Study On Investment pattern of HNIs Reliance Money A Study On The Investment Patterns Of High Networth Individuals In Ahmedabad (A Focus On Mutual Fund) For The Organization Reliance Capital Asset Management Limited A PROJECT REPORT SUBMITTED BY HARSHA HARJANI (08075) SAVITRI FUFAL (08073) BATCH - 2 Submitted To: A J BHAMBHANI in partial fulfillment of the requirements of Tolani Institute of Management Studies, Adipur for the award of the degree of Post Graduate Diploma in Management TOLANI INSTITUTE OF MANAGEMENT STUDIES Tolani Institute Of Management Studies 1
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Study On Investment pattern of HNIs Reliance Money
A Study On The Investment Patterns Of High Networth Individuals In
Ahmedabad
(A Focus On Mutual Fund)
For The Organization
Reliance Capital Asset Management Limited
A PROJECT REPORT SUBMITTED
BY
HARSHA HARJANI (08075)
SAVITRI FUFAL (08073)
BATCH - 2
Submitted To: A J BHAMBHANI
in partial fulfillment of the requirements of
Tolani Institute of Management Studies, Adipur
for the award of the degree of
Post Graduate Diploma in Management
TOLANI INSTITUTE OF MANAGEMENT STUDIES
ADIPUR – 370 205
JULY 2009
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ACKNOWLEDGEMENT
We would like to thank Reliance Money for giving us this opportunity to be associated with an
esteemed organization as theirs.
We would also like to express our sincere thanks to Mr. Abhijeet sangani, Regional Head
Gujarat, Reliance Capital Asset Management Ltd and Mr. Faizal khan, Center Manager, Reliance
Capital Asset Management Ltd . who were our project mentors for providing us with valuable
mentoring and constant feedback on our progress made during the project. They were constant
support and had have helped us in successful completion of our project.
Our sincere appreciation for all the help, advice and warmth we received from all the employees
at Reliance money, Ahmedabad.
We would like to show our gratitude to Prof for allowing us this opportunity to take over this
project. We also thank Prof (Faculty guide and mentor) for being supportive at all the point of
time.
We would like to express our gratitude to all the respondents who took out time from their
schedules and discussed about their investment patterns and their views about Mutual Funds.
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EXECUTIVE SUMMARY
Reliance Mutual Fund (RMF) has been established as a trust with Reliance Capital Limited
(RCL), as the Settler / Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the
Trustee was established in June 30, 1995.
In an expansion drive to gain a greater share in Ahmedabad market, RMF has tried to explore the
opportunities of selling mutual fund to the High Networth Individuals, further segmented into
Hotel Owners, Doctors and Builders and wanted to know more about their investment patterns.
In our report, we have analyzed the investment patterns of these High Networth Individuals,
which investment tools they invested most in, the attributes they give most importance to while
investing, whether they invest for short or long periods both in corporate as well as individual
perspective. We also found out what proportion of the HNIs interviewed already invested in
mutual funds, which schemes they invested mostly in, whether debt, equity or balanced mutual
funds and their reasons for doing so. We have also incorporated in our report the reasons people
don’t invest in mutual funds.
During the course of our project, we interviewed 150 HNIs and learnt about their investment
patterns using which we have suggested recommendations as to how they can be pitched and
tapped for future investments in Reliance Mutual Fund. Our report also explains why the HNIs
are not regular investors in any investment tools, company wise. Towards the end of the report,
on the basis of the knowledge we gathered from interviewing the HNIs, we have suggested few
recommendations, which would be helpful in expanding the investor base of Reliance Mutual
Fund across these segments.
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Study On Investment pattern of HNIs Reliance Money
Interest Rate Risk
In a free market economy interest rates are difficult if not impossible to predict. Changes in
interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds
fall and vice versa. Equity might be negatively affected as well in a rising interest rate
environment. A well-diversified portfolio might help mitigate this risk.
Political/Government Policy Risk
Changes in government policy and political decision can change the investment environment.
They can create a favorable environment for investment or vice versa.
Liquidity Risk
Liquidity risk arises when it becomes difficult to sell the securities that one has purchased.
Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as
internal risk controls that lean towards purchase of liquid securities.
You have been reading about diversification above, but what is it?
