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STRUCTURE RELIANCE MUTUAL FUND BY SAINATTH WAGH 2/27/2011 WELINGKAR INST OF MANAGEMENT AND DEVELOPMENT 1

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Page 1: Reliance amc

STRUCTURE – RELIANCE MUTUAL

FUND

B Y

S A I N A T T H W A G H

2/27/2011W E L I N G K A R I N S T O F M A N A G E M E N T A N D

D E V E L O P M E N T1

Page 2: Reliance amc

MUTUAL FUND ?

“A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings the mutual fund owns are known as its portfolio. Each share represents an investor's proportionate ownership of the fund's holdings and the income those holdings generate “

Page 3: Reliance amc

RELIANCE MUTUAL FUND

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 3

• India’s leading Mutual Fund

• Average Assets under Management: 1,02,179 Cr

• Investor Count : 73 Lakh Folios

• Presence in 159 Cities across country

• 14 years of extensive market experience, 35 schemes combined with a strong performance track record.

• - AMFI Website, 2010

Page 4: Reliance amc

CONSTITUTION AND MANAGEMENT

AMCTrustSponsor

Reliance Capital Limited (RCL)

Reliance Capital Trustee Co. Ltd

(RCTC)

[Trustee]

Reliance Mutual Fund (RMF)

[Name of Fund House]

Reliance Capital Asset Management Limited

Net Worth : 841.32 Cr

Reliance Mutual Fund [Trust]

Page 5: Reliance amc

47 FUNDS RCAM

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 5

Reliance Growth Fund

(September 1995)

Reliance Vision Fund

(September 1995)

Reliance Fixed Horizon Fund VI

(December 2007)

Reliance Liquidity Fund (June

2005)

Reliance Income Fund

(December 1997)

Reliance Liquid Fund (March

1998)

Reliance Fixed Horizon Fund VII

(January 2008)

Reliance Interval Fund (March

2007)

Reliance Medium Term Fund

(August 2000)

Reliance Short Term Fund

(December 2002)

Reliance Fixed Horizon Fund IX

(March 2008)

Reliance Equity Advantage

Fund (June 2007)

Reliance Fixed Term Scheme

(March 2003)

Reliance Banking Fund (May

2003)

Reliance Fixed Horizon Fund X

(August 2008)Reliance Fixed Horizon Fund V

(September 2007)

Reliance Gilt Securities Fund

(July 2003)

Reliance Diversified Power

Sector Fund (March 2004)

Reliance Fixed Horizon Fund XII

(November 2008)

Reliance Fixed Horizon Fund IV

(August 2007)

Reliance Monthly Income Plan

(December 2003)

Reliance Floating Rate Fund

(August 2004)

Reliance InfrasReliance Equity

Linked Saving Fund - Series I

(December 2007)

Reliance Fixed Horizon Fund

(April 2006)

Reliance Pharma Fund ( May

2004)

Reliance NRI Equity Fund

(October 2004)

Reliance Natural Resources

Fund (January 2008)

Reliance Fixed Horizon Fund II (

November 2006)

Reliance Media &

Entertainment Fund

(September 2004)

Reliance Index Fund (February

2005)*

Reliance Fixed Horizon Fund

VIII (March 2008)Reliance Long Term Equity

Fund (November 2006)

Reliance NRI Income Fund

(October 2004)

Reliance Fixed Maturity Fund –

Series I (March 2005)

Reliance Banking Exchange

Traded Fund (May 2008)

Reliance Equity Fund (February

2006)

Reliance Equity Opportunities

Fund (February 2005)

Reliance Regular Savings Fund

(May 2005)

Reliance Fixed Horizon Fund XI

(October 2008)tructure Fund

(June 2009)

Reliance Fixed Tenor Fund

(November 2005)

Reliance Fixed Maturity Fund –

Series II (April 2005)

Reliance Tax Saver (ELSS) Fund

(July 2005)

