A

PROJECT REPORT
ON

“A Study of Investment Avenue offered by

Reliance Money”

Submitted in partial fulfillment of the

requirement for the award of the degree
Of
Master of Business Administration

COMPANY GUIDE: SUBMITTED BY:

MANOJ GUPTA SHIKHA AGARWAL
(CENTRAL MANAGER)

MAHARISHI ARVIND INSTITUTE OF ENGINEERING

& TECHNOLOGY
(AFFILIATED TO UNIVERSITY OF RAJASTHAN)
 ACKNOWLEDGEMENT

The project would not be complete without a mention of those,

who have spared their valuable time and shared their rich
experience, in making this project a success.

I owe my indebtedness to “Mr. Manoj Gupta” Central Manager,

Rajasthan for Mutual Funds and Automatic Investment Plans, for
granting me an opportunity to work with the esteemed
organisation. He has been benevolent enough to lend his help and
spare his valuable time throughout the project. I am thankful for his
continuous motivation and encouragement.

I extend my heartfelt thanks to “Ms. Sapna Pareek”

Relationship Officer, for their incessant guidance and support all
through the project. They have been immensely contributed with
their ideas and have guided me on all aspects.

I am thankful to my Faculty Guide “Mrs. Tanvi Phatak &

Shweta Mathur” for their continuous support and guidance.

And finally I would like to thank to the entire faculty at Maharishi

Arvind Institute of Engineering & Technology (FMS), Jaipur
for equipping me to carry out this study.
 PROFILE CONTENTS

1. Industry profile

Growth in assets under Management

Major players in mutual fund Industry

2. Organization’s profile
Introduction of Reliance money

Plans are offered by reliance money

3. Objectives of study

4. Scope of objectives
Concepts of Mutual Fund

Evolution of Mutual Fund in India

Types of Mutual Fund

Benefits of Mutual Fund

Future of Mutual Fund in India

 Concepts of Automatic investment plan

Allocation charges, switching option & Sum

assured

5. Research methodology & Sample

design
Research objectives
Types of research design
Data (primary & secondary)
Sample unit
Time & place
Type of sampling
Sample size

6. Analysis and Interpretation

7. Findings

8. Suggestions & recommendations

9. Appendices (Questionnaire)

10.Bibliography
 INDUSTRY PROFILE

The origin of mutual fund industry in India is with the introduction of

the concept of mutual fund by UTI in the year 1963.Though the growth
was slow, but it accelerated from the year 1987 when non-UTI players
entered the industry.
By the end of the 80s decade, Indian mutual
fund industry had seen a dramatic improvement, both qualities wise
as well as quantity wise and few other mutual fund companies in
India took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual
Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund,
Indian Bank Mutual Fund, Bank of India Mutual Fund.

The succeeding decade showed a new horizon in Indian mutual fund

industry. By the end of 1993, the total AUM of the industry was Rs.
470.04 bn. The private sector funds started penetrating the fund
families. In the same year the first Mutual Fund Regulations came
into existence with re-registering all mutual funds except UTI. The
regulations were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in
India which has now merged with Franklin Templeton. Just after ten
years with private sector players’ penetration, the total assets rose
up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in
India.
The major players in the Indian Mutual Fund Industry
are:

GROWTH IN ASSETS UNDER MANAGEMENT

Major Mutual Fund Companies in India: -

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN
AMRO Asset Management (India) Ltd. was incorporated on November
4, 2003. Deutsche Bank AG is the custodian of ABN AMRO Mutual
Fund.
Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group
and Sun Life Financial. Sun Life Financial is a global organisation
evolved in 1871 and is being represented in Canada, the US, the
Philippines, Japan, Indonesia and Bermuda apart from India. Birla
Sun Life Mutual Fund follows a conservative long-term approach to
investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on

October 30, 1992 under the sponsorship of Bank of Baroda. BOB
Asset Management Company Limited is the AMC of BOB Mutual Fund
and was incorporated on November 5, 1992. Deutsche Bank AG is
the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors
namely Housing Development Finance Corporation Limited and
Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities
and Capital Markets (India) Private Limited as the sponsor. HSBC
Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.
ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the
same named Trustee Company. It is a joint venture of Vysya and
ING. The AMC, ING Investment Management (India) Pvt. Ltd. was
incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of

America, one of the largest life insurance companies in the US of A.
Prudential ICICI Mutual Fund was setup on 13th of October, 1993
with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee
Company formed is Prudential ICICI Trust Ltd. and the AMC is
Prudential ICICI Asset Management Company Limited incorporated
on 22nd of June, 1993.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual
Fund to launch offshore fund, the India Magnum Fund with a corpus
of Rs. 225 cr. approximately. Today it is the largest Bank sponsored
Mutual Fund in India. They have already launched 35 Schemes out of
which 15 have already yielded handsome returns to investors. State
Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM.
Now it has an investor base of over 8 Lakhs spread over 18 schemes.
Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882.
The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata
Investment Corporation Ltd. The investment manager is Tata Asset
Management Limited and its Tata Trustee Company Pvt. Limited.
Tata Asset Management Limited's is one of the fastest in the country
with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary

of KMBL. It is presently having more than 1, 99,818 investors in its
various schemes. KMAMC started its operations in December 1998.
Kotak Mahindra Mutual Fund offers schemes catering to investors
with varying risk - return profiles. It was the first company to
launch dedicated gilt scheme investing only in government
securities.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian

Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and
Reliance Capital Trustee Co. Limited is the Trustee. It was
registered on June 30, 1995 as Reliance Capital Mutual Fund which
was changed on March 11, 2004. Reliance Mutual Fund was formed
for launching of various schemes under which units are issued to the
Public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in
diversified securities.
Franklin Templeton India Mutual Fund

The group, Franklin Templeton Investments is a California (USA)

based company with a global AUM of US$ 409.2 bn. (as of April 30,
2005). It is one of the largest financial services groups in the world.
Investors can buy or sell the Mutual Fund through their financial
advisor or through mail or through their website.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with
Alliance Capital Management Corp. of Delaware (USA) as sponsorers.
The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance
Capital Asset Management India (Pvt) Ltd. with the corporate office
in Mumbai.
 COMPANY PROFILE

Company Profile Reliance Capital Limited is a financial services

company. The Company has interests in asset management and
mutual funds, life and general insurance, private equity and
investments, stock broking, depository services, distribution of
financial products, consumer finance and other activities in
financial services.
Reliance Money is a group company of Reliance
Capital; one of India's leading and fastest growing private sector
financial services companies, ranking among the top 3 private
sector financial services and banking companies, in terms
of net worth. Reliance Capital is a part of the Reliance Anil
Dhirubhai Ambani Group.
Reliance Money is a brokerage and distributor of
financial products which Launched in Apr 2006. Reliance Money is a
comprehensive electronic transaction platform offering a wide
range of asset classes. Its Endeavour is to change the way India
transacts in financial markets and avails financial services. Reliance
Money is a single window, enabling you to access, amongst others in
Equities, Equity & Commodities Derivatives, Mutual Funds, IPO’s,
Life & General Insurance products, Offshore Investments, Money
Transfer, Money Changing and Credit Cards.
Reliance Money has further divided into two categories:

1. Capital Market

2. Third party distribution

1. Capital Market :-This department deals into direct trading

into equity, Equities, Equity & Commodities Derivatives, IPO,
Offshore Investments, Money Transfer, Money Changing.

2. Third party distribution:-This department is into investment in

various sectors in Mutual fund Life and general Insurance and
PMS.

LIFE INSURANCE PLANS ARE OFFERED BY RELIANCE

MONEY:-

 Protection Plans
 Savings and Investment Plans
 Retirement Plans
 Child Plans

1. Protection Plan: - Protect your family even when you’re not

around by investing in Reliance Protection Plans. Choose a limited
period plan or a lifetime protection plan depending on your needs.

 Term plan
Invest in the Reliance Term Plan, a pure life insurance plan
that offers you comprehensive and affordable coverage for a
limited period of time to suit your needs.
2. Savings and Investment Plan: - Reliance Savings &
Investment Plans help you to set aside some money to achieve
specific goals in life, which means that you can enjoy life and
provide for your family’s daily needs.

 Reliance Super Invest Assure Plan

Reliance Super Invest Assure is a complete plan which
addresses your vital needs like Flexibility, Security,
Investment Return and Financial Planning.

 Total Investment Plan - Insurance

Reliance TIPS -Series I- Insurance is a Unit Linked
Investment + Insurance Plan that helps you meet all your
financial needs, without the complexity of managing
multiple products.

 Reliance Wealth + Health Plan

Invest in the Reliance Wealth Health Plan and balance your
health needs and wealth needs, without compromising on
either health or wealth.

 Reliance Automatic Investment Plan

The Reliance Automatic Investment Plan is an enhanced
unit linked plan that allows you to choose the right
investment mix to reap maximum benefits. It also provides
you with enhanced Life Cover.

 Reliance Money Guarantee Plan

To reap the benefits of a rising market and to protect
yourself from any market decline, invest in the unit linked
Reliance Money Guarantee plan that gives you the perfect
balance between Protection and Savings.
3. Retirement Plan: - Invest today in Reliance Retirement
Plans and save money to enjoy life even after retirement. You
will never have to depend on another person or make any
compromises to maintain your current lifestyle.

 Reliance Golden Years Plan

The Reliance Golden Years Plan helps you save
systematically and generate the much-needed corpus to
help you enjoy life after retirement.

 Reliance Golden Years Plan Value

Realize all your dreams of playing golf, or going for a
world tour after retirement by investing in the Reliance
Golden Years Plan Value, which helps you generate the
amount you will need for the future.

