SUMMER TRAINING PROJECT REPORT ON “Study of customer satisfaction towards Demat Account and Mutual Funds of Reliance Money” Submitted in the partial fulfillment for the requirement of MBA curriculum. Submitted to of:
Under the guidance
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ACKNOWLEDGEMENT Summer training is a bridge connecting the educational qualification and the Professional use .It is the path leading to success by shouldering responsibilities under the careful guidance of seniors and experienced personnel without fear and failure. This acknowledgement gives me an epic opportunity to tender thanks to all those people who have helped me in completion of this report. I am grateful to our Head of the department, Prof. XYZ, to give us the opportunity to make this project. I am indebted to my project guide, Ms. XYZ , The faculty of Research Methodology and XYZ (summer training coordinator) for giving me her continuous support and guidance in delivering this chore successfully. At last, I want to express my profound gratitude to all the faculty members of MBA department and the students of MBA II year, who have helped me in completing this project. I would to thank RELIANCE MONEY LIMITED for giving me an opportunity to do my internship in their esteemed organization. My special appreciation extend to Mr. XYZ(Centre Manager), Reliance Money Limited Lucknow for his constant encouragement throughout this period.
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PREFACE Mutual fund is a trust registered with Securities and Exchange Board of India (SEBI), which pools up individual/ corporate investments and invests the same on behalf of the investors / a unit holder, in equity shares, securities, Bonds, call money markets etc., and distributes the profits.In this report there is I have studied about Study of customer satisfaction towards Demat Account and Mutual Funds of Reliance Money. Mutual funds are broadly categorized as Open Ended Mutual Funds and Closed Ended Mutual Funds. Open Ended mutual funds are those funds which offer unit for sales without specifying any duration for redemption. The open ended scheme sells and repurchases the units of mutual fund on a continuous basis. These sales and repurchase takes place at a price called Net Asset Value. Equity diversified funds are those funds in which whole money is invested in equity (shares) market only. My objective is stretches towards their thoughts about these financial instruments which are provided by the Reliance Money Limited. What are their assumption about share market and mutual funds? How much investment they want to these financial instrument? How much knowledge they have about share market and mutual funds?
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TABLE OF CONTENT CERTIFICATE
I
ACKNOWLEDGEMENT
II
PREFACE
III
INTRODUCTION
1-32
TYPES OF MUTUAL FUND
1-6
MUTUAL FUND FEES AND EXPENSES
7-8
MUTUAL FUND INDUSTRY IN INDIA RELIANCE MUTUAL FUNDS
COMPANY PROFILE
9-28 29-32
33-76
COMPANY HISTORY
33-39
CHAIRMAN PROFILE
40-42
RELIANCE MONEY
43-47
PARTNERS OF COMPANY
48
COMPETITORS OF COMPANY
49-58
PRODUCTS OF RELIANCE MONEY
59-66
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BENEFITS
67-78
EXECUTIVE SUMMARY
79-80
RESEARCH METHODOLOGY
81-106
DEFINITION OF “RESEARCH PROBLEM”
81
SAMPLING METHODOLOGY
82
COLLECTION OF DATA
83
MARKET ANALYSIS
84-85
TABULATION AND ANALYSIS OF DATA
86-98
SWOT ANALYSIS
99
FINDINGS
100
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SUGGESTION
101-102
CONCLUSION
103
LIMITATION
104
APPENDICES
105
QUESTIONNAIRE
106-109
BIBLIOGRAPHY
110-111
INTRODUCTION A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. On March 31,2009, the value of all mutual funds totals Rs. 493,000 crores in India.
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TYPES OF MUTUAL FUNDS : A. Schemes according to Maturity Period:
A mutual fund scheme can be classified into open-ended scheme or closeended scheme depending on its maturity period.
1) Open-ended Fund
An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.
2) Close-ended Fund
A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-
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ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. B. Fund according to Investment Objective:
A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: ď ś Growth / Equity Oriented Scheme
The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
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Income / Debt Oriented Scheme
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. Money Market or Liquid Fund
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These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. ď ś Gilt Fund
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. ď ś Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.
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There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.
TYPES OF MUTUAL FUNDS Figure 1 MUTUAL FUNDS
4 EQUITY SECTOR SPECIFIC BALANCED GROWTH SCHEMES OPEN-ENDED SCHEMES INTERVAL SCHEMES DIVERSIFIED SCHEMES
BY STRUCTURE INDEX SCHEMES TAX SAVINGS BY INVESTMENT MONEY MARKET OTHERS INCOME SCHEMES SCHEMES CLOSED ENDED OBJECTIVE SCHEMES
Mutual fund fees and expenses A front-end load or sales charge is a commission paid to a broker by a mutual fund when shares are purchased, taken as a percentage of funds invested. The value of the investment is reduced by the amount of the load. Some funds have a deferred sales charge or back-end load. In this type of fund an investor pays no sales charge when purchasing shares, but will pay a commission out of the proceeds when shares are redeemed depending on how long they are held. Another derivative structure is a level-load fund, in which no sales charge is paid when buying the fund, but a back-end load may be charged if the shares purchased are sold within a year. Load funds are sold through financial intermediaries such as brokers, financial planners, and other types of registered representatives who charge a commission for their services. Shares of front-end load funds are frequently eligible for breakpoints (i.e., a reduction in the commission paid) based on a number of variables. These include other accounts in the same fund family held by the investor or various family members, or committing to buy more of the fund within a set period of time in return for a lower commission "today".
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No-load funds include both index funds and actively managed funds. The largest mutual fund families selling no-load index funds are Vanguard and Fidelity, though there are a number of smaller mutual fund families with no-load funds as well. Expense ratios in some no-load index funds are less than 0.2% per year versus the typical actively managed fund's expense ratio of about 1.5% per year. Load funds usually have even higher expense ratios when the load is considered. The expense ratio is the anticipated annual cost to the investor of holding shares of the fund. For example, on a $100,000 investment, an expense ratio of 0.2% means $200 of annual expense, while a 1.5% expense ratio would result in $1,500 of annual expense. These expenses are before any sales commissions paid to purchase the mutual fund. Many fee-only financial advisors strongly suggest no-load funds such as index funds. If the advisor is not of the fee-only type but is instead compensated by commissions, the advisor may have a conflict of interest in selling high-commission load funds.
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Mutual Fund Industry In India
The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund
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family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be made familiar with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.
First Phase - 1964-87 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 administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in
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place of RBI. 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. Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canra bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management. 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 fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, 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 comprehensive and revised Mutual Fund Regulations in 1996. The
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industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. 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 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under
the
purview
of
the
Mutual
Fund
Regulations.
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. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the 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.
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LEGAL FRAMEWORK OF MUTUAL FUNDS AMFI has defined following rules and regulations for Mutual Funds and Asset Management Companies. 1.0 INTEGRITY 1.1 Members and their key personnel, in the conduct of their business shall observe high standards of integrity and fairness in all dealings with investors, issuers, market intermediaries, other members and regulatory and other government authorities. 1.2 Mutual Fund Schemes shall be organized, operated, managed and their portfolios of securities selected, in the interest of all classes of unit holders and not in the interest of _ sponsors _ directors of Members _ members of Board of Trustees or directors of the Trustee company _ brokers and other market intermediaries _ associates of the Members _ a special class selected from out of unit holders 2.0 DUE DILIGENCE 2.1 Members in the conduct of their Asset Management business shall at all times _ render high standards of service. _ exercise due diligence. _ exercise independent professional judgment.
