Devendra Final1

COMPREHENSIVE STUDY OF MUTUAL FUNDS Reliance Infrastructure Fund SUMMER TRAINING PROJECT REPORT

Submitted on Partial Fulfillment of MBA To Vinayaka Mission University &

POONA SCHOOL OF BUSINESS

ACADEMIC SESSION 2008 – 2010

Under the Guidance of:

Submitted By:

External Supervisor:

Devendra Kumar Sharma

Mr.Niranjan Avasthi

PRN. 810046

(Relationship Manager) Reliance mutual Fund Internal Supervisor: Prof. Vijay Rao 1

TO WHOM SO EVER IT MAY CONCERN

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

Prof. Vijay Rao Marketing Faculty

2

ACKNOWLEDGEMENT

Presenting this Project today remains an unparalleled event for me since it recapitulates all my toils and efforts undergone. And I would like to thank each and everyone who made it possible for me to achieve something which appeared like a Herculean Task. Wherever and whatever I present today has been made possible by the undying efforts of my project guide, Mr. Niranjan Avasthi (Relationship Manager), Reliance Mutual Fund Ltd. Pune (Maharashtra). It was he who always made available whatever I needed like Telephone, Internet facilities, Stationary items, etc and most important of all his guidance. I would also like to convey my deep regards to Prof. Vijay Rao, Marketing Head (Faculty), PSB and to all my team members who had always bestowed upon me their goodwill, blessings and providing me with the best of amenities. Last but not the least I wish to thank my friend Yatendra Sharma and all those noble hearts who directly or indirectly helped me to complete this project work.

DEVENDRA KUMAR SHARMA

3

PREFACE

This project title is “A COMPREHENSIVE STUDY OF MUTUAL FUND IN INDIA” is done in RELIANCE MUTUAL FUND (Reliance Capital Asset Management Ltd.), Pune. In this project, apart from introduction, the concept of mutual fund, its history, a comprehensive study has been done to understand the overall impact of portfolios of mutual fund scheme. The focus of the project is to find out whether mutual fund investors are interested to invest in the present scenario or not. Another important area is to find out which products of

mutual

funds

are

they

interested

in

investing.

4

INDEX

CHAPTER NO.

CONTENTS

1

Introduction 1.1 What is Mutual Fund? 1.2 Net Asset Value 1.3 Classification of Mutual Fund. 1.4 Types of Mutual Fund. 1.5 Advantage Of Mutual Fund 1.6 Disadvantage Of Mutual Fund 1.7 Mutual Fund In India 1.8 Growth of Mutual fund Industry in India 1.9 How Long to Keep Investment to get maximum return 1.10 Returns 1.11 The Risk Return Graph. 1.12 Association of mutual fund in India 1.13 Objectives of AMFIA in India 1.14 Regulatory Aspect 1.15 Structure of mutual fund in India 1.16 Some AMC’S Operating currently Company profile Problem Statements and Objectives of Study. 3.1 Problem Statements. 3.2 Objectives of Study.

2 3

4

5 6

PAGE NO. 9 10 11 12 15 15 16 17 18 18 19 19 20 21 22 26 29 37 38

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

39 39 39 39 40 40 41

Limitations. 5.1 Limitations.

41

Analysis of Mutual Fund.

5

6.1

Analysis on the basis of Schemes.

6.2

Comparison between Bank and MF Industry.

7

Data collection 7.1 Questionnaire 7.2 Personal Visits. 7.3 Telephonic Information.

8

Interpretation of Data. 8.1 Percentage of People who Invest. 8.2 Investment in Financial Product in Percentage. 8.3 Awareness of Mutual Fund. 8.4 Perception of Mutual Fund. Comparison between Risk Investment and 8.5 Returns. 8.6 Identification of Mutual Fund Industry. 8.7 Risk taken ability by different Age Groups. 8.8 Percentage of total Income Invested in Mutual Fund. 8.9

9

10 11

Awareness of Reliance Capital Company out of 100 people

42 43 44 45 46 46` 47 48 51 52 53 54 55 56 57

9.1

Project Findings.

58

9.2

Recommendations.

58

Bibliography. Annexure

59 61

6

EXECUTIVE SUMMARY The project titled “COMPREHENSIVE STUDY OF MUTUAL FUND IN PUNE” being carried out for RELIANCE MUTUAL FUND (A RELIANCE CAPITAL ASSET MANAGEMENT LTD.) RELIANCE CAPITAL operates in various financial products and services like, Mutual Fund, Insurance, etc. The evaluation of financial planning has been increased through decades, which is best seen in customer rise. Now a day’s investment of saving has assumed great importance. According to the study of the markets, it is being observed that markets are doing well in Mutual fund. In near future a proper financial planning is required to invest money in all type of financial product because there is good potential in market to invest. In this project the great emphasis is given to the investor’s mind in respect to investment in Mutual Fund .The needs and wants of the client is taken into consideration. I hope RELIANCE CAPITAL COMAPNY, Pune will recognize this as well as take more references from this project report.

7

The main objective of this project is to know the Awareness of Mutual Fund among investors and also to know the investing pattern of people in different Financial Project. IT sector has been given more emphasis for the study of the project because it is the only sector where all type of Age group, Income class and different level of people are represented. After analyzing the feedback the conclusion has been made that the Indian financial market is having lots of potential customer the only thing is to give a proper guidance to the prospective customers. 1. INTRODUCTION 1.1 Mutual Fund Mutual fund is a mechanism for pooling the investment, made by the investors, in stock market, securities, shares and debentures as disclosed in offer document and issuing units to the investors. Units are issued to the investors in accordance with quantum of money invested by them. Investors of Mutual funds are known as Unit Holders.

