SUMMER INTERNSHIP REPORT ON

COMPARITIVE ANALYSIS OF RELIANCE MUTUAL FUNDS WITH OTHER EXISTING MUTUAL FUNDS...

Submitted in u! i!!ment "# t$e %&%#d " M%'te# " bu'ine'' %dmini't#%ti"n (G.).T.U. Lu*+n"&, SESSION- ./0/1./0. FOR THE PARTIAL FULFILLMENT OF TWO YEAR DEGREE IN MASTER OF )USINESS ADMINISTRATION

UNDER THE GUIDANCE OF)YSAN2AY 3UMAR )A2PAI )#%n*$ M%n%4e#

SU)MITTED
ANSHI3A M)A1Fin%! 5#

Re!i%n*e Mutu%! Fund 0/6789///7

R"!! N".1

MAHARANA INSTITUTE OF PROFESSIONAL STUDIES

(AFFILIATED )Y GAUTAM )UDDH TECHNICAL UNIVERSITY, APPROVED )Y AICTE: MINISTERY OF HRD: GOVT. OF INDIA:

PREFACE
With the growth of rapid industrialization the need of management is felt every where .management, A research report provides the most natural condition under which a student can learn and got success in implementing the theoretically learned in to the practical and current environment of daily practices done by the people (investor) it helps a student to learn, to improve, to improvise, to e periment, to find !nowledge in all possible ways and to translate that !nowledge into action. "#A is a foundation stone to the management career. $he classroom learning needs to practical e posure. $o develop concrete managerial and administrative s!ills of potential manager, it is important that the interaction to the real environment be there. $he pro%ect is a real life venture for me. &t is a great privilege that you have spread your for reading this. &n forthcoming pages, an attempt has been made to present the different aspect of my pro%ect.

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Date Bajpai) Place !anp"#

(Anshika

AC!NO$%ED&MENT

&f words are considered as a symbol of approval and ta!en of appreciation then let the words play the heralding role e pressing my gratitude. (irst of all & than! to my )racie god who blessed me with all !ind of facilities that had been provided to me for completion of my report. &*m also grateful to m5 te%*$e# for guiding me to learn and helped me on pro%ect on COMPARITI'E ANA%(SIS OF RE%IANCE MUTUA% FUND $ITH OTHER E)ISTIN& MUTUA% FUNDS* "y endless appreciation goes to my all respected faculty who has stood by my side and give me moral support whenever & was low and boosted my will power. (inally, & would li!e to e press my solidarity towards the +,-&A./, )+012 for providing me with such an opportunity.

Thank You

TAB%E OF CONTENTS
INTRODUCTION HISTORY OF THE RELIANCE COMPANY COMPANY PROFILE RELIANCE MUTUAL FUND PROFILE 08
Reliance M"t"al F"n+ , Accele#atin- &#./th A0."t the p#.ject

91; 810/ 00106

071

HISTORY OF MUTUAL FUND <. A+1anta-es .2 3"t"al 2"n+s Disa+1anta-es .2 3"t"al 2"n+s

./1

 Risks in1.l1e+ in 3"t"al 2"n+s 'a#i."s 3"t"al 2"n+ sche3e T4pes .2 3"t"al 2"n+ Di22e#ent t4pes .2 2"n+s C.sts in1.l1e+ in 3"t"al 2"n+ The 1al"es .2 4."# 2"n+ S.3e .2 the e5istin- asset 3ana-e3ent c.3pan4 De1el.p3ent .2 3"t"al 2"n+ in In+ia &#aphical #ep#esentati.n M"t"al 2"n+s .#-ani6ati.ns
Fl./ cha#t F#e7"entl4 "se+ te#3s in 3"t"al 2"n+s St#"ct"#e .2 In+ian 3"t"al 2"n+ $.#kin- .2 3"t"al 2"n+

O)2ECTIVE OF THE STUDY

<61<7 <=1<< <919/ 90 9.196 9718/ 8018.

SCOPE OF THE STUDY

RESEARCH METHODOLOGY USE OF THE PRO2ECT

IMPORTANCE OF THE STUDY

RESEARCH ANALYSIS AND INTERPRETATION

FINDINGS 5

 SWOT ANALYSIS

861

8<
St#en-ths /eakness RECOMMENDATIONS

8918; 881

CONCLUSION 0//
ANNEXURE

0/01

0/=
)I)LIOGRAPHY 0/<

Int#.+"cti.n
6

There are a lot of investment avenues available today in the financial mar!et for an investor with an investable surplus. 7e can invest in #an! 8eposits, /orporate 8ebentures, and #onds where there is low ris! but low return. 7e may invest in "utual of companies where the ris! is high and the returns are also proportionately high. $he recent trends in the "utual "ar!et have shown that an average retail investor always lost with periodic bearish tends. 2eople began opting for portfolio managers with e pertise in "utual mar!ets who would invest on their behalf. $hus we had wealth management services provided by many institutions. 7owever they proved too costly for a small investor. $hese investors have found a good shelter with the mutual funds. -i!e most developed and developing countries the mutual fund cult has been catching on in &ndia. $he reasons for this interesting occurrence are9

; "utual funds ma!e it easy and less costly for investors to satisfy their need for capital growth, income and<or income preservation.

; "utual fund brings the benefits of diversification and money management to the individual investor, providing a 0pportunity for financial success that was once available only to a select few.

Hist.#4 .2 Reliance C.3pan4

$he reliance group founded by 8hirubhai. 7. Ambani (1='2>2??2) is &ndia*s largest private sector enterprise. 7e is credited to have brought about the e@uity cult in &ndia in the late seventies and is regarded as an icon for enterprise in &ndia. 7e epitomized the spirit Adare to dream and learn to e cel*. $he +eliance )roup is a living testimony to his indomitable will, single>minded dedication and an unrelenting commitment to his goals.

1nit $rust of &ndia is the first "utual (und set up under a separate act, 1$& Act in 1=5', and started its operations in 1=53 with the issue of units under the scheme 1B>531. &n 1=6: 1$& was delin!ed from the +#& and &ndustrial 8evelopment #an! of &ndia (&8#&) too! over the +egulatory and administrative control in place of +#&.

&n the year 1=:6 2ublic Bector ban!s li!e Btate #an! of &ndia, 2un%ab .ational #an!, &ndian #an!, #an! of &ndia, and #an! of #aroda have set up mutual funds. Apart from these above mentioned ban!s -ife &nsurance /orporation C-&/D and )eneral &nsurance /orporation C)&/D too have set up mutual fund. -&/ established its mutual fund in Eune 1=:=.while )&/ had set up its mutual fund in 8ecember 1==?.$he mutual fund industry had assets under management of +s. 36,??3 crores. With the entry of 2rivate Bector (unds a new era has started in "utual (und &ndustry .e.g9> 2rincipal "utual (und.

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C.3pan4 P#.2ile

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+eliance )roup 7oldings has grown from a small office data>processing e@uipment firm in 1=51 into a ma%or insurance and financial>services group in one generation under one chief. +elianceAs insurance operations constitute the nationAs 26th>largest property and casualty operation. $he parent company also includes a development subsidiary in commercial real estate. +elianceAs international consulting group contains several energy, environment, and natural resources consulting. A financial arm invests in other businesses, primarily television stations. +eliance &nsurance started as the (ire Association of 2hiladelphia in 1:16, organized by 4 hose and 11 engine fire companies. &t became the nationAs first association of volunteer fire departments. #usiness got a boost as a result of the )reat /hicago (ire of 1:61. 12

$he association soon developed a field of agents to write policies across the country. (or the first two years, shareholders received dividends twice a year of F4 a share, which increased gradually to F1? in 1:65. &n 1=62, the +eliance insurance group divided its pool so that +eliance &nsurance /ompany and its subsidiaries handled most standard lines, while 1nited 2acific &nsurance /ompany handled the nonstandard and other operations. &n 1=66, the company moved into real estate, forming /ontinental /ities /orporation, which became +eliance 8evelopment )roup, &nc. $his division handled all real estate operations of the parent company and other subsidiaries. +eliance /apital )roup, -.2. constituted the investment branch of the +eliance conglomerate. &n 8ecember 1=:=, +eliance /apital sold its investment, 8ays /orporation, parent company of 8ays &nn of America, the worldAs third>largest hotel chainG it had been purchased in 1=:3. +eliance &ndustries -imited. $he )roupAs principal activity is to produce and distribute plastic and intermediates, polyester filament yarn, fiber intermediates, polymer intermediates, crac!ers, chemicals, te tiles, oil and gas. $he refining segment includes production and mar!eting operations of the 2etroleum refinery. $he petrochemicals segment includes production and mar!eting operations of petrochemical products namely, 7igh and -ow density 2olyethylene. >&#./th has n. li3it at Reliance* I keep #e1isin- 34 1isi.n. Onl4 /hen 4." can +#ea3 it8 4." can +. it."

