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“A THESIS ON SERVICE PROLIFERATION AND CUSTOMER SATISFACTION AT RELIANCE MUTUAL FUND GUNTUR”
Under the guidance of Mr. SITA RAMAIAHA, Center Head, ICFAI National College Guntur Mr., P.Guruprasad, Faculty Supervisor, Faculty Member, ICFAI National College, Guntur.
BY K.Srikanth Enrollment No 7NBGU003 MBA Program (Class of 2007-2009)
I take this opportunity to express my gratitude to all the people who have guided and helped me directly or indirectly in the course of completion of my project. I feel immense pleasure to express a deep sense of gratitude to my beloved Principal Mr. SITA RAMAIAHA ICFAI National College Guntur, who has given me an opportunity to do my Management Thesis in RELIANCE mutual funds. I would also thankful to my Faculty Guide Mr., P.Guruprasad for his constant support and guidance. His valuable suggestions and helping hands has helped me to complete my project successfully.
I am also very thankful to Mr. M. RAVI SAGAR Branch manager RELIANCE mutual funds, Guntur for his cooperation in providing me all the necessary information for doing this project in RELIANCE Mutual Funds.
K. SRIKANTH 7NBGU003 ICFAI national college. GUNTUR.
I hereby declare that the management thesis report “A Thesis On Service Proliferation And Customer Satisfaction At Reliance Mutual Fund Guntur”, submitted by me to ICAFI National College, Guntur is of my own and it is not submitted to any other college or published any time before.
K. SRIKANTH, 7NBGU003, ICFAI National college. Guntur.
This is to certify that the Management Thesis entitled “A Thesis On Service Proliferation And Customer Satisfaction At Reliance Mutual Fund Guntur”, a bonafied work of K. SRIKANTH is original and has been done under my supervision is partial fulfillment for the award of Masters of Business Administration. This report or a part of this has not been submitted for the award of any other degree of with this university or any other university. I am pleased to say that his performance during the period was extremely satisfactory.
Mr., P.Guruprasad, Faculty guide, ICFAI National College, Guntur.
1. 2. 3. 4.
LIST OF TABLES, CHARTS AND DIAGRAMS ABBREVIATIONS SUMMARY/ABSTRACT INTRODUCTION
6 7 8 9-13 12 13 13 14 15 16-24 25-29 30-40 41-42 43 44-45 46 47-51
of the study
4.1.2.Objectives 4.1.3.Limitations 5. 6. 7. 8. 9.
METHODOLOGY REVIEW OF LITERATURE INDUSTRY PROFILE COMPANY PROFILE DATA ANALYSIS
10. FINDINGS&SUGGESTIONS 11. CONCLUSIONS AND 12. QUESTIONNAIRE 13. BIBLIOGRAPHY 14. GLOSSARY
LIST OF TABLES, CHARTS AND DIAGRAMS
1. Customer behavior 2. Mutual Fund operation flow chart
3. Organization of a Mutual Fund
11 19 19 21 23
4. Mutual Fund Industry Growth 5. Mutual Funds Structure /Company Structure
Tables and Charts:
1. Market Share Of The Mutual Fund Industry 2. Different Age Group Of The Respondents 3. Preferred Fund Structure 4. Investors Scheme Preference
24 31 32 33 34 35 36
5. Investor Fund Preference
6. Repeating Of Investments 7. Getting Monthly / Quarterly Statements From Time To Time 8. Ranking On The Customer Service Of Reliance Mutual Funds 9. Regarding Areas For Improvement By Reliance Mutual Funds 10. Redemption Satisfaction Of The Customers 39 11. Usage Of Value Added Services Offered By Reliance Mutual Funds
ASL SE Mf MF’S NASDAQ BSE AMC AMFI AUM CBFI CCBI CRISIL FDI NAV NFO SEBI
: : : : : : : : : : : : : : : :
Allianz Securities Limited Securities Mutual Fund Mutual Funds National Association of Securities Dealers Automated Quotation Bombay Stock Exchange Asset Management Company Association of Mutual Funds India Assets under Management Crisil Balanced Fund Index Crisil Composite Bond Index Credit Rating & Information Services of India Ltd. Foreign Direct Investment Net Asset Value New Fund Offer Securities Exchange Board of India
The basic objective of any financial services company would be to provide an absolute tailor made products and services to the customer and to retain them into the organization, but to retain a particular customer is not easy because customer expectations change by time and it becomes a tough job for the companies to curb the needs of their customers. Now with the case of asset management company which is getting its pace and a lot of companies are emerging as players, here a study has been undertaken with regards to RELIANCE AMC where study looks into the expectation of the customers regarding mutual funds and issues relating to customers expectation. The need for this research is to emphasis the expectations of customer of mutual funds and how the company in contrast to the expectations is performing. This research is conducted to understand the customer’s perception towards mutual fund. Till yesterday people are having very less knowledge for mutual