As investments are spread across a wide cross-section of industries and sectors, the risk are reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time.

8

The profits or losses are shared by investors in proportion to their investments. The Mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchanges Board of India (SEBI) which regulates securities markets before it can collect funds from the public. ONE CAN MAKE MONEY FROM MUTUAL FUND IN THREE WAYS: Income is earned from dividends and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution.  If the fund sell securities that have increased in price, the fund have a capital gain most fund also pass on this gain to investor in a distribution.  If fund holding increases in price but are not sold by the fund manager, the fund shares increase in price. One can sell then this mutual fund shares the profit. 1.2 Net Asset Value Following are the regulatory requirements and accounting definitions laid down by SEBI: NAV = Net Asset of the Scheme / Number of Units Outstanding = MVL+ REC+ AI+ Asset – AE – Pay – Lia No .of Units Outstanding as at the NAV date MVL: Market value of Investment REC: Receivables AI: Other Accrued Income Asset: Other Assets (Dividend yet to be received) AE: Accrued Expenses

9

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

Fund’s NAV is affected by: •

Purchase or Sale of Investors Securities.

•

Valuation of all Investment Securities.

•

Other Assets and Liabilities.

•

Units Sold or Redeemed.

1.3 Classification of Mutual Fund •

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

•

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

•

Load Funds: Fund Manager made charges to the investors to cover distribution/ sales/marketing expenses. These charges are called

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

10

•

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

1.4 TYPES OF MUTUAL FUNDS : Mutual Funds have specific investment objectives such as growth of capital, safety of principal current income or tax exempt income, one can select one fund or any number of different funds to help one meets ones specific goals. In general mutual fund fall under 3 general categories :  Equity fund invest in shares of common stocks.  Fixed income funds invest in government or corporate securities which offer fixed rate of returns.  Balanced fund invest in a combination of both stocks and bonds. AGGRESSIVE GROWTH FUNDS :These funds seek to provide maximum growth of capital with secondary emphasis on dividend or interest income. They invest in common stocks with a high potential for rapid growth and capital appreciation. Aggressive growth funds are suitable for those investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. They are not suitable for investors who must conserve their principal or who must maximize their current income. GROWTH FUNDS:-

11

Like aggressive growth funds, growth fund generally invests in stocks for growth rather than income. They are considered more conservative in their approach because they usually invest in established companies to achieve long-term growth. Growth fund provides low current income but the investor principal is more stable then it would be in an aggressive growth fund. While the growth potential may be less over the short term, many growth funds have superior long-term performance records. These funds are suitable for growth oriented investors but not investors who are unable to assume risk or who are dependent on maximizing current income from there investments.

GROWTH AND INCOME FUNDS:Growth and income funds seek long-term growth of capital as well as current income. The investments strategies use to reach these goals vary among funds. Growth and income funds have low to moderate stability of principal and moderate potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but want to maintain a moderate level of current income. FIXED INCOME FUNDS:The goal of fixed income fund is to provide high current income consistent with the level of capital. Growth of capital is of secondary importance. Fixed income funds offer a higher level of current income than money market funds, but a lower stability of principal. Fixed income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so. EQUITY FUNDS:-

12

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

BALANCED FUNDS:The Balanced funds aims to provide both growth and income. These funds invest in both shares and fixed income securities in the proportion indicated in their offer documents. It is an idea for investors who are looking for the combinations of income and moderate growth. MONEY MARKET FUNDS/ LIQUID FUNDS:For the cautious investors these funds provide a very high stability of principal while seeking a moderate to high current income. They invest in highly liquid; virtually risk free, short-term debt securities of agencies of the Indian government, banks and corporation and treasury bills. Because of their short-term investments, money market mutual funds are able to keep a virtually constant unit price; only the yield fluctuates. Money market funds are suitable for those investors who want high stability of principal and current income with immediate liquidity. SPECIALITY / SECTOR FUNDS:These funds invest in securities of a specific industry or sector of the economy such as health care, technology, leisure, utilities or precious metals. The funds enable investor to diversify holding among many companies within an industry, a more conservative approach than investing directly in one particular company. Sector funds offer a opportunity for sharp capital gains in cases where the fund’s industry is “in favor” but also entail the risk of capital losses when the industry is out of favor.

13

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

1.5 Advantages of Mutual funds •

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

•

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

•

Diversification of Risk: Diversification reduces the risk of exposure to one or two shares or debentures or other instruments.

•

Reduction in Transaction Cost: A direct investors bears all costs of investing such as brokerage or custody of securities. Investing via Mutual Fund help investors to reduce the cost as larger volumes are involved

. •

Liquidity: An MF investor can invest and disinvest at will, irrespective of market conditions. In case of shares or bonds it’s very difficult to sell them unless and until a buyer is there. Mutual Funds give the option of liquidity. The units of an open ended scheme can be redeemed at any working day.

•

Convenience and Flexibility: Various options of Systematic Investment Plan, Systematic Withdrawal Plan and Systematic Transfer Plan are designed for the convenience of the investors. 14

1.6 Disadvantages of Mutual Fund No Control over Costs: A Mutual Fund Investor has to pay management fees, fund distribution cost to the Mutual Fund. This cost is not incurred in direct investing. But this cost is less than the cost of direct investing by the investors. •

No Tailor-made Portfolios: Investors investing in Mutual Fund gives the rights to Fund Manager

to build the portfolio of shares, bonds and other securities.

