Sana My Pms

A STUDY

ON

IN THE TESTING TIMES OF THE MARKET PMS AS AN INVESTMENT AVENUE

IN

RELIANCE MONEY

A summer training project report submitted in partial fulfillment of the requirements for the award of the degree of Masters of Business Administration (MBA) from Rajasthan Technical University (RTU), Kota

BATCH (2007-2009)

SUBMITTED BY:

FACULTY GUIDE:

Syeda Mehrunnisa

Mr.R.Mukundan

MBA 3rd Sem (Finance)

COMPUCOM INSTITUTE OF INFORMATION TECHNOLOGY AND MANAGEMENT AN ENGINEERING & MANAGEMENT COLLEGE, JAIPUR (Approved by AICTE & Affiliated to University of Rajasthan & RTU, Kota)

ACKNOWLEDGEMENT

“One’s mind, once stretched by a new idea; never regains its original dimensions”

-Oliver Windell Holmes

On this note I would like to take this opportunity to convey my respect and special gratitude towards Mr. Abhishek Mehra (Centre manager, Ajmer branch) who considered me worthy of doing this unique and untruden project in their esteemed establishment and never failed to satisfy my over-zealous thirst to obtain information.

Working on this project was a great experience.

I gave my sincere thanks to Mr. Nitin Bhargava and Mr. Piyush Tiwari for allowing me to undertake this training and guiding me along. I also like to thank the staff of Reliance Money which was very supportive.

I would like to express my heartiest gratitude to Mr.Surendra Surana (Director CIITM), Mr.R.Mukundan (Coordinator MBA) and all the faculty members of CIITM, Jaipur for their support and guidance.

No language is ever adequate to express my gratitude towards my family members for their dedicated and enthusiastic cooperation.

(Syeda Mehrunnisa)

DECLARATION

I hereby declare the project work carried out during the period from 1st July, 2008 to 22nd August, 2008 at Reliance Money, Ajmer is my original work. I hereby assure that this is not copied work to the best of my knowledge.

(Syeda Mehrunnisa)

CONTENTS Chapters

Pages

1. INTRODUCTION TO THE INDUSTRY •

Founder……………………………………………………………....1 - 3

•

Overview……………………………………………………………..4 - 8

2. INTRODUCTION TO THE COMPANY • Reliance Capital Ltd………………………………………………..9 - 10 • Introduction of Reliance Money………………………………….11 - 15

• Different Ranges of Products……………………………………..16 - 21 • Reliance Money Structure (Board of Directors)……………………..22 • SWOT Analysis…………………………………………………....23 - 24 3. PORTFOLIO MANAGEMENT SERVICES (PMS)

• An Introduction……………………………………………………25 - 38 • Shari’ah Complaint PMS………………………………………….39 - 48 • Domestic PMS……………………………………………………....49 - 53 4. RESEARCH METHODOLOGY……………………………………..54 - 57

• Title • Objective of the Study • Scope of the Study • Significance of the Industry • Significance of the Research • Research Technique • Sampling Methodology •

Limitations of the Research

5. DATA ANALYSIS AND INTERPRETATION………………………58 - 72 6. FACTS AND FINDINGS…………………………………………………...73 7. RECOMMENDATIONS …………………………………………………..74 8. CONCLUSION……………………………………………………………...75

9. ANNEXURE •

Questionnaire....................................................................................76 – 79

10. BIBLIOGRAPHY..........................................................................................80

TABLES AND CHARTS Pages

1. Occupation wise representation...................................................................58

Table 1.1 Chart 1.2 2. Categorization on the basis of religion.........................................................59

Table 2.1 Chart 2.2 3. Data Representation according to age-group..............................................60

Table 3.1 Chart 3.2 4. Data showing yearly income..........................................................................61

Table 4.1 Chart 4.2 5. Data showing investment objective...............................................................62

Table 5.1 Chart 5.2 6. Data showing willingness to take financial risk............................................63

Table 6.1 Chart 6.2 7. Data showing feelings of respondents, after they make a financial

decision...64 Table 7.1 Chart 7.2

8. Data showing investment experience..............................................................65

Table 8.1 Chart 8.2 9. Description of expected future income over next 5 years..............................66

Table 9.1 Chart 9.2

10. Data showing ease of management..............................................................67

Table 10.1 Chart 10.2 11. Data showing, "Who manages your portfolio?”........................................68

Table 11.1 Chart 11.2 12. Data showing the no: of respondents who need a fund manager.............69

Table 12.1 Chart 12.2 13. Data showing the awareness level of the respondents towards PMS.......70

Table 13.1 Chart 13.2 14. Data showing respondent’s interest in Shari’ah Compliant

Investments.....................................................................................................71 Table 14.1 Chart 14.2 15. Data showing the benefits of PMS which had attracted respondents.......72

Table 15.1 Chart 15.2

INTRODUCTION TO THE INDUSTRY

RELIANCE ANIL DIRUBHAI AMBANI GROUP

FOUNDER “ Growth has no limit at Reliance. I keep revising my vision. Only when you can dream it, you can do it ”

Dirubhai.H.Ambani Founder Chairman Reliance Group

December 28th ,1932 – July 6th ,2002

Few men in history have made as dramatic a contribution to their country’s economic fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani. Fewer still have left behind a legacy that is more enduring and timeless.

•

As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of India’s capital markets, the champion of shareholder interest.

•

But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, India’s largest private sector enterprise.

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When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this fledgling enterprise into an Rs 60,000 crore colossus—an achievement which earned Reliance a place on the global Fortune 500 list, the first ever Indian private company to do so.

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Dhirubhai is widely regarded as the father of India’s capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronized by a small club of elite investors which dabbled in a handful of stocks.

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Undaunted, Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned

money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial return on their investments. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets.

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Under Dhirubhai’s extraordinary vision and leadership, Reliance scripted one of the greatest growth stories in corporate history anywhere in the world, and went on to become India’s largest private sector enterprise.

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Throughout this amazing journey, Dhirubhai always kept the interests of the ordinary shareholder uppermost in mind, in the process making millionaires out of many of the initial investors in the Reliance stock, and creating one of the world’s largest shareholder families.

AN OVERVIEW The Reliance – Anil Dhirubhai Ambani Group is among India’s top three private sector business houses on all major financial parameters, with a market capitalization of Rs.325,000 crores (US$ 81 billion), net assets in excess of Rs.115,000 crores (US$ 29 billion), and net worth to the tune of Rs.55,000 crores (US$ 14 billion) Across different companies, the group has a customer base of over 100 million, the largest in India, and a shareholder base of over 12 million, among the largest in the world. Through its products and services, the Reliance - ADA Group touches the life of 1 in 10 Indians every single day. It has a business presence that extends to over 4,500 towns and 300,000 villages in India, and 5 continents across the world. The interests of the Group range from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment.

VISION • • • •

To build a global enterprise for all the stakeholders. A great future for our country. To give millions of young Indians the power to shape their destiny. The means to realize their full potential.

VALUES • • • • • • • • •

Shareholder interest People Care Consumer Focus Excellence in Execution Team Work Proactive Innovation Leadership by Employment Social Responsibility Respect for Competition

Shareholder Interest Reliance value the trust of shareholders, and they keep their interest paramount in every business decision they make, every choice they exercise.

