17-03-2012, 10:34 AM
Reliance Mut ual Fund
DECLARATION
I Vinay Rastogi do hereby declare that the project report entitled “Reliance Mut
ual Fund” being submitted to Mumbai University of, this is my own piece of work
and it has not been submitted to any other institute or published at any time be
fore.
Vinay R Rastogi
IBSAR insti
tution of
Management
ACKNOWLEDGEMENT
This report bears the imprint of many people. Right from the experienced staff o
f Reliance Money, to the staff of IBSAR Institution of Management Karjat,without
whose support and guidance I would have not got the unique opportunity to succe
ssfully complete my internship in this esteemed organization.
I take this opportunity to express my deep gratitude to all the employees of, Re
liance Money, Thane. Also I am indebted for the rich guidance, knowledge and sug
gestions provided by my guide, Prof. pophle who took sincere efforts and illustr
ated the Marketing Concept of Financial Products, with their vast knowledge in t
he field, which helped me in carrying out my internship.
I am gratified to Prof. Pophle for their earnest coordination owing to which, I
had the leg-up of undertaking the internship at the prominent organization, Reli
ance Money Pvt ltd.
Last but not least, I also thank all those people whom I met in the industry dur
ing my internship and helped me to accomplish my assignments in the most efficie
nt and effective manner.
Date: 18th Aug 2008
Place: Karjat (Vinay Rastogi)
EXECUTIVE SUMMARY
The project work is pursued as a part of MBA (FINANCE) Curriculum at IBSAR INSTI
TUTION OF MANAGEMENT, KARJAT. It is undertaken as a traineeship at Reliance Mone
y Ltd. The project is done under expert supervision and guidance of Prof. Dr.POP
HLE(Lecture Finance) and Mr. Gaurav patkar(Center Sales Manager, Reliance Money
Thane)
The Project is about the study of marketing and sales of financial products and
also the efforts done to make improvements in the customer acquisition process f
or better results.
At RELIANCE MONEY, initially the trainees were imparted process and product know
ledge. They were given sufficient time to know about the products and also about
sales and distribution channel They had to work with the sales representatives
of the Distributor and think of ways of improving the sales and distribution ch
annel and implementing them. The main aim was to increase sales and for this dif
ferent ways were tried and implemented. They were provided with database and had
to make cold calls from the data. Company activity was also one of the major so
urces for generating business. Initially they even accompanied sales representat
ives to the clients place. Main objective was to know the need of the customer a
nd how to fulfill that in the best way.
CONTENTS
1 INTRODUCTION 7
2 HISTORY & MUTUAL FUND REGULATION 9
3 TYPES OF MUTUAL FUND SCHEME IN INDIA 11
4 ADVANTAGES & FETURES OF MUTUAL FUND 19
5 COMPANY PROFILE 21
6 COMPETITORS RELIANCE MONEY 31
7 OBJECTIVE OF STUDY 36
8 RESERCH METHODOLOGY 37
9 DATA ANALYSIS AND INTERPRETATION 40
10 OBSERVATION 45
13 FINDINGS AND SUGGESTION ,QUESTIONNAIR 46
14 LIMITATION 48
15 CONCLUSION 49
16 BIBLIOGRAPHY 50
INTRODUCTION
Mutual fund
Mutual funds can give investors access to emerging markets
A mutual fund is a professionally managed type of collective investment scheme t
hat pools money from many investors and invests it in stocks, bonds, short-term
money market instruments, and/or other securities. The mutual fund will have a f
und manager that trades the pooled money on a regular basis. As of early 2008, t
he worldwide value of all mutual funds totals more than $26 trillion.
Since 1940, there have been three basic types of investment companies in the Uni
ted States: open-end funds, also known in the US as mutual funds; unit investmen
t trusts (UITs); and closed-end funds. Similar funds also operate in Canada. How
ever, in the rest of the world, mutual fund is used as a generic term for variou
s types of collective investment vehicles, such as unit trusts, open-ended inves
tment companies (OEICs), unitized insurance funds, and undertakings for collecti
ve investments in transferable securities (UCITS).
There are a lot of investment avenues available today in the financial market fo
r an investor with an invest able surplus. He can invest in Bank Deposits, Corpo
rate Debentures, and Bonds where there is low risk but low return. He may invest
in Stock of companies where the risk is high and the returns are also proportio
nately high. The recent trends in the Stock Market have shown that an average re
tail investor always lost with periodic bearish tends. People began opting for p
ortfolio managers with expertise in stock markets who would invest on their beha
lf. Thus we had wealth management services provided by many institutions. Howeve
r they proved too costly for a small investor. These investors have found a good
shelter with the mutual funds.
Like most developed
and developing countries the mutual fund cult has been catching on in India. The
reasons for this interesting occurrence are:
1. Mutual funds make it easy and less costly for investors to satisfy their
need for capital growth, income and/or income preservation.
2. Mutual fund brings the benefits of diversification and money management to
the individual investor, providing a
Opportunity for financial success that was once available only to a select few.
HISTORY
• Unit Trust of India is the first Mutual Fund set up under a separate act, UTI
Act in 1963, and started its operations in 1964 with the issue of units under th
e scheme US-641. In 1978 UTI was delinked from the RBI and Industrial Developmen
t Bank of India (IDBI) took over the
Regulatory and administrative control in place of RBI.
