A SUMMER TRAINING REPORT ON

“AN EMPIRICAL STUDY OF INVESTORS PERCEPTION ABOUT

INVESTMENT IN MUTUAL FUNDS WITH REFERENCE TO
RELIANCE MUTUAL FUND”

By

DHARA R. KOTECHA

29, MBA SEM II,

Marwadi Education Foundation’s Group of Institutions, Rajkot.

AY: 2010-11

Conducted at

RELIANCE MUTUAL FUND

Head branch, Rajkot.

Submitted to

GUJARAT TECHNOLOGICAL UNIVERSITY

AHMEDABAD

Under the guidance of

Dr. S Chinnam Reddy,

Dean,

Faculty of Management,MEFGI, Rajkot.

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2
 Miss. DHARA R. KOTECHA

(Student of MBA Sem - II)

Marwadi Education Foundation’s

Group of Institutions,

DECLARATION

I, the under signed Miss. DHARA R. KOTECHA hereby declare that the research work
presented in this summer internship project is my own contribution and has been carried
out under the supervision of Dr. CHINNAM REDDY, Dean and Faculty of Management,
Marwadi Education Foundation’s Group of Institutions, Rajkot.

This is an original contribution in every respect and has not been previously submitted to

any university for any degree.

Date:

Place: Rajkot (DHARA R. KOTECHA)

3
 PREFACE

MBA is a stepping-stone to the management carrier and to develop good manager. It

is necessary that the theoretical must be supplemented with exposure to the real environment.
Theoretical knowledge just provides the base and it’s not sufficient to produce a good
manager that’s why practical knowledge is needed.

Therefore the research product is an essential requirement for the student of MBA.
This research project not only helps the student to utilize his skills properly learn field
realities but also provides a chance to the organization to find out talent among the budding
managers in the very beginning. Investing money where the risk is less has always been risky
to decide. The first factor, which an investor would like to see before investing, is risk factor.
Diversification of risk gave birth to the phenomenon called Mutual Fund. The Mutual Fund
Industry is in the growing stage in India, which is evident from the flood of mutual funds
offered by the Banks, Financial Institutes & Private Financial Companies. In accordance with
the requirement of MBA course I have summer training Research project on the topic “AN
EMPHIRICAL STUDY OF MUTUAL FUNDS AND STUDY OF INVESTORS
PERCEPTION ABOUT INVESTMENT IN MUTUAL FUNDS WITH REFERENCE
TO RELEANCE MUTUAL FUND”

For conducting the research project sample size of 120 customers of Mutual Funds
were selected. The information regarding the project research was collected through the
questionnaire formed by me which was filled by the investors of Mutual Funds.

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 ACKNOWLEDGEMENT

“Expression of feelings by words makes them less significant when it comes to make
statement of gratitude”

I take this opportunity to express my gratitude to all the people who have guided and
helped me directly or indirectly in the course of completion of my project. I feel immense
pleasure to express a deep sense of gratitude to my Dean Dr. S Chinnam Reddy who has
given me an opportunity to do my internship in Reliance Mutual Fund. I would also thankful
to my Faculty Guide Dr. S Chinnam Reddy for his constant support and guidance. His
valuable suggestions and helping hands has helped me to complete my project successfully.

I am also very thankful to Mr. Rohan Dhruv, Relationship Manager, Reliance

Mutual -Fund, for his cooperation in providing me all the necessary information for doing
this project.

Date:

Place: Rajkot (DHARA R. KOTECHA)

5
 CONTENTS

Sr.No Description Page No.

.

I List of tables, charts and diagram 3

II List of Abbreviations 4

CHAPTER 1

1.1 Introduction 8

1.2 Industry Profile 21

1.3 Company Profile 27

1.4 SWOT Analysis 50

CHAPTER 2

2.1 Research Methodology 53

2.2 Objectives 55

2.3 Rationale 55

2.4 Literature Review 56

2.5 Research method 60

2.6 Sample Design 61

2.7 Collection of data 61

2.8 Limitations of the study 61

CHAPTER 3

3.1 Analysis and Interpretation of Collected Data. 64

CHAPTER 4

4.1 Hypothesis 84

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4.2 Findings 92

4.3 Summary 93

4.4 Suggestions 94

Bibliography 95

Annexure 96

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 LIST OF TABLES, CHARTS AND DIAGRAMS

Diagrams:

 Mutual Fund operation flow chart

 Organization of a Mutual Fund
 Mutual Fund Industry Growth
 Mutual Funds Structure /Company Structure
 Flow chart of marketing research process

Tables and charts:

Table showing:-

 Occupation of investors
 Age group
 Income level of respondents
 Reasons for not investing in MF
 Respondents preference towards various instrument
 Average investment period
 Sources of information
 Reasons for investing in MF
 Influence of promotion on respondents
 Investment preference towards various companies
 Knowledge about MF among respondents
 From where do they purchase
 Most suitable age of investment
 Preference towards features of MF
 Return expected by respondents
 Type of fund preferred
 Preference in MF

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 ABBREVIATION

SE : Securities
Mf : Mutual Fund
MF’S : Mutual Funds
BSE : Bombay Stock Exchange
AMC : Asset Management Company
AMFI : Association of Mutual Funds India
AUM : Assets under Management
CRISIL : Credit Rating & Information Services of India Ltd.
FDI : Foreign Direct Investment
NAV : Net Asset Value
SEBI : Securities Exchange Board of India
AAUM: Average Asset Under Management
ISC: Investor Service Center
CAMS: Computer Age Management Services

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10
11
 TABLE CONTENTS

Sr No Description Page No

1 Introduction 8

2 Why Mutual fund 9

3 What is Mutual fund 10

4 How MF is structured 11

5 Types of MF 14

6 Benefit of MF 17

7 Disadvantages of MF 18

8 Risk involved in MF 18

9 Legal & regulatory framework of MF 19

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 INTRODUCTION

Investment in share markets are influenced by the analysis & reasoning which help in
predicting the market to some extent. Over the past years a number of technical & theories
for analysis have evolved, these combined with modern technology guides the investor. The
big players in the market, like Foreign Institutional Investors, Mutual Funds, etc. have the
expertise for various analytical tools & make use of them. The small investors are not in a
position to benefit from the market the way Mutual Funds can do. Generally a small
investor’s investments are based on market sentiments, inside information, through
grapevine, tips & intuition. The small investors depend on brokers and brokerage house for
his investments. They can invest through the Mutual Funds who are more experienced and
expert in this field than a small investor himself.

In recent years a large number of players have entered into this market. The project
has been carried out to have an overview of Mutual Fund Industry and to understand
investor’s perception about Mutual Funds in the context of their trading preference, explore
investor’s risk perception & find out their preference over Top Mutual

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 ABOUT MUTUAL FUND

A Mutual fund is the ideal investment vehicle for today's complex and modem
financial scenario. Markets for equity shares, bonds and other fixed income instruments, real
estate, derivatives and other assets have become mature and information driven. Price
changes in these assets are driven by global events occurring in faraway places. A typical
individual is unlikely 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
keep track of ownership of his assets, investments, brokerage dues and bank transaction etc.

CHARECTERISTIC:

 A mutual fund actually belongs to the investors who have pooled their funds.
 A mutual fund is managed by investment professionals and other service providers,
who earn a fee for their services, from the fund
 The pool of funds is invested m a portfolio of marketable investments. The value of
the portfolio is updated every day
 The investor's share m the fund is denominated by 'units'. The value of the units
changes with change m the portfolio's value, every day. The value of one unit of
investment is called the Net Asset Value or NAV.

WHY MUTUAL FUND?

One can avail of the benefits of better returns with added benefits of anytime
liquidity by investing in open-ended debt funds at lower risk. Many people have burnt their
fingers by investing in fixed deposits of companies who were assuring high returns but have
gone bust in course of time leading to distraught investors as well as pending cases in
company law board.

This risk of default by any company that one has chosen to invest in, can be
minimized by investing in mutual funds as the fund managers analyze the
companies’ financials more minutely than an individual can do as they have the expertise
to do so.
Capital markets interest people, albeit not all for there are several problems
associated. First issue is that of expertise. While investing directly into capital market
one has to be analytical enough to judge the valuation of the stock and understand the
complex undertones of the stock. One needs to judge the right valuation for exiting the
stock too. It is very difficult for a small investor to keep track of the movements of the
market. Entrusting the job to experts, who watch the trends of the market and analyze
the valuations of the stocks will solve this problem for an investor. Mutual funds
specialize in identification of stocks through dedicated experts in the field and this
enables them to pick stocks at the right moment. Sector funds provide an edge and
generate good returns if the particular sectors is doing well.

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 Next problem is that of funds/money. A single person can’t invest in multiple
high-priced stocks for the sole reason that his pockets are not likely to be deep enough.
This limits him from diversifying his portfolio as well as benefiting from multiple
investments.

Here again, investing through MF route enables an investor to invest in many good
stocks and reap benefits even through a small investment. This not only diversifies the
portfolio and helps in generating returns from a number of sectors but reduces the risk as
well. Though identification of the right fund might not be an easy task, availability of good
investment consultants and counselors will help investors take informed decision.

WHAT IS MUTUAL FUND?

RETURNS INVESTORS

Generates Mutual Fund Pool their money

Operation Flow with
Chart
SECURITIES
FUND MANAGER

Invest in

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 are 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.

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 HOW MUTUAL FUND IS STRUCTURED?

