Project On Risk & Return Analysis of Reliance Mutual Fund
Project On Risk & Return Analysis of Reliance Mutual Fund
Project On Risk & Return Analysis of Reliance Mutual Fund
Supervisor:
Name: - Mr. SUNIL KUMAR Designation: - SENIOR FACULTY Specialization: - FINANCE
Submitted By:
PRIYA BHATNAGAR
Session 2008-10 DIRECTORATE OF DISTANCE EDUCATION GURU JAMBHESHWAR UNIVERSITY OF SCIENCE & TECNOLOGY
TABLE OF CONTENTS
1.) 1.1) 1.2) 1.3) 1.4) 1.5)
1.6)
Introduction and Rationale Of Topic Chosen Mutual Fund The Concept Mutual Fund Structure Classification of Mutual Funds Advantages of Mutual Fund Disadvantages of Mutual Fund History of Mutual Fund (Worldwide) Indian Mutual Industry-An Insight History Of Indian Mutual Fund Industry Indian Mutual Fund Industry Today Association of Mutual Funds in India (AMFI)
SEBI Regulations for Mutual Funds (1996)
Future of Mutual Funds in India Risk Return Analysis of the Schemes Literature Review & Problem Statement 2.1) About Reliance Mutual Fund 2.2) Sponsor 2.3) The Asset Management Company 2.4) Reliance Mutual Fund Schemes
3.) Objectives & Research Methodology 4.) Analysis & Interpretation of Data
5.) 6.)
7.) Bibliography
The above diagram gives an idea on the structure of an Indian mutual fund.
Trustees: Two third of the trustees are independent professionals who own
the fund and supervises the activities of the AMC. It has the authority to sack AMC employees for non-adherence to the rules of the regulator. It safeguards the interests of the investors. They are legally appointed i.e. approved by SEBI.
money. It doesnt own the money. AMC is only a fee-for-service provider. The above 3 tier structure of Indian mutual funds is very strong and virtually no chance for fraud.
Return Based
Investment Based
Sector Based
Others
Income Funds
Equity
IT Industry
Commodity Funds
Growth Funds
Debt
Pharmaceutical Industry
Conservative Funds
Balanced
Power Sector
Return based
I1.
The investors of the mutual fund schemes are made to enjoy a good return in form of regular dividends or capital appreciation or a combination of these both. a) Income Funds Income funds are floated for the interest of investors who want to maximize current income. These funds distribute periodically the income earned by them, in the form of either a constant income at relatively low risk or in the form of maximum income possible with higher risk by the use of leverage. b) Growth Funds These Schemes have the objective to achieve an increase in the value of the underlying investments through capital appreciation, and they invest in growth oriented securities. c) Conservative Funds These funds offer a blend of good average returns and reasonable capital appreciation. These funds are very popular and are ideal for the investors who want both growth and income from their investment.
There is a category of investors who have two critical needs that short-term debt funds help achieve. One they want to be invested for the short-term less than 6 months. Two- over this time frame, they are looking at preserving capital with a return that is superior to that of a fixed deposit of a comparable tenure. The reason why short-term debt funds can preserve capital better than long term debt funds is because they are invested in debt instruments of a shorter tenure. c) Balanced Fund: These funds have their portfolio consisting of a balanced mix of equity and bonds. The composition of these funds may vary depending upon the outlook of the market. Balanced funds invest their corpus in both equity and debt instruments in a predetermined ratio, say 60:40. An aggressive balanced fund would typically hold a higher portion of its assets in equities maybe as high as 70% of the total assets. On the other hand, a 'disciplined' balanced fund would maintain a conservative equity allocation during most times.
4. Others:
a) Commodity Funds: It will invest directly in commodities or through shares of the commodity companies or through commodity futures contract .Most common example of such fund is precious-metal fund, Gold funds invest in Gold, Gold futures or shares of gold mines b) Exchange Traded Funds: It combines the best features of open end and closed structure. It tracks a market index and trades like a stock on the stock market. ETFs are not the index funds. c) Real Estate Funds: It can invest in real estate, Fund real estate developers, Buy shares of housing finance companies, Buy securitized assets.
Objective
Liquidity + Moderate Income + Reservation of Capital
Risk
Negligible
Investment Portfolio
Treasury Bills, Certificate of Deposits, Comm. Papers, Call, Money
Investme nt horizon
2 days - 3 weeks
Liquidity + ShortModerate term Income Funds (Floating short-term) Regular Bond Income Funds (Floating Long-term) Gilt Funds Security & Income
3 weeks 3 months
Credit Risk & Interest Rate Risk Interest Rate Risk High Risk
Equity Funds
Salaried & conservative investors Aggressive investors with long term Outlook.
NAV Portfolio varies indices like with index BSE, NIFTY performanceetc
Aggressive Investors.
3 years plus
Balanced Funds
2 years plus
you are provided with the immediate benefit of instant diversification and asset allocation without the large amounts of cash needed to create individual portfolios. Economies of scale- Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Divisibility- Investors can purchase mutual funds in smaller denominations. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. This provides an additional advantage liquidity. Liquidity- Another advantage of mutual funds is the ability to get in and out with relative ease. In general, you are able to sell your mutual funds in a short period of time without there being much difference between the sale price and the most current market value. Professional Management- When you buy a mutual fund, you are also choosing a professional money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. Therefore, rather than having to thoroughly research every investment before you decide to buy or sell, you have a mutual fund's money manager to handle it for you.
Costs- Mutual funds provide investors with professional management, but it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. Evaluating Funds- Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc.
fund be registered with the SEC and provide prospective investors with a prospectus. The SEC helped create the Investment Company Act of 1940, which provides the guidelines that all funds must comply with today. With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s there were around 270 funds with $48 billion in assets. In 1976, John C. Bogle opened the first retail index fund called the First Index Investment Trust. It is now called the Vanguard 500 Index fund. In November of 2000 it became the largest mutual fund ever with $100 billion in assets.