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3.0 DISCLOSURES 3.1 Members shall ensure timely dissemination to all unit holders of adequate, accurate, and explicit information presented in a simple language about the investment objectives, investment policies, financial position and general affairs of the scheme. 3.2 Members shall disclose to unit holders investment pattern, portfolio details, ratios of expenses to net assets and total income and portfolio turnover wherever applicable in respect of schemes on annual basis. 3.3 Members shall in respect of transactions of purchase and sale of securities entered into with any of their associates or any significant unit holder. _ submit to the Board of Trustees details of such transactions, justifying its fairness to the scheme. _ disclose to the unit holders details of the transaction in brief through annual and half yearly reports. 3.4 All transactions of purchase and sale of securities by key personnel who are directly involved in investment operations shall be disclosed to the compliance officer of the member at least on half yearly basis and subsequently reported to the Board of Trustees if found having conflict of interest with the transactions of the fund. 4.0 PROFESSIONAL SELLING PRACTICES 4.1 Members shall not use any unethical means to sell, market or induce any investor to buy their products and schemes
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4.2 Members shall not make any exaggerated statement regarding performance of any product or scheme. 4.3 Members shall endeavor to ensure that at all times _ investors are provided with true and adequate information without any misleading or exaggerated claims to investors about their capability to render certain services or their achievements in regard to services rendered to other clients, _ investors are made aware of attendant risks in members’ schemes before any investment decision is made by the investors, _ copies of prospectus, memoranda and related literature is made available to investors on request, _ adequate steps are taken for fair allotment of mutual fund units and refund of application moneys without delay and within the prescribed time limits and, _ complaints from investors are fairly and expeditiously dealt with. 4.4 Members in all their communications to investors and selling agents shall _ not present a mutual fund scheme as if it were a new share issue _ not create unrealistic expectations _ not guarantee returns except as stated in the Offer Document of the scheme approved by SEBI, and in such case, the Members shall ensure that adequate resources will be made available and maintained to meet the guaranteed returns. _ convey in clear terms the market risk and the investment risks of any scheme being offered by the Members 4
5.0 INVESTMENT PRACTICES 5.1 Members shall manage all the schemes in accordance with the fundamental investment objectives and investment policies stated in the offer documents and take investment decisions solely in the interest of the unit holders. 5.2 Members shall not knowingly buy or sell securities for any of their schemes from or to any director, officer, or employee of the member _ any trustee or any director, officer, or employee of the Trustee Company
6.0 OPERATIONS 6.1 Members shall avoid conflicts of interest in managing the affairs of the schemes and shall keep the interest of all unit holders paramount in all matters relating to the scheme. 6.2 Members or any of their directors, officers or employees shall not indulge in front running (buying or selling of any securities ahead of transaction of the fund, with access to information regarding the transaction which is not public and which is material to making an investment decision, so as to derive unfair advantage). 6.3 Members or any of their directors, officers or employees shall not indulge in self dealing (using their position to engage in transactions with the fund by which they benefit unfairly at the expense of the fund and the unit holders).
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6.4 Members shall not engage in any act, practice or course of business in connection with the purchase or sale, directly or indirectly, of any security held or to be acquired by any scheme managed by the Members, and in purchase, sale and redemption of units of schemes managed by the Members, which is fraudulent, deceptive or manipulative. 6.5 Members shall not, in respect of any securities, be party to_ creating a false market, _ price rigging or manipulation _ passing of price sensitive information to brokers, Members of stock exchanges and other players in the capital markets or take action which is unethical or unfair to investors. 6.6 Employees, officers and directors of the Members shall not work as agents/ brokers for selling of the schemes of the Members, except in their capacity as employees of the Member or the Trustee Company. 6.7 Members shall not make any change in the fundamental attributes of a scheme, without the prior approval of unit holders except when such change is consequent on changes in the regulations. 6.8 Members shall avoid excessive concentration of business with any broking firm, and excessive holding of units in a scheme by few persons or entities. 7.0 REPORTING PRACTICES 7.1 Members shall follow comparable and standardized valuation policies in accordance with the SEBI Mutual Fund Regulations. 7.2 Members shall follow uniform performance reporting on the basis of total return. 4
7.3 Members shall ensure scheme wise segregation of cash and securities accounts.
8.0 UNFAIR COMPETITION Members shall not make any statement or become privy to any act, practice or competition, which is likely to be harmful to the interests of other Members or is likely to place other Members in a disadvantageous position in relation to a market player or investors, while competing for investible funds. 9.0 OBSERVANCE OF STATUTES, RULES AND REGULATIONS Members shall abide by the letter and spirit of the provisions of the Statutes, Rules and Regulations which may be applicable and relevant to the activities carried on by the Members.
10.0 ENFORCEMENT Members shall: _ widely disseminate the AMFI Code to all persons and entities covered by it _ make observance of the Code a condition of employment _ make violation of the provisions of the code, a ground for revocation of contractual arrangement without redress and a cause for disciplinary action _ require that each officer and employee of the Member sign a statement that he/she has received and read a copy of the Code
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_ establish internal controls and compliance mechanisms, including assigning supervisory responsibility _ designate one person with primary responsibility for excercising compliance with power to fully investigate all possible violations and report to competent authority _ file regular reports to the Trustees on a half yearly and annual basis regarding observance of the Code and special reports as circumstances require _ maintain records of all activities and transactions for at least three years, which records shall be subject to review by the Trustees _ dedicate adequate resources to carrying out the provisions of the Code
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11.0 DEFINITIONS When used in this code, unless the context otherwise requires (a) AMFI “AMFI” means the Association of Mutual Funds in India (b) Associate “Associate” means and includes an ‘associate’ as defined in regulation 2(c) of SEBI (Mutual Fund) Regulations 1996. (c) Fundamental investment policies The “fundamental investment policies” of a scheme managed by a member means the investment objectives, policies, and terms of the scheme, that are considered fundamental attributes of the scheme and on the basis of which unit holders have invested in the scheme. (d) Member A “member” means the member of the Association of Mutual Funds in India. (e) SEBI “SEBI” means Securities and Exchange Board of India. (f) Significant Unitholder A “Significant Unitholder” means any entity holding 5% or more of the total corpus of any scheme managed by the member and includes all entities directly or indirectly controlled by such a unitholder.
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(g) Trustee A “trustee� means a member of the Board of Trustees or a director of the Trustee Company.
CURRENT SCENARIO OF MUTUAL FUNDS INDUSTRY Data released by the Association of Mutual Funds in India (AMFI) demonstrate the country's mutual fund industry is not immune to the global downturn. Mutual fund assets fell by 7 per cent by the end of 2008-09 over the previous year. The slump is severe compared to the tremendous growth of around 46 per cent on an average achieved for the past 5 years. Average assets under management (AUM) grew over six times from Rs.79,000 crore in March 2003 to a whopping Rs.530,000 crore plus by the end of March 2008. However, the assets shrunk by Rs.37,000 crore to Rs.493,000 by March 2009, reflecting the fall in investor confidence. During the period the BSE Sensex plummeted 38 per cent from 15,644 points to 9708 indicating substantial erosion of the net asset values (NAV) of the mutual funds, which not only reined the growth in assets but also resulted in the 7 per cent drop. Of the 35 fund houses, 28 registered losses and the other 7 recorded gains in their AUM.
