PROJECT REPORT ON SUMMER TRAINING TO STUDY THE INVESTORS PERCEPTION WHILE INVESTING IN RELIANCE MUTUAL FUND IN LUDHIANA

SUBMITTED TO
PUNJAB TECHNICAL UNIVERSITY, JALANDHAR

As the partial fulfillment of the requirements for the award of

Degree of MASTER OF BUSINESS ADMINSTRATION (MBA)

SUBMITTED BY: Ajay Sehgal University Roll No. 105182250453

SUBMITTED TO: Mrs.Shalu Madam

DEPARTMENT OF MANAGEMENT SHREE ATAM VALLABH JAIN COLLEGE LUDHIANA

(2011)

ACKNOWLEDGEMENT

After the various efforts made for the completion of this project. It is with a sense of great pleasure that I perform the agreeable duty of acknowledging the obligations of those who have rendered valuable guidance to me. I am greatly thankful Mr. GB Singh (Branch Manager) ,Mrs. Lovepreet singh (Relationship Manager), Mrs. Shalu Madam (faculty guide) SHREE ATAM VALLABH JAIN COLLEGE, Punjab University Jalandhar, who supported me in all possible ways and rendered his valuable guidance along with all possible functions that I needed to successfully complete this project. I offer my heartiest appreciation to all my friends and other well wishers for their ever willing cooperation, moral support and assistance wherever and whenever needed and best for successfully taking the study. I wish them best in their life. I find no word to acknowledge in so formal manner the sacrifice, love, inspiration and help rendered by my parents to take up this study.

(Ajay Sehgal)

PREFACE

As a part of course Masters Degree in Marketing Management from Shree Atam Vallabh Jain College (UNIVERSITY OF PTU), I had to go one and half month of training in any reputed organization which leads to develop my managerial skill of a sort of technical training. For this purpose I had undergone training from 01-06-2011 to 10-07-2011 at Reliance Asset Management in the city of Ludhiana. The subject of the training was the TO STUDY THE INVESTORS PERCEPTION MUTUAL FUND IN LUDHIANA. WHILE INVESTING IN RELIANCE

ABSTRACT

A study of The Perception While Investing analysis of Reliance Mutual Fund Industry has been conducted with day help of primary data. This study is important as too aware about Perception While Investing in Reliance Mutual Fund. It depicts the company efficiency and effectiveness of Mutual Fund. The ability to meet customer requirement and ability to beat competitors can clear be judge with the help of this study.

CONTENTS

SR.NO

CHAPTERS

Page No

INTRODUCTION

REVIEW OF LITERATURE

RESEARCH METHODOLOGY

DATA ANALYSIS

CONCLUSION

REFERENCE

CHAPTER -1 INTRODUCTION

CHAPTER-1

INTRODUCTION

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 invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an inventible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.( Vaid,Seema (1994)) A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.(Chandra ,Prasanna(1995)) A mutual fund is the answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas - research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20th century phenomenon. In fact, mutual funds gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with different investment

objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks. (Gupta, L.C (1993),) A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes. TYPES OF MUTUAL FUNDS General Classification of Mutual Funds
Open-end Funds Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day. Tax- exempt Funds

Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end equity oriented funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands of investors are tax-free. Non-Tax-exempt Funds

Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor. BROAD MUTUAL FUND TYPES

Equity Funds

Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds:

Aggressive Growth Funds - In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds.

Growth Funds - Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future. Specialty Funds

- Specialty Funds have stated criteria for

investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some specialty funds could be to invest/not to invest in particular regions/companies. Specialty funds are concentrated and thus, are comparatively riskier than diversified funds.. There are following types of specialty funds:
Sector Funds : Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization Companies are called Mid-Cap or Small-Cap Funds. Market

Capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding

shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky.
Option Income Funds : While not yet available in India, Option Income Funds write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors. Diversified Equity Funds - Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. Equity Index Funds - Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sect oral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky. Value Funds - Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to

Earnings Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced.

Equity Income or Dividend Yield Funds - The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity fund

Money Market / Liquid Funds

Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). Hybrid Funds

As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in Ludhiana:

Balanced Funds - The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. Growth-and-Income Funds - Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds.

