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PROJECT REPORT

ON

SUBMITTED TO

DEVIAHILYA UNIVERSITY, INDORE

BY:

PRIYANKA BHAWSAR

(MMM)

2007-2009

INSTITUTE OF MANAGEMENT STUDIES,

DAVV, INDORE

https://mail.google.com/mail/?attid=0.1&disp=attd&view=att&th=11c8e10b5add0e28

https://mail.google.com/mail/?attid=0.1&disp=attd&view=att&th=11c8e10b5add0e28



TABLE OF CONTENTS

Topics Page No.

Acknowledgements 4

Executive summery 5

1. Introduction 6

1.1 Objective of the project 6

1.2 Limitations of the study 7

2. Main Text 8

2.1 About the organization 9

2.2 Concept of mutual fund 11

2.3 Organization of mutual fund 12

2.4 Types of mutual fund scheme 12

2.5 Advantages of mutual fund investment 15

2.6 Disadvantages of mutual fund investment 16

2.7 Types of returns 17

2.8 History of the Indian mutual fund industry 18

2.9 Marketing channels and value network 21

2.10 Channels function 22

2.11 Promotional activities 23

2.12 Future of mutual funds in India 23

2.13 Choosing a mutual fund 25

3. Research Methodology 32

4. Data Analysis and Interpretation 33

4.1. Overall analysis of responses gathered from all therespondents

33

4.2.Statement analysis 34

5. Suggestions 44

6.Conclusion 45

7. Annexure 46

9. Bibliography 58



Acknowledgement

I take immense pleasure in completing this project and submitting the final project report.This project has been a platform in my learning about the financial sector and gave the platform to acquire knowledge in this area. I am deeply indebted to my institute Institute

of Management Studies, DAVV, Indore to provide me an opportunity to undergo such a project, which gave me thorough insights and experience of the corporate culture that willalways milestone in the path of my successful career.

The last 2 month with Reliance Capital Asset Management Ltd. has been full of learningand sense of contribution toward the organization. I would like to thank Reliance CapitalAsset Management Ltd. For giving me an opportunity to thank all those people that madethis experiences a memorable one. I am greatly thankful to my company guide Mr.Shailandra Dave and Mr. Pulkit Chandorkar for guiding me to complete my summer internship program as a trainee. My special thanks to Mr. Amod Gawrikar (Branch Head)for assigning me such a worthwhile topic.

A successful project can never be prepared by the single effort of the person to whom project is assigned, but it also demand the help and guardianship of some conversant person who helped the undersigned actively or passively in the completion of successful project.

The project couldn’t have been completed without timely and vital help of other officestuff. Special thanks to Dr. Apoorva Palkar for there invaluable guidance, Keen interest,cooperation, inspiration and of course moral support through my project session.

Priyanka Bhawsar



Executive summary

This project has been a great learning experience for me; at the same time it gave meenough scope to implement my analytical ability. This project as a whole can be dividedinto two parts:

The first part gives an insight about the mutual funds and its various aspects. It is purely based on whatever I learned at Reliance AMC. One can have a brief knowledge about mutual funds and all its basics through the project. Other thanthat the real servings come when one moves ahead. Some of the most interestingquestions regarding mutual funds to know the perception of distributors have been

covered. Some of them are: Reliance AMC sales people are helpful? Do you likethe incentive schemes of the Reliance AMC? All the topics have been covered in avery systematic way. The language has been kept simple so that even a laymancould understand. All the data’s have been well analyzed with the help of charts.

The second part consists of data’s and their analysis, collected through a surveydone on 100 people. It covers the topic” Analyzing the perception of Distributors”. The data collected has been well organized and presented. Hope theresearch findings and conclusions will be of use. It has also covered why Relianceis loosing too much Distributors in Indore where the survey is done.



INTRODUCTION

1. Objectives of the project:

• This study has been an attempt to know perception of distributors of Reliance

AMC.• To analyze perception of distributors about RELIANCE MUTUAL FUNDS with

the quality of services provided to them• To find out the reason behind loosing distributors.

• To know benefits of SIP plan.

• Comparative study of two strongest sip plans

2. Outline of the work :

The project is broadly into three operational categories:

• Knowledge of Mutual Fund market and the operational strategy of Reliance

AMC.• Direct selling of Mutual Fund.

• Conducting a market research of Distributors to perception about Reliance AMC.

3. Limitations of the study:

Major limitation constraints are:



• Location constraints: as the study/survey will be concluded in Indore city only

this project report cannot be generalized for other locations.

•

Inaccuracy of data: It may be possible that persons who are contacted for collection of data may not provide accurate or correct data.

• Reluctant in giving information: Respondents were often reluctant in giving their

details, information and response to my questionnaire.

•

Time constraints: Due to shortage or less availability of time it may be possiblethat all the related and concerned aspects may not be covered in the project andsurvey.

COMPANY PROFILE

MISSION OF RELIANCE AMC:-

To create and nurture a world-class, high performance environment aimed at delightingour customers.

VISION OF RELIANCE AMC:-

To be a globally respected wealth creator with an emphasis on customer care and aculture of good corporate governance.

OVERVIEW:-



Reliance mutual fund, a part of the Reliance Capital – Anil Dhirubhai Ambani Group, isone of the fastest growing mutual funds in the country. Reliance Capital has interests inasset 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. Reliance Capital

Ltd. Is one of India’s leading and fastest growing private sector financial servicescompanies, and ranks among the top 3 private sector financial services and bankingcompanies, in terms of net worth.

