A PROJECT REPORT ON “CUSTOMER PERCEPTION ON PERFORMANCE OF MUTUAL FUND WITH SPECIAL REFRENCE TO RELIANCE MUTUAL FUNDS” (In partial fulfillment for the award of degree of) Master of Business Administration OF Rajasthan Technical University, Kota SUBMITTED TO SUBMITTED BY Mrs. Smita Sharma Pragya Jain MBA – IV Sem
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A
PROJECT REPORT
ON
“CUSTOMER PERCEPTION ON PERFORMANCE OF MUTUAL
FUND WITH SPECIAL REFRENCE TO RELIANCE MUTUAL
FUNDS”
(In partial fulfillment for the award of degree of)
Master of Business Administration
OF
Rajasthan Technical University, Kota
SUBMITTED TO SUBMITTED BYMrs. Smita Sharma Pragya Jain
MBA – IV Sem
S UBODH INSTITUTE OF MANAGEMENT&CAREER STUDIES, JAIPUR(2010-2012)
STUDENT DECLARATION
I, Rashmi Singh hereby that I have completed the project report entitled “customer
perception on performance of mutual fund with special reference to reliance mutual
funds” from R.M.F Jaipur.
Submitted in partial fulfillment of the requirement for the degree of masters of business
administrative of RTU, Kota is my original work and not submitted for the reward of any
degree, diploma, fellowship or any other similar title and it will not be used elsewhere.
I further declare that the information presented in this project is true and original to the best
of my knowledge.
Date: Pragya Jain
Place: Jaipur (MBA IV Sem)
ACKNOWLEDGEMENT
I am indeed very happy to acknowledge the numerous personalities involved in lending
their help to make my project a successful one.
Firstly, I would like to thank Reliance Mutual Fund for providing me the opportunity to work
on this project.
I would like to thank my corporate guide Mr. H. S. Chauhan and all other staff of Reliance
Money for helping me in learning the lessons of professional management. His able
guidance and valuable inputs have helped me a lot in successfully completing this project.
I express my sincere gratitude to my institute guide Mrs. Preeti Gupta who took a lot of
personal interest in supervising this project and guiding me. She has been a great source of
inspiration in the task of completion of this project work. Her profound advice, timely
guidance has been of immense value to me.
I express my thanks to all the members of Reliance Mutual Fund, who gave me full
fledged support throughout my project. I express my gratitude to all those people, who have
directly or indirectly helped me in the completion of this project
Rashmi Singh
MBA IV Sem
PREFACE
Recently from the past few years, the financial service sector industry has shown a rapid
rising trend. With the advent and augmentation of several privately sponsored higher return
financial products viz. unit linked life insurance, mutual funds, post office etc. Are turning
the investors towards themselves than to the schemes of investing in security markets. In
the present economic scenario, the investor has wide options available that are safe and
give reasonable return too. This has been major factor in popularity of mutual funds, ULIPs,
Securities, Post Office deposits, NSC etc.
Reliance Mutual Fund is one of the largest market players in India’s Mutual Fund Industry’s.
Right from its launch it has made an impression in market and become successful only in
10 Years. Indeed, Mutual Fund is growing and accepting in present scenario since people
is realizing risk coverage but also as a potential investment opportunity. This project is an
effort to study of the “customer perception on performance of mutual fund with special
reference to reliance mutual funds” like real state, equity, fixed deposit in the market as
well as to study its financial performance in the financial market.
CONTENTS
COVER PAGE
STUDENT DECLARATION
ACKNOWLEDGEMENT
PREFACE
Page No.
1. INDUSTRY PROFILE 1
2. INTRODUCTION TO THE ORGANIZATION 44
3. RESEARCH METHODOLOGY 68
3.1. TITLE OF THE STUDY 68
3.2. OBJECTIVES OF THE STUDY 68
3.3. TYPE OF RESEARCH 69
3.4. SAMPLE SIZE AND METHOD OF SELECTING SAMPLE 70
3.5. SCOPE OF STUDY 72
3.6. LIMITATION OF STUDY 73
4. FACTS AND FINDINGS 74
5. ANALYSIS AND INTERPRETATION 76
6. SWOT ANALYSIS 94
7. CONCLUSIONS 96
8. RECOMMENDATION AND SUGGESTIONS 97
9. APPENDIX 100
10.BIBLIOGRAPHY 105
CHAPTER 1 - INDUSTRY PROFILE
1.1 OVERVIEW OF MUTUAL FUND INDUSTRY
1.1.1 INTRODUCTION TO MUTUAL FUNDS
Mutual fund is a trust that pools money from a group of investors (sharing common financial
goals) and invest the money thus collected into asset classes that match the stated
investment objectives of the scheme. Since the stated investment objectives of a mutual
fund scheme generally form the basis for an investor's decision to contribute money to the
pool, a mutual fund can not deviate from its stated objectives at any point of time.
Every Mutual Fund is managed by a fund manager, who using his investment management
skills and necessary research works ensures much better return than what an investor can
manage on his own. The capital appreciation and other incomes earned from these
investments are passed on to the investors (also known as unit holders) in proportion of the
number of units they own.
1
When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as mutual fund
shareholder or a unit holder. Any change in the value of the investments made into capital
market instruments (such as shares, debentures etc) is reflected in the Net Asset Value
(NAV) of the scheme. NAV is defined as the market value of the Mutual Funds scheme's
assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.
Structure of a Mutual Fund
2
TYPES OF MUTUAL FUNDS
There are many types of mutual funds available to the investor. However, these different types of funds can be grouped into certain classifications for better understanding.
3
WORKING OF MUTUAL FUNDS
4
1.1.2 HISTORY OF INDIAN MUTUAL FUND
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 of India. 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.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 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.
5
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.
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, 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. 6
The graph indicates the growth of assets over the years.
GROWTH IN ASSETS UNDER MANAGEMENT
1.1.3 CLASSIFICATION OF MUTUAL FUNDS
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. thus mutual funds has Variety of
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flavors, Being a collection of many stocks, an investors can go for picking a mutual fund
might be easy. There are over hundreds of mutual funds scheme to choose from. It is
easier to think of mutual funds in categories, mentioned below.
BY STRUCTURE
Open-end fund:
The term mutual fund is the common name for what is classified as an open-end
investment company by the SEC. Being open-ended means that, at the end of every
day, the fund issues new shares to investors and buys back shares from investors
wishing to leave the fund.
