Chapter-1

INTRODUCTION

1
 INTRODUCTION
A mutual fund is a scheme in which several people invest money for a common financial

cause. The collected money invests in the capital market and the money, which they earned,

is divided based on the number of units, which they hold.

The mutual fund industry started in India in a small way with the UTI Act creating what was

effectively a small savings division within the RBI. Over a period of 25 years this grew fairly

successfully and gave investors a good return, and therefore in 1989, as the next logical step ,

public sector banks and financial institutions were allowed to float mutual funds and their

success emboldened the government to allow the private sector to foray into this area.

The advantages of mutual fund are professional management, diversification, economies of

scale, simplicity and liquidity.

The disadvantages of mutual fund are high costs, over-diversification, possible tax

consequences, and the inability of management to guarantee a superior return.

The biggest problems with mutual funds are their costs and fees it includes Purchase fee,

Redemption fee, Exchange fee, Management fee, Account fee and Transaction costs. There

are some loads which add to the cost of mutual fund. Load is a type of commission depending

upon the type of funds.

The biggest problems with mutual funds are their costs and fees it includes Purchase fee,

Redemption fee, Exchange fee, Management fee, Account fee and Transaction costs. There

are some loads which add to the cost of mutual fund. Load is a type of commission depending

upon the type of funds.

2
Mutual funds are easy to buy and sell. You can either buy them directly from the fund

company or through a third party. Before investing in any funds one should consider some

factors like objective, risk, fund manager’s and scheme track record , cost factor etc.

There are many types of mutual funds. You can classify funds based structure(open-ended

and close-ended), Nature(equity, debt, balanced), Investment objective(growth, income,

money market etc).

A code of conduct and registration structure for mutual fund intermediaries, which were

subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of

developments and enhancements to the regulatory framework.

The most important trend in the mutual fund industry is the aggressive expansion of the

foreign owned mutual fund companies and the decline of the companies floated by

nationalized banks and smaller private sector players.

Reliance Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual

Fund and Birla Sun Life Mutual Fund are the top five mutual fund companies in India.

INTRODUCTION OF MUTUAL FUND MARKET

3
There are a lot of investment avenues available today in the financial market for an investor

with an investable surplus. He can invest in Bank Deposits, Corporate 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 proportionately high. The recent trends in the stock market have

shown that an average retail investor always lost with periodic bearish trends. People began

opting for portfolio managers with expertise in stock market who would invest on their

behalf. Thus we had wealth management services provided by many institutions. However

they proved too costly for a small investor. These investors have found a good shelter with

the mutual funds.

Concept of mutual fund

A mutual fund is a common pool of money into which investors place 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.

Mutual funds are trusts, which accepts savings from investors and invest the same in

diversified financial instruments in terms of objectives set out in the trusts deed with the view

to reduce the risk and maximize the income and capital appreciation for distribution for the

members. A Mutual Fund is a corporation and the fund manager’s interest is to professionally

manage the funds provided by the investors and provide a return on them after deducting

reasonable management fees.

The objective sought to be achieved by mutual fund is to provide an opportunity for lower

income groups to acquire without much difficulty financial assets. They cater mainly to the

needs of the individual investor whose means are small and to manage investors portfolio in a

4
manner that provides a regular income, growth, safety, liquidity and diversification

opportunities.

Definition

“Mutual funds are collective savings and investment vehicles where savings of small l(or

sometimes big) investors are pooled together to invest for their mutual benefit and returns

distributed proportionately”.

“A Mutual fund is an investment that pools your money with the money of an unlimited

number of other investors. In return, you and the other investors each own shares of the fund.

The fund’s assets are invested according to an investment objective into the fund’s portfolio

of investments. Aggressive growth funds seek long-term capital growth by investing primarily

in stocks of fast-growing smaller companies or market segments. Aggressive growth funds

are also called capital appreciation funds.”

WHY SELECT MUTUAL FUND?

The risk return trade-off indicates that if investor is willing to take higher risk then

correspondingly he can expects higher returns and vice versa if he pertains to lower risk

instruments, which would be satisfied by lower returns. For example, if an investor opts for

bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest

in capital protected funds and the profit-bonds that give out more return which is slightly

higher as compared to the bank deposits but the risk involved also increases in the same

proportion.

Thus investors choose mutual funds as their primary means of investing,as mutual funds

provide professional management, diversification, convenience and liquidity. That does not

mean mutual fund investments risk free.

5
This is because the money that is pooled in are not invested only in debts funds which are

less riskier but are also invested in the stock markets which involves a higher risk but can

expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the

derivatives markets which are considered very volatile.

HISTORY OF MUTUAL FUNDS IN INDIA

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. The history of mutual funds in

India can be broadly divided into four distinct phases.

FIRST PHASE-(1964-87)

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by

the Reserve Bank of India and functioned under the Regulatory and administrative control of

the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and administrative control in

place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988

UTI had Rs.6,700 crores of assets under management.

SECOND PHASE- 1987-1993(ENTRY OF PUBLIC SECTOR FUNDS):

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks

and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India

(GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987

followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),

Indian Bank Mutual Fund (Nov 89), Bank of India (June 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.

6
At the end of 1993, the mutual fund industry had assets under management of Rs. 47,004

crores.

THIRD PHASE-1993-2003(ENTRY OF PRIVATE SECTOR FUNDS):

With the entry of private sector funds in 1993, a new era started in the indian mutual fund

industry, giving the indian investors a wider choice of fund families. Also, 1993 was the year

in which the first Mutual Fund Regulations came into being, under which all mutual funds,

except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged

with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and

revised Mutual Fund Regulations in 1996. The industry now functions under the

SEBI(Mutual Fund)Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds

setting up funds in India and also the industry has witnessed several mergers and acquisitions.

As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805

crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way

ahead of other mutual funds.

FOURTH PHASE-SINCE FEBRUARY 2003:

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of

India with assets under management of Rs 29,835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain other schemes.

The Specified Undertaking of Unit Trust of India, functioning under an administrator and

7
under the rules framed by Government of India and does not come under the purview of the

Mutual Fund Regulations.

The second is the UTI Mutual Fund 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 head in March 2000 more than Rs. 76,000 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual

Fund Regulations, and with recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phase of consolidation and growth. As at the

end of September 2004, there were 29 funds, which manage assets of Rs. 1,53,108 crores

under 421 schemes.

MUTUAL FUND TERMINOLOGY

 NET ASSET VALUE(NAV):

NAV represents a fund’s per share market value. This is the price at which investors buy fund

shares from a fund company and sell then to a fund company. It is derived by dividing the

total value of all the cash and securities in a fund’s portfolio, less any liabilities, by the

number of shares outstanding. An NAV computation is undertaking once at the end of each

trading day based on the closing market prices of the portfolio’s securities.

For example, if a fund has assets of $50 million, it would have a NAV of $40 million.

The net asset value more popularly known as the NAV is the most important thing for the

investor in a mutual fund because all purchases and sales that they make are related to this

figure. The NAV will determine the gains or losses that they will make on the investment.

Consider the NAV as being similar to the price of a share as both of them play the same role

of determining the value of the investment.

8
There is however big differences between the NAV and the price of an equity share. The first

one is that the NAV depends upon the value of the assets being held by the scheme. Thus the

value of the NAV can rise only when the value of the underlying holdings go up. In this case

mere demand and supply can have no impact on the NAV of the scheme.

The price of a share on the other hand can be affected by demand and supply even when other

fundamental factors are constant. Thus one might see a sharp spike in the price of a share

even when there is no other movement all around. This will not happen in a NAV and hence

investor who mistakes a mutual fund for a share will learn it the hard way that NAV does not

just double or tripple based on demand for the fund. However if there is large scale churning

by short term investors then this can work to the detriment of long term investors not because

NAV will suddenly become half but because the long term investors end up bearing a larger

part of the cost.

The NAV is the value of all the investments in the scheme plus the current assets of the

scheme less the current liabilities of the scheme. This entire figure is then divided by the

number of units outstanding in the scheme to get the NAV per unit. This shows the value of

each unit of the scheme and it is used for the purpose of buying and selling units by the fund.

An important thing is the value of the NAV at a particular point of time does not matter. All

that matters is the future growth potential in the scheme, which is based on the change in the

value of the assets held by the scheme. Thus for an example Rs. 10 NAV if it rises by 20%

will go to Rs. 12 while the same portfolio held by a scheme with a NAV of Rs. 30 will go to

Rs. 36. In that sense if there is a decision regarding the purchase of a unit in either of the

schemes then the actual NAV does not matter but only the growth there does.

The NAV of the scheme is usually calculated as follows

9
NAV (Rs) = Market or fair value of schemes investments + Current Assets – Current

Liabilities and provisions

Number of units outstanding under the scheme

 LOADS:

Loads are an extra charge that investors pay to the mutual fund. This is an additional expense

for the investor. Loads are of two kinds – entry loads and exit loads. Mutual funds can charge

either of these loads or even both of these loads so one has to check about the features of a

particular scheme as the type of loads as well as the amount of load differs from scheme to

scheme. A load is usually calculated as a percentage of the NAV. An entry load is the load

that is paid by the investor when they buy units in a mutual fund. The cost or the investor will

rise to the extent of the load and they will get a lower number of units than what would have

been available had there been no entry load. For example if there is an entry load of 2% in a

scheme then an investor who goes out to buy units of the fund when the NAV is Rs. 10 will

get it at a cost of Rs. 12.2

An exit load is the load that is charged to investors when they withdraw money from a

scheme. Here the investors get a price lower than the NAV applicable on the particular date.

For example when investors go to sell units in a scheme with an exit load of 2% when the

NAV is Rs. 20 then the investor will get a sale value of Rs. 19.6 per unit.

In both the cases these represent an extra charge that is paid by the investors when they make

a buy or sell decision in the units of the fund. In this entire process two more terms come into

the picture. The first is the repurchase price which is the price paid by the fund to the investor

when it buys units from them. The other term is the sale price, which is the price at which the

fund sells the units to the investor.

10
  SCHEME OPTIONS:

After selecting a particular mutual fund and a specific scheme there is still some more work

to be done by the investor because they have to select the options available to them within a

scheme. There are three such options available and these are the dividend payout, dividend

reinvestment and the growth option.

In the dividend payout option the dividend declared by the scheme is paid out in cash to the

investor. Investors have to be careful and select this as the option when they want the actual

payment to be received in cash. One has to note that the dividend declaration is always on the

face value of the units and not on the current value. Thus if the NAV of a scheme is Rs. 55

and the fund declared a 60% dividend then the dividend declared is Rs. 6 per unit because the

percentage figure is considered on the face value of Rs. 10 and not the current NAV of the

scheme.