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Fund, with Average AssetsUnder Management (AAUM) of Rs.90, 938 Crores (AAUM for Mar 08) and an investor base of over 6.69 million. Reliance Mutual Fund offers investors a well rounded portfolioof products to meet varying investor requirements. Reliance Mutual Fund has a presencein 300 cities across the country and constantly endeavors to launch innovative productsand customer service initiatives to increase value to investors. Reliance Mutual Fundschemes are managed by Reliance Capital Asset Management Ltd., a wholly owned

subsidiary of Reliance Capital Ltd. Reliance Mutual Fund constantly endeavors to launchinnovative products and customer service initiatives to increase value to investors.

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,1882 with Reliance Capital Limited (RCL), as the settler/sponsor and Reliance CapitalTrustee Co. Limited (RCTCL), as the Trustee. RMF has been registered with theSecurities & Exchange Board of India (SEBI).

Reliance Capital Asset Management Limited (RCAM), a company registered under theCompanies Act, 1956 was appointed to act as the Investment Manager of RelianceMutual Fund. Reliance Capital Asset Management Limited (RCAM) was approved as the

Asset Management Company for the Mutual Fund by SEBI. Reliance Mutual Fundschemes 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.



AWARDS AND ACHIEVEMENTS:-

• Reliance Mutual Fund won the prestigious "Fund House of the Year" award in the

Equity category according to a survey by ICRA Online Ltd.• Reliance Capital Asset Management Ltd. won the Asia Asset Management Award

2007.• Reliance Capital Asset Management Ltd. won the Social & Corporate Governance

Award 2007.• Reliance Mutual Fund has won the "Most Trusted Mutual Fund Brand" for the

second year, in succession by Economic Times - AC Nielsen ORG-MARGsurvey.

• Reliance Mutual Fund has been awarded the "NDTV Business Leadership Award

2007" in the Mutual Fund category.• Reliance Mutual Fund has been awarded “Best Fund House" (Runners up) for

2007.• CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007.



ABOUT MUTUAL FUNDS

Concept of mutual fund:

A Mutual Fund is a trust that pools the savings of a number of investors who share acommon financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned throughthese investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the mostsuitable investment for the common man as it offers an opportunity to invest in adiversified, professionally managed basket of securities at a relatively low cost.

Diversification:-

Diversification is nothing but spreading out your money across available or differenttypes of investments. By choosing to diversify respective investment holding reduces risk tremendously up to certain extent.

2.3 Organization of mutual funds in India:

There are many entities involved and the diagram below illustrates the organizational set

up of a mutual fund:



2.4 Types of mutual fund schemes:

Wide variety of mutual fund schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. thus mutual funds has variety of flavors, being a collection of many stocks, an investors can go for picking a mutual fund

might be easy. There are over hundreds of mutual funds scheme to choose from. It iseasier to think of mutual funds in categories, mentioned below:

Overview of existing schemes existed in mutual fund category:

● BY STRUCTURE

1. Close-ended fund/Scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund isopen for subscription only during a specified period at the time of launch of the scheme.

The mutual fund provides a repurchase option to investors for a specified period.

2. Open-ended fund/Scheme:

An open-ended scheme available for subscription and repurchase on a continuous basis.These schemes do not have a fixed maturity period. Key feature of these schemes isliquidity, as investor can buy and sell on an ongoing basis.

3. Interval scheme:

Interval schemes are that scheme, which combines the features of open-ended and close-

ended schemes. The units may be traded on the stock exchange or may be open for saleor redemption during pre-determined intervals at NAV related price.

● BY INVESTMENT OBJECTIVE:

1. Growth schemes:



Growth schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest amajor part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation.

2. Income schemes:

Income schemes are also known as debt schemes. The aim of these schemes is to provideregular and steady income to investors. These schemes generally invest in fixed incomesecurities such as bonds and corporate debentures. Capital appreciation in such schemesmay be limited.

3. Balanced schemes:

Balanced schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and

fixed income securities, in the proportion indicated in their offer documents (normally50:50)

4. Money market schemes:

Money market schemes aim to provide easy liquidity, preservation of capital andmoderate income. These schemes generally invest in safer, short-term instruments, suchas treasury bills, certificates of deposit, commercial paper and inter-bank money.

● OTHER SCHEMES:

1. Tax saving schemes:

Tax saving schemes offer tax rebates to the investors under tax laws prescribed from timeto time. Under Sec.88 of the Income Tax Act, contributions made to any Equity LinkedScheme (ELSS) are eligible for rebate.

2. Index schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSESensex or the NSE 50. The portfolio of these schemes will consist of only those stocks

that constitute the index. The percentage of each stock to the total holding will beidentical to the stocks index weightage. And hence, the returns from such schemes would be more or less equivalent to those of the index.

3. Sector specific schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. The returns in these funds are dependent



on the performance of the respective sectors/industries. While these funds may givehigher returns, they are more risky compared to diversified funds. Investors need to keepa watch on the performance of those sectors/industries and must exit at an appropriatetime.

2.5) Advantages of mutual fund investment:

• Diversification: The best mutual funds design their portfolios so individual

investments will react differently to the same economic conditions. For example,economic conditions like a rise in interest rates may cause certain securities in adiversified portfolio to decrease in value. Other securities in the portfolio willrespond to the same economic conditions by increasing in value. When a portfoliois balanced in this way, the value of the overall portfolio should gradually increase

over time, even if some securities lose value.• Professional Management: Most mutual funds pay topflight professionals to

manage their investments. These managers decide what securities the fund will buy and sell.

• Regulatory oversight: Mutual funds are subject to many government regulations

that protect investors from fraud.• Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a

call, and you've got the cash.• Convenience: You can usually buy mutual fund shares by mail, phone, or over the

Internet.• Low cost: Mutual fund expenses are often no more than 1.5 percent of your

investment. Expenses for Index Funds are less than that, because index funds arenot actively managed. Instead, they automatically buy stock in companies that arelisted on a specific index.

