Beruflich Dokumente
Kultur Dokumente
Report on
Submitted by:
Nikhil Bajaj
07BS2556
Corporate Guide: Academic
Guide: Mr. Vikas Sharma
Prof. V.N.Srivastava
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Acknowledgements
Finally, I would also like to thank all my dear friends for their
cooperation, advice and encouragement during the long and
arduous task of carrying out the project and preparing this report
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TABLE OF CONTENTS
1 Acknowledgement 2
2 Abstract 4
4 Executive Summary 5
6 Introduction 7
9 Company Background 21
10 Literature Review 24
12 SWOT Analysis 35
12 Methodology 44
13 Analysis 46
3
14 Comparison with other AMCs 53
15 Bibliography 66
ABSTRACT
The Final Report includes, the analysis of the whole data (primary and
Secondary) by putting in Graphical Mode. This analysis might be a Value
Addition to RELIANCE Mutual Fund to make a strategy for particular Area
(SOUTH DELHI).
4
Executive Summary
The project involves a study of mutual fund industry and evaluating and
suggesting measures to improve the services provided by the
Representatives of Reliance Mutual fund to the retail distributors and also to
identify the strong as well as the weak points so that an appropriate sales
pitch could be developed. The sales pitch highlighted features like Reliance
being the pioneer in terms of AUM, its huge distributor base, returns being
independent of the market ups and downs, etc. Calls were made to all the
different channel distributors (Retail) across all tiers from company‘s
database and appointments were sought. Thereafter a brief questionnaire
was filled up by them regarding their and consumer’s perception about
reliance since they get the direct interaction with investors.
The second part of the project is to study & analyze the comparison of beta,
volatility measures, portfolios and returns of different large Cap, mid cap &
small cap funds because every distributors ask about the different ratios &
beta (risk factor) of Reliance. So I have to provide all the necessary
information to them so as to manage the relationship with them.
A lot of interaction has been done with the distributors about the products
and services of Reliance. A comparative analysis is also done of Reliance
Mutual Fund with other AMC’s in order to find the market position of the
company with respect to services provided by it. It was found that there are
many issues on which the company needs to improve, which are
elaborated in further parts of the report.
5
/
As the title of the project suggests, the objective of the project is to find
out the satisfaction level of Distributors with respect to the services &
overall quality provided by the AMC.
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Introduction
What are mutual funds?
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Advantages of Mutual Funds:
Professional management:
8
Even if an investor has a big amount of capital available to him, he
benefits from the professional management skills brought in by the
fund in the management of investor’s portfolio. The investment
management skills along with the needed research into available
investment options ensure a much better return than what an
investor can manage on his own.
Diversification of Risk:
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accounting requirements. Such a high level of regulation seeks to
protect the interest of investors.
Costs:
Mutual funds don't exist solely to make your life easier--all funds are
in it for a profit. The mutual fund industry is masterful at burying costs
under layers of jargon. These costs are so complicated that in this
tutorial we have devoted an entire section to the subject.
Dilution:
Taxes
10
There are wide variety of Mutual Fund schemes that cater to investor
needs, whatever the age, financial position, risk tolerance and return
expectations. The mutual fund schemes can be classified according to both
their investment objective (like income, growth, tax saving) as well as the
number of units (if these are unlimited then the fund is an open-ended one
while if there are limited units then the fund is close-ended).
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Open-ended schemes
These funds are sold at the NAV based prices, generally calculated on
every business day. These schemes have unlimited capitalization, open-
ended schemes do not have a fixed maturity - i.e. there is no cap on the
amount you can buy from the fund and the unit capital can keep growing.
These funds are not generally listed on any exchange.
a) Any time exit option: The issuing company directly takes the
responsibility of providing an entry and an exit. This provides ready liquidity
to the investors and avoids reliance on transfer deeds, signature
verifications and bad deliveries.
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c) Any time entry option: An open-ended fund allows one to enter the fund
at any time and even to invest at regular intervals (a systematic investment
plan).
i) Growth Funds
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can afford to assume the risk of potential loss in value of their investment in
the hope of achieving substantial and rapid gains.
They are not suitable for investors who must conserve their principal or who
must maximize current income.
Growth and income funds have low to moderate stability of principal and
moderate potential for current income and growth. They are suitable for
investors who can assume some risk to achieve growth of capital but who
also want to maintain a moderate level of current income.
The goal of fixed income funds is to provide current income consistent with
the preservation of capital.
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iv) Balanced Funds
The Balanced fund aims to provide both growth and income. These funds
invest in both shares and fixed income securities in the proportion indicated
in their offer documents. These funds are ideal for investors who are
looking for a combination of income and moderate growth.