Debt / Income Funds

Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors
Diversified Debt Funds Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. Focused Debt Funds - Unlike diversified debt funds, focused debt funds are narrow focus funds that are confined to investments in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest only in Tax Free Infrastructure or Municipal

Bonds. Because of their narrow orientation, focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India, these funds are conceivable and may be offered to investors very soon.

High Yield Debt funds - As we now understand that risk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors.

Assured Return Funds - Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document).

Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target shortterm investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period.

Gilt Funds Also known as Government Securities in India, Gilt Funds invest in

government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates exults in a change in the NAV of debt gilt funds in an opposite direction.

Other
Commodity Funds

Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund
Real Estate Funds

Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation.
Exchange Traded Funds (ETF)

Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share at the same time.

Fund of Funds

Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets INTRODUCTION OF THE COMPANTY

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor.

OUR FOUNDER

Dhirubhai H. Ambani Founder Chairman, Reliance Industries Limited, India December 28, 1932 - July 6, 2002 Major Group Companies:Reliance Industries Limited, India's largest private sector company.

Birthplace: Chorwad, village in Saurashtra (Gujarat), India Father's Name: Hirachand Govardhandas Ambani Mother's Name: Jamunaben Hirachand Ambani

INTRODUCTION About Reliance Capital Asset Management Ltd: Reliance Capital Asset Management Limited (RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. Reliance Capital Asset Management Limited was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including

preference shares as on March 31, 2005 is Rs.30.13 crores. RCAM has been registered as a portfolio manager vide SEBI Registration No. INP000000423 and renewed effective 1st August, 2003. RCAM has commenced these activities. It has been ensured that key personnel of the AMC, the systems, back office, bank and securities accounts are segregated activity wise and there exists systems to prohibit access to inside information of various activities. As per SEBI Regulations, it will further ensure that AMC meets the capital adequacy requirements, if any, separately for each such activity. RCAM has been appointed as the Investment Manager of "Reliance India Power Fund", a Venture Capital Fund registered with SEBI vide Registration no.IN/VCF/05-06/062 dated June 16, 2005 but this activity is yet to commence. Mr. Amitabh Chaturvedi * Raheja Empress, (Singapore) Flat No. 1201/1202, 12th Floor, Veer Savarkar Marg, (Mauritius) Opp. Siddhi Vinayak Temple Prabhadevi, Mumbai - 400 025 Mr. Kanu Doshi 102, Shivala, Khatau Road, Cuffe Parade, Mumbai - 400 005 Chartered Accountant Limited,Peoples Director: Reliance Asset Management Private Limited, Reliance Asset Management Limited, Reliance Infoinvestments Limited. Chairman: Matrix Advisors (India) Private Limited Director: BOB Capital Markets Financial Services Limited Alphaplus Investment Management Private Limited.

Mr. Manu Chadha Himalayan C-35, Malcha Marg Finance Chankyapuri, New Delhi - 110 021 Management Chartered Accountant

Director: TRC Financial Services Ltd, Crest Power Ltd, GIC Housing Ltd., Kotla Hydro Power Ltd., Ispat Industries Ltd, SBI Funds Pvt. Ltd.

Reliance Mutual Fund: Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the Trustee. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no. IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 88,388 Crs (AAUM for 30th Apr 09 ) and an investor base of over 71.53 Lacs. Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 118 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital 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 Indias leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and Proprietary Investments , stock broking and other financial service. PRODUCTS AND SERVICES OF RELIANCE MUTUAL FUND Equity scheme Reliance Tax Saver (ELSS) Fund

(An Open-ended Equity Linked Savings Scheme.) The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Reliance Equity Opportunities Fund

(An Open-Ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Vision Fund

(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach. Reliance Growth Fund

(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach Reliance Index Fund

(An Open Ended Index Linked Scheme.) The Investment Objective under the Nifty Plan is to replicate the composition of the Nifty, with a view to endeavor to generate returns, which could approximately be the same as that of Nifty. The Investment Objective under the Sensex plan is to replicate the composition of the Sensex, with a view to endeavor to generate returns, which could approximately be the same as that of Sensex. Reliance NRI Equity Fund

(An open-ended Diversified Equity Scheme.) The Primary investment objective of the scheme is to generate optimal returns by investing in equity or equity related instruments primarily drawn from the Companies in the BSE 200 Index

