DORANDA COLLEGE RANCHI

(A Constituent Unit of Ranchi University, Ranchi)

A PROJECT REPORT ON

“COMPARATIVE ANALYSIS OF MUTUAL FUND AS AN INVESTMENT

OPTION’’

IN PARTIAL FULFILLMENT OF BACHELOR OF COMMERCE PROGRAM,

UNDER

RANCHI UNIVERSITY, RANCHI

UNDER THE GUIDANCE OF

DR.ROSHAN KUMAR (DEPT. OF COMMERCE)

SUBMITTED BY:- NAMAN KUMAR

EXAM ROLL NO:- 20BC8170658

ClASS ROLL NO:-212

B.SEM 6

SESSION-2020-2023

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 DECLARATION

NAMAN KUMAR hereby declare that the project title

“COMPARATIVE ANALYSIS OF MUTUAL FUND AS AN INVESTMENT OPTION’’

. has been

prepared by me and submitted under B.Com curriculum. All the

information, facts and figures are collected by me and are first hand in nature.

Any resemblance from existing work is purely coincidental in

nature.

Name of Candidate:- NAMAN KUMAR

Class Roll No: - 212

Exam Roll No: - 20BC8170658

Session: - 2020-2023

Signature of the candidate

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 CERTIFICATE

This is to certify that project has been submitted by

NAMAN KUMAR a student of B.Com semester VI, Session

– 2020-2023 bearing Exam Roll No-

20BC8170507 of Doranda College, Ranchi on a given Topic

“COMPARATIVE ANALYSIS OF MUTUAL FUND AS AN INVESTMENT

OPTION’’

This is for partial fulfillment or requirement for the award of

BACHELOR OF COMMERCE under Ranchi University, Ranchi. The
work done by him is appreciable of an outstanding level. I wish
him every success in his life.

INTERNAL GUIDE HOD EXTERNAL

COMMERCE DEP.OF COMMERCE

(DR.ROSHAN KUMAR) (PROF ALKA DIVYA TIGGA)

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 ACKNOWLEDGEMENT

I take this opportunity with much pleasure to thanks the all the people who have

helped me through the course of my journey toward producing this project. I

sincerely thank my Project guide _Dept of commerce, for his guidance, help

and motivation. Apart from the subject of my research, I learnt a lot from him, I

am sure will be useful in different stage of my life. I would like to express my

gratitude To ALKA MAM HOD, Dept of Commerce, for his review and many helpful

comments. I am especially grateful to my colleagues for their assistance, criticism,

and useful insights. I would like to acknowledge the support and encouragement

of my friends. My sincere gratitude also goes to all those who instructed and

taught me through the years. Finally, this Project would not have been possible

without the confidence endurance and support of my family. My family has

always been a source of inspiration and encouragement. I wish to thanks my

parents, whose love, teaching and support have bought me this far.

NAMAN KUMAR

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 TABLE OF CONTENT

CHAPTER NO DESCRIPTION PAGE NO

1. INTRODUCTION 6-7
2. LITRETURE REVIEW 8-12

3. RESEARCH METHODOLOGY 13-15

4. INDUSTRY PROFILE 16-35

5. COMPANY 36-49
PROFILE(COMPARISON)
6 ANALYSIS AND FINDING 50-60

7 CONCLUSION AND SUGGESTION 61-62

8 BIBLOGRAPHY 63

INTRODUCTION OF TOPIC

About Mutual Funds

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Mutual Funds operate as collective investment vehicles (CIV) that pools resources by issuing

units to investors and collectively invests those resources in a diversified portfolio comprising

of stocks, bonds or money market instruments in accordance with the objectives mentioned in

the offer document issued for the purpose of pooling resources. The investors share the profit

or losses in proportion to their investments in the fund. The first ever Mutual Fund in India,

the Unit trust of India was set up in 1964. This was followed by entry of MFs supported by

public sector banks and insurance companies in 1987. The industry was opened for the

private players in 1993 providing Indian investors with a broader choice. Starting with an

asset base of Rs. 25 crore in 1964, the industry has grown exponentially.

The MF industry in India is governed by the SEBI, which lay norms for MF and its Asset

Managing Companies (AMCs). A Mutual Fund is allowed to issue open-ended and closed-

ended schemes under a common legal structure. Respective Asset Management Companies

(AMC) manages mutual fund schemes. Different business groups/ financial institutions/

banks have sponsored these AMCs, either alone or in collaboration with reputed international

firms. Several international funds like Alliance and Templeton are also operating

independently in India. Many more international Mutual Fund giants are expected to come

into Indian markets in the near future.

Market survey plays a vital role in understanding the investment pattern of the customer and

the level of satisfaction. It is very important for the company to perform such activities like

market research and surveys at regular intervals and accordingly further plans and policies

can be formulated. By studying the investment pattern of the customers, the company can

plan the strategies to capture the more market share by providing the better services and

customized plans.

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Mutual Funds are dynamic financial institutions, which play a crucial role in an economy

mobilizing a link between savings and the capital market. Therefore the activities of Mutual

Funds have both short and long term impact on the savings and capital markets and the

national economy. Mutual Funds thus assist the process of financial deepening and

intermediation. They mobilize Funds in the savings market and act as complementary to

banking, at the same time they also compete with banks and other financial institutions. In the

process stock market activities are also significantly influenced by Mutual Funds. The scope

and efficiency of Mutual Funds are influenced by overall economic fundamentals, the

interrelationship between the financial and real sector, the nature of development of the

savings and capital markets, market structure, institutional arrangements and overall policy

regime.

LITERATURE REVIEW:

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 Sapar & Narayan(2003)

o Examines the performance of Indian mutual funds in a bear market through

relative performance index, risk-return analysis, Treyor's ratio, Sharp's ratio, Sharp's

measure with a sample of 269 open ended schemes (out of total schemes of 433).

 Rao D. N (2006)

o Studied the financial performance of select open-ended equity mutual fund

schemes for the period 1st April 2005 - 31st March 2006 pertaining to the two

dominant investment styles and tested the hypothesis whether the differences in

performance are statistically significant. The analysis indicated that growth plans have

generated higher returns than that of dividend plans but at a higher risk studied

classified the 419 open-ended equity mutual fund schemes into six distinct investment

styles.

 Agrawal Deepak & Patidar

o Deepak (2009) studied the empirically testing on the basis of fund manager

performance and analyzing data at the fund-manager and fund-investor levels. The

objective of the study is to provide an overview of mutual fund activity in emerging

markets, to describe their size, asset allocation, to analyze the Indian Mutual Fund

Industry pricing mechanism with empirical studies on its valuation, to analyze data at

both the fund-manager and fund-investor levels. The study reveled that the

performance is affected saving and investment habits of the people at the second side

the confidence and loyalty of the fund Manager and rewards affects the performance

of the MF industry in India.

 Mehta Sushilkumar (2010)

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 o Analyze the performance of mutual fund schemes of SBI and UTI and found

out that SBI schemes have performed better then the UTI in the year 2007-2008

studied the risk and return relationship of Indian mutual fund schemes. The study

found out that out of thirty five sample schemes, eleven showed significant t–values

and all other twenty four sample schemes did not prove significant relationship

between the risk and return. According to t-alpha values, majority (thirty two) of the

sample schemes' returns were not significantly different from their market returns and

very few number of sample schemes' returns were significantly different from their

market returns during the study period.

 Mr. Vijay Anand (2000)

o Mr. Vijay Anand in IFMR, Chennai (June 2000).The study focused on to understand

the position of the schemes of birla sunlife and the competitors schemes available in the

market. The study did Analysis of Performance of Equity fund for 3 years and SWOT

Analysis of Birla Sunlife by Literature survey, Delphi technique, in depth financial review to

identify among the selected equity funds that earns higher returns than benchmark and

competitors and concluded that Birla Sunlife performs well compared to the benchmarks and

competitors.

 R.Nithya (2004)

o R.Nithya in the IFMR Chennai (2004). The objective of the study is to analyse the

performance of all the schemes available in the Franklin Templeton Mutual funds and

Emphasize the values of mutual funds to the target people by identifying Asset Management

Company that is performing well and identifying the top schemes in the category such as

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equity, balanced, Monthly Income Plan (MIP) & Income in the AMC. The AMC chosen was

Franklin Templeton Mutual funds and it performed well and met the expectations.

