Professional Documents
Culture Documents
CONTENTS
- Executive Summary
- Introduction
- Objectives
1
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
EXECUTIVE SUMMARY
Now a day, there is a tough competition in financial avenues due to increase in the
investment products. People can get many investment options to invest their savings. Selecting
one from the many available options considering many associated factors is a very complex
process.
Reliance Mutual Fund is one of India's largest brokerage and securities distribution
house in India. It is new to Securities market but still among the top 5 performing company
leaving far behind the oldest companies. It is considered to be one of the leading investment
broking houses catering to the needs of both institutional and non-institutional investor
categories with presence all over the country through franchisees and co-coordinators.
In this project I studied the schemes of Reliance Mutual fund and their returns in
various period of time which helped me in knowing how the various schemes are performing
and the reasons behind it. I also came to know the risk associated with the various schemes and
how risk and returns are related. Hence my topic of study is “Comparative study on
2
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
The study will help the organization in knowing how the Equity schemes of the company’s are
• To understand the concept of Mutual Fund its working, mechanism and types traded in
India.
• To compare the risk and return associated with the Equity Schemes of Reliance Mutual
Fund.
• To know which scheme of Equity of Reliance Mutual Fund is most preferred by the
investors and what factors they consider while investing in reliance mutual fund.
For the study Equity schemes of Reliance Mutual Fund were scanned whose
corpus value is more than 500 crores to compare their performance by calculating risk and
return associated with these schemes. Also a survey was conducted on Reliance Investors to
know the most preferred Equity scheme by the Investors and what factors make them Invest
in Reliance mutual Fund
3
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
To evaluate the performance of the scheme and funds I have applied sharp’s index &
Treynor’s index .
The data collection was strictly confined to secondary sources. Primary data was
Selection of schemes for study is very difficult because lot of Varieties in equity Schemes
Techniques of analysis:
1. Return:
Return on a typical investment consists of two components. The basic is the periodic cash
receipts (or income) on the investment, either in the form of interest or dividends. The second
component is the change in the price of the assets-commonly called the capital gain or loss.
This element of return is the difference between the purchase price and the price at which the
assets can be or is sold; therefore, it can be again or a loss.
NAVt – NAVt-1
NAV t-1
Where Rit is the difference between Net Asset Values for two consecutive days dividend by the
NAV of the preceding day.
4
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
M.indt – M.indt-1
M.indt-1
Where Rmt is the difference between market indices of two consecutive days dividend by
the market index for the preceding day
2. Risk :
Risk is neither good nor bad. Risk in holding securities is generally associated with the
possibility that realized returns will be less than expected returns. The difference between the
required rate of returns on mutual fund investment and the risk free return is the risk premium.
Risk can be measured in terms of Beta & standard deviations.
Standard deviation
It is used to measure the variation in individual returns from the average expected returns
over a certain period. Standard deviation is used in the concept of risk of a portfolio of
investments. Higher standard deviation means a greater fluctuation in expected return.
5
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Var= Σ p (ri-E(r)) 2
• Beta :
Beta measures the systematic risk and shows how prices of securities respond to the
market forces. It is calculated by relating the return on a security with return for the market. By
convention, market will have beta 1.0.Mutual fund is said to be volatile, more volatile or less
volatile. If beta is grater than 1 the stock is said to be riskier than market. If beta is less than
1,the indication is that stock is less risky in comparison to market. If beta is zero then the risk is
the same as that of the market. Negative beta is rare.
β = nΣ xy-(Σ x)( Σ y)
nΣ x2-(Σ x) 2
3. Sharpe index
Sharpe index measures risk premium of a portfolio, relative to the total amount of risk in
the portfolio. Sharpe index summarizes the risk and return of a portfolio in a single measure
that categorizes the performance of funds on the risk- adjusted basis. The larger the Sharpe’s
index the portfolio over performs the market and vise versa.
