A STUDY ON

MUTUAL FUNDS
IN
RELALINCE

VISAKAPATANAM
A PROJECT REPORT SUBMITTED FOR THE PARTIAL FULFILLMENT OF

FINANCIAL MANAGEMENT
Under the Guidance of
Ms .BHAVYA KUMARI P MBA
(Asst Professor)
Submitted by
UPPALA.PURNIMA
(H.T.NO: 14HQ1E0088)

MASTER OF BUSINESS ADMINISTRATION

AVANTHIS RESEARCH AND TECHNOLOGICAL ACADEMY
BASAVAPALEM (V), BHOGAPURAM (M),
VIZIANAGARAM (DIST).

(2014-2016)
1

CERTIFICATE
AVANTHIS RESEARCH AND TECHNOLOGICAL ACADEMY

(Affiliated to JNTUK, Kakinada)

BASAVAPALEM (VILLAGE), BHOGAPURAM (MANDAL),

VIZIANAGARAM.

This is to certify that Ms .UPPALA PURNIMA Regd. No: 14HQ1E0088 project report title A study on
FUND

PERFORMOUNCE

to

AVANTHIS

RESEARCH

AND

TECHNOLOGICAL

ACADEMY, Department of MASTER OF BUSINESS ADMINISTRATION affiliated to JNTUK

Kakinada is a records of independent analysis work under taken by his during the academic year 20142016.

MR. L. RAMESH, MBA,(Ph.D)

Ms.BHAVYA KUMARI.P, MBA

HEAD OF THE DEPARTMENT

PROJECT GUIDE

DECLARATION
I

UPPALA PURNIMA Regd. No: 14HQ1E0088, student MBA, AVANTHIS RESEARCH AND

TECHNOLOGICAL ACADEMY is here by declare that the Project Report submitted by me to the
Head of management studies A STUDY ONFUND PERFORMONCE in RELIANCEat
VISHAKAPATANAM was submitted by me to the JAWAHARLAL NEHRU TECHNOLOGICAL
UNIVERSITY KAKINADA in partial fulfilment of the requirement for the Degree MASTER OF
BUSINESS ADMINISTRATION is a record of a bondified research carried out by me. I further
declare that this project is a genuine bondified work done by me and is not submitted to any other
University published anytime before.

Station :

Date

NAME :UPPAL PURNIMA

Regd.No 14HQ1E0088

Date : 14.06.2015

CERTIFICATE

This is to certify that Miss. UPPALA PURNIMA (Reg. No.14HQ1E0088). MBA

(FINANCE) Student of AVANTHIS RESEARCH & TECHNOLOGICAL
ACADEMY, VIZIANAGARAM has done her project work in the area of A
STUDY ON FUND PERFORMANCE in RELIANCE MUTUAL FUND (P) LTD.,
VISAKHAPATNAM during the period from 02.05.2015 to 14.06.2015 (6 WEEKS).
Her performance and conduct during the project period is found satisfactory.

CHAPTERS
PG.NOS
CHAPTER 1
1. INTRODUCTION TO MUTUAL FUND
2. NEED FOR THE STUDY
3. OBJECTIVES OF THE STUDY
4. METHODOLOGY OF THE STUDY
5. LIMITATIONS OF THE STUDY

CHAPTER 2
1. INDUSTRY PROFILE
2. COMPANY PROFILE

CHAPTER 3
1. FUND PERFORMANCE
CHAPTER 4
1. DATA ANALYSIS AND INTERPRETATION
CHAPTER 5
1. FINDINGS & SUGGESTIONS
SUMMARY
BIBLIOGRAPHY

CHAPTER - I

INTORDUCTION
NEED FOR THE STUDY
OBJECTIVE OF THE STUDY
METHODOLOGY
LIMITATIONS

INTRODUCTION TO MUTUAL FUNDS

Mutual Fund is an instrument of investing money. Nowadays, bank rates
have gone down and are generally below the inflation rate. Therefore, keeping large amounts of
money in bank is not a wise option, in real terms the value of money decreases over a period of
time.

One of the options is to invest the money is in stock market. But a

common investor is not informed and competent enough to understand the intricacies of stock
market. This is where mutual funds come to the rescue.

A mutual fund is a group of investors operating through a fund manager to

purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very
easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or
bonds with much lower trading costs than if they try to do it on their own. Also, one doesn't have
to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is
diversification.

Diversification means spreading out money across different types of

investments. When one investment is low another might be high. Diversification of investment
holdings reduces the risk tremendously.

CLASSIFICATION OF MUTUAL FUNDS

On the basis of their structure and objective, mutual funds can be classified into
following major types:
Closed end funds
Open end funds
Large cap funds
Mid-cap funds
Equity funds
Balanced funds
Growth funds
No load funds
Exchange traded funds
value funds
Money market funds
International mutual funds
Regional mutual funds
Sector funds
Index funds
Fund of funds

Closed-end funds:
A closed-end mutual fund has a set number of shares issued to the public through
an initial public offering.

Open-end funds:
Open end funds are operated by a mutual fund house which raises money from
shareholders and invests in a group of assets.

Large cap funds:

Large cap funds are those mutual funds, which seek capital appreciation by
investing primarily in stocks of large blue chip companies.

Mid-cap funds:
Mid cap funds are those mutual funds, which invest in small / medium sized
companies. As there is no standard definition classifying companies.

Equity funds:
Equity mutual funds are also known as stock mutual funds. Equity mutual funds
invest pooled amounts of money in the stocks of public companies.

Balanced funds:
Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a
combination of common stock, preferred stock, bonds, and short-term bonds.

Growth funds;
Growth funds are those mutual funds that aim to achieve capital appreciation by
investing in growth stocks.

No load funds:
Mutual funds can be classified into two types - Load mutual funds and No-Load
mutual funds.

Exchange traded funds:

Exchange Traded Funds (ETFs) represent a basket of securities that is traded
on an exchange, similar to a stock.
Hence, unlike conventional mutual funds

Value funds:
Value funds are those mutual funds that tend to focus on safety rather than growth,
and often choose investments providing dividends as well as capital appreciation.

Money market funds:

A money market fund is a mutual fund that invests solely in money market instruments.
Money market instruments are forms of debt that mature in less than one year and are very
liquid.

International mutual funds:

International mutual funds are those funds that invest in non-domestic securities
markets throughout the world.

Regional mutual funds:

Regional mutual fund is a mutual fund that confines itself to investments in securities
from a specified geographical area, usually, the fund's local region.

Sector funds:
Sector mutual funds are those mutual funds that restrict their investments to a
particular segment or sector of the economy.

Index funds:
An index fund is a mutual fund or exchange-traded fund) that aims to replicate the
movements of an index of a specific financial market.

Fund of funds:
A fund of funds (FoF) is an investment fund that holds a portfolio of other
investment funds rather than investing directly in shares, bonds or other securities.

NEED FOR THE STUDY

1. The main purpose of doing this project was to know about mutual fund and its functioning.
2. This helps to know in details about mutual fund industry right from its inception stage, growth
and future prospects.
3. It also helps in understanding different schemes of mutual funds. Because my study depends
upon prominent funds in India and their schemes like equity, income, balance as well as the
returns associated with those schemes.
4. The project study was done to ascertain the asset allocation, entry load, exit load, associated
with the mutual funds.
5. Ultimately this would help in understanding the benefits of mutual funds to investors.

10

OBJECTIVES OF THE STUDY

1. To have a brief idea about the benefits available from Mutual Fund investment.
2. To give an idea of the types of schemes available.
3. To discuss about the market trends of Mutual Fund investment.
4. To study some of the mutual fund schemes and analyze them.
5. Observe the fund management process of mutual funds.
6. Explore the recent developments in the mutual funds in India.
7. To get an idea about the regulations of mutual funds.

