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ENHANCEMENT OF MUTUAL FUND INVESTORS THROUGH PUBLIC SECTORBANK NETWORK IN LUCKNOW (ACQUISITION & NEW MARKET DEVELOPMENT)
INDEX
Acknowledgment Executive Summary Industry Profile Risk and Return Associated with Mutual Funds Types of Mutual Fund Schemes Company profile About Gold Savings Fund Financial Planning With SIP Difference Between SIP and Lump Sum Research Methodology Objectives Inscope Outscope Findings Recommendations Analysis Bibliography Annexure
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ACKNOWLEDGEMENT
A Successful completion of Project work is a result of well-organized and coordinated team work. So at the completion of the project. I take this opportunity to thank all the people who provided me proper guidance and help in completing this project. First of all I would like to thank Mr. MohitMehrotra Regional Head at Reliance capital asset management ltd. Besides him I am also thankful to Mr. ShashiRanjan (Cluster Manager), Mr. AlokSrivastava (Regional Operations Manager), Mr. Ankush Roy Regional training manager and all other Relationship Managers, Staff at RCAM who provided me valuable guidance in completing this project. I express a deep sense of gratitude to my corporate mentor and facilitator of this project Mr. AnshulGuptawho continuously guided me throughout the Project. I would also like to thank my faculty mentor Ms. VandnaMisra who provided me guidance and support for successful completion of the project. Last But not the least I would like to thank all my family members and friends for their cooperation and inspiration for their direct and indirect help without this project could not be completed.
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Executive Summary
This report is to describe the project that is based on HNIS profiling, generating sales lead and ultimately business generation for reliance mutual fund and channel handling for business promotion. Reliance Mutual Fund is amongst the largest private sector mutual funds in India. It constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. They offer a wide spectrum of products to meet varying
investment requirements. It has a presence in over eighty cities across the country with an impressive investor base of over two million. The funds are managed by Reliance Capital Asset Management Ltd., a wholly owned subsidiary of Reliance Capital Limited. It is having an Aum of Rs6959908.44 Lakhs. It is the only asset management Company having a training academy, EDGE, THE LEARNING ACADEMY. The academy mission of this training
distributors, banks about the mutual fund industry , share market , communicat ion skills , time management ,various debt and equity instruments and about various products of the company The mission of project is to tap the untapped market of HNIs where there is large investment opportunity available. This is the market with immense potential but is not being focused upon.The second mission of the project is to analyze the working of the alternate channel (P.S.B`s).For the above mentioned objective the first and the foremost thing which we did was that a survey was conducted for the people visiting the banks regularly I met the people and obtained all the necessary information about their occupation, where they invest and their attitude and awareness towards the share market. I gave all the detailed feed back to my office and chalked out our plan of action accordingly. We have to carry out our actions fewer than two subheads as per their attitude and awareness towards share market. For the ones having positive attitude and awareness towards share mar ket and
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investment in share market I scheduled only one meet for pitching in the products as per their profile thus generated .. The process was conducted in two steps, First to develop
positive attitude for the share market and mutual funds and in the n ext visit pitch in the products as per their profile thus generated. For the project I used to visit the psu banks and I used to meet the people there and pitch in the product and the information about Reliance Gold Savings Fund. Apart from the leads given by the banks I used to generate new sale leads. I used to take their contacts and do a follow up. Final objective of all these activities is to generate more revenue for the amc from a new channel and to analyze the current psu channel.
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Industry Profile
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The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. The history of mutual funds in India can be broadly divided into four distinct phases First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and
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acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44,541crores of assets under management was way ahead of other mutual funds. Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. While UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from February 2003. The Assets under management of the Specified Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the industry as a whole from February 2003 onwards. The Assets under Management of UTI was Rs. 67bn. by the end of 1987. The performance of mutual funds in India through figures is appreciable. From Rs. 67bn. the Assets under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There was rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary
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market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the losses by disinvestments and of course the lack of transparent rules in the
whereabouts rocked confidence among the investors. Funds now have shifted their focus to the recession free sectors like pharmaceuticals, FMCG and technology sector. Funds performances are improving. Funds collection, which averaged at less than Rs100bn per annum over five-year period spanning 1993-98 doubled to Rs210bn in 1998-99. In the 2000 mobilization had exceeded Rs300bn. Total collection for the financial year ending March 2000 reached Rs450bn. India had been at the first stage of a revolution that has already peaked in the U.S. The U.S. boasts of an Asset base that is much higher than its bank deposits. In India, mutual fund assets are not even 10% of the bank deposits, but this trend is beginning to change. The figures indicate that in the first quarter of the year 1999-2000 mutual fund assets went up by 115% whereas bank deposits rose by only 17%. (Source: Think tank, The Financial Express September, 99) This is forcing a large number of banks to adopt the concept of narrow banking wherein the deposits are kept in Gilts and some other assets which improves liquidity and reduces risk. The basic fact lies that banks cannot be ignored and they will not close down completely. Their role as intermediariescannotbe ignored. It is just that Mutual Funds are going to change the way banks do business in the future
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Diagram 1
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Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908. The Fund Sponsor acts as the Settler of the Trust, contributing to its initial capital and appoints a Trustee to hold the assets of the Trust for the benefit of the unit-holders, who are the beneficiaries of the Trust. The fund then invites investors to contribute their money in the common pool, by subscribing to units issued by various schemes established by the trust, units fund is just a pass-through
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being the evidence of their beneficial interest in the fund. It should be understood that a mutual
vehicle. Under the Indian Trusts Act. The Trust or the Fund has no independent legal capacity itself, rather it is the Trustee or Trustees who have the legal capacity and therefore all acts in relation to the trust are taken on its behalf by the Trustees. The Trustees hold the unit-holders money in a fiduciary capacity i.e. the money belongs to the unitholders and is entrusted to the fund for the purpose of investment. In legal parlance, the investors or the unit holders are the beneficial owners of the investments held by the Trust, even as these investments are held in the name of the trustees on a day-to-day basis. Being Public Trusts, mutual funds can invite any number of investors as beneficial owners in their investment schemes.
Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. The Board or the Trustee Company, as an independent body, acts as protector of the unit-holders interests. The Trustees do not directly manage the portfolio of securities. For this specialist function, they appoint an Asset Management Company. They ensure that the fund is managed by the AMC as per the defined objectives and in accordance with the Trust Deed and SEBI Regulations. The trust is created through a document called the Trust Deed that is executed by the Fund Sponsor in favour of the Trustees. The Trust Deed is required to be stamped as registered under the provisions of the Indian Registration Act and registered with SEB!. Clauses in the Trust Deed, inter alia, deal with the establishment of the Trust, the appointment of Trustees, their powers and duties, and the obligations of the Trustees towards the unit-holders and the AMC. These clauses also specify activities that the fund/AMC cannot undertake. The Third Schedule of the SEBI (MF) Regulations, 1996 specifies the contents of the Trust Deed. The Trustees being the primary guardians of the
laid down a set of conditions to be fulfilled by the individuals being proposed as trustees of mutual funds both independent and non-independent. Besides specifying the
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unit-holders funds and assets, a Trustee has to be a person of high repute and integrity. SEBI has
disqualifications, SEBI has also set down the Rights and Obligations of the Trustees. Broadly, the Trustees must ensure that the investors interests are safeguarded and that the AMCs operations are along professional lines. They must also ensure that the management of the fund is in accordance with SEBI Regulations
activities.
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always act in the interest of the unit-holders and report to the trustees with respect to its
Diagram-3
Risk & Return The performance of a fund depends upon two things must be considered-
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Return
Diagram-4
All investments are characterized by the expectation of a return in the future. In fact, investments are made with the primary objective of deriving a return. The return may be received in the form of yield plus capital appreciation. The difference between the sale price and the purchase price is capital appreciation. The dividend or interest received from the investment is the yield. The return from an investment depends upon the nature of the investment, the maturity period and a host of other factors. But important thing is that the future is uncertain, so is the future expected return. The expected return is the uncertain future return that an investor expects to get from his investment. The realized return on the contrary, is the certain return that an investor has actually obtained from his investment at the end of the holding period. The investor makes the investment decision based on the expected return from the investment. The actual return realized from the investment may not correspond to the expected return. This possibility of variation of the actual return from the expected return is termed as risk.