 Reliance Golden Years Plan Plus

Invest in the special Reliance Golden Years Plan Plus that
not only helps you build the corpus you need after, but
also collects a basic minimum amount in case something
were to happen before you realize your dreams.

4. Child Plans: - Save systematically and secure your child’s

future needs by investing in Reliance Child Plans. You can
always be there for your child when he or she needs you.

 Reliance Child Plan

Save systematically and secure the financial future of your
child by investing in the Reliance Child Plan and let your
child enjoy today without worrying about tomorrow.

 Reliance Secure Child Plan

Reliance Life Insurance presents a unit linked insurance
plan that secures your child’s financial future, leaving you
free from worry.
OBJECTIVE OF STUDY: -

I have worked into TPD department of reliance

money where I Looked after all financial products
like: - Mutual fund Life Insurance and PMS.
Major area I looked after are: - Mutual Fund
and Automatic Investment Plan.

SCOPE: -

MUTUAL FUNDS: AN OVERVIEW

INTRODUCTION

A mutual fund is a trust that pools the savings of a number of

investors that share a financial goal. The money thus collected is
invested by the fund manager in capital market instruments such as
shares, debentures and the other securities in accordance with the
objectives as disclosed in offer document of a scheme. Mutual fund
issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual fund are known as unit
holders.
 The income earned through these investments and the capital
appreciation realized is shared by its unit holders in proportion to
the number of units owned by them. Anybody with an investible
surplus of a 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 the ideal investment vehicle
for today’s complex and modern financial scenario. Markets for
equity shares, bonds and other fixed income instruments, real
estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by
global events occurring in faraway places.
A typical individual is unlikely to have the
knowledge, skills, inclination and time to keep track of events,
understand their implications and speedily. An individual also finds
it difficult to keep track of ownership of his assets, investments,
brokerage dues and bank transactions.

A Mutual Fund is the answer to all these situations because it

normally comes out with a number of schemes with different
investment objectives which are launched from time to time.

It appoints professionally qualified and experienced staff that

manages each of these functions on a full time basis.

The large pool of money collected in the fund allows it to

hire such staff at a very low cost to each investor.

In effect, the mutual fund vehicle exploits economies of scale

in all three areas – researchers, investments and
transaction processing.
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 public.

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 working of a mutual fund has been illustrated with the help of a
flow chart mentioned below:

Mutual Fund Operation Flow Chart

Evolution of Mutual Funds in India

1. Phase I – ( 1964 – 1987)- Growth of UTI

 UTI sole player in the industry, created by an Act of

Parliament, 1963

 UTI launches first product Unit Scheme 1964

 UTI creates products such as MIP's, children plans

offshore funds etc

 MASTERSHARE – First Diversified Equity Investment

Scheme in India.

 INDIA Fund – First Indian offshore fund launched in

August 1996.

2. Phase 2 – ( 1987 – 1993)- Entry of Public Sector Funds

 SBI mutual fund was the first non -UTI mutual fund

 In 1987 Public Sector Banks and FI's got permission to set up

MF.

 In 1993, Mutual Fund Industry was open to private players.

3. Phase 3 – ( 1993-1996) – Emergence of Private Funds

 In 1993, Mutual Fund Industry was open to private players.

 SEBI's first set of regulations for the industry formulated in

1993.

 Significant innovations, mostly initiated by private players.

4. Phase 4 – ( 1996-1999) – Growth and SEBI Regulation

 Implementation of new SEBI regulations led to rapid

growth.

 Bank mutual funds were recast as per SEBI guidelines.

 UTI came under voluntary SEBI supervision.

 Dividends made tax free in 1999.

During this phase, both SEBI and AMFI launched

investor awareness programmers.

AMFI also published a booklet titled “Making Mutual

Funds work for you – The investors’ Guide”
5. Phase 5 – (1999-2004) – Emergence of a large and
uniform industry

 Uti Act Repealed in February 2003.

 UTI mutual fund came under SEBI’s regulations 1996.

 Rapid growth, significant increase in corpus of private

players.

 Tax break offered created arbitrage opportunities.

 Bond funds and liquid funds registered highest growth.

6. Phase 6 – From 2004 onwards: Consolidation and

Growth

 Mergers and Acquisitions witnessed

 Alliance MF acquired by Birla Sun life

 Sun F & C by Principal PNB Mutual fund.

 TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure

and its investment objective.

(1) By Structure/Operational classification:-

 Open-ended Funds-

 Open ended funds are ones that sell & repurchase units at all
times. These do not have a fixed maturity. The Asset under
management keeps fluctuating depend on investors buying or
selling units. An AMC might stop selling units if the fund size
becomes too big to manage. However repurchase of units is
done at all times.

