ACKNOWLEDGEMENT In the course of this project I got an insight into the mutual fund industry, came to know a lot

about the basic working of an asset management company, understood how the mutual fund schemes are compared, learnt various computations and overall got a preview of what a job in the mutual fund industry would entail. First and foremost I am very proud to be a student of Institute of Management and Research for Rural Development ,Shrirampur and am most grateful for having been given the chance to work with a reputed company like Reliance Mutual Fund at the beginning of my career. I would like to thanks the Principal Dr.Kamble and guide Dr,G.H.Barhate ,Professors S.N Gwali who gave me support and helped in analytical study of the subject of this project

I would fail to do my duty if I didnt take this opportunity to thank my faculty guide, Prof.G.H.Barhate and Dr.S.N.Gwali for their timely help and guidance. I would say that this project wouldnt have been the same without his support, guidance, encouragement and constant demand for improvement. My company guide, Mr. Saiffuddin Shaikh ( Branch Manager) is another person who has played a key role in the development of me as a person, in the completion of this project and in being educated about the mutual fund industry in general. He is truly an
1

inspiration for me and drove me towards working harder than my expectations which simply made me more ready for the corporate life. He truly gave me the corporate exposure I had thought of. I acknowledge the staff members of Reliance Mutual Fund and my team mates and constant encouragement and motivation to me. At last but not the least I would like to give my heartiest gratitude to my parents, my well wishers and friends for their valuable insights and suggestions that helped me in preparing the final report.

Mahale Sonali Subhash

EXECUTIVE SUMMARY The performance evaluation of mutual fund is a vital matter of concern to the fund managers, investors, and researchers alike. The core competence of the company is to meet objectives and the needs of the investors and to provide optimum return for their risk. This study tries to find out the risk and return allied with the mutual funds. This project paper is segmented into three sections to explore the link between conventional subjective and statistical approach of Mutual Fund analysis. To start with, the first section deals with the introductory part of the paper by giving an overview of the Mutual fund industry and company profile. This section also talks about the Scope, Objectives and Purpose of the analysis. The second section details on the Methodology used for the study and Theoretical background of the risk and return analysis. It also discusses about the sources and the period for the data collection. It also deals with the data interpretation and analysis part wherein all the key measures related to risk and return are done with the interpretation of the results. This section also deals with the profile of the Asset Management Company and Indian Mutual Fund Industry. In the third section, an attempt is made to analyze and compare the performance of the equity mutual fund. For this purpose -value,
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standard deviation, and risk adjusted performance measures such as Sharpe ratio, Treynor measure, Jenson Alpha, and Fema measure have been used. The portfolio analysis of the selected fund has been done by the measure return for the holding period. At the end, it illustrates the Findings, Recommendations and the Limitations of the study based on the analysis done in the previous sections and finally it deals with Biblography used for the study.

A Project Report On RISK RETURN ANALYSIS AND COMPARATIVE STUDY OF SELECTED MUTUAL FUND SCHEMES At "Reliance Mutual Fund By Mahale Sonali Subhash Under the guidance of Dr.G.H.Barhate Submitted to "University of Pune" In partial fulfillment of the requirement for the award of the Post Graduate Degree of Business Management (P..G.D.B.M.) THROUGH INSTITUTE OF MANAGEMENT AND RESEARCH FOR RURAL DEVELOPMENT , SHRIRAMPUR ( 2010-2011)

INDEX

SR NO 1 2 3 4 5 6 7 8 9 10

Particulars Introduction to the study Scope and Objectives of the Study Industry Profile Company profile Research Methodology Theoretical Background Data Analysis and Interpretation Findings Recommendations Limitations Of The Study

PAGE NO 7 17 19 31 39 40 46 74 78 80

CHAPTER 1 INTRODUCTION TO MUTUAL FUND 1.1 MUTUAL FUND OVERVIEW Mutual fund is an investment company that pools money from small investors and Invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end Mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end Mutual funds continuously offer new shares to investors. The flow chart below describes broadly the working of a mutual fund:

(Fig. 1.1) Working Of Mutual Fund

A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI) that pools up the money from individual/corporate investors and invests the same on behalf of the investors/unit holders, in Equity shares, Government securities, Bonds, Call Money Markets etc, and distributes the profits. In the other words, a Mutual Fund allows investors to indirectly take a position in a basket of assets. Mutual Fund 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. Investments in securities are spread among a wide cross-section of industries and sectors thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at same time. Investors of mutual funds are known as unit holders. 1.2PURPOSE OF MEASURING AND EVALUATING Every investor investing in the mutual funds is driven by the motto of either wealth creation or wealth increment or both. Therefore its very necessary to continuously evaluate the funds performance with the help of factsheets and newsletters, websites, newspapers and professional advisors etc. If the investors ignore the evaluation of funds performance then he can lose hold of it any time. In this ever-changing industry, he can face any of the following problems: 1. Variation in the funds performance due to change in its management/ objective.

2. The funds performance can slip in comparison to similar funds. 3. There may be an increase in the various costs associated with the fund. 4. The funds ratings may go down in the various lists published by independent rating agencies. 5. It can merge into another fund or could be acquired by another fund house.

The table describes the efficiency of mutual funds with respect to equity, bonds, debentures, bank deposits , life insurance Volatili ty Liquidity Convinience Ence Modera High te

Return

Safety

Equity

High

Low

High

Bonds Co Debentu res Bank deposits

Modera te High

Modera Modera te te High

Modera Modera Modera te te te Low Low High Low High

Low High

Life Insuranc e

Modera te High

Low

Modera te High

Mutual Funds

High

High

Modera te High

High

(Table No.2.1) Instruments

Comparison Of Different Financial

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From the above comparison  We can very well see that mutual funds outperform than every other investment option. On three parameters, it scores high whereas its moderate at one. comparing it with the other options,  we find that equities gives us high returns with high liquidity but its volatility too is high with low safety which doesnt makes it favorite among persons who have low risk- appetite. Even the convenience involved with investing in equities is just moderate.  Now looking at bank deposits, it scores better than equities at all fronts but lags badly in the parameter of utmost important i.e.; it scores low on return , so its not an happening option for person who can afford to take risks for higher return.  The other option offering high return is real estate but that even comes with high volatility and moderate safety level, even the liquidity and convenience involved are too low.  Gold have always been a favorite among Indians but when we look at it as an investment option then it definitely doesnt gives a very bright picture. Although it ensures high safety but the returns generated and liquidity are moderate.  Similarly, the other investment options are not at par with mutual funds and serve the needs of only a specific customer group.
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Straightforward, we can say that mutual fund emerges as a clear winner among all The Options available.