• In the year 1987 Public Sector banks like State Bank of India, Punjab Nationa
l Bank, Indian Bank, Bank of India, and Bank of Baroda have set up mutual funds.
• Apart from these above mentioned banks Life Insurance Corporation [LIC] and
General Insurance Corporation [GIC] too have set up mutual fund. LIC established
its mutual fund in June 1989.while GIC had set up its mutual fund in December 1
990.The mutual fund industry had assest under management of Rs. 47,004 crores.
• With the entry of Private Sector Funds a new era has started in Mutual Fund I
ndustry [e.g:- Principal Mutual Fund.]
Mutual Fund Regulations
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. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 cro
res of assets under management and with the setting up of a UTI Mutual Fund, con
forming to the SEBI Mutual Fund Regulations, and with recent mergers taking plac
e among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of September, 2004, th
ere were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
Types of Mutual Funds Scheme in India
Open end versus Closed end Schemes
There are two different types of funds.
• Open-ended Fund/ Scheme
• Closed-ended fund/ Scheme
The key differences between the closed-end and open-end schemes area as follows:
-
The subscription to a closed-end scheme is kept open only for a limited period (
usually one month to three months). Where an open-end scheme accepts funds from
investors by offering its units or shares on a continuing basis.
A closed-end scheme does not allow investors to withdraw funds as and when they
like, whereas an open-end scheme permits investors to withdraw funds on a contin
uing basis under a re-purchase arrangement.
A closed-end scheme has a fixed maturity period (usually five to fifteen years)
whereas an open-end scheme has no maturity period.
The closed-end schemes are listed on the secondary market, whereas the open-end
schemes are ordinarily not list.
In India, three entities are central to a mutual fund operation:
• The sponsor,
• The mutual fund
• The asset management company.
The sponsor is the key who establishes the mutual fund and the asset Management
Company. For example, Templeton International (sponsor) set up the Templeton Mu
tual Fund which has been constituted as a trust under the Indian Trusts Act, 188
2 and registered with SEBI. The mutual fund is, in a way, an umbrella organizat
ion that floats various schemes in which investors participate. The asset manag
ement company, organized as a separate joint Stock company, manages the funds of
mutual fund under its various schemes. For example, Templeton Asset Management
(India) Pvt. Ltd., the asset management company set up by Templeton Internation
al, manages the various schemes of Templeton Mutual Fund.
Why one should invest in mutual funds?
Mutual funds are preferable mode of investment due to the following reasons:
• Reduction of risk
• Professional Management
• Tax benefits
• Low transaction costs
• Highly regulated
• Liquidity
• Easy to administer
Why one should not invest in mutual funds?
The following are the reasons, which are deterrent to mutual fund investment:
• No control over costs
• No tailor made portfolios
• Managing a portfolio of funds
Constitution of a Mutual Fund
There are a number of bodies that form a part of the mutual fund, they are as fo
llows:
• Sponsors
The sponsor is the company which sets up the mutual fund. It means anybody corpo
rate acting alone or in combination with another body corporate established a mu
tual fund after initiating and completing the formalities.
• Trustees
The management of the mutual fund is subject to the control of the board of trus
tees of the fund. They guide the operations of the fund and carry the crucial re
sponsibility to see that AMC always act in the best interest of the investors.
• Asset Management Company
The mutual fund is operated by a separately established asset management company
(AMC).It manages the funds of the various schemes. It is entrusted with the spe
cific task of mobilizing funds under the scheme.
• Custodian
A custodian is a person carrying on the activities of the safekeeping of the sec
urities or participating in any clearing system on behalf of the clients to effe
ct deliveries of the securities.
• An EQUITY FUND invests mainly in stocks and shares of companies. EQUITY
FUNDS typically aim to generate long term growth in the unit capital. There are
a variety of ways in which an equity portfolio can be created for investors. The
re are thus the following choices in equity funds:
o Simple equity funds
o Industry Specific funds
o Index funds
o ELSS
Target market:
They are ideal for investors having a long term perspective, Speculative outlook
- the equity cult, who would like to make gains in the shortest period of time a
nd investors in their prime earning years-specifically the young who have a dece
nt earning and can take some kind of risk.
• A DEBT FUND invests mainly in debt instruments like bonds and debentures
, with high and consistent dividend payout. These funds give decent returns but
the capital appreciation is not much. There are a variety of ways in which a deb
t portfolio can be created for investors. There are thus the following choices i
n debt funds:
o Liquid and Money market funds
o Gilt Funds
o Monthly Income Plan
o Floating rate funds
Target market:
o Retired people and others with a need for stability and regular income.
o Investors who need some income to supplement their earnings.
• A BALANCED FUND invests in both equity and debt instruments. It aims to
generate growth and income by periodically distributing its assets over both typ
es of securities.
•
Target market:
These ideal for investors looking for a combination of income and moderate growt
h.
How to invest in mutual funds?
The following are the essential steps which one must take into account while inv
esting in Mutual funds:-
Step 1- Identify the investment needs
Financial goals of an individual will vary, based on his/her age, lifestyle, fin
ancial independence, family commitments, level of income and expenses among many
other factors. Therefore the first step is to assess one’s needs, which can be
done by asking oneself these questions:
Net asset value (NAV)
The net asset value, or NAV, is the current market value of a fund