Académique Documents
Professionnel Documents
Culture Documents
Project Report
On
Submitted to:
Mr. K.K.Patel
Faculty member of
S.K.School of Business Management
Hemchandracharya North Gujarat University
Patan
On
Date:
Submitted by:
Rafik piprani
R.M.Thakkar
Kiran raval
1
Preface
2
Acknowledgement
I am glad to express my profound sentiments of
gratitude to all who rendered their valuable help for the
successful completion of this project report titled,
“Comparison of Mutual Fund among Financial Advisors”
3
qualification that provided me this opportunity to have a
practical knowledge of relevant fields and Dr.Ashvin Modi –
Faculty of S.K.School Of Business Management, patan. Who
is be my guide in real sense in this project and without
whose guidelines I can be perfect.
EXECUTIVE SUMMARY
Mutual Funds were started in the year 1822 at Netherlands. Originally name of
the Mutual fund was investment trusts. In USA it is called Mutual Fund and in Britain it
was called Unit Trust. In India, it has started since 1964. In the starting of Mutual
Concept in India only one AMC was in the resistance. It is Unit Trust of India. Right
now there are 38 AMCs and they have lunched more then 300 schemes. As per the
record of the Association of Mutual Fund in India; since end of month of January 2006,
Indian AMCs are managing assets of Rs. 20798.610.7 lakhs.
The economy is highly influenced by the Financial System of the country. The
Indian Financial System has been broadly divided into two segments: the organized and
unorganized. An investor has a wide array of investment avenues available. Economic
well being in the long run depends significantly on how wise he invests.
4
In present financial scenario where gold has lost its investment value, since last two
decade and also there is no attractive return in the bank FD, PPF, KVP, NSC, MIS, and
other Post saving sachems. Due to uncertainty in share market and low return in the
inflationary economy, investor are puzzled, that where to invest their money from
which they can get better return with flexibility, tax benefit and as well as capital
appreciation. So it is necessary for investor to find the answer and way of capital
growth with better return than uncertain share market and other low yield investment
avenues.
Mutual fund is indeed of great benefit in this respect. They provide the services of
experienced and skilled professionals who determine this risk and monitor them on
going basis. They are also backed by through research.
When investors are confronted with an outstanding range of products, form traditional
bank deposits to downright shady money-multiples schemes, it has to be judged on the
yardsticks of returns, liquidity, safety, convenience and tax efficiency. An important
question facing many investors across the country today is whether one should invest in
a bank fixed deposit the amount with a debt-oriented Mutual Fund.
There is one apex body that regulates and promotes mutual fund in India. This apex
body is AMFI (Association of Mutual Fund in India). AMFI also regulates advisers of
mutual fund. AMFI conduct the test that is compulsory for all the mutual fund advisers.
The data is contained form insurance advisors, income tax consultant, post office agent,
and stockbroker. So the basic objective of the study was to test the potentiality and
develop the business of mutual funds by obtaining the data form Independent financial
advisors.
The sample size is 102. The study uses convenient sampling for Financial Advisers;
contacting personally and interviewing them collect the data: questionnaire is used as
the instrument for research.
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CONTENTS
Sr No Particulars
1 Chapter -1 Profile of mutual funds
1.1 Global Scenario
1.2 Indian Scenario
1.3 History of Mutual funds in India
1.4 Growth of Mutual funds in India
1.5 Classification of mutual funds Companies
2 Chapter-2 About Mutual fund
2.1 Introduction
2.2 Mutual fund -Concept
2.3 Types of Mutual funds Schemes
2.4 How to invest Mutual fund
2.5 Benefit of Mutual fund invest
2.6 Net Asset Value (NAV)
2.7 Entry and Exit Lord
2.8 Regulatory Aspect of Mutual funds
3 Chapter-3 Comparison of other Mutual fund to Reliance Mutual fund
3.1 SBI mutual fund company
3.2 HDFC Mutual fund company
3.3 UTI Mutual fund company
4 Chapter-4 About The RELIANCE Mutual fund Company
4.1 The Mutual fund
4.2 Our Corporate Governance Policy
4.3 Management
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4.4 Employee
4.5 About RELIANCE Capital Asset
4.6 Auditors
4.7 The Register
4.8 Management Team
4.9 Registered Office
4.1 Schemes
4.11 NAVs
4.12 Our Service Providers
4.13 How to invest Mutual fund
5 Chapter-5 Research Methodology
5.1 Problem Discription
5.2 Research Methodology
5.3 Sampling
5.4 Sources of India
5.5 Benefit of this Report
6 Chapter-6 Analysis of Data
7 Chapter-7 Test of Hypothesis
8 Chapter-8 Conclusions
Recommendations and Suggestion
Bibliography
Annexure
7
CHAPTER 1: PROFILE OF MUTUAL
FUND
Global Scenario
Basic facts:
The money market mutual fund segment has a total corpus of $ 1.48 trillion in the
U.S. against a corpus of $ 100 million in India.
Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity
and Capital are non-bank mutual funds in this group.
In the U.S. the total number of schemes is higher than that of the listed companies
while in India they have just 277 schemes
Internationally, mutual funds are allowed to go short. In India fund managers do not
have such leeway.
In the U.S. about 9.7 million households will manage their assets on-line by the year
2003, such a facility is not yet of avail in India.
On- line trading is a great idea to reduce management expenses from the current 2 %
of total assets to about 0.75 % of the total assets.
72% of the core customer bases of mutual funds in the top 50-broking firms in the
U.S. are expected to trade on-line by 2003.
(Source: The Financial Express September 99)
8
In fact in advanced countries like the U.S.A, mutual funds buy- sell
transactions have already begun on the net, while in India the Net is used as a source
of Information.
Such changes could facilitate easy access, lower intermediation costs and
better services for all. A research agency that specializes in internet technology
estimates that over the next four years Mutual Fund Assets traded on- line will grow
ten folds from $ 128 billion to $ 1,227 billion; whereas equity assets traded on-line
will increase during the period from $ 246 billion to $ 1,561 billion. This will
increase the share of mutual funds from 34% to 40% during the period.
Such increases in volumes are expected to bring about large changes in the
way Mutual Funds conduct their business.
Here are some of the basic changes that have taken place since the advent of the Net.
Lower Costs: Distribution of funds will fall in the online trading regime by
2003. Mutual funds could bring down their administrative costs to 0.75% if trading is
done on- line. As per SEBI regulations, bond funds can charge a maximum of 2.25%
and equity funds can charge 2.5% as administrative fees. Therefore if the
administrative costs are low, the benefits are passed down and hence Mutual Funds
are able to attract mire investors and increase their asset base.
Better advice: Mutual funds could provide better advice to their investors through
the Net rather than through the traditional investment routes where there is an
additional channel to deal with the Brokers. Direct dealing with the fund could help
the investor with their financial planning.
In India, brokers could get more Net savvy than investors and could help the investors
with the knowledge through get from the Net.
New investors would prefer online: Mutual funds can target investors who are young
individuals and who are Net savvy, since servicing them would be easier on the Net.
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India has around 1.6 million net users who are prime target for these funds and this
could just be the beginning. The Internet users are going to increase dramatically and
mutual funds are going to be the best beneficiary. With smaller administrative costs
more funds would be mobilized .A fund manager must be ready to tackle the
volatility and will have to maintain sufficient amount of investments which are high
liquidity and low yielding investments to honor redemption.
Net based advertisements: There will be more sites involved in ads and promotion of
mutual funds. In the U.S. sites like AOL offer detailed research and financial details
about the functioning of different funds and their performance statistics. a is
witnessing a genesis in this area.
Indian Scenario
stimated that by 2010 March-end, the total assets of all scheduled commercial banks
The annual composite rate of growth is expected 13.4% during the rest of the decade.
In the last 5 years we have seen annual growth rate of 9%. According to the current
10
Mutual Fund AUM’s Growth
Month/Year Mar-98 Mar- Mar- Mar- Mar- Mar-04 Sep-04 4-Dec
00 01 02 03
MF AUM's 68984 93717 83131 9401 75306 13762 15114 149300
7 6 1
Change in % - 26 13 12 25 45 9 1
over last yr
Number of foreign AMC's are in the que to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management
worldwide.
Our saving rate is over 23%, highest in the world. Only canalizing these savings
in mutual funds sector is required.
We have approximately 29 mutual funds that are much less than US having more
than 800. There is a big scope for expansion.
'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing
cities.
Mutual fund can penetrate rural like the Indian insurance industry with simple and
limited products.
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In the 1960's there was a phenomenal rise in aggressive growth funds (with very
high risk). Sometimes called "go-go" or "hot-shot" funds, they received the majority of
the billions of dollars flowing into mutual funds at that time. In 1968 and 1969, over 100
of these new aggressive growth funds were established.
A severe bear market began in the autumn of 1969. People became disillusioned
with stocks and mutual funds. "The market's toast. Panicked investors echoed it’ll never
get back to where it was.”
Unemployment grew; inflation went crazy, and investors pulled billions back out of
the funds. They should have hung in there! Many funds have risen 9,000% since then.
UTI commenced its operations from July 1964 .The impetus for establishing a
formal institution came from the desire to increase the propensity of the middle and lower
groups to save and to invest. UTI came into existence during a period marked by great
political and economic uncertainty in India. With war on the borders and economic
turmoil that depressed the financial market, entrepreneurs were hesitant to enter capital
market.
The already existing companies found it difficult to raise fresh capital, as investors
did not respond adequately to new issues. Earnest efforts were required to canalize
savings of the community into productive uses in order to speed up the process of
industrial growth. The then Finance Minister, T.T. Krishnamachari set up the idea of a
unit trust that would be "open to any person or institution to purchase the units offered by
the trust. However, this institution as they see it, is intended to cater to the needs of
individual investors, and even among them as far as possible, to those whose means are
small."
12
His ideas took the form of the Unit Trust of India, an intermediary that would help
fulfill the twin objectives of mobilizing retail savings and investing those savings in the
capital market and passing on the benefits so accrued to the small investors.
UTI commenced its operations from July 1964 “with a view to encouraging
savings and investment and participation in the income, profits and gains accruing to the
Corporation from the acquisition, holding, management and disposal of securities."
Different provisions of the UTI Act laid down the structure of management, scope of
business, powers and functions of the Trust as well as accounting, disclosures and
regulatory requirements for the Trust.
One thing is certain – the fund industry is here to stay. The industry was one-
entity show till 1986 when the UTI monopoly was broken when SBI and Canbank mutual
fund entered the arena. This was followed by the entry of others like BOI, LIC, GIC, etc.
sponsored by public sector banks. Starting with an asset base of Rs. 25 crore in 1964 the
industry has grown at a compounded average growth rate of 27% to its current size of
Rs.90000 crore.
