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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.
GROWTH FUNDS Growth funds predominantly invest in stock market securities and carry risks larger than income funds. OPEN ENDED FUNDS Funds in which investor can invest & withdraw whenever he wishes. . 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. 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. 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. Equity funds may earn higher but they also carry larger risks. after the close of initial offer. For risk taking investor equity are best suited. Close-ended funds mature after a specified period. CLOSE ENDED In a close-ended fund an investor is allowed to subscribe only during the period of the initial offer. Withdrawals are allowed at NAV minus a back end load.INCOME FUND These Funds invest largely in fixed income securities like bonds and debentures. their scale may fluctuate depending upon the prevalent interest rates and credit quality of the debt securities.
perform data entry services and dispatches account statements. REDEMPTION Disbursement of the unit capital on maturity of the scheme to all exiting unit holders. it provides required services like system capabilities back up. and regulated by SEBI. CUSTODAIN Banking organization that keeps in safe custody all the securities & other instruments belonging to the fund to insure smooth inflow & outflow of securities. It is also approved regulated and registered with SEBI. . monitored. REGISTRAR Organization appointed by an AMC to the schemes it is registered. 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.LOCK IN PERIOD Period of time during which you can neither redeem nor transfer your holdings to others. it could be charged to the scheme irrespective of the performance of the scheme. MARKET PRICE Price at which units of mutual funds are quoted in stock exchange where they are listed. 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. accepts and processes investors applications in informs AMC about amounts received/disbursed for subscription/ purchase/ redemption it also handles communications with investors.
well monitored & transparent working of AMC is regulated by SEBI it is audited weekly. Mutual funds incur many expenses during an issue. . and its NAV is calculated and published daily so that there is no chance of any default in the working of Mutual Funds. it has to work under strict guidelines issued by SEBI.EXIT LOAD Value of deduction from NAV on the date when one choose to withdraw from a fund. their functioning is very efficient. 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. TRANSPARENCY Basic feature of mutual funds is transparency. Such load is called entry load. LIQUIDITY Ability of investors to change its unit into cash within minimum time as and when he needs money. which are charged to the scheme. ENTRY LOAD Charge paid by unit holder when he invests an amount in the scheme.
Apart from that. . Investors of mutual funds are known as unit holders. You are not the only one. you probably have most of your money in a bank savings account and your biggest investment may be your home. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. This is why investing through mutual funds has become such a popular way of investing. investing is probably something you simply do not have the time or knowledge to get involved in. 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.INTRODUCTION CONCEPT OF MUTUAL FUNDS These days you are hearing more and more about mutual funds as a means of investment. The mutual funds normally come out with a number of schemes with different investment objectives. The investors in proportion to their investments share the profits or losses. If you are like most people. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced.
is reflected in the NAV or distributed as income. are shared by the investors in same proportion as the number of units owned by them. MUTUAL FUND V/S BANK DEPOSIT When you deposit money with the bank. The profit. The investors buy units of a fund that best suits their investment objectives and future needs. the bank is supposed to return the principal amount and interest to you. on your behalf. if any. is to be borne by you. after charging for the AMC fees.which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI). 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. money market instruments etc. the investments of a particular investor remains identifiable to him. is in turn invested by the manager. with the expenses. 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. less expenses of the manager. . the bank promises to pay you a certain rate of interest for the period you specify. in a mutual fund. Here the gain or loss of all the investors will be different from each other. the money you invest. debt. if any. as per the investment strategy specified for the scheme. On the date of maturity. The income earned and the capital appreciation realized by the scheme. which regulates securities markets before it can collect funds from the public. Likewise. A Mutual Fund invests the pool of money collected from the investors in a range of securities comprising equities. Whereas. loss. MUTUAL FUNDS V/S PORTFOLIO MANAGEMENT SCHEMES In case of mutual funds.
Capital Appreciation: An increase in the value of the units of the fund is known as capital appreciation. As the value of individual securities in the fund increases.Capital Appreciation or Dividend Distribution.TYPES OF RETURNS FROM A MUTUAL FUND :Mutual Funds give returns in two ways . the fund's unit price increases. . An investor can book a profit by selling the units at prices higher than the price at which he bought the units. 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. It can either be reinvested in the fund or can be on paid to the investor.
of Outstanding Units The NAV reflects the liquidation value of the fund's investments on that particular day after accounting for all expenses. There are liabilities of short-term nature. Net Asset Value is the market value of the securities held by the scheme. In simple words. In mutual funds it is not treated as a liability.MUTUAL FUND TERMINOLOGY NET ASSET VALUE (NAV) Net Asset Value (NAV) denotes the performance of a particular scheme of a mutual fund. Investments made on behalf of the investors are reflected on the assets side of the balance sheet. Unit Capital is the investor’s subscriptions. Since market value of securities changes every day. 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. 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. Fund’s Net Asset = Asset – Liabilities Net Asset Value = Net Assets of the scheme / No. . NAV of a scheme also varies on day-to-day basis.
• 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. 10 each to the investors. Other assets and liabilities.20.daily or weekly .depending on the type of scheme. . then the NAV per unit of the fund is Rs. Dividend and income earned on the assets. Capital Appreciation in the underlying value of the stocks held in the portfolio. 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). The entry load percentage is added to the NAV at the time of allotment of units. 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. 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. Number of units sold or purchased. NAV is required to be disclosed by the mutual funds on a regular basis . The exit load percentage is deducted from the NAV at the time of redemption or transfer between schemes.For example.
