SUMMER TRANING PROJECT REPORT ON RISK RETURN ANALYSIS AND COMPARATIVE STUDY OF RELIANCE MUTUAL FUND (A dissertation submitted to “RELIANCE CAPITAL ASSETS MANAGEMENT COMPANY” COMPANY” In partial fulfillment of the requirement requirement of summer training for the award of degree of MBA)
Submitted by:
Supervisor: Ms.KAMAL SODHI
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BONAFIDE CERTIFICATE This is to certify that the Report on Project Work titled “Risk Return Analysis and Comparative Study of Reliance Mutual Fund” for Reliance Capital Asset Management Company Ltd. is a bonafide record of the work done by
Studying in Master of Business Administration 4th semester in “K.R. Mangalam Institute of Management”, Management”, New Delhi during the year 2009-11.
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ACKNOWLEDGEMENT I would like to express my appreciation and gratitude to various people who have shared thei theirr valu valuabl ablee time time and made made possi possibl blee this this proje project ct,, throu through gh thei theirr direc directt or indi indirec rectt cooperation. My first word of gratitude is for Mr.Abhis Mr.Abhishek hek Srivasta Srivastava va – Relationship Manager(Corporate Sale), RELIANCE AMC, Delhi my corporate guide, guide, for his kind help and support and his valuable guidance throughout my project. I am also thankful to Ms. Kamal Sodhi, Sodhi, my faculty guide of “K.R MANGALAM MANGALAM INSTITUT INSTITUTE E OF MANAGE MANAGEMEN MENT” T”,, Grea Greate terr kail kailas ashh New New Delh Delhi, i, for for her her valu valuab able le guidance. She has helped me learn about the process, conducting survey, analyzing and presenting the facts and figures. I am also thankful to my respected faculties, dear friend & colleagues, who have helped me in every possible ways, supported me and encouraged me to explore new dimensions.
MBA 4TH SEMESTER
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DECLARATION I here by declare that the project report entitled: A Project Report on “Risk Return Analysis And Comparative Study Of Reliance Mutual Fund” submitted in partial fulfillment of the requirement for the degree of Master of Business Administration to RELIANCE CAPITAL ASSET MANAGEMENT COMPANY is my original work and not submitted for the award of any other degree, diploma, fellowship, or any other similar title or prizes. Name: Place: New Delhi Date: _________
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TABLE OF CONTENT S.No. 1 2 3 4 5 6 7 8 9 10 11 12
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INTRODUCTION COMPANY PROFILE OBJECTIVES OF THE STUDY COMPETITORS OF RELIANCE MUTUAL FUND RESEARCH METHODOLOGY DATA ANALYSIS AND INTERPRETATION COMPARATIVE STUDY OBSERVATION FINDINGS AND SUGGESTIONS CONCLUSION LIMITATION BIBLIOGRAPHY
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Page No. 27 39 33 58 59 62 85 94 95 97 61 98
PREFACE This is the age of technical up gradation. Nothing remains same for a long period every thing change with a certain span of time. So it is must for every organization to put a birds eye view on it’s over all functioning. This report has been prepared during practical training of Master of business administration (M.B.A.) from K.R Mangalam Institute of Management .The student of M.B.A. essentially required a practical training of 4 to 6 weeks in any organization. It gives an opportunity to the student to test their acquired knowledge through practical experiences. The successful completion of this project was a unique experience for me because by visiting many place and interacting various person, I achieved a better knowledge about sales. The experience which I gained by doing this project was essential at this turning point of my carrier this project is being submitted which content detailed analysis of the research under taken by me. The research provides an opportunity to the student to devote his/her skills knowledge and competencies required during the technical session. The research has been conducted on the topic “Risk Return Analysis And Comparative Study Of Reliance Mutual Fund”.
PLACE-……….. DATE…………..
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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 theory of portfolio analysis and the different measures of risk and return used for the comparison. The second section details on the need, objective, and the limitations of the study. 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. In the third section, an attempt is made to analyze and compare the performance of the equity mutual fund. For this purpose β-value, 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 suggestions and findings based on the analysis done in the previous sections and finally it deals with conclusion part.
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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. It is also known as an open-end investment company, to differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund’s current net asset value: total fund assets divided by shares outstanding.
S E
INVEST THEIR MONEY R O T S E V NI
PROFIT/LOSS FORM PORTFOLIO OF INVESTMENT
F L A U T U M
M E H S D N U
)
INVEST IN VARIETY OF STOCKS/BONDS
PROFIT/LOSS FROM INDIVIDUAL
T A U T C U L (F T E K R A M
S N OI
In Simple Words, 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.
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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 not all stocks may move in the same direction in the same proportion at the same time. Mutual fund issues units t o the investors in accordance with quantum of money invested by them. Investors of Mutual fund 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, A Mutual fund is required to be registered with Securities and Exchange Boa rd of India (SEBI) which regulates securities markets before it can collect funds from the public. In Short , a Mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the state d investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, a n equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment for the common ma n a s it offers an Oporto unity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
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HISTORY OF MUTUAL FUNDS (WORLDWIDE) When three Boston securities executives pooled their money together in 1924 to create the first mutual fund, they had no idea how popular mutual funds would become. The idea of pooling money together for investing purposes started in Europe in the mid-1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was called the Massachusetts Investors Trust. After one year, the Massachusetts Investors Trust grew from $50,000 in assets in 1924 to $392,000 in assets (with around 200 shareholders). In contrast, there are over 10,000 mutual funds in the U.S. today totaling around $7 trillion (with approximately 83 million individual investors) according to the Investment Company Institute. The stock market crash of 1929 slowed the growth of mutual funds. In response to the stock market crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the SEC and provide prospective investors with a prospectus. The SEC (U.S. Securities and Exchange Commission) helped create the Investment Company Act of 1940, which provides the guidelines that all funds must comply with today. With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s there were around 270 funds with $48 billion in assets. In 1976, John C. Bogle opened the first retail index fund called the First Index Investment Trust. It is now called the Vanguard 500 Index fund. In November of 2000 it became the largest mutual fund ever with $100 billion in assets.
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History of Indian Mutual Fund Industry The history of Mutual Funds in India can be broadly divided into 4 Phases: 1. First phase (1964-1987) 1
T he Unit Trust of India (UTI) was established in the year 1963 by passing an
2 3
Act in the Parliament. T he UTI was setup by the Reserve Bank of India (RBI) and functioned under
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the Regulatory and Administrative control of the RBI. T he First scheme in the history of mutual funds was UNIT SCHEME-64,
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which is popularly known as US-64. I n 1978, UTI was de-linked from RBI. The Industrial Development Bank of
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India (IDBI) took over the Regulatory and Administrative control. A t the end of the year 1988, UTI had Rs.6,700/- Crores of Assets Under
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Management.
2. Second phase (1987-1993) 1
E ntry of Public Sector Funds.
2
I n the year 1987, public sector Mutual Funds setup by public sector banks,
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Life Insurance Corporation of India (LIC) and General Insurance
4
Corporation of India (GIC) are came in to existence.
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S tate Bank of India Mutual Fund was the first non-UTI Mutual Fund. T he following are the non-UTI Mutual Funds at initial stages. S BI Mutual Fund in June 1987. C an Bank Mutual Fund in December 1987. L IC Mutual Fund in June 1989. P unjab National Bank Mutual Fund in August 1989. 11
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I ndian Bank Mutual Fund in November 1989.
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1
2
B ank of India Mutual Fund in June 1990. G IC Mutual Fund in December 1990. B ank of Baroda Mutual Fund in October 1992.
At the end of 1993, the entire Mutual Fund Industry had Assets under Management of Rs.47, 004/- Crores. 3. Third phase (1993-2003) 1
E ntry of Private Sector Funds - a wide choice to Indian Mutual Fund
2 3
investors. I n 1993, the first Mutual Fund Regulations came into existence, under which
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all mutual funds except UTI were to be registered and governed. T he Erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
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the first private sector Mutual Fund Registered in July 1993. I n 1996, the 1993 Securities Exchange Board of India (SEBI) Mutual Funds
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Regulations were substituted by a more comprehensive and revised Mutual
9
Fund Regulations.
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T he number of Mutual Fund houses went on increasing, with many foreign
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mutual funds setting up funds in India. I n this time, the Mutual Fund industry has witnessed several Mergers
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&Acquisitions. T he UTI with Rs.44, 541/- Crores. Of Assets Under management was way
ahead of all other Mutual Funds.
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The following was the status at end of February 2003: Number of schemes Amount (in Crores) Open-ended schemes 32 82,693 1 Close-ended schemes 51 TOTAL 37
4497 87,190
2 (Source – AMFI website)
The diagram below shows the three segments and some players in each segment: 4. Fourth phase (since 2003 February) 1
F ollowing the repeal of the UTI Act in February 2003, it was (UTI)
2 3
bifurcated into 2 separate entities. O ne is the specified undertaking of the UTI with asset under management of
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Rs.29, 835/- Crores as at the end of January 2003. T he second is the UTI Mutual Funds Limited, sponsored by State Bank of
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India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation
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of India.
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U TI is functioning under an Administrator and
under the Rules framed by 9
the Government of India and does not come under the purview of the
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Mutual Fund Regulations. T he UTI Mutual Funds Limited is registered with
SEBI and functions under 12 13
the Mutual Funds Regulations. W ith the bifurcation of the Erstwhile UTI, with the
setting up of a UTI 14
Mutual Fund, confirming to the SEBI Mutual Fund Regulations and with
15
recent mergers taking
16 place among different private sector funds, the Mutual Fund Industry has entered its current phases of consolidation and growth. 1
A t the end of September 2004, there were 29 funds,
which manage assets of 2
Rs.1, 53,108/- Crores under 421 different schemes.
