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VIJAY KUMAR (REG.NO- 5049) OF
VISHWA VISHWANI INSTITUTE OF SYSTEM AND MANAGEMENT Under the Guidance of Prof. Bhagya rao (F.Finance)
A PROJECT REPORT Submitted to the FACULTY OF BUSINESS MANAGEMENT In partial fulfillment of the requirements For the award of the POST GRADUATE DIPLOMA IN MANAGEMENT July 2010
I Vijay Kumar, hereby declare that this project tiled “A Study on Different Schemes with Comparison and Evaluation among the Mutual Funds” is an original work carried out by me, under the guidance of Prof. Bhagya rao (F.Finance). The report submitted by me is a bonafide work carried by me of my own efforts and it has not been submitted to any other University or published any time before.
Signature of the Student (Vijay Kumar)
Certified that this Project titled “A Study on Different Schemes with Comparison and Evaluation among Mutual Funds”, is the bonafide work of “Vijay Kumar”, who carried out the research under my supervision, certified further, that to the best of my knowledge the work reported here is does not form part of any other thesis or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.
Signature of the faculty Guide
Certified that this Project titled “A Study on Different Schemes with Comparison and Evaluation among Mutual Funds”, is the bonafide work of “Vijay Kumar”, who carried out the research under my supervision, certified further, that to the best of my knowledge the work reported here is does not form part of any other thesis or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.
Signature of the Company Guide
finance Faculty of VVISM Hyderabad for acting as a Guiding star for me. I shall take forward to receive suggestions. Vijay Kumar (5049) 35 . Vaibhav Shukla (Relationship manager corporate sales) who guide me and help taking right direction in field work. I am highly grateful to Prof. . I firmly believe that there is always scope for improvement and accordingly.I am further thankful to Reliance Mutual Fund.Bikash Gupta (Relationship manager Banking) I further want to thank to Mr. First of all I would like to thank God for his grace . Hyderabad . I further welcome inspiration and suggestion to make it best. Hence I shall forward to end gratefully acknowledge all suggestions received.ACKNOWLEDGEMENT I am grateful to all those who have helped me directly or indirectly in company this project. My sincere apology is who helped me in a variety of wage and whose name could not be individually acknowledged. I sincerely believe that the road of improvement is never ending. Bhagya Rao.which give me chance to held my project study upon of it. I exuberantly thankful to Mr. Who helped me in their own way to complete this interim report.
41 C) COMPANY OVERVIEW…………………………………………………………. RESEARCH METHODOLOGY……………………………………………………. Scope & Limitation………………………………………………………………….14 3. A) INDUSTRY OVERVIEW………………………………………………………. 10 c. Objectives……………………………………………………………………………........34 B) LITERATURE REWIEW…………………………………………………………. 1. 13. 9 b. Need for the Study…………………………………………………………………. DATA ANALYSIS……………………………………………………………………60-79 i) SWOT Analysis………………………………………………………………………. 15 i) Introduction of Mutual Funds……………………………………………………..TABLE OF CONTENTS Chapter Page no.24 ii) Advantages & Disadvantages of Mutual Funds……………………………………28 iii) Types of Mutual Funds…………………………………………………………….11 2.30 iv) Fundamental Term Related With Mutual Funds………………………………….80 35 .44-59 4.. INTRODUCTION…………………………………………………………………… 9 – 12 a.
5...89 35 .83 B) RECOMMENDATION & SUGGESTION…………………………………………84 C) CONCLUSION………………………………………………………………………. A) FINDINGS…………………………………………………………………………….88 i) Bibliography…………………………………………………………………………….
It also classifies the Mutual fund schemes and describes the major players in the industry. This research is exploratory in nature. 35 . which collect the savings of investors and invest them in a large and well-diversified portfolio of securities such as money market instruments. This project deals with the structure of the Indian MF industry and its constituents.Executive Summary Mutual funds are financial intermediaries. MF’s can survive and thrive only if they can live up to the hopes and trusts of their individual members. corporate and government bonds and equity shares of joint stock companies. The choice of sample scheme was guided by the fact that a reasonable amount of information was available and representing true picture of Indian mutual fund industry. I collected data from various secondary sources. with specific reference to Reliance Mutual Fund.
35 . To conduct a comparative analysis of Mutual Fund Returns with that of BSE-100 Sensex returns Evaluating fund performance.CHAPTER 1 Introduction a) Objectives:- To get insight knowledge about mutual funds To know the mutual funds performance levels in the present market analyze the comparative study between other leading mutual funds in the present market To know why one has invested or not invested in Reliance Mutual fund. Identifying and selection of best mutual fund schemes.
35 . Therefore. This study will help the investor to select the best mutual funds which are doing well in the market. the investors are getting confused weather to invest their money in mutual fund and if they invest which mutual fund schemes will be best suitable for them. All of them are introducing the new schemes in the market. This study will also help the company to compare their funds with the other company. the competition is very much increased in terms of mutual fund industry.b) Need for the Study In the current scenario.
ICICI Pru. Also in some cases the companies contacted. which company. The time was not enough to know in detail about the factors. portfolio. Birla Sun Life Mutual Funds. Which could give us clearer picture of the subject. to major the performance of all mutual funds companies in the industry and to what extent each factor is responsible for the same. Reliance mutual fund 2. 35 .e. The study will help to know the preferences of the customers. this constraint led to inability to cover the whole data. This project report may help the company to make further planning and strategy Limitation The major constraint faced by me in making the project was time. were not willing to provide adequate information about the Mutual funds schemes. option for getting return and so on they prefer. i. HDFC Mutual Fund 3.c) Scope of the study The project will cover the 4 mutual funds schemes of 4 different mutual fund companies. 1. mode of investment. Mutual Funds 4.
35 . which can be manipulated or exaggerated by the company (Window dressing). a humble attempt to present useful information and format with an analytical picture of the study with suggestions has been made. However.Most of the data about the companies are collected from the concerned Companies Website or directly through the Concerned Companies. inspite of all these limitations and constraint.
Sources of the data collection will be.CHAPTER-2 Research Methodology Collection of data For the complete study I required data of Mutual Fund and getting from the secondary data base. (1) Internet (2) Various magazines/bulletins (3) News papers (4) Related books TECHNIQUES USED IN THIS STUDY 35 .
the following steps were taken: ¾ Objectives were set . for analyzing. R squared. ¾ Reports were generated. percentage. ¾ Data were collected and recorded. 2010(45 days). 35 . interpreting and comparison of different mutual fund schemes. annual growth rate etc. Standard deviation. Beta. we have used various statistics tools like descriptive statistics. Sharpe Ratio. ¾ Data were analyzed and interpreted. DURATION OF THE STUDY During the period May to June.In this study.
public sector mutual funds set up by public sector banks and Life 35 . at the initiative of the Government of India and Reserve Bank of india.3 INDUSTRY OVERVIEW HISTORY AND ORGANIZATION OF MUTUAL FUNDS IN INDIA The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. At the end of 1988 UTI had Rs. Second Phase – 1987-1993 (Entry of Public Sector Funds): 1987 marked the entry of non.700 crores of assets under management. The first scheme launched by UTI was Unit Scheme 1964.UTI. The history of mutual funds in India can be broadly divided into four distinct phases First Phase – 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.6.CHAPTER. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India.
LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. the mutual fund industry had assets under management of Rs. Bank of India (Jun 90). 1.541 crores of assets under management was way ahead of other mutual funds.47. Punjab National Bank Mutual Fund (Aug 89). following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. At the end of 1993. The number of mutual fund houses went on increasing. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. Bank of Baroda Mutual Fund (Oct 92). SBI Mutual Fund was the first non.Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).44. there were 33 mutual funds with total assets of Rs. Third Phase – 1993-2003 (Entry of Private Sector Funds): The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. the assets of US 35 . The Unit Trust of India with Rs. Fourth Phase – since February 2003: In February 2003.805 crores.21.29. As at the end of January 2003.835 crores as at the end of January 2003. 004 crores. Indian Bank Mutual Fund (Nov 89).UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. representing broadly.
