Reliance Mutual Fund-2019

PORTFOLIO MANAGEMENT
CHAPTER -1
INTRODUCTION TO MUTUAL FUND
A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus collected is then
invested in capital market instruments such as shares, debentures and other securities.
The income earned through these investments and the capital appreciation realized is
shared by its unit holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of mutual
funds. .
Investment means conversion of money/cash into the
monetary asset. Investment is a scarifying the current amount for future benefit.
Investment is the employment of funds with the aim of achieving additional income
or growth in value. The essential quality of an investment is that it involves “waiting”
for reward. It involves the commitment of resources, which have been saved or put
away from current consumption in a hope that some benefits will accrue in future.
There are a number of fields where people can invests there surplus money, just like
in Bank, Mutual fund, Insurance, Chit funds, Post office, Purchasing directly shares
from the company and many more.
Mutual Funds (MF) are one such type of investment. It is a

mechanism for pooling the resources by issuing units to the investors and investing
funds in securities in accordance with objectives as disclosed in offer document.
Mutual Fund issues units to the investors in accordance with the quantum of money
invested by them.
Investors of Mutual Funds are known as unit holders. The
investors in the proportion to their investments share the profit or losses. The Mutual
Funds come out with a number of schemes with different investments objectives,
which are launched from time to time. Mutual Funds are required to be registered
with Securities and Exchange Board of India (SEBI) that regulates securities before it
can collect funds from the public.
KMMITS - TIRUPATI Page 1

It was set up in the form of a trust that has a Sponsor,

Trustee; Asset Management the mutual fund needs to be constituted in the form of a
trust and the instrument of the trust should be in the form of a deed registered under
the provision of the Indian Registration Act, 1908. The sponsor is required to
contribute at least 40 percent of the minimum net worth (Rest 10 cores) of the asset
management company.
What is a Mutual Fund?
To state in simple words, a mutual fund collects the

savings from small investors, invest them in Government and other corporate
securities and earn income through interest and dividends, besides capital gains. It
works on the principle of ‘small drops of water make a big ocean’. For instance, if one
has Rs.1000 each from a lot of other people, then, one could create a ‘big fund’ large
enough to invest in a wide varieties of shares and debentures on a commanding scale
and thus, to enjoy the economies of large scale operations. Hence, a mutual fund is
nothing but a form of collective investment. It is formed by the coming together of a
number of investors who transfer their surplus funds to a professionally qualified
organization to manage it. To get the surplus funds from investors, the fund adopts a
simple technique. Each fund is dividend into a small fraction called “units” of equal
value. Each investor is allocated units in proportion to the size of his investment.
Thus, every investor, whether big or small, will have a stake in the fund and can enjoy
the wide portfolio of the investment held by the fund. Hence, mutual funds enable
millions of small and large investors to participate in and derive the benefit of the
capital market growth. It has emerged as a popular vehicle of creation of wealth due
to high return, lower cost and diversified risk.
DEFINITION:
The SEBI (Mutual Funds) Regulations 1993 define a mutual
fund as a fund established in the form a trust by a sponsor to raise monies by the
trustee through the sale of units to the public under one or more schemes for investing
in securities in accordance with these regulations.

A mutual fund is nothing more than a collection of stocks and/or

bonds. You can think of a mutual fund as a company that brings together a group of
people and invests their money in stocks, bonds, and other securities. Each investor
owns shares, which represent a portion of the holdings of the fund.
Mutual Funds are financial intermediaries. They are companies

set up to receive your money , and then having received it , make investment with
the money via an Asset Management Company (AMC) .
As you probably know, mutual funds have become extremely

popular over the last 20 years. What was once just another obscure financial
instrument is now a part of our daily lives. More than 80 million people, or one half of
the households in America, invest in mutual funds. That means that, in the United
States alone, trillions of dollars are invested in mutual funds.
In fact, to many people, investing means buying mutual funds.

After all, it's common knowledge that investing in mutual funds is (or at least should
be) better than simply letting your cash waste away in a savings account, but, for most
people, that's where the understanding of funds ends. It doesn't help that mutual fund
salespeople speak a strange language that is interspersed with jargon that many
investors don't understand Originally, mutual funds were heralded as a way for the
little guy to get a piece of the market. Instead of spending all your free time buried in
the financial pages of the Wall Street Journal, all you had to do was buy a mutual fund
and you'd be set on your way to financial freedom. As you might have guessed, it's
not that easy. Mutual funds are an excellent idea in theory, but, in reality, they haven't
always delivered. Not all mutual funds are created equal, and investing in mutuals
isn't as easy as throwing your money at the first salesperson who solicits your
business.
You can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and interest on bonds. A fund pays out
nearly all of the income it receives over the year to fund owners in the form of
distribution

2) If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for-profit.
Funds will also usually give you a choice either to receive a check for
distributions or to reinvest the earnings and get more shares.
CONCEPT OF MUTUAL FUNDS
A Mutual fund is not an alternatives investment option stocks and bond;

rather it pools of money, collected from investors and is invested according to the
investment objectives. The term “Mutual” means that investor contributing to the pool
also benefit from that pool. The pools of funds held mutually by investors are called
Mutual Funds. There are no other claimants to the funds.
Mutual fund is essentially a mechanism of pooling together the savings of

a large number of small investors for collected investors for collective investment
with an avowed objective of rewarded yields and capital appreciation, holdings safely
and liquidity as the primary parameters. Thus the money collected is invested by the
funds manager in different types of securities depending upon the objective of the
scheme.
These could range from shares to debentures. The income earned through
these investment the capital realized by the scheme and shared by its unit holders in
proportion to the number of units owned by them .Mutual Funds in the most suitable
investment for the common man as it offer an opportunity manager portfolio at a
relatively low cost. Each Mutual fund has a defined investment objectives and
strategy. This can be explained in the following figure ………

Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. The
era between 1963 and 1987 marked the existence of only one mutual fund company in
India with Rs. 67bn assets under management (AUM), by the end of its monopoly era,
the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund
companies in India took their position in mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual
Fund, Can bank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank
Mutual Fund, Bank of India Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund

industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The
private sector funds started penetrating the fund families. In the same year the first
Mutual Fund Regulations came into existence with re-registering all mutual funds
except UTI. The regulations were further given are vised shapein 1996.
Kothari Pioneer was the first private sector mutual fund company in
India which has now merged with Franklin Templeton. Just after ten years with
private sector players penetration, the total assets rose up to Rs. 1218.05 bn. Today
there are 33 mutual fund companies in India.

Major Mutual Fund Companies in India:
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 SunLife 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 crossedAUMofRs.10,000crores.
Bank of Baroda Mutual Fund (BOBMutualFund):

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on
October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management
Company Limited is the AMC of BOB Mutual Fund and was incorporated on
November 5, 1992. Deutsche Bank AG is the custodian.
HDFC Mutual Fund:

HDFC Mutual Fund was setup on June 30, 2000 with two
sponsorers namely Housing Development Finance Corporation Limited and Standard
Life Investments Limited.
HSBCMutualFund:
HSBC Mutual Fund was setup on May 27, 2002 with HSBC
Securities and Capital Markets (India) Private Limited as the sponsor. Board of
Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya MutualFund:

ING Vysya Mutual Fund was setup on February 11, 1999 with
the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC,
ING Investment Management (India) Pvt. Ltd. was incorporated 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 13th of October, 1993 with two sponsorers,
Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust
Ltd. and the AMC is Prudential ICICI Asset Management Company Limited
incorporated on 22nd of June, 1993
Sahara Mutual Fund:

Sahara Mutual Fund was set up on July 18, 1996 with Sahara
India Financial Corporation Ltd. as the sponsor. Sahara Asset 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 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India.
They have already launched 35 Schemes out of which 15 have already yielded
handsome returns to investors. State Bank of India Mutual Fund has more than Rs.
5,500 Crores as AUM..
Tata Mutual Fund:

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act,
1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment
Corporation Ltd. The investment manager is Tata Asset Management Limited and its
Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the
fastest in the country with more than Rs. 7,703crores(asonApril30,2005)ofAUM.