 Prasath.R.H (2009)

o The study is trying to emphasize the core values of mutual fund investment, benefits

of mutual funds, types of mutual funds, etc., The study is going to conducted by taking the

NAV values of different types of HDFC mutual fund products. The study concludes that

before choosing the mutual fund scheme, the investor should undergo fact sheet thoroughly

and he has to choose the best one by calculating NAV calculation. If the investor finds

difficulty of getting Rp, Rf, Standard deviation, and Beta parameters, NAV calculations are

the best alternative to assess the performance.

 Dr S Narayan Rao (2002)

o The Study is conducted to understand whether most of the mutual fund schemes were

able to satisfy investor’s expectations by giving excess returns over expected returns. The

objective of this study was to evaluate the performance of Indian Mutual Fund Schemes

during bear market through relative performance index (RPI), risk- return analysis. The

research study concluded that out of 269 schemes, 49 were under performers, 102 were par

performers and 118 were out performers of the market and Medium Term Debt Funds were

the best .It was also concluded that 58 of 269 open ended mutual funds have provided better

returns than the market during the bear period of September 98-April 2002. Some of the

funds provided excess returns over expected returns based on both premium for systematic

risk and total risk.

 Sharad Panwar and Dr. R. Madhumathi (2005)

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o The objective of the study is to identify differences in characteristics of public-sector

sponsored & private-sector sponsored mutual funds and to find the extent of diversification in

the portfolio of securities of public-sector sponsored and private-sector sponsored mutual

funds and to compare the performance of public-sector sponsored and private-sector

sponsored mutual funds using traditional investment measures. The study found that public-

sector sponsored , private-sector Indian sponsored and private-sector foreign sponsored

mutual funds do not differ statistically in terms of portfolio characteristics such as net assets,

common stock%, market capitalization, holdings, Top Ten %. Portfolio risk characteristics

measured through private-sector Indian sponsored mutual funds seems to have outperformed

both Public- sector sponsored and Private-sector foreign sponsored mutual funds.

 Jaspal Singh and Subhash Chander (2006)

o The results show that the investors consider gold to be the most preferred form of

investment, followed by NSC and Post Office schemes. Hence, the basic psyche of an Indian

investor, who still prefers to keep his savings in the form of yellow metal, is indicated.

Investors belonging to the salaried category, and in the age group of 20-35, years showed

inclination towards close-ended growth (equity-oriented) schemes over the other scheme

type.

 Dr. S. Anand & Dr. V Murugaiah (2003)

o The purpose of this study is to apply the measurement tools of modern portfolio

theory to the performance of mutual funds. The study aims to examine the degree of

correlation that exists between fund and market return, to understand the impact of fund

specific characteristics on performance ,to evaluate the diversification and selectivity skills of

fund managers. The study concluded on the basis of overall analysis in can be inferred here

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that the additional return on sampled schemes and the market over risk free return was

significantly low during the study period. The study covers the period between April 1999

and March 2003 This indicates that the majority of schemes were showed underperformance

in comparison with risk free return.

 Soumya Guha Deb, Prof. Ashok Banerjee ,Prof. BB Chakrabarti in IIM,

Calcutta (2005)

o The research “Performance of Indian Equity Mutual Funds, Their Style Benchmarks–

an Empirical Exploration” is done by. Indian equity mutual funds and to perform a return

based style analysis of equity mutual funds in India and analyzed their relative performance

with respect to style benchmarks. The analysis shows that Indian equity mutual fund

managers have not been able to beat their style benchmarks on the average. It also shows that

although all the funds in our sample are equity funds, the fixed income asset classes have

come out important components of their style exposures, may be due to „sticky‟ returns of

their component securities. The most important component of their style exposures are the

mid cap stocks. This may indicate actual investment in those stocks, or in some other stocks

that behaved like the mid cap index.

 Mohit Gupta and Navdeep Agarwal (2009)

o There is very little research on the construction of mutual fund portfolio. The present

study seeks to fill this gap. The objective of the research is to construct the portfolio using

uses the cluster method, taking industry concentration as a variable and to compare the

performance of two types of portfolios with selected benchmarks, selected according to the

prevalent modes of mutual fund purchase Results are found to be encouraging, as far as risk

mitigation is concerned. This study also expected to help in the construction of funds.

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RESEARCH METHODOLOGY

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A comparative analysis of mutual funds as an investment option typically involves
evaluating different mutual funds based on various parameters and criteria. To
conduct this research, you can follow these steps:

1. Research Objectives and Questions: Clearly define your research objectives

and questions. For example, you might want to compare mutual funds from
different asset management companies, compare their historical performance,
risk factors, expense ratios, portfolio diversification, and suitability for different
investor profiles.
2. Literature Review: Conduct a thorough literature review to understand the
existing research and studies related to mutual funds and investment options.
This will help you identify gaps in the literature and ensure that your research
adds value to the existing knowledge.
3. Data Collection: Collect relevant data on mutual funds from various sources.
This data may include historical returns, expense ratios, asset allocation, fund
manager information, investment strategy, risk measures, and other relevant
parameters. Data can be obtained from financial databases, fund houses,
regulatory bodies, and financial news sources.
4. Data Analysis: Perform a comprehensive analysis of the collected data. You
can use statistical methods, financial ratios, and tools to compare the mutual
funds. Analyze performance over different time periods, risk-adjusted returns,
volatility, and other factors that are crucial in evaluating mutual funds as
investment options.
5. Benchmarking: Choose appropriate benchmarks to compare the mutual
funds' performance against relevant market indices. This will help you
understand how the funds have performed in comparison to the broader
market.
6. Risk Analysis: Evaluate the risk associated with each mutual fund using
metrics like standard deviation, beta, and Sharpe ratio. This will allow you to
assess whether the funds are suitable for different risk profiles.
7. Qualitative Factors: Consider qualitative factors such as the fund manager's
experience and track record, the investment philosophy of the fund house,
and the overall reputation of the asset management company. These factors
can impact the fund's performance and are essential to consider in a
comparative analysis.
8. Graphical Representation: Present your findings using graphs, charts, and
visual representations. This will make it easier for readers to understand the
performance and risk characteristics of different mutual funds.
9. Limitations: Discuss the limitations of your research. For example, data
availability, time constraints, and potential biases in the data should be
acknowledged.

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 10. Conclusion and Recommendations: Based on your analysis, draw
conclusions and provide recommendations on which mutual funds might be
more suitable for specific investor goals and risk appetites.
11. Citations and References: Ensure that you properly cite all the sources you
have used in your research and provide a comprehensive reference list.

Remember that this is just a general outline, and the actual research methodology
may vary depending on the scope and depth of your study. Always consider seeking
guidance from your academic advisor or research mentor to refine and finalize your
research methodology.

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INDUSTRY PROFILE

Definition:

A mutual fund is an investment vehicle which allows investors with similar (one could say

mutual) investment objectives, to pool their resources and thereby achieve economies of scale

and diversification in their investing.

History:

A mutual fund is a financial intermediary that pools the savings of investors for collective

investment in a diversified portfolio of securities. A fund is “mutual” as all of its returns,

minus its expenses, are shared by the fund’s investors.

The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 defines a

mutual fund as a ‘a fund established 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, including money market instruments’.

According to the above definition, a mutual fund in India can raise resources through sale of

units to the public. It can be set up in the form of a Trust under the Indian Trust Act. The

definition has been further extended by allowing mutual funds to diversify their activities in

the following areas:

· Portfolio management services

· Management of offshore funds

· Providing advice to offshore funds

· Management of pension or provident funds

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· Management of venture capital funds

· Management of money market funds

· Management of real estate funds

A mutual fund serves as a link between the investor and the securities market by mobilising

savings from the investors and investing them in the securities market to generate returns.

Thus, a mutual fund is akin to portfolio management services (PMS). Although, both are

conceptually same, they are different from each other. Portfolio management services are

offered to high net worth individuals; taking into account their risk profile, their investments

are managed separately. In the case of mutual funds, savings of small investors are pooled

under a scheme and the returns are distributed in the same proportion in which the

investments are made by the investors/unit-holders.

Mutual fund is a collective savings scheme. Mutual funds play an important role in

mobilising the savings of small investors and channelising the same for productive ventures

in the Indian economy.

The history of mutual funds, dates back to 19th century Europe, in particular, Great Britain.

