Summer Internship Report

On

"A STUDY ON INVESTOR’S AWARENESS LEVEL ON MUTUAL FUND"

Submitted Towards The

Partial Fulfillment for the Requirement for the Award of the Degree of

Master of Business Administration (FM)

Under the Guidance

Of

Mr. RAHUL MISHRA

Operation Manager, Reliance Securities.

Submitted to Submitted BY
Mr. DEEP KUMAR ANAMIKA SINGH
Program In-charge MBA (FM)
MBA (FM) Roll no -2108030700005
Batch- 2021-2023

Greater Noida Institute of

Business Management

1
 DECLARATION

I ANAMIKA SINGH, Roll No.2108030700005 hereby declare that the summer

training project report Topic "A STUDY ON INVESTOR’S AWARENESS LEVEL ON

MUTUAL FUND" submitted by me in partial fulfillment for the award of the MBA degree

from AKTU.

I t contains nonmaterial previously published or written by any other person, nor any

material which to a substantial extent has been accepted for the award of any other degree of

any other University, except where due acknowledgement has been made in the text. And if

some where reference is quoted then it is mentioned and this report is not a claim infavour or

against the Reliance Securities or any such business organization that has been referred in this

report, I do not take any responsibility for projection, image building, whbord of mouth and

any such promotion or demotion of Reliance or associate.

ANAMIKA SINGH

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 ACKNOWLEDGEMENT

I am indebted to my project guide Mr. Pankaj Mishra (Center Manager) who gave me

guidance, encouragement and inspiration throughout the project. I am very grateful to him for

his support that enabled me to enhance my knowledge and helped to draft the report. I also

express my sincere thanks to Mr. Rahul Mishra (Operation Manager) for helping me and

guiding me in completing my project.

All in all, it was the pleasant learning experience for me in Reliance Security. Thanks to all

seniors and staff for making it so memorable. It was their encouragement that support and co-

operation, which made me, give some meaning to my project.

ANAMIKA SINGH

RolLNo-2108030700005

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A STUDY ON INVESTOR’S AWARENESS LEVEL OF MUTUAL FUND

ABSTRACT

A mutual fund is a type of professionally managed collective investment vehicle that pools

money from many investors to purchase securities. As the mutual fund sector has developed,
there's been a growing acceptance by most policy holders that the assured return era is a thing
of the past. The mutual fund companies are focusing on the Market Linked Plans. This study
would help in explaining the investor’s perception of risk & return & their preference for
different schemes of mutual fund.

The Primary objective of the study is to assess “A Study on investors awareness level of
Mutual fund. The secondary objectives include identifying the advantages of RELIANCE
Mutual funds over other forms of investments and compare RELIANCE Mutual funds with
other types of investments and mutual funds of other companies. This study also aims to
understanding the investor’s perception of risk & return & their preference for different
schemes of mutual fund.

This study Constitute a sample of 250 different kinds of investors they diversification of
investment plans, opinion of the investors has been collected through structured questionnaire
and study confined to the area of different areas in Chennai. Most of the investors have very
good knowledge about RELIANCE Mutual funds investment and other investment plan.
Based on the findings and analysis it can be concluded that the investors are satisfied with the
returns and performance of RELIANCE Mutual funds superiority and over other investments
plan of other mutual fund companies.

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TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO.

NO.

I INTRODUCTION

II 2.1 INDUSTRY PROFILE

2.2 COMPANY PROFILE

III REVIEW OF LITERATURE

IV RESEARCH METHODOLOGY

4.1 Statement of the problem

4.2 Need for the study

4.3 Objectives of the study

4.4 Scope of the study

4.5 Research Design

4.6 Limitations of the study

4.7 Expected contribution of the study

V DATA ANALYSIS AND INTERPRETATION

VI FINDINGS

VII SUGGESTIONS

VIII CONCLUSION

IX BIBLIOGRAPHY

X ANNEXURE

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 CHAPTER - I

INTRODUCTION:

Mutual fund: -

A Mutual Fund is a pool of money collected from investors & is invested according to
certain investment objectives. A Mutual Fund is created when investors put their money
together. It is therefore a pool of the investor’s funds. The most important characteristic of a
Mutual Fund is that the contributors & the beneficiaries of the fund are the same class of
people, namely the investors. The term Mutual means that investors contributed to the pool &
also benefit from the pool. There are no other claimants to the funds. The pool of funds held
mutually by investors is the Mutual Fund.

A Mutual Fund’s business is to invest the funds thus collected, according to the
wishes of the investors who create the pool. In many markets the wishes are articulated as
“Investment Mandates” Usually, the investor’s appoint professional investment managers, to
manage their funds. The main objective is achieved when professional investment managers
create a “Product” & offer it for investment to the investor. This product represents a share in
the pool, & pre-states investment objectives.

For example: A Mutual Fund, which sells a “money market mutual fund”, is actually
seeking investor’s willing to invest in a pool that would invest pre-dominantly in money
market instruments.

Characteristics of a Mutual Fund:

1. A Mutual Fund actually belongs to the investors who have pooled their funds. The
ownership of the Mutual Fund is in the hands of the investors.
2. A Mutual Fund is managed by investment professionals & other service providers, who
earn a fee to their services from the fund.
3. The pool of funds is invested in a portfolio of marketable investments. The value of the
portfolio is updated every day.

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4. The investor’s share in the fund is denominated by “Units”. The value of the unit’s
changes with change in the portfolio’s value, every day. The value of the unit of the
investment is called as Net Asset Value or NAV.

Emergence of Mutual Fund:

Mutual Funds now represent perhaps the most appropriate investment opportunity for most
investors; as financial markets became more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing.

It is no wonder then that in the birth place of Mutual Funds – U.S.A. – the fund industry has
already overtaken the banking industry, more funds being under Mutual Fund management
than deposited with banks.

The Indian Mutual Fund industry has already started opening up many of the existing
investment opportunities to Indian Investors. We have started witnessing the phenomenon of
more saving now being entrusted to the funds than to the banks.

Despite the expected continuing growth in the industry, Mutual Funds are still a new
financial intermediary in India.

Hence, it is important that the investors, the Mutual Fund agents / distributors, the investment
advisors and even the fund employees acquire better knowledge of what Mutual Funds are,
what they can do for investors and what they cannot, and how they function differently from
other intermediary such as the banks.

The Association of Mutual Fund in India has commissioned this workbook as the basic
compilation of the minimum knowledge required by both the fund distributors and the
employees. The Workbook will also serve as a guide to the AMFI Testing Programmer for
distributors and employees.

7
 CHAPTER 2

2.1 INDUSTRY PROFILE

HISTORY OF MUTUAL FUNDS IN INDIA:

The Mutual Fund industry started in 1963 with the formation of Unit Trust of India.
At the initiative of the Reserve Bank and the Government of India, the objective then was to
attract the small investors and introduce them to market investments. Since then, the history
of Mutual Funds in India can be broadly divided into three distinct phases.

Phase 1 – 1964 – 1987 [Unit Trust of India]

This phase spans from 1964 to 1987. In 1963, UTI was established by an Art of
Parliament and given a monopoly. Operationally, UTI was set up by the Reserve Bank India,
but was later de-linked from RBI. The first and still one of the largest schemes, launched by
UTI was Unit Scheme 1964. Over the years, US-64 attached, and probably still has, the
largest number of investors in any single investment scheme. It was also at least partially the
first open-end scheme in the country, now moving towards becoming fully open-end.

Later in 1970s and 80s, UTI started innovating and offering different schemes to suit the
needs of different classes of investors. Unit Linked Insurance Plan [ULIP] was launched in
1971. Six new schemes were introduced between 1981 and 1984. During 1984 – 1987, new
schemes like children’s Gilt Growth Fund [1986] and Master share [1987] were launched.
Master share could be termed at the first diversified equity investment scheme in India. The
first Indian offshore fund, India Fund, was launched in August 1986. During 1990s, UTI
catered to the demand for income-oriented schemes by launching Monthly Income Schemes,
a somewhat unusual fund product offering “assured returns”.