3
A t the end of March 2006, the status of Mutual
fund Industry was:
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No. of schemes
Amount (in crores)
Open-ended schemes 41
1,85,999
4 Close-ended schemes 46
71,500
TOTAL
2,57,499
46 0
(Source – AMFI website)
ADVANTAGES OF MUTUAL FUND Table:1.1 S. No.
Advanta ge
Particulars
1.
Portfolio Diversifi cation
Mutual Funds invest in a well-diversified portfolio of securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).
2.
Professio nal Manage ment
Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own.
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3.
Less Risk
Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.
4.
Low Transact ion Costs
Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors.
5.
Liquidit y
An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid.
Choice of Schemes
Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options
Transpa rency
Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.
Flexibilit y
Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.
Safety
Mutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.
6.
7.
8.
9.
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DISADVANTAGE OF INVESTING THROUGH MUTUAL FUNDS Table:1.2 S. No.
Disadv antage
Particulars
1.
Costs Control Not in the Hands of an Investo r
Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund.
2.
No Custom ized Portfoli os
The portfolio of securities in which a fund invests is a decision taken by the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives.
3.
Difficul ty in Selectin g a Suitabl e Fund Scheme
Many investors find it difficult to select one option from the plethora of funds/schemes/plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.
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SCHEMES OF MUTUAL FUND
BASED ON THEIR STURCTURE
OPEN ENDED FUNDS
CLOSE-ENDED FUNDS
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2. BASED ON INVESTMENT
EQUITY FUNDS
BALANCE D FUNDS
DEBT FUNDS
LEQUID INDEX FUNDS
DEBT
DEVIDEND
EQUITY
GUILT FUNDS INCOME
EQUITY
FMPS FUNDS
THEMANTIC
FLOATING
SECTOR FUND
ARBITAGE
ELSS
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Mutual funds can be classified as follow: Based on their structure:
Open-ended Funds:
An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
Closed-ended Funds:
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for
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subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some closeended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
Based on their investment objective:
Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as:
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1. Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their
portfolio mirrors the
benchmark index in terms of both composition and individual stock weightages. 2. Equity diversified funds- 100% of the capital is invested in equities spreading across different sectors and stocks. 3. Dividend yield funds- it is similar to the equity-diversified funds except that they invest in companies offering high dividend yields. 4. Thematic funds- Invest 100% of the assets in sectors which
are
related
through
some
theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc. 5. Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. 6. ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund : Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes:
1
Debt-oriented funds -Investment below 65% in equities. 22
2
Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund : They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs.
1.
Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market.
2. Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills. 3.
Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments, which have variable coupon rate.
4.
Arbitrage fund- They generate income through arbitrage opportunities due to miss-pricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. 23
Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. 5. Gilt funds LT- They invest 100% of their portfolio in long-term government securities. 6.
Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term debt papers.
7.
MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.
8.
FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.
How are funds different in terms of their risk profile: Table:1.3 Equity Funds High level of return, but has a high level of risk too Debt funds Returns comparatively less risky than equity funds Liquid and Money Provide stable but low level of return Market funds
INVESTMENT STRATEGIES 1. Systematic Investment Plan: Under this, a fixed sum is invested each month on a fixed date of a month. Payment is
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made through post-dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: Under this, an investor invest in debt-oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.
1.6. ORGANISATION OF MUTUAL FUND:
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Figure:1.4
THE STRUCTURE CONSISTS OF: SPONSOR Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Fund) Regulations, 1996. The sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. 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.
TRUSTEE Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the
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Trustee is to safeguard the interest of the unit holders and ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. ASSET MANAGEMENT COMPANY (AMC) The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 cores at all times. REGISTRAR AND TRANSFER AGENT The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records.
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ASSET UNDER MANAGEMENT:
Table1.4 ASSET UNDER MANAGEMENT OF TOP AMC,S as on Jun 30, 2009
Mutual Fund Name
No. of Corpus (Rs.Crores)
Reliance Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund Birla Sun Life Mutual Fund SBI Mutual Fund LIC Mutual Fund Kotak Mahindra Mutual Fund Franklin Templeton Mutual Fund IDFC Mutual Fund Tata Mutual Fund
schemes 263 202 325 207 283 130 70 124 191 164 175
108,332.36 78,197.90 70,169.46 67,978.19 56,282.87 34,061.04 32,414.92 30,833.02 25,472.85 21,676.29 21,222.81
The graph indicates the growth of assets over the years.
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Figure:1.5
DISTRIBUTION CHANNELS:
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Mutual funds posses a very strong distribution channel so that the ultimate customers doesn’t face any difficulty in the final procurement. The various parties involved in distribution of mutual funds are: 1. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. The investors can approach to the AMCs for the forms. some of the top AMCs of India are; Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: Standard Chartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc. 2. Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can enjoy the advantage of large network of these brokers and sub brokers. 3. Individual agents, Banks, NBFC: investors can procure the funds through individual agents, independent brokers, banks and several non- banking financial corporations too, whichever he finds convenient for him.
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INTRODUCTION The stocks have risk, which comprises of either unique risk also called as diversifiable risk or unsystematic risk and market risk also called as non-diversifiable risk Or systematic. There are few problems, which reveal the necessity to analyze the risk and return of the MF’s. we can neither predict the risk involved nor the future performance of the stock. Many MF’s schemes have not performed well due to which investor have incurred losses. The movement of BSE-100 index depends on the performance of the company’s stock. If a particular industry is not in a booming 31
stage, then the stock of companies related to that industry would be affected. Given the background of risk and uncertainty about investment in mutual fund, present study tries to find out risk return on Reliance mutual fund in comparison with BSE-100 index has been under taken. There are a lot of investment avenues available today in the financial market for an investor with an invest able surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return. He may invest in Stock of companies where the risk is high and the returns are also proportionately high. The recent trends in the Stock Market have shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds. Like most developed and developing countries the mutual fund cult has been catching on in India. The reasons for this interesting occurrence are: 1.
Mutual funds make it easy and less costly for investors
to satisfy their need for capital growth, income and/or income preservation.
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2.
Mutual fund brings the benefits of diversification and
money management to the individual investor, providing a opportunity for financial success that was once available only to a select few.
HISTORY
Unit Trust of India is the first Mutual Fund set up under a
separate act, UTI Act in 1963, and started its operations in 1964 with the issue of units under the scheme US-641. In 1978 UTI was delinked from the RBI and Industrial Development Bank of India (IDBI) took over the Regulatory and administrative control in place of RBI.
In the year 1987 Public Sector banks like State Bank of
India, Punjab National Bank, Indian Bank, Bank of India, and Bank of Baroda have set up mutual funds.
Apart from these above mentioned banks Life Insurance
Corporation [LIC] and General Insurance Corporation [GIC] too have set up mutual fund. LIC established its mutual fund in June 1989.while GIC had set up its mutual fund in December 1990.The mutual fund industry had assest under management of Rs. 47,004 crores.
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With the entry of Private Sector Funds a new era has
started in Mutual Fund Industry [e.g:- Principal Mutual Fund.]
Mutual Fund Regulations
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund
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industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
Types of Mutual Funds Scheme in India
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Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry. •
•
•
By Structure o
Open - Ended Schemes
o
Close - Ended Schemes
o
Interval Schemes
By Investment Objective o
Growth Schemes
o
Income Schemes
o
Balanced Schemes
o
Money Market Schemes
Other Schemes o
Tax Saving Schemes
o
Special Schemes
Index Schemes
Sector Specfic
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Features related mutual funds
•
Reliance was the first fund house to launch sector funds with flexibility to invest in a range of 0% to 100% in either equity or debt instruments.
•
Mutual fund investments linked to an ATM/debit card
a Reliance innovation India’s first long-
short fund comes from Reliance Mutual Fund .
•
As at 31st May 2008, more than 6.6 million people had invested in Reliance Mutual Fund;the investments comprised 16% of the country’s entire mutual fund.
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Mutual Fund Companies in India The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market. The new entries of mutual fund companies in India were SBI Mutual Fund, Canra bank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund. The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first
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Mutual Fund Regulations came into existence with reregistering all mutual funds except UTI. The regulations were further given a revised shape in 1996.
COMPITITORS OF RELIANCE MUTUAL FUND ABN AMRO Mutual Fund
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ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. As the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund. Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores. Bank of Baroda Mutual Fund (BOB Mutual Fund) Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian. HDFC Mutual Fund
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HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers
namely
Housing
Development
Finance
Corporation Limited and Standard Life Investments Limited. HSBC Mutual Fund HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund. ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. Was incorporated on April 6, 1998. Prudential ICICI Mutual Fund The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October,1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset
41
Management Company Limited Incorporated on 22nd of June, 1993.
Sahara Mutual Fund Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. As the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.
State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.
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Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM. Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1, 99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities. Unit Trust of India Mutual Fund UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund
43
with the support of UTI Trustee Company Private Limited. UTI Asset Management.
Standard Chartered Mutual Fund Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999. Franklin Templeton India Mutual Fund The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer. Morgan Stanley Mutual Fund India
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Morgan Stanley is a worldwide financial services company and it’s leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organizations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focusing on a long-term capital appreciation. Escorts Mutual Fund Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. It’s AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited. Alliance Capital Mutual Fund
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Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsored. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai. Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsored and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated
on October
16, 2000 and
headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC. Canbank Mutual Fund Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.