Debt Schemes. Reliance Monthly Income Plan

(An Open Ended Fund. Monthly Income is not assured & is subject to the availability of distributable surplus ) The Primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital. Primarily the investment shall be made in debt and money market securities (i.e. 80%) with a small exposure (i.e. upto 20%) in equity. Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt Plan Open-ended Government Securities Scheme) The primary objective of the Scheme is to generate Optimal credit risk-free returns by investing in portfolio of securities issued and guaranteed by the central Government and State Government Reliance Income Fund

(An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal returns consistent with moderate levels of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money Instruments. Reliance Medium Term Fund

(An Open End Income Scheme with no assured returns.) The primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital Reliance Short Term Fund (An Open End Income Scheme) The primary investment objective of the scheme is to generate stable returns for investors with a short investment horizon by investing in Fixed Income Securities of short term maturity. Reliance Liquid Fund (Open-ended Liquid Scheme). The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments Reliance Fixed Term Scheme (Close-ended Income Scheme) The primary objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the plan with the objective of limiting interest rate volatility. Reliance Floating Rate Fund (An Open End Income Scheme) The primary objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitized debt and Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed rate debt Securities (including fixed rate securitized debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns Reliance NRI Income Fund (An Open-ended Income scheme) The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risks. This income may be complimented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in debt Instruments. Reliance Fixed Maturity Fund - Series I

(A Close Ended Income Scheme) The primary investment objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the Plan with the objective of limiting interest rate volatility. Reliance Fixed Maturity Fund - Series II (A closed ended Income Scheme) The primary investment objective of the Scheme is to seek to achieve growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the respective plans. Reliance Liquidity Fund (An Open - ended Liquid Scheme) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Reliance Regular Savings Fund (An Open - ended scheme) The Investment Objectives: Debt Option: The primary investment objective of this plan is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be

made in Debt & Money Market Instruments. Equity Option: The primary investment objective is to seek capital Appreciation and or consistent returns by actively investing in equity / Equity related securities. Hybrid Option: The primary investment objective is to generate Reliance Media & Entertainment Fund

Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector scheme. The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies

CHAPTER -2 REVIEW OF LITERATURE

CHAPTER-2

REVIEW OF LITERATURE

In this section the literature study has been done by analyzing the various research studies done by the various researchers in this regard i.e. the investors perception and awareness regarding the mutual fund investment from time to time. By In India, one of the earliest attempts was made by NCAER in 1964 when a survey of households was undertaken to understand the attitude towards and motivation for saving of individuals. Another NCAER study in 1996 analyzed the structure of the capital market and presented the views and attitudes of individual shareholders. Dr Gursharan Singh Kainth and Manpinder Kaur: INVESTORS PERCEPTION to

examine the investors perception, a sample of 300 investors of Jalandhar investing in mutual fund was selected. 34 per cent of the target population included business class, 50 per cent service class and the remaining 16 per cent were professionals who have invested in mutual funds. Nearly three-fourth of the target population was in the age group of 25 to 50 years of age. One fourth of the target population was above 50 years of age and the balance 6 per cent below 25 years of age. Furthermore, one-fourth of the investors fall between the income group of Rs. 40,000 to 50,000; 16 per cent in above 50,000 income class. Majority of the investors (58 per cent) fall between the income groups of Rs.10, 000 to 40,000 per month. On the other hand, onefifth of the respondents are not satisfied with their investment due to poor service after sales (9

