Report on reliance mutual funds


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Report on reliance mutual funds by Anshika Bajpai

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Report on reliance mutual funds

  3. 3. PREFACEWith the growth of rapid industrialization the need of management is felt every, A research report provides the most natural condition under which a studentcan learn and got success in implementing the theoretically learned in to the practical andcurrent environment of daily practices done by the people (investor) it helps a student tolearn, to improve, to improvise, to experiment, to find knowledge in all possible ways andto translate that knowledge into action.MBA is a foundation stone to the management career. The classroom learning needs topractical exposure. To develop concrete managerial and administrative skills of potentialmanager, it is important that the interaction to the real environment be there.The project is a real life venture for me. It is a great privilege that you have spread your forreading this. In forthcoming pages, an attempt has been made to present the different aspectof my project. 3
  4. 4. Date (AnshikaBajpai)Place: Kanpur ACKNOWLEDGMENTIf words are considered as a symbol of approval and taken of appreciation then let thewords play the heralding role expressing my gratitude.First of all I thank to my Gracie god who blessed me with all kind of facilities that had beenprovided to me for completion of my report.I’m also grateful to my teacher for guiding me to learn and helped me on project onCOMPARITIVE ANALYSIS OF RELIANCE MUTUAL FUND WITH OTHEREXISTING MUTUAL FUNDS.My endless appreciation goes to my all respected faculty who has stood by my side andgive me moral support whenever I was low and boosted my will power. Finally, I wouldlike to express my solidarity towards the RELIANCE GROUP for providing me with suchan opportunity. 4
  5. 5. Thank You TABLE OF CONTENTS INTRODUCTION 7-8 HISTORY OF THE RELIANCE COMPANY 9-10 COMPANY PROFILE 11-13 RELIANCE MUTUAL FUND PROFILE 14- 19 Reliance Mutual Fund - Accelerating Growth About the project HISTORY OF MUTUAL FUND 20- 62 Advantages of mutual funds Disadvantages of mutual funds 5
  6. 6.  Risks involved in mutual funds Various mutual fund scheme Types of mutual fund Different types of funds Costs involved in mutual fund The values of your fund Some of the existing asset management company Development of mutual fund in India Graphical representation Mutual funds organizations Flow chart Frequently used terms in mutual funds Structure of Indian mutual fund Working of mutual fund OBJECTIVE OF THE STUDY 63-64 SCOPE OF THE STUDY 65-66 RESEARCH METHODOLOGY 67-70 USE OF THE PROJECT 71 IMPORTANCE OF THE STUDY 72-73 RESEARCH ANALYSIS AND INTERPRETATION 74-90 FINDINGS 91-92 6
  7. 7.  SWOT ANALYSIS 93- 96 Strengths weakness RECOMMENDATIONS 97-98 CONCLUSION 99- 100 ANNEXURE 101- 105 BIBLIOGRAPHY 106 Introduction 7
  8. 8. There are a lot of investment avenues available today in the financial market for an investorwith an investable surplus. He can invest in Bank Deposits, Corporate Debentures, andBonds where there is low risk but low return. He may invest in Mutual of companies wherethe risk is high and the returns are also proportionately high. The recent trends in theMutual Market have shown that an average retail investor always lost with periodic bearishtends. People began opting for portfolio managers with expertise in Mutual markets whowould invest on their behalf. Thus we had wealth management services provided by manyinstitutions. However they proved too costly for a small investor. These investors havefound a good shelter with the mutual funds.Like most developed and developing countries the mutual fund cult has been catching on inIndia. The reasons for this interesting occurrence are: 8
  9. 9. # Mutual funds make it easy and less costly for investors to satisfy their need for capitalgrowth, income and/or income preservation.# Mutual fund brings the benefits of diversification and money management to theindividual investor, providing a Opportunity for financial success that was once availableonly to a select few. History of Reliance Company 9
  10. 10. The reliance group founded by Dhirubhai. H. Ambani (1932-2002) is India’s largest privatesector enterprise. He is credited to have brought about the equity cult in India in the lateseventies and is regarded as an icon for enterprise in India. He epitomized the spirit dare todream and learn to excel’. The Reliance Group is a living testimony to his indomitable will,single-minded dedication and an unrelenting commitment to his goals.Unit Trust of India is the first Mutual Fund set up under a separate act, UTI Act in 1963,and started its operations in 1964 with the issue of units under the scheme US-641. In 1978UTI was delinked from the RBI and Industrial Development Bank of India (IDBI) took overthe Regulatory and administrative control in place of RBI.In the year 1987 Public Sector banks like State Bank of India, Punjab National Bank, IndianBank, Bank of India, and Bank of Baroda have set up mutual funds.Apart from these above mentioned banks Life Insurance Corporation [LIC] and GeneralInsurance Corporation [GIC] too have set up mutual fund. LIC established its mutual fundin June 1989.while GIC had set up its mutual fund in December 1990.The mutual fundindustry had assets under management of Rs. 47,004 crores.With the entry of Private Sector Funds a new era has started in Mutual Fund Industry .e.g:-Principal Mutual Fund. 10
  11. 11. Company Profile 11
  12. 12. Reliance Group Holdings has grown from a small office data-processing equipment firm in1961 into a major insurance and financial-services group in one generation under one chief.Reliances insurance operations constitute the nations 27th-largest property and casualtyoperation. The parent company also includes a development subsidiary in commercial realestate. Reliances international consulting group contains several energy, environment, andnatural resources consulting. A financial arm invests in other businesses, primarilytelevision stations.Reliance Insurance started as the Fire Association of Philadelphia in 1817, organized by 5hose and 11 engine fire companies. It became the nations first association of volunteer firedepartments. Business got a boost as a result of the Great Chicago Fire of 1871. 12
  13. 13. The association soon developed a field of agents to write policies across the country. Forthe first two years, shareholders received dividends twice a year of $5 a share, whichincreased gradually to $10 in 1876.In 1972, the Reliance insurance group divided its pool so that Reliance Insurance Companyand its subsidiaries handled most standard lines, while United Pacific Insurance Companyhandled the nonstandard and other operations.In 1977, the company moved into real estate, forming Continental Cities Corporation,which became Reliance Development Group, Inc. This division handled all real estateoperations of the parent company and other subsidiaries. Reliance Capital Group, L.P.constituted the investment branch of the Reliance conglomerate.In December 1989, Reliance Capital sold its investment, Days Corporation, parent companyof Days Inn of America, the worlds third-largest hotel chain; it had been purchased in 1984.Reliance Industries Limited. The Groups principal activity is to produce and distributeplastic and intermediates, polyester filament yarn, fiber intermediates, polymerintermediates, crackers, chemicals, textiles, oil and gas. The refining segment includesproduction and marketing operations of the Petroleum refinery. The petrochemicalssegment includes production and marketing operations of petrochemical products namely,High and Low density Polyethylene."Growth has no limit at Reliance. I keep revising my vision.Only when you can dream it, you can do it." 13
  14. 14. Reliance mutual fund profileReliance Mutual Fund - Accelerating GrowthReliance Mutual Fund, a part of the Reliance Anil Dhirubhai Ambani Group is the No. 1Mutual Fund in India. Reliance Mutual Fund offers investors a well rounded portfolio ofproducts to meet varying investor requirements. Reliance Mutual Fund has a presence inover 100 cities across the country, an investor base of over 3.9 million and manages assetsover Rs. 67,598 Crores as on August 31, 2007. Reliance Mutual Fund constantly endeavorsto launch innovative products and customer service initiatives to increase value to investors.Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Ltd.,awholly owned subsidiary of Reliance Capital Ltd. Reliance Capital Ltd. is one of India’sleading and fastest growing private sector financial services companies, and ranks amongthe top 3 private sector financial services and banking companies, in terms of net worth.Reliance Capital Ltd. has interests in asset management and mutual funds, life and generalinsurance, private equity and proprietary investments, stock broking and other financialservices. 14