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Risk
In general, it refers to the possibility of incurring a loss in a financial transaction. Risk is the potential for variability in returns. Risk arises where there is a possibility of variation between expectations and realizations with regard to an investment. The variation in returns is caused by a number of factors. These, factors which produce variations in the returns from an investment constitute the elements of risk. The elements of risk may be broadly classified into two groups. The first, group Comprises factors that are external to a company and affect a large number of securities simultaneously. These are mostly uncontrollable in nature. The second, group includes those factors which are internal to the companies and affect only those particular companies. These are controllable to a great extent. Risk produced by the first group of factors is known as systematic risk, and that produced by the second group is known as unsystematic risk. The total variability in returns of a security represents the total risk of that security. Where, Total risk = systematic risk + unsystematic risk
Systematic risk
As the society is dynamic, changes occur in the economic, political and social systems constantly. These changes have an influence on the performance of companies and thereby on their stock prices but these changes affect all companies and all securities in varying degrees. Thus the impact of economic and political and social changes is system wide and that portion of total variability in security returns caused by such system-wide factors is referred as systematic risk.
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Market Risk
Sometimes prices and yields of all securities rise and fall. Broad, outside influences affecting the market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is known as Market Risk.
Unsystematic risk
The returns from a security may sometimes vary because of certain factors affecting only the company issuing such security. When variability of returns occurs because of such firm specific factors, it is known as unsystematic risk. The unsystematic risk affecting specific securities arises from two sources:
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These two types of unsystematic risk are referred to as business risk and financial risk
company and is the variability in operating income caused by the operating conditions of the company. Financial risk is the variability in EPS (earning per share) due to the presence of debt in the capital structure of a company.
Measurement of risk
Risk or variability in returns can be measured and can be analyzed in two ways
considered in isolation.
Beta
One of the most popular indicators of risk is a statistical measure called beta. Stock analysts use this measure all the time to get a sense of stocks' risk profiles. Beta is a measure of a stock's volatility in relation to the market. Beta is the only relevant measure of a stock's risk. It measures a stock's relative volatility - that is, it shows how much the price of a particular stock jumps up and down compared with how much the stock market as a whole jumps up and down. The Beta coefficient, or financial elasticity is a sensitivity of the asset returns to market returns, relative volatility. Beta can also be defined as the risk of the stock to a diversified portfolio. Therefore the beta of a stock will be much lower
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than its (the stock's) standard deviation. The coefficient alsp measures the asset's nondiversifiable risk, On an individual asset level, measuring beta can give clues to volatility and liquidity in the marketplace. On a portfolio level, measuring beta is thought to separate a manager's skill from his willingness to take risk.
Disadvantages of Beta
Like,
Betas are merely rear-view mirrors, reflecting very little of what lies ahead. Lastly, the beta measure on a single stock tends to flip around over time, which makes it unreliable. Granted, for traders looking to buy and sell stocks within short time periods, beta is a fairly good risk metric. But for investors with long-term horizons, it's less useful.
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Diagram-5
Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that 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. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.
Convenient Administration
deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.
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Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad
Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.
Low Costs
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, custodial and other fees translate into lower costs for investors.
Liquidity
In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed ended schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility ofdirect repurchase at NAV related prices by the Mutual Fund.
Transparency
You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.
Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.
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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. The operations of Mutual Funds are regularly monitored by SEBI.
By Structure
Open-end Funds An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
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Convenience An investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes.
Flexibility Mutual Funds offering multiple schemes allow investors to switch easily between various schemes. This flexibility gives the investor convenient way to change the mix of his portfolio over time.
Transparency Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the underlying assets bought with his money, is unmatched by any other financial instrument. Thus the investor is in the know of the quality of the portfolio and caninvest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager.
Closed-ended Funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the
scheme on the stock exchanges where they are listed. In order to provide an exit route to the
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scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
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By Investment Objective
Equity Oriented Schemes These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because theyinvest in equities, these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. They are ideal for investors who have a long-term investment horizon. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social, political as well as economic.
Debt Based Schemes These schemes, also commonly called Income Schemes, invest in debt securities such as corporate bonds, debentures and government securities. The prices of these schemes tend to be more stable compared with equity schemes and most of the returnsto the investors are generated through dividends or steady capital appreciation. These schemes are ideal for conservative investors or those not in a position to take higher equity risks, such as retired individuals. However, as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk.
Hybrid Schemes These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long-term orientation.
General Purpose
specific industries or sectors. They thus have a diversified portfolio of companies across a large spectrum of industries. While they are exposed to equity pricerisks, diversified general-purpose
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The investment objectives of general-purpose equity schemes do not restrict them to invest in
equity funds seek to reduce the sector or stock specific risks through diversification. They mainly have market risk exposure.
Sector Specific These schemes restrict their investing to one or more pre-defined sectors, e.g. banking sector, Diversified Power Sector Fund. Since they depend upon the performance of selected sectors only, these schemes are inherently more risky than general-purpose schemes. They are suited for informed investors who wish to take a view and risk on theconcerned sector.
Special Schemes
Index schemes The primary purpose of an Index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested in investing in the market in general rather than investing in any specific fund. Such investors are happy to receive the returns posted by the markets. As it is not practical to invest in each and every stock in the market in proportion to its size, these investorsare comfortable investing in a fund that they believe is a good representative of the entire market. Index Funds are launched and managed for such investors
Tax Saving schemes Investors (individuals and Hindu Undivided Families (HUFs)) are being encouraged to invest in equity markets through Equity Linked Savings Scheme (ELSS) by offering them a tax rebate. Units purchased cannot be assigned / transferred/ pledged / redeemed / switched out until completion of 3 years from the date ofallotment of the respective Units. The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations, 1996 and the notifications issued bythe Ministry of Finance (Department of Economic Affairs), Government
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of India regarding ELSS. Subject to such conditions and limitations, as prescribed under Section
88 of the Income-tax Act, 1961, subscriptions to the Units not exceeding Rs.10, 000 would be eligible to a deduction, from income tax, of an amount equal to 20% of the amount subscribed.
Real Estate Funds Specialized real estate funds would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securitized assets.
Liquid Income Schemes Similar to the Income scheme but with a shorter maturity than Income schemes.
Money Market Schemes These schemes invest in short term instruments such as commercial paper (CP), certificates of deposit (CD), treasury bills (T-Bill) and overnight money (Call). The schemes are the least volatile of all the types of schemes because of their investments in money market instrument with short-term maturities. These schemes have become popular with institutional investors and high net worth individuals having short-term surplus funds.
Gilt Funds This scheme primarily invests in Government Debt. Hence the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free
Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.
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Load Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history.
No-Load Funds A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.
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Mission Statement To create and nurture a world-class, high performance environment aimed at delighting our customers
BANKER
:HDFC BANKS
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COMPANY PROFILE
Reliance Capital
Reliance Capital is a part of the Reliance Anil DhirubhaiAmbani Group. It is one of Indias leading and fastest growing private sector financial services companies. It ranks among the top three private sector financial companies and banking groups in terms of net worth. Its interests are in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. Reliance Mutual Fund is India's biggest Mutual Fund. Reliance Life Insurance is one of India's fastest growing life insurance company and among the top four private sector insurers. Reliance General Insurance is one of India's fastest growing general insurance company and among the top three private sector insurers. Reliance Money is one of the leading retail brokerage houses and distributors of financial products in India with over 3 million customers..Reliance Capital has a net worth of Rs. 11,696 crore (US$ 2.3 billion) and total assets of Rs. 35,344 crore (US$ 6.9 billion) as on March 31, 2012.
