A FINAL REPORT ON

“A THESIS ON SERVICE PROLIFERATION AND CUSTOMER SATISFACTION AT RELIANCE MUTUAL FU

ND GUNTUR”
Under the guidance of Mr. SITA RAMAIAHA, Center Head, ICFAI National College Gun
tur Mr., P.Guruprasad, Faculty Supervisor, Faculty Member, ICFAI National Colleg
e, Guntur.
BY K.Srikanth Enrollment No 7NBGU003 MBA Program (Class of 2007-2009)
1
ACKNOWLEDGEMENTS
I take this opportunity to express my gratitude to all the people who have guide
d and helped me directly or indirectly in the course of completion of my project
. I feel immense pleasure to express a deep sense of gratitude to my beloved Pri
ncipal Mr. SITA RAMAIAHA ICFAI National College Guntur, who has given me an oppo
rtunity to do my Management Thesis in RELIANCE mutual funds. I would also thankf
ul to my Faculty Guide Mr., P.Guruprasad for his constant support and guidance.
His valuable suggestions and helping hands has helped me to complete my project
successfully.
I am also very thankful to Mr. M. RAVI SAGAR Branch manager RELIANCE mutual fund
s, Guntur for his cooperation in providing me all the necessary information for
doing this project in RELIANCE Mutual Funds.
K. SRIKANTH 7NBGU003 ICFAI national college. GUNTUR.
2
DECLARATION
I hereby declare that the management thesis report “A Thesis On Service Proliferat
ion And Customer Satisfaction At Reliance Mutual Fund Guntur”, submitted by me to
ICAFI National College, Guntur is of my own and it is not submitted to any other
college or published any time before.
K. SRIKANTH, 7NBGU003, ICFAI National college. Guntur.
3
CERTIFICATE
This is to certify that the Management Thesis entitled “A Thesis On Service Prolif
eration And Customer Satisfaction At Reliance Mutual Fund Guntur”, a bonafied work
of K. SRIKANTH is original and has been done under my supervision is partial fu
lfillment for the award of Masters of Business Administration. This report or a
part of this has not been submitted for the award of any other degree of with th
is university or any other university. I am pleased to say that his performance
during the period was extremely satisfactory.
Mr., P.Guruprasad, Faculty guide, ICFAI National College, Guntur.
CONTENTS
4
PAGE NO
1. 2. 3. 4.
LIST OF TABLES, CHARTS AND DIAGRAMS ABBREVIATIONS SUMMARY/ABSTRACT INTRODUCTION
4.1.1.Purpose
6 7 8 9-13 12 13 13 14 15 16-24 25-29 30-40 41-42 43 44-45 46 47-51
of the study
4.1.2.Objectives 4.1.3.Limitations 5. 6. 7. 8. 9.
METHODOLOGY REVIEW OF LITERATURE INDUSTRY PROFILE COMPANY PROFILE DATA ANALYSIS
10.FINDINGS&SUGGESTIONS 11.CONCLUSIONS AND 12.QUESTIONNAIRE 13.BIBLIOGRAPHY 14.G
LOSSARY
RECOMMENDATIONS
LIST OF TABLES, CHARTS AND DIAGRAMS
5
Diagrams:
Page No.
1.Customer behavior 2.Mutual Fund operation flow chart
3. Organization of a Mutual Fund
11 19 19 21 23
4.Mutual Fund Industry Growth 5.Mutual Funds Structure /Company Structure
Tables and Charts:
1. Market Share Of The Mutual Fund Industry 2. Different Age Group Of The Respon
dents 3. Preferred Fund Structure 4. Investors Scheme Preference
24 31 32 33 34 35 36
37
5. Investor Fund Preference
6. Repeating Of Investments 7. Getting Monthly / Quarterly Statements From Time
To Time 8. Ranking On The Customer Service Of Reliance Mutual Funds 9. Regarding
Areas For Improvement By Reliance Mutual Funds 10. Redemption Satisfaction Of T
he Customers 39 11.Usage Of Value Added Services Offered By Reliance Mutual Fund
s
38
40
6
ABBREVIATIONS
ASL SE Mf MF’S NASDAQ BSE AMC AMFI AUM CBFI CCBI CRISIL FDI NAV NFO SEBI
: : : : : : : : : : : : : : : :
Allianz Securities Limited Securities Mutual Fund Mutual Funds National Associat
ion of Securities Dealers Automated Quotation Bombay Stock Exchange Asset Manage
ment Company Association of Mutual Funds India Assets under Management Crisil Ba
lanced Fund Index Crisil Composite Bond Index Credit Rating & Information Servic
es of India Ltd. Foreign Direct Investment Net Asset Value New Fund Offer Securi
ties Exchange Board of India
7
SUMMARY/ABSTRACT
The basic objective of any financial services company would be to provide an abs
olute tailor made products and services to the customer and to retain them into
the organization, but to retain a particular customer is not easy because custom
er expectations change by time and it becomes a tough job for the companies to c
urb the needs of their customers. Now with the case of asset management company
which is getting its pace and a lot of companies are emerging as players, here a
study has been undertaken with regards to RELIANCE AMC where study looks into t
he expectation of the customers regarding mutual funds and issues relating to cu
stomers expectation. The need for this research is to emphasis the expectations
of customer of mutual funds and how the company in contrast to the expectations
is performing. This research is conducted to understand the customer’s perception
towards mutual fund. Till yesterday people are having very less knowledge for mu
tual funds because of brokerage companies in India have not made efforts to expa
nd the market. They have been doing business with the same clientele. There is a
lso a lack of investor awareness as far as markets are concerned. The Harshad Me
hta scam and various other scams have created a bad impression in people s minds
and this need to be changed. Just to put things in perspective, India has 330 m
illion bank accounts. The mutual fund industry has 30 million unique folios. Unf
ortunately, in the broking industry, the number of people with Demat accounts ha
s continued to stagnate at 5.85 million in the last 10-12 years, which is worris
ome. Every industry in India has grown over the last 10 years except this one. W
hatever retail participation exists is coming from bigger cities such as Mumbai
and Delhi. The services have not reached bottom-of-the-pyramid towns. Reliance i
s conducting investor awareness campaigns every Saturday at Reliance money cente
rs. 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 cap
ital market instruments such as shares, debentures and other securities. The inc
ome earned through these investments and the capital appreciation realized is sh
ared by its unit holders in proportion to the number of units owned by them. Thu
s 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 secu
rities at a relatively low cost. The flow chart below describes broadly the work
ing of a mutual fund.