  15. 15. No.1 basis Assets under Management (AUM) as on August 31, 2007. 15
  16. 16. ABOUT PROJECT MUTUAL FUNDA mutual fund is nothing more than a collection of Mutuals and/or bonds. You can think ofa mutual fund as a company that brings together a group of people and invests their moneyin Mutuals, bonds, and other securities. Each investor owns shares, which represent aportion of the holdings of the fund. 16
  17. 17. You can make money from a mutual fund in three ways:1) Income is earned from dividends on Mutuals and interest on bonds. A fund pays out.Nearly all income it receives over the year to fund owners in the form of a distribution.2) If the fund sells securities that have increased in price, the fund have a capital gain. Mostfunds also pass on these gains to investors in a distribution.3) If fund holdings increase in price but are not sold by the fund manager, the funds .Sharesincrease in price. You can then sell your mutual fund shares for a profit.Funds will also usually give you a choice either to receive a check for distributions ortoReinvest the earnings and get more shares.The competition among funds has led to the launch of newer products, tailor-made to suitthe requirements of investors. Mutual funds now offer products for the entire range of needsof investors. The encouraging response to index funds and sector funds shows the growingmaturity among investors. Open-end funds, which provide liquidity to investors at dailyNAV related prices, are growing in popularity. The funds have be en adopting technology 17
  18. 18. to provide good service to investors and with the proposed introduction of electronic fundstransfer and the growing trend towards E-Commerce; the efficiency of service will increaseeven further. In the coming year’s mutual funds as saving intermediaries will play a greater role inbringing the gap between investors and issuers, especially in the area of equity funds ?Atpresent these funds represents 13% of BSE market capitalization. This is expected to go upwith increasing flows into financial savings, especially the mutual fund with thegrowth and stability in the capital market flows into equity funds are expected to go up. A Mutual Fund is a trust that pools the savings of a number of investors who share acommon financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned throughthese investments and the capital appreciation realized is shared by its unit holders inproportion to the number of units owned by them. Thus a Mutual Fund is the most suitableinvestment for the common man as it offers an opportunity to invest in a diversified,professionally managed basket of securities at a relatively low cost. Mutual funds, also referred to as investment companies, offer an alternative investmentchoice for individuals with a long-term horizon. The way they operate is that individualinvestor money are pooled and invested in many different companies. Assets areprofessionally managed to meet various investment objectives. They issue and sell shares toshare holders and also redeem them (buy them back) upon request. Prices of shares are setdaily at the close of business, based on the value of all investments in the mutual fund’sportfolio. Their major advantages are diversification and professional management, which 18
  19. 19. are not readily available to small investors outside the mutual fund arena. Money marketmutual funds are short-term funds. They invest in short-term cash and cash equivalentinstruments, such as Treasury bills, certificates of deposit, and short-term notes. Mutualfunds may own Mutual and bonds of many different companies.A mutual fund is the ideal investment vehicle for today’s complex and modern financialscenario. Markets for equity shares, bonds and other fixed income instruments, real estate,derivatives and other assets have become mature and information driven. Price changes inthese assets are driven by global events occurring in faraway places. A typical individual isunlikely to have the knowledge, skills, inclination and time to keep track of events,understand their implications and act speedily. An individual also finds it difficult to keeptrack of ownership of his assets, investments, brokerage dues and bank transactions etc. 19
  20. 20. 20
  21. 21. History of mutualfundIn 1924 three Boston securities executives pooled their money together to create the firstmutual fund. The idea of pooling money together for investing purposes started in Europein the mid-1800s. The first pooled fund in the U.S was created in 1893 for the faculty and 21
  22. 22. staff of Harvard University on March 21st, 1924 the first official mutual fund was born. Itwas called the Massachusetts Investors Trust.However in India UTI was the first to introduce mutual funds in the Indian markets and itcommenced its operations from July 1964, Government allowed public sector banks andinstitutions to set up mutual funds.In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. Theobjectives of SEBI are – to protect the interest of investors in securities and to promote thedevelopment of and to regulate the securities market.As far as mutual funds are concerned, SEBI formulates policies and regulates the mutualfunds to protect the interest of the investors. SEBI notified regulations for the mutual fundsin1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enterthe capital market. The regulations were fully revised in 1996 and have been amendedthereafter from time to time. SEBI has also issued guidelines to the mutual funds from timeto time to protect the interests of investors.All mutual funds whether promoted by public sector or private sector entities includingthose promoted by foreign entities are governed by the same set of Regulations. There is nodistinction in regulatory requirements for these mutual funds and all are subject tomonitoring and inspections by SEBI. The risks associated with the schemes launched by themutual funds sponsored by these entities are of similar type. It may be mentioned here thatUnit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January15,2002. The end of millennium marks 36 years of existence of mutual funds in our country. 22
  23. 23. The ride through these 36 years is not been smooth. Investor opinion is still divided. Whilesome are for mutual funds others are against it.  MUTUAL FUND SCHEMESMutual funds offer a variety of schemes to investor so as to provide steady income orgrowth or both. They differ according to the investment policies. The funds like individualinvestor have different goals. Of the investor who will first ascertain his investmentobjectives, thinking that the units of a fund have an investment goal paralleling hisobjectives  FUND MUTUAL BASICS:As you probably know, mutual funds have become extremely popular over the last 20years.What was once just another obscure financial instrument is now a part of our daily lives.In fact, too many people, investing means buying mutual funds. After all, its commonknowledge that investing in mutual funds is (or at least should be) better than simply lettingyour cash waste away in a savings account, but, for most people, thats where theunderstanding of funds ends. It doesnt help those mutual fund sales people speak a strangelanguage that, sounding sort of like English, is interspersed with jargon like MER, NAVPS,load/no-load, etc.Originally mutual funds were heralded as a way for the little guy to get a piece of themarket. Instead of spending all your free time buried in the financial pages of the 23
  24. 24. investment Journal, all you have to do is buy a mutual fund and youd be set on your way tofinancial freedom. As you might have guessed, its not that easy. Mutual funds are anexcellent idea in theory, but, in reality, they havent always delivered. Not all mutual fundsare created equal, and investing in mutual’s isnt as easy as throwing your money at the firstsalesperson who solicits your business. ADVANTAGES OF MUTUAL FUND1-Professional Management - The primary advantage of funds (at least theoretically)is the professional management of your money. Investors purchase funds because they donot have the time or the expertise to manage their own portfolio. A mutual fund is arelatively inexpensive way for a small investor to get a full-time manager to make andmonitor investments. 24
