17.40 24.74 21.04
S&P BSE 100 Ret
(% Annualized)
39.77 25.72 16.78 15.29 13.70 16.62 13.97
S&P BSE Sensex
Ret (% Annualized)
36.16 24.94 16.55 15.04 13.57 16.25 13.30

SBI MF PRODUCTS- DEBT
SCHEMES
DEBT SCHEMES
• SBI Ultra short term Debt
fund
• SBI Short term Debt fund
• SBI Magnum Monthly
income plan
• SBI Premier Liquid Fund
• SBI Magnum Gilt Fund-
ST
• SBI Magnum Gilt Fund-
LT
• SBI savings Fund
DEBT SCHEMES
SBI Dynamic Bond
Fund
SBI Magnum Insta
Cash Fund
SBI Treasury
Advantage Fund
SBI Corporate Bond
Fund

Risk
Return
Managing debt strategies across risk spectrum
Money Market
Ultra Short Term Bond
Short Term Bond
Fixed Maturity Plan
Short Term GILT
Bond Fund
Long Term
Dynamic Bond SBI Dynamic Bond Fund
Magnum GILT Fund - Long Term Plan
Magnum Income Fund
Magnum GILT Fund - Short Term Plan
SBI Short Horizon Debt Fund
SBI Select Debt Fund Series
SBI Short Horizon Debt Fund - Ultra Short Term
Fund
Magnum Insta Cash, Magnum Insta Cash - Liquid
Floater, SBI Premier Liquid Fund

Portfolio Construction of Liquid and Ultra Short Term funds

SBI Premier Liquid Fund
• SBI Premier Liquid Fund (SPLF) is a liquid
fund and the scheme investments would
be made in securities with maturity less
than or equal to 91 days. The investments
in the scheme would be made only in
debt/ money market securities.

SBI Premier Liquid Fund
Date of Inception 24/11/2003
Fund Manager Mr. Rajeev Radhakrishnan
Minimum Application
Rs. 50,000/- and in multiples of Rs. 1
thereafter
Entry Load N.A.
Exit Load Nil
SIP N.A.

As on
09/04/2015
SBI Premier Liquid Plan 4.3 8.9 9.2 8.7
SBI Insta Cash Fund 4.3 8.9 9.1 8.6

SBI SAVINGS FUND FORMARLY KNOWN AS SBI Magnum Income Fund – Floating
Rate Plan – Savings Plus Bond Plan
• To endeavour to mitigate interest rate risk
and seek to generate regular income
alongwith opportunities for capital
appreciation through a portfolio investing
in Floating rate debt securities, Fixed rate
securities, derivative instruments as well
as in Money Market instruments

This product is suitable for investors who are
seeking:
• Regular income for medium term
• Investment in floating rate Debt and Money
Market securities
• Best suited for conservative investors
• This Plan will be ideal for investors with a short-
term investment horizon of not more than 1 year.

• EXIT LOAD:
FOR EXIT WITHIN 3 BUSINESS DAYS :-
0.10%
Performance as on 9th
April 2015
1-Year 3-Year 5-Year 10-Year
SBI Savings Fund 8.79 9.19 8.84 7.69

What is Monthly Income Plan?
• Monthly Income Plans or MIPs are debt-oriented products designed with the objective of giving
a regular return (in the form of dividend) in addition to capital appreciation to investors. However
Monthly Income is not assured and is subject to the availability of distributable surplus
• The periodicity of return depends upon the option chosen by the investor. MIPs generally come
with the monthly, quarterly, half-yearly, yearly dividend and growth options.
• Investors, who choose the growth option, are entitled for a return by way of gains in the form of
capital appreciation.
• MIP generally invests some portion of its assets (about 10-25%) in equities and the balance in
debt and money-market instruments.
• Having exposure in debt & money market instruments takes benefit of relatively safer
investment avenue with moderate returns.
• Having exposure in equity takes benefit of capital appreciation with high expected returns

Who should invest in MIP?
• Retired or near to retirement investors who can get regular
monthly/quarterly/yearly income through dividends.
• Age group of 50+ years: Conservative investors who want to earn marginally
better returns than a debt-only portfolio.
• Young investors, HNIs, Institutions & Trusts, Pension funds who can match
their regular normal outflows with regular inflows from the MIP.

Features: SBI Magnum Monthly Income
Plan(AN OPEN-ENDED DEBT SCHEME, MONTHLY INCOME IS NOT ASSURED AND IS SUBJECT TO AVAILABILITY
OF DISTRIBUTABLE SURPLUS)
• An Investment in actively managed portfolio of equity, debt & money market
instruments
• Aims to provide regular income, liquidity and attractive returns through equity ,debt
and money market instruments.
• Minimum Investment – Rs. 5000
• Exit load: : For exit within 1 year from the date of allotment, For 10% of
investment : Nil ; For remaining investment: 1.00% ; For exit after one year from the
date of allotment – Nil (w.e.f. February 13, 2014)
• Systematic Investment Plan (SIP): Monthly- Minimum Rs. 1000 & in multiples of Rs.
1 thereafter for a minimum six months (or) Minimum Rs. 500 & in multiple of Rs. 1
thereafter for a minimum one year. Quarterly – Minimum Rs 1500 & in multiple of
Rs. 1 thereafter for minimum one year.

Features: SBI Magnum Monthly Income Plan(AN OPEN-
ENDED DEBT SCHEME, MONTHLY INCOME IS NOT ASSURED AND IS SUBJECT TO AVAILABILITY OF DISTRIBUTABLE SURPLUS)
Performance As on 09/04/15

6 month 1Y 3Y 5Y
Fund % 10.5 19.9 12.3 9.3
Crisil MIP Blended Index %
6.9 13.5 7.6 4.8

Performance As on 09/04/15
Data as on July 8 ,2014
SBI Corporate Bond Fund
3 mth (%) 6 mth (%) 1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)
Fund Returns 2.6 6.2 11.1 10.8 10.2 9.5
Category avg 2.1 4.6 9.2 9.1 9.0 8.5

http://grietinfo.in/projects/MAIN/MBA
2012/cd-6-MUTUL%20FUNDS.pdf

IDBI Basic of MF & SBI Product

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