The Structure Consists:

The structure of mutual funds m India is governed by the SEBI Regulations, 1996.
These regulations make it mandatory for mutual funds to have a 3-tier structure of
Sponsors-Trustee-AMC (Asset Management Company). The Sponsor is the promoter of
mutual fund, and appoints the Trustee. The Trustees are responsible to the investors m
the mutual funds, and appoint the AMC for managing the investment portfolio. The AMC
is the business face of the mutual funds, as it manages all the affairs of mutual funds. The
mutual funds and AMC have to be registered by the SEBI.

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  Sponsor
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth
of the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor
is not responsible or liable for any loss or shortfall resulting from the operation of the
Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund
 Trust
The Mutual Fund is constituted as a trust m accordance with the provisions of the Indian
Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration
Act, 1908
 Trustee
Trustees are like internal regulators in a mutual fund, and their job is to protect the
interests of the unit holders. Trustees are appointed by the sponsors, and can be either
individuals or corporate bodies. In order to ensure they are impartial and fair, SEBI rules
mandate that at least two-thirds of the trustees be independent, i.e., not have any
association with the sponsor

 Asset Management Company

An AMC is the legal entity formed by the sponsor to run a mutual fund. The AMC is
usually a private limited company in which the sponsors and their associates or joint
venture partners are the shareholders.

The people in the AMC who should matter the most to you are those who take
investment decisions. There is the head of the fund house, generally referred to as the Chief
Executive Officer (CEO). Under him comes the Chief Investment Officer (CIO), who
shapes the fund’s investment philosophy, and fund managers, who manages its schemes.
They are assisted by a team of analysts, who track markets, sectors and companies.

Only SEBI registered AMC can be appointed as investment managers of mutual funds.
AMC must have a minimum net worth of Rs. 10 crores at all times. AMCs cannot indulge in
any other business, other than that of asset Management. At least half of the members of the
Board of an AMC have to be independent.

 Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form, redemption
requests and dispatches account statements to the unit holders

17
 Some fund houses handle such functions in-house. Others outsource it to the
Registrars; Karvy and CAMS are the more popular ones. It doesn’t really matter which
model your mutual fund opt for, as long as it is prompt and efficient in servicing you.
Most mutual funds, in addition to registrars, also have investors service centers of their
own in some cities.
 Some of the investor – related services are:-

 Processing investor applications

 Recording details of the investors

 Sending information to the investors

 Processing dividend payout

 Incorporating changes in the investor information

 Keeping investor information up to date

 Custodian
A custodian handles the investment back office of a mutual fund. Its responsibilities
include receipt and delivery of securities, collection of income, distribution of dividends,
and segregation of assets between schemes. The sponsor of a mutual fund cannot act as
a custodian to the fund. For example, Deutsche Bank is a custodian, but it cannot
service Deutsche Mutual Fund, its mutual fund arm

 Distributors

Distributors appoint agents and other mechanisms to mobilize funds from the investors.
Banks and post offices also act as distributors The commission received by the distributors
is split into initial commission which is paid on mobilization of funds and trail commission
which is paid depending on the time the investor stays with the fund.

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 Types of Mutual Funds Scheme in India

Subject to the SEBI regulations, a Mutual Fund is free to design its scheme to suit the
needs of the various types of investors. The Mutual Fund in India, from the point of view of
schemes, can be categorized into:
1. Constitution
2. Investment objective

1. AS PER CONSTITUTION
The Mutual Fund as per the structure basis can be divided into:

 Open-ended schemes
It is a scheme in which an investor can buy and sell units on a daily basis. Such scheme
has a perpetual existence and a flexible and ever changing corpus. The investor under such
scheme is free to buy and sell any number of units, at any point of time, as there is no
boundation on to limited period or has no fixed maturity period. The scheme permits the
investors to withdraw their funds on to a continuing basis as it gives to the investor almost
instant liquidity. Such schemes as are not listed on to the stock market can be bought and sold
only from, and to, the Mutual Fund.
 Close- ended schemes
It is a scheme in which the subscription period for the Mutual fund kept open only for a
limited period, called the “redemption period”. Such schemes do not allow investors to
withdraw their funds as when they like as it has a fix maturity period (ranging from 2 to 15
years). These schemes are generally traded at discount to NAV; but closer to maturity, the

19
discount narrows. The close-ended schemes are listed on to the stock exchanges for dealing
in the secondary markets.

 Interval schemes
These combine the features of open-ended and close-ended schemes. They may be traded
on the stock exchange or may be open for sale or redemption during predetermined intervals
at NAV related prices.

2. AS PER INVESTMENT OBJECTIVE

The Mutual Funds according to investment objectives comprises of:

 Equity oriented schemes

These schemes also commonly called Growth Schemes, seek to invest a majority of their
funds in equities and a small portion in money market instruments. Such schemes have the
potential to deliver superior returns over the long term. However, because they invest in
equities these schemes are exposed to fluctuations in value especially in the short term.
Equity schemes are hence not suitable for investors seeking regular income or investors who
have a long term investment horizon.
General purpose
The investment objectives of general purpose equity schemes do not restrict them to
invest in specific industries or sectors. They thus have a diversified portfolio of companies
across a large spectrum of industries. While they are exposed to equity price risks, diversified
general purpose equity funds seek to reduce the sector or stock specific risks through
diversification. They mainly have market risk exposure. HDFC Growth Fund is a general
purpose equity schemes.
Sector Specific
The schemes restrict their investing to one or more pre-defined sectors. E.G.
technology sector. Since they depend upon the performance of select sectors only, these
schemes are inherently more risky than general purpose schemes. They are suited for
informed investors who wish to take a view and risk on the concerned sector.
Special schemes;
Index schemes
The primary purpose of an index is to serve as a measure of the performance of the
market as a whole, or a specific sector of the market. An index also serves as a relevant
benchmark to evaluate the performance of mutual funds. Some investors are interested in
investing in the market in general rather than investing in any specific fund. Such investors
are happy to receive the returns posted by the market. As it is not practical to invest in each
and every stock in the market in proportion to its size, these investors are comfortable
investing in a fund that they believe is a good representative of the entire market. Index funds
are launched and managed for such investors.

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Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws as the Government offers tax incentives for investment in specified
avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes
are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides
opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual
Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is
invested before September 30, 2000.
Real Estate Fund
Specialized real estate funds would invest in real estate directly, or may fund real estate
developers or lend to them directly or buy shares of housing of finance companies or may
even buy their securitized assets.

 DEBT BASED SCHEMES

These schemes are commonly called Income schemes, Invest in debt securities such as
corporate bonds, debentures and Govt. securities. The prices of these schemes tend to be
more stable compared with the equity schemes and most of the returns to the investors are
generated through dividend or steady capital appreciation. These schemes are ideal for
conservative investors or those not in a position to take higher equity risks, such as retired
individuals. However, as compared to the money market schemes they do have a higher price
fluctuation risk and compared to a Gift fund they have a higher credit risk.

Income schemes
A pure income scheme aims at generating and distributing regular income to the
investors. These schemes generally invest a substantial portion (70% to 80%) of the corpus in
the fixed income securities such as bonds and corporate debentures. Declaration of regular
dividends is the main objective of such schemes.
Liquid income schemes
Similar to the Income schemes but with a shorter maturity than Income schemes.
Money Market Schemes
The aim of money market funds is to provide easy liquidity, preservation of capital
and moderate income. These schemes generally invest in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on
these schemes may fluctuate depending upon the interest rates prevailing in the market. These
are ideal for Corporate and individual investors as a means to park their surplus funds for
short periods.
Gilt fund
This scheme primarily invests in Govt. Debt. Hence the investor usually does not have to
worry about the credit risk since Govt. Debt is generally credit risk free.

21
  HYBRID SCHEMES
These schemes are commonly known as balanced schemes. These schemes invest in both
Equity as well as Debt. By investing in a mix of this nature, balanced schemes seek to attain
the objective of income and moderate capital appreciation and are ideal for investors with a
conservative.

BENEFITS OF MUTUAL FUND INVESTMENT

Mutual Funds offer several benefits to an investor that are unmatched by the other
investment options. Last six years have been the most turbulent as well as exiting ones for
the industry. New players have come in, while others have decided to close shop by either
selling off or merging with others. Product innovation is now pass6 with the game shifting
to performance delivery in fund management as well as service. Those directly associated
with the fund management industry like distributors, registrars and transfer agents, and
even the regulators have become more mature and responsible.

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 DISADVANTAGES OF MUTUAL FUND INVESTMENT

No control over cost

No tailor-made portfolio Managing portfolio of funds

Delay in redemption
Non availability of funds

RISK INVOLVED IN MUTUAL FUND:

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 LEGAL & REGULATORY FRAMEWORK OF MF

In the year 1992, securities and exchange Broad of India (SEBI) Act was passed. The
objectives of SEBI are – to protect the interest of investors in securities and to protect the
development of and to regulate the securities market. SEBI formulates policies and regulates
the mutual funds to protect the interest of the investors.

Following are the regulators of Mutual Fund in India

 AMFI ( Association Of Mutual Fund In INDIA)
It is Association of Mutual Fund in India. It promotes Mutual Fund among the mass
and give recommendations in order to uphold the interest of investors.
This Association conducts AMFI exam. Initially the Association gave rights of
conducting the exam to Bombay Stock Exchange (BSE) and National Stock Exchange
(NSE). Then rights were also given to the UTI (Unit Trust of India). Corporate
distributors are also given rights to conduct exam. It is compulsory for a person to
clear AMFI exam in order to become advisor in Mutual Fund.

 SEBI (Securities and Exchange Board of INDIA)

Securities and Exchange Board of India (SEBI), the capital market regulator has
clearly defined rules which govern mutual funds. These rules relate to the formation,
administration, and management of mutual funds and also prescribe disclosure and
accounting requirements. Such a high level of regulation seeks to protect the interest
of investors.
All Mutual Fund schemes are registered with SEBI and they follow the rules and
regulation as prescribed by SEBI. It registers every mutual fund scheme in order to
protect the interest of investors.

