religare mutual fund

7/25/2019 Religare Mutual Fund

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Net asset value (1-front end load)

Public offer price=

Let us assume, an investor invests Rs.10,000 in a scheme that charges it ! front end

load at a N"# per unit Rs.10 using the formula public offer price $ 10%(1-0.0) is

Rs.10,0. &o onl' 0 units are allo*ed to the investor.

"mount invested

Public offer price

CONTINGENT DEFERRED SALES CHARGES (CDSC):-

+ontingent differed sales charges of a structured bac end load. t is paid *hen the

units are reading during the initial 'ears of o*nership. t is for a predetermined period

onl' and reduced over the time 'ou invested for a fund. he longer remains in a fund

the lo*er the +/&+.

he & stipulate the a +/&+ ma' be charge onl' for first four 'ears after purchase

of units and also stipulate the ma2imum +/&+ that can *e charge ever' 'ear. his is

the & mutual funds regulations 13 do not allo* either the front end load or bac

end load to an' combination is higher than 4!.

TRANSACTION COST:-

&ome funds ma' also impose a s*itch over fee *hich is charge on transfer of

investment from one scheme to another *ithin a same mutual funds famil' and also to

s*itch from one plan to another *ithin same scheme. he real estate mutual funds

sector is no* being considered as the engine of economic gro*th.


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1.1.12 The objectie! o" A!!oci#tio$ o" %&t' F&$! i$ I$i#5-

he "ssociation of 6utual 7unds of ndia *ors *ith 80 registered "6+s of the

countr'. t has certain defined ob9ectives *hich 9u2taposes the guidelines of its oard

of /irectors. he ob9ectives are as follo*s5

his mutual fund association of ndia maintains a high professional and ethical

standards in all areas of operation of the industr'.

t also recommends and promotes the top class business practices and code of

conduct *hich is follo*ed b' members and related people engaged in the

activities of mutual fund and asset management. he agencies *ho are b' an'

means connected or involved in the field of capital marets and financial

services also involved in this code of conduct of the association.

"67 interacts *ith & and *ors according to &s guidelines in the

mutual fund industr'.

"ssociation of 6utual 7und of ndia do represent the :overnment of ndia, the

Reserve an of ndia and other related bodies on matters relating to the

6utual 7und ndustr'.


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t develops a team of *ell ;ualified and trained "gent distributors. t

implements a program of training and certification for all intermediaries and

other engaged in the mutual fund industr'.

"67 undertaes all ndia a*areness program for investors in order to

promote proper understanding of the concept and *oring of mutual funds.

"t last but not the least association of mutual fund of ndia also disseminate

information on 6utual 7und ndustr' and undertaes studies and research

either directl' or in association *ith other bodies.

1.1.1 The !*o$!o+! o" A!!oci#tio$ o" %&t' F&$! i$ I$i#:-

an &ponsored 5

& 7und 6anagement Ltd.


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>6 7inancial 6utual 7und

?ota 6ahindra "sset 6anagement +o. Ltd.

Reliance +apital "sset 6anagement Ltd.

&ahara "sset 6anagement +o. Pvt. Ltd

&undaram "sset 6anagement +ompan' Ltd.

ata "sset 6anagement Private Ltd.

Predominantl' ndia >oint #entures5-

irla &un Life "sset 6anagement +o. Ltd.

/&P 6errill L'nch 7und 6anagers Limited

@/7+ "sset 6anagement +ompan' Ltd.

,+eoi$#$t' Fo+ei/$ 0oi$t e$t&+e!:-

"N "6R< "sset 6anagement () Ltd.

"lliance +apital "sset 6anagement (ndia) Pvt. Ltd.

/eutsche "sset 6anagement (ndia) Pvt. Ltd.

7idelit' 7und 6anagement Private Limited

7ranlin empleton "sset 6gmt. (ndia) Pvt. Ltd.

@&+ "sset 6anagement (ndia) Private Ltd.

N: nvestment 6anagement (ndia) Pvt. Ltd.

6organ &tanle' nvestment 6anagement Pvt. Ltd.

Principal "sset 6anagement +o. Pvt. Ltd. Prudential ++ "sset 6anagement +o. Ltd.

&tandard +hartered "sset 6gmt +o. Pvt. Ltd.

1.1.1A ,e+"o+#$ce o" %&t' F&$! i$ I$i#5-


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Let us start the discussion of the performance of mutual funds in ndia from the

da' the concept of mutual fund too birth in ndia. he 'ear *as 138. =nit

rust of ndia invited investors or rather to those *ho believed in savings, to

par their mone' in = 6utual 7und. 7or 80 'ears it goaled *ithout a singlesecond pla'er. hough the 1 'ear sa* some ne* mutual fund companies,

but = remained in a monopol' position.

he performance of mutual funds in ndia in the initial phase *as not even

closer to satisfactor' level. People rarel' understood, and of course investing

*as out of ;uestion. ut 'es, some A million shareholders *as accustomed

*ith guaranteed high returns b' the beginning of liberaliBation of the industr'

in 1. his good record of = became mareting tool for ne* entrants. he

e2pectations of investors touched the s' in profitabilit' factor. @o*ever,

people *ere miles a*a' from the preparedness of riss

he 1 stoc maret scandal, the losses b' disinvestments and of courses the

lac of transparent rules in the *here about roced confidence among the

investors. Partl' o*ing to a relativel' *ea stoc maret performance, mutual

funds have not 'et recovered, *ith funds trading at an average discount of 100

percent of their net asset value.

"t last to mention, as long as mutual fund companies are performing *ith

lo*er riss and higher profitabilit' *ithin a short span of time, more and more

people *ill be inclined to invest.

1.1.1 %AR3ET TREND:-

" lone = *ith 9ust one scheme in 13A, no* competes *ith as man' as A00 odd

products and 8A pla'ers in the maret. n spite of the stiff competition and losing

maret share, = still remains a formidable force to recon *ith.

Last si2 'ears have been the most turbulent as *ell as e2iting ones for the industr'.

Ne* pla'ers have come in, *hile others have decided to close shop b' either selling

off or merging *ith others. hose directl' associated *ith the fund management

industr' lie distributors, registrars and transfer agents, and even the regulators have

become more mature and responsible.

he industr' is also having a profound impact on financial marets. Chile = has

al*a's been a dominant pla'er on the bourses as *ell as the debt marets, the ne*


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generation of private funds *hich have gained substantial mass are no* seen fle2ing

their muscles. ' re*arding honest and transparent management *ith higher

valuations, a s'stem of ris-re*ard has been created *here the corporate sector is

more transparent then before.

7unds have shifted their focus to the recession free sectors lie pharmaceuticals,

76+: and technolog' sector. 7unds collection, *hich averaged at less than Rs.100bn

per annum over five-'ear period spanning 18- doubled to Rs.10bn in 1-. n

the current 'ear mobiliBation till no* have e2ceeded Rs.800bn. otal collection for the

current financial 'ear ending 6arch 000 is e2pected to reach Rs.AD0bn.to*ards

mutual funds has become obvious. he coming fe* 'ears *ill sho* that the traditional

saving avenues are losing out in the current scenario. he fund mobiliBation trend b'

mutual funds in the current 'ear indicates that mone' is going to mutual funds in a big

*a'. he collection in the first half of the financial 'ear 1-000 matches the *holeof 1-.

ndia is at the first stage of a revolution that has alread' peaed in the =.&. he =.&.

boasts of an "sset base that is much higher than its ban deposits. n ndia, mutual

fund assets are not even 10! of the ban deposits, but this trend is beginning to

change. Recent figures indicate that in the first ;uarter of the current fiscal 'ear mutual

fund assets *ent up b' 11D! *hereas ban deposits rose b' onl' 14!. (&ource5 hin

tan, he 7inancial 2press &eptember, ) his is forcing a large number of bans

to adopt the concept of narro* baning *herein the deposits are ept in :ilts and some

other assets *hich improves li;uidit' and reduces ris. he basic fact lies that bans

cannot be ignored and the' *ill not close do*n completel'. heir role as

intermediaries cannot be ignored. t is 9ust that 6utual 7unds are going to change the

*a' bans do business in the future.

