MUTUAL FUND AS TOOL OF

FINANCIAL PLANNING

SUMMER TRAINING PROJECT REPORT

SUBMITTED
TO
INDIRA SCHOOL OF CAREER DEVELOPMENT

ACADEMIC SESSION
2009 – 2011

Under the Guidance of:

Submitted By:
External Supervisor: Ajay kumar
Mr. Ujwal jaggi G - 03
(Deputy Manager)
Reliance mutual Fund
Internal Supervisor
Mr M.V kulkarni
Faculty ISCD
 TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project entitled, “ MUTUAL FUND AS TOOL OF

FINANCIAL PLANNING REFERENCE TO RELIANCE GROWTH FUND”, project
done for “RELIANCE MUTUAL FUND”, submitted by MR. AJAY KUMAR, 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.

MR .M.V. kulkarni
ISCD,Chinchwad
 ACKNOWLEDGEMENT

Before going to the thick of things I would like to add some heartfelt words. I owe
a huge debt of thanks and deep sense of gratitude to my learned guide Mr. UJWAL
[DEPUTY MANAGER] at RELIANCE MUTUAL FUND LMITED F.C ROAD
DECCAN(PUNE) branch under whose guidance, supervision and encouragement the
present study was undertaken and completed. Their sympathetic, accommodating and
constructive nature remained a constant source of inspiration for me throughout the
duration of this summer project .
I am thankful to all the personnel in RELIANCE MUTUAL FUND LIMITED
specially Mr.UJWAL for utmost co-operation and timely help extended by them for the
completion of the project summer.
My overriding debt is to Mr. M.V.kulkarni (Faculty ISCD, Chinchwad) for
providing me the opportunity to take up this project with Reliance Mutual Fund.
At last but not the least I would like to thank my Colleagues (Summer Trainees),
at (Reliance mutual Fund) from different colleges, as this project would not have been
successfully completed without the help and support of them.

Ajay kumar
ISCD, Chinchwad.
 PREFACE

Mutual fund is a trust that pools money from a group of investors (sharing common
financial goals) and invests the money .Thus, collected into asset classes that match the
stated investment objectives of the schemes. Since the stated investment objectives of a
mutual fund scheme genrally forms the basis for an investor’s decision to contribute
money to the pool, a mutual fund can not deviate from its stated objective at any point of
time.
Every mutual fund is managed by a fund manager, who using his investment
management skills and necessary research works ensures much better return than what an
investor can manage on his own. The capital appreciation and other incomes earned from
these investments are passed on to the investor (also known as unit holders) in proportion
of the number of units they own. Every Asset Management Company (AMC) sells its
product with the help of distributor and its own .The distributor gets the fixed
commission in return. Each Asset Management Company adopt different ways to
The project focus on different ways of promoting and selling mutual funds. The project
also focuses on the core basic of mutual funds, their types, their promotional schemes and
my experiences of promoting and selling mutual funds.
 CONTENTS

CLAUSE PAGE

CHAPTER 1 INTRODUCTION
1.1 EXECUTIVE SUMMARY…………………………………7

CHAPTER 2 INTRODUCTION
2.1 INTRODUCTION OF MUTUAL FUND…………………….8
2.3ADVANTAGES OF MUTUAL FUND ……………………9
2.4 DISADVANTAGES OF MUTUAL FUND ……………10
2.5 HISTORY OF MUTUAL FUND IN INDIA…………………...10
2.6 TYPES OF FUNDS………………………...13
2.7 FUND STRUCTURE AND CONSTITUENTS……21

CHAPTER 3 COMPANY PROFILE

3.1 RELIANCE COMPANY INTRODUCTION………………………27
3.2 VISION OF THE COMPANY………………………………………28
3.3 HISTORY OF THE COMPANY…………………………………….28
3.4 YEARWISE MILESTONE OF RELIANCE MUTUAL FUND……..29
3.5 COMETITIVE ADVANTAGE OF RELIANCE MUTUAL FUND…29
3.7 BUSINESS MODEL………………………………………………32
3.8 COMPETITORS OF RELIANCE MUTUAL FUND…………….32
3.9 SWOT……………………………………………………………….33
3.10 MANAGEMENT OF RELIANCE………………………………..34

3.11 FOCUS ON GROWTH FUND AND SIP PLANS……………….36

3.11 FINANCIAL PLANNING APPROACH FOR INVESTERS……38
CHAPTER 4 RESEARCH
4.1OBJECTIVE OF THE STUDY…………………………48
4.2 REARCH METHEDOLOGY……………………………49

4.3 LIMITATION…………………………………………….51
4.3 ANALYSIS & INTERPRETATION OF THE DATA……52
CHAPTER 5 FINDINGS
5.1 CONCLUSION………………………71
5.2 RECOMMENDATIONS…………..73

ANNEXTURE……………………………….75
 EXECUTIVE SUMMARY

The project covers an over view of the MUTUAL FUND industry. The total corpus of
the AMC industry recently crossed 7.5 lac Crore Rupees. which is around 6% of current
GDP of India. This means that people in India are getting their focus shifted towards
investing in a way which is safe as well as providing returns.
Various factors which affect the decision of investor while investing in mutual fund have
been discussed in detail in the project. By the use of various statistical tools it has been
find out that past return is the most important factor considered by the investors’ while
investing in the mutual fund scheme.
In this report we have discussed about “MUTUAL FUNDAS A TOOL OF
FINANCIAL PLANNING” The Project also discusses various ways to promote mutual
funds and different ways which are adopted by AMCs to sell mutual fund in India.
To complete the project during summer training various industries and retail investors
had been visited to promote mutual fund , tried to convince them to invest in mutual fund
and & even personal relationships have been generated with them. The database helps
Reliance Mutual Fund to find new clients and expands its institutional client base. This
gives Reliance Mutual Fund monetary benefits.

INTRODUCTION OF MUTUAL FUNDS

 INTRODUCTION OF MUTUAL FUNDS:

A mutual fund is simply a financial intermediary that allows a group of investors to pool
their money together with a predetermined investment objective. The mutual fund will
have a fund manager who is responsible for investing the pooled money into specific
securities (usually equity or bonds). When you invest in a mutual fund, you are buying
shares of the mutual fund and become a unit holder of the fund.
Mutual funds are one of the best investments ever created because they are very cost
efficient and very easy to invest in (you don't have to figure out which stocks or bonds to
buy).
By pooling money together in a mutual fund, investors can purchase stocks or bonds with
much lower trading costs than if they tried to do it on their own. But the biggest
advantage to mutual funds is diversification.