Kotak Mahindra MutualFund:

Kotak Mahindra Asset Management Company (KMAMC) is a
subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various
schemes. KMAMC started 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 dedicated gilt scheme investing on lying over government
securities.
Unit Trust of India MutualFund:

UTI Asset Management Company Private Limited, established in
Jan 14, 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.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of
Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life
Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid
Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and
Balance Funds.
Reliance Mutual Fund:

Reliance Mutual Fund (RMF) was established as trust under
Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and
Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30,
1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004.
Reliance Mutual Fund was formed for launching of 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 investment in diversified securities.
Standard Chartered Mutual Fund:

Standard Chartered Mutual Fund was set up 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.

Franklin Templeton India Mutual Fund:

The group, Franklin Templeton Investments is a California (USA)
based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one
of the largest financial services groups 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.
Morgan Stanley Mutual Fund India:

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 (MISM) was established in the year 1975. It
provides customized asset management services and products to governments,
corporations, pension funds and non-profit organisations. Its services are also
extended to high net worth individuals and retail investors. In India it is known as
Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC
is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity
scheme serving the needs of Indian retail investors focusing on a long-term capital
appreciation.
Escorts Mutual Fund:

Escorts Mutual Fund was setup on April 15, 1996 with
Excorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment
Trust Limited. Its AMC was incorporated on December 1, 1995 with the name
EscortsAssetManagementLimited.
Alliance Capital Mutual Fund:

Alliance Capital Mutual Fund was setup on December 30,

1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The
Trustee is ACAM Trust 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 sponsorer and Benchmark Trustee Company
Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and
headquartered in Mumbai, Benchmark Asset Management Company Pvt.
Ltd.istheAMC.
Canbank Mutual Fund:

Canbank Mutual Fund was setup on December 19, 1987 with
Canara Bank acting as the sponsor. Canbank Investment Management Services 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 of India set up LIC Mutual Fund on
19th June 1989. It contributed Rs. 2 Crores 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 LIC Mutual Fund.
GIC MutualFund:
GIC Mutual Fund, sponsored by General Insurance Corporation
of India (GIC), a Government of India undertaking and the four Public Sector General

Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India
Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India
Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the
provisions of the Indian Trusts Act, 1882.
2.1 INDUSTRY PROFILE
The Indian retail brokerage industry consists of companies that

primarily act as agents for the buying and selling of securities (e.g. stocks, shares, and
similar financial instruments) on a commission or transaction fee basis. It has two
main interdependent segments: Primary market and the Secondary market
Primary market: it is a market where the new securities are issued.
Secondary market: it is a market where the stocks are traded
Indian financial market:

It is a market for creation &exchange of financial aseets.The
financial market in India at present is more advanced than many other sectors as it
became organized as early as the 19th century with the securities exchanges in
Mumbai, Ahmedabad and Kolkata. In the early 1960s, the number of securities
exchanges in India became eight - including Mumbai, Ahmedabad and Kolkata. Apart
from these three exchanges, there was the Madras, Kanpur, Delhi, Bangalore and
Pune exchanges as well. Today there are 23 regional securities exchanges in India.
The Indian stock markets till date have remained stagnant due to
the rigid economic controls. It was only in 1991, after the liberalization process that
the India securities market witnessed a flurry of IPOs serially. The market saw many
new companies spanning across different industry segments and business began to
flourish.
The launch of the NSE (National Stock Exchange) and the OTCEI
(Over the Counter Exchange of India) in the mid 1990s helped in regulating a smooth
and transparent form of securities trading.

SEBI (Securities and Exchange Board of India) ESTABLISHMENT OF

SEBI
The Securities and Exchange Board of India was established on

April 12, 1992 in accordance with the provisions of the Securities and Exchange
Board of India Act, 1992.
PREAMBLE
The Preamble of the Securities and Exchange Board of India

describes the basic functions of the Securities and Exchange Board of India as
“…..To protect the interests of investors in securities and to

promote the development of, and to regulate the securities market and for
matters connected therewith or incidental thereto”
The regulatory body for the Indian capital markets was the SEBI
(Securities and Exchange Board of India). The capital markets in India experienced
turbulence after which the SEBI came into prominence. The market loopholes had to
be bridged by taking drastic measures.
It explains the evolution of the brokerage market in three phases:

pre1990, 1990-2000,post 2000. The Indian retail brokerage market is showing
phenomenal growth. The total trading volume of brokerage companies has increased
from US$1239.1 billion in 2004 to US$1492.1 billion in 2005, and is expected to
reach US$6535.7 billion by 2015.Some of the main characteristics of the brokerage
industry include growth in e-broking, growing derivatives market, decline in
brokerage fees etc.)
Though the Indian brokerage industry has been consolidating

steadily over the last 10 years, the share of the top 10 brokers has risen to only around
one-fourth of the total industry revenues..
History of Mutual fund industry:
Mutual funds really captured the public's attention in the 1980s

and '90s when mutual fund investment hit record highs and investors saw incredible
returns. However, the idea of pooling assets for investment purposes has been around
for a long time.
Here we look at the evolution of this investment vehicle, from
its beginnings in the Netherlands in the eighteenth century to its present status as a
growing, international industry with fund holdings accounting for trillions of dollars
in the United States alone.
Historians are uncertain of the origins of investment funds;
some cite the closed-end investment companies launched in the Netherlands in 1822
by King William ,It was the first mutual funds, while others point to a Dutch merchant
named Adriaan van Ketwich whose investment trust created in 1774 may have given
the king the idea. Van Ketwich probably theorized that diversification would increase
the appeal of investments to smaller investors with minimal capital.
The name of van Ketwich's fund, Eendragt Maakt Magt,

translates to "unity creates strength". The next wave of near-mutual funds included an
investment trust launched in Switzerland in 1849, followed by similar vehicles created
in Scotland in the1880s. The idea of pooling resources and spreading risk using
closed-end investments soon took root in Great Britain and France, making its way to
the United States in the 1890s. The Boston Personal Property Trust, formed in 1893,
was the first closed-end fund in the U.S.
The creation of the Alexander Fund in Philadelphia,