The dividend reinvestment option is one where the dividend declared by the scheme is then

poured down back into the scheme at the applicable NAV. In reality what happens is that the

investor first receives the dividend on paper and then the same figure is converted into

additional units. An investor might earn Rs. 6,000 as dividend but that is not received in cash

but will be converted into additional units. Many investors select the dividend option but tick

the dividend reinvestment part resulting in no payout coming to them.

The growth option is one where the gains of the schemes are added on to the NAV of the

scheme and no payout is received. This means that the value of the NAV keeps on increasing

without any intervention from the fund. If there is a scheme that has grown consistently over

the years then it will be witnessed that the NAV has also gone quite high while in the

dividend option this will keep reducing as and when the dividend is paid.

11
  EXPENSE RATIO:

There are various expenses that are incurred by the mutual fund in respects to its operations.

There are two expense ratios that one will read about. The first is the initial issue expense

ratio which is the expense incurred at the time of a new fund offering. The other is the

expense ratio that is witnessed during the normal operation of the scheme. There are limits

prescribed for various expenses. According to the regulations issued by the Securities and

Exchange Board of India (SEBI) the total initial expenses shall not exceed 6% of the initial

resources raised under a closed ended scheme and any excess over this figure will have to be

borne by the asset management company (AMC). There has been a recent change to the

provisions of the charging of the initial issue expenses for an open ended scheme and there

cannot be any initial issue expenses over and above the entry load on the scheme. The initial

issue expenses will include advertising expenses, agent commission, registrar expenses,

marketing expenses, banker’s fees, legal fees, printing and distribution expenses etc.

There is a bit of calculation involved in terms of the maximum recurring expenses permitted

by SEBI as it depends upon the assets under management. The list of such expenses include

investment management and advisory fees, trustee fees, custodian fees, marketing and selling

expenses, registrar and transfer agent fees, audit fees, communication costs, cost of providing

account statements, dividend, redemption warrants, cost of statutory advertisement and other

expenses.

Investors need to watch this final figure as this will be the one that will affect them because

their earnings, which are linked to the NAV will be the net figure after the scheme has

charged off the expense made. While a better performing scheme might have some higher

expense one has to look carefully at the total expense figure and how they shape up over a

period of time.

12
  NEW FUND OFFER(NFO)

A new fund offer is a new scheme launched by a mutual fund. It is called a NFO to

differentiate it from the IPO of a stock because there was large confusion among investors

who were being sold new units of mutual fund schemes like a new share offering.

As can be seen by the meaning of the NAV of the scheme there is no way that a NFO will

open at double and triple the value of the offer price because the assets of the scheme will

have not grown in value by the same extent during the period from which the new offer

closed and the scheme then reopened for investment.

There is a difference also within the way in which a new offering has to be evaluated because

there cannot be under pricing or over pricing of the issue which can be the case with a share

offering and hence one has to be careful in the way in which one is able to evaluate these

offerings that are available for the investor. In such offers unlike other mutual fund schemes

there is also no track record to measure the past performance of the scheme.

 SYSTEMATIC INVESTMENT PLAN (SIP):

Systematic investment plan is often called SIP and this is a method of investing used by

mutual fund investors. In this method there is an investment of a fixed sum on the same day

of each month for a period of say 6 months or 1 year by an investor. This ensures that there is

a regular investment each month and the idea is to ensure that the highs and lows are

averaged out so that the investor is able to get an average price for the units. The way a SIP

plan works is that the investor has to decide on two factors when the decision is made. The

first is the amount of investment that one would like to make and this could be something as

low as Rs 1,000 or even higher like Rs. 10,000 as this can be selected depending upon the

profile of the investment and the extent of funds that are to be invested. The next things to

13
decide is the period of the investment and this will be 6 months or a year, which will enable

the actual benefits for the investor to flow in.

The benefit for the investor is that when the prices are high there are a few units that are

allotted to him but when the prices drop the same amount of money will ensure that there is

automatically a higher allocation of units. This ensures that the investor is able to gain in

terms of higher allocation when the price is low. This will also ensure that the investor does

not face the risk of the one time investment that would be present had the entire investment

be made in a lump sum at a single time point.

 SYSTEMATIC TRANSFER PLAN (STP):

Systematic transfer plan is a variant of the SIP that has been explained above. In a SIP the

investor makes a direct investment into a scheme on a regular basis. On the other hand in STP

there is a regular transfer of money into a particular scheme but this is a transfer from an

existing scheme by an investor.

This is useful for any investor who has funds at his disposal and they still do not want to

invest the whole amount at one go. What can be done in such a situation is that the funds are

first transferred to a debt oriented scheme and from that scheme there is a movement each

month amounting to a specific sum into an equity oriented scheme.

This will ensure that two objectives of the investor are met. The first is that the funds of the

investor are not lying vacant and earning a low rate of return but they will be earning a

slightly higher figure in the debt scheme and at the same time there is the benefit of the

systematic investment that is available because the money is transferred each month

14
ADVANTAGES OF MUTUAL FUNDS

If mutual funds are emerging as the favourite investment vehicle, it is because of the many

advantages they have over other forms and the avenues of investing, particularly for the

investor who has limited resources available in terms of capital and the ability to carry out

detailed research and market monitoring. The following are the major advantages offered by

mutual funds to all investors:

1.Portfolio Diversification

Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold a

diversified investment portfolio even with a small amount of investment that would otherwise

require big capital.

2.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 skill and resources of their own to succeed in today’s fast

moving, global and sophisticated markets.

3.Reduction/Diversification Of Risk:

When an investor invests directly, all the risk of potential loss is his own, whether he places a

deposit with a company or a bank, or he buys a share or debenture on his own or in any other

form. While investing in the pool of funds with investors, the potential losses are also shared

with other investors. The risk reduction is one of the most important benefits of a collective

investment vehicle like the mutual fund.

15
4.Reduction of Transaction Cost:

What is true of risk as also true of the transaction costs. The 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 funds pay lesser costs because of larger volumes, a benefit

passed on to its investors.

5.Liquidity:

Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they

invest in the units of a fund, they can generally cash their investments any time, by selling

their units to the fund if open-ended, or selling them in the market if the fund is close-ended.

Liquidity of investment is clearly a big benefit.

6.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.

7.Tax benefits:

Any income distributed after March 31, 2002 will be subject to tax in the assessment of all

unit holders. However, as a measure of concession to unit holders of open-ended equity-

oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a

concessional rate of 10.5%.

In case of individuals and Hindu Undivided Families a deduction up to Rs. 9,000 from the

total income will be admissible in respect of income from investments specified in section

16
80L, including income from units of the mutual fund. Units of the schemes are not subject to

Wealth-Tax and Gift-Tax.

8.Choice Of Schemes:

Mutual funds offer a family of scheme to suit your varying needs over a lifetime.

9.Well Regulated:

All mutual funds are registered with SEBI and they function within the provisions of strict

regulations designed to protect the interests of investors. The operations of mutual funds are

regularly monitored by SEBI.

10.Transparency:

You get regular information on the value of your investment in addition to disclosure on the

specific investments made by your scheme, the proportion invested in each class of assets and

the fund manager’s investment strategy and outlook.

DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS

1.No Control Over Costs

An investor in a mutual fund has no control of the overall cost of investing. The investor

pays investment management fees as long as he remains with the fund, in return for the

professional management and research. Fees are payable even if the value of his investments

is 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

the mutual fund services.

17
2.No Tailor-Made Portfolio

Investors who invest on their own can build their own portfolios of shares and bonds and

other securities. Investing through fund 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 fund managers help

investors overcome this constraint by offering families of funds- a large number of different

schemes- within their own management company. An investor can choose from different

investment plans and constructs a portfolio to his choice.

3.Managing a Portfolio Of Fund

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 individual shares or bonds to select.

4.The Wisdom of Professional Management

That’s right, this is not an advantage. The average mutual fund manager is no better at

picking stocks than the average nonprofessional, but charges fees.

5.No Control

Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of

somebody else’s car.

18
6.Dilution

Mutual funds generally have such small holdings of so many different stocks that insanely

great performance by a fund’s top holdings still does not make much of a difference in a

mutual fund’s total performance.

7.Buried Costs

Many mutual funds specialize in burying their costs and in hiring salesmen who do not make

those costs clear to their clients.

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,

risk tolerance and return expectations etc. thus mutual fund has variety of flavours. Being a

collection of many stocks, an investor can go for picking a mutual fund might be easy. There

are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual

funds in categories mentioned below:

19
A).By Structure

1. Open-ended Schemes:

An open-ended 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.

2. Close-ended Schemes:

A close-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 sells 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 atleast one of the two exit routes is provided to the investor.

3. 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.

B) By Nature:

1. Equity Fund:

These funds invest a maximum part of their corpus into equity holdings. The structure of the

fund may vary different for different schemes and the fund manager’s outlook on different

20
stocks. The Equity Funds are sub-classified depending upon their investment objective, as

follows:

 Diversified Equity Funds

 Mid-Cap Funds

 Sector Specific Funds

 Tax Saving 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:

 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.

 Income Funds:

Invest a major portion into various debt instruments such as bonds, corporate debentures and

Government securities.

21
  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 schemes rank slightly high

on the risk-return matrix when compared with other debt schemes.

 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.

 Liquid Funds:

Also known as Money Market Scheme. These funds provide 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 1 day 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.

22
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 funds objective and invest accordingly.

C) 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 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 the 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.

23
Load Funds:

A load fund is one that charges a commission for entry and exit. That is, each time you buy or

sell units in the fund, a commission will be payable. Typically entry and exit loads range

from 1% to 2% . It could be worth paying the load, if the fund has a good performance

history.

No-Load Funds:

A no-load fund is one that does not charge a commission for entry or exit. That is, no

commission is payable on purchase or sale of units in the fund. The advantage of a no-load

fund is that the entire corpus is put to work.

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 NSC 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

stock index weightage. And hence, the returns from such schemes would be more or less

equivalent to those of the index.

24
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.

MUTUAL FUND FEES AND EXPENSES

Mutual fund fees and expenses are charges that may be incurred by investors who hold

mutual funds. Running a mutual fund involves costs, including shareholder transaction costs,

investment advisory fees and marketing and distribution expenses. Funds pass along these

costs to investors in a number of ways.

1. Transaction Fees:

 Purchase Fee:

It is a type of fee that some funds charge their shareholders when they sell or redeem shares.

Unlike a front-end sales load, a purchase fee is paid to the fund (not to a broker) and is

typically imposed to defray some of the fund’s costs associated with the purchase.

 Redemption Fee:

It is another type of fee that some funds charge their shareholders when they sell or redeem

shares. Unlike a deferred sales load, a redemption fee is paid to the fund (not to a broker) and

is typically used to defray fund costs associated with a shareholder’s redemption.

25
  Exchange Fee:

Exchange fee that some funds impose on shareholders if they exchange (transfer) to another

fund within the same fund group or “family of funds”.