The Mutual Fund industry in India not only started with UTI, but still counts UTI as its
largest player with the largest corpus of investible funds among all Mutual Funds currently
operating in India. Until 1980s, UTI operations in the stock market often determined the
direction of market movements. Now, many Indian investors have taken to direct investing
on the stock markets. Foreign and other institutional players have been brought in. so direct
influence of UTI on the markets may be less than before, through it remains the largest player
in the fund industry. In absolute terms, the investible funds corpus of even UTI was still

8
relatively small at about Rs.600 crores in 1984. But, at the end of this phase one, UTI has
grown large as evidenced by the following statistics:

1987 – 1988
Amount Mobilized Assets Under Management Mobilization as % of
[Rs. Crores] [Rs. Crores] Gross Domestic
Savings
UTI 2,175 6,700 3.1%
Total 2,175 6,700 3.1%

Phase 2 – 1987 – 1993 [Entry of Public Sector Funds]

1987 marketed the entry of non-UTI, Public Sector Mutual Funds, bringing in
competition. With the opening up of the economy, many public sector banks and
financial institutions were allowed to establish Mutual Funds. The State Bank of India
established the first non-UTI Mutual Fund –RELIANCE Mutual Fund – in November
1987. This was followed by Can bank Mutual Fund [launched in December 1987], LIC
Mutual Fund [launched in 1989], GIC Mutual Fund and PNB Mutual Fund. These
Mutual Funds helped enlarge the investor community and the investible funds. From
1987 to 1992 – 1993, the fund industry expanded nearly seven times in terms of Assets
Under Management, as seen in the following figures:

1992 – 1993
Amount Mobilized Assets Under Management Mobilization as % of
[Rs. Crores] [Rs. Crores] Gross Domestic
Savings
UTI 11,057 38,247 5.2%
Public 1,964 8,757 0.9%
sector
Total 13,021 47,004 6.1%

During this period, investors were shifting away from bank deposits to Mutual Funds, as they
started allocating larger part of their financial assets and savings [5.2% in 1992, 3.1% in
1988] to fund investments. UTI was still the largest segment of the industry, although with
nearly 20% market share ceded to the Public Sector Funds.

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Phase 3 – 1993 – 1996 [Emergence of Private Funds]

A new era the Mutual Fund industry began with the permission granted for the entry of
private sector funds in 1993, giving the Indian investors a broader choice of ‘fund families’
and increasing competition for the existing public sector funds. Quite significantly, foreign
fund management companies were also allowed to operate Mutual Funds, most of them
coming into India through their joint ventures with Indian promoters. These private funds
have brought in with them the latest product innovations, investment management techniques
and investor serving technology that makes the Indian Mutual Fund industry today a vibrant
and growing financial intermediary.

During the year 1993 – 1994, five private sector Mutual Funds launched their schemes
followed by six others in 1994 – 1995. Initially, the mobilization of funds by the private
Mutual Funds was slow. But this segment of the fund industry now has been witnessing much
greater investor confidence in them. One influencing factor has been the development of a
SEBI driven regulatory framework for Mutual Funds.

But another important factor has been the steadily improving performance of several funds
themselves. Investors in India now clearly see the benefits of investing through Mutual Funds
and have started becoming selective.

Phase 4 – 1996 [SEBI Regulation for Mutual Funds]

The entire Mutual Fund industry in India, despite initial hiccups, has since scaled new heights
in terms of mobilization of funds and number of players. Deregulation and liberalization of
the Indian economy has introduced competition and provided impetus to the growth of the
industry. Finally, most investors – small or large – have started shifting towards Mutual
Funds as opposed to banks or direct market investments.

More investor friendly regulatory measures have been taken both by SEBI to promote the
investor and by the government to enhance investors’ returns through tax benefits. A
comprehensive set of regulations for all Mutual Funds operating in India has been
accomplished with SEBI [Mutual Fund] Regulations, 1996. These regulations set uniform
standards for all funds and will eventually be applied in full to Unit Trust of India as well,
even through UTI is governed by its own UTI Act. In fact, UTI has been voluntarily adopting

10
SEBI guidelines for most of its schemes. Similarly, the 1999 Union Government Budget took
a big step in exempting all Mutual Fund dividends from income tax in the hands of investors.
Both the 1996 regulation and the 1999 Budget must be considered of historic importance,
given their far – reaching impact on the fund industry and investors.

The Mutual Fund industry 1999 seems to mark the beginning of a new phase in its history, a
phase of significant growth in terms of assets under management. Consider the growth in
assets as seen in the figures below:

1998 – 1999
Amount Mobilized Assets Under Management Mobilization as % of
[Rs. Crores] [Rs. Crores] Gross Domestic
Savings
UTI 11,679 53,320 2.79%
Public 1,732 8,292 0.08%
sector
Public 7,966* 6,860* 1.14%
sector
Total 21,377 68,472 5.1%
1998 – 1999
Amount Mobilized Assets Under Management
[Rs. Crores] [Rs. Crores]
UTI 8,312 64,276
Public 1,222 8,656
sector
Public 13,789* 14,017*
sector
Total 23,323 86,949

* Figures of Assets under management are after taking account of Redemptions. Amounts
Mobilized are Grass.

The size of the industry is growing rapidly, as seen by the figure of assets under management,
which have gone from over 68,000 crores to nearly 87,000 crores in just one year. Within the
growing industry, by March 1999, UTI’s share of mobilizations ‘had decreased to 55% [from
85% in 1992 – 1993], while the share of the private sector stood at 37%. During April to
October 1999, the private sector accounted for 59% of mobilizations. Mobilizations during
this period of 7 months in fact exceeded the same for the whole of 1998 – 1999.

11
 It is also clear that the enhanced share of the private sector is explained not only by the
growing appetite for Mutual Funds, but also by the growing acceptance of the private sector
funds.

The following chart portrays the growth of the Mutual Fund industry in

India across the development phases discussed above

Place of Mutual Funds in Financial Markets:

Indian household started allocating more of their savings to the capital markets in 1980s, with
investments flowing into equity and debt instruments. Besides the conventional mode of bank
deposits.

Until 1992, primary market investors were assured good returns as the price of new equity
issues was controlled. After introduction of free pricing of shares lost money and withdrew
from the markets altogether. Even those investors who continued as direct investors in the
stock markets realized that the key to successful investing in the capital markets lay in
building a diversified portfolio, potential from the capital market involved careful research
and monitoring of the market, which was not possible for all investors. Under similar
circumstances in other countries, Mutual Funds had emerged as professional intermediaries.

Besides providing the expertise in stock market investing, these funds allow investing in
small amounts and yet holding a diversifies portfolio to limit risk, while providing the
potential for income and growth associated with the debt and equity instruments. In India
Unit Trust of India occupied this place as the only capital markets intermediary from 1964

12
until 1988, when the Government started other sponsors also set up Mutual Funds. With some
ups and downs, this new class of intermediary institutions is emerging, in India as elsewhere,
as a good alternative to direct investing in capital markets.

Mutual Funds serve as a link between the saving public and the capital markets in that they
mobilize savings from investors and borrowers in the capital markets. By the nature of their
activities, and by virtue of being knowledgeable and informed investors, they influence the
stock markets and play an active role in promoting good corporate governance, investor
protection and the health of capital markets.

Mutual Funds have imparted much needed liquidity into the financial system and challenged
the hitherto dominant role of banking and financial institutions in the capital markets.

Understanding of mutual fund

Using Mutual Fund:

A small man – anyone with a portfolio of, Say, under $100,000 – is unlikely to do as well
investing his own money as he can do in a [Mutual Fund]

- Paul Samuelson,
- MIT Economist
- Nobel Laureate.