 RBI (Reserve Bank of INDIA)

Reserve Bank of India was the regulator of Mutual Fund before SEBI. It regulated
mutual fund initially and there were only few schemes in the market. But now with
coming of SEBI, it has now become the main regulator of the Mutual Fund. RBI now
only governs the Bank Sponsored Mutual Fund.

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 FREQUENTLY USED TERMS

 Corpus:
The total amount of money invested in a scheme by all the investors.
 Entry/Exit load :
Entry load is the load on purchase or switch-out of units
Exit load is load on redemptions Dividend switch out of units.
 NET ASSET VALUE:
A mutual fund is a common investment vehicle where the assets of the fund belong directly
to the investors. Investors’ subscriptions are accounted for by the fund not as liabilities or
deposits but as Unit Capital. On the other hand, the investments made on behalf of the
investors are reflected on the assets side and are the main constituent of the balance sheet.
There are, however, liabilities of a strictly short- term nature that may be part of the balance
sheet. The fund’s Net Assets are therefore defined as the assets minus the liabilities. As there
are many investors in a fund, it is common practice for mutual funds to compute the share of
each investor on the basis of the value of Net Assets Per Share/Unit, commonly known as the
Net Asset Value (NAV).

The following are the regulatory requirements and accounting definitions laid down by SEBI.

NAV = Market/ fair value of schemes investments + receivables + accrued income +

other assets – accrued expenses – payables – other liabilities
Number of units outstanding

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26
 TABLE CONTENTS

Sr. No Description Page No

1 History of MF 23

2 Major players of MF 25

27
 HISTORY AND ORGANIZATION OF MUTUAL FUNDS 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 four distinct phases.

First Phase-1964-87
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 assets under management.

Second Phase-1987-1993 (Entry of Public Sector Funds)

1987 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), Indian 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.

Third Phase-1993-2003 (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.

28
Fourth Phase- since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return 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 and does not come
under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
Crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place
among different private sector funds, the mutual fund industry has entered its current
phase of consolidation and growth. As at the end of September, 2004, there were 29
funds, which manage assets of Rs.153108 Crores under 421 schemes. The net asset value
(NAV) of mutual funds in India declined when stock prices started falling in the year
1992. Those days, the market regulations did not allow portfolio shifts into alternative
investments. There was rather no choice apart from holding the cash or to further continue
investing in shares. One more thing to be noted, since only closed-end funds were
floated in the market, the investors disinvested by selling at a loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992 stock
market scandal, the losses by disinvestments and of course the lack of transparent rules in
the whereabouts rocked confidence among the investor.
The graph indicates the growth of assets over the years.
Graph 1: The graph showing Growth in assets under management through

Mutual Funds

29
30
 MUTUAL FUND(PLAYERS)SOLD BY COMPANY

The Indian mutual fund industry is mainly divided into three kinds of categories.
These categories include public sector players, nationalized banks and private sector and
foreign players. UTI Mutual Fund was one of the leading Mutual Fund companies in India till
May 2006 with a corpus of more than Rs. 3 1, 000 Crore and it is the public sector mutual
fund. Bank of Baroda, Punjab National Bank, Can Bank and SBI are the major nationalized
banks mutual fund. At present mutual fund industry is mainly dominated by private and
foreign sector players which include major players like Prudential ICICI Mutual Fund,
HDFC Mutual Fund, Reliance Mutual Fund etc. are private sector mutual funds players
while Franklin Templeton etc. are major foreign mutual fund players. At present there are
more than 33 players operating in Indian.

The brief introduction of major players is given as follows

Alliance Capital Mutual Fund

Birla Mutual Fund

Cholamandalam Mutual Fund

DSP Merrill Lynch Mutual Fund

Fidelity Equity Fund

Franklin Templeton Mutual

Fund

HDFC Mutual Fund

HSBC Mutual Fund

IDBI Principal

IL & FS Mutual Fund

ING Savings Trust

31
JM Mutual Fund

Prudential ICICI Mutual Fund

Reliance Capital

SBI Mutual

Sundaram Mutual Fund

Tata Mutual

Unit Trust Of India

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33
 TABLE CONTENTS

Sr. No Description Page No

1 About Reliance Capital 30

2 Reliance Capital businesses 33

3 Board of Directors 35

4 About Reliance Mutual Fund 36

5 Vision & Mission Statement 38

6 Management Team 39

7 Reliance Customer Service 40

8 Reliance various schemes 42

9 Service Provider 46

10 Reliance Distribution Channel 48

11 Awards & Achevements 49

34
 THE MAN BEHIND RELIANCE

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.

 FOUNDER

Dhirubhai H. Ambani

Founder Chairman,

Reliance Industries Limited, India

December 28, 1932 - July 6, 2002

Major Group Companies: Reliance

Industries Limited, India's largest private sector

company.

Birthplace: Chorwad, village in Saurashtra (Gujarat), India

Father's Name: Hirachand Govardhandas Ambani

Mother's Name: Jamunaben Hirachand Ambani

35
 ABOUT RELIANCE CAPITAL

Reliance Capital, a constituent of S&P CNX Nifty and MSCI India, is a part of the
Reliance Anil Dhirubhai Ambani Group. It is one of India's leading and most valuable
financial service companies in the privet sector. .

Reliance Capital has interests in asset management and mutual fund; life and general
insurance; consumer finance and industrial finance; stock broking; depository services;
private equity and proprietary investments; exchanges, asset reconstruction; distribution of
financial products and other activities in financial services.

Reliance Mutual Fund is India's largest Mutual Fund with over seven million
investors. Reliance Life Insurance is one of India's fastest growing life insurance companies
and among the top four private sector insurers. Reliance General Insurance is one of India's
fastest growing general insurance companies and among the top three private sector insurers.
Reliance Money is one of India’s leading retail brokerage houses and distributors of financial
products and services. 

Reliance Capital has a net worth of Rs. 7,712 crore (US$ 2 billion) and total assets of
Rs. 26,003 crore (US$ 6 billion) as on March 31, 2010.

36
 VISION [Reliance capital]

Reliance Capital's vision is that:

By 2012, it will be a company that is known as:

"The largest, most profitable, innovative, and most trusted financial services company
in India and in the emerging markets"

In doing so, the company expects to reach the following targets by 2012:

1. 50 million customers.
2. 75,000 employees
3. A profit after tax of Rs. 5,000 crore for that financial year.
4. A valuation of Rs. 100,000 crore for the company and its subsidiary businesses.
In achieving this vision, the company will be both customer-centric and innovation-driven

Business mix of Reliance Capital:

Asset Management Mutual Fund, Portfolio Management, Offshore Fund

Insurance Life Insurance, General Insurance

Consumer Finance Mortgages, Loans against Property , Business Loans,

& Home Finance Loans for Commercial Vehicles, Loans for Construction
Equipment, Auto Loans, Loans against shares, Business
Loans

Broking and Stocks Commodities and Derivatives, Wealth

Distribution Management Services, Portfolio Management Services,
Investment Banking, Foreign Exchange and Offshore
Investment, Third Party Products

Other Businesses Asset Reconstruction, Institutional Broking, Private

Equity, Exchanges, Venture Capital

37
 COMPANY HISTORY

Reliance Capital Limited (RCL) was incorporated in year 1986 at Ahmedabad in

Gujarat as Reliance Capital & Finance Trust Limited. The name RCL came into effect from
January 5, 1995. In 2002, RCL shifted its registered office to Jamnagar in Gujarat before it
finally moved to Mumbai in Maharashtra, in 2006.

In 2006, Reliance Capital Ventures Limited merged with RCL and with this merger
the shareholder base of RCL rose from 0.15 million shareholders to 1.3 million.

RCL entered the Capital Market with a maiden public issue in 1990 and in subsequent
years further tapped the capital market through rights issue and public issues. The equity
shares were initially listed on the Ahmedabad Stock Exchange and The Stock Exchange
Mumbai. Presently the shares are listed on The Stock Exchange Mumbai and the National
Stock Exchange of India.

RCL in the initial years engaged itself in steady annuity yielding businesses such as
leasing, bill discounting, and inter-corporate deposits. Later, in 1993 diversified its business
in the areas of portfolio investment, lending against securities, custodial services, money
market operations, project finance advisory services, and investment banking.

RCL was accredited a Category 1 Merchant banker by the Securities Exchange Board
of India (SEBI). It had lead managed/co-managed 15 issues of an aggregate value of Rs. 400
crore and had underwritten 33 issues for an aggregate value of Rs. 550 crore. All these
companies were listed on various exchanges.

RCL obtained its registration as a Non-banking Finance Company (NBFC) in

December 1998. In view of the regulatory requirements RCL surrendered its Merchant
Banking License.

RCL has since diversified its activities in the areas of asset management and mutual
fund; life and general insurance; consumer finance and industrial finance; stock broking;
depository services; private equity and proprietary investments; exchanges, asset
reconstruction; distribution of financial products and other activities in financial services.

38
Reliance Capital businesses:

39
Other businesses

40
 BOARD OF DIRECTORS

Anil Ambani, Chairman Amitabh Jhunjhunwala, Vice-Chairman

Rajendra Chitale, Independent Director Dr.

Bidhubhusan Samal

Shri C. P. Jain

41
 ABOUT RELIANCE MUTUAL FUND

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.

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average
Assets Under Management (AAUM) of Rs. 1,18,973 Crores and an investor count of over 74
Lakh folios. (AAUM and investor count as of May 2010) AAUM (Source :
http://www.amfiindia.com)

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one
of 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 159 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 India’s 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.

42
 COMPANY AT GLANCE

Sponsor: Reliance Capital Limited

Trustee: Reliance Capital Trustee Co. Limited

Investment Manager: Reliance Capital Asset Management Limited

Statutory Details: The Sponsor, the Trustee and the Investment Manager are incorporated
under the Companies Act 1956.

Custodian The Trustee has appointed Deutsche Bank, AG located at Kodak House, Ground
Floor, 222 Dr. D.N.Road, Mumbai-400 001, as the Custodian of the securities that are bought
and sold under the Scheme.

The Registrar Reliance Capital Asset Management Limited has appointed M/s. Karvy
Computer share Pvt. Limited to act as the Registrar and Transfer Agent to the Schemes of
Reliance Mutual Fund.

The main objectives of the Trust are:

 To carry on the activity of a Mutual Fund as may be permitted at law and formulate
and devise various collective Schemes of savings and investments for people in India
and abroad and also ensure liquidity of investments for the Unit holders;
 To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on
their savings and
 To take such steps as may be necessary from time to time to realise the effects without
any limitation.

43
 VISION AND MISSION

Vision statement:

To be a globally respected wealth creator with an emphasis on customer care and a culture of
good corporate governance.

Mission Statement:

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

44
 THE MANAGEMENT TEAM

BOARD OF DIRECTORS Mr. Soumen Ghosh

Mr. Kanu Doshi
Mr. Manu Chadha
Mr. Sushil Tripathi
MANAGEMENT TEAM Mr. Sundeep Sikka
Mr. Madhusudan Kela
Mr. Amitabh Mohanty
EQUITY FUND MANAGERS Mr. Sunil B. Singhania
Mr. Shailesh Raj Bhan
Mr. Krishan Daga
Mr. Omprakash S. Kuckian
Mr. Ashwani Kumar
Mr. Shiv Chanani
Mr. Govind Agrawal
DEBT FUND MANAGERS Mr. Amit Tripathi
Mr. Prashant Pimple
Ms. Anju Chhajer
Mr. Arpit Malaviya
COMMODITIES Mr. Hiren Chandaria
HEAD OF DEPARTMENTS Mr. Pradeep Andrade
Mr. Milind Gandhi
Mr. Rajesh Derhgawen
Mr. Vinay Nigudkar
ZONAL HEAD Mr. Gurbir Chopra
Mr. Aashwin Dugal
Mr. Gopal Khaitan
Mr. Vikas Rathie

45
 RELIANCE CUSTOMER SERVICE

 Online Services
The ease and convenience of transacting online is made available by reliance Mutual
fund. Customers can purchase, redeem or switch their units of Reliance Mutual Fund
schemes at www.reliancemutual.com. They can also check your account statement, fill in and
submit the application form as well as view and download Offer Documents. All this is
possible by sitting at our home or office. Following ís a simple step-by-step online
transaction guide that is available.

 Online Transaction
Customers can purchase, switch or redeem their Reliance Mutual Fund units through
online.

 Online Payment
When customers can choose Online Payment, they will be directed to the Payment
Gateway Page, where they have to choose one of the banks to make the payment. Once they
select their bank, they will be directed to the Net Banking page of the respective bank. Log in
to their bank account and make the payment. When the transaction is complete, a
confirmatory mail will be sent to their registered email address.

 Cheque Payment
If they choose to make the payment by Cheque, they will need to download and print
the application form by clicking on the link provided. They need to simply sign this form and
submit it at the nearest Investor Service Centre (ISC), along with their cheque. The
transaction reference number should be written on the reverse of the cheque before
submission. The ISC will acknowledge receipt of the same and send their application for
further processing.

46
47
48
 RELIANCE VARIOUS SCHEMES

Equity/Growth Schemes

The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a major part of their corpus in equities. Such funds have
comparatively high risks. These schemes provide different options to the investors like
dividend option, capital appreciation, etc. and the investors may choose an option depending
on their preferences. The investors must indicate the option in the application form. The
mutual funds also allow the investors to change the options at a later date. Growth schemes
are good for investors having a long-term outlook seeking appreciation over a period of time.

In reliance mutual fund, the following pattern of the investment mainly of equity
fund:

Diversified Large cap: Reliance Equity Advantage Fund

Reliance NRI Equity Fund

Reliance Vision Fund

Reliance Quant plus Fund

Reliance Equity Fund

Diversified Mid cap: Reliance Growth Fund

Reliance Long Term Equity Fund

Diversified Multi cap: Reliance Equity opportunities Fund

Reliance Regular Saving Balanced Fund

Debt/Income Schemes

The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures,
Government securities and money market instruments. Such funds are less risky compared to
equity schemes. These funds are not affected because of fluctuations in equity markets.
However, opportunities of capital appreciation are also limited in such funds. The NAVs of
such funds are affected because of change in interest rates in the country. If the interest rates
fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long
term investors may not bother about these fluctuations.

49
 Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving
Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent
on the performance of the respective sectors/industries. While these funds may give higher
returns, they are more risky compared to diversified funds. Investors need to keep a watch on
the performance of those sectors/industries and must exit at an appropriate time. They may
also seek advice of an expert.

In reliance mutual fund, the following pattern of the investment mainly of sector fund:

Reliance Banking Fund

Reliance Diversified Power Sector Fund

Reliance Media & Entertainment Fund

Reliance Pharma Fund

Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) are usually passively managed mutual fund schemes
tracking a benchmark index and reflect the performance of that index. These schemes are
listed on the stock exchange and therefore have the flexibility of trading like a share on the
stock exchange. It can also be looked as a security that tracks an index, a commodity or a
basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing
price changes throughout the day as it is bought and sold.

Reliance Banking Exchage Traded Fund

Reliance Gold Exchage Traded Fund

Fixed Maturity Plans (FMPs)

Fixed Maturity Plans (FMPs) are basically debt oriented investment schemes with a
pre-specified tenure offered by mutual funds. FMPs invest in a portfolio of debt instruments
whose maturity coincides with the maturity of the concerned FMP. The primary objective of
a FMP is to generate income while aiming to protect the capital by investing in a portfolio of
debt and money market securities. Since FMPs are available with several maturity options,
one can invest in the relevant plan depending upon his investment horizon and the
requirement of cash flows.

50
 MUTUAL FUND INVESTING STRATEGIES

Systematic Investment Plan

Many mutual funds offer investment programs whereby unit holders can invest. The
Unit holders of the scheme can benefit by investing specific Rupee amounts periodically, for
a continuous period. The SIP allows the investors to invest a fixed amount of Rupees every
month or quarter for purchasing additional units of the scheme at NAV based prices.

Systematic Withdrawal Plans

Many mutual funds offer withdrawal programs whereby unit holders receive
payments from their investments. These payments are usually drawn from the fund's dividend
income and capital gain distributions, if any, and from principal only when necessary.

Systematic Transfer Plans (STPs)

They allow the investor to transfer on a periodic basis a specified amount from one
scheme to another within the same fund family – meaning two schemes belonging to the
same mutual fund. A transfer will be treated as redemption of units from the scheme from
which the transfer is made. Such redemption or investment will be at the applicable NAV.
This service allows the investor to manage his investments actively to achieve his objectives.
Many funds do not even charge any transaction fees for his service – an added advantage for
the active investor

51
 WHY RELIANCE MUTUAL FUND ?

 Reliance Mutual Fund ,a part of the –Anil Dhirubhai Ambani Group (RADAG) is one
of the fastest growing mutual fund company in the country.

 Reliance mutual fund offer investors a well –rounded portfolio of products to meet
varying investor requirements.

 Reliance mutual fund has a presence over 159 cities across the country.

 Reliance mutual fund manages assets over Rs. 1,18,973 Crores and an investor count
of over 74 Lakh folios. (AAUM and investor count as of May 2010)
AAUM(source:www.amfiindia.com)

 A fund from Reliance mutual fund ,an AMC with a established track record of
consistent return.

 Investor –friendly personal and technological support.

 Strong and consistent fund management team.

"G
rowth has no limit at Reliance. I keep revising my vision.

Only when you can dream it, you can do it."

52
 SERVICE PROVIDER
Registrar to the schemes of Reliance Capital Asset Managment :
Karvy Computer share Pvt. Ltd

Custodians to the schemes of Reliance Capital Asset Managment

Deutsche Bank AG

Auditors to the Schemes of Reliance Capital Asset Management

Bankers to the Schemes of Reliance Capital Asset Management

ABN Amro Bank
Axis Bank
Citibank N.A
Deutsche Bank AG
Development Bank of Singapore-only for online investors
HDFC Bank limited
HSBC Bank
ICICI Bank limited
IDBI Bank
ING.Vysya Bank
Kotak Mahindra Bank
State bank of India
Standard Chartered Bank
Yes Bank

Webservices
Reliance Infocomm

53
 MARKETING IN MUTUAL FUNDS
Marketing is the process of planning and executing the conception, pricing,
promotion, communication and distribution of ideas, goods, and services to create exchanges
that satisfy individual and organizational goals. Through marketing, individuals and groups
create and exchange products and services with others in order to create value or satisfy
wants and needs.

Marketing in
Mutual Fund

Needs and Wants Satisfaction of needs and

Marketing wants through ideas, products
and services.

 THE FOUR MAIN CREDIT RATING AGENCIES

The role of the rating agencies was questioned during the global financial meltdown as
many of the companies and their issues collapsed despite enjoying high ratings. As per the
Sebi guidelines, the CRAs will have to maintain records of the important factors underlying
the credit rating and a summary of discussions with all the stakeholders involved as well as
decisions of the rating committee, including voting details and notes of dissent.

Crisil, Fitch, Icra and Care are the four main credit rating agencies operating in India.
Based on the creditworthiness of companies, these agencies assign ratings such as AAA, AA,
BBB. Investors, banks and other institutions use these ratings while making investment
decisions.The new guidelines require the credit rating agencies to disclose their shareholding
patterns as well.

54
 DISTRIBUTION CHANNEL
In Reliance, the distribution channels are slightly different. The flow chart for the distribution
channels for Reliance is as follows:

Reliance Distribution
channel

National Independent Alternate Corporate

Distributor financial channel channels
advisor

The National Distributors consists of all the private banks like Standard Chartered Bank,
American Express Bank, Deutsche bank to name a few and other investment consultants like
Karvy securities, Bajaj Capital etc.

The Independent Financial Advisors are the ones who are eligible to sell financial products
individually to the retail investors after they have obtained AMFI certification.

The Alternate Channels consists of all the PSUs like State Bank of India, Oriental bank of
Commerce, Unit Trust of India bank among many.

The Corporate Channels are targeted to the corporate clients. It is very imperative for the
fund houses to develop a proper distribution network in order to reach out to the investors

effectively.

55
 AWARDS AND ACHIVEMENTS

1.Reliance Capital Asset Management Ltd. won the Asia Asset Management Award 2007.

2. Reliance Capital Asset Management Ltd. won the Social & Corporate Governance Award
2007.

3. Reliance Mutual Fund has been awarded the "NDTV Business Leadership Award 2007" in
the Mutual Fund category.

4. CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007.

5. Reliance Growth Fund-Growth Plan was declared the best fund over 5 years
in the Equity India category, out of 81 eligible schemes.

6.Reliance Natural Resources fund is the only one Natural Resources sector fund in
India .

56
57
 SWOT Analysis
The SWOT analysis provides information that is helpful in matching firm’s resources and
capabilities to the competitive environment in which it operates. Hence SWOT analysis fits
into an environmental scan:

Strengths – to build on

Weaknesses – to cover

Opportunities – to capture

Threats – to defend aginst

 STRENGTHS

Reliance Mutual Fund ,a part of the –Anil Dhirubhai Ambani Group(R-ADAG) is one
of the fastest growing mutual fund company in the country.

Reliance mutual fund offer investors a well –rounded portfolio products to meet
varying investor requirements.

Reliance mutual fund has a presence over 159 cities across the country, with investor
base over 74 lacs.

Reliance mutual fund investor base of over 2 million and manages assets over Rs.
1,18,973 crore as on May 2010(source:www.amfiindia.com)

A fund from Reliance mutual fund ,an AMC with a established track record of
consistent return.

Strong and consistent fund management team.

Investor –friendly personal and technological support.

Ensures better costumer services, conveniences ,communication by efficient network.

Quality product & services – High quality standard maintained.

Brand Name – ‘Reliance Mutual Fund ’ is popular brand name among customers

58
 Good image between customers.

 WEAKNESS

Less existence in rural areas

Less expenditure on advertising and promotional schemes

Lack of awareness technological support.

 OPPORTUNITIES

Reliance mutual fund has a very good quality products &schemes comparison to other
competitor.

Reliance is first company which launched Equity fund with hedging feature which
aim to minimize risk..

Good perception among the customer.

Increasing number of e-banking investors.

 THREATS

Lot of competitor in market.

Lot of schemes are provided by competitors.

Share market may be go down in future.

The Mutual Fund is not guaranteeing or assuring any dividend/ bonus.

59
60
61
 AN EMPIRICAL STUDY OF INVESTORS PERCEPTION ABOUT
INVESTMENT IN MUTUAL FUNDS WITH REFERENCE TO
RELIANCE MUTUAL FUND

Managerial Usefulness of Study:

 The study will give information about prospective investors both individual as well as
institutional clients in areas of surrey where they can get lead.

 The study provides the complete information about all close competitors in Mutual
Fund investment.

 It provides the AMC a feedback from customers regarding their problems and
perception about investing in mutual funds so that they can improve their services.

Objectives:
 To study the Mutual funds industry in detail

 To study the Investment procedure in Mutual funds

 To study in brief various Mutual funds promoted by different AMC

 To study the investors Preference regarding Investment in Mutual Funds

62
 LITERATURE REVIEW
“ Mutual funds are as much about marketing as investing in the 1990’s, which is why the
hoary cliché” Mutual funds are sold, not bought” is as true as ever. As Glorianne Stromberg
once told Canadian Business magazine, the fund business may have started out in the
portfolio management business, but “somewhere along the line, the marketers got hold of it,
and the advisory function has been almost superseded by the sales function.”

 Jonathan Chevreau, the Wealthy Boomer

Successful fund marketing creates value for Fund companies, dealers and unit holders so that
each is satisfied. The definition goes much deeper than simply "selling something to
somebody". Fund marketeers must understand both the "Needs & Wants" side of the
equation and the "Product, Ideas, & Services" side of the equation. Not only must marketing
fully understand both sides of the equation, but it must also effectively communicate the
details of each in order to successfully bridge the gap between the two. Every facet of modern
marketing has been effectively employed to dramatically grow the Indian mutual fund
industry.

 An Analysis of Investor’s Risk Perception towards Mutual Funds Services

Nidhi Walia, Ravi Kiran

Financial markets are constantly becoming more efficient by providing more promising
solutions to the investors. Being a part of financial markets although mutual funds industry is
responding very fast by understanding the dynamics of investor’s perception towards
rewards, still they are continuously following this race in their endeavor to differentiate their
products responding to sudden changes in the economy. Thus, it is high time to understand
and analyze investor’s perception and expectations, and unveil some extremely valuable
information to support financial decision making of mutual funds. Financial markets are
becoming more exhaustive with financial products seeking new innovations and to some
extent innovations are also visible in designing mutual funds portfolio but these changes need
alignment in accordance with investor’s expectations. Thus, it has become imperative to
study mutual funds from a different angle, i.e, to focus on investor’s expectations and
uncover the unidentified parameters that account for their dissatisfaction. Present research
proposes to identify critical gaps in the existing framework for mutual funds and further
extend it to understand realizing the need of redesigning existing mutual fund services by
acknowledging Investor Oriented Service Quality Arrangements (IOSQA) in order to
comprehend investor’s behavior while introducing any financial innovations.

63
 RESEARCH METHODOLOGY
I decided to do the project in two parts. The first part of the project is comprised of
the study of Mutual Funds as a whole and the second part deals with the investors perception
regarding their investment preferences about investment in Mutual Funds. The first part of
the project i.e. descriptive study is comprising an overall study of Mutual funds as what it is,
why to invest and where to invest, risk factor associated with it i.e. an overview of whole
Mutual fund industry. The second part of the project that is related to investors perception
about investment in Mutual funds available in market. Indian Stock market has undergone
tremendous changes over the years. Investment in Mutual Funds has become a major
alternative among Investors. The project has been carried out to understand investor’s
perception about Mutual Funds in the context of their trading preference and explore
investor’s risk perception . The first part of the project relating the study of Mutual funds is
collected through secondary data obtained from internet & books whereas the second part
relating the Investors perception about investment in Mutual Funds is covered using primary
data.

64
 RESEARCH METHODOLOGY
The Marketing Research Process adopted by me in the present study consists of the
following stages:

Flow chart of Marketing Research Process

65
  Identifying & Defining Problem:
The study undertaken by me is a study on investors perception about mutual fund of
Reliance mutual fund in Rajkot city.

The main objective behind this particular study is to know about investors preference
about mutual fund. The study is based on Exploratory Research. It is undertaken in the initial
stage of the research process.

 Planning the Research Design :

Once the problem is identified, the process of research design begins. This is the
crucial stage in research methodology as planning plays very important role in further
proceeding of the study.

As the study has to be carried out in Rajkot City, a detailed knowledge had to be
acquiring to gather the information regarding my Project Title.

I had successfully gathered the information which was directly affecting my study i.e.,
the major players prevailing in Rajkot City other than Reliance Mutual Fund total population,
knowledge prevailing in the minds of people, their desire for Mutual Fund.

Here I needed to frame information regarding:

 From where to get information

 Time allotted for getting information
 Budget allotted for getting information
 Measurement techniques
 Cost involved in conducting it
 Availability of data sources
After gathering the above information, I had framed a design through which I got
sufficient information about my Project Title. But as there was a time constraint, the sample
size was not too large.

66
  Selecting the Research Method :
The research design method is chosen based on thee objectives of the study, the cost
involved in conducting the study, the availability of the data and finally the importance &
urgency of the decisions.

There are four main research methods:

 Secondary Data studies

 Surveys
 Experiments
 Observations
I have chosen mainly the Survey Method for my research work as the information can
only be gathered with the help of Questionnaire. I have conducted survey to get primary data
regarding the services of different Mutual Fund service providers. I got the data gathered first
hand to answer the research question being investigated.

I have prepared a questionnaire related to my study & had circulated to the walk in
customers at different Banks in Rajkot City. The questionnaire contained many important
questions.

I have also taken help of Secondary Data Studies in completion of my Project as it is

concerned with the analysis of already existing data that is related to the research topic.

 Selecting Sampling Procedure :

Sampling is generally a part of the research design but it is considered separately in
the research process. Sampling is a process that uses a small number of items or a small
portion of population to draw conclusion regarding the whole population.

Alternatively, a sample can be considered as a subset of a larger set called

POPULATION.

In the present study, PROBABILITY SAMPLING has used and to be more precise,
SIMPLE RANDOM SAMPLING Method has used.

I have taken the sample size of 100 walk in customers randomly from different
Mutual Fund service Providers in Rajkot City.

67
  Data Collection :
After the research design, research method and Sampling procedure is decided, the
next main step is Collection of Data for related study with the help of Research Method
decided.

In this study, the research method decided by me is – Survey Method and Secondary
Data Collection Method.

Survey Method provides primary Data i.e., first – hand information by filling-up the
Questionnaires. The Questionnaires have filled-up from walk in customers at different
Mutual Fund service Providers in Rajkot City.

Secondary Data collected from different Brochures, books and internet.

 SAMPLE PLAN
 Population – Walk in customers of bank in Rajkot City.
 Sample Frame – customers of different banks in Rajkot City.
 Sampling Method – Simple Random Sampling
 Sample Size – 120 people ( Due to time constraint )

 LIMITATIONS
Though the present study aimed to achieve the above-mentioned objectives in full
earnest and accuracy, it was hampered due to certain limitation.

Some of the limitations of this study undertaken are as follows :

 Sample of 120 customers was only taken randomly due to time constraint for the
preparation of project. A large sample size would have given an opportunity to get
more accurate over-all feedback from actual and prospective customers.
 The research was limited to only bank in Rajkot City.
 During my survey in Rajkot City, some people were having very reserved nature.
They were not so open. They avoid sharing their responses under the testing
condition.

68
  CHANCE OF RESPONSE ERROR
There are many respondents who have filled up questions. Chance of response error
might be possible. There might have been tendencies among the respondents to amplify or
filer their response under the testing condition.

In various banks some customers are regularly transactions in huge amount, so that
they can get extra facilities from it. There might be possibility that they make favor about
other option which actually not as satisfactory as his opinion for all customers.

69
70
71
(1)Occupation of Investors.

Respondents in
Particulars Number Percentage
Business 56 47%
Service 45 38%
Other 19 15%
Total 120 100%

Occupation

47%
38% Busines
50% s
40% Service
30% Other
15%
20%
10%
0%
1

From the above chart suggests that out of 120 respondents 47% respondents invests their
money in mutual fund this shows that investor choose mutual fund because they want to earn
good return with some safety. Ratio of respondents who are from business 47% and service
37% is more than ratio of respondents who are from other 16%t had choose mutual fund as
their investment tools.

(2)Age Group

72
 Respondents in
Particulars Number Percentage
18-22 14 12%
22-30 35 29%
30-40 42 35%
More than 40 29 24%
Total 120 100%

Age Group
12%
24%

29%

35%

18-22 22-30 30-40 More than 40

Out of these 120 people, 12% lie in the age group of 18-22 years, 29% in the age group of 22-
30 years, 35% in the age of 30-40 and 24% above 40 years of age. The age groups were
selected in this manner because a considerable change in the knowledge and investment
pattern was seen in these break-ups.

(3) Income level of Investors

Respondents in
Particulars Number Percentage
Less than 2 lakh 52 43%

73
 2-3 lakh 55 46%
More than 3 lakh 13 11%
Total 120 100%

Income group
11%

43% less than 2 lakh

2- 3 lakh
more than 3 lakh

46%

Here the highest group of people (46%) is earning annual income of Rs. 2 to 3 lakh. While
the people having annual income of Rs. less than 2 lakh (43%) the people are mostly
professionals and businesspersons. We found that the annual incomes of more than Rs. 3 lakh
are of business class and are 11%.

(4) Do you invest in mutual fund ?

Respondents in
Particulars Number Percentage
Yes 92 77%
No 28 23%

74
 Total 120 100%

Investment in mutual fund

77%

80%

60%
23%
40%

20%

0%
Yes No

From the above chart suggests that out of 100 respondents 77% respondents invests their
money in mutual fund this shows that investor choose mutual fund because they want to earn
good return with some safety. And 23% respondents are not interested in investing in mutual
fund.

(5) If No Then,

What is the most important reason for not investing in mutual funds?

Respondents in
Particulars Number Percentage
Lack of knowledge about MF 17 14%
Enjoys investing in other options 61 51%

75
 Its benefits are not enough to drive 23 19%
for investment
No trust over fund managers 19 16%
Total 120 100%

Reasons for not investing in MF

16% 14%
Lack of knowledge about mutual
funds
Enjoys investing in other options
19% Its benefits are not enough to
drive you for investment
No trust over the fund managers

51%

23 out of 120 total respondents say they are not investing their money in mutual fund the
main reason behind it they enjoys investing in other options except this investors didn’t have
trust over the fund manager of the AMC companies . And very few respondents says they
have lack of knowledge about mutual funds.

(6) Please rank the following investment instruments according to your preference.(On
the basis of risk and return concept)

Respondents in
Particulars Number Percentage
Fixed Deposit 36 30%
Mutual Fund 17 14%
Equity 10 9%
Bonds 5 4%
ULIP 7 6%

76
 Govt. Securities 6 5%
LIC 20 17%
Post office 19 16%
Total 120 100%

Repondents preference towards various intsrument

30%
30% Fixed Deposit

25% Mutual Fund

Equity
20% 17%
14% 15% Bonds
15% ULIP
9%
10% 6% Govt Securitites
4% 5%
LIC
5%
Post office
0%

People are habitual to invest and they have many investment options. But from our survey we
find that because of safety reasons people mostly invest in Fixed Deposits (30%).People are
also investing in LIC(17%) as they found it the safer one. Post office and Mutual Fund are
also popular as an investment tool as share of both 15% and 14%. While Govt.Securities
and bonds is 5% & 4% and in equity there is 9% in the total survey.

(7) What is your Average investment period?

Respondents in
Particulars Number Percentage
Less than 6 months 34 28%
6 to 12 months 39 33%
1 to 3 years 28 24%
More than 3 years 19 15%
Total 120 100%

77
 Average investment period
15%
28%

24%

33%

Less than 6 months 6 to 12 months 1 to 3 years More than 3 years

The above graph reflects the average investment period for all the 120 respondents. 6 – 12
months is the most chosen option among all the other options because of the current market
condition people are not interested in investing their money for short time like less than 6
months because return will be very less in short time period .If they want to earn more return
they need to invest their money at least more than 6 months or more than one year.

(8)How do you normally get information about Mutual Fund?

Respondents in
Particulars Number Percentage
Television 12 10%
Internet 14 11%
Newspaper 19 14%
Financial Advisors 28 30%
Friends/Relatives 36 26%
Others 11 9%
Total 120 100%

78
 Sources of information

30%
30% 26%
Television
25%
Internet
20% Newspaper
14%
15% 10% 11% Financial Advisors
9%
10% Friends/Relatives
Others
5%

0%

The main source of information for people is the financial advisors with 30% because they
directly approach to the customers. Friends/relatives who made investment and get benefit
also recommend others so their ratio is 26%. Now a day the Internet users are increasing day
by day and therefore 14% people are getting information through Internet. The respondents
prefer to get the routine special information like daily NAV, dividend, bonus, change in asset
mix etc., through Internet. While 11% people get knowledge from Newspaper.

(9) Which are the main reasons for investing into MF?

Respondents in
Particulars Number Percentage
Tax benefit 13 12%
High return 38 32%
Saving 24 20%
Tax benefit & high 13 12%
return
Tax benefit & saving 10 7%
High return & saving 13 12%
All of above 5 3%
Others 4 2%
Total 120 100%

79
 Reasons for investing in MF
Tax benefit High return Saving
Tax benefit & High return Tax benefit & Saving High return & Saving
All of above other
3% 2% 12%
12%

7%

32%
12%

20%

From the above graph we can analyze that 32% people want high returns in return of their
investment while 12% people invest for the purpose of tax benefits. People preferring both
tax benefit as well as high return are 22% whereas people with tax benefit as well as saving
are 12%.

(10) Do you get influenced by the name of Company promoting Mutual funds?

Respondents in
Particulars Number Percentage
Yes 94 78%
No 26 22%
Total 120 100%

80
 Promotion influence
22%

Yes
No

78%

Above graph suggests that AMC companies promoting their product well because 78% of the
total respondents are influenced by their promotional activities and very few are not
influenced.

81
(11) Which company influence you the most.

Respondents in
Particulars Number Percentage
Reliance MF 25 20%
SBI MF 6 5%
Birla Sun Life MF 14 11%
Principal PNB 4 3%
UTI MF 14 12%
HDFC MF 21 18%
ICICI Prudential 17 16%
Franklin Templeton 19 15%
Total 120 100%

Investment preference towards various companies

20%
20% 18% Reliance mutual fund
16% SBI mutual fund
15%
15% Birla sun life mutual fund
12%
11% Principal PNB
10% UTI mutual fund
5% HDFC mutual fund
5% 3% ICICI prudential
Franklin Templeton
0%

Reliance Mutual Fund is having the 1st position among the 8 mutual fund companies. HDFC
and ICICI are on 2nd and 3rd position respectively while Franklin Templeton is on the 4 th
position with 15%. SBI, Birla sun and PNB has 5% ,11% and 3% share respectively. As
Reliance has a good image in the mind of people who have faith in Reliance. So when
Reliance entered in Mutual Fund people invest more and it results in 1st rank among the all
MF Companies. Where HDFC MF is known for the its professionalism and for this reason
CRISIL has given the 1st rank to HDFC MF. HDFC is assumed to be a bit conservative for
short-term investments. That’s why people prefer Reliance over HDFC because of its
aggressiveness.

82
(12) Where do you find yourself as a mutual fund investor?

Respondents in
Particulars Number Percentage
Total ignorant 6 5%%
Partial knowledge of MF 72 60%
Aware only of any specific scheme in 30 25%
which you invested
Fully aware 12 10%
Total 120 100%

Knowledge about mutual fund

10% 5%
Totally ignorant
25% Partial knowledge of mutual
funds
Aware only of any specific
scheme in which you invested
Fully aware

60%

Above graph suggests that most of the respondents have partial knowledge about mutual fund
followed by some of the customer who are aware only of any specifics scheme in which they have
invested. Only 10% of the respondents are full ware and only 5% of the total respondent doesn’t have
any knowledge about mutual fund.

83
(13)From where do you purchase mutual funds?

Respondents in
Particulars Number Percentage
Directly from AMC’s 28 23%
Brokers only 49 41%
Sub-brokers 25 20%
Other sources 18 16%
Total 120 100%

Where do they purchase?

16% 24%

Directly from AMC's

Brokers only
20% Sub-brokers
Other sources

40%

Brokers are very important role in the distribution channel of AMCS most of the respondents
buys their investment produts from brokers. This shows the importance of brokers and they
also want to earn money so they gave good service to their investors and in the return they
gets good business. Only few of the investors knows that they can buy directly for AMCS.

(14)According to you which is the most suitable stage to invest in mutual funds?

84
 Respondents in
Particulars Number Percentage
Young unmarried stage 28 23%
Young married with children 46 38%
Married with older children stage 34 28%
Pre-retirement stage 12 11%
Total 120 100%

Most suitable age for investment

40% 38%

35%
30% 28% Young unmarried stage
25% 23%
Young Married with children
20% stage
Married with older children
15% 11% stage
10% Pre-retirement stage
5%
0%

As above graph reflects that whatever may be the profession but respondents think that young
married age is the perfect age for investment when they don’t have much responsibilities and
they have some extra amount for investment. It is general observation that young people are
willing to take some risk and specially when they don’t have any social responsibilities, And
at the age of retirement people need fixed income because they are least interested in taking
risk as they have some fix amount which they got to use after retirement.

(15) Feature of the mutual funds that attracts the most.

Respondents in
Particulars Number Percentage
Diversification 43 36%

85
 Professional management 30 25%
Reduction in risk and transaction cost 21 18%
Helps in achieving long term goals 26 21%
Total 120 100%

Preference towards features of MF

36%
40% Diversification

30% 25% Professional management

21%
18%
20% Reduction in risk and
transaction cost

10% Helps in achieving long term

goals

0%

Above graph reflects that respondents need diversification because through this they can
reduce their risk and enjoy investing in other options. As graph shows that the ratio is 36
respondents choose it as their first priority option for investment. Mutual fund companies
invest the money but they charge for that so its not fact if they invest in mutual fund they can
save their cost and above graph reflects the same thing that they gave 3 rd preference to
reduction in risk and cost because after all mutual fund are subject to market risk. And for
long term goals ratio is 21%.

(16) How much return do you expect from your Investments?

Respondents in
Particulars Number Percentage
5-10% 14 12%
10-15% 21 18%

86
 15-25% 65 53%
25-35% 12 10%
More than 35% 8 7%
Total 120 100%

Return expected in percentage

60%
53%
50%
5-10%
40%
10-15%
30%
15-25%
18%
20%
12% 25-35%
10%
10% 7%
More than
35%
0%

If any person invested their money in any option which are available in the market they
obviously look for good return but if they want to earn high return than high risk is also
associated with it as above graph suggests that most of the respondents choose the return
between 15% to 25% because they knows that the current market condition its good return
they can get and very few respondents choose more than 35% return which is actually very
difficult to get.

(17) Which type of Mutual funds do you prefer?

Respondents in
Particulars Number Percentage
Open ended schemes 79 66%
Close ended schemes 41 34%
Total 120 100%

87
 Types of MF schemes preferred by respondents

34%

Open ended schemes

Close ended schemes

66%

H0: Most of the investors invest in Open-Ended Schemes of Mutual Funds.

H1: Most of the investors do not invest in Open-Ended Schemes of Mutual Funds.

Above graph shows that no matter in which profession they are but they choose open ended schemes.
In open ended schemes they can enter at any time or they can exit at any time. And as they knows
they with current market conditions no one wants to continue their investment if they won’t get good
return of negative return. Ratio of close ended schemes is very low. So we can say that H0 is
accepted.

(18) What is your preference in Mutual Funds?

Respondents in
Particulars Number Percentage
Equity 9 8%
Money market fund 11 9%
Balanced fund 58 48%
Income funds 3 2%
ELSS (tax saver) 25 20%

88
 SIP 14 13%
Total 120 100%

Preference in mutual fund

48%
50%
Equity
40%
Money market fund
30% Balanced fund
20%
Income funds
20% 13% ELSS(tax saver)
8% 9%
10% SIP
2%

0%

Above graph reflects that the respondents who are from job or they have their own profession choose
equity fund more than other options available. And the respondents have their own business they
choose SIP more as their investment product compare to two other groups because SIP is more safe
and convinent option for investment. ELSS (Tax Saver) is also choose by some respondents because
they can get the tax saving benefit if they invests their money in it.

89
90
 TEST OF HYPOTHESIS

HYPOTHESIS:

A hypothesis is a statement about population parameter. Hypothesis testing/significance.

Testing is procedure that helps us to decide whether the hypnotized population parameter
value is accepted or rejected by making use of the information obtained from the sample.

Null hypothesis:

A statistical hypothesis which is stated for the purpose of possible acceptance is called null
hypothesis. It is usually denoted by H0, the null hypothesis may be expressed symbolically.

“Null hypothesis is the hypothesis which is tested for possible rejection under the assumption
that it is true.”

Alternative hypothesis:

Any hypothesis which is complementary to null hypothesis to the null

The following questions are taken to test the hypothesis using chi-square test.

CHI SQUARE TEST

 Please rank the following investment instruments according to your preference.

(On the basis of risk and return concept)
 Which are the main reasons for investing into MF?
 Which company influence you the most.
 From where do you purchase mutual funds?
 According to you which is the most suitable stage to invest in mutual funds?
 Rank the following feature of the mutual funds that attracts you most.
 What is your preference in Mutual Funds?

91
  Please rank the following investment instruments according to your preference.
(On the basis of risk and return concept)

In India, the investment instrument other than mutual fund are still more popular than MF

Null hypothesis (Ho): All investment instrument are equally popular.

Alternative hypothesis(Ha): Other investment instruments are more popular than MF.

Total investment instrument covered under the survey 8

Equally population mean 1/8
Expected frequency(E = N * probability) =15(120*1/8)

Investment instrument Observed Expected O-E (O-E)2/E

frequency frequency
Fixed Deposit 36 15 21 29.40
Mutual Fund 17 15 2 0.26

Equity 10 15 -5 1.67
Bonds 5 15 -10 6.67
ULIP 7 15 -8 4.26
Govt. Securities 6 15 -9 5.40
LIC 20 15 5 1.67
Post office 19 15 4 1.06
Total 120 50.39
Degree of freedom = 8-1 = 7

Level of significance = 1%

Critical value = 18.475

X2 cal > X2 critical

Therefore, Ho is rejected

Conclusion: Other investment instrument are more popular than MF.

 Which are the main reasons for investing into MF?

Null hypothesis (Ho): Investors invest in MF equally for various reasons like tax

92
 benefit, high return n others
Alternative hypothesis(Ha): Investors invest for high return and saving

Total investment instrument covered under the survey 8

Equally population mean 1/8
Expected frequency(E = N * probability) =15(120*1/8)

Various reasons Observed Expected O-E (O-E)2/E

frequency frequency
Tax benefit 13 15 -2 0.27
High return 38 15 23 35.27
Saving 24 15 9 5.40

Tax benefit & high return 13 15 -2 0.27

Tax benefit & saving 10 15 -5 1.66
High return & saving 13 15 -2 0.27
All of above 5 15 -10 6.67
Others 4 15 -11 8.07
Total 120 57.88

Degree of freedom = 8-1 = 7

Level of significance = 1%

Critical value = 18.475

X2 cal > X2 critical

Therefore, Ho is rejected

Conclusion: Therefore, Investors invest for high return and saving.

 Which company influence you the most.

Reliance MF is most popular MF

Null hypothesis (Ho): All MF are equally popular

93
 Alternative hypothesis(Ha): Reliance MF is more popular than other MF

Total investment instrument covered under the survey 8

Equally population mean 1/8
Expected frequency(E = N * probability) =15(120*1/8)

Particulars Observed Expected O-E (O-E)2/E

frequency frequency
Reliance MF 25 15 10 6.67
SBI MF 6 15 -9 5.4
Birla Sun Life MF 14 15 -1 0.06
Principal PNB 4 15 -11 8.07
UTI MF 14 15 -1 0.06
HDFC MF 21 15 6 2.4
ICICI Prudential 17 15 2 0.27
Franklin Templeton 19 15 4 1.06
Total 120 23.99

Degree of freedom = 8-1 = 7

Level of significance = 1%

Critical value = 18.475

X2 cal > X2 critical

Therefore, Ho is rejected

Conclusion: Therefore, Reliance MF is more popular than other MF.

94
  From where do you purchase mutual funds?

Null hypothesis (Ho): Investors purchase MF equally from all sources.

Alternative hypothesis(Ha): Investors purchase MF’s mostly from broker.

Total investment instrument covered under the survey 4

Equally population mean 1/4
Expected frequency(E = N * probability) =30(120*1/4)

Sources Observed Expected O-E (O-E)2/E

frequency frequency
Directly from 28 30 -2 0.13
AMC’s
Brokers only 49 30 19 12.03
Sub-brokers 25 30 -5 0.83
Other sources 18 30 -12 4.8
Total 120 17.79

Degree of freedom = 4-1 = 3

Level of significance = 1%

Critical value = 11.345

X2 cal > X2 critical

Therefore, Ho is rejected

Conclusion: Therefore, Investors purchase MF’s mostly from broker.

