A

Project Report

On

“Mutual fund is better investment of plan in India”

At

RELIANCE MUTUAL FUND

In partial fulfilment of the requirements of Summer Internship

Programme in the P.G.D.M. at UNITED WORLD SCHOOL
OF BUSINESS.

Submitted to

Faculty of Management

Under the Guidance of

DR. GURMEET SINGH

ASSOCIATE PROFESSOR &

MR. PANKAJ BANTHIA

REGIONAL HEAD OF GUJ. , MP&CG

By

AKHIL KHANDELWAL (17P013) Batch: 2017-19

Date: 30/06/2018

Place: AHMEDABAD
Declaration

I, AKHIL KHANDELWAL, Enrollment No 17P013, student of Faculty of

Management hereby declare that I have successfully completed this project
on ‘MUTUAL FUND IS BETTER INVESTMENT PLAN IN INDIA”

In the academic year 2017-18.

I declare that this submitted work is done by me and to the best of my

knowledge; no such work has been submitted by any other person for the
award of degree or diploma.

I also declare that all the information collected from various secondary and
primary sources has been duly acknowledged in this project report.

AKHIL KHANDELWAL

Student Name
 PREFACE

As a part of P.G.D.M.curriculum in order to gain practical knowledge in the field

of management I am required to make a report on “MUTUAL FUND IS
BETTER INVESTMENT PLAN IN INDIA” The basic objective behind doing
this project report is to get knowledge of factors affecting investor’s preference
for mutual fund and savings pattern of investors for SIP and Lump-Sum.

Doing this project report helped us to enhance our knowledge regarding the
Mutual fund in to the attitude of investor towards mutual fund for the sources of
information for investment in mutual fund, their perception, preference towards
risk and return, liquidity, diversification, saving avenue preference, scheme
preferred by investors, method of purchase of mutual fund units, how they are
satisfied with their mutual fund performance of the company, and lastly investor’s
attributes towards savings pattern with special focus on SIP and Lump-Sum.

Through this report I come to know about importance of the mutual fund in the
financial industry and its contribution in the economy of the country.
 ACKNOWLEDGEMENT:

I frequently say that “Knowledge is Power”. But this statement is true only when
we apply our knowledge in practical things. To achieve this, our college,
UNITED WORLD SCHOOL OF BUSINESS, provided us the opportunity to
work with real industry. I hereby declare my humble thanks to my college for
providing such opportunities to the students. I am thankful to Reliance Nippon
Life Asset Management Limited, Ahmedabad for giving me an opportunity to do
summer training in the company.

First of all, I am extremely grateful to Mr. pankaj banthia (regional head of

guj,mp&cg) for his guidance, encouragement and tutelage during the course of
the internship despite her extremely busy schedule. My very special thanks to her
for giving me the opportunity to do this project and for her support throughout as
a mentor. I would even like to thank Mr. Akash rana (zonal head of -Gujarat &
MPCG), for his kind words of encouragement.

I sincerely thank all staff team officers attached to Reliance Nippon Life Asset
Management Limited, Ahmedabad Branch, who guided me about the procedure
and other basic guidelines to be observed during the training. I thank them for
their insight and suggestions and for being so kind and patient with me for
providing all valuable advices and knowledge.

I am thankful and obliged to Director Dr.kishor bhanushali and my internal guide

DR. gurmeet singh and all the faculty members of uwsb for providing all the
necessary support from their side. Without their continuous guidance and support,
it would have been difficult for me to complete the project on time and in such a
successful manner.

Sincerely,

Akhil khandelwal
 Chapter: - 1
1.1 LITERATURE REVIEW:

Madhusudan V. Jambodekar (1996): The investors want to have their

money in safer hands and want to get regular profit (interest) from it. So, many
of them invest their money in Mutual funds as Mutual Funds provide greater
return at high risk. Many of the investors are satisfied by the service provided
by Mutual Fund Companies.

Mutual Fund Schemes are selected on the basis of past performance and the
money outflow i.e; return on investment. Agents and AMC are the chief
source of spreading knowledge about Mutual Funds.

Robert J. Shiller (1993): Time & Risk are the two attributes of investment.
At present, people are investing in Mutual Funds (SIP’s & LIP’s) to get higher
rate of return (Goal and Jain, 2010). But, while investing their money in
Mutual Funds, the investor does not do the analysis and interpretation. Instead,
they only gets attracted towards the future return and doesn’t see the loop holes
of the schemes

Hirshleifer (2001): So, they 4 make common mistakes while investing their
money in Mutual Funds. These are self deception, heuristic simplification and
disposition effect. All these occur because of the greed of people, lack of
knowledge, over confidence and limited attention towards the scheme

Ravi Shankar (2002): SEBI-NCAER did a survey in 2000 to check the

preference of equity and other schemes. This survey revealed that about 60%
of the people do not have the knowledge of share market. So, maximum people
invest their money in Banks. Only High Class people invest their money in
Mutual Funds. The study also says that the investment, in Mutual Funds, from
House Hold will increase in coming 2 years. Many financial institutions and
financial bodies were set up in India in past few years to handle the needs of
investors and their return on investment

Bhole (1997): The RBI and Government of India issued some guidelines for
investment companies and for the investors. The investors have to make their
investment according to those guidelines only and the companies have to work
according to the guideline issued by RBI and Government of India.
Shanmgham (2000): Research on individual investors to study the
information source does investors depends, founded 3 factors economical,
sociological and psychological that control investors decisions. Madhusudhan
(1996) survey to find out what all factors to be undertaken that influence the
behaviour of investors in mutual funds.

Shivanighalot (1998): The study result in open mind scheme were more
preferred over the closed ended and growth scheme. Newspaper and
advertisement are widely spread sources of information about mutual fund.
found that load fee and expense ratio is one of the major cause in mutual fund
scheme for inefficient and inactive of investors hence companies must reduce
it to make better investment scheme. Syama sunder (1998) conducted a survey
resulting in lack of awareness in small cities, town and also prime factors are
brand image and high return for 5 investment.

Syama sunder (1998): The survey founded that mutual fund are preferred by
salaried and self-employed individual due to the tax benefits. Conducted a
research with identifying the in-depth view into the operation of private sector
mutual fund with special reference to Kothari Pioneer. The survey found that
in Visakhapatnam like small cities, the knowledge about mutual fund is not
satisfactory, but somehow open ended mutual fund are more preferable than
any other schemes and agents can help to create mutual fund culture, asset
management companies brand is core to be considered to invest in mutual
fund.

Rahul Malik (1997) underlined that there is a need for awareness of mutual
fund amongs the general public as liquidity is perceived as high & tax benefits
& procedural understanding are low for investment 6 purpose. Investment in
Mutual Funds is in great demand now days. Many research papers have been
published on mutual funds.

Raghav (2001) conducted a study in South India and he found that people
invest in Mutual Funds because Mutual Funds provide regular returns and
saves taxes. According to Keli (2005); past performance and fund investment
are the two main factors that help the investors to select the right scheme for
them so that they can invest their valuable money in the best scheme. Women
are the one who never invest in Mutual Funds. This is because of the lack of
awareness about Mutual Funds, long procedures, complex structures etc.

Warren Bailey Alok Kumar and David Ng (July2010): concluded that

people with higher education, higher income level and greater investment
experience has a hold on investing in mutual fund schemes to enjoy the higher
returns with less risk factor.

On the other hand, Jay Talat & Riddhi Sanghvi (2011): had a research
specifically in Gujarat about the preference of investors in different kinds of
securities, found that people prefer to invest in fixed deposits of nationalize
banks or government securities focusing on to safeguard their money with
less return and also investors generally prefer to check the past performance
of the funds for investing their money rather than consulting with the
financers in the market as to cut down the cost to be paid in the form of
consultancy charges.

Ms. Pooja Chaturvedi Sharma & Dr. Anoop Pandey (March 2014):
underlined the big part of investors behavior having a vague perception
about mutual funds 7 investment plans are confused to invest in mutual funds
or other type of securities, not able to make a attitude towards this particular
form of investment due to the lack awareness about various functions of
mutual funds. Gender, income, age, and level of education have also a
significant affect influencing the investor’s behavior towards mutual funds.
Investor’s perceptions and attitudes towards savings and investment avenues
are deeply influenced by socio-economic environment. Education, income
level, values, customs and beliefs and accessibility to financial services
determine the investor’s behaviour

Agrawal (2009): noted that there is no significant difference between male

and female investors in the expected rate of return. Marital status, earnings,
occupation and number of dependents are significant factors associated with
risk tolerance.

Vyas Ravi and Moonar Surendra (2012) found that gold was the first
preference of the investors followed by bank deposits, life insurance and
postal deposits. Kumar Rajesh and Arora R. S. (2013) suggested that
investors need investment education and well informed about investment
avenues through TV, internet, Newspapers and professional journals in order
to enhance the awareness level.

Priyalaxmi and Dhanlaxmi (2014) examined investors’ preferences

towards various forms of investment viz., shares, bank deposits, gold, real
estate, life insurance, postal savings and mutual funds and found that bank
deposits were popular among the investors. The researchers concluded that
there was no significant association between income level and investment
awareness level.

Kathuria and Singhania (2010) found that print media and websites are
two most important sources of information that helped investors to make
investment decisions. The investors had given preference to postal deposits,
insurance and public provident funds. Pointed out that the choice of
individual investors is affected by family income, timing of investment and
savings motives.

Keshvan, Chidambaram and Ramchandran (2012) noticed that age,

gender, educational qualification, occupation and annual income do not
influence the type of investment avenues. It is to be noted that not much
research studies have been conducted on the awareness level of rural
investors and their pattern of investment in India. Finding the gap, the
present study was designed to understand the association between education
and investment awareness level and preferences of rural investors.

Padmaja Choudhury (Mar 30, 2018) Although SIP has become a

buzzword in the mutual fund industry, it witnessed higher growth in lump
sum folios in the first nine months of the current fiscal. CAMS data, which
covers 64% of the industry, shows that over 45.21 lakh new lump sum folios
were added between April and December 2017, while the total number of
new SIP folios was 40.89 lakh. This indicates that fresh lump sum folios
have exceeded SIP accounts by a huge margin of 4.32 lakh new folios. If we
compare the top 15 cities and the beyond-top 15 cities, though, we see a
sharp difference. Data shows that a large proportion of the new lump sum
folios came from T15 cities. Investors in these cities opened 25.36 lakh, or
56%, of the new folios.
Experts attribute this to the presence of seasoned investors in the bigger
cities. “The investors in the top 15 cities are more attuned to the market.
These investors generally try to time the markets and churn their portfolio
more often.”

Shivani Bazaz (March 23, 2018) Mutual fund advisors are trying hard to
prevent investors from making extra investments in a lumpsum after the
recent fall in the market. “This is not the right time to put in a lumpsum. We
are not sure how long this correction will last. The valuations are still rich.
It doesn’t seem like the market will go up substantially from this point,”
 says Puneet Oberoi, Founder, Excellent Investment Advisors. The markets
have fallen around 8 per cent since February 1, from 35906 points to 33006
points. But mutual fund advisors believe that the correction may last for a
long time. “Even though small and midcaps have fallen around 10 per cent,
the valuations are still not reasonable. We are expecting this year to be fairly
volatile. So, we are not recommending any lumpsum allocations at these
levels."