For the cautious investor, these funds provide a very high stability of
principal while seeking a moderate to high current income. They invest in
highly liquid, virtually risk-free, short-term debt securities of agencies of the
Indian Government, banks and corporations and Treasury Bills. Because of
their short-term investments, money market mutual funds are able to keep
a virtually constant unit price; only the yield fluctuates.
Money market funds are suitable for investors who want high stability of
principal and current income with immediate liquidity.
Sector funds offer the opportunity for sharp capital gains in cases where the
fund's industry is "in favor" but also entail the risk of capital losses when the
industry is out of favor. While sector funds restrict holdings to a particular
industry, other specialty funds such as index funds give investors a broadly
diversified portfolio and attempt to mirror the performance of various market
averages.
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Index funds generally buy shares in all the companies composing the BSE
Sensex or NSE Nifty or other broad stock market indices. They are not
suitable for investors who must conserve their principal or maximize current
income.
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Structure of Mutual Funds in India:
• Mutual funds in India act as a Unit Trust.
• The structure is required to be followed by mutual funds in India as
per SEBI Regulations, 1996.
• It is constituted in the form of a Public Trust created under the Indian
trust act, 1882.
• The Trustees hold the unit holders money in a fiduciary capacity i.e.
the money belong to the unit holders and is entrusted to the fund for
the purpose of investment.
• The Trustees do not manage the portfolio of securities directly, for
this specialist function they appoint the Asset Management
Company.
• The trust is executed through a document called a trust deed that is
executed by the fund sponsor in favour of the trustees.
• The Trust deed is required to be stamped as registered under the
provisions of the Indian Registration Act and registered with SEBI.
• The role of the Asset Management Company is to act as the
investment manager of the Trust and must have a net worth of at
least Rs. 10 crores.
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Sponsors:
Trust:
Trustee:
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Trustee is usually a company (corporate body) or a Board of Trustees
(body of individuals). The main responsibility of the Trustee is to
safeguard the interest of the unit holders and inter alia ensure that the
AMC functions in the interest of investors and in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations,
1996, the provisions of the Trust Deed and the Offer Documents of the
respective Schemes. Atleast 2/3rd directors of the Trustee are
independent directors who are not associated with the Sponsor in any
manner.
The AMC if so authorised by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the
application form, redemption requests and dispatches account
statements to the unit holders. The Registrar and Transfer agent also
handles communications with investors and updates investor records.
Custodians:
Sell units on behalf of funds and are generally appointed by the AMC.
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Corpus:
Entry/Exit load :
For the purpose of the NAV calculation, the day on which NAV is calculated
by a fund is known as the valuation date.
A fund’s NAV is affected by four sets of factors:
• Purchase and sale of investment securities
• Valuation of all investment securities held
• Other assets and liabilities, and
• Units sold or redeemed
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Measuring mutual fund performance
FORMULA:
If period covered is less/more than one year: for annualized NAV change:
{[(Absolute change in NAV/NAV at the beginning)/months covered]*12} 100
Example: Thus, if a fund’s NAV was Rs.20 at the beginning of the year and
Rs.22 at the end of the year, the absolute change was Rs.2 (22-20) and
percentage change was + 10% (22-20/20*100). Now, let us assume that an
investor purchases a unit in an open-end fund at Rs.20, and its NAV after
16 months is Rs.22, the annualized NAV change is: 7.5%: ({[22-20]/20}
16}*12)*100).
The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank
the. The history of mutual funds in India can be broadly divided into four
distinct phases.
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• The first scheme launched by UTI was Unit Scheme 1964.
• At the end of 1988 UTI had Rs.6,700 crores of assets under
management
At the end of 1993, the mutual fund industry had assets under management
of Rs.47, 004 crores.
• 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 Trust of India with assets under
management of Rs.29,835 crores as at the end of January 2003
• The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the
Mutual Fund Regulations.
• As at the end of September, 2004, there were 29 funds, which
manage assets of Rs.153108 crores under 421 schemes.
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Reliance Capital Asset Management Ltd. has a vision of being a leading
player in the Mutual Fund business and has achieved significant
success and visibility in the market.
Management:
Employees:
The Sponsors
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Reliance Mutual Fund (RMF) has been established as a trust under the
Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the
Settlor/Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as
the Trustee.
RMF has been registered with the Securities & Exchange Board of India
(SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The
name of Reliance Capital Mutual Fund has been changed to Reliance
Mutual Fund effective 11th. March 2004 vide SEBI's letter no.
IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was
formed to launch various schemes under which units are issued to the
Public with a view to contribute to the capital market and to provide
investors the opportunities to make investments in diversified securities.
Custodian
The Registrar
Trustees
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Organizational Hierarchy
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Literature Review
Successful fund marketing creates value for Fund companies, dealers and
unit holders so that each is satisfied. The definition goes much deeper than
simply "selling something to somebody". Fund marketeers must understand
both the "Needs & Wants" side of the equation and the "Product, Ideas, &
Services" side of the equation. Not only must marketing fully understand
both sides of the equation, but it must also effectively communicate the
details of each in order to successfully bridge the gap between the two.
