Mutual fund is an investment company that pools money from shareholders and

invests in a variety of securities, such as stocks, bonds and money market

instruments.

Most

open-end Mutual funds stand ready to buy back (redeem) its

shares at their current net asset value, which depends on the total market value of the
fund's investment portfolio at the time of redemption. Most open-end Mutual funds
continuously offer new shares to investors. Also known as an open- end investment
company, to differentiate it from a closed-end investment company. Mutual funds
invest pooled cash of many investors to meet the fund's stated investment objective.
Mutual funds stand ready to sell and redeem their shares at any time at the fund's
current net asset value: total fund assets divided by shares outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as disclosed in offer
document. Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not

move in the same direction in the same proportion at the same time. Mutual fund
issues units to the investors in accordance with quantum of money invested by them.
Investors of Mutual funds are known as unit holders. The profits or losses are shared by the
investors in proportion to their investments. The Mutual funds normally come out with a
number of schemes with different investment objectives which are launched from time to time.
In India, A Mutual fund is required to be registered with Securities and Exchange Board of
India (SEBI) which regulates securities markets before it can collect funds from the public. In
Short, a Mutual fund is a common pool of money in to which investors with common
investment objective place their contributions that are to be invested in accordance with the
stated investment objective of the scheme. The investment manager would invest the money
collected from the investor in to assets that are defined/ permitted by the stated objective

of the scheme. For example, an equity fund would invest equity and equity related instruments
and a debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable
investment for the common man as it offers an opportunity to invest in a diversified,

professionally managed basket of securities at a relatively low cost.

CONCEPT OF THE MUTUAL FUND

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

basket of securities at a relatively low cost. The flow chart below describes broadly the

working of a mutual fund:

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A mutual fund is a professionally managed form of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market
instruments, and other securities. In a mutual fund the fund manager who is also
known as the portfolio manager, trades the funds underlying securities, realizing
capital gains or losses, and collects the dividend or interest income. The investment
proceeds are then passed along to the individual investors.
Investor preference in mutual funds tells about the interest or willingness of investor to
invest in mutual funds. And also how many individuals know about the mutual fund as
a investment alternative. And what is the scenario in these days towards mutual funds
in terms of risk and return. There are a lot of investment avenues available today in the
financial market for an investor with an investable surplus. He can invest in bank
deposits, corporate debentures and bonds where there is low risk but low return. He
may invest in stock of companies where the risk is high and return is also
proportionately high. The recent trends in the stock market have shown that an average
retail investor always lost with periodic bearish tends. People began opting for

portfolio managers with expertise in stock markets who would invest on their behalf.
Thus are had wealth management services provided by many institutions. However
they proved too costly for a small investor. These investors have found a good shelter
with the mutual funds.
The mutual fund is structured around a fairly simple concept, the mitigation of risk
through the spreading of investments across multiple entities, which is achieved by the
pooling of a number of small investments into a large bucket. Yet, it has been the
subject of Perhaps the most elaborate and prolonged regulatory effort in the history of
the country. The mutual fund industry has grown to gigantic proportions in countries
like the USA, in India it is still in the phase of infancy.
A small investor is the one who is able to correctly plan & decide in which Profitable
& safe instrument to invest. To lock up ones hard earned money in a savings Banks
account is not enough to counter the monster of inflation. Investment is a serious
proposition one has to look into various factors before Deciding on the instruments in
which to invest. Using simple concepts of Diversification, power of compound
interest, stable returns & limited exposure to equity Investment, one can maximize his
returns on investments & multiply ones savings.
Investment is a serious proposition one has to look into various factors before
Deciding on the instruments in which to invest. To save is not enough. One must invest
wisely & get maximum returns. One must plan investment in such a way that his
Investment objectives are satisfied. A sound investment is one which gives the investor
Reasonable returns with a proper profitable management.

The mutual fund is structured around a fairly simple concept, the mitigation of risk
through the spreading of investments across multiple entities, which is achieved by the
pooling of a number of small investments into a large bucket. Yet, it has been the
subject of perhaps the most elaborate and prolonged regulatory effort in the history of
the country. The mutual fund industry has grown to gigantic proportions in countries
like the USA, in India it is still in the phase of infancy. The origin of the Indian mutual
fund industry can be traced back to 1964 when the Indian Government, with a view to
augment small savings within the country and to channelize these savings to the
capital markets, set up the Unit Trust of India (UTI). The UTI was setup under a
specific statute, the Unit Trust of India Act, 1963. The Unit Trust of India launched its
first open-ended equity scheme called Unit 64 in the year 1964, which turned out to be
one of the most popular mutual fund schemes in the country. In 1987, the government
permitted other public sector banks and insurance companies to promote mutual fund
schemes. Pursuant to this relaxation, six public sector banks and two insurance
companies viz. Life Insurance Corporation of India and General Insurance
Corporation of India launched mutual fund schemes in the country. Securities
Exchange Board of India, better known as SEBI, formulated the Mutual Fund
(Regulation) 1993, which for the first time established a comprehensive regulatory
framework for the mutual fund industry. This proved to be a boon for the mutual fund
industry and since then several mutual funds have been set up by the private sector as
well as the joint sector. Kothari Pioneer Mutual fund became the first from the private
sector to establish a mutual fund in association with a foreign fund. Since then several
private sector companies have established their own funds in the country, making
mutual fund industry one of the most followed sector by critics and investors alike.
The share of private sector mutual funds too has gone up rapidly. In the period
between 1963 and 1988, when the UTI was the sole player in the industry, the assets
under management grew to about Rs.67 billion. In the second phase between 19881994, when public sector banks and insurance companies were allowed to launch
mutual fund schemes, the total assets in the mutual fund industry grew to about Rs.
610 billion with the total number of schemes increasing to 167 by the end of 1994. The
third phase of the mutual fund industry, which commenced in 1994, witnessed

exponential growth of the industry, with the advent of private players therein. As on
May 31, 2004, the total assets under management stood at Rs. 1540 billion and the
total number of schemes stood at 399. During the last three and a half decades, UTI
has been a dominant player in the mutual fund industry. The total assets under the
management of the UTI as on September 30, 2002 were to the tune of Rs. 442 billion,
which amount to almost 41% of the total assets under management in the domestic
mutual fund industry. UTI has witnessed some erosion of assets pursuant to the last
years crisis arising on account of its Unit 64 scheme, the scheme with largest amount
of assets under management. This was the first scheme launched by the UTI with a
significant equity exposure and the returns of which was not linked to the market. This
resulted in a payment crisis when the stock markets crashed during the last two years,
which resulted in some degree of loss of investors confidence in UTI leading to
erosion of its assets under management. This period also gave opportunity to the
private players to demonstrate better returns thereby capturing a significant market
share.
Whatever may have happened to mutual funds in the past and whatever one is seeing
now, mutual funds are here to stay as long as they can deliver the aspirations of their
investors. One must not forget that India is a large nation with a population of more
than 1 billion people and the potential continues to be huge. However, to be fair
mutual fund managers should also strive to improve their performance and not blame
the vagaries of the market all the times. Mutual fund is an investment company that
pools money from shareholders and invests in a variety

of

securities,

such

as

stocks, bonds and money market instruments. Most open-end Mutual funds
stand ready to buy back (redeem) its shares at their current net asset value, which
depends on the total market value of the fund's investment portfolio at the time of
redemption. Most open-end Mutual funds continuously offer new shares to investors.
Also known as an open-end investment company, to differentiate it from a closed-end
investment company. Mutual funds invest pooled cash of many investors to meet the
fund's stated investment objective. Mutual funds stand ready to sell and redeem their
shares at any time at the fund's current net asset value: total fund assets divided by
shares outstanding. In Simple Words, Mutual fund is a mechanism for pooling the

resources by issuing units to the investors and investing funds in securities in

accordance with objectives as disclosed in offer document. Investments in securities
are spread across a wide cross-section of industries and sectors and thus the risk is
reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of Mutual
funds are known as unit holders. The profits or losses are shared by the investors in
proportion to their investments. The Mutual funds normally come out with a number
of schemes with different investment objectives which are launched from time to time.
In India, A Mutual fund is required to be registered with Securities and Exchange
Board of India (SEBI) which regulates securities markets before it can collect funds
from the public. In Short, a Mutual fund is a common pool of money in to which
investors with common investment objective place their contributions that are to be
invested in accordance with the stated investment objective of the scheme. The
investment manager would invest the money collected from the investor in
to

assets that are

defined/ permitted by the stated objective of the scheme. For

example, an equity fund would invest equity and equity related instruments and a debt
fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment
for the common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.