W h i l e i n v e s t i n g d i r e c t l y, i n v e s t o r s c a n b u i l d t h e r e o w n p o r t f o l i o However, today Mutual Funds are offering families of schemes. Investors can choose from different investment plans c construct a portfolio of his choice. •

Managing a Portfolio of Funds: Due to presence of large number of funds availability in the market, investor needs some advice to select a fund to achieve his objective.

1.7 MUTUAL FUND INDUSTRY IN INDIA

15

Mutual Funds in India

UTI

JV’s with foreign Partners Birla Sun Capital Prudential ICICI Alliance Capital Kothari Pioneer

Private sector

Foreign Houses

Templeton Alliance Morgan Stanley

Banks SBI CANARA PNB BOI etc.

Public

Indian Houses

TATA JM Reliance

Institutions GIC LIC etc.

1.8 Growth of the Mutual Fund Industry in India

16

•

1963: Unit Trust of India was established by an Act of Parliament.

•

1964: First scheme launched by UTI - Unit Scheme 1964(US 64).

•

1978: UTI de-linked from the RBI and IDBI took over.

•

1987: SBI Mutual Fund was the first Public Sector Fund (November) Canbank Mutual Fund (December) UTI had Rs.6, 700 crores of AUM

•

1989: Punjab National Bank Mutual Fund ( Augest ) Indian Bank Mutual Fund (November) LIC Mutual Fund

•

1990: Bank of India (June) GIC Mutual Fund

•

1992: Bank of Baroda Mutual Fund (October).

•

1993: Total Rs.47, 004 as AUM. Kothari Pioneer- First Private Sector Mutual Fund (July) SEBI (Mutual Fund) Regulations

•

1996: Revised SEBI (Mutual Fund) Regulations

•

2003: Mutual Funds Total assets: Rs.1, 21, 805 crores. The Unit Trust of India: Rs.44, 541 crores of AUM UTI bifurcated into two separate entities The Specified Undertaking of UTI: Rs.29, 835 crores of AUM The UTI Mutual Fund Ltd

•

2004: Mutual Funds Total Asset: Rs.153108 crores Schemes: 421.

•

2005: Indian mutual fund industry has Rs. 199200 crores 17

s 1.9 HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM

RETURNS:-

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

Funds Equity Funds Balanced Funds MIP’s Income Funds Liquid Funds

Time Period 3 Years (plus) 18 months to 3 Years 1 Year (plus) 6 months to 1 Year few days to 6 months

1.10 WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY FOR SUGGESTED TIME FRAMES:Funds Sector funds Balance funds MIP’s Pension Plans Income Funds Liquid Funds

Returns 22% to 25% p.a 15% to 18% p.a 12% to 15% p.a 10% to 12% p.a 7% to 9% p.a

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

18

1.11 THE RISK RETURN GRAPHS FOR VARIOUS FUNDS:-

Sector Funds R E T U R N S

Equity Funds Balanced Funds Income Funds Liquid Funds RISKS

The above Graph shows the Risk and Returns generated by different Funds. Liquid Funds are less Risky and also generate less Returns where as Sector Funds are more Risky but generate more Returns by the example of above two Funds it is clear that Risk and Returns are directly proportional to each other. Other Funds like Equity Funds, Balanced Funds and Income Funds are also gives the same percentage of Returns as the Risk involved. 1.12 ASSOCIATION OF MUTUAL FUNDS IN INDIA:With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual

19

Funds

in

India

(AMFI)

was

incorporated

on

22nd

August

1995.

AMFI is an apex body of all Asset Management Companies (AMC), which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holder 1.13

The

objectives

of

Association

of

Mutual

Funds

in

India:-

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives, which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:  This mutual fund association of India maintains high professional and ethical standards in all areas of operation of the industry.  It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual Fund and asset management. The agencies that are by any means connected or involved In the field of capital markets and financial services also involved in this code of conduct Of the association.  AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund Industry.  Association of Mutual Fund in India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

20

 It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry.  AMFI undertakes all India awareness programmed for investor’s in order to promote Proper understanding of the concepts and working of mutual funds.  At last but not the least association of mutual fund of India also disseminate Information’s on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

1.14 FUTURE OF MUTUAL FUND IN INDIA:-

By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010 the asset will be double.

Some facts for the growth of mutual funds in India: 100% growth in the last 6 years.  Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.  Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required.

21

 We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion.  'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.  Mutual fund can penetrate rural like the Indian insurance industry with simple and Limited products.  SEBI allowing the MF's to launch commodity mutual funds.  Emphasis on better corporate governance.  Trying to curb the late trading practices.  Introduction of Financial Planners who can provide need based advice.

1.15 REGULATORY ASPECT :Schemes of mutual funds: The Asset management company shall launch no schemes unless the trustees approve such scheme and a copy of the offer has been filed with the Board.  Every mutual fund shall along with the offer documents of each scheme pay filing fees.  The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision including the disclosure non maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor. A close-ended scheme

22

shall be fully redeemed at the end of the maturity period. “Unless a majority of the unit holders otherwise decide for its rollover by passing a resolution”.  The mutual fund and asset management company shall be liable to refund the application money to the applicants: If the mutual fund fails to receive the minimum subscription amount referred to in clause (i) of sub- regulation.  If the moneys received from the applicants for units are in excess of subscription as referred to in clause (ii) of sub-regulation. o The asset management company shall issue to the applicant whose  application has been accepted, unit certificates or a statement of accounts  specifying the number of units allotted to the applicant as soon as possible  but not later than six weeks from the date of closure of the initial  subscription list and or from the date of receipt of the request from the unit  Holders in any open ended scheme. Rules Regarding Advertisement: The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false. Investment objectives and valuation policies: The price at which the units may be subscribed or sold the price at which such unit may at any time be repurchased by the mutual fund shall be made available to the investors.  General Obligation:-

23

•

Every asset management company for each scheme shall keep and maintain proper book of accounts, records and document, for each scheme so as to explain its transaction and to disclose at any point of time the financial position of each scheme and in particular give a true and fair

•

view of the state of affairs of the fund and intimate to the board the place where such books of accounts, records and documents are maintained.