The period 1986-1993 can be termed as the period of public sector mutual funds
(PMFs). From one player in 1985 the number increased to 8 in 1993. The party did not
last long. When the private sector made its debut in 1993-94, the stock market was
booming.
The opening up of the asset management business to private sector in 1993 saw
international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros
and Capital International along with the host of domestic players joins the party. But for
the equity funds, the period of 1994-96 was one of the worst in the history of Indian
Mutual Funds.
Mutual funds have been around for a long period of time to be precise for 36 yrs
but the year 1999 saw immense future potential and developments in this sector. This
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year signaled the year of resurgence of mutual funds and the regaining of investor
confidence in these MF’s. This time around all the participants are involved in the revival
of the funds ----- the AMC’s, the unit holders, the other related parties. However the sole
factor that gave lifer to the revival of the funds was the Union Budget. The budget
brought about a large number of changes in one stroke. An insight of the Union Budget
on mutual funds taxation benefits is provided later.
It provided centre stage to the mutual funds, made them more attractive and
provides acceptability among the investors. The Union Budget exempted mutual fund
dividend given out by equity-oriented schemes from tax, both at the hands of the investor
as well as the mutual fund. No longer were the mutual funds interested in selling the
concept of mutual funds they wanted to talk business which would mean to increase asset
base, and to get asset base and investor base they had to be fully armed with a whole lot
of schemes for every investor .So new schemes for new IPO’s were inevitable. The quest
to attract investors extended beyond just new schemes. The funds started to regulate
themselves and were all out on winning the trust and confidence of the investors under
the aegis of the Association of Mutual Funds of India (AMFI)
One cam say that the industry is moving from infancy to adolescence, the industry
is maturing and the investors and funds are frankly and openly discussing difficulties
opportunities and compulsions.
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 four distinct phases
First Phase – 1964-87
An Act of Parliament established Unit Trust of India (UTI) on 1963. 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
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Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.
15
In the year of 2005 Mutual funds had collected 24000 Crores and in this year Mutual
funds has collected 9000 crores in January.
16
Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management of
the Specified Undertaking of the Unit Trust of India has therefore been excluded from the
total assets of the industry as a whole from February 2003 onwards.
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Classification of Mutual Funds Companies
The Mutual Funds Organization can be classified as below:
BANK SPONSORED
BOB Asset Management Co. Ltd.
Canbank Investment Management Services Ltd.
SBI Funds Management Ltd.
UTI Asset Management Company Pvt. Ltd.
INSTITUTIONS
GIC Asset Management Co. Ltd.
IL & FS Asset Management Co. Ltd.
Jeevan Bima Sahayog Asset Management Co. Ltd.
PRIVATE SECTOR
Benchmark Asset Management Co. Pvt. Ltd.
Cholamandalam Asset Management Co. Ltd.
Escorts Asset Management Ltd.
J.M. Capital Management Pvt. Ltd.
Kotak Mahindra Asset Management Co. Ltd.
Reliance Capital Asset Management Ltd.
Sahara Asset Management Co. Pvt. Ltd
Sundaram Asset Management Company Ltd.
Tata Asset Management Private Ltd.
JOINT VENTURES- PREDOMINANTLY INDIAN
Birla Sun Life Asset Management Co. Ltd.
Credit Capital Asset Management Co. Ltd.
DSP Merrill Lynch Fund Managers Ltd.
HDFC Asset Management Co. Ltd.
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instruments issued by corporations and governments, according to the stated investment
objectives of the funds. Individual investors own a percentage of the value of the fund as
represented by the number of units they purchase. A collection of money invested in a
group of assets and managed by an investment company (a mutual fund company or
other). The money comes from investors who want to buy shares in the fund. The
benefits to investors in buying shares of mutual funds come primarily from
diversification, professional money management, and capital gains and dividend
reinvestment.
Like most developed and developing countries the mutual fund cult has been catching on
in India. There are various reasons for this. Mutual funds make it easy and less costly for
investors to satisfy their need for capital growth, income and/or income preservation.
And in addition to this a mutual fund brings the benefits of diversification and money
management to the individual investor, providing an opportunity for financial success
that was once available only to a select few.
Understanding Mutual funds is easy as it's such a simple concept: a mutual fund is a
company that pools the money of many investors -- its shareholders -- to invest in a
variety of different securities. Investments may be in stocks, bonds, money market
securities or some combination of these. Those securities are professionally managed on
behalf of the shareholders, and each investor holds a pro rata share of the portfolio
entitled to any profits when the securities are sold, but subject to any losses in value as
well.
A mutual fund, by its very nature, is diversified -- its assets are invested in many different
securities. Beyond that, there are many different types of mutual funds with different
objectives and levels of growth potential, furthering investor’s chances to diversify.
19
Mutual Fund Operation Flow Chart
Pooled their
Passed back to Investor money with
Fund
Returns
Manager
20
Organization of Mutual Fund
21
Open-ended schemes
Open-ended schemes do not have a fixed maturity period. Investors can buy or sell
units at NAV-related prices from and to the mutual fund on any business day. These
schemes have unlimited capitalization, open-ended schemes do not have a fixed
maturity, there is no cap on the amount you can buy from the fund and the unit capital
can keep growing. These funds are not generally listed on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue and
redeem units any time during the life of a scheme. Hence, unit capital of open-ended
funds can fluctuate on a daily basis. The advantages of open-ended funds over close-
ended are as follows:
Any time exit option, the issuing company directly takes the responsibility of
providing an entry and an exit. This provides ready liquidity to the investors and avoids
reliance on transfer deeds, signature verifications and bad deliveries. Any time entry
option, An open-ended fund allows one to enter the fund at any time and even to invest at
regular intervals.
Close-ended schemes
Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such
scheme cannot issue new units except in case of bonus or rights issue? However, after
the initial issue, you can buy or sell units of the scheme on the stock exchanges where
they are listed. The market price of the units could vary from the NAV of the scheme
due to demand and supply factors, investors’ expectations and other market factors
22
Growth Funds
Growth funds primarily look for growth of capital with secondary emphasis on
dividend. Such funds invest in shares with a potential for growth and capital
appreciation. They invest in well-established companies where the company itself and
the industry in which it operates are thought to have good long-term growth potential,
and hence growth funds provide low current income. Growth funds generally incur
higher risks than income funds in an effort to secure more pronounced growth.
Some growth funds concentrate on one or more industry sectors and also invest in a
broad range of industries. Growth funds are suitable for investors who can afford to
assume the risk of potential loss in value of their investment in the hope of achieving
substantial and rapid gains. They are not suitable for investors who must conserve
their principal or who must maximize current income.
Growth and Income Funds
Growth and income funds seek long-term growth of capital as well as current income.
The investment strategies used to reach these goals vary among funds. Some invest in a
dual portfolio consisting of growth stocks and income stocks, or a combination of growth
stocks, stocks paying high dividends, preferred stocks, convertible securities or fixed-
income securities such as corporate bonds and money market instruments. Others may
invest in growth stocks and earn current income by selling covered call options on their
portfolio stocks.
Growth and income funds have low to moderate stability of principal and moderate
potential for current income and growth. They are suitable for investors who can assume
some risk to achieve growth of capital but who also want to maintain a moderate level of
current income.
Fixed-Income Funds
Fixed income funds primarily look to provide current income consistent with the
preservation of capital. These funds invest in corporate bonds or government-backed
mortgage securities that have a fixed rate of return. Within the fixed-income category,
funds vary greatly in their stability of principal and in their dividend yields. High-yield
funds, which seek to maximize yield by investing in lower-rated bonds of longer
maturities, entail less stability of principal than fixed-income funds that invest in higher-
rated but lower-yielding securities.
23
the Indian Government. Fixed-income funds are suitable for investors who want to
maximize current income and who can assume a degree of capital risk in order to do so.
Balanced
The Balanced fund aims to provide both growth and income. These funds invest in
both shares and fixed income securities in the proportion indicated in their offer
documents Ideal for investors, who are looking for a combination of income and
moderate growth.
2.4 How to Invest In Mutual Fund
These are steps given below to invest in Mutual Funds.
Step one - Identify investor’s Investment needs
Investor’s financial goals will vary, based on investor’s age, lifestyle, financial
independence, family commitments, and level of income and expenses among many
other factors. Therefore, the first step is to assess investor’s needs. You can begin by
defining investor’s investment objectives and needs which could be regular income,
buying a home or finance a wedding or educate investor’s children or a combination
of all these needs, the quantum of risk you are willing to take and investor’s cash flow
requirements.
Step Two - Choose the right Mutual Fund
The important thing is to choose the right mutual fund scheme, which suits investor’s
requirements. The offer document of the scheme tells you its objectives and provides
supplementary details like the track record of other schemes managed by the same
Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund
are the track record of the performance of the fund over the last few years in relation
to the appropriate yardstick and similar funds in the same category. Other factors
could be the portfolio allocation, the dividend yield and the degree of transparency as
reflected in the frequency and quality of their communications.
Step Three - Select the ideal mix of Schemes
Investing in just one Mutual Fund scheme may not meet all investor’s investment
needs. You may consider investing in a combination of schemes to achieve investor’s
specific goals.
Step Four - Invest regularly
The best approach is to invest a fixed amount at specific intervals, say every month.
By investing a fixed sum each month, you buy fewer units when the price is higher
and more units when the price is low, thus bringing down investor’s average cost per
unit. This is called rupee cost averaging and do investors all over the world follow a
disciplined investment strategy. You can also avail the systematic investment plan
facility offered by many open-end funds.
Step Five- Start early
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It is desirable to start investing early and stick to a regular investment plan. If you
start now, you will make more than if you wait and invest later. The power of
compounding lets you earn income on income and investor’s money multiplies at a
compounded rate of return.
Step Six - The final step
All you need to do then visit to www.njindia.com for online application forms of
various mutual fund schemes and start investing. You may reap the rewards in the
years to come. Mutual Funds are suitable for every kind of investor - whether starting
a career or retiring, conservative or risk taking, growth oriented or income seeking
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1. Number of Available Options
Mutual funds invest according to the underlying investment objective as specified at the
time of launching a scheme. So, they have equity funds, debt funds, gilt funds and many
others that cater to the different needs of the investor. The availability of these options
makes them a good option. While equity funds can be as risky as the stock markets
themselves, debt funds offer the kind of security that is aimed for at the time of making
investments. Money market funds offer the liquidity that is desired by big investors who
wish to park surplus funds for very short-term periods. Balance Funds faster to the
investors having an appetite for risk greater than the debt funds but less than the equity
funds. The only pertinent factor here is that the fund has to be selected keeping the risk
profile of the investor in mind because the products listed above have different risks
associated with them. So, while equity funds are a good bet for a long term, they may not
find favor with corporate or High Net worth Individuals (HNIs) who have short-term
needs.
