INTRODUCTION

Analysis on various mutual fund schemes includes estimating the

risk by calculating Alpha, Beta, Standard deviation and Sharp ratio. Return of t
he particular fund can also be estimated by Net asset value (NAV), Compound aver
age annual return, and fund’s total return. Best Five Mutual fund schemes from t
he reliance have been selected to analyze. Asset under management (AUM) can also
be calculated to know the present value of fund. Equity exposure of each scheme
and schemes which will give higher return can also be determined.
Alpha, Beta, Standard deviation and Sharp ratio are the main four import
ant statistical tools to calculate the risk of the each and every mutual fund sc
heme. The intrinsic value of mutual fund depends on a multitude of factors. The
evaluation of the mutual fund provides a feed back about the performance to evol
ve better management strategy. Even though evaluation of mutual fund’s performan
ce is considered to be the last stage of investment process, it is a continuous
process. The managed portfolios are commonly known as mutual funds. Their relati
ve merits of return and risk criteria are evaluated.
Analysis of various mutual fund schemes helps to people in the areas of
Professional management, Diversification, Convenient administration, Return pote
ntial, Low costs, Transparency, Flexibility, Choice of scheme and Well-regulated
.
Choosing a mutual fund scheme is a tough task today than ever. With over
30 fund houses to pick from, and most of them claiming first-rate performance,
investors are finding it extremely difficult to select a scheme. For example, if
one has to look at the performance of most of the equity funds I the last year,
most of them have returned 100% or more. How can one find fault with any of the
m. The case is not very different in the debt segment, too. Only percentage poin
t differentiates the top performers.

INDUSTRY PROFILE
The mutual fund industry in India started in 1963 with the formation of Unit Tru
st of India, at the initiative of the Government of India and Reserve Bank of In
dia. 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 dramatic improvements,
both quality wise as well as quantity wise. Before, the monopoly of the market h
ad seen an ending phase; the Asset under Management (AUM) was Rs. 6,700 cr. The
private sector entry to the fund family raised the AUM to Rs. 4,700 cr in March
1993 and till March 2007; it reached the height of Rs. 3, 25,000 cr.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total o
f its less than the deposits of SBI alone, constitute less than 11% of the total
deposits held by the Indian banking industry.
The main reason of 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 in telling
actuated with the concept. Hence, it is the prime responsibility of all mutual f
und companies, to market the product correctly abreast to the development of the
sector. Each phase is briefly described as:
FIRST PHASE – 1964-87:
Unit Trust of India was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and adminis
trative control of the Reserve Bank of India. In 1978 UTI was de-linked from the
RBI and the Industrial Development Bank of India took over the regulatory and a
dministrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under manage
ment.
SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):
1987 marked the entry of non- UTI, public sector mutual funds set up by public s
ector banks and Life Insurance Corporation of India and General Insurance Corpor
ation of India. SBI Mutual Fund was the first non- UTI Mutual Fund established i
n June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutu
al Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank
of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 wh
ile GIC had set up its mutual fund in December 1990. At the end of 1993, the mut
ual fund industry had assets under management of Rs.47, 004 crores.
THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS):
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund familie
s. Also, 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and govern
ed. The erstwhile Kothari Pioneer was the first private sector mutual fund regis
tered in July 1993.
The 1993 SEBI Regulations were substituted by a more comprehensive and revised M
utual Fund Regulations in 1996. The industry now functions under the SEBI Regula
tions 1996.
The number of mutual fund houses went on increasing, with many foreign mutual fu
nds setting up funds in India and also the industry has witnessed several merger
s and acquisitions. As at the end of January 2003, there were 33 mutual funds wi
th total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541
crores of assets under management was way ahead of other mutual funds.
FOURTH PHASE – SINCE FEBRUARY 2003:
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI w
as bifurcated into two separate entities. One is the Specified Undertaking of th
e Unit Trust of India with assets under management of Rs.29, 835 crores as at th
e end of January 2003, representing broadly, the assets of US 64 scheme, assured
return and certain other schemes. The Specified Undertaking of Unit Trust of In
dia, functioning under an administrator and under the rules framed by Government
of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB an
d LIC. It is registered with SEBI and functions under the Mutual Fund Regulation
s. With the bifurcation of the erstwhile UTI which had in March 2000 more than R
s.76, 000 crores of assets under management and with the setting up of a UTI Mut
ual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent merger
s taking place among different private sector funds, the mutual fund industry ha
s entered its current phase of consolidation and growth. As at the end of Septem
ber, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 42
1 schemes.
GROWTH OF MUTAL FUND IN INDIA:
The Indian Mutual Fund has passed through three phases. The first phase was betw
een 1964 and 1987 and the only player was the Unit Trust of India, which had a t
otal asset of Rs. 6,700 crores at the end of 1988.
The second phase is between 1987 and 1993 during which period 8 Funds were estab
lished. The total assets under management had grown to 61,028 crores at the end
of 1994 and the number of schemes was 167.
The third phase began with the entry of private and foreign sectors
in the Mutual Fund industry in 1993. Kothari Pioneer Mutual Fund was the first F
und to be established by the private sector in association with a foreign Fund.
As at the end of financial year 2000 32 Funds were functioning with
Rs. 1, 13,005 crores as total assets under management. As on august end 2000, t
here were 33 Funds with 391 schemes and assets under management with Rs 1, 02,84
9 crores. The securities and Exchange Board of India came out with comprehensive
regulation in 1993 which defined the structure of Mutual Fund and Asset Managem
ent Companies for the first time. Several private sectors Mutual Funds were lau
nched in 1993 and 1994. The share of the private players has risen rapidly since
then. Currently there are 34 Mutual Fund organizations in India managing 1, 02,
000 crores.
COMPANY PROFILE
INTRODUCTION:
“Success is a journey, not a destination.” If we look for examples to prove thi
s quote then we can find many but there is none like that of karvy. Back in the
year 1981, five people created history by establishing karvy and company which i
s today known as karvy, the largest financial service provider of India.
SUCCESS SUTRAS OF KARVY:
The success story of karvy is driven by 8 success sutras adopted by it namely tr
ust, integrity, dedication, commitment, enterprise, hard work and team play, le
arning and innovation, empathy and humility. These are the values that bind succ
ess with karvy.
VISION OF KARVY:
To achieve & sustain market leadership, Karvy shall aim for complete customer sa
tisfaction, by combining its human and technological resources, to provide world
class quality services. In the process Karvy shall strive to meet and exceed cu
stomer s satisfaction and set industry standards.
MISSION STATEMENT:
“Our mission is to be a leading and preferred service provider to our customers,
and we aim to achieve this leadership position by building an innovative, enter
prising , and technology driven organization which will set the highest standard
s of service and business ethics.”
COMPANY OVERVIEW:
Karvy was established as karvy and company by five chartered accountants during
the year 1979-80, and then its work was confined to audit and taxation only. La
ter on it diversified into financial and accounting services during the year 198
1-82 with a capital of rs.150000. It achieved its first milestone after its firs
t investment in technology. Karvy became a known name during the year 1985-86 wh
en it forayed into capital market as registrar.
EVOLUTION OF KARVY:
It is well said that success is a journey not a destination and we can see it be
ing proved by karvy. Under this section we will see that how this “karvy and com
pany” of 1980 became “karvy” of 2008. Karvy blossomed with the setting up of its
first branch at Mumbai during the year 1987-88. The turning point came in the y
ear 1989 when it decided to enter into one of the not only emerging rather poten
tial field too i.e; stock broking. It added the feather of stock broking into it
s cap. At the same time it became the member of Hyderabad Stock Exchange through
associate firm karvy securities ltd and then karvy never looked back……..it went
on adding services one after another, it entered into retail stock broking in t
he year 1990. Karvy investor service centers were set up in the year 1992. Karvy
which already enjoyed a wide network through its investor service centers, ente
red into financial product distribution services in the year 1993. One year more
and karvy was now dealing into mutual fund services too in the year 1994 but it
didn’t stopped there, it stepped into corporate finance and investment banking
in the year 1995.
Karvy’s strategy has always been being the first entrant in the market. Karvy ag
ain hit the limelight by becoming the first registrar in the country to be award
ed ISO 9002 in the year 1997. Then it stepped into the other most happening sect
or i.e.; IT enabled services by establishing its own BPO units and at a gap of j
ust 1 year it took the path of e-Business through its website www.karvy.com . Th
en it entered into insurance services in the year 2001 with the launch of its re
tail arm “karvy- the finapolis: your personal finance advisor”. Then in the year
2002 it launched its PCG (Private Client Group) which looks after its High Net
worth Individuals .and maintain their portfolio and provides them with other fin
ancial services. In the year 2003, it commenced secondary debt and WDM trading.
It was a decade which saw many Indian companies going global…..so why the larges
t financial service provider of India should lag behind? Hence, karvy launched “
karvy global services limited” after entering into a joint venture with Computer
share, Australia in the year 2004.the year 2004 also saw karvy entering into com
modities marketing through karvy comtrade. Year 2005 saw karvy establishing a se
parate branch for its insurance services under the head “karvy insurance broking
ltd” and in the same year, after being impressed with the rapid growth of karvy
stock broking limited, PCG group of Hong Kong acquired 25% stake at KSBL. In th
e year 2006, karvy entered into one of the hottest sector of present time i.e re
al estate through Karvy realty& services (India) ltd. hence , we can see now kar
vy being established as the lagest financial service provider of the country.
THE SUCCESS LADDER:
ORGANIZATION STRUCTURE OF KARVY:

HOW KARVY ACHIEVED IT?

The core competency of karvy lies in the following points due to which it enjoys
a competitive edge over its competitors. The following culture adopted by karvy
makes it all time favorite among its clientele:
Professionally managed by qualified and trained manpower.
Uniquely structured in-house software and hardware department
Query handling within 48 hrs.
Strong secretarial, accounting and audit systems.
Unique work culture of working 7 days a week in 3 shifts.
Unmatched network spreading all over India.
HOW ACHIEVEMENTS SOUNDS SYNONYMOUS TO KARVY:
The landmarks achieved by karvy very well define its success story. In the previ
ous pages, we learnt how a company started by five chartered accountants, named
as karvy and company turned into today’s karvy group, the largest financial inte
rmediary of India. But success didn’t came to karvy at a flow, the hard work and
dedication of its workforce made it what it is today…gradually it achieved the
following landmarks and now it has became what we call the karvy group, now it i
s:
Largest independent distributor for financial products.
Amongst the top 5 stock broker.
Among the top 3 depository participants.
Largest network of branches & business associates.
ISO 9002 certified operations by DNV.
Amongst top 10 investment bankers.
Adjudged as one of the top 50 IT users in India by MIS south Asia.
Full- fledged IT driven operation.
India’s no.1 registrar & securities transfer agent.
CLIENTES OF KARVY:
Karvy’s culture has helped karvy in achieving such a distinct position in the ma
rket where it can boast of its huge client base. Be it a retail investor investi
ng Rs. 500 in a SIP in Reliance mutual fund or be it the largest corporate house
of the country: Reliance industries- everybody is heading towards karvy for the
ir wealth maximization, lets have a look at the clientele of karvy:
According to the datas published in year 2007, karvy stock broking ltd. Operates
through more than 12000 terminals, more than 290000 accounts are maintained and
commands over 3.14% market share of NSE. The distribution services have access
to more than Rs. 40 billion Assets under Management. Karvy being a depository pa
rticipant with both NSDL and CDSL manages more than 700000 accounts from more th
an 380 locations. Talking about the registry services, it manages over 750 publi
c/ right issues. At the same time; it is managing over 16 million portfolios as
registrar.
If we took a look at some of the top corporate houses availing the services of
karvy then we have: Reliance, IOC, IDBI,LIC, Hindustan Unilever, Principal Mut
ual Fund, Duetsche Mutual Fund, Yogokawa, Marico Industries, Patni Computers, Mo
rgan Stanley, Glenmark, CRISIL, 3M, Kotak Mahindra Bank, Bharti Televenture, Inf
osys Technologies, Wipro, Infotech, IPCL,TATA consultancy services, UTI mutual
fund etc. Thus in total karvy serves over 16 million investors and 300 corporate
s.

PRODUCT PROFILE
Now karvy group consists of 8 highly renowned entities which are as follow:
1. : The first securities registry to receive ISO 9002 certification in India.
Registered with SEBI as Category I Registrar, is Number 1 Registrar in the Coun
try. The award of being ‘Most Admired’ Registrar is one among many of the acknow
ledgements we received for our customer friendly and competent services.
2. : karvy stock broking ltd. Consists of five units namely stock broking serv
ics, depository participant, advisory services, distribution of financial produc
ts, advisory services and private client goups.
3. : it is registered with SEBI as a category 1 merchant banker. Its clientele
includesinclude leading corporate, State Governments, foreign institutional inv
estors, public and private sector companies and banks, in Indian and global mark
ets.
4. : karvy insurance broking ltd is also a part of karvy stock broking ltd. At
Karvy Insurance Broking Limited both life and non-life insurance products are
provided to retail individuals, high net-worth clients and corporates
5. : The company provides investment, advisory and brokerage services in India
n Commodities Markets. And most importantly, it offer a wide reach through our b
ranch network of over 225 branches located across 180 cities.
6. : Karvy Global is a leading business and knowledge process outsourcing Servic
es Company offering creative business solutions to clients globally. It operates
in banking and financial services, inurance, healthcare and pharmaceuticals, m
edia , telecom and technology. It has its sales and business development office
in New York, USA and the offshore global delivery center in Hyderabad, India
7. : Karvy Realty (India) Limited is engaged in the business of real estate an
d property services offering:
• Buying/ selling/ renting of properties
• Identifying valuable investments opportunities in the real estate sector

• Facilitating financial support for real estate and investments in proper

ties
• Real estate portfolio advisory services
8. : it is a joint venture between Computershare, Australia and Karvy Consulta
nts Limited, India in the registry management services industry.
NEED FOR THE STUDY
The main purpose of doing this project was to know about different schem
e in reliance mutual fund.
This helps to know in details about different scheme in reliance mutual
fund right from its inception stage, growth and future prospects.
It also helps in understanding different schemes in reliance mutual fund
s.
This project will suggest an investor to choose one among the best of eq
uity fund schemes of reliance mutual fund.

OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE
To analyze the relationship between risk and return of equity funds of r
eliance mutual fund.
SECONDARY OBJECTIVE
To evaluate the reliance mutual fund.
To calculate the rate of return earned over the period.
To measure rise taken by the fund.
To measure return per unit of risk.
To provide valuable suggestion and recommendations.

SCOPE OF THE STUDY

Scope of the project is restricted to 5 equity fund managed by reliance
mutual fund. They are: 1. Reliance Growth Fund, 2. Reliance Vision Fund, 3. Reli
ance Banking Fund, 4. Reliance Diversified Power Sector Fund 5. Reliance pharma
Fund.
Its analysis of relationship between risk and return; it helps in unders
tanding te performance of reliance mutual fund schemes.
The techniques of risk and return can be used as an effective mechanism
to provide suggestions to an investor of reliance mutual fund
RESEARCH METODLOGY
Business Research is an organized, data based, systematic, critical, objective,
scientific inquiry or investigation in to a specific problem undertaken, with th
e purpose of finding answers or solutions to it. The information provided could
be the result of a careful analysis of data gathered first hand or of the data t
hat are already available.
RESEARCH DESIGN
Descriptive research design:
The descriptive research includes surveys and fact-finding enquires of different
kinds. The major purpose of descriptive research is description of the state of
affairs, as it exists at present. The major characteristic of this method is re
searchers has no control over the variables, he can only report what has happene
d or what is happening. The descriptive study is under taken in order to ascerta
in and be able to describe the characteristics of the variables of interest in a
situation.
DATA COLLECTION
The data collection is the data constitute the foundation on which the super str
ucture of statistical analysis is built. The results obtained from the analysis
are properly interpreted and policy decisions are taken. Hence if the data are a
ccurate and in adequate, the whole analysis may be faulty and the decisions will
be misleading.
SECONDARY DATA COLLECTION:
The research has collected the secondary data from the company’s records
, products pamphlet, internet, previous project reports. The study is based on s
econdary data.

