Project Report On Reliance PMS

1 JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL

SUMMER TRAINING REPORT ON

ANALYSIS OF BUYING BEHAVIOUR AND CRITERIA

OF PMS INVESTORS TOWARDS VARIOUS

PORTFOLIO MANAGERS

SUBMITTED IN PARTIAL FULFILLMENT FOR THE

REQUIREMENT OF

POST GRADUATE DIPLOMA IN MANAGEMENT

SUBMITTED TO SUBMITTED BY

Dr Neelam Tandon Saurabh Pandey
Asst. Prof. PGDM(Sec-B)
JIMS,Kalkaji Roll No.126

Mrs Pallavi Chauhan
Regional Manager
Reliance Portfolio Management Services

Ms Ritika Arora
Relationship Manager
Reliance Portfolio Management Services

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL


DECLARATION
I Saurabh Pandey Roll No.126 ,hereby declare that the project titled, which has
been submitted to the JIMS Kalkaji, is an original work of undersigned and has not
been reproduced from any other sources.

Saurabh Pandey


TABLE OF CONTENTS

ACKNOWLEDGEMENT

EXECUTIVE SUMMARY

CHAPTER-1

INTRODUCTION

PORTFOLIO MANAGEMENT SERVUCES (PMS)

 TYPE OF PMS
 ROLE OF PORTFOLIO MANAGEMENT
 SCOPE OF PORTFOLIO MANAGEMENT
 ELEMENTS OF PORTFOLIO MANAGEMENT
 OBJECTIVE OF PORTFOLIO MANAGEMENT
 SEBI GUIELINES TO PORTFOLIO MANAGEMENT
 TYPES OF RISK IN PORTFOLIO MANAGEMENT
 WORKING OF PORTFOLIO MANAGEMENT SERVICES (PMS)
 PORTFOLIO MANAGEMENT SERVICES (PMS) CHARGES
 TAXATION FOR PORTFOLIO MANAGEMENT SERVICES
 HOW IS PMS DIFFERENT FROM MUTUAL FUND

CHAPTER-2

RELIANCE COMPANY (ADAG GROUP)

 THE RELIANCE GROUP
 RELIANCE CAPITAL
 BUSINESS MIX OF RELIANCE CAPITAL
 RELIANCE MUTUAL FUND
 RELIANCE PORTFOLIO MANAGEMENT

PMS PRODUCTS ANALYSIS

 RELIANCE
 MOTILAL OSWAL
 ENAM
 ICICI PRUDENTIAL

LITERATURE REVIEW


CHAPTER-3

STATEMENT OF THE PROBLEM

 TOPIC OF THE STUDY
 PURPOSE OF THE STUDY
 SCOPE OF STUDY

METHODOLOGY OF RESEARCH

 DESIGN
 SAMPLING
 TOOLS OF DATA COLLECTION
 DATA COLLECTION PROCESS
 DATA ANALYSIS

CHAPTER-4

ANALYSIS AND RESULTS

 ANALYSIS BRIEF
 ANALYSIS OF PIE-CHARTS
 KAISER-MEYER-OLKIN TEST
 FACTOR ANALYSIS
 TOTAL VARIANCE EXPLAINED

CHAPTER-5

CONCLUSION

RECOMMENDATION

REFERENCES

QUESTIONNAIRE


ACKNOWLEDGEMENT
I,Saurabh Pandey is highly grateful to Reliance Capital Asset Management Ltd.,New
Delhi for giving me the opportunity of carrying out a comprehensive study on the
topic, “Analysis of buying behaviour & buying criteria of PMS investors
through factor analysis” as part of my eight weeks summer internship.
I extend my thanks to the entire team of Reliance capital asset Management Ltd. for
their valuable support throughout the project. I am highly thankful to Mrs Pallavi
Chauhan,Regional Manager-PMS, under her guidance ;i was able to enhance my
knowledge of pms industry and the applied marketing techniques in the financial
service sector and also for extending the full support of utilizing research database
and material.
I pay thank to Mr Amit Kapoor and Ms Ritika Arora for their valuable support and
guidance for providing me an expedient learning plateform where i have had my first
encounter with one of the best corporate practices and analytics.
I would like to thank Dr. Neelam tendon ,Associate Prof. Of Economics,Jagannath
International Management School(JIMS), for her guidance and valuable insight
throughtout the project.
The internship experience for this summer project also demand to acknowledge my
family and friends for their support and cooperation.


EXECUTIVE SUMMARY

Reliance PMS wanted a thorough analysis of investor’s needs and preferences with
respect to PMS investment. Nowadays, to survive in such intensely competitive
environment, knowledge of customer’s need and requirement has become a
prerequisite of success most of the companies realising this are doing their best to
find out how a customer perceives their product. In the Indian PMS industry, This
area has been overlooked to a great extent with with over 38 AMCs bombarding the
Indian investors with a number of products. As soon as an investor plans to make a
PMS investment, That is when his nightmare starts. He is soon caught in the frenzy
of complicated jargon of the PMS industry, and he find himself dealing with
complicated structured products. For a normal investor, it becomes really arduous
task to make a PMS investment and so most of the time he approaches a broker or
an agent to get a recommendation. However, even with a recommendation he ends
up investing in a non-suitable PMS scheme. Hence, it is very important for
companies to know their customers and develop products that are suited to their
requirement rather than selling random scheme to them.

On concluding the analysis, 3 major factors were extracted that were primarily the
investor’s expectation level in a PMS product. The factors were improved product,
investor assurance, elementary product and influential promotion. All the 18 variable
were grouped under these factors depending upon the respondent data collected.

In a nutshell, at the end of the study, I am providing Reliance PMS with an insight in
to customer’s need and requirements through a statistically proven model and some
general excerpts that might come in handy while servicing the customers and
dealing with them.


INTRODUCTION TO THE TOPIC

Portfolio Management Services
“Customer Relationship” have slowly but steadily gained in importance from the point
of view of a firm,so much so that they can now be thought as being one of the
“valuable asset”.Especially when it comes to B2B scenario wherein the number of
clients is very much limited and more or less static.
While there has been a lot of academic, research-based as well as industry oriented
deliberations on the importance and need of maintaining good customer relationship
in order to survive and thrive in market,not much emphasize has been laid on the
financial viability of undertaking such an activity. While the customer relationship
strategy go on to help a firm in building portfolios of customers, which can be defined
as mutually exclusive group of customers that share similar behaviours and
preferences when interacting with a business, and retaining the customer and
market segment for the long run in order to optimize the profit of the firm, the focus
should be on portfolios theories which, in turn should dictate relationships
management because this can enable the firm to invest its resources in a way which
is efficient and effective. “Marketing has evolved overtime from an emphasis on
market share and size to an emphasis on developing relationship with customers as
the key to profitability.” Customer portfolio analysis enables managers and
researchers to capture a customer’s value to the firm in isolation.
As per SEBI guidelines, only those entities who are registered with SEBI for
providing PMS services can offer PMS to clients. There is no separate certification
required for selling any PMS product, so there is a case where miss-selling can
happen. As per SEBI guidelines, the minimum investment required to open a PMS
account is Rs. 5 lacs for a product.
However, different providers have different minimum balance
requirement of Rs. 25 lacs for a product. In India PMS are also provided by equity
broking firms & wealth management services.


Types of PMS:-

1.Discretionary PMS:- Under these services, the choice as well as the timings of
the investment decisions rest solely with the Portfolio Managers.

2. Non Discretionary PMS :- Under these services, the portfolio manager only
suggests the investment ideas. The choice as well as the timings of the investment
decisions rest solely with the Investor.
However the execution of trade is done by the portfolio manager.

3. Advisory PMS :- Under these services, the portfolio manager only suggests the
investment ideas. The choice as well as the execution of the investment decisions
rest solely with the Investor.
Note: In India majority of PMS providers offer Discretionary Services.
The client may give negative list of stocks in a discretionary PMS at the time of
opening his account and the fund manager would ensure that those stocks are not
bought in hisher portfolio. Majority of PMS providers in India offer discretionary
services.

ROLE OF PORTFOLIO MANAGEMENT:-
In the beginning of the nineties India embarked on a programme of economic
liberalization and globalization. This reform process has made the Indian capital
markets active. The Indian stock markets are steadily moving towards capital
efficiency , with rapid computerization , increasing market transparency, better
infrastructure, better customer service, close integration and higher volumes. Large
institutional investors with their diversified portfolios dominate the markets. A large
number of PMS have been set up in the country since 1987.
The Securities And exchange board of India, the stock market regulatory body in
India, is supervising the whole process with a view to making portfolio management
a responsible professional service to be rendered by expert in the field.