Every facet of modern marketing has been effectively employed to
dramatically grow the Indian mutual fund industry.
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MARKETING IN MUTUAL FUNDS
Marketing
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often dial in on the conference calls managers hold regularly with sales
representatives.
Selling Models
As mentioned earlier, apart from the existing players like Reliance, Franklin
Templeton, Fidelity, Prudential ICICI etc. more and more players like Bharti
AXA, JP Morgan, AIG etc. are entering the mutual fund industry and this
has given rise to increased competition among the players. To sustain this
cut throat competition, the fund houses are developing new marketing
strategies and revamping the existing strategies. Thus, the marketing in
mutual funds have assumed an important role like never before. The
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marketing strategies that can help the fund houses to hold the market share
are:
1. Product Innovation
2. Devise innovative channels of delivery, i.e., different distribution
channels and models.
3. Build brand awareness strong enough to “pull” the investors towards
itself.
1. PRODUCT INNOVATION
The asset management companies are shifting from old plain vanilla
schemes towards differentiating themselves by providing innovative options
to the investors.
For instance:
Apart from the plain vanilla schemes, fund houses are offering SECTOR
FUNDS, in order to capitalize on the success of sectors like Banking,
Power, Media & Entertainment, pharmaceuticals etc.
Also keeping in mind the different type of risk taking propensity among the
investors, fund houses have come up with BALANCED/ HYBRID FUNDS to
cater effectively to their investors.
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In the U.S.A, mutual funds are sold through five principal distribution
channels:
1. Direct Channel
3. Advice Channel
4. Institutional Channel
5. Supermarket Channel
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to attain economies of scale are forcing industry players to increase their
reach in non-metro cities and small towns, where the potential is high, but,
penetration is low. This is resulting in fund houses exploring innovative
distribution channels.
In India, mutual funds are sold through four principal channels viz.:
2. Direct channel
4. Banks
Reliance
Distribution
Channel
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to name a few and other investment consultants like Karvy
securities, Bajaj Capital etc.
o The Independent Financial Advisors are the ones who are eligible
to sell financial products individually to the retail investors after they
have obtained AMFI certification.
o The Alternate Channels consists of all the PSUs like State Bank of
India, Oriental bank of Commerce, Unit Trust of India bank among
many.
Brand name in mutual funds highlights the inherent benefits and investment
objectives and ensures investor loyalty. Brand name and identity is an
important marketing aspect because it facilitates product identification at
the market place.
To achieve this, the fund house should be able to carve a niche for itself in
the mind of the customers by making them aware about their products. A
significant amount of brand awareness in the minds of the investors/
customers creates a PULL for the products when the customers walk in and
ask for the product by themselves, instead of a third party pushing it for
the company.
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1. Know your product
Before you start selling Mutual funds you need to understand the scheme
you are selling. You should not only focus on the specific features of the
scheme but focus also on the specific financial goals of the prospect and
show how the scheme enables him to get what he really wants. You should
keep yourself updated on the track record of the scheme as well as the
overall performance of the mutual fund.
Clients are different. Their financial needs and choice of investment vary
depending upon their age, earning capacity, family commitments and ability
to take on risks. Some broad types of clients are given below:
To make the most of your time, you must identify the clients with whom you
can establish a good business relationship. There are three types of clients
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- respective, potential and independent minded. The receptive clients are
those who will work with you to develop a financial plan, have the discipline
to invest regularly and believe in the merits of professional financial
advisors.
The potential client is one who wishes to become a successful investor, but
does not have the discipline or patience to do so. If you work closely with
these investors, they could join the ranks of your good receptive clients.
The independent minded are those who do not use financial intermediaries
and prefer investing directly. Such clients need to be cultivated over time.
For you are to be able to recommend a sound financial plan to your clients,
you must understand their needs and priorities. Find out your client's:
Having understood your client's profile and needs, you now have to advise
them on where to invest. It might be a selection of only Mutual Funds or a
combination of Mutual Funds and other investments.
Advise your clients to invest early and stick to a regular investment plan.
This will help them to make more money because the power of
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compounding enables your clients to earn income on income and their
money to multiply at compounded rates.
The best plans and the best choice of investments are of little use unless
your clients act upon them and invest. Ensure that your clients give you the
commitment for their investment. Be ready with application forms and other
documents and if necessary, help them to complete the paperwork and
bank the cheques.
o Making periodic calls to see if they need any help with their
investments;
o Getting in touch if there is a great deal of fluctuation in market
prices which may be of concern to them;
o Assessing any change in their personal circumstances which
may call for a review of the financial plan recommended by
you.
o Informing them of new schemes and products that could be
useful to them;
o Following up with the Mutual Fund if your clients have
experienced a service related problem with their investments.