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.SALE PRICE It is the price paid by an investor when investing in a scheme of a Mutual Fund.
MUTUAL FUND ORGANIZATION:There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund: .
Most of its investors believe that the UTI is government owned and controlled. is the biggest scheme with a corpus of about Rs200bn. while legally incorrect. income etc with some being openended and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64. equity. The UTI has many funds/schemes in all categories i. which is a balanced fund.ORGANISATION OF MUTUAL FUND INDUSTRY STRUCTURE OF THE INDIAN MUTUAL FUND INDUSTRY : The Unit Trust of India dominates the Indian mutual fund industry.e. balanced. UTI was floated by financial institutions and is governed by a special act of Parliament. is true for all practical purposes. which has a total corpus of Rs700bn collected from more than 20 million investors. which. .
TRUST The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act. The aggregate corpus of funds managed by this category of AMCs is about Rs150bn. The trust deed is registered under the Indian Registration Act. GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. TRUSTEE Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). 1996. 1908. 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. 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 .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. Can bank Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. 1882 by the Sponsor.The second largest category of mutual funds is the ones floated by nationalized banks. 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 largest of these are Prudential ICICI AMC and Birla Sun Life AMC.
The AMC must have a net worth of at least 10 crore at all times. The registrar and transfer agent also handles communications with investors and updates investor records. D. 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. Ground Floor. The Custodian is approved by SEBI under registration no. Deutsche Bank. The Registrar processes the application form. REGISTRAR AND TRANSFER AGENT The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund.Road. AG located at Kodak House. IN/CUS/003 to act as Custodian for the Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. 1996.Investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations. redemption requests and dispatches account statements to the unit holders. Mumbai-400 001. A Custody Agreement has been entered with Deutsche Bank in accordance with SEBI Regulations. 222 Dr. the provisions of the Trust Deed and the Offer Documents of the respective Schemes. which will have the physical possession of all the securities purchased by the mutual fund. CUSTODIAN Custodian is the agency. AG • The Trustee has appointed Deutsche Bank. . as the Custodian of the securities that are bought and sold under the Scheme. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner.N. ASSET MANAGEMENT COMPANY (AMC) : The Trustee as the Investment Manager of the Mutual Fund appoints the AMC.
FUND STRUCTURE Fund Sponsor Trustees Asset Management Company Depository Agent Custodian .
They thoroughly analyze the markets and economy to pick good investment opportunities. so the risk is diversified at the same time taking advantage of the position it holds.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. However. Mutual Funds clearly layout their investment strategy to the investor. A fund normally invests in companies across a wide range of industries. thus increasing his or her risk. 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. Also in cases of liquidity crisis where stocks are sold at a distress. Transparency and interactivity: Mutual Funds regularly provide investors with information on the value of their investments. Mutual Funds also provide complete portfolio disclosure of the investments made by various schemes and also the proportion invested in each asset type. experience and resources manage the pool of money collected by a mutual fund. a mutual fund will spread its risk by investing a number of sound stocks or bonds. Spreading Risk: An investor with a limited amount of fund might be able to to invest in only one or two stocks / bonds. . Liquidity: Closed ended funds have their units listed at the stock exchange. thus they can be bought and sold at their market value. mutual funds have the advantage of the redemption option at the NAVs. Such a spread would not have been possible without their assistance. Choice: The large amount of Mutual Funds offers the investor a wide variety to choose from.
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. Other Advantages of investing in a Mutual Fund are: • • • • • • Diversification Convenient Administration Return Potential Low Costs Flexibility Tax benefits .
the Unit Trust of India Act 1963 was repealed and UTI was broken into two separate entities. 67.004 million. PNB. Unit Trust of India (UTI) was established in 1963 and launched its legendary first scheme 'US-64' in 1964. It is registered with SEBI and functions under the Mutual Fund Regulations. Detailed guidelines were established and the mutual fund industry (except UTI) came under the regulation of Securities Exchange Board of India (SEBI). paving the way for an unprecedented choice of products and services to Indian investors. BOB and LIC. 1. One is the Specified Undertaking of the Unit Trust of India. The mutual fund industry was opened up for private participation 1993 and a new era was ushered in.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. still under the control of Government of India with AUM of Rs. UTI witnessed a slow and steady growth over seventies and eighties and by end of 1988 it had an AUM of Rs. In February 2003. 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. with assets under . The second is the UTI Mutual Fund Ltd. As at the end of October 31. Alliance. From 1987. Many reputed foreign mutual funds such as Templeton. 2003.218.000 million. Prudential group etc. there were totally 31 funds in India. As at the end of January 2003.350 million as at the end of January 2003. sponsored by SBI. there were 33 mutual funds with total assets of Rs. 470. non-UTI.050 million. set up operations in India.INDIAN MUTUAL FUND INDUSTRY The history of Indian mutual fund industry can be distinctly divided into two phases . 298.
there were 29 funds. As at the end of March 04. the total of mutual fund reaches to 1. which manage assets of Rs. As the end of September 2004.396. But at the end of financial year (05-06) the total of Mutual Fund reaches Rs. 2318620 million.management of about Rs. 1.260 million. 1531080 million under 521 schemes.160 million. The MAJOR PLAYERS in the Indian Mutual Fund Industry are: GROWTH IN ASSETS UNDER MANAGEMENT .267.