Meaning of mutual funds:

A mutual fund is a professionally managed form of collective investments that pools
money from many investors and invests it in stocks, bonds, short term money market
instruments, and other securities. In a mutual fund, the fund manager ,who is also
known as the portfolio manager, trades the funds underlying securities, Realizing
capital gains or losses and collects the dividend or interest income. The investment
proceeds are then passed along to the individual investors.

Definition
Mutual funds are corporations which accept dollars from savers and then use these
dollars to buy stocks, long term bonds, and short term debt instruments issued by
business or government units, these corporations pools funds and thus reduce risk by
diversification.
Mutual funds as financial intermediaries which bring a wide variety of securities
within the reach of the most modest of investors.
It is a non depository or non banking financial intermediary which acts as an
important vehicle for bringing wealth holders and deficit units together indirectly.
A mutual fund, also referred to as an open-end fund, is an
investment company that spreads its money across a diversified
portfolio of securities -- including stocks, bonds, or money market
instruments. Shareholders who invest in a fund each own a
representative portion of those investments, less any expenses
charged by the fund. Mutual fund investors make money either by
receiving dividends and interest from their investments, or by the
rise in value of the securities. Dividends, interest and profits from the
sale of any securities (capital gains) are passed on to the
shareholders in the form of distributions. And shareholders generally
are allowed to sell (redeem) their shares at anytime for the closing
market price of the fund on that day.
Mutual funds have been around for a long time, dating back to the
early 19th century. The first modern American mutual fund opened in
1924, yet it was only in the 1990s that mutual funds became
mainstream investments, as the number of households owning them
nearly tripled during that decade. With recent surveys showing that
over 88% of all investors participate in mutual funds, you're probably
already familiar with these investments, or perhaps even own some.
In any case, it's important that you know exactly how these
investments work and how you can use them to your advantage.

A mutual fund is a special type of company that pools together

money from many investors and invests it on behalf of the group, in
accordance with a stated set of objectives. Mutual funds raise the
money by selling shares of the fund to the public; much like any
other company can sell stock in itself to the public. Funds then take
the money they receive from the sale of their shares (along with any
money made from previous investments) and use it to purchase
various investment vehicles, such as stocks, bonds and money
market instruments. In return for the money they give to the fund
when purchasing shares, shareholders receive an equity position in
the fund and, in effect, in each of its underlying securities. For most
mutual funds, shareholders are free to sell their shares at any time,
although the price of a share in a mutual fund will fluctuate daily,
depending upon the performance of the securities held by the fund.
A mutual fund is simply a financial intermediary that allows a group
of investors to pool their money together with a predetermined
investment objective. The mutual fund will have a fund manager
who is responsible for investing the pooled money into specific
securities (usually stocks or bonds). When you invest in a mutual
fund, you are buying shares (or portions) of the mutual fund and
become a shareholder of the fund.
An open-ended fund operated by an investment company which
raises money from shareholders and invests in a group of assets, in
accordance with a stated set of objectives. Mutual funds raise money
by selling shares of the fund to the public, much like any other type
of company can sell stock in itself to the public. Mutual funds then
take the money they receive from the sale of their shares (along with
any money made from previous investments) and use it to purchase
various investment vehicles, such as stocks, bonds and money
market instruments. In return for the money they give to the fund

when purchasing shares, shareholders receive an equity position in

the fund and, in effect, in each of its underlying securities. For most
mutual funds, shareholders are free to sell their shares at any time,
although the price of a share in a mutual fund will fluctuate daily,
depending upon the performance of the securities held by the fund.
Benefits of mutual funds include diversification and professional
money management. Mutual funds offer choice, liquidity, and
convenience, but charge fees and often require a minimum
investment. A closed-end fund is often incorrectly referred to as a
mutual fund, but is actually an investment trust. There are many
types of mutual funds, including aggressive growth fund, asset
allocation fund, balanced fund, blend fund, bond fund, capital
appreciation fund, clone fund, closed fund, crossover fund, equity
fund, fund of funds, global fund, growth fund, growth and income
fund, hedge fund, income fund, index fund, international fund,
money market fund, municipal bond fund, prime rate fund, regional
fund, sector fund, specialty fund, stock fund, and tax-free bond fund.
History of the Indian Mutual Fund Industry
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 history of mutual funds in India can be broadly
divided into four distinct phases.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. It was set up by the Reserve Bank of India and
functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and
the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first

scheme launched by UTI was Unit Scheme 1964. At the end of 1988
UTI had Rs.6700 crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
In the year 1987 marked the entry of non- UTI, public sector mutual
funds set up by public sector banks and Life Insurance Corporation of
India (LIC) and General Insurance Corporation of India (GIC). SBI
Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Can bank Mutual Fund (Dec 87), Punjab National
Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank
of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its
mutual fund in December 1990.At the end of 1993, the mutual fund
industry had assets under management of Rs.47004 crores
.
Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in
the Indian mutual fund industry, giving the Indian investors a wider
choice of fund families. Also, 1993 was the year in which the first
Mutual Fund Regulations came into being, under which all mutual
funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first
private sector mutual fund registered in July 1993. The 1993 SEBI
(Mutual

Fund)

Regulations

were

substituted

by

more

comprehensive and revised Mutual Fund Regulations in 1996. The

industry now functions under the SEBI (Mutual Fund) Regulations
1996. The number of mutual fund houses went on increasing, with
many foreign mutual funds setting up funds in India and also the
industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of

Rs. 121805 crores. The Unit Trust of India with Rs.44541 crores of
assets under management was way ahead of other mutual funds.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act
1963 UTI was bifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return
and certain other schemes. The Specified Undertaking of Unit Trust
of India, functioning under an administrator and under the rules
framed by Government of India and does not come under the
purview of the Mutual Fund Regulations. The second is the UTI
Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than
Rs.76000 crores of assets under management and with the setting
up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different
private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of October
31, 2003, there were 31 funds, which manage assets of Rs.126726
crores under 386 schemes.
FUND BASICS
A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus collected is
invested by the fund manager in different types of securities depending upon the
objective of the scheme. These could range from shares to debentures to money
market instruments. The income earned through these investments and the capital
appreciation realized by the scheme is shared by its unit holders in proportion to the

number of units owned by them. Thus a Mutual Fund is the most suitable investment
for the common man as it offers an opportunity to invest in a diversified,
professionally managed portfolio at a relatively low cost. The small savings of all the
investors are put together to increase the buying power and hire a professional
manager to invest and monitor the money. Anybody with an investible surplus of as
little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme
has a defined investment objective and strategy. A Mutual Fund is a trust that pools
the savings of a number of investors who share a common financial goal. The money
thus collected is then invested in capital market instruments such as shares, debentures
and other securities. The income earned through these investments and the capital
appreciations realized are shared by its unit holders in proportion to the number of
units owned by them. Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost.

Structure of a Mutual Fund

A mutual fund is set up in the form of a trust, which has Sponsor,
Trustees, asset Management Company (AMC) and a Custodian. The
trust is established by a sponsor or more than one sponsor who is
like a promoter of a company. The trustees of the mutual fund hold
its property for the benefit of the unit-holders. The AMC, approved by
SEBI, Manages the funds by making investments in various types of
securities. The custodian, who is registered with SEBI, holds the
securities of various schemes of the fund in its custody. The trustees
are vested with the general power of superintendence and direction
over AMC. They monitor the performance and compliance of SEBI
Regulations by the mutual fund.

Sponsor
The sponsor is required, under the provisions of the Mutual Fund
Regulations, to have a sound track record, a reputation of fairness
and integrity in all his business transactions. Additionally, the
sponsor should contribute at least 40% to the net worth of the AMC.

However, if any person holds 40% or more of the net worth of an

AMC shall be deemed to be a sponsor and will be required to fulfill
the eligibility criteria specified in the Mutual Fund Regulations. The
sponsor or any of its directors or the principal officer employed by
the mutual fund should not be guilty of fraud, not be convicted of an
offence involving moral turpitude or should have not been found
guilty of any economic offence.