 Closed-ended Funds-

 Close ended funds are one that makes a one time sale of
units. After the offer closes CEF’s do not let the investors buy
directly from the fund. To provide liquidity to the investors,
these funds are traded in the stock markets. Some times the
fund house also offers buy backs at regular intervals. SEBI
regulations state that all fund houses should need to give one
of the 2 exit options to the customers.
 Load and no load Funds-

There are three ways to charge a customer to recover the

marketing expenses of a new fund:-
 At the time of entry, by deducting a specific amount fro the
contribution. (Entry Load)
 By charging the fund a fixed amount during the tenure of the
fund, for a specified period. (deferred load)
 At the time, the investor is leaving the fund, by deducting
specific amount from the proceeds payable to him. (exit load)
Funds that charge any of the above are termed as load funds or
else as no-load funds.

 Tax exempt & non tax exempt funds-

 When a fund invests in tax exempt securities, it is called a tax

exempt fund.
 In India any income received by mutual fund is tax free.
 After 1999 budget, all dividend income received from MF is
tax free in hands of the investor. But all funds other than
open ended equity funds have to pay a dividend distribution
tax.
 So in India, open end equity oriented mutual fund schemes are
tax exempt investment avenue, while other funds are taxable
for distributable income.
(2) By Investment Objective/Portfolio Classification:-

Equity
Debt Money Market

Equity Funds Fixed Income

Index Funds Funds Money Market
Sector Funds GILT Funds Mutual Funds

Balanced Funds Liquid Funds

 Equity Funds

 Offer greater risk than debt funds, as well as offer higher

potential for growth.
 Subject to equity price fluctuation in the markets. Price
movements are caused by many factors like political, social as
well as economic.

Types of equity funds

Aggressive Growth funds

 Target maximum capital appreciation.

 Invest in less researched or speculative shares & may adopt
speculative investment strategies to attain their objectives of
high returns.

Growth fund

 Invest in companies whose earnings are expected to rise above

average.
 Target capital appreciation over a three to five year span.
 Less volatile than aggressive growth funds.
 Specialty funds

Have narrow portfolio orientation & invest in only companies that

meet predefined criteria.

1. Sector Funds: Invest in a particular sector, like pharmacy,

power, IT etc. Since they are not diversified in nature, they
carry a higher risk than growth funds.

2. Foreign Securities Fund: Invest in equities of one or more

countries and advantageous because it offers greater
diversification and Carries inherent risk of foreign exchange
rate risk. Its performance depends on the economic conditions
of countries invested in.

3. Mid-Cap or Small- Cap funds: Invest in companies that have a

lower market capitalization compared to blue chip companies.
More volatile as the scripts are not freely traded.

Diversified Equity Funds

 Invest majority portion of their funds in the equity market & a

small portion in liquid money market securities.
 Invest in equity across sectors, definitely more than one
sector.
 Have lower risk than growth funds because they are
diversified in nature.
 Equity linked saving schemes

 Offer tax benefits under section 80 C

 Lock in period of 3 years.

Equity index funds

 Track the performance of a specific stock market index.

 Objective of the fund is to out perform the index.
 There can be sector specific, like pharmacy sector index fund.
These deal with only pharmacy companies which form a part
of the index.

Value index funds

 Invest in companies with good or improving profit prospects,

aiming primarily at capital appreciation.
 Seek out fundamentally strong companies, whose shares are
currently under valued in the market.
 Have stocks which are selling at lower price earning ratios.

Equity income or dividend yield fund

Equity funds designed to give investors a high level of current

income along with some steady capital appreciation.
 Invest mainly in companies giving a high dividend & less price
fluctuation.
DEBT Funds (income funds)
 Invest in debt instruments issued by the government, private
companies, banks, financial instruments & other entities like
infrastructure companies, utilities etc.
 Target low risk – stable income.
 Invest in long term securities.
 They do not target long term appreciation but look for current
income. They distribute a substantial part of their surplus to
investors.

Types of debt funds

Fixed term plan series:-

 Mutual funds can either be open or close ended. In India MF's

have developed an innovative middle approach.
 A series of plans are offered & units are issued at frequent
intervals for short plan durations.

Gilt Fund:-

 It invests only in securities that are issued by the Government

and therefore do not carry any credit risk.
 Government papers are called as dated securities also.
 It invests in both long-term and short-term paper.
 Ideal for institutional investors who have to invest in Govt.
Securities.
 Enables retail Participation.
Diversified debt fund:-

 Invests in all types of debt securities issued by entities across

all industries & sectors.
 Benefit of risk reduction though diversification.

Focused debt fund:-

 Have a narrower approach; invest in sector, offshore &

specialized debt funds.
 Higher risk than diversified debt funds.
 E.g. Invest in corporate debentures, tax free bonds or
municipal bonds.

