Chapter O. Content Page o List of Tables 2 List of Figures 3 Executive Summary 4 1

Chapter
o. Content Page o
List of Tables 2
List of Figures 3
Executive summary 4
1. Introduction 5
Overview of mutual fund 6
Objective of study 9
Research methodology 11
Limitation of study 12
2. Review of literature 13
Modern portfolio theory 14
How mutual fund operates 20
3. Company profile 39
Background of company 40
Management team 42
Core Funds of Mutual Fund Industry 43
Diversified Equity Funds of MF Industry 49
Liquid Funds of Mutual Fund Industry 55
SWOT Analysis of Reliance Mutual Fund 61
Data Interpretation and Data analysis 63-73
4. Findings and conclusion 74
5. Appendix 77
Copy of questionnaire 77
List of various Bank Branches in Pune 79
Bibliography 80
Institute Of Business Studies & Research, Pune 1|Page

Table Table Content Page
o. o.
2.1 Mutual Fund Schemes 33
3.1 Reliance Capital Limited Company Financial Statement 42
3.2 Management Team Reliance Mutual Fund 42
3.3 Fund Facts- Birla Sunlife Equity 44
3.4 Fund Facts-Tata Pure Equity 45
3.5 Fund Facts- Reliance Growth Fund 46
3.6 Risk Measurement 47
3.7 Trailing Returns 48
3.8 Fund Facts- Kotak-30 50
3.9 Fund Facts-Reliance Regular Saving Equity Fund 51
3.10 Fund Facts-ICICI Infrastructure Fund 52
3.13 Fund Facts-LIC Liquid Fund 56
3.14 Fund Facts-HDFC Liquid Fund 57
3.15 Fund Facts-Reliance Liquid 58
4.1 Investment of people in current scenario 64
4.2 Factors Influencing the Investment Decision of Investors 65
4.3 Age of investor 66
4.4 How stable your current income 67
4.5 Average Investment Period of Investors 68
4.6 Preference in Mutual Funds 69
4.7 Expected rate of return 70
4.8 Risk taken by people 71
4.9 Experience in the market 72
4.10 Preference in mode of investment 73

Figure Title Page
o. o.
1.1 Growth of assets 08
1.2 No. of Mutual Fund Schemes 08
2.1 Diversify Away Unsystematic Risk 16
2.2 Efficient Frontier of 2 Stocks(Google and Coca Cola) 17
2.3 Structure of Mutual Fund Industry 22
2.4 Different Types of Risk 30
2.5 Types of Mutual Fund 33
3.1 Reliance ADAG Structure 40
3.2 Relative Performance of Birla Sunlife Equity Fund and its category 44
3.3 Relative Performance of Tata Pure Equity Fund and its category 45
3.4 Relative Performance of Reliance Growth Fund and its category 46
3.5 Relative Performance of Kotak 30 Fund and its category 50
3.6 Relative Performance of Reliance Regular Saving Equity and its 51
category
3.7 Relative Performance of ICICI Infrastructure Fund and its category 52
3.8 Relative Performance of LIC Liquid Fund and its category 56
3.9 Relative Performance of HDFC Liquid Fund and its category 57
3.10 Relative Performance of Reliance Liquid Fund and its category 58
4.1 Investment of people in current scenario 64
4.2 Factors Influencing the Investment Decision of Investors 65
4.3 Age of investor 66
4.4 How stable your current income 67
4.5 Average Investment Period of Investors 68
4.6 Preference in Mutual Funds 69
4.7 Expected rate of return 70
4.8 Risk taken by people 71
4.9 Experience in the market 72
4.10 Preference in mode of investment 73

The Project on Portfolio Management and mutual fund analysis was carried out for Reliance
Mutual Fund.
Overview:
The project on Portfolio Management and mutual fund analysis was carried out in Reliance
Mutual Fund, Pune Branch. The intention behind taking over this project with Reliance
Mutual Fund was to primarily understand the role of banks in providing investment solutions
and advices to its customers. The project was done by analyzing the different investment
options available and to compare them with the mutual fund investments. For the purpose of
analyzing the investment pattern and selecting effective and beneficial schemes of mutual
funds different available schemes were thoroughly analyzed and then an ideal portfolio of
those investment options available was made.
Finally the ideal portfolio was created to understand the importance of
portfolio management and to ease the selection of different mutual fund schemes and the
weightage to be given to them.

“Mutual fund is vehicle that enables a number of investors to pool their money and have it
jointly managed by a professional money manager.”
Different investment avenues are available to investors. Mutual funds also offer good
investment opportunities to the investors. Like all investments, they also carry certain risks.
The investors should compare the risks and expected yields after adjustment of tax on various
instruments while taking investment decisions. The investors may seek advice from experts
and consultants including agents and distributors of mutual funds schemes while making
investment decisions.
With an objective to make the investors aware of functioning of mutual funds, an attempt has
been made to provide information in question-answer format which may help the investors in
taking investment decisions.
Investments in securities are spread across a wide cross-section of industries and sectors and
thus the risk is reduced. Diversification reduces the risk because all stocks may not move in
the same direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders.
The profits or losses are shared by the investors in proportion to their investments. The mutual
funds normally come out with a number of schemes with different investment objectives
which are launched from time to time.

In India, the mutual fund industry started with the setting up of the erstwhile Unit Trust of
India in 1963. Public sector banks and financial institutions were allowed to establish mutual
funds in 1987. Since 1993, private sector and foreign institutions were permitted to set up
mutual funds. In February 2003, following the repeal of the Unit Trust of India Act 1963 the
erstwhile UTI was bifurcated into two separate entities viz. The Specified Undertaking of
The Unit Trust of India, representing broadly, the assets of US 64 scheme, schemes with
assured returns and certain other schemes and UTI Mutual Fund conforming to SEBI Mutual
Fund Regulations. As at the end of March 2008, there were 33 mutual funds, which managed
assets of Rs. 5, 05,152 crores (US $ 126 Billion)* under 956 schemes. This fast growing
industry is regulated by the Securities and Exchange Board of India (SEBI). Worldwide,
Mutual Fund or Unit Trust as it is referred to in some parts of the world, has a long and
successful history. The popularity of Mutual Funds has increased manifold in developed
financial markets, like the United States. As at the end of March 2008, in the US alone there
were 8,064 mutual funds with total assets of about US$ 11.734 trillion (Rs.470 lakh crores)*.

(Source- www.amfi.com) Figure 1.1
(Source- www.amfi.com) Figure 1.2

RESEARCH OBJECTIVE
To evaluate investment performance of selected mutual funds in terms of risk and

return.
To evaluate and create an ideal portfolio consisting the best mutual fund schemes
which will earn highest possible returns and will minimize the risk.
Also to analyze the performance of mutual fund schemes on the basis of various
parameters.
How to improve your organization with the specific feedback from the tool and
become more attractive to current and potential clients.