LlC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. SECOND PHASE -1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) 1987 marked the entry of non. 004 crores. Bank of Baroda Mutual Fund (Oct 92). At the end of 1988 UTI had Rs. Punjab National Bank Mutual Fund (Aug 89).At the end of 1993. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LlC) and General Insurance Corporation of India (GIC). Indian Bank Mutual Fund (Nov 89). the mutual fund industry had assets under management of Rs.47.UTI. SBI Mutual Fund was the first non.1964-87 An Act of Parliament established Unit Trust of India (UTI) on 1963. at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases FIRST PHASE . THIRD PHASE 1993. 700 crores of assets under management.6.1996 EMERGENCE OF PRIVATE FUNDS . The first scheme launched by UTI was Unit Scheme 1964.UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87). Bank of India (Jun 90). 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 (lOBI) took over the regulatory and administrative control in place of RBI.HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.
both SEBI and AMFl launched investor awareness programmed aimed at educating the investors in investing through mutual funds.1996-1999: GROWTH AND SEBI REGULATION Since 1996 the mutual fund industry in India saw tighter regulation and higher growth. 2. This gave the Indian investor a broader choice of fund families and an increasing competition to the existing public sector funds. Investors now clearly saw the benefits of investing through mutual funds and became discerning and selective. The factors that contributed to greater inventor’s confidence were: 1.1999-2004: EMERGENCE OF LARGE AND UNIFORM INDUSTRY The other major development in the fund industry has been the creation of level playing . investment management techniques and investor servicing technology that make the Indian mutual fund industry today a vibrant and growing financial intermediary. s regulatory framework for the Indian mutual fund industry. FOURTH PHASE . Quite significantly. The development of SEBI. It scaled new heights in terms of mobilization of funds and number of players.A new era in the Mutual Fund industry began in 1993 with the permission granted for the entry of private sector funds. The steadily improving performance of several funds houses. Measures were taken by SEBI to protect the investor and by the Government to enhance investor's returns through tax benefits. During this phase. These regulations set uniform standards for all funds. foreign fund management companies were also allowed to operate mutual funds. A comprehensive set of regulation for all mutual funds operating in India was introduced with SEBI Regulation s. FIFTH PHASE . 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. 1996. These private funds have brought with them the latest product innovation. .
the size of the industry has doubled in terms of assets under management. SIXTH PHASE .2004: CONSOLIDATION AND GROWTH The industry has lately witnessed a spate of mergers and acquisitions. 6800 to over Rs. which have gone from about Rs.The mutual fund industry has entered its current phase of consolidation and growth. This happened in February 2003. 150. there were 29 funds. As at the end of September 2004.153108 crores under 421 schemes. .000 crores.field for all mutual funds operating in India.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. At the same time. most recent one being the acquisition of schemes of Alliance Fund by Birla Sun Life etc. Within the growing industry relative market shares of different players in terms of amount mobilized and assets under Management has also undergone changes. when the UTI Act was repealed . Between 1999 and 2005. more international players continue to enter India . which manage assets of Rs.
The table below gives an overview into the existing types of schemes in the Industry.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.
which are declared on a daily basis. UTI MIP offers a repurchase after 3 years. Units’ maybe traded at a discount or premium to NAV based on investor’s perception about the funds future performance and other market factors. • • Fund is open for subscription only during a specified period at the time of launch of the scheme. 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. Fund size and its total investment go up if more new subscriptions come in than redemptions and vice-versa. .g.TYPES OF MUTUAL FUNDS SCHEMES : Mutual fund schemes may be classified on the basis of its structure and its investment objective. • • • Investors are not allowed to buy or redeem the units directly from the funds. Some funds offer repurchase after a fixed period. For example. The key feature of open-end schemes is liquidity. Unit capital of the fund is not fixed but variable. 5-7 years. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. CLOSE-ENDED FUND/SCHEME • Stipulated maturity period e. BY STRUCTURE: OPEN-ENDED FUND/ SCHEME • • • • • • Available for subscription and repurchase on a continuous basis.
the fund shares could be trading at a discount or premium. Examples include buying illiquid securities or using leverage. • • . are open to new investors (they can create as many shares as needed). sell high. on the other hand. Remember. However.DIFFERENCE BETWEEN OPEN-END AND CLOSED-END FUNDS Open-end funds. Closed-end funds can sometimes be sold at a premium. also known as mutual funds. They also trade according to market demands. Closed-end funds are generally riskier. Closed-end funds have access to some investments and strategies that mutual funds shy away from. which could work against you. Closed-end funds. have a fixed number of shares. ADVANTAGES OF CLOSED-END FUNDS • Closed-end funds can sometimes be purchased at a discount. meaning they are trading below their NAV. • • DISADVANTAGES OF CLOSED-END FUNDS • As mentioned above. When a mutual fund closes. Every seller must have a buyer. 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. Closed-end funds are plagued with broker trading fees. when a mutual fund closes to new investors it does not make it a closed-end fund. buy low. Much like a new publicly traded stock. they don't need to find a buyer. closed-end funds have an IPO.