AAUM Movement
120000 100000 80000 60000 40000 20000 0 AAUM (Rs. Cr)
Sep-10
Birla Franklin
AMC Aug-10
As per the data released by the Association of Mutual Funds in India (AMFI), the combined average AUM of the 41 fund houses in the country increased to Rs. 715466.98 crores in September, 2010, witnessing a growth of 4.06 per cent compared to Rs. 687559.54 crores in August, 2010. Reliance Mutual Fund AAUM increased for a consecutive month and currently stood at Rs 1, 07,748.54 crores. Out of the 41 mutual funds, 13 mutual funds registered fall in AAUM in September, 2010. All top 10 fund houses registered a gain in the current month. Among the top 5 AMC in terms of total AAUM, ICICI Mutual Fund had the lowest percentage growth of only 1.39 per cent to Rs 69,754.78 crores while UTI Mutual Fund managed to top by growing at 5.36 per cent. The fund houses which have experienced the maximum gain in their AAUM are Pramerica Mutual Fund, Peerless Mutual Fund, Axis Mutual Fund, DSP
Fidelity
Black Rock Mutual Fund and Fortis Mutual Fund, the growth experienced by them were above 10 per cent compared to last month.
7. At last but not the least Association of Mutual Fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.
standardization of accounting policies, valuation norms for NAV and pricing. The regulations also sought to address the areas of misuse of funds by introducing prohibitions and restrictions on affiliate transactions and investment exposures to companies belonging to the group of sponsors of mutual funds. The payment of early bird incentive for various schemes has been allowed provided they are viewed as interest payment of early bird incentive for early investment with full disclosure. The various Mutual Funds are allowed to mention an indicative return for schemes for fixed income securities. In 1998-99 the Mutual Funds Regulation were amended to permit Mutual Funds to trade in derivatives for the purpose of hedging and portfolio balancing. SEBI registered Mutual Funds and Fund managers are permitted to invest in overseas markets, initially within an overall limit of US $500 million and a ceiling for an individual fund at US$ 50 million. SEBI made (October 8, 1999) investment guidelines for MFs more stringent. The new guidelines restrict MFs to invest no more than 10% of NAV of a scheme in share or share related instruments of a single company. MFs in rated debt instruments of a single issuer is restricted to 15% of NAV of the scheme (up to 20% with prior approval of Board of Trustees or AMC). The new norms also specify a maximum limit of 25% of NAV for any scheme for investment in listed group companies as against an umbrella limit of 25% of NAV of all schemes taken together earlier. SEBI increased (June 7, 2000) the maximum investment limit for MFs in listed companies from 5% to 10% of NAV in respect of open-ended funds. Changes in fundamental attributes of a scheme was also allowed without the consent of three fourths of unit holders provided the unit holders are given the exit option at NAV without any exit load. MFs are also not to make assurance or claim that is likely to mislead investors. They are also banned from making claims in advertisement based on past performance.
At the end of 2006 March, Indian mutual fund industry reached Rs. 2, 57, 499 crores. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs. 40, 90, 000 crores. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%.
According to the current growth rate, by year 2010, mutual fund assets will be double. Going by the above facts and generally, mutual funds have often been considered a good route to invest and earn returns with reasonable safety. Small and big investors have both invested in instruments that have suited their needs. And so equity and debt funds have attracted investments alike. The performance of the investments, equity in particular, for the last oneyear, has however been disappointing for the investors. The fall in NAVs of equity funds, and it is really steep in some, even to the extent of 60-70 percent, has left investors disgusted. Such backlash was only to be expected when funds, in a hurry to post good returns invested in volatile tech stocks. The move, though good under conducive market conditions, is the point of rebuttal now. Owing to volatility in market and profit warnings by some IT majors, tech stocks have been on the downhill journey and the result is fall in NAVs of most equity funds. This hurts the investor but then investments in equity are never safe. Mutual funds are not just guilty of mismanaging their risks as the recent survey by Price water house Coopers indicates but also not educating their investors enough on the risks facing them. It is for the mutual benefit of the investors as well as mutual funds that investor is educated enough or else an agitated investor might route his investments to other avenues that are considered safe. Debt funds are safe investments and generate returns far in excess of what other so-called safe avenues such as banks generate. Despite this, the inflow of funds in debt funds and banks is by no means comparable. The factor contributing to this the lack of understanding caused by improper guidance by the intermediaries. Till now, Investor education has been one of the issues, less cared for, by the industry. The industry focused upon the amounts and not why a person wanted to invest or whether a particular product suited him or not. While educating the customer might not have been on the cards earlier, the things are beginning to change now. With SEBI passing on the guidelines, the funds will engage in investor education. The guidelines state that funds will utilize the income earned on unclaimed money lying with them for a period exceeding three years to educate the investors. AMFI has started a certification program for intermediaries. This will be made mandatory for the intermediaries and is aimed at educating the investors about the risks attached to the schemes and to inculcate adequate skills into the intermediaries to help the investors choose the right kind of fund. Steps such as these are aimed at obliterating various flaws in the system by standardizing the knowledge base of intermediaries, as they are the interface between the investor and the funds. Although the investors themselves are also guilty of picking funds that were not suited for them, the blame cant lie square on their shoulders alone. The industry has also got to bear some of it. With such programs becoming
mandatory, it can be ensured to some extent that ignorance ceases to be an aspect associated with the industry. Till now, investors have been ignorant about the kind of fund to be picked or how to select a fund. Teaching an investor how to select a fund is thus an important aspect. Educated investors can, on their part, ask pertinent questions to find funds that qualify to be in their portfolio as per their risk bearing capacity. It would not be improper to say that investor education is still the key to managing the funds handed over by investors. The investors are important to the industry and likewise, mutual funds form an important avenue for an investor. It would thus be of critical importance to educate people for an informed investor is in the best position to pick up Schemes as per his need.
Systematic risk
The systematic risk affects the entire market. The economic conditional, political situation, sociological change affects the entire market in turn affecting the company and even the stock market. These situations are uncontrollable by corporate and investors.
Unsystematic risk
The Unsystematic risk is unique to industries. It differs from industries to industries. Unsystematic risk stems from managerial inefficiency, technological change in production process, availability of raw materials, change in the customer preference and labour problem. The nature and magnitude of above mentioned factors differ from industry to industry and company to company.
