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COMPREHENSIVE STUDY OF MUTUAL FUNDS

Reliance Infrastructure Fund


SUMMER TRAINING PROJECT REPORT
Submitted on Partial Fulfillment of
MBA
To
Vinayaka Mission University

&
POONA SCHOOL OF BUSINESS

ACADEMIC SESSION
2008 – 2010
Under the Guidance of: Submitted By:
External Supervisor: Devendra Kumar Sharma
Mr.Niranjan Avasthi PRN. 810046
(Relationship Manager)
Reliance mutual Fund

Internal Supervisor:
Prof. Vijay Rao

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TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project entitled, “ COMPREHENSIVE STUDY OF MUTUAL


FUND”, project done for “RELIANCE MUTUAL FUND”, submitted by Mr Devendra
Kumar Sharma, for the partial fulfillment of the requirements for the award of two year
Post Graduate Program is a bonafied record of the work done by him under my guidance
and that this has not been submitted by him for any other Degree or Diploma.

Prof. Vijay Rao


Marketing Faculty

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ACKNOWLEDGEMENT

Presenting this Project today remains an unparalleled event for me since it recapitulates
all my toils and efforts undergone. And I would like to thank each and everyone who
made it possible for me to achieve something which appeared like a Herculean Task.

Wherever and whatever I present today has been made possible by the undying efforts of
my project guide, Mr. Niranjan Avasthi (Relationship Manager), Reliance Mutual
Fund Ltd. Pune (Maharashtra). It was he who always made available whatever I
needed like Telephone, Internet facilities, Stationary items, etc and most important of all
his guidance.

I would also like to convey my deep regards to Prof. Vijay Rao, Marketing Head
(Faculty), PSB and to all my team members who had always bestowed upon me their
goodwill, blessings and providing me with the best of amenities.

Last but not the least I wish to thank my friend Yatendra Sharma and all those noble
hearts who directly or indirectly helped me to complete this project work.

DEVENDRA KUMAR SHARMA

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PREFACE

This project title is “A COMPREHENSIVE STUDY OF MUTUAL FUND IN INDIA”


is done in RELIANCE MUTUAL FUND (Reliance Capital Asset Management Ltd.),
Pune. In this project, apart from introduction, the concept of mutual fund, its history, a
comprehensive study has been done to understand the overall impact of portfolios of
mutual fund scheme.

The focus of the project is to find out whether mutual fund investors are interested to
invest in the present scenario or not. Another important area is to find out which products
of mutual funds are they interested in investing.

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INDEX

PAGE
CHAPTER NO. CONTENTS
NO.
1 Introduction
1.1 What is Mutual Fund? 9
1.2 Net Asset Value 10
1.3 Classification of Mutual Fund. 11
1.4 Types of Mutual Fund. 12
1.5 Advantage Of Mutual Fund 15
1.6 Disadvantage Of Mutual Fund 15
1.7 Mutual Fund In India 16
1.8 Growth of Mutual fund Industry in India 17
1.9 How Long to Keep Investment to get maximum return 18
1.10 Returns 18
1.11 The Risk Return Graph. 19
1.12 Association of mutual fund in India 19
1.13 Objectives of AMFIA in India 20
1.14 Regulatory Aspect 21
1.15 Structure of mutual fund in India 22
1.16 Some AMC’S Operating currently 26
2 Company profile 29
3 Problem Statements and Objectives of Study.
3.1 Problem Statements. 37
3.2 Objectives of Study. 38

4 Research Methodology.
4.1 Methodology of Study. 39
4.2 Research Methodology. 39
4.3 Assumptions. 39
4.4 Literature Survey. 39
4.5 Probability Sampling. 40
4.6 Sampling Size. 40
4.7 Execution of Project. 41

5 Limitations.
5.1 Limitations. 41

6 Analysis of Mutual Fund.

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6.1 Analysis on the basis of Schemes.
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43
6.2 Comparison between Bank and MF Industry.

7 Data collection 44
7.1 Questionnaire 45
7.2 Personal Visits. 46
7.3 Telephonic Information. 46`

8 Interpretation of Data.
8.1 Percentage of People who Invest. 47
8.2 Investment in Financial Product in Percentage. 48
8.3 Awareness of Mutual Fund. 51
8.4 Perception of Mutual Fund. 52
Comparison between Risk Investment and
8.5 53
Returns.
8.6 Identification of Mutual Fund Industry. 54
8.7 Risk taken ability by different Age Groups. 55
8.8 Percentage of total Income Invested in Mutual Fund. 56

Awareness of Reliance Capital Company out of 100


8.9 57
people

9 9.1 Project Findings. 58

9.2 Recommendations. 58

10 Bibliography. 59
11 Annexure 61

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EXECUTIVE SUMMARY

The project titled “COMPREHENSIVE STUDY OF MUTUAL FUND IN PUNE”


being carried out for RELIANCE MUTUAL FUND (A RELIANCE CAPITAL ASSET
MANAGEMENT LTD.)

RELIANCE CAPITAL operates in various financial products and services like, Mutual
Fund, Insurance, etc.
The evaluation of financial planning has been increased through decades, which is best
seen in customer rise. Now a day’s investment of saving has assumed great importance.

According to the study of the markets, it is being observed that markets are doing well in
Mutual fund. In near future a proper financial planning is required to invest money in all
type of financial product because there is good potential in market to invest.

In this project the great emphasis is given to the investor’s mind in respect to investment
in Mutual Fund .The needs and wants of the client is taken into consideration.

I hope RELIANCE CAPITAL COMAPNY, Pune will recognize this as well as take more
references from this project report.

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The main objective of this project is to know the Awareness of Mutual Fund among
investors and also to know the investing pattern of people in different Financial Project.

IT sector has been given more emphasis for the study of the project because it is the only
sector where all type of Age group, Income class and different level of people are
represented.
After analyzing the feedback the conclusion has been made that the Indian financial
market is having lots of potential customer the only thing is to give a proper guidance to
the prospective customers.
1. INTRODUCTION

1.1 Mutual Fund

Mutual fund is a mechanism for pooling the investment, made by the investors, in
stock market, securities, shares and debentures as disclosed in offer document and issuing
units to the investors. Units are issued to the investors in accordance with quantum of
money invested by them. Investors of Mutual funds are known as Unit Holders.

As investments are spread across a wide cross-section of industries


and sectors, the risk are reduced. Diversification reduces the risk because all stocks may
not move in the same direction in the same proportion at the same time.

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The profits or losses are shared by investors in proportion to their investments.
The Mutual funds normally come out with a number of schemes with different
investment objectives which are launched from time to time. A mutual fund is required to
be registered with Securities and Exchanges Board of India (SEBI) which regulates
securities markets before it can collect funds from the public.

ONE CAN MAKE MONEY FROM MUTUAL FUND IN THREE WAYS:-

 Income is earned from dividends and interest on bonds. A fund pays out nearly all
income it receives over the year to fund owners in the form of a distribution.
 If the fund sell securities that have increased in price, the fund have a capital gain
most fund also pass on this gain to investor in a distribution.

 If fund holding increases in price but are not sold by the fund manager, the fund
shares increase in price. One can sell then this mutual fund shares the profit.