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LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund. GIC Mutual Fund GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies , viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882. Future of Mutual Funds in India By December 2004, Indian mutual fund industry reached Rs 1, 50,537 crore. It is estimated that
47
by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40, 90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double.
COMPANY PROFILE OF RELIANCE 48
About Reliance Capital Asset Management Ltd. Reliance Capital Asset Management Limited ( RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual fund. . Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 49
dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on September 30, 2007 is Rs.152.02 crores. Reliance Mutual Fund has launched thirty-five Schemes till date, namely: "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 Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The networth of the Asset Management Company as on March 31, 2008 is Rs 709.39
50
crores. Reliance Mutual Fund has launched Forty Three Schemes till date, namely:
This group dominates this key area in the financial sector. This mega business houses show that it has assets under management of Rs. 90,938 crore(US$ 22.73 billion) and an investor
base
of
over6.6
(Source:www.amfiindia.com).Reliance’s
mutual
million fund
schemes are managed by Reliance Capital Asset Management Limited(RCAM), a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM. The company notched up a healthy growth of Rs. 16,354 crore(US$ 4.09 billion)in assets under management in February2008 and helped propel the total industry-wide AUM to Rs. 565,459 crore (US$ 141.36 billion)(Source: indiainvestments.com). A sharp rise infixed maturity plans (FMPs) and collection ofRs. 7000 crore (US$ 1.75 billion) through newfound offers (NFOs) created this surge. In AU rankings, Reliance continues to be in the number one spot.
RELIANCE MUTUAL FUND
51
Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of the fastest growing mutual funds in India having doubled its assets over the last one year. In March, 2006, the Reliance mutual fund emerged as the largest private sector fund house in the country, overtaking Prudential ICICI which has been holding that position for many years. The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG. Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance Capital Limited, acts as the AMC to the fund. Directors of the company include Amitabh Jhunjhunwala, a senior executive of ADAG. Amitabh Chaturvedi is the managing director of the AMC. As of end August 2006, Reliance mutual fund has Rs 28,753 crore of assets under management. Reliance Equity Fund, launched by Reliance MF in early 2006, is the largest mutual find scheme in the country with a fund size of over Rs 5,500 crore. Here is a list of mutual funds of Reliance which includes Debt/Income Funds , Equity Funds and Sector Specific Funds.
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India's Best Offering: Reliance Mutual Fund Investing has become global. Today, a lot of countries are waking up to the reality that in order to gain financial growth, they must encourage their citizens to not only save but also invest. Mutual funds are fast becoming the mode of investment in the world. In India, a mutual fund company called the Reliance Mutual Fund is making waves. Reliance is considered India's best when it comes to mutual funds. Its investors number to 4.6 billion people. Reliance Capital Asset Management Limited ranks in the top 3 of India's banking companies and financial sector in terms of net value. The Anil Dhirubhai Ambani Group owns Reliance; they are the fastest growing investment company in India so far. To meet the erratic demand of the financial market, Reliance 53
Mutual Fund designed a distinct portfolio that is sure to please potential investors. Reliance Capital Asset Management Limited manages RMF. Vision
And
Mission
Reliance Mutual Fund is so popular because it is investor focused. They show their dedication by continually dishing out innovative offerings and unparalleled service initiatives. It is their goal to become respected globally for helping people achieve their financial dreams through excellent organization governance and customer care. Reliance Mutual fund wants a high performance environment that is geared at making investors happy. RMF aims to do business lawfully and without stepping on other people. They want to be able to create portfolios that will ensure the liquidity of the investment of people in India as well as abroad. Reliance Mutual Fund also wants to make sure that their shareholders realize reasonable profit, by deploying funds wisely. Taking appropriate risks to reach the company's potential is also one of Reliance Mutual Fund's objectives.
54
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.
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Types of Reliance Mutual Funds
1. Reliance Growth Fund 2. Reliance Vision Fund 3. Reliance Banking Fund 4. Reliance Di versified Power Sector Fund 5. Reliance Pharma Fund 6. Reliance Media & Entertainment Fund 7. Reliance NRI Equity Fund 8. Reliance Equity opportunities Fund 9. Reliance Index Fund 10.Reliance Tax Saver (ELSS) Fund 11.Reliance Equity Fund 12.Reliance Long Term Equity Fund 13.Reliance Regular Saving Fund There are two types of investment in Mutual Funds. 1) Lump Sum 2) Systematic Investment Plan(SIP)
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Lump Sum : In Lump sum the investment is only one times that is of Rs. 5,000. and if the investment is monthly then the investment will be 6,000/-. Systematic Investment Plan(SIP): We have already mentioned about SIPs in brief in the previous pages but now going into details, we will see how the power of compounding could benefit us. In such case, every small amountsinvested regularly can grow substantially. SIP gives a clear picture of how an early and regular investment can help the investor in wealth creation. Due to its unlimited advantages SIP could be Redefined as “a methodology of fund investing regularly to benefit regularly from the stock market volatility. In the later sections we will see how returns generated from some of the SIPs have outperformed their benchmark. But before moving on to that lets have a look at some of the top performing SIPs and their return for 1 year: Scheme Amount NAV NAV Date Total Amount Reliance
diversified
power sector retail 1000
62.74
30/5/2008 14524.07 Reliance regular savings equity 1000 22.208 30/5/2008 13584.944
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principal global opportunities fund 1000 18.86 30/5/2008 14247.728 DWS investment opportunities fund 1000 35.31 30/5/2008 13791.157 BOB growth fund 1000 42.14 30/5/2008 13769.152 In the above chart we can see how if we start investing Rs 1000 per month then what return we’ll get for the total investment of Rs. 12000. There is reliance diversified power sector retail giving the maximum returns of Rs. 2524.07 per year which comes to 21% roughly. Next we can see if anybody would have undertaken the SIP in Principal would have got returns of app. 18%. We can see reliance
regular
savings
equity,
DWS
investment
opportunities and BOB growth fund giving returns of 13.20%, 14.92%, and 14.74% respectively which is greater than any other monthly investment options. Thus we can easily make out how SIP is beneficial for us. Its hassle free, it forces the investors to save and get them into the habit of saving. Also paying a small amount of Rs. 1000 is easy and convenient for them, thus putting no pressure on their pockets. Now we will analyze some of the equity fund SIP s of Birla Sunlife with BSE 200 and bank fixed deposits In a tabular format as well as graphical.
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RELIANCE MUTUAL FUND SCHEMES Equity/Growth Schemes The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Debt/IncomeSchemes 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
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equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. Sector Specific Schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.
EQUITY/GROWTH SCHEMES Reliance Natural Resources Fund : (An Open Ended Equity Scheme) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth
60
opportunities by investing in companies principally engaged in the discovery, development, production, or distribution of natural resources and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Equity Fund : (An open-ended diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & of companies which are available in the derivatives segment from time to time and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Tax Saver (ELSS) Fund : (An Open-ended Equity Linked Savings Scheme.) The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Reliance Equity Opportunities Fund : (An Open-Ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth 61
opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Vision Fund : (An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach. Reliance Growth Fund : (An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach. Reliance Quant Plus Fund (Formerly known as Reliance Index Fund) : (An Open Ended Equity Scheme.) The investment objective of the Scheme is to generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation by investing in an active portfolio of stocks selected from S & P CNX Nifty on the basis of a mathematical model. model. Reliance NRI Equity Fund : 62
(An open-ended Diversified Equity Scheme.) The Primary investment objective of the scheme is to generate optimal returns by investing in equity or equity related instruments primarily drawn from the Companies in the BSE 200 Index. Reliance Regular Savings Fund (An Open-ended Scheme.) Equity Option: The primary investment objective of this option is to seek capital appreciation and/or to generate consistent returns by actively investing in Equity &Equity-related Securities.
Balanced Option: The primary investment objective of this option is to generate consistent returns and appreciation of capital by investing in mix of securities comprising of equity, equity related instruments & fixed income instruments. Reliance Long Term Equity Fund: (An close-ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the
63
secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Equity Advantage Fund: (An open-ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio predominantly of equity & equity related instruments with investments generally in S & P CNX Nifty stocks and the secondary objective is to generate consistent returns by investing in debt and money market securities.
DEBT/LIQUID SCHEMES Reliance Monthly Income Plan : (An Open Ended Fund. Monthly Income is not assured & is subject to the availability of distributable surplus ) The Primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unitholders and the secondary objective is growth of capital. Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt Plan : Open-ended Government Securities Scheme) The primary objective of the Scheme is to generate Optimal credit risk-free returns by investing in a portfolio of securities 64
issued and guaranteed by the central Government and State Government
Reliance Income Fund : (An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal returns consistent with moderate levels of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money market Instruments. Reliance Medium Term Fund : (An Open End Income Scheme with no assured returns.) The primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unitholders and the secondary objective is growth of capital Reliance Short Term Fund : (An Open End Income Scheme) The primary investment objective of the scheme is to generate stable returns for investors with a short investment horizon by investing in Fixed Income Securities of short term maturity.
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Reliance Liquid Fund : (Open-ended Liquid Scheme). The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Reliance Floating Rate Fund : (An Open End Liquid Scheme) The primary objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitised debt and Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed rate debt Securities (including fixed rate securitised debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns Reliance NRI Income Fund : (An Open-ended Income scheme) The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risks. This income may be complimented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in debt Instruments.