6
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Where
st = Sharpe’s index
St= RP-Rf
SD
4. Treynor’s Index
Treynor’s model is on the concept of the characteristics straight line. The characteristics
line has drawn a relationship between the market return and a specific portfolio without taking
into consideration any direct adjustment for risk. It is also known as reward to volatility ratio
and is defined as:
Rp -Rf
7
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Tn = -------------------------
Bp
8
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
INTRODUCTION
• Return
• Risk
• Liquidity
• Hedge against inflation
• Safety
There are many alternatives which investment avenues are open to the investors to suit
their needs and nature .The selection of investment alternatives are depends up on the required
level of return and the risk tolerance level. These alternatives range from financial securities to
traditional non-securities investment.
• Equity shares
• Preference share
9
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
• Debentures
• Bonds
• Indira vikas patra &Kisan Vikas patra
• Government securities
• Money market securities (i.e. treasury bill, commercial paper, certificate of
Deposit etc)
Non-negotiable securities
• Bank deposit
• Post office deposit
• NBFC deposit
• Tax saving schemes
• Public provident fund scheme
• National saving scheme
• Life insurance
• Mutual funds
• Real estate
10
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Securities
Companies raise funds to finance their projects through various methods. The promoters
can bring their own money or barrow from the financial institutions or mobilizes capital by
issuing securities. The funds ` may be raised through issue of fresh share at per or
premium. Preference shares debenture or global depository receipts. These are mainly two
markets which any company can raise their funds; those are primary market and secondary
market .the companies raise funds for the following purposes:
Stock available for the first time is offered through new issue market. The issuer may be
a new company or an existing company. These issues may be of new type or the secure used in
the past. In the new market the issuer can be consider as a manufacturers. The issuing house,
investing banker and broker act as the channel of distributing for new issue. They take the
responsibility of selling the stock to the public
The primary market provides a direct link between the prospective investors and
11
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
• Origination
• Underwriting
• Distribution
To establish the nation wide trading facility for Equities, Debt instruments and hybrids.
To ensure equal access to investors all over the country through appropriate
communication network.
To enable shorter settlement cycle and book entry settlement system.
12
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Mutual Funds are dynamic financial institutions, which play a crucial role in an economy my
mobilizing a link between savings and the capital market. Therefore the activities of Mutual
Funds have both short and long term impact on the savings and capital markets and the national
economy. Mutual Funds thus assist the process of financial deepening and intermediation. They
mobilize Funds in the savings market and act as complementary to banking, at the same time
they also compete with banks and other financial institutions. In the process stock market
activities are also significantly influenced by Mutual Funds. The scope and efficiency of Mutual
Funds are influenced by overall economic fundamentals, the interrelationship between the
financial and real sector, the nature of development of the savings and capital markets, market
MEANING
Mutual fund is a mechanism for pooling the resources by issuing units to the investors
And investing funds in securities in accordance with objectives as disclosed in offer document
Investments in securities are spread across a wide cross-section of industries and sectors and thus
the risk is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the investors in
13
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
accordance with quantum of money invested by them. Investors of mutual funds are known as
unit holders.
The investors in proportion to their investments share the profits or losses. The mutual funds
normally come out with a number of schemes with different investment objectives, which are
launches from time to time. A mutual fund is required to be registered with Securities and
Exchange Board of India (SEBI), which regulates securities markets before it can collect funds
Reliance Capital Asset Management Limited (RCAM), a company registered under the
Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.
Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance Capital
Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset Management
Reliance Capital Asset Management Limited was approved as the Asset Management
Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30,
1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with
RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual
Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorised to act as Investment
Manager of Reliance Mutual Fund. The networth of the Asset Management Company including
preference shares as on March 31, 2005 is Rs.30.13 crores. Reliance Mutual Fund has launched
14
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
twenty five Schemes till date, namely: Reliance Vision Fund (September 1995), Reliance
Growth Fund (September 1995) Reliance Income Fund (December 1997), Reliance Liquid Fund
(March 1998), Reliance Medium Term Fund (August 2000), Reliance Short Term Fund
(December 2002), Reliance Fixed Term Scheme (March 2003), Reliance Banking Fund (May
2003), Reliance Gilt Securities Fund (July 2003), Reliance Monthly Income Plan (December
2003), Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund ( May
2004), Reliance Floating Rate Fund (August 2004), Reliance Media & Entertainment Fund
(September 2004), Reliance NRI Equity Fund (October 2004), Reliance NRI Income Fund
(October 2004), Reliance Index Fund (January 2005), Reliance Equity Opportunities Fund
(February 2005), Reliance Fixed Maturity Fund - Series I (March 2005), Reliance Fixed
Maturity Fund - Series II (April 2005), Reliance Regular Saving Fund (May 2005), Reliance
Liquidity Fund (June 2005), Reliance Tax Saver (ELSS) Fund (July 2005), Reliance Fixed Tenor
RCAM has been registered as a portfolio manager vide SEBI Registration No.
