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With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organisation. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995. AMFI is an apex body of all Asset Management Companies (AMC), which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders
THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN INDIA :
The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives, which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:
This mutual fund association of India maintains a high professional and ethical standard in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services
also involved in this code of conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.
It develops a team of well-qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry.
AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate information’s on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.
THE SPONSORERS OF ASSOCIATION OF MUTUAL FUNDS IN INDIA :
• • • •
SBI Fund Management Ltd. BOB Asset Management Co. Ltd. Can bank Investment Management Services Ltd. UTI Asset Management Company Pvt. Ltd.
GIC Asset Management Co. Ltd. Jeevan Bima Sahayog Asset Management Co. Ltd
Private Sector Indian:•
Benchmark Asset Management Co. Pvt. Ltd.
• • • • • • • • •
Cholamandalam Asset Management Co. Ltd. Credit Capital Asset Management Co. Ltd. Escorts Asset Management Ltd. JM Financial Mutual Fund Kotak Mahindra Asset Management Co. Ltd. Reliance Capital Asset Management Ltd. Sahara Asset Management Co. Pvt. Ltd Sundaram Asset Management Company Ltd. Tata Asset Management Private Ltd.
Predominantly India Joint Ventures:• • •
Birla Sun Life Asset Management Co. Ltd. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Ltd.
Predominantly Foreign Joint Ventures:• • • • • • • • •
ABN AMRO Asset Management (I) Ltd. Alliance Capital Asset Management (India) Pvt. Ltd. Deutsche Asset Management (India) Pvt. Ltd. Fidelity Fund Management Private Limited Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Pvt. Ltd. Morgan Stanley Investment Management Pvt. Ltd. Principal Asset Management Co. Pvt. Ltd.
Prudential ICICI Asset Management Co. Ltd. Standard Chartered Asset Mgmt Co. Pvt. Ltd.
GLOSSARY OF SOME CONCEPTS
AMC The AMC is the corporate entity, which markets and manager and manages a mutual fund scheme and in return receives a management fee from the fund corpus. SEBI specifies that an AMC must be separate entity the trust that manages it. NAV It is the value of unit of a Mutual Fund scheme and represents its true worth. NAV is arrived at by dividing total value of all investment made under the scheme by number of units of the scheme. NAV is critical yardstick of the funds performance. UNITS Units in a mutual fund scheme are similar to shares of a joint company. These are always in denominations of Rs. 10 each the sum total of all the units constitutes corpus of mutual fund. SPONSORS Sponsor of a mutual fund are those who establish the mutual fund trust and the AMC they constitute the shareholders of the AMC and receive dividends on profits made by the AMC. SEBI rules stipulate that mutual fund trust as well as the AMC must maintain an arms length relationship with the sponsors to avoid any conflict to interests, which may affect the unit holders.
Since stock markets travel through a natural cycle of boom and bursts one should normally stay invested inequity funds for a longer times to earn higher returns. BALANCED FUNDS A balanced fund is the mixture of income fund and growth fund invested partly in equity to achieve a trade-of between risk and return. their scale may fluctuate depending upon the prevalent interest rates and credit quality of the debt securities. . OPEN ENDED FUNDS Funds in which investor can invest & withdraw whenever he wishes. Such funds earn returns more regularly than a growth fund but level of returns over longer periods normally lag behind those offered by growth funds while returns in such funds may be regular. after the close of initial offer. CLOSE ENDED In a close-ended fund an investor is allowed to subscribe only during the period of the initial offer. Close-ended funds mature after a specified period. Withdrawals are allowed at NAV minus a back end load. GROWTH FUNDS Growth funds predominantly invest in stock market securities and carry risks larger than income funds.INCOME FUND These Funds invest largely in fixed income securities like bonds and debentures. For risk taking investor equity are best suited. Equity funds may earn higher but they also carry larger risks.
accepts and processes investors applications in informs AMC about amounts received/disbursed for subscription/ purchase/ redemption it also handles communications with investors. REDEMPTION Disbursement of the unit capital on maturity of the scheme to all exiting unit holders. CUSTODAIN Banking organization that keeps in safe custody all the securities & other instruments belonging to the fund to insure smooth inflow & outflow of securities. and regulated by SEBI. monitored. It is also approved regulated and registered with SEBI. perform data entry services and dispatches account statements. MARKET PRICE Price at which units of mutual funds are quoted in stock exchange where they are listed. it could be charged to the scheme irrespective of the performance of the scheme. it provides required services like system capabilities back up.LOCK IN PERIOD Period of time during which you can neither redeem nor transfer your holdings to others. . MANAGEMENT FEES An AMC that mangers & markets a mutual fund scheme is entitled to a management fee@ 1% to 25% of the total funds managed. Lock in period is imposed to allow fund manager to deploy money for an adequate period of time to earn a reasonable return premature withdrawals may destabilize the fund & are not beneficial to the interests of investors. REGISTRAR Organization appointed by an AMC to the schemes it is registered.
TRANSPARENCY Basic feature of mutual funds is transparency. well monitored & transparent working of AMC is regulated by SEBI it is audited weekly. their functioning is very efficient. which are charged to the scheme. ENTRY LOAD Charge paid by unit holder when he invests an amount in the scheme. Mutual funds incur many expenses during an issue.EXIT LOAD Value of deduction from NAV on the date when one choose to withdraw from a fund. it has to work under strict guidelines issued by SEBI. LIQUIDITY Ability of investors to change its unit into cash within minimum time as and when he needs money. and its NAV is calculated and published daily so that there is no chance of any default in the working of Mutual Funds. Such load is called entry load. load is imposed because withdrawals carry transaction cost to AMC it can not be more than 6% of NAV of corpus as prescribed by SEBI many schemes offer redemption facility without exit load. .
Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. The investors in proportion to their investments share the profits or losses. Apart from that. This is why investing through mutual funds has become such a popular way of investing.INTRODUCTION CONCEPT OF MUTUAL FUNDS These days you are hearing more and more about mutual funds as a means of investment. If you are like most people. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. . Investors of mutual funds are known as unit holders. you probably have most of your money in a bank savings account and your biggest investment may be your home. You are not the only one. WHAT IS A MUTUAL FUND? Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. The mutual funds normally come out with a number of schemes with different investment objectives. investing is probably something you simply do not have the time or knowledge to get involved in.
Here the gain or loss of all the investors will be different from each other. is reflected in the NAV or distributed as income. On the date of maturity. which regulates securities markets before it can collect funds from the public. with the expenses. Likewise. the investments of different investors are pooled to form a common investible corpus and gain/loss to all investors during a given period are same for all investors while in case of portfolio management scheme. in a mutual fund. the bank is supposed to return the principal amount and interest to you. are shared by the investors in same proportion as the number of units owned by them. is in turn invested by the manager. the bank promises to pay you a certain rate of interest for the period you specify. loss.which are launched from time to time. debt. if any. WHAT DOES A MUTUAL FUND DO WITH INVESTOR'S MONEY? Anybody with an investible surplus of as little as a few hundred rupees can invest in mutual funds. A Mutual Fund invests the pool of money collected from the investors in a range of securities comprising equities. The income earned and the capital appreciation realized by the scheme. on your behalf. money market instruments etc. less expenses of the manager. the money you invest. after charging for the AMC fees. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI). . the investments of a particular investor remains identifiable to him. is to be borne by you. MUTUAL FUNDS V/S PORTFOLIO MANAGEMENT SCHEMES In case of mutual funds. MUTUAL FUND V/S BANK DEPOSIT When you deposit money with the bank. Whereas. The profit. if any. as per the investment strategy specified for the scheme. The investors buy units of a fund that best suits their investment objectives and future needs.