People Care

Reliance possess no greater asset than the quality of their human capital and no greater priority than the retention, growth and well-being of their vast pool of human talent.

Consumer Focus They rethink every business process, product and service from the standpoint of the consumer – so as to exceed expectations at every touch point.

Excellence in Execution Reliance believe in excellence of execution – in large, complex projects as much as small everyday tasks. If something is worth doing, it is worth doing well.

Team Work The whole is greater than the sum of its parts; in our rapidly-changing knowledge economy, organizations can prosper only by mobilizing diverse competencies, skill sets and expertise; by imbibing the spirit of “thinking together” -- integration is the rule, escalation is an exception.

Proactive Innovation Reliance has nurtured innovation by breaking silos, encouraging cross-fertilization of ideas & flexibility of roles and functions. They created an environment of accountability, ownership and problem-solving –based on participative work ethic and leading-edge research.

Leadership by Empowerment They believe that leadership in the new economy is about consensus building, about giving up control; about enabling and empowering people down the line to take decisions in their areas of operation and competence.

Social Responsibility Reliance believe that organizations, like individuals, depend on the support of the community for their survival and sustenance, and must repay this generosity in the best way they can.

Respect for Competition Reliance respect competition – because there’s more than one way of doing things right. “We can learn as much from the success of others as from our own failures.”

Corporate Philosophy Think big. Think different. Think ahead Dhirubhai preached — and personally practiced — one mantra throughout his life: Dream with conviction.

He built the Reliance empire from scratch and, in a short span of 25 years, catapulted it to become one of the top Fortune 500 corporations of the world — an achievement unparalleled in history. He was deeply rooted in traditional Indian values, yet Dhirubhai possessed the outlook of a modern man — truly a person of the 21st century. His corporate philosophy was short, simple and incredibly effective: “Think big. Think different. Think fast. Think ahead. Aim for the best.” This clearly reflected in his passion for mega-sized projects, as well as his fascination for cutting–edge technology and desire to always achieve the highest possible productivity. At Reliance, Dhirubhai was a pillar of inspiration for one and all. By practicing what he preached, he inspired and encouraged everyone to surpass the best in the world.

Corporate Mission The transparent HR policies and robust processes of Reliance are driven by a single overarching objective: To attract, nurture, grow and retain the best leadership talent in every sector and industry is which they operate. Company’s aim is to create a team of world beaters that is: Committed to excellence in quality, Focused on creation and enhancement of stakeholder value Responsive to evolving business needs and challenges Dedicated to uphold the core values of the Group

Corporate Promise In order to achieve the objectives, company offers their people... Growth opportunities to expand leadership capabilities

True meritocracy and freedom to choose career paths Opportunities to develop and hone leadership and functional capabilities An entrepreneurial environment where people can pursue their dreams Competitive compensation periodically identifies exceptional individual and team achievers among the various business functions and verticals in the Group.

INTRODUCTION TO THE COMPANY

RELIANCE CAPITAL LTD

Reliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani Group, and is ranked among the 20 most valuable private companies in India. Reliance Capital 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 groups, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking, depository services, distribution of financial products, consumer finance and other activities in financial services. Reliance capital is mainly divided into five parts according to their area of operations. These parts are:• • • • •

Reliance general insurance company LTD Reliance life insurance company LTD Reliance capital asset management company LTD (Reliance mutual fund) Reliance portfolio management. Reliance Money LTD (Flagship Company of reliance capital)

The Reliance Anil Dhirubhai Ambani Group is one of India's top 2 business houses, and has a market capitalization of over Rs.2,25,000 crore (US$ 53 billion), net worth in excess of Rs.58,000 crore (US$ 14 billion), cash flows of Rs. 12,000 crore (US$ 3 billion) and net profit of Rs. 8,000 crore (US$ 2 billion)

INTRODUCTION OF RELIANCE MONEY

Reliance Money is a comprehensive financial services and solutions provider. Its endeavor is to change the way India transacts in financial markets and avails financial services. Reliance Money provides a single window, enabling customers to access, amongst others, Equity & Commodity, Derivatives, Mutual Funds, IPOs, Life & General Insurance Products, Offshore Investments, Money Transfer, Money Changing, Gold Coins, Credit Cards and now Portfolio Management Services.

Reliance Money is a group company of Reliance Capital and reliance capital is a company of Anil Dhirubhai Ambani Group, one of India’s leading and fastest growing

private sector financial services companies, ranking among the top 3 private sector financial services and banking companies in terms of net worth.

•

Reliance Money currently offers its services in Broking and Distribution of Financial services and Products. Thus, Reliance Money is also dealing into general and life insurance and mutual funds. Other than this reliance money is also dealing in gold coins, credit cards and various types of loans. So Reliance money has a wide range of products to offer its customers.

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Currently 2800+ employees across 124 locations spread across the country.

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Largest NBFC in India.

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Among the top 3 Private Sector Companies in Financial services sectors.

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Zero debt company and no NPA’s.

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2 Million customers within 12 months.

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20000+ touch points, 10000+ outlets across 5000+ towns / cities.

DIVISIONS OF RELIANCE MONEY

RELIANCE SECURITIES LIMITED will spearhead Reliance–ADA Group’s foray into the Indian Capital markets,providing investors the facility of anytime-anyway online trading in all shares and securities.

RELIANCE COMMODITIES LIMITED is the company through which all commodity-trading facilities would be provided to not only the sophisticated, metro investor but also to the Indian farmer who needs these commodity services for daily living.

RELIANCE FINANCIAL SERVICES LIMITED – A registered NBFC which will be offering retail foreign currency trading.

WHY RELIANCE MONEY ?

Reliance Money is the most cost-effective, convenient and secure way for the people to transact in a wide range of financial products and services

BUSINESS MODEL

Reliance money has an excellent business model to capture the whole market of any city. Company has three step model to reach to the potential customers. These three steps are:-

• • •

Reliance money branch office Franchisee Remisre

In this model a Reliance money branch in any city select some franchisees. These franchisees are business associates of the company and there is certain criterion to give franchisee to any firm and number of franchisee is depends according to the size of the city or potential market available. Franchisee can further appoint remissers to do business in the city. These remissers are individual entity. Number of remissers also depends on various conditions.

DIFFERENT RANGES OF PRODUCTS

IPO Online When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer’s securities.When private companies i.e. companies that are wholly owned by their promoters, invite the public to subscribe to their shares, this issue of shares is called an Initial Public Offering (IPO).

Trade In Commodities Commodities mean rice, wheat, sugar, gold etc. People can trade in these commodities without owning a piece of the commodity they trade in. Commodities, which you have been eating or using all these years or donning it as a fashion accessory or even running you car with, can be now traded on the Indian exchanges. It has always been traded in the Global exchanges, now it is our turn to turn to experience the power of commodities.

