Kotecha Dhara SIP- Reliance MF

8/8/2019 Kotecha Dhara SIP- Reliance MF

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A SUMMER TRAINING REPORT ON

AN EMPIRICAL STUDY OF INVESTORS PERCEPTION ABOUT

INVESTMENT IN MUTUAL FUNDS WITH REFERENCE TO

RELIANCE MUTUAL FUND

By

DHARA R. KOTECHA

29, MBA SEM II,

Marwadi Education Foundations Group of Institutions, Rajkot.

AY: 2010-11

Conducted at


Head branch, Rajkot.

Submitted to

GUJARAT TECHNOLOGICAL UNIVERSITY

AHMEDABAD

Under the guidance of

Dr. S Chinnam Reddy,

Dean,

Faculty of Management,MEFGI, Rajkot.


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DECLARATION

I, the under signed Miss. DHARA R. KOTECHA hereby declare that the research work

presented in this summer internship project is my own contribution and has been carried

out under the supervision of Dr. CHINNAM REDDY, Dean and Faculty of Management,

Marwadi Education Foundations Group of Institutions, Rajkot.

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

any university for any degree.

Date:

Place: Rajkot (DHARA R. KOTECHA)

Miss. DHARA R. KOTECHA

(Student of MBA Sem - II)

Marwadi Education Foundations

Group of Institutions,


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PREFACE

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

is necessary that the theoretical must be supplemented with exposure to the real environment.

Theoretical knowledge just provides the base and its not sufficient to produce a good

manager thats why practical knowledge is needed.

Therefore the research product is an essential requirement for the student of MBA.

This research project not only helps the student to utilize his skills properly learn field

realities but also provides a chance to the organization to find out talent amongthe budding

managers in the very beginning. Investing money where the risk is less has always been risky

to decide. The first factor, which an investor would like to see before investing, is risk factor.

Diversification of risk gave birth to the phenomenon called Mutual Fund. The Mutual FundIndustry is in the growing stage in India, which is evident from the flood of mutual funds

offered by the Banks, Financial Institutes & Private Financial Companies. In accordance with

the requirement of MBA course I have summer training Research project on the topic AN

EMPHIRICAL STUDY OF MUTUAL FUNDS AND STUDY OF INVESTORS

PERCEPTION ABOUT INVESTMENT IN MUTUAL FUNDS WITH REFERENCE

TO RELEANCE MUTUAL FUND

For conducting the research project sample size of 120 customers of Mutual Funds

were selected. The information regarding the project research was collected through the

questionnaire formed by me which was filled by the investors of Mutual Funds.


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ACKNOWLEDGEMENT

Expression of feelings by words makes them less significant when it comes to make

statement of gratitude

I take this opportunity to express my gratitude to all the people who have guidedandhelped me directly or indirectly in the course of completion of my project.I feel immense

pleasure to express a deep sense of gratitude to my Dean Dr. S Chinnam Reddy who hasgiven me an opportunity to do my internship in Reliance Mutual Fund. I would also thankfulto my Faculty Guide Dr. S Chinnam Reddy for his constant support and guidance. Hisvaluable suggestions and helping hands has helped me to complete my projectsuccessfully.

I am also very thankful to Mr. Rohan Dhruv, Relationship Manager, RelianceMutual -Fund, for his cooperation in providing me all the necessary information for doingthis project.

Date:

Place: Rajkot (DHARA R. KOTECHA)


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CONTENTS

Sr.No. Description Page No.

I List of tables, charts and diagram 3

II List of Abbreviations 4

CHAPTER 1

1.1 Introduction 8

1.2 Industry Profile 21

1.3 Company Profile 27

1.4 SWOT Analysis 50

CHAPTER 2

2.1 Research Methodology 53

2.2 Objectives 55

2.3 Rationale 55

2.4 Literature Review 56

2.5 Research method 60

2.6 Sample Design 61

2.7 Collection of data 61

2.8 Limitations of the study 61

CHAPTER 3

3.1 Analysis and Interpretation of Collected Data. 64


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CHAPTER 4

4.1 Hypothesis 84

4.2 Findings 92

4.3 Summary 93

4.4 Suggestions 94

Bibliography 95

Annexure 96


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LIST OF TABLES, CHARTS AND DIAGRAMS

Diagrams:

y Mutual Fund operation flow chart

y Organization of a Mutual Fund

y Mutual Fund Industry Growth

y Mutual Funds Structure /Company Structure

y Flow chart of marketing research process

Tables and charts:

Table showing:-

y Occupation of investorsy Age group

y Income level of respondents

y Reasons for not investing in MF

y Respondents preference towards various instrument

y Average investment period

y Sources of information

y Reasons for investing in MF

y Influence of promotion on respondents

y Investment preference towards various companies

y Knowledge about MF among respondents

y From where do they purchasey Most suitable age of investment

y Preference towards features of MF

y Return expected by respondents

y Type of fund preferred

y Preference in MF


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ABBREVIATION

SE : SecuritiesMf: Mutual FundMFS : Mutual Funds

BSE : Bombay Stock ExchangeAMC : Asset Management CompanyAMFI : Association of Mutual Funds IndiaAUM : Assets under ManagementCRISIL : Credit Rating & Information Services of India Ltd.FDI : Foreign Direct Investment

NAV : Net Asset ValueSEBI : Securities Exchange Board of India

AAUM: Average Asset Under Management

ISC: Investor Service CenterCAMS: Computer Age Management Services


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TABLE CONTENTS

Sr No Description Page No

1 Introduction 8

2 Why Mutual fund 9

3 What is Mutual fund 10

4 How MF is structured 11

5 Types of MF 14

6 Benefit of MF 17

7 Disadvantages of MF 18

8 Risk involved in MF 18

9 Legal & regulatory framework of MF 19


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INTRODUCTION

Investment in share markets are influenced by the analysis & reasoning which help inpredicting the market to some extent. Over the past years a number of technical & theories

for analysis have evolved, these combined with modern technology guides the investor. The big players in the market, like Foreign Institutional Investors, Mutual Funds, etc. have theexpertise for various analytical tools & make use ofthem. The small investors are not in a

position to benefit from the market the way Mutual Funds can do. Generally a smallinvestors investments are based on market sentiments, inside information, throughgrapevine, tips & intuition. The small investors depend on brokers and brokerage house forhis investments. They can invest through the Mutual Funds who are more experienced andexpert in this field than a small investor himself.

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


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ABOUT MUTUAL FUND

A Mutual fund is the ideal investment vehicle for today's complex and modemfinancial scenario. Markets for equity shares, bonds and other fixed income instruments, realestate, derivatives and other assets have become mature and information driven. Price

changes in these assets are drivenby global events occurring in faraway places. A typicalindividual is unlikely to have the knowledge, skills, inclination and time to keep track ofevents, understand their implications and act speedily. An individual also finds it difficult tokeep track of ownership of his assets, investments, brokerage duesand bank transaction etc.

CHARECTERISTIC:

A mutual fund actually belongs to the investors who have pooled their funds.

A mutual fund is managed by investment professionals and other service providers,who earn a fee for their services, from the fund

The pool of funds is invested m a portfolio of marketable investments. The value of

the portfolio is updated every day The investor's share m the fund is denominated by 'units'. The value of the units

changes with change m the portfolio's value, every day. The value of one unit ofinvestment is called the Net Asset Value or NAV.

