Ajay kumar RMF

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MUTUAL FUND AS TOOL OF

FINANCIAL PLANNING

SUMMER TRAINING PROJECT REPORT

SUBMITTED

TO

INDIRA SCHOOL OF CAREER DEVELOPMENT

ACADEMIC SESSION

2009 2011

Under the Guidance of:

Submitted By:

External Supervisor: Ajay kumar

Mr. Ujwal jaggi G - 03

(Deputy Manager)

Reliance mutual Fund

Internal Supervisor

Mr M.V kulkarni

Faculty ISCD


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TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project entitled, MUTUAL FUND AS TOOL OF

FINANCIAL PLANNING REFERENCE TO RELIANCE GROWTH FUND, project

done for RELIANCE MUTUAL FUND, submitted by MR. AJAY KUMAR, for the

partial fulfillment of the requirements for the award of two year Post Graduate Program

is a bonafied record of the work done by him under my guidance and that this has not

been submitted by him for any other degree or diploma.

MR .M.V. kulkarni

ISCD,Chinchwad


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ACKNOWLEDGEMENT

Before going to the thick of things I would like to add some heartfelt words. I owe

a huge debt of thanks and deep sense of gratitude to my learned guide Mr. UJWAL[DEPUTY MANAGER] at RELIANCE MUTUAL FUND LMITED F.C ROAD

DECCAN(PUNE) branch under whose guidance, supervision and encouragement the

present study was undertaken and completed. Their sympathetic, accommodating and

constructive nature remained a constant source of inspiration for me throughout the

duration of this summer project .

I am thankful to all the personnel in RELIANCE MUTUAL FUND LIMITED

specially Mr.UJWAL for utmost co-operation and timely help extended by them for the

completion of the project summer.My overriding debt is to Mr. M.V.kulkarni (Faculty ISCD, Chinchwad) for

providing me the opportunity to take up this project with Reliance Mutual Fund.

At last but not the least I would like to thank my Colleagues (Summer Trainees),

at (Reliance mutual Fund) from different colleges, as this project would not have been

successfully completed without the help and support of them.

Ajay kumar

ISCD, Chinchwad.


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PREFACE

Mutual fund is a trust that pools money from a group of investors (sharing common

financial goals) and invests the money .Thus, collected into asset classes that match the

stated investment objectives of the schemes. Since the stated investment objectives of a

mutual fund scheme genrally forms the basis for an investors decision to contribute

money to the pool, a mutual fund can not deviate from its stated objective at any point of

time.

Every mutual fund is managed by a fund manager, who using his investment

management skills and necessary research works ensures much better return than what an

investor can manage on his own. The capital appreciation and other incomes earned from

these investments are passed on to the investor (also known as unit holders) in proportion

of the number of units they own. Every Asset Management Company (AMC) sells its

product with the help of distributor and its own .The distributor gets the fixed

commission in return. Each Asset Management Company adopt different ways to

The project focus on different ways of promoting and selling mutual funds. The projectalso focuses on the core basic of mutual funds, their types, their promotional schemes and

my experiences of promoting and selling mutual funds.


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CONTENTS

CLAUSE PAGE

CHAPTER 1 INTRODUCTION

1.1 EXECUTIVE SUMMARY7

CHAPTER 2 INTRODUCTION2.1 INTRODUCTION OF MUTUAL FUND.8

2.3ADVANTAGES OF MUTUAL FUND 9

2.4 DISADVANTAGES OF MUTUAL FUND 10

2.5 HISTORY OF MUTUAL FUND IN INDIA...10

2.6 TYPES OF FUNDS...13

2.7 FUND STRUCTURE AND CONSTITUENTS21

CHAPTER 3 COMPANY PROFILE

3.1 RELIANCE COMPANY INTRODUCTION27

3.2 VISION OF THE COMPANY28

3.3 HISTORY OF THE COMPANY.28

3.4 YEARWISE MILESTONE OF RELIANCE MUTUAL FUND..29

3.5 COMETITIVE ADVANTAGE OF RELIANCE MUTUAL FUND29

3.7 BUSINESS MODEL32

3.8 COMPETITORS OF RELIANCE MUTUAL FUND.32

3.9 SWOT.33

3.10 MANAGEMENT OF RELIANCE..34

3.11 FOCUS ON GROWTH FUND AND SIP PLANS.363.11 FINANCIAL PLANNING APPROACH FOR INVESTERS38


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CHAPTER 4 RESEARCH

4.1OBJECTIVE OF THE STUDY48

4.2 REARCH METHEDOLOGY49

4.3 LIMITATION.51

4.3 ANALYSIS & INTERPRETATION OF THE DATA52CHAPTER 5 FINDINGS

5.1 CONCLUSION71

5.2 RECOMMENDATIONS..73

ANNEXTURE.75


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EXECUTIVE SUMMARY

The project covers an over view of the MUTUAL FUND industry. The total corpus of

the AMC industry recently crossed 7.5 lac Crore Rupees. which is around 6% of current

GDP of India. This means that people in India are getting their focus shifted towards

investing in a way which is safe as well as providing returns.

Various factors which affect the decision of investor while investing in mutual fund have

been discussed in detail in the project. By the use of various statistical tools it has been

find out that past return is the most important factor considered by the investors while

investing in the mutual fund scheme.

In this report we have discussed about MUTUAL FUNDAS A TOOL OF

FINANCIAL PLANNING The Project also discusses various ways to promote mutual

funds and different ways which are adopted by AMCs to sell mutual fund in India.

To complete the project during summer training various industries and retail investors

had been visited to promote mutual fund , tried to convince them to invest in mutual fund

and & even personal relationships have been generated with them. The database helps

Reliance Mutual Fund to find new clients and expands its institutional client base. This

gives Reliance Mutual Fund monetary benefits.

INTRODUCTION OF MUTUAL FUNDS


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INTRODUCTION OF MUTUAL FUNDS:

A mutual fund is simply a financial intermediary that allows a group of investors to pool

their money together with a predetermined investment objective. The mutual fund willhave a fund manager who is responsible for investing the pooled money into specific

securities (usually equity or bonds). When you invest in a mutual fund, you are buying

shares of the mutual fund and become a unit holder of the fund.

Mutual funds are one of the best investments ever created because they are very cost

efficient and very easy to invest in (you don't have to figure out which stocks or bonds to

buy).

By pooling money together in a mutual fund, investors can purchase stocks or bonds withmuch lower trading costs than if they tried to do it on their own. But the biggest

advantage to mutual funds is diversification.

ACCORDING TO AMFI (ASSOCIATION OF MUTUAL FUND OF INDIA) :


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A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through

these investments and the capital appreciation realized is shared by its unit holders in

proportion to the number of units owned by them.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed basket of securities at a

relatively low cost. The flow chart below describes broadly the working of a mutual fund.