Diversification
The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must
spread your investment across different securities (stocks, bonds, money market instruments, real
estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This
kind of a diversification may add to the stability of your returns, for example during one period
of time equities might underperforms but bonds and money market instruments might do well
enough to offset the effect of a slump in the equity markets. Similarly the information technology
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sector might be faring poorly but the auto and textile sectors might do well and may protect you
principal investment as well as help you meet your return objectives.
1.7 Setting Up of Mutual Fund
A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management
Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor
who is like promoter of a company. The trustees of the mutual fund hold its property for the
benefit of the unitholders. Asset Management Company (AMC) approved by SEBI manages the
funds by making investments in various types of securities. 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.
SEBI Regulations require that at least two thirds of the directors of trustee company or board of
trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of
the directors of AMC must be independent. All mutual funds are required to be registered with
SEBI before they launch any scheme.
1.8 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. The history of mutual funds in India
can be broadly divided into four distinct phases
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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.6,700
crores of assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
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
Canbank 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.47,004 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.
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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The
Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other
mutual funds.
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.29,835 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.76,000 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
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
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The graph indicates the growth of assets over the years.
GROWTH IN ASSETS UNDER MANAGEMENT
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The mutual fund schemes are continuously increasing since 1989. We can see from the diagram
that in the year 1989 it was only 21 schemes available with the Asset Management Companies
(AMC).
From 1989 to 1994, the mutual fund schemes increased to eight times. Then in the next five
years from 1994 to 1999 it is increased by 110 schemes. After that we can see continuous
increase in the number of schemes of AMCs
These schemes are different from each other. The schemes are differing on the basis of risk, time
period, open ended and closed ended schemes. These schemes are also differing on the basis of
sectoral schemes, diversified schemes.
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CHAPTER 2: RELIANCE MUTUAL FUND
2.1 The Sponsors: Reliance Capital Limited
Reliance Capital Asset Management Ltd. is a wholly owned subsidiary of Reliance Capital
Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset
Management Ltd is held by Reliance Capital Ltd.
Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL). Reliance
Capital is India’s fastest growing private sector financial services company. Ranking
among the top 3 private sector banking and finance companies in India, with a shareholder
base of over 1.3 million. Reliance Capital has interests in asset management and mutual
funds, life and general insurance, private equity and proprietary investments, stock
broking and other financial services with a net worth in excess of Rs. 5,262 crore (as of
March 31, 2007)
Particulars
(Rs.in crores)crores)
2005-06 2004-05 2003-04 2002-03
Total Income 652.02 295.69 356.79 458.78
Profit Before Tax 550.61 111.21 105.79 102.63
Profit After Tax 537.61 105.81 105.79 102.63
Reserves & Surplus 3849.58 1310.08 1271.84 1208.5
Net Worth 4122.46 1437.92 1399.81 1336.33
Earnings per Share
(Rs.)
29.74
(Basic + Diluted)
8.31
(Basic + Diluted)
8.31
(Basic + Diluted)
8.06
(Basic + Diluted)
Book Value per Share
(Rs.)
112.95 112.95 109.96 104.54
Dividend (%) 30% 30% 29% 29%
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Paid up Equity
Capital
223.40 127.84 127.84 127.83
Reliance Capital Ltd. has contributed Rupees One Lac as the initial contribution to the corpus for
the setting up of the Mutual Fund. Reliance Capital Ltd. is responsible for discharging its
functions and responsibilities towards the Fund in accordance with the Securities and Exchange
Board of India (SEBI) Regulations.
The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme
beyond the contribution of an amount of Rupees one Lac made by them towards the initial
corpus for setting up the Fund and such other accretions and additions to the corpus.
2.2 Reliance Capital Asset Management Limited
Reliance Capital Asset Management Limited (RCAM), a company registered under the
Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.
Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital
Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management
Limited is held by Reliance Capital Limited.
Reliance Capital Asset Management Limited was approved as the Asset Management Company
for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995.
The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM
dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds)
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Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of
Reliance Mutual Fund.
The networth of the Asset Management Company including preference shares as on March 31,
2005 is Rs.30.13 crores.
2.3 Reliance Mutual Fund
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets Under
Management (AUM) of Rs. 48,828 crore (AUM as on 30th Apr 2007) and an investor base of
over 3.1 million.
Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the
fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of
products to meet varying investor requirements and has presence in 115 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 Ltd., a
wholly owned subsidiary of Reliance Capital Ltd.
Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services and banking
companies, in terms of net worth.
Reliance Capital Ltd. has interests in asset management, life and general insurance, private
equity and proprietary investments, stock broking and other financial services.