2.6) Disadvantages of mutual fund investment:

•

No Guarantees: No investment is risk free. If the entire stock market declines invalue, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutualfunds than when they buy and sell stocks on their own. However, anyone whoinvests through a mutual fund runs the risk of losing money.

• Fees and commissions: All funds charge administrative fees to cover their day-to-

day expenses. Some funds also charge sales commissions or "loads" tocompensate brokers, financial consultants, or financial planners. Even if you don't



use a broker or other financial adviser, you will pay a sales commission if you buyshares in a Load Fund.

• Taxes: During a typical year, most actively managed mutual funds sell anywhere

from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you

reinvest the money you made.• Management risk: When you invest in a mutual fund, you depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much moneyon your investment as you expected. Of course, if you invest in Index Funds, youforego management risk, because these funds do not employ managers.

7. Types of returns:

There are three ways, where the total returns provided by mutual funds can be enjoyed byinvestors:

1. Income is earned from dividends on stocks and interest on bonds. A fund pays outnearly all income it receives over the year to fund owners in the form owners in

the form of a distribution.2. If the fund sells securities that have increased in price, the fund has a capital gain.Most funds also pass on these gains to investors in a distribution.

3. If fund holdings increase in price but are not sold by the fund manager, the fund’sshares increase in price. You can then sell your mutual fund shares for a profit.Funds will also usually give you a choice either to receive a check for distributionor to re-invest the earnings and get more shares.



2.8) History of the Indian mutual fund industry:

The history of mutual funds in India can be broadly divided into four distinct phases-

First Phase – 1964-68

Unit trust of India (UTI) was established on 1963 by an act of Parliament. It was set up by the Reserve Bank of India and functioned under the regulatory and administrativecontrol of the Reserve Bank of India. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

Second Phase -1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by Public Sector Banks and Life Insurance Corporation of India (LIC) and General Insurance corporationof India(GIC).

SBI Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 890, Indian Bank Mutual Fund (Nov 89), Bank of India (June 90), Bank of Baroda Mutual Fund (Oct 92).LIC established its mutual fund in June 1989 while GIC had set up its mutual fund inDecember 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47,004Crores.

Third Phase -1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was theyear in which the first Mutual Fund Regulations came into being, under which all mutualfunds, except UTI were to be registered and governed.

The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensiveand revised Mutual Fund Regulations in 1996. The industry now functions under theSEBI (Mutual und) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual fundssetting up funds in India and also the industry has witnessed several mergers andacquisitions. As at the end of January 2003, there were 33 mutual funds with total assets



of Rs.1,21,805 Crores. The Unit Trust of India with Rs.44,541 Crores of assets under management was way ahead of other mutual funds.

Fourth Phase- since February 2003

In February 2003, following the repeal of the unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trustof India with assets under management of Rs.29,835 Crores as at the end of January2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 Crores of assets under management and with the setting up of a UTI Mutual Fund, conforming tothe SEBI Mutual Fund Regulations, and with recent mergers taking place among different

private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, whichmanage assets of Rs.1,53,108 Crores under 421 schemes.

GROWTH IN ASSETS UNDER MANAGEMENT



Over the year growth in Assets under Management (AUM) in Indian Mutual Fundindustry

2.9) Marketing channels and value networks:

Most producers do not sell their goods directly to the final users; between them stands aset of intermediaries performing a variety of functions. These intermediaries constitute amarketing channels are the sets of interdependent organization involved in the process of making a product or services available for use or consumption.

They are the set of pathways a product or services follows after production, culminatingin purchase and use by the final end user. Marketing channels also represents asubstantial opportunity cost. One of the chief roles of marketing channels is to convert potential buyers into profitable orders. Marketing channels must not just serve markets,they must also make markets. In managing its intermediaries, the firm must decide howmuch effort to devote to push versus pull marketing.

Push Strategy:



It involves the company using its sales force and trade promotion money to induceintermediaries to carry promotes and sells the product to end users. Push strategy isappropriate where there is low brand loyalty in a category, brand choice is made in thestore, the product is an impulse item, and product benefits are well understood.

Pull Strategy:

It involves the company using advertising and promotion to persuade consumers to ask intermediaries for the product, thus including intermediaries to order it. Pull strategy isappropriate when there is a high brand loyalty and high involvement in the category.

2.10) Channels function:

A company selling services might require three channels-

●Sales Channels

●A delivery Channels

●Service Channels

All channel functions have three things in common-

●They use up scarce resources

●They can often be performed better through specialization

●They can be shifted among channel members.

Channel Management Decision:

After a company has chosen channel alternative, individual intermediaries must beselected, trained motivated and evaluated. Channel arrangements must be modified over time.

Training Channel Member:

Companies need to plan and implement careful training program for their channel partners;

(Like Microsoft requires third party service engineers to complete a set of course and takecertification exams. Those who pass are formally recognized as Microsoft CertifiedProfessionals, and they can use this designation to promote business. Others usecustomer’s survey rather than exams).



Motivating Channel Members:

Being able to stimulate channel members to top performance starts with understandingtheir needs and wants.

The company must constantly communicate its view that the intermediaries are partner ina joint effort to satisfy end users of the product.

2.11) The promotional activities comprises of:

● Marketing Communications

● Sales promotion

● Advertising

● Personal Selling

● Sales Techniques

2.12) Future of mutual funds in India:

By December 2004, Indian mutual fund industry reached Rs.1, 50,537 Crore. It isestimated that by 2010 March end, the total assets of all scheduled commercial banksshould be Rs.40, 90,000 Crore.

The annual composite rate of growth is expected 13.4% during the rest of the decade. In

the last 5 years we have seen annual growth rate of 9%. According to the current growthrate, by year 2010, mutual fund assets will be double.

Some facts for the growth of mutual funds in India:-

• 100% growth in the last 6 years.

•

Numbers of foreign AMC’s are in the queue to enter the Indian markets likeFidelity investments, US based, with over US $ 1 trillion assets under management worldwide.