1.2 PROJECT OBJECTIVES:

1. To evaluate investment of performance of mutual fund (SIP and

Lump sum) in terms of risk and return.
2. To know the preferences for the portfolios.
3. To find out with the most preferred fund in R.L.M.F.
4. To study the impact of demographics like age, gender, occupation
and monthly income on the behavior of mutual fund investors.
5. To know, which form of investment earns more growth (SIP or
Lump sum).
6. To find the factors that influences the behavior of mutual fund
investors while investing in mutual funds.
7. To find investors’ preference for mode of investing in mutual
fund.
8. To know the tenure of investment in mutual fund and link the
same with SIP and Lump Sum.
9. To find out the preferences of the investor for asset management
company.
10. To know which A.M.C on boost.

1.3 SCOPE OF THE STUDY:

A big boom has been witnessed in mutual fund industry in recent times. A large
number of new players have entered the market and trying to gain market share
in this rapidly improving market.
The study will help to know the preferences of the customer, which company,
portfolio, mode of investment, and option for getting return and so on they
prefer. This project may help the company to make further planning and strategy.

The scope is limited to RELIANCE MUTUAL FUND employees who are

investing in mutual fund. Investors &Distributors.
 The scope of study is of certain selected factors and its effect on investors in their
investment on mutual funds and saving pattern with special focus on SIP and
Lump sum Amount and what are the benefits and returns they will get in long
term.

1.4. Data sources:

Data for this study is collected through online journals, newspapers, magazines,
journals, company website, online reports and database and through workbook
for NISM (National Institute of Securities Markets)

1.5. Duration of study:

The study was carried out for a period of two months. 2nd may to 30th June.

1.6. BENEFICIARIES OF THE STUDY:

INDUSTRY:

It is beneficiary to industry like AMFI & Different AMC’s, to know

the investor’s savings pattern and the perception about investment
attributes of different investment avenues.

COMPANY (RELIANCE MUTUAL FUND)

The research is very helpful to know what mode investors prefer for
investing in mutual fund.

STUDENTS:
Helpful to the students to know the mutual fund industry in detail as
it is on the growing stage.
 Chapter:-2
Mutual Fund Industry
INTRODUCTION:-

2.1. INVESTMENT:-

Investment is using money to purchase assets in the hope that the asset will generate
income over time or appreciate over time. Consumption, on the other hand, is when
you purchase something with the immediate intent of personal use and with no
expectation that it will generate money or increase in value.

Investment also helps grow the economy because it creates economic activity, such
as the buying and selling of goods and services and employing people. Employed
people get paid and either save, invest, or spend their money. If they spend their
money, businesses make more profits. Businesses can then reinvest the profits in
further business activities that expand the economy.

Of course, too much of a good thing can be bad. If everyone is investing, then no
one is consuming. If no one is consuming, consumer-orientated businesses, such as
restaurants and retail establishments, will suffer. This may lead to layoffs. The key
is to find the proper balance between investment and consumption.
Today’s investor has a wide array of investment avenues and he can choose the
one that suits his preferences. Following are the various asset classes that the
investor can choose from.

A. Equity

B. Debentures

C. Bonds or Fixed Income

 Securities Government Securities

 Savings bonds
 Private Sector debentures
 PSU bonds
 Infrastructure Bonds

D. Money Market Instruments

 Certificate of Deposits
 Commercial Papers
 Treasury bills

E. Non-marketable Financial Assets

 Post office deposits (POTD)
 National Savings Certificate (NSC)
 Company Deposits
 Bank deposits
 Employees Provident Fund Scheme (EPF)
 Public Provident Fund (PPF)

F. Real Estate
 Residential House
 Commercial Property
 Agricultural Land
 Suburban Land
 Time Share in Holiday Resort
 Real Estate Investment Trust (REIT)
 G. Precious Objects
 Gold & Silver
 Gold ETFs
H. Insurance Policies
 Endowment Assurance
 Money Back Plans
 Whole Life Assurance
 Term Assurance
 Immediate Annuity
I. Mutual Funds

J. Pension Funds
 NPS
 Private Pension Funds

2.2 INTRODUCTION TO INDIAN MUTUAL FUND INDUSTRY

During the past decade, the Indian financial market has witnessed remarkable
development. The reason can be attributed to the Liberalization, Privatization,
Globalization (LPG) process launched in 1991 under the guidance of Prime
Minister Mr P.V. Narsimha Rao and the then finance minister Dr. Man Mohan
Singh.

It is a fact beyond doubt that everyone wants to be secured against future uncertain
events. Financial security is considered to be the most important factor in any
individual’s life. Investment is the sacrifice of certain present value of the uncertain
future reward. It involves the decisions like, where to invest, when to invest and
how much to invest. Even though the capital market attracts people, there are a
number of problems associated with it. The reason is that while investing directly
in the capital market an individual investor has to be very careful to judge the
valuation of the stocks and to be able to understand clearly the complexities
involved in the stock market operations as well as fluctuations in stock prices.

In last few years, there has been a mixture of investment opportunities that has been
made accessible for an investor to choose from. Investors have a basic choice either
they can invest directly in individual securities, or they can invest indirectly
through a financial intermediary or collective investment vehicles. Financial
intermediary or collective investment vehicle collect savings from small and
scattered investors and invest these funds in a portfolio of financial assets. Mutual
fund is one form of such financial intermediary. It is one of those areas of financial
services which have grown rapidly. Mutual funds are playing a major part in
channelizing individual savings in productive areas.

A mutual fund is type of financial intermediary that pools the savings of investors
who seeks the same general investment objective and there by invest such savings
in a diversified portfolio of securities. The term “mutual” is used in the sense that
all its returns, minus its expenses, are shared by the particular fund‟s unit holders.

Mutual fund, a financial innovation provides a novel way of mobilizing savings

from small investors thus permitting them to enjoy the participation in the equity
& other securities of leading companies with less amount of risk involvement,
which otherwise would had been impossible for them. In other words, Mutual fund
is a mechanism for pooling the resources by issuing units to the investors &
investing funds in securities as per the objective as disclosed in offer document
issued by the respective mutual fund company.

A MF represents a vehicle for collective investment. When an investor participates

in the scheme of a mutual fund, he automatically becomes part owner of the
investment held under that scheme. The investors get a proportional share in the
gain as well as losses of the fund. A mutual fund companies invest in equity shares,
debentures, bonds, money market instruments, government securities. Originally,
mutual funds were devised as investment options for retail investors, but now
corporate investors are also forming an important part of the investors‟ base.

2.3 WHAT IS MUTUAL FUND?

A Mutual Fund is a trust that pools the savings of a number of investors who share
a common financial goal. Anybody with an investible surplus of as little as a few
hundred rupees can invest in Mutual Funds. These investors buy units of a
particular Mutual Fund scheme that has a defined investment objective and
strategy.
The money thus collected is then invested by the fund manager in different types
of securities. These could range from shares to debentures to money market
instruments, depending upon the scheme’s stated objectives. The income earned
through these investments and the capital appreciation realized by the scheme are
shared by its unit in proportion to the number of units owned by them. Thus, a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities
at a relatively low cost.

Mutual funds offer different kinds of schemes to cater to the need of diverse
investors. In the industry, the words ‘fund’ and ‘scheme’ are used inter-changeably.
Various categories of schemes are called “funds”. However, wherever a difference
is required to be drawn, the scheme offering entity is referred to as “mutual fund”
or “the fund”.

In simple words, if today as an investor we do not have the funds to buy shares of
5 different companies together, or we do not understand the markets much and
when to enter and exit the markets and what companies to invest in and when to
get out of it; then mutual funds do that for us. It is like when one friend doesn’t
have money to order a pizza or does not know what the different toppings like
jalapenos and paprika or olives would taste, other friends also pool in money for
a large pizza and ask the chef to suggest the best and place the order, thus all get
a slice each and most likely will have a good tasting pizza. Mutual funds follow
the same approach, wherein the other friends pooling in money here are different
investors from all over the country and the chef is the financial expert knows as
Fund Manager, handling your investments on behalf of the mutual fund house to
make sure your investment pizza is pan fresh and you get good returns as well.

Mutual Funds diversify their activities in the following areas:

• Portfolio management services

• Management of offshore funds
• Providing advice to offshore funds
• Management of pension or provident funds
• Management of venture capital funds
• Management of money market funds
• Management of real estate funds
Mutual Fund Operation Flow Chart

Source: marketbusiness.com
 2.4 HISTORY OF MUTUAL FUNDS

A.) Global
Market

2.4.1 Global Market:

B.) Indian
Market

A mutual fund, as the term suggests is a pooling of resources of many investors

and is managed by professionals. Mutual funds really captured the public's
attention in the 1980s and '90s when mutual fund investment hit record highs and
investors saw incredible returns. However, the idea of pooling assets for
investment purposes has been around for a long time. Here we look at the
evolution of this investment vehicle, from its beginnings in the Netherlands in the
18th century to its present status as a growing, international industry with fund
holdings accounting for trillions of dollars in the United States alone. The closed-
end investment companies launched in the Netherlands in 1822 by King William
I as the first mutual funds, while others point to a Dutch merchant named Adriaan
van Ketwich whose investment trust created in 1774 may have given the king the
idea. Ketwich probably theorized that diversification would increase the appeal
of investments to smaller investors with minimal capital. The name of Ketwich's
fund, Eendragt Maakt Magt, translates to "unity creates strength". The next wave
of near-mutual funds included an investment trust launched in Switzerland in
1849, followed by similar vehicles created in Scotland in the 1880s. The idea of
pooling resources and spreading risk using closedend investments soon took root
in Great Britain and France, making its way to the United States in the 1890s. The
Boston Personal Property Trust, formed in 1893, was the first closed-end fund in
the U.S. The creation of the Alexander Fund in Philadelphia in 1907 was an
important step in the evolution toward what we know as the modern mutual fund.
The Alexander Fund featured semi-annual issues and allowed investors to make
withdrawals on demand.

2.4.2 INDIAN MARKET:

The Indian mutual fund industry has evolved over distinct stages. The growth of
mutual fund industry in India can be divided into phases:

Source: kotaksecurities.com
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 India. The
purpose of establishing the Unit Trust of India was to give a fillip to equity market.
In the wake of IndoChina war of 1961, there was shortage of savings going into
industrial investment for economic development. There was a need to mobilize
adequate amount of risk capital for industrial enterprises.

2.5 HOW IT EVOLVED?

Distribution Channels

2.5.1 Traditional Distribution Channels:

Individual in the past, individual agents distributed units of Unit Trust of India and
insurance policies of Life Insurance Corporation (LIC). They facilitated
investments in
Government’s Small Savings Schemes and also sold Fixed Deposits and Public
Issues of shares of companies, either directly, or as a sub-broker of some large
broker. UTI, LIC or other issuers of the investment product (often referred to in the
market as “product manufacturers”) usually advertised through the mass media,
while an all-India field force of agents approached investors to get application
forms signed and collected their cheques. Earlier, the agents were familiar with the
investors’ families and were often viewed as an extension of the family.

Over the last two decades or so, a number of changes have happened:

Several new insurance and mutual fund companies have commenced operations.