In general view, the risk for any investor would be the probably loss from investing money in any mutual fund. but when look at the technical side of its, we cant just say these schemes/ fund carry risk without any proof. They are certain set formulas to say the percentage risk associated with it. There are certain tools or formulas used to calculate the risk associated with schemes. These tools helps us to understand the associated wit the schemes. These schemes are compared with the benchmark BSE 100.
Arithmetic mean
AM=y/N Where y= returns of NAV values N= number of observation Average returns that can be expected from investment. The Arithmetic returns is appropriate as a measure of a central tendency of a number of returns calculated from particular time i.e. for 5 years.
Returns
Investor wants to maximize expected retunes subject to their tolerance for risk. Returns are the motivating force and principal reward in investment process and it is the key method available to investors in comparing alternative the investments. Measuring the historical returns allows investor to access the how well the stocks have performed. Investor get returns either in form of interest, dividend or capital appreciation. There are two terms, realized term and expected return. Realized return earned in past. RETURN= (Closing price-opening price) /opening price*100
Standard Deviation
The Standard deviation is measure of the variables around its mean or it is square root of the sum of the squared root deviations from the mean divided the number of observation. S.D is used to measure the variability of return i.e. the measure of dispersion. S.D is calculated as the square root of variation. In finance investments volatility, S.D is also known as historical volatility and it is used by investors as a gauge from the amounted of volatility. S.D. = (y-Y) /N Where, y= return of portfolio Y=average return of portfolio N= number of months
Beta
Beta describes the relationship between the securities return and the index returns. Beta = + 1.0 One percent change in market index returns causes exactly one percent change in the security return. It indicates that the security moves in tandem with the market. Beta = + 0.5 One percent change in the market index return causes 0.5 percent change in the security return. The security is less volatile compared to the market. Beta = + 2.0 One percent change in the market index return causes 2 percent change in the security return. The security return is more volatile. When there is a decline of 10% in the market return, the security with beta of 2 would give a negative return of 20%. The security with more than 1 beta value is considered to be risky. Negative Beta Negative beta value indicates that the security return moves in the opposite direction to the market return. A security with a negative beta of -1 would provide a return of 10%, if the market return declines by 10% and vice-versa. Beta= N*XY-(X) (Y) N* (X)-(X) Where N=No of observation X=Total of market index value Y=Total of return to Nav
Alpha
Alpha represents the forecast of residual return, which we consider the future return of any portfolio. Alpha measures the unsystematic risk of a portfolio property because the portfolio property also consists of both residual return and future expectation. It is important to remember that the risk-free portfolio will always show a zero residual return hence, any risk less security like cash will have always alpha equal to zero. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1% correspondingly; a similar negative alpha would indicate an underperformance of 1%. Alpha indicates that the stock return is independent of the market return .A positive value of alpha is a healthy sign. Positive alpha values would yield profitable return. The Formula is used to calculate:Alpha=Y-beta(x) Where Y= Average return to NAV return X=Average return to market index
Sharpe Ratio
The performance measure developed by William Sharpe is referred to as the Sharpe ratio or the reward to variability ration. It is the ratio of the reward or risk to the variability of return or risk measured by the standard deviation of return the formula for calculating Sharpe ratio may be stated as: Sharpe ratio= Rp-Rf S.D Where, Rp=Realised return on the portfolio. Rf=Risk free rate of return. S.D=standard deviation of portfolio return Sharpe performance index gives a single value to be used for the performance ranking of various fund or portfolio. Sharpe index measures the risk premium of the portfolio relative to the total amount of risk in the portfolio. The risk premium is the difference between the portfolios average rate of return and the risk less rate of return. The Standard Deviation of the portfolio indicates the risk.
Higher the value of Sharpe ratio better the fund has performed. Sharpe ratio can be used to rank the desirability of fund or portfolio. The fund that has performed well compared to other will be rank first than others.
Treynor Ratio
The performance measure by jack. Treynor is referred to as Treynor ratio or reward to volatility ratio. It is the ratio of the reward or risk premium to the volatility of return as measuring by the portfolio beta. The formula for calculating Treynor ratio may be stated as: Treynor ratio= Rp-Rf Beta Where: Rp= realized return on the portfolio Rf= risk free rate of return Beta=portfolio beta.
Particulars (Rs. in crores) Total Income Profit Before Tax Profit After Tax Reserves & Surplus Net Worth Earnings per Share (Rs.)
200708
2006-07
2005-06
2079.79 1171.45 1025.45 5779.06 5927.50 41.75 (Basic + Diluted) 55% 246.16
883.86 733.18 646.18 4915.07 5161.23 28.39 (Basic + Diluted) 35% 246.16
652.02 550.61 537.61 3849.58 4122.46 29.74 (Basic + Diluted) 30% 223.40
Reliance Capital Ltd. has contributed Rupees One Lac as the initial contribution to the corpus for the setting up of the Mutual Fund. Reliance Capital Ltd. is responsible for discharging its functions and responsibilities towards the Fund in accordance with the Securities and Exchange Board of India (SEBI) Regulations.
The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the contribution of an amount of Rupees one Lac made by them towards the initial corpus for setting up the Fund and such other accretions and additions to the corpus.
Vision Statement:
To be a globally respected wealth creator, with an emphasis on customer care and a culture of good corporate governance.
Mission Statement:
To create and nurture a world-class, high performance environment aimed at delighting their customers.
No. of schemes No. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes Equity & Debt Money Market Gilt Fund 57 185 60 100 15 2 0 6
b) Debt/Income Schemes
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.
Equity/Growth Schemes
a) Reliance Natural Resources Fund:
(An Open Ended Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in companies principally engaged in the discovery, development, production, or distribution of natural resources and the secondary objective is to generate consistent returns by investing in debt and money market securities.
(An Open-ended Equity Growth Scheme.): The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach.
the secondary objective is to generate consistent returns by investing in debt and money market securities.