SCOPE OF PORTFOLIO MANAGEMENT:-
Portfolio management is ongoing process. It is dynamic activity, following are the
basic operations of a portfolio management.
1. Monitoring the the performance of portfolio by incorporating the latest market
conditions.
2. Identification of investor’s objective, constraints and preferences.

3. Making revision in the portfolio.

4. Implementation of strategies in tune with the investment

Objectives.
ELEMENTS OF PORTFOLIO MANAGEMENT:-
Portfolio management is ongoing process involving the following basic task.
1. Identification of the investor’s objectives, constraints and preferences, which will
help formulate the investment policy.
2. Strategies are to be developed and implemented in tune with the investements
policy formulated.This will help the selection of asset classes and securities in each
class depending upon their risk return attributes.
3. Review and monitoring of the performance of the portfolio by the continuous
overview of the market condition, companies performance and investor
circumstances.
4. Finally, the evaluation of the portfolio for the result to compare with target and
needed adjustments have to be made in the portfolio to the emerging condition and
to make up for any shortfalls in achievements vis-a` Vis targets.
The collection of data on the investor’s preferences, objectives, etc., is the
foundation of portfolio management. This gives an idea of channels of investment in
term of asset classes to be selected and securities to be chosen based upon the
liquidity requirements, time horizon , taxes, asset preferences of investors, etc.
These are the building blocks for the construction of the portfolio according to these
objective and constraints, the investment policy can be formulated. The policy will lay
down the weights to be given to different asset classes of investment such as equity
shares, preference shares, debentures, company deposits, etc., and the proportion

of fund to be invested in each class and selection of assets and securities in each
class are made on the basis. The next stage to is to formulate the investment
strategy for a time horizon for income and capital appreciation and for a level of risk
tolerance.
The investment strategies developed by the portfolio managers have to be correlated
with their expectation of the capital market and the individual sectors of industry.
Then a particular combination of asset is chosen on the basis of investment strategy
and managers expectation of the market.

MYTHS ABOUT PMS:-
There are two most common myths found about Portfolio Management Services
(PMS) which we found among most of the Investors, They are as follows.

Myth No. 1:
“PMS and Mutual Fund are Similar as the investment option”
As in the Finance Basket both the PMS and Mutual Fund are used for minimizing
risk and maximize the profit of the Investors.
The objectives are similar as in both the product but they are different from each
other in certain aspects. They are as follows.

Management Side:-
In PMS, its ongoing personalized access to professional money management
services. Whereas, in Mutual fund gives personalize access to money.
Customization:- In PMS, Portfolio can be tailored to address each investor's
specific needs. Whereas in Mutual Fund Portfolio structured to meet the fund's
stated investment objectives.
Ownership:-
In PMS, Investors directly own the individual securities in their portfolio, allowing for
tax management flexibility, whereas in Mutual Fund Shareholders own shares of the
fund and cannot influence buy and sell decisions or control their exposure to
incurring tax liabilities.


Liquidity:-
In PMS, managers may hold cash; they are not required to hold cash to meet
redemptions, whereas, Mutual funds generally hold some cash to meet redemptions
Flexibility:-
PMS is generally more flexible than mutual funds. The Portfolio Manager may move
to 100% cash if it required. The Portfolio Manager may take his own time in building
up the portfolio.
The Portfolio Manager can also manage a portfolio with disproportionate allocation to
select compelling opportunities whereas, in Mutual Fund comparatively less flexible.
OBJECTIVE OF PORTFOLIO MANAGEMENT SERVICES:-
The objective of portfolio management is to maximize the return and minimize the
risk. These objective are characterized in to
 Basic Objectives.
 Subsidiary Objective.
Basic Objectives:-
The basic objectives of a PMS are further divided into two kinds viz., (a) Maximize
Yield (b) Minimize risk
The aim of the portfolio management is to enhance the returns for the level of risk to
the portfolio owner. A desired return for a given risk level is being started. The level
of risk of the portfolio depends upon many factors. The investor, who invests the
saving in the financial asset, requires regular return and capital appreciation.
Subsidiary Objective:-
The subsidiary objectives of a portfolio management are expecting the reasonable
income, appreciation of the capital at the time of disposal, safety of investments and
liquidity etc.
The objective of investors is to get a reasonable return on his investments without
any risk. Any investor desires regularity of income at a consistent rate however, it
may not always be possible to get such income. Every investor has to dispose his
holding after a stipulated period of time for a capital appreciation.
Capital appreciation of a financial asset highly influenced by a strong brand image,
market leadership, guaranteed sales, financial strength and large pool of reverses,
retained earnings and accumulated profit of the company. The Idea of growth stocks


is the right issue in the right industry, bought at right time. A portfolio management
desires the safety of investment.
The portfolio objective is to take the precautionary measures about the safety of the
principle even by diversification process. The safety of the investments calls careful
review of economic and industry trend liquidity of the investment is most important,
which may not be neglected by any investors/ portfolio managers. An investment is
to be liquid, it must have “termination & marketable” facility at any time.

SEBI Guidelines to Portfolio Managers:-
For registration as a portfolio manager, an applicant is required to pay a non-
refundable application fee of Rs.1,00,000/- by way of demand draft drawn
in favour of ‘Securities and Exchange Board of India’, payable at Mumbai.
The portfolio manager is required to have a minimum networth of Rs. 2 crore.
Every portfolio manager is required to pay Rs. 10 lakhs as registration fees at the
time of grant of certificate of registration by SEBI.
The certificate of registration remains valid for three years. The portfolio manager
has to apply for renewal of its registration certificate to SEBI, 3 months before the
expiry of the validity of the certificate, if it wishes to continue as a registered portfolio
manager.
The portfolio manager is required to pay Rs. 5 lakh as renewal fees to SEBI.
The portfolio manager, before taking up an assignment of management of funds or
portfolio of securities on behalf of the client, enters into an agreement in writing with
the client, clearly defining the inter se relationship and setting out their mutual rights,
liabilities and obligations relating to the management of funds or portfolio of
securities, containing the details as specified in Schedule IV of the SEBI (Portfolio
Managers) Regulations, 1993.
The portfolio manager is required to accept minimum Rs. 5 lakhs or securities having
a minimum worth of Rs. 5 lakhs from the client while opening the account for the
purpose of rendering portfolio management service to the client.
Portfolio manager can only invest and not borrow on behalf of his clients.
The portfolio manager shall furnish periodically a report to the client, as agreed in the
contract, but not exceeding a period of six months and as and when required by the
client and such report shall contain the following details, namely:-


(a) The composition and the value of the portfolio, description of security, number of
securities, value of each security held in the portfolio, cash balance and aggregate
value of the portfolio as on the date of report;

(b) Transactions undertaken during the period of report including date of transaction
and details of purchases and sales;

(c) Beneficial interest received during that period in respect of interest, dividend,
bonus shares, rights shares and debentures;

(d) expenses incurred in managing the portfolio of the client;

(e) details of risk foreseen by the portfolio manager and the risk relating to the
securities recommended by the portfolio manager for investment or disinvestment.

This report may also be available on the website with restricted access to each
client. The portfolio manager shall, in terms of the agreement with the client, also
furnish to the client documents and information relating only to the management of a
portfolio. The client has right to obtain details of his portfolio from the portfolio
managers.
The portfolio manager provides to the client the Disclosure Document at least two
days prior to entering into an agreement with the client.
The Disclosure Document contains the quantum and manner of payment of fees
payable by the client for each activity, portfolio risks, complete disclosures in respect
of transactions with related parties, the performance of the portfolio manager and the
audited financial statements of the portfolio manager for the immediately preceding
three years.
Please note that the disclosure document is neither approved nor disapproved by
SEBI nor does SEBI certify the accuracy or adequacy of the contents of the
Documents.
Types of risk in Portfolio Management:-
Each and every investor has to face risk while investing. Risk is classified into:


 Systematic Risk or Market Related Risk.
 Unsystematic Risk or company Related Risk.