2. Periodic Fees:

 Management Fee:

Management fees are fees that are paid out of fund assets to the fund’s investment advisor

for investment portfolio management, any other management fees payable to the fund’s

investment advisor or its affiliates, and administrative fees payable to the investment adviser

that are not included in the “other expenses” category. They are also called maintenance

fees..

 Account Fee:

Account fees are fees that some funds separately impose on investors in connection with the

maintenance of their accounts. For example, some funds impose an account maintenance fee

on accounts whose value is less than a certain doller amount.

3.Other Operating Expenses:

Transaction Costs:

These costs are incurred in the trading of the fund’s assets. Funds with a high turnover ratio,

or investing in illiquid or exotic markets usually face higher transaction costs. Unlike the total

expense ratio these costs are usually not reported.

26
SELECTION PARAMETES FOR MUTUAL FUND

 Your Objective:

The first point to note before investing in a fund is to find out whether your objective matches

with the scheme. It is necessary, as any conflict would directly affect your perspective

returns. Similarly, you should pick schemes that meet your specific needs. Examples: pension

plans, children’s plans, sector-specific schemes, etc.

 Your Risk Capacity and Capability:

This dictates the choice of schemes. Those with no risk tolerance should go for debt

schemes, as they are relatively safer. Aggressive investors can go for equity investments.

Investors that are even more aggressive can try schemes that invest in specific industry or

sectors.

 Fund Manager’s and Scheme Track Record:

Since you are giving your hard earned money to someone to manage it, it is imperative that

he manages it well. It is also essential that the fund house you choose has excellent track

record. It also should be professional and maintain high transparency in operations. Look at

the performance of a longer period, as it will give you how the scheme fared in different

market conditions.

 Cost Factor:

Though the AMC fee is regulated, you should look at the expense ratio of the fund before

investing. This is because the money is deducted from your investments. A higher entry load

or exit load also will eat into your returns. A higher expense ratio can be justified only by

27
superlative returns. It is very crucial in a debt fund, as it will devour a few percentages from

your modest returns.

Also, morningstar rates mutual funds. Each year end, many financial publications list the

year’s best performing mutual funds. Naturally, very eager investors will rush out to purchase

shares of last year’s top performers. That’s a big mistake. Remember, changing market

conditions make it rare that last year’s top performer repeats that ranking for the current year.

Mutual fund investors would be well advised to consider the fund prospectus, the fund

manager, and the current market conditions. Never rely on last year’s top performers.

TYPES OF RETURNS ON MUTUAL FUND

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 earnings

and get more shares.

28
RISK FACTORS OF MUTUAL FUNDS

1. The Risk-Return Trade-Off:

The most important relationship to understand is the risk-return trade-off. Higher the risk

greater the returns/loss and lower the risk lesser the return/loss.

Hence, it is up to you, the investor to decide how much risk you are willing to take. In order

to do this you must first be aware of the different types of risks involved with your

investment decision.

2. Market Risk:

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting

the market in general lead to this. This is true, may it be big corporations or smaller mid-sized

companies. This is known as market risk. A Systematic Investment Plan(SIP) that works on

the concept of Rupee Cost Averaging(RCA) might help mitigate this risk.

3.Credit Risk:

The debt servicing ability (may it be interest payments or repayment of principal) of a

company through its cash flows determines the Credit Risk faced by you. This credit risk is

measured by independent rating agencies like CRISIL who rate companies and their paper. A

‘AAA’ rating is considered the safest whereas a ‘D’ rating is considered poor credit quality.

A well-diversified portfolio might help mitigate this risk.

4. Inflation Risk:

Things you hear people talk about:

“Rs 100 today is worth more than Rs. 100 tomorrow”

29
“Remember the time when a bus ride costs 50 Paisa”

“Mehangai ka Jamana Hai”

The route cause is Inflation. Inflation is the loss of purchasing power over time. A lot of

times people make conservative investment decisions to protect their capital but end up with

a sum of money that can buy less than what the principal could at the time of investment.

This happens when inflation grows faster than the return on your investment. A well

diversified portfolio with some investment in equities might help mitigate this risk.

5.Interest Rate Risk:

In a free market economy interest rates are difficult if not impossible to predict. Changes in

interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of

bonds fall and vice-versa. Equity might be negatively affected as well in a rising interest rate

environment. A well diversified portfolio might help mitigate this risk.

6.Political/Government Policy Risk:

Changes in government policy and political decision can change the investment environment.

They can create a favourable environment for investment or vice versa.

7.Liquidity Risk:

Liquidity risk arises when it becomes difficult to sell the securities that one has purchased.

Liquidity risk can be partly mitigated by diversification, staggering of maturities as well as

internal risk controls that lean towards purchase of liquid securities.

30
WORKING OF MUTUAL FUNDS

The mutual fund collects money directly or through brokers from investors. The money is

invested in various instruments depending on the objective of the scheme. The income

generated by selling securities or capital appreciation of these securities is passed on to the

investors in proportion to their investment in the scheme. The investments are divided into

units and the value of the units will be reflected in Net Asset Value or NAV of the unit. NAV

is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the

net asset value of the scheme divided by the number of units outstanding on the valuation

date. Mutual fund companies provide daily net asset value of their schemes to their investors.

NAV is important, as it will determine the price at which you buy or redeem the units of a

scheme. Depending on the load structure of the scheme, you have to pay entry or exit load.

31
STRUCTURE OF A MUTUAL FUND

India has a legal framework within which Mutual Fund have to be constituted. In India open

and close-end funds operate under the same regulatory structure i.e. as unit trusts. A mutual

fund in India is allowed to issue open-end and close-end schemes under a common legal

structure. The structure that is required to be followed by any Mutual Fund in India is laid

down under SEBI (Mutual Fund) Regulations, 1996.

The Fund Sponsor:

Sponsor is defined under SEBI regulations as any person who, acting alone or in combination

of another corporate body establishes a mutual fund. The sponsor of the fund is a promoter of

a company as he gets the fund registered with SEBI. The sponsor forms a trust and appoints a

Board of Trustees. The sponsor who appoints the Asset Management Company as fund

manager. The sponsor either directly or acting through the trustees will also appoint a

32
custodian to hold funds assets. All these are made in accordance with the regulation and

guidelines of SEBI.

As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute atleast

40% of the net worth of the Asset Management Company and possesses a sound financial

track record over 5 years prior to registration.

Mutual Funds as Trusts:

A mutual fund in India is constituted in the form of Public Trust Act, 1882. The fund sponsor

acts as a settlor of the Trust, contributing to its initial capital and appoints a trustee to hold the

assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the trust.

The fund then invites investors to contribute their money in common pool, by scribing to

“units” issued by various schemes established by the Trusts as evidence of their beneficial

interest in the fund.

It should be understood that the fund should be just a “pass through” vehicle. Under the

Indian Trust Act, the trust of the fund has no independent legal capacity itself, rather it is the

Trustee or the Trustees who have the legal capacity and therefore all acts in relation to the

trusts are taken on its behalf by the Trustees. In legal parlance the investors or the unit-

holders are the beneficial owners of the investment held by the Trusts, even as these

investments are held in the name of the Trustees on a day-to-day basis. Being public trusts,

Mutual Fund can invite any number of investors as beneficial owners in their investment

schemes.

Trustees:

A trust is created through a document called the Trust Deed that is executed by the fund

sponsor in favour of the trustees. The Trust- the Mutual Fund- may be managed by a board of

33
trustees- a body of individuals, or a trust company- a corporate body. Most of the funds in

India are managed by Boards of Trustees. While the Board of Trustees are governed by the

Indian Trusts Act,1956. The Board or the Trust company as an independent body acts as a

protector of the unit-holders interests. The Trustees do not directly manage the portfolio of

securities. For this specialist function, they appoint an Asset Management Company. They

ensure that the Fund is managed by AMC as per the defined objectives and in accordance

with the trusts deeds and SEBI regulations.

The Asset Management Companies:

The role of an Asset Management Company (AMC) is to act as the investment manager of

the Trust under the board supervision and the guidance of the Trustees. The AMC is required

to be approved and registered with SEBI as an AMC. The AMC of a Mutual Fund must have

a net worth of atleast Rs. 10 crores at all times. Directors of the AMC, both independent and

non-independent, should have adequate professional expertise in financial services and

should be individuals of high morale standing, a condition also applicable to other key

personnel of the AMC. The AMC cannot act as a Trustee of any other Mutual Fund. Besides

its role as a fund manager, it may undertake specifies activities such as advisory services and

financial consulting, provided these activities are run independent of one another and the

AMC’s resources (such as personnel, systems etc.) are properly segregated by the activity.

The AMC must always act in the interest of the unit-holders and reports to the trustees with

respect to its activities.

Custodian and Depositories:

Mutual fund is in the business of buying and selling of securities in large volumes. Handling

these securities in terms of physical delivery and eventual safekeeping is a specialized

activity. The custodian is appointed by the Board of trustees for safekeeping of securities or

34
participating in any clearance system through approved depository companies on behalf of

the Mutual Fund and it must fulfil its responsibilities in accordance with its aggrement with

the Mutual Fund. The custodian should be an entity independent of the sponsors and is

required to be registered with SEBI. With the introduction of the concept of dematerialization

of shares. The dematerialized shares are kept with the Depository participant while the

custodian holds the physical securities. Thus, the deliveries of a fund’s securities are given or

received by a custodian or a depository participant, at the instructions of the AMC, although

under the overall direction and responsibilities of the trusties.

Bankers:

A funds’s activities involve dealing in money on a continuous basis primarily with respect to

buying and selling units, paying for investment made, receiving the proceeds from sale of the

investments and discharging its obligations towards operating expenses. Thus the fund’s

banker plays an important role to determine quality of service that the fund gives in timely

delivery of remittances etc.

Transfer Agents:

Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and

provide other related services such as preparation of transfer documents and updating

investor records. A fund may choose to carry out its activity in-house and charge the scheme

for the service at a comparative market rate. Where an outside Transfer agent is used, the

fund investor will find the agent to be an important interface to deal with, since all of the

investor services that a fund provides are going to be dependent on the transfer agent.

35
 REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA

The structure of mutual funds in India is guided by the SEBI Regulations 1996. These

regulations make it mandatory for mutual fund to have three structures of sponsor trustee and

Asset Management Company. The sponsor of the mutual fund appoints the trustees. The

trustees are responsible to the investors in mutual fund and appoint the AMC for managing

the investment portfolio. The AMC is the business face of the mutual fund, as it manages all

the affairs of the mutual fund. The AMC and the mutual fund have to be registered with

SEBI.

SEBI Regulations:

 As far as mutual funds are concerned, SEBI formulates policies and regulates the

mutual funds to protect the interest of the investors.

 SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds

sponsored by private sector entities were allowed to enter the capital market.

 The regulations were fully revised in 1996 and have been amended thereafter from

time to time.