Debt/Liquid Schemes
a) Reliance Monthly Income Plan:
(An Open-ended Fund-Monthly Income is not assured & is subject to the availability of distributable surplus): The primary investment objective of the scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital.
b) 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 the central Government and State Government. c) Reliance Income Fund:
(An Open-ended Income Scheme): The primary objective of the scheme is to generate optimal returns consistent with moderate levels of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money market Instruments.
order to make regular dividend payments to unit holders and the secondary objective is growth of capital.
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.
provided by price of gold through investment in physical Gold (and Gold related securities as permitted by Regulators from time to time). However, the performance of the scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors.
Problem Statement:
The stocks have risk, which comprises of either unique risk also called as diversifiable risk or unsystematic risk and market risk also called as non-diversifiable risk Or systematic. There are few problems, which reveal the necessity to analyze the risk and return of the Mutual Funds. We can neither predict the risk involved nor the future performance of the stock. Many Mutual Fund schemes have not performed well due to which investor have incurred losses. The movement of BSE-100 index depends on the performance of the companys stock. If a particular industry is not in a booming stage, then the stock of companies related to that industry would be affected. Given the background of risk and uncertainty about investment in mutual fund, present study tries to find out risk return on Reliance mutual fund in comparison with BSE-100 index has been under taken.
The Objectives of the Study Are: To study Mutual Fund Industry in India. To study the different Schemes provided by Reliance Mutual Fund. To study the performance of different schemes of the Company. To study the Risk involved in different Schemes. To study the Monthly Returns with respect to their Benchmark.
Research Methodology
Method of Research Design To Be Used Under Study Is:
Descriptive Research
In this research an attempt has been made to analyze the past performance of the Reliance Mutual schemes and to know the benefits to the investors. The study is to be done on different schemes provided by the company to know the companys performance for the past few months and to know the risk and returns of the funds.
Five Years monthly Navs of different schemes Five Years monthly index of BSE-100 & S&P CNX NIFTY
Conceptual Design:
Sample unit: Schemes of Reliance Mutual Fund. Sample size: Five years monthly Navs
Y=y/1 2
4 1.205 2
X=x/1 2
6 1.9721
40 35 30 25 20 15 10 5 0 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2006 to Dec 2006. From the above graph we can see there is some correlation between the movements of both.
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 TOTAL Y=y/ 12
35.55 37.91 32.61 33.66 36.16 36.75 41.13 45.72 47.57 42.94 47.74 48.57
-0.1694 7.2419 -13.98 3.2199 7.4272 1.6316 11.918 11.16 4.0464 -9.733 11.178 1.7386 35.679 2.9733
-3.1427 4.26861 -16.954 0.24661 4.45396 -1.3416 8.94511 8.18648 1.07311 -12.706 8.20513 -1.2347
9.877 18.22 287.4 0.061 19.84 1.8 80.01 67.02 1.152 161.4 67.32 1.524 715. 7
3521.71 3611.9 3481.86 3313.45 3601.73 3800.24 4072.15 4184.83 4566.63 4159.59 4649.87 4953.28 TOTAL X=x/1 2
-1.6376 2.56097 -3.6003 -4.8368 8.7003 5.51152 7.15507 2.76709 9.12343 -8.9134 11.7867 6.52513 35.142 2 2.9285 2
2.6816 6.5586 12.962 23.394 75.695 30.377 51.195 7.6568 83.237 79.448 138.93 42.577 554.7 1
0.2775 18.546 50.334 15.574 64.619 8.9928 85.277 30.88 36.917 86.754 131.76 11.344 509.8 5
60 50 40 30 20 10 0 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2007 to Dec 2007. From the above graph we can see there is some correlation between the movement of both.
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 TOTAL Y=y/ 12
52.1 52.82 51.42 55.34 49.36 44.66 43.34 48.34 52.55 53.08 55.1 57.01
7.2679 1.382 -2.6505 7.6235 -10.806 -9.5219 -2.9557 11.537 8.7091 1.0086 3.8056 3.4664 18.866 1.5721
5.69572 -0.1902 -4.2227 6.05135 -12.378 -11.094 -4.5278 9.96454 7.137 -0.5636 2.23343 1.89428
32.44 5224.97 0.036 5422.67 17.83 5904.17 36.62 153.2 123.1 20.5 99.29 50.94 0.318 4.988 3.588 542. 8 6251.39 5385.21 5382.11 5422.39 5933.77 6328.33 6603.6 6931.05 6982.58 TOTAL X=x/1 2
5.48505 3.78375 8.87939 5.88093 -13.856 -0.0576 0.74841 9.4309 6.6494 4.3498 4.95866 0.74347 36.996 4 3.0830 3
30.086 14.317 78.844 34.585 191.98 0.0033 0.5601 88.942 44.214 18.921 24.588 0.5527 527.6
39.865 5.229 23.535 44.833 149.72 0.5481 -2.212 108.8 57.911 4.3871 18.871 2.5772 407
60 50 40 30 20 10 0 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2008 to Dec 2008. From the above graph we can see there is some correlation between the movement of both Jan-09 59.12 3.7011 0.30373 0.092 7145.91 2.33911 5.4714 8.6573 Feb-09 55.73 -5.7341 -9.1315 83.38 6527.12 -8.6594 74.984 49.654 Mar-09 47.86 -14.122 -17.519 306.9 6587.21 0.92062 0.8475 13.001
Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 TOTAL Y=y/ 12
12000 10000 8000 6000 4000 2000 0
6.1429 6.8701 4.4391 5.4145 -9.8879 11.511 16.367 3.5627 12.503 40.769 3.3974
7032.93 7468.7 7605.37 8004.05 7857.61 8967.41 10391.1 9 0.027 10384.4 82.92 11154.2 8 908. TOTAL 6 X=x/1 2
6.76645 6.19614 1.8299 5.24209 -1.8296 14.1239 15.8773 -0.0653 7.41381 50.155 4.1795 8
45.785 38.392 3.3485 27.479 3.3473 199.48 252.09 0.0043 54.965 706.2
41.566 42.568 8.1232 28.383 18.091 162.58 259.86 0.2328 92.698 698.9 5
90 80 70 60 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2009 to Dec 2009. From the above graph we can see there is some correlation between the movement of both. Jan-10 Feb-10 Mar-10 Apr-10 May-10 67.48 65.61 65.61 56.16 53.7 -17.1313 -2.77119 0 -14.4033 -4.38034 -10.291 4.06905 6.84025 -7.563 2.4599 105.9 16.56 46.79 57.2 9440.94 9404.98 8232.82 9199.46 -15.36 -0.3809 -12.463 11.7413 -5.6111 235.94 0.1451 155.33 137.86 31.484 263.14 1.0555 0 169.11 24.578
6.051 8683.27
80 70 60 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2010 to Oct 2010. From the above graph we can see there is some correlation between the movement of both.