8
CHAPTER 1 INTRODUCTION
9
INTRODUCTION
Customer satisfaction is a measure of how products and services supplied by a co
mpany can meet the customer’s expectations. Customer satisfaction is still one of
the single strongest predictors of customer retention. It’s considerably more expe
nsive to attract new customers than it is to keep old ones happy. In a climate o
f decreasing brand loyalties, understanding customer service and measuring custo
mer satisfaction are very crucial. There is obviously a strong link between cust
omer satisfaction and customer retention. Customer s perception of Service and Q
uality of product will determine the success of the product or service in the ma
rket. With better understanding of customers perceptions, companies can determi
ne the actions required to meet the customers needs. They can identify their ow
n strengths and weaknesses, where they stand in comparison to their competitors,
chart out path future progress and improvement. Customer satisfaction measureme
nt helps to promote an increased focus on customer outcomes and stimulate improv
ements in the work practices and processes used within the company. Customer exp
ectations are the customer-defined attributes of your product or service you mus
t meet or exceed to achieve customer satisfaction.1 There are many reasons why c
ustomer expectations are likely to change over time. Process improvements, adven
t of new technology, changes in customer s priorities, improved quality of servi
ce provided by competitors are just a few examples.
10
11
PURPOSE OF THE STUDY
The main purpose of the study is to know the expectations of those investors who
invested in RELIANCE mutual funds and the satisfaction levels of investors with
the services provided by the RELIANCE Asset Management Company, Guntur. In the
present competitive environment it is very crucial to every business firm to ens
ure satisfaction to its customers. According to one survey it was found that it
costs five times more to attract a new customer than to retain an existing custo
mer. So with all these parameters taking into consideration one can say that it
is very important to provide goods and services that satisfy customers needs or
wants irrespective of the industry or scale of the business in which a firm is o
perating. Here the main purpose of the survey is to know the various factors tha
t are very important in satisfying the customers needs and to know how RELIANCE
AMC is ensuring its customers satisfaction. The expectations of customers are va
ry from one customer to the other customer. For example some customers are only
concerned about the returns that they are getting in a fund but at the same time
there are some other customers who are very specific about the location, ambien
ce and front line employees’ interaction and some other parameters. It is very dif
ficult to any business firm to satisfy all the expectations of all customers but
there are some common factors that are essential to fulfill. The objectives of
the projects are given as below. The details of the survey such as the source of
data, the sample size taken and the methods of analysis are all given briefly i
n the methodologies. There are some constraints throughout the project, which ar
e given clearly in the limitations.
12
OBJECTIVES
The following are the objectives of the Management Thesis.
To understand the different investment options provided by RELIANC mutual funds
through it’s mutual fund schemes.
To know the investors’ expectations on mutual funds offered by
RELIANCE
mutual funds.
To know the various services provided by RELIANCE AMC to its investors. To study
the satisfaction levels of customers in RELIANCE mutual funds.
To identify how the brand building helps in meeting the customers expectations t
o meet their investment objectives
LIMITATIONS
As the data will be collected through questionnaire, there are chances of biased
information provided by the respondent.
The study is confined to the existing customers of RELIANCE mutual funds only. T
he survey will be limited only to Guntur city. The study does not consider the e
quity investment portfolio of investors.
13
METHODOLOGY
Data for the survey is collected through: Primary source
•
Visiting the organization (Observation Techniques) Using structured questionnair
e for the existing customer.
•
Secondary Source • • • Company Broachers Company Website Internet
Sample size: sample size for the survey is 100. Type of sampling: stratified ran
dom sampling technique is used for collecting the primary data. The data is coll
ected only from RELIANCE mutual fund customers’, Guntur. Methods used for analysis
: bar charts and pie charts are the tools that will be used in analyzing the dat
a.