1.3THE REASON FOR BEING THIS I) Mutual funds combine the advantage of each of the investment products: Mutual fund is one such option which can invest in all other investment options. Its principle of diversification allows the investors to taste all the fruits in one plate. Just by investing in it, the investor can enjoy the best investment option as per the investment objective. II) Dispense the shortcomings of the other options: Every other investment option has more or less some shortcomings. Such as if some are good at return then they are not safe, if some are safe then either they have low liquidity or low safety or both.likewise, there exists no single option which can fit to the need of everybody. But mutual funds have definitely sorted out this problem. Now everybody can choose their fund according to their investment objectives.

III) Returns get adjusted for the market movements:

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As the mutual funds are managed by experts so they are ready to switch to the profitable option along with the market movement. Suppose they predict that market is going to fall then they can sell some of their shares and book profit and can reinvest the amount again in money market instruments.

IV) Flexibility of invested amount: Other then the above mentioned reasons, there exists one more reason which has established mutual funds as one of the largest financial intermediary and that is the flexibility that mutual funds offer regarding the investment amount. One can start investing in mutual funds with amount as low as Rs. 500 through SIPs and even Rs. 100 in some cases. 1.4ADVANTAGES OF MUTUAL FUNDS: y 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 risk of the investment. y Professional Management: An investor lacks the knowledge of the capital Market operations and does not have large resources to reap the benefits of investment. Hence, he requires the help of an expert. Mutual funds are managed by professional managers who have the

13

requisite skills and experiences to analyze the performance and prospectus of companies. y Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud.

y Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a call, and you've got the cash. y Convenience : You can usually buy mutual fund shares by mail, phone, or over the Internet. It reduces paperwork, saves time and makes investment easy.

y Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index y 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. y Flexibility:
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Mutual funds offer a family of schemes, and investors have the option of transferring their holdings from one scheme to other.

y Tax benefits: Mutual fund investors now enjoy income tax benefits. Dividend received from mutual funds debt schemes are tax exempt to the overall limit of Rs 9000 allowed under section SOL of the Income Tax Act.

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1.5 DISADVANTAGES OF MUTUAL FUNDS y Hidden costs: The mutual fund industry tactfully buries costs under layers of jargon. These costs come despite of negative returns. Examples of such costs include sales charges, annual fees, and other expenses; and depending on the timing of their investment, investors may also have to pay taxes on any capital gains distribution they receive even if the fund went on to perform poorly after they bought shares. y Lack of control: Investors typically cannot ascertain the exact make-up of a fund's portfolio at any given time, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. y Dilution: Because funds have small holdings in so many different Companies, y Price Uncertainty: With an individual stock, one can obtain real-time (or close to real-time) pricing information with relative ease by checking financial websites or through a broker, as can one observe stock price changes by the hour or minute. By contrast, with a mutual fund, the price at which one purchases or redeems shares will typically depend on the fund's NAV, which the fund might not calculate until many hours after the order has been placed. In general, mutual funds must calculate their NAV at least once every business day, typically after the major U.S. exchanges close.

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CHAPTER 2 OBJECTIVES AND SCOPE OF THE STUDY 2.1The objectives of the study are as follows: Primary objective: y To compare the schemes based on Sharpes ratio, Treynors ratio, Beta Coefficient, Returns and show which scheme is best for the investor based on his risk profile. y To compare the performance of selected mutual funds schemes by analyzing the NAV and their respective returns. y To study whether the growth oriented Mutual Fund schemes are earning higher returns than the benchmark returns in terms of risk. y To study about the risk factors involved in the Mutual Funds and How to analyze it? Secondary objectives: y To know the advantages and disadvantages of the Mutual Funds. y To understand Mutual Fund, its importance & Risk involved.
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y To study about the factors involved in performance of Mutual Funds. y To know the different Asset Management Companies which are providing Mutual Fund Schemes in India. 2.2 SCOPE OF THE STUDY: I. The study here has been limited to analyze schemes of only one company i.e. Reliance Mutual Fund. There are only five schemes of Reliance Mutual Fund are taken for granted for comparison a. b. c. d. e. Reliance Equity Opportunities Fund Reliance Banking Fund Reliance Growth Fund Reliance Vision Fund Reliance Regular Saving equity Fund

II.

III.

Each scheme is analyzed according to its performance against the other, based on factors like a. Sharpes Ratio, b. Treynors Ratio, c. (Beta) Co-efficient, d. Standerd Deviation

IV.

The data for comparison and risk return analysis is taken for the period of AUGUST 2009 to JULY, 2010
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CHAPTER 3 INDUSTRY PROFILE 3.1Industry Profile y In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India invited investors or rather to those who believed in savings, to park their money in UTI Mutual Fund. For 30 years it goaled without a single second player. Though the 1988 year saw some new mutual fund companies, but UTI remained in a monopoly position. y The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders were accustomed with guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the preparedness of risks factor after the liberalization. y The securities and Exchange Board of India (SEBI) came out with comprehensive regulation in 1993 which defined the structure of Mutual Fund and Asset Management Companies for the first time. The supervisory authority adopted a set of measures to create a transparent and competitive environment in mutual funds. Some of them were like relaxing investment
19

restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes. y The measure was taken to make mutual funds the key instrument for long-term saving. The more the variety offered, the quantitative will be investors. Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the private players has risen rapidly since then. Currently there are 34 Mutual Fund organizations in India managing 1,02,000 crores. y At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and donts of mutual funds. Mutual fund industry has seen a lot of changes in past few years with multinational companies coming into the country, bringing in their professional expertise in managing funds worldwide. y In the past few months there has been a consolidation phase going on in the mutual fund industry in India. Now investors have a wide range of Schemes to choose from depending on their individual profiles. y

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3.2HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY 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 of India. 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. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC
21

had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the 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,
22

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.

