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and Sharp ratio. Return of t he particular fund can also be estimated by Net asset value (NAV), Compound aver age annual return, and fund’s total return. Best Five Mutual fund schemes from t he reliance have been selected to analyze. Asset under management (AUM) can also be calculated to know the present value of fund. Equity exposure of each scheme and schemes which will give higher return can also be determined. Alpha, Beta, Standard deviation and Sharp ratio are the main four import ant statistical tools to calculate the risk of the each and every mutual fund sc heme. The intrinsic value of mutual fund depends on a multitude of factors. The evaluation of the mutual fund provides a feed back about the performance to evol ve better management strategy. Even though evaluation of mutual fund’s performan ce is considered to be the last stage of investment process, it is a continuous process. The managed portfolios are commonly known as mutual funds. Their relati ve merits of return and risk criteria are evaluated. Analysis of various mutual fund schemes helps to people in the areas of Professional management, Diversification, Convenient administration, Return pote ntial, Low costs, Transparency, Flexibility, Choice of scheme and Well-regulated . Choosing a mutual fund scheme is a tough task today than ever. With over 30 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, if one 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 the m. The case is not very different in the debt segment, too. Only percentage poin t differentiates the top performers.
INDUSTRY PROFILE The mutual fund industry in India started in 1963 with the formation of Unit Tru st of India, at the initiative of the Government of India and Reserve Bank of In dia. Though the growth was slow, but it accelerated from the year 1987 when nonUTI 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 h ad seen an ending phase; the Asset under Management (AUM) was Rs. 6,700 cr. The private sector entry to the fund family raised the AUM to Rs. 4,700 cr in March 1993 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 o f its less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be in telling actuated with the concept. Hence, it is the prime responsibility of all mutual f und companies, to market the product correctly abreast to the development of the sector. 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 set up by the Reserve Bank of India and functioned under the Regulatory and adminis trative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India took over the regulatory and a dministrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under manage ment. SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS): 1987 marked the entry of non- UTI, public sector mutual funds set up by public s ector 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 i n June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutu al Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 wh ile GIC had set up its mutual fund in December 1990. At the end of 1993, the mut ual 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 Indian mutual fund industry, giving the Indian investors a wider choice of fund familie s. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and govern ed. The erstwhile Kothari Pioneer was the first private sector mutual fund regis tered in July 1993. The 1993 SEBI Regulations were substituted by a more comprehensive and revised M utual Fund Regulations in 1996. The industry now functions under the SEBI Regula tions 1996. The number of mutual fund houses went on increasing, with many foreign mutual fu nds setting up funds in India and also the industry has witnessed several merger s and acquisitions. As at the end of January 2003, there were 33 mutual funds wi th total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds. FOURTH PHASE – SINCE FEBRUARY 2003: In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI w as bifurcated into two separate entities. One is the Specified Undertaking of th e Unit Trust of India with assets under management of Rs.29, 835 crores as at th e end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of In dia, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB an d LIC. It is registered with SEBI and functions under the Mutual Fund Regulation s. With the bifurcation of the erstwhile UTI which had in March 2000 more than R s.76, 000 crores of assets under management and with the setting up of a UTI Mut ual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent merger s taking place among different private sector funds, the mutual fund industry ha s entered its current phase of consolidation and growth. As at the end of Septem ber, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 42 1 schemes. GROWTH OF MUTAL FUND IN INDIA: The Indian Mutual Fund has passed through three phases. The first phase was betw een 1964 and 1987 and the only player was the Unit Trust of India, which had a t otal 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 estab lished. The total assets under management had grown to 61,028 crores at the end of 1994 and the number of schemes was 167. The third phase began with the entry of private and foreign sectors in the Mutual Fund industry in 1993. Kothari Pioneer Mutual Fund was the first F und 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 with Rs. 1, 13,005 crores as total assets under management. As on august end 2000, t here were 33 Funds with 391 schemes and assets under management with Rs 1, 02,84 9 crores. The securities and Exchange Board of India came out with comprehensive regulation in 1993 which defined the structure of Mutual Fund and Asset Managem ent Companies for the first time. Several private sectors Mutual Funds were lau nched in 1993 and 1994. The share of the private players has risen rapidly since then. Currently there are 34 Mutual Fund organizations in India managing 1, 02, 000 crores.
COMPANY PROFILE INTRODUCTION: “Success is a journey, not a destination.” If we look for examples to prove thi s quote then we can find many but there is none like that of karvy. Back in the year 1981, five people created history by establishing karvy and company which i s 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 tr ust, integrity, dedication, commitment, enterprise, hard work and team play, le arning and innovation, empathy and humility. These are the values that bind succ ess with karvy. VISION OF KARVY: To achieve & sustain market leadership, Karvy shall aim for complete customer sa tisfaction, by combining its human and technological resources, to provide world class quality services. In the process Karvy shall strive to meet and exceed cu stomer 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, enter prising , and technology driven organization which will set the highest standard s of service and business ethics.” COMPANY OVERVIEW: Karvy was established as karvy and company by five chartered accountants during the year 1979-80, and then its work was confined to audit and taxation only. La ter on it diversified into financial and accounting services during the year 198 1-82 with a capital of rs.150000. It achieved its first milestone after its firs t investment in technology. Karvy became a known name during the year 1985-86 wh en 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 be ing proved by karvy. Under this section we will see that how this “karvy and com pany” of 1980 became “karvy” of 2008. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. The turning point came in the y ear 1989 when it decided to enter into one of the not only emerging rather poten tial field too i.e; stock broking. It added the feather of stock broking into it s cap. At the same time it became the member of Hyderabad Stock Exchange through associate firm karvy securities ltd and then karvy never looked back……..it went on adding services one after another, it entered into retail stock broking in t he year 1990. Karvy investor service centers were set up in the year 1992. Karvy which already enjoyed a wide network through its investor service centers, ente red into financial product distribution services in the year 1993. One year more and karvy was now dealing into mutual fund services too in the year 1994 but it didn’t stopped there, it stepped into corporate finance and investment banking in the year 1995. Karvy’s strategy has always been being the first entrant in the market. Karvy ag ain hit the limelight by becoming the first registrar in the country to be award
