A Comparative Study of Equity Mutual Funds between Reliance and Birla SunLife

1
NAME: PRIYANK AGARWAL
ROLL NO:
SEMESTER: 6
COURSE: BACHELOR OF BUSINESS ADMINISTRATION
(HONOURS)
SPECIALISATION: FINANCE
TOPIC: A COMPARATIVE STUDY OF EQUITY MUTUAL
FUNDS BETWEEN RELIANCE AND BIRLA SUN LIFE.
SUPERVISOR:
DATE: 17TH
APRIL, 2017
Dissertation submitted in the partial fulfillment of the requirement of
the Graduate Degree in
BACHELOR OF BUSINESS ADMINISTRATION (HONOURS)
Signature of the student Signature of the supervisor

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Date: 17th April, 2017
To,
The Controller of Examination
Respected Sir,
I, Priyank Agarwal, take full ownership of this work, titled “A Comparative study of
equity mutual funds between Reliance and Birla Sun Life”. All the references used are well
acknowledged in the Bibliography.
This Project Report is in partial fulfillment of the requirements of Graduation.
Yours Sincerely,
Priyank Agarwal
Registration No:
Roll No:

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DECLARATION
I hereby declare the following:
The word count of the dissertation is 11000 words approximately.
The material contained in the paper is the end result of my own work and due acknowledgement
has been given in the bibliography and references to all sources be they printed, electronic or
personal.
I am aware that my dissertation may be submitted to a plagiarism detection service where it will
be stored in a database and compared against work submitted from this institute or from any
other institutions.
In the event that there is a high degree of similarity in content detected, further investigations
may lead to disciplinary actions including the cancellation of my degree according to University
rules and regulations.
I declare that ethical issues have been considered, evaluated and appropriately addressed in this
research.
I agree to an entire electronic copy or sections of the dissertation to being placed on the e-
learning portal, if deemed appropriate, to allow future students the opportunity to see examples
of past dissertations and to be able to print and download copies if they so desire.
SIGNED:
DATE:
NAME: PRIYANK AGARWAL
ROLL NO:
SUPERVISOR:

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ACKNOWLEDGEMENT
Before we get into thick of things, I would like to add a few words of appreciation for the people
who have been a part of this project right from its inception. The writing of this project has been
one of the significant academic challenges I have faced and without the support, patience, and
guidance of the people involved, this task would not have been completed. It is to them I owe my
deepest gratitude.
It gives me immense pleasure in presenting this project report on "A COMPARATIVE STUDY
OF EQUITY MUTUAL FUNDS BETWEEN RELIANCE AND BIRLA SUN LIFE". I am
thankful to the director of this institute – Professor , for incorporating such an
exercise into the course since it has presented me with an excellent opportunity to explore and
enjoy my analytical and report-writing skills, consequently preparing me for my corporate future.
The success of this project is a result of sheer hard work, and determination put in by me with the
help of my project guide. I hereby take this opportunity to add a special note of thanks for Mr. ,
who undertook to act as my mentor despite his many other academic and professional
commitments. His wisdom, knowledge, and commitment to the highest standards inspired and
motivated me. Without his insight, support, and energy, this project wouldn't have kick-started
and neither would have reached fruitfulness.
I also feel heartiest sense of obligation to my library staff members & seniors, who helped me in
collection of data & resource material & also in its processing as well as in drafting manuscript.
The project is dedicated to all those people, who helped me while doing this project.

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ABSTRACT
This project is based on the comparative analysis of the Indian Mutual Fund companies Reliance
and Birla Sun Life, respectively. There are a lot of investment avenues available today in the
financial market for an investor with an investable surplus. He can invest in Bank Deposits,
Corporate Debentures, and Bonds where there is low risk but low return. He may invest in Stock
of companies where the risk is high and the returns are also proportionately high. The recent
trends in the Stock Market have shown that an average retail investor always lost with periodic
bearish tends. People began opting for portfolio managers with expertise in stock markets who
would invest on their behalf. Thus we had wealth management services provided by many
institutions. However they proved too costly for a small investor. These investors have found a
good shelter with the mutual funds.
The following table shows the Mutual Fund schemes which are to be compared:
Schemes Reliance Mutual Fund Birla Sun Life Mutual Fund
1.
2.
Reliance Equity Fund-Growth Plan
Reliance Tax Plan-Growth option
Birla Sun Life Equity Fund-
Growth Plan
Birla Sun Life Tax Plan-Growth
option

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EXECUTIVE SUMMARY
A mutual fund is a scheme in which several people invest their money for a common financial
cause. The collected money invests in the capital market and the money, which they earned, is
divided based on the number of units, which they hold. The mutual fund industry started in India
in a small way with the UTI Act creating what was effectively a small savings division within
the RBI. Over a period of 25 years this grew fairly successfully and gave investors a good return,
and therefore in 1989, as the next logical step, public sector banks and financial institutions were
allowed to float mutual funds and their success emboldened the government to allow the private
sector to foray into this area.
Mutual funds are easy to buy and sell. You can either buy them directly from the fund company
or through a third party. Before investing in any funds one should consider some factor like
objective, risk, Fund Manager’s and scheme track record, Cost factor etc.
There are many, many types of mutual funds. You can classify funds based Structure (open-
ended & close-ended), Nature (equity, debt, balanced), Investment objective (growth, income,
money market) etc.
Reliance Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund
and Birla Sun Life Mutual Fund are the top five mutual fund company in India.
Reliance mutual funding is considered to be most reliable mutual funds in India. People want to
invest in this institution because they know that this institution will never dissatisfy them at any
cost. You should always keep this into your mind that if particular mutual funding scheme is on
larger scale then next time, you might not get the same results so being a careful investor you
should take your major step diligently otherwise you will be unable to obtain the high returns.
“Mutual Funds are Subject to Market Risk, Please read the offer document before
Investing"

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CONTENTS
S NO. TITLE PAGE NO.
1 INTRODUCTION 9
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Macro Economic Scenario of India
Overview
Concept
Industry Profile
Why select Mutual Funds?
Objectives and Scope of study
History of Mutual Funds in India
9
9
10
10
12
13
14
2 LITERATURE REVIEW 16
2.1
2.2
Advantages of Mutual Funds
Disadvantages of Mutual Funds
20
21
3 Types of Mutual Funds schemes in India 23
3.1
3.2
Selection Parameters for Mutual Funds
Risk factors of Mutual Funds
28
29
4 Working of Mutual Funds 30
4.1 Structure of a Mutual Fund 30
5 Reliance Mutual Fund 33
5.1
5.2
Company Profile
Schemes offered by Reliance
33
34
6 BirlaSun Life Mutual Fund 35
6.1
6.2
Company Profile
Schemes offered by Birla Sun Life
35
36