ACCORDING TO AMFI (ASSOCIATION OF MUTUAL FUND OF INDIA) :

A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized is shared by its unit holders in
proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund.

ADVANTAGES OF MUTUAL FUNDS:

The advantages of investing in a Mutual Fund are:
• Professional Management
• Diversification
• Return Potential
• Low Costs
• Liquidity
• Transparency
• Flexibility
• Choice of schemes
• Tax benefits
• Reduction in risk

DISADVANTAGES OF MUTUAL FUNDS:

• No control over cost
• Customized Portfolio are not possible
• Fund selection can be difficult
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY IN
INDIA:

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history of
mutual funds in India can be broadly divided into six distinct phases

FIRST PHASE (1964-1987):

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6,700 crores of (AMC) assets under management.
• MF Industry started in India in 1963 with formation of UTI
• Asset under management in 1987- 88: Rs. 6700 crores
• Launch of First Scheme - US 64(Unit scheme 1964)
• UTI was the only player in the market enjoying monopoly position huge
mobilization on funds till 1987.

SECOND PHASE ( 1987-1993):

 Entry of Public Sector Funds1987 marked the entry of non- UTI, public sector mutual
funds set up by public sector banks and Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87),
Punjab National Bank Mutual Fund (Aug 89), Janata Sahakari Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its
mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the
end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.
• Establishment of SBI MF – the first non UTI MF.
• SEBI was setup in1988 and regulatory powers in 1992.
• UTI was still the undisputed leader of the market and held over 95%of the assets in
mutual fund industry.

THIRD PHASE (1993-1996):

Entry of Private Sector Funds with the entry of private sector funds in 1993, a new era
started in the Indian mutual fund industry, giving the Indian investors a wider choice of
fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came
into being, under which all mutual funds, except UTI were to be registered and governed.
The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first
private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund)
Regulations were substituted by a more comprehensive and revised Mutual Fund
Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)
Regulations 1996. The number of mutual fund houses went on increasing, with many
foreign mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of
assets under management was way ahead of other mutual funds.
• Entry of the Pvt. Sector funds in 1993
• Kothari Pioneer mutual fund (now merged with Franklin templeton) was the first
private sector mutual fund in India.

FOURTH PHASE (1996-1999):

 • A new set of regulations for mutual fund referred to as SEBI (Mutual Fund)
Regulation ,1996 was created
• SEBI (mutual fund) Regulation required that mutual funds have a three tier
structure of sponsors –trust-AMC.
• In 1999 all dividends declared by mutual funds made tax free.

FIFTH PHASE (1999-2004):

• In February 2003, the UTI act was repealed and UTI mutual fund was formed .it
had same 3-tier structure as other mutual funds .
• The assets under management of the industry crossed Rs.150000 crore in 2001.

SIX PHASE(2004 onwards):-

• The period from 2004 is referred to as consolidation and growth phase of the
Indian mutual fund industry.
• Several mergers and acquisitions took place and new international players entered
the business.
Till now 35 players are working in India.
TYPES OF MUTUAL FUNDS:

Closed-end or Open-end

Open-end Funds: An open-end fund is one that has units available for sale and
repurchase at all time. An investor can buy or redeem units from the fund itself at a price
based on the Net Asset Value (NAV) per unit.

Close-end Funds: A close ended fund makes a one-time sale of a fixed number of
unit. It does not allow investors to buy or redeem units directly from the funds. However,
to provide liquidity to investors many closed-end funds get themselves listed on stock
exchange. Funds do offer “buy-back of funds/units” thus offering another avenue for
liquidity to closed-end fund investor.

Load vs. No Load:

Marketing of a new mutual fund scheme involves initial expense. These expenses may
be recovered from the investors in different ways at different times. Three usual ways in
which a fund’s sales expenses may be recovered from the investors are:
1. At the time of investor’s entry into the fund/scheme, by deducting a specific amount
from his initial contribution: front-end or entry load.
2. By charging the fund/scheme with a fixed amount each year, during the stated number
of years: deferred load.
3. At the time of the investor’s exit from the fund/scheme, by deducting a specific
amount from the redemption proceeds payable to the investor: back end or exit load
These charges made by the fund managers to the investors to cover
distribution/sales/marketing expenses are often called “loads”. Funds that charge front-
end, back-end or deferred loads are called load funds. Funds that make no such charges
or loads for sales expenses are called no-load funds.
In India, SEBI has defined a “load” as the one-time fee payable by the investor to allow
the fund to meet initial issue expenses including brokers’/agents’/distributors’
commissions, advertising and marketing expenses.
A load fund’s declared NAV does not include load charges.

Tax-exempt vs. Non-Tax exempt Funds:-

Generally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. In
India, after the 1999 Union Government Budget, all of the dividend income received
from any of the mutual funds is tax-free in the hands of the investors. However, funds
other than Equity Funds have to pay a distribution tax, before distributing income to
investors. In other words, equity mutual fund schemes are tax-exempt investment
avenues, while other funds are taxable for distributable income.

Types of Mutual Funds on the Basis of

Risk Vs Returns
Sector Funds

Diversified
Money
Income
Floaters
Gilt
Balanced
MIPs
RRisk
Market
Funds
Equity
e
Funds
t
u
r
n
s

A.Broad Fund Types by Nature of Investments:

Mutual funds may invest in equities, bonds or other fixed income securities, or short-term
money market securities. So we have Equity, Bonds and Money Market Funds. All of
them invest in financial assets. But there are funds that invest in physical assets. For
example, we may have Gold or other Precious Metal Funds, or Real Estate Funds.

B. Broad Fund Types by Investment Objective:

Investors and hence the mutual funds pursue different objectives while investing. Thus,
Growth Funds invest for medium to long term capital appreciation.
Income Funds invest to generate regular income, and less for capital appreciation.
Value Funds invest in equities that are considered under-valued today, whose value will
be unlocked in the future.