14
REVIEW OF LITERATURE
For the present study, the following literatures are being reviewed.
The title of Article is “Does customer satisfaction lead to profitability?”
Author(s): Timothy L. Keiningham, Tiffany Perkins-Munn, Lerzan Aksoy, Demitry Es
trin Journal: Managing Service Quality Publisher: Emerald Group Publishing Limit
ed Purpose – Many researchers have proposed a virtuous chain of effects from impro
ved customer satisfaction to profits. In particular, satisfaction is thought to
improve share-ofspending, which in turn leads to higher customer revenue and cus
tomer profitability. This paper aims to examine these proposed linkages using da
ta from the institutional securities industry. Design/methodology/approach – The d
ata used in the analyses were collected as part of an ongoing telephone satisfac
tion survey of 81 clients of an institutional securities firm across two contine
nts (North America and Europe). Mediation analysis was used to test the hypothes
ized effects. Findings – Customer revenue was found to correlate negatively with c
ustomer profitability for unprofitable customers, and positively for profitable
customers. Research limitations/implications – One of the limitations of this rese
arch is that it tests the propositions within a single industry. Future research
should attempt to replicate these findings in other contexts. Practical implica
tions – A simplistic focus on improving customer satisfaction for all customers in
order to improve share-of-wallet and customer revenue does not seem to represen
t the best management approach to maximize overall firm profitability. In fact,
it could actually result in a negative return on investment. Therefore, customer
s should first be segmented by their profitability to the firm before expending
resources to improve customer satisfaction and share-of-wallet. Originality/valu
e – The results of this paper challenge the conventional belief that customer sati
sfaction should lead to customer retention in turn, resulting in customer revenu
e and ultimately customer profitability. The findings indicate that this may not
always be true.
15
CHAPTER 2 INDUSTRY PROFILE.
16
INTRODUCTION TO MUTUAL FUND INDUSTRY
The origin of mutual fund industry in India is with the introduction of the conc
ept of mutual fund by UTI in the year 1963. Though the growth was slow, but it a
ccelerated from the year 1987 when non-UTI players entered the industry in the p
ast decade, Indian mutual fund industry had seen a dramatic improvement, both qu
alities wise as well as quantity wise. Before, the monopoly of the market had se
en an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private
sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and
till April 2004; it reached the height of 1,540 bn. Putting the AUM of the India
n Mutual Funds Industry into comparison, the total of it is less than the deposi
ts of SBI alone, constitute less than 11% of the total deposits held by the Indi
an banking industry. The main reason of its poor growth is that the mutual fund
industry in India is new in the country. Large sections of Indian investors are
yet to be intellectuated with the concept. Hence, it is the prime responsibility
of all mutual fund companies, to market the product correctly abreast of sellin
g. The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under. First Phas
e - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parli
ament. It was set up by the Reserve Bank of India and functioned under the Regul
atory and administrative control of the Reserve Bank of India. In 1978 UTI was d
e-linked from the RBI and the Industrial Development Bank of India (IDBI) took o
ver 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 crore
s of assets under management. Second Phase - 1987-1993 (Entry of Public Sector F
unds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by C
an 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 (O
ct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets
under management.
Third Phase - 1993-2003 (Entry of Private Sector Funds)
17
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 familie
s. 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 govern
ed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the f
irst private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual F
und) Regulations were substituted by a more comprehensive and revised Mutual Fun
d Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) R
egulations 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 witness
ed several mergers and acquisitions. As at the end of January 2003, there were 3
3 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of Indi
a with Rs.44, 541 crores of assets under management was way ahead of other mutua
l funds. Fourth Phase - since February 2003 This phase had bitter experience for
UTI. It was bifurcated into two separate entities. One is the Specified Underta
king of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003
). The Specified Undertaking of Unit Trust of India, functioning under an admini
strator and under the rules framed by Government of India and does not come unde
r the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund
Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and function
s under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI w
hich had in March 2000 more than Rs.76,000 crores of AUM 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 fun
d industry has entered its current phase of consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of Rs.153108 cr
ores under 421 schemes.
18
Mutual Fund Operation Flow Chart
ORGANISATION OF A MUTUAL FUND:
There are many entities involved and the diagram below illustrates the organizat
ional set up of a mutual fund:
Mutual funds in INDIA have a 3-tier structure of Sponsor – Trustee – AMC. Sponsor is
the promoter of the fund. Sponsor creates the AMC and the trustee company and a
ppoints the Boards of both these companies, with SEBI approval. A mutual fund is
constituted as a Trust
19
 A trust deed is signed by trustees and registered under the Indian Trust Act. Th
e mutual fund is formed as trust in INDIA, and supervised by the Board of Truste
es.