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7 Future Prospects of Mutual Funds in India 37
8 Research Statement 38
9 Research Methodology 39
9.1
9.2
9.3
Technique of the study
Scope of the study
Measure of performance used
40
40
40
10 Data Analysis and Interpretation 42
10.1
10.2
10.3
10.4
Performance comparison of Birla Sun Life MF
Performance comparison of Reliance MF
Analysis of Equity Fund Growth Plan
Analysis of Tax Saver Plan
42
46
49
51
11 Conclusion 53
12 Bibliography 54

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1. INTRODUCTION
.
1.1 MACRO ECONOMIC SCENARIO OF INDIA
The International Monetary Fund’s chief World Economic Outlook has projected that India’s
Gross Domestic Product (GDP) will remain stagnant at 6.4 percent for the year 2016. The reports
suggest that India is likely to increase in 2016 as exports and investment will increase and will
balance the effect of unfavourable monsoon on agriculture this year.
The International Monetary Fund said India, in the past year has strongly lowered its
indebtedness to adverse the impact by adopting stiffer macroeconomic policies to reduce
inflation and limit current account deficits. The IMF said that growth in India has increased in
the second quarter of 2015 due to rising business confidence and strong manufacturing activities
due to General elections in 2015.
Due to inflationary trends India is likely to experience high inflation rates due to monetary
tightening and disinflation. Inflation will remain at an all time high of 7.8 percent in 2014 and
will fall slightly to 7.5 percent in 2016. As inflation is still high in India monetary normalisation
will proceed gradually.
The IMF projected that by 2018, India’s GDP growth is likely to be around 6.7 percent, returning
to what it was in 2011, 6.6 percent but much lower than 10.3 percent which the Indian economy
had achieved in 2011 or over 9 percent in the period 2006-2007.
1.2 Overview
There are a lot of investment avenues available today in the financial market for an investor with
an investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where
there is low risk but low return. He may invest in Stock of companies where the risk is high and
the returns are also proportionately high. The recent trends in the Stock Market have shown that
an average retail investor always lost with periodic bearish tends. People began opting for
portfolio managers with expertise in stock markets who would invest on their behalf. Thus we
had wealth management services provided by many institutions. However they proved too costly
for a small investor. These investors have found a good shelter with the mutual funds.

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1.3 Concept
A mutual fund is a common pool of money into which investors place their contributions that are
to be invested in accordance with a stated objective. The ownership of the fund is thus joint or
“mutual”; the fund belongs to all investors. A single investor’s ownership of the fund is in the
same proportion as the amount of the contribution made by him or her bears to the total amount
of the fund.
Mutual Funds are trusts, which accept savings from investors and invest the same in diversified
financial instruments in terms of objectives set out in the trusts deed with the view to reduce the
risk and maximize the income and capital appreciation for distribution for the members. A
Mutual Fund is a corporation and the fund manager’s interest is to professionally manage the
funds provided by the investors and provide a return on them after deducting reasonable
management fees.
The objective sought to be achieved by Mutual Fund is to provide an opportunity for lower
income groups to acquire without much difficulty financial assets. They cater mainly to the
needs of the individual investor whose means are small and to manage investors portfolio in a
manner that provides a regular income, growth, safety, liquidity and diversification
opportunities.
1.4 Industry Profile
The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total
corpus of Rs700bn collected from more than 20 million investors. In 1963, the day the concept
of Mutual Fund took birth in India. Unit Trust of India invited investors or rather to those who
believed in savings, to park their money in UTI Mutual Fund.
For 30 years it goaled without a single second player. Though the 1988 year saw some new
mutual fund companies, but UTI remained in a monopoly position.
The performance of mutual funds in India in the initial phase was not even closer to satisfactory
level. People rarely understood, and of course investing was out of question. But yes, some 24
million shareholders were accustomed with guaranteed high returns by the beginning of
liberalization of the industry in 1992. This good record of UTI became marketing tool for new

11
entrants. The expectations of investors touched the sky in profitability factor. However, people
were miles away from the preparedness of risks factor after the liberalization.
The net asset value (NAV) of mutual funds in India declined when stock prices started falling in
the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative
investments. There was rather no choice apart from holding the cash or to further continue
investing in shares. One more thing to be noted, since only closed-end funds were floated in the
market, the investors disinvested by selling at a loss in the secondary market.
Several private sectors Mutual Funds were launched 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 102000 crores.
At last to mention, as long as mutual fund companies are performing with lower risks and higher
profitability within a short span of time, more and more people will be inclined to invest until
and unless they are fully educated with the dos and don’ts of mutual funds.
Mutual fund industry has seen a lot of changes in past few years with multinational companies
coming into the country, bringing in their professional expertise in managing funds worldwide.
In the past few months there has been a consolidation phase going on in the mutual fund industry
in India. Now investors have a wide range of Schemes to choose from depending on their
individual profiles.

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1.5 Why select Mutual funds?
The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vice versa if he pertains to lower risk
instruments, which would be satisfied by lower returns. For example, if an investors opt for
bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in
capital protected funds and the profit-bonds that give out more return which is slightly higher as
compared to the bank deposits but the risk involved also increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds
provide professional management, diversification, convenience and liquidity. That doesn’t mean
mutual fund investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are less
riskier but are also invested in the stock markets which involves a higher risk but can expect
higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives
market which is considered very volatile.
Risk and return matrix
Mutual
Funds
Equity
Bank FD
Postal
Savings
Venture
Capital
HIGHER RISK
HIGHIER RETURNS
LOWER RISK
HIGIER RETURNS
LOWER RISK
LOWER RETURNS
HIGHIER RISK
MODERATE
RETURNS

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1.6 Objectives
The objective of this project is to study-
 To give a brief idea about the benefits available from mutual funds.
 To give an idea of the types of schemes available.
 To study Equity mutual fund schemes.
 To compare Reliance and Birla Sun Life different Equity schemes on the basis of their
return.
 To give an idea about the performance of Equity mutual funds.
 Observe the fund management process of mutual funds.
1.6 Scope of study
 The main purpose of doing this project was to know about mutual fund and its
functioning. This helps to know in details about mutual fund industry right from its
inception stage, growth and future prospects.
 It also helps in understanding different schemes of mutual funds. Because my study
depends upon prominent funds in India and their schemes like equity as well as the
returns associated with those schemes.
 The project study was done to ascertain the asset allocation, entry load, exit load,
associated with the mutual funds. Ultimately this would help in understanding the
benefits of mutual funds to investors.

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1.7 HISTORY OF MUTUAL FUNDS IN INDIA
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can
be broadly divided into four distinct phases
FIRST PHASE – 1964-87:
Unit Trust of India (UTI) 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 administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative 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 management.
SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual 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 while GIC had set up its mutual fund in December
1990.
At the end of 1993, the mutual 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 families. 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 governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.