Advantages of Mutual Fund:

1. Portfolio diversification:

By offering diversified portfolios Mutual Fund enable investors to hold diversified

portfolios. Through investors can create their own diversified portfolios. The cost of creating
& conditioning such portfolios can be high apart from fact that investors may lack
professional expertise to manage such a portfolio.

2. Professional management:

13
Mutual Funds are managed by investment managers who are appointed by trustees &
bannered by the investment management agreement & the AMC’S are closely regulated by
the SEBI.

3. Reduction in risk:

Mutual Fund invests in a portfolio of securities. This means that all funds are not invested in
the same investment avenue. Therefore, holding a portfolio that is diversified across
investment avenues in a wise way to manage risk.

4. Reduction of transaction costs:

Mutual Funds provide the benefit of economics of scale by virtue of their size. Through the
individual investor’s contribution may be small; the Mutual Fund itself is large enough to be
able to reduce cost in its transactions.

5. Liquidity: Most of the funds being sold today are open ended. That is investors can sell
their existing units or buy new units, at any point of time at prices that are related to the
NAV of the fund on the date of transaction.
6. Helps in financial planning:

Investors in the Mutual Fund industry today have a choice of 39 Mutual Funds, offering
nearly 500 products. They provide different categories of products. It is also possible for the
investors to choose the manner in which the returns would be distributed. The most important
benefit of product choice is that it enables investors to choose options that suit their return
requirements.

7. Enables regular periodic saving:

It enables regular periodic savings through systematic investment plan [SIP].

Why Buy Mutual Fund?

Reason 1 – Tax superior

 Dividend received is exempt

 Capital gains-long term

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 With indexation – 20%
 Without indexation – 10%

Short-term – applicable tax bracket.

Reason 2 – deposit rates are reducing.

PLUS

 Very few companies accepting FD investments.

 Most of them going to debt market for fresh money - & this gives Mutual Funds an
opportunity to buy them for your customers.
 Mutual Funds – lock in period is low & liquidity is very high.
 And give higher returns generally.
 Minimum amount of investment is lower than FDs generally – thus everyone can sfford
it.

Reason 3 –stock markets remain good… but long term only.

If your holding period was… The number of negative returns / loss

periods would be
6 days 51% of the time – losses.
15 days 49% of the time – losses.
30 days 57% of the time – losses.
180 days 48% of the time – losses.
365 days 43% of the time – losses.
5 years 24% of the time – losses.
10 years 5% of the time – losses.
15 years O% of the time – losses.
Daily rolling returns for relevant period from 2000 onwards [ short terms, 365days] &
from 1980 [for long term]

Average return over 10year period is > 15%

 Direct equity in short term is very volatile – thousands have suffered losses
 Not everyone can afford to spend time & money in monitoring – thus equity Mutual
Funds are a good option – one can invest REGULARLY & even with LOW
INVESTMENTS.

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 Equity Mutual Funds can select the right shares at the right time & can often buy at lower
prices.

Types of Mutual Fund:

I. Types available with respect to investment:

Depending on the investment portfolio that is created, the following are the types of products
offered by Mutual Fund:

1) Equity funds / Growth schemes.

2) Debt funds / Income schemes.
3) Balanced funds.

1) Equity funds / Growth schemes:

Equity funds are those that invest predominantly in equity shares of companies.
Following are the various types of equity funds

a) Growth funds:

Growth funds invest in companies whose earnings are expected to rise at an above
average rate. The primary objective of growth funds is capital appreciation over 3 to 5
years span.

b) Specialty funds:

These funds have a narrow portfolio orientation & invest in only companies that meet
predefined criteria. For example: - at the height of the South African apartheid region
many funds in the U.S. offered plans that promised not to invest in South African
companies.

c) Sectoral funds:

Sector funds portfolio consists of investment in only one industry or sector of the market
such as information technology etc.

d) Index funds:

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 An index fund tracks the performance of a specific stock market index. The objective is
to match the performance of the stock market by tracking an index that represents the
overall market. The fund invests in shares that constitute the index & in the same
proportion as the index.

e) Value funds:

Value funds try to seek out fundamentally sound companies whose shares are currently
under priced in the market. Value funds will add only those shares to their portfolios that
are selling at low price-earning ratios & are undervalued by other yardsticks.

f) Diversified equity funds:

A fund that seeks to invest only in equities, except for a very small portion in liquid
money market securities, but is not focused on any one or few sectors or shares may
be remedy as diversified equity fund.

g) Equity Linked Saving Schemes [ELSS]:

In India the investors have been given tax concessions to encourage them to invest in
equity market through these special schemes. Investment in these schemes entitles the
investors to claim an income tax rebate, but usually has a lock in period before the end of
which funds cannot be with drawn.

2) Debt funds / Income schemes:

Debt funds are those that predominantly invest in debt securities. Since most debt
securities pay periodic interest to investors. These funds are also known as income funds.
What is important in that portfolio is pre-dominantly made up of debt securities. Debt
securities companies of long-term instruments such as bond issued by Central & State
Governments, public sector organizations, corporate debentures & money market
instruments like Treasury bills, Commercial papers, Certificate of deposit etc. following
are the various types of debt funds:

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Liquid or money market funds:

These funds provide easy liquidity, preservation of capital & moderate income. These
schemes invest exclusively in safer short-term instruments such as Treasury bills,
Commercial papers, Certificate of deposit etc. return on these schemes fluctuate much less
compound to other schemes.

a) Gilt funds:

These funds invest exclusively in government securities. Government securities have no

default risk.

b) Diversifies debt funds:

A debt fund that invests in all available types of debt securities issued by entities across all
industries & sector is a diversified debt fund.

c) Focused debt fund:

Some debt funds have a narrow focus, with less diversification in its investments. Example:
includes sector, specialized & off share debt funds.

d) High yield debt funds:

A high yield debt fund seeks to obtain higher interest returns by investing in debt instruments
that are considered “Below investment grade”.

e) Assured return funds: Assured return schemes are those schemes that assure a specific
return to the unit holders irrespective of performance of the scheme. A scheme cannot
promise return unless such returns are fully guaranteed by the sponsor or AMC.

3) Balanced fund:

The aim of balanced funds is to provide both growth & regular income as such schemes
invest both in equities & fixed income securities in the proportion indicated in their offer
document. These are appropriate for investors looking for moderate growth. They generally
invest 40 – 60% in equities & debt instrument.

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Types according to maturity period:

1) Open-ended schemes:

An Open-ended fund or scheme is one that is available for subscription & repurchase of, on a
continuous basis. These schemes do not conveniently buy & sell units at Net Asset Value
[NAV] related prices, which are declared on a daily basis. The key features if an open-end
scheme is liquidity.

2) Close-ended scheme:

A Close-ended scheme or fund has a stipulated maturity period. Example: 5 to 7 years. The
fund is open for subscription only during a specified period at the time of launch of the
scheme.

Investors can invest in the scheme at the time of the initial public images & therefore they
can buy or sell the units of the schemes on the stock exchanges where the units are listed. In
order to provide an exit route to the investors, some close-ended funds give an option of
selling back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI regulations stipulate that at least one of the two exit routes is provided to the through
listing on stock exchanges. These Mutual Funds schemes disclose NAV generally on weekly
basis.

Load funds & No-load funds: A load fund is one that charges a percentage of NAV for
entry or exit. That is each time one buys or sells units in the fund; a charge will be payable.
This charge is used by the Mutual Fund for marketing & distribution expenses. Suppose the
NAV per unit is Rs.10, if the entry as well as exit load is 1% then the investor who buy would
be required to pay Rs.10.10 & those who offer their units for repurchase to the Mutual Fund
will get only Rs.9.90 per unit.

Options for structuring returns to investors:

Mutual Funds offer a variety of opinions to investors in which the returns from their
investments in structured. Investor has two options:

1) Dividend opinion:

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Under this option the dividends will be declared by the Mutual Fund. Again, this option is
divided into two. They are:

A) Dividend payout:

Under this option the investor will receive dividends from the Mutual Fund as & when such
dividends are declared or are directly credited to the investors bank A/C. dividends may be
declared weekly, monthly, quarterly, half yearly or annually.