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Reliance 3"t"al 2"n+ p#.2ile

Reliance M"t"al F"n+ , Accele#atin- &#./th

+eliance "utual (und, a part of the +eliance Anil 8hirubhai Ambani )roup is the .o. 1 "utual (und in &ndia. +eliance "utual (und offers investors a well rounded portfolio of products to meet varying investor re@uirements. +eliance "utual (und has a presence in over 1?? cities across the country, an investor base of over '.= million and manages assets over +s. 56,4=: /rores as on August '1, 2??6. +eliance "utual (und constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. +eliance "utual (und schemes are managed by +eliance /apital Asset "anagement -td.,a wholly owned subsidiary of +eliance /apital -td. +eliance /apital -td. is one of &ndia*s leading and fastest growing private sector financial services companies, and ran!s among the top ' private sector financial services and ban!ing companies, in terms of net worth. +eliance /apital -td. has interests in asset management and mutual funds, life and general insurance, private e@uity and proprietary investments, stoc! bro!ing and other financial services. 13

.o.1 basis Assets under "anagement (A1") as on August '1, 2??6.

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ABOUT PRO9ECT
MUTUA% FUND

A mutual fund is nothing more than a collection of "utuals and<or bonds. Hou can thin! of a mutual fund as a company that brings together a group of people and invests their money in "utuals, bonds, and other securities. ,ach investor owns shares, which represent a portion of the holdings of the fund. 15

(." can 3ake 3.ne4 2#.3 a 3"t"al 2"n+ in th#ee /a4s

0, &ncome is earned from dividends on "utuals and interest on bonds. A fund pays out.
.early all income it receives over the year to fund owners in the form of a distribution.

., &f the fund sells securities that have increased in price, the fund have a capital gain. "ost funds also pass on these gains to investors in a distribution.

6, &f fund holdings increase in price but are not sold by the fund manager, the fundAs .Bhares increase in price. Hou can then sell your mutual fund shares for a profit.

Fund' &i!! %!'" u'u%!!5 4i?e 5"u % *$"i*e eit$e# t" #e*ei?e % *$e*+ "# di't#ibuti"n' "# t" Rein?e't t$e e%#nin4' %nd 4et m"#e '$%#e'.

$he competition among funds has led to the launch of newer products, tailor>made to suit the re@uirements of investors. "utual funds now offer products for the entire range of needs of investors. $he encouraging response to inde funds and sector funds shows the growing maturity among investors. 0pen>end funds, which provide li@uidity to investors at daily .AI related prices, are growing in popularity. $he funds have be en adopting technology 16

to provide good service to investors and with the proposed introduction of electronic funds transfer and the growing trend towards ,>/ommerceG the efficiency of service will increase even further. &n the coming year*s mutual funds as saving intermediaries will play a greater role in bringing the gap between investors and issuers, especially in the area of e@uity funds JAt present these funds represents 1'K of #B, mar!et capitalization. $his is e pected to go up with increasing flows into financial savings, especially the mutual fund with the growth and stability in the capital mar!et flows into e@uity funds are e pected to go up. A "utual (und is a trust that pools the savings of a number of investors who share a common financial goal. $he money thus collected is then invested in capital mar!et instruments such as shares, debentures and other securities. $he income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. $hus a "utual (und is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed bas!et of securities at a relatively low cost. "utual funds, also referred to as investment companies, offer an alternative investment choice for individuals with a long>term horizon. $he way they operate is that individual investor money are pooled and invested in many different companies. Assets are professionally managed to meet various investment ob%ectives. $hey issue and sell shares to share holders and also redeem them (buy them bac!) upon re@uest. 2rices of shares are set daily at the close of business, based on the value of all investments in the mutual fund*s portfolio. $heir ma%or advantages are diversification and professional management, which

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are not readily available to small investors outside the mutual fund arena. "oney mar!et mutual funds are short>term funds. $hey invest in short>term cash and cash e@uivalent instruments, such as $reasury bills, certificates of deposit, and short>term notes. "utual funds may own "utual and bonds of many different companies.

A mutual fund is the ideal investment vehicle for today*s comple and modern financial scenario. "ar!ets for e@uity shares, bonds and other fi ed income instruments, real estate, derivatives and other assets have become mature and information driven. 2rice changes in these assets are driven by global events occurring in faraway places. A typical individual is unli!ely to have the !nowledge, s!ills, inclination and time to !eep trac! of events, understand their implications and act speedily. An individual also finds it difficult to !eep trac! of ownership of his assets, investments, bro!erage dues and ban! transactions etc.

1=

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Hist.#4 .2 3"t"al 2"n+

&n 1=23 three #oston securities e ecutives pooled their money together to create the first mutual fund. $he idea of pooling money together for investing purposes started in ,urope in the mid>1:??s. $he first pooled fund in the 1.B was created in 1:=' for the faculty and

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staff of 7arvard 1niversity on "arch 21st, 1=23 the first official mutual fund was born. &t was called the "assachusetts &nvestors $rust. 7owever in &ndia 1$& was the first to introduce mutual funds in the &ndian mar!ets and it commenced its operations from Euly 1=53, )overnment allowed public sector ban!s and institutions to set up mutual funds.

&n the year 1==2, Becurities and e change #oard of &ndia (B,#&) Act was passed. $he ob%ectives of B,#& are L to protect the interest of investors in securities and to promote the development of and to regulate the securities mar!et. As far as mutual funds are concerned, B,#& formulates policies and regulates the mutual funds to protect the interest of the investors. B,#& notified regulations for the mutual funds in1=='. $hereafter, mutual funds sponsored by private sector entities were allowed to enter the capital mar!et. $he regulations were fully revised in 1==5 and have been amended thereafter from time to time. B,#& has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of +egulations. $here is no distinction in regulatory re@uirements for these mutual funds and all are sub%ect to monitoring and inspections by B,#&. $he ris!s associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. &t may be mentioned here that 1nit $rust of &ndia (1$&) is not registered with B,#& as a mutual fund (as on Eanuary14, 2??2. $he end of millennium mar!s '5 years of e istence of mutual funds in our country.

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$he ride through these '5 years is not been smooth. &nvestor opinion is still divided. While some are for mutual funds others are against it.

MUTUAL FUND SCHEMES

"utual funds offer a variety of schemes to investor so as to provide steady income or growth or both. $hey differ according to the investment policies. $he funds li!e individual investor have different goals. 0f the investor who will first ascertain his investment ob%ectives, thin!ing that the units of a fund have an investment goal paralleling his ob%ectives

FUND MUTUA% BASICS

As you probably !now, mutual funds have become e tremely popular over the last 2?years. What was once %ust another obscure financial instrument is now a part of our daily lives. &n fact, too many people, investing means buying mutual funds. After all, itAs common !nowledge that investing in mutual funds is (or at least should be) better than simply letting your cash waste away in a savings account, but, for most people, thatAs where the understanding of funds ends. &t doesnAt help those mutual fund sales people spea! a strange language that, sounding sort of li!e ,nglish, is interspersed with %argon li!e ",+, .AI2B, load<no>load, etc.

0riginally mutual funds were heralded as a way for the little guy to get a piece of the mar!et. &nstead of spending all your free time buried in the financial pages of the

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investment Eournal, all you have to do is buy a mutual fund and youAd be set on your way to financial freedom. As you might have guessed, itAs not that easy. "utual funds are an e cellent idea in theory, but, in reality, they havenAt always delivered. .ot all mutual funds are created e@ual, and investing in mutual*s isnAt as easy as throwing your money at the first salesperson who solicits your business.

AD'ANTA&ES OF MUTUA% FUND

:,P#.2essi.nal Mana-e3ent > $he primary advantage of funds (at least theoretically)
is the professional management of your money. &nvestors purchase funds because they do not have the time or the e pertise to manage their own portfolio. A mutual fund is a relatively ine pensive way for a small investor to get a full>time manager to ma!e and monitor investments. 23

;,Di1e#si2icati.n > #y owning shares in a mutual fund instead of owning individual

"utual 0r bonds, your ris! is spread out. $he idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. &n other words, the more "utuals and bonds you own, the less any one of them can hurt you (thin! about ,nron). -arge mutual funds typically own hundreds of different "utuals in many different industries. &t wouldnAt be possible for an investor to build this !ind of a portfolio with a small amount of money.