INP000000423 and renewed effective 1st August, 2003.RCAM has commenced these activities.
It has been ensured that key personnel of the AMC, the systems, back office, bank and securities
accounts are segregated activity wise and there exists systems to prohibit access to inside
information of various activities. As per SEBI Regulations, it will further ensure that AMC meets
the capital adequacy requirements, if any, separately for each such activity.
15
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
TRUSTEES: Trustees are like internal regulators in a mutual fund, and their job is to protect the
interest of unitholders. Sponsors appoint trustees. Trustees appoint the AMC, which,
subsequently seek their approval for the work it does, and reports periodically to them on how
the business is being run. Trustees float and market schemes, and secure necessary approvals.
They check if the AMC’s investments are within defined limits and whether the fund’s assets are
protected. Trustees can be held accountable for financial irregularities in the mutual fund.
CUSTODIAN: A custodian handles the investment back office of a mutual fund. Its
dividends, and segregation of assets between schemes. The sponsor of a mutual fund mutual fund
cannot act as a custodian to the fund. This condition, formulated in the interest of investors,
ensures that the assets of mutual fund are not in the hands of its sponsor.
REGISTRAR : Registrars, also known as transfer agents, handle all investor-related services.
This includes issuing and redeeming units, sending fact sheet and annual reports. Some fund
16
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Operations AMC
Mutual Fund
Schemes
Investor
The Indian mutual fund as passed through three phases. The first phase was between 1964 and
1987 and only player was the trust of India, which had a total asset of Rs. 6700/- crores and the
end of 1988.the second phase is between 1987 and 1993 during which period 8 funds were
established (6 by banks and one each by LIC and GIC). The total asset under management had
grown to Rs.61, 028/- crores at and of 1994 and the numbers of schemes were 167.
17
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
The third began with the entry of private and foreign sectors in the mutual fund industry in 1993.
Kothari pioneer mutual fund was the first fund to be established by the private sector in
As at the end of financial year 2000 (31 march) 32 funds were functioning with Rs. 1,13,005
crores as total asset under management. As on august end 2000, there were 33 with 391 schemes
The securities and exchange board of India (SEBI) came out with comprehensive regulation in
1993, which defined the structure of mutual fund and asset management companies for the first
time. Currently there are 34 of mutual fund organizations in India managing over Rs.1, 02,000/-
crore
• First investors pool their money in Mutual fund through franchisee or agents or himself in
particular scheme.
• Fund manager collect that money and diversify that money in different securities.
18
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
An open-ended fund or scheme is one that is available for subscription and repurchase on a
continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently
buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis.
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
19
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
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 basis.
A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended schemes
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
20
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
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
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes invest
both in equities and fixed income securities in the proportion indicated in their offer documents.
These are appropriate for investors looking for moderate growth. They generally invest 40-60%
in equity and debt instruments. These funds are also affected because of fluctuations in share
prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared
These funds are also income funds and their aim is to provide easy liquidity, preservation of
capital and moderate income. These schemes invest exclusively in safer short-term instruments
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money,
21
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
government securities, etc. Returns on these schemes fluctuate much less compared to other
funds. These funds are appropriate for corporate and individual investors as a means to park their
Gilt Fund
These funds invest exclusively in government securities. Government securities have no default
risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic
Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P
NSE 50 index (Nifty), etc These schemes invest in the securities in the same weight age
comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or
fall in the index, though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme. There are also exchange traded index funds launched by
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
22
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
(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.
These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act,
1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity
Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax
benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth
A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one
buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund
for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well
as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and
those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The
investors should take the loads into consideration while making investment as these affect their
yields/returns. However, the investors should also consider the performance track record and
service standards of the mutual fund, which are more important. Efficient funds may give higher
23
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the
investors can enter the fund/scheme at NAV and no additional charges are payable on purchase
or sale of units.