64 scheme. conforming to the SEBI Mutual Fund Regulations. there were 29 funds.76. The second is the UTI Mutual Fund Ltd. which manage assets of Rs.153108 crores under 421 schemes. and with recent mergers taking place among different private sector funds. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 35 . BOB and LIC. PNB. The Specified Undertaking of Unit Trust of India. It is registered with SEBI and functions under the Mutual Fund Regulations. assured return and certain other schemes.000 crores of assets under management and with the setting up of a UTI Mutual Fund. As at the end of September. 2004. 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. sponsored by SBI. the mutual fund industry has entered its current phase of consolidation and growth.
MUTUAL FUND COMPANIES IN INDIA 35 .
List of Some of the AMCs Operating in India Name of the AMC Nature ownership Alliance Capital Asset Management (I) Private Limited Birla Sun Life Asset Management Company Limited Bank of Baroda Asset Management Company Limited Bank of India Asset Management Company Limited Canbank Investment Management Services Limited Cholamandalam Cazenove Asset Management Company Limited Dundee Asset Management Company Limited DSP Merrill Lynch Asset Management Company Limited Escorts Asset Management Limited First India Asset Management Limited GIC Asset Management Company Limited IDBI Investment Management Company Limited Indfund Management Limited ING Investment Asset Management Company Private Limited J M Capital Management Limited Jardine Fleming (I) Asset Management Limited Kotak Mahindra Asset Management Company Limited Kothari Pioneer Asset Management Company Limited Jeevan Bima Sahayog Asset Management Company Limited Morgan Stanley Asset Management Company Private Limited Private Foreign Private Indian Banks Banks Banks Private Foreign Private Foreign Private Foreign Private Indian Private Indian Institutions Institutions Banks Private Foreign Private Indian Private Foreign Private Indian Private Indian Institutions Private Foreign of 35 .
Punjab National Bank Asset Management Company Limited Reliance Capital Asset Management Company Limited State Bank of India Funds Management Limited Shriram Asset Management Company Limited Sun F and C Asset Management (I) Private Limited Sundaram Newton Asset Management Company Limited Tata Asset Management Company Limited Credit Capital Asset Management Company Limited Templeton Asset Management (India) Private Limited Unit Trust of India Zurich Asset Management Company (I) Limited Banks Private Indian Banks Private Indian Private Foreign Private Foreign Private Indian Private Indian Private Foreign Institutions Private Foreign The sponsorers of Association of Mutual Funds in India Bank Sponsored : • • • • SBI Fund Management Ltd. UTI Asset Management Company Pvt. Ltd. BOB Asset Management Co. Institutions: 35 . Canbank Investment Management Services Ltd. Ltd.
JM Financial Mutual Fund Kotak Mahindra Asset Management Co.• • • GIC Asset Management Co. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Ltd 35 . Ltd. Cholamandalam Asset Management Co. Sahara Asset Management Co. Ltd. Credit Capital Asset Management Co. Jeevan Bima Sahayog Asset Management Co. Reliance Capital Asset Management Ltd. Ltd. Escorts Asset Management Ltd. Ltd Sundaram Asset Management Company Ltd. Ltd. Tata Asset Management Private Ltd. Pvt. Predominantly India Joint Ventures: • • • Birla Sun Life Asset Management Co. Ltd. Ltd. Ltd. Private Sector Indian: • • • • • • • • • • BenchMark Asset Management Co. Pvt.
Morgan Stanley Investment Management Pvt. Prudential ICICI Asset Management Co. Pvt. Ltd. One is on the monthly basis and the other is quarterly. Ltd. Fidelity Fund Management Private Limited Franklin Templeton Asset Mgmt. Alliance Capital Asset Management (India) Pvt. These publications are of great support for the investors to get intimation of the know-how of their parked money.Predominantly Foreign Joint Ventures: • • • • • • • • • • • ABN AMRO Asset Management (I) Ltd. HSBC Asset Management (India) Private Ltd. Ltd. Ltd. Ltd. Ltd. 35 . Deutsche Asset Management (India) Pvt. ING Investment Management (India) Pvt. Standard Chartered Asset Mgmt Co. Pvt. Ltd. Principal Asset Management Co. Association of Mutual Funds in India Publications AMFI publishes mainly two types of bulletin. Ltd. (India) Pvt.
MUTUAL FUNDS A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. professionally managed basket of securities at a relatively low cost. Mutual fund brings the benefits of diversification and money management to the 35 . income and/or income preservation. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. The important reasons for this interesting occurrence are: Mutual funds make it easy and less costly for investors to satisfy their need for capital growth. The flow chart below describes broadly the working of a mutual fund: Like most developed and developing countries the mutual fund cult has been catching on in India. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. The money thus collected is then invested in capital market instruments such as shares. debentures and other securities.
Beyond that. THE SECURITY AND EXCHANGE BOARD OF INDIA (Mutual Funds) REGULATIONS. providing an opportunity for financial success that was once available only to a select few." Working of Mutual Fund 35 . furthering your odds to diversify. including money market instruments.its assets are invested in many different securities. A mutual fund.1996 defines a mutual fund as a " a fund establishment in the form of a trust to raise money through the sale of units to the public or a section of the public under one or more schemes for investing in securities. is diversified -.individual investor. by its very nature. there are many different types of mutual funds with different objectives and levels of growth potential.
thus depriving the investors of the possibility of earning a better return. while retaining the right and the obligation to monitor their investments in the scheme (which. The management fee is calculated as a percentage of net assets managed. who are responsible to ensure for ensuring that investors’ interests are properly taken care of In return for their services. The hypothesis is that by taking an incremental risk (of losing capital. Because the goal of investing is to accumulate real wealth – an enhanced ability to pay for goods and services – the ultimate focus of the long-term investor must be on real.Investors: Every investor. has a certain tendency preference to take risk (risk profile / risk appetite). it would be possible for the investor to earn an incremental return. They can delegate this role to the MF. wholly or partly). it would be prudent for investors who take a risk to be able to manage this risk. the moneys of such “passive” these investors would lie either in bank deposits or other “safe” investment options. In the absence of a MF option. not nominal. Therefore. they are paid trustee fees. or the inclination or the skills to actively manage their investment risk in individual securities. But assuming risk without regularly monitoring it is foolhardy. An AMC’s Income for an AMC comes through from the management fees that are it charges to the schemes. invests in individual securities). Distributors 35 . in turn. Trustees: Trustees are the people within the mutual fund organization. over the medium to long term. which is normally charged to the scheme. Asset Management Company (AMC): AMCs manage the investment portfolios of schemes. returns. Some countries provide for performance based management fees as well. fetches a return (net of all costs and expenses) that is higher than what she would otherwise have earned by investing directly. Investing through a MF would make economic sense for an investor if his investment. MF is a solution for investors who lack the time. given his financial position and personal disposition.
Close . some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor . Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed.Ended Schemes : A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The key feature of open-end schemes is liquidity. The fund is open for subscription only during a specified period. In order to provide an exit route to the investors. They are open for sale or redemption during pre-determined intervals at NAV related prices.Ended Schemes : An open-end fund is one that is available for subscription all through the year.TYPES OF MUTUAL FUNDS By Structure: Open . By Investment Objective : 35 . These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. Interval Schemes: Interval funds combine the features of open-ended and close-ended schemes.
preservation of capital and moderate income. Money Market Schemes: The aim of money market funds is to provide easy liquidity. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. each time you buy or sell units in the fund. or fall equally when the market falls. Such schemes generally invest in fixed income securities such as bonds. Income Schemes : The aim of income funds is to provide regular and steady income to investors. Load Funds: A Load Fund is one that charges a commission for entry or exit. It could be worth paying the load. the NAV of these schemes may not normally keep pace. That is. Income Funds are ideal for capital stability and regular income. 35 . It has been proven that returns from stocks.term. That is. no commission is payable on purchase or sale of units in the fund. have outperformed most other kind of investments held over the long term. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. The advantage of a no load fund is that the entire corpus is put to work. certificates of deposit. These schemes generally invest in safer short-term instruments such as treasury bills. corporate debentures and Government securities. These are ideal for investors looking for a combination of income and moderate growth. No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. a commission will be payable.Growth Schemes: The aim of growth funds is to provide capital appreciation over the medium to long. if the fund has a good performance history. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. Such schemes normally invest a majority of their corpus in equities. Balanced Schemes : The aim of balanced funds is to provide both growth and regular income. Typically entry and exit loads range from 1% to 2%. commercial paper and inter-bank call money. In a rising stock market.