The trustees appoint the asset management company (AMC) to actually manage the
investor’s money. The AMC’s capital is contributed by the sponsor. The AMC is the bu
siness face of the mutual fund. Investor’s money is held in the Trust (the mutual
fund). The AMC gets a fee for managing the funds, according to the mandate of th
e investors. Sponsor should have at-least 5-year track record in the financial s
ervices business and should have made profit in at-least 3 out of the 5 years. S
ponsor should contribute at-least 40% of the capital of the AMC. Trustees are ap
pointed by the sponsor with SEBI approval. At-least 2/3 of trustees should be in
dependent. At-least ½ of the AMC’s Board should be independent members. An AMC of on
e fund cannot be Trustee of another fund. AMC should have a net worth of at leas
t Rs. 10 crore at all times. AMC should be registered with SEBI. AMC signs an in
vestment management agreement with the trustees. Trustee Company and AMC are usu
ally private limited companies. Trustees oversee the AMC and seek regular report
s and information from them. Trustees are required to meet at least 4 times a ye
ar to review the AMC. The investor’s funds and the investments are held by the cus
todian. Sponsor and the custodian cannot be the same entity. R&T agents manage t
he sale and repurchase of units and keep the unit holder accounts.
20
 If the schemes of one fund are taken over by another fund, it is called as schem
e take over. This requires SEBI and trustee approval. If two AMCs merge, the sta
kes of sponsor’s changes and the schemes of both funds come together. High court,
SEBI and Trustee approval needed. If one AMC or sponsor buys out the entire stak
e of another sponsor in an AMC, there is a takeover of AMC. The sponsor, who has
sold out, exits the AMC. This needs high court approval as well as SEBI and Tru
stee approval. Investors can choose to exit at NAV if they do not approve of the
transfer. They have a right to be informed. No approval is required, in the cas
e of open ended funds. For close ended funds investor approvals is required for
all cases of merger and take over.
GROWTH IN ASSETS UNDER MANAGEMENT
21
REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA
The regulation of mutual funds in India is governed by the SEBI vide the SEBI (M
utual Fund) Regulation, Act 1996 (here in after referred to as SEBI Regulations)
. These regulations make it mandatory for mutual funds to have a three-tier stru
cture of sponsor – Trustee – Asset Management Company (AMC). The sponsor is the prom
oter of the mutual fund and appoints the trustees. The Trustees are responsible
to the investors in the mutual fund and appoint the AMC for managing the investm
ent portfolio.SEBI regulations also provide for who can be a sponsor, trustee an
d AMC, specifying the format of agreement between these entities. These agreemen
ts provide for the rights, duties and obligations of these three entities. The U
TI is also structured as a trust. The important difference through is that UTI d
oes not have sponsors or a separate AMC. Financial intuitions and banks that con
tributed to the initial capital of the UTI have their representatives on UTI’s Boa
rd of Trustees, which oversees the operation of UTI Mutual Fund. The Association
of Mutual Funds in India (AMFI) is a self-regulatory body formed by the various
MF Companies to address the practices and policies of various aspects like new
scheme launches, payments to intermediaries’ comparisons and other ethical systems
. Likewise, different companies have their own Compliance and Audit offices, whi
ch are mandated to control and report adherence to and deviations if any on the
regulations and policies issued by SEBI. ADVANTAGES OF MUTUAL FUNDS Professional
Management Diversification Convenient Administration Return Potential Low Costs
Liquidity Transparency Flexibility Choice of schemes Tax benefits well regulate
d
22
MUTUAL FUNDS STRUCTURE /COMPANY STRUCTURE.
Establishes the mutual fund as a trust and registers with SEBI Mutual fund (For
e.g. Reliance AMC)
Sponsor Company
Managed by the board of trustees.
Hold unit holders funds in mutual fund. Enters into an agreement with SEBI.
Asset Management Company.
Floats mutual funds as per the regulations of SEBI regulations.
Custodian
Provides custodial services.
Registrar
Provides registrar and transfer services.
Distributors
Provides the network for distribution of schemes to the investors.
23
Market Share of the mutual fund industry.
Assets Under Management (AUM) as at the end of Jan-2008 Sl.no. 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Mutual Fun
d Name ABN AMRO Mutual Fund AIG Global Investment Group Mutual Fund Benchmark Mu
tual Fund Birla Sun Life Mutual Fund BOB Mutual Fund Can bank Mutual Fund DBS Ch
ola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutua
l Fund Fidelity Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC
Mutual Fund ICICI Prudential Mutual Fund ING Vysya Mutual Fund JM Financial Mut
ual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Lotus I
ndia Mutual Fund Morgan Stanley Mutual Fund PRINCIPAL Mutual Fund Quantum Mutual
Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund Standard Chartered
Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund Taurus Mutual Fun
d UTI Mutual Fund Grand Total % Market share 1.66 0.00 1.55 5.73 0.02 0.70 0.60
1.76 2.86 0.03 2.13 6.34 8.73 3.52 12.24 1.38 0.91 0.00 4.04 2.39 0.87 0.77 3.17
0.01 14.28 0.04 4.75 3.90 2.45 3.40 0.07 9.67 100.00
24
CHAPTER 3 COMPANY PROFILE.