<,Ec.n.3ies .2 Scale > #ecause a mutual fund buys and sells large amounts of
securities at a time, its transaction costs are lower than you as an individual would pay.

=,%i7"i+it4 - Eust li!e an individual "utual, a mutual fund allows you to re@uest that your
shares be converted into cash.

>,Si3plicit4> #uying a mutual fund is easy.

DISAD'ANTA&ES OF MUTUA% FUND

:,P#.2essi.nal Mana-e3ent> 8id you notice how we @ualified the advantage of

professional management with the word MtheoreticallyMJ "any investors debate over

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whether or not the so>called professionals are any better than you or & at pic!ing "utuals. "anagement is by no means infallible, and, even if the fund loses money, the manager still ta!es his<her cut. .

;,C.sts> "utual funds donAt e ist solely to ma!e your life easier>>all funds are in it for a
2rofit. $he mutual fund industry is masterful at burying costs under layers of %argon .#ecause funds have small holdings in so many different companies, high returns from a few &nvestments often donAt ma!e much difference on the overall return. 8ilution is also the result of a successful fund getting too big. When money pours into funds that have had strong Buccess, the manager often has trouble finding a good investment for all the new money

<,Ta5es> When ma!ing decisions about your money, fund managers donAt consider your
personal ta situation. (or e ample, when a fund manager sells a security, a capital>gain ta is triggered, which affects how profitable the individual is from the sale. &t might have been more advantageous for the individual to defer the capital gains liability

RIS!S IN'O%'ED IN MUTUA% FUND

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&n short, how stable is the company or entity to which you lend your money when you investJ 7ow certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment maturesJ

In2lati.n #isk /hanging interest rates affect both e@uities and bonds in many ways. &nvestors are reminded that NpredictingO which way rates will go is rarely successful. A diversified portfolio can help in offsetting these changes.

E22ect .2 l.ss .2 ke4 p#.2essi.nal an+ ina0ilit4 t. a+.pt An industries* !ey asset is often the personnel who run the business i.e. intellectual properties of the !ey employees of the respective companies. )iven the ever>changing comple ion of few industries and the high obsolescence levels, availability of @ualified, trained and motivated personnel is very critical for the success of industries in few sectors. &t is, therefore, necessary to attract !ey personnel and also to retain them to meet the changing environment and challenges all investments involve some form of ris!, which should be evaluated them potential +ewards when an investment is selected.

Mana-in- #isk

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At times the prices or yields of all the securities in a particular mar!et rise or fall due to broad outside influences. When this happens, the "utual prices of an out standing, highly profitable company and a fledgling corporation may be affected.

$his change in price is due to @m%#+et #i'+A.

Inte#est #ate #isk

Bometimes referred to as Nloss of purchasing powerO. Whenever inflation sprints forward faster than the earnings on your investment, you run the ris! that you will actually be able to buy less, not more. &nflation ris! also occurs when prices rise faster than your returns.

C#e+it #isk
$he sector offers. (ailure or inability to attract<retain such @ualified !ey personnel may impact the prospects of the companies in the particular sector in which the fund invests. E5chan-e #isks A number of companies generate revenues in foreign currencies and may have investments or e penses also denominated in foreign currencies. /hanges in e change rates may, therefore, have a positive or negative impact on companies which in turn would have an effect on the investment of the fund.

In1est3ent #isks 2:

$he sectoral fund schemes, investments will be predominantly in e@uities of select companies in the particular sectors. Accordingly, the .AI of the schemes are lin!ed to the e@uity performance of such companies and may be more volatile than a more diversified portfolio of e@uities.

Chan-es in -.1e#n3ent p.lic4 /hanges in )overnment policy especially in regard to the ta benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.

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'ARIOUS MUTUA% FUND SCHEME

M"t"al F"n+ Sche3es ,

Wide variety of "utual (und Bchemes e ists to cater to the needs such as financial position, ris! tolerance and return e pectations etc. $he table below gives an overview into the e isting types of schemes in the &ndustry.

B4 St#"ct"#e

; ; ;

0pen > ,nded Bchemes /lose > ,nded Bchemes &nterval Bchemes

B4 In1est3ent O0jecti1e
)rowth Bchemes &ncome Bchemes #alanced Bchemes "oney "ar!et Bchemes

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T4pes .2 M"t"al F"n+

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M"t"al F"n+s Di22e#ent T4pes .2 F"n+s

.o matter what type of investor you are there is bound to be a mutual fund that fits your style. According to the last count there are over 1?,??? mutual funds in .orth AmericaP $hat means there are more mutual funds than "utuals. &tAs important to understand that each mutual fund has different ris!s and rewards. &n general, the higher the potential return, the higher the ris! of loss. Although some funds are less ris!y than others, all funds have some level of ris!>>itAs never possible to diversify away all ris!. $his is a fact for all investments.

,ach fund has a predetermined investment ob%ective that tailors the fundAs assets, regions of investments, and investment strategies. At the fundamental level, there are three varieties9 of mutual funds 1) ,@uity funds ("utual) 2)(i ed>income funds (bonds) ') "oney mar!et funds

All mutual funds are variations of these three asset classes. (or e ample, while e@uity (unds that invest in fast>growing companies are !nown as growth funds, e@uity funds that '2

&nvest only in companies of the same sector or region is !nown as specialty funds. -et*s go over the many different flavors of funds. WeAll start with the safest and then Wor! through to the more ris!y.

M.ne4 Ma#ket F"n+s

$he money mar!et consists of short>term debt instruments, mostly $>bills. $his is a safe -ace to par! your money. Hou wonAt get great returns, but you wonAt have to worry about losing your principal. A typical return is twice the amount you would earn in a regular chec!ing<savings account and a little less than the average certificate of deposit (/8).WeAve got a whole tutorial on the money mar!et if youAd li!e to learn more about it.

B.n+?Inc.3e F"n+s
&ncome funds are named appropriately9 their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms Mfi ed>income,M Mbond,M andM incomeM are synonymous. $hese terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary ob%ective of these funds is to provide a steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees.

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#ond funds are li!ely to pay higher returns than certificates of deposit and money mar!et &nvestments, but bond funds arenAt without ris!. #ecause there are many different types of #onds, bond funds can vary dramatically depending on where they invest. (or e ample, a fund specializing in high>yield %un! bonds is much more ris!y than a fund that invests in government securitiesG also, nearly all bond funds are sub%ect to interest rate ris!, which means that if rates go up the value of the fund goes down.

Balance+ F"n+s
$he ob%ective of these funds is to provide a MbalancedM mi ture of safety, income, and capital appreciation. $he strategy of balanced funds is to invest in a combination of fi ed> income and e@uities. A typical balanced fund might have a weighting of 5?K e@uity and3?K fi ed>income. $he weighting might also be restricted to a specified ma imum or minimum for each asset class. A similar type of fund is !nown as an asset allocation fund. 0b%ectives are similar to those of a balanced fund, but these !inds of funds typically do not have to hold a specified percentage of any asset class. $he portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves through the business cycle.

E7"it4 F"n+s
(unds that invest in "utual represent the largest category of mutual funds. )enerally, the investment ob%ective of this class of funds is long>term capital growth with some income. '3

$here are, however, many different types of e@uity funds because there are many different types of e@uities. A great way to understand the universe of e@uity funds is to use a style bo , an e ample of which is below. $he idea is to classify funds based on both the size of the companies invested in and the investment style of the manager. $he term MvalueM refers to a style of investing that loo!s for high @uality companies that are out of favor with the mar!et. $hese companies are characterized by low 2<, ratios, price>to>boo! ratios, and high dividend yields, etc. $he opposite of value is growth, which refers to companies that have had (and are e pected to continue to have) strong growth in earnings, sales, and cash flow, etc. A compromise between value and growth is Mblend,M which simply refers to companies that are neither value nor growth "utuals and so are classified as being somewhere in the middle. F.# e5a3ple, a mutual fund that invests in large>cap companies who are in strong financial shape but have recently seen their share price fall would be placed in the upper left @uadrant of the style bo (large and value). $he opposite of this would be a fund that invests in startup technology companies with e cellent growth prospects. Buch a mutual would reside in the bottom right @uadrant

&l.0al?Inte#nati.nal F"nd'
An international fund (or foreign fund) invests only outside your home country. )lobal funds invest anywhere around the world, including your home country. &tAs tough to classify these funds as either ris!ier or safer. 0n the one hand they tend to be more volatile and have uni@ue country and<or political ris!s. #ut, on the flip side, they can,

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as part of a well>balanced portfolio, actually reduce ris! by increasing diversification. Although the worldAs economies are becoming more inter>related, it is -i!ely that another economy somewhere is outperforming the economy of your home /ountry.