Stay in touch with your clients on a regular basis. You will not only get more
business from them, but you can also earn the business of their friends and
relatives by getting positive
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Mutual fund industry has seen a high rate of growth due to exceptional
marketing. Over 80 mutual fund companies employs 60,000 salespersons
and employs thousands more portfolio managers, administrators, analysts
and marketing personnel. Brokers gain substantial transaction business
from the funds. Auditors trust firms and advertising agencies make a good
living off the funds. Guides, books, newsletters, public speakers, fund
gurus, specialist software firms, rating companies and advisors also cash
in. The media love to write about the fund industry and their advertising
departments gladly receive the lucrative ad revenues. During RRSP
season, television advertising becomes so pervasive that one cartoon
observed, “The RRSP ads are periodically interrupted by hockey games”.
Mutual Funds are still not the most preferred investment vehicle in the
country. In our country, people want to buy only sacred assets. Unless this
mindset changes, it will be difficult to get investors interested in mutual
funds. Government securities and post-office investments offer 8 per cent
assured returns, while banks offer 6 per cent. So, competition is very high.
Only sustained efforts by a trained and qualified distributor class can bring
success.
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locations by different fund companies. Thanks to foreign banks distributing
funds, there is a band of new investors today. More than 50 banks are
active distributors. A lot of churning has been happening because of new
fund launches wherein distributors are paid substantially higher
commissions.
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SWOT Analysis
Internal External
Strengths - to build on
Weaknesses - to cover
Opportunities - to capture
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extent the customer perception about RMF as well. This allowed us to form
recommendations that are listed at the end of this project.
Strengths:
Well run companies have a well known name and reputation and this
is the most powerful strength of the RMF as well. It’s the company
brand name which is giving a hit to other market players when it
comes to competing in the market whether it be in terms of coming
up with new schemes or tapping the market opportunities.
2. Funds performances:
One of the most important reasons for RMF’s popularity is the return
that its schemes have given i.e. the fund performance of RMF. The
continuous dividend that the company keeps declaring is one of the
most attractive elements of the RMF schemes. The flagship products
of RMF i.e. Reliance Vision and Reliance Growth both have given
returns of approximately more than 50% since its inception. Both the
schemes have declared dividends on a regular basis. Also some of
the schemes have been awarded for their best performances.
Reliance banking fund growth plan bagged the best fund award for
three year return in the equity banking segment
Reliance Growth Fund was named as best equity funds in three year
as well as five year return categories
Reliance Income fund growth plan was selected as best fund for five-
year returns in the bond Indian rupee category
Reliance Gilt securities fund was awarded as the best three-year
return fund in the bond India rupee-government segment
(According to globally acclaimed fund tracking firm Lipper Inc.)
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3. Strong channel partner network:
Reliance Mutual Fund is one of the few mutual funds to pioneer retail
investing in the country by reaching out to investors and distributors
in over 115 cities through branches and representatives across India.
Also the company has 1500+ distributors in Delhi region itself. Hence
the company’s strong distribution network is playing a great role in
making reliance reaching out to maximum number of investors.
4. Highly trustable:
Any RMF scheme that is launched in the market does well because
of the trust that RMF enjoys as a fund house. It is the most trusted
mutual fund brand in the country according to a survey conducted by
AC Nielsen ORG Marg.
5. Very Innovative:
6. Aggressive:
Service
There are two ways in which a fund house can increase its market
share. First, is by increasing the market share in the entire pie (which
every fund house does). And second, is by increasing the radius or
circumference of that pie. RMF believes in the second option. RMF
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has continuously increased the number of investors especially from
retail segment. It has been instrumental in converting the FD
investors into first time mutual fund investors. And this happened due
to Fixed Maturity Plan launched by RMF. FMP(s) contributed app.
Rs. 18000 crore in the total AUM of Rs.46307 crores. And this
amount was mobilized majorly through RMF’s focus on retail
segment.
Weaknesses:
1. Services:
Services provided to the bankers and retailers are the biggest area
of concern. The services provided to distributors such as complaints
solving, query handling and statements delivery have to be improved
upon. The distributors surveyed complain about the queries at times
are not followed up properly and the biggest concern is the delivery
of accounts statements.
Opportunities:
1. Educational institutions:
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The educational institutions turn out to be a great opportunity for
RMF in terms of obtaining large number investors and the amount of
investments as well. These provide the potential for Reliance Salary
Advantage product as the employees (teachers, office staff etc) can
be tapped for the same. In addition to the employees their also lies
another category i.e. of students of the graduation and the post
graduation colleges who start earning either along with their studies
or shortly after the completion of their degrees or courses. Also when
studied the business model of these institutions it is learnt that the
revenue inflows are mainly in the month of April May June July which
is generally the lean period for rest of the industry and hence can be
tapped at the beginning of the year.