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In percentage terms, Franklin Telmpleton Mutual Fund had a large loss of 28 per cent in AUM from Rs.26,822 crore to Rs.19,203 crore. Tata Mutual Fund dropped 13 per cent from Rs.19,679 crore to Rs.17,030 crore. The largest fund, Reliance Mutual Fund fell by about 11 per cent from Rs.90,938 crore to Rs.80,963 crore. SBI Mutual Fund too dropped close to 10 per cent from Ts.29,179 crore to Rs.26,383 crore and ICICI Prudential Mutual Fund, the third largest fund declined over 5 per cent from Rs.54,322 crore to Rs.51,432 crore. Leading funds which bucked the trend by recording an increase in the AUM included LIC Mutual Fund which gained a whopping 64 per cent from Rs.14,056 crore to Rs.23,092 crore, Birla Sunlife 31 per cent from Rs.35,906 crore to Rs.47,096 crore and HDFC Mutual fund, the second largest fund rose 29 per cent from Rs.44,773 crore to Rs.57,956 crore. Two funds which were relatively stable were UTI Mutual Fund which had a marginal drop of 0.4 per cent from Rs.48,952 crore to Rs.48,754 crore and Kotak Mutual Fund which increased 0.7 per cent from Rs.18,071 crore to Rs.18,204 crore. Assests drop by 1.5 per cent in March
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The monthly data indicate a marginal 1.5 per cent or Rs.7,686 crore drop in AUM after a 10 per cent increase in January and 9 per cent in February. The BSE Sensex climbed 11 per cent during the month.
Industry experts say that the drop in assets at the end of the fiscal year is a usual phenomenon. This is mainly due to redemption by banks and corporate houses for advance tax payments. It is believed that around Rs.50,000 crore redemption took place to meet the year end requirements. Bucking the general trend, of the top five fund houses, HDFC Mutual Fund, posted an increase in its asset base by 1.9 per cent or Rs.1092 crore. Reliance Mutual fund recorded a marginal drop of 0.81 per cent (Rs.664 crore). ICICI Prudential declined 3.8 per cent (Rs.2082 crore), UTI Mutual Fund 0.96 per cent (Rs.471 crore) and Birla Sunlife Mutual Fund 3 per cent (Rs.1460 crore) during the month. Other leading fund houses which posted an increase in March are Kotak Mahindra Mutual Fund 5.5 per cent (RS.941 crore), IDFC Mutual Fund 5.6 per cent (Rs.763 crore) and Religare Mutual Fund 11.3 per cent (Rs.600 crore) and Fortis 5.5 per cent (Rs.321 crore). Major losers include Tata Mutual Fund 11.8 per cent (RS.2,270 crore), SBI Mutual Fund 4.5 per cent (Rs.1,244 crore) and LIC Mutual Fund 4.8 per cent (Rs.1,176 crore).
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Fund houses which were able to withstand the redemption pressure attribute the reason to better client penetration, their systematic investment plans (SIP) and new fund offers.
Nevertheless, industry is optimistic that April will see a reversal of the general trend.
Table 1
Years Apr-07 Rs (in crores) 357691
Jul-07
Oct-07
Jan-08
Mar-08
Apr08
464755
531639
570876
538508
573411
Figure 2
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Jul-08
Oct-08
Jan-09
Mar09
529631
431902
460949
493285
AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS INDUSTRY DURING LAST TWO YEARS
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TOOLS FOR PERFORMANCE EVALUATION OF MUTUAL FUNDS
NET ASSET VALUE : Mutual funds are portfolio of several securities. For valuation of these securities we calculate NAV (Net Asset Value) of Mutual funds. NAV is calculated on daily basis. The formula for calculating NAV is given as follows: NAV = (Value of Assets – Liabilities) / No. of units of Mutual funds Here, Value of Assets = The sum of market Values of all the Assets Liabilities = All the expenses made in trading of these assets Open ended are Mutual funds traded at NAV and they are listed at Stock Exchanges for their trading. RISK AND RETURN OF MUTUAL FUNDS: The mutual funds are subjected to market risk and return. The risk can be of two types: • Systematic risk
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• Unsystematic risk The measure of Systematic risk is Beta and the measure of unsystematic risk is Standard deviation. STANDARD DEVIATION = √∑(X – MEAN (X))² / N BETA = COVARIANCE(Ri,Rm) / ∂m
Return of a portfolio can be calculated by following method: Return = (P1- P0) / P0 Where, P1 = LATEST VALUE OF SECURITY OR PORTFOLIO P0 = VALUE OF SECURITY FROM WHERE THE RETURN HAS TO BE CALCULATED PERFORMANCE INDECIES OF MUTUAL FUNDS
1. SHARPE’S PERFORMANCE INDEX: Sharpe’s performance index gives a single value to be used for the performance rankings to the various funds or portfolios. Sharpe index measures the risk premium of the portfolio relative to the total amount of risk in the portfolio. This risk premium is the difference between the portfolio’s average rate of return. The 4
standard deviation of the portfolio indicates the risk. The index assigns the highest values to the assets that have best risk adjusted average rate of return. Sharpe Index = (Portfolio average return – Risk free rate of interest) / Standard deviation of the portfolio return SHARPE’S INDEX = (Rp – Rf) / ∂p Where, Rp = Return of portfolio Rf= Risk Free rate of return ∂p= Standard deviation of portfolio/ Mutual fund
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2. TREYNOR’S PERFORMANCE INDEX: Treynor’s risk premium of the portfolio is the difference between the average return and riskless rate of return. The risk premium depends on the systematic risk assumed in a portfolio. Tn = (Portfolio average return – Riskless rate of interest) / Beta co-efficient of portfolio TREYNER’S INDEX = (Rp - Rf) / β Where, Rp = Return of portfolio Rf= Risk Free rate of return β = Measure of systematic risk of portfolio /security 3. JENSEN’S PERFORMANCE INDEX: The absolute risk adjusted return measure was developed by Micheal Jensen and commonly known as Jensen’s measure. It is mentioned as a measure of absolute performance because a definite standard is set and against that the performance is measured. The standard is based on manager’s predictive ability. Successful prediction of security price would enable the manager to earn
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higher returns than the ordinary investor expects to earn in a given level of risk. The basic model of Jensen is given NEXT PAGE:-
JENSEN MODEL = Rp = α + β*(Rm - Rf) Where, Rp = Return of portfolio Rf= Risk Free rate of return ∂p= Standard deviation of portfolio/ Mutual fund β = Measure of systematic risk of portfolio /security α = The intercept = Mean (Ri) - β*Mean (Rm) After calculating Risk and returns of every mutual fund, these are compared with market risk and returns.
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RELIANCE MUTUAL FUND (RMF) Reliance Mutual Fund, a part of the reliance – Anil Dhirudhai Ambani Group (R-ADAG) is one of the fastest growing mutual funds in the country. Reliance Mutual Fund offers investor a well rounded portfolio of products to met varying investor requirements. Reliance Mutual Fund has a presence in over 115 cities across the country, an investor base of over 3.1 Million and manages assets over Rs. 39019 crore as on 31st Jan 2007. Reliance Mutual Fund constantly Endeavor’s to launch innovative products and customer service initiatives to increase value to investors.
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Reliance Mutual Fund schemes are managed by Reliance CapitalAsset Management Ltd., a wholly owned subsidiary of Reliance Capital Ltd. Reliance Capital is one of India leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, life insurance and general insurance, private equity and proprietary investments, stock broking and other financial services.
GROWTH OF RELIANCE MUTUAL FUNDS
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ORGANIZATION OF A MUTUAL FUND
The are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:
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COMPANY PROFILE
Reliance Industries Limited (RIL) is India’s largest private sector company on all major financial parameters. It has emerged as the only Indian company in the list of global companies that create most value for their shareholders, published by Financial Times based on a global survey and research conducted by PricewaterhouseCoopers in 2004. RIL features in the Forbes Global list of world’s 400 best big companies and in FT Global 500 list of world’s largest companies. Reliance Infocomm is the outcome of late Dhirubhai Ambani’s dream of bringing about a digital revolution in India that will bring to every Indian’s doorstep an affordable means of information and communication. "Make the tools of infocomm available to people at an affordable cost. They will overcome the handicaps of illiteracy and lack of mobility", was how Dhirubhai, as he was fondly called, spelt out Reliance Infocomm’s mission in late 1999. He firmly believed the country could use information and communication technology to overcome its backwardness and underdevelopment.