1.2 Net Asset Value


Following are the regulatory requirements and accounting definitions laid down by
SEBI:
NAV = Net Asset of the Scheme / Number of Units Outstanding
= MVL+ REC+ AI+ Asset – AE – Pay – Lia
No .of Units Outstanding as at the NAV date

MVL: Market value of Investment


REC: Receivables
AI: Other Accrued Income
Asset: Other Assets (Dividend yet to be received)
AE: Accrued Expenses

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Pay: Other Payables
Lia: Other Liabilities (Custodian and Management Fees)

Fund’s NAV is affected by:


• Purchase or Sale of Investors Securities.
• Valuation of all Investment Securities.
• Other Assets and Liabilities.
• Units Sold or Redeemed.

1.3 Classification of Mutual Fund

• Open Ended Funds: These funds have units available for sale and repurchase at
all time. An investor can buy or redeem the units at price based on NAV per
Unit.

• Close Ended Funds: These funds don’t have units available for sale and
repurchase at all time. It allows only one-time sale of a fixed number of units.
However, to provide liquidity to investors many close-ended funds get listed on a
Stock Exchange(s).

• Load Funds: Fund Manager made charges to the investors to cover


distribution/ sales/marketing expenses. These charges are called
“Loads”.If load amount is charged over a period of time, it is called a “Deferred
Load”. Some funds charge different amount of load to the investors depending
on number of years the investors have stayed with funds. Such charges are called
“Contingent Deferred Sale Charge”.

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• No-Load Funds: Funds which make no charges or load for sales expenses are
called as “No Load Funds”.

1.4 TYPES OF MUTUAL FUNDS : -

Mutual Funds have specific investment objectives such as growth of capital, safety of
principal current income or tax exempt income, one can select one fund or any number of
different funds to help one meets ones specific goals. In general mutual fund fall under 3
general categories : -

 Equity fund invest in shares of common stocks.


 Fixed income funds invest in government or corporate securities which offer fixed
rate of returns.
 Balanced fund invest in a combination of both stocks and bonds.

AGGRESSIVE GROWTH FUNDS :-

These funds seek to provide maximum growth of capital with secondary emphasis on
dividend or interest income. They invest in common stocks with a high potential for rapid
growth and capital appreciation.

Aggressive growth funds are suitable for those investors who can afford to assume the
risk of potential loss in value of their investment in the hope of achieving substantial and
rapid gains. They are not suitable for investors who must conserve their principal or who
must maximize their current income.

GROWTH FUNDS:-

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Like aggressive growth funds, growth fund generally invests in stocks for growth rather
than income. They are considered more conservative in their approach because they
usually invest in established companies to achieve long-term growth. Growth fund
provides low current income but the investor principal is more stable then it would be in
an aggressive growth fund. While the growth potential may be less over the short term,
many growth funds have superior long-term performance records.

These funds are suitable for growth oriented investors but not investors who are unable to
assume risk or who are dependent on maximizing current income from there investments.

GROWTH AND INCOME FUNDS:-


Growth and income funds seek long-term growth of capital as well as current income.
The investments strategies use to reach these goals vary among funds.

Growth and income funds have low to moderate stability of principal and moderate
potential for current income and growth. They are suitable for investors who can assume
some risk to achieve growth of capital but want to maintain a moderate level of current
income.

FIXED INCOME FUNDS:-


The goal of fixed income fund is to provide high current income consistent with the level
of capital. Growth of capital is of secondary importance.

Fixed income funds offer a higher level of current income than money market funds, but
a lower stability of principal. Fixed income funds are suitable for investors who want to
maximize current income and who can assume a degree of capital risk in order to do so.

EQUITY FUNDS:-

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Funds that invest in stocks represent the largest category of mutual fund. Generally the
investment objective of this class of fund is long-term capital growth with some income.
There are however many type of equity funds.

BALANCED FUNDS:-

The Balanced funds aims to provide both growth and income. These funds invest in both
shares and fixed income securities in the proportion indicated in their offer documents. It
is an idea for investors who are looking for the combinations of income and moderate
growth.

MONEY MARKET FUNDS/ LIQUID FUNDS:-

For the cautious investors these funds provide a very high stability of principal while
seeking a moderate to high current income. They invest in highly liquid; virtually risk
free, short-term debt securities of agencies of the Indian government, banks and
corporation and treasury bills. Because of their short-term investments, money market
mutual funds are able to keep a virtually constant unit price; only the yield fluctuates.
Money market funds are suitable for those investors who want high stability of principal
and current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS:-

These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The funds enable investor to
diversify holding among many companies within an industry, a more conservative
approach than investing directly in one particular company.
Sector funds offer a opportunity for sharp capital gains in cases where the fund’s industry
is “in favor” but also entail the risk of capital losses when the industry is out of favor.

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While sectors funds restrict holdings to a particular industry, other specialty funds such
as index funds gives investors a broadly diversified portfolio and attempt to mirror the
performance of various market averages.

1.5 Advantages of Mutual funds

• Diversified portfolio of investments: As the investments are made in various


stocks of different companies, Professional Management: Fund Managers and
his/her team of highly qualified professional looks at all perspectives before
committing to an investment decision. This sort of specialist knowledge is
available to the small retail investor through the MF route.

• Market Linked Return: Many schemes offered by mutual funds help investors
to gain return better than the market.

• Diversification of Risk: Diversification reduces the risk of exposure to one or


two shares or debentures or other instruments.

• Reduction in Transaction Cost: A direct investors bears all costs of investing


such as brokerage or custody of securities. Investing via Mutual Fund help
investors to reduce the cost as larger volumes are involved
.
• Liquidity: An MF investor can invest and disinvest at will, irrespective of market
conditions. In case of shares or bonds it’s very difficult to sell them unless and
until a buyer is there. Mutual Funds give the option of liquidity. The units of an
open ended scheme can be redeemed at any working day.

• Convenience and Flexibility: Various options of Systematic Investment Plan,


Systematic Withdrawal Plan and Systematic Transfer Plan are designed for the
convenience of the investors.

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1.6 Disadvantages of Mutual Fund
No Control over Costs: A Mutual Fund Investor has to pay management fees, fund
distribution cost to the Mutual Fund. This cost is not incurred in direct investing. But
this cost is less than the cost of direct investing by the investors.
• No Tailor-made Portfolios: Investors investing in Mutual Fund gives the rights
to Fund Manager to build the portfolio of shares, bonds and other securities.
W h i l e i n v e s t i n g d i r e c t l y, i n v e s t o r s c a n b u i l d t h e r e o w n p o r t f o l i o
However, today Mutual Funds are offering families of schemes. Investors
can choose from different investment plans c construct a portfolio of his choice.
• Managing a Portfolio of Funds: Due to presence of large number of funds
availability in the market, investor needs some advice to select a fund to achieve
his objective.

1.7 MUTUAL FUND INDUSTRY IN INDIA

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Mutual Funds in India

UTI Private sector Public

JV’s with foreign Foreign Houses Indian Houses


Partners

Birla Sun Capital Templeton TATA


Prudential ICICI Alliance JM Reliance
Alliance Capital Morgan Stanley
Kothari Pioneer

Banks Institutions
SBI GIC
CANARA LIC etc.
PNB
BOI etc.