66
Reliance Liquidity Fund : (An Open - ended Liquid Scheme) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Reliance Interval Fund: (A Debt Oriented Interval Scheme) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio Reliance Liquid Plus Fund (An Open-ended Income Scheme.) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities. Reliance Fixed Horizon Fund –I (A closed ended Scheme) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio. Reliance Fixed Horizon Fund -II (An closed ended Scheme.) The primary investment
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objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio. Reliance Fixed Horizon Fund -III (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio Reliance Fixed Tenor Fund (An Close-ended Scheme.) The primary investment objective of the Plan is to seek to generate regular returns and growth of capital by investing in a diversified portfolio. Reliance Fixed Horizon Fund -Plan C (An closed ended Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio. Reliance Fixed Horizon Fund - IV: (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio Reliance Fixed Horizon Fund - V: (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate 68
regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and Other fixed income/ debt securities normally maturing in line with the time profile of the scheme with the objective of limiting interest rate volatility Reliance Fixed Horizon Fund - VI: (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and Other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility Reliance Fixed Horizon Fund - VII: (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and Other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility.
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SECTOR SPECIFIC SCHEMES Sector Funds are specialty funds that invest in stocks falling into a certain sector of the economy. Here the portfolio is dispersed or spread across the stocks in that particular sector. This type of scheme is ideal for investors who have already made up their mind to confine risk and return to a particular sector. Reliance Banking Fund Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the primary investment objective to generate continuous returns by actively investing in equity / equity related or fixed income securities of banks. Reliance Diversified Power Sector Fund Reliance Diversified Power Sector Scheme is an Openended Power Sector Scheme. The primary investment objective of the Scheme is to seek to generate consistent returns by actively investing in equity / equity related or fixed income securities of Power and other associated companies.
Reliance Pharma Fund Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. 70
The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of Pharma and other associated companies. Reliance Media & Entertainment Fund Reliance Media & Entertainment Fund is an Openended Media & Entertainment sector scheme.The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies EXCHANGE TRADED FUND Reliance Gold Exchange Traded Fund: (An open-ended Gold Exchange Traded Fund) the investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold (and Gold related securities as permitted by Regulators from time to time). However, the performance of the scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors.
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GROWTH OF RELIANCE MUTUAL FUND THROUGH RECOGNITION
Growth through Recognition 72
Reliance has merited a series of awards and recognitions for excellence for businesses and operations. Corporate Ranking and Ratings:
Reliance featured in the Fortune Global 500 list of ‘World’s Largest Corporations’ for the fourth consecutive year. •
Ranked 269th in 2007 having moved up 73 places from the previous year.
•
Featured as one of the world’s Top 200 companies in terms of Profits.
•
Among the top 25 climbers for two years in a row.
•
Featured among top 50 companies with the biggest increase in Revenues.
•
Ranked 26th within the refining industry.
Reliance is ranked 182nd in the FT Global 500 (up from previous year’s 284th rank). •
PetroFed, an apex hydrocarbon industry association, conferred the PetroFed 2007 awards in the categories of “Refinery of the Year” and “Exploration & Production - Company of the Year”.
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•
Brand Reliance was conferred the “Bronze Award” at The Buzziest Brands Awards 2008, organized by agencyfaqs!
•
Institute of Economic Studies conferred the “Udyog Ratna” award in October 2007 for contributions to the industry.
•
Chemtech Foundation conferred the “Hall of Fame” in February 2008 for sterling contributions to the industry.
•
Chemtech Foundation conferred the “Outstanding Achievement - Oil Refining” for work at the Jamnagar Manufacturing Division.
Petroleum Federation of India conferred the “Refinery of the Year Award - 2007” to Jamnagar Manufacturing Division •
“The Plastics Export Promotion Council PLEXCOUNCIL Export Award” in the category of Plastic Polymers for the year 2006-2007 was awarded to Reliance being the largest exporter in this category.
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AWARDS OF THE COMPANY-
1. Reliance Capital Asset Management Ltd. won the Asia Asset Management Award 2007 2. Reliance Capital Asset Management Ltd. won the Social & Corporate Governance Award 2007 3. Reliance Mutual Fund has been awarded the "NDTV Business Leadership Award 2007" in the Mutual Fund category. 4. CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007
Achievements
75
In two successive joint surveys by The Economic Times’ Brand Equity and AC Nielsen, Reliance was recognized as India’s Most Trusted Mutual Fund. The company also walked away with seven other scheme prizes – five of them being outright winners – in the Gulf 2007 Lipper Awards. These included the Fund House of the Year by Lipper GCC as well as ICRA Online and the Most Improved Fund House by Asia Asset Management. It also received the NDTV Business Leadership Award 2007 in the mutual fund category and runners’ up recognition as the Best Fund House in the Outlook Money-NDTV Profit Awards. In addition, the company received the coveted CNBC Web18 Genius of the Web distinction for the Best Mutual Fund Website in the country. RCAM was awarded the India Onshore Fund House 2008 instituted by the Asian Investor magazine. The company also won the India Equities award in the 5yearPerformance category.
OBJECTIVES OF THE STUDY •
To create the awareness of Mutual Fund among people and getting the opinion of people regarding Mutual Funds.
•
To study Mutual Fund Industry in India.
•
To give an idea about the regulations of mutual funds.
76
•
To give a brief idea about the benefits available from mutual Fund investment.
•
To give an idea of different Schemes provided by Reliance Mutual Fund.
•
To study the performance of different schemes of the Company.
•
To study the Monthly Returns with respect to their Benchmark.
•
To analyze reliance mutual fund strategy against its competitor.
SCOPE OF THE STUDY : •
The study was limited to just finding the risk
and returns associated with the schemes. •
The study covers the six different schemes
provided by Reliance Mutual Fund. Are as : 1) Reliance Growth Fund-BSE100 2)Reliance Equity Fund-S&P CNX NIFTY 3)Reliance Liquid Fund-Crisil Liquid Fund Index •
The study covers the period of past two month
from June to July. •
The study covers only the open-ended funds. 77
RESEARCH METHODOLOGY Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. METHOD OF RESEARCH DESIGN TO BE USED UNDER STUDY IS:
DESCRIPTIVE RESEARCH: In this research an attempt has been made to analyze
the past performance of the Reliance Mutual schemes and to know the benefits to the investors. The study is to be done on different schemes provided by the company to know the company’s performance for the past few months and to know the risk and returns of the funds. METHODOLOGY OF DATA COLLECTION: 78
In this project work primary and secondary data has been used:Primary data - The primary data to be selected is based upon the response of the respondents to the questionnaire designed. Primary data collection helps in the specific purpose of addressing the problem at hand. The primary data is collected in 2 ways: Questionnaire: Structured Questionnaire has been filled by the respondents to analyze its effectiveness. Personal Interviews: Data has been collected from the personal interviews of the corporate.
Secondary data - Secondary data are collected from the following methods:1) Journals 2) Books 3) Magazines 4) News paper 5) Websites 6) Fact sheets of various mutual funds TOOLS & TECHNIQUES USED FOR THE STUDY
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• • • • • • •
Beta: Standard deviation Alpha Sharpe Ratio Treynor Ratio Bar chart Average& Percentage method
CONCEPTUAL DESIGN: Sample unit: Schemes of Reliance Mutual Fund. Sample size: Five years monthly Navs & 50persons.
LIMITATIONS OF THE STUDY : 80
•
The study was limited only to Reliance Mutual
Fund schemes. Only six schemes have been taken for
•
analysis. •
The study was limited to the extent of just
finding the risks and returns of each schemes of the fund. •
The time constraint was one of the major
problems. •
The study is limited to the different schemes available under the mutual funds selected. • The study is limited to selected mutual fund schemes. • The lack of information sources for the analysis part.
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RISK RETURN ANALYSIS OF THE SCHEMES A rational investor before investing his/her money in stock analysis the risk associated with the particular stock. The actual returns he receives from the stock may vary from the expected one and thus an investor is always caution about the rate of risk associated with particular stock. hence it becomes very essential on the part of investors to know the risk as the hard earned money is being invested with the view to good return on investment. Risk mainly consists of two components. •
Systematic risk
•
unsystematic risk
Systematic risk The systematic risk affects the entire market. The economic conditional, political situation, sociological change affects the entire market in turn affecting the company and even the stock market. These situations are uncontrollable by corporate and investeors.
82
Unsystematic risk The Unsystematic risk is unique to industries. It differs from industries to industries. Unsystematic risk stems from managerial inefficiency, technological change in production process, availability of raw materials, change in the customer preference and labour problem. The nature and magnitude of above mentioned factors differ from industry to industry and company to company. In general view, the risk for any investor would be the probably loss from investing money in any mutual fund.but when look at the technical side of its, we cant just say these schemes/ fund carry risk without any proof. They are certain set formulas to say the percentage risk associated with it. There are certain tools or formulas used to calculate the risk associated with schemes. These tools helps us to understand the associated wit the schemes. These schemes are compared with the benchmark BSE 100 THE TOOLS USED FOR CALCULATION
Standard deviation
Beta
Alpha
Sharpe ratio
Treynor ratio
83
Arithmetic mean AM=Σy/N Where y= returns of NAV values N= number of observation Average returns that can be expected from investment. The Arithmetic returns is appropriate as a measure of a central tendency of a number of returns calculated from particular time i.e. for 5 years. RETURNS Investor wants to maximize expected retunes subject to their tolerance for risk. Returns are the motivating force and principal reward in investment process and it is the key method available to investors in comparing alternative the investments. Measuring the historical returns allows investor to access the how well the stocks have performed. Investor get returns either in form of interest, dividend or capital appreciation. There are two terms, realized term and expected return. Realized return earned in past. RETURN=( Closing price-opening price) /opening price*100
STANDARD DIVEATION
84
The Standard Standard deviation deviation is measure measure of the variables variables around its mean or it is square root of the sum of the squared root deviations from the mean divided the number of observation. S.D is used to measure the variability of return i.e the a measure of dispersion. S.D is calculated as the square root of variation. In finance investments volatility.S.D is also know as historical volatility and its used by investors as a gauge from the amounted of volatility. S.D=√(y-Y)² N Where y= return of portfolio Y=average return of portfolio N= number of months BETA: Beta describes the relationship between the securities return and the index 1
returns.
Beta = + 1.0
One percent change in market index returns causes exactly one percent change in the security return. It indicates that the security moves in tandem with the market.
1
Beta = + 0.5
One percent change in the market index return causes 0.5 percent change in the security return. The security is less 85
volatile compared to the market. 1
Beta = + 2.0
One percent change in the market index return causes 2 percent change in the security return. The security return is more volatile. When there is a decline of 10% in the market return, the security with beta of 2 would give a negative return of 20%. The security with more than 1 beta value is considered to be risky.
1
Negative Beta
Negative beta value indicates that the security return moves in the opposite direction to the market return. A security with a negative beta of -1 would provide a return of 10%, if the market return declines by 10% and vice-versa. Beta=
N*Σxy-(Σx)(Σy) N*Σ(x)²-(Σx)²
Where N=No of observation X=Total of market index value Y=Total of return to Nav
86
ALPHA: Alpha represent the forecast of residual return, which we cons consid ider er the the futu future re retu return rn of any any port portfo foli lio. o. Alph Alphaa measu measure ress the the unsys unsyste tema mati ticc risk risk of a port portfol folio io prope propert rtyy because the portfolio property also consists of both residual return and future expectation. It is important to remember that the risk-free portfolio will always show a zero residual return hence, any risk less security like cash will have always alpha equal to zero. ro. A pos positive alpha pha of 1.0 1.0 means
the fund has has
outperformed outperformed its benchmark benchmark index by 1% correspondingl correspondingly, y, a similar negative alpha would indicate an underperformance of 1%. Alpha indicates that the stock return is independent of the market return .A positive positive value of alpha is a healthy sign. Positive alpha values would yield profitable return. The Formula is used to calculate:Alpha=Y-beta(x) Where Y-average Y-average return to nav return
X-average X-average return to
market index
SHARPE RATIO 87
The performance measure developed by William sharpe is referred to as the sharpe ratio or the reward to variability ration. It is the ratio of the reward or risk to the variability of return or risk measured by the standard deviation of return the formula for calculating sharpe ratio may be stated as: Sharpe ratio= Rp-Rf S.D Where, Rp=Realised return on the portfolio. Rf=Risk free rate of return. S.D=standard deviation of portfolio return Sharpe performance index gives a single value to be used for the performance ranking of various fund or portfolio. sharpe index measures the risk premium of the portfolio relative to the total amount of risk in the portfolio. The risk premium is the difference between the portfolio’s average rate of return and the risk less rate of return. The standard Deviation of the portfolio indicates the risk. Higher the value of sharpe ratio better the fund has performed. Sharpe ratio can be used to rank the desirability of fund or portfolio. The fund that has performed well compared to other will be rank first than others.
Treynor ratio The performance measure by jack. Treynor is referred to as Treynor ratio or reward to volatility ratio. It is the ratio of the reward or risk premium to the volatility of 88
return as measuring by the portfolio beta. The formula for calculating Treynor ratio may be stated as: Treynor ratio= Rp-Rf Beta Where: Rp= realized return on the portfolio Rf= risk free rate of return Beta=portfolio beta.
ANALYSIS AND INTERPRETATION 1) RELIANCE GROWTH FUND: Benchmark -100 RETURN DATE Jan 05 Feb 05 Mar 05 Apr 05 May 05 Jun 05 Jul 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05 TOTAL Y=Σy/12
0F PORTFOLIO NAV Rp(y) 34.95 35.5 1.5737 27.99 -21.155 29.83 25.59 25.88 28.31 31.23 32.93 30.48 33.52 35.41
6.5738 -14.214 1.1333 9.3895 10.314 5.4435 -7.44 9.9738 5.6384 7.2314 1.2052
(y-Y) 0.36844 -22.36 5.36854 -15.419 -0.072 8.18426 9.10914 4.23825 -8.6453 8.76852 4.43319
MARKET RETURN (y-Y)² INDEX Rm(x) (x*X) x*y 2946.14 0.136 2923.99 -0.7518 0.5653 -1.1831 500 2966.31 1.44734 2.0948 -30.618 28.82 237.7 0.005 66.98 82.98 17.96 74.74 76.89 19.65 1106
3025.14 2658.23 2561.16 2755.22 2789.07 2997.07 3027.96 3339.75 3580.34
1.98327 -12.129 -3.6517 7.57704 1.22858 7.45768 1.03067 10.297 7.20383 TOTAL X=Σx/12
89
3.9334 147.11 13.335 57.411 1.5094 55.617 1.0623 106.03 51.895 21.693 1.9721
13.038 172.4 -4.1383 71.144 12.672 40.596 -7.6682 102.7 40.618 440.56
4000
40
3500
35
3000
30
2500
25
2000
20
in N
1500
15
1000
10
500
5
0
0 1
Analysis:
2
3
4
5
6
7
8
9
10
11
12
The above graph shows the movement of NAV of
reliance growth fund and Benchmark index for the period from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both
Dec 05 Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 Jul 06 Aug 06 Sep 06
35.41 35.35 37.91 32.61 33.66 36.16 36.75 41.13 45.72 47.57
-0.1694 7.2419 -13.98 3.2199 7.4272 1.6316 11.918 11.16 4.0464
-3.1427 4.26861 -16.954 0.24661 4.45396 -1.3416 8.94511 8 .18648 1.07311
9.877 18.22 287.4 0.061 19.84 1.8 80.01 6 7.02 1.152
3580.34 3521.71 3611.9 3481.86 3313.45 3601.73 3800.24 4072.15 4184.83 4566.63
-1.6376 2.56097 -3.6003 -4.8368 8.7003 5.51152 7.15507 2 .76709 9.12343
90
2.6816 6.5586 12.962 23.394 75.695 3 0.377 51.195 7.6568 83.237
0.2775 18.546 50.334 -15.574 64.619 8.9928 85.277 30.88 36.917
Oct 06 Nov 06 Dec 06 TOTAL Y=Σy/12
42.94 47.74 48.57
-9.733 11.178 1.7386 35.679 2.9733
-12.706 8.20513 -1.2347
161.4 67.32 1.524 715.7
4159.59 -8.9134 79.448 4649.87 11.7867 138.93 4953.28 6.52513 42.577 TOTAL 35.1422 554.71 X=Σx/12 2.92852
6000
60
5000
50
4000
40
3000
30
86.754 131.76 11.344 509.85
in Na 2000
20
1000
10
0
0 1
Analysis:
2
3
4
5
6
7
8
9
10
11
12
The above graph shows the movement of NAV of
reliance growth fund and Benchmark index for the period from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both
91
Dec 06 48.57 Jan 07 52.1 Feb 07 52.82 Mar 07 51.42 Apr 07 55.34 May 07 49.36 Jun 07 44.66 Jul 07 43.34 Aug 07 48.34 Sep 07 52.55 Oct 07 53.08 Nov 07 55.1 Dec 07 57.01 TOTAL Y=Σy/12
7.2679 1.382 -2.6505 7.6235 -10.806 -9.5219 -2.9557 11.537 8.7091 1.0086 3.8056 3.4664 18.866
5.69572 -0.1902 -4.2227 6.05135 -12.378 -11.094 -4.5278 9 .96454 7.137 -0.5636 2.23343 1.89428
32.44 0 .036 17.83 36.62 153.2 123.1 20.5 9 9.29 5 0.94 0 .318 4.988 3.588 542.8
1.5721
4953.28 5224.97 5.48505 5422.67 3.78375 5904.17 8.87939 6251.39 5.88093 5385.21 -13.856 5382.11 -0.0576 5422.39 0.74841 5933.77 9.4309 6328.33 6.6494 6603.6 4.3498 6931.05 4.95866 6982.58 0.74347 TOTAL 36.9964 X=Σx/12 3.08303
30.086 1 4.317 78.844 34.585 191.98 0.0033 0.5601 88.942 4 4.214 1 8.921 24.588 0.5527 527.6
6000
60
5000
50
4000
40
39.865 5.229 -23.535 44.833 149.72 0.5481 -2.212 108.8 57.911 4.3871 18.871 2.5772 407
ind 3000
30
2000
20
1000
10
0
0 1
Analysis:
2
3
4
5
6
7
8
9
10
11
The above graph shows the movement of NAV of
reliance growth fund and Benchmark index for the period 92
12
Na
from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both
Dec 07 57.01 Jan 08 59.12 Feb 08 55.73 Mar 08 47.86 Apr 08 50.8 May 08 54.29 Jun 08 56.7 Jul 08 59.77 Aug 08 53.86 Sep 08 60.06 Oct 08 69.89 Nov 08 72.38 Dec 08 81.43 TOTAL Y=Σy/12
3.7011 0.30373 0.092 -5.7341 -9.1315 83.38 -14.122 -17.519 306.9 6.1429 2.74554 7.538 6.8701 3.4727 12.06 4.4391 1.04175 1.085 5.4145 2.01709 4.069 -9.8879 -13.285 176.5 11.511 8.11395 65.84 16.367 12.9696 168.2 3.5627 0.16537 0.027 12.503 9.10608 82.92 40.769 908.6 3.3974
6982.58 7145.91 2.33911 5.4714 6527.12 -8.6594 74.984 6587.21 0.92062 0.8475 7032.93 6.76645 45.785 7468.7 6.19614 38.392 7605.37 1.8299 3.3485 8004.05 5.24209 27.479 7857.61 -1.8296 3.3473 8967.41 14.1239 199.48 10391.19 15.8773 252.09 10384.4 -0.0653 0.0043 11154.28 7.41381 54.965 TOTAL 50.155 706.2 X=Σx/12 4.17958
12000
8.6573 49.654 -13.001 41.566 42.568 8.1232 28.383 18.091 162.58 259.86 -0.2328 92.698 698.95
90 80
10000 70 8000
60 50
ind
6000 40 4000
30 20
2000 10 0
0 1
2
3
4
5
6
7
8
9
10
11
93
12
Na
Analysis:
The above graph shows the movement of NAV of
reliance growth fund and Benchmark index for the period from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both
Dec 08 81.43 Jan 09 67.48 Feb 09 65.61 Mar 09 65.61 Apr 09 56.16 May 09 53.7 Jun 09 45.81 Jul 09 48.2036 Aug 09 48.4178 Sep 09 42.6755 Oct 09 33.1429 Nov 09 30.471 Dec 09 32.8738 TOTAL Y=Σy/12
-17.1313 -10.291 105.9 -2.77119 4.06905 16.56 0 6.84025 46.79 -14.4033 -7.563 57.2 -4.38034 2.4599 6.051 -14.6927 -7.8525 61.66 5.22506 12.0653 145.6 0.44437 7.28461 53.07 -11.8599 -5.0196 25.2 -22.3374 -15.497 240.2 -8.06176 -1.2215 1.492 7.88553 14.7258 216.8 -82.0829 976.5 -6.84025
11154.28 9440.94 -15.36 235.94 9404.98 -0.3809 0.1451 8232.82 -12.463 155.33 9199.46 11.7413 137.86 8683.27 -5.6111 31.484 7029.27 -19.048 362.83 7488.48 6.53283 42.678 7621.4 1.77499 3.1506 6621.57 -13.119 172.1 4953.98 -25.184 634.24 4600.45 -7.1363 50.927 4988.04 8.42505 70.981 TOTAL -69.829 1897.7 X=Σx/12 10.5004
94
263.14 1.0555 0 -169.11 24.578 279.87 34.134 0.7887 155.59 562.55 57.531 66.436 1276.6
10000
80
9000
70
8000 60 7000 50
6000 5000
40
in N
4000
30
3000 20 2000 10
1000 0
0 1
Analysis:
2
3
4
5
6
7
8
9
10
11
12
The above graph shows the movement of NAV of
reliance growth fund and Benchmark index for the period from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both 1) STANDARD DEVIATION S.D= √ (y-Y) N STANDARD DEVIATION (y-Y)²
y-Y)²/N
2005
1102.589
91.88242
Square root (S.D) 9.5855
2006
715.7085
59.64238
7.7228
YEAR
95
2007
542.8451
45.23709
6.7258
2008
908.6373
75.71978
8.7017
2009
76.5005
81.37504
9.0208
2) BETA β = N *ΣXY-(ΣX)(ΣY) NΣX²-(ΣX)² YEAR 2005 2006
N* Σ XY 5286.72
BETA (ΣX) 21.69324
6118.165
35.14223
35.67909
6656.522
1234.977
β 0.9878 0.8972
2007
4883.992
36.99639
18.86572
6331.154
1368.733
0.8435
2008
8387.444
50.15499
40.76851
8474.359
2515.523
1.0644
2009
15318.71
-69.8287
-82.0829
22772.07
4876.05
0.5357
( ΣY) 7.231404
NΣx² 5286.692
(ΣX)² 470.5966
3) ALPHA α =Y-β(X)
YEAR 2005
1.205234
ALPHA β 0.9878
2006
2.973257
0.8972
2.928519
0.34579
2007
1.572144
0.8435
3.083033
-1.02839
Y
X 1.972113
α =Y-β(X) -0.742819
96
2008
3.397376
1.0644
4.179583
-`1.0513
2009
-6.84025
0.5357
-5.81906
-3.7229
4)SHARPE RATIO SR=Rp-Rf/SD Where; Rp= (Closing Nav/opening Nav-1)
YEAR 2005
SHARPE RATIO Rp 1.316166
Rf 5
SD 9.5855
SR -0.38431
2006
37.39745
5.1
7.7228
2007
9.424184
5.7
6.7258
2008
37.73681
7
8.7017
3.532276
2009
-51.2836
7.5
9.0208
-6.51645
5)TREYNOR RATIO TR=Rp-Rf/β 97
4.182091 0.553716
YEAR 2005
TREY NOR RATIO Rp Rf 1.316166
5
β 0.9878
TR -3.72933
2006
37.39745
5.1
0.8972
35.9905
2007
9.424184
5.7
0.8435
4.415156
2008
37.73681
7
1.0644
28.87712
2009
-51.2836
7.5
0.5357
-109.732
INTERPRETATION In the year 2005 standard deviation was high at the rate of 9.5855 and in the year 2007 standard deviation was low at the rate of 6.7258. in the year 2008 β is 1.0644 which is high risk because β greater than 1 in the year 2009 β value is 0.5357it is less risky because it is less than 1 . In the year 2006 sharpe index was higher at the rate of 4.182091 and in the year 2009 sharpe index was less at the rate of -6.51645. in the year 2006 treynor index was higher at the rate of 35.9905 and in the year 2009 treynor index was less at the rate of -109.732 .
98
2)RELIANCE EQUITY FUND: Benchmark- S&P CNX NIFTY RETURN OF PORTFOLIO DATE NAV Rp(y) (y-Y) (y-Y)2 Jan 08 11.77 Feb 08 10.94 -7.05183 -11.005 121.1029 Mar 08 11.04 0.91408 -3.0388 9.234154 Apr 08 11.67 5.70652 1.75367 3.075358 May 08 12.35 5.82691 1.87405 3.512081 Jun 08 12.75 3.23887 -0.714 0.509775 Jul 08 13.33 4.54902 0.59617 0.355416 Aug 08 13.12 -1.57539 -5.5282 30.5615 Sep 08 14.47 10.2896 6.33678 40.15481 Oct 08 16.35 12.9924 9.03955 81.7134 Nov 08 16.56 1.2844 -2.6684 7.120615 Dec 08 17.77 7.30676 3.35391 11.24872 TOTAL 43.4814 308.5888 Y=Σy/12 3.95285
MARKET RETURN INDEX Rm(x) (x*x) x*y 4899.39 4504.73 -8.0553 64.8877 56.8045 4605.89 2.24564 5.0429 2.05269 4934.46 7.13369 50.8896 40.7086 5185.95 5.09661 25.9754 29.6974 5223.82 0.73024 0.53325 2.36516 5483.25 4.96629 24.664 22.5917 5411.29 -1.3124 1.72229 2.06748 6094.11 12.6184 159.225 129.839 7163.3 17.5446 307.815 227.947 6997.6 -2.3132 5.3508 -2.97106 7461.48 6.62913 43.9454 48.4375 TOTAL 45.2838 690.051 559.54 X=Σx/12 4.11671
99
8000
20 18
7000
16 6000 14 5000
12 in
4000
10 N 8
3000
6 2000 4 1000
2
0
0 1
2
3
4
5
6
7
8
9
10
11
12
Analysis: The above graph shows the movement of NAV of reliance equity fund and Benchmark index for the period from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both
Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09
17.77 15.47 14.63 13.28 14.16 13.47 11.7 12.32 12.63 11.74 9.567
-12.9432 -5.42986 -9.22761 6.62651 -4.87288 -13.1403 5.33932 2.45118 -7.05167 -18.4852
-8.4373 -0.924 -4.7217 11.1324 -0.367 -8.6344 9.84519 6.95705 -2.5458 -13.979
71.1878 0.85376 22.2948 123.93 0.13469 74.5535 96.9278 48.4006 6.48106 195.422
7461.48 6245.45 6356.92 5762.88 6289.07 5937.81 4929.98 5297.47 5337.28 4807.2 3539.57
-16.297 1.78482 -9.3448 9.13068 -5.5852 -16.973 7.45419 0.75149 -9.9317 -26.369
100
265.606 3.18558 87.3249 83.3693 31.195 288.086 55.5649 0.56474 98.6377 695.345
210.94 -9.69133 86.23 60.5045 27.2162 223.032 39.8003 1.84204 70.0347 487.444
Nov 09 9.2 9.231 Dec 09 9.8 9.801 TOTAL Y=Σy/12
-3. -3.516 51629 6.17 6.1795 951 1 -54.0705 -4.50588
0.989 .98959 59 10.68 0.6854 54
0.97 0.9792 928 8 114. 114.17 178 8 755.343
3379 3379.5 .53 3 3635 3635.8 .87 7 TOTAL X=Σx/12
-4.5 -4.521 215 5 20. 20.4435 4435 7.58 7.5850 508 8 57. 57.5334 5334 -62. -62.31 317 7 1686 1686.8 .86 6 -5.193 -5.1931 1 140.57 140.571 1
7000
18 16
6000
14 5000 12 4000
10
index
3000
8
Navs
6 2000 4 1000
2
0
0 Jan Feb Mar Apr May Jun 09 09 09 09 09 09
Jul Aug Sep Oct Nov Dec 09 09 09 09 09 09
Analysis: Analysis: The above graph shows the movement of NAV of reliance equity fund and Benchmark index for the period from Jan 2005 to Dec 2005. From the above graph we can see there is some correlation between the movement of both
1)STANDARD DEVIATION: DEVIATION:
101
15.8 15.898 987 7 46.8 46.872 721 1 1260 1260.1 .12 2
S.D= √ (y-Y) N
YEAR
(y-Y)²
2008
308.5888
y-Y)²/N 2 5. 7 1 5 7
2009
755.3429
6 2. 9 4 4 5
Square root (S.D) 5.0710 7.93380
2)BETA β = N *ΣXY-(ΣX)(ΣY) NΣX²-(ΣX)²
YEAR 2008
N* Σ XY 6714.48
2009
15121.48
BETA (ΣX)
( ΣY)
45.2 45.283 8385 85
43.4 43.481 8137 37
NΣx² 8 2 8 0. 6
-62.3 62.316 168 8
-54. -54.07 0705 05
2 0 2 4 2. 2 8
(ΣX)² 2050.62
β 0. 7 6 1 7
3883.38
0.7183
3) ALPHA α =Y-β(X) YEAR 2008
Y 3.952852
β 0.7617
X 4.116714
102
α =Y-β(X) 0.81715
2009
-4.50588
0.7183
-5.19307
-0.77569
4)SHARPE RATIO SR=Rp-Rf/SD Where; Rp= (Closing Nav/opening Nav-1)*100
YEAR
SHARPE RATIO Rp
Rf
SD
2008
50.97706
7
5.0710
8. 6 7 2 2 6 5
2009
-36.6458
7. 5
7. 9 3 3 8 0
-5.56427
TREY NOR RATIO Rp Rf 50.97706 7
β 0.7617
TR 57.7354
7. 5
0. 7 1 8 3
-61.4587
SR
5)TREYNOR RATIO TR=Rp-Rf/β YEAR 2008 2009
-36.6458
INTERPRETATION
103
In the year 2009 standard deviation was high at the rate of 7.93380 and in the year 2008 standard deviation was low at the rate of 5.0710. in the year 2008 β is 0.7617 which is high risk because β greater than 1 in the year 2009 β value is 0.7183 it is less risky compared to year 2008 . In the year 2008 sharpe index was higher at the rate of 8.672265 and in the year 2009 sharpe index was lesser at the rate of – 5.56427. In the year 2008 treynor index was higher at the rate of 57.7354 and treynor index was lesser at the rate of -61.4587
3)RELIANCE LIQUID FUND RETURN OF PORTFOLIO DATE NAV Rp(y) (y-Y) (y-Y)2 Jan 05 11.1677 Feb 05 11.202 0.307136 -0.02615 0.000684 Jun 05 11.3348 0.303526 -0.02976 0.000886 Jul 05 11.3711 0.320253 -0.01303 0.00017 Aug 05 11.4086 0.329783 -0.0035 1.23E-05 Sep 05 11.4462 0.329576 -0.00371 1.38E-05 Oct 05 11.4878 0.363439 0.030155 0.000909 Nov 05 11.537 0.42828 0.094996 0.009024 Dec 05 11.584 0.407385 0.074101 0.005491 TOTAL 3.666125 0.022968 Y=Σy/12 0.333284
104
Dec 05 11.584 Jan 06 11.6257 0.359979 -0.01823 Feb 06 11.6643 0.332023 -0.04618 Mar 06 11.7086 0.379791 0.001584 Apr 06 11.7494 0.348462 -0.02975 May 06 11.7964 0.40002 0.021813 Jun 06 11.8397 0.367061 -0.01115 Jul 06 11.8838 0.372476 -0.00573 Aug 06 11.924 0.338276 -0.03993 Sep 06 11.9632 0.328749 -0.04946 Oct 06 12.0086 0.379497 0.001289 Nov 06 12.0639 0.460503 0.082296 Dec 06 12.1208 0.471655 0.093447 TOTAL 4.538493 Y=Σy/12 0.378208
Dec 06 12.1208 Jan 07 12.1862 Feb 07 12.243 Mar 07 12.3054 Apr 07 12.3561 May 07 12.4067 Jun 07 12.459 Jul 07 12.5136 Aug 07 12.5759 Sep 07 12.6371 Oct 07 0 Nov 07 0 Dec 07 -TOTAL Y=Σy/12
0.539568 10.12145 0.466101 10.04798 0.509679 10.09156 0.412014 9.993898 0.409514 9.991398 0.421546 10.00343 0.438237 10.02012 0.497858 10.07974 0.486645 10.06853 -100 0 0 -95.8188 -9.58188
0.000332 0.002133 2.51E-06 0.000885 0.000476 0.000124 3.29E-05 0.001595 0.002446 1.66E-06 0.006773 0.008732 0.023533
102.4438 100.962 101.8396 99.87799 99.82803 100.0686 100.4028 101.6012 101.3753
908.3993
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Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 TOTAL Y=Σy/12
Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09
0 12.9355 13.0013 13.0952 13.2044 13.2676 13.2842 13.2926 13.3493 13.4105 13.4662 13.5369 13.6097 Y
0 0.508678 0.722235 0.833893 0.478628 0.125117 0.063233 0.426553 0.458451 0.415346 0.525018 0.537789 5.094942 0.463177
13.6097 13.6668 13.7314 13.8034 13.8604 13.9262 14.0024 14.0846 14.176 14.2857
0.419554 0.472678 0.524346 0.412942 0.474734 0.54717 0.587042 0.648936 0.773843
0.045501 0.259059 0.370717 0.015452 -0.33806 -0.39994 -0.03662 -0.00473 -0.04783 0.061842 0.074613
0.00207 0.067112 0.137431 0.000239 0.114284 0.159955 0.001341 2.23E-05 0.002288 0.003824 0.005567 0.494134
-0.13968 -0.08656 -0.03489 -0.14629 -0.0845 -0.01206 0.027809 0.089702 0.21461
0.01951 0.007492 0.001217 0.021401 0.00714 0.000146 0.000773 0.008047 0.046057
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Oct 09 14.4055 Nov 09 14.4827 Dec 09 14.5515 TOTAL Y=Σy/12
0.838601 0.279367 0.535906 -0.02333 0.47505 -0.08418 6.710801 0.559233
0.078046 0.000544 0.007087 0.197461
STANDARD DEVIATION
S.D= √ (y-Y) N STANDA
YEAR
RAD DEVIATION (y-Y)2
2005
0.022968
y-Y)2/N 1.914
2006
0.023533
1.961
1.4003
2007
908.3993
75.69
8.7005
2008
0.494134
0.0411
0.2029
2009
0.541306
0.0451
0.212
INTERPRETATION In the year 2007 standard deviation was high at the rate of 8.7005 and in the year 2009 standard deviation was low at the rate of 0.212 107
Square root (S.D) 1.1761
INTERPRETATION 1)Standard Deviation: •
When we see Reliance growth fund it has high standard deviation in the year 2005 as compared to other 4 years i.e 2006,2007,2008 &2009
•
When we see Reliance equity fund it has high standard deviation in the year 2009 as compared to another one year i.e 2008
•
When we see Reliance liquid fund has high standard deviation in 2007 compared other years
•
Here standard deviation is referred to volatility of Nav of the scheme hence the one with high standard deviation means it has high volatility hence the standard deviation is directly related to the returns hence higher the standard deviation higher the returns
2)Beta: •
βBeta is referred to how much the portfolio is dependent on the market return so higher the β higher the dependent hence high risk i.e systematic risk
•
When we see Reliance growth fund in 2008 it has high β i.e if 10% decrease in Rm result in 10%cRp which very dangerous to invest ors but at the when observe in 2009 108
i.e o.5357 which mean 10%decrease in Rm results in 5.3 Rp which is healty sigh i.e the 2006 the scheme has lowest systematic risk .
•
In 2005 1.048 which has higher β value which means the schemes has involved highest risk •
But it is scheme is all the 5 years the βvalue is less than or which means decrease in Rm is greater tham decrease in Rp
•
So it has less systematic risk compared to reliance growth fnd •
When we observe Reliance equity fund the β valu 0.7677 which is highest in the 2008.
•
Where as in the other one year 2009 is 0.7183
3 Alpha By observing the all the 3 schemes we can see that all schemes over the all 3 year s have negative are on . The reason behind alpha in the 3 in due to change in investment pattern of the as in 2007 4) Sharpe ratio :
109
Since sharpe ratio is one of the most popular method of knowing the risk associated with the particulars scheme the higher the ratio better is the performance •
In case of Reliance growth fund the sharpe ratio is high in the year 2006 i.e 4.182091 compared to other four year 2005 i.e -0.38431,2007 i.e 0.553716 2008 i.e 3.532276 & 2009 i.e -6.51645. so we can say that scheme has performed very well in the year 2006 or compared to other four yea
•
In case of Reliance equity fund the sharpe ratio is high in the year 2008 i.e 8.672265 compared to other one year 2009 i.e -61.4587 this very good sigh as compared to all other scheme ,this scheme has recorded higher sharpe ratio with the value of 8.672265 in 2008.
5) Treynor’s Ratio: Now coming to another ratio which is derived as treynor’s ratio which is different from sharp ratio since this ratio observe & consider only systematic risk. which is uncontrollable but where as sharp ratio considers both 110
controllable & uncontrollable risk i.e systematic as well as unsystematic. •
In case of Reliance growth fund the ratio is high in the year 2006 i.e 3.25708 compared to other four years 2005.e 1.16950,2007 i.e 1.79626, 2008 i.e3.12612 and 2009 i.e – 12.9086.so we say the scheme performed very well in year 2006 compared to other four years but in 2009 it has lower performance.
