INTRODUCTION TO THE TOPIC:
STUDY ON THE
RODUCTS AT RELIANCE MUTUAL FUND
Mutual funds are investment companies that pool money from investors at large and offerto sell and buy back its shares on a continuous basis and use the capital thus raised toinvest in securities of different companies. The stocks these mutual funds have are veryfluid and are used for buying or redeeming and/or selling shares at a net asset value.Mutual funds possess shares of several companies and receive dividends in lieu of themand the earnings are distributed among the share holders. A mutual fund is a companythat brings together a group of people and invests their money in stocks, bonds, and othersecurities. Each investor owns shares, which represent a portion of the holdings of thefund. Mutual funds face risks based on the investments they hold. A bond fund facesinterest rate risk and income risk. Bond values are inversely related to interest rates. If interest rates go up, bond values will go down and vice versa. Bond income is alsoaffected by the change in interest rates. Bond yields are directly related to interest ratesfalling as interest rates fall and rising as interest rise. Income risk is greater for a short-term bond fund than for a long-term bond fund. Similarly, a sector stock fund is at risk that its price will decline due to developments in its industry. A stock fund that investsacross many industries is more sheltered from this risk defined as industry risk. Differentmutual fund categories have inherently different risk characteristics.
Statement of the problem:
At a time when the markets have become highly volatile, the rapid growth of investmentoptions often leads to confusion. The general economic environment impacts theperformance of companies. Therefore, it pays to choose a mutual fund depending on
preferences for regularity of income, risk averseness and repayment of capital.Mutual funds are considered as one of the best available investments as compared toothers, since they are very cost efficient and also a convenient Investment avenue. AllMutual Funds have some amount of risk, but debt oriented Mutual Funds are less risky