C. Broad Fund Types by Risk Profile:

The nature of a fund’s portfolio and its investment objective imply different levels of risk
undertaken. Funds are therefore often grouped in order of risk. Thus, Equity Funds have a
greater risk of capital loss than a Debt Fund that seeks to protect the capital while looking
for income. Money Market Funds are exposed to less risk than even the For internal use
by Training Department of Prudential ICICI Mutual Fund Bond Funds, since they invest
in short-term fixed income securities, as compared to longer-term portfolios of Bond
Funds.
Money Market Funds: Lowest rung in the order of risk level, Money Market Funds
invest in securities of a short-term nature, which generally means securities of less than
one-year maturity.
Gilt Funds: Gilts are government securities with medium to long-term maturities,
typically of over one year (under one-year instruments being money market securities).
Debt Funds (or Income Funds): Next in the order of risk level, we have the general
category Debt Funds. Debt funds invest in debt instruments issued not only by
governments, but also by private companies, banks and financial institutions and other
entities such as infrastructure companies/utilities.
Diversifies Debt Funds: A debt fund that invests in all available types of debt securities,
issued by entities across all industries and sectors is a properly diversified debt fund. A
diversified debt fund is less risky than a narrow-focus fund that invests in debt securities
of a particular sector or industry.
Focused Debt Funds: Some debt funds have a narrow focus, with less diversification in
its investment. Examples include sector, specialized and offshore debt funds. Other
examples of focused funds include those that invest only in Corporate Debentures and
Bonds or only in Tax Free Infrastructure or Municipal Bonds.
High yield Debt Funds: There are funds which seek to obtain higher interest rates by
investing in debt instruments that are considered “below investment grade”. e.g. Junk
Bond Funds.
Assured Return Funds – an Indian Variant: The SEBI permits only those funds
whose sponsors have adequate net-worth to offer assurance of return. For e.g. MIPs.
Investors have some lock-in period.
Fixed Term Plan Series – Another Indian Variant: These are essentially closed-end.
These plans do not generally offer guaranteed returns. This scheme is for short-term
investors who otherwise place money as fixed term bank deposits or inter corporate
bonds.

Equity Fund:

As investors move from Debt Fund category to Equity Funds,

they face increased risk level.
• No guarantee returns
• High potential for growth of capital
Types of Equity Fund:

a) Aggressive Growth Fund

• Maximum capital appreciation
• Invests in less researched or speculative shares.
• Very volatile & riskier.

b) Growth Fund
• Growth fund invest in companies whose earnings are expected to
• Rise above average rate. e.g. vision fund
• Capital appreciation in 3 – 5 years
• Less volatile then aggressive growth fund.

c) Specialty Fund
They invest in companies that meet predefined criteria.
i) Sector Funds
• Banking fund
• Pharmaceutical Fund
• FMCG Fund
ii) Offshore Funds
Invest in equities in one or more foreign countries.
iii) Small-Cap equity Funds
Invest in shares of companies with relative lower market capital.

d) Diversified Equity Funds

A fund that seeks to invest only in equities, except for a very small portion in liquid
money market securities, bur is not focused on any one or few sectors or shares, may be
termed a diversified equity fund. While exposed to all equity price risks, diversified
equity funds seek to reduce the sector or stock specific risks through diversification.
Equity Linked Savings Schemes: An Indian Variant
Investment in these schemes entitles the investor to claim an income tax rebate, but
usually has a lock-in period before the end of which funds cannot be withdrawn.

e) Equity Index Funds

An index fund tracks the performance of a specific stock market index. The objective is
to match the performance of the stock market by tracking an index that represents the
overall market. The funds invest in share that constitute the index and in the same
proportion on the index.

f) Value Funds
Value Funds try to seek out fundamentally sound companies whose shares are currently
under-prices in the market. Value Funds will add only those shares to their portfolios that
are selling at low price-earnings ratios, low market to book value ratios and are
undervalued by other yardsticks. Fund concentrate on future growth prospect having
good potential.

g) Equity Income Funds

There are equity funds that can be designed to give the investor a high level of current
income along with some steady capital appreciation, investing mainly in shares of
companies with high dividend yields.

• Hybrid Funds – Quasi Equity/Quasi Debt: Many mutual funds mix these
(money market, debt and equity) different types of securities in their portfolios.
Such funds are termed “hybrid funds” as they have a dual equity/bond focus.
• Commodity Funds: While all of the debt/equity/money market funds invest in
financial assets, the mutual fund vehicle is suited for investment in any other- for
examples- physical assets.

• Real Estate Funds: Specialized Real Estate Funds would invest in Real Estate
directly, or may fund real estate developers, or lend to them, or buy shares of
housing finance companies or may even buy their securities assets.

FUND STRUCTURE & CONSTITUENTS

• In USA Mutual Funds are investment companies

• In UK, its unit trust or investment trusts
• In India, there is only unit trust (i.e. trust form)
–
– They are all under SEBI regulations
• Sponsor – Person or a body who sets up or form the trust
– Appoints board of trustees, AMC, custodian,
– Qualification
• Contribution 40 % net worth of AMC
• Should have firm financial track record for 5 years
• Hands over trust deed to trustees.
• Trustees – There can be a trustee company (comes under companies act, too) or
board of trustees (comes under Indian Trust Act only)
• The role of the Trustees is to safeguard the interest of the investor/unit-holder of
the fund – Fiduciary Capacity
• The trustees make sure that the funds are invested according to the investor’s
mandate and objective.
• The board of trustees is appointed by Sponsor with SEBI approval At least 4
trustees of which at least 2/3rd of the board of trustees should be independent
• Trustees of one mutual fund cannot be trustee of another mutual fund
• Right to seek regular information and remedial action All major decisions need
trustee approval
• The board of trustees are required to meet at least 4 times in a year to review the
AMC
• Trust created through a document called the ‘Trust Deed’, executed by the Fund
Sponsor in favor of the Trustees.

Asset Management Company

AMCs are fund managers Registered with SEBI

• The AMC is also formed as a private limited company.