  25. 25. 2-Diversification - By owning shares in a mutual fund instead of owning individualMutualOr bonds, your risk is spread out. The idea behind diversification is to invest in a largenumber of assets so that a loss in any particular investment is minimized by gains in others.In other words, the more Mutuals and bonds you own, the less any one of them can hurt you(think about Enron). Large mutual funds typically own hundreds of different Mutuals inmany different industries. It wouldnt be possible for an investor to build this kind of aportfolio with a small amount of money.3-Economies of Scale - Because a mutual fund buys and sells large amounts ofsecurities at a time, its transaction costs are lower than you as an individual would pay.4-Liquidity - Just like an individual Mutual, a mutual fund allows you to request that yourshares be converted into cash.5-Simplicity- Buying a mutual fund is easy. DISADVANTAGES OF MUTUAL FUND1-Professional Management- Did you notice how we qualified the advantage ofprofessional management with the word "theoretically"? Many investors debate over 25
  26. 26. whether or not the so-called professionals are any better than you or I at picking Mutuals.Management is by no means infallible, and, even if the fund loses money, the manager stilltakes his/her cut. .2-Costs- Mutual funds dont exist solely to make your life easier--all funds are in it for aProfit. The mutual fund industry is masterful at burying costs under layers of jargon.Because funds have small holdings in so many different companies, high returns from afew Investments often dont make much difference on the overall return. Dilution is also theresult of a successful fund getting too big. When money pours into funds that have hadstrong Success, the manager often has trouble finding a good investment for all the newmoney3-Taxes- When making decisions about your money, fund managers dont consider yourpersonal tax situation. For example, when a fund manager sells a security, a capital-gain taxis triggered, which affects how profitable the individual is from the sale. It might have beenmore advantageous for the individual to defer the capital gains liability RISKS INVOLVED IN MUTUAL FUND 26
  27. 27. In short, how stable is the company or entity to which you lend your money when youinvest? How certain are you that it will be able to pay the interest you are promised, orrepay your principal when the investment matures?  Inflation riskChanging interest rates affect both equities and bonds in many ways. Investors arereminded that “predicting” which way rates will go is rarely successful. A diversifiedportfolio can help in offsetting these changes.  Effect of loss of key professional and inability to adoptAn industries’ key asset is often the personnel who run the business i.e. intellectualproperties of the key employees of the respective companies. Given the ever-changingcomplexion of few industries and the high obsolescence levels, availability of qualified,trained and motivated personnel is very critical for the success of industries in few sectors.It is, therefore, necessary to attract key personnel and also to retain them to meet thechanging environment and challenges all investments involve some form of risk, whichshould be evaluated them potential Rewards when an investment is selected.  Managing risk 27
  28. 28. At times the prices or yields of all the securities in a particular market rise or fall due tobroad outside influences. When this happens, the Mutual prices of an out standing, highlyprofitable company and a fledgling corporation may be affected.This change in price is due to “market risk”.  Interest rate riskSometimes referred to as “loss of purchasing power”. Whenever inflation sprints forwardfaster than the earnings on your investment, you run the risk that you will actually be able tobuy less, not more. Inflation risk also occurs when prices rise faster than your returns.  Credit riskThe sector offers. Failure or inability to attract/retain such qualified key personnel mayimpact the prospects of the companies in the particular sector in which the fund invests.  Exchange risksA number of companies generate revenues in foreign currencies and may have investmentsor expenses also denominated in foreign currencies. Changes in exchange rates may,therefore, have a positive or negative impact on companies which in turn would have aneffect on the investment of the fund.  Investment risks 28
  29. 29. The sectoral fund schemes, investments will be predominantly in equities of selectcompanies in the particular sectors. Accordingly, the NAV of the schemes are linked to theequity performance of such companies and may be more volatile than a more diversifiedportfolio of equities.  Changes in government policyChanges in Government policy especially in regard to the tax benefits may impact thebusiness prospects of the companies leading to an impact on the investments made bythe fund. 29
  30. 30. VARIOUS MUTUAL FUND SCHEME  Mutual Fund Schemes:-Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,risk tolerance and return expectations etc. The table below gives an overview into theexisting types of schemes in the Industry.  By Structure# Open - Ended Schemes# Close - Ended Schemes# Interval Schemes  By Investment Objective  Growth Schemes  Income Schemes  Balanced Schemes  Money Market Schemes 30
  31. 31. Types of Mutual Fund 31
  32. 32. Mutual Funds: Different Types of FundsNo matter what type of investor you are there is bound to be a mutual fund that fits yourstyle. According to the last count there are over 10,000 mutual funds in North America!That means there are more mutual funds than Mutuals. Its important to understand thateach mutual fund has different risks and rewards. In general, the higher the potential return,the higher the risk of loss. Although some funds are less risky than others, all funds havesome level of risk--its never possible to diversify away all risk. This is a fact for allinvestments.Each fund has a predetermined investment objective that tailors the funds assets, regionsof investments, and investment strategies. At the fundamental level, there are threevarieties: of mutual funds1) Equity funds (Mutual)2)Fixed-income funds (bonds)3) Money market fundsAll mutual funds are variations of these three asset classes. For example, while equityFunds that invest in fast-growing companies are known as growth funds, equity funds that 32
  33. 33. Invest only in companies of the same sector or region is known as specialty funds. Let’s goover the many different flavors of funds. Well start with the safest and then Work throughto the more risky.  Money Market FundsThe money market consists of short-term debt instruments, mostly T-bills. This is a safeLace to park your money. You wont get great returns, but you wont have to worry aboutlosing your principal. A typical return is twice the amount you would earn in a regularchecking/savings account and a little less than the average certificate of deposit (CD).Wevegot a whole tutorial on the money market if youd like to learn more about it.  Bond/Income FundsIncome funds are named appropriately: their purpose is to provide current income on asteady basis. When referring to mutual funds, the terms "fixed-income," "bond," and"income" are synonymous. These terms denote funds that invest primarily in governmentand corporate debt. While fund holdings may appreciate in value, the primary objective ofthese funds is to provide a steady cash flow to investors. As such, the audience for thesefunds consists of conservative investors and retirees. 33
  34. 34. Bond funds are likely to pay higher returns than certificates of deposit and money marketInvestments, but bond funds arent without risk. Because there are many different types ofBonds, bond funds can vary dramatically depending on where they invest. For example, afund specializing in high-yield junk bonds is much more risky than a fund that invests ingovernment securities; also, nearly all bond funds are subject to interest rate risk, whichmeans that if rates go up the value of the fund goes down.  Balanced FundsThe objective of these funds is to provide a "balanced" mixture of safety, income, andcapital appreciation. The strategy of balanced funds is to invest in a combination of fixed-income and equities. A typical balanced fund might have a weighting of 60% equityand40% fixed-income. The weighting might also be restricted to a specified maximum orminimum for each asset class.A similar type of fund is known as an asset allocation fund. Objectives are similar to thoseof a balanced fund, but these kinds of funds typically do not have to hold a specifiedpercentage of any asset class. The portfolio manager is therefore given freedom to switchthe ratio of asset classes as the economy moves through the business cycle.  Equity FundsFunds that invest in Mutual represent the largest category of mutual funds. Generally, theinvestment objective of this class of funds is long-term capital growth with some income. 34