• Our saving rate is over 23%, highest in the world. Only channelizing these

savings in mutual funds sector is required.



• We have approximately 29 mutual funds which are much less than US having

more than 800. There is a big scope for expansion.

• ‘B’ and ‘C’ class cities are growing rapidly. Today most of the mutual funds are

concentrating on the ‘A’ class cities. Soon they will find scope in the growingcities.

• Mutual Fund can penetrate rural like the Indian insurance industry with simple

and limited products.

2.13) Choosing a mutual fund:

The selection of an existing mutual fund depends on its performance. How should aninvestor judge the performance of a mutual fund? What criteria should be used toevaluate and rank a mutual fund?S

There are a number of mutual funds in the market. New schemes are hitting the market

almost daily, with new names and targets. So, it becomes difficult for the small investor to judge the performance of the fund accurately, and to know how his investment ismoving.

The performance of a mutual fund scheme is reflected in its net asset value (NAV) whichis disclosed on a daily basis in case of open-ended schemes and on weekly basis in caseof close-ended schemes.

The NAV of mutual funds are required to be published. The NAV are also available onthe web sites of mutual funds. All mutual funds are also required to put their NAV on theweb site of the Association of Mutual Funds in India (AMFI). The investors can access

NAV of all mutual funds at one place. The NAV is the most common denominator whichsummarizes the entire performance of the fund.

The mutual funds are also required to publish their performance in the form of half-yearlyresults which also include their returns/yields over a period of time- last six months, oneyear, three years, five years and since inception of schemes. Investors can also look intoother details like percentage of expenses of total assets as these have an effect on theyield, and other useful information in the same half-yearly format.



In addition, the mutual funds are also required to send an annual report, or abridgedannual report, to the unit holders at the end of the year. These contain the details of investments made by the fund in addition to the other financial information.

2.14) Relationship between risk and return:

• Securities are risky because their returns are variable.

• The most commonly used measure of risk or variability in finance is standard

deviation.• The risk of a security can be split into two parts: unique risk and market risk.

• Portfolio diversification washes away unique risk but not market risk. Hence, therisk of a fully diversified portfolio is its market risk.

The contribution of a security to the risk of a fully diversified portfolio is measured by its

beta, which reflects its sensitivity to the general market movements.

2.15) Demystifying mutual fund fact sheets:

Most Asset Management Companies (AMCs) usually publish monthly reports (alsocalled fact sheets) that contain critical information related to the portfolios, at times aroundup on debt and equity markets from the fund manager and performance details of the schemes managed by the AMC. The idea is to help investors (both existing and potential) to track the performance of the mutual fund schemes so as to take an informeddecision. To that end, fact sheets serve as an investor’s guide.

To be sure, fact sheets were always meant to be the investor’s guide. However, in manycases, they are not up to the mark leaving much scope for improvement and evenstandardization. We highlight the most critical reference points for the uninformedinvestor based on data that is more or less standardized across AMCs. For ease of reference, we have divided the article in two parts, the first part discusses how to assessthe equity fund fact sheet and the second part discusses the debt fund fact sheet

A) Equity fund fact sheets:

1. Stock allocation

Thankfully, fact sheets of most AMCs highlight the portfolio composition wellenough, although there is scope for standardization. For an investor who wants toinvest in equity funds, the fact sheet can offer some critical insight into the fundmanagement style/approach.

To begin with, consider the top 10 stocks in the portfolio to determine the level of diversification. In our view, a diversified equity fund should have more than 40%



of net assets in the top 10 stocks. This should help the fund negotiate volatilitymore effectively than its concentrated peers. For instance, Sundaram BNP ParibasGrowth Fund is a fund we like for its disciplined investment approach, whichensure, that its top 10 stocks are well diversified.

Sometimes, a fund could be well-diversified across the top 10 stocks, butinvestments in a single stock could be so high so as to offset an otherwisediversified portfolio. A case in point is HDFC Capital Builder (a well-managedvalue fund), which was done in during the market crash in May last year due tounduly high investments in a single stock(Hindustan Zinc).

Also look at the fund’s portfolio over several months to get a sense of theconsistency in the fund manager’s stock picks. Too much churn in the stock picks(new names every other month) indicates that the fund manager could be puntingrather than investing. Thereby adding to the trading cost, this ultimately eats intothe returns.

2. Sectoral allocation

Just as you evaluate the stock allocation, it is important to consider the sectoralallocation of the equity fund. Diversified equity funds should be well-diversified acrossstocks and sectors. A fund could be well-diversified across stocks, but may pay the pricefor not diversifying well enough across sectors. For instance, Sundaram Growth Fund, afund we admire for superior diversification across stocks, learnt the hard way during thelast market slide that diversification across stocks is as important as diversification acrosssectors. The fund had unduly high investment in infrastructure-related sectors. The crash proved particularly harsh for the fund, as it had failed to diversify across other sectors. So

like stocks, being diversified across sectors is just as important; unfortunately, it oftentakes a sharp dip in the stock markets to highlight the importance.

However, funds like HSBC Equity Fund, which pursue the top down investmentapproach, have concentrated sectoral allocations, which suit their investment style. Thesefunds need to be evaluated differently from funds that pursue the bottom up investmentstyle.

While calculating the sectoral allocation, the investor must combine like-natured sectorsto understand the level of sectoral diversification. For instance, most equity funds listAuto and Ancillaries sectors distinctly; given the similar nature of these sectors, their

allocation must be combined.

Another problem relates to the categorization of companies across sectors. Differentequity funds categorize the same company across different sectors. There is nostandardization. While AMFI (Association of Mutual Funds in India) has introducedcertain standardization in this regard, the same is not adhered to across the industry.