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Sponsor: Reliance Capital Limited.
Asset Management Company: Reliance Capital Asset Management Ltd.
Trustee: Reliance Capital Trustee Co. Limited.
Transfer Agent/Registrar: Karvy Computer Share Private Limited.
Custodian: Deutsche Bank AG
Auditors: Haribhakti & Co. (statutory auditors),
Price Waterhouse Coopers (internal auditors),
C.C.Chokshi & Co. (auditors to AMC),
M/s. Malpani & Associates (auditors to trustee)
Investment Manager: Reliance Capital Asset Management
Limited. The Sponsor, the Trustee and the
Investment Manager are incorporated under the
Companies Act 1956.
Vision
Reliance Capital Asset Management Ltd. has a vision of being a leading player in the Mutual
Fund business and has achieved significant success and visibility in the market.
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However, an imperative part of growth and visibility is adherence to Good Conduct in the
marketplace. At Reliance Capital Asset Management Ltd., the implementation and observance of
ethical processes and policies has helped us in standing up to the scrutiny of our domestic and
international investors.
Management
The management at Reliance Capital Asset Management Ltd. Is committed to good Corporate
Governance, which includes transparency and timely dissemination of information to its
investors and unit holders. The Reliance Capital Asset Management Limited Board is a
professional body, including well-experienced and knowledgeable Independent Directors.
Regular Audit Committee meetings are conducted to review the operations and performance of
the company.
Reliance Capital Ltd. has contributed Rupees One Lac as the initial contribution to the corpus for
the setting up of the Mutual Fund. Reliance Capital Ltd. is responsible for discharging its
functions and responsibilities towards the Fund in accordance with the Securities and Exchange
Board of India (SEBI) Regulations.
The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme
beyond the contribution of an amount of Rupees one Lac made by them towards the initial
corpus for setting up the Fund and such other accretions and additions to the corpus.
2.3(1) Trustees
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The trustees of Reliance Mutual Fund are:
Reliance Capital Trustee Co. Limited (RCTCL)
2.3(2) The Custodian
Deutsche Bank, AG .The Trustee has appointed Deutsche Bank, AG located at Kodak House,
Ground Floor, 222 Dr. D.N.Road, Mumbai-400 001, as the Custodian of the securities that are
bought and sold under the Scheme. A Custody Agreement has been entered with Deutsche Bank
in accordance with SEBI Regulations. The Custodian is approved by SEBI under registration no.
IN/CUS/003 to act as Custodian for the Fund.
Deutsche Bank AG, the Custodian shall, inter alia:
Provide post-trading and custodial services to the Mutual Fund.
Keep Securities and other instruments belonging to the Scheme in safe custody.
Ensure smooth inflow/outflow of securities and such other instruments as and when
necessary, in the best interests of the unit holders.
Ensure that the benefits due to the holdings of the Mutual Fund are recovered and
Be responsible for loss of or damage to the securities due to negligence on its part on the
part of its approved agents.
2.3(3) The Registrar
Reliance Capital Asset Management Limited has appointed M/s. Karvy Computershare Pvt.
Limited to act as the Registrar and Transfer Agent to the Schemes of Reliance Mutual Fund. M/s.
Karvy Computershare Pvt. Limited (KCL) having their office at No.21, Avenue 4, Street No.1,
Adjacent to Rainbow Hospital, Banjara Hills, Hyderabad - 500 034, is a Registrar and Transfer
Agent registered with SEBI under registration no. INR000000221.
Reliance Capital Asset Management Ltd. and the Trustee have satisfied themselves, after
undertaking appropriate due diligence measures, that they can provide the services required and
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have adequate facilities, including systems facilities and back up, to do so. The Trustee has also
laid down broad parameters for supervision of the Registrar. As Registrar to the Schemes, KCL
will accept and process investor's applications, handle communications with investors, perform
data entry services, dispatch Account Statements and also perform such other functions as
agreed, on an ongoing basis.
The Registrar is responsible for carrying out diligently the functions of a Registrar and Transfer
Agent and will be paid fees as set out in the agreement entered into with it and as per any
modification made thereof from time to time.