1)Dividend re-investment:

Under this option the investor re-invests the dividends that are declared by Mutual Fund
back into the fund itself, at NAV that is prevalent at the time of re-investment. In this option
the number of units held by the investor will charge with every re-investment.

2) Growth option: Investors who do not require periodic income distributions can choose
the growth option. Where the incomes earned are retained in the investment portfolio &
allowed to grow, rather than being distributed to the investors.

Net Asset Value [NAV]:

The performance of a particular scheme of a Mutual Fund is denoted by Net Asset Value
[NAV]. NAV of Mutual Fund is the value of one unit of investment in the fund, in the Net
Asset terms. It is computed by dividing the Net Asset of the fund by the number of units that
are outstanding in the books of the funds. NAV is calculated as follows: -

NAV = Total assets – Total liabilities

No. Of units outstanding

Total Assets = Market value of investment + Current assets

+ Accrued income.

Total Liabilities = Current Liabilities + Accrued expenses.

Role of SEBI:

20
As far as Mutual Funds are concerned SEBI formulated policies & interest of the investor.
SEBI notified regulations for the Mutual Funds in 1993. Thereafter Mutual Funds sponsored
by private sector entities were allowed to enter the capital market.

The regulations were revised in 1996 & have been amended thereafter from time to time.
SEBI has also issued guidelines to the Mutual Funds from time to time to protect the interest
of investors.

All Mutual Funds in India are required to be mandatory registered with the SEBI. The
structured & formation of Mutual Funds, appointment of key functionaries, investment
restrictions etc. are all defined under SEBI regulations. Mutual Funds have to send half-
yearly compliance reports to SEBI & also provide all other information about their operations
as SEBI may require.

Advantages of Income Funds over Bank Fixed Deposits:

1. Portfolio diversification:

By offering ready-made diversified portfolios Mutual Funds enable investors to hold

diversified portfolios. But Bank Deposits does not enjoy this advantage of Income Fund &
other schemes of Mutual Fund.

2. Liquidity:

Since the Income funds are open-ended that investors sell their existing units or buy new
units at any point of time. This enables investors to enjoy a high level of liquidity on their
investments on the other hand in Bank FD’s the money invested will be locked up for the
period of deposits hence does not enjoy liquidity.

3. Higher Returns:

An income fund gives much better return when compared to Bank Fixed Deposits.

4. Professional management:

Mutual Funds provide professional management of funds where the funds are managed by
investment managers appointed by trustees & the AMC’s are closely regulated by SEBI.

21
Comparison:

Return:

Where we compare income funds table & Bank Deposits rates table, it is implicated that the
returns available from income funds are much higher when compared to Bank Deposits.
Income Funds give better returns than the Bank deposits for an investor.

Risk:

Bank Deposits are safer when compared to Income funds. But in Income Funds the
investment will be made in debt instruments like money market instruments, government
bonds & securities etc, which are safe. That is why Income funds are considered as safe may
be not much as Bank Deposits.

Liquidity:

Income Funds, Liquid Funds enjoy liquidity. The investors can redeem their investment when
they want to do so. But Bank Fixed Deposits does not enjoy liquidity features. The amount
invested will be locked for the period of deposit.

LIQUID FUNDS:

Making the banks run for their money:

Liquid funds in India, and across the world, form a major chunk of total assets under
management in the Mutual Funds industry. In India itself, 22% of assets go into liquid funds.

How it started?

The first money market fund – the Reserve Fund – was established in the US in the early
1970’s. Its masterstroke was to take the privileges that institutions enjoyed, & make them
available to average investors.

Bruce Bent, who was the genius behind the fund, summarized it this way: ‘I wanted to put
money where people could forget about it – dollar back, plus a competitive rate of return. We
broke the stranglehold by banks for savers, and it leveled the playing field.’

22
His idea was to package high-yielding money market debt instruments and commercial paper,
into a Mutual Fund. Investors could safely take advantage of high yields, while paying only a
small fee to the manager of the fund. The concept was an overnight sensation. Today, there
are around 1,500 such funds in the US, and a further 1,300 in Europe.

However, the success didn’t come without growing pains. Following some high-profile fund
failure in the early years, the US Securities and Exchange Commission decided to closely
regulate their workings. One of its main stipulations for these funds was the high quality of
the underlying securities. This was to minimize the potential for any losses.

Today, in Europe, money market funds tend to be more aggressive, focusing more on better
performance, whereas US-style money funds focus on preserving capital. Dubbed ‘money
market plus’ funds, these souped-up versions invest beyond the most conservative range of
short-term securities.

FMP’S competing with bank deposit (Fixed Maturity plan)

Next target of Mutual Fund!

After giving s stiff competition to the banks for cash management needs of corporate and
large investors through liquid funds, mutual funds are now eyeing the deposit base of the
banks through Fixed Maturity Plans – debt funds that invest your money for a fixed period
and earn [almost] fixed returns. The FMPs as they are popularly known as, are an excellent
substitute of short-term bank deposits where the investor is certain about his investment
horizon and wants to take minimum risk.

FMPs are Mutual Fund schemes where the fund manager invests your money for the tenure
of your choice in fixed income securities. For example, if you wish to invest Rs.1,00,000 for
three months, then you select a quarterly fixed maturity plan and invest at par when the
scheme opens for investments. The scheme matures after 3 months and you get your money
back based on the prevailing NAV.

Fixed returns through fixed Maturity: FMPs are typically close-ended schemes [or exit is
restricted by charging high exit loads]. This allows the fund manager to buy debt securities
that have a maturity equal to the tenure of the scheme and then these securities are held on till
the scheme matures.

23
Since trading in the portfolio is minimal and securities are held till maturity, the portfolio is
free from interest rate risk and thus its ability to assure ‘indicative returns’.

The Mutual Funds do not assure ‘fixed’ returns as it may not always be possible to buy
securities whose maturity exactly matches the tenure of the scheme and hence there may be a
small reinvestment risk as some of the debt papers in the portfolio mature before the scheme
matures.

SESTEMATIC INVESTMENT PLAN (SIP) VERSUS CHIT FUND

Systematic investment plan (SIP):

Whether investors are ready to take their first step towards their long-term investment goals
or have already started their journey, investors may be concerned about the possibility of
market volatility or high prices. There are ways the investor can benefit from the market and
still not suffer stocks.

What is known in the US as Dollar cost averaging is a systematic approach to long term
investing. Basically, under SIP option an investor commits making a regular [monthly,
quarterly] investment in a particular Mutual Fund and there by accumulate more units when
the market prices are low and lower number of units when prices are high in effect.

This has the effect of keeping an investors average cost of units lower than if investor were to
go into the market with the lump sum investment on any given day or if the investor were to
buy similar amount of units in the market irrespective of price. Repeated studies have shown
that the best way to benefit from markets is to invest long term and invest systematically.

SIP is an application of the principals of Dollar cost averaging in the Indian context.

What is systematic investment plan [SIP]

An investment strategy based on the concept of rupees-cost averaging, which automatically

ensure that the average purchase price of securities over a series of periodic transactions is
always lower than the security’s highest prices at any point of time. SIP’s which are based on
the concept of rupee cost averaging which is a very common investment strategy in the stock
market. Under this, an investor purchases unit worth a fixed amount regularly, in effect

24
buying fewer units when the NAV is high and more when the NAV is low. A SIP
automatically disciplines investors to invest regardless of market movements.

Systematic investments are an easy way to accumulate assets and take advantage of Rupee
cost averaging [buying more shares when prices are low] by allocating pre-determined
periodic investment into Mutual Funds.