•

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

•

Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in any way associated with the auditor of the asset management comp Procedure for Action In Case Of Default:-

 On and from the date of the suspension of the certificate or the approval, as the case may be, the mutual fund, trustees or asset management company, during the period of suspension and shall be subject to the direction of the Board with regard to any records, documents, or securities that may be in its custody or control relating to its activities as mutual funds, trustees or the asset management company. Restrictions on Investments:  A mutual fund scheme shall not invest more than 15% of its NAV in debt instrument issued by a single issuer, which are rated not below investment grade by a credit rating agency authorize to carry out such activity under the act. Such investment limit may be extended to 20% of the NAV of the

24

 scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company.  A mutual fund Scheme shall not invest more than 10% of its NAV in unrated debt instrument issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the Board of Trustees and the Board of Asset management.  No mutual funds under all its schemes should own more than 10% of any company’s paid up capital carrying voting rights.  Such transfers are done at the prevailing market price for quoted instrument on spot basis.  The securities so transferred shall be in conformity with the investment objectives of the scheme to which such transfer has been made.  A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that aggregated intercourse inter scheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund. The initial issue expenses in respect of any scheme may not exceed 6% of the funds raised under that scheme.  Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall in no case put itself in a position whereby it has to make short sale or carry forward transaction or engage in Badla finance.

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 Every mutual fund shall get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long-term nature.  Pending deployment of funds of a scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled commercial banks.  No mutual fund scheme shall make any investment in ; o Any unlisted security of an associate or group company of the sponsor or o Any security issued by way of private placement by an associate or group company of the sponsor.

The listed securities of group companies of the sponsor which is in excess of 30% of the net assets (of all the schemes of a mutual fund)  No mutual fund scheme shall invest more than 105 of its NAV in the equity shares or equity related instrument of any company. Provided that, the limit of 10 percent shall not be applicable for investments in index fund or sector or industry specific schemes.  A Mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or equity related investments in case of open-ended schemes and 10 % of its NAV in case of close ended schemes. 1.16 STRUCTURE OF MUTUAL FUND IN INDIA:The Indian mutual fund industry is dominated by the Unit Trust of India which has a total corpus of Rs.700bn collected from more than 20 million investors. The UTI has many funds schemes in all categories i.e. equity , balanced , income etc with some being open ended and some being close ended . The unit schemes 1964 commonly referred to as US 26

64 , which is a Balanced fund is a biggest schemes with a corpus of about Rs. 200 billion UTI was floated by financial institution and is governed by a special act of parliament . Most of its investors believe that UTI is government owned and controlled which while legally incorrect, is true for all practical purposes. The second largest category of mutual funds is the ones floated by Nationalize Banks. Canbank Asset Management floated by Canera Bank and SBI Funds Management floated by State Bank of India are the largest of it. GIC AMC floated by General Insurance Corporation and Jeevan Bema Sahayog AMC floated by LIC are some of the other prominent ones. The aggregate corpus of funds managed by this category of AMCs is about 150bn. The third largest category of mutual fund is the ones floated by the private sector and by foreign Asset Management Company . The largest of these are Prudential ICICI AMC and Birla Sunlife AMC. The aggregate corpus of asset managed by this category of AMCs is in excess of Rs. 250bn. Some of AMCs operating currently are:-

NAME OF AMC Alliance capital asset management (I)Pvt. Ltd

OWNERSHIP Private foreign

Birla Sunlife Asset Management Company ltd. Bank of Baroda Asset management Company LTD

Private Indian Bank

Bank of India Asset Management Company Ltd Bank Canbank Investment Management Services Ltd Bank Cholamandalam Cazenove Asset Management Company Ltd.

Private foreign 27

Dundee Asset Management Company Ltd Private foreign DSP Merrill Lynch ASSET Management Company Ltd Escorts Asset management ltd

Private foreign Private Indian

First India Asset Management Ltd Private Indian GIC Asset Management Company Ltd. Institution IDBI Investment Management Company Ltd Institution Indfund Management Ltd Bank ING Investment Asset Management Company Pvt. Ltd J M Capital Management limited

Private foreign Private Indian

Jardine Fleming Asset Management ltd Private foreign Kotak Mahindra Asset Management Company Private Indian Kothari Pioneer Asset Management Company Private Indian Morgan Stanley Asset Management Company Pvt Ltd

Private foreign

Punjab National Bank Asset Management Company Ltd Reliance Mutual FundCompany State Bank of India Funds Management ltd.

Bank Private Indian Bank

Shriram Asset Management Company Ltd. Private Indian Sun F and C Asset Management Company Ltd. Private foreign Sundaram Newton Asset Management Company ltd Tara Asset Management Company Ltd.

Private foreign Private Indian

28

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

2. COMPANY PROFILE:COMPANY OVERVIEW: Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 1,08,332 CRORES and an investor base of over

70.87

Lacs.

(AAUM

and

investor

count

as

on

June

30,

2009)

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 118 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Mutual FundLimited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up

capital

being

held

by

minority

shareholders."

Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, and other

financial

services.