1) Standard Deviation
S.D. = (y-Y) N
STANDARD DEVIATION
YEAR 2006 (y-Y) 1102.589 (y-Y) /N 91.88242 Square (S.D) 9.5855 root
2) Beta
= N*XY-(X) (Y) N* (X)-(X) N* XY 5286.72 6118.165 4883.992 8387.444 15318.71 (X) 21.69324 35.14223 36.99639 50.15499 -69.8287 ( Y) 7.231404 35.67909 18.86572 40.76851 -82.0829
BETA
3) Alpha
=Y-(X)
ALPHA
YEAR 2006 2007 2008 2009 2010 Y 1.205234 2.973257 1.572144 3.397376 -6.84025 X 1.972113 2.928519 3.083033 4.179583 -5.81906 0.9878 0.8972 0.8435 1.0644 0.5357
4) Sharpe Ratio
SR=Rp-Rf/SD Where; Rp= (Closing Nav-opening Nav)/ opening Nav *100
SHARPE RATIO
5) Treynor Ratio
TR=Rp-Rf/
TREYNOR RATIO
YEAR 2006 2007 2008 2009 2010 Rp 1.316166 37.39745 9.424184 37.73691 -51.2836 Rf 5 5.1 5.7 7 7.5
INTERPRETATION
In the year 2006 standard deviation was high at the rate of 9.5855 and in the year 2008 standard deviation was low at the rate of 6.7258. In the year 2009 is 1.0644 which is high risk because greater than 1. In the year 2010 value is 0.5357; it is less risky because it is less than 1. In the year 2007 Sharpe index was higher at the rate of 4.182091 and in the year 2010 Sharpe index was less at the rate of -6.51645. In the year 2007 Treynor index was higher at the rate of 35.9905 and in the year 2010 treynor index was less at the rate of -109.732 .
90 80 70 60 50 40 30 20 10 0 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance vision fund and Benchmark index for the period from Jan 2006 to Dec 2006. From the above graph we can see there is some correlation between the movement of both.
Analysis:
The above graph shows the movement of NAV of reliance vision fund and Benchmark index for the period from Jan 2007 to Dec 2007. From the above graph we can see there is some correlation between the movement of both. Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 134.38 6.6762 139.26 3.6315 155.75 11.841 165.65 6.3563 141.84 -14.374 137.65 -2.954 3.2654 0.2207 8.4304 2.9455 -17.784 -6.3648 10.662 7 0.0487 71.070 8 8.6761 5 316.28 8 40.511 5224.9 7 5422.6 7 5904.1 7 6251.3 9 5385.2 1 5382.1 5.4850 5 3.7837 5 8.8793 9 5.8809 3 13.856 30.08 6 14.31 7 78.84 4 34.58 5 191.9 8 0.003 36.619 3 13.740 7 105.14 2 37.381 2 199.15 9 0.1700
138.85 0.8718 150.99 8.7432 160.53 6.3183 171.09 6.5782 174.93 2.2444 183.67 4.9963 40.93 3.4108
Analysis:
The above graph shows the movement of NAV of reliance vision fund and Benchmark index for the period from Jan 2008 to Dec 2008. From the above graph we can see there is some correlation between the movement of both. Jan-09 Feb-09 Mar-09 Apr-09 184.14 0.2559 171.42 6.9078 169.69 1.0092 183.8 8.3152 3.7235 10.887 4.9886 4.3358 13.864 1 118.53 24.885 8 18.799 7145.9 1 6527.1 2 6587.2 1 7032.9 2.3391 1 8.6594 0.9206 2 6.7664 5.471 4 74.98 4 0.847 5 45.78 0.5985 6 59.817 0.9291 56.264
May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 TOTAL Y=y/ 12
12000 10000 8000 6000 4000 2000 0
200
8.8139
207.32 3.66 219.24 5.7496 214.28 2.2624 235.29 9.8049 267.61 13.736 264.45 1.1808 287.66 8.7767 47.75 2 3.979 4
2 4.8346 23.373 1 0.1019 0.3194 9 1.7702 3.1336 5 38.959 6.2417 5.8256 33.937 3 9.7569 95.196 8 26.627 5.1602 4 4.7974 23.014 6 420.4 23
3 7468.7 7605.3 7 8004.0 5 7857.6 1 8967.4 1 10391. 2 10384. 4 11154. 3 TOTAL X=x/ 12
5 6.1961 4 1.8299 5.2420 9 1.8296 14.123 9 15.877 3 0.0653 7.4138 1 50.15 5 4.179 58
Analysis:
The above graph shows the movement of NAV of reliance vision fund and Benchmark index for the period from Jan 2009 to Dec 2009. From the above graph we can see there is some correlation between the movement of both. Jan-10 246.44 -8.9084 79.360 9440.9 -15.36 235.9 220.10 14.329 3 4 4 5 Feb-10 240.47 2.9985 8.9908 9404.9 0.145 0.9227
Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 TOTAL Y=y/ 12
2.4225 -8.8635 14.285 7.4423 12.863 1.0771 4.3439 -13.353 18.774 7.1023 12.523 1.0534 6.4744 -4.6171 10.038 -14.868 20.289 65.05 2 5.421
8 8232.8 2 9199.4 6 8683.2 7 7029.2 7 7488.4 8 7621.4 6621.5 7 4953.9 8 TOTAL X=x/ 12
0.3809 12.463 11.741 3 5.6111 19.048 6.5328 3 1.7749 9 13.119 25.184 69.82 9 5.819 1
10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9 10
Analysis:
The above graph shows the movement of NAV of reliance vision fund and Benchmark index for the period from Jan 2010 to Oct 2010. From the above graph we can see there is some correlation between the movement of both.