The investments are held by the trust in fiduciary capacity (The fiduciary duty is a legal relationship of confidence or trust between two or more parties). FMCG. beneficial and proportional owners of the scheme’s assets. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. 1961. 2000. provided the capital asset has been sold prior to April 1. RIGHTS AND OBLIGATIONS OF MUTUAL FUND INVESTORS Investors are mutual. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. Index Schemes : Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50 Sector Specific Schemes: Sectoral Funds are those. which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings. and Pharmaceuticals etc.Other Schemes : Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. 2000 and the amount is invested before September 30. 35 . Special Schemes : Industry Specific Schemes : Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech.
Investors have a right to be informed about changes in the fundamental attributes of a scheme. 35 . investors can approach the investor relations officer for grievance redressal. etc. offer documents. On redemption request by investors. In case the investor fails to claim the redemption proceeds immediately. it has to pay an interest @ 15%. annual reports. In case of dividend declaration. In case the investor does not get appropriate solution. Investors can obtain relevant information from the trustees and inspect documents like trust deed. he can approach the investor grievance cell of SEBI. Investors can wind up a scheme or even terminate the AMC if unit holders representing 75% of scheme’s assets pass a resolution to that respect. They must receive audited annual reports within 6 months from the financial year end. This rate may change from time to time subject to regulations. investors have a right to receive the dividend within 30 days of declaration. then the applicable NAV depends upon when the investor claims the redemption proceeds. Lastly. In case the AMC fails to do so. investment management agreement. Fundamental attributes include type of scheme. The investor can also sue the trustees. the AMC must dispatch the redemption proceeds within 10 working days of the request. investment objectives and policies and terms of issue.
The per unit NAV is the net asset value of the scheme divided by the number of units. NAV: NAV is the market value of the assets of the scheme minus its liabilities.. It is expressed as per-share amount. SALE PRICE: The price you pay when you invest in a scheme. However in some of the mutual funds. 2. The Net Asset Value . FUNDAMENTAL TERMS RELATED WITH MUTUAL FUNDS 1. the net asset value is calculated many times in a day during the trading period.NAV mainly determines the value of each holdings of the mutual fund. the Net Asset Value is calculated on a daily basis after the trading closes in some specified financial exchange. In a majority of the mutual fund holdings. It is also called offer 35 .
In case of sharp market falls. _ Loads are charged to a scheme to meet its selling. AUM is calculated by multiplying the Net Asset Value (NAV – explained in detail later) of a scheme by the number of units issued by that scheme. A major portion of the Entry Load is used for paying commissions to the distributor. This is also known as front end load.price. 3. This price is NAV related. The first expense that an investor has to incur is by way of Entry Load. Loads are charged as a percent of the NAV. REPURCHASE PRICE: The price at which a close-ended scheme repurchases its units. because of which the AUM may reduce. Adding AUMs for all schemes of a fund house gives the AUM of that fund house and the figure arrived at by adding AUM of all fund houses represents the industry AUM. Entry Load is charged when the investor enters the scheme. 4. 5. the NAVs move down. ENTRY LOAD: Investors have to bear expenses for availing of the services (professional management) of the mutual fund. This is charged to meet the selling and distribution expenses of the scheme. as a fixed amount every year or in a staggered manner depending upon the time for which the investor is invested. Loads can be charged at the time of entry. at the time of exit. Entry load can have an 35 . It is also called bid price. A change in AUM can happen either because of fall in NAV or redemptions. _ 6. ASSET UNDER MANAGEMENT: Assets Under Management (AUM) represents the money which is managed by a mutual fund in a scheme. marketing and distribution expenses. REDEMPTION PRICE: The price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity.
The AMC must have a net worth of at least Rs10 crores at all times and it cannot act as a trustee of any other mutual fund. and not all schemes have similar exit loads as well. if the investor exits after a specified time period. the dividend is reinvested in the scheme itself. ASSET MANAGEMENT COMPANY (AMC) . As Entry Loads increase the cost of buying. Some schemes have Contingent Deferred Sales Charge (CDSC). the unit holders receive units. he will not have to bear any Exit Load. there exist Exit Loads as well. 9.The trustee delegates the task of floating schemes and managing the collected money to a company of professionals. INITIAL PUBLIC OFFER (IPO). AMC charges a fee for the services it renders to the MF trust. usually experts who are known for smart stock picks. Thus the AMC acts as the investment manager of the trust under the broad supervision and direction of the trustees. 8.A fixed time period during which the first sale of units of a scheme are made available to the public. he will have to bear more Exit Load and if he remains invested for a longer period of time. This is an asset management company (AMC).e. his Exit Load will reduce. If the investor exits early. This is nothing but a modified form of Exit Load. wherein the investor has to pay different Exit Loads depending upon his investment period. similarly Exit Loads reduce the amount received by the investor. Not all schemes have an Exit Load. 7. DIVIDEND REINVESTMENT. After some time the Exit Load reduces to nil. 2005 by SEBI. The term Initial Public Offer used by mutual funds has been replaced by a new term “New Fund Offer” effective June 2. 35 . EXIT LOAD: As there are Entry Loads.In a dividend reinvestment plan.impact on the number of units being allotted to an investor. i. Thus the longer the investor remains invested. 10. lesser is the Exit Load. Hence instead of receiving dividend.
which provide moderate return with minimal risk. the average cost of your shares may be lower than the average price over the period you bought them. if an investors opt for bank FD.Allows an investor to periodically invest in units by issuing post-dated cheques or by giving auto debit instructions. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases in the same proportion. For example. It allows the investor to benefit from rupee cost averaging. The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vise versa if he pertains to lower risk instruments. RUPEE COST AVERAGING. 12. which would be satisfied by lower returns. 35 .11. SYSTEMATIC INVESTMENT PLAN (SIP).An investment strategy based on investing equal amounts in a fund at regular intervals. Rupee cost averaging cannot guarantee a profit or protect against loss in declining markets. Because more shares are bought when prices are low and fewer shares when prices are high.
convenience and liquidity. as Mutual funds provide professional management.Thus investors choose mutual funds as their primary means of investing. 35 . That doesn’t mean mutual fund investments risk free. Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns. diversification.
35 . Valuations of assets The value that the underlying asset has. Since. the securities that we have in the portfolio play pivotal importance. Sale and repurchase of units: Sale and repurchase of any unit that we have in our portfolio changes the overall NAV of the fund. We sell this security and after one week when the price of the security becomes Rs 80 we buy it. which in turn may change the value of the entire fund. if the value of that asset changes. sale and repurchase also affects the NAV of the fund. Factors affecting NAV: Variation in investment portfolio: Variation in the investment portfolio causes changes in the NAV of the fund. less the liabilities divided by the total number of units outstanding. or NAV. which in turn may affect the overall value of the fund. which in turn will result in better valuation for the fund. For example. it can change the overall NAV of the fund.NAV: Net Asset Value.. is the sum total of the market value of all the shares held in the portfolio including cash. therefore. same investment portfolios with different NAV gives same returns in percentage terms. keeping all other investments intact. then the NAV of the portfolio will come down. we have a portfolio in which the security A is priced at Rs 100. Therefore. NAV of a mutual fund unit is nothing but the 'book value'. Changing the portfolio or replacing any security with the existing security may change the overall NAV of the fund. whose portfolio the fund has managed or is managing. Thus.