WHY MUTUAL FUND?

One can avail of the benefits of better returns with added benefits of anytime

liquidity by investing in open-ended debt funds at lower risk. Many people haveburnt their

fingers by investing in fixed deposits of companies who were assuringhigh returns but

have gone bust in course of time leading to distraught investors as well as pending cases incompany law board.

This risk of default by any company that one has chosen to invest in, can beminimized by investing in mutual funds as the fund managers analyze thecompanies financials more minutely than an individual can do as they have theexpertiseto do so.

Capital markets interest people, albeit not all for there are several problemsassociated. First issue is that of expertise. While investing directly into capital marketone has to be analytical enough to judge the valuation of the stock andunderstand thecomplex undertones of the stock. One needs to judge the rightvaluation for exiting thestock too. It is very difficult for a small investor to keep track of the movements of themarket. Entrusting the job to experts, who watch the trends of the market and analyzethe valuations of the stocks will solve this problem for an investor. Mutual fundsspecialize in identification of stocks through dedicated experts in the field and thisenables them to pick stocks at the right moment. Sector funds provide an edge andgenerate good returns if the particular sectors is doing well.


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INVESTORS

Pool their moneywith

RETURNS

SECURITIES FUND MANAGER

Generates

Invest in

Mutual Fund

Operation Flow

Next problem is that of funds/money. A single person cant invest in multiple

high-priced stocks for the sole reason that his pockets are not likely to be deepenough.

This limits him from diversifying his portfolio as well as benefiting from multiple

investments.

Here again, investing through MF route enables an investor to invest in many good

stocks and reap benefits even through a small investment. This not only diversifies the

portfolio and helps in generating returns from a number of sectors but reducesthe risk as

well. Though identification of the right fund might not be an easy task,availability of good

investment consultants and counselors will help investors takeinformed decision.

WHAT IS MUTUAL FUND?

A Mutual Fund is a trust that pools the savings of a number of investors who share acommon financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned through theseinvestments and the capital appreciation realized are shared by its unit holders in proportionto the number of units owned by them. Thus a Mutual Fund is the most suitable investmentfor 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 broadlythe working of a mutual fund.


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HOW MUTUAL FUND IS STRUCTURED?

The Structure Consists:

The structure of mutual funds m India is governed by the SEBI Regulations, 1996.These regulations make it mandatory for mutual funds to have a 3-tier structure of

Sponsors-Trustee-AMC (Asset Management Company). The Sponsor is the promoter ofmutual fund, and appoints the Trustee. TheTrustees are responsible to the investors mthe mutual funds, and appoint the AMC for managing theinvestment portfolio. The AMCis the business face of the mutual funds, as it manages all the affairs ofmutual funds. Themutual funds and AMC have to be registered by the SEBI.


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Sponsor

Sponsor is the person who acting alone or in combination with another bodycorporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worthof the Investment Managed and meet the eligibility criteria prescribed under theSecurities and Exchange Board of India (Mutual Funds)Regulations, 1996.The Sponsoris not responsible or liable for any loss or shortfall resulting from the operation of theSchemes beyond the initial contribution made by it towards setting up of the Mutual Fund

Trust

The Mutual Fund is constituted as a trust m accordance with the provisions of the IndianTrusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian RegistrationAct, 1908

Trustee

Trustees are like internal regulators in a mutual fund, and their job is to protect theinterests of the unit holders. Trustees are appointed by the sponsors, and can beeitherindividuals or corporate bodies. In order to ensure they are impartial andfair, SEBI rulesmandate that at least two-thirds of the trustees be independent, i.e., not have anyassociation with the sponsor

Asset Management Company

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

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

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

Registrar and Transfer Agent

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


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Some fund houses handle such functions in-house. Others outsource it to theRegistrars; Karvy and CAMS are the more popular ones. It doesnt really matter which

model your mutual fund opt for, as long as it is prompt and efficient in servicing you.Most mutual funds, in addition to registrars, also have investors service centers of theirown in some cities.

Some of the investor related services are:-

b Processing investor applications

b Recording details of the investors

b Sending information to the investors

b Processing dividend payout

b Incorporating changes in the investor information

b Keeping investor information up to date

Custodian

A custodian handles the investment back office of a mutual fund. Its responsibilitiesinclude receipt and delivery of securities, collection of income, distribution of dividends,and segregation of assets between schemes. The sponsor of a mutual fund cannot act asa custodian to the fund. For example, Deutsche Bank is a custodian, but it cannot

service Deutsche Mutual Fund, its mutual fund arm

Distributors

Distributors appoint agents and other mechanisms to mobilize funds fromthe investors.Banks and post offices also act as distributors The commission received by the distributors

is split into initial commission which is paid on mobilization of funds and trail commissionwhich is paid depending on the time the investor stays with the fund.


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Types of Mutual Funds Scheme in India

Subject to the SEBI regulations, a Mutual Fund is free to design its scheme to suit theneeds of the various types of investors. The Mutual Fund in India, from the point of view ofschemes, can be categorized into:

1. Constitution2. Investment objective

1. AS PER CONSTITUTION

The Mutual Fund as per the structure basis can be divided into:

Open-ended schemes

It is a scheme in which an investor can buy and sell units on a daily basis. Such schemehas a perpetual existence and a flexible and ever changing corpus. The investor under suchscheme is free to buy and sell any number of units, at any point of time, as there is no

boundation on to limited period or has no fixed maturity period.The scheme permits theinvestors to withdraw their funds on to a continuing basis as it gives to the investor almostinstant liquidity. Such schemes as are not listed on to the stock market can be bought and sold

only from, and to, the Mutual Fund.

Close- ended schemes

It is a scheme in which the subscription period for the Mutual fund kept open only for alimited period, called the redemption period. Such schemes do not allow investors towithdraw their funds as when they like as it has a fix maturity period (ranging from 2 to 15years). These schemes are generally traded at discount to NAV; but closer to maturity, the


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

Interval schemes

These combine the features of open-ended and close-ended schemes. They may be tradedon the stock exchange or may be open for sale or redemption during predetermined intervalsat NAV related prices.

2. AS PER INVESTMENT OBJECTIVE

The Mutual Funds according to investment objectives comprises of:

Equityorientedschemes

These schemes also commonly called Growth Schemes, seek to invest a majority of their

funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest inequities these schemes are exposed to fluctuations in value especially in the short term.

Equity schemes are hence not suitable for investors seeking regular income or investors whohave a long term investment horizon.

General purpose

The investment objectives of general purpose equity schemes do not restrict them toinvest in specific industries or sectors. They thus have a diversified portfolio of companiesacross a large spectrum of industries. While they are exposed to equity price risks, diversifiedgeneral purpose equity funds seek to reduce the sector or stock specific risks throughdiversification. They mainly have market risk exposure. HDFC Growth Fund is a general

purpose equity schemes.

Sector Specific

The schemes restrict their investing to one or more pre-defined sectors. E.G.technology sector. Since they depend upon the performance of select sectors only, theseschemes are inherently more risky than general purpose schemes. They are suited forinformed investors who wish to take a view and risk on the concerned sector.