ADVANTAGES OF MUTUAL FUNDS:

The advantages of investing in a Mutual Fund are: Professional Management Diversification Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Reduction in risk

DISADVANTAGES OF MUTUAL FUNDS : No control over cost Customized Portfolio are not possible Fund selection can be difficult


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HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY IN

INDIA:

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank the. The history of

mutual funds in India can be broadly divided into six distinct phases

FIRST PHASE ( 1964-1987 ):

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up

by the Reserve Bank of India and functioned under the Regulatory and administrative

control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the

Industrial Development Bank of India (IDBI) took over the regulatory and administrative

control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the

end of 1988 UTI had Rs.6,700 crores of (AMC) assets under management. MF Industry started in India in 1963 with formation of UTI

Asset under management in 1987- 88: Rs. 6700 crores Launch of First Scheme - US 64(Unit scheme 1964) UTI was the only player in the market enjoying monopoly position huge

mobilization on funds till 1987.

SECOND PHASE ( 1987-1993 ) :


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Entry of Public Sector Funds1987 marked the entry of non- UTI, public sector mutual

funds set up by public sector banks and Life Insurance Corporation of India (LIC) and

General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI

Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87),

Punjab National Bank Mutual Fund (Aug 89), Janata Sahakari Bank Mutual Fund (Nov

89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its

mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the

end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores. Establishment of SBI MF the first non UTI MF. SEBI was setup in1988 and regulatory powers in 1992. UTI was still the undisputed leader of the market and held over 95%of the assets in

mutual fund industry.

THIRD PHASE (1993-1996):

Entry of Private Sector Funds with the entry of private sector funds in 1993, a new era

started in the Indian mutual fund industry, giving the Indian investors a wider choice of

fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came

into being, under which all mutual funds, except UTI were to be registered and governed.

The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first

private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund)

Regulations were substituted by a more comprehensive and revised Mutual Fund

Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)

Regulations 1996. The number of mutual fund houses went on increasing, with many

foreign mutual funds setting up funds in India and also the industry has witnessed several

mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with

total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of

assets under management was way ahead of other mutual funds. Entry of the Pvt. Sector funds in 1993 Kothari Pioneer mutual fund (now merged with Franklin templeton) was the first

private sector mutual fund in India.

FOURTH PHASE (1996-1999):


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A new set of regulations for mutual fund referred to as SEBI (Mutual Fund)

Regulation ,1996 was created SEBI (mutual fund) Regulation required that mutual funds have a three tier

structure of sponsors trust-AMC. In 1999 all dividends declared by mutual funds made tax free.

FIFTH PHASE (1999-2004): In February 2003, the UTI act was repealed and UTI mutual fund was formed .it

had same 3-tier structure as other mutual funds .

The assets under management of the industry crossed Rs.150000 crore in 2001.

SIX PHASE (2004 onwards):- The period from 2004 is referred to as consolidation and growth phase of the

Indian mutual fund industry. Several mergers and acquisitions took place and new international players entered

the business.

Till now 35 players are working in India.


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TYPES OF MUTUAL FUNDS:

Closed-end or Open-end

Open-end Funds : An open-end fund is one that has units available for sale andrepurchase at all time. An investor can buy or redeem units from the fund itself at a price

based on the Net Asset Value (NAV) per unit.

Close-end Funds : A close ended fund makes a one-time sale of a fixed number of

unit. It does not allow investors to buy or redeem units directly from the funds. However,

to provide liquidity to investors many closed-end funds get themselves listed on stock exchange. Funds do offer buy-back of funds/units thus offering another avenue for

liquidity to closed-end fund investor.

Load vs. No Load:


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Marketing of a new mutual fund scheme involves initial expense. These expenses may

be recovered from the investors in different ways at different times. Three usual ways in

which a funds sales expenses may be recovered from the investors are:

1. At the time of investors entry into the fund/scheme, by deducting a specific amount

from his initial contribution: front-end or entry load.

2. By charging the fund/scheme with a fixed amount each year, during the stated number

of years: deferred load.

3. At the time of the investors exit from the fund/scheme, by deducting a specific

amount from the redemption proceeds payable to the investor: back end or exit load

These charges made by the fund managers to the investors to cover

distribution/sales/marketing expenses are often called loads. Funds that charge front-

end, back-end or deferred loads are called load funds. Funds that make no such charges

or loads for sales expenses are called no-load funds.

In India, SEBI has defined a load as the one-time fee payable by the investor to allow

the fund to meet initial issue expenses including brokers/agents/distributors

commissions, advertising and marketing expenses.

A load funds declared NAV does not include load charges.

Tax-exempt vs. Non-Tax exempt Funds:-

Generally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. In

India, after the 1999 Union Government Budget, all of the dividend income received

from any of the mutual funds is tax-free in the hands of the investors. However, funds

other than Equity Funds have to pay a distribution tax, before distributing income to

investors. In other words, equity mutual fund schemes are tax-exempt investment

avenues, while other funds are taxable for distributable income.

Types of Mutual Funds on the Basis of

Risk Vs Returns


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A.B road Fund Types by Nature of Investments :

Sector Funds

RiskMoneyMarketFunds

FloatersIncomeFundsGiltFundsMIPsBalancedFundsDiversifiedEquityFunds

Re

tur ns


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Mutual funds may invest in equities, bonds or other fixed income securities, or short-term

money market securities. So we have Equity, Bonds and Money Market Funds . All of

them invest in financial assets. But there are funds that invest in physical assets. For

example, we may have Gold or other Precious Metal Funds, or Real Estate Funds .

B. Broad Fund Types by Investment Objective :

Investors and hence the mutual funds pursue different objectives while investing. Thus,

Growth Funds invest for medium to long term capital appreciation.

Income Funds invest to generate regular income, and less for capital appreciation.

Value Funds invest in equities that are considered under-valued today, whose value will

be unlocked in the future.

C. Broad Fund Types by Risk Profile :

The nature of a funds portfolio and its investment objective imply different levels of risk

undertaken. Funds are therefore often grouped in order of risk. Thus, Equity Funds have a

greater risk of capital loss than a Debt Fund that seeks to protect the capital while looking

for income. Money Market Funds are exposed to less risk than even the For internal use

by Training Department of Prudential ICICI Mutual Fund Bond Funds, since they invest

in short-term fixed income securities, as compared to longer-term portfolios of BondFunds.

Money Market Funds : Lowest rung in the order of risk level, Money Market Funds

invest in securities of a short-term nature, which generally means securities of less than

one-year maturity.


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Gilt Funds: Gilts are government securities with medium to long-term maturities,

typically of over one year (under one-year instruments being money market securities).

Debt Funds (or Income Funds): Next in the order of risk level, we have the general

category Debt Funds. Debt funds invest in debt instruments issued not only by

governments, but also by private companies, banks and financial institutions and other

entities such as infrastructure companies/utilities.

Diversifies Debt Funds : A debt fund that invests in all available types of debt securities,

issued by entities across all industries and sectors is a properly diversified debt fund . A

diversified debt fund is less risky than a narrow-focus fund that invests in debt securities

of a particular sector or industry.