 SEBI has also issued guidelines to the mutual funds from time to time to protect the

interest of the investors.

 All mutual funds whether promoted by public sector or private sector entities

including those promoted by foreign entities are governed by the same set of

formulations. The risks associated with the schemes launched by the mutual funds

sponsored by these entities are of similar type. There is no distinction in regulatory

36
 requirements for these mutual funds and all are subject to monitoring and inspection

by SEBI.

 SEBI regulations require that atleast two thirds of the directors of trustee company or

board of trustees must be independent i.e. they should not be associated with the

sponsors.

 Also, 50% of the directors of AMC must be independent. All mutual funds are

required to be registered with SEBI before they launch any scheme.

 Further SEBI regulations, inter-allia, stipulate that MFs cannot guarantee returns in

any scheme and that each scheme is subject to 20:25 condition (i.e. minimum 20

investors per scheme and one investor can hold more than 25% stake in the corpus in

that one scheme).

 Also SEBI has permitted MFs to launch schemes overseas subject various restrictions

and also to launch schemes linked to Real Estate, Options and Futures, Commodities

etc.

ASSOCIATION OF MUTUAL FUNDS IN INDIA

With the increase in mutual fund players in India, a need for mutual fund association in India

was generated to function as a non-profit organisation. Association of Mutual Funds in India

(AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are

its members. It functions under the supervision and guidelines of its Board of Directors.

37
Association of Mutual Funds in India has brought down the Indian Mutual Fund Industry to a

professional and healthy market with ethical lines enhancing and maintaining standards. It

follows the principle of both protecting and promoting the interests of mutual funds as well as

their unit holders.

The Objectives of Association of Mutual Funds In India

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It

had certain defined objectives which juxtaposes the guidelines of its Board of Directors. The

objectives are as follows:

 This Mutual Fund Association of India maintains high professional and ethical

standards in all areas of operation of the industry.

 It also recommends and promotes the top class business practices and code of conduct

which is followed by members and related people engaged in the activities of mutual

fund and asset management. The agencies who are by any means connected or

involved in the field of capital markets and financial services also involved in this

code of conduct of the association.

 AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual

fund industry.

 Association of Mutual Fund of India do represent the Government of India, the

Reserve Bank of India and other related bodies on matters related to the Mutual Fund

Industry.

 It develops a team of well qualified and trained Agents distributors. It implements a

program of training and certification for all intermediaries and other engaged in the

mutual fund industry.

38
  AMFI undertakes all India awareness program for investors in order to promote

proper understanding of the concept and working of mutual funds.

 At last but not the least association of mutual fund of India also disseminate

information on Mutual Fund Industry and undertakes studies and research either

directly or in association with other bodies.

AMFI Publications:

AMFI publish mainly two types of bulletin. One is on the monthly basis and the other is

quarterly. These publications are of great support for the investors to get intimation of the

know how of their parked money.

MUTUAL FUNDS IN INDIA

In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India invited

investors or rather to those who believed in savings, to park their money in UTI Mutual Fund.

For 30 years it goals without a single second player. Though the 1988 year saw some new

mutual fund companies, but UTI remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to

satisfactory level. People rarely understood, and off course investing was out of question. But

yes, some 24 million shareholders were accustomed with guaranteed high returns by the

beginning of liberalization of the industry in 1992. This good record of UTI became

marketing tool for new entrants. The expectations of investors touched the sky in profitability

factor. However people, were miles away from the preparedness of risks factor after the

liberalization.

39
The Net Asset Value (NAV) of mutual funds in India declined when stock prices started

falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into

alternative investments. There was rather no choice apart from holding the cash or to further

continue investing in shares. One more thing to be noted, since only close-end funds were

floated in the market, the investors disinvested by selling at a loss in the secondary market.

The performance of mutual funds in India suffered qualitatively. The 1992 stock market

scandal, the losses by disinvestments and off course the lack of transparent rules in the where

about rocked confidence among the investors. Partly owing to a relatively weak stock market

performance, mutual funds have not yet recovered, with funds trading at an average discount

of 1020 percent of their net asset value.

The Securities and Exchange Board of India (SEBI) came out with comprehensive regulation

in 1993 which defined the structure of Mutual Fund and Asset Management Companies for

the first time.

The supervisory authority adopted a set of measures to create a transparent and competitive

environment in mutual funds. Some of them were like relaxing investment restrictions into

the market, introduction of open-ended funds and paving the gateway for mutual funds to

launch pension schemes.

The measure was taken to make mutual funds the key instrument for long-term saving. The

more the variety offered, the quantitative will be investors.

Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the

private players has risen rapidly since then. Currently there are 34 Mutual Fund organisations

in India managing 1,02,000 crores.

40
At last to mention, as long as mutual fund companies are performing with lower risks and

higher profitability within a short span of time, more and more people will be inclined to

invest until and unless they are fully educated with the do’s and don’ts of mutual funds.

Mutual Fund industry has seen a lot of changes in past few years with multinational

companies coming into the country, bringing in their professional expertise in managing

funds world wide. In the past few months there has been a consolidation phase going on in

the mutual fund industry in India. Now investors have a wide range of schemes to choose

from depending on their individual’s profile.

MUTUAL FUND COMPANIES IN INDIA

The concept of mutual fund in India dates back to the year 1963. The era between 1963 and

1987 marked the existence of only one mutual fund company in India with Rs. 67 bn assets

under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By

the end of the 80s decade, few other mutual fund companies in India took their position in

mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual

Fund, Punjab National Bank Mutual Fund, India Bank Mutual Fund, Bank of India Mutual

Fund.

The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of

1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started

penetrating the fund families. In the same year the first Mutual Fund Regulations came into

existence with re-registering all mutual funds except UTI. The regulations were further given

a revised shape in 1996.

41
Kothari pioneer was the first private sector mutual fund company in India which has now

merged with Franklin Templeton. Just after ten years with private sector players penetration,

the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

Major Mutual Fund companies in India

 ABN AMRO Mutual Fund

 Birla Sun Life Mutual Fund

 Bank of Baroda Mutual Fund

 HDFC Mutual Fund

 HSBC Mutual Fund

 ING Vysya Mutual Fund

 Prudential ICICI Mutual Fund

 State Bank of India Mutual Fund

 Tata Mutual Fund

 Unit trust of India Mutual Fund

 Reliance Mutual Fund

 Standard Chartered Mutual Fund

 Franklin Templeton India Mutual Fund

 Morgan Stanley Mutual Fund India

 Escorts Mutual Fund

42
  Alliance Capital Mutual Fund

 Benchmark Mutual Fund

 Canbank Mutual Fund

 Chola Mutual Fund

 LIC Mutual Fund

 GIC Mutual Fund

For the first time in the history of Indian mutual fund industry, Unit Trust of India Mutual

Fund has slipped from the first slot. Earlier, in May 2006, the Prudential ICICI Mutual Fund

was ranked at the number one slot in terms of total assets.

In the very next month, the UTIMF had regained its top position as the largest fund house in

India.

Now according to the current pegging order and the data released by Association of Mutual

Funds in India (AMFI), the Reliance Mutual Fund, with a January-end AUM of Rs. 39,020

crore has become the largest mutual fund in India.

On the other hand, UTIMF, with an AUM of Rs. 37,535 crore, has gone to second position.

The prudential ICICI MF has slipped to the third position with an AUM of Rs. 34,746 crore.

It happened for the first time in last one year that a private sector mutual fund house has

reached to the top slot in terms of Asset Under Management(AUM). In the last one year to

January, AUM of the Indian fund industry has risen by 64% to Rs. 3.39 lakh crore.

43
According to the data released by Association of Mutual Fund in India (AMFI), the combined

average AUM of the 35 fund houses in the country increased to Rs. 5,512.99 billion in April

compared to Rs. 4,932.86 billion in March.

Reliance MF maintained its top position as the largest fund house in the country with Rs.

74.25 billion jump in AUM to Rs. 883.87 billion at April-end.

The second-largest fund house HDFC MF gained Rs. 59.24 billion in its AUM at Rs. 638.80

billion.

ICICI Prudential and state-run UTI MF added Rs. 57.35 billion respectively to their assets

last month. ICICI Prudential’s AUM stood at Rs. 560.49 billion at the end of April, while

UTI MF had assets worth Rs. 544.89 billion.

The other fund houses which saw an increase in their average AUM in April include- Canara

Robeco MF, IDFC MF, RSP BlackRock, Deutsche MF, Kotak Mahindra MF and LIC MF.

44
 Chapter-2
COMPANY PROFILE

45
 COMPANY PROFILE

Reliance Mutual Fund (RMF) is one of India's leading mutual funds, with Average Assets

Under Management (AAUM) of Rs 2,33,628.56 Crores (January 2019 - March 2019

QAAUM) and 90.67 lakhs folios (as on March 31, 2019).

RMF which is one of the fastest growing mutual funds in India, offers investors a well-

rounded portfolio of products to meet varying investor requirements and has presence in 300

cities (as on March 31, 2019) across the country. RMF constantly endeavours to launch

innovative products and customer service initiatives to increase value to investors.

RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,

1882 with Reliance Capital Limited (RCL), as the Settler/Sponsor and Reliance Capital

Trustee Co. Limited (RCTC), as the Trustee.

Reliance Mutual Fund has been registered with the Securities & Exchange Board of India

(SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance

Capital Mutual Fund was changed to Reliance Mutual Fund effective March 11,2004 vide

SEBI's letter no. IMD/PSP/4958/2004 dated March 11,2004. RMF was formed to launch

various schemes under which units are issued to the public with a view to contribute to the

capital market and to provide investors the opportunities to make investments in diversified

securities.

46
THE MAIN OBJECTIVES OF RMF ARE

01 To carry on the activity of a mutual fund as may be permitted at law, and formulate and

devise various collective schemes of savings and investments for people in India and abroad,

and also ensure liquidity of investments for the unit holders;

02 To deploy funds thus raised so as to help the unit holders earn reasonable returns on their

savings; and

03 To take such steps as may be necessary from time to time to realise the effects without

any limitation.

Vission Statement

“To be a globally respected wealth creator with an emphasis on customer care and a culture

of good corporate governance”

Mission Statement

To create and nurture a world-class, high performance environment aimed at delighting our

customers.

RELIANCE MUTUAL FUND PROFILE SUMMARY

● Reliance capital : Government funded agency.

● Exchanged : BSE: 500111. NSE.

● RELCAPITAL : Industry money related administrations.

● Established in : 1986.

● Organizer By ; DHIRUBHAI AMBANI

● Home office ; Mumbai, India.

● Income ; 95. 44 billion (US$1. 1 billion) (2018).