per cent), other better paying avenues in the market (6 per cent) and longer redemption period (21 per cent).One half of the investors believe bright future of mutual fund industry. Only 5 per cent believe to be dark and 9 per cent it is a risky avenue. One-tenth of the investors believe that most of the people are not aware about the functioning of the mutual fund industry. Some generally people have a traditional mind set of investing in banks, post offices and government securities. In the era of declining interest rates, investors are looking foe at other avenues and mutual funds is the foremost avenue. kavitha Ranganathan 2006 A Study of Fund Selection Behavior of Individual Investors Towards Mutual Funds - with Reference to Mumbai City Consumer behaviors from the marketing world and financial economics has brought together to the surface an exciting area for study and research: behavioral finance. The realization that this is a serious subject is, however, barely dawning. Analysts seem to treat financial markets as an aggregate of statistical observations, technical and fundamental analysis. A rich view of research waits this sophisticated understanding of how financial markets are also affected by the 'financial behaviors' of investors. With the reforms of industrial policy, public sector, financial sector and the many developments in the Indian money market and capital market, Mutual Funds which has become an important portal for the small investors, is also influenced by their financial behaviors. Hence, this study has made an attempt to examine the related aspects of the fund selection behaviors of individual investors towards Mutual funds, in the city of Mumbai. From the researchers and academicians point of view, such a study will help in developing and expanding knowledge in this field. Shanmugham (2000) conducted a survey of 201 individual investors To study the information sourcing by investor, their perceptions of various investment strategy dimensions and the factors motivating share investment decisions, and reports that among the various factors, psychological and sociological factors dominated the economic factors in share investment decisions De Bondt and Thaler (1985) while investigating the possible psychological basis for investor behaviors, argue that mean reversion in stock prices is an evidence of investor over reaction where investors overemphasize recent firm performance in forming future expectations. Gupta (1994) made a household investor survey with the objective to provide data on the investor preferences on MFs and other financial assets. The findings of the study were more

appropriate, at that time, to the policy makers and mutual funds to design the financial products for the future. Syama Sunder (1998) conducted a survey to get an insight into the mutual fund operations of private institutions with special reference to Kothari Pioneer. The survey revealed that awareness about Mutual Fund concept was poor during that time in small cities like Vishakhapatnam. Agents play a vital role in spreading the Mutual Fund culture; open-end schemes were much preferred then; age and income are the two important determinants in the selection of the fund/scheme; brand image and return are the prime considerations while investing in any Mutual Fund. Anjan Chakarabarti and Harsh Rungta (2000) stressed the importance of brand effect in determining the competitive position of the AMCs. Their study reveals that brand image factor, though cannot be easily captured by computable performance measures, influences the investors perception and hence his fund/scheme selection. Shankar (1996) points out that the Indian investors do view Mutual Funds as commodity products and AMCs, to capture the market should follow the consumer product distribution model. Since 1986, a number of articles and brief essays have been published in financial dailies, periodicals, professional and research journals, explaining the basic concept of Mutual Funds and highlight their importance in the Indian capital Market environment. They touch upon varied aspects like Regulation of Mutual Funds, Investor expectations, Investor protection, Trend in growth of Mutual Funds and some are critical views on the performance and functioning of Mutual Funds.

Bhagat, Sanjai

June 22 1999 Why Consumers Choose Managed Mutual Funds Over

Index Funds: Hypotheses from Consumer Behavior. Much evidence exists which suggests that the vast majority of equity mutual fund managers do not possess differential information (or skills) which allow them to achieve above average market returns for their investors. Thus, when investors pay fees to equity mutual fund managers for investment advice and management, the

very probable outcome is that they are reducing the return that they would otherwise achieve by investing in a no managed index fund that tracks the total stock market (e.g., Wilshire 5000) or some significant portion of it (e.g., the Standard & Poor's 500). The long-term negative consumer welfare implications are large, very possibly in the hundreds of thousands of dollars for individual consumer investors. Drawing largely on insights from the psychology, consumer behavior, and behavioral finance literatures, we offer a series of hypotheses that may partially account for such consumer choices. We conclude with a call for increased government- and employer-sponsored education programs aimed at creating a more informed consumer investor. Falkenstein, Eric(1996) Fund Portfolio Holdings Preferences for Stock Characteristics as Revealed by Mutual This investigation of the cross-section of mutual fund equity

holdings for the years 1991 and 1992 shows that mutual funds have a significant preference towards stocks with high visibility and low transaction costs, and are averse to stocks with low idiosyncratic volatility. These findings are relevant to theories concerning investor recognition, a potential agency problem in mutual funds, tests of trend-following and herd behavior by mutual funds, and corporate finance.

