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This project aims to identify alternate channels of distribution for the ‘Reliance mutual funds’, to increase the sale of the various funds being offered by it. A modest attempt has been made to study and understand the behavior and perception of the target audience, about mutual funds and distribution channels for the same.
Introduction of the Mutual Fund Industry:
The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous – in that it is a young industry where there are changes in the rules of the game everyday, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket. Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country. The Indian mutual fund industry is one of the fastest growing sectors in the Indian capital and financial markets. The mutual fund industry in India has seen dramatic improvements in quantity as well as quality of product and service offerings in recent years. Mutual funds assets under management grew by 96% between the end of 2001 and June 2007 and as a result it rose from 8% of GDP to 15%. The industry has grown in size and manages total assets of more than $30351 million. Of the various sectors, the private sector accounts for nearly 91% of the resources mobilised showing their overwhelming dominance in the market. Individuals constitute 98.04% of the total number of investors and contribute US $12062 million, which is 55.16% of the net assets under management.
Steady growth of mutual fund business in India in the four decades from 1964, when UTI was set up is given in the table below:
Period (Year) 1964-69 1969-74 1974-79 1979-84 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 Aggregate Investment In Crores of Rupees 65 172 402 1261 4563.68 6738.81 13455.65 19110.92 23060.45 37480.20 Period (Year) 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Aggregate Investment In Crores of Rupees 46988.02 61301.21 75050.21 81026.52 80539.00 68984.00 63472.00 107966.10 90587.00 94571.00
Mutual Fund Industry in its true spirit rooted in a free market and oriented towards competitive functioning with the dedicated goal of service to the investors can be said to have settled in India only in 1993. However the industry took its roots much earlier with the setting up of the Unit Trust in India (UTI) in 1964 by the Government of India. During the last 36 years, UTI has grown to be a dominant player in the industry with assets of over Rs.72,333.43 Crores as on March 31, 2000. The UTI is governed by a special legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds. Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. Since then several mutual funds have been set up by the private and joint sectors.
WHAT ARE MUTUAL FUNDS?
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus, a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
“Mutual funds are collective savings and investment vehicles where savings of small (or sometimes big) investors are pooled together to invest for their mutual benefit and returns distributed proportionately”. Pooling of money ensures that small investors get the benefit of advice and expertise that is normally available only to very large investors.
In return. The first phase was between 1964 and 1987. Franklin Templeton etc are international AMC's. you and the other investors each own shares of the fund. Aggressive growth funds are also called capital appreciation funds”. Growth of Mutual Fund Business in India The Indian Mutual fund business has passed through three phases.“A mutual fund is an investment that pools your money with the money of an unlimited number of other investors.028/. The second phase is between 1987 and 1993 during which period 8 funds were established (6 by banks and one each by LIC and GIC). 61. and such ratings can be used to establish a match with investor goals and suitability”. The biggest Indian AMC is UTI while Alliance. Funds are rated widely as to risk and return. The fund's assets are invested according to an investment objective into the fund's portfolio of investments.crores at the end of 1994 and the number of schemes were 167. The third phase began with the entry of private and foreign sectors in the Mutual fund industry in 1993. The share of the private players has risen rapidly since then. when the only player was the Unit Trust of India. The total assets under management had grown to Rs. private companies or international firms. which had a total asset of Rs. Aggressive growth funds seek long-term capital growth by investing primarily in stocks of fast-growing smaller companies or market segments. "Mutual Funds schemes are managed by respective Asset Management Companies sponsored by financial institutions. -4- . 6. “Mutual Funds are investment companies that make investments on behalf of individuals and institutions that share common financial goals. The suitability of a particular mutual fund for an individual investor depends on the type and nature of the fund's investments and amount of diversification. Kothari Pioneer Mutual fund was the first fund to be established by the private sector in association with a foreign fund. banks.700/.crores at the end of 1988.
32 100.167.2 to Rs. it is no longer attractive.10 Percentage (%) 67.89 1.68 23.Within a short period of seven years after 1993 the growth statistics of the business of Mutual Funds in India is given in the table below: Amount (Rs Crores) UTI Public Sector Private Sector Total 72.00 Scope for Development of Mutual Fund Business in India A Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. but what are the other sources of investment for the common man? Mutual Fund is the ready answer. A typical Indian middle class family can have liquid savings ranging from Rs. professionally managed basket of securities at a relatively low cost. India has a burgeoning population of middle class now estimated around 300 million.444. but with the falling rate of interest offered by Banks on Deposits.07.78 25. -5- .43 10. At best a part can be saved in bank deposits. Investments in Banks are liquid and safe.00 9.10 Lacs today.333.946.
Mutual funds. became loss leaders for retail investors. But to be fair. From those days to today the retail investor.The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. The sheer magnitude of the population of educated white collar employees provides unlimited scope for development of Mutual Fund Business in India. First Phase – 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.A little history: The mutual fund industry started in India in a small way with the UTI Act creating what was effectively a small savings division within the RBI. when a number of mistakes were made and hence the mutual fund schemes.Viewed in this sense globally India is one of the best markets for Mutual Fund Business. The initial years of the industry also saw the emerging years of the Indian equity market. as the next logical step. which can make the retail investor feel more secure. Over a period of 25 years this grew fairly successfully and gave investors a good return. The history of mutual funds in India can be broadly divided into four distinct phases. the industry too has focused on brining in the large investor. which invested in lesser-known stocks and at very high levels. so also for Insurance business. for whom the mutual fund is actually intended. so that it can create a significant base corpus. at the initiative of the Government of India and Reserve Bank the. This is the reason that foreign companies compete with one another in setting up insurance and mutual fund business units in India. has not yet returned to the industry in a big way. It was set up by the Reserve Bank of India and functioned under the Regulatory -6- . public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area. and therefore in 1989.
UTI.6.and administrative control of the Reserve Bank of India. Indian Bank Mutual Fund (Nov 89). Bank of India (Jun 90). under which all mutual funds. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. the mutual fund industry had assets under management of Rs.47. At the end of 1993. -7- . a new era started in the Indian mutual fund industry. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).700 crores of assets under management. LIC 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. The first scheme launched by UTI was Unit Scheme 1964. Bank of Baroda Mutual Fund (Oct 92). 1993 was the year in which the first Mutual Fund Regulations came into being. At the end of 1988 UTI had Rs. In 1978 UTI was delinked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. except UTI were to be registered and governed. Third Phase – 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993. SBI Mutual Fund was the first non. Punjab National Bank Mutual Fund (Aug 89). giving the Indian investors a wider choice of fund families. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. 004 crores.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). Also. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.
44. -8- . The Specified Undertaking of Unit Trust of India. 2004. As at the end of September. 21. The second is the UTI Mutual Fund Ltd. As at the end of January 2003.76. 1.153108 crores under 421 schemes. sponsored by SBI.805 crores.000 crores of assets under management and with the setting up of a UTI Mutual Fund. It is registered with SEBI and functions under the Mutual Fund Regulations. functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. which manage assets of Rs.The number of mutual fund houses went on increasing. representing broadly. there were 33 mutual funds with total assets of Rs. assured return and certain other schemes. The Unit Trust of India with Rs.835 crores as at the end of January 2003. PNB. 541 crores of assets under management was way ahead of other mutual funds. there were 29 funds. conforming to the SEBI Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. BOB and LIC. and with recent mergers taking place among different private sector funds. Fourth Phase – since February 2003 In February 2003. the mutual fund industry has entered its current phase of consolidation and growth. the assets of US 64 scheme.29. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities.
barring a few. The other aspect of this issue is that institutional investors do not usually favor equity. while Zurich has been sold to HDFC Mutual. Equity did not find favor with investors since the market was lack-luster and performances of funds. Alliance decided to remain in the ring after a highly public bidding war did not yield an acceptable price.The graph indicates the growth of assets over the years. on the back of the continuing debt bull run. But at the same time. Large money brought with it the problems of low retention and consequently low profitability. The growth of the industry continued to be corporate focused barring a few initiatives by mutual funds to expand the retail base. It is -9- . particularly among the private sector players. 2003-2004: A retrospect: This year was extremely eventful for mutual funds. which is one of the problems plaguing the business. were quite disappointing for investors. the industry did see spectacular growth in assets. The aggressive competition in the business took its toll and two more mutual funds bit the dust.
10 - . most mutual funds have been unable to tap this market. for the industry as a whole and for debt and equity separately.largely a retail segment product and without retail depth. ORGANISATION OF A MUTUAL FUND There are many entities involved and the diagram below illustrates the organi zational set up of a mutual fund: Organization of a Mutual Fund . The tables given below are a snapshot of the AUM story.
The sponsors appoint the trustee AMC and custodian. its units and segregating assets and settlement .11 - . Trust Board of Trustee Trustees hold a fiduciary responsibility towards unit holders by protecting their interest Trustees float and market schemes and secure necessary approvals. it takes custody of securities and other assets of mutual funds. They check if the AMC’s investments are within well-defined limits.a sponsor has to satisfy certain conditions such as capital record (at least five year operation in financial market) default free dealings and general reputation of fairness. Custodian Often an independent organization. Whether the funds assets are protected and also ensure that unit holders get their due returns. calculates the NAV and provides information on listed schemes. Fund Manager/Asset Management Company They are the ones who manages money of investors .an AMC takes decisions compensates investors through dividends maintains proper accounting and information for pricing of units.Sponsors Sponsors initiates the idea to set up mutual fund .it could be registered company schedule banks or financial institution .
The value of investor’s part ownership is thus determined by the NAV of the numbers of units held. the value of the total assets of the fund when divided by the total number of units issued by mutual funds gives us the value of one unit.15-1.e.12 - . Investor’s subscriptions are accounted for by the fund not as liabilities or deposits but as Unit Capital. Valuation of Mutual Funds Since owner is a part owner of a Mutual Fund. Their charges range between . each share or unit that an investor holds need to be assigned a value. These units held by an investor evidence the ownership of the fund’s assets. .between schemes. The investments made on behalf of the investors are refecleted on the assets side which are the main constituent of the balance sheet and the liabilities of strictly in short term nature may also be part of the balance sheet. This is generally called the Net Assets Value (NAV) of one unit or one share. it is necessary to establish the value of his part i.minus liabilities. Custodian can service more than one find. A Mutual Fund is a common investment vehicle to where the assets of the fund belong directly to the investors. The funds net assets are therefore defined as the assets.2 percent of the net value of holding.
it is common practice for mutual fund to complete the share of each investor on the basis of the value of Net Assets per Share/Unit. the day on which NAV is calculated by a fund is known as the Valuation Date. 2. and 4. A fund’s NAV is a affected by four sets of factors: 1. commonly known as the Net Asset Value (NAV). Valuation of all investments securities held 3. NAV of all the schemes must be calculated and published at least weekly for closed –end schemes and daily for open-ended schemes. Units sold or redeemed “Other Assets” include any income due to the fund but not received as on the valuation date (for example. NAV’ s for a day must also be posted on AMFT’s website by 8:00pm on that day. dividend announced by the company yet to be received) . NAV = Net Assets of the scheme /Number of units outstanding.As there are many investors in a fund.e. Of units outstanding as at the NAV date For the purpose of the NAV calculations. Market Value of investment + receivables + other accrued income + other asset – accrued expenses – other payables – other liabilities/ No. Other assets and liabilities. Purchase and sale of investment securities. i.13 - .
“Other Liabilities” includes expenses payable by the fund.14 - . for example Custodian fees or even the management fees payable to the AMC. .
TYPES OF MUTUAL FUND SCHEMES Article II. BY STRUCTURE OPEN-ENDED SCHEME CLOSE-ENDED SCHEME INTERVAL SCHEME BY INVESTMENT OBJECTIVE GROWTH SCHEME INCOME SCHEME BALANCED SCHEME MONEY MARKET SCHEME OTHER SCHEMES TAX SAVING SCHEME SECTOR SPECIFIC SCHEME INDEX SCHEME Risk Vs Reward .Article I.15 - .
Having understood the basics of mutual funds the next step is to build a successful investment portfolio. there is no guarantee that you will end up with more money when you withdraw your investment than what you started out with.16 - . But it is this very volatility that is the exact reason that you can expect to earn a higher long-term return from these investments than from a savings account. The first thing that has to be kept in mind is that when you invest in mutual funds. At the cornerstone of investing is the basic principal that the greater the risk you take. Before you can begin to build a portfolio. refers to the volatility -.interest rate changes. you get what you pay for and you get paid a higher return only when you're willing to accept more volatility. This volatility can be caused by a number of factors -. Or stated in another way. uncertainty and potential for loss. one should understand some other elements of mutual fund investing and how they can affect the potential value of your investments over the years. inflation or general economic conditions. The loss of value in your investment is what is considered risk in investing. Even so. We all fear the possibility that a stock we invest in will fall substantially. that causes investors to worry. and those with the greater chance of losing value are also the . Risk then. That is the potential of loss is always there. It is this variability. the opportunity for investment growth that is possible through investments in mutual funds far exceeds that concern for most investors. Different types of mutual funds have different levels of volatility or potential price change.the up and down activity in the markets and individual issues that occurs constantly over time. Here’s why. the greater the potential reward.