1.8 Growth of the Mutual Fund Industry in India

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• 1963: Unit Trust of India was established by an Act of Parliament.
• 1964: First scheme launched by UTI - Unit Scheme 1964(US 64).
• 1978: UTI de-linked from the RBI and IDBI took over.
• 1987: SBI Mutual Fund was the first Public Sector Fund (November)
Canbank Mutual Fund (December)
UTI had Rs.6, 700 crores of AUM
• 1989: Punjab National Bank Mutual Fund ( Augest )
Indian Bank Mutual Fund (November)
LIC Mutual Fund
• 1990: Bank of India (June)
GIC Mutual Fund
• 1992: Bank of Baroda Mutual Fund (October).
• 1993: Total Rs.47, 004 as AUM.
Kothari Pioneer- First Private Sector Mutual Fund (July)
SEBI (Mutual Fund) Regulations
• 1996: Revised SEBI (Mutual Fund) Regulations
• 2003: Mutual Funds
Total assets: Rs.1, 21, 805 crores.
The Unit Trust of India: Rs.44, 541 crores of AUM
UTI bifurcated into two separate entities
The Specified Undertaking of UTI: Rs.29, 835 crores of AUM
The UTI Mutual Fund Ltd

• 2004: Mutual Funds


Total Asset: Rs.153108 crores
Schemes: 421.
• 2005: Indian mutual fund industry has Rs. 199200 crores

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s

1.9 HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM RETURNS:-

Technically open-ended funds you can withdraw your investments even within a week,
but to get desired returns positive time frame is required are:

Funds Time Period


Equity Funds 3 Years (plus)
Balanced Funds 18 months to 3 Years
MIP’s 1 Year (plus)
Income Funds 6 months to 1 Year
Liquid Funds few days to 6 months

1.10 WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY FOR


SUGGESTED TIME FRAMES:-
Funds Returns

Sector funds 22% to 25% p.a


Balance funds 15% to 18% p.a
MIP’s Pension Plans 12% to 15% p.a
Income Funds 10% to 12% p.a
Liquid Funds 7% to 9% p.a

The above-mentioned returns in the table are indicative and not assured. All investments
in MUTUAL FUNDS are securities and are subject to market risk and the NAVs of the
schemes may go up and down depending upon the factors and forces affecting the
security market including the fluctuations in the internal rates .The past performance of
the MUTUAL FUNDS is not indicative of future performance.

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1.11 THE RISK RETURN GRAPHS FOR VARIOUS FUNDS:-

Sector Funds

R
E Equity Funds
T
U Balanced Funds
R
N Income Funds
S
Liquid Funds

RISKS

The above Graph shows the Risk and Returns generated by different Funds. Liquid Funds
are less Risky and also generate less Returns where as Sector Funds are more Risky but
generate more Returns by the example of above two Funds it is clear that Risk and
Returns are directly proportional to each other. Other Funds like Equity Funds, Balanced
Funds and Income Funds are also gives the same percentage of Returns as the Risk
involved.

1.12 ASSOCIATION OF MUTUAL FUNDS IN INDIA:-


With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual

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Funds in India (AMFI) was incorporated on 22nd August 1995.
AMFI is an apex body of all Asset Management Companies (AMC), which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes
are its members. It functions under the supervision and guidelines of its Board of
Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to
a professional and healthy market with ethical lines enhancing and maintaining standards.
It follows the principle of both protecting and promoting the interests of mutual funds as
well as their unit holder

1.13 The objectives of Association of Mutual Funds in India:-


The Association of Mutual Funds of India works with 30 registered AMCs of the country.
It has certain defined objectives, which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:

 This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.

 It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the
activities of mutual Fund and asset management. The agencies that are by any
means connected or involved In the field of capital markets and financial services
also involved in this code of conduct Of the association.

 AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund Industry.

 Association of Mutual Fund in India do represent the Government of India, the


Reserve Bank of India and other related bodies on matters relating to the Mutual
Fund Industry.

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 It develops a team of well qualified and trained Agent distributors. It
implements a programme of training and certification for all intermediaries and
other engaged in the mutual fund industry.

 AMFI undertakes all India awareness programmed for investor’s in order to


promote Proper understanding of the concepts and working of mutual funds.

 At last but not the least association of mutual fund of India also disseminate
Information’s on Mutual Fund Industry and undertakes studies and research either
directly or in association with other bodies.

1.14 FUTURE OF MUTUAL FUND IN INDIA:-

By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is


estimated that by 2010 March-end, the total assets of all scheduled commercial banks
should be Rs 40,90,000 crore.

The annual composite rate of growth is expected 13.4% during the rest of the decade. In
the last 5 years we have seen annual growth rate of 9%. According to the current growth
rate, by year 2010 the asset will be double.

Some facts for the growth of mutual funds in India:-

 100% growth in the last 6 years.

 Number of foreign AMC's are in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under management
worldwide.

 Our saving rate is over 23%, highest in the world. Only channelizing these
savings in mutual funds sector is required.

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 We have approximately 29 mutual funds which is much less than US having
more than 800. There is a big scope for expansion.

 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing
cities.

 Mutual fund can penetrate rural like the Indian insurance industry with simple and
Limited products.

 SEBI allowing the MF's to launch commodity mutual funds.

 Emphasis on better corporate governance.

 Trying to curb the late trading practices.

 Introduction of Financial Planners who can provide need based advice.

1.15 REGULATORY ASPECT :-

Schemes of mutual funds:-

 The Asset management company shall launch no schemes unless the trustees
approve such scheme and a copy of the offer has been filed with the Board.

 Every mutual fund shall along with the offer documents of each scheme pay filing
fees.

 The offer document shall contain disclosures which are adequate in order to
enable the investors to make informed investment decision including the
disclosure non maximum investments proposed to be made by the scheme in the
listed securities of the group companies of the sponsor. A close-ended scheme

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shall be fully redeemed at the end of the maturity period. “Unless a majority of
the unit holders otherwise decide for its rollover by passing a resolution”.

 The mutual fund and asset management company shall be liable to refund the
application money to the applicants:-

 If the mutual fund fails to receive the minimum subscription amount referred to in
clause (i) of sub- regulation.
 If the moneys received from the applicants for units are in excess of subscription
as referred to in clause (ii) of sub-regulation.

o The asset management company shall issue to the applicant whose


 application has been accepted, unit certificates or a statement of accounts
 specifying the number of units allotted to the applicant as soon as possible
 but not later than six weeks from the date of closure of the initial
 subscription list and or from the date of receipt of the request from the unit
 Holders in any open ended scheme.
Rules Regarding Advertisement:-

 The offer document and advertisement materials shall not be misleading or


contain any statement or opinion, which are incorrect or false.

Investment objectives and valuation policies:-

 The price at which the units may be subscribed or sold the price at which such
unit may at any time be repurchased by the mutual fund shall be made available to
the investors.

General Obligation:-

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• Every asset management company for each scheme shall keep and maintain
proper book of accounts, records and document, for each scheme so as to explain
its transaction and to disclose at any point of time the financial position of each
scheme and in particular give a true and fair
• view of the state of affairs of the fund and intimate to the board the place where
such books of accounts, records and documents are maintained.

• The financial year for all the scheme shall end as of March 31 of each year. Every
mutual fund or the asset management company shall prepare in respect of each
financial year an annual report and annual statement of accounts of the schemes
and the fund as specified in Eleventh Schedule.