3. Asset allocation



Stocks and sectors apart, there is another detail that must catch your attention and that isthe asset allocation. The asset allocation table tells you how the fund’s net assets arediversified across stocks, current assets/cash. An equity fund’s allocation to cash should be noted. Among other reasons, this could be because the fund manager is notcomfortable with market levels at that point in time. This fact can be established easily by

browsing through the previous month’s fact sheets. If the fund manager has been in cashfor some time, it means he does not find enough stock-picking opportunities at existinglevels.

Being in cash could work in the fund manager’s favor if the market crashes, like it did for Sundaram BNP Paribas Select Midcap May 2006. But a higher cash allocation worksagainst the fund during a rising market, when being fully invested is what counts.Sundaram BNP Paribas Select Midcap has also witnessed this scenario, which explainsits relative underperformance over the last few months.

4. Other data points

In addition to the points listed above, there are some data points that must be marked bythe investor.

4.1) Portfolio turnover ratio

Put simply, this ratio tells the investor how much churn the portfolio has witnessed. Thisratio is calculated based on the number of shares bought and sold by the equity fund over the review period. A high turnover ratio (vis-à-vis peers or other equity funds from thesame fund house) indicates that the portfolio has seen above-average churn. A high churn by itself does not necessarily imply that the fund is good or bad; however, it must be in

line with the fund’s investment philosophy. A growth fund can have a high turnover ratio(although that’s not necessarily a good thing as it adds to the trading costs and thereforeeats into your returns). However, a value fund should typically have a lower churn as thefund manager would usually be investing in the stocks over the long term.

Important as it is, the Portfolio Turnover Ratio is yet to be given due importance by thefund houses (may be they are afraid of ‘exposing’ their fund managers). How else, do youexplain the fact that fund houses either don’t reveal the Portfolio Turnover Ratios or when they do reveal them, it is not standardized thereby robbing investors of theopportunity to compare them across fund houses?

4.2) Expense ratio

This ratio underscores how expensive your equity fund really is. A high expense ratioindicates that your mutual fund investment is expensive. As per regulations, fundmanagement expenses, which form the largest chunk of the expense ratio, must declinewith a rise in Net Assets. So larger equity have more scope to reduce their ExpenseRatios.



Again fund houses are not very enthusiastic about sharing this important detail withinvestors. However, they do declare this ratio every 6 months, which is only becauseregulations demand that they do so.

4.3) Fund manager information

It always helps to know who is managing your fund. Not that we have any particular fundmanager in mind, rather we recommend that investors do not get infatuated by any fundmanager in particular and look for investment teams instead. Over the long-term, it paysto have your money managed by a group of fund managers, rather than one star fundmanager, who could quit the fund house any time and take the performance with him.

So keep an eye on the fund manager details, typically, there should not be many externalchanges in the fund management team. When the same names manage your money, over a period of time there is stability in the fund management process. Thankfully for investors, majority of the fund houses do provide the fund manager details.

B) Debt fund fact sheets:

Like their equity fund counterparts, debt fund fact sheets offer enough insight to the debtfund investor. For this, investors have to keep an eye on at least three aspects:

1) Average maturity

For debt fund investors, this is perhaps the most significant detail to look out for in a debtfund fact sheet. Since the average maturity of a portfolio for a particular month inisolation does not tell the investor much, he must go back several months to see how the

average maturity of the portfolio has moved in order to understand the fund manager’sview on debt markets.

To give investors an idea – if the fund manager has been maintaining a higher averagematurity for some time, it means that he expects interest rates to fall over time. On theother hand, if the average maturity of the portfolio is lower, it means that the fundmanager is cautious about interest rates. Ideally, investors must read upon peer fact sheetsto understand the consensus on interest rates and if your fund manager has a differingview, you must try to understand why.

2) Credit rating profile

Debt funds invest in securities with varying credit rating. In the Indian context, most debtfunds do not take on undue credit risk – i.e. they invest primarily in securities that arehighly rated. Investors should mark the credit rating profile of the debt fund. A largechunk in AAA/Sovereign Paper (which is the highest rating) implies that the fund istaking credit risk. On the other hand, a higher allocation to AA+/AA paper underlines thefact that the fund manager is taking credit risk.



3) Asset allocation

Like with equity funds, debt fund investors must consider the asset allocation of the fundunder review. This should help him understand the investment approach of the fundmanager and the risk he is taking. Debt funds invest mainly in corporate bonds and

government securities, both of which carry varying risk. Investors must make a note of the assets invested across both these segments.

Then there are floating rate funds that invest predominantly in floating rate paper; in practice however, many are predominantly invested in cash/current assets for lack of adequate floating rate instruments. Likewise MIPs (monthly income plans) invest a portion of assets in equities (the maximum limit on which is predetermined), investorsmust check the equity allocation over the last several months to understand the kind of risk the fund manager is taking (on the equity side) and whether he is adhering to theceiling on equity investments.

RESEARCH METHODOLOGY

Sample size: 100

It is assumed that the sample size reflects the characteristics of the universe and has a realindicator.

Distributors are the respondents.

Method of sampling:

Convenience sampling.

Data collection method:

Primary data: For this project data are collected by primary means. Questionnaire isformulated as a primary means to collect the information from the target to differentdistributors and meeting over there in indore.

Secondary data: Data for research report is also collected by the means of secondarydata, for that I referred to the database already with the company.

Data Collection Technique:

Data collected by going to different Distributors by filling questionnaire.

Research Tool:

For research report various research tool has been used, such as questionnaire. Thequestionnaire which is used for the research has 10 question, all of them are close ended.