Special schemes;

Index schemes

The primary purpose of an index is to serve as a measure of the performance of the

market as a whole, or a specific sector of the market. An index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested ininvesting in the market in general rather than investing in any specific fund. Such investorsare happy to receive the returns posted by the market. As it is not practical to invest in eachand every stock in the market in proportion to its size, these investors are comfortableinvesting in a fund that they believe is a good representative of the entire market. Index fundsare launched and managed for such investors.


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Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of theIndian Income Tax laws as the Government offers tax incentives for investment in specifiedavenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemesare allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides

opportunities to investors to save capital gains u/s 54EA and 54EB by investing in MutualFunds, provided the capital asset has been sold prior to April 1, 2000 and the amount isinvested before September 30, 2000.

Real Estate Fund

Specialized real estate funds would invest in real estate directly, or may fund real estatedevelopers or lend to them directly or buy shares of housing of finance companies or mayeven buy their securitized assets.

DEBT BASED SCHEMES

These schemes are commonly called Income schemes, Invest in debt securities such ascorporate bonds, debentures and Govt. securities. The prices of these schemes tend to bemore stable compared with the equity schemes and most of the returns to the investors aregenerated through dividend or steady capital appreciation. These schemes are ideal forconservative investors or those not in a position to take higher equity risks, such as retiredindividuals. However, as compared to the money market schemes they do have a higher pricefluctuation risk and compared to a Gift fund they have a higher credit risk.

Income schemes

A pure income scheme aims at generating and distributing regular income to theinvestors. These schemes generally invest a substantial portion (70% to 80%) of the corpus in

the fixed income securities such as bonds and corporate debentures. Declaration of regulardividends is the main objective of such schemes.

Liquid income schemes

Similar to the Income schemes but with a shorter maturity than Income schemes.

Money Market Schemes

The aim of money market funds is to provide easy liquidity, preservation of capital

and moderate income. These schemes generally invest in safer short-term instruments such as

treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on

these schemes may fluctuate depending upon the interest rates prevailingin the market. These

are ideal for Corporate and individual investors as a means to park their surplus funds forshort periods.

Gilt fund

This scheme primarily invests in Govt. Debt. Hence the investor usually does not have to

worry about the credit risk since Govt. Debt is generally credit risk free.


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HYBRID SCHEMES

These schemes are commonly known as balanced schemes. These schemes invest in both

Equity as well as Debt. By investing in a mix of this nature, balanced schemes seek to attain

the objective of income and moderate capital appreciation and are ideal for investors with aconservative.

BENEFITS OF MUTUAL FUND INVESTMENT

Mutual Funds offer several benefits to an investor that are unmatched by the other

investment options. Last six years have been the most turbulent as well as exiting ones forthe industry. New players have come in, while others have decided to close shop by eitherselling off or merging with others. Product innovation is now pass6 with the game shiftingto performance delivery in fund management as well as service. Those directly associatedwith the fund management industry like distributors, registrars and transfer agents, andeven the regulators have become more mature and responsible.


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DISADVANTAGES OF MUTUAL FUND INVESTMENT

No control over cost

Managing portfolio of fundsNo tailor-made portfolio

Delay in redemption Non availability of funds

RISK INVOLVED IN MUTUAL FUND:


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LEGAL & REGULATORY FRAMEWORK OF MF

In the year 1992, securities and exchange Broad of India (SEBI) Act was passed. The

objectives of SEBI are to protect the interest of investors in securities and to protect the

development of and to regulate the securities market. SEBI formulates policies and regulatesthe mutual funds to protect the interest of the investors.

Following are the regulators of Mutual Fund in India

AMFI ( Association Of Mutual Fund In INDIA)

It is Association of Mutual Fund in India. It promotes Mutual Fund among the massand give recommendations in order to uphold the interest of investors.

This Association conducts AMFI exam. Initially the Association gave rights ofconducting the exam to Bombay Stock Exchange (BSE) and National Stock Exchange(NSE). Then rights were also given to the UTI (Unit Trust of India). Corporate

distributors are also given rights to conduct exam. It is compulsory for a person toclear AMFI exam in order to become advisor in Mutual Fund.

SEBI (Securities and Exchange Board of INDIA)

Securities and Exchange Board of India (SEBI), the capital market regulatorhasclearly defined rules which govern mutual funds. These rules relate to the formation,administration, and management of mutual funds and also prescribe disclosure andaccounting requirements. Such a high level of regulation seeks to protect the interestof investors.

All Mutual Fund schemes are registered with SEBI and they follow the rules andregulation as prescribed by SEBI. It registers every mutual fund scheme in order to

protect the interest of investors.

RBI (Reserve Bank of INDIA)

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


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FREQUENTLY USED TERMS

Corpus:

The total amount of money invested in a scheme by all the investors.

Entry/Exit load :

Entry load is the load on purchase or switch-out of units

Exit load is load on redemptions Dividend switch out of units.

NET ASSET VALUE:

A mutual fund is a common investment vehicle where the assets of thefund belong directlyto the investors. Investors subscriptions are accounted for by the fund not as liabilities or

deposits but as Unit Capital. On the other hand, the investments made on behalf of theinvestors are reflected on the assets side and are the main constituentof the balance sheet.

There are, however, liabilities of a strictly short- term nature that may be part of the balance

sheet. The funds Net Assets are therefore defined as the assets minus the liabilities. As thereare many investors in a fund, it is common practice for mutual funds tocompute the share ofeach investor on the basis of the value of Net Assets Per Share/Unit, commonly known as the

Net Asset Value (NAV).

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

NAV = Market/ fair value of schemes investments + receivables + accrued income +other assets accrued expenses payables other liabilities

Number of units outstanding


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TABLE CONTENTS

Sr. No Description Page No

1 History of MF 23

2 Major players of MF 25


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HISTORY AND ORGANIZATION OF MUTUAL FUNDS IN INDIA

The mutual fund industry in India started in 1963 with the formation of Unit Trust ofIndia, at the initiative of the Government of India and Reserve Bank the. The history of

mutual funds in India can be broadly divided into four distinct phases.

First Phase-1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set

up by the Reserve Bank of India and functioned under the Regulatory andadministrative control of the Reserve Bank of India. In 1978 UTI was de-linked from theRBI and the Industrial Development Bank of India (IDBI) took over theregulatory andadministrative control in place of RBI. The first scheme launched by UTI was UnitScheme 1964. At the end of 1988 UTI had Rs.6,700 Crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by publicsector banks and Life Insurance Corporation of India (LIC) and General InsuranceCorporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fundestablished in June 1987 followed by Canbank Mutual Fund (Dec 87), PunjabNationalBank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bankof India (Jun 90),Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutualfund industry had assets under management of Rs.47,004 Crores.

Third Phase-1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund families.Also,1993 was the year in which the first Mutual Fund Regulations came intobeing, underwhich all mutual funds, except UTI were to be registered and governed. Theerstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first privatesector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in 1996. The industry nowfunctions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreignmutual funds setting up funds in India and also the industry has witnessed several mergersand acquisitions. As at the end of January 2003, there were 33 mutual funds withtotalassets of Rs. 1,21,805 Crores. The Unit Trust of India with Rs.44,541 Crores of assetsunder management was way ahead of other mutual funds.