15
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with 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 was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 crores as at the 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 India, 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 and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management
and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
(Source: www.amfiindia.com)

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2. LITERATURE REVIEW
A literature review is an analysis of existing research which is relevant to a particular field or
topic. It explains and justifies how your investigation may help answer some of the questions or
gaps in this area of research. A literature review is not a straightforward summary and it is not a
chronological description of what was discovered in your field.
For the purpose of this study articles from various journals, research papers and by varied
authors have been reviewed.
1. Comparative study of mutual funds of selected Indian companies
Author: Mr. Sunil M. Adhav / Dr Pratap M Chauhan
Source: Issn no: 2394-1537, publishing year: 2015
India’s mutual fund market has witnessed phenomenal growth over the last decade. The
consistency in the performance of mutual funds has been a major factor that has attracted many
investors. The present research is an attempt to study comparative performance of mutual funds
of selected Indian companies. The study focus on mutual fund schemes of selected Indian
companies comprising Equity, Debt and Hybrid Schemes. The total of 390 schemes comprising
of 178 equity mutual funds, 138 debt schemes and 74 hybrid schemes are selected for the study.
The performance of selected Indian companies’ mutual fund is analyzed with the help of Return,
risk. Selected Mutual Fund are compared with their respective bench mark.
2. Investor’s preferences towards Mutual Fund and Future Investments
Author: Y Prabhavathi, N T Krishna Kishore
The advent of Mutual Funds changed the way the world invested their money. The start of
Mutual Funds gave an opportunity to the common man to hope of high returns from their
investments when compared to other traditional sources of investment. The main focus of the
study is to understand the attitude, awareness and preferences of mutual fund investors. Most of
the respondents prefer systematic investment plans and got their source of information primarily
from banks and financial advisors. Investors preferred mutual funds mainly for professional fund
management and better returns and assessed funds mainly through Net Asset Values and past
performance.

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3. A Study on Indian Mutual Funds Equity Diversified growth Schemes and their performance
evaluation
Author: D.S.Chaubey
Indian Mutual Fund industry has experienced tremendous growth due to infrastructure and also
supported by high saving of funds. After liberalization and globalization of Indian economy,
market witness huge crowd towards the option of investing in mutual funds but investment in a
particular funds needs a lot of specification like- investor’s objectives, cost, availability of funds,
risk & return factors etc. And thus invite fundamental study for better future and growth. This
paper aims to know how the performance of mutual funds is assessed and ranked after analyzing
the NAV and their respective returns so as to measure investment avenues.
4. Investor awareness and perception about mutual funds
Author: Simran Saini / DR Bimal Anjum
Source: Issn no: 2231 5780, publishing Year: 2011
Indian Mutual Fund has gained popularity in last few years. The present study analyses the
mutual fund investments in relation to investor’s behaviour. Investors’ opinion and perception
has been studied relating to various issues like type of mutual fund scheme, main objective
behind investing in mutual fund scheme, role of financial advisors and brokers, investors’
opinion relating to factors that attract them to invest in mutual funds, sources of information,
deficiencies in the services provided by the mutual fund managers, challenges before the Indian
mutual fund industry.
5. Mutual funds in India and their working
Author: Gayathri, S., Karthika, S. & Kumar, Gajendran L.
Source: Publishing year: 2010
Mutual Funds in India are financial instruments. A mutual fund is not an alternative
investment option to stocks and bonds; rather it pools the money of several
investors and invests this in stocks, bonds, money ma rke t ins t r ume nts a nd
ot he r t ype s o f s ec ur it ies . The o w ner o f a mut ua l fund unit ge ts
a proportional share of the fund’s gains, losses, income and expenses. Mutual Fund is vehicle
for investment in stocks and bonds. Each mutual fund has a specific stated
objective. The fund’s objective is l a i d o u t i n t h e f u n d ’ s p r o s p e c t u s ,
w h i c h i s t h e l e g a l d o c u m e n t t h a t c o n t a i n s information about the fund, its
history, its officers and its performance. Some popular objectives of a mutual fund are: Fund
Objective – What the fund will invest in; Equity (Growth) – Only in stocks; Debt (Income);
Only in fixed- income securities; Money Market (including Gilt) – In short-term

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money market instruments (including government securities); Balanced – Partly in
stocks and partly in fixed-income securities, in order to maintain a ‘balance’ in returns and risk.
The share value of the Mutual Funds in India is known as net asset value per share (NAV).
The NAV is calculated on the total amount of the Mutual Funds in I ndia, by
dividing it with the number of shares issued and outstanding shares on daily basis. The
company that puts together a mutual fund is called an AMC. An AMC may have several mutual
fund schemes with similar or varied investment objectives. The AMC hires a professional money
manager, who buys and sells securities in line with the fund ’s stated objective. The
Securities and Exchange Board of India (SEBI) mutual fund regulations require
that the fund’s objectives are clearly spelt out in the prospectus. In addition, every
mutual fund has a board of directors that is supposed to represent the shareholders’ interests,
rather than the AMC’s.
6. Performance evaluation of mutual funds.
Author: R K. Agarwal
Source: Issue 4, publishing year: 2010
Reviewed since long the performance of mutual funds has been receiving a great deal of
attention from both practitioners and academics. With an aggregate investment of
trillion dollars in India, the investing public’s interest in identifying successful
fund managers is understandable. From an academic perspective, the goal of identifying
superior fund managers is interesting as it encourages development and application
of new models and theories. The idea behind performance evaluation is to find the returns
provided by the individual schemes especially growth funds and the risk levels at
which they are delivered in comparison w it h t he ma rke t a nd t he r isk free
rat es. I t is a lso o ur a im to ide nt if y t he o ut - pe r fo r mer s for healthy
investments. We have also ranked the investme nt opportunities for better
evaluation of these funds based on various adjusted ratios like Sharpe ratio,
Jensen Measure, Fama ratio Sortino ratio, Treynor’s ratio and few others.
Financial literature has very little studies which concentrate on multiple measures of
mutual fund performance evaluation. Therefore, an attempt has been made to capture the critical
measures of performance evaluation of mutual funds.