funds because of brokerage companies in India have not made efforts to expand the market. They have been doing business with the same clientele. There is also a lack of investor awareness as far as markets are concerned. The Harshad Mehta scam and various other scams have created a bad impression in people's minds and this need to be changed. Just to put things in perspective, India has 330 million bank accounts. The mutual fund industry has 30 million unique folios. Unfortunately, in the broking industry, the number of people with Demat accounts has continued to stagnate at 5.85 million in the last 10-12 years, which is worrisome. Every industry in India has grown over the last 10 years except this one. Whatever retail participation exists is coming from bigger cities such as Mumbai and Delhi. The services have not reached bottom-of-the-pyramid towns. Reliance is conducting investor awareness campaigns every Saturday at Reliance money centers. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund.
CHAPTER 1 INTRODUCTION
Customer satisfaction is a measure of how products and services supplied by a company can meet the customer’s expectations. Customer satisfaction is still one of the single strongest predictors of customer retention. It’s considerably more expensive to attract new customers than it is to keep old ones happy. In a climate of decreasing brand loyalties, understanding customer service and measuring customer satisfaction are very crucial. There is obviously a strong link between customer satisfaction and customer retention. Customer's perception of Service and Quality of product will determine the success of the product or service in the market. With better understanding of customers' perceptions, companies can determine the actions required to meet the customers' needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. Customer expectations are the customer-defined attributes of your product or service you must meet or exceed to achieve customer satisfaction.1 There are many reasons why customer expectations are likely to change over time. Process improvements, advent of new technology, changes in customer's priorities, improved quality of service provided by competitors are just a few examples.
PURPOSE OF THE STUDY
The main purpose of the study is to know the expectations of those investors who invested in RELIANCE mutual funds and the satisfaction levels of investors with the services provided by the RELIANCE Asset Management Company, Guntur. In the present competitive environment it is very crucial to every business firm to ensure satisfaction to its customers. According to one survey it was found that it costs five times more to attract a new customer than to retain an existing customer. So with all these parameters taking into consideration one can say that it is very important to provide goods and services that satisfy customers needs or wants irrespective of the industry or scale of the business in which a firm is operating. Here the main purpose of the survey is to know the various factors that are very important in satisfying the customers needs and to know how RELIANCE AMC is ensuring its customers satisfaction. The expectations of customers are vary from one customer to the other customer. For example some customers are only concerned about the returns that they are getting in a fund but at the same time there are some other customers who are very specific about the location, ambience and front line employees’ interaction and some other parameters. It is very difficult to any business firm to satisfy all the expectations of all customers but there are some common factors that are essential to fulfill. The objectives of the projects are given as below. The details of the survey such as the source of data, the sample size taken and the methods of analysis are all given briefly in the methodologies. There are some constraints throughout the project, which are given clearly in the limitations.
The following are the objectives of the Management Thesis.
To understand the different investment options provided by RELIANC mutual funds
through it’s mutual fund schemes.
To know the investors’ expectations on mutual funds offered by
To know the various services provided by RELIANCE AMC to its investors. To study the satisfaction levels of customers in RELIANCE mutual funds.
To identify how the brand building helps in meeting the customers expectations to meet their investment objectives
As the data will be collected through questionnaire, there are chances of biased information provided by the respondent.
The study is confined to the existing customers of RELIANCE mutual funds only. The survey will be limited only to Guntur city. The study does not consider the equity investment portfolio of investors.