25
COMPANY PROFILE
Reliance Mutual Fund is one of India’s leading Mutual Funds, with Average Assets u
nder Management (AAUM) of Rs. 90,938 Cores (AAUM for Mar 08) and an investor bas
e of over 66.87 Lakhs. Reliance Mutual Fund, a part of the Reliance - Anil Dhiru
bhai Ambani Group, is one of the fastest growing mutual funds in the country. RM
F offers investors a wellrounded portfolio of products to meet varying investor
requirements and has presence in 115 cities across the country. Reliance Mutual
Fund constantly endeavors to launch innovative products and customer service ini
tiatives to increase value to investors. "Reliance Mutual Fund schemes are manag
ed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capit
al Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid
up capital being held by minority shareholders."
Reliance Capital Ltd. is one of India’s leading and fastest growing private sector
financial services companies, and ranks among the top 3 private sector financia
l services and banking companies, in terms of net worth. Reliance Capital Ltd. h
as interests in asset management, life and general insurance, private equity and
proprietary investments, stock broking and other financial services.
Statutory Details: Sponsor: Reliance Capital Limited. Trustee: Reliance Capital
Trustee Co. Limited. Investment Manager: Reliance Capital Asset Management Limit
ed. The Sponsor, the Trustee and the Investment Manager are incorporated under t
he Companies Act 1956. General Risk Factors: Mutual Funds and securities investm
ents are subject to market risks and there is no assurance or guarantee that the
objectives of the Scheme will be achieved. As with any investment in securities
, the NAV of the Units issued under the Scheme can go up or down depending on th
e factors and forces affecting the capital
26
markets. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of th
e future performance of the Scheme. The Sponsor is not responsible or liable for
any loss resulting from the operation of the Scheme beyond their initial contri
bution of Rs.1 lakh towards the setting up of the Mutual Fund and such other acc
retions and additions to the corpus. The Mutual Fund is not guaranteeing or assu
ring any dividend/ bonus. The Mutual Fund is also not assuring that it will make
periodical dividend/bonus distributions, though it has every intention of doing
so. All dividend/bonus distributions are subject to the availability of the dis
tributable surplus in the Scheme. For details of scheme features and scheme spec
ific risk factors, please refer to the provisions of the offer document.
•
Reliance Mutual Fund has won the "Most Trusted Mutual Fund Brand" for the second
year, in succession by Economic Times - AC Nielsen ORG-MARG survey.
•
CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007 Reliance Growth Fund -
Most Consistent CPR Performer - Equity Fund Category Reliance Growth Fund was t
he only scheme that won the CNBC TV18 - CRISIL Mutual Fund of the Year Award in
the Most Consistent CPR Performer - Equity Fund category. In total 8 schemes wer
e eligible for the award universe. Schemes present in all 20 quarterly CRISIL CP
Rs for the 5 years ending with 2007 were considered for the award. The award is
based on consistency of the scheme’s performance in the twenty quarterly CRISIL CP
R rankings released during the calendar years 2003 to 2007.
• •
•
Reliance Growth Fund-Growth Plan was declared the best fund over 5 years in the
Equity India category, out of 81 eligible schemes. Reliance Natural Resources fu
nd is the only one Natural Resources sector fund in India . Reliance Mutual has
completely withdrawn the restriction/upper limit imposed on subscription in Reli
ance Equity and Reliance Growth schemes with effect from August 18. Fresh and ad
ditional subscriptions including systematic investment plans will henceforth be
accepted without any limit, subject to the minimum subscription amount for each
scheme.
27
•
Reliance mutual funds has now gone ahead of Unit Trust of India (UTI) to become
India s largest mutual fund by AUM (assets under management
RELIANCE CUSTOMER SERVICE Online Services Transact Online. It’s really simple. It
s time you experienced the ease and convenience of transacting online. You can n
ow purchase, redeem or switch your units of Reliance Mutual Fund schemes at www.
reliancemutual.com. You can also check your account statement, fill in and submi
t the application form as well as view and download Offer Documents. You can do
all this from the comfort of your home or office. Here ís a simple step-by-step on
line transaction guide that will help you get started. Online Transaction Custom
ers can purchase, switch or redeem their Reliance Mutual Fund units through onli
ne. Online Payment: When customers can choose Online Payment, they will be direc
ted to the Payment Gateway Page, where they have to choose one of the banks to m
ake the payment. Once they select their bank, they will be directed to the Net B
anking page of the respective bank. Log in to their bank account and make the pa
yment. When the transaction is complete, a confirmatory mail will be sent to the
ir registered email address. Cheque Payment: If they choose to make the payment
by Cheque, they will need to download and print the application form by clicking
on the link provided. They need to simply sign this form and submit it at the n
earest Investor Service Centre (ISC), along with their cheque. The transaction r
eference number should be written on the reverse of the cheque before submission
. The ISC will acknowledge receipt of the same and send their application for fu
rther processing. Till now in the part of MT research understood the products an
d features of mutual funds and gather complete information on Mutual Fund Indust
ry . Studied completely about products of Reliance Mutual funds and their perfor
mance levels and also studied value added
28
services offered by Reliance Mutual Fund AMC to the customers . Met company exec
utive to know about the performances of the products in our region and also cust
omer perception on Reliance Mutual Funds .