DATA ANALSIS AND INTERPRETATION

3.1. Overall Analysis of Responses Gathered From All the Respondents

In many project works I have used 5 point linkert scale for rating purpose of variousstatements in my questionnaire which I have formed to know the perception of theDistributors with special reference to Reliance AMC. Explanation or values relating tothose 5 points in my scale are as fallows:

Numerical points Values

1 Strongly disagree

2 Disagree3 Undecided

4 Agree

5 Strongly agree

Interpretation:

From above data it can be concluded that 64% respondent agree and strongly agree thatmeans they have good perception about reliance AMC, whereas 24% are disagree which

shows that they wish to see some improvement some aspect, whereas 12% areuncertain.

3.2. Statement Analysis

1. Reliance AMC sales representative is well organized.

Interpretation:

Form the chart drawn above it can be concluded that:

Strongly agree and agree – 79%.

Disagree -9%.

Undecided - 12%.



So on the whole 79% respondent agree that Reliance AMC sales representative is wellorganized.

2. Reliance AMC sales people are helpful.

Interpretation:

From the pie chart drawn above it can be concluded that:


Strongly disagree and disagree-19%.

Undecided -12%.

So on the whole only 69% respondent agrees that Reliance AMC sales people are helpfulwhereas 19% disagree to this.

3. I am so much excited when a new Reliance AMC product comes.

Interpretation:

From the chart drawn above it can be concluded that:



Undecided -17%.

So on the whole only 62% respondent agrees that I am so much excited when a newReliance AMC product comes whereas 21% disagree to this.

4. Reliance AMC conducts excellent consumer promotions.

Interpretation:






Undecided -16%.

So on the whole only 37% respondent agrees that Reliance AMC conducts excellentconsumer promotions whereas 47% disagree to this.

5. Reliance AMC provides adequate promotional support for their products.

Interpretation:




Undecided -9%.

So on the whole 42% respondents of total sample size agree that Reliance AMC providesadequate promotional support for their products whereas 49% disagree to this.

6. I like the incentive schemes of the Reliance AMC.

Interpretation:

From the chart drawn above it can be concluded that:

Agree – 42%.


Undecided -14%.

Out of total respondents 42% agree that I like the incentive schemes of the RelianceAMC.



7. My customers are willing to pay more for Reliance AMC products.

Interpretation:



Disagree -14%.

Undecided - 16%.

On the whole 71% respondents agree that my customers are willing to pay more for Reliance AMC products.

8. I would have a difficult time replacing Reliance AMC products with similarproducts.

Interpretation:




Undecided -11%.

On the whole 64% respondents agree that I would have a difficult time replacingReliance AMC products with similar products.

9. Reliance AMC provides vital information on time.

Interpretation:



Undecided -10%.

Disagree – 14%



On the whole 76% respondents agree that Reliance AMC provides vital information ontime.

10. Reliance AMC products are well known by my customers.

Interpretation:



Undecided - 10%.

On the whole only 85% respondents agree that Reliance AMC products are well known

by my customers.

SUGGESTIONS

I would like to recommend to company to work on weaker areas where the perception of distributors is low. I tried to questionnaire is really plays an important role for thecompany.

Consumer promotions done by the company to their distributor rated lowest by

respondent and merely 37% agree to this, whereas 47% are disagree with it. There are somany people disagree to it then there is need for some changes and improvementsregarding this. So company should do better consumer promotions to help the distributorsto sell their product.

Company should adopt good incentive schemes which are not challenging for distributors but easy for them so that they can attract more distributors to work for them.

Reliance AMC should work on understanding needs of each individual distributor. Thisshould be done with extra care and attention as each individual is unique and so is their needs.



Product analysis

SIP+INSURE

On June 27 Reliance Mutual Fund launched Reliance SIP (Systematic InvestmentPlan) Insure - an add on feature of free life insurance cover ensuring that all plannedinvestments are completed even in the event of unfortunate demise of an investor.The advantage of the new Reliance SIP Insure is that free life insurance cover, the balance unpaid SIP installments would be made good from the insurance cover. In theunfortunateevent of the demise of an investor during the tenure of the SIP, the insurance companywill pay for the balance amount towards the remaining unpaid SIP installments subject toa maximum of Rs 10 lakhs (across all designated schemes/plans and folios)

Features

Minimum SIP + insure installment 1000 Rs. Per month

Entry load 2.25%

Exit load Before decided tenure 2%

Payment option Electronic Clearing Service (ECS) or Direct Debits

Life cover proceeds Goes to the nominee(in case of jointholding to second holder.

Benefits to nominee Fund value+unpaid sip amount upto 10lakh Rs.

Benefits to the investor

The benefit of Long Term Equity Investment

• Equities provide relatively better returns among all asset classes over a longer

period of time.

The benefit of Systematic Investment Plan

• Inculcates Savings Habit.

• Rupee Cost Averaging & Eliminates the need to time the market.

Free Life Insurance Cover

• Maturity Proceeds at NAV based prices.

• Helps to complete the planned investments.

Flexibility

• Wide choice of eligible schemes.



Convenience

• Auto Debit from 4 banks namely ICICI bank, HDFC bank, AXIS bank & HSBC.

• ECS facility across – 65 locations.

Eligibility• All individual investors enrolling for investments via SIP & opting for ‘Reliance

SIP Insure’

• Only individual investors whose completed age is greater than 20 years and less

than 46 years at the time of investment.

• In case of multiple holders in the any scheme, only the first unit holder will be

eligible for the insurance cover.

Investment Details

• Minimum Investment per installment: Rs.1000 per month & in multiples of Re 1

thereafter. There no upper limit

• Minimum Period of Contribution: 3 years and in multiples of 1 year thereafter.

Maximum Period of Contribution:15 years OR till attaining 55 years of age, whichever is earlier (e.g., a person can

register an SIP of maximum10 yrs at the age of 45 yrs.) The insurance cover ceases when the investor attains 55 yearsof age.