SIP is an investment option that is presently available only with Mutual Funds. The
other investment option comparable to SIP’s is the recurring deposit schemes for Post office
and banks. Basically, under an SIP option an investor commits making a regular [monthly]
investment in a particular Mutual Fund / deposit.

Systematic investments do not assure a profit and do not protect against a loss in declining
markets. Since systematic investing involves continuous involvement in the market
regardless of functioning price levels of securities, you should consider your financial ability
to continue your purchases through periods of low-price levels.

How to invest in Sips?

 The SIP option is available with all types of funds like equity, income or gilt.

 An investor can avail the SIP option by giving post-dated cheques of Rs.500 or Rs.1000
according to the funds’ policy.
 If an investor wants to put more than Rs.500 or Rs.1000 in any given month he will have
to fill in a new form for SIP intimating the fund that he is changing his SIP structure.
Also, he will be allowed to change the SIP structure only in the multiples of the SIP
amount.
 If an investor is investing in two different schemes of the same fund he can fill in a
common SIP form for all the schemes. However, if the first holders in those schemes are
different than they will have to fill different SIP forms, as the first holder has to sign on
the form.
 The investor can get out of the fund i.e. redeem his units any time irrespective of whether
he completed his minimum investment in that scheme. In such a case his post-dated
cheques will be returned back to him.

Benefits of SIP built wealth over the long term:

25
The key to building wealth is to start investing early and regularly. These regular amounts of
savings, however small they may be, can possibly grow into a substantial amount of wealth
over the long term. Most of us tend to procrastinate investment decisions for there is always
some expense, which is a top priority. Therefore, if you have to save regularly. It makes sense
to pay yourself first and that is the only way to increase your savings.

SIP makes sense to an investor if and only it the investor considers the following:

1. Investor is unsure about which to invest.

2. Investor doesn’t want to commit too much at a time.
3. A disciplined approach to long term investing appeals to investor.
4. Investor wants to use potential market volatility to his advent

Chit fund:

Chit fund is an investment where person invests his money on monthly basis. The gain or the
dividend, which an investor gets after certain period of time, depends entirely on the bid
amount.

The following are the 8 different schemes from SRI RAM CHITS [K] LTD having different
chit values & investment period. These are the data related to the schemes from 1999 – April
2003.

SIP: The following table shows the returns available from investment in systematic
investment plan. The table gives the Absolute return from SIP of different income funds if at
all the investor had invested through a SIP instead of putting the money in a chit fund.

Advantages of SIP over chit fund:

1. Safety: Mutual Fund schemes are much safer when compared to chit fund. This is
because Mutual Funds are regulated by SEBI. On the other hand, chit fund involves
higher risk. They are not regulated hence there is no surety for the investor’s money.
2. Better returns:

26
 SIP’s gives a better return than a chit fund. In a chit fund the dividend or the return
entirely depends on the Bid amount apart from this the amount collected from the investors
anywhere. It is a kind of rotating the money among the investors.

3. Diversified portfolio: -

A Mutual Fund scheme gives different portfolios to the investor. But a chit fund does not
involve any such term.

SIP versus Bank Recurring Deposits:

Both SIP & Bank Recurring Deposits are similar in nature. Both involve monthly or periodic
investment. The people who want to invest their monthly savings usually go for Bank
Recurring Deposits but Mutual Fund schemes gives a similar kind of investment option that
is Systematic investment plan. Following gives the comparison between the to:

Advantages of SIP over recurring deposits:

1. Diversified portfolio:

Mutual Fund schemes invest in different securities or instruments & there by enable the
investor to get the advantages of diversified returns.

2. Higher Returns:

Systematic investment plan gives a better return when compared to the Bank Recurring
Deposits.

3. Professional management:

Investment managers manage Mutual Funds & therefore they bring in significant professional
expertise & are bound by regulatory & trustee supervision.

RBI bonds:

There are two types of RBI bonds. They are:

1. 8% savings bonds [taxable]:

27
These bonds will bear interest at the rate of 8% p.a. interest in non-cumulative bonds will be
payable at half yearly intervals & interest on the cumulative bonds will be compounded with
half yearly rests & will the principal as the subscriber may choose. Interest, as these bonds
will be taxable under the income tax act 1961 as applicable. According to the relevant tax
status of the bondholder. These bonds are exempt from wealth tax. The tenure of the bond is
6 years.

2. 6.50% savings bonds [non-taxable]:

The tenure of these bonds is 5 years. The Interest on bonds will be exempt from income tax
under the income tax act of 1961.

Post office savings:

Post office savings involve following forms of investment: -

1. National saving certificate [NSC]:

The tenure of these certificates is 6 years. This certificate bears interest at the rate of 8%.

2. Kisan Vikas Patra:

Under savings the principal amount doubles in 8 years 7 months.

3. Public provident fund:

This bears an interest rate of 8%.

4. Recurring deposit [RD]:

The tenure is 5 years & it bears an interest rate of 8%.

5. Time deposit:
Years Interest rate.
1 year 6.25%
2 years 6.50%
5 years 7%
6. Monthly income schemes:

28
 This bears an interest rate of 8% & after maturity a bonus of 10% is given to the investor.

Advantages of Mutual funds over RBI bonds & post office savings:

1. Liquidity:

Even though the RBI bonds & post office certificates are very safe for the investor, they
do not have liquidity. The principal amounts & the interest are paid only after the tenure
of the bond or certificate on the other hand Mutual Funds provides liquidity features to
the investor where he can redeem his units at any point of time.

2. Diversified portfolio: Mutual Funds provide ready-made portfolio to the investor

which involves different shares, money market instruments, government bonds,
debentures etc.

Co-operative society deposits: There are various co-operative societies & banks, which
accepts deposits from the customers. Apart from income funds, there are equity-oriented
schemes & balanced funds provided by the mutual funds. Investor can earn a good return if
the chooses the right fund at a right time. He can earn a good return if he knows when to
invest & when to come out of it.

2.2 COMPANY PROFILE

Reliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani Group, and is ranked
among the 25 most valuable private companies in India.
Reliance Capital is one of India's leading and fastest growing private sector financial services
companies, and ranks among the top 3 private sector financial services and banking groups,
in terms of net worth.
Reliance Capital has interests in asset management and mutual funds, life and general
insurance, private equity and proprietary investments, stock broking, depository services,
distribution of financial products, consumer finance and other activities in financial services.
The Reliance Anil Dhirubhai Ambani Group is one of India's top 2 business houses, and has
a market capitalization of over Rs.2,90,000 crore (US$ 75 billion), net worth in excess of
Rs.55,000 crore (US$ 14 billion), cash flows of Rs. 11,000 crore (US$ 2.8 billion) and net
profit of Rs. 7,700 crores (US$ 1.9 billion).
Reliance Capital Ltd. is a Non-Banking Financial Company (NBFC) registered with the

29
Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934. RCL was
incorporated as a public limited company in 1986 and is now listed on the Bombay Stock
Exchange and the National Stock Exchange (India). With a net worth of over Rs 3,300 crore
and over 165,000 shareholders, Reliance Capital has established its presence as a leading
player in the financial services sector in the country.
On conversion of outstanding equity instruments, the net worth of the company will increase
to about Rs 4,100 crore.
Reliance Capital sees immense potential in the rapidly growing financial services sector in
India and aims to become a dominant player in this industry and offer fully integrated
financial services. It is headed by Anil Ambani.