• Responsible for operational aspects of the MF.
• Investment management agreement with trustees.
• The AMC gets fee for managing the funds according to the mandate of the
investors.
• An AMC’s net worth (Share Capital + Reserves & Surplus) should be at least
Rs.10 crores at all times.
• At least 40% of AMC capital must be contributed by the Sponsor.
• At least half (50%) of the directors of the AMC must be independent.
• Appoints other constituents - Custodian , Registrar & Transfer Agent.
• Cannot have any other business interest.
• AMC of one MF cannot be trustee/AMC of another MF.
• Quarterly reporting to Trustees.
• An AMC cannot engage in any business other than portfolio advisory and
management.
• Custodian – Appointed by board of trustees for safe keeping of securities as
independent entity of sponsors.
• Transfer Agents – Issue and redeem units and other related services such as
preparation of transfer documents and updating investor records.
 • Distributors – Are appointed by AMC and may act on behalf of different funds
Independent individuals are appointed as agent.
• In merger of two AMCs, SEBI approval and consent of 75% unit holders are
required.

AMC takeover by another sponsor

• SEBI approval required.

• Inform the unit holders.
Scheme takeover

• SEBI approval required.

• Investors should be given option to redeem units in case they do not consent for
it.

REGULATORS IN INDIA

• SEBI - The capital markets regulators also regulates the mutual funds in India.
SEBI requires all mutual funds to be registered with them. SEBI issues guidelines
for all mutual funds operations - investment, accounts, expenses etc.

• RBI as supervisor of banks owned mutual funds - As banks in India came under
the regulatory jurisdiction of RBI, bank owned funds to be under supervision of
RBI and SEBI.

• RBI as supervisor of Money Market Mutual Funds - RBI has supervisory

responsibility over all entities that operate in the money markets. Hence in the
past Money Market Mutual Funds scheme of Mutual funds had to be abide by
policies laid down by RBI.
Recently, it has been decided that Money Market Mutual Funds of registered mutual
funds will be regulated by SEBI through SEBI (Mutual Fund) Regulations 1996.

WORKING OF MUTUAL FUNDS

The scope of the study refers to the job that to know about the activities of the
organization. The study means that the analysis of the products of the company on which
he/she has to focus.

During the summer training the volunteer need to find out the corporate strategies of the
running company and the mile stone which the company has covered during its journey.
In the winter training, it is necessary for the student that he /she involve with the
experience guys to get the knowledge about the company. That is how the company has
got the success, Or if it is going in the loss, why.

In my training period I have found that the reliance group is the biggest group in Indian
companies. I felt that I can learn the more in the Reliance Mutual Fund.
Reliance Mutual Fund is the part of the Reliance Capital Limited which is a growing
company in the financial products.

Reliance Anil Dhirubhai Ambani group is also deals in communication, energy, natural
resources, media, and entertainment, healthcare and infrastructure.
COMPAN
 Y PROFILE
Reliance
RelianceReliance
Reliance Capital
Life
General
Mutual
Money
Insurance
Consumer
fund
Insurance Finance

Mutual Fund

COMPANY OVERVIEW:
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average
Assets Under Management (AAUM) of Rs. 1,22,000 CRORES and an investor base of
over 7.5 million. (AUM and investor count as on December 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 Capital Asset Management Limited., a
subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of
RCAM, the balance paid up capital being held by minority shareholders."

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

VISION OF THE COMPANY:

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 Capital Asset Management Limited (RCAM), a company registered under the
Companies Act, 1956 was appointed to act as the Investment Manager of Reliance
Mutual Fund.
Reliance Capital Asset Management Limited (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..
Reliance Mutual Fund has launched thirty-five Schemes till date, namely :
"Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management
Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up
capital of RCAM, the balance paid up capital being held by minority shareholders."

Reliance Capital Asset Management Limited (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 authorised to act as Investment Manager of Reliance Mutual Fund. The
networth of the Asset Management Company as on March 31, 2009 is Rs 709.39 crores.
YEAR WISE MILESTONES OF RELIANCE MUTUAL FUND
Reliance Growth Fund (September 1995)
Reliance vision 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 Natural Resource Fund (February 2008)
Reliance NRI Income Fund (November 2004)

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. 1,22,000 crore (AUM as on 30th January
2010) and an investor base of over 7.5 million

• Investor base of over 7.5 million as on 30 January, 2009

• 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.

• 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 :

○ 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.

○ 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 :

○ Reliance Banking Fund-Growth Plan-Growth Option was declared the

best fund over 3 years in Equity Sector Banks and Other Financials

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

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

○ Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the

best fund over 3 years in the Bond INR Government category

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

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

○ 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

○ 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 :

○ 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.

○ 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.

○ 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 .

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.

COMPETITORS:
• Birla Sun Life Mutual Fund
• DSP Merrill Lynch Mutual Fund
• Franklin Templeton Mutual Fund
 • HDFC Mutual Fund
• Kotak Mahindra Mutual Fund
• LIC Mutual Fund
• Prudential ICICI Mutual Fund
• SBI 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

MANAGEMENT
CEO Mr. Sundeep Sikka

Board of Directors Mr. Soumen Ghosh

Mr. Kanu Doshi
Mr. Manu Chadha
Mr. Sushil Tripathi

Head Of Departments

Mr. Pradeep
Infrastructure & Admin
Andrade
Finance and Accounts Mr. Milind Gandhi
Mr. Rajesh
Human Resource Development
Derhgawen
Information Technology Mr. Vinay Nigudkar
Mr. Bhalchandra
Service Delivery & Operations Excellence
Joshi
Operations & Settlement Ms. Geeta Chandran
R&T Operations & Investor Relations Mr. Milind Nesarikar
 Mr. Himanshu
Sales & Distribution
Vyapak
Mr. Suresh
Compliance Viswanathan

Head Equity Investments Mr. Madhusudan Kela

Head Fixed Income Mr. Amitabh Mohanty

Equity Fund Managers

Mr. Sunil B. Singhania Mr. Ashwani Kumar
Mr. Shailesh Raj Bhan Mr. Shiv Chanani
Mr. Krishan Daga Mr. Govind Agrawal

Debt Fund Managers

Mr. Amit Tripathi Ms. Anju Chhajer
Mr. Arpit
Mr. Prashant Pimple
Malaviya

Zonal Heads
Northern Mr. Gurbir
ZoneHead Chopra
Western Zone Mr. Sanjiv
Head Gudal
Southern Zone Mr. Nikunj
Head Sharma
Eastern Zone Mr. Gopal
Head Khaitan
 FOCUS ON GROWTH FUND AND SIP PLANS

Growth fund:-
Launching date :- 8 October 1995
Corpus :- 6113 crores rupees

OBJECTIVE OF GROWTH FUND :

The primary investment objective of the scheme is to achieve a long term growth of
Capital by investing in equity and equity related securities through a research based

Investment approach.

