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a study on analysis of relationship between risk and return of reliance mutual fund

a study on analysis of relationship between risk and return of reliance mutual fund

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Published by sharathamba
its the work on analysis relationship between risk and return
its the work on analysis relationship between risk and return

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Published by: sharathamba on Mar 19, 2010
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INTRODUCTIONAnalysis on various mutual fund schemes includes estimating therisk by calculating Alpha, Beta, Standard deviation and Sharp ratio. Return of the particular fund can also be estimated by Net asset value (NAV), Compound average annual return, and fund’s total return. Best Five Mutual fund schemes from the reliance have been selected to analyze. Asset under management (AUM) can alsobe calculated to know the present value of fund. Equity exposure of each schemeand schemes which will give higher return can also be determined.Alpha, Beta, Standard deviation and Sharp ratio are the main four important statistical tools to calculate the risk of the each and every mutual fund scheme. The intrinsic value of mutual fund depends on a multitude of factors. Theevaluation of the mutual fund provides a feed back about the performance to evolve better management strategy. Even though evaluation of mutual fund’s performance is considered to be the last stage of investment process, it is a continuousprocess. The managed portfolios are commonly known as mutual funds. Their relative merits of return and risk criteria are evaluated.Analysis of various mutual fund schemes helps to people in the areas ofProfessional management, Diversification, Convenient administration, Return potential, Low costs, Transparency, Flexibility, Choice of scheme and Well-regulated.Choosing a mutual fund scheme is a tough task today than ever. With over30 fund houses to pick from, and most of them claiming first-rate performance,investors are finding it extremely difficult to select a scheme. For example, ifone has to look at the performance of most of the equity funds I the last year,most of them have returned 100% or more. How can one find fault with any of them. The case is not very different in the debt segment, too. Only percentage point differentiates the top performers.INDUSTRY PROFILEThe mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.In the past decade, Indian mutual fund industry had seen dramatic improvements,both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Asset under Management (AUM) was Rs. 6,700 cr. Theprivate sector entry to the fund family raised the AUM to Rs. 4,700 cr in March1993 and till March 2007; it reached the height of Rs. 3, 25,000 cr.Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of its less than the deposits of SBI alone, constitute less than 11% of the totaldeposits held by the Indian banking industry.The main reason of its poor growth is that the mutual fund industry in India isnew in the country. Large sections of Indian investors are yet to be in tellingactuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast to the development of thesector. Each phase is briefly described as:FIRST PHASE – 1964-87:Unit Trust of India was established on 1963 by an Act of Parliament. It was setup by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from theRBI and the Industrial Development Bank of India took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was UnitScheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India and General Insurance Corpor
ation of India. SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bankof Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS):With the entry of private sector funds in 1993, a new era started in the Indianmutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came intobeing, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer was the first private sector mutual fund registered in July 1993.The 1993 SEBI Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI Regulations 1996.The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541crores of assets under management was way ahead of other mutualfunds.FOURTH PHASE – SINCE FEBRUARY 2003:In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assuredreturn and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Governmentof India and does not come under the purview of the Mutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.GROWTH OF MUTAL FUND IN INDIA: The Indian Mutual Fund has passed through three phases. The first phase was between 1964 and 1987 and the only player was the Unit Trust of India, which had a total asset of Rs. 6,700 crores at the end of 1988.The second phase is between 1987 and 1993 during which period 8 Funds were established. The total assets under management had grown to 61,028 crores at the endof 1994 and the number of schemes was 167.The third phase began with the entry of private and foreign sectorsin the Mutual Fund industry in 1993. Kothari Pioneer Mutual Fund was the first Fund to be established by the private sector in association with a foreign Fund.As at the end of financial year 2000 32 Funds were functioning withRs. 1, 13,005 crores as total assets under management. As on august end 2000, there were 33 Funds with 391 schemes and assets under management with Rs 1, 02,849 crores. The securities and Exchange Board of India came out with comprehensiveregulation in 1993 which defined the structure of Mutual Fund and Asset Management Companies for the first time. Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the private players has risen rapidly sincethen. Currently there are 34 Mutual Fund organizations in India managing 1, 02,000 crores.
COMPANY PROFILEINTRODUCTION:“Success is a journey, not a destination.” If we look for examples to prove this quote then we can find many but there is none like that of karvy. Back in theyear 1981, five people created history by establishing karvy and company which is today known as karvy, the largest financial service provider of India.SUCCESS SUTRAS OF KARVY:The success story of karvy is driven by 8 success sutras adopted by it namely trust, integrity, dedication, commitment, enterprise, hard work and team play, learning and innovation, empathy and humility. These are the values that bind success with karvy.VISION OF KARVY:To achieve & sustain market leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide worldclass quality services. In the process Karvy shall strive to meet and exceed customer
s satisfaction and set industry standards.MISSION STATEMENT:“Our mission is to be a leading and preferred service provider to our customers,and we aim to achieve this leadership position by building an innovative, enterprising , and technology driven organization which will set the highest standards of service and business ethics.”COMPANY OVERVIEW:Karvy was established as karvy and company by five chartered accountants duringthe year 1979-80, and then its work was confined to audit and taxation only. Later on it diversified into financial and accounting services during the year 1981-82 with a capital of rs.150000. It achieved its first milestone after its first investment in technology. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar.EVOLUTION OF KARVY:It is well said that success is a journey not a destination and we can see it being proved by karvy. Under this section we will see that how this “karvy and company” of 1980 became “karvy” of 2008. Karvy blossomed with the setting up of itsfirst branch at Mumbai during the year 1987-88. The turning point came in the year 1989 when it decided to enter into one of the not only emerging rather potential field too i.e; stock broking. It added the feather of stock broking into its cap. At the same time it became the member of Hyderabad Stock Exchange throughassociate firm karvy securities ltd and then karvy never looked back……..it wenton adding services one after another, it entered into retail stock broking in the year 1990. Karvy investor service centers were set up in the year 1992. Karvywhich already enjoyed a wide network through its investor service centers, entered into financial product distribution services in the year 1993. One year moreand karvy was now dealing into mutual fund services too in the year 1994 but itdidn’t stopped there, it stepped into corporate finance and investment bankingin the year 1995.Karvy’s strategy has always been being the first entrant in the market. Karvy again hit the limelight by becoming the first registrar in the country to be award

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