TECHNIQUES OF ANALYSIS
Beta:
Beta = [Cov (r, Km)] / [StdDev (Km)] 2
Where:
r is the return rate of the investment; Km is the return rate of the asset class
.
Alpha:
Alpha = [(sum of x)-((b) (sum of x))]/n
Where:
n = number of observations; b = beta of the found.
Standard Deviation:
Where N is the number of samples taken.
Sharp Ratio:
S(x) = (r-R) / StdDev(x)
Where x is some investment; r is the average annual rate of return of x; R is th
e best available rate of return of a “risk-free” security (i.e. cash); StdDev is
the standard deviation of r.
Net Asset Value (NAV):
NAV = Market value of asset – Liabilities
No. of. Shares out Standing
REVIEW OF LITERATURE
PERFORMANCE IN INDIA:
The industry has steadily grown over the decade. For example, before the public
sector mutual funds entry, UTI was managing around Rs 6,700 crore on its own. Pu
blic sector mutual funds also helped accelerate the growth of assets under manag
ement. UTI and its public sector counterparts were managing around Rs 47,000 cro
re when Kothari Pioneer, the first private sector mutual fund, set up shop in 19
93. Before the US 64 fiasco, there were 33 mutual funds with total assets of Rs
1, 21,805 crore as on January 2003. The UTI was way ahead of other mutual funds
with Rs 44,541 crore assets under management. The industry overall has performed
well over the years. Of course, there were a few funds houses, which disappoint
ed investors. However, overall performance has been good. However, lack of aware
ness still impedes the growth of the mutual fund industry. Unlike developed coun
tries, most of the household savings still go to bank deposits in India.
1. Financial Management of Private and Public Equity Mutual Funds in India: An A
nalysis of Profitability (By H.J Sondhi and PK Jain from The ICFAI Journal of ap
plied finance, July 2005) This article examines the rates of returns generated b
y equity mutual funds,vis-à-vis,364 days T-bills and the Bombay Stock Exchange-1
00(BSE-100) National Index during the period 1993-2002.Rate of return on 364 day
s T-bill is the surrogate measure for risk free return and the BSE-100 National
index has been chosen as proxy for market portfolio in our analysis. Equity mutu
al funds predominantly invest in company equities and hence are risky investment
s while choosing to invest in equity mutual funds, the investors expect not only
risk premium but also better returns than the market portfolio. The paper has b
een divided in to four sections.Section1 outlines the scope and methodology of t
he study that includes, inter alia, the basis of computation of rate of return e
arned by the equity mutual funds,364 days T-bills and BSE-100 National Index,Sec
tion2 computes and analyzes rates of return.Section3 is concerned with compariso
n to rates of return of private sector company sponsored equity mutual funds and
PSU sponsored equity mutual funds Concluding observations have been recapitulat
ed in Section.
2. RelativeRisk Return Analysis Use the Proprietary Bubble Analysis of the Relat
ive Risk and Return Analysis of Mutual Funds by the ICICI Bank Private Bank Advi
sory Group.
3. Mutual Fund Investments are subject to Market Risks (Portfolio Organizer, Oct
ober 2005) this article deals with the risk of Mutual Fund Investments, Types of
risks, and the common mistakes done by investor while choosing the funds for th
e purpose of investing, Investors responsibility in Investing
4. Empirical Investigation on the Investment Managers’ Stock Selection Abilities
: The Indian Experience (By Ramesh Chander from The ICFAI Journal of applied fin
ance, August 2005) The study examined the stock selection abilities of investmen
t managers in India across the fund characteristics as well as the persistence o
f such performance. It also investigated performance variability for a sample of
80 investment schemes for the period starting from January 1998-December 2002.O
n the whole, the results reported documents significant statistical evidences fo
r passive stock selection abilities of Indian investment managers. It points to
the consistency of performance across the measurement criteria. Investment Perfo
rmance depends on the stock selection and pertains to the successful micro forec
asting for company specific events. It refers to the manager’s ability to identi
fy under or overvalued securities.
5. Mutual Fund Industry in India: On a growth Trail (Cover Story, Chartered Fina
ncial Analyst, July 2005) the mutual fund industry in India has been on a roll a
s the assets under management continue to see strong spurt in growth. The assets
under management swelled to Rs. 1, 67,978 cr. By May 31, 2005 from Rs.1, 01,565
cr. In January 2000.This apart, the industry has also seen a spurt in the numbe
r of schemes on offer which amount to 460 at present, catering to varied needs o
f investors. A booming economy, soaring stock market and a conducive regulatory
environment, amongst a slew of other factors have added to the growth of the ind
ustry. Given the huge opportunity in sub-urban and rural markets, which lie hith
erto untapped and growing income levels in the country, the industry’s future lo
ok bright.
6. Managing Mutual Fund Investments in the Era of change (By Kulbhushan Chandel
and OP Verma from the ICFAI Journal of applied finance, October 2005): The study
is confined to evaluate the performance of mutual funds on the basis of weekly
returns compared with risk free security returns and BSE Index. The present stud
y includes the five different sector specific schemes. Among these 25 schemes, o
nly sector specific schemes floated by different institutions have been studied
.To evaluate the performance of funds only three performance measures have been
applied i.e. Sharpe Index, Treynor Index and Jensen’s measure. It is observed th
at the performance of sample schemes during the study period is best. However; t
here are some instances where poor performance has been reflected.
A number of studies have examined the impact of firm-specific variables such as
firm size and book-to-market-value, as in Fama and French (1992), while other st
udies have examined the impact of the macro-economic factors, as in Chen, Roll a
nd Ross (1986), Antoniou, Garret and Priestly (1998), and Poon and Taylor (1992)
.
Journal of Research into New Media Convergence: The International Technologies:
This very journal is basically an interview which is done by Patrick Crogan to S
amuel Weber. The title is Targeting, Television and Networking: An Interview wit
h Samuel Weber. Here a light is thrown on various aspects by the interviewee on
the targeting, media and networking.
According to him;
The ‘target’ is someone who doesn’t fit the usual criteria so one doesn’t have t
he same kind of search procedures as in the normal hiring process. The target of
opportunity can be a function of affirmative action policy or be somebody whose
qualifications are unusual enough that one would not find them with a regular s
earch process following criteria peculiar to an individual discipline.
On the one hand the association of targeting with the aim of controlling the fut
ure, controlling the environment by identifying a target, localizing it and hitt
ing it or reaching it, depending on what area a person is in, and on the other h
and the notion of opportunity, which suggests the unpredictable emergence of an
event that can’t be entirely planned The coupling of the two terms suggests that
targeting, rather than just designating an abstract activity in which, unencumb
ered by constraints of time and space, he identify something that he/she wants t
o accomplish or goals to be reach and then everything is done to achieve that, i
nvolves responding in a very determinate situation spatially and temporally to a
n unpredicted, unforeseen event, trying to get that event in some sense under co
ntrol.
The word ‘opportunity’ itself is interesting because it already condenses this i
dea of the unpredictable, singular event being turned into an occasion to do som
ething else. An opportunity means precisely to be able to do something with the
event. Quite literally, the word suggests a portal, op-port-unity; a gateway thr
ough which one can pass into another domain. The latter can be construed as a re
alm of goals, and then the opportunity is instrumental zed, like the target. But
it can also suggest an area that may not be definable strictly or primarily in
terms of goals, aims or ends. In the latter case you can’t be absolutely sure th
at you are going to be able to reach your target or even that there is one. So y
ou have this tension between the two terms, target and opportunity.
In the financial domain as well, where the maximization of profit in the short t
erm takes precedence over all other considerations and has come to undermine the
very foundations of the capitalist economy that produced it in the first place.
Analyzing Mutual Fund Risk By Arturo Neto , CFA (Contact Author | Biography)File
d Under: Economics, Mutual Funds: There are a number of attractive mutual funds
and fund managers that have performed very well over both long-term and short-te
rm horizons. Sometimes, performance can be attributable to a mutual fund manager
s superior stock-picking abilities and/or asset allocation decisions. In this a
rticle, we ll summarize how to analyze a mutual fund s portfolio and determine w
hether there are specific performance drivers.
Port folio analysis: - All mutual funds have a stated investment mandate that sp
ecifies whether the fund will invest in large companies or small companies, and
whether those companies exhibit growth or value characteristics. It is assumed t
hat the mutual fund manager will adhere to the stated investment objective. It s
a good start to understand the fund s specific investment mandate, but there is
more to fund performance that can only be revealed by digging a bit deeper into
the fund s portfolio over time.
1. Sector Weights: Sometimes fund managers will gravitate toward certain sectors
either because they have deeper experience within those sectors, or the charact
eristics they look for in companies force them into certain industries. A relian
ce on a particular sector may leave a manager with limited possibilities if they
have not broadened their investment net.
To determine a fund s sector weight, we must either use analytical software or s
ources like Yahoo! or MSN. Regardless of how the information is obtained, the in
vestor must compare the fund to its relevant indexes to determine where the fund
manager increased or decreased his allocation to specific sectors relative to t
he index. This analysis will shed light on the manager s over/underexposure to s
pecific indexes in order to gain additional insight on the fund manager s tenden
cies or performance drivers. The analysis can be as simple as listing the fund
and relevant indexes side by side with a breakdown by sector. For example, for a
large cap manager, the simplest way to determine sector reliance is to place th
e fund s sector breakdown next to both the S&P 500 Growth Index and the S&P 500
Value Index. Both of these indexes exhibit unique sector breakdowns because cert
ain sectors routinely fall into the value category, while others fall into the g
rowth category. Technology, known more as a growth sector, will have a higher we
ight in the S&P Growth Index than in the S&P 500 Value Index. Industrials, on th
e other hand, known as a value sector, will have a higher weight in the S&P 500
Value Index than in the S&P 500 Growth Index. identify any tendencies the fund m
anager may have.
2. Attribution Analysis: There are fund managers who claim to have a top-down ap
proach and others that claim to have a bottom-up approach to stock-picking. Top-
down indicates that a fund manager evaluates the economic environment to identif
y global trends and then determines which regions or sectors will benefit from t
hese trends. The fund manager will then look for specific companies within those
regions or sectors that are attractive. A bottom-up approach, on the other hand
, ignores, for the most part, macroeconomic factors when searching for companies
to invest in. A manager that employs a bottom-up methodology will filter the en
tire universe of companies based on certain criteria, such as valuation, earning
s, size, growth, or a variety of combinations of these types of factors. They th
en perform rigorous due diligence on the companies that pass through each phase
of the filtering process.
Step 1: Determine the sector weights for both the fund and the index.
Step 2: Calculate the contribution of each sector for the fund by multiplying th
e sector weight by the sector return. Repeat for the index.
Step 3: Calculate the rate of return for the fund by adding the contribution of
each sector together. Repeat for the index. In this case, the fund had a return
for the period of 4.38%. The second chart shows the same calculations for the re
levant benchmark. We could see that the total return for the benchmark was 3.55%
and that the fund outperformed the benchmark by 0.83%.
Step 4: Calculate the overweight amount by subtracting the index weight for each
sector from the fund weight for each sector.
Step 5: Calculate performance by subtracting the index return for each sector fr
om the fund return for each sector. Notice that the fund had a 30% weight to Sec
tor 1 while the benchmark only had a 20% weight. As such, the fund manager over
allocated to this sector assuming it would outperform. We can see from the retur
n of 4.2% for Sector 1 within the fund was 2% less than the return for the same
sector within the benchmark. Now this might get a bit tricky: The fund manager m
ade the correct choice of allocating to Sector 1 as the sector for the benchmark
had a return of 6.2%, the highest of all five sectors; however, the security se
lection within the sector was not very good and therefore the fund only had a 4.
2% return.
Step 6: Calculate the selection attribution by multiplying the benchmark weight
with the difference in performance.
Step 7: Calculate the allocation attribution by multiplying the index return for
each sector by the overweight amount.
Step 8: Calculate the interaction by multiplying the overweight column by the pe
rformance column.
The third chart shows the calculation of both allocation and security selection
contribution. In this example, the manager contribution to performance for overw
eighting Sector 1 was 0.62% but the manager did a poor job of security selection
, which resulted in a contribution of -0.4%.
The last chart shows the active management effect of positive 0.88% minus the un
explained portion of -0.055, resulting in active management contribution of 0.82
5%.
As you can see, this information is very useful to determine whether a manager i
s driving performance through asset allocation (top-down) or security selection
(bottom-up) analysis. The results of this analysis should be compared to the fun
d s stated mandate and the fund manager s process.
A study on the performance and characteristics on the Swedish fund market Author
: Johan Bergström; Victor Sundén; [2008]:- Abstract: In this paper we study the
relation between fund performance and a set of fund-specific attributes of Swede
n funds in the period 2003-2007, extending the existing research on fund perform
ance. The paper studies a sample of about 90 Sweden funds, performing a number o
f different statistical tests to verify the robustness of the results. We genera
te the risk-adjusted return of the funds, by regressing fund returns against app
ropriate benchmarks. We use these estimates as a measure of fund performance and
then analyze the relation between fund performance and attributes such as fund
size, flows, management fees, past performance and a proxy for trading activity.
We find evidence of a significant, positive relationship between fund size and
risk-adjusted return as well as a positive relation between the money flow to fu
nds and risk-adjusted return, i.e. the existence of “smart money”. We also find
some evidence of persistence in the sample.
Risk and Return in Mutual Fund Selection: - How to interpret statistical measure
s of risk. BY ROBERT A. CLARFELD AND PHYLLIS BERNSTEIN JULY 1997:- Mutual fund i
nvestors still get only half the story. The focus—in both the financial press an
d in advertisements—is on investment return, often precisely quantified by histo
rical returns over several time intervals, with any mention of the funds relativ
e risk relegated to imprecise generalities.
Mutual fund lists featuring "funds to consider for the next millennium" or "the
17 greatest funds in the history of the universe" appear frequently in the media
and make interesting reading. But, over time, such lists have not proven to be
particularly insightful. Funds with records of steady gains and favorable risk—r
eward characteristics usually are better choices for long-term investors. This m
ay be apparent following a deep market correction but difficult to fathom during
rising markets, a time when many of these same funds are labeled "laggards." Re
ducing mutual fund selection to simplistic levels presumes an ignorant investing
public, which does little to promote successful investing.
This article is designed to help CPAs interpret the various statistical measures
of risk as they apply to mutual funds so they will be in a better position to a
dvise their clients on this often complex aspect of stock and bond investing. Kn
owing how to interpret this information correctly will make it easier for CPAs t
o make responsible and informed investment recommendations to their clients.
UNDERSTANDING RISK:-Many investors believe the United States is in a period of g
reat uncertainty in its investment markets. This is a conclusion that applies du
ring all market conditions—except in hindsight. The risk an investor takes is wh
at provides the opportunity for higher returns. Recognizing this makes it clear
that more emphasis should be placed on risk analysis when CPAs and their clients
make investment decisions. Risk analysis is central to mutual fund research. Fo
cusing on the long-term relationship between risk and return will enable CPAs to
establish realistic expectations as to expected performance under various marke
t conditions.
Risk exists when there is uncertainty about whether future returns will differ f
rom the expected returns. Risk is an attribute that without context is neither g
ood nor bad. Accordingly, the CPAs role is not to eliminate risk but, rather, to
control risk and to make sure that clients are adequately compensated for the r
isks they take. The difference between the required rate of return on a mutual f
und—given its risk—and the risk-free rate is the risk premium.
MEASURING RISK: - Since assuming risk is inherent to the investment process, mut
ual fund investors must be adequately and consistently rewarded for the risks th
ey assume. Prudent research means searching for fund managers who consistently p
roduce returns justifying the risks they have taken.
Modern portfolio theory research developed a number of statistics that make it p
ossible to more precisely quantify the relationship between risk and return. The
se measurements help determine
• Funds volatility (standard deviation).
• How closely a fund mirrors a particular market index (R²).
• How volatile a fund is compared with that market index (Beta).
• How much of funds risk-adjusted return is created by a talented manager
(Alpha)

