Post on 07-Apr-2018
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A Summer Internship Project Report
On
To evaluate the performance on Mutual Fund equity schemes of Reliance Mutual Fund
Submitted in partial fulfillment of the requirements for the degree of
Post Graduate Diploma in Management - International Business
By
Sagar Tathed
Roll No: D54
Under the guidance of
Prof. Zohra Zabeen
A Study Conducted for
RELIANCE MUTUAL FUNDS
Indira School of Business Studies,
Tathwade, Pune 411033
(2010-2012)
Introduction on Mutual funds
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Meaning
Mutual funds are the vehicles to mobilize money from the investors, to invest in different
markets and securities in line with the investment objectives agreed upon, between the
mutual fund and the investors.
The primary role is to assist investors in earning an income or building their wealth, by
participating in the opportunities available in various securities and markets.
It is possible for mutual funds to structure a scheme for any kind of investment objective.
Thus, the mutual fund structure, through its various schemes, makes it possible to tap a
large corpus of money from diverse investors.
The money that is raised from investors, ultimately benefits governments, companies or
other entities, directly or indirectly, to raise money to invest in various projects or pay for
various expenses.
As a large investor, the mutual funds can keep check on the operations of the investee
company, and their corporate governance and ethical standards.
Mutual funds are therefore viewed as a key participant in the capital market of any
country. Higher employment, income and output in the economy boost the revenue
collection of the government through taxes and other means. When these taxes are spent
prudently, it promotes further economic development and nation building.
The mutual fund industry itself offers livelihood to a large number of employees of
mutual fund, distributors, registrars and various other service providers.
Concept of Mutual Fund
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When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the
corpus. Mutual fund investor is also known as a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments such as
shares , debentures etc is reflected in the Net asset value (NAV) of the scheme.
Types of mutual funds:
Many investors with common financial objectives pool their money.
Investors, on a proportionate basis, get mutual fund units for the sum contributedto the pool.
The money collected from the investors is invested in shares, debentures and
other securities by the fund manager.
The fund manager realizes the gains or losses and collects dividend or interestincome.
Any capital gains or losses from such investments are passed on to the investorsin proportion of the number of units held by them.
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1. Open ended funds
2. Close ended funds
3. Interval funds
4. Actively managed and passive managed funds
5. Debt, equity and hybrid funds
6. Growth funds
7. Income funds
8. Balanced funds
Features of Mutual Funds
1. It is established as a trust.
2. It raises money through sale of units to the public or a section of the public.
3. The units are sold under one or more schemes.
4. The schemes invested in securities or gold or gold related instruments or real
estate assets.
Scope of Mutual fund
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1. 100% growth in the last 6 years
2. Numbers of foreign AMCs are in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under management
worldwide.
3. Our saving rate is over 23, highest in the world. Only channelizing these savings
in mutual funds sector is required.
4. We have approximately 37 mutual funds which are much less than US having
more than 800. There is a big scope for expansion.
5. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing
cities.
6. Mutual fund can penetrate rural like the Indian insurance industry with simple an
limited products.
7. SEBI allowing the MF's to launch commodity mutual funds.
8. Emphasis on better corporate governance.
9. Trying to curb the late trading practices
10. Introduction of Financial Planners who can provide need based advice.
Advantages of mutual funds
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1. Systematic approach to investments-Mutual funds also facilities that help
investor invest amounts regularly through a systematic Investment plan (SIP)or
withdraw amounts regularly through SIP or move money between different kinds
of schemes through a systematic transfer plan.
2. Convenient options- The options offered under a scheme allow investors to
structure their investments in line with their liquidity preference and tax position.
3. Investment control- Once an investment is made with a mutual fund, they make
it convenient for the investor to make further purchases with very little
documentation.
4. Regulatory control- The regulator, Securities and exchange board of india
(SEBI) has mandated strict checks and balances in the structure of mutual funds
and their activities. These are detailed in the subsequent units.
5. Economies of scale- The pooling of large sum of money from so many investors
makes it possible for the mutual fund to engage professional managers to manage
the investment.