Mutual funds must be structured as corporations or trusts, such as business trusts, and
any corporation or trust will be classified by the SEC as an investment company if it
issues securities and primarily invests in non-government securities. An investment
company will be classified by the SEC as an open-end investment company if they do
not issue undivided interests in specified securities (the defining characteristic of unit
investment trusts or UITs) and if they issue redeemable securities. Registered
investment companies that are not UITs or open-end investment companies are closed-
end funds. Neither UITs nor closed-end funds are mutual funds (as that term is used in
breakthroughs, but it is true that this aspect of technology could and will change the way
financial sectors function. However, mutual funds cannot be left far behind. They have
realized the potential of the Internet and are equipping themselves to perform better. In fact
in advanced countries like the U.S.A, mutual funds buy- sell transactions have already
begun on the net, while in India the Net is used as a source of Information.
Such changes could facilitate easy access, lower intermediation costs and better services
for all. A research agency that specializes in internet technology estimates that over the
next four years Mutual Fund Assets traded on- line will grow ten folds from $ 128 billion to $
1,227 billion; whereas equity assets traded on-line will increase during the period from $
246 billion to $ 1,561 billion. This will increase the share of mutual funds from 34% to 40%
during the period. Such increases in volumes are expected to bring about large changes in
the way Mutual Funds conduct their business.
“Here are some of the basic changes that have taken place since the advent of the
Net”
Lower Costs: Distribution of funds will fall in the online trading regime by 2003. Mutual
funds could bring down their administrative costs to 0.75% if trading is done on- line. As per
SEBI regulations, bond funds can charge a maximum of 2.25% and equity funds can
charge 2.5% as administrative fees. Therefore if the administrative costs are low, the
benefits are passed down and hence Mutual Funds are able to attract mire investors and
increase their asset base.
Better advice: Mutual funds could provide better advice to their investors through the Net
rather than through the traditional investment routes where there is an additional channel to
deal with the Brokers. Direct dealing with the fund could help the investor with their financial
planning.
In India, brokers could get more Net savvy than investors and could help the investors with
the knowledge through get from the Net.
New investors would prefer online: Mutual funds can target investors who are young
individuals and who are Net savvy, since servicing them would be easier on the Net.
India has around 1.6 million net users who are prime target for these funds and this could
just be the beginning. The Internet users are going to increase dramatically and mutual
funds are going to be the best beneficiary. With smaller administrative costs more funds 36
would be mobilized .A fund manager must be ready to tackle the volatility and will have to
maintain sufficient amount of investments which are high liquidity and low yielding
investments to honor redemption.
In the U.S. most mutual funds concentrate only on financial funds like equity and debt.
Some like real estate funds and commodity funds also take an exposure to physical assets.
The latter type of funds are preferred by corporate who want to hedge their exposure to the
commodities they deal with.
In U.S.A. apart from bullion funds there are copper funds, precious metal funds and real
estate funds (investing in real estate and other related assets as well.).In India, the Canada
based Dundee mutual fund is planning to launch gold and a real estate fund before the
year-end.
In developed countries like the U.S.A there are funds to satisfy everybody’s requirement,
but in India only the tip of the iceberg has been explored. In the near future India too will
concentrate on financial as well as physical funds
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1.5
OR
GANIZATION OF A MUTUAL FUND
1.5.1 SEBI
The Securities Exchange Board of India (SEBI) is the regulatory authority for all the mutual
funds sponsored by the public/private sector banks, financial institutions, private sector
companies, non- banking finance companies and foreign institutional investors. SEBI has
laid down the rules and regulations regarding the obligations of the entities involves in a
mutual fund, its establishment and launch of different schemes, investments and valuation,
financial reporting, conduct and operations of mutual funds.
1.5.2 SPONSOR
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Sponsor is the person who acting alone or in combination with another body corporate
establishes a mutual fund. The sponsor establishes the mutual fund and registers the same
with SEBI. Sponsor appoints the Trustees, custodians and the AMC with prior approval of
SEBI and in accordance with SEBI Regulations. Sponsor must have a 5-year track record
of business interest in the financial markets. Sponsor must have been profit making in at
least 3 of the above 5 years. Sponsor must contribute at least 40% of the net worth of the
Investment Managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible
or liable for any loss or shortfall resulting from the operation of the Schemes beyond the
initial contribution made by it towards setting up of the Mutual Fund.
1.5.3 TRUST
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian
Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration
Act, 1908.
1.5.4 TRUSTEE
Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).
The main responsibility of the Trustee is to safeguard the interest of the unit holders and
inter alia ensure that the AMC functions in the interest of investors and in accordance with
the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the
provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least
2/3rd directors of the Trustee are independent directors who are not associated with the
Sponsor in any manner.
1.5.5 ASSET MANAGEMENT COMPANY (AMC)
The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The
AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to
act as an asset management company of the Mutual Fund. At least 50% of the directors of
the AMC are independent directors who are not associated with the Sponsor in any
manner. The AMC must have a net worth of at least 10 crore at all times.
1.5.6 REGISTRAR AND TRANSFER AGENT
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The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to
the Mutual Fund. The Registrar processes the application form, redemption requests and
dispatches account statements to the unit holders. The Registrar and Transfer agent also
handles communications with investors and updates investor records.
1.5.7 CUSTODIAN
A custodian is an agent, bank, trust company, or other organization which holds and
safeguards an individual's, mutual fund's, or investment company's assets for them.
CODE OF CONDUCT FOR INTERMEDIARIES OF MUTUAL FUNDS:
Take necessary steps to ensure that the clients’ interest is protected.
Adhere to SEBI Mutual Fund Regulations and guidelines related to selling,
distribution and advertising practices. Be fully conversant with the key provisions of
the offer document as well as the operational requirements of various schemes.
Provide full and latest information of schemes to investors in the form of offer
documents, performance reports, fact sheets, portfolio disclosures and brochures,
and recommend schemes appropriate for the client’s situation and needs.
Highlight risk factors of each scheme, avoid misrepresentation and exaggeration,
and urge investors to go through offer documents/key information memorandum
before deciding to make investments.
Disclose all material information related to the schemes/plans while canvassing for
business.
Abstain from indicating or assuring returns in any type of scheme, unless the offer
document is explicit in this regard.
Maintain necessary infrastructure to support the AMCs in maintaining high service
standards to investors, and ensure that critical operations such as forwarding forms
and cheques to AMCs/registrars and dispatch of statement of account and
redemption cheques to investors are done within the time frame prescribed in the
offer document and SEBI Mutual Fund Regulations.
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Avoid colluding with clients in faulty business practices such as bouncing cheques,
wrong claiming of dividend/redemption cheques, etc.
Avoid commission driven malpractices such as:
o Recommending inappropriate products solely because the intermediary is
getting higher commissions there from.
o Encouraging over transacting and churning of mutual fund investments to
earn higher commissions, even if they mean higher transaction costs and tax
for investors.
Avoid making negative statements about any AMC or scheme and ensure that
comparisons if any are made with similar and comparable products.