Data for the survey is collected through: Primary source
Visiting the organization (Observation Techniques) Using structured questionnaire for the existing customer.
Secondary Source • • • Company Broachers Company Website Internet
Sample size: sample size for the survey is 100. Type of sampling: stratified random sampling technique is used for collecting the primary data. The data is collected only from RELIANCE mutual fund customers’, Guntur. Methods used for analysis: bar charts and pie charts are the tools that will be used in analyzing the data.
REVIEW OF LITERATURE
For the present study, the following literatures are being reviewed.
The title of Article is “Does customer satisfaction lead to profitability?”
Author(s): Timothy L. Keiningham, Tiffany Perkins-Munn, Lerzan Aksoy, Demitry Estrin Journal: Managing Service Quality Publisher: Emerald Group Publishing Limited Purpose – Many researchers have proposed a virtuous chain of effects from improved customer satisfaction to profits. In particular, satisfaction is thought to improve share-ofspending, which in turn leads to higher customer revenue and customer profitability. This paper aims to examine these proposed linkages using data from the institutional securities industry. Design/methodology/approach – The data used in the analyses were collected as part of an ongoing telephone satisfaction survey of 81 clients of an institutional securities firm across two continents (North America and Europe). Mediation analysis was used to test the hypothesized effects. Findings – Customer revenue was found to correlate negatively with customer profitability for unprofitable customers, and positively for profitable customers. Research limitations/implications – One of the limitations of this research is that it tests the propositions within a single industry. Future research should attempt to replicate these findings in other contexts. Practical implications – A simplistic focus on improving customer satisfaction for all customers in order to improve share-of-wallet and customer revenue does not seem to represent the best management approach to maximize overall firm profitability. In fact, it could actually result in a negative return on investment. Therefore, customers should first be segmented by their profitability to the firm before expending resources to improve customer satisfaction and share-of-wallet. Originality/value – The results of this paper challenge the conventional belief that customer satisfaction should lead to customer retention in turn, resulting in customer revenue and ultimately customer profitability. The findings indicate that this may not always be true.
CHAPTER 2 INDUSTRY PROFILE.
INTRODUCTION TO MUTUAL FUND INDUSTRY
The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry in the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.
Third Phase - 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
Mutual Fund Operation Flow Chart
ORGANISATION OF A MUTUAL FUND:
There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:
Mutual funds in INDIA have a 3-tier structure of Sponsor – Trustee – AMC. Sponsor is the promoter of the fund. Sponsor creates the AMC and the trustee company and appoints the Boards of both these companies, with SEBI approval. A mutual fund is constituted as a Trust
A trust deed is signed by trustees and registered under the Indian Trust Act. The mutual fund is formed as trust in INDIA, and supervised by the Board of Trustees.
The trustees appoint the asset management company (AMC) to actually manage the
investor’s money. The AMC’s capital is contributed by the sponsor. The AMC is the business face of the mutual fund. Investor’s money is held in the Trust (the mutual fund). The AMC gets a fee for managing the funds, according to the mandate of the investors. Sponsor should have at-least 5-year track record in the financial services business and should have made profit in at-least 3 out of the 5 years. Sponsor should contribute at-least 40% of the capital of the AMC. Trustees are appointed by the sponsor with SEBI approval. At-least 2/3 of trustees should be independent. At-least ½ of the AMC’s Board should be independent members. An AMC of one fund cannot be Trustee of another fund. AMC should have a net worth of at least Rs. 10 crore at all times. AMC should be registered with SEBI. AMC signs an investment management agreement with the trustees. Trustee Company and AMC are usually private limited companies. Trustees oversee the AMC and seek regular reports and information from them. Trustees are required to meet at least 4 times a year to review the AMC. The investor’s funds and the investments are held by the custodian. Sponsor and the custodian cannot be the same entity. R&T agents manage the sale and repurchase of units and keep the unit holder accounts.