VISION OF THE COMPANY:

29

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

MISSION OF THE COMPANY To create and nurture a world-class, high performance environment aimed at delighting our customers. HISTORY Reliance Mutual FundLimited (RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. Reliance Mutual FundLimited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The networth of the Asset Management Company including preference shares as on September 30, 2007 is Rs.152.02 crores. Reliance Mutual Fund has launched thirty-five Schemes till date, namely

:

"Reliance Mutual Fund schemes are managed by Reliance Mutual FundLimited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders." Reliance Mutual FundLimited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line

30

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

Growth

Fund

(September

1995)

Reliance

Income

Fund

(December

1997)

Reliance Medium Term Fund (August 2000) Reliance Diversified Power Sector Fund (March 2004) Reliance Index Fund (February 2005) Reliance Tax Saver (ELSS) Fund (July 2005) Reliance Equity Linked Saving Fund - Series I (December 2007) Reliance Infrastructure Fund (May 2009) RELIANCE MUTUAL FUND COMPETITIVE ADVANTAGES Reliance Mutual Fund – At a Glance •

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets Under Management (AUM) of Rs. 1,08,332 crore (AUM as on 30th June 2009) and an investor base of over 70.87 Lacs.

•

Investor base of over 3.38 million as on March 31, 2007

•

Rapid growth in Assets Under Management (AUM), 87.7% growth in AUM year on year. AUM of over Rs.46,306 crore ($10.62 billion) as on March 30, 2007 from Rs. 24,669 crore ($5.53 billion) as on March 31, 2006.

•

Accelerated growth in investor base – 66.89% growth in investor base year on year. Over 3.38 million investors as on March 31, 2007 from over 2.02 million investors as on March 31, 2006.

•

Reliance Mutual Fund has over 10 years of extensive market experience, over 26 schemes combined with a strong performance track record.

31

•

Reliance Equity Fund NFO (6th Feb -7th March 2006), the largest ever collection of Rs.5,759 crore ($1.29 billion) in the history of the Indian Mutual Fund industry.

•

Footprint in over 100 cities in India

•

Wide network of 130 collection points

•

Wide portfolio of 26 well-rounded products to meet varying investor requirements.

•

Reliance Mutual Fund is amongst the few mutual funds in the industry to offer Subscription, Redemption and Switch through Online Transactions.

•

Lipper Fund Award India 2007 : o

Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the best fund over 3 years in the Bond INR Government category, out of 52 eligible schemes.

o

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

•

Lipper Fund Award Gulf 2007 : o

Reliance Banking Fund-Growth Plan-Growth Option was declared the best fund over 3 years in Equity Sector Banks and Other Financials

o

Reliance Growth Fund-Growth Plan was declared the best fund over 3 years in the Equity India category

o

Reliance Growth Fund-Growth Plan was declared the best fund over 5 years in the Equity India category

o

Reliance Income Fund-Growth Plan-Growth Option was declared the best fund over 5 years in Bond Indian Rupee – General category

o

Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the best fund over 3 years in the Bond INR Government category

o

Reliance Short Term Fund-Growth Plan was declared the best fund over 3 years in Bond Indian Rupee

o •

CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006 :

32

o

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

o

Reliance Short Term Fund was awarded CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006, in the Open End Debt Short Term Category

•

ICRA Mutual Funds Awards 2007 : o

Reliance Short Term Fund has been ranked ICRA MFR 1 by ICRA Mutual Funds Awards 2007 in the category Open Ended Debt – Short Term for its 1 year performance till December 31, 2006. The rank indicates performance within the top 10% of the stated category.

o

Reliance Gilt Securities Fund - Long Term Retail Plan has been ranked ICRA MFR 1 by ICRA Mutual Funds Awards 2007 in the category Open Ended Gilt - Long Term for its 3 year performance till December 31, 2006. The rank indicates performance within the top 10% of the stated category.

o

Reliance Liquidity Fund has been ranked ICRA MFR 1 by ICRA Mutual Funds Awards 2007 in the category Open Ended Liquid Scheme for its 1 year performance till December 31, 2006. The rank indicates performance within the top 10% of the stated category.

•

The first mutual fund in India to offer instant cash withdrawal facility on investments. Reliance Mutual Fund offers the Reliance Any Time Money (ATM) Card with select schemes. The card is a boon for retail investors as it enables them to withdraw their investment any time, anywhere at over 1 million VISA-enabled ATMs across the world.

•

Reliance Mutual Fund is amongst the few mutual funds with a 24X7 Call Centre facility

OBJECTS OF THE COMPANY

33

The main objects as contained in our Memorandum of Association are: 1. To engage or undertake software and internet based services, data processing, IT enabled services, software development services, selling advertisement space on the site, web consulting and related services including web designing and web maintenance, software product development and marketing, software supply services, computer consultancy services, e-commerce of all types including electronic financial intermediation business and e-broking, market research, business and management consultancy. 2. To undertake, conduct, study, carry on, help, promote any kind of research, probe, investigation, survey, developmental work on economy, industries. corporates, business houses, agricultural and mineral, financial institutions, foreign financial institutions, capital market on matters related to investment decisions primary equity market, secondary equity market, debentures, bond, ventures, capital funding proposals, competitive analysis, preparation of corporate/industry profile etc. and trade/invest in researched securities. BUSINESS MODEL Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital Trustee

Co.

Limited

(RCTCL),

as

the

Trustee.

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no. IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments

in

diversified

securities.

The main objectives of the Trust are :

34

•

To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unit holders;

•

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

•

To take such steps as may be necessary from time to time to realise the effects without any limitation.