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It was with this belief that Reliance Infocomm began laying its 60,000 route kilometres of pan-India fibre optic backbone in 1999. The backbone was commissioned on December 28, 2002, Dhirubhai’s 70th birth anniversary, first since his sad demise on July 6, 2002.
COMPANY HISTORY1986- The Company was incorporated on 5th March, and obtained the Certificate for Commencement of Business on 27th March. It promoted by Reliance Industries Ltd.
1990- The Company obtained permission from SEBI to take up merchant banking activities. The Company undertook portfolio management services for reputed corporate clients. -7,000 No. of equity shares subscribed for by signatories to the Memorandum of Association.
1991- 199,93,000 No. of equity shares of Rs 10 each then issued at a par of which 9,93,000 shares were allotted to Indian Resident Directors, their friends, etc. 18,00,000 shares were allotted to Reliance Industries Ltd. 18,00,000 shares were allotted to investment companies in RIL Group. The remaining 154, 00,000 shares were offered for public subscription during April 1990, of which 10, 00,000 shares were allotted on preferential basis to
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employees (including Indian working directors)/workers of the Company. 77, 00,000 shares were allotted on preferential basis to shareholders of Reliance Industries, Ltd. The balance 67, 00,000 shares were allotted to public. 1992- 18, 70,000 No. of equity shares allotted to Arsine hotels on its amalgamation in January. 218, 70,000 Rights equity shares (Prop. 1:1, Prem. Rs 30 per share) issued. Another 9600 shares issued to employees (only 7500 shares taken up).
1993- The Company issued 125, 00,000-12% non-convertible unsecured redeemable debentures of Rs 100 each with one non-detachable warrant entitling the holder to apply for 2 equity shares of Rs 10 each at a premium Rs 40 per shares. Accordingly 250, 00,000 shares were allotted on conversion of warrants.
1994- Pursuant to a resolution at the Extra Ordinary General Meeting held at 12th February, the Company issued 137, 00,000-12% non-convertible redeemable debentures of Rs 100 each to promoters having one warrant entitling the holder to receive 2 equity shares to Rs 10 each at a premium of Rs 40 per share within 12 months from the date of allotment. Accordingly 274, 00,000 No. of equity shares were allotted.
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1995- The Company issued 142, 29,500 Rights equity shares of Rs 10 each at a premium of Rs 40 per share in proportion 1:5. Another 429, 57,200 shares at a premium of Rs 130 per share were issued through a Prospectus as follows: On firm allotment basis: (1) 107, 14,300 shares to promoters, directors, etc. (ii) 52, 26,342 shares to Ind. Fin. Association (iii) 17, 70,000 shares to Indian Mutual Funds. (iv)
78,600 shares to NRIs - Of the
remaining, following were reserved for allotment on a preferential basis: (i) 12, 02,158 shares to Ind. Fin. Institutes (ii) 46, 58,500 shares to Mutual Funds (iii) 76, 35,600 shares to NRIs on non-repatriation basis (iv) 15,000 shares to employees. The Company plans to diversify its activities into money market operations, project finance advisory services, foreign exchange and every sphere of financial services. - 65,690 shares allotted.
1996- The company had been allotted a plot by the Mumbai Metropolitan Region Development Authority (BMRDA) in the Bandra Kurla Complex, Mumbai. During the year under review, the company sponsored the launch of the two maiden schemes of the Reliance Capital Mutual Fund. Reliance Share & Stock Brokers Ltd. (RSSB), the company’s 100% subsidiary engaged in the broking business, also made satisfactory progress during the year under review.
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The Company’s Fixed Deposit programmed was accorded CARE “AAA” by Credit Analysis and Research Limited during the year.
1997- Reliance Capital (RCL) has shelved its plans to enter into auto finance business because of a sluggish trend in the auto finance segment. The Company has received an AAA rating from Credit Analysis and Research Ltd., for the proposed non-convertible debenture issue incidentally, its fixed deposit programmed was also rated AAA. The company sought a fresh rating raising the amount of the proposed issuer to Rs. 300 crores. The Company has also become the first non-banking financial company to receive approval to act as a depository participant. The company has been granted approval by the Securities and Exchange Board of India (SEBI) to act as an ‘Approved Intermediary’ under the provisions of
SEBI’s Securities Lending Scheme, 1997.
The company has appointed Spectrum Corporate Services Limited, as its share transfer Agents with effect from March 5, 1997.
1998- The Company’s bond/debenture programmed is rated by Credit Analysis & Research Limited as CARE “AA +“, indicating that the instruments carrying this rating are judged to be of high quality by all standards and as high investment grade.
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During the year, the Company suspended acceptance/renewal of fixed deposit. At the end of the financial year, there were 705 deposits aggregating Rs. 0.84 crores due for repayment but which remained unclaimed on the due dates.
1999- Reliance Capital Limited (RCL) has decided to move away from the traditional non-banking finance company (NBFC) mould and convert itself into a special purpose vehicle-cum-venture capital outfit, which will develop infrastructure projects and invest in InfoTech, the Internet, media and bio-tech start-ups. 2002- Reliance Capital Ltd has annulled the forfeiture of 2200 equity shares which were earlier forfeited by the Company due to non-payment of monies. Hence members should note that the above mentioned annulled shares will be good delivery in the market. 2003- Reliance Capital has forfeited 12,614 Equity shares due to nonpayment of allotment or call money. Reliance capital, a NBFC of Reliance group is financing Reliance India mobile connections. Securities and Exchange Board of India has exempted Reliance Capital Ltd from making an open offer to the shareholders of BSES following its proposed acquisition of stake in the power generation company.
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Shifted the Company’s registered office from Avdesh House, 2 nd Floor, Pritam nagar 1st Slope, Ellis Bridge, and Ahmedabad 380006 in the State of Gujarat to Village Meghpar/Padana, Taluka Lalpur, and Dist. Jamnagar 361280, in the State of Gujarat. 2004- Reliance Capital Limited acquires 11, 24,209 shares representing 5.23% of the total shareholding/voting rights of Ad labs Films Limited The Acquirer is making an Open Offer to the public shareholders of Reliance Capital Ltd (“Target Company”) to acquire up to 5,14,6 1,249 fully paid up equity shares, representing 20% of the fully expanded voting equity capital of the Target Company (including the entire share allotment as well as warrants) at a price of Rs 231 (Rupees Two (“Offer price”) to be paid in cash in accordance with the Regulations.
2005 - Reliance Capital Forays into Life Insurance.
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Chairman's Profile Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D Ambani, 50, is the chairman of all listed companies of the Reliance ADA Group, namely, Reliance Communications, Reliance Capital, Reliance Energy, Reliance Natural Resources and Reliance Power. He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology, Gandhi Nagar, Gujarat. Till recently, he also held the post of Vice Chairman and Managing Director in Reliance Industries Limited (RIL), India's largest private sector enterprise. Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was centrally involved in every aspect of the company's management over the next 22 years.