Robert Fleming set up in 1868 the first investment trust called Foreign and Colonial

Investment Trust which promised to manage the finances of the moneyed classes of Scotland

by spreading the investment over a number of different stocks. This investment trust and

other investment trusts which were subsequently set up in Britain and the US, resembled

today’s close-ended mutual funds. The first mutual fund in the US, Massachusetts Investors’

Trust, was setup in March 1924. This was the first open-ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of the Second World

War slackened the pace of growth of the mutual fund industry. Innovations in products

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and services increased the popularity of mutual funds in the 1950s and 1960s. The first

international stock mutual fund was introduced in the US in 1940. In 1976, the first tax-

exempt municipal bond funds emerged and in 1979, the first money market mutual funds

were created. The latest additions are the international bond fund in 1986 and arm funds in

1990. This industry witnessed substantial growth in the eighties and nineties when there was

a significant increase in the number of mutual funds, schemes, assets, and shareholders. In the

US, the mutual fund industry registered a ten fold growth in the eighties (1980-89) only, with

25% of the household sector’s investment in financial assets made through them. Fund assets

increased from less than $150 billion in 1980 to over $4 trillion by the end of 1997. Since

1996, mutual fund assets have exceeded bank deposits. The mutual fund industry and the

banking industry virtually rival each other in size.

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CONCEPT OF MUTUAL FUNDS

BUSINESS STRUCTURE OF MUTUAL FUND

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Benefits of Mutual Funds

An investor can invest directly in individual securities or indirectly through a financial

intermediary. Globally, mutual funds have established themselves as the means of investment

for the retail investor.

1. Professional management: An average investor lacks the knowledge of capital market

operations and does not have large resources to reap the benefits of investment. Hence, he

requires the help of an expert. It, is not only expensive to ‘hire the services’ of an expert but it

is more difficult to identify a real expert. Mutual funds are managed by professional

managers who have the requisite skills and experience to analyse the performance and

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prospects of companies. They make possible an organised investment strategy, which is

hardly possible for an individual investor.

2. Portfolio diversification: An investor undertakes risk if he invests all his funds in a single

scrip. Mutual funds invest in a number of companies across various industries and sectors.

This diversification reduces the riskiness of the investments.

3. Reduction in transaction costs: Compared to direct investing in the capital market,

investing through the funds is relatively less expensive as the benefit of economies of

scale is passed on to the investors.

4. Liquidity: Often, investors cannot sell the securities held easily, while in case of mutual

funds, they can easily encash their investment by selling their units to the fund if it is an

open-ended scheme or selling them on a stock exchange if it is a close-ended scheme.

5. Convenience: Investing in mutual fund reduces paperwork, saves time and makes

investment easy.

6. Flexibility: Mutual funds offer a family of schemes, and investors have the option of

transferring their holdings from one scheme to the other.

7. Tax benefits Mutual fund investors now enjoy income-tax benefits. Dividends received

from mutual funds’ debt schemes are tax exempt to the overall limit of Rs 9,000 allowed

under section 80L of the Income Tax Act.

8. Transparency Mutual funds transparently declare their portfolio every month. Thus an

investor knows where his/her money is being deployed and in case they are not happy with

the portfolio they can withdraw at a short notice.

9. Stability to the stock market Mutual funds have a large amount of funds which provide

them economies of scale by which they can absorb any losses in the stock market and

continue investing in the stock market. In addition, mutual funds increase liquidity in the

money and capital market.

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10. Equity research Mutual funds can afford information and data required for investments as

they have large amount of funds and equity research teams available with them.

Growth of Mutual Funds in India

The Indian mutual fund industry has evolved over distinct stages. The growth of the mutual

fund industry in India can be divided into four phases: Phase I (1964-87), Phase II (1987-92),

Phase III (1992-97), and Phase IV (beyond 1997).

Phase I: The mutual fund concept was introduced in India with the setting up of UTI in 1963.

The Unit Trust of India (UTI) was the first mutual fund set up under the UTI Act, 1963, a

special act of the Parliament. It became operational in 1964 with a major objective of

mobilising savings through the sale of units and investing them in corporate securities for

maximising yield and capital appreciation. This phase commenced with the launch of Unit

Scheme 1964 (US-64) the first open-ended and the most popular scheme. UTI’s investible

funds, at market value (and including the book value of fixed assets) grew from Rs 49 crore

in1965 to Rs 219 crore in 1970-71 to Rs 1,126 crore in 1980-81 and further to Rs 5,068 crore

by June 1987. Its investor base had also grown to about 2 million investors. It launched

innovative schemes during this phase. Its fund family included five income-oriented, open-

ended schemes, which were sold largely through its agent network built up over the years.

Master share, the equity growth fund launched in 1986, proved to be a grand marketing

success. Master share was the first real close-ended scheme floated by UTI. It launched India

Fund in 1986-the first Indian offshore fund for overseas investors, which was listed on the

London Stock Exchange (LSE). UTI maintained its monopoly and experienced a consistent

growth till 1987.

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Phase II: The second phase witnessed the entry of mutual fund companies sponsored by

nationalised banks and insurance companies. In 1987, SBI Mutual Fund and Canbank Mutual

Fund were set up as trusts under the Indian Trust Act, 1882. In 1988, UTI floated another

offshore fund, namely, The India Growth Fund which was listed on the New York Stock

Exchange (NYSB). By 1990, the two nationalised insurance giants, LIC and GIC, and

nationalised banks, namely, Indian Bank, Bank of India, and Punjab National Bank had

started operations of wholly-owned mutual fund subsidiaries. The assured return type of

schemes floated by the mutual funds during this phase were perceived to be another banking

product offered by the arms of sponsor banks. In October 1989, the first regulatory guidelines

were issued by the Reserve Bank of India, but they were applicable only to the mutual funds

sponsored by FIIs. Subsequently, the Government of India issued comprehensive guidelines

in June 1990 covering all ‘mutual funds. These guidelines emphasised compulsory

registration with SEBI and an arms length relationship be maintained between the sponsor

and asset management company (AMC). With the entry of public sector funds, there was a

tremendous growth in the size of the mutual fund industry with investible funds, at market

value, increasing to Rs 53,462 crore and the number of investors increasing to over 23

million. The buoyant equity markets in 1991-92 and tax benefits under equity-linked savings

schemes enhanced the attractiveness of equity funds.

Phase III: The year 1993 marked a turning point in the history of mutual funds in India. Tile

Securities and Exchange Board of India (SEBI) issued the Mutual Fund Regulations in

January 1993. SEBI notified regulations bringing all mutual funds except UTI under a

common regulatory framework. Private domestic and foreign players were allowed entry in

the mutual fund industry. Kothari group of companies, in joint venture with Pioneer, a US

fund company, set up the first private mutual fund the Kothari Pioneer Mutual Fund, in 1993.

Kothari Pioneer introduced the first open-ended fund Prima in 1993. Several other private

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sector mutual funds were set up during this phase. UTI launched a new scheme, Master-gain,

in May 1992, which was a phenomenal success with a subscription of Rs 4,700 crore from

631akh applicants. The industry’s investible funds at market value increased to Rs 78,655

crore and the number of investor accounts increased to 50 million. However, the year 1995

was the beginning of the sluggish phase of the mutual fund industry. During 1995 and 1996,

unit holders saw an erosion in the value of their investments due to a decline in the NA V s of

the equity funds. Moreover, the service quality of mutual funds declined due to a rapid

growth in the number of investor accounts, and the inadequacy of service infrastructure. A

lack of performance of the public sector funds and miserable failure of foreign funds like

Morgan Stanley eroded the confidence of investors in fund managers. Investors perception

about mutual funds, gradually turned negative. Mutual funds found it increasingly difficult to

raise money. The average annual sales declined from about Rs 13,000 crore in 1991-94 to

about Rs 9,000 crore in 1995 and 1996.

Phase IV: During this phase, the flow of funds into the kitty of mutual funds sharply

increased. This significant growth was aided by a more positive sentiment in the capital

market, significant tax benefits, and improvement in the quality of investor service. Investible

funds, at market value, of the industry rose by June 2000 to over Rs 1,10,000 crore with UTI

having 68% of the market share. During 1999-2000 sales mobilisation reached a record level

of Rs 73,000 crore as against Rs 31,420 crore in the preceding year. This trend was, however,

sharply reversed in 2000-01. The UTI dropped a bombshell on the investing public by

disclosing the NAV of US-64-its flagship scheme as on December 28,2000, just at Rs 5.81 as

against the face value of Rs 10 and the last sale price of Rs 14.50. The disclosure of NAV of

the country’s largest mutual fund scheme was the biggest shock of the year to investors.

Crumbling global equity markets, a sluggish economy coupled with bad investment decisions

made life tough for big funds across the world in 2001-02. The effect of these problems was

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felt strongly in India also. Pioneer m, JP Morgan and Newton Investment Management pulled

out from the Indian market. Bank of India MF liquidated all its schemes in 2002.