COMPETITORS •

ABN AMRO Mutual Fund ,

•

Birla Sun Life Mutual Fund

•

BOB Mutual Fund

•

Chola Mutual Fund

•

Deutsche Mutual Fund

•

DSP Merrill Lynch Mutual Fund

•

Fidelity Mutual Fund

•

Franklin Templeton Mutual Fund

•

HDFC Mutual Fund

•

HSBC Mutual Fund

•

ING Vysya Mutual Fund

•

J M Financial Mutual Fund

•

Kotak Mahindra Mutual Fund

•

LIC Mutual Fund

•

Morgan Stanley Mutual Fund

•

Principal Mutual Fund

•

Prudential ICICI Mutual Fund

•

Sahara Mutual Fund

35

•

SBI Mutual Fund

•

Standard Chartered Mutual Fund

•

Sundaram Mutual Fund

•

Tata Mutual Fund

•

Taurus Mutual Fund

•

UTI Mutual Fund

SWOT ANALYSIS STRENGTHS •

Original research

•

Integrated technology platform

•

Performance of previously introduced funds

•

Pan – India distribution

WEAKNESS •

After Sales Services

•

Limited number of outlet

OPPORTUNITIES •

Changing demographic with higher disposable income and increasing complex financial instruments will drive the demand for investment advisory services

•

Rapid penetration of internet and computer needs that technology enabled services will gain market share

THREATS •

Economic slowdown

•

Stock market fall will have a cascading effect on mutual fund mobilization

•

Increase or decrease in interest rates can effect debt or income mobilizations

•

Future changes in personal taxation rules can impact insurance sales

•

Increasing competition from large and particularly foreign players

36

3. PROBLEM STATEMENT AND OBJECTIVE OF THE STUDY:-

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

Difficult in convincing people for investment.

•

Difficult to change mind of the investor according to age and Profession.

•

Difficult to make an approach to investors.

•

Difficult to take an appointment with professional people.

•

Difficult to get the documents required for formalities from investors

. •

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

•

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

•

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

37

3.2 OBJECTIVE OF STUDY:In view of the problem cited above, the study aims at analyzing the following major issues: s •

To know the awareness of MUTUAL FUND among people.

•

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

•

To know the different aspects of MUTUAL FUND according to different age, profession etc.

•

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

•

To know the future of MUTUAL FUNDS in India.

•

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

•

To study the diversification of mutual fund.

4. RESERCH METHODOLOGY: 4.1 METHODOLOGY OF STUDY:-

38

Research can be defined as systemized effort to gain new knowledge. A research is carried out by different methodologies which have their own pros and cons. Research methodology is a way to solve research in studying and solving research problem along with logic behind them are defined through research methodology. Thus while talking about research methodology we are not only talking of research methods but also considered the logic behind the methods. We are in context of our research studies and explain why it is being used a particular method or technique and why the others are not used. So that research result is capable of being evaluated either by researcher himself or by others 4.2 Research Methodology:Research has its special significance in solving various operational and planning problem of business and industry. Research methodology is the way to systematically solve the research problem. 4.3 ASSUMPTIONS:1. It has been assumed that sample of 100 respondents represents the whole population. 2. The information given by the customer is unbiased 4.4 Literature Survey:The project is based on pure findings of facts. Development of Working Hypothesis:-The Hypothesis could be developed by discussing with the concerning department heads and guides about this exploratory research and reached to the conclusion that the data is to be collected by personal interaction with the customers, asking them about the services and the improvement required. First of all they

39

are aware of mutual funds or not and then analyzing the findings to reach to the objectives of research. Collection of Data:-There was secondary data available for the study and also primary data collected by carrying out by the survey which has been carried out to through personal interviews of the customers. The sample size was roughly 100. Sampling methods: - A sample is the representative of the population which will predict the behavior of the whole universe. a. The sampling size put under two categories: Probability sampling and non probability sampling. 4.5 Probability sampling:This is the process of selecting the elements or group of elements from as well defined population by such procedure which gives every element in the population an equal chance of being selected for observation. The sampling method use for this survey is the area sampling which is a sub type of probability sampling. 4.6 Sampling size:Large sample gives reliable result than small sample. However, it is not feasible to target entire population or even a substantial portion to achieve a reliable result. So, in this aspect selecting the sample to study is known as sample size. Hence, for my project my sample size was 100. The Sample Size of 100 is not enough to draw a conclusion but as per the time assigned it was difficult to take a sample size more than 100. The Sample Size consist of both the Professional and Business class people. IT peoples, Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample . 4.7 Execution of the project:-

40

It is the very important step in the research process accuracy findings depends on how systematically the study has been carried out in time so that it can make some sense when required. I have executed the project after prior discussion with the guide and structured in following steps: a. Preparation of questionnaire. b. Collection of list of some of the clients interview of the customer so that more interaction is impossible and the variety of responses can be registered to have a good data for analysis. c. Visiting the corporate and asking about their feedback on the mutual funds services they are availing. Try to find out their satisfaction level with the existing mutual fund.

5. LIMITATIONS: 5.1 Limitations:Every work has its own limitation. Limitations are extent to which the process should not exceed. Limitations of this project are:1. Duration of Project was not enough to make a conclusion on such a vast subject time Constraint has become a big limitation. 2. The Sample Size being taken for drawing a conclusion was too small to get an accurate result. 3. Changing the Mentality of people for investing in a particular Financial Product is a very difficult task.

41

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

6. ANALYSIS OF MUTUAL FUNDS:-

6.1 ANALYSIS OF MUTUAL FUNDS ON THE BASIS OF SCHEMES:The schemes have been divided into 10 different categories for the purpose of meaningful comparison. The categories are as follows: 1. Equity diversified Funds. 2. Equity ELSS Funds. 3. Equity sectoral Funds. 4. Balanced Funds. 5. Income Funds. 6. Liquid Funds.