11

METHODOLOGY OF THE STUDY

Methodology adopted is collection of information in a systematic manner in order to

analyze and verify a phenomenon. The information is collected through primary and secondary
sources during the course of the study. There are two types of data collection methods:

Primary data collection

Secondary data collection

Primary Data:
It is the information collected directly without any references. In this study it is gathered
through interviews with concerned officers and staff, either individually or collectively, some of
the information has been verified or supplement with personal observation conducting personal
interviews with the concerned officers of finance department of dredging corporation of India
ltd.

Secondary Data:
The secondary data was collected from already published sources such as pamphlets of
annual reports, returns and internal records, reference from textbooks and journals relating to
financial management.
The data collection includes.
1) Most of the computations are made from the figures contained in the financial statements
provided by the company.
2) Collection of some of the information regarding theoretical aspects by referring standard
texts and referred books.
3.)Collection of required data from annual records of Dredging corporation of India
12

LIMITATIONS OF THE STUDY

1. The study is confined to selected AMCs.
2. Lack of information for analysis is a limitation.
3. Availability of time is a constraint in the proposed survey, since the project should be
completed in 8weeks.

13

CHAPTER - II

INDUSTRY PROFILE

14

INDUSTRY PROFILE
The origin of mutual fund industry in India is with the introduction of the
concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated
from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a drastic
improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase; the Assets under Management (AUM) were Rs.67bn. the private sector
entry to the mutual fund family raised the AUM to Rs.470bn in March 1993 and till April 2004; it
reached the height of Rs.1540bn. Putting the AUM of Indian mutual fund industry into
comparison, the total of it is less than the deposits of SBI alone, industry. The main reason for its
poor growth is that the mutual fund industry in India is new in the country. Large sections of
Indian investors are yet to be informed about the concept. Hence it is the responsibility of all the
mutual fund companies to market the product correctly abreast of selling.
The mutual fund industry can be broadly put into four phases according to
the development of the sector.
PHASE 1: Establishment and Growth of UTI-1964-87
Unit trust of India enjoyed complete monopoly when it was
established in the year 1963 by an act of parliament. UTI was set up by the RBI and it continued to
operate under the regulatory control of the RBI until the two were delinked in the year 1978 and
the entire control was transferred into the hands of Industrial Development Bank of India. UTI
launched its first scheme in the year 1964, named as Unit scheme 1964 (US-1964), which attracted
the largest number of investors in any single investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to
suit to the needs of different investors. It launched ULIP in 1971, six more schemes during 19811984, Childrens gift growth fund and India fund in 1986, Master share and Monthly income
schemes during 1990s. By the end of 1987, UTIs assets under management grew ten times to
Rs.6700 crores.
15

PHASE 2: Entry of Public Sector Funds-1987-1993

The Indian mutual fund industry witnessed a number of
public sector players entering the market in the year 1987. In November 1987, SBI mutual fund
from State Bank of India became the first non-UTI mutual fund in India.SBI mutual fund was later
followed by Canara Bank mutual fund, LIC mutual fund, Indian Bank mutual fund, Bank of India
mutual fund, GIC mutual fund and PNB mutual fund. By 1993, the assets under management of
the industry increased seven times to Rs.47004 crores. However, UTI remained to be the leader
with about 80% market share.
1992-93

Amount mobilized

Assets Under
Management

Mobilization as % of
domestic savings

UTI

11,057

38,247

5.2%

Public Sector

1,964

8,757

0.9%

Total

13,021

47,004

6.1%

PHASE 3: Emergence of Private sector funds-1993-96

The permission given to private sector funds including
foreign fund management companies to enter the mutual fund industry in 1993 provided a wide
range of choice to investors and more competition in the industry. Private funds introduced
innovative products, investment techniques and investor-servicing technology. By 1994-95, about
11 private sector funds had launched their schemes.
16

PHASE 4: Growth and SEBI Regulation-1996-2004

The mutual fund industry witnessed robust growth and
strict regulation from SEBI after the year 1996. The mobilization of funds and the number of
players operating in the industry reached new heights as investors started showing more interest
in mutual funds. Investors interests were safeguarded by SEBI. The government offered tax
benefits to the investors in order to encourage them. SEBI (mutual fund) regulations 1996 was
introduced by SEBI that set uniform standards for all mutual funds in India. The union budget in
1999 exempted all dividend incomes in the hands of investors from income tax. Various investor
awareness programs were launched during this phase, both by SEBI and AMFI, with an
objective to educate investors and make them informed about mutual fund industry. In February
2003, the UTI Act was repealed and UTI was stripped of its special legal status as a trust formed
by an Act of Parliament. The primary objective behind this was to bring all mutual fund players
on the same level. UTI was organized into two parts

1. The Specified Undertaking, 2. The

UTI Mutual Fund. Presently Unit Trust of India operates under the name of UTI Mutual Fund
and its past schemes (like US-64, Assured Return Schemes) are being gradually wind up.
However, UTI Mutual Fund is still the largest player in the industry.

ASSETS UNDER MANAGEMENT (Rs. Crores)

AS 0N

UTI

31-March-99

53,320

PUBLIC
SECTOR
8,292

PRIVATE
SECTOR
6,860

TOTAL
68,472

GROWTH IN ASSETS UNDER MANAGEMENT

17

PHASE 5: Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and
acquisitions recently, examples of which are acquisition of schemes of Alliance mutual fund by
Birla Sun Life, Sun F&C Mutual Fund and PNB mutual fund by Principal mutual fund.
Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin
Templeton mutual fund etc. There were 29 funds as at the end of March 2006. This is a continuing
phase of growth of the industry through consolidation and entry of new international and private
sector players.

18

WORKING OF MUTUAL FUND

Regulatory Authorities:
To protect the interest of the investors, SEBI formulates
policies and regulates the mutual funds. It notified regulations in 1993 and issues guidelines from
time to time. Mutual funds either promoted by public or private sector entities including one
promoted by foreign entities is governed by these regulations.
SEBI approved Asset Management Company (AMC) manages the funds
by making investments in various types of securities. Custodian, registered with SEBI, holds the
securities of various schemes of the fund in its custody.
According to SEBI regulations, 2/3rd of the directors of the Trustee
Company or board of trustees must be independent. The Association of Mutual Funds in India
(AMFI) reassures the investors in units of mutual funds that the mutual funds function within the
strict regulatory framework. Its objective is to increase public awareness of the mutual fund

19

industry. AMFI is also engaged in upgrading professional standards and in promoting best industry
practices in diverse areas such as valuation, disclosure, transparency etc.

Recent trends in mutual fund industry

The most important trend in the mutual fund industry is the
aggressive expansion of the foreign owned mutual fund companies and the decline of the
companies floated by nationalized banks and smaller private sector players.
Many nationalized banks got into the mutual fund business in the early
nineties and got off to a good start due to the stock market boom prevailing then. These banks did
not really understand the mutual fund business and they just viewed it as another kind of banking
activity. Few hired specialized staff and generally chose to transfer staff from the parent
organizations. The performance of most of the schemes floated by these funds was not good. Some
schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs
by paying large amounts of money as the difference between the guaranteed and actual returns.
The service levels were also very bad. Most of these AMCs have not been able to retain staff, float
new schemes etc. and it is doubtful whether, barring a few exceptions, they have serious plans of
continuing the activity in a major way.
The experience of some of the AMCs floated by private sector Indian
companies was also very similar. They quickly realized that the AMC business is a business,
which makes money in the long term and requires deep-pocketed support in the intermediate years.
Some have sold out to foreign owned companies, some have merged with others and there is
general restructuring going on.
They can be credited with introducing many new practices such as new
product innovation, sharp improvement in service standards and disclosure, usage of technology,
broker education and support etc. In fact, they have forced the industry to upgrade itself and
service levels of organizations like UTI have improved dramatically in the last few years in
response to the competition provided by these.