Trade In Equity

Equity is a share in the ownership of a company. It represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company increases. The terms share, equity and stock mean the same thing and can be used interchangeably. Holding a company’s stock means that you are one of the many owners (shareholders) of a company, and, as such, you have a claim (to the extent of your holding) to everything the company owns. Yes, this means that technically, you own a portion of every piece of furniture; every trademark; every contract, etc. of the company. As an owner, you are entitled to your share of the company’s earnings as well as any voting rights attached to the stock. Another extremely important feature of equity is its limited liability, which means that, as a part-owner of the company, you are not personally liable if the company is not able to pay its debts. In case of other entities such as partnerships, if the partnership goes bankrupt, the partners are personally liable towards the creditors/lenders and they may have to sell off their personal assets like their house, car, furniture, etc., to make good the loss. In case of holding equity shares, the maximum value you can lose is the value of your investment. Even if a company of which you are a shareholder goes bankrupt, you can never lose your personal assets.

Personal Finance There are good times and bad times during every stage of our lives, and being financially prepared to face all kinds of situations makes the journey of life a lot easier and certainly more.

Trade In Derivatives Derivative products have been around for a long, long time. In fact, as early as the 1650s, dealings resembling present day derivative market transactions were seen in rice markets in Osaka, Japan. The first leap towards an organized derivatives market came in 1848, when the Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was established. Derivatives, as the name suggests, are financial instruments that derive their value from an underlying security or asset. Today, equity and commodity derivative markets are rapidly gaining in size in India. In terms of popularity too, these markets are catching on like a forest fire. Reliance Money, offers their clients the facility to trade in Futures and Options of Index i.e. Nifty and other Stocks on NSE under its Derivatives Section.

Offshore Investment or Forex The global foreign exchange market is the biggest market in the world. The nearly USD 2 trillion daily turnover exceeds the combined turnover of the entire world’s stock and bond markets.

There are many reasons for the popularity of foreign exchange trading, but among the most important are, the high liquidity 24 hours a day and the very low dealing costs associated with trading. The market is so large that a handful of players can never influence its outcome.

Investments in Mutual Funds Reliance Money brings to the clients a unique, hassle-free and paperless way to invest in Mutual Funds. Clients can now invest on-line in Mutual Funds through Reliance Money. No more filling application forms manually or any going through other paperwork. Client needs no signatures or proof of identity for investing. Once client places a request for investing in a particular fund, there are no manual processes involved. Their bank funds are automatically debited or credited while simultaneously crediting or debiting their unit holdings. Client also gets control over their investments with on-line order confirmations and order status tracking. Client gets to know the performance of their investments through online updation of their portfolio with current NAVs.

Insurance

Life Insurance Life insurance helps Provide financial assurance & security for your dependents & loved ones. It is an important part of the financial planning bouquet for all individuals & families. Life insurance products offer comprehensive financial solutions which besides offering financial security also provide opportunity for saving, investment & tax planning

General Insurance It is a system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. It is a hedge against the occurrence of unforeseen incidents. Insurance products help you in not only mitigating risks but also helps you by providing a financial cushion against adverse financial burdens suffered. Accidents... illness... fire... financial securities are the things you'd like to worry about any time. General Insurance provides you the much-needed protection against such unforeseen events. Unlike Life Insurance, General Insurance is not meant to offer returns but is a protection against contingencies. Under certain Acts of Parliament, some types of insurance like Motor Insurance and Public Liability Insurance have been made compulsory.

Gold Coins Gold is one of the most precious metals ever mined. Fought for over centuries,Gold has always been a highly sought after commodity. Gold not only acts as a secure investment, but is an efficient store of value offering high security & credibility. An instrument of long term investment, Gold acts as a hedge against inflation besides providing high liquidity. Most Indians share an emotional bond with Gold nearly bordering on spirituality. Festive occasions & auspicious days like Akshaya Trithiya, Dussehra, Dhanteras/Diwali are days when customers throng Gold selling outlets to have a piece of this precious metal. But in a highly disorganized Gold market, the purity aspect and thereby the value for one’s Money during the purchase of Gold has always been a question mark. For the customer, the lack of access to a branded, affordable, reliable Gold coin has always been a matter of concern. Reliance aims to bridge this gap by giving 99.99% pure, 24 carat, Swiss Gold coins through its distribution network. Available in 0.5g, 1g, 5gm and 8gm denominations, these 24 carat, 99.99% pure, internationally certified Gold coins cater to a large segment of the society in both the retail and the corporate world. Available in tamper proof packaging, the overall look and feel of these coins is far superior & they possess a great finish. These Gold coins are Ideal for customers or corporates to be used as a gifting idea, for retail/agent contests, as employee rewards etc.

Retail customers buy these coins just for the pleasure of owning it or as an investment idea.

These Gold coins are available at all Reliance Money and Reliance World branches across.

Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager thatcan potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique.

Reliance money structure (board of directors)

SWOT ANALYSIS

Strengths

➢ Diversified Investment - Share trading are having a number of investment

objectives from which an investor can choose according to his requirements, time to get returns etc.

➢ Easy procedure - The procedure involved for purchasing or selling shares is

not very easy . Individual investor can also easily understand and can himself buy or sell shares .

Weaknesses

➢ Market risk - The capital market is highly volatile in nature. No matter how

much one is precautious, he will always be under threat of incurring losses.& share market is a Satta Bazaar.

➢ No control over cost - There is not much control over the cost of operations as

the market is volatile and the cost increases quickly or dawn rapidly.

➢ High risk - The share market is a place where price of the shares goes up &

down rapidly so it is not possible for initial investor to buy or sale shares easily.

Opportunities

➢ Growing capital market - Capital market in India is growing at a very fast

pace and if this pace continuous then Indian capital market will be one of the strongest economies of the world and investment in this today will then be very fruitful.

➢ Branch expansion - Large no. of branches are opening day by day and even

Reliance are trapping the countries having almost same type of socioeconomic condition & even same culture etc.

➢ Untapped rural market - Rural market in India is still not covered fully by

the various AMCs. Rural market in India is a very big market and if this market is tapped then awareness about shares can boost a lot.

Threats

➢ Tough competition - There is a very tough competition because of large

number of companies who can provide on line Share trading.

➢ Unawareness - Major % of population is not aware of Share market , so it’s

hard to convince people.

➢ Changing scenario - Our market scenario is changing day by day i.e. our

market is fluctuating, so this makes investor hard to invest in shares

PORTFOLIO MANAGEMENT SERVICES (PMS)

AN INTRODUCTION

Reliance Money, the largest broking and distribution house in India and part of the Reliance Anil Dhirubhai Ambani Group, forayed into Portfolio management, as part of its expansion plans, completing the entire gamut of its financial services.

In May 2008, Reliance money launched Shari’ah Complaint Portfolio Management Services starting at Rs 5 Lakhs. It was especially framed for the Muslim brethren to plan their finances and investment effectively. The launch was announced by Mr. Sudip Bandyopadhyay, Director & CEO of Reliance Money, at a press conference.

In July 2008, Reliance money again introduced Rs 10 Lakhs Portfolio Management service scheme. It comprises Growth and value schemes in it, which gives a minimum return of 16% p.a.in the volatile market of June-July 2008. It is also known as Domestic Portfolio Management service. This 16% return offer last only till 31st July, 2008.