(Fig. No 1.2) Growth Assets Under Management

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(Table No 2.2) July-2010

Average Assets under Management As On

Average Assets under Management (AAUM) for the month of JUL-2010 (Rs in Lakhs) Average Month AUM For The

Excluding Fund of Sr Funds Mutual Fund Name Fund Of No Domestic but Funds including Domestic Fund of Funds Overseas 1 2 3 4 5 6 AEGON Mutual Fund AIG Investment Mutual Fund Baroda Mutual Fund Benchmark Fund Bharti Fund AXA N/A N/A 0 0 0 0 0 Global Group 95329.13 303699.87 395472.21 228484.50 70185.79

Axis Mutual Fund Pioneer Mutual Mutual

24

7 8 9 10 11

Birla Sun Life Mutual 6153269.16 Fund Canara Mutual Fund Deutsche Fund Robeco Mutual 779682.00 1002704.08

2851.47 0 0 0 0 0 12612.26 0 96788.56 N/A 0 0 2751.92 0 56621.57 4688.74 0

DSP BlackRock 2189276.48 Mutual Fund Edelweiss Fund Mutual 28541.23 19764.25 806511.75 535311.51

12 Escorts Mutual Fund 13 Fidelity Mutual Fund 14 Fortis Mutual Fund 15 16

Franklin Templeton 3518062.70 Mutual Fund Goldman Mutual Fund Sachs N/A 8462820.61 539647.46

17 HDFC Mutual Fund 18 HSBC Mutual Fund 19

ICICI Prudential 6871511.72 Mutual Fund 94076.44 1853347.38 142229.10

20 IDBI Mutual Fund 21 IDFC Mutual Fund 22 ING Mutual Fund

23 JM Financial Mutual 595255.14

25

Fund 24 25 JPMorgan Fund Mutual 631579.00 0 9653.14 0 0 0 0 0 0 N/A 0 146.95 0 0 0 0 0

Kotak Mahindra 2748984.19 Mutual Fund 338634.55 2442485.17 27105.04 226889.33

26 L&T Mutual Fund 27 LIC Mutual Fund 28 29 30 Mirae Fund Asset Mutual Stanley

Morgan Mutual Fund

Motilal Oswal Mutual 3320.99 Fund Pramerica Fund PRINCIPAL Fund Quantum Fund Mutual Mutual Mutual

31 Peerless Mutual Fund 107790.80 32 33 34 N/A 585493.23 10455.71

35 Reliance Mutual Fund 10217940.01 36 Religare Mutual Fund 1047642.97 37 Sahara Mutual Fund 38 SBI Mutual Fund 39 Shinsei Mutual Fund 76094.65 3851277.55 35303.43
26

40

Sundaram BNP 1259166.50 Paribas Mutual Fund 1817147.04 223492.65 6220757.10

0 0 0 0

41 Tata Mutual Fund 42 Taurus Mutual Fund 43 UTI Mutual Fund Grand Total

66556742.42 186114.61

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3.3FACTORS IMPACTING THE INDUSTRY: PEST Analysis: 1. Political Factors: a) Government Regulation: SEBI regulates the industry and every decision taken by them impact the industry very quickly. b) Stable constituency: The mutual fund industry can take long term decision if the government is stable. c) Fiscal policy: Tax structure plays a very important role in the growth of the industry .If the tax structure will be high than there will be less savings and investment. We have seen the interest rate reducing continuously which boost the industry to sell products which are better than the FDs, PF, NSC and KVPs. 2. Economic factors: a) Market performance: The last five years witnessed a sharp rise in the markets. The mutual fund industry basically works parallel with the markets. Suppose, if the markets always be on downside, then the investors will not be so comfortable to invest. This will reduce the market size drastically.
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b) Global Standards: As the industry will grow better, India being a global economy, the MF industry has to match to the global mature MF markets. They have to give due emphasis on product innovation, cost reduction and penetration. c) Inflation: price rise affects interest rate and reduces the chances of investment.

3. Social factors: a) Consumer behaviour: This is very unpredictable and based on sentiments gets changed very frequently, which sometimes makes selling of products difficult. b) Income: The rich people are in bigger cities, so the mutual fund industry is much more concentrated there. 4. Technological factors: a. Easy Access :

29

With the help of internet investors can easily know the latest NAV, Scheme Information , NFO etc. b. Online Investment: Some companies are also providing online investment like Reliance Mutual Fund c. Saving Of Time Also technology can save the investors most valuable time.

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CHAPTER 4 COMPANY PROFILE MAN WITH A MISSION

 Few men in history have made as dramatic a contribution to their countrys economic fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani. Fewer still have left behind a legacy that is more enduring and timeless. As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of Indias capital markets, the champion of shareholder interest. But the role Dhirubhai cherished most was perhaps that of Indias greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, Indias largest private sector enterprise.

 When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this fledgling enterprise into an Rs 60,000 crore colossusan achievement which earned Reliance a place on the global Fortune 500 list, the first ever Indian
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private company to do so.

 Dhirubhai is widely regarded as the father of Indias capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronized by a small club of elite investors which dabbled in a handful of stocks.

 Undaunted, Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial return on their investments. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets.

 Under Dhirubhai extraordinary vision and leadership, Reliance scripted one of the greatest growth stories in corporate history anywhere in the world, and went on to become Indias largest private sector enterprise. .