Pennsylvania, in 1907 was an important step in the evolution toward what we know as
the modern mutual fund. The Alexander Fund featured semi-annual issues and
allowed investors to make withdrawals on demand.
The mutual fund industry is a lot like the film star of the
finance business.Though it is perhaps the smallest segment of the industry, it is also
the most glamorous – in that it is a young industry where there are changes in the rule
of the game everyday, and there are constant shifts and upheavals The mutual fund is
structured around a fairly simple concept, the mitigation of risk through the spreading
of investments across multiple entities, which is achieved by the pooling of a number
of small investments into a large bucket. Yet it has been the subject of perhaps the
most elaborate and prolonged regulatory effort in the history of the country.
The mutual fund industry started in India in a small way
with the UTI Act creating what was effectively a small savings division within the
RBI. Over a period of 25 years this grew fairly successfully and gave investors a good
return, and therefore in 1989, as the next logical step, public sector banks and
financial institutions were allowed to float mutual funds and their success emboldened
the government to allow the private sector to foray into this area.
The initial years of the industry also saw the emerging
years of the Indian equity market, when a number of mistakes were made and hence
the mutual fund schemes, which invested in lesser-known stocks and at very high
levels, became loss leaders for retail investors. From those days to today the retail
investor, for whom the mutual fund is actually intended, has not yet returned to the
industry in a big way. But to be fair, the industry too has focused on brining in the
large.
The mutual fund industry in India started in 1963 with the
formation of Unit Trust of India, at the initiative of the Government of India and
Reserve Bank. 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. It was set up by the Reserve Bank of India and functioned under the
Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was
de-linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI.
Second Phase – 1987-1993 (Entry of Public Sector Funds):
1987 marked the entry of non- UTI, public sector mutual

funds set up by public sector banks and Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-
UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov
89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established
its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.At the end of 1993, the mutual fund industry had assets under management of

Rs.47,004crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds):
With the entry of private sector funds in 1993, a new era

started in the Indian mutual fund industry, giving the Indian investors a wider choice
of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were

substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.
The industry now functions under the SEBI (Mutual Fund) Regulations 1996.The
number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets
under management was way ahead of other mutual funds.
Fourth Phase – since February 2003:
In February 2003, following the repeal of the Unit Trust of

India Act 1963 UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of Rs.29,835
crores as at the end of January 2003, representing broadly, the assets of US 64
scheme, assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB
and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March

2000 more than Rs.76,000 crores of assets under management and with the setting up
of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations.

GROWTH IN ASSETS UNDER MANAGEMENT

2.2 COMPANY PROFILE

Reliance Mutual Fund, a part of the reliance Anil Dhirubhani
Ambani Group is one of the fastest growing mutual funds in the country, with the
presence in over 116 locations across India, an investor base of over 4.6 million and
manager assets over Rs 77210 crore as a on January 31, 2008. Reliance Mutual Fund
offers investors a well- rounded portfolio of product to meet varying investor
requirements.
Indian billionaires: Biggest losers & gainers
Mukesh's brother Anil Ambani, the second

wealthiest Indian, lost Rs 1,10,082 crore (Rs 1100.82
billion), or 66 percent of his wealth, as his flagship
Reliance Communications fell in line with the
broader market even as buyout talks with South African Telco MTN failed. Mega
power projects under Reliance Power will test his execution skills.
Reliance Industries Limited (RIL) is India’s largest private

sector company on all major financial parameters. It has emerged as the only Indian
company in the list of global companies that create most value for their shareholders,
published by Financial Times based on a global survey and research conducted by
PricewaterhouseCoopers in 2004. RIL features in the Forbes Global list of world’s
400 best big companies and in FT Global 500 list of world’s largest companies.

Reliance Infocomm is the outcome of late Dhirubhai

Ambani’s dream of bringing about a digital revolution in India that will bring to every
Indian’s doorstep an affordable means of information and communication.
"Make the tools of infocomm available to people at an
affordable cost. They will overcome the handicaps of illiteracy and lack of mobility",
was how Dhirubhai, as he was fondly called, spelt out Reliance Infocomm’s mission
in late 1999. He firmly believed the country could use information and
communication technology to overcome its backwardness and underdevelopment.
It was with this belief that Reliance Infocomm began laying its
60,000 route kilometres of pan-India fiber optic backbone in 1999. The backbone was
commissioned on December 28, 2002, Dhirubhai’s 70th birth anniversary, first since
his sad demise on July 6, 2002.
Broking:
Reliance Money has 75,000 customers and more than
Rs.500crs daily turnover happening. It has captured 1percent of the total market share.
It also distributes life and general insurance products, mutual fund distribution,
marketing of credit cards. Only 4.9 percent of household savings invested in
equity/equity related assets. Unrealized gains of Rs.27.2 bn(consolidated) on listed
investments as on
March 31,2007 (Remember, this is inclusive of REL). Unlisted companies include
yatra.com, 44 percent stake in DTDC, 31 percent stake in BLR India, and many
others. Consumer finance and Asset Reconstruction business is yet to launch. Every
subsidiary is 100 percent owned.
Investors should have a three-year perspective in Reliance

Capital as the benefits of its expansion will be reflected in phases. Reliance Capital,
the financial services arm of Anil Dhirubhai Ambani Group (ADAG), has witnessed a
spectacular run on the bourses, almost doubling over the past year.
In the past month, it has gone up 36 per cent. Investors are

flocking to the Reliance Capital counter, taking cue from the company's big bang
expansion plans, its growing leadership position in existing businesses within a short
period of time and buy recommendation by various foreign and domestic brokerage

firms due to attractive valuation and future potential. After touching its all-time high
of Rs 1046 on May 22, the stock seems to have consolidated at around Rs 950-980
levels. Analysts advise investors to accumulate the stock at about Rs 850-900 levels as
it has appreciated too fast. But they don't deny that there are many triggers for the
stock that could occur over the next two years.
Reliance Capital has presence in some of the fastest growing

segments of financial services like asset management, life insurance and general
insurance through more than 2,700 outlets of the group. It is further slated to expand
its product base. It recently set up its retail broking arm 'Reliance Money' and plans to
start its consumer finance business in this fiscal year. The company has also applied to
the Reserve Bank of India for its entry into asset reconstruction business and is
awaiting approval.
Reliance Mutual Fund is today the largest Indian asset

management company with a corpus of over Rs 48,000 Crore (which witnessed a
growth of about 85 per cent year on year as on April 2007). Similarly, the company is
at the fifth position in life insurance despite a late start and the fourth largest general
insurer with a market share of 8-9 per cent among the private players.
The company has outperformed the market in each of the

above businesses. SaysAmitabh Chaturvedi, president-group businesses, Reliance
Capital, "We endeavour to be among the top three players in each of our businesses,
and also create one of the largest distribution networks for financial products and
services in India."
Reliance Mutual Fund, a part of the Reliance – Anil

Dhirubhai Ambani Group, is one of the mutual funds in the country. RMF offers
investors a portfolio of products to meet varying investor requirements and has
presence in 159 cities across the country.
Reliance Mutual Fund has launched new products and

customer service initiatives to increase value to investors. Reliance Mutual Fund
schemes are managed by Reliance Capital Asset Management Limited., a subsidiary

of Reliance Capital Limited, which holds 93.37 percent of the paid-up capital of
RCAM, the balance paid up capital being held by minority shareholders.
Reliance Mutual Fund (RMF) has been established as a

trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as
the Settlor/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, promoted by the Anil Dhirubhai

Ambani (ADAG) group, is one of the fastest growing mutual funds in India
having doubled its assets over the last one year. In March, 2006, the Reliance
mutual fund emerged as the largest private sector fund house in the country,
overtaking Prudential ICICI which has been holding that position for many years.
The sponsor of the fund is Reliance Capital Limited, the

financial services arm of ADAG. Reliance Capital Asset Management Limited, a
wholly owned subsidiary of Reliance Capital Limited, acts as the AMC to the fund.
Directors of the company include Amitabh Jhunjhunwala, a senior executive of
ADAG. Amitabh Chaturvedi is the managing director of the AMC.
As of end August 2006, Reliance mutual fund has Rs 28,753
crore of assets under management. Reliance Equity Fund, launched by Reliance MF
in early 2006, is the largest mutual fund scheme in the country with a fund size
ofoverRs5,500crore. Here is a list of mutual funds of Reliance which includes
Debt/Income Funds , Equity Funds and Sector Specific Funds.