6. Portfolio diversification- Units of a scheme gives investors exposure to a range
of securities held in the investment portfolio of the schemes. Thus even a small
investment in a mutual fund scheme can give investors a diversified investment
portfolio.
7. Tax Deferral-Mutual funds offer options whereby the investor can let the money
grow in the scheme for several year. By selecting such options ,it is possibl gor
the investor to defer the tax liability.
8. Professional Management- There are several aspects to such Professional
management viz investing in line with the investment objective, investing based
on adequate research and ensuring that prudent investment processes are
followed.
Disadvantages of Mutual Fund
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1. Choice Overhead-Over 800 mutual fund schemes offered by 38 mutual funds
and multiple options within those schemes make it difficult for investors to
choose between them. Greater dissemination of industry information through
various media and availability of professional advisors in the market should
help investors handle the overload.
2. Lack of Portfolio customization- Some securities houses offer portfolio
management schemes to large investors. In a portfolio management scheme,
the investor has better control over of what securities are bought and sold on
this behalf.
Structure of Reliance Mutual funds
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Structure of mutual fund
Structure Functions
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SEBI SEBI has stipulated the legal structure under mutual funds in india
need to be constituted.
Sponsors They are the promoters of the company. They are the wealth
creators. They put in the capital for the company
Trustee They are the operator of the company. He keeps an eye on theworking of the Mutual funds.
Trust It is registered under Indian Trust Act 1882.It holds assets of the
investors appointed by the sponsors.
Asset
management
company
It checks on the day to day operation of the asset management. It
arranges for the requisite offices and infrastructure, engages
employees, provided for the requisite software, handles advertising
and sales promotion, and interacts with the regulators.
Custodian The custodian has the assets of the fund. The custodian needs to
accept and give delivery of securities for the purchase and sale
transactions of the various schemes of the fund
Company overview
Reliance Mutual Fund, a part of Anil Dhirubhai Ambani Group, is one of the fastest
growing mutual funds in the country. Reliance mutual fund was started in 1995. Within 2
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days reliance launched two schemes Reliance Vision fund and Reliance Growth
fund Reliance mutual funds are one of the leading mutual funds with the asset
management of Rs 108332 crores and an investor base of over 71 lakhs.
Reliance mutual fund offers a well- rounded portfolio of products to meet varying
investor requirements and has presence in 118 cities across the country. Reliance mutual
fund constantly endeavors to launch innovative products and customer service initiatives
to increase value to investors.
Reliance mutual fund schemes are managed by Reliance Capital Asset Management
limited (RCA) a subsidiary of Reliance Capital Limited, which holds 93.37% of the
paid-up capital of RCAM, the balance paid up capital being held by minority
shareholders.
One of the core objectives of Reliance Capital Asset Management Ltd. is to identify
issues considered sensitive by global corporate standards, and implement
policies/guidelines in conformity with the best practices as an ongoing process.
Reliance Capital Limited is a Non- Banking Finance Company. Reliance Capital Limited
is one of the Indias leading and fastest growing financial services companies, and ranks
among the top three private sector financial services and banking companies, in terms of
net worth.
Anil Dhirubhai Ambani Group firm Reliance Mutual Fund on Wednesday 27 may 2011,
announced a dividend of up to 50% for its two schemes: Reliance Regular Savings Fund
and Reliance Equity Opportunities Fund. The company would pay a dividend of 50% or
Rs5 per unit and 30% or Rs3 per piece under the equity and balanced options of Reliance
Regular Savings Fund, respectively, it said in a statement.
The fund house has also announced a dividend of 20% or Rs2 per unit under the retail
and institutional plans of Reliance Equity Opportunities Fund. It has fixed 24 July as the
record date for dividends.
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Theoretical Background of Reliance Mutual Fund
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Reliance Capital Asset management limited,(RCAM) a company registered under the
companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual
Fund.