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Company structure
RELIANCE MUTUAL FUND
RELIANCE CAPITAL
RELIANCE MONEY
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Reliance Money
Reliance Money is one of India's leading and fastest growing private sector financial services companies, ranking among the top 3 private sector financial services and banking companies, in terms of net worth.
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Reliance General Insurance is one of Indias leading private general insurance companies with over 94 customized insurance products catering to the corporate, SME, and individual customers.
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PRODUCT PROFILE
VISION FUND
TOP 200 FUND NRI EQUITY FUND QUANT PLUS FUND EQUITY FUND INDEX FUND-NIFTY PLAN INDEX FUND-SENSEX PLAN GROWTH FUND LONG TERM EQUITY FUND SMALL CAP FUND REGULAR SAVINGS FUNDEQUITY OPTION EQUITY OPPURTUNITIES FUND REGULAR SAVINGS FUNDBALANCED OPTION
INDEX
DIVERSIFIED MID AND SMALL CAP
EQUIT Y
BALANCED
INFRASTRUCTURE FUND NATURAL RESOURCES FUND BANKING FUND DIVERSIFIED POWER SECTOR FUND MEDIA AND ENTERTAINMENT FUND PHARMA FUND TAX SAVER(ELSS) FUND EQUITY LINKED SAVINGS FUNDSERIES 1
ARBITRAGE ETF
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EQUITY SCHEMES
Reliance Quant Plus Fund: A Moderate Large-cap Oriented Fund. It is actively managed Quant based fund focusing on constituents of S&P CNX Nifty Index. It is this fund is suitable for those investors who are seeking capital appreciation and growth vis--vis the benchmark index in all market conditions by investing in a concentrated active portfolio of frontline stocks which is constructed on the basis of a mathematical model. The fund can be viewed as an additional asset allocation option by the investors.
Reliance Top 200 Fund: A Conservative Largecap Oriented Fund. The Scheme will invest in equity or equity related instruments of companies whose market capitalization is within the range of highest & lowest market capitalization of BSE 200 Index. The selection of the companies will be done so as to capture the growth in the Indian economy. The fund will be focusing on companies having good liquidity in the stock market.
Reliance NRI Equity Fund: A Conservative Large cap Oriented Fund. It is an exclusive offering for NRIs having a large cap oriented portfolio with focus on stable companies. It is reliance NRI Equity Fund is suitable for NRI investors who are seeking exposure to diversified equity space to participate in the strong trajectory of India growth story.
Reliance Equity Fund: A Moderate Large-cap Oriented Fund. It is large-cap Fund that aims to capitalise on long and short opportunities. It is a useful product in every investors portfolio as it intends to reduce volatility and reduce downside risks by using innovative P/E based hedging/shortingstrategies
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Reliance Vision Fund: A Moderate Large-cap Oriented Fund. It is large-cap fund with a small
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exposure to mid cap stocks. It is the fund is ideal for those investors who are seeking a higher exposure to liquid large-cap stocks for capital appreciation & growth and considerably lower exposure to debt markets for consistent returns.
Reliance Long Term Equity Fund: An Aggressive Mid cap and small-cap Oriented Fund. It is poised to Take Benefits of Opportunities in Mid Caps and Small Caps. It is ideal for those investors who want to capitalize on opportunites in small and mid cap space with a long term investment horizon of more than 3 years.
Reliance Small Cap Fund: A Very Aggressive small- cap oriented fund. It is a relatively high risk/high return oriented fund which shall predominantly invest in small cap companies/stocks with an objective to maximize the returns and at the same time trying to minimize the risk by reasonable diversification. Small Cap stocks for the purpose of the Fund, are stocks whose market capitalization is in between the highest and lowest market capitalization of companies on BSE Small Cap Index at the time of investment. Reliance Small Cap Fund will be a vital part of an investor's core portfolio that aims to create an alpha for his/her investments.
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Reliance Equity Opportunities Fund: A Moderate Multi cap Oriented Fund. It is multi-cap, trend based with the flexibility to be overweight in a particular sector or market caps depending on the potential & opportunities as they arise. It is the fund is suitable for those investors who want added diversification to portfolio by investing across sectors and m caps with a medium term investment horizon Reliance Regular Savings Fund - Equity Plan: An Aggressive Multi cap Oriented Fund. It is an aggressive multi cap oriented portfolio. It is the fund is ideal for those investors who seek long term capital growth by investing in a portfolio having the flexibility to capitalize on market trends in volatile situations by adopting a multi-cap strategy. Reliance Regular Savings Fund - Balanced Plan: A Conservative Large & Mid cap Oriented Fund A hybrid equity oriented portfolio focusing on well managed, high quality large cap stocks as well as mid cap stocks Ideal for those investors who have a balanced approach towards risk takingability.
Reliance Infrastructure Fund: A Moderate Multi cap Oriented Fund. It is the fund aims to invest in companies operating & listed in India engaged in infrastructure & infrastructure related activities. It follows a multi cap strategy with a medium to long term investment horizon. It is a product for those investors who want to take exposure in India's infrastructure growth story with a medium to long term investment horizon.
Reliance Natural Resources Fund: An Aggressive Large Cap Oriented Fund. It is large cap oriented fund that allows the investor to participate in Indian and Global stocks of issuers in natural resources industries.The fund does not invest in natural resources themselves. It is the fund is ideal for those investors who want to invest in those sectors which are scarcely available in Indian & Global Markets. Reliance Banking Fund: A Moderate Multi cap Oriented Fund. It is the fund aims to generate consistent returns by investing in equity / equity related or fixed income securities of companies
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belonging to the Banking Sector.The fund follows an active strategy of management with
Reliance Diversified Power Sector Fund: A Moderate Multi cap Oriented Fund. It is the fund focuses on companies related to power sector. It provides opportunity to diversify within the sector, with focused approach and flexibility to invest in power distribution, transmission and generation related companies.
Reliance Media Entertainment Fund: A Moderate Multi cap Oriented Fund. It is a sector specific fund which focuses on investing in companies related to media & entertainment sector.
Reliance Pharma Fund: A Moderate Multi cap Oriented Fund. It is a dynamic asset allocation sector fund which aims to generate consistent returns by investing in all important segments of the pharmaceutical industry.
Reliance Tax Saver (ELSS) Fund: An Aggressive Large cap Mid Cap Oriented Fund. It is the fund is an open ended equity linked savings scheme which gives dual advantage of tax savings & growth potential. It is a large cap orientated fund which aims to have a mix of minimum 50% exposure to top 100 companies by market capitalization and high quality mid cap companies. It is this fund is ideal offering for investors who are seeking exposure to equity to participate in the India Story and the Indian markets in the diversified equity space as well as who want to take advantage of the tax benefit availed under Section 80C of Income Tax Act, 1961
Reliance Equity Linked Saving Fund Series 1: (A 10 year close-ended Equity Linked Savings Scheme) The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equities along with income tax benefit. Reliance Arbitrage Advantage Fund: A Conservative Arbitrage Fund. It is the fund aims to generate income through arbitrage opportunities arising out of pricing mismatch in a security between cash and derivative segment and with derivatives segment along with investments in debt securities and money market instruments.It is reliance Arbitrage Advantage Fund would prove to be an apt product for those investors who want to remain conservative and invest in relatively less risky portfolio.