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Fourth Phase- since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTIwas bifurcated into two separate entities. One is the Specified Undertaking of theUnit Trustof India with assets under management of Rs.29,835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain otherschemes. The Specified Undertaking of Unit Trust of India, functioning under anadministrator and under the rules framed by Government of India and does not comeunder the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. With the

bifurcation of the erstwhile UTI w hich had in March 200 0 more than Rs.76,000Crores of assets under management and with the setting up of a UTIMutual Fund,conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking placeamong different private sector funds, the mutual fund industry has entered itscurrent phase of consolidation and growth. A s at the end of September, 2004, therewere 29 funds, which manage assets of Rs.153108 Croresunder 421 schemes. The net asset

value (NAV) of mutual funds in India declined when stock pricesstarted falling in theyear 1992. Those days, the market regulations did not allowportfolio shifts into alternativeinvestments. There was rather no choice apart fromholding the cash or to further continueinvesting in shares. One more thing to be noted, since only closed-end funds werefloated in the market, the investors disinvested by selling at a loss in the secondary market.

The performance of mutual funds in India suffered qualitatively. The 1992 stockmarket scandal, the losses by disinvestments and of course the lack of transparentrules inthe whereabouts rocked confidence among the investor.

The graph indicates the growth of assets over the years.

Graph 1: The graph showing Growth in assets under management through

Mutual Funds


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MUTUAL FUND(PLAYERS)SOLD BY COMPANY

The Indian mutual fund industry is mainly divided into three kinds of categories.

These categories include public sector players, nationalized banks and private sector and

foreign players. UTI Mutual Fund was one of the leading Mutual Fund companies in India till

May 2006 with a corpus of more than Rs. 3 1, 000 Crore and it is the public sector mutual

fund. Bank of Baroda, Punjab National Bank, Can Bank and SBI are the major nationalized

banks mutual fund. At present mutual fund industry is mainly dominated by private and

foreign sector players which include major players like Prudential ICICI Mutual Fund,

HDFC Mutual Fund, Reliance Mutual Fund etc. are private sector mutual funds players

while Franklin Templeton etc. are major foreign mutual fund players. At present there are

more than 33 players operating in Indian.

The brief introduction of major players is given as follows

Alliance Capital Mutual Fund

Birla Mutual Fund

Cholamandalam Mutual Fund

DSP Merrill Lynch Mutual Fund

Fidelity Equity Fund

Franklin Templeton Mutual Fund

HDFC Mutual Fund

HSBC Mutual Fund

IDBI Principal

IL & FS Mutual Fund

ING Savings Trust


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JM Mutual Fund

Prudential ICICI Mutual Fund

Reliance Capital

SBI Mutual

Sundaram Mutual Fund

Tata Mutual

Unit Trust Of India


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TABLE CONTENTS

Sr. No Description Page No

1 About Reliance Capital 30

2 Reliance Capital businesses 33

3 Board of Directors 35

4 About Reliance Mutual Fund 36

5 Vision & Mission Statement 38

6 Management Team 39

7 Reliance Customer Service 40

8 Reliance various schemes 42

9 Service Provider 46

10 Reliance Distribution Channel 48

11 Awards & Achevements 49


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THE MAN BEHIND RELIANCE

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,

1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor.

FOUNDER

Dhirubhai H. Ambani

Founder Chairman,

Reliance Industries Limited, India

December 28, 1932 - July 6, 2002

Major Group Companies: Reliance

Industries Limited, India's largest private sector

company.

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

Father's Name: Hirachand Govardhandas Ambani

Mother's Name: Jamunaben Hirachand Ambani


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ABOUT RELIANCE CAPITAL

Reliance Capital, a constituent of S&P CNX Nifty and MSCI India, is a part of the

Reliance Anil Dhirubhai Ambani Group. It is one of India's leading and most valuablefinancial service companies in the privet sector. .

Reliance Capital has interests in asset management and mutual fund; life and general

insurance; consumer finance and industrial finance; stock broking; depository services; private equity and proprietary investments; exchanges, asset reconstruction; distribution of

financial products and other activities in financial services.

Reliance Mutual Fund is India's largest Mutual Fund with over seven millioninvestors. Reliance Life Insurance is one of India's fastest growing life insurance companiesand among the top four private sector insurers. Reliance General Insurance is one of India's

fastest growing general insurance companies and among the top three private sector insurers.Reliance Money is one of Indias leading retail brokerage houses and distributors of financial products and

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


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VISION [Reliance capital]

Reliance Capital's vision is that:

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

"The largest, most profitable, innovative, and most trusted financial services company

in India and in the emerging markets"

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

1. 50 million customers.2. 75,000 employees3. A profit after tax of Rs. 5,000 crore for that financial year.4. A valuation of Rs. 100,000 crore for the company and its subsidiary businesses.

In achieving this vision, the company will be both customer-centric and innovation-driven

Business mix of Reliance Capital:

Asset Management Mutual Fund, Portfolio Management, Offshore Fund

Insurance Life Insurance, General Insurance

Consumer Finance

& Home Finance

Mortgages, Loans against Property , Business Loans,

Loans for Commercial Vehicles, Loans for Construction

Equipment, Auto Loans, Loans against shares, Business

Loans

Broking and

Distribution

Stocks Commodities and Derivatives, Wealth

Management Services, Portfolio Management Services,

Investment Banking, Foreign Exchange and Offshore

Investment, Third Party Products

Other Businesses Asset Reconstruction, Institutional Broking, Private

Equity, Exchanges, Venture Capital


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COMPANY HISTORY

Reliance Capital Limited (RCL) was incorporated in year 1986 at Ahmedabad inGujarat as Reliance Capital & Finance Trust Limited. The name RCL came into effect from

January 5, 1995. In 2002, RCL shifted its registered office to Jamnagar in Gujarat before itfinally moved to Mumbai in Maharashtra, in 2006.

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

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

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

RCL was accredited a Category 1 Merchant banker by the Securities Exchange Boardof India (SEBI). It had lead managed/co-managed 15 issues of an aggregate value of Rs. 400

crore and had underwritten 33 issues for an aggregate value of Rs. 550 crore. All thesecompanies were listed on various exchanges.

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

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

RCL has since diversified its activities in the areas of asset management and mutual

fund; life and general insurance; consumer finance and industrial finance; stock broking;depository services; private equity and proprietary investments; exchanges, assetreconstruction; distribution of financial products and other activities in financial services.


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Reliance Capital businesses:


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Other businesses


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BOARD OF DIRECTORS

Anil Ambani, Chairman Amitabh Jhunjhunwala, Vice-Chairman

Rajendra Chitale, Independent Director Dr. Bidhubhusan Samal

Shri C. P. Jain


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ABOUT RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts

Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital

Trustee Co. Limited (RCTCL), as the Trustee.

Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average

Assets Under Management (AAUM) of Rs. 1,18,973 Crores and an investorcount of over 74

Lakh folios. (AAUM and investor count as of May 2010) AAUM (Source :

http://www.amfiindia.com)

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is oneof the fastest growing mutual funds in the country. RMF offers investors a well-rounded

portfolio of products to meet varying investor requirements and has presence in 159 cities

across the country. Reliance Mutual Fund constantly endeavors to launch innovativeproducts

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 Indias 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 assetmanagement, life and general insurance, private equity and proprietary investments, stock

broking and other financial services.