Organization Structure
Reliance Anil Dhirubhai Ambani Group
Reliance Securities Reliance Commodities Reliance Capital
Reliance securities:
The Company was established in the right momentum during

the growth of stock exchange era. Since the commencement in 1993 and joining with
the Reliance Group in 2003, the Company continues to grow becoming one of
securities brokerage and financial services company that is getting more and more
recognition from the stock market industry in Indonesia.
In 2005, the Company broadened its financial activities by

forming a newly subsidiary company PT Reliance Asset Management, to provide
investment and wealth management services. In July 13th, 2005 Reliance has become
a listed company by registering in Jakarta Stock Exchange (now “Indonesia Stock
Exchange”), with stock code of “RELI”, making the Company as the first joint
venture publicly listed securities company in Indonesia, and since October 2007,
RELI has noted in the main board of Indonesia Stock Exchange.
In accordance with its mission, the Company continues to

focus on the development of human resources. Supported by about 126 employees,
the Company gives high appreciation to the power of process, willingness to learn, a
self-drive to go forward, and hard work. Empowered by those qualities, the company
is ready to face competitive challenges by giving a comprehensive financial solutions,
keeps providing and improving its financial service products of investment banking
and stock market services, and to develop a strong foundation for a sustainable and
continuous growth.

Reliance commodities:
They are a leading importer of metals and minerals for the

foundry, batteries manufacturing, galvanizing, mining and steel mills industries.
Products include ferroalloys, non-ferrous metals, minerals, crucibles, refractory
firebricks, castables, industrial chemicals and photoengraving and printing supplies.
2.3 PRODUCT PROFILE
Reliance Capital is one of India’s leading and fastest growing

private sector financial services companies, and ranks among the top 3 private sector
financial services and banking companies, in terms of net worth.
The company has interests in asset management and mutual

funds, life and general insurance, private equity and proprietary investments, stock
broking and other activities in financial services.
It is the largest asset management co in India. It also offers life
insurance and general insurance products through its subsidiaries. It has sizable
private equity and proprietary investments. It recently commenced its stock broking
business and will soon start consumer finance Reliance Mutual Fund has a total
Assets under Management(AUM) of Rs.59, 143.47crs as on 30th May,2007.PMS
AUM at end of FY07 - Rs.30bn Offshore Fund – Current AUM US $125mn.
PRODUCT PROFILE
Reliance money is performing as a distribution outlet for financial services such as
 Equity
 Equity& commodities Derivatives
 Off shore investments
 Mutual funds
 IPO’s

 Life & General Insurance

 Portfolio management
 Wealth management
Mutual fund schemes

Equity/Growth Schemes:
The aim of growth funds is to provide capital appreciation
over the medium to long- term. Such schemes normally invest a major part of their
corpus in equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation, etc. and
the investors may choose an option depending on their preferences. The investors
must indicate the option in the application form. The mutual funds also allow the
investors to change the options at a later date. Growth schemes are good for investors
having a long-term outlook seeking appreciation over a period of time.
Debt/Income Schemes:
The aim of income funds is to provide regular and steady
income to investors. Such schemes generally invest in fixed income securities such as
bonds, corporate debentures, Government securities and money market instruments.
Such funds are less risky compared to equity schemes. These funds are not affected
because of fluctuations in equity markets. However, opportunities of capital
appreciation are also limited in such funds. The NAVs of such funds are affected
because of change in interest rates in the country. If the interest rates fall, NAVs of
such funds are likely to increase in the short run and vice versa. However, long term
investors may not bother about the salutations.
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 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. They

may also seek advice of an expert.
Exchange Traded Funds (ETFs):
Exchange Traded Funds (ETFs) are usually passively

managed mutual fund schemes tracking a benchmark index and reflect the
performance of that index. These schemes are listed on the stock exchange and
therefore have the flexibility of trading like a share on the stock exchange. It can also
be looked as a security that tracks an index, a commodity or a basket of assets like an
index fund, but trades like a stock on an exchange, thus experiencing price changes
throughout the day as it is bought and sold.
Fixed Maturity Plans (FMPs):
Fixed Maturity Plans (FMPs) are basically debt oriented

investment schemes with a pre-specified tenure offered by mutual funds. FMPs invest
in a portfolio of debt instruments whose maturity coincides with the maturity of the
concerned FMP. The primary objective of a FMP is to generate income while aiming
to protect the capital by investing in a portfolio of debt and money market securities.
Since FMPs are available with several maturity options, one can invest in the relevant
plan depending upon his investment horizon and the requirement of cash flows.
The structure of Mutual Fund:

Mutual fund in India is governed by the SEBI (MF) regulations,

1996 these regulations make it mandatory for mutual funds to have structure of:
Sponsor:
Any corporate body which initiates the launching of mutual fund
A sponsor role’s is to establish trust and appoint a team of professional managers
under an AMC to manage your money. The sponsor’s good image doesn’t guaranteed
good performance; bad image doesn’t necessarily mean that the MF is bad. Sponsor it
is the promoter of the MF. The sponsor establishes the MF & regulates the same with
SEBI. The followings are the points to be noted of a sponsor:
o Sponsor appoints the trustees, custodian and Asset Management

Company (AMC) with prior approval of SEBI and in accordance
with SEBI Regulations.
o Sponsor must have at least 5 years track record of business
interest in the financial market.
o Sponsor must have been profits making in at least 3 of the above
5years
o Sponsor must contribute at least 40 percent of the capital of the
AMC.

Trustees:
Persons who hold the property of MF in trust for the benefit of unit
holders.75 percent of trustees must be independent Of sponcers.The MF is a trust is
managed either by a trust Company (or) a Board of Trustees. Board of Trustees and
Trust Company are governed by the provisions of the Indian Trust Act. If the trustee is
a company it is also subject to the provisions of Indian Trust Company Act. It is the
responsibility of the trustees to protect the interest of the investors, whose funds are
managed by the AMC.
AMC:
Investment manager is technically known as AMC. Is appointed by
trustee/sponcer.it manages the affairs of MF. It’s responsible for operating all schemes
of fund Assets Management Company: It is usually a private limited company in
which the sponsors and their associates or joint venture partners are shareholders. The
AMC has to be a SEBI registered entity, and should have minimum net worth of Rs.
10 Cr. The trustees assign an investment management agreement with the AMC,
which spells out in accordance with Chapter (i v) of SEBI Regulation. The various
types of AMC in India are as follows:
o AMC owned by banks.
o AMC owned by Indian private Sector Company.
Custodians:
An agency that keeps custody of securities that are purchased by MF
manager under the various schemes.
CHAPTER-3
RESEARCH METHODOLOGY
3.1 REVIEW OF LITERATURE
Literature on mutual fund performance evaluation is enormous. A

few research studies that haveinfluenced the preparation of this paper substantially are
discussed in this section.Sharpe, William F. (1966) suggested a measure for
the evaluation of portfolio performance.Drawing on results obtained in the
field of portfolio analysis, economist Jack L. Treynor has suggested a new
predictor of mutual fund performance, one that differs from virtually all thoseused