CHAPTER 3 RESEACH METHODOLOGY

CHAPTER-3

RESEARCH METHODOLOGY

For this study a survey conducted by collecting information from various sources. For the purpose of collecting information both primary and secondary data was used. The study is manly aims to now the AWARENESS AND INVESTORS PERCEPTION RERGARDING MUTUAL FUND IN THE LUDHIANA. The study undertaken is of exploratory in nature. The present chapter deals with the database and research methodology. This chapter explains the research design, universe of the study, selection of sample, data collection techniques and tools used in data analysis. NEED OF THE STUDY The need of study has been aroused in order to see the preference, awareness and the investors perception regarding the mutual funds in the India The mutual funds industry has grown by leaps and bounds in last couple of years. Following the strengthening of regulatory framework there is now greater transparency and credibility in the functioning of mutual funds and has been successful in regaining investors faith. But to sustain the

momentum

it

should

start

focusing

on

the

areas

where

greater

accountability and transparency could propel the industry towards a new growth trajectory. As of now big challenge for the mutual fund industry is to mount on investor awareness and to spread further to the semi-urban and rural areas. These initiatives would help towards making the Indian mutual fund industry more vibrant and competitive. To make this happen it calls for a greater role not only part of the regulator but also on industry and distributors and ensure that investor confidence is maintained through consistent performance and best business practices. Mutual Funds have emerged as an important segment of financial markets and so far have delivered value to the investors. But no industry can flourish without a proper regulatory mechanism in the place. SEBI has played a vital role in regularizing the mutual fund business. From time to time it has tried to plug the loopholes prevailing in the system and safeguard the interest of investor who has been the backbone of this unprecedented growth. OBJECTIVES OF THE STUDY The study has been undertaken and various objectives have been determined. These objectives are as follows:

To evaluate the Awareness and investors perception regarding the mutual funds in the India. To evaluate the impact of banking perspective on mutual funds in the Ludhiana.

Research Design A research design is an arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. A good research design has the characteristics like; problem definition, specific method of data collection and analysis, a

research design is purely and simply the frame work or planned for a study that guides the collection and analysis of data. Scope of the study The Primary study is conducted in the city of Srinagar and some rural areas of Kashmir also. Due to time and resources constraints, the primary study is limited to certain boundaries. But secondary study has been made with the help of various literatures. Data Collection Both primary and secondary data has been collected for meeting the objectives of the research. Primary data Primary data has been collected by conducting personal interviews and administering an undisguised, unbiased structured questionnaire to the respondents. Primary data was collected, by getting filled the questionnaires from the respondents. A copy of the questionnaire has been attached in the appendix. Secondary data The secondary data has been collected from secondary sources of information that included websites, books and previous reports, brochures, journals, magazines, newspapers. Procedure of data collection The procedure, which has been used for data collection, is through Questionnaire. Universe of the study The universe of present study was taken as the rural and urban people of the Ludhiana. Selection of sample A sample of 100 respondents was taken from the universe. The respondents of both genders belonging to different age groups, occupation and having different education qualification were taken for the study. Random sampling technique was used for collecting the

sample and the respondents were personally interviewed for the data collection. Random sampling refers to that fraction of population being investigated, which is selected by the convenience of the investigator. Sample Size: The sample size for this project is 100 on the basis of the questionnaire. Tools for data analysis: For analyzing Investors perception regarding mutual fund in the India percentage analysis is used. This has been done through bar charts.

CHAPTER-4 DATA ANALYSIS

1. How many time investor invest

Response(Time) Monthly Semi-Annually Annually

% of Respondents 54 26 20

Above finding shows that out of 100 respondents, 54 respondents invest in monthly, 26 respondents invest semiannually and rest of the respondents i.e.20 has invested in annually.

2. Number of fields or avenues in which the investor can invest Response Stock Market Mutual Funds Banks Real Estate Postal Saving Services % of respondents 9 23 32 16 20

The evident from above finding showed that out of 100 respondents, 9 respondents are invested in stock market, 23 in mutual funds, 32 in the banks, 16 in the real estate and 20 in postal saving services.

Period Less than 1 year 1-5 years 5 years & above 3. Investment period of the investor

% of Respondents 24 56 20

Investment Period
60 No of Respondents 50 40 30 20 10 0 Less than 1 1-5 years Time period More than 5 Less than 1, 24 1-5 years, 56 More than 5, 20

From the above graph it is clear that most of respondents preferred to invest their money for 1-5 years i.e. 56 respondents, 24 invested in less than 1 year, 20 respondents invest in 5 years and above.

4. The factors influenced while invested in mutual funds Factor influenced Goodwill Return Safety Better Service % of Respondents 30 35 25 10

Factors influenced
40 No of respondents 35 30 25 20 15 10 5 0 Goodwill Return Factors Safety Goodwill, 30 Return, 35 Safety, 25 Better Service, 10 Better Service

From the above graph it is clear that the Goodwill and Return are the important factors which are preferred by respondents while taken any mutual funds. Followed by the Safety and Better services.