In+e5 F"n+s
$he last but certainly not the least important are inde funds. $his type of mutual fund replicates the performance of a broad mar!et inde such as the sense and nifty. An investor in an inde fund figures that most managers canAt beat the mar!et. An inde fund merely replicates the mar!et return and benefits investors in the form of low fees.

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COSTS IN'O%'ED IN MUTUA% FUND

M"t"al F"n+s C.sts

/osts are the biggest problem with mutual funds. $hese costs eat into your return, and they are the main reason why the ma%ority of funds end up with sub>par performance. What*s even more disturbing is the way the fund industry hides costs through a layer of financial comple ity and %argon. Bome critics of the industry say that mutual fund /ompanies get away with the fees they charge only because the average investor does not understand what he<she is paying for.

'6

Fees can 0e 0#.ken +./n int. t/. cate-.#ies

1. On4"in4 5e%#!5 ee' t" +eeB 5"u in?e'ted in t$e und. .. T#%n'%*ti"n ee' B%id &$en 5"u bu5 "# 'e!! '$%#e' in % und (!"%d',

The E5pense Rati.

$he ongoing e penses of a mutual fund are represented by the e pense ratio. $his is sometimes also referred to as the management e pense ratio (",+). $he e pense ratio is composed of the following9

The c.st .2 hi#in- the 2"n+ 3ana-e#(s) > Also !nown as the management fee,

$his cost is between ?.4K and 1.?K of assets on average. While it sounds small, $his fee ensures that mutual fund managers remain in the country*s top echelon of ,arners. $hin! about it for a Becond9 1K of 24? million (a small mutual fund) is 2.4 million>>fund managers are definitely not going hungryP &t*s true that paying "anagers is a necessary fee, but don*t thin! that a high fee assures superior 2erformance.

A+3inist#ati1e c.sts L

$hese include necessities such as postage, record !eeping, customer service, cappuccino machines, etc. Bome funds are e cellent at minimizing these costs while others (the ones with the cappuccino machines in the office) are not. 0n the whole, e pense ratios range

':

from as low as ?.2K (usually for inde funds) to as high as 2.?K. $he average e@uity mutual fund charges around 1.'K>1.4K. Hou*ll generally pay more for specialty or international funds, which re@uire more e pertise from manager.

B"4in- an+ Sellin-

'=

(Hou can buy some mutual funds no>load) by contacting the fund companies directly. 0ther funds are sold through bro!ers, ban!s financial planners, or insurance agents. &f you buy through a third party there is a good chance they*ll hit you with a sales charge (load). $hat being said, more and more funds can be purchased through no>transaction fee programs that offer funds of many companies. Bometimes referred to as a Mfund supermar!et,M this service lets you consolidate your holdings and record !eeping, and it still allows you to buy funds without sales charges from many different companies.

P.p"la# e5a3ples are Bchwab*s 0neBource, Ianguard*s (und Access, and

(idelity*s (unds .etwor!. "any large bro!erages have similar offerings. Belling a fund is as easy as purchasing one. All mutual funds will redeem (buy bac!) your shares on any business day. &n the 1nited Btates companies must send you the payment within seven days.

3?

THE 'A%UES OF (OUR FUND

Net asset 1al"e (NA')8 which is a fundAs assets minus liabilities, is the value of a mutual fund. .AI per share is the value of one share in the mutual fund, and it is the number that is @uoted in newspapers. Hou can basically %ust thin! of .AI per share as the price of a mutual fund. &t fluctuates everyday as fund holdings and shares outstanding change.

When you buy shares, you pay the current .AI per share plus any sales front>end load. When you sell your shares, the fund will pay you .AI less any bac!>end load ."oses gave to his follow eternities 1? commandments that were to be followed till9 $he world of investments too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad world of investments. $hese come in handy for there is every possibility of losing what one has if due care is not ta!en.

0. Assess 4."#sel29 Belf>assessment of one*s needsG e pectations and ris! profile is of prime
importance failing whichG one will ma!e more mista!es in putting money in right places than otherwise. 0ne should identify the degree of ris! bearing capacity one has and also clearly state the e pectations from the investments. &rrational e pectations will only bring pain. 31

.. T#4 t. "n+e#stan+ /he#e the 3.ne4 is -.in- 9 &t is important to identify the nature of
investment and to !now if one is compatible with the investment. 0ne can lose substantially if one pic!s the wrong !ind of mutual fund. &n order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that mutual fund companies provide on their funds.

6. One 2i#st has t. +eci+e /hat he /ants the 3.ne4 2.# and it is this investment goal
that should be the guiding light for all investments done. &t is thus important to !now the ris!s associated with the fund and align it with the @uantum of ris! one is willing to ta!e. 0ne should ta!e a loo! at the portfolio of the funds for the purpose. , cessive e posure to any specific sector should be avoided, as it will only add to the ris! of the entire portfolio ."utual funds invest with a certain ideology such as the MIalue 2rincipleM or M)rowth 2hilosophyM. #oth have their share of critics but both philosophies wor! for investors of different !inds. &dentifying the proposed investment philosophy of the fund will give an insight into the !ind of ris!s that it shall be ta!ing in future.

7.

A c.33.n in1est.# is li3ite+ in the +e-#ee .2 #isk that

. &t is thus of !ey

importance that there is thought given to the process of investment and to the time horizon of the intended investment. 0ne should abstain from speculating which in other words would mean getting out of one fund and investing in another with the intention of ma!ing

32

@uic! money. 0ne would do well to remember that nobody can perfectly time the mar!et so staying invested is the best option unless there are compelling reasons to e it.

=* This .l+ a-e a+a-e is .2 "t3.st i3p.#tance. .o matter what the ris! profile of a
person is, it is always advisable to diversify the ris!s associated. Bo putting one*s money in different asset classes is generally the best option as it averages the ris!s in each category. $hus, even investors of e@uity should be %udicious and invest some portion of the investment in debt. 8iversification even in any particular asset class (such as e@uity, debt) is good. .ot all fund managers have the same acumen of fund management and with identification of the best man being a tough tas!G it is good to place money in the hands of several fund managers. $his might reduce the ma imum return possible, but will also reduce the ris!s.

<* In1estin- sh."l+ 0e a ha0it an+ n.t an e5e#cise "n+e#taken at .ne@s wishes, if
one has to really benefit from them. As we said earlier, since it is e tremely difficult to !now when to enter or e it the mar!et, it is important to beat the mar!et by being systematic. $he basic philosophy of +upee cost averaging would suggest that if one invests regularly through the ups and downs .of the mar!et, he would stand a better chance of generating more returns than the mar!et for the entire duration. $he B&2 s (Bystematic &nvestment 2lans) offered by all funds helps in being systematic. All that one needs to do is to give post>dated che@ues to the fund and thereafter one will not be harried later. $he

3'

Automatic investment 2lans offered by some funds goes a step further, as the amount can be directly<electronically transferred from the account of the investment

9* D. 4."# h.3e/.#k
&t is important for all investors to research the avenues available to them irrespective of the investor category they belong to. $his is important because an informed investor is in a better decision to ma!e right decisions. 7aving identified the ris!s associated with the investment is important and so one should try to !now all aspects associated with it. As!ing the intermediaries is one of the ways to ta!e care of the problem.

;. Fin+ the #i-ht 2"n+s

(inding funds that do not charge many fees is of importance, as the fee charged ultimately goes from the poc!et of the investor. $his is even more important for debt funds as the returns from these funds are not much. (unds that charge more will reduce the yield to the investor. (inding the right funds is important and one should also use these funds for ta efficiency. &nvestors of e@uity should !eep in mind that all dividends are currently ta >free in &ndia and so their ta liabilities can be reduced if the dividend payout option is used. &nvestors of debt will be charged a ta on dividend distribution and so can easily avoid the payout options. 33

8. !eep t#ack .2 4."# in1est3ents

(inding the right fund is important but even more important is to !eep trac! of the way they are performing in the mar!et. &f the mar!et is beginning to enter a bearish phase, then investors of e@uity too will benefit by switching to debt funds as the losses can be minimized. 0ne can always switch bac! to e@uity if the e@uity mar!et starts to show some buoyancy.