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4.1ABOUT ADAG GROUP CHAIRMAN

 Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D. Ambani, 50, is the chairman of all listed companies of the Reliance ADA Group, namely, Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources.  He is also the president of the Dhirubhai Ambani Institute of Information and Communications Technology, Gandhinagar An MBA from the Wharton School of the University of Pennsylvania, Shri Ambani is credited with pioneering several financial innovations in the Indian capital markets.  He spearheaded the countrys first forays into overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds.  Under his chairmanship, the constituent companies of the Reliance ADA group have raised nearly US$ 3 billion from global financial markets in a period of less than 15 months.

33

STRUCTURE OF RELIANCE ADA GROUP

(Fig No. 1.3) STRUCTURE OF RELIANCE ADAG GROUP

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4.2ABOUT RELIANCE MUTUAL FUND Vision Statement To be a globally respected wealth creator with an emphasis on customer care and a culture of good corporate governance. Mission Statement To create and nurture a world-class, high performance environment aimed at delighting our customers. Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 1,02,179 Crores and an investor count of over 73 Lakh folios. (AAUM and investor count as of July 2010) Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 159 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative 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% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders.
35

Reliance Capital Ltd. is one of Indias 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. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments stock broking. Sponsor: Reliance Capital Limited Trustee: Investment Manager: Limited Reliance Capital Trustee Co. Limited Reliance Capital Asset Management

The Sponsor, the Trustee and the Investment Statutory Details: Manager are Incorporated under companies act 1956

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4.3AWARDS AND ACHIVEMENTS

 CNBC TV18-CRISIL Mutual Fund Of The Year 2009 Reliance Mutual Fund has won the CNBC TV18 - CRISIL Mutual Fund of the Year Award in the Category Mutual Fund House of the Year (Awarded by CRISIL Fund Services, CRISIL Limited

 2010 CIO 100 Award Reliance Capital Asset Management Limited has won the prestigious US based, 2010 CIO 100 award. The 2010 CIO 100 Awards is presented by the CIO magazine & honors 100 companies worldwide that are creating new business value by innovating with technology.  ASIA MANAGER OF THE YEAR 2010 Reliance Capital Asset Management Limited has been awarded Asset Manager for the year 2009 i.e. from July 2008 to July 2009 at Asia Risk Awards 2009 by Incisive Media Publishing Limited.

4.5 The Main Objectives Of The Trust: y 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
37

abroad and also ensure liquidity of investments for the Unit holders; y To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their savings and y To take such steps as may be necessary from time to time to realize the effects without any limitation

38

CHAPTER 5 RESEARCH METHODOLOGY

Methodology y Research is an organized activity designed and carried out to provide information for solving a problem. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. y The Methodology involves the selected Open-Ended equity schemes of Reliance mutual fund for the purpose of risk return and comparative analysis the competitive fund y The data collected for this project is basically from secondary sources, they are; The monthly fact sheets of Reliance AMC fund house. y For the Benchmark prices, data has been taken from BSE and NSE sites.

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CHAPTER 6 THEORETICAL BACKGROUND 6.1MEASURES OF RISK AND RETURN: y Risk is variability in future cash flows. It is also known as uncertainty in the distribution of possible outcomes. A risky situation is one, which has some probability of loss or unexpected results. The higher the probability of loss or unexpected results is, the greater the risk. y It is the uncertainty that an investment will earn its expected rate of return. For an investor, evaluating a future investment alternative expects or anticipates a certain rate of return is very important. y Portfolio risk management includes processes that identify, analyze, respond, to track, and control any risk that would prevent the portfolio from achieving its business objectives. y These processes should include reviews of project level risks with negative implications for the portfolio, ensuring that the project manager has a responsible risk mitigation plan. Additionally, it is important to do a consolidated risk assessment for the portfolio overall to determine whether it is within the already specified limits. Since portfolio and their environments are dynamic, managers should review and update their portfolio risk management plans on a regular basis through the fund life cycle.

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6.2MEASURE OF RISK Investors are interested not only in funds return but also in risk taken to achieve those returns. So risk can be thought as the uncertainty of the expected return, and uncertainty is generally equated with variability. Variability and the risk are correlated; hence high returns will tend to high variability.

6.3 The comparison between the schemes is made based on the following factors

6.3.1STANDERD DEVIATION ( d ) In simple terms standard deviation is one of the commonly used statistical parameter to measure risk, which determines the volatility of a fund. Deviation is defined as any variation from a mean value (upward & downward). Since the markets are volatile, the returns fluctuate every day.  High standard deviation of a fund implies high volatility and  Low standard deviation implies low volatility. y Calculation For Standerd Deviation ( )

= [Rp Avg Rp]2 / N - [ Rp - Avg Rp ] / N

41

Where, Rp-

Portfolio Returns Of The Fund

Avg Rp- Average Portfolio Returns Of The Fund NNo. Of Periods Standerd Deviation

6.3.2. BETA COEFFICIENT ( ) Systematic risk is measured in terms of Beta, which represents fluctuations in the NAV of the fund vis-a-vis market. The more responsive the NAV of a Mutual Fund is to the changes in the market; higher will be its beta. Beta is calculated by relating the returns on a Mutual Fund with the returns in the market. While unsystematic risk can be diversified through investments in a number of instruments, systematic risk cannot. By using the risk return relationship, we try to assess the competitive strength of the Mutual Funds vis-a-vis one another in a better way.

(Beta) is calculated as: ( ) = [ N (X Y) - X. Y]/ N (X2)- (X)2 ]

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Beta is used to measure the risk. It basically indicates the level of volatility associated with the fund as compared to the market. In case of funds, as compared to the market. In case of funds, beta would indicate the volatility against the benchmark index. It is used as a short term decision making tool.  A beta that is greater than 1 means that the fund is more volatile than the benchmark index,  While a beta of less than 1 means that the fund is less volatile than the benchmark index.  A fund with a beta very close to 1 means the funds performance closely matches the index or benchmark.