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He is credited with having pioneered a number of path-breaking financial innovations in the Indian capital markets. He spearheaded the country's first forays into the overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. Starting in 1991, he directed Reliance Industries in its efforts to raise over US$ 2 billion. He also steered the 100-year Yankee bond issue for the company in January 1997. He is a member of: •
Wharton Board of Overseers, The Wharton School, USA
•
Central
Advisory
Committee,
Central
Electricity
Regulatory
Commission •
Board of Governors, Indian Institute of Management, Ahmedabad
•
Board of Governors Indian Institute of Technology, Kanpur
In June 2004, he was elected for a six-year term as an independent member of the Rajya Sabha, Upper House of India’s Parliament a position he chose to resign voluntarily on March 25, 2006. Awards and Achievements •
Conferred the ‘CEO of the Year 2004’ in the Platts Global Energy Awards
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•
Rated as one of ‘India’s Most Admired CEOs’ for the sixth consecutive year in the Business Barons – TNS Mode opinion poll, 2004
•
Conferred ‘The Entrepreneur of the Decade Award’ by the Bombay Management Association, October 2002
•
Awarded the First Wharton Indian Alumni Award by the Wharton India Economic Forum (WIEF) in recognition of his contribution to the establishment of Reliance as a global leader in many of its business areas, December 2001
•
Selected by Asiaweek magazine for its list of ‘Leaders of the Millennium in Business and Finance’ and was introduced as the only ‘new hero’ in Business and Finance from India, June 1999
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RELIANCE MONEY Reliance Capital Asset Management Ltd. A Reliance Capital Limited Company, is the financial services division of Reliance Anil Dhirubhai Ambani (ADA) Group. Reliance ADA group is among top 3 business houses in India with wide range of presence across various sectors. Group’s major interests ranges from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment. Reliance Money has over 22 lakhs customers and more then 10'000 branches in around 5000 cities in India. Company is among the largest broking and distribution house of financial products and having share of more then 3% of total stock market volume at BSE & NSE.
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RelianceMoney.com is the web based investment portal (with Online Stock Trading) from Reliance Money. This website enables its customer to invest & manage most of the services provided by Reliance Money including Equity (Stock) Trading, Commodity Trading, Derivatives, Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money Transfer, Forex exchange, Gold Coins and Credit Cards Services. Company recently entered in to Wealth Management with tools like investment in equity-linked portfolio management services, structured products, insurance and mutual funds. The Reliance Money stock trading websites uses special security features 'Security Token', which makes your online trading experience more secure without complexity. Stock Trading through RelianceMoney.com is available for BSE and NSE stock exchanges. Offline trading is also available through Reliance Money partners in more then 5000 city across India and through phone by dialing 022-39886000.
Investment Options The investment options available with Reliance Money online portal are as below: 1. Equity (Stock) Trading at BSE, NSE and NSE F&O 2. IPO Investment
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3. Derivatives Trading 4. Forex Trading 5.
Commodity Trading(Gold, Silver, Crude etc....) at MCX, NCDEX and NMCE (FAQ's)
6. Mutual Fund Investment 7. Life & General Insurance 8. 'Pure Swiss' Gold Coins (99.99% pure, 24 carat) 9. Fixed deposit(new) Trading PlatformsReliance Money provides 4 different trading platforms for equity trading: Reliance Money Technical Analysis (A paid service) Relance Money offers a simplified, automated, sophisticated technical analysis to Indian retail broking consumers with the help of Recognia's Technical Analysis tools. Recognia, a Canada based company, has proprietary pattern recognition technology capable of recognizing patterns in the price charts of any publicly traded financial instrument including stocks, bonds, funds, commodities, currencies and indexes. The technical services are available for introductory free 7-day trail period to Reliance Money users. Post the trail period, this service is available to
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users at a nominal subscription of Rs. 99 for 3 months/ Rs. 179 for 6 months/ Rs. 299 for a year, i.e., less than Re 1 a day.
Reliance Money Brokerage and fees: Reliance Money offers lowest brokerage rates in today's online stock trading industry in India. The brokerages are as low as 0.075% for delivery based trading and 0.02 for now delivery. For more detail about Reliance Money’s brokerage and fees visit the below section of this webpage. Reliance Money Demat Account Charges: DP
Fee Head
Charges
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Annual Services Charges - For Individuals / HUFs / Trust Annual Services Charges - For NRIs / Foreign Nationals, Corporates / Others Transaction
Charges
-
SELL
(Market
&
Off
Market)
&
Off
Market)
For instructions given in physical form. Transaction
Charges
-
SELL
(Market
Rs. 50/Rs. 1000/Rs. 25/-
For instructions received through Internet/ online trading Rs. 12/through Reliance Securities Ltd. Note: The brokerage & fees on this webpage may not accurate, please contact your nearest Reliance Money broker for latest available information. Also check rates of Securities Transaction Tax
Advantages of Reliance Money 1.
Extra security features with 'Security Token'', which is the most secure and tested technology in computer world.
2. Simple, easy and fast online stock trading. 3. Almost all investment options are available under one account including Equity Trading, Derivatives, Forex, Commodity, IPO, Mutual Funds and Insurance. 4. Branches are available in all major cities and the number is growing.
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4
CMPETITORS OF COMPANY-
4
Company Athena Financial Services Ltd.
Sales Current (Rs.Cr.) Price 11.37 4.72
Change P/E Ratio Market 52-Week (%) Cap.(Rs.Cr.) High/Low 19.79 0.00 5.95 -/-
Kojam Fininvest Ltd.
0.09
291.15
9.16
0.00
0.00
-/-
Joindre Capital Services Ltd.
12.47
22.55
7.38
15.41
31.20
33/9
3.68
29.00
5.65
8.75
17.98
42/12
223.41
12.45
5.06
0.00
65.82
20/7
-1.75
10.71
5.00
8.79
3.28
21/7
Warner Multimedia Ltd.
0.01
1.68
5.00
0.00
3.12
2/1
Industrial & Prudential Investment Company Ltd.
3.55
757.00
4.99
15.00
44.04
833/360
Marg Projects and Infrastructure Ltd.
0.22
28.45
4.98
8.98
15.49
28/18
Dhanalaxmi Cotex Ltd.
1.61
49.45
4.98
0.00
24.09
-/-
Ajcon Global Services Ltd.
3.34
13.11
4.96
27.95
8.02
17/5
DJS Stock & Shares Ltd.
2.82
37.05
4.96
201.36
18.64
41/15
Matra Realty Ltd.
1.12
7.86
4.94
13.63
9.65
13/2
BNK Capital Markets Ltd. BLB Ltd. KJMC Global Market (India) Ltd.
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P RODUCTS O FFERINGS AT R ELIANCE M ONEY Reliance Money provides a comprehensive platform, offering an investment avenue for a wide range of asset classes. Its Endeavour is to change the way India transacts in financial markets
and
avails
4
financial
services.
Reliance Money offers a single window facility, enabling you to access, amongst others.
•
Equity
•
Commodity
•
Derivatives
•
Offshore Investments
•
IPOs
•
Mutual Funds
•
Life
Insurance
&General
Insurance
Products.
Reliance Money is the most cost-effective, convenient and secure way to transact in a wide range of financial products and services.
The brand ‘Reliance Money’ lends its sheen to 3 companies, which are the legal entities through which Reliance – ADA Group will revolutionize the way financial transactions are currently carried out in the India financial markets.
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• Reliance Money Ltd: Will spearhead Reliance–ADA Group’s foray into the Indian and global capital markets, providing investors the facility of anytime-anywhere online trading in all major asset classes. • Reliance Commodities Ltd: This is the company through which all commodity related – trading, distribution, warehouse receipt financing – will be provided to not only the sophisticated, metro investor but also to the Indian farmer who needs these commodity services for his daily living . • Reliance Financial Service Ltd: The registered NBFC under Reliance Money which will be in the distribution and funding business.
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PRODUCTS OFFERINGS AT RELIANCE MONEY:
• Online Offerings of Reliance Money
Equity Broking Commodity Broking FX Broking Other Financial Products
• IPO Funding and subscription • Margin Funding
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Why Reliance Money?
• It’s Cost-effective
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You pay comparatively lower transaction fees. As an introductory offer, Reliance Money invite you pay a flat fee of just Rs. 500/- and transact through reliance Money. This fee is valid for two moths or a specified transaction value.