ed ISO 9002 in the year 1997. Then it stepped into the other most happening sect or i.e.; IT enabled services by establishing its own BPO units and at a gap of j ust 1 year it took the path of e-Business through its website www.karvy.com . Th en it entered into insurance services in the year 2001 with the launch of its re tail arm “karvy- the finapolis: your personal finance advisor”. Then in the year 2002 it launched its PCG (Private Client Group) which looks after its High Net worth Individuals .and maintain their portfolio and provides them with other fin ancial services. In the year 2003, it commenced secondary debt and WDM trading. It was a decade which saw many Indian companies going global…..so why the larges t financial service provider of India should lag behind? Hence, karvy launched “ karvy global services limited” after entering into a joint venture with Computer share, Australia in the year 2004.the year 2004 also saw karvy entering into com modities marketing through karvy comtrade. Year 2005 saw karvy establishing a se parate branch for its insurance services under the head “karvy insurance broking ltd” and in the same year, after being impressed with the rapid growth of karvy stock broking limited, PCG group of Hong Kong acquired 25% stake at KSBL. In th e year 2006, karvy entered into one of the hottest sector of present time i.e re al estate through Karvy realty& services (India) ltd. hence , we can see now kar vy being established as the lagest financial service provider of the country. THE SUCCESS LADDER: ORGANIZATION STRUCTURE OF KARVY: HOW KARVY ACHIEVED IT? The core competency of karvy lies in the following points due to which it enjoys a competitive edge over its competitors. The following culture adopted by karvy makes it all time favorite among its clientele: Professionally managed by qualified and trained manpower. Uniquely structured in-house software and hardware department Query handling within 48 hrs. Strong secretarial, accounting and audit systems. Unique work culture of working 7 days a week in 3 shifts. Unmatched network spreading all over India. HOW ACHIEVEMENTS SOUNDS SYNONYMOUS TO KARVY: The landmarks achieved by karvy very well define its success story. In the previ ous pages, we learnt how a company started by five chartered accountants, named as karvy and company turned into today’s karvy group, the largest financial inte rmediary of India. But success didn’t came to karvy at a flow, the hard work and dedication of its workforce made it what it is today…gradually it achieved the following landmarks and now it has became what we call the karvy group, now it i s: Largest independent distributor for financial products. Amongst the top 5 stock broker. Among the top 3 depository participants. Largest network of branches & business associates. ISO 9002 certified operations by DNV. Amongst top 10 investment bankers. Adjudged as one of the top 50 IT users in India by MIS south Asia. Full- fledged IT driven operation. India’s no.1 registrar & securities transfer agent. CLIENTES OF KARVY: Karvy’s culture has helped karvy in achieving such a distinct position in the ma rket where it can boast of its huge client base. Be it a retail investor investi ng Rs. 500 in a SIP in Reliance mutual fund or be it the largest corporate house of the country: Reliance industries- everybody is heading towards karvy for the ir wealth maximization, lets have a look at the clientele of karvy: According to the datas published in year 2007, karvy stock broking ltd. Operates through more than 12000 terminals, more than 290000 accounts are maintained and commands over 3.14% market share of NSE. The distribution services have access
to more than Rs. 40 billion Assets under Management. Karvy being a depository pa rticipant with both NSDL and CDSL manages more than 700000 accounts from more th an 380 locations. Talking about the registry services, it manages over 750 publi c/ right issues. At the same time; it is managing over 16 million portfolios as registrar. If we took a look at some of the top corporate houses availing the services of karvy then we have: Reliance, IOC, IDBI,LIC, Hindustan Unilever, Principal Mut ual Fund, Duetsche Mutual Fund, Yogokawa, Marico Industries, Patni Computers, Mo rgan Stanley, Glenmark, CRISIL, 3M, Kotak Mahindra Bank, Bharti Televenture, Inf osys Technologies, Wipro, Infotech, IPCL,TATA consultancy services, UTI mutual fund etc. Thus in total karvy serves over 16 million investors and 300 corporate s.
PRODUCT PROFILE Now karvy group consists of 8 highly renowned entities which are as follow: 1. : The first securities registry to receive ISO 9002 certification in India. Registered with SEBI as Category I Registrar, is Number 1 Registrar in the Coun try. The award of being ‘Most Admired’ Registrar is one among many of the acknow ledgements we received for our customer friendly and competent services. 2. : karvy stock broking ltd. Consists of five units namely stock broking serv ics, depository participant, advisory services, distribution of financial produc ts, advisory services and private client goups. 3. : it is registered with SEBI as a category 1 merchant banker. Its clientele includesinclude leading corporate, State Governments, foreign institutional inv estors, public and private sector companies and banks, in Indian and global mark ets. 4. : karvy insurance broking ltd is also a part of karvy stock broking ltd. At Karvy Insurance Broking Limited both life and non-life insurance products are provided to retail individuals, high net-worth clients and corporates 5. : The company provides investment, advisory and brokerage services in India n Commodities Markets. And most importantly, it offer a wide reach through our b ranch network of over 225 branches located across 180 cities. 6. : Karvy Global is a leading business and knowledge process outsourcing Servic es Company offering creative business solutions to clients globally. It operates in banking and financial services, inurance, healthcare and pharmaceuticals, m edia , telecom and technology. It has its sales and business development office in New York, USA and the offshore global delivery center in Hyderabad, India 7. : Karvy Realty (India) Limited is engaged in the business of real estate an d property services offering: • Buying/ selling/ renting of properties • Identifying valuable investments opportunities in the real estate sector • Facilitating financial support for real estate and investments in proper ties • Real estate portfolio advisory services 8. : it is a joint venture between Computershare, Australia and Karvy Consulta nts Limited, India in the registry management services industry.
NEED FOR THE STUDY The main purpose of doing this project was to know about different schem e in reliance mutual fund. This helps to know in details about different scheme in reliance mutual fund right from its inception stage, growth and future prospects. It also helps in understanding different schemes in reliance mutual fund s. This project will suggest an investor to choose one among the best of eq uity fund schemes of reliance mutual fund.
OBJECTIVES OF THE STUDY PRIMARY OBJECTIVE To analyze the relationship between risk and return of equity funds of r eliance mutual fund. SECONDARY OBJECTIVE To evaluate the reliance mutual fund. To calculate the rate of return earned over the period. To measure rise taken by the fund. To measure return per unit of risk. To provide valuable suggestion and recommendations.