Prepared a questionnaire to measure customer satisfaction on Reliance Mutual Fun
ds . Gather some customers information list from Reliance Mutual Fund office, Gu
ntur . The customers of Reliance Mutual funds are mainly business people, employ
ees and Institutional Investors .The Mutual fund customers are risk averse .They
expect high returns from less risk .Customers have different views regarding Mu
tual fund investments . They are in dilemma whether to invest in Bear market or
Bull market . The investment objective is varies from customers to customers . T
here are different objectives like Growth Fund , Income Fund , Balance Fund . Me
t some customers and got feed back about Reliance Mutual Funds from them .
29
CHAPTER 4 EMPIRICAL ANALYSIS
30
BODY OF THESIS
TABLE: 1
TABLE SHOWING DIFFERENT AGE GROUP OF THE RESPONDENTS
AGE
0-18 18-36 36-54 54-72 72 & ABOVE CHART - 1
72 & Above 0%
NO OF RESPONDENTS
0 40 50 10 0
noof respondentS 0-18
0% 54-72 10% 18-36 40%
36-54 50%
Inference: The majority of the respondents i.e. 46% are from the age group of 36
-54. And
the second largest age group is 18-36. And the remaining investors are from 54-7
2 age group.
31
PREFERRED FUND STRUCTURE
Table-2
Structure of the fund Open – ended fund Close – ended fund Interval funds Total
No of investors preferred 64 24 12 100
CHART - 2
Noof investorspreferred
100 90 80 70 60 50 40 30 20 10 0 Open – ended fund 64 Close – ended fund 24 Interval
funds 12 Total 100
e l t T s i x A
No of investors preferred
Inference: It is observed that 64 out of 100 that are 64% of investors are inter
ested to invest their money in open ended funds the reason can be attributed to
its convenience to enter and exit at any time. 24% investors preferred to invest
in close ended funds because they are long term investors as well as they want
some tax benefits. And the remaining 12% investors replied that they don’t mind to
invest in any funds including interval funds
INVESTORS SCHEME PREFERENCE
32
Table-3 Preferred fund scheme Growth scheme Income scheme Balanced scheme Total
No of investors preferred 52 16 32 100
CHART - 3
Inference: In the above given graph it is showed that 52 out of 100 that are 52%
of customers are interested to invest in growth schemes. 8 out of 25 that are 3
2% of customers are interested to invest in Balanced schemes and the remaining 1
6% customers are preferred to invest in Income schemes.
INVESTORS FUND PREFERENCE
33
Table-4 Type of fund Tax saver funds Index funds Sectorial funds Total No of inv
estors preferred 15 40 45 100
CHART - 4
Inference: Out of 100 investors 15 that is 15% of customers are preferred to inv
est in Tax saver funds. 40 that is 40% of investors are preferred to invest in i
ndex funds which give returns based upon respective indexes.. 45 that is 45% of
investors are interested to invest in sectorial funds that means they are ready
to take high risk but want high returns
Table-5
34
TABLE SHOWING REPEATION OF INVESTMENTS MADE BY THE RESPONDENTS.
RESPONSE
YES NO TOTAL Chart-5
NO OF RESPONDENTS
64 36 100
No of Respondents
NO, 36
YES NO
YES, 64
Inference: Out of 100 respondents 64 customers have already reinvested in the co
mpany, while the rest are waiting for a correct time to enter in the market for
the second time.
35
GETTING MONTHLY / QUARTERLY STATEMENTS FROM TIME TO TIME
TABLE-6 Getting Monthly / Quarterly statements from time to time
No of Investors 70 30
Yes No
CHART - 6
Inference: 70 out of 100 people getting monthly/quarterly statements from time t
o time 30 out of 100 people not getting monthly/quarterly statements from time t
o time .
Table-7
36
RESPONDENTS RANKING ON THE CUSTOMER SERVICE OF RELIANCE MUTUAL FUNDS
RANKS
ONE TWO THREE FOUR FIVE
NO OF RESPONDENTS
34 16 26 16 8
Chart-7
37
Inference: Out of 100 respondents 34 ranked RELIANCE as AMC one for customer ser
vice function. Table-8
RESPONSE REGARDING AREAS FOR IMPROVEMENT BY RELIANCE MUTUAL FUNDS
AREAS
CUSTOMER SERVICE MONITORING OF FUND AGENTS TRAINING OTHERS TOTAL
NO OF RESPONDENT
35 38 22 5 100
Chart-8
38
Inference: Out of 100 respondents 38 respondents want RELIANCE to improve at the
ir fund monitoring function.
39
Table-9
REDEMPTION SATISFACTION OF THE CUSTOMERS
Satisfaction about Redemption facilities Yes No
No of Investors 65 35
Chart-9
Inference: Sixty five percent of the customers are happy with the redemption fac
ilities of RMF.
40
Table-10
RESPONSE REGARDING USAGE OF VALUE ADDED SERVICES OFFERED BY RELIANCE MUTUAL FUND
S
VALUE ADDED SERVICES
ATM Ecs Online transaction Direct investment
NO OF RESPONDENT
0 60 20 40
CHART-10
41
Inference: Most of the customers are making use of value added services of Ecs a
nd a few of them make use online transaction and direct investment.