2. Diversification
Investments are spread across a wide cross-section of industries and sectors and so the
risk is reduced. Diversification reduces the risk because all stocks don’t move in the same
direction at the same time. One can achieve this diversification through a Mutual Fund
with far less money than one can on his own.
3. Professional Management
Mutual Funds employ the services of skilled professionals who have years of experience
to back them up. They use intensive research techniques to analyze each investment
option for the potential of returns along with their risk levels to come up with the figures
for performance that determine the suitability of any potential investment.
26
4. Potential of Returns
Returns in the mutual funds are generally better than any other option in any other avenue
over a reasonable period of time. People can pick their investment horizon and stay put in
the chosen fund for the duration. Equity funds can outperform most other investments
over long periods by placing long-term calls on fundamentally good stocks. The debt
funds too will outperform other options such as banks. Though they are affected by the
interest rate risk in general, the returns generated are more as they pick securities with
different duration that have different yields and so are able to increase the overall returns
from the portfolio.
5. Liquidity
Fixed deposits with companies or in banks are usually not withdrawn premature because
there is a penal clause attached to it. The investors can withdraw or redeem money at the
Net Asset Value related prices in the open-end schemes. In closed-end schemes, the units
can be transacted at the prevailing market price on a stock exchange. Mutual funds also
provide the facility of direct repurchase at NAV related prices. The market prices of these
schemes are dependent on the NAVs of funds and may trade at more than NAV (known
as Premium) or less than NAV (known as Discount) depending on the expected future
trend of NAV, which in turn is linked to general market conditions. Bullish market may
result in schemes trading at Premium while in bearish markets the funds usually trade at
Discount. This means that the money can be withdrawn anytime, without much reduction
in yield. Some mutual funds however, charge exit loads for withdrawal within a period
linked to a specific scheme.
2.6 Net Asset Value (NAV):-
The net asset value of the fund is the cumulative market value of the assets fund net of its
liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the
assets in the fund, this is the amount that the shareholders would collectively own. This
gives rise to the concept of net asset value per unit, which is the value, represented by the
ownership of one unit in the fund. It is calculated simply by dividing the net asset value
of the fund by the number of units. However, most people refer loosely to the NAV per
unit as NAV, ignoring the "per unit". We also abide by the same convention.
The NAV of the units of the Scheme(s) will be computed by dividing the net assets of the
Scheme(s) by the number of Units outstanding on the valuation date.
Assets Value
27
sales literature, distribution, advertising and agent/broker commissions. The price at
which an investor buys into the fund is a function of both the NAV and sales load. For
instance, if the funds NAV is Rs 12 and the applicable sales load is 6 per cent, investor’s
cost of entry is Rs 12.77 (12/(1-0.06)). If the investor applied for Rs 10,000 worth of
units he would receive 783.085 units (10,000/12.77).
Exit load
If you withdraw within a specified period is charged while redeeming investor’s
units. The latter is for more logical reasons, especially with income or money market
funds, where a quick withdrawal by too many investors can put pressure on the fund's
asset maturity profile. So to ensure that longer-term investors are not penalized, short-
term investors are charged an exit load. But an exit load can also be applied by the AMC,
if it wants to prevent unit holders from selling their units. This happens when the fund
has done poorly against the benchmark index. An established fund can also manipulate
investor entry into a fund by charging or not charging a sales load. An AMC can charge a
stiff entry load if it wants to prevent more investor from pouring money into its schemes.
However, that rarely happens. More often, the AMC welcomes investors by
advertisements screaming "no load" if invested within a certain time frame. Smart
investors have to recognize this tactic used by an AMC.
28
closure of the initial subscription list and or from the date of receipt of the request from
the unit holders in any open ended scheme.
Rules Regarding Advertisement:
The offer document and advertisement materials shall not be misleading or contain any
statement or opinion, which are incorrect or false.
Investment Objectives and Valuation Policies:
The price at which the units may be subscribed or sold and the price at which such units
may at any time be repurchased by the mutual fund shall be made available to the
investors.
General Obligations:
Every asset management company for each scheme shall keep and maintain proper books
of accounts, records and documents, for each scheme so as to explain its transactions and
to disclose at any point of time the financial position of each scheme and in particular
give a true and fair view of the state of affairs of the fund and intimate to the Board the
place where such books of accounts, records and documents are maintained.
The financial year for all the schemes shall end as of March 31 of each year.
Every mutual fund shall have the annual statement of accounts audited by an auditor who
is not in any way associated with the auditor of the asset management company.
Procedure for Action In Case Of Default:
On and from the date of the suspension of the certificate or the approval, as the case may
be, the mutual fund, trustees or asset management company, shall cease to carry on any
activity as a mutual fund, trustee or asset management company, during the period of
suspension, and shall be subject to the directions of the Board with regard to any records,
documents, or securities that may be in its custody or control, relating to its activities as
mutual fund, trustees or asset management company.
Restrictions on Investments:
A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments
issued by a single issuer, which are rated not below investment grade by a credit rating
agency authorized to carry out such activity under the Act. Such investment limit may be
extended to 20% of the NAV of the scheme with the prior approval of the Board of
Trustees and the Board of Asset Management Company.
A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt
instruments issued by a single issuer and the total investment in such instruments shall
not exceed 25% of the NAV of the scheme. All such investments shall be made with the
prior approval of the Board of Trustees and the Board of Asset Management Company.
No mutual fund under all its schemes should own more than ten per cent of any
company's paid up capital carrying voting rights.
Such transfers are done at the prevailing market price for quoted instruments on spot
basis.
29
The securities so transferred shall be in conformity with the investment objective of the
scheme to which such transfer has been made.
A scheme may invest in another scheme under the same asset management company or
any other mutual fund without charging any fees, provided that aggregate inter scheme
investment made by all schemes under the same management or in schemes under the
management of any other asset management company shall not exceed 5% of the net
asset value of the mutual fund.
The initial issue expenses in respect of any scheme may not exceed six per cent of the
funds raised under that scheme.
Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all
cases of purchases, take delivery of relative securities and in all cases of sale, deliver the
securities and shall in no case put itself in a position whereby it
has to make short sale or carry forward transaction or engage in badla finance.
Every mutual fund shall, get the securities purchased or transferred in the name of the
mutual fund on account of the concerned scheme, wherever investments are intended to
be of long-term nature.
Pending deployment of funds of a scheme in securities in terms of investment objectives
of the scheme a mutual fund can invest the funds of the scheme in short term deposits of
scheduled commercial banks.
No mutual fund scheme shall make any investment in;
Any unlisted security of an associate or group company of the sponsor; or
Any security issued by way of private placement by an associate or group company of the
sponsor
30
The nature of investment in the financial sense differs from its use in the economic sense.
To the economist, ‘Investment’ means the net additions to the economy’s capital stock,
which consists of goods, and services that are used in production of other goods and
services.
The financial and economic meanings of investment are related to each other because
investment is a part of the savings of individuals, which flow into the capital market
directly or through institutions, dividend in ‘new’ and secondhand capital financing.
Investor as ‘suppliers’ and investors as ‘users’ of long-term funds find a meeting place in
the market. In this book however, investment will be used in its ‘financial sense’ and
investment will include those instruments and institutional media into which savings are
placed.
3.1.1 Reasons for Investments
Investments are both important and useful in the context of present-day conditions. Some
factors that have made investment decisions increasingly important are:
Longer life expectancy:
Investment decisions have become significant as most people in India retire between the
ages of 55 to 60 years. Also, the trend shows longer life expectancy. The earning from
employment should, therefore be calculated in such a manner that a portion should be put
away as a savings. Savings by themselves do not increase wealth; these must be invested
in such a way that the principal and income will be adequate for a greater number of
retirement years.
The importance of investment decisions is further enhanced by the fact that there are an
increasing number of women working in organizations. These women will be responsible
for planning their own investments during their working in organizations. These women
will be responsible for planning their own investments during their working life so that
after retirement, they are able to have a stable income.
Increasing in the working population, proper planning for life span and longevity have
ensured the need for balanced investments
Increasing Rate of Taxation:
Taxation is one of crucial factors in any country, which introduces an element of
compulsion in a person’s savings. There are various forms of savings outlets in our
country in the form of investments which helps in bring down the tax level by offering
deductions in personal income. These will be discussed in greater detail under availability
of investment Options later in the chapter. Some examples, however, may be cited hare.
Benefits in tax accrue out of investment in Equity Link Savings Scheme (ELSS), Unit
Linked Insurance Plan, Life Insurance, National Savings Certificates, Development
Bonds, and Post Office Cumulative Deposit Schemes etc.
Interest Rate:
Another aspect, which is necessary for a sound investment plan, is the level of interest
rates. Interest rates vary between one investment and another. These may vary between
risky and safe investments; they may also differ due to different benefit schemes offered
by the investments. These aspects must be considered before actually allocating any
31
amount. A high rate of interest may not be the only factor favoring the outlets for
investment. The investor has to include in his portfolio several kinds of investments.
Stability of interest is as important as receiving a high rate of interest. This book is
concerned with determining whether the investor is getting an acceptable return
commensurate with the risks that are taken.
Inflation:
Inflation has become continues problem since the last decade. In these years of rising
prices, several problems are associated coupled with a falling standard of living. Before
funds are invested, erosion of the resources will have to be carefully considered in odder
to make the right choice of investor will try and search an outlet which will give him a
high rate of return in the form of interest or return will be continuous or there is a
likelihood of irregularity. Coupled with high rate of interest, he will have to find outlets,
which will ensure safety of principal. Besides high rate of Interest and safety of principal,
an investor also has to always bear in mind the taxation burden. Otherwise, the benefit
derived from interest will be offset by an increase in taxation.
Income:
Another reason why investment decisions have assumed importance is the general
increase in employment opportunities in India. After independence, with the stages of
development in the country, a number of new organizations and services were formed.
The Banking Recruitment Services, the Indian Administrative Services, Public Sector
Enterprises, expansion in the Private Corporate Sector, establishing of Financial
Institutions, Tourism, Hotels, and Education are some examples. The employment
opportunities gave rise to both male and female working force. More incomes and more
avenues of investment have led to the ability and willingness of working people to save
and investments have led to the ability and willingness of working people to save and
invest their funds.