20

Performance of Mutual Funds in India

Unit Trust of India invited investors or rather to those who
believed in savings, to park their money in UTI Mutual Fund. The performance of mutual funds in
India in the initial phase was not even closer to satisfactory level. People rarely understood, and of
course investing was out of question. But yes, some 24 million shareholders were accustomed with
guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record
of UTI became marketing tool for new entrants. The expectations of investors touched the sky in
profitability factor. The Assets under Management of UTI was Rs. 67bn by the end of 1987.
From Rs. 67bn. the Assets under Management rose to Rs. 470 bn. in
March 1993 and the figure had a three times higher performance by April 2004. It rose as high as
Rs. 1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices
started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts
into alternative investments. There was rather no choice apart from holding the cash or to further
continue investing in shares. One more thing to be noted, since only closed-end funds were floated
in the market, the investors disinvested by selling at a loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992
stock market scandal, the losses by disinvestments and of course the lack of transparent rules in the
whereabouts rocked confidence among the investors. Partly owing to a relatively weak stock
market performance, mutual funds have not yet recovered, with funds trading at an average
discount of 1020 percent of their net asset value. The measure was taken to make mutual funds the
key instrument for long-term saving. The more the variety offered the quantitative will be
investors. At last to mention, as long as mutual fund companies are performing with lower risks
and higher profitability within a short span of time, more and more people will be inclined to
invest until and unless they are fully educated with the dos and don'ts of mutual funds.

CLASSIFICATION OF MUTUAL FUNDS

Wide variety of Mutual Fund Schemes exists to cater to the
needs such as financial position, risk tolerance and return expectations etc. thus mutual funds has
Variety of flavors, Being a collection of many stocks, an investors can go for picking a mutual
fund might be easy. There are over hundreds of mutual funds scheme to choose from.
21

BY STRUCTURE

Open-end fund:
The term mutual fund is the common name for what is classified as an open-end
investment company by the SEC. Being open-ended means that, at the end of every day, the fund
issues new shares to investors and buys back shares from investors wishing to leave the fund.
Mutual funds must be structured as corporations or trusts, such as business trusts, and any
corporation or trust will be classified by the SEC as an investment company if it issues securities
and primarily invests in non-government securities. An investment company will be classified by
the SEC as an open-end investment company if they do not issue undivided interests in specified
securities (the defining characteristic of unit investment trusts or UITs) and if they issue
redeemable securities. Registered investment companies that are not UITs or open-end investment
companies are closed-end funds. Neither UITs nor closed-end funds are mutual funds (as that term
is used in the US).

Close-ended Fund/ Scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7
years. The fund is open for subscription only during a specified period at the time of launch of the
scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they
can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order
to provide an exit route to the investors, some close-ended funds give an option of selling back the
units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose NAV
generally on weekly

22

Interval Schemes:
Interval Schemes are that scheme, which combines the features of openended and close-ended schemes. The units may be traded on the stock exchange or may be open
for sale or redemption during pre-determined intervals at NAV related prices.

The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vice versa if he pertains to lower risk
instruments, which would be satisfied by lower returns. For example, if an investors opt for bank
FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital
protected funds and the profit-bonds that give out more return which is slightly higher as compared
to the bank deposits but the risk involved also increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing,
as Mutual funds provide professional management, diversification, convenience and liquidity. That
23

doesnt mean mutual fund investments risk free. This is because the money that is pooled in are
not invested only in debts funds which are less riskier but are also invested in the stock markets
which involves a higher risk but can expect higher returns. Hedge fund involves a very high risk
since it is mostly traded in the derivatives market which is considered very volatile.

BY NATURE:

Equity (Stock or Income) Funds:

Funds that invest in stocks represent the largest category of mutual
funds. Generally, the investment objective of this class of funds is long-term capital growth with
some income. There are, however, many different types of equity funds because there are many
different types of equities. A great way to understand the universe of equity funds is to use a style
box, an example of which is below.

The idea is to classify funds based on both the size of the companies
invested in and the investment style of the manager. The term value refers to a style of investing
that looks for high quality companies that are out of favor with the market. These companies are
characterized by low P/E and price-to-book ratios and high dividend yields. The opposite of value
is growth, which refers to companies that have had (and are expected to continue to have) strong
growth in earnings, sales and cash flow. A compromise between value and growth is blend, which
24

simply refers to companies that are neither value nor growth stocks and are classified as being
somewhere in the middle.

Debt funds:
The objective of these Funds is to invest in debt papers. Government authorities,
private companies, banks and financial institutions are some of the major issuers of debt papers.
By investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:
Gilt Funds:
Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated with
Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

Income Funds:
Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

MIPs:
Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly
high on the risk-return matrix when compared with other debt schemes.

Short Term Plans (STPs):

These funds primarily invest in short term papers like Certificate of
Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures. Meant for investment horizon for three to six months.

Liquid Funds:
Also known as Money Market Schemes, These funds provides easy liquidity and
preservation of capital. These schemes invest in short-term instruments like Treasury Bills, interbank call money market, CPs and CDs. These funds are meant for short-term cash management of
25

corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes
rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual
funds.

Balanced funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined investment objective
of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity
part provides growth and the debt part provides stability in returns.
BY INVESTMENT OBJECTIVE:

Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes
is to provide capital appreciation over medium to long term. These schemes normally invest a
major part of their fund in equities and are willing to bear short-term decline in value for possible
future appreciation.

Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular
and steady income to investors. These schemes generally invest in fixed income securities such
as bonds and corporate debentures. Capital appreciation in such schemes may be limited.

Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically
distributing a part of the income and capital gains they earn. These schemes invest in both shares
and fixed income securities, in the proportion indicated in their offer documents (normally
50:50).

26

Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of
capital and moderate income. These schemes generally invest in safer, short-term instruments,
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.

OTHER SCHEMES:

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any
Equity Linked Savings Scheme (ELSS) are eligible for rebate.

Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as
the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks
that constitute the index. The percentage of each stock to the total holding will be identical to the
stocks index weight age. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.

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. 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.

27

MAJOR MUTUAL FUNDS COMPANIES IN INDIA

ABN AMRO Mutual Fund:

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management
(India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN
AMRO Mutual Fund.

Birla 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.

HDFC Mutual Fund:

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life Investments Limited.

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.

28

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 sponsors, Prudential Plc. and ICICI Ltd. The
Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset
Management Company Limited incorporated on 22nd of June, 1993.

State Bank of India Mutual Fund:

State Bank of India Mutual Fund is the first Bank sponsored Mutual
Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately.
Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35
Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India
Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8
Lakhs spread over 18 schemes.

Tata Mutual Fund:

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The
sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The
investment manager is Tata 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.

29

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 with the support of UTI Trustee Company Private
Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore.
The sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State
Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual
Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and
Balance Funds.

Reliance Mutual Fund:

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts
Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co.
Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which
was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various
schemes under which units are issued to the Public with a view to contribute to the capital market
and to provide investors the opportunities to make investments in diversified securities.

30

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 mail or through their website. They have Open end Diversified Equity
schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving
schemes, Open end Income and Liquid schemes, closed end Income schemes and Open end Fund
of Funds schemes to offer.

Morgan Stanley Mutual Fund India:

Morgan Stanley is a worldwide financial services company and it is
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.

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
31

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.

Pros & cons of investing in mutual funds

For investments in mutual fund, one must keep in mind about the Pros and cons of investments in
mutual fund.

Advantages of Investing in Mutual Funds:

1. Professional Management
The basic advantage of funds is that, they are professional managed, by well
qualified professional. Investors purchase funds because they do not have the time or the
expertise to manage their own portfolio. A mutual fund is considered to be relatively less
expensive way to make and monitor their investments.

2. Diversification
Purchasing units in a mutual fund instead of buying individual stocks or bonds,
the investors risk is spread out and minimized up to certain extent. The idea behind
diversification is to invest in a large number of assets so that a loss in any particular
investment is minimized by gains in others.