If the schemes of one fund are taken over by another fund, it is called as scheme take over. This requires SEBI and trustee approval. If two AMCs merge, the stakes of sponsor’s changes and the schemes of both funds come together. High court, SEBI and Trustee approval needed. If one AMC or sponsor buys out the entire stake of another sponsor in an AMC, there is a takeover of AMC. The sponsor, who has sold out, exits the AMC. This needs high court approval as well as SEBI and Trustee approval. Investors can choose to exit at NAV if they do not approve of the transfer. They have a right to be informed. No approval is required, in the case of open ended funds. For close ended funds investor approvals is required for all cases of merger and take over.
GROWTH IN ASSETS UNDER MANAGEMENT
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA
The regulation of mutual funds in India is governed by the SEBI vide the SEBI (Mutual Fund) Regulation, Act 1996 (here in after referred to as SEBI Regulations). These regulations make it mandatory for mutual funds to have a three-tier structure of sponsor – Trustee – Asset Management Company (AMC). The sponsor is the promoter of the mutual fund and appoints the trustees. The Trustees are responsible to the investors in the mutual fund and appoint the AMC for managing the investment portfolio.SEBI regulations also provide for who can be a sponsor, trustee and AMC, specifying the format of agreement between these entities. These agreements provide for the rights, duties and obligations of these three entities. The UTI is also structured as a trust. The important difference through is that UTI does not have sponsors or a separate AMC. Financial intuitions and banks that contributed to the initial capital of the UTI have their representatives on UTI’s Board of Trustees, which oversees the operation of UTI Mutual Fund. The Association of Mutual Funds in India (AMFI) is a self-regulatory body formed by the various MF Companies to address the practices and policies of various aspects like new scheme launches, payments to intermediaries’ comparisons and other ethical systems. Likewise, different companies have their own Compliance and Audit offices, which are mandated to control and report adherence to and deviations if any on the regulations and policies issued by SEBI. ADVANTAGES OF MUTUAL FUNDS Professional Management Diversification Convenient Administration Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits well regulated
MUTUAL FUNDS STRUCTURE /COMPANY STRUCTURE.
Establishes the mutual fund as a trust and registers with SEBI Mutual fund (For e.g. Reliance AMC)
Managed by the board of trustees.
Hold unit holders funds in mutual fund. Enters into an agreement with SEBI.
Asset Management Company.
Floats mutual funds as per the regulations of SEBI regulations.
Provides custodial services.
Provides registrar and transfer services.
Provides the network for distribution of schemes to the investors.
Market Share of the mutual fund industry.
Assets Under Management (AUM) as at the end of Jan-2008 Sl.no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Mutual Fund Name ABN AMRO Mutual Fund AIG Global Investment Group Mutual Fund Benchmark Mutual Fund Birla Sun Life Mutual Fund BOB Mutual Fund Can bank Mutual Fund DBS Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund ING Vysya Mutual Fund JM Financial Mutual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Lotus India Mutual Fund Morgan Stanley Mutual Fund PRINCIPAL Mutual Fund Quantum Mutual Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund Standard Chartered Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund Taurus Mutual Fund UTI Mutual Fund Grand Total % Market share 1.66 0.00 1.55 5.73 0.02 0.70 0.60 1.76 2.86 0.03 2.13 6.34 8.73 3.52 12.24 1.38 0.91 0.00 4.04 2.39 0.87 0.77 3.17 0.01 14.28 0.04 4.75 3.90 2.45 3.40 0.07 9.67 100.00
CHAPTER 3 COMPANY PROFILE.
Reliance Mutual Fund is one of India’s leading Mutual Funds, with Average Assets under Management (AAUM) of Rs. 90,938 Cores (AAUM for Mar 08) and an investor base of over 66.87 Lakhs. 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 wellrounded portfolio of products to meet varying investor requirements and has presence in 115 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders."
Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services.
Statutory Details: Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment Manager: Reliance Capital Asset Management Limited. The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. General Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital
markets. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. The Mutual Fund is not guaranteeing or assuring any dividend/ bonus. The Mutual Fund is also not assuring that it will make periodical dividend/bonus distributions, though it has every intention of doing so. All dividend/bonus distributions are subject to the availability of the distributable surplus in the Scheme. For details of scheme features and scheme specific risk factors, please refer to the provisions of the offer document.
Reliance Mutual Fund has won the "Most Trusted Mutual Fund Brand" for the second year, in succession by Economic Times - AC Nielsen ORG-MARG survey.
CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007 Reliance Growth Fund - Most Consistent CPR Performer - Equity Fund Category Reliance Growth Fund was the only scheme that won the CNBC TV18 - CRISIL Mutual Fund of the Year Award in the Most Consistent CPR Performer - Equity Fund category. In total 8 schemes were eligible for the award universe. Schemes present in all 20 quarterly CRISIL CPRs for the 5 years ending with 2007 were considered for the award. The award is based on consistency of the scheme’s performance in the twenty quarterly CRISIL CPR rankings released during the calendar years 2003 to 2007.
Reliance Growth Fund-Growth Plan was declared the best fund over 5 years in the Equity India category, out of 81 eligible schemes. Reliance Natural Resources fund is the only one Natural Resources sector fund in India . Reliance Mutual has completely withdrawn the restriction/upper limit imposed on subscription in Reliance Equity and Reliance Growth schemes with effect from August 18. Fresh and additional subscriptions including systematic investment plans will henceforth be accepted without any limit, subject to the minimum subscription amount for each scheme.
Reliance mutual funds has now gone ahead of Unit Trust of India (UTI) to become India's largest mutual fund by AUM (assets under management
RELIANCE CUSTOMER SERVICE Online Services Transact Online. It’s really simple. It's time you experienced the ease and convenience of transacting online. You can now purchase, redeem or switch your units of Reliance Mutual Fund schemes at www.reliancemutual.com. You can also check your account statement, fill in and submit the application form as well as view and download Offer Documents. You can do all this from the comfort of your home or office. Here ís a simple step-by-step online transaction guide that will help you get started. Online Transaction Customers can purchase, switch or redeem their Reliance Mutual Fund units through online. Online Payment: When customers can choose Online Payment, they will be directed to the Payment Gateway Page, where they have to choose one of the banks to make the payment. Once they select their bank, they will be directed to the Net Banking page of the respective bank. Log in to their bank account and make the payment. When the transaction is complete, a confirmatory mail will be sent to their registered email address. Cheque Payment: If they choose to make the payment by Cheque, they will need to download and print the application form by clicking on the link provided. They need to simply sign this form and submit it at the nearest Investor Service Centre (ISC), along with their cheque. The transaction reference number should be written on the reverse of the cheque before submission. The ISC will acknowledge receipt of the same and send their application for further processing. Till now in the part of MT research understood the products and features of mutual funds and gather complete information on Mutual Fund Industry . Studied completely about products of Reliance Mutual funds and their performance levels and also studied value added
services offered by Reliance Mutual Fund AMC to the customers . Met company executive to know about the performances of the products in our region and also customer perception on Reliance Mutual Funds .
Prepared a questionnaire to measure customer satisfaction on Reliance Mutual Funds . Gather some customers information list from Reliance Mutual Fund office, Guntur . The customers of Reliance Mutual funds are mainly business people, employees and Institutional Investors .The Mutual fund customers are risk averse .They expect high returns from less risk .Customers have different views regarding Mutual fund investments . They are in dilemma whether to invest in Bear market or Bull market . The investment objective is varies from customers to customers . There are different objectives like Growth Fund , Income Fund , Balance Fund . Met some customers and got feed back about Reliance Mutual Funds from them .
CHAPTER 4 EMPIRICAL ANALYSIS
BODY OF THESIS
TABLE SHOWING DIFFERENT AGE GROUP OF THE RESPONDENTS
0-18 18-36 36-54 54-72 72 & ABOVE CHART - 1
72 & Above 0%
NO OF RESPONDENTS
0 40 50 10 0
noof respondentS 0-18
0% 54-72 10% 18-36 40%
Inference: The majority of the respondents i.e. 46% are from the age group of 36-54. And
the second largest age group is 18-36. And the remaining investors are from 54-72 age group.