Investment Channels:
The growth and development of the country leading to greater economic activity has led
to the introduction of a vast array of investment outlets. Apart from putting aside savings
in savings in savings banks where interest is low, investors have the choice of a variety of
instruments. The question to reason out is which is the most suitable channel? Which
Options will give a balanced growth and stability of return? The investor in his choice of
investment will have to try and achieve a proper mix between high rate of return and
stability of return to reap the benefits of both. Some of the instruments available are
corporate stock, provident fund, life insurance, fixed deposit in the corporate sector,
Mutual fund Schemes and so on. These will be discussed in greater detail in the head of
Investment Options.
Investment Options
Many types of investment Options or channels for making investment are available. A
sound investment program can be constructed if the investor familiarizes himself with the
various alternative investments available. Investment Options are of several kinds- some
are simple and direct, other present complex problems of analysis and investigation.
32
Some are familiar; others are relatively new and unidentified. Some investments are
appropriate for one type of investor and another may be suitable to another person.
The ultimate objective of the investor is to derive a variety of investments that meet this
preference for risk and expected return. The investor will select the portfolio, which will
maximize his utility. Security presents a wide range of risk from risk-free instruments to
highly speculative shares and debentures. From this board spectrum, the investor will
have to select those securities that maximize his utility. The investor, in other words, has
a optimization problems. He has to choose the security, which will maximize his
expected returns subject to certain considerations. The investment decision is an
optimization problem but the objective function varies from investor to investor. It is not
only the construction of a portfolio that will promise the highest expected return but also
it is the satisfaction of the need of the investor. For instance, one investor may face a
situation when he requires extreme liquidity. He may also want safety of securities.
Therefore, he will have to choose a security with low returns, another investor would not
mi9nd risk because he dose not have financial problems but he would like a high return.
Such an investor can put his savings in growth shares, as he is willing to accept risk.
Another important consideration is the temperament and psychology of the investor.
Some investors are temperamentally suited to take risks, there is other who is not willing
to invest in risky securities even if the return to take risks, there are others who are not
willing to invest in risky securities even if the return is high. One investor may prefer safe
government bonds whereas another may be willing to invest in blue chip equity shares of
a company.
CORPORATE PROFILE
SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track
record in judicious investments and consistent wealth creation.
The fund traces its lineage to SBI - India’s largest banking enterprise. The institution has
grown immensely since its inception and today it is India's largest bank, patronised by
over 80% of the top corporate houses of the country.
SBI Mutual Fund is a joint venture between the State Bank of India and Société Générale
Asset Management, one of the world’s leading fund management companies that
manages over
US$ 330 Billion worldwide.
Exploiting expertise, compounding growth
In eighteen years of operation, the fund has launched thirty-two schemes and
successfully redeemed fifteen of them. In the process it has rewarded it’s
investors handsomely with consistently high returns.
33
A total of over 3.8 million investors have reposed their faith in the wealth
generation expertise of the Mutual Fund.
Schemes of the Mutual fund have consistently outperformed benchmark indices
and have emerged as the preferred investment for millions of investors and HNI’s.
Today, the fund manages over Rs. 20000 crores of assets and has a diverse profile
of investors actively parking their investments across 40 active schemes.
The fund serves this vast family of investors by reaching out to them through
network of over 100 points of acceptance, 26 investor service centres, 33 investor
service desks and 52 district organisers.
SBI Mutual is the first bank-sponsored fund to launch an offshore fund –
Resurgent India Opportunities Fund .
Growth through innovation and stable investment policies is the SBI MF credo.
MANAGEMENT TEAM
Chief Investment Officer :
Sanjay Sinha
Mr. Sanjay Sinha has taken over as Chief Investment Officer with effect from
June 1, 2007. Mr. Sinha joined SBI Mutual Fund as the Head of Equities in
November 2005 and has managed the largest number of funds in SBI MF covering
the entire spectrum of equity funds – from index funds, diversified equity funds to
sector funds.
He has over 18 years of experience in the Mutual Fund Industry. Prior to joining
SBI MF, Mr. Sinha worked as Senior Fund Manager with UTI Mutual Fund and
was managing a corpus of over Rs 28 billion (over US$600 million). A Post
Graduate from IIM Kolkatta, Mr. Sanjay Sinha has a rich experience in managing
funds.
Head Investment Risk & Process Control :
Eric Bramoull é - Head Investment Risk & Process Control
Eric post-graduated from La Sorbonne University with a DESS in Bank &
Finance. He worked 7 years as equity portfolio manager at SGAM before joining
SBI Funds Management Pvt. Ltd. in May 2005 handling institutional and mutual
34
funds invested in European and International markets. Eric specialized in the
commodity sector and the use of derivatives. Eric is also a post-graduate of SFAF
(diploma from European Federation of Financial Analysts Societies).
Head Portfolio Management Services / Fund Manager :
Nipa Ladiwala
After obtaining a post graduate degree in Business Management and Law, Nipa
worked as an equity analyst, and dealer for the offshore Funds of UTI.
Subsequently she was appointed as Fund Manager for India Growth Fund, which
was listed on NYSE. She was head of Research at UTI Securities before joining
SBI Funds Management Pvt. Ltd. as Head of PMS. Nipa has 6 years experience as
Fund Manager. She has a total of 15 years experience and has been with SBI
Funds Management Pvt. Ltd since October 2005.
Equity :
Aashish Wakankar (Vice President & Fund Manager)
Aashish Wakankar is a Bachelor of Science from University of Mumbai and holds
Post Graduate Diploma in Management Studies from Jamnalal Bajaj Institute of
Management Studies, University of Mumbai. He has more than 12 years of
experience in capital markets ranging from institutional equities, equity research
and fund management. He is associated with SBI Funds Management from
December 2005.
Prior to joining SBI Funds Management, he has worked with Kotak Mahindra Asset
Management, Deutsche Asset Management - part of Deutsche Bank Group, and TATA
TD Waterhouse Securities - a joint venture between the TATA Group, India and TD
Bank Financial Group, Canada. At Deutsche Asset Management, he was responsible for
advising the offshore fund Deutsche India Equity Fund, Japan and MetLife Insurance.
Debt / Fixed Income :
EQUITY SCHEME
The investments of these schemes will predominantly be in the stock markets and
endeavor will be to provide investors the opportunity to benefit from the higher returns
which stock markets can provide. However they are also exposed to the volatility and
attendant risks of stock markets and hence should be chosen only by such investors who
have high risk taking capacities and are willing to think long term. Equity Funds include
diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds
invest in various stocks across different sectors while sectoral funds which are specialized
Equity Funds restrict their investments only to shares of a particular sector and hence, are
riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of
a particular index and the performance of such funds move with the movements of the
index.
35
Magnum Global Fund
Magnum Index Fund
Magnum MidCap Fund
Magnum Multicap Fund
Magnum Multiplier Plus 1993
Magnum Sector Funds Umbrella
MSFU - FMCG Fund
MSFU - Emerging Businesses Fund
MSFU - IT Fund
MSFU - Pharma Fund
MSFU - Contra Fund
SBI Arbitrage Opportunities Fund
SBI Blue chip Fund
SBI Infrastructure Fund - Series I
SBI Magnum Taxgain Scheme 1993
SBI ONE India Fund
DEBTS SCHEMES
36
MSFU - Contra Fund
SBI Arbitrage Opportunities Fund
SBI Blue chip Fund
SBI Infrastructure Fund - Series I
SBI Magnum Taxgain Scheme 1993
SBI ONE India Fund
BALANCED SCHEMES
Magnum Balanced Fund invest in a mix of equity and debt investments. Hence they are
less risky than equity funds, but at the same time provide commensurately lower returns.
They provide a good investment opportunity to investors who do not wish to be
completely exposed to equity markets, but is looking for higher returns than those
provided by debt funds.
Vision
To be a dominant player in the Indian mutual fund space, recognized for its high levels of
ethical and professional conduct and a commitment towards enhancing investor interests.
investment Objective
Nifty Plan:
The objective of this Plan is to generate returns that are commensurate with the
performance of the Nifty, subject to tracking errors
37
Nature of Scheme Open Ended Index Linked Scheme
Inception Date July 17, 2002
Option/Plan Growth Plan.
Entry Load
(as a % of the Applicable Nil
NAV)
Exit Load In respect of each purchase / switch-in of Units upto
(as a % of the Applicable and including Rs.5 lakh in value, an Exit Load of
NAV) 1.00% is payable if Units are redeemed within one
year from the date of allotment.
In respect of each purchase / switch-in of Units
greater than Rs. 5 lakh in value, no Exit Load is
payable.
For new investors :Rs.5000 and in multiples of
Rs.100 thereafter .
Minimum Application Amount
For existing investors : Rs. 1000 and in multiples of
Rs. 100 thereafter.
Lock-In-Period Nil
Net Asset Value Periodicity Every Business Day.
Redemption Proceeds Normally despatched within 3 Business days
Tax Benefits
(As per present Laws)
Investment Pattern
The net assets of the Plan will be invested predominantly in stocks constituting the S&P
CNX Nifty and / or in exchange traded derivatives on the S&P CNX Nifty. This would be
done by investing in almost all the stocks comprising the S&P CNX Nifty in
approximately the same weightage that they represent in the S&P CNX Nifty Index and /
or investing in derivatives including futures contracts and options contracts on the S&P
CNX Nifty Index. A small portion of the net assets will be invested in money market
instruments permitted by SEBI / RBI including call money market or in alternative
investment for the call money market as may be provided by the RBI, to meet the liquidity
requirements of the Plan.
38
The SENSEX Plan and the Nifty Plan will be managed passively with investments in
stocks in a proportion that is as close as possible to the weightages of these stocks in the
respective indices. The investment strategy would revolve around reducing the tracking
error to the least possible through regular rebalancing of the portfolio, taking into account
the change in weights of stocks in the indices as well as the incremental collections /
redemptions from these Plans.
The SENSEX Plus Plan will be passively managed to the extent of 80-90% of the net
assets of the Plan and would follow similar investment strategy as for the SENSEX and
the Nifty Plan, for this component. The actively managed portion of 10-20% of net assets
of the Plan would be invested in stocks that have been identified as having high
probability to outperform the SENSEX. The Investment Manager would follow the
process of in-depth research to identify such candidates from stocks other than those
comprising the SENSEX, for potential investment.
RISK CONTROL
For the SENSEX Plan, the Nifty Plan and the proportion of the SENSEX Plus Plan that
would be managed similar to the SENSEX Plan, risks would be the impact cost on
securities, the delayed communication of weightage changes by the index service
providers and the delayed calculation of net change in assets of each of the Plans, amongst
others.
It is proposed to manage the risks by placing limit orders for basket trades and other
trades, proactive follow-up with the service providers for daily change in weights in the
respective indices as well as monitor daily inflows and outflows to and from the Fund
closely.