Focused Debt Funds : Some debt funds have a narrow focus, with less diversification in

its investment. Examples include sector, specialized and offshore debt funds. Other

examples of focused funds include those that invest only in Corporate Debentures and

Bonds or only in Tax Free Infrastructure or Municipal Bonds.

High yield Debt Funds: There are funds which seek to obtain higher interest rates by

investing in debt instruments that are considered below investment grade. e.g. Junk

Bond Funds.

Assured Return Funds an Indian Variant : The SEBI permits only those funds

whose sponsors have adequate net-worth to offer assurance of return. For e.g. MIPs.

Investors have some lock-in period.Fixed Term Plan Series Another Indian Variant : These are essentially closed-end.

These plans do not generally offer guaranteed returns. This scheme is for short-term

investors who otherwise place money as fixed term bank deposits or inter corporate

bonds.

Equity Fund:

As investors move from Debt Fund category to Equity Funds,

they face increased risk level. No guarantee returns High potential for growth of capital


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Types of Equity Fund :

a) Aggressive Growth Fund Maximum capital appreciation Invests in less researched or speculative shares. Very volatile & riskier.

b) Growth Fund Growth fund invest in companies whose earnings are expected to Rise above average rate. e.g. vision fund Capital appreciation in 3 5 years Less volatile then aggressive growth fund.

c) Specialty Fund

They invest in companies that meet predefined criteria.

i) Sector Funds Banking fund

Pharmaceutical Fund FMCG Fund

ii) Offshore Funds

Invest in equities in one or more foreign countries.

iii) Small-Cap equity Funds

Invest in shares of companies with relative lower market capital.

d) Diversified Equity Funds

A fund that seeks to invest only in equities, except for a very small portion in liquid

money market securities, bur is not focused on any one or few sectors or shares, may be

termed a diversified equity fund. While exposed to all equity price risks, diversified

equity funds seek to reduce the sector or stock specific risks through diversification.


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Equity Linked Savings Schemes: An Indian Variant

Investment in these schemes entitles the investor to claim an income tax rebate, but

usually has a lock-in period before the end of which funds cannot be withdrawn.

e) Equity Index Funds

An index fund tracks the performance of a specific stock market index. The objective is

to match the performance of the stock market by tracking an index that represents the

overall market. The funds invest in share that constitute the index and in the same

proportion on the index.

f) Value Funds

Value Funds try to seek out fundamentally sound companies whose shares are currently

under-prices in the market. Value Funds will add only those shares to their portfolios that

are selling at low price-earnings ratios, low market to book value ratios and are

undervalued by other yardsticks. Fund concentrate on future growth prospect having

good potential.

g) Equity Income Funds

There are equity funds that can be designed to give the investor a high level of current

income along with some steady capital appreciation, investing mainly in shares of

companies with high dividend yields.

Hybrid Funds Quasi Equity/Quasi Debt: Many mutual funds mix these

(money market, debt and equity) different types of securities in their portfolios.

Such funds are termed hybrid funds as they have a dual equity/bond focus.


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Commodity Funds: While all of the debt/equity/money market funds invest in

financial assets, the mutual fund vehicle is suited for investment in any other- for

examples- physical assets.

Real Estate Funds: Specialized Real Estate Funds would invest in Real Estate

directly, or may fund real estate developers, or lend to them, or buy shares of

housing finance companies or may even buy their securities assets.

FUND STRUCTURE & CONSTITUENTS

In USA Mutual Funds are investment companies In UK, its unit trust or investment trusts In India, there is only unit trust (i.e. trust form)

They are all under SEBI regulations Sponsor Person or a body who sets up or form the trust

Appoints board of trustees, AMC, custodian,

Qualification Contribution 40 % net worth of AMC Should have firm financial track record for 5 years Hands over trust deed to trustees. Trustees There can be a trustee company (comes under companies act, too) or

board of trustees (comes under Indian Trust Act only) The role of the Trustees is to safeguard the interest of the investor/unit-holder of

the fund Fiduciary Capacity

The trustees make sure that the funds are invested according to the investorsmandate and objective.

The board of trustees is appointed by Sponsor with SEBI approval At least 4

trustees of which at least 2/3rd of the board of trustees should be independent Trustees of one mutual fund cannot be trustee of another mutual fund


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Right to seek regular information and remedial action All major decisions need

trustee approval The board of trustees are required to meet at least 4 times in a year to review the

AMC Trust created through a document called the Trust Deed, executed by the Fund

Sponsor in favor of the Trustees.

Asset Management Company

AMCs are fund managers Registered with SEBI

The AMC is also formed as a private limited company. Responsible for operational aspects of the MF. Investment management agreement with trustees. The AMC gets fee for managing the funds according to the mandate of the

investors. An AMCs net worth (Share Capital + Reserves & Surplus) should be at least

Rs.10 crores at all times. At least 40% of AMC capital must be contributed by the Sponsor. At least half (50%) of the directors of the AMC must be independent. Appoints other constituents - Custodian , Registrar & Transfer Agent. Cannot have any other business interest. AMC of one MF cannot be trustee/AMC of another MF. Quarterly reporting to Trustees. An AMC cannot engage in any business other than portfolio advisory and

management. Custodian Appointed by board of trustees for safe keeping of securities as

independent entity of sponsors. Transfer Agents Issue and redeem units and other related services such as

preparation of transfer documents and updating investor records.


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Distributors Are appointed by AMC and may act on behalf of different funds

Independent individuals are appointed as agent. In merger of two AMCs, SEBI approval and consent of 75% unit holders are

required.

AMC takeover by another sponsor

SEBI approval required. Inform the unit holders.

Scheme takeover

SEBI approval required. Investors should be given option to redeem units in case they do not consent for

it.

REGULATORS IN INDIA

SEBI - The capital markets regulators also regulates the mutual funds in India.

SEBI requires all mutual funds to be registered with them. SEBI issues guidelines

for all mutual funds operations - investment, accounts, expenses etc.

RBI as supervisor of banks owned mutual funds - As banks in India came under

the regulatory jurisdiction of RBI, bank owned funds to be under supervision of

RBI and SEBI.

RBI as supervisor of Money Market Mutual Funds - RBI has supervisory

responsibility over all entities that operate in the money markets. Hence in the

past Money Market Mutual Funds scheme of Mutual funds had to be abide by

policies laid down by RBI.


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Recently, it has been decided that Money Market Mutual Funds of registered mutual

funds will be regulated by SEBI through SEBI (Mutual Fund) Regulations 1996.

WORKING OF MUTUAL FUNDS


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The scope of the study refers to the job that to know about the activities of the

organization. The study means that the analysis of the products of the company on which

he/she has to focus.

During the summer training the volunteer need to find out the corporate strategies of the

running company and the mile stone which the company has covered during its journey.

In the winter training, it is necessary for the student that he /she involve with the

experience guys to get the knowledge about the company. That is how the company has

got the success, Or if it is going in the loss, why.

In my training period I have found that the reliance group is the biggest group in Indian

companies. I felt that I can learn the more in the Reliance Mutual Fund.

Reliance Mutual Fund is the part of the Reliance Capital Limited which is a growing

company in the financial products.

Reliance Anil Dhirubhai Ambani group is also deals in communication, energy, naturalresources, media, and entertainment, healthcare and infrastructure.


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COMPAN


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Reliance Capital RelianceLife InsuranceRelianceGeneral Insurance Reliance

Money Reliance

Consumer FinanceRelianceMutual fund

Mutual Fund

Y PROFILE

COMPANY OVERVIEW:Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average

Assets Under Management (AAUM) of Rs. 1,22,000 CRORES and an investor base of

over 7.5 million. (AUM and investor count as on December 30, 2009)

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of


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the fastest growing mutual funds in the country. RMF offers investors a well-rounded

portfolio of products to meet varying investor requirements and has presence in 118 cities

across the country. Reliance Mutual Fund constantly endeavors to launch innovative

products and customer service initiatives to increase value to investors. "Reliance Mutual

Fund schemes are managed by Reliance Capital Asset Management Limited., a

subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of

RCAM, the balance paid up capital being held by minority shareholders."

Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and

banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset

management, life and general insurance, private equity and proprietary investments, stock

broking and other financial services.

VISION OF THE COMPANY:

To be a globally respected wealth creator with an emphasis on customer care and a

culture of good corporate governance.

MISSION OF THE COMPANY

To create and nurture a world-class, high performance environment aimed at delightingour customers.

HISTORY

Reliance Capital Asset Management Limited (RCAM), a company registered under the

Companies Act, 1956 was appointed to act as the Investment Manager of Reliance

Mutual Fund.

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset

Management Company for the Mutual Fund by SEBI vide their letter noIIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment

Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on

August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this

IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund..

Reliance Mutual Fund has launched thirty-five Schemes till date, namely :


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"Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management

Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up

capital of RCAM, the balance paid up capital being held by minority shareholders."

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset

Management Company for the Mutual Fund by SEBI vide their letter no

IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment

Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on

August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this

IMA, RCAM is authorised to act as Investment Manager of Reliance Mutual Fund. The

networth of the Asset Management Company as on March 31, 2009 is Rs 709.39 crores.

YEAR WISE MILESTO NES OF RELIANCE MUTUAL FUND

Reliance Growth Fund (September 1995)

Reliance vision fund (September

1995)

Reliance Income Fund (December 1997)

Reliance Medium Term Fund (August 2000)

Reliance Diversified Power Sector Fund (March 2004)

Reliance Index Fund (February 2005)Reliance Tax Saver (ELSS) Fund (July 2005)

Reliance Equity Linked Saving Fund - Series I (December 2007)

Reliance Infrastructure Fund (May 2009)

Reliance Natural Resource Fund (February 2008)

Reliance NRI Income Fund (November 2004)

R ELIAN CE MUTUAL FUND COMPETITIVE ADVANTAGES

Reliance Mutual Fund At a Glance

Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Assets

Under Management (AUM) of Rs. 1,22,000 crore (AUM as on 30 th January

2010) and an investor base of over 7.5 million

Investor base of over 7.5 million as on 30 January, 2009


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Accelerated growth in investor base 66.89% growth in investor base year on

year. Over 3.38 million investors as on March 31, 2007 from over 2.02 million

investors as on March 31, 2006.

Reliance Mutual Fund has over 10 years of extensive market experience, over 26

schemes combined with a strong performance track record.

Reliance Equity Fund NFO (6th Feb -7th March 2006), the largest ever collection

of Rs.5,759 crore ($1.29 billion) in the history of the Indian Mutual Fund

industry.

Footprint in over 100 cities in India

Wide network of 130 collection points

Wide portfolio of 26 well-rounded products to meet varying investor requirements.

Reliance Mutual Fund is amongst the few mutual funds in the industry to offer

Subscription, Redemption and Switch through Online Transactions.

Lipper Fund Award India 2007 :

Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the

best fund over 3 years in the Bond INR Government category, out of 52

eligible schemes.

Reliance Growth Fund-Growth Plan was declared the best fund over 5

years in the Equity India category, out of 81 eligible schemes.

Lipper Fund Award Gulf 2007 :

Reliance Banking Fund-Growth Plan-Growth Option was declared the

best fund over 3 years in Equity Sector Banks and Other Financials


years in the Equity India category


years in the Equity India category


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Reliance Income Fund-Growth Plan-Growth Option was declared the best

fund over 5 years in Bond Indian Rupee General category

Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the

best fund over 3 years in the Bond INR Government category

Reliance Short Term Fund-Growth Plan was declared the best fund over 3

years in Bond Indian Rupee

CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006 :

Reliance Gilt Securities Fund - Long Term Plan was awarded CNBC

TV18 - CRISIL Mutual Fund of the Year Awards 2006, in the Open End

Long Term Gilt Category

Reliance Short Term Fund was awarded CNBC TV18 - CRISIL Mutual

Fund of the Year Awards 2006, in the Open End Debt Short Term

Category

ICRA Mutual Funds Awards 2007 :

Reliance Short Term Fund has been ranked ICRA MFR 1 by ICRA

Mutual Funds Awards 2007 in the category Open Ended Debt Short

Term for its 1 year performance till December 31, 2006. The rank

indicates performance within the top 10% of the stated category.

Reliance Gilt Securities Fund - Long Term Retail Plan has been ranked

ICRA MFR 1 by ICRA Mutual Funds Awards 2007 in the category Open

Ended Gilt - Long Term for its 3 year performance till December 31,

2006. The rank indicates performance within the top 10% of the stated

category.

Reliance Liquidity Fund has been ranked ICRA MFR 1 by ICRA Mutual

Funds Awards 2007 in the category Open Ended Liquid Scheme for its 1

year performance till December 31, 2006. The rank indicates performance

within the top 10% of the stated category.


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The first mutual fund in India to offer instant cash withdrawal facility on

investments. Reliance Mutual Fund offers the Reliance Any Time Money (ATM)

Card with select schemes. The card is a boon for retail investors as it enables

them to withdraw their investment any time, anywhere at over 1 million VISA-

enabled ATMs across the world.

Reliance Mutual Fund is amongst the few mutual funds with a 24X7 Call Centre

facility .

B USINESS MODEL

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts

Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance

Capital Trustee Co. Limited (RCTCL), as the Trustee.

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide

registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital

Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004

vide SEBI's letter no. IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual

Fund was formed to launch various schemes under which units are issued to the

Public with a view to contribute to the capital market and to provide investors the

opportunities to make investments in diversified securities.