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LIQUIDITY FUND
LIQUID
LIQUID FUND-TREASURY PLAN LIQUID FIRM-CASH PLAN FLOATING RATE FUND-SHORT TERM PLAN MONEY MANAGER FUND MEDIUM TERM FUND
FIXED INCOM E
LONG TERM
DYNAMIC
GILT
MIP
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Reliance Medium Term Fund: This fund belongs to the family of ultra short term debt funds,with moderate exposure to MTM assets. The portfolio is positioned at the shorter end of the yield curve but has a leeway to take marginal exposure to securities upto 1 year maturity in case value is identified at that part of the curve. This fund can marginally enhance the credit risk profile of the portfolio to enhance returns. The NAV of the fund may be a little more volatile than a liquid fund because of a higher MTM component in the fund. The fund is suitable for investors with an investment horizon of 1 month or more. It is suitable for investors with an investment horizon of 1 month or more
Reliance Floating Rate Fund Short Term Plan: The fund belongs to the category of Ultra Short Term Funds. A significant portion of the fund is mandated to invest in a combination of debt securities, money market instruments and floating rate instruments with a maturity profile of three months and upto 2 years. This fund may have a slightly more aggressive credit and duration profile compared to Reliance Money Manager fund and Reliance Medium Term Fund and therefore would be suitable for investors with minimum 3 months holding period. It is suitable for investors with minimum 3 months holding period
Reliance Dynamic Bond Fund: The fund has a dynamic asset allocation structure enabling complete flexibility in investment in debt instruments which may include investments in corporate and PSU bonds, Government Securities, money market instruments, securitized debt
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etc of varying tenors and the quantum of investments in any of the above mentioned categories is also flexible. Therefore, the fund intends to take medium term calls on interest rates and take significant bets on the same. A significant portion of the funds pie shall be invested in higher rate corporate bonds, money market instruments and gilts. Credit call, if at all, will be taken on low duration securities. It is suitable for investors with minimum 6 months holding period
Reliance Short Term Fund: The fund belongs to the family of income funds. It is suitable for investors with short to medium term investment horizon of 6 9 months and medium appetite for risk. The fund predominantly invests in various debt instruments like Government and Corporate bonds, Securitized Debt, Money Market Instruments etc and normally maintains a moderate maturity of the portfolio between 1- 2 years. It is suitable for investors with short to medium term investment horizon of 6 9monthsmedium appetite for risk
Reliance Regular Savings Fund Debt Option: This fund belongs to the family of income funds. This fund is positioned towards the retail/HNI/SME kind of fixed income investors. The fund has a limit on the amount that the investor can invest in a month. The fund basically seeks to benefit from any opportunity available in the debt market space at different points in time. Therefore, this fund invests based on short to medium term interest rate view and shape of the yield curve.It typically maintains a moderate duration between 1 - 2 years and invests in well researched credits/ structures for yield enhancement. The fund is intended towards ensuring that the investors have a healthy holding period return over1 - 2 years. It is suitable for investors with 1-2 years holding period
Reliance Income Fund: This fund belongs to the family of income funds. It is suitable for investors with medium to longer term investment horizon of 12 months and more and medium to high appetite for risk. Income funds mainly invest in debt securities of varying maturity periods, i.e. both in short term and long term debt instruments like Government and Corporate bonds, Securitized Debt, Money Market Instruments etc, depending on the fund managers view of the
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more
and
medium
to
high
appetite
for
risk
42
market.Suitable for investors with medium to longer term investment horizon of 12 months and
Reliance Gilt Securities Fund: This fund belongs to the family of Gilt Funds. It predominantly invests in a portfolio comprising of securities issued and guaranteed by the Central Government and State Government, hence has a higher credit profile. It has a very low credit risk profile. However, it can run extremely long durations and therefore, have a higher interest rate risk profile. It is suitable for investors with an investment horizon of 12 months and longer who have a positive view on falling interest rates.Suitable for investors with an investment horizon of 12 months and longer who have a positive view on falling interest rates. Reliance Liquid Fund - Cash Plan: This fund also belongs to the family of Liquid Funds. The fund is managed with a relatively conservative approach to credit risk as compared to other liquid funds. Large part of the portfolio will be invested in the banks/financial institution space to achieve this objective. The fund is suitable to park very short term investment surplus fora duration ranging from a day to a month. It is suitable to park very short term investment surplus for a duration ranging from a day to a week.
Reliance Liquid Fund - Treasury Plan: This fund belongs to the family of Liquid Funds. It is targeted towards varied investor categories like retail/SMEs/HNIs due to which the minimum investment amount in the fund is Rs 5000. Since the fund is targeted towards a diverse investor base, the AUM of the fund is relatively more stable in nature. This is reflected in its portfolio wherein there is a relatively lower allocation to relative cash and cash like instruments. Also because of a more diversified investor base, the marketing expenses on an average are slightly higher than Reliance Liquidity Fund resulting in relatively higher expense charged. It is meant for short term cash management & is suitable investors with investment horizon between 1 day to 1 month.
Reliance Liquidity Fund: The fund belongs to the family of Liquid Funds. It is designed to handle extremely large ticket size investments with the minimum application amount being Rs. 1 crore. Since the fund is meant for large ticket size investors, therefore, on an average maintains low total expense ratio resulting from low marketing expense.The portfolio endeavors to
for corporates & is suitable investors with investment horizon between 1 day to 1 month.
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possibility of larger volatility in a smooth manner. It is meant for short term cash management
43
maintain a larger proportion of assets in liquid, cash and near cash instruments to handle the
Reliance Monthly Income Plan: This is a hybrid fund with amarginal allocation to equity whichmay go up to maximum 20%. This is ideal for a predominantly fixed income investor with a marginal appetite for equity risk.The investment horizon in this fund should typically be 2 years ormore so that the long term benefit of having a marginal exposure to equity pays off. The fund intends to offer a predominantly fixed income investor the power of equity alongwith the stability of debt. It is suitable for investors with 2 years holding period
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Reliance Gold Exchange Traded Fund: (An open-ended Gold Exchange Traded Fund) The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold (and Gold related securities as permitted by Regulators from time to time). However, the performance of the scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors. Reliance Gold Savings Fund: Gold is seen as a sign of prosperity. Indian consumers consider gold jewellery as an investment and are well aware of golds benefits as a store of value. Gold is also recognized as a form of money in India, a tradable liquid asset.
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The Euro area crises have spread like a plague and have tumbled the global growth momentum. Moreand more investors are concerned about safe keeping of capital than they are about earning decentreturns. There is crisis of investors' confidence and risk aversion increases. Investors' holding period goesdown as investors' tends to exit trade at the slightest rumor/signal of market turning. Uncertainty is on arise and so is volatility among all assets. Wishful thinking leads mass audience to believeregulators/policy designers will do whatever is required to pull global markets out of dumps. But prudencyacknowledges that regulators are running out of ammunitions and there are very little incremental stepsthey can do to bring back global economy on growth track. European Union summit was called upon to produce a credible plan, to save the euro zone, but the planis believed to have done too little, too late. European leaders added a trifle sum of 200 billion Euro (~USD267 billion) to alienate crisis. They lowered down loss-sharing provision and outlined a fiscal compact rules tightening budget surveillance and institutionalizing limits on public spending - to lure banks toaggressively participate and help the rescue process. 500 billion euro crisis fund is also on cards.However, I'll be surprised to see a long term and positive meaning full impact on the markets. Thespreads are still very high and AAA credit ratings of the few of the biggest European economies are beingthreatened. Global risk aversion is scaling new heights. Investors are fleeing into US dollar despite negative realreturns. Dollar index has moved up by more than 5 per cent to 79 since the interim - low of 74.7 reachedon 27th Oct, 2011. Indian rupee is one of the worst performing currency this year. It has tanked by 14percent so far in 2011, the second highest fall, since 2008. It has depreciated by more than 19 per centsince it reached a level of 43.8550 on 27th Jul, 2011. Despite, very aggressive, 13 rate hikes, policymaker failed to contain inflation but instead toppled the growth momentum. The future outlook for IndianRupee is predicated to be weak by many prominent analysts. Gold demand in third quarter of 2011 measured 1053.9 tones up 6% y-o-y as investment demand morethan offset the decline in jewellery demand. Jewellery demand contracted by 10% in Q3
fell by 26 per cent during thequarter. The drop in jewellery demand in India is a normal
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four quarter jewellerydemand was up 2 percent to reach 2018.2 tones. Indian jewellery demand
47
2011, at 465.6tones; in value terms was up 24% higher driven by higher gold prices. The rolling
phenomenon. It tends to taper off when pricesare high and volatile as Indian investors are very price sensitive. However, if demand from investmentdries up and prices tends to correct, then Indian jewellery investors spurn into action and startaccumulating gold and that caps the downside.