Trustees
The mutual fund is required to have an independent Board of
Trustees, i.e. two thirds of the trustees should be independent
persons who are not associated with the sponsors in any manner
whatsoever. An AMC or any of its officers or employees are not
eligible to act as a trustee of any mutual fund. In case a company is
appointed as a trustee, then its directors can act as trustees of any
other trust provided that the object of such other trust is not in
conflict with the object of the mutual fund. Additionally, no person
who is appointed as a trustee of a mutual fund can be appointed as
a trustee of any other mutual fund unless he is an independent
trustee and prior approval of the mutual fund of which he is a trustee
has been obtained for such an appointment.
The trustees are responsible for inter alia -ensuring that the AMC
has all its systems in place, all key personnel, auditors, registrars
etc. have been appointed prior to the launch of any scheme. It is
also the responsibility of the trustees to ensure that the AMC does
not act in a manner that is favorable to its associates such that it has
a detrimental impact on the unit holders, or that the management of
one scheme by the AMC does not compromise the management of
another scheme. The trustees are also required to ensure that an
AMC has been diligent in empanelling and monitoring any securities

transactions with brokers, so as to avoid any undue concentration of

business with any broker. The Mutual Fund Regulations further
mandates that the trustees should prevent any conflicts of interest
between the AMC and the unit holders in terms of deployment of net
worth.

Asset Management Company

The sponsor or the trustees are required to appoint an AMC to
manage the assets of the mutual fund. Under the Mutual Fund
Regulations, the applicant must satisfy certain eligibility criteria in
order to qualify to register with SEBI as an AMC.

The sponsor must have at least 40% stake in the AMC.

The directors of the AMC should be persons having adequate
professional

experience in finance and financial services

related field and not found guilty of moral turpitude or

convicted of any economic offence or violation of any

securities laws.
The AMC should have and must at all times maintain, a
minimum net worth of Rs 10 cr.

The board of directors of such AMC has at least 50% directors, who
are not associates of or associated in any manner with, the sponsor
or any of its subsidiaries or the trustees. The Chairman of the AMC is
not a trustee of any mutual fund. In addition to the above eligibility
criteria and other ongoing compliance requirements laid down in the
Mutual Fund Regulations, the AMC is required to observe the
following restrictions in its normal course of business. Any director of
the AMC cannot hold office of a director in another AMC unless such
person is an independent director and the approval of the board of
the AMC of which such person is a director, has been obtained; the
AMC shall not act as a trustee of any mutual fund; the AMC cannot
undertake any other business activities except activities in the

nature of portfolio management services, management and advisory

services to offshore funds, pension funds, provident funds, venture
capital funds, management of insurance funds, financial consultancy
and exchange of research on commercial basis if any of such
activities are not in conflict with the activities of the mutual fund.

Custodian
The mutual fund is required, under the Mutual Fund Regulations, to
appoint a custodian to carry out the custodial services for the
schemes of the fund. Only institutions with substantial organizational
strength, service capability in terms of computerization, and other
infrastructure facilities are approved to act as custodians. The
custodian must be totally de-linked from the AMC and must be
registered with SEBI. Under the Securities and Exchange Board of
India

(Custodian of

Securities) Guidelines, 1996,

any person

proposing to carry on the business as a custodian of securities must

register with the SEBI and is required to fulfill specified eligibility
criteria. Additionally, a custodian in which the sponsor or its
associates holds 50% or more of the voting rights of the share
capital of the custodian or where 50% or more of the directors of the
custodian represent the interest of the sponsor or its associates
cannot act as custodian for a mutual fund constituted by the same
sponsor or any of its associate or subsidiary company.

Classification of mutual funds

There are a wide variety of Mutual Fund schemes that cater to
investors need, whatever your age, financial position, risk tolerance
and return expectations. Whether as the foundation of your

investment program or as a supplement, Mutual Fund schemes can

help you meet your financial goals.
Mutual funds can be classified under four different categories:
1. Operational classification
2. Portfolio classification
3. Geographical classification
4. Structural classification

Operational classification
Mutual funds are broadly categorized into three types, namely

Open-Ended mutual funds

These do not have a fixed maturity. Investors deal directly with the
Mutual Fund for their investments and redemptions. The key feature
is liquidity. They can conveniently buy and sell their units at Net
Asset Value ("NAV") related prices.

Close-Ended mutual funds

Schemes that have a stipulated maturity period (ranging from 2 to
15 years) are called close-ended schemes. Investors can invest
directly in the scheme at the time of the initial issue and thereafter
they can buy or sell the units of the scheme on the stock exchanges
where they are listed. The market price at the stock exchange could
vary from the scheme's NAV on account of demand and supply
situation, unit holders' expectations and other market factors. One of
the characteristics of the close-ended schemes is that they are
generally traded at a discount to NAV; but closer to maturity, the
discount

narrows. Some close-ended schemes give them an

additional option of selling their units directly to the Mutual Fund

through periodic repurchase at NAV related prices. SEBI Regulations

ensure that at least one of the two exit routes is provided to the
investor.

Interval mutual funds

These combine the features of open-ended and close- ended
schemes. They may be traded on the stock exchange or may be
open for sale or redemption during pre-determined intervals at NAV
related prices.

By portfolio classification
Mutual funds differ with reference to their instruments. Therefore, different mutual
funds are designed to meet the needs of the investors. This section discusses the types
of mutual funds classified on the basis of their portfolios.

Growth/Equity Schemes
Aim to provide capital appreciation over the medium to long term. These schemes
normally invest a majority of their funds in equities and are willing to bear short- term
decline in value for possible future appreciation. These schemes are not for investors
seeking regular income or needing their money back in the short-term.

Income Schemes
Aim to provide regular and steady income to investors. These schemes generally
invest in fixed income securities such as bonds and corporate debentures. Capital
appreciation in such schemes may be limited.

Balanced Schemes
Aim to provide both growth and income by periodically distributing a part of the
income and capital gains they earn. They invest in both shares and fixed income
securities in the proportion indicated in their offer documents. In a rising stock market,

the NAV of these schemes may not normally keep pace, or fall equally when the
market falls.

Money Market Schemes

Aim to provide easy liquidity, preservation of capital and moderate income. These
schemes generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter- bank call money. Returns on these
schemes may fluctuate, depending upon the interest rates prevailing in the market.

Tax Saving Schemes

These schemes offer tax rebates to the investors under tax laws as prescribed from
time to time. This is made possible because the Government offers tax incentives for
investment in specified avenues. For example, Equity Linked Savings Schemes
(ELSS) and Pension Schemes. Recent amendments to the Income Tax Act provide
further opportunities to investors to save capital gains by investing in Mutual Funds.
The details of such tax savings are provided in the relevant offer documents.

Special Schemes
This category includes index schemes that attempt to replicate the performance of a
particular index, such as the BSE Sensex or the NSE 50, or industry specific schemes
(which invest in specific industries) or Sectoral schemes (which invest exclusively in
segments such as 'A' Group shares or initial public offerings). Index fund schemes are
ideal for investors who are satisfied with a return approximately equal to that of an
index. Sectoral fund schemes are ideal for investors who have already decided to
invest in a particular sector or segment. Keeping in mind that any one scheme may not
meet all the investors requirements for all time.

By Geographical classification

On the basis of geographical limits, mutual funds schemes can be classified as

Domestic mutual funds

Offshore mutual funds

Domestic mutual funds

Domestic mutual funds schemes mobilize the savings of the citizens of the country.
However the NRIs and foreign investors can invest in these schemes. All the schemes
in vogue in the country are the domestic mutual fund schemes.

Offshore mutual funds

These funds enable the NRIs and international investors to participate in Indian capital
market. Further these funds are governed by the rules and procedures laid down for the
purpose of approving and monitoring their performance by the department of
economic affairs, ministry of finance and the directions of RBI.

By structural classification
From the point of view of financial market structure, mutual funds can be divided into
two categories, namely,
a) Capital market fund
b) Money market mutual fund
Mutual funds generally invest the pooled resources in capital market instruments
where as money mutual funds invest in money market instruments.