•
In case of Reliance equity fund the ratio is high in the year 2008 i.e 5.09761 compared to last year 2009 i.e -6.37737. so we can say the scheme performed very well in year 2008 compared to last year.
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COMPARATIVE STUDY OF MUTUAL FUND Major competitor of Reliance Mutual Fund
Company Profile of HDFC HDFC BANK is one of the leading Depository Participant (DP) in the country with over 8 Lac demat accounts. HDFC Bank Demat services offers you a secure and convenient way to keep track of your securities and investments, over a period of time, without the hassle of handling physical documents that get mutilated or lost in transit. HDFC BANK is Depository particpant both with -National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL).
112
Features & Benefits As opposed to the earlier form of dealing in physical certificates with delays in transaction, holding and trading in Demat form has the following benefits : •
Settlement of Securities traded on the exchanges as well as off market transactions.
•
Shorter settlements thereby enhancing liquidity.
•
Pledging of Securities.
•
Electronic credit in public issue.
•
Auto Credit of Rights / Bonus / Public Issues / Dividend credit through ECS.
•
Auto Credit of Public Issue refunds to the bank account.
•
No stamp duty on transfer of securities held in demat form. No concept of Market Lots. Change of address, Signature, Dividend Mandate,
registration of power of attorney, transmission etc. can be effected across companies held in demat form by a single instruction to the Depository Participant (DP). Secured & easy transaction processing
113
HDFC Bank Ltd provides convenient facility called 'SPEEDe' (Internet based transaction) whereby account holder can submit delivery instructions electronically through SPEED-e website (https://speed-e.nsdl.com). SPEED-e offers secured means of transaction processing eliminating preparation of instruction slips and submission of the same across the counter to the depository participant. The 'IDEAS' facility helps in viewing the current transactions and balances (holdings) of Demat account on Internet on real time basis.
Company Profile of ICICI ICICIDirect (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stock trading and trading in derivatives in BSE and NSE, it also provides facility to invest in IPOs, Mutual Funds and Bonds. Trading is available in BSE and NSE ICICIDirect offers 3 different online trading platforms to its customers 1. Investment Account Along with stock trading and IPO investing in BSE and NSE, Wise Investment account also provide options to invest in Mutual Funds and Bonds online.
114
Online Mutual funds investment allows investor to invest on-line in around 19 Mutual Fund companies. ICICI Direct offers various options while investing in Mutual
Funds
like
Purchase
Mutual
Fund,
Redemption and switch between different schemes, Systematic Investment plans, Systematic withdrawal plan and transferring existing Mutual Funds in to electronic mode. This account also provides facility to invest in Government of India Bonds and ICICI Bank
Tax
Saving
Bonds.
ICICIDirect.com website is the primary tool to invest in Mutual Funds, IPOs, Bonds and stock trading.
Reliance Mutual Fund Tax Saving funds Reliance Money: Tax-saving funds (due to their equity-oriented nature) are capable of clocking far superior returns their assured return counterparts like National Savings Certificate (NSC) and Public Provident Fund (PPF). However investors must appreciate that the risk profile of tax-saving funds tends to be proportionately higher. Reliance Tax Saver (ELSS) Fund (RTSF) is the latest entrant in the tax-saving funds segment. Flagship diversified equity funds (Reliance Growth Fund and Reliance Equity 115
Fund) from Reliance Mutual Fund have emerged as top performers in their segment across time horizons. However investors should note that these funds are managed aggressively; also they have displayed an opportunistic streak by moving fluidly across market segments (large caps, mid caps) to clock superior growth. RTSF is likely to be a similar (high risk - high return) investment proposition within the tax-saving funds segment.
SYSTEMATIC INVESTMENT PLAN SIP is a way of investing in Mutual Funds. It is designed for those investors who are willing to invest regularly rather than making a lump sum investment. It is just like a recurring deposit with the post office or bank where we deposit some amount every month. The difference here is that the amount is invested in a mutual fund. Mutual Fund makes investment according to their objective .They collect fund from investor and invests it. Every fund has an objective and 116
pattern of investing. There are various kinds of mutual funds. There are equity funds and debt funds. Further equity funds can be divided into equity diversified mutual fund where funds are invested in shares of different companies , sectoral funds where investment is made in shares of some particular sector like FMCG, IT, Auto, Oil & Gas, Banking etc. Every fund has a NAV (net asset value) which is the value per unit. It is calculated as the total asset is divided by the number of outstanding units. As the value of asset changes, nav also changes. The best way to invest in stock market is mutual fund through Systematic Investment Plan. But to get the benefit of an SIP, a long term horizon is must.
117
DATA ANALYSIS AND INTERPRETATION
Q.1 Which banking mutual fund do you prefer for mutual Fund ? Co mpany Name Reliance Money HDFC ICICI
Persentages of respondents 25 10 15
25 20 15 10 5 0 Reliance
HDFC
ICICI
118
INTERPRETATION: 50% of respondent have Reliance Money , 30% of respondent says that other%.
Q.2 Which banking mutual fund offer you good investment plan? Company Name
Percentage of respondent
Reliance
22
HDFC
21
ICICI
7
119
25
20
15
10
5
0 RELIANCE
HDFC
ICICI
INTERPRETATION: 44% respondent for Reliance,32 %forHdfc,14% for ICICI
Q.3 Which banking mutul fund offer a lot of tax saving? Company Name Percentage of respondent Reliance
20
HDFC
15
120
ICICI
15
20
15
10
5
0 Reliance
HDFC
ICICI
INTERPRETATION: 40% respondent for Reliance,30 %forHdfc,30% for ICICI
121
Q.4 Which banking mutual fund offer you a large number of product & services? Company Name Percentage of respondent Reliance
18
HDFC
16
ICICI
16
18 17.5 17 16.5 16 15.5 15 Reliance
HDFC
ICICI
INTERPRETATION: 36% respondent for Reliance,32%forHdfc,32% for ICICI
122
Q.5 Which banking mutual fund offer you a good e-mail facility ? Company Name Percentage of respondent Reliance
22
HDFC
15
ICICI
13
25 20 15 10 5 0 Reliance
HDFC
ICICI
INTERPRETATION: 44% respondent for Reliance,30%forHdfc,26% for ICICI 123
Represent by pie chart
ICICI 29%
Reliance 41%
HDFC 30%
OBSERVATION 50%
of respondent have Reliance Money , 30% of respondent says that other%. 124
44% respondent for Reliance,32 %forHdfc,14% for ICICI. 40% respondent for Reliance,30 %forHdfc,30% for ICICI. 36% respondent for Reliance,32%forHdfc,32% for ICICI. 44% respondent for Reliance,30%forHdfc,26% for ICICI.
FINDINGS AND SUGGESTION In Equity Schemes we have taken Reliance Vison Fund and Reliance growth Fund . Both schemes are open ended but Reliance Growth fund is more valuable for Reliance Mutual Fund than reliance vision Fund.
125
In Dedt scheme we have taken Reliance money Manager Fund and Reliance Liquidty Fund .In it boths schemes are open ended but reliance money manager is more beneficial for reliance mutual fund .In sector specific scheme we have taken Reliance media and entertainment fund and Reliance Pharma fund scheme both is more efficient for Reliance Mutual Fund. Above all the schemes of Reliance Mutual Fund Debt schemes are best schemes for Mutual Fund . There is a Good investment plan and saving scheme in reliance Mutual Fund.
126
SUGGESTION •
Reliance Money have to add some extra features in it with aggressive marketing promotional strategy.
•
Advertisement on television is the main source of attraction so the company must advertise its products heavily.
•
Product must be improved .
•
There should be provision of complain suggestion boxes at each branch.
127
CONCLUSION Mutual Fund investment is better than other raising fund . Reliance Mutual Fund have good returns in investment . A good brand is always welcomed over here people are more aware and conscious for the brand so they go for they are ready to spend some extra bucks for the quality . At last all con be concluded by that Reliance Mutual Fund is still growing industry in India and is still exploring its potential and prospects in here.
128
BIBLIOGRAPHY Books: 1. Security Analysis and Portfolio Management (sixth Edition 1995) by Donald E. Fisher and Ronald J. Jordan. Publication: Pearson education. 2. The Indian Financial System (second edition) by Bharati V. Pathak. Published by Dorling Kindersley (India) Pvt. Ltd., licensees of Pearson Education in South Asia.
129
3. Security Analysis and Portfolio Management by Khan and Jain. Magazines: Money Outlook (May &June 2009) •
•
Business world (May & June 2009)
Websites: •
www.Reliancemutualfund.com
•
www.amfiindia.com
•
www.moneycontrol.com
•
www.sebi.gov.in
•
www.bseindia.com
•
www.nseindia.com
•
www.mutualfundsindia.com
•
www.indiainfoline.com
•
www.in.finance.yahoo.com
•
www.investing.businessweek.com
QUESTIONNAIR
130
Q.1 Which banking mutual fund do you prefer for mutual Fund ? Reliance Money HDFC ICICI • • •
Q.2 Which banking mutual fund offer you good investment plan? Reliance Money HDFC ICICI • • •
Q.3 Which banking mutul fund offer a lot of tax saving? Reliance Money HDFC ICICI • • •
Q.4 Which banking mutual fund offer you a large number of product & services? Reliance Money HDFC ICICI • • •
131