CHAPTER I
INTRODUCTION
Mutual Fund is one of the financial instruments in capital market, here the study based on
the empirical investigation on the performance of Mutual Fund schemes, main purpose of the
study is to identify which of the month and year schemes provided highest return and minimize
the risk. Research need because of the capital market is unexpected volatility and some time
reaction was positive and negative. Good and bad news affects price movement, that needs to
identify how much market or bench mark provided return. On years 2008 started with large IPO
offering of Reliance Power, which sucked the liquidity from the market and more companies
have lined up plans to raise money from the markets.
Investors need to identify trade off return and risk. The year 2009 had unprecedented
global liquidity crisis that led to a share slowdown in growth. The industrial growth index was
zero. Time valuations are attractive for investment decision and strategies for active
diversification of portfolio. March 2009 sensex and Nifty down by 37% & 36 % respectively.
Mutual fund industry has been affected by stock market movements. Mutual fund increased their
stock/ scrip fund holding from 4.1% to 21.2% of the total market capitalization. It had
opportunity to research in this field, with focus on competitive structure of the mutual fund
industry. Equity diversified fund directly affect the stock movements while index, income and
balance fund are less affects.
There are a lot of investment avenues available today in the financial market for an
investor with an investable 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
TYBFM
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.
DEFINITION:
TYBFM
Mutual funds are collective savings and investment vehicles where savings of small (or
sometimes big) investors are pooled together to invest for their mutual benefit and returns
distributed proportionately.
A mutual fund is an investment that pools your money with the money of an unlimited
number of other investors. In return, you and the other investors each own shares of the fund.
investments. Aggressive growth funds seek long-term capital growth by investing
primarily in stocks of fast-growing smaller companies or market segments. Aggressive growth
funds are also called capital appreciation funds.
TYBFM
higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives
market which is considered very volatile.
s, on a proportionate basis, get mutual fund units for the sum contributed to t
d from investors is invested into shares, debentures and the other securities b
e fund manager realize gains or losses, and collects dividend or interest incom
from such investment are passed on to the investors in proportion of the num
TYBFM
1992-93
Amount Mobilized
Assets Under
Management
Mobilization as % of
gross Domestic
Savings
UTI
11,057
38,247
5.2%
TYBFM
Public Sector
1,964
8,757
0.9%
Total
13,021
47,004
6.1%
TYBFM
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.
The Assets under Management(AUM) have grown at a rapid pace over the past few years at a
CAGR of 35% for the past few years at a CAGR of 35 percent for the five- year period from 31
March, 2005 to 31 March, 2009. Over the 10-year period from 1999 to 2009 encompassing
varied economic cycles, the industry grew at 22% CAGR.
This growth was despite two falls in the AUM the first being after year 2001 due to dotcom
bubble burst and the second in 2008, consequent to the global economic crisis.
TYBFM
TYBFM
To study about the risk factors involved in the Mutual Funds and How to analyze it?
To study the performance indices that can be used for mutual fund comparison.
To compare mutual funds of selected companies on the basis of their return and Sharpe
Index.
To study the people in which age and income group prefer mutual funds over other
investment options.
TYBFM
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the funds assets, thus enabling him to hold a
diversified investment portfolio even with a small amount of investment that would otherwise
require big capital.
2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from the professional
management skills brought in by the fund in the management of the investors portfolio. The
investment management skills, along with the needed research into available investment options,
TYBFM
ensure a much better return than what an investor can manage on his own. Few investors have
the skill and resources of their own to succeed in todays fast moving, global and sophisticated
markets.
3. Reduction/Diversification Of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he places a
deposit with a company or a bank, or he buys a share or debenture on his own or in any other
from. While investing in the pool of funds with investors, the potential losses are also shared
with other investors. The risk reduction is one of the most important benefits of a collective
investment vehicle like the mutual fund.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they
invest in the units of a fund, they can generally cash their investments any time, by selling their
units to the fund if open-ended, or selling them in the market if the fund is close-end. Liquidity
of investment is clearly a big benefit.
7. Tax Benefits:
TYBFM
Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit
holders. However, as a measure of concession to Unit holders of open-ended equity- oriented
funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional
rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total
Income will be admissible in respect of income from investments specified in Section 80L,
including income from Units of the Mutual Fund. Units of the schemes are not subject to WealthTax and Gift-Tax.
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
9. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
10. Transparency:
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and
the fund manager's investment strategy and outlook.
TYBFM
An investor in a mutual fund has no control of the overall costs of investing. The investor pays
investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are payable even if the value of his investments is
declining. A mutual fund investor also pays fund distribution costs, which he would not incur in
direct investing. However, this shortcoming only means that there is a cost to obtain the mutual
fund services.
2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and other
securities. Investing through fund means he delegates this decision to the fund managers. The
very-high-net-worth individuals or large corporate investors may find this to be a constraint in
achieving their objectives. However, most mutual fund managers help investors overcome this
constraint by offering families of funds- a large number of different schemes- within their own
management company. An investor can choose from different investment plans and constructs a
portfolio to his choice.
5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of
somebody else's car.
6. Dilution:
TYBFM
Mutual funds generally have such small holdings of so many different stocks that insanely great
performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's
total performance.
7. Buried Costs:
Many mutual funds specialize in burying their costs and in hiring salesmen who do not make
those costs clear to their clients.
F.) Hypothesis
TYBFM
TYBFM
1. Universe:
The universe of the study consists of the all the assets management companies (AMC), included
selected five start mutual funds under the different objective of the study.
Sampling Unit:
The sample unit included Equity Schemes Diversification Funds, Balanced Schemes, Income
Balanced Schemes, Monthly Income Funds, Long Term and Short Term Funds. All the
schemes rating the five starts by Mutual fund Insight.
Sources List:
Sample should collect on secondary sources. Its included the mutual fund fact sheet and
magazine the Mutual Fund Insight. and addition to others journals, magazines, articles, books
and the publisher and unpublished documents of the mutual funds have been consider in the
research.
Sample Period:
Sample study should take from period January 2005 to December 2009.
Sample Size:
Sample size of the study was as below:
1. Equity Diversified Mutual Fund 19th Schemes
Birla Sun Life Equity Fund
3.A
3.B
TYBFM
Franklin India Prima Fund
3.C
3.D
3.E
3.F
3.G
3.H
3.I
3.J
3.K
3.L
3.M
3.N
3.O
3.P
3.Q
3.R
3.S
TYBFM
Birla Sun Life Midcap Fund
4.A
4.B
4.C
4.D
4.E
4.F
4.G
4.H
4.I
4.J
4.K
4.L
4.M
4.O
TYBFM
5.I
5.J
5.K
CHAPTER II
PROFILE OF STUDY
TYBFM
B.) PROGRESS
TYBFM
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.
RMF is one of Indias leading Mutual Funds, with Average Assets Under Management
(AAUM) of Rs. 88,388 crs (AAUM for 30th Apr 09) and an investor base of over 71.53 Lacs.
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 118 cities across the country.
Reliance Mutual Fund constantly endeavours 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."
Sponsor: Reliance Capital Limited.
Trustee: Reliance Capital Trustee Co. Limited.
Investment Manager:
Reliance Capital Asset Management Limited. The Sponsor, the Trustee and the Investment
Manager are incorporated under the Companies Act 1956.
Vision Statement:
To be a globally respected wealth creator with an emphasis on customer care and a culture of
good corporate governance.
Mission Statement:
TYBFM
To create and nurture a world-class, high performance environment aimed at delighting our
customers.
The Main Objectives of the Trust:
To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise
various collective Schemes of savings and investments for people in India and abroad and also
ensure liquidity of investments for the Unit holders;
To deploy Funds thus rose so as to help the Unit holders earn reasonable returns on their
savings.
To take such steps as may be necessary from time to time to realise the effects without any
limitation.
TYBFM
SCHEMES:
A). 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. Growth schemes are good for investors having a long-term outlook seeking
appreciation over a period of time.
1. Reliance Infrastructure Fund (Open-Ended Equity):
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 (Airports, Construction, Telecommunication, Transportation) 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.
Investment Strategy:
The investment focus would be guided by the growth potential and other economic factors of the
country. The Fund aims to maximize long-term total return by investing in equity and equityrelated securities which have their area of primary activity in India.
2. Reliance Quant plus Fund/Reliance Index Fund (Open-Ended Equity):
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. An investment fund that approach stock selection process based on
quantitative analysis.
TYBFM
3. Reliance Natural Resources Fund (Open-Ended Equity):
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 resourhe secondary objective is to
generate consistent returns by investing in debt and money market securities.
Natural resources may include, for example, energy sources, precious and other metals, forest
products, food and agriculture, and other basic commodities.
4. Reliance Equity Linked Saving Fund (A 10 Year Close-Ended Equity ):
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.
The scheme may invest in equity shares in foreign companies and instruments convertible into
equity shares of domestic or foreign companies and in derivatives as may be permissible under
the guidelines issued by SEBI and RBI.
5. Reliance Equity Advantage Fund (Open-Ended Diversified Equity):
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.
6. Reliance Equity Fund (Open-Ended Diversified Equity) :
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.
TYBFM
7. Reliance Tax Saver (ELSS) Fund (Open-Ended Equity):
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.
Tax Benefits:
Investment upto Rs 1 lakh by the eligible investor in this fund would enable you to avail the
benefits under Section 80C (2) of the Income-tax Act, 1961.
Dividends received will be absolutely TAX FREE.
The dividend distribution tax (payable by the AMC) for equity schemes is also NIL
8. Reliance Growth Fund (Open-Ended Equity):
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.
9. Reliance Vision Fund (Open-Ended Equity) :
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.
10. Reliance Equity Opportunities Fund (Open-Ended Diversified Equity):
The primary investment objective of the scheme is to seek to generate capital appreciation &
provide long-term growth opportunities by investing in a portfolio constituted of equity securities
& equity related securities and the secondary objective is to generate consistent returns by
investing in debt and money market securities.
TYBFM
B). 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.
TYBFM
4. 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 unit holders
and the secondary objective is growth of capital
5. 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.
6. 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.
7. 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.
8. 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.
TYBFM
TYBFM
Vision:
To be the most Preferred Mutual Fund.
Mission:
The most trusted brand, admired by all stakeholders.
The largest and most efficient money manager with global presence
The best in class customer service provider
The most preferred employer
The most innovative and best wealth creator
A socially responsible organisation known for best corporate governance.
Assets Under Management: UTI Asset Management Co. Ltd
Sponsor:
State Bank of India
Bank of Baroda
Punjab National Bank
Life Insurance Corporation of India
Trustee: UTI Trustee Co. Limited.
Reliability:
UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and
registrar offices are connected on a robust IT network to ensure cost-effective quick and efficient
service. All these have evolved UTIMF to position as a dynamic, responsive, restructured,
efficient and transparent entity, fully compliant with SEBI regulations.
TYBFM
SCHEMES:
A). EQUITY FUND:
2. UTI Transportation And Logistics Fund (Auto Sector Fund) (Open Ended
Fund):
Investment Objective is capital appreciation through investments in stocks of the companies
engaged in the transportation and logistics sector. At least 90% of the funds will be invested in
equity and equity related instruments. At least 80% of the funds will be invested in equity and
equity related instruments of the companies principally engaged in providing transportation
services, companies principally engaged in the design, manufacture, distribution, or sale of
transportation equipment and companies in the logistics sector. Up to 10% of the funds will be
invested in cash/money market instruments.
TYBFM
TYBFM
TYBFM
TYBFM
When started?
Established in 1995
Established in 1964
How
they
come
into Registered with SEBI as trust By the UTI act passed by the
business?
parliament in 1963.
Minimum investment
Rs. 500.0
Rs. 1000.0
Investment
Equity:
Equity:
Bank: 8-15%
Software: 8-19%
Energy: 12-18%
TYBFM
Pharmaceuticals: 6-10%
Invest in 12-20 sectors which Invest in 7-15 sector which
includes: Auto, Auto Ancillaries, include:
IT,
Telecom,
Cement
Telecom-Services,
Power, Products,
Construction
Project,
Derivatives,
TYBFM
Main Funds.
regular
saving
funds.
Type of fund offered
Numbers
of
offered
Distribution
branches.
Life Insurance.
UTI Bank.
General Insurance.
Pan card.
Bank Recruitment.
Consumer Finance.
ULIP.
Private Equity.
Assets Reconstruction.
CHAPTER III
REVIEW OF LITERATURE
TYBFM
An attempt has been made to review some existing literature available and having broad
relatively with the subjective area.
Treynor, Jeck L. (1965), How to Rate the Management of Investment Funds, Harvard
Business Review, Vol 43, No.1, Jan Feb. , pp. 63-75. The Treynor give you an idea about
scheme rate and fund manager investment style. The fund manager success in the side of
selection of the scrip, fund provided first-rate return.
NAV 2007 Mutual Fund, Insight, volume V, number 2, value research in this journal sanjeev
pandiya has evaluate the market and needs of mutual funds. He had evaluated NAV of selected
fund and shows the fluctuations on unit price. Sanjeev mentioned highlight market capitalization
of Mutual Fund.
Nucleus Investment, 15 September to 15 October 2007, Volume 1, publication by Asit Mehta
investment Intermediates Ltd, the agency providing the facility for investor for mutual fund
investment. Asit Mehta has own researcher team doing work on performance measurement of the
fund input and capital appreciation.
Invest Know how Sept 2007, Publications from Punjab National Bank in association with Vijay
Bank, Issuing by principal Assets Management Company. Assets Management Company has
responsibility to issue every month fact sheets and key information memorandum.
Portfolio Statement Sept 2007, Fund Manager speaks, Tata Mutual Fund under Tata Assets
Management Company. Tata Mutual Fund issued every month fact sheet which mentioned fund
performance and compare with indices returns, also mentioned systematic investment plan return
compare with lump sum investment.
Fundamentals, October 2007, Reliance Mutual Fund, Reliance Capital Assets Management Ltd.
Annual Report for the AMC of Reliance Mutual Funds. Reliance Mutual fund schemes
performance mentioned on offer documents. Offer document indicates detail information of
particular fund with past performance.
Applied Finance, Sept 2007 Volume 13 No: 9. The Institute of Chartered Financial Analysts of
India, University Press ICFAI, how to maximum take the benefit for fluctuation of the capital
market. Here the author accent how to take maximum benefits for fluctuation of capital market,
trading of units
Journal Capital Market October 22, No: 04 2007, Volume XX11/17 issuing by capital market
publishers India Pvt. Ltd, What is the future situation for the capital market and how much fund
will come to the mutual fund industry. The data indicates how capital market reacts and take
advantages of it.
TYBFM
Indian Journal of Finance, Volume Number 4, October November 2007, Prof. Vedulla Shekhar,
the article mention that how the fund manager role follow the active investment strategies. The
research paper shows the strategic of fund manager, diversification of different sector as per the
mention on the fact sheet. Active and passive strategic of investment affects on fund return.
Investment Monitors, The complete Magazine for Indian Investors, volume VIII issue 12 under
the analysis of technical and mutual funds scheme cost and data of last three years performance
of risk and return. The magazine shows the technical analysis and how much investor paid for
transaction cost and tax.
Money Today, make you richer your financial diet, The Indian Today Group, RNI no. deleng/
2006 / 18800, Indian GDP growing, how its affected the number of the investment opportunities
in the capital market.
Journal of Financial Management and Analysis Volume 20 No; 1, US congress library card No;
90 640754, the financial analyses based on how to used different types of ratio. (Financial
Decision Making): The fund having own features of investment on equity, debt and money
market Mutual Fund.
E.J. Elton And M.J. Gurber (1996) have tried to prove that past performance is predictive of
future risk adjusted performance and form a combination of actively managed portfolios with the
same risk as a portfolio of index fund but higher mean return. The research paper weight on
portfolio index return means market return and could fund provided same return.
Fisher and Gorden, Security Analysis and Portfolio Management, his study based on how to
verified the risk under the calculated of Beta and Portfolio risk adjustment return. Beta played
role for risk measurement of the fund. Risk involved on the fund than tried to reduce it and
increased return. Beta indicates diversification of the portfolio.
Bala Ramasamy, Mattew C.H., have examined the growth in terms of size and choice, in the
Mutual Funds industry among emerging markets has been impressive. The papers give you an
idea about future market of Mutual Fund, Also highlight tax benefit received to invest in Mutual
Fund.
Kuo Ping Chang Evaluating Mutual Fund Performance an application of minimum convex
input requirement set approach, Computer and Operational research, Vol 39, Issue 6, may
2006. The papers evaluating the performance of the fund with follow the operational research
technique. The author pursue computer excel sheet to measure the performance of the funds.
Charactered Financial Analyst March 2007. The ICFAI Press, the magazine states the how to
used different type of covariance and correlation and risk and return. The correlation of the fund
TYBFM
return also needs to check out. Portfolio construction and diversification of portfolio as per the
market shows sector wise return.
Funds Watch; Nj Investment Mutual Funds; September 15 2007. NJ Investment Consultancy,
selected Investor portfolio, how to construction of the portfolio for individual investor in Mutual
Fund. Nj Investment Mutual Fund magazine explained individual portfolio construction and
selection of selected fund for active investment strategic.