Ensure that all investor related statutory communications (such as changes in
fundamental attributes, exit/entry load, exit options, and other material aspects) are
sent to investors reliably and on time.
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1.6 MUTUAL FUNDS AND BUDGET 2009-2010
1.6.1 FIXED INCOME MARKETS TO BENEFIT
MEASURES:-
Revenue deficit target reduced to 1% in FY10 from 1.4% in FY09; fiscal deficit target
reduced to 2.5% in FY10 from 3.1% in FY09
Gross borrowings lower at Rs.1.45 trillion in FY10 from Rs.1.56 trillion in FY09; net
borrowing also lower at Rs.1.01 trillion from Rs.1.11 trillion in FY09
Measures announced to develop bond, currency and derivatives markets that will
include launching exchange-traded currency and interest rate futures and developing
a transparent credit derivatives market with appropriate safeguards.
Measures announced to enhance tradability of domestic convertible bonds by putting
in place a mechanism that will enable investors to separate embedded equity options
from convertible bonds and trade them separately.
Measures announced to encourage development of a market-based system for
classifying financial instruments based on their complexity and implicit risks.
Proposal announced to exempt from TDS, corporate debt instruments issued in
demat form and listed on recognized stock exchanges.
IMPACT:-
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Decision of expanding the corporate debt market will help in increased focus towards
bond funds and in a scenario where interest rates are not expected to be adverse in
the medium term, this would further assist in increasing the popularity of bond funds
which have not been doing well in the last few years.
Development of the derivatives markets can in turn enhance the development of the
structured products market.
1.6.2 EASING IN INCOME TAX SLABS
MEASURES:-
Threshold limit of Income Tax exemption for individuals raised as follows -
Up to Rs.150,000 – NIL
Rs.150,001 to Rs.300,000 - 10%
Rs.300,001 to Rs.500,000 - 20%
Rs.500,001 and above - 30%
IMPACT:-
This is expected to increase the disposable income in the hands of the individuals to some
extent which could translate into increased retail investments in mutual funds.
1.6.3 INCREASE IN SHORT TERM CAPITAL GAINS TAX
MEASURES:-
Short Term Capital Gains Tax raised from 10% to 15%
IMPACT:-
Since long term capital gains tax has been left unchanged, this hike in short-term
capital gains tax could encourage long-term investments which augur well to the
development of the concept of "long terms" in the Indian Mutual Fund industry, which
is conspicuous by its absence but which is coveted by the fund industry given the
greater flexibility that this provides in fund management.
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At the same time since the short term capital gains tax is still lower than the income
tax slabs of typical capital market investors, it is not expected to cause too many
investors to turn away from mutual funds.
The fact that the dividend distribution tax structure has not changed would mean that
dividend reinvestment plans in liquid schemes will continue to be popular and also
the liquid plus category will continue to attract inflows as the tax rates there would
continue to be lower than the liquid category.
1.7 MARKET TRENDS
Alone UTI with just one scheme in 1964 now competes with as many as 400 odd products
and 34 players in the market. Now with increasing competition and losing market share, UTI
no longer remains a formidable force to reckon with.
Last six years have been the most turbulent as well as exiting ones for the industry. New
players have come in, while others have decided to close shop by either selling off or
merging with others. Product innovation is now passed with the game shifting to
performance delivery in fund management as well as service. Those directly associated
with the fund management industry like distributors, registrars and transfer agents, and
even the regulator have become more mature and responsible.
The industry is also having a profound impact on financial market. UTI has once been a
dominant player on the bourses as well as the debt market, but now, new generations of
private funds, has gained substantial mass, and are flexing their muscles. Fund managers
by their selection criteria for stocks have forced corporate governance on the industry. By
rewarding honest and transparent management with higher valuations, a system of risk
reward has been created where the corporate sector is more transparent than before.
Funds have shifted their focus to the recession free sector like pharmaceutical, FMCG and
technology sector, funds performances are improving. Funds collection, which averaged at
less than Rs 100 bn per annum over five-year period spanning 1993-1998 doubled to Rs
210 bn in 1998-1999. In the financial year ending march2000 was mobilization was above
Rs 300 bn. Total collections for the financial year march 2000 was around Rs 450 bn.
What is particularly noteworthy is that bulk of the mobilization has been by the private
sector mutual funds rather than public sector mutual funds. Indeed private MFs saw a net
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inflow of Rs 7819.43 crores during the first nine months of the year as against a net inflow
of Rs 604.40 crores in case of public sector funds.
Mutual funds are now also competing with commercial banks in race for retail investor’s
savings and corporate float money. The power shift towards mutual funds has become
obvious. The coming few years will show that the traditional saving avenues are losing out
in the current scenario. Many investors are realizing that investments in saving account are
good as locking up their deposits in a closet. The fund mobilization trends by mutual funds
in the current year indicate that money is going to mutual funds in a big way.
CHAPTER 2 - INTRODUCTION TO THE ORGANIZATION
Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor.
Reliance Mutual Fund, a part of the –Anil Dhirubhai Ambani Group(R-ADAG) is one of
the fastest growing mutual fund company in the country.
Reliance mutual fund offer investors a well –rounded portfolio of products to meet
varying investor requirements.
Reliance mutual fund has a presence over 80 cities across the country.
Reliance mutual fund investor base of over 2 million and manages assets over
Rs.88388 crore as on 30 April 2009,(source:www.amfiindia.com)
A fund from Reliance mutual fund, an AMC with a established track record of consistent
return.
Investor –friendly personal and technological support.
Strong and consistent fund management team.
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2.8 RISK VS REWARD
Having understood the basics of mutual funds the next step is to build a successful
investment portfolio. Before you can begin to build a portfolio, one should understand some
other elements of mutual fund investing and how they can affect the potential value of your
investments over the years. The first thing that has to be kept in mind is that when you
invest in mutual funds, there is no guarantee that you will end up with more money when
you withdraw your investment than what you started out with. That is the potential of loss is
always there. The loss of value in your investment is what is considered risk in investing.
Even so, the opportunity for investment growth that is possible through investments in
mutual funds far exceeds that concern for most investors. Here’s why.
At the cornerstone of investing is the basic principal that the greater the risk you take, the
greater the potential reward. Or stated in another way, you get what you pay for and you
get paid a higher return only when you're willing to accept more volatility.
Risk then, refers to the volatility -- the up and down activity in the markets and individual
issues that occurs constantly over time. This volatility can be caused by a number of factors
-- interest rate changes, inflation or general economic conditions. It is this variability,
uncertainty and potential for loss, that causes investors to worry. We all fear the possibility
that a stock we invest in will fall substantially. But it is this very volatility that is the exact
64
reason that you can expect to earn a higher long-term return from these investments than
from a savings account.
Different types of mutual funds have different levels of volatility or potential price change,
and those with the greater chance of losing value are also the funds that can produce the
greater returns for you over time. So risk has two sides: it causes the value of your
investments to fluctuate, but it is precisely the reason you can expect to earn higher returns.
You might find it helpful to remember that all financial investments will fluctuate. There are
very few perfectly safe havens and those simply don't pay enough to beat inflation over the
long run.
Types of risks:
All investments involve some form of risk. Consider these common types of risk and
evaluate them against potential rewards when you select an investment.
Market Risk:
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At times the prices or yields of all the securities in a particular market rise or fall due to
broad outside influences. When this happens, the stock prices of both an outstanding,
highly profitable company and a fledgling corporation may be affected. This change in price
is due to "market risk". Also known as systematic risk.
Inflation Risk:
Sometimes referred to as "loss of purchasing power." Whenever inflation rises forward
faster than the earnings on your investment, you run the risk that you'll actually be able to
buy less, not more. Inflation risk also occurs when prices rise faster than your returns.
Credit Risk:
In short, how stable is the company or entity to which you lend your money when you
invest? How certain are you that it will be able to pay the interest you are promised, or
repay your principal when the investment matures?
Interest Rate Risk:
Changing interest rates affect both equities and bonds in many ways. Investors are
reminded that "predicting" which way rates will go is rarely successful. A diversified portfolio
can help in offsetting these changes.
Exchange risk:
A number of companies generate revenues in foreign currencies and may have
investments or expenses also denominated in foreign currencies. Changes in exchange
rates may, therefore, have a positive or negative impact on companies which in turn would
have an effect on the investment of the fund.
Investment Risks:
The sectoral fund schemes, investments will be predominantly in equities of select
companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the
equity performance of such companies and may be more volatile than a more diversified
portfolio of equities.
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Changes in the Government Policy:
Changes in Government policy especially in regard to the tax benefits may impact the
business prospects of the companies leading to an impact on the investments made by the
fund
Effect of loss of key professionals and inability to adapt business to the rapid technological
change.
An industries' key asset is often the personnel who run the business i.e. intellectual
properties of the key employees of the respective companies. Given the ever-changing
complexion of few industries and the high obsolescence levels, availability of qualified,
trained and motivated personnel is very critical for the success of industries in few sectors.
It is, therefore, necessary to attract key personnel and also to retain them to meet the
changing environment and challenges the sector offers. Failure or inability to attract/retain
such qualified key personnel may impact the prospects of the companies in the particular
sector in which the fund invests.
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2.9 AWARDS AND ACHIEVEMENT
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets
Under Management (AUM) of Rs. 88,388 crore (AUM as on 30th Apr 2009) and an
investor base of over 71.53 Lacs.
Investor base of over 3.38 million as on March 31, 2007
Rapid growth in Assets Under Management (AUM), 87.7% growth in AUM year on
year. AUM of over Rs.46,306 crore ($10.62 billion) as on March 30, 2007 from Rs.
24,669 crore ($5.53 billion) as on March 31, 2006.
Accelerated growth in investor base – 66.89% growth in investor base year on year.
Over 3.38 million investors as on March 31, 2007
Reliance Mutual Fund has over 10 years of extensive market experience, over 26
schemes combined with a strong performance track record.
Reliance Equity Fund NFO (6th Feb -7th March 2006), the largest ever collection of
Rs.5,759 crore ($1.29 billion) in the history of the Indian Mutual Fund industry.
Footprint in over 100 cities in India
Wide network of 130 collection points
Wide portfolio of 26 well-rounded products to meet varying investor requirements.
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Reliance Mutual Fund is amongst the few mutual funds in the industry to offer
Subscription, Redemption and Switch through Online Transactions.
Lipper Fund Award India 2007
Lipper Fund Award Gulf 2007 :
CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006
ICRA Mutual Funds Awards 2007
CHAPTER 3 - RESEARCH METHODOLOGY
3.1 TITLE OF THE STUDY
To understand the perception and behavior of investors and potential investors this study
has been conducted. In addition, attitude of investors towards Reliance Mutual Fund has
also been considered. So, research has been carried on the title “customer perception on
performance of mutual fund with special refrence to reliance mutual funds”.
Need of the study
The need of the study arises because of the reason that a trainee must
understand the company, its achievements and tasks, products and services and also to
collect information about its competitors.
But the major focus was on making a customer profile for Reliance Mutual Fund and study
the position of Reliance Mutual Fund in the market as well as among its competitors. In
addition, investors were to be made aware about various products and services offered
by Reliance Mutual Fund and checking the satisfaction level of present customers
3.2 OBJECTIVES OF THE STUDY
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Mutual fund industry today, with about 34 players and more than five hundred schemes, is
one of the most preferred investment avenues in India. However with a plethora of schemes
to choose from, the retail investors faces problem in selecting funds. Factors such as
investment strategy and management style are qualitative, but the funds records are
important indicator too. For any economy to grow it is necessary that savings of the masses
are converted into investments. Mutual fund is one of the tools which allow amateur person
to invest because the funds are managed by experienced fund managers. It has been
predicted that if the investment becomes 77% of income in various avenues then only we
would be able to maintain our GDP growth rate of 8-10%.
Here the objective of our study is to compare various reliance mutual funds schemes with
the other AMC .To make the report more detailed the report also contains an extensive
details on schemes from other fund houses like HDFC, Kotak, Birla,Tata, UTI,DWS ,etc.
The present study has been undertaken with the object of examining, analyzing and inferring the performance of the mutual funds, which addresses the following issues:
To understand what type of mutual fund is most preferred by the existing customer
because performance of these funds is the criteria for customer selection.
Which mutual fund is the best in its category?
To understand the best way to attract customer investing in mutual fund by
understanding the factors responsible for making a mutual fund successful.
To find out the reasons behind not investing in mutual fund and to find out the most
important attributes so as to keep the existing customer & to attract new customers.
To understand which factors govern their choice of investment?
To check the potentiality and scope of Reliance Mutual Fund?
3.3 TYPE OF RESEARCH
EXPLORATORY:
Exploratory research is a type of research conducted because a problem has not
been clearly defined. Exploratory research helps determine the best research
design, data collection method and selection of subjects Exploratory research often
relies on secondary research such as reviewing available literature and/or data, or
qualitative approaches such as informal discussions with consumers, employees,
70
management or competitors, and more formal approaches through in-depth
interviews, focus groups, projective methods, case studies or pilot studies.
DESCRIPTIVE:
Descriptive research, also known as statistical research, describes data and
characteristics about the population or phenomenon being studied. Descriptive
research answers the questions who, what, where, when and how... The description
is used for frequencies, averages and other statistical calculations.
Types of Data:
PRIMARY: Primary data was obtained through questionnaires filled by people and
through direct communication with respondents in the form of Interview.
SECONDARY: The secondary sources of data were taken from the various
websites, books, journals reports, articles etc. This mainly provided information
about the mutual fund industry in India.
3.4 SAMPLE SIZE AND METHOD OF SELECTING SAMPLE
Universe: - Jaipur
Population: - Infinite
SOURCES OF DATA:
There are two main source of collecting data. One is primary and the other is secondary
data.
PRIMARY DATA :
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Open ended interaction with clients.
Discussions with managers ,heads.
Also interacting with other intermediaries.
SECONDARY DATA:
The fact sheets of the Assets Managements Companies.
The websites of the Assets Managements Companies.
The total AUM and NAV were sourced from the website of the Association of
Mutual Funds of India.
Much information has been taken out by the magazines, books and mutual funds
workbook.
3.4.1 SAMPLING PLAN:
Sample unit :- The sampling units are various areas of Jaipur which have
been approached to collect data from different people
Sampling method:- Sampling method used in this research is simple random
sampling which is also known as probability sampling. Under this sampling design
every item of universe has an equal chance of inclusion in sample. It is say to a
lottery method.
Sample size:- The size of the sample was restricted to 100, as to just get a quick
analysis
3.4.2 CONTACT METHOD
Personal interview is used as a method of contacting people.
It is a market research technique for gathering information through face-to-face Contact
with individuals. Personal interviews take place in a variety of settings-in Homes, at
shopping malls, in a business office. This type of research is relatively costly, because it
requires a staff of interviewers, but it provides the best opportunity to obtain
information through probing for clearer explanations. It is the best technique to use early on
in the research process when the researcher is not yet sure which questions need 72
to be asked, because new and better questions can come out of the dialogue
3.4.3 DATA COLLECTION METHOD
Research Instrument used in this research was Questionnaire.
A questionnaire is a formalized set of questions for eliciting information. It is one of the most
common instruments used for primary data collection.
The questionnaire can be administered in various ways. It can be administered by means of
a personal interviewer as well as by the telephone, Mail. Here, the questionnaire was
administered by a personal interview.
3.4.4 TOOLS OF ANALYSIS
For the proper analysis of data, Quantitative Technique such as percentage
method was used. In addition, Microsoft excel was also used for preparing charts for
deducing inferences.
3.5 SCOPE OF STUDY
The project undertake aims at finding out the perception of people about
investment pattern and to analyses how does a common person perceives
Reliance Mutual Fund as an investment alternative.
By finding the perception of people and the factors affecting these
perceptions, the significance for the study is then to try and identify ways to
attract the non investing community of the potential investors towards the
different investment avenue.
Significance of the Project Report:-
It helps investors to invest its money in right avenue.
It helps to analysis the investors perception about Reliance Mutual Fund .
It provide guidance to investors investing in Reliance Mutual Fund.
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By this project investors come to know about different beneficiary mutual
fund.
It help to analyze that in which age most of the investors invest their money
for better returns in future.
It helps to publicize Reliance Mutual Fund Products and services.
3.6 LIMITATION OF STUDY
As every aspect of life has its own limitations the same goes with researches. The few
limitations attached to this research are: -
As time and tide waits for none so is the case with this research. A much more
detailed analysis could be done had there been more time spent for data
collection. Due to lack of Time data from the all the places could not be collected.
Management of all the activities from one place limited the research with in it self
as appropriate data, which was required, was not available.
Giving Instruction through telecommunications has caused a communication gap
due to which the cream of data has not been available.
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CHAPTER 4 - FACTS AND FINDINGS
FINDINGS
The findings for the above research are as follows:-
It was found that majority of the investors i.e.40% are from the age group of 25-
40. This is the group of middle age people who deserve to invest for their future
financial needs.
Out of 100 people being surveyed to know the awareness and perception among
people about mutual funds, I found that 14% knew about mutual funds who
mostly invest in these funds while 86% where not at all aware about the product
and its investments
Some People were less interested in knowing about the product.
They have the impression that these funds are not safe, as the money is locked
in for a particular period, which is known as the lock in period.
Mutual funds, in a country like India is in its growth stage and it would take some
time to enter into the maturity stage.
People investing into mutual funds basically invest at the financial year-end.
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They invest into these funds mostly for tax saving purposes other than
investment or return purposes.
Total number of 100 responses were more concerned about the secure future
(59%) and capital gains(21%), and after that they considered tax benefits(14%)
and regular return(6%) as their main investment objectives.
The company image acts as the determining factor for their investment with
44%.the second most important factor was fund performance (21%) and
economic scenario (19%).
Total numbers of 100 responses were more concerned about the saving for the
future was the foremost important criteria for investment in the minds of investors
(51%), while 23%respondents said that they considered the returns before
making investment decisions.
Out of 100 people 66% of investor preferred to have banks savings as one of the
investment avenue. While 12% of the investor said that they would certainly like
to have post office schemes as one of their preferred investment avenue.
My findings demonstrate that 41% of investors prefer to invest in growth
schemes,18% of investor in ELSS schemes.
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CHAPTER 5 - ANALYSIS AND INTERPRETATION
Knowing the awareness and perception of the customers is very important in any industry.
This provides insight into the customer behavior and his expectation from the industry
players. a proper understanding of the awareness and perception would definitely benefit
the players. This survey attempt to know the mutual fund investor better. It examines some
interesting choices of the retail investor including the reasons behind investing in mutual
funds and the risk tolerance levels of the investors. The investor knowledge about the
mutual funds and what according to him are the best mutual funds is also analyzed. This
Jaipur city survey was conducted to know the retail investor awareness and perception
about mutual funds. It is hoped that this survey in Jaipur city would go a long way in
benefiting for reliance mutual fund.
I. AN OVERVIEW:
This section shows a simple overview of respondents like their age, gender, income profile,
saving habits and qualification
(a) Age-profile:
Table No. I(a) showing age profile of respondents:
S. No Age No .of
respondents
Percentage
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1. 20-25 19 19%
2. 25-40 40 40%
3. 40-55 21 21%
4. 55-60 15 15%
5. 60-Above 5 5%
Total 100 100%
INTERPRETATION:
In this survey I found the maximum number of respondents belongs to the age group of 25-
40 years, followed by 40-55 years of age category.
(b) Gender-wise:
Table No. I(b) showing gender wise profile of respondents:
S. No Gender No. of respondents Percentage
1. Male 92 92%
2. Female 8 8%
Total 100 100%
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INTERPRETATION:
Table No.I(b) represents the gender ratio of the respondents in this survey.92%of the
covered respondents were male and remaining 8% were female
(c)Income Profile:
Table No. I(c) showing income wise profile of respondents:
S. No Income No. of
respondents
Percentage
1. Less then 1.0
Lakh
34 17%
2. 1.0-2.0 Lakh 38 38%
3. 2.0-3.0 Lakh 30 30%
4. 3.0-5.0 Lakh 6 6%
5. More then 5.0
Lakh
4 4%
6. No response 5 5%
Total 100 100%
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Gender-wise overview
Male92%
Female8%
Male
Female
INTERPRETATION:
In this survey I found the break up of the respondents. Around 38%of the respondents have
an income between of Rs.1.0-2.0 Lakhs per annum and 30% of respondents in between
2.0-3.0 Lakhs .it display the income profile of respondents.
(d) Saving Habits:
Table No. I(d) showing saving habits profile of respondents:
S. No Savings No. of
respondents
Percentage
1. Up to Rs. 2000 31 31%
2. Rs.2001-5000 33 33%
3. Rs.5001-10000 16 16%
4. Rs.10001-20000 3 3%
5. Above Rs.20001 1 1%
6. No Response 16 16%
Total 100 100%
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INTERPRETATION:
In this survey around 33% of the respondents reported to have a saving in the range of
Rs.2001-5000 per month .only 1% of the respondents reported having in higher bracket i.e
more then 20001 per month.
(e)Qualification :
Table No. I(e) showing Qualification profile of respondents:
S.No Qualification No. of
respondents
Percentage
1. Undergraduates 6 6%
2. Graduates 39 39%
3. Postgraduates 40 40%
4. Others 1 1%
5. No response 14 14%
Total 100 100%
INTERPRETATION :
The surveyed group are well educated group with 40%being post graduates and 39%being
graduates. around 6% of the samples collected were undergraduates.
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II. KNOWLEDGE OF MUTUAL FUNDS:
In the survey ,I attempted to understand from the investors their knowledge of Mutual fund.
(a)Knowledge of Mutual Fund:
Table No. II(a) showing knowledge of mutual fund of respondents:
S.n No Knowledge of
Mutual Funds
No. of
respondents
Percentage
1. Very good 4 4
2. Good 9 9
3. Average 19 19
4. Poor 64 64
5. No response 4 4
Total 100 100%
INTERPRETATION :
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In this survey it was found that 64% of the respondents don’t’ know or their knowledge is
very poor about Mutual funds. they ,while 4% respondents rated their understanding as
very good about Mutual funds. it shows knowledge of Mutual funds are very low..
(b) Knowledge related to share market:
Table No. II(b) showing knowledge related to share market of respondents:
S. No Knowledge related
to share market
No. of
respondents
Percentage
1. Yes 32 32%
2. No 64 64%
3. Can’t say 4 4%
Total 100 100%
INTERPRETATION:
It was found that 64% of the respondents don’t know that the Mutual fund is related to share
market. They also don’t know that Mutual funds returns are affected by the fluctuation in
share market.83
(c) Preference of various mutual funds of different peoples:
Table No. II(c) showing if in the near future if you ever plan to invest in your money in any
of the mutual fund company, which would be your choice?
INTERPRETATION:
Total number of 100 responses were generated for this question and multiple response
were sought for the various investment objectives. the analysis brings out the fact that
investor were more concerned about the SBI mutual fund (27%) and HDFC (19%) as main
investment companies.
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Options Responses Responses in %
ABN AMRO 17 17
HDFC 19 19
Reliance 11 11
ICICI 18 18
SBI 27 27
Any other 8 8
III. INVESTMENT OBJECTIVE/DECISIONS:
This section of survey was aimed at understanding the main reason behind the investment
decision made by an individual. I tried to catch the factor that contributes to making of an
investment portfolio off an individual.
(a)Investment objective:
S. No Investment
objective
No. of
respondents
Percentage
1. Capital Gain 21 21%
2. Generate Regular
return
6 6%
3. Secure Future 59 59%
4. Tax benefits 14 14%
Total 100 100%
INTERPRETATION :
Total number of 100 responses were generated for this question and multiple response
were sought for the various investment objectives. the analysis brings out the fact that
investor were more concerned about the secure future(59%) and capital gains(21%), and
after that they considered tax benefits(14%) and regular return(6%) as their main
investment objectives.
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(b)Decision affecting Factors:
S. No Decision affecting
Factors
No. of
respondents
Percentage
1. Economic
scenario
19 19%
2. Company image 44 44%
3. Fund performance 21 21%
4. Fund manager
image
2 2%
5. Tax incentive 14 14%
Total 100 100%
INTERPRETATION :
There are certain overall factors that tend to affect the investment decision decision of the
investor, such as economic scenario. I tried to know the respondents opinion on these
macro factors that further tend to affect their investment decisions.
This survey showed that company image acts as the determining factor for their
investment with 44%.the second most important factor was fund performance(21%) and
economic scenario(19%).
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(c)Information sources regarding Mutual Funds:
S. No Information sources No. of
respondents
Percentage
1. Print media 29 29%
2. Electronic media 21 21%
3. Friends/Relative 6 6%
4. Financial advisors 19 19%
5. Personal analysis 4 4%
6. Agents 21 21%
Total 100 100%
INTERPRETATION:
In this survey I asked from the respondents about the kind of media that affect their
investment decision.29% of the respondents said that the print media is the major
influencer in making their investment decisions, electronic media(21%) and agents(21%)
were the second major influencer in investment decision making.
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(d)Priority of reason for investment:
S. No Priority for
investment
No. of
respondents
Percentage
1. Saving for future 51 51%
2. Tax incentive 14 14%
3. Returns 23 23%
4. Future outlook 7 7%
5. Brand value 2 2%
6. Risk factors 3 3%
Total 100 100%
INTERPRETATION:
In this survey I found that saving for the future was the foremost important criteria for
investment in the minds of investors (51%),while 23%respondents said that they considered
the returns before making investment decisions.
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(e) Preferred fund structure:
Structure of the fund No of investors preferred
Open – ended fund 64
Close – ended fund 24
Interval funds 12
Total 100
INTERPRETATION:
It is observed that 64 out of 100 that are 64% of investors are interested to invest their
money in open ended funds the reason can be attributed to its convenience to enter and
exit at any time. 24% investors preferred to invest in close ended funds because they are
long term investors as well as they want some tax benefits. And the remaining 12%
investors replied that they don’t mind to invest in any funds including interval funds
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IV. RISK-RETURN PROFILE :
In my study I also tried to understand the risk and return matrix of an individual investor. this
was done in order to obtain information on the relationship between the kind of funds an
individual investor opts to invest in and the relative expectation he has on the return front.
(a)Investment Avenues:
S. No
Investment Avenues No. of respondents Percentage
1. Post office schemes 12 12%
2. Insurance 4 4%
3. Banks 66 66%
4. Share market 3 3%
5. Mutual funds 7 7%
6. Govt. securities 8 8%
Total 100 100%
INTERPRETATION:
The risk return matrix of an individual is the key factor in framing his investment portfolio. I
asked the respondents to select the investment avenues they would prefer to keep their
investment portfolio. 66% of investor preferred to have banks savings as one of the
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investment avenue., while 12% of the investor said that they would certainly would like to
have post office schemes as one of their preferred investment avenue.
(b)Return expectation from Mutual funds:
S. No Return
expectation from
Mutual funds
No. of
respondents
Percentage
1. 5%-10% 5 5%
2. 11%-15% 24 24%
3. 16%-20% 31 31%
4. More then 20% 16 16%
5. Can’t say 24 24%
Total 100 100%
INTERPRETATION:
In this survey when I came to return expected, I found that 31% of the investor are
expecting a return in range of 16%-20%, while 24%of the investor are expecting 11%-15%
rate of return but 24% of investor can’t said about return expectation.
91
(c) Investment pattern preferred in Mutual fund by investor:
S. No Investment
pattern preferred
in Mutual fund
No. of
respondents
Percentage
1. Growth schemes 41 41%
2. Balanced
schemes
11 11%
3. ELSS 18 18%
4. Sector specific
schemes
6 6%
5. Liquid schemes 7 7%
6. Can’t say 17 17%
Total 100 100%
INTERPRETATION:
The type of schemes selected for investment depends largely on the risk return matrix of an
individual and the time horizon of his investment.
My findings demonstrate that 41% of investors prefer to invest in growth schemes, 18% of
investor in ELSS schemes.
92
(d) Return in diversified schemes in Mutual fund:
S. No Return in
diversified
schemes in
Mutual fund
No. of
respondents
Percentage
1. Yes 23 23%
2. No 77 77%
Total 100 100%
INTERPRETATION:
In this survey I tried to know the knowledge of investors about the return on diversified
schemes .I found that 77%of surveyed people don’t know that the return on diversified
mutual fund schemes is more then other schemes. so, it shows that vary lake of awareness
about mutual funds.
93
(e) Sources of product information:
S. No Sources of
product
information
No. of
respondents
Percentage
1. Company
brochures
39 39%
2. Company
websites
3 3%
3. Investment
advisor
14 14%
4. Newspaper 37 37%
5. Friends and
relatives
7 7%
Total 100 100%
INTERPRETATION:
This chart represents the different sources of product information, through which investor
generally tend to know regarding the mutual fund’s new schemes and products.39% of the
respondents said that they receive the product information from the company brochures
and 37% respondents said that they get it from newspaper.
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CHAPTER 6 - SWOT ANALYSIS
SWOT ANALYSIS OF MUTUAL FUNDS
STRENGTHS
Large numbers of potential customers as base.
Government support by way of tax concessions for MF investors.
Sophisticated capital market.
Volatility of bank interest rate.
Vital source of capital information.
Scope of accessing market information.
Offer liquidity to investors at ant time.
The size of the market is very large.
WEAKNESS
Poor participation of retail investors.
There is very high degree of discomfort along with uncertainty.
Lack of focus.
Leadership vacuum.
Under performance.
Inability to scale up.
Unclear value proportion.
Overemphasis on funds under management.
Poor service conditions.
Distribution network is confined only to metro cities.
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Increasing NPA in the portfolio.
OPPORTUNITIES
Huge untapped market in semi urban and rural areas.
High level of savings habit among the people.
Liberalized business environment.
Using online mode of trading system.
Linkage of ATMs for cash withdrawal is ongoing.
Consolidation in the industry is in progress.
Investment opportunities abound in the international market.
Failures of non bank financial company operations.
THREATS
Increasing competition among the players.
High level of volatility in the stock market.
NAVs are highly sensitive to internal and market factors.
Possibility of more stringent regulations by SEBI,AMFI etc in future.
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CHAPTER 7 - CONCLUSIONS
A mutual fund is the ideal investment vehicle for today’s complex and modern financial
scenario. Markets for equity shares, bonds and other fixes income instruments, real estate,
derivatives and other assets have become mature and information driven. Today each and
every person is fully aware of every kind of investment proposal. Everybody wants to invest
money, which entitled of low risk, high returns and easy redemption. In my opinion before
investing in mutual funds, one should be fully aware of each and everything
The end of millennium marks 44 years of existence of mutual funds in this country. The ride
through these 44 years is not been smooth .Investors opinion is still divided .while some are
for the mutual funds others are against it.
Mutual Funds (MF) have become one of the most attractive ways for the average person to
invest his money. It is said that Bank investment is the first priority of people to invest their
savings and the second place is for investment in Mutual Funds and other avenues. A
Mutual Fund pools resources from thousands of investors and then diversifies its
investment into many different holdings such as stocks, bonds, or Government securities in
order to provide high relative safety and returns. . Also generate leads of the prospective
investors in Mutual Funds for the Asset Management Company (AMC)
There are many improvements pending in the field and it has to happen as soon as
possible so as to call the MF industry as an Organized and well-developed sector.
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CHAPTER 8 - RECOMMENDATION AND SUGGESTIONS
The key to the success of the Mutual fund industry is the perceived confidence of the
investors in the organization in total. And this is to take into account both the historical
quality of the product in terms of return as well as the way accounts are perceived to be
managed in terms of concern along with the technical ability for savings mobilization and
customer servicing. The major recommendations which are based on the observations that
were made while working with Reliance are as follows.
The marketing strategy which they follow should be segment wise. They should not
waste their time on reaching students, who are unaware of investing and have
insufficient cash supply.
In times of growing macroeconomic concerns like inflation and the RBI measures to
curb it and to regulate the liquidity, one should be careful before investing in debt
funds as their yield fluctuates in such situation.
Buy that portfolio which is doing very well in the market because that fund has the
chance of increment.
It’s good to pick funds which have the higher Beta and Sharpe ratio that justifies the
additional risk taken by those funds in terms of better return.
An investor with a long term investment horizon may select funds with value style of
investing as they are expected to give good returns when market realizes the
potential of their portfolios stocks.
While investing in sect oral funds, the sector specific risk should be analysed along
with the returns from the sector.
The past return should be viewed to get the record performance of the funds.
The expense ratio should be preferably low and should be checked and compared
with returns.
In India less than 5% of an individual savings is invested in mutual fund, therefore it
is advisable to make more effort to communicate the benefits, investment pattern
and reward associated to it.
The advisors should be given proper training so that they can easily influence the
clients and also the motivation power should be given to them.
Lock in period for the scheme should be minimized so that the investors can
liquidate their money whenever they want.
There should be no entry and exit load for the schemes.
98
8.1 FOR ENHANCING SALES ACTIVITIES
The first and foremost resource needed for enhancing he sales activities is the Human
Power, that is, to recruit some business development executives to assist the sales
activities of particular franchisees. The recommendation should pass through proper
channel to the business associate.
8.2 FOR CUSTOMERS’ SATISFACTION
When I had a chance to meet the existing customers, I came to know that they are not
happy with the internet assistance provided by the Reliance mutual funds.
8.3 CREATING AWARENESS REGARDING BENEFITS OF INVESTMENTS
The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be made
to realize that ignorance is no longer bliss and what they are losing by not investing.
So the advisors should try to change their mindsets. The advisors should target for more
and more young investors. Young investors as well as persons at the height of their career
would like to go for advisors due to lack of expertise and time.
8.4 PRODUCT SPECIALIZATION
Reliance is having too many financial products right from mutual fund to General Insurance
and not all the salespeople are familiar with each and every product so the work force
should be segregated each group dealing in a specific product and the sales target should
be given likewise.
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8.5 SUGGESTION BOXES
There should be provision of complain suggestion boxes at each branch so that the
problems of customers can be dealt with. This can be an effective system for showing
hospitality towards customers
8.6 CUSTOMER EDUCATION
The customer should be educated about the stock market to overcome his fear of
uncertainty in these markets and must be assured of expert advice in case of market
fluctuations. The customer should also be educated about the benefits of investment in
stock markets over other investment schemes.
100
CHAPTER 9 - APPENDIX
Average Assets Under Management as of March 2010.
The Average Assets Under Management (AAUM) of Mutual Fund Industry has registered a
fall of 4.37 per cent for March 2010, after recording a rise of 2.64 per cent in February
2010.The fall during the month is seen as a result of banks and corporate pulling out money
to pay their respective advance taxes. According to the data, the AAUM of 38 fund houses
stood at Rs 7,47,524.58 crore in March 2010 compared with Rs 7,81,711.52 crore in Feb
2010. Of the 38 mutual funds, 23 registered fall in the AAUM in March 2010 compared with
February 2010 while 14 mutual funds saw a rise in AAUM. There were only 2 fund houses
which had seen an increase of above Rs 1000 crore in AAUM in March i.e. DSP Black
Rock Mutual Fund and SBI Mutual Fund. DSP Black Rock Mutual Fund and SBI Mutual
Fund saw a highest inflow of Rs 1,557.25 and Rs 1,344.81 crores respectively, while on the
other side, highest outflow were seen in HDFC Mutual Fund (Rs 6364.56 crores) followed
by Kotak Mutual Fund (Rs 5678.35 crores), Reliance Mutual Fund (Rs 5340.70 crores) and
LIC Mutual Fund (4158.37 crores).
Among the top five fund houses based on AAUM, Reliance Mutual Fund and HDFC Mutual
Fund and Birla Sun Life Mutual Fund faced decline while the other two fund houses
witnessed increase. Reliance Mutual Fund continues to dominate top fund house in AAUM
101
in March with Rs 1,10,412.71 crores, though it had dipped 4.6 per cent (Rs 5340.70 crores).
UTI Mutual Fund and ICICI Prudential Mutual Fund have gained by 0.6 and 1.1 per cent
respectively. Being the new entrant to the market, Peerless Mutual Fund stood as the out
performer with 149.9 per cent growth as against February 2010. Other top performers were
Edelweiss Mutual Fund and DSP Blackrock Mutual Fund.
QUESTIONNAIRE
Dear Sir/Madam,
I am currently engaged in a study on “Customer Perception On Mutual Funds”.
In this connection I request you to read the following items carefully & answer them .The
answers you give will be held confidential & used purely for academic purposes.
Indicate your response by tick marking when applicable.
1.) Name:-
2.) Sex:- Male Female
3.) Age:- Below 30 31 – 40 years
41 – 50 years above 50 years.
Academic Qualification (Last Qualification):-
Q1. Do you know about the Mutual Funds?
(a) Very good (b) Good
(c)Average (d) Poor
(e)No response
Q2. What are your objective /motive behind investment?
(a)Capital gain (b) Generate regular
(c)Secure future (d) Tax benefits
Q3. Where do you generally invest/save?
(a)Post office schemes
(b)Insurance
102
(c)Banks
(d)Share market
(e)Mutual funds
(f)Govt. securities
Q4. How do you prioritize the reason for investment?
[Rank from 1-5, 1 being highest priority]
Saving for future __________
Tax incentives __________
Returns __________
Future outlook __________
Brand value __________
Risk factor __________
Q5. How did you come to know about mutual fund?
(a)Print media
(b)Electronic media
(c)Friend/relative
(d)Financial advisor/C.A
(c)Personal analysis
(f)Agents
Q6. What factors affect your decision for investment in Mutual Fund?
(a)Economic scenario
(b)Company image
(c)Fund performance
(d)Fund manager image
(e)Tax incentive
Q7. How much return you expect from Mutual Fund?
(a)5%-10%
(b)11% -15%
(c)16%-20%
(d)more than 20%
(e)can’t say103
Q8. What kind of investment pattern you prefer in Mutual Fund?
(a)Growth schemes
(b)Balanced schemes
(c)ELSS
(d)Sector specific schemes
(e)Income schemes
(f)Liquid schemes
Q9. What are the sources of information gathering for you regarding mutual fund?
(a)Company brochures
(b)Company websites
(c)Investment advisor
(d)Newspaper
(e)Friends and relatives
Q10. Are you aware that by investing in diversified investment avenues the average rate of
return would considerable go up?
(a)Yes
(b)No
Q11. Do you know that mutual fund is related to share market?
(a)Yes
(b)No
(c)Can’t say
Q12. For which company’s mutual fund or Banks mutual fund you are interested
(a) ABN AMRO
(b) HDFC
(c) Reliance mutual fund
(d) SBI Mutual fund
(e) ICICI
(f) Others
Q13. By structure in which type of schemes did you invested?104
(a) Open - Ended Schemes
(b) Close - Ended Schemes
(e) Interval Schemes
Thanks you very much for your kind co-operation & for taking time to complete this
questionnaire.
105
CHAPTER 10 – BIBLIOGRAPHY
BOOKS REFERRED
C R Kothari, “Research Methodology”,1st edition, New Age International Publishers,
ISBN: 978-81-224-1522-3
Malhotra, Naresh "Marketing Research and Applied Orientation" IV Ed., 2005,
Pearson
Agarwal, J.D. "Security Analysis & Portfolio Management: A Review, Finance India,
Vol. II No. 1, March 1989.
AMFI –Mutual Fund Testing Programme for Distributors & Employees of Mutual