COMPETITORS: Birla Sun Life Mutual Fund DSP Merrill Lynch Mutual Fund Franklin Templeton Mutual Fund
http://www.birlasunlife.com/http://www.dspmlmutualfund.com/http://www.franklintempletonindia.com/india/jsp_cm/ft_home.asphttp://www.dspmlmutualfund.com/http://www.franklintempletonindia.com/india/jsp_cm/ft_home.asphttp://www.birlasunlife.com/


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HDFC Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Prudential ICICI Mutual Fund SBI Mutual Fund UTI Mutual Fund

SWOT ANALYSIS

STRENGTHS Original research Integrated technology platform Performance of previously introduced funds Pan India distribution

WEAKNESS After Sales Services Limited number of outlet

OPPORTUNITIES Changing demographic with higher disposable income and increasing complex

financial instruments will drive the demand for investment advisory services Rapid penetration of internet and computer needs that technology enabled

services will gain market share

THREATS Economic slowdown
http://www.hdfcfund.com/http://www.kotakmutual.com/http://www.licmutual.com/http://www.pruicici.com/http://www.sbimf.com/http://www.utimf.com/http://www.hdfcfund.com/http://www.kotakmutual.com/http://www.licmutual.com/http://www.pruicici.com/http://www.sbimf.com/http://www.utimf.com/


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Stock market fall will have a cascading effect on mutual fund mobilization Increase or decrease in interest rates can effect debt or income mobilizations Future changes in personal taxation rules can impact insurance sales Increasing competition from large and particularly foreign players

MANAGEMENTCEO Mr. Sundeep Sikka

Board of Directors Mr. Soumen Ghosh Mr. Kanu Doshi Mr. Manu Chadha Mr. Sushil Tripathi

Head Of Departments

Infrastructure & Admin Mr. PradeepAndradeFinance and Accounts Mr. Milind Gandhi

Human Resource Development Mr. Rajesh

DerhgawenInformation Technology Mr. Vinay Nigudkar

Service Delivery & Operations Excellence Mr. BhalchandraJoshiOperations & Settlement Ms. Geeta ChandranR&T Operations & Investor Relations Mr. Milind Nesarikar
http://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspx


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Sales & Distribution Mr. HimanshuVyapak

Compliance Mr. SureshViswanathan

Head Equity Investments Mr. Madhusudan Kela

Head Fixed Income Mr. Amitabh Mohanty

Equity Fund ManagersMr. Sunil B. Singhania Mr. Ashwani Kumar Mr. Shailesh Raj Bhan Mr. Shiv ChananiMr. Krishan Daga Mr. Govind Agrawal

Debt Fund Managers

Mr. Amit Tripathi Ms. Anju Chhajer

Mr. Prashant Pimple Mr. ArpitMalaviya

Zonal Heads

NorthernZoneHead

Mr. Gurbir Chopr a

Western ZoneHead Mr. SanjivGudal

Southern ZoneHead

Mr. NikunjSharma

Eastern ZoneHead

Mr. GopalKhaitan
http://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspxhttp://www.reliancemutual.com/AboutUs/ManagementTeam.aspx


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FOCUS ON GROWTH FUND AND SIP PLANS

Growth fund:-Launching date :- 8 October 1995

Corpus :- 6113 crores rupees

OBJECTIVE OF GROWTH FUND :

The primary investment objective of the scheme is to achieve a long term growth of Capital by investing in equity and equity related securities through a research based

Investment approach.

Product Feature Investment in Equities of MID CAP Companies (85% equity) Investment in Debt & Money Market Securities (15%) Best scheme of reliance mutual fund

Fee Structure & Investment Amount

Entry Load: NIL

Exit Load:

1% if redeemed/ switched on or before completion of 1 year fromthe date of allotment

Nil If redeemed/ switched after completion of 1 year from the dateof allotment


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For subscriptions of more than Rs. 5 Crs. Nil

For Institutional Plan:

Entry Load : NilExit Load : Nil

Systematic Investment Plan

Reliance Systematic Investment Plan

Invest as little as Rs. 100 per month.

Welcome to Reliance Mutual Fund

Just as drops of water make an ocean, small but regular investments can go a

long way in building wealth over time.


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This way you grow step by step. Its always prudent to invest with a

long term horizon in mind. Small but regular investments go a long way in

creating wealth over time. Reliance Systematic Investment Plan helps you

achieve just that. It is an investment technique where you deposit as little asRs. 100 regularly every month into the mutual fund scheme at the then

prevailing NAV (Net Asset Value), subject to applicable load.

FINANCIAL PLANNING APPROACH FOR INVESTORS

( REF. TO MUTUAL FUNDS):

Investment is never an easy process. However, a sound understanding of

some basic concepts make the process of investment decision-making much

easier and the experience much more enjoyable. The following step can help you

get started on your path to becoming a successful investor:

1. Identify your financial needs and goals:

The first step is to get a clear understanding of your own financial needs andgoals. Ask yourself the question When do I need money and for what purpose?

List down your financial goals and when they will materialise (daughters higher

education after 6 years, purchase of a house after 10 years), and how much

money you will need for the same. The answer will help you arrive at the time

frame for your investment short term, medium term or long term.

Financial Goals Amount requiredat todays price

Years to achieveyour goal

Investmenthorizon

Retirement

Daughters

Rs. 25 Lakhs

Rs. 2 Lakhs

20 years

6 years

Long term

Long term


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higher Education

Buying a car

Sons computer course

Rs. 4 Lakhs

Rs. 0.5 Lakhs

2 years

6 months

Medium term

Short term

2. Understand your tolerance to risk:

Before making an investment decision, it is very necessary for an investor

to know his risk tolerance limits. Will he be comfortable with fluctuations in the

value of his investments? Or would he prefer to settle down for a lower return

without many ups and downs. By knowing risk tolerance limit of himself an

investor can decide his portfolio and also choose from a variety of financial

investment tools , one which suit his portfolio the most.

3. Estimate your required rate of return:

Your required rate of return depends on your financial goals and the time

you have to achieve them. Take an example that your retirement goal at 58

years is Rs. 20 Lakhs and your monthly savings is Rs. 5000, your required rate

of return depending on your current age would be:

Present Age Returns

43 years

48 years

9.5 %

21.2%

As you can see, the later you start, the higher will be your required rate of return,

hence as your investment horizon reduces, for the same level of saving you may

need to take higher risk. Alternatively, if you were not willing to take a higher risk,


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you would have to save a higher amount every month- Rs 9800, almost twice the

original savings required to achieve your target accumulation.

These three steps give a very basic idea about how to invest, when an

investor is seeking investment in different financial tools. Though there are

different steps of investment in each financial tool, these acts as blue print for

them too.

Investors are required to go for financial planning before making investments in

any mutual fund. The objective of financial planning is to ensure that the right

amount of money is available at the right time to the investor to be able to meet

his financial goals. It is more than mere tax planning. Steps in financial

planning are:

Asset allocation.

Selection of fund.Studying the features of a scheme.

In case of mutual funds, financial planning is concerned only with broad asset

allocation, leaving the actual allocation of securities and their management to

fund managers. A fund manager has to closely follow the objectives stated in the

offer document, because financial plans of users are chosen using these

objectives.


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Why has it become one of the largest financial instruments?