High yield debt funds:-

 Debt funds invest in securities issued by borrowers who are

rated by credit rating agencies & are considered to be
`investment grade`.
 These funds target securities which carry a higher risk, as they
give a higher return. These are considered risky as they are
exposed to higher default risk.

Assured return funds:-

 Assured returns are offered to the investor. (An Indian

variant)
 Explicit guarantee is required by the guarantor.
Money Market Funds
 The aim of money market fund is to provide easy liquidity,
preservation of capital and moderate income.
 These schemes generally invest in safer short-term
instruments such as treasury bills commercial paper etc.
 These are ideal for Corporate and individual as a means to
park their surplus funds for short-term periods.

Balanced Funds

 Aim of these funds is to provide both growth and regular

incomes.
 Such schemes periodically distribute a part of their earnings
and invest both in equities and debts.
 These are ideal for investors looking for a combination of
income and moderate growth.

Liquid Funds

 Has a portfolio comprising of debt instruments, convertible

securities, and preference & equity shares.
 Aims are to attain the objectives of income, moderate capital
appreciation, & preservation of capital & are ideal for
investors with a conservative & long term orientation.
 NET ASSET VALUE (NAV)

All fund assets belong to the investors & are held in fiduciary
capacity. Mutual Fund is required to follow the accounting policies
laid down in SEBI (MF) regulations 1996.

CALCULATION OF NAV:-

Total net assets = assets – liability

NAV= market value of investments + receivables + other accrued

income + other assets – accrued expenses –other payables –other
liabilities / no of units outstanding on the valuable.

NAV have be calculated & uploaded on the AMFI site by 8 pm for

OEF’s & every Wednesday for close ended funds

o Close ended schemes which are not mandated to be listed

on the stock exchange for e.g. Monthly income schemes
may publish NAV on a monthly or quarterly basis as
permitted by SEBI.

Applications received before the cut off time will carry the same
days NAV & ones received after that will carry the next days
NAV. Cut off time is 15:00. For unit repurchases the cut of time
is 10:00 am.
Factors affecting the NAV

 Purchase & sale of investment securities

 Valuation of all investment securities held
 Other assets & liabilities
 Units sold or redeemed

Other assets include due to the fund but not received as on the
valuation date.

Other Liability includes expense payable by the fund for

e.g. Custodian fee or trustee fee.

NAV needs to be rounded of to 4 decimal points in case of a

liquid fund & 2 decimal points in case of other schemes.

Purchasing of units.

Entry & Exit load.

o Sale price = NAV + entry load (cannot be more than 7%)

o Repurchase price = NAV – exit load (cannot be more than
7%)

 The difference between the repurchase price & sale price of a

unit is not permitted to exceed 7% of the sale price.

 In case of close ended funds maximum spread (sale price &

repurchase price) is 5%.
ADVANTAGE OF INVESTING IN MUTUAL
FUNDS

 Professional Management:

Mutual Funds provide the series of experience and skilled

professionals, backed by a dedicated investment research
team that analyses the performance and prospects of a
companies and selects suitable investments to achieve the
objective of schemes.

 Liquidity:

In open-ended schemes, the investor gets the money back

promptly at net asset value related price from the Mutual
Fund. In close-ended schemes, the units can be sold on a
stock exchange at the prevailing market price or the investor
can avail of the facility of direct repurchase of NAV related
prices by the Mutual Fund.

 Diversification:

Mutual Funds invest in a number of companies across a broad

cross-section of industries and sectors. This diversification
reduces the risk because seldom do all stocks decline at the
same time and in the same proportion. One can achieve this
diversification through Mutual Fund with far less money than
he/she can do on his own.
 Return potential:

Over a medium to long term, Mutual Fund has the potential to

provide higher return as they invest in a diversified basket of
selected securities.

 Convenient Administration:

Mutual Funds save the time and makes investing easy and
convenient. Investing in a Mutual Fund reduces paperwork and
helps in avoiding many problems such as bad deliveries,
delay payments and follow up with brokers and companies.

 Low cost:

Mutual Funds are a relatively less expensive way to invest

compared directly investing in the capital market because the
benefits of scale in brokerage, custodial and other fees
translate into low costs for investor.

 Tax Benefits:

Dividends distributed by the Mutual Funds are tax free in the

hands of the recipient. Also, the investment in the equity
schemes for the period exceeding one year are exempt from
long term capital gain tax.

 Choice of schemes:

Mutual Funds offer a family of schemes to suit your varying

needs over a lifetime.
 Flexibility:

Through feature such as Systematic Investment Plans (SIP),

Systematic Withdrawal Plans (SWP), Systematic Transfer Plans
(STP) and Dividend Reinvestment Option, the investors can
systematically invest or withdraw funds according to their
needs and convenience.

 Transparency:

The investors receives the regular information on the value of

your investment in addition to the disclosure on the specific
investments made by the schemes, the proportion invested in
each class of assets and the fund manager’s investment
strategy and outlook.