42

7 .Gilt Funds. 8. MIPS (Monthly income plans) 9. Index Funds. 10. Hybrid Funds. There are many asset management companies being involved in mutual fund but people invest thing reputated mutual fund like ICICI PRUDENTIAL, FRANKLIN TEMPLETON, HSBC, KOTAK, HDFC, RELIANCE etc. All the companies have different mutual fund schemes vary from different needs of a customer. Like in the month of June the NFO of Reliance Infrastructure Fund has been issued with different concept and also being accepted by the investors. 6.2 COMPARISAN BETWEEN BANKS AND MUTUAL FUNDS IN DIFFERENT ASPECTS:MUTUAL Returns Administrative

Low

BANKS

FUNDS Better

exp. Risk Investment

High Low

Low Moderate

option Network Liquidity Quality of asset Interest

Less High Penetration At a cost Not Transparent Min. Balance between 10th and

More Low but improving Better Transparent

calculation Guarantee

31st of month. Max. Rs. 1Lakh on Deposit

Everyday None

43

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

7. DATA COLLECTION: DATA COLLECTION: Proceeding further after determines the Methodology and limitation of the study the next step is to analyze the Data being collected for the study. Data is being collected from various sources like:

Questionnaire



Personal visit



Telephonic Information etc.

7.1 QUESTIONAIRE:Questionnaire is a written form being given to the prospective investor to give feedback about the services provided to them and also to find the satisfaction level of the investor for a particular investment product .Questionnaire is an easy and simple way of collecting a data .After filling up of form the next step is to evaluate the form in different dimensions and draw a conclusion. It is difficult to get a Questionnaire filled by corporate because of time they don’t have time to fill the Questionnaire so at the time of meeting them personally or after that the Questionnaire is filled by us.

44

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

CATEGORY

OF

INVESTORS IT PEOPLE DOCTORS TIMBER MERCHANTS JEWELLERS REAL ESTATE AGENTS

TOTAL

RISK

RETURN

INCOME HIGH HIGH HIGH HIGH HIGH

LOW LOW HIGH HIGH HIGH

HIGH HIGH HIGH HIGH HIGH

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

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

45

PROFESSIONAL PEOPLE PPF KISAN VIKAS PATR BANK ACCOUNT INSURANCE FURTHER STUDIES etc.

BUSINESS PEOPLE LAND GOLD STOCKS INSURANCE VEHICLES etc.

From the above table it is clear that the Professional people invest in the Value Added items where as Business people they invest in Future Prospect assets like land, gold etc. 7.3 TELEPHONIC INFORMATION:The further source of collecting data is telephonic information with the existing coustomer and the prospective investors. It is very difficult to reveal the data of investors from the company itself because it has been kept as a secret document. After getting a data some problems too come in the way. Some are: People are not ready to listen.  People ask question like from where did you get the number?  From this source not much of the Information is drawn.  Few respondents where not happy with the level of customer services rendered by RELIANCE MUTUAL FUND LTD. Particularly about the delays in replying or not replying the queries raised by them.

8. INTERPRETATION AND ANALYSIS OF DATA:-

CHART:- 8.1 From the data collected through the questioner, observation made during the personal visits the data revealed following information :46

PERCENTAGE OF PEOPLE WHO INVEST 

100% people invest in various instruments

PERCENTAGE OF INVESTMENT TO TOTAL INCOME The following table and pie chart throw the light on the percentage of saving out of income.

NO. INCOME Over 50% 30%-50% 10%-30% 10% & below

of

PEOPLE 1 5 56 38

PERCENTAGE 1% 5% 56% 38%

Percentage in Income People Invest

1%

5%

38%

56%

Over 50%

30-50%

10-30%

Below 10%

47

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

CHART:-8.2 INVESTMENT IN FINANCIAL PRODUCTS FINANCIAL INSTRUMENTS BANK INSURANCE STOCK MARKET BONDS & DEBENTURE PPF NSC POST OFFICE SAVING SCHEMES REALESTATE GOLD CHIT FUND

% OF INVESTMENT 40% 10% 15% 3% 7% 5% 8% 2% 5% 5%

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

48

BANK

INSURANCE 5%

STOCK MARKET

5% 2% 8%

40%

5%

BONDS & DEBENTURE PPF

7% 3% 15%

10%

NSC

POST OFFICE SAVING SCHEMES REALESTATE

GOLD In this chart it is clear that people mainly invest and keep their money in banks

CHIT FUND

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

49

CHART:-8.3 AWARENESS OF MUTUAL FUND OUT OF 100 PEOPLE:-

Awareness of M utual Funds

7%

Yes No

93%

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

50

CHART :- 8.4 PERCEPTION ABOUT MUTUAL FUND Safe Risky Other

10% 28% 62%

Perception of Investors

10%

Safe 28% 62%

Risky Others

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

51

CHART :-8.5 COMPARITIVE STUDY OF RISK , INVESTMENT AND RETURN. AGE GROUP 25-35 35-45 45-60 60& ABOVE

RISK 60% 25% 10% 5%

RETURN 35% 15% 20% 30%

INVESTMENT 45% 15% 10% 30%

Risk Return and Investment Chart according to different age group 60% 50% 40% RISK

30%

RETURN

20%

INVESTMENT

10% 0%

25-35

45-60

In chart 7.5 above it is determined that people of the age group 25-30 yrs are more risk takers as compared to other age groups. However they are able to invest less because they do not have any responsibility toward the society and family. They also invest less because they don’t get proper guidance. As the age increases the saving percentage decrease but the people above 55 are keener to invest because they become free from all the responsibilities of the family and society. At this stage they need continuous flow of income.