47
Reliance Mutual Fund – Growth:

Reliance mutual fund is a part of the Reliance Anil Dhirubhai Ambani Group is the top most

mutual funds all over India. Reliance Mutual Fund offers to investors a well rounded

portfolio of products to meet varying investor’s requirements Reliance Mutual Fund adjusted

portfolio of items to help fluctuating investor’s necessities. It having presence 100 urban

groups over the world, a investor’s Fabricate regarding once more 3. 9 million and manages

possessions over Rs. 67,598crores concerning illustration looking into admirable 31, 2007.

Reliance mutual fund always endeavors to propel inventive results What's more client

administration activities on expand quality.

Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Ltd. a

wholly owned subsidiary of Reliance Capital Ltd. Reliance Capital Ltd. is one of India’s

leading and fastest growing private sector financial services companies. . Amongst India’s

heading in addition speediest creating private section cash related administrations companies,

Moreover highest point ranks around the individuals’ most elevated perspective 3 private

section cash related administrations. It is wholly owned by the Reliance Capital limited.

You can make money from a mutual fund in three ways:

No. 1 support stakes under administration (AUM) Similarly as looking into admirable 31,

2007.

1. Pay will be earned from profits for common and interest a head bonds. A store visits

on constantly on wage it receives through the quite a while those store owners in the

structure of a dissemination.

48
 2. If funds are holding by the fund manager but not sold then increase the share price or

profit which trough increase the profitability.

3. On those store offers securities that have expanded to price, those funds need a capital

addition.

4. Whether store property build for cost yet are not sold Eventually Tom's perusing those

reserve manager, the fund's imparts increment done value. You could afterward offer

your common store stakes to a benefit quickly develop.

Funds will also usually provide you a choice either to receive a check for distributions or to

Reinvest the earnings and get more shares:

The competition among funds has led to the launch of new products, tailor-made to suit the

requirements of investors. Mutual funds now offer products for the entire range of needs of

investors. Those empowering light of list believes Furthermore segment subsidizes indicates

the development "around moguls. Open-end funds, which furnish liquidity on gurus toward

every day NAV related prices, are developing Previously, Notoriety. Those competitions

"around finances need prompted about new products, tailor-made to suit of shield those

prerequisites for investors. Common trusts not standing the table results for the whole extend

for needs for moguls. The individual empowering light of rundown accepts Moreover section

subsidizes demonstrates those improvement "around moguls. Open-end funds, which outfit

liquidity for masters to consistently NAV related prices, need aid Creating Previously,

reputation. The saves bring been adopting advancement with furnish helpful organization will

moguls and to the suggestions prologue to electronic trusts return and the Creating design

towards E-Commerce; the individuals viability to organization will extend in reality setting

off further.

49
In the advancing year shared trusts concerning illustration sparing mediators will assume a

imperative part over bringing the hole the middle of moguls Also issuers, particularly in the

range of equity funds?

Reliance mutual funds represent 15% of Bombay stock exchange market

capitalization. This is expected to go up with expansion flows into financial savings,

especially the mutual fund with the growth and stability in the capital market flows into

equity funds are expected to go up.

The Main Objectives Of The Trust

 To carry on the activity of a Mutual Fund as may be permitted at law and formulate

and devise various collective schemes of savings and investments for people in India

and abroad and also ensure liquidity of investments for the Unit Holders.

 To deploy Funds thus raised so as to help the Unit Holders earn reasonable returns on

their savings.

 To take such steps as may be necessary from time to time to realise the effects without

any limitation.

50
SCHEMES

A)EQUITY/GROWTH SCHEMES:

The aim of growth funds is to provide capital appreciation over the medium to long-term.

Such schemes normally invest a major part of their corpus in equities. Such funds have

comparatively high risks. Growth schemes are good for investors having a long-term outlook

seeking appreciation over a period of time.

1.Reliance Infrastructure Fund (Open-Ended Equity):

The primary investment objective of the scheme is to generate long term capital appreciation

by investing predominantly in equity and equity related instruments of companies engaged in

infrastructure (Airport, Constructions, Telecommunication, Transportation) and infrastructure

related sectors and which are incorporated or have their area of primary activity in India and

the secondary objective is to generate consistent returns by investing in debt and money

market securities.

Investment Strategy:

The investment focus would be guided by the growth potential and other economic factors of

the country. The Fund aims to maximize long-term total return by investing in equity and

equity related securities which have the area of primary activity in India.

2.Reliance Quant Plus Fund/Reliance Index Fund (Open Ended Equity):

The investment objective of the scheme is to generate capital appreciation through investment

in equity and equity related instruments. The scheme will seek to generate capital

appreciation by investing in an active portfolio of stocks selected from S & P CNX Nifty on

the basis of a mathematical model.

51
An investment fund that approach stock selection process based on quantitative analysis.

3.Reliance Natural Resources Fund (Open-Ended Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation

and provide long-term growth opportunities by investing in companies principally engaged in

the discovery, development, production or distribution of natural resources and the secondary

objective is to generate consistent returns by investing in debt and money market securities.

Natural resources may include, for example, energy resources, precious and other metals,

forest products, food and agriculture and other basic commodities.

4.Reliance Equity Linked Saving Fund(A 10 Year Closed-Ended Equity) :

The primary objective of the scheme is to generate long-term capital appreciation from a

portfolio that is invested predominantly in equities along with income tax benefit.

The scheme may invest in equity shares in foreign companies and instruments convertible

into equity shares of domestic or foreign companies and in derivatives as may be permissible

under the guidelines issued by SEBI and RBI.

5. Reliance Equity Advantage Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation

and provide long-term growth opportunities by investing in a portfolio predominantly of

equity and equity related instruments with investments generally in S & P CNX Nifty stocks

and the secondary objective is to generate consistent returns by investing in debt and money

market securities.

52
6.Reliance Equity Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation

and provide long-term growth opportunities by investing in a portfolio constituted of equity

and equity related securities of top 100 companies by market capitalization and 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.

7.Reliance Tax Saver (ELSS) Fund (Open-Ended Equity):

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.

Tax Benefits:

 Investment up to Rs 1 Lakh by the eligible investor in this fund would enable you to

avail the benefits under Section 80C (2) of the Income-Tax Act, 1961.

 Dividends received will be absolutely TAX FREE.

 The dividend distribution tax (payable by the AMC) for equity schemes is also NIL.

8.Reliance Growth Fund (Open-Ended Equity):

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.

53
9.Reliance Vision Fund(Open-Ended Equity):

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.

10.Reliance Equity Opportunities Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital appreciation

and provide long-term growth opportunities by investing in a portfolio constituted of equity

securities and equity related securities and the secondary objective is to generate consistent

returns by investing in debt and money market securities.

11.Reliance NRI Equity Fund(Open-Ended Diversified Equity):

The primary investment objective of the scheme is to generate optimal returns by investing in

equity or equity related instruments primarily drawn from the Companies in the BSE 200

Index.

12.Reliance Long-Term Equity Fund(Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate long term capital

appreciation and provide long-term growth opportunities by investing in a portfolio

constituted of equity and equity related securities and derivatives and the secondary objective

is to generate consistent returns by investing in debt and money market securities.

It is a 36-month close ended diversified equity fund with an automatic conversion into an

open-ended scheme on expiry of 36-months from the date of allotment. It aims to maximize

returns by investing 70-100% in Equities focusing in small and mid cap companies.

54
13.Reliance Regular Savings Fund(Open-Ended Equity):

Reliance Regular Savings Fund provides you the choice of investing in Debt, Equity or

Hybrid options with a pertinent investment objective and pattern for each option. Invest as

little as Rs. 100/- every month in the Reliance Regular Savings Fund.

For the first time in India, your mutual fund offers instant cash withdrawal facility on your

investment at any VISA-enabled ATM near you. With a choice of three investment options,

the fund is truly, the smart new way to invest.

B).DEBT/INCOME SCHEMES:

The aim of income funds is to provide regular and steady income to investors. Such schemes

generally invest in fixed income securities such as bonds, corporate debentures, Government

securities and money market instruments. Such funds are less risky compared to equity

schemes. These funds are not affected because of fluctuations in equity markets. However,

opportunities of capital appreciation are also limited in such funds. The NAVs of such funds

are affected because of change in interest rates in the country. If the interest rates fall, NAVs

of such funds are likely to increase in the short run and vice versa. However, long term

investors may not bother about these fluctuations.

1.Reliance Monthly Income Plan:

(An Open Ended Fund, Monthly Income is not assured and 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.

55
2.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.

3.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

and Money market instruments.

4.Reliance Medium Term Fund:

(An Open End Income Scheme with no assured returns) The primary 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.

5.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.

6.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.

56
7.Reliance Floating Rate Fund:

(An Open End Liquid Scheme) The primary objective of the scheme is to generate regular

income through investment in a portfolio comprising substantially of Floating Rate Debt

Securities (including floating rate securitised debt and Money Market Intruments 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.

8.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.

9.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 Instrument.

10.Reliance Interval Fund:

(A Debt Oriented Interval Scheme) The primary investment objective of the scheme is to

seek to generate regular returns and growth of capital bt investing in a diversified portfolio.

57
11.Reliance Liquid Plus Fund:

(An Open-ended Income Scheme) The investment objective of the scheme is to generate

optimal returns consistent with moderate levels of risk and liquidity by investing in debt

securities and money market securities.

12.Reliance Fixed Horizon Fund-a)

(A closed Ended Scheme) The primary investment objective of the scheme is to seek to

generate regular returns and growth of capital by investing in a diversified portfolio.

13. Reliance Fixed Horizon Fund-b)

(A Closed Ended Scheme) The primary objective of the scheme is to seek to generate regular

returns and growth of capital by investing in a diversified portfolio.

14. Reliance Fixed Horizon Fund-c)

(A Close ended Income Scheme) The primary investment objective of the scheme is to seek

to generate regular returns and growth of capital by investing in a diversified portfolio.

15. Reliance Fixed Tenor Fund:

(A Close ended Scheme) The primary investment objective of the plan is to seek to generate

regular returns and growth of capital by investing in a diversified portfolio.

16. Reliance Fixed Horizon Fund-Plan C:

(A closed ended scheme) The primary investment objective of the scheme is to seek to

generate regular returns and growth of capital by investing in a diversified portfolio.

58
17.Reliance Fixed Horizon Fund- d):

(A Close-ended Income Scheme) The primary investment objective of the scheme is to seek

to generate regular returns and growth of capital by investing in a diversified portfolio.

18. Reliance Fixed Horizon Fund-e):

(A Close-ended Income Scheme) The primary investment objective of the scheme is to seek

to generate regular returns and growth of capital by investing in a diversified portfolio of:

Central and State Government securities and

Other fixed income/debt securities normally maturing in line with the time profile of the

scheme with the objective of limiting interest rate volatility.

19.Reliance Fixed Horizon Fund-f)

(A Close-ended Income Scheme) The primary investment objective of the scheme is to seek

to generate regular returns and growth of capital by investing in a diversified portfolio of:

Central and State Government securities and

Other fixed income/debt securities normally maturing in line with the time profile of the

series with the objective of limiting interest rate volatility.