• Professional Management: Qualified professionals manage your money but they are not
alone. They have a research team that continuously analyses the performance and
prospects of companies. They also select suitable investment to achieve the objective of
the scheme, so you see that it is a continues process that takes time and expertise that will
add value to your investment. These fund managers are in a better position to manage
• Diversification: the Cliché, “Don’t put all your eggs in one basket”. Really applies to the
concept of intelligent investing. Diversification lowers the risk of loss by spreading your
money across various industries it is a rare occasion when all stocks decline at the same
• Choice of schemes: Mutual Fund offers a variety of schemes that will suit individuals
needs over a lifetime. When you enter a new stage in your life, all you need to do is sit
down with your investments advisers who will help you to re-arrange your portfolio to
• Affordability: As small investors, we may find that it is not possible to buy shares of
larger corporations. Mutual funds generally buy and sell securities in large volumes,
24
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
which allow investors to benefit from lower trading costs. The smallest investor can get
started on mutual funds because of the minimal investment requirements. We can invest
with a minimum of Rs. 500 in Systematic Investment Plan (SIP) on a regular basis.
• Tax benefits: Investments held by investors for a period of 12 months or more qualify
for capital gains and will be taxed accordingly. These investments also get the benefit of
indexation. And also the dividend received by an investor is tax free in the hands of
investors.
• Liquidity: with open-end funds, we can redeem all or part of investment any time when
we wish and receive the current value of the shares or the NAV related price. Funds are
more liquid than most investments in shares, deposits and bonds and the process is
standardize, making it quick and efficient so that we can get your cash in hand as soon as
possible.
• Rupees Cost Averaging: Through using this concept of investing the same amount
regularly, mutual funds give you the advantage of getting the average unit price over the
long-term. This reduces your risk and also allows you to discipline yourself by actually
various publications and rating agencies, making it easy for investors to compare one to
the other. Once we became part of mutual fund scheme, we were provided with regular
updates, for example daily NAVs, as well as information on the specific investments
made and the fund manager’s strategy and out look of the scheme.
25
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
• Regulations of Mutual Funds: All mutual funds are required to register with SEBI.
They are obliged to follow strict regulations designed to protect investors. All operations
Mutual funds have their drawbacks and may not be for everyone:
• No Guarantees: No investment is risk free. If the entire stock market declines in value,
the value of mutual fund shares will go down as well, no matter how balanced the
portfolio. Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own. However, anyone who invests through a mutual
• Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers,
financial consultants, or financial planners. Even if you don't use a broker or other
financial adviser, you will pay a sales commission if you buy shares in a Load Fund.
• Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20
to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales,
you will pay taxes on the income you receive, even if you reinvest the money you made.
26
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
CONTENTS
- Organization Profile
- Sampling
- Measuring Tools
27
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
RELIANCE MONEY
Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882
with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital Trustee Co.
RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration
number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been
changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no.
IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch
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.
28
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
• 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 raised 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 realize the effects without
any limitation
Vision statement –
Mission statement-
“To offer unparalleled value by providing the customer transparent, convenient and
riders
29
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
The easiest, fastest and most convenient way to carry out your financial transactions is now at
your fingertips! Reliance Money offers you the widest range of asset classes to trade in: Equity,
Derivatives, Commodities and Forex. Also invest on-line in Mutual Funds, IPOs and Insurance
products (Life & General). All this through one single window. Reliance Money is a state-of-the-
art financial transaction platform, which enables you to conduct your financial transactions in
cost effective, convenient and secure manner. Reliance Money has introduced several never .
before features and thereby changed the way you will invest:
1. Flat Fees instead of Brokerage - Put your money into investments, not into brokerage. Pay a
flat fee of Rs. 500/- and transact as much you want upto Rs. 1crore or for 2 months (whichever is
2. Trading Kiosks - No matter if you don.t have access to a computer or the Internet. You will
find exclusive Reliance Money Trading Kiosks at convenient locations throughout your city.
These internet-enabled Kiosks bring the market to you, wherever you are.