LIMITATIONS OF THE STUDY

• The study is based on secondary data
• The analysis is based on one company
• The study is restricted to limit duration (3 months).
• Risk management is the wide topic and it’s difficult to analyze thorough
ly with in the short period
• This analysis is carried based on certain assumptions hence the analysis
would be biased

34ANALYSIS AND INTERPRETATIONS

Reliance Growth Fund as on January 29, 2010
Investment objective
The primary investment objective of the Scheme is to achieve long-term growth of
capital by investment in equity and equity related securities through a researc
h based investment approach. However, it may be understood that the above is onl
y indicative. The above pattern may be altered by the Investment Manager in line
 with the Investment Objective.
Fund manager: Mr. Sunil B. Singhania
Volatility Measures:
Standard deviation 37.29
Sharp ratio 0.41
Beta 1

Dividend plan 54.1992

Growth plan 422.5226
PERFORMANCE
6 months 1 Year 3 Years 5 Years Since Inception
Growth Fund 19.61 107.28 14.26 30.09 29.69
BSE100 9.38 85.39 6.47 20.3 12.37
Table No: 3.1.1
Inference:-
Fund performed very well when compared with Benchmark index (BSE SENSEX)
since inception.
Chart No: 3.1.1

TABLE : 3.1.2
MONTHLY RETURNS OF RELIANCE GROWTH FUND NAV FOR THE PEROID OF APRIL 2005 – MARC
H 2010

DATE NAV (Rs) DIVIDEND (Rs) RETURN (Fund)

31/03/2005 32.61 5
29/04/2005 33.66 1.05
31/05/2005 36.16 2.5
30/06/2005 36.75 0.59
31/07/2005 41.13 4.38
31/08/2005 45.72 4.59
30/09/2005 47.57 1.85
31/10/2006 42.94 -4.63
30/11/2005 47.74 4.8
30/12/2005 48.57 3 0.892840385
31/01/2006 52.01 3.44
28/02/2006 52.82 0.81
31/03/2006 48.31 7.5 -4.36800833
28/04/2006 55.34 7.03
31/05/2006 49.36 -5.98
30/06/2006 44.66 -4.7
31/07/2006 43.34 -1.32
31/08/2006 48.34 5
29/09/2006 52.55 4.21
31/10/2006 53.08 2.5 0.577573739
30/11/2006 55.1 2.02
29/12/2006 57.01 1.91
31/01/2007 59.12 2.11
28/02/2007 10.94 -48.18
31/03/2007 47.86 7.5 37.60555759
30/04/2007 50.8 2.94
31/05/2007 47.86 -2.94
29/06/2007 56.7 8.84
31/07/2007 59.77 3.07
31/08/2007 53.86 3.5 -5.851442195
28/09/2007 60.06 6.2
31/10/2007 69.89 9.83
30/11/2007 72.38 2.49
31/12/2007 81.43 9.05
31/01/2008 67.48 -13.95
29/02/2008 65.61 -1.87
31/03/2008 50.67 6.5 -14.84092974
30/04/2008 56.16 5.49
30/05/2008 53.7 -2.46
30/06/2008 45.18 -8.52
31/07/2008 48.2036 3.0236
31/08/2008 42.6755 -5.5281
30/09/2008 42.6755 0
31/10/2008 33.1429 -9.5326
28/11/2008 30.471 -2.6719
31/12/2008 32.8738 2.4028
30/01/2009 30.7907 -2.0831
27/02/2009 29.4795 -1.3112
31/03/2009 29.3961 2 -0.015556244
29/04/2009 34.4708 5.0747
29/05/2009 46.1747 11.7039
30/06/2009 46.2197 0.045
31/07/2009 49.8809 3.6612
31/08/2009 51.9222 2.0413
30/09/2009 55.8195 3.8973
30/10/2009 53.4006 5 -2.329325568
30/11/2009 51.9876 -1.413
31/12/2009 54.8143 2.8267
29/01/2010 53.1127 -1.7016
26/02/2010 53.0201 0.8 -0.077537689
11/3/2010 55.4667 2.4466
Monthly Mean Return 0.402079532
Annualized Monthly Return 24.12477195
Inference:-
It is inferred from the above table that Reliance Growth Funhas given an
nualised return of 24.12% for the Period of April 2005 to March 2010.
CHART: 3.1.2
MONTHLY RETURNS OF RELIANCE GROWTH FUND FOR THE PERIOD OF APRIL 2005 – FEBURARY
2009