  35. 35. There are, however, many different types of equity funds because there are many differenttypes of equities. A great way to understand the universe of equity funds is to use a stylebox, an example of which is below.The idea is to classify funds based on both the size of the companies invested in and theinvestment style of the manager. The term "value" refers to a style of investing that looksfor high quality companies that are out of favor with the market. These companies arecharacterized by low P/E ratios, price-to-book ratios, and high dividend yields, etc.The opposite of value is growth, which refers to companies that have had (and are expectedto continue to have) strong growth in earnings, sales, and cash flow, etc. A compromisebetween value and growth is "blend," which simply refers to companies that are neithervalue nor growth Mutuals and so are classified as being somewhere in the middle.  For example, a mutual fund that invests in large-cap companies who are in strong financial shape but have recently seen their share price fall would be placed in the upper left quadrant of the style box (large and value). The opposite of this would be a fund that invests in startup technology companies with excellent growth prospects. Such a mutual would reside in the bottom right quadrant  Global/International FundsAn international fund (or foreign fund) invests only outside your home country.Global funds invest anywhere around the world, including your home country.Its tough to classify these funds as either riskier or safer. On the one hand they tend to bemore volatile and have unique country and/or political risks. But, on the flip side, they can, 35
  36. 36. as part of a well-balanced portfolio, actually reduce risk by increasing diversification.Although the worlds economies are becoming more inter-related, it is Likely that anothereconomy somewhere is outperforming the economy of your home Country.  Index FundsThe last but certainly not the least important are index funds. This type of mutual fundreplicates the performance of a broad market index such as the sensex and nifty. Aninvestor in an index fund figures that most managers cant beat the market. An index fundmerely replicates the market return and benefits investors in the form of low fees. 36
  37. 37. COSTS INVOLVED IN MUTUAL FUND• Mutual Funds: CostsCosts are the biggest problem with mutual funds. These costs eat into your return, and theyare the main reason why the majority of funds end up with sub-par performance. What’seven more disturbing is the way the fund industry hides costs through a layer of financialcomplexity and jargon. Some critics of the industry say that mutual fund Companies getaway with the fees they charge only because the average investor does not understand whathe/she is paying for. 37
  38. 38. Fees can be broken down into two categories:1. Ongoing yearly fees to keep you invested in the fund.2. Transaction fees paid when you buy or sell shares in a fund (loads)• The Expense RatioThe ongoing expenses of a mutual fund are represented by the expense ratio. Thisis sometimes also referred to as the management expense ratio (MER). The expense ratio iscomposed of the following:• The cost of hiring the fund manager(s) - Also known as the management fee,This cost is between 0.5% and 1.0% of assets on average. While it sounds small,This fee ensures that mutual fund managers remain in the country’s top echelon ofEarners. Think about it for a Second: 1% of 250 million (a small mutual fund) is2.5 million--fund managers are definitely not going hungry! It’s true that payingManagers is a necessary fee, but don’t think that a high fee assures superiorPerformance.• Administrative costs –These include necessities such as postage, record keeping, customer service, cappuccinomachines, etc. Some funds are excellent at minimizing these costs while others (the oneswith the cappuccino machines in the office) are not. On the whole, expense ratios range 38
  39. 39. from as low as 0.2% (usually for index funds) to as high as 2.0%. The average equitymutual fund charges around 1.3%-1.5%. You’ll generally pay more for specialty orinternational funds, which require more expertise from manager..• Buying and Selling 39
  40. 40. (You can buy some mutual funds no-load) by contacting the fund companies directly.Other funds are sold through brokers, banks financial planners, or insurance agents. If youbuy through a third party there is a good chance they’ll hit you with a sales charge (load).That being said, more and more funds can be purchased through no-transaction feeprograms that offer funds of many companies. Sometimes referred to as a "fundsupermarket," this service lets you consolidate your holdings and record keeping, and it stillallows you to buy funds without sales charges from many different companies.• Popular examples are Schwab’s OneSource, Vanguard’s Fund Access, and Fidelity’s Funds Network. Many large brokerages have similar offerings. Selling a fund is as easy as purchasing one. All mutual funds will redeem (buy back) your shares on any business day. In the United States companies must send you the payment within seven days. 40
  41. 41. THE VALUES OF YOUR FUND Net asset value (NAV), which is a funds assets minus liabilities, is the value of a mutual fund. NAV per share is the value of one share in the mutual fund, and it is the number that is quoted in newspapers. You can basically just think of NAV per share as the price of a mutual fund. It fluctuates everyday as fund holdings and shares outstanding change. When you buy shares, you pay the current NAV per share plus any sales front-end load. When you sell your shares, the fund will pay you NAV less any back-end load .Moses gave to his follow eternities 10 commandments that were to be followed till: The world of investments too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad world of investments. These come in handy for there is every possibility of losing what one has if due care is not taken.1. Assess yourself: Self-assessment of one’s needs; expectations and risk profile is of prime importance failing which; one will make more mistakes in putting money in right places than otherwise. One should identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments. Irrational expectations will only bring pain. 41
  42. 42. 2. Try to understand where the money is going : It is important to identify the nature of investment and to know if one is compatible with the investment. One can lose substantially if one picks the wrong kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that mutual fund companies provide on their funds.3. One first has to decide what he wants the money for and it is this investment goal that should be the guiding light for all investments done. It is thus important to know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should take a look at the portfolio of the funds for the purpose. Excessive exposure to any specific sector should be avoided, as it will only add to the risk of the entire portfolio .Mutual funds invest with a certain ideology such as the "Value Principle" or "Growth Philosophy". Both have their share of critics but both philosophies work for investors of different kinds. Identifying the proposed investment philosophy of the fund will give an insight into the kind of risks that it shall be taking in future.4. A common investor is limited in the degree of risk that . It is thus of key importance that there is thought given to the process of investment and to the time horizon of the intended investment. One should abstain from speculating which in other words would mean getting out of one fund and investing in another with the intention of making 42
  43. 43. quick money. One would do well to remember that nobody can perfectly time the market so staying invested is the best option unless there are compelling reasons to exit.5. This old age adage is of utmost importance. No matter what the risk profile of a person is, it is always advisable to diversify the risks associated. So putting one’s money in different asset classes is generally the best option as it averages the risks in each category. Thus, even investors of equity should be judicious and invest some portion of the investment in debt. Diversification even in any particular asset class (such as equity, debt) is good. Not all fund managers have the same acumen of fund management and with identification of the best man being a tough task; it is good to place money in the hands of several fund managers. This might reduce the maximum return possible, but will also reduce the risks.6. Investing should be a habit and not an exercise undertaken at one’s wishes, if one has to really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the market, it is important to beat the market by being systematic. The basic philosophy of Rupee cost averaging would suggest that if one invests regularly through the ups and downs .of the market, he would stand a better chance of generating more returns than the market for the entire duration. The SIP s (Systematic Investment Plans) offered by all funds helps in being systematic. All that one needs to do is to give post-dated cheques to the fund and thereafter one will not be harried later. The 43