3. Economies of Scale
Mutual fund buy and sell large amounts of securities at a time, thus help to
reducing transaction costs, and help to bring down the average cost of the unit for their
investors.

4. Liquidity
Just like an individual stock, mutual fund also allows investors to liquidate
their holdings as and when they want.

5. Simplicity
Investments in mutual fund are considered to be easy, compared to other
available instruments in the market, and the minimum investment is small. Most AMC also
have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just
32

Rs.50 per month basis.

6. Affordability
A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc.
depending upon the investment objective of the scheme. An investor can buy into a
portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus
gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount
today would get you less than quarter of an Infosys share! Thus it would be affordable for
an investor to build a portfolio of investments through a mutual fund rather than investing
directly in the stock market.

Disadvantages of Investing in Mutual Funds:

1. Professional Management
Some funds dont perform in either the market, as their management is not
dynamic enough to explore the available opportunity in the market, thus many investors
debate over whether or not the so-called professionals are better than mutual fund or
investor himself, for picking up stocks.

2. Costs
The biggest source of AMC income is generally from the entry & exit load which
they charge from investors, at the time of purchase. The mutual fund industries are thus
charging extra cost under layers of jargon.

3. Dilution
Because funds have small holdings across different companies, high returns from a
few investments often don't make much difference on the overall return. Dilution is also
the result of a successful fund getting too big. When money pours into funds that have had
strong success, the manager often has trouble finding a good investment for all the new
money.
4

Taxes
When making decisions about your money, fund managers don't consider your personal tax
situation. For example, when a fund manager sells a security, a capital-gain tax is triggered,
33

which affects how profitable the individual is from the sale. It might have been more
advantageous for the individual to defer the capital gains liability.

34

COMPANY PROFILE

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 on end August 2006, Reliance mutual fund has Rs 28,753 crore of assets under management.
Reliance Equity Fund, launched by Reliance MF in early 2006, is the largest mutual fund scheme
in the country with a fund size of over Rs 5,500 crore.
Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets
Under Management (AAUM) of Rs. 1, 11,819 Crores and an investor count of over 74 Lakh
folios. Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of
the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio
of products to meet varying investor requirements and has presence in 159 cities across the
country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer
service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed by
Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which
holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by
minority shareholders."
Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services and banking
companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life
and general insurance, private equity and proprietary investments, stock broking and other
financial services.

35

STRUCTURE OF RELIANCE

VISION STATEMENT
To be a globally respected wealth creator, with an emphasis on customer care and a culture of
good corporate governance.
MISION STATEMENT
To create and nurture a world-class, high performance environment aimed at delighting their
customers.
36

Equity/Growth Schemes
The aim of growth funds is to provide capital appreciation over the
medium to long- term. Such schemes normally invest a major part of their corpus in equities.
Such funds have comparatively high risks. These schemes provide different options to the
investors like dividend option, capital appreciation, etc. and the investors may choose an option
depending on their preferences. The investors must indicate the option in the application form.
The mutual funds also allow the investors to change the options at a later date. Growth schemes
are good for investors having a long-term outlook seeking appreciation over a period of time.

Debt/Income Schemes
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate debentures,
Government securities and money market instruments. Such funds are less risky compared to
equity schemes. These funds are not affected because of fluctuations in equity markets.
However, opportunities of capital appreciation are also limited in such funds. The NAVs of such
funds are affected because of change in interest rates in the country. If the interest rates fall,
NAVs of such funds are likely to increase in the short run and vice versa. However, long term
investors may not bother about 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.

37

ExchangeTradedFunds (ETFs)
Exchange Traded Funds (ETFs) are usually passively managed mutual fund
schemes tracking a benchmark index and reflect the performance of that index. These schemes
are listed on the stock exchange and therefore have the flexibility of trading like a share on the
stock exchange. It can also be looked as a security that tracks an index, a commodity or a basket
of assets like an index fund, but trades like a stock on an exchange, thus experiencing price
changes throughout the day as it is bought and sold.

Fixed Maturity Plans (FMPs)

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

EQUITY / GROWTH SCHEMES

Reliance Growth Fund :
The primary investment objective of the scheme is to achieve long term growth of
capital by investing in equity and equity related securities through a research based investment
approach.

Reliance Vision Fund :

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 Equity Opportunities Fund :

The primary investment objective of the scheme is to seek to generate capital
38

appreciation & provide long-term growth opportunities by investing in a portfolio constituted of

equity securities & equity related securities and the secondary objective is to generate consistent
returns by investing in debt and money market securities.

Reliance Quant Plus Fund :

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.

Reliance NRI Equity Fund :

The primary investment objective of the scheme is to generate optimal returns by
investing in equity and equity related instruments primarily drawn from the Companies in the
BSE 200 Index.

Reliance Tax Saver (ELSS) Fund :

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 Regular Savings Fund 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.

Reliance Regular Savings Fund () Balanced Option:

The primary investment objective of this Option is to generate consistent return and
appreciation of capital by investing in mix of securities comprising of Equity, Equity related
Instruments & Fixed income instruments.

Reliance Equity Fund :

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
39

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 Equity Advantage Fund :

The primary investment objective of the scheme is to seek to generate capital
appreciation & provide long-term growth opportunities by investing in a portfolio predominately
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.

Reliance Long Term Equity Fund:

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

Reliance Equity Linked Saving Fund

The primary objective of the scheme is to generate long-term capital appreciation from
a portfolio that is invested predominantly in equities along with income tax benefit.

Reliance Natural Resources Fund :

The primary investment objective of the scheme is to seek to generate capital
appreciation & provide long-term growth 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 Infrastructure Fund :

40

The primary investment objective of the scheme is to generate long term capital
appreciation by investing predominantly in equity and equity related instruments of companies
engaged in infrastructure and infrastructure related sectors and which are incorporated or have
their area of primary activity, in India and the secondary objective is to generate consistent
returns by investing in debt and money market securities.

DEBT/INCOME SCHEMES

Reliance Income Fund :

The primary investment objective of the scheme is to generate optimal returns
consistent with moderate level 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 Liquid Fund:

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 Medium Term Fund:

The primary investment objective of the scheme is to generate regular income in
order to make regular dividend payments to unit holders and the secondary objective is growth of
capital.

Reliance Short Term Fund:

The primary investment objective of the scheme is to generate stable returns for
investors with a short term investment horizon by investing in fixed income securities of a short
term maturity.

Reliance Gilt Securities Fund:

41

The primary investment objective of the scheme is to generate optimal credit risk-free
returns by investing in a portfolio of securities issued and guaranteed by the Central Government
and State Government.

Reliance Monthly Income Plan:

The primary investment objective of the scheme is to generate regular income in
order to make regular dividend payments to unit holders and the secondary objective is growth of
capital.

Reliance Floating Rate Fund:

The primary investment objective of the scheme is to generate regular income
through investment in a portfolio comprising substantially of Floating Rate Debt Securities
(including floating rate securitized debt, 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 securitized debt, Money Market Instruments and Fixed Rate Debt
Instruments swapped for fixed returns).

Reliance NRI Income Fund:

The primary investment 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
Instruments.

Reliance Money Manager Fund:

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.
42

Reliance Liquidity Fund:

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 Regular Savings Fund :

The primary investment objective of this Option is to generate optimal returns
consistent with moderate level of risk. This income may be complemented by capital
appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt &
Money Market Instruments. Balanced Option: The primary investment objective of this Option is
to generate consistent return and appreciation of capital by investing in mix of securities
comprising of Equity, Equity related Instruments & Fixed income instruments.