Reliance Vision Fund as on January 29, 2010

Investment Objective:
The primary investment objective of the Scheme is to achieve long-term g
rowth of capital by investment in equity and equity related securities through a
research based investment approach.
Fund Manager: Mr. Ashwani Kumar
Volatility Measures:
Standard deviation 37.29
Sharp 0.41
Beta 1

Dividend Plan 41.4501

Growth Plan 239.5465
PERFORMANCE
6 months 1 Year 3 Years 5 years Since In
ception
Equity Opportunities Fund 30.5 86.65 8.72 23.82 24.81
BSE100 9.38 85.39 6.47 20.3 12.37
Table No: 3.1.3
Inference:-
Fund performed very well when compared with Benchmark index (BSE SENSEX) since i
nception.
CHART NO: 3.1.3

TABLE: 3.1.4
MONTHLY RETURNS OF RELIANCE VISION FUND NAV FOR THE PEROID OF APRIL 2005 – MARCH
2010
DATE NAV (Rs) DIVIDEND (Rs) RETURN (Fund)
31/03/2005 33.2 5
29/04/2005 33 -0.2
31/05/2005 35.12 2.12
30/06/2005 35.06 -0.06
31/07/2005 38.22 3.16
31/08/2005 40.16 1.94
30/09/2005 43.78 3.62
31/10/2005 40.35 -3.43
30/11/2005 45.24 4.89
30/12/2005 45.25 3 0.076312997
31/01/2006 47.89 2.64
28/02/2006 50.03 2.14
31/03/2006 48.31 7.5 -1.570089946
28/04/2006 51.38 3.07
31/05/2006 44 -7.38
30/06/2006 42.7 -1.3
31/07/2006 43.08 0.38
31/08/2006 46.34 3.26
29/09/2006 49.81 3.47
31/10/2006 50.99 2 1.22015258
30/11/2006 52.13 1.14
29/12/2006 54.74 2.61
31/01/2007 47.01 8 -7.583854585
28/02/2007 43.76 -3.25
31/03/2007 43.31 -0.45
30/04/2007 46.91 3.6
31/05/2007 43.31 -3.6
29/06/2007 52.92 9.61
31/07/2007 55.96 3.04
31/08/2007 54.7 -1.26
28/09/2007 60.06 5.36
31/10/2007 65.49 3 5.47995005
30/11/2007 64.55 -0.94
31/12/2007 70.21 5.66
31/01/2008 60.16 -10.05
29/02/2008 58.7 -1.46
31/03/2008 43.06 7 -15.52074957
30/04/2008 46.26 3.2
30/05/2008 44.25 -2.01
30/06/2008 35.94 -8.31
31/07/2008 38.5091 2.5691
31/08/2008 35.0355 -3.4736
30/09/2008 35.0355 0
31/10/2008 27.9335 -7.102
28/11/2008 26.9556 -0.9779
31/12/2008 28.942 1.9864
30/01/2009 27.3057 -1.6363
27/02/2009 26.0832 -1.2225
31/03/2009 25.9406 2 -0.065922292
29/04/2009 29.2417 3.3011
29/05/2009 38.4738 9.2321
30/06/2009 38.0466 -0.4272
31/07/2009 41.3579 3.3113
31/08/2009 41.7586 0.4007
30/09/2009 46.1048 4.3462
30/10/2009 43.4097 -2.6951
30/11/2009 41.3967 9 -1.805673066
31/12/2009 43.5886 2.1919
29/01/2010 41.3658 -2.2228
26/02/2010 41.4501 1.02 0.108958051
11/3/2010 42.9 1.4499
Monthly Mean Return 0.176339737
Annualized Monthly Return 10.58038421
Inference:-
It is inferred from the above table that Reliance Growth Funhas given an
nualised return of 10.58% for the Period of April 2005 to March 2010.
CHART: 3.1.4
MONTHLY RETURNS OF RELIANCE VISION FUND FOR THE PERIOD OF APRIL 2005 – FEBURARY
2009
Reliance Banking Fund as on January 29, 2010
Investment Objective:
The primary investment objective of the scheme is to generate continuous returns
by actively investing in equity and equity related or fixed income securities o
f Banks.
Fund Manager - Mr. Sunil Singhania
Volatility Measures:
Standard deviation 38.78
Sharp 0.67
Beta 1.03
Dividend Plan 29.4033
Growth Plan 73.6623
PERFORMANCE
6 months 1 Year 3 Years 5 years Since Inception
Banking Fund 20.4 98.27 23.39 25.1 34.69
S&P CNX Bank Index 18.17 95.62 12.94 21.05 29.2
Table No: 3.1.5

Inference:-
Fund performed very well when compared with S&P CNX Bank Index since inception.
Chart: 3.1.5

TABLE : 3.1.6
MONTHLY RETURNS OF RELIANCE BANKING FUND NAV FOR THE PEROID OF APRIL 2005 – MARC
H 2010
DATE NAV (Rs) DIVIDEND (Rs) RETURN (Fund)
31/03/2005 20.34 3
29/04/2005 19.03 -1.31
31/05/2005 20.31 1.28
30/06/2005 20.99 0.68
31/07/2005 24.61 3.62
31/08/2005 24.48 -0.13
30/09/2005 26.71 2.23
31/10/2006 23.32 -3.39
30/11/2005 24.59 1.27
30/12/2005 21.35 4 -3.077332249
31/01/2006 21.35 0
28/02/2006 20.84 -0.51
31/03/2006 16.32 -4.52
28/04/2006 15.82 -0.5
31/05/2006 15.2 -0.62
30/06/2006 13.09 -2.11
31/07/2006 14.38 1.29
31/08/2006 13.07 -1.31
29/09/2006 18.13 5.06
31/10/2006 18.69 0.56
30/11/2006 19.7 1.01
29/12/2006 19.36 -0.34
31/01/2007 20.3 0.94
28/02/2007 16.45 2 -3.751477833
31/03/2007 16.63 0.18
30/04/2007 17.76 1.13
31/05/2007 16.63 -1.13
29/06/2007 21.25 4.62
31/07/2007 22.78 1.53
31/08/2007 22.64 -0.14
28/09/2007 25.74 3.1
31/10/2007 26.58 0.84
30/11/2007 26.45 2 -0.054755455
31/12/2007 28.52 2.07
31/01/2008 27.32 -1.2
29/02/2008 26.45 -0.87
31/03/2008 22.18 -4.27
30/04/2008 24.64 2.46
30/05/2008 22.3 -2.34
30/06/2008 18.11 -4.19
31/07/2008 20.4732 2.3632
31/08/2008 20.1403 -0.3329
30/09/2008 20.1403 0
31/10/2008 16.1242 -4.0161
28/11/2008 15.8557 -0.2685
31/12/2008 17.7356 1.8799
30/01/2009 16.2437 -1.4919
27/02/2009 14.3839 -1.8598
31/03/2009 15.4691 1.0852
29/04/2009 18.8265 3.3574
29/05/2009 26.1508 7.3243
30/06/2009 25.992 -0.1588
31/07/2009 27.099 1.107
31/08/2009 25.2564 2 -1.768796539
30/09/2009 29.1262 3.8698
30/10/2009 28.6996 -0.4266
30/11/2009 30.3555 1.6559
31/12/2009 30.0596 -0.2959
29/01/2010 29.356 -0.7036
26/02/2010 29.4033 1.69 0.104869151
11/3/2010 30.8514 1.4481
Monthly Mean Return 0.182986785
Annualized Monthly Return 10.97920708
Inference:-
It is inferred from the above table that Reliance Growth Funhas given an
nualised return of 10.58% for the Period of April 2005 to March 2010.
CHART: 3.1.6
MONTHLY RETURNS OF RELIANCE BANKING FUND FOR THE PEROID OF APRIL 2005 – MARCH 20
10

Reliance Pharma Fund as on January 29, 2010

Investment Objective:-
The primary investment objective of the scheme is to seek to generate consistent
returns by investing in equity and equity related or fixed income securities of
Pharma and other associated companies.
Fund Manager - Mr. Sailesh Raj Bhan
Volatility Measures:
Standard deviation 36.28
Sharp 0.72
Beta 1.06

Dividend Plan 32.2923

Growth Plan 43.3026
PERFORMANCE
6 months 1 Year 3 Years 5 years Since Inception
Pharma fund 50.54 139.51 27.25 27.36 29.15
BSE-HC 25.83 74.71 7.67 12.22 14.26
Table: 3.1.7

Inference:-
Fund performed very well when compared with Benchmark index (BSE Health Care) si
nce inception.
Chart: 3.1.7

TABLE: 3.1.8
RELIANCE PHARMA FUND NAV FOR THE PEROID OF APRIL 2005 – MARCH 2010
DATE NAV (Rs) DIVIDEND (Rs) RETURN (Fund)
31/03/2005 12.15
29/04/2005 11.86 -0.29
31/05/2005 12.97 1.11
30/06/2005 13.3 0.33
31/07/2005 14.61 1.31
31/08/2005 16 1.39
30/09/2005 15.69 -0.31
31/10/2006 14.02 -1.67
30/11/2005 16.19 2.17
30/12/2005 16.39 4 0.44706609
31/01/2006 17.46 1.07
28/02/2006 17.98 0.52
31/03/2006 18.79 0.81
28/04/2006 19.64 0.85
31/05/2006 16.589 -3.051
30/06/2006 14.9124 -1.6766
31/07/2006 14.8439 -0.0685
31/08/2006 17.3782 2.5343
29/09/2006 18.2849 0.9067
31/10/2006 18.5753 0.2904
30/11/2006 18.8251 0.2498
29/12/2006 19.1398 0.3147
31/01/2007 19.8327 0.6929
28/02/2007 16.9229 1.5 -2.834167333
31/03/2007 17.0994 0.1765
30/04/2007 18.7051 1.6057
31/05/2007 17.0994 -1.6057
29/06/2007 22.002 4.9026
31/07/2007 22.7237 0.7217
31/08/2007 21.4995 -1.2242
28/09/2007 21.7865 0.287
31/10/2007 23.0309 1.2444
30/11/2007 21.752 -1.2789
31/12/2007 26.416 4.664
31/01/2008 19.6858 -6.7302
29/02/2008 20.7242 1.0384
31/03/2008 17.3621 1.5 -3.289720849
30/04/2008 19.326 1.9639
30/05/2008 18.9237 -0.4023
30/06/2008 17.575 -1.3487
31/07/2008 18.4276 0.8526
31/08/2008 17.6943 -0.7333
30/09/2008 17.6943 0
31/10/2008 14.1642 -3.5301
28/11/2008 14.0845 -0.0797
31/12/2008 15.9388 1.8543
30/01/2009 14.1402 -1.7986
27/02/2009 13.8812 -0.259
31/03/2009 15.204 1.3228
29/04/2009 15.8915 0.6875
29/05/2009 20.0278 4.1363
30/06/2009 20.1635 0.1357
31/07/2009 22.6739 2.5104
31/08/2009 23.9825 1.5 1.374755359
30/09/2009 26.7942 2.8117
30/10/2009 26.7706 -0.0236
30/11/2009 29.2269 2.4563
31/12/2009 32.784 3.5571
29/01/2010 31.633 -1.151
26/02/2010 32.2923 0.97 0.68996418
11/3/2010 33.9615 1.6692
Monthly Mean Return 0.371723291
Annualized Monthly Return 22.30339745
Inference:-
It is inferred from the above table that Reliance Growth Funhas given an
nualised return of 22.30% for the Period of April 2005 to March 2010.
CHART: 3.1.8
MONTHLY RETURNS OF RELIANCE PHARMA FUND FOR THE PEROID OF APRIL 2005 – MARCH 201
0
Reliance Diversified Sector Fund as on January 29, 2010
Investment Objective –
The primary investment objective of the scheme is to seek to generate continuous
return by actively investing in equity and equity related or fixed income secur
ities of Power and other associated companies Securitized debt up to 100% of the
corpus. The scheme may have an exposure of up to 90% of its net assets in forei
gn securities.
However, it may be understood that the above is only indicative. The above patte
rn may be altered by the Investment Manager in line with the Investment Objectiv
e.
Fund Manager - Mr. Sunil Singhania
Volatility Measures:
Standard deviation 38.78
Sharp 0.67
Beta 1.03

Dividend Plan 46.4634

Growth Plan 74.7162
PERFORMANCE
6 months 1 Year 3 Years 5 years Since In
ception
Diversified Power Fund 12.65 94.24 26.33 43.47 42.12
S&P CNX Bank Index 4.99 53.19 14.43 24.84 22.84
Table: 3.1.9
Inference:-
Fund performed very well when compared with S&P CNX Bank Inception since incept
ion.
Chart: 3.1.9

TABLE:3.1.10
RELIANCE DIVERSIFIED SECTOR FUND NAV FOR THE PEROID OF APRIL 2005 – MARCH 2010
DATE NAV (Rs) DIVIDEND (Rs) RETURN (Fund)
31/03/2005 14.31
29/04/2005 14.47 0.16
31/05/2005 15.23 0.76
30/06/2005 15.58 0.35
31/07/2005 17.85 2.27
31/08/2005 19.43 1.58
30/09/2005 20.61 1.18
31/10/2006 18.96 -1.65
30/11/2005 21.59 2.63
30/12/2005 18.99 4 -2.414729041
31/01/2006 20.83 1.84
28/02/2006 21.91 1.08
31/03/2006 24.87 2.96
28/04/2006 24.99 0.12
31/05/2006 21.7975 -3.1925
30/06/2006 20.0308 -1.7667
31/07/2006 20.4674 0.4366
31/08/2006 22.433 1.9656
29/09/2006 24.5436 2.1106
31/10/2006 26.4324 1.8888
30/11/2006 29.8653 3.4329
29/12/2006 30.1741 0.3088
31/01/2007 30.5996 0.4255
28/02/2007 26.4092 2.5 -4.108699586
31/03/2007 26.0804 -0.3288
30/04/2007 28.7362 2.6558
31/05/2007 26.0804 -2.6558
29/06/2007 33.2504 7.17
31/07/2007 36.3598 3.1094
31/08/2007 34.1088 3 -2.168491295
28/09/2007 38.7219 4.6131
31/10/2007 50.5208 11.7989
30/11/2007 52.466 1.9452
31/12/2007 56.8144 4.3484
31/01/2008 50.4632 -6.3512
29/02/2008 48.8515 -1.6117
31/03/2008 42.1742 1.5 -6.646594699
30/04/2008 44.9972 2.823
30/05/2008 42.0708 -2.9264
30/06/2008 35.2083 -6.8625
31/07/2008 38.2306 3.0223
31/08/2008 34.348 -3.8826
30/09/2008 34.348 0
31/10/2008 26.5329 -7.8151
28/11/2008 24.9402 -1.5927
31/12/2008 27.227 2.2868
30/01/2009 26.3476 -0.8794
27/02/2009 25.3458 -1.0018
31/03/2009 25.1115 2 -0.155391463
29/04/2009 29.074 3.9625
29/05/2009 38.8966 9.8226
30/06/2009 39.4656 0.569
31/07/2009 41.9618 2.4962
31/08/2009 43.4897 1.5279
30/09/2009 46.375 2.8853
30/10/2009 45.0982 -1.2768
30/11/2009 47.0848 1.9866
31/12/2009 48.8749 1.7901
29/01/2010 46.7287 -2.1462
26/02/2010 46.4634 0.78 -0.248607903
11/3/2010 48.37 1.9066
Monthly Mean Return 0.575596434
Annualized Monthly Return 34.53578601
Inference:-
It is inferred from the above table that Reliance Growth Funhas given an
nualised return of 34.54% for the Period of April 2005 to March 2010.
CHART:3.1.10
MONTHLY RETURN OF RELIANCE DIVERSIFIED SECTOR FUND NAV FOR THE PEROID OF APRIL 2
005 – MARCH 2010

TABLE: 3.1.11
ANALYSIS OF RELATIONSHIP BETWEEN RISK AND RETURN – FROM APRIL 2005 TO FEBURARY 2
010
SCHEMES PERIOD ANNUALISED RETURN ANNUALISED STANDARD DEVIATION SHARP RA
TIO
RELIANCE GROWTH FUND 60months 24.12% 37.29% 0.41

RELIANCE VISION FUND 60months 10.58% 37.29% 0.41

RELIANCE BANKING FUND 60months 11% 38.78% 0.67
RELIANCE PHARMA FUND 60months 22.3% 36.28% 0.72
RELIANCE DIVERSIFIED SECTOR FUND 60months 34.54% 38.78% 0.67
INTERFERENCE:-
Reliance Pharma Fund has the highest Sharp ratio and hence it is the bes
t among the funds taken for analysis for the period April 2005 to March 2010 and
Reliance Growth Fund is the most conservative fund chosen for analysis for the
period April 2005 to March 2010.

CHART: 3.1.11
ANNUALISED RETURN FROM APRIL 2005 – FEBURARY 2010

RISK FOR PERIOD APRIL 2005 – MARCH 2009

Chart: 3.1.12

Chart: 3.1.13

TABLE: 3.1.12
ANALYSIS OF RELATIONSHIP BETWEEN RISK AND RETURN – FROM APRIL 2007 TO MARCH 2010
SCHEMES PERIOD ANNUALISED RETURN ANNUALISED STANDARD DEVIATION SHARP RA
TIO
RELIANCE GROWTH FUND 36months 14.472% 22.374% 0.246
RELIANCE VISION FUND 36months 6.348% 22.374% 0.246
RELIANCE BANKING FUND 36months 6.6% 23.268% 0.402
RELIANCE PHARMA FUND 36months 13.38% 21.768% 0.432
RELIANCE DIVERSIFIED SECTOR FUND 36months 20.724% 23.268% 0.402
INTERFRENCE:-
Reliance Pharma Fund has the highest Sharp ratio and hence it is the bes
t among the funds taken for analysis for the period April 2007 to March 2010 and
Reliance Growth Fund is the most conservative fund chosen for analysis for the
period April 2007 to March 2010.
FINDINGS FROM THE STUDY
Reliance Diversified Sector has given the maximum return for the period
April 2005 to March 2010.
Reliance Vision fund has given the minimun return for the period April 2
005 to March 2010.
Reliance Growth Fund has been associated with maximum risk during the p
eriod April 2005 to March 2010.
Reliance Pharma Fund has been associated with minimum risk during the p
eriod April 2005 to March 2010.
In terms of risk adjusted returns Relaince Diversified Sector is the bes
t for the period of April 2005 to March 2010.
In terms of risk adjusted returns Relaince Vision Fund is the wrost for
the period of April 2005 to March 2010.
SUGGESTION AND RECOMMENDATION
For the investors looking for the least risky fund, Relaince Pharma Fund
is the right fund as the associated with the fund is minimum.
For investor looking for high return funds, Reliance Diversified Sector
Fund is the right fund as it has given the maximum returns during the period of
April 2005 to March 2010.

For investors who are looking for funds with highest Risk Adjust Return,
Reliance Growth fund is the right fund

CONCLUSION
Reliance mutual fund is one of the largest Asset Management Company in the count
ry. It manages more than 48 equity schemes and overall and more than 55 schemes
for domestic as well as international investors. The total assets managed by Rel
iance Mutual Fund as on September 30, 2009 are Rs. 929.79 Crore.
The total investors’ accounts handled by Reliance Mutual Fund are more than 8 mi
llion. For the benefit of the existing investors and for the new investors the s
tudy would of great help. The existing investor can check whether their investme
nt is with the right funds, whether the risk associated with the funds are accep
table for them. And for the new investors, the study would help them in identify
ing the right funds as per their return expectation and risk appetite.
The analysis suggest that Reliance Growth fund is the most conservative fund amo
ng the diversified equity Funds and Reliance Diversified Sector Fund is the bes
t among the equity funds managed by Reliance Mutual fund in terms of Risk Adjust
ed Returns.