2.4 Management Team
Board of Directors
Amitabh Chaturvedi
Kanu Doshi
Manu Chadha
Sushil Tripathi
Management Team
President
Vikrant Gugnani
Chief Investment Officer
K.Rajagopal
Head Equity Investments
Madhusudan Kela
Equity Fund Managers
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Equity Fund Manager Sunil B. Singhania
Equity Fund Manager Ashwani Kumar
Equity Fund Manager Shailesh Raj Bhan
Debt Fund Managers
Head Fixed Income Amitabh Mohanty
Debt Fund Manager Amit Tripathi
Debt Fund Manager Prashant Pimple
Head Of Departments
Brand and Communication Abraham Alapatt
Finance and Accounts Amit Bapna
Human Resource Development Rajesh Derhgawen
Information Technology Vinay Nigudkar
Legal & Compliance Balkrishna Kini
Risk Management Lav Chaturvedi
Operations & Settlement Geeta Chandran
Infrastructure & Administration Pradeep Andrade
R&T operations Prashanth D Pereira
Sales and Distribution Sundeep Sikka
Zonal Heads
Northern Zone Head Aashwin Dugal
Western Zone Head Devendra Daga
Southern Zone Head Gurbir Chopra
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2.5 Different Schemes Offered By Reliance Mutual Fund
Debt Schemes
Reliance Income Fund
The primary objective of the scheme is to generate optimal returns consistent with
moderate levels of risk. This income may be complemented by capital appreciation of the
portfolio. Accordingly, investments shall predominantly be made in Debt & Money market
instruments. The benchmark for the scheme is Crisil Composite Bond Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 5.27 3.68
3 Years 4.36 2.83
5 Years 6.76 5.40
Since Inception 9.48 NA
Reliance Monthly Income Plan
The primary investment objective of the scheme is to generate regular income in order to
make regular dividend payments to unitholders and the secondary objective is growth of capital.
The benchmark for the scheme is Crisil MIP Blended Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 6.46 8.88
3 Years 10.74 8.19
Since Inception 9.51 6.38
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Reliance Medium Term Fund
The primary investment objective of the scheme is to generate regular income in
order ro make regular dividend payments to unitholders and the secondary objective is growth of
capital. The benchmark for the scheme is Crisil Short Term Bond Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 6.21 6.10
3 Years 3.73 4.67
5 Years 5.22 5.36
Since Inception 7.05 NA
Reliance Liquid Fund (Treasury Plan)
The primary investment objectiveof the scheme is to generate optimal returns consistent
with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be
made in Debt and Money market instruments. The benchmark for the scheme is Crisil Liquid
Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 7.15 7.18
3 Years 5.66 5.58
5 Years 5.71 5.32
Since Inception 6.78 NA
Reliance Liquid Fund (Cash Plan)
The primary investment objectiveof the scheme is to generate optimal returns consistent
with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be
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made in Debt and Money market instruments. The benchmark for the scheme is Crisil Liquid
Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 6.94 7.18
3 Years 5.49 5.58
5 Years 5.19 5.32
Since Inception 5.29 NA
Reliance Short Term Fund
The primary objective of the scheme is to generate stable returns for investors with a
short term investment horizon by investing in fixed income securities of a short term maturity.
The benchmark for the scheme is Crisil Liquid Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 8.01 7.18
3 Years 6.41 5.58
Since Inception 6.55 5.20
Reliance Gilt Securities Fund (Short Term Plan)
The primary objective of the scheme is to generate optimal credit risk-free returns by
investing in a portfolio of securities issued and guaranteed by the Central Government and State
Government. The benchmark for the scheme is I - Sec Si - Bex.
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FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 4.31 6.84
3 Years 3.19 5.17
Since Inception 3.92 5.39
Reliance Gilt Securities Fund (Long Term Plan)
The primary objective of the scheme is to generate optimal credit risk-free returns by
investing in a portfolio of securities issued and guaranteed by the Central Government and State
Government. The benchmark for the scheme is I - Sec Li - Bex.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 6.64 6.64
3 Years 5.54 3.13
Since Inception 6.73 4.31
Reliance Floating Rate Fund
The primary objective of the scheme is to generate regular income through investments in
a portfolio comprising substantially of Floating Rate Debt Securities ( including floating rate
securitized debt and Money market instruments and Fixed Rate debt instruments swapped for
floating rate returns.) The scheme shall also invest in Fixed rate debt securities (including fixed
rate securitized debt, money market instruments and floating rate debt instruments swapped for
fixed returns). The benchmark for the scheme is Crisil Liquid Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 6.11 5.52
Since Inception 5.70 5.01
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Reliance NRI Income Fund
The primary investment objective of the scheme is to generate optimal returns consistent
with moderate levels of risks. This income may be complimented by capital appreciation of the
portfolio. Accordingly, investments shall predominantly be made in debt instruments. The
benchmark for the scheme is Cirsil Composite Bond Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 7.15 3.68
Since Inception 5.47 4.51
Reliance Regular Savings Fund (Debt Option)
The primary investment objective of this option is to generate optimal returns consistent
with moderate level of risk. This income may be complemented by the capital appreciation of the
portfolio. Accordingly investments shall predominantly be made in debt and money market
instruments. The benchmark for the scheme is Crisil Composite Bond Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 3.22 3.68
Since Inception 3.14 3.50
Reliance Regular Savings Fund (Equity Option)
The primary investment objective of this option is to seek capital appreciation and / or to
generate consistent returns by actively investing in equity / equity related instruments. The
benchmark for the scheme is BSE 100 Index.