19
7. Commonly held belief amoung Indian investors and fund managers.
Author: D N Rao and S B Rao
Source: Financial review. 2009, Vol. 18 Issue 1
Conducted research on the general perceptions/commonly he ld b e lie f a mo ng I nd ia n
I nve st ors a nd F und M a na ger s a re t hat ( A ) M ar ket o utpe r for ms Balanced
and Income Funds during Bull run (B) Balanced and Income Funds outperform the
stock market during Bear run (C) Market outperforms Balanced and Income Funds
over a long holding period (a minimum period of three years). The objective of the study was
to empirically investigate whether the above stated perceptions are valid in the Indian context.
For this purpose, six hypotheses were tested. The performance of the 47 Balanced and 72
Income Funds were analyzed in terms of Return, Risk, Return per Risk and Sharpe
ratio over the past three years (2006, 2007 and 2008) during which period the Indian
Stock Market had witnessed much volatility. Further, the performance of these funds was
compared with that of the Market and Benchmark Indices. The Null Hypotheses were rejected
leading to the acceptance of Alternate Hypothesis in all the six cases leading us to conclude that
Market outperformed both the Balanced and Income Funds over Bull run and 3-year
periods while both the funds outperformed the Market over Bear run period which
confirms the popular belief of the Investors and Fund Managers in India.
8. Short term persistence in mutual funds performance
Author: S. Sehgal and M. Jhanwar
Source: Publishing year: 2007
Authors examine if there is any short-term p er s ist e nc e in mut ua l funds
per for ma nce in t he I nd ia n co nte xt. W e find no e vide nce t hat confirms
persistence using monthly data. Using daily data, we observe that for fund
schemes sorted on prior period four- factor abnormal returns, the winner’s
portfolio does provide gross abnormal returns of 10% per annum on post-formation basis.
The economic feasibility of zero-investment trading strategies that involve buying past winners
and selling past losers is however in doubt. This is owing to the fact that these
strategies generate low gross returns and that the winner’s portfolios involve
higher investment costs than losers portfolios, thus destroying a major portion of
extra-normal returns. O ur empirical findings are consistent with the efficient
market hypothesis and have implications for hedge funds and other managed portfolios that rely
on innovative investment styles, including the fund of funds trading strategies that
implicitly assume short-term persistence.

20
2.1 ADVANTAGES OF MUTUAL FUNDS
If mutual funds are emerging as the favourite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the investor
who has limited resources available in terms of capital and the ability to carry out detailed
research and market monitoring. The following are the major advantages offered by mutual
funds to all investors:
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold a
diversified investment portfolio even with a small amount of investment that would otherwise
require big capital.
2. Reduction/DiversificationofRisk:
When an investor invests directly, all the risk of potential loss is his own, whether he places a
deposit with a company or a bank, or he buys a share or debenture on his own or in any other
from. While investing in the pool of funds with investors, the potential losses are also shared
with other investors. The risk reduction is one of the most important benefits of a collective
investment vehicle like the mutual fund.
3. Reductionof TransactionCosts:
What is true of risk as also true of the transaction costs. The investor bears all the costs of
investing such as brokerage or custody of securities. When going through a fund, he has the
benefit of economies of scale; the funds pay lesser costs because of larger volumes, a benefit
passed on to its investors.
4. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they
invest in the units of a fund, they can generally cash their investments any time, by selling their

21
units to the fund if open-ended, or selling them in the market if the fund is close-end. Liquidity
of investment is clearly a big benefit.
5. Convenience and Flexibility:
Mutual fund management companies offer many investor services that a direct market investor
cannot get. Investors can easily transfer their holding from one scheme to the other; get updated
market information and so on.
6. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
7. Transparency:
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and
the fund manager’s investment strategy and outlook.
2.2 DISADVANTAGES OF MUTUAL FUNDS
1. No Control over Costs:
An investor in a mutual fund has no control of the overall costs of investing. The investor pays
investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are payable even if the value of his investments is
declining. A mutual fund investor also pays fund distribution costs, which he would not incur in
direct investing. However, this shortcoming only means that there is a cost to obtain the mutual
fund services.

22
2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and other
securities. Investing through fund means he delegates this decision to the fund managers. The
very-high-net-worth individuals or large corporate investors may find this to be a constraint in
achieving their objectives. However, most mutual fund managers help investors overcome this
constraint by offering families of funds- a large number of different schemes- within their own
management company. An investor can choose from different investment plans and constructs a
portfolio to his choice.
3. Managing A Portfolio Of Funds:
A vailability of a large number of funds can actually mean too much choice for the investor. He
may again need advice on how to select a fund to achieve his objectives, quite similar to the
situation when he has individual shares or bonds to select.
4. The Wisdom Of ProfessionalManagement:
That's right, this is not an advantage. The average mutual fund manager is no better at picking
stocks than the average nonprofessional, but charges fees.
5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of
somebody else's car
6. Dilution:
Mutual funds generally have such small holdings of so many different stocks that insanely great
performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's
total performance.
7. Buried Costs:
Many mutual funds specialize in burying their costs and in hiring salesmen who do not make
those costs clear to their clients.

23
TYPES OF MUTUAL
FUNDS
BY STRUCTURE
Open - Ended
Schemes
Close - Ended
Schemes
Interval Schemes
BY NATURE
Equity Fund
Debt Funds
Balanced Funds
BY INVESTMENT
OBJECTIVE
Growth Schemes
Income Schemes
Balanced Schemes
Money Market
Schemes
OTHER SCHEMES
Tax Saving
Schemes
Index Schemes
Sector Specific
Schemes
3. TYPES OF MUTUAL FUNDS SCHEMES IN INDIA
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk
tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a
collection of many stocks, an investors can go for picking a mutual fund might be easy. There
are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in
categories, mentioned below.

24
A). BY STRUCTURE
1. Open - Ended Schemes:
An open-end fund is one that is available for subscription all through the year. These do not have
a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")
related prices. The key feature of open-end schemes is liquidity.
2. Close - Ended Schemes:
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.
The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one
of the two exit routes is provided to the investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and close-ended
schemes. The units may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV related prices.

25
B). BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager’s outlook on different
stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:
 Diversified Equity Funds
 Mid-Cap Funds
 Sector Specific Funds
 Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on
the risk-return matrix.
2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:
 Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
Government of India debt papers. These Funds carry zero Default risk but are associated
with Interest Rate risk. These schemes are safer as they invest in papers backed by
Government.
 Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
 MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.

26
 Short Term Plans (STPs): Meant for investment horizon for three to six months. These
funds primarily invest in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also invested in corporate
debentures.
 Liquid Funds: Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term instruments like
Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for
short-term cash management of corporate houses and are meant for an investment
horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are
considered to be the safest amongst all categories of mutual funds.
3. BalancedFunds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both equities
and fixed income securities, which are in line with pre-defined investment objective of the
scheme. These schemes aim to provide investors with the best of both the worlds. Equity part
provides growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz.
Each category of funds is backed by an investment philosophy, which is pre-defined in the
objectives of the fund. The investor can align his own investment needs with the funds objective
and invest accordingly.