 Affordability:

Investors individually may lack sufficient funds to invest in

high-grade stocks. A Mutual Fund because of its large corpus
allows even a small investor to take the benefit of its
investment strategy.

 Well regulated:

All Mutual Funds are registered with SEBI and function within
the provision of strict regulations designed to protect the
interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
 Future of Mutual Funds in India

By December 2004, Indian mutual fund industry reached Rs1, 50,537

crore. It is estimated that by 2010 March-end, the total assets of all
scheduled commercial banks should be Rs 40, 90,000 crore.

The annual composite rate of growth is expected 13.4% during the

rest of the decade. In the last 5 years we have seen annual growth
rate of 9%. According to the current growth rate, by year 2010,
mutual fund assets will be double.

Let us discuss with the following table:

Aggregate deposits of
Scheduled Com Banks in
India (Rs.Crore)

Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Sep-04 4-Dec

Deposits 605410 851593 989141 1131188 1280853 - 1567251 1622579

Change in % over last yr 15 14 13 12 - 18 3

Mutual Fund AUM’s Growth

Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Sep-04 4-D

MF AUM's 68984 93717 83131 94017 75306 137626 151141 149

Change in % over last yr 26 13 12 25 45 9 1

Some facts for the growth of mutual funds in India:-

 100% growth in the last 6 years.

 Numbers of foreign AMC’s are in the queue to enter the Indian

markets like Fidelity Investments, US based, with over
US$1trillion assets under management worldwide.

 Our saving rate is over 23%, highest in the world. Only

canalizing these savings in mutual funds sector is required.

 We have approximately 29 mutual funds which is much less

than US having more than 800. There is a big scope for
expansion.

 'B' and 'C' class cities are growing rapidly. Today most of the
mutual funds are concentrating on the 'A' class cities. Soon
they will find scope in the growing cities.

 Mutual fund can penetrate rural like the Indian insurance

industry with simple and limited products.

 SEBI allowing the MF's to launch commodity mutual funds.

 Emphasis on better corporate governance.

 Trying to curb the late trading practices.

 Introduction of Financial Planners who can provide need based

advice.
 RESEARCH METHODOLOGY

AND

SAMPLE DESIGN

REASEARCH DEFINED

Research in common parlance refers to a search for knowledge. One

can also define research as a scientific and a systematic search for
pertinent information on specific topic.

“A careful investigation (or) inquiry especially through search for

new facts in any branch of knowledge”.

-Oxford advance learner dictionary

Redman and Mory define research as –“a systematic effort to

gain new knowledge”.

RESEARCH OBJECTIVE

The objective of the research is to drive the opinion of the investors

about investment plan (Mutual Fund and automatic investment
plan), which were offered by the Reliance Capital.
RESEARCH DESIGN

“A research design is an arrangement of condition for collection and

analysis of data in a manner that aims to combine relevance to the
research purpose with economy in procedure”.
The research is “Descriptive” in nature as
it dealt with describing the market and the buying behavior of
consumers. The research is designed to discover the potentiality of
the investment market at Jaipur and also survey of the investor’s to
know about their perception, the psychological factors associated
with the product, the benefits they are looking forth from the
product and how do they rank in terms of risk and returns
associated with it.

DATA COLLECTION AND SOURCE OF DATA

A research requires two kinds of data that is primary data and

secondary data. In the present study data gathering will involve
usage of both primary and secondary data though there will be an
extensive usage of primary data. Well-structured questionnaires will
be prepared for both the individual’s investors and the other local
market player.
There will be personal interview surveys mostly. The
questionnaire will contain both open ended and close ended
questions. Here open ended questions will be more useful, as it is
an exploratory research being conducted; where in the main
objective is to get an insight into how people think rather than
measuring how many people think in a particular way. Secondary
data will be collected from various journals, books and websites.
SAMPLE DESIGN

A sample design is a definite plan for obtaining a sample from a

given population. It refers to the technique or the procedure that
the researcher would adopt in selecting items for the sample.

SAMPLING TECHNIQUE: - “Random Sampling”

TIME AND PLACE: - 7 August to 23 September, Jaipur

SURVEY AREA:-Jaipur

SAMPLE SIZE:-Sample size is 100. This size is only for whole

Project.
ANALYSIS

AND

INTERPRETATION
For Local Market Player (SPECULATOR)
Q.1 What is the purpose of your investment?
Preference Savings Returns Tax Benefit Safety

Frequency 14 35 33 18

Investment Pattern

Safety Savings
18% 14%
Savings
Returns
Tax benefit
Returns
Tax benefit Safety
35%
33%

The investor’s main purpose of investment is to have good returns

and then tax benefits. After that safety of funds is considered and
then the savings. And so their investment pattern depends upon the
above-mentioned factors.

Q.2 What is the general investment pattern?