Outlook
International Gold prices have appreciated by more than 20 per cent ytd, the domestic gold prices haveincreased by more than 40 percent during the same period as depreciating rupee keeps gold priceselevated in domestic terms. The current global macroeconomic environment is very conducive for higher gold prices. European debtcrisis, higher inflation expectation, fragile global growth, geo political unrest makes gold a palatable asset.The rise in volatility across all assets makes investors jittery about their investments. Gold has lowervolatility and tends to benefit during such an environment. Again, factors affecting gold prices do not affect other assets in a similar fashion and hence gold tends toexhibits lower correlation with other asset classes. Hence, gold tends to act as an excellent portfoliodiversifier and improves risk adjusted returns. Off lately, many investors are forced to liquidate gold positions to book profits and improve the performance of their bleeding portfolio. Again due to rise in risk aversion investors then to exit marketsand this may drive down gold prices in near term. However, deprecating rupee help gold prices remain atelevated levels and hence Indian investors are not likely to be impacted. But, the fundamental outlook forgold remains extremely bullish and paints a rosy picture for gold bulls. If crisis in Euro continue then that is favorable for gold prices. However, crisis cannot be resolved withmonetising debt i.e. printing more money to finance debt. This will lead to higher inflation going forward asmoney supply is increasing and gold tends to benefit during higher inflationary environment. The longer term outlook for gold seems bullish. Any correction can be looked at opportunity to accumulate and long term prudent investor may continue investing in gold in a systemic manner as itimproves risk adjusted returns for the portfolio.
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The graph above shows the open, close high and low from 2001 till 26th December, 2011. Thefigure in the graph indicates the movement of gold prices every year. The gold prices have risen for 10 consecutive years driven by recovery in key sectors of demandand continued global economic uncertainty. Moreover there is a mismatch in demand and supply of gold with the declining trend of officialsector sales. In fact for the first time over two decades, the official sector is set to record netinflows in 2010.(Source: World Gold Council) The performance of gold has not only been strong, but its volatility also remained low, providing afoundation for a well diversified portfolio. Asset allocation with gold aims to provide an opportunity to stabilize returns of the portfolio over aperiod Gold as asset over centuries has maintained its value against inflation and attempt to hedge against inflation.
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Investment Philosophy
A modern way of accumulating Gold the mutual fund way.An investment opportunity which enables an investor to allocate gold a foundation asset to his portfolio in a systematic way. This fund would enable you to add the yellow metal which is usually considered hedge to inflation and diversify your portfolio in a convenient way. Passively managed Fund of Fund investing in Open-ended Reliance Gold Exchange Traded fund Invests exclusively in Reliance Gold Exchange Traded Fund which in turn invests in physical gold which shall be of fineness( or purity) of 995 parts per 1000 ( 99.5 % ) or higher Portfolio focused on providing returns that closely correspond to the returns provided by Reliance Gold Exchange Traded Fund.
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servicecentre across the country thereby making it easily accessible and convenient.
51
directly subscribe/ redeem units through the physical mode at the various designated investor
Cost Effective: Investing in gold through the Reliance Gold Savings Fund in physical Application mode enables you invest in a low cost manner as the investor does not have to incur charges like annual maintenance charges for demat account , delivery brokerages charges, transaction charges incurred for investing through the dematerialized mode. The investors will be bearing the recurring expenses of the scheme, in addition to the expenses of underlying Scheme. Taxation: Investments in Reliance Gold savings Fund enables you to claim for long term capital gains tax after a period of one year of investments, whereas for physical long term taxation is available after 3 years.
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Scheme details
Fund Type Open-Ended Investment PlanGrowth Launch date Feb 28, 2011 Benchmark Price of Gold Asset Size (Rscr) 2,120.20 (Mar-31-2012) Minimum Investment Rs.5000 Last Dividend N.A. Bonus N.A. Fund ManagerHirenChandaria Notes N.A.
Load Details
Entry Load Exit Load N.A. 2.00%
Load Comments Exit load - 2 % if redeemed/switched out on or before completion of 1 yrs from the date of allotment.
Contact Details
Regd. Office Kamala Mills Compound, Trade World, B-Wing, SenapatiBapatMarg, Lower Parel (W), Mumbai, 400013 Tel. No. Fax No. 022-30994600 91 22 30414899
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2011-07-07
2012-07-06
Reliance Gold Savings Fund (G) - Performance Snapshot as on Jul 06, 2012
Period Absolute Returns (%) Annualised Returns (%) Performance Rank # (within fund classes)
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Holdings
Others
99.44
Full Portfolio
Sector Allocation
Sector
Low
Class
Equity Others / Unlisted Debt Mutual Funds Money Market Cash / Call Net Receivable / Payable
%
0.00 99.44 0.00 N.A 0.00 0.56 N.A
Concentration
Holdings Top 5 Top 10 Sectors Top 3 % 99.44 99.44 % N.A.
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2 1 4 2 -
2012 2011
2.5 -0.4
5.4
19.6
2.4
28.8
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Performance
Fund returns v/s Category average (Fund of Funds - Commodity oriented)
1 mth (%)
3 mth (%)
6 mth (%)
1 yr (%)
2 yr (%)
3 yr (%)
5yr (%)
Fund Returns Category avg Difference of Fund returns and Category returns Best of category Worst of category
* Returns over 1 year are Annualised
----
----
----
1.0 -0.3
5.3 3.8
6.9 4.0
31.7 31.2
-0.00
-0.00
-0.00
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A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. It is just like a recurring deposit with the post office or bank where there is a need to put in a small amount every month. The difference here is that the amount is invested in a mutual fund. The minimum amount to be invested can be as small as 100 and the frequency of investment is usually monthly or quarterly
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TARGET 10 LAC
AT THE RATE OF 4% TIME SIP 5 Yrs Rs 15,083 10Yrs Rs 6791 20 Yrs Rs 2726 30 Yrs Rs 1441
AT THE RATE OF 8% TIME SIP 5 Yrs Rs 13610 10Yrs Rs5466 20 Yrs Rs1698 30 Yrs Rs671
AT THE RATE OF 12% TIME SIP 5 Yrs Rs 12244 10Yrs Rs 4347 20 Yrs Rs 1011 30 Yrs Rs 286
AT THE RATE OF 15% TIME SIP 5 Yrs Rs11290 10Yrs Rs3633 20 Yrs Rs668 30 Yrs Rs144
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TARGET 20 LAC
AT THE RATE OF 4% TIME SIP 5 Yrs Rs 30116 10Yrs Rs 13582 20 Yrs Rs 5453 30 Yrs Rs 2882
AT THE RATE OF 8% TIME SIP 5 Yrs Rs27219 10Yrs Rs 10932 20 Yrs Rs 3395 30 Yrs Rs 1342
AT THE RATE OF 12% TIME SIP 5 Yrs Rs 24489 10Yrs Rs 8694 20 Yrs Rs 2022 30 Yrs Rs 572
AT THE RATE OF 15% TIME SIP 5 Yrs Rs 22580 10Yrs Rs 7267 20 Yrs Rs 1336 30 Yrs Rs 289
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TARGET OF 50 LAC
AT THE RATE OF 4% TIME SIP 5 Yrs Rs75416 10Yrs Rs33956 20 Yrs Rs13632 30 Yrs Rs7204
AT THE RATE OF 8% TIME SIP 5 Yrs Rs68049 10Yrs Rs27330 20 Yrs Rs8489 30 Yrs Rs3355
AT THE RATE OF 12% TIME SIP 5 Yrs Rs61222 10Yrs Rs21735 20 Yrs Rs5054 30 Yrs Rs1431
AT THE RATE OF 15% TIME SIP 5 Yrs Rs56450 10Yrs Rs18167 20 Yrs Rs3339 30 Yrs Rs 7204
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AT THE RATE OF 8% TIME SIP 5 Yrs Rs 136097 10Yrs Rs54661 20 Yrs Rs16977 30 Yrs Rs6710
AT THE RATE OF 12% TIME SIP 5 Yrs Rs 122444 10Yrs Rs 43471 20 Yrs Rs10109 30 Yrs Rs 2861
AT THE RATE OF 15% TIME SIP 5 Yrs Rs 112899 10Yrs Rs36335 20 Yrs Rs6679 30 Yrs Rs1444
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1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
12.3 11.5 10.5 9.7 11.3 10.9 9.7 9 11.7 12.5 12.9 12.5
81.30081 86.95652 95.2381 103.0928 88.49558 91.74312 103.0928 111.1111 85.47009 80 77.51938 80
81.30081301 168.2573347 263.49543 366.5882135 455.0837887 546.826908 649.9196915 761.0308026 846.5008881 926.5008881 1004.020268 1084.020268
81300.81 1934.959 2766.702 3555.906 5142.447 5960.413 6304.221 6849.277 9904.06 11581.26 12951.86 13550.25
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NAV
UNITS
TOTAL UNITS
AMOUNT
12000
12.3 11.5 10.5 9.7 11.3 10.9 9.7 9 11.7 12.5 12.9 12.5
975.6098 975.6097561 975.6098 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561 975.6097561
12000 11219.51 10243.9 9463.415 11024.39 10634.15 9463.415 8780.488 11414.63 12195.12 12585.37 12195.12
Through this example we can easily see that by investing in Lump sum a person is getting an amount of only Rs 12,195.12 at the end of 12 months while in SIP he is getting a amount of Rs 13550.25 at the end of 12 months.Hence investing in SIP is much more beneficial as compared to investing in Lump Sum.