Unutilized Delivery limit may be added to Non-Delivery limit. • It offers Single – Window access Through Reliance Money’s affiliates, you can transact in Equity, Equity & Commodity Derivatives, Offshore investments, Mutual Funds, IPO’s, Life Insurance, General Insurance Money Transfer, Money Charging and Credit Cards.
• It’s Convenient
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Reliance money’s service can be accessed through the Internet, at Transaction Kiosks, over the phone (call & transact) or seek personal assistance through the reliance Mobile Network all over India.
• It’s Safe Your account is safeguard with a unique security number that changes every 32 seconds. This number works as a dynamic password to keep the account extra safe.
• It allows 3-in-1 Access An account holder can access Banking, Trading and Demat Account through the single window of Reliance Money and transfer the funds across the accounts seamlessly.
• It provides you a Demat Account
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You can get your own demat Account with Reliance Capital at an annual fee of just Rs. 50/-
• It provides you value –added services At www.reliancemoney.com, you get • Reliable research, including views of external experts with an enviable track record • Live news updates from Reuters and Dow Jones • CEO’s / expert views on the economy and financial markets • Tools that help you plan your investments, tax, retirement, etc. in the personal finance section • Risk Analyser for analysis of your risk profile • Asset allocators to build an appropriate investment portfolio
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•
Innovative
use
of
technology
for
facilitating
convenient
trading/investments – kiosks (similar to ATM’s)
Reliance Money Provide the kiosks (similar to ATM’s) Facilities, to their customer through which the customers can trade on available kiosks at the particular Branch of Reliance Money. The company are going to open these kiosks in the market as the ATM’s of the Banks. Reliance Money provides 3 different trading platforms for equity trading: Intra Trade Fast Trade Easy trade
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The benefits: • A safe and convenient way to hold securities; • Immediate transfer of securities; •
No stamp duty on transfer of securities;
• Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.; •
Reduction in paperwork involved in transfer of securities;
•
Reduction in transaction cost;
•
No odd lot problem, even one share can be sold;
•
Nomination facility;
•
Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately;
•
Transmission of securities is done by DP eliminating correspondence with companies;
•
Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.
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•
Holding investments in equity and debt instruments in a single account.
Required Documents The extent of documentation required to open a demat account may vary according to your relationship with the institution. If you plan to open a demat account with a bank, a savings, current and, or other account for which the holder have been issued a check book, such holder has an edge over the non-account holder. In fact, banks usually offer additional incentives to customers who open a demat account with them. Along with the application form, your photographs (with co-applicants) and proof of identity/residence/date of birth have to be submitted. The DPs also ask for a DP-client agreement to be executed on non-judicial stamp paper. Here is a broad list: • A canceled check, preferably MICR • Proof of Identification • Proof of Address •
Proof of Pan card (mandatory)
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•
Recent photographs, one and, or more
For proof of identification and, or address self-attested facsimile copies of PAN card, Voter’s ID, Passport, Ration card, Driver’s license, Photo credit card, Employee ID card, Bank attestation, latest IT returns and, or latest Electricity/Landline phone bill are sufficient. While they only ask for photocopies of the documents, they will need the originals for verification.
How it works
Customer opens a R TRADE account i.e., Broking Account Depository Account and Linked fund transfer facility with HDFC Bank/ ICICI Bank/ UTI Bank/ IDBI Bank or RMF (Liquid Scheme)
R TRADE offers online broking facilities to the customer At his home At Reliance Infocomm Web Worlds (PCs/Kiosks) R TRADE offices (Kiosks)
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Other places like Post offices, shopping complex Partner’s premises, Kiosks, etc Call Center
IPO • On a click of button, a customer can apply IPO online • No need to fill in a complex application form and take trouble to send to the lead managers or marketing agents • On allotment the shares will be directly credited into demat account • Balance money will be credited in the bank account by R Trade – No need to wait for refund orders Security and Safety of Trade to be ensured through issuance of security tokens to the registered customers which would act as a 3rd form of identity verification (apart from Customer ID and Password) Customer pays a monthly charge for trading through R TRADE and NO BROKERAGE is paid by him separately. Research & Content Strong Research team to supply research inputs to customers on: -
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Equity, Commodities and Forex Fundamental Technical Other Services Live Market News – Dow Jones, Moneycontrol and Capital Line Volume Toppers & Circuit Breakers Personal Finance & Risk Profiling
News Customer can have online access to Reuters news They can archive the earlier news as may by relevant Customer can get Live Market Top Gainers Top Losers Circuit Breakers Volume Toppers 52 week high/low FII activity Charts & Technical Analysis Customer can get charts of their specifies shares & securities They can view charts with various indicators like moving average, median price
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Option to select exchange, chart type ( one year, 6 months etc), plot type (line, mountain) Compare chart with BSE sensex, NSE Index
Research Customer can get a detailed research reports to make informed buying decision Research reports from (sources) will be made available Customer can get a database of around 2000 companies Learn Yourself to give practical & technical details and insights into equity trading, derivatives trading, commodity trading etc.
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Personal Finance Customer can use Personal Finance Model to get tools for Retirement Planning Investment Planning Tax Planning Financial Management Investment Guide Know your Profile – customer can get his Investment profile with this module and accordingly plan his investments
BUSSINES DETAILS:RELIANCE MONEY – ACCOUNT OPENING • Equity Trading
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• Equity DP • Derivatives • Commodities (To be added in future) • Forex – Foreign Currency / Commodities / Stocks • Online Mutual Fund/IPO/Insurance
FUND TRANSFER • Any of the following Bank Account (Customer has to do fund transfer through Internet) * UTI * HDFC * IDBI
EXPOSURE:• INTRADAY - 4-5 Times of the balance in top 200 STOCKS (F&O STOCKS ONLY)
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• DELIVARY – Full Balance Required Online Trading – Brokerage Structure PREPAID BROKERAGE COUPON :• Rs.500/- : Validity 2 months, Trading Volume : Rs.1 Crore (Rs.90 Lakhs FNO & Intra day and Rs.10 Lakhs Delivery) • Rs.1350/- : Validity 6 months, Trading Volume : Rs.3 Crore (Rs.270 Lakhs FNO & Intra day and Rs.30 Lakhs Delivery) • Rs.2500/- : Validity 12 months, Trading Volume : Rs.6 Crore (Rs.540 Lakhs FNO & Intra day and Rs.60 Lakhs Delivery)
CALL CENTER CHARGES:In case customer places a trade and it gets fully or partially executed he will be charged Rs.12/- per call. All service calls are free. Customer will dial one centralized number for which he bear the local call charges. The same shall not be applicable if the Trade is done completely online and if it’s a Online account. DEMAT ACCOUNT CHARGES:Annual Maintenance fees of Rs.50 per annum will be charged to the customer on March 31st. NOTES:
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1) Card Status: Status of the card can be viewed online. 2) Expiry of card while trading:- Clients may continue trading for the day even if the card has expired, due to the trading turnover exceeding the ceiling applicable to the card. Client's ledger with Reliance Money will be debited with the appropriate renewal charges for the card at the end of the day. The card will get auto renewed as per the slab applicable to the extent of trading turnover exceeded by the client during the day. e.g. if the card of Rs.500 has been exhausted and delivery based transactions during the day is Rs.5,00,000, the card will get auto renewed by Rs.500.