• Every mutual fund shall have the annual statement of accounts audited by an
auditor who is not in any way associated with the auditor of the asset management
comp

Procedure for Action In Case Of Default:-

 On and from the date of the suspension of the certificate or the approval, as the
case may be, the mutual fund, trustees or asset management company, during the
period of suspension and shall be subject to the direction of the Board with regard
to any records, documents, or securities that may be in its custody or control
relating to its activities as mutual funds, trustees or the asset management
company.

Restrictions on Investments:
 A mutual fund scheme shall not invest more than 15% of its NAV in debt
instrument issued by a single issuer, which are rated not below investment grade
by a credit rating agency authorize to carry out such activity under the act. Such
investment limit may be extended to 20% of the NAV of the

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 scheme with the prior approval of the Board of Trustees and the Board of Asset
Management Company.

 A mutual fund Scheme shall not invest more than 10% of its NAV in unrated debt
instrument issued by a single issuer and the total investment in such instruments
shall not exceed 25% of the NAV of the Board of Trustees and the Board of Asset
management.

 No mutual funds under all its schemes should own more than 10% of any
company’s paid up capital carrying voting rights.

 Such transfers are done at the prevailing market price for quoted instrument on
spot basis.

 The securities so transferred shall be in conformity with the investment objectives


of the scheme to which such transfer has been made.

 A scheme may invest in another scheme under the same asset management
company or any other mutual fund without charging any fees, provided that
aggregated intercourse inter scheme investment made by all schemes under the
same management or in schemes under the management of any other asset
management company shall not exceed 5% of the net asset value of the mutual
fund.
The initial issue expenses in respect of any scheme may not exceed 6% of the funds
raised under that scheme.

 Every mutual fund shall buy and sell securities on the basis of deliveries and shall
in all cases of purchases, take delivery of relative securities and in all cases of
sale, deliver the securities and shall in no case put itself in a position whereby it
has to make short sale or carry forward transaction or engage in Badla finance.

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 Every mutual fund shall get the securities purchased or transferred in the name
of the mutual fund on account of the concerned scheme, wherever investments are
intended to be of long-term nature.

 Pending deployment of funds of a scheme a mutual fund can invest the funds of
the scheme in short term deposits of scheduled commercial banks.

 No mutual fund scheme shall make any investment in ;


o Any unlisted security of an associate or group company of the sponsor or

o Any security issued by way of private placement by an associate or group


company of the sponsor.

The listed securities of group companies of the sponsor which is in excess of 30% of the
net assets (of all the schemes of a mutual fund)

 No mutual fund scheme shall invest more than 105 of its NAV in the equity shares
or equity related instrument of any company. Provided that, the limit of 10 percent
shall not be applicable for investments in index fund or sector or industry specific
schemes.

 A Mutual fund scheme shall not invest more than 5% of its NAV in the equity
shares or equity related investments in case of open-ended schemes and 10 % of
its NAV in case of close ended schemes.
1.16 STRUCTURE OF MUTUAL FUND IN INDIA:-

The Indian mutual fund industry is dominated by the Unit Trust of India which has a total
corpus of Rs.700bn collected from more than 20 million investors. The UTI has many
funds schemes in all categories i.e. equity , balanced , income etc with some being open
ended and some being close ended . The unit schemes 1964 commonly referred to as US

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64 , which is a Balanced fund is a biggest schemes with a corpus of about Rs. 200
billion UTI was floated by financial institution and is governed by a special act of
parliament . Most of its investors believe that UTI is government owned and controlled
which while legally incorrect, is true for all practical purposes.

The second largest category of mutual funds is the ones floated by Nationalize Banks.
Canbank Asset Management floated by Canera Bank and SBI Funds Management floated
by State Bank of India are the largest of it. GIC AMC floated by General Insurance
Corporation and Jeevan Bema Sahayog AMC floated by LIC are some of the other
prominent ones. The aggregate corpus of funds managed by this category of AMCs is
about 150bn.

The third largest category of mutual fund is the ones floated by the private sector and by
foreign Asset Management Company . The largest of these are Prudential ICICI AMC
and Birla Sunlife AMC. The aggregate corpus of asset managed by this category of
AMCs is in excess of Rs. 250bn.

Some of AMCs operating currently are:-

NAME OF AMC OWNERSHIP


Alliance capital asset management (I)Pvt. Ltd
Private foreign

Birla Sunlife Asset Management Company ltd. Private Indian


Bank of Baroda Asset management Company LTD
Bank
Bank of India Asset Management Company Ltd
Bank
Canbank Investment Management Services Ltd
Bank
Cholamandalam Cazenove Asset Management Company
Ltd. Private foreign

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Dundee Asset Management Company Ltd
Private foreign
DSP Merrill Lynch ASSET Management Company Ltd Private foreign
Escorts Asset management ltd
Private Indian
First India Asset Management Ltd
Private Indian
GIC Asset Management Company Ltd.
Institution
IDBI Investment Management Company Ltd
Institution
Indfund Management Ltd
Bank
ING Investment Asset Management Company Pvt. Ltd Private foreign
J M Capital Management limited
Private Indian
Jardine Fleming Asset Management ltd
Private foreign
Kotak Mahindra Asset Management Company
Private Indian
Kothari Pioneer Asset Management Company
Private Indian
Morgan Stanley Asset Management Company Pvt Ltd Private foreign
Punjab National Bank Asset Management Company Ltd Bank
Reliance Mutual FundCompany Private Indian
State Bank of India Funds Management ltd.
Bank
Shriram Asset Management Company Ltd.
Private Indian
Sun F and C Asset Management Company Ltd.
Private foreign

Sundaram Newton Asset Management Company ltd Private foreign


Tara Asset Management Company Ltd.
Private Indian

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Credit Capital Asset Management Company Ltd
Private Indian
Templeton Asset Management Company Ltd
Private foreign
Unit Trust Of India
Institution

2. COMPANY PROFILE:-

COMPANY OVERVIEW:
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average
Assets Under Management (AAUM) of Rs. 1,08,332 CRORES and an investor base of
over 70.87 Lacs. (AAUM and investor count as on June 30, 2009)

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 118 cities
across the country. Reliance Mutual Fund constantly endeavors to launch innovative
products and customer service initiatives to increase value to investors. "Reliance Mutual
Fund schemes are managed by Reliance Mutual FundLimited., 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, and
other financial services.

VISION OF THE COMPANY:

29
To be a globally respected wealth creator with an emphasis on customer care and a
culture of good corporate governance.

MISSION OF THE COMPANY

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


our customers.

HISTORY

Reliance Mutual FundLimited (RCAM), a company registered under the Companies Act,
1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.

Reliance Mutual FundLimited (RCAM) was approved as the Asset Management


Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June
30, 1995. The Mutual Fund has entered into an Investment Management Agreement
(IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line
with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized
to act as Investment Manager of Reliance Mutual Fund. The networth of the Asset
Management Company including preference shares as on September 30, 2007 is
Rs.152.02 crores. Reliance Mutual Fund has launched thirty-five Schemes till date,
namely :

"Reliance Mutual Fund schemes are managed by Reliance Mutual FundLimited., 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 Mutual FundLimited (RCAM) was approved as the Asset Management


Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June
30, 1995. The Mutual Fund has entered into an Investment Management Agreement
(IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line

30
with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is
authorised to act as Investment Manager of Reliance Mutual Fund. The networth of the
Asset Management Company as on March 31, 2008 is Rs 709.39 crores.