SYSTEMATIC RISK:-
Systematic risk refers to that portion of variation in return caused by factors that
affect the price of all securities. It can’t be avoided. It related to economic trend with
effect to the whole market.
This is further divided in to the following

Market risk: A variation in price sparked of due to real, social, political and
economic event is refer to as market risk.
Interest Rate Risk: Uncertainty of future market values and the size of future
incomes, caused by fluctuation in the general level of interest refer to as interest rate
risk. Here the price of securities tend to move inversely with the change in rate of
interest
Inflation Risk: Uncertainity in purchasing power is set to be inflation risk.

UNSYSTEMATIC RISK:
Unsystematic risk refers to that portion of risk that is caused due to factors related to
a firm or industry. This is further divided in to:
Business Risk: Business risk arises due to the changes in operating condition
caused by conditions that thrust upon the firm which are beyond its control. Such as
business cycles, government controls etc.
Internal Risk: Internal risk is associated with the efficiency which a firm conducted its
operations within the broader environment imposed upon it.
Financial Risk: Financial risk is associated with the capital structure of a firm. A firm
with no debt financing has no financial risk, Extends depend upon the leverage of the
firm’s capital structure.
WORKING OF A PORTFOLIO MANAGEMENT SERVICES:-
Each PMS account is unique and the valuation and portfolio of each account may
differ from one another . there is no NAV for PMS scheme ; however the customer
will get the valuation of his portfolio on a daily basis from the PMS provider. Each ne


PMS account is unique from one another. Every PMS scheme has a model portfolio
and all the investments for a particular investor are done in the portfolio management
services on the basis of model portfolio of the scheme .However the portfolio may
differ from investor to investor .this is because of:

Entry of investors at different time.
Difference in amount of investment by the investors.
Redempt ions/additional purchase done by investors.
Market scenario – E.g. if the model portfolio has investment in Infosys ,and the
current view of the fund manager on Infosys is “HOLD” (and not “BUY”), a new
investor may not have Infosys in his portfolio.
Under PMS scheme the fund manager interaction also take place. The frequency
depend on the size of client portfolio and the portfolio management services
provider. Bigger the portfolio, frequency of interaction is more .Generally, the PMS
provider arranges for fund manager interaction on a quarterly/half yearly basis.

PORTFOLIO MANAGEMENT SERVICES (PMS) CHARGES
A PMS charges following fees. The charges are decided at the time of investment
and are vetted by the investor.
ENTRY LOAD – PMS scheme may have an entry load of 3%.it is charged at the
time of buying the PMS only .
MANAGEMENT CHARGES- Every portfolio management services scheme
charges fund management charges. Fund management charges may vary from 1%
to 3% depending upon the PMS provider . It is charged on a quarterly basis to the
basis PMS account.
PROFIT SHARING – some PMS scheme also have profit sharing arrangement (in
addition to the fixed fees),where in provider charges a certain amount of fees/profit
over the stipulated return generated in the fund. According to the SEBI mandate,
every PMS has to follow a high watermarking scheme.
For E.g. PMS X has fixed charges of 2% plus a charge of 20% of fees for return
generated above 15%in the year. In this case if the return generated in the year by
the scheme is 25%,the fees charged by the PMS will be 2%+{(25%-15%)}*20%}


the fees charged is different for every portfolio management services provider and
for scheme. It is advisable for the investor to check the charge of the scheme. Apart
from the charge mentioned above, the PMS charges the investors on following
counts as all the investment are done in the name of the investor:
 Custodian fee
 Demat account opening charges
 Audit charges
 Transaction brokerage

TAXATION FOR PORTFOLIO MANAGEMENT SERVICES (PMS)
Any income from portfolio management services account is a business income.
Unlike MF,PMS is not required to remain 65%+invested in equity to get equity
taxation benefit. Each portfolio management services account is in the name of
additional investor and so the tax treatment is done on an individual investor level.
Profit on the same can be considered as business income. (I.e. slab wise ). Profit
can be considered as capital gains. [STCG (15%)or LTCG(Tax-free)]. It depend on
client charted Accountant or the assessing officer how he treats this income. The
PMS provider sends an audited statement at the end of the FY giving details of
STCG and LTCG; it is on the client and his CA to decide to treat it as capital gain or
business income.

HOW IS PMS DIFFERENT FROM A MUTUAL FUND?
Both PMS and MUTUAL FUNDS are types of managed funds. The difference to the
investor in a portfolio management services over a MUTUAL FUND is:
 Concentrated portfolio.
 Portfolio can be tailored to suit the needs of investor.
 Investors directly own the stocks, rather than fund owning the stocks.
 Difference in taxation.


COMPANY PROFILE
THE RELIANCE GROUP

The Reliance Group is among India’s top three private sector business houses on all
major financial parameters, with a market capitalization of Rs. 325000 Crores( US$
81 Billion), net assets in excess of Rs. 115000 Cr. (US$29 Billion) and net worth to
the tune of Rs 55000 Cr (US$14 Billion).
Across different companies, the group has a customer base of over 100 million, the
largest in India, and a shareholder base of over 12 million, among the largest in the
world.
Through its products and services, The Reliance group touches the life of 1 in 10
Indians every day. It has a business presence that extends to over 20000 towns and
4.5 lacs villages in India, and 5 continents across the world.
The interest of the group range from communication
(Reliance Comm.) And financial services (Reliance Capital Ltd) to generation,
transmission and distribution of power(Reliance Energy), infrastructure and
entertainment.
 Reliance communications.
 Reliance capital.
 Reliance infrastructure.
 Reliance power.
 Reliance entertainment.
 Reliance Health.

Reliance Capital :-
Reliance Capital, a constituents S&P, CNX. Nifty, MCSE India, is the part of the
Reliance group. It is one of India’s leading and amongst most valuable financial
services companies in the private sector.
Reliance capital has interest in
 Asset management & Mutual funds
 Life and general insurance


 Commercial finance
 Stock Broking
 Investment Banking
 PMS (Portfolio Management Services)
 Distribution of financial products
 Exchanges
 Private Equity
 Asset Reconstructions
 Wealth Management services
 Proprietary investments
 Other Activities in Financial services
Reliance mutual fund is India’s largest mutual fund over 7 million investor folios.
Reliance life insurance is among the top 4 private sectors life Insurers, in terms of
individual premium.
Reliance general insurance is amongst the leading private sector general insurers.
Reliance securities is one of india’s leading broking houses. Reliance money is one
of india’s leading distributors of financial products and services.
Reliance capital has a net worth of Rs. 7810 Cr. And total assets of Rs. 31994
Crores on march 31,2011.

Reliance Mutual Fund:-
Reliance Mutual Fund ('RMF'/ 'Mutual Fund') is one of India’s leading Mutual Funds,
with Average Assets Under Management (AAUM) of Rs. 1,01,577 Crores and an
investor count of over 66.71 Lakh folios. (AAUM and investor count Jan-Mar 2011)
Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing
mutual funds in India. RMF offers investors a well-rounded portfolio of products to
meet varying investor requirements and has presence in 159 cities across the
country. Reliance Mutual Fund constantly endeavors to launch innovative products
and customer service initiatives to increase value to investors. Reliance Capital
Asset Management Limited (‘RCAM’) is the asset manager of Reliance Mutual Fund.


RCAM a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up
capital of RCAM, the balance paid up capital being held by minority shareholders.
Reliance Capital Ltd. is one of India’s 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 Ltd. has
interests in asset management, life and general insurance, private equity and
proprietary investments, stock broking and other financial services.

Sponsor : Reliance Capital Limited
Trustee : Reliance Capital Trustee Co. Limited
Investment Manager : Reliance Capital Asset Management Limited
/ AMC
Statutory Details : The Sponsor, the Trustee and the Investment Manager are
incorporated under the Companies Act 1956.

Reliance Portfolio Management Services:-
Reliance Portfolio Management Services is a premium financial service, offering
innovative & exclusive products through discretionary & advisory services. Our
expertise has earned the trust of thousands of high net-worth individual/ institutional
investors and created a family that is constantly growing. Reliance Portfolio
Management Services can conduct your investments with true finesse coupled with
passion and innovation.
Reliance Portfolio Management Services is a part of Reliance Capital Asset
Management Ltd., a wholly owned subsidiary of Reliance Capital Ltd.
Reliance Capital Ltd. is one of India's 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 Ltd. has interests in asset management, life and general insurance,
private equity and proprietary investments, stock broking and other financial
services.


Our Vision

"To be a globally respected wealth creator with an emphasis on customer care and a
culture of good corporate governance"
Our Mission

"To be a multi-asset class player with a significant presence in domestic market &
expand horizons in International markets through Advisory services."