The Indian mutual fund industry has stagnated at around Rs 1,00,000 crore assets since 2000-

01. This stagnation is partly a result of stagnated equity markets and the indifferent

performance by players. As against this, the aggregate deposits of Scheduled Commercial

Banks (SCBs) as on May 3, 2002, stood at Rs 11,86,468 crore. Mutual funds assets under

management (AUM) form just around 10% of deposits of SCBs.

The Unit Trust of India is losing out to other private sector players. While there has been an

increase in AUM by around 11% during the year 2002, UTI on the contrary has lost more

than 11% in AUM. The private sector mutual funds have benefited the most from the debacle

ofUS-64 of UTI. The AUM of this sector grew by around- 60% for the year ending March

2002.

Types of Mutual Fund Schemes

The objectives of mutual funds are to provide continuous liquidity and higher yields with

high degree of safety to investors. Based on these objectives, different types of mutual fund

schemes have evolved.

Types of Mutual Fund Schemes

Functional :- Portfolio :- Geographical :- Other :-

Open-Ended Event Income Funds Domestic Sectoral Specific

Close-Ended Scheme Growth Funds Off-Shore Tax Saving

Interval Scheme Balanced Funds ELSS

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 Money Market Special

Mutual Fund Gilt Funds

Load Funds

Index Funds

ETFs

PIE Ratio Fund

Functional Classification of Mutual Funds :-

1. Open-ended schemes: In case of open-ended schemes, the mutual fund continuously offers

to sell and repurchase its units at net asset value (NAV) or NAV-related prices. Unlike close-

ended schemes, open-ended ones do not have to be listed on the stock exchange and can also

offer repurchase soon after allotment. Investors can enter and exit the scheme any time during

the life of the fund. Open-ended schemes do not have a fixed corpus. The corpus of fund

increases or decreases, depending on the purchase or redemption of units by investors.

There is no fixed redemption period in open-ended schemes, which can be terminated

whenever the need arises. The fund offers a redemption price at which the holder can sell

units to the fund and exit. Besides, an investor can enter the fund again by buying units from

the fund at its offer price. Such funds announce sale and repurchase prices from time-to-time.

UTI’s US-64 scheme is an example of such a fund. The key feature of open-ended funds is

liquidity. They increase liquidity of the investors as the units can be continuously bought and

sold. The investors can develop their income or saving plan due to free entry and exit frame

of funds. Open-ended schemes usually come as a family of schemes which enable the

investors to switch over from one scheme to another of same family.

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2. Close-ended schemes: Close-ended schemes have a fixed corpus and a stipulated maturity

period ranging between 2 to 5 years. Investors can invest in the scheme when it is launched.

The scheme remains open for a period not exceeding 45 days. Investors in close-ended

schemes can buy units only from the market, once initial subscriptions are over and thereafter

the units are listed on the stock exchanges where they dm be bought and sold. The fund has

no interaction with investors till redemption except for paying dividend/bonus. In order to

provide an alternate exit route to the investors, some close-ended funds give an option of

selling back the units to the mutual fund through periodic repurchase at NAV related prices.

If an investor sells units directly to the fund, he cannot enter the fund again, as units bought

back by the fund cannot be reissued. The close-ended scheme can be converted into an open-

ended one. The units can be rolled over by the passing of a resolution by a majority of the

3. Interval scheme: Interval scheme combines the features of open-ended and close-ended

schemes. They are open for sale or redemption during predetermined intervals at NAVrelated

prices.

Portfolio Classification :-

Here, classification is on the basis of nature and types of securities and objective of

investment.

1. Income funds: The aim of income funds is to provide safety of investments and regular

income to investors. Such schemes invest predominantly in income-bearing instruments like

bonds, debentures, government securities, and commercial paper. The return as well as the

risk are lower in income funds as compared to growth funds.

2. Growth funds: The main objective of growth funds is capital appreciation over the

medium-to-long- term. They invest most of the corpus in equity shares with significant

growth potential and they offer higher return to investors in the long-term. They assume the

Page | 27
risks associated with equity investments. There is no guarantee or assurance of returns. These

schemes are usually close-ended and listed on stock exchanges.

3. Balanced funds: The aim of balanced scheme is to provide both capital appreciation and

regular income. They divide their investment between equity shares and fixed nicebearing

instruments in such a proportion that, the portfolio is balanced. The portfolio of such funds

usually comprises of companies with good profit and dividend track records. Their exposure

to risk is moderate and they offer a reasonable rate of return.

4. Money market mutual funds: They specialise in investing in short-term money market

instruments like treasury bills, and certificate of deposits. The objective of such funds is high

liquidity with low rate of return.

Geographical Classification :-

1. Domestic funds: Funds which mobilise resources from a particular geographical locality

like a country or region are domestic funds. The market is limited and confined to the

boundaries of a nation in which the fund operates. They can invest only in the securities

which are issued and traded in the domestic financial markets.

2. Offshore funds: Offshore funds attract foreign capital for investment in ‘the country of the

issuing company. They facilitate cross-border fund flow which leads to an increase in foreign

currency and foreign exchange reserves. Such mutual funds can invest in securities of foreign

companies. They open domestic capital market to international investors. Many mutual funds

in India have launched a number of offshore funds, either independently or jointly with

foreign investment management companies. The first offshore fund, the India Fund, was

launched by Unit Trust of India in July 1986 in collaboration with the US fund manager,

Merril Lynch.

Others :-

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1. Sectoral: These funds invest in specific core sectors like energy, telecommunications, IT,

construction, transportation, and financial services. Some of these newly opened-up sectors

offer good investment potential.

2. Tax saving schemes: Tax-saving schemes are designed on the basis of tax policy with

special tax incentives to investors. Mutual funds have introduced a number of tax saving

schemes. These are close--ended schemes and investments are made for ten years, although

investors can avail of encashment facilities after 3 years. These schemes Contain various

options like income, growth or capital application. The latest scheme offered is the

Systematic Withdrawal Plan (SWP) which enables investors to reduce their tax incidence on

dividends from as high as 30% to as low as 3 to 4%.

3. Equity-linked savings scheme (ELSS): In order to encourage investors to invest in equity

market, the government has given tax-concessions through special schemes. Investment in

these schemes entitles the investor to claim an income tax rebate, but these schemes carry a

lock-in period before the end of which funds cannot be withdrawn.

4. Special schemes: Mutual funds have launched special schemes to cater to the special needs

of investors. UTI has launched special schemes such as Children’s Gift Growth Fund, 1986,

Housing Unit Scheme, 1992, and Venture Capital Funds.

5. Gilt funds: Mutual funds which deal exclusively in gilts are called gilt funds. With a view

to creating a wider investor base for government securities, the Reserve Bank of India

encouraged setting up of gilt funds. These funds are provided liquidity support by the

Reserve Bank.

6. Load funds: Mutual funds incur certain expenses such as brokerage, marketing expenses,

and communication expenses. These expenses are known as ‘load’ and are recovered by the

fund when it sells the units to investors or repurchases the units from withholders. In other

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words, load is a sales charge, or commission, assessed by certain mutual funds to cover their

selling costs.

Loads can be of two types-

1) Front-end-load and

2) back-end load.

Front-end-load, or sale load, is a charge collected at the time when an investor enters into the

scheme. Back-end, or repurchase, load is a charge collected when the investor gets out of the

scheme. Schemes that do not charge a load are called ‘No load’ schemes. In other words, if

the asset management company (AMC) bears the load during the initial launch of the scheme,

then these schemes are known as no-load schemes. However, these no-load schemes can have

an exit load when the unit holder gets out of the scheme before a I stipulated period

mentioned in the initial offer. This is done to prevent short-term investments and

redemptions. Some funds may also charge different amount of loads to investors depending

upon the time period the investor has stayed with the funds. The longer the investor stays

with the fund, less is the amount of exit load charged. This is known as contingent deferred

sales’ charge (CDSL). It is a back-end (exit load) fee imposed by certain funds on shares

redeemed with a specific period following their purchase and is usually assessed on a sliding

scale.

7. Index funds: An index fund is a mutual fund which invests in securities in the index on

which it is based BSE Sensex or S&P CNX Nifty. It invests only in those shares which

comprise the market index and in exactly the same proportion as the companies/weight age in

the index so that the value of such index funds varies with the market index. An index fund

follows a passive investment strategy as no effort is made by the fund manager to identify

stocks for investment/dis-investment. The fund manager has to merely track the index on

which it is based. His portfolio will need an adjustment in case there is a revision in the

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underlying index. In other words, the fund manager has to buy stocks which are added to the

index and sell stocks which are deleted from the index.