SCOPE OF THE STUDY Scope of the project is restricted to 5 equity fund managed by reliance mutual fund. They are: 1. Reliance Growth Fund, 2. Reliance Vision Fund, 3. Reli ance Banking Fund, 4. Reliance Diversified Power Sector Fund 5. Reliance pharma Fund. Its analysis of relationship between risk and return; it helps in unders tanding te performance of reliance mutual fund schemes. The techniques of risk and return can be used as an effective mechanism to provide suggestions to an investor of reliance mutual fund
RESEARCH METODLOGY Business Research is an organized, data based, systematic, critical, objective, scientific inquiry or investigation in to a specific problem undertaken, with th e purpose of finding answers or solutions to it. The information provided could be the result of a careful analysis of data gathered first hand or of the data t hat are already available. RESEARCH DESIGN Descriptive research design: The descriptive research includes surveys and fact-finding enquires of different kinds. The major purpose of descriptive research is description of the state of affairs, as it exists at present. The major characteristic of this method is re searchers has no control over the variables, he can only report what has happene d or what is happening. The descriptive study is under taken in order to ascerta in and be able to describe the characteristics of the variables of interest in a situation. DATA COLLECTION The data collection is the data constitute the foundation on which the super str ucture of statistical analysis is built. The results obtained from the analysis are properly interpreted and policy decisions are taken. Hence if the data are a ccurate and in adequate, the whole analysis may be faulty and the decisions will be misleading. SECONDARY DATA COLLECTION: The research has collected the secondary data from the company’s records , products pamphlet, internet, previous project reports. The study is based on s econdary data. TECHNIQUES OF ANALYSIS Beta: Beta = [Cov (r, Km)] / [StdDev (Km)] 2 Where: r is the return rate of the investment; Km is the return rate of the asset class . Alpha: Alpha = [(sum of x)-((b) (sum of x))]/n Where: n = number of observations; b = beta of the found. Standard Deviation:
Where N is the number of samples taken. Sharp Ratio: S(x) = (r-R) / StdDev(x) Where x is some investment; r is the average annual rate of return of x; R is th e best available rate of return of a “risk-free” security (i.e. cash); StdDev is the standard deviation of r. Net Asset Value (NAV): NAV = Market value of asset – Liabilities No. of. Shares out Standing REVIEW OF LITERATURE PERFORMANCE IN INDIA: The industry has steadily grown over the decade. For example, before the public sector mutual funds entry, UTI was managing around Rs 6,700 crore on its own. Pu blic sector mutual funds also helped accelerate the growth of assets under manag ement. UTI and its public sector counterparts were managing around Rs 47,000 cro re when Kothari Pioneer, the first private sector mutual fund, set up shop in 19 93. Before the US 64 fiasco, there were 33 mutual funds with total assets of Rs 1, 21,805 crore as on January 2003. The UTI was way ahead of other mutual funds with Rs 44,541 crore assets under management. The industry overall has performed well over the years. Of course, there were a few funds houses, which disappoint ed investors. However, overall performance has been good. However, lack of aware ness still impedes the growth of the mutual fund industry. Unlike developed coun tries, most of the household savings still go to bank deposits in India. 1. Financial Management of Private and Public Equity Mutual Funds in India: An A nalysis of Profitability (By H.J Sondhi and PK Jain from The ICFAI Journal of ap plied finance, July 2005) This article examines the rates of returns generated b y equity mutual funds,vis-à-vis,364 days T-bills and the Bombay Stock Exchange-1 00(BSE-100) National Index during the period 1993-2002.Rate of return on 364 day s T-bill is the surrogate measure for risk free return and the BSE-100 National index has been chosen as proxy for market portfolio in our analysis. Equity mutu al funds predominantly invest in company equities and hence are risky investment s while choosing to invest in equity mutual funds, the investors expect not only risk premium but also better returns than the market portfolio. The paper has b een divided in to four sections.Section1 outlines the scope and methodology of t he study that includes, inter alia, the basis of computation of rate of return e arned by the equity mutual funds,364 days T-bills and BSE-100 National Index,Sec tion2 computes and analyzes rates of return.Section3 is concerned with compariso n to rates of return of private sector company sponsored equity mutual funds and PSU sponsored equity mutual funds Concluding observations have been recapitulat ed in Section. 2. RelativeRisk Return Analysis Use the Proprietary Bubble Analysis of the Relat ive Risk and Return Analysis of Mutual Funds by the ICICI Bank Private Bank Advi sory Group. 3. Mutual Fund Investments are subject to Market Risks (Portfolio Organizer, Oct ober 2005) this article deals with the risk of Mutual Fund Investments, Types of risks, and the common mistakes done by investor while choosing the funds for th e purpose of investing, Investors responsibility in Investing 4. Empirical Investigation on the Investment Managers’ Stock Selection Abilities : The Indian Experience (By Ramesh Chander from The ICFAI Journal of applied fin ance, August 2005) The study examined the stock selection abilities of investmen t managers in India across the fund characteristics as well as the persistence o f such performance. It also investigated performance variability for a sample of 80 investment schemes for the period starting from January 1998-December 2002.O n the whole, the results reported documents significant statistical evidences fo r passive stock selection abilities of Indian investment managers. It points to the consistency of performance across the measurement criteria. Investment Perfo rmance depends on the stock selection and pertains to the successful micro forec asting for company specific events. It refers to the manager’s ability to identi fy under or overvalued securities. 5. Mutual Fund Industry in India: On a growth Trail (Cover Story, Chartered Fina
ncial Analyst, July 2005) the mutual fund industry in India has been on a roll a s the assets under management continue to see strong spurt in growth. The assets under management swelled to Rs. 1, 67,978 cr. By May 31, 2005 from Rs.1, 01,565 cr. In January 2000.This apart, the industry has also seen a spurt in the numbe r of schemes on offer which amount to 460 at present, catering to varied needs o f investors. A booming economy, soaring stock market and a conducive regulatory environment, amongst a slew of other factors have added to the growth of the ind ustry. Given the huge opportunity in sub-urban and rural markets, which lie hith erto untapped and growing income levels in the country, the industry’s future lo ok bright. 6. Managing Mutual Fund Investments in the Era of change (By Kulbhushan Chandel and OP Verma from the ICFAI Journal of applied finance, October 2005): The study is confined to evaluate the performance of mutual funds on the basis of weekly returns compared with risk free security returns and BSE Index. The present stud y includes the five different sector specific schemes. Among these 25 schemes, o nly sector specific schemes floated by different institutions have been studied .To evaluate the performance of funds only three performance measures have been applied i.e. Sharpe Index, Treynor Index and Jensen’s measure. It is observed th at the performance of sample schemes during the study period is best. However; t here are some instances where poor performance has been reflected. A number of studies have examined the impact of firm-specific variables such as firm size and book-to-market-value, as in Fama and French (1992), while other st udies have examined the impact of the macro-economic factors, as in Chen, Roll a nd Ross (1986), Antoniou, Garret and Priestly (1998), and Poon and Taylor (1992) . Journal of Research into New Media Convergence: The International Technologies: This very journal is basically an interview which is done by Patrick Crogan to S amuel Weber. The title is Targeting, Television and Networking: An Interview wit h Samuel Weber. Here a light is thrown on various aspects by the interviewee on the targeting, media and networking. According to him; The ‘target’ is someone who doesn’t fit the usual criteria so one doesn’t have t he same kind of search procedures as in the normal hiring process. The target of opportunity can be a function of affirmative action policy or be somebody whose qualifications are unusual enough that one would not find them with a regular s earch process following criteria peculiar to an individual discipline. On the one hand the association of targeting with the aim of controlling the fut ure, controlling the environment by identifying a target, localizing it and hitt ing it or reaching it, depending on what area a person is in, and on the other h and the notion of opportunity, which suggests the unpredictable emergence of an event that can’t be entirely planned The coupling of the two terms suggests that targeting, rather than just designating an abstract activity in which, unencumb ered by constraints of time and space, he identify something that he/she wants t o accomplish or goals to be reach and then everything is done to achieve that, i nvolves responding in a very determinate situation spatially and temporally to a n unpredicted, unforeseen event, trying to get that event in some sense under co ntrol. The word ‘opportunity’ itself is interesting because it already condenses this i dea of the unpredictable, singular event being turned into an occasion to do som ething else. An opportunity means precisely to be able to do something with the event. Quite literally, the word suggests a portal, op-port-unity; a gateway thr ough which one can pass into another domain. The latter can be construed as a re alm of goals, and then the opportunity is instrumental zed, like the target. But it can also suggest an area that may not be definable strictly or primarily in terms of goals, aims or ends. In the latter case you can’t be absolutely sure th at you are going to be able to reach your target or even that there is one. So y ou have this tension between the two terms, target and opportunity. In the financial domain as well, where the maximization of profit in the short t erm takes precedence over all other considerations and has come to undermine the very foundations of the capitalist economy that produced it in the first place.