0/. !n./ /hen t. sell 4."# 3"t"al 2"n+sQnowing when to e it a fund too is of utmost importance. 0ne should boo! profits immediately when enough has been earned i.e. the initial e pectation from the fund has been met with. 0ther factors li!e non>performance, hi!e in fee charged and change in any basic attribute of the fund etc. are some of the reasons for to e it. (or more on it, read A$hen t. sa4 -..+04e t. 4."# 3"t"al 2"n+*B

&nvestments in mutual funds too are not ris!>free and so investments warrant some caution and careful attention of the investor. &nvesting in mutual funds can be a dicey business for people who do not remember to follow these rules diligently, as people are li!ely to commit mista!es by being ignorant or adventurous enough to ta!e ris!s more than what they can absorb. $his is the reason why people would do well to remember these rules before they set out to invest their hard>earned money.

SOME OF THE E)ISTIN& AMC (ASSET MANA&EMENT COMPAN()

34

 A!!i%n*e Mutu%! Fund )i#!% Mutu%! Fund )O) Mutu%! Fund )OI Mutu%! Fund DSP Me##i!! L5n*$ Mutu%! Fund HDFC Mutu%! Fund ID)I P#in*iB%! Mutu%! Fund Indi%n )%n+ Mutu%! Fund ING Mutu%! Fund 3"t%+ M%$ind#% Mutu%! Fund LIC Mutu%! Fund M"#4%n St%n!e5 Mutu%! Fund Pi"nee# ITI Mutu%! Fund PN) Mutu%! Fund P#udenti%! ICICI Mutu%! FundCDRe!i%n*e C%Bit%! Mutu%! FundCDS)I Mutu%! Fund St%nd%#d C$%#te#ed Mutu%! Fund Sund%#%m Mutu%! Fund T%t% TD W%te#$"u'e Mutu%! Fun T%u#u' Mutu%! Fund 35

DE'E%OPMENT OF MUTUA% FUND IN INDIA

$he mutual fund industry in &ndia started in 08<6 with the formation of unit trust of &ndia at the initiative of government of &ndia and reserve ban! of &ndia. $he history 0f mutual fund

In In+ia can 0e +i1i+e+ int. 2."# phases

FIRST PHASE 9

1=53 L :6

SECOND PHASE: 1=:6>1==' (,.$+H 0( 21#-&/ B,/$0+ (1.8B)

THIRD PHASE

: 1==' L 2??' (,.$+H 0( 2+&IA$, B,/$0+ (1.8B)

FOURTH PHASE9 B&./, (,#1+A+H 2??'

36

$he mutual fund industry in &ndia started in 1=5' with the formation of 1nit $rust of &ndia, at the initiative of the )overnment of &ndia and +eserve #an! of &ndia. $he history of mutual funds in &ndia can be broadly divided into four distinct phases Fi#st Phase L 1=53>:6 1nit $rust of &ndia (1$&) was established on 1=5' by an Act of 2arliament. &t was set up by the +eserve #an! of &ndia and functioned under the +egulatory and administrative control of the +eserve #an! of &ndia. &n 1=6: 1$& was de>lin!ed from the +#& and the &ndustrial 8evelopment #an! of &ndia (&8#&) too! over the regulatory

and administrative control in place of +#&. $he first scheme launched by 1$& was 1nit
Bcheme 1=53. At the end of 1=:: 1$& had +s.5, 6?? crores of assets under management.

Sec.n+ Phase L 1=:6>1==' (,ntry of 2ublic Bector (unds) 1=:6 mar!ed the entry of
non> 1$&, public sector mutual funds set up by public sector ban!s and -ife &nsurance /orporation of &ndia (-&/) and )eneral &nsurance /orporation of &ndia ()&/). B#& "utual (und was the first non> 1$& "utual (und established in Eune 1=:6 followed by /anara ban! "utual (und (8ec :6), 2un%ab .ational #an! "utual (und (Aug :=), &ndian #an! "utual (und (.ov :=), #an! of &ndia (Eun =?), #an! of #aroda "utual (und (0ct =2). -&/ established its mutual fund in Eune 1=:= while )&/ had set up its mutual fund in 8ecember 1==?. At the end of 1==', the mutual fund industry had assets under management of +s.36, ??3 crores.

Thi#+ Phase L 1=='>2??' (,ntry of 2rivate Bector (unds) with the entry of private
sector funds in 1==', a new era started in the &ndian mutual fund industry, giving the &ndian 3:

investors a wider choice of fund families. Also, 1==' was the year in which the first "utual (und +egulations came into being, under which all mutual funds, e cept 1$& were to be registered and governed. $he erstwhile Qothari 2ioneer (now merged with (ran!lin $empleton) was the first private sector mutual fund registered in Euly 1=='. $he 1=='

B,#& ("utual (und) +egulations were substituted by a more comprehensive and revised "utual (und +egulations in 1==5. $he industry now functions under the B,#& ("utual (und) +egulations 1==5. $he number of mutual fund houses went on increasing, with

many foreign mutual funds setting up funds in &ndia and also the industry has witnessed several mergers and ac@uisitions. As at the end of Eanuary 2??', there were '' mutual funds with total assets of +s. 1, 21,:?4 crores. $he 1nit $rust of &ndia with +s.33, 431 crores of assets under management was way ahead of other mutual funds.

F."#th Phase L since (ebruary 2??' &n (ebruary 2??', following the repeal of the 1nit
$rust of &ndia Act 1=5' 1$& was bifurcated into two separate entities. 0ne is the Bpecified 1nderta!ing of the 1nit $rust of &ndia with assets under management of +s.2=, :'4 crores as at the end of Eanuary 2??', representing broadly, the assets of 1B 53 scheme, assured return and certain other schemes. $he Bpecified 1nderta!ing of 1nit $rust of &ndia, functioning under an administrator and under the rules framed by )overnment of &ndia and does not come under the purview of the "utual (und +egulations. $he second is the 1$& "utual (und, sponsored by B#&, 2.#, #0# and -&/. &t is registered with B,#& and functions under the "utual (und +egulations. With the bifurcation of the erstwhile 1$& which had in "arch 2??? more than +s.65, ??? crores of assets under management and

3=

with the setting up of a 1$& "utual (und, conforming to the B,#& "utual (und +egulations, and with recent mergers ta!ing place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth.

&RAPHICA% REPRESENTATION

4?

MUTUA% FUND , OR&ANICATIONS

T$e#e %#e m%n5 entitie' in?"!?ed %nd t$e di%4#%m be!"& i!!u't#%te' t$e 41

O#4%niE%ti"n%! 'et uB " % mutu%! und-

RE&U%ATOR( BODIES
(inancial Bystem is basically responsible for the ma%or up and downs in the 42

,conomy. Bo, there are some regulatory bodies on it which ensures effectiveness &n the management of (und of the investors and transparency in the transactions.

F%O$ CHART

4'

FREDUENT%( USED TERMS IN MUTUA% FUND

43

 NET ASSET 'A%UE

.et Asset Ialue is the mar!et value of the assets of the scheme minus its liabilities. $he per unit .AI is the net asset value of the scheme divided by the number of units outstanding on the Ialuation 8ate.

SA%E PRICE $he price you pay when you invest in a scheme. Also called 0ffer 2rice. &t may include a sales load.

REPURCHASE PRICE

44

$he price at which units under open>ended schemes are repurchased by the "utual (und. Buch prices are .AI related.

REDEMPTION PRICE $he price at which close>ended schemes redeem their units on maturity. Buch prices are .AI related.

SA%ES %OAD A charge collected by a scheme when it sells the units. Also called, R(ront>end* load. Bchemes that do not charge a load are called R.o -oad* schemes.

REPURCHASE OR BAC! END %OAD A charge collected by a scheme when it buys bac! the units from the 1nit holders.

STRUCTURE OF INDIAN MUTUA% FUND

INDIAN MUTUAL FUND INDUSTRY
45

$he rising &ndian mutual funds industry probably never had it better, as far as the entry of individual or retail investors is concerned. $he industry*s total A1" in 8ecember 2??5 stood at a hefty +s ', 2',4=6 crore, with a total of2.6= crore depositor folios, of which 2.'1 crore depositor folios had invested ine@uity schemes. $he share of direct investors, on the other hand, has been dropping, stating that more retail investors see mutual funds as a preferred route for investing in the mar!ets. , isting and new mar!et players as well as , change $raded (unds are li!ely to hit the mar!et in the coming months with a flurry of new "utual (unds schemes. An action pac!ed first @uarter of 2??6 was forecasted to witness at -east 2? new schemes which are waiting on the sidelines to be launched.