Product Feature
• Investment in Equities of MID CAP Companies (85% equity)
• Investment in Debt & Money Market Securities (15%)
• Best scheme of reliance mutual fund

Fee Structure & Investment Amount

Entry Load: NIL

Exit Load:

• 1% if redeemed/ switched on or before completion of 1 year from

the date of allotment
• Nil If redeemed/ switched after completion of 1 year from the date
of allotment
For subscriptions of more than Rs. 5 Crs. Nil

For Institutional Plan:

Entry Load : Nil
Exit Load : Nil

Systematic Investment Plan

Reliance Systematic Investment Plan

Invest as little as Rs. 100 per month.
Welcome to Reliance Mutual Fund

Just as drops of water make an ocean, small but regular investments can go a
long way in building wealth over time.
 This way you grow step by step. It’s always prudent to invest with a
long term horizon in mind. Small but regular investments go a long way in
creating wealth over time. Reliance Systematic Investment Plan helps you
achieve just that. It is an investment technique where you deposit as little as
Rs. 100 regularly every month into the mutual fund scheme at the then
prevailing NAV (Net Asset Value), subject to applicable load.
FINANCIAL PLANNING APPROACH FOR INVESTORS
( REF. TO MUTUAL FUNDS):

Investment is never an easy process. However, a sound understanding of

some basic concepts make the process of investment decision-making much

easier and the experience much more enjoyable. The following step can help you

get started on your path to becoming a successful investor:

1. Identify your financial needs and goals:

The first step is to get a clear understanding of your own financial needs and

goals. Ask yourself the question –When do I need money and for what purpose?

List down your financial goals and when they will materialise (daughter’s higher

education after 6 years, purchase of a house after 10 years), and how much

money you will need for the same. The answer will help you arrive at the time

frame for your investment – short term, medium term or long term.

Financial Goals Amount required Year’s to achieve Investment

at today’s price your goal horizon

Retirement Rs. 25 Lakhs 20 years Long term

Daughter’s Rs. 2 Lakhs 6 years Long term

 higher
Education
Rs. 4 Lakhs 2 years Medium term
Buying a car
Rs. 0.5 Lakhs 6 months Short term
Son’s computer
course

2. Understand your tolerance to risk:

Before making an investment decision, it is very necessary for an investor

to know his risk tolerance limits. Will he be comfortable with fluctuations in the

value of his investments? Or would he prefer to settle down for a lower return

without many ups and downs. By knowing risk tolerance limit of himself an

investor can decide his portfolio and also choose from a variety of financial

investment tools , one which suit his portfolio the most.

3. Estimate your required rate of return:

Your required rate of return depends on your financial goals and the time

you have to achieve them. Take an example that your retirement goal at 58

years is Rs. 20 Lakhs and your monthly savings is Rs. 5000, your required rate

of return depending on your current age would be:

Present Age Returns

43 years 9.5 %

48 years 21.2%

As you can see, the later you start, the higher will be your required rate of return,

hence as your investment horizon reduces, for the same level of saving you may

need to take higher risk. Alternatively, if you were not willing to take a higher risk,
you would have to save a higher amount every month- Rs 9800, almost twice the

original savings required to achieve your target accumulation.

These three steps give a very basic idea about how to invest, when an

investor is seeking investment in different financial tools. Though there are

different steps of investment in each financial tool, these acts as blue print for

them too.

Investors are required to go for financial planning before making investments in

any mutual fund. The objective of financial planning is to ensure that the right

amount of money is available at the right time to the investor to be able to meet

his financial goals. It is more than mere tax planning. Steps in financial

planning are:

Asset allocation.

Selection of fund.

Studying the features of a scheme.

In case of mutual funds, financial planning is concerned only with broad asset

allocation, leaving the actual allocation of securities and their management to

fund managers. A fund manager has to closely follow the objectives stated in the

offer document, because financial plans of users are chosen using these

objectives.
Why has it become one of the largest financial instruments?

If we take a look at the recent scenario in the Indian financial market then we can

find the market flooded with a variety of investment options which includes

mutual funds, equities, fixed income bonds, corporate debentures, company

fixed deposits, bank deposits, PPF, life insurance, gold, real estate etc. all these

investment options could be judged on the basis of various parameters such as-

return, safety convenience, volatility and liquidity. measuring these investment

options on the basis of the mentioned parameters, we get this in a tabular form

Return Safety Volatility Liquidity Convenie

nce
Equity High Low High High Moderate

Bonds Moderate High Moderate Moderate High

Co. Moderate Moderate Moderate Low Low

Debenture
s
Co. FDs Moderate Low Low Low Moderate

Bank Low High Low High High

Deposits
PPF Moderate High Low Moderate High

Life Low High Low Low Moderate

Insurance
Gold Moderate High Moderate Moderate Gold

Real High Moderate High Low Low

Estate
Mutual High High Moderate High High
 Funds

We can very well see that mutual funds outperform every other investment

option. On three parameters it scores high whereas it’s moderate at one.

comparing it with the other options, we find that equities gives us high returns

with high liquidity but its volatility too is high with low safety which doesn’t makes

it favourite among persons who have low risk- appetite. Even the convenience

involved with investing in equities is just moderate.

Now looking at bank deposits, it scores better than equities at all

fronts but lags badly in the parameter of utmost important i.e.; it scores low on

return , so it’s not an happening option for person who can afford to take risks

for higher return. The other option offering high return is real estate but that even

comes with high volatility and moderate safety level, even the liquidity and

convenience involved are too low. Gold have always been a favourite among

Indians but when we look at it as an investment option then it definitely doesn’t

gives a very bright picture. Although it ensures high safety but the returns

generated and liquidity are moderate. Similarly the other investment options are

not at par with mutual funds and serve the needs of only a specific customer

group. Straightforward, we can say that mutual fund emerges as a clear winner

among all the options available.

The reasons for this being:

I) Mutual funds combine the advantage of each of the investment products:

Mutual fund is one such option which can invest in all other investment options.
Its principle of diversification allows the investors to taste all the fruits in one

plate. just by investing in it, the investor can enjoy the best investment option as

per the investment objective.