AN OVERVIEW As Portfolio Managers, Reliance endeavor that every portfolio created by them reflects the values on which Reliance ADA Group has been built. A commitment towards transparency and service. Add to that, a strong research driven investment process. Investor’s personal portfolio reflects their own investment style and profile, but it requires considerable amount of their time and efforts to manage it. Anticipating & analysing market movements, financial statements and studying macroeconomic variables is becoming increasingly complex. Investors may not have required time to devote to their investments. Under Portfolio Management Services, investors delegate the responsibility of managing their portfolio to a team of specialists who understands their investment objectives. Reliance team of Portfolio Managers, Research Analysts and Relationship Managers are working continuously to create and actively manage investor’s portfolio to provide them the best returns in the forever-changing market dynamics.

Meaning of Portfolio Management services Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique. Investment Management Solutions in PMS can be provided in the following ways: • • •

Discretionary Non Discretionary Advisory

Discretionary: Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager. Non Discretionary: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager. Advisory: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor.

Note: In India majority of PMS providers offer Discretionary Service

Entities who can offer PMS PMS can be offered only by entities having specific SEBI registration for rendering portfolio management services. Currently in India PMS is offered primarily by asset management companies (AMCs) and brokerage houses.

An Ideal PMS Investor The Investment solutions provided by PMS cater to a niche segment of clients. The clients can be Individuals or Institutions entities with high net worth. The offerings are usually ideal for investors: •

who are looking to invest in asset classes like equity, fixed income, structured products etc • who desire personalised investment solutions • who desire long-term wealth creation • who appreciate a high level of service Thus, Any one of the following can sign up for PMS • • • • •

Resident Individuals (Minimum investment is Rs.5,10,000) Non-Resident/PIO (Minimum investment is USD 50,000 / Rs 20 Lacs) Hindu Undivided Families (HUF) Association of Persons Limited Companies Trust

• •

Partnership Firms Societies

Opening of the PMS account At the time of opening the PMS account the cutomer has to pay the required amount in cash. But apart from cash, the client can also hand over an existing portfolio of stocks, bonds or mutual funds to a PMS that could be revamped to suit his profile.However the portfolio manager may at his own sole discretion sell the said existing securities in favour of fresh investments. Mode of payment for the charges incurred - Cash will be deducted from the customer’s funds on monthly basis for Fixed fee and annually for Performance based fee.

Tax liability for the PMS investor The portfolio manager is a trustee acting in a fiduciary capacity on behalf of the investor. Therefore, the tax liability for a PMS investor would remain the same as if the investor is accessing the capital market directly. However the investor should consult his tax advisor for the same. The portfolio manager ideally provides audited statement of accounts at the end of the financial year to aid the investor in assessing his/ her tax liabilities.

When Investor has special requests

PMS allow investors to impose reasonable stock, sector, or other preferences and restrictions on the management of their accounts. For example, if the investor owns his employer's stock in investment, the investor and the Financial Advisor may decide not to invest additional assets in the company.

Input by investor in the stocks which was chosen for his portfolio The Investor and the Financial Advisor will want to have an initial consultation to discuss specific objectives, risk tolerance, time horizon, and goals. Depending on the PMS account chosen, the investor may have the ability to impose reasonable investment restrictions on the management of his account. Some PMSs offer more flexibility than others, usually based on the amount invested.

Risks associated with PMS investments All investments involve a certain amount of risk, including the possible erosion of the principal amount invested, which varies depending on the security selected. For example, investments in small and mid-sized companies tend to involve more risk than investments in larger companies

Safety of Investor’s securities under Porifolio management services With a view to create transparency in reporting standards of portfolio management arena, we have appointed Deutsche Bank for custody banking and settlement functions of all our Portfolio Management Services.

Benefits of PMS

➢

Professional Management - The service provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk.

➢ Continuous Monitoring - It is important to recognize that portfolios need to be

constantly monitored and periodic changes made to optimise the results.

➢ Risk Control - A research team responsible for establishing the client's

investment strategy and providing the PMS provider real time information to support it backs any firm's portfolio managers.

➢ Hassle Free Operation - Portfolio Management Service provider gives the client

a customised service. The company takes care of all the administrative aspects of the client's portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance.

➢ Flexibility - The Portfolio Manager has fair amount of flexibility in terms of

holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities.

➢ Transparency - PMS provide comprehensive communications and performance

• • • • • •

reporting. Investors will get regular statements and updates from the firm. Webenabled access will ensure that client is just a click away from all information relating to his investment. Your account statements will give you a complete picture of which individual securities you hold, as well as the number of shares you own. It will also usually provide: the current value of the securities you own; the cost basis of each security; details of account activity (such as purchases, sales and dividends paid out or reinvested); your portfolio's asset allocation; your portfolio's performance in comparison to a benchmark; market commentary from your Portfolio Manager

➢ Customised Advice - PMS give select clients the benefit of tailor made

investment advice designed to achieve his financial objectives. It can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed too little company’s stock, a separately

managed account provides you with the ability to exclude that stock from your portfolio.

➢ Personalised Approach - Some Portfolio Managers may provide a personal

investment management service to achieve the client's investment objective. In PMS, you may gain direct personalised access to the professional money managers who actively manage your portfolio. This interaction may come in various different ways including in-person meetings, conference calls, written commentary, etc with the fund management team.

Expectations from PMS When one has entrusted his money to a PMS, one can expect: • • •

•

•

Handholding from his portfolio manager than he has been accustomed to from his mutual fund. One can expect to have a relationship manager/ financial advisor through whom he can interact with the fund manager at any time of his choice. One can also expect frequent (maybe monthly) interaction with the portfolio manager to discuss any concerns that he might have. To be updated on any major changes in asset allocation or in the investment strategy relating to his portfolio. All administrative matters, including operating a bank account and dealing with settlement and depository transactions, will be handled by the PMS. On handing over one's money, he will receive a user-ID and password from the PMS, which will grant him online access to his portfolio details. He can use these to check back on his portfolio as often as he likes. Keeping track of capital gains (and losses) for the taxman can be a depressing chore, when one has furiously churned his investments through the year. Opting for PMS will free him of this chore, as a detailed statement of the transactions on his portfolio for tax purposes comes as a part of the package.

Portfolio Management Services and Mutual Funds : The Differences

Features

PMS

Mutual Fund

Management

Provide ongoing, personalized access to professional money management services

Provide access to professional money management services

Customization

Portfolio can be tailored to address each investor's specific needs

Portfolio structured to meet the fund's stated investment objectives

Management

Provide ongoing, personalized access to professional money management services

Provide access to professional money management services

Ownership

Investors directly own the individual securities in their portfolio, allowing for tax management flexibility

Shareholders own shares of the fund and cannot influence buy and sell decisions or control their exposure to incurring tax liabilities

Liquidity

Although managers may hold cash, they are not required to hold cash to meet redemptions

Mutual funds generally hold some cash to meet redemptions

Minimums

Significantly higher minimum investments than mutual funds. Generally, minimum ranges from:

Provide ongoing, personalized access to professional money management services

Rs. 1 Crore + for Equity Options Rs. 5 Crore + for Fixed Income Options Rs. 20 Lacs + for Structured Products

Flexibility

Generally more flexible than mutual funds. The Portfolio Manager may move to 100% cash if required. The Portfolio Manager may take his own time in building up the portfolio. The Portfolio Manager can also manage a portfolio with disproportionate allocation to select compelling opportunities

Comparatively less flexible

The Role of the Financial Advisor

The Financial Advisor should guide the investor through an ongoing consulting process designed to lead him towards his investing goals and keep his investment strategy on track. This process may include the following:

➢ Setting Goals and Guidelines: The investor along with the Financial Advisor can

work together to identify his financial goals and expectations, which can be translated into a long-term investment plan.