Accounting & Finance; Publisher of Tata Mcgraw Hill & Mcgraw Hill, How to calculated the
beta and Price Earning Ratio. The Fund Performance also communicated return inform of Price
Earnings Ratio and Price Book Ratio.
Indian Economy Review, Capital Market Publisher India Private Limited. Over all review for
Assets Management Company, strategies follow by the fund managers. The Capital Market
publisher high light the economic situation and how the fund performance under particular
political and business risk.
Indian Journal of Finance, Volume I Number 2, June and July 2007. The data for balance scrod
card of the selected schemes of mutual funds, the research paper was evidence for selected
schemes performance and balance scored card of the fund.
India Today, Newspapers for India under NO. 28587/75, data based on the fund performance of
the equity related scheme and how the FII investment affected the diversification of the assets.
The Fund Performance also confirmed how Foreign Institutional Investors purchased Mutual
Fund, might the Fund diversification of the portfolio.
Fund Manager, Business Standards October 2007, Going Global Market for Investment,
Evolution of the diversification of the assets to one sector to another sector, Fund demonstrates
return as well as risk. Equity diversification fund has highly risky compare with balance fund and
risk.
Shapre W.F. (1963), A simplified Model for portfolio Analysis, Management Science, vol
Fuller R.J. and Farell J.L. jr, (1987), Modern Investments and Security Analysis,
Singapore: McGraw Hill Book Co.: the paper explained the modern investment management,
how much pororation of the Mutual fund on portfolio compare with the scrip investment.
Obaidullah M.,(1992),Are Price / Earnings Ratios Indicators of Future Investment
TYBFM
Performance?, Indian Journals of Finance and Research, vol 2 (1); 5-12: the future investment
means portfolio diversification, every time need to adjustment of fund risk, that wise portfolio
diversification.
Huang Stanely S.C. and Randall Maury R., Investment Theory, Englewood Cliffs, New Jersey
(1987) ; Investment Theory proved when to invest, to hold, to sell. The theory indicates the
investment process and when to invest, how much to save the money.
Mallikarrajunappa T., and Iqbal, (2003),Stock Price reactions to Earnings Announcement,
Journals of IAMD and IUCBEr, vol.26(1), 53 -60
Baks, Klaas P., Andrew Metrick, and Jessica Wachter, 2000, Should investors avoid all actively
managed mutual funds? A study in Bayesian performance evaluation, Journal of Finance,
forthcoming. Here paper point toward Bayesian theorem for evaluation of the portfolio, future
can fund Manger pursue this model.
Brown, Stephen J., 1979. Optimal portfolio choice under uncertainty: a Bayesian approach. The
optimum portfolio should achieve with strategic planned. The fund manger must need to study
the different approach to measure the risk and return. Optimum portfolios means not just reduce
risk but reduce average risk and increased average return.
In V. S. Bawa, S. J. Brown, and R.W. Klein, eds.: Estimation Risk and Optimal Portfolio Choice
(North Holland, Amsterdam). The fund has need to identification of the risk and return. The
estimation of risk and return was very difficult due to economy and political risk. The Optimal
Portfolio means proportion of the fund allocation.
Carhart, Mark M., 1997, on persistence in mutual fund performance, Journal of Finance 52,57
82.On determination of the fund performance need to identification risk and measures fund
return. The paper demonstrate how to identified scheme and diversification of the portfolio. The
portfolio need to adjustment risk.
Chen, Zhiwu, and Peter J. Knez, 1996, Portfolio performance measurement: Theory and
applications, Review of Financial Studies 9, 511555. Portfolio performance evaluation was
needed. Capital market affects by number of factors and political and market risk. Research team
has been Assets Management Company pocket watch the market return or bench mark return.
Elton, Edwin J., Martin J. Gruber and Christopher R. Blake, 1996, The persistence of riskadjusted mutual fund performance, Journal of Business 69, 133157. The
TYBFM
Lintner, John, 1965, The valuation of risk assets and the selection of risky investments in stock
portfolios and capital budgets, Review of Economics and Statistics 47, 1337. The paper was
concentration risky fund affects fund return.
Sharpe, William F., 1964, Capital asset prices: A theory of market equilibrium under conditions
of risk, Journal of Finance 19, 425442. William model confirmed how much risk free return
plus risk premium. The risk premium is high when fund has high risk, the fund manger should
concentration portfolio diversification.