Ma#ket sha#e E(F) .2 3"t"al 2"n+s c.3panies

46

PERFORMANCE SNAPSHOTGGG

$he year 2??5 scored high in terms of both returns and volatility. $he rising &ndian mutual funds industry saw its best, as far as the entry of individual or retail investors is concerned. &n 2??5, out of the 14= diversified e@uity funds (includes diversified e@uity, midcap, and e@uity ta saving schemes)9 S ./ und' (06F, "ut1Be# "#med t$e Sen'eGD =/ und' (69F, "ut1Be# "#med t$e Ni t5 4:

D T$e be't #etu#n' 4ene#%ted &e#e uB t" =;.6F (T%t% In #%'t#u*tu#e Fund, D EHuit5 Di?e#'i ied und' *$u#ned "ut %n %?e#%4e 66..F #etu#n: &$i*$ C"mB#i'e " 9. und' in t$i' *%te4"#5 *"mB#i'in4 " t"t%! 06= und'

D In #%'t#u*tu#e und' 't"!e t$e !ime!i4$t t$i' 5e%# &it$ t$e t"B t$#ee Pe# "#me#' bein4 In #%'t#u*tu#e Fund.

TOTA% ASSET MANA&ED B( 'ARIOUS FUND HOUSES

4=

$he amount of assets managed by A"/s varies every year. (ollowing is the table that depicts the total amount of asset managed by the well !nown A"/s in &ndia. &t also shows the ran!ing of A"/s for the year 2??6, based on the above mentioned parameter.

FUND HOUSE

2AN .//8

2AN .//;

DEC .//;

Re!i%n*e MF UTI MF P#udenti%! ICICI HDFC MF F#%n+!in TemB!et"n )i#!% Sun Li e S)I MF DSP Me##i!! L5n*$ TATA MF St%nd%#d C$%#te#ed 3"t%+ M%$ind#% LIC MF HS)C P#in*iB%! Fi4u#e' in R' *#"#e'

'=,?2? '6,4'4 '3,635 '1,324 2',=?: 21,1=? 16,442 1',33? 1',222 12,635 12,563 12,2'6 12,13? 1?,'''

15,6?2 24,516 22,5'4 1:,4=1 1:,14' 1',6=6 1?,:'= :,=65 :,53= =,3:? 6,'=6 5,':5 5,2:: 5,6:=

'5,=2: ':,1?= '','?4 2=,5'4 2',3?' 16,?43 14,?:5 1',416 12,166 12,52= 12,?52 11,4== 1?,34? 1?,422

5?

1)

#irla Bun life was the best performer in Eanuary 2??6 and +s3, 1'5 crore to its assets

2)

+eliance "( has become the top mutual fund house in the country by adding a very &mpressive +s2, ?=2 crore to assets under management

')

2revious $op (und 7ouse 1$& "( declined by +s463 crore and top position to +eliance

lost its

3) 4)

B#& "( was able to ac@uire 6th position by an addition of +s2, 355 crore $ata "( gained +s1, ?34 crore and able to secure its position in top 1?.

51

BEST EDUIT( MUTUA% FUNDS

(As .n ;Hth Ap#il8 ;IIJ)

(ollowing is the ran!ing of the best mutual funds and their .AIs as on 26thApril, 2??=. $he ran!ings are based on 1 year returns of the ,@uity "utual (unds available in the mar!et.

S*NO*

SCHEME NAME

: (#* #et"#n P#esent (F) NA'

.<.;8 .0.79 .;.78 .0.66 =8/.60 0=.88 0<./.

0 . 6 7 = < 9

DSPML Te*$n"!"45.*"m und14#"&t$ UTI )%n+in4 'e*t"# und14#"&t$ M%4num IT )i#!% Sun !i e Ne& Mi!!ennium1G#"&t$ )%n+in4 )ee' P#udenti%! ICICI Te*$n"!"45 IG#"&t$

79.=/ 7/./= 6<./< 6=.</ 6..<8 6..=8

P#udenti%! ICICI Se#?i*e' Indu't#ie' Fund I 6../9 G#"&t$

; 8 0/ 00 0. 06 07 0=

UTI S" t&%#e I G#"&t$ Re!i%n*e Medi% J Ente#t%inment I G#"&t$ )i#!% Sun !i e F#"nt!ine EHuit5 I G#"&t$ Re!i%n*e )%n+in4 I G#"&t$ Re!i%n*e NRI EHuit5 Fund I G#"&t$ F#%n+!in In "Te*$ I G#"&t$ D)S C$"!% OBB"#tunit5 Re!i%n*e Di?e#'i ied P"&e# Se*t"# I G#"&t$ 52

6/./8 .;.<0 .9.8/ .9.;0 .<.=7 .=.8= .=.;= .=.0<

.9.90 .<./9 =..;0 68../ .7.9/ =..<. .;.<6 69.90

MUTUA% FUND AT A &%ANCE

A mutual fund is professionally managed firm of collective instrument that pools money from many investors and invest it in "utual, bonds etc. A mutual fund is a trust registered with securities and e change board of &ndia.

'al"e .2 the 2"n+

$he value of each unit of mutual fund, !nown as net asset value (.AI)

F.#3"la
.et asset scheme < .o. of unit outstanding

METHODS OF MUTUA% FUND

0ne time payment Bystematic investment plan

5'

S(STEMATIC IN'ESTMENT P%AN

1nder this a fi ed sum is invested each month on a fi ed date of a month. 2ayment is through post dated che@ue or direct debit facilities $he investor gets the fewer units when the .AI is high and gets the more units when the .AI is low.

53

$OR!IN& OF MUTUA% FUND

54

.....

55

O0jecti1e .2 the st"+4

56

$o study the mutual fund industry in detail. $o study the investment procedure in detail. $o find out the mar!et ris! of sip plan. $o aware the client about mutual fund investment. $o suggest better investment option according to mar!et behavior to the client. , pansion of mutual fund investment. $o remove the past image of mutual fund from the mind of investors. $o show the beneficiary aspect of mutual fund. $o give the updated information to the investors about the high return and less ris! fund.

5:

Sc.pe .2 the st"+4

5=

Bcope of "utual (unds has grown enormously over the years. &n the first age of mutual funds, when the investment management companies started to offer mutual funds, choices were few. ,ven though people invested their money in mutual funds as these funds offered them diversified investment option for the first time. #y investing in these funds they were able to diversify their investment in common "utuals, preferred "utuals, bonds and other financial securities. At the same time they also en%oyed the advantage of li@uidity. With "utual (unds, they got the scope of easy access to their invested funds on re@uirement.

#ut, in today*s world, Bcope of "utual (unds has become so wide, that people sometimes ta!e long time to decide the mutual fund type, they are going to invest in. Beveral &nvestment "anagement /ompanies have emerged over the years, who offer various types of "utual (unds, ,ach type carrying uni@ue characteristics and different beneficial features.

6?

Resea#ch Meth.+.l.-4

61

1* Resea#ch Desi-n
A research design is a pattern or an outline of a research pro%ect*s wor!ing. &t is a statement of only the essential element of a study, those that provide the basic guidelines for the details of the pro%ect. &t comprises a series of prior decision that ta!en together provide master plans for e ecuting a research pro%ects. A research design serves as a bridge between what has been established i.e., the research ob%ectives and what is to be done, in conduct of the study to relish those ob%ectives. &f there were no research design, the research would have only foggy notions as about what is to be done.

& have used of R, ploratory T5BeK. $he research is of both @ualitative as well as @uantitative type.

2. Unit .2 Anal4sis
&nvestors

Cha#acte#istics .2 inte#est
/lient*s !nowledge about "utual (und. 62

 /lient*s !nowledge about +eliance. /lient*s interest in getting !nowledge of "utual (und. /lient*s willingness to deal in "utual (und with +eliance. /lient*s preference in selecting ta saving instrument of investment. /lient*s preference in selecting dealer.

<* S."#ces .2 Data

P#im%#5 S"u#*e$he primary data is collected using sampling method and by survey using @uestionnaire. Se*"nd%#5 S"u#*eBecondary data includes information regarding present mar!et scenario, &nformation regarding "utual (unds and competitors are collected by internet, "agazines and .ewspaper and boo!s.

=* Sa3ple Plannin Bample Bize9 4? units. Bample , tent9 Qanpur city.

>* Sa3ple +esi-n

6'

A sample design is a definite plan for obtaining a sample from a given population. &t refers to the techni@ue or method the researcher would adopt in selecting items for the sample. & have used convenience sampling method

K* Data c.llecti.n 3eth.+

& have used survey method to collect the data. Tuestionnaire plan9 & have used structured for gathering the re@uired data through contacting respondent personally

H* T4pe .2 in2.#3ati.n
& have collected facts, awareness, attitude, future action plan and reason using @uestionnaire.