II)Dispense the shortcomings of the other options: Every other investment

option has more or less some shortcomings. Such as if some are good at return

then they are not safe, if some are safe then either they have low liquidity or low

safety or both….likewise, there exists no single option which can fit to the need

of everybody. But mutual funds have definitely sorted out this problem. Now

everybody can choose their fund according to their investment objectives.

III) Returns get adjusted for the market movements: As the mutual funds are

managed by experts so they are ready to switch to the profitable option along

with the market movement. Suppose they predict that market is going to fall then

they can sell some of their shares and book profit and can reinvest the amount

again in money market instruments.

IV) Flexibility of invested amount: Other then the above mentioned reasons,

there exists one more reason which has established mutual funds as one of the

largest financial intermediary and that is the flexibility that mutual funds offer

regarding the investment amount. One can start investing in mutual funds with

amount as low as Rs. 500 through SIPs and even Rs. 100 in some cases.

How do investors choose between funds?

When the market is flooded with mutual funds, it’s a very tough job for the

investors to choose the best fund for them. Whenever an investor thinks of

investing in mutual funds, he must look at the investment objective of the fund.

Then the investors sort out the funds whose investment objective matches with

that of the investor’s. Now the tough task for investors start, they may carry on

the further process themselves or can go for advisors like BSL . Of course the

investors can save their money by going the direct route i.e. through the AMCs

directly but it will only save 1-2.25% (entry load) but could cost the investors in

terms of returns if the investor is not an expert. So it is always advisable to go for

MF advisors. The mf advisors’ thoughts go beyond just investment objectives

and rate of return. Some of the basic tools which an investor may ignore but an

mf advisor will always look for are as follow:

1. Rupee cost averaging

The investors going for Systematic Investment Plans(SIP) and Systematic

Transfer Plans(STP) may enjoy the benefits of RCA (Rupee Cost Averaging).

Rupee cost averaging allows an investor to bring down the average cost of

buying a scheme by making a fixed investment periodically, like Rs 5,000 a

month and nowadays even as low as Rs. 500 or Rs. 100. In this case, the

investor is always at a profit, even if the market falls. In case if the NAV of fund

falls, the investors can get more number of units and vice-versa. This results in

the average cost per unit for the investor being lower than the average price per

unit over time.

The investor needs to decide on the investment amount and the frequency. More

frequent the investment interval, greater the chances of benefiting from lower
prices. Investors can also benefit by increasing the SIP amount during market

downturns, which will result in reducing the average cost and enhancing returns.

Whereas STP allows investors who have lump sums to park the funds in a low-

risk fund like liquid funds and make periodic transfers to another fund to take

advantage of rupee cost averaging.

2. Rebalancing
Rebalancing involves booking profit in the fund class that has gone up and

investing in the asset class that is down. Trigger and switching are tools that can

be used to rebalance a portfolio. Trigger facilities allow automatic redemption or

switch if a specified event occurs. The trigger could be the value of the

investment, the net asset value of the scheme, level of capital appreciation, level

of the market indices or even a date. The funds redeemed can be switched to

other specified schemes within the same fund house. Some fund houses allow

such switches without charging an entry load.

To use the trigger and switch facility, the investor needs to specify the event, the

amount or the number of units to be redeemed and the scheme into which the

switch has to be made. This ensures that the investor books some profits and

maintains the asset allocation in the portfolio.

3. Diversification
Diversification involves investing the amount into different options. In case of

mutual funds, the investor may enjoy it afterwards also through dividend transfer

option. Under this, the dividend is reinvested not into the same scheme but into

another scheme of the investor's choice.

 For example, the dividends from debt funds may be transferred to equity

schemes. This gives the investor a small exposure to a new asset class without

risk to the principal amount. Such transfers may be done with or without entry

loads, depending on the MF's policy.

4. Tax efficiency
Tax factor acts as the “x-factor” for mutual funds. Tax efficiency affects the final

decision of any investor before investing. The investors gain through either

dividends or capital appreciation but if they haven’t considered the tax factor then

they may end loosing.

Debt funds have to pay a dividend distribution tax of 12.50 per cent (plus

surcharge and education cess) on dividends paid out. Investors who need a

regular stream of income have to choose between the dividend option and a

systematic withdrawal plan that allows them to redeem units periodically. SWP

implies capital gains for the investor.

If it is short-term, then the SWP is suitable only for investors in the 10-per-cent-

tax bracket. Investors in higher tax brackets will end up paying a higher rate as

short-term capital gains and should choose the dividend option.

If the capital gain is long-term (where the investment has been held for more

than one year), the growth option is more tax efficient for all investors. This is

because investors can redeem units using the SWP where they will have to pay

10 per cent as long-term capital gains tax against the 12.50 per cent DDT paid

by the MF on dividends.
All the tools discussed over here are used by all the advisors and have helped

investors in reducing risk, simplicity and affordability. Even then an investor

needs to examine costs, tax implications and minimum applicable investment

amounts before committing to a service.

OBJECTIVES OF THE STUDY

• To design database of prospective clients.

• To study various types of investment options and comprehensive study of
mutual funds as one.
• Also to understand the customer psychology of investments and what are the
various objectives behind the investment.
• To know about market penetration of Reliance Mutual Fund.

RESEARCH METHODOLOGY

The Reliance promotes its product through its distribution channels. The different

distribution channels are Banking, IFA, National Distributor, Institutional etc. I am

promoting the product of Reliance through the Banking division. The research is

based on primary as well secondary data, however primary data collection was

given more importance since it is overhearing factor in attitude studies. Primary

data is collected through interaction with the customers in the bank. One of the

most important uses of this research methodology is that it helps in identifying

the problem, collecting, analyzing the required information data and providing an

alternative solution to the problem .It will also help in collecting the vital

information that is required by the top management to assist them for the better

decision making both day to day decision and critical ony data can be used only

for the reference. Research will be done by primary data collection, and primary

data has been collected by interacting with various people in the bank. The

secondary data has been collected through various journals and websites.

Duration of Study: The study was carried out for a period of two months,
from 23 Nov to 18 Jan 2010.

Sampling:

 Sampling procedure:

The sample was selected of them who are the customers/visitors of Janata

Sahakari Bank, Pune irrespective of them being investors or not or availing

the services or not. It was also collected through personal visits to persons,

by formal and informal talks and through filling up the questionnaire

prepared. The Questionnaire design was necessary for proper analysis of

the research work done. The data has been analyzed by using

mathematical/Statistical tool.