It also measures the volatility of the fund. BETA: It is a ratio that measures the market risk of securities or a fund. on average. Funds with low expense ratios are always preferred as they decrease the overall cost of the security. as compared to that of the overall market. The Beta coefficient indicates the percentage change of the fund’s value when the benchmark value changes by one percentage point.00 is considered to be less volatile. The beta may also be negative.00. the fund is more sensitive than funds in general to the fluctuations of the stock market. move to the opposite direction than the general market development. Beta measures the volatility of the fund’s value relative to the volatility of the fund’s benchmark value. If the beta ratio exceeds one. which means that the value of the fund will. Beta measures the sensitivity of rates of return on a fund to general market movements. Cost associated with the Fund The cost associated with the fund also affects the NAV of the fund. The Market's beta is set at 1. while a beta lower than 1. 35 .00 is considered to be more volatile than the market. a beta higher than 1. All the charges accumulated during the selling of a security are known as Sales charges.
35 . STANDARD DEVIATION: It measures the tendency of data to be spread out. the returns are lower than the risk-free rate. While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund. Sa e h rp R −R P f = σP σ R R P = The standard deviation of the portfolio. The only difference being the use of standard deviation instead of beta.*Benchmark index that is taken here is Sensex. Accountants can make important inferences from past data with this measure. is defined as follows: SHARPE RATIO: Sharpe (1966) developed a composite index which is very similar to the Treynor measure which will be discussed on a later stage. the risk taken has paid off. and if the figure is negative. to measure the portfolio risk. If the Sharpe figure is positive. P= f = Risk free rate. in other words except it uses the total risk of the portfolio rather than just the systematic risk. The standard deviation. a low and negative Sharpe Ratio is an indication of unfavorable performance. denoted with S and read as sigma. Return of the portfolio.
805 crore as on January 2003.REVIEW OF LITERATURE PERFORMANCE IN INDIA: The industry has steadily grown over the decade. lack of awareness still impedes the growth of the mutual fund industry. the first private sector mutual fund. there were 33 mutual funds with total assets of Rs 1. However.vis-à-vis. Public sector mutual funds also helped accelerate the growth of assets under management.J Sondhi and PK Jain from The ICFAI Journal of applied finance. 21. The industry overall has performed well over the years. For example. most of the household savings still go to bank deposits in India. UTI and its public sector counterparts were managing around Rs 47.541 crore assets under management. before the public sector mutual funds entry. overall performance has been good. UTI was managing around Rs 6. However. set up shop in 1993. Financial Management of Private and Public Equity Mutual Funds in India: An Analysis of Profitability (By H. which disappointed investors. Unlike developed countries. 1.364 days T-bills and the Bombay Stock Exchange-100(BSE-100) National Index during the period 1993-2002. Of course. there were a few funds houses.000 crore when Kothari Pioneer.Rate of return on 35 .700 crore on its own. Before the US 64 fiasco. July 2005) This article examines the rates of returns generated by equity mutual funds. The UTI was way ahead of other mutual funds with Rs 44.
It points to the consistency of performance across the measurement criteria. 35 .On the whole.364 days T-bills and BSE-100 National Index. Empirical Investigation on the Investment Managers’ Stock Selection Abilities: The Indian Experience (By Ramesh Chander from The ICFAI Journal of applied finance. October 2005) this article deals with the risk of Mutual Fund Investments. Investors responsibility in Investing 4. August 2005) The study examined the stock selection abilities of investment managers in India across the fund characteristics as well as the persistence of such performance. 5. 3. Investment Performance depends on the stock selection and pertains to the successful micro forecasting for company specific events. and the common mistakes done by investor while choosing the funds for the purpose of investing.Section3 is concerned with comparison to rates of return of private sector company sponsored equity mutual funds and PSU sponsored equity mutual funds Concluding observations have been recapitulated in Section. It refers to the manager’s ability to identify under or overvalued securities.Section2 computes and analyzes rates of return. Types of risks. the investors expect not only risk premium but also better returns than the market portfolio. Mutual Fund Investments are subject to Market Risks (Portfolio Organizer. the basis of computation of rate of return earned by the equity mutual funds.364 days 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. inter alia. Chartered Financial Analyst. It also investigated performance variability for a sample of 80 investment schemes for the period starting from January 1998-December 2002. Equity mutual funds predominantly invest in company equities and hence are risky investments while choosing to invest in equity mutual funds. RelativeRisk Return Analysis Use the Proprietary Bubble Analysis of the Relative Risk and Return Analysis of Mutual Funds by the ICICI Bank Private Bank Advisory Group. The paper has been divided in to four sections. 2. Mutual Fund Industry in India: On a growth Trail (Cover Story.Section1 outlines the scope and methodology of the study that includes. the results reported documents significant statistical evidences for passive stock selection abilities of Indian investment managers.
565 cr.e. Sharpe Index. there are some instances where poor performance has been reflected. 1. Among these 25 schemes. Managing Mutual Fund Investments in the Era of change (By Kulbhushan Chandel and OP Verma from the ICFAI Journal of applied finance. However.To evaluate the performance of funds only three performance measures have been applied i. amongst a slew of other factors have added to the growth of the industry. which lie hitherto untapped and growing income levels in the country. The present study includes the five different sector specific schemes. By May 31.July 2005) the mutual fund industry in India has been on a roll as the assets under management continue to see strong spurt in growth.1. 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. Treynor Index and Jensen’s measure. 6. only sector specific schemes floated by different institutions have been studied . The assets under management swelled to Rs.This apart. 2005 from Rs. the industry’s future look bright. soaring stock market and a conducive regulatory environment. Given the huge opportunity in sub-urban and rural markets. the industry has also seen a spurt in the number of schemes on offer which amount to 460 at present. 67. A booming economy.978 cr. 01. catering to varied needs of investors. It is observed that the performance of sample schemes during the study period is best. 35 . In January 2000.
July 6. India's largest private sector company. 1882 with Reliance Capital Limited (RCL). Birthplace: Chorwad. India Father's Name: Hirachand Govardhandas Ambani Mother's Name: Jamunaben Hirachand Ambani 35 . Ambani Founder Chairman. 2002 Major Group Companies: Reliance Industries Limited. OUR FOUNDER Dhirubhai H. Reliance Industries Limited. 1932 .COMPANY OVERVIEW Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act. as the Settler/Sponsor. village in Saurashtra (Gujarat). India December 28.
the sponsor. 1995 and was amended on August 12. The entire paid-up capital (100%) of Reliance Capital Asset Management Limited is held by Reliance Capital Limited. 35 . a company registered under the Companies Act. 1997 in line with SEBI (Mutual Funds) Regulations.13 crores. Pursuant to this IMA. Reliance Capital Asset Management Limited was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30. Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital Limited.About Reliance Capital Asset Management Ltd: Capital Asset Management Limited (RCAM).30. 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. 1995. The net worth of the Asset Management Company including preference shares as on March 31. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12. 2005 is Rs. 1996.
back office. GIC Housing Finance Ltd. Mumbai . Siddhi Vinayak Temple. Ispat Industries Ltd. RCAM has commenced these activities.RCAM has been registered as a portfolio manager vide SEBI Registration No. if any. 2005 but this activity is yet to commence. Reliance Asset Management (Mauritius) Limited. a Venture Capital Fund registered with SEBI vide Registration no.110 021 Chartered Accountant Director: TRC Financial Services Ltd.Peoples Financial Services Limited Alphaplus Investment Management Private Limited. Malcha Marg. it will further ensure that AMC meets the capital adequacy requirements. New Delhi . Cuffe Parade. Manu Chadha C-35. It has been ensured that key personnel of the AMC. the systems. Flat No.. bank and securities accounts are segregated activity wise and there exists systems to prohibit access to inside information of various activities.IN/VCF/05-06/062 dated June 16. INP000000423 and renewed effective 1st August. Prabhadevi. separately for each such activity. Mr. Ltd. 2003. About Reliance Mutual Fund: 35 . Opp. 12th Floor. Reliance Infoinvestments Limited. 1201/1202. Mr. Kanu Doshi 102. As per SEBI Regulations. Veer Savarkar Marg. Amitabh Chaturvedi * Raheja Empress.400 005 Chartered Accountant Director: Reliance Asset Management (Singapore) Pte Limited. Himalayan Crest Power Ltd. Chankyapuri.400 025 Mr. RCAM has been appointed as the Investment Manager of "Reliance India Power Fund". Khatau Road. SBI Funds Management Pvt.. Kotla Hydro Power Ltd. Shivala. Chairman: Matrix Advisors (India) Private Limited Director: BOB Capital Markets Limited. Mumbai .
Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds. Reliance Equity Advantage Fund. 1995. as the Trustee. 18. Limited (RCTCL). The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. PRODUCTS AND SERVICES OF RELIANCE MF • Equity Schemes 1. IMD/PSP/4958/2004 date 11th. ( Diversified Large Cap) (Structure.973 Crores and an investor count of over 74 Lakh folios. March 2004 vide SEBI's letter no. 1882 with Reliance Capital Limited (RCL). as the Settlor/Sponsor and Reliance Capital Trustee Co. with Average Assets under Management (AAUM) of Rs. Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act. March 2004.Open-ended Diversified Equity Scheme) The primary investment objective of the scheme is to seek to generate capital appreciation and provide long term growth opportunities by investing in portfolio predominately of equity & equity 35 . RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30. (AAUM and investor count as of May 2010). 1.
. . . . . .Rs 2025. . . .related instruments with investments generally in S & P CNX Nifty stocks and the secondary objective is to generate consistent returns by investing in debt and money & money market securities. . . . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . . . . . Exit load……………….22 crore (30/04/2010) Entry load…………… nil. . . August 9. . Reliance Equity Fund ( Diversified Large Cap) (An open-ended diversified Equity Scheme. March 30. 2007 Corpus . Exit load………………. Nil if redeemed or switched out after completion of 1 year from the date of allotment of units.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & of companies which are available in the derivatives segment from time to time and the secondary objective is to generate consistent returns by investing in debt and money market securities. . . Inception Date . . . 2. . . Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. Inception Date .26 crore (30/04/2010) Entry load…………… nil. . . . . 2006 Corpus . . . . . . . . . Rs1466. . . . . . 35 . . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . . . . .
. . Inception Date . . Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. . 4.98 crore (30/04/2010) Entry load…………… nil. Rs 2669. . . . . .3. 35 . 2005 Corpus . . . . Reliance Pharma Fund( Sector) (Open-ended Pharma Sector Scheme) 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. . Reliance Regular Savings Fund (Equity Option) ( Diversified Multi Cap) (Open-ended Scheme) The primary investment objective of this option is to seek capital appreciation and or to generate Consistent returns by actively investing in equity / equity related securities. June 9. 1% if redeemed or switched out on or before completion of 1 year from the date of units. . . . . . . Exit load………………. . . . . .
Inception Date . . . . . . .) The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. . . Nil . Exit load………………. . 2004 Corpus . . . .41 crore (30/04/2010) Entry load…………… nil. . Rs 379. . . . . . . 2005 Corpus . . . . . . Reliance Tax Saver (ELSS) Fund ( Tax Saver) (An Open-ended Equity Linked Savings Scheme. June 8. . Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. . .. 6. Inception Date . . . Rs 2241. . .) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity 35 . September 21. 5. . . .59 crore (30/04/2010) Entry load…………… nil. . . Exit load………………. . . . . Reliance Equity Opportunities Fund( Diversified Multi Cap) (An Open-Ended Diversified Equity Scheme. . . . . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . .
. . . . Inception Date . 1% if redeemed or switched out on or before completion of 1 year 35 . Rs 3699. . Reliance Vision Fund( Diversified Large Cap) (An Open-ended Equity Growth Scheme. Exit load………………. . Exit load………………. . Rs 2092. 7. . 2005 Corpus . . . . .related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities. . . October 8. . . . . . . . . . .) 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 research based investment approach. . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . . . . . . . . . . 1995 Corpus .82 crores (30/04/2010) Entry load…………… nil. . . . . . Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. . March 31. . . . . .28 crore (30/04/2010) Entry load…………… nil. . . Inception Date .
. 1995 Corpus . . . . . . . Exit load………………. . . Reliance Growth Fund( Diversified Mid Cap) (An Open-ended Equity Growth Scheme. . Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. . .) 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 research based investment approach. . . . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . .75 crores . 35 . Rs 7567. Nil if redeemed or switched out after completion of 1 year from the date of allotment of units 8. . . Inception Date . .from the date of units. . . (30/04/2010) Entry load…………… nil. October 8. . .
16 November. . Reliance NRI Equity Fund( Diversified Large Cap) (An open-ended Diversified Equity Scheme. . .54 crore . which could approximately be the same as that of Sensex. 1% if redeemed or switched out on or before completion of 1 year 35 . . . . 2004 .) The Investment Objective under the Nifty Plan is to replicate the composition of the Nifty. . . . with a view to endeavor to generate returns. Inception Date .9. . Rs 137. 10. Corpus . . . Reliance Index Fund (An Open Ended Index Linked Scheme. . .) The Primary investment objective of the scheme is to generate optimal returns by investing in equity or equity related instruments primarily drawn from the Companies in the BSE 200 Index. . with a view to endeavor to generate returns. . Exit load………………. . . . . (30/04/2010) Entry load…………… nil. . . which could approximately be the same as that of Nifty. The Investment Objective under the Sensex plan is to replicate the composition of the Sensex. .
12. Nil if redeemed or switched out after completion of 1 year from the date of allotment of units.28 May. Exit load………………. . Rs 1126. . Inception Date . . 11. . . . Corpus . . . . . . Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. Reliance Banking Fund (Sector) (Open-ended Banking Sector Scheme) Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the primary investment objective to generate continuous returns by actively investing in equity / equity related or fixed income securities of banks.98 crore (30/04/2010) Entry load…………… nil.from the date of units. Reliance Diversified Power Sector Fund (Sector) (Open-ended Power Sector Scheme) 35 . . . . . . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . . . . 2003 . . . .
. . . . .30 Sept. . Exit load………………. . . . . Inception Date . . . . . . . . . Rs 136. Corpus . Corpus .08 crore (30/04/2010) Entry load…………… nil.The primary investment objective of the Scheme is to seek to generate consistent returns by actively investing in equity / equity related or fixed income securities of Power and other associated companies. Rs 5614. . . . .10 May. 13. . . . . . . 1% if redeemed or switched out on or before completion of 1 year from the date of units. . Reliance Media & Entertainment Fund (Open-ended Media & Entertainment sector scheme) The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies. Nil if redeemed or switched out after completion of 1 year from the date of allotment of units. . . . .01 crore (30/04/2010) 35 . 2004 . Inception Date . . . . . . . . 2004 . . . . . . .
• Debt Schemes. Monthly Income is not assured & is subject to the availability of distributable surplus ) The Primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unitholders and the secondary objective is growth of capital. Nil if redeemed or switched out after completion of 1 year from the date of allotment of units.Primarily the investment shall be made in debt and money market securities (i.: Reliance Monthly Income Plan ( MIP) (An Open Ended Fund. Reliance Gilt Securities Fund .Short Term Gilt Plan & Long Term Gilt Plan(Gilt) (Open-ended Government Securities Scheme) The primary objective of the Scheme is to generate Optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by the central Government and State Government Reliance Income Fund ( Income) (An Open-ended Income Scheme) 35 .Entry load…………… nil. Exit load………………. 1% if redeemed or switched out on or before completion of 1 year from the date of units. upto 20%) in equity.e.e. 80%) with a small exposure (i.