While these measures are expected to mitigate the above risks to a large extent, there can
be no assurance that these risks would be completely eliminated.
Risk control for the actively managed portion of the SENSEX Plus Plan would entail
setting limits for single stock and single industry exposures by the Investment committee
for this portion, subject to SEBI Regulations.
Management :
39
Management Company Limited to manage the Mutual Fund. The paid up capital of the
AMC is Rs. 75.161 crore.
% OF THE PAID UP
PARTICULARS
SHARE CAPITAL
HDFC 50.10
Standard Life Investments
49.90
Limited
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a
review of its overall strategy, had decided to divest its Asset Management business in
India. The AMC had entered into an agreement with ZIC to acquire the said business,
subject to necessary regulatory approvals. On obtaining the regulatory approvals, the
Schemes of Zurich India Mutual Fund has now migrated to HDFC Mutual Fund on June
19, 2003. The AMC is managing 18 open-ended schemes of the Mutual Fund viz. HDFC
Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF), HDFC
Liquid Fund (HLF), HDFC Tax Plan 2000 (HTP), HDFC Children's Gift Fund (HDFC
CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP), HDFC Index Fund,
HDFC Floating Rate Income Fund (HFRIF), HDFC Equity Fund (HEF), HDFC Top 200
Fund, (HT200), HDFC Capital Builder Fund (HCBF), HDFC TaxSaver (HTS), HDFC
Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC Sovereign Gilt Fund
(HSGF) and HDFC Cash Management Fund (HCMF). The AMC is also managing the
respective Plans of HDFC Fixed Investment Plan, a closed ended Income Scheme. The
AMC has obtained registration from SEBI vide Registration No. - PM / INP000000506
dated December 22, 2000 to act as a Portfolio Manager under the SEBI (Portfolio
Managers) Regulations, 1993. The Certificate of Registration is valid from January 1,
2001 to December 31, 2003. The AMC is also providing portfolio management / advisory
services and such activities are not in conflict with the activities of the Mutual Fund.
Sponsors
HDFC was incorporated in 1977 as the first specialised mortgage company in India.
HDFC provides financial assistance to individuals, corporates and developers for the
purchase or construction of residential housing. It also provides property related
services (e.g. property identification, sales services and valuation), training and
consultancy. Of these activities, housing finance remains the dominant activity.
HDFC has a client base of around 9.5 lac borrowers, around 1 million depositors,
over 91,000 shareholders and 50,000 deposit agents as at March 31, 2007. HDFC has
40
raised funds from international agencies such as the World Bank, IFC (Washington),
USAID, DEG, ADB and KfW, international syndicated loans, domestic term loans
from banks and insurance companies, bonds and deposits. HDFC has received the
highest rating for its bonds and deposits program for the twelfth year in succession.
HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first
life insurance company in the private sector to be granted a Certificate of Registration
(on October 23, 2000) by the Insurance Regulatory and Development Authority to
transact life insurance business in India.
The Standard Life Assurance Company was established in 1825 and has considerable
experience in global financial markets. The company was present in the Indian life
insurance market from 1847 to 1938 when agencies were set up in Kolkata and
Mumbai. The company re-entered the Indian market in 1995, when an agreement was
signed with HDFC to launch an insurance joint venture. On April 2006, the Board of
The Standard Life Assurance Company recommended that it should demutualise and
Standard Life plc float on the London Stock Exchange. At a Special General Meeting
held in May voting members overwhelmingly voted in favour of this. The Court of
Session in Scotland approved this in June and Standard Life plc floated on the
London Stock Exchange on 10 July 2006. Standard Life Investments was launched as
an investment management company in 1998. It is a wholly owned subsidiary of
Standard Life Investments (Holdings) Limited, which in turn is a wholly owned
subsidiary of Standard Life plc. Standard Life Investments is a leading asset
management company, with approximately US$ 269 billion as at March 30, 2007, of
assets under management. The company operates in the UK, Canada, Hong Kong,
China, Korea, Ireland and the USA to ensure it is able to form a truly global
investment view. In order to meet the different needs and risk profiles of its clients,
Standard Life Investments Limited manages a diverse portfolio covering all of the
major markets world-wide, which includes a range of private and public equities,
government and company bonds, property investments and various derivative
instruments. The company's current holdings in UK equities account for
approximately 1.8% of the market capitalisation of the London Stock Exchange.
INTRODUCTION
UTI Mutual Fund is managed by UTI Asset Management Company Private Limited
(Estb: Jan 14, 2003) who has been appointed by the UTI Trustee Company Private
Limited for managing the schemes of UTI Mutual Fund and the schemes transferred /
migrated from UTI Mutual Fund.
41
The UTI Asset Management Company has its registered office at : UTI Tower, Gn
Block, Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051 will provide
professionally managed back office support for all business services of UTI Mutual
Fund (excluding fund management) in accordance with the provisions of the
Investment Management Agreement, the Trust Deed, the SEBI (Mutual Funds)
Regulations and the objectives of the schemes. State-of-the-art systems and
communications are in place to ensure a seamless flow across the various activities
undertaken by UTI AMC.
UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)
Regulations, 1993 on February 3 2004, for undertaking portfolio management
services and also acts as the manager and marketer to offshore funds through its 100
% subsidiary, UTI International Limited, registered in Guernsey, Channel Islands.
UTI Mutual Fund has come into existence with effect from 1st February 2003. UTI
Asset Management Company presently manages a corpus of over Rs. 34500 Crore.
UTI Mutual Fund has a track record of managing a variety of schemes catering to the
needs of every class of citizenry. It has a nationwide network consisting 70 UTI
Financial Centers (UFCs) and UTI International offices in London, Dubai and
Bahrain. With a view to reach to common investors at district level, 4 satellite offices
have also been opened in select towns and districts. It has a well-qualified,
professional fund management team, who have been highly empowered to manage
funds with greater efficiency and accountability in the sole interest of unit holders.
The fund managers are also ably supported with a strong in-house equity research
department. To ensure better management of funds, a risk management department is
also in operation.
It has reset and upgraded transparency standards for the mutual funds industry. All
the branches, UFCs and registrar offices are connected on a robust IT network to
ensure
cost effective quick and efficient service. All these have evolved UTI Mutual Fund to
position as a dynamic, responsive, restructured, efficient, and transparent and SEBI
compliant entity.
SPONSORS
Three leading public sector banks – Bank of Baroda (BOB), Punjab National Bank
(PNB) and State Bank of India (SBI) and Life Insurance Corporation of India (LIC),
the largest public financial investment institution and life insurer in India have
entered into an agreement with the Government of India as Sponsors of the UTI
Mutual Fund.
Bank of Baroda
Bank of Baroda was established in July 1908 by Maharaja - Sir Sayajirao Gaikwad III.
During the period since inception, it has always maintained its practice of sound value
based banking to emerge as one of the premier public sector Banks of the country
today. It has a track record of uninterrupted profits since inception in 1908. The
financial strength of the Bank and its long tradition of efficient customer service are
42
drawn substantially from the extensive reach of its 2,715 strong branch network (as of
31.03.2003) covering almost every State and Union Territory in the Country. The
Bank is also one of the few Indian Banks with a formidable presence overseas with 38
branches. Thus, the total branch network is 2,753 as at 31.03.2003.
TheLife
sponsors are notCorporation
Insurance responsible nor liable for any loss resulting from the operation of
of India
all the schemes
Life of UTI
Insurance Mutual Fund
Corporation beyond
of India (LIC)the
is contribution
amongst the of an amount
largest of Rs.10,000/-
insurance companies
made by them towards setting up of the UTI Mutual Fund.
in the world, serving over 10 crore policy holders and managing a Fund of over Rs.-
186000 crores.
Systematic Investment Plan (SIP)
State Bank
A mutual fund isofa India
trust. It pools money from like-minded shareholders and invests in
diversified portfolioof
The State Bank ofIndia is the through
securities, largest public
varioussector bankthat
schemes in India with
address 9033 branches
different needs of
in India
investors. andpool
The 48 offices
of money in 28 countries
thus worldwide.
collected In addition
is then invested by thetoAsset
this, SBI also has 17
Management
subsidiaries.
Company (AMC) in different types of securities. These could include shares, debentures,
convertibles, bonds, money market instruments or other securities, based on the
investment objective of a particular scheme. Such objective is clearly laid down in the
offer document for that scheme. The fund adds value to the investment in two ways:
income earned and any capital appreciation realised through sale. This is shared by unit
holders in proportion to the number of units they own.
An investor can opt for systematic transfer of fixed amount or of the Capital Appreciation
on investment in the scheme to any desired scheme on a monthly or quarterly basis. STP
of Capital Appreciation is available only under the Growth plan and not under Dividend
Plan. The amount of transfer under STP will be considered as redemption and will be
made at the applicable redemption price on the day of transfer and at the applicable load,
if any.
43
CHAPTER:4 ABOUT THE RELIANCE
MUTUAL FUND COMPANY
Reliance Capital Asset Management Ltd. has a vision of being a leading player in the
Mutual Fund business and has achieved significant success and visibility in the market.
However, an imperative part of growth and visibility is adherence to Good Conduct in the
marketplace. At Reliance Capital Asset Management Ltd., the implementation and
observance of ethical processes and policies has helped us in standing up to the scrutiny
of our domestic and international investors.
Management :
The management at Reliance Capital Asset Management Ltd. is committed to good
44
Corporate Governance, which includes transparency and timely dissemination of
information to its investors and unitholders. The Reliance Capital Asset Management
Limited Board is a professional body, including well-experienced and knowledgeable
Independent Directors. Regular Audit Committee meetings are conducted to review the
operations and performance of the company.
Employees :
Reliance Capital Asset Management Ltd. has a preset code of conduct for all its officers.
It has a clearly defined prohibition on insider trading policy and regulations. The
management believes in the principles of propriety and utmost care is taken while
handling public money, making proper and adequate disclosures.
All personnel at Reliance Capital Asset Management Ltd. are made aware of the dos and
donts as part of the Dealing policy laid down by the Securities and Exchange Board of
India (SEBI). They are taken through a well-designed HR program, conducted to impart
work ethics, the Code of Conduct, information security, Internet and e-mail usage and a
host of other issues.
One of the core objectives of Reliance Capital Asset Management Ltd. is to identify
issues considered sensitive by global corporate standards, and implement
policies/guidelines in conformity with the best practices as an ongoing process.
Reliance Capital Asset Management Ltd. gives top priority to compliance in true letter
and spirit, fully understanding its fiduciary responsibilities.
The AMC
About Reliance Capital Asset Management Ltd.