17 - . So risk has two sides: it causes the value of your investments to fluctuate. Types of risks . You might find it helpful to remember that all financial investments will fluctuate.funds that can produce the greater returns for you over time. There are very few perfectly safe havens and those simply don't pay enough to beat inflation over the long run. but it is precisely the reason you can expect to earn higher returns.
the stock prices of both an outstanding. When this happens. how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised.18 - . Also known as systematic risk. This change in price is due to "market risk". Credit Risk In short. Inflation Risk Sometimes referred to as "loss of purchasing power. not more. or repay your principal when the investment matures? Interest Rate Risk Changing interest rates affect both equities and bonds in many ways. Consider these common types of risk and evaluate them against potential rewards when you select an investment." Whenever inflation rises forward faster than the earnings on your investment. Market Risk At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. A diversified portfolio can help in offseting these changes. Exchange risk A number of companies generate revenues in foreign currencies and may have investments or expenses also denominated in . you run the risk that you'll actually be able to buy less. Investors are reminded that "predicting" which way rates will go is rarely successful.All investments involve some form of risk. Inflation risk also occurs when prices rise faster than your returns. highly profitable company and a fledgling corporation may be affected.
An industries' key asset is often the personnel who run the business i. Investment Risks The sectoral fund schemes. intellectual properties of the key employees of the respective companies. investments will be predominantly in equities of select companies in the particular sectors. Accordingly. It is. the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities. Changes in exchange rates may. therefore. PROS & CONS OF INVESTING IN MUTUAL FUNDS: . availability of qualified. Changes in the Government Policy Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund Effect of loss of key professionals and inability to adapt business to the rapid technological change. therefore.19 - . trained and motivated personnel is very critical for the success of industries in few sectors.foreign currencies. Given the ever-changing complexion of few industries and the high obsolescence levels.e. Failure or inability to attract/retain such qualified key personnel may impact the prospects of the companies in the particular sector in which the fund invests. have a positive or negative impact on companies which in turn would have an effect on the investment of the fund. necessary to attract key personnel and also to retain them to meet the changing environment and challenges the sector offers.
Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Mutual Funds save your time and make investing easy and convenient. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries.20 - . Low Costs: .The Advantages of Investing in a Mutual Fund: Professional Management: The investor avails of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. Return Potential: Over a medium to long-term. delayed payments and unnecessary follow up with brokers and companies.
you can systematically invest or withdraw funds according to your needs and convenience. custodial and other fees translate into lower costs for investors. you can sell your units on a stock exchange at the prevailing market price or avail of the facility of direct repurchase at NAV related prices which some close-ended and interval schemes offer you periodically. With close-ended schemes. Drawbacks of mutual funds . regular withdrawal plans and dividend reinvestment plans.21 - . Liquidity: In open-ended schemes. The operations of Mutual Funds are regularly monitored by SEBI.Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage. Flexibility: Through features such as regular investment plans. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. you can get your money back promptly at net asset value related prices from the Mutual Fund itself. the proportion invested in each class of assets and the fund manager's investment strategy and outlook.
Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved just because a professional manager is looking after the fund, that doesn't mean the performance will be stellar. Another important thing to know is that mutual funds are not guaranteed by the U.S. government, so in the case of dissolution, you won't get anything back. This is especially important for investors in money market funds. Unlike a bank deposit, a mutual fund will be insured by the Federal Deposit Insurance Corporation (FDIC).
Although diversification is one of the keys to successful investing, many mutual fund investors tend to overdiversify. The idea of diversification is to reduce the risks associated with holding a single security; overdiversification (also known as diworsification) occurs when investors acquire many funds that are highly related and, as a result, don't get the risk reducing benefits of diversification. At the other extreme, just because you own mutual funds doesn't mean you are automatically diversified. For example, a fund that invests only in a particular industry or region is still relatively risky.
Cash, Cash and More Cash:
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As you know already, mutual funds pool money from thousands of investors, so everyday investors are putting money into the fund as well as withdrawing investments. To maintain liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolios as cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous.
Mutual funds provide investors with professional management, but it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money, these fees only magnify losses.
The misleading advertisements of different funds can guide investors down the wrong path. Some funds may be incorrectly labeled as growth funds, while others are classified as small cap or income funds. The Securities and Exchange Commission (SEC) requires that funds have at least 80% of assets in the particular type of investment implied in their names. How the remaining assets are invested is up to the fund manager.
However, the different categories that qualify for the required 80% of the assets may be vague and wide-ranging. A fund can therefore manipulate
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prospective investors by using names that are attractive and misleading. Instead of labeling itself a small cap, a fund may be sold as a "growth fund". Or, the "Congo High-Tech Fund" could be sold with the title "International High-Tech Fund".
Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's net asset value gives investors the total value of the fund's portfolio less liabilities, but how do you know if one fund is better than another? Furthermore, advertisements, rankings and ratings issued by fund companies only describe past performance. Always note that mutual fund descriptions/advertisements always include the tagline "past results are not indicative of future returns". Be sure not to pick funds only because they have performed well in the past - yesterday's big winners may be today's big losers.
When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.
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25 - .Structure of Investment Companies (Mutual Funds) A Typical MF in India has the following constituents: .
Fund Sponsor: .26 - .
by subscribing to 'units' issued by various schemes established by the trust. The sponsor of a fund is similar to the promoter of a company. The portfolio is managed by the AMC as per the defined objectives. it is the trustee(s) who have the legal capacity. The sponsor must contribute at least 40% of the net worth of the AMC and possess a sound financial track record over five years prior to registration. the sponsor also appoints a custodian to hold the fund assets. however. a trustee has to be a person of high repute and integrity. the sponsor forms a trust and appoints a Board of Trustees. Under the Indian Trusts Act. Mutual Fund: A MF in India is constituted in the form of a trust under the Indian Trusts Act. accordance with Trust Deed and SEBI (Mutual Funds) Regulations. In addition. beneficiaries of the trust. or by a Trust Company. The fund invites investors to contribute their money in the common pool. In accordance with SEBI Regulations. The trustees. the trust or the fund has no independent legal capacity. guardians of the unit holders’ funds and assets.A 'sponsor' is any person who. Trustees: The MF or trust can either be managed by the Board of Trustees.27 - . and 'also generally appoints an AMC as fund manager. establishes a MF. acting alone or in combination with another body corporate. which is a body of individuals. Most of the funds in India are managed by Board of Trustees. do not directly manage the portfolio securities. Asset Management Company: . which is a corporate body. The trustees being the primary. who are the. The assets of the trust are held by the trustee for the benefit of unit holders. 1882.
and also under the direction of the trustees and SEBI. and also serve as investment advisers. The AMC functions under the supervision of its own Board of Directors. banks. Types of Investment Companies . Apart from these. Besides brokers. the MF has some other fund constituents. The custodian is appointed for safe keeping of securities and participating in the clearing system through approved depository. independent individuals are also appointed as 'agents' for the purpose of selling fund schemes to investors. which is appointed by the sponsor or the trustees and approved by SEBI. Transfer agents a responsible for issue and redemption of units of MF. trustees. The bankers handle the financial dealings of the fund.28 - . such as custodians and depositories. AMC in the name of the trust. AMCs appoint distributors of brokers who sell units on behalf of the Fund. floats and manages the different investment 'schemes' as per the SEBI Regulations and as per the Investment Management Agreement signed with the Trustees.The AMC. The regulations require arm's length relationship between the fund sponsors. custodians and AMC. transfer agents and distributors. acts like the investment manager of the trust.
investing in both equity and fixed. against assets. no level age occurs in the openend fund. It issues a fixed number of shares. An example of open-end investment company in India is the Unit Trust of India.29 - . . and Closed-end companies. unless the company can borrow money to invest. If the management desires. Such a company will have both asset leverage as well as earnings leverage. Majority of such companies have bonds and preferred stocks outstanding as apart of their capital structure. transactions.end Investment Companies: These companies raise capital through issue of shares. but handled by specified dealer in over-the-counter. Open . 1963. It came into existence on 1 February 1964 under the Unit Trust of India Act. there is greater proportional increase in the value of the equity shares of the investment company and being fixed claims. it might revise additional equity issues. The UTI is declared to be a balanced fund.income securities. Usually. Closed-end Investment Companies These companies operate in much the same fashion as any industrial company. The money obtained from the sale of share is invested directly in the shares of other companies.Investment companies fall into two general categories: Open-end. any increase in assets goes to equity shareholders. bonds or preferred stock issues. Asset leverage is said to occur when the price of equity owned by the company (company's assets) increase or decreases. as some companies do. The actual sales of units were commenced by the UTI from 1 July 1964. which may be listed on a stock exchange and bought and sold like any company's shares. The sale is conducted through branches of banks and through members of recognized stock exchanges. If the value of the total assets increases. which are not traded on stock exchanges. The use of fixed income securities results in financial leverage for equity shareholders.
30 - . Given that most such companies are listed on the stock exchange. These mutual funds are: Equity funds: Those funds which invest only in equity shares and undertake the associated risk. As long as company earns more than is needed to pay the interest and dividends. they offer better returns to investors. Due to greater diversification and a higher scope for gearing of capital. As earnings increase. than a company with a relatively small amount of debt. These leverage effects to also tend to accentuate the cyclical movement of stock prices. Closed-end investment companies offer various Advantages to an investor. but. it may have adverse effects when earnings fall and assets decline in value. hence increasing returns to their members. there are many other types of mutual funds which may be classified on the basis of their objectives and portfolios. the owner will benefit owing to the earning leverage.Thus. A closed-end company that raises a substantial portion of its capital by way of debt will be susceptible to wider fluctuations in value. The interest of debt and the dividends on preference shares represent a fixed charge on the company's earnings . the rate of increase of the return to the equity shareholder increases faster than the rate of increase of the return on the total assets. they provide an opportunity for greater diversification of investment than open-end companies. However. shareholders face no problems in disposing of their holdings. In addition to the above. as the value of investment of an investment company increases the value of its equity shares increases faster. Some of these may be listed as follows: Their investment policies are highly flexible and hence. as the asset value increases without a corresponding increase in debt capital. Any increase in earnings over the interest payments and dividends goes to the equity shareholders. . the leverage effect is diminished. They have an additional advantage of ploughing back of profit and. Risk of loss is minimized due to above reasons.
term money market instruments with emphasis on liquidity with a low rate of REGULATION OF MUTUAL FUNDS The primary authority for regulating Mutual Funds in India is SEBI. India Fund. shares whose prices are expected to go down. They move with the market index. etc. 1996 outlined the broad framework of authorization process and . Growth funds: Those funds which invest in growth oriented securities so as to assure appreciation in their value in the long run. (b) a specific country (Japan Fund.31 - . Hedge funds: Funds that buy shares whose prices are likely to go up and sell short.). Balanced funds: Those which divide their investments between equity shares and bonds in order to meet the objectives of safety. (c) a specific category of companies (Technology Fund). and regularity of income. Liquid funds: Those funds which specialize in investing in shortreturn. and finally Offshore funds: These specialize in investing in foreign companies. SEBI requires all Mutual Funds to be registered with it. The SEBI (Mutual Funds) Regulations. Real Estate fund: Such funds are meant for the real estate ventures. Income funds: Those funds which invest in securities which will earn high income. Special funds: Those funds which invest only in specialized channels like (a) gold and silver. Leveraged funds: Leveraged funds are those which increase the size of the value of the portfolio and benefit the shareholders by gains exceeding the cost of the borrowed funds. growth. Index-Linked funds: Those funds which invest only in those shares which are included in the market indices and in the same proportion.
It shall be SEBI's endeavor to advise an applicant within 10 to 15 working days of receipt of his letter / application form regarding status of his application. The authorisation shall be granted subject to conditions as may be considered necessary by SEBI and payment of auth9risation fee as may be specified. The second stage will involve formal authorization of the mutual funds for business. More than one registered company can also act as sponsor for a mutual fund. sponsors. and Sponsoring registered companies could be private or public limited companies either listed or unlisted.32 - . For this purpose the interested parties would be required to submit necessary information only in on prescribed formats). trustees. For this purpose the sponsor or the AMC would be required to apply to SEBI in an application form for authorization along with an application fee to be specified later. The first step will involve approval and eligibility of each of the constituents of the mutual fund viz. Joint sponsorship with any of the entities in (a) above will also be eligible. each of the sponsoring entities. The eligibility of the sponsor will be examined with respect to the following: Sponsor could be a registered company. must have a sound track record as evidenced by .selection criteria. Accordingly. asset management company (AMC) and custodian. Sponsor and where there is more than one sponsor. scheduled bank or all India or State level financial institution. the authorization for the mutual fund will be granted in two steps.
separate board of trustee companies.account for last five years. This is to ensure an arm's length relationship between trustees.33 - . the process of forming and floating mutual funds has been made a tripartite exercise by authorities. Organization and management. Audited balance sheet and profit and loss . SEBI has recently taken following steps for the regulation of mutual funds: Formation: Certain structural changes have also been made in the mutual fund industry. . The trustees. . consisting of a minimum fifty percent of independent trustees and to appoint independent custodians. and is in contrast with the situation prevailing earlier in which all three functions were often performed by one body which was usually the sponsor of the fund or a subsidiary of the sponsor . A positive net worth and consistent record of profitability and a good financial standing during the last five years. Guidelines for mutual funds as per SEBI The AMC will be authorized by SEBI on the basis of the criteria indicated in the guidelines. the asset management companies (AMCs) and the mutual fund shareholders form the three legs. General reputation in the market. Sponsor or more than one sponsor put together should have at least a 40 per cent stake in the paid-up equity of the AMC. Thus. Good credit record with banks and financial institutions. mutual funds are required to set up asset management companies with fifty percent independent directors. and Fairness in business transactions. SEBI regulations clearly state that all funds and schemes operational under them would be bound by their regulations. as part of which. fund managers and custodians.