The primary objective of the scheme is to generate optimal returns consistent with moderate levels of risk. Reliance Medium Term Fund( Ultra Short Term) (An Open End Income Scheme with no assured returns. Reliance Fixed Term Scheme (Close-ended Income Scheme) The primary objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the plan with the objective of limiting interest rate volatility. investments shall predominantly be made in Debt and Money Market Instruments. This income may be complemented by capital appreciation of the portfolio. investments shall predominantly be made in Debt & Money Instruments. Accordingly.) The primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital Reliance Short Term Fund (An Open End Income Scheme) The primary investment objective of the scheme is to generate stable returns for investors with a short investment horizon by investing in Fixed Income Securities of short term maturity. Accordingly. Reliance Liquid Fund (Open-ended Liquid Scheme). 35 . The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity.
Series I (A Close Ended Income Scheme) The primary investment objective of the Scheme is to seek to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the Plan with the objective of limiting interest rate volatility. Reliance Fixed Maturity Fund . The scheme shall also invest in Fixed rate debt Securities (including fixed rate securitized debt. investments shall predominantly be made in debt Instruments. Reliance Fixed Maturity Fund .ended Liquid Scheme) 35 . Accordingly.Reliance Floating Rate Fund (An Open End Income Scheme) The primary objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitized debt and Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns).Series II (A closed ended Income Scheme) The primary investment objective of the Scheme is to seek to achieve growth of capital by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the respective plans. This income may be complimented by capital appreciation of the portfolio. Reliance Liquidity Fund (An Open . Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns Reliance NRI Income Fund (An Open-ended Income scheme) The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risks.
Reliance Regular Savings Fund (An Open . Accordingly. investments shall predominantly be made in Debt and Money Market Instruments. Accordingly investments shall predominantly be made in Debt & Money Market Instruments. This income may be complemented by capital appreciation of the portfolio. 35 .The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Hybrid Option: The primary investment objective is to generate consistent return by investing a major portion in debt & money market securities and a small portion in equity & equity related instruments. Equity Option: The primary investment objective is to seek capital appreciation and or consistent returns by actively investing in equity / equity related securities.ended scheme) The Investment Objectives: Debt Option: The primary investment objective of this plan is to generate optimal returns consistent with moderate level of risk.
Mission Statement To create and nurture a world-class. 35 schemes (as on January 31. • *(75 lakh investor folios is calculated on the basis of live folios as on February.18. 1. 2010) combined with a strong performance track record. with Average Assets Under Management (AAUM) of Rs. 2009) • Reliance Mutual Fund has over 14 years of extensive market experience.Vision Statement To be a globally respected wealth creator with an emphasis on customer care and a culture of good corporate governance. 35 . Awards and Achievements Reliance Mutual Fund – At a Glance • Reliance Mutual Fund is one of India’s leading Mutual Funds. Offices and Resident Representatives of RCAM as on December 31. high performance environment aimed at delighting our customers. 2010 and includes investors across all the schemes of Reliance Mutual Fund and Presence in over 400 locations includes the Designated Investor Service Centres (DISCs) of RCAM and Registrar & Transfer Agents .973 Crores (AAUM as of May 2010 ) and an investor count of over 74 Lakh folios.
Dividend policy etc. in a general. called unsystematic risk. Fund Asset Size. The higher the fluctuations in the returns of a fund during a given period.CHAPTER4 DATA ANALYSIS Comparative Analysis:INTRODUCTION: Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme. it should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. which affect all the securities. Risk associated with a fund. can be defined as variability or fluctuations in the returns generated by it. These fluctuations in the returns generated by a fund are resultant of two guiding forces. called market risk or systematic risk and second. higher will be the risk associated with it. The Total Risk of a given fund is sum of these two and is measured in terms of standard deviation of returns of the fund. general market fluctuations. First. present in the market. In order to determine the risk-adjusted returns of investment portfolios. But before that we need to understand all the 35 . several eminent authors have worked since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative portfolios within a particular risk class. fluctuations due to specific securities present in the portfolio of the fund.
. to select the categories and top performing funds in those categories. Sharpe. and R squred etc. I have taken the help of recently done OUTLOOK MONEY SURVEY. the components are as follows: INTER FIRM COMPARISON: The main objective of doing Inter Firm Analysis is to judge where RELIANCE EQUITY FUNDS stands in comparison to other Asset Management Companies (AMCs) as per different criterion which are explained as follows.components that are used to explain the ratios like Beta. The following are those 2 categories: EQUITY FUNDS TAX SAVER FUNDS The comparative analysis of categories mentioned above is shown as follows as on 29-05-09: The following three parameters are considered for comparative analysis: 35 .
35 .• • • Funds’ Returns Risk Profile Portfolio Analysis 1. Latest returns are shown in the analysis.GROWTH b) HDFC EQUITY FUND c) BIRLA SUN LIFE FRONTLINE EQUITY FUND.PLAN A. Returns of less than one year are on absolute basis and for more than one year are on compounded basis. EQUITY FUNDS The following are the top 4 funds in the market in this category as per the recently held survey: a) ICICI PRUDENTIAL DYNAMIC PLAN.GROWTH d) RELIANCE GROWTH FUND ANALYSIS: FUNDS RETURNS: As per this criterion funds are compared from past six month duration to five years time.
12 12.09 48.93 26.Growth Birla Sun Life Frontline Fund- Reliance Growth Equity Fund .51 28.20 35.13 Growth 7.00 29.13 44.03 Source: Mutual Fund India 35 .93 32.62 15.43 42.Growth A12.60 31.) ICICI Prudential Dynamic PlanGrowth HDFC Equity Fund.06 28.58 12.71 13.71 Plan 6 Months 1Year 3Year 5Year Since Inception AS ON 21-06-10 13.80 23.97 15.15 27.Fund Return(in ‘000 cr.
20) %. During 5 Year Reliance Growth Fund giving almost the best return (28.71)% is good but ICICI Prudential Dynamic Plan ( 35.12)% and Birla Sun Life Frontline Equity Fund. If we see overall return only ICICI Prudential Dynamic Plan is giving slightly better return than Reliance Growth Fund. Since Inception the return of reliance Growth Fund(29. 35 . Only ICICI prudential Dynamic Plan is giving good competition (28.03)% are giving better returns than reliance growth fund.97)% but it was given tough completion by ICICI Prudential Dynamic Plan( 44.58)% and HDFC Equity Fund( 48.FINDINGS: Reliance Growth fund has performed well during 1year( 42.plan A ( 31.62)%.00) % among all the funds.
Growth A4.14 0.84 Source: Mutual Fund India 35 .70 -0.77 Plan Growth 4.84 0.86 HDFC Equity Fund.87 0.08 0.09 0.28 -0.99 -0.80 0.10 0.Squared AS ON 21-06-10 4.79 5.74 -0.RISK PROFILE: ICICI Prudential Dynamic PlanGrowth Standard Deviation Sharpe Ratio Beta R.Growth Birla Sun Life Frontline FundReliance Growth Equity Fund .78 0.
R-Squared. Therefore. Reliance Growth is having an r-squared value of . Since Reliance Growth Fund is having lowest Beta they are tend to be less aggressive or less volatile in nature. higher the ratio the better it is. Therefore. it is suggested that if a fund has very high r-square value it means similar returns can be achieved by investing in the stock markets. Accordingly. Therefore. is again measure of volatility or risk. But a high r-square means that much of change is caused by market sentiments or fundamentals. Sharpe ratio. The fund with the lower standard deviation would be more optimal because it is maximizing the return received for the amount of risk acquired. which explains the change in return caused by market volatility is a good measure of risk. It shows that Reliance Growth Fund is less volatile and less risky than other funds. which shows the co-movement of funds return with Market rate of returns. Beta. it is taking the benefit of its portfolio in most optimum way than other funds. Since. lower than all other funds. which means returns per unit of risk that a fund is able to generate.77. Therefore. a moderate r-square value ranging between 65-85% is considered good from portfolio management point of view.FINDINGS: Standard Deviation of Reliance Growth Fund is lower than all other funds. Reliance Growth Fund is not a winner as per this criterion. 35 .