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COMPANY AT GLANCE

Sponsor: Reliance Capital Limited

Trustee: Reliance Capital Trustee Co. Limited

Investment Manager: Reliance Capital Asset Management Limited

Statutory Details: The Sponsor, the Trustee and the Investment Manager are incorporated

under the Companies Act 1956.

Custodian The Trustee has appointed Deutsche Bank, AG located at Kodak House, Ground

Floor, 222 Dr. D.N.Road, Mumbai-400 001, as the Custodian of the securities thatare bought

and sold under the Scheme.

The Registrar Reliance Capital Asset Management Limited has appointed M/s. Karvy

Computer share Pvt. Limited to act as the Registrar andTransfer Agent to the Schemes of

Reliance Mutual Fund.

The main objectives of the Trust are:

y To carry on the activity of a Mutual Fund as may be permitted at law and formulate

and devise various collective Schemes of savings and investments for people in India

and abroad and also ensure liquidity of investments for the Unit holders;

y To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on

their savings and

y To take such steps as may be necessary from time to time to realise the effects without

any limitation.


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VISION AND MISSION

Vision statement:

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

Mission Statement:

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

customers.


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THE MANAGEMENT TEAM

BOARD OF DIRECTORS Mr. Soumen Ghosh

Mr. Kanu Doshi

Mr. Manu Chadha

Mr. Sushil Tripathi

MANAGEMENT TEAM Mr. Sundeep Sikka

Mr. Madhusudan Kela

Mr. Amitabh Mohanty

EQUITY FUND MANAGERS Mr. Sunil B. Singhania

Mr. Shailesh Raj Bhan

Mr. Krishan Daga

Mr. Omprakash S. Kuckian

Mr. Ashwani Kumar

Mr. Shiv Chanani

Mr. Govind Agrawal

DEBT FUND MANAGERS Mr. Amit Tripathi

Mr. Prashant Pimple

Ms. Anju Chhajer

Mr. Arpit Malaviya

COMMODITIES Mr. Hiren Chandaria

HEAD OF DEPARTMENTS Mr. Pradeep Andrade

Mr. Milind Gandhi

Mr. Rajesh Derhgawen

Mr. Vinay Nigudkar

ZONAL HEAD Mr. Gurbir Chopra

Mr. Aashwin Dugal

Mr. Gopal Khaitan

Mr. Vikas Rathie


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RELIANCE CUSTOMER SERVICE

Online Services

The ease and convenience of transacting online is made available by reliance Mutualfund. Customers can purchase, redeem or switch their units of Reliance Mutual Fundschemes at www.reliancemutual.com. They can also check your account statement, fill in andsubmit the application form as well as view and download Offer Documents. All this is

possible by sitting at our home or office. Following s a simple step-by-step onlinetransaction guide that is available.

Online TransactionCustomers 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 PaymentGateway Page, where they have to choose one of the banks to make the payment. Once theyselect their bank, they will be directed to the Net Banking page of the respective bank. Log into their bank account and make the payment. When the transaction is complete, aconfirmatory mail will be sent to their registered email address.

Cheque PaymentIf 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 andsubmit 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 beforesubmission. The ISC will acknowledge receipt of the same and send their application for

further processing.


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RELIANCE VARIOUS SCHEMES

Equity/Growth Schemes

The aim of growth funds is to provide capital appreciation over the medium to long-

term. Such schemes normally invest a major part of their corpus in equities. Such funds have

comparatively high risks. These schemes provide different options to the investors like

dividend option, capital appreciation, etc. and the investors may choose an option depending

on their preferences. The investors must indicate the option in the application form. The

mutual funds also allow the investors to change the options at a later date. Growth schemes

are good for investors having a long-term outlook seeking appreciation over a period of time.

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

fund:

Diversified Large cap: Reliance Equity Advantage Fund

Reliance NRI Equity Fund

Reliance Vision Fund

Reliance Quant plus Fund

Reliance Equity Fund

Diversified Mid cap: Reliance Growth Fund

Reliance Long Term Equity Fund

Diversified Multi cap: Reliance Equity opportunities Fund

Reliance Regular Saving Balanced Fund

Debt/Income Schemes

The aim of income funds is to provide regular and steady income to investors. Such

schemes generally invest in fixed income securities such as bonds, corporate debentures,

Government securities and money market instruments. Such funds are less risky compared to

equity schemes. These funds are not affected because of fluctuations in equity markets.

However, opportunities of capital appreciation are also limited in such funds. The NAVs ofsuch funds are affected because of change in interest rates in the country. If the interest rates

fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long

term investors may not bother about these fluctuations.


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Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectors or

industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving

Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent

on the performance of the respective sectors/industries. While these funds may give higherreturns, they are more risky compared to diversified funds. Investors need to keep a watch on

the performance of those sectors/industries and must exit at an appropriate time. They may

also seek advice of an expert.

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

Reliance Banking Fund

Reliance Diversified Power Sector Fund

Reliance Media & Entertainment Fund

Reliance Pharma Fund

Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) are usually passively managed mutual fund schemestracking a benchmark index and reflect the performance of that index. These schemes arelisted on the stock exchange and therefore have the flexibility of trading like a share on thestock exchange. It can also be looked as a security that tracks an index, a commodity or a

basket of assets like an index fund, but trades like a stock on an exchange, thus experiencingprice changes throughout the day as it is bought and sold.

Reliance Banking Exchage Traded Fund

Reliance Gold Exchage Traded Fund

Fixed Maturity Plans (FMPs)

Fixed Maturity Plans (FMPs) are basically debt oriented investment schemes with apre-specified tenure offered by mutual funds. FMPs invest in a portfolio of debt instruments

whose maturity coincides with the maturity of the concerned FMP. The primary objective ofa FMP is to generate income while aiming to protect the capital by investing in a portfolio of

debt and money market securities. Since FMPs are available with several maturity options,

one can invest in the relevant plan depending upon his investment horizon and therequirement of cash flows.


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MUTUAL FUND INVESTING STRATEGIES

Systematic Investment PlanMany 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 everymonth or quarter for purchasing additional units of the scheme at NAV based prices.

Systematic Withdrawal PlansMany mutual funds offer withdrawal programs whereby unit holders receive

payments from their investments. These payments are usually drawn from the fund's dividendincome and capital gain distributions, if any, and from principal only when necessary.

Systematic Transfer Plans (STPs)

They allow the investor to transfer on a periodic basis a specified amount from one

scheme to another within the same fund family meaning two schemes belonging to the

same mutual fund. A transfer will be treated as redemption of units from the scheme from

which the transfer is made. Such redemption or investment will be at the applicable NAV.

This service allows the investor to manage his investments actively to achieve his objectives.

Many funds do not even charge any transaction fees for his service an added advantage for

the active investor


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WHY RELIANCE MUTUAL FUND ?

y Reliance Mutual Fund ,a part of the Anil Dhirubhai Ambani Group (RADAG) is one

of the fastest growing mutual fund company in the country.

y Reliance mutual fund offer investors a well rounded portfolio of products to meet

varying investor requirements.

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

y Reliance mutual fund manages assets over Rs. 1,18,973 Crores and an investorcountof over 74 Lakh folios. (AAUM and investor count as of May 2010)

AAUM(source:www.amfiindia.com)y A fund from Reliance mutual fund ,an AMC with a established track record of

consistent return.

y Investor friendly personal and technological support.

y Strong and consistent fund management team.