3. Security Token - The Reliance Money security token is so hi-tech, it almost defies belief.
This small, portable plastic device flashes a unique number that changes every 36 seconds,
ensuring that the number used for an earlier transaction is discarded. This number works over
and above your normal login and password, serving as a third level of protection that guarantees
30
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
4. Call N Trade - You don.t have to access your computer to trade or invest.With our Call N
5. Multiple Offerings - Along with equity, you can also trade / invest in Commodities (gold,
silver, base metals and other agri commodities to name a few), Derivatives, Forex (RBI allows
you to remit US$25,000 per calendar year), Mutual Funds, IPOs and Insurance products (Life &
General).
6. Widest Network: Reliance Money has a network of branches all over the country with
associates who will assist you with your financial investment requirements.
• Research, market views and stock views from independent experts, with an enviable
track record
• LIVE news from Dow Jones, Capital Market and Commodities Control
• Personal Finance planning tools that help you plan your investments, retirement, tax etc.
• Portfolio Tracker that will help you track your investments from one single
screen
• Risk Analyzer to analyz e your risk profile and get a suitable investment portfolio plan
• Knowledge Centre will help you understand investing and trading basics and also delve
• Market Watch, a unique tool that will help you track your favorite companies. Just
31
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
configure it and get real time quotes, news, views, result etc. Our technology allows you to
A product for every need: Reliance Money is the most comprehensive platform which allows
you to invest in Shares, Mutual Funds, Derivatives (Futures & Options), Commodities, Forex,
IPOs, Insurance and other financial products. Simply put, we offer you a product for almost
Reliance Money brings you a unique, hassle-free and paperless way to invest in Mutual Funds.
You can now invest on-line in Mutual Funds through Reliance Money No more filling
application forms manually or any going through other paperwork. You need no signatures or
proof of identity for investing. Once you place a request for investing in a particular fund, there
are no manual processes involved. Your bank funds are automatically debited or credited while
simultaneously crediting or debiting your unit holdings.You also get control over your
investments with on-line order confirmations and order status tracking. You get to know the
performance of your investments through online updation of your portfolio with current NAVs.
Reliance Money offers you various options while investing in Mutual Funds:
Purchase: Buying of Mutual Fund units is very convenient without the hassles of filling in the
applications manually. Redemption: As with Purchases, redemptions too can be done online.
Switch: You can shift money from one scheme to another in the same mutual fund house, with
32
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Equity Schemes :
(An open-ended diversified Equity Scheme.) The primary investment objective of the scheme is
to seek to generate capital appreciation & provide long-term growth opportunities by investing in
a portfolio constituted of equity & equity related securities of top 100 companies by market
capitalization & of companies which are available in the derivatives segment from time to time
and the secondary objective is to generate consistent returns by investing in debt and money
market securities.
(An Open-ended Equity Linked Savings Scheme.) The primary objective of the scheme is to
generate long-term capital appreciation from a portfolio that is invested predominantly in equity
(An Open-Ended Diversified Equity Scheme.) The primary investment objective of the scheme
is to seek to generate capital appreciation & provide long-term growth opportunities by investing
in a portfolio constituted of equity securities &equity related securities and the secondary
objective is to generate consistent returns by investing in debt and money market securities.
33
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to
achieve long term growth of capital by investment in equity and equity related securities through
(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to
achieve long term growth of capital by investment in equity and equity related securities through
(An Open Ended Index Linked Scheme.) The Investment Objective under the Nifty Plan is to
replicate the composition of the Nifty, with a view to endeavor to generate returns, which could
approximately be the same as that of Nifty. The Investment Objective under the Sensex plan is to
replicate the composition of the Sensex, with a view to endeavor to generate returns, which could
(An open-ended Diversified Equity Scheme.) The Primary investment objective of the scheme is
to generate optimal returns by investing in equity or equity related instruments primarily drawn
Debt/Income Schemes
34
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
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.
Debt Schemes :
(An Open Ended Fund. Monthly Income is not assured & is subject to the availability of
distributable surplus ) The Primary investment objective of the Scheme is to generate regular
income in order to make regular dividend payments to unitholders and the secondary objective is
growth of capital.Primarily the investment shall be made in debt and money market securities
Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt Plan:
Open-ended Government Securities Scheme) The primary objective of the Scheme is to generate
Optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by
35
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
(An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal
returns consistent with moderate levels of risk. This income may be complemented by capital
appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt &
Money Instruments.