previously by incorporating the volatility of a fund's return in a simple yet

meaningfulmanner.
Michael C. Jensen (1967) derived a risk-adjusted measure
of portfolio performance (Jensen’s alpha) that estimates how much a manager’s
forecasting ability contributes to fund’s returns. Asindicated by Statman (2000), the e
SDAR of a fund portfolio is the excess return of the portfolioover the return of the
benchmark index, where the portfolio is leveraged to have the benchmark index’s
standard deviation.S.Narayan Rao , et. al., evaluated performance of Indian mutual
funds in a bear market throughr e l a t i v e p e r f o r m a n c e i n d e x , r i s k - r e t u r n
a n a l y s i s , Tr e y n o r ’s r a t i o , S h a r p e ’s r a t i o , S h a r p e ’s measure , Jensen’s
measure, and Fama’s measure.
The study used 269 open-ended schemes (outof total schemes of
433) for computing relative performance index. Then after excluding fundswhose
returns are less than risk-free returns, 58 schemes are finally used for further analysis.
Theresults of performance measures suggest that most of mutual fund schemes in the
sample of 58were able to satisfy investor’s expectations by giving excess returns over
expected returns basedon both premium for systematic risk and total risk.
Bijan Roy, et. al., conducted an empiricalstudy on conditional performance
of Indian mutual funds.
This paper uses a technique called conditional

performance evaluation on a sample of eighty-nine Indian mutual fund schemes
.This paper measures the performance of various mutual funds with both
unconditional and conditional f o r m o f C A P M , T r e y n o r - M a z u y m o d e l
a n d H e n r i k s s o n - M e r t o n m o d e l . T h e e ff e c t o f incorporating
lagged information variables into the evaluation of mutual fund
m a n a g e r s ’ performance is examined in the Indian context. The results suggest that
the use of conditioninglagged information variables improves the performance of
mutual fund schemes, causing alphasto shift towards right and reducing the
number of negative timing coefficients. Mishra, et al., (2002) measured
mutual fund performance using lower partial moment. In this paper, measuresof
evaluating portfolio performance based on lower partial moment are developed. Risk
from thelower partial moment is measured by taking into account only

those states in which return is below a pre-specified “target rate” like risk-free
rate.
Kshama Fernandes(2003) evaluated indexfund
implementation in India. In this paper, tracking error of index funds in
India is measured.The consistency and level of tracking errors obtained by some
well-run index fund suggests thatit is possible to attain low levels of tracking
error under Indian conditions. At the same time,there do seem to be
periods where certain index funds appear to depart from the discipline
of indexation. K. Pendaraki et al. studied construction of mutual fund portfolios,
developed a multi-c r i t e r i a m e t h o d o l o g y a n d a p p l i e d i t t o t h e
G r e e k m a r k e t o f e q u i t y m u t u a l f u n d s . T h e methodology is based on
the combination of discrete and continuous multi-criteria decision aidmethods for
mutual fund selection and composition. UTADIS multi-criteria decision aid methodis
employed in order to develop mutual fund’s performance models. Goal programming
model isemployed to determine proportion of selected mutual funds in the
final portfolios.
2.1 Meaning of Mutual Fund
Mutual Funds (MF) are one such type of investment. It is a

mechanism for pooling the resources by issuing units to the investors and investing
funds in securities in accordance with objectives as disclosed in offer document.
Mutual Fund issues units to the investors in accordance with the quantum of money
invested by them.
Investors of Mutual Funds are known as unit holders. The investors
in the proportion to their investments share the profit or losses. The Mutual Funds

come out with a number of schemes with different investments objectives, which are
launched from time to time.
Mutual Funds are financial intermediaries. They are companies set

up to receive your money , and then having received it , make investment with the
money via an Asset Management Company (AMC) .
A Mutual fund is not an alternatives investment option stocks and

bond; rather it pools of money, collected from investors and is invested according to
the investment objectives. The term “Mutual” means that investor contributing to the
pool also benefit from that pool. The pools of funds held mutually by investors are
called Mutual Funds. There are no other claimants to the funds.
Mutual fund is essentially a mechanism of pooling together the savings

of a large number of small investors for collected investors for collective investment
with an avowed objective of rewarded yields and capital appreciation, holdings safely
and liquidity as the primary parameters. Thus the money collected is invested by the
funds manager in different types of securities depending upon the objective of the
scheme.
TYPES OF MUTUAL FUNDS

By Scheme Type:
A mutual fund schemes can be classified into open-ended scheme or
close-ended depending on its maturity period.
Open-ended Fund/Scheme:
An open-ended fund or scheme is one that is available for
subscription and repurchase on a continuous basis. These schemes do not have a fixed
maturity period.
Investors can conveniently buy and sell units at Net Asset Value (NAV) related price
which are declare on a daily basis. The key feature of open-ended schemes is
liquidity.
Close-ended Fund/Scheme:
A Close ended fund or schemes has a stipulated maturity period,
e.g.5-7 year. The fund is open for subscription only during a specified period at the
time of launch of the scheme. 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 exchange where the units are listed. In order to provide an exit route to the
investors, some close ended funds given option of selling back the units to the, mutual
fund through periodic repurchase at NAV related price.

SEBI regulations stipulated that at least one of the two exit routes
is provided to the investors, i.e. either repurchase facility or through listing on stock
exchanges. These mutual fund schemes disclose NAV generally on a weekly basis.
These funds invest in companies spread across sectors. These funds are generally
meant for risk-averse investors who want a diversified portfolio across sectors.
ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)
With the increase in mutual fund players in India, a need for

mutual fund association in India was generated to function as a non-profit
organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd
August, 1995.
AMFI is an apex body of all Asset Management Companies
(AMC) which has been registered with SEBI. Till date all the AMCs are that have
launched mutual fund schemes are its members. It functions under the supervision and
guidelines of its Board of Directors. Association of Mutual Funds India has brought
down the Indian Mutual Fund Industry to a professional and healthy market with
ethical lines enhancing and maintaining standards. It follows the principle of both
protecting and promoting the interests of mutual funds as well as their unit holders.
AMFI is dedicated to developing the mutual funds industry on
professional, healthy and ethical lines and to enhance and maintain standards all areas
with a view to protecting and promoting the interest of mutual funds and their unit
holders.
The AMFI members can be divided into followings categories:
A. Bank Sponsored
1. Joint Ventures - Predominantly Indian

a. SBI Funds Management Private Limited
2. Others
a. BOB Asset Management Company Limited
b. Can bank Investment Management Services Ltd.

c. UTI Asset Management Company (Pvt.) Ltd

B. Institutions
a. LIC Mutual Fund Asset Management Company Limited

B. Private Sector
1. Indian
a. Benchmark Asset Management Company Pvt. Ltd.

b. DBS Cholamandalam Asset Management Ltd.
c. Deutsche Asset Management (India) Pvt. Ltd.
d. Escorts Asset Management Limited
e. JM Financial Asset Management Private Limited
f. Kotak Mahindra Asset Management
CompanyLimited(KMAMCL)
g. Quantum Asset Management Co. Private Ltd.
h. Reliance Capital Asset Management Ltd.
i. Sahara Asset Management Company Private Limited
j. Tata Asset Management Limited
k. Taurus Asset Management Company Limited
2. Foreign
i. AIG Global Asset Management Company (India) Pvt. Ltd.

ii. Franklin Templeton Asset Management (India) Private Limited
3. Joint Ventures - Predominantly Indian
iii. Birla Sun Life Asset Management Company Limited

iv. DSP Merrill Lynch Fund Managers Limited
v. HDFC Asset Management Company Limited
vi. ICICI Prudential Asset Mgmt.Company Limited
vii. Sundaram BNP Paribas Asset Management Company Limited
4. Joint Ventures - Predominantly Foreign

i. ABN AMRO Asset Management (India) Ltd.