 Sample size:

The sample size of my project is limited to 200 people only. Out of which

only 120 people had invested in Mutual Fund. Other 80 people did not have

invested in Mutual Fund.

 Sample design:

Data has been presented with the help of bar graph, pie charts, line

graphs etc.

Limitation

➢ Some of the persons were not so responsive.

➢ Possibility of error in data collection because many of

investors may have not given actual answers of my questionnaire.

➢ Sample size is limited to 200 visitors of Janata Sahakari Bank,

Pune out of these only 120 had invested in Mutual Fund. The
sample,size may not adequately represent the whole market.

➢ Some respondents were reluctant to divulge personal information

which can affect the validity of all responses.

➢ The research is confined to a certain part of Pune.

ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors

Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of 12 18 30 24 20 16
Investors

Interpretation: According to this chart out of 120 Mutual Fund investors

most are in the age group of 36-40 yrs. i.e. 25%, the second most investors

are in the age group of 41-45yrs i.e. 20% and the least investors are in the

age group of below 30 yrs.

(b). Educational Qualification of investors

Educational Qualification Number of Investors

 Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120

Interpretation: Out of 120 Mutual Fund investors 71% of

the investors are Graduate/Post Graduate, 23% are Under

Graduate and 6% are others (under HSC).

c). Occupation of the investors

Occupation No. of Investors

Govt. Service 30

Pvt. Service 45

Business 35

Agriculture 4

Others 6

Interpretation:In Occupation group out of 120 investors,

38% are Pvt. Employees, 25% are Businessman, 29% are

Govt. Employees, 3% are in Agriculture and 5% are in

others.
(d). Monthly Family Income of the Investors

Income Group No. of Investors

<=10,000 5

10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32

Interpretation:
In the Income Group of the investors out of 120 investors, 36% investors that is

the maximum investors are in the monthly income group Rs. 20,001 to Rs.

30,000, Second one i.e. 27% investors are in the monthly income group of more

than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income

group of below Rs. 10,000.

(2) Investors invested in different kind of investments.

Kind of Investments No. of

Respondents
Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
 Post office (NSC) 75
Shares/Debentures 50
Gold/Silver 30
Real Estate 65

Interpretation: From the above graph it can be inferred that out of 200
people, 97.5% people have invested in Saving A/c, 76% in Insurance, 74%
in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in
Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of 40 60 64 36

Respondents

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High

Return, 30% prefer to invest where there is Low Risk, 20% prefer

easy Liquidity and 18% prefer Trust.

4. Awareness about Mutual Fund and its Operations

Response Yes No

No. of Respondents 135 65

Interpretation:From the above chart it is inferred that 67% People are

aware of Mutual Fund and its operations and 33% are not aware of Mutual

Fund and its operations.

5. Source of information for customers about Mutual Fund

Source of information No. of Respondents

Advertisement 18

Peer Group 25

Bank 30

Financial Advisors 6

Interpretation:From the above chart it can be inferred that the Bank is

the most important source of information about Mutual Fund. Out of 135
Respondents, 46% know about Mutual fund Through Bank, 22% through
Financial Advisor, 19% through Peer Group and 13% through
Advertisement.

6. Investors invested in Mutual Fund

Response No. of Respondents

YES 120

NO 80

Total 200

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do

not have invested in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason No. of Respondents

Not Aware 65
Higher Risk 5
Not any Specific 10
Reason
 Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are

not aware of Mutual Fund, 13% said there is likely to be higher risk

and 6% do not have any specific reason.

8. Investors invested in different Assets Management Co.

(AMC)

Name of AMC No. of Investors

BSLMF 62
UTI 56
HDFC 30
Reliance 49
ICICI Prudential 75
Kotak 45
Others 70

Interpretation:Here most of the Investors preferred ICICI and

BSLMF. Out of 120 Investors 62 have invested in BSLMF each of

them,75 have invested in ICICI, 56 in UTI , 49 in Reliance, 45 in

Kotak and 30 in HDFC.

9. Reason for invested in Reliance Mutual Fund

Reason No. of
 Respondents
Associated with 37

Reliance Company

Better Return 10

Agents Advice 15

Interpretation:

Out of 62 investors of BSLMF 60% have invested because of its association

with Brand Birla, 24% invested on Agent’s Advice, 16% invested because

of better return.

10. Reason for not invested in RMF

Reason No. of Respondents

Not Aware 25

Less Return 18

Agent’s Advice 22

Interpretation:

Out of 65 people who have not invested in BSLMF, 38% were not

aware with BSLMF, 28% do not have invested due to less return

and 34% due to Agent’s Advice.

11. Channel Preferred by the Investors for Mutual Fund

Investment

Channel Financial Advisor Bank AMC

No. of 21 69 30

Respondents

Interpretation:

Out of 120 Investors 58% preferred to invest through Bank, 25%

through AMC and 17% through Financial Advisor.

12. Mode of Investment Preferred by the Investors

Mode of Investment One time Investment Systematic Investment Plan

(SIP)

No. of Respondents 42 78

Interpretation:
Out of 120 Investors 35% preferred One time Investment and 65 %

preferred Systematic Investment Plan.

13. Preferred Portfolios by the Investors

Portfolio No. of Investors

Equity 56

Debt 20

Balanced 44

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37%

preferred Balance and 17% preferred Debt portfolio

14. Option for getting Return Preferred by the Investors

Option Dividend Payout Dividend Growth

Reinvestment

No. of 25 10 85

Respondents
 Interpretation:

From the above graph 71% preferred Growth Option, 21%

preferred Dividend Payout and 8% preferred Dividend

Reinvestment Option.

FINDINGS

➢ The Age Group of 36-40 years were more in numbers. The second most

Investors were in the age group of 41-45 years and the least were in the

age group of below 30 years.

➢ Most of the Investors were Graduate or Post Graduate and below HSC

there were very few in numbers.

➢ In Occupation group most of the Investors were pvt. employees, the

second most Investors were Govt. employees and the least were

associated with Agriculture.

➢ In family Income group, between Rs. 20,001- 30,000 were more in

numbers, the second most were in the Income group of more than

Rs.30,000 and the least were in the group of below Rs. 10,000.
➢ About all the Respondents had a Saving A/c in Bank, 76% Invested in

Fixed Deposits, Only 60% Respondents invested in Mutual fund.

➢ Mostly Respondents preferred High Return while investment, the second

most preferred Low Risk then liquidity and the least preferred Trust.

➢ Only 67% Respondents were aware about Mutual fund and its operations

and 33% were not.

➢ Among 200 Respondents only 60% had invested in Mutual Fund and

40% did not have invested in Mutual fund.

➢ Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told

there is not any specific reason for not invested in Mutual Fund and 6%

told there is likely to be higher risk in Mutual Fund.

➢ Most of the Investors had invested in ICICI or BSLMF, UTI has also good

Brand Position among investors.

➢ Out of 62 investors of RMF 60% have invested due to its association with

the Brand Reliance, 24% Invested because of Advisor’s Advice and 16%

due to better return.

➢ Most of the investors who did not invested in RMF due to not Aware of

RMF, the second most due to Agent’s advice and rest due to Less

Return.

➢ 68% Investors preferred to Invest through Bank, 25% through AMC

(means Direct Investment) and 17% through Financial Advisors.

 ➢ 35% preferred One Time Investment and 65% preferred SIP out of

both type of Mode of Investment.

➢ The most preferred Portfolio was Equity, the second most was Balance

(mixture of both equity and debt), and the least preferred Portfolio was

Debt portfolio.

➢ Maximum Number of Investors Preferred Growth Option for returns, the

second most preferred Dividend Payout and then Dividend

Reinvestment.

CONCLUSION

Running a successful Mutual Fund requires complete understanding of the

peculiarities of the Indian Stock Market and also the psyche of the small

investors. This study has made an attempt to understand the financial behavior

of Mutual Fund investors in connection with the preferences of Brand (AMC),

Products, Channels etc. I observed that many of people have fear of Mutual

Fund. They think their money will not be secure in Mutual Fund. They need the

knowledge of Mutual Fund and its related terms. Many of people do not have

invested in mutual fund due to lack of awareness although they have money to
invest. As the awareness and income is growing the number of mutual fund

investors are also growing.

“Brand” plays important role for the investment. People invest in those

Companies where they have faith or they are well known with them. There are

many AMCs in Pune but only some are performing well due to Brand awareness.

Some AMCs are not performing well although some of the schemes of them are

giving good return because of not awareness about Brand. Reliance, UTI,

BSLMF, ICICI Prudential etc. they are well known Brand, they are performing

well and their Assets Under Management is larger than others whose Brand

name are not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund.

Financial Advisors could also be the most preferred channel for the investment in

mutual fund. They can change investors’ mind from one investment option to

others. Many of investors directly invest their money through AMC because they

do not have to pay entry load. Only those people invest directly who know well

about mutual fund and its operations and those have time.
 SUGGESTIONS AND RECOMMENDATIONS

➢ The most vital problem spotted is of ignorance. Investors should be made

aware of the benefits. Nobody will invest until and unless he is fully

convinced. Investors should be made to realize that ignorance is no longer

bliss and what they are losing by not investing.

➢ Mutual funds offer a lot of benefit which no other single option could offer.

But most of the people are not even aware of what actually a mutual fund

is? They only see it as just another investment option. So the advisors

should try to change their mindsets. The advisors should target for more

and more young investors. Young investors as well as persons at the

height of their career would like to go for advisors due to lack of expertise

and time.
➢ Mutual Fund Company needs to give the training of the Individual

Financial Advisors about the Fund/Scheme and its objective, because they

are the main source to influence the investors.

➢ Younger people aged under 35 will be a key new customer group into the

future, so making greater efforts with younger customers who show some

interest in investing should pay off.

➢ Customers with graduate level education are easier to sell to and there is a

large untapped market there. To succeed however, advisors must provide

sound advice and high quality.

➢ Systematic Investment Plan (SIP) is one the innovative products

launched by Assets Management companies. SIP is easy for monthly

salaried person as it provides the facility of do the investment in EMI.

Though most of the prospects and potential investors are not aware about

the SIP. There is a large scope for the companies to tap the salaried

persons.
 Annexure

QUESTIONNAIRE

A study of preferences of the investors for investment in mutual

funds.

1. Personal Details:

(a). Name:-

(b). Add: - Phone:-

(c). Age:-

(d). Qualification:-

Graduation/PG Under Graduate Others

(e). Occupation. Pl tick (√)

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick (√).

Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001

Rs.10,000 15000 20,000 30,000 and above
2. What kind of investments you have made so far? Pl tick (√). All applicable.

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, f. g. Gold/ Silver h. Real Estate
etc Shares/Debenture
s

3. While investing your money, which factor will you prefer?

.
(a) Liquidity (b) Low Risk (c) High (d) Trust
Return

4. Are you aware about Mutual Funds and their operations? Pl tick (√). Yes
No

5. If yes, how did you know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (√). Yes

No

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (√). All applicable.

a. b. UTI c. d. e. Kotak f. Other. specify

 BSLMF HDFC Reliance

9. If invested in RMF, you do so because (Pl. tick (√), all applicable).

a. RMF is a leading company in mutual funds.

b. They have a record of giving good returns year after year.
c. Agent’ Advice

10. If NOT invested in RMF, you do so because (Pl. tick (√) all applicable).

a. You are not aware of RMF.

b. RMF gives less return compared to the others.
c. Agent’ Advice

11. Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor (b) Bank (c) AMC

12. When you invest in Mutual Funds which mode of investment will you prefer?
Pl. tick (√).

a. One Time Investment b. Systematic Investment Plan (SIP)

13. When you want to invest which type of funds would you choose?

a. Having only debt b. Having debt & equity c. Only equity portfolio.
portfolio portfolio.

14. How would you like to receive the returns every year? Pl. tick (√).

a. Dividend payout b. Dividend re- c. Growth in NAV

investment

Bibliography
By the help of Books

• Research Methodology written BY

“ M.V. KULKARNI”
• Marketing Management written BY
“ Phillip Kotlar”
By the Help of Manuals

• Reliance Mutual Fund Report of 2009 & Internet.

By the help of Other Sources

• By the head’s and the consultant of the Reliance Mutual Fund.

By the help of Websites

1. www.amfiIndia.org.
2. www.Reliancemutualfund.com
3. www.google.com
4. www.Wikipedia.com