Reliance Gold Exchange Traded

Fund (October 2007)

Reliance Fixed Horizon Fund I

(August 2006)

Reliance Fixed Horizon Fund III

(March 2007)

Reliance Money Manager Fund

(March 2007)

Page 6: Reliance amc

TRUSTEE

Registered Office: Corporate Office :

EO1, Reliance Greens,

Village Motikhavdi,

P.O. Digvijaygram,

District Jamnagar -

361140

(GUJARAT)

Express Building (4th & 6th

Floor),

14, 'E' Road, Churchgate,

Opp. Churchgate Station,

Mumbai 400 020.

Tel. 022 – 3041 4800,

Reliance Capital Trustee Co. Limited (RCTC), a company incorporated under the Companies Act, 1956, has been appointed as the Trustee to the Fund vide the Trust Deed dated April 25, 1995 executed between the Sponsor and the Trustee. For Eg: OD says that RCTC has been appointed as the Trustee to

“Reliance India Power Fund”, a Venture Capital Fund registered with the SEBI vide registration number IN/VCF/05-06/062 dated June 16, 2005

An application has also been filed for registration of “Reliance Venture Capital Fund” with SEBI.

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 6

AMC

Registered Office: Corporate Office :

EO1, Reliance Greens,

Village Motikhavdi,

P.O. Digvijaygram,

District Jamnagar -

361140

(GUJARAT)

Express Building (4th & 6th

Floor),

14, 'E' Road, Churchgate,

Opp. Churchgate Station,

Mumbai 400 020.

Tel. 022 – 3041 4800,

Page 7: Reliance amc

BANKERS TO RCAM

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 7

• ABN Amro Bank

• Axis Bank

• Citibank N. A.

• Deutsche Bank AG

• Development Bank of Singapore

• HDFC Bank Limited

• HSBC Bank

• ICICI Bank Limited

• IDBI Bank

• Ing Vysya Bank

• Kotak Mahindra Bank

• State Bank of India

• Standard Chartered Bank

• Yes Bank

Page 8: Reliance amc

STRUCTURE OF AMC

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 8

CEO

Mr. Sudeep Sikka

Head Equity Investments

Mr. MadhusudanKela

Equity Fund Managers

Head Fixed Income

Mr. AmitabhMohanty

Debt Fund Managers

Bo

ard

of D

irecto

rs

Page 9: Reliance amc

ROLE OF AMC

Transparency

Liquidity

Flexibility

Decision Making

Valuation

Drafting of Structure of Scheme

Page 10: Reliance amc

CEO of AMC ensures fund complies with

SEBI norms and investments made are

in norms of Fund objectives as in OD

Investment decisions made in interest

of unit holders.

Fund Managers ensure that

investments are made in the interest of

Unit holders and as per the norms and

objectives of FOD

AMC shall not utilize the services of

Sponsor for purchase of new securities

AMC reports data to both SEBI and

Trustees.

The RCAM shall not invest in any of its

schemes unless full disclosure of its

intention to invest has been made in the

offer documents

Decision are taken by team comprising of

Fund Managers

Investment Committee

Based on

Research Report

Market Intelligence

Analysis of Macro and Micro economic

indicators

Market Trends

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 10

DUTIES AND OBLIGATIONS OF THE AMC

Page 11: Reliance amc

a) RCAM will be responsible for making, floating,

issuing Schemes for the Trust after approval of the

same by the Trustees and SEBI as well as investing

and managing the funds mobilized under various

Schemes, in accordance with the provisions of the

Trust Deed and SEBI Regulations.

b) RCAM must disclose the basis of calculating the

repurchase/redemption price and Net Asset Value

of the various Schemes of the Fund to the

investors, at such intervals as may be specified by

SEBI and/or the Trustees and in accordance with

the SEBI Regulations.