Investment Current Mutual Fund Share Others
Pattern account Market
Freq. 45 15 30 10

Investment Pattern

Mutual Fund
15%
investment
Share Market Current account
30% Mutual Fund
Share Market
others
Current account
45%
others
10%

45 % of the investors have their investments in current account to

avail the liquidity and 30 % prefer to invest in share market so as to
earn higher returns while 15 % invest in mutual fund and 10 % in
other investment avenues like insurance, real estate etc.
Q.3 Are you aware of Mutual fund as an investment
avenue?

Awareness of Yes No
investors
Freq. 8 92

Awareness of investors

Yes
8%

Yes
No

No
92%

Investors’ preference for financial assets is diverse and varied. 92 %

respondents said Yes and 8 % said that they are unaware, such a
high percentage of aware investors indicated that mutual fund
concept is though recent in Jaipur, it is there in the mindset of the
investors.
Q.4 Would you like to invest in a low return and low risk
investment plan?

Preference about Yes No

low risk & return
Freq. 40 60

Pereference about low risk &return

Yes
40%
Yes
No
No
60%

Investors basically look for high return investments. 60 % investors

want to invest their own money in high return investment plan but
still 40 % investors prefer low return and low risk investment plan
that is 100 % debt fund.
Q.5 In which kind of fund, investors prefer to invest?

Types of fund Balanced fund Equity fund Debt fund

Freq. 50 30 20

60
50
50

40
30
30 Freq.
20
20

10

0
Balanced fund Equity fund Debt fund

50 % investors make their investments in balance fund so as to have

risk and returns in equal ratio. While 30 % of the investors prefer
invest money in equity funds so as to earn higher returns and 20 %
of the investors make their investments in debt funds so as to have
moderate returns with low risk.
Q .6 What is the Investors’ readiness stage about the
investments plan?

Stage unaware Aware Interested Intending to

invest
Freq. 32 12 20 36

Investors'readiness stage

40
35
30
25
Freq.
20
36
15 32
10 20
5 12
0
unaware Aware Interested Intending to
invest

This forms the behavioral base for segmenting the market. A market
consists of people in different stages of readiness to buy a product.
Some are unaware of, some are aware, some are interested and
some are intending by the product.
36 % of the respondents are intending to buy the
product. But 32 % are unaware about the product. 20 % are
interested and 12 % are aware of the investment plan.
For Individual Investors

Q .1 What are the instrument in which you invest?

Type of LIC Gold Real Stock Fixed Govt. Mutual

instrument estate Market Deposits Bonds fund
Freq 25 19 14 7 20 10 5

Individual preference

30
25
20
15 Freq
10
5
0

Above analysis tells us that people still are stick to only those
instruments which are traditional in nature and yield a limited
return in present scenario but a ray of hope comes from the person
who invested in the mutual fund it means people are trying to
change their investment habit.
 Q .2 For tax saving purpose you invest your money in-

Investment PPF Bonds Mutual NSC LIC

plan funds
Freq. 22 5 15 26 32

Investment plan

PPF Investment plan

LIC 22% PPF
32% Bonds Bonds
5%
Mutual funds Mutual funds
NSC 15% NSC
26% LIC

For tax saving, mostly people invest their money in NSC and PPF.
But in present scenario, market is very down so they are not
generating good results. So people are trying to fluctuate from
traditional instruments and started investing in mutual fund.
 Q .3 What do you refer while investing in any of the
above schemes?

To whom Advisors C.A. Friends News News Self

u consult paper channel analysis
Freq. 20 22 18 17 10 13

To whom individual consult before investment

Self analysis
To whom u consult
13% Advisors
Advisors
News channel 20%
C.A.
10%
Friends
News paper C.A.
News paper
17% Friends 22%
News channel
18%
Self analysis

It depicts that peoples preference goes to their financial advisors

and C.A. After that they consult with their friends. People generally
take advice that they think trust worthy and knowledgeable.
Q.4 Is investment in mutual fund risky?
Yes 70

No 30

Investing in mutual fund is risky

No
30%

Yes
No
Yes
70%

All an all people still consider that mutual fund investment is risky.
Because 70 % amount in the total amount is invested in equity fund.
We all know very well that equity fund affected with the market up
and downs.
Q.5 You generally invest in investments plan for-

Preference Tax Higher Capital Future Regular Child

saving returns Gain savings income education
Freq. 38 32 9 10 7 4

Reasons for investment

Child
education
Regular 4%
income Preference
7% Tax saving
Tax saving
Future savings Higher returns
38%
10%
Capital Gain
Capital Gain
9% Future savings
Regular income
Higher returns Child education
32%

Most of the people think that investment in mutual fund and life
insurance is for the tax saving purpose. 32 % people invest money
for higher return. After that the purpose is capital gain and future
savings.
Q.6 In which of the mutual fund schemes you have
invested?