3. Households:
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Delhi has around 35 residential locations having huge potential and
can be tapped through average 4000 houses in each location. And
there lies again the efforts to create the awareness for the same.
This can be done through contacting various RWA’S and conducting
group presentations to inform them about the products and the
benefits they stand to gain from it. Another method can be stationing
of canopies and placing a representative there to inform them about
the products and not actually sell but to get leads and spread
awareness about the product. Also getting a few local residents to
become IFAs first and help them to conduct the presentation or
seminar.
4. International fund
Threats
1. Increased competition:
2. Services:
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3. Recent volatility in stock market:
The first and last question on the minds of the investors is `what returns has
the fund given?' What goes into the expenses? Is it possible for the fund
house to lower the expenses?'
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First it's important to understand the structure of a mutual fund before one
begins to appreciate how expenses are charged. While there are several
entities involved in a mutual fund, like the Sponsors, Board of Trustees,
Asset Management Company (AMC eg. HDFC Standard Life Asset
Management Co. Pvt. Ltd.) And the mutual fund scheme (eg. HDFC Equity
Fund), the last two are the most important elements in the context of our
discussion. The AMC launches mutual fund schemes. The AMC and the
mutual fund are two distinct entities. They have distinct revenue streams
and expenses.
As is evident from the table, the expenses of the AMC typically comprise of
fund management expenses, marketing fees and audit fees among other
expenses. Investors must note that these are expenses the fund incurs on
a recurring basis (annually) to operate the mutual fund. This is over and
above the entry/exit load which is a one-time fee. The entry load is usually a
distribution expense that the AMC passes on to your mutual fund agent.
Then there are expenses a fund incurs at the time of the NFO (New Fund
Offer), which are distinct from the recurring expenses in the table above.
The NFO expenses are one-time in nature, with a ceiling of 6% (of net
assets), and as per SEBI (Securities and Exchange Board of India)
guidelines are to be amortized over 5 years.
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The fund management expenses are very important for the AMC. It is the
AMC's only revenue stream. It is the fund management expense from which
the AMC declares a profit after accounting for all expenses like salaries for
its employees (which include fund managers and analysts among others),
rent and administration expenses.
Equity funds can and do charge as high as 1.25% (of net assets) as fund
management fee to the mutual fund. Long term debt funds are also
mandated to charge a maximum of 1.25% (of net assets), but rarely do so.
scope to charge the entire 1.25% fund management charge to the fund. So
with most debt funds, the 1.25% fund management charge is a lot lower.
The percentage varies across funds, but it's below 1.00% in most cases.
This also explains why AMCs prefer to own a larger share of equity assets
than debt assets. Equity assets draw a much larger fund management fee,
which has a direct impact on the AMC's profitability. That tells investors a lot
about the mad rush to launch equity NFOs (new fund offers) that has been
on display for quite some time now.
As investors would have gathered, it's a matter of choice for the AMC
whether its wishes to beef up its own profitability or lower costs for the
mutual fund. Since uncompromising investors have their eye on NAV
returns and not on the AMC's net profit, it seems like an easy decision for
AMCs how they must allocate expenses. However, as we have seen, it's
not always that obvious. AMCs can cut the fund management charges on
equity funds (from the maximum of 1.25%), but rarely do so. They prefer to
do that only with debt funds because the environment demands such cost-
cutting.
That is why investors must get a lot more aware and question AMCs on why
they charge such high expenses when they can very well cut down on them
to add to the investors' returns. Investors in developed markets like the US
for instance, have already driven AMCs into getting cost conscious and
making them impose rigid ceilings on several charges, including fund
management charges. It's time for the domestic mutual fund investor to
take his cue from his US counterpart.
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Methodology and Findings
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Methodology
Stage 1: Gathering data from the company and plan schedule to meet the
concerned
Person
Stage 2: Collecting data by survey method, on the basis of questionnaires.
Stage 3: Analyzing and interpreting the primary data collected.
Research design:
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various parameters which a relationship manager would consider before
selling a mutual fund. Each question is based on different variables like
investment decisions, selling decisions, company policies, servicing issues
etc.
Structure:
Scaling techniques:
Scaling is a process creating a continuum on which measured objects are
located.
For this project the following scaling techniques were used:
1) Ordinal scale:
A ranking scale in which numbers are assigned to the objects to indicate
the relative extent to which some characteristic is possessed. Thus it is
possible to know whether an object has more of a characteristic than some
other object. Examples are quality ranking, service characteristics ranking
etc.
Questionnaire:
The information needed for the research project can be best collected
through questionnaire method as the information is more clearly defined
and it would clearly address all the components of the problem.