Analyzing Mutual Fund Risk By Arturo Neto , CFA (Contact Author Biography)File d Under: Economics, Mutual Funds: There are a number of attractive mutual funds and fund managers that have performed very well over both long-term and short-te rm horizons. Sometimes, performance can be attributable to a mutual fund manager s superior stock-picking abilities and/or asset allocation decisions. In this a rticle, we ll summarize how to analyze a mutual fund s portfolio and determine w hether there are specific performance drivers. Port folio analysis: - All mutual funds have a stated investment mandate that sp ecifies whether the fund will invest in large companies or small companies, and whether those companies exhibit growth or value characteristics. It is assumed t hat the mutual fund manager will adhere to the stated investment objective. It s a good start to understand the fund s specific investment mandate, but there is more to fund performance that can only be revealed by digging a bit deeper into the fund s portfolio over time. 1. Sector Weights: Sometimes fund managers will gravitate toward certain sectors either because they have deeper experience within those sectors, or the charact eristics they look for in companies force them into certain industries. A relian ce on a particular sector may leave a manager with limited possibilities if they have not broadened their investment net. To determine a fund s sector weight, we must either use analytical software or s ources like Yahoo! or MSN. Regardless of how the information is obtained, the in vestor must compare the fund to its relevant indexes to determine where the fund manager increased or decreased his allocation to specific sectors relative to t he index. This analysis will shed light on the manager s over/underexposure to s pecific indexes in order to gain additional insight on the fund manager s tenden cies or performance drivers. The analysis can be as simple as listing the fund and relevant indexes side by side with a breakdown by sector. For example, for a large cap manager, the simplest way to determine sector reliance is to place th e fund s sector breakdown next to both the S&P 500 Growth Index and the S&P 500 Value Index. Both of these indexes exhibit unique sector breakdowns because cert ain sectors routinely fall into the value category, while others fall into the g rowth category. Technology, known more as a growth sector, will have a higher we ight in the S&P Growth Index than in the S&P 500 Value Index. Industrials, on th e other hand, known as a value sector, will have a higher weight in the S&P 500 Value Index than in the S&P 500 Growth Index. identify any tendencies the fund m anager may have. 2. Attribution Analysis: There are fund managers who claim to have a top-down ap proach and others that claim to have a bottom-up approach to stock-picking. Topdown indicates that a fund manager evaluates the economic environment to identif y global trends and then determines which regions or sectors will benefit from t hese trends. The fund manager will then look for specific companies within those regions or sectors that are attractive. A bottom-up approach, on the other hand , ignores, for the most part, macroeconomic factors when searching for companies to invest in. A manager that employs a bottom-up methodology will filter the en tire universe of companies based on certain criteria, such as valuation, earning s, size, growth, or a variety of combinations of these types of factors. They th en perform rigorous due diligence on the companies that pass through each phase of the filtering process. Step 1: Determine the sector weights for both the fund and the index. Step 2: Calculate the contribution of each sector for the fund by multiplying th e sector weight by the sector return. Repeat for the index. Step 3: Calculate the rate of return for the fund by adding the contribution of each sector together. Repeat for the index. In this case, the fund had a return for the period of 4.38%. The second chart shows the same calculations for the re levant benchmark. We could see that the total return for the benchmark was 3.55% and that the fund outperformed the benchmark by 0.83%. Step 4: Calculate the overweight amount by subtracting the index weight for each sector from the fund weight for each sector.
Step 5: Calculate performance by subtracting the index return for each sector fr om the fund return for each sector. Notice that the fund had a 30% weight to Sec tor 1 while the benchmark only had a 20% weight. As such, the fund manager over allocated to this sector assuming it would outperform. We can see from the retur n of 4.2% for Sector 1 within the fund was 2% less than the return for the same sector within the benchmark. Now this might get a bit tricky: The fund manager m ade the correct choice of allocating to Sector 1 as the sector for the benchmark had a return of 6.2%, the highest of all five sectors; however, the security se lection within the sector was not very good and therefore the fund only had a 4. 2% return. Step 6: Calculate the selection attribution by multiplying the benchmark weight with the difference in performance. Step 7: Calculate the allocation attribution by multiplying the index return for each sector by the overweight amount. Step 8: Calculate the interaction by multiplying the overweight column by the pe rformance column. The third chart shows the calculation of both allocation and security selection contribution. In this example, the manager contribution to performance for overw eighting Sector 1 was 0.62% but the manager did a poor job of security selection , which resulted in a contribution of -0.4%. The last chart shows the active management effect of positive 0.88% minus the un explained portion of -0.055, resulting in active management contribution of 0.82 5%. As you can see, this information is very useful to determine whether a manager i s driving performance through asset allocation (top-down) or security selection (bottom-up) analysis. The results of this analysis should be compared to the fun d s stated mandate and the fund manager s process. A study on the performance and characteristics on the Swedish fund market Author : Johan Bergström; Victor Sundén; :- Abstract: In this paper we study the relation between fund performance and a set of fund-specific attributes of Swede n funds in the period 2003-2007, extending the existing research on fund perform ance. The paper studies a sample of about 90 Sweden funds, performing a number o f different statistical tests to verify the robustness of the results. We genera te the risk-adjusted return of the funds, by regressing fund returns against app ropriate benchmarks. We use these estimates as a measure of fund performance and then analyze the relation between fund performance and attributes such as fund size, flows, management fees, past performance and a proxy for trading activity. We find evidence of a significant, positive relationship between fund size and risk-adjusted return as well as a positive relation between the money flow to fu nds and risk-adjusted return, i.e. the existence of “smart money”. We also find some evidence of persistence in the sample. Risk and Return in Mutual Fund Selection: - How to interpret statistical measure s of risk. BY ROBERT A. CLARFELD AND PHYLLIS BERNSTEIN JULY 1997:- Mutual fund i nvestors still get only half the story. The focus—in both the financial press an d in advertisements—is on investment return, often precisely quantified by histo rical returns over several time intervals, with any mention of the funds relativ e risk relegated to imprecise generalities. Mutual fund lists featuring "funds to consider for the next millennium" or "the 17 greatest funds in the history of the universe" appear frequently in the media and make interesting reading. But, over time, such lists have not proven to be particularly insightful. Funds with records of steady gains and favorable risk—r eward characteristics usually are better choices for long-term investors. This m ay be apparent following a deep market correction but difficult to fathom during rising markets, a time when many of these same funds are labeled "laggards." Re ducing mutual fund selection to simplistic levels presumes an ignorant investing public, which does little to promote successful investing. This article is designed to help CPAs interpret the various statistical measures of risk as they apply to mutual funds so they will be in a better position to a dvise their clients on this often complex aspect of stock and bond investing. Kn owing how to interpret this information correctly will make it easier for CPAs t
o make responsible and informed investment recommendations to their clients. UNDERSTANDING RISK:-Many investors believe the United States is in a period of g reat uncertainty in its investment markets. This is a conclusion that applies du ring all market conditions—except in hindsight. The risk an investor takes is wh at provides the opportunity for higher returns. Recognizing this makes it clear that more emphasis should be placed on risk analysis when CPAs and their clients make investment decisions. Risk analysis is central to mutual fund research. Fo cusing on the long-term relationship between risk and return will enable CPAs to establish realistic expectations as to expected performance under various marke t conditions. Risk exists when there is uncertainty about whether future returns will differ f rom the expected returns. Risk is an attribute that without context is neither g ood nor bad. Accordingly, the CPAs role is not to eliminate risk but, rather, to control risk and to make sure that clients are adequately compensated for the r isks they take. The difference between the required rate of return on a mutual f und—given its risk—and the risk-free rate is the risk premium. MEASURING RISK: - Since assuming risk is inherent to the investment process, mut ual fund investors must be adequately and consistently rewarded for the risks th ey assume. Prudent research means searching for fund managers who consistently p roduce returns justifying the risks they have taken. Modern portfolio theory research developed a number of statistics that make it p ossible to more precisely quantify the relationship between risk and return. The se measurements help determine • Funds volatility (standard deviation). • How closely a fund mirrors a particular market index (R²). • How volatile a fund is compared with that market index (Beta). • How much of funds risk-adjusted return is created by a talented manager (Alpha)
LIMITATIONS OF THE STUDY • The study is based on secondary data • The analysis is based on one company • The study is restricted to limit duration (3 months). • Risk management is the wide topic and it’s difficult to analyze thorough ly with in the short period • This analysis is carried based on certain assumptions hence the analysis would be biased
34ANALYSIS AND INTERPRETATIONS Reliance Growth Fund as on January 29, 2010 Investment objective The primary investment objective of the Scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a researc h based investment approach. However, it may be understood that the above is onl y indicative. The above pattern may be altered by the Investment Manager in line
with the Investment Objective. Fund manager: Mr. Sunil B. Singhania Volatility Measures: Standard deviation 37.29 Sharp ratio 0.41 Beta 1
Dividend plan Growth plan PERFORMANCE 6 months Growth Fund 19.61 BSE100 9.38 85.39 Table No: 3.1.1
54.1992 422.5226 1 Year 3 Years 5 Years Since Inception 107.28 14.26 30.09 29.69 6.47 20.3 12.37
Inference:Fund performed very well when compared with Benchmark index (BSE SENSEX) since inception. Chart No: 3.1.1
TABLE : 3.1.2 MONTHLY RETURNS OF RELIANCE GROWTH FUND NAV FOR THE PEROID OF APRIL 2005 – MARC H 2010 DATE NAV (Rs) 31/03/2005 32.61 29/04/2005 33.66 31/05/2005 36.16 30/06/2005 36.75 31/07/2005 41.13 31/08/2005 45.72 30/09/2005 47.57 31/10/2006 42.94 30/11/2005 47.74 30/12/2005 48.57 31/01/2006 52.01 28/02/2006 52.82 31/03/2006 48.31 28/04/2006 55.34 31/05/2006 49.36 30/06/2006 44.66 31/07/2006 43.34 31/08/2006 48.34 29/09/2006 52.55 DIVIDEND (Rs) RETURN (Fund) 5 1.05 2.5 0.59 4.38 4.59 1.85 -4.63 4.8 3 0.892840385 3.44 0.81 7.5 -4.36800833 7.03 -5.98 -4.7 -1.32 5 4.21
31/10/2006 30/11/2006 29/12/2006 31/01/2007 28/02/2007 31/03/2007 30/04/2007 31/05/2007 29/06/2007 31/07/2007 31/08/2007 28/09/2007 31/10/2007 30/11/2007 31/12/2007 31/01/2008 29/02/2008 31/03/2008 30/04/2008 30/05/2008 30/06/2008 31/07/2008 31/08/2008 30/09/2008 31/10/2008 28/11/2008 31/12/2008 30/01/2009 27/02/2009 31/03/2009 29/04/2009 29/05/2009 30/06/2009 31/07/2009 31/08/2009 30/09/2009 30/10/2009 30/11/2009 31/12/2009 29/01/2010 26/02/2010 11/3/2010
53.08 55.1 57.01 59.12 10.94 47.86 50.8 47.86 56.7 59.77 53.86 60.06 69.89 72.38 81.43 67.48 65.61 50.67 56.16 53.7 45.18 48.2036 42.6755 42.6755 33.1429 30.471 32.8738 30.7907 29.4795 29.3961 34.4708 46.1747 46.2197 49.8809 51.9222 55.8195 53.4006 51.9876 54.8143 53.1127 53.0201 55.4667
0.577573739 2.02 1.91 2.11 -48.18 37.60555759 2.94 -2.94 8.84 3.07 -5.851442195 6.2 9.83 2.49 9.05 -13.95 -1.87 -14.84092974 5.49 -2.46 -8.52 3.0236 -5.5281 0 -9.5326 -2.6719 2.4028 -2.0831 -1.3112 -0.015556244 5.0747 11.7039 0.045 3.6612 2.0413 3.8973 -2.329325568 -1.413 2.8267 -1.7016 -0.077537689 2.4466
Monthly Mean Return 0.402079532 Annualized Monthly Return 24.12477195 Inference:It is inferred from the above table that Reliance Growth Funhas given an nualised return of 24.12% for the Period of April 2005 to March 2010. CHART: 3.1.2 MONTHLY RETURNS OF RELIANCE GROWTH FUND FOR THE PERIOD OF APRIL 2005 – FEBURARY 2009 Reliance Vision Fund as on January 29, 2010 Investment Objective: The primary investment objective of the Scheme is to achieve long-term g rowth of capital by investment in equity and equity related securities through a research based investment approach. Fund Manager: Mr. Ashwani Kumar Volatility Measures:
Standard deviation Sharp 0.41 Beta 1
Dividend Plan 41.4501 Growth Plan 239.5465 PERFORMANCE 6 months 1 Year ception Equity Opportunities Fund 30.5 BSE100 9.38 85.39 6.47 20.3 Table No: 3.1.3
3 Years 86.65 12.37 8.72
5 years 23.82 24.81
Inference:Fund performed very well when compared with Benchmark index (BSE SENSEX) since i nception. CHART NO: 3.1.3
TABLE: 3.1.4 MONTHLY RETURNS OF RELIANCE VISION FUND NAV FOR THE PEROID OF APRIL 2005 – MARCH 2010 DATE NAV (Rs) 31/03/2005 33.2 29/04/2005 33 31/05/2005 35.12 30/06/2005 35.06 31/07/2005 38.22 31/08/2005 40.16 30/09/2005 43.78 31/10/2005 40.35 30/11/2005 45.24 30/12/2005 45.25 31/01/2006 47.89 28/02/2006 50.03 31/03/2006 48.31 28/04/2006 51.38 31/05/2006 44 30/06/2006 42.7 31/07/2006 43.08 31/08/2006 46.34 29/09/2006 49.81 31/10/2006 50.99 30/11/2006 52.13 29/12/2006 54.74 31/01/2007 47.01 DIVIDEND (Rs) RETURN (Fund) 5 -0.2 2.12 -0.06 3.16 1.94 3.62 -3.43 4.89 3 0.076312997 2.64 2.14 7.5 -1.570089946 3.07 -7.38 -1.3 0.38 3.26 3.47 2 1.22015258 1.14 2.61 8 -7.583854585
28/02/2007 31/03/2007 30/04/2007 31/05/2007 29/06/2007 31/07/2007 31/08/2007 28/09/2007 31/10/2007 30/11/2007 31/12/2007 31/01/2008 29/02/2008 31/03/2008 30/04/2008 30/05/2008 30/06/2008 31/07/2008 31/08/2008 30/09/2008 31/10/2008 28/11/2008 31/12/2008 30/01/2009 27/02/2009 31/03/2009 29/04/2009 29/05/2009 30/06/2009 31/07/2009 31/08/2009 30/09/2009 30/10/2009 30/11/2009 31/12/2009 29/01/2010 26/02/2010 11/3/2010
43.76 43.31 46.91 43.31 52.92 55.96 54.7 60.06 65.49 64.55 70.21 60.16 58.7 43.06 46.26 44.25 35.94 38.5091 35.0355 35.0355 27.9335 26.9556 28.942 27.3057 26.0832 25.9406 29.2417 38.4738 38.0466 41.3579 41.7586 46.1048 43.4097 41.3967 43.5886 41.3658 41.4501 42.9
-3.25 -0.45 3.6 -3.6 9.61 3.04 -1.26 5.36 5.47995005 -0.94 5.66 -10.05 -1.46 -15.52074957 3.2 -2.01 -8.31 2.5691 -3.4736 0 -7.102 -0.9779 1.9864 -1.6363 -1.2225 -0.065922292 3.3011 9.2321 -0.4272 3.3113 0.4007 4.3462 -2.6951 -1.805673066 2.1919 -2.2228 0.108958051 1.4499 0.176339737 10.58038421
Monthly Mean Return Annualized Monthly Return
