You are on page 1of 96

SUMMER TRAINING

ON
POWER OF SYSTEMATIC INVESTMENT
PLAN
TO SPECIAL
REFERENCE
(RELIANCE MUTUAL FUND)

Submitted in partial fulfillment of the requirement for two year


MASTER OF BUSINESS ADMINISTRATION
Submitted To:
Submitted By:
Mr.Sunit Kumar Mishra
KAVISHA SRIVASTAVA
Professor, SMS
MBA 3rd Semester
Varanasi
Roll No.1510670045

School of Management Science, Varanasi

PREFACE
The course of MBA require one to undergo a research project with
the end of the 3rd Semester, so as to get a practical knowledge and
understanding the practical aspects of all the theories read. It helps us
to make the best use of our skills and intelligence so as to make a
better research report. It is really the most important thing during the
course of the study.

KAVISHA SRIVASTAVA
MBA 3rd Semester
SMS, Varanasi

School of Management Science, Varanasi

ACKNOWLEDGEMENT

It is indeed a moment of immense gratefulness for me to express my


deepest gratitude to the faculty of SMS for providing me with any
opportunity to carry out this survey and help me create survey report on
Comparative study of POWER OF SYSTEMATIC INVESTMENT
PLAN TO SPECIAL REFERENCE TO RELIANCE MUTUAL
FUND
I am immensely grateful to Prof P.N. Jha (Director of SMS) for providing
me opportunity to prove my skills and shoulder the responsibilities through
this survey report. I would also like to convey my sincere my project guide
Mr.Sunit Kumar Mishra for his valuable guidance and suggestions while
pursuing the project and for taking pains to give his valuable inputs to
structure the report. Without his help and valuable inputs and guidelines, the
completion of this project would not have been possible.

I am highly indebted and thankful to each and every person who devoted
valuable time out of their busy schedule to fill-up the questionnaire in the
time. I am also thankful to our faculty and classmates for their suggestion
and support to undertake this work and also during the course of study.

KAVISHA SRIVASTAVA
MBA 3rd Semester
SMS, Varanasi

School of Management Science, Varanasi

DECLARATION
I KAVISHA SRIVASTAVA a student of MBA of School of
Management Science, Varanasi hereby declares that all the information
collected through the questionnaire is correct in accordance with the sample
size. The entire statistical diagram from the information collected through
the questionnaire.

I also declare that no part of this project has been duplicated from another
source, the information included in the project has been researched and
project written by me and the information collected or presented in the
report is correct to the best of my knowledge and belief.

Thanks
KAVISHA SRIVASTAVA
MBA 3rd Semester
SMS, Varanasi

School of Management Science, Varanasi

EXECUTIVE SUMMARY
Indias economy is highly developing. The development is taken place due to the growth
in the financial system. This financial system provides the background to various
investors regarding varied options to invest. Thus, development of the economy depends
on how these investors invest for the well being in long run.
As financial markets become more sophisticated and complex, investors need a financial
intermediary who provides the required knowledge and professional expertise on
successful investing. Mutual Funds represent perhaps the most appropriate investment
opportunity for investors. No wonder the concept of Mutual Fund was initially developed
in the U.S. market, but the entry of the concept in the Indian Financial Market was in the
year 1964 with the formulation of the UTI, at the initiative of the RBI and Govt. of India.
For most people, money is a delicate matter and when it comes to investing they are
wary. Simply because there are many investment options out there, each out promising
the other. An important question facing many investors is whether to invest in Banks,
National Savings, Post office, Non-banking finance companies, Fixed deposits, Shares
etc. or to invest distinctively in Mutual Funds.
I have observed that approximately 40% of the people are unaware of Trading but most
of them are interested to know about trading. They are also interested to work with
RELIANCE MUTUAL FUND if sufficient information is provided to them about
Trading and RELIANCE MUTUAL FUND.

People from service class prefers safety of income plus the regular income as well as tax
benefits while on the other hand Professional and Businessman focus on high return with
some risk.
For growth and development of the Stock Market Industry, the misconception regarding
Share Market should be removed & the awareness for the same should be made.

School of Management Science, Varanasi

TITLE

S. NO.
1.

2.

INTRODUCTION
Company Profile
Overview of Industry
PROCEDURE TO INVEST IN MUTUAL FUND

3.

SYSTEMATIC INVESTMENT PLAN (SIP)

4.

REASONS TO INVEST IN SIP

5.

RISK INVOLVE IN SIP

6.

RESEARCH METHODOLOGY

7.

SWOT ANALYSIS

8.

RECOMMENDATION

9.

CONCLUSION

10.

BIBLIOGRAPHY

11.

ANNEXURE

School of Management Science, Varanasi

OVERVIEW OF INDUSTRY
History of the Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of
Unit Trust of India, at the initiative of the Government of India and
Reserve Bank of India. The history of mutual funds in India can be broadly
divided into four distinct phases:
First Phase 1964-87
An Act of Parliament established Unit Trust of India (UTI) on 1963. 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 in 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.

School of Management Science, Varanasi

At the end of 1993, the mutual fund industry had assets under management
of Rs.47,004 crores.
Third Phase 1993-2015 (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 2015, 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.
Fourth Phase since February 2015
In February 2015, 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 2015, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes.
School of Management Science, Varanasi

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, 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.

School of Management Science, Varanasi

The graph indicates the growth of assets over the years:

School of Management Science, Varanasi

10

OVERVEIW OF ORGANISATION

COMPANY DETAILS

RELIANCE INDUSTRIES LIMITED

Reliance Group Holdings has grown from a small office


data-processing equipment firm in 1961 into a major insurance and
financial-services group in one generation under one chief.
School of Management Science, Varanasi

11

Reliance's insurance operations constitute the nation's 27thlargest property and casualty operation. The parent company also includes a
development subsidiary in commercial real estate. Reliance's international
consulting group contains several subsidiaries in energy, environment, and
natural resources consulting. A financial arm invests in other businesses,
primarily television stations.

Reliance Insurance started as the Fire Association of Philadelphia in 1817,


organized by 5 hose and 11 engine fire companies. It became the nation's
first association of volunteer fire departments.

Business got a boost as a result of the Great


Chicago Fire of 1871.The association soon developed a field of agents to
write policies across the country. For the first two years, shareholders
received dividends twice a year of $5 a share, which increased gradually to
$10 in 1876.

In 1972, the Reliance insurance group divided its pool so that


Reliance Insurance Company and its
subsidiaries handled most standard lines, while United Pacific Insurance
Company handled the nonstandard and other operations.

In 1977, the company moved into real estate, forming Continental


Cities Corporation, which became Reliance Development Group, Inc. This

School of Management Science, Varanasi

12

division handled all real estate operations of the parent company and other
subsidiaries.

Reliance Capital Group, L.P. constituted the investment branch of


the Reliance conglomerate.
In December 1989, Reliance Capital sold its investment, Days Corporation,
parent company of Days Inn of America, the world's third-largest hotel
chain; it had been purchased in 1984.

Reliance

Industries

Limited. The Group's principal activity


is to produce and distribute plastic and
intermediates, polyester filament yarn,
fibre

intermediates,

intermediates,

crackers,

polymer
chemicals,

textiles, oil and gas. The refining


segment

includes

production

and

marketing operations of the Petroleum


refinery. The petrochemicals segment includes production and marketing
operations of petrochemical products namely, High and Low density
Polyethylene.

School of Management Science, Varanasi

13

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


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

Dhirubhai Ambani founded Reliance as a textile company and led its


evolution as a global leader in the materials and energy value chain
businesses.
He is credited to have brought about the equity cult in India in the late
seventies and is regarded as an icon for enterprise in India. He epitomized
the spirit 'dare to dream and learn to excel'.
The Reliance Group is a living testimony to his indomitable will, singleminded dedication and an unrelenting commitment to his goals.

RELIANCE MUTUAL FUND

This groupdominates this key areain the financial sector..This


megabusiness houses

show that it has assetsunder management ofRs.

90,938 crore(US$ 22.73 billion) andan investor base of over6.6 million


(Source:www.amfiindia.com).Reliances mutual fundschemes are managed
byReliance Capital AssetManagement LimitedRCAM), a subsidiary of
Reliance Capital Limited,which holds 93.37% ofthe paid-up capitalof
RCAM.
The company notchedup a healthy growth ofRs. 16,354
crore(US$ 4.09 billion)in assets under management in February2008 and
helped propelthe total industry-wideAUM to Rs. 565,459 crore (US$ 141.36
billion)(Source: indiainvestments.com). A sharp rise infixed maturity plans
School of Management Science, Varanasi

14

(FMPs) and collection ofRs. 7000 crore (US$ 1.75 billion) through newfund
offers (NFOs) created this surge. In AUrankings, Reliance continues to be in
thenumber one spot.