Reliance PMS products:-
1. Absolute freedom portfolio
2. Absolute freedom option optimizer portfolio- A tactical Asset Allocation Plan.
3. Young Star Portfolio – Mid & Small cap option
4. Principal protected silver linked structure
5. All Season Debt Shield- Aggressive Return Option
6. Blended Debt Plus- Hybrid Option

ABSOLUTE FREEDOM PORTFOLIO

Investment Strategy:
The investment strategy endeavours to create a diversified portfolio spread across
market capitalizations. The portfolio will generally aim to hold around 25 stocks. This
would ensure meaningful positions in majority of the holdings. The top 10holdings
would generally comprise 50% of the portfolio value. The intent is to identify,
businesses having sustainable competitive advantage, scalability, ability to generate
cash, high operating margins, good return ratios, quality management, low debt to
equity ratio and are available at low valuations, relative to their historical valuations
and peer group sectors. The portfolio would normally have low churn ratio.
Cash/derivatives may be tactically used as a defensive/hedging tool at points in time.
Investment Structure
Minimum Investment : Rs. 50 Lacs
Suitable Investment Horizon : 3 years


Mode of Inflow:
Domestic Investors: Cheque should be drawn in clients name only. Investors will
also have the option to transfer their portfolio holding subject to review.
NRI Investors: A separate PIS account shall be opened in the name of the investor
and cheque should be drawn in favor of the account holder.

YOUNG STAR PORTFOLIO- Mid Small Cap Opion

Investment Strategy
The Young Star Portfolio shall follow a growth oriented strategy with focus on small
and mid cap stocks. Large Cap stocks shall be used to provide stability and liquidity
to the portfolio. Importantly, the portfolio shall not be averse to using cash and cash
equivalents in a bearish market. The endeavour would be to offer greater stability
with potentially higher returns.

Investment Rationale
The Indian economy is characterised by high savings and high investments rate.
Empirical evidence of Asian economies suggests that high savings investments
rate, results in a phase of hyper growth for an average period of 25 – 35 years.
Importantly, India is only at the 7th year of this phase of high growth.
Growth has caused and will continue to result in significant changes in the structure
of the economy and markets
New opportunities emerge throwing up new winners / leaders. This churn offers
investors a huge opportunity to create wealth. These opportunities typically start
small and then grow large as they realize their potential. In the past 11 years market
capitalization of Nifty has increased by more than 17 times.
The growth witnessed has bought significant transformation in the economy and
markets.
 there are sectors and stocks which have seen significantly higher growth than
the broad index
 28 companies currently comprising the Nifty did not form part of the index in
1998


 Small companies of yester years have emerged and now form part of the Nifty
index eg: Axis Bank, Sun Pharmaceuticals
Identifying such companies, which are capable of making this transition, offers
investors the potential for out sized returns.

Investment Features
Investor Category: Resident Individual, Institutions

Minimum Investment: Rs. 25 Lacs
Suitable time frame for Investment: 3 years
Benchmark: BSE 200
Upfront Fee: 2.25%
Fixed Management Fee: Investors can choose from the following 2
options.
Option 1: 2.00% p.a.; OR Option 2: 1.50% p.a. Profit sharing of
20% above the hurdle rate of 15% to be charged annually.

Exit Load: 1.00% if exit is made before 12 months from the inception
Other Expenses: Custody, Fund Accounting, audit and other marketing expenses
shall be charged on actual.

Mode of Inflow: Inflow in the form of cash only. Cheque should be drawn in
clients name only.
Investment Risks
The global economic recovery continues to be tenuous. While this may have limited
impact on the Indian fundamentals it could have substantial impact on the portfolio
inflows
The portfolio composition being skewed more towards mid and small-cap stocks, the
volatility in portfolio performance may be much higher in the short term. The ability to
make quick changes to the portfolio may be limited While the investment manager
will conduct full due-diligence on the underlying investments, any error in estimating
future potential may have an adverse impact on the investments, such investments


shall also be impacted to a greater extent by adverse changes in the external
environment / macro economic situation.

Principal Protected Silver Linked Structure:-
Indicative Term Sheet

Nature of Instrument Non convertible debenture
Rating AA-r/Stable (Reaffirmed) by CRISIL
Tenor 36 / 42 months
Issuer of Debentures ECL Finance Ltd
Form of Debentures Dematerialised
Issue opening date 16-Mar-11
Closing date 31-Mar-11
Face Value Rs 100,000/- (Rupees One Lakh Only)
Issue Price Rs 100,000/- (Rupees One Lakh only)

Underlying Benchmark MCX Silver future
Participation Ratio 90%
Silver Performance (Final Fixing Level - Initial Fixing Level)/Initial
Fixing Level.

Structure Payoff Principal + Max(0, PR*Min(80%, Silver
Performance))
Initial fixing value Average of first three quarters
12 A R_______ C______ _______
Final fixing value Average of last three Minimum Investment Rs.
20 lakhs and multiples of 1 lakh.


Terms and Conditions
Tenure (Months):- 42
Minimum Investment (Lacs):- 20
Thereafter in multiples of (Lacs) 01
Upfront Charges 2. 50%


Analysis Of other PMS industry players:-

Motilal Oswal:

1. Value strategy
Value Strategy is meant for investors with a Long Term investment horizon in the
Indian Equity Markets. Discovering an original investment idea involves deep and
meticulous analysis to discover the hidden true values. The portfolio’s investments
philosophy revolves around finding value. As such, the investment philosophy is not
dependent on the market trends but banks on the power of the intellect. A business
is prudently picked for investment after a thorough study of its underlying hidden
long-term potential. To purchase a piece of great business at a fraction of its true
value is the discipline. The Fund manager conservatively picks 12 to 15 value stocks
for a portfolio with a long-term investment philosophy, keeping the portfolio churn
very low and high margin of safety.
Objectives
The Strategy aims to benefit from the long term compounding effect on investments
done in good businesses, run by great business managers for superior wealth
creation.

Follows a value based stock selection strategy
Investment Approach : “Buy Hold”
Investment Horizon: Medium to Long term
Maximize post tax return due to Low Churn
Characteristics
Value based stock selection
Investment Approach : “Buy and Hold”
Investments with Long term perspective
Focused portfolio construction
Capital preservation consciousness*
* No capital guarantee


Philosophy
Identify and purchase a piece of great business at a fraction of its true
value.
Investments with a Long-term investment View. The fund manager strongly
believes that
“Money is made by Sitting”.
Investments are identified by a Bottom up Approach. The aim is to identify
potential long- term wealth creators by focusing on individual companies and
their management bandwidth.
Margin of Safety.
Profile
Investors who like to invest with a Long-term wealth creation view.
Tenure
Long term(3-5 yrs)

2. Bulls Eyes Strategy
Bull’s Eye PMS Strategy under is designed to invest in stocks with short-medium
term perspective. The investment philosophy is to find “Momentum in Value”. It
follows an active process driven method of profit booking and is parked temporarily
in the safety of liquid mutual funds/ exchanges traded liquid funds till further
opportunities are identified. The stock selection lays greater emphasis on companies
which good corporate governance and excellent management track record. It would
participate in emerging sector and turn around stories so as to participate and
capture sharp rallies.
Objective
The Scheme aims to deliver superior returns in Low to medium term by investing in
fundamentally strong stocks with momentum approach, coupled with active profit
booking.


Actively managed multi cap strategy
Investment Approach: Capitalizing on short to medium-term market
opportunities
Regular Profit booking based on stock and market movements

Characteristics
Investment Approach : “Momentum in Value”.
Investments with Short-Medium term perspective.
Regular Profit Booking.
Ability to sit on cash.

Philosophy
Investment in Momentum Sectors.
Identifying the right Sector and right Company with a scalable business
managed by competent managers. To look out for companies with transparency
execution capability and Management Bandwidth.
Investments in market Leaders, who have the Vision to make it big.
The investments timing is event based and doe not take help of technicals.
Buying when the stock is just ripe to begin its big move upwards or vise versa.
The investments are done with a predefined price targets and portfolio follows
an active process of Profit Booking.
In absence of investment opportunities, funds are temporarily parked in the
safety of liquid mutual funds or exchange traded Liquid fund
Profile
Investors who like to invest in value stocks and capitalize on the periodic upside by
an active process of profit booking.
Tenure
Medium Term 1 Year


3.NTDOP
The portfolio is designed to invest in themes /stocks in the small and mid cap
segment which are going to be a part the “NEXT TRILLION DOLLAR GDP
GROWTH”. The Portfolio would target to invest in Small and Mid Cap Opportunities
which have the potential of delivering above-average growth over the next 2-3 years.