52

Middle age people of the age group of 35-45 yrs. are not investing much because they are bound to many responsibilities towards family and society. CHART:- 8.6 IDENTIFICATION OF MUTUAL FUND COMPANIES ASPECTS Brand Name Good Services High Yield Advertisement Any other reason

PERCENTAGE 39 24 15 10 12

40 35 30 25 Percentage 20 Series1

15

Series2

10 5 0

Brand Name

Good Services

High Yeild Advertisement Any other reason Aspects

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

CHART :- 8.7

53

RISK TAKEN BY DIFFERENT AGE GROUP :AGE

RISK

TAKEN

GROUP 25-35 35-45 45-60 60 &

PERCENTAGE 60 20 17

above

3

IN

RISK TAKEN IN PERCENTAGE

3% 17% 25-35 35-45 45-60 20%

60%

60 & above

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

CHART :- 8.8

54

PERCENTAGE OF TOTAL INCOME INVESTED IN MUTUAL FUND:INVESTORS

%

OF

TOTAL

CATEGORY IT SECTOR

MUTUAL FUNDS

PEOPLE DOCTORS TIMBER

50% 30%

MERCHANTS JEWELLERS REALESTATE

7% 3%

AGENTS

10%

INCOME

INVEST

IN

PERCENTAGE OF TOTAL INCOME INVEST IN MUTUAL FUND

IT SECTOR PEOPLE

10% 3%

DOCTORS

7% 50%

TIMBER MERCHANTS JEWELLERS

30% REALESTATE AGENTS

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

55

CHART 8.9 AWARENESS OF RELIANCE MUTUAL FUND LTD OUT OF 100 PEOPLE



55% says that they are aware of Reliance Mutual Fund Ltd



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

yes no

9. PROJECT FINDINGS AND RECOMMENDATIONS:9.1 PROJECT FINDINGS: There is a great potential for investment in Mutual Fund as people wants to save for various future obligation. 56

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

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

ANNEXURE

LIST OF BANKS VISITED FOR SELLING INFRASTRUCTURE FUND

57

NAME OF

PERSON NAME

PERSONS

PHONE

BANK JANTA

PRASHANT

DESIGNATION BANK

NO 020

SEHKARI DENA BANK

PATHANKAR OM PRAKASH

OFFICER MARKETING

25652409 9890531992

S.R VITTHAL CO

CHOUDHARY PRADEEP

OFFICER MARKETING

020

OPERATIVE BANK

CORPORATION

KURNALE MR RAHUL

BANK UNITED BANK

P.VISHVANA

CASHIER

2543837 9011687970

OF INDIA DENA BANK

S.Y DESHPANDE

BANK STAFF

020

VAIBHAV

MARKETING

24331660 9860377322

SONASWAMI

MANAGER

Mr.DESHPANDEY

BANK

020

MANAGER

24471165

Mrs.JOSHI

ASSISTANCE

--

BANK BANK OF

Mr.P MURALI

MANAGER MANAGER

9890603113

BARODA BANK OF

K.SUNDARA

MANAGER

020

BARODA

RAJAN

CENTRAL

OFFICER BANK STAFF

25532460 020

BANK OF INDIA JANTA SEHKARI BANK SARASWAT

2355662

10. REFERENCES:1.www.njindiainvest.com 2.http://mutualfunds.about.com

58

3.www.shcil.com 4.MutualFunds-ICMR book of readings 5.Fact Sheet of various Mutual Funds. 6.ICMR Text Book 7.Dalal Street Journal’s Stock Market Book

ANNEXURE

11. QUESTIONAIRE:1. DO YOU INVEST? YES

59

NO 2. WHAT PERCENTAGE OF INCOME DO YOU INVEST? OVER 50% 30% TO 50% 10% TO 30% Below 10% 3. WHAT ARE THE VARIOUS INVESTMENT SCHEMES IN WHICH YOU INVEST? Bank Insurance Stock Market Bonds and Debenture PPF (Public provident Funds) NSC (National saving certificate) Post office saving schemes Real Estate Gold Chit Funds

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

60

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

5. ARE YOU AWARE OF MUTUAL FUNDS? Yes No

6. WHAT IS YOUR PERCEPTION ABOUT MUTUAL FUNDS? Safe Risky Others

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

61

Growth schemes.(provide appreciation of capital over medium to long term) Income schemes.(provide regular and continuous income to investor) Balance schemes.(provide both growth and income) Money market and Liquid Schemes.(provide easy liquidy preservation of capital and moderate income). Tax saving schemes.(offer tax rebates under tax laws) Guilt funds(generating returns by investing in securities created and issued by a central gov. or state gov.) 8. WHICH OF THEM DO YOU PREFER? Growth schemes Income schemes Balance schemes Money Market and Liquid schemes Tax saving schemes Guilt Funds s

9. DO YOU THINK THE MUTUAL FUNDS ARE NOT AS POPULAR IN INDIA AS IN OTHER COUNTRIES? Risk involved as returns are not assured. Any other reason please specify…………………………………………… …

62

10. HOW DO YOU LOOK MUTUAL FUND COMPANYS? Brand Name Good Service High Yield Advertisement Any Other Reason……………………………........................................... 11. NAME 12. AGE 25-35 35-45 45-60 60 & above

13. ARE YOU AWARE OF RELIANCE MUTUAL FUND LTD? YES NO

63

14. WOULD YOU CONSIDER AVAILING THE FINANCIAL CONSULTANCY OFFERED BY RELIANCE MUTUAL FUND LTD? YES NO

64