L* T4pe .2 7"esti.ns
/lose ended @uestions for dichotomous. "ultiple choice type

J* Data Anal4sis an+ Inte#p#etati.n

8ata analysis is based on the data collected by way of @uestionnaires. $he data is tabulated and fre@uency distribution chart is prepared.

63

Use .2 the P#.ject

$hrough this / can ta!e the way that in which direction they should go for promoting mutual fund. $hrough this pro%ect (Awareness of /lient towards "utual (und) we can !now about the securities mar!et.

64

We can !now that how many investors are aware about the mutual fund. We can !now that in which type of securities, people want to invest and why. We can !now that if investors don*t want to invest in mutual fund so what the reason behind that is.

We can aware the investors about mutual funds beneficiary schemes. We can !now about the mar!et potential. #y this pro%ect we can !now that, which fund is growing up and which fund is going down.

#y this we can !now about the co.*s that provide the mutual fund investment facilities.

We can !now about the +eliance "utual fund co. and it*s wor!ing. We can !now about the mutual fund A"/ (A''et M%n%4ement C"mB%n5,

65

I3p.#tance .2 the st"+4

"utual funds offer ine perienced and e perienced investors>>>who may not have a lot of money to invest>>>the ability to invest in more than %ust one investment tool without having to monitor or manage that investment personally and at a reduced ris!. 66

,very person who have no more !nowledge about investment and he want to invest anywhere so he can invest easily in mutual fund.

0ne of the mode to invest mutual fund that*s B&2 (Bystematic &nvestment 2lan) is less ris!y to invest and every investor want to invest in less price.

"utual fund is totally depend upon the .AI value (.et Assets Ialue) #y purchasing a combination of "utuals, bonds and other securities>>rather than %ust one single "utual purchase>>their ris! is spread out over many fields and companies, instead of %ust one.

2urchasing into a mutual fund automatically provides the investor with an e perienced investment manager to oversee their investment. $his is because the mutual fund is composed of different investment securities and re@uires a competent professional to oversee it from the onset.

&t is one of the easiest ways of investing your saving money

6:

Resea#ch anal4sis an+ inte#p#etati.n

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MUTUAL FUND ADVISORS SUGGESTION A)OUT INVESTMENT

INTERPRETATION
"utual fund advisor will suggest the investors to invest in mutual fund investment more because it is les ris!y than any investment. &n mutual fund the investor can invest in sip (systematic investment plan) which is depend upon .AI (net asset value) which is less ris!y and whenever investors want to close that scheme they can. And it is profitable because its profit is based on average basis.

:?

REASONS FOR CHOOSING A)OVE

INTERPRETATION
After analysis we have got that lots of investors want to invest %ust for security purpose. because most of the investors want to secure or their money, so for holding the money they want to invest in somewhere so that they can safe their money for future .and a persons who have no !nowledge about security mar!et, they can also be invest in mutual funds.

:1

INVESTORS WHO 3NOW A)OUT THE MUTUAL FUND SERVICES PROVIDED )Y RELIANCE

INTERPRETATION
After analysis we have !nown that most of the investors don*t !now about the mutual fund services which has been provided by +eliance %ust because of publicity, +eliance doesn*t show that it provides mutual fund services along with other services such as9 pan card services, d.p. services, share trading services, &20s services etc. that*s why most of the peoples are un!nown about the +eliance mutual fund services.

:2

INVESTORS INTERESTED TO INVEST IN MUTUAL FUND

INTERPRETATION
After analysis we have seen that most of the investors are not interested to invest in mutual fund %ust because of9 2ast image of mutual fund. #ecause of unawareness. $hey are unaware about the mutual fund benefits.

:'

 $hey don*t want to ta!e ris!

A INVESTORS WANTS TO INVEST ON WHICH )ASIS

INTERPRETATION
After analysis we have got the result that most of the investors want to invest in any securities on the basis of rate of return, when they invest in any believable security so they e pected or anticipated that they will got the e pected rate of return ,

:3

Bome people invest on the basis of safety purpose , some small investors mostly invest their money for saving and for getting into near future

#usinessman mostly invests their money on securities %ust for saving the ta because invested money always is ta free

A PERSON WANTS TO TA3E INFORMATION A)OUT MUTUAL FUND

INTERPRETATION
#y above analysis we can !now that most of the clients, 2ersons or investors want to !now about the mutual fund benefits, schemes, and :4

,ach and every information, because now a days every persons or investors want to )et information about everything so that on time he can utilize optimum utilization 0f resources in a right way and could get profit.

A PERSON WHO WANT TO DO THE 2O) IN RELIANCE MUTUAL FUND

:5

INTERPRETATION
After analysis we got that investors don*t want to do the %ob in +eliance because9 #ecause lots of persons have no time for %oining that and there is lac! of management in each dept. of +eliance that is also be reason that persons don*t want to do %ob in +eliance Bome persons don*t want %ust because of lac! of !nowledge about investment. Bome persons don*t want to do the %ob in +eliance because they don*t want to e pand their business. Bome persons gave no answers on such issues.

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A INVESTORS WHO WANT TO ATTEND THE SEMINAR PROVIDED )Y RELIANCE

INTERPRETATION

::

#y above evaluation we can see that some investors are interested to %oin the seminar on mutual fund which has been organized by +eliance because they actually want to !now the actual situation of mutual fund that 9 benefits ,why this investment e ist, why they should invest over there.

M.st .2 the pe#s.ns +.n@t /ant t. atten+ se3ina# 0eca"se

$hey have no time for such type of activities. $hey don*t trust on mutual fund investment. $hey thin! that these all are rubbish thing.

ON WHICH COMPANIES THE CLIENT )ELIEVES MORE

:=

INTERPRETATION

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We all !now that most of the investors or persons are interested to invest in public co. or government co. in which there is less chance to drop out the invested money while on the other hand less of the persons are not interested to invest in private sector because there is more ris! than public sectors. Bame as we can see in the above chart that most of the investors want to invest in reliance co. because investors has made the mind set that we will get always the profit in investing over there while only small investors who invest very small amount in security invest in private co. such as9 hdfc , icici. 0ther.

WHY THE CLIENTS )ELIEVE ONLY A)OVE CHOOSING FUND

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INTERPRETATION
"ost of the investors or clients want to invest in public co. because most of the clients thin! that<G &t is ris! free means to say there is less ris! to invest in that type of funds, that is a trustworthy co. Bome investors invest %ust because of good return, peoples perception towards that co. is that it will never incurred loss and it will not cheat the investors. +eliance is one of the most powerful and reputed co. even we can say "./ co. so %ust because of good positioned in the mar!et investors want to invest over there.

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CLIENTS WANT TO GET ADVISORY SERVICES FROM RELIANCE

INTERPRETATION
&nvestors who have already invested in mutual fund they all want advisory services from +eliance, in advisory servicesG we can !now .AI (net assets value) of each fund on daily basis. Bo investors want to get those services so that they can ta!e right decision on right time, if he sees that he is getting loss in investing fund so by this services he can switch from loss fund to profitable fund. Bo all the investors want to get that type of services from +eliance.

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CLIENTS ATTITUDE TOWARDS DSP )LAC3 ROC3 FUND WHICH PROVIDE 0//F RETURN NOW A DAYS

INTERPRETATION
We have seen that most of the investors don*t want to invest in dsp blac! roc! fund, which is international co. , they don*t want to invest because they !now that now a days the .AI of this fund is very low appro . (13 >14 rs.) so on this the 1??K return is not so hectic for the org. and mar!et is totally based upon uncertainty and always be fluctuating so he thin!s that may be dspblac! roc! will not provide same return in future so the investors may get lost, so they don*t want to invest in this. 0nly those investors would li!e to invest in this fund who invests for short term.

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INVESTORS WOULD LI3E TO INVEST IN

INTERPRETATION
We can see that most if the investors want to invest in debt funds because there is a solid reason behind this is that the debt funds provide the fi ed rate of interest to the investors, there is no ris! in that type of funds for the investors. While only big investors want to invest in e@uity mar!et because e@uity fund provide the dividend according to performance of the org. if there will be profit in org so investors will get the dividend otherwise they will have to face loss $hat*s why investors want to invest in debt funds rather than e@uity mar!et.

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WHICH TYPE OF INSTRUMENT CURRENTLY INVESTED IN

INTERPRETATION
.ow a day*s most of the investors want to invest in others funds such as9 (8*s &.B1+A./, ,tc.

=5

 After that the investors mostly focus on to invest in debt mar!et %ust for reducing the ris!. After that they want to invest in e@uity mar!et for getting more profit. $hen investors want to invest in commodity mar!et %ust for saving money in near future.