1) Standard Deviation
S.D. = (y-Y) N
STANDARD DEVIATION
YEAR 2006 2007 2008 2009 2010 (y-Y) 563.5243 368.4037 504.4993 420.423 1120.02 (y-Y) /N 46.9603 30.7003 42.0416 35.0352 93.335 Square (S.D) 6.8527 5.5407 6.4839 5.9190 9.6610 root
2) Beta
= N*XY-(X) (Y) N* (X)-(X) N* XY 6005.88 6729.50 7596.75 19759.41 (X) 35.14223 36.99639 50.15499 -69.8287 ( Y) 45.42131 40.92972 47.75224 -65.0517
BETA
3) Alpha
=Y-(X)
ALPHA
YEAR 2007 Y 3.785109 X 2.928519 0.8133
=Y-(X) 1.4033
4) Sharpe Ratio
SR=Rp-Rf/SD Where; Rp= (Closing Nav/opening Nav-1)
SHARPE RATIO
YEAR 2006 2007 2008 2009 2010 Rp 28.87423 51.51552 36.67957 56.21809 -43.8747 Rf 5 5.1 5.7 7 7.5 SD 6.8527 5.5407 6.4839 5.9190 9.6610 SR 3.483916 8.377194 4.777922 8.315271 -5.31774
5) Treynor Ratio
TR=Rp-Rf/
TREYNOR RATIO
YEAR 2006 2007 2008 2009 2010 Rp 28.87423 51.51552 36.67957 56.21809 -43.8747 Rf 5 5.1 5.7 7 7.5
Interpretation
In the year 2006 standard deviation was high at the rate of 9.6610 and in the year 2008 standard deviation was low at the rate of 5.5407. in the year 2008 is 1.0279 which is high risk because greater than 1.In the year 2005 value is 0.8133 it is less risky because it is less than 1 . In the year 2007 Sharpe index was higher at the rate of 8.377194 and in the year 2010 Sharpe index was lesser at the rate of 5.31774 and in the year 2007 Treynor index was higher at the rate of 57.0706 and Treynor index was lesser at the rate of -60.4408.
20 18 16 14 12 10 8 6 4 2 0
Index NAV
Analysis:
The above graph shows the movement of NAV of reliance equity fund and Benchmark index for the period from Jan 2009 to Dec 2009. From
the above graph we can see there is some correlation between the movement of both.
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 TOTAL Y=y/ 12
15.4 7 14.6 3 13.2 8 14.1 6 13.4 7 11.7 12.3 2 12.6 3 11.7 4 9.56 7
12.9432 5.42986 9.22761 6.62651 4.87288 13.1403 5.33932 2.45118 7.05167 18.4852 54.0705 4.50588
8.4373 -0.924 4.7217 11.132 4 -0.367 8.6344 9.8451 9 6.9570 5 2.5458 13.979
71.187 8 0.8537 6 22.294 8 123.93 0.1346 9 74.553 5 96.927 8 48.400 6 6.4810 6 195.42 2 755.3 43
6245.4 5 6356.9 2 5762.8 8 6289.0 7 5937.8 1 4929.9 8 5297.4 7 5337.2 8 4807.2 3539.5 7 TOTAL X=x/ 12
16.297 1.7848 2 9.3448 9.1306 8 5.5852 16.973 7.4541 9 0.7514 9 9.9317 26.369 62.31 7 5.193 1
265.60 6 3.1855 8 87.324 9 83.369 3 31.195 288.08 6 55.564 9 0.5647 4 98.637 7 695.34 5 1686.8 6 140.57 1
210.94 -9.69133 86.23 60.5045 27.2162 223.032 39.8003 1.84204 70.0347 487.444 1260.12
7000 6000 5000 4000 3000 2000 1000 0 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10
18 16 14 12 10 8 6 4 2 0 Index NAV
Analysis:
The above graph shows the movement of NAV of reliance equity fund and Benchmark index for the period from Jan 2010 to Oct 2010. From the above graph we can see there is some correlation between the movement of both.
1) Standard Deviation
S.D. = (y-Y) N
STANDARD DEVIATION
YEAR 2009 2010 (y-Y) 308.5888 755.3429 (y-Y) /N 25.7157 62.9445 Square (S.D) 5.0710 7.93380 root
2) Beta
= N*XY-(X) (Y) N* (X)-(X) N* XY (X) ( Y) Nx (X) 6714.48 45.28385 43.48137 8280.6 2050.62 15121.48 -62.3168 -54.0705 20242.28 3883.38
BETA
0.7617 0.7183
3) Alpha
=Y-(X)
ALPHA
X 4.116714 -5.19307
Y 3.952852 -4.50588
0.7617 0.7183
4) Sharpe Ratio
SR=Rp-Rf/SD Where; Rp= (Closing Nav/opening Nav-1)
SHARPE RATIO
YEAR 2009 2010 Rp 50.97706 -36.6458 Rf 7 7.5 SD 5.0710 7.93380 SR 8.672265 -5.56427
5) Treynor Ratio
TR=Rp-Rf/
TREYNOR RATIO
YEAR 2009 2010 Rp 50.97706 -36.6458 Rf 7 7.5
0.7617 0.7183
TR 57.7354
-61.4587
Interpretation
In the year 2010 standard deviation was high at the rate of 7.93380 and in the year 2009 standard deviation was low at the rate of 5.0710. in the year 2009 is 0.7617 which is high risk because greater than 1.In the year 2010 value is 0.7183 it is less risky compared to year 2009 . In the year 2009 Sharpe index was higher at the rate of 8.672265 and in the year 2010 Sharpe index was lesser at the rate of 5.56427. In the year 2009 Treynor
index was higher at the rate of 57.7354 and Treynor index was lesser at the rate of -61.4587.
Jan-07 Feb-07
12.2833 12.3696
-40.7874 0.70258
-43.6211 -2.13112
1902.8 4.541686
Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 TOTAL Y=y/12
12.4257 21.1542 21.327 21.4811 21.576 21.6339 21.7031 21.7566 21.838 21.8817
0.453531 70.24554 0.816859 0.722558 0.441784 0.268354 0.319868 0.246509 0.374139 0.20011 34.00444 2.833703
-2.38017 67.41184 -2.01684 -2.11114 -2.39192 -2.56535 -2.51383 -2.58719 -2.45956 -2.63359
5.665219 4544.356 4.06766 4.456933 5.721279 6.581018 6.319366 6.693576 6.049454 6.935814 6504.188
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 TOTAL Y=y/12 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
21.9243 21.9714 22.0254 22.1279 22.2222 22.2053 22.321 22.5169 22.7517 22.9167 23.1332 23.1843
0.194683 0.21483 0.245774 0.465372 0.426159 -0.07605 0.521047 0.877649 1.042772 0.725221 0.944726 0.220895 5.803077 0.48359 0.156571 -0.44659 0.202449 0.377315 0.609864 0.507419 2.631042 -0.51927 0.863157 2.024608
-0.28891 -0.26876 -0.23782 -0.01822 -0.05743 -0.55964 0.037457 0.394059 0.559183 0.241631 0.461136 -0.2627
0.083467 0.072232 0.056556 0.000332 0.003298 0.313197 0.001403 0.155283 0.312685 0.058385 0.212647 0.069009 1.338493
23.2206 23.1169 23.1637 23.2511 23.3929 23.5116 24.1302 24.0049 24.2121 24.7023
-0.58936 -1.19252 -0.54349 -0.36862 -0.13607 -0.23852 1.885106 -1.2652 0.117221 1.278672
0.34735 1.422109 0.135882 0.018516 0.018516 0.05689 3.553624 1.600736 0.013741 1.635002
24.8961 25.3343
0.0386 1.014179
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 TOTAL Y=y/12
25.9301 25.8515 25.5116 25.5555 25.596 23.5116 25.3348 25.6685 25.7618 26.1378
2.351752 -0.30312 -1.31482 0.172079 0.158479 -8.14346 7.75447 1.317161 3.258499 14.03953 21.11358 1.759465
0.592287 -2.06259 -3.07428 -1.58739 -1.60099 -9.90292 5.995005 -0.4423 1.499034 12.28007
0.350804 4.254267 9.451211 2.519795 2.563157 98.06792 35.94009 0.195633 2.247104 150.8001 308.4288
Standard Deviation
S.D. = (y-Y) N
STANDARD DEVIATION
YEAR 2006 2007 2008 2009 2010 (y-Y) 7.178206 6504.188 1.338493 10.10928 308.4288 (y-Y) /N 0.59818 542.015 0.1115 0.8419 25.7024 Square (S.D) 0.77342 23.2812 0.3339 0.9175 5.0697 root
Interpretation
In the year 2006 standard deviation was high at the rate of 23.2812 and in the year 2008 standard deviation was low at the rate of 0.3339.
11.6257 11.6643 11.7086 11.7494 11.7964 11.8397 11.8838 11.924 11.9632 12.0086 12.0639
-0.01823 -0.04618 0.001584 -0.02975 0.021813 -0.01115 -0.00573 -0.03993 -0.04946 0.001289 0.082296
Dec-07 TOTAL Y=y/12 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 TOTAL Y=y/12 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 TOTAL Y=y/12 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10
12.1208
0.471655 4.538493 0.378208 0.539568 0.466101 0.509679 0.412014 0.409514 0.421546 0.438237 0.497858 0.486645 -100 #DIV/0! #VALUE! -95.8188 -9.58188 #DIV/0! 0.508678 0.722235 0.833893 0.478628 0.125117 0.063233 0.426553 0.458451 0.415346 0.525018 0.537789 5.094942 0.463177 0.419554 0.472678 0.524346 0.412942 0.474734 0.54717 0.587042 0.648936 0.773843 0.838601
0.093447
0.008732 0.023533 102.4438 100.962 101.8396 99.87799 99.82803 100.0686 100.4028 101.6012 101.3753
908.3993
12.9355 13.0013 13.0952 13.2044 13.2676 13.2842 13.2926 13.3493 13.4105 13.4662 13.5369 13.6097 13.6668 13.7314 13.8034 13.8604 13.9262 14.0024 14.0846 14.176 14.2857 14.4055
0.045501 0.259059 0.370717 0.015452 -0.33806 -0.39994 -0.03662 -0.00473 -0.04783 0.061842 0.074613 -0.13968 0.08656 --0.03489 -0.14629 -0.0845 -0.01206 0.027809 0.089702 0.21461 0.279367
0.00207 0.067112 0.137431 0.000239 0.114284 0.159955 0.001341 2.23E-07 0.002288 0.003824 0.005567 0.494134 0.01951 0.007492 0.001217 0.021401 0.00714 0.000146 0.000773 0.008047 0.046057 0.078046
TOTAL Y=y/12
6.710801 0.559233
0.197461
Standard Deviation
S.D. = (y-Y) N
STANDARD DEVIATION
YEAR 2006 2007 2008 2009 2010 (y-Y) 0.022968 0.023533 908.3993 0.494134 0.541306 (y-Y) /N 1.914 1.961 75.69 0.0411 0.0451 Square (S.D) 1.1761 1.4003 8.7005 0.2029 0.212 root
Interpretation
In the year 2008 standard deviation was high at the rate of 8.7005 and in the year 2010 standard deviation was low at the rate of 0.212.