Reliance Capital is one of India’s leading and fastest growing private sector
financial services companies, and ranks among the top 3 private sector financial services
and banking companies, in terms of net worth. Reliance Capital has interests in asset management
and mutual funds, life and general insurance, private equity and proprietary investments, stock
broking and other activities in financial services.
I have done my project in Reliance Money and the study of mutual funds of Reliance products or
schemes.
About Reliance Money:
Reliance Money is a group company of Reliance Capital; one of India's leading and fastest growing
private sector financial services companies, ranking among the top 3
private sector financial services and banking companies, in terms of net worth. Reliance Capital is a
part of the Reliance Anil Dhirubhai Ambani Group.
Reliance Money which commenced commercial operations in April 2007 has over
300,000 customers and 4,300 outlets in more than 3,500 locations across India.
Reliance Money is a comprehensive electronic transaction platform offering a wide range
of asset classes. Its Endeavour is to change the way India transacts in financial markets
and avails financial services. Reliance Money is a single window, enabling you to access,
amongst others in Equities, Equity & Commodities Derivatives, Mutual Funds, IPO’s,
Life & General Insurance products, Off share Investments, Money Transfer, Money
Changing and Credit Cards.
Reliance Capital Ltd. has interests in asset management, life and general insurance,
private equity and proprietary investments, stock broking and other financial services.
ABOUT RELIANCE MUTUAL FUND:
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average Assets Under

30
Management (AAUM) of Rs. 84563.92 Crores (AAUM for June 30th 08) and an investor base of
over 68.38 Lakhs.
Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest
growing mutual funds in the country. RMF offers investors 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., 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."
Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial services
companies, and ranks among the top 3 private sector financial services and banking companies, in
terms of net worth.
Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity
and proprietary investments, stock broking and other financial services.

CHAPTER 3

3. REVIEW OF LITERATURE

Using Mutual Fund:

A small man – anyone with a portfolio of, Say, under $100,000 – is unlikely to do as well
investing his own money as he can do in a [Mutual Fund]

- Paul Samuelson,
- MIT Economist
- Nobel Laureate.

A mutual fund is financial service organization that receives money from shareholder, invests
it, attempts to make it grow and agrees to pay the shareholder cash on demand for the current
value of his investment”

AUTHOR:

BURTON G. MALKIEL

PUBLISHED BY THE INVESTMENT COMPANY OF THE U.S.

31
  A trust that pools the savings of investors who share a common financial goal is
known as a ‘mutual fund’.
 The money thus collected is then invested in financial market instruments such as
shares debentures and other securities like government paper, etc.

AUTHOR:

DONALD R. LICHTENSTEIN [PROFESSOR OF FINANCE]

UNIVERSITY OF COLORADO.

 The income earned through these investments, and the capital appreciation realized,
are shared by its unit holders in proportion to the number of units owned by them.
 Investments in securities are spread over wide cross-section of industries and sectors,
thus allowing risk reduction to take place. Diversification reduces the risk because all
stocks and/or debt instruments may not move in the same time.

AUTHOR:

MA. SANJAI BHAGAT

PROFESSOR OF FINAANCE

UNIVERSITY OF COLORADO.

The investment of mutual fund it is essentially a mechanism of pooling together the savings
of a large number of investors for collective investment with the objective of attractive yields
and appreciation in their value.

Mutual funds are an important segment of the financial system. It is a non-depository

financial intermediary. Mutual funds are mobilizing of saving particularly of the small and
household sectors, for investment in the stock and money market.

Features, role, benefits of mutual funds superiority over other investments:

 Mutual funds mobilize funds by sell in their own shares, known as unit. To an
investor, a unit in mutual funds means ownership of proportional share of securities in
the portfolio of a mutual fund.
 This gives the benefit of convenience and the satisfaction of owning shares in many
industries.
 Thus, mutual funds are primarily investment intermediaries to acquire individual
investments and pass on the returns to small fund investors

Diversified investment: mutual funds have the advantage of diversified investment of funds
in various industry segments spread across the country. This is advantageous to small
investors who cannot afford having the shares of highly established corporate because of high
market price.

32
Mutual funds have the distinct advantage of offering to its investors the benefit of better
liquidity of investment. There is always a ready market available for the mutual funds’ units.

There is only a minimum risk attached to the principal amount and return f or the investments
made in mutual fund schemes. This is usually made possible by expert supervision,
diversification and liquidity of units.

CHAPTER 4

4.1 STATEMENT OF THE PROBLEM:

 There is very low awareness among people about the RELIANCE Mutual funds. This
prevents them from obtaining a fair return for their investment.
 A very few educated people who do not want to invest in mutual fund just because
they are completely unaware of functioning of a mutual fund & they perceive a very
high degree of risk.
 There are over 500 different types of products offered by different mutual funds both
private & public. These discount products will have different portfolios according to
the investment period involved.
 For e.g.: short-term, medium-term etc. these products meet the expectations of
investors. But awareness among investors about the RELIANCE Mutual funds is
limited in this regard.

4. 2 NEED FOR THE STUDY

A mutual fund is a type of professionally managed collective investment vehicle that

pools money from many investors to purchase securities. As the mutual fund sector has
developed, there's been a growing acceptance by most policy holders that the assured
return era is a thing of the past. The mutual fund companies are focusing on the Market
Linked Plans.

This study would help in explaining the investor’s perception of risk & return & their
preference for different schemes of mutual fund. All this would help in giving suggestions
to strengthen the marketing efforts of insurance companies’ and expand their business.

33
4.3 OBJECTIVES:

PRIMARY OBJECTIVES:

The Primary objective of the study is to assess the investor’s perception towards the mutual
funds of RELIANCE

SECONDARY OBJECTIVES:

 To understand how a mutual fund works.

 To identify the advantages of RELIANCE mutual funds over other forms of
investments.
 To compare the RELIANCE mutual funds with other types of investments.
 To know investors perception of risk & return & their preference for different
schemes of mutual fund.

4.4 SCOPE OF THE STUDY

 The scope of the study is to analyze and interpret the Customer Maximization in
Equity Market and over other investments.
 The research records around a general awareness on then mutual fund and other
investment level and precaution towards RELIANCE Mutual Funds.
 Analyze and interpret the factors affecting the choice of Mutual Fund and
investors preference on the RELIANCE Mutual Fund and over other investment
Schemes.

4.5. RESEARCH DESIGN

The research design indicates the types of research methodology undertaken to collect the
information for the study. The research design selected for this study for this project is both
descriptive research design and hypothesis testing research design.

The purpose of descriptive research is to get the characteristic of an individual toward an

objective or the variable of interest in a situation. A descriptive research design is the one that
simply describes something such as demographic characteristic of group (or) customers of the
product.

34
Descriptive research study provides clear specification of who, what, when, why, where and
how aspects of the research. It involves more specific hypothesis and testing of them through
statistical inference techniques. However, the descriptive does not find the cause and effect
relationship among variables.

SAMPLING DESIGN

The selected samples based on the stratified random sampling.

A sample design is a definite plan for obtaining a sample from a given population. It refers
to the technique or the procedure the research would adopt in selecting items for the sample.
Sample design may as well lay down the number of items to be included in the sample that is
the size of the sample. Sample design is determined before data are collected.

Stratified Random sampling:

Under stratified random sampling the population is divided in to several. Sub-population that
are individually more homogeneous than the population, (the different sub – population are
called strata) and then we select items from each stratum to constitute a sample.

Since each stratum is homogenous than the population, we are able to get more precise,
estimate for each stratum and by estimating more accurately each of the component part, we
get a better estimate of the whole. In brief stratified sampling results in more reliable and
detailed information.

DATA COLLECTION METHOD

PRIMARY DATA:

For this study, this questionnaire type survey is used to collect the primary data because of its
extreme flexibility. This primary data pertains demographic and socio-economic
characteristics of the investors, attitudes and opinion of investors, their awareness and
knowledge.

SECONDARY DATA:

Secondary data has been collected from magazines and journals like “TAKE STOCK”, from
the books of “MFI” and “HDFC”, and “SEBI INVESTORS GUIDE”

35
Secondary data need for conducting this research work was collected both internally and
externally. The required internal data was collected from company brochures, etc…, and the
external source was magazines, other business forms, websites, investors, bank, mutual fund
industry, post office, statistical and management books and so on. The research did here is
desk research, that is collection and analysis were made in secondary data.