SCOPE OF PROJECT
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.
India has a burgeoning population of middle class now estimated around 300 million. A
typical Indian middle class family can have liquid savings ranging from Rs.2 to Rs.10 Lacs
today. Investments in Banks are liquid and safe, but with the falling rate of interest offered by
Banks on Deposits, it is no longer attractive. At best a part can be saved in bank deposits, but
what are the other sources of investment for the common man? Mutual Fund is the ready
answer. Viewed in this sense globally India is one of the best markets for Mutual Fund
Business, so also for Insurance business. This is the reason that foreign companies compete
with one another in setting up insurance and mutual fund business units in India. The sheer
magnitude of the population of educated white collar employees provides unlimited scope for
development of Mutual Fund Business in India.
The funds are selected which are preferred by customers of various banks. The
Schemes were categorized and selected on evaluating their performance and relative
risk for last 1month to 3 years.
The scope of the project is mainly concentrated on the different categories of the
mutual funds such as equity schemes, debt funds, balanced funds and equity linked
savings schemes etc.
The ideal portfolio is created by analyzing the risk pattern of the schemes and
distributing the overall risk to earn maximum returns.
Institute Of Business Studies & Research, Pune 10 | P a g e

RESEARCH METHODOLOGY
Research methodology is a very organized and systematic way through which a
particular case or problem can be solved efficiently.
It is a step-by-step logical process, which involves:
DATA COLLECTIO
There are two types of data:-
Primary data.
Secondary data
The survey is conducted through the following phases:-

1. Planning the survey:-
To know the preference of investors the first step was to identify or select the parameter. On
the basis of which the questionnaire can be framed and then selecting the customer to be
surveyed.

2. Identification of the parameter:-
The different parameters that were selected for the questionnaire is:-
Main objective of investment.
Capability to handle risk involved in investment.
Return on investment.
Investor’s requirement
Investor’s satisfaction
3. Framing the questionnaire;-

After identification and selection of the parameter, the next step was frame the
Questionnaire. The questionnaire was made up of multiple choice questions.
For the purpose of survey, give choice of Yes and No. It also provides options are very good,
good, average, and poor.
4. Sampling plane:-
Period: - 1st June, 08 to 31st Aug.08

Location: - Various branches of ICICI, HDFC, IDBI, DCB and AXIS Bank Pune.

Modern Portfolio Theory: An Overview
By Ben McClure, Contributor - Investopedia Advisor
If you were to craft the perfect investment, you would probably want its attributes to include
high returns coupled with little risk. The reality, of course, is that this kind of investment is
next to impossible to find. Not surprisingly, people spend a lot of time developing methods
and strategies that come close to the "perfect investment". But none is as popular, or as
compelling, as Modern Portfolio Theory (MPT). Here we look at the basic ideas behind
MPT, the pros and cons of the theory, and how MPT affects the management of your
portfolio.
The Theory
One of the most important and influential economic theories dealing with finance and
investment, MPT was developed by Harry Markowitz and published under the title
"Portfolio Selection" in the 1952 Journal of Finance. MPT says that it is not enough to look at
the expected risk and return of one particular stock. By investing in more than one stock, an
investor can reap the benefits of diversification - chief among them, a reduction in the
riskiness of the portfolio. MPT quantifies the benefits of diversification, also known as not
putting all of your eggs in one basket.
For most investors, the risk they take when they buy a stock is that the return will be lower
than expected. In other words, it is the deviation from the average return. Each stock has its
own standard deviation from the mean, which MPT calls "risk".

The risk in a portfolio of diverse individual stocks will be less than the risk inherent in holding
any single one of the individual stocks (provided the risks of the various stocks are not directly
related). Consider a portfolio that holds two risky stocks: one that pays off when it rains and
another that pays off when it doesn't rain. A portfolio that contains both assets will always pay
off, regardless of whether it rains or shines. Adding one risky asset to another can reduce the
overall risk of an all-weather portfolio.
In other words, Markowitz showed that investment is not just about picking stocks, but about
choosing the right combination of stocks among which to distribute one's nest eggs.
Modern portfolio theory states that the risk for individual stock returns has two components:
Systematic Risk - These are market risks that cannot be diversified away. Interest rates,
recessions and wars are examples of systematic risks.
Unsystematic Risk - Also known as "specific risk", this risk is specific to individual stocks
and can be diversified away as you increase the number of stocks in your portfolio (see Figure
2.1). It represents the component of a stock's return that is not correlated with general market
moves.
For a well-diversified portfolio, the risk - or average deviation from the mean - of each stock
contributes little to portfolio risk. Instead, it is the difference - or covariance - between
individual stocks' levels of risk that determines overall portfolio risk. As a result, investors
benefit from holding diversified portfolios instead of individual stocks.

Figure 2.1
The Efficient Frontier
Now that we understand the benefits of diversification, the question of how to identify the best
level of diversification arises. Enter the efficient frontier. For every level of return, there is one
portfolio that offers the lowest possible risk, and for every level of risk, there is a portfolio that
offers the highest return. These combinations can be plotted on a graph, and the resulting line
is the efficient frontier. Figure 2.2 shows the efficient frontier for just two stocks - a high
risk/high return technology stock (Google) and a low risk/low return consumer products stock
(Coca Cola).

Figure 2.2
Any portfolio that lies on the upper part of the curve is efficient: it gives the maximum
expected return for a given level of risk. A rational investor will only ever hold a portfolio that
lies somewhere on the efficient frontier. The maximum level of risk that the investor will take
on determines the position of the portfolio on the line.
Modern portfolio theory takes this idea even further. It suggests that combining a stock
portfolio that sits on the efficient frontier with a risk-free asset, the purchase of which is
funded by borrowing, can actually increase returns beyond the efficient frontier. In other
words, if you were to borrow to acquire a risk-free stock, then the remaining stock portfolio
could have a riskier profile and, therefore, a higher return than you might otherwise choose.

What MPT Means to me?
Modern portfolio theory has had a marked impact on how investors perceive risk, return and
portfolio management. The theory demonstrates that portfolio diversification can reduce
investment risk. In fact, modern money managers routinely follow its precepts.
That being said, MPT has some shortcomings in the real world. For starters, it often requires
investors to rethink notions of risk. Sometimes it demands that the investor take on a perceived
risky investment (futures, for example) in order to reduce overall risk. That can be a tough sell
to an investor not familiar with the benefits of sophisticated portfolio management techniques.
Furthermore, MPT assumes that it is possible to select stocks whose individual performance is
independent of other investments in the portfolio. But market historians have shown that there
are no such instruments; in times of market stress, seemingly independent investments do, in
fact, act as though they are related.
Likewise, it is logical to borrow to hold a risk-free asset and increase your portfolio returns,
but finding a truly risk-free asset is another matter. Government-backed bonds are presumed to
be risk free, but, in reality, they are not. Securities such as gilts and U.S. Treasury bonds are
free of default risk, but expectations of higher inflation and interest rate changes can both
affect their value.

Then there is the question of the number of stocks required for diversification. How many is
enough? Mutual funds can contain dozens and dozens of stocks. Investment guru William J.
Bernstein says that even 100 stocks is not enough to diversify away unsystematic risk.
By contrast, Edwin J. Elton and Martin J. Gruber, in their book "Modern Portfolio Theory
And Investment Analysis" (1981), conclude that you would come very close to achieving
optimal diversity after adding the twentieth stock.
Conclusion
The gist of MPT is that the market is hard to beat and that the people who beat the market are
those who take above-average risk. It is also implied that these risk takers will get their
comeuppance when markets turn down.
Then again, investors such as Warren Buffett remind us that portfolio theory is just that -
theory. At the end of the day, a portfolio's success rests on the investor's skills and the time he
or she devotes to it. Sometimes it is better to pick a small number of out-of-favor investments
and wait for the market to turn in your favor than to rely on market averages alone.