  44. 44. Automatic investment Plans offered by some funds goes a step further, as the amount can be directly/electronically transferred from the account of the investment7. Do your homework: It is important for all investors to research the avenues available to them irrespective of the investor category they belong to. This is important because an informed investor is in a better decision to make right decisions. Having identified the risks associated with the investment is important and so one should try to know all aspects associated with it. Asking the intermediaries is one of the ways to take care of the problem. 8. Find the right funds Finding funds that do not charge many fees is of importance, as the fee charged ultimately goes from the pocket of the investor. This is even more important for debt funds as the returns from these funds are not much. Funds that charge more will reduce the yield to the investor. Finding the right funds is important and one should also use these funds for tax efficiency. Investors of equity should keep in mind that all dividends are currently tax-free in India and so their tax liabilities can be reduced if the dividend payout option is used. Investors of debt will be charged a tax on dividend distribution and so can easily avoid the payout options. 44
  45. 45. 9. Keep track of your investmentsFinding the right fund is important but even more important is to keep track of the way theyare performing in the market. If the market is beginning to enter a bearish phase, theninvestors of equity too will benefit by switching to debt funds as the losses can beminimized. One can always switch back to equity if the equity market starts to show somebuoyancy.10. Know when to sell your mutual funds:Knowing when to exit a fund too is of utmost importance. One should book profitsimmediately when enough has been earned i.e. the initial expectation from the fund hasbeen met with. Other factors like non-performance, hike in fee charged and change in anybasic attribute of the fund etc. are some of the reasons for to exit. For more on it, read"When to say goodbye to your mutual fund.”Investments in mutual funds too are not risk-free and so investments warrant some cautionand careful attention of the investor. Investing in mutual funds can be a dicey business forpeople who do not remember to follow these rules diligently, as people are likely to commitmistakes by being ignorant or adventurous enough to take risks more than what they canabsorb. This is the reason why people would do well to remember these rules before theyset out to invest their hard-earned money.SOME OF THE EXISTING AMC (ASSET MANAGEMENTCOMPANY) 45
  46. 46.  Alliance Mutual Fund Birla Mutual Fund BOB Mutual Fund BOI Mutual Fund DSP Merrill Lynch Mutual Fund HDFC Mutual Fund IDBI Principal Mutual Fund Indian Bank Mutual Fund ING Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Morgan Stanley Mutual Fund Pioneer ITI Mutual Fund PNB Mutual Fund Prudential ICICI Mutual Fund¾Reliance Capital Mutual Fund¾SBI Mutual Fund Standard Chartered Mutual Fund Sundaram Mutual Fund Tata TD Waterhouse Mutual Fun Taurus Mutual Fund 46
  47. 47. DEVELOPMENT OF MUTUAL FUND IN INDIAThe mutual fund industry in India started in 1963 with the formation of unit trust ofIndia at the initiative of government of India and reserve bank of India. The historyOf mutual fundIn India can be divided into four phases:FIRST PHASE : 1964 – 87SECOND PHASE: 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)THIRD PHASE : 1993 – 2003 (ENTRY OF PRIVATE SECTOR FUNDS)FOURTH PHASE: SINCE FEBURARY 2003 47
  48. 48. 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 of India. The history ofmutual funds in India can be broadly divided into four distinct phasesFirst Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act ofParliament. It was set up by the Reserve Bank of India and functioned under the Regulatoryand administrative control of the Reserve Bank of India. In 1978 UTI was de-linked fromthe RBI and the Industrial Development Bank of India (IDBI) took over the regulatoryand administrative control in place of RBI. The first scheme launched by UTI was UnitScheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry ofnon- UTI, public sector mutual funds set up by public sector banks and Life InsuranceCorporation of India (LIC) and General Insurance Corporation of India (GIC). SBI MutualFund was the first non- UTI Mutual Fund established in June 1987 followed by Canarabank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian BankMutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LICestablished its mutual fund in June 1989 while GIC had set up its mutual fund in December1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) with the entry of privatesector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian 48
  49. 49. investors a wider choice of fund families. Also, 1993 was the year in which the first MutualFund Regulations came into being, under which all mutual funds, except UTI were to beregistered and governed. The erstwhile Kothari Pioneer (now merged with FranklinTempleton) was the first private sector mutual fund registered in July 1993. The 1993SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revisedMutual Fund Regulations in 1996. The industry now functions under the SEBI (MutualFund) Regulations 1996. The number of mutual fund houses went on increasing, withmany foreign mutual funds setting up funds in India and also the industry has witnessedseveral mergers and acquisitions. As at the end of January 2003, there were 33 mutual fundswith total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores ofassets under management was way ahead of other mutual funds.Fourth Phase – since February 2003 In February 2003, following the repeal of the UnitTrust of India Act 1963 UTI was bifurcated into two separate entities. One is the SpecifiedUndertaking of the Unit Trust of India with assets under management of Rs.29, 835 croresas at the end of January 2003, representing broadly, the assets of US 64 scheme, assuredreturn and certain other schemes. The Specified Undertaking of Unit Trust of India,functioning under an administrator and under the rules framed by Government of India anddoes not come under the purview of the Mutual Fund Regulations. The second is the UTIMutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI andfunctions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTIwhich had in March 2000 more than Rs.76, 000 crores of assets under management and 49
  50. 50. with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual FundRegulations, and with recent mergers taking place among different private sector funds, themutual fund industry has entered its current phase of consolidation and growth. GRAPHICAL REPRESENTATION 50
  51. 51. MUTUAL FUND - ORGANIZATIONSThere are many entities involved and the diagram below illustrates the 51
  52. 52. Organizational set up of a mutual fund: REGULATORY BODIESFinancial System is basically responsible for the major up and downs in the 52
  53. 53. Economy. So, there are some regulatory bodies on it which ensures effectivenessIn the management of Fund of the investors and transparency in the transactions. FLOW CHART 53
  55. 55.  NET ASSET VALUENet Asset Value is the market value of the assets of the scheme minus its liabilities. The perunit NAV is the net asset value of the scheme divided by the number of units outstandingon the Valuation Date.  SALE PRICEThe price you pay when you invest in a scheme. Also called Offer Price. It may include asales load.  REPURCHASE PRICE 55
  56. 56. The price at which units under open-ended schemes are repurchased by the Mutual Fund.Such prices are NAV related.  REDEMPTION PRICEThe price at which close-ended schemes redeem their units on maturity. Such prices areNAV related.  SALES LOAD A charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load.Schemes that do not charge a load are called ‘No Load’ schemes.  REPURCHASE OR BACK END LOADA charge collected by a scheme when it buys back the units from the Unit holders. STRUCTURE OF INDIAN MUTUAL FUND INDIAN MUTUAL FUND INDUSTRY 56