If we take a look at the recent scenario in the Indian financial market then we can

find the market flooded with a variety of investment options which includes

mutual funds, equities, fixed income bonds, corporate debentures, company

fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc. all these

investment options could be judged on the basis of various parameters such as-

return, safety convenience, volatility and liquidity. measuring these investment

options on the basis of the mentioned parameters, we get this in a tabular form

Return Safety Volatility Liquidity Convenie

nce Equity High Low High High Moderate

Bonds Moderate High Moderate Moderate High

Co.Debenture

s

Moderate Moderate Moderate Low Low

Co. FDs Moderate Low Low Low Moderate

Bank

Deposits

Low High Low High High

PPF Moderate High Low Moderate High

LifeInsurance

Low High Low Low Moderate

Gold Moderate High Moderate Moderate Gold

Real

Estate

High Moderate High Low Low

Mutual High High Moderate High High


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Funds

We can very well see that mutual funds outperform every other investment

option. On three parameters it scores high whereas its moderate at one.

comparing it with the other options, we find that equities gives us high returns

with high liquidity but its volatility too is high with low safety which doesnt makes

it favourite among persons who have low risk- appetite. Even the convenience

involved with investing in equities is just moderate.

Now looking at bank deposits, it scores better than equities at all

fronts but lags badly in the parameter of utmost important i.e.; it scores low on

return , so its not an happening option for person who can afford to take risks

for higher return. The other option offering high return is real estate but that even

comes with high volatility and moderate safety level, even the liquidity and

convenience involved are too low. Gold have always been a favourite among

Indians but when we look at it as an investment option then it definitely doesntgives a very bright picture. Although it ensures high safety but the returns

generated and liquidity are moderate. Similarly the other investment options are

not at par with mutual funds and serve the needs of only a specific customer

group. Straightforward, we can say that mutual fund emerges as a clear winner

among all the options available.

The reasons for this being:

I) Mutual funds combine the advantage of each of the investment products :

Mutual fund is one such option which can invest in all other investment options.


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Its principle of diversification allows the investors to taste all the fruits in one

plate. just by investing in it, the investor can enjoy the best investment option as

per the investment objective.

II )Dispense the shortcomings of the other options: Every other investment

option has more or less some shortcomings. Such as if some are good at return

then they are not safe, if some are safe then either they have low liquidity or low

safety or both.likewise, there exists no single option which can fit to the need

of everybody. But mutual funds have definitely sorted out this problem. Now

everybody can choose their fund according to their investment objectives.

III) Returns get adjusted for the market movements : As the mutual funds are

managed by experts so they are ready to switch to the profitable option along

with the market movement. Suppose they predict that market is going to fall then

they can sell some of their shares and book profit and can reinvest the amount

again in money market instruments.

IV) Flexibility of invested amount: Other then the above mentioned reasons,

there exists one more reason which has established mutual funds as one of the

largest financial intermediary and that is the flexibility that mutual funds offer

regarding the investment amount. One can start investing in mutual funds withamount as low as Rs. 500 through SIPs and even Rs. 100 in some cases.

How do investors choose between funds?


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When the market is flooded with mutual funds, its a very tough job for the

investors to choose the best fund for them. Whenever an investor thinks of

investing in mutual funds, he must look at the investment objective of the fund.

Then the investors sort out the funds whose investment objective matches with

that of the investors. Now the tough task for investors start, they may carry on

the further process themselves or can go for advisors like BSL . Of course the

investors can save their money by going the direct route i.e. through the AMCs

directly but it will only save 1-2.25% (entry load) but could cost the investors in

terms of returns if the investor is not an expert. So it is always advisable to go for

MF advisors. The mf advisors thoughts go beyond just investment objectives

and rate of return. Some of the basic tools which an investor may ignore but an

mf advisor will always look for are as follow:

1. Rupee cost averaging

The investors going for Systematic Investment Plans(SIP) and Systematic

Transfer Plans(STP) may enjoy the benefits of RCA (Rupee Cost Averaging).

Rupee cost averaging allows an investor to bring down the average cost of

buying a scheme by making a fixed investment periodically, like Rs 5,000 a

month and nowadays even as low as Rs. 500 or Rs. 100. In this case, the

investor is always at a profit, even if the market falls. In case if the NAV of fund

falls, the investors can get more number of units and vice-versa. This results in

the average cost per unit for the investor being lower than the average price per unit over time.

The investor needs to decide on the investment amount and the frequency. More

frequent the investment interval, greater the chances of benefiting from lower


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prices. Investors can also benefit by increasing the SIP amount during market

downturns, which will result in reducing the average cost and enhancing returns.

Whereas STP allows investors who have lump sums to park the funds in a low-

risk fund like liquid funds and make periodic transfers to another fund to take

advantage of rupee cost averaging.

2. Rebalancing

Rebalancing involves booking profit in the fund class that has gone up and

investing in the asset class that is down. Trigger and switching are tools that can

be used to rebalance a portfolio. Trigger facilities allow automatic redemption or switch if a specified event occurs. The trigger could be the value of the

investment, the net asset value of the scheme, level of capital appreciation, level

of the market indices or even a date. The funds redeemed can be switched to

other specified schemes within the same fund house. Some fund houses allow

such switches without charging an entry load.

To use the trigger and switch facility, the investor needs to specify the event, the

amount or the number of units to be redeemed and the scheme into which the

switch has to be made. This ensures that the investor books some profits and

maintains the asset allocation in the portfolio.

3. Diversification

Diversification involves investing the amount into different options. In case of

mutual funds, the investor may enjoy it afterwards also through dividend transfer

option. Under this, the dividend is reinvested not into the same scheme but into

another scheme of the investor's choice.


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For example, the dividends from debt funds may be transferred to equity

schemes. This gives the investor a small exposure to a new asset class without

risk to the principal amount. Such transfers may be done with or without entry

loads, depending on the MF's policy.

4. Tax efficiency

Tax factor acts as the x-factor for mutual funds. Tax efficiency affects the final

decision of any investor before investing. The investors gain through either

dividends or capital appreciation but if they havent considered the tax factor then

they may end loosing.Debt funds have to pay a dividend distribution tax of 12.50 per cent (plus

surcharge and education cess) on dividends paid out. Investors who need a

regular stream of income have to choose between the dividend option and a

systematic withdrawal plan that allows them to redeem units periodically. SWP

implies capital gains for the investor.

If it is short-term, then the SWP is suitable only for investors in the 10-per-cent-

tax bracket. Investors in higher tax brackets will end up paying a higher rate as

short-term capital gains and should choose the dividend option.

If the capital gain is long-term (where the investment has been held for more

than one year), the growth option is more tax efficient for all investors. This is

because investors can redeem units using the SWP where they will have to pay

10 per cent as long-term capital gains tax against the 12.50 per cent DDT paid

by the MF on dividends.


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All the tools discussed over here are used by all the advisors and have helped

investors in reducing risk, simplicity and affordability. Even then an investor

needs to examine costs, tax implications and minimum applicable investment

amounts before committing to a service.