CHAPTER 5 FINDINGS & SUGGESTIONS
42
FINDINGS & SUGGESTIONS
The findings for the above research are as follows: It was found that majority of
the investors i.e.46% are from the age group of 3654. This is the group of midd
le age people who deserve to invest for their future financial needs.
It was found that Out of 100 respondents 64 customers have already reinvested in
the company, while the rest are waiting for a correct time to enter in the marke
t for the second time.
It was observed that Out of 100 respondents 62 investors have reinvested due to
better returns and performance of funds. While the rest of the investors have vo
ted for performance of funds and services provided by the company.
It was observed that Out of 100 investors 15 that is 15% of customers are
preferred to invest in Tax saver funds. 40 that is 40% of investors are preferre
d to invest in index funds which give returns based upon respective indexes.. 45
that is 45% of investors are interested to invest in sectorial funds that means
they are ready to take high risk but want high returns
It was found that Out of 100 respondents 34 ranked RELIANCE as AMC one for
customer service function.
It was found that Out of 100 respondents 38 respondents want RELIANCE to
improve at their fund monitoring function
43
CONCLUSION AND
suggestions are not necessary:-
RECOMMENDATIONS
The following suggestions are the outcome of the research and applications of th
ese
The company should come up with innovative ways of service at their door steps t
his may be a costly affair but will surely give positive results in the long run
. The company should take the initiative of training the advisors about the new
funds from time to time which also makes the advisors connected to the company.
The company should also emphasis on the monitoring of funds which directly relat
es to the returns of a specific fund. The company should come up with proper Hed
ge funds at this point of time where the market is highly volatile and the inves
tors become very cautious at this level. The company should use brand ambassador
s for example the CEO’s of major companies where the company allocate the funds. T
his will probably ensure proper results. The company should focus on the adverti
sing strategy and also the marketing of the product. The company should emphasis
on creating an awareness about the SIP options which is always preferable when
the market is volatile. The company doesn’t have enough tax saving plans or approp
riate plans for tax so which they should come up with.
44
QUESTIONNAIRE
NAME: AGE: PROFESSION:
1. Have you ever invested in RELIANCE Mutual Funds?
Yes No
[] []
2. If yes why did you choose RELIANC Mutual Funds? 3. By structure in which type
of schemes did you invested?
Open - Ended Schemes Close - Ended Schemes Interval Schemes
[] [] []
4. By investment objective in which type of schemes have you invested?
Growth Schemes Income Schemes Balanced Schemes
[] [] []
5. In which type of fund you want to invest?
Tax saver funds Index funds Sectorial funds
[] [] []
6. Did you repeat your investment after your initial investments? Yes No
7. Are you getting Monthly / Quarterly statements from time to time?
Yes
[]
45
No
[]
8. Are you satisfied with the redemption facilities provided by RELIANCE AMC?
Yes No
[] []
9. Are you satisfied with portfolio management managed by RELIANCE AMC?
Yes No
[] []
10.Which value added service you are using?
ATM [ ] Ecs []
Online tranction Direct investment
[] []
11.Are you satisfied with value added services offered by RELIANCE AMC?
Yes No 1-10
[] []
12.Grade the customer service of RELIANCE with regards to Mutual Funds on a scal
e of
(Where 1 will represent the best monitoring of fund, while 10 would reflect the
poor monitoring of fund)
46
1
2
3
4
5
6
7
8
9
10
13.What is your opinion on RELIANCE Mutual Funds overall performance?
Excellent Good Better Bad
[] [] [] []
14.In what areas do you want RELIANCE mutual funds to improve?
E.g. Customer service Monitoring of fund Agents training Others
BIBLIOGRAPHY
BOOKS MUTUAL FUNDS IN INDIA - PERSPECTIVES AND STRATEGIES Edition 2007 Published
by ICFAI BUSINESS SCHOOL :- Arindam Banerjee
REFERENCES Websites: • • • • • www.reliancemutualfunds.com www.amfiindia.com www.mutualfun
dsindia.com www.mutualfundsindia.com www.ask.com
47
• • • •
www.faq.com www.bseindia.com www.amfiindia.com/mutual funds/nav/about funds/open
ended schemes.com www.investopedia/aboutus/html
GLOSSARY
Advisor Your financial consultant who gives professional advice on the fund s in
vestments and to supervise the management of its assets. Amortization A method o
f equated monthly payments over the life of a loan. Payments usually are paid mo
nthly but can be paid annually, quarterly, or on any other schedule. In the earl
y part of a loan, repayment of interest is higher than that of principal. This r
elationship is reversed at the end of the loan. Appreciation When an investment
increases in value, it appreciates. For example, a equity share whose price goes
from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-.
48
Arbitrage The practice of buying and selling an interlaced stock on different ex
changes in order to profit from minute differences in price between the two mark
ets. Asset Property and resources, such as cash and investments, comprise a pers
on s assets; i.e., anything that has value and can be traded. Examples include s
tocks, bonds, real estate, bank accounts, and jeweler. Asset Allocation When you
divide your money among various types of investments, such as stocks, bonds, an
d short-term investments (also known as "instruments"), you are allocating your
assets. The way in which your money is divided is called your asset allocation.