CHAPTER IV
DATA ANALYSIS AND INTERPRETATION
Q.1 Which banking mutual fund do you prefer for mutual Fund?
Company Name
Percentages of respondents
Reliance Money
25
Other
10
UTI
15
TYBFM
25
20
15
10
5
0
Reliance
Other
UTI
INTERPRETATION: 50% of respondent have Reliance Money, 30% of respondent have UTI
and 20% others.
Q.2 Which banking mutual fund offer you good investment plan?
Company Name
Percentage of respondent
Reliance
22
Other
21
UTI
TYBFM
25
20
15
10
5
0
RELIANCE
Other
UTI
INTERPRETATION: 44% respondent for Reliance, 32 % for other, 14% for UTI.
Company Name
Percentage of respondent
Reliance
20
Other
15
TYBFM
UTI
15
20
18
16
14
12
10
8
6
4
2
0
Reliance
Other
UTI
INTERPRETATION: 40% respondent for Reliance, 30%for UTI, 30% for other
Q.4 which banking mutual fund offers you a large number of product & services?
Company Name
Percentage of respondent
Reliance
18
Other
16
UTI
16
TYBFM
18
17.5
17
16.5
16
15.5
15
Reliance
Other
UTI
INTERPRETATION: 36% respondent for Reliance, 32%for UTI and 32% for other.
Q.5 Which banking mutual fund offer you a good e-mail facility?
Company Name
Percentage of respondent
Reliance
22
Other
15
UTI
13
TYBFM
25
20
15
10
5
0
Reliance
Other
UTI
INTERPRETATION: 44% respondent for Reliance, 30% for other and 26% UTI.
TYBFM
UTI; 29%
Reliance; 41%
Other; 30%
TYBFM
Tools of Analysis
Sharpes Performance
Sharpes performance index gives a single value to be used for the performance ranking of
various funds or portfolios. Sharpe Index measures the risk premium of the portfolio relative to
the total amount of the risk in the portfolio. This risk premium is the Different between the
portfolios average rate of return and the risk less rate of return. The standard deviation indicates
portfolio the risk. The index assigns the highest values to assets that have best risk- adjusted
average rate of return.
St = Rp Rf / 6p
Sharpes index
Jenson Measure
The absolute risk adjusted return measure was developed by Michael Jensen and commonly
known as Jensens measure. It is mentioned as a measure of absolute performance because a
definite standard is set and against that the performance is measured. The standard is based on
the managers predictive ability successful prediction of security price would enable the
managers to earn higher returns than the ordinary investor expects to earn in a given level of
risk.
Jenson = Portfolio Average Return Risk Free Rate of Return/Beta
TYBFM
rate of return declines slowly than the market return, in the decline. The ideal fund may place its
fund in the treasury bills or short sell the stock during the decline and earn positive return.
Rp = a + B ( Rm Rf)
Rp = Average return of portfolio
Rf = Risk less rate of return
a = The intercept
B = A measure of systematic risk
Rm = Average market return
CHAPTER V
FINDINGS AND SUGGESTIONS
FINDINGS:
In Equity Schemes we have taken Reliance Vision 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.
In Debt scheme we have taken Reliance money Manager Fund and Reliance Liquidity Fund .In it
both 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.
SUGGESTION:
Reliance Money and UTI have to add some extra features in it with aggressive marketing
promotional strategy.
TYBFM
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 cons are concluded by that Reliance Money is still growing industry in India and is
still exploring its potential and prospects in here.
LIMITATIONS:
The research done only selected a scheme which was related with five rating star and the
value research magazine.
The data would not collect to the Assets Management Company data sheet, but collection
from the market or secondary source.
The research analysis was based on the past performance of the only selected Equity
Diversified Scheme.
The research had been based on the Net Assets Value, that NAV continuous fluctuation
The research analysis compares the Net Assets Value and Expense Ratio, but NAV
continuous fluctuation.
Fund manager investment style based on capital market situation. It could not possible
always pursue the mentioned objectives.
TYBFM
Equity Diversified schemes having different objectives due to sector wise allocation of the
fund.
Performance measurement techniques should not give equal weight to each of the schemes.
Sharpen Performance evaluation is based on variance, not cover market risk and that risk also
affect fund return.
CHAPTER VI
BIBLIOGRAPHY