.TYPES OF RETURNS FROM A MUTUAL FUND :Mutual Funds give returns in two ways . the fund's unit price increases. Dividend distribution again is of two types. Dividend Distribution: The profit earned by the fund is distributed among unit holders in the form of dividends. As the value of individual securities in the fund increases.Capital Appreciation or Dividend Distribution. Capital Appreciation: An increase in the value of the units of the fund is known as capital appreciation. It can either be reinvested in the fund or can be on paid to the investor. An investor can book a profit by selling the units at prices higher than the price at which he bought the units.
Unit Capital is the investor’s subscriptions. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. NAV of a scheme also varies on day-to-day basis. Net Asset Value is the market value of the securities held by the scheme. Fund’s Net Asset = Asset – Liabilities Net Asset Value = Net Assets of the scheme / No. It is calculated by deducting all liabilities (except unit capital) of the fund from the realizable value of all assets and dividing it by number of units outstanding. In simple words. . Investments made on behalf of the investors are reflected on the assets side of the balance sheet. Since market value of securities changes every day.MUTUAL FUND TERMINOLOGY NET ASSET VALUE (NAV) Net Asset Value (NAV) denotes the performance of a particular scheme of a mutual fund. There are liabilities of short-term nature. In mutual funds it is not treated as a liability. of Outstanding Units The NAV reflects the liquidation value of the fund's investments on that particular day after accounting for all expenses.
The entry load percentage is added to the NAV at the time of allotment of units. Other assets and liabilities. Capital Appreciation in the underlying value of the stocks held in the portfolio. 10 each to the investors. if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. • An Exit load or Back-end load or Repurchase load is a charge that is collected at the time of redeeming or for transfer between schemes (switch). When a charge is collected at the time of entering into the scheme it is called an Entry load or Front-end load or Sales load. NAV is required to be disclosed by the mutual funds on a regular basis .daily or weekly . then the NAV per unit of the fund is Rs.For example. The factors affecting the NAV are as following: • • • • • LOAD • • The charge collected by a Mutual Fund from an investor for selling the units or investing in it. . • Some schemes do not charge any load and are called "No Load Schemes" Capital Gains or Losses on the sale or purchase of the Investment securities. The exit load percentage is deducted from the NAV at the time of redemption or transfer between schemes.depending on the type of scheme.20. Dividend and income earned on the assets. Number of units sold or purchased.
SALE PRICE It is the price paid by an investor when investing in a scheme of a Mutual Fund. The flow chart above describes broadly the working of mutual fund . This price may include the sales or entry load. MUTUAL FUND INVESTMENT CYCLE Funds will also usually give you a choice either to receive a cheque for distributors or to reinvest the earnings and get more shares.
MUTUAL FUND ORGANIZATION:There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund: .
is the biggest scheme with a corpus of about Rs200bn. income etc with some being openended and some being closed-ended. The UTI has many funds/schemes in all categories i.e. . The Unit Scheme 1964 commonly referred to as US 64. is true for all practical purposes. which is a balanced fund. equity.ORGANISATION OF MUTUAL FUND INDUSTRY STRUCTURE OF THE INDIAN MUTUAL FUND INDUSTRY : The Unit Trust of India dominates the Indian mutual fund industry. while legally incorrect. Most of its investors believe that the UTI is government owned and controlled. balanced. UTI was floated by financial institutions and is governed by a special act of Parliament. which has a total corpus of Rs700bn collected from more than 20 million investors. which.
The second largest category of mutual funds is the ones floated by nationalized banks. The aggregate corpus of assets managed by this category of AMCs is in excess of Rs250bn THE STRUCTURE CONSISTS OF : SPONSOR Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. The third largest category of mutual funds is the ones floated by the private sector and by foreign asset management companies. 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.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. GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. Can bank Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. The aggregate corpus of funds managed by this category of AMCs is about Rs150bn. TRUSTEE Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). TRUST The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act. 1908. 1996. 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 . 1882 by the Sponsor. The largest of these are Prudential ICICI AMC and Birla Sun Life AMC. The trust deed is registered under the Indian Registration Act.
. The Custodian is approved by SEBI under registration no. AG located at Kodak House. The registrar and transfer agent also handles communications with investors and updates investor records. the provisions of the Trust Deed and the Offer Documents of the respective Schemes. A Custody Agreement has been entered with Deutsche Bank in accordance with SEBI Regulations. The AMC must have a net worth of at least 10 crore at all times.Investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. 1996. Ground Floor. Mumbai-400 001. Deutsche Bank. REGISTRAR AND TRANSFER AGENT The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to 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. 222 Dr. which will have the physical possession of all the securities purchased by the mutual fund. IN/CUS/003 to act as Custodian for the Fund. AG • The Trustee has appointed Deutsche Bank. ASSET MANAGEMENT COMPANY (AMC) : The Trustee as the Investment Manager of the Mutual Fund appoints the AMC. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. The Registrar processes the application form.Road. as the Custodian of the securities that are bought and sold under the Scheme. redemption requests and dispatches account statements to the unit holders.N. CUSTODIAN Custodian is the agency. D.
FUND STRUCTURE Fund Sponsor Trustees Asset Management Company Depository Agent Custodian .
Transparency and interactivity: Mutual Funds regularly provide investors with information on the value of their investments. Also in cases of liquidity crisis where stocks are sold at a distress. Choice: The large amount of Mutual Funds offers the investor a wide variety to choose from. so the risk is diversified at the same time taking advantage of the position it holds. experience and resources manage the pool of money collected by a mutual fund. thus they can be bought and sold at their market value.ADVANTAGES OF MUTUAL FUNDS Small investments: Mutual funds help you to reap the benefit of returns by a portfolio spread across a wide spectrum of companies with small investments. Professional Fund Management: Professionals having considerable expertise. They thoroughly analyze the markets and economy to pick good investment opportunities. Over and above this the units can be directly redeemed to the Mutual Fund as and when they announce the repurchase. An investor can pick up a scheme depending upon his risk / return profile. A fund normally invests in companies across a wide range of industries. thus increasing his or her risk. mutual funds have the advantage of the redemption option at the NAVs. However. a mutual fund will spread its risk by investing a number of sound stocks or bonds. Liquidity: Closed ended funds have their units listed at the stock exchange. . Such a spread would not have been possible without their assistance. Mutual Funds also provide complete portfolio disclosure of the investments made by various schemes and also the proportion invested in each asset type. Mutual Funds clearly layout their investment strategy to the investor. Spreading Risk: An investor with a limited amount of fund might be able to to invest in only one or two stocks / bonds.
Other Advantages of investing in a Mutual Fund are: • • • • • • Diversification Convenient Administration Return Potential Low Costs Flexibility Tax benefits .Regulations: All the mutual funds are registered with SEBI and they function within the provisions of strict regulation designed to protect the interests of the investor.