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FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 40.90 38.69
Since Inception 29.86 43.27
Reliance Regular Savings Fund (Hybrid Option)
The primary investment objective of this option is to generate consistent return by
investing a major portion in debt and money market securities and a small portion in equity and
equity related instruments. The benchmark for the scheme is Crisil MIP Blended Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 14.40 9.14
Since Inception 9.57 10.20
Reliance Liquidity Fund
The primary investment objective of the scheme is to generate optimal returns consistent
with moderate levels of risks. Accordingly, investments shall predominantly be made in debt
instruments.
The benchmark for the scheme is Crisil Liquid Fund Index. The fund has given a
weighted average return of 4.57% since inception date 16/06/2005.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 7.96 7.18
Since Inception 6.98 6.27
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Reliance Liquid Plus Fund
The investment objective of the scheme is to generate optimal returns consistent with
moderate levels of risk and liquidity by investing in debt securities and money market securities.
The benchmark for the scheme is Crisil Liquid Fund Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
Since Inception 2.01 2.24
EQUITY FUNDS
Reliance Growth Fund
The primary investment objective of the scheme is to achieve long term growth of capital
by investing in equity and equity related securities through a research based investment
approach. The benchmark for the scheme is BSE 100 Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 33.48 38.69
3 Years 62.23 43.54
5 Years 61.33 36.12
Since Inception 33.68 13.90
Reliance Vision Fund
The primary investment objective of the scheme is to achieve long term growth of capital
by investing in equity and equity related securities through a research based investment
approach. The benchmark for the scheme is BSE 100 Index.
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FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 41.01 38.69
3 Years 54.30 43,54
5 Years 55.49 36.12
Since Inception 29.32 13.90
Reliance NRI Equity Fund
The primary investment objective of the scheme is to generate optimal returns by
investing in equity or equity related instruments primarily drawn from companies in the BSE 200
Index. The benchmark for the scheme is BSE 200 Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 46.49 36.92
Since Inception 44.88 37.71
Reliance Equity Opportunities Fund
The primary investment objective of the scheme is to seek to generate capital
appreciation and provide long term growth opportunities by investing in a portfolio constituted
of equity and equity related securities and the secondary objective is to generate consistent
returns by investing in debt and money market securities. The benchmark for the scheme is BSE
100 Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 33.81 38.69
Since Inception 46.52 42.21
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Reliance Index Fund (Nifty Plan)
The objective of this plan is to replicate the composition of the Nifty with a view to
endeavor to generate returns which could approximately be the same as that of the Nifty. The
benchmark of the scheme is S & P CNX Nifty Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 26.00 39.88
Since Inception 25.44 37.66
Reliance Index Fund (Sensex Plan)
The objective of this plan is to replicate the composition of the Sensex with a view to
endeavor to generate returns which could approximately be the same as that of the Sensex. The
benchmark of the scheme is BSE Sensex.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 34.84 39.87
Since Inception 39.14 41.36
Reliance Tax Saver Fund (ELSS)
The primary objective of the scheme is to generate long term capital appreciation from a
portfolio that is invested predominantly in equity and equity related instruments. The benchmark
for the scheme is BSE 100 Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 23.37 38.69
Since Inception 26.17 37.73
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Reliance Equity Fund
The primary objective of the scheme is to generate capital appreciation and provide long
term growth opportunities by investing in a portfolio constituted of equity and equity related
securities of top 100 companies by market capitalization and of companies which are available in
the derivatives segment from time to time and the secondary objective is to generate consistent
returns by investing in debt and money market securities. The benchmark for the scheme is S &
P CNX Nifty.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 30.21 39.88
Since Inception 18.42 21.55
Reliance Long Term Equity Fund
The primary investment objective of the scheme is to seek to generate long term capital
appreciation and provide long term growth opportunities by investing in a portfolio constituted
of equity and equity related securities and derivatives and the secondary objective is to generate
consistent returns by investing in debt and money market securities. The benchmark for the
scheme is BSE 200 Index.