3) Rollover :In case the validity of customer’s card expires and he still has delivery & non-delivery limits left he can roll over the limits. Maximum rollover limit will be; For delivery Rs.1crore For non-delivery Rs. 10 crore 4) Dormant Account:- An account will be marked as a dormant account if not renewed within six months from the date the validity period of the card ends. The validity period of Rs.500/ card ends, for instance, after 2 month of purchase of the card, even if the card has expired before
4
because the turnover limit has crossed. e.g. card is activated on 1 st January and the card limit is exhausted on 28th January, However, the card validity ends on 28th February and the account will become dormant 6 months from the end of 28 th February i.e. on 31st August if it is not renewed in the interim. Process of renewal of dormant account is as follows: (i) If the card is renewed within six months from the date of end of validity, then the client shall pay appropriate renewal charges. Card activation – 1st January’06 Card expiry – 28th February’06 Card renewal – 15th June’06 Total charges – Rs.500/1350/2500 (ii) If the card is renewed after the lapse of six months from the date of end of validity but before one year, the client shall pay a renewal fee of appropriate card slab plus Rs.150/-. Card activation – 1st January’06 Card expiry – 28th February’06 Card renewal amount –Rs.500 Card renewal – 2nd September’06 Total charges – Rs.650 (Rs.150 renewal fees + Rs.500 recharge amount) (iii) If the card is renewed after one year from the date of end of validity
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then the client shall pay appropriate card slab charges plus Rs.150/plus Rs.25/- for every month after one year. Card activation – 1st January’06 Card expiry -28th February’06 Card renewal – 1st May’07 Total
charges
–
Rs.700
(Rs.500
refill+Rs.150
renewal
fees
Rs.50(Rs.25*2months) 5) Trading though Kiosks: Charges for Broadband usage will be debited
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+
Re.0.01 trade
BROKERAGE
per
executed
Taxes & Charges (like Service Tax, Turnover As applicable Charges, Stamp Duty, Educational Cess & Statutory Cost Securities Transaction Tax) below)
(refer Table
Assisted trade through Sub-broker
Rs.12/trade
per
executed
Tele trade (dial 022-3988 6000)
Rs.12/trade
per
executed
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EXECUTIVE SUMMARY:-
RESEARCH TOPIC:The topic of my research study is “Study of customer satisfaction towards Demat Account and Mutual Funds of Reliance Money”.
RESEARCH OBJECTIVES:The main objective of my research study is to know about customer satisfaction towards Demat account and mutual funds of Reliance Money. My objective is stretches towards their thoughts about these financial instruments which are provided by the Reliance Money Limited.
What are their assumption about share market and mutual funds? How much investment they want to these financial instrument? How much knowledge they have about share market and mutual funds? What are their expectations about these financial instruments? How much risk they want and how much they are secure after investing their money in these instruments?
RESEARCH METHOD:Types of research ANALYTICAL RESEARCH
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DESCRIPTIVE RESEARCH
FINDINGS: Reliance money is providing better email facility for their customer than others. Reliance money is providing large number of services than others. Brokerage rate on share trading by Reliance demat account is less than others. Maximum number of people are stretching their minds towards Mutual funds investment. Share market is most risky financial instrument. People have very short knowledge about share market and mutual funds. Customer of reliance money mutual funds are less satisfied in compression to others.
LIMITATION • This report is based on only 100 people. • Most of the people are government employee. 4
• Observed only the people of LUCKNOW. • Purity of report depends on the respondents how willingly they have given the answer.
RESEARCH METHODOLOGY Types of research ANALYTICAL RESEARCH
DESCRIPTIVE RESEARCH
DEFINITION OF “RESEARCH PROBLEM” The study pertain to the competitive advantage of Reliance Money over the trade brokers in the mutual fund and online trading industry in the financial sector. The main objective of my research study is to know about customer satisfaction towards Demat account and mutual funds of Reliance Money. My objective is stretches towards their thoughts about these financial instruments which are provided by the Reliance Money Limited. What are their assumption about share market and mutual funds?
4
How much investment they want to these financial instrument? How much knowledge they have about share market and mutual funds? What are their expectations about these financial instruments? How much risk they want and how much they are secure after investing their money in these instruments?
Sampling Methodology Sampling Technique: Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the schedule. The final schedule was arrived only after certain important changes were done. Thus my sampling came out to be judgmental and convenient.
Sampling Unit: The schedules were filled with the responses of people. These comprise of retired government employees, Self Employed people, graduates etc.
Sample size: The sample size was restricted to only 100, which comprised of mainly people of Lucknow.
Sampling Area:
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The area of the research was Lucknow Utter Pradesh, INDIA.
Collection of Data Sources of Data1. Primary data:• Supervisor • Market survey 2. Secondary data:• Newspaper • Internet • Magazines • T.V. Channels • Telephonic conversation
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Markets In tune with the global stock markets that began to recover from the second half of 2003; Indian stock markets too witnessed rapid growth. India’s two leading indices, the most popular BSE Sensex, and the one most used by the markets the National Stock Exchanges’ S&P CNX Nifty rose to record levels. Both primary and secondary market activity experienced sharp surge. Much progress was made in further strengthening and streamlining risk management, market regulation and supervision. A few aspects of the major developments in the India’s stock markets are described below. And the insurance sector is also play an important role in the growth of the financial market.
Market Structure
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Indian securities market is fairly large as compared to several other emerging markets. There are 22 stock exchanges in the country, though the entire liquidity is shared between the country’s two national level exchanges namely, the National Stock Exchange of India and the Bombay Stock Exchange Ltd. The regional stock exchanges are in pursuit of business models that make them viable and vibrant. Meanwhile, these exchanges have become members of the national level exchanges through formation of subsidiaries whose business is showing continuous growth and progress. The number of brokers in various stock exchanges rose from 6,711 in 1994-95 to 9,335 in FY06. The number of brokers in all the exchanges together peaked to 10,213 in the year FY01 but gradually declined thereafter when the regional stock exchanges began to lose business in the light of wide ranging market structure reforms introduced since then. In FY01, when the markets were in upswing, several regional stock exchanges were generating business owing to the availability of deferral products, such Badla and different settlement calendars prevailing at that time in these exchanges. For instance in FY01, the Delhi Stock Exchange registered cash market turnover of Rs 838.71 bn; Uttar Pradesh Stock Exchange, Rs 247.47 bn, Ludhiana Stock Exchange Rs 97.32 bn, Pune Stock Exchange Rs 61.71 bn as against Rs 13,395.11 bn of the turnover at the National Stock Exchange and Rs 10,000.32 bn turnover at the Bombay Stock Exchange. With the abolition of the deferral products and introduction of uniform T+2 settlement cycle, the liquidity in these exchanges flowed to the national level system consisting of NSE and BSE.
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TABULATION AND ANALYSIS OF DATA
1. Do you invest? OPTIONS PERCENTAGE OF PEOPLE YES 90 NO 10
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INTERPRETATION OF DATA:Near about 90% people are invested their money in different types financial instruments 10% people do not like to invest their money.
2.In what do you invest? Instruments ULIP Real estate M.F. Stock market
Percentage of respondent 30 8 45 17
4
Interpretation:Maximum 45% respondent are investing their money in MF, then 30% in ULIP, then 17% in stock market and minimum 8% in real estate.
3.What percentage of income on annual basis you invest? Percentage of income 5-10% 10-30% 30-50%
Percentage of respondent 28 61 11
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Interpretation:61% respondent are investing 10-30%,28% respondent are investing 510%,and 11%respondent are investing 30-50% their income on annual basis.
4.How much you are satisfied with Mutual Fund of Reliance Money? Percentage of satisfaction 5-25% 25-50% 50-75% 75-100%
Percentage of respondent 15 35 29 21 4
Interpretation:Maximum 35% respondent are satisfied with 25-50%,then 29 with 5075%,then 21 with 75-100%,then 15 are with 5-25%.
5.How much you are satisfied with Demat account of Reliance Money? Percentage of satisfaction 5-25% 25-50% 50-75% 75-100%
Percentage of respondent 9 34 47 10
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Interpretation:Maximum 47 are satisfied with 50-75%,then 34 with 25-50%,then 10 with 75-100%,and at last 9 percentage are satisfied with 5-25%.