➢ Determining Asset Allocation: Based on the investor objectives, the Financial

Advisor may suggest an asset allocation divided among stocks, fixed income, debt, cash, structured products and other investments and also determine which investment vehicles are most appropriate for the investor. Having a mix of broad asset categories is an important factor in achieving the investor's investment objectives.

➢ Selecting Investment Managers and Investment Vehicles: After determining

asset allocation, the Financial Advisor may recommend specific portfolio managers who manage assets in a particular style, such as large cap growth, for

example. The Financial Advisor's choice of managers is generally based on the manager's investment style and performance history, the professional relationship he or she has developed with the manager and the manager's firm, and a number of other criteria.

➢ Managing and Monitoring Investor Accounts: Investors may receive periodic

statements detailing their account's holdings and performance. The Financial Advisor may want to meet with the investor to explain the information in these statements and evaluate the performance in light of his goals. If a change is needed, the Financial Advisor can recommend adjustments to help meet investor objectives. ➢ Ongoing Personal Service: PMS Service may include ongoing communication

and frequent contact from the Financial Advisor, in addition to periodic reviews. Also the Financial Advisor may help you put investment performance in the proper perspective, and help you decide whether it may be appropriate to: • modify your expectations to reflect a changing market; • adjust your risk considerations; or • Reallocate the assets in your portfolio.

Customized solutions At Reliance - PMS believe in delivering more than what the customer expects, customized solutions are just a step towards it. Customized solutions are investments specially created to meet needs that cannot be met from the standardized financial instruments available in the market. Customized solutions capture the characteristics of traditional and non-traditional investments with financial instruments. The strategic combination of these components provides control and flexibility to address those investors whose investment objective is not met through traditional investments available.

Client engagement At Reliance - PMS seek high service standards through a full fledged service desk for addressing client and investment related queries and providing sound resolution with an endeavor to achieve complete customer satisfaction. Although in Reliance’s ongoing post sales activity, the company attempt to build and maintain customer confidence by keeping their investors abreast of the latest updates on the growth of their investment... For achieving this company share a number of reports with their customers like: Portfolio Performance Report Performance Appraisal Report Accounting Transaction Report

Investment Strategy

•

Reliance follows a robust and disciplined investment process and endeavor to generate absolute returns consistently over a long term.

•

Reliance believes in active management of portfolios to generate superior returns and regular review of portfolios help in better risk measurement to ensure consistent performance.

•

An efficient asset allocation with flexibility to apportion 100% cash and use the cash to grab market opportunities when they arise.

•

Reliance research team has the capability to value the companies on the basis of their current and expected future potential which helps in generating better & consistent returns.

•

Invest in relatively concentrated portfolio of not more than 15 – 20 stocks, which their researches believe to be excellent picks.

Investment Process

Investment Consideration

Systems & Processes Reliance operations team takes care of the systems, MIS & related back office activity. The account details and portfolio valuation can be viewed on the Reliance website with the help of special used id & password for each client.

Deutsche Bank has been appointed as Custodian & Fund Accountant - The banking, accounting, settlement & clearing operations will be done by Deutsche Bank AG, thereby providing total transparency to the whole system.

Reliance has dedicated team of Advisors, Relationship Managers and operations team to whom the investors can contact for any specific information related to their investment.

TYPES OF PMS OFFERED BY RELIANCE MONEY

1. Shari’ah Complaint Portfolio Management Services.

2. Domestic Portfolio Management Services under: • Growth Scheme • Value Scheme

SHARI’AH COMPLIANT PORTFOLIO MANAGEMENT SERVICES

Islamic Fund Industry Overview

The modern Islamic fund management industry was born in the 1970s, when a new class of Arab investors, rich from oil profits and celebrating the 15th century of the Islamic calendar (Hijra) in 1976, sought a culturally-aware alternative to the "profit at all costs" mentality of western investing, particularly in interest-dealings. The industry has been growing ever since: Islamic banking is active in 75 countries and is growing at 15% globally, with an estimated $1 trillion waiting to be managed.

Today, there are over 250 Islamic financial institutions with assets around $230 billion. However, the vast wealth of Islamic funds under management is not well-diversified; Saudi Arabia controls 70% of all assets under management. The primary fund management companies that cater to these investors are Citibank (Saudi American Bank), HSBC (Saudi British Bank/Al Amanah), Al Rahji and Al Ahli. Outside the Muslim world, London is the world's hub of Islamic banking activity; however, its banks offer few retail products to the Muslim community.

In Southeast Asia, Malaysia is the aggressive force, holding 9% of Muslim finances. Reciprocally, Islamic banking comprises 10% of Malaysian finances. With a dominant force like Saudi Arabia in the mix, Malaysia's goal of being the number one player in the Islamic fund industry remains a daunting challenge. However, with industry liberalisation following the 9-11 attacks, its efforts to woo rich Saudis have given it a decisive regional advantage.

The Shariah Law

Islam forbids paying and receiving of interest, and involvement in companies having high degree of impure interest income, high debt or those involved in banking, life insurance, alcohol, tobacco, gambling, Non-Halal meat or vulgar entertainment.

The basic industries which are prohibited for Islamic investments are as follows: • • • • •

production and sales of alcohol, production and sales of tobacco, production and sales of vulgar entertainment lending and borrowing on interest (banks and finance companies) some financial parameters required for Shariah compliance like Debt-equity ratio to market cap must be less than 0.33:1 and receivables to market cap must be less than 0.45:1

Key financing methods for Shariah investment

•

Ijarah: An Islamic lease agreement. Instead of lending money and earning interest, Ijarah allows the bank to earn profits by charging rentals on the asset leased to the customer.

•

Murabahah: Purchase and resale. Instead of lending money, the capital provider purchases the desired commodity (for which the loan would have been taken out) from a third party and resells it at a predetermined higher price to the capital user. By paying this higher price over installments, the capital user has effectively obtained credit without paying interest.

•

Sukuk: Similar to a conventional bond, but asset backed, a sukuk represents proportionate beneficial ownership in the underlying asset. The asset will be leased to the client to yield the return on the investment.

•

Musharakah: Profit and loss sharing. It is a partnership where profits are shared according to an agreed ratio, whereas the losses are shared in proportion to the capital/investment of each partner. In a musharakah, all partners to a business undertaking contribute funds and have the right, but not the obligation, to exercise executive powers in that project, similar to a conventional partnership structure and the holding of voting stock in a limited company. This equity financing arrangement is widely regarded as the purest form of Islamic financing.

•

Mudarabah: An investment partnership, whereby the investor (the rab-ul-mal) provides capital to another party/ entrepreneur (the mudarib) in order to undertake a business/investment activity. While profits are shared on a pre-agreed ratio, loss of investment is born by the investor only. The mudarib loses its share of the expected income. A mudarabah is essentially similar to a diversified pool of assets held in a discretionary asset management portfolio.