The Mutual Funds are structured in two forms.
• Company Form: These forms of mutual funds are more popular in US.
• Trust Form: In India, mutual funds are organized as Trusts. The Trust is either
managed by a Board of Trustees or by a Trustee Company.
There must be at least 4 members in the Board of Trustees and at least 2/3 of the
members of the board must be independent.
Trustee of one mutual fund cannot be a trustee of another mutual fund.
Unit Trusts – Constituents:
A Mutual Fund is set up in the form of a Trust which has the following constituents:-
1. Fund Sponsor
2. Mutual Fund as Trust
3. Asset Management Company
4. Other Fund Constituents
4.1. Custodian and Depositor
4.2. Brokers
4.3. Transfer Agent
4.4. Distributors
Figure 2.3

Fund sponsor:-
What a promoter is to a company, a sponsor is to a mutual fund. The sponsor initiates the idea
to set up a mutual fund. It could be a financial services company, a bank or a financial
institution. It could be Indian or foreign. It could do it alone or through a joint venture. In
order to run a mutual fund in India, the sponsor has to obtain a license from SEBI. For this, it
has to satisfy certain conditions, such as on capital and profits, track record (at least five years
in financial services), default-free dealings and a general reputation for fairness. The sponsor
must have been profit making in at least 3 years of the above 5 years.
Trust:-
The Mutual Fund is constituted as a Trust in accordance with the provisions of the Indian
Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration
Act, 1908. The Trust appoints the Trustees who are responsible to the investors of the fund.
Trustees:-
Trustees are like internal regulators in a mutual fund, and their job is to protect the interests of
the unit holders. Trustees are appointed by the sponsors, and can be either individuals or
corporate bodies. In order to ensure they are impartial and fair, SEBI rules mandate that at
least two-thirds of the trustees be independent, i.e., not have any association with the sponsor.
Rights of the Trustees:-

• Trustees appoint the AMC in consultation with the sponsor and according to the SEBI
Regulations.
• All Mutual Fund Schemes floated by the AMC have to be approved by the Trustees.
• Trustees can seek information from the AMC regarding the operations and compliance
of the mutual fund.
• Trustees can seek remedial actions from AMC, and in cases can dismiss the AMC.
• Trustees review and ensure that the net worth of the AMC is according to the
stipulated norms, every quarter.

Obligations of the Trustees:-
• Trustees must ensure that the transactions of the mutual fund are in accordance with
the trust deed.
• Trustees must ensure that the AMC has systems and procedures in place.
• Trustees must ensure due diligence on the part of AMC in the appointment of
constituents and business associates.
• Trustees must furnish to the SEBI, on half yearly basis a report on the activities of the
AMC.
• Trustees must ensure compliance with SEBI Regulations.
Asset management company (AMC):-

An AMC is the legal entity formed by the sponsor to run a mutual fund. The AMC is usually a
private limited company in which the sponsors and their associates or joint venture partners
are the shareholders. The trustees sign an investment agreement with the AMC, which spells
out the functions of the AMC. It is the AMC that employs fund managers and analysts, and
other personnel. It is the AMC that handles all operational matters of a mutual fund – from
launching schemes to managing them to interacting with investors.
Regulatory requirements for the AMC:-

• Only SEBI registered AMC can be appointed as investment managers of mutual funds.
• AMC must have a minimum net worth of Rs.10 crores at all times.
• An AMC cannot be an AMC or Trustee of another Mutual Fund.
• AMCs cannot indulge in any other business, other than that of asset management
• At least half of the members of the Board of an AMC have to be independent.
• The 4th schedule of SEBI Regulations spells out rights and obligations of both trustees
and AMCs.
Obligations of the AMC:-

• Investments have to be according to the investment management agreement and SEBI
regulations.
• The actions of its employees and associates have to be as mandated by the trustees.
• AMCs have to submit detailed quarterly reports on the working and performance of the
mutual fund.
• AMCs have to make the necessary statutory disclosures on portfolio, NAV and price to
the investors.
Restrictions on the AMC:-

• AMCs cannot launch a scheme without the prior approval of the trustees.
• AMCs have to provide full details of the investments by employees and Board
members in all cases where the investment exceeds Rs.1 lakh.
• AMCs cannot take up any activity that is in conflict with the activities of the mutual
fund.
Custodian:-
A custodian handles the investment back office of a mutual fund. Its responsibilities include
receipt and delivery of securities, collection of income, and distribution of dividends and
segregation of assets between the schemes. It also track corporate actions like bonus issues,
right offers, offer for sale, buy back and open offers for acquisition. The sponsor of a mutual
fund cannot act as a custodian to the fund. This condition, formulated in the interest of
investors, ensures that the assets of a mutual fund are not in the hands of its sponsor. For
example, Deutsche Bank is a custodian, but it cannot service Deutsche Mutual Fund, its
mutual fund arm.
Brokers: - Role of Brokers in a Mutual Fund

• They enable the investment managers to buy and sell securities.
• Brokers are the registered members of the stock exchange.
• They charge a commission for their services.
• In some cases, provide investment managers with research reports.
• Act as an important source of market information.

Registrar or transfer agents:-
Registrars, also known as the transfer agents, are responsible for the investor servicing
functions. This includes issuing and redeeming units, sending fact sheets and annual reports.
Some fund houses handle such functions in-house. Others outsource it to the Registrars; Karvy
and CAMS are the more popular ones. It doesn’t really matter which model your mutual fund
opt for, as long as it is prompt and efficient in servicing you. Most mutual funds, in addition to
registrars, also have investor service centers of their own in some cities.
Some of the investor – related services are:-
• Processing investor applications.
• Recording details of the investors.
• Sending information to the investors.
• Processing dividend payout.
• Incorporating changes in the investor information.
• Keeping investor information up to date.
Distributors: - Distribution channels in the mutual fund industry

The Direct Channels:-
In the direct channel, customers invest in the schemes directly through AMC. In most cases,
the company does not provide any investment advice, so these investors have to carry out their
own research and select schemes themselves
The banking channel:-

The large customer base of banks, in developed countries, has played an important role in the
selling MFs. In the recent years, this channel has also opened up in India. Banks operating in
India , including public sector, private and foreign banks have established tie-up with various
fund companies for providing distribution and servicing.
The retail channel:-

A customer can deal with directly with a sub broker belonging to a distribution company,
instead of taking trouble of dealing with several agents. Distribution companies sell the

schemes of several fund houses simultaneously and brokerage is paid by the AMC whose
funds they sell. The retail channel offers the benefits of specialist knowledge and established
client contact and, therefore private fund houses are generally prefer this channel.
The corporate channel:-