• The universe of investment products available for investors has

multiplied.
• Investors are better informed about many products and their
features.
• Technologies such as the internet and data mining software
opened the doors to newer ways of targeting investors, sharing
information with them, and putting through their transactions.
• Companies have started offering products in more and more
locations, thus increasing the pressure on the product
manufacture-to-agent, single level distribution architecture.
A need was felt for newer formats of distribution that would leverage on the above
to generate much higher volumes in the market. Individual distributors, also
referred to as Individual Financial Advisors (IFA) continue to be a large force for
distribution numerically, though the volume of sales generated are significantly
lower than other distribution channels such as Institutional Distributors.

 Institutional Channels:

The changing competitive context led to the emergence of institutional

channels of distribution for a wide spectrum of financial products. This
comprised:

• Brokerage firms and other securities distribution companies, who

widened their offering beyondcompany Fixed Deposits and
public issue of shares.
• Banks, who started viewing distribution of financial products as
a key avenue to earn fee-basedincome, while addressing the
investment needs of their customers.
• Non-banking finance companies (NBFC) with multiple branches.

2.5.2 Newer Distribution Channels:

 Internet :

The internet gave an opportunity to mutual funds to establish direct contact with
investors. Investors can now access the website of the mutual fund and deal
directly with the fund. Direct transactions afford scope to optimize on the
commission costs involved in distribution. Other electronic/internet based modes
of conducting financial and nonfinancial transactions include those offered by
banks, financial institutions, distributors, registrar and transfer agent, electronic
platforms provided by stock exchanges such as NSE’s MFSS and BSE’s StAR
platform.
Investors, on their part, have found a lot of convenience in doing transactions
instantaneously through the internet, rather than doing the cumbersome paper
work and depending on the distributor to do transactions.
A few professional distributors have rightly taken the path of value added advice
and excellent service level to hold on to their customers and develop new
customer relationships. Many of them offer transaction support through their
own websites.
 A large mass of investors in the market need advice. The future of intermediaries
lies in catering to their needs, personally and/or through a team and/or with
support of technology.

 Stock Exchanges:

The institutional channels have had their limitations in reaching out

deep into the hinterland of the country. A disproportionate share of mutual fund
collections has tended to come from corporate and institutional investors and
from urban centers, rather than retail individuals for whose benefit the mutual
fund industry exists.
Stock exchanges, on the other hand, have managed to ride on the equity cult in
the country and the power of communication networks to establish a cost-
effective all-India network of brokers and trading terminals. This has been a
successful initiative in the high-volume low-margin model of doing business,
which is more appropriate and beneficial for the country.
SEBI has facilitated buying and selling of mutual fund units through the stock
exchanges.
Both NSE and BSE have developed mutual fund transaction engines for the
purpose. The underlying premise is that the low cost and deeper reach of the
stock exchange network can increase the role of retail investors in mutual
funds, and take the mutual fund industry into its next wave of growth.
While the transaction engines are a new phenomenon, stock exchanges always
had a role in the following aspects of mutual funds:
• Close-ended schemes are required to be listed in a stock
exchange.
• ETFs are bought and sold in the stock exchange.

Distribution through PSU Banks:

Mutual funds have been encouraged to build relationships with PSU banks that
have a wide reach in the non-urban centres to distribute mutual fund products
through them.

SEBI has also permitted mutual funds to charge an additional expense ratio of
30 bps for garnering funds from B15 cities.

 New Cadre of Distributors:

 SEBI, in September 2012, provided for a new cadre of distributors, such as postal
agents, retired government and semi-government officials (class III and above or
equivalent), retired teachers and retired bank officers with a service of at least 10
years, and other similar persons (such as Bank correspondents) as may be notified
by AMFI/ AMC from time to time. These new distributors are allowed to sell
units of simple and performing mutual fund schemes.

Simple and performing mutual fund schemes comprises diversified equity

schemes, fixed maturity plans (FMPs), Liquid and Money Market schemes,
Retirement benefit schemes having tax benefits and index schemes that have
returns equal to or better than their scheme benchmark returns during each of the
last three years. Diversified equity schemes category shall be large-cap oriented
and well-diversified and shall not include thematic or sectoral funds, small, mid
and micro-cap funds or concentrated funds which intend to hold less than 30
stocks in their portfolio according to the offer document. The list of eligible
schemes shall be drawn up based on the performance of the schemes in each of
the last three financial years and shall be reviewed and modified every year in
April. The AMCs are required to display the list of eligible schemes on the
websites.

2.6:- WHY SHOULD WE INVEST IN

MUTUAL FUNDS?

2.6.1 CHARACTERISTICS OF MUTUAL FUNDS:

Some noteworthy distinctiveness of mutual funds which are considered to be

universal in nature irrespective of the type of fund is summarized as under.

1. Mobilization of funds: Mutual fund helps to mobilize the savings of small

investor by launching schemes which are specially designed to meet their
investment preferences. In this way the scattered savings of small investors are
accumulated into a common fund of considerable amount and then invested in a
number of financial instruments available in the capital market. Hence the retail
investors get an opportunity to participate in the prosperity of a large number of
companies.
2. Diversification of risks: Mutual funds with the collected funds from small
investors can ensure diversification. The investment collected from various
investors of a mutual fund scheme are invested in the scrip of a number of
companies so as to make certain the diversification of the portfolio, which results
in the diminution of magnitude of risk.

3. Allocation of returns with fellow investors: Returns earned on the plentiful of

scrip of various companies, that constitute the portfolio of a mutual fund scheme
are distributed among the investors after the deduction of administration
expenditure. The degree of returns earned depends on the value of the underlying
portfolio and as well on the proceeds earned on the various scrips that make up
the portfolio of an individual investor.

4. Expert services: Mutual fund employs experts and professional managers to take
the investment decision and to efficiently manage the portfolio of the individual
investors. Thus the professional insight and the dynamic approach towards the
investment of the resources provide these managers an edge over the individual
investor in dealing with risk of capital market securities.
 2.6.2 THE MERITS OF MUTUAL FUND

Source: marketbusiness.com

1. Diversification: Retail investors owing to financial constraints cannot do

diversification of portfolio, which is a necessity for risk minimization. Also an
investor undertakes risk if he invests all his funds in a particular scrip without
diversifying.

2. Professional Management: The fund manager of a mutual fund is a professional,

performing the job to handle the investors‟ investment so that he does not have
to worry about where to invest, as very few people have the required time,
knowledge, experience and the inclination to understand and analyze financial
markets, on their own to succeed in today’s fast moving, global and sophisticated
world. Even if the investor has a big amount of capital available to him, he gets
the much deserved benefits from the professional management skills brought in
by the fund in the management of the investor’s portfolio. The fund manager is
concerned about following areas of managing an investor’s investment.
 Protection of value of the original investment.
 Generation of a stable return on the original investment.
 Facilitation of capital appreciation.

3. Convenient Administration: Mutual fund companies offer services such as
updated information on the status of the investment through the fund’s newsletter.
Investing in a mutual fund company results in the reduction of paperwork and
also assist an investor to avoid many problems for example bad deliveries,
delayed payments of dividends and any unnecessary follow up with the brokers
and companies. Also investors can easily transfer their holdings from one scheme
to the other without any difficulty as well they don’t have to make payment for
brokerage. Hence providing these important services, mutual fund save investor’s
time and make investing trouble-free and convenient.

4. Liquidity: Investment in a mutual fund scheme is fairly liquid as compared to

many corporate shares. In an open-ended scheme, an investor can get back his
money promptly at the net asset value related prices from the mutual fund itself.
On the other hand, in case of a close-ended scheme, an investor can sell the units
on a stock exchange at the existing market prices or can avail of the facility of
direct repurchase at NAV related prices which some close-ended and interval
schemes offer the investors occasionally. Thus when there is requirement of
immediate cash, the units of the mutual fund scheme can be liquidated by the
respective investor without any impediment.

5. Return Potential: Mutual fund have the potential to provide higher return over
a long term as they yield to diversification of securities which are mentioned
clearly and specifically in an offer document. In a mutual fund, dividend and
capital gains earned by the investor can be repeatedly reinvested, thus
compounding the reinvestments.

6. Assured Allotment: Mutual fund houses endow with assurance to the potential
investors of firm allotment (typically it is total, sometime it is partial) when an
application has been made for the units of the mutual fund schemes. Obviously,
under the tax-savings schemes, there is limit on investment.

7. Low Cost: Investment in a mutual fund scheme proves to be relatively less

expensive as compared to directly investing in the capital market. A direct
investor bears all the costs of investing for example brokerage or custody of
securities. Even a small investor will obtain the benefits of economies of scale, if
resorts to mutual fund investment option. Moreover, the entry and exit load are
nominal as well as administration expenses are also economical.
8. Transparency: Investment in a mutual fund is perhaps considered the most
transparent financial intermediary. When investors invests in a scheme of a
mutual fund house, the investor knows the investment objective, the asset
allocation pattern, net asset value, expenses, and any other information which is
important before investment is made. The investors receives regular information
on the value of investment in addition to disclosure on specific investment made
by the scheme, the proportion of money invested in each category of assets and
the fund manager’s investment strategy and Outlook. In addition to this, mutual
fund clearly declares their portfolio every month. Thus an investor has the idea
of where his money is being deployed and in case they are not satisfied with their
portfolio construction, they can withdraw at a short notice. With the help of such
transparency an investor can track the performance of the mutual fund scheme
periodically.

9. Flexibility: Investing in a mutual fund scheme provides elasticity to the investors.

Through features of regular investment plans, regular withdrawal plan,
reinvestment option, dividend option, growth plans an investor can systematically
invest according to the necessity and convenience. Along with this, mutual fund
offers a family of schemes or investment patterns such as equity, debt, liquid or
balanced funds and an investor have the option of transferring their holdings from
one scheme to the other within the same fund house.

10. Tax Benefits: Some mutual fund schemes offer tax rebates to the investors under
specific provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues, for example, Equity Linked
Savings Schemes (ELSS). Pension schemes launched by the mutual funds also
offer tax benefits. These schemes are growth oriented and invest pre-dominantly
in equities. Their growth opportunities and risks associated are like any equity-
oriented scheme.

11. Asset Allocation: Investment in a mutual funds helps in allocating money into
diverse investment options, keeping the risk aptitude and tolerance in mind. If
Rs10000 is invested in a fund, then the money can be allocated in debt or equity
instruments, as per the risk appetite of the individual investor.

12. Career Planning: Mutual fund offers the option of Systematic Investment Plan
(SIP) which proves to be an ideal way of investment for young people who are
on the threshold of commencing their career and require building wealth over a
 long period of time. Through systematic investment plan an investor can invest
money at regular interval in a mutual fund scheme. This will also help in
escalating the habit of savings among younger generation.

13. Retirement Planning: Besides the concern for younger people, mutual fund also
offers Systematic Withdrawal Plan (SWP), which is ideal for retired or nearing
retirement persons. Under these plans one can make investments in a mutual fund
scheme and can withdraw money at regular interval to take care of the old age
expenditure.

14. Stability to Stock Market: As mutual fund houses have a large amount of pooled
funds at their discretion, it provides those economies of scale by which they can
absorb any losses in the stock market and can continue investing in the stock
market. In addition, mutual fund increases liquidity in the money and capital
market.

15. Equity Research: Mutual fund houses are able to afford information and data
required for investment in performing companies and sectors as they have
availability of large amount of funds, resources, and dedicated equity research
teams.