FIXED MATURITY PLAN (closed ended schemes)

Reliance Interval Fund:
The 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 plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund Plan C:

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 scheme with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund - IV:

43

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 scheme with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund - V:

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 plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund - VII:

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 plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund - VIII:

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 plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund - IX:

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 plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund X:

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
44

Government securities and other fixed income/ debt securities normally maturing in line with the
time profile of the plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund XII:

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 plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund XIII:

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 plan with the objective of limiting interest rate volatility.

SECTOR SPECIFIC SCHEMES

Reliance Pharma Fund
The primary investment objective of the scheme is to seek to generate consistent
returns by investing in equity and equity related securities or fixed income securities of Pharma
and other associated companies.

Reliance Diversified Power Sector Fund:

The primary investment objective of the scheme is to seek to generate continuous
returns by actively investing in equity and equity related or fixed income securities of Power and
other associated companies.
45

Reliance Media & Entertainment Fund:

The primary investment objective of the scheme is to generate continuous returns by
investing in equity and equity related or fixed income securities of Media & Entertainment and
other associated companies.

Reliance Banking Fund:

The primary investment objective of the scheme is to generate continuous returns by
actively investing in equity and equity related or fixed income securities of Banks.

46

CHAPTER III

THEORETICAL FRAME WORK

47

FUND PERFORMANCE
For the majority of investors, investment performance is ultimately the most important
factor in determining which mutual fund to invest in. A mutual fund's performance can be
measured in several different ways, depending on its investment objectives. Whether a fund aims
for long term growth, current income, or a combination of the two, investors can track fund
performance and judge profitability by:

Following changes in share price or net asset value (NAV)

Calculating total return

Figuring yield

While each calculation enables investors to compare a fund's performance to similar funds
offered by different companies, there is no simple calculation for comparing funds to individual
securities, because each return is figured differently depending on the type of investment.
As individual investors, we are all investment managers- of our own portfolios! Therefore, to
accurately answer the question of how are my investments doing we need to gauge our
investment performance at the portfolio level, rather than by each individual security. Utilizing
the net asset value (NAV) method of performance tracking allows us to measure the performance
of our entire portfolio and accurately compare our results with the universe of professionally
managed funds.
The NAV method is also the only accurate means of accounting for cash placed into, or taken out
of, an investment portfolio. New investments in the portfolio are made at the closing NAV on the
day of the investment. Similarly, money taken out of a portfolio is taken out at the NAV on the
day of the withdrawal. In either case, because a funds shares increase or decrease with the flow
of investments, accurate performance measurement is assured. Remember, the net asset value
equals the value of the fund investments divided by the shares outstanding.

48

Sample calculation:

Portfolio
Value
Fund
Shares
NAV

Day 1

Day 2

Day 3

$1,000,000

$1,200,000

$1,205,000

100,000

100,000

100,416.67

100,416.67

$10.00

$12.00

$12.00

$17.43

NAV = Portfolio

$5000 invested at

New assets and

Change since Day 1:

shares reflected

$7.43 ($17.43-$10.00)

value / fund shares NAV

Day 4
$1,750,000

$5000 / $12.00 =

Performance: up 74.3%

416.67 new shares

($7.43 / $10.00 = 0.743)

Notice the new investment on day 2 increases both the funds total portfolio value and shares
outstanding. To calculate investment performance, find the difference between the beginning and
ending net asset values and divide that number by the beginning NAV.
To use this method of performance tracking for your own portfolio, choose an arbitrary number
of shares outstanding and calculate your NAV. Note that in getting started, it is not important
what number you choose. Here at Marketocracy, for example, we choose 100,000.
When new investments are made, look at the closing NAV on that day and divide the amount of
your new investment by it. This will give you the correct number of shares to add to your
portfolio shares outstanding. Do the same calculation when you take money out of your
investment portfolio, but subtract the equivalent number of shares from the total portfolio shares
outstanding. For instance, if you were to withdrawal $20,000 from the above portfolio on day 4,
the shares of the portfolio would be reduced by 1,147.45 ($20,000 divided by $17.43 =
1,147.45). The shares outstanding would then be 99,269.22.
Total Return % = (Change in Value + Dividends) / Cost of Initial Investment
49

e.g.: $2,000 / $7,000 = 28.57%

A fund's total return is the annual amount your investment changes in value, plus any
distributions, divided by your initial investment. Of course, if additional purchases are made, or
some shares are redeemed, this will affect your total return. When considering total return it is
important to remember that two people invested in the same fund can have different total returns,
depending on when they each invested. The NAV method of performance tracking mentioned
above addresses this issue and is the easiest way for us to account for additional purchases or
sales of an investment and to accurately compare our results to professionally managed funds.

Yield % = Distribution per Share / Price per Share

e.g.: $0.68 / $20 = 3.4%
Yield measures the amount of income a fund generates as a percentage of its Net Asset Value.
An intermediate bond fund with an NAV of $20 paying $0.68 of income distribution per share
provides a 3.4%yield. This measurement allows for yield comparisons between different bond
funds, or between a bond fund and the current yield on a comparable investment. However, when
evaluating a fund's overall investment performance, yield is only part of the equation.

Performance measures for mutual funds

Risk and investing go hand in hand. To know your funds performance, apart from comparing
the performance vi-a-vies the benchmarks, an investor should also make use of certain statistical
measures that make evaluation of a mutual fund even more precise. Among the most commonly
used ratios, there are six ratios, which we come across very often but fail to understand their
utility. They are Standard Deviation, Beta, Sharpe, Alpha, Trey nor and R-Squared.

Standard deviation:
Standard deviation is a statistical measure of the range of a fund's performance, and is
reported as an annual number. When a fund has a high standard deviation, its range of
performance has been very wide, indicating that there is a greater potential for volatility.

Beta:

50

Another way to assess the Funds up and down movement is its Beta measure. Beta
measures the volatility of a fund relative to a particular market benchmark i.e. how sensitive the
fund is to market movements.
A Beta greater than 1 means that the fund is more volatile than the benchmark. A Beta less than
1 means that the fund is less volatile than the benchmark. For example, a Beta of 1.1 would
indicate that if the market goes up 10%, the fund might rise 11% and vice versa in a down
market.

Sharpe:
The most common measure that combines both risk and reward into a single indicator is
the Sharpe Ratio. A Sharpe Ratio is computed by dividing a funds return in excess of a risk-free
return (usually a 90-day Treasury Bill or SBI fixed deposit rate) by its standard deviation. This
measures the amount of return over and above a risk-free rate against the amount of risk taken to
achieve the return. So if a fund produced a 20% return while the SBI fixed deposit rate returned
6.5% and its standard deviation is 10%, its Sharpe Ratio would be
(20 6.5) / 10 = 1.35.
Generally, there is no right or wrong Sharpe Ratio. The measure is best used to compare one
funds ratio with another, or to its peer group average. For similar funds, the higher the Sharpe
Ratio, the better a funds historical risk-adjusted performance.
Sharpe ratio = (Fund Average Return - Risk Free Return) / Standard Deviation of the Fund

R-Squared (R2):
The R-Squared measure reveals what percentage of a funds movements can be related
to movements in its benchmark index. An R-Squared of 100 would mean that all of the funds
movements are perfectly explained by its benchmark; Index funds normally achieve this ideal. A
high R-squared means the beta on a fund is actually a useful measurement. A low R-squared
means ignore the beta.

Alpha:
The Alpha measure is less about risk than it is about "value added." Alpha represents
the difference between the performance you would expect from a fund, given its Beta, and the
51

actual returns it generates. A high alpha (more than 1) means that the fund has performed well. A
negative alpha means the fund under performed.
Mathematically, Alpha= fund return - [Risk free rate + Beta of fund (Benchmark return - Risk
free return)]

Trey nor:
The neither Trey nor ratio is similar to the Sharpe ratio. Instead of comparing the funds
risk adjusted performance to the risk free return, it compares the funds risk adjusted
performance of the relative index.

The following AMCs have been selected for comparing the fund performance and for analyzing
the portfolio of RELIANCE MUTUAL FUND.

Reliance Mutual Fund

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.

52

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.

Sundaram BNP Paribas Mutual Fund

Sundaram BNP Paribas mutual fund is a joint venture between Sundaram Finance and
French banking giant BNP Paribas. Sponsors of the fund are Sundaram Finance Limited and
BNP Paribas Asset Management, which is the asset management arm of BNP Paribas.
Sundaram Finance is one of India's largest non-banking companies with an asset base in excess
of Rs 3,000 crore and annual revenues of over Rs350 crore. BNP Paribas is one of the largest
European banks with a total asset base of 1.2 trillion and market capitalization of around 57
billion.

Sundaram BNP Paribas Asset Management Company Limited is the fund manager to the mutual
fund. BNP Paribas acquired a 49 per cent in the AMC in August, 2006, with Sundaram Finance
holding the balance.
T. P. Raman is the managing director and CEO of the AMC. Fund management function is
headed by N Prasad, chief investment officer. As of end August 2006, the fund has assets of over
Rs.5, 808 crore under management.

Franklin Templeton Mutual Fund

53

Franklin Templeton Investments, global investment management major, started their

India operations in 1996 as Templeton Asset Management India Pvt. Limited. It flagged off the
mutual fund business with the launch of Templeton India Growth Fund in September 1996.
Over the years, Franklin Templeton has emerged as one of the largest and renowned mutual
funds in the country. Franklin Templeton has over Rs.24,198 crore under management as of Aug
2006.
Franklin Templeton Asset Management (India) Private Limited acts as the asset management
company with Templeton holding a majority of 75 per cent of the equity. The fund management
is headed by Mark Mobius, who is also a director of the AMC and one of the best fund managers
in the world.
The board of directors of the company has Gregory Johnson, president of Franklin Templeton
USA as its chairman. Deepak Satwalekar of HDFC and Rajan Rahja are the other prominent
members.

HDFC Mutual Fund

HDFC Mutual Fund has been one of the best performing mutual funds in the last few
years. HDFC Asset Management Company Limited (AMC) functions as an Asset Management
Company for the HDFC Mutual Fund.
AMC is a joint venture between housing finance giant HDFC and British investment firm
Standard Life Investments Limited. It conducts the operations of the Mutual Fund and manages
assets of the schemes, including the schemes launched from time to time. As of Aug 2006, the
fund has assets of Rs.25,892 crores under management.
IN 2003, following a decision by the Zurich Insurance Company (ZIC), the Sponsor of Zurich
India Mutual Fund, to divest its asset management business in India, AMC had entered into an
agreement with ZIC to acquire the asset management business. Consequently, all the schemes of
Zurich Mutual Fund in India had been transferred to HDFC Mutual Fund and renamed as HDFC
schemes.

HSBC Mutual Fund

54

HSBC is one of the world's leading banking giants and boasts of a 140-year history in
banking services. HSBC operates in more than 70 countries across the globe and has assets of
over $1.2 trillion on the consolidated group balance sheet. The investment banking and fund
management businesses of the group is handled by HSBC Investments.
HSBC Asset Management India Private Limited acts as the Asset Management Company to the
HSBC Mutual Fund. HSBC Securities and Capital Markets India Private Limited, an affiliate of
the HSBC group, is the sponsor of the fund and owns 75 percent stake in the AMC.
The AMC is headed by its chairman Niall S Booker, who is also the head of HSBC Bank in
India. The operations of the AMC are headed by Sanjay Prakash, director and CEO. As of Aug
2006, the fund has assets of over Rs.10, 684 crore under management.

J M Mutual Fund
One of India's first private sector mutual funds, JM mutual fund was launched by
the one of the best-known domestic brokerages, JM Financial, owned by the Kampani family.
The Nilesh Kampani-led JM Group played a pivotal role in the development of India's nascent
capital markets in the 1950s. JM mutual fund is not a part of JM Morgan Stanley, JM Financial's
joint venture with Morgan Stanley for investment banking and other financial services. The fund
is sponsored by JM Financial and Investment Consultancy Services Private Limited and JM
Financial Limited.
The AMC of the fund is JM Financial Asset Management Private Limited. The AMC started
operations in December 1994 with a simultaneous launch of three funds-JM Liquid Fund (now
JM Income Fund), JM Equity Fund and JM balanced Fund. The company is headed by Vijay
Kelkar, former finance secretary and advisor to the government of India, as chairman of the
board. As on Aug 2006, the fund has assets of over Rs.4,241 crore under management.

LIC Mutual Fund

Promoted by India's largest life insurer, Life Insurance Corporation of India, LIC
mutual fund was launched on June 19, 1989. As of Aug 2006, the fund has assets of close to
Rs.10, 703 crore under management. The fund is sponsored by Life Insurance Corporation of
55

India. The investment manager for the mutual fund, Jeevan Bima Sahayog Asset Management
Company Limited, was formed on April 20, 1994 in compliance with the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1993. The operations of the company are
headed by M. S. Suryanarayana, chief executive officer.

UTI Mutual Fund

The setting up of the Unit Trust of India (UTI) in 1963 heralded the birth of the
Indian mutual fund industry. In 1964, UTI mutual fund launched its flagship scheme US-64 and
went on to become a generic term for the mutual fund sector till the government allowed public
sector banks to start mutual funds in 1987. Despite being the trendsetter in the segment, the UTI
mutual fund could not sustain the initial tempo and was on the verge of a collapse in 2001,
before the government bailed it out and restructured the fund. After the restructuring, the fund
has somewhat redeemed its credibility through professional management and a booming market.
The fund's sponsors are public sector financial giants like Life Insurance Corporation, SBI, Bank
of Baroda and Punjab National Bank. The sponsors hold equal stakes in the asset management
company, UTI Asset Management Company Private Limited. UTI Mutual Fund remains the
largest fund in the country with assets of over Rs.35,028 crore under management as of Aug
2006.
In 2003, UTI was divided into two parts, UTI Mutual Fund (UTI MF) and a specified
undertaking of UTI or UTI-I. UTI MF was brought under SEBI regulations while UTI-I was kept
under direct government control since its schemes offered guaranteed

56

CHAPTER - IV

DATA ANLYSIS AND INTEERPRETATION

57

BANKING FUND
RELIANCE BANKING FUND

Returns (as on Apr

13, 11)
Period

Returns (%)

Rank #

1 mth

6.5

3 mths

4.9

6 mths

-6.8

1 year

33.5

2 year

62.4

3 year

27.0

5 year

24.1

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual
58

2014-15

3.8

9.6

29.9

-3.4

44.2

2013-14

-14.4

65.5

20.1

-0.2

79.5

2012-13

-24.1

-18.2

16.2

-13.6

-39.3

2011-12

-5.0

36.1

19.8

19.8

75.5

2010-11

-0.3

-21.0

37.9

7.2

18.3

UTI BANKING SECTORFUND

Returns (as on Apr

13, 11)

Period

Returns (%)

Rank #

1 mth

9.0

3 mths

12.8

6 mths

-6.6

1 year

29.5

2 year

53.8

3 year

22.9

5 year

24.1

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual
59

2014-15

6.1

4.0

29.7

-6.4

35.7

2013-14

-13.3

63.1

17.6

-0.2

74.9

2012-13

-30.8

-20.6

16.5

-12.9

-46.3

2011-12

-5.6

29.9

18.5

22.1

65.9

2010-11

1.0

-17.8

34.1

16.3

30.8

PERFORMANCE OF BANKING FUND

Fig: 4(a)

INTERPRETATION:
From the above graph we can know that the Reliance banking fund has been performing well
when compared with UTI banking sector fund for the past 5years. Taking from 2010to 2015 the
performance of the reliance banking fund has shown a very high growth when compared with
UTI banking fund.

60

DEBT SHORT TERM

FORTIS FLEXI DEBT FUND

Returns

Period

Returns (%)

Rank #

1 mth

1.1

25

3 mths

1.7

99

6 mths

2.2

116

1 year

4.2

105

2 year

5.8

20

3 year

9.3

5 year

9.3

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.3

1.5

0.7

0.2

3.8

2014-13

-5.2

6.3

0.1

1.2

2.9
61

2013-12

2.8

1.7

2.7

15.2

23.7

2012-11

2.0

1.6

1.5

2.6

8.3

2011-10

1.5

1.6

2.2

2.5

8.4

CANARA ROBECO INCOME

Returns (as on Apr 13, 11)

Period

Returns (%)

Rank #

1 mth

0.6

72

3 mths

1.9

72

6 mths

3.3

69

1 year

6.2

49

2 year

5.6

32

3 year

13.5

5 year

10.3

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

0.3

2.5

0.6

1.3

4.9

2013-14

5.0

0.5

1.1

6.9

2012-13

1.5

2.7

10.2

12.8

29.9

2011-12

1.5

1.4

1.5

1.5

6.4
62

2010-11

1.0

0.8

1.2

1.3

4.6

HDFC HIGH INTEREST FUND

Returns 0n apr 13,11

Period

Returns (%)

Rank #

1 mth

1.1

3 mths

2.1

36

6 mths

2.8

102

1 year

5.3

86

2 year

6.4

12

3 year

8.7

5 year

8.9

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.6

1.5

0.9

0.6

4.9

2013-14

2.3

2.9

1.2

-0.2

9.4

2012-13

2.2

2.0

2.1

5.6

12.4

2011-12

1.5

2.5

2.6

2.6

9.8

2010-11

0.6

2.1

1.8

1.6

6.5

63

J M SHORT TERM PLAN

Returns on apr 13,11

Period

Returns (%)

Rank #

1 mth

0.8

43

3 mths

2.1

29

6 mths

3.7

42

1 year

6.9

12

2 year

6.2

14

3 year

9.4

5 year

8.9

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.0

1.6

1.3

1.4

5.5

2013-14

1.2

2.0

1.0

1.7

6.1

2012-13

2.1

1.7

1.9

10.6

17.1

2011-12

1.6

2.1

2.1

2.6

9.0

64

2010-11

1.0

1.2

1.8

1.6

6.0

RELIANCE SHORT TERM FUND

Returns
Period

Returns (%)

Rank #

1 mth

0.9

36

3 mths

2.0

72

6 mths

3.1

89

1 year

5.5

80

2 year

6.0

16

3 year

8.5

13

5 year

8.6

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.2

1.4

0.9

1.2

5.0

2013-14

2.5

2.8

1.1

-0.2

8.9

2012-13

1.9

1.4

2.0

6.2

12.0

2011-12

1.7

2.3

2.6

2.4

9.7
65

2010-11

1.2

1.7

1.8

1.9

6.9

PERFORMANCE OF DEBT FUND

Fig: 4(b)

INTERPRETATION:
From the above graph we can interpret that the performance of Reliance short term fund has
been decreasing due to the fund portfolio allocation made by the fund manager. The
performance was declining due to the allocation of 99 per cent of fund in debt where as Canara
Robeco has allocated only 55.60 per cent of funds into debt and the remaining in money
market.

66

EQUITY DIVERSIFIED
RELIANCE GROWTH FUND

Returns
Period

Returns (%)

Rank #

1 mth

6.2

212

3 mths

-3.4

244

6 mths

-11.4

195

1 year

2.9

183

2 year

41.2

67

3 year

10.6

60

5 year

14.6

21

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.8

3.4

11.6

-3.4

16.1

2013-14

-6.2

54.7

19.9

-0.2

93.5

2012-13

-30.0

-9.2

-3.6

-23.6

-54.6

2011-12

-3.9

22.1

12.5

33.2

74.7

67

2010-11

20.4

-14.9

17.4

13.8

39.8

RELIANCE REGULAR SAVINGS FUND

Returns
Period

Returns (%)

Rank #

1 mth

7.3

127

3 mths

-3.3

242

6 mths

-10.5

178

1 year

4.6

174

2 year

42.7

52

3 year

11.4

50

5 year

20.9

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.8

2.6

13.2

-1.9

18.3

2013-14

-4.3

55.9

18.9

-0.2

97.8

2012-13

-27.8

-15.6

0.7

-23.7

-54.8

2011-12

-8.5

24.5

12.1

51.8

91.1

2010-11

18.3

-9.0

27.1

9.9

55.9
68

HDFC TOP 200 FUNDS

Returns
Period

Returns (%)

Rank #

1 mth

6.9

161

3 mths

4.6

15

6 mths

-4.5

47

1 year

18.4

2 year

48.6

40

3 year

17.3

10

5 year

17.7

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.3

5.2

16.5

-1.0

24.4

2013-14

-2.0

53.7

18.2

-0.2

91.0

2012-13

-22.7

-11.8

6.2

-22.8

-45.5

2011-12

-5.7

20.3

15.8

20.2

53.2

2010-11

20.5

-12.8

16.9

9.7

37.6

69

SUNDARAM BNP PARIBAS SELECT MIDCAP

Returns
Period

Returns (%)

Rank #

1 mth

8.2

63

3 mths

-0.4

198

6 mths

-11.2

190

1 year

11.0

93

2 year

49.5

16

3 year

14.0

29

5 year

13.9

27

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

-2.3

4.5

16.1

-2.0

18.6

2013-14

-13.1

71.5

24.5

-0.2

109.3

2012-13

-34.2

-12.8

-4.8

-22.2

-58.9

70

2011-12

-7.4

18.0

13.2

31.2

62.3

2010-11

29.1

-4.4

11.3

10.4

56.8

PERFORMANCE OF EQUITY DIVERSIFIED FUND

Fig: 4(c)

INTERPRETATION:
From the above graph the performance of both Reliance Growth and Reliance Regular savings
fund are slightly equal from the past 5 years and they could perform better if more per cent of
investments are allocated into equity sector.

71

MONTHLY INCOME PLAN

RELIANCE MIP
Returns
Period

Returns (%)

Rank #

1 mth

1.9

18

3 mths

1.2

33

6 mths

0.4

26

1 year

6.9

2 year

13.9

3 year

15.4

5 year

11.1

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.1

2.2

4.2

0.3

8.7

2013-14

-3.1

10.0

5.8

-0.2

20.8

2012-13

-6.3

-0.1

1.4

13.6

9.4

2011-12

-3.0

2.5

3.3

5.6

8.3

72

2010-11

4.2

-0.5

5.0

4.3

14.7

HDFC MIP

Returns (as on Aug 04, 10)

Period

Returns (%)

Rank #

1 mth

2.6

3 mths

2.5

6 mths

1.4

12

1 year

9.1

2 year

17.2

3 year

12.7

5 year

11.1

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.7

2.5

4.7

0.6

10.7

2013-14

0.7

17.4

5.5

3.3

30.5

2012-13

-7.1

-3.5

2.3

0.6

-8.6

2011-12

0.6

5.8

4.1

7.1

18.0
73

2010-11

4.7

-2.1

5.6

3.2

12.6

HSBC MIP
Returns
Period

Returns (%)

Rank #

1 mth

2.4

3 mths

1.2

34

6 mths

-0.9

35

1 year

3.3

26

2 year

11.8

3 year

8.4

5 year

9.4

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

1.0

0.4

3.9

0.4

6.8

2013-14

-2.5

9.2

5.4

3.1

18.1

2012-13

-4.9

-2.7

-0.4

5.3

-2.9

74

2011-12

-0.8

7.1

5.6

6.7

19.4

2010-11

2.9

-1.0

4.3

4.0

11.2

LIC MF FLOATER MIP

Returns
Period

Returns (%)