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A type of fundamental analysis of the health of a company by examining its strengths(S), weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed to.
I.
STRENGTHS Brand Name: Reliance Mutual fund is a part of Anil DhirubhaiAmbani Group which is a well-known brand in India. It is also one of the fastest growing Mutual fund company in India. Thus it has a strong Brand Image in the minds of Indian consumers. Also RMF being a domestic brand plays a significant role in sale of product.
Strategy:. The company operates under numerous well-known schemes, which allows the company to appeal to many different segments of the market. This makes Reliance more familiar in the minds of Indian Customer.
Fund performances:One of the most important reason for RMFs popularity is the return that its schemes have given i.e.: the fund performance of RMF. The continuous dividend that the company keeps on declaring is one of the most attractive elements of RMF schemes. The Flagship product of RMF i.e. Reliance vision and Reliance Growth both have given returns approximately more than 50% since its inception. Both the schemes have declared dividend on regular basis. Also some of the schemes have been awarded for their best performances.
Strong channel partner network: Reliance Mutual fund is one of the few mutual funds to pioneer retail investing in the country by reaching out to investors and distributors in over 115 cities through branches and representatives across India. Hence the companys strong distribution network is playing a great role in making reliance reaching out to maximum number of investors.
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this diversity within the group makes the company more flexible and resistant to
66
Strong Financial Base: Reliance has many sources of income throughout the group, and
economic and environmental changes. Unlike other Competitors they have enough financial strength to handle periods of Economic turmoil & slowdown.
Diverse portfolio: Reliance Mutual fund offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 179 cities across the country. It has products to meet the needs of all types of consumers, and provides them greater flexibility and choice to them.
Excellent customer service: Ensures better customer services, convenience and communication by efficient network. It has better and superior customer support service which gives an edge to the company over its competitors. II. WEAKNESS
Emerging markets: Reliance Mutual Fund only covers Indian market and does not have global reach.As there is more investment demand in the United States, Japan and the rest of Asia, Reliance should concentrate on these markets, especially in view of low global interest rates.
No Guaranteed Return:Mutual funds are like many other investments without a guaranteed return:there is always a possibility that the value of your investment may 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. This creates a doubt in the minds of Indian Consumer who generally prefer low risk, low return than high risk and high return.
Fees: 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 doesnt make money, these fees only magnify losses.
Less promotional expenditure: With growing competition there is a need to promote the product, so as increase recall rates in consumers mind. At present company do not spends much on advertisements and promotions.
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III. OPPORTUNITIES
Potential markets: The Indian rural market has great potential. All the major market leaders consider the segments and real markets for their products. With Rural market which remains untouched, entry into this market could be highly beneficial.
Rising inflation: In Past few years there has been a continuous increase in inflation rate, which makes traditional investment avenues ineffective. Thus Mutual funds have emerged as more paying avenues.
Small and Medium enterprises: This is the segment which contributes 40% of the industrial output and 35% of direct exports; this sector has achieved significant milestones for the industrial development of India. According to mutual fund experts only 10 % of these invest in mutual funds and rest 90% of these still remains as an untapped market. So along with existing markets their lies an opportunity to expand the base and capture this new market as in the future outlook these current SME segments are expected to turn into big corporates with current boom in the country. So it is essential to catch them young in initial growth cycle as they can turn out to be future large corpus client.
International fund: Investing internationally opens up a huge market which is otherwise left untapped. Indias market at present constitutes only 5% of the worlds Stock market. Several other fund houses have invested in international market like Franklin Templeton and Fidelity International Opportunities fund. Moreover fund houses are now permitted by RBI to invest in ADR/GDR.
IV.THREATS
Increased Competition: With increasing competition in the industry in terms of more upcoming schemes and better existing performances of mutual fund schemes of other AMCs is the threat posed to RMF. As per the distributors HDFC, Franklin Templeton and SBI mutual fund schemes are giving tough competition to the Reliance Mutual Fund.
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increases as the stock market falls. When volatility increases, risk increases and returns
68
and market performance. Volatility tends to decline as the stock market rises and
decreases. The market is so volatile now a day that no one is able to predict the market. Hence this has become a big threat for AMC. Possibility of more stringent regulations by SEBI, RBI, and AMFI in future: Due to various scams and fluctuations in Financial sector, there may be chances of amendment of rules, which may hamper the growth of mutual funds in India.
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AUM
(Rs. cr.) Mar 12
1mth
3mth
6mth
1yr
2yr
3yr
5yr
SBI Gold Exchange Traded Fund UTI Gold Exchange Traded Fund Reliance Gold ETF Quantum Gold Fund Religare Gold ETF Kotak Gold ETF HDFC Gold Exchange Traded Fund Birla Sun Life Gold ETF (G) Axis Gold ETF GS Gold BeES IDBI Gold Exchange Traded Fund MotilalOswalMOSt Shares Gold ETF Can Gold Exchange Traded Fund Scheme
987.69
4.1
7.8
7.5 32.8
25.8
26.4
--
7.4 32.7 7.4 32.7 7.5 32.7 7.5 32.7 7.4 32.7 7.4 32.5
27.1 ------
--25.4 --
--26.3 --
--27.0 --
3.44
3.9
5.9
--
--
--
--
--
3.9
8.1
--
--
--
--
--
Fund Class
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71
Scheme Asset Rs in cr Inception Date Last Dividend Rs/Units Benchmark Minimum Investment Rs AMC/Fund Family
Rs.5000
Rs.5000
Rs.5000
SBI Funds Management Private Limited 47,184.11 Jun-30-2012 >More Scheme Info
AMC Asset Rs in cr
NAV Details
13.934
Jul-06-2012
10.407
Jul-06-2012
10.676
Jul-06-2012
14.126
Jun 19, 12
10.643
Jun 19, 12
10.803
Jun 19, 12
52 week low
10.539
Jul 06, 11
9.251
Oct 05, 11
9.876
Jan 25, 12
Performance Returns as on Jul 06, 12 * Returns over 1 year are Annualised 3 Months 6 Months 1 Year 2 Years 5.3% 6.1% 31.6% 4.7% 5.9% 5.2% 6.9% -
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3 Years 5 Years
Portfolio
Top 5 holdings
N.A.
N.A.
N.A.