OBJECTIVES OF THE STUDY

To design database of prospective clients.


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To study various types of investment options and comprehensive study of mutual funds as one.

Also to understand the customer psychology of investments and what are thevarious objectives behind the investment.

To know about market penetration of Reliance Mutual Fund.

RE SEARCH METHODOLOGY

The Reliance promotes its product through its distribution channels. The different

distribution channels are Banking, IFA, National Distributor, Institutional etc. I am

promoting the product of Reliance through the Banking division. The research is

based on primary as well secondary data, however primary data collection was

given more importance since it is overhearing factor in attitude studies. Primary


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data is collected through interaction with the customers in the bank. One of the

most important uses of this research methodology is that it helps in identifying

the problem, collecting, analyzing the required information data and providing an

alternative solution to the problem .It will also help in collecting the vital

information that is required by the top management to assist them for the better

decision making both day to day decision and critical ony data can be used only

for the reference. Research will be done by primary data collection, and primary

data has been collected by interacting with various people in the bank. The

secondary data has been collected through various journals and websites.

Duration of Study: The study was carried out for a period of two months,

from 23 Nov to 18 Jan 2010.

Sampling:

Sampling procedure:

The sample was selected of them who are the customers/visitors of Janata

Sahakari Bank, Pune irrespective of them being investors or not or availing

the services or not. It was also collected through personal visits to persons,

by formal and informal talks and through filling up the questionnaire

prepared. The Questionnaire design was necessary for proper analysis of


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the research work done. The data has been analyzed by using

mathematical/Statistical tool.

Sample size:

The sample size of my project is limited to 200 people only. Out of which

only 120 people had invested in Mutual Fund. Other 80 people did not have

invested in Mutual Fund.

Sample design:

Data has been presented with the help of bar graph, pie charts, line

graphs etc.

Limitation

Some of the persons were not so responsive.

Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire.

Sample size is limited to 200 visitors of Janata Sahakari Bank,Pune out of these only 120 had invested in Mutual Fund. Thesample,size may not adequately represent the whole market.

Some respondents were reluctant to divulge personal informationwhich can affect the validity of all responses.

The research is confined to a certain part of Pune.


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ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors

Age Group 50

No. of

Investors

12 18 30 24 20 16

Interpretation: According to this chart out of 120 Mutual Fund investors

most are in the age group of 36-40 yrs. i.e. 25%, the second most investors

are in the age group of 41-45yrs i.e. 20% and the least investors are in the

age group of below 30 yrs.

(b). Educational Qualification of investors

Educational Qualification Number of Investors


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Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120

Interpretation: Out of 120 Mutual Fund investors 71% of

the investors are Graduate/Post Graduate, 23% are Under

Graduate and 6% are others (under HSC).

c). Occupation of the investors

.

Interpretation: In Occupation group out of 120 investors,

38% are Pvt. Employees, 25% are Businessman, 29% are

Govt. Employees, 3% are in Agriculture and 5% are in

others.

Occupation No. of InvestorsGovt. Service 30

Pvt. Service 45

Business 35

Agriculture 4

Others 6


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(d). Monthly Family Income of the Investors

Income Group No. of Investors30,000 32

Interpretation:In the Income Group of the investors out of 120 investors, 36% investors that is

the maximum investors are in the monthly income group Rs. 20,001 to Rs.

30,000, Second one i.e. 27% investors are in the monthly income group of more

than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income

group of below Rs. 10,000.

(2) Investors invested in different kind of investments.

Kind of Investments No. of Respondents

Saving A/C 195Fixed deposits 148

Insurance 152

Mutual Fund 120


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Post office (NSC) 75

Shares/Debentures 50

Gold/Silver 30

Real Estate 65

Interpretation: From the above graph it can be inferred that out of 200people, 97.5% people have invested in Saving A/c, 76% in Insurance, 74%in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in

Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of

Respondents

40 60 64 36

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High

Return, 30% prefer to invest where there is Low Risk, 20% prefer

easy Liquidity and 18% prefer Trust.

4. Awareness about Mutual Fund and its Operations


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Interpretation: From the above chart it is inferred that 67% People are

aware of Mutual Fund and its operations and 33% are not aware of Mutual

Fund and its operations.

5. Source of information for customers about Mutual Fund

Source of information No. of Respondents

Advertisement 18

Peer Group 25

Bank 30

Financial Advisors 6

Interpretation: From the above chart it can be inferred that the Bank isthe most important source of information about Mutual Fund. Out of 135Respondents, 46% know about Mutual fund Through Bank, 22% through

Response Yes No

No. of Respondents 135 65


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Financial Advisor, 19% through Peer Group and 13% throughAdvertisement.

6. Investors invested in Mutual Fund

Response No. of Respondents

YES 120

NO 80

Total 200

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do

not have invested in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason No. of Respondents

Not Aware 65

Higher Risk 5

Not any Specific

Reason10


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Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are

not aware of Mutual Fund, 13% said there is likely to be higher risk

and 6% do not have any specific reason.

8. Investors invested in different Assets Management Co.

(AMC)

Name of AMC No. of Investors

BSLMF 62UTI 56

HDFC 30

Reliance 49

ICICI Prudential 75

Kotak 45

Others 70

Interpretation: Here most of the Investors preferred ICICI and

BSLMF. Out of 120 Investors 62 have invested in BSLMF each of

them,75 have invested in ICICI, 56 in UTI , 49 in Reliance, 45 in

Kotak and 30 in HDFC.

9. Reason for invested in Reliance Mutual Fund

Reason No. of


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Respondents

Associated with

Reliance Company

37

Better Return 10

Agents Advice 15

Interpretation:

Out of 62 investors of BSLMF 60% have invested because of its association

with Brand Birla, 24% invested on Agents Advice, 16% invested becauseof better return.

10. Reason for not invested in RMF

Reason No. of RespondentsNot Aware 25

Less Return 18

Agents Advice 22

Interpretation:

Out of 65 people who have not invested in BSLMF, 38% were not

aware with BSLMF, 28% do not have invested due to less return

and 34% due to Agents Advice.


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11. Channel Preferred by the Investors for Mutual Fund

Investment

Channel Financial Advisor Bank AMC

No. of

Respondents

21 69 30

Interpretation:

Out of 120 Investors 58% preferred to invest through Bank, 25%

through AMC and 17% through Financial Advisor.

12. Mode of Investment Preferred by the Investors

Mode of Investment One time Investment Systematic Investment Plan

(SIP)

No. of Respondents 42 78

Interpretation:


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Out of 120 Investors 35% preferred One time Investment and 65 %

preferred Systematic Investment Plan.

13. Preferred Portfolios by the Investors

Portfolio No. of InvestorsEquity 56

Debt 20Balanced 44

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37%preferred Balance and 17% preferred Debt portfolio

14. Option for getting Return Preferred by the Investors

Option Dividend Payout Dividend

Reinvestment

Growth

No. of

Respondents

25 10 85


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Interpretation:

From the above graph 71% preferred Growth Option, 21%

preferred Dividend Payout and 8% preferred Dividend

Reinvestment Option.