Inference:It is inferred from the above table that Reliance Growth Funhas given an nualised return of 10.58% for the Period of April 2005 to March 2010. CHART: 3.1.4 MONTHLY RETURNS OF RELIANCE VISION FUND FOR THE PERIOD OF APRIL 2005 – FEBURARY 2009 Reliance Banking Fund as on January 29, 2010 Investment Objective: The primary investment objective of the scheme is to generate continuous returns by actively investing in equity and equity related or fixed income securities o f Banks. Fund Manager - Mr. Sunil Singhania Volatility Measures: Standard deviation 38.78 Sharp 0.67 Beta 1.03
Dividend Plan Growth Plan PERFORMANCE 6 months Banking Fund 20.4 S&P CNX Bank Index Table No: 3.1.5
29.4033 73.6623 1 Year 3 Years 5 years Since Inception 98.27 23.39 25.1 34.69 18.17 95.62 12.94 21.05 29.2
Inference:Fund performed very well when compared with S&P CNX Bank Index since inception. Chart: 3.1.5
TABLE : 3.1.6 MONTHLY RETURNS OF RELIANCE BANKING FUND NAV FOR THE PEROID OF APRIL 2005 – MARC H 2010 DATE NAV (Rs) 31/03/2005 20.34 29/04/2005 19.03 31/05/2005 20.31 30/06/2005 20.99 31/07/2005 24.61 31/08/2005 24.48 30/09/2005 26.71 31/10/2006 23.32 30/11/2005 24.59 30/12/2005 21.35 31/01/2006 21.35 28/02/2006 20.84 31/03/2006 16.32 28/04/2006 15.82 31/05/2006 15.2 30/06/2006 13.09 31/07/2006 14.38 31/08/2006 13.07 29/09/2006 18.13 31/10/2006 18.69 30/11/2006 19.7 29/12/2006 19.36 31/01/2007 20.3 28/02/2007 16.45 31/03/2007 16.63 30/04/2007 17.76 31/05/2007 16.63 29/06/2007 21.25 DIVIDEND (Rs) RETURN (Fund) 3 -1.31 1.28 0.68 3.62 -0.13 2.23 -3.39 1.27 4 -3.077332249 0 -0.51 -4.52 -0.5 -0.62 -2.11 1.29 -1.31 5.06 0.56 1.01 -0.34 0.94 2 -3.751477833 0.18 1.13 -1.13 4.62
31/07/2007 31/08/2007 28/09/2007 31/10/2007 30/11/2007 31/12/2007 31/01/2008 29/02/2008 31/03/2008 30/04/2008 30/05/2008 30/06/2008 31/07/2008 31/08/2008 30/09/2008 31/10/2008 28/11/2008 31/12/2008 30/01/2009 27/02/2009 31/03/2009 29/04/2009 29/05/2009 30/06/2009 31/07/2009 31/08/2009 30/09/2009 30/10/2009 30/11/2009 31/12/2009 29/01/2010 26/02/2010 11/3/2010
22.78 22.64 25.74 26.58 26.45 2 28.52 27.32 26.45 22.18 24.64 22.3 18.11 20.4732 20.1403 20.1403 16.1242 15.8557 17.7356 16.2437 14.3839 15.4691 18.8265 26.1508 25.992 27.099 25.2564 2 29.1262 28.6996 30.3555 30.0596 29.356 29.4033 1.69 30.8514
1.53 -0.14 3.1 0.84 -0.054755455 2.07 -1.2 -0.87 -4.27 2.46 -2.34 -4.19 2.3632 -0.3329 0 -4.0161 -0.2685 1.8799 -1.4919 -1.8598 1.0852 3.3574 7.3243 -0.1588 1.107 -1.768796539 3.8698 -0.4266 1.6559 -0.2959 -0.7036 0.104869151 1.4481
Monthly Mean Return 0.182986785 Annualized Monthly Return 10.97920708 Inference:It is inferred from the above table that Reliance Growth Funhas given an nualised return of 10.58% for the Period of April 2005 to March 2010. CHART: 3.1.6 MONTHLY RETURNS OF RELIANCE BANKING FUND FOR THE PEROID OF APRIL 2005 – MARCH 20 10 Reliance Pharma Fund as on January 29, 2010 Investment Objective:The primary investment objective of the scheme is to seek to generate consistent returns by investing in equity and equity related or fixed income securities of Pharma and other associated companies. Fund Manager - Mr. Sailesh Raj Bhan Volatility Measures: Standard deviation 36.28 Sharp 0.72 Beta 1.06
Dividend Plan Growth Plan
PERFORMANCE 6 months Pharma fund 50.54 BSE-HC 25.83 74.71 Table: 3.1.7
1 Year 3 Years 5 years 139.51 27.25 27.36 29.15 7.67 12.22 14.26
Inference:Fund performed very well when compared with Benchmark index (BSE Health Care) si nce inception. Chart: 3.1.7
TABLE: 3.1.8 RELIANCE PHARMA FUND NAV FOR THE PEROID OF APRIL 2005 – MARCH 2010 DATE NAV (Rs) DIVIDEND (Rs) RETURN (Fund) 31/03/2005 12.15 29/04/2005 11.86 -0.29 31/05/2005 12.97 1.11 30/06/2005 13.3 0.33 31/07/2005 14.61 1.31 31/08/2005 16 1.39 30/09/2005 15.69 -0.31 31/10/2006 14.02 -1.67 30/11/2005 16.19 2.17 30/12/2005 16.39 4 0.44706609 31/01/2006 17.46 1.07 28/02/2006 17.98 0.52 31/03/2006 18.79 0.81 28/04/2006 19.64 0.85 31/05/2006 16.589 -3.051 30/06/2006 14.9124 -1.6766 31/07/2006 14.8439 -0.0685 31/08/2006 17.3782 2.5343 29/09/2006 18.2849 0.9067 31/10/2006 18.5753 0.2904 30/11/2006 18.8251 0.2498 29/12/2006 19.1398 0.3147 31/01/2007 19.8327 0.6929 28/02/2007 16.9229 1.5 -2.834167333 31/03/2007 17.0994 0.1765 30/04/2007 18.7051 1.6057 31/05/2007 17.0994 -1.6057 29/06/2007 22.002 4.9026 31/07/2007 22.7237 0.7217 31/08/2007 21.4995 -1.2242 28/09/2007 21.7865 0.287 31/10/2007 23.0309 1.2444 30/11/2007 21.752 -1.2789
31/12/2007 31/01/2008 29/02/2008 31/03/2008 30/04/2008 30/05/2008 30/06/2008 31/07/2008 31/08/2008 30/09/2008 31/10/2008 28/11/2008 31/12/2008 30/01/2009 27/02/2009 31/03/2009 29/04/2009 29/05/2009 30/06/2009 31/07/2009 31/08/2009 30/09/2009 30/10/2009 30/11/2009 31/12/2009 29/01/2010 26/02/2010 11/3/2010
26.416 19.6858 20.7242 17.3621 1.5 19.326 18.9237 17.575 18.4276 17.6943 17.6943 14.1642 14.0845 15.9388 14.1402 13.8812 15.204 15.8915 20.0278 20.1635 22.6739 23.9825 1.5 26.7942 26.7706 29.2269 32.784 31.633 32.2923 0.97 33.9615
4.664 -6.7302 1.0384 -3.289720849 1.9639 -0.4023 -1.3487 0.8526 -0.7333 0 -3.5301 -0.0797 1.8543 -1.7986 -0.259 1.3228 0.6875 4.1363 0.1357 2.5104 1.374755359 2.8117 -0.0236 2.4563 3.5571 -1.151 0.68996418 1.6692
Monthly Mean Return 0.371723291 Annualized Monthly Return 22.30339745 Inference:It is inferred from the above table that Reliance Growth Funhas given an nualised return of 22.30% for the Period of April 2005 to March 2010. CHART: 3.1.8 MONTHLY RETURNS OF RELIANCE PHARMA FUND FOR THE PEROID OF APRIL 2005 – MARCH 201 0 Reliance Diversified Sector Fund as on January 29, 2010 Investment Objective – The primary investment objective of the scheme is to seek to generate continuous return by actively investing in equity and equity related or fixed income secur ities of Power and other associated companies Securitized debt up to 100% of the corpus. The scheme may have an exposure of up to 90% of its net assets in forei gn securities. However, it may be understood that the above is only indicative. The above patte rn may be altered by the Investment Manager in line with the Investment Objectiv e. Fund Manager - Mr. Sunil Singhania Volatility Measures: Standard deviation 38.78 Sharp 0.67 Beta 1.03
Dividend Plan Growth Plan
PERFORMANCE 6 months 1 Year ception Diversified Power Fund 12.65 94.24 S&P CNX Bank Index 4.99 53.19 Table: 3.1.9