  57. 57. The rising Indian mutual funds industry probably never had it better, as far as the entry ofindividual or retail investors is concerned. The industry’s total AUM in December 2006stood at a hefty Rs 3, 23,597 crore, with a total of2.79 crore depositor folios, of which 2.31crore depositor folios had invested inequity schemes. The share of direct investors, on theother hand, has been dropping, stating that more retail investors see mutual funds as apreferred route for investing in the markets.Existing and new market players as well as Exchange Traded Funds are likely to hit themarket in the coming months with a flurry of new Mutual Funds schemes. An action packedfirst quarter of 2007 was forecasted to witness at Least 20 new schemes which are waitingon the sidelines to be launched. Market share *(%) of mutual funds companies 57
  58. 58. PERFORMANCE SNAPSHOT!!!The year 2006 scored high in terms of both returns and volatility. The rising Indian mutualfunds industry saw its best, as far as the entry of individual or retail investors is concerned.In 2006, out of the 159 diversified equity funds (includes diversified equity, midcap, andequity tax saving schemes): 20 funds (13%) out-performed the Sensex 50 funds (37%) out-performed theNifty 58
  59. 59.  The best returns generated were up to 58.3% (Tata Infrastructure Fund) Equity Diversified funds churned out an average 33.2% return, which Compriseof 72 funds in this category comprising of total 135 funds Infrastructure funds stole the limelight this year with the top three Performersbeing Infrastructure Fund. TOTAL ASSET MANAGED BY VARIOUS FUND HOUSES: 59
  60. 60. The amount of assets managed by AMCs varies every year. Following is the table thatdepicts the total amount of asset managed by the well known AMCs in India. It also showsthe ranking of AMCs for the year 2007, based on the above mentioned parameter.FUND HOUSE JAN 2009 JAN 2008 DEC 2008Reliance MF 39,020 16,702 36,928UTI MF 37,535 25,617 38,109Prudential ICICI 34,746 22,635 33,305HDFC MF 31,425 18,591 29,635Franklin Templeton 23,908 18,153 23,403Birla Sun Life 21,190 13,797 17,054SBI MF 17,552 10,839 15,086DSP Merrill Lynch 13,440 8,976 13,517TATA MF 13,222 8,649 12,177Standard Chartered 12,746 9,480 12,629Kotak Mahindra 12,674 7,397 12,062LIC MF 12,237 6,386 11,599HSBC 12,140 6,288 10,450Principal 10,333 6,789 10,522Figures in Rs crores 60
  61. 61. 1) Birla Sun life was the best performer in January 2007 and Rs4, 136 crore to its assets2) Reliance MF has become the top mutual fund house in the country by adding a very Impressive Rs2, 092 crore to assets under management3) Previous Top Fund House UTI MF declined by Rs574 crore and lost its top position to Reliance4) SBI MF was able to acquire 7th position by an addition of Rs2, 466 crore5) Tata MF gained Rs1, 045 crore and able to secure its position in top 10. 61
  62. 62. BEST EQUITY MUTUAL FUNDS: (As on 27th April, 2009) Following is the ranking of the best mutual funds and their NAVs as on 27thApril, 2009. The rankings are based on 1 year returns of the Equity Mutual Funds available in the market.S.NO. SCHEME NAME 1 Yr. return Present (%) NAV1 DSPML fund-growth 47.50 26.892 UTI Banking sector fund-growth 40.05 21.473 Magnum IT 36.06 28.494 Birla Sun life New Millennium-Growth 35.60 21.335 Banking Bees 32.69 590.316 Prudential ICICI Technology –Growth 32.59 15.997 Prudential ICICI Services Industries Fund – 32.07 16.02 Growth8 UTI Software – Growth 30.09 27.719 Reliance Media & Entertainment – Growth 28.61 26.0710 Birla Sun life Frontline Equity – Growth 27.90 52.8111 Reliance Banking – Growth 27.81 39.2012 Reliance NRI Equity Fund – Growth 26.54 24.7013 Franklin InfoTech – Growth 25.95 52.6214 DBS Chola Opportunity 25.85 28.6315 Reliance Diversified Power Sector – Growth 25.16 37.71 62
  63. 63. MUTUAL FUND AT A GLANCE• A mutual fund is professionally managed firm of collective instrument that pools money from many investors and invest it in Mutual, bonds etc.• A mutual fund is a trust registered with securities and exchange board of India.  Value of the fundThe value of each unit of mutual fund, known as net asset value (NAV)  Formula: Net asset scheme / No. of unit outstanding  METHODS OF MUTUAL FUND • One time payment • Systematic investment plan 63
  64. 64. SYSTEMATIC INVESTMENT PLAN:• Under this a fixed sum is invested each month on a fixed date of a month.• Payment is through post dated cheque or direct debit facilities• The investor gets the fewer units when the NAV is high and gets the more units when the NAV is low. 64
  66. 66. NNNNN 66
  67. 67. Objective of the study 67
  68. 68. • To study the mutual fund industry in detail.• To study the investment procedure in detail.• To find out the market risk of sip plan.• To aware the client about mutual fund investment.• To suggest better investment option according to market behavior to the client.• Expansion of mutual fund investment.• To remove the past image of mutual fund from the mind of investors.• To show the beneficiary aspect of mutual fund.• To give the updated information to the investors about the high return and less risk fund. 68
  69. 69. Scope of the study 69
  70. 70. Scope of Mutual Funds has grown enormously over the years. In the first age of mutualfunds, when the investment management companies started to offer mutual funds, choiceswere few. Even though people invested their money in mutual funds as these funds offeredthem diversified investment option for the first time. By investing in these funds they wereable to diversify their investment in common Mutuals, preferred Mutuals, bonds and otherfinancial securities. At the same time they also enjoyed the advantage of liquidity. WithMutual Funds, they got the scope of easy access to their invested funds on requirement.But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimestake long time to decide the mutual fund type, they are going to invest in. SeveralInvestment Management Companies have emerged over the years, who offer various typesof Mutual Funds, Each type carrying unique characteristics and different beneficial features. 70
  71. 71. ResearchMethodology 71
  72. 72. 1. Research Design:A research design is a pattern or an outline of a research project’s working. It is a statementof only the essential element of a study, those that provide the basic guidelines for thedetails of the project. It comprises a series of prior decision that taken together providemaster plans for executing a research projects.A research design serves as a bridge between what has been established i.e., the researchobjectives and what is to be done, in conduct of the study to relish those objectives. If therewere no research design, the research would have only foggy notions as about what is to bedone.  I have used of ‘Exploratory Type’. The research is of both qualitative as well as quantitative type.2. Unit of Analysis:  Investors Characteristics of interest:  Client’s knowledge about Mutual Fund. 72
  73. 73.  Client’s knowledge about Reliance.  Client’s interest in getting knowledge of Mutual Fund.  Client’s willingness to deal in Mutual Fund with Reliance.  Client’s preference in selecting tax saving instrument of investment.  Client’s preference in selecting dealer.3. Sources of Data:  Primary Source:The primary data is collected using sampling method and by survey using questionnaire.  Secondary Source:Secondary data includes information regarding present market scenario, Informationregarding Mutual Funds and competitors are collected by internet, Magazines andNewspaper and books.4. Sample Planning:  Sample Size: 50 units.  Sample Extent: Kanpur city.5. Sample design: 73
  74. 74. A sample design is a definite plan for obtaining a sample from a given population. It refersto the technique or method the researcher would adopt in selecting items for the sample.  I have used convenience sampling method6. Data collection method:  I have used survey method to collect the data.  Questionnaire plan: I have used structured for gathering the required data through contacting respondent personally7. Type of information:  I have collected facts, awareness, attitude, future action plan and reason using questionnaire.8. Type of questions:  Close ended questions for dichotomous.  Multiple choice type9. Data Analysis and Interpretation:  Data analysis is based on the data collected by way of questionnaires. The data is tabulated and frequency distribution chart is prepared. 74
  75. 75. Use of the Project• Through this C can take the way that in which direction they should go for promoting mutual fund.• Through this project (Awareness of Client towards Mutual Fund) we can know about the securities market. 75