Internationally, index funds are very popular. Around onethird of professionally run

portfolios in the US are index funds. Empirical evidence points out that active fund managers

have not been able to perform well. Only 20-25% of actively managed equity mutual funds

out-perform benchmark indices in the long-term. These active fund managers park 80% of

their money in an index and do active management on the remaining 20%. Moreover, risk

investors like provident funds and pension funds prefer investment in passively managed

funds like index funds.

8. PIE ratio fund: PIE ratio fund is another mutual fund variant that is offered by Pioneer IT!

Mutual Fund. The PIE (Price-Earnings) ratio is the ratio of the price of the stock of a

company to its earnings per share (EPS). The PIE ratio of the index is the weighted average

price-earnings ratio of all its constituent stocks.

The PIE ratio fund invests in equities and debt instruments wherein the proportion of the

investment is determined by the ongoing price-earnings multiple of the market. Broadly,

around 90% of the investible funds will be invested in equity if the Nifty Index PIE ratio is 12

or below. If this ratio exceeds 28, the investment will be in debt/money markets. Between the

two ends of 12 and 28 PIE ratio of the Nifty, the fund will allocate varying proportions of its

investible funds to equity and debt. The objective of this scheme is to provide superior risk-

adjusted returns through a balanced portfolio of equity and debt instruments.

9. Exchange traded funds: Exchange Traded Funds (ETFs) are a hybrid of open-ended mutual

funds and listed individual stocks. They are listed on stock exchanges and trade like

individual stocks on the stock exchange. However, trading at the stock exchanges does not

affect their portfolio. ETFs do not sell their shares directly to investors for cash. The shares

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are offered to investors over the stock exchange. ETFs are basically passively managed funds

that track a particular index such as S&P CNX Nifty.

Since they are listed on stock exchanges, it is possible to buy and sell them throughout the

day and their price is determined by the demand-supply forces in the market. In practice, they

trade in a small range around the value of the assets (NAV) held by them.

 ETFs offer several distinct advantages:

 ETFs bring the trading and real time pricing advantages of individual stocks to mutual

funds. The ability to trade intraday at prices that are usually close to the actual intra-

day NAV of the scheme makes it almost real-time trading.

 ETFs are simpler to understand and hence they can attract small investors who are

deterred to trade in index futures due to requirement of minimum contract size. Small

investors can buy minimum one unit of ETF, can place limit orders and trade intra-

day. This, in turn, would increase liquidity of the cash market.

 ETFs can be used to arbitrate effectively between index futures and spot index.

 ETFs provide the benefits of diversified index funds. The investor can benefit from

the flexibility of stocks as well as the diversification.

 ETFs being passively managed, have somewhat higher NAV against an index fund of

the same portfolio. The operating expenses of ETFs are lower than even those of

similar index funds as they do not have to service investors who deal in shares

through stock exchanges.

 ETFs can be beneficial for financial institutions also. Financial institutions can use

ETFs for utilizing idle cash, managing redemptions, modifying sector allocations, and

hedging market exposure.

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The first exchange traded fund-Standard and Poor’s Depository Receipt (SPDR-also called

Spider)-was launched in the US in 1993. ETFs have grown rapidly with around US$100

billion in assets as on December 2001. Today, about 60% of trading value on the American

Stock Exchange (AMEX) is from ETFs. ETFs were launched in Europe and Asia in 2001.

Currently, more than 120 ETFs are available in US, Europe, Singapore, Hongkong, Japan,

and other countries. Among the popular ones are SPDRs (Spiders) based on the S&P 500

Index, QQQs (cubes) based on the Nasdaq-100 Index, i SHARES based on MSCI Indices and

TRAHK (Tracks) based on the Hang Seng Index. The ETF structure has seen over $120 bn

pouring into it in more than 220 funds. It has become the fastest growing fund structure. In

year 2001 alone, the number of funds doubled from 100 to 200.

The first ETF to be introduced in India is Nifty Bench mark Exchange-Traded Scheme (Nifty

BeES). It is an open-ended ETF, launched towards the end of 2001 by Benchmark Mutual

Funds. The fund is listed in the capital market segment of the NSE and trades the S&P CNX

Nifty Index. The Benchmark Asset Management Company has become the first company in

Asia (excluding Japan) to introduce ETF.

Net Asset Value: The net asset value of a fund is the market value of the assets minus the

liabilities on the day of valuation. In other words, it is the amount which the shareholders will

collectively get if the fund is dissolved or liquidated. The net asset value of a unit is the net

asset value of fund divided by the number of outstanding units. Thus NAV = Market Price of

Securities + Other Assets – Total Liabilities + Units Outstanding as at the NAV date. NAV =

Net Assets of the Scheme + Number of units outstanding, that is, Market value of

investments + Receivables + Other Accrued Income + Other Assets - Accrued Expenses -

Other Payables - Other Liabilities + No. of units outstanding as at the NAV date.

Page | 33
A fund’s NAV is affected by four sets of factors: purchase and sale of investment securities,

valuation of all investment securities held, other assets and liabilities, and units sold or

redeemed.

SEBI has issued guidelines on valuation of traded securities, thinly traded securities and non-

traded securities. These guidelines were issued to streamline the procedure of calculation

of NAV of the schemes of mutual funds. The aggregate value of illiquid securities as defined

in the guidelines shall not exceed 15% of the total assets of the scheme and any illiquid

securities held above 15% of the total assets shall be valued in the manner as specified in the

guidelines issued by the SEBI. Where income receivables on investments has accrued but has

not been received for the period specified in the guidelines issued by SEBI, provision shall be

made by debiting to the revenue account the income so accrued in the manner specified

By guidelines issued by SEBI.

Mutual funds are required to declare their NAV s and seller purchase prices of all schemes

updated daily on regular basis on the AMFI website by 8.00 p.m. and declare NA V s of their

Close-ended schemes on every Wednesday.

According to SEBI (Mutual Funds) (Second Amendment) Regulations, 2000, a mutual fund

can now invest up to 5% of its NAV in the unlisted equity shares or equity related

instruments in case of open-ended schemes; while in case of close-ended schemes, the mutual

fund can now invest up to 10% of its NAY.

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Mutual Fund Investors

Mutual funds in India are open to investment by

o Residents including:-

 Resident Indian Individuals, including high net worthindividuals and the retail or

small investors. Indian Companies

 Indian Trusts/Charitable Institutions

 Banks

 Non-Banking Finance Companies

 Insurance Companies

 Provident Funds

o Non-Residents, including

 Non-Resident Indians

 Other Corporate Bodies (OCBs)

c. Foreign entities, namely, Foreign Institutional Investors (FIIs) registered with SEBI.

Foreign citizens/ entities are however not allowed to invest in mutual funds in India.

Market survey plays a vital role in understanding the investment pattern of the customer and

the level of satisfaction. It is very important for the company to perform such activities like

market research and surveys at regular intervals and accordingly further plans and policies

can be formulated. By studying the investment pattern of the customers, the company can

plan the strategies to capture the more market share by providing the better services and

customized plans.

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 COMPANY PROFILE

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,

1882 with Reliance Capital Limited (RCL), as the Settlers/Sponsor and Reliance Capital

Trustee Co. Limited (RCTCL), as the Trustee.

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide

registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual

Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's

letter no. IMD/PSP/4958/2004 date 11th. March 2004. 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 was approved as the Asset Management Company for the

Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual

Fund has entered into an Investment Management Agreement (IMA) with RMF dated May

12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds)

Regulations, 1996. Pursuant to this IMA, RMF is authorised to act as Investment Manager of

Reliance Mutual Fund. The networth of the Asset Management Company including

preference shares as on March 31, 2005 is Rs.30.13 crores. Reliance Mutual Fund has

launched twenty five Schemes till date, namely: Reliance Vision Fund (September 1995),

Reliance Growth Fund (September 1995) Reliance Income Fund (December 1997), Reliance

Liquid Fund (March 1998), Reliance Medium Term Fund (August 2000), Reliance Short

Term Fund (December 2002), Reliance Fixed Term Scheme (March 2003), Reliance Banking

Page | 36
Fund (May 2003), Reliance Gilt Securities Fund (July 2003), Reliance Monthly Income Plan

(December 2003), Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma

Fund ( May 2004), Reliance Floating Rate Fund (August 2004), Reliance Media &

Entertainment Fund (September 2004), Reliance NRI Equity Fund (October 2004), Reliance

NRI Income Fund (October 2004), Reliance Index Fund (January 2005), Reliance Equity

Opportunities Fund (February 2005), Reliance Fixed Maturity Fund - Series I (March 2005),

Reliance Fixed Maturity Fund - Series II (April 2005), Reliance Regular Saving Fund (May

2005), Reliance Liquidity Fund (June 2005), Reliance Tax Saver (ELSS) Fund (July 2005),

Reliance Fixed Tenor Fund (November 2005) and Reliance Equity Fund (Feb 2006).