Schemes Equity ELSS Debt Liquid

diversified
Freq. 52 40 3 5

Mutual fund schemes

Liquid
Debt 5%
3%
Equity diversified
Equity ELSS
ELSS diversified Debt
40% 52% Liquid

52 % people invested in the equity diversified schemes. After that

they prefer equity link saving scheme. Individuals are not much
aware about the other investment horizons.
Q. 7.How many investment companies name you know on mutual
fund?

Mf UTI ICICI RELIANC HDFC SBI TATA

companies E

Freq. 25 22 19 9 15 10

Freq.

30
25
25 22
19
20
15
15 Freq.
9 10
10
5
0

In India, there are 29 mutual fund companies, but people are still
not much aware about the whole companies. They can remember
only few companies. Only 25 % people know that UTI is a mutual
fund company while 19 % people know that reliance is a mutual
fund company.
 FINDINGS

1. The investor’s main purpose of investment is to have

good returns and then tax benefit. 35 % people invest for
high return while 33 % invest for tax benefit.

2. 45 % speculators have their investment in current

account to avail the liquidity while 25 % individual
investors have invested in LIC and Fixed Deposits. For
that they look towards the advisors and C.A.

3. 92 % individuals are not aware about mutual fund but

36% individuals are intending to buy the investment
plan. Moreover does not invest in low risk and low return
so that they prefer balance fund.

4. According to 70% individuals, mutual fund is risky. If

they invest in, they prefer Equity diversified and Equity
link saving schemes.

5. In India, moreover people invest in traditional

instrument like LIC and PPF only for tax benefit and
good returns.
SUGGESTIONS AND RECOMMENDATION
1. The method of one to one agency distribution should be
stopped or it should be minimized because to meet his/ her
targets the trainees or the UM’s give a lot of follow up
prospective advisors. Due to this, that individual gets a
wrong perception in his mind that it is need of the company
to recruit him and not his requirement. Therefore, he tries
to dictate terms on the company. This activity can defame
the company’s image in the eyes of general masses.

2. If the company wants to persist with the same activity, the

agency distribution then professional salesperson should be
employed.

3. Alternatively, the company should tap the needy person and

the prospective advisors should be called for the business
opportunity presentation. This will enhance the reputation of
the company in the eyes of the general masses and the
company will also be in a position to dictate terms to them.

4. The company should also provide 7 days seminar program for

product knowledge, market knowledge and customer and
their needs to a trainee and employed salesperson.

5. Company should lay emphasis to create investor friendly

environment by helping the investors in selecting the right
type of the schemes.
 Appendices

Name:-………………………

Age:-……. Gender:-…… Contact No:-…………..

Qualification:-…………………….Profession:-………………

FOR LOCAL MARKET PLAYER (SPECULATOR)

Q.1 What is the purpose of your investment?

(A) Saving (B) Returns

(C) Tax benefit (D) Safety

Q.2 What is the general investment pattern?

(A) Current account (B) Mutual Fund

(C) Share market (D) Others

Q.3 Are you aware of Mutual fund as an investment avenue?

(A) Yes (B) No

Q.4 Would you like to invest in a low return and low risk investment
plan?

(A) Yes (B) No

Q.5 In which kind of fund, investors prefer to invest?

(A) Balanced Fund (B) Equity Fund

(C) Debt Fund

Q .6 What is the Investors’ readiness stage about the investments

plan?

(A) Unaware (B) Aware

(C) Interested (D) Intending to invest

FOR INDIVIDUAL INVESTORS

Q .1 What are the instrument in which you invest?

(A) LIC (B) Gold

(C) Real Estate (D) Stock market

(E) Fixed Deposits (F) Govt. Bonds

(G) Mutual Fund

Q .2 For tax saving purpose you invest your money in-

(A) LIC (B) PPF

(C) Bond (D) Mutual Fund

(E) NSC

Q .3 What do you refer while investing in any of the above schemes?

(A) C.A. (B) Friends

(C) News paper (D) News channel

(E) Self analysis

Q.4 Is investment in mutual fund risky?

(A) Yes (B) No

Q.5 You generally invest in investments plan for-

(A) Tax Saving (B) Higher Returns

(C) Capital gain (D) Future Saving

(E) Regular Income (E) Child education

Q.6 In which of the mutual fund schemes you have invested?

(A) Equity Diversified (B) ELSS

(C) Debt (D) Liquid

Q. 7.How many investment companies name you know on mutual

fund?

(A) UTI (B) ICICI

(C) RELIANCE (D) HDFC

(E) TATA (E) SBI

 Bibliography

To obtain more information regarding the present study and to

substantiate it with theoretical proof, the following references
were made: -

Text book: -

 “Research Methodology” By C.R. Kothari.

 “Investment Management” By Avadhani.

Web Sites visited: -

 www.amfiindia.com

 www.reliancemoney.com

 www.reliancelifeco.in

 www.reliancecapital.com

 www.google.com

 www.moneycontrol.com