Amount of Life Insurance Cover Available:An amount equivalent to the aggregate balance of unpaid SIP installments, subject

to a maximum of Rs.10 lakhs per investor across all schemes / plans and folios will beinvested in the Nominee’s accountThis amount will be invested in the same scheme/s (under which the deceased investor has enrolled for SIP) at the applicable price based on the closing NAV on the date onwhich the cheque for insurance claim settlement is received by the AMC from theinsurance company, subject to completion of requisite procedure for transmission of unitsin favour of the nominee.

Commencement of Insurance Cover

The Insurance cover shall commence after “waiting period” of 90 days from thecommencement of SIP installments. However, the waiting period will not be applicable inrespect of accidental deaths.

Reliance SIP Insure – How does this work?

An investor does a monthly SIP of Rs. 10,000 for 5 years in Reliance Growth Fund.

If he dies after a period of 3 yrs, thenhis Sum Assured= Unpaid SIP installments



= 2 yrs (i.e. 24months) X 10, 000= Rs 2, 40,000

This amount will be paid by life insurance company to SIP investor’s nominee account*with Reliance Mutual Fund and will be invested in Reliance Growth Fund (in the same

scheme in which the deceased has earlier invested)

Designated Schemes in which Reliance SIP Insure is offered

• Reliance Growth Fund - Retail Plan

• Reliance Vision Fund - Retail Plan

• Reliance Equity Opportunities Fund - Retail Plan

• Reliance Equity Fund - Retail Plan

• Reliance Equity Advantage Fund- Retail Plan

• Reliance Regular Savings Fund – Equity option

• Reliance Regular Savings Fund – Balanced option

• Reliance Pharma Fund

• Reliance Media & Entertainment Fund

• Reliance Diversified Power Sector Fund – Retail Plan

• Reliance Banking Fund

Expiry of the Policy

The insurance cover shall cease upon occurrence of any of the following:

• At the end of mandated Reliance SIP Insure tenure, i.e., upon completion of

payment of all the monthly installments as registered

• Discontinuation SIP installments midway by the investor i.e., before completing

the opted SIP tenure /installments• Redemption / switch-out of units purchased under Reliance SIP Insure before

completion the mandated SIP tenure / installments

• In case of default in payment of two consecutive monthly SIP installments or four

separate occasions of such defaults during the tenure of the SIP duration chosen.

Exclusions for Insurance cover

No insurance cover shall be admissible in respect of death of the SIP-Insure unit

holder (the insured person) on account of-

• Death due to suicide.

• Death within 90 days from the commencement of SIP installments except for

death due to accident.

• Death due to pre-existing illness, disease(s) or accident which has occurred prior

to the start of cover.



Century SIP:-

Along with Reliance SIP + Insure Plan, there is a similar offering from Birla Sun Life Mutual Fund which claims to offer both investment as well as FREE insurance for the

investor or insured.Birla Sun Life Mutual fund offers the benefit of both Protection andwealth creation through Birla Sun Life Century SIP (CSIP).

Wealth Creation – Systematic Investment Plans (SIP) as a mode of investment is knownto create long term wealth for the investor Protection – Century SIP offers its investors Life Insurance Cover of upto 100 times theSIP installment amount.

Features

Minimum CSIPInstallment amount

Rs. 1,000 per month

Entry Load For purchase of units under CSIP: 2.25%

Exit Load If Redeemed / switched out within 3 yrs: 2%If Redeemed / switched out after 3 yrs: Nil

Payment OptionsElectronic Clearing Service (ECS) or Direct Debits or Post Dated Cheques (PDC)

Life Cover Proceeds Goes to the nominee

Benefits to Nominee Fund Value + Life Cover equivalent upto 100times SIP installments

Schemes Available All Open Ended Equity Schemes

Life Insurance Cover details

The Insurance cover available with Century SIP will be absolutely free for the investor.The cost of insurance will be entirely borne by the AMC.

100 times Insurance

http://invest-n-trade.blogspot.com/2008/07/reliance-sip-insure-reliance-sip-insure.html


http://www.birlasunlife.com/BirlaSunLife/Mutual_Fund/SIP_Macro_Site/Century_SIP.html







In the unfortunate event of the demise of an investor during the tenure of the SIP, thenominee gets the Fund Value + Insurance Cover equivalent upto 100 times monthly SIPinstallments. The insurance cover offered to the investor grows with the tenure of the SIPas shown below:

Year Life Insurance Cover 1 Monthly SIP Installment x 10

2 Monthly SIP Installment x 50

3 Monthly SIP Installment x 100

4 onwards till end of tenure Monthly SIP Installment x 100

Exclusions for Insurance cover

No insurance cover shall be admissible in respect of death of the SIP-Insure unit

holder (the insured person) on account of-

• Death due to suicide.

• Death within 45 days from the commencement of SIP installments except for

death due to accident.

• Death due to pre-existing illness, disease(s) or accident which has occurred prior

to the start of cover.

Insurance Tenure & discontinuation of CSIP

The tenure of CSIP is 55 yrs – Completed age of Investor. The life insurance cover

offered to the eligible investor would continue even if the SIP stops after a minimum period of 3 years at the fund value subject to a maximum of 100 times of the monthly SIPinstallment. The cover ceases to exist on full/partial redemption or switching prior tocompletion of the SIP tenure

How does it work?

In the unfortunate event of the demise of an investor during the tenure of the SIP, thenominee gets the Fund Value + Insurance Cover equivalent upto 100 times monthly SIPinstallments. Also no exit load will be cahrged for redemption / switching out of units by

the nominee.

Assuming a scenario where in an investor had started a 10 year CSIP @ Rs. 20,000 pminstallment and a rate of return @ 8%p.a.

On completion of the CSIP tenure, value of investment and insurance cover would be Rs.



36.59 lakhs and Rs. 20 lakhs respectively.