6.3.3. THE TREYNOR MEASURE Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free rate of return (generally taken to be the return on securities backed by the government, as there is no credit risk associated), during a given period and systematic risk associated with it (beta). Symbolically, it can be represented as:

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Treynor's Index (Ti) = (Rp - Rf)/ Where, Rp - return on fund, Rf - risk free rate of return and - Beta of the fund. All risk-averse investors would like to maximize this value.  While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund,  And a low and negative Treynor's Index is an indication of unfavorable performance.

44

6.3.4.THE SHARP MEASURE In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about. So, the model evaluates funds on the basis of reward per unit of total risk. Symbolically, it can be written as: (Si) = (Rp - Rf)/ Where, Si - Sharp Index Rp -Portfolio average return Rf -Risk free rate of return -Standerd Deviation  While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund  And a low and negative Sharpe Ratio is an indication of unfavorable performance. 6.3.5 Returns : Returns for the last one-year of five schemes are taken for the comparison and analysis part

45

CHAPTER 7 DATA ANALYSIS AND INTERPRETATION 7.1 For Performance Comparison we take Five Mutual Fund Schemes of Reliance: 1. Reliance Equity Oppournities Fund 2. Reliance Banking Fund 3. Reliance Growth Fund 4. Reliance Vision Fund 5. Reliance Regular Saving Fund

46

7.1.1. Reliance Equity Opportunities Fund

Investment objective 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. Fund Data y Structure . . . . Equity Scheme y Date of allotment . . . . . . . . . . . . y Inception Date . . . . . . . . . . . . . . y Corpus . . . . . . . . . y Minimum Investment . . . Open-ended Diversified

March 28, 2005 March 31, 2005 Rs. 2319.71 crore

Retail Plan- Rs 5,000 Institutional Plan (IP)- Rs 5 cr Shailesh Raj Bhan

y Fund Manager . . . . . . . . . . . . . . .

y Entry Load* . . . . . . . . . . . . . . . . . . . Retail Plan : Nil Institutional Plan : Nil

47

y Exit Load ( August 24, 2009) RELIANCE EQUITY OPPORTUNITIES PERFORMANCE (Table No 2.3) RmRf X 5.62 RpRf Y 0.97

FUND

Year LAST 1 MONT H LAST 3 MONT H LAST 6 MONT H LAST 1 YEAR Total Averag e

Rp

Rm

Rf

X2

XY

5.53

0.88

6.5

31.584

5.4514

16.67 6.67

6.5

0.17

16.5

0.0289

2.805

10.8 25.39 8

6.5

18.8 19.184 4.38 9 4

82.7382

19.1 60.35 3

6.5

12.6 53.8 3 5 11.5 6 88.2 7

159.51

680.125 5

107.4 26.98 5

210.307 771.120 3 1

48

Where, Rp - Portfolio Return Rm - Market Return Rf - Risk free rate of return (On the basis of one year Treasury Bills 6.48 %  6.5 %) (Fig1.4) GRAPH SHOWING RELIANCE EQUITY OPPOURNITIES FUND PERFORMANCE:-

70 60

R E T U R N S

50 40 Rp 30 20 10 0 Rm Rf

1. Calculation for Standerd Deviation ( )

= [Rp Avg Rp] 2 / N - [Rp - Avg Rp] / N

49

= [107.4 - 26.985 ]2 / 4-[107.4 -26.985]/4 =20.1038 2. CALCULATIONS FOR BETA- ( ) CO-EFFICIENT;-

= N [ X .Y]- X . Y / N X2 [ X]2 =4 [ 771.12 ] - [ 11.56 ] [ 88.27 ] / 4 [ 210.30 ] - 133.63 =2.9170

3. CALCULATIONS FOR SHARP RATIO-(Si)

Si=Rp-Rf/ =88.27/20.1038 =4.3907 4. CALCULATIONS FOR TREYNORS RATIO: = Rp Rf / =88.27 / 2.9170

50

=30.2605 /100 =0.3026 Interpretation:y Last 1 Month : It reveals that Reliance Equity Opportunities Returns are 5.53.As compare to Funds Benchmark Returns are 0.88, and The Risk Free Rate is considered as 6.5% y Last 3 Months : It reveals that Reliance Equity Opportunities Returns are 16.67 As compare to Funds Benchmark Returns are 6.67 and The Risk Free Rate is considered as 6.5 % y Last 6 Months : It reveals that Reliance Equity Opportunities Returns are 25.39.As compare to Funds Benchmark Returns are 10.88, and The Risk Free Rate is considered as 6.5 % y Last 1 Year : It reveals that Reliance Equity Opportunities Returns are 60.35, As compare to Funds Benchmark Returns are 19.13. The Risk Free Rate is considered as 6.5 %

51

7.1.2. Reliance Banking Fund

Investment objective The primary investment objective of the scheme is to seek to generate continuous returns by actively investing in equity and equity related or fixed income securities of companies in the Banking Sector Fund Data y Structure. Banking Sector Scheme Open-ended

y Date of allotment. ... May 26, 2003 y Inception Date. May 28, 2003 y Corpus: 1145.86 crore (31/05/2010) y Minimum Investment Rs 5000 y Institutional Plan- Rs 5 cr y Fund Singhania Retail Plan-

Manager.Sunil

52

y Entry Load* . . . . . . . . . . . . . . . . . . . . . . . . Nil

Retail Plan

Institutional Plan Nil y Exit Load (w.e.f 24th Aug 09) . . . . .