For this purpose personal interviews were taken along with filling the
questionnaire to get detailed information for other products prevailing in the
market. Thus varied questions were also asked verbally along with the
written questionnaire to find out how do services of other mutual fund
companies are different or better than services of Reliance Mutual Fund.
Questions like:
1. What are the frequencies of visiting of relationship managers of other
companies?
2. In what ways do you find other mutual fund companies better than
RMF?
3. What complaints do you have from RMF?
4. Do you get sufficient inputs based on knowledge about various funds
from RMF?
5. Are there any servicing issues like account statements for investors,
unavailability of forms, fact sheets etc?
6. Any suggestions for RMF
Questions were asked from the respondents to get the real picture of what
is expected out of Reliance Mutual Fund in order to improve its services.
Sampling:
Sample size:
• The sample size of 50 distributors of retail channel is taken.
• 28 were personally interviewed and questionnaires were filled and 22
questionnaires were filled through e-mails.
1. The overall response of the customers about the Reliance Mutual Fund
is very satisfied and more than 50% of the distributors are selling
51
Reliance Mutual Fund because of the credibility of RMF among the
customers.
a) 26 out of 50 distributors have experienced that the overall
quality of RMF is very satisfied among customers, which is
more than 50%.
b) About 38% prefer that the overall quality is satisfied.
c) About 6% distributors said that the customers are neutral
about RMF.
d) About 4% of the distributors said that customers are
dissatisfied and very dissatisfied.
By this graph, We can see that the overall quality of RMF is very satisfied
among the customers. This can be due to the following reasons:
• Greater Distribution Channels.
• Employees knowledge about the products
• Responsiveness of the employees in resolving queries.
• Individualized attention/personalized services.
• Greater Return with less risk.
• Goodwill of the company.
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2. The service & Operation part of RMF is very good & about 60% of the
distributors are very happy with the services part of RMF.
a) About 60% of the distributors told that the services & operation
part of RMF is very good.
b) About 32% of the distributors told that the overall services of RMF
is good.
c) 6% of the distributors told that the services of RMF is on average.
d) About 2% of the distributors are not happy with RMF regarding
their services & Operation part.
By this graph, We can see that the Overall services & operations part of
RMF is very good and mostly all the distributors are very happy with this.
• To improve the services of Reliance mutual fund the distributors
expect the representatives to meet them regularly and update them
with new facts and figures.
• The frequency of visits expected from the representatives of
Reliance Mutual fund is one of the important criteria which is
considered by the distributors as a characteristic of good services.
3. Almost 94% of the Distributors are getting enough materials for the
promotional purposes and about 6% of the distributors are disagree with
the promotional part of RMF. This can be shown in the graph as shown:
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For the promotion purpose, the servicing like availability of format forms and
fact sheets etc should be provided to the distributors in time. Just 6% of the
distributors were disappointed by the promotional activities, most of them
are tier-3 distributors.
4. The most & the important part of any business is the relationship
between the seller & the buyer. So, I categorized the strongness of the
relationship between the Relationship Manager & the Distributors.
(a) About 74% of the distributors have a very strong relationship with the
Relationship Manager.
(b) About 16% of the distributors have a strong relationship with RM of
RMF.
(c) About 8% of the distributors have average kind of relationship with
RM
(d) Only 2% of the distributors are not happy with the relationship with
RM
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By the above graph, I have analyzed that the overall Relationship of the
Relationship Manager of Nehru Place Branch is very Strong. There are
some reasons behind this as follows:
(a) Frequent Calling to all the distributors
(b) Communication & updation with the E-mails as well as calls.
(c) Frequent meetings with the distributors.
(d) Interactive sessions with the distributors time to time. E.g. we have
done sessions on ‘Current Market Scenario and Asset Allocation’ &
‘Time Management’.
(e) Updation of New Products e.g NFOs, FMPs, Liquid Funds etc.&
Dividends via calling, SMSs, E-mails.
(f) Faster response to the queries of the distributors like brokerages,
materials for promotions.
(g) Frequently sending the stationary materials to the distributors for the
promotional purposes.
I have also analyzed that the relationship of the distributors & Relationship
Manager is not good only in case of the distributors who lies in the Tier-3
categories. So, the concentration should be taken place on the Tier-3
distributors.
55
How company got benefit by my project:
There should be the concentration & timing not only on the Tier-1 &
Tier-2 distributors but also, Relationship Managers also have to
concentrate on Tier-3 distributors. For this purpose, I personally
handling Tier-3 distributors, I regularly meet them, updating the
information about the new products by calling them and resolved all
their queries. If there are any complaints, I use to solve that problem.
If any distributor wants to do any activities like canopy etc., then I
take permission for this from Relationship Manager and allow them
for the activities. At Nutshell I want to say, I am working as the
Relationship Manager of the Tier-3 distributors and new empanelled
distributors. That was actually needed because earlier there was
very less concentration & timing on the Tier-3 distributors because
‘These small drops (business given by Tier-3 distributors) will make
Reliance Mutual Fund that biggest ocean that no one can compete’.