16. Well Regulated: Registration of mutual fund houses is made mandatory by

Securities Exchange Board of India (SEBI). All the mutual fund companies are
required to function within provision of strict regulations designed to protect the
interest of investors. Moreover, the operations of mutual fund are regularly
monitored by SEBI.

17. Small Investments: Even a small investor can become a part of mutual fund
scheme without any difficulty. Most mutual fund schemes keep the minimum
investment between Rs 1000 to 5000. No other avenue of investment offers such
a wide array of choice for such an affordable sum by retail investors. Simplicity:
Investments in mutual fund is measured to be straightforward, in contrast to other
available instruments in the market. Most Asset Management Company also has
automatic purchase plans whereby units of the mutual fund can be purchased from
as little as Rs 2000, as also where systematic investment plan starts with just
Rs.50 per month basis.
18. Freedom from Tracking Investments: Investors are relieved from tracking the
performance of their investments on a regular basis. The important task of
checking the scheme‟s performance is done by experts appointed by the mutual
fund house, who buy and sell securities on the behalf of investor to achieve the
present objectives for them. Investors are only required to track the performance
of the mutual fund house.

19. Essentials: Investors are required to match their wants with the detailed benefits
that are provided by mutual fund. This will make certain that the investor makes
a better choice and gets the maximum advantages of various schemes.

2.6.3.:- DEMERITS OF MUTUAL FUNDS

1. No Control over Cost
2. No Tailor Made Portfolio
3. Difficulty in Managing Portfolio of Fund’s
4. No Guaranteed Returns:
5. Inadequacy of Professional Management
6. Dilution
7. Taxes
8. Shifting Of Loyalty of a Fund Manager.
 2.7 ORGANISATION STRUCTURE OF MUTUAL FUND

Mutual fund industry has shown a remarkable growth in performance. Over the last
few years and is still enduring to do so. It is considered to be the safest investment
avenues because of its well-diversified portfolio and strict follow up by SEBI.

SEBI, the market regulator, has outlined clearly the role, responsibilities and duties
of each entity, which form a mutual fund. In India, the entities which are involved
in a mutual fund operation are specified as under.

1. Sponsor

2. Trust

3. Asset Management Company

4. Custodian and depositories

5. Bankers

6. Brokers

7. Distributors

8. Transfer agent/ Registrar

 2.8 REGULATORY FRAMEWORK:
Indian Mutual Funds are regulated by SEBI, whose regulations are quite
comprehensive and qualitatively superior to those of many other countries.
Association of Mutual Funds in India (AMFI) represents the Asset Management
Companies (AMCs) in India. Established as a non-profit organization on 22nd
August, 1995. This association is dedicated for promoting and protecting the
interest of mutual funds and their unit holders, increasing public awareness of
mutual funds and serving the investor’s interest by defining and maintaining high
ethical and professional standards in the mutual fund industry.

Though RBI role is to regulating banking industry in India but as many mutual fund
companies are backed by banks so indirectly RBI has significant contribution and
role for safeguarding the interest of investors and other stakeholders in India.

List of all stakeholders in Indian mutual fund industry is as follows:

 RBI
 SEBI
 AMFI
 2.9 CLASSIFICATION OF MUTUAL FUNDS:

1. Based on Asset Class/Nature

a. Equity Funds
b. Debt Funds
c. Hybrid Funds
2. Based on Structure
a. Open-ended Funds
b. Closed-ended Funds
c. Interval Funds
3. Based on Investment Goals
a. Growth Funds
b. Income Funds
c. Liquid Funds
d. Money Market Funds
e. Tax-Saving Funds
f. Capital protection funds
g. Fixed maturity funds
h. Pension funds

4. Specialized Mutual Funds

a. Sector fund
b. Index fund
c. Fund of funds
d. Emerging market funds
e. International/foreign funds
f. Global funds
g. Real estate funds
h. Exchange traded funds
5. Based on Risk
a. Very Low-Risk Funds
b. Low-Risk Funds
c. Medium Risk Funds
d. High-Risk Funds

2.9.1 Mutual Funds Based on Asset Class:

a. Equity Funds

Primarily investing in stocks, they also go by the name stock funds. They invest
the money amassed from investors from diverse backgrounds into shares of
different companies. The returns or losses are determined by how these shares
perform (price-hikes or price-drops) in the stock market. As equity funds come
with a quick growth, the risk of losing money is comparatively higher.

b. Debt Funds

Debt funds invest in fixed-income securities like bonds, securities and treasury bills
– Fixed Maturity Plans (FMPs), Gilt Fund, Liquid Funds, Short Term Plans, Long
Term Bonds and Monthly Income Plans among others – with fixed interest rate and
maturity date. Go for it, only if you are a passive investor looking for a small but
regular income (interest and capital appreciation) with minimal risks.

c. Hybrid Funds
 As the name implies, Hybrid Funds (also go by the name Balanced Funds) is an
optimum mix of bonds and stocks, thereby bridging the gap between equity funds
and debt funds. The ratio can be variable or fixed. In short, it takes the best of two
mutual funds by distributing, say, 60% of assets in stocks and the rest in bonds or
vice versa. This is suitable for investors willing to take more risks for ‘debt plus
returns’ benefit rather than sticking to lower but steady income schemes.
2.9.2 Mutual Funds Based On Structure:
Mutual funds can be categorized based on different attributes (like risk profile,
asset class etc.). Structural classification – open-ended funds, close-ended funds,
and interval funds – is broad in nature and the difference depends on how flexible
is the purchase and sales of individual mutual fund units.

a. Open-Ended Funds

These funds don’t have any constraints in a time period or number of units – an
investor can trade funds at their convenience and exit when they like at the current
NAV (Net Asset Value). This is why its unit capital changes constantly with new
entries and exits. An open-ended fund may also decide to stop taking in new
investors if they do not want to (or cannot manage large funds).

b. Closed-Ended Funds

Here, the unit capital to invest is fixed beforehand, and hence they cannot sell a
more than a pre-agreed number of units. Some funds also come with an NFO
period, wherein there is a deadline to buy units. It has a specific maturity tenure
and fund managers are open to any fund size, however large. SEBI mandates
investors to be given either repurchase option or listing on stock exchanges to exit
the scheme.

c. Interval Funds

This has traits of both open-ended and closed-ended funds. Interval funds can be
purchased or exited only at specific intervals (decided by the fund house) and are
closed the rest of the time. No transactions will be permitted for at least 2 years.
This is suitable for those who want to save a lump sum for an immediate goal (312
months)

2.9.3. Mutual Funds Based on Investment Goals:

a. Growth Funds

Growth funds usually put a huge portion in shares and growth sectors, suitable for
investors (mostly Millennial) who have a surplus of idle money to be distributed in
riskier plans (albeit with possibly high returns) or are positive about the scheme.

b. Income Funds

This belongs to the family of debt mutual funds that distribute their money in a mix
of bonds, certificate of deposits and securities among others. Helmed by skilled
fund managers who keep the portfolio in tandem with the rate fluctuations without
compromising on the portfolio’s creditworthiness, Income Funds have historically
earned investors better returns than deposits and are best suited for risk-averse
individuals from a 2-3 years perspective.

c. Liquid Funds

Like Income Funds, this too belongs to the debt fund category as they invest in debt
instruments and money market with tenure of up to 91 days. The maximum sum
allowed to invest is Rs 10 lakhs. One feature that differentiates Liquid Funds from
other debt funds is how the Net Asset Value is calculated – NAV of liquid funds
are calculated for 365 days (including Sundays) while for others, only business
days are calculated.

d. Money Market Funds

Just as some investors trade stocks in the stock market, some trade money in the
money market, also known as capital market or cash market. It is usually run by
the government, banks or corporations by issuing money market securities like
bonds, T-bills, dated securities and certificate of deposits among others. The fund
manager invests your money and disburses regular dividends to you in return. If
you opt for a short-term plan (13 months max), the risk is relatively less.

e. Tax-Saving Funds

ELSS or Equity Linked Saving Scheme is gaining popularity as it serves investors

the double benefit of building wealth as well as saves on taxes – all in the lowest
lock-in period of only 3 years. Investing predominantly in equity (and related
products), it has been known to earn you non-taxed returns from 14-16%. This is
best-suited for long-term and salaried investors.

f. Capital Protection Funds

 If protecting your principal is your priority, Capital Protection Funds can serve the
purpose while earning relatively smaller returns (12% at best). The fund manager
invests a portion of your money in bonds or CDs and the rest in equities. You will
not incur any loss. However, you need at least 3 years (closed-ended) to safeguard
your money and the returns are taxable.

g. Fixed Maturity Funds

Investors choose as the FY ends to take advantage of triple indexation, thereby

bringing down tax burden. If uncomfortable with the debt market trends and related
risks, Fixed Maturity Plans (FMP) – investing in bonds, securities, money market
etc. – presents a great opportunity. As a close-ended plan, FMP functions on a fixed
maturity period, which could range from 1 month to 5 years (like FDs). The Fund
Manager makes sure to put the money in an investment with the same tenure, to
reap accrual interest at the time of FMP maturity.

h. Pension Funds

Putting away a portion of your income in a chosen Pension Fund to accrue over a
long period to secure you and your family’s financial future after retiring from
regular employment – it can take care of most contingencies (like a medical
emergency or children’s wedding). Relying solely on savings to get through your
golden years is not recommended as savings (no matter how big) get used up. EPF
is an example, but there are many lucrative schemes offered by banks, insurance
firms etc.

2.9.4 Specialized Mutual Funds:

a. Sector Funds

Investing solely in one specific sector, theme-based mutual funds. As these funds
invest only in specific sectors with only a few stocks, the risk factor is on the higher
side. One must be constantly aware of the various sector-related trends, and in case
of any decline, just exit immediately. However, sector funds also deliver great
returns. Some areas of banking, IT and pharma have witnessed huge and consistent
growth in recent past and are predicted to be promising in future as well.

b. Index Funds
 Suited best for passive investors, index funds put money in an index. It is not
managed by a fund manager. An index fund simply identifies stocks and their
corresponding ratio in the market index and put the money in similar proportion in
similar stocks. Even if they cannot outdo the market (which is the reason why they
are not popular in India), they play it safe by mimicking the index performance.

c. Funds of Funds

A diversified mutual fund investment portfolio offers a slew of benefits, and ‘Funds
of Funds’ aka multi-manager mutual funds are made to exploit this to the tilt – by
putting their money in diverse fund categories. In short, buying one fund that
invests in many funds rather than investing in several achieves diversification as
well as saves on costs.

d. Emerging market Funds

To invest in developing markets is considered a steep bet and it has undergone

negative returns too. India itself a dynamic and emerging market and investors to
earn high returns from the domestic stock market, they are prone to fall prey to
market volatilities. However, in a longer-term perspective, it is evident that
emerging economies will contribute to the majority of global growth in the coming
decade as their economic growth rate is way superior to that of the US or the UK.

e. International/ Foreign Funds

Favoured by investors looking to spread their investment to other countries,

Foreign Mutual Funds can get investors good returns even when the Indian Stock
Markets do fare well. An investor can employ a hybrid approach (say, 60% in
domestic equities and the rest in overseas funds) or a feeder approach (getting local
funds to place them in foreign stocks) or a theme-based allocation (e.g., Gold
Mining).

f. Global Funds

Aside from the same lexical meaning, Global Funds are quite different from
International Funds. While a global fund chiefly invests in markets worldwide, it
also includes investment in your home country. The International Funds
concentrate solely on foreign markets. Diverse and universal in approach, Global
Funds can be quite risky to owing to different policies, market and currency
variations, though it does work as a break against inflation and long-term returns
have been historically high.
g. Real Estate Funds

In spite of the real estate boom in India, many are wary about investing in such
projects due to multiple risks. Real Estate Fund can be a perfect alternative as the
investor is only an indirect participant by putting their money in established real
estate companies/trusts rather than projects.