91 24.10 Plan 23.33 Source: Mutual Fund India 35 .Growth A27.96 35.) Top 5 Holdings AS ON 21-06-10 24.38 18.17 2172.Growth Birla Sun Life Frontline Fund- Reliance Growth Equity Fund .PORTFOLIO ANALYSIS: ICICI Prudential Dynamic PlanGrowth P/E Ratio Fund Size (In Rs Cr.57 Growth 23.28 HDFC Equity Fund.56 6355.43 24.51 7428.18 2168.
As usual funds from Reliance brands have largest Assets under Management (in cr. Reliance Growth Fund is having highest holdings in top five stocks. which means the fund is concentrated towards major stocks in the portfolio. 35 . P/E ratio is high for young/growth funds/stock. As shown in above table.FINDINGS: P/E RATIO is a measure of investors’ confidence in the fund/stock. it shows that investors have a lot of confidence in funds. Generally. High P/E ratio means that investors are paying higher prices for stock when compared to its earnings. On the contrary. Since Reliance Growth Fund-G is having a highest P/E ratio in the category. other funds have less P/E ratio than Reliance Growth Fund means investor have more confidence in Reliance mutual fund than any other fund.) this shows the Brand Reliance has no problem when it comes to raising funds.
you can’t withdraw any amount from your account. These scheme are most popular among retail investors(also see in Appendices) due to its three-inone feature which means these schemes are able to satisfy three different investment objectives simultaneously which are mentioned as follows: Tax Benefit Good Return Capital Appreciation The following are the top four performing funds in ELSS category: a) ICICI PRUDENTIAL TAX PLAN.GROWTH b) HDFC TAX SAVER.1) EQUITY LINKED SAVING SCHEME :(ELSS) These are the open ended saving schemes which generally have lock-in-period of three years which means that once you have invested certain amount in your fund.GROWTH d) RELIANCE TAX SAVER.GROWTH 35 .GROWTH c) BIRLA SUN LIFE TAX RELIEF 96.
Saver.Growth 12.) ICICI Prudential HDFC Tax Saver.52 9.70 Tax Sun Relief Life Reliance Tax 96.75 Source: Mutual Fund India 35 .51 25.73 19. Latest returns are shown in the analysis.46 49.20 N.49 40.56 22.80 26.74 57.16 40.23 6 Months 1Year 3Year 5Year Since Inception AS ON 21-06-10 Growth 8.05 12.96 N.A N.ANALYSIS: FUNDS RETURNS: As per this criterion funds are compared from past six month duration to five years time.Growth 11.76 11.79 Growth 11.A 5. Fund Return (in ‘000 cr.A 15. Returns of less than one year are on absolute basis and for more than one year are on compounded basis.Birla Tax Plan.
Only Since Inception Reliance Tax saver is better than Birla Sun life Tax Relief 96.05%.FINDINGS: In six month category Reliance Tax Saver has performed very well. fund has performed averagely well than other funds like Birla Sun life Tax Relief 96.52% return against the best of ICICI Prudential Tax Plan 57. In one year category. Last but not the least. than all the other Funds. 35 . the Performance of Reliance Growth Fund is not up to the mark because its Return is not better than all the other funds during 3 rd year. Fund has given only 40.
Saver.12 0.Growth 4.96 -0.83 0.83 Growth 5.03 -0.RISK PROFILE: ICICI Prudential HDFC Tax Saver.10 0.01 0.32 -0.Growth Standard Deviation Sharpe Ratio Beta R.13 -0.72 0.Birla Tax Plan.Squared AS ON 21-06-10 5.71 Growth 5.84 0.82 Tax Sun Relief Life Reliance Tax 96.14 0.99 Source: Mutual Fund India FINDINGS: 35 .14 1.
higher the ratio the better it is. 35 .72. But a high r-square means that much of change is caused by market sentiments or fundamentals. similar to Birla Sun Life Tax Relief 96 and lower than all other funds. it is suggested that if a fund has very high r-square value it means similar returns can be achieved by investing in the stock markets. Reliance Tax Saver is having an r-squared value of . Beta. R-Squared. a moderate r-square value ranging between 65-85% is considered good from portfolio management point of view. Accordingly. Therefore. In case of Reliance Tax Saver. All funds in this category are showing negative ratio which indicates that funds are not able to justify well whatever it has investments in risky assets. Reliance Tax Saver is among the best fund as it is having 2nd highest ratio in the category. which means returns per unit of risk that a fund is able to generate. Therefore. Sharpe ratio. which shows the co-movement of funds return with Market rate of returns. therefore it is considered to be the direct and primary measure of risk. Therefore. Since Standard Deviation is the measure which shows variability in the returns from the mean return. it is taking the benefit of its portfolio in most optimum way than other funds. which explains the change in return caused by market volatility is a good measure of risk. Therefore. Since. is again measure of volatility or risk. it has the lowest standard deviation in the category which means that the fund has not much risky portfolio. Reliance Tax Saver which is having one of the lowest Beta in the category shows that the fund is actually very less sensitive to stock market movement.
Growth P/E Ratio Fund Size (In Rs Cr.32 1370 17.48 24.Saver.65 1159.) Top 5 Holdings AS ON 21-06-10 22.06 2151 27.63 Growth 21.PORTFOLIO ANALYSIS: ICICI Prudential HDFC Tax Saver.87 Growth 22.34 2465.Birla Tax Plan.31 21.79 Source: Mutual Fund India FINDINGS: 35 .22 Tax Sun Relief Life Reliance Tax 96.Growth 26.
As shown in above table. In this case Investors have faith in Reliance Tax saver fund as it is having highest P/E ratio (26. Therefore. Reliance Growth Fund. Reliance Growth Fund As on Apr30. as a result of strong distribution network. Generally.79 5 years 01/05/05 457.06). Again Reliance Tax Saver has 2nd largest Assets under Management (AUM).21% 33. strong brand.79 49. High P/E ratio means that investors are paying higher prices for stock when compared to its earnings.79 3 years 01/05/07 457.07% 24. and the message of faith that Reliance name itself give to masses of investors. which means the fund is concentrated towards major stocks in the portfolio. 1.66% 27. P/E ratio is high for young/growth funds or stock.From the above table it can be concluded that: P/E RATIO is a measure of investors’ confidence in the fund/stock.75% 35 .79 Since Inception SIP Start Date Current NAV(30/04/2010) Return On SIP in Schemes 08/10/95 457. TOP 4 SCHEMES OF RELIANCE MUTUAL FUND AS ON MAY 2010. Reliance Tax Saver is having highest holdings in top five stocks. 2010 1 year 01/05/09 457. Reliance Mutual Funds in particular should build on strength of its Sponsor.
2010 SIP Start Date 5 years NA Since Inception 09/06/05 . Reliance Regular Savings Fund (Equity) Reliance Savings Regular Fund 1 year 01/05/09 3 years 01/05/07 35 (Equity) As on Apr30.08% 17.75% 16.Return on SIP in 27.28% Benchmark(BSE1oo ) 16.05% SIP Return (%) Comparison of Reliance Growth Fund with BSE 100:- 2.
19% 16.35 29. Reliance Pharma Fund- Reliance Pharma 1 year 01/05/09 49.62 Since Inception 08/06/04 49.62 3 years 01/05/07 49.73% SIP Return (%) Comparison of Reliance Regular Savings Fund (Equity) with BSE 100:- 3. 2010 SIP Start Date Current 35 .Current NAV(30/04/2010) Return On SIP in Schemes Return on SIP in Benchmark(BSE1oo ) 29.35 44.35 26.44% 27.59% 15.62 5 years 01/05/05 49.75% NA NA NA 29.62 Fund As on Apr30.28% 29.