I. POPULATION

The universe or population is the specified group of people, firms, conditions, activities, etc..,
which form the pivotal point of the research project. For developing and using a sample, it
becomes a primary duty to define the population from which draw the sample.

II.SAMPLING FRAME

A sampling frame may be defined as the listing of the general components of the individual
units that comprise the defined population.

III.SAMPLING METHOD AND SAMPLE SIZE

Non-probability sampling method was used for this research study in non-probability
sampling, the method adopted is convenience-sampling method. The investigator has selected
the sample according to this convenience. He has included those items in the sample, which
he thought were most typical of population.

NON-PROBABILITY SAMPLING

Non –probability sampling method is one, which does not provide every item in the universe
with a known chance of being include in the sample. The selection process is partially
subjective.

CONVENIENCE SMAPLING

A convenience sample is obtained by selecting’ ’convenient’’ population units. Convenience

samples are prove to bias by their very nature selecting population elements which are
convenient to choose almost always make them special or different from the best of the
elements in the population in same way.

IV. SAMPLE SIZE DETERMINANTS

36
The sample size is usually determined by the sampling method selected and nature of the
research. Hence considering this, the sample size is determined. The sampling here is non-
probability and convenience sapling for that more number of sample sizes is preferred.

v. SAMPLE SIZE:

The method of sampling used here was Convenience sampling. The survey was conducted in
Lucknow with sample size of 250 customers of State of India.

Secondary data

Secondary data has been collected from magazines and journals like “TAKE STOCK”, from
the books of “AMFI” and “HDFC”, and “SEBI INVESTORS GUIDE”.

The task here depends on whether probability or non-probability sampling. As it was taken as
non-probability sampling, large number of sampling is preferred to precise the sampling error
estimate. The sample size here includes existing and potential investors, which is 250.

QUESTIONNAIRE DESIGN

The researcher used a questionnaire method to collect the data from the mutual fund investors
and other investors for the research work.

The questionnaire framed for the research study is a structured questionnaire in which all the
questions are predetermined before conducting the survey. The form of questionnaire is of
both closed and open type

A pilot survey was administrated to revise and complement survey questions before preparing
the final questionnaire. All the variable were to be

Part I to be demographic details on age, sex, occupation, income, education.

Part II Six-point scale of one to Two, with 1 representing HDFC income fund and 6
representing Templeton India Income Builder.

Part III Five point scale of one to five, with 1 representing Mutual fund and 5 representing
Co-operative society.

37
Part IV Four-point scale of one to four, with 1 representing Equity and 4 representing
balanced fund.

Part V Three-point scale of one to three, 1 representing Recurring Deposits and 3

representing Chit fund.

4.6 LIMITATIONS OF THE STUDY

 Only 250 customers of RELIANCE from Chennai were selected for the study because
only the investors in mutual fund with sufficient knowledge about various forms of
investment will be able to make a comparison between them.
 Lack of time because of which some of the information could not be collected.
 Unwillingness & Bias from the part of respondents limits the coverage of the Study.

4.7 EXPECTED CONTRIBUTION OF THE STUDY

The project was a great learning experience. Each moment spent during the project brought
new experiences and practical learning which is not confined within the text book but gave
exposure to the real-world constraints in applying all that we have read in books. Following
are some learning attained during the project.

 The training very usefully to understand about the mutual fund investment
functioning, mutual fund superiority and over other investment position.
 The study gave ample opportunity to learn about preparation of mutual fund investors
and other investor’s analysis and collect they are primary repots and overall
investment industrial report identified.
 The project usefully to understand about the RELIANCE Mutual funds, bank deposit,
chit fund, bond, post office savings.

Thus, the project was a great learning experience and will be so helpful for my future

CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

Table1. Shows Distribution of the respondents based on the age.

38
 Respondents Percent
S.No Age
1 BELOW 20 30 12
2 20 -30 86 34.4
3 30 – 40 69 27.6
4 40 – 50 42 16.8
5 ABOVE 50 23 9.2
Total 250 100

Source: Data gathered from the primary source

Interpretation:

Table1. Shows that distribution of the respondents based on the age group.

The highest 34.4% of the respondents were 20-30 years age group follow;
S,no Gender respondents Percent
1 male 186 74.4
2 female 64 25.6
Total 250 100

wed by 12% of the respondents were below 20 years age group and 27.6% of the respondents
were 30-40 years .

39
Interpretation:

Table2. Shows that distribution of the respondents based on the educational

qualification.

The highest 45.2% of the respondents were PG and 28.8% of the respondents were UG and
18.4% of the respondents were Professional and 7.6% of the respondents were
HSC/SSLC.

Education Qualification

120
100
80
Respondentes
60
Percent
40
20
0

Table3. Shows distribution of the respondents based on the Occupation:

40
 Respondents Percent
S.No Occupation
1 PROFESSIONAL 19 7.6
2 OWN BUSINESS 112 44.8
3 PRIVATE EMPLOYEE 61 24.4
4 GOVT EMPLOYEE 42 16.8
5 OTHERS 16 6.4
  Total 250 100

Table4. Shows that distribution of the respondents based on the occupation.

The highest 44.8% of the respondents were own business and 7.6% of the respondents were
professional and 24.4% of the respondents were private employee and 16.8% of the
respondents were Govt employee and 6.4% of the respondents were others.

Occupation

PROFESSIONAL

OWN BUSINESS
6% 8%
17%
PRIVATE
EMPLOYEE
45%
24% GOVT
EMPLOYEE
OTHERS

Source: Data gathered from the primary source

Table7. Shows distribution of the respondents based on the awareness about fund is:

Awareness about Respondents Percent

S.No fund
1 HIGH 101 40.4
2 MEDIUM 90 36
3 LOW 45 18
4 NOT AWARE 14 5.6

41
 250 100
  Total

Source: Data gathered from the primary source

Interpretation;
Table8. Shows distribution of the respondents based on the investment in RELIANCE
Mutual funds so far is:

S.No Investment Respondents Percent

1 LESS THAN 10000 23 9.2
2 10000 -25000 135 54
3 25000 - 50000 41 16.4
4 ABOVE 50000 47 18.8
5 NOT INVESTED 4 1.6
250 100
  Total

Source: Data gathered from the primary source

Interpretation:

Table9. Shows that distribution of the respondents based on the investment in

RELIANCE Mutual funds so far is:

The highest 54% of the respondents were invest 10000-25000 and 9.2% of the respondents
were invest less than 10000 and 16.4% of the respondents were invest 25000 - 50000 and
18.8% of the respondents were invest above 50000 and 1.6% of the respondents not invested.

42
Table 10. Shows distribution of the respondents based on the RELIANCE Mutual funds
are a great way to let money grow:

Respondents Percent
S.No Money grow
1 STRONGLY AGREE 52 20.8
2 AGREE 106 42.4
3 STRONGLY DISAGREE 40 16
4 DISAGREE 52 20.8
  Total 250 100
Table10. Shows Distribution of the respondents based on the choose the best types of
investments based on the satisfaction available from their return:

S.No Satisfaction investment Respondent Percent

1 RELIANCE Mutual funds 80 32
2 Bank FD 50 20
3 Chit funds 40 16
4 Bonds 35 14
5 Co-Operative Society 30 12
6 Post office Savings 15 6
Total 250 100

Source: Data gathered from the primary source

Interpretation:

Table10. Shows that distribution of the respondents based on the choose the best types
of investments based on the satisfaction available from their return.

The highest 32% of the respondents were choose on mutual fund and 20% of the respondents
were choose bank Fd and 16% of the respondents were choose Chit funds and 14% of the
respondents were choose bonds and 12% of the respondent were choose co- operative society
and 6%of the respondent were choose post office savings.

43
Source: Data gathered from the primary source

Interpretation:

Table11. Shows that distribution of the respondents based on the risk perception about
mutual fund:

The highest 45.2% of the respondents were Risk and 24% of the respondents were High-risk
12.4% of the respondents were Safe and 18.4% of the respondents were Very safe.