(Table No 2.4)RELIANCE PERFORMANCE; RmRf X -0.9

BANKING

FUND

Year LAST 1 MONT H LAST 3 MONT H LAST 6 MONT H

Rp

Rm

Rf

RpRf Y

X2

XY

5.59

5.6

6.5

-0.91 0.81

0.819

19.81

14.7

6.5

8.2

13.3 1

67.24

109.142

33.71

21.2

6.5

14.7

27.2 1

216.09

399.98

53

LAST 1 YEAR Total

62.27

40.6

6.5

34.1

55.7 7

1162.8 1

1901.75

121.3 8

56.1

95.3 8

1446.9 5

2411.69 1

Where, Rp - Portfolio Return Rm - Market Return Rf - Risk free rate of return (On the basis of one year Treasury Bills 6.48 %  6.5 %)

(Fig1.5)GRAPH SHOWING RELIANCE BANKING FUND PERFORMANCE:-

54

70

R E T U R N S

60 50 40 Rp 30 20 10 0 Rm Rf

1.Calculation For Standerd Deviation ( )

= [Rp Avg Rp]2 / N - [ Rp - Avg Rp ] / N = [ 121.38 30.34 ]2 /4 - [ 121.38 30.34 ] / 4 = 45.52 -22.76 =22.76 2. CALCULATIONS FOR BETA CO-EFFICIENT;-

= N [ X .Y]- X . Y / N X2 [ X]2 =4 [2411.69 ] - [56.1 ] [95.38] / 4 [1446.95] [56.1]2

55

=1.6273 3. CALCULATIONS FOR SHARP RATIO=Rp-Rf/ =95.38 / 22.76 =4.1906 4.CALCULATIONS FOR TREYNORS RATIO : = Rp Rf / = 95.38 /1.6273 =58.6124/100 =0.5861 Interpretation:-

y Last 1 Month : It reveals that Reliance Banking Returns are 5.59 As compare to Funds Benchmark Returns are 5.6% The Risk Free Rate is considered as 6.5 % y Last 3 Months : It reveals that Reliance Banking Returns are 19.81%As compare to Funds Benchmark Returns are 14.7%, and The Risk Free Rate is considered as 6.5%
56

y Last 6 Months : It reveals that Reliance Banking Returns are 33.71% As compare to Funds Benchmark Returns are 21.2% and The Risk Free Rate is considered as 6.5% y Last 1 Year : It reveals that Reliance Banking Returns are 60.27% As compare to Funds Benchmark Returns are 40.6 % and The Risk Free Rate is considered as 6.5%

7.1.3. Reliance Growth Fund Investment objective The primary investment objective of the scheme is to achieve long-term growth of capital by investing in equity and equity related securities through a research based investment approach. Fund Data y Structure . . . . . . Growth Scheme Open-ended Equity

y Date of allotment . . . . . . . . . . . . . October 8, 1995 y Inception Date . . . . . . . . . . . . . . . October 8, 1995

57

y Corpus: . . . . . . . . . (31/05/2010) y Minimum Investment . . .

7428.96 crores

Retail Plan- Rs 5,000 Institutional Plan (IP) -

Rs 5 cr y Fund Manager . . . . . . . . . . . . . . . . . Sunil Singhania y Entry Load* . . . . . . . . . . . . . . . . . . Retail Plan: Nil Institutional Plan: Nil y Exit Load (w.e.f 24th Aug 09) . . . . . . . . . . . . . . . .

58

RELIANCE GROWTH FUND PERFORMANCE; (Table No 2.5) PERIO D LAST 1 MONT H LAST 3 MONT H LAST 6 MONT H LAST 1 YEAR RmRf X RpRf Y

Rp

Rm

Rf

X2

XY

3.23

0.88

6.5

-5.62 -3.27 31.584

18.377

9.97

6.67

6.5

0.17

3.47

0.0289

0.589

14.5 1

10.8 8

6.5

4.38

8.01

19.18

35.083

35.2 9

19.1 3

6.5

12.6 3 11.5 6

28.7 9

159.51 210.302 9

363.61 7 417.66 6

63

37

59

Where, Rp - Portfolio Return Rm - Market Return Rf - Risk free rate of return (On the basis of one year Treasury Bills 6.48 %  6.5 %) GRAPH SHOWING RELIANCE PERFORMANCE:- (Fig 1.6) GROWTH FUND

40 35 30

R E T U R N S

25 20 15 10 5 0 Rp Rm Rm

1.Calculation For Standerd Deviation ( )

= [Rp Avg Rp]2 / N - [ Rp - Avg Rp ] / N

60

= [63 -15.75 ]2 / 4-[63 15.75]/4 = 11.81 2. CALCULATIONS FOR BETA CO-EFFICIENT;-

= N [ X .Y]- X . Y / N X2 [ X]2 =4 [417.66 ] - [11.56 ] [37 ] / 4 [210.30 ] [11.56 ]2 =1.7565

3. CALCULATIONS FOR SHARP RATIO-

=Rp-Rf/ =37 / 11.81 =3.13

4.CALCULATIONS FOR TREYNORS RATIO : = Rp Rf /

61

=37 / 1.1765 =31.44 =0.3144 Interpretation:-

y Last 1 Month : It reveals that Reliance Growth Returns are 3.23% As compare to Funds Benchmark Returns are 0.88 , and The Risk Free Rate is considered as 6.5% y Last 3 Months : It reveals that Reliance Growth Returns are 9.97 % As compare to Funds Benchmark Returns are 6.67%, and The Risk Free Rate is considered as 6.5% y Last 6 Months : It reveals that Reliance Growth Returns are compare to Funds Benchmark Returns are 30.14, and The Risk Free Rate is considered as 6.5 % y Last 1 Year :It reveals that Reliance Growth Returns are 35.29% As compare to Funds Benchmark Returns are 19.13% , and The Risk Free Rate is considered as 6.5 %

62

7.1.4. Reliance Vision Fund Investment Objective The primary investment objective of the scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach. Fund Data y Type . . . . . . . . An Open Ended Equity Growth Scheme y Date of allotment . . . . . . . . . . . October 8, 1995 y Inception Date . . . . . . . . . . . . . October 8, 1995 y Corpus: ..3653.99 crores (July 31, 2010) y Minimum Investment Retail Plan - Rs 5,000 and Institutional Plan - Rs 5 cr and y Fund Manager . . . . . . . . . . . . . Ashwani Kumar y Entry Load* . . . . . . . . . . . . . . . Retail Plan: Nil Institutional Plan: Nil y Exit Load (w.e.f August 24, 2009)
63