(An Open End Income Scheme with no assured returns.) The primary investment objective of the
Scheme is to generate regular income in order to make regular dividend payments to unitholders
(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
(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,
36
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
(Close-ended Income Scheme) The primary objective of the Scheme is to seek to achieve regular
maturing in line with the time profile of the plan with the objective of limiting interest rate
volatility.
(An Open End Income Scheme) The primary objective of the scheme is to generate regular
Securities (including floating rate securitized debt and Money Market Instruments and Fixed
Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed
rate debt Securities (including fixed rate securitised debt, Money Market Instruments and
(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
debt Instruments.
(A Close Ended Income Scheme) The primary investment objective of the Scheme is to seek to
achieve regular returns / growth of capital by investing in a portfolio of fixed income securities
normally maturing in line with the time profile of the Plan with the objective of limiting interest
rate volatility.
37
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
(A closed ended Income Scheme) The primary investment objective of the Scheme is to seek to
(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,
Debt Option : The primary investment objective of this plan 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 &
Equity Option : The primary investment objective is to seek capital appreciation and or
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
38
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
more risky compared to diversified funds. Investors need to keep a watch on the performance
Sector Funds are specialty funds that invest in stocks falling into a certain sector of the economy.
Here the portfolio is dispersed or spread across the stocks in that particular sector. This type of
scheme is ideal for investors who have already made up their mind to confine risk and return to a
particular sector
Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the primary
Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme. The
primary investment objective of the Scheme is to seek to generate consistent returns by actively
investing in equity / equity related or fixed income securities of Power and other associated
companies.
Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. The primary investment
objective of the Scheme is to generate consistent returns by investing in equity / equity related or
39
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector scheme.
The The primary investment objective of the Scheme is to generate consistent returns by
investing in equity / equity related or fixed income securities of media & entertainment and other
associated companies.
NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net
of its liabilities. NAV per unit is simply the net value of assets divided by the number of units
outstanding. Buying and selling into funds is done on the basis of NAV-related prices. NAV is
calculated as follows:
Liabilities-Accrued Expenses
40
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Methodology
Data sources :
Investors . The basic purpose of collecting primary data is to know the preferred
• Secondary data: Secondary data’s are collected from Reliance website, financial
journals, recent Fact sheet of Reliance mutual fund relating to mutual funds
Sampling
41
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
CONTENTS
- Results & Discussion with Charts & Graphs
- Summary, Conclusion & a Proposed Action Plan with Resource Requirements &
42
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
PERFORMANCE
COMPARISM OF
MUTUAL FUND
SCHEMES
43
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
44
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
1. Return:
NAVt – NAVt-1
NAV t-1
Where Rit is the difference between Net Asset Values for two consecutive days dividend by the
NAV of the preceding day.
45
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
2. Risk
Beta
β = nΣ xy-(Σ x)( Σ y)
nΣ x2-(Σ x) 2
Beta describes the relationship between the stock’s return and the index returns. it describes
the risk in the portfolio with comparing market risk as 1 .
If beta =1
One percent changes in market index return causes exactly one percent change in the stock
returns. it indicates that the stock moves in tandem with the market .
46
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
If Beta <1
If Beta >1
Then the stock is more volatile compared to the market. The stock value
If Beta –ve: native Beta indicates that the stock returns moves in the opposite direction to the
market return.
Standard deviation
47
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
It is used to measure the variation in individual returns from the average expected
returns over a certain period. Standard deviation is used in the concept of risk of a
portfolio of investments. Higher standard deviation means a greater fluctuation in
expected return.
Var= Σ p (ri-E(r)) 2
48
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
5 yrs avg
Name of Scheme DOI(30/03/07) returns sd beta
Sharpe’s
49
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Sharpe’s index measures the risk premium of the portfolio relative to the total amt of risk
in the portfolio. This risk premium is the difference between the portfolio’s average rate of return
and the risk less rate of return. The index assigns the highest values to assets that have best risk-
adjusted average rate of returns.
5 yrs avg
returns
Name of Scheme DOI(30/03/07) rp rf sd st
Where
st =Sharpe’s index
Rp=portfolio return
St= RP-Rf
SD
50
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Fund (G)
2
1.5 Reliance Tax Saver
(ELLS) Fund(G)
1
0.5 Reliance Equity
0 Opportunities Fund
(G)
Sharpe’s Reliance Equity
Schemes Fund (G)
Interpretation:
Reliance Vision Fund (G) is performing well and is ranked No 1 according to Sharpe’s as
it is giving higher returns compared to other Schemes.
Treynor’s Index:
5 yrs avg
returns
Name of Scheme DOI(30/03/07) rp rf Beta tn
Tn =Treynor’s index
Rp=portfolio return
Formula
Tn= RP-Rf
Beta
52
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Interpretation:
Reliance Growth Fund (G) is performing well and is ranked No 1 according to Treynor’s
index as it is giving higher returns compared to other Schemes according to him and also the
risk involved is less
53
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
DOI
Name of the scheme (30/06/06) Rp Beta SD Sharpe’s Treynor’s
Reliance Growth Fund (G) 3263.71 60.54 0.91 23.55 2.23 57.74
Reliance Vision Fund (G) 2473.68 57.89 0.98 15.43 3.23 50.91
Reliance Tax Saver (ELLS)
Fund(G) 1501.78 51.05 0.93 30.59 1.40 46.29
Reliance Equity Opportunities
Fund (G) 2385.65 42.50 0.96 26.00 1.33 35.94
Reliance Equity Fund (G) 4359.6 27.37 0.94 14.59 1.32 20.61
Analysis of Survey
Belgaum Institute of Management Studies (MBA)
54
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
10
Frequency
0
Friends/Relatives Brokers/Agents
New spapers/Televisio Financial Consultant
Interpretation:
For the popularity of the mutual funds all the means contributed all most equally but the
dominated factor in these factors is advice from the Brokers/Agents, which contributed around
55
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
30
20
Frequency
10
0
Equity Debt
Interpretation:
60% of the respondents prefer equity schemes as investors now days are ready to risk
because they are getting good returns, whereas 40% of the respondents prefer debt schemes.
56
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
60
50
40
30
20
Percent
10
0
1 2 4 5
Interpretation:
Reliance equity fund is ranked 4th by majority of the Investors as the returns are not so
57
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
60
50
40
30
20
Percent
10
0
1 2 4 5
Interpretation:
Reliance Equity opportunity fund is ranked 5th by 60% of the Investors investing in Reliance
mutual fund as the returns are low and also riskier compared to other 4 schemes.
58
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
50
40
30
20
10
Percent
0
1 2 3 4
59
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
50
40
30
20
10
Percent
0
1 2 3 4 5
60
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
30
20
10
4a. Safety
Percent
0 Frequency P
1 2 3 5
Valid 1 10
Reliance Tax Saver-ELSS 2 33
5 2
6 5
Total 50
61
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Safety
70
60
50
40
30
20
Percent
10
0
1 2 5 6
Safety
Interpretation:
Out of the 50 respondents 66 % of them have rated 2 to safety because every investors
needs safety in his investment made but also some of them have given least preference to safety
62
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Rate of Return
70
60
50
40
30
20
Percent
10
0
1 2 3 4 5
Rate of Return
Interpretation:
66% of the respondents have ranked rate of return as No 1 ranking this is because of the
changing trend where people are ready to take risk but they expect good returns and higher return
each time.
4c. Liquidity
63
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Liquidity
60
50
Interpretation:
40
30 Out of the 50
20
respondents 52% of
Percent
10
0
them have ranked
1 2 3 4 5
them have ranked 3rd which shows liquidity is given least preference when compared to other
factors.
64
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
TaxBenefit
60
50
40
30
20
Percent
10
0
2 3 4 5 6
TaxBenefit
Interpretation:
52% of the respondents have ranked 3rd for tax benefit which shows people give
65
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Brand name
40
30
20
10
Percent
0
2 3 4 5 6
Brand name
Interpretation:
36% of the respondents have ranked 5th to Brand which shows importance is given to
brand name of the company in which investors are investing as it is shows the credit worthiness
of the company.
4f. Flexibility
66
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Flexibility
50
40
30
20
10
Percent
0
1 3 5 6
Flexibility
Interpretation:
42% of the respondents have ranked 6th to Flexibility which shows not much importance
is given to flexibility as far as investors are getting good return from the schemes.
67
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
60
40
20
Percent
0
1 2 4
Interpretation:
Majority of the respondents have ranked Reliance mutual funds as 2nd when compared to
the other 4 companies so this shows that in a short span of time Reliance has made a good image
68
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
60
40
20
Percent
0
1 2 3 4 5
Interpretation:
Majority of the investors have ranked HDFC mutual fund as 3rd when compared to other
69
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
60
50
40
30
20
Percent
10
0
1 2 3 4
Interpretation:
Franklin has been ranked NO 1 mutual fund company by the respondents when compared
to the other mutual funds as it has maintained its returns over a long period of time.
70
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
60
40
20
Percent
0
1 3 4 5
Interpretation:
Majority of the investors are not preferring UTI mutual funds as their returns are very low
when compared to their previous records and so it is been ranked 4th by the investors.
Frequency P
Valid 1 1
3 3
4 33
5 13
ICICI mutual fund Total 50
70
60
50
40 Interpretation:
30
20
Percent
10
Majority of the investors are not preferring UTI mutual funds as their returns are very low
when compared to other 3 companies but it is ranked 4th that shows it is performing good than
Findings
• 32% of the Investors have come to know about Reliance mutual fund through
Consultants
• 60% of the Investors are giving more preference to Equity schemes as they are giving
higher return whereas 40% of them prefer Debt Schemes because of the Safety they
provide
• 52% of the investors prefer Reliance Growth Fund followed by Reliance Vision Fund and
other Schemes.
• 66% of the investors give most importance to Rate of return as they expect higher and
• Reliance Mutual Fund is Ranked 2nd by the Investors i.e. 68% of them have ranked
72
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
SUGGESTIONS
• Holding a seminar and presentations or Investors meet in the stock broking firm help the
investors to remove any misconception regarding the Mutual Fund and this will create
• Agents are the main person who influences the investment decision. Company can hire
fresh graduates train them and sponsor for the AMFI exam just like insurance companies
who conduct IRDA training. This will increase the feet on street for the mutual fund
companies.
• Company has to provide timely services to its customers so that it can compete with its
CONCLUSION
Mutual Fund I can conclude that Equity schemes are most preferred by Investors and overall
73
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Reliance Vision Fund and Reliance Growth scheme are doing extremely well in the market
satisfying the customer wants of high returns and also through survey conducted it is clear
that Reliance is performing quite well so it has been ranked 2nd among the selected
companies. From the study we also came to know that according to Sharpe ‘s Reliance
Vision fund is ranked First but according to Treynor’s Reliance growth fund is ranked First.
CONTENTS
- QUESTIONAREE
74
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
- ANNEXURE
- BIBLOGRAPHY
QUESTIONNAIRE
Dear Sir/Madam:
information provided by you will be strictly kept confidential and used for academic purpose
only.
Personal Details:
75
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
• Name : _____________________________________________
• Address : _____________________________________________
• Occupation : _____________________________________________
• Contact No : _____________________________________________
Other_________________________
2. Which Schemes of Reliance Mutual fund would you prefer the most?
3. Which Equity Scheme you prefer the most in Reliance Mutual Fund?
(Rank them from 1 to 5, 1 being the most preferred and 5 being the least)
Reliance Growth [ ]
76
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
(Rank them from 1 to 6. No1 for preferred and No 6 for least preferred)
5. How would you rate Reliance mutual fund when compared to the other mutual
Fund? (Rank them from 1 to 5, 1 being the Highest & 5 being the lowest).
Reliance [ ]
HDFC [ ]
Franklin Templeton [ ]
UTI [ ]
Pru ICICI [ ]
THANK YOU
Annexure
Details about top schemes
77
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
78
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
79
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
80
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
81
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
82
“Comparative study on performance of Equity Schemes of
Reliance Mutual Fund.”
Bibliography
Websites
- www.myris.com
- www.reliancemf.com
- www.equitymaster.com
83