Comparative analysis

Century SIP v/s SIP+insure

Features Sip+insure Century SIP Comparison

Sum Insured Depends on tenure of SIP

Upto 100 times MonthlySIP installment

Max Rs. 10 lac Max Rs. 20 lac

Sum Insured(if SIP stops beforematurity)

No insurance cover Cover continues, if SIPstops after 3 years, @fund value, subject tomaximum of 100 timesmonthly SIP installment



Life Cover Proceeds(in case of pre maturedeath)

Goes to AMC towards payment of remainingSIP installments

Goes to the nominee

Benefits to Nominee(in case of pre mature

death)

Fund Value + LifeCover equivalent to

outstanding SIPinstallments

Fund Value + LifeCover equivalent upto

100 times SIPinstallments

Minimum SIPInstallment

Rs. 2,000 pm Rs. 1,000 pm

Entry Load 2.25% 2.25%

Exit Load 2% throughout thetenure of SIP

2% upto 3 years & Nilthereafter

Exit Load(in case of pre maturedeath)

2% on Fund Value andalso on Insuranceamount

Nil

Age Group 20 Yrs to less than 46Yrs

18 Yrs to less than 46 Y

Maximum Age up towhich Cover isAvailable

55 Yrs 55 Yrs

Minimum Tenure 3 years 3 years

Maximum Tenure 15 years 37 years

Payment Options ECS & Direct Debits ECS, Direct Debits &PDCs

Findings:-

Reliance ‘SIP + insure’ is comparatively less beneficial than Birla Sun Life Century SIP.

• Offers half amount of insurance :-

Reliance sip+insure - max. 10 lack

Birla Sun Life Centuary SIP - max. 20 lack



• Covers a relatively small age group :-

Reliance sip+insure - 20 Yrs to less than 46 Yrs

Birla Sun Life Century SIP - 18 Yrs to less than 46 Yrs

• Doesn’t provide any insurance cover if SIP stops before maturity while century

SIP provides Cover if SIP stops after 3 years.

• Maximum tenure is lesser :-

Reliance sip + insure - 15 yrs.

Birla Sun Life Century SIP - 37 yrs.

• In case of pre mature death the amount of benifite to the nominee is smaller

Reliance sip+insure - Fund Value + Life Cover Equivalent to outstanding SIP installments.

Birla Sun Life Centuary SIP - Fund Value + Life Cover equivalent upto 100 times SIP installments.

• Charges 2% exit load throughout the tenure of SIP while Century SIP charges 2%

upto 3 years & Nil thereafter.

CONCLUSION

The objective of doing this project was to know the perception of Distributors of RelianceAMC. This study has been an attempt to know the different perception of Distributors of Reliance AMC. I also have to analyze why the company is loosing so many distributors.

Reliance Mutual Fund (RMF) is India’s no. one Mutual Fund Company, with AverageAssets Under Management (AAUM) of Rs.90, 938 Crores (AUM for Mar 08) and an



investor base of over 6.69 million. As they are the no. one player in the market they havecreated very good perception in the Distributors mind.

Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. This makes easier for Distributors to sell

their products easily in the markets and hence it creates good perception for theDistributors.

The survey also reflects that the Incentive schemes of the Reliance AMC are verychallenging. That’s why it’s very difficult for the Distributors to work for them and henceit may be the reason for loss of Distributors.

After concluding the survey and analyzing the feedback which is received fromDistributors, it can be concluded that 64% have a good perception about the RelianceAMC.

There are some areas which needs attention. Reliance AMC should look towards theseaspects and should work out on these problem areas, so that they can create very good perception in Distributors mind.

ANNEXURE

QUESTIONNAIRE:-

A study for analyzing the perception of Distributors of Reliance AMC.

Dear Sir, I am a student of SIMCA. I am doing a survey to know the perception of Distributors. It’s been very kind to you if you will please give some time to answer fewquestions. Thank you!

QUESTIONNAIRE:-

Please rate the following comments on a scale of 1-5 for the services you getfrom Reliance AMC with whom you are associated as a Distributors (1 is highly

disagree/dissatisfied, 2 is disagree/dissatisfied, 3 is neutral/undecided, 4 is agree/satisfied,5 is highly agree/satisfied).

S. No. Comments Rating

1. Reliance AMC sales representative is well organized.



2.

.

Reliance AMC sales people are helpful.

3. I am so much excited when a new Reliance AMC product comes.

4. Reliance AMC conducts excellent consumer promotions.

5. Reliance AMC provides adequate promotional support for their products.

6. I like the incentive schemes of the Reliance AMC.

7. My customers are willing to pay more for Reliance AMC products.

S. No. Comments Rating

8. I would have a difficult time replacing Reliance AMC products withsimilar.

9. Reliance AMC provides vital information on time.

10. Reliance AMC products are well known by my customers.

PERSONAL DETAILS:-

NAME:-

AGE:-

SEX:-

CONTACT NO.:-

ADDRESS:-

MONILE NO.:-

E-MAIL:-



BIBLOGRAPHY

I have benefited from various websites, books, magazines & newspapers. I have givendown a list of websites, books and newspapers from which I got much information duringmy project work.

Websites

• http://www.amfiindia.com

• http://www.moneycontrol.com

• http://www.reliancemutual.com

• http://www.mutualfunds.about.com

• http://www.valueresearchonline.com

Books

• The investor’s concise guide- AMFI

• Fundamental booklet of RAMC

• Mutual Funds- ICMR

• Company fact sheet

http://www.amfiindia.com/

http://www.moneycontrol.com/

http://www.reliancemutual.com/

http://www.mutualfunds.about.com/

http://www.valueresearchonline.com/

http://www.amfiindia.com/

http://www.moneycontrol.com/

http://www.reliancemutual.com/

http://www.mutualfunds.about.com/

http://www.valueresearchonline.com/

project on rmf

Documents