99.44%
98.45%
N.A. -
N.A. -
N.A. -
Fund Manager
HirenChandaria
Raviprakash Sharma 0% 1.00% Exit Load 1% for exits within 1 years from the date of allotment
Anil Bamboli
0% 2.00% Exit load - 2 % if redeemed/switched out on or before completion of 1 yrs from the date of allotment.
0% 2.00% Exit Load of 2% if Units are redeemed / switched-out within 6 months and 1% is payable if Units are redeemed / switched-out after 6 months but within 1 year from the date of allotment.
Latest NAVs
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NAV Date DIVIDEND PLAN GROWTH PLAN 13.99950 13.99950 27-Jun-2012 27-Jun-2012
Gold is seen as a sign of prosperity. Indian consumers consider gold jewellery as an investment and are well aware of golds benefits as a store of value. Gold is also recognized as a form of money in India, a tradable liquid asset.
Performance
NAV as at March 30, 2012 (Rs.) : 13.2929 Performance of Reliance Gold Saving Fund - Dividend Payout Option As on 30/03/2012 Date NAV Per Unit (Rs.) Scheme Returns Benchmark Returns (%) # (%) Additional Benchmark Returns # # (%)
Since inception till March 30, 2012 March 30, 2011 to March 30, 2012 March 30, 2010 to March 30, 2011 March 30, 2009 to March 30, 2010
Since Inception Date - 11/03/2011 # Benchmark: Prices of Gold ## Additional Benchmark: N.A.
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7th Apr 7th May ' 9th Jun ' 7th Jul ' 7th Aug ' 8th Set ' 7th Oct ' 7th Nov 8th Dec ' 7th Jan ' 9th Feb 8th Mar ' Total
4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000
11.34 11.01 12.05 13.13 13.67 15.81 16.78 18.28 18.71 21.48 21.49 21.98
352.73 363.31 331.95 304.65 292.61 253.00 238.38 218.82 213.79 186.22 186.13 181.98
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Actual Average NAV = (11.34 + 11.01 + 12.05 + 13.13 + 13.67 + 15.81 + 16.78 + 18.28 + 18.71 + 21.48 + 21.49 + 21.77) / 12 = Rs.16.29. NAV for Rahul = (4,000 * 12) / (352.73 + 363.31 + 331.95 + 304.65 + 292.61 + 253.00 + 238.38 + 218.82 + 213.79 + 186.22 + 186.13 + 183.74) = Rs.15.36
Thus Rupee Cost Averaging smoothens out the market ups and downs and reduces the risk of investing in volatile markets. However, rupee cost averaging does not guarantee a profit, as this depends on the performance of the market.
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questionnaire, in depth interview .To serve the purpose of the research Followed procedure was
OBJECTIVES OF THE STUDY:a)To identify the untapped market and make them aware about the SIP concept of Mutual Funds. b)To increase the awareness level of investors through various methods. c) Ultimately provide company an opportunity of greater penetration in the market through SIP in Reliance gold Funds d)To generate an effective and efficient channel development through various techniques.
INSCOPE
In this report we mainly took account of Bank Of India branches of
efficient channel development with the main objective of increasing the market share of Reliance.
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OUTSCOPE
In this project we will not consider the other branches of Bank Of India
Data collection: Data was collected from both primary and secondary sources. Primary data was collected through the bank visit to the specified areas. Also I personally interacted with the
other persons and other concerned people of the organization, in order to collect the required information. Secondary data was collected with the help of various resources like Google Tools of data collection:Data was collected by conducting survey using various tools like Questionnaire, Interview and Observation. All possible efforts were made to make the
interview as easy as possible for the specified person. Questionnaires were designed for this purpose, which were purely close ended. Random sampling method was used for the questionnaires to get filled SAMPLE SIZE I took the sample size of 50 persons which included government, businessmen and also the private sector employees
LIMITATION a) Time and cost b) Distance travelled c) Validity of data collected d) Some persons were hesitant while revealing their information. e) Convince them to learn more and more and invest in mutual funds. f) To change the wrong perception of persons regarding mutual funds.
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ANALYSIS
During the study respondents were exposed to various questions to suit the purpose of study following
GOVERNMENT SECTOR, 48% PRIVATE SECTOR, 20% GOVERNMENT SECTOR PRIVATE SECTOR
SELF EMPLOYED
From this pie chart it can be found out that most of the people that were under survey were belonging to that of government sector i.e of 48% who can easily invest in SIP method of
33% of the people under survey were holding their own business who can also be a target market for Mutual Fund Industry and rest were the private sector employees
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Q2:- TYPE OF BUSINESS IF OWNED This question was asked to know that whether the owner has the power of taking the decision by himself or he has to depend on others for taking the decision regarding investment in Mutual Funds.
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% FAMILY BUSINESS PARTNERSHIP SOLE PROPRIETARY 38.88% 22.22% 38.88%
PARTNERSHIP 22%
Among all the businessmen that were considered under the study were having family business or they are sole proprieter of their business.All the sole proprieter have all the decision making powers and hence they can take any decision and hence they are of high value for Reliance Mutual Fund.The other type of business also included partnership firms.
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Q3:-REGARDING DURATION OF BUSINESS This question was asked to judge the status of the business with respect to its relation with its partners , its credibility in the market , its reputation in the market.
80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% IS BUSINESS FOR 3 YRS IS BUSINESS FOR greater than3 YRS 27.77% 72.22%
Most of the businessmen that were taken under study were there in the market for more than 3 years and hence they have a good reputation in the market.They can easily invest their money in Mutual Funds if they are provided with all the information regarding Mutual Funds.
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Q4:-FUTURE PLANS FOR THE BUSINESS This question was asked to judge the future plan for the business , because for expanding a business a person requires money and if the company know the future plan for the business a company can easily suggest the owners with the right type of Mutual Funds that can be best suited to them.
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% DIVERSIFY DIVERSIFY AND EXPAND 5% DIVERSIFY 28% EXPAND DIVERSIFY AND EXPAND 5.55% 27.78% 66.66%
EXPAND 67%
This is a very important and vital question for the businessmen as well as for us as by this question we can get a thorough knowledge about their plans down the line.According to the survey that were conducted 66.66% of the businessmen want to expand their business their business in their near future,27.78% of the businessmen want to expand their business in different
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sectors and about 5.55% want to expand as well as diversify their business.
Q5:- INCOME OF THE PERSON INTERVIEWED This question was primarily asked from the person in order to get a outlook of how much that person can invest in Mutual Funds and what is his risk taking ability.
45% 5 Lac-7.5 Lac, 40% 40% 35% 30% INCOME < 5 Lac, 24% 25% 20% 7.5 Lac-10 Lac, 16% 15% 10 Lac- 15 Lac, 10% 10% 15 Lac-20 Lac, 6% 5% 0% INCOME < 5 Lac 5 Lac-7.5 Lac 7.5 Lac-10 Lac 10 Lac- 15 Lac 15 Lac-20 Lac
Income of the person reveals the status of an individual and it also gives us the idea about the risk apetite of an individual.This information is very much beneficial for a company to pitch the right product to the right customers so as to make the customer benefitted from the Mutual Fund.Most of the people that were interviewed were of the income range of 5 Lac to 7.5 Lac
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This question was asked to know which is the most preferred investment option for the public and what is the main reason behind this.This question also helped us to check about the awareness level of public regarding Mutual Funds.
18% 16% 16% 14% 12% 10% 10% 10% 8% 6% 6% 4% 4% 4% 4% 2% 2% 2% 2% 2% 0% BANK DEPOSITSF.DSHARE MARKET IN BUSINESS ITSELF AND FD AND MUTUAL FUNDS SHARE IN BUSINESS BUSINESS MUTUAL FUNDS DEPOSITS DEPOSITS AND FD AND DEPOSITS AND MARKET IN BANK DEPOSITS AND FDDEPOSITS AND FD MUTUAL FUNDS AND BANK BANK BANK BANK IN BUSINESS AND BANK DEPOSITS AND BANK DEPOSITS AND IN BUSINESS FD AND SHARE 6% MARKET 3% BANK DEPOSITS AND FD AND IN BUSINESS 3% BANK DEPOSITS AND FD AND MUTUAL FUNDS 7% BANK DEPOSITS AND FD 16%
This is a question regarding the investment avenues for the persons under observation.Most of the
well as in bank deposits.There were people who took very keen interest in listening about the Mutual Fund Gold Plan and were interested in investing in it in near future.