SECTORAL FUNDS
Reliance Banking Fund
The primary investment objective of the scheme is to seek to generate continuous returns
by actively investing in equity and equity related instruments or fixed income securities of banks.
The benchmark for the scheme is S & P CNX Banks Index.
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FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 47.05 55.27
3 Years 35.95 40.94
Since Inception 43.80 41.75
Reliance Diversified Power Sector Funds
The primary investment objective of the scheme is to seek to generate continuous returns
by actively investing in equity and equity related instruments or fixed income securities of power
and other associated companies. The benchmark for the scheme is India Power Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 56.42 43.43
3 Years 63.28 49.43
Since Inception 58.72 32.99
Reliance Pharma Fund
The primary investment objective of the scheme is to seek to generate continuous returns
by actively investing in equity and equity related instruments or fixed income securities of
pharma and associated companies. The benchmark for the scheme is BSE Health Care Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 35.20 13.40
Since Inception 33.84 19.78
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RELIANCE INFRASTRUCTURE FUND:-.The new fund offers two plans — Retail and Institutional. The minimum investment in the fund would be Rs. 5,000 and in multiples of Re. 1 thereafter for the Retail Plan and Rs. 5 crore and in multiples of Re 1 thereafter for the Institutional Plan.
Reliance Infrastructure Fund will invest at least 65 per cent of its assets in engineering, cement and power stocks as well as banks, whereas the balance will be invested in debt and money markets.
Here is a list of sectors that the fund may invest in (from their prospectus): At first glance it may occur to you that the Reliance mutual fund will invest most of its assets in Airport, then Banks, then Cement and so on (which is what I felt), but this is not true. This is just a list of indicative sectors and is not in any particular order.
AirportsBanks, Financial Institutions and Term Lending institutions.CementCoalConstructionElectrical and Electric ComponentEngineeringEnergyIndustry Capital GoodsMetals and MineralsPortsPower and Power equipmentRoad and RailwaysTelecomTransportationUrban InfrastructureMiningAluminumReliance Infrastructure Fund Manager
Why to Consider Infrastructure Mutual Fund Now?• Stable and stronger government - easy policy makingo The earlier coalition government had limited scope to thrust infrastructure related reforms given its constitution. However stability of the new government should ease policy making.
• Sharp government focus on infrastructure - better implementationo The government has indicated that infrastructure is a crucial growth area and hence one can expect better project implementation than what was witnessed in the past. The UPA in its manifesto seeks to increase public investment into infrastructure and plans to increase
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power capacity by 12,000 - 15,000 MW per year.
• Key to reviving domestic growtho The government has recognized that infrastructure spend might aid the economy to ride overthe ongoing slowdown while even insulating the economy from the adverse impact of the financial meltdown.
Entry Load of Reliance Infrastructure Mutual FundSubscription below Rs. 2 Crores: 2.25%Between Rs. 2 and 5 Crores: 1.25%Above Rs. 5 Crores: NilExit Load of Reliance Infrastructure Mutual Fund
1% if redeemed within a year of allotmentNil if redeemed after a year of allotmentNil if subscription is more than Rs. 5 croresMinimum Application Amount for Retail Investors
The minimum investment needed is Rs.5000 and if you want to invest additional money then you must invest a minimum of Rs.1000.Plans offered by Reliance Infrastructure Mutual Fund
There are two types of plans in this fund:Growth Plan and Dividend PlanThe growth plan is meant for people who are not looking for regular dividend payouts from the mutual fund and the income from their funds will be reinvested in the fund. The Dividend plan on the other hand will give you dividend income (when the fund declares dividends). There is a dividend reinvestment plan also where the fund will reinvest your dividends to buy more units of the mutual fund.