OPTIONS OFFERED BY MUTUAL FUND SCHEMES

Dividend

Insurance Growth

Retireme OPTIONS SIP

nt

Lumpsum SWP

STP

Due to the growing competition in the mutual fund industry, mutual

funds offer various options which cater according to the requirements and capacity
of investors.
1. Dividend option:
Dividend option offers the gains of the particular scheme to be paid out at regular
intervals in the form of dividends. Dividend distribution depends on the funds policy
to offer daily, weekly, monthly, quarterly, half-early, or annual dividend option.
 2. Growth option:
Under growth option, investments gains are subject to be ploughed back into the
scheme and announcement of dividend is not done.

Systematic Investment Plan (SIP):

Systematic investment Plan is an option offered by the mutual funds to assist one
save regularly. It resembles the recurring deposit with small money. The investor is
provided the facility of investing regular sums of money every month to buy units
of a mutual fund scheme. The minimum amount of investment in Mutual fund SIP
is Rs 500 either monthly or quarterly depending on the policies of the fund house.
As the investment is made on a regular basis, the investor buys more units when the
prices are low and fewer units when the prices are high. Basically it means the
respective investor resorts to Rupee Cost Averaging. SIP helps the investor to make
money over the long time.

Systematic Withdrawal Plan (SWP) :

The systematic withdrawal plan allows the investor to extract a fixed amount every
month. The investor can select the withdrawal of a fixed sum every month or a
certain percentage of the capital appreciation in the NAV of the scheme

Systematic Transfer Plan (STP):

An STP (Systematic Transfer Plan) /SWP (Systematic Switch Plan), is a plan that
allows investor to give consent to the Mutual fund to periodically transfer a certain
amount / switch(redeem) certain units from one scheme and invest in another
Scheme. Thus, at regular intervals an amount/number of units you choose is
transferred from one mutual fund scheme to another of your choice. This helps
ensure that your money is unaffected by any market volatility in the short term.
Bearing in mind that investing in equities at one go could be risky, you can choose
to park your funds in liquid or debt funds, reducing the downside risk. This facility
thus helps in deploying funds at regular intervals.

Lump Sum / One Time Investment:

A lump sum amount is defined as a single complete sum of money. A lump sum
investment is of the entire amount at one go. If an investor is willing to invest the
entire amount available with him in a mutual fund, it will refer to as lump sum
mutual fund investment. Lump sum investment is considered as one way of
investing into mutual funds. Usually lump sum investments are undertaken by big
players and investors, in stocks especially those related to assets that are likely to
appreciate in the long term, making the investment profitable except in cases of high
volatility.
Retirement Pension Plan:

Some schemes offered by the mutual fund houses are linked with retirement
pensions. Individual investors participate in these plans to safeguard their retired
lives and corporate for their employees‟ benefit.
 CHAPTER-3

Overview of Reliance Mutual Fund

3.1 RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) is one of the India’s leading mutual funds.
A part of the reliance Anil Dhirubhai Ambani (ADA) group, is one of the fastest
growing mutual funds in India. RMF offers investors a well-rounded portfolio of
products to meet varying investor requirements and has presence in 160 cities across
the country. RMF constantly endeavours to launch innovative products and customer
service initiatives to increase value to investors.
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) wide 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.

3.2:-OBJECTIVES OF RELIANCE MUTUAL FUND

 1.
To carry on the activity of Mutual Fund
as may be permitted at law,and
formulate and devise varies collective
schemes of savings and Investment for
people in india and abroad,and also
ensure Liquidity of Investment for the
unit holders.

2.
To deploy funds thus raised so as
to help the unit holders earn
reasonable returns on their
Savings.
3.
To take such steps as may be
necessary from time to time to
realise the effects without any
limitations.

3.3 Introduction to Reliance Nippon Life Asset Management Ltd

Reliance Nippon Life Asset Management Limited (formerly Reliance Capital
Asset Management Limited) (RNLAM) is the asset manager of Reliance Mutual
Fund (RMF). RNLAM is a subsidiary of Reliance Capital Limited (RCL).
Presently, RCL holds 51% of its total issued and paid-up equity share capital of
RNLAM. Nippon Life Insurance Company (NLI) holds 44.57% of RNLAM's total
issued and paid up equity share capital.
Reliance Capital Limited is one of India’s leading and fastest growing, RBI
registered Non-Banking Finance Company (NBFC) and has its business interests
in Asset Management, Life Insurance, General Insurance, Private Equity,
Proprietary Investments, Stock Broking, & other activities in the Financial Services
Sector.

Nippon Life Insurance Company (“NLI”) is a Japan’s leading private life insurer
and offers a wide range of financial products, including individual and group life
and annuity policies through various distribution channels, mainly using face-to-
face sales channels for its traditional insurance products. It primarily operates in
Japan, North America, Europe and Asia, and is headquartered in Osaka, Japan. NLI
conducts asset management operations in Asia, through its subsidiary Nissay Asset
Management Corporation (“Nissay”), which manages assets globally.

Source: Reliance Mutual Fund

 3.4 ABOUT RELIANCE NIPPON LIFE ASSET MANAGEMENT
LIMITED:

Reliance Nippon Life Asset Management Limited (formerly Reliance Capital

Asset Management Limited) is an unlisted public limited company incorporated
under the Companies Act, 1956 on February 24, 1995, having its registered office
at:

'H'Block, 1st Floor, Dhirubhai Ambani Knowledge City,

Koparkhairane, Navi Mumbai – 400710.

and its Corporate Office at:

Reliance Centre,

7th Floor South Wing,

Off Western Express Highway,

Santacruz (East), Mumbai – 400 055.

RNLAM has been appointed as the Asset Management Company (AMC) of

Reliance Mutual Fund (RMF) by the Trustees of RMF vide Investment
Management Agreement (IMA) dated May 12, 1995 amended on August 12, 1997,
January 20, 2004 and February 17, 2011 in line with Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996.

3.5 RECENT MILESTONES:

 With an AUM of approx. Rs. 2, 44,904 crores, Reliance Nippon Life Asset
Management (RNLAM) is India’s largest asset manager. Also, it is the second most
profitable asset management company.
 A strong retail franchise has helped RNLAM in better access to investors
across the length and breadth of the country and build a stable asset base.
 Reliance Mutual Fund has the highest SIP count in the industry with committed
flows of approx. Rs. 9,000 crores per year.
 RMF has a 30% market share in the ETF category
• The CPSE FFO in January 2017 was one of the largest initial
offerings in the MF industry. As part of the issuance, RMF raised
over Rs. 13,700 crores (over 3x the issue size) from more than
2.7 lakh investors.
 Equity/ Equity Oriented Hybrid Schemes
Sr No. Old Schme Name New Scheme Name New Category

1 Reliance Top 200 Fund Reliance Large CapLarge Cap fund

Fund
2 Reliance Vision Fund Reliance Vision Large & Mid Cap Fund
Fund
3 Reliance Equity Reliance Multi CapMulti Cap Fund
Opportunities fund Fund
4 Reliance Growth Fund Reliance Growth Multi Cap Fund
Fund
5 Reliance Focused Large Cap Fund Reliance Focused Focused Fund-Multi Cap
(getting Equity Fund
merged into)
Reliance Mid & Small
Cap Fund
6 Reliance Small Cap fund Reliance Small CapSmall Cap fund
fund
7 Reliance Regular Savings Fund- Reliance Value Value Fund
Equity Option Fund
8 Reliance tax Saver (ELSS) Fund Reliance Tax SaverELSS
(ELSS) fund
9 Reliance Retirement fund Reliance Retirement
Retirement Fund
– Wealth Creation fund – Wealth
Scheme Creation Scheme
10 Reliance Banking Fund Reliance Banking Sectoral
Fund
11 Reliance Pharma Fund Reliance Pharma Sectoral
Fund
12 Reliance Diversified Power Reliance Power & Thematic
Sector Fund Infra Fund
13 Reliance Media & Reliance Thematic
Entertainment Fund Consumption
Fund
14 Reliance Fund Quant Plus Reliance Quant Thematic (following a
Fund factor – based model)
15 Reliance Fund Japan Equity Reliance Thematic (International)
Japan Equity
Fund
 16 Reliance US Equity
Reliance US Thematic (International)
Opportunit ies Fund Equity
Opportunities Fund
17 Reliance Arbitrage Reliance Arbitrage Arbitrage Fund
Advantage Fund Fund
18 Reliance Equity Savings Fund Reliance Equity Equity Savings
Savings Fund
19 Reliance NRI Equity Reliance Balanced Advantage Fund
Balanced
 RNLAM has one of the most stable and experienced Management and
Investment teams in the sector.

3.6 DIGITAL INITIATIVES:

• RMF has focused approach in deploying technology in the gamut of B2B and
B2C transactions.
• RMF is sourcing approx. 30% purchases from the Digital channel.

 RNLAM has a fast-growing international distribution network with strategic

tie-ups with Nippon Life Insurance and Samsung Asset Management
 A robust retail presence, integrated digital infrastructure and strong focus on
Alternative Investments are amongst the key drivers of RNLAM’s future
growth.
 Reliance Mutual fund has 3 India focused funds sold in Japan through 23
distributors and Rs. 6000 crores already raised by them.
 Reliance Mutual Fund launched UCITS Equity in Europe.
 Reliance Mutual Fund has on-ground presence in Singapore, Mauritius &
Dubai.

3.7 PRODUCTS OF RELIANCE MUTUAL FUND:

The products offered by Reliance Mutual Fund (currently) are as follow:

Debt/ Debt Oriented Hybrid Schemes

Sr Old Scheme New Scheme New Category
No. Name Name
1 Reliance Liquid Fund Reliance Liquid Fund Liquid Fund
– Treasury Plan
Pursuant to the SEBI
 2 Reliance Liquid Fund Reliance Ultra Ultra Short
– Cash Plan Short Duration Fund
Duration Fund
3 Reliance Money Reliance Low Low Duration fund
Manager Fund Duration fund
4 Reliance Short term Reliance Short term Short Duration Fund
Fund Fund
5 Reliance Corporate Reliance Classic Medium Duration
Bond Fund Bond Fund Category
6 Reliance Income Fund Reliance Income Fund Medium to Long
Duration Category
7 Reliance Dynamic Reliance Dynamic Dynamic Bond
Bond Fund Bond Fund
8 Reliance Liquidity Reliance Money Market Money Market Fund
Fund Fund
9 Reliance Medium Reliance Prime Debt Corporate Bond Fund
Term Fund Fund
10 Reliance Regular Reliance Credit Risk Credit Risk Fund
Savings Fund – Debt Fund
Option
11 Reliance Banking & Reliance Banking & Banking & PSU Debt
PSU Debt Fund PSU Debt Fund Fund
12 Reliance Gilt Reliance Gilt Gilt Fund
Securities Fund Securities Fund
13 Reliance Floating Rate Reliance Floating Floater Fund
Fund – Short Term Rate Fund
Plan
14 Reliance Reliance Hybrid Conservative Hybrid
Monthly Bond Fund
Income Plan Fund
15 Reliance Reliance Retirement Retirement Fund
Retirement Fund -
Fund - Income
Income Generation
Generation Scheme Scheme
Circular on “Scheme Categorization and Rationalization of Mutual Fund
Schemes.”
 3.8 NEW PRODUCTS LAUNCHED WITHIN THE SPAN OF 2
MONTH OF SUMMER INTERNSHIP PROGRAMME

A.) RELIANCE NIVESH LAKSHYA FUND:

Leaving
a Legacy

Preservation of Wealth

Long Term Goals

 “NFO opened on 18th June.”

1.) “Reliance Nivas Lakshya Fund” (100% Govt of India Bonds

Investment)

2.) If investor invest 1 crore then after 25 yrs it becomes 6.75 crores.

3.) Investors is getting return @ 22% Annualy yearly if taken 25 yrs

in account. As he is getting 5.75 crore extra.In 25 yrs @22-23 lakhs
per yr.

4.) Simple interest @22% for 25 yrs tenure. Big opportunity for
investors
5.) Bank is getting brokerage of 22 lakhs for 1 crore for 25 yrs. 22%
on amount invested. HIGH EARNING POTENTIAL .
6.) Pre tax return 10.25% and post tax 7.1% .
7.) Exit load nil and client can withdraw Anytimes!!
B.) RELIANCE FIXED HORIZON FUND XXXVII – SERIES 9
(HIGH YIELD):

NFO Opening - 25th May 2018

NFO Closing - 8th June 2018

Maturity Date - 25th May 2022

Indexations benefit:

1. Tenure – 1443 Days

2. Portfolio – AA & A

3. Regular – 8.50

4. Brokerage - 90 bps upfront + 15 bps trail

 3.9:- REVAMPED PRODUCTS LAUNCHED WITHIN THE SPAN
OF 2MONTHS OF SUMMER INTERNSHIP PROGRAMME

A.) RELIANCE BALANCED ADVANTAGE FUND:

Reliance MF Most Awaited Balanced Advantage Fund Open

for Subscriptions Dated 30/04/2018

Emotion Free Asset Allocation

Lowers Downside Risk

Long Term Alpha Generation

RBAF Strategy & Rationale:

1.) “Equity Level Range 30% to 80%” based on Proprietary Based Model

2.) Attempts to “Buy more on Lows & Sell on Highs”

3.) Investment Primarily “Top 200 Cos by Mktcap”

4.) Focus on High Quality Businesses with a “Proven

Track Record”

5.) “Conservative Portfolio” focused on Market Leaders & Larger Mid Caps (I.e.
Large cap oriented portfolio)

6.) Well Diversified Portfolio “Across Stocks & Sectors”

7.) Derivative (Arbitrage) exposure for “Hedging/Portfolio

Rebalancing”
 8.) Debt Exposure usually in the “Range of 15% to
20%”

9.) Debt Portfolio will be “Conservative focused on the shorter

end”

10.) “Monthly Rebalancing Frequency”

11.) RBAF Generated 3 yr Avg Rolling Returns of “13% CAGR Vs 9% of

Sensex”

12.) “Last but not least do not forgot to submit RBAF application on 02nd
May”

B.) RELIANCE SIP INSURE

Reliance SIP Insure facility is an add on feature of life insurance cover under
Group Term Insurance to individual investors opting for SIP in the designated
schemes. It helps to encourage individual investors to save & invest regularly
through Systematic Investment Plan (SIP) and help achieve their financial
objective without any hindrance.

Benefits to the Investor:

Free Life Insurance Cover at no extra cost (Since Insurance premium borne by
AMC) Free life insurance cover up to 50 lakhs per investor across all schemes /
plans and folios (Including 16 schemes of equity and 1 scheme of debt) it Helps
to complete the planned investments Maturity Proceeds at NAV based prices.

Amount of Life Insurance Cover Available:

The Life Insurance Cover under ‘Reliance SIP Insure’ facility will be as per the
following clause.

 Year 1(From 1st to 12th Installment) – 10 Times the Monthly SIP

Installment
 Year 2 (After 12th to 24th Installment) – 50 Times the Monthly SIP
Installment
 Year 3 onwards (After 24th Installment) – 120 Times the Monthly SIP
Installment

• Limits above are subject to maximum coverage of Rs. 50 lakhs per investor.
• Since the limit is per investor, all his existing investments in Reliance SIP Insure
across all eligible schemes will be considered for calculating the maximum sum
assured limit.

ELIGIBILITY

 All individual investors enrolling for investments via SIP and opting for ‘Reliance
SIP Insure’
 Only individual investors whose entry age is 18 years & more and less than 51
years at the time of investment
 In case of multiple holders in the any scheme, only the first unit holder will be
eligible for the insurance cover.

3.10 DIGITAL BUSINESS OF RELIANCE MUTUAL FUND:

Reliance Mutual Fund provide its investors have many ways to do transactions as
below:

1. Website:
You can use our website to transact with us 24X7. The website is simple and easy
to use enabling you to complete a host of transactions online.

➢ Key benefits:

• All you need is a PAN to start investing

• Existing investors can even login using their Gmail
• Purchase in just 3 simple steps
• Multiple online payment options, such as, debit card with ATM PIN, net banking,
NEFT, RTGS, Interbank Mobile Payment Service (IMPS) and One Time Bank
Mandate
• Many services like purchase, track your transaction etc. are available even without
registering
• Live chat and call back to assist you at all times
• Use our "Learn and invest" section to know about our schemes and facilities and
invest.
 2. Mobile App:

Source: Reliance Mutual Fund

Transacting with the app is safe, easy and simple. You can use our app to plan
your investments.

➢ Key benefits:
• Use 'Simply save' to invest in 1 step – anytime and anywhere
• Get account statement with ease
• Track investments
• Have access to information on all company’s funds.
• Use company’s tools and calculators to invest smarter
• Invest using internet banking, debit card, Interbank Mobile Payment Service MPS
or a debit mandate.
2. SMS:

Transact on the move through SMS from registered mobile number! Investors can
now easily perform Purchase, Redeem and SIP transaction under your folio
though SMS. To avail the SMS based transactional services, investors need to
register their "One-time Bank Mandate (OTBM)" with company.

Send an SMS to 9664001111 in the format given below:

3. Call Centre:

Use land phone or mobile to buy more RMF units, call us on toll free number
1800 300 11111.

Company’s self-help options(IVR) is functional 24x7. Investor can speak to

company’s customer service executives from 8am to 9pm, Monday to Saturday

4. Buy through the Stock Exchange Platform:

Reliance Mutual Fund makes it simple to Subscribe/redeem units through the

BSE STAR Platform (BSE) and MFSS Platform (NSE). Any number of units that
you can purchase through these platforms and the same will be credited to your
demat account.

5. Reliance Any Time Money Card:

Reliance Any Time Money card that combines the benefits of mutual fund
investments along with the convenience of a debit card. While traditional Mutual
Fund investments offer the potential to earn market-linked returns with benefits
of diversification, relatively low cost, liquidity, and professional management,
accessibility to investments in these funds, mostly provided through physical
redemptions, though high, is not instantaneous. The Reliance Any Time Money
Card offers instant accessibility and liquidity to investors of mutual fund.
 Source: Reliance Mutual Fund

➢ FEATURES OF RELIANCE ANYTIME MONEY CARD:

• Cash withdrawal facility at Visa enabled ATMs and purchase transactions at

merchant establishments just like a regular debit card in India.

• Daily Visa enabled ATM cash withdrawal limit of 50% of the balance in the
primary scheme account or up to permissible limit determined by the bank or Rs.
50,000 whichever is lower.

• Daily purchases limit of 50% of the balance in the primary scheme account or Rs.
100,000 whichever is lower.

• Fuel surcharge waiver

• Free SMS and E-mail alerts on every transaction Investor can choose either
Reliance Liquid Fund – Treasury Plan/Cash Plan or Reliance Money Manager
Fund as a primary scheme.

6. Buy with Application Forms:

If investor would rather buy and sell through a paper-based application form,
company would be happy to serve you at any of our investor service centres.

Investors have the added convenience of receiving their Account Statement

promptly in their email id registered with company. Investors need to do is enter
their folio number and period for which they would like to receive the Account
Statement in boxes in the Get Account Statements at company’s website.

Following figure shows digital services available for B2C & B2B:
 3.11 SWOT Analysis
A type of fundamental analysis of the health of a company by examining its
strengths(S), weakness (W), business opportunity (O), and any threat (T) or
dangers it might be exposed to.

I. STRENGTHS:

 Brand Name:
Reliance Mutual Fund is the subsidiary of Reliance Capital which has a brand name
of Anil Dhirubhai Ambani Group.

 Large, Stable, Experienced Workforce:

According to Sundeep Sikka, CEO, Reliance Mutual Fund, “Large, stable &
experienced workforce is the major strength of the company”.

 Long-Term Wealth Creation Record:

According to Sundeep Sikka, CEO, Reliance Mutual Fund, “Long-term wealth
creation record is the key strength of company”.

 Reliance Self Service Kiosk:

Reliance Mutual Fund has a machine which looks like ATM, from which the
investors can easily get statements & do redemptions. Its industry’s first initiative
by Reliance Mutual Fund.
II. WEAKNESS:

➢ Switching Customers:
The major weakness of Reliance Mutual Fund is switching customers to other
AMCs because they are not satisfied with the services provided by Reliance Mutual
Fund.

III. OPPORTUNITIES:

➢ Potential markets:

The Indian rural market has great potential. All the major market leaders consider
the segments and real markets for their products. So, Reliance Mutual Fund has an
opportunity to be market leader in rural area. Reliance Mutual Fund has an
opportunity to increase its global presence.

IV. THREATS:

 Competition:

Reliance Mutual Fund has many competitors like ICICI Prudential Mutual Fund,
HDFC Mutual Fund, SBI Mutual Fund etc.

 Stringent Laws:

SEBI & AMFI can imply more stringent laws in future on AMCs which may affect
the Reliance Mutual Fund
 Chapter- 4
INTRODUCTION TO SIP AND LUMPSUM

4.1 SYSTEMATIC INVESTMENT PLAN

Systematic Investment Plan (SIP) is a method of investing a fixed sum, regularly, in

a mutual fund scheme. An ideal way for first-time investors to enter capital markets
with an aspiration to create wealth SIP helps investors create wealth by investing
fixed sums of money every month over a period of time.

Source: jagran.com

4.1.1 KEY FEATURES OF SIP

A) Helps you to adopt disciplined approach towards savings.
B) Averaging your investment without worry of market movement (Rupee Cost
Averaging)
C) Helps in creating Wealth for the Long term.
D) It is essential tool for your financial goals/saving needs.

4.1.2 KEEP IN MIND WHILE DOING SIP

 Start early, earn bigger returns
 Stay longer, enjoy the compounding effect
 Be patient, the money is sure to grow in the long run
 Be consistent, never skip your monthly payment

Like the hare-tortoise story, the success mantra in SIP besets, not in how fast you
run but how long you run. Here the race is won by starting early and staying
longer.
 4.1.3BENEFITS OF SIPs

Source: Personal FN

1. SIPs are light on the wallet:

SIPs enable you to invest in smaller amounts at regular intervals (daily, monthly or
quarterly). This in turn reduces your burden of defraying a lump-sum - at one go -
from your bank account.
If you cannot invest Rs 5,000 in one shot, that's not a huge stumbling block, you
can simply take the SIP route and trigger the mutual fund investment with as low
as Rs 500 per month.

2. Makes market timing irrelevant:

Investors are always in a dilemma that if it is a right time to invest or not. No one
can predict which may the market will move or if the market has achieved its peak
or low point. Investing through SIP resolves this dilemma as it is a periodic
investment which occurs across market cycles. SIP is not free from the market
volatility and the fund value may go down, but it frees you from the worry of
market movements.

3. SIPs enable rupee-cost averaging:

Many a time, a SIP works better as opposed to one-time, lump sum investing. This
is because of rupee-cost averaging. Under rupee-cost averaging you would
typically buy more of a mutual fund unit when prices are low, and similarly, buy
fewer mutual units when prices are high. This infuses good discipline since it forces
 you to commit cash at market lows, when other investors around you are wary and
exiting the market. It also enables you to lower the average cost of your
investments.

4. SIPs benefit from the power of compounding:

As SIPs subscribe you to the habit of investing regularly, it enables you to

compound your money invested. So, say you start a SIP of Rs 1,000, in a mutual
fund scheme following prudent investment system and processes, with a SIP tenure
of 20 years and expect a modest return of 15% p.a., your money would grow to
approximately Rs 15 lakh.
So, over the long-term, SIPs can compound wealth better and systematically as
opposed to investing a lump sum, especially when the journey of wealth creation
is volatile.

5. SIPs are effective medium for goal planning:

All of us have financial goals – may be buying a house, buying a dream car,
providing good education to children, getting them (children) married well, retiring
etc. But all this comes with systematic financial planning. Very often many invest
in the equity markets, with a motive of making short-term gains, and often ignore
to use the equity markets as a window for long-term wealth creation, in order to
achieve one's financial goals. You can effectively achieve your financial goals by
enrolling for SIPs. The earlier you start the better it is.
Despite the benefits, many investors have some misbelieve about SIPs owing to
incorrect information shared by friends, family, brokers etc.

4.1.4DISADVANTAGES

1. Unsuitable for irregular income flow:

This method is not suitable for investors who do not have reliable and regular
cash flow as the investment is to be made at predetermined intervals.

2. Uniform investment through ups and downs:

 An investor cannot immediately change the amount being invested in response
to the ups and downs in the market. This keeps the investor from taking
advantage of the upswings.

3. Insufficient funds:
If an investor fails to maintain adequate balance in the bank on the day of debit
of SIP, the PDC or ECS, as opted, will return dishonoured. This means that the
investment will not happen that month.

4.1.5. Types of SIP

Mutual fund houses while offering SIP facility have been receptive to what
investors want. Thus over the years, SIPs have been transformed, they've
evolved.
Mutual fund houses have added several new features to the plain vanilla SIP to
complement the regular form of investing. So, let's see what more you can do
with your monthly SIP…

1. Step-up SIP or Top-up SIP:

Step-up SIP (also known as Top-up SIP) enables you to increase your SIP amount
at regular intervals. This is helpful especially in goal planning, where you say you
have a windfall income or bonus and want to invest. So, you can start with a small
amount initially and gradually increase the amount you invest. Consequently, as
our income increases, so do our expenses. Therefore, increasing your investment
level will protect you on rainy days.

Many a times, investors continue the same monthly investment through SIP for
over 5-7 years. Though they may have earned good returns on the investment, they
would have lost out on earning an additional income had they topped up or
stepped-up their SIP. Adding up the SIP amount regularly is an easy way to build
up wealth.

To add on, you have an option to have a fixed or variable top-up (Top-up Cap)
amount and a Cap Year. You can either set a fixed limit to your top-up amount or
keep it variable. Also, you can set a date until when you would wish to continue
your top-up facility.
Top-up option must be specified at the time of enrolment. The amount can be as
low as Rs 500 and in multiples of Rs 500 only. Further, the top-up details cannot
 be modified once enrolment is done. Hence, be sure before applying for it. A half
yearly and yearly SIP top-up frequency is available for monthly SIP. Quarterly
SIP offers top-up frequency at yearly intervals only. If you miss out on informing
your top-up frequency it is assumed to be at yearly intervals.

2. Flex SIP:
At times if you do not wish to SIP owing to uncertain cash flows, you can opt in
for flex SIP (also known as flexible SIP) and still stay invested. With this, you can
adjust your installment as you would want. Not only this, you can even opt for a
trigger-based option (explained in the following point).
For example, if you are rewarded by a bonus of Rs 1,00,000, with the help of Flex
SIP, you can allocate the investible surplus to directly into one of the funds of your
existing portfolio. This gives you the flexibility to either increase or decrease the
amount in any particular month.

3. Trigger SIP:
This facility is more viable if you are experienced as it involves some amount of
awareness and knowledge.
With Trigger SIP, you can set either an index level, NAV, date or an event. This
is to take advantage of any movement in anticipation. For example, if you know a
certain kind of Government policy is due next week and that will impact the index
crossing a certain mark, you can set it as a trigger date.
Similarly, you can set trigger target for your fund NAV appreciation/ depreciation
(in percentage terms) or capital appreciation or depreciation trigger.
However, Personal FN believe this could induce speculative habit and should be
avoided.
Best is to always have a long-term view in mind to achieve your set of financial
goals.

4. Perpetual SIP:
Usually when signing up a SIP mandate, you must enter the start and end date.
This is for a pre-decided term period say 1 year, 2 years, 3 years, 5 years, etc. And
once the SIP matures, many a times investors tend to procrastinate and delay
 renewal due to operational hassles. In turn, they end up missing few instalments,
which upsets the saving discipline and affect returns in the long run.
If you leave the end date block blank in a SIP mandate, by default you opt for
perpetual SIP. Most fund houses will assume this SIP to continue till 2099, unless
you submit/provide a written communication to the fund house. So, once you
achieve your goal corpus, you can redeem your funds as per your convenience.

5. Pause SIP:
God forbid, but when in a financial crunch or crisis, you can even pause SIP
instalments instead of stopping SIPs altogether and impeding your path to
systematic wealth creation. By doing so you don't have to undergo the process of
re-starting SIPs all over again.
As mentioned before, you can stop SIPs for period of 1 to 3 months until normalcy
returns. This will give you the needed relief for those few months under distress.
Here are steps to pause your SIPs…

•Submit the pause form to the mutual fund house (or the AMC) and send an
instruction. The form can be downloaded from the mutual fund house's (or the
AMC's) website or sourced from the Investor Service Centre.
•Submit a Bank Mandate.

Once the form is submitted, do not forget to instruct your bank to stop the auto
debit service or stop the post-dated cheque. If you miss out on the bank's mandate,
they might charge you for dishonour of payment.

Once your pause period is over, ideally, you should resume your SIP. Proactively
ensure, that you aren't jeopardising your long-term financial wellbeing.
Keep in mind that not all mutual fund houses provide the Pause-a-SIP facility.
Therefore, it is best to check whether the option is available at the time of
registration. Also, bear in mind that pause facility is usually offered only once the
whole tenure of your investment.
Although pausing a SIP is option, that provides suppleness to sail through
turbulence, avoid pausing (or even cancellations of) a SIP; because in effect it
hinders the path to wealth creation and accomplishing your financial goals.
Instead, adopt utmost financial discipline and be focused to achieve your long-
term financial goals. Engage in prudent budgeting exercise and maintain a
 sufficient contingency fund, which can act as a protective shield in times of
emergency.

4.1.6. ASPECTS WITHIN THE MUTUAL FUND SCHEME FOR

INVESTORS BEFORE INVESTING IN SIP

 Performance:
The past performance of a fund is important in analysing a mutual fund. But,
remember that past performance is not everything, as it may or may not be
sustained in future and therefore should not be used as a basis for comparison with
other investments.

It just indicates the fund’s ability to clock returns across market conditions. And, if
the fund has a well-established track record, the likelihood of it performing well in
the future is higher than a fund which has not performed well.

Under the performance criteria, we must make a note of the following:

1. Comparison: A fund’s performance in isolation does not indicate anything.
Hence, it becomes crucial to compare the fund with its benchmark index and its
peers, so as to deduce a meaningful inference. Again, one must be careful while
selecting the peers for comparison. For instance, it doesn’t make sense comparing
the performance of a midcap fund to that of a large-cap.
2. Time period:
It’s very important that investors have a long-term horizon (of at least 3-5 years) if
they wish to invest in equity oriented funds. So, it becomes important for them to
evaluate the long-term performance of the funds. However this does not imply that
the short term performance should be ignored. Besides, it is equally important to
evaluate how a fund has performed over different market cycles (especially during
the downturn). During a rally it is easy for a fund to deliver above-average returns;
but the true measure of its performance is when it posts higher returns than its
benchmark and peers during the downturn.
3. Returns:
Returns are obviously one of the important parameters that one must look at while
evaluating a fund. But remember, although it is one of the most important, it is not
the only parameter. Many investors simply invest in a fund because it has given
higher returns. In our opinion, such an approach for making investments is
 incomplete. In addition to the returns, one also needs to look at the risk parameters,
which explain how much risk the fund has undertaken to clock higher returns.

4. Risk:
To put it simply, risk is a result or outcome which is other than what is / was
expected. The outcome, when different from the expected outcome is referred to as
a deviation. When we talk about expected outcome, we are referring to the average
or what is technically called the mean of the multiple outcomes. Further filtering
it, the term risk simply means deviation from average or mean return.

Risk is normally measured by Standard Deviation (SD or STDEV) and signifies

the degree of risk the fund has exposed its investors to. From an investor’s
perspective, evaluating a fund on risk parameters is important because it will help
to check whether the fund’s risk profile is in line with their risk profile or not. For
example, if two funds have delivered similar returns, then a prudent investor will
invest in the fund which has taken less risk i.e. the fund that has a lower SD.
5. Risk-adjusted return:
This is normally measured by Sharpe Ratio (SR). It signifies how much return a
fund has delivered vis-à-vis the risk taken. Higher the Sharpe Ratio better is the
fund’s performance. As investors, it is important to know the same because they
should choose a fund which has delivered higher risk-adjusted returns. In fact, this
ratio tells us whether the high returns of a fund are attributed to good investment
decisions, or to higher risk.
6. Portfolio Concentration:
Funds that have a high concentration in particular stocks or sectors tend to be very
risky and volatile. Hence, investors should invest in these funds only if they have
a high risk appetite. Ideally, a well-diversified fund should hold no more than 50%
of its assets in its top-10 stock holdings.
7. Portfolio Turnover:
The portfolio turnover rate refers to the frequency with which stocks are bought
and sold in a fund’s portfolio. Higher the turnover rate, higher the volatility. The
fund might not be able to compensate the investors adequately for the higher risk
taken.

