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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


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


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: [email protected]

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

Sagar Sip

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