PREFERRED FUND STRUCTURE
Structure of the fund Open – ended fund Close – ended fund Interval funds Total
No of investors preferred 64 24 12 100
CHART - 2
100 90 80 70 60 50 40 30 20 10 0 Open – ended fund 64 Close – ended fund 24 Interval funds 12 Total 100
e l t T s i x A
No of investors preferred
Inference: It is observed that 64 out of 100 that are 64% of investors are interested to invest their money in open ended funds the reason can be attributed to its convenience to enter and exit at any time. 24% investors preferred to invest in close ended funds because they are long term investors as well as they want some tax benefits. And the remaining 12% investors replied that they don’t mind to invest in any funds including interval funds
INVESTORS SCHEME PREFERENCE
Table-3 Preferred fund scheme Growth scheme Income scheme Balanced scheme Total No of investors preferred 52 16 32 100
CHART - 3
Inference: In the above given graph it is showed that 52 out of 100 that are 52% of customers are interested to invest in growth schemes. 8 out of 25 that are 32% of customers are interested to invest in Balanced schemes and the remaining 16% customers are preferred to invest in Income schemes.
INVESTORS FUND PREFERENCE
Table-4 Type of fund Tax saver funds Index funds Sectorial funds Total No of investors preferred 15 40 45 100
CHART - 4
Inference: Out of 100 investors 15 that is 15% of customers are preferred to invest in Tax saver funds. 40 that is 40% of investors are preferred to invest in index funds which give returns based upon respective indexes.. 45 that is 45% of investors are interested to invest in sectorial funds that means they are ready to take high risk but want high returns
TABLE SHOWING REPEATION OF INVESTMENTS MADE BY THE RESPONDENTS.
YES NO TOTAL Chart-5
NO OF RESPONDENTS
64 36 100
No of Respondents
Inference: Out of 100 respondents 64 customers have already reinvested in the company, while the rest are waiting for a correct time to enter in the market for the second time.
GETTING MONTHLY / QUARTERLY STATEMENTS FROM TIME TO TIME
TABLE-6 Getting Monthly / Quarterly statements from time to time
No of Investors 70 30
CHART - 6
Inference: 70 out of 100 people getting monthly/quarterly statements from time to time 30 out of 100 people not getting monthly/quarterly statements from time to time .
RESPONDENTS RANKING ON THE CUSTOMER SERVICE OF RELIANCE MUTUAL FUNDS
ONE TWO THREE FOUR FIVE
NO OF RESPONDENTS
34 16 26 16 8
Inference: Out of 100 respondents 34 ranked RELIANCE as AMC one for customer service function. Table-8
RESPONSE REGARDING AREAS FOR IMPROVEMENT BY RELIANCE MUTUAL FUNDS
CUSTOMER SERVICE MONITORING OF FUND AGENTS TRAINING OTHERS TOTAL
NO OF RESPONDENT
35 38 22 5 100
Inference: Out of 100 respondents 38 respondents want RELIANCE to improve at their fund monitoring function.
REDEMPTION SATISFACTION OF THE CUSTOMERS
Satisfaction about Redemption facilities Yes No
No of Investors 65 35
Inference: Sixty five percent of the customers are happy with the redemption facilities of RMF.
RESPONSE REGARDING USAGE OF VALUE ADDED SERVICES OFFERED BY RELIANCE MUTUAL FUNDS
VALUE ADDED SERVICES
ATM Ecs Online transaction Direct investment
NO OF RESPONDENT
0 60 20 40
Inference: Most of the customers are making use of value added services of Ecs and a few of them make use online transaction and direct investment.
CHAPTER 5 FINDINGS & SUGGESTIONS
FINDINGS & SUGGESTIONS
The findings for the above research are as follows: It was found that majority of the investors i.e.46% are from the age group of 3654. This is the group of middle age people who deserve to invest for their future financial needs.
It was found that Out of 100 respondents 64 customers have already reinvested in
the company, while the rest are waiting for a correct time to enter in the market for the second time.
It was observed that Out of 100 respondents 62 investors have reinvested due to
better returns and performance of funds. While the rest of the investors have voted for performance of funds and services provided by the company.
It was observed that Out of 100 investors 15 that is 15% of customers are
preferred to invest in Tax saver funds. 40 that is 40% of investors are preferred to invest in index funds which give returns based upon respective indexes.. 45 that is 45% of investors are interested to invest in sectorial funds that means they are ready to take high risk but want high returns
It was found that Out of 100 respondents 34 ranked RELIANCE as AMC one for
customer service function.