India's Best Offering: Reliance Mutual Fund


Investing has become global. Today, a lot of countries are waking up to the
reality that in order to gain financial growth, they must encourage their
citizens to not only save but also invest. Mutual funds are fast becoming the
mode

of

investment

in

the

world.

In India, a mutual fund company called the Reliance Mutual Fund is making
waves. Reliance is considered India's best when it comes to mutual funds. Its
investors number to 4.6 billion people. Reliance Capital Asset Management
Limited ranks in the top 3 of India's banking companies and financial sector
in

terms

of

net

value.

The Anil Dhirubhai Ambani Group owns Reliance; they are the fastest
growing investment company in India so far. To meet the erratic demand of
the financial market, Reliance Mutual Fund designed a distinct portfolio that
is sure to please potential investors. Reliance Capital Asset Management
Limited

manages

RMF.

Vision And Mission


Reliance Mutual Fund is so popular because it is investor focused. They
show their dedication by continually dishing out innovative offerings and
unparalleled service initiatives. It is their goal to become respected globally
School of Management Science, Varanasi

15

for helping people achieve their financial dreams through excellent


organization governance and customer care. Reliance Mutual fund wants a
high performance environment that is geared at making investors happy.

RMF aims to do business lawfully and without stepping on other people.


They want to be able to create portfolios that will ensure the liquidity of the
investment of people in India as well as abroad. Reliance Mutual Fund also
wants to make sure that their shareholders realize reasonable profit, by
deploying funds wisely. Taking appropriate risks to reach the company's
potential

is

also

one

of

Reliance

Mutual

Fund's

objectives.

Schemes

To make their packages more attractive, Reliance Mutual Fund created


proposals called The Equity/ Growth scheme, Debt/Income Scheme, and
Sector

i.

Specific

Debt/Income

Scheme,

and

Scheme.

Sector

Specific

Scheme.

The Equity/ Growth scheme give medium to long term capital


increase. The major part of the investment is on equities and they have
fairly high risks. The scheme gives the investors varying options like,
capital augmentation or dividend preference. The choices are not
deadlocked because if you want you may change the options later on.

Providing steady and regular income is one of the Debt/Income


Scheme's primary goals. The Debt/Income scheme has in its portfolio
School of Management Science, Varanasi

16

government securities, corporate debentures fixed income securities,


and bonds.

returns on Sector Specific Scheme are dependent on the

performance of the industry at which your money is invested upon.


Compared to diversified funds this is a lot more risky and you will
need to really give your time on observing the market.

Although RMF is gaining good ground in the financial market,


remember that they are a risk taking bunch. They give higher profit
because they take a lot of risks. So, if you are faint hearted, then
Reliance Mutual Fund is not for you.

GROWTH OF RELIANCE MONEY THROUGH RECOGNITION

Growth through Recognition


Reliance has merited a series of awards and recognitions for excellence for
businesses and operations.

School of Management Science, Varanasi

17

Corporate Ranking and Ratings:

Reliance featured in the Fortune Global 500 list of Worlds Largest


Corporations for the fourth consecutive year.
Ranked 269th in 2014 having moved up 73 places from the previous
year.
Featured as one of the worlds Top 200 companies in terms of Profits.
Among the top 25 climbers for two years in a row.
Featured among top 50 companies with the biggest increase in
Revenues.
Ranked 26th within the refining industry.
Reliance is ranked 182nd in the FT Global 500 (up from previous years
284th rank).
PetroFed, an apex hydrocarbon industry association, conferred the
PetroFed 2014 awards in the categories of Refinery of the Year and
Exploration & Production - Company of the Year.
Brand Reliance was conferred the Bronze Award at The Buzziest
Brands Awards 2008, organized by agencyfaqs!
Institute of Economic Studies conferred the Udyog Ratna award in
October 2014 for contributions to the industry.

School of Management Science, Varanasi

18

Chemtech Foundation conferred the Hall of Fame in February 2008


for sterling contributions to the industry.
Chemtech Foundation conferred the Outstanding Achievement - Oil
Refining for work at the Jamnagar Manufacturing Division.
Petroleum Federation of India conferred the Refinery of the Year Award 2014 to Jamnagar Manufacturing Division
The Plastics Export Promotion Council - PLEXCOUNCIL Export
Award in the category of Plastic Polymers for the year 2006-2014
was awarded to Reliance being the largest exporter in this category.

HEALTH:-

Jamnagar Manufacturing Division was conferred the Golden


Peacock Award for Occupational Health & Safety - 2014 by Institute
of Directors.
Jamnagar Manufacturing Division was conferred the ICC Award for
Water Resource Management in Chemical Industry.
Jamnagar Manufacturing Division was conferred the Good House
Keeping Award from Baroda Productivity Council.
Jamnagar Manufacturing Division was conferred the BEL-IND
Award for the best scientific paper at the 58th National Conference of
Occupational Health.

School of Management Science, Varanasi

19

Naroda Manufacturing Division was conferred the Safety Award and


Certificate of Appreciation presented by Gujarat Safety Council &
Directorate of Industrial Safety & Health, Gujarat State for the
recognition of safety performance at the 29th State Level Annual
Safety Conference.
Dahej Manufacturing Division received BSC 5-Star rating from
British Safety Council, UK.
Dhenkanal Manufacturing Division received the 2nd Prize for
Longest Accident Free Period from the Honble Minister of Labour,
State of Orissa.
Hoshiarpur Manufacturing Division bagged the First Prize in Safety
in Punjab, organized by Punjab Safety Council.
Patalganga Manufacturing Division won the Gold Medal at CASHe
(Change Agents for Safety, Health and Environment) Conference. It
also won the III Prize in Process Management category for
Presentation on Safety through Design in chemical process industry in
Petrosafe 2014 Conference.
Kurkumbh Manufacturing Division won the Greentech Safety Award
silver trophy for outstanding achievement in safety management in
chemical sector.
Hazira Manufacturing Division received the TERI Corporate
Environmental Award (Certificate of Appreciation) for PET
recycling project.

School of Management Science, Varanasi

20

Nagothane Manufacturing Division received the Shrishti G-Cube Award


for Good Green Governance from Minister for Commerce and Industry,
on World Earth Day.

Training and Development:-

Jamnagar Refinery was adjudged the winner of the Golden Peacock


National Training Award -2014.
Patalganga Manufacturing Division won the ASTD (American
Society for Training & Development) Excellence in Practice Award
for innovative practice titled Learning Functions role as Business
partner: Empowering people with Knowledge to achieve Business
Goals.
Reliance won the CNBC TV-18 instituted Jobstreet.com Jobseekers
Employer of Choice Award.

Energy Excellence:-

Exploration & Production (E&P) Division won The Infraline Energy


Excellence Awards 2014: Hydrocarbon Columbus Award for
Excellence in Petroleum Exploration.

School of Management Science, Varanasi

21

Patalganga Manufacturing Division won the First Prize in Energy


Conservation in State of Maharashtra organized by Maharashtra
Energy Development Agency (MEDA).
Jamnagar Manufacturing Division won the Oil & Gas Conservation
Award -2014 from the Centre for High Technology, Ministry of
Power

&

Natural

Gas

for

the

excellent

performance

in

reduction/elimination of steam leaks in the plant.


Jamnagar Manufacturing Division was the recipient of the Infraline
Energy Award-2014 by Ministry of Power.
Hazira Manufacturing Division won the Government of India Energy
Conservation Award (2014) conferred by the Bureau of energy
efficiency and Ministry of Power.
Hazira Manufacturing Division was adjudged Excellent Energy
Efficient Unit at Energy Summit - 2014 by CII.
Vadodara Manufacturing Division received the CII award for
Excellence in Energy Management - 2014 as energy efficient unit. This
division also received the 2nd prize in National Energy Conservation
Award 2014 from Bureau of Energy efficiency, Ministry of Power,
Government of India.
The Companys manufacturing divisions at Vadodara and Hazira were
honoured with CII-National award for excellence in water management 2014 as water efficient unit in Within the fence category. Additionally,
Hazira Manufacturing Division was honoured as water efficient unit
Beyond the Fence category.
School of Management Science, Varanasi

22

Quality:-

For the first time ever, globally, a petrochemical company bagged the
Deming Prize for Management Quality. The Quality Control
Award for Operations Business Unit 2014 was awarded to the Hazira
Manufacturing Division for Outstanding Performance by Practicing
Total Quality Management.
QUALTECH PRIZE 2014, which recognizes extraordinary results
in improvement and innovation, was won by Hazira Manufacturing
Division for its Small Group Activity Project.
Vadodara Manufacturing Divisions Polypropylene-IV (PP-IV) plant
was conferred the Spheripol Process Operability Award-2006 for
the highest operability rate with an on stream factor 98.97% by M/s.
BASELL, Italy.
Allahabad Manufacturing Division won the Excellent Category Award
at National Convention of Quality Circle (NCQC) - 07.