P"R+=L"R "N?& 6=="L 7=N/R=RN L


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NC


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nvestments, =& based, *ith over =&I1trillion assets under management

*orld*ide


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1.2 ,ROFILE OF THE ORGANI7ATION

Re'i/#+e Sec&+itie! Lt. (RSL)is a *holl' o*ned subsidiar' of Religare 7inancial

&ervices Ltd. (R7&L), a +ompan' promoted b' the late /r. Parvinder &ingh, 2-+6/

of Ranba2' Laboratories Ltd.

he primar' focus of Religare &ecurities Ltd. is to cater to services in

+apital 6aret


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group *ors on the philosoph' of partnering for *ealth creation. Ce not onl' e2ecute

trades for our clients but also provide them critical and timel' investment advice. he

gro*ing list of financial institutions *ith *hich Religare is empanelled as an approved

broer is a reflection of the high-level service standard maintained b' the compan'.

GRO5, CO%,ANIES:-

Religare nterprises Limited group comprises of Religare &ecurities Limited, Religare

+ommodities Limited, Religare 7invest Limited and Religare nsurance roing

Limited *hich deal in e;uit', commodit' and financial services business.

Re'i/#+e Sec&+itie! Liite:-

R&L is one of the leading broing houses of ndia and are dealing into ;uit' roing,

/epositor' &ervices, Portfolio 6anagement &ervices, nternet rading, nstitutional

;uit' roerage K Research, nvestment aning, 6erchant aning and +orporate

7inance.

o facilitate free and fare trading process Religare is a member of ma9or financial

institutions lie, National &toc 2change of ndia, omba' &toc 2change of ndia,

/epositor' Participant *ith National &ecurities /epositor' Limited and +entral

/epositor' &ervices () Limited, and a & approved Portfolio 6anager.

R&L serves a platform to all segments of investors to avail the opportunities offered b'

investing in ndian e;uities either on their o*n or through managed funds in Portfolio

6anagement.

Re'i/#+e Cooitie! Liite:-

Religare is a member of N+/G and 6+G and provides platform for trading in

commodities, *hich is an online facilit' also.

R+L provides platform to both agro and non-agro commodit' traders to derive the

actual price of the commodit' and also to trade and hedge activel' in the gro*ing

commodit' trading maret in ndia.

Cith this realiBation, Religare +ommodities is coming up *ith its branches at mandilocations. t is a flagship effort from our team *hich *ould be helpful in facilitating

trade and speculating price of commodities in future.


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Re'i/#+e Fi$ee!t:-

Religare 7inevest Limited (R7L), a Non aning 7inance +ompan' (N7+) is

aggressivel' maing a name in the

7inancial services arena in ndia. n a fast paced, constantl' changing d'namic

business environment, R7L has delivered the most competitive products and services.

R7L is primaril' engaged in the business of providing finance against securities in the

secondar' maret. t also provides finance for application in nitial Public


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a *ide reach *ith our services literall'M hatJs *h' *e are catering the insurance

re;uirements of both retail and corporate segments *ith products of all the insurance

companies on life and non-life &till, there is more in store. Ce also cater individuals

*ith a complete suite of insurance solutions, both life and general to mitigate riss tolife and assets through our e2isting net*or side.

7or corporate clients, *e *ill be offering value based customiBed solutions to cover all

riss, *hich their business is e2posed to.


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h c&!toe+ t+#e 6ith Re'i/#+e;

,e+!o$#' A!!i!t#$ce:-

/edicated dealers for facilitating trading and post trade needs.

/edicated Relationship 6anagers for assisting multiple investments

needs.

Re!e#+ch < Ai!o+:-

Regular ne*s and updates on maret.

Research service over &6& to eep 'ou abreast.

/ail' and *eel' technical reports. " complete information report on results and performance individual

companies. +omplete reports on various economic sectors and their

performance along *ith anal'sis of fe* ma9or companies in that sector.

rading calls in 7utures K


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nvestment aning

+orporate "dvisor' :roup

6utual 7und

1. ,RO8LE%S OF THE ORGANI7ATION:-

&ince Religare &ecurities is a private pla'er in the insurance industr', it has not 'et

reached brea-even. @ence, it has high cost due to *hich its premiums are high as

compared to other maret pla'ers.

t has to create credibilit' in the public.

t has to compete *ith the *ide range of products that its competitors offer.

t has to focus to*ards rural segment also *hich has a great scope of gro*th.

t has to decide on the strategies to be adopted *hich *ill help to counter

competition.

t has to increase its no. of branches and also enhance its net*or of agents so that

it can compete *ith other maret pla'ers.

t has to focus on providing effective training to its agents so that the customer

base can be increased and moreover customer satisfaction can be ensured.


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1. CO%,ETITION INFOR%ATION

8#$9 S*o$!o+e:-

& 7und 6anagement Ltd.


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&undaram "sset 6anagement +ompan' Ltd.

ata "sset 6anagement Private Ltd.

,+eoi$#$t' I$i# 0oi$t e$t&+e!:-

irla &un Life "sset 6anagement +o. Ltd.

/&P 6errill L'nch 7und 6anagers Limited

@/7+ "sset 6anagement +ompan' Ltd.

,+eoi$#$t' Fo+ei/$ 0oi$t e$t&+e!:-

"N "6R< "sset 6anagement () Ltd.

"lliance +apital "sset 6anagement (ndia) Pvt. Ltd.

/eutsche "sset 6anagement (ndia) Pvt. Ltd.

7idelit' 7und 6anagement Private Limited

7ranlin empleton "sset 6gmt. (ndia) Pvt. Ltd.

@&+ "sset 6anagement (ndia) Private Ltd.

N: nvestment 6anagement (ndia) Pvt. Ltd.

6organ &tanle' nvestment 6anagement Pvt. Ltd.

Principal "sset 6anagement +o. Pvt. Ltd.

Prudential ++ "sset 6anagement +o. Ltd.

&tandard +hartered "sset 6gmt. +o. Pvt. Ltd.


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1. S..O.T. ANAL>SIS OF THE ORGANI7ATION

STRENGTHS:-

Die+!e 8+#$ch Net6o+9

&ince +ompan' inception in 7F 1 +ompan' and its subsidiaries have gro*n from

a single location to a nation*ide net*or spread over 00 offices in 80 cities. he'

have a pan ndia distribution net*ors for the purpose of distribution of financial

products and services. &uch a diverse and integrated net*or provides a centraliBed

platform to their clients.

8o&?&et o" "i$#$ci#' *+o&ct! #$ !e+ice!:-

+ompan' and its subsidiaries offer various financial services and products ranging

from e;uit', 7 K < and *holesale debt, mutual fund an distribution, e;uit' research

anal'sis, depositor' services to cater to the specific needs of the retail and institutional

investors thus providing all these services in single platform.

A#$ce Tech$o'o/ te# th#t e'ie+! #+9et 'e#i$/ *+o&ct

i$$o#tio$:-

heir ongoing investment in technolog' is a e' element in e2panding their product

and service offerings, enhancing their deliver' s'stems, providing fast and consistent

client service, reducing processing costs, and facilitating their abilit' to handle

significant increases in client activit' *ithout a corresponding rise in ris and staff.

+ompan' and its subsidiaries have an in-house technolog' team of 4 people

comprising of several engineers. he in-house technolog' team has been responsible

for developing the technolog' products for operating at a large scale *ith efficient

bac office s'stems. he application of technolog' allo*s +ompan' and its

subsidiaries.

o build scalable product and service offerings. he in-house technolog' team

developed one of the first nternet trading platforms in ndia, one of the first in-house

real-time ++L lin *ith N&. +ompan' and its subsidiaries introduced integrated

accounts *ith automated gate*a's *ith client ban accounts so that the' can transfer


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funds to and from their ban account to their broerage account *ith the +ompan'.

his has enhanced customer abilit' to access their funds for maret related activities.

he in-house technolog' team has good e2pertise to create mission critical

applications and in the maintenance and upeep of high transaction processing of there*eb-site.

St+o$/ S#'e! #$ %#+9eti$/ Te#! 6ith co$ti$&o&! +ei$e!te$t #$

t+#i$i$/:-

+ompan'Js relationship manager channel (through a team of 10D0 Relationship6anagers as on "pril 80, 00A) offers a single point contact to retail customers

*hereb' their high net *orth clients have separate relationship managers catering to

them. hese managers offer personaliBed services to the customers helping build

strong and continuing relationships *ith them. "lso, our mareting associate channel

helps +ompan' and its subsidiaries in client ac;uisitions at minimal costs *ith client

lo'alt'. he mareting associateJs channel also helps +ompan' and its subsidiaries in

increasing their penetration in smaller to*n and cities.


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e#9$e!!

C&!toe+ S#ti!"#ctio$:-"s far as customer satisfaction goes Religare has to

tighten their socs. 6an' broing houses catering to heav' investors or small segment

of the maret can afford to and does provide relationship managers for their customers,

*ho can understand the trading needs of individual customers, and advise accordingl'.

@o*ever, a broing house lie Religare that caters to the mass segment *ill find

difficult to provide relationship managers for individual customers.

8+#$i$/5-Fet to obtain approval of rademar for developing into brand thoughthe compan' has a efficient products but large part of investment interested population

does not no* the compan'. he most basic e2pectation for a trader or investor *hen

one begins trading is that one must get timel' deliver' of shares and proceeds from

sale of shares. "lso ones cash balances *ith the broer must be safe and secure.

hough this confidence in the broer comes *ith time and e2perience, good and

transparent practices also pla' a ma9or role in imbibing confidence in traders.

Co*etitio$ "+o b#$9!:-6ost of the bans due to good branding have thefaith of the customers of their baning database. &o the' en9o' the libert' of huge

database and customers find it more reliable to trade there rather than *ith a unno*n

broer. "lso bans lie @/7+ an and ++ an have the advantage of lining the

trading accounts of their customers to saving accounts. his maes trading easier, and


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at the same time a trader *ithdra*s e2actl' as much mone' from his account as is

needed to complete the trade. &imilarl' sales proceeds are credited directl' to saving

account.

LocaliBed presence due to insufficient investments for countr'*ide e2pansion.

Lac of a*areness among customers because of non-aggressive promotional

strategies (print media, ne*spapers, etc).

Lesser emphasis on customer retention.

7ocuses more on @Ns than retail investors *hich results in meager maret-share

as compared to close competitors.

O**o+t&$itie!

Cith the booming capital maret it can successfull' launch ne* services and raise

its clientJs base. t can easil' tap the retail investors *ith small saving through promotional

channels lie print media, electronic media, etc.

"s interest on fi2ed deposits *ith post office and bans are all time lo*, more and

more small investors are entering into stoc maret.

"bolition of long-term capital gain ta2 on shares and reduction in short term

capital gain is maing stoc maret as hot destination for investment among small

investors.

ncreasing usage of nternet through broadband connectivit' ma' boost a *hole

ne* breed of investors for trading in securities.

"dditional centers *ill increase the clientele base and in-turn *ill increase revenue

Retail sector is e2pected to gro* due to reduction in interest rate and opting for

ne* opportunities in e;uit' and related instruments

Rapid penetration of nternet and computers *ill be instrumental in increasing e-

broing business


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Ee+-i$c+e#!i$/ #+9et :-"fter the N& brought the screen based trading

s'stem stoc marets are no* more secured *hich has attracted lot of retail investors

and the demand is increasing da' b' da'. his has resulted in improved li;uidit' and

heav' volumes on transactions. Religare is one of the earl' entrants here. "s to ho*much it *ill roar and ho* s*ift it can s*oop on the maret, the future alone can

ans*er such ;ueries. Religare has been a mega pla'er and is no*n for being a mover

of stocs. t is also no*n for putting big deals through and en9o's good net*oring

*ith the 7s. t has been d'namic enough to move *ith the times and capture the

opportunities that the maret thro*s up from time to time.

I*+oi$/ Tech$o'o/5- n countr' lie ndia technolog' is al*a's improving*hich gives the compan' a chance to eep on improving their product *ith time

*hereas for the small pla'ers lie local broers it *ill be difficult to eep the same

pace as the changing technolog'. "lso *ith & l'ing do*n some strict guidelines

small broers are finding it harder to retain the customers *ith no research department

and small capital. he traditional business model is highl' dependent on a large

net*or of sub-broers, and man' established pla'ers ma' not have s'stems

(technolog', customer service, etc.) capable of directl' servicing so man' retail

customers.

5$"&'"i''e $ee! o" the c&!toe+!:- Cith so man' competitors offering their

products in the maret but no one is able to completel' satisf' the customers. &ome

have the problem of lac of information or some *ere scared of volatilit' of the stoc

marets. &hare han has the opportunit' to tap this unsatisfied set of customers and to

mae hold in the maret. he nternet serves to brea all barriers to information, as it

offers an e2tremel' hassle-free investing platform. "nd, &hare han hopes to full'

utiliBe and capitaliBe on this platform. his original idea b' &hare han itself *as born

out of the consumerHs need for a more transparent, eas' to understand and convenient

option of investing in stocs.

E&c#tio$ Lee':-he education level in the countr' is improving 'ear after 'ear

as far as technolog' goes. Cith that the understanding of the stoc maret is also


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increasing and a lot of retail investors are steeping in the marets *hich are being

sho*n b' increasing volumes, transactions and indices.

Th+e#t:-

"ggressive promotional strategies b' close competitors ma' hamper Religare

acceptance b' ne* clients.

Lac of sufficient branch-offices for speed' deliver' of services.

6ore and more pla'ers are venturing into this domain, *hich can further reduce

the earnings of Religare.


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/o*nturn or volatilit' of securities and commodities maret.

&lo*do*n of ndian and global econom'

+hange in government and economic policies including personal ta2ation ma'

affect our volume and fund mobiliBation.

Ne6 Co*etito+!:-" lot of ne* competitors are tr'ing to enter the maret in this

bullish run to taste the flavor of this cherr'. his is creating a lot of competition for

large pla'ers lie Religare and it is creating little confusion in the minds of the

customers about the services provided b' the broer. "lso man' baning firms are

entering into the maret *ith huge investment. +ompetitors lie ++, ?ota, @/7+,

D-paisa etc. are posing a lot of threats to the compan'.

Tech$o'o/ b#!e b&!i$e!!:-


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O80ECTIE AND %ETHODOLG>

2.1 Si/$i"ic#$ce:-

1. t helps in creating the investorsJ confidence.

. t helps to find out prospect investors of 6utual 7unds and also to provide e'

information about the investorJs perception and preferences b' 6utual 7und

industr'.

8. t helps in getting information about their performance at distributors as *ell as at

their o*n investment center or *h' people go for 6utual 7und for investments.

A. t helps in finding out the problems related to distribution.2.2 %#$#/e+i#' &!e"&'$e!! o" the !t&:-

helps to have sale e2perience.

helps to deal *ith different customers.

helpsto overcome the ob9ections of the customers.

helps to understand the problems of agents in a broader prospect.

t provides a platform *here managerial role can be pla'ed effectivel' and

efficientl'.

2. Objectie!:-

o stud'ing the various mutual fund schemes offered b' Religare &ecurities Ltd.

and then comparing it *ith the other schemes available in the current maret.

o stud' various needs and e2pectations of small investors from different t'pes of

mutual funds

o stud'ing and anal'Bing the mutual fund industr' of the countr'.

o stud' the ndian maret and identif' the ris return perception *ith the

purchase of mutual funds.

o stud' the "ccounting and #aluation methods of 6utual 7unds.

o stud' in brief various 6utual funds promoted b' Religare.

o stud' the investors Preference regarding nvestment in 6utual 7unds.

2. Sco*e o" the !t&:-

n current scenario, the ban rates have been cut do*n rapidl' due to severe

competition, so people are not going for contemporar' deposits because that


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cannot provide them the better returns or the desired interest rates. &o, the' can

loo for some other investment options lie 6utual 7unds, *hich can provide them

higher returns in medium to long term and can easil' meet their financial goals.

o loo out for ne* prospective customers *ho are *illing to invest in 6utual

7unds.

%ethoo'o/

1. @5ESTIONNAIRE:-

he stud' is based on a surve' of 100 respondents through a ;uestionnaire covering

different groups of investors

S#*'e SieB N=1

Cith the help of this pro9ect, have attempted to stud' various needs and e2pectations

of small investors from different t'pes of mutual funds available in ndian maret and

identif' the ris return perception *ith the purchase of mutual funds.

#arious sophisticated multivariate techni;ues lie 7actor "nal'sis, +hi &;uare est etc.

*ill then be applied to identif' important characteristics being considered b' the

ndian investors in the purchase decision.

he ;uestionnaire has been developed on the basis of five ma9or components. hese

are5

1. /emographic "ttributes lie age, ncome, No. of 'ears until retirement,

e2pectations from future earning, 7amil' &iBe and no*ledge of financial

products K the financial maret.

. Ris "ttitude of the customers

8. Latest nvestment in 6utual 7und .g. "mount invested in the mutual fund

recentl', t'pe of mutual fund, priorit' *hile investing in mutual fund and *h'

mutual funds.

A. ime @oriBon5 his component has been included in order to identif' the time

period in *hich the customer *ithdra*s his mone' from the investment made

b' him.

D. nvestment ob9ective5 his *ill help in identif'ing the investment ob9ective of

the customer i.e. for travel, for his children, for further investment or for

availing retirement benefit.


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Deo/+#*hic Att+ib&te!:-

he various demographic attributes lie "ge, ncome, and No.


27/71

"fter ho* man' 'ears *ill the' start using their mone'

hus, data collection from the various customers has been done *ith the help of

;uestionnaires.

2. TELE,HONIC INTERIES:-

he summer pro9ect also helped me in gaining an e2perience to sell the various mutual

fund schemes over the telephone. t onl' helped me improve m' communication sills

but also gave me an in depth no*ledge about the various schemes offered b' Religare

&ecurities Ltd., ++, @/7+, @&+, 7idelit', etc.

his *ould further help me in doing a sophisticated and detailed comparison bet*een

the various schemes.


28/71

. A,,OIN%ENTS ITH CO%,ANIES:-

he pro9ect also gave me an opportunit' to fi2 appointments *ith corporate

organiBation and allo*ed me to e2plain the various products to the compan' officials.

he various organiBations covered *ere5


29/71

INTROD5CTION OF %5T5AL F5ND:-

Oe+ie6:-

" 6utual 7und is a trust that pools the savings of a number of investors *ho share a

common financial goal. he mone' thus collected is then invested in capital maret

instruments such as shares, debentures and other securities. he income earned

through these investments and the capital appreciation realiBed is then shared b' its

unit holders in proportion to the number of units o*ned b' them. hus a 6utual 7und

is the most suitable investment for the common man as it offers an opportunit' to

invest in a diversified, professionall' managed baset of securities at a relativel' lo*

cost. he flo* chart belo* describes broadl' the *oring of a mutual fund5

%5T5AL F5ND O,ERATION FLO CHART


30/71

Co$!tit&e$t! o" %&t' F&$:-

here are man' entities involved and the diagram belo* illustrates the organiBational

set up of a mutual fund.

he &ecurities and 2change oard of ndia (6utual 7unds) Regulations 18 define

a mutual fund (67) as a fund established in the form of a trust b' a sponsor to raise

mone' b' the trustees through the sale of units to the public under one or more

schemes for investing in securities in accordance *ith these regulations.

hese regulations have since been replaced b' the & (6utual 7unds) Regulations,

13. he structure indicated b' the ne* regulations is indicated as under.

" mutual fund comprises four separate entities. hese are5 &ponsor, 6utual 7und

rust, "6+ and +ustodian.

he sponsor establishes the mutual fund and gets it registered *ith &. he mutual

fund needs to be constituted in the form of a trust and the instrument of the trust should

be in the form of a deed registered under the provisions of the ndian Registration "ct,

10. he sponsor is re;uired to contribute at least A0! of the minimum net *orth

(Rs. 10 crores) of the asset management compan'. he board of trustees manages the

67 and the sponsor e2ecutes the trust deeds in favor of the trustees. t is the 9ob of the

67 trustees to see that schemes floated and managed b' the "6+ appointed b' the

trustees are in accordance *ith the trust deed and & guidelines.


31/71

F&$ctio$! o" the #+io&! Co$!tit&e$t! i$ the O+/#$i#tio$ o"

%&t' F&$ Hi!to+:-

he origin of mutual fund industr' in ndia is *ith the introduction of the concept of

mutual fund b' = in the 'ear 138. hough the gro*th *as slo*, but it accelerated

from the 'ear 14 *hen non-= pla'ers entered the industr'.

n the past decade, ndian mutual fund industr' had seen dramatic improvements, both

;ualit' *ise as *ell as ;uantit' *ise. efore, the monopol' of the maret had seen an

ending phaseQ the "ssets under 6anagement ("=6) *ere Rs. 34bn. he private sector

entr' to the fund famil' rose the "=6 to Rs. A40 bn in 6arch 18 and till "pril

00AQ it reached the height of 1,DA0 bn. Putting the "=6 of the ndian 6utual 7unds

ndustr' into comparison, the total of it is less than the deposits of & alone,

constitute less than 11! of the total deposits held b' the ndian baning industr'. hemain reason of its poor gro*th is that the mutual fund industr' in ndia is ne* in the

countr'. Large sections of ndian investors are 'et to be intellectuated *ith the

concept. @ence, it is the prime responsibilit' of all mutual fund companies, to maret

the product correctl' abreast of selling.


32/71

he mutual fund industr' can be broadl' put into four phases according to the

development of the sector. ach phase is briefl' described as under.

Fi+!t ,h#!e 14-:-

he =nit rust of ndia (=) *as established in 138 b' an "ct of Parliament. t *as

set up b' the Reserve an of ndia and functioned under the Regulator' and

administrative control of the Reserve an of ndia. n 14 = *as de-lined from

the R and the ndustrial /evelopment an of ndia (/) too over the regulator'

and administrative control in place of R. he first scheme launched b' = *as =nit

&cheme 13A. "t the end of 1 = had Rs.3, 400 crores of assets under

management.

Seco$ ,h#!e - 1-1 (E$t+ o" ,&b'ic Secto+ F&$!):-

his *as mared b' the entr' of non-= mutual funds. & 6utual 7und *as the first

follo*ed b' +an ban 6utual 7und (/ec 4), Pun9ab National an 6utual 7und

("ug ), ndian an 6utual 7und (Nov ), an of ndia (>un 0), an of aroda

6utual 7und (anuar' 008). he &pecified =ndertaing of =nit rust of ndia,


33/71

functioning under an administrator and under the rules framed b' :overnment of ndia

and does not come under the purvie* of the 6utual 7und Regulations.

he second is the = 6utual 7und Ltd, sponsored b' &, PN,


34/71

#+io&! Schee! o" %&t' F&$!:-

O*e$-E$e Schee!

hese funds are sold at the N"# based prices, generall' calculated on ever' businessda'. hese schemes have unlimited capitaliBation, open-ended schemes do not have a

fi2ed maturit' - i.e. there is no cap on the amount 'ou can bu' from the fund and the

unit capital can eep gro*ing. hese funds are not generall' listed on an' e2change.

hese funds have a no. of benefits. hese are5


35/71

a) "n' time e2it option

b) a2 advantage

c) "n' time entr' optionC'o!e E$e Schee!:-

&chemes that have a stipulated maturit' period, limited capitaliBation and the units are

listed on the stoc e2change are called close-ended schemes. hese schemes have

historicall' seen a lot of subscription. his popularit' is estimated to be on account of

firstl', public sector 67s having floated a lot of close-ended income schemes *ith

guaranteed returns and secondl' eas' li;uidit' on account of listing on the stoc

e2changes.

G+o6th F&$!:-

hese funds see to provide gro*th of capital *ith secondar' emphasis on dividend.

he' invest in shares *ith a potential for gro*th and capital appreciation. ecause

the' invest in *ell-established companies *here the compan' itself and the industr' in

*hich it operates are thought to have good long-term gro*th potential, gro*th funds

provide lo* current income.

G+o6th #$ I$coe F&$!:-

:ro*th and income funds see long-term gro*th of capital as *ell as current income.

he investment strategies used to reach these goals var' among funds. &ome invest in

a dual portfolio consisting of gro*th stocs and income stocs, or a combination ofgro*th stocs, stocs pa'ing high dividends, preferred stocs, convertible securities or

fi2ed-income securities such as corporate bonds and mone' maret instruments.

Fie-I$coe F&$!:-

he goal of fi2ed income funds is to provide current income consistent *ith the

preservation of capital. hese funds invest in corporate bonds or government-baced

mortgage securities that have a fi2ed rate of return.

8#'#$ce:-

he alanced fund aims to provide both gro*th and income. hese funds invest in

both shares and fi2ed income securities in the proportion indicated in their offer


36/71

documents.

hese are ideal for investors *ho are looing for a combination of income and

moderate gro*th.

%o$e %#+9et F&$!Li?&i F&$!:-

hese invest in highl' li;uid, virtuall' ris-free, short-term debt securities of agencies

of the ndian :overnment, bans and corporations and reasur'

S*eci#'tSecto+ F&$!:-

hese funds invest in securities of a specific industr' or sector of the econom' such as

health care, technolog', leisure, utilities or precious metals. he funds enable investors

to diversif' holdings among man' companies *ithin an industr', a more conservative

approach than investing directl' in one particular compan'.

" summar' is presented in the table belo* of the various funds and their investment

ob9ectives5

&+@6 FP 6

@


37/71

N+


38/71

003, *hich is an impressive gro*th of 84 per cent from last 'ear, thans to the

booming e;uit' marets in ma9orit' of the countries across the globe.

"s on >une 80, 003, the mutual funds globall' manage assets *orth I13.A1 trillion,

*hile ndia has a small share of 0. per cent. he huge participation of investors in

the N7


39/71

impetus has come after the changes in the mutual fund regulations in earl' 10s.

Private and foreign mutual funds are operating in the ndian maret and constitute a

substantial portion of the mutual fund industr'.

oda' the industr' consists of =nit rust of ndia, mutual funds sponsored b' public

sector bans and insurance corporations, private and foreign mutual funds.

nvestors are constantl' being bombarded b' ;uestions concerning their ris profile.

&uch investors often invest their mone' in a guilt fund or mone' maret fund. ans

lie +itiban, "NO :rind la's, /eutsche ban, @ong ?ong ban, +ommerce ban,

an;ue nationale de Paris, Religare &ecurities Ltd. is not onl' aggressivel' mareting

funds but have also launched their o*n mutual funds.

he mutual fund product designers have identified a strategic gap in the product

offering in the capital maret and no* are fighting a losing battle *ith government

savings plans, ban deposits and provident funds. he' are providing che;ue facilit'

on mone' maret mutual funds to mae them more enticing and guilt funds for the ris

averse. Product innovations and ne* product combinations have started rolling in to

the ndian maret. .g. :+ mutual fund in the 'ear 000 had launched an open-ended

scheme named as :+ /J6" in *hich 41 demat scripts having a *eight of nearl'

sevent'- percent in the &ense2 and the Nift' are being mared for trading. he

specialt' of this ne* product is that investors *ill have an opportunit' to e2change

their holdings of scrip, *hich are available for dematerialiBation *ith units of this

scheme.

" large no. of companies are toda' launching a no. of mutual funds schemes in orderto attract small investors. "nd the reason for launching of these large numbers of

mutual fund products is the distributed pattern of investment behavior of ndian small

investor.

he purchase decision of a mutual fund is largel' dependant upon investorJs level of

savings, investment pattern and the ris profile. 6an' managers are no* taing

interest in designing mutual fund products *ith multi feature options for investors.

+ustomers are often benefited from the improvements that are offered b' ne* features,

for e2ample b' enhanced ;ualit' products :arvin (1A)S. hese additions of features

also offer advantages to others in the value chain. 7or the mutual fund agents ne*features provide ne* sales arguments in seller bu'er interaction. Ne* features do not

onl' infuse single products but also entire product categories periodicall' *ith ne*

lease of life.

DISADANTAGES OF %5T5AL F5NDS


40/71

he follo*ing are important disadvantages of investing through mutual funds5

NO CONTROL OER COSTS5-

&ince investors do not directl' monitor the funds operations the' cannot control thecosts effectivel'. Regulations therefore usuall' limit the e2penses of mutual funds.

NO TAILOR %ADE ,ORTFOLIOS5-

6utual fund portfolios are created and mared b' "6+s, into *hich investor invest.

he' cannot create tailor made portfolios.

%ANAGING A ,ORTFOLIO OF F5NDS5-

"s the number of mutual funds increases in order to tailor a portfolio for him, an

investor ma' be holding a portfolio of funds *ith the cost of monitoring them and

using them, being incurred b' him.

RIS3 FACTORS OF INEST%ENTS IN %5T5AL F5NDS:-

6utual funds lie securities investments are sub9ect to maret and other riss and there

can be no assurance that the ob9ectives of an' of the schemes of the 7und *ill be

achieved.

he N"# of units issued under the &chemes can go up or do*n depending on

the factors and forces affecting capital marets and ma' also be affected b'

changes in the general level of interest rates.

he past performance of the mutual funds managed b' the &ponsors and their

affiliates% associates is not necessaril' indicative of the future performance of

the schemes.

he &ponsors are not responsible or liable for an' loss resulting from the

operation of the schemes be'ond the initial contribution of an amount of Rs.1

lah made b' the &ponsors to*ards setting up the 7und or such other accretions

and additions that ma' be made to the initial corpus set up b' the &ponsors.

he li;uidit' of the &chemeHs investments ma' be restricted b' trading volumessettlement periods and transfer procedures. n the event of an inordinatel' large

number of redemption re;uests or of a restructuring of an' of the &chemesH

portfolios, the time taen b' the 7und for redemption of units ma' become

significant. nvestors are also re;uested to peruse the Ris 7actors and &pecial

+onsiderations. Right to Limit Redemptions in the


41/71

respective schemes of the 7und.

The Ri!9-Ret&+$ T+#e-o"":-

he most important relationship to understand is the ris-return trade-off. @igher the

ris greater the returns%loss and lo*er the ris lesser the returns%loss.

@ence it is up to 'ou, the investor to decide ho* much ris 'ou are *illing to tae. n

order to do this 'ou must first be a*are of the different t'pes of riss involved *ith

'our investment decision.

%#+9et Ri!9:-

&ometimes prices and 'ields of all securities rise and fall. road outside influences

affecting the maret in general lead to this. his is true, ma' it be big corporations or

smaller mid-siBed companies. his is no*n as 6aret Ris. " &'stematic nvestment

Plan (T&PU) that *ors on the concept of Rupee +ost "veraging (TR+"U) might help

mitigate this ris.

C+eit Ri!9:-

he debt servicing abilit' (ma' it be interest pa'ments or repa'ment of principal) of a

compan' through its cash flo*s determines the +redit Ris faced b' 'ou. his credit


42/71

ris is measured b' independent rating agencies lie +R&L *ho rate companies and

their paper. " V"""J rating is considered the safest *hereas a V/J rating is considered

poor credit ;ualit'. " *ell-diversified portfolio might help mitigate this ris.

I$"'#tio$ Ri!9:-

nflation is the loss of purchasing po*er over time. " lot of times people mae

conservative investment decisions to protect their capital but end up *ith a sum of

mone' that can bu' less than *hat the principal could at the time of the investment.

his happens *hen inflation gro*s faster than the return on 'our investment. " *ell-

diversified portfolio *ith some investment in e;uities might help mitigate this ris.

I$te+e!t R#te Ri!9:-

n a free maret econom' interest rates are difficult if not impossible to predict.

+hanges in interest rates affect the prices of bonds as *ell as e;uities. f interest ratesrise the prices of bonds fall and vice versa. ;uit' might be negativel' affected as *ell

in a rising interest rate environment. " *ell-diversified portfolio might help mitigate

this ris.

,o'itic#'Goe+$e$t ,o'ic Ri!9:-

+hanges in government polic' and political decision can change the investment

environment. he' can create a favorable environment for investment or vice versa.

Li?&iit Ri!9:-

Li;uidit' ris arises *hen it becomes difficult to sell the securities that one has

purchased. Li;uidit' Ris can be partl' mitigated b' diversification, staggering of

maturities as *ell as internal ris controls that lean to*ards purchase of li;uid

securities.

Fou have been reading about diversification above, but *hat is itW


43/71

T>,ES OF %5T5AL F5ND SCHE%ES:-

Cide variet' of 6utual 7und &chemes e2ists to cater to the needs such as financial

position, ris tolerance and return e2pectations etc. he table belo* gives an overvie*

into the e2isting t'pes of schemes in the ndustr'.


44/71

FRE@5ENTL> 5SED TER%S:-

Net A!!et #'&e (NA):-

Net "sset #alue is the maret value of the assets of the scheme minus its liabilities.he per unit N"# is the net asset value of the scheme divided b' the number of units

outstanding on the #aluation /ate.

S#'e ,+ice

s the price 'ou pa' *hen 'ou invest in a scheme. "lso called


45/71

F5NDS

Returns Lo* etter

"dministrative e2p. @igh Lo*

Ris Lo* 6oderate

nvestment options Less 6ore

Net*or @igh penetration Lo* but

improving

Li;uidit' "t a cost etter

Eualit' of assets Not transparent ransparent

nterest calculation 6inimum balance bet*een 10th. K 80th.


46/71

investment. =nits of the funds are allotted on Net "sset #alue (N"#) of the fund at the

point of time. =nlie other investments, the mutual fund itself is not traded nor does it

offer guaranteed returns lie a deposit. he mutual fundHs Net "sset #alue (N"#)

determines the value of the investment. nvestors redeem their investments in themutual fund on the basis of the N"# from the mutual fund itself (this is repurchase of

units b' "6+).


47/71

Soe othe+ +e'#te te+i$o'o/ie!:-

C&!toi#$!:-

he ban or trust compan' that maintains a mutual fundJs assets, including its

portfolio of securities or some record of them. Provides safe eeping of securities

but has no role in portfolio management.

Di!t+ib&to+! #$ #/e$t!:-

&ell units on behalf of funds and are generall' appointed b' the "6+.

Co+*&!:-

he total amount of mone' invested in a scheme b' all the investors.

E$t+Eit 'o#:-

ntr' load is the load on purchase or s*itch-out of units

2it load is load on redemptions /ividend s*itch out of units.

Net A!!et #'&e:-

Net "sset #alue (N"#) is the actual value of one unit of a given scheme on an'

given business da'. he N"# reflects the li;uidation value of the fundHs

investments on that particular da' after accounting for all e2penses. t is calculated

b' deducting all liabilities (e2cept unit capital) of the fund from the realiBable

value of all assets and dividing it b' number of units outstanding.

S!te#tic I$e!te$t ,'#$ (SI,):-

" &'stematic nvestment Plan (&P) is a simple method of investing, used across

the *orld as a means to accumulate *ealth. t *ors the same *a' as a recurring

deposit account. &P involves investing a fi2ed sum of mone' in a specificinvestment scheme, on a regular basis, for a pre-determined number of periods.

he various options available are *eel', fortnightl', monthl', ;uarterl' and as

lo* as Rs.D0.

SI, i! # i!ci*'i$e #**+o#ch to i$e!ti$/ #$:-


48/71

M@elps investor to invest disposable funds each month.

M:ives investor the benefits of rupee-cost averaging

MRelieves investor of tr'ing to time the maret

Le/#' #$ +e/&'#to+ "+#e6o+9

Re/&'#to+! i$ I$i#

SE8I the C#*it#' %#+9et! Re/&'#to+:-

t re;uires all mutual funds to be registered *ith them

ssues guidelines for all mutual fund operations including *here the' can

invest, *hat investment limits and restrictions are to be implied *ith.

"cts in the interest of the investor.

R8I %o$e %#+9et! Re/&'#to+:-

S&*e+i!o+ o" b#$9 o6$e "&$!

ans come under the 9oint regulator' 9urisdiction of R and & .

S&*e+i!o+ o" o$e #+9et &t' "&$!:-

6one' maret mutual funds *ere regulated b' R guidelines dated8%11%1D speciall' issued for the purpose.

Recentl' it has been decided that 6one' 6aret 6utual 7unds *ill be

regulated b' & through the same guidelines issued for other mutual funds.

%i$i!t+ o" Fi$#$ce:-

t is charged *ith implementing the government policies, supervises both the R

and &.

Stoc9 Ech#$/e:-

&toc e2changes are self regulator' organiBations supervised b' &

+lose ended schemes are listed on one or more stoc e2changes through a listing

agreement bet*een the fund and the stoc e2change.


49/71

A!!oci#tio$ o" %&t' F&$! i$ I$i# (1):-

ncorporated in1D in ndia *ith the ob9ectives of

o promote interest of mutual funds and unit holders o set ethical, commercial and professional standards in the industr'.

o increase public a*areness of mutual funds in the countr'.

The O""e+ Doc&e$t:-

he legal document containing the details of a ne* scheme that the "6+ or &ponsor

prepares for and circulates to the prospective investor is called the Prospectus or


50/71

Seco$ ,h#!e 1-1 (E$t+ o" ,&b'ic Secto+ F&$!):-

14,entr' of non- =, public sector mutual funds set up b' public sector

bans and Life nsurance +orporation of ndia (L+) and :eneral nsurance

+orporation of ndia (:+). L+ established its mutual fund in >une 1 *hile :+ had set up its mutual

fund in /ecember 10."t the end of 18, the mutual fund industr' had assets

under management of Rs.A4, 00A crores.

Thi+ ,h#!e 1-2 (E$t+ o" ,+i#te Secto+ F&$!):-

18 - ntr' of private sector funds.

"lso, first 6utual 7und Regulations came into being, under *hich all mutual

funds, e2cept = *ere to be registered and governed.

he 18 & (6utual 7und) Regulations *ere substituted b' a more

comprehensive and revised 6utual 7und Regulations in 13.

as at the end of >anuar' 008, there *ere 88 mutual funds *ith total assets of

Rs. 1, 1,0D crores.

he =nit rust of ndia *ith Rs.AA, DA1 crores of assets under management

*as *a' ahead of other mutual funds.

Fo&+th ,h#!e !i$ce Feb++ 2:-

n 7ebruar' 008, follo*ing the repeal of the =nit rust of ndia "ct 138 =

*as bifurcated into t*o separate entities. anuar' 008

he second is the = 6utual 7und Ltd, sponsored b' &, PN,


51/71

/uring the current 'ear, *hile initiall' there had been a decline in the "=6

until "pril 00A, the situation reversed as, riding on a positive maret

sentiment, a &le* of ne* offerings from mutual fund houses s*elled the "=6,

*hich stands at Rs. ,81,3 cr as on 6arch 003. his is remarable increasefor the industr' *hich according to "67 *as Rs. 1, D,0 cr as on >anuar'

004. Chich in 18 had less than 10 schemes, toda' has D1 schemes offered

b' mutual funds. he schemes are more diverse and offer a *ide arra' of

choices to investors.


52/71

DATA ANAL>SIS AND INTER,RETATION

Fo''o6i$/ /+#*h !ho6! the "#cto+! i$"'&e$ci$/ the eci!io$ o" #

*e+!o$ to i$e!t i$to &t' "&$!.

INTER,RETATION:-

"bove factors have been evaluated on a scale of 10. Number V1J means least a*are and

number V10J means most a*are.

t is observed from the surve' that people generall' come to no* about the

investment options through ne*s papers and magaBines. 6ass media options lie

television and radio options are also coming up but still a lot of promotional campaign

is to be done to mae this channel an effective one.

hese options are mainl' present in front of an' financial institution lie ban etc for

instant appeal.


53/71

Fo''o6i$/ /+#*h !ho6! the +e'#tio$!hi* bet6ee$ #$$' i$coe #$

the t*e o" i$e!te$t #e

0

10000

20000

30000

40000

50000

60000

70000

8000090000

Mutual

Funds

Shares Fixed

Deposits

Insurance

Under !"s100000 10

"s#100000 ! 200000 26

"s#200001!500000 46

"s#500001!1000000 12

$%er"s#1000000 6

I$coe /+o&* be'o6 1 '#9h5-

his categor' invest ma9or amount into banJs 7/ or post office schemes. he' do not

go for e;uit' related investments because of fund shortage. "lthough insurance is

given some *eight age but it is generall' life insurance *ithout investment options.

No* it is observed that this segment has also started investing into mutual funds

although it is a small investment.

I$coe /+o&* bet6ee$ 1 - 2 '#9h:-his categor' invest ma9or amount into banJs 7/ or bonds. he' also donJt go for

e;uit' related investments because of fund shortage. "lthough insurance, shares and

mutual funds are given some *eight age but it is generall' life insurance *ithout

investment options.

I$coe /+o&* bet6ee$ 2 '#9h!:

his categor'Js ma9or area of investment is in mutual funds and insurance. &ince the'

have enough disposable income so considerable amount is invested into e;uit' related

funds. "n investment in ban 7/s is made automaticall' since the salar' comes in the

account other*ise no specific direct investment is made into such options. 'increasing the a*areness about 67 the' can be potential customers.

I$coe /+o&* bet6ee$ 1 '#9h!:-

he' have enough disposable income so ma9or investment is made into both e;uit'

and mutual funds. nsurance is also given due *eight age but *ith the e;uit' related


54/71

options for better returns. he' are updated *ith the features so thorough no*ledge is

needed before advising them an' fund.

I$coe /+o&* #boe 1 '#9h:-

he' too have enough disposable income so ma9or investment is made into bothe;uit' and mutual funds. his categor' also demands for portfolio facilit'. he' are

important customers so specific relationship e2ecutives are assigned to them. he' are

continuousl' updated about ne* fund schemes.

0

5

10

15

20

25

Under

30

31!40 41!50 51!60 $%er 60

&ax 'ene(it 26

)ro(essional

Mana*e+ent 9

,ess &i+e -onsu+in*

16

Di%ersi(ication .nd &hus

,ess "is/ 7

.ll &he .o%e 42

0

5

10

15

20

25

Under

30

31!40 41!50 51!60 $%er 60

&ax 'ene(it 26

)ro(essional

Mana*e+ent 9

,ess &i+e -onsu+in*

16

Di%ersi(ication .nd &hus

,ess "is/ 7

.ll &he .o%e 42

Fo''o6i$/ /+#*h e!c+ibe! the +e'#tio$!hi* bet6ee$ the #/e #$


55/71

the o*tio$!


56/71

5$e+ #/e /+o&* :-

n this age group it *as observed that customers give importance to all factors but

much importance is given to Professional 6anagement. t is also perceived that the

mone' invested is diversified so it less ris'

5$e+ #/e /+o&* 1- e#+!5-

his age group people la' stress on both Professional 6anagement and time saving

option.

5$e+ #/e /+o&* 1- e#+!:-

People under this categor' people start planning for retirement so the' loo for time

saving option to be a better one. 6oreover the' also start seeing for a2 benefit.

5$e+ #/e /+o&* 1-4 e#+!:-

he inclination of people is more on a2 enefit as ris taing capacit' is lo* and

most of the no*ledge ac;uired b' them is through ne*spapers and 9ournals etc. time

saving option is also considered.

5$e+ #/e /+o&* 4:-

"s this categor' people donJt have their regular income so the' go for a2 benefit onl'

.@o*ever the' *ant returns earl' so time saving is also taen into consideration.

6oreover people are averse to tae ris so the' feel lie investing in :overnment

&ecurities also.


57/71

Fo''o6i$/ /+#*h e!c+ibe! the +e'#tio$!hi* bet6ee$ the #/e #$ the

9i$ o" i$e!te$t! *eo*'e #9e:

0

1

2

3

4

5

6

7

8

9

10

Under

30

31!40 41!50 51!60 $%er 60

Age

Investments

'an/ Deposits and

'onds 15

Mutual Funds 15

Shares 13

-o+ination o(

'an/sFDs'onds 25

-o+ination o( MutualFunds and Shares 32

-o+ination o( Mutual

Funds and Shares 32

A/e /+o&* &$e+ :-

Largel' investment is made into mutual funds and shares. his age group has large

disposable income and is therefore read' to tae the ris. t is also observed that still

ban fi2ed deposits are made b' this age group, because the' have salar' account so

7/Js are created. +ompan' bonds are also a preferred option.

A/e /+o&* 1 e#+!5-

his age group la' stress on both the returns and ta2 planning. 7or ta2 purpose it is

observed that Tunit lined investment plans are preferred as the' also provide the

insurance cover. heir investment into mutual funds and shares is less in comparison t

previous age group.


58/71

A/e /+o&* 1 e#+!:- n this age group inclination to*ards an 7/s,onds and mutual fund has increased. he reason observed is in this age group, peoplestart planning for their retirement.

A/e /+o&* 1 - 4 e#+!:- n this age group inclination to*ards an7/s, onds has increased and 6utual 7unds has decreased. he reason

observed is in this age group, people are almost near to retirement and plan to

spend their mone' on travel and leisure

A/e /+o&* &$e+ 4 e#+!:- n this age group people start investing in

ans 7/s , as it is believed to be the safer options *ith fi2 returns. t *as also

found that almost none *ere interested for investment in shares because of

perception of ris' maret trend

Fo''o6i$/ /+#*h !ho6! the *+e"e+e$ce! o" the c&!toe+ 6hi'e

!e'ecti$/ "o+ i$e!te$t i$ #$ %&t' F&$ co*#$:-

0

10

20

30

40

50

60U&I Mutual Fund

S'I

Standard -harted Mutual

Fund

Fran/lin &e+pleton

S'- Mutual Fund

Fidelit uit Fund

)rudentil I-I-I Mutual

Fund

.' .+ro

t is observed from the surve' that people generall' give much preference to invest in

Religare &ecurities Ltd. 6utual 7und. t is observed that Religare &ecurities Ltd. has

outperformed ever' other fund *ith annual return of 100.A! for the past 1 'ear and

= is least performing fund *ith return of D0.1! for past 8 'ears. Religare

&ecurities Ltd. 6utual 7und invest in sectors and = invest in 1A sectors still it is

giving higher returns *hich attracts the customers to invest more in it.

7ranlin empleton is considered to be the second best compan' for investment


59/71

purpose. &trong 7 flo*s along *ith inflo*s from domestic investors helped the

ndian e;uit' marets close the ;uarter and the financial 'ear on a strong note. t is

drasticall' increasing its portfolio. he main additions to the portfolio have been +&,

@industan Lever, >et "ir*a's, /r.Redd'Js, =nion an of ndia. he e2posure to thecompan' in sectors lie metals, auto and cement has gone up. he compan' is

continuousl' earning profit and giving good returns. &tandard +harted 6utual 7und

and @&+ 6utual 7und are also giving good returns so people are highl' satisfied

*ith both of the compan'Js.

Fo''o6i$/ /+#*h !ho6! th#t ho6 *eo*'e o" i""e+e$t #/e /+o&*

&!e thei+ o$e "+o i$e!te$t.

0

2

4

6

8

10

12

14

Under

30

31!40 41!50 51!60 $%er 60

&ra%el or ,eis ure 16

-hild 7education or

+arria*e8 30

Further in%est+ents 34

"etire+ent 'ene(it 20

5$e+ #/e /+o&* :-

his age group of people generall' does have large disposable income and the' are

*illing to tae higher ris as such the' eep themselves updated *ith the prevailingmaret trends so the' use their mone' for further investments. t *as also found that

the' spend in ravel or Leisure.

5$e+ #/e /+o&* 1 - :-


60/71

his age group of people gives least importance to travel and leisure but the' sho*

their interest in investments.

5$e+ #/e /+o&* 1 - 5-

his age group of people not onl' is interested in further investments and travel but

the' start investing for their child education or marriage. he' are found to have ;uite

proficient no*ledge of finance and can tae ris so the' utiliBe their mone' for

further investment.

5$e+ #/e /+o&* 1 - 4:-

People of this age group start planning for retirement so the' are not ver' much

interested in further investments in mutual funds. ut the' prefer to go for investing in

7/s and life insurance.

Oe+ 4:-

Chile having interaction *ith the people of this age group most of them respondedthat the' *ould lie to spend their earnings on travel and leisure .he' donJt go for

further investments0 as the' alread' relieve from the burdens of life.


61/71

CONCL5SION

CONCL5SION:-

hrough the stud' finall' reached to the conclusion that nvestment is the best

utiliBation of the earnings and leads to the improvement in the living standard of the

people.

t *as found that people of different age groups have different perception s regarding

investments in 6utual 7und schemes.

@igh ris taers are generall' interested in investing in 6utual 7und and shares. he'

basicall' go for ;uit' &hares. Chereas those *ho can tae calculated ris aregenerall' interested in investing in alanced &chemes. hese schemes invest their

funds in e;uit' shares and debt in apportion of 305A0 ratio. "nd those *ho are not

*illing to tae ris at all go for a /ebt &cheme or 6one' 6aret &cheme.

t is observed that 6utual 7und gives better returns in comparison to bans. 6utual

7und provides better li;uidit' and moderate ris. 6utual 7unds offer their investors a

number of facilities such as inter-fund transfers, online checing of holding status, etc

6utual 7und offers investors a valuable tool for "sset "LL


62/71

RECO%%ENDATION AND S5GGETIONS

RECO%%ENDATION AND S5GGETIONS:-

1) nvestors should al*a's eep a photocop' of the application form. *hich can

be filed to no* the manner in *hich application *as made single, 9oint

o*nership and order of o*nership. nvestors *ill also be able to see ho* the'

have signed the forms , man' investors change their signatures over timeQ some

have a different signatures for baning and investment transactionsQ some

investors use both @indi and nglish signatures). nvestors *ill also no* the

choice the' have e2ercised (dividend and redemption options).

) nvestors should preserve the counterfoil acno*ledgement issued b' the

collecting agenc'. his acno*ledgement usuall' also has the applicationnumber. f account statement or certificate is not received, the

acno*ledgement is the proof of purchase, *ith *hich investors can approach

the registrar and transfer agent.

8) t is preferable to have 9oint o*nership, so that investments *ill pass on to the

9oint o*ner in the event of death of the first holder.

A) t is important to fill up nomination details in the application. his *ill enable

legal heirs to claim the holdings *ithout procedural dela's. Nominations that

do not indicate the guardian of a minor are not valid. :uardian indicated *illhave to be a person other than the holders of the investment.

D) +he;ues should be crossed and application number and name should be *ritten

on the bac of the che;ue. 6ost mutual funds do not accept outstation che;ues,

post dated che;ues (*ith the e2ception of specific investment plans) or postal

orders.

3) 2isting investors can ;uote their uni;ue account or folio numbers so that their

holdings *ill be consolidated. his is helpful in ta2 matters and in eeping

investment information in a consolidated manner.


63/71

LI%ITATION OF THE ST5D>

LI%ITATION OF THE ST5D>:-

The #+io&! 'iit#tio$! o" the !t& #+e:-

+onservative attitude of the customer5

he ndian investor is beginning to reconsider mutual funds as a possible investment

avenue. he current perception of the investor is that in general, mutual funds are

o Ris' investments

o @ave high costs

+ollection of data from other "6+s

+oalition of huge amounts of data at one place. n this data *ould be collected

from various sources. "nd thus bringing together all data might lead to

duplication and redundanc'.

+ollection of that data to *hich *e do not have access. /ata that is not

published b' the ban in an' of the periodicals is difficult to obtain.

Chile selling the products to the customers, man' ased for commission the'

*ill receive. ut since am not an agent and is *oring directl' *ith the ban,

*as unable to provide them *ith the same. his led to the cancellation of the

deal.


64/71

A,,ENDI

@5ESTIONNAIRE

/ear &ir% 6adam,

he title of m' pro9ect is T" &tud' of 6utual 7unds in Religare &ecurities Ltd.U

re;uest 'ou to indl' fill this surve', as it *ould help me in successful completion of

m' pro9ect. assure that the information given b' 'ou *ill be confidential and *ill be

utiliBed for research purposes onl'.

1. Four "ge is

=nder 80

81-A0

A1-D0

D1-30


65/71

t *ould not be able to eep pace *ith inflation

D. Fou are financiall' responsible forW


66/71

. Four feelings about the riss can be summed up as follo*s5

*ant the highest long-term gro*th and am comfortable *ith large

variations in the N"# in the short term

can accept minor variations in the N"# in the short term if it means

can potentiall' earn more over the long run.

had rather accept lo*er long-term return than *orr' about losing m'

capital in the short-term

10. f 'ou had R.D0000 to invest, *hich of the follo*ing choices *ould 'ou

maeW put the mone' in an 7i2ed /eposits and onds

nvest in 6utual 7unds

nvest in &hares

nvest in a combination of the above *ith a higher proportion of an

7/s and onds

nvest in a combination of the above *ith a higher portion of 6utual 7unds

and &hares.

11. he stoc maret has dropped D! and the 6utual 7und 'ou invested

also dropped D!, but the maret e2pects the 6utual 7und to go up again.

Chat do 'ou doW


67/71

&ell 6utual 7und

u' more of it

?eep it as it is, as 'ou e2pect it to rise later ?eep it 'ou are afraid of booing a loss

%5T5AL F5NDS:-

1. Four latest investment involves5

6utual 7unds


68/71

= 6utual 7und 7idelit' ;uit' 7und

& 6utual 7undReligare &ecurities Ltd.

6utual 7und&tandard +hartered 6utual 7und irla &un Life 6utual 7und

/&P 6errill L'nch 6utual 7und Principal 6utual 7und- PN

@&+ 6utual 7und 7ranlin empleton

1D. Chile investing in a 6utual 7und, *hat is 'our priorit'W (Please ran

the follo*ing in the order of preference)

+urrent N"# XXXXXXXXXXXXX

+ompan' mage XXXXXXXXXXXXX

Past Returns XXXXXXXXXXXXX

7und 6anager XXXXXXXXXXXXX

6inimum amount in the 7und XXXXXXXXXXXXX

Ris Profile XXXXXXXXXXXXX

Li;uidit' XXXXXXXXXXXXX

Loc n Period XXXXXXXXXXXXX

ntr' Load% 2it Load XXXXXXXXXXXXX

/ividend Polic' XXXXXXXXXXXXX

"sset "llocation XXXXXXXXXXXXX

13. Ch' do 'ou invest in a 6utual 7undW

a2 enefit


69/71

Professional 6anagement

Less ime +onsuming

/iversification and thus less ris "ll the above

TI%E HORI7ON:-

14. n ho* man' 'ears do 'ou e2pect to start using the latest investment

done b' 'ou in last 1 'earW 6ore than 0 'ears

10 to 0 'ears

D to 'ears

Less than D 'ears

INEST%ENT O80ECTIE:-

1. Chich of the follo*ing best describes 'our plans for this mone' during

the ne2t 10 'earsW

do not plan to *ithdra* an' of m' account value%

plan to *ithdra* less than 1D! of m' account, at one time

plan to *ithdra* more than 1D! of m' account, at one time

Not sure

1. @o* do 'ou e2pect to use the mone' from this investment in the

futureW 7or travel or leisure

7or m' child (education or marriage)

7or further investments


70/71

7or availing retirement benefit


71/71

8I8LIOGRA,H>

8oo9!

1. C.. Certher and ?eith /avis, @uman Resources and Personnel

6anagement, 6c:ra* @ill, Ne* For, 13

. P.7./rucer, the Practice of 6anagement, "llied, Ne* /elhi 140.

8. 6. "rmstrong, a @andboo of Personnel 6anagement, ?oran page,

London,11

A. >.&tore', /evelopments in the management of @uman Resources, lac*ell,

religare mutual fund

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