Fixed Maturity Plans are open only for 3-5 days. In this small period
of time, most of the distributors even don’t know whether any FMP is
coming or not. For this reason, I use to call each & every distributors
and mail them about the FMP because in case of any AMC, the most
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of the business comes from the FMP & Liquid Funds. That increases
the AUM of the company in easy way, hence increases the liquidity.
Some distributors don’t know about the liquid fund, some don’t know
about the debt funds etc. So, there should be a time to time training
given about all the products. For this purpose, I called and gathered
5-6 distributors at a time and gave the understanding about these
products. I exercised this practice for 7 times means I gave the
thorough knowledge of the products of Reliance Mutual Fund to
about 40 distributors.(Mostly Tier-3 Distributors, because they need
this kind of presentations).
1. Sharpe Ratio:
While an investor seeks to generate high returns the question arises, how
high? Though the sky can be the limit, usually one asks for returns, which
are higher than those, which we are normally accustomed to. These are
returns from risk-less instruments like treasury bills, government securities
or bank savings deposits. So the aim of investing seems to be to generate
returns in excess of the risk free return.
At the same times high returns are generally associated with a high degree
of volatility. The Investors accept this volatility only because they want
higher returns. The Sharpe ratio represents this tradeoff between risk and
returns. At the same time it also factors in the desire to generate returns,
which are higher than those from risk free returns.
Mathematically, the Sharpe ratio is the returns generated over the risk free
rate, per unit of risk. Risk in this case is taken to be the fund's standard
deviation. As standard deviation represents the total risk experienced by a
fund, the Sharpe ratio reflects the returns generated by undertaking all
possible risks.
58
Sharpe Ratio:
• Alternatively one can compare the Sharpe ratio of a fund with that of
its benchmark index. If the only information available is that the
Sharpe ratio of a fund is 1.2, no meaningful inference can be drawn
as nothing is known about the peer group performance.
59
greater a portfolio's Sharpe ratio, the better its risk-adjusted
performance has been.
2. Beta:
Calculating BETA
3. Alpha:
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fund manager has "beat the market" with his or her stock picking
skills.
4. R-Squared:
5. Standard Deviation:
In the core of the fund analysis activity lie the twin pursuits of judging
returns and risk. Stripped of a lot of the complexity, this task involves
determining a fund's average performance over a period of time.
61
• A high Standard Deviation may be a measure of volatility, but it does
not necessarily mean that such a fund is worse than one with a low
Standard Deviation. If the first fund is a much higher performer than
the second one, the deviation will not matter much.
6. P/B ratio:
7. P/E Ratio:
Calculated as:
HDFC Equity-G
62
The following are given the comparison of these four funds according to some
factors:
63
The movements of a ICICI pru-G Fund is mostly explained by
movements in the index followed by HDFC Equity Fund, Tata Pure
Equity Fund, Reliance Vision Fund. Hence high R-squared value of
ICICI Pru-G Fund indicates the fund's performance patterns have
been in line with the index.
0.94 0.93
0.92 0.91
0.9
0.9
0.88
0.86 0.84 R-Squared
0.84
0.82
0.8
0.78
Reliance ICICI HDFC Tata
The volatility of all the funds are less volatile than that of the market
because the beta of all the funds is less than 1.
0.94 0.93
0.93 0.92 0.92
0.92
0.91
0.9
Beta
0.89 0.88
0.88
0.87
0.86
0.85
Reliance ICICI HDFC Tata
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HDFC Equity-G Fund is taking higher risk and earning higher returns
followed by Tata, Reliance, ICICI AMCs.
6
4.81
5
4 3.18
3
3 Alpha
1.75
2
1
0
Reliance ICICI HDFC Tata
26 25.51
25.5
24.87
25 24.6
24.5
Standard Deviation
24 23.65
23.5
23
22.5
Reliance ICICI HDFC Tata
65
1.25
1.2
1.2
1.15 1.12
Sharpe Ratio
1.1 1.08 1.08
1.05
1
Reliance ICICI HDFC Tata
The stocks in the portfolio ICICI Pru-G Fund are earning highest with
less risk than that of other AMCs and the stocks in the portfolio of
Tata Pure-Equity Fund is earning least with the same risk.
40 36.94
34.04
35 31.18
28.25
30
25
20 P/ERatio
15
10
5
0
Reliance ICICI HDFC Tata
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Comparison of Mid Cap funds of different AMCs:
I have analyzed the large Cap funds of Reliance, ICICI, HDFC, Tata AMCs.