Annualized Return This is the hypothetical rate of return that, if the fund achi
eved it over a year s time, would produce the same cumulative total return if th
e fund performed consistently over the entire period. A total return is expresse
d in a percentage and tells you how much money you have earned or lost on an inv
estment over time, assuming that all dividends and capital gains are reinvested.
Balanced Fund A mutual fund that maintains a balanced portfolio, generally 40%
bonds and 60% equity. Barter The exchange of goods and services for other goods
and services without the use of money. Bid or Sell Price The price at which a mu
tual fund s shares are redeemed (bought back) by the fund. The bid or redemption
price means the current net asset value per share, less any redemption fee or b
ackend load. Blue Chip
49
A share in a large, safe, prestigious company, of the highest class among stock
market investments. A blue-chip company would be called thus by being well-known
, having a large paid-up capital, a good track record of dividend payments and s
killed management. Capital This is the amount of money you have invested. When y
our investing objective is capital preservation, your priority is trying not to
lose any money. When your investing objective is capital growth, your priority i
s trying to make your initial investment grow in value. Capital Gain Profit from
a sale of an investment constitutes a capital gain. For example, if you bought
a share of stock for Rs. 5/- and later sold it for Rs. 7/-, you would have a cap
ital gain of Rs. 2/-. Capital Gains Distributions Payments (usually annually) to
mutual fund shareholders of gains realized on the sale of portfolio securities.
Capital Growth A rise in market value of a mutual fund s securities, reflected i
n its NAV per share. This is a specific long-term objective of many mutual funds
. Closed-ended Mutual Fund A mutual fund that offers a limited number of shares.
They are traded in the securities markets. Price is determined by supply and de
mand. Unlike open-ended mutual funds, closed-ended funds do not redeem their sha
res. Derivative An investment contract based on an underlying investment called
an "instrument." The most common type of derivative is an option contract, which
involves the right to buy or sell the underlying instrument at an agreed price.
Futures contracts are also derivatives. Diversification
50
The policy of spreading investments among a range of different securities to red
uce the risks inherent in investing. Dividend When companies pay part of their p
rofits to shareholders, those profits are called dividends. A mutual fund s divi
dend is money paid to shareholders from investment income the fund has earned. T
he amount of each share s dividend depends on how well the company does. Endorse
ment Assigning or transferring a lien to another person is accomplished through
the use of an endorsement. The words "PAY TO THE ORDER OF" and then the name of
the person to whom the lien is being assigned to, is written. If there is not en
ough space on the original note to write an endorsement, it is written on a sepa
rate piece of paper that is permanently affixed to the original note. This is ca
lled an along. Face Value The face value is the term used to describe the value
of a bond in terms of what the company which issued the bond will actually repay
when the loan matures. It s sometimes described as nominal or par value. Growth
Fund A mutual fund whose primary investment objective is long-term growth of ca
pital. It invests principally in common stocks with significant growth potential
. Income Fund A mutual fund that primarily seeks current income rather than grow
th of capital. It will tend to invest in stocks and bonds that normally pay high
dividends and interest. Index Fund A mutual fund that seeks to mirror general s
tock-market performance by matching its portfolio to a broad-based index (e.g. B
SE Sensex). Load A sales charge or commission assessed by certain mutual funds (
"load funds") to cover their selling costs.
51
Net Asset Value Also known as NAV, this is the unit price (or rupee value) of on
e unit of a mutual fund. NAV is calculated at the end of every business day. It
is calculated by adding up the value of all the securities and cash in the mutua
l fund s portfolio (its assets), subtracting the fund s liabilities, and dividin
g that number by the number of units that the fund has issued. It does not inclu
de a sales charge. The NAV increases (or decreases) when the value of the mutual
fund s holdings increase (or decrease). Redeemable Preferred shares or bonds th
at give the issuing corporation an option to repurchase securities at a stated p
rice. These are also known as callable securities. Redemption Fee A fee charged
by a limited number of funds for redeeming, or buying back, fund units.
Redemption Price The price at which a mutual fund s units are redeemed (bought b
ack) by the fund. The redemption price is usually equal to the current NAV per u
nit. Reinvestment Date The date on which a share s dividend and/or capital gains
will be reinvested (if requested) in additional fund shares. Rupee Cost Averagi
ng (SIP) The technique of investing a fixed sum at regular intervals regardless
of stock market movements. This reduces average share costs to the investor, who
acquires more shares in periods of lower securities prices and fewer shares in
periods of high prices. In this way, investment risk is spread over time. Sector
Fund
52
A fund that operates several specialized industries sectors portfolios under one
umbrella. These sectors could be FMCG or Technology. Systematic Investment Plan
Many mutual funds offer investment programs whereby unit holders can invest. Th
e Unit holders of the scheme can benefit by investing specific Rupee amounts per
iodically, for a continuous period. The SIP allows the investors to invest a fix
ed amount of Rupees every month or quarter for purchasing additional units of th
e scheme at NAV based prices. Systematic Withdrawal Plans Many mutual funds offe
r withdrawal programs whereby unit holders receive payments from their investmen
ts. These payments are usually drawn from the fund s dividend income and capital
gain distributions, if any, and from principal only when necessary.
53