The corporate channel includes a variety of institutions that invest in shares on the company’s
name. These are businesses, trust, and even state and local governments. For institutional
investors, fund managers prefer to create special funds and share classes. Corporate can either
invest directly in mutual funds, or through an intermediary such as a distribution house or a
bank.
Individual Financial Advisors (IFA) or Agents:-

The IFA channel is the oldest channel for distribution and was widely employed at the time
when UTI monopoly in the market. In recent times with the emergence significantly
decreased.
An agent who basically acts as an interface between the customer and the fund house there is
a unique systems in place in India , wherein several sub-brokers are working under one main
broker. The huge network of sub-brokers, thus ensure larger market penetration and
geographic coverage. As per AMFI, over one lakh agents are registered to sell mutual funds
and other financial products such as insurance across the country.
Benefits of investing in mutual funds:-
Professional Management:-
Mutual Funds provide the services of experienced and skilled professionals, backed by a
dedicated investment research team that analyses the performance and prospects of companies
and selects suitable investments to achieve the objectives of the scheme.
Diversification:-

Mutual Funds invest in a number of companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because seldom do all stocks decline at the same
time and in the same proportion. You achieve this diversification through a Mutual Fund with
far less money than you can do on your own.
Convenient Administration:-
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as
bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds
save your time and make investing easy and convenient.
Return Potential:-
Over a medium to long-term, Mutual Funds have the potential to provide a higher return as
they invest in a diversified basket of selected securities.
Low Costs:-
Mutual Funds are a relatively less expensive way to invest compared to directly investing in
the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.
Liquidity:-
In open-end schemes, the investor gets the money back promptly at net asset value related
prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock
exchange at the prevailing market price or the investor can avail of the facility of direct
repurchase at NAV related prices by the Mutual Fund.
Transparency:-
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and
the fund manager's investment strategy and outlook.

Flexibility:-
Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your needs
and convenience.
Affordability:-
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund
because of its large corpus allows even a small investor to take the benefit of its investment
strategy.
Choice of Schemes:-
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
Well Regulated:-
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
The risks associated with investment of mutual fund:-

The most important relationship to understand is the risk-return trade-off. Higher the risk
greater the returns/loss and lower the risk lesser the returns/loss.
Hence it is up to you, the investor to decide how much risk you are willing to take. In order to
do this you must first be aware of the different types of risks involved with your investment
decision.
Market risk:-
Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting
the market in general lead to this. This is true, may it be big corporations or smaller mid-sized
companies. This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works
on the concept of Rupee Cost Averaging (“RCA”) might help mitigate this risk.

Figure 2.4
Credit risk:-
The debt servicing ability (may it be interest payments or repayment of principal) of a
company through its cash flows determines the Credit Risk faced by you. This credit risk is
measured by independent rating agencies like CRISIL who rate companies and their paper.
An ‘AAA’ rating is considered the safest whereas a ‘D’ rating is considered poor credit
quality. A well-diversified portfolio might help mitigate this risk.

Inflation risk:-
Things you hear people talk about: “Rs. 100 today is worth more than Rs. 100 tomorrow.”
“Remember the time when a bus ride coasted 50 paisa?” “Mehangai Ka Jamana Hai.”
The root cause is inflation. Inflation is the loss of purchasing power over time. A lot of times
people make conservative investment decisions to protect their capital but end up with a sum
of money that can buy less than what the principal could at the time of the investment. This
happens when inflation grows faster than the return on your investment. A well-diversified
portfolio with some investment in equities might help mitigate this risk.
Interest rate risk:-

In a free market economy interest rates are difficult if not impossible to predict. Changes in
interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of
bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate
environment. A well-diversified portfolio might help mitigate this risk.
Political risk:-
Changes in government policy and political decision can change the investment environment.
They can create a favorable environment for investment or vice versa.
Liquidity risk:-
Liquidity risk arises when it becomes difficult to sell the securities that one has purchased.
Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as
internal risk controls that lean towards purchase of liquid securities.
Risk measures of mutual fund:-

Beta ratio:-
A high beta is good or bad depending on the state of the market. If the market sentiments are
bullish, i.e., the market is seeing a rise in general, then a high beta stock is better and if the
market sentiment is bearish then low beta is preferred.

A beta of 1 indicates that the security's price will move with the market.
A beta less than 1 means that the security will be less volatile than the market. A beta greater
than 1 indicates that the security's price will be more volatile than the market.
R_squared:-
A statistical measure that represents the percentage of a fund's or security's movements that
are explained by movements in a benchmark index. R-squared values range from 0 to 100. An
R-squared of 100 means that all movements of a security are completely explained by
movements in index. A higher R-squared value will indicate a more useful beta figure.
Sharpe ratio:-
High returns are generally associated with a high degree of volatility. The Sharpe ratio
represents this tradeoff between risk and returns. At the same time it also factors in the desire
to generate returns, which are higher than those from risk free returns. The greater a portfolio's
Sharpe ratio, the better its risk-adjusted performance is.
Sharpe Index = (Ri – Rf) / Si
Where,
Ri = Return on Fund.
Rf = Risk free rate of Return.
Si = Standard Deviation of the fund.
Expense ratio:-
The percentage of total fund assets that is used to cover expenses associated with the operation
of a mutual fund. This amount is taken out of the fund's assets and lowers the return that fund
holders achieve. These expenses include management fees and operating expenses
So lesser the expense ratio the better it is for the investors
Types of mutual fund schemes:-

Figure 2.5

Table 2.1
Mutual Fund Investment Who should Investment

Objective Risk
Type Portfolio invest horizon
Treasury Bills, who park

Liquidity + Certificate of their funds in
Moderate Income Deposits, current 2 days - 3
Money Market Negligible
+ Reservation of Commercial accounts or weeks
Capital Papers, Call short-term
Money bank deposit
Short-term Call Money,

Those with
Funds (Floating Commercial
Liquidity + Little Interest surplus 3 weeks -
- short-term) Papers, Treasury
Moderate Income Rate short-term 3 months
Bills, CDs, Short-
funds
term G-sec
Predominantly
Bond Funds Credit Risk Salaried &
Debentures, More than 9
(Floating - Regular Income & Interest conservative
G-sec , Corporate - 12 months
Long-term) Rate Risk investors
Bonds
Salaried &
Interest Rate Government 12 months
Gilt Funds Security & Income conservative
Risk securities & more
investors
Aggressive
Long-term Capital investors
Equity Funds High Risk Stocks 3 years plus
Appreciation with long
term vision
To generate
returns that are NAV varies Portfolio indices
Aggressive
Index Funds commensurate with index like BSE, NIFTY 3 years plus
investors.
with returns of performance etc
respective indices
Balanced ratio of
Capital
equity and debt
Balanced Growth & Regular Market Risk Moderate &
funds to ensure 2 years plus
Funds Income and Interest Aggressive
higher returns at
Rate Risk
lower risk

Schemes according to Maturity Period:-
A mutual fund scheme can be classified into open-ended scheme or close-ended
scheme 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 prices which are declared on
a daily basis. The key feature of open-ended schemes is liquidity.
Close-ended Fund/ Scheme:-
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. 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 exchanges where the units are listed.
Schemes according to Investment Objective:-
A scheme can also be classified as growth scheme, income scheme, or balanced
scheme considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:
Growth / Equity Oriented Scheme:-
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.
Income / Debt Oriented Scheme:-
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.