The investment philosophy is to invest in stocks which are available at reasonable
valuations and promise more than average growth. The portfolio would aim to
identify emerging themes. The Portfolio would attempt to identify emerging themes
early and exit when these when they are fairly discounted.

We firmly believe that markets rewards consistent growth over a period of time and
only after critical size has been achieved by the company. For any stock to get
recognized by the Market and get a desired Valuation one has to wait for the right
“Trigger Point”. Perception Re-rating happens due to:
Increased Sales volume
Consistent Growth
Better Margins
Growing stakeholders confidence

Objective
The strategy aims to deliver superior returns by investing in focused themes which
are part of the next Trillion Dollar GDP growth opportunity. It aims to predominantly
invest in Small Mid Cap stocks with a focus on Identifying Emerging
Stocks/Sectors.
Investment Approach: “Buy Hold” strategy
Focus on Sectors and Companies which
Promise a higher than average growth


Characteristics
Investments in Small and Mid-cap Stocks
Bottom Up Stock Picking Approach
Focused Theme Portfolio
Investment Horizon - Long term (2 to 3 Yrs)
Benchmark: - CNX Mid Cap
Buy and Hold Philosophy – low portfolio churn
Open Ended Portfolio with Exit Fee
Quarterly Disclosure Of Portfolio

Philosophy
High Growth Story - Sector and Companies which promise a higher than
average growth
Reasonable Valuation - Invest in high growth companies at reasonable
price / value
Emerging Themes - Focus on Identifying Emerging Stocks / Sectors
Buy and Hold Strategy - The Portfolio shall focus on above philosophies and
hold them till it realizes it true market potential. Wealth is created by sitting.

Profile
Investors who would like to invest in opportunities with a long term view in high
growth, under valued stocks in emerging themes.

Tenure
Long Term (3 Years)


Focused IV – A Flexi Cap Strategy
A strategy that can mould itself from a large cap portfolio to mid cap portfolio or vice-
versa History suggests that Large Mid Cap companies tend to perform differently
through economic and market cycles For e.g. mid or small cap stocks could move up
sharply during a certain time period while large cap stocks remain range bound and
vice versa. On the other hand, large cap stocks tend to be less volatile than Mid
Small cap stocks during the downturn. Past experience suggests that at varying
times, MidCaps trade at varying discounts (and sometimes at a premium) to the
Large Caps and this gives opportunities in terms of asset allocation between Mid
Caps and Large Caps. In order to derive optimal returns from the stock markets,
investments need to be diversified and have the flexibility to shift allocations across
market caps.
Helps keep emotions sentiments out of investment process
E.g. A client has invested Rs. 1 crore and when the target return of 15% is achieved,
Rs. 15 Lakhs will automatically be redeemed given back to client
The Fund Manager will continue to manage the balance Rs. 1 crore ( market value)
the above process will be repeated every time the strategy achieves the target
return of 15%.

Objective
The Strategy aims to generate superior returns over a medium to long term by
investing in only 8-10 companies across market capitalization. The Fund Manager
will take active asset allocation calls between cash equity. The strategy will also
take active equity allocation calls between investments in large caps mid caps it
will follow a policy of profit booking with predefined price targets.

Actively managed multi cap strategy
Investment Approach: Capitalize on Top Down Bottom Up strategies of
investing.


Cash Out Strategy: Automatic payout of appreciation amount when the
Client's AUM appreciates by 15%.

Characteristics

Top Down Bottom Up Approaches
Invest in Fund Manager’s top 8-10 stock ideas across Market Cap
Investment horizon: Medium term (12-18 months)
Actively Managed Strategy
Focused Stregy of 8-10 stocks
Risk Return Profile: Medium Risk - Medium to High Return
Benchmark: BSE 200
Monthly disclosure of portfolio
Exit load on withdrawal of the portfolio (part or full) in the 1st year
Exit load will not be charged on the automatic pay-out of the target returns
of 15%
Philosophy
Fundamental Stock Selection Approach
Invest in good blend of Growth Value stocks across market capitalization
Active Equity Allocation between Mid caps Large caps
Allocation between Large Caps and Mid Caps will be a function of their
relative valuations
Market Timing
Active Asset Allocation calls between Cash and Equity
Regular Profit Booking
Strategy will follow a policy of profit booking with predefined price targets
Cash Out Strategy
When the Client’s AUM appreciates by 15%, the appreciation amount will
be automatically paid-out.


Exit load will not be charged on this automatic pay-out
Profile
For investors who look for high return with medium to high risk
Tenure
Medium term (12-18 months)

Focused V contra strategy
Contra Strategy - takes a different view Picking ‘overlooked’ or ‘undiscovered’
stocks-albeit with sound fundamentals. These companies exhibit strong balance
sheet and sustainable business models, but may be underperforming the markets for
a brief period due to various reasons, which are temporary in nature.
Invest in companies, which are out-of-favour with the overall market but at the same
time have unrecognized value. Identify these out-of-favour stocks and go against the
tide, look for that first mover advantage in these scrip’s, in case of a turnaround.
Investors tend to follow trends and short-term events, and flock to the performing
themes. Conversely, they tend to overreact to negative news. Higher the prices go
up; more the people want to buy, resulting in herd mentality. Herd mentality often
leads to stocks trading at a much higher premium/discount than their intrinsic value,
thus creating ‘Contra’ opportunities.
Buy ignored companies and then wait for market to discover them, which then
results in their share prices going up, thus benefiting by going against the tide.
Sell companies when Re-rating target is achieved.

Objective
The strategy aims to invest in fundamentally sound companies that can benefit from
changes in a company’s valuation which reflects a significant change in the markets
view of the company over an horizon of three years. The Strategy focuses on
investing in stocks that can benefit from growth in earnings, re-rating of business or


higher valuation of assets.
The objective is to increase return rather than reduce risk for Investors.

Follows the principle to pick best ideas rather than diversification
Concentrated Strategy Structure of less than 10 stocks
Investment Approach: Follows a “Buy and hold” philosophy with low to
medium churn

Characteristics
Bottom - up stock selection approach
Investment in fundamentally sound Contra stocks
Concentrated strategy of 8 - 10 stocks
Buy and Hold philosophy - Low portfolio churn

Investment Horizon
Hold stock till Re-rating potential is realized
Medium to Long Term - 2 to 3 years

Allocation:
Cash: 0 - 100%;
Stocks: 0 - 100%;
Derivatives: NIL
Risk : Medium to High
Exit load : Applicable in the 1st year
Benchmark : BSE 200
Philosophy

 Companies whose earnings are likely to do better than market expectations.

 Companies benefiting from fundamental changes.


 New management team or new product launch.

 Cost-cutting initiatives or improved pricing.

 Takeovers / Mergers or Acquisitions.

 Companies benefiting from changes in business environment.

 Consolidation or reduction in industry capacity leading to improved pricing.

 Shift in consumption patterns or demographic trends.

 Fundamentally sound companies that have underperformed due to a various
reasons, which are temporary in nature.


 Companies with lower valuation as compared to sector or peers or market.
Profile
For investors who seek for high returns with high risk.

Tenure
Medium to Long Term - 2 to 3 years


Invest India Strategy
A strategy that can mould itself from a large cap portfolio to mid cap portfolio or vice-
versa History suggests that Large Mid Cap companies tend to perform differently
through economic and market cycles. For e.g. mid or small cap stocks could move
up sharply during a certain time period while large cap stocks remain range bound
and vice versa. On the other hand, large cap stocks tend to be less volatile than Mid
Small cap stocks during the downturn. Past experience suggests that at varying
times, MidCaps trade at varying discounts (and sometimes at a premium) to the
Large Caps and this gives opportunities in terms of asset allocation between Mid
Caps and Large Caps. In order to derive optimal returns from the stock markets,
investments need to be diversified and have the flexibility to shift allocations across
market caps.
Helps keep emotions sentiments out of investment process.
E.g. A client has invested Rs. 1 crore and when the target return of 15% is achieved,
Rs. 15 Lakhs will automatically be redeemed given back to client
The Fund Manager will continue to manage the balance Rs. 1 crore ( market value)
the above process will be repeated every time the strategy achieves the target
return of 15%.
Objective
The Strategy aims to generate superior returns over a medium to long term by
investing in only 8-10 companies across market capitalization. The Fund Manager
will take active asset allocation calls between cash equity. The strategy will also
take active equity allocation calls between investments in large caps mid caps it
will follow a policy of profit booking with predefined price targets.