Tax RatesThe dividends are tax free in the hands of resident Indian investors. Similarly, there is no tax on long term capital gains. There is a 15% tax on short term capital gains of the scheme
Following the result of the 2009 general elections the stock market has gone up
substantially in India. Over the last three months the Sensex has jumped by 80%. Despite
this rally there are many opportunities that remain in the stock market. Billions of dollars
have been poured into the Indian markets by foreign institutional investors over the last few
weeks. Not surprisingly the dollar has dipped to around 47 rupees after hitting a high of 52+
earlier this year. Indications are that there is a lot of money waiting to be invested in Indian
stocks. The recent run-up is very difficult for many hedge funds, foreign investors and
mutual funds to buy stocks at reasonable price. Many mutual funds like Morgan Stanley
and investment stalwarts like Mark Mobius have talked of very high targets for the Sensex
over the next year or two. The targets spoken about by significantly from 19,500 to as high
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as 25,000. In this scenario mutual fund houses like reliance mutual fund are better
equipped as compared to the retail investor to make money from investing in stocks.
Until March this year most mutual funds had reported a poor performance. Since then
there have been increasing gains in the NAVs of most major mutual funds. From the signs
of it, then next year to two years will continue to see a lot of money flowing in the Indian
stock markets. So far only between 5 to 10% of the investment in the dust. Infrastructure
remains a key sector for investment.
Reliance infrastructure fund comes at an opportune time as the NFO will close barely a
week before the Indian budget is announced. Indications are that reliance will mop up
anywhere between 4000 and 6000 crores with this NFO. Most of the earliest mutual fund
schemes of reliance have outperformed many other mutual fund schemes. Reliance mutual
fund manages a corpus of 100,000 crores across all its mutual fund schemes. While many
investors invest in new fund offers because they are priced at 10 rupees instead of a higher
NAV, there are several other more rational reasons reliance infrastructure fund may be a
good pick. For one the infrastructure boom story is far from over. A lot of new money is
expected to come in over the next one year from FIIs, mutual funds, financial institutions
and even local HNIs who haven't been able to push in all their money yet. Given their track
record, financial clout and management, reliance mutual fund is well-equipped to manage
your money.
While the last month has seen the stock market go up substantially, it cannot go up all the
time and occasionally hiccups can be expected. If you would like to ride the infrastructure
boom and are willing to be patient with your investments, the reliance infrastructure fund
may be a good option to consider.
»
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Reliance Media and Entertainment Fund
The primary investment objective of the scheme is to seek to generate continuous returns
by actively investing in equity and equity related instruments or fixed income securities of media
and entertainment and other associated companies. The benchmark for the scheme is S & P CNX
Media and Entertainment Index.
FUND PERFORMANCE
Period % change in NAV % change in Index
1 Year 57.95 83.65
Since Inception 49.90 46.21
2.6 Reliance Mutual Fund: An Overview
Reliance Mutual Fund has been awarded as India’s Most Trusted Mutual Fund Brand by
Economic Times Brand Equity survey by AC Nielsen ORG-MARG – 2005
Reliance Mutual Fund is the of the Largest Private Sector AMC in the country
First Mutual Fund in the World to launch Online Redemption through ATMs/ PoS
o Investors can redeem their Mutual Fund Units using any VISA ATM/ PoS across
the Globe on 24 X 7 bases.