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 is a wholly owned subsidiary of Reliance
Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset
Management Limited is held by Reliance Capital Limited.
Reliance Capital Asset Management Limited 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 including preference shares as on March 31, 2005 is Rs.30.13
crores. Reliance Mutual Fund has launched twenty five Schemes till date, namely:
Reliance Vision Fund (September 1995), Reliance Growth Fund (September 1995)
Reliance Income Fund (December 1997), Reliance Liquid Fund (March 1998), Reliance
Medium Term Fund (August 2000), Reliance Short Term Fund (December 2002),
Reliance Fixed Term Scheme (March 2003), Reliance Banking Fund (May 2003),
Reliance Gilt Securities Fund (July 2003), Reliance Monthly Income Plan (December
2003), Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund
( May 2004), Reliance Floating Rate Fund (August 2004), Reliance Media &
Entertainment Fund (September 2004), Reliance NRI Equity Fund (October 2004),
45
Reliance NRI Income Fund (October 2004), Reliance Index Fund (January 2005),
Reliance Equity Opportunities Fund (February 2005), Reliance Fixed Maturity Fund -
Series I (March 2005), Reliance Fixed Maturity Fund - Series II (April 2005), Reliance
Regular Saving Fund (May 2005), Reliance Liquidity Fund (June 2005), Reliance Tax
Saver (ELSS) Fund (July 2005), Reliance Fixed Tenor Fund (November 2005) and
Reliance Equity Fund (Feb 2006).
RCAM has been registered as a portfolio manager vide SEBI Registration No.
INP000000423 and renewed effective 1st August, 2003.
RCAM has commenced these activities. It has been ensured that key personnel of the
AMC, the systems, back office, bank and securities accounts are segregated activity wise
and there exists systems to prohibit access to inside information of various activities. As
per SEBI Regulations, it will further ensure that AMC meets the capital adequacy
requirements, if any, separately for each such activity.
RCAM has been appointed as the Investment Manager of "Reliance India Power Fund", a
Venture Capital Fund registered with SEBI vide Registration no.IN/VCF/05-06/062 dated
June 16, 2005 but this activity is yet to commence.
46
Partner :
M/s T.R. Chadha & Co., Chartered Accountants
(Former Secretary to
Government of India,
Ministry of Petroleum & Natural
Gas /
Ministry of Education)
Auditors
Statutory Auditor to the Schemes of Reliance Mutual Fund :
Haribhakti & Co.
Chartered Accountants
42, Free Press House,
Nariman Point, Mumbai - 400 021.
Internal Auditor to the Schemes of Reliance Mutual Fund :
Price Waterhouse Coopers.
Chartered Accountants
252, Veer Savarkar Marg,
Shivaji Park, Dadar,
Mumbai - 400 028.
47
Mutual Fund. M/s. Karvy Computershare Pvt. Limited (KCL) having their office at
No.21, Avenue 4, Street No.1, Adjacent to Rainbow Hospital, Banjara Hills, Hyderabad -
500 034, is a Registrar and Transfer Agent registered with SEBI under registration no.
INR000000221.
Reliance Capital Asset Management Ltd. and the Trustee have satisfied themselves, after
undertaking appropriate due diligence measures, that they can provide the services
required and have adequate facilities, including systems facilities and back up, to do so.
The Trustee has also laid down broad parameters for supervision of the Registrar. As
Registrar to the Schemes, KCL will accept and process investor's applications, handle
communications with investors, perform data entry services, despatch Account
Statements and also perform such other functions as agreed, on an ongoing basis.
The Registrar is responsible for carrying out diligently the functions of a Registrar and
Transfer Agent and will be paid fees as set out in the agreement entered into with it and
as per any modification made thereof from time to time.
Management Team
Board of Directors
Amitabh Chaturvedi
Kanu Doshi
Manu Chadha
Sushil Tripathi
Management Team
President
Vikrant Gugnani
48
Head Fixed Income Amitabh Mohanty
Head Of Departments
Zonal Heads
49
Fax No.:+91 22 3041 4818 / 3041 4899.
Email : customer_care@reliancemutual.com
50
Tel No.: 0141 - 3293185
Contact Person : Ashish Purohit
Email :
ashish.m.purohit@reliaceada.com
51
(An Open Ended Index Linked Scheme.) The Investment Objective under the Nifty Plan
is to replicate the composition of the Nifty, with a view to endeavor to generate returns,
which could approximately be the same as that of Nifty. The Investment Objective under
the Sensex plan is to replicate the composition of the Sensex, with a view to endeavor to
generate returns, which could approximately be the same as that of Sensex.
Reliance NRI Equity Fund :
(An open-ended Diversified Equity Scheme.) The Primary investment objective of the
scheme is to generate optimal returns by investing in equity or equity related instruments
primarily drawn from the Companies in the BSE 200 Index.
Debt Schemes :
Reliance Monthly Income Plan :
(An Open Ended Fund. Monthly Income is not assured & is subject to the availability of
distributable surplus ) The Primary investment objective of the Scheme is to generate
regular income in order to make regular dividend payments to unitholders and the
secondary objective is growth of capital.Primarily the investment shall be made in debt
and money market securities (i.e. 80%) with a small exposure (i.e. upto 20%) in equity.
Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt Plan :
Open-ended Government Securities Scheme) The primary objective of the Scheme is to
generate Optimal credit risk-free returns by investing in a portfolio of securities issued
and guaranteed by the central Government and State Government
52
regular returns / growth of capital by investing in a portfolio of fixed income securities
normally maturing in line with the time profile of the plan with the objective of limiting
interest rate volatility.
Reliance Floating Rate Fund :
(An Open End Income Scheme) The primary objective of the scheme is to generate
regular income through investment in a portfolio comprising substantially of Floating
Rate Debt Securities (including floating rate securitised debt and Money Market
Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The
scheme shall also invest in Fixed rate debt Securities (including fixed rate securitised
debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed
returns
Reliance NRI Income Fund :
(An Open-ended Income scheme) The primary investment objective of the Scheme is to
generate optimal returns consistent with moderate levels of risks. This income may be
complimented by capital appreciation of the portfolio. Accordingly, investments shall
predominantly be made in debt Instruments.
Reliance Fixed Maturity Fund - Series I :
(A Close Ended Income Scheme)
The primary investment objective of the Scheme is to seek to achieve regular returns /
growth of capital by investing in a portfolio of fixed income securities normally maturing
in line with the time profile of the Plan with the objective of limiting interest rate
volatility.
Reliance Fixed Maturity Fund - Series II :
(A closed ended Income Scheme) The primary investment objective of the Scheme is to
seek to achieve growth of capital by investing in a portfolio of fixed income securities
normally maturing in line with the time profile of the respective plans.
Reliance Liquidity Fund :
(An Open - ended Liquid Scheme) The investment objective of the Scheme is to generate
optimal returns consistent with moderate levels of risk and high liquidity. Accordingly,
investments shall predominantly be made in Debt and Money Market Instruments.
Reliance Regular Savings Fund :
(An Open - ended scheme)
The Investment Objectives :
Debt Option : The primary investment objective of this plan is to generate optimal
returns consistent with moderate level of risk. This income may be complemented by
capital appreciation of the portfolio. Accordingly investments shall predominantly be
made in Debt & Money Market Instruments.
Equity Option : The primary investment objective is to seek capital appreciation and or
consistent returns by actively investing in equity / equity related securities.
Hybrid Option : The primary investment objective is to generate consistent return by
investing a major portion in debt & money market securities and a small portion in equity
& equity related instruments.
Sector Specific Schemes
Sector Funds are specialty funds that invest in stocks falling into a certain sector of the
economy. Here the portfolio is dispersed or spread across the stocks in that particular
sector. This type of scheme is ideal for investors who have already made up their mind to
53
confine risk and return to a particular sector.
Reliance Banking Fund
Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the
primary investment objective to generate continuous returns by actively investing in
equity / equity related or fixed income securities of banks.
Reliance Diversified Power Sector Fund
Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme.
The primary investment objective of the Scheme is to seek to generate consistent returns
by actively investing in equity / equity related or fixed income securities of Power and
other associated companies.
Reliance Pharma Fund
Reliance Pharma Fund is an Open-ended Pharma Sector Scheme.
The primary investment objective of the Scheme is to generate consistent returns by
investing in equity / equity related or fixed income securities of Pharma and other
associated companies.
Reliance Media & Entertainment Fund
Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector
scheme.
The The primary investment objective of the Scheme is to generate consistent returns by
investing in equity / equity related or fixed income securities of media & entertainment
and other associated companies.
NAVs
Net Asset Value (NAV) is the actual value of one unit of a given scheme for a given
business day.
Units in the schemes are alloted on the basis of the Sale Price, which is calculated as
follows :
Units in the schemes are repurchased on the basis of Repurchase Price, which is
calculated as follows :
Latest NAVs
54
Schemes 07 Aug 08 Aug Change %
2007 2007 Change
Nifty Plan Growth Plan Bonus Option 17.0490 17.4269 0.38 2.18
Sensex Plan Growth Plan Bonus Option 21.9782 22.4731 0.49 2.18
55
Nifty Plan Growth Plan Growth Option 17.0490 17.4269 0.38 2.18
56
Dividend Plan 24.6767 25.3212 0.64 2.53
Retail Plan Growth Plan Growth Option 16.0863 16.0700 -0.02 -0.12
57
Reliance Fixed Horizon Fund Plan C
58
Retail Plan - Annual Plan I - Series I - 10.7968 10.7978 0.00 0.00
Growth Option
Annual Plan - Series III - Retail Growth 10.6142 10.6139 0.00 0.00
Plan
Annual Plan - Series III - Retail Growth 10.4648 10.4509 -0.01 -0.10
Plan
59
Annual Plan Series II - 10.3855 10.3771 -0.01 -0.10
INSTITUTIONAL DIVIDEND PLAN
60
Deutsche Bank AG
Bankers to the Schemes of Reliance Capital Asset Management
61
Standard Chartered Bank Deutsche Bank AG
62
Reliance Medium Term Fund
(Redemption)
Reliance Monthly Income Plan
(Redemption)
Reliance Income Fund (Redemption)
Reliance Banking Fund (Redemption
63
10/5/04 81.49 1.23 100.00
Average Cost = Total Cash Outflow / Total Number of units = Rs. 600 / 7.60 = Rs. 78.91
Average Price = Sum of all NAVs at which you have invested / Number of months of
investment = Rs. 475.75 / 6 = Rs. 79.29 Average Cost < Average Price Note: Above table
uses historical NAVs for illustration purpose. Past NAVs of a scheme are no indicator of
future NAVs.