27
C). BY INVESTMENTOBJECTIVE:
Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to provide
capital appreciation over medium to long term. These schemes normally invest a major part of
their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.
Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular
and steady income to investors. These schemes generally invest in fixed income securities such
as bonds and corporate debentures. Capital appreciation in such schemes may be limited.
BalancedSchemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a part of
the income and capital gains they earn. These schemes invest in both shares and fixed income
securities, in the proportion indicated in their offer documents (normally 50:50).
Money MarketSchemes:
Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or
sell units in the fund, a commission will be payable. Typically entry and exit loads range from
1% to 2%. It could be worth paying the load, if the fund has a good performance history.
No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no
commission is payable on purchase or sale of units in the fund. The advantage of a no load fund
is that the entire corpus is put to work.

28
3.1 SELECTION PARAMETERS FOR MUTUAL FUND
1. Your objective:
The first point to note before investing in a fund is to find out whether your objective matches
with the scheme. It is necessary, as any conflict would directly affect your prospective returns.
Similarly, you should pick schemes that meet your specific needs. Examples: pension plans,
children’s plans, sector-specific schemes, etc.
2. Your risk capacityand capability:
This dictates the choice of schemes. Those with no risk tolerance should go for debt schemes, as
they are relatively safer. Aggressive investors can go for equity investments. Investors that are
even more aggressive can try schemes that invest in specific industry or sectors.
3. Fund Manager’s andscheme track record:
Since you are giving your hard earned money to someone to manage it, it is imperative that he
manages it well. It is also essential that the fund house you choose has excellent track record. It
also should be professional and maintain high transparency in operations. Look at the
performance of the scheme against relevant market benchmarks and its competitors. Look at the
performance of a longer period, as it will give you how the scheme fared in different market
conditions.
4. Costfactor:
Though the AMC fee is regulated, you should look at the expense ratio of the fund before
investing. This is because the money is deducted from your investments. A higher entry load or
exit load also will eat into your returns. A higher expense ratio can be justified only by
superlative returns. It is very crucial in a debt fund, as it will devour a few percentages from your
modest returns.

29
3.2 RISK FACTORS OF MUTUAL FUNDS
1. MarketRisk:
Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the
market in general lead to this. This is true, may it be big corporations or smaller mid-sized
companies. This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works on
the concept of Rupee Cost Averaging (“RCA”) might help mitigate this risk.
2. Credit Risk:
The debt servicing ability (may it be interest payments or repayment of principal) of a company
through its cash flows determines the Credit Risk faced by you. This credit risk is measured by
independent rating agencies like CRISIL who rate companies and their paper. A ‘AAA’ rating is
considered the safest whereas a ‘D’ rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.
3. Inflation Risk:
The root cause is inflation. Inflation is the loss of purchasing power over time. A lot of times
people make conservative investment decisions to protect their capital but end up with a sum of
money that can buy less than what the principal could at the time of the investment. This happens
when inflation grows faster than the return on your investment. A well-diversified portfolio with
some investment in equities might help mitigate this risk.
4. Interest Rate Risk:
In a free market economy interest rates are difficult if not impossible to predict. Changes in
interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds
fall and vice versa. Equity might be negatively affected as well in a rising interest rate
environment. A well-diversified portfolio might help mitigate this risk.
5. Political/ Government PolicyRisk:
Changes in government policy and political decision can change the investment environment.
They can create a favourable environment for investment or vice versa.

30
4. Working of Mutual Funds
The mutual fund collects money directly or through brokers from investors. The money is
invested in various instruments depending on the objective of the scheme. The income generated
by selling securities or capital appreciation of these securities is passed on to the investors in
proportion to their investment in the scheme. The investments are divided into units and the
value of the units will be reflected in Net Asset Value or NAV of the unit. NAV is the market
value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of
the scheme divided by the number of units outstanding on the valuation date. Mutual fund
companies provide daily net asset value of their schemes to their investors. NAV is important, as
it will determine the price at which you buy or redeem the units of a scheme. Depending on the
load structure of the scheme, you have to pay entry or exit load.
4.1 STRUCTURE OF A MUTUAL FUND
India has a legal framework within which Mutual Fund have to be constituted. In India open and
close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in
India is allowed to issue open-end and close-end schemes under a common legal structure. The
structure that is required to be followed by any Mutual Fund in India is laid down under SEBI
(Mutual Fund) Regulations, 1996.
1. The Fund Sponsor:
Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of
another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the
promoter of a company as he gets the fund registered with SEBI. The sponsor forms a trust and
appoints a Board of Trustees. The sponsor also appoints the Asset Management Company as
fund managers. The sponsor either directly or acting through the trustees will also appoint a
custodian to hold funds assets. All these are made in accordance with the regulation and
guidelines of SEBI.

31
As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least
40% of the net worth of the Asset Management Company and possesses a sound financial track
record over 5 years prior to registration.
2. Mutual Funds as Trusts:
A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor
acts as a settlor of the Trust, contributing to its initial capital and appoints a trustee to hold the
assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The
fund then invites investors to contribute their money in common pool, by scribing to “units”
issued by various schemes established by the Trusts as evidence of their beneficial interest in the
fund.
It should be understood that the fund should be just a “pass through” vehicle. Under the Indian
Trusts Act, the trust of the fund has no independent legal capacity itself, rather it is the Trustee or
the Trustees who have the legal capacity and therefore all acts in relation to the trusts are taken
on its behalf by the Trustees. In legal parlance the investors or the unit-holders are the beneficial
owners of the investment held by the Trusts, even as these investments are held in the name of
the Trustees on a day-to-day basis. Being public trusts, Mutual Fund can invite any number of
investors as beneficial owners in their investment schemes.
3. Trustees:
A Trust is created through a document called the Trust Deed that is executed by the fund sponsor
in favour of the trustees. The Trust- the Mutual Fund – may be managed by a board of trustees- a
body of individuals, or a trust company- a corporate body. Most of the funds in India are
managed by Boards of Trustees. While the boards of trustees are governed by the Indian Trusts
Act, where the trusts are a corporate body, it would also require to comply with the Companies
Act, 1956. The Board or the Trust company as an independent body, acts as a protector of the of
the unit-holders interests. The Trustees do not directly manage the portfolio of securities. For this
specialist function, the appoint an Asset Management Company. They ensure that the Fund is
managed by ht AMC as per the defined objectives and in accordance with the trusts deeds and
SEBI regulations.