INTERVAL FUNDS. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. BY INVESTMENT OBJECTIVE: GROWTH FUNDS The aim of growth funds is to provide capital appreciation over the medium to longterm. meaning they are much harder to sell. have outperformed most other kind of investments held over the long term. Unlike mutual funds. .• Closed-end funds are less liquid. It has been proven that returns from stocks. 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. As a general rule. Such schemes normally invest a majority of their corpus in equities. • 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. yet providing reasonable liquidity. • 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. open-end funds attract better management talent because they can grow by attracting new investors over time.
but also by private companies. moderate capital appreciation and preservation of capital.INCOME FUNDS • Invest in debt instruments issued not only by government. . Are best suited for the medium to long-term investors who are averse to risk and seek capital preservation. Carry both credit risk and interest rate risks. Ideal for investors with a conservative and long-term orientation. and preference and equity shares. • • • Almost equal proportion of debt/money market securities and equities. banks and financial institutions and other entities such as infrastructure companies/utilities. convertible securities. • • • • • • Target low risk and stable income for the investor and not capital appreciation. Normally funds maintain a Equity-Debt ratio of 55:45 or 60:40. Objective is to gain income. Debt funds can be categorized further based on their risk profiles. 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. Have higher price fluctuation as compared to money market funds due to interest rate fluctuation. Have a higher risk of default by borrowers as compared to Gilt funds.
Typically entry and exit loads range from 1% to 2%. a commission will be payable. It could be worth paying the load. • • • • • • Aim to provide easy liquidity. NO-LOAD FUNDS A No-Load Fund is one that does not charge a commission for entry or exit. government securities and inter-bank call money.TYPES OF HYBRID FUNDS • • • Balanced funds.seek to provide high dividend and capital appreciation Asset allocation funds. each time you buy or sell units in the fund. Commercial Paper issued companies.flexible asset allocation between debt equity and Money Market MONEY MARKET FUNDS • • Invest in securities of short-term nature I. These funds are ideal for Corporate. less than one-year maturity. Invest in Treasury bills issued by government. Have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. That is. That is. preservation of capital and moderate income. institutional investors and business houses LOAD FUNDS A Load Fund is one that charges a commission for entry or exit. if the fund has a good performance history. Certificates of deposit issued by banks.seek to provide regular income and capital appreciation Growth income funds. High liquidity and safety of principal Low risk and low returns Period of investment could be as short as a day. no .e.
SPECIAL SCHEMES Industry Specific Schemes Industry Specific Schemes invest only in the industries specified in the offer document.commission is payable on purchase or sale of units in the fund. FMCG. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. 2000 and the amount is invested before September 30. 1961. The advantage of a no load fund is that the entire corpus is put to work. 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. . The investment of these funds is limited to specific industries like InfoTech. 2000. which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings. 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. 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.
availing of the interest rate swings is allpossible through the diversified or sector dedicated as well as Debt funds. the liquidity position is tightening. CHECK OUT THE MACROS Don’t just blindly look at every new float as an opportunity to invest. always keep the background in mind. just a thorough read of the newspaper everyday will give you all this dope. . inflation is up.000 minimum to start investing in shares of sensex pivotal. where the economy is in a downtrend. So today one doesn’t need Rs. sector concentration. and liquidity position in the markets? Don’t be alarmed by all the economic jargon. An indication of this is the number and variety of funds offered by the issuers. 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. As you would do with investing in the market directly. as well as the depth of the market in terms of the secondary trading. perhaps you can wait to pick up the new float after it is listed rather than at the time of the offer. 100. industrial growth. What are the current economic scenario. Also diversification. and the funds are usually liquid.LOOK BEFORE INVESTMENT The mutual funds industry in India has also finally come of age. One can invest in them for as little as Rs 1000. Against a turbulent background.
which normally happens when the liquidity position is loose in the market. In case the sensex has been consistently on a high. as these prices may be difficult to reach again. watch the sensex has it been rising or falling. Remember the basic rule .-overall economic scenario . specific service standards promised (like maximum time to be taken in mailing repurchase/redemption proceed). the fund will invest your money into scrip’s at these high prices. Other aspects like availability of an exit route. As we had mentioned earlier timing the market is the essence of success. 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. When one goes up. the other comes down. What is the parentage of the Fund house proposing the issues what has been their past in terms of good management and reporting practices. INTEREST RATES AND LIQUIDITY In case you are keen on a balanced or debt fund. dispatch of dividends and certificates etc? Their financial performance in terms of dividend and NAVs. track record of the fund manager (if possible) and objectives of the particular scheme. See if the time is right to invest in equity funds. Remember the InfoTech funds which today are quoting below par.SENSE OF THE SENSEX One of the cardinal rules of investing is getting the price right. they had all invested in the frenzy of the ICE age and have been caught on the wrong foot in the subsequent meltdown. look for investing in Debt funds (which have a medium to long term horizon). you must check out the interest rate scenario. or has it been steady. it is time to check out the Micros. CHECK OUT THE MICROS After a risky of the Macros. Look at the track record of the mutual fund under consideration. then remember. i. and then perhaps it will not be able to generate a positive momentum in its NAV. Lastly. Time the market. So in case you are expecting a fall in the interest rates. So.interest rates and bond prices are inversely proportional.e.