Start early - The power of compounding
Suppose A & B invest Rs. 100 every month earning interest @ 8% p.a. on a monthly
compounding basis. A starts at the age of 25 years & B starts at the age of 35 years. Both
of them invest for 5 years (Rs. 6000) & hold their investments till 60 years of age. A’s
investment would have appreciated to approx. Rs. 74,430 whereas B’s investment would
have grown to approx.
Rs. 34,475 only. Thus, A’s investment would have almost doubled by just starting earlier
than B.
Past performance may or may not be sustained in future.
64
Period 1 Year 3 Year 5 Year Since
inception
How to invest?
Select Reliance Mutual Fund schemes of your choice.
Under the Reliance Systematic Investment Plan, you can choose from a range of equity
and debt schemes which offer SIP.
Investment periodicity - You can choose to make your investment on a monthly or
quarterly basis.
Minimum investment amount - Monthly SIP Option - 60 instalments of Rs. 100/- each or
12 instalments of Rs. 500/- each or 6 instalments of Rs. 1,000/- each and in multiples of
Re. 1/- thereafter. Quarterly SIP Option - 12 instalments of Rs. 500/- each or 4
instalments of Rs.1,500/- each and in multiples of Re. 1/- thereafter. The first SIP
instalment could be submitted on any working day.
65
However, the subsequent instalments can be dated 2nd, 10th, 18th or 28th of every
month/quarter.
You can choose a day convenient for you. However, only one SIP transaction per
month/quarter per folio is permitted.
Investment method - The SIP facility can be availed by :
a) Electronic Clearing Service (ECS) or Direct Debit mandate, wherein the investor will
have to give a debit mandate along with one signed cheque from his Savings Bank
account.
b) Issuing Post-Dated Cheques (PDCs). (Rs.100 SIP can be processed only through
Electronic Clearing Service (ECS) or Direct Debit).
Investment Objective : Reliance Vision Fund and Reliance Growth Fund aims to
achieve long-term growth of capital by investment in equity and equity-related securities
through a research-based investment approach.
Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited.
Investment Manager : Reliance Capital Asset Management Limited
Statutory Details : The Sponsor, the Trustee and the Investment Manager are
incorporated under the Companies Act 1956.
Reliance Capital
SBI Mutual
66
CHAPTER 6 RESEARCH
METHODOLOGY
6.1 Problem Description:-
To study the awareness about mutual funds among Independent Financial Advisors
compare other mutual fund company to reliance mutual fund
It has been perceived that there is a huge potential market in the patan city. patan is well
known for its patola business. patan has good financial service center and other small
companies are there. In the city there are other companies having their offices. So in
patan city there may be more business and more business brings more people in the city.
Since this bright future of city every service sector has good chance to get good business
in patan.
Since last 5 years mutual fund industry is grooving fast. In last two month there was 14
new fund offers are introduced. To understand the investor and to convince them to
invest in Mutual fund, more adviser of Mutual fund are needed. To be Adviser of
Mutual Fund is easier for the person who is already dealing with other category of
investment e.g. Small savings, Insurance. Because of they have good cliental base, they
may be successes in mutual fund selling. So we can say that there is good chance for
every financial adviser to be Broker of Mutual fund. To make them broker fist we have to
make aware them with the mutual fund and search their opinion against the mutual fund.
This is analytical research. The awareness is to be found out after knowing the
behavioral study of independent financial advisors they have different options available
in the market for investment.
6.2 Research Objectives:-
To study the perception of independent financial advisors about different investment
options available in the market.
To know priority level between different criteria of investment like safety level, retunes,
liquidity, tax benefit, maturity of investment.
To study about different type of services provided by independent financial advisors to
their clients.
To know the awareness of Mutual Funds in the market of patan and it’s surrounding
areas.
To study about the different types of services provided by professional Mutual Fund
Distributors.
To find out how many independent financial advisors want to attain the Business
Opportunity program arranged by Reliance mutual fund.
To find how many independent financial advisors are AMFI certified and how many are
interested to become registered mutual fund advisor.
67
6.3 Sampling:-
Sampling Method
In the context of this project the survey, this is of independent financial advisors done by
convenient sampling method. Taking Addresses and Contact Number from Development
Officers and other persons who are ready to give contact of Insurance agents.
Sample size
Our total sample size is 50.
In this sample 27 Advisors are security Agent. Out of them 22 advisers are also advisers
in other financial services e.g. Mutual fund, Postal investment and bank deposits. And 1
adviser was share broker.
Sample Area
The survey is done in the central city of patan and its surrounding areas. So the sample
area is consider as patan as whole.
6.4 Sources of data:-
Primary Data
In this research the source of primary data is Individual Financial Advisors, form that the
segment is used in research, is stock market Advisors.
Secondary Data
To know the information about current market scenario making use of internet,
magazines, newspaper, periodicals and fact sheets of different Asset Management
Companies.
Communication Approach.
Research tool is the questionnaire filled up by the independent financial advisors and
informal interview of independent financial advisors conducted by me.
6.5 Benefits of this Report
Persons who have no knowledge about Investment instruments, can know the different
instrument of investment
One can aware of mutual fund without any queries.
This report may be a motivating tool for investors.
Assets Management Company can get direction for appointing adviser of Mutual funds.
Reliance capital.Can get a list of persons who want to be Adviser of Mutual Fund under
them.
Financial Advisers, who wants to be adviser of Mutual Fund, can get perfect information
and procedure from this report.
68
CHAPTER 7: ANALYSIS OF DATA
There are 12 questions included in questionnaire. Data of all the response presented
below and also the answers of the entire questions are interpreted one by one.
Frequencies
Statistics
Have You Using Any Financial Services?
N Valid 50
Missing 0
Cumulative
Frequency Percent Valid Percent Percent
Valid yes 50 100.0 100.0 100.0
yes 100.00%
Interpretation:
69
>. 100% of the people are preferred of that they are using of financial services.
>. So that in the sense of this era is business era all are people are aware of financial
services.
2. Which Type Financial Services You Are Using?
Frequencies
Statistics
Cumulative
Frequency Percent Valid Percent Percent
Valid mutualfund 21 42.0 42.0 42.0
Insurance 5 10.0 10.0 52.0
Banking Services 5 10.0 10.0 62.0
Stock Market 7 14.0 14.0 76.0
Other 5 10.0 10.0 86.0
Mutualfund,insurance&
3 6.0 6.0 92.0
Banking
mutualfund,Banking
4 8.0 8.0 100.0
services&Stock Market
Total 50 100.0 100.0
8.00%
m utualfund,Banking services&Stock Market
4.0 W h ic h T y p e F in a n c ia l S e rv ic e s Y o u A re U s in g ?
6.00% mutualfund
Mutualfund,insurance&Banking
3.0 Insurance
Bank ing Services
Stock Market
10.00%
O ther O ther
5.0 42.00%
m utualfund Mutualfund,insuranc e&Banking
21.0
mutualfund,Banking serv ices&Stock Market
14.00%
Stock Market
7.0
10.00%
Banking Services 10.00%
5.0 Insurance
5.0
Interpretation:
>. most of people are using mutual fund financial services.
70
>. 42%of people are of the opinion of the are of they are using mutual fund financial
services .they are believe good financial services is mutual fund because of respondents
are using that type
Cumulative
Frequency Percent Valid Percent Percent
Valid 5% to 10% 25 50.0 50.0 50.0
10% to 20% 13 26.0 26.0 76.0
20% to 30% 6 12.0 12.0 88.0
Above 30% 6 12.0 12.0 100.0
Total 50 100.0 100.0
12.00% W h a t P a rt o f Y o u r In c o m e W o u ld Y o u S e t a S id e F o r In v e
A b o ve 30%
6.0 5% to 10%
10% to 20%
20% to 30%
12.00% Abov e 30%
20% t o 30%
6.0
Pies s how c ounts
50.00%
5% to 10%
25.0
26.00%
10% to 20%
13.0
Interpretation :- > 50% people spend more than 5% To 10% their income for investment
>very few people 12% spend small part 20& To 30% their income for
Investment
>26 people are more than 10% To 20% their income investment in
71
Financial sector
>that mean income of investors in the population lies between 5% To
10%
Cumulative
Frequency Percent Valid Percent Percent
Valid Housing car and
8 16.0 16.0 16.0
marriage
insurance 9 18.0 18.0 34.0
retirement 11 22.0 22.0 56.0
Children Education 22 44.0 44.0 100.0
Total 50 100.0 100.0
W1 6h.0ic0%h O f T h is M o s t Im p o rta n t R e a s o n ,F o r Y o u T o In v
H o u s in g c a r an d m a rriagH eou s in g c a r an d m a rr iag e
8 .0
in s u r a nc e
r e tir em e n t
C hild re n E d u c a tio n
44 .0 0 % P ies s ho w c ou n ts
C h ild re n E d u ca t io n
22 .0
1 8 .0 0 %
in s u ran c e
9 .0
2 2 .00 %
ret ire m e n t
1 1 .0
Interpretation :- >People spend more than half of their income for investments.
>Respondents spend nearly half of their income ( 44% ) for children’s
Education.
72
>People spend very small part of their income 18% To 22% for
retiremen
and insurance.
>16% people spend their income for also housing car and marriage.
5. When investing you will be more concerned about ? (Give the rank)
rank
tax s aving,
1 tax s aving
diverc ified getting
ris k , 4 return, 2 getting return
liqidity
liqidity , 3 diverc ified ris k
Interpretation:-
In the Patan City, there are large number of family are middle class. This class of persons
prefers safety first in their investment of their savings. Returns on the investment are also
important but safety of principle invested is most important then it. The Financial
advisers have also understood it and they give their views in questioners.
As per the Advisers view, on an average one investor is taking all attribute in mind while
investing his savings. But first he considers safety then return comes. Liquidity is also
important while taking decision of investment. Investor wants their investment in liquid
form so that when ever they want their money they can easily get at lowest lose of return.
Some investors want to kept some money or save money for any future need. This type of
73
need use to conceder maturity period of investment. Some investor also wants to invest
their money in such a security which gives them a tax benefit.
Frequencies
Statistics
Are You Aware Of Mutual Fund?
N Valid 50
Missing 0
Are You Aware Of Mutual Fund?
Cumulative
Frequency Percent Valid Percent Percent
Valid yes 50 100.0 100.0 100.0
74
A re Y o u A w a re O f M u tu a l F u n d ?
yes
P ie s s ho w c o un ts
ye s 10 0 .0 0 %
Frequencies
Statistics
From Where You Get Information about Mutual Fund?
N Valid 50
Missing 0
75
From Where You Get Information about Mutual Fund?