YEAR WISE MILESTONES OF RELIANCE MUTUAL FUND


Reliance Growth Fund (September 1995)
Reliance Income Fund (December 1997)
Reliance Medium Term Fund (August 2000)
Reliance Diversified Power Sector Fund (March 2004)
Reliance Index Fund (February 2005)
Reliance Tax Saver (ELSS) Fund (July 2005)
Reliance Equity Linked Saving Fund - Series I (December 2007)
Reliance Infrastructure Fund (May 2009)

RELIANCE MUTUAL FUND COMPETITIVE ADVANTAGES


Reliance Mutual Fund – At a Glance

• Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets
Under Management (AUM) of Rs. 1,08,332 crore (AUM as on 30th June 2009)
and an investor base of over 70.87 Lacs.
• Investor base of over 3.38 million as on March 31, 2007
• Rapid growth in Assets Under Management (AUM), 87.7% growth in AUM year
on year. AUM of over Rs.46,306 crore ($10.62 billion) as on March 30, 2007
from Rs. 24,669 crore ($5.53 billion) as on March 31, 2006.
• Accelerated growth in investor base – 66.89% growth in investor base year on
year. Over 3.38 million investors as on March 31, 2007 from over 2.02 million
investors as on March 31, 2006.
• Reliance Mutual Fund has over 10 years of extensive market experience, over 26
schemes combined with a strong performance track record.

31
• Reliance Equity Fund NFO (6th Feb -7th March 2006), the largest ever
collection of Rs.5,759 crore ($1.29 billion) in the history of the Indian Mutual
Fund industry.
• Footprint in over 100 cities in India
• Wide network of 130 collection points
• Wide portfolio of 26 well-rounded products to meet varying investor
requirements.
• Reliance Mutual Fund is amongst the few mutual funds in the industry to offer
Subscription, Redemption and Switch through Online Transactions.
• Lipper Fund Award India 2007 :
o Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the
best fund over 3 years in the Bond INR Government category, out of 52
eligible schemes.
o Reliance Growth Fund-Growth Plan was declared the best fund over 5
years in the Equity India category, out of 81 eligible schemes.
• Lipper Fund Award Gulf 2007 :
o Reliance Banking Fund-Growth Plan-Growth Option was declared the
best fund over 3 years in Equity Sector Banks and Other Financials
o Reliance Growth Fund-Growth Plan was declared the best fund over 3
years in the Equity India category
o Reliance Growth Fund-Growth Plan was declared the best fund over 5
years in the Equity India category
o Reliance Income Fund-Growth Plan-Growth Option was declared the best
fund over 5 years in Bond Indian Rupee – General category
o Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the
best fund over 3 years in the Bond INR Government category
o Reliance Short Term Fund-Growth Plan was declared the best fund over 3
years in Bond Indian Rupee
o
• CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006 :

32
o Reliance Gilt Securities Fund - Long Term Plan was awarded CNBC
TV18 - CRISIL Mutual Fund of the Year Awards 2006, in the Open End
Long Term Gilt Category
o Reliance Short Term Fund was awarded CNBC TV18 - CRISIL Mutual
Fund of the Year Awards 2006, in the Open End Debt Short Term
Category

• ICRA Mutual Funds Awards 2007 :


o Reliance Short Term Fund has been ranked ICRA MFR 1 by ICRA Mutual
Funds Awards 2007 in the category Open Ended Debt – Short Term for its
1 year performance till December 31, 2006. The rank indicates
performance within the top 10% of the stated category.
o Reliance Gilt Securities Fund - Long Term Retail Plan has been ranked
ICRA MFR 1 by ICRA Mutual Funds Awards 2007 in the category Open
Ended Gilt - Long Term for its 3 year performance till December 31, 2006.
The rank indicates performance within the top 10% of the stated category.
o Reliance Liquidity Fund has been ranked ICRA MFR 1 by ICRA Mutual
Funds Awards 2007 in the category Open Ended Liquid Scheme for its 1
year performance till December 31, 2006. The rank indicates performance
within the top 10% of the stated category.
• The first mutual fund in India to offer instant cash withdrawal facility on
investments. Reliance Mutual Fund offers the Reliance Any Time Money (ATM)
Card with select schemes. The card is a boon for retail investors as it enables them
to withdraw their investment any time, anywhere at over 1 million VISA-enabled
ATMs across the world.
• Reliance Mutual Fund is amongst the few mutual funds with a 24X7 Call Centre
facility

OBJECTS OF THE COMPANY

33
The main objects as contained in our Memorandum of Association are:
1. To engage or undertake software and internet based services, data processing, IT
enabled services, software development services, selling advertisement space on the site,
web consulting and related services including web designing and web maintenance,
software product development and marketing, software supply services, computer
consultancy services, e-commerce of all types including electronic financial
intermediation business and e-broking, market research, business and management
consultancy.
2. To undertake, conduct, study, carry on, help, promote any kind of research, probe,
investigation, survey, developmental work on economy, industries. corporates, business
houses, agricultural and mineral, financial institutions, foreign financial institutions,
capital market on matters related to investment decisions primary equity market,
secondary equity market, debentures, bond, ventures, capital funding proposals,
competitive analysis, preparation of corporate/industry profile etc. and trade/invest in
researched securities.

BUSINESS MODEL
Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,
1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital
Trustee Co. Limited (RCTCL), as the Trustee.
RMF has been registered with the Securities & Exchange Board of India (SEBI) vide
registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital
Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide
SEBI's letter no. IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was
formed to launch various schemes under which units are issued to the Public with a view
to contribute to the capital market and to provide investors the opportunities to make
investments in diversified securities.

The main objectives of the Trust are :

34
• 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.

COMPETITORS
• ABN AMRO Mutual Fund ,
• Birla Sun Life Mutual Fund
• BOB Mutual Fund
• Chola Mutual Fund
• Deutsche Mutual Fund
• DSP Merrill Lynch Mutual Fund
• Fidelity Mutual Fund
• Franklin Templeton Mutual Fund
• HDFC Mutual Fund
• HSBC Mutual Fund
• ING Vysya Mutual Fund
• J M Financial Mutual Fund
• Kotak Mahindra Mutual Fund
• LIC Mutual Fund
• Morgan Stanley Mutual Fund
• Principal Mutual Fund
• Prudential ICICI Mutual Fund
• Sahara Mutual Fund

35
• SBI Mutual Fund
• Standard Chartered Mutual Fund
• Sundaram Mutual Fund
• Tata Mutual Fund
• Taurus Mutual Fund
• UTI Mutual Fund

SWOT ANALYSIS
STRENGTHS
• Original research
• Integrated technology platform
• Performance of previously introduced funds
• Pan – India distribution
WEAKNESS
• After Sales Services
• Limited number of outlet
OPPORTUNITIES
• Changing demographic with higher disposable income and increasing complex
financial instruments will drive the demand for investment advisory services
• Rapid penetration of internet and computer needs that technology enabled
services will gain market share
THREATS
• Economic slowdown
• Stock market fall will have a cascading effect on mutual fund mobilization
• Increase or decrease in interest rates can effect debt or income mobilizations
• Future changes in personal taxation rules can impact insurance sales
• Increasing competition from large and particularly foreign players

36
3. PROBLEM STATEMENT AND OBJECTIVE OF THE
STUDY:-

3.1 PROBLEM STATEMENT:-

Due to the falling Rate of Interest on Bank deposits, it is obvious that Investment in
Mutual Fund will grow in year to come. However lack of Awareness of Mutual Fund
is a hindering factor in expected growth of Mutual Fund Business. Under noted
problems are envisaged in this area:

• Difficult in convincing people for investment.

• Difficult to change mind of the investor according to age and


Profession.

• Difficult to make an approach to investors.

• Difficult to take an appointment with professional people.

• Difficult to get the documents required for formalities from investors


.
• Difficult to overcome an impassionate person who wants return in less time.

• Difficult to follow up the people whose names are being stored in a data.

• Difficult to remove the fear of risk from the minds of investors.

37
3.2 OBJECTIVE OF STUDY:-

In view of the problem cited above, the study aims at analyzing the following major
issues:
s
• To know the awareness of MUTUAL FUND among people.

• To know the different Asset management companies involve in MUTUAL FUND.

• To know the different aspects of MUTUAL FUND according to different age,


profession etc.

• To see the interest of people in investing in MUTUAL FUNDS.

• To know the future of MUTUAL FUNDS in India.

• To know the different attitudes of people regarding risk, rate of return, period of
investment etc.

• To study the diversification of mutual fund.

4. RESERCH METHODOLOGY:

4.1 METHODOLOGY OF STUDY:-

38
Research can be defined as systemized effort to gain new knowledge. A research is
carried out by different methodologies which have their own pros and cons. Research
methodology is a way to solve research in studying and solving research problem along
with logic behind them are defined through research methodology. Thus while talking
about research methodology we are not only talking of research methods but also
considered the logic behind the methods. We are in context of our research studies and
explain why it is being used a particular method or technique and why the others are not
used. So that research result is capable of being evaluated either by researcher himself or
by others

4.2 Research Methodology:-

Research has its special significance in solving various operational and planning problem
of business and industry. Research methodology is the way to systematically solve the
research problem.

4.3 ASSUMPTIONS:-

1. It has been assumed that sample of 100 respondents represents the whole
population.
2. The information given by the customer is unbiased

4.4 Literature Survey:-

The project is based on pure findings of facts.

Development of Working Hypothesis:-The Hypothesis could be developed by discussing


with the concerning department heads and guides about this exploratory research and
reached to the conclusion that the data is to be collected by personal interaction with the
customers, asking them about the services and the improvement required. First of all they

39
are aware of mutual funds or not and then analyzing the findings to reach to the
objectives of research.
Collection of Data:-There was secondary data available for the study and also primary
data collected by carrying out by the survey which has been carried out to through
personal interviews of the customers. The sample size was roughly 100.

Sampling methods: - A sample is the representative of the population which will


predict the behavior of the whole universe.
a. The sampling size put under two categories: Probability sampling and non
probability sampling.

4.5 Probability sampling:-


This is the process of selecting the elements or group of elements from as well defined
population by such procedure which gives every element in the population an equal
chance of being selected for observation. The sampling method use for this survey is the
area sampling which is a sub type of probability sampling.

4.6 Sampling size:-


Large sample gives reliable result than small sample. However, it is not feasible to target
entire population or even a substantial portion to achieve a reliable result. So, in this
aspect selecting the sample to study is known as sample size. Hence, for my project my
sample size was 100.

The Sample Size of 100 is not enough to draw a conclusion but as per the time assigned it
was difficult to take a sample size more than 100.

The Sample Size consist of both the Professional and Business class people. IT peoples,
Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample .

4.7 Execution of the project:-

40
It is the very important step in the research process accuracy findings depends on how
systematically the study has been carried out in time so that it can make some sense when
required. I have executed the project after prior discussion with the guide and structured
in following steps:

a. Preparation of questionnaire.

b. Collection of list of some of the clients interview of the customer so that more
interaction is impossible and the variety of responses can be registered to have
a good data for analysis.

c. Visiting the corporate and asking about their feedback on the mutual funds
services they are availing. Try to find out their satisfaction level with the
existing mutual fund.

5. LIMITATIONS:

5.1 Limitations:-

Every work has its own limitation. Limitations are extent to which the process should not
exceed. Limitations of this project are:-

1. Duration of Project was not enough to make a conclusion on such a vast subject
time Constraint has become a big limitation.

2. The Sample Size being taken for drawing a conclusion was too small to get an
accurate result.

3. Changing the Mentality of people for investing in a particular Financial Product is


a very difficult task.

41
All the above mentioned statements are the limitations of the project ,Time, Sample
Size & Mentality of investor are the main limitations of the project. The study is
being done by taking and keeping all the limitations in mind. The project is completed
in prescribed time. To find the Awareness of Mutual Fund the Sample Size is not at all
enough because the population size is much bigger than the sample size and the last
limitation was to change the mentality of the investor to invest in a particular type of
the Investment Product. As the Indian Market have a large number of potential
customer to draw a conclusion in such a small size may not be reliable.

6. ANALYSIS OF MUTUAL FUNDS:-

6.1 ANALYSIS OF MUTUAL FUNDS ON THE BASIS OF SCHEMES:-

The schemes have been divided into 10 different categories for the purpose of meaningful
comparison. The categories are as follows:

1. Equity diversified Funds.

2. Equity ELSS Funds.

3. Equity sectoral Funds.

4. Balanced Funds.

5. Income Funds.

6. Liquid Funds.

42
7 .Gilt Funds.

8. MIPS (Monthly income plans)

9. Index Funds.

10. Hybrid Funds.

There are many asset management companies being involved in mutual fund but people
invest thing reputated mutual fund like ICICI PRUDENTIAL, FRANKLIN
TEMPLETON, HSBC, KOTAK, HDFC, RELIANCE etc. All the companies have
different mutual fund schemes vary from different needs of a customer. Like in the month
of June the NFO of Reliance Infrastructure Fund has been issued with different concept
and also being accepted by the investors.

6.2 COMPARISAN BETWEEN BANKS AND MUTUAL FUNDS IN DIFFERENT


ASPECTS:-
MUTUAL
BANKS FUNDS
Returns Low Better
Administrative
exp. High Low
Risk Low Moderate
Investment
option Less More
Network High Penetration Low but improving
Liquidity At a cost Better
Quality of asset Not Transparent Transparent
Interest Min. Balance between 10th and
calculation 31st of month. Everyday
Guarantee Max. Rs. 1Lakh on Deposit None

43
In the above table the Comparison is made between Banks and Mutual Fund with
different aspects. Now a day due to low Rate of interest people prefer to invest in those
products which give more Returns in less time without Risk. Now a days also nearly 40%
of people keep there money in Banks because they are less Risky (reference with chart
8.2). The Returns expected in Mutual Funds are high where as in bank it is low but the
Guarantee of money back is more than Mutual fund. Thus both Bank and Mutual Fund
are good enough in themselves. It is depend on the Investor what type of investment they
want to do.

7. DATA COLLECTION:

DATA COLLECTION:
Proceeding further after determines the Methodology and limitation of the study the next
step is to analyze the Data being collected for the study. Data is being collected from
various sources like:-
 Questionnaire
 Personal visit
 Telephonic Information etc.
7.1 QUESTIONAIRE:-
Questionnaire is a written form being given to the prospective investor to give
feedback about the services provided to them and also to find the satisfaction
level of the investor for a particular investment product .Questionnaire is an easy
and simple way of collecting a data .After filling up of form the next step is to
evaluate the form in different dimensions and draw a conclusion.
It is difficult to get a Questionnaire filled by corporate because of time they don’t
have time to fill the Questionnaire so at the time of meeting them personally or
after that the Questionnaire is filled by us.

44
The Sample size taken for this study is 100 which is not enough to draw a
conclusion but due to time limitation only this much size has been taken into
consideration. After analyzing the Questionnaire the following evaluation has
been done:-

CATEGORY OF TOTAL RISK RETURN


INVESTORS INCOME

IT PEOPLE HIGH LOW HIGH


DOCTORS HIGH LOW HIGH
TIMBER MERCHANTS HIGH HIGH HIGH
JEWELLERS HIGH HIGH HIGH
REAL ESTATE AGENTS HIGH HIGH HIGH

After analyzing the above table the conclusion was made that the business people are
more Risk taker while professional people are less Risk taker where the return
expected in both the case are high.

7.2 PERSONAL VISIT:-


The second way of collecting data is Personal Visits to the corporate personally by
fixing an appointment. Personal Visit gives a clear picture of the conclusion drawn in
Questionnaire It gives a clear view of the client Awareness about the product .Some
of the difficulties in making Personal Visits are:-
 To take a time or appointment from the corporate.
 To convenes investor to invest in a particular product.

Personal Visit gives a clear picture about the Investment areas of both the categories
they are:-

45
PROFESSIONAL PEOPLE BUSINESS PEOPLE
PPF LAND
KISAN VIKAS PATR GOLD
BANK ACCOUNT STOCKS
INSURANCE INSURANCE
FURTHER STUDIES etc. VEHICLES etc.

From the above table it is clear that the Professional people invest in the Value Added
items where as Business people they invest in Future Prospect assets like land, gold
etc.

7.3 TELEPHONIC INFORMATION:-


The further source of collecting data is telephonic information with the existing
coustomer and the prospective investors. It is very difficult to reveal the data of
investors from the company itself because it has been kept as a secret document. After
getting a data some problems too come in the way. Some are:-
 People are not ready to listen.
 People ask question like from where did you get the number?
 From this source not much of the Information is drawn.

 Few respondents where not happy with the level of customer services
rendered by RELIANCE MUTUAL FUND LTD. Particularly about the delays
in replying or not replying the queries raised by them.

8. INTERPRETATION AND ANALYSIS OF DATA:-

CHART:- 8.1
From the data collected through the questioner, observation made during the personal
visits the data revealed following information :-

46
PERCENTAGE OF PEOPLE WHO INVEST
 100% people invest in various instruments

PERCENTAGE OF INVESTMENT TO TOTAL INCOME


The following table and pie chart throw the light on the percentage of saving out of
income.

NO. of
INCOME PEOPLE PERCENTAGE
Over 50% 1 1%
30%-50% 5 5%
10%-30% 56 56%
10% & below 38 38%

Percentage in Income People Invest

1% 5%

38%

56%

Over 50% 30-50% 10-30% Below 10%

47
In the above chat it has been observed that people invest mostly between 10% to 30%
of their income as the moderate level of income is in the range of rupees 30,000 to
40,000. There are very few people who invest above 50% of their Income as their
income level is too high say above Rs. 10,000,00. Investors are having different
responsibilities toward the society and family due to which they are not able to invest
more money in Financial product .There are many people who invest only 10% of there
income according to total Sample Size.

CHART:-8.2

INVESTMENT IN FINANCIAL PRODUCTS

FINANCIAL INSTRUMENTS % OF INVESTMENT


BANK 40%
INSURANCE 10%
STOCK MARKET 15%
BONDS & DEBENTURE 3%
PPF 7%
NSC 5%
POST OFFICE SAVING SCHEMES 8%
REALESTATE 2%
GOLD 5%
CHIT FUND 5%

These are many Financial Instrument in Indian Market. People in early days kept their
money in Bank. They think Bank is the only place where the money is safe till today also
40% of people feel the same but many of them have started investing in other Financial
Products like Insurance, Stock Markets etc. The Post Office savings are less preferred by
the Investors due to the less Returns in more Time. Businessmen mostly invest in tangible
assets like land, building, gold etc.

48
BANK

INSURANCE

5%
STOCK
5% MARKET
2%
BONDS &
8% DEBENTURE
40%
5%
PPF
7%
3%
NSC
15% 10%

POST OFFICE
SAVING
SCHEMES
REALESTATE

GOLD

In this chart it is clear that people mainly invest and keep their money in banks
CHIT FUND
.Stock market came into existence only from early 90s that’s why the percentage
investment in stocks is low as compared to banks. People generally invest in risk
free financial product like PPF, NSC etc. as they get tax exemption. Investment in
Insurance is also preferred by people because it is not a risky instrument.

49
CHART:-8.3

AWARENESS OF MUTUAL FUND OUT OF 100 PEOPLE:-

Awareness of M utual Funds

7%

Yes
No

93%

In chart 7.3 the awareness of mutual fund is determined in the percentage terms only
7% of the total population are not aware of MUTUAL FUNDS. As Mutual Funds of
India are growing rapidly the awareness of Mutual Funds is increasing among the
Investors although & every Investor knows about Mutual Funds by its nomenclature.
They are not really aware of the concept.

50
CHART :- 8.4
PERCEPTION ABOUT MUTUAL FUND

Safe 10%
Risky 28%
Other 62%

Perception of Investors

10%

Safe
28% Risky
Others
62%

From the above pie chart it is clear that people perceive mutual fund as an risky product
whereas 62% of investors believe that mutual fund gives high returns.
Only 10 % of people feel that it is safe. Out of 100 sample size it is very difficult to
determine the exact perception of investors. Due to continuous increase in mutual fund
industries the perception of people are changing slowly.

51
CHART :-8.5

COMPARITIVE STUDY OF RISK , INVESTMENT AND RETURN.

AGE GROUP RISK RETURN INVESTMENT


25-35 60% 35% 45%
35-45 25% 15% 15%
45-60 10% 20% 10%
60& ABOVE 5% 30% 30%

Risk Return and Investment Chart


according to different age group

60%

50%

40%
30% RISK
RETURN
20%
INVESTMENT
10%
0%
25-35 45-60

In chart 7.5 above it is determined that people of the age group 25-30 yrs are more
risk takers as compared to other age groups. However they are able to invest less
because they do not have any responsibility toward the society

and family. They also invest less because they don’t get proper guidance. As the age
increases the saving percentage decrease but the people above 55 are keener to invest
because they become free from all the responsibilities of the family and society. At
this stage they need continuous flow of income.

52
Middle age people of the age group of 35-45 yrs. are not investing much because
they are bound to many responsibilities towards family and society.

CHART:- 8.6
IDENTIFICATION OF MUTUAL FUND COMPANIES
ASPECTS PERCENTAGE
Brand Name 39
Good Services 24
High Yield 15
Advertisement 10
Any other reason 12

40
35
30
25
Percentage 20
Series1
15
Series2
10
5
0
Brand Name Good High Yeild Advertisement Any other
Services reason
Aspects

From the above chart it is clear that Brand Name plays an important role for attracting
investors. Secondly, good services are also expected by an investor from the companies.
In other reasons investors generally pointed out the identification of the companies
known by their friends or relatives.
Advertisements and high yield are the secondary aspects of identifying the mutual fund
industries.