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 TOTAL Y=y/12
11.2682 11.3737 11.4206 11.4524 11.5772 11.6694 11.7971 11.8247 11.8582 11.8923 11.9611 12.0133
0.299076 0.936263 0.412355 0.278444 1.089728 0.796393 1.094315 0.233956 0.283305 0.287565 0.578526 0.436415 6.72634 0.560528
-0.26145 0.375735 -0.14817 -0.28208 0.5292 0.235865 0.533787 -0.32657 -0.27722 -0.27296 0.017997 -0.12411
0.068357 0.141177 0.021955 0.079571 0.280052 0.055632 0.284928 0.10665 0.076853 0.074509 0.000324 0.015404 1.205413
Oct-08 Nov-08 Dec-08 TOTAL Y=y/12 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 TOTAL Y=y/12
12.7163 12.7042 12.7487 12.7655 12.8997 12.9131 13.1887 13.2008 13.2516 13.4267 13.4644 13.7513
-0.27135 -0.09515 0.350278 0.131778 1.051271 0.103878 2.134267 0.091745 0.384825 1.32135 0.280784 2.130804 7.614474 0.634539
-0.90589 -0.72969 -0.28426 -0.50276 0.416732 -0.53066 1.499727 -0.54279 -0.24971 0.68681 -0.35376 1.496265
0.820642 0.532452 0.080805 0.252769 0.173665 0.281601 2.249182 0.294626 0.062357 0.471709 0.125143 2.238808 7.583758
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 TOTAL Y=y/12
0.389217 0.032434
19.01525
Standard Deviation
S.D. = (y-Y) N
STANDARD DEVIATION
root
Interpretation
In the year 2010 standard deviation was high at the rate of 1.2588 and in the year 2007 standard deviation was low at the rate of 0.3169.
When we see Reliance gilt securities fund has high standard deviation in 2010 compared to last year. Here standard deviation is referred to volatility of NAV of the scheme hence the one with high standard deviation means it has high volatility hence the standard deviation is directly related to the returns hence higher the standard deviation higher the returns.
2) Beta:
Beta is referred to how much the portfolio is dependent on the market return so higher the higher the dependent hence high risk i.e. systematic risk. When we see Reliance growth fund in 2009 it has high i.e. if 10% decrease in Rm result in 10% Rp which very dangerous to investors but when we observe in 2010 i.e. 0.5357 which mean 10% decrease in Rm results in 5.3 Rp which is healthy sign i.e. in 2007 the scheme has lowest systematic risk . In 2006 1.048 which has higher value which means the schemes has involved highest risk. In all the 5 years value is less or decrease in Rm is greater than decrease in Rp. So it has less systematic risk as compared to reliance growth fund. When we observe Reliance equity fund the value 0.7677 which is highest in the year 2009 whereas in the other one year 2010 is 0.7183.
3) Alpha:
By observing all the 3 schemes we can see that all schemes over all the 3 years have negative alpha. The reason behind this is due to change in investment plan as in the year 2008.
4) Sharpe Ratio:
Since Sharpe ratio is one of the most popular method of knowing the risk associated with the particular scheme, the higher the ratio better is the performance. In case of Reliance growth fund the Sharpe ratio is high in the year 2007 i.e. 4.182091 compared to other four year 2006 i.e. -0.38431, 2008 i.e. 0.553716,2009 i.e. 3.532276 & 2010 i.e. -6.51645.So we can say that scheme has performed very well in the year 2007 compared to other four years.
In case of Reliance vision fund the Sharpe ratio is high in the year 2007 8.377194 compared to other 4 years, 2006 i.e. 3.483916, 2008 i.e. 4.777922, 2009 i.e. 8.315271 & 2010 i.e. -5.31774. So we can say the scheme as performed very well in the year 2007 as compared to other four years. In case of Reliance equity fund the Sharpe ratio is high in the year 2009 i.e. 8.672265 compared to other one year 2010 i.e. -61.4587 this is very good sign as compared to all other scheme ,this scheme has recorded higher Sharpe ratio with the value of 8.672265 in 2009.
6) Treynor Ratio:
Now coming to another ratio which is derived as treynors ratio which is different from Sharpe ratio since this ratio observe & consider only systematic risk, which is uncontrollable but whereas Sharpe ratio considers both controllable & uncontrollable risk i.e. systematic as well as unsystematic. In case of Reliance vision fund the treynors ratio is high in the year 2007 i.e. 4.5912 compared to other four years 2006 i.e. -0.2458, 2008 i.e. 3.7252, 2009 i.e. 4.4819 and 2010 i.e. -6.4567.So we can say the scheme performed very well in year 2007 compared to other four years but in 2006 it has lower performance. In case of Reliance growth fund the ratio is high in the year 2007 i.e. 3.25708 compared to other four years 2006 i.e. 1.16950, 2008 i.e. 1.79626, 2009 i.e. 3.12612 and 2010 i.e. 12.9086.So we say the scheme performed very well in year 2007 compared to other four years but in 2010 it has lower performance. In case of Reliance equity fund the ratio is high in the year 2009 i.e. 5.09761 compared to last year 2010 i.e. -6.37737.So we can say the scheme performed very well in year 2009 compared to last year.
Suggestions
The Mutual Fund companies should utilize this opportunity of soft interest regime followed by the banks and attract the fixed deposit and the savings Bank Account Investors. The Mutual Fund Asset Management companies should educate and give Awareness about the concept of Mutual Funds to the investors. As majority of the investors do not know what a Mutual Fund is. And it should highlight the benefits of mutual fund over other investment and attract more number of customers. The Mutual Fund Asset Management companies come up with more advertisements and promotional measures and it should also target the F I Is and individual investors who invest in the capital markets. Always the fund should state the objective of each fund floated by the Asset Management Company to the investors so that the right investors choose the right fund.
6.) Questionnaire
NAME: - _______________________________________________ ADDRESS: - ____________________________________________ ____________________________________________ CONTACT NO:- (O)__________ (R)__________ (M)____________ 1) Which investment avenues are you aware of? Equity /Mutual fund
Post Office (NSC, KVP, PPF) Fixed Deposits Others If others please specify 2) Do you invest in mutual funds? Yes
No
Debt
Liquid
3) If yes, in which assets class do you want to invest in Mutual Funds? Equity
No
5) If yes, in which scheme would you invest in RELIANCE MUTUAL FUND? Equity Tax Saver Others
7.) Bibliography
Books: Security Analysis & Portfolio Management by R.P.RUSTAGI Security Analysis & Portfolio Management by D.E. FISHER & R.J. JORDAN
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