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

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


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SERVICE PROVIDER

Registrar to the schemes of Reliance Capital Asset Managment :

Karvy Computer share Pvt. Ltd

Custodians to the schemes of Reliance Capital Asset Managment

Deutsche Bank AG

Auditors to the Schemes of Reliance Capital Asset Management

Bankers to the Schemes of Reliance Capital Asset Management

ABN Amro Bank

Axis Bank

Citibank N.A

Deutsche Bank AG

Development Bank of Singapore-only for online investors

HDFC Bank limited

HSBC Bank

ICICI Bank limited

IDBI Bank

ING.Vysya Bank

Kotak Mahindra Bank

State bank of India

Standard Chartered Bank

Yes Bank

Webservices

Reliance Infocomm


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MARKETING IN MUTUAL FUNDS

Marketing is the process of planning and executing the conception, pricing,

promotion, communication and distribution of ideas, goods, and services tocreate exchanges

that satisfy individual and organizational goals. Throughmarketing, individuals and groups

create and exchange products and services with others in order to create value or satisfywants and needs.

THE FOUR MAIN CREDIT RATING AGENCIES

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

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

patterns as well.

Marketing in

Mutual Fund

Needs and Wants Satisfaction of needs

and wants through

ideas, products and

services.

Marketing


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DISTRIBUTION CHANNEL

In Reliance, the distribution channels are slightly different. The flow chart for the distribution

channels for Reliance is as follows:

The National Distributors consists of all the private banks like Standard Chartered Bank,

American Express Bank, Deutsche bank to name a few and other investment consultantslike

Karvy securities, Bajaj Capital etc.

The Independent Financial Advisors are the ones who are eligible to sell financial products

individually to the retail investors after they have obtained AMFI certification.

The Alternate Channels consists of all the PSUs like State Bank of India, Oriental bank of

Commerce, Unit Trust of India bank among many.

The Corporate Channels are targeted to the corporate clients. It is very imperative for the

fund houses to develop a proper distribution network in order to reach out to the investors

effectively.

Reliance Distribution

channel

National

Distributor

Independent

financial

advisor

Alternate

channel

Corporate

channels


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AWARDS AND ACHIVEMENTS

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

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

2007.

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

the Mutual Fund category.

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

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

6.Reliance Natural Resources fund is the only one Natural Resources sector fund inIndia .


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SWOT Analysis

The SWOT analysis provides information that is helpful in matching firms resources and

capabilities to the competitive environment in which it operates. Hence SWOT analysis fitsinto an environmental scan:

Strengths to build on

Weaknesses to cover

Opportunities to capture

Threats to defend aginst

STRENGTHS

Reliance Mutual Fund ,a part of the Anil Dhirubhai Ambani Group(R-ADAG) is one

of the fastest growing mutual fund company in the country.

Reliance mutual fund offer investors a well rounded portfolio products to meet

varying investor requirements.

Reliance mutual fund has a presence over 159 cities across the country, with investor

base over 74 lacs.

Reliance mutual fund investor base of over 2 million and manages assets over Rs.

1,18,973 crore as on May 2010(source:www.amfiindia.com)

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

consistent return.

Strong and consistent fund management team.

Investor friendly personal and technological support.

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

Quality product & services High quality standard maintained.

Brand Name Reliance Mutual Fund is popular brand name among customers


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Good image between customers.

WEAKNESS

Less existence in rural areas

Less expenditure on advertising and promotional schemes

Lack of awareness technological support.

OPPORTUNITIES

Reliance mutual fund has a very good quality products &schemes comparisonto othercompetitor.

Reliance is first company which launched Equity fund with hedging feature which

aim to minimize risk..

Good perception among the customer.

Increasing number of e-banking investors.

THREATS

Lot of competitor in market.

Lot of schemes are provided by competitors.

Share market may be go down in future.

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


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AN EMPIRICAL STUDY OF INVESTORS PERCEPTION ABOUT

INVESTMENT IN MUTUAL FUNDS WITH REFERENCE TO


Managerial Usefulness of Study:

y The study will give information about prospective investors both individual as well as

institutional clients in areas of surrey where they can get lead.

y The study provides the complete information about all close competitors in Mutual

Fund investment.

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

Objectives:

y To study the Mutual funds industry in detail

y To study the Investment procedure in Mutual funds

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

y To study the investors Preference regarding Investment in Mutual Funds


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LITERATURE REVIEW

Mutual funds are as much about marketing as investing in the 1990s, which is why the

hoary clich Mutual funds are sold, not bought is astrue as ever. As Glorianne Stromberg

once told Canadian Business magazine, the fund business may have started out in the

portfolio management business, but somewhere along the line, the marketers got hold of it,and the advisory function has been almost superseded bythe sales function.

Jonathan Chevreau, the Wealthy Boomer

Successful fund marketing creates value for Fund companies, dealers and unit holders so that

each is satisfied. The definition goes much deeper than simply "selling something to

somebody". Fund marketeers must understand both the "Needs & Wants" side of the

equation and the "Product, Ideas, & Services" side of the equation. Not only must marketing

fully understand both sides of the equation, but it must also effectively communicate the

details of each in order to successfully bridge the gap between the two.Every facet of modernmarketing has been effectively employed to dramatically grow the Indian mutual fund

industry.

An Analysis of Investors Risk Perception towards Mutual Funds Services

Nidhi Walia, Ravi Kiran

Financial markets are constantly becoming more efficient by providing more promising

solutions to the investors. Being a part of financial markets although mutual funds industry is

responding very fast by understanding the dynamics of investors perception towards

rewards, still they are continuously following this race in their endeavor to differentiate their

products responding to sudden changes in the economy. Thus, it is high time to understand

and analyze investors perception and expectations, and unveil some extremely valuable

information to support financial decision making of mutual funds. Financial markets are

becoming more exhaustive with financial products seeking new innovations and to some

extent innovations are also visible in designing mutual funds portfolio but these changes need

alignment in accordance with investors expectations. Thus, it has become imperative to

study mutual funds from a different angle, i.e, to focus on investors expectations and

uncover the unidentified parameters that account for their dissatisfaction. Present research

proposes to identify critical gaps in the existing framework for mutual funds and further

extend it to understand realizing the need of redesigning existing mutual fund services by

acknowledging Investor Oriented Service Quality Arrangements (IOSQA) in order to

comprehend investors behavior while introducing any financial innovations.


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RESEARCH METHODOLOGY

I decided to do the project in two parts. The first part of the project is comprised of

the study of Mutual Funds as a whole and the second part deals with the investors perception

regarding their investment preferences about investment in Mutual Funds. The first part of

the project i.e. descriptive study is comprising an overall study of Mutual funds as what it is,

why to invest and where to invest, risk factor associated with it i.e. an overview of whole

Mutual fund industry. The second part of the project that is related to investors perception

about investment in Mutual funds available in market. Indian Stock market has undergone

tremendous changes over the years. Investment in Mutual Funds has become a major

alternative among Investors. The project has been carried out to understand investors

perception about Mutual Funds in the context of their trading preference and explore

investors risk perception . The first part of the project relating the study of Mutual funds is

collected through secondary data obtained from internet & books whereas the second part

relating the Investors perception about investment in Mutual Funds is covered using primary

data.