Actively managed multi cap strategy.
Investment Horizon: Medium to Long term.
Investment Approach: Capitalize on Top Down Bottom Up strategies of
investing.
Cash Out Strategy: Automatic payout of appreciation amount when the
Client's AUM appreciates by 15%.


Characteristics
 Top Down Bottom Up Approaches
Invest in Fund Manager’s top 8-10 stock ideas across Market Cap
Investment horizon: Medium term (12-18 months)
Actively Managed Strategy
Focused Stregy of 8-10 stocks
Risk Return Profile: Medium Risk - Medium to High Return
Benchmark: BSE 200
Monthly disclosure of portfolio
Exit load on withdrawal of the portfolio (part or full) in the 1st year
Exit load will not be charged on the automatic pay-out of the target returns
of 15%
Philosophy
Fundamental Stock Selection Approach
Invest in good blend of Growth Value stocks across market capitalization
Active Equity Allocation between Mid caps Large caps
Allocation between Large Caps and Mid Caps will be a function of their
relative valuations
Market Timing
Active Asset Allocation calls between Cash and Equity
Regular Profit Booking
Strategy will follow a policy of profit booking with predefined price targets
Cash Out Strategy
When the Client’s AUM appreciates by 15%, the appreciation amount will
be automatically paid-out.
Exit load will not be charged on this automatic pay-out
Profile
For investors who look for high return with medium to high risk.
Tenure
Medium term (12-18 months)


ENAM PMS
Research based investment approach.
Select stocks with High Margin of Safety.
Adopt appropriate equity diversification.
Integrated approach to portfolio construction.
Top Down + Bottom Up = Model Portfolio.
Value + Growth = Growth At Right Price.
Invest in quality businesses run by sound managements with focus on value
creation.

Focus on pricing value rather than valuing price
Invest with conviction disregarding the crowd
Keep minimal portfolio churn
Corpus can be given either in cheque, securities or a combination of either of these.

Fee Structure

Fixed Fee plan: The fixed fee shall be apportioned and charged at the end of each
quarter based on the daily weighted average net asset value.

Variable fee plan: Variable fee plan shall have a combination of fixed fee and
performance fee.
Fixed Fee component: fixed fee shall be charged on the net asset value. The fixed
fee shall be apportioned and charged at the end of each quarter based on the daily
weighted average net asset value.
Performance Fee component: performance fee shall be levied at the end of the
year on the net asset value subject to returns being over the minimum threshold
level for the year.
The scheme shall follow the system of High Water marking.


Early Withdrawl
Withdrawal before 12 months is permissible subject to conditions.

Execution Reporting
Client portfolio will be maintained on Non-pooled basis, however execution shall be
undertaken on a pooled basis. Net asset Value of the portfolio shall be disclosed on
a daily basis, however the transaction and holding statement shall be provided to the
client on a quarterly basis. Clients shall be provided Audited statements for financial
year ending 31st March for income tax purposes.

ICICI PRUDENTIAL

Aggressive Portfolio

Investment Objective
The Aggressive Portfolio is a diversified equity portfolio that endeavours to achieve
long term growth through capital appreciation

Positioning
The Portfolio is suitable for investors with a medium to high-risk appetite and an
investment horizon of above twelve to eighteen months.

Investment Strategy
Investments in equity related instruments are targeted at long-term capital
appreciation. The focus is on identifying stocks with attractive growth prospects that
are available at reasonable valuations.
The investment strategy follows a mix of a top-down and a bottom-up approach. The
top-down approach is used to identify key macroeconomic and sectoral themes and
subsequently help identify stocks that will benefit from the same. A bottom-up
approach is applied based on the belief that there are always individual companies
that provide attractive investment opportunities in various industry and market
conditions. The prominence given to the top-down vs. bottom-up approach would


vary from time to time depending on macroeconomic, sectoral and company specific
fundamentals.
The Portfolio Manager maintains a diversified portfolio by investing in a basket of
stocks without any undue concentration in any stock or sector. The Aggressive
Portfolio comprises primarily large cap stocks but the flexibility to invest in mid-
cap/momentum stocks is retained. The portfolio may be actively traded to take
advantage of certain market trends with an endeavour to enhance returns.
When markets are uncertain or have a downward bias, the Portfolio Manager
attempt to protect capital by the use of tactical asset allocation. This includes moving
between equity and cash, depending on the market conditions. Large asset
allocation calls will generally be taken in case of an expectation of a sustained and
sharp decline in the markets. At other points, smaller tactical asset allocation calls
may be undertaken with a perspective of attempting to enhance portfolio returns.

Deep Value Portfolio

Investment Objective
The Deep Value portfolio endeavours to generate capital gains over the long term,
by investing in a diversified portfolio of significantly undervalued stocks.

Suitability of the Product

The Deep Value portfolio may be considered suitable for investors with a medium to
high-risk appetite and an investment horizon of above 12 to 18 months.
Investment Strategy
The Deep Value portfolio will invest primarily in stocks that are significantly
undervalued i.e. a stock, which trades at valuations that are significantly below the
estimated fair value of the company. The degree of undervaluation of the stock may
be judged by various quantitative valuation parameters including, but not limited to,
price/earnings, price/book, dividend yield, price/cash flow, replacement cost, sum-of-
part valuation etc.
The core investment philosophy of value investing is based on the belief that stocks


cannot continue to quote at values that are significantly below their fair values over
the long term. At some point in time, the markets are likely to recognize the extent of
undervaluation of these companies. The same could lead to a rerating / appreciation
in the companies stock price. There are various reasons why stocks tend to quote at
low valuations. Some of these include: Irrational market sentiments: that drive down
the price of a stock to a level lower than justified by fundamentals. This could occur
as an overreaction to negative news or as result of market pessimism on
corporate/industry fundamentals. Markets also often tend to ignore certain
stocks/sectors that appear to have low growth or non-exciting stories.

Valuations not factoring in all aspects of the companies earning potential:
Companies may have certain hidden assets on their books or assets whose actual
value may not be factored in by the markets. This could include surplus land, equity
holdings, cash on balance sheets, trademarks etc. The markets are also at times
slow to factor in company developments such as operational or financial
restructuring, entry in to new markets, capacity expansions, introduction of new
products, change in management etc. that could potentially add significant value to
the worth of the business. During cyclical downturns, a number of companies are
also often valued based on bottom cycle earnings, which can look very attractive as
the industry cycle improves. The investment process consists of initially preparing a
universe of stocks that are quoting at low valuations, and subsequently conducting
in-depth fundamental research with an aim of understanding the true worth of the
business, reasons behind the current undervaluation and the potential drivers that
could lead to a rerating of the stock. This is because there are also a large number of
companies whose low valuations are justified by weak fundamentals.
The holding periods of individual stocks tend to be high as the necessary drivers for
the expected re-rating could fall into place over a period of time. The performance of
the Deep Value portfolio may thus not move in line with the overall markets, and
could significantly under or outperform the markets at various points in time. We
would thus recommend that investors invest in the Deep Value portfolio with a
longer-term investment horizon. lio returns.


Literature Review
A number of portfolio models have come up in the past 30 yrs. Which have helped
lay down the theoretical foundations of this concept and which invariably suggest the
best possible ways of forging and maintaining profitable and value enhancing
relationships with customers. Insights have been offered by the likes of
Fiocca(1982), Campbell and cunnigham(1983), Shapiro et al(1987),and many more
scholars, with each of them trying to discuss some new dimension and improving
upon the limitation of previous theories.
Fiocca(1982), The research seeks to establish that customer portfolio management
relies upon the level of competition for customers, buying behaviour and product
attribute in use, while at the same time considering factors like “Difficulty in
managing customers” and “strategic importance” , along with their casual
parameters. A mix of objective, Judgemental and subjective factors has also been
applied while trying to establish any results. Perceived strength of the relationship
was calculated using the variables: technical ability, experience, pricing
requirements, speed of response, frequency of contact, degree of cooperation, trust,
length of relationship, friendship and management distance(frequency of contact).
This research had originally come-up with famous “20-80” rule. The model does not
take into account the distance and culture factor and overlooks the significance of
the customer profitability.