20. Reliance Fixed Horizon Fund-g):

(A Close-ended Income Scheme) The primary investment objective of the scheme is to seek

to generate regular returns and growth of capital by investing in a diversified portfolio of:

Central and State Government securities and

Other fixed income/debt securities normally maturing in line with the time profile of the

series with the objective of limiting interest rate volatility.

59
C) SECTOR SPECIFIC SCHEMES:

These are the funds/schemes which invest in the securities of specified sectors or industries

e.g. Pharmaceuticals, Software, 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.

1.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.

2.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.

3.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.

4.Reliance Media & Entertainment Fund:

Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector

scheme.

60
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.

D) RELIANCE GOLD EXCHANGE TRADED FUND:

(An open-ended Gold Exchange Traded Fund) The investment objective is to seek to provide

returns that closely corressponds to returns provided by price of gold through investment in

physical Gold (and Gold related securities as permitted by Regulators from time to time).

However, the performance of the scheme may differ from that of the domestic prices of Gold

due to expenses and or other related factors.

RIGHTS FOR A MUTUAL FUND HOLDER IN INDIA

As per SEBI Regulations on Mutual Funds, an investor is entitled to-

 Receive Unit certificates or statements of accounts confirming your title within 6

weeks from the date your request for a unit certificate is received by the Mutual

Fund.

 Receive information about the investment policies, Investment objectives, financial

position and general affairs of the scheme.

 Receive dividend within 42 days of their declaration and receive the redemption or

repurchase proceeds within 10 days from the date of redemption or repurchase.

 The trustees shall be bound to make such disclosures to the unit holders as are

essential in order to keep them informed about any information, which may have an

adverse bearing on their investments.

61
  75% of the unit holders with the prior approval of SEBI can terminate the AMC of the

fund.

 75% of the unit holders can pass a resolution to wind-up the scheme.

 An investor can send complaints to SEBI, who will take up the matter with the

Connected Mutual Funds and follow up with them till they are resolved.

FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA

Financial experts believe that the future of Mutual Funds in India will be very bright. It has

been estimated that by March-end of 2010, the mutual fund industry of India will reach Rs.

40,90,000 crore, taking into account the total assets of the Indian commercial banks. In the

coming 10 years the annual composite growth rate is expected to go up by 13.4%.

 100% growth in the last 6 years.

 Number of foreign AMC’s are in the queue to enter the Indian markets like Fidelity

Investments, US based, with over US $ 1 trillion assets under management

worldwide.

 Our saving rate is over 23%, highest in the world. Only channelizing these savings in

mutual funds sector is required.

 We have approximately 29 mutual funds which is much less than US having more

than 800. There is a big scope for expansion.

 ‘B’ and ‘C’ class cities are growing rapidly. Today most of the mutual funds are

concentrating on the ‘A’ class cities. Soon they will find scope in the growing cities.

62
  Mutual Fund can penetrate rurals like the Indian insurance industry with simple and

limited products.

 SEBI allowing the MF’s to launch commodity mutual funds.

 Emphasis on better corporate governance.

 Trying to curb the late trading practices.

 Introduction of Financial Planners who can provide need based advice.

Looking at the past developments and combining it with the current trends it can be

concluded that the future of Mutual Funds in India has lot of positive things to offer to its

investors.

63
 CHAPTER 3
OBJECTIVES OF THE
STUDY

64
 OBJECTIVES OF THE STUDY
The study aims at analyzing the following major issues:

 To enhance our knowledge about mutual fund.

 The objective of this study is to measuring satisfaction levels of customers regarding

mutual funds.

 To study the consumer awareness regarding mutual fund.

 To analyse the perception of existing investors about Reliance Mutual Fund.

 Evaluate perception towards risk involved in mutual fund in comparison to avenues.

 To study the diversification of mutual fund.

 To know the different attitudes of people regarding risk, rate of return, period of

investment etc.

65
 CHAPTER 4
SCOPE OF THE STUDY

66
 SCOPE OF THE STUDY

 This study will help in understanding the growing mutual fund market in India and this

will also help us to understand the fast changes in nature of mutual fund.

 This study is quite helpful in understanding the functioning of any mutual fund

company in recent market condition.

 This study will help in understanding the investment pattern of the mutual fund and

help the customer to choose a particular pattern.

 The study will help to understand the organizations to understand the changing needs

of the customers and that will the organization to track the customers in future.

67
 CHAPTER 5
LITERATURE REVIEW

68
 LITERATURE REVIEW

Mutual fund has emerged as one of the best option for investment nowadays. Great amount of

researches has been carried out on investor’s behaviour on mutual fund.

Pastor Lubos and Stambaugh Robert F. (2000) entitled “Evaluating and Investing in

Equity Mutual Funds” suggested that their framework for evaluating and investing in mutual

funds combines observed returns on funds and passive assets with prior beliefs that

distinguish pricing-model inaccuracy from managerial skill. A fund's alpha' is defined using

passive benchmarks. They showed that returns on non-benchmark passive assets help

estimate that alpha more precisely for most funds. The resulting estimates generally vary less

than standard estimates across alternative benchmark specifications. Optimal portfolios

constructed from a large universe of equity funds can include actively managed funds even

when managerial skill is precluded. The fund universe offers no close substitutes for the

Fama-French and momentum benchmarks.

Chevalier Judith and Ellison Glenn (1997) entitled “Risk Taking by Mutual Funds as a

Response to Incentives” examined that a potential agency conflict between mutual fund

investors and mutual fund companies. Investors would like the fund company to use its

judgement to maximize risk-adjusted fund returns. A fund company, however, in its desire to

maximize its value as a concern, has an incentive to take actions that increase the inflow of

investments. We use a semiparametric model to estimate the shape of the flow-performance

relationship creates incentives for fund managers to increase or decrease the riskiness of the

fund that are dependent on the fund’s year-to-date return. They examined portfolio holdings

of mutual funds in September and December and showed that mutual funds do alter the

riskiness of their portfolios at the end of the year in a manner consistent with these incentives.

69
Barber Brad M, Odean Terrance and Zheng Lu (2000) entitled “The Behaviour of

Mutual Fund Investors” analysed that the mutual fund purchase and sale decisions of over

30,000 households with accounts at a large U.S. discount broker for the six years ending in

1996. They documented three primary results. First, investors buy funds with strong past

performance; over half of all fund purchases occur in funds ranked in the top quintile of past

annual returns. Second, investors sell funds with strong past performance and are reluctant to

sell their losing fund investments; they are twice as likely to sell a winning mutual fund rather

than a losing mutual fund and, thus, nearly 40 percent of fund sales occur in funds ranked in

the top quintile of past annual returns. Third, investors are sensitive to the form in which fund

expenses are charged; though investors are less likely to buy funds with high transaction fees

(e.g., broker commissions or front-end load fees), their purchases are relatively insensitive to

a fund’s operating expense ratio.

Sarish (2012) entitled “A Study of Opportunities and Challenges for Mutual Fund in India :

Vision 2020” studied that mutual fund sectors are one of the fastest growing sectors in Indian

Economy and have awesome potential for sustained future growth. Mutual funds make

saving and investing simple, accessible, and affordable. The advantages of mutual funds

include professional management, diversification, variety, liquidity, affordability,

convenience, and ease of recordkeeping—as well as strict government regulation and full

disclosure. The Mutual Funds originated in UK and thereafter they crossed the border to

reach other destinations. The concept of MF was Indianized only in the later part of the

twentieth century in the year 1964 with its roots embedded into Unit Trust of India (UTI).

Since its inception in 1964 there were only 25cr assets under management like a sapling but

it has grown into a big banyan tree with assets of Rs. 481749cr under assets management

companies till March 2010. But presently it has increases up to 700538cr at the end of March

70
2011. Now, booming stock markets & innovative marketing strategies of mutual fund

companies in India are influencing the retail investors to invest their surplus funds with

different schemes of mutual fund companies with or without complete understanding of

Mutual Funds (MF).

Padmaja R (2013) entitled “A study of consumer behaviour towards mutual funds with

special reference to ICICI prudential mutual funds, Vijayawada” studied that a mutual fund is

a type of professionally-managed collective investment vehicle that pools money from many

investors to purchase securities. As there is no legal definition of mutual fund, the term is

frequently applied only to those collective investments that are regulated, available to the

general public and open-ended in nature. Mutual funds have both advantages and

disadvantages compared to direct investing in individual securities. Today they play an

important role in household finances. So the present study aims at consumer behaviour

towards mutual funds with special reference to ICICI Prudential Mutual Funds Limited,

Vijayawada. Data was collected through primary and secondary sources. Primary data was

collected through structured questionnaire. Convenience sampling method was used to collect

the data and entire study was conducted in Vijayawada City. The study explains about

investors’ awareness towards mutual funds, investor perceptions, their preferences and the

extent of satisfaction towards mutual funds. Some suggestions were also made to increase the

awareness towards mutual funds and measures to select appropriate mutual funds to

maximize the returns.

Kumar Vikas (2011) entitled “performance evaluation of open ended schemes of mutual

funds” conducted a study on mutual funds that Mutual funds are one of the most favoured

investment routes for the small and medium investors across the world. Ideally, Mutual

71
funds provide opportunities for small investors to participate in the capital market without

assuming a very high degree of risk. An important principle of investment in capital market is

that do not put all the eggs in one basket i.e. diversification. A small investor is not able to

have a diversified portfolio mainly due to paucity of resources. However, a mutual fund pools

together the savings of such small investors and invests the same in the capital market and

passes the benefits to the investors. Thus, investors can indirectly participate in the capital

market by subscribing to the units of mutual funds. Mutual funds employ professional fund

managers to manage the investment activities. Therefore, investors also get benefits of

professional expertise of these managers.

Santhi N.S and Gurunathan K.Balanaga (2013) entitled “The Growth of Mutual Funds

and Regulatory Challenges” told that Mutual funds are one of the most innovative financial

products introduced in India during the period 1964. It becomes popular and the market size

has been increased after 1990 by allowing public sector companies entered into mutual funds.

The original mutual funds were simple, low risk and easy to understand and recent mutual

funds have additional dimensions of risk. The additional risks, complexity, and reduced

transparency have resulted in heightened attention by regulators. Concerns related to systemic

risk and excess volatility, suitability for retail investors, lack of transparency and liquidity

have been raised. These concerns are being addressed by a shift towards multiple

counterparties, overcollateralization, and disclosure of collateral holdings and index holdings.

The appropriate regulatory and market reforms can ensure the continued success of mutual

funds.