Basic Non-Compliant Industries

What is Reliance Securities offering.....

....the first Shari’ah compliant equity portfolio management scheme for the investors.

Reliance is targeting the investors who are currently keeping their money idle in cash due to unavailability of investment options which are Shariah compliant.

Resident Indians as well as NRI/PIOs can participate in the said scheme.

How would the Compliance be ensured..

Parsoli Corporation would certify all the investments as per the Shari’ah compliance through their existing Shari’ah Board.

There would be quarterly review of all the instruments to ensure that they are Shari’ah compliant

Scheme: Shariah Growth

A Moderate scheme with growth approach and investments predominantly in large-cap stocks. The objective is to ensure liquidity and lower impact cost leading to the construction of a relatively more stable portfolio. The portfolio management process will also focus on using cash as an investment tool.

•

Investment Objective - Generate capital appreciation in medium to long term through investments in equities and equity related instruments comprising predominantly large cap companies that conform to Shariah investment principles. This scheme will be benchmarked to the BSE 200.

•

Investment Strategy - The portfolio will have 15-20 high quality stocks and overweight on large Cap stocks. However select mid cap stocks may also be considered for investment. The portfolio strives to insulate an investor from cyclical themes by investing in sectors offering secular growth outlook.

•

Parameters Driving Investment Decision - The portfolio strives at all times to achieve an overall 70% allocation to large cap companies. Again the portfolio will limit the exposure to any sector to be less than 25% of the portfolio size and to any scrip to be less than 10%. No Lock-in Period, No Exit Load Maximise post tax returns by concentrating on long-term gains & low churning of portfolio Fixed and Performance based fee structure Custody & Fund Accounting to be done by Deutsche Bank

➢ ➢ ➢ ➢

•

Pricing Features

Note: Custody, Service tax, Security transaction Tax & Other Statutory levies at actuals as applicable

•

Expected returns - Reliance Money offers various schemes to suit individual investment objectives.As per regulations governing Portfolio Management Services in India, neither capital nor returns can be guaranteed. We shall endeavor to outperform the benchmark indices like Nifty but there can be no guarantee or certainty of the same. We believe, over long term, equities' performance will track corporate performance.We expect India's GDP to grow at 7-8% p.a. in real terms; or 12-13% p.a. in nominal terms. Therefore historical trends indicate that well managed portfolios in Indian equities should give minimum 20-25% p.a. returns.

Investor Touch Points

Reports

Customer web access wherein the following reports can be viewed • • • •

Courier

Portfolio Performance Statements. Asset Allocation Statements. Trade Transaction Statements. Statement of Financial Position.

News letters informing customers about fund manager’s portfolio strategy and the equity market outlook. Thiswill also include International & Indian Market trends.

CA certified statement of investments ( Annual)

DOMESTIC MANAGEMENT SERVICES

Under Domestic Portfolio Management Services there are two types of schemes:

•

Growth Scheme

•

Value Scheme

What is Reliance Securities offering....

Reliance is offering a single style PMS with minimum investment requirements of:

• • •

Rs. 1 crore and above for Equity, Rs. 5 crore and above for Debt, Rs. 20 lacs and above for Structured Products.

Recently in July 2008, Reliance money launched a new PMS scheme of Rs 10 Lakhs. This scheme was giving an annual guaranteed return of 16%. However, the scheme was introduced only for a month.

GROWTH SCHEME

A Moderate fund with growth approach and investments predominantly in large-cap stocks. The objective is to ensure liquidity and lower impact cost leading to the construction of a relatively more stable portfolio. The portfolio management process will also focus on using cash as an investment tool and derivatives for protection of portfolio.

Investment Objective Generate capital appreciation in medium to long term through investments in equities and equity related instruments comprising predominantly large cap companies. This scheme will be benchmarked to the Nifty 50 stocks.

Investment Strategy The portfolio will have 18-20 high quality stocks and overweight on large Cap stocks. However select mid cap stocks may also be considered for investment. The portfolio strives to insulate an investor from cyclical themes by investing in sectors offering secular growth outlook.

Parameters Driving Investment Decision The portfolio strives at all times to achieve an overall 70% allocation to large cap companies. Again the portfolio will limit the exposure to any sector to be less than 25% of the portfolio size and to any scrip to be less than 10%. • •

No Lock-in Period, No Exit Load Maximise post tax returns by concentrating on long-term gains & low churning of portfolio • Fixed and Performance based fee structure • Funds managed on a Pool basis • Custody & Fund Accounting to be done by Deutsche Bank

Pricing Features

Note: Custody, Service tax, Security transaction Tax & Other Statutory levies at actuals as applicable

VALUE SCHEME

A highly flexible investment option, which offers a diversified investment portfolio across both large-cap and mid-cap stocks. This option follows a moderately aggressive approach to portfolio construction. The portfolio management process will also focus on using cash as an investment tool and derivatives for protection of portfolio.

Investment Objective The objective of this scheme is wealth creation by delivering superior returns over long term (18 months) through investments in value & growth stocks. This will be benchmarked with BSE 200. .

Investment Strategy The portfolio will have 18-20 high quality stocks and overweight on Mid-Cap stocks. The investments will be made for a medium to long term horizon. Early identification of

stocks to ride through the entire investment cycle. Timing of investment is important to generate superior returns.

Parameters Driving Investment Decision Selection of stocks based on potential for value unlocking based on key events and strong growth potential, Scalable business potential, Beneficiary of favorable economic cycle and Large market / business opportunity

• • • • •

Lock-in Period – 6 months, Exit Load if redeemed between 6-12 months: 2%, redeemed between 12-18 months :1% Maximise post tax returns by concentrating on long-term gains & low churning of portfolio Fixed and Performance based fee structure Funds managed on a Pool basis Custody & Fund Accounting to be done by Deutsche Bank

Pricing Features

Note: Custody, Service tax, Security transaction Tax & Other Statutory levies at actuals as applicable

Investor Touch Points

Emails

- Performance Statement ( Monthly Basis) - Portfolio & Transaction Statement ( Quarterly)

Courier

Newsletters informs customers about fund manager portfolio strategy and the equity market outlook. This also

include International & Indian Market trends.

-CA certified statement of investments ( Annual)

RESEARCH METHODOLOGY

ABOUT THE RESEARCH

This section basically deals with steps undertaking towards procuring the desirable data in the shortest possible time & in the most efficient manner. This research is basically concerned with the introduction of Portfolio Management Services in the market. PMS is a very new concept and it has many benefits to the customers and the company. Shari’ah compliant PMS is recently introduced by Reliance Money and it is now getting very popular in the market.

TITLE: In the testing times of the market - PMS as an investment avenue.

TITLE JUSTIFICATION:

The title given to me for research was very interesting and learning in nature. In present scenario, environment is changing very fast and the market is floating with various new schemes and financial products. In order to be on the top Reliance has always introduced something new in the market. This time it is has launched Portfolio Management Services (PMS) schemes, which was a challenge for the organisation as it is an emerging concept. Through my research and findings i helped the organisation in launching the product in the market.