Healthy Debt Equity mix of 50:50 with largest Equity Fund corpus in the Industry as on
September ’06
Reliance Equity Fund NFO had created history for having the highest collection ever
among domestic mutual funds, by raising a record Rs 5723.26 crores & 9.24 lakh
applications- Surpassed UTI’s 14-year-old record
Some of our Funds have been awarded both by International as well as Domestic Rating
Agencies in terms of their Performance and Consistency
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Current Competitive Analysis
Amt. in Rs. Crs
Industry Players AUM as
on Mar
‘05
AUM as on
Mar’06
AUM as
on Jan’07
Growth
(Mar ‘05-
Mar ‘06)
YTD
Annualised
Growth
Reliance 9,543 24,669 39,020 159% 70%
UTI 20,740 29,519 37,535 55% 33%
Pru ICICI 15,201 23,502 34,746 42% 57%
HDFC 15,010 21,550 31,425 44% 55%
Franklin Templeton 15,354 17,827 23,907 16% 41%
Birla 10,373 15,018 21,190 45% 49%
Industry 1,49,600 2,31,715 3,39,663 55% 56%
0
5000
10000
15000
20000
25000
30000
35000
40000
Mar-06 Jun-06 Sep-06 Dec-06
0
50000
100000
150000
200000
250000
300000
350000
400000
Reliance Mutual Fund Industry
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Current Competitive Analysis…
RMF Vs Industry – QOQ Growth
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Q1 Q2 Q3Industry RMF
Asset Class Wise - QOQ Growth
0
5000
10000
15000
20000
25000
Mar 06 Jun-06 Sep-06 Dec-06Equity Debt
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Current Investor Base
0
100
200
300
400
500
600
700
Debt Liquid** Equity
* The base period is Mar 05 which is taken as 100
Asset
Class
# of Folios as
on Mar ‘05
# of Folios as
on Mar ’06
%
Growth
# of Folios as
on Jan ’07
YTD %
Growth
Debt 30,205 34,138 13% 54,519 59.7%
Liquid** 5,616 12,547 123% 12,841 2.3%
Equity 4,40,768 20,50,369 365% 30,08,254 46.7%
Total 4,76,840 20,96,952 340% 30,75,614 46.6%
**Liquid category Includes Reliance Floating Rate Fund
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Mar ‘06
Jan ‘07
Study On Investment pattern of HNIs Reliance Money
Footprint
Mar - 06 Jan - 07 FY 06-07
Branches 30 46 50
FPC 20 22 25
Sub Total (A) 49 67 75
RRs 08 14 20
BFs 24 29 30
Sub Total (B) 32 43 50
Total 82 110 125
Expansion plan into Tier-III & Tier IV cities
Expansion route
o Aggressively ramp up Resident Representatives (RR’s) platforms for
market expansion
o Convert RRs into Branches on achieving Rs. 20 crs of Equity AUMs per
location
o Branch breakeven target at 12 months & payback in 24 months.
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CHAPTER 3: ANALYSIS
ANALYSIS OF RESPONSES FROM DIFFERENT SEGMENTS OF HIGH NETWORTH
INDIVDUALS:
3.1 Doctors:
Do you invest in different instruments?
Objective:
The main objective for asking this question is to know whether Doctors have knowledge
about and invest in different financial instruments
Response In Figures In Percentages
Yes 47 (94)
No 3 (6)
Total 50 (100)
Analysis:
We can infer from the responses that most of them do invest in different instruments for
different purposes.
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Which are the investment tools you invest in?
Objective:
The reason for asking this question is to understand which type of investment tools are
more preferred by Doctors.
Instrument In figures In percentages
F.D. 30 (60)
RBI Bond 15 (30)
Mutual Fund 43 (86)
Equity 28 (56)
Others 24 (48)
CHART SHOWING PREFERENCE FOR DIFFERENT INSTRUMENTS
[Figures in Percentages]
Analysis:
From the feedback obtained, it is easy to identify that Mutual Funds are most preferred
by Doctors.
From the graph above we can infer that 86% Doctors invest in mutual fund.
Moreover there is an equal weightage between F.D and Equity.
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The least preferred by them is RBI Bonds. Our interaction revealed that the reason for
low preference in RBI bonds was the lock in period for investment in these bonds as well
as the fact that in a booming stock market, they could earn higher returns from
investment in equities and mutual funds.
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You primarily invest for:
Objective:
The reason for asking this question is to know the main purpose why these Doctors
invest.
Ranks 1 2 3 4
Tax Benefits 8(16.67) 12(25) 16(33.33) 12(25)
Returns 6(12.5) 22(45.83) 13(27.08) 7(14.58)
Liquidity 0 7(14.58) 17(35.42) 27(56.25)
Savings 34(70.83) 10(20.83) 2(4.17) 2(4.17)
CHART SHOWING PERCENTAGE OF DOCTORS WHO HAVE GIVEN 1st RANK TO
VARIOUS ATTRIBUTES
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CHART SHOWING PERCENTAGE OF DOCTORS WHO HAVE GIVEN 2ND RANK TO
VARIOUS ATTRIBUTES
Analysis
We can infer that the main purpose of investment for Doctors is Savings.
70.83% people gave Savings as their main purpose for investment whereas 12.5% and
16.67% gave returns and tax benefit as their main purpose.
The second most preferred reason for investing by Doctors is Returns. Moreover this
segment people don’t invest for tax benefit because all of them fall in high tax slab. They
take the full benefit of exemption.
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Rank the investment options:
Objective:
The purpose for this question is to know the preference of Doctors for investing in