Prajapati Kalpesh P and Patel Mahesh K (2012) entitled “comparative study on

performance evaluation of mutual fund schemes of Indian companies” studied that in this

72
paper the performance evaluation of Indian mutual funds is carried out through relative

performance index, risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure,

Jensen's measure, and Fama's measure. The data used is daily closing NAVs. The source of

data is website of Association of Mutual Funds in India (AMFI). The study period is 1 st

January 2007 to 31st December, 2011. The results of performance measures suggest that most

of the mutual fund have given positive return during 2007 to 2011.

Mehta Shantanu and Shah Charmi (2012) entitled “Preference of Investors for Indian

Mutual Funds and its Performance Evaluation” suggested that Mutual funds have opened new

vistas to millions of small investors by virtually taking investment to their doorstep. In India,

a small investor generally goes for such kind of information, which do not provide hedge

against inflation and often have negative real returns. He finds himself to be an odd man out

in the investment game. Mutual funds have come, as a much needed help to these investors.

Thus the success of MFs is essentially the result of the combined efforts of competent fund

managers and alert investors. A competent fund manager should analyze investor behaviour

and understand their needs and expectations, to gear up the performance to meet investor

requirements. Therefore, in this current scenario it is very important to identify needs of

mutual funds investors, their preference for mutual funds schemes and its performance

evaluation. In this research paper, researcher has an objective to know preference of mutual

funds investors and performance evaluation of the preferred schemes by the investors. The

survey is undertaken of 100 educated investors of Ahmedabad and Baroda city and the major

findings reveal the major factors that influence buying behaviour mutual funds investors,

sources that investor rely more while making investment and preferable mode to invest in

mutual funds market. The study will be immensely useful to the AMC';s , Brokers,

distributors and to the other potential investors and last but not least to academician as well

73
Bahl Sarita and Rani Meenakshi (2012) entitled “a comparative analysis of mutual fund

schemes in India” explained about the present paper investigates the performance of 29 open-

ended, growth-oriented equity schemes for the period from April 2005 to March 2011 (six

years) of transition economy. Monthly NAV of different schemes have been used to calculate

the returns from the fund schemes. BSE-Sensex has been used for market portfolio. The

historical performance of the selected schemes were evaluated on the basis of Sharpe,

Treynor, and Jensen’s measure whose results will be useful for investors for taking better

investment decisions. The study revealed that 14 out of 29 (48.28 percent) sample mutual

fund schemes had outperformed the benchmark return. The results also showed that some of

the schemes had under performed, these schemes were facing the diversification problem. In

the study, the Sharpe ratio was positive for all schemes which showed that funds were

providing returns greater than risk free rate. Results of Jensen measure revealed that 19 out of

29 (65.52 percent) schemes were showed positive alpha which indicated superior

performance of the schemes.

Prabhavathi Y and Kishore N T Krishna (2013) entitled “Investor’s preferences towards

Mutual Fund and Future Investments: A Case study of India” studied that the advent of

Mutual Funds changed the way the world invested their money. The start of Mutual Funds

gave an opportunity to the common man to hope of high returns from their investments when

compared to other traditional sources of investment .The main focus of the study is to

understand the attitude, awareness and preferences of mutual fund investors. Most of the

respondents prefer systematic investment plans and got their source of information primarily

from banks and financial advisors. Investors preferred mutual funds mainly for professional

fund management and better returns and assessed funds mainly through Net Asset Values and

past performance.

74
B.S Sumalatha (2007) entitled “state of competition among the mutual funds in India: an

exploratory analysis” explored that In the context of growing importance of mutual funds in

the developing countries like India, the study objectives are to analyze the structure of the

mutual fund industry in India, to examine the state of competition among the mutual funds,

sector wise competition and within sector competition. The preliminary observation provides

that there occurred drastic changes in the industry after liberalization. The entry of large

number of private and the foreign mutual funds (both joint venture predominantly Indian and

foreign) has changed the structure of the industry as a whole. This could have made changes

in the total resources mobilization and the product innovation (new schemes under each

mutual fund). This large number of new entrants could have led to competition among the

mutual funds in the industry for their existence. An attempt was made to understand whether

the structural changes in the industry have led to the competition among the mutual funds.

For this purpose, the study analyzed competition among the mutual funds which includes

private sector, public sector and foreign sector mutual funds.

75
 CHAPTER 6
RESEARCH
METHODOLOGY

76
 RESEARCH METHODOLOGY
Research methodology define as the systematic plan, design, collection, analysis and

reporting of data and findings relevant to a specific marketing situation facing the company.

Research Design

The research requires developing the most efficient plan for gathering the needed

information. This involves decision on the data sources, research approaches, research

instrument, sampling plan and contact method.

There are three types of research design as follows:-

EXPLARATORY RESEARCH:

Exploratory research is conducted when researcher does not know how and why certain

phenomenon occurs. The prime goal for this research is to know unknown, this research is

unstructured.

DESCRIPTIVE RESEARCH:

Descriptive research is carried out to describe the phenomenon or market characteristics. This

study is done to understand buyer behaviour and describe characteristics of the target market.

This study is done for evaluation of the customer preference.

CAUSATIVE RESEARCH:

Causative research is done to establish the cause and effect relationship.

I used the descriptive research for my study.

77
DATA SOURCES:

PRIMARY DATA:

Primary data are collected by a study specifically to fulfill the data needs of the problem at

hand. such data are original in character and are generated in large number of surveys

conducted mostly by government and also by individual, institution, and research bodies.

METHODS OF COLLECTING PRIMARY DATA:

Direct personal interviews.

Indirect oral interviews.

Information from correspondence.

Mail questionnaire method.

SECONDARY DATA:

Data which are not originally collected but rather obtained from published and unpublished

sources are known as secondary data.

SOURCES OF SECONDARY DATA:-

Published sources

Unpublished sources

78
SAMPLE:-

When secondary data are not available for the problem under study, a decision may be made

to collect primary data by different methods for information. The information may be

collected by either the census method or sample method.

The sample is a portion of universe.

SAMPLING METHODS:-

1.Non probability sampling method.

2.Probability sampling method.

Non probability sampling method:-

Judgment sampling:-

In this method of sampling the choice of sample items depends on judgment of the

investigator. In other words, the investigator exercises his judgment in the choice and

includes those items in sample which he thinks are most typical of universe with regard to

characteristics under investigation.

Quota sampling:-

In a quota sample, quotas are set up according to some specified characteristics such as so

many in each of several income groups, so many in each age group etc.

Convenience sampling:-

A convenient sampling is obtained by convenient population. This is also called as chunk.

79
 Probability sampling method:-

Sampling or unrestricted random samples:-simple or restricted random sampling technique

refers to that sampling in which each and every unit of the population has an equal

opportunity of being selected in the sample.

Restricted random sampling:-

oStratified sampling:- Stratified random sampling or simply stratified sampling is one of the

random methods which, by using the available information concerning the population,

attempt to design a more efficient sample than obtained by the simple random procedure.

oSystematic sampling:- A systematic sample is formed by selecting one unit at random and then

selecting additional unit at evenly spaced intervals until the samples has been formed.

oMulti stage or cluster sampling:- Under this method, the random selection is made of primary,

intermediate and final (the ultimate) units given from a given population or stratum.

SAMPLE SIZE:-

The sample size taken in the project work is 100. The area selected is Moradabad and its

surrounding areas.

Convenience sampling methods was used in this study because of the constraints like cost

and time.

80
 CHAPTER 7
DATA ANALYSIS AND
INTERPRETATION

81
 DATA ANALYSIS AND INTERPRETATION
1. Have you invested in Reliance Mutual fund?

Option No of Respondents Percentage

Yes 100 100%
No 0 0%
Table No. 01

Graph No. 01

INTERPRETATION

This chart shows that out of 100 respondents all respondents invested in Reliance Mutual
Fund.

82
2. How much amount Have You Invested?

Option No of Percentage
Respondents
Less Than 10,000 24 24%
10,000-50,000 48 48%
50,000-100,000 16 16%
More Than 1 Lakh 12 12%

Table No.2

12%
24% Less Than
16% 10,000
10,000-
50,000
50,000-
100,000
48% More Than
1 Lakh

Graph No.2

INTERPRETATION

This chart shows that out of 100 respondents 24% said less than 10000, 48% said 10000-
50000, 16% said 50000-100000, and 12% said that more than 1 lakh they have invested.

83
3. Are you a Regular Investor in Reliance Mutual Fund?

Option No of Respondents Percentage

Yes 84 84%
No 16 16%
Table No.3

16%

Yes No

84%

Graph No.3

INTERPRETATION

This chart shows that out of 100 respondents 84% said that they are regular investor in
Reliance Mutual Fund and 16% said they are not regular investor of Reliance Mutual Fund.

84
 4. In which Plan you Have Invested in Reliance Mutual fund?

Table No.4

Option No of Percentage
Respondents
Equity ( Reliance Small Cap fund ) 36 36%
Dept (Reliance Small Low Duration fund ) 24 24%
Liquid ( Reliance Liquid Fund) 24 24%
Others 16 16%

Equity ( Reliance
Small Cap fund )
16%
36% Dept (Reliance
Small Low
Duration fund )
Liquid ( Reliance
Liquid Fund)
24%
Others
24%

Graph No.4

INTERPRETATION

This chart shows that out of 100 respondents 36% said Equity ( Reliance Small Cap Fund),
24% Dept (Reliance small low duration fund), 24% said Liquid (Reliance Liquid Fund) and
16% said in others plan they have invested in Reliance Mutual Fund.

85
5. Are you satisfied with the Return of Reliance Mutual Fund?

Option No of Respondents Percentage

Yes 88 88%
No 12 12%
Table No.5

12%

Yes No

88%

Graph No.5

INTERPRETATION

This chart shows that out of 100 respondents 88% said that they are satisfied with the return
of Reliance Mutual Fund and 12% said that they are not satisfied with the return of Reliance
Mutual Fund.

86
6. What is Yours Annual Expected rate of return?

Option No of Percentage
Respondents
0%-5% 16 16%
5%-7% 32 32%
7%-9% 12 12%
Above 9% 40 40%
Table No.6

0%-5%
16%
40%
5%-7%

32% 7%-9%

Above 9%

12%

Graph No.6

INTERPRETATION

This chart shows that out of 100 respondents 16% said 0-5%, 32% said 5-7%, 12% said 7-9%
and 40% said above 9% is the rate of return.

87
7. Are you satisfied with the different Plans Available with Reliance Mutual Fund?

Option No of Respondents Percentage

Yes 84 84%
No 16 16%
Table No.7

16%

Yes No

84%

Graph No.7

INTERPRETATION

This chart shows that out of 100 respondents 84% said that they are satisfied with the
different plans of Reliance Mutual Fund and 12% said that they are not satisfied with the
different plans of Reliance Mutual Fund.

88
8. Are You Satisfied With The customers Support Service of Reliance Mutual fund?

Option No of Respondents Percentage

Yes 72 72%
No 28 28%

Table No.