Campbell and Cunningham (1983)
Relationship between customer life cycle and customer data on various buying
parameters is the core issue addressed in the portfolio model which consists of a
three-step analysis using two variables at each stage. The customer preferences
and the portfolio planning, customer market and level of competition are the basic
determinants of the model. However, two drawbacks are associated with this model.
The first one is that the conceptual validity and practicality of using a life cycle
approach to customer analysis can be challenged. Secondly, the choice of
appropriate variables for the analysis can be difficult (Rajagopal and Sanchez,
2005)[1]. The difficulty associated with the collection of accurate market-
share related data is also a big drawback of the suggested approach.

Shapiro et al (1987)
A customer classification matrix was developed after considering cost to
serve suppliers, customer behavior and management of customers, while
considering customers as profit centres. This matrix was used to calculate the profit
dispersion of the portfolio.
Krapfel et al (1991)
This research considered customer relationship as being dependent on criticality of
goods purchased by a customer, quantity of seller’s output consumed by this
customer, substitution costs associated with leaving this buyer and accessing others,
and cost saving resulting from the buyer’s practices and procedures. A relationship
classification matrix was also suggested using “relationship value” and “interest
commonality”.
Since the firms need to be focussed upon providing maximum possible value to
the customer, while at the same maximizing profitability from the overall
customer portfolio, therefore the portfolio theories should be structured in a way
which gives due consideration to market environment and other value determinants.


STATEMENT OF THE PROBLEM

Topic of the study
Analysis of buying behaviour buying criteria of PMS investors towards various
portfolio managers.
Purpose Of the study
This aim of the study is to analyse the buying behaviour of investors towards
different types of PMS product and for identifying key features of a PMS for
deciphering sustainable marketing variables in the design of a new PMS product.
Taking a lead from this, an attempt is also made to find out the important PMS
product attributes that are essential in influencing the purchase decision of the
investors.

Scope of Study
The study is limited to the set of 80 PMS investors who was willing to share their
investment information with us and provide their views on the different investments
criteria that affect PMS investments. The main idea is to study the psyche of HNIs
and corporate investors and find out the most important determinants they consider
while making a PMS investment.

RESEARCH METHODOLOGY
DESIGN
The design of the study undertaken is exploratory and descriptive in nature the
factors that have an impact on the investors psyche are extremely varied and
perception specific. In order to arrive at a reliable and definite conclusion, it was
imperative that an exploratory research is carried out so that all the factors could be
taken into account. To accomplish this most influencing factors from investors point
of view were transformed into 13 positive statement and respondents replies were
recorded on the a scale of 1-5


Sampling
The target population here are HNI and corporate investors. The sample size chosen
for the study is 80 PMS investors with investments in different AMC’s

Tools of data Collection
Out of various tools available for data, questionnaire was considered the most
appropriate. For conducting this research a questionnaire was designed for the
purpose of factor analysis and employed a likert scale from 1-5.

Length of the questionnaire: the questionnaire was restricted to only 9 for the
question. Only those question was included in the questionnaire that was useful and
a must know for the study to be effectively conducted. Lengthy questionnaire can
negatively impact the response rates as well as the representation of the sample.

Question: repetitive question were avoided in the questionnaire so that the
respondent enjoy filling the questionnaire and can fill it using all his knowledge
without getting irritated . apart from this, while framing the question, each and every
factor was taken into consideration.

Scale of the questionnaire: A Likert scale from 1-5 was used for the questionnaire
covering all the possible answers to the question asked so that the respondent has a
say in his answer. The respondent should never feel that the answer he actually
wants to give is not present in the questionnaire.

Structure of the questionnaire: The questionnaire used in the study was structured
in a manner that they reflected a train of thought so that the respondent feels
connected to the questionnaire is the order of question. If the question are not
propetrly ordered, it would resulted in the problem of habituation, it means that some
people will usally start giving the same answer, without really considering it,after


being asked a series of similar question.Respondent tend to deliver more accurate
answer if the question pertaining to the particular factor not asked in a series. The
third important feature that was considered during the formulation of the question is
avoidance of multiple concepts in a single question. So after taking all the
aforementioned variables in to the mind the questionnaire was formulated and
consequently designed.

Avoidance Error:
While the questionnaire was designed, full attention was paid that all possible error
can be avoided. There are two types of errors that could arise while constructing a
questionnaire:

Errors of commission:
Where the questions involved are worded poorly so that they are unclear and
ambiguous.
Errors of Omission:
Where in some questions representing a factor are left out and hence omitted from
the study.

Data Collection Process: The study required the collection of primary data. So in
order to get detailed responses meeting with the investors were fixed and data was
colled through personal visits and discussion done with the investors on a range of
issues. While filling up questionnaire attention was paid in order to avoid any errors.
Data Analysis
For the purpose of data analysis, Version 19 was used to conduct factor analysis.
Moreover, for the survey the primary thing is the excerpts and idea that the investors
have discussed with us. The ideas put forward are quite implementable and
practicable. They are just simple solutions and our focus during the survey was to
extract as much information and ideas as we can during the course of interview.


BASIC STATISTIC ANALYSIS
1. The assets management companies create substantial awareness about their
schemes in the market.
AMCAWARENESS
Cumulative
Frequency Percent Valid Percent Percent
Valid strongly disagree 4 5.0 5.0 5.0
Disagree 18 22.5 22.5 27.5
Neutral 34 42.5 42.5 70.0
Agree 14 17.5 17.5 87.5
Strongly Agree 10 12.5 12.5 100.0
Total 80 100.0 100.0

INFERENCE:-Only 12.5% of the total respondent are Strongly Agree with the
statement that AMC awareness matters before making investment But most of them
are neutral(42.5%).


2. Past performance of the product plays vital role in its selection.

PastexperienceofProduct
Cumulative
Disagree 16 20.0 20.0 35.0
Neutral 19 23.8 23.8 58.8
Agree 19 23.8 23.8 82.5
Strongly Agree 14 17.5 17.5 100.0
Total 80 100.0 100.0

INFERENCE:- Similar percentage(23.75%) of respondent are agree and neutral with
the statement that past experience matters before making an investment. It means
this factor doesn’t effect much for influencing an investor.

3. The advertisement campaigns of products are able to attract investors.


Advertisement
Cumulative
Disagree 16 20.0 20.0 31.3
Neutral 22 27.5 27.5 58.8
Agree 19 23.8 23.8 82.5
Strongly Agree 14 17.5 17.5 100.0
Total 80 100.0 100.0

INFERENCE:- Above graph shows that almost similar percentage of respondents
are with every condition but still maximum respondents are neutral(27.5%).


4. Capital appreciation achieved by a scheme is important while considering
investment.
CapitalAppretiation
Cumulative
Disagree 15 18.8 18.8 35.0
Neutral 19 23.8 23.8 58.8
Agree 23 28.8 28.8 87.5
Strongly Agree 10 12.5 12.5 100.0
Total 80 100.0 100.0

INFERENCE:- Maximum percentage of respondents are agree with the
statement(28.75%).


5. The fund should have overall safety and security.

OverallsafetyofFund
Cumulative
Disagree 19 23.8 23.8 47.5
Neutral 13 16.3 16.3 63.8
Agree 14 17.5 17.5 81.3
Strongly Agree 15 18.8 18.8 100.0
Total 80 100.0 100.0

INFERENCE:- Most of the respondents are not agree with this statement. Around
47% respondents are against and 17% neutral so it shows that major portion is not
agree with this statement.

6. Associate suggestions impacts scheme selection and investment.


AssociateSuggestion
Cumulative
Disagree 14 17.5 17.5 23.8
Neutral 33 41.3 41.3 65.0
Agree 9 11.3 11.3 76.3
Strongly Agree 19 23.8 23.8 100.0
Total 80 100.0 100.0

INFERENCE:- Most of the respondent as shown in pie chart are neutral but inspite
of this 2nd major portion is strongly agree.


7. Tax benefit schemes have an edge over other schemes.

TaxBenefit
Cumulative
Disagree 20 25.0 25.0 31.3
Neutral 10 12.5 12.5 43.8
Agree 24 30.0 30.0 73.8
Strongly Agree 21 26.3 26.3 100.0
Total 80 100.0 100.0

INFERENCE:- Major portion of the respondents are agree with this statement as
30% strongly Agree and 27% are agree, only 6.25% are strongly disagree.


Factor Analysis

1.
a
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .519
Bartlett's Test of Sphericity Approx. Chi-Square 143.737
df 15
Sig. .000
a. Based on correlations

The value of KMO and Bartlett’s test is :- .519 which is more than .5. So it shows that
factor analysis can be applied in this case.