5. No. of responding in invest in reliance infrastructure fund Response % of Respondents

Yes

45

No

55

Above finding shows that out of 100 respondents, only 44 respondents invest in reliance infrastructure fund.

6. Factor hold you back while investment in Mutual Fund Response Stock Market is risky Hidden Chargesno transparency No assurance of guaranteed return Low Liquidity % of respondents 10 10 13

15

No awareness about mutual fund

52

As the above evident shows that as most as 52 of the respondents no aware to M f, 15 is low liquidity 13 is no assurance of guaranteed return, 10 hidden charges, and 10 stock market risky.

7. Rank given to Reliance Mutual Funds:-

Rank Very Good Good Average

% of Respondents 20 55 25

Reliance Mutual Fund

No of Respondents 60 50 40 30 20 10 0 Very Good Good Ranks Given Average 20 25 55

Rank of MF 20 respondents, very good,55 good and 25 average

CHAPTER-5 CONCLUSION

FINDINGS

The persons who are investing mainly prefer the open ended schemes. Because it gives him/her the option to redeem at any time.

People are still relied upon the sources like the brokers, the relatives, friends etc.

CONCLUSION 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 invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments.

Reliance Mutual Fund have good returns in investment.

SUGGESTION Govt. of India must do some awareness programmers with the mutual fund companies in order to make the people more knowledgably and aware. Product must be improved There should be provision of complain suggestion boxes at each branch.

QUESTIONNAIRE (1)Personal Information

Name : Address:

______________________ ______________________ _____________________

Age: Marital Status:

_____________________ Single Married

Educational qualification:_______________

Gender:

Male

Female

< 50000

Monthly Income: < 10000

< 25000

< 100000 Total annual saving: Less than 60000 between 60001 to Rs 120000 More than 250000

between 120001 to Rs 250000 Occupation: Business Profession Agriculture Student Service

Other

(2)You make investment in mutual fund because (rank in order of preference) Regular income Capital appreciation Tax saving Growth Liquidity Speculation

(3) Which scheme do you prefer? Open ended Growth Closed ended Equity ELSS

Debt

(4)Rank the following financial assets in order of your preference (rank 1 to be given to most preferred asset)

Mutual funds Equity shares Debentures Bonds Bank deposits Post office time deposits Public provident fund LIC policies National saving certificate

(5)Your satisfaction level regarding returns in mutual fund: Highly satisfied Satisfied Average Unsatisfied

Highly unsatisfied

(6)How long you have been investing in the mutual funds? Less than 1 years Above 5 years 1-3 years 3-5 years

1-2 months

(7)Mutual funds are? Highly Risky Risky Average Low Risky Safe

(8) Which mutual fund sector you mainly prefer? Private owned mutual fund Public owned mutual funds both (9)Your none satisfaction regarding the promises made by any

MF/agent/broker/distributor to an individual before and after the investment: Highly Satisfied Satisfied

Average Unsatisfied Highly Unsatisfied

(10)What Is Your Criteria For Selecting The Mutual Fund?(Rank in order of preference) Promoters Name Past performance

Sector where investment would be made Professional magazines/newspapers Advertisement Any other

(11) What according to you is the major deficiency in the working of mutual funds? Functioning unclear Service Procedural complexities Awareness lacking any other

dissatisfaction

(12)Please assign ranks in order of preference for mutual funds.

LIC MF GIC MF

CANBANK MF SBI MF HDFC MF PRINCIPLE

MF

MF

FRANKLIN TEMPLTON RELIANCE MF ALLIANCE TATA MF MF BIRLA SUN LIFE MF

ICICI PRU MF

(13) What do you think is the future of the mutual fund in the INDIA? Very Bright Bright Black Cant Say Very Black

(14)What would be your suggestions regarding proper functioning of mutual funds? _______________________________________________ _________________________________________ (Thanking you)

REFERENCE www.researchonline.com www.mutualfundsindia.com www.sebi.gov.in www.timesofmoney.com www.thehindubusinessline.com www.amfiindia.com

www.moneycontrol.com www.geojit.com www.morningstar.com www.ShareKhan-FirstStep.com