RCAM has been registered as a portfolio manager vide SEBI Registration No.

INP000000423 and renewed effective 1st August, 2003.RCAM has commenced these

activities. It has been ensured that key personnel of the AMC, the systems, back office, bank

and securities accounts are segregated activity wise and there exists systems to prohibit

access to inside information of various activities. As per SEBI Regulations, it will further

ensure that AMC meets the capital adequacy requirements, if any, separately for each such

activity.

TRUSTEES: Trustees are like internal regulators in a mutual fund, and their job is to protect

the interest of unitholders. Sponsors appoint trustees. Trustees appoint the AMC, which,

subsequently seek their approval for the work it does, and reports periodically to them on

how the business is being run. Trustees float and market schemes, and secure necessary

approvals. They check if the AMC’s investments are within defined limits and whether the

fund’s assets are protected. Trustees can be held accountable for financial irregularities in the

mutual fund.

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CUSTODIAN: A custodian handles the investment back office of a mutual fund. Its

responsibilities include receipt and delivery of securities, collection of income, distribution of

dividends, and segregation of assets between schemes. The sponsor of a mutual fund mutual

fund cannot act as a custodian to the fund. This condition, formulated in the interest of

investors, ensures that the assets of mutual fund are not in the hands of its sponsor.

REGISTRAR : Registrars, also known as transfer agents, handle all investor-related services.

This includes issuing and redeeming units, sending fact sheet and annual reports. Some fund

houses handle such functions in-house.

The main objectives of the Trust are:

 To carry on the activity of a Mutual Fund as may be permitted at law and formulate

and devise various collective Schemes of savings and investments for people in

India and abroad and also ensure liquidity of investments for the Unit holders;

 To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on

their savings

 To take such steps as may be necessary from time to time to realize the effects

without any limitation

Vision, Mission & Market Strategy:-

o Vision statement –

 “Empowering everyone to live their dream”

o Mission statement-

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  “To offer unparalleled value by providing the customer transparent, convenient and

effective anytime-anywhere integrated financial transaction capability”

o Marketing strategy- to provide

 Simple, easy-to-understand, safe and secure trading platform/software

 Uncomplicated, easy-to-understand brokerage/trading cost structure without any

riders

 Easy access to the financial market through convenient modes of distribution

 Sound, genuine, unbiased advise individual investments.

Detail Study about the company

The easiest, fastest and most convenient way to carry out your financial transactions is now at

your fingertips! Reliance Money offers you the widest range of asset classes to trade in:

Equity, Derivatives, Commodities and Forex. Also invest on-line in Mutual Funds, IPOs and

Insurance products (Life & General). All this through one single window. Reliance Money is

a state-of-the-art financial transaction platform, which enables you to conduct your financial

transactions in cost effective, convenient and secure manner. Reliance Money has introduced

several never . before features and thereby changed the way you will invest:

1. Flat Fees instead of Brokerage - Put your money into investments, not into brokerage.

Pay a flat fee of Rs. 500/- and transact as much you want upto Rs. 1crore or for 2 months

(whichever is earlier). It.s never happened before anywhere in the world!

2. Trading Kiosks - No matter if you don.t have access to a computer or the Internet. You

will find exclusive Reliance Money Trading Kiosks at convenient locations throughout your

city. These internet-enabled Kiosks bring the market to you, wherever you are.

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3. Security Token - The Reliance Money security token is so hi-tech, it almost defies belief.

This small, portable plastic device flashes a unique number that changes every 36 seconds,

ensuring that the number used for an earlier transaction is discarded. This number works over

and above your normal login and password, serving as a third level of protection that

guarantees your account total safety.

4. Call N Trade - You don.t have to access your computer to trade or invest.With our Call N

Trade facility, you can place orders over the phone.

5. Multiple Offerings - Along with equity, you can also trade / invest in Commodities (gold,

silver, base metals and other agri commodities to name a few), Derivatives, Forex (RBI

allows you to remit US$25,000 per calendar year), Mutual Funds, IPOs and Insurance

products (Life & General).

6. Widest Network: Reliance Money has a network of branches all over the country with

associates who will assist you with your financial investment requirements.

7. Other value - added Services: -Reliance Money provides:

• Research, market views and stock views from independent experts, with an enviable

track record

• LIVE news from Dow Jones, Capital Market and Commodities Control

• CEOs. / experts. views on economy and the financial market

• Personal Finance planning tools that help you plan your investments, retirement, tax etc.

• Portfolio Tracker that will help you track your investments from one single

screen

• Risk Analyzer to analyze your risk profile and get a suitable investment portfolio plan

using our Asset Allocator.

• Knowledge Centre will help you understand investing and trading basics and also delve

into advanced concepts like trading strategies

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• Market Watch, a unique tool that will help you track your favorite companies. Just

configure it and get real time quotes, news, views, result etc. Our technology allows you to

detach it from the main screen and place it on your desktop.

Products and Services

A product for every need: Reliance Money is the most comprehensive platform which allows

you to invest in Shares, Mutual Funds, Derivatives (Futures & Options), Commodities,

Forex, IPOs, Insurance and other financial products. Simply put, we offer you a product for

almost every investment need.

Investing in Mutual Funds:

Reliance Money brings you a unique, hassle-free and paperless way to invest in Mutual

Funds. You can now invest on-line in Mutual Funds through Reliance Money No more filling

application forms manually or any going through other paperwork. You need no signatures or

proof of identity for investing. Once you place a request for investing in a particular fund,

there are no manual processes involved. Your bank funds are automatically debited or

credited while simultaneously crediting or debiting your unit holdings.You also get control

over your investments with on-line order confirmations and order status tracking. You get to

know the performance of your investments through online updation of your portfolio with

current NAVs.

Reliance Money offers you various options while investing in Mutual Funds:

Purchase: Buying of Mutual Fund units is very convenient without the hassles of filling in the

applications manually. Redemption: As with Purchases, redemptions too can be done online.

Switch: You can shift money from one scheme to another in the same mutual fund house,

with the click of a button.

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Reliance Mutual Funds

Equity Schemes :

Reliance Equity Fund:

(An open-ended diversified Equity Scheme.) 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.

Reliance Tax Saver (ELSS) Fund:

(An Open-ended Equity Linked Savings Scheme.) 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.

Reliance Equity Opportunities Fund:

(An Open-Ended Diversified Equity Scheme.) 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 related securities and the

secondary objective is to generate consistent returns by investing in debt and money market

securities.

Reliance Vision Fund:

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(An Open-ended Equity Growth Scheme.) 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.

Reliance Growth Fund:

(An Open-ended Equity Growth Scheme.) 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.

Reliance Index Fund:

(An Open Ended Index Linked Scheme.) The Investment Objective under the Nifty Plan is to

replicate the composition of the Nifty, with a view to endeavor to generate returns, 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, with a view to endeavor to generate

returns, which could approximately be the same as that of Sensex.

Reliance NRI Equity Fund:

(An open-ended Diversified Equity 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.

Equity Option: The primary investment objective is to seek capital appreciation and or

consistent returns by actively investing in equity / equity related securities.

Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectors or industries

as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer

Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the

performance of the respective sectors/industries. While these funds may give higher

Page | 43
returns, they are more risky compared to diversified funds. Investors need to keep a

watch on the performance of those sectors/industries and must exit at an appropriate time.

Sector Specific Schemes

Sector Funds are specialty funds that invest in stocks falling into a certain sector of the

economy. Here the portfolio is dispersed or spread across the stocks in that particular sector.

This type of scheme is ideal for investors who have already made up their mind to confine

risk and return to a particular sector

Reliance Banking Fund

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.

Reliance Diversified Power Sector Fund

Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme. 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.

Reliance Pharma Fund

Reliance Pharma Fund is an Open-ended Pharma 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 Pharma and other associated companies.

Reliance Media & Entertainment Fund

Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector

scheme.

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The 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.

NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund

net of its liabilities. NAV per unit is simply the net value of assets divided by the number of

units outstanding. Buying and selling into funds is done on the basis of NAV-related prices.