Six-Sigma:-

Lean Six sigma project on Reducing retention time of caustic soda


lye tankers at Jamnagar won the 1st prize in the national level
competition held by Indian Statistical Institute (ISI).
Patalganga Manufacturing Divisions Six Sigma Project on Improve
Transfer Efficiency for Automatic winders in PFY won the 2nd Prize
School of Management Science, Varanasi

23

for Best design for Six Sigma Project in International Six Sigma
Competition organized by IQPC (International Quality and
Productivity center).
Barabanki Manufacturing Division won the 3rd prize in All India Six
Sigma case study contest 2008 for the Case study on Reduction of
waste of Plant 2 from 16% to 8%.
Hoshiarpur Manufacturing Division won the 2nd prize in Six Sigma
competition at National Level organized by ISI and Quality Council
of India (in manufacturing category), while Dhenkanal and Barabanki
Manufacturing Divisions won the 3rd prize.
Vadodara Manufacturing Divisions Six Sigma project won the 1st prize
as the Best Six Sigma project at National level by CII.

Technology, R&D and Innovation:-

Vadodra Manufacturing Divisions R&D bagged an award from


Indian Institute of Chemical Engineers for Excellence in Process /
Product Development for the work on Eco friendly Process for
Acetonitrile Recovery.
DSIR National Award for R&D Efforts in Industry (2014) was
conferred on Hazira Manufacturing Division for the Cyclehexane
Recovery Project.

School of Management Science, Varanasi

24

Patalganga Manufacturing Divisions Project titled Augmentation of


ETP and use of biogas in Fired heaters won the Best Innovative
Project from CII.
Reliance bagged the Innovation Award at Tech Converge 2014 for
innovative developments in short-cut fibres.
Hazira Manufacturing Division won the Golden Peacock Innovation
Award - 2014 for its Cyclohexane Recovery Process.

Information Technology:-

CIO of the Year Award for the best IT-enabled organization in


India for the Year 2014.
Ones to Watch - CIO - USA Award, for figuring among the top 20
organizations fostering excellence in IT team.
The Skoch Challenger Award conferred for the best IT Head
(managing the most IT enabled organization) of the Year 2014.
Best IT Implementation Award, by PC Quest for Knowledge
Management Systems portal (KMS).
CIO Excellence Award for Chemical Industry Information
Technology

Forum

for

exemplary

Information

Technology

implementation amongst global chemical companies.


CTO Forum Hall of Fame Award for the best CIOs in India for not
only providing service to their
School of Management Science, Varanasi

25

PRODUCT S : RELIANCE MONEY

The products on offer from Reliance MutualFund fall into four main
categories: equity, debt,sector specific and ETF (Exchange Traded
Fund).Each taps into a specific audience profile fulfilling their varying
needs.Under the equity category, Reliance has118 SUPERBRANDS sixteen
schemes with Reliance Growth Fundand Reliance Vision Fund as its
flagship schemes.Reliance Equity Opportunities Fund is a schemewhich
operates in the multi-cap/multi-sectorsegment; Reliance Equity Fund is a
long-shortfund, Reliance Quant Plus Fund is a quant fund.Reliance offers
investments

in

banking,

power,media,

entertainment

and

pharmaceuticals;Reliance Tax Saver Fund and Reliance Equity-Linked


Savings Fund Series 1 are tax saving schemes; an NRI-dedicated equity
scheme is
tailored for non-resident Indians. RelianceRegular Savings Fund is an assetallocation fund with three options.Under the debt and liquid categories,
Reliancehas liquid funds, liquid plus funds, income funds,an NRI-dedicated
debt fund, gilt funds, fixedmaturity plans and an interval fund.In the hybrid
category, Reliance Monthlyincome Plan is a popular option

Reliance understands that

investments in mutual fundshare a

function of knowledge dissemination and awareness of products amongst


potential investors. In building its ownbase of assets under management it
will necessarily have to carry the entire mutual fund
industry.Towards this end Reliance has launched a

t wo-pronged

initiative.In the first pincer it has created aformidable network of 26,000


distributors including some of thebiggest names in the banking sector.This
School of Management Science, Varanasi

26

whos who of the financial industry comprises such giants asCitibank,


Standard Chartered, HSBC,ICICI, AXIS, Bank of Baroda, Central Bank of
India, Allahabad Bank andfund houses such as JM, DSP Merrill Lynch and
Reliance mutual fund in addition to a massive infrastructure of direct
financial investment officers. Thisprodigious effort is supplemented by
thebrands captive network of 120 branch offices
and 30 financial centres. In the second prong, Reliance has created a series
of

informationpacked

presentations

which

help

dispel

misinformationGroup.This mega business house dominates this key area in


the financial sector.Figures for March 2008 show that it has emerged as the
top Indian mutual fund with average assets under management of Rs. 90,938
crore (US$ 22.73 billion) and an investor base of over 6.6 million
(Source:www.amfiindia.com).
Reliances mutual fund schemes are managed by
RelianceCapitalAssetManagementLimited

(RCAM),

subsidiary

of

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


RCAM.The company notchedup a healthy growth ofRs. 16,354 crore (US$
4.09billion)inassetsunder

management

in

February2008

and

helped

propelthe total industry-wideAUM to Rs. 565,459 crore(US$ 141.36 billion)


(Source: indiainvestments.com). A sharp rise infixed maturity plans
(FMPs)andcollection of Rs. 7000 crore (US$ 1.75 billion) through new fund
offers (NFOs) created this surge. InAUMrankings, Reliance continues to be
in thenumber one spot.

Reliance was the first fund house to launch sector funds with flexibility to
invest in a range of 0% to 100% in either equity or debt instruments Mutual
fund

investments

linked

to

anATM/debit

School of Management Science, Varanasi

card

are

Reliance
27

innovationIndias first long-short fund comes from Reliance Mutual Fund


As at 31st May 2008, more than 6.6 million people had invested in Reliance
Mutual Fund;the investments comprised 16% of the countrys entire mutual
fund asset base.

Achievements

In two successive joint surveys by The Economic Times Brand Equity


andACNielsen, Reliance was recognised as Indias Most Trusted Mutual
Fund.Thecompanyalsowalked away with seven other scheme prizes five of
them being outright winners in the Gulf 2014 Lipper Awards.These
included the Fund House of the Year by Lipper GCC as well asICRA Online
and the Most Improved FundHouse by Asia Asset Management.It also
received the NDTV Business Leadership Award 2014 in the mutual fund
category and runners up recognition as the Best Fund House in theOutlook
Money-NDTV Profit Awards. In addition,the company received thecoveted
CNBC Web18 Genius of the Web distinction for the Best Mutual Fund
Website inthe country. RCAM was awarded the India Onshore Fund House
2008 instituted by theAsian Investor magazine.The company also won the
India Equities award in the 5-yearPerformance category.

School of Management Science, Varanasi

28

COMPARATIVE STUDY OF MUTUAL FUND

Major competitior of Reliance Money

Company Profile of HDFC

HDFC BANK is one of the leading Depository Participant (DP) in the


country with over 8 Lac demat accounts.

HDFC Bank Demat services offers you a secure and convenient way to keep
track of your securities and investments, over a period of time, without the
hassle of handling physical documents that get mutilated or lost in transit.

HDFC BANK is Depository particpant both with -National Securities


Depositories Limited (NSDL) and Central Depository Services Limited
(CDSL).

Features & Benefits

As opposed to the earlier form of dealing in physical certificates with delays


in transaction, holding and trading in Demat form has the following benefits
:

Settlement of Securities traded on the exchanges as well as off market


transactions.
Shorter settlements thereby enhancing liquidity.
Pledging of Securities.
School of Management Science, Varanasi

29

Electronic credit in public issue.


Auto Credit of Rights / Bonus / Public Issues / Dividend credit
through ECS.
Auto Credit of Public Issue refunds to the bank account.
No stamp duty on transfer of securities held in demat form.
No concept of Market Lots.
Change of address, Signature, Dividend Mandate, registration of
power of attorney, transmission etc. can be effected across companies held
in demat form by a single instruction to the Depository Participant (DP).

Secured & easy transaction processing

HDFC Bank Ltd provides convenient facility called 'SPEED-e' (Internet


based transaction) whereby account holder can submit delivery instructions
electronically through SPEED-e website (https://speed-e.nsdl.com). SPEEDe offers secured means of transaction processing eliminating preparation of
instruction slips and submission of the same across the counter to the
depository participant. The 'IDEAS' facility helps in viewing the current
transactions and balances (holdings) of Demat account on Internet on real
time basis.

School of Management Science, Varanasi

30

Company Profile of ICICI


ICICIDirect (or ICICIDirect.com) is stock trading company of ICICI Bank.
Along with stock trading and trading in derivatives in BSE and NSE, it also
provides facility to invest in IPOs, Mutual Funds and Bonds. Trading is
available in BSE and NSE
ICICIDirect offers 3 different online trading platforms to its customers
1. Investment Account
Along with stock trading and IPO investing in BSE and NSE, Wise
Investment account also provide options to invest in Mutual Funds
and Bonds online.
Online Mutual funds investment allows investor to invest on-line in
around 19 Mutual Fund companies. ICICI Direct offers various
options while investing in Mutual Funds like Purchase Mutual Fund,
Redemption and switch between different schemes, Systematic
Investment plans, Systematic withdrawal plan and transferring
existing Mutual Funds in to electronic mode. This account also
provides facility to invest in Government of India Bonds and ICICI
Bank

Tax

Saving

Bonds.

ICICIDirect.com website is the primary tool to invest in Mutual


Funds, IPOs, Bonds and stock trading.

School of Management Science, Varanasi

31

Reliance Money
Tax Saving funds Reliance Money:
Tax-saving funds (due to their equity-oriented nature) are capable
of clocking far superior returns their assured return counterparts like
National Savings Certificate (NSC) and Public Provident Fund (PPF).
However investors must appreciate that the risk profile of tax-saving funds
tends to be proportionately higher.
Reliance Tax Saver (ELSS) Fund (RTSF) is the latest entrant in the taxsaving funds segment. Flagship diversified equity funds (Reliance Growth
Fund and Reliance Equity Fund) from Reliance Mutual Fund have emerged
as top performers in their segment across time horizons. However investors
should note that these funds are managed aggressively; also they have
displayed an opportunistic streak by moving fluidly across market segments
(large caps, mid caps) to clock superior growth. RTSF is likely to be a
similar (high risk - high return) investment proposition within the tax-saving
funds segment.

SYSTEM INVESTMENT PLAN

SIP is a way of investing in Mutual Funds. It is designed for those


investors who are willing to invest regularly rather than making a lump sum
investment. It is just like a recurring deposit with the post office or bank
where we deposit some amount every month. The difference here is that the
amount is invested in a mutual fund. Mutual Fund makes investment
according to their objective .They collect fund from investor and invests it.
School of Management Science, Varanasi

32

Every fund has an objective and pattern of investing. There are various kinds
of mutual funds. There are equity funds and debt funds. Further equity funds
can be divided into equity diversified mutual fund where funds are invested
in shares of different companies , sectoral funds where investment is made in
shares of some particular sector like FMCG, IT, Auto, Oil & Gas, Banking
etc. Every fund has a NAV (net asset value) which is the value per unit. It is
calculated as the total asset is divided by the number of outstanding units. As
the value of asset changes, nav also changes.

The best way to invest in stock market is mutual fund through Systematic
Investment Plan. But to get the benefit of an SIP, a long term horizon is
must.

School of Management Science, Varanasi

33

Competitors of RELIANCE MUTUAL FUND :-

KOTAK SECURITIES:

Kotak securities ltd is India leading stock broking house with a market share
of close to 9% as on 31 march 2014. kotak securities ltd has been the largest
in IPO distribution.
The company has a full fledged research division involved in macro
economic studies sect oral research and company specific equity research
combined with a strong and well networked sales force which helps deliver
current and up to date market information and news

Kotak securities ltd is also a depository participant with national securities


depository limited and central depository service limited .providing dual
benefits services where in the investor can use the brokerage services of the
company for executing the transactions and the depository service for
settling them.

Kotak securities have 813 outlets servicing more than 315000 customers and
a coverage of 277 cities. Kotak securities com the online division of kotak
securities limited offers internet broking services and also online IPO and
mutual fund investment

School of Management Science, Varanasi

34

A Kotak security limited manages assets around 2300 crores of assets under
management. The portfolio management service provides top class service
catering to the high end of the market. Portfolio management from kotak
securities comes as an answer to those who would like to grow from
exponentially on the crest of the stock market, with the backing of an expert.

Sharekhan, the retail broking arm of SSKI group and one of the largest stock
broking house in the country has won the prestigious awaaz consumer vote
awards 2005 for the most preferred stock broking brand in India, in the
investment advisors category

Share khan equity related services include trade execution on BSE,NSE


derivatives commodities depository services online trading and investment
advice ,.sharekhan online trading and investment site www.sharekhan.com
was launched in 2000 . Sharekhan Bag round network includes over 250
centers across 123 cities in India and having around 120000 customers and
equal number of demat customers.

Sharekhan won the award by vote of customer around the country, as part of
India largest consumer study cover 7000 respondents 21 product and service
across 21 major cities. the study initiated by awaaz India first dedicated
consumer channel and member of the world wide CNBC network and ac
School of Management Science, Varanasi

35

Nielsen org marg was aimed at understanding the brand preference of the
consumer and to decipher what are the most important loyalty criteria for the
consumer in each vertical

In order to select the award recipient spontaneous responses rather than


prompted responses were garnered with an intention to glean unbiased
preferences.

The reason behind the preferences for brands were unveiled by examines
the following:

Tangible features of product /service


Softer, intangible features like imagery, equity driving preference
Tactical measures such as promotional /pricing schemes

School of Management Science, Varanasi

36

The India Infoline group, comprising the holding company, India Infoline
Limited and its wholly-owned subsidiaries, straddle the entire financial
services space with offerings ranging from Equity research, Equities and
derivatives trading, Commodities trading, Portfolio Management Services,
Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small
savings instruments to loan products and Investment banking. India Infoline
also owns and manages the websites http://www.indiainfoline.com/and
http://www.5paisa.com/
The company has a network of 758 business locations (branches and subbrokers) spread across 346 cities and towns. It has more than 800,000
customers
India Infoline Limited is listed on both the leading stock exchanges in India,
viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE) and is also a member of both the exchanges. It is engaged in the
businesses of Equities broking, Wealth Advisory Services and Portfolio
Management Services. It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment of the BSE. It is registered
with NSDL as well as CDSL as a depository participant, providing a onestop solution for clients trading in the equities market. It has recently
launched its Investment banking and Institutional Broking business.

School of Management Science, Varanasi

37

Religare Enterprises Limited (REL), is one of the leading integrated


financial services groups of India. RELs businesses are broadly clubbed
across three key verticals, the Retail, Institutional and Wealth spectrums,
catering to a diverse and wide base of clients.
REL offers a multitude of investment options and a diverse bouquet of
financial services and has a pan India reach in more than 1550 locations
across more than 460 cities and towns.
As part of its recent initiatives, the group has also started expanding globally
and has acquired Londons oldest brokerage & investment firm, Hichens,
Harrison & Co. plc. Following this acquisition Religare now proposes to
operate out of 10 countries. With a view to expand, diversify and introduce
offerings benchmarked against global best practices, Religare has entered
into joint ventures with the global major- Aegon for its Asset Management
and Life Insurance businesses in India.
Religares wealth management subsidiary is now rechristened as Religare
Macquarie Wealth Management Limited, following a joint venture with the
School of Management Science, Varanasi

38

Australia based financial services major, Macquarie Bank. Religare has also
partnered with Vistaar Entertainment to launch Indias first Film Fund.
The vision is to build Religare as a globally trusted brand in the financial
services domain and present it as the Investment Gateway of India. All
employees of the group guided by an experienced and professional
management team are committed to providing financial care, backed by the
core values of diligence and transparency.

School of Management Science, Varanasi

39

ABOUT INDIABULLS

Indiabulls is Indias leading Financial Services and Real Estate company


having over 640 branches all over India. Indiabulls serves the financial
needs of more than 4,50,000 customers with its wide range of financial
services and products from securities, derivatives trading, depositary
services, research & advisory services, consumer secured & unsecured
credit, loan against shares and mortgage & housing finance. With around
4000 Relationship Managers, Indiabulls helps its clients to satisfy their
customized financial goals. Indiabulls through its group companies has
entered Indian Real Estate business in 2005. It is currently evaluating several
large-scale projects worth several hundred million dollars.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange,
Bombay Stock Exchange and Luxembourg Stock Exchange. The market
capitalization of Indiabulls is around USD 6,300 million (31st December,
2014). Consolidated net worth of the group is around USD 905 million (31st
December, 2014). Indiabulls and its group companies have attracted more
than USD 800 million of equity capital in Foreign Direct Investment (FDI)
since March 2000. Some of the large shareholders of Indiabulls are the
largest financial institutions of the world such as Fidelity Funds, Goldman
Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.

School of Management Science, Varanasi

40

Business of the company has grown in leaps and bounds since its inception.
Revenue of the company grew at a CAGR of 159% from FY03 to FY07.
During the same period, profits of the company grew at a CAGR of 184%.

Indiabulls became the first company to bring FDI in Indian Real Estate
through a JV with Farallon Capital Management LLC, a respected US based
investment firm. Indiabulls has demonstrated deep understanding and
commitment to Indian Real Estate market by winning competitive bids for
landmark properties in Mumbai and Delhi.
Indiabulls Financial Services Ltd

School of Management Science, Varanasi

41

The Angel Group of Companies was brought to life by Mr. Dinesh Thakkar.
He ventured into stock trading with an intention to raise capital for his own
independent enterprise. However, he recognised the opportunity offered by
the stock market to serve individual investors. Thus Indias first retailfocused stock-broking house was established in 1987. Under his leadership,
Angel became the first broking house to embrace new technology for faster,
more effective and affordable services to retail investors.

Mr. Thakkar is valued for his understanding of the economy and the stockmarket. The print and electronic media often seek his views on the market
trend as well as investment strategies.

Angel Broking's tryst with excellence in customer relations began in 1987.


Today, Angel has emerged as one of the most respected Stock-Broking and
Wealth Management Companies in India. With its unique retail-focused
stock trading business model, Angel is committed to providing Real Value
for Money to all its clients.

The Angel Group is a member of the Bombay Stock Exchange (BSE),


National Stock Exchange (NSE) and the two leading Commodity Exchanges
in the country: NCDEX & MCX. Angel is also registered as a Depository
Participant with CDSL.
School of Management Science, Varanasi

42

PROCEDURE TO INVEST IN MUTUAL FUND

CONCEPT OF MUTUAL FUND


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:

Mutual Fund Operation Flow Chart

School of Management Science, Varanasi

43

Constitution of a Mutual Fund:

There are a number of bodies that form a part of the mutual fund,
they are as follows:

Sponsors
The sponsor is the company which sets up the mutual fund. It
means anybody corporate acting alone or in combination with
another body corporate established a mutual fund after initiating
and completing the formalities.

Trustees
The management of the mutual fund is subject to the control of
the board of trustees of the fund. They guide the opera tions of
the fund and carry the crucial responsibility to see that AMC
always act in the best interest of the investors.

Asset Management Company


The mutual fund is operated by a separately established asset
management company (AMC).It manages the funds of the various
schemes. It is entrusted with the specific task of mobilizing
funds under the scheme.

School of Management Science, Varanasi

44

Custodian
A custodian is a person carrying on the activities of the
safekeeping of the securities or participating in any clearin g
system on behalf of the clients to effect deliveries of the
securities.

ORGANIZATION OF A MUTUAL FUND


There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:

School of Management Science, Varanasi

45

ADVANTAGES OF MUTUAL FUNDS:


Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated

School of Management Science, Varanasi

46

TYPES OF MUTUAL FUND SCHEMES


Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. The table
below gives an overview into the existing types of schemes in the
Industry.

School of Management Science, Varanasi

47

Risk Return Hierarchy of Different Funds

School of Management Science, Varanasi

48

FREQUENTLY USED TERMS


Net Asset Value (NAV):
Net Asset Value is the market value of the assets of the scheme minus its
liabilities. The per unit NAV is the net asset value of the scheme divided by
the number of units outstanding on the Valuation Date.
Sale Price:
Is the price you pay when you invest in a scheme. Also called Offer Price. It
may include a sales load.
Repurchase Price:
Is the price at which units under open-ended schemes are repurchased by the
Mutual Fund. Such prices are NAV related.
Redemption Price:
Is the price at which close-ended schemes redeem their units on maturity.
Such prices are NAV related.
Sales Load:
Is a charge collected by a scheme when it sells the units. Also called, Frontend load. Schemes that do not charge a load are called No Load schemes.
Repurchase or Back-end Load:
Is a charge collected by a scheme when it buys back the units from the unit
holders.

School of Management Science, Varanasi

49

Taxation of Mutual Fund and investor


Finance Act 1999 radically changed taxation of Dividends received
by investors in Mutual Funds
Mutual Fund as an entity is not taxed since it is a Pass through Entity.
Section 10(23d) of the IT Act.
Finance Act 1999 made income (dividends) from UNITS totally
EXEMPT from tax u/s 10(33) in the hands of all investors
Income (dividends) distributed by a Debt Fund was made liable to
Dividend Distribution Tax at applicable rate
Open Ended Funds with more than 50% invested in Equity do not pay
any DDT ( since changed to 65% in FY 06-07)
Individuals 14.02%. Companies 22.44%.
Security Transaction Tax (STT) is charged as applicable
80 C benefit under ELSS up to Rs. 1 Lac
Restriction on dividend stripping (Sec 94(7))
o Within 3 months prior to record date of dividend distribution
and
o Within 3 months after record date for dividend distribution

School of Management Science, Varanasi

50

HOW TO INVEST IN MUTUAL FUND


There are two ways in which you can invest in a mutual fund.
1. A one-time outright payment
If you invest directly in the fund, you just hand over the cheque and you get
your fund units depending on the value of the units on that particular day.
Let's say you want to invest Rs 10,000. All you have to do is approach the
fund and buy units worth Rs 10,000. There will be one factor which
determine

how

many

units

you

get.

that is NAV.
NAV
The Net Asset Value is the price of a unit of a fund. Let's say that the NAV
on the day you invest is Rs 50.
So you will get 200 units (Rs 10000 / 50).
2. Periodic investments
This is referred to as a SIP.That means that, every month, you commit to
investing, say, Rs 1,000 in your fund. At the end of a year, you would have
invested Rs 12,000 in your fund. Let's say the NAV on the day you invest in
the first month is Rs 20; you will get 50 units. The next month, the NAV is
Rs 25. You will get 40 units. The following month, the NAV is Rs 18. You
will get 55.56 units.

School of Management Science, Varanasi

51

So, after three months, you would have 145.56 units. On an average, you
would have paid around Rs 21 per unit. This is because, when the NAV is
high, you get fewer units per Rs 1,000. When the NAV falls, you get more
units per Rs 1,000.
Here are some Facts on the SIP
1. Is there a load?
An exit load is a fee you pay the fund when you sell the units, the funds
never charged an entry load on SIPs. An exit load is charged if you stop the
SIP

mid-way.

Which is 1%. Let's say you have a one-year SIP but discontinue after five
months, and then an exit load will be levied. These conditions will wary
between mutual funds.
2. What is the minimum investment?
If you do a one-time investment, the minimum amount that you have to
invest is Rs 5,000.If you invest via an SIP, the amount drops. Each fund has
their own minimum amount. Some may keep it at least Rs 500 per month;
others may keep it as Rs 1,000.
3. How often does one have to invest?
It would depend on the fund. Some insist the SIP must be done every month.
Others give you the option of investing once in three months or once in six
months.They also give fixed dates. So you will get the option of various
dates and you will have to choose one. Let's say you are presented with these
dates: 1, 10, 20 or 30. You can pick any one date. If you pick the 10 th of the
School of Management Science, Varanasi

52

month, then on that day, the amount you have decided to invest in the fund
has to be credited to your mutual fund.
4. How must the payment be made?
You can opt for the Electronic Clearance Service from your bank; this
means the mutual fund will, as per your instructions, debit a certain amount
from your account every month.Let's say you have a SIP of Rs 1,000 every
month and you have chosen to invest in it on the 10 th of every month. Under
this option, you can instruct your mutual fund to directly debit your bank
account of Rs 1,000 on the due date.
If you don't have the required money in your account, then for that month,
no units will be allocated to you. But, if this continues periodically, the
mutual fund will discontinue the SIP. You need to check with each mutual
fund what their parameters are.
Alternately, you can give cheques to your mutual fund. In this case, they
may ask for five Post Dated Cheques upfront with your first investment.
Since these cheques are dated ahead of time, they cannot be processed till
the date indicated.
5. Must I state for how long I want the SIP?
Yes. You will have to state whether you want it for a year or two years, etc.
If, during the course of this period, you realize you cannot continue with the
SIP, all you have to do is inform the fund 15 days prior to the payout. The
SIP will be discontinued. You can continue to keep your money with the
fund and withdraw it when you want.
School of Management Science, Varanasi

53

6. Do all funds offer SIP?


No. Liquid funds, cash funds and floating rate debt funds do not offer an
SIP. These are funds that invest in very short-term fixed-return investments.
Floating rate debt funds invest in fixed return investments where the interest
rate moves in tandem with interest rates in the economy (just like a floating
rate home loan).
All types of equity funds (funds that invest in the shares of companies), debt
funds (funds that invest in fixed-return investments) and balanced funds
(funds that invest in both) offer a SIP.
7. Tax implications
Let's say you have invested in the SIP option of a diversified equity fund.
If you sell the units after a year of buying, you pay no capital gains tax. If
you sell if before a year, you pay capital gains tax of 10%.
Let's say you invest through a SIP for 12 months: January to December
2005. Now, in February 2006, you want to sell some units.

Will you be charged capital gains tax?


The system of first-in, first-out applies here. So, the amount you invest in
January 2005 and the units you bought with that money, will be regarded as

School of Management Science, Varanasi

54

the units you sell in February 2006. For tax purposes, the units that you sell
first will be considered as the first units bought.
8. How will an SIP help?
When you buy the units of a fund, you may do so when the NAV is really
high. For instance, let's say you bought the units of a fund when the bull run
was at its peak, leading to a high NAV.
If the market dips after that, the value of your investments falls and you may
have to wait for a long while to make a return on your investment. But, if
you invest via a SIP, you do not commit the error of buying units when the
market is at its peak. Since you are buying small amounts continuously, your
investment will average out over a period of time.
You will end up buying some units at a high cost and some units a lower
price. Over time, your chances of making a profit are much higher when
compared to an one-time investment.

School of Management Science, Varanasi

55

7 GOOD REASONS TO INVEST IN SYSTEMATIC INVESTMENT


PLAN

Power of compounding: The power of compounding underlines the essence


of making money work if only invested at an early age. The longer one
delays in investing, the greater the financial burden to meet desired goals.
Saving a small sum of money regularly at an early age makes money work
with greater power of compounding with significant impact on wealth
accumulation.

Convenience: SIP can be operated by simply providing post dated cheques


with the completed enrolment form or give ECS instructions. The cheques
can be banked on the specified dates and the units credited into the
investor's account. The SIP facility is available in the Principal Income
Fund, Monthly Income Plan, Child Benefit Fund, Balanced Fund, Index
Fund, Growth Fund, Equity fund and Tax Savings Fund.

Its An Experts Field: The Fund Manager who are the expert in
management of the fund and have experience of 8-10 years manages Funds.

Putting Eggs In Different Baskets: The investments are done in diversified


sectors, which reduce the overall impact on the returns from a portfolio on
account of a loss in particular, company or sector.

School of Management Science, Varanasi

56

Its All Transparent And Well Regulated: The Mutual Fund Industry is
well regulated both by SEBI and AMFI.

Rupee Cost Averaging: Timing the market consistency is a difficult task.


Rupee cost averaging is an automatic market timing mechanism that
eliminates the need to time one's investments. Here one need not worry
about where share prices or interest are headed as investment of a regular
sum is done at regular intervals; with fewer units being bought in a declining
market and more units in a rising market. Although SIP does not guarantee
profit, it can go a long way in minimizing the effects of investing in volatile
markets.

Rupee Cost Averaging is an effective market-timer mechanism that


eliminates the need to time the markets. All one has to do is to invest a fixed,
pre-decided amount of money on a regular basis over a long period of time.
Since the amount invested per month is constant, one buys more units
when the price is low and fewer units when the price is high. As a result
the average unit cost will always be less than the average sale price per unit,
irrespective of the market rising, falling or fluctuating.

Let's take an example of Mr. X, wherein he started investing Rs. 4,000 every
month in the Maximiser Fund of the Lifetime Super Plan.

School of Management Science, Varanasi

57

The table related to this is given in next page:

Period
7th Apr
'03
7th May
'03
9th

Jun

'03
7th

Jul

'03
7th Aug
'03
8th

Set

'03
7th

Oct

'03
7th Nov
'03
8th Dec
'03
7th

Jan

'04
S9th Feb
'04

Invested

NAV of Maximiser

Units

Premium (Rs.)

Fund (Rs. Per unit)

allocated

4,000

11.34

352.73

4,000

11.01

363.31

4,000

12.05

331.95

4,000

13.13

304.65

4,000

13.67

292.61

4,000

15.81

253.00

4,000

16.78

238.38

4,000

18.28

218.82

4,000

18.71

213.79

4,000

21.48

186.22

4,000

21.49

186.13

School of Management Science, Varanasi

58

8th Mar
'04
Total

4,000

21.98

181.98

48,000

School of Management Science, Varanasi

59

Actual Average NAV = (11.34 + 11.01 + 12.05 + 13.13 + 13.67 + 15.81 +


16.78 + 18.28 + 18.71 + 21.48 + 21.49 + 21.77) / 12 = Rs.16.29.

NAV for Mr. X = (4,000 * 12) / (352.73 + 363.31 + 331.95 + 304.65 +


292.61 + 253.00 + 238.38 + 218.82 + 213.79 + 186.22 + 186.13
+ 183.74) = Rs.15.36
Based on the historical analysis for BSE Sensex for last ten years (1-Jan1994 to 1-Jan-2004) we find that if an individual had invested Rs. 1000 ever
year (SIP) he would have earned a return of 9% vis--vis 5% earned by an
individual who had invested Rs. 1000 at the beginning of 10 year period.
Similarly over a five-year period (1-Jan-1994 to 1-Jan-1999) SIP investment
return would have been 16.52% compared to 14.09% for a one-time
investment

at

the

beginning

of

the

period.

Thus Rupee Cost Averaging smoothens out the market ups and downs
and reduces the risk of investing in volatile markets. However, rupee cost
averaging does not guarantee a profit, as this depends on the performance of
the market.

Does Not Strain Our Day-to-Day Finances: It allows us to invest very


small amounts

(Rs. 500 Rs. 1000) As against the larger one time

investment, which makes easier to the investor.

School of Management Science, Varanasi

60

Top 5 schemes of mutual fund


Category wise
Absolute Returns (in %) as on Jun 30, 2010
Equity Diversified

Asset

NAV

1wk 1mth 3mth 6mth 1yr 2yr

3yr

Size (Rs./Unit

ICICI Pru Discovery


Fund (G)
IDFC Small Midcap
Eqty -G
IDFC Premier
Equity - A (G)
Birla SL Dividend
Yield (G)
DSP-BR Small &
Mid Cap -RP (G)

Equity Tax Saving

(Rs. cr.)

1,083.58

45.37

686.89

17.38

2.9

5.3 12.9 65.8 89.5 57.5

0.8

4.8

7.1 14.9 54.7 103.7

29.65 -0.3

6.4

7.6 13.5 51.2 63.6 67.8

384.83

79.54

5.2 10.0 15.2 54.2 96.5 68.6

847.67

16.59 -0.5

1,376.30

Asset

NAV

0.8

1.0

5.1

8.4 12.9 62.5 75.5 42.8

1wk 1mth 3mth 6mth 1yr 2yr

3yr

Size (Rs./Unit
(Rs. cr.)

Can Robeco Eqty


TaxSaver (G)

174.14

24.48

School of Management Science, Varanasi

0.4

2.9

5.1 12.9 42.9 83.0 58.4

61

ICICI Pru Tax Plan


(G)
HDFC Tax Saver
(G)
Religare Tax Plan
(G)
Fidelity Tax
Advantage (G)

Balanced

1,159.48

131.15 -0.5

3.4

3.0

2,465.31

216.61

0.2

4.2

5.2 10.4 47.6 71.3 37.8

16.57 -0.2

4.7

5.5

20.39

4.8

7.8 12.5 44.3 60.8 42.5

97.58

1,155.62

Asset

NAV

0.1

8.5 52.6 56.8 40.7

9.9 45.2 67.7 50.5

1wk 1mth 3mth 6mth 1yr 2yr

3yr

Size (Rs./Unit
(Rs. cr.)

School of Management Science, Varanasi

62

ICICI Pru CCP - Gift


Plan
HDFC Prudence
Fund (G)
Reliance RSF Balanced (G)
HDFC Balanced
Fund (G)
HDFC Childrens
Gift (Inv)

161.19

56.47 -0.4

195.13

0.5

3.4

7.4 12.1 44.1 73.2 55.3

539.15

21.09

0.2

2.9

2.3

155.77

50.54

0.4

4.1

6.7 13.3 40.4 60.8 55.5

234.41

37.14 -0.3

4.5

7.9 14.5 39.5 52.0 39.6

Asset

Plan

Size (Rs./Unit

HDFC MIP - LTP


(G)
LIC MF Floater
MIP-Plan A (G)
Tata MIP Plus Fund
(G)
HSBC MIP -

7.8 15.2 53.0 38.9 28.9

4,113.52

Monthly Income

Reliance MIP (G)

3.7

NAV

9.2 31.7 67.8 70.7

1wk 1mth 3mth 6mth 1yr 2yr

3yr

(Rs. cr.)

4,771.44

20.69

--

0.9

2.4

3.7 15.5 46.4 50.3

6,397.61

21.72

0.2

1.3

3.1

4.8 15.2 39.9 40.3

120.05

17.49 -0.1

0.9

1.9

4.0

78.45

15.58 -0.1

1.2

3.7

4.9 10.6 23.0 25.1

414.36

18.60 -0.2

0.9

1.2

2.2 12.5 26.9 32.9

School of Management Science, Varanasi

9.7 22.8 31.3

63

Savings Plan (G)

Money Market

Asset

NAV

1wk 1mth 3mth 6mth 1yr 2yr

3yr

Size (Rs./Unit
(Rs. cr.)

IDFC Savings Adv.


Fund (G)
Tata Treasury
Manager-RIP (G)
HDFC CMFTreasury Advg (G)
LIC MF Liquid Fund
(G)
HDFC Cash Mgmt SP (G)

Debt Short Term

1,159.52 1,311.80

0.1

0.5

1.5

2.6

4.5 11.0 19.8

60.17 1,234.95

0.1

0.4

1.2

2.3

4.7 14.0

--

6,023.68

20.23

0.1

0.4

1.2

2.3

4.6 12.7 21.8

2,639.66

17.06

0.1

0.4

1.2

2.2

4.6 13.5 22.8

3,149.10

19.47

0.1

0.4

1.2

2.2

4.5 12.8 22.0

Asset

NAV

1wk 1mth 3mth 6mth 1yr 2yr

3yr

Size (Rs./Unit
(Rs. cr.)

School of Management Science, Varanasi

64

IDFC SSIF -MTP


RP A (G)
Kotak Bond
(Deposit) (G)
Can Robeco Income
(G)
Fortis Flexi Debt
Fund-RP (G)
HDFC High Interest
- STP (G)

Debt - Long Term

58.92

16.08

0.5

2.7

4.9

9.4 24.1 32.3

40.80

25.23 -0.1 -0.4

3.2

4.2

6.1 25.5 33.9

215.44

19.95

0.1

0.3

2.6

3.0

4.9 37.2 47.4

322.72

16.16

0.1

0.2

1.5

2.8

4.9 25.5 36.7

3,891.48

18.71

0.1

0.4

1.7

3.3

7.0 21.9 33.9

Asset

NAV

0.1

1wk 1mth 3mth 6mth 1yr 2yr

3yr

Size (Rs./Unit
(Rs. cr.)

Birla Sun Life GSec


- LTF (G)
ICICI Pru Gilt Inv
Plan - PF
Templeton (I) ST
Income (G)
DSP-BR Govt. Sec.
(G)

86.42

27.46

0.1

0.3

5.7

7.0 11.8 37.2 36.5

79.17

18.52

0.2

0.3

1.4

1.9

1.8 44.8 54.8

4,991.56 1,878.17

0.1

0.4

1.7

3.4

8.6 22.9 33.3

0.1

0.3

3.1

3.8

4.2 33.1 39.6

68.75

32.71

School of Management Science, Varanasi

65

Birla SL Dynamic
Bond -RP (G)

8,611.67

15.73

Debt - Floating

Asset

Rate

Size (Rs./Unit
(Rs. cr.)

Birla SL FRF - LTP


- RP (G)
HDFC Float Rate
Inc-LTP (G)
LIC MF Floating
Rate (G)
Templeton FRIF
LTP (G)
Kotak Floater LTP
(G)

NAV

0.2

0.4

1.5

3.4

6.8 21.2 34.6

1wk 1mth 3mth 6mth 1yr 2yr

3yr

233.48

15.98

0.1

0.4

1.3

2.9

7.2 16.4 26.6

1,490.80

16.05

0.1

0.5

1.6

2.6

6.1 16.7 27.3

5,102.00

15.32

0.1

0.4

1.3

2.6

5.4 14.7 25.2

412.85

17.04

0.1

0.4

1.2

2.3

5.1 14.6 23.4

14.80

0.1

0.4

1.3

2.5

5.0 13.9 24.1

10,000.0
0

School of Management Science, Varanasi

66

RISKS IN SYSTEMATIC INVESTMENT PLAN


In this competitive world the risk is common in almost all the business. The
basic objective of a mutual fund is to provide a diversified portfolio so as to
reduce the risk in investments at a low cost. Investors who take up mutual
fund route for investments believe that their risk is minimized at low costs,
and they get an optimum portfolio of securities that match their risk appetite.
A mutual fund investor is exposed to a variety of risks. Among these, there
are four major ones:
Market Risk:
It refers to the extent to which fluctuations in the return are caused by broad
market factors.
Regulatory Risk:
It is the result of unexpected changes in the regulation.
Industry Risk:
The returns of a particular scheme may be adversely affected by the poor
performance of a particular sector.
Company Risk:
If a particular fund scheme has made substantial investments in the stocks of
a particular company; risks may arise as a result of below par performance
of that particular company.

School of Management Science, Varanasi

67

School of Management Science, Varanasi

68

RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY

The purpose of choosing this project is to know:


Investors option for entry into a Mutual Fund.
a) Lump sum
b) SIP
Comparative analysis between SIP and Lump sum.
Investors Delight when investment is through SIP.
Procedure for investment in SIP.

SCOPE OF THE STUDY

Since the summer internship training is done in Kanpur, so the universe


taken is from Kanpur only.
This project will help existing/prospective investor to understand what are
the various mode of investment in Mutual Fund and why Systematic
Investment Plan gives better returns than Lump sum. So that investors can
do better use of their hard earned money to earn more profit.
School of Management Science, Varanasi

69

TYPES OF DATA
There are two types of data:
1. Primary Data
2. Secondary Data
Primary Data is that data which is collected by the researcher as per his/her
needs.
Secondary Data is that data which is collected through references as
websites, journals, books, newspapers, magazines etc.

SOURCES OF DATA COLLECTION


The data for research is collected in two ways: Primary source
Secondary source

Primary Data is collected through Questionnaire and interviewing the


investors directly.
Secondary data which is used just for reference, is collected through
magazines,

FACTSHEET of ICICI PRU AMC namely The

PRUDENT.
RESEARCH DESIGN
This research is Explorative and conclusive in nature because it aims to
collect the data about the behavior of investors in which way they invest in
Mutual Funds. The research approach used is survey based and the analysis
is largely based on the primary data.

School of Management Science, Varanasi

70

RESEARCH INSTRUMENT
Structured questionnaire: open- ended and close- ended.

CONTACT METHOD
Personal interview

RESEARCH APPROACH
Any methodology includes the overall research design, the sampling
procedure and data collection method. The methodology adopted by me for
purpose of finding the investment behavior of investors was DIRECT
SURVEY METHOD.
RESEARCH TYPE
Conclusive and explorative approach has been adopted in the study. As
here the topic of research problem has been explored so that hidden facts can
come into the light and then the final conclusion is given.
POPULATION
Kanpur City

SAMPLE SIZE

A sample size of 50 investors was chosen to meet the earlier mentioned


objectives. The selection of sample was based on the following criteria: People belonging to different strata of society.

School of Management Science, Varanasi

71

Servicemen

working

in

government

organization

&

private

organization.
Professionals who includes doctors, lawyers, teachers etc.
FINDINGS
The analysis is done based on the structured questions and we got following
points:
55% investor invests in SIP mode.
84% got more profit in SIP.
The maximum duration of investment in SIP is 3 years i.e. 34%.
The maximum allocation criteria in SIP are Rs. 1000-3000 i.e. 45%.

School of Management Science, Varanasi

72

ANALYSIS

The analysis is done on the basis of the response of respondents, which is


collected through the questions present in questionnaire.

Q 1: In which Financial Instrument do you invest into?

Ans:
Financial Instrument Investment in %
Mutual Funds

76

Bond

15

Online Trading

Derivatives

Investment Criteria in Financial


Insrument
2
7
76 15

Mutual fund
Bond
Online trading
Derivatives

Interpretation: From above pie chart, I have analysed that 75% of investors
invest in Mutual Funds. Rest of the investors invest in Bond (i.e. 16%),
Online Trading (i.e. 7%) and Derivatives (i.e. 2%).

School of Management Science, Varanasi

73

Q 2: By structure in which type of schemes have you invested?

Ans:

Type of schemes on the Basis of Structure Investment in %


Open-ended funds

66

Close-ended funds

22

Interval Funds

12

Interpretation: The above pie chart depicts that 66% investors invest in
Open-ended funds, 22% in close-ended funds and 12% in interval funds.

School of Management Science, Varanasi

74

Q 3: By investment objective in which schemes have you invested?

Ans:
Type of schemes on the Basis of Investment Objective Investment in %
Growth Schemes

55

Income Schemes

13

Balanced Schemes

32

Interpretation: From above pie chart, I conclude that there are 55%
investors who invest in Growth Schemes, 13% investors invest in Income
Schemes and 32% investors invest in Balanced Schemes.

School of Management Science, Varanasi

75

Q 4: In which type of fund you want to invest?

Ans:
Types of Funds Investment in %
Index Fund

41

Tax saver Fund

15

Sectorial Fund

44

Interpretation: The above chart depicts that the maximum no. of investors
i.e.41% investors invest in Sectorial Funds, 44% in Index funds and 15% in
Tax saver funds.

School of Management Science, Varanasi

76

Q 5: Did you repeat your investment after the initial investments?

Ans:
Repeatition of Investment Investers In %
Yes

68

No

32

Interpretation: The above pie chart depicts that 68% of investors invest
again after the initial investments.

School of Management Science, Varanasi

77

Q 6: What percentage of your earnings do you invest in Mutual Funds?

Ans:
% Of earnings invested in Investors in
MF

%
Up to 10%

43

Up to 25%

32

Up to 50%

15

Above 50%

10

Interpretation: The above chart depicts that 43% investors invest up to


10% of their earnings in Mutual Funds.

School of Management Science, Varanasi

78

Q 7: How many investors invested in SIP, Lumpsum or Both?

Ans:

Type of

Investment

Investment

in %

SIP

55

Lumpsum

10

Both

35

Interpretation: From above chart I have analysed that 55% investors have
invested in Systematic Investment Plan, 10% in Lumpsum and 35% in both
the category.

School of Management Science, Varanasi

79

Q 8: What is an allocation criterion of investor in SIP?


Ans:

Investment in %

Allocation criteria (in Rs.)

Investment in %

Less than 1000

1000-3000

45

3000-5000

36

Above than 5000

10

50
45
40
35
30
25
20
15
10
5
0

Less than 1000

1000 - 3000

3000-5000

Above 5000

Alocation criteria in Rs

Interpretation: From above chart I have analysed that the allocation criteria
of investment is 45% in the range Rs.1000 to Rs.3000.

School of Management Science, Varanasi

80

Q 9: What is time duration of investment?


Ans.
Time Duration

Investment in %

Less than equal to 5 years

25

Less than equal to 4 years

Less than equal to 3 years

34

Less than equal to 2 years

25

Less than equal to 1 years

Interpretation: The above bar chart depicts that most of the investors (i.e.
33.33%) invest in less than 3 years.

School of Management Science, Varanasi

81

Q 10: Which has given more profit according to investors?


Ans.
Investment in Profit in percentage
SIP

84

Lumpsum

16

Interpretation: The above Pie chart depicts that 83.33% of investors have
got more profit in Systematic Investment Plan.

School of Management Science, Varanasi

82

Q 11: Are you satisfied with the facilities provided by RELIANCE


MUTUAL FUND ?

Ans:

Satisfaction Level with RELIANCE MUTUAL

Responses of

FUND

Investors
Yes

65%

No

35%

Interpretation: The above chart depicts that 65% investors are satisfied
with the redemption facilities provided by RELIANCE MUTUAL FUND.
School of Management Science, Varanasi

83

Q12. What is your opinion on RELIANCE MUTUAL FUND overall


performance?
EXCELLENT

[ ]

GOOD

[ ]

AVERAGE

[ ]

UNSATISFIED

[ ]

School of Management Science, Varanasi

84

Q13.In what areas do you want RELIANCE MUTUAL FUND has to


improve?

E.g. Customer service

Agents training

Others

School of Management Science, Varanasi

85

RECOMMENDATION AND SUGGESTIONS:

Though the Reliance mutual fund have a very good ascribed plan with
exclusive band of opportunities but as nothing is free from the hurdles
therefore there are few shortcomings which I felt makes Reliance mutual
fund fail to achieve its target.

.
There is high potential market for Mutual Fund Advisors in kanpur
city, but this market needs to be explored as investors are still hesitated
to invest their money in Mutual Funds.

In Kanpur investors have inadequate knowledge about Mutual Funds,


So proper Marketing of various schemes is required, company should
arranges more and more seminars on Mutual Funds.

Awareness of MF services among the investors are very low so Asset


Management company needs proper marketing of their all services by
advertising, distribution of pamphlet, arranging seminars etc.

Most of advisors are not interested in dealing of Mutual Funds because


they get very low commission.

Company should also provide knowledge about the growth rate and the
expected growth rate of Mutual Fund industry in India.

School of Management Science, Varanasi

86

Most of people aware of life insurance, NSC and PPF for tax saving
so, company should market various tax saving schemes of Mutual
Funds and their benefits.

The interface among the investors and the Mutual Fund Companies is
the agents, so the agents should have proper knowledge about Mutual
Funds as well as market so that they can help investors in their
investment decisions. The quality of agents performance and investors
trust on them can be improved only if they are permanent in nature.

School of Management Science, Varanasi

87

LIMITATIONS TO THE SURVEY

Though research based decision-making is now considered but still there is


gap between the understanding of researcher and users.
Research is there to help in decision-making, not a substitute of decisionmaking. Some of the following limitations have restricted the scope of
survey to some extent:
Some respondents gave vague information and were not serious while
responding.
Some respondents were hesitant to reveal information about their
finances because of income tax queries.
It was difficult to find whether respondents actually participate in their
financial planning.
Research can provide no. Of facts but it does not provide actionable
results.
It cannot provide the answer to any problem but can only provide a set
of guidelines.
Management rely more on the intuitions and judgment rather than
research.
Area of research was restricted to some locations of the city and
strata.

School of Management Science, Varanasi

88

SWOT ANALYSIS
Strength :
A well-known name in
Financial Companies.

Weakness :
No access to rural market.
No direct link between

Wide Experience in this

investors & the AMC.

field.
Dedicated Employees.
Tie up with many financial
institutions.
Ever growing distribution
network.
Good Infrastructure.
Experienced Fund
Managers.
Easy access to the branch.

Opportunity :

Threat :

Positive outlook of people

Highly volatile and

towards mutual funds.

uncertain market conditions.

Untapped market.

Large number of financial


giants present in this field.
.

School of Management Science, Varanasi

89

CONCLUSION

FINDINGS :
Our findings during the training with Reliance mutual fund Stock Broking
Limited, Kanpur
Companys Plan was good on the following ground:

Reliance mutual fund is a top-ranked company listed with


NSDL

and

CDSL,

provide

trading through both NSE & BSE.

Reliance mutual fund is providing software to their prospective


sub

broker

and

Remissers.
Cheque updating in 15 mins. And the credit limit up to 10 times.

There are some more points

Mutual Fund Advisors give emphasis on mutual funds than other


investment options.

School of Management Science, Varanasi

90

Mutual Funds have given a new direction to the flow of personal


saving and enable small and medium investors in remote rural and
semi urban areas to reap the benefits of the stock market investment.
Indian Mutual Funds are thus playing a very important developmental
role in allocation of scares resources in the emerging economy.

Reliance mutual fund is not able to provide sufficient services to the


investors due to unawareness among advisors regarding services.

The awareness level of investor is low in advisors are interested in


dealing in mutual fund.

Very less advisors are knowing about services provided by reliance


mutual fund.

School of Management Science, Varanasi

91

BIBLIOGRAPHY:Websites:

www.reliance mutual fund.com

www.indiacorporateadvisor.com

www.amfiindia.com

www.nsdl.co.in

www.wikipedia.com

www.moneycontrol.com

Books Referred: Research Methodology by C.R. KOTHARI


Mutual Funds by Akhilesh

Magazines & Journals Referred: Business Today


ICICI Prudential AMCs Fact sheet-THE PRUDENT

School of Management Science, Varanasi

92

School of Management Science, Varanasi

93

QUESTIONNAIRE

NAME: ______________________________________
__________________

AGE:
0-18_____

18-36_____

36-54_____

54-72______

72

ABOVE______

GENDER:

Male

[ ]

Female

[ ]

OCCUPATION: Businessman

[ ]

Govt. Employee [ ]
Student

[ ]

Pvt. Employee

[ ]

Professional

[ ]

Other (specify):________

CONTACT NO: __________________________________

Q1. In which of these Financial Instruments do you invest into?


Shares
Gold

Mutual Funds

Bonds

Derivatives

Property

NSC

Bank Deposit

PPF

Q2 .By structure in which type of schemes did you invested?


Open - Ended Schemes [ ]
Close - Ended Schemes [ ]
Interval Schemes

[ ]

School of Management Science, Varanasi

94

Q3.By investment objective in which type of schemes have you invested?


Growth Schemes

[ ]

Income Schemes

[ ]

Balanced Schemes

[ ]

Q4.In which type of funds you want to invest?


Tax saver funds

[ ]

Index funds

[ ]

Sectorial funds

[ ]

Q5. Did you repeat your investment after your initial investments?

Yes

No

Q6. What percentage of your earnings do you invest in Mutual Funds?


Up to 10%

Up to 25%

Up to 50%

Above 50%

Q7. In which you have invested?


SIP

Lumpsum

Both

Q8. What is your allocation criterion?


<1000

1000-3000

3000-5000

School of Management Science, Varanasi

>5000

95

Q9. For what time period you have invested?


<= 1 yr.

<= 2 yr.

<= 3 yr.

<= 4 yr.

<= 5 yr.

Q10. Which has given you more profit?


SIP

Lumpsum

Q11. Are you satisfied with the facilities provided by RELIANCE


MUTUAL FUND?
No

[ ]

Yes

[ ]

Q12. What is your opinion on RELIANCE MUTUAL FUND overall


performance?
EXCELLENT

[ ]

GOOD

[ ]

AVERAGE

[ ]

UNSATISFIED

[ ]

Q13.In what areas do you want RELIANCE MUTUAL FUND has to


improve?
E.g. Customer service

Agents training

Others

(Thanks for your kind support)


School of Management Science, Varanasi

96