NAV
Net asset value (NAV) represents a fund's per share market value. This is the price at
which investors buy ("bid price") fund shares from a fund company and sell them
("redemption price") to a fund company. It is derived by dividing the total value of all
the cash and securities in a fund's portfolio, less any liabilities, by the number of shares
outstanding. An NAV computation is undertaken once at the end of each trading day
based on the closing market prices of the portfolio's securities. For example, if a fund
has assets of $50 million and liabilities of $10 million, it would have a NAV

of

$40

million. This number is important to investors, because it is from NAV that the

price per unit of a fund is calculated. By dividing the NAV of a fund by the number of
outstanding units, you are left with the price per unit. In our example, if the fund had 4
million shares outstanding, the price-per-share value would be $40 million divided by
4 million, which equals $10.
This pricing system for the trading of shares in a mutual fund differs significantly from
that of common stock issued by a company listed on a stock exchange. In this instance,
a company issues a finite number of shares through an initial public offering (IPO),
and possibly subsequent additional offerings, which then trade in the securities. In this
market, stock prices are set by market forces of supply and demand. The pricing
system for stocks is based solely on market sentiment.

Advantages of Mutual Fund

Professional Management
Investors avail the services of experienced and skilled professionals
who are backed by a dedicated investment research team, which
analyses the performance and prospects of companies and selects
suitable investments to achieve the objectives of the scheme.

Diversification
Mutual Funds invest in a number of companies across a broad crosssection of industries and sectors. This diversification reduces the risk
because seldom do all stocks declare at the same time and in the
same proportion. Investors achieve this diversification through a
Mutual Fund with far less money than they can do on their own.

Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps to avoid
many problems such as bad deliveries, delayed payments and

unnecessary follow up with brokers and companies. Mutual Funds

save time and make investing easy and convenient.

Return Potential
Over a medium to long-term, Mutual Funds have the potential to
provide a higher return as they invest in a diversified basket of
selected securities.

Low Costs
Mutual Funds are a relatively less expensive way to invest compared
to directly investing in the capital markets because the benefits of
scale in brokerage, custodial and other fees translate into lower
costs for investors.

Liquidity
In open-ended schemes, Investors can get their money back
promptly at net asset value related prices from the Mutual Fund
itself. With close-ended schemes, they can sell their units on a stock
exchange at the prevailing market price or avail of the facility of
direct repurchase at NAV related prices which some close-ended and
interval schemes offer periodically.

Transparency
Investors get regular information on the value of their investment in
addition to disclosure on the specific investments made by the
scheme, the proportion invested in each class of assets and the fund
manager's investment strategy and outlook.

Flexibility

Through

features

such

as

regular

investment

plans,

regular

withdrawal plans and dividend reinvestment plans, Investors can

systematically invest or withdraw funds according to their needs and
convenience.

Choice of Schemes
Mutual Funds offer a family of schemes to suit the varying needs
over a lifetime of their Investors.

Well Regulated
All Mutual Funds are registered with SEBI and they function within
the provisions of strict regulations designed to protect the interests
of investors. The operations of Mutual Funds are regularly monitored
by SEBI.

Disadvantages of Mutual Fund Investment

No Control over costs
An investor in a mutual fund has no control over the overall cost of
investing. He pays investment management fees as long as he
remains with the fund, albeit in return for the professional
management

and

research.

Fees

are

usually

payable

as

percentage of the value of his investments, whether the fund value

is rising or declining.

No Tailor-made Portfolios

Investors who invest on their own can build their own portfolios of
shares, bonds and other securities. Investing through funds means
he delegates this decision to the fund managers. The very high net
worth individuals or large corporate investors may find this to be a
constraint in achieving their objectives.

Managing a portfolio of funds

Availability of a large number of funds can actually mean too much
choice for the investor. He may again need advice on how to select a
fund to achieve his objective, quite similar to the situation when has
to select individual shares or bonds to invest in.

ROLE OF MUTUAL FUNDS

Mutual Funds & Financial Market
In the process of development Indian mutual funds have emerged as
strong financial intermediaries & are playing a very important role in
bringing stability to the financial system & efficiency to resource
allocation. Mutual Funds have opened new vistas to investors &
imparted a much-needed liquidity to the system. In the process they
have challenged the hitherto role of commercial banks in the
financial market & national economy.

Mutual Fund & Capital Market

The

active

involvement

of

Mutual

Funds

in

promoting

economic

development can be seen not only in terms of their participation in

the savings market but also in their dominant presence in the money
& capital market. A developed financial market is critical to overall
economic development, & Mutual Funds play an active role in
promoting a healthy capital market. The asset holding pattern of

mutual funds in the USA indicates the dominant role of Mutual Funds
in the capital market & money market. More over they have also
rendered critical support to securities mortgage loans & municipal
bond market in the USA. In the USA, Mutual Funds provide very
active support to the secondary market in terms of purchase of
securities. Investors preferences pattern in India has undergone a
tremendous change during recent times, along with the changes in
the share of financial assets in the total annual savings. Indian
investors have moved towards more liquid & growth oriented trade
able instruments likes shares/debentures & units of Mutual Funds.
The shift is asset holding pattern of investors has been significantly
influenced by the equity & unit culture while the holders of
company shares & debentures are concentrated in the urban areas,
small/medium investors in the semi-urban & rural areas are tending
towards Mutual Funds. Mutual Funds in India have certainly created
awareness among investors about equity oriented investments & its
benefits.

Objectives of the Study

To study the preference of investors in todays scenario in terms of risk
&return.
To know the opinion about mutual fund.
To study the performance of mutual funds.
To know the investment proportion in the mutual fund.

Need and Importance of study

Inflation is increasing day to day. So in order to overcome the inflation, investing in
only less yielding opportunities gives no fruitful results.
Diversification, stable returns & limited exposure to equity investment maximize
returns on investment &multiply ones savings. Mutual funds can fulfill these
requirements.
Just investment is not enough. One must plan investment in such a way that his
investment objectives are satisfied.
This report gives the details about various investment objectives desired by an
investor.
This report highlights the concept &working of mutual funds and different avenues of
investment &in detail about RELIANCE MUTUAL FUND.

Methodology of the study:

Sources of data collection
Two sources of collecting data have been employing i.e. primary data and secondary
data.

Primary data
Research instrument: Questionnaire which is used to collect the primary data by
personnel interview.

Secondary Data
In this type of data collection information is already exiting. Secondary data is
collected from the companys websites.

Sampling technique: convenience sample technique

Sample size: 80

Limitations of the study

Much interaction is not been possible with the customer.

Different perceptions about the investment options.
The non-availability of time to them.
Many investors think mutual funds and shares are the one and same.
Time constraint.
Limited sample size
Report restricted to Kurnool only.

History of Mutual Funds has evolved over the years and it is sure to appear as
something very interesting for all the investors of the world. In present world, mutual
funds have become a main form of investment because of its diversified and liquid
features. Not only in the developed world, but in the developing countries also
different types of mutual funds are gaining popularity very fast in a tremendous way.
But, there was a time when the concepts of Mutual Funds were not present in the
economy.
There is an ambiguity about the fact that when and where the Mutual Fund
Concept was introduced for the first time. According to some historians, the mutual
funds were first introduced in Netherlands in 1822. But according to some other belief,
the idea of Mutual Fund first came from a Dutch Merchant ling back in 1774. In 1822,
that

idea

was

further

developed.

In

1822,

the

concept

of Investment

Diversification was properly incorporated in the mutual funds. In fact, the Investment
Diversification is the main attraction of mutual funds as the small investors are also
able

to

allocate

their

little Funds in

diversified

way

to

lower Risks.

After 1822 in Netherlands, the Mutual Funds Concept came in Switzerland in 1849
and thereafter in Scotland in the 1880s. After being popular in Great Britain and

France, Mutual fund concept traveled to U.S.A in the 1890s. In 1920s and 1930s, the
Mutual Fund popularity reached a new high. There was record investment done in
mutual funds. But, before 1920s, the mutual funds were not like the modern day
mutual funds. The modern day mutual funds came into existence in 1924, in Boston.
Massachusetts Investors Trust introduced the Modern Mutual Funds and the funds
were available from 1928. At present this Massachusetts Investors Trust is known
as MFS Investment Management Company. After the glorious year of 1928, Mutual
fund ideas expanded to different levels and different regulations came for well
functioning of the funds.
Still today, the funds are evolving and improving in order to offer people much wider
choices and better advantages for fulfillment of their various investment needs and
financial objectives
.