The following are given the funds which invest their corpus in mid cap
companies
Reliance Growth Fund
The following are given comparison of these four funds according to some factors:
67
crores
Exit Load 1%, if 1%, if Nil 1% , if
redemptio redemption in redemption
n before 1 between 0 & between 0 &
year 180 days, 0.5%, 180 days
if redemption in upto 1 crore
between 180 &
365 days upto 5
crores
Analysis & Findings:
1 0.9
0.2
0
Reliance ICICI HDFC Tata
The volatility of all the funds are less volatile than that of the market
because the beta of all the funds is less than 1. The volatility is very
less in case of HDFC LT Advantage.
68
1 0.92 0.92
0.87
0.8 0.71
0.6
Beta
0.4
0.2
0
Reliance ICICI HDFC Tata
10 8.85
4 3.18 Alpha
2.08
2
0
Reliance ICICI HDFC Tata
-2 -1.35
69
30 27.59 28.16
24.87
25 21.83
20
Standard
15
Deviation
10
5
0
Reliance ICICI HDFC Tata
1.4
1.21
1.2 1.12
0.96
1
0.77
0.8
Sharpe Ratio
0.6
0.4
0.2
0
Reliance ICICI HDFC Tata
70
45
38.24
40
35
28.03
30 23.9
25
17.74 P/ERatio
20
15
10
5
0
Reliance ICICI HDFC Tata
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By the above pie chart, It is shown that the Fund manager of
Reliance Vision Fund is mostly dependent on the companies which
comprises of financial sectors means maximum corpus has been
invested into financial services companies. By the above graph, it is
also shown that total corpus has been divided somewhat equally
among all the sectors, there is not much fluctuation in the
investments among the sectors hence by this we can say that the
diversification of the total corpus is managed equally among all the
chosen sectors.
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2. ICICI Pru Growth-G Fund:
By the above pie chart, It is shown that the Fund manager of ICICI
Pru Growth-G Fund is mostly dependent on the energy sectors
companies means maximum corpus has been invested into energy
sectors companies. By the above graph, it is also shown that there is
a fluctuation in the investments among the sectors e.g. we can see
that about 22.97% of the corpus has been invested into energy
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sectors and only 1.46% of the corpus has been invested into
consumer Non-durables.
74
By the above pie chart, It is shown that the Fund manager of HDFC
Equity-G Fund is mostly dependent on the companies which
comprises of financial sectors means maximum corpus has been
invested into financial services companies. By the above graph, it is
also shown that total corpus has been divided somewhat equally
among all the sectors, there is not much fluctuation in the
investments among the sectors hence by this we can say that the
diversification of the total corpus is managed equally among all the
chosen sectors.
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By the above pie chart, It is shown that the Fund manager of Tata
Pure Equity-G fund is mostly dependent on the companies which
comprises of financial sectors means maximum corpus has been
invested into financial services companies. By the above graph, it is
also shown that there is a fluctuation in the investments among the
sectors e.g. we can see that about 16.93% of the corpus has been
invested into financial sectors and only 0.79% of the corpus has
been invested into consumer durables.
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Comparison of Sector Allocations among the AMCs:
77
2. ICICI Pru Discovery Fund:
78
By the above pie chart, It is shown that the Fund manager of ICICI
Pru Discovery Fund is mostly dependent on the companies which
comprises of consumer durables means maximum corpus has been
invested into consumer durables sectors companies. By the above
graph, it is also shown that total corpus has been divided somewhat
equally among all the sectors, there is not much fluctuation in the
investments among the sectors hence by this we can say that the
diversification of the total corpus is managed equally among all the
chosen sectors.
79
By the above pie chart, It is shown that the Fund manager of HDFC
LT Advantage fund is mostly dependent on the companies which
comprises of Basic/Engineering sectors means maximum corpus has
been invested into Basic/Engineering companies. By the above
graph, it is also shown that there is a fluctuation in the investments
among the sectors e.g. we can see that about 19.22% of the corpus
has been invested into Basic/Engineering sectors and only 1.99% of
the corpus has been invested into Textiles sectors.
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4. Tata Contra-G Fund:
By the above pie chart, It is shown that the Fund manager of Tata
contra-G fund is mostly dependent on the companies which
comprises of services sectors means maximum corpus has been
invested into services companies. By the above graph, it is also
shown that there is a fluctuation in the investments among the
sectors e.g. we can see that about 21.93% of the corpus has been
invested into services sectors and only 0.83% of the corpus has
been invested into Consumer Durables sectors.
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Recommendations and Suggestions:
All the persons who have cleared the AMFI exam should be
empanelled with Reliance Mutual Fund so as to be largest distributor
base.
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Bibliography
Search Engines
a) Google
b) Yahoo
Websites
a) www.valueresearchonline.com
b) www.business-standard.com
c) www.reliancemutual.com
d) www.amfi.com
e) www.hdfcbank.com
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