  76. 76. • We can know that how many investors are aware about the mutual fund.• We can know that in which type of securities, people want to invest and why.• We can know that if investors don’t want to invest in mutual fund so what the reason behind that is.• We can aware the investors about mutual funds beneficiary schemes.• We can know about the market potential.• By this project we can know that, which fund is growing up and which fund is going down.• By this we can know about the co.’s that provide the mutual fund investment facilities.• We can know about the Reliance Mutual fund co. and it’s working.• We can know about the mutual fund AMC (Asset Management Company) 76
  77. 77. Importance of the study• Mutual funds offer inexperienced and experienced investors---who may not have a lot of money to invest---the ability to invest in more than just one investment tool without having to monitor or manage that investment personally and at a reduced risk. 77
  78. 78. • Every person who have no more knowledge about investment and he want to invest anywhere so he can invest easily in mutual fund.• One of the mode to invest mutual fund that’s SIP (Systematic Investment Plan) is less risky to invest and every investor want to invest in less price.• Mutual fund is totally depend upon the NAV value (Net Assets Value)• By purchasing a combination of Mutuals, bonds and other securities--rather than just one single Mutual purchase--their risk is spread out over many fields and companies, instead of just one.• Purchasing into a mutual fund automatically provides the investor with an experienced investment manager to oversee their investment. This is because the mutual fund is composed of different investment securities and requires a competent professional to oversee it from the onset.• It is one of the easiest ways of investing your saving money 78
  79. 79. Research analysisand interpretation 79
  80. 80. MUTUAL FUND ADVISORS SUGGESTION ABOUT INVESTMENTINTERPRETATION:Mutual fund advisor will suggest the investors to invest in mutual fund investment morebecause it is les risky than any investment. In mutual fund the investor can invest in sip(systematic investment plan) which is depend upon NAV (net asset value) which is lessrisky and whenever investors want to close that scheme they can. And it is profitablebecause its profit is based on average basis. 80
  81. 81. REASONS FOR CHOOSING ABOVEINTERPRETATION:After analysis we have got that lots of investors want to invest just for security purpose.because most of the investors want to secure or their money, so for holding the money theywant to invest in somewhere so that they can safe their money for future .and a persons whohave no knowledge about security market, they can also be invest in mutual funds. 81
  82. 82. INVESTORS WHO KNOW ABOUT THE MUTUAL FUND SERVICES PROVIDED BY RELIANCEINTERPRETATION:After analysis we have known that most of the investors don’t know about the mutual fundservices which has been provided by Reliance just because of publicity, Reliance doesn’tshow that it provides mutual fund services along with other services such as: pan cardservices, d.p. services, share trading services, IPOs services etc. that’s why most of thepeoples are unknown about the Reliance mutual fund services. 82
  83. 83. INVESTORS INTERESTED TO INVEST IN MUTUAL FUNDINTERPRETATION:After analysis we have seen that most of the investors are not interested to invest in mutualfund just because of:  Past image of mutual fund.  Because of unawareness.  They are unaware about the mutual fund benefits. 83
  84. 84.  They don’t want to take risk A INVESTORS WANTS TO INVEST ON WHICH BASISINTERPRETATION: • After analysis we have got the result that most of the investors want to invest in any securities on the basis of rate of return, when they invest in any believable security so they expected or anticipated that they will got the expected rate of return , 84
  85. 85. • Some people invest on the basis of safety purpose , some small investors mostly invest their money for saving and for getting into near future • Businessman mostly invests their money on securities just for saving the tax because invested money always is tax free A PERSON WANTS TO TAKE INFORMATION ABOUT MUTUAL FUNDINTERPRETATION:By above analysis we can know that most of the clients,Persons or investors want to know about the mutual fund benefits, schemes, and 85
  86. 86. Each and every information, because now a days every persons or investors want toGet information about everything so that on time he can utilize optimum utilizationOf resources in a right way and could get profit. A PERSON WHO WANT TO DO THE JOB IN RELIANCE MUTUAL FUND 86
  87. 87. INTERPRETATION: • After analysis we got that investors don’t want to do the job in Reliance because: • Because lots of persons have no time for joining that and there is lack of management in each dept. of Reliance that is also be reason that persons don’t want to do job in Reliance • Some persons don’t want just because of lack of knowledge about investment. • Some persons don’t want to do the job in Reliance because they don’t want to expand their business. • Some persons gave no answers on such issues. 87
  89. 89. • By above evaluation we can see that some investors are interested to join the seminar on mutual fund which has been organized by Reliance because they actually want to know the actual situation of mutual fund that : benefits ,why this investment exist, why they should invest over there. Most of the persons don’t want to attend seminar because They have no time for such type of activities. They don’t trust on mutual fund investment. They think that these all are rubbish thing. ON WHICH COMPANIES THE CLIENT BELIEVES MORE 89
  90. 90. INTERPRETATION: 90
  91. 91. We all know that most of the investors or persons are interested to invest in public co. orgovernment co. in which there is less chance to drop out the invested money while on theother hand less of the persons are not interested to invest in private sector because there ismore risk than public sectors.Same as we can see in the above chart that most of the investors want to invest in relianceco. because investors has made the mind set that we will get always the profit in investingover there while only small investors who invest very small amount in security invest inprivate co. such as: hdfc , icici. Other. WHY THE CLIENTS BELIEVE ONLY ABOVE CHOOSING FUND 91
  92. 92. INTERPRETATION:  Most of the investors or clients want to invest in public co. because most of the clients think that/;  It is risk free means to say there is less risk to invest in that type of funds, that is a trustworthy co.  Some investors invest just because of good return, peoples perception towards that co. is that it will never incurred loss and it will not cheat the investors.  Reliance is one of the most powerful and reputed co. even we can say MNC co. so just because of good positioned in the market investors want to invest over there. 92
  93. 93. CLIENTS WANT TO GET ADVISORY SERVICES FROM RELIANCEINTERPRETATION:Investors who have already invested in mutual fund they all want advisory services fromReliance, in advisory services; we can know NAV (net assets value) of each fund on dailybasis.So investors want to get those services so that they can take right decision on right time, ifhe sees that he is getting loss in investing fund so by this services he can switch from lossfund to profitable fund. So all the investors want to get that type of services from Reliance. 93
  94. 94. CLIENTS ATTITUDE TOWARDS DSP BLACK ROCK FUND WHICH PROVIDE 100% RETURN NOW A DAYSINTERPRETATION:We have seen that most of the investors don’t want to invest in dsp black rock fund, whichis international co. , they don’t want to invest because they know that now a days the NAVof this fund is very low approx. (14 -15 rs.) so on this the 100% return is not so hectic forthe org. and market is totally based upon uncertainty and always be fluctuating so he thinksthat may be dspblack rock will not provide same return in future so the investors may getlost, so they don’t want to invest in this. Only those investors would like to invest in thisfund who invests for short term. 94
  95. 95. INVESTORS WOULD LIKE TO INVEST ININTERPRETATION:We can see that most if the investors want to invest in debt funds because there is a solidreason behind this is that the debt funds provide the fixed rate of interest to the investors,there is no risk in that type of funds for the investors.While only big investors want to invest in equity market because equity fund provide thedividend according to performance of the org. if there will be profit in org so investors willget the dividend otherwise they will have to face lossThat’s why investors want to invest in debt funds rather than equity market. 95