c) RCAM must maintain books and records about

the operation of various Schemes of the Fund to

ensure compliance with the Regulations and

guidelines for Mutual Funds as may be issued by

SEBI from time to time, and shall submit a Scheme

wise quarterly report on functioning of the Fund to

the Trustee or at such intervals and in such manner

as may be required or called for by the Trustee or

SEBI.

d) RCAM shall exercise all due diligence and vigilance in carrying out its duties and in protecting the rights and interest of the

unit holders.

e) RCAM will at all times ensure that the Trust Fund is segregated from assets of RCAM and assets of any other funds for which RCAM is responsible.

f) RCAM shall submit to the Trustee all information concerning the operation of the various Schemes of the Fund managed by RCAM at such intervals and in such manner as required by the Trustee to ensure that RCAM is complying with the provisions of the Trust Deed and SEBI Regulations.

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 11

IMA AND DUTIES OF RCAM

Page 12: Reliance amc

Trustee main duties before Fund Launch:

(i)Systems in place for its back office, dealing room and accounting

(ii) Appointed all key personnel including fund manager(s) for the Scheme(s) and submitted

their bio-data which shall contain the educational qualifications, past experience in the

securities market to SEBI, within 15 days of their appointment;

(iii) Appointed Auditors to audit its accounts;

(iv) Appointed a Compliance Officer to comply with regulatory requirement and to redress

investor grievances;

(v) Appointed Registrars and laid down parameters for their supervision;

(vi) Prepared a compliance manual and designed internal control mechanisms including

internal audit systems; and

(vii) Specified norms for empanelment of brokers and marketing agents.

The Trustees shall obtain the consent of the unit holders of the Scheme:

(i) Whenever required to do so by SEBI in the interest of the unit holders;

(ii) Whenever required to do so, on the requisition made by three-fourths of the unit holders

of any Scheme under the Mutual Fund;

(iii) When the majority of the Trustees decide to wind up the Scheme or prematurely redeem

the Units W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 12

DUTIES AND OBLIGATIONS OF THE TRUSTEES

Page 13: Reliance amc

1. Trust Deed

2. Right to Obtain Information from AMC

3. Monitors broker and AMC transactions

4. Ensures AMC works as per SEBI regulations, 1996

5. Informs SEBI for 1 Lac Plus transactions

6. Informs Unit holders and SEBI for change in structure and load if situation demands

change

1. Unit holders are given a option to Exit

2. Change is advertised in Leading Newspaper

7. Periodically review service contracts like Custodian documents

8. Periodically Review Customer Complaints and Review.

9. Appoint Statutory Auditors and have one Independent Director

10. Due Diligence

11. Signs the IMA with the AMC

12. Keeps a check on Vacant Positions and nominates individual.

13. Prescribe and adhere to a code of ethics by the Trustees, Asset Management Company

and its personnel. W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 13

DUTIES AND OBLIGATIONS OF THE TRUSTEES

Page 14: Reliance amc

THE CUSTODIAN

Trustee has appointed Deutsche Bank as Custodian

Duties of Custodian:

Provide post-trading and custodial services to the Mutual Fund;

Keep securities and other instruments belonging to the Scheme in safe custody;

Ensure smooth inflow/outflow of securities and such other instruments as and when necessary, in the best interests of the unit holders

Be responsible for loss of or damage to the securities due to negligence on its part or on the part of its approved agents.

The Custodian will charge the Mutual Fund, portfolio fee, transaction fee and out-of -pocket expenses in accordance with the terms of the Custody Agreement and as per any modification made thereof from time to time.

Page 15: Reliance amc

THE REGISTRAR

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 15

•RCAM has appointed M/s. Karvy Computershare Pvt. Limited

•As Registrar to the Scheme KCPL will

accept and process investor's applications

handle communications with investors

perform data entry services

Dispatch Account Statements

other functions as agreed, on an ongoing basis.

•The Registrar is responsible for carrying out diligently the functions of a

Registrar

and Transfer Agent and will be paid fees as set out in the agreement entered

into with it and as per any modification made thereof from time to time.