Fin+in-s

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0, After getting in depth research study of +eliance, & came to !now that +eliance is not much popular as other brands operating in Qanpur city. #a%a% Allianz, 78(/, &/&/& are having much higher tapped mar!et in respect to mutual funds. ., +eliance as an investment option in "utual (und does not possess much proficiency and potential customers in Qanpur city. $hough the financial advisors advise their clients to go for "utual (und as an investment option. About 32K of advisors advise their clients to invest in "utual (unds, followed by investing in &nsurance sector. 6, $he advisors after having a deep thought says that it is the +eturns that ma!e them convince their clients to go for investment in mutual funds. '5K of advisors said that it is the +eturns which ma!e a person to invest in "utual (und. (ollowed by +is! which is @uite lesser in other investment options. 7, A huge lot of advisors showed a positive response in dealing of for "utual (und. About 5?K of them said that they are interested in dealing for "utual (unds, because that results in higher bro!erage. =, As far as +eliance is concerned about =1K of the advisors said that they are not aware of the services provided by +eliance, including "utual (und. =:

<, When as!ed, 4'K of advisors said that they are not interested to wor! with +eliance Becurities, to the contrary with they don*t have any such e pansion plans and they have little !nowledge about +eliance. 9, &n Qanpur city advisors don*t have an appropriate !nowledge about +eliance as an &nvestment hub.

S/.t Anal4sis

==

A type of fundamental analysis of the health of a company by e amining its strengths(B), wea!ness (W), business opportunity (0), and any threat ($) or dangers it might be e posed to.

L I. STREN&THS

B#an+ st#ate-4-

as opposed to some of its competitors (e.g. 7B#/), +eliance

A8A) operates a multi>brand strategy. $he company operates under numerous well>!nown brand names, which allows the company to appeal to many different segments of the mar!et.

Dist#i0"ti.n channel st#ate-49

+eliance is continuously improving the distribution

of its products. &ts online and &nternet>based access offers a combination of e cellent growth prospects and its retail direct business also saw growth of 26K in 2??2 and 14K in 2??'.

1??

'a#i."s s."#ces .2 inc.3e9 +eliance has many sources of income throughout the group, and this diversity within the group ma!es the company more fle ible and resistant to economic and environmental changes.

%a#-e p..l of installed capacities. E5pe#ience+ 3ana-e#s for large number of )enerics. -arge pool of skille+ an+ kn./le+-ea0le 3anp./e#. An inc#easin- li0e#ali6ati.n of government policies.

II* $EA!NESS

E3e#-in- 3a#kets- since there is more investment demand in the 1nited Btates, Eapan and the rest of Asia, +eliance should concentrate on these mar!ets, especially in view of low global interest rates.

"utual funds are li!e many other investments without a guaranteed return9 there is always the possibility that the value of your mutual fund will depreciate. 1nli!e fi ed>income products, such as bonds and $reasury bills, mutual funds e perience price fluctuations along with the stoc!s that ma!e up the fund. When deciding on a particular fund to buy, you need to research the ris!s involved L %ust because a

1?1

professional manager is loo!ing after the fund, that doesn*t mean the performance will be stellar.

Fees- &n mutual funds, the fees are classified into two categories9 shareholder fees and annual operating fees. $he shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. $he annual fund operating fees are charged as an annual percentage L usually ranging from 1>'K. $hese fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn*t ma!e money, these fees only magnify losses.

III* OPPORTUNITIES

P.tential 3a#kets- $he &ndian rural mar!et has great potential. All the ma%or mar!et leaders consider the segments and real mar!ets for their products. A senior official in a one of the leading company says foray into rural &ndia already started and there has been realization that the rural mar!et is both price and @uantity conscious.

1?2

Ent#4 .2 MNCs9 8ue to multinationals are entering into mar!et %ob opportunities are increasing day by day. Also &ndia "utual (und ma%ors are tie up with other financial institutions.

I'* THREATS He+-e 2"n+s- sometimes referred to as as hot money, are also causing a threat for mutual funds have gained worldwide notoriety for bringing the mar!ets down. #e it a crash in the currency, A stoc! or A bond mar!et, A usually a hedge fund prominently figures somewhere in the picture.

1?'

Rec.33en+ati.ns

$here is high potential mar!et. (or mutual fund investors Qanpur city but this mar!et need to bed e plored as investors are still hesitated to invest their money in mutual fund.

1?3

&n Qanpur city, investor has inade@uate !nowledge of mutual fund, so proper mar!eting of various scheme is re@uired, co. should arrange more and more seminar about mutual fund.

/o. should also provide the !nowledge of growth rate and e pected growth rate of mutual fund in &ndia.

+eliance must be concentrate on the management of the co. so that every wor! can be done in a proper way.

+eliance must be advertising its tie up co. fund along with their features that the investors can invest in that type of fund in +eliance.

+eliance must be provided the advice to investors about mutual fund growing fund.

1?4

C.ncl"si.n

1?5

The a/a#eness le1el .2 in1est.#s is l./ /h. a#e inte#este+ in +ealin- in 3"t"al 2"n+
"ost of investors are totally unaware about this investment. Iery less people !nows about the service of +eliance. 2ast image of mutual fund is not good. +eliance can promote the investors by advertising, hording, and by interviews to invest in this fund. "ost of the investors want to invest in public co.*s fund %ust because of safety purpose. "ost of the investors want to safer side in investment. "ost of the investors want to invest in debt funds because those are the ris! free fundsG it gives the interest on investment. "ost of the investors don*t !now about the mutual funds so they want advisory services from reliance which could provide them whole information about the mar!et situation of mutual fund.

1?6

Anne5"#e
1?:

$e ass"#e 4." that all the in2.#3ati.n that /ill 0e c.llecte+ 2#.3 4." /ill #e3ain 2"ll4 c.n2i+ential an+ "se .nl4 2.# st"+4 p"#p.se.

.A",9 UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU 8,B&).A$&0.<A88+,BB9 UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU ,"A&- &89 UUUUUUUUUUUUUUUUUUUUUU .0.9UUUUUUUUUUUUUUUUUUU 270.,

1) As a financial advisor which investment options you will suggest your customers9 a) Bhares ( ) b) &nsurance ( ) c) "utual fund ( ) d) (i ed deposit ( )

1?=

2) 2lease indicate reason for choosing above 9 a) +eturn ( ) b) +is! ( ) c) Bafety ( ) d) $a benefit ( ) e) 0thers ( )

') 8o you !now about the mutual fund services provided by the +eliance 9 a) Hes ( ) b) .o ( ) 3) Are you interested to invest in mutual fund 9 a) Hes ( ) b) .o ( )

4) 8o you invest your money on which basis 9 a) +eturn ( ) b) Bafety ( ) 11?

c) $a saving ( ) d) 0thers ( )

5) 8o you want to collect information about mutual fund investment9 a) Hes ( ) b) .o ( )

6) Will you li!e to wor! in +eliance "utual (und -td. , which deals with mutual fund 9 a) Hes ( ) b) .o ( )

:) &n future will you attend the seminar arranged by +eliance to guide the investors about mutual fund 9 a) Hes ( ) b) .o ( ) =) &n which co. you believe more 9

111

a) 7dfc b) &cici c) +eliance d) 8sp blac! roc! e) Any other fund UUUUUUUUUUUUUUUUUUUUUUUUU

1?) Why you believe only such !ind of fund 9 a) +eturn ( ) b) )ood mar!et position ( ) c) +is! free ( ) d) Any other reason ( )

11) 8o you want the advisory services of +eliance 9 a) Hes ( ) b) .o ( )

112

12) .ow a days 8B2 blac! roc! fund provides the 1?? K return so do you want to invest in this fund 9 a) Hes ( ) b) .o ( ) c) &f yes<no why UUUUUUUUUUUUUUUUUUUUUU

1') &f you have +s. 1?? , in which of these assets classes would you li!e to invest 9 a) ,@uity ( ) b) 8ebt ( ) c) /ommodities ( ) d) 8erivatives ( )

13) Which type of instrument are currently invested in 9 a) "utual fund (e@uities) ( ) b) 8ebt funds ( ) c) /urrency V /ommodities ( ) d) 0thersUUUUUUUUUUUUUUUUUUUUU 11'

Bi0li.-#aph4

$EBSITE
http9<<www.moneycontrol.com http9<<www.amfi.com http9<<www.+eliance .com<<v2< 113

www.amfiindia.com

MA&ACINES
B.)opichand, the finapolis , +eliance "utual (und -td..,volume 3 , 2?1? 2unithavathy2andian , Becurity Analysis And 2ortfolio "anagement , Ii!as 2ublishing 7ouse , 2??1

T$%n+ 5"u

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