28%

Yes No

72%

Graph No.8

INTERPRETATION

This chart shows that out of 100 respondents 72% said that they are satisfied with the
customer support service of Reliance Mutual Fund and 28% said that they are not satisfied
with the customer support service of Reliance Mutual Fund.

89
9. Are You Satisfied With the Behaviors of front & Staff And Employs of Reliance Mutual
fund?

Option No of Respondents Percentage

Yes 64 64%
No 36 36%
Table No.9

36%

Yes No
64%

Graph No.9

INTERPRETATION

This chart shows that out of 100 respondents 88% said that they are satisfied with behaviour
of front staff of Reliance Mutual Fund and 12% said that they are not satisfied with the
behaviour of front staff of Reliance Mutual Fund.

90
10. Are you satisfied With the Papers / documentation Work Of Reliance Mutual fund?

Option No of Respondents Percentage

Yes 88 88%
No 12 12%
Table No.10

12%

Yes No

88%

Graph No.10

INTERPRETATION

This chart shows that out of 100 respondents 88% said that they are satisfied with the
papers/documentation of Reliance Mutual Fund and 12% said that they are not satisfied with
the papers/documentation of Reliance Mutual Fund.

91
11. Are you satisfied with Expert Advice Provided by Reliance Mutual fund?

Option No of Respondents Percentage

Yes 72 72%
No 28 28%

Table No. 11

28%

Yes No

72%

Graph No.11

INTERPRETATION

This chart shows that out of 100 respondents 88% said that they are satisfied with the expert
advice and 12% said that they are not satisfied with the expert advice.

92
12. Would you recommend your friends or Relatives to Invest Reliance Mutual
Fund?

Option No of Respondents Percentage

Yes 82 82%
No 18 18%

Table No. 12

18%

Yes No

82%

Graph No.12

INTERPRETATION

This chart shows that out of 100 respondents 82% said that they will recommended Reliance
Mutual Fund to others and 18% said that they will not recommended Reliance mutual Fund
to others.

93
CHAPTER 8
FINDINGS

94
 FINDINGS
 All respondents invested in Reliance Mutual Fund.

 24% said less than 10000, 48% said 10000-50000, 16% said 50000-100000, and 12%
said that more than 1 lakh they have invested

 84% said that they are regular investor in Reliance Mutual Fund and 16% said they
are not regular investor of Reliance Mutual Fund.

 36% said Equity ( Reliance Small Cap Fund), 24% Dept (Reliance small low duration
fund), 24% said Liquid (Reliance Liquid Fund) and 16% said in others plan they have
invested in Reliance Mutual Fund.

 88% said that they are satisfied with the return of Reliance Mutual Fund and 12% said
that they are not satisfied with the return of Reliance Mutual Fund.

 16% said 0-5%, 32% said 5-7%, 12% said 7-9% and 40% said above 9% is the rate of
return.

 84% said that they are satisfied with the different plans of Reliance Mutual Fund and
12% said that they are not satisfied with the different plans of Reliance Mutual Fund.

 72% said that they are satisfied with the customer support service of Reliance Mutual
Fund and 28% said that they are not satisfied with the customer support service of
Reliance Mutual Fund.

 88% said that they are satisfied with behaviour of front staff of Reliance Mutual Fund
and 12% said that they are not satisfied with the behaviour of front staff of Reliance
Mutual Fund.

 88% said that they are satisfied with the papers/documentation of Reliance Mutual
Fund and 12% said that they are not satisfied with the papers/documentation of
Reliance Mutual Fund.

 88% said that they are satisfied with the expert advice and 12% said that they are not
satisfied with the expert advice.

 82% said that they will recommended Reliance Mutual Fund to others and 18% said
that they will not recommended Reliance mutual Fund to others.

95
96
 CHAPTER 9
CONCLUSION

97
 CONCLUSION

Finally I would like to conclude my study by saying that the RELIANCE MUTUAL FUND
is one of the fastest growing mutual fund company in India which fulfils the needs of new
and existing investors. The RELIANCE MUTUAL FUND also gives a way to forthcoming
investors.

Mutual fund is an emerging investment alternative which has grown so fatly in few decades
and definitely it will be the powerful industry in future.

The mutual fund is one of the safe investment alternative in which the new investor, who
belong to limited salaried group, like to invest in these kind of mutual for steady and limited
yield with limited risk, tax benefit.

From the above responses of questionnaire we can say that

Investors are still not very much aware about mutual fund.
Equity fund is most preferable fund.
Advertisement is one of the ways to explore mutual fund.
AMC should be more focuses on fund performance.
The tax benefits on mutual funds made a turning point to its investors.

Company should reduce the initial amount of mutual fund schemes so, it covers lot of
customers.
Banks is most preferable investment on the basis of safety.

98
 CHAPTER 10
RECOMMENDATIONS

99
 RECOMMENDDATIONS
Even though the mutual funds are good source of income, the people lack awareness and

information towards mutual funds. So the following suggestions were made in order to

increase the awareness among the people especially the rural people.

1. Increase awareness among investors: Many investors are still restricting their choices to the

non-governmental options like gold and fixed deposits even the market is flooded with

countless investment opportunities. This is because of lack of awareness about mutual funds

which makes many investors restrict their choice to traditional options like gold and fixed

deposits. So awareness relating to mutual funds must be increased among the investors to

encourage them to invest in mutual funds.

2. Provide complete information relating to mutual funds: Even among the investors who

invest in mutual funds are unclear about how they function and how to manage them. So

proper information must be provided to the investors in order to increase the loyalty among

the investors.

3. Investors’ fee must be reduced by reducing paper work: Investors fee includes

management fee, distribution fee, distribution fee, andadministrative costs, etc., which are

generally deducted from the asset value. This can be possible if the investment is made

without agent and if the paper work is reduced.

4. Better commission should be paid to Asset Management Companies: From the past 4-5

years the trust of investors on mutual funds is reduced because of the poor performance of

mutual funds in these years. So if better commission is paid to Asset Management Companies

which are highly knowledgeable and by motivating them we can improve the distribution

system of mutual funds.

100
5. Subsidized Investments to rural investors: Because of the issue of commercial viability,

mutual funds were limited to major cities only. So if mutual funds are offered to rural and

semi urban investors at subsidized rates like agricultural loans, the demand for mutual funds

increases in rural and semi urban areas also.

6. Advertising campaigns must be conducted in rural areas to increase awareness among rural

investors.

101
 CHAPTER 11
LIMITATIONS OF THE
STUDY

102
 LIMITATIONS OF THE STUDY

 The study was limited to specific area of the Delhi city.

 This study was limited to sample size of 50.

 The time has constraint of 50 days.

 The customer was not providing right information to us.

 Non-availability of past data, Balance Sheet etc.

 Non-availability of Fund Manager to discuss on fund strategies and growth

projections due to geographical location.

 This study has been limited by time and cost factors.

 This study has been made from the information given by Reliance Mutual Fund
office. Accuracy of the findings is dependent on the quality of their responses.

103
BIBLIOGRAPHY

104
 BIBLIOGRAPHY
REFERENCES

 Pastor Lubos, Stambaugh Robert F (2012) , Evaluating and Investing in Equity

Mutual Funds (http://www.nber.org)

 Chevalier Judith, Ellison Glenn (1997) , Risk Taking by Mutual Funds as a Response
to Incentives (http://economics.mit.edu)

 Barber Brad M, Odean Terrance, Zheng Lu (2000) , The Behaviour of Mutual Fund
Investors (http://faculty.haas.berkeley.edu)

 Sarish (2012) , A Study of Opportunities and Challenges for Mutual Fund in India :
Vision 2020 ( http://www.vsrdjournals.com)

 Padmaja R (2013) , A study of consumer behaviour towards mutual funds with special
reference to ICICI prudential mutual funds, Vijayawada (http://www.ijmrbs.com)

 Kumar Vikas (2011) , performance evaluation of open ended schemes of mutual funds

(http://www.zenithresearch.org.in)

 Santhi N.S, Gurunathan K.Balanaga (2013) , The Growth of Mutual Funds and
Regulatory Challenges (http://www.theglobaljournals.com)

 Prajapati Kalpesh P, Patel Mahesh K (2012) , comparative study on performance

evaluation of mutual fund schemes of Indian companies
(http://www.researchersworld.com)

 Mehta Shantanu ,Shah Charmi (2012) , Preference of Investors for Indian Mutual
Funds and its Performance Evaluation (http://www.pbr.co.in)

 Bahl Sarita , Rani Meenakshi (2012) , A comparative analysis of mutual fund schemes
in India (http://www.indianresearchjournals.com)

 Prabhavathi Y, Kishore N T Krishna (2013) , Investor’s preferences towards Mutual

Fund and Future Investments: A Case study of India (http://www.ijsrp.org)

 B.S Sumalatha (2007) , state of competition among the mutual funds in exploratory
analysis (http://www.igidr.ac.in)

REFERENCE BOOK:

Financial Market and Services

-Jordon and Natarajan

105
WEBSITE:

www.utimf.com

www.reliancemutual.com

www.amfiindia.com

www.moneycontrol.com

www.sebi.com

SEARCH ENGINE:

www.google.com

www.altavista.com

www.yahoo.com

106
APPENDIX/ ANNEXURE

107
 APPENDIX/ ANNEXURE

Question
1. Have you invested in Reliance Mutual fund?

(a) Yes 100% (b) No 0%

2. How much amount Have You Invested?

(a) Less Than 10,000 (b) 10,000 – 50,000

(c) 50,000 – 100,000 (d) More Than 1 Lakh

3. Are you a Regular Investor in Reliance Mutual Fund?

(a) Yes (b) No

4. In which Plan you Have Invested in Reliance Mutual fund?

(a) Equity (Reliance Small Cap fund)

(b) Dept (Reliance Low Duration fund)

(c) Liquid (Reliance Liquid Fund)

(d) Others

5. Are you satisfied with the Return of Reliance Mutual Fund?

(a) Yes (b) No

6. What is Yours Annual Expected rate of return?

(a) 8% -5% (b) 5%-7%

(c) 7%- 9% (d) Above 9%

7. Are You Satisfied With the different Plans Available with Reliance Mutual Fund?

(a) Yes (b) No

8. Are You Satisfied With The customers Support Service of Reliance Mutual fund?

(a) Yes (b) No

9. Are You Satisfied With the Behaviors of front & Staff And Employs of Reliance Mutual
fund?

(a) Yes (b) No

108
10. Are you satisfied With the Popes/ documentation Work Of Reliance Mutual fund?

(a) Yes (b) No.

11. Are you satisfied with Expert Advice Provided by Reliance Mutual fund?

(a) Yes (b) No.

12. Would You Hemmed Your friends or Relatives to Invest Reliance Mutual Fund?

(a) Yes (b) No

Any Suggestions:

…………………………………………………………………………………………………
……………………………………………………………

Thanks for your cooperation.

109
THANK YOU

110