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RESEARCH METHODOLOGY

The Marketing Research Process adopted by me in the present study consists of the

following stages:

Flow chart of Marketing Research Process

Identifyingthe

Problem

Planningthe

ResearchDesign

Selecting aResearchMethod

Selecting aSamplingProcedure

DataCollection

DataEvaluation

Preparing

Thesis


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Identifying & Defining Problem:

The study undertaken by me is a study on investors perception about mutual fundof

Reliance mutual fund in Rajkot city.

The main objective behind this particular study is to know about investors preference

about mutual fund. The study is based on Exploratory Research. It is undertaken in the initial

stage of the research process.

Planning the Research Design :

Once the problem is identified, the process of research design begins. This is the

crucial stage in research methodology as planning plays very important role in further

proceeding of the study.

As the study has to be carried out in Rajkot City, a detailed knowledge had to be

acquiring to gather the information regarding my Project Title.

I had successfully gathered the information which was directly affecting my study i.e.,

the major players prevailing in Rajkot City other than Reliance Mutual Fund total population,

knowledge prevailing in the minds of people, their desire for Mutual Fund.

Here I needed to frame information regarding:

From where to get information

Time allotted for getting information

Budget allotted for getting information

Measurement techniques

Cost involved in conducting it

Availability of data sources

After gathering the above information, I had framed a design through which I got

sufficient information about my Project Title. But as there was a time constraint, the samplesize was not too large.


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Selecting the Research Method :

The research design method is chosen based on thee objectives of the study, the cost

involved in conducting the study, the availability of the data and finally the importance&

urgency of the decisions.

There are four main research methods:

Secondary Data studies

Surveys

Experiments

Observations

I have chosen mainly the Survey Method for my research work as the information can

only be gathered with the help of Questionnaire. I have conducted survey to get primary data

regarding the services of different Mutual Fund service providers. I got the data gathered first

hand to answer the research question being investigated.

I have prepared a questionnaire related to my study & had circulated to the walk in

customers at different Banks in Rajkot City. The questionnaire contained many important

questions.

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

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

Selecting Sampling Procedure :

Sampling is generally a part of the research design but it is considered separately in

the research process. Sampling is a process that uses a small number of items or a small

portion of population to draw conclusion regarding the whole population.

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

POPULATION.

In the present study, PROBABILITY SAMPLING has used and to be more precise,

SIMPLE RANDOM SAMPLING Method has used.

I have taken the sample size of 100 walk in customers randomly from different

Mutual Fund service Providers in Rajkot City.


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Data Collection :

After the research design, research method and Sampling procedure is decided, the

next main step is Collection of Data for related study with the help of Research Method

decided.

In this study, the research method decided by me is Survey Method and Secondary

Data Collection Method.

Survey Method provides primary Data i.e., first hand information by filling-up the

Questionnaires. The Questionnaires have filled-up from walk in customers at different

Mutual Fund service Providers in Rajkot City.

Secondary Data collected from different Brochures, books and internet.

SAMPLE PLAN

Population Walk in customers of bank in Rajkot City.

Sample Frame customers of different banks in Rajkot City.

Sampling Method Simple Random Sampling

Sample Size 120 people ( Due to time constraint )

LIMITATIONS

Though the present study aimed to achieve the above-mentioned objectives in full

earnest and accuracy, it was hampered due to certain limitation.

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

Sample of 120 customers was only taken randomly due to time constraint for the

preparation of project. A large sample size would have given an opportunity to get

more accurate over-all feedback from actual and prospective customers.

The research was limited to only bank in Rajkot City.

During my survey in Rajkot City, some people were having very reserved nature.

They were not so open. They avoid sharing their responses under the testing

condition.


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CHANCE OF RESPONSE ERROR

There are many respondents who have filled up questions. Chance of response error

might be possible. There might have been tendencies among the respondents to amplify or

filer their response under the testing condition.

In various banks some customers are regularly transactions in huge amount, so that

they can get extra facilities from it. There might be possibility that they makefavor about

other option which actually not as satisfactory as his opinion for all customers.


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(1)Occupation of Investors.

Respondents in

Particulars Number Percentage

Business 56 47%

Service 45 38%

Other 19 15%

Total 120 100%

From the above chart suggests that out of 120 respondents 47% respondents invests their

money in mutual fund this shows that investor choose mutual fund because they want to earn

good return with some safety. Ratio of respondents who are from business 47%and service

37% is more than ratio of respondents who are from other 16%t had choose mutual fund as

their investment tools.

0%

10%

20%

30%

40%

50%

47%

37%

15%

Occupation

Business

ervice

Other


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(2)Age Group

Respondents in


18-22 14 12%

22-30 35 29%

30-40 42 35%

More than 40 29 24%

Total 120 100%

Out of these 120 people, 12% lie in the age group of 18-22 years, 29% in the age group of 22-

30 years, 35% in the age of 30-40 and 24% above 40 years of age. The age groups were

selected in this manner because a considerable change in the knowledge and investment

pattern was seen in these break-ups.

12%

29%

%

24%

Age Group

1

-22 22-

-4

r

than 4


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(3) Income level of Investors

Respondents in


Less than 2 lakh 52 43%

2-3 lakh 55 46%

More than 3 lakh 13 11%

Total 120 100%

Here the highest group of people (46%) is earning annual income of Rs. 2 to 3 lakh. While

the people having annual income of Rs. less than 2 lakh (43%) the people are mostly

professionals and businesspersons. We found that the annual incomes of more than Rs. 3 lakh

are of business class and are 11%.

43%

46%

11%

Income group

less than 2 lakh

2- 3 lakh

more than 3 lakh


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(4) Do you invest in mutual fund ?

Respondents in


Yes 92 77%

No 28 23%

Total 120 100%

From the above chart suggests that out of 100 respondents 77% respondents invests their

money in mutual fund this shows that investor choose mutual fund because they want to earn

good return with some safety. And 23% respondents are not interested in investing in mutual

fund.

77%

23%

0%

20%

40%

60%

80%

Yes No

Investment in mutual fund


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(5) If No Then,

What is the most important reason for not investingin mutual funds?

Respondents in


Lack of knowledge about MF 17 14%

Enjoys investing in other options 61 51%

Its benefits are not enough to drive

for investment

23 19%

No trust over fund managers 19 16%

Total 120 100%

23 out of 120 total respondents say they are not investing their money in mutual fund the

main reason behind it they enjoys investing in other options except this investors didnt havetrust over the fund manager of the AMC companies . And very few respondents says they

have lack of knowledge about mutual funds.

14%

51%

19%

16%

Reasons for not investing in MF

Lack of knowledge about

mutual funds

Enjoys investing in other

options

Its benefits are not enough to

drive you for investment

No trust over the fund

managers


75/105

75

(6) Please rank the following investment instruments according to your preference.(On

the basis of risk and return concept)

Respondents in


Fixed Deposit 36 30%

Mutual Fund 17 14%

Equity 10 9%

Bonds 5 4%

ULIP 7 6%

Govt. Securities 6 5%

LIC 20 17%

Post office 19 16%

Total 120 100%

People are habitual to invest and they have many investment options. But from our survey wefind that because of safety reasons people mostly invest in Fixed Deposits (30%).People are

also investing in LIC(17%) as they found it the safer one. Post office and Mutual Fund are

also popular as an investment tool as share of both 15% and 14%.While Govt.Securities

and bonds is 5% & 4% and in equity there is 9% in the total survey.