ii. Fidelity Fund Management Private Limited

iii. HSBC Asset Management (India) Private Ltd.
iv. ING Investment Management (India) Pvt. Ltd.
v. JP Morgan Asset Management India Pvt. Ltd.
vi. Lotus India Asset Management Co. Private Ltd.
vii. Morgan Stanley Investment Management Pvt.Ltd.
viii. Principal Pnb Asset Management Co. Pvt. Ltd.
Advantages of Mutual Funds:

Professional Management:
The primary advantage of funds is the professional
management of your money. Investors purchase funds because they do not have the
time or the expertise to manage their own portfolios. A mutual fund is a relatively
inexpensive way for a small investor to get a full-time manager to make and monitor
investments.
Diversification:
By owning shares in a mutual fund instead of owning
individual stocks or bonds, your risk is spread out. The idea behind diversification is
to invest in a large number of assets so that a loss in any particular investment is
minimized by gains in others. In other words, the more stocks and bonds you own, the
less any one of them can hurt you (think about Enron). Large mutual funds typically
own hundreds of different stocks in many different industries. It wouldn't be possible
for an investor to build this kind of a portfolio with a small amount of money.
Economies of Scale:
Because a mutual fund buys and sells large amounts of
securities at a time, its transaction costs are lower than what an individual would pay
for securities transactions.
Liquidity :

Just like an individual stock, a mutual fund allows you to

request that your shares be converted into cash at any time.
Simplicity:
Buying a mutual fund is easy! Pretty well any bank has its own
line of mutual funds, and the minimum investment is small. Most companies also
have automatic purchase plans whereby as little as $100 can be invested on a monthly
basis.
Disadvantages of Mutual Funds
Professional Management :
Many investors debate whether or not the professionals are any
better than you or I at picking stocks. Management is by no means infallible, and,
even if the fund loses money, the manager still gets paid.
Costs :
Creating, distributing, and running a mutual fund is an
expensive proposition. Everything from the manager’s salary to the investors’
statements cost money. Those expenses are passed on to the investors. Since fees vary
widely from fund to fund, failing to pay attention to the fees can have negative long-
term consequences. Remember, every dollar spend on fees is a dollar that has no
opportunity to grow over time.
Dilution :
It's possible to have too much diversification. Because funds
have small holdings in so many different companies, high returns from a few
investments often don't make much difference on the overall return. Dilution is also
the result of a successful fund getting too big. When money pours into funds that have
had strong success, the manager often has trouble finding a good investment for all
the new money.
Taxes:

When a fund manager sells a security, a capital-gains tax is

triggered. Investors who are concerned about the impact of taxes need to keep those
concerns in mind when investing in mutual funds. Taxes can be mitigated by investing
in tax-sensitive funds or by holding non-tax sensitive mutual fund in a tax-deferred
account.
Mutual Funds: Different Types of Funds

No matter what type of investor you are, there is bound
to be a mutual fund that fits your style. According to the last count there are more than
10,000 mutual funds in North America! That means there are more mutual funds than
stocks.
It's important to understand that each mutual fund has

different risks and rewards. In general, the higher the potential return, the higher the
risk of loss. Although some funds are less risky than others, all funds have some level
of risk - it's never possible to diversify away all risk. This is a fact for all investments.
Each fund has a predetermined investment objective that tailors the fund's assets,
regions of investments and investment strategies. At the fundamental level, there are
three varieties of mutual funds:
1) Equity funds (stocks)

2) Fixed-income funds (bonds
3) Money market funds
All mutual funds are variations of these three asset classes.

For example, while equity funds that invest in fast-growing companies are known as
growth funds, equity funds that invest only in companies of the same sector or region
are known as specialty funds. Let's go over the many different flavors of funds. We'll
start with the safest and then work through to the more risky.
Money Market Funds:

The money market consists of short-term debt instruments,

mostly treasury bills This is a safe place to park your money. You won't get great
returns, but you won't have to worry about losing your principal. A typical return is
twice the amount you would earn in a regular checking/savings account and a little
less than the average certificate of deposit (CD).
Bond/Income Funds:
Income funds are named appropriately: their purpose is to
provide current income on a steady basis. When referring to mutual funds, the terms
"fixed-income," "bond," and "income" are synonymous. These terms denote funds
that invest primarily in government and corporate debt. While fund holdings may
appreciate in value, the primary objective of these funds is to provide a steady cash
flow to investors. As such, the audience for these funds consists of conservative
investors and retirees.Bond funds are likely to pay higher returns than certificates of
deposit and money market investments, but bond funds aren't without risk. Because
there are many different types of bonds, bond funds can vary dramatically depending
on where they invest. For example, a fund specializing in high-yield junk bonds is
much more risky than a fund that invests in government securities.
Balanced Funds :
The objective of these funds is to provide a balanced mixture
of safety, income and capital appreciation. The strategy of balanced funds is to invest
in a combination of fixed income and equities. A typical balanced fund might have a
weighting of 60% equity and 40% fixed income. The weighting might also be
restricted to a specified maximum or minimum for each asset class.
Equity Funds:
Funds that invest in stocks represent the largest category of

mutual funds. Generally, the investment objective of this class of funds is long-term
capital growth with some income. There are, however, many different types of equity
funds because there are many different types of equities.

3.2 NEED FOR THE STUDY
 The main purpose of doing this project was to know about mutual fund and its
functioning.
 To know in details about mutual fund industry right from its inception stage,
growth and future prospects.
 To know the different schemes of mutual funds.
 To know the performance of .equity and debt schemes
3.3 SCOPE OF THE STUDY
 I analyzed the funds depending on their schemes like equity, income.

 But there is so many other schemes in mutual fund like sectorial,exchange

trade fund, fixed maturity plan.
 The study mainly concentrate on NAV’s of mutual funds.
 The study relating to the returns&AUM of mutual funds.
 The study relating to choice of plans& options in the equity and debt schemes.
3.4 OBJECTIVES OF THE STUDY
 To study a brief idea about the benefits available from Mutual Fund
investment.
 To study an idea of the types of schemes available.
 To study some of the mutual fund schemes and analyze them.
 To study an idea about the regulations of mutual funds.

 To know which schemes are giving the good returns to it’s unit holders.
3.5 RESEARCH DESIGN

One can visualize the fact that detailed study is required in each practical
situation for better result. Any effort which is directed to such study for better results
is known as research.
RESEARCH METHODOLOGY
A system of models, procedures and techniques used to find the results of
a research problem is called a research methodology.
Research methodology carried for this study can be two types
1. Primary

2. Secondary
PRIMARY:
The data, which has being collected for the first time and it is the original data.
In this project the primary data has been taken from staff and advising.
SECONDARY:
The secondary information is mostly taken from websites, books, etc.
3.6 PERIOD OF THE STUDY

 The kinds of questions that project port folio management enables us to
answer .
 We then take a look at the critical steps involved in effective port folio
project .
 Port folio to achive stagetic objectives
 Ensure that an organisation can liverage its project selection and

execution success .

3.7LIMITATIONS OF THE STUDY
 Limited period of time to analyze various schemes in reliance mutual fund.