NAV is calculated as follows:

NAV= Market value of the fund’s investments+Receivables+Accrued Income.

Liabilities-Accrued Expenses.

Various Companies Detail:

FRANKLIN TEMPLETON MUTUAL FUND

The group, Franklin Templeton investment is a California based company with a

global AUM of US $409.2(as on 2005). It is one of the largest financial service group in

the world. Investors can buy or sell the Mutual Fund through their financial advisor or

through mail or through their website. They have open end Diversified Equity schemes,

Open end Sector Equity schemes, Open end Hybrid schemes, Open end tax saving

schemes, Open end income and liquid schemes, Closed end Income schemes and Open

end Fund of Funds schemes to offer.

HDFC MUTUAL FUND

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely

Housing Development Finance Corporation Limited and Standard Life Investments

Limited.

ING VYSYA MUTUAL FUND

ING Yysya Mutual Fund was setup on February 11, 1999 with the same named Trustee

Page | 45
Company. It is a joint venture of Vysya and ING. The AMC, ING Investment

Management (India) Pvt. Ltd. was on corporaed on April 6, 1998.

PRUDENTIAL ICICI MUTUAL FUND

The mutual fund of ICICI is a joint venture with Prudential Plc. Of America, one

of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was

setup on 13 October, 1993 with two sponsors, Prudential Plc. and the AMC is Prudential

ICICI Asset Management Company Limited incorporated on 22 June, 1993.

SAHARA MUTUAL FUND

Sahara Mutual Fund was setup on July 18, 1996 with Sahara India financial

Corporation Ltd. as the sponsor. Sahara Assets Management Company Private Limited

incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid up

capital of the AMC stands at Rs.25.8 crore.

STATE BANK OF INDIA MUTUAL FUND

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to

launch offshore fund, the India Magnum Fund with a corpus of Rs.225 crore

approximately. Today it is the largest Bank sponsored Mutual Fund in India. They

already launched 35 schemes out of which 15 have already yield handsome returns to

investors. State Bank of India Mutual Fund has more than Rs.5, 500 crores as AUM.

Now it has an investor base of over 8 lakhs spread over 18 schemes.

TATA MUTUAL FUND

TATA Mutual Fund is a Trust under the Indian Trust Act, 1882. the sponsors for

Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. the

investment manager is Tata management Limited is one of the fastest in the country with

more than Rs.7,703 Crore (as on 2005) of AUM.

KOTAK MAHINDRA ASSTE MANAGEMENT COMPANY

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Kotak Mahindra Asset Management Company is a subsidiary of KMBL. It is

presently having more than 1, 99,818 investors in its various schemes. KMAMC stared

its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering

to investors with varying risk return profiles. It was the first company to launch to

dedicated gilt scheme investing only in government securities.

UNIT TRUST OF INDIA MUTUAL FUND

UTI Asset Management Company Private Limited, established in Jan 24, 2003

manages the UTI Mutual Fund with the support of UTI Trustee Company Private

Limited. UTI Asset Management Company presently manages a corpus of over Rs.20,

000 crore. The sponsors of UTI Mutual Fund are Bank of Baroda, Punjab National Bank,

State Bank of India, and Life Insurance Corporation of India. The schemes of UTI

Mutual Fund are Liquid Funds, assets Management Funds, Index Funds and Balanced

Funds.

ABN AMRO MUTUAL FUND

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO

Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset

Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is

the custodian of ABN AMRO Mutual Fund.

BIRLA SUN LIFE MUTUAL FUND

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun

Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being

represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from

India. Birla Sun life Mutual Fund follows a conservative long-term approach to

investment. Recently it crossed an AUM of Rs.10, 000 crores.

BANK OF BARODA MUTUAL FUND

Page | 47
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,

1992 under the sponsorship of Bank of Baroda. BOB Assets Management Company

Limited is the AUM of BOB Mutual Fund and was incorporated on November 5, 1992.

Deutsche Bank AG is the custodian. STANDARD CHARTERED MUTUAL FUND

Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by

Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd.

Standard Chartered Asset Management Company Pvt. Ltd is the AMC which was

incorporated with SEBI on December 20, 1999.

MORGAN STANLEY MUTUAL FUND

Morgan Stanley is a worldwide financial services company and its leading in the

market in securities, investment management and credit services. Morgan Stanley

Investment management was established in the year 1975. It provides customized asset

Management services and products to governments, corporations, pension funds and non

Profit organizations. Its services are also extending to high net worth individuals and

Retail investors. In India it is known as Morgan Stanley investment management Private

Ltd. and its AMC is Morgan Stanley Mutual Fund. This is the first closed end diversified

equity scheme serving the needs of Indian retail investors focusing on the long term

capital appreciation.

ESCORT MUTUAL FUNDS

Escort Mutual Funds was set up on April 15th, 1996 with Escorts Finance Ltd. as its

sponsor. The Trustee Company is Escorts Investments Trust Ltd. its AMC was

Incorporated on Dec1st, 95 with the name Escorts Asset Management Ltd.

ALLAINCE CAPITAL MUTUAL FUND

Allaince Capital Mutual Fund was set up on December 30, 1994 with Alliance

Capital Management Corp. of Delaware (USA) as sponsor. The Trustee is ACAM Trust

Page | 48
Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India Pvt. Ltd.

with the corporate office in Mumbai.

BENCHMARK MUTUAL FUND

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial

Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the

Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai,

Benchmark Assets Management Company Pvt. Ltd. is the AMC.

CAN BANK MUTUAL FUND

Can Bank Mutual Fund was setup on December 19, 1987 with Canara Bank

Acting as the sponsor. Canara bank investment Management Service Ltd. incorporated on

March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

CHOLA MUTUAL FUND

Chola Mutual Fund under the sponsorship of Cholamandalam Investment &

Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is

The Trustee Company and AMC is Cholamandalam AMC Limited.

LIC MUTUAL FUND

Life Insurance Corporation on India setup LIC Mutual Fund on 19th June 1989. It

Contributed Rs.2 crore towards the corpus of the Fund. LIC Mutual Fund was constituted

As a trust in accordance with the provisions of the Indian trust Act, 1882. The Company

Started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed

Jeevan Bima Sahayog Asset Management Company Ltd. as the Investment Managers for

Mutual fund.

GIC MUTUAL FUND

GIC Mutual Fund, sponsored by General Insurance Corporation of India, a

Government of India undertaking and the four Public Sector General Insurance

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Companies, viz. National Insurance Co. Ltd, the New India Assurance Co. Ltd. the

Oriental Insurance Co. Ltd and United India Insurance Co. Ltd and is constituted as a

Trust in Accordance with the provisions of the Indian Trusts Act, 1882.

DATA ANALYSIS

The given below is the Primary Analysis

i.e. one variable analysis of the questionnaire.

1. You belong to which one of the following category:

Frequency Percent Valid Cumulative

Percent Percent
Govt. 21 21.0 21.0 21.0
Employee
Valid Profestional 23 23.0 23.0 44.0
Pvt. Firm
Employee
Self 23 23.0 23.0 67.0
Employed
Business 7 7.0 7.0 74.0
Person
Agriculturist 1 1.0 1.0 75.0
Others 25 25.0 25.0 100.0
Total 100 100.0 100.0

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 Table 5.1 Frequency of No. Of Category

25 21

Govt. Employee
Professional Pvt. Firm Employee
Self Employed
1 Business Person
Agriculturist
7 Others
23
23

Interpretation:

Out of the 21 People Govt. Employee, 23 People Professional Pvt. Firm Employee, 23

People Self Employed, 7 People Business Person, 1 Person Agriculturist, 25 People Others.

2. Your annual income is in the range of:

Frequency Percent Valid Cumulative

Percent Percent
Below Rs. 1 12 12.0 12.0 12.0
Lakh
Between 1 23 23.0 23.0 35.0
Valid Lakh to 2
Lakh
Between 2 22 22.0 22.0 57.0
Lakh to 3
Lakh
Between 3 15 15.0 15.0 72.0
Lakh to 4
Lakh
Between 4 12 12.0 12.0 84.0

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 Lakh to 5
Lakh
Above Rs. 5 16 16.0 16.0 100.0
Lakh
Total 100 100.0 100.0

Table 5.2 Frequency No. Of Income

12
16

Below Rs. 1 Lakh

Between 1 Lakh to 2 Lakh
Between 2 Lakh to 3 Lakh
12
23 Between 3 Lakh to 4 Lakh
Between 4 Lakh to 5 Lakh
Above Rs. 5 Lakh

15

22

Interpretation:

Out of the 12 People income Below Rs. 1 Lakh, 23 people income Between 1 Lakh to 2

Lakh, 22 People Between 2 Lakh to3 Lakh, 15 people Between 3 Lakh to 4 Lakh, 12 people

Between 4 Lakh to 5 Lakh, 16 people Above Rs. 5 Lakh.