6) Owning too many funds means you may be paying for active management when you really hold the market. consider your amount of investment capital.seems positive. 8) In choosing mutual funds. overall sentiment is flat to good. And then decide which type of fund you want to invest in. 7) Your investment adviser can help you evaluate each fund to determine its role in your portfolio. 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. time frame. 2) There is no ideal number of mutual funds to own. and . 3) Before picking a mutual fund. your first task is to formulate your investment objectives and identify your time frame. 4) Diversify among different asset classes to help reduce risk and potentially increase the rate of return of your portfolio. sensex has been on the upswing but not necessarily peaking. For balanced funds to debt funds check out the interest rate scenario. 5) Diversify among different investment styles to potentially reduce risk and increase returns. 9) The next step is to identify which types of mutual funds match your investment goals investment goals. Have a look at the NAV performance of other funds floated in the same quarter.
30. Reliance Capital Asset Management Ltd. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12. It is a wholly owned subsidiary of Reliance Capital Ltd. 1997 in line with SEBI (Mutual Funds) Regulations. 1996. 1995 and was amended on August 12.and risk tolerance. 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. ABOUT THE COMPANY RELIANCE CAPITAL ASSET MANAGEMENT LTD. (RCAM). The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. a company registered under the Companies Act. Reliance Mutual Fund has launched twenty five Schemes till date. 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund (w. Pursuant to this IMA. the sponsor.e. Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited.13 crores. the name of Reliance Capital Mutual Fund has been changed to -Reliance Mutual Fund).f November 2003. 10) Companies such as Crisil and dedicated websites provide statistical information on mutual funds. 2005 is Rs. namely: Reliance Vision Fund . The net worth of the Asset Management Company including preference shares as on March 31. 1995. RCAM is authorized to act as Investment Manager of Reliance Mutual Fund.
Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997). Reliance NRI Income Fund (October 2004). 1995.Series I (March 2005). Reliance Regular Saving Fund (May 2005). Reliance Liquidity Fund (June 2005). Reliance Medium Term Fund (August 2000). Reliance Equity Opportunities Fund (February 2005). 1882 with Reliance Capital Limited (RCL). Reliance Liquid Fund (March 1998). Reliance Banking Fund (May 2003). as the Settler/Sponsor and Reliance Capital Trustee Co. Reliance Index Fund (January 2005). March 2004 vide SEBI's letter no. Reliance Fixed Tenor Fund (November 2005) and Reliance Equity Fund (Feb 2006). Reliance Fixed Term Scheme (March 2003). March 2004. Reliance Short Term Fund (December 2002). Limited (RCTCL). Reliance Tax Saver (ELSS) Fund (July 2005). Reliance NRI Equity Fund (October 2004).Series II (April 2005). Reliance Floating Rate Fund (August 2004). Reliance Fixed Maturity Fund . RELIANCE MUTUAL FUND Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act. Reliance Media & Entertainment Fund (September 2004).(September 1995). IMD/PSP/4958/2004 date 11th. Reliance Monthly Income Plan (December 2003). The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. The main objectives of the Trust are: . Reliance Fixed Maturity Fund . as the Trustee. Reliance Gilt Securities Fund (July 2003). 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. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30. Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund ( May 2004).
. • 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. 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.• 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 PRODUCTS EQUITY SCHEMES :RELIANCE EQUITY FUND (An open-ended diversified Equity Scheme.
RELIANCE INDEX FUND (An Open Ended Index Linked Scheme.) 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 VISION FUND (An Open-ended Equity Growth Scheme. which could approximately be the same as that of Sensex.) 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. with a view to endeavor to generate returns.RELIANCE EQUITY OPPORTUNITIES FUND (An Open-Ended Diversified Equity Scheme.) The Investment Objective under the Nifty Plan is to replicate the composition of the Nifty. RELIANCE GROWTH FUND (An Open-ended Equity Growth Scheme. The Investment Objective under the Sensex plan is to replicate the composition of the Sensex. with a view to endeavor to generate returns.) 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. which could approximately be the same as that of Nifty. RELIANCE NRI EQUITY FUND .
RELIANCE MEDIUM TERM FUND (An Open End Income Scheme with no assured returns. 80%) with a small exposure (i.(An open-ended Diversified Equity Scheme. 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.e. Primarily the investment shall be made in debt and money market securities (i.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. DEBT SCHEMES :RELIANCE MONTHLY INCOME PLAN (An Open Ended Fund. RELIANCE GILT SECURITIES FUND (Short Term Gilt Plan & Long Term Gilt Plan Open-ended Government Securities Scheme) .e. investments shall predominantly be made in Debt & Money Instruments.) 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 . Accordingly. This income may be complemented by capital appreciation of the portfolio. up to 20%) in equity.) 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.
. 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. The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly. 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. investments shall predominantly be made in Debt and Money Market Instruments. The scheme shall also invest in Fixed rate debt Securities (including fixed rate securitised debt. investments shall predominantly be made in debt Instruments. Accordingly. 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).(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). This income may be complimented by capital appreciation of the portfolio.
This income may be complemented by capital appreciation of the portfolio.RELIANCE FIXED MATURITY FUND . RELIANCE LIQUIDITY FUND (An Open .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. investments shall predominantly be made in Debt and Money Market Instruments.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.ended Liquid Scheme) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly. RELIANCE REGULAR SAVINGS FUND(AN OPEN . Accordingly investments shall predominantly be made in Debt & Money Market Instruments. RELIANCE FIXED MATURITY FUND . Hybrid Option: The primary investment objective is to generate consistent return by .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. Equity Option: The primary investment objective is to seek capital appreciation and or consistent returns by actively investing in equity / equity related securities.
SECTOR SPECIFIC SCHEMES :Sector Funds are specialty funds that invest in stocks falling into a certain sector of the economy. Here the portfolio is dispersed or spread across the stocks in that particular sector.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. 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. . 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. 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 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.
Because markets may rise. And markets may fall. the Reliance Equity Fund NFO collection is the highest ever in the 42-year history of the Mutual Fund industry in the country. The recent record mobilization in any equity fund was Rs.SALIENT FEATURES : § Record collection of over Rs. A diversified equity fund with derivative strategies that aim to minimize risk and take advantage of both the rising and falling market conditions. The fund has received a tremendous response from investors across the length and breadth of the country. The investment strategy being that even if the markets go down. 2008: The recently concluded Reliance Equity Fund NFO has created history with collections of over Rs. the fund has a part of its portfolio hedged. The Reliance Equity Fund aims to capitalize on both the rising and falling markets.855 crore mopped up by SBI Mutual Fund in its Blue Chip Fund that closed this January. Backed by a huge marketing push. which aims at minimizing the downside risk. 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 .472 crore. Went the advertisements. 4. 2. March 14. striking just the right chord amongst the investor community. NFO collection ever in the history of the Indian mutual fund industry. Mastergain had garnered Rs. 5700 crore from over 9. It has replaced the 14-year-old record of the UTI Mastergain IPO.29 Lac applications. 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. 5700 crores from over 9.29 lac applications.
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.Rajagopal Head Equity Investments Madhusudan Kela Equity Fund Managers • Equity Fund Manager .
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 .
Himanshu Vyapak Devendra Daga Gurbir Chopra .• 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.
2. An attempt has been made to measure various variable’s playing in the minds of investors in terms of safety. Fosbery Road. OBJECTIVES OF THE STUDY 1. The entire paid-up capital (100%) of Reliance Capital Asset Management Ltd is held by Reliance Capital Ltd. Padana Taluka Lalpur. Corporate Office Reliance Capital Ltd. To measure the satisfaction level of investors regarding mutual funds. District Jamnagar 361280 . liquidity. Reliance Capital Asset Management Ltd. Old ICI Godown. . service. tax efficiency.Gujarat. Off Reay Road Station (East). returns.400033. Village Meghpar. Mumbai .RELIANCE CAPITAL LIMITED Registered Office Reliance Capital Ltd. 3. 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. the sponsor.
DEVELOPING THE RESEARCH PLAN : The development of Research Plan has the following Steps : DATA SOURCES . A. PROBLEM: The problem at hand was to study and measure the awareness level of people regarding mutual funds in the city. The research process which was followed by me consisted following steps. B.RESEARCH METHODOLOGY My research project has a specified framework for collecting the data in an effective manner. Such framework is called “RESEARCH DESIGN”.
Two types of data were taken into consideration i. I have collected the information from the respondents with the help of questionnaire ANALYZE THE INFORMATION .e. The selection of the respondents was done on the basis of simple random sampling. COLLECTING THE INFORMATION After this. i. A Questionnaire consisting a set of questions was presented to respondents for their answers. a. c. SAMPLING PLAN The sampling plan calls for three decisions. Contact Methods : I have contacted the respondents through personal interviews. Sampling Unit: I have completed my survey in Yamuna Nagar District . Secondary data & primary data. technology including personal interviewing. survey etc. Books. Annual publications. b. The secondary data has been used to make things more clear. Primary Data: Direct collection of data from the source of information. RESEARCH INSTRUMENT A close friend questionnaire was constructed for my survey. My major emphasis was on gathering the primary data. ii. Sample Size: The sample consisted of 50 respondents. The sample was drawn from walk in customers of Reliance Mutual fund. Newspaper & Magazines etc. Secondary Data: Indirect collection of data from sources containing past or recent past information like Bank’s Brochures.
I have tabulated the collected data & developed frequency distributions. • Since a smaller sample was chosen so it may not be a true representative of the population under study. Thus. LIMITATIONS • Due to paucity of time and resources a countrywide survey was not possible. Hence only Yamuna Nagar district has been taken for the study. frequencies & percentages were prepared to render impact of the study. .The next step is to extract the pertinent findings from the collected data. Thus the whole data was grouped aspect wise and was presented in tabular form.
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
Banks & investors directly before 3 p. . Scrutinize the applications for investor’s Bank Account no. Cheques are then send to respective Bank. Rejection can be arise by mis-matching of signatures. one should be on application form. Keep all record of rejection of cheques for future references. Broker’s code. When customers apply in particular fund then they receive statement next day. KARVY BACKEND SERVICE • • • • Receive applications from our office after 3 p. Out of these. if related to non-liquid funds then we only put time punching on that & send to the Registrar Karvy Branch. & 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. Address. Make sure the cheque is not post-dated & it should be of local clearing with customer’s signature. The respective amounts are credited into the bank accounts of various schemes of Reliance Mutual fund.m. keep all record & then send to near Karvy Branch.. it should be noted that the punching machine releases the same stamp. At the time of punching.m.• • • • • • • • • • Receiving of applications from different brokers. His signature. post-dated cheques or incomplete bank details. Applications. Applications. HDFC bank give report about the clearance or rejection of the cheques to Karvy. Pan no. if related to liquid funds then we do all punching.. A DTR (Daily Transactions Record) prepares to keep a track of the transactions. Hyderabad & send cheques to HDFC bank. one on the backside of the cheque & the third stamp is for the purpose of customers on acknowledgement.
Mumbai. SALES .• • • If cheque clears then the respective amount credited into bank accounts of various schemes of Reliance Mutual Fund. Wrong updation of Broker’s code No information about rejection. 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. files etc. and thereby maximizing time with the investor by assisting him promptly and efficiently which is only possible if things are organized. Karvy Head Office sends all record to Reliance Head Office. 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. Operations required a lot of observation and involvement in the day-to-day working and grasping things rapidly.
or some other unkind adjective. relationships that are intended to last for a long time. Professionally trained salespeople are among the most important individuals within many companies. instantly use terms such as pushy. . the competition will bite you if you keep running. 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. when asked what they think of salespeople. successful selling requires the establishment of strong relationships with customers.William S. greedy. you can Make a fortune. initially I was given an overview of the entire working of the organization. they will swallow you. Salespeople whose goal is to just get the sale and not worry about the customer satisfaction are doomed to failure. If you stand still. Knudsen If you make a sale you make a living. Yet professional selling is not what most people think.In business. Many people. Also. During my training with Reliance Mutual Fund. . which involved right from learning about the basic .Jim Rohn Selling is a highly misunderstood profession. If you make an investment of time and good service In a customer.
Load structure . • • • • Improves communication skills. Developing and maintaining relationships As u know. The fund house offers a varying range of funds in equity as well as debt. Organizing skills are also developed. I also got the opportunity to interact with the industry and do direct selling to Individual customers as well as corporate customers. My learning involved a core understanding on: .Past track record of funds . PRODUCT TRAINING : The first phase of my training involved understanding and learning about the products as offered by Reliance Mutual Fund. sales channel of Reliance mutual fund includes: .Plans & options . maintaining relationships with the distributors and that with the banks.Type of schemes .performed operations.Investment objective .Last but not least position of the funds in the market vis-à-vis competitors. An activity such as Direct Sales infuses selling confidence.Features available . Lead generation and materializing sales.
While my training. Sometimes. they can make investments in SIP rather than lump sum amount. Hence it is very essential for the fund house to maintain healthy working relationships with the distributors. • • • • • • • . I visited to their office personally if required. if they start doing a business of 5 lakhs in a month. So there. I was given the responsibility to activate such distributors for RMF (Chandigarh). if they face any problem. But I did it very passion sly. interesting and challenging one for me. he gave me seven distributors name and address that are not giving good business to the company. Complete product training to the direct selling agents of the distribution house. my duty was to call them or visit individually but have to make generate business from them. Also told them. which generate a decent size of business from the distributors. But there were certain distributors. Send daily NAV sheet to them by SMS or through Email so that they make comparison between our funds & others funds. Hence. IFA (Individual financial Agents) channel.The distributions houses generate a huge chunk of business for any fund house. MY ROLE • • Call them daily & try to make aware about our schemes. It was very good. Rominder Singh. He has achieved success in this regard to a huge extent. which is handled by Mr. Called them to come our office on tea for meeting & discussion Company also offers a surprise gift to them. Try to make clear picture about other mutual funds also. Same is the case with Reliance Mutual funds. which needed to be revived in terms of the business that they were generating for the fund house. that was either in the form of low business or irregular business. Making the aware of the risk & profit margin regarding schemes. Moreover a distribution house is an agent of mutual funds of a number of fund houses.
S. Hence. handled by Mr. Nishant Mahajan (Territory Manager). 4 2 3 4 4 4 3 MASTER TRUST KARVY VIKSON INVESTMENTS INNOVATIVE CONSULTANTS B. They achieved success in this regard to a huge extent. But there were certain bank branches.NO. INVESTORS BAJAJ CAPITAL Daily average applications from these distributors picked up from 21 to 35 in span of 3 weeks. High level of motivation achieved. Vinay Khera (Branch Head) & Mr. it is very essential for the fund house to maintain healthy working relationships with the bankers. Same is the case with Reliance Mutual Funds.The following are the results of various distributors. 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. I was given the responsibility to activate such branches for Reliance Mutual Fund (Chandigarh).R. . NO. that was either in the form of low business or irregular business. LTD R. The bank relationship here at Reliance Mutual Funds (Chandigarh). Moreover a bank is a distributor of mutual funds of a number of fund houses.D. 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. Hence. which needed to be revived in terms of the business that they were generating for the fund house. which generates a decent size of business from the banks. OF S.
Sec. PH. Sec.NO.32 CHD INDUSIND BANK. 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. 8 CHD CPOB BANK. Sec. My job further extended to collect new database of customers for them.MY ROLE They instruct to look after the five banks. handling customers queries on the mutual funds and at some branches reviving existing customers for making in further investments. 9 CHD UTI BANK. 7 MOHALI OUTCOME • Daily receive applications from these banks picked up from 15 to 23 in span of 3 weeks. OF APP. 11 NO. which were not performing business. 1 2 3 BRANCHES PNB BANK. High level of motivation achieved Training of new Territory Manager to these location Increasing in visibility • • • . 3 3 4 4 3 TOTAL BUSINESS GENERATED 20000 2000(SIP) 1500(SIP) 22500 5000(SIP) 4 PKL 5 HDFC BANK. Sec. Makes the sales manager or financial advisors aware of the latest offers and news from RMF. The following are the results of various banks: NAME OF BANK S.
While my training. OPERATIONS AT RELIANCE MUTUAL FUNDS. which was held in Hotel Shivalikview in which I had to promote SIP of various schemes related to equity. Collections of funds by investments done by Investors directly Through brokers Through bank agents . 8 investors invested in various schemes. and then I make them aware (what is risk & profit) and later on. there was exhibition. 4 customers invested in SIP & 4 invested in lump sum. some of them don’t know about mutual fund. I attended 30 customers.
OBJECTIVES: . 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. COMPLAINT MANAGEMENT MODULE :The general aim of a complaint management system is to restore customer satisfaction. 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. minimize the negative effects of customer dissatisfaction and to identify and review company’s structural and process weaknesses.
Analysis and usage of complaint information. As in the future the differentiating point between products and services is going to be how customers are handled effectively and timely. Implementation and clarification of a customer-oriented company strategy. Restoring (complaint) satisfaction. Reduction of internal and external error costs. It is created to ensure customer delight. 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. Influencing word of mouth communication.
ARE YOU AWARE OF THE MUTUAL FUND SCHEME BEING OFFERED BY VARIOUS INSTITUTION? YES NO 100% 0 .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.
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. IF YES . Q. ARE YOU INVESTING IN THEM? 100 Y E S NO 0 .
Q.% 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 .
WHICH FACTOR INFLUENCES YOU MOST TO INVEST IN MUTUAL FUNDS Factors Percentage .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. 10% in SBI and 4% in ICICI prudential. 32% invest in reliance due to its goodwill . Q.
34% of the investors preferred liquidity as the most important thing. most of respondents chose liquidity as the most important factor. An investor keeps in mind all the factors while investing.16% of the investors think that tax benefit is the most important factor .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.14 % of the investors choose high returns as the important factor and 12% of investor choose because of less risk. . 24% investors choose safety. Above all one thing is there that all the above factors are very important.
Most of the investors prefer to invest for 1 to 5 years. . About 40% invest for 1 to 3 years and about 10% invest for 3 to 5 years.Q. 26% invest for a time period of 6 month to 1 year. Only 4% invest for more then 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. Very few invest for more then 5 years.
investors are taking risk. 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.Q. 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. .
.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.
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. Around of the investors prefer SIP at this stage of market. 36% the investors .
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.prefer investing lump sum.
14% word of mouth and 6% advertisement. 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 .20% Reliance services . Q.When asked that what factor affect most while investing in Mutual Funds through Reliance Mutual fund than wide preference is given to safety.18% past experience .
Q.INTERPRETATION Out of the respondents 80% are extremely satisfied with the services offered by Reliance Mutual fund .5%are extremely dissatisfied. 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% .10% are satisfied to lesser extent .
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. Also it would help in reverting back to the customer query more quickly and efficiently. During this procedure at times the cheques get misplaced leading to inconvenience to the customer. 50% of the investors say that future is strong and only 15% said that future is moderate. it results in loss of trust of the customers that might further lead to spreading a bad word of mouth about the organization. the registrar from Hyderabad releases the respective cheques. • Whenever the management declares dividend. 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. Hence a provision should be there so that the cheques of a particular AMC should reach that AMC only. This would not only result in cost efficiency for the registrar but also in better management in giving cheques to the customers. This would help us in saving time and tracking the query more efficiently and providing quick services to the customers. Due to lack of communication regarding the status of their query. 35% of the investors say that future is very strong. .INTERPRETATION As Indian equity market is growing the future of mutual funds is very bright. • One way to combat this problem is by having tie-ups with more number of banks regarding direct credit facility.
Due to large number of investors it becomes very essential for a complaint logbook. Not having the proper record of their meeting with the financial consultants of banks Problem of not receiving the brokerage on time .• The major problem that I encountered over here was that most of the complaints of the customers went unregistered. FINDINGS • • • Not send NAV sheet to their regular bankers. As a result of which most of the times one lost track about the status of the query. Payment schedule should be changed. which is not good for any organization. • Brokerage problems arise because of quarterly basis. Brokers should receive their brokerage by monthly. as a dissatisfied customer would spread a bad word of mouth.
BIBLIOGRAPHY WEBSITES: • • • • • www.rbi.com www. July 2006 Marketing Management – Philip Kotler howhohiow .amfiindia.valueresearchonline.reliancemutual.com www.org BOOKS & MAGAZINES: • • Business world.com www.com www.google.
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