 Fund Management:
 The performance of a mutual fund scheme is largely linked to the fund manager
and his team. Hence, it’s important that the team managing the fund should have
considerable experience in dealing with market ups and downs. As mentioned
earlier, investors should avoid fund’s that owe their performance to a ‘star’ fund
manager. Simply because if the fund manager is present today, he might quit
tomorrow, and hence the fund will be unable to deliver its ‘star’ performance
without its ‘star’ fund manager. Therefore, the focus should be on the fund houses
that are strong in their systems and processes.

 Costs:
If two funds are similar in most contexts, it might not be worth buying mutual fund
scheme which has a high costs associated with it, only for a marginally better
performance than the other. Simply put, there is no reason for an AMC to incur
higher costs, other than its desire to have higher margins. The two main costs
incurred are:

1. Expense ratio:
Annual expenses involved in running the mutual fund include administrative costs,
management salary, overheads etc. Expense Ratio is the percentage of assets that
go towards these expenses. Every time the fund manager churns his portfolio, he
pays a brokerage fee, which is ultimately borne by investors in the form of an
expense ratio.
2. Exit Load:
Due to SEBI’s ban on entry loads, investors now have only exit loads to worry
about. An exit load is charged to investors when they sell units of a mutual fund
within a particular tenure; most funds charge if the units are sold within a year from
date of purchase. As exit load is a fraction of the NAV, it eats into your investment
value.
Notwithstanding the above when you invest in mutual funds make it a point to opt
for the ‘Direct Plans’ over ‘Regular Plan’. The mutual fund direct plans make a
positive difference to your investments every year. These plans generate roughly
0.5% to 1.0% additional returns every year, thanks to lower costs – mainly the
expense ratio. By opting for the direct plan you eliminate the services of a mutual
fund distributor / agent / relationship manager. The transaction may be performed
online or even physically by visiting the registrar’s or the asset management
company’s office.

It may not seem much at first, but, if you sow seeds of these small savings, you
may harvest rich rewards over 15- 20 years — thanks to the power of compounding
.

Save Huge Costs over the Long Term

As can be seen in the chart above, a small difference in costs can result in savings
of anywhere between Rs8-17 lakh over 20 years, on an Rs10 lakh investment. Yes,
you can earn an additional amount of as much as Rs17 lakh, if the difference
in costs is as much as 1% point. The final portfolio value varies with the magnitude
difference in expenses. Every 0.25%-point difference in the expense ratio works
out to an additional earning of Rs4.50 lakh in 20 years' time, if Rs10 lakh is
invested.
This Rs 10 lakh investment is just as assumption. In reality, if you are saving for
your long-term goals such as retirement, you will be targeting a corpus of over Rs1
crore for sure. Just imagine the costs then. Surely, you do not want to lose your
hard-earned money in the form of costs that can be easily avoided. Moreover, the
additional saving to such an extent can make huge difference to your financial
goals.
The time has come to ask yourself and judge: Are you compromising on long-term
returns for a little comfort in the short-term by availing services of mutual fund
distributors, or is there a real value.
 4.2:- Lump sum Amount
A lump sum amount is defined as a single complete sum of money. A lump sum
investment is of the entire amount at one go.

Lump sum investment is considered as one way of investing into mutual funds.
Usually lump sum investments are undertaken by big players and investors, in
stocks especially those related to assets that are likely to appreciate in the long term,
making the investment profitable except in cases of high volatility.

For example, if an investor is willing to invest the entire amount available with
him in a mutual fund, it will refer to as lump sum mutual fund investment .

Source: motilaloswalmf.com

4.2.1 ADVANTAGES

1. Investment of big amount:

This is a good option for investing extra cash on hand instead of keeping it idle.

2. Convenience:

Since the payment has to be made only once, the investor can just relax without
worrying about any further payments to be met in the future.
3. Ideal for a long term horizon:

Lump sum investment is well suited for financial goals like a child’s education &
marriage or others which go over 10-12 years into the future.

4.2.2 DISADVANTAGES

1. Irregular investment:

Lump sum plan does not instill investment discipline. It also does not take care of
regular savings that an investor might have.

2. Not ideal for short term:

If the requirement of funds is in the near future, then a lump sum investment may
not be the best option as the real returns are derived only over the longer term.

3. Higher risk:

As the sum is invested at one go, the investor may end up buying lesser units if the
market is on a decline. There is no option of buying units in between or regularly.
The only option is to invest in a new fund for which an investor may not even have
funds due to single cash outflow owing to lump sum payment. So, the market timing
is quite crucial while investing through lump sum method.

4.2.3 POINTS TO CONSIDER WHILE MAKING LUMP SUM MUTUAL

FUND INVESTMENTS

1. Timing the market before you invest

2. Diversify your investment
3. Invest as per your financial goal
4. Do not ignore the tax impact
5. When to redeem the investment
6. Patience and equanimity is the key to lump-sum investing
 Timing the market before you invest:

It is important to time your investment and look for the most opportune moment for
maximum returns. If you’re investing in equity mutual funds and if the fund’s NAV
has peaked, you may consider holding off from investing with a lump sum. The best
time for a lump sum investment in a mutual fund is when the market or the NAV is
close to its year’s low and when there’s scope for the fund to start appreciating again
soon. If the fund is already at a high, the situation may not be appropriate for a lump
sum investment. It would be advisable for you to park your lump sum in a fixed
deposit or liquid fund and wait till the situation suits a lump sum investment.

 Invest as per your financial goal:

The main purpose of your investment should be to achieve a financial goal. So while
making a lump sum investment, diversify your fund allocation as per your financial
goals. For example, for short term goals you can invest in a liquid fund, which has
low risk and returns with great flexibility for redemption. For the medium term, you
can invest in a balanced fund, and for the long term you can invest in equity-oriented
funds. Similarly, if you are investing to save tax, then allocate towards an ELSS fund.
In essence, you can divide your lump sum into smaller chunks that you can allocate
towards all of these financial goals, thus giving each investment a tiny push towards
achieving them.

 Do not ignore the tax impact:

While investing lump sum amount in the mutual fund, normally people look at the
ROI, but they must also look at the tax impact that may erode their absolute gains. If
the investment is for the short term, profits from debt funds are taxed at the applicable
slab rate of the individual, whereas if it is profit from an equity fund, then the tax
rate is 15%. On long term profit from the debt fund (if investment period is more
than three years), the tax rate is 20% with indexation or 10 percent without
indexation. Long term capital gain from equity investment (investment for more than
one years) is totally tax-free. If you’re investing the lump sum for saving taxes
through an ELSS fund, the three-year lock-in on ELSS funds makes your total gains
from this investment tax-free.

 When to redeem the investment:

When you invest a lump sum in a mutual fund, it is important to understand the right
time to exit the investment. Redemption should be decided as per the investment
 objective, but it is essential to review the investment on a regular basis, and switch
to another fund if the one you’re in is not performing as per expectations. Most
mutual funds charge exit loads for redemption before a year. Tax impact should also
be kept in mind while redeeming investment. Also, do not lose the patience if the
overall market is dull. Stay invested and let the fund perform in the long term.

 Patience and equanimity is the key to lump-sum investing

The most important principle in lump-sum investing, especially in equity funds, is to
maintain your calm and equanimity. For example, investors who bought tech sector
funds in 2002 when NAVs had fallen 70 percent below par, still had to put up with
another 30 percent correction in NAV. Of course, over the next five years all these
tech funds became multi-baggers many times over. But keeping patience and
equanimity in the midst of volatility is easier said than done. That is a risk you run
in lump-sum investing and you need to be calm and patient.
 Chapter:-5 conclusion
Running a successful mutual fund requires complete understanding of the
peculiarities of the indian stock market and also the psyche of the small investor.
This study has made an attempt to understand the financial behaviour of mutual
fund investor in connection with the prefernces of brand
(Amc),products,channel,etc. I observed that many of people have fear of mutual
fund. They think their money will not be secure in mutual fund. They need the
knowledge of mutual fund and its related terms.
Many of people do not have invested in mutual fund due to lack of awareness and
income is growing the number of mutual fund investor are also growing. Brand
plays important role for the investment . people invest in those companies where
they have faith or they are well known with them.there are many amc’s in
Ahmedabad but only some are performing well due to brand awareness. Hdfc
,Aditya birla,kotak,tata, icici,sbimf etc. they are well known brand they are
performing well and their assets under management is larger than others whose
brand name are not well known.
Distribution channels are also important for the investment in mutual fund.
Financial advisors are the most perffered channel for the investment in mutual
fund. They can change investor mind from one investment option to others. Many
of investor directly invest their money through AMC because they do not have pay
entry load. They are getting information to invest in mutual fund from
recommendations of brokers, relatives, family/friends, advertisements on
newspapers, TVs etc. and from websites of AMFI, SEBI & AMCs. There is a
difference between genders, academic qualification and occupation for investment
perception and saving avenue preference.

From our survey we conclude that SIP is the most preferable mode of investing in
mutual funds as compared to lump-sum as it is the best vehicle to drive through
market volatilities.

As the investor’s save majorly on monthly basis and for less than 2 years so the
ratio of SIP is more and preferable. SIP provides Systematic withdrawal Plan
facility so investors can withdraw any time in case of urgency as well as the cash
flow is also regular and any day is good day to invest in SIP. As well as the horizon
for the SIP is ideal for short term & best suited for equity markets where there is
volatility. The risk in SIP is Low to Moderate.
While Lump-Sum is One time large Investment so the risk appetite is Moderate to
High and it matters a lot on the market conditions. Lump-Sum is also risky as the
money is invested in debt markets.

So we conclude, that SIP is better than Lump-Sum as it is the best way for
SYSTEMATIC WEALTH CREATION.

Many investors are not aware about mutual fund or they think that mutual fund is
not profitable or have low risk. So, “MUTUAL FUND SAHI HAI” initiative by
AMFI is great move towards positioning mutual fund as preferred investment
option in investor’s mind. It will increase the awareness among the investors
regarding mutual fund.
 Chapter 6:- RECOMMEDATIONS

 Reliance Mutual Fund should do their advertisement through brokers because

from our study we found that recommendations of friends/family, brokers etc. are
the main source of information. Company has to more upgrade its website and should
increase the expenditure on the advertisement on televisions, newspapers, hoardings,
etc.

 On the basis of study, we found from our responses that male investors are more than
female investors so Reliance Mutual Fund has to more focus on the female investors
who are investing in other avenues.

 From the responses, most of investors are from job backgrounds (salaried) so we
suggest to MF companies they should make different segment of funds specially
focus on these investors.

 Reliance Mutual Fund should frequently conduct short term courses for investor’s
education. Even college students should be made aware of investment in Financial
Product. Companies should conduct courses at University and colleges.

 Many investors are not aware about Reliance Mutual Fund’s Self-Service Kiosk. So,
the front counter has to aware the investors about it and also for the people who are
not aware about self service kiosk machine for them special guide need to be
appointed.

 As reliance mutual fund was the first AMC to launch self service kiosk so they need
to create more awareness and need to promote more.
 Reliance mutual fund organizes “Investor Connect” and “Distributor Meet” every
month so in that they should make the investor’s aware about digital customer
services provided by the company.

 Many investors have savings for investment and one-fourth of people are investing
in mutual fund and three-fourth of the people are not preferring mutual fund as a
medium to invest as they are still following traditional investment avenues.

 The investors are converted in to highly satisfied by providing better services.

CHAPTER:-7 ANNEXURE
 CHAPTER:-8 BIBLIOGRAPHY

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