6.How much knowledge you have about share market? Percentage of knowledge Percentage of respondent
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5-25% 25-50% 50-75% 75-100%
28 39 23 10
Interpretation:Maximum 39 have 25-50% of knowledge about share market, then 28 have 5-25%,then 23 have 50-75%,and at last only 10 have 75-100% of knowledge.
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7.How much you are secure after investing into these instruments(MF and share market)? Percentage of secure 5-25% 25-50% 50-75% 75-100%
Percentage of respondent 13 43 34 10
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Interpretation:43 are secure with 25-50%,34 with 50-75%,13 with 5-25%,and at last 10 with 75-100% after investing into these instruments.
8.Which financial instrument are more risky ? Financial instruments Mutual fund Share market Life insurance Real estate
Percentage of Respondent 24 56 5 15
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Interpretation:In people point of view share market (demat) trading ix more risky in compression to other(mutual funds, real estate, life insurance).
9.Which financial instrument will you prefer for your investment? Financial instruments Demat trading Mutual fund Life insurance Real estate
Preference of people 15 45 33 7
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Interpretation:Maximum no. of respondent are interested in investing their money in mutual funds, then others life insurance, share trading and real estate.
10.Which banks demat account offered you a large no. of services?
Banks
Percentage of respondent
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HDFC bank Reliance money ICICI SBI bank
25 40 20 15
Interpretation:Reliance money provides large no. of products and services in compression to HDFC banks, ICICI, SBI bank.
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11Which company provides you less brokerage rate?
Banks HDFC banks Reliance money ICICI SBI banks
Percentage of respondent 28 30 23 19
Interpretation:-
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Reliance money provides less brokerage rate in compression to others.
12.Which company provides you a large number of products and services? Company HDFC Bank Reliance Money ICICI SBI Bank
Percentage of respondent 20 48 18 14
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Interpretation:Reliance money provides large number of products and services in compression to others.
13.Which company provides you better email facility?
Company HDFC Bank Reliance Money ICICI bank SBI
Percentage of respondents 26 47 17 10
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Interpretation:-
Email facility of reliance money is better than others.
SWOT ANALYSIS
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STRENGTHS
WEAKNESS
Brand name of Ambani group Low brokerage charges
It is franchisee base company
Single window for all transaction
directly doesn’t come .
Cost effective A pass word is issue to maintain a security which keeps changes positive government policy OPPORTUNITY
THREAT
Per capital can increase
Stiff competition from ICICI share khan, karvy,India bulls.
As people disposable income is increases knowledge about share
Lots of foreign player.
market stiff in the pattern of saving.
FINDINGS 4
Reliance money is providing better email facility for their customer than others. Reliance money is providing large number of services than others. Brokerage rate on share trading by Reliance demat account is less than others. Maximum number of people are stretching their minds towards Mutual funds investment. Share market is most risky financial instrument. People have very short knowledge about share market and mutual funds. Customer of reliance money mutual funds are less satisfied in compression to others.
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SUGGESTIONS The past few months have been volatile as far as the Indian stock markets are concerned, with the indices struggling to grope for direction. Both domestic factors (the Union Budget and interest rate hikes) and international factors (meltdown in the Asian markets) have contributed to the volatility. Nevertheless, we believe that such 'corrections' provide opportunities. We enumerate these aforesaid factors that investors need to consider while choosing the stocks that they want to invest in. The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. The advisors may try to highlight some of the value added benefits of Mutual funds such as tax benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc. these benefits are not offered by other options single-handedly. So these are enough to drive the investors
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towards mutual funds. Investors could also try to increase the spectrum of services offered. Now the most important reason for not availing the services of advisors was spotted was being expensive. The advisors should try to charge a nominal fee at the beginning. But if not possible then they could go for offering more services and benefits at the existing rate. They should also maintain their decency and follow the code of ethics so that the investors could trust upon them. Thus the advisors should try to attract more and more persons and turn them into investors and finally their clients. According to Sharpe’s , Treyner and Jenson’s measure RELIANCE VISION GROWTH FUND is the best fund to invest in.
Reliance Money provides a single window facility, enabling one to access, amongst others, equity, equity& commodity, derivatives, offshore investments, IPO’s, Mutual Funds & Life Insurance Products. Reliance Money is the most cost effective, convenient and secures way to transact in a wide range of financial products. The products offered are Cost effective. • Convenient. • Security. • Single window for multiple products. • 3 in 1 integrated access
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CONCLUSION
With the globalize economy and immense competition among countries for faster development of their respective economies, the significance of Mutual Funds and Foreign investment has taken manifold. With a buoyant vibrant and experienced stock market, India today is looking ahead to surpass China in terms of foreign Investment and growth prospects. Stock exchange being the barometer of the economy plays a vital role in showcasing growth of an economy and luring investment. While studying the role of Mutual fund and FIIs in Stock Market, I discussed with a few persons who are into stock broking business. And the information they have provided shows that though the investment and participation of domestic investors are rising, still, they have not been able to prove themselves to be as influential as mutual funds and FIIs. Importance and the role of Mutual funds and FIIs play in the Indian stock market can be seen from the fact that the recent surge in Sensex and NIFTY is attributed to the active participation of FIIs in the Stock Market. Despite being aware of the Asian economic crisis where FIIs role was of a major concern, the importance of foreign capital in the development of economy can not be undermined in anyway.
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LIMITATION
• This report is based on only 100 people.
• Most of the people are government employee.
• Observed only the people of LUCKNOW.
• Purity of report depends on the respondents how willingly they have given the answer.
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APPENDICES
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QUESTIONAIRE NAME:ADDRESS:PHONE NO.:OCCUPATION:AGE:-
1. What is your annual income? • 100000-200000 • 200000-300000 • 500000-1000000 2. Do you invest? • Yes • No 3. In what do you invest? • ULIP • Real Estate • MF • Stock Market
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4. What percentage of income on annual basis you invest? • 5-10% • 10-30% • 30-50%
5. How much you are satisfied with mutual funds of Reliance Money? • 5-25% • 25-50% • 50-75% • 75-100% 6. How much you are satisfied with demat account of Reliance Money? • 5-25% • 25-50% • 50-75% • 75-100% 7. How much knowledge you have about share market? • 5-25% • 25-50% 4
• 50-75% • 75-100% 8. How much you are secure after investing into these instruments? • 5-25% • 25-50% • 50-75% • 75-100%
9. Which financial instruments are more risky mutual funds or investment in share market? • MF • Share Market 10.Which instruments will you prefer for your investment? • Share Market • Mutual Fund • Life insurance • 0thers 11.Which banks demat account offered you a large no. of services?
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• HDFC • Reliance Money • ICICI • others 12.Which company provides you less brokerage rate? • HDFC • Reliance money • ICICI • Others 13.Which company provides you a large no. of products and services? • HDFC • Reliance money • ICICI • Others 14.Which company provides you better email facility? • HDFC • Reliance money
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• ICICI • Others
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BIBLIOGRAPHY BOOKS: • Financial Management I.M. Pandey • Business Environment written By “ Francis Cherunilam “ • Marketing Management written BY “ Phillip Kotlar 1. WEBSITES: 1. www.wikepedia.com 2. www.economicstimes.com 3. www.sify.com 4. www.mutualfundindia.com 5. www.moneycontrol.com 6. www.google.co.in 7. www.icicipru.com 8. www.hdfc.com
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9. www.sbi.com
MAGAZINES AND NEWS PAPERS: 1. BUSINESS WORLD 2. BUSINESS TIMES 3. TIMES OF INDIA 4. ECONOMICS TIMES 5. BUSINESS STANDARD
NEWS CHANNELS: 1. ZEE BUSINESS 2. CNBC AWAZ 3. NDTV PROFIT
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