RELIANCE VISION FUND PERFORMANCE (Table No 2.6)

PERIO D LAST 1 MONT H LAST 3 MONT H LAST 6 MONT H LAST 1 YEAR

Rp

Rm

Rf

RmRf X

RpRf Y

X2

XY

2.64

0.88

6.5

-5.62 -3.86 31.58

21.69

9.68

6.67

6.5

0.17

3.01

0.0289

0.0086

12.2 3

10.8 8

6.5

4.38

1.35

19.18

5.913

29.8 3

19.1 3

6.5

12.6 3

23.3 3

159.5

294.65

TOTAL 54.3 8

11.5 6

23.8 3

210.288 322.261 9 6

64

Where, Rp - Portfolio Return Rm - Market Return Rf - Risk free rate of return (On the basis of one year Treasury Bills 6.48 %  6.5 %) GRAPH SHOWING RELIANCE PERFORMANCE (Fig No 1.7) VISION FUND

30 25

R E 20 T U 15 R N 10 S
5 0

Rp Rm Rf

1.Calculation For Standerd Deviation ( )

= [Rp Avg Rp]2 / N - [ Rp - Avg Rp ] / N

65

= [ 54.38 13.59 ]2 / 4-[54.38 13.59] / 4 =10.198 2. CALCULATIONS FOR BETA  CO-EFFICIENT;-

= N [ X .Y]- X . Y / N X2 [ X]2 =4 [322.2616 ] - [11.56 ] [23.83 ] / 4 [210.2889 ] [11.56]2 =1.43

3. CALCULATIONS FOR SHARP RATIO=Rp-Rf/ =23.83/10.198 =2.33 4. CALCULATIONS FOR TREYNORS RATIO: = Rp Rf / =23.83 / 1.43

66

=16.66 /100 =0.1666 Interpretation:-

y Last 1 Month : It reveals the Reliance Vision Returns are 2.64% As compare to Funds Benchmark Returns are 0.88%, and The Risk Free Rate is considered as 6.5% y Last 3 Months : It reveals that Reliance Vision Returns are 9.68% As compare to Funds Benchmark Returns are 6.67%, andThe Risk Free Rate is considered as 6.5% y Last 6 Months : It reveals that Reliance Vision Returns are 12.23%As compare to Funds Benchmark Returns are 10.88%, and The Risk Free Rate is considered as 6.5% y Last 1 year : It reveals that Reliance Vision Returns 29.83% As compare to Funds Benchmark Returns are 19.13% The Risk Free Rate is considered as 6.5%

7.1.5. Reliance Regular Saving (Equity) Fund Investment Objective The scheme aims to generate consistent returns by actively investing in equity or equity related securities. It will invest at least
67

80 per cent of its assets in equity and equity related securities. Up to 20 per cent of its assets will be invested in debt and money market instruments with an average maturity of 5 to10 years. Fund Data y Type An Open Ended Scheme y Date of allotment June 8, 2005 y Inception Date June 9, 2005 y Corpus.. Rs. 2983.07 crore (July 31, 2010) y Minimum Investment .Rs 500 y Fund Manager Kuckian . Omprakash

y Entry Load* . . . . . . . . . . . . . . . . . . . . . . . Nil y Exit Load (w.e.f August 24, 2009)

68

RELIANCE RSF EQUITY FUND PERFORMANCE (Table No 2.7) . Rm- RpYEAR Rp Rm Rf Rf Rf X2 XY X Y LAST 1 3.69 1.39 6.5 -5.11 -2.81 26.11 14.35 MONT H LAST 3 MONT H LAST 6 MONT H

12.02 7.35

6.5

0.85

5.52

0.7225

4.69

13.89 9.93

6.5

3.43

7.39

11.76

25.34

LAST 1 34.91 15.88 6.5

9.38
69

28.41 87.98

266.4

8 YEAR TOTAL Where, Rp - Portfolio Return Rm - Market Return Rf - Risk free rate of return (On the basis of one year Treasury Bills 6.48 %  6.5 %) 64.51 8.55 126.572 38.51 5 310.8 6

70

GRAPH SHOWING RELIANCE RSF EQUITY FUND PERFORMANCE (Fig1.8)

35 30

R E T U R N S

25 20 Rp 15 10 5 0 Rm Rf

71

=1.Calculation For Standerd Deviation ( )

= [Rp Avg Rp]2 / N - [ Rp - Avg Rp ] / N = [64.51 16.12 ]2 / 4 - [ 64.51 16.12 ] / 4 =12.09 2. CALCULATIONS FOR BETA CO-EFFICIENT;-

= N [ X .Y]- X . Y / N X2 [ X]2 =4 [ 310.86 ] - [8.55 ] [38.51 ] / 4 [126.5725 ] [9.38]2 =2.188 3. CALCULATIONS FOR SHARP RATIO-

=Rp-Rf/ =38.51 / 12.09

=3.18 4. CALCULATIONS FOR TREYNORS RATIO: -

72

= Rp Rf / =38.51 / 2.188 =17.60/100 =0.1760

Interpretation:-

y Last 1 Month : It reveals that Reliance RSF Equity Returns are 3.69% As compare to Funds Benchmark Returns are 1.39%, and The Risk Free Rate is considered as 6.5% y Last 3 Months : It reveals that Reliance RSF Equity Returns are 12.02 % As compare to Funds Benchmark Returns are 7.35%, and The Risk Free Rate is considered as 6.5% y Last 6 Months : It reveals that Reliance RSF Equity Returns are 13.89% As compare to Funds Benchmark Returns are 9.93%, and The Risk Free Rate is considered as 6.5% y Last 1 Year : It reveals that Reliance RSF Equity Returns are 34.91% As compare to Funds Benchmark Returns are 15.88%, and The Risk Free Rate is considered as 6.5%