32
4. The Asset ManagementCompanies:
The role of an Asset Management Company (AMC) is to act as the investment manager of the
Trust under the board supervision and the guidance of the Trustees. The AMC is required to be
approved and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net
worth of at least Rs. 10 Crores at all times. Directors of the AMC, both independent and non-
independent, should have adequate professional expertise in financial services and should be
individuals of high morale standing, a condition also applicable to other key personnel of the
AMC. The AMC cannot act as a Trustee of any other Mutual Fund. Besides its role as a fund
manager, it may undertake specified activities such as advisory services and financial consulting,
provided these activities are run independent of one another and the AMC’s resources (such as
personnel, systems etc.) are properly segregated by the activity. The AMC must always act in the
interest of the unit-holders and reports to the trustees with respect to its activities.
5. Custodianand Depositories:
Mutual Fund is in the business of buying and selling of securities in large volumes. Handling
these securities in terms of physical delivery and eventual safekeeping is a specialized activity.
The custodian is appointed by the Board of Trustees for safekeeping of securities or participating
in any clearance system through approved depository companies on behalf of the Mutual Fund
and it must fulfill its responsibilities in accordance with its agreement with the Mutual Fund. The
custodian should be an entity independent of the sponsors and is required to be registered with
SEBI. With the introduction of the concept of dematerialization of shares the dematerialized
shares are kept with the Depository participant while the custodian holds the physical securities.
Thus, deliveries of a fund’s securities are given or received by a custodian or a depository
participant, at the instructions of the AMC, although under the overall direction and
responsibilities of the Trustees.

33
5. RELIANCE MUTUAL FUND
5.1 Company Profile
Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of the
fastest growing mutual funds in India having doubled its assets over the last one year. In March,
2006, the Reliance mutual fund emerged as the largest private sector fund house in the country,
overtaking Prudential ICICI which has been holding that position for many years.
The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG.
Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance Capital
Limited, acts as the AMC to the fund. Directors of the company include Amitabh Jhunjhunwala,
a senior executive of ADAG.
Reliance Mutual Fund provides funds under 5 classes – Debt Funds, Equity Funds, Liquid
Funds, Gold Funds and Retirement Funds (both equity and debt). Funds are available for
investment in 20 distinct categories subject to individual funds’ terms and conditions, which
include – Ultra Short Term, Gilt, Short Term, Long Term, MIP (monthly income plan) Dynamic,
ETF, Liquid etc. Reliance Mutual Fund provides more than 200 different schemes to choose
from and more than 800 different scheme options.
Corpus Under Management: Rs.211738.29 Crs. as on March 31, 2017
Key Personnel: Sundeep Sikka (CEO), Madhusudan Kela (Hd-Equity), Rajesh Derhgawen
(Head HRD), Himanshu Vyapak (Sales & Dist), Milind Nesarikar (IRO).

34
5.2 SCHEMES OFFERED BY RELIANCE MUTUAL FUNDS
Source: www.indiainfoline.com/mutualfunds
No. of schemes 1377
Fund of Funds 4
Interval income Funds 111
Liquid Funds 37
ETFs 16
Equity 162
Global Funds 10
Monthly Income Plans 6
Income Funds 33
Gilt Funds 14
Short Term Income Funds 20
Balanced 14
Ultra Short Term Funds 34
Arbitrage Funds 16
Fixed Maturity Plans 888
Floating Rate Income Funds 12

35
6. BIRLA SUN LIFE MUTUAL FUND
6.1 Company Profile
Birla Sun Life Asset Management Company Limited, the investment manager of Birla Sunlife
Mutual Fund, is a joint venture between the Aditya Birla Group and Sun Life Financial Services,
leading international financial services organization.
Established in 1994, Birla Sunlife AMC provides investors a range of 18 investment options,
which include diversified and sector specific equity schemes, a wide range of debt and treasury
products, and two offshore funds.
Both the sponsors have equal stakes in the AMC. In recognition to its high quality investment
products, Birla Sun Life Asset Management Company became India's first asset management
company to be awarded the coveted ISO 9001:2000 certification by DNV Netherlands.
Birla Sun Life Mutual Fund furnishes investors with one of the most economical ways of earning
returns through professional money management. Customers with various investment goals
ranging from wealth creation, tax saving, personal savings to regular income building have
achieved them with Birla Sun Life Mutual Fund. The company’s mutual fund schemes are
customised to suit different parameters including, career paths, inheritance and financial goals of
the customers. The schemes offer investors with both conservative as well as aggressive
investment plans.
Corpus Under Management: Rs.195331.11 Crs. as on March 31, 2017
Key Personnel: Mr. Donald Stewart (Chairman), A Balasubramanian (CEO), Ashok Suvarna
(COO), Abhay Palnitkar (CFO), Sanjay Singal (CMO), Bhavdeep Bhatt (Head Products).

36
6.2 SCHEMES OFFERED BY BIRLA SUN LIFE MUTUAL FUNDS
Source: www.indiainfoline.com/mutualfunds
No. of schemes 924
Fund of Funds 24
Interval income Funds 50
Liquid Funds 14
ETFs 3
Equity 148
Global Funds 21
Monthly Income Plans 21
Income Funds 43
Gilt Funds 14
Short Term Income Funds 6
Balanced 26
Ultra Short Term Funds 31
Arbitrage Funds 8
Fixed Maturity Plans 498
Floating Rate Income Funds 17

37
7. FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA
Financial experts believe that the future of Mutual Funds in India will be very bright. It has been
estimated that by March-end of 2018, the mutual fund industry of India will reach Rs 17,23,000
crore, taking into account the total assets of the Indian commercial banks. In the coming 10 years
the annual composite growth rate is expected to go up by 13.4%.
 100% growth in the last 6 years.
 Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management worldwide.
 Our saving rate is over 23%, highest in the world. Only channelizing these savings in
mutual funds sector is required.
 We have approximately 44 mutual funds which is much less than US having more than
800. There is a big scope for expansion.
 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
 Mutual fund can penetrate rurals like the Indian insurance industry with simple and
limited products.
 SEBI allowing the MF's to launch commodity mutual funds.
 Emphasis on better corporate governance.
 Trying to curb the late trading practices.
 Introduction of Financial Planners who can provide need based advice.
Looking at the past developments and combining it with the current trends it can be concluded
that the future of Mutual Funds in India has lot of positive things to offer to its investors.

38
8. RESEARCH STATEMENT
The findings and analysis is based upon a research done by using quantitative data and secondary
data on comparative study of equity mutual funds between Reliance and Birla Sun Life.