The mutual fund industry in India:

The mutual fund industry in India began in 1963 with the formation of the Unit Trust
of India (UTI) as an initiative of the Government of India and the Reserve Bank of
India. Much later, in 1987, SBI Mutual Fund became the first non-UTI mutual fund in
India.
Subsequently, the year 1993 heralded a new era in the mutual fund industry. This was
marked by the entry of private companies in the sector. After the Securities and
Exchange Board of India (SEBI) Act was passed in 1992, the SEBI Mutual Fund
Regulations came into being in 1996. Since then, the Mutual fund companies have
continued to grow exponentially with foreign institutions setting shop in India, through
joint ventures and acquisitions.
As the industry expanded, a non-profit organization, the Association of Mutual Funds
in India (AMFI), was established on 1995. Its objective is to promote healthy and
ethical marketing practices in the Indian mutual fund Industry. SEBI has made AMFI
certification mandatory for all those engaged
fund products.

The Evolution:

in selling or marketing mutual

The formation of Unit Trust of India marked the evolution of the Indian mutual fund
industry in the year 1963. The primary objective at that time was to attract the small
investors and it was made possible through the collective efforts of the Government of
India and the Reserve Bank of India. The history of mutual fund industry in India can
be better understood divided into following phases:

Phase1. Establishment and Growth of Unit Trust of India - 1964-87:

Unit Trust of India enjoyed complete monopoly when it was established in the year
1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it
continued to operate under the regulatory control of the RBI until the two were delinked in 1978 and the entire control was transferred in the hands of Industrial
Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as
Unit Scheme 1964 (US-64), which attracted the largest number of investors in any
single investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of different
investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's
Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share
(Indias first equity diversified scheme) in 1987 and Monthly Income Schemes
(offering assured returns) during 1990s. By the end of 1987, UTI's assets under
management grew ten times to Rs6700 crores.

PhaseII.EntryofPublicSectorFunds1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering
the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank
of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later
followed by can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund,
Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the
assets under management of the industry increased seven times to Rs. 47004 crores.

However, UTI remained to be the leader with about 80% market share.

1992-93

UTI
Public Sector
Total

Amount
Mobilized

Assets Under
Management

Mobilization
as % of gross
Domestic
Savings

11,057

38,247

5.2%

1,964

8,757

0.9%

13,021

47,004

6.1%

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to
enter the mutual fund industry in 1993, provided a wide range of choice to investors
and more competition in the industry. Private funds introduced innovative products,
investment techniques and investor-servicing technology. By 1994-95, about 11
private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the
SEBI after the year 1996. The mobilization of funds and the number of players
operating in the industry reached new heights as investors started showing more
interest in mutual funds.
Investors' interests were safeguarded by SEBI and the Government offered tax benefits
to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996
was introduced by SEBI that set uniform standards for all mutual funds in India. The
Union Budget in 1999 exempted all dividend incomes in the hands of investors from
income tax. Various Investor Awareness Programmes were launched during this phase,

both by SEBI and AMFI, with an objective to educate investors and make them
informed about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal
status as a trust formed by an Act of Parliament. The primary objective behind this was
to bring all mutual fund players on the same level. UTI was re-organized into two
parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past
schemes (like US-64, Assured Return Schemes) are being gradually wound up.
However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was
a significant growth in mobilization of funds from investors and assets under
management which is supported by the following data:

GROSS FUND MOBILISATION (RS. CRORES)

PUBLIC
SECTOR

UTI

PRIVATE
SECTOR

FROM

TO

01-April-98

31-March-99

11,679

1,732

7,966

21,377

01-April-99

31-March-00

13,536

4,039

42,173

59,748

01-April-00

31-March-01

12,413

6,192

74,352

92,957

01-April-01

31-March-02

4,643

13,613

1,46,267 1,64,523

01-April-02

31-Jan-03

5,505

22,923

2,20,551 2,48,979

01-Feb.-03

31-March-03

7,259*

01-April-03

31-March-04

68,558

5,21,632 5,90,190

01-April-04

31-March-05

1,03,246

7,36,416 8,39,662

01-April-05

31-March-06

1,83,446

9,14,712

58,435

TOTAL

65,694

10,98,15
8

ASSETS UNDER MANAGEMENT (RS. CRORES)

AS ON

UTI

PUBLIC SECTOR

PRIVATE

TOTAL

SECTOR
31-March-99

53,320

8,292

6,860

68,472

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of
which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun
F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously,
more international mutual fund players have entered India like Fidelity, Franklin
Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is
a continuing phase of growth of the industry through consolidation and entry of new
international and private sector players.

Regulatory of mutual fund in India

SEBI
The capital market regulates the mutual funds in India. SEBI requires all
mutual funds to be registered with them. SEBI issues guidelines for
all mutual funds operations- investment, accounts, expenses etc. Recently,
it has been decided that Money Market Mutual Funds of registered mutual
funds will be regulated by SEBI through (Mutual Fund) Regulations 1996.

RBI
RBI, a supervisor of the Banks owned Mutual Funds-As banks in India come
under the regulatory Jurisdiction of RBI, banks owned funds to be under
supervision of RBI and SEBI. RBI has supervisory responsibility over all
entities that operate in the money markets.

MINISTRY OF FINANCE (MOF)

Ministry of Finance ultimately supervises both the RBI and the SEBI and plays
the role of apex authority for any major disputes over SEBI guidelines.

COMPANY LOW BOARD

Registrar of companies is called Company Low Board. AMCs of
Mutual

Funds

are companies

registered

under

the

companies

Act

1956 and therefore answerable to regulatory authorities empowered by the

Companies Act.

STOCK EXCHANGE
Stock Exchanges are Self-regulatory organizations supervised by SEBI. Many
closed ended funds of AMCs are listed as stock exchanges and are traded like
shares.

OFFICE OF THE PUBLIC TRUSTE

Mutual Fund being public trust is governed y the Indian Trust Act 1882. The
Board of trustee or the Trustees Company is accountable to the office of public
trustee, which in turn reports to the Charity commissioner.

ASSOCIATION OF MUTUAL FUNDS IN INDIA

AMFI is dedicated to develop the mutual funds industry in India along professional,
healthy, and ethical lines, and to enhance and maintain standards in all areas with a
view to protecting and promoting the interests of mutual funds and the unit holders.
AMFI has taken the initiative to position the mutual funds industry in its proper
perspective and convey the correct meaning and understanding of the concept working
of a mutual fund to the investors. The AMFI periodically publishes information that is
useful to investor.

ORIGIN/GROWTH OF AMFI:

SEBI tightened the disclosure norms for the mutual funds to help investors in taking
better informed decisions. SEBI laid-down investment and disclosure norms for
employees of AMCs and trustee companies in order to avoid any conflict of interest.
To promote venture capital activity, SEBI allowed the mutual funds to invest in the
listed or unlisted securities, or units of venture capital funds within the overall ceiling
for such investment. Detailed guidelines on the disclosure and reporting requirements
were issued to mutual funds for investment in foreign securities. With a view improve
professional standards; SEBI has decided to make it mandatory for all mutual funds to
appoint agents/distributors who have obtained association of mutual funds of India
(AMFI) certification.
With the increase in mutual fund players in India, a need for mutual fund association
in India was generated to function as a non-profit organization. Association of mutual
funds in India was incorporated on 22nd august,1995.The association of mutual funds
in India is dedicated to developing the Indian mutual fund industry on professional,
healthy, and ethical lines and to enhance and maintain standards in all areas with a
view to protect and promote the interests of mutual funds their unit holders.

Objectives of AMFI:

AMFI interacts with SEBI and works according to SEBIs guidelines in the

mutual fund industry.

Association of mutual fund of India does represent the government of India,
The reserve bank of India, and other related bodies on matters relating to the

mutual fund industry.

AMFI undertakes all India awareness program for investors in order to

promote understanding of the concept and working of mutual funds.

Association of mutual fund of India also disseminate informations on mutual
fund industry and undertakes studies and research either directly or in
association with other bodies.

Role of AMFI:

To define and maintain high professional and ethical standards in all areas

of operation of mutual fund industry.

To recommend and promote best business practices and code of conduct to
be followed by members and others engaged in the activities of mutual
fund and asset management including agencies connected or involved in

the field of capital markets and financial services.

To undertake nationwide investor awareness program so as to promote
proper understanding of the concept and working of mutual funds.

Fund Houses: Indian Mutual Fund Companies

No. of
Schemes
(Incl
Options)

31-Mar-14

31-Dec-13

Net Chg

AXIS Mutual Fund

465

16,285

14,729

1,555

Baroda Pioneer Mutual

Fund

165

8,106

7,217

889

1,873

89,136

85,086

4,049

BNP Paribas Mutual

Fund

843

3,446

3,674

[228]

BOI AXA Mutual Fund

149

1,991

1,760

231

Canada Robe co Mutual

Fund

216

6,660

7,077

[417]

Deutsche Mutual Fund

1,029

18,795

18,596

199

DSP Blackrock Mutual

Fund

1,063

31,966

32,641

[675]

Edelweiss Mutual Fund

126

169

167

Escorts Mutual Fund

66

269

280

[11]

Franklin Templeton
Mutual Fund

396

46,406

45,331

1,076

28

3,764

3,847

[83]

Mutual Fund Name

Birla Sun Life Mutual

Fund

Goldman Sachs Mutual

Fund
HDFC Mutual Fund

2,040

113,354

109,393

3,961

HSBC Mutual Fund

412

7,659

7,652

1,988

106,941

97,318

9,623

IDBI Mutual Fund

227

6,018

5,303

715

IDFC Mutual Fund

1,635

41,454

41,362

92

IIFL Mutual Fund

58

234

225

India bulls Mutual Fund

78

1,097

1,225

[128]

ING Mutual Fund

375

794

964

[170]

JM Financial Mutual
Fund

314

6,046

7,192

[1,145]

JP Morgan Mutual Fund

280

16,248

12,928

3,320

Kotak Mahindra Mutual

Fund

762

33,502

36,228

[2,726]

L&T Mutual Fund

553

18,255

17,003

1,253

LIC NOMURA Mutual

Fund

316

10,584

10,010

574

Mirae Asset Mutual

Fund

126

692

582

110

Morgan Stanley Mutual

Fund

55

2,572

3,273

[701]

Motilal Oswald Mutual

Fund

38

489

434

55

Peerless Mutual Fund

94

4,046

3,399

646

110

649

814

[165]

340

312

27

Pramerica Mutual Fund

153

2,411

2,043

367

PRINCIPAL Mutual
Fund

283

4,134

4,547

[413]

Quantum Mutual Fund

13

372

344

28

Reliance Mutual Fund

1,522

105,293

104,412

881

809

14,521

13,734

788

ICICI Prudential Mutual

Fund

Pine Bridge Mutual

Fund
PPFAS Mutual Fund

Religare Invesco Mutual

Fund

Sahara Mutual Fund

100

191

194

[4]

SBI Mutual Fund

977

66,311

65,415

896

24

24

Sundaram Mutual Fund

986

16,422

16,024

398

Tata Mutual Fund

897

21,954

19,723

2,231

Taurus Mutual Fund

183

3,532

3,223

309

Union KBC Mutual

Fund

102

2,847

2,266

580

1,347

74,233

74,351

[118]

Shriram Mutual Fund

UTI Mutual Fund

Reliance Group Holdings has grown from a small office data-processing equipment
firm in 1961 into a major insurance and financial-services group in one generation
under one chief.

Reliance's insurance operations constitute the nation's 27th-largest property and

casualty operation. The parent company also includes a development subsidiary in
commercial real estate. Reliance's international consulting group contains several
subsidiaries in energy, environment, and natural resources consulting. A financial arm
invests in other businesses, primarily television stations. Reliance Insurance started as
the Fire association of Philadelphia in 1817, organized by 5 hose and engine fire
companies. It became the nation's first association of volunteer fire departments.
Reliance Capital Group, L.P. constituted the investment branch of the Reliance
conglomerate. In December 1989, Reliance Capital sold its investment, Days
Corporation, parent company of Days Inn of America, the world's third-largest hotel
chain; it had been purchased in 1984.
RELIANCE MUTUAL FUND
This group dominates this key area in the financial sector..This mega business houses
show that it has assets under management of Rs. 90938 crore (US$ 22.73billion) and
an investor base of over6.6 million Reliances mutual fund schemes are managed by
Reliance Capital Asset Management Limited RCAM), a subsidiary of Reliance Capital
Limited, which holds 93.37% of the paid-up capital of RCAM. The company notched
up a healthy growth of Rs. 16354 crore (US$ 4.09 billion) in assets under management
in February2008 and helped propel the total industry-wide AUM to Rs. 565459 crore
(US$ 141.36 billion) A sharp rise in fixed maturity plans (FMPs) and collection of Rs.
7000 crore (US$ 1.75 billion) through new fund offers (NFOs) created this surge. In
AU rankings, Reliance continues to be in the number one spot.

India's Best Offering: Reliance Mutual Fund

Investing has become global. Today, a lot of countries are waking up to the reality that
in order to gain financial growth, they must encourage their citizens to not only save
but also invest. Mutual funds are fast becoming the mode of investment in the world.
In India, a mutual fund company called the Reliance Mutual Fund is making waves.
Reliance is considered India's best when it comes to mutual funds. Its investors

number to 4.6 billion people. Reliance Capital Asset Management Limited ranks in the
top 3 of India's banking companies and financial sector in terms of net value.

Vision
Reliance Mutual Fund is so popular because it is investor focused. They show their
dedication by continually dishing out innovative offerings and unparalleled service
initiatives. It is their goal to become respected globally for helping people achieve
their financial dreams through excellent organization governance and customer care.
Reliance Mutual fund wants a high performance environment that is geared at making
investors happy.

Mission
RMF aims to do business lawfully and without stepping on other people. They want to
be able to create portfolios that will ensure the liquidity of the investment of people in
India as well as abroad. Reliance Mutual Fund also wants to make sure that their
shareholders realize reasonable profit, by deploying funds wisely. Taking appropriate
risks to reach the company's potential is also one of Reliance Mutual Fund's
objectives.

Schemes
To make their packages more attractive, Reliance Mutual Fund created proposals
called the Equity/ Growth scheme, Debt/Income Scheme, and Sector Specific Scheme.

Equity Schemes
Investments in equities are made with a long-term objective in mind.
Empirical studies have indicated that despite the short-term volatility
that is characteristic of equities, over the longer term, equities have
generated superior returns. This makes equities the best instruments
for long-term growth of capital. Investing in a diversified equity
portfolio can help minimize risk as the portfolio gets exposure across

various sectors, while enabling Investors to capitalize on the

fundamental upsides presented by these sectors. The various Equity
schemes are
1)
2)
3)
4)
5)
6)
7)
8)
9)

Reliance diversified large cap

Reliance index
Reliance diversified mid cap & small cap
Reliance multi cap
Reliance balanced
Reliance sector
Reliance tax saver
Reliance arbitrage
Reliance ETF

Debt schemes:
1)
2)
3)
4)
5)
6)
7)

Reliance liquid
Reliance ultra short term
Reliance short term
Reliance long term
Reliance dynamic
Reliance gilt
Reliance MIP

Gold schemes:
1) Reliance ETF
2) Reliance FOF

Equity Schemes of Reliance mutual funds

Reliance vision fund:
Type

Open ended growth scheme

Investment pattern

99.90% in equity 0.105 in debt.

Fund objective

Long term growth of capital

Investment horizon

Minimum of one year

Scheme: Reliance NRI equity fund

Type

Open ended growth fund

Investment pattern

95.85% in equity 4.15% in debt

Fund objective

Long term growth of capital

Investment horizon

Minimum of one year

Scheme: Reliance focused large cap fund

Type

Open ended growth scheme

Investment pattern

96.96% in equity 3.04% in debt

Fund objective

Long term capital growth

Investment horizon

Minimum of one year

Scheme: Reliance index fund-Nifty plan

Type

Open ended scheme

Investment pattern

99.32% in equity 0.68% in cash and other

receivables

Fund objective

Long term capital growth

Investment horizon

Minimum of one year

Scheme: Reliance small cap fund

Type

Open ended scheme

Investment pattern

85.34% in equity 14.66% in cash and

other receivables.