73

CHAPTER 8 FINDINGS FINDINGS: y The mutual funds performance is evaluated easily with the help of Sharpe Index Model. The fund having low Si (Sharp Index Ratio) value performs weakly and form high Si performs comparatively well. It also shows effectiveness of Sharpe Index Method. y With a number of mutual funds scheme existing in the market, it is very difficult by an investor to choose the best among them. This paper provides a necessary and sufficient result to help to choose the best portfolio to get maximum return with minimum risk. y Standard deviation proves to be very useful statistical tool in order to reach to some valuable result. Without help of standard deviation one cannot apply Sharpe Index Method. y The best performing and worst-performing funds can be easily identified. The above table is in a good support of this study. By studying this table one can easily interpret it. y The finding can be decided on the basis of above table:-

74

Reliance Equity Opportuniti es Fund

Relianc e Bankin g Fund

Relianc e Growt h Fund

Relianc e Vision Fund

Relianc e Regula r Saving Equity Fund 3.69 3.18 0.1760 2.188

Monthly Returns Sharps Ratio (Si) Treynors Ratio (Tr) Beta Coefficient( Standerd( d) Deviation

5.53 4.3907 0.3026 2.9170

5.59 4.1906 0.5861 1.6273

3.23 3.13 0.3144 1.7565

2.64 2.33 0.1666 1.43

20.1038

22.76

11.81

10.198

12.09

(Table No 2.8) Comparison of selected schemes

1. Reliance Equity Opportunities Fund  It is open ended Equity Diversified Scheme  The Monthly Returns Of this Scheme are relatively higher than the other schemes
75

 As Sharp Ratio is High Risk associated with this scheme is more than the other schemes.  As Beta Ratio is more than 1 the Scheme shows the greater than the Benchmark index.

2. Reliance Banking Fund

 It is open ended Banking Sector Scheme.  The Monthly Returns Of this Scheme are higher than the all other schemes  The Higher Returns of the Scheme are associated with the High Risk because Sharp and Treynor Ratio are higher than the other schemes.  As Beta Ratio is more than 1 the Scheme shows the greater performance than the Benchmark index.

3. Reliance Growth Fund :  It is open ended Equity Growth Scheme  The Monthly Returns Of this Scheme are lower than the Banking, Equity Opportunities and Regular Saving Equity Scheme.  As Sharp Ratio is less it is less Risky Fund.  As Beta Ratio is more than 1 the Scheme shows the greater Performance than the Benchmark index.

76

4. Reliance Vision Fund:  It is open ended Equity Growth Scheme.  The Monthly Returns Of this Scheme are relatively lower than the other schemes.  As Sharp Ratio is low Risk associated with this scheme is less than the other schemes.  As Beta Ratio is more than 1 the Scheme shows the greater Performance than the Benchmark index. 5. Reliance Regular Saving Equity Fund:  It is open ended Scheme  The Monthly Returns Of this Scheme are relatively Lower than the other schemes  As Sharp Ratio is Low Risk associated with this scheme is less than the other schemes.  As Beta Ratio is more than 1 the Scheme shows the greater Performance than the Benchmark index

77

CHAPTER 9 RECOMMENDATIONS

This study can easily suggest and help to an investor in many ways. Some of the suggestions are belowy It is not only fund or companys goodwill which can be taken into consideration while choosing a portfolio, the market factors like government policies, economies of sales and the trend in a particular sector so the fund Manager should also consider the above factors while framing the portfolio of any scheme. y Today investor is having enough funds to invest in a number of schemes. He is always in search of such statistical tools which can provide him better information about risk and returns of any scheme. So the Fund Manager tries to frame the portfolio which gives maximum returns with lower risk. y Growth oriented mutual funds are expected to offer the advantages of Diversification, Market timing and Selectivity. In the sample, Reliance Growth Fund and Reliance Vision fund are found to be diversified fund and because of high diversification, it has reduced total risk of the portfolio. Whereas, others are low diversified and because of low diversification their total risk is found to be very high. Further, the fund managers of these under performing funds
78

are found to be poor in terms of their ability of market timing and selectivity. y The Asset Management Company must manage the Fund efficiently and with dedication to earn the goodwill of the public. The Asset Management Company must dedicate itself, because it motivates the investors and potential investors to invest in Mutual Funds.

79

CHAPTER 10 LIMITATIONS OF THE STUDY LIMITATIONS OF THE STUDY y Due to shortage of time and money, There are only 5 mutual funds schemes are selected which include the Top 5 schemes of Reliance Asset Management Company. The data have been collected for the period of AUGUST 2009 to JULY, 2010. y The study is limited only to the Risk and Return analysis of selected schemes and its suitability to different investors according to their risk-taking ability. y The Risk is calculated on the basis of only Sharp Ratio, Beta Ratio, and Treynor Ratio And the Returns are taken only for the period of 1 Month, 3 Months, 6 Months, and 1year y The study is based on secondary data available from monthly fact sheets, websites Other books, as primary data was not accessible. y The Study is limited with the only Equity Schemes Of Reliance Asset Management Company, it never provides information about the Fixed income Schemes and ExchangeTraded Fund Schemes

80

BIBLIOGRAPHY y Workbook for Mutual Fund Distributors Certification Examination by Mr. Sundar Sankaran Published byNational Institute of Securities Markets Workbook Version:- May 2010 , Page No-17-21, 269 ,278-280 y y http://www.amfiindia.com/showhtml.aspx?page=aum http://www.amfiindia.com/NavHistoryReport_Frm.aspx

y http://www.mutualfundsindia.com/images/pdf/RiskAdjusted Performance.pdf y http://www.reliancemutual.com/CMT/Upload/FactSheet/Fun damentals2010.pdf http://www.reliancemutual.com/Downloads/SchemeInformat ionDocuments.aspx http://www.reliancemutual.com/AboutUs/AboutUs.aspx http://www.reliancemutual.com/Downloads/AnnualHalfYear lyReport.aspx y http://www.nseindia.com/content/indices/mir.csv y www.rbi.org.in/home.aspx/Market Securities Market Trends/Government

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82