Unit Trust of India (UTI) was established in 1963 and launched its legendary first scheme 'US-64' in 1964. 67. The second is the UTI Mutual Fund Ltd. PNB. BOB and LIC.050 million.004 million.000 million. set up operations in India. In February 2003. The mutual fund industry was opened up for private participation 1993 and a new era was ushered in. As at the end of October 31. From 1987. non-UTI. UTI witnessed a slow and steady growth over seventies and eighties and by end of 1988 it had an AUM of Rs. 298. It is registered with SEBI and functions under the Mutual Fund Regulations.218. 470. Many reputed foreign mutual funds such as Templeton. As at the end of January 2003. there were 33 mutual funds with total assets of Rs.INDIAN MUTUAL FUND INDUSTRY The history of Indian mutual fund industry can be distinctly divided into two phases . sponsored by SBI. 2003. the Unit Trust of India Act 1963 was repealed and UTI was broken into two separate entities. At the end of1993 the overall AUM of mutual fund industry was Rs. public sector mutual funds were allowed and public sector banks and financial institutions set up a series of mutual fund companies. 1. still under the control of Government of India with AUM of Rs. there were totally 31 funds in India. Alliance.350 million as at the end of January 2003.the period before liberalization when only public sector players existed with one dominant player Unit Trust of India and the post-liberalization era where the industry was opened up to private players. Detailed guidelines were established and the mutual fund industry (except UTI) came under the regulation of Securities Exchange Board of India (SEBI). with assets under . One is the Specified Undertaking of the Unit Trust of India. paving the way for an unprecedented choice of products and services to Indian investors. Prudential group etc.
But at the end of financial year (05-06) the total of Mutual Fund reaches Rs. The MAJOR PLAYERS in the Indian Mutual Fund Industry are: GROWTH IN ASSETS UNDER MANAGEMENT .260 million. 2318620 million.396. As at the end of March 04.267. which manage assets of Rs. As the end of September 2004. there were 29 funds.160 million. the total of mutual fund reaches to 1. 1. 1531080 million under 521 schemes.management of about Rs.
THIRD PHASE 1993.UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87).At the end of 1993. SECOND PHASE -1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) 1987 marked the entry of non. the mutual fund industry had assets under management of Rs. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LlC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. LlC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.1996 EMERGENCE OF PRIVATE FUNDS . 700 crores of assets under management.6. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (lOBI) took over the regulatory and administrative control in place of RBI. Bank of Baroda Mutual Fund (Oct 92).1964-87 An Act of Parliament established Unit Trust of India (UTI) on 1963. Punjab National Bank Mutual Fund (Aug 89).UTI.47. The history of mutual funds in India can be broadly divided into four distinct phases FIRST PHASE . The first scheme launched by UTI was Unit Scheme 1964. Bank of India (Jun 90). at the initiative of the Government of India and Reserve Bank the. Indian Bank Mutual Fund (Nov 89). 004 crores. At the end of 1988 UTI had Rs.
Similarly the Budget of Union Government in 1996 took a big step in exempting all mutual funds dividends from income tax in the hands of investors.A new era in the Mutual Fund industry began in 1993 with the permission granted for the entry of private sector funds. 1996. The development of SEBI. These regulations set uniform standards for all funds. The factors that contributed to greater inventor’s confidence were: 1. A comprehensive set of regulation for all mutual funds operating in India was introduced with SEBI Regulation s.1999-2004: EMERGENCE OF LARGE AND UNIFORM INDUSTRY The other major development in the fund industry has been the creation of level playing . The steadily improving performance of several funds houses. FIFTH PHASE . investment management techniques and investor servicing technology that make the Indian mutual fund industry today a vibrant and growing financial intermediary.1996-1999: GROWTH AND SEBI REGULATION Since 1996 the mutual fund industry in India saw tighter regulation and higher growth. During this phase. Quite significantly. . foreign fund management companies were also allowed to operate mutual funds. FOURTH PHASE . It scaled new heights in terms of mobilization of funds and number of players. Investors now clearly saw the benefits of investing through mutual funds and became discerning and selective. s regulatory framework for the Indian mutual fund industry. This gave the Indian investor a broader choice of fund families and an increasing competition to the existing public sector funds. 2. Measures were taken by SEBI to protect the investor and by the Government to enhance investor's returns through tax benefits. both SEBI and AMFl launched investor awareness programmed aimed at educating the investors in investing through mutual funds. These private funds have brought with them the latest product innovation.
SIXTH PHASE . As at the end of September 2004. more international players continue to enter India .field for all mutual funds operating in India. Between 1999 and 2005.153108 crores under 421 schemes. Within the growing industry relative market shares of different players in terms of amount mobilized and assets under Management has also undergone changes.UTI no longer had a special legal status and had to adopt the same structure as any other fund in India -a Trust and an Asset Management Company. This happened in February 2003.000 crores. there were 29 funds. which manage assets of Rs.2004: CONSOLIDATION AND GROWTH The industry has lately witnessed a spate of mergers and acquisitions. most recent one being the acquisition of schemes of Alliance Fund by Birla Sun Life etc. which have gone from about Rs. . when the UTI Act was repealed . At the same time.The mutual fund industry has entered its current phase of consolidation and growth. 150. 6800 to over Rs. the size of the industry has doubled in terms of assets under management.
TYPES OF MUTUAL FUND SCHEMES Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position. . risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
TYPES OF MUTUAL FUNDS SCHEMES : Mutual fund schemes may be classified on the basis of its structure and its investment objective. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed.g. UTI MIP offers a repurchase after 3 years. Unit capital of the fund is not fixed but variable. The key feature of open-end schemes is liquidity. Fund size and its total investment go up if more new subscriptions come in than redemptions and vice-versa. Some funds offer repurchase after a fixed period. which are declared on a daily basis. • • • Investors are not allowed to buy or redeem the units directly from the funds. CLOSE-ENDED FUND/SCHEME • Stipulated maturity period e. Units’ maybe traded at a discount or premium to NAV based on investor’s perception about the funds future performance and other market factors. BY STRUCTURE: OPEN-ENDED FUND/ SCHEME • • • • • • Available for subscription and repurchase on a continuous basis. For example. . Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. These schemes do not have a fixed maturity period. 5-7 years. • • Fund is open for subscription only during a specified period at the time of launch of the scheme.
When a mutual fund closes. Examples include buying illiquid securities or using leverage. Closed-end funds are plagued with broker trading fees. sell high. meaning they can be sold for more than their NAV. it still allows current investors to buy more shares and when those investors want to sell their holdings. they don't need to find a buyer. Closed-end funds have access to some investments and strategies that mutual funds shy away from. Closed-end funds are generally riskier. Every seller must have a buyer. the fund shares could be trading at a discount or premium. • • DISADVANTAGES OF CLOSED-END FUNDS • As mentioned above. Remember. Closed-end funds can sometimes be sold at a premium. meaning they are trading below their NAV. which could work against you. buy low. • • . Closed-end funds. ADVANTAGES OF CLOSED-END FUNDS • Closed-end funds can sometimes be purchased at a discount.DIFFERENCE BETWEEN OPEN-END AND CLOSED-END FUNDS Open-end funds. when a mutual fund closes to new investors it does not make it a closed-end fund. are open to new investors (they can create as many shares as needed). Much like a new publicly traded stock. However. have a fixed number of shares. They also trade according to market demands. closed-end funds have an IPO. also known as mutual funds. on the other hand.
Unlike mutual funds. open-end funds attract better management talent because they can grow by attracting new investors over time. • These funds combine the features of both open–ended and close-ended funds wherein the fund is close-ended for the first couple of years and open-ended thereafter. It has been proven that returns from stocks. As a general rule. INTERVAL FUNDS. yet providing reasonable liquidity. have outperformed most other kind of investments held over the long term. meaning they are much harder to sell. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. Such schemes normally invest a majority of their corpus in equities.• Closed-end funds are less liquid. BY INVESTMENT OBJECTIVE: GROWTH FUNDS The aim of growth funds is to provide capital appreciation over the medium to longterm. • Some funds allow fresh subscriptions and redemption at fixed times every year (say every six months) in order to reduce the administrative aspects of daily entry or exit. Closed-end fund price information is not always available. . the shares are not redeemable (meaning the company does not have to buy the shares back) • • Closed-end funds tend to charge between 1-2 percent a year for management fees.
convertible securities. Have higher price fluctuation as compared to money market funds due to interest rate fluctuation. banks and financial institutions and other entities such as infrastructure companies/utilities. • • • • • • Target low risk and stable income for the investor and not capital appreciation. moderate capital appreciation and preservation of capital. Objective is to gain income. TYPES OF INCOME FUNDS Diversified Debt Funds Focused Debt Funds High yield Debt Funds Assured return Debt funds BALANCED FUNDS / HYBRID FUNDS Aim of Hybrid funds is to provide both growth and regular income as such schemes have a portfolio comprising of debt instruments. Debt funds can be categorized further based on their risk profiles. but also by private companies. Are best suited for the medium to long-term investors who are averse to risk and seek capital preservation. Ideal for investors with a conservative and long-term orientation. . • • • Almost equal proportion of debt/money market securities and equities. Normally funds maintain a Equity-Debt ratio of 55:45 or 60:40. Carry both credit risk and interest rate risks. Have a higher risk of default by borrowers as compared to Gilt funds.INCOME FUNDS • Invest in debt instruments issued not only by government. and preference and equity shares.
That is. less than one-year maturity. if the fund has a good performance history. Commercial Paper issued companies. • • • • • • Aim to provide easy liquidity. Invest in Treasury bills issued by government. government securities and inter-bank call money. preservation of capital and moderate income.e. each time you buy or sell units in the fund. High liquidity and safety of principal Low risk and low returns Period of investment could be as short as a day. Have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. Typically entry and exit loads range from 1% to 2%. no . Certificates of deposit issued by banks. a commission will be payable. These funds are ideal for Corporate. It could be worth paying the load.seek to provide high dividend and capital appreciation Asset allocation funds.seek to provide regular income and capital appreciation Growth income funds.flexible asset allocation between debt equity and Money Market MONEY MARKET FUNDS • • Invest in securities of short-term nature I.TYPES OF HYBRID FUNDS • • • Balanced funds. That is. NO-LOAD FUNDS A No-Load Fund is one that does not charge a commission for entry or exit. institutional investors and business houses LOAD FUNDS A Load Fund is one that charges a commission for entry or exit.
OTHER SCHEMES: TAX SAVING SCHEMES These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. SPECIAL SCHEMES Industry Specific Schemes Industry Specific Schemes invest only in the industries specified in the offer document. . 2000.commission is payable on purchase or sale of units in the fund. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. provided the capital asset has been sold prior to April 1. and Pharmaceuticals etc Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50 Sectoral Schemes Sectoral Funds are those. 2000 and the amount is invested before September 30. which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings. The advantage of a no load fund is that the entire corpus is put to work. The investment of these funds is limited to specific industries like InfoTech. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. FMCG. 1961.
100. Against a turbulent background. just a thorough read of the newspaper everyday will give you all this dope. availing of the interest rate swings is allpossible through the diversified or sector dedicated as well as Debt funds. Also diversification. inflation is up. CHECK OUT THE MACROS Don’t just blindly look at every new float as an opportunity to invest. always keep the background in mind. Mutual funds issuers have cast their nets wide by offering a plethora of instruments which aim to maximize returns while minimizing risk They offer the advantage of professionals managing your money. One can invest in them for as little as Rs 1000. An indication of this is the number and variety of funds offered by the issuers. the liquidity position is tightening. as well as the depth of the market in terms of the secondary trading.LOOK BEFORE INVESTMENT The mutual funds industry in India has also finally come of age.000 minimum to start investing in shares of sensex pivotal. and liquidity position in the markets? Don’t be alarmed by all the economic jargon. and the funds are usually liquid. What are the current economic scenario. industrial growth. where the economy is in a downtrend. . perhaps you can wait to pick up the new float after it is listed rather than at the time of the offer. So today one doesn’t need Rs. sector concentration. As you would do with investing in the market directly.
In case you are expecting a rise in the interest rates then look at Gilt funds (which have a shorter time horizon) or at balanced funds. it is time to check out the Micros. Remember the InfoTech funds which today are quoting below par. and then perhaps it will not be able to generate a positive momentum in its NAV. or has it been steady.e. the fund will invest your money into scrip’s at these high prices.-overall economic scenario . they had all invested in the frenzy of the ICE age and have been caught on the wrong foot in the subsequent meltdown. Remember the basic rule . Other aspects like availability of an exit route. dispatch of dividends and certificates etc? Their financial performance in terms of dividend and NAVs. In case the sensex has been consistently on a high. As we had mentioned earlier timing the market is the essence of success. What is the parentage of the Fund house proposing the issues what has been their past in terms of good management and reporting practices. as these prices may be difficult to reach again. track record of the fund manager (if possible) and objectives of the particular scheme.SENSE OF THE SENSEX One of the cardinal rules of investing is getting the price right. CHECK OUT THE MICROS After a risky of the Macros. specific service standards promised (like maximum time to be taken in mailing repurchase/redemption proceed). So in case you are expecting a fall in the interest rates.interest rates and bond prices are inversely proportional. Look at the track record of the mutual fund under consideration. i. then remember. When one goes up. See if the time is right to invest in equity funds. watch the sensex has it been rising or falling. INTEREST RATES AND LIQUIDITY In case you are keen on a balanced or debt fund. Time the market. which normally happens when the liquidity position is loose in the market. you must check out the interest rate scenario. the other comes down. look for investing in Debt funds (which have a medium to long term horizon). Lastly. So.
7) Your investment adviser can help you evaluate each fund to determine its role in your portfolio. Have a look at the NAV performance of other funds floated in the same quarter. 5) Diversify among different investment styles to potentially reduce risk and increase returns. time frame. consider your amount of investment capital. And then decide which type of fund you want to invest in. 4) Diversify among different asset classes to help reduce risk and potentially increase the rate of return of your portfolio. overall sentiment is flat to good. For balanced funds to debt funds check out the interest rate scenario. sensex has been on the upswing but not necessarily peaking. 2) There is no ideal number of mutual funds to own. 3) Before picking a mutual fund. 6) Owning too many funds means you may be paying for active management when you really hold the market.seems positive. your first task is to formulate your investment objectives and identify your time frame. 9) The next step is to identify which types of mutual funds match your investment goals investment goals. 8) In choosing mutual funds. and . POINTS TO REMEMBER BEFORE INVESTMENT : 1) People invest in mutual funds in order to achieve diversification without the time and cost of tracking hundreds of individual securities.
2005 is Rs. Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited. Reliance Capital Asset Management Ltd.f November 2003. 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. 1996. the name of Reliance Capital Mutual Fund has been changed to -Reliance Mutual Fund).13 crores. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12. RCAM is authorized to act as Investment Manager of Reliance Mutual Fund.and risk tolerance.e. ABOUT THE COMPANY RELIANCE CAPITAL ASSET MANAGEMENT LTD. 1997 in line with SEBI (Mutual Funds) Regulations. 1995. Pursuant to this IMA. 1995 and was amended on August 12. 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund (w.30. The net worth of the Asset Management Company including preference shares as on March 31. the sponsor. (RCAM). a company registered under the Companies Act. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. 10) Companies such as Crisil and dedicated websites provide statistical information on mutual funds. Reliance Mutual Fund has launched twenty five Schemes till date. It is a wholly owned subsidiary of Reliance Capital Ltd. namely: Reliance Vision Fund .