Fund objective

Long term capital growth

Investment horizon

Minimum of one year

Scheme: reliance regular savings fund-equity option

Type
Open ended scheme

Investment pattern

97.60% in equity 2.40% in cash and other

receivables

Fund objective

Long term capital growth

Investment horizon

Minimum of one year

Scheme: reliance banking fund

Type

Open ended scheme

Investment pattern

98.52% I equity 1.48% in cash and other

receivables

Fund objective

Long term capital growth

Investment horizon

Minimum of one year

Scheme: reliance tax saver fund

Type

Open ended scheme

Investment pattern

99.44% in equity fund 0.56% in cash and

other receivables.

Fund objective

Long term capital growth

Investment horizon

Minimum of one year

Debt scheme: reliance liquidity fund

Type

Open ended scheme

Investment pattern

Fund objective
Investment horizon

Scheme: Reliance short term fund

Type

56.01% in banks 25.64% in cash and

receivables 12.43% in miscellaneous
5.92% in others.
Optimal returns with moderate levels of
risk and high liquidity.
Minimum of one year

Open ended scheme

Investment pattern

49.67% in miscellaneous 29.40% in finance

5.37% in banks 15.56% in others

Fund objective

Stable returns with a short term investment

horizon

Investment horizon

Short term

Scheme: Reliance dynamic bond fund

Type

Open ended scheme

Investment pattern

80.20% in miscellaneous 12.32% in finance

7.48% in others.

Fund objective

Optimal returns with moderate risk.

Investment horizon

Minimum of one year

Scheme: Reliance monthly income plan

Type

Open ended scheme

Investment pattern

49.69%
finance

in

miscellaneous

10.73%

Fund objective

Investment horizon

Minimum of one year

Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing
mutual funds in India. RMF offers investors a well-rounded portfolio of products to
meet varying investor requirements and has presence in 179 cities across the country.
Reliance Mutual Fund constantly endeavors to launch innovative products and
customer service initiatives to increase value to investors. Reliance Capital Asset
Management Limited (RCAM) is the asset manager of Reliance Mutual Fund.
RCAM is a subsidiary of Reliance Capital Limited (RCL). Presently, RCL holds
65.23% of its total issued and paid-up equity share capital and the balance of its issued
and paid up equity share capital is held by other shareholders which includes Nippon
Life Insurance Company (NLI), holding 26% of RCAMs total issued and paid up
equity share capital.
Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average
Assets under Management (AAUM) of Rs. 107749 Crores and an investor count of
over 72 Lakh folios. Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai

in

Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers
investors a well-rounded portfolio of products to meet varying investor requirements
and has presence in 159 cities across the country. Reliance Mutual Fund constantly
endeavors to launch innovative products and customer service initiatives to increase
value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital
Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds
93.37% of the paid-up capital of RCAM, the balance paid up capital being held by
minority shareholders
Reliance Capital Ltd. is one of Indias leading and fastest growing private sector
financial services companies, and ranks among the top 3 private sector financial
services and banking companies, in terms of net worth. Reliance Capital Ltd. has
interests in asset management, life and general insurance, private equity and
proprietary

investments,

stock

broking

and

other

financial

.Summary of Schemes
No of schemes : 886
Corpus under management: Rs. 105293.1567 crs. (as on 31-Mar-2014)
Fund of Funds (4)
Interval Income Funds (95)
Liquid Funds (38)
ETFs (6)
Equity Funds (142)
Monthly Income Plans (6)
Income Funds (38)
Gilt Funds (15)
Short Term Income Funds (8)

services.

Balanced Funds (6)

Ultra Short Term Funds (20)
Arbitrage Funds (6)
Fixed Maturity Plans (482)
Floating Rate Income Funds (20)
Reliance Mutual Fund ('RMF'/ 'Mutual Fund') is one of Indias leading Mutual Funds,
with Average Assets Under Management (AAUM) of Rs. 103542 Crores (Jan to Mar
'14 Quarter) and 55.08 Lakh folios. (31st Mar 14)
Reliance Capital Ltd. is one of Indias leading and fastest growing private sector
financial services companies, and ranks among the top 3 private sector financial
services and banking companies, in terms of net worth. Reliance Capital Ltd. has
interests in asset management, life and general insurance, private equity and
proprietary investment, stock broking and other financial services.

Sponsor

Reliance Capital Limited

Trustee

Reliance Capital Trustee Co. Limited

Investment
Manager / AMC

Reliance Capital Asset Management Limited

Statutory Details

The Sponsor, the Trustee and the Investment Manager are

incorporated under the Companies Act 1956.

The Sponsor, the Trustee and the Investment Manager are incorporated under the
Companies Act 1956. Reliance Mutual Fund (formerly known as Reliance Capital
Mutual Fund), a Trust under Indian Trust Act, 1882 and registered with SEBI vide
registration number MF/022/95/1 dated June 30, 1995.

TABLE-1
AGE WISE CLASSIFICATION OF RESPONDENTS
AGE

NO.OF.RESPONDENTS

PERCENTAGE

BELLOW 20

NIL

20-29

10%

30-39

24

30%

40-49

20

25%

50-59

24

30%

ABOVE 60

5%

TOTAL

80

100%

age wise 4no.of.respondents

8

20-29
24

30-39
24

40-49
50-59
ABOVE 60

20

INTERPRETATION: According to the survey the respondents were of

different age groups. There are no respondents of age below 20 are
in no number. The investors of age 20-29 are 08 in number with
10%. The investors of age 30-39 are 24 with 30%, 40-49 there are 20
investors with 25% and in between 50-59 there are 24 investors with
30% and above 60 there are 4 investors with 5%.

TABLE-2
GENDER OF THE RESPONDENTS

GENDER

NO.OF.RESPONDENTS

PERCENTAGE

MALE

64

80%

FEMALE

16

20%

TOTAL

80

100%

gender of respondents
16

MALE
FEMALE

64

INTERPRATATION: In the survey number of male respondents is

more in number that is about 80% & the next position has been
occupied by female respondents they are about 20% of the sample
so, mainly men prefer to go for investments.

TABLE-3
OCCUPATION OF THE RESPONDENTS
OCCUPATION

NO.OF RESPONDENTS

PERCENTAGE

SALARIED

32

40%

BUSINESS

32

40%

PROFESSIONAL

12

15%

RETIRED

5%

OTHERS

5%

TOTAL

80

100%

occupation
of the respondents
4
4

12

SALARIED
32

BUSINESS
PROFESSIONAL
RETIRED
OTHERS

32

INTERPRETATION: According to the survey the respondents were

of different occupations Respondents from the business are
occupying 40%, then comes professional with 15 %, others 5%,
retired people occupy 5%, with salaried occupying 40%.

TABLE-4
ANNUAL INCOME OF THE RESPONDENTS

ANNUAL INCOME

NO.OF RESPONDENTS

PERCENTAGE

1-5LAKH

48

60%

5-10LAKH

28

35%

ABOVE 10 LAKH

24

5%

TOTAL

80

100%

ANNUAL INCOME OF THE RESPONDENTS

24
1-5LAKH
5-10LAKH
48

ABOVE 10 LAKH

28

INTERPRETATION: According to the survey, the respondents of the

income group of less than 5 lacks are of 60%. They were about 35%
of the respondents are of the income group between 5-10 lakh 5% of
the respondents were of the income group above 10 lacks.

TABLE-5
DO THE RESPONDENT INVEST THEIR MONEY

INVESTMENTS

NO.OF.RESPONDENTS

PERCENTAGE

YES

72

90%

NO

10%

TOTAL

80

100%

RESPONDENTS INVEST THEIR MONEY

8

YES
NO

72

INTERPRETATION: All the respondents considered in the sample, do

invest their savings.
Out of the total sample the respondents going for investments are
total in numbers with the two hundred respondents considered in
sample are going for complete investments with100%.

TABLE-6
AMOUNT THAT RESPONDENTS SAVE YEARLY

YEARLY SAVINGS

NO.OF.RESPONDENTS

PERCENTAGE

< 25000

12

15%

<50000

40

35%

<100000

48

10%

>100000

80

40%

TOTAL

80

100%

THE AMOUNT THE RESPONDENTS

SAVE YEARLY
12
40

< 25000
<50000

80

<100000
>100000

48

INTERPRETATION: According to the survey, the respondents who

save< 25,000 yearly is about 15%, <50,000 is about 35% & the
individuals who save less than 1,00,000 are 10%, followed by
individuals who save more than 1,00,000 is 40%.