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investments.Most of the business class people opted for investing their savings in business itself as
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people considered Fixed deposits and Bank deposits as a better and safer avenue for their
Q7:-REGARDING AWARENESS ABOUT MUTUAL FUNDS This question was asked to check the awareness level of public regarding Mutual Funds.This question also helped me to understand the insights of general public or what they think about the Mutual Funds.
70% 60% 50% 40% 30% 20% 10% 0% 66%
34%
About 66% of the people interviewed were aware of the Mutual Fund but they were slightly confused regarding the investment procedure and method of investing in mutual funds.They were also worried regarding the market fluctuations and negative segments of the market.About 34% of the people were not aware of the mutual funds and I tried to explain the concept of Mutual funds in inimum possible time.
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Q8:-REGARDING THEIR INVESTMENT IN MUTUAL FUNDS This question was asked to know about their investment in Mutual Funds.If they invest then in which scheme that person invests and what is the expectation from that mutual Fund Scheme and if that person do not invest in mutual funds then wahat is the main reason behind this.
80% 60% 40% 20% 0% INVESTING IN MUTUAL FUNDS NOT INVESTING IN MUTUAL FUNDS 30% 70%
This pie chart provides us the idea of the people who are investing in Mutual Funds.The people were very reluctant to invest in Mutual Funds due to the dynamic nature of market and due to negative sentiments of the market.I tried to explain them the concept of SIP which can provide them with good returns in their years down the line.
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Q9:-AWARENESS REGARDING SIP Systemetic Investment Plan is a new concept in Mutual Funds.So this question was asked to judge whether the general public is aware about the various investment avenues available for the general public in mutual funds.
80% 70% 60% 50% 40% 30% 20% 10% 0%
68%
32%
This pie chart provides us the idea of the people who are investing in Mutual Funds.The people were very reluctant to invest in Mutual Funds due to the dynamic nature of market and due to negative sentiments of the market.I tried to explain them the concept of SIP which can provide the with good returns in their years down the line.
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53% 52% 51% 50% 49% 48% 47% 46% WANT TO KNOW MORE ABOUT MUTUAL FUNDS 48%
52%
WANT TO KNOW MORE ABOUT MUTUAL FUNDS DONT WANT TO KNOW ABOUT MF
This was the concluding question of the questionnaire asking whether they want to know more about the Mutual Fund 52% of the people were keen to learn more about the Mutual Fund Industry but the rest 48% do not want to learn more about the Mutual Fund.
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FINDINGS
a) Many people are aware of mutual funds but they are not aware of the methods and procedure to invest in Mutual Funds. b) Most of the businessmen invest their money in business itself rather then investing in mutual funds. c) People consider Fixed and Bank deposits as a better and safer avenue for their investments. d) People directly correlate mutual funds with the share market and hence are reluctant to invest in mutual funds. e) Many people are aware of mutual funds but are not aware of SIP Concept of Mutual Funds which can provide them with better returns. f) Many people are reluctant to reveal their income and other details. g) Many people to whom I explained the SIP Concept of Reliance Gold Plan were very interested and had also invested in SIP in Reliance Mutual Fund. h)Young people these days are particularly more interested in mutual funds because they see mutual fund as safe bet. Also these people have large disposable incomes and risk taking capability too.
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RECOMMENDATIONS
a) There is a need to create more and more awareness regarding mutual funds among the public:-Most of the people are not aware of the concept of mutual funds,if they are aware they are not aware of the procedure of investing in it.So there is a need to enhance their knowledge through various awareness campaigns. b) There is a wrong perception among the investors regarding mutual funds,this should be rectified as soon as possible:-Most of the persons have wrong perception that the mutual funds are directly related to share market so this perception of the public have to be rectified. c) Banking channel should be focused more and more as it have a huge potential for Mutual Fund Industry:-The banking channel should be dealt more aggressively which can be a great source of income for Reliance Mutual Fund. d) There is lot of complaint regarding the service of Reliance Mutual Fund industry so it should be dealt more seriously to make the investors happy:-Most of the public that I came across were very dissatisfied regarding the customer support service of Reliance.. e) Reliance should arrange much more awareness campaigns to make the public aware about the recent schemes of Reliance which will enhance Reliance to grabmore and more market share.
f)It has been seen that there is a major increase in the percentage of young investors who have
large amount of disposable income with them and want to invest, these type of prospective clients should be tapped at an early stage.
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LEARNINGS
1:-From this project under Reliance Mutual Fund made me aware about the whole functioning of Mutual Funds , and how it can benefit us in our near furture 2:-It also gave me a chance to meet the HNIS who can act as a heart and soul for this industry. 3:-It made me understand the various expectation that a person have while investing in Mutual Funds. 4:- It also made me aware of the risk and return associated with the Mutual Fund Schemes. 5:- It made me learn how negative market sentiments affect the investment option of the general public. 6:- It made me learn the awareness level of the general public and the perception that they hold towards Mutual Fund Industry. 7:- It also made me learn how we can pitch the right product to the right person after knowing the risk taking ability of the person. 8:-It also made me aware of the various competitors of Reliance Mutual Fund and what steps have been taken by Reliance to make the investors happy and satisfied. 9:-Learned how to process the new applications and got to know the various formalities required to invest in Reliance Mutual Fund.. 10:-During the course of the project I learned how to interact with new people so that they can be convinced to be a part of Mutual Fund Industry.
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BIBLIOGRAPHY
BOOKS
MUTUAL FUND PRODUCT AND SERVICES---- TAXMAN AMFI COURSE BOOK INDIAN MUTUAL FUNDS HANDBOOK--SUNDER SANKARAN
WEBSITES
www.reliancemutualfunds.com www.amfiindia.com www.mutualfundsindia.com www.bseindia.com www.amfiindia.com/mutual funds/nav/about funds/open ended schemes.com www.investopedia/aboutus/html
http://www.moneycontrol.com
NEWSPAPERS
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Annexure: 1
QUESTIONNAIRE QUESTIONNAIRE
HOUSEHOLDS INFORMATION NAME:. Address:.... Mobile no:- Email id: Q1:-EMPLOYMENT DETAILS a) b) c) d) e) GOVERNMENT SECTOR PRIVATE SECTOR SELF EMPLOYMED HOMEMAKER OTHERS Please Specify
Q2:-If you are in a business sector then is it a? a) b) c) d) Family business Partnership Sole proprietary Other Please Specify .
Q4:-What are the future plans of your business? a) b) c) d) Diversify Expand Sustain in the market Become a leader
Q5:-What is your income? 1) 2) 3) 4) LESS THAN 5 LAC 5 LAC- 7.5 LAC 7.5 LAC- 10 LAC 10 LAC- 15 LAC
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5) 15 LAC 20 LAC 6) > 20 LAC Q6:-Where do you invest your savings? a) b) c) d) e) Bank deposits F.D. Share market Mutual funds In business itself
Q7:-Are you aware of Mutual Funds A ) Yes b) No Q8:-If Yes, Do you invest in Mutual Funds a) Yes b) No If yes you invest in ..scheme in .plan Q9:-Are you aware of Systematic Investment Plan (SIP)? a) Yes b) No If yes, in which company do you invest? a) b) c) d) ICICI HDFC RELIANCE Other Please Specify..
If yes which scheme and in which plan do you invest? If No what is the main reason behind this? .
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Do you have any recommendations for improving the performance of Reliance Mutual FUND? . Q10:-Do you want to know more about Mutual Funds? a) Yes b) No
Would you like to avail the benefits of Reliance Mutual Funds for your future financial planning? a) Yes b) No
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