3. Where do you invest your savings?

Frequency Percent Valid Cumulative

Percent Percent
Savings Bank 77 77.0 27.5 27.5
Fixed Deposit 51 51.0 18.21 45.71
Shares/ 7 7.0 2.5 2.5
Debentures

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 Valid Gold/Silver 25 25.0 8.93 57.14
Postal savings 33 33.0 11.78 68.92
Real Estate 13 13.0 4.64 73.56
Mutual Funds 12 12.0 4.30 77.86
Insurance 62 62.0 22.14 100.0
Total 280 280.0 100.0

Table 5.3 Frequency No. Of Savings

62 Savings Bank
77 Fixed Deposit
shares/Debentures
Gold/Silver
12 Postal savings
Real Estate
13
Mutual Funds
Insurance
33 51

25 7

Interpretation:

Out of the 77 People savings in bank, 51 people saving in Fixed Deposit, 7 people saving in

Shares / Debentures, 25 people saving in Gold / Silver, 33 people saving in Postal Savings,

13 people saving in Real Estate, 12 people saving in Mutual Fund, 62 People saving in

Insurance.

4. What is the percentage of savings from your total income?

Frequency Percent Valid Cumulative

Percent Percent

<=25% 88 88.0 88.0 88.0

Valid <=50% 10 10.0 10.0 98.0
<=75% 2 2.0 2.0 100.0
100 100.0 100.0

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 Table 5.4 Frequency % Of Total Income
100
90
80
70
60
50
88
40
30
20
10
10
0 2
<=25 % <= 50 % <= 75 %

Interpretation:

88% people in ranked 1st < 25% are savings in total income, 10% people in ranked 2nd

< 50% are savings in total income, 2% people in ranked 3rd < 75% savings in total income.

5. Are you an investor in Mutual Funds? (If No, then directly go to question No.18)

Frequency Percent Valid Cumulative

Percent Percent
Yes 17 17.0 17.0 17.0
Valid No 83 83.0 83.0 100.0
Total 100 100.0 100.0

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 Table 5.5 Frequency of Investors in Mutual Fund
90

80

70

60

50

40 83

30

20

10 17
0
Yes No

Interpretation:

17% of the respondents prefer investors invest in Mutual Fund, whereas 83% of the

respondents prefer other investing source.

6. If yes, then you have invested in the Mutual Fund Which Company?

Please Mention________________________

Scheme ________________________

7. Which Schemes of Mutual fund would you prefer the most?

Frequency Percent Valid Percent Cumulative

Percent

Equity 14 14.0 82.35 82.35

Valid Schemes

Debt 3 3.0 17.65 100.0

Schemes

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 Total 17 17.0 100.0

Table 5.6 Frequency of most prefered

Mutual Fund schmes
16

14

12

10

8
14
6

2
3
0
Equity Schemes Debt Scheme

Interpretation:

82.35% of the respondents prefer equity schemes as investors now days are ready to risk

because they are getting good returns, whereas 17.65% of the respondents prefer debt

schemes.

8. If Equity Funds then, in which category:

Frequency Percent Valid Percent Cumulative

Percent

Diversified 7 7.0 25.0 25.0

Equity Funds
Valid Mid-Cap 6 6.0 21.43 46.43

Funds Sector

Page | 56
 Specific 4 4.0 14.29 60.72

Funds

Tax Savings 11 11.0 39.28 100.0

Funds

Total 28 28.0 100.0

Table 5.7 Frequency Of Equity funds Category

12

10

6
11

4
7
6
2 4

0
Diversified Equity Mid-Cap Funds Sector Specific Funds Tax Savings Funds
Funds

Interpretation:

Tax saving fund is ranked 1st by 39.20% of the Investors investing in saving fund as the

returns are low and also riskier compared to other 3 schemes. Diversified equity fund is

ranked 2nd by majority of the Investors as the returns are not so high compared to the other

Schemes of Equity.

9. Do you have knowledge about the share market & its functioning?

Frequency Percent Valid Cumulative

Percent Percent
Yes 13 13.0 76.47 76.47
Valid No 4 4.0 23.53 100.0

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 Total 17 17.0 100.0

Table 5.8 Frequency Of Knowledge Share

Market
14

12

10

8
13
6

2 4

0
Yes No

Interpretation:

76.47% of the respondents have knowledge about share market and its functioning, whereas

23.53% of the respondents have no knowledge.

10. Are you aware of the fact that Mutual Fund Companies will invest your money in

Share Market?

Frequency Percent Valid Percent Cumulative

Percent
Yes 14 14.0 82.35 82.35
Valid No 3 3.0 17.65 100.0
Total 17 17.0 100.0

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 Table 5.9 Frequency Of aware companies invest in
share market
16

14

12

10

8
14
6

2
3
0
Yes No

Interpretation:

82.35% of the respondents have aware about companies invest in share market, whereas

17.65% of the respondents have no about the companies strategy.

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 FINDINGS

 25% of the Investors have come to know about Mutual fund through Internet followed

by 20% who have come to know through News Paper.

 82% of the Investors are giving more preference to Equity schemes as they are giving

higher return whereas 18% of them prefer Debt Schemes because of the Safety they provide.

 39% investing in Equity schemes Tax Saving Fund Category and 25% followed by

Diversified Equity Fund.

 53% of the investors prefer Reliance Growth Fund followed by Reliance Vision Fund

and other Schemes.

 76% of the investors give most importance to Tax Benefit as they expect 64%

followed by Safety as it is also important aspect of investors.

 47% invested in Mutual Fund Scheme More than Five Years and 23% Followed By

two years.

 Reliance Mutual Fund is Ranked 3rd by the Investors i.e. 53 % of them have ranked

Reliance as 3rd , Pru. ICICI 2nd and Franklin Templeton is Ranked 1st.

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 CONCLUSION

I order to study the concept of mutual fund we should note that a mutual fund is a

Trust that pools the money of several investors and manages investments on behalf. The

Fund collects this money from investors through various schemes. Each schemes is

Differentiated by its objectives of investments or in other words a broadly defined

Purpose of how the collected money is going to be involved.

Investors invest in mutual fund due to following advantages: they have

Professional management, diversification, convenient administration, return potential,

Low cost, liquidity.

By comparing the above mentioned schemes I came to know the risk and return

Relation between the specified schemes. Therefore investors before investing in Equity

Mutual Fund schemes they should study the risk and return relation. And if the risk and

Returns is been matched with their planning, then only the investors should go for Equity

Mutual Fund schemes.

After the analysis made on the performance of Equity Schemes of Mutual Fund I can

conclude that Equity schemes are most preferred by Investors and overall Vision Fund and

Growth scheme are doing extremely well in the market satisfying the customer wants of high

returns and also through survey conducted it is clear that is performing quite well so it has

been Reliance Mutual Fund ranked 3rd among the selected companies. From the study we

also came to know that according to Investor Vision fund is ranked First but Company View

(Profit) Reliance growth fund is ranked First.

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 SUGGESTIONS

• Holding a seminar and presentations or Investors meet in the stock broking firm help

the investors to remove any misconception regarding the Mutual Fund and this will create

awareness of Mutual fund.

• Agents are the main person who influences the investment decision. Company can

hire fresh graduates train them and sponsor for the AMFI exam just like insurance companies

who conduct IRDA training. This will increase the feet on street for the mutual fund

companies.

• Company has to provide timely services to its customers so that it can compete with

its competitors like Franklin Templeton and HDFC.

Page | 62
 BIBLIOGRAPHY

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(2014, july 7). Retrieved july 19, 2014, from www.reliancemf.com.
(2014, june 30). Retrieved july 16, 2014, from
www.moneycontrol.com.
(2014, MARCH). Retrieved JUNE 27, 2014, from
www.mutualfunds.com.
(2014, february). Retrieved july 5, 2014, from www.amfiindia.com.
(2014, MARCH 31). Retrieved JULY 11, 2014, from
www.equitymaster.com.
Chartered Wealth Management (Vol. 3). (2014). Ahmedabad,
Gujarat, India: AAFM.
Nikita. (2013). Analysis of Mutual Fund. Pune.
(2013). Reliance Fact Sheet. AHMEDABAD.
smart invest. (2013). Invest smart financial Journal .

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