OBJECTIVE:

• • • • • •

To determine customers perception towards Portfolio Management Services. To study the types of benefits provided by Portfolio Management Services. To provide the company information regarding PMS. To find out the awareness level of investors towards PMS. Analyze the factors that influence the investment decision. Aware more to the investors to invest in PMS rather than in other investment options like MF’s, bank a\c FD’s etc. • Objective of the study to help company to improve its positioning in the market & launch PMS.

SCOPE OF THE STUDY

A big boom has been witnessed in Portfolio Management Services in recent times. A large number of new players are entering intothe market and are vying to gain market share in this rapidly improving market. The study deals with Reliance in focus and the various segments that it caters to. The study then goes on to evaluate and analyse the findings so as to present a clear picture of trends in the Portfolio Management Services.

SIGNIFICANCE OF THE STUDY

•

Significance to the company -This is a limited study which takes into consideration the responses of 100 people. This data can be explorated to take in the trends across the market. The significance for the company lies in studying these trends that emerge from the study. It is a rapiddly changing and evolving sector. People are only beginning to wake up to it’s vast possibilities. A study like this can attempt to guide the future of the company based on current trends.

•

Significance to the researcher - During the study, through practical experience researcher found that Portfolio Management Services is really a new tide in the investment sea. If a investor does’nt know about the share market than also he can easily invest in this through portfolio manager. PMS gives customized advise, hassle free operation, flexibility, risk control and transparency etc which makes much easier for investors to invest. Portfolio Management Services are in the growing stage and it is a great investment avenue. Therefore, it was a great learning experience for the researcher to work on this project.

DATA COLLECTION METHOD

Data source: Primary and secondary data

• •

Primary data: personal meeting, questionnaire and tally calling. Secondary data: magazines, journals and annual report

RESEARCH DESIGN

• •

NON-PROBABILITY EXPLORATORY & DISCRIPTIVE EXPERIMENTAL RESEARCH

The research is primarily both exploratory as well as descriptive in nature. The sources of information are both primary & secondary. A well-structured questionnaire was prepared and personal interviews were conducted to collect the customer’s perception and interest towards PMS, through this questionnaire.

SAMPLING METHODOLOGY

•

SamplingTechnique - Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the Questionnaire. The final Questionnaire was arrived only after certain important changes were done. Thus my sampling came out to be judemental and convinent

•

Sampling Unit - The respondants who were asked to fill out questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, Self Employed, Businessmen etc.

•

Sample size - The sample size was restricted to only 100, which comprised of mainly peoples from different regions of Ajmer due to time constraints.

•

Sampling Area - The area of the research was Ajmer (Raj), India.

LIMITATIONS OF THE RESEARCH

1. The research is confined to a certain parts of Ajmer and does not necessarily shows a pattern applicable to all of Country.

2. Some respondents were reluctant to divulge personal information which can affect the validity of all responses.

3. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.

DATA ANALYSIS AND INTERPRETATION

A.Personal information

1. Occupation wise representation.

Table 1.1 Occupation

No: of Respondents

Share (%)

Businessman Service Others

52 27 21

52 27 21

Chart 1.2

Interpretation

52% of the respondents in ajmer are basically businessman whereas 27% of them are from the seavice class.

2. Categorization on the basis of religion

Table 2.1 Categories Hinduism Islam Christianity Others

Chart 2.2

No: of Respondents 41 32 9 18

Share (%) 41 32 9 18

Interpretation

•

Ajmer has a cosmopolitain soceity.

•

41% and 32% of the respondents are hindus and muslims respectively whereas 9% are christians and 18% of the respondents are from other communities like Jains and Parsies etc.

3. Data Representation according to age-group.

Table 3.1

Age-group

No: of respondents

Share (%)

Under 34 35 – 44 45 – 54 55 and above

19 41 34 6

19 41 34 6

Chart 3.2

Interpretation

•

Data showing that maximum 41% of the respondents are of 35-44 age group.

•

Whereas 34% and 19% of the respondents comes under 45-54 and under 34 agegroup respectively.

•

Only 6% of the respondents are 55 and above, that means the maximum respondents are young and of middle age.

4. Data showing yearly income

Table 4.1 Yearly income

No: of Respondents

Share (%)

Below Rs 50000 Rs 50000 to 1 lakh 1 to 5 lakhs 5 lakhs & above

5 10 30 55

5 10 30 55

Chart 4.2

Interpretation

According to above pie-chart more persons are having yearly income of 5 lakhs & above.

5. Data showing investment objective

Table 5.1 Investment objective

No: of Respondents

Share (%)

Perserving capital

21

21

Providing additional income

28

28

Providing a combination of income and capital growth

51

51

Chart 5.2

Interpretation

According to the above pie-chart maximum 51% of the respondents are having only one investment objective i.e.providing a combination of income and capital growth.

B. Risk tolerance

6. Data showing willingness to take financial risk

Table 6.1 Level of financial risk

No: of Respondents

Share (%)

Low risk taker Average risk taker High risk taker Very high risk taker

20 40 20 10

22 45 22 11

Chart 6.2

Interpretation

•

According to above chart 45% of the people are average risk taker.

•

Whereas 22% of the respondents are both low and high risk takers and only 11% are very high risk takers.

7. Data showing feelings of respondents, after they make a financial decision

Table 7.1 Feelings after making financial decisions Pessimistic Somewhat pessimistic optimistic Somewhat optimisic

Chart 7.2

No: of Respondents 17 26 15 42

Share(%) 17 26 15 42

Interpretation

•

Only 42% of the people are somewhat optimistic after they make a financial decision.

•

Whereas 26% and 17% of the respondents are somewhat pessimistic and pessimistic respectively. That means, maximum investors are not confident about the decisions which they make.

C. Investment Experience

8. Data showing investment experience

Table 8.1 Type of investment Bonds/Fixed income/Bond Mutual fund Equity and/or Equity Mutual funds Derivatives Offshore investments

Chart 8.2

No: of Respondents 60 50 20 10

Share (%) 42.86 35.71 14.28 7.14

Interpretation

•

According to the above chart maximum 43% of the respondents have invested in Bonds/ Fixed income/Bond Mutual fund.

•

Whereas only 36% have invested in equity and/or equity Mutual funds

D. Income Source

9. Description of expected future income over next 5 years

Table 9.1 Expected future income

No: of Respondents

Share (%)

I expect my income to increase I expect my income to remain steady I expect my income to decrease

52 40 8

52 40 8

Chart 9.2

Interpretation

•

According to the above table and chart, 53% of the people believe that their expected future income over next five years will increase.

•

Whereas 40% believes that in future their income will remain steady.

E. Ease of Management.

10. Data showing ease of management Statement - “I want to play an active role in managing my investment”

Table 10.1 Categories

No: of Respondents

Share (%)

Disagree Neutral Agree Strongly Agree

9 54 26 11

9 54 26 11

Chart 10.2

Interpretation

According to the above chart, 54% of the people are neutral to the statement “ I want to play an active role in managing my investment”. This means, that they need an outside assistance also in making their investment decisions.

F. Miscellaneous

11. Data showing, "Who manages your portfolio?”

Table 11.1

Categories Myself Relatives Financial Advisor Fund Manager Others

No: of Respondents 40 27 22 6 5

Share (%) 40 27 22 6 5

Chart 11.2

Interpretation

•

40% of the respondents manages their portfolio themselves whereas 27% and 22% takes the help of their relatives and financial advisor respectively.