FINDINGS

The Age Group of 36-40 years were more in numbers. The second most

Investors were in the age group of 41-45 years and the least were in the

age group of below 30 years.

Most of the Investors were Graduate or Post Graduate and below HSC

there were very few in numbers.

In Occupation group most of the Investors were pvt. employees, the

second most Investors were Govt. employees and the least were

associated with Agriculture.

In family Income group, between Rs. 20,001- 30,000 were more in

numbers, the second most were in the Income group of more than

Rs.30,000 and the least were in the group of below Rs. 10,000.


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About all the Respondents had a Saving A/c in Bank, 76% Invested in

Fixed Deposits, Only 60% Respondents invested in Mutual fund.

Mostly Respondents preferred High Return while investment, the second

most preferred Low Risk then liquidity and the least preferred Trust.

Only 67% Respondents were aware about Mutual fund and its operations

and 33% were not.

Among 200 Respondents only 60% had invested in Mutual Fund and

40% did not have invested in Mutual fund.

Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told

there is not any specific reason for not invested in Mutual Fund and 6%

told there is likely to be higher risk in Mutual Fund.

Most of the Investors had invested in ICICI or BSLMF, UTI has also good

Brand Position among investors.

Out of 62 investors of RMF 60% have invested due to its association withthe Brand Reliance, 24% Invested because of Advisors Advice and 16%

due to better return.

Most of the investors who did not invested in RMF due to not Aware of

RMF, the second most due to Agents advice and rest due to Less

Return.

68% Investors preferred to Invest through Bank, 25% through AMC

(means Direct Investment) and 17% through Financial Advisors.


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35% preferred One Time Investment and 65% preferred SIP out of

both type of Mode of Investment.

The most preferred Portfolio was Equity, the second most was Balance

(mixture of both equity and debt), and the least preferred Portfolio was

Debt portfolio.

Maximum Number of Investors Preferred Growth Option for returns, the

second most preferred Dividend Payout and then Dividend

Reinvestment.

CONCLUSION

Running a successful Mutual Fund requires complete understanding of the

peculiarities of the Indian Stock Market and also the psyche of the small

investors. This study has made an attempt to understand the financial behavior

of Mutual Fund investors in connection with the preferences of Brand (AMC),

Products, Channels etc. I observed that many of people have fear of Mutual

Fund. They think their money will not be secure in Mutual Fund. They need the

knowledge of Mutual Fund and its related terms. Many of people do not have

invested in mutual fund due to lack of awareness although they have money to


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invest. As the awareness and income is growing the number of mutual fund

investors are also growing.

Brand plays important role for the investment. People invest in those

Companies where they have faith or they are well known with them. There are

many AMCs in Pune but only some are performing well due to Brand awareness.

Some AMCs are not performing well although some of the schemes of them are

giving good return because of not awareness about Brand. Reliance, UTI,

BSLMF, ICICI Prudential etc. they are well known Brand, they are performing

well and their Assets Under Management is larger than others whose Brand

name are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund.

Financial Advisors could also be the most preferred channel for the investment in

mutual fund. They can change investors mind from one investment option to

others. Many of investors directly invest their money through AMC because they

do not have to pay entry load. Only those people invest directly who know well

about mutual fund and its operations and those have time.


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SUGGESTIONS AND RECOMMENDATIONS The most vital problem spotted is of ignorance. Investors should be made

aware of the benefits. Nobody will invest until and unless he is fully

convinced. Investors should be made to realize that ignorance is no longer

bliss and what they are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer.

But most of the people are not even aware of what actually a mutual fund

is? They only see it as just another investment option. So the advisors

should try to change their mindsets. The advisors should target for more

and more young investors. Young investors as well as persons at the

height of their career would like to go for advisors due to lack of expertiseand time.


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Mutual Fund Company needs to give the training of the Individual

Financial Advisors about the Fund/Scheme and its objective, because they

are the main source to influence the investors.

Younger people aged under 35 will be a key new customer group into the

future, so making greater efforts with younger customers who show some

interest in investing should pay off.

Customers with graduate level education are easier to sell to and there is a

large untapped market there. To succeed however, advisors must provide

sound advice and high quality.

Systematic Investment Plan (SIP) is one the innovative products

launched by Assets Management companies. SIP is easy for monthly

salaried person as it provides the facility of do the investment in EMI.

Though most of the prospects and potential investors are not aware about

the SIP. There is a large scope for the companies to tap the salaried

persons.


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Annexure

QUESTIONNAIRE

A study of preferences of the investors for investment in mutual

funds.

1. Personal Details:

(a). Name:-

(b). Add: - Phone:-

(c). Age:-

(d). Qualification:-

(e). Occupation. Pl tick ()

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick ().

Up toRs.10,000

Rs. 10,001 to15000

Rs. 15,001 to20,000

Rs. 20,001 to30,000

Rs. 30,001and above

Graduation/PG Under Graduate Others


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2. What kind of investments you have made so far? Pl tick (). All applicable.

a. Saving account b. Fixed deposits c. Insurance d. Mutual Funde. Post Office-NSC,etc

f.Shares/Debentures

g. Gold/ Silver h. Real Estate

3. While investing your money, which factor will you prefer?.

(a) Liquidity (b) Low Risk (c) HighReturn

(d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (). YesNo

5. If yes, how did you know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (). YesNo

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

8 . If yes, in which Mutual Fund you have invested? Pl. tick (). All applicable.

a. b. UTI c. d. e. Kotak f. Other. specify


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BSLMF HDFC Reliance

9. If invested in RMF, you do so because (Pl. tick (), all applicable).

a. RMF is a leading company in mutual funds.b. They have a record of giving good returns year after year.c. Agent Advice

10. If NOT invested in RMF, you do so because (Pl. tick () all applicable).

a. You are not aware of RMF.b. RMF gives less return compared to the others.c. Agent Advice

11 . Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor (b) Bank (c) AMC

12. When you invest in Mutual Funds which mode of investment will you prefer?Pl. tick ().

a. One Time Investment b. Systematic Investment Plan (SIP)

13. When you want to invest which type of funds would you choose?

a. Having only debtportfolio

b. Having debt & equityportfolio.

c. Only equity portfolio.

14. How would you like to receive the returns every year? Pl. tick ().

a. Dividend payout b. Dividend re-investment

c. Growth in NAV

Bibliography


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By the help of Books

Research Methodology written BY

M.V. KULKARNI Marketing Management written BY

Phillip Kotlar

By the Help of Manuals

Reliance Mutual Fund Report of 2009 & Internet .

By the help of Other Sources

By the heads and the consultant of the Reliance Mutual Fund.

By the help of Websites1. www.amfiIndia.org.

2. www.Reliancemutualfund.com

3. www.google.com

4. www.Wikipedia.com
http://www.reliancemutualfund.com/http://www.reliancemutualfund.com/

Ajay kumar RMF

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