Reliance Capital Asset management limited was approved as the Asset management
Company for the mutual fund by SEBI with their letter ni IIMARP/1264/95. On june
30,1995.
The Mutual Fund has entered into an Investment Management Agreement (IMA) with
RCAM on May 12, 1995 and was amended on August 12, 1997 in line with SEBI. It has
launched 35 schemes till date
Reliance Mutual fund at a glance
1. At the end of June 2011, Reliance Mutual Fund has a corpus of over Rs1,08,332
crore for over 71 lakh investors.
2. It has investor base of over 8.5 Million as on March 31 2010.
3. Accelerated growth in investor base-66.89% year on year.
4. Reliance Mutual fund has over 10 years of extensive market experience over 26
schemes combined with a strong performance track around.
5. It has footprint in over 118 cities.
6. It has wide portfolio of 26 well rounded products to meet varying investor
requirements.
7. Reliance Mutual Fund is amongst the few mutual funds in the industry to offer
subscription , Redemption and Switch through online transactions.
8. Reliance Equity fund has over NFO (6th feb-7th march 2006), the largest ever
collection of Rs 5579(1.29 billion dollars)min the history of the indian Mutual
funds.
Mission of Reliance Mutual Fund
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To create and nurture a world-class, high performance environment aimed at delighting
our customers
Vision of Reliance Mutual Fund
To be globally respected wealth creator with an emphasis on customer care and a culture
of good corporate governance
Some of the achievements for Reliance Mutual Funds
1. Best Mutual Fund debt 2011
2. Winner for the Best Mutual Fund House and
3. Runner up for the Best Equity Fund House 2010
4. CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2009/2007
5. Liper fund award India 2007
6. Liper fund award Gulf 2007
7. ICRA mutual funds awards 2007
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Objectives of the study
1. To study the concept and the various types of Mutual funds
2. TO evaluate the performance of equity mutual find schemes offeres by selected
Asset management company
3. To offer suitable suggestions to the new investors,
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Equity Schemes of Reliance Mutual Fund
1. Reliance Equity Fund
Reliance Equity Fund is an open ended equity mutual fund launched by Reliance Capital
limited. It invests in the public equity markets of India. The fund invests in the stocks of
companies operating across diversified sectors. It benchmarks the performance of its
portfolio against the S&P CNX Nifty Index. Reliance Mutual Fund - Reliance Equity
Fund was formed on March 28, 2006 and is domiciled in India.
Objective of the fund:
The primary objective of the scheme is to seek capital appreciation and long term growth
opportunity by investing in equity of top 200 companies.
The secondary objective is to generate consistent returns by investing in debt and money
market securities.
2. Reliance Index Fund Nifty Plan
Investment Objective
The objective of the scheme is to replicate the performance of NIFTY, with a view to
generate returns that are commensurate with the performance of NIFTY.
Fund Data
Type Open Ended Diversified Equity Scheme
Date of Inception 30/03/2006
Fund Manager Mr. Omprakash Kuchian
3. Reliance Index Fund Sensex Plan
The objective of the scheme is to replicate the performance of SENSEX, with a view to
generate returns that are commensurate with the performance of SENSEX.
Type Open Ended Index Linked Scheme
Date Of Inception 01/10/2010
Fund Manager Mr.Krishan Daga
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4. Reliance Vision Fund
The primary objective of the scheme is to achieve long term growth of capital by
investment in equity and equity related securities through a researched based investment
approach.
Fund Data
Type Open Ended Equity Growth Scheme
Date of Inception 08/10/1995
Fund Manager Mr. Ashwani Kumar
4. Reliance Regular Saving Fund
The investment objective of this option is to generate consistent returns and appreciate of
capital by investing in a mix of securities comprising of equity and related instruments
and fixed income instruments.
Fund Data
Type Open Ended Scheme
Date of Inception 09/06/2005
Fund Manager Mr. Omprakash Kuchian and Mr. Amit Tripathi
Risk factor in Equity Schemes
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Mutual fund offer incredible flexibility in managing equity risks. Diversification and
Systematic Investing Plan (SIP) are two key techniques one can use to reduce investment
risk considerably and reach long term financial goals.