39
9. RESEARCH METHODOLOGY
Introduction to ResearchMethodology
The design of any study begins with the selection of a topic and a research methodology. The
word “research” is used to describe a number of similar and often overlapping activities
involving a search for information. The word “methodology” can properly refer to the theoretical
analysis of methods appropriate to a field of study or to the body of methods and principles may
be derived to understand different situations within scope of a particular discipline. Therefore,
research methodology refers to the way in which the data are collected for the research project.
RESEARCH TYPE
Quantitative Research is based on the measurement of quantity or amount. It is applicable to
phenomena that can be expressed in terms of quantity. In quantitative research the main aim is to
determine the relationship between one thing (an independent variable) and another (a dependent
variable) in a population. Quantitative research designs are either descriptive (subjects usually
measured once) or experimental (subjects measured before and after a treatment). A descriptive
study establishes only associations between variables.
DATA TYPE
Data refers to information in raw or unorganized form ( such as alphabets , numbers or symbols)
that refer to, or represent, conditions, ideas, or objects.
STASTICAL DATA USED - Secondary data: on the other hand, refers to such numerical
information which have previously been collected by some agency for one purpose and are
mainly compiled from that source for use in different connections. Such data is more cheaper and
more quickly available when primary data cannot be obtained at all. It refers to the statistical
material which is not originated by the investigator himself but is obtained from someone else’s
records, or when primary data is utilized for any other purpose at some subsequent enquiry, it is
termed as Secondary data. This type of data is generally taken from newspapers, bulletins,
reports, journals, etc.

40
TECHNIQUES USED IN THIS STUDY
In this study, we have used various statistics tools like descriptive statistics, percentage,
indices available, etc. for analyzing, interpreting and comparison of different mutual fund
schemes. The Sharpe Index Model is also used to analyze the performance evaluation and
ranking for the difference mutual funds schemes in India.
SCOPE OF THE STUDY
The 2 most preferred Reliance and Birla Sun Life mutual funds schemes have been taken for the
study. These mutual funds schemes were studies during the period of 1st April, 2015 to 31st
March, 2016
MEASURE OF PERFORMANCE USED
1. Standard Deviation (SD):
The total risk (market risk, security-specific risk and portfolio risk) of a mutual fund is
measured by ‘Standard Deviation’ (SD). In mutual funds, the standard deviation tells us
how much the return on a fund is deviating from the expected returns based on its
historical performance. In other words can be said it evaluates the volatility of the fund.
The standard deviation of a fund measures this risk by measuring the degree to which
the fund fluctuates in relation to its average return of a fund over a period of time. In
other words, it is a measure of the consistency of a mutual fund's returns. A higher SD
number indicates that the net asset value (NAV) of the mutual fund is more volatile and,
it is riskier than a fund with a lower Standard Deviation of average portfolio return.

41
2. Sharpe Ratio:
Sharpe ratio (SR) is another important measure that evaluates the return that a fund
has generated relative to the risk taken. Risk here is measured by SD. It is used for
funds that have low correlation with benchmark index. This ratio helps an investor to
know whether it is a safe bet to invest in this fund by taking the quantum of risk. The
higher the Sharpe ratio (SR), the better a fund’s return relative to the amount of risk
taken. In other words, a mutual fund with a higher SR is better because it implies that it
has generated higher returns for every unit of risk that was taken. On the contrary, a
negative Sharpe ratio indicates that a risk-free asset would perform better than the fund
being analyzed. It tries to find out the excess return generated by a mutual fund over
and above a risk-free rate of return such as an RBI bond or a post-office savings
scheme,etc.
Formula to Calculate Sharpe Ratio:
Sharpe ratio = (Average Return – Risk free rate)/Standard deviation of Average
Return.

42
10. Data Analysis and Interpretation
DATA COLLECTION
The task of data collection begins after a research problem has been defined. While deciding
about the method of data collection to be used for the study, the researcher should keep in mind
two types of data viz, primary and secondary.
NAV and corresponding returns of 2 Mutual Funds Schemes:
In this study, we have selected the 2 mutual fund companies. Following is the NAV and
corresponding return of last 1 year starting from 1st April, 2015 to 31st March, 2016. The funds
are chosen randomly from the available means.
Risk free return rate:
Here, 91-DAY GOVERNMENT OF INDIA TREASURY BILLS are used as a risk-free asset,
and they pay a fixed rate of interest and have exceptionally low default risk.
The risk-free asset has zero variance in returns (hence is risk-free); it is also uncorrelated with
any other asset (by definition: since its variance is zero).
Risk free return rate is 3.55% for 2015-2016 (Source: www.rbi.com)
10.1 For Performance Comparison we take two Mutual Fund
Schemes of BIRLA SUN LIFE MUTUAL FUNDS
 Birla Sun Life Equity Fund-Growth Plan
 Birla Sun Life Tax Plan-Growth option

43
The Monthly NAV & Returns of above two Mutual Fund Schemes as Follows:-
1. Birla Sun Life Equity Fund -Growth Plan: An open-ended growth scheme with the
objective of long term growth of capital, through a portfolio with a target allocation of 100%
equity by aiming at being as diversified across various industries and sectors as its chosen
benchmark index, BSE 200.
Top 5 Holdings: Infosys, HDFC Bank, ICICI Bank, Reliance, ITC
Month Net Assets Value Monthly Return
Apr-15 123.90 - 183.76 15.3132
May-15 183.76 - 195.43 6.3507
Jun-15 195.43 - 194.66 -0.394
Jul-15 194.66 - 216.34 11.1374
Aug-15 216.34 - 216.34 -
Sep-15 216.34 - 231.95 7.2155
Oct-15 231.95 - 223.08 -3.8241
Nov-15 223.08 - 239.77 7.4816
Dec-15 239.77 - 252.08 5.1341
Jan-16 252.08 - 241.77 -4.09
Feb-16 241.77 - 237.14 -1.915
Mar-16 237.14 - 252.91 6.6501
Source: www.moneycontrol.com, www.bseindia.com
AVERAGERETURN
StandardDeviation
SHARPEINDEX
6.84%
13.39
0.235

44
2. Birla Sun Life Tax Plan-Growth option: An Open-ended Equity Linked Savings Scheme
(ELSS) with the objective to achieve long-term growth of capital along with income tax relief for
investment.
Top 5 Holdings: Sundaram-Clayto, Honeywell Autom, Bayer CropScien, ICRA, Gillette India
Apr-15 32.0807 - 31.9038 -0.5514
May-15 31.9038 - 32.3045 1.2560
Jun-15 32.3045 - 33.0633 2.3489
Jul-15 33.0633 - 32.8129 -0.7573
Aug-15 32.8129 - 33.0589 0.7497
Sep-15 33.0589 - 33.3736 0.9519
Oct-15 33.3736 - 33.9135 1.6177
Nov-15 33.9135 - 33.7813 -0.3898
Dec-15 33.7813 - 33.8415 0.1782
Jan-16 33.8415 - 33.7849 -0.1673
Feb-16 33.7849 - 33.7849 0.0000
Mar-16 33.7849 - 33.9643 0.5310
AVERAGERETURN
StandardDeviation
SHARPEINDEX
0.4806%
0.942
-3.259