CHART :- 8.7

53
RISK TAKEN BY DIFFERENT AGE GROUP :-

AGE RISK TAKEN IN


GROUP PERCENTAGE
25-35 60
35-45 20
45-60 17
60 &
above 3

RISK TAKEN IN PERCENTAGE

3%
17%

25-35
35-45
45-60
20% 60% 60 & above

In chart 8.8 the risk taking ability are being depicted. The person of younger age
are willing to take more risk as compared to the elder age group people. The middle
age people do not take much risk because of much responsibility toward family and
society With reference to this chart only 17% of income of middle age people is
being invested in risk prone securities.

CHART :- 8.8

54
PERCENTAGE OF TOTAL INCOME INVESTED IN MUTUAL FUND:-

INVESTORS % OF TOTAL INCOME INVEST IN


CATEGORY MUTUAL FUNDS
IT SECTOR
PEOPLE 50%
DOCTORS 30%
TIMBER
MERCHANTS 7%
JEWELLERS 3%
REALESTATE
AGENTS 10%

PERCENTAGE OF TOTAL INCOME INVEST IN


MUTUAL FUND

10% IT SECTOR
3% PEOPLE
7% DOCTORS

TIMBER
50%
MERCHANTS
JEWELLERS
30%
REALESTATE
AGENTS

In the Pie chart above it is clear that professional people are more indented to invest in
comparison with business people who are high risk takers. Business people are more in
dined to invest in real estate, land etc. This is because business people want money in less
time as and when required while Professional people believe in continuous flow of
money.

55
CHART 8.9

AWARENESS OF RELIANCE MUTUAL FUND LTD OUT OF 100 PEOPLE

 55% says that they are aware of Reliance Mutual Fund Ltd
 45% says that they are not aware of Reliance Mutual Fund Ltd

yes
no

9. PROJECT FINDINGS AND RECOMMENDATIONS:-

9.1 PROJECT FINDINGS:-

 There is a great potential for investment in Mutual Fund as people wants to save
for various future obligation.

56
 Since Rate of Interest on Bank deposit is falling people will be attracted towards
investments in Mutual Funds because of high rate of returns
 Comparatively people of small towns are less aware of other investment avenues
viz Mutual Fund.
 People of young age group are ready to take risk and they can be targeted for
investment in Mutual Fund.
 Some of the people who were personally contacted showed reservation about
dealing with RELIANCE MUTUAL FUND LTD.

9.2 RECOMMENDATION:-

 Looking to the level of Awareness it is recommended that Mutual Fund promotion


companies may be undertaken in the following forms:-
( i ) Advertisement in Newspaper and Magazines.
(ii ) Hoardings etc.
 The prospective clients may be imparted training and education through :-
( i ) Seminar.
( ii ) Short Duration training programmes.
 Small towns may be targeted for business development as this area is untapped
relatively and there exist huge potential for business development
 People of young age group who are risk takers by nature may be targeted
separately.

BIBLIOGRAPHY:-

ANNEXURE

LIST OF BANKS VISITED FOR SELLING INFRASTRUCTURE FUND

57
NAME OF PERSON NAME PERSONS PHONE
BANK DESIGNATION NO
JANTA PRASHANT BANK 020
SEHKARI PATHANKAR OFFICER 25652409
DENA BANK OM PRAKASH MARKETING 9890531992
CHOUDHARY OFFICER
S.R VITTHAL CO PRADEEP MARKETING 020
OPERATIVE BANK
KURNALE OFFICER 25532460
CORPORATION MR RAHUL BANK STAFF 020
BANK 2543837
UNITED BANK P.VISHVANA CASHIER 9011687970
OF INDIA
DENA BANK S.Y DESHPANDE BANK STAFF 020
24331660
VAIBHAV MARKETING 9860377322
CENTRAL SONASWAMI MANAGER
BANK OF
INDIA
JANTA Mr.DESHPANDEY BANK 020
SEHKARI MANAGER 24471165
BANK
SARASWAT Mrs.JOSHI ASSISTANCE --
BANK MANAGER
BANK OF Mr.P MURALI MANAGER 9890603113
BARODA
BANK OF K.SUNDARA MANAGER 020
BARODA RAJAN 2355662

10. REFERENCES:-

1.www.njindiainvest.com

2.http://mutualfunds.about.com

58
3.www.shcil.com

4.MutualFunds-ICMR book of readings

5.Fact Sheet of various Mutual Funds.

6.ICMR Text Book

7.Dalal Street Journal’s Stock Market Book

ANNEXURE

11. QUESTIONAIRE:-

1. DO YOU INVEST?

YES

59
NO

2. WHAT PERCENTAGE OF INCOME DO YOU INVEST?

OVER 50%
30% TO 50%
10% TO 30%
Below 10%

3. WHAT ARE THE VARIOUS INVESTMENT SCHEMES IN WHICH YOU


INVEST?
Bank
Insurance
Stock Market
Bonds and Debenture
PPF (Public provident Funds)
NSC (National saving certificate)
Post office saving schemes
Real Estate
Gold
Chit Funds

4. WHAT ARE THE BREAK UP IN PERCENTAGE TERMS TO YOUR


INVESTMENT?

60
TYPE OF INVESTMENT PERCENTAGE
BANK
INSURANCE
STOCK MARKET
BONDS & DEBENTURE
PPF
NSC
POST OFFICE SAVING
SCHEMES
REAL ESTATE
GOLD
CHIT FUNDS

5. ARE YOU AWARE OF MUTUAL FUNDS?

Yes
No

6. WHAT IS YOUR PERCEPTION ABOUT MUTUAL FUNDS?

Safe
Risky
Others

7. WHAT ARE DIFFERENT TYPES OF MUTUAL FUNDS ARE YOU AWARE


OF?

61
Growth schemes.(provide appreciation of capital over medium to long
term)
Income schemes.(provide regular and continuous income to investor)
Balance schemes.(provide both growth and income)
Money market and Liquid Schemes.(provide easy liquidy preservation of
capital and moderate income).
Tax saving schemes.(offer tax rebates under tax laws)
Guilt funds(generating returns by investing in securities created and issued
by a central gov. or state gov.)

8. WHICH OF THEM DO YOU PREFER?

Growth schemes
Income schemes
Balance schemes
Money Market and Liquid schemes
Tax saving schemes
Guilt Funds

9. DO YOU THINK THE MUTUAL FUNDS ARE NOT AS POPULAR IN INDIA


AS IN OTHER COUNTRIES?
Risk involved as returns are not assured.
Any other reason please specify……………………………………………

62
10. HOW DO YOU LOOK MUTUAL FUND COMPANYS?

Brand Name
Good Service
High Yield
Advertisement
Any Other Reason……………………………...........................................

11. NAME

12. AGE

25-35
35-45
45-60
60 & above

13. ARE YOU AWARE OF RELIANCE MUTUAL FUND LTD?

YES
NO

63
14. WOULD YOU CONSIDER AVAILING THE FINANCIAL CONSULTANCY
OFFERED BY RELIANCE MUTUAL FUND LTD?

YES
NO

64