Cumulative
Frequency Percent Valid Percent Percent
Valid Agent 12 24.0 24.0 24.0
Newspaper 14 28.0 28.0 52.0
Television 13 26.0 26.0 78.0
Other 11 22.0 22.0 100.0
Total 50 100.0 100.0
F r o m W h e r e Y o u G e t In f o r m a t io n a b o u t M u t u a l F u
2 2 .0 0 % Agent
O th er 2 4 .0 0 %
1 1 .0 A g en t N ew spaper
1 2 .0
T e le v is io n
O th e r
P ie s s h o w c o u n ts
2 6 .0 0 %
T e le v is io n
1 3 .0 2 8 .0 0 %
N ew sp ap er
1 4 .0
8. According to you which is the best from of investment, taking risk factor return in to
consideration (Give the rank)
76
Fixed Deposite
Best form of investment
Mutual fund
Interpretation:-
We give first rank is fixed deposit ,second rank is mutual fund, third rank is life
insurance, forth rank is equity, fifth rank is Real estate and sixth rank is Gold and other
commodity In the sample of this survey Most of people give the fist rank of Mutual fund.
Because most of people is interested to investment but more people has not good
knowledge of stock market.
The most valuable reason behind this is the Mutual fund covers Life Risk of the prospect
and also giving the return as a bonus to their client. This is not available in any other
investment avenues. The Mutual fund also gives the tax benefits, and people prefer it
because it is the safer than others. Now Mutual fund companies also offers different types
of scheme in which investor can get higher return with life protection facilities.
9. In which mutual fund that you like to invest your money ?
Frequencies
Statistics
In which mutual fund that you like to invest your money?
N Valid 50
Missing 0
77
In which mutual fund that you like to invest your money?
Cumulative
Frequency Percent Valid Percent Percent
Valid Reliance 25 50.0 50.0 50.0
SBI 6 12.0 12.0 62.0
UTI 4 8.0 8.0 70.0
ICICI 7 14.0 14.0 84.0
HDFC 3 6.0 6.0 90.0
Kotak 5 10.0 10.0 100.0
Total 50 100.0 100.0
10.00%
Kotak In w h ich m u tu a l fu n d th at y o u lik e to in v e s t y o u r m o n e y ?
5.0
R elianc e
6.00% SBI
HDF C
3.0 U TI
ICICI
H DF C
Kotak
14.00%
IC ICI
7.0 50.00%
Reliance Pies s how c ounts
25.0
8.00%
UTI
4.0
12.00%
SBI
6.0
78
Which Type scheme you are using?
Cumulative
Frequency Percent Valid Percent Percent
Valid open ended 32 64.0 64.0 64.0
close ended 18 36.0 36.0 100.0
Total 50 100.0 100.0
64.00%
open ended
32.0
79
Missing 0
Cumulative
Frequency Percent Valid Percent Percent
Valid very good 8 16.0 16.0 16.0
fair 9 18.0 18.0 34.0
good 28 56.0 56.0 90.0
poor 5 10.0 10.0 100.0
Total 50 100.0 100.0
10.00%
poor 16.00% Schem e o f R elian ce Mu tu al F un d g ives go od retu rn or not?
5.0 very good
8.0 very good
fair
good
poor
18.00%
fair
9.0
56.00%
good
28.0
Interpretation :-
> Most of the respondent are of the opinion that scheme of Reliance
Mutual Fund gives good return.
> 16% of the people are of the opinion that scheme of Reliance Mutual
Fund gives very good return.
> 56% of the people are of the opinion that scheme of Reliance Mutual
Fund gives good return.
80
Are You Agree to people should invest in mutual fund?
Cumulative
Frequency Percent Valid Percent Percent
Valid agree 48 96.0 96.0 96.0
disagree 2 4.0 4.0 100.0
Total 50 100.0 100.0
4.00%
disagree
2.0 A re Y o u A g re e to p e o p le s h o u ld in v e s t in m u tu a l fu n d ?
agree
disagree
96.00%
ag ree
48.0
Interpretation :-
> Most of the people are of the opinion that Mutual Fund Company
Gives good return
>Tax benefit, Good returns, Liquidity are the most reason to people
Invest money in Mutual Fund.
>That’s way 96% people are agree to other people will invest his/her
Money in Mutual Fund.
HYPOTHESIS TESTING
81
Test-1 Whether 70% of peoples are using Financial services.
Ho= 70% of people are using financial services.
H1= 70% of people are not using financial services.
pHo=0.70
qHo=0.30
n=50
α =0.05
P1=50/50=1
σ^x=√ (Pho*Qho/N)
= √ [(0.70) (0.30)/ 50]
= .0648
Conclusion:
Here, the sample mean P1=1 which lie on rejedted region so we reject the null hypothesis
and reject the alternatative hypothesis. So More than 70% of people like to using
financial services.
So Ho and H1 is rejected.
82
Ho= 35% of people are using Mutual Fund financial services.
H1= 35% of people are not using Mutual Fund financial services.
pHo=0.35
qHo=0.65
n=50
α =0.05
P1=21/50=0.42
σ^x=√ (Pho*Qho/N)
= √ [(0.35) (0.65)/ 50]
= .0674
Conclusion:
Here, the sample mean P1=0.35 which lie on accepted region so we accept the null
hypothesis and reject the alternatative hypothesis. So More than 35% of people like to
using financial services.
.
Test-3 Whether 50% of peoples are invest 5% to 10% his part
of income.
83
Ho= 50% of people are invest 5% to 10% his part of income.
H1= 50% of people are not invest 5% to 10% his part of income.
pHo=0.50
qHo=0.50
n=50
α =0.05
P1=25/50=0.50
σ^x=√ (Pho*Qho/N)
= √ [(0.50) (0.50)/ 50]
= .0707
Conclusion:
Here, the sample mean P1=0.50 which lie on accepted region so we accept the null
hypothesis and accept the alternatative hypothesis. So 50% of people are invest 5% to
10% his part of income.and also 50%of people are not invest 5% to10% his part of
income.
84
Ho= 60% of people are invest money because the most important reason is Retirement.
H1=60% of people are not invest money because the most important reason isRetirement.
pHo=0.60
qHo=0.40
n=50
α =0.05
P1=11/50=0.22
σ^x=√ (Pho*Qho/N)
= √ [(0.60) (0.40)/ 50]
= .0692
Conclusion:
Here, the sample mean P1=0.60 which lie on rejected region so we reject the null
hypothesis and accept the alternatative hypothesis. So 22% of people are invest money
because the most important reason is retirement.
So Ho is rejected.
Ho= 20% of people are getting information about mutual fund through news paper.
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H1=20% of people are not getting information about mutual fund through news paper.
pHo=0.20
qHo=0.80
n=50
α =0.05
P1=12/50=0.24
σ^x=√ (Pho*Qho/N)
= √ [(0.20) (0.80)/ 50]
= .0056
Conclusion:
Here, the sample mean P1=0.24 which lie on rejected region so we reject the null
hypothesis and accept the alternatative hypothesis. because 24% of people are getting
information about mutual fund through news paper.
So Ho is rejected.
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Ho= 60% of people are like to invest in reliance mutual fund.
.
H1=60% of people are not like to invest in reliance mutual fund.
pHo=0.60
qHo=0.40
n=50
α =0.05
P1=25/50=0.50
σ^x=√ (Pho*Qho/N)
= √ [(0.60) (0.40)/ 50]
= .0692
Conclusion:
Here, the sample mean P1=0.50 which lie on accepted region so we accept the null
hypothesis and reject alternatative hypothesis. because 50% people are like to invest in
reliance mutual fund.
So Ho is accepted
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H1=65% of respondent are not prefer of Reliance Mutual Fund gives good return.
pHo=0.65
qHo=0.35
n=50
α =0.05
P1=28/50=0.56
σ^x=√ (Pho*Qho/N)
= √ [(0.65(0.35 )/50]
= .0675
Conclusion:
Here, the sample mean P1=0.65 which lie on accepted region so we accept the null
hypothesis and reject alternatative hypothesis. because 56% of respondent are prefer of
Reliance Mutual Fund gives good return.
So Ho is accepted
CONCLUSION
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Mutual Fund is good concept of investment with collects the savings and invests in
different sector and different market in such a way that investment get highest return.
This return will be paid back to Unit holder.
The perception of Independent Financial Advisor is that insurance is a best
investment option among all investment products and then other options are coming
into consideration. And stock is least advisable according to their view.
Most of Advisers now suggesting mutual fund. Today Advisers are kept them
selves full of knowledge of all investment instruments. And their researches allow
them to suggest Mutual Fund as Investment Avenue.
Still some advisers have not suggested the Mutual funds as investment instrument.
The basic reason behind that is, lack of knowledge about mutual funds, which is
followed by high risk and unasserted returns.
Safety is at the peak of all attributes list of investment products in the mindset of
Advisers, which is followed by tax benefit, returns, maturity and liquidity.
Advisers are highly providing pre-investment advisory services and doorstep
collection services. Some of the Advisers are follow their clients and provide post-
investment advisory services also. Sharing of brokerage and online valuation report
providing is very less in a practice.
There is very poor awareness of asset management companies among independent
financial advisors.
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RECOMMENDATIONS
• Give more stress on safety attributes because Independent Financial Advisors are
more concern about safety of the investments of their clients.
• 30 % of Independent Financial Advisors who are not suggesting their clients to
invest in mutual funds due to their lack of knowledge of mutual funds. So
Reliance capital should arrange mutual fund awareness Program of Independent
Financial Advisors on regular basis.
• By providing better service Reliance capital should try to switch the Independent
Financial Advisors who are directly working with AMC to join with them.
• Reliance capital should arrange special mutual fund awareness program for
general public. So they can directly work with Reliance capital as direct client.
• Majority of the Government employees take into consideration tax benefits before
making any investment. So Reliance capital should highlight tax benefits in
mutual funds.
• Reliance capital should launch its brand awareness campaign to be number one in
Mutual fund advisory service provider.
Suggestion
Reliance Mutual Fund should reduce the Entry charges.
Reliance Mutual Fund should try to launch new schemes so reliance mutual fund
will become a market leader.
Reliance Mutual Fund has to come up with an excellent advertisement with news
paper segments.
Reliance Mutual Fund should give more return rather than another because only
16% respondents are opinion of very good return.
Reliance Mutual Fund should reduce the risk compare to equity because only 10%
respondents are opinion of good investment reduce risk in mutual fund.
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BIBLIOGRAPHY
Books
Websites
1) www.reliancemutualfund.com.
2) www.hdfcmutualfund.com.
3) www.sbimutualfund.com.
4) www.amfi.com
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