2.

Correlation Matrix
Brokeragentreco
BrandName mmendation Hastlefree LowUpfront Transparency LockinPeriod
Correlation BrandName 1.000 .155 -.467 -.653 .061 .325
Brokeragentr .155 1.000 .041 -.475 .100 -.210
ecommendat
ion
Hastlefree -.467 .041 1.000 .458 .156 -.225
LowUpfront -.653 -.475 .458 1.000 .118 -.090
Transparenc .061 .100 .156 .118 1.000 .446
y
LockinPeriod .325 -.210 -.225 -.090 .446 1.000
Above correlation explains that

Brand Name and Low Upfront have negative relationship (-.653) it means both the
factors are antipropotional to each other.

Broker Agent and Low Upfront also have negative relationship(-.475).

Hastle Free investment is also inversely propotional to Brand Name (-.467).

Transparency and Lockinperiod are propotional to each other.


4.

Total Variance Explained
Extraction Sums of Squared Rotation Sums of Squared
a
Initial Eigenvalues Loadings Loadings
Compone % of Cumulative % of Cumulative % of Cumulative
nt Total Variance % Total Variance % Total Variance %
Raw 1 3.709 37.868 37.868 3.709 37.868 37.868 3.560 36.341 36.341
2 2.523 25.752 63.620 2.523 25.752 63.620 2.516 25.685 62.026
3 1.831 18.688 82.308 1.831 18.688 82.308 1.987 20.282 82.308
4 .825 8.424 90.732
5 .575 5.866 96.597
6 .333 3.403 100.000
Extraction Method: Principal Component Analysis.


Total Variance Explained
Extraction Sums of Squared Rotation Sums of Squared
a
Initial Eigenvalues Loadings Loadings
Compone % of Cumulative % of Cumulative % of Cumulative
nt Total Variance % Total Variance % Total Variance %
Raw 1 3.709 37.868 37.868 3.709 37.868 37.868 3.560 36.341 36.341
2 2.523 25.752 63.620 2.523 25.752 63.620 2.516 25.685 62.026
3 1.831 18.688 82.308 1.831 18.688 82.308 1.987 20.282 82.308
4 .825 8.424 90.732
5 .575 5.866 96.597
6 .333 3.403 100.000
a. When analyzing a covariance matrix, the initial eigenvalues are the same across the raw and rescaled solution.

EXPLANATION:-
Three factors out of total six factor covered 82.3% of the total variance. These three factors can
be explained with the help of component matrix. Same thing this Scree Plot is also explaining
same result.


5.

a
Component Matrix
Raw Rescaled
Component Component
1 2 3 1 2 3
BrandName -1.007 .116 .084 -.836 .097 .069
Brokeragentrecommendatio -.309 -.252 .948 -.273 -.223 .838
n
Hastlefree 1.087 .150 .636 .773 .106 .452
LowUpfront 1.090 .313 -.428 .842 .242 -.331
Transparency .016 1.146 .497 .012 .858 .372
LockinPeriod -.480 1.006 -.300 -.376 .788 -.235
a. 3 components extracted.

Component matrix explains that 3 Factors.

Broker/ Agent Recommendation,

Low Upfront fees

Transparency, are most influential factors.


Analysis And Results

Analysis Brief :-

The 13 variables that affect the investor’s decision were put through factor analysis
and Basic Statistical Analysis in SPSS Version 19. 6 out of 13 variables Th variables
were put through Principal Component Analysis and 3 components were extracted
that cumulatively explained 82.3% of the variance in data.

Before probing further in to the analysis part, the data was put through the Kaiser-
Meyer-Olkin(KMO) measure of sampling adequacy and Bartlett’s test of sphericity.

The KMO came out .519, which depicts the suitability of factor analysis to the
undertaken project.

Basic statistic analysis is done by making pie-chart. After analysis I have found
that Capital Appreciation and Tax Benefit are some factors which have significant
influence while investors are indifferent towards factors AMC Awareness,
Advertisement, Associate Suggestions. Certain factors for which investors are
against with the statement of overall safety of fund as they said in security market
there is no certainty.

But there is only one factor Past experience for which there is mixed response from
the investors and hence it is difficult to conclude about this parameter from investors
point of view.


CONCLUSION

The study primarily looks at customers expectation level in PMS product. It focuses
on what are those key attributes that an investor consider while investing into a PMS
product. The investors purchase behaviour doesn’t have a high level of coherence
due to the influence of different purchase factors. The buying intent of a PMS
investor can be due to multiple reasons depending upon his/ her risk return trade-off,
So in such a situation it is getting increasingly difficult for AMC’s to come up with
products that are suitable to the needs of target segment. Hence, this study was
conducted so that a complete PMS product can be developed that would be
inclusive of all the variables affecting investment and it would help marketers to
neatly classify different variables into independent factors. A prudent product design
encompassing all the variables and factors spelt out in this research will make the
new PMS product attractive for the investors. The factors identified in the study
would serve as a key information inputs regarding investors preferences and
priorities and shall guide future fund manager to designing attractive PMS products
for the Indian market.


RECOMMENDATION

Enhancing customer awareness about PMS: AMFI along with NISM should
conduct nationwide customer awareness programme with respect to PMS since a
majority of the potential investors still don’t have clear idea about the concept of
PMS.

COMPLICATED KYC NORMS RESTRICT POTENTIAL INVESTORS:-

PAN card requirement for an investment amount of Rs. 500000 and above in PMS
the customer are required to procure KYC acknowledgement which require huge
amount of paper work. Furthermore , this regulatory directive is not applicable to
other investment schemes.

Banks and NBFC’s still remains the preferred channel of investment, however
customers are not satisfied with quality of advice provided to them. This has also led
to the problem of Mis-selling v/s Right-selling in the Indian pms industry.

PROMOTING PMS IN Tier 2, Tier 3 and Tier 4 Cities:- According to industry
estimates, only 10 of the total AUM come from beyond the top 20 cities. The PMS
industry is ignoring the huge potential of small cities where there are many HNIs,
who don’t have any knowledge about PMS. India post with its 154000 branches,
double the size of all bank branches put together is a formidable channel which has
been highly unutilised and unexplored.

PMS industry lacks a level playing field:PMS industry has been subject to many
regulations like, payment for investment in PMS can only be done through banking
facilities, which although is good but excessive regulation can negatively affect the
customer base. There is a perceived need for AMC’s to shift their business towards
fulfilling customer needs. As customer seek trusted advisors, The relation among
manufacturer- Distributors-customers should not centred towards sales of the
products but for collectively promoting the financial success of customers across all
facets of their professional and personal lives.

“Customer Should Be The King”


REFERENCES
WEBSITES:
1. www.theeconomictimes.com
2. www.valueresearchonline.co
3. www.amfiindia.com
4. www.google.com
5. www.moneycontrol.com
6. www.relianceadagroup.com
7. www.motilaloswal.com
8. www.enam.com
9. www.reliancepms.com
10. www.icicipruamc.com

Books
Marketing Research- By Ajay Pandit


Questionnaire:

Name: Age:

Strongly Agree (SA), Agree (A), neither Agree nor Disagree (Neutral),
Disagree (D), Strongly Disagree (SD)

1. The assets management companies create substantial
awareness about their schemes in the market.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

2. Tick factors according to your choice of making investment.

(A) Brand name of AMC.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

(B) Brokers/ Agent Recommendation.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

(C) Convenient and hassle free investment scheme

SA ( ) A( ) Neutral ( ) D( ) SD ( )

(D) Low upfront fees.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

(E) Transparency in Operations of AMCs.

SA ( ) A( ) Neutral ( ) D( ) SD ( )


(F) Lock in period.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

3. The services provided by AMCs are satisfactory

(Pre and post investment).

SA ( ) A( ) Neutral ( ) D( ) SD ( )

4. Past performance of the product plays vital role in its selection.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

5. The advertisement campaigns of products are able to attract
investors.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

6. Capital appreciation achieved by a scheme is important is
important while considering investment.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

7. The fund should have overall safety and security.

SA ( ) A( ) Neutral ( ) D( ) SD ( )


8. Associate suggestions impacts scheme selection and investment.

SA ( ) A( ) Neutral ( ) D( ) SD ( )

9. Tax benefit schemes have an edge over other schemes.

SA ( ) A( ) Neutral ( ) D( ) SD ( )


Project Report On Reliance PMS

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