3 Years 26.33 14.43 43.47 24.84
5 years 42.12 22.84
Inference:Fund performed very well when compared with S&P CNX Bank Inception since incept ion. Chart: 3.1.9
TABLE:3.1.10 RELIANCE DIVERSIFIED SECTOR FUND NAV FOR THE PEROID OF APRIL 2005 – MARCH 2010 DATE NAV (Rs) 31/03/2005 14.31 29/04/2005 14.47 31/05/2005 15.23 30/06/2005 15.58 31/07/2005 17.85 31/08/2005 19.43 30/09/2005 20.61 31/10/2006 18.96 30/11/2005 21.59 30/12/2005 18.99 31/01/2006 20.83 28/02/2006 21.91 31/03/2006 24.87 28/04/2006 24.99 31/05/2006 21.7975 30/06/2006 20.0308 31/07/2006 20.4674 31/08/2006 22.433 29/09/2006 24.5436 31/10/2006 26.4324 30/11/2006 29.8653 29/12/2006 30.1741 31/01/2007 30.5996 28/02/2007 26.4092 31/03/2007 26.0804 30/04/2007 28.7362 31/05/2007 26.0804 29/06/2007 33.2504 31/07/2007 36.3598 31/08/2007 34.1088 28/09/2007 38.7219 31/10/2007 50.5208 30/11/2007 52.466 31/12/2007 56.8144 31/01/2008 50.4632 DIVIDEND (Rs) RETURN (Fund)
0.16 0.76 0.35 2.27 1.58 1.18 -1.65 2.63 -2.414729041 1.84 1.08 2.96 0.12 -3.1925 -1.7667 0.4366 1.9656 2.1106 1.8888 3.4329 0.3088 0.4255 -4.108699586 -0.3288 2.6558 -2.6558 7.17 3.1094 -2.168491295 4.6131 11.7989 1.9452 4.3484 -6.3512
29/02/2008 31/03/2008 30/04/2008 30/05/2008 30/06/2008 31/07/2008 31/08/2008 30/09/2008 31/10/2008 28/11/2008 31/12/2008 30/01/2009 27/02/2009 31/03/2009 29/04/2009 29/05/2009 30/06/2009 31/07/2009 31/08/2009 30/09/2009 30/10/2009 30/11/2009 31/12/2009 29/01/2010 26/02/2010 11/3/2010
48.8515 42.1742 1.5 44.9972 42.0708 35.2083 38.2306 34.348 34.348 26.5329 24.9402 27.227 26.3476 25.3458 25.1115 2 29.074 38.8966 39.4656 41.9618 43.4897 46.375 45.0982 47.0848 48.8749 46.7287 46.4634 0.78 48.37
-1.6117 -6.646594699 2.823 -2.9264 -6.8625 3.0223 -3.8826 0 -7.8151 -1.5927 2.2868 -0.8794 -1.0018 -0.155391463 3.9625 9.8226 0.569 2.4962 1.5279 2.8853 -1.2768 1.9866 1.7901 -2.1462 -0.248607903 1.9066
Monthly Mean Return 0.575596434 Annualized Monthly Return 34.53578601 Inference:It is inferred from the above table that Reliance Growth Funhas given an nualised return of 34.54% for the Period of April 2005 to March 2010. CHART:3.1.10 MONTHLY RETURN OF RELIANCE DIVERSIFIED SECTOR FUND NAV FOR THE PEROID OF APRIL 2 005 – MARCH 2010 TABLE: 3.1.11 ANALYSIS OF RELATIONSHIP BETWEEN RISK AND RETURN – FROM APRIL 2005 TO FEBURARY 2 010 SCHEMES PERIOD ANNUALISED RETURN ANNUALISED STANDARD DEVIATION SHARP RA TIO RELIANCE GROWTH FUND 60months 24.12% 37.29% 0.41 RELIANCE VISION FUND RELIANCE BANKING FUND RELIANCE PHARMA FUND 60months 60months 60months 10.58% 37.29% 0.41 11% 22.3% 60months 38.78% 0.67 36.28% 0.72 34.54% 38.78% 0.67
RELIANCE DIVERSIFIED SECTOR FUND
INTERFERENCE:Reliance Pharma Fund has the highest Sharp ratio and hence it is the bes t among the funds taken for analysis for the period April 2005 to March 2010 and Reliance Growth Fund is the most conservative fund chosen for analysis for the period April 2005 to March 2010. CHART: 3.1.11
ANNUALISED RETURN FROM APRIL 2005 – FEBURARY 2010
RISK FOR PERIOD APRIL 2005 – MARCH 2009 Chart: 3.1.12 Chart: 3.1.13
TABLE: 3.1.12 ANALYSIS OF RELATIONSHIP BETWEEN RISK AND RETURN – FROM APRIL 2007 TO MARCH 2010 SCHEMES PERIOD ANNUALISED RETURN ANNUALISED STANDARD DEVIATION SHARP RA TIO RELIANCE GROWTH FUND 36months 14.472% 22.374% 0.246 RELIANCE VISION FUND RELIANCE BANKING FUND RELIANCE PHARMA FUND 36months 36months 36months 6.348% 22.374% 0.246 6.6% 23.268% 0.402
13.38% 21.768% 0.432 36months 20.724% 23.268% 0.402
RELIANCE DIVERSIFIED SECTOR FUND
INTERFRENCE:Reliance Pharma Fund has the highest Sharp ratio and hence it is the bes t among the funds taken for analysis for the period April 2007 to March 2010 and Reliance Growth Fund is the most conservative fund chosen for analysis for the period April 2007 to March 2010. FINDINGS FROM THE STUDY Reliance Diversified Sector has given the maximum return for the period April 2005 to March 2010. Reliance Vision fund has given the minimun return for the period April 2 005 to March 2010. Reliance Growth Fund has been associated with maximum risk during the p eriod April 2005 to March 2010. Reliance Pharma Fund has been associated with minimum risk during the p eriod April 2005 to March 2010. In terms of risk adjusted returns Relaince Diversified Sector is the bes t for the period of April 2005 to March 2010. In terms of risk adjusted returns Relaince Vision Fund is the wrost for the period of April 2005 to March 2010.
SUGGESTION AND RECOMMENDATION For the investors looking for the least risky fund, Relaince Pharma Fund is the right fund as the associated with the fund is minimum. For investor looking for high return funds, Reliance Diversified Sector Fund is the right fund as it has given the maximum returns during the period of April 2005 to March 2010. For investors who are looking for funds with highest Risk Adjust Return, Reliance Growth fund is the right fund
CONCLUSION Reliance mutual fund is one of the largest Asset Management Company in the count ry. It manages more than 48 equity schemes and overall and more than 55 schemes for domestic as well as international investors. The total assets managed by Rel iance Mutual Fund as on September 30, 2009 are Rs. 929.79 Crore. The total investors’ accounts handled by Reliance Mutual Fund are more than 8 mi llion. For the benefit of the existing investors and for the new investors the s tudy would of great help. The existing investor can check whether their investme nt is with the right funds, whether the risk associated with the funds are accep table for them. And for the new investors, the study would help them in identify ing the right funds as per their return expectation and risk appetite. The analysis suggest that Reliance Growth fund is the most conservative fund amo ng the diversified equity Funds and Reliance Diversified Sector Fund is the bes t among the equity funds managed by Reliance Mutual fund in terms of Risk Adjust ed Returns.
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