  96. 96. WHICH TYPE OF INSTRUMENT CURRENTLY INVESTED ININTERPRETATION: Now a day’s most of the investors want to invest in others funds such as: • FD’s • INSURANCE • Etc. 96
  97. 97.  After that the investors mostly focus on to invest in debt market just for reducing the risk. After that they want to invest in equity market for getting more profit. Then investors want to invest in commodity market just for saving money in near future. Findings 97
  98. 98. 1) After getting in depth research study of Reliance, I came to know that Reliance is not much popular as other brands operating in Kanpur city. Bajaj Allianz, HDFC, ICICI are having much higher tapped market in respect to mutual funds.2) Reliance as an investment option in Mutual Fund does not possess much proficiency and potential customers in Kanpur city. Though the financial advisors advise their clients to go for Mutual Fund as an investment option. About 42% of advisors advise their clients to invest in Mutual Funds, followed by investing in Insurance sector.3) The advisors after having a deep thought says that it is the Returns that make them convince their clients to go for investment in mutual funds. 36% of advisors said that it is the Returns which make a person to invest in Mutual Fund. Followed by Risk which is quite lesser in other investment options.4) A huge lot of advisors showed a positive response in dealing of for Mutual Fund. About 60% of them said that they are interested in dealing for Mutual Funds, because that results in higher brokerage.5) As far as Reliance is concerned about 91% of the advisors said that they are not aware of the services provided by Reliance, including Mutual Fund. 98
  99. 99. 6) When asked, 53% of advisors said that they are not interested to work with Reliance Securities, to the contrary with they don’t have any such expansion plans and they have little knowledge about Reliance.7) In Kanpur city advisors don’t have an appropriate knowledge about Reliance as an Investment hub. Swot Analysis 99
  100. 100. A type of fundamental analysis of the health of a company by examining its strengths(S),weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposedto. # I. STRENGTHS • Brand strategy: as opposed to some of its competitors (e.g. HSBC), Reliance ADAG operates a multi-brand strategy. The company operates under numerous well-known brand names, which allows the company to appeal to many different segments of the market. • Distribution channel strategy: Reliance is continuously improving the distribution of its products. Its online and Internet-based access offers a combination of excellent growth prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003. 100
  101. 101. • Various sources of income: Reliance has many sources of income throughout the group, and this diversity within the group makes the company more flexible and resistant to economic and environmental changes.• Large pool of installed capacities.• Experienced managers for large number of Generics.• Large pool of skilled and knowledgeable manpower.• An increasing liberalization of government policies.# II. WEAKNESS• Emerging markets: since there is more investment demand in the United States, Japan and the rest of Asia, Reliance should concentrate on these markets, especially in view of low global interest rates.• Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved – just because a 101
  102. 102. professional manager is looking after the fund, that doesn’t mean the performance will be stellar.• Fees: In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage – usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn’t make money, these fees only magnify losses.III. OPPORTUNITIES• Potential markets: The Indian rural market has great potential. All the major market leaders consider the segments and real markets for their products. A senior official in a one of the leading company says foray into rural India already started and there has been realization that the rural market is both price and quantity conscious. 102
  103. 103. • Entry of MNCs: Due to multinationals are entering into market job opportunities are increasing day by day. Also India Mutual Fund majors are tie up with other financial institutions.•# IV. THREATS• Hedge funds: sometimes referred to as as hot money, are also causing a threat for mutual funds have gained worldwide notoriety for bringing the markets down. Be it a crash in the currency, A stock or A bond market, A usually a hedge fund prominently figures somewhere in the picture. 103
  104. 104. Recommendations• There is high potential market. For mutual fund investors Kanpur city but this market need to bed explored as investors are still hesitated to invest their money in mutual fund. 104
  105. 105. • In Kanpur city, investor has inadequate knowledge of mutual fund, so proper marketing of various scheme is required, co. should arrange more and more seminar about mutual fund.• Co. should also provide the knowledge of growth rate and expected growth rate of mutual fund in India.• Reliance must be concentrate on the management of the co. so that every work can be done in a proper way.• Reliance must be advertising its tie up co. fund along with their features that the investors can invest in that type of fund in Reliance.• Reliance must be provided the advice to investors about mutual fund growing fund. 105
  106. 106. Conclusion 106
  107. 107. The awareness level of investors is low who are interested in dealing in mutual fund:• Most of investors are totally unaware about this investment.• Very less people knows about the service of Reliance.• Past image of mutual fund is not good.• Reliance can promote the investors by advertising, hording, and by interviews to invest in this fund.• Most of the investors want to invest in public co.’s fund just because of safety purpose.• Most of the investors want to safer side in investment.• Most of the investors want to invest in debt funds because those are the risk free funds; it gives the interest on investment.• Most of the investors don’t know about the mutual funds so they want advisory services from reliance which could provide them whole information about the market situation of mutual fund. 107
  108. 108. Annexure 108
  109. 109. We assure you that all the information that will be collected from youwill remain fully confidential and use only for study purpose.NAME: ___________________________________DESIGNATION/ADDRESS: ____________________________________________EMAIL ID: ______________________ PHONENO.:___________________ 1) As a financial advisor which investment options you will suggest your customers: a) Shares ( ) b) Insurance ( ) c) Mutual fund ( ) d) Fixed deposit ( ) 109
  110. 110. 2) Please indicate reason for choosing above : a) Return ( ) b) Risk ( ) c) Safety ( ) d) Tax benefit ( ) e) Others ( )3) Do you know about the mutual fund services provided by the Reliance : a) Yes ( ) b) No ( )4) Are you interested to invest in mutual fund : a) Yes ( ) b) No ( )5) Do you invest your money on which basis : a) Return ( ) b) Safety ( ) 110
  111. 111. c) Tax saving ( ) d) Others ( )6) Do you want to collect information about mutual fund investment: a) Yes ( ) b) No ( )7) Will you like to work in Reliance Mutual Fund Ltd. , which deals with mutual fund : a) Yes ( ) b) No ( )8) In future will you attend the seminar arranged by Reliance to guide the investors about mutual fund : a) Yes ( ) b) No ( )9) In which co. you believe more : 111
  112. 112. a) Hdfc b) Icici c) Reliance d) Dsp black rock e) Any other fund _________________________10) Why you believe only such kind of fund : a) Return ( ) b) Good market position ( ) c) Risk free ( ) d) Any other reason ( )11) Do you want the advisory services of Reliance : a) Yes ( ) b) No ( ) 112
  113. 113. 12) Now a days DSP black rock fund provides the 100 % return so do you want to invest in this fund : a) Yes ( ) b) No ( ) c) If yes/no why ______________________13) If you have Rs. 100 , in which of these assets classes would you like to invest : a) Equity ( ) b) Debt ( ) c) Commodities ( ) d) Derivatives ( )14) Which type of instrument are currently invested in : a) Mutual fund (equities) ( ) b) Debt funds ( ) c) Currency & Commodities ( ) d) Others_____________________ 113
  114. 114. Bibliography WEBSITE:••• http://www.Reliance .com//v2/ 114
  115. 115. • MAGAZINES:• S.Gopichand, the finapolis , Reliance Mutual Fund Ltd..,volume 4 , 2010• PunithavathyPandian , Security Analysis And Portfolio Management , Vikas Publishing House , 2001 Thank you 115