When one invest in mutual fund equity schemes, instantly one spread its risk over a
number of different companies. One can also diversify over several different kinds of
securities by investing in different mutual fund, further reducing ones potential risk.
Diversification is a basic risk management tool that one will want to use throughout
lifetime as one rebalances their portfolio to meet changing needs and goals. Investors who
are willing to maintain a mix of equity shares, bonds, and money market securities have a
greater chance of earning significantly higher returns over time than those who invest in
only the most conservative investments.
Additionally, a diversified approach to investing, combining the growth potential of
equities with the higher income of bonds and the stability of money markets and helps
moderate the risk of investors and enhance their potential returns.
Research Methodology
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Research Methodology is procedure designed to the extent to which it is planned and
evaluated before conducting inquiry and the extent to which the method for making
decisions is evaluated
Research Methodology is what must be done, how it will be done, what data will be
needed, what data gathering will be employed, how sources of data will be selected and
how the data will be analyzed and conclusions reached.
Sample size
The sample size will be 100
Sample frame
Sample frame will be 20-70 of age groups. And they will be investors who visit in
Reliance Mutual fund and people who are customers of Bank of Baroda, State Bank of
India, Dena Bank and ICICI bank.
Data Collection
Primary data- Get Questionnaire fill up from bank customers and investors of Reliance
Mutual Fund and new investor who come for inquiry.
Secondary Data- Reliance fact sheets and surfing internet
Duration of the study
Project duration from 16th May to 16th July.
Sampling Method
Sampling method used was probability designs and simple random method.
Questionnaire
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Respected Sir/Maam,
I Sagar Tathed, student of Indira School of Business Studies, from PGDM-IB doing a
study To evaluate the performance on mutual fund equity schemes of Reliance Mutual
Fund
I will be highly obliged if you fill the questionnaire . I assure you that the information
shared by you would be used only for the study purpose.
For any queries regarding the questionnaire:
Please Contact:
Name: Sagar Tathed
Email Id: sagar.tated@indiraisbs.ac.in
Mobile No: 09028685337
Questionnaire
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Name: __________________
Occupation: __________________
Contact Details: __________________
Q1) How old are you?
A. 20-30 years.
B. 30-40 years
C. 40-50 years
D. Above 50 years
Q2) How much is your monthly income?
A. Up to 15ooo Rs
B. Rs 15000-25000
C. Rs 25000-50000
D. Above Rs 50000
Q3) Have you ever invested/ interested to invest in Reliance mutual funds Equity
schemes?
A. Yes
B. No
Q4) If no than what is the most important reason for not investing in Reliance Mutual
funds equity schemes?
A. Lack of knowledge about mutual funds
B. Prefer enjoying in other options
C. Benefits not enough to drive you for investment
D. No trust over fund managers
E. High Risk
Q5) What factors do you consider the most while choosing Mutual Fund Company?
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A. Brand Name
B. References
C. High Returns
D. Advertisements
Q6) While investing in your Reliance Mutual fund company which of the following
factor do you prefer the most?
A. Liquidity
B. Low Risk
C. High Returns
D. Past performance
E. Fund portfolio
Q7) which of the following portfolio is preferred by you while investing in Reliance
Mutual funds equity schemes?
A. Debt
B. Equity
C. Balanced funds
Q8)While investing in Reliance mutual funds equity schemes whom do you consult?
A. Friends
B. Relatives
C. Financial Advisors
D. Advertisements
E. Bank employees
Q9) Which fund do you prefer the most for investment?
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A. Growth fund
B. Vision fund
C. Regular saving fund
D. Long term equity fund
Q10) Which mode of investment do you prefer?
A. One time
B. SIP
Q11) From where do you buy Mutual funds?
A. Distributor
B. AMC
C. Banks
Q12) What do you look in mutual funds company before investing?
A. Customer services
B. Popularity
C. Schemes and benefits
D. Agents training
E. Less complicated work