Page 16: Reliance amc

FEES

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 16

AMC Fees : In terms of the Investment Management Agreement and the

Regulations, the AMC is entitled to a management and advisory fee at the rate

of 1.25% of the average daily net assets for net assets up to Rs.100 crore and

at the rate of 1.00% for the net assets in excess of Rs.100 crore. For Schemes

launched on a No- Load basis, the AMC is entitled to collect and additional

management fee of up to 1% of the average net assets outstanding in each

financial year and the total management fee shall not exceed the limit stated

under the Regulation 52(6) of SEBI.

Trust Fees: Pursuant to the Trust Deed constituting the Fund, the Fund is

authorized to pay the Trustee, a fee for their services, in addition to the

reimbursement of all costs, charges and expenses, sum computed at the rate

of 0.05% of the amount, being the aggregate of the Trust Fund and Unit Capital

of all the Schemes put together on 1st April each year or a sum of Rs.5

Lacs, which ever is lower or such other sum as may be agreed upon between

the Settler and the Trustee from time to time. The Trustee may charge further

fees as permitted from time to time under the Trust Deed and the Regulations.

Page 17: Reliance amc

SPONSOR LOSS PROTECTION

RCL contributes Rupees One Lac as the initial contribution to the corpus for the

setting up of the Mutual Fund.

RCL is responsible for discharging its functions and responsibilities towards the Fund

in accordance with the SEBI Regulations.

The Sponsor is not responsible or liable for any loss resulting from the operation of

the Scheme beyond the contribution of an amount of Rupees one lakh made by

them towards the initial corpus for setting up the Fund and such other accretions

and additions to the corpus

Page 18: Reliance amc

DUTIES AND OBLIGATIONS OF INVESTOR

Study of Offer Document

In case of dividend declaration, investors have a right to receive the dividend within 30 days of

declaration

On redemption request by investors, the AMC must dispatch the redemption proceeds within

10 working days of the request.

Investors can obtain relevant information from the trustees and inspect documents like trust

deed, investment management agreement, annual reports, offer documents, etc. They

must receive audited annual reports within 6 months from the financial year end.

Investors have a right to be informed about changes in the fundamental attributes of a

scheme. Fundamental attributes include type of scheme, investment objectives and

policies and terms of issue.

Investors can approach the investor relations officer for grievance redressal

Page 19: Reliance amc

MUTUAL FUND CYCLE

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 19

Investors

Fund manager

Securities

Returns

Page 20: Reliance amc

MUTUAL FUND OPEARATION

PRODUCT

DESIGN

PRODUCT

MARKETING

FUND

MANAGEMENT

OUT

SOURCING

INVESTOR’S

SERVICE

THE

CHAIN

OF

OPERATION

Page 21: Reliance amc

MUTUAL FUND OPERATION

PRODUCT DESGIN

INNOVATION

SUPERIOR DESIGN

ADAPATABILITY

PRODUCT MARKETING

COST

AGGRESSIVE

MARKETING

UPFRONT COST

FUND MANAGEMENT

CAPITAL PROTECTION

MARKET TIMING

ASSET QUALITY

OUTSOURCING

COST CONTROL

FLEXIBILITY

CHOICE

INVESTOR SERVICE

CUSTOMER FOCUS

BETTER

CONFIDENCE

EFFICIENT SERVICE

Page 22: Reliance amc

TYPES OF MUTUAL FUNDS

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 22

Type of Mutual Fund

Schemes

Structure

Open Ended Funds

Close Ended Funds

Investment Objective

Growth Funds

Income Funds

Balanced Funds

Money Market Funds

Special Schemes

Industry SpecificSchemes

Index Schemes

Sectoral Schemes

Page 23: Reliance amc

W E L I N G K A R I N S T O F M A N A G E M E N T A N D D E V E L O P M E N T 23

Thank You