TABLE-7

INVESTORS OPPURTUNITIES FOR VARIOUS INVESTMENTS:

INVESTMENT
OPPORTUNITIES

No.of.respondents percentage

BANK DEPOSITS

48

60%

LIC

5%

MUTUAL FUNDS

10%

SHARES

5%

OTHERS

10%

Total

72

90%

INVESTMENTS AVENUES OPTED BY INVESTORS

8
4

BANK DEPOSITS
LIC
MUTUAL FUNDS

SHARES
OTHERS

4
48

Interpretation: It is observed from the above chart that 60% of the

individuals prefer to bank deposits, 5% of the individuals prefer to

shares, respondents preferring mutual funds are 10%,life insurance

are 5% followed by other avenues with 10%.

Table-8
INVESTORS PREFERENCE FOR VARIOUS INVESTMENT OBJECIVES
Options

No. Of. respondents

Percentage

rank

Security

42

58.8%

Yield

11.9%

Maturity

5.8%

Tax benefit

11.7%

liquidity

5.8%

goal

5.8%

Total

72

95%

5
5

Security
Yield
Maturity
Tax benefit

liquidity
42

goal

Interpretation: Different types of investors look forward to different

investment objectives. Most of the investors ranked 1 st to security,
2nd rank to yield, 3rd rank has been given to tax benefit, 4 th
for
maturity, liquidity & goal.
rank

Table-9
AWARENESS OF MUTUAL FUNDS
Options

No. Of. respondents

Percentage

Yes

68

85%

No

12

15%

total

80

100%

awarness of the mutual funds

12

Yes
No

68

Interpretation: According to the survey, most investors are aware of

mutual funds. It can be observed from the above table that 85% of
respondents are aware of Mutual Funds and the rest are not aware of
Mutual Funds.

Table-10
AWARENESS OF MUTUAL FUNDS IS THROUGH
Option

No. of respondents

percentage

Advertisements

Friends

34

47%

Family members

11.7%

Financial advisors

30

41.1%

Relatives

Total

72

97%

30
34
Friends

Family members

Financial advisors

Interpretation: According to the survey, the respondents are more

aware of mutual funds through friends who occupy 47%, followed by
financial advisors 41% & Family Members 10%.there is no influence
through advertisements and relatives.

Table-11
Type of funds investors preferring
Type of funds

No. of respondents

Percentage

Debt funds

13

17.6%

Equity funds

54

76%

Liquid funds

29%

Total

72

TYPE OF FUNDS 5RESPONDENTS PREFER TO

13

Debt funds
Equity funds
Liquid funds

54

Interpretation: From the survey conducted the respondents

prefer Equity funds more in number they occupy 76%, followed by
liquid funds with 29% and a very few respondents prefer to debt
funds with 17.6%.

Table-12
Opinion about mutual funds
Options

No.of.respondents

Percentage

Better option

38

53%

Not better option

30

41%

Cant say

5.8%

Total

72

99.8%

MUTUAL FUND IS A BETTER OPTION

4

Better option
Not better option
Cant say
30

38

Interpretation: According to the survey, the respondents are mostly

of the opinion that investing in Mutual funds is a Better option as it
occupies 58%, a few respondents are of no opinion with 5.8%, & the
rest feel that it is not a better option with only 41% of the total.
Table-13
Recommending mutual fund as a better option
Option

No. of respondents

Percentage

Yes

38

52.9%

No

34

47%

Total

72

99.8%

IS MUTUAL FUND IS A RECOMMANDING OPTION

Yes
No

34
38

Interpretation: According to the survey, the respondents are

mostly of the opinion that recommending Mutual funds as a Better
option as it occupies 52.9%, a few respondents are of no opinion
with 47%.

Table-14
Awareness of the taxation on investment:
Taxation

No. of respondents

percentage

Yes

15

20.8%

No

57

79.16%

Total

72

99.96%

No. of respondents
15

Yes
No

57

Interpretation: According to the survey most of the respondents i.e. 79% are dont
know about the taxation of their investment. Remaining of the sample know about the
taxation.

FINDINGS

Majority of the respondents belong to age group of 30-39 and

50-59.
Major part of the respondents is male only.
Annual income of the respondents between 1-5lacks prefers
more of investments.
Respondents irrespective
of major investment or small are investing in some other
sources of investments.
Investors preference when going for an investment in
primarily for security. Respondents prefer Bank Deposits as
most secured avenue for investment, & then preference is
given to mutual funds, others & then to shares and lic.
The role of Financial Advisors play a key role in making
investors educated about mutual fund. Around 41.1% of the
respondents choose financial advisors for guidance.
From the Survey conducted it is clear that 52.9% of the
respondents feel that Mutual Fund is a good investment option.
From the survey it is clear that most of the respondents feel
mutual fund as a better option
52.9% of the Respondents are recommending mutual fund as a
better investment Opportunity.
Respondents who invested presently and have continuous
monitoring are gaining good returns from mutual funds.
Respondents who invested in the years 90s are faced losses
and not having a good opinion on mutual funds.
Average investment proportion of the investors is 30000/-.

SUGGESTIONS:

The awareness of mutual fund & its various schemes should be

increased among the people by proper advertising, promotion
and conducting investors meets.
Proper guidance should be given by fund managers after
investor invested the amount.
If there is certain security in equity funds many of the people
might have shown interest to invest.

Conclusion: Mutual funds are the investment avenue to get returns. After
completion of my survey I found that investors who are investing presently and have
continuous monitoring are gaining more returns and they got satisfied with mutual
funds. Investors who invested in last 10 years and having no monitoring they gained
nothing at least they do not get back their principle amount. Because of no proper
guidance and unawareness. Still most of the people have no awareness about mutual
funds and available schemes.

Bibliography:
Financial Services & Marketing E. Gordon, (Himalaya Publishing
House, Mumbai)
Financial services
- Nalini Prava Tripathy
Security Analysis & Portfolio Management - Preethi Singh

Websites Visited:
www.amfiindia.com
www.mutual funds india.com
www.reliancemutual.com
www.moneycontrol.com

Questionnaire:

1. Name of the respondent:

2. Age group:
a) Below 20

b) 20 29

d) 40 49

e) 50 59

c) 30 39
f) Above

60
3. Sex:
a) Male

b) Female

4. Address:
5. Occupation:
a) Salaried

b) Business

c)

Professional
d) Retired

e) Student.

6. Annual Income
a) 1-5 Lakh

b) 5 10 Lakh

c) Above 10 Lakh
7. Do you invest any part of your savings?
a) Yes

b) No

If yes
8. What amount do you save yearly?
a) < 25000

b) < 50000

c) < 100000

d) > 100000

9. Normally what investment opportunities you prefer to invest your savings? (Rank
them accordingly)

A) Mutual Funds

b) LIC

C) Shares

d) Bank deposits

10. What criteria you keep in your mind while selecting an investment opportunity
(Rank them accordingly)?
a) Security

b) Yield

c) Maturity

d) Tax Benefits

e) Liquidity

f) goal

11. Do you know about the Mutual Funds?

a) Yes

b) No

I). If yes how did you come to know about mutual funds?
a) Advertisements

b) Friends

c)

Family

members
d) Financial Advisors

e) Relatives

12. Have you invested any amount in the Mutual Funds?

a) Yes

b) No

13. What type of funds do you prefer?

a) Debt Funds

b) Equity Funds

c) liquid Funds

14. Risk involved in mutual funds.

a) High
d) Low

b) Moderate

c) Neutral

e) Nil

15. Returns in mutual funds

a) Excellent

b) good

c)

average
d) Fair

e) poor.

19. In your opinion, investment in Mutual Fund is a

a) Better option

b) not a better option

c) cant say

22. Will you recommend Mutual Fund as a better investment alternative to your
friends?
a) Yes

b) NO

23. If you have 100000/- how much money do you invest in mutual funds?
24. Have you aware of taxation on your investment?

a) yes

b)no

25. What are your valuable suggestions for the improvement of Mutual?
Funds schemes?