•

Only 6% of the people takes the help of the fund manager in managing their porfolio.

12. Data showing the no: of respondents who need a fund manager.

Table 12.1 - Do you need a Fund Manager? Categories

No: of Respondents

Share (%)

Yes No Can't say

46 9 45

46 9 45

Chart 12.2

Interpretation

According to the above chart, 46% of the people needs a fund manager whereas 45% are still confused that whether a fund manager is beneficial or not.

13. Data showing the awareness level of the respondents towards PMS.

Table 13.1 - Are you aware about portfolio Management Services? Categories

No: of Respondents

Share (%)

Yes No Confused

22 41 37

22 41 37

Chart 13.2

Interpretation

•

According to the above chart, 41% of the people does’nt have any knowledege about PMS.

•

Whereas 37% are confused and only 22% of the respondents know about PMS.

14. Data showing respondent’s interest in Shari’ah Compliant investments

Table 14.1 - Are you interested in Shari’ah Compliant Investments? Categories

No: of Respondents

Share (%)

Yes No Can't say

53 12 35

53 12 35

Chart 14.2

Interpretation

According to the above chart, 53% of the respondents are interested in Shari’ah Complaint investment.

15. Data showing the benefits of PMS which had attracted respondents

Table 15.1 Benefits of PMS

No: of Respondents

Share (%)

Flexibility Focused Portfolio Professional Management Transparency Hassle free operation Any other

50 90 100 40 100 10

13 23 26 10 26 2

Chart 15.2

Interpretation •

According to the ranking done by the respondent, the researcher came to know that the perception of the respondents about PMS is mixed.

•

26% of the respondents believe that PMS has hassle free operation and it provides professional help through proper management.

•

Whereas, 23%,13% and 10% of them believe that the other benefits are focused portfolio, flexibility and transparency respectively.

•

The other 2% of the respondents has given other benefits like risk monitoring and customised advise.

FACTS/FINDINGS

•

As the people think that PMS provides professional assistance, transparency, flexibility and diversification etc to their portfolio. They are very much interested in it but since the starting amount is very high, so the investors are quite scared by the consequences of the volatile market.

•

As seen from the survey that at present 53% of the customer are interested in Shari’ah Complaint investments and 41% of the people are not aware about PMS. So, it can be a good potential for the company and they should make an attempt to trap these customers by proper awareness and marketing.

•

In Ajmer, maximum population is from business class. They invest their money in their own business and real estate for further growth. In todays market which is very volatile, these rich businessmen are very much scared of the consequences.

•

Now-a-days, markets are dynamic in nature and is changing very fast. Portfolio Management services by Reliance Money is a new tide in the investment sea. Investors need professional help which should be hassle-free, transparent etc and which provides maximum return to them.

•

As seen from the survey 51% of the investor’s objective is providing a combination of income and capital growth. So, PMS can help them in achieving their objectives.

•

Shair’ah complaint PMS is extremly appreciated by muslims and it is also welcomed by the other communities. But since the starting amount is very high (Rs 5 lakhs) investors will not invest in it as the market is very volatile. A good scheme and awareness can only motivate them towards investment in PMS.

RECOMMENDATIONS

•

The company should try to expand & build up its infrastructure because there is a large potential for PMS in India.

•

Company should come up with various marketing startegies in order to make people aware about the Portfolio management services. People in ajmer are interested in Shair’ah complaint investments, so it is a very good market for Shair’ah complaint PMS.

•

Since Reliance Money is a leading Brokerage company with several policies, it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship.

•

53% of the customer is even ready to go for PMS if the company guarantees maximum returns to them. So the company should plan its future according to the demands of the customers.

•

Therefore, Reliance Money should make little more efforts to trap the potential investors by media advertisements, paper advertisements, seminars & business meets & building a good relationship with potential customers.

CONCLUSION

•

Our exhaustive research in the field of Portfolio Management Services threw up some intresting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the little awareness and knowledge among people about PMS

•

People in general are impressed by the Shair’ah Complaint PMS and they also want to know more about it.

•

From the analysis of the responses received from the investors of AJMER city, a majority of investors are found to be conscious and enlightened regarding their investments, returns & growth.

•

We have a very good market in AJMER which comprises potential investors. But there is lack of information about Reliance Money’s Portfolio Management Services.

•

Therefore, Reliance Money should make little more efforts to trap the potential investors by media advertisements, paper advertisements, seminars & business meets & building a good relationship with potential customers.

ANNEXURES

QUESTIONNAIRE

A. Personal Information

1. Occupation Businessmen Service Others 2. From which religion do you belong? Hinduism Islam Christianity Others___________________________(Specify) 3. Please select the range of your age. Under 34 35-44 45-54 55 and above 4.What is your yearly Income?

Below Rs 50000

Rs 50000 to 1 Lakh

1-5 Lakhs

5 Lakhs & above

5. Which of the following would be your investment Objective? Perserving capital. Providing additional income. Providing a combination of income and capital growth.

B. Risk tolerance 6. Compared to others, how do you rate your willingness to take financial risk? Low risk taker Av e r a g e r i s k t a k e r High risk taker Ve r y h i g h r i s k t a k e r 7. How do you usually feel about your financial decisions after you make them? Pessimistic Somewhat pessimistic Optimistic Somewhat optimistic

C.Investment Experience 8 . Yo u r i n v e s t m e n t e x p e r i e n c e . P l e a s e t i c k a l l t h a t a r e applicable. Bonds/Fixed income/Bond Mutual Funds. Equity and/or Equity Mutual Funds. Derivatives. Offshore investments.

D. Income Source 9.How will you describe your expected future income over next 5 years I expect my income to increase. I e x p e c t m y i n c o m e t o r e m a i n s t e a d y. I expect my income to decrease. E.Ease of Management. 10.I want yo play an active role in managing my investment. Disagree Neutral Agree Strongly Agree F. M i s c e l l a n e o u s 11. Wh o m a n a g es y o u r p o r t f o l i o? Myself

Relatives Financial Advisor Fund Manager Others____________________________(If Any) 12.Do you need a Fund Manager? Ye s

No

Can’t say

13.Are you aware about portfolio Management Services? Ye s

No

Confused

14.Are you interested in Shari’ah Compliant Investments? Ye s

No

Can’t Say

15.What do you think are the benefits of PMS? (Rank them) Flexibility Focused Portfolio Professional Management Tra ns pa re ncy Hassle free operation Any other__________________________(Specify)

THANK YOU

Name___________________________ Address_________________________ _________________________ Phone No_______________________

BIBLIOGRAPHY

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NEWSPAPERS/MAGAZINES REFFERED: Business world The Economic Times Money Outlook Reliance Money Fact Sheet Fund Statements

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WEBSITES REFFERED: www.reliancecapital.com www.reliancemoney.com www.nseindia.com www.bseindia.com

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BOOKS REFFERED: ➢ Research Methodology, Author- C.R.Kothari ➢ Securities Analysis and Portfolio Management- Pretti Sinha ➢ Statistical Method, Author- S.P.Gupta