 Some data has collected from websites. So it may not be reliable due to past
data.
 Port folio management service is a hug business today
 Is the authority giving today to the manager to have control over investments

CHAPTER-4
DATA ANALYSIS
Return Safety Volatility Liquidity Convenience

Equity High Low High High Moderate
Bonds Moderate High Moderate Moderate High
Co. Moderate Moderate Moderate Low Low

Debentures
Co. FDs Moderate Low Low Low Moderate

Bank Low High Low High High

Deposits
PPF Moderate High Low Moderate High
Life Low High Low Low Moderate

Insurance
Gold Moderate High Moderate Moderate Gold
Real Estate High Moderate High Low Low
Mutual High High Moderate High High

Funds
ANALYSIS OF MUTUAL FUNDS SCHEMES

I have analyzed the few funds in the following two categories:
Equity or Growth Scheme

 Reliance Growth Fund - (G)
 Reliance Vision Fund - (G)

 Reliance Quant Plus Fund (G)
Income or Debt Scheme

 Reliance Income Fund - (G)
 Reliance Medium Term Fund - (G)
 Reliance Regular Savings Fund - Debt (G)

EQUITY SCHEMES
RELIANCE GROWTH FUND - (G)
Investment objective: The primary objective is to achieve long term growth of

capital by investing in equity and equity related securities.
Entry load: No entry load will be charged by the scheme to the investor effective
august 2016.
Exit load: 1 percent if redeemed on or before completion of 1 year from the date of
allotment of units. There shall be no exit load after completion of 1 year.
Choice of plans and options: Under each retail and institutional plans following
options are included:
 Growth plan(growth and bonus option)

 Dividend plan(dividend pay out and dividend reinvestment)
TABLE NO: 4.1

Calculation of Bonus and Dividend on Reliance Growth Fund
Bench mark: BSE100
Asset Size (Cr.) Fund Mngr Launch Date Min. Inv Inc. Inv(Rs.)
7428.96 Sunil Singhania Sep 25 1995 5000 100000
Latest NAV Latest Dividend

455.0347 0.00
Date NAV (Rs.)

17 Jun 2017 455.0347
16 Jun 2017 453.8323
15 Jun 2017 453.6883
14 Jun 2017 451.1113

11 Jun 2017 447.1439
Asset allocation
Type Asset Value

Equity 71.36
Debt 0.00
Others 28.26
Returns
Scheme Name 3MONTH 6MONTH 1YEAR
Nifty 0.82 4.62 21.09
Reliance Growth
4.54 10.38 40.38
Fund - (G)
Sensex 0.72 4.28 21.30
Sectorial allocation
Sector Assets(%) Value(Rs./Cr.)

Others 20.42 1096.53
Ferrous Metal 8.31 446.23
Pharma 7.13 382.87
Construction & Others 5.96 320.04
Industrial Capital Goods 5.88 315.74
GROWTH PLAN:
 Growth option:
Unit value Total units Total unit value(Rs.)
10 500 5000
455 500 227500
 Bonus option:
100000/455=219.7
Total units=500+219.7
=719.7
DIVIDEND PLAN:
 Dividend pay out option:
Dividend(per annum) Per unit(Rs) Total unit(Rs)
(40.38%) 4 2000
 Dividend reinvestment option:
Total units(div)/current NAV-per unit(div)
2000/451=4.43
=504.4
Interpretation:
From the above table no 4.1 it is clearly shows that the value of this
asset is high. Per unit, unit holder gets Rs. 4 as dividend. It’s better to investor to sell
his units.

RELIANCE VISION FUND - (G)
Investment objective: The primary objective is to achieve long term growth of

capital by investing in equity and equity related securities.
august2016.
Exit load:1 percent if redeemed on or before completion of 1 year from the date of
allotment of units. there shall be no exit load after completion of 1 year.


TABLE NO:4.2
Calculation of Bonus and Dividend on Reliance vision Fund
Bench mark: BSE100
3591.84 Ashwani Kumar May 25 2017 5000 100000

259.3438 0.00
Date NAV (Rs.)

17 Jun 2017 259.3438
16 Jun 2017 257.7359
15 Jun 2017 257.266
14 Jun 2017 256.3396
11 Jun 2017 254.0949
Asset allocation
Type Asset Value

Equity 76.59
Debt 0.00
Others 23.41
Returns

Nifty 0.82 4.62 21.09
Reliance Vision
3.81 6.40 32.84
Fund - (G)
Sensex 0.72 4.28 21.30
Sectorial allocation
Sector Assets(%) Value(Rs./Cr.)

Others 11.64 449.82
Banks 11.60 448.27
Software 8.88 343.16
Automobiles 7.58 292.92
Petroleum 7.12 275.15
GROWTH PLAN:
 Growth option:
10 500 5000
259.3 500 129650
 Bonus option:
100000/259.3=385.6
=885.6
DIVIDEND PLAN:

(32.84%) 3.284 1642
Total units (div)/current NAV-per unit (div)
1642/256=6.41
=506.41
Interpretation:
asset is high. Per unit, unit holder gets Rs.3.2 as dividend. It’s better to investor to sell
his units.

RELIANCE QUANT PLUS FUND (G) (RELIANCE INDEX FUND):
Investment objective: The primary objective is to generate the capital appreciation

through investment in equity and equity related instruments.
august 2016.
Exit load: 1 percent if redeemed on or before completion of 15 days from the date
of allotment of units. there shall be no exit load after completion of 15 days.


TABLE NO:4.3
Calculation of Bonus and Dividend on Reliance Quant plus Fund
Bench mark: S&P CNX nifty
62.7 Krishan Daga Apr 18 2008 5000 100000

12.0624 0.00
NAV (Rs.)
Date
17 Jun 2017 12.0624

16 Jun 2017 11.9644
15 Jun 2017 11.9206
14 Jun 2017 11.8947
11 Jun 2017 11.7127
Returns

Nifty 0.82 4.62 21.09
Reliance Quant Plus
2.43 5.49 22.78
Fund (G)

Sensex 0.72 4.28 21.30
GROWTH PLAN:
 Growth option:
10 500 5000
12.06 500 6030
 Bonus option:
100000/12.06=342.5
=842.
DIVIDEND PLAN:
(22.78%) 2.27 1135
Total units (div)/current NAV-per unit (div)
1135/9.79=115.9
=615.9
Interpretation:

asset is low. Per unit, unit holder gets Rs.2.27 as dividend. It’s better to investor to
hold his units, because it gives more returns than it’s unit value.
INCOME FUNDS
RELIANCE INCOME FUND - (G)
Investment objective: The primary objective is to generate the optimal returns
consistent with moderate level of risk.
august 2016.
Exit load:1 percent if redeemed on or before completion of 30 days from the date
of allotment of units. there shall be no exit load after completion of 30 days.


TABLE NO:4.4
Calculation of Bonus and Dividend on Reliance Income Fund
Bench mark: crisil composite bond fund index

Dividend frequencies: monthly, quarterly, half yearly, annually.
330.55 Prashant Pimple Dec 20 1997 5000 100000

31.2365 0.00
17 Jun 2017 31.2365

Date NAV (Rs.)
16 Jun 2017 31.2613
15 Jun 2017 31.2094
14 Jun 2017 31.1934
11 Jun 2017 31.2191
Asset allocation
Type Asset Value

Equity 73.35
Debt 0
Others 26.65
Returns

Nifty 0.82 4.62 21.09
Reliance Income
1.59 2.32 4.24
Fund - (G)
Sensex 0.72 4.28 21.30
GROWTH PLAN:
 Growth option:
10 500 5000
330.5 500 165250
 Bonus option:
100000/31.29=319.5
=819.5
DIVIDEND PLAN:
(4.24%) 0.42 210

210/330=0.63
=500.63
Interpretation:
RELIANCE MEDIUM TERM FUND - (G)
Investment objective: The primary objective is to generate the regular income in

order to make regular dividend payments to unit holders.
august 2016.
Exit load: nil.
Choice of plans and options: under each retail and institutional plans following


TABLE NO:4.5
Calculation of Bonus and Dividend on Reliance Medium Term Fund
Bench mark: crisil short term bond fund index
13356.67 Amit Tripathy Aug 16 2000 5000 100000

19.2904 0.00
Date NAV (Rs.)