30%

14%

9%

4%6%

5%

17%15%

0%

5%

10%

15%

20%

25%

30%

Repo e ts prefere ce towar s vario s i tsr e t

Fixed Deposit

Mutual Fund

Equity

Bonds

ULIP

Govt Securitites

LIC

Post office


76/105

76

(7) What is your Average investment period?

Respondents in


Less than 6 months 34 28%

6 to 12 months 39 33%

1 to 3 years 28 24%

More than 3 years 19 15%

Total 120 100%

The above graph reflects the average investment period for all the 120 respondents. 6 12

months is the most chosen option among all the other options because of the current market

condition people are not interested in investing their money for short time like less than 6

months because return will be very less in short time period .If they want to earn more return

they need to invest their money at least more than 6 months or more than one year.

28%

33%

24%

15%

Average investment period

than

m

nth

t

12 m

nth

1 t

3

ar

r

than 3

ar


77/105

77

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

Respondents in


Television 12 10%

Internet 14 11%

Newspaper 19 14%

Financial Advisors 28 30%

Friends/Relatives 36 26%

Others 11 9%

Total 120 100%

The main source of information for people is the financial advisors with 30% because theydirectly approach to the customers. Friends/relatives who made investment and get benefitalso recommend others so their ratio is 26%. Now a day the Internet users are increasing day

by day and therefore 14% peopleare getting information through Internet. The respondents

prefer to get the routine special information like daily NAV, dividend, bonus, changein assetmix etc., through Internet. While 11% people get knowledge from Newspaper.

10%11%

14%

30%

26%

9%

0%

5%

10%

15%

20%

25%

30%

So rces of i for atio

Television

Internet

Newspaper

Financial Advisors

Friends/Relatives

Others


78/105

78

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

Respondents in


Tax benefit 13 12%

High return 38 32%

Saving 24 20%

Tax benefit & high return 13 12%

Tax benefit & saving 10 7%

High return & saving 13 12%

All of above 5 3%

Others 4 2%

Total 120 100%

From the above graph we can analyze that 32% people want high returns in return of their

investment while 12% people invest for the purpose of tax benefits. People preferring both

tax benefit as well as high return are 22% whereas people with tax benefit as well as saving

are 12%.

12%

32%

20%

12%

7%12%

3% 2%

Reasons for investing in MFTax benefit High return Saving

Tax benefit & High return Tax benefit & Saving High return & Saving

All of above other


79/105

79

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

Respondents in


Yes 94 78%

No 26 22%

Total 120 100%

Above graph suggests that AMC companies promoting their product well because 78% of the

total respondents are influenced by their promotional activities and very few are not

influenced.

78%

22%

Promotion influence

Yes

No


80/105

80

(11) Which company influence you the most.

Respondents in


Reliance MF 25 20%SBI MF 6 5%

Birla Sun Life MF 14 11%

Principal PNB 4 3%

UTI MF 14 12%

HDFC MF 21 18%

ICICI Prudential 17 16%

Franklin Templeton 19 15%

Total 120 100%

Reliance Mutual Fund is having the 1st

position among the 8 mutual fund companies. HDFC

and ICICI are on 2nd and 3rd position respectively while Franklin Templeton is on the 4th

position with 15%. SBI, Birla sun and PNB has 5% ,11% and 3% share respectively. As

Reliance has a good image in the mind of people who have faith in Reliance. So when

Reliance entered in Mutual Fund people invest more and it results in 1st rank among the all

MF Companies. Where HDFC MF is known for the its professionalism and for this reason

CRISIL has given the 1st

rank to HDFC MF. HDFC is assumed to be a bit conservative for

short-term investments. Thats why people prefer Reliance over HDFC because of its

aggressiveness.

20%

5%

11%

3%

12%

18%

16%15%

0%

5%

10%

15%

20%

I vest e t prefere ce towar s vario s co pa ies

Reliance mutual fund

SBImutual fund

Birla sun life mutual fund

Principal PNB

UT

Imutual fund

HDFCmutual fund

ICICI prudential

Franklin Templeton


81/105

81

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

Respondents in


Total ignorant 6 5%%

Partial knowledge of MF 72 60%

Aware only of any specific scheme in

which you invested

30 25%

Fully aware 12 10%

Total 120 100%

Above graph suggests that most of the respondents have partial knowledge about mutual fund

followed by some of the customer who are aware only of any specifics scheme in which they have

invested. Only 10% of the respondents are full ware and only 5% of the total respondent doesnt have

any knowledge about mutual fund.

5%

%

25%

%

K wle ge a m al

Totally ignorant

Partial knowledge of mutual

funds

Aware only of any specific

scheme in which you invested

ully aware


82/105

82

(13)From where do you purchase mutual funds?

Respondents in


Directly from AMCs 28 23%

Brokers only 49 41%

Sub-brokers 25 20%

Other sources 18 16%

Total 120 100%

Brokers are very important role in the distribution channel of AMCS most of the respondentsbuys their investment produts from brokers. This shows the importance of brokers and they

also want to earn money so they gave good service to their investors and in the return they

gets good business. Only few of the investors knows that they can buy directly for AMCS.

24%

40%

20%

16%

Where do they purchase?

Directly from AMC's

Brokers only

Sub-brokersOther sources


83/105

83

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

Respondents in


Young unmarried stage 28 23%

Young married with children 46 38%

Married with older children stage 34 28%

Pre-retirement stage 12 11%

Total 120 100%

As above graph reflects that whatever may be the profession but respondents think that young

married age is the perfect age for investment when they dont have muchresponsibilities and

they have some extra amount for investment. It is general observation that young people are

willing to take some risk and specially when they dont have any social responsibilities, Andat the age of retirement people need fixed income because they are least interested in taking

risk as they have some fix amount which they got to use after retirement.

Most suita le age or in estment

23%

38%

28%

11%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Young unmarried stage

Young Married with children

stageMarried with older children

stage

Pre-retirement s tage


84/105

84

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

Respondents in


Diversification 43 36%

Professional management 30 25%

Reduction in risk and transaction cost 21 18%

Helps in achieving long term goals 26 21%

Total 120 100%

Above graph reflects that respondents need diversification because through this they can

reduce their risk and enjoy investing in other options. As graph shows that the ratio is 36

respondents choose it as their first priority option for investment.Mutual fund companies

invest the money but they charge for that so its not fact if they invest in mutual fund they can

save their cost and above graph reflects the same thing that they gave 3rd preference to

reduction in risk and cost because after all mutual fund are subject to market risk. And for

long term goals ratio is 21%.

36%

!

%

"

#

%

"

%

0%

10%

20%

30%

40%

Preference towards features of MF

Diversification

Professional management

Reduction in risk and

transaction cost

Helps in achieving long term

goals


85/105

85

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

Respondents in


5-10% 14 12%

10-15% 21 18%

15-25% 65 53%

25-35% 12 10%

More than 35% 8 7%

Total 120 100%

If any person invested their money in any option which are available in the market they

obviously look for good return but if they want to earn high return than high risk is also

associated with it as above graph suggests that most of the respondents choose the return

between 15% to 25% because they knows that the current market condition its good return

they can get and very few respondents choose more than 35% return which is actually verydifficult to get.

et rn e ecte n ercenta e

12%

18%

$

%