Table12. Shows distribution of the respondents based on the following schemes/ funds
would like to invest in mutual fund:

Respondents Percent
S.No SCHEMES/FUNDS
1 EQUITY ORIENTED 96 38.4
2 DEBT ORIENTED 108 43.2
3 BALANCED ORIENTED 46 18.4
250 100
  Total

Source: Data gathered from the primary source

Interpretation:

Table12. Shows that distribution of the respondents based on the following

schemes/funds would like to invest in:

The highest 45.2% of the respondents were Risk and 24% of the respondents were High-risk
12.4% of the respondents were Safe and 18.4% of the respondents were Very safe.

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Table14. Shows distribution of the respondents based on the influenced to invest in
mutual fund:

Respondents Percent
S.No Influenced
1 FRIENDS 59 23.6
2 RELATIVES 77 30.8
3 MEDIA 68 27.2
4 BROKERS 39 15.6
5 OTHERS 7 2.8
Total 250 100

Table14. Shows that distribution of the respondents based on the influenced to invest in
mutual fund:

The highest 30.8% of the respondents were influenced Relatives and 23.6% of the
respondents were influenced Friends 27.2% of the respondents were influenced Media and
15.6% of the respondents were influenced Brokers and 15.6% of the respondents were others.

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 Invest In Mutual Fund

90
80
70
60
50 Respondents
40 Percent
30
20
10
0

Table15. Shows distribution of the respondents based on the mutual fund schemes fulfill
objective of maximizing the return from the investment:

Respondents Percent

S.No Return from

1 TO A GREAT EXTENT 83 33.2
2 TO SOME EXTENT 133 53.2
3 DOES NOT FULFILL 34 13.6
  Total 250 100
Interpretation:

Table15. Shows that distribution of the respondents based on the mutual fund schemes
fulfill objective of maximizing the return from the investment:

The highest 53.2% of the respondents were and 23.6% of the respondents were influenced
Friends 27.2% of the respondents were influenced Media and 15.6% of the respondents were
influenced Brokers and 15.6% of the respondents were others.

46
Table16. Shows distribution of the respondents based on the investors want to invest on
monthly savings:

Respondents Percent
S.no Monthly invest
1 RECURRING DEPOSITS 106 42.4
2 SIP 85 34
3 CHIT FUND 59 23.6
  Total 250 100

Interpretation:

Table16. Shows that distribution of the respondents based on the investors want to
invest on monthly savings:

The highest 42.4% of the respondents were invest in recurring deposits saving scheme and
34% of the respondents were invest in Sip saving scheme 23.6% of the respondents were
invest in chit fund saving scheme.

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CHAPTER 6

6. FINDINGS OF THE STUDY:

1. The comparison made between mutual fund & other forms of investment shows those
mutual fund products gives a higher, stable return than others. The rate of return available
from mutual fund is quite higher than other forms of investment. Apart from this mutual
fund gives different or diversified portfolios to the investor.

2. From the Analysis it is inferred that 34.4% of the respondents were 20-30 years age group
followed by 12% of the respondents were below 20 years age group and 27.6% of the
respondents were 30-40 years age group and 16.8% of the respondents were 40-50 years
and 9.2% of the respondents were above 50 years age.

3. From the Analysis it is inferred that 74.4% of the respondents were male followed by
25.6% of the respondents were female

4. From the Analysis it is inferred that 45.2% of the respondents were PG and 28.8% of the
respondents were UG and 18.4% of the respondents were Professional and 7.6%
of the respondents were HSC/SSLC.

5. From the Analysis it is inferred that 44.8% of the respondents were own business and
7.6% of the respondents were professional and 24.4% of the respondents were private
employee and 16.8% of the respondents were Govt employee and 6.4% of the
respondents were others.

6. From the Analysis it is inferred that 36.8% of the respondents are SEMI-URBAN and
23.2% of the respondents are URBAN and 16.4% of the respondents are RURAL and
23.6% of the respondents are CITY.

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CHAPTER 7

SUGGESTIONS

 Investment in real estate:

Mutual fund is allowed to invest in real estates. Real estates gives higher profit & there
by enables the investors in RELIANCE Mutual funds to get higher returns for their
investment. SEBI must allow RELIANCE Mutual funds to invest either directly in real estate
business or invest in companies shares that do real estate business.

 Higher awareness among investors:

Mutual fund companies should bring greater awareness in the investors mind about
their different schemes. Since the bank interest rates are falling, the mutual fund
companies must bring awareness among investors about their products & enable the
investors to get a better return for their investments.

 Tax rebate for investing in mutual fund:

Tax rebate should be provided to the investor for investing in mutual fund so as to
encourage them to invest in RELIANCE Mutual funds apart from ELSS.

 Innovative products or funds:

Mutual fund companies must create innovative funds for the investor keeping in mind
the investment period of the investor. For e.g.: Standard charted mutual fund offered
medium term plan for the investor which gives a better return when the investor looks
for a investment period of 6 months – 1years.

CHAPTER 8
CONCLUSION

The study on Customer Maximization in Equity Market enables us to find over other
investments plans, level, structure, benefits and superiority of RELIANCE Mutual funds level
compare with other investments and mutual funds. This study constitutes a sample of 250
different kinds of investors they diversification of investment plans, opinion of the investors
has been collected through structured questionnaire and study confined to the area of
different areas in Chennai. Most of the investors have very good knowledge about
RELIANCE Mutual funds investment and other investment plan and they are satisfied with
the returns and with the performance of the investments scheme. Very easily long term and
short-term wealth can be created and investors are aware of that and this is a scheme which is
disciplined and it gives good return and it protects the investors when the market falls.

49
Conclusion is that almost all the investors are satisfied with the returns and with the
performance of the schemes. Based on the findings and analysis it can be concluded that the
investors are satisfied with the returns and performance of RELIANCE Mutual funds
superiority and over other investments plan from other mutual fund companies.

CHAPTER 9

BIBLIOGRAPHY
1. A. N ARORA & S. ARORA “Statistical For Management”
UNIVERSITY OF COLORADO.
THE U.S PUBLISHED….

2. AUTHOR:
DR. S GURUSAMY
FINANCIAL SERCICES READER, “MUTUAL FUNDS AND OTHER
INVESTMENT “
DG VAISHNAV COLLEGE
PUBLISHED BY MARGHAM…

3. AUTHOR: “INVESTMEN ANALYZIS AND PLANNING”

BURTON G. MALKIEL
PUBLISHED BY THE INVESTMENT COMPANY OF THE U.S.

AUTHOR:
C R KOTHARI
SECOND EDITION “RESEARCH METHODOLOGY”
PUBLISHE BY WISHWA PRAKASHAN

WEBSITES:
 www.amfifndia.com
 www.iepindia.com
 www.mutualfundsindia.com

CHAPTER 10
ANNEXURE

QUESTIONNAIRE

DEMOGRAPHIC DETAILS:
1. Name__________________________________
2. Address________________________________

3. Age

50
 □ Below 20
□ 22 to 30
□ 30 to 40
□ 40 to 50
□ Above 50

4. Gender
□ Male
□ Female

5. Education qualification
□ Under graduate
□ post graduate
□ professional
□ HSC/SSLC

6. Occupation
□ Professional
□ Own Business
□ Private employee
□ Govt employee
□ Others, please specify_________

7. Place of living
□ urban
□ Semi urban
□ Rural
□ city

8. Monthly Income
□ Less than 10000
□ 10000 to 15000
□ 15000 to 20000
□ 20000 to 25000
□ Above 25000
9. Your awareness about RELIANCE mutual funds is
□ High
□ Medium
□ Low
□ Not aware

10. Your Investment in RELIANCE Mutual funds so far is

□ Less than 10,000
□ 10, 000 to 25,000
□ 25,000 to 50,000
□ Above 50,000
□ Not Invested

_____________________________________________________________

51