Balanced Fund:- The aim of balanced funds is to provide both growth and regular income as
such schemes invest both in equities and fixed income securities in the proportion indicated in
their offer documents. These are appropriate for investors looking for moderate growth. They
generally invest 40-60% in equity and debt instruments. These funds are also affected because
of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to
be less volatile compared to pure equity funds.
Money Market or Liquid Fund:- These funds are also income funds and their aim is to
provide easy liquidity, preservation of capital and moderate income. These schemes invest
exclusively in safer short-term instruments such as treasury bills, certificates of deposit,
commercial paper and inter-bank call money, government securities, etc. Returns on these
schemes fluctuate much less compared to other funds. These funds are appropriate for
corporate and individual investors as a means to park their surplus funds for short periods.
Gilt Fund:- These funds invest exclusively in government securities. Government securities
have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and
other economic factors as is the case with income or debt oriented schemes.
Index Funds:- Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the
same weightage comprising of an index. NAVs of such schemes would rise or fall in
accordance with the rise or fall in the index, though not exactly by the same percentage due to
some factors known as "tracking error" in technical terms. Necessary disclosures in this regard
are made in the offer document of the mutual fund scheme.

Figure 3.1

Introduction:
The Reliance group - one of India's largest business houses with revenues of Rs. 990 billion ($22.6
billion) that is equal to 3.5 percent of the country's gross domestic product was split into two.
The group - which claims to contribute nearly 10 per cent of the country's indirect tax revenues and
over six percent of India's exports - was divided between Mr. Mukesh Ambani and his younger
brother Mr. Anil Ambani on June 18, 2005.
The group's activities span exploration, production, refining and marketing of oil and natural gas,
petrochemicals, textiles, financial services, insurance, power and telecom. The family also has interests
in advertising agency and life sciences.
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average Assets Under
Management (AAUM) of Rs. 90,938 Crores (AAUM for Mar 08 ) and an investor base of over 66.87
Lakhs. 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 115 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."
Reliance Capital Ltd. 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.

Given below is a summary of RCL’s financials:
Particulars (Rs. in Crores) 2006-07 2005-06 2004-05 2003-04

Total Income 883.86 652.02 295.69 356.79
Profit Before Tax 733.18 550.61 111.21 105.79
Profit After Tax 646.18 537.61 105.81 105.79
Reserves & Surplus 4915.07 3849.58 1310.08 1271.84
et Worth 5161.23 4122.46 1437.92 1399.81
Earnings per Share (Rs.) 28.39 29.74 8.31 8.31
(Basic + Diluted)
Book Value per Share (Rs.) 210.12 112.95 112.95 109.96
Dividend (%) 35% 30% 30% 29%
Paid up Equity Capital 246.16 223.4 127.84 127.84
Table 3.1
Board of Director Management team
Mr. Amitabh Chaturvedi CEO: - Mr. Vikrant Gugnani

Mr. Kanu Doshi Deputy CEO: -Mr. Sundeep Sikka
Mr. Manu Chadha Head Equity Invest.: - Mr. Madhusudan Kela
Mr. Sushil Tripathi Head Fixed Income: - Mr. Amitabh Mohanty
Table 3.2
Statutory Details:-
Sponsor: - Reliance Capital Limited.
Trustee: - Reliance Capital Trustee Co. Limited.
Investment Manager: - Reliance Capital Asset Management Limited. The Sponsor, the
Trustee and the Investment Manager are incorporated under the Companies Act 1956.
Custodian: - Deutsche Bank, AG
Registrar: - M/s. Karvy Computershare Pvt. Limited

OBJECTIVE: - Aims to provide long term capital appreciation through a portfolio with
target allocation of 90 percent in equity.
Table 3.3
Type of scheme Open Fund size 946.82 as on Sep 30, 2008

ature Equity Expense ratio 1.98
Date of inception Aug 27, 1998 Portfolio turnover 138
Relative Performance (Fund Vs Category Average) as on Sep 30, 2008
Figure 3.2
Source- www.mutualfundsindia.com

OBJECTIVE: - Aims to invest primarily in equity related securities for high capital
appreciation.
Table 3.4
Date of inception May 7, 1998 Portfolio turnover 69.63
Relative Performance (Fund Vs Category Average)

Figure 3.3

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 Facts-Table 3.5

Date of inception Oct 7, 1995 Portfolio turnover 48


Figure 3.4

Table 3.6- Risk Measurement
Birla Sunlife R Growth Tata pure equity
Mean 1.15 1.23 1.03
Standard Deviation 3.43 3.19 3.54
Sharpe 0.31 0.35 0.26
Beta 0.88 0.8 0.94
Treynor 1.19 1.49 0.99
Interpretation:-
1. Beta: - In this category all the funds has almost the same Beta value. In the bearish market
condition the fund which has least value of beta is considered as good Beta value. We can
evaluate the performances by comparing the beta values. R. Growth fund is least volatile in
bearish market and T. Pure Equity fund is more volatile than other two funds.
2. Mean: - It indicates the average return of mutual fund schemes .In this case R. Growth has
highest value of mean and T. Pure Equity has least value.
3. Standard Deviation:-For a better return deviation should be zero with respect to mean
value. R. Growth fund has highest value of mean but at the same time it has least value of
Standard Deviation. Birla Sun life is slightly more than the Mean value but Tata Pure equity is
more deviate from its daily average return.
4. Sharpe ratio: - The Sharpe Ratio is a measure of excess return per unit of total risk. Higher
the Sharpe Ratio, the better. R. growth Fund has highest Sharpe ratio value because the value
is its standard deviation is less than other two funds schemes. Birla is comparably good than
Tata Pure.
5. Treynor ratio: - It is a measure of excess return per unit of systematic risk. Tata pure
equity has least value of treynor ratio it indicates that return is less than risk but at the same
time R. Growth fund has highest value. It means that performance of Reliance is much better
than other two.

Table 3.7-Trailing Returns:-
As of 30/9/2008 Category Return Tata Pure Equity R. Growth Fund Birla Sunlife
Year-to-Date -51.88 -39.65 -50.78 -55.91
1-Week -5.94 2.58 -5.78 -3.71
1-Month -21.35 -5.22 -22.03 -21.32
3-Month -17.43 -4.54 -19.88 -20.87
1-Year -44.10 -41.94 -39.25 -47.3
2-Year -9.11 14.48 -1.92 -8.57
3-Year 15.46 26.62 21.59 16.89
5-Year 27.12 -- 31.85 28.37
Interpretation: - In the worst condition of market all the funds are giving negative return but
these funds are core fund of Indian Mutual fund industry. Investor should have long vision for
these funds not the short term. As reliance growth fund and Birla sunlife equity are very old
fund of mutual fund industry as compare to Tata infra. In 3 year return Tata Infra is better
with 26.62% return as compare to category and reliance growth fund and Birla sunlife fund.
Conclusion:-
The last two years have been marvelous for Reliance Growth. After gaining 55.75 per cent in
2002 Reliance Growth is up another 117.78 per cent this year till December 1 2003. Though a
major part of Reliance Growth s portfolio consists of quality stocks it hardly sticks to anything
for long. The other thing about this fund is that it does not hesitate to be the only mutual fund
to own a new stock. It is also more partial to mid-caps than other diversified equity funds. And
in fact this bias towards mid-caps since August 2002 till date has been the biggest contributing
factor for the fund s excellent performance. All in all Reliance Growth has a well-diversified
portfolio but it is not a conventional diversified equity fund due to a mid-cap bias high
turnover and the high cash component.

Objective: - The investment objective of the scheme is to generate capital appreciation from a
portfolio of predominantly equity and equity related securities. The portfolio will generally
comprise of equity and equity related instruments of around 30companies which may go up to
39 companies, and that these companies may or may not be the same which constitute the BSE
Sensitive Index or NSE Fifty (S&P CNX Nifty) Index

Date of inception 22 dec,1998 Portfolio turnover Ratio 138.47

Figure 3.5

Objective: - The primary investment objective is to seek capital appreciation and or
consistent returns by actively investing in equity / equity related securities.

Type of scheme Open Fund size 779.74 Cr as on Sep 30, 2008
Date of inception 10th May,2005 Portfolio turnover 83
Ratio

Figure 3.6

Objective- To provide capital appreciation and income distribution to unit holders by
investing predominantly in equity/equity related securities of the companies belonging to
infrastructure development and the balance in debt securities and money market instruments
including call money.

Type of scheme Open Fund size 3438.39 as on 30/9/08
Date of inception Aug 16, 2005 Portfolio turnover Ratio 140
Figure 3.7

Table 3.11- Risk Measurement:-
Volatile Ratios RRSEF KOTAK 30 ICICI Infra

Mean 1.4 1.12 1.39
Sharpe 0.36 0.28 0.36
Beta 0.83 0.96 0.93
Treynor 1.57 1.05 1.38
Interpretation:-
1. Beta: - In the bearish market condition the fund which has least value of beta is considered
as good Beta value. We can evaluate the performances by comparing the beta values. RRSEF
is least volatile in bearish market. Kotak 30 and ICICI Infra have almost the same market
volatility measurement.
2. Mean: - It indicates the average return of mutual fund schemes .In this case RRSEF and
ICICI Infra have almost same value of mean measurement but Kotak 30 has least value
3. Standard Deviation:-For a better return deviation should b zero with respect to mean
value. ICICI Infra has highest value of mean but at the same time it has least value of Standard
Deviation. Kotak 30 has slightly more deviation than ICICI but it has least value of mean at
the same time RRSEF has average value of both mean and deviation.
4. Sharpe ratio: - The Sharpe Ratio is a measure of excess return per unit of total risk. Higher
the Sharpe Ratio, the better. RRSEF and ICICI infra have same and highest Sharpe ratio value
but ICICI has deviation of 3.55 but RRSEF has 3.63 so it is clear that returns of RRSEF are
more than ICICI. Kotak 30 has least value of Sharpe so returns are less than other two funds.
5. Treynor ratio: - It is a measure of excess return per unit of systematic risk. Kotak 30 has
least value of Treynor ratio it indicates that return is less than risk but at the same time RRSEF
has highest value. It means that performance of Reliance is much better than other two.

Table 3.12-Trailing Returns:-
Period KOTAK 30 ICICI Infra RRSEF Category Return

1-Week -4.8 4.15 2.39 1.71
1-Month -17.6 -4.72 -5.57 -5.46
3-Month -13.92 1.64 -2.09 -4.28
1-Year -12.98 -7.92 -2.53 -21.3
2-Year 8.85 22.4 16.64 4.89
3-Year 14.28 31.77 23.49 14.32
5-Year 27.37 -- 29.12
Interpretation:-
For last 1 week to 1 year all the stocks are not performing well due to global financial crisis. In
the worst condition like that RRSEF was able to perform well within category though it has
negative return .ICICI Infra is also performing good as compare to category return and Kotak
30. It is clear that ICICI Infra is better among all these three with 3 year return of 31.77 but
Treynor ratio is very low that means systematic risk is more as compared RRSEF.

OBJECTIVE: - To generate reasonable returns with low risk and high liquidity through
investments primarily in money market securities.
Table 3.13
ature Equity Expense ratio 0.44%
Date of inception 13 March2002 Portfolio turnover Ratio NA
Figure 3.8

Objective: - The primary objective of the Scheme is to enhance income consistent with a high
level of liquidity, through a judicious portfolio mix comprising of money market and debt
instruments.
Table 3.14
Type of scheme Open Fund size 4758.13 as on Aug 31, 2008
ature Short Term Debt Expense ratio 0.61%
Date of inception 17 Oct 2000 Portfolio turnover NA
Ratio

Figure 3.9

Objective: - Aims to generate optimal returns consistent with moderate risk and high
liquidity.
Table 3.15
ature Short Term Debt Expense ratio 0.80%
Date of inception 18 March 1998 Portfolio turnover Ratio NA

Figure 3.10

Risk and return of liquid funds
Table 3.16
LIC HDFC RELIA CE
Mean 0.15 0.15 0.14
Sharpe 2.14 2.09 2.16
Beta 0.12 0.14 0.13
Treynor 0.34 0.31 0.26
Interpretation:-
1. Mean: - As all these are liquid funds probably they should have same value of mean and all
the three funds have almost same value of Mean.
2. Standard Deviation: - All the three funds have same value of Standard Deviation. It means
they are performing consistently with good returns.
3. Sharpe Ratio: -The Sharpe Ratio is a measure of excess return per unit of total risk. Higher
the Sharpe Ratio, the better. Reliance liquid fund has highest Sharpe ratio value of 2.16 that
means return is more as compared to total risk. HDFC liquid fund has least value and having
more risk in it. LIC liquid fund has also better return with low risk.
4. Beta: - In the bearish market condition lower beta is considered as a good for fund. As on
comparing LIC has least and HDFC has highest value but Reliance has average value. So LIC
is less volatile than HDFC and Reliance liquid fund.
5. Treynor: - It is a measure of excess return per unit of systematic risk. It is clear that LIC
has more return per unit of risk than other two. HDFC is just slightly less than LIC but
Reliance has least value. It means Reliance is not capable to minimize its systematic risk and
to generate returns.

TRAILI G RETUR as on 30 Sept 2008
Table 3.16
Period RELIA CE HDFC LIC MF Category Return

1-Week 0.26 0.18 0.18 0.19
1-Month 0.8 0.76 0.79 0.74
3-Month 2.05 2.3 2.37 2.18
Year-to-Date 5.02 6.6 6.82 6.03
5-Year 5.38 6.4 6.78 6.19
3-Year 6.11 7.55 7.83 7.08
2-Year 6.34 8.3 8.43 7.68
1-Year 6.56 8.71 8.98 8.01
Interpretation:-
Reliance liquid fund is performing well in worst condition of market with highest returns. In
the case of LIC and HDFC, both are just matching with category returns. If we look in good
time of market LIC was performing well at that time with highest returns. HDFC was also
good at that time but returns were less than LIC.

STRE GTHS:
Brand strategy: The Company operates under numerous well-known brand names, which
allows the company to appeal to many different segments of the market.
Distribution channel strategy: Reliance is continuously improving the distribution of its
products. Its online and Internet-based access offers a combination of excellent growth
prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003.
Large pool of installed capacities.
Experienced managers for large number of Generics.
Large pool of skilled and knowledgeable manpower.
Increasing liberalization of government policies.
WEAK ESS:
Emerging markets: since there is more investment demand in the United States, Japan
and the rest of Asia, Reliance should concentrate on these markets, especially in view of
low global interest rates.
Mutual funds are like many other investments without a guaranteed return: there is
always the possibility that the value of your mutual fund will depreciate. Unlike fixed-
income products, such as bonds and Treasury bills, mutual funds experience price
fluctuations along with the stocks that make up the fund.

Fees: In mutual funds, the fees are classified into two categories: shareholder fees and
annual operating fees. The shareholder fees, in the forms of loads and redemption fees are
paid directly by shareholders purchasing or selling the funds. The annual fund operating
fees are charged as an annual percentage - usually ranging from 1-3%. These fees are
assessed to mutual fund investors regardless of the performance of the fund.
OPPORTU ITIES:
Potential markets: The Indian rural market has great potential. All the major market
leaders consider the segments and real markets for their products. A senior official in a one
of the leading company says foray into rural India already started and there has been
realization that the rural market is both price and quantity conscious.
Entry of M Cs: Due to multinationals are entering into market job opportunities are
increasing day by day. Also India Mutual Fund majors are tie up with other financial
institutions.
THREATS:
Increased Competition: With intense competition by so many local players causing

headache to the current marketers. In addition to this though multinational brands are not
yet established but still they will soon hit the mark. Almost 60 to 70% of the revenue is
spending on the management and services.
Hedge funds: sometimes referred to as ‘hot money’, are also causing a threat for mutual
funds have gained worldwide notoriety for bringing the markets down. Be it a crash in the
currency, stock or bond market, usually a hedge fund prominently figures somewhere in
the picture.

Table 4.1 -Investment of people in current scenario
Investment o. of People Percentage

Mutual Fund 84 42 %
Stock 52 26 %
Govt. Bonds & securities 17 07 %
Fixed Deposits 28 14 %
Insurance 22 11 %
Figure 4.1
Interpretation: - There are various investment avenues available for investor. But in survey I
found that mutual funds have a significant market share. In crisis of market people are
investing more in mutual funds. Although mutual fund has a tremendous scope of growth.
Some people are investing in insurance & G-sec. because of purpose of security. The major
part of the sample taken has invested in the Mutual Funds. Still there are few who are not
investing in MF.

Table 4.2- Factors Influencing the Investment Decision of Investors: -
Influencing factor o of people percentage

Broker 64 32
Friend 40 20
Self 60 30
Magazine 12 6
News 20 10
Others 4 2
Figure 4.2
Interpretation: - There are many factors which influence the investment decision of the
investors. It may be the current news (political, technological, financial, etc.), Magazines,
friends, etc. in the study it proved that many people trust the brokers most for the investment
decisions. These are the ones who have less experience. The “Self-Evaluation” is the next
major factor. The experienced person trust himself thereafter he/she invests. Magazines and
current News also matters. Any bad news can make a person change his/her decision.

Table 4.3 -Age of investor
Age o. of People Percentage

Under 30 58 29 %
30-40 84 42 %
40-60 46 23 %
60 and above 12 6%
Figure 4.3
I TERPRETATIO : - It is clear from above data that 42% of investor is belonging to age
group of 30-40 who are predominantly private employees.

Table 4.4 -How stable your current income
Income o. of People Percentage

Very unstable 02 01 %
Moderately unstable 24 12 %
Moderately stable 106 53 %
Very stable 68 34 %
Figure 4.4
Interpretation: - From above data it is clear that majority of investors have moderately stable
income. It means that they invest from their saving. And invest frequently. Only 1% has very
unstable income so it is a healthy sign for mutual fund industry.

Table-4.5 Average Investment Period of Investors:-
Investment Period o. of people percentage

Less than 6 months 14 7%
6 months to 1 year 20 10%
1 year to 3 year 62 31%
More than 3 year 84 42%
Figure 4.5
Interpretation: - The investment period is very important to increase the profits. The timing
must be right enough to benefit from fluctuations. The smart investor decides it in advance for
how much time he would be keeping his money in the market and when he should leave
squaring-up. Many people consider the investment for 9 months – 2 years as a right option.
Still some want to be invested for over 2 years. The least responded to the 3-9 months period.

Table 4.6 Preference in Mutual Funds:-
Sector o. of people Percentage

Equity-normal 58 29
ELSS 52 26
Balanced 32 16
Debt 54 27
other 4 2
Figure 4.5
Interpretation: - There are different types of mutual funds available in the market according
to the needs of the investors. There are Equity funds, ELSS, Income Funds, Balanced Funds,
etc. The highest sought after fund is the Income fund which offers a regular income through
investments in the Govt. Bonds. The risk is also low in this. It was followed by the Equity
Fund which offers higher returns but it is riskier also. Some people would like to have Equity
Linked Saving Schemes (ELSS). This provides some exemption in the Tax also.

Table 4.7-Expected rate of return
Rate of return o. of People Percentage

0-10% 24 12 %
10-20% 52 26 %
20-30% 108 54 %
30 & above 16 8%
Figure 4.7
Interpretation:
From above data I found that in current scenario of financial market nobody can expect return
of more than 10%. There are 54% investors expect the return of 20-30% in a period for 1year
to 3 year.

Table 4.8-Risk taken by people
Rate of return o. of People Percentage

High 26 13 %
Medium 142 71 %
Low 32 16 %
Figure 4.8
I TERPRETATIO : - People invest in mutual fund always seeks high return with low risk.
But in this case 71% people want to go beyond the low risk level and to achieve high growth.
There are still 13% people who can bear high risk in this financial crisis.

Table 4.9- Experience in the market:-
Experience o. of people Percentage

Less than 1 year 52 26
1 to 4 year 42 21
More than 4 year 106 53
Figure 4.9
Interpretation: - The experience in the market was the factor which influenced the
investments. There are some people who have experience of less than a year. These are those
investors who entered into the market after noticing the rise in the market. The achievement of
21,000 marks by SENSEX was motivational force in this. Major part was having vast
experience that is of more than 4 years. These are the ones who have been in the market and
saw it rising to conquer the 10.000 to 21000 peak

Table 4.10- Preference in mode of investment:-
Mode of investment o. of people Percentage

Lump sum 46 23
SIP 68 34
Both 76 38
Figure 4.10
Interpretation: - The investor of mutual fund follows the different mode of investment. In
such a volatile market majority of people invest by SIP because this there is no need to time
the market. SIP also has an advantage of rupee cost averaging. So people invest lump sum
when market is stable and they keep continues investment through SIP.

After studying & analyzing different mutual fund schemes the following conclusions can be
made:
Winning with stocks means performing at least as well as a major market index over
the long haul. If one can sidestep the common investor mistakes, then one has taken
the first and biggest step in the right direction.
The most important consideration while making investment decision was
Return aspect followed by Safety, Liquidity and Taxability
Diversified stock portfolios have offered superior long term inflation
Protection. Equities are especially important today with people living longer and
retiring early.
To understand stock funds, one needs to be familiar with the characteristics of the
different types of companies they hold.
Portfolio managers have done a fairly good job in generating positive returns. It may
lead to gain investors confidence.
On the basis of the analysis the performance of the schemes during the study period
can be concluded to be good.
Those who want to eliminate the risk element but still want to reap a better then it
would be advisable to go for debt or arbitrage schemes which ensure both safety and
returns.
So the future of mutual funds in India is bright, because it meets investor s needs perfectly.
This will give boost to Indian investors and will attract foreign investors also. It will lead to
the growth of strong institutional framework that can support the capital markets in the long
run.

1. To build a successful investment strategy you should carefully structure your investment
plan to achieve your goals without taking more risk than you can afford you are comfortable
with. You also need to consider how much time you have to reach various goals and your
personal circumstances
2. No single asset is appropriate for all your goals at any given point of the in life you will
probably want to keep apart your money secure and accessible invested for growth but the
proportions of safety income and growth will change as prepare for and then move past
successive investment objectives
3. Asset allocation which means combining different types of assets in varying amounts
depending on your goals is the key to successful investment strategy
4. The key to building wealth is to start investing early and regularly these regular amounts of
saving however small can grow into a substantial amount of wealth over the long term
5. A wise investment strategy may be to have an investment portfolio that also consists of
more than just granted return shames. That way one is protected against the impact of future
inflation. Furthermore unlike in the past when the interest rate was flat rate were flat and
administered today interest rates are market driven and volatile.

ame : Sex :
Address : Contact o :
1. Where you will invest your money in current scenario?

A. Mutual Fund B. Insurance
C. Fixed deposit D. Stock market
E. Govt. bonds and securities
2. Which factor influences your investment decision?

A. Broker B. Friend
C. Self D. Magazine
E. News F. Others
3. What is your age?

A. Under 30 B. 30-40
C. 44-59 D. 60 and over
4. How stable is your current income source?

A. Very unstable B. Moderately unstable
C. Moderately stable D. Very Stable

5. How much long do you prefer your investment?
A. < 6 Months B. 6 Months -1 Year
C. 1- 3 Years D. > 3 years
6. Which scheme of mutual fund do you prefer for investment?

A. Equity B.ELSS
C. Balanced D. Debt
E. Other
7. Your expected rate of return?

A.0-10% B.10-20%
C.20-30% D.30& above
8. How much you can take risk?

A. High B. Medium C. Low
9. How experienced are you at investing in bonds or bond mutual funds?

A. < 1 Year B. 1 – 4 Years C. > 4 Year
10. Which mode of investment do you prefer most?

A. Lump sum B. SIP C. Both
11. Do you influences by brand name of AMC.

A. High B. Low C. Not at all

Banking channel to distribute mutual fund schemes
ICICI BA K
Bund garden Aundh
Bhandarkar Rd Kothrud
Apte Road Karve road
HDFC BA K
F.C. Road East Street
Aundh rd Kalyani agar
ana Peth Bhandarkar Rd,
ShankarSeth Rd Aundh
IDBI BA K PU E
Laxmi Road Model Colony
Hinjewadi Ghole Road
FC Road Aundh
AXIS BA K
JM Road DP Road
Baner Kalyani agar
East Street Senapati Bapat Road
DCB BA K
Deccan
Sharda Arcade
Sadhu Vasvani Road

1. Websites:
www.mutualfundsindia.com
www.google.com
www.valueresearchonline.com
www.investmentz.com
www.sify.business.com
www.investopedia.com
2. from Reliance Mutual Fund

Reliance fund Reckoned
3. Books and magazines

Security analysis & Portfolio management by Prasanna Chandra
Dalaal street

Chapter O. Content Page o List of Tables 2 List of Figures 3 Executive Summary 4 1

Uploaded by

Document Information

Original Description:

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

Chapter O. Content Page o List of Tables 2 List of Figures 3 Executive Summary 4 1

Uploaded by

Copyright:

Available Formats

Chapter

Institute Of Business Studies & Research, Pune 1|Page

Institute Of Business Studies & Research, Pune 2|Page

Institute Of Business Studies & Research, Pune 3|Page

Institute Of Business Studies & Research, Pune 4|Page

Institute Of Business Studies & Research, Pune 6|Page

Institute Of Business Studies & Research, Pune 7|Page

(Source- www.amfi.com) Figure 1.2

Institute Of Business Studies & Research, Pune 8|Page

To evaluate investment performance of selected mutual funds in terms of risk and

Institute Of Business Studies & Research, Pune 9|Page

Institute Of Business Studies & Research, Pune 10 | P a g e

The survey is conducted through the following phases:-

Institute Of Business Studies & Research, Pune 11 | P a g e

3. Framing the questionnaire;-

Period: - 1st June, 08 to 31st Aug.08

Institute Of Business Studies & Research, Pune 12 | P a g e

By Ben McClure, Contributor - Investopedia Advisor

putting all of your eggs in one basket.

Institute Of Business Studies & Research, Pune 14 | P a g e

overall risk of an all-weather portfolio.

recessions and wars are examples of systematic risks.

contributes little to portfolio risk. Instead, it is the difference - or covariance - between

benefit from holding diversified portfolios instead of individual stocks.

The Efficient Frontier

Institute Of Business Studies & Research, Pune 16 | P a g e

on determines the position of the portfolio on the line.

Institute Of Business Studies & Research, Pune 17 | P a g e

fact, act as though they are related.

affect their value.

Institute Of Business Studies & Research, Pune 18 | P a g e

optimal diversity after adding the twentieth stock.

comeuppance when markets turn down.

Institute Of Business Studies & Research, Pune 19 | P a g e

Institute Of Business Studies & Research, Pune 22 | P a g e

Rights of the Trustees:-

Institute Of Business Studies & Research, Pune 23 | P a g e

Asset management company (AMC):-

Regulatory requirements for the AMC:-

Obligations of the AMC:-

Restrictions on the AMC:-

Brokers: - Role of Brokers in a Mutual Fund

Institute Of Business Studies & Research, Pune 25 | P a g e

Distributors: - Distribution channels in the mutual fund industry

The banking channel:-

The retail channel:-

Institute Of Business Studies & Research, Pune 26 | P a g e

The corporate channel:-

Individual Financial Advisors (IFA) or Agents:-

Benefits of investing in mutual funds:-

Institute Of Business Studies & Research, Pune 27 | P a g e

Institute Of Business Studies & Research, Pune 28 | P a g e

The risks associated with investment of mutual fund:-

Institute Of Business Studies & Research, Pune 29 | P a g e

Institute Of Business Studies & Research, Pune 30 | P a g e

Interest rate risk:-

Risk measures of mutual fund:-

Institute Of Business Studies & Research, Pune 31 | P a g e

Types of mutual fund schemes:-

Institute Of Business Studies & Research, Pune 32 | P a g e

Institute Of Business Studies & Research, Pune 33 | P a g e

Mutual Fund Investment Who should Investment