Code of advertisement: Mutual funds have been required to adhere to a code of advertisement. Ceat Financial Services and Apple Industries. an element of counter-balancing of risks exists as both can keep tabs on each other. This will curb excessive growth of the mutual funds and protect investor's interest by registering only the sound promoters with a proven track record and financial strength. Registration: In January 1993. 20th Century Finance Corporation.SEBI guidelines provide for the trustees to maintain an arm's length relationship with the AMCs and do all those things that would secure the right of investors. Credit Capital Finance Corporation.34 - . A standard format for mutual fund prospectuses is being formulated. Industrial Credit& Investment Corporation of India. In February 1993. With funds being managed by AMCs and custody of assets remaining with trustees. SEBI cleared six private sect9r mutual funds viz. Tata Sons. . Documents: The offer documents of schemes launched by mutual funds and the scheme particulars are required to be vetted by SEBI. integrity in business transactions and financial soundness while granting permission. SEBI prescribed registration of mutual funds taking into account track record of a sponsor.
and Rs. allowed public sector mutual funds an advantage against the newly set up private mutual funds. only those mutual funds which have been in the market for at least live years are allowed to assure a maximum return of 12 per cent only. by default. the Association' of Mutual Funds in India (AMFI) has repeatedly appealed to the regulatory authorities for scrapping the minimum corpus requirements. Minimum corpus: The current SEBI guidelines on mutual funds prescribe a minimum s art-up corpus of Rs. or otherwise. SEBI. for one year. However. the minimum corpus requirements have forced AMCs to solicit funds from corporate bodies. Now the mutual funds were prevented from giving any assurance on the land of returns they would be providing. The idea behind forwarding such a proposal to SEBI is that in the past. In fact. under pressure from the mutual funds. failing which application money has to be refunded. SEBI revised the guidelines allowing assurances on return subject to certain conditions. thus. should also be prepared to bear the risks of loss.20 crore corpus :or closed-ended scheme. Hence.35 - . and any investor investing in the markets with an aim of making profit from capital appreciation. in the last few years. been to institutionalise the market by introducing proportionate allotment and increasing the minimum . Assurance on returns: SEBI has introduced a change in the Securities Control and Regulations Act governing the mutual funds.50 crore for a open-ended scheme. reducing mutual funds into quasi-portfolio management outfits. With this. Institutionalization: The efforts of SEBI have. it can be justifiably argued that investments in the capital market carried a certain amount of risk. As per basic tenets of investment.
deposit amount to Rs.5000 etc. These efforts are to channel the investment of individual investors into the mutual funds.
Investment of funds mobilized: In November 1992, SEBI increased the time limit from six months to nine months within which the mutual funds have to invest resources raised from the latest tax saving schemes. The guideline was issued to protect the mutual funds from the disadvantage of investing funds in the bullish market at very high prices and suffering from poor NA V thereafter.
Investment in money market: SEBI guidelines say that mutual funds can invest a maximum of 25 per cent of resources mobilised into money-market instruments in the first six months after closing the funds and a maximum of 15 per cent of the corpus after six months to meet short term liquidity requirements. Private sector mutual funds, for the first time, were allowed to invest in the call money market after this year's budget. As SEBI regulations limit their exposure to money markets, mutual funds are not major players in the call money market. Thus, mutual funds do not have a significant impact on the call money market. SEBI also conclude that mutual funds were not responsible for the unprecedented shooting up of call money rates. Some funds exceeded their limits in an effort to improve their sagging net asset values (NAVs), Usually, funds can early only about 9-12 per cent. Thus, the prospect of earning more than 40 per cent may have been tempting.
Valuation of investment:
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SEBI should work in tandem with the Institute of Chartered Accountants of India (ICAI) to take up a fresh look at mutual fund regulations enacted in 1993. The valuation of investments, a key aspect of fund accounting, as on balance sheet date, needs review, SEBI regulations 1993, give discretionary powers to the fund managers as far as the valuation of the investment portfolio on the balance sheet date is concerned. There are no accounting standards or guidelines prescribed by the ICAI for the valuation of a mutual fund's investment portfolio. The mutual funds are clearly taking advantage of this situation and valuing the portfolio at cost of acquisition. The subsequent depreciation or appreciation in the investment portfolio are not accounted for. Thus, the mutual funds may be able to show profits in the balance sheet even if there is a severe erosion in the value of the investment portfolio. This erosion in the values of the investment portfolios is clearly seen in the net asset values (NA V) as on the balance sheet date. But the accounts of the mutual funds do not reveal the same. The objective of the accounting in case of a mutual fund should be besides showing details of income, expenses, assets and liabilities, has to reveal the true value of the fund. The value of the fund is already reflected in, its NAV and the balance sheet is expected to be in consonance with this value. This requires that the investment portfolio be calculated at market values, providing for any depreciation or appreciation. . The transparent and well understood declaration or Net Asset Values (NAVs) of mutual fund schemes is an important issue in providing investors with information as to the performance of the fund.
SEBI had warned some mutual funds earlier of unhealthy market practices, and is currently working on a common format for calculating the net asset
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values (NAVs) of mutual funds, which are done in various ways by them at present.
Inspection: SEBI inspect mutual funds every year. A full SEBI inspection of all f the 27 mutual funds was proposed to be done by the March 1996 to streamline their operations and protect the investor's interests. Mutual funds are monitored and inspected by SEBI to ensure compliance with the regulations.
Underwriting: In July 1994, SEBI permitted mutual funds to take up underwriting of primary issues as apart of their investment activity. This step may assist the mutual funds in diversifying the business.
Conduct: In September 1994, it was clarified by SEBI that mutual funds shall not offer buy back schemes or assured returns to corporate investors. The Regulations governing Mutual Funds and Portfolio Managers ensure transparency in their functioning.
Voting rights: In September 1993, mutual funds were allowed to exercise their voting rights. Department of Company Affairs has reportedly granted mutual funds the right to vote as full-fledged shareholders in companies where they have equity investments.
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Mutual Funds could also invest in mortgage-backed securitised debt. Allow Mutual Funds to invest in unlisted companies. which are rated not below investment grade by a credit rating agency registered with SEBI. A MF scheme could invest upto 5% of its net asset value (NAV) in the unlisted equity shares or equity related instruments in case of open-ended scheme and up to 10% of its NAV in case of closed-ended scheme.RECENT POLICY AND REGULATORY INITIATIVES The policy and regulatory initiatives since April 2000 include: Investment by Mutual funds. AMC boards may develop a mechanism to verify that due diligence is being exercised while making investment decisions.e. however. These securities. This was expected to augment the availability of funds for housing sector and provide greater investment flexibility to the MFS. loans secured by real estate collateral) and not directly in real estate. non-performing assets (NP As). For effective implementation and bringing about transparency in the investment decisions. Specific attention may be given to investments in unlisted' and privately placed securities. SEBI Regulations also stipulate that the asset management company (AMC) shall exercise due diligence and care in all its investment decisions. facts and opinion leading to that decision.. Within the investment limit of 15% of NAV in debt instruments issued by a single issuer. . all the AMCs were advised to maintain records in support of each investment decisions which would indicate data. unrated debt securities. must have a credit rating of not below investment grade and would represent investments in real estate mortgages (i. SEBI amended regulations to: Permit investments by Mutual funds in the mortgage-backed securities.39 - . transactions where associates are involved and the instances where there is poor performance of the schemes.
The salient features of the system are as follows: Orders for purchase and sale of units from investors are collected using the on. the facilities for transacting in open-ended schemes of the Mutual Funds are very limited. The orders would be cleared and settled on an order to order basis. The orders collected on 'T' day would be received by NSCCL by the end of the day or latest on T +1 morning and conveyed to the MFS to facilitate computation of the NA V and the corresponding sale/repurchase prices of the units. which are finally settled using the clearing and settlement system of NSCCL. NSE and NSCCL have launched the Mutual' Fund Service System (MFSS) to effectively cater to buying/redemption of units of Mutual Funds by individual investors. Settlement would be on rolling basis with the orders received on T day being settled on T+5 day. Today the entire process of buying and redeeming open-ended MF scheme units takes place directly between the individual investor and the AMC.40 - . .line order collection system of NSE. The MF would send the issue/repurchase prices computed by them to the NSCCL on T+l day. The main objective of MFSS is to provide a one-stop shop to investors for transacting in financial products. which presently takes place manually. : While a good number of closed-ended schemes are traded on the exchanges.MF Distribution by NSCCL: In a move to encourage the MF industry. NSE with its trading terminals across the country offers a mechanism for collection of orders from the market and NSCCL undertakes the clearing and settlement of the same. The respective MF would be the counter-party for each trade.
The MF supplies application forms for their schemes to the post office for sale over the counter and any customer who wishes to invest in MF can take a form from the counter. fill it in and hand it back to the officials in the post office which in turn are handed over to the MF office. NET ASSET VALUE (NAV) The share ice of the mutual fund is based on its net asset value (NAV) per share. MF Distribution through Post Offices: Post offices started distributing MF products. ICICI Prudential. That is: Market value of portfolio -Liabilities Net asset value per share = Number of mutual fund shares issued . Mumbai. The members are required to deliver the securities/ funds due to the investors within two working days of receiving the pay-out from NSCCL.41 - . This system of distribution is presently operational only in selected post offices in the 4 cities of Delhi. IDBI Principal Mutual Fund has started distributing its index. Other Mutual Funds like. Patna and Kolkatta.Zurich Mutual Fund is the first MF to go live using this system. SBI Mutual. which is found by subtracting from the market value of the portfolio the mutual fun liabilities and the dividing by the number of mutual fund shares issued. UTI and Zurich Mutual Fund are also tying up with Department of Posts to distribute their products. No transaction charges will be levied on members. This will not only boost the Mutual Fund industry but would also enable easy access for the investors to the industry . balanced and income funds through select post offices branches.
It has been recommended that the NAVs of both open-end and close-end scheme be calculated on a weekly basis. The AMC will have the discretion of floating no load or load schemes or a mixture of the two. The investments which are shown in balance sheet should also be shown at market value so that this comparable with the net asset value. The fees paid by the mutual fund to the asset management company should linked to the performance of the mutual fund schemes as against a flat rate charge earlier which did not take into account the mutual fund scheme's performance. The committee finalised its report on 12 December 1995 and the same was released on 1 January 1996. Earlier. at least. The major guidelines are discussed below: There has been a major shift in the valuation of securities used for the calculation the net asset value (NAV) of the mutual fund scheme. now suggested that mutual funds would be paying a basic annual fee to the AMC computed as a percentage of the average weekly net asset value of the scheme and an additional fee calculated as a percentage of the net growth of the scheme. . This has now been changed to marking securities at market value.In August 1994. calculation of the NAV was done by valuing the securities at cost. Presently. mutual funds are permitted to deduct up to 6% from the net asset value to account for issue expenses. SEBI had formed a six-member committee to suggest disclosure practices and standardised procedures for computation of net asset values for mutual fund schemes.42 - .scheme comparison some extent. It. Further marking of all investments at market prices also permits inter.
Mutual fund shares are quoted on a bid. mutual funds operation has become integral part of the Indian financial system. Also. Accordingly.The report has suggested that repurchase and resale price of open-end schemes should be linked to the NAV of the scheme. .offer basis. The committee has suggested the disclosure of ratio of expenses to net assets and gross income to net assets. The sales commission is referred to as a load.43 - . the repurchase price of an open-end scheme should not be lower than 93 per cent of the net asset value and the resale price should not be more than 1. The report has suggested that the AMC should disclose custodian and registration fees and has done away with the distinction of short term and long term capital gains. It is equal to the NAV per share plus any sales commission that the mutual fund may charge. Some members of the committee feel that existing schemes should adhere to these guidelines with effect from 1 April 1997. the spread between the repurchase and re-sale price should not exceed seven percentage points. These guidelines would apply to all the mutual fund schemes launched in the future but it is not yet decided if these guidelines should be made applicable to existing schemes. It has been suggested that the failure of a mutual fund scheme to give the minimum assured returns should be met out of the funds of the asset management company and not the corpus of the mutual fund scheme. Investors in India look at mutual funds as a substitute of fixed deposits in banks rather than as a substitute for investment in securities. Within a short span of four to five years.07 times the net asset value. The offer price is the price at which the mutual fund will sell the shares.
Too many investors do not understand what they are buying. investors also buy laggards. plunges in value. Besides investing in inappropriate and high-cost mutual funds.out plan. There is no shortage of mediocre performers.44 - . The popularity of mutual funds has soared so have their diversity and complexity. or even what they are paying. Critics argue that funds are boring. With so many choices. mutual funds are not for everyone. and takes the life savings down with it. However. diversification. Despite the many advantages (e. low operating costs.Mutual funds provide an opportunity for the risk-averse investors to share their risk and yet go in for high return equities in the capital market. since shareholders do not have any say as to which stocks are selected.g. That then is also a danger of getting carried away and ending up with a big stake in a promising company that is suddenly runs into deep trouble. . successful investing being a serious business requiring a well thought. investors do not need to be familiar with the characteristics of the different types of mutual funds. many of which can be avoided or minimised with mutual funds. continuous professional management. The chances of that happening with the mutual funds are much lower since they are diversified and professionally managed. Some people have been able to strike it rich with the right stock. liquidity. safety from loss due to unethical practices etc. The reason most investors do not excel in stock picking is that they succumb to certain common errors.). investors make the wrong decisions. shareholder services.
Total resources mobilised as proportion of GDP declined to 1.13 per cent during 1999-2000. 68.193 crore in the corresponding previous period.7 per cent of gross resource mobilisation during April-December.114 crore in 1999-2000.45 - .0 per cent in the corresponding previous period. there was a net outflow of funds form mutual funds. Resources mobilised by mutual fund (UTI was the only mutual fund until 1987-88) grew at a steady rate until 1992-93. Net resource mobilisation by mutual funds declined to Rs. thereby making their net resource mobilisation negative. In the case of public sector mutual funds. redemption/repurchase exceeded gross resource mobilisation.846 crore in April-December. From 1997-98 onwards. as a result of which the ratio turned negative.200 crore in 199899 to Rs. Resources mobilised by mutual funds which was just 0.09. During the period from 1995-97. 2000 compared with 66. The investible resources of mutual funds rose form Rs. the ratio again turned positive and stood at 1. 6.59 per cent during 1990-91 to 1992-93. The outflow of funds via repurchase/redemption constituted 88. The mutual fund industry registered significant growth in the last few years.12 per cent by 1994-95 but nevertheless remained positive.Mutual Funds Operations In India Mutual funds le households an option for portfolio diversification and relative risk-aversion through collection of funds from the households and make investments in the stock and debt markets. . This was on account of the steep increase in redemption/repurchase during this period. 1.04 per cent of GDP (at current market prices) during the period of 1970-71 to 1974-85 increased to 1. especially UTI. 2000 from Rs. since then they showed some variations. 12.
Reliance Mutual Fund. power and telecom. petrochemicals. with Average Assets Under Management (AAUM) of Rs.Anil Dhirubhai Ambani Group. 2005." Reliance Capital Ltd.46 - . textiles. the balance paid up capital being held by minority shareholders.was divided between Mukesh Ambani and his younger brother Anil on June 18. Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds.one of India's largest business houses with revenues of Rs. and ranks among the top 3 private sector financial services and banking companies.87 Lakhs. a subsidiary of Reliance Capital Limited. a part of the Reliance . "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited.Introduction of the organisation: The Reliance ADA Group The Reliance group .37% of the paid-up capital of RCAM.938 Crores (AAUM for Mar 08 ) and an investor base of over 66. The group .6 billion) that is equal to 3.. in terms of net worth. 990 billion ($22.which claims to contribute nearly 10 per cent of the country's indirect tax revenues and over six percent of India's exports . refining and marketing of oil and natural gas. The group's activities span exploration. financial services. insurance. is one of India’s leading and fastest growing private sector financial services companies. 90. production. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. which holds 93. .5 percent of the country's gross domestic product was split into two. The family also has interests in advertising agency and life sciences. is one of the fastest growing mutual funds in the country RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 115 cities across the country.
when & how much an investor invest & according to it.47 - . where do they invest. This study gave us basis to profile investors. What factor they consider. life and general insurance. we have to make profile of investors. where. before taking any step they want to understand market & investor and distributor behavior of SMEs. Reliance Mutual fund has largest AUM in India. so they may plan accordingly to capture Rajasthan Market. has interests in asset management. private equity and proprietary investments.02 Average AUM Fund of Funds 0 . how. how do they invest. This behavioral study consists of how any investor invests in CG. stock broking and other financial services. Reliance capital asset Management is no. Reliance Mutual Fund : Asset under management: AUM Month Mar 2008 Average AUM Excluding Fund of Funds 9093794. In Rajasthan they are no. purpose behind investment.Reliance Capital Ltd. 1 AMC in India but the picture is not the same in Rajasthan. timing of investment & duration of investment. why these factors they consider. 2 AMC. In this report I have endeavored to understand the factors affecting Investment behavior of an investor in Rajasthan. size of investment. In this research we have to analyze why. Management of Reliance mutual fund wants to expand its feet in Rajasthan.
Reliance Corporate PROFILE: .48 - .
1995. Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30. RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. 1995 and was amended on August 12.152. Pursuant to this IMA. 1997 in line with SEBI (Mutual Funds) Regulations. which holds 93. 1995 and was amended on August 12.Reliance Capital Asset Management Ltd. 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. 1995.. Pursuant to this IMA. 1996. the balance paid up capital being held by minority shareholders". IIMARP/1264/95 dated June 30. The net worth of the Asset Management Company including preference shares as on March 31. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12. a company registered under the Companies Act. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12. a subsidiary of Reliance Capital Limited.37% of the paid-up capital of RCAM. 1996. 2005 is Rs. Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI by their letter no. 1997 in line with SEBI (Mutual Funds) Regulations. The net worth of the Asset Management Company including preference shares as on September 30.: Reliance Capital Asset Management Limited (RCAM). "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited.02 crores.113. . 2007 is Rs.59 crores.49 - . RCAM is authorized to act as Investment Manager of Reliance Mutual Fund.
high performance environment aimed at delighting their customers”. Mission Statement: “To create and nurture a world-class.. the implementation and observance of ethical processes and policies has helped us in standing up to the scrutiny of our domestic and international investors. . Corporate Governance of reliance: Corporate Governance Policy: Reliance Capital Asset Management Ltd. is committed to good Corporate Governance. with an emphasis on customer care and a culture of good corporate governance”. At Reliance Capital Asset Management Ltd. However. Management: The management at Reliance Capital Asset Management Ltd. The Board of Directors of RCAM is a professional body.Vision Statement: “To be a globally respected wealth creator. has a vision of being a leading player in the Mutual Fund business and has achieved significant success and visibility in the market.50 - . including well-experienced and knowledgeable Independent Members. an imperative part of growth and visibility is adherence to Good Conduct in the marketplace. which includes transparency and timely dissemination of information to its investors and unit holders. Regular Audit Committee meetings are conducted to review the operations and performance of the company.
gives top priority to compliance in true letter and spirit. Sponsors: ‘‘Reliance Mutual Fund’’ schemes are managed by Reliance Capital Asset Management Limited.Employees: Reliance Capital Asset Management Ltd. Reliance Capital has interests in asset management and mutual funds. and implement policies/guidelines in conformity with the best practices as an ongoing process. The management believes in the principles of propriety and utmost care is taken while handling public money. The net worth of RCL is Rs. a subsidiary of Reliance Capital Limited.. Reliance Capital Limited is one of the India’s leading and fastest growing financial services companies. life and non-life insurance. in terms of net worth. the sponsor. 5. 2007. which holds 93. stock broking and other activities in the financial services sector.". . They are taken through a well-designed HR program. obligations and duties as part of the Dealing Policy laid down in terms of SEBI guidelines.23 crores as on March 31. making proper and adequate disclosures.161. private equity and proprietary investments. The promoter of RCL is AAA Enterprises Private Limited. is to identify issues considered sensitive by global corporate standards. and ranks among the top three private sector financial services and banking companies. a code of conduct for all its officers.51 - .37% of the paid-up capital of RCAM. One of the core objectives of Reliance Capital Asset Management Ltd. Reliance Capital Limited is a Non Banking Finance Company. fully understanding its fiduciary responsibilities. Internet and e-mail usage and a host of other issues. conducted to impart work ethics. information security. It has a clearly defined prohibition on insider trading policy and regulations. the balance paid up capital being held by minority shareholders. Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL). the Code of Conduct. Reliance Capital Asset Management Ltd. All personnel at Reliance Capital Asset Management Ltd are made aware of their rights. has at present.
84 Reliance Capital Ltd.92 8.74 2004-05 295.16 112.79 1271.39 (Basic + Diluted) (Basic + Diluted) (Basic + Diluted) (Basic + Diluted) Book Value per Share (Rs. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the contribution of an amount of Rupees one Lac made by them towards the initial corpus for setting up the Fund and such other accretions and additions to the corpus.96 29% 127.58 4122.40 112.61 537.02 550.52 - . in crores) Total Income Profit Before Tax Profit After Tax Reserves & Surplus Net Worth 2006-07 883.61 3849. Reliance Capital Ltd.08 1437.21 105.) Dividend (%) Paid up Equity Capital 210.Given below is a summary of RCL’s financials: Particulars (Rs.31 2003-04 356.23 2005-06 652.12 35% 246.81 1310.81 8. has contributed Rupees One Lac as the initial contribution to the corpus for the setting up of the Mutual Fund.31 Earnings per Share (Rs.79 105.95 30% 223. The Reliance capital Management Team: .18 646.84 109. is responsible for discharging its functions and responsibilities towards the Fund in accordance with the Securities and Exchange Board of India (SEBI) Regulations.79 105.95 30% 127.46 29.86 733.) 28.69 111.07 5161.18 4915.84 1399.
Omprakash S. Shailesh Raj Bhan Mr. Sushil Tripathi Management Team CEO Mr. Arpit Malaviya Ms. Sundeep Sikka Head Equity Investments Mr. Vikrant Gugnani Deputy CEO Mr.53 Mr Vikram Dhawan . Shiv Chanani Commodities Head of Commodities Head Of Departments Marketing Communication Finance and Accounts Human Resource Development Information Technology Mr Rajat Johri Mr. Amitabh Mohanty Equity Fund Managers Mr. Anju Chhajer Mr. Ashwani Kumar Mr. Kuckian Debt Fund Managers Mr.Board of Directors Mr. Singhania Mr. Sanjay Wadhwa Mr. Amitabh Chaturvedi Mr. Manu Chadha Mr. Rajesh Derhgawen Mr. Sunil B. Kanu Doshi Mr. Amit Tripathi Mr. Madhusudan Kela Head Fixed Income Mr. Vinay Nigudkar .
Lav Chaturvedi Mr Himanshu Vyapak Mr.983 -3.March08 Reliance Mutual Fund 93. Balkrishna Kini Ms. Aashwin Dugal Mr.482 -6. cr.532 08 90.278 54. Gurbir Chopra Mr.465 48. Sanjiv Gudal Mr.64 HDFC Mutual Fund 46.77 ICICI Prudential Mutual Fund 59.956 -8. Milind Nesarikar Mr.938 Change %Change -2.Legal & Compliance Operations & Settlement R&T Operations & Investor Relations Risk Management Sales & Distribution Zonal Heads Northern Zone Head Western Zone Head Southern Zone Head Eastern Zone Head Mr.54 - .773 -1.28 .594 -2.292 44.36 UTI Mutual Fund 52.519 -3. Gopal Khaitan MUTUAL FUNDS ASSET UNDER MANAGEMENT: Top 10 companies list: Mutual Fund Assets Under Management (Rs.322 -4.) February. Geeta Chandran Mr.
23 Tata Mutual Fund 20.968 18.675 -2.82 DSP Merrill Lynch Mutual Fund 19.463 -12.202 3.Birla Sun Life Mutual Fund 34.902 26.842 -3.897 -13.60 Kotak Mahindra Mutual Fund 20.179 -314 -1.059 -10.205 19.906 1.55 - .06 Franklin Templeton Mutual Fund 29.87 Reliance Mutual Fund: .139 16.704 35.493 29.679 -526 -2.071 -2.46 SBI Mutual Fund 29.
The main objectives of the Trust are: 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. 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. 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 Social Responsibilities: .About Reliance Mutual Fund: Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act. 1995. 1882 with Reliance Capital Limited (RCL). as the Settler /Sponsor and Reliance Capital Trustee Co. IMD / PSP / 4958 / 2004 date 11th. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30. March 2004 vide SEBI's letter no. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. Limited (RCTCL).56 - . March 2004.
being socially responsible is not an occasional act of charity or that one-time token financial contribution to the local school. it is part of a much larger compact which they have with their entire body of stakeholders: From employees.57 - . They evaluate and assess each critical business decision or choice from the point of view of diverse stakeholder interest.“Organizations. lies at the heart of the CSR philosophy of the Reliance Group. The Schemes: Equity/Growth Schemes: . depend for their survival. It is an ongoing year-round commitment.” This ethical standpoint. economic and environmental costs and concerns. hospital or environmental NGO. and society at large. like individuals. Because they believe that there is no contradiction between doing well and doing right. customers and vendors to business partners. and must pay back this generosity in every way they can. which is integrated into the very core of their business objectives and strategy. “doing right is a necessary condition for doing well”. local communities. While they strongly believe that their primary obligation or duty as corporate entities is to their shareholders – they are just as mindful of the fact that this imperative does not exist in isolation. For them. eco-system. derived from the vision of the founder. driven by the need to minimize risk and to pro-actively address long-term social. Indeed. sustenance and growth on the support and goodwill of the communities of which they are an integral part.
capital appreciation. Such schemes generally invest in fixed income securities such as bonds. corporate debentures. However. Pharmaceuticals. Such funds have comparatively high risks.term. While these funds may give higher returns. Such funds are less risky compared to equity schemes. These schemes provide different options to the investors like dividend option. they are more risky compared to diversified funds. etc.58 - . and the investors may choose an option depending on their preferences. Various Schemes of Reliance Mutual Fund: . Petroleum stocks. Eg. Government securities and money market instruments. The returns in these funds are dependent on the performance of the respective sectors/industries. etc. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Debt/Income Schemes: The aim of income funds is to provide regular and steady income to investors. The mutual funds also allow the investors to change the options at a later date. These funds are not affected because of fluctuations in equity markets. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. Fast Moving Consumer Goods (FMCG). NAVs of such funds are likely to increase in the short run and vice versa. Software. opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. The investors must indicate the option in the application form.The aim of growth funds is to provide capital appreciation over the medium to long. Sector Specific Schemes: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. Such schemes normally invest a major part of their corpus in equities. If the interest rates fall.
59 - .V (September 2007) 2007) Investment Objectives: .Reliance Mutual Fund has launched thirty-two Schemes till date.IV (AugustReliance Fixed Horizon Fund . namely: Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997) Reliance Medium Term Fund (August 2000) Reliance Gilt Securities Fund (July 2003) Reliance Vision Fund (September 1995) Reliance Liquid Fund (March 1998) Reliance Short Term Fund (December 2002) Reliance Banking Fund (May 2003) Reliance Monthly Income Plan (DecemberReliance Diversified Power Sector Fund 2003) Reliance Pharma Fund ( May 2004) Reliance Media & Entertainment (March 2004) Reliance Floating Rate Fund (August 2004) FundReliance NRI Equity Fund (October 2004) Reliance Index Fund (February 2005) (September 2004) Reliance NRI Income Fund (October 2004) Reliance Equity Opportunities Fund (FebruaryReliance Regular Savings Fund (May 2005) 2005) Reliance Liquidity Fund (June 2005) Reliance Tax Saver (ELSS) Fund (July 2005) Reliance Fixed Tenor Fund (November 2005) Reliance Equity Fund (February 2006) Reliance Fixed Horizon Fund I (August 2006) Reliance Fixed Horizon Fund (April 2006) Reliance Fixed Horizon Fund III (March 2007) Reliance Fixed Horizon Fund II (November Reliance Liquid Plus Fund (March 2007) 2006) Reliance Long Term Equity Fund (November 2006) Reliance Long Term Equity Fund (Nov 2006) Reliance Interval Fund (March 2007) Reliance Fixed Horizon Fund .
Reliance Income Fund aims to generate optimal returns consistent with moderate levels of risk.Reliance Monthly Income Plan aims to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital. Reliance Liquid Fund aims to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly.60 - . investments shall predominantly be made in Debt and Money Market Instruments Reliance Short Term Fund aims to generate stable returns for investors with a short term investment horizon by investing in fixed income securities of a short term maturity. investments shall predominantly be made in Debt and Money Market Instruments. Reliance Medium Term Fund aims to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital. investments shall predominantly be made in Debt and Money Market Instruments. Accordingly. Reliance Gilt Securities Fund aims to generate optimal credit risk free returns by investing in a portfolio of securities issued and guaranteed by the Central Government and State Governments Reliance Floating Rate Fund aims to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitized debt and Money Market . This income may be complemented by capital appreciation of the portfolio. Reliance Liquidity Fund aims to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly.
Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). Reliance Regular Savings Fund Debt Option: The primary investment objective of this plan is to generate optimal returns consistent with moderate level of risk. Reliance Regular Savings Fund Equity Option: The primary investment objective is to seek capital appreciation and or consistent returns by actively investing in equity / equity related securities. Reliance Vision Fund aims to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach. Reliance Diversified Power Sector Fund seek to generate consistent returns by investing in equity / equity related or fixed income securities of Power and other associated companies .61 - . Reliance Growth Fund aims to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach. Reliance Regular Savings Fund Hybrid Option: The primary investment objective is to generate consistent return by investing a major portion in debt & money market securities and a small portion in equity & equity related instruments. Accordingly investments shall predominantly be made in Debt & Money Market Instruments. Reliance Equity Opportunities Fund aims to generate capital appreciation & provide long term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities Reliance Banking Fund aims to generate continuous returns by actively investing in equity / equity related or fixed income securities of banks. This income may be complemented by capital appreciation of the portfolio.
which could approximately be the same as that of Nifty. .62 - . with a view to endeavor to generate returns. Reliance Equity Fund: 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. Reliance NRI Equity Fund aims to generate optimal returns by investing in equity and equity related instruments primarily drawn from the Companies in the BSE 200 Index. RESEARCH DESIGN and Methodology: A research design is the detailed blueprint used to guide a research study toward its objectives. Reliance Index Fund-Sensex Plan aims to replicate the composition of the Sensex. with a view to endeavor to generate returns. Reliance Index Fund-Nifty Plan aims to replicate the composition of the Nifty. which could approximately be the same as that of Sensex. Reliance Media & Entertainment Fund to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies.Reliance Pharma Fund aims generate consistent returns by investing in equity / equity related or fixed income securities of Pharma and other associated companies.
Analysis of Data Drawing Conclusions Suggestions/ Recommendation Research Methodology: Title of the Project Study: . and research tactics is inherently an iterative process in which earlier decisions are constantly reconsidered in light of subsequent decisions. because it determines how the information will be obtained.63 - . research approach. Research design Defining the purpose of research Determining the data required and their resources. The achievement of this fit among objective.The process of designing a research study involves many interrelated decisions. A Questionnaire was designed to get detailed information. To design something also means to ensure that the pieces fit together. The most significant decision is the choice of research approach. Face to face interviews was taken were conducted to get the required information.
In the last week of my project I completed my project report with the help of my Project Guide.A project study conducted for “Identifying alternate channels of distribution for the Reliance mutual funds”. fill-up the questionnaire made for them with the help of my Project Guide.2 Months In the first two weeks of my project I had gone through the existing work which has been done in this field. . The project was a unique experience for me for tracking down information from various types of people and all through it is a vast learning process. In the next five weeks time period I started my field work and I moved around the market and collected data from the targeted audience by making them. There were several things that I had made out and learnt out of this project of mine. OBJECTIVE OF THE PROJECT: This project is an attempt to deep and thorough approach toward development of channel relationship for “Reliance Mutual Funds”.64 - . I thoroughly studied the published literature in different magazines & journals I had also referred many books and browsed the internet to collect secondary data. This field work had taken around 4-5 weeks time as my Sample Size was 200. In this period I started preparing for the field work and started identifying my target audience. Project Duration: -.
The questionnaire was prepared on scientific basis.65 - . to increase the sale of the various funds being offered by it. and therefore the greatest risk of loosing them. the companies need to develop a wide network of its distributors and need to have a smooth relationship with them. Approach to the problem: All the objectives were taken into account before preparing the questionnaire. history regarding it. How to improve your organization with the specific feedback from the tool and become more attractive to current and potential clients. Problem Analysis: This project aims to identify alternate channels of distribution for the ‘Reliance mutual funds’. Some points are listed below which can be considered as the objective of this project topic: To identify activities that has the greatest potential benefits in increasing the network. . So this project is tending to find out that what actually the mutual fund is. its types and other facts and figures related to it. deliberately hidden questions were asked to get the required information. A modest attempt has been made to study and understand the behavior and perception of the target audience. about mutual funds and distribution channels for the same.As in the present scenario of business world. To discover what is of most concern to your client. To learn the reasons your clients stay to continue and improve in these areas.
to broaden the horizon of research topic. To know about the industrial relation in the company. To analyze the strength and weakness. To relate theory with practice. attempt was made to know the opportunities and threats related to other players in mutual funds. To familiarize with the different departments in the organization and their functioning. Understand how information is used in organization for decision making at various levels. To get clear cut idea about the various departments and functions. Problem Definition A problem exists when the decision-maker faces uncertainty regarding which action to adopt in the situation. To know the history about the company. If only one action is available (or none . Strategic planning for the Research: To familiarize with a business organization. Information was extracted from other sites of different companies and various other mutual fund associations. To enable to understand how the key business process are carried out in organizations. Though complete focus was kept. To give findings and solutions.66 - .Besides this. To get clear cut idea about the management and administration. extensive research was done.
For instance the marketing manager may state that sales of a product have fallen by 25% because its price is too high & hence may ask the researcher to throw more light on “what is a more effective price”? Actually the decline in sales may be due to any other factor or factor like poor product quality. Type of Research: The different research designs can be categorized into research design in case of: Exploratory Research Studies.67 - . The project’s objectives are the specific purpose or goal of the research. poor salesmanship etc. competitor’s action. The existence of a disorder or a problem is the reason why the research is needed. Defining a problem is a situation where: 1) The decision-maker has not yet determined how to exploit an opportunity or 2) There are difficulties that are currently faced or are anticipated. there really is no problem. the researcher may set the projects objectives. since the objective flow from the disorder must precede the selection of the objectives. . The research dealing solely with the price may be able to solve the problem correctly.at all) or if there is certainty about the outcomes of the alternatives. Once the problem is identified/disorder is located.
The object is to obtain insight into the relationship between variables and new ideas relating to the research problem. Purpose of such studies is formulating a problem for more precise investigation. The survey of concerning literature: This happens to be the most simple and fruitful method of formulating the research problem. Experience Survey: It is the survey of people who have had practical experience with the survey to be studied.Testing Research Studies (Experimental Studies) Exploratory Research Studies: Also termed as formulative research studies. Inbuilt flexibility is essential. Hypothesis stated by earlier workers may be reviewed and their usefulness be evaluated as a basis for further research. Descriptive And Diagnostic Research Studies Hypothesis.68 - . but in cases where hypothesis has not been formulated hi task is to review the available material for deriving the relevant hypothesis from it. In this way researcher should review and build upon the work already done by others. Following are three methods in the context of research design for studies: The survey of concerning literature The experience survey The analysis of insight –stimulating examples. Major emphasis is on the discovery of ideas and insights. For such a survey people who are competent and can contribute new ideas may be carefully . Research design has to be flexible enough to provide opportunity for considering different aspects of a problem under study.
An interview schedule is prepared by the researcher for systematic questioning of informants.69 - . For this purpose the existing records may be examined the unstructured interviewing may take place or some other approach may be adopted. The interview may last for few hours.selected as respondents to ensure representation of different of experience. Descriptive And Diagnostic Research Studies Descriptive research studies are concerned with describing the characteristics of certain individuals or a group. . This survey may as well provide information about the practical possibilities for doing different types of research. Thus. The respondents selected can be interviewed by the investigator. at the time of interview they may be able to contribute effectively. E. This gives an opportunity to the respondents for doing some advance thinking over various issues involved so that. an experience survey may enable the researcher to define the problem more concisely and help in formulation of research hypothesis. it its often considered desirable to send a copy of the questions to be discussed to the respondents well in advance. the intensity of the study and the ability of the researcher to draw together diverse information into a unified interpretation are the main features which make this method an appropriate procedure for evoking insights. Hence. Attitude of the investigator. It consists of the intensive study of the selected instances of the phenomenon in which on is interested. studies concerning whether certain variables are associated. The interview must ensure flexibility in the sense that the respondents should be allowed to raise issues and questions which the investigator has not previously considered.g. It is particularly suitable in areas where there is little experience to serve as a guide. Analysis of insight stimulating examples: This is a fruitful method for suggesting hypothesis for research.
It should make enough provision for protection against bias and must maximize reliability. what he wants to measure and must find adequate methods of measuring it. Selecting the sample (how much material will be needed). The design must be rigid and not flexible.Diagnostic research studies determine the frequency of with which something occurs or its association with something else. Collecting the data (where can the required data be found and with what time period should the data be related). with narration of facts and characteristics concerning individual. E.70 - . the procedure to be used must be carefully planned. Following are the steps involved in both the studies: Step 1.Specify the objectives with sufficient precision to ensure that ht data collected is relevant. The descriptive as well as diagnostic research studies share common requirements. Processing and analyzing the data. In both the studies. group or situation. The aim is to obtain complete and accurate information. . Reporting the findings.g. the researcher must be able to define clearly. hence. Designing the methods of data collection (what techniques of gathering data will be adopted). studies concerned with specific predictions. Following should be focused: Formulating the objective of the study (what is the study about and why is it being made).
consistency and reliability. The layout of the report needs to be well planned so that all things relating to the research study may be well presented in a simple and effective style. communicating the findings to others and the researcher must do it in an efficient manner..Select the methods by which the data are to be obtained. This includes steps like coding the interview replies. As data are collected.e. comprehensibility. The data collected must be processed and analysed. it is necessary to supervise closely the staff of field workers. Last of all comes the task of reporting the findings. the research design in the case of descriptive/diagnostic studies is a comparative design and must be prepared keeping the objective(s) of the study and the resources available. E. . techniques of collecting the data must be devised. To avoid error in coding. i. The processing and analyzing procedure should be planned in detail before actual work is started. In most studies researcher takes down samples and then wishes to make statements about the population on the basis of the sample analyses. observations.g. Similarly.Step 2. etc. the reliability of coders needs to be checked. Thus. and performing several statistical computations.71 - . as they collect and record information. the accuracy of tabulation may be checked by having a sample of tables re-done. tabulating the data. The problem of designing samples should be tackled in such a form that the samples may yield accurate information with a minimum amount of research effort. To obtain data free from errors. they should be examined for completeness.
the information collected and inferences drawn happen to be more reliable.72 - . It can be referred to as a survey design since it takes into account all the steps involved in a survey concerning a phenomenon to be studied. Sampling Process And Design: .A. Professor R. office goers. reasons for opting those funds and what drives there inclination towards particular types of funds . Fisher begun such designs when he was working at Rothamsted Experimental Station (Centre for Agricultural Research in England). Professor Fischer found that by dividing agricultural fields or plots into different blocks and then by conducting experiments in each of these blocks. Hypothesis: Testing Research Studies (Experimental Studies): Hypothesis-tested research studies (experimental studies) are those where the researcher tests the hypothesis of casual relationship between variables. it must ensure the minimization of bias and maximisation of reliability of the evidence collected. Such studies require procedures that will not only reduce bias and increase reliability. Discussion of the Information Needs: The sources of information are young students. but will permit drawing inferences about casuality. The main information needed was which types of funds they preferred . However. The targeted audience was easily available and information asked for was easily available. chartered accountants and tax consultants with reasonable amount of internet usage and awareness.
Advantages of observation method: . The majority of the respondents were young students. we have not taken them into account Data Collection Technique: Data is collected through primary research conducted in the city among CAs and tax consultants. A questionnaire of 14 questions was used to gather their opinion.g.Sampling Size: -. Instead of asking consumers what brand they buy the researchers arrange to observe what products are brought. a large food retailer tested a new slot-type shelf arrangement for canned foods by observing shoppers as they used the new shelves. The survey was conducted in the city malls where people usually have free time. to interact. E. OBSERVATION: Definition: It is the process of recognizing people. Hence.200 I had conducted In-depth interviews under which 210 CAs and Tax Consultants were interviewed to get insights about investment patterns. businessmen and office goers. objects and occurrences rather than asking for information. As far as this research is concerned secondary data is not required & will be of no relevance because no such research is conducted in Jaipur and other State’s data will be of no use.73 - .
yet the vast majority of researchers continue to rely on the use of a questionnaire. Disadvantages of observation method: Researchers have recognized the merits of observations opposed to questioning. it is not necessary to rely on the willingness and ability of respondents to report accurately. The biasing effects of interviewers or their phrasing of the questions is either eliminated or reduced.74 - . Whether the observation is structured or unstructured Whether the factor of interest is observed directly or indirectly Whether observers or mechanical means makes observations. Direct observation: . Data collection by observation is more objective and hence more accurate. etc. Events of more than short-term duration such as a family’s use of leisure time and personal activities such as brushing of teeth are better discussed with questionnaires. The most limiting factor in the use of observation is the inability to observe things such as attitudes. When the researcher observes and records events. METHODS OF OBSERVATION: Observational studies can be classified on five bases: Whether the situation in which the observation is made is natural or contrived Whether the observation is obtrusive or unobtrusive. motivation.
75 - . the observation is structured. No one can observe everything that is going on. Not all observations are as simple as the above but experiments have shown that even observers with a different viewpoint on a given question tend to make similar observations under structured conditions.g. direct observation in a natural situation. A form can easily be printed for simple recordings of such observations. If the observer has to go about observing how shoppers go about selecting a brand of soup. Customers standing at a counter with annoyed faces may be observed as irritated because of the service or lack of it. . hence the observer must select certain things which he can make a note of. Observers in a supermarket might note the number of soup cans picked up by each customer. In an effort to find ways of improving the service of a store. the situation is unstructured. When an observer is stationed in a grocery store to note how many different brands of canned soup each shopper picks up before selecting one. direct observation: Observers are placed in situations and observe whatever they deem significant.g. there is unobtrusive. Unstructured. observation is by mechanical means If the observer counts the specific cans picked up. If a camera is positioned to record shopping actions. Structured direct observation: It is used when the problem at hand has been formulated precisely enough to enable researchers to define specifically the observations to be made E. observers may mingle with customers in the store and look for activities that suggest service problems. E.
g. the observer can pose as a customer and take various bargaining attitudes from the most-eager-to-buy to the toughest price seeking.g. An example would be the study of a relative readership of different sections of an encyclopedia by measuring the wear and tear on the pages. Contrived observations often have a validity and economic advantage. Indirect observation: One type of observation focuses on the physical traces left by the factors of interest. Accretions involve studies such as the observation of liquor bottles in the Erosion. it may be more desirable to contrive situations so that observations may be made more efficiently. Pantry audits determine what purchases have been made in the past. As long as the sales person believes the researcher to be a bonafide customer. These traces are of two types: Accretions left. To study the bargaining between an automobile salesman and a customer. . Observation of the results of past actions will not bias the data if done on a one-time basis. E. Accretions involve a trash to eliminate the liquor consumption in cities without liquor stores. E. Erosion observations are less frequent. there is no bias in the observation.76 - .Contrived observation: When researchers rely on natural direct observation it results in a lot of wasted time while they wait for the desired events to take place. Erosion. In each case the observer notes the salesperson’s response. To reduce this.
77 - . Types of surveys: Surveys can be divided into two broad categories: the questionnaire and the interview. Survey method: Definition: Survey research is one of the most important areas of measurement in applied social research. Questionnaires are usually paper-and-pencil instruments that the respondent completes.Observation of records: Whenever researchers use data collected for another purpose. The interviewer based on what the respondent says completes interviews. The broad area of survey research encompasses any measurement procedures that involve asking questions of respondents. . they are employing the observation method in a manner similar in character to the observation of physical trace The records of previous activities such as population census are physical traces of previous periods.
questionnaires were administered in-group settings for convenience. Traditionally. Mail questionnaires are not the best vehicles for asking for detailed written responses. Group-administered questionnaire: A sample of respondents is brought together and asked to respond to a structured sequence of questions. They allow the respondent to fill it out at their own convenience. . The researcher could give the questionnaire to those who were present and be fairly sure that there would be a high response rate If the respondents were unclear about the meaning of a question they could ask for clarification.78 - . Disadvantages: Response rates from mail surveys are often very low.Questionnaires: Mail survey: when a respondent receives a questionnaire by mail it is known as mail survey. Advantages: They are relatively inexpensive to administer. for instance). And. there were often organizational settings where it was relatively easy to assemble the group (in a company or business. You can send the exact same instrument to a wide number of people.
79 - . Telephone Interview: Telephone interviews enable a researcher to gather information rapidly. The interviewer is considered as a part of the measurement instrument and interviewers have to be well trained in how to respond to any contingency. Advantages They allow for personal contact between the interviewer and respondent. Interviews are generally easier for the respondent.Interviews: Interviews are a far more personal form of research than questionnaires Personal interview: The interviewer works directly with the respondent Advantages The interviewer has the opportunity to probe or ask follow-up questions. They allow the interviewer to ask follow-up questions Disadvantages . especially if what is sought is opinions or impressions Disadvantages: Interviews can be time consuming and they are resource intensive.
People often don't like the intrusion of a call to their homes. You have to use your judgment to balance the advantages and disadvantages of different survey types. Some don't have telephones. Many people don't have publicly-listed telephone numbers. Following are the issues that the researcher must look into before conducting a research. Telephone interviews have to be relatively short or people will feel imposed upon. Selecting the survey method: Selecting the type of survey you are going to use is one of the most critical decisions in many social research contexts.80 - . Sampling issues: What data is available? What information do you have about your sample? Do you know their current addresses? Their current phone numbers? Are your contact lists up to date? Can your respondents be located? Who is the respondent in your study? If the specific individual is unavailable is the researcher willing to interview another? Are response rates likely to be a problem? Questions: What types of questions can be asked? Are they personal or require a detailed answer? Can question sequence be controlled? .
Cost is often the major determining factor in selecting survey type. E.81 - . True/False or Agree/Disagree response. Do you need responses immediately (as in an overnight public opinion poll)? Have you budgeted enough time for your study to send out mail surveys and follow-up reminders. Your survey is one where you can construct in advance a reasonable sequence of questions? Or. You might prefer to do personal interviews. we consider it dichotomous.g. Do you have the facilities (or access to them) to process and manage your study? In phone interviews. You may prefer to send out an extensive mailing but can't afford the postage to do so. but can't justify the high cost of training and paying for the interviewers. please enter your gender Male female . and to get the responses back by mail? Have you allowed for enough time to get enough personal interviews to justify Types of questions: Survey questions can be divided into two broad types: structured and unstructured Dichotomous Questions: When a question has two possible responses. Surveys often use dichotomous questions that ask for a Yes/No. are you doing an initial exploratory study where you may need to ask lots of follow-up questions that you can't easily anticipate. do you have well-equipped phone surveying facilities? For focus groups. do you have a comfortable and accessible room to host the group? Do you have the equipment needed to record and transcribe responses Some types of surveys take longer than others.
They tend to cost substantially less than primary data and can be collected in less time also.SECONDARY DATA: Secondary data are data that were developed for some purpose other than helping to solve the problem at hand. it may be possible to utilize the secondary data in conjunction with primary data. Secondary data can provide a complete or partial solution to many problems and help in structuring other problems. Even when the data covers the same general topic as that . Or. they can often help to structure the problem and eliminate some variables from consideration. In some cases where the secondary data cannot solve the problem. Relevancy refers to the extent to which the data fits the information needs of research problem. Even when reports or publications are ordered. their relevance and accuracy must be assessed. A thorough search on secondary data will often provide sufficient information to resolve the problem.82 - . Secondary data can be gathered quickly and is inexpensive as compared to primary data. Problems Encountered with Secondary Data Before secondary data are applied to a particular marketing problem. the time involved is generally less than the time required to collect original data.
g. on the other hand. If available secondary data are based on age categories 5 to 9 and 10 to 14. complete census reports are not available for several years. Secondly using original source . Data are frequently collected one to three years prior to its publication. The final major factor that is affecting relevancy is time. However. E. if not future. The second general problem that can reduce relevancy of secondary data is the definition of classes. This is important because. it is the difficulty of determining how inaccurate the data is likely to be. research problems require current.required by the research problem. data.g. E.g. have been in existence for some time. E. Accuracy is the second major concern of the user of secondary data. they may not fit the requirements of the problem. the original source should be used if possible. Most secondary data. Three general problems reduce the relevance of data that would otherwise be useful. The real problem is not inaccuracy. the firm will have a hard time utilizing it. They are: There is often a difference in the units of measurement. Generally. a manufacturer may have a product that appeals to children 8 to 12 years old. While using secondary data. the original report is generally more complete than the second or third reports. many retail decisions require detailed information on the characteristics of the population within their trade area. cities or census tracts that do not match the trade area of the retail outlet. the available population statistics may focus on countries.83 - .
Internal Sources: Internal sources include sales record. allows the researcher to isolate profitable and unprofitable customers. There are four types of general external secondary information. unfortunately many companies do not collect or maintain sales data in the manner that allows the researcher to tap their full potential. and product lines. previous research reports and the likes. territories. and Syndicated services. . operating statements. Such records. They are available and inexpensive. But. By changing the format of collection forms (sales invoices.84 - . if properly utilized. etc) other useful data can be often collected. to identify developing trends and perhaps to measure the effects of manipulations of marketing mix variables. External Sources Numerous sources external to the firm may produce data relevant to the firm’s requirements. sales force reports. budgets. salesman call reports. The most useful type of internal information is generally sales data. Many firms have useful but unutilized data. Sources of Secondary Data: There are two general sources of secondary data – internal sources and external sources. Internal data are available within the firm whereas external sources provide data that are developed outside the firm. they are: Trade associations Government Agencies Other published sources. Internal data must be collected in a usable format and must be analyzed to be of value.allows the data to be examined in context and may provide a better basis for assessing the competence and motivation of the collector. internal data are the best information buy.
These include demographics. growth patterns and the like. The federal government maintains five major agencies whose primary function is the collection and dissemination of statistical data. Government agencies: Federal. They may also conduct special studies of factors relevant to their industry. state and local government agencies produce a massive amount of data that is of relevance to marketers. Since trade associations have good reputation for not revealing data on individual firms as well as good working relationships with the firms in the industry.Trade Associations: Trade associations frequently publish or maintain detailed information on industry sales. labor and social conditions. operating characteristics. These materials may be published in the form of annual reports or as special reports. they are: Bureau of Census Bureau of Labor Statistics National Center for Educational Statistics National Center for Health Statistics. . vital and health statistics. Department of Agriculture There are also a number of specialized analytic and research agencies. they may be able to secure information that may be unavailable to other researchers.85 - . These sources produce two types of data: Statistics focused on people are produced. numerous administrative and regulatory agencies. and Statistical Reporting Service.
Syndicated Services A number of firms regularly collect data of relevance to marketers that they sell on a subscription basis. it can only infer the output of other manufacturing firms. . Store audits provide data on the movement of brands through retail outlets. The second broad category focuses on economic activity: commerce. At the intermediary or wholesale level. Census publications are one of the most widely used sources of secondary data. Therefore. dissertations. Both types of data are widely used by business firms as an aid in decisionmaking. that contain information relevant to marketing decisions. Two types of syndicated services are widely used by marketing researchers – channel information and omnibus surveys. agriculture and the like. several syndicated firms provide information on the flow of products and brands to retail outlets. intermediaries. although a firm can monitor its own activities at this level. finance. such as census data. Omnibus surveys collect data that are useful to a number of subscribers from a series of independent samples. retailers and consumers. books. newspapers and the like. Other published Sources There is virtually endless array of periodicals. A manufacturers sales and shipment are generally available only through the firms own internal records. or it may be in the form of special reports. The data available may be standardized. Channel information is available to the firm at four levels – manufacturers.86 - .
87 - . which leads to increase the business. Reliance Mutual fund is targeting the Charted accountants and Tax Advisors to increase its’ channel of distribution. THE PROSPECTS: The Starting point is every one who might conceivably buy the product that is called suspects and from these the company determines the most likely prospects which it hopes to convert into first time customers then repeat customers and then clients. Following figure shows the main steps of attracting and keeping customers. in this process of expansion new prospects are needed to be tapped. Suspects Prospects First Time Customers Disqualified Prospects Repeat Customers Clients Inactive or ex customers Members Advocates Partners .Prospects and scope of research: Area wise Identifying Potential Prospective distributors.
Establish Research Objectives Research questions Research questions Hypotheses Hypotheses Boundaries of study Boundaries of study ESTIMATE THE VALUE OF INFORMATIO N Is benefit > cost? DO NOT DO NOT CONDUCT MR CONDUCT MR 4. Design the research Choose among alternative research approaches Choose among alternative research approaches Specify the sampling plan Specify the sampling plan Design the experiment Design the experiment Design the questionnaire Design the questionnaire 5. Prepare and analyze the data 6. Report the research results and provide strategic 7. Design the research 4. recommendations. Prepare and analyze the data 7. Agree on Research Purpose 1. Report the research results and provide strategic recommendations. Agree on Research Purpose Problems or opportunities Problems or opportunities Decision alternatives Decision alternatives Research users Research users RESEARCH PROCESS: STEPS: 2. .88 - . Establish Research Objectives 2. Collect the data 5. Collect the data 6.Marketing planning and information system Marketing planning and information system Planning system Planning system Strategic plans Strategic plans Tactical plans Tactical plans Information system Information system Database Database DSS DSS 1.
Some of them are: The most signified limitation has been the individuals involved in this study had a little experience. Our reliance was made on the primary data.89 - . Some people were not willing to disclose the investment profile. . The area of sample was decided after taking into consideration the major factors like: Availability of investors Approachability. etc. Due to work pressure. The data provided by the prospects may not be 100% correct as they too have their limitations. The sample size selected for the survey was too small as compared to large population. Time and money are critical factors limiting this study. Time available with investor for interaction. The project was carried out only in the Jaipur city so findings on data gathered can be best true for Jaipur only and not applicable to other parts of state and country.LIMITATION OF THE Project: Many constraints were involved in doing this study. Finding and suggestion have been given from personal point of view. The biased ness was being taken care of. detailed interaction with the chartered accountants and tax consultants was not possible.
Data analysis ana interpretation: Now after exploratory research we have given following weight to different variables: Variables Total no. 47% Not interested. of tax Consultants Interested Not interested Already a distributor Weights 104 45 38 21 96 54 21 21 Not interested already distributors intere sted RESPONSES interested. 33% already distributors 42. 20% .90 - . 59. of CAs Interested Not interested Already a distributor No. 99.
In this questionnaire there were 14 multiple choice questions and there were no open ended questions because to make questionnaire a bit easy for the respondents.91 - .Distributors Responses Not interested Interested 60 40 Interest ed Not interest ed Distribut ors 20 CA's TC's 21 21 54 0 Distributors Interested 21 45 Not interested 38 Results of The Questionnaire: Data Score Sheet Total This is the score sheet generated after collecting the required data by the way questionnaire. Ans\Qu es A B C D E F TOTAL 1 10 4 96 20 0 2 70 71 36 23 20 0 3 77 79 44 20 0 4 61 12 5 14 20 0 5 44 29 27 20 60 20 20 0 6 91 95 14 20 0 7 45 71 29 55 20 0 8 15 7 43 20 0 9 46 98 13 15 7 10 44 79 27 20 30 20 0 11 64 49 27 20 40 20 0 12 17 2 28 20 0 13 17 7 23 20 0 14 88 89 17 7 . No personal information was taken from the participants as to make this whole survey anonymous. There were 200 participants who have filled the questionnaire.
Fifth question was to determine the most important factor which they consider while advising there clients so the majority of respondents have mentioned the good service and risk factor which was mostly used by them while giving advice.92 - . 5.A. . 2. First question was to determine whether the participant is a practicing C. Third question was to determine the profile of the clients whether they are risk taker or risk averse so in this questions the majority of the response was for the risk taker so we can say that the general number of corporate and business class people are risk takers. Fourth questions was to determine the average age group of their clients so the majority of the response was for the 35-45 age group of people. whether is he involved in tax consulting business.Data Interpretation of Questionnaire: 1. Second question was to determine which segment of people they deal with in their business out of which majority of the respondents declared they mainly deal with “Corporate Clients” and the “Individual Entrepreneurs”. or. 4. Here 104 participants declared that they were a practicing Chartered Accountant and 96 declared that they were involved in tax consulting business. 3.
This questions was to determine whether they advice their clients to invest in mutual funds so majority of respondents mentioned that they sometimes advice them about Mutual Funds. This question was to determine the best investment instrument for financial planning on the basis of risk adjusted return so the majority of the response was for the tax saving mutual funds. 9. This question was to determine which investment instruments was suggested to their clients for tax planning purposes so the majority of response was for the Mutual Fund ELSS. Sixth questions was to check whether Mutual Funds is a good option for investment or not so almost fifty percent of respondents have consider that mutual funds are better and safe for making investments. 8. This question was to determine whether they get queries from their customers about the tax saving mutual funds or not so the almost all of the respondents agreed to the fact that they receive various queries about mutual funds.6. 7. 10. 11.93 - . negative or neutral so majority of the respondents have shown their positive response to their clients about the mutual funds. . This questions was to determine whether their response to there clients was positive.
1 Profit Parking Risk Motive Tax Benefit Liquidity Flexibility Awareness 0. Factor Analysis: Now we have taken 7 attributes that were having significant impact on distributors’ behavior.85 0.3 0.94 - .91 0.58 0. Through factor analysis.91 0.06 0. This question was to determine whether they like if they are associated with mutual fund industry or not so some of them were already associated with mutual fund industry and majority of them were interested and wanted to be a part of Mutual Fund industry.77 0. Factor analysis has grouped attributes into three groups. 14.72 0.91 2 0.13 . We tried to group these attributes into major groups.24 -0.08 0.08 0.41 3 -0.8 0.48 0.04 0. we have grouped these attributes. This question was to determine in which way they would appreciate if the AMC approaches them so half of the participants liked if they are personally visited and the other like if they are approached by telephone.25 0. 13.12.48 0.37 0. This question was to check whether the respondents are aware of AMFI certification or not so majority was the participants were already aware of AMFI certification.13 -0.
Awareness Tax Saving. Below diagram shows factors according to their importance. Flexibility Label Value For Money Economy Features From factor analysis we can say that there seven factors which have impact on distributors’ Behavior while deciding about any selling Option.Compone nt 1 2 3 Attributes Profit Parking. Liquidity. Motive.95 - . . Risk.
21 2. Approval seeking.39 1. Conventional. Cluster 1 Profit Parking Motive Tax Saving Risk Liquidity Flexibility Awareness 2. Conservative.17 1.87 2 Cluster 3 2. Believers Strivers Cluster Analysis The following table shows the result of clustering.36 No.59 2. Vital. Insecure.09 3.78 2.There are some special characteristics shown by above categories of Prospective CAs and Tax consultants: Name Of The Profile Experiencers Characteristics Young. Enthusiastic. We stopped at three clusters as after that no major differences can be seen in the attribute-profile being generated for the distributors.55 2.93 2. & Favor familiar options.96 - .94 2. Uncertain. of Respondents 69 42 99 . Impulsive.31 3.8 2.54 1.75 2.84 1.21 1.21 2. Traditional.33 Cluster 2 2.03 2. Invest comparatively High Proportion of Income in new things. & Resource Constrained.
Various sources of income: Reliance has many sources of income throughout the group. Its online and Internet-based access offers a combination of excellent growth prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003. HSBC). Large pool of installed capacities. and any threat (T) or dangers it might be exposed to.SWOT Analysis A type of fundamental analysis of the health of a company by examining its strengths(S). The company operates under numerous well-known brand names. and this diversity within the group makes the company more flexible and resistant to economic and environmental changes. Experienced managers for large number of Generics. .g. Increasing liberalization of government policies. Distribution channel strategy: Reliance is continuously improving the distribution of its products. Large pool of skilled and knowledgeable manpower. business opportunity (O). which allows the company to appeal to many different segments of the market. weakness (W). Reliance ADAG operates a multi-brand strategy.97 - . STRENGTHS: Brand strategy: as opposed to some of its competitors (e.
Japan and the rest of Asia. The shareholder fees. such as bonds and Treasury bills. especially in view of low global interest rates. . mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy.usually ranging from 1-3%. Unlike fixed-income products.WEAKNESS: Emerging markets: since there is more investment demand in the United States. Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. that doesn't mean the performance will be stellar. in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. As you can imagine. The annual fund operating fees are charged as an annual percentage . in years when the fund doesn't make money. Fees: In mutual funds. These fees are assessed to mutual fund investors regardless of the performance of the fund. Reliance should concentrate on these markets. these fees only magnify losses. the fees are classified into two categories: shareholder fees and annual operating fees. you need to research the risks involved .98 - .just because a professional manager is looking after the fund.
Entry of MNCs: Due to multinationals are entering into market job opportunities are increasing day by day. Also India Mutual Fund majors are tie up with other financial institutions.99 - .OPPORTUNITIES: Potential markets: The Indian rural market has great potential. THREATS: Increased Competition: With intense competition by so many local players causing headache to the current marketers. All the major market leaders consider the segments and real markets for their products. . stock or bond market. are also causing a threat for mutual funds have gained worldwide notoriety for bringing the markets down. Almost 60 to 70% of the revenue is spending on the management and services. Be it a crash in the currency. A senior official in a one of the leading company says foray into rural India already started and there has been realization that the rural market is both price and quantity conscious. Hedge funds: sometimes referred to as ‘hot money’. usually a hedge fund prominently figures somewhere in the picture. In addition to this though multinational brands are not yet established but still they will soon hit the mark.
People are not willing to take much risk and bear loss. Create Awareness about Mutual Fund. People tend to gain through long investments rather than through short term. Mutual Funds are more of an investment option than the speculative avenue. Remove the differences in perception of audience about Private Company & PSU. . Literate audience about MF as better investment option.100 - .Conclusion: Jaipur has huge untapped market as far as MF is concerned. Broker’s advice matters to as many of the people. Major part of people preferred self-evaluation as best. Most of the people look at the returns that are given by funds some are Fund. so go & hit the market. Income funds and ELSS are among the few top funds. Run some program to bring MF in final decision set while prospects decide about distributorship. Experience was the main factor that made a person invest in mutual funds in this favour and some people are those who consider Fund name and current NAV of the fund before investing into a Mutual Recommendations and Suggestions Brand Equity of Reliance is very high just.
comprise a person's assets.Appendix: Glossary: Some terms related with Mutual Funds: ACCOUNT STATEMENT: A document issued by the mutual fund. anything that has value and can be traded.e. For example.has appreciated by Rs. . giving details of transactions and holdings of an investor..101 - . ADJUSTED NAV (TOTAL RETURN): The net asset value of a unit assuming reinvestment of distributions made to the investors in any form. ANNUAL RETURN: The percentage of change in net asset value over a year's time. i. and short-term investments (also known as "instruments").to Rs. bonds. bonds. such as stocks. assuming reinvestment of distribution such as dividend payment and bonuses. 20/. bank accounts. ASSET ALLOCATION: When you divide your money among various types of investments. you are allocating your assets. The way in which your money is divided is called your asset allocation. APPRECIATION: When an investment increases in value. Examples include stocks. it appreciates. ADVISOR: Your financial consultant who gives professional advice on the fund's investments and who supervise the management of its assets. APPLICATION FORM: Form prescribed for investors to make applications for subscribing to the units of a fund ASSET: Property and resources. 25/. 5/-. a equity share whose price goes from Rs. such as cash and investments. real estate. and jewellery.
BALANCE MATURITY TENURE OF A SCHEME: In the case of close-ended schemes.ASSET MANAGEMENT COMPANY / AMC / INVESTMENT MANAGER / Reliance Capital Asset Management Ltd. BALANCE SHEET: A financial statement showing the nature and amount of a company's assets.) against which the investor provides post-dated cheques. . the performance of a scheme can be benchmarked against an appropriate index. additional units are allotted to the investor at the prevailing NAV. quarterly. deed of Trust and other provisions of the Investment Management Agreement.due on a specific date. BACK END LOAD: The difference between the NAV of the units of a scheme and the price at which they are redeemed. generally 40% bonds and 60% equity. the investor mandates the mutual fund to allot fresh units at specified intervals (monthly. BOND FUNDS: Registered investment companies whose assets are invested in diversified portfolios of bonds primarily fixed income securities. the balance period till the redemption of the scheme. For example. BOND: An interest-bearing promise to pay a specified sum of money -.the principal amount -. On the specified dates. The difference is charged by the fund. BENCHMARK: A parameter with which a scheme can be compared. It is a company set up primarily for managing the investment of mutual funds and makes investment decisions in accordance with the scheme objectives. BALANCED FUND: A mutual fund that maintains a balanced portfolio.102 - . liabilities and shareholders' equity. the cheques are realized by the mutual fund and on realization. etc.: It is the investment manager for the mutual fund. AUTOMATIC INVESTMENT PLAN: Under these plans.
BROKERAGE: The fee payable to a broker for acting as an intermediary in a transaction. If you sell units at a lower price than you paid for them. BULL MARKET: Period during which the prices of stocks in the stock market keep continuously rising for a significant period of time on the back of sustained demand for the stocks. If you sell units at a higher price than you paid for them. CAPITAL: This is the amount of money you have invested. your priority is trying not to lose any money. A capital loss would be when the difference between an asset's purchase price and selling price is negative. you make a profit. meaning that the value of your investment rises. reflected in its NAV per share. When your investing objective is capital growth.103 - . CAPITAL GROWTH: A rise in market value of a mutual fund's securities. CAPITAL APPRECIATION: As the value of the securities in a portfolio increases. when the difference is positive. a fund's Net Asset Value (NAV) increases. CAPITAL GAINS: The difference between an asset's purchased price and selling price. brokerage is payable by a fund for getting fresh investments from investors. Capital Loss realized when an instrument or asset is sold at a price below its cost. When your investing objective is capital preservation. A broker is a member of a recognized stock exchange who buys and sells or otherwise deals in securities. This is a specific long-term objective of many mutual funds. For example. you'll have a capital loss. . or capital gain.BROKER: One who guides the investors on one or more investments and facilitates the process of investment. your priority is trying to make your initial investment grow in value.
CONVERTIBLE BOND: A corporate bond. Some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at NAV related prices. unitholders' expectations and other market factors. One can invest directly in the scheme at the time for the initial issue and thereafter transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. debt (bonds) and equity ( stocks) are traded. . Examples include bond interest and stock dividends.104 - . The market price at the stock exchanges could vary from the scheme's net asset value (NAV) on account of demand and supply situation. CLOSED-ENDED MUTUAL FUND: They are schemes that have a prespecified maturity period generally ranging from 2 to 15 years. short-term securities. CURRENT INCOME: Monies paid during the period an investment is held. usually a junior subordinated debenture. and any other securities (such as options) not included in other asset allocation categories. COMMISSION: The broker's or agent's fee for buying or selling securities for a client. SEBI Regulations ensure that at least one of the two exit routes are provided to the investor. CORPUS: The total amount of money invested by all the investors in a scheme.CAPITAL MARKET: The market where capital funds. which can be exchanged for shares of the issuer's common stock. CASH & OTHER CATEGORY: A mutual fund asset allocation theory that includes net cash. The fee is usually based on a percentage of the transaction's market value.
DEBT /INCOME FUNDS: Funds that invest in income bearing instruments such as corporate debentures. DIVERSIFICATION: Diversification is the concept of spreading your money across different types of investments and/or issuers to potentially moderate your investment risk. Thus the number of units allotted under the dividend reinvestment plan would be the dividend declared divided by the ex-dividend NAV. ENTRY LOAD: It is the load charged by the fund when one invests into the fund. EQUITY SCHEMES: Schemes where more than 50% of the investments are done in equity shares of various companies. It increases the price of the units to more than the NAV and is expressed as a percentage of NAV.CURRENT LOAD: Load structure applicable currently. the unit holders receive units. The objective is to provide capital appreciation over a period of time. .105 - . the fund pays dividend from time to time as and when the dividend is declared. DIVIDEND REINVESTMENT: In a dividend reinvestment plan. CURRENT MARKET VALUE: The amount a willing buyer will pay for a bond today. which may be at a premium (above face value) or a discount (below face value). treasury bills. These funds are the least risky and are generally preferred by risk-averse investors. Funds keep revising the load structures from time to time. DIVIDEND: Income distributed by the Scheme on the Units DIVIDEND PLAN: In a dividend plan. the dividend is reinvested in the scheme itself. certificates of deposit and commercial papers. Hence instead of receiving dividend. gilts. PSU bonds.
INCOME FUND: A mutual fund that primarily seeks current income rather than growth of capital.EXPENSE RATIO: Annual percentage of fund's assets that is paid out in expenses. 1995. It reduces the price of the units to less than the NAV and is expressed as a percentage of NAV. Growth Stocks of companies that have shown or are expected to show rapid earnings and revenue growth. he is the person who makes all the final decisions regarding investments of a scheme GROWTH FUND: A mutual fund whose primary investment objective is longterm growth of capital. Growth stocks have relatively more risk than other conventional forms of investment. . Index funds are expected to provide a rate of return over time that will approximate or match. Expenses include management fees and all the fees associated with the fund's daily operations. but not exceed. FACE VALUE: The original issue price of one unit of a scheme FII: Foreign Institutional Investors. It will tend to invest in stocks and bonds that normally pay high dividends and interest. registered with SEBI under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations. INDEX FUND: A type of mutual fund in which the portfolios are constructed to mirror a specific market index.106 - . which they are mirroring. FUND MANAGER: Appointed by the AMC. INITIAL OFFER/INITIAL ISSUE: Offer of Reliance Income Fund units during the initial offer period. that of the market. It invests principally in common stocks with significant growth potential. EXIT LOAD: It is the load charged by the fund when one redeems the units from the fund.
A company may have 10 million shares in issue. MANAGEMENT FEE: Money paid by a mutual fund to its investment manager or advisor for overseeing the portfolio. 1. LOCK IN PERIOD: The period after investment in fresh units during which the investor cannot redeem the units. ISSUED SHARE CAPITAL: This is the total number of shares a company has made publicly available multiplied by the total nominal value of the shares. The objective is to provide liquidity and preserve the capital LOAD: A charge that may be levied as a percentage of NAV at the time of entry into the Scheme/Plans or at the time of exiting from the Scheme/Plans. each with a nominal value of Re. LIQUIDITY: The ability to buy or sell an asset quickly or the ability to convert to cash quickly LIQUID FUNDS /MONEY MARKET FUNDS : Funds investing only in shortterm money market instruments including treasury bills. 10 million. MATURITY OR MATURITY DATE: The date upon which the principal of a security becomes due and payable to the security holder. A management fee is usually between one-half and one percent of the fund's net asset value. So the issued share capital is Rs. On most securities the maturity value equals the par value.INITIAL OFFER PRICE: The price at which units of a scheme are offered in its Initial Public Offer (IPO). .107 - . MATURITY VALUE: The amount (other than periodic interest payment) that will be received at the time a security is redeemed at its maturity. commercial paper and certificates of deposit.
to regulate the activities of the Mutual Fund. . NON PERFORMING INVESTMENTS: Part of the portfolio investment of a debt fund which is not making interest payment or principal amount repayments in time. NAV Change %: The percentage change between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV) NET WORTH: A person's net worth is equal to the total value of all possessions. This represents a way of investing money into a professionally managed and diversified pool of securities that hopefully will provide a good return on unitholders' money. bonds. such as commissions or markups. and other securities. stocks. NET YIELD: Rate of return on a security net of out-of-pocket costs associated with its purchase. and money-market instruments. as may be in force from time to time. including stocks. such as mortgage and revolving credit lines. NAV Change: The difference between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV). NAV: Net Asset Value of the Units in each plan of the Scheme is calculated in the manner provided in this Offer Document or as may be prescribed by Regulations from time to time. bonds. MUTUAL FUND REGULATIONS: Securities and Exchange Board of India (Mutual Funds) Regulations. 1996 as amended up to date and such other Regulations.MUTUAL FUNDS: An investment company that pools money from its unitholders and invests that money into a variety of securities.108 - . minus all outstanding debts. such as a house.
and fees. OPENING NAV: The NAV disclosed by the fund for the first time after the closure of an NFO. or buying back. The redemption price is usually equal to the current NAV per unit. PORTFOLIO: It refers to the total investment holdings of the fund. PORTFOLIO CHURNING: It refers to the changes made to the portfolio keeping in view the market conditions.OFFER DOCUMENT OR PROSPECTUS: The official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed fund to all its prospective investors. Funds that do not have any fixed maturity and are continuously open for subscription and redemption. REDEMPTION PRICE: The price at which a mutual fund's units are redeemed (bought back) by the fund. services. RETURNS: The dividend and capital appreciation accruing to the investor on the investment held by him .109 - . It includes both buying and selling of holdings and is aimed at giving a better yield to the investor. It contains information required by the Securities and Exchange Board of India. REDEMPTION FEE: A fee charged by a limited number of funds for redeeming. fund units. such as investment objective and policies. One can conveniently buy and sell the units held at the NAV related price. Individual investors are encouraged to read and understand the fund's prospectus OPEN-ENDED SCHEMES/ FUNDS: Scheme of a mutual fund where purchase or sale of units is allowed on a continued basis. REDEMPTION: The paying off or buying back of units of a mutual fund / bond by the issuer. The key feature is liquidity.
This enables him to invest as little as Rs 1000 a month and take advantage of rupee cost averaging. SYSTEMATIC WITHDRAWAL PLANS (SWP): A plan offered with some schemes under which post-dated cheques for fixed amounts (as may be fixed by the fund) are issued to the investors for monthly. the cheques are realized by the mutual fund and additional units at the prevailing NAV are allotted to the investor. With different schemes. The withdrawals are as per the requirements of the investor specified by him/ her at the time of investment. in spite of there being a common trust. the assets contributed by the unit holders of a particular scheme are maintained and managed separately from other schemes and any profit/loss from the assets accrue only to the unit holders of that scheme SYSTEMATIC INVESTMENT PLAN (SIP): A program that allows an investor to provide post-dated cheques to the mutual fund to allot fresh units at specified intervals (usually monthly or quarterly).110 - . bi-monthly or quarterly withdrawals. . TRUST FUND: The corpus of the Trust.SCHEME: A mutual fund can launch more than one scheme. unit capital and all property belonging to and i or vested in the Trustee UNIT: A Unit represents one undivided share in the assets of the Schemes. On the specified dates. UNIT HOLDER: A person who holds Unit(s) under any plan of the Scheme. TRANSACTION SLIP: A brief form to be filled at the time of additional purchases or redemption.
WEEK LOW: The lowest value of a unit (in terms of NAV) during the immediately preceding 52 weeks owns.VALUATION: Calculation of the market value of the assets of a mutual fund scheme at any point of time VOLATILITY: In investing. the more volatile the investment 52 WEEK HIGH: The highest market value of a unit (in terms of NAV) during the immediately preceding 52 weeks. volatility refers to the ups and downs of the price of an investment. Unlike total return. the more volatile the investment. usually expressed as a percentage of net asset value or market price.111 - . The greater the ups and downs. ZERO-COUPON BOND: A bond where no periodic interest payments are made. The maturity value an investor receives is equal to the principal invested plus interest earned compounded semi-annually at the original rate to maturity. . yield has the single component of investment income and does not include capital gains distributions or capital appreciation of underlying shares. The investor purchases the bond at a discounted price and receives one payment at maturity. YIELD: Distributions form investment income.
Are you practicing C.Which segment of people/ client you deal with? (A) HNI Trust (B) Corporate (C) Individuals (D) Society.5.6. How Often you suggest your clients to invest in mutual funds? (A) Always (B) Sometimes (C) Rarely (D) Never Q. 8.. Q. or are you a tax consultant? (A)Yes (B) No Age______ Contact Q. What is the average age of your clients? (A) Less than 35 (B) 35-40 (C) 50 Above Q. Which factor do you think is important while you advice your clients for financial plans? (A) Risk (B) Tax Benefit (C) Time Period (D) Good Returns. Do you get queries from your clients regarding mutual funds/ Tax saving mutual funds? (A) Yes (B) No .112 - .A. What is the profile of your clients who come for investment? (A) Risk Averse (B) Risk Taker (C) Risk Neutral Q. “I am a student of MBA 4 th semester.4.1. Pursuing my academic project on mutual funds. (B) No (C) Can’t say._____________ Dear Sir/Madam. I would appreciate if you could spend some time in filling this questionnaire:” Q.2. Do you think Mutual Fund is a good option for investment? (A) Yes. HUF.7. (E) Good Service (F) All of above Q.Questionnaire for CA’s and Tax Consultants Name_________________ No.3. Q.
Yes No Q. 9.Q. Life insurance. (E). then in what way you would appreciate the AMC to approach you? (A). (B).14. (C). 12. (D). (B). Yes No Q.11. Q. . (B). How will you rank the below investment instruments for your clients financial planning on the basis of risk adjusted return? (A). (B). (C). (B). Would you like yourself to be associated with the mutual fund industry? (A). Positive Neutral Negative Q. (E). (D). (C). What is your response to their queries? (A). If yes. Telephone Personal visit. NSC PPF.113 - . 10. Thank you for your precious time.13. Mutual funds ELSS. Q. Mutual funds Fixes deposits Post office deposits Life insurance policy Bank share trading. Post office schemes. Are you aware of AMFI certification? (A). (B). What are the investment instruments you suggest to your clients for tax planning purpose? (A).
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