95
  According to you which is the most suitable stage to invest in mutual funds?

Null hypothesis (Ho): Investors do not believe in any specific stage of life
suitable to invest in MF.
Alternative hypothesis(Ha): Most investors believe that “Young married with children”
stage of life is most suitable to invest in MF.
Stages of life Observed Expected O-E (O-E)2/E
frequency frequency
Young unmarried stage 28 30 -2 0.13
Young married with 46 30 16 8.53
children
Married with older 34 30 4 0.53
children stage
Pre-retirement stage 12 30 -18 10.8
Total 120 19.99

Total investment instrument covered under the survey 8

Equally population mean 1/8
Expected frequency(E = N * probability) =15(120*1/8)

Degree of freedom = 4-1 = 3

Level of significance = 1%

Critical value = 11.345

X2 cal > X2 critical

Therefore, Ho is rejected

Conclusion: Therefore, Most investors believe that “Young married with children” stage of
life is most suitable to invest in MF.

96
  Rank the following feature of the mutual funds that attracts you most.

Null hypothesis (Ho): All features are equally attracts to investors.

Alternative hypothesis(Ha): Diversification is the most popular feature of MF which
attracts to investors.

Total investment instrument covered under the survey 4

Equally population mean 1/4
Expected frequency(E = N * probability) =30(120*1/4)

Features Observed Expected O-E (O-E)2/E

frequency frequency
Diversification 43 30 13 5.63
Professional management 30 30 0 0
Reduction in risk and 21 30 -9 2.7
transaction cost
Helps in achieving long term 26 30 -4 0.53
goals
Total 120 8.86

Degree of freedom = 4-1 = 3

Level of significance = 1%

Critical value = 11.345

X2 cal < X2 critical

Therefore, Ho is Accepted

Conclusion: Therefore, all features are also equally attracts to investors.

97
  What is your preference in Mutual Funds?

Null hypothesis (Ho): All type of MF schemes out of below are equally popular.
Alternative hypothesis(Ha): Balanced fund are more popular than other.

Total investment instrument covered under the survey 6

Equally population mean 1/6
Expected frequency(E = N * probability) =20(120*1/6)

Particulars Observed Expected O-E (O-E)2/E

frequency frequency
Equity 9 20 -11 6.05
Money market fund 11 20 -9 4.05
Balanced fund 58 20 38 72.2
Income funds 3 20 -17 14.45
ELSS (tax saver) 25 20 5 1.25
SIP 14 20 -6 1.8
Total 120 99.8

Degree of freedom = 6-1 = 5

Level of significance = 1%

Critical value = 15.086

X2 cal > X2 critical

Therefore, Ho is rejected

Conclusion: Therefore, balanced fund are more popular than other.

98
 FINDINGS

The study done was a tool to analyze the present setup and to know the investors perception
regarding investment in Mutual Funds . The study proved fruitful and many facts came to the
light. The following were the findings of the study:

 People with less experience were inclined towards investment in the Mutual Funds. It
attracted as a safer avenue as compared to share market.

 Mutual Funds are more of an investment option than the speculative avenue. People
tend to gain through long investments rather than through short term.

 Income funds and ELSS are among the few top funds

 Old age people are not willing to take much risk and bear loss.

 Broker’s advice matters to as much as 72% of the people. Major part of people
preferred self-evaluation as best.

 Around 50% of the investors invest to maximize their returns and they are ready to
take moderate risk in their investment portfolio.

 While the age group above 30years concentrates on safety and tax saving and they
even take care of the liquidity.

‘Experience was the main factor that made a person invest in mutual funds’

99
 SUMMARY

The project contains the brief description of the mutual fund industry in general. It
also includes mutual fund as an investment- avenue. A survey was conducted to get the
primary data to judge the factors that the investors kept in their mind before they invest m
any of the investment tools and thus the first part of the paper scrutinizes the objectives of
the investors for investing m a mutual fund. Second part related to the investment patterns
of investors .that is related to the way or the factors which he takes under consideration
while investing m mutual funds. Third part considers which scheme is better according to
investors. For this the investor concerns the advisors/ friend and consult the various
resources from where he get the help for investing in the various schemes. The last part
contains the investors' perceptions about level of satisfaction while investing m mutual
funds.. Currently there are more than 2500 schemes with varied objectives and AMCs are
competing against each other by launching new products or repositioning old ones.
MF industry today is facing competition not only from within the industry but also
from other financial products like insurance policies product that provide many of the
same economic functions as mutual funds but are not strictly MFs. Thus paper attempts to
study the mutual fund as an investment avenue selection behavior of retail investors who
invest in mutual funds schemes. Analysis and conclusion based on actual research of the
topic.

As been analyzed people are very rarely aware of mutual funds as people were not
properly educated about the policies but when made aware they wanted to get more
information about the funds by this we can say that mutual fund is in its infant stage today but
it will reach its growth stage within no time.

Mutual fund has been compared to Unit linked polices people are more aware of
ULIP than Mutual fund which takes more customer to the insurance sector but slowly as
people are getting more aware of the funds they will surely start investing in these funds as
some of the mutual fund companies have already started giving more than 30% returns which
is really a huge amount being 6% minimum and 10% maximum guidelines given a company.

Mutual funds in this competitive world is very helpful for the people who are interested into
investments as this particular fund can take less investment but give u hefty.

100
 RECOMMENDATIONS

 Reliance Mutual fund should focus more on promotional activities so that consumer
awareness about its new schemes can be generated.

 The Reliance Mutual Fund should go for tie-ups with the corporate to invest in RMF.

 As per customer’s point of view, they feel that Reliance Mutual Fund should open
more number of branches for the convenience of people.

 Company should more focus on creating awareness about mutual fund and knowledge
about that.

 Company should focus on old aged people ranged between 50 years to 65 years.

101
 BIBLIOGRAPHY

BOOKS REFERRED

 Donald R Cooper and Pamela S Schindler , Business Research Methods, Page no. 54
 Fact sheet of the company
 Ken Black, Business Statistics, Page no. 456

WEBSITES:

http://www.managementfunda/reliancemutualfund
http://www.beta.profit.ndtv.com/news/show
http://www.reliancemutualfund.com/aboutus/aboutus.aspx
http://www.reliancemutualfund.com/ourschemes/ourschemes.aspx
http://www.reliancemutualfund.com/NAV/NAV.aspx
http://www.sebi.gov.in/Index.jsp?contentDisp=Department&dep_id=4
http://www.amfiindia.com/mutual funds/nav/about funds/open ended schemes.com
http://www.moneycontrol.com/easymf/learn/
http://www.moneycontrol.com/mutualfundindia/
http://new.valueresearchonline.com/ads/splash.asp
http://www.reliancecapital.co.in/about_bo.html

102
 ANNEXURE

Questionnaire
For

“AN EMPIRICAL STUDY OF INVESTORS PERCEPTION ABOUT INVESTMENT

IN MUTUAL FUNDS OF RELIANCE MUTUAL FUND”

Dear Respondent,

I am conducting this survey for investors perception about mutual fund in Rajkot city.I assure
you that the information given by you will be kept confidential by me. It is entirely for the
purpose of carrying out research. Kindly co-operate me and oblige.

Name: ...…………………………

Phone: ...…………………………

Email…………………………….

(1)What is your occupation status?

Business Service Other

(2)Age:

18-22 30-40

22-30 More than 40

(3) What is your annual income?

Less than 2 lakh 2 – 3 lakh More than 3 lakh

(4) Do you invest in Mutual Funds?

Yes No

103
If No Then,
What is the most important reason for not investing in mutual funds?
Lack of knowledge about mutual funds

Enjoys investing in other options

Its benefits are not enough to drive you for investment

No trust over the fund managers

(5) Please rank the following investment instruments according to your preference.(On
the basis of risk and return concept)

Fixed deposit Mutual fund

Direct Equity Bonds

ULIP Govt. Securities

LIC Post Office

(6) What is your Average investment period?

Less than 6 months 6 to 12 months

1 year to 3 years. More than 3 years

(7)How do you normally get information about Mutual Fund?

Television Internet

Newspaper Financial Advisors

Friends / Relations Others

104
(8) Which are the main reasons for investing into MF?

Tax benefit High return

Saving Tax benefit & High return

Tax benefit & Saving High return & Saving

Other All of above

(9) Do you get influenced by the name of Company promoting Mutual funds?

Yes No

(10) Which company influence you the most.

Reliance mutual fund UTI mutual fund

SBI mutual fund HDFC mutual fund

Birla sun life mutual fund ICICI prudential

Principal PNB Franklin templeton

(11) Where do you find yourself as a mutual fund investor?

Totally ignorant

Partial knowledge of mutual funds

Aware only of any specific scheme in which you invested

Fully aware

105
(12) From where do you purchase mutual funds?

Directly from AMCs

Brokers only

Sub-brokers

Other sources

(13)According to you which is the most suitable stage to invest in mutual funds?

Young unmarried stage

Young Married with children stage

Married with older children stage

Pre-retirement stage

(14) Rank the following feature of the mutual funds that attracts you most.

(Where 1 is most preferable and 4th is less is preferable)

Diversification

Professional management

Reduction in risk and transaction cost

Helps in achieving long term goals

(15) How much return do you expect from your Investments?

5%-10% 10%-15%

15%-25% 25%-35%

More than 35%

106
(16) Which type of Mutual funds do you prefer?

Open ended schemes Close ended schemes

(17) What is your preference in Mutual Funds?

Equity Funds Income funds

Money market funds ELSS(tax saver)

Balanced funds Fixed SIP

107