It was found that Out of 100 respondents 38 respondents want RELIANCE to
improve at their fund monitoring function
suggestions are not necessary:-
The following suggestions are the outcome of the research and applications of these
The company should come up with innovative ways of service at their door steps this may be a costly affair but will surely give positive results in the long run. The company should take the initiative of training the advisors about the new funds from time to time which also makes the advisors connected to the company. The company should also emphasis on the monitoring of funds which directly relates to the returns of a specific fund. The company should come up with proper Hedge funds at this point of time where the market is highly volatile and the investors become very cautious at this level. The company should use brand ambassadors for example the CEO’s of major companies where the company allocate the funds. This will probably ensure proper results. The company should focus on the advertising strategy and also the marketing of the product. The company should emphasis on creating an awareness about the SIP options which is always preferable when the market is volatile. The company doesn’t have enough tax saving plans or appropriate plans for tax so which they should come up with.
NAME: AGE: PROFESSION:
1. Have you ever invested in RELIANCE Mutual Funds?
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2. If yes why did you choose RELIANC Mutual Funds? 3. By structure in which type of schemes did you invested?
Open - Ended Schemes Close - Ended Schemes Interval Schemes
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4. By investment objective in which type of schemes have you invested?
Growth Schemes Income Schemes Balanced Schemes
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5. In which type of fund you want to invest?
Tax saver funds Index funds Sectorial funds
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6. Did you repeat your investment after your initial investments? Yes No
7. Are you getting Monthly / Quarterly statements from time to time?
8. Are you satisfied with the redemption facilities provided by RELIANCE AMC?
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9. Are you satisfied with portfolio management managed by RELIANCE AMC?
[ ] [ ]
10. Which value added service you are using?
ATM [ ] Ecs [ ]
Online tranction Direct investment
[ ] [ ]
11. Are you satisfied with value added services offered by RELIANCE AMC?
Yes No 1-10
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12. Grade the customer service of RELIANCE with regards to Mutual Funds on a scale of
(Where 1 will represent the best monitoring of fund, while 10 would reflect the poor monitoring of fund)
13. What is your opinion on RELIANCE Mutual Funds overall performance?
Excellent Good Better Bad
[ ] [ ] [ ] [ ]
14. In what areas do you want RELIANCE mutual funds to improve?
E.g. Customer service Monitoring of fund Agents training Others
BOOKS MUTUAL FUNDS IN INDIA - PERSPECTIVES AND STRATEGIES Edition 2007 Published by ICFAI BUSINESS SCHOOL :- Arindam Banerjee
REFERENCES Websites: • • • • • www.reliancemutualfunds.com www.amfiindia.com www.mutualfundsindia.com www.mutualfundsindia.com www.ask.com
• • • •
www.faq.com www.bseindia.com www.amfiindia.com/mutual funds/nav/about funds/open ended schemes.com www.investopedia/aboutus/html
Advisor Your financial consultant who gives professional advice on the fund's investments and to supervise the management of its assets. Amortization A method of equated monthly payments over the life of a loan. Payments usually are paid monthly but can be paid annually, quarterly, or on any other schedule. In the early part of a loan, repayment of interest is higher than that of principal. This relationship is reversed at the end of the loan. Appreciation When an investment increases in value, it appreciates. For example, a equity share whose price goes from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-.
Arbitrage The practice of buying and selling an interlaced stock on different exchanges in order to profit from minute differences in price between the two markets. Asset Property and resources, such as cash and investments, comprise a person's assets; i.e., anything that has value and can be traded. Examples include stocks, bonds, real estate, bank accounts, and jeweler. Asset Allocation When you divide your money among various types of investments, such as stocks, bonds, and short-term investments (also known as "instruments"), you are allocating your assets. The way in which your money is divided is called your asset allocation. Annualized Return This is the hypothetical rate of return that, if the fund achieved it over a year's time, would produce the same cumulative total return if the fund performed consistently over the entire period. A total return is expressed in a percentage and tells you how much money you have earned or lost on an investment over time, assuming that all dividends and capital gains are reinvested. Balanced Fund A mutual fund that maintains a balanced portfolio, generally 40% bonds and 60% equity. Barter The exchange of goods and services for other goods and services without the use of money. Bid or Sell Price The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or redemption price means the current net asset value per share, less any redemption fee or backend load. Blue Chip
A share in a large, safe, prestigious company, of the highest class among stock market investments. A blue-chip company would be called thus by being well-known, having a large paid-up capital, a good track record of dividend payments and skilled management. Capital This is the amount of money you have invested. When your investing objective is capital preservation, your priority is trying not to lose any money. When your investing objective is capital growth, your priority is trying to make your initial investment grow in value. Capital Gain Profit from a sale of an investment constitutes a capital gain. For example, if you bought a share of stock for Rs. 5/- and later sold it for Rs. 7/-, you would have a capital gain of Rs. 2/-. Capital Gains Distributions Payments (usually annually) to mutual fund shareholders of gains realized on the sale of portfolio securities.
Capital Growth A rise in market value of a mutual fund's securities, reflected in its NAV per share. This is a specific long-term objective of many mutual funds. Closed-ended Mutual Fund A mutual fund that offers a limited number of shares. They are traded in the securities markets. Price is determined by supply and demand. Unlike open-ended mutual funds, closed-ended funds do not redeem their shares. Derivative An investment contract based on an underlying investment called an "instrument." The most common type of derivative is an option contract, which involves the right to buy or sell the underlying instrument at an agreed price. Futures contracts are also derivatives. Diversification
The policy of spreading investments among a range of different securities to reduce the risks inherent in investing. Dividend When companies pay part of their profits to shareholders, those profits are called dividends. A mutual fund's dividend is money paid to shareholders from investment income the fund has earned. The amount of each share's dividend depends on how well the company does. Endorsement Assigning or transferring a lien to another person is accomplished through the use of an endorsement. The words "PAY TO THE ORDER OF" and then the name of the person to whom the lien is being assigned to, is written. If there is not enough space on the original note to write an endorsement, it is written on a separate piece of paper that is permanently affixed to the original note. This is called an along. Face Value The face value is the term used to describe the value of a bond in terms of what the company which issued the bond will actually repay when the loan matures. It's sometimes described as nominal or par value. Growth Fund A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with significant growth potential. Income Fund A mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in stocks and bonds that normally pay high dividends and interest. Index Fund A mutual fund that seeks to mirror general stock-market performance by matching its portfolio to a broad-based index (e.g. BSE Sensex). Load A sales charge or commission assessed by certain mutual funds ("load funds") to cover their selling costs.
Net Asset Value Also known as NAV, this is the unit price (or rupee value) of one unit of a mutual fund. NAV is calculated at the end of every business day. It is calculated by adding up the value of all the securities and cash in the mutual fund's portfolio (its assets), subtracting the fund's liabilities, and dividing that number by the number of units that the fund has issued. It does not include a sales charge. The NAV increases (or decreases) when the value of the mutual fund's holdings increase (or decrease). Redeemable Preferred shares or bonds that give the issuing corporation an option to repurchase securities at a stated price. These are also known as callable securities. Redemption Fee A fee charged by a limited number of funds for redeeming, or buying back, fund units.
Redemption Price The price at which a mutual fund's units are redeemed (bought back) by the fund. The redemption price is usually equal to the current NAV per unit. Reinvestment Date The date on which a share's dividend and/or capital gains will be reinvested (if requested) in additional fund shares. Rupee Cost Averaging (SIP) The technique of investing a fixed sum at regular intervals regardless of stock market movements. This reduces average share costs to the investor, who acquires more shares in periods of lower securities prices and fewer shares in periods of high prices. In this way, investment risk is spread over time. Sector Fund
A fund that operates several specialized industries sectors portfolios under one umbrella. These sectors could be FMCG or Technology. Systematic Investment Plan Many mutual funds offer investment programs whereby unit holders can invest. The Unit holders of the scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. The SIP allows the investors to invest a fixed amount of Rupees every month or quarter for purchasing additional units of the scheme at NAV based prices. Systematic Withdrawal Plans Many mutual funds offer withdrawal programs whereby unit holders receive payments from their investments. These payments are usually drawn from the fund's dividend income and capital gain distributions, if any, and from principal only when necessary.
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