77% 24.21 23.36% 15.44% 3 years 01/05/07 32.57% 35 .21 24.52% 50.19% 16.NAV(30/04/2010) Return On SIP in Schemes Return on SIP in Benchmark(BSE1oo ) 106. 2010 SIP Start Date Current NAV(30/04/2010) Return On SIP in 1 year 01/05/09 32.12% 54.21 71.83% 35. Reliance Equity Opportunities Fund Reliance Equity Opportunities Fund As on Apr30.49% 33.86% SIP Return (%) Comparison of Reliance Pharma Fund with BSE 100:- 4.59% 5 years 01/05/05 32.21 31.21% Since Inception 31/03/2005 32.
28% 16.75% 16.08% 16.52% SIP Return (%) Comparison of Reliance Equity Opportunities Fund with BSE 100:- SWOT Analysis STRENGTHS : 35 .Schemes Return on SIP in Benchmark(BSE1oo ) 27.
a part of the –Anil Dhirubhai Ambani Group(R-ADAG) is one of the fastest growing mutual fund company in the country. conveniences.an AMC with a established track record of consistent Ensures better costumer services. • • Strong and consistent fund management team.• Reliance Mutual Fund .com) • return. Good image between customers.2009(source:www. communication by efficient network.amfiindia. Brand Name – ‘Reliance Mutual Fund’ is popular brand name among customers.53 lacs. WEAKNESS 35 .88388 crore Reliance mutual fund has a presence over 118 cities across the country. • 71. • Reliance mutual fund offer investors a well –rounded portfolio of products to meet varying investor requirements. A fund from Reliance mutual fund .with investor base over as on April 30. • • • Quality product & services – High quality standard maintained. Investor –friendly personal and technological support. • Reliance mutual fund investor base of over 2 million and manages assets over Rs.
you need to research the risks involved – just because a professional manager is looking after the fund. such as bonds and Treasury bills. When deciding on a particular fund to buy. that doesn’t mean the performance will be stellar. • Lot of schemes are provided by competitors. HDFC Mutual Funds. Entry of MNCs: Due to multinationals are entering into market job opportunities are increasing day by day. Also India Mutual Fund majors are tie up with other financial institutions THREATS: • Lot of competitor in market like SBI Mutual funds. Unlike fixed-income products. OPPORTUNITIES: • Hyderabad is a big industrial area so there is a huge opportunities.• Less existence in rural areas • less expenditure on advertising and promotional schemes Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. • Good perception among the customer. • Reliance mutual fund has a very good quality products &schemes comparison to other competitors. The Mutual Fund is not guaranteeing or assuring any dividend/ bonus 35 . • Reliance is first company which launched Equity fund with hedging feature which aim to minimize risk. ICICI Mutual Funds. mutual funds experience price fluctuations along with the stocks that make up the fund.
Satisfactory and the demand for those schemes is also very good. For Long term investment. 35 . As far as sector fund is concerned Reliance Pharma Fund is doing well than any other Fund in the market for 1 year. Means as long as you stay in the market it provides more benefits to its investors. say minimum 1 year. As far as the Reliance Tax Saver plan is concerned the performance of the fund is not up to the mark than all the other funds like ICICI prudential Tax Plan and HDFC Tax saver Plan in terms of return but it is less risky than any other fund as far as investment is concerned. The reason behind its popularity is its investment in Mid Cap Companies which can grow in a future market and give more benefits to its customers. This fund is also quiet popular among young generation who can save their money by investing in this fund and they can get more benefits. Reliance Growth Fund is the most popular fund among individual investor. So it is quite popular among the individual investor who wants to invest in short period of time.CHAPTER. But there are very much close competitor of Reliance mutual funds like ICICI mutual fund. HDFC mutual fund who can give the tough competition to Reliance mutual fund.5 FINDINGS: While dealing with them I have observed that the performance of the scheme of Reliance Mutual Fund Is quiet good.
SUGGESTIONS & RECOMMENDATIONS:A) THE GROUND RULES OF MUTUAL FUND INVESTING
The following are the 10 commandments that were to be followed till eternity. The world of investments too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad world of investments. These come in handy for there is every possibility of losing what one has if due care is not taken.
1. Assess yourself: Self-assessment of one’s needs; expectations and risk profile is of prime
importance failing which; one will make more mistakes in putting money in right places than otherwise. Irrational expectations will only bring pain.
2. Try to understand where the money is going: One can lose substantially if one picks the wrong
kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that mutual fund companies provide on their funds.
3. Don't rush in picking funds, think first: one first has to decide what he wants the money for and
it is this investment goal that should be the guiding light for all investments done. It is thus important to know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should take a look at the portfolio of the funds for the purpose. Excessive
exposure to any specific sector should be avoided, as it will only add to the risk of the entire portfolio.
4. Invest. Don’t speculate: A common investor is limited in the degree of risk that he is willing to
take. It is thus of key importance that there is thought given to the process of investment and to the time horizon of the intended investment. One should abstain from speculating which in other words would mean getting out of one fund and investing in another with the intention of making quick money
5. Don’t put all the eggs in one basket: This old age adage is of utmost importance. No matter what
the risk profile of a person is, it is always advisable to diversify the risks associated. So putting one’s money in different asset classes is generally the best option as it averages the risks in each category.
6. Be regular: Investing should be a habit and not an exercise undertaken at one’s wishes, if one has
to really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the market, it is important to beat the market by being systematic. The SIPs (Systematic Investment Plans) offered by all funds helps in being systematic. All that one needs to do is to give post-dated cheques to the fund and thereafter one will not be harried later.
7. Do your homework: It is important for all investors to research the avenues available to them
irrespective of the investor category they belong to. This is important because an informed investor is in a better decision to make right decisions. Having identified the risks associated with the investment is important and so one should try to know all aspects associated with it. Asking the intermediaries is one of the ways to take care of the problem.
8. Find the right funds: Finding funds that do not charge much fees is of importance, as the fee
charged ultimately goes from the pocket of the investor. This is even more important for debt funds as the returns from these funds are not much. Funds that charge more will reduce the yield to the investor. Finding the right funds is important and one should also use these funds for tax efficiency.
9. Keep track of your investments: Finding the right fund is important but even more important is to
keep track of the way they are performing in the market. If the market is beginning to enter a bearish phase, then investors of equity too will benefit by switching to debt funds as the losses can be minimized. One can always switch back to equity if the equity market starts to show some buoyancy.
10. Know when to sell your mutual funds: Knowing when to exit a fund too is of utmost importance.
One should book profits immediately when enough has been earned i.e. the initial expectation from the fund has been met with. Other factors like non-performance, hike in fee charged and change in any basic attribute of the fund etc. are some of the reasons for to exit.
which is a price sensitive market. and if it keeps the traditional base for marketing in India. if the progress of Reliance Mutual Fund goes in the same way. which it needs to focus on. The only thing. They have much potential to expand their distribution network in northern India.CONCLUSION The future of primary market is growing at a very high pace. there are lots of opportunities for the Reliance Capital Asset Management Ltd. people have accepted it as a one of the major investment avenue. As far as the other investment products marketed by Reliance Mutual Fund are concerned. 35 . Mutual funds will become one of the sought after investment avenues. Taking this thing into consideration. is that they should have a strong network so that prompt services and availability of forms is made available to the investor at a short notice. we can say that Reliance MF has a great future ahead. It is expanding its area of business. they have a ready market. than I can say that there is bright future for Reliance Mutual Fund in coming years. Reliance Capital Asset Management Ltd has emerged a very strong player in the field of distribution of financial product within a short period of one year time in South India and is giving stiff competition to all the players in the market including the banks. There is little awareness about mutual fund in India. to tap the golden opportunities from the Indian market.
com www.com 35 .amfiindia.com www.icicidirect.hdfcfund.com www.com · Website of the AMC’s taken in cases where data was not available on the above sites www.mutualfundsindia.birlasunlife.com · www.com www.com · www.BIBLIOGRAPHY Websites referred: · www.valueresearchonline.moneycontrol.reliancemutual.
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