17 Jun 2017 19.2904
16 Jun 2017 19.2876
15 Jun 2017 19.2849
14 Jun 2017 19.2822
11 Jun 2017 19.2742
Asset allocation
Type Asset Value

Equity 60.25
Debt 0
Others 39.75
Returns


Nifty 0.82 4.62 21.09
Reliance Medium
1.29 2.44 4.91
Term Fund - (G)
Sensex 0.72 4.28 21.30
GROWTH PLAN:
 Growth option:
10 500 5000
19.29 500 9645
 Bonus option:
100000/19.29=207.3
=707.3
DIVIDEND PLAN:
(4.91%) 0.49 245
245/18.8=13
Total units=500+13
=513
Interpretation:

RELIANCE REGULAR SAVINGS FUND - DEBT (G)
Investment objective: The primary objective is to generate the optimal returns

consistent with moderate level of risk.
august 2016.
Exit load: 2 percent if redeemed on or before completion of 1 year. Nil after
completion of 1 year.
Choice of plans and options: under each retail and institutional plans following


TABLE NO:4.6
Calculation of Bonus and Dividend on Reliance Regular Savings
Fund
Bench mark: crisil composite bond fund index
2994.33 Arpit Malaviya Jun 10 2005 500 100000

12.7972 0.00
Date NAV (Rs.)

17 Jun 2017 12.7972
16 Jun 2017 12.7908
15 Jun 2017 12.7878
14 Jun 2017 12.0806
11 Jun 2017 12.788
Asset allocation
Type Asset Value

Equity 100.00
Debt 0.00
Others 0.00
Returns

Nifty 0.82 4.62 21.09
Reliance Regular 5.55 7.00 7.16
Savings Fund - Debt

(G)
Sensex 0.72 4.28 21.30
GROWTH PLAN:
 Growth option:
10 500 5000
12.79 500 6395
 Bonus option:
100000/12.79=781.1
=1281.1
DIVIDEND PLAN:
(7.16%) 0.71 355
355/12.08=29.3
=529.3
Interpretation:

What is Net Asset Value (NAV)?
Net Asset Value (NAV) is the actual value of one unit of a given scheme on any given
business day.
The NAV reflects the liquidation value of the fund's investments on that particular day
after accounting for all expenses.

CHAPTER-5
FINDINGS, SUGGESTIONS&CONCLUSION
5.1 FINDINGS
 In Equity Schemes Reliance quant plus Fund is better than the others because
unit value is low but the returns are more.
 In debt scheme reliance regular savings fund is better than the rest of funds
because unit value is low but returns are more.
 Mutual funds although regulated by the government but they are not insured
against loses.
 Changing the government policies & taxes are impact the returns to the
investors in various schemes.
 Management charge some fees on fund amount so if it reduces the returns are
available to investors.

5.2 SUGGESTIONS
 When government regulates the insurance against the losses it will be benefit
to the investors.
 Willing to create a mutual fund for development of rural sectors.
 If the government gives some protection policies to investors it will encourage
them to invest their money in mutual funds.
 If the management reduces the additional fee charges on funds it’s benefit to
the investors to get the reasonable returns.
 The fund manager should take necessary steps to control the risk.
 The fund manager should be actively participated at the investment situations
can get growth returns.
 RMF should take the essential steps to increasing the performance and growth.

5.3 CONCLUSION
There are various opportunities to invest our money but mutual funds are
better because every one think that “low risk – high returns” but in the mutual funds
we get the optimum returns with low risk.
Reliance mutual funds schemes are giving the good returns to its unit
holders. That’s why reliance mutual fund is occupying today the largest Indian
AMC’S.


BIBLOGRAPHY
BOOKS:
1. I.M.pandey “Financial Management”, Edition 12th , Vikas publishers.
2. L.M.bhole, “Financial institutions markets”, Edition 16th , TATA MC Grawhill
publishers.
WEB SITES:
WWW.MUTUAL FUNDS.COM
WWW.AMFI.COM
WWW.RELIANCE MONEY.COM

Reliance Mutual Fund-2019

Uploaded by

Copyright:

Available Formats

You might also like

Reliance Mutual Fund-2019

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Reliance Mutual Fund-2019

Uploaded by

Copyright:

Available Formats

PORTFOLIO MANAGEMENT

A Mutual Fund is a trust that pools the savings of a number of

Mutual Funds (MF) are one such type of investment. It is a

KMMITS - TIRUPATI Page 1

It was set up in the form of a trust that has a Sponsor,

What is a Mutual Fund?

To state in simple words, a mutual fund collects the

KMMITS - TIRUPATI Page 2

A mutual fund is nothing more than a collection of stocks and/or

Mutual Funds are financial intermediaries. They are companies

As you probably know, mutual funds have become extremely

In fact, to many people, investing means buying mutual funds.

You can make money from a mutual fund in three ways:

KMMITS - TIRUPATI Page 3

CONCEPT OF MUTUAL FUNDS

A Mutual fund is not an alternatives investment option stocks and bond;

Mutual fund is essentially a mechanism of pooling together the savings of

KMMITS - TIRUPATI Page 4

Mutual Fund Companies in India

The succeeding decade showed a new horizon in Indian mutual fund

KMMITS - TIRUPATI Page 5

Major Mutual Fund Companies in India:

ABN AMRO Mutual Fund:

Birla SunLife Mutual Fund:

Bank of Baroda Mutual Fund (BOBMutualFund):

HDFC Mutual Fund:

KMMITS - TIRUPATI Page 6

ING Vysya MutualFund:

Prudential ICICI Mutual Fund:

Sahara Mutual Fund:

State Bank of India Mutual Fund:

Tata Mutual Fund:

KMMITS - TIRUPATI Page 7

Kotak Mahindra MutualFund:

Unit Trust of India MutualFund:

Reliance Mutual Fund:

Standard Chartered Mutual Fund:

KMMITS - TIRUPATI Page 8

Franklin Templeton India Mutual Fund:

Morgan Stanley Mutual Fund India:

Escorts Mutual Fund:

Alliance Capital Mutual Fund:

KMMITS - TIRUPATI Page 9

Alliance Capital Mutual Fund was setup on December 30,

Canbank Mutual Fund:

Chola Mutual Fund:

LIC Mutual Fund:

KMMITS - TIRUPATI Page 10

The Indian retail brokerage industry consists of companies that

Primary market: it is a market where the new securities are issued.

Secondary market: it is a market where the stocks are traded

Indian financial market:

KMMITS - TIRUPATI Page 11

SEBI (Securities and Exchange Board of India) ESTABLISHMENT OF

The Securities and Exchange Board of India was established on

The Preamble of the Securities and Exchange Board of India

“…..To protect the interests of investors in securities and to

It explains the evolution of the brokerage market in three phases: