PROJECT REPORT

ON

COMPARISON BETWEEN
INVESTMENT IN EQUITY AND
MUTUAL FUND

SUBMITTED BY
NAME:
REG NO:

SUBMITTED TO SCDL

In partial fulfillment of the requirements for the award of degree of

PO ST G RA D U AT E DIP LO MA IN
BU SIN E SS AD MIN IST R AT ION
 NO OBJECTION CERTIFICATE

This is to certify that “……………………………” is permitted to use relevant

data/information of this organisation for his/her project as a partial fulfillment of the Post
Graduate Diploma in Business Administration (Specialization – Finance) Programme.
We wish him/her all the success.

Signature of the competent authority

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 DECLARATION

This is to declare that I “…………………………….” have carried out this project work
myself in part fulfillment of the Post Graduate Diploma In Business Administration
(Specialization - Finance) Program of SCDL.

The work is original, has not been copied from anywhere else and has not been submitted
to any other University/Institute for an award of any degree/diploma.

________________
Student’s Signature

Name: Date: ………………….

Registration No.:

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 CERTIFICATE OF SUPERVISOR

Certified that the work incorporated in this Project Report on Comparison between
Investment in Equity and Mutual Fund submitted by “………………………………..” is
his/her original work and completed under my supervision.

Material obtained from other sources has been duly acknowledged in the Project Report.

Signature of Guide

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 INDEX

1 Abstract 6

2 Executive Summary 8

3 Objective & Scope of the study 11

4 Introduction 13

4.1 Company Profile 14

4.2 Introduction to Mutual Fund 18

4.3 Objectives of Mutual Funds 25

4.4 Guidelines of the SEBI for Mutual Fund 32

4.5 Types of Funds 37

4.6 Mutual Fund Classification 38

4.7 Advantages & Disadvantages of Mutual Fund 43

4.8 Reliance Mutual Fund 46

4.9 SBI Mutual Fund 53

5 Research Methodology 57

6 Analysis & Interpretation of the data 63

7 Findings 78

8 Conclusions 81

9 Suggestions & Rrecommendations 83

10 Bibliography 86

11 Questionnaire 88

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Abstract

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 ABSTRACT

This project is to investigate the Reliance Mutual Fund. My goal of this project is to find
out the processes by which this was done. For this I have used questionnaire method.
Gathering information and finally analyzing the data so for doing this project successfully
first I have gathered information about the company from different peoples. After that I
have talked personally with the Managers and Senior Executives and have gathered
information about the customers and getting feedback from them. For this purpose I have
visited customers and have gathered information from them as well to prepare this project.
The project given to me is completed after completing the company surveys and I have
successfully arrived at conclusion and have also given useful suggestions.

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Executive Summary

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 EXECUTIVE SUMMERY

In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being.
Mutual Funds have not only contributed to the India growth story but have also helped
families tap into the success of Indian Industry. As information and awareness is rising
more and more people are enjoying the benefits of investing in mutual funds.

The main reason the number of retail mutual fund investors remains small is that nine in
ten people with incomes in India do not know that mutual funds exist. But once people are
aware of mutual fund investment opportunities, the number who decide to invest in mutual
funds increases to as many as one in five people.

The trick for converting a person with no knowledge of mutual funds to a new Mutual
Fund customer is to understand which of the potential investors are more likely to buy
mutual funds and to use the right arguments in the sales process that customers will accept
as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave m enough
scope to implement my analytical ability. The analysis and advice presented in this Project
Report is based on market research on the saving and investment practices of the investors
and preferences of the investors for investment in Mutual Funds.

This Report will help to know about the investors’ Preferences in Mutual Fund means Are
they prefer any particular Asset Management Company (AMC), Which type of Product
they prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy
they follow (Systematic Investment Plan or One time Plan). This Project as a Whole can be
divided into two parts. The first part gives an insight about Mutual Fund and its various
aspects, the Company Profile, Objectives of the study, Research Methodology.

One can have a brief knowledge about Mutual Fund and its basics through the Project. The
second part of the Project consists of data and its analysis collected through survey done on
200 people. For the collection of Primary data I made a questionnaire and surveyed of 200
people. I also taken interview of many People those who were coming at the Reliance

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Mutual Fund Office where I done my Project. I visited other AMCs in Bhubaneswar to get
some knowledge related to my topic. I studied about the products and strategies of other
AMCs in Bhubaneswar to know why people prefer to invest in those AMCs. The data
collected has been well organized and presented. I hope the research findings and
conclusion will be of use.

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Objectives & Scope of Study

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 OBJECTIVE OF THE STUDY

 To ascertain the position & performance of company with physical and financial.
 To evaluate the current and long term financial position of Reliance.
 To provides reliable financial information about economic resources obligation.
 To evaluate the efficiency with which the firm manager utilizes its assets.
 To know whether the firm is able to meets its current maturing obligations.
 To find out debt-equity proportion of the organization.
 To study the profitability ratio of the company.
 To find out the Preferences of the investors for Asset Management.
 To know the Preferences for the portfolios.
 To know why one has invested or not invested in Reliance Mutual fund.
 To find out the most preferred channel.
 To find out what should do to boost Mutual Fund Industry.

IMPORTANCE OF STUDY
With increasing in the size of the organization, it becomes very difficult to manage and
also know the earning capacity and real position of the firm. It is only through the analysis
of the financial ratio, the true position both of operation and financial position can be
known or predicted with a high degree of accuracy. Ratio act as a barometer to show the
real position of the firm. Therefore all the students pursuing management studies should go
through the project to better equip themselves in finance.

SCOPE OF THE STUDY

A big boom has been witnessed in Mutual Fund Industry in recent times. A large number
of new players have entered the market and trying to gain market share in this rapidly
improving market. The research was carried on in Bhubaneswar. I had been sent at one of
the branch of Reliance Mutual Fund, Bhubaneswar where I completed my Project work. I
surveyed on my Project Topic “Reliance Mutual Fund & its competitive analysis with SBI
Mutual Fund” on the visiting customers of the Reliance Mutual Fund office Bhubaneswar.
The study will help to know the preferences of the customers, which company, portfolio,
mode of investment, and option for getting return and so on they prefer. This project report
may help the company to make further planning and strategy.

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Introduction

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 INTRODUCTION OF THE PROJECT

The study of “MUTUAL FUND & ITS COMPETITIVE ANALYSIS” is important in the
present circumstances because of changing business environment and adoption of policies
of liberalization in India. The main purpose of analysis of risks and reward is the
evaluation of strengths and weakness of a business and to analyze the environment.
Environment Industry and company analysis is done thoroughly to understand the external
factors influencing the company. This analysis can be used by different interest groups like
management of the company to plan future financial requirements by means of forecasting
and budgeting procedures. This analysis also helpful to other groups like share
holders/debenture holders to judge their investment in the company.

The trade union/employee to know, the possibility of getting higher wages and bonus
security analyst take the help of financial analyst to learn and advice their clients whether it
is line to buy to hold or to sale the securities of the company. “Analysis of risks and
reward of Reliance Mutual Fund” involves like measurement of risks, different type of
funds/schemes, standard deviation etc. On the other hand, “NET ASSET VALUE” shows
the company’s performance, revenues, expenses and profits for a particular period or a day
or a month. We selected this topic, Analysis of risk and reward of Reliance mutual fund
because of the reason this is one of the leading private company or being a star trading
house. It provides ample scope for analysis and interpretation of its financial statement.

COMPANY PROFILE
The Reliance-Anil Dhirubhai Ambani Group is among India’s top three private sector
business houses on all major financial parameter, with a market capitalization of Rs.
325,000crores (US$ 81 billion), net assets in excess of Rs. 115,000crores (US$ 29 billion)
and net worth to the tune of Rs.55,000crores (US$ 14 billion)

Across different companies, the group has a customer base of over 100 million the largest
in India and a shareholder base of over 12 million, among the largest in the world.RIL
features in the Forbes global list of world’s 400 best companies and in FT Global 500 list
of world’s largest companies.

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Through its products and services, the Reliance –ADA Group touches the life of 1 in 10
Indians every single day. It has a business presence that extends to over 20000 towns and
4.5lakhs villages in India and 5 continents across the world.

The interests of the Group range from communications (Reliance Communications) and
financial services (Reliance Capital Ltd.) to generation transmission and distribution of
power (Reliance Energy) infrastructure and entertainment.

Backward vertical integration has been the cornerstone of the evolution and growth of
Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of
backward vertical integration- in polyester, fiber intermediates, plastics, petrochemicals,
petroleum refining and oil and gas explorations and production – to be fully integrated
along the materials and energy value chain.

The Group’s activities span exploration and production of oil and gas, petroleum refining
and marketing, petrochemicals (polyester, fiber intermediates, plastics and
chemicals),textiles, retail and special economic zones.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and
fiber producer in the world and among the top five to ten producers in the world in major
petrochemical products. Major Group companies are Reliance Industry Limited (including
main subsidiary Reliance Retail limited) and Reliance Industrial Infrastructure Limited.

OVERVIEW OF RELIANCE

Reliance Capital
Reliance Capital is one of India’s 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.

The company has interest in asset management and mutual funds, life and general
insurance private equity and proprietary investments, stock broking and other activities in
financial services.

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Reliance Info com
Reliance Info com is the outcome of late Dhirubhai Ambani’s dream of bringing about a
digital revolution in India that will bring to every Indian’s doorstep an affordable means of
information and communication.

“Makes the tools of Info com available to people at an affordable cost. They will
overcome the handicaps of literacy and lack of mobility”, was how Dhirubhai, as he was
fondly called, spelt out Reliance Info com mission in late 1999. He firmly believes that the
country could use information and communication technology to overcome its
backwardness and underdevelopment.

It was with this belief that Reliance Info com began laying its 60,000 route kilometers of
pan-India fiber optic backbone in 1999.The backbone was commissioned on December
28,2002 Dhirubhai’s 70th birth anniversary, first since his sad demise on July 6,2002.

Reliance Communication Limited

The flagship company of the Reliance- ADA Group, Reliance Communication Limited is
the realization of our founder’s dream of bringing about a digital revolution that will
provide every Indian with affordable means of communication and a ready access to
information.

The company began operations in 1999 and has over 50 million subscribers today. It offers
a complete range of integrated telecom services. These include mobile and fixed line
telephony broadband national and international long distance services data services and a
wide range of value added services and applications aimed at enhancing the productivity of
enterprises and individuals.

Reliance infrastructure Limited

Reliance Infrastructure Ltd is not only India’s largest private sector enterprise in power
utility but also the largest private sector player in many other infrastructure sectors of
India. In the power sector we are involved in generation transmission, distribution and
trading of electricity and constructing power plants as EPC partners. In the infrastructure
space the company is focused on roads, Urban infrastructure which includes MRTS, Sea

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link and Airports, Specialty Real Estate which includes business districts Trade tower,
convention centre and SEZ which includes IT & ITES SEZ and non IT SEZ as well as free
trade zones.

Reliance Health
In a country where healthcare is fast becoming a booming industry, Reliance Health is a
focused healthcare services company enabling the provision of solution to Indians, at
affordable prices. The company aims at providing integrated health services that will
compete with the best in the world. It also plans to venture into diversified fields like
Insurance Administration, Health care Delivery and Integrated Health Informatics and
information Management and Consumer Health.

Reliance Health aims at revolutionizing healthcare in India by enabling a healthcare

environment that is both affordable and accessible through partnership with government
and private businesses.

Reliance Big Entertainment

India is standing on the threshold of an experience and entertainment economy. It is at the
cross roads of an exciting phase that will shape its cultural and social framework forever.
Reliance Big Entertainment has evolved out of the group’s vision of meeting young India’s
aspirations and assuming a leadership position in communication media and entertainment.
Reliance Big Entertainment is geared to create a significant presence in business across
various vectors of content, Internet, broadcast and retail services and platforms for
distribution. The company strives to create converged services and platforms for masses to
access innovative, cutting-edge content. Key content initiatives include production and
strategic collaboration in area such as gaming, movies, animation, music broadcast, DTH
and user-generated content, amongst others.

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 INTRODUCTION TO MUTUAL FUNDS

Before we understand what is mutual fund, it’s very important to know the area in which
mutual funds works, the basic understanding of stocks and bonds.

Stocks :
Stocks represent shares of ownership in a public company. Examples of public companies
include Reliance, ONGC and Infosys. Stocks are considered to be the most common
owned investment traded on the market.

Bonds :
Bonds are basically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is back over predetermined
amounts of time. Bonds are considered to be the most common lending investment traded
on the market. There are many other types of investments other than stocks and bonds
(including annuities, real estate, and precious metals), but the majority of mutual funds
invest in stocks and/or bonds.

Mutual Fund
A mutual fund is a common pool of money into which investors places their contributions
that are to be invested in accordance with a stated objective. The ownership of the fund is
thus joint or “mutual”; the fund belongs to all investors. A single investor’s ownership of
the fund is in the same proportion as the amount of the contribution made by him or her
bears to the total amount of the fund.

A mutual fund uses the money collected from investors to buy those assets which are
specifically permitted by its stated investment objective. Thus, an equity fund would buy
mainly equity assets-ordinary shares, preference shares, warrants etc. A bond fund would
mainly buy debt instruments such as debentures, bonds, or government securities. It is
these assets which are owned by the investors in the same proportion as their contribution
bears to the total contributions of all investors put to get. Mutual fund is a trust that pools
the savings of a number of investors who share a common financial goal. This pool of
money is invested in accordance with a stated objective. The joint ownership of the fund is

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thus “Mutual”, i.e. the fund belongs to all investors. The money thus collected is then
invested in capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciations realized are shared
by its unit holders in proportion the number of units owned by them.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. A Mutual Fund is an investment tool that allows small investors access
to a well diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as needed.
The funds Net Asset value (NAV) is determined each day. Investments in securities are
spread across a wide cross-section of industries a sectors and thus the risk is reduced.
Diversification reduces the risk because all stocks may not move in the same direction in
the same proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested b them. Investors of mutual funds are known
as unit holders. The flow chart below describes broadly the working of a mutual fund.

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When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as a mutual fund
shareholder or a unit holder. Any change in the value of the investments made into capital
market instruments (such as shares, debentures etc) is reflected in the Net Asset Value
(NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's
assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.

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 HISTORY OF MUTUAL FUND

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India,
at the initiative of the Government of India and Reserve Bank of India.

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Canara Bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up
its mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004
crores.

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all mutual
funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton) was the first private sector mutual fund registered in July
1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of
Rs. 12180crores.

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The Mutual Fund Industry is obviously growing at a tremendous space with 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 Phase (1964-87)

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve
Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6, 700 crores of assets under management.

Second Phase (1987-1993) ---Entry of Public Sector Funds

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up
its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets
under management of Rs.47, 004 crores.

Third Phase (1993-2003)--Entry of Private Sector Funds

1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual
fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted
by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003,
there were 33 Mutual funds with total assets of Rs. 1, 21,805 crores.

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Fourth Phase (since February 2003)
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29, 835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. Consolidation and
growth. As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.

The following graph indicated the growth of assets over the year:

When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as a mutual fund
shareholder or a unit holder. Any change in the value of the investments made into capital
market instruments (such as shares, debentures etc) is reflected in the Net Asset Value

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(NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's
assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.

Characteristics of Mutual Fund

 A mutual Fund actually belongs to the investors who have pooled their funds. The
ownership of the mutual fund is in the hands of the investors.
 A mutual Fund is managed by investment professional and other service providers,
who earn a fee for their services, from the funds.
 The pool of funds is invested in a portfolio of marketable investments.
 The value of portfolio is update everyday.
 The investors’ share in the fund is denominated by “units”. The value of the units
changes with change in the portfolio value, everyday. The value of one unit of
investment is called Net Asset Value.
 The investment portfolio of the mutual fund is created according to the stated
investment objectives of the fund.

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 OBJECTIVES OF A MUTUAL FUND

 To provide an opportunity for lower income groups to acquire without much

difficulty, property in the form of shares.

 To cater mainly of the need of individual investors, whose means are small?

 To manage investor’s portfolio that provides regular income, growth, safety,

liquidity, tax advantage, professional management and diversification.

How to select a Good Mutual Fund

Steps 1- Decide what percentage of Your Money you will allocate to mutual funds. If
you'll be investing less than $15,000 to $20,000 overall, many investors advise that all of
your investments should be in mutual funds.
Step 2- Determine how many mutual funds you will invest in. Three to five funds is
generally considered an adequate amount of diversification.
Step 3- Decide whether you'll deal directly with the fund manager or use a broker.
Step 4- Diversify the funds you buy in terms of the size of the companies in their
portfolios and the businesses that those companies are in.
Step 5- Choose high-performance funds by using Internet resources and newspapers to
pick those funds that have had the best performance over at least the last three years.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept of
mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from
the year 1987 when non- UTI players entered the industry. In the past decade, Indian
mutual fund industry had seen a dramatic improvement, both qualities wise as well as
quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets
under Management (AUM) were Rs. 67bn. The private sector entry to the fund family rose
the AUM to Rs. 470 in March 1993 and till April 2004, it reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is
less than the deposits of SBI alone, constitute less than 11% of the total deposits held by
the Indian banking industry.

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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 selling. The mutual fund industry can be broadly put into four phases
according to the development of the sector.

A mutual fund is a professionally-managed firm of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities. In other words we can say that A Mutual Fund is a
trust registered with the Securities and Exchange Board of India (SEBI), which pools up
the money from individual / corporate investors and invests the same on behalf of the
investors /unit holders, in equity shares, Government securities, Bonds, Call money
markets etc., and distributes the profits. The value of each unit of the mutual fund, known
as the net asset value (NAV), is mostly calculated daily based on the total value of the fund
divided by the number of shares currently issued and outstanding. The value of all the
securities in the portfolio in calculated daily. From this, all expenses are deducted and the
resultant value divided by the number of units in the fund is the fund’s NAV.

NAV = Total value of the fund.........................

No. of shares currently issued and outstanding

The way to invest in mutual funds

Mutual funds normally come out with an advertisement in newspapers publishing the date
of launch of new schemes. Investors can also contact the agents and distributors of mutual
funds who are spread all over the country for necessary information and application forms.
Forms can be deposited with mutual funds through the agents and distributors who provide
such services. Now days, the post offices and banks also distribute the units of mutual
funds. However, the investors may please note that the mutual funds schemes being
marketed by banks and post offices should not be taken as their own schemes and no
assurance of return is given by them. The only role of bank and post office is to help in
distribution of mutual fund schemes to the investors. Investors should not be carried away
by commission/gifts given by agents/distributors for investing in a particular scheme. On

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the other hand they must consider the track record of the mutual fund and should take
objective decision.

One time Investment

The amount that has to be invested in onetime is known as onetime investment. The
investor has to pay the whole amount at once. The minimum amount is Rs. 5000 and
maximum is as per the investor’s choice. The investment is generally preferred for the
business men who are able to pay at one time.

Systematic Investment Plan(SIP)

The amount that has to be invested through same monthly instalment is known as
Systematic Investment Plan. The investor has to pay the minimum amount of Rs. 1000
monthly for all equity and balanced schemes like that for 6 months and Rs. 500 monthly
for tax saver schemes like that for 12 months. The minimum amount that the investor has
to invest is Rs. 6000 and maximum as per their choice. This type of investment is generally
preferred for the salaried persons.

Why has it become one of the largest financial instruments?

If we take a look at the recent scenario in the Indian financial market then we can find the
market flooded with a variety of investment options which includes mutual funds, equities,
fixed income bonds, corporate debentures, company fixed deposits, bank deposits, PPF,
life insurance, gold, real estate etc. all these investment options could be judged on the
basis of various parameters such as- return, safety convenience, volatility and liquidity.
Measuring these investment options on the basis of the mentioned parameters, we get this
in a tabular form

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We can very well see that mutual funds outperform every other investment option. On
three parameters it scores high whereas it’s moderate at one. comparing it with the other
options, we find that equities gives us high returns with high liquidity but its volatility too
is high with low safety which doesn’t makes it favourite among persons who have low
risk- appetite. Even the convenience involved with investing in equities is just moderate.
Now looking at bank deposits, it scores better than equities at all fronts but lags badly in
the parameter of utmost important ie; it scores low on return , so it’s not an happening
option for person who can afford to take risks for higher return. The other option offering
high return is real estate but that even comes with high volatility and moderate safety level,
even the liquidity and convenience involved are too low. Gold have always been a
favourite among Indians but when we look at it as an investment option then it definitely
doesn’t gives a very bright picture. Although it ensures high safety but the returns
generated and liquidity are moderate. Similarly the other investment options are not at par

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with mutual funds and serve the needs of only a specific customer group. Straightforward,
we can say that mutual fund emerges as a clear winner among all the options available.

The reasons for this being:

 Mutual funds combine the advantage of each of the investment products:

mutual fund is one such option which can invest in all other investment options. Its
principle of diversification allows the investors to taste all the fruits in one plate.
just by investing in it, the investor can enjoy the best investment option as per the
investment objective.

 Dispense the shortcomings of the other options: every other investment option
has more or les some shortcomings. Such as if some are good at return then they
are not safe, if some are safe then either they have low liquidity or low safety or
both….likewise, there exists no single option which can fit to the need of
everybody. But mutual funds have definitely sorted out this problem. Now
everybody can choose their fund according to their investment objectives

 Returns get adjusted for the market movements: as the mutual funds are
managed by experts so they are ready to switch to the profitable option along with
the market movement. Suppose they predict that market is going to fall then they
can sell some of their shares and book profit and can reinvest the amount again in
money market instruments.

 Flexibility of invested amount: Other then the above mentioned reasons, there
exists one more reason which has established mutual funds as one of the largest
financial intermediary and that is the flexibility that mutual funds offer regarding
the investment amount. One can start investing in mutual funds with amount as low
as Rs. 500 through SIPs and even Rs. 100.

How do investors choose between funds?

When the market is flooded with mutual funds, it’s a very tough job for the investors to
choose the best fund for them. Whenever an investor thinks of investing in mutual funds,

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he must look at the investment objective of the fund. Then the investors sort out the funds
whose investment objective matches with that of the investor’s. Now the tough task for
investors start, they may carry on the further process themselves or can go for advisors like
SBI . Of course the investors can save their money by going the direct route i.e. through
the AMCs directly but it will only save 1-2.25% (entry load) but could cost the investors in
terms of returns if the investor is not an expert. So it is always advisable to go for MF
advisors. The mf advisors’ thoughts go beyond just investment objectives and rate of
return. Some of the basic tools which an investor may ignore but an mf advisor will always
look for are as follow:

1. Rupee cost averaging:

The investors going for Systematic Investment Plans(SIP) and Systematic Transfer
Plans(STP) may enjoy the benefits of RCA (Rupee Cost Averaging). Rupee cost averaging
allows an investor to bring down the average cost of buying a scheme by making a fixed
investment periodically, like Rs 5,000 a month and nowadays even as low as Rs. 500 or
Rs. 100. In this case, the investor is always at a profit, even if the market falls. In case if
the NAV of fund falls the investors can get more number of units and vice-versa. This
results in the average cost per unit for the investor being lower than the average price per
unit over time. The investor needs to decide on the investment amount and the frequency.
More frequent the investment interval, greater the chances of benefiting from lower prices.
Investors can also benefit by increasing the SIP amount during market downturns, which
will result in reducing the average cost and enhancing returns. Whereas STP allows
investors who have lump sums to park the funds in a low-risk fund like liquid funds and
make periodic transfers to another fund to take advantage of rupee cost averaging.

2. Rebalancing:
Rebalancing involves booking profit in the fund class that has gone up and investing in the
asset class that is down. Trigger and switching are tools that can be used to rebalance a
portfolio. Trigger facilities allow automatic redemption or switch if a specified event
occurs. The trigger could be the value of the investment, the net asset value of the scheme,
level of capital appreciation, level of the market indices or even a date. The funds
redeemed can be switched to other specified schemes within the same fund house. Some
fund houses allow such switches without charging an entry load. To use the trigger and

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switch facility, the investor needs to specify the event, the amount or the number of units to
be redeemed and the scheme into which the switch has to be made. This ensures that the
investor books some profits and maintains the asset allocation in the portfolio.

3. Diversification:
Diversification involves investing the amount into different options. In case of mutual
funds, the investor may enjoy it afterwards also through dividend transfer option. Under
this, the dividend is reinvested not into the same scheme but into another scheme of the
investor's choice. For example, the dividends from debt funds may be transferred to equity
schemes. This gives the investor a small exposure to a new asset class without risk to the
principal amount. Such transfers may be done with or without entry loads, depending on
the MF's policy.

4. Tax efficiency:
Tax factor acts as the “x-factor” for mutual funds. Tax efficiency affects the final decision
of any investor before investing. The investors gain through either dividends or capital
appreciation but if they haven’t considered the tax factor then they may end loosing. Debt
funds have to pay a dividend distribution tax of 12.50 per cent (plus surcharge and
education cess) on dividends paid out. Investors who need a regular stream of income have
to choose between the dividend option and a systematic withdrawal plan that allows them
to redeem units periodically. SWP implies capital gains for the investor. If it is short-term,
then the SWP is suitable only for investors in the 10-per-cent-tax bracket. Investors in
higher tax brackets will end up paying a higher rate as short-term capital gains and should
choose the dividend option. If the capital gain is long-term (where the investment has been
held for more than one year), the growth option is more tax efficient for all investors. This
is because investors can redeem units using the SWP where they will have to pay 10 per
cent as long-term capital gains tax against the 12.50 per cent DDT paid by the MF on
dividends All the tools discussed over here are used by all the advisors and have helped
investors in reducing risk, simplicity and affordability. Even then an investor needs to
examine costs, tax implications and minimum applicable investment amounts before com

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Guidelines of the SEBI & AMFI for Mutual Fund Companies

Regulatory Aspects of Mutual Funds

In the year of 1992, Securities and Exchange Board of India (SEBI) Act was passed. The
objectives of SEBI are –to protect the interest of investors in securities and to promote the
development of and to regulate the securities market.

SEBI formulates policies and regulates the mutual funds to protect the interest of investors.
 Mutual funds are regulated by SEBI ( Mutual Funds) registrations, 1996
 SEBI is regulator of all funds, except off shore funds.
 Bank sponsored mutual funds are jointly regulated by SEBI & RBI
 The bank sponsored funds can’t provide a guarantee without RBI permission.
 RBI regulates money & government securities markets, in which mutual funds are
invested.
 Listed mutual funds are subject to the listing regulations of stock exchange.
 Since the AMC & Trustee companies are companies, the department of company
affairs regulate them. They have to send periodic reports to the ROC (Registrar Of
Companies) and the CLB (Company Law Board) is the appellate authority.
 Investors can’t sue the trust, as they are the same as the Trusts & can’t sue them.
 UTI doesn’t have a separate sponsor and AMC.
 UTI is governed by UTI Act, 1963 and is voluntarily under SEBI regulations.
 UTI can borrow as well as lend also engage in other financial services activities.
 Only AMFI certified agents can sell Mutual Fund units.
 Mutual Funds Company is required to update the NAV of the scheme on the AMFI
website on a daily basis in case of open-ended scheme.

To protect the interest of the investors, SEBI formulates policies and regulates the mutual
funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from
time to time.

SEBI approved Asset Management Company (AMC) manages the funds by making
investments in various types of securities. Custodian, registered with SEBI, holds the
securities of various schemes of the fund in its custody. According to SEBI Regulations,
two thirds of the directors of Trustee Company or board of trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of

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mutual funds that the mutual funds function within the strict regulatory framework. Its
objective is to increase public awareness of the mutual fund industry. AMFI also is
engaged in upgrading professional standards and in promoting best industry practices in
diverse areas such as valuation, disclosure, transparency etc.

REGULATORY OF MUTUAL FUND IN INDIA

 SEBI: The capital market regulates the mutual funds in India. SEBI requires all mutual
funds to be registered with them. SEBI issues guidelines for all mutual funds
operations-investments, accounts, expenses etc. Recently, it has been decided that
Money market Mutual Funds of registered mutual funds will be regulated by SEBI
through mutual funds Regulation Act, 1996.
 RBI: RBI, a supervisor of Banks owned mutual funds as banks in India come under the
regulatory jurisdiction of RBI, banks owned funds to be under supervision of RBI &
SEBI. RBI has supervisory responsibility over all entities that operate in the money
markets.
 MINISTRY OF FINANCE: Ministry of Finance ultimately supervises both the RBI
and the SBI and plays the role of apex authority for any major disputes over SEBI
guidelines.
 COMPANY LAW BOARD: Registrar of companies is called company Law Board.
AMC of Mutual Funds is companies registered under the companies Act, 1956 and
therefore answerable to regulatory attributes empowered by the companies Act.
 STOCK EXCHANGE: Stock Exchanges are self-regulatory organizations supervised
by SEBI. Many closed ended funds of AMCs are listed as stock exchanges and are
traded like shares.
 OFFICE OF THE PUBLIC TRUSTEE: Mutual Fund being public trust is governed
by the Indian Trust Act, 1882. The Board of Trustee or the Trustees company is
accountable to the office of Public trustee, which in turn reports to the charity
commissioner.

What are the most lucrative sectors for mutual fund managers?
This is a question of utmost interest for all the investors even for those who don’t invest in
mutual funds. Because the investments done by the MFs acts as trendsetters. The
investments made by the fund managers are used for prediction. Huge investments assure
liquidity and reflects appositive picture whereas tight investment policy reflects crunch and

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investors may look forward for a gloomy picture. Their investments show that which sector
is hot? And will set the market trends. The expert management of the funds will always
look for profitable and high paying sectors. So we can have looked at most lucrative
sectors to know about the recent trends:

From the above data collected we can say that engineering & capital goods sector has
emerged as the hottest as most of the funds are betting on it. We can say that this sector is
on boom and presents a bright picture. Other than it other sectors on height are oil & gas,
telecom, metals &mining and information technology. Sectors performing average are
automotive, cement & construction, chemicals, media & entertainment, manufacturing,
miscellaneous, pharmaceuticals and utility. The sectors which are not so favourite are
banking & financial services, conglomerates, consumer non- durables, food & beverages,
services and tobacco. And the sector which failed to attract the fund managers is consumer
durables with just 51 funds betting on it. Thus this analysis not only gives a picture of the

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mindset of fund managers rather it also reflects the liquidity existing in each of the sectors.
It is not only useful for investors of mutual funds rather the investors of equity and debt too
could take a hint from it. Asset allocation by fund managers are based on several
researches carried on so, it is always advisable for other investors to take a look on it. It
can be further presented in the form of a graph as follow:

Causes for the Irrelevant of Ratings

1. Mutual fund ratings are based on the returns generated, that is, appreciation of net
asset value, based on the historical performance. So they rely more on the past,
rather than the current scenario.
2. As returns play a key role in deciding the ratings, any change in returns will lead to
rerating of the mutual fund. If you choose your mutual fund only on the basis of
rating, it will be a nuisance to keep realigning your investment in line with the
revision of the ratings.
3. The ratings don’t value the investment processes followed by the mutual fund. As a
result, a fund following a certain process may lose out to a fund that has given
superior returns only because it has a star fund manager. But there is a higher risk
associated with a star fund manager that the ratings don’t reflect. If the star fund
manager quits, it can throw the working of a mutual fund out of gear and thus affect
its performance.

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4. The ratings don’t show the level of ethics followed by the fund. A fund or fund
manager that is involved in a scam or financial irregularities won’t get poor ratings
on the basis of ethics. As the star ratings look at just returns, any wrongdoing
carried out by the fund or fund manager will be completely ignored.
5. Ratings also don’t consider two very important factors: transparency and keepin
investors informed. There are no negative ratings awarded to the fund for being
investor-unfriendly.
6. Ratings don’t match the investor’s risk-appetite with their portfolio. As a matter of
fact, investments should be done only after considering the risk appetite of the
investor. For example, equities may not be the best investment vehicle for a very
conservative investor. However ratings fail to take that into account. Ratings should
be the starting point for making an investment decision. They are not the be all and
end all of mutual fund investments. There are other important factors like portfolio
management, age of funds and more, which should be taken into account before
making an investment.

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TYPES OF FUNDS:

There are many types of mutual funds available to the investors. However, these different
types of funds can be grouped into certain classifications for better understanding. From
the investor’s perspective, we would follow three basic classifications.

Firstly, funds are usually classified in terms of their constitution-as closed–end or open-
end. The distinction depends upon whether they give the investors the option to redeem
and buy units at any time from the fund itself(open end) or whether the investors have to
await a given maturity before they can redeem they collect from investors any charges at
the time of entry or exit or both, thus reducing the investible amount or the redemption
proceeds. Funds that make these charges are classified as load funds, and funds that do not
their units to the fund (close end).

Funds can also be grouped in terms of whether make any of these charges are termed no-
load funds.

Finally, funds can also be classified as being tax-exempt or non-tax-exempt, depending

on whether they invest in securities that give tax-exempt returns or not. Currently in India,

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this classification may be somewhat less important, given the recent tax exemptions given
to investors receiving any dividends from all mutual funds.
Under each board classification, we may then distinguish between several types of funds
on the basis of the nature of their portfolios, meaning whether they invest in equities or
fixed income securities or some combination of both. Every type of fund has a unique risk
profile that is determined by its portfolio, for which reason funds are often separated into
more or less risk bearing .We first look at the fund classifications and then understand the
various types of funds under them.

MUTUAL FUND CLASSIFICATIONS

(A) BY STRUCTURE

Open Ended Schemes

An open-end fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.

Close Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest
in the scheme at the time of the initial public issue and thereafter they can buy or sell the
units of the scheme on the stock exchanges where they are listed. In order to provide an
exit route to the investors, some close-ended funds give an option of selling back the units
to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor.

Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended and close-
ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.

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(B) BY NATURE
1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of
the fund may vary different for different schemes and the fund manager’s outlook on
different stocks. The Equity Funds are sub-classified depending upon their investment
objective, as follows:
 Diversified Equity Funds
 Mid-Cap Funds
 Sector Specific Funds
 Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.

2. Debt funds:
The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers.
By investing in debt instruments, these funds ensure low risk and provide stable income to
the investors. Debt funds are further classified as:

(a)Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated
with Interest Rate risk. These schemes are safer as they invest in papers backed by
Government.
(b)Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
(c)MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
(d)Short Term Plans (STPs): Meant for investment horizon for three to six months. These
funds primarily invest in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also invested in corporate
debentures.

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(e) FMPs: Fixed Monthly Plans invest in debt papers whose maturity is in line with that of
the fund.
(f) Income funds LT: Typically, such funds invest a major portion of the portfolio in long-
term debt papers.
(g) Gilt funds LT: They invest 100% of their portfolio in long-term government securities.
(h) Arbitrage fund: They generate income through arbitrage opportunities due to
mispricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money markets,
in the absence of arbitrage opportunities.

2. Liquid Funds:
Also known as Money Market Schemes, These funds provides easy liquidity and
preservation of capital. These schemes invest in short-term instruments like Treasury Bills,
inter-bank call money market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon of 1day to 3
months. These schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.

3. Balanced funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both
equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter
viz,

Each category of funds is backed by an investment philosophy, which is pre-defined in the

objectives of the fund. The investor can align his own investment needs with the funds
objective and invest accordingly.
BY INVESTMENT OBJECTIVE
Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these
schemes is to provide capital appreciation over medium to long term. These schemes

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normally invest a major part of their fund in equities and are willing to bear short-term
decline in value for possible future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The aim of these
schemes is to provide regular and steady income to investors. These schemes generally
invest in fixed income securities such as bonds and corporate debentures. Capital
appreciation in such schemes may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing a part of the income and capital gains they earn. These schemes
invest in both shares and fixed income securities, in the proportion indicated in their offer
documents (normally 50:50).
Money Market Schemes: Money Market Schemes aim to provide easy liquidity,
preservation of capital and moderate income. These schemes generally invest in safer,
short-term instruments, such as treasury bills, certificates of deposit, commercial paper and
inter-bank call money.

OTHER SCHEMES
Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to
any Equity Linked Savings Scheme (ELSS) are eligible for rebate.
Index Schemes: Index schemes attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only
those stocks that constitute the index. The percentage of each stock to the total holding will
be identical to the stocks index weightage. And hence, the returns from such schemes
would be more or less equivalent to those of the Index.
Sector Specific Schemes: These are the funds/schemes which invest in the securities of
only those sectors or industries as specified in the offer documents e.g. Pharmaceuticals,
Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in
these funds are dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they are more risky compared to diversified funds.
Investors need to keep a watch on the performance of those sectors/industries and must
exit at an appropriate time.

Types of returns

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There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:
 Income is earned from dividends on stocks and interest on bonds. A fund pays out
nearly all income it receives over the year to fund owners in the form of a
distribution.
 If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
 If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for distributions
or to reinvest the earning and get more shares. Pros & cons of investing in mutual
funds: For investments in mutual fund, one must keep in mind about the Pros and
cons o investments in mutual fund.

INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of
the same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund
then he can withdraw a fixed amount each month.

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RISK VS RETURN

ADVANTAGES & DISADVANTAGES OF MUTUAL FUND:

A mutual fund is a common pool of money into which investors places their contributions
that are to be invested in accordance with a stated objective. The ownership of the fund is
thus joint or “mutual”; the fund belongs to all investors. A single investor’s ownership of
the fund is in the same proportion as the amount of the contribution made by him or her
bears to the total amount of the fund. A mutual fund uses the money collected from
investors to buy those assets which are specifically permitted by its stated investment
objective. Thus, an equity fund would buy mainly equity assets-ordinary shares, preference
shares, warrants etc. A bond fund would mainly buy debt instruments such as debentures,
bonds, or government securities. It is these assets which are owned by the investors in the
same proportion as their contribution bears to the total contributions of all investors put
together.

ADVANTAGES OF MUTUAL FUND:

If mutual funds are emerging as the favorite investment vehicle, it is because of the many
advantages they have over other forms and avenues of investing, particularly for the
investor who has limited resources available in terms of capital and ability to carry out
detailed research and market monitoring. The following are the major advantages offered
by mutual funds to all investors:

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  Portfolio diversification: Mutual funds normally invest in a well diversified
portfolio or securities. Each investor in a fund is a part owner of all of the fund’s
assets. This enables him to hold a diversified investment portfolio even with a small
amount of investment that would otherwise require big capital.
 Professional management: Even if an investor has a big amount of capital
available to him, he benefits from the professional management skills brought in by
the fund in the management of the investor’s portfolio. The investment
management skills, along with the needed research into available investment
options, ensure a much better return than what an investor can manage on his own.
Few investors have the skills and resources of their own to succeed in today’s fast
moving, global and sophisticated markets.
 Reduction/Diversification of risk: An investor in a mutual fund acquires a
diversified portfolio, no matter how small his investment. Diversification reduces
the risk of loss, as compared to investing directly in one or two shares or
debentures or other instruments. When an investor invests directly, all the risk of
potential loss is his own. Fund investors also reduce his risk in another way. While
investing in the pool of funds with other investors, any loss on one or two securities
is also shared with other investors. This risk reduction is one of the most important
benefits of a collective investment vehicle like the mutual fund.
 Reduction of transaction costs: What is true of risk is also true of the transaction
costs. A direct investor bears all the costs of investing such as brokerage or custody
of securities. When going through a fund, he has the benefit of economies of scale;
the fund pay lesser costs because of larger volumes, a benefit passed on to its
investors.
 Liquidity: Often, investors hold shares or bonds they cannot directly, easily and
quickly sell. Investment in a mutual fund, on the other hand, is more liquid. An
investor can liquidate the investment, by selling the units to the fund if open end, or
selling them in the market if the fund is closed end, and collect funds at the end of a
period specified by the mutual fund or the stock market.
 Convenience and flexibility: Mutual fund management companies offer many
investor services that a direct market investor cannot get. Investors can easily
transfer their holdings from one scheme to the other; get updated market
information, and so on.
DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS:

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While the benefits of investing through mutual funds far outweigh the disadvantages, an
investor and his advisor will do well to be aware of a few shortcomings of using the mutual
funds as investment vehicles.
 No control over costs: an investor in a mutual fund has any control over the
overall cost of investing. He pays investment management fees as long as he
remains with the fund, albeit in return for the professional management and
research. Fees are usually payable as a percentage of the value of his investments,
whether the fund value is rising or declining. A mutual fund investor also pays fund
distribution costs, which he would not incur in direct investing. However, this
shortcoming only means that there is a cost to obtain benefits of a mutual fund
services. However, this cost is often less than the cost of direct investing by the
investors.
 No tailor-made portfolios: Investors who invest on their own can build their own
portfolios of shares, bonds and other securities. Investing through funds means he
delegates this decision to the fund managers. The very high net worth individuals or
large corporate investors may find this to be a constraint in achieving their
objectives. However, most mutual funds help investors overcome this constraint by
offering families of schemes-a large number of different schemes- within the same
fund. An investor can choose from different investment plans and construct a
portfolio of his choice.
 Managing a portfolio of funds: Availability of a large number of funds can
actually mean too much choice for the investor .He may again need advice on how
to select a fund to achieve his objectives, quite similar to the situation when he has
to select individual shares or bonds to invest in.

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 RELIANCE MUTUAL FUND &
ITS COMPETITIVE ANALYSIS WITH SBI MUTUAL FUND

Reliance Mutual Fund

The Money invested by investors in reliance Mutual Fund is further invested in the equity
market or fixed income securities of various sectors and companies to generate a regular
income for the investors.

How to purchase Reliance Mutual Fund

You can purchase the reliance mutual fund by enclosing the demand draft or local cheque
payable at par at the place where you can submit the application.

Applicable NAV (Net Asset value) of Reliance Mutual Fund

The closing NAV of the day on which the application is received would be applicable. This
stands valid if the application id received before 3 pm. In case if the application is received
after 3 pm, the closing NAV of the next business day would be applicable.

Reliance Mutual Fund scheme Annual returns

Reliance Mutual Fund has different plans & schemes for different investor groups and the
compounded annual returns have demonstrated a decent return percentage up to 40 %,
though the returns may vary based on investment plan you have chosen.

Reliance Mutual Fund dividend Policy

The dividends are distributed for these mutual funds from the surplus amount after the
deduction of all applicable taxes and surcharges.

Tax benefits to the mutual fund

Reliance mutual fund is as a mutual fund registered with SEBI (Securities Exchange Board
Of India) and hence the entire income from the mutual fund is exempt from Income Tax in
accordance with the provisions of Section 10(23D) of the Income tax Act 1961.

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RELIANCE MUTUAL FUND PRODUCTS

EQUITY SCHEMES:-

 Reliance Equity 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
& equity related securities of top 100 companies by market capitalization & of
companies which are available in the derivatives segment from time to time and the
secondary objective is to generate consistent returns by investing in debt and money
market securities.
 Reliance 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

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 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. up to 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 a portfolio of securities issued
and guaranteed by the central Government and State Government.
 Reliance Income Fund: (An Open-ended Income Scheme) The primary objective of
the scheme is to generate optimal returns consistent with moderate levels of risk. 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

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 comprising substantially of Floating Rate Debt Securities (including floating rate
securitised debt and Money Market Instruments and Fixed Rate Debt Instruments
swapped for floating rate returns). The scheme shall also invest in Fixed rate debt
Securities (including fixed rate securitised 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.

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 consistent return by

investing a major portion in debt & money market securities and a small portion in equity

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& equity related instruments.

SECTOR SPECIFIC SCHEMES: Sector Funds are specialty funds that invest in stocks
falling into a certain sector of the economy. Here the portfolio is dispersed or spread across
the stocks in that particular sector. This type of scheme is ideal for investors who have
already made up their mind to confine risk and return to a particular sector.

RELIANCE BANKING FUND: Reliance Mutual Fund has an Open-Ended Banking

Sector Scheme which has the primary investment objective to generate continuous returns
by actively investing in equity/equity related or fixed income securities of banks.

RELIANCE DIVERSIFIED POWER SECTOR FUND: Reliance Diversified Power

Sector Scheme is an Open-ended Power Sector Scheme - The primary investment
objective of the Scheme is to seek to generate consistent returns by actively investing in
equity / equity related or fixed income securities of Power and other associated companies.

RELIANCE PHARMA FUND: (Reliance Pharma Fund is an Open-ended Pharma Sector

Scheme) The primary investment objective of the Scheme is to generate consistent returns
by investing in equity / equity related or fixed income securities of Pharma and other
associated companies.

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.

ACHIEVEMENTS
The two successive joints surveys by the Economic Times Brand equity and A C Nielsen,
Reliance were recognized as India’s most trusted Mutual Fund. The company also worked
away with seven other scheme prizes- five of them being outright winners- in the Gulf
2007 Lipper Awards. These included the Fund House of the Year by Lipper GCC as well as

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ICRA online and the most improved Fund House by Asia Asset management. It also
received the NDTV Business leadership Award 2007 in the mutual fund category and
runners’ up recognition as the Best Fund House in the Outlook Money- NDTV profit
Awards. In addition. The company the company received the coveted CNBC Web 18
Genius of the Web distinction for the Best Mutual Fund Website in the country. RCAM
was awarded the India onshore Fund House 2008instituted by the Asian Investor
magazine. The company also won the India Equities award in the 5-year performance
category.

SWOT ANALYSIS OF RELIANCE MUTUAL FUND

I. STRENGTHS
 Brand strategy: as opposed to some of its competitors (e.g. HSBC), Reliance
ADAG operates a multi-brand strategy. The company operates under numerous
well-known brand names, which allows the company to appeal to many different
segments of the market.
 Distribution channel strategy: Reliance is continuously improving the
distribution of its products. Its online and Internet-based access offers a
combination of excellent growth prospects and its retail direct business also saw
growth of 27% in 2002 and 15% in 2003.
 Various sources of income: Reliance has many sources of income throughout the
group, and this diversity within the group makes the company more flexible and
resistant to economic and environmental changes.
 Large pool of installed capacities.
 Experienced managers for large number of Generics.
 Large pool of skilled and knowledgeable manpower.
 Increasing liberalization of government policies.

II. WEAKNESS
 Emerging markets: since there is more investment demand in the United States,
Japan and the rest of Asia, Reliance should concentrate on these markets, especially
in view of low global interest rates.
 Mutual funds are like many other investments without a guaranteed return: there
is always the possibility that the value of your mutual fund will depreciate. Unlike
fixed-income products, such as bonds and Treasury bills, mutual funds experience

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 price fluctuations along with the stocks that make up the fund. When deciding on a
particular fund to buy, you need to research the risks involved – just because a
professional manager is looking after the fund, that doesn’t mean the performance
will be stellar.
 Fees: In mutual funds, the fees are classified into two categories: shareholder fees
and annual operating fees. The shareholder fees, in the forms of loads and
redemption fees are paid directly by shareholders purchasing or selling the funds.
The annual fund operating fees are charged as an annual percentage – usually
ranging from 1-3%. These fees are assessed to mutual fund investors regardless of
the performance of the fund. As you can imagine, in years when the fund doesn’t
make money, these fees only magnify losses.

III. OPPORTUNITIES
 Potential markets: The Indian rural market has great potential. All the major
market leaders consider the segments and real markets for their products. A senior
official in a one of the leading company says foray into rural India already started
and there has been realization that the rural market is both price and quantity
conscious.
 Entry of MNCs: Due to multinationals are entering into market job
opportunities are increasing day by day. Also India Mutual Fund majors are tie up
with other financial institutions.

IV. THREATS
 Increased Competition: With intense competition by so many local players
causing headache to the current marketers. In addition to this though multinational
brands are not yet established but still they will soon hit the mark. Almost 60 to
70% of the revenue is spending on the management and services.
 Hedge funds: sometimes referred to as ‘hot money’, are also causing a threat for
mutual funds have gained worldwide notoriety for bringing the markets down. Be it
a crash in the currency, stock or bond market, usually a hedge fund prominently
figures somewhere in the picture.

SBI MUTUAL FUND

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SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the Country with an
investor base of over 4.6 million and over 20 years of rich Experience in fund management
consistently delivering value to its investors.

SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Banks of India' one
of India's largest banking enterprises, and Societe Generale Asset Management (France),
one of the world's leading fund management companies that manage over US$ 500 Billion
worldwide. Today the fund house manages over Rs 28500 crores of assets and has a
diverse profile of investors actively parking their investments across 36 active schemes. In
20 years of operation, the fund has launched 38 schemes and successfully redeemed 15 of
them, and in the process, has rewarded our investors with consistent returns. Schemes of
the Mutual Fund have time after time outperformed benchmark indices, honored us with
15 awards of performance and have emerged as the preferred investment for millions of
investors. The trust reposed on us by over 4.6 million investors is a genuine tribute to our
expertise in fund management. SBI Funds Management Pvt. Ltd. serves its vast family of
investors through a network of over 130 points of acceptance, 28 Investor Service Centers,
46 Investor Service Desks and 56 District Organizers.SBI Mutual is the first bank
sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund. Growth
through innovation and stable investment policies is the SBI MF credo.

SCHEMES OF SBI MUTUAL FUND

 Equity schemes: The investments of these schemes will predominantly be in the stock
markets and endeavor will be to provide investors the opportunity to benefit from the
higher returns which stock markets can provide. However they are also exposed to the
volatility and attendant risks of stock markets and hence should be chosen only by such
investors who have high risk taking capacities and are willing to think long term.
Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds.
Diversified Equity Funds invest in various stocks across different sectors while sectoral
funds which are specialized Equity Funds restrict their investments only to shares of a
particular sector and hence, are riskier than Diversified Equity Funds. Index Funds
invest passively only in the stocks of a particular index and the performance of such
funds move with the movements of the index.
 Magnum COMMA Fund
 Magnum Equity Fund

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  Magnum Global Fund
 Magnum Index Fund
 Magnum Midcap Fund
 Magnum Multicap Fund
 Magnum Multiplier plus 1993
 Magnum Sectoral Funds Umbrella
 MSFU- Emerging Business Fund
 MSFU- IT Fund
 MSFU- Pharma Fund
 MSFU- Contra Fund
 MSFU- FMCG Fund
 SBI Arbitrage Opportunities Fund
 SBI Blue chip Fund
 SBI Infrastructure Fund - Series I
 SBI Magnum Taxgain Scheme 1993
 SBI ONE India Fund
 SBI TAX ADVANTAGE FUND - SERIES I

 Debt schemes: Debt Funds invest only in debt instruments such as Corporate Bonds,
Government Securities and Money Market instruments either completely avoiding any
investments in the stock markets as in Income Funds or Gilt Funds or having a small
exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are
safer than equity funds. At the same time the expected returns from debt funds would
be lower. Such investments are advisable for the Risk-averse investor and as a part of
the investment portfolio for other investors.
 Magnum Children’s benefit Plan
 Magnum Gilt Fund
 Magnum Income Fund
 Magnum Insta Cash Fund
 Magnum Income Fund- Floating Rate Plan
 Magnum Income Plus Fund
 Magnum Insta Cash Fund -Liquid Floater Plan
 Magnum Monthly Income Plan
 Magnum Monthly Income Plan - Floater
 Magnum NRI Investment Fund
 SBI Premier Liquid Fund

 Balanced Schemes: Magnum Balanced Fund invests in a mix of equity and debt
investments. Hence they are less risky than equity funds, but at the same time provide
commensurately lower returns. They provide a good investment opportunity to
investors who do not wish to be completely exposed to equity markets, but is looking
for higher returns than those provided by debt funds.

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  Magnum Balanced Fund

SWOT ANALYSIS OF SBI MUTUAL FUND

 Strengths
 Being the 7th biggest AMC, SBI Mutual has a cutting edge over other AMC’s
 The name of SBI is also associated with one of the largest public sector bank in
India, and hence people show more faith in SBI Mutual Fund.
 SBI Mutual Fund is one the oldest AMC’s in private sector and schemes which are
matured enough pull new investors because of high returns.
 Wide variety of funds ranging from debt funds to equity and a mixture of both in
various proportions give ample amount of choice of customers.
 SBI Mutual Fund offers clear and non over lapping positioning of different funds.
 Winner of IRCA Mutual Fund Awards 2009(Magnum Taxgain Schemes)
 Winner of Lipper Fund Awards 2009
 Winner of Outlook Money NDTV Profit Awards 2008

 Weakness
 Lack of promotional material, dispensers, banners
 Proper training not being provided to bank officials

 Opprotunitities
 Untapped rural market offers huge potentials
 More focus on PSU’s may enhance business
 Training provided to investors may lead to more investments

 Threats
 Competitors like Reliance AMC, ICICI Prudential are catching up fast on the
market share
 Share market slump may see downfall in investments
 Ongoing recession may impose adverse effects

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Research Methodology

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 RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data Collection
was given more importance since it is overhearing factor in attitude studies. One of the
most important users of research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an alternative solution to
the problem .It also helps in collecting the vital information that is required by the top
management to assist them for the better decision making both day to day decision and
critical ones.

Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has been
collected by interacting with various people. The secondary data has been collected
through various journals and websites.

Primary Data
The data from the customer or public relating to the investment schemes of the Bank were
collected with the help of direct interview schedule or direct interaction with people. Apart
from this primary data and information were collected by the way of specially designed
questionnaire. After that many relevant information were collected through filling up of
questionnaires contained ten questions.

Secondary Data
These were the data collected from existing sources of from those sources, or from those
sources, which were already developed, organized and collected previously. Secondary
data were collected from
Company Website-www.ucobank.com
o Articles
o Leaflets
o Journal
o Newspaper
o Company

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Both primary and secondary data were acquired for the successful and smooth completion
of this study. The primary data were collected from the Finance Department of Reliance
Communication were full freedom and cooperation was extended to me. On the other
hand, the secondary data were collected from the annual report of Reliance mutual fund for
analyzing the data comparative financial statement, funds flow analysis and ratio analysis
which are most useful and common methods are adopted.

DATA PROCESSING
After the completion of the interview and questionnaire schedule a through check-up data
was made. The missing data were collected immediately. The data were processed with the
help of some statistical tools like percentage, graphs, charts and tables.

RESEARCH DESIGN
It includes data on the characteristics, profile and perception of the consumer in accessing
the credit to the Bank.

Market research defined as a function that links the customer and the public to market
through information to identify and define market opportunities problems to generate,
define and enable marketing action monitor marketing process. Marketing research
specifies the information needed to address marketing issues.

Research design is a method for collecting, managing and implementing the data collection
process, analyses the result and communicated the findings and their implication.

The research is based on the customers i.e. an extension of marketing research. This
research is conducted with a view to understand prospective customers better, to introduce
and modify the products and services of carrier.
Some of the activities in carrying this research are-:
 To form a basis of sale
 Planning, promotion & advertisement.
 It enables to identify the customer needs in relation to the product category and
develop potential markets.
 To help the management to determine persuasive advertisement appeals and
identify appropriate media choices to reach selected targeted markets.

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  To determine market characteristics, potentials and share of its competitors.

Sampling procedure:
The sample was selected of them who are the customers/visitors of Reliance Mutual Fund
Office, Bhubaneswar, irrespective of them being investors or not or availing the services or
not. It was also collected through personal visits to persons, by formal and informal talks
and through filling up the questionnaire prepared. The data has been analyzed by using
mathematical/Statistical tool.

Sample size:
The sample size of my project is limited to 200 people only. Out of which only 120 people
had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.

Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.

Limitation:
 Some of the persons were not so responsive.
 Possibility of error in data collection because many of investors may have not given
actual answers of my questionnaire.
 Sample size is limited to 200 visitors of Reliance Mutual Fund; Bhubaneswar out
of these only 120 had invested in Mutual Fund. The sample Size may not
adequately represent the whole market.
 Some respondents were reluctant to divulge personal information which can affect
the validity of all responses.
 The research is confined to a certain part of Bhubaneswar.

Portfolio analysis tools:

With the increasing number of mutual fund schemes, it becomes very difficult for an
investor to choose the type of funds for investment. By using some of the portfolio analysis
tools, he can become more equipped to make a well informed choice. There are many
financial tools to analyze mutual funds. Each has their unique strengths and limitations as
well. Therefore, one needs to use a combination of these tools to make a thorough analysis
of the funds. The present market has become very volatile and buoyant, so it is getting

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difficult for the investors to take right investing decision. so the easiest available option for
investors is to choose the best performing funds in terms of “returns” which have yielded
maximum returns. But if we look deeply to it, we can find that the returns are important
but it is also important to look at the ‘quality’ of the returns. ‘Quality’ determines how
much risk a fund is taking to generate those returns. One can make a judgment on the
quality of a fund from various ratios such as standard deviation, sharpe ratio, beta, treynor
measure, R-squared, alpha, portfolio turnover ratio, total expense ratio etc. Now I have
compared two funds of SBI on the basis of standard deviation, beta, R-squared, sharpe
ratio, portfolio turnover ratio and total expense ratio. So before going into details, lets have
a look at these ratios:

Standard deviation:
In simple terms standard deviation is one of the commonly used statistical parameter to
measure risk, which determines the volatility of a fund. Deviation is defined as any
variation from a mean value (upward & downward). Since the markets are volatile, the
returns fluctuate every day. High standard deviation of a fund implies high volatility and a
low standard deviation implies low volatility.

Beta analysis:
Beta is used to measure the risk. It basically indicates the level of volatility associated with
the fund as compared to the market. In case of funds, as compared to the market. In case of
funds, beta would indicate the volatility against the benchmark index. It is used as a short
term decision making tool. A beta that is greater than 1 means that the fund is more volatile
than the benchmark index, while a beta of less than 1 means that the fund is more volatile
than the benchmark index. A fund with a beta very close to 1 means the fund’s
performance closely matches the index or benchmark.

The success of beta is heavily dependent on the correlation between correlation between a
fund and its benchmark. Thus, if the fund’s portfolio doesn’t have a relevant benchmark
index then a beta would be grossly inappropriate. For example if we are considering a
banking fund, we should look at the beta against a bank index.

R-Squared (R2):

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R squared is the square of ‘R’ (i.e.; coefficient of correlation). It describes the level of
association between the fun’s market volatility and market risk. The value of R- squared
ranges from0 to1. A high R- squared (more than 0.80) indicates that beta can be used as a
reliable measure to analyze the performance of a fund. Beta should be ignored when the r-
squared is low as it indicates that the fund performance is affected by factors other than the
markets.

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Analysis & Interpretations of Data

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 ANALYSIS & INTERPRETATION OF THE DATA

Result: From the above graph, it is clear, peoples are not aware about mutual fund because
they were not educated. According to business men, 72% people known what is mutual
fund because they aware about share market. According to government employees, 40%
peoples know what is mutual fund; they don’t intrastate in share market. Youngsters have
so aware about mutual fund. 80% youngsters known, what is mutual fund? Now, we talk
about private Employees, maximum people known, what is mutual fund, it is 60%.

Result: As shown above chart 60% business men want to invest money into the mutual
fund because they have interest in mutual fund, maximum customers want to invest our
money into the mutual fund because their interest decreased in equity market they know
that in this field, risk is low compare to share market. 40% government employees want to
invest your money into the mutual fund, 56% youngsters and 40% private employees want
to invest money into the mutual fund.

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Result: We know that mutual fund is not always risk free. According to the customers who
know what is mutual fund, they also know it is not always risk free. Problem has that
maximum people are not aware about mutual fund.28% business men don’t know, 60%
government employees, 20% youngsters and private employees don’t know it is risk free
or not.

Result: From the above graph, mostly customers want to invest your money into the gold,
the purchased gold, according to customers, price of gold always increase and this is
always profitable in future. Youngsters and business men have interest in mutual fund; they
like to take risk because they know that, if risk is high then return may be high. 28%
business men,16% government employees, 40% youngsters, 20% private employees like to
invest money into the mutual fund.

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Result: From the above graph, which is according to the primary data collected, clearly
shows that “Preference of investors are based on high return, liquidity and growth of fund”
i.e. investors give their preferences to that fund which gives them high return. 26%
customers like to the Reliance Mutual Fund. 14% Customer’s belief HDFC Mutual Fund.
Birla Sun life Mutual Fund having 15% preferred. Kotak Mahindra mutual fund having
17% preferred, other’s mutual fund having 28% preferred.

Result: From the above graph, which is according to the primary data collected, clearly
shows that investors have two types mutual fund, it is 18%. They want earn maximum
profit from mutual fund. These customers want to increase number of units and also invest
other plan like saving plan.

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Result: The result of the primary data shows that investors of reliance mutual fund who
invested in other mutual fund having the higher percentage prudential ICICI Mutual fund
but it may be right or wrong. As reliance is the brand name in India, the company has good
reputation in the market, almost everyone heard about the reliance and their companies.
Brand management is also required to increase the product perceived value to the
customer. That’s the reason behind 37% of the people choosing reliance.

Result: From the above graph, which is according to the primary data collection, clearly
shows that the investors are satisfy with the services providing by the reliance AMC. 37%
belief on Reliance Mutual Fund. It is fine compare to others.

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Result: 74% customers of reliance are satisfied with the services provided by Reliance
Mutual fund and the rest 26% are not satisfied. Customers of today are better educated,
better informed, more discriminating, more sophisticated and are more individualistic.
What they value in a mutual fund transaction has dramatically changed.

1. (a) Age distribution of the Investors of Bhubaneswar

Interpretation: According to this chart out of 120 Mutual Fund investors of Bhubaneswar
the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the
age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

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(b). Educational Qualification of investors of Bhubaneswar

Interpretation: Out of 120 Mutual Fund investors 71% of the investors in Bhubaneswar
are Graduate/ Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of Bhubaneswar

Interpretation: In Occupation group out of 120 investors, 38% are Pvt. Employees, 25%
are Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in Others.

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(d). Monthly Family Income of the Investors of Bhubaneswar

Interpretation: In the Income Group of the investors of Bhubaneswar, out of 120

investors, 36% investors that is the maximum investors are in the monthly income group
Rs. 20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly income group
of more than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income
group of below Rs. 10,000.

(2) Investors invested in different kind of investments.

Interpretation: From the above graph it can be inferred that out of 200 people, 97.5%
people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in
Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and
32.5% in Real Estate.

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3. Preference of factors while investing

Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to
invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust.

4. Awareness about Mutual Fund and its Operations

Interpretation: From the above chart it is inferred that 67% People are aware of Mutual
Fund and its operations and 33% are not aware of Mutual Fund and its operations.

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5. Source of information for customers about Mutual Fund

Interpretation: From the above chart it can be inferred that the Financial Advisor is the
most important source of information about Mutual Fund. Out of 135 Respondents, 46%
know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through
Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Interpretation: Out of 200 People, 60% have invested in Mutual Fund and 40% do not
have invested in Mutual Fund.

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7. Reason for not invested in Mutual Fund

Interpretation: Out of 80 people, who have not invested in Mutual Fund, 81% are not
aware of Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any
specific reason.

8. Investors invested in different Assets Management Co. (AMC)

Interpretation: In Bhubaneswar most of the Investors preferred UTI and Reliance Mutual
Fund. Out of 120 Investors 62.5% have invested in each of them, only 46% have invested
in SBIMF, 47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

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9. Reason for invested in Reliance Mutual Fund

Interpretation: Out of 55 investors of Reliance Mutual Fund, 64% have invested because
of its association with Brand Reliance, 27% invested on Agent’s Advice, 9% invested
because of better return.

10. Reason for not invested in SBIMF

Interpretation: Out of 65 people who have not invested in Reliance Mutual Fund, 38%
were not aware with Reliance Mutual Fund, 28% do not have invested due to less return
and 34% due to Agent’s Advice.

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11. Preference of Investors for future investment in Mutual Fund

Interpretation: Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI
Prudential, 63% in SBIMF, 62.5% in others, 50% in Kotak, 37.5% in UTI and 29% in
HDFC Mutual Fund.

12. Channel Preferred by the Investors for Mutual Fund Investment

Interpretation: Out of 120 Investors 60% preferred to invest through Financial Advisors,
25% through AMC and 15% through Bank.

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13. Mode of Investment Preferred by the Investors

Interpretation: Out of 120 Investors 65% preferred One time Investment and 35 %
Preferred through Systematic Investment Plan.

14. Preferred Portfolios by the Investors

Interpretation: From the above graph 46% preferred Equity Portfolio, 37% preferred
Balance and 17% preferred Debt portfolio.

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15. Option for getting Return Preferred by the Investors

Interpretation: From the above graph 71% preferred Growth Option, 21% preferred
Dividend Payout and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds

Interpretation: Out of 120 investors, 79% investors do not prefer to invest in Sectoral
Fund because there is maximum risk and 21% prefer to invest in Sectoral Fund.

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Findings of Study

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 FINIDINGS

 In Bhubaneswar in the Age Group of 36-40 years were more in numbers. The second
most Investors were in the age group of 41-45 years and the least were in the age group
of below 30 years.

 In Bhubaneswar most of the Investors were Graduate or Post Graduate and below HSC
there were very few in numbers.

 In Occupation group most of the Investors were Govt. employees, the second most
Investors were Private employees and the least were associated with Agriculture.

 In family Income group, between Rs. 20,001- 30,000 were more in numbers, the
second most were in the Income group of more than Rs.30,000 and the least were in
the group of below Rs. 10,000.

 About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits,
Only 60% Respondents invested in Mutual fund.

 Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.

 Only 67% Respondents were aware about Mutual fund and its operations and 33%
were not.

 Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have
invested in Mutual fund.

 Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any
specific reason for not invested in Mutual Fund and 6% told there is likely to be higher
risk in Mutual Fund.

 Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI Prudential
has also good Brand Position among investors, SBIMF places after ICICI Prudential
according to the Respondents.

 Out of 55 investors of Reliance Mutual Fund 64% have invested due to its Association
with the Brand Reliance, 27% Invested because of Advisor’s Advice and 9% due to
better return.

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 Most of the investors who did not invested in Reliance Mutual Fund due to not Aware
of Reliance Mutual Fund, the second most due to Agent’s advice and rest due to Less
Return.

 For Future investment the maximum Respondents preferred Reliance Mutual Fund, the
second most preferred ICICI Prudential, SBIMF has been preferred after them.

 60% Investors preferred to invest through Financial Advisors, 25% through AMC
(means Direct Investment) and 15% through Bank.

 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode
of Investment.

 The most preferred Portfolio was Equity, the second most was Balance (mixture of
both equity and debt), and the least preferred Portfolio was Debt portfolio.

 Maximum Number of Investors Preferred Growth Option for returns, the second most
preferred Dividend Payout and then Dividend reinvestment.

 Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to
invest in Sectoral Fund.

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Conclusions

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 CONCLUSION

The analysis done for Reliance Mutual fund ltd. reflects the strong performance of the
company over the past 3 years, in terms of returns on and of the investment and financial
performance. And this too is midst of the scenario where most of the other firms in this
industry are suffering huge losses and trying to cope with the challenges ahead with this
sector.

The investors have shown tremendous faith in the company over the years and Reliance
mutual fund has responded with the kind of performances, which is fueling the growth and
increasing economic growth of the country. From the net profit, we see that Reliance
mutual fund has been growing, and becoming stronger. It reflects on the policies the
company has, and the transactions it has been making over the years.

The mutual fund sector has its share of opportunities and challenges lying ahead and with
the present scenario, Reliance mutual fund (R.M.F) looks all set to break paths and catapult
itself to a position of leadership in the market. The current scenario and the expansion
plans it has, and adds to it the efficient selling and distribution channel it commands; it
makes R.M.F a big force in the reckoning and in the near future, a market leader and trend
setter in the Mutual fund sector.

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Suggestions & Recommendations

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 SUGGESTIONS AND RECOMMENDATIONS

It was a gratifying experience to be in corporate and work as a trainee with the brand name
of Reliance Mutual Fund. During my Project I came to know much more about the mutual
funds, how they work, what are the norms of SEBI to regulate the AMCs. I have learnt so
many things also which I cannot explain in my report. I got the opportunity during my
project to comparatively analyze two funds and give the recommendations also.

Whatever I learnt during the completion of my project on behalf of that I am

recommending to the Reliance Mutual Funds.
 The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be
made to realize that ignorance is no longer bliss and what they are losing by not
investing.

 Mutual funds offer a lot of benefit which no other single option could offer. But most
of the people are not even aware of what actually a mutual fund is? They only see it as
just another investment option. So the advisors should try to change their mindsets. The
advisors should target for more and more young investors. Young investors as well as
persons at the height of their career would like to go for advisors due to lack of
expertise and time.

 Mutual Fund Company needs to give the training of the Individual Financial Advisors
about the Fund/Scheme and its objective, because they are the main source to influence
the investors.

 Before making any investment Financial Advisors should first enquire about the risk
tolerance of the investors/customers, their need and time (how long they want to
invest). By considering these three things they can take the customers into
consideration.

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 Younger people aged fewer than 35 will be a key new customer group into the future,
so making greater efforts with younger customers who show some interest in investing
should pay off.

 Customers with graduate level education are easier to sell to and there is a large
untapped market there. To succeed however, advisors must provide sound advice and
high quality.

 Systematic Investment Plan (SIP) is one the innovative products launched by Assets
Management companies very recently in the industry. SIP is easy for monthly salaried
person as it provides the facility of do the investment in EMI. Though most of the
prospects and potential investors are not aware about the SIP. There is a large scope for
the companies to tap the salaried persons.

 Asset management companies need to proper educate the investor to increase the
awareness and break the myths about mutual fund.

 Mutual fund distributors like Reliance Mutual Fund should start a campaign to educate
the investors: there is a need of advertisement also to attract the investor.

 AMCs should target rural market as a potential hub of customer. In rural area people
are getting wealth gradually and need a guidance to shift their portfolio from old
sources to new and modern sources.

 Sales force should be well educated about every aspect of mutual fund so that they can
solve the queries of the investors.

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Bibliography

Page 85 of 89
 BIBLIOGRAPHY

WEBSITES:-
 www.valueresearchonine.com

 www.reliancemutual.com

 www.moneycontrol.com

 www.bseindia.com

 www.scribd.com

 News papers

 Outlook money

 Television channel (cnbc aawaj)

 Mutual fund hand book

 Fact sheet and statement

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Questionnaire

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 QUESTIONNAIRE FOR CUSTOMER

1. Do you know, what is mutual fund?

a) Yes b) No

2. Do you want to invest your money into the mutual fund?

a) Yes b) No

3. Is Mutual fund always risk free?

a) Yes b) No c) I don’t know

4. Do you want to invest your money into the given following sector?
a) Mutual fund b) Property c) Gold
d) Shares e) Insurance

5. If yes, Which AMC (asset Management Company) will you prefer?

a) Reliance mutual fund b) HDFC mutual fund
c) Birla sun life mutual fund d) SBI Mutual Fund
e) Other

6. How many AMC’s mutual fund do you have?

a) One b) Two c) More than two
d) None

7. According to you which company has more demand in the market?

a) Reliance mutual fund b) HDFC mutual fund
c) Birla sun life mutual fund d) SBI Mutual Fund
e) Other

8. Which AMC provides better service?

a) Reliance mutual fund b) HDFC mutual fund
c) SBI Mutual Fund d) Other

9. Are you satisfied by the services provided by Reliance Mutual fund?

a) Yes b) No

10. What is your view about reliance mutual fund?

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_________________________________________________________________________
_________________________________________________________________________

Signature__________________

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