Rank #

1 mth

2.4

3 mths

2.5

6 mths

1.8

1 year

7.0

2 year

10.7

3 year

8.1

11

5 year

8.8

10

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

2.0

1.8

3.1

0.8

8.1

2013-14

9.0

3.6

1.4

15.1

75

2012-13

-4.2

-2.0

2.1

-0.3

-4.0

2011-12

-0.5

6.0

6.0

6.9

19.3

2010-11

6.1

-3.1

4.4

3.7

12.1

UTI MIS MIP

Returns
Period

Returns (%)

Rank #

1 mth

2.8

3 mths

2.4

6 mths

1.1

16

1 year

6.7

10

2 year

12.4

3 year

9.1

5 year

9.0

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

0.7

1.7

3.3

0.4

6.8

2013-14

0.6

11.8

4.5

2.2

21.2

2012-13

-5.8

-4.0

0.5

2.8

-7.2
76

2011-12

-1.7

6.6

4.2

8.5

17.8

2010-11

5.6

-2.9

4.1

4.3

12.3

PERFORMANCE OF MIP

Fig: 4(d)
INTERPRETATION:
From the above graph we can find that Reliance MIP has never given negative returns since 5
years and also started performing extraordinarily by providing better dividends to the small
investors when compared with the MIPs of other AMCs.

77

PHARMA FUND
FRANKLIN PHARMA FUND

Returns (as on Aug 04, 10)

Period

Returns (%)

Rank #

1 mth

6.7

3 mths

-1.5

6 mths

0.1

1 year

15.2

2 year

60.8

3 year

31.8

5 year

16.2

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

13.0

7.3

3.9

6.1

36.6

2013-14

-0.8

37.5

31.6

19.7

111.2

2012-13

-13.3

4.8

1.2

-20.8

-27.4
78

2011-12

-1.9

11.9

-11.8

10.0

5.6

2010-11

17.0

-21.6

14.9

6.7

13.5

SBI MAGNUM PHARMA FUND

Returns
Period

Returns (%)

Rank #

1 mth

7.8

3 mths

-1.1

6 mths

1.1

1 year

17.2

2 year

50.1

3 year

13.1

5 year

3.3

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

4.6

9.8

-0.3

9.5

29.6

2013-14

-11.3

43.8

26.2

-0.2

81.2

2012-13

-27.0

6.7

-10.5

-27.8

-50.2

79

2011-12

-7.3

12.9

-9.7

11.7

5.6

2010-11

10.0

-17.8

14.9

4.1

11.1

UTI PHARMA & HEALTH CARE FUND

Returns
Period

Returns (%)

Rank #

1 mth

6.8

3 mths

-2.3

6 mths

1.4

1 year

15.5

2 year

44.0

3 year

22.0

5 year

11.1

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

11.8

8.9

1.4

9.9

37.4

2013-14

-1.3

18.2

25.1

-0.2

65.7

2012-13

-15.5

9.8

-0.4

-18.4

-26.4

80

2011-12

-4.4

13.4

-6.5

10.7

10.8

2010-11

14.1

-22.2

13.5

4.8

7.8

RELIANCE PHARMA Funds

Returns
Period

Returns (%)

Rank #

1 mth

8.4

3 mths

-1.9

6 mths

-1.1

1 year

12.2

2 year

67.3

3 year

32.7

5 year

22.2

Absolute Returns (in %)

Year

Qtr 1

Qtr 2

Qtr 3

Qtr 4

Annual

2014-15

11.0

8.7

0.9

6.6

32.0

2013-14

-5.4

33.0

40.9

-0.2

116.7

2012-13

-29.1

0.6

3.4

-10.6

-35.0

81

2011-12

-4.3

31.2

-2.7

18.5

47.8

2010-11

13.6

-23.2

21.9

4.9

15.7

PERFORMANCE OF PHARMA FUND

Fig: 4(e)
INTERPRETATION:

82

From the above graph we can interpret that Reliance pharma fund has been performing well
since 5 years when compared with UTI, SBI, and Franklin.

CHAPTER V

FINDINGS
SUMMARY
SUGGESTIONS
BIBLIOGRAPHY

83

FINDINGS
1. The performance of the Reliance Banking Fund was comparatively much better when
compared with UTI Banking Fund since 5 years when we look in terms of returns.
2. Though Canara Robeco debt fund performed well in 2008 Reliance Banking fund stood in
better position in 2009.
3.Though Reliance regular savings fund growth showed a poor performance in 2008 the
performance picked up in 2009 but still it could not perform much better than Sundaram BNP
Paribas.
4. Performance of Reliance MIP was not good when compared with HDFC MIP.Because HDFC
allocated 23.75 per cent of its assets in equity whereas Reliance allocated only 17.38 per cent.
5. Reliance Pharma Fund has performed well with 116.7 percent absolute returns in 2009.
6. Only Reliance AMC has allocated its funds in other options whereas other AMCs allocated
only in equity.
7. Reliance has allocated 99.82 per cent of its funds in Debt and 40.58 per cent is concentrated in
Top5 holdings and 60.28 per cent in Top10 holdings for better fund performance.

84

8. Reliance AMC has 38.50 per cent of holdings in Top5 companies and 65.48 per cent in Top10
holdings which is very less when compared with UTI.
9. Reliance MIP has allocated 80.82 per cent of its assets in Debt and 17.38 per cent in equity
when compared with other AMCs.

SUGGESTIONS
1. Asset management companies need to proper educate the investor to increase the awareness
and break the myths about mutual fund.
2. Index Funds have delivered much less compared to actively managed Funds. Gilt and Income
Funds have performed very well during the last three years. They perform best in a falling
interest environment. Since interest rates are now much lower, short term Funds are preferable.
3. Diversified equity has done very well while sectorial categories have fared poorly in Indian
market.
4. Mutual fund distributors like Reliance Mutual Fund should start a campaign to educate the
investors: there is a need of advertisement also to attract the investor.
5. Sales force should be well educated about every aspect of mutual fund so that they can solve
the queries of the investors.
6. AMCs should target rural market as a potential hub of customer. In rural area people are
getting wealth gradually and need a guidance to shift their portfolio from old sources to new and
modern sources

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SUMMARY
Indias mutual fund industry suffered one of its worst crises in recent times during 2008-2009 as
the US originated housing market crises, which rocked the global financial markets towards
October 2008, hit domestic financial market as well. Equities crashed, bond markets went into a
tailspin, exports suffered, and India Inc.s sentiment was hit badly for the first time in many years,
possibly 2000. But the industry made a comeback of a sort led by a strong revival in equities,
worldwide, towards the beginning of the fiscal 2009-10, as investor sentiment in equities revived
as they left behind memories of the shocks from the banking sector turmoil and shrugged off fears
of long recessionary period. The sustained rally in equities since then saw the fortunes of the fund
industry change for the better. A slew of factors like a benign interest rate regime, improved
liquidity, revival in the job market, and moderate inflation among others helped revive investor
sentiment in mutual funds. The period also saw the market regulator introducing a slew of reforms
aimed at furthering the growth of the industry. Against this backdrop, the industry looks all set to
cross many more milestones in the years to come, provided it addresses certain concerns.
The previous fiscal year marked a major watershed in the history of the mutual funds industry in
India as the market regulator SEBI introduced some really path breaking reforms which in the long

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run could prove beneficial to the industry even as it hurts the industry in the short run in terms of
investment inflows.
Investing in mutual funds purely on the basis of return is a decision that investors often regret later.
The credit quality of the fund is a key risk parameter, without which no meaningful analysis of the
fund performance can be done.

BIBLIOGRAPHY

BOOKS
1. MUTUAL FUNDS IN INDIA
Nalini Prava Tripathy

WEBSITES
www.mutualfundsindia.com
www.valueresearchonline.com
www.nseindia.com
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www.reliancemutualfund.com

JOURNALS
The Analyst Mutual Funds July 2010
(Pages 26, 28, 72)

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