(September 1995). Reliance Floating Rate Fund (August 2004). Reliance Gilt Securities Fund (July 2003). Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund ( May 2004). Limited (RCTCL). The main objectives of the Trust are: . IMD/PSP/4958/2004 date 11th. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no. Reliance NRI Equity Fund (October 2004). Reliance NRI Income Fund (October 2004). 1882 with Reliance Capital Limited (RCL). Reliance Banking Fund (May 2003). Reliance Short Term Fund (December 2002). RELIANCE MUTUAL FUND Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act. Reliance Equity Opportunities Fund (February 2005). as the Trustee. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997).Series I (March 2005). Reliance Tax Saver (ELSS) Fund (July 2005). Reliance Fixed Maturity Fund . Reliance Medium Term Fund (August 2000). RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30.Series II (April 2005). Reliance Regular Saving Fund (May 2005). March 2004. 1995. Reliance Liquid Fund (March 1998). Reliance Fixed Maturity Fund . as the Settler/Sponsor and Reliance Capital Trustee Co. Reliance Fixed Tenor Fund (November 2005) and Reliance Equity Fund (Feb 2006). Reliance Liquidity Fund (June 2005). Reliance Media & Entertainment Fund (September 2004). Reliance Index Fund (January 2005). Reliance Monthly Income Plan (December 2003). Reliance Fixed Term Scheme (March 2003).
RELIANCE TAX SAVER (ELSS) FUND (An Open-ended Equity Linked Savings Scheme.) 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 primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & 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 PRODUCTS EQUITY SCHEMES :RELIANCE EQUITY FUND (An open-ended diversified Equity Scheme. • To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their savings and To take such steps as may be necessary from time to time to realize the effects without any limitation.• To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unit holders.
) The primary investment objective of the Scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach. RELIANCE GROWTH FUND (An Open-ended Equity Growth Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities. which could approximately be the same as that of Sensex. RELIANCE VISION FUND (An Open-ended Equity Growth Scheme. RELIANCE INDEX FUND (An Open Ended Index Linked Scheme. with a view to endeavor to generate returns. with a view to endeavor to generate returns.RELIANCE EQUITY OPPORTUNITIES FUND (An Open-Ended Diversified Equity Scheme. RELIANCE NRI EQUITY FUND . which could approximately be the same as that of Nifty. The Investment Objective under the Sensex plan is to replicate the composition of the Sensex.) The primary investment objective of the Scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach.) The Investment Objective under the Nifty Plan is to replicate the composition of the Nifty.
(An open-ended Diversified Equity Scheme. RELIANCE MEDIUM TERM FUND (An Open End Income Scheme with no assured returns. up to 20%) in equity. Accordingly. 80%) with a small exposure (i. Primarily the investment shall be made in debt and money market securities (i. DEBT SCHEMES :RELIANCE MONTHLY INCOME PLAN (An Open Ended Fund. This income may be complemented by capital appreciation of the portfolio.) The Primary investment objective of the scheme is to generate optimal returns by investing in equity or equity related instruments primarily drawn from the Companies in the BSE 200 Index.e.) The primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital RELIANCE SHORT TERM FUND . investments shall predominantly be made in Debt & Money Instruments. Monthly Income is not assured & is subject to the availability of distributable surplus) The Primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital. RELIANCE GILT SECURITIES FUND (Short Term Gilt Plan & Long Term Gilt Plan Open-ended Government Securities Scheme) .e.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 RELIANCE INCOME FUND (An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal returns consistent with moderate levels of risk.
This income may be complimented by capital appreciation of the portfolio. investments shall predominantly be made in debt Instruments. Accordingly. The scheme shall also invest in Fixed rate debt Securities (including fixed rate securitised debt.(An Open End Income Scheme) The primary investment objective of the scheme is to generate stable returns for investors with a short investment horizon by investing in Fixed Income Securities of short term maturity. RELIANCE LIQUID FUND (Open-ended Liquid Scheme). The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. RELIANCE FLOATING RATE FUND (An Open End Income Scheme) The primary objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitised debt and Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). . investments shall predominantly be made in Debt and Money Market Instruments. Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns RELIANCE NRI INCOME FUND (An Open-ended Income scheme) The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risks. RELIANCE FIXED TERM SCHEME (Close-ended Income Scheme) The primary objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the plan with the objective of limiting interest rate volatility. Accordingly.
Accordingly. Hybrid Option: The primary investment objective is to generate consistent return by . RELIANCE FIXED MATURITY FUND .SERIES I (A Close Ended Income Scheme)The primary investment objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the Plan with the objective of limiting interest rate volatility. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt & Money Market Instruments.SERIES II (A closed ended Income Scheme) The primary investment objective of the Scheme is to seek to achieve growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the respective plans.ended Liquid Scheme) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. investments shall predominantly be made in Debt and Money Market Instruments. RELIANCE REGULAR SAVINGS FUND(AN OPEN . RELIANCE LIQUIDITY FUND (An Open . Equity Option: The primary investment objective is to seek capital appreciation and or consistent returns by actively investing in equity / equity related securities.ENDED SCHEME) THE INVESTMENT OBJECTIVES: Debt Option: The primary investment objective of this plan is to generate optimal returns consistent with moderate level of risk.RELIANCE FIXED MATURITY FUND .
. RELIANCE PHARMA FUND (Reliance Pharma Fund is an Open-ended Pharma Sector Scheme) The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of Pharma and other associated companies. RELIANCE MEDIA & ENTERTAINMENT FUND (Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector scheme). This type of scheme is ideal for investors who have already made up their mind to confine risk and return to a particular sector. Here the portfolio is dispersed or spread across the stocks in that particular sector. RELIANCE BANKING FUND Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the primary investment objective to generate continuous returns by actively investing in equity/equity related or fixed income securities of banks. RELIANCE DIVERSIFIED POWER SECTOR FUND Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme The primary investment objective of the Scheme is to seek to generate consistent returns by actively investing in equity / equity related or fixed income securities of Power and other associated companies.investing a major portion in debt & money market securities and a small portion in equity & equity related instruments. The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies. SECTOR SPECIFIC SCHEMES :Sector Funds are specialty funds that invest in stocks falling into a certain sector of the economy.
striking just the right chord amongst the investor community. Mastergain had garnered Rs. Because markets may rise.29 lac applications. 2008: The recently concluded Reliance Equity Fund NFO has created history with collections of over Rs. NFO collection ever in the history of the Indian mutual fund industry. Went the advertisements. 5700 crore from over 9. 4. Backed by a huge marketing push. the fund has a part of its portfolio hedged.29 Lac applications. The investment strategy being that even if the markets go down. The recent record mobilization in any equity fund was Rs. March 14.855 crore mopped up by SBI Mutual Fund in its Blue Chip Fund that closed this January. It has replaced the 14-year-old record of the UTI Mastergain IPO.SALIENT FEATURES : § Record collection of over Rs. which aims at minimizing the downside risk. 5700 crores from over 9. And markets may fall. the Reliance Equity Fund was launched at a time when the markets were at an all time high and there was a need for such an innovative product. The Reliance Equity Fund aims to capitalize on both the rising and falling markets. The fund has received a tremendous response from investors across the length and breadth of the country. A diversified equity fund with derivative strategies that aim to minimize risk and take advantage of both the rising and falling market conditions. the Reliance Equity Fund NFO collection is the highest ever in the 42-year history of the Mutual Fund industry in the country. 2.472 crore. The fund will not only use hedging techniques to limit the downside risk but will also try & capitalize on short selling opportunities to generate additional returns for the investors § Highest .
Rajagopal Head Equity Investments Madhusudan Kela Equity Fund Managers • Equity Fund Manager .BOARD OF DIRECTORS & MANAGEMENT TEAM • Board of Directors • • • • • Amitabh Jhunjhunwala Amitabh Chaturvedi Kanu Doshi Manu Chadha Management Team • • • • President Vikrant Gugnani Chief Investment Officer K.
Ashish N Mehta • 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 Ramesh Rachuri • 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 • Operations & Settlement Geeta Chandran • • • • Product Management Ramaswamy Subramanian R&T operations Prashanth D Pereira Risk Management Sangya Nigam Sales and Distribution Sundeep Sikka ZONAL HEADS Northern Zone Head Western Zone Head Eastern Zone Head THE SPONSORS. Himanshu Vyapak Devendra Daga Gurbir Chopra .
service. Fosbery Road. The objective of the research is to study and analyze the awareness level of investors of mutual funds through Reliance Mutual fund . is a wholly owned subsidiary of Reliance Capital Limited. 2. 3. returns. Padana Taluka Lalpur.Gujarat. An attempt has been made to measure various variable’s playing in the minds of investors in terms of safety.RELIANCE CAPITAL LIMITED Registered Office Reliance Capital Ltd. . To measure the satisfaction level of investors regarding mutual funds. District Jamnagar 361280 . Reliance Capital Asset Management Ltd. liquidity. Off Reay Road Station (East).400033. the sponsor. tax efficiency. Corporate Office Reliance Capital Ltd. Old ICI Godown. The entire paid-up capital (100%) of Reliance Capital Asset Management Ltd is held by Reliance Capital Ltd. OBJECTIVES OF THE STUDY 1. Mumbai . Village Meghpar.
A. The research process which was followed by me consisted following steps. Such framework is called “RESEARCH DESIGN”.RESEARCH METHODOLOGY My research project has a specified framework for collecting the data in an effective manner. PROBLEM: The problem at hand was to study and measure the awareness level of people regarding mutual funds in the city. DEVELOPING THE RESEARCH PLAN : The development of Research Plan has the following Steps : DATA SOURCES . B.
Sample Size: The sample consisted of 50 respondents. Books. I have collected the information from the respondents with the help of questionnaire ANALYZE THE INFORMATION . survey etc. RESEARCH INSTRUMENT A close friend questionnaire was constructed for my survey. Newspaper & Magazines etc. My major emphasis was on gathering the primary data. COLLECTING THE INFORMATION After this.Two types of data were taken into consideration i. The secondary data has been used to make things more clear. Primary Data: Direct collection of data from the source of information. A Questionnaire consisting a set of questions was presented to respondents for their answers. c. The sample was drawn from walk in customers of Reliance Mutual fund.e. Secondary data & primary data. Contact Methods : I have contacted the respondents through personal interviews. ii. Annual publications. technology including personal interviewing. Sampling Unit: I have completed my survey in Yamuna Nagar District . SAMPLING PLAN The sampling plan calls for three decisions. i. a. b. Secondary Data: Indirect collection of data from sources containing past or recent past information like Bank’s Brochures. The selection of the respondents was done on the basis of simple random sampling.
LIMITATIONS • Due to paucity of time and resources a countrywide survey was not possible. • Since a smaller sample was chosen so it may not be a true representative of the population under study. Thus the whole data was grouped aspect wise and was presented in tabular form.The next step is to extract the pertinent findings from the collected data. I have tabulated the collected data & developed frequency distributions. frequencies & percentages were prepared to render impact of the study. Hence only Yamuna Nagar district has been taken for the study. . Thus.
The possibility of the respondent’s responses being biased cannot be ruled out.
RELIANCE MUTUAL FUND,
o INHOUSE IFA’S
o KARVY BACKEND SERVICE
BANKSPRIVATE BANKS PUBLIC SECTOR BANKS
OPERATIONS AND CUSTOMER SATISFACTIONS
IMPORTANCE OF OPERATIONS AND CUSTOMER SATISFACTION What makes service industry so distinct from manufacturing ones is their immediacy. Balancing the supply and demand sides is not easy. Services are direct; they cannot be inventoried. The perishability of services leaves the manager without an important buffer that is available to manufacturing managers. Whereas the consumption of goods can be delayed, as a general rule services are produced and consumed almost simultaneously. There is a high degree of producer consumer interaction in the production of service, which is a mixed blessing; on the one hand, consumers are a source of productive
capacity, but on the other, the consumer’s role creates uncertainty for managers about the process’s time, the product’s quality, and the facility’s accommodation of the consumer’s needs. Operations form the spinal cord, which supports the organization. It not only helps in saving huge amount of hidden cost but it also generates huge amount of profit as in the process of handling queries it creates a sale. Furthermore, it supplies adequate information to each and every person associated with the organization. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes.
Barnes’ 4 R’s
Customer Retention Customer Referrals Customer Relationships Recovery
Custome r Satisfact ion
Custome r Retentio n& Increase d Profits Employe e Loyalty
.m. post-dated cheques or incomplete bank details. Rejection can be arise by mis-matching of signatures... His signature. keep all record & then send to near Karvy Branch. At the time of punching. Address.m. Broker’s code. Out of these. Cheques are then send to respective Bank. When customers apply in particular fund then they receive statement next day. Keep all record of rejection of cheques for future references. HDFC bank give report about the clearance or rejection of the cheques to Karvy. A DTR (Daily Transactions Record) prepares to keep a track of the transactions. Applications.• • • • • • • • • • Receiving of applications from different brokers. one should be on application form. Banks & investors directly before 3 p. one on the backside of the cheque & the third stamp is for the purpose of customers on acknowledgement. Pan no. Hyderabad & send cheques to HDFC bank. Applications. Scrutinize the applications for investor’s Bank Account no. & then Karvy put data punching in K-BOLT (Karvy Branch Online transactions) Send scan image or hard copy of transactions & DTR report to Karvy Head Office. The respective amounts are credited into the bank accounts of various schemes of Reliance Mutual fund. it should be noted that the punching machine releases the same stamp. if related to liquid funds then we do all punching. Make sure the cheque is not post-dated & it should be of local clearing with customer’s signature. KARVY BACKEND SERVICE • • • • Receive applications from our office after 3 p. if related to non-liquid funds then we only put time punching on that & send to the Registrar Karvy Branch.
Operations required a lot of observation and involvement in the day-to-day working and grasping things rapidly. Wrong updation of Broker’s code No information about rejection. Karvy Head Office sends all record to Reliance Head Office. Mumbai. The foremost was how one can improve the systems to help the individual working at the reception to minimize his time in searching for things like papers. SALES . and thereby maximizing time with the investor by assisting him promptly and efficiently which is only possible if things are organized. The major areas of Queries by: INVESTORS • • • • • Non receipt of statements Corrections in the details in the statement Problem in SIP/STP Non-receipt of dividend cheques Non-receipt of redemption amount BROKERS • • • • Delay in brokerage No updation of Broker’s code in switch transactions.• • • If cheque clears then the respective amount credited into bank accounts of various schemes of Reliance Mutual Fund. files etc.
greedy. Salespeople whose goal is to just get the sale and not worry about the customer satisfaction are doomed to failure. Professional selling requires knowledge and skills that must be learnt over time. This is especially true in business-to-business selling situations where the amount of promotional expense allocated to support a sales force far exceeds expenses for advertising. you can Make a fortune. successful selling requires the establishment of strong relationships with customers. they will swallow you. Many people. or some other unkind adjective. . Yet professional selling is not what most people think. instantly use terms such as pushy. the competition will bite you if you keep running. Also. . If you stand still. which involved right from learning about the basic . During my training with Reliance Mutual Fund. when asked what they think of salespeople. relationships that are intended to last for a long time.In business. Knudsen If you make a sale you make a living.Jim Rohn Selling is a highly misunderstood profession.William S. If you make an investment of time and good service In a customer. Professionally trained salespeople are among the most important individuals within many companies. initially I was given an overview of the entire working of the organization.
Organizing skills are also developed. sales channel of Reliance mutual fund includes: . I also got the opportunity to interact with the industry and do direct selling to Individual customers as well as corporate customers. Developing and maintaining relationships As u know. maintaining relationships with the distributors and that with the banks. An activity such as Direct Sales infuses selling confidence. Lead generation and materializing sales. The fund house offers a varying range of funds in equity as well as debt.Plans & options . • • • • Improves communication skills.Last but not least position of the funds in the market vis-à-vis competitors.Investment objective . PRODUCT TRAINING : The first phase of my training involved understanding and learning about the products as offered by Reliance Mutual Fund.Load structure .performed operations. My learning involved a core understanding on: .Type of schemes .Features available .Past track record of funds .
which generate a decent size of business from the distributors. MY ROLE • • Call them daily & try to make aware about our schemes. he gave me seven distributors name and address that are not giving good business to the company. Hence it is very essential for the fund house to maintain healthy working relationships with the distributors. • • • • • • • . they can make investments in SIP rather than lump sum amount. that was either in the form of low business or irregular business. I was given the responsibility to activate such distributors for RMF (Chandigarh). if they start doing a business of 5 lakhs in a month. Called them to come our office on tea for meeting & discussion Company also offers a surprise gift to them. So there. Hence. Try to make clear picture about other mutual funds also. Also told them. He has achieved success in this regard to a huge extent. I visited to their office personally if required. IFA (Individual financial Agents) channel. While my training. Making the aware of the risk & profit margin regarding schemes. Sometimes. Same is the case with Reliance Mutual funds. if they face any problem. Moreover a distribution house is an agent of mutual funds of a number of fund houses. Rominder Singh. But I did it very passion sly. which needed to be revived in terms of the business that they were generating for the fund house. which is handled by Mr. my duty was to call them or visit individually but have to make generate business from them. But there were certain distributors. interesting and challenging one for me. It was very good. Complete product training to the direct selling agents of the distribution house. Send daily NAV sheet to them by SMS or through Email so that they make comparison between our funds & others funds.The distributions houses generate a huge chunk of business for any fund house.
Training of new relationship manager to these location Increasing in visibility • • • BANKS & CORPORATES The banks generate a huge chunk of business for any fund house. Hence. High level of motivation achieved. handled by Mr. They achieved success in this regard to a huge extent. that was either in the form of low business or irregular business. which needed to be revived in terms of the business that they were generating for the fund house. Moreover a bank is a distributor of mutual funds of a number of fund houses. LTD R.D.The following are the results of various distributors. Vinay Khera (Branch Head) & Mr. OF S.NO. which generates a decent size of business from the banks. But there were certain bank branches. . NO. Same is the case with Reliance Mutual Funds. INVESTORS BAJAJ CAPITAL Daily average applications from these distributors picked up from 21 to 35 in span of 3 weeks. I was given the responsibility to activate such branches for Reliance Mutual Fund (Chandigarh). Nishant Mahajan (Territory Manager). 4 2 3 4 4 4 3 MASTER TRUST KARVY VIKSON INVESTMENTS INNOVATIVE CONSULTANTS B. The bank relationship here at Reliance Mutual Funds (Chandigarh).R.S. Hence. NAME OF DISTRIBUTORS 1 2 3 4 5 6 7 OUTCOME • TOTAL BUSINESS GENERATED 20000 2000(SIP) 1500(SIP) 3500(SIP) 5000(SIP) 22000 15000 APP. it is very essential for the fund house to maintain healthy working relationships with the bankers.
I did various following steps to generate business: • • • • • • Complete product training to the direct selling of the agents of the banks Makes the sales manager aware of the risk & profit margin Send daily NAV sheet of our schemes by SMS or through EMAIL Try to make clear information about others Mutual Fund house also Done meeting with them to reduce their doubts. The following are the results of various banks: NAME OF BANK S. 1 2 3 BRANCHES PNB BANK. 7 MOHALI OUTCOME • Daily receive applications from these banks picked up from 15 to 23 in span of 3 weeks. 3 3 4 4 3 TOTAL BUSINESS GENERATED 20000 2000(SIP) 1500(SIP) 22500 5000(SIP) 4 PKL 5 HDFC BANK. Sec. Sec. OF APP. Makes the sales manager or financial advisors aware of the latest offers and news from RMF.NO.32 CHD INDUSIND BANK. My job further extended to collect new database of customers for them. PH. Sec. handling customers queries on the mutual funds and at some branches reviving existing customers for making in further investments. Sec. 8 CHD CPOB BANK. 9 CHD UTI BANK. High level of motivation achieved Training of new Territory Manager to these location Increasing in visibility • • • . 11 NO.MY ROLE They instruct to look after the five banks. which were not performing business.
there was exhibition. 8 investors invested in various schemes. I attended 30 customers. and then I make them aware (what is risk & profit) and later on. 4 customers invested in SIP & 4 invested in lump sum. which was held in Hotel Shivalikview in which I had to promote SIP of various schemes related to equity. OPERATIONS AT RELIANCE MUTUAL FUNDS. Collections of funds by investments done by Investors directly Through brokers Through bank agents .While my training. some of them don’t know about mutual fund.
COMPLAINT MANAGEMENT MODULE :The general aim of a complaint management system is to restore customer satisfaction. The respective amounts are credited into the bank accounts of various schemes of reliance mutual fund The collected amount is then informed to the fund manager who utilize that amount accordingly The fund managers utilize the amount keeping aside the amount required for redemption.Applications submitted before 3’o clock are time stamped A daily transactions report of the stamped applications is prepared to keep a track of the transactions taking place on daily basis Collected applications are then send to karvy All the necessary data is entered for each and every application The cheques are then submitted in the HDFC bank. After performing a quality check statements are sent to the investors. The hard copy of applications is sent to the head office of the registrar (karvy) that is in Hyderabad where managers do a quality check for every application. OBJECTIVES: . minimize the negative effects of customer dissatisfaction and to identify and review company’s structural and process weaknesses.
Analysis and usage of complaint information. Implementation and clarification of a customer-oriented company strategy. It is created to ensure customer delight. Reduction of internal and external error costs. COMPLAINT LOGBOOK FORMAT :- Complaint Serial # Date Name of the Person Calling Contact # Address (if required) . This module is created as user friendly and keeping in mind the above objectives on an excel sheet. Restoring (complaint) satisfaction. As in the future the differentiating point between products and services is going to be how customers are handled effectively and timely. Influencing word of mouth communication.
Email Address (if Required) Fax #(if required) Name of the Client Folio # Contact # Address (if required) Email Address (if Required) Fax #(if required) Nature of Complaint If any Other Please Mention Consignment #(if required) Name of the Person Contacted for Resolving the Problem Contact # Action Taken If any Other Please Mention Resolved If Unresolved Please Mention Reason GRAPHICAL PRESENTATION Q. ARE YOU AWARE OF THE MUTUAL FUND SCHEME BEING OFFERED BY VARIOUS INSTITUTION? YES NO 100% 0 .
IF YES . ARE YOU INVESTING IN THEM? 100 Y E S NO 0 . Q.Response of Awareness amonf the investors 150% 100% 50% 0% YES 0 NO 100% Series1 INTERPRETATION According to the respondents taken by me for my research all of them are aware about the mutual funds offered by various institutions.
% of Investors 120% 100% 80% 60% 40% 20% 0% 100% 0 YES NO INTERPRETATION According to the respondents taken by me all of them are invested in mutual funds. OUT OF THE FOLLOWING IN WHICH MUTUAL FUND YOU ARE INVESTED? NAMES PERCENTAGE . Q.
32% invest in reliance due to its goodwill . WHICH FACTOR INFLUENCES YOU MOST TO INVEST IN MUTUAL FUNDS Factors Percentage . 10% in SBI and 4% in ICICI prudential. Q.TATA MUTAL FUND 14% FRANKLIN TEMPLTON 40% RELIANCE 32% ICICI PRUDENTIAL 4% SBI 10% OTHER - % of investors in various mutual fund companies 0% 10% 4% 32% 14% TATA MUTAL FUND FRANKLIN TEMPLTON RELIANCE ICICI PRUDENTIAL 40% SBI OTHER INTERPRETATION According researcher sample size 40% investor invest in franklin templeton because it’s a very old company and having good market experience.
14 % of the investors choose high returns as the important factor and 12% of investor choose because of less risk. Above all one thing is there that all the above factors are very important.16% of the investors think that tax benefit is the most important factor . . 34% of the investors preferred liquidity as the most important thing.Less Risk 12% High Returns 14% Liquidity 34% Safety 24% Tax benefit 16% Factor responsible for the invest 40% 30% 20% 12% 10% 0% Series1 34% 24% 14% 16% Percentag e of Responde nts Less 12% High 14% Liquidi 34% Safety 24% Tax 16% Factors Responsible INTERPRETATION When asked that what factor affect most while investing in Mutual Funds. most of respondents chose liquidity as the most important factor. 24% investors choose safety. An investor keeps in mind all the factors while investing.
Very few invest for more then 5 years. Most of the investors prefer to invest for 1 to 5 years. . Only 4% invest for more then 5 years.Q. 26% invest for a time period of 6 month to 1 year. About 40% invest for 1 to 3 years and about 10% invest for 3 to 5 years. WHAT IS YOUR INVESTMENT ? AVERAGE TIME HORIZON OF Percentage Time-Horizon 6 mon – 1yr 26% 1 yr – 3 yr 40% 3 yr – 5 yr 10% More than 5 yr 4% % of investors average time 50% 40% 30% 20% 10% 0% 40% 26% 10% 4% More than 5 yr 6 mon – 1yr 1 yr – 3 yr 3 yr – 5 yr INTERPRETATION Of the total respondents considered for the survey.
Q. 56% of the investors invest in pure equity funds. 30% prefer investing in balanced funds and only 14% of the investors invest in debt funds. WHICH SCHEME WOULD INVESTING IN MUTUAL FUNDS ? YOU PREFER WHILE Various Schemes Percentage Debt 14% Equity 56% Balanced 30% % of investors preference in various Mutual fund schemes 14% Debt Equity Balanced 56% 30% INTERPRETATION As the market conditions have changed. . investors are taking risk.
Q. . OUT OF THE FOLLOWING WHICH OPTION WOULD YOU PREFER? Open ended 74% Close ended 26% 26% Open ended Close ended 74% INTERPRETATION 74% Investors opt open ended because this option will increase the level of liquidity and 26% investor opt close ended option.
36% the investors . Around of the investors prefer SIP at this stage of market.Q DO YOU PREFER SIP (SYSTEMATIC INVESTMENT PLAN) OR INVESTING LUMP SUM ? FACTOR PERCENTAGE SIP 48% Lump sum 36% Depends upon financial conditions 16% 16% SIP 48% 36% Lump sum Depends upon financial conditions INTERPRETATION It depends upon the availability of funds that whether an investor should opt for SIP or lump sum.
Q.prefer investing lump sum. WHICH FACTOR INFLUENCE YOU MOST TO INVEST THROUGH RELIANCE MUTUAL FUND ? FACTORS PERCENTAGE RELIANCE SERVICES 20% SAFETY 42% WORD OF MOUTH 14% ADVERTISEMENT 6% PAST EXPERIENCE 18% RELIANCE SERVICES SAFETY WORD OF MOUTH ADVERTISEMEN T 42% PAST EXPERIENCE 18% 6% 14% 20% INTERPRETATION . 16% of the investors said it depends upon the availability of funds.
Q. 42% investors choose safety. TO HOW MUCH EXTENT ARE YOU SATISFIED WITH THE SERVICES OFFERED BY RELAINCE ? 80% EXTREMELY SATISFIED SATISFIED TO LESSER EXTENT 10% DISSATISFIED TO LESSER 5% EXTENT EXTREMELY DISSATISFIED 5% % OF INVESTORS SATISFACTION 5% 5% 10% LEVEL EXTREMELY SATISFIED SATISFIED TO LESSER EXTENT DISSATISFIED TO LESSER EXTENT 80% EXTREMELY DISSATISFIED .When asked that what factor affect most while investing in Mutual Funds through Reliance Mutual fund than wide preference is given to safety.14% word of mouth and 6% advertisement.18% past experience .20% Reliance services .
10% are satisfied to lesser extent .INTERPRETATION Out of the respondents 80% are extremely satisfied with the services offered by Reliance Mutual fund . AS EQUITY MARKET IS GROWING WHAT ACCORDING TO YOU IS THE FUTURE OF MUTUAL FUNDS? DEGREE Very strong Strong Moderate PERCENTAGE 35% 50% 15% 15% 35% Very strong Strong Moderate 50% . Q.5%are extremely dissatisfied.
50% of the investors say that future is strong and only 15% said that future is moderate. 35% of the investors say that future is very strong. it results in loss of trust of the customers that might further lead to spreading a bad word of mouth about the organization. .INTERPRETATION As Indian equity market is growing the future of mutual funds is very bright. During this procedure at times the cheques get misplaced leading to inconvenience to the customer. Hence a board displaying the NAV’S should be put up at the front desk itself so that it would save the time of the person at the reception and he could focus on other queries of the customers. This would help us in saving time and tracking the query more efficiently and providing quick services to the customers. • Whenever the management declares dividend. Due to lack of communication regarding the status of their query. This would not only result in cost efficiency for the registrar but also in better management in giving cheques to the customers. Hence a provision should be there so that the cheques of a particular AMC should reach that AMC only. • One way to combat this problem is by having tie-ups with more number of banks regarding direct credit facility. the registrar from Hyderabad releases the respective cheques. RECOMMODATION INCREASING CONSUMER PARTICIPATION • One of the most frequently asked queries by the customers is the current NAV’S. • Non-receipt of dividend cheques is a major issue with the customers. Also it would help in reverting back to the customer query more quickly and efficiently.
• The major problem that I encountered over here was that most of the complaints of the customers went unregistered. Due to large number of investors it becomes very essential for a complaint logbook. • Brokerage problems arise because of quarterly basis. Payment schedule should be changed. Brokers should receive their brokerage by monthly. Not having the proper record of their meeting with the financial consultants of banks Problem of not receiving the brokerage on time . As a result of which most of the times one lost track about the status of the query. which is not good for any organization. as a dissatisfied customer would spread a bad word of mouth. FINDINGS • • • Not send NAV sheet to their regular bankers.
BIBLIOGRAPHY WEBSITES: • • • • • www.amfiindia.com www.google. July 2006 Marketing Management – Philip Kotler howhohiow .valueresearchonline.reliancemutual.com www.com www.org BOOKS & MAGAZINES: • • Business world.com www.rbi.
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