45
Interpretation of the Funds Performance
Particular Average
Return
Sharpe
Index Ratio
Rank
Birla Sun Life Equity Fund-Growth
Plan
6.8383 % 0.235 I
Birla Sun Life Tax Plan-Growth option 0.4806 % -3.259 II
-4
-2
0
2
4
6
8
Birla Sun Life Equity Fund - Growth
Plan
Birla Sun Life Tax Plan-Growth option
Average Return
Sharpe Index

46
10.2 For Performance Comparison we take two Mutual Fund
Schemes of RELIANCE MUTUAL FUNDS
 Reliance Equity Fund-Growth Plan
 Reliance Tax Plan-Growth option
The Monthly NAV & Returns of above two Mutual Fund Schemes as Follows:-
1. Reliance Equity Fund-Growth Plan: The investment objective of the scheme is to seek to
generate capital appreciation & provide longterm growth opportunities by investing in a portfolio
constituted of equity securities & equity related securities.
Top 5 Holdings: SBI, ICICI Bank, Indian Hotels, Larsen, HCL Tech
Apr-15 9.2882 - 10.0227 7.9079
May-15 10.0227 - 13.0391 9.0957
Jun-15 13.0391 - 12.9842 -0.4210
Jul-15 12.9842 - 14.0367 8.1060
Aug-15 14.0367 - 14.0367 0.0000
Sep-15 14.0367 - 14.9553 6.5443
Oct-15 14.9553 - 14.0006 -6.3837
Nov-15 14.0006- 14.7205 5.1419
Dec-15 14.7205 - 15.1637 3.0108
Jan-16 15.1637 - 14.5187 -4.2536
Feb-16 14.5187 - 14.4188 -0.6881
Mar-16 14.4188 - 14.8268 2.8296
AVERAGERETURN
StandardDeviation
SHARPEINDEX
4.3241%
9.3198
0.0831

47
2. Reliance Tax Plan- Growth option: The primary objective of the scheme is to generate long
term capital appreciation from a portfolio that is invested predominantly in equity and equity
related instruments.
Top 5 Holdings: TVS Motor, Infosys, SBI, ICICI Bank, Tata Steel
Apr-15 29.0575 - 30.4693 4.8586
May-15 30.4693 - 29.9680 -1.6453
Jun-15 29.9680 - 30.0525 0.2820
Jul-15 30.0525 - 29.9510 -0.3377
Aug-15 29.9510 - 29.9510 -
Sep-15 29.9510 - 30.0241 0.2434
Oct-15 30.0241 - 30.2366 0.7084
Nov-15 30.2366 - 30.6048 1.2177
Dec-15 30.6048 - 30.5788 -0.0850
Jan-16 30.5788 - 30.7195 0.4601
Feb-16 30.7195 - 30.6491 -0.2292
Mar-16 30.7195 - 30.8515 0.6604
AVERAGERETURN
StandardDeviation
SHARPEINDEX
0.5111%
1.54
-1.9719

48
Interpretation of the Funds Performance
Particular Average Return Sharp Index Ratio Rank
Reliance Equity Fund-Growth
Plan
4.3241 % 0.0831 I
Reliance Tax Plan-Growth option 0.5111 % -1.9719 II
-3
-2
-1
0
1
2
3
4
5
Reliance Equity Fund-Growth Plan Reliance Tax Plan-Growth option
Average Return
Sharpe Index

49
10.3 Analysis of Equity Fund-Growth Plans of both Companies
1. On the basis of Sharpe’s Index
Fund Sharpe
Index
Birla Sun Life Equity
Fund
0.235
Reliance Equity Fund 0.0831
On the basis of Sharpe’s index it is seen that Birla Sun life Equity
Fund’s risk adjusted performance is better than the Reliance.
0
0.05
0.1
0.15
0.2
0.25
Birla Sun Life Equity Fund Reliance Equity Fund
Shapre Index Ratio
Shapre Index Ratio

50
2. On the basis of Average Return
Fund Return
Birla Sun Life Equity
Fund
6.84%
Reliance Equity Fund 4.87%
Whereas on the basis of return, it is seen that Birla Sun life Equity Fund
is doing good.
0
1
2
3
4
5
6
7
8
Birla Sun Life Equity Fund Reliance Equity Fund
Average Return
Sharpe Index Ratio

51
10.4 Analysis of Tax Plans-Growth option of both Companies
1. On the basis of Sharpe’s Index
Fund Sharpe
Index
Birla Sun Life Tax Plan -3.259
Reliance Tax Plan -1.9719
The Tax Plan of Reliance is doing better than Birla Sun Life by the risk-
adjusted performance measure.
-3.5
-3
-2.5
-2
-1.5
-1
-0.5
0
Birla Sun Life Tax Plan Reliance Tax Plan
Sharpe Index
Sharpe Index

52
2. On the basis of Average Return
On the basis of return it is seen that Reliance Tax Plan’s risk adjusted
performance is better than Birla Sun Life.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Birla Sun Life Tax Plan Reliance Tax Plan
Average Return
Average Return
Fund Return
Birla Sun Life Tax Plan 0.48%
Reliance Tax Plan 0.65%

53
11. CONCLUSION
Mutual Fund Industry now represents perhaps most appropriate opportunity for most
investors. The financial market is most sophisticated and complex. Investors need required
knowledge to invest in the mutual fund industry. Mutual fund industry also gives good
returns if the markets are high and you can also suffer losses if the market does not do well
or while investing fund manager makes some mistakes duringinvestment of Mutual Funds.
Mutual Fund returns are compared on the basis of performance of the stock market. If the
stock market do well than the fund in which you have invested will also do well. As the
markets are diversifiedthe loss is minimal.
In my above research I had compared Reliance mutual fund & Birla Sun Life mutual fund.
The study shows that by comparing Reliance Mutual Fund and Birla Sun Life Mutual Fund
companies on the basis of their average returns (NAV) and the available data of the year
2015-2016we find that the difference is significant.
I had compared last year returns which both the Mutual Funds have given good returns after
a specifiedperiod.
Looking at both the Mutual Funds ratio Reliance Mutual Fund has given a good return in Tax
Plan and Birla Sun Life Mutual Fund has given good returnin Equity Fund-Growth Plan.
It is best for investor to invest in Reliance’s Tax Plan and Birla Sun Life’s Equity fund as it
has given good returns. While on the other hand investment in mutual funds compared
equities, mutual funds have a better option. Studies show that mutual fund is more of
preferred option by people these days, still in the long run mutual funds not provide extra
benefit to the individual, it is just another stabilizer.

54
12. BIBLIOGRAPHY
[1] D.S.Chaubey, A Study on Indian Mutual Funds Equity Diversified growth Schemes and their
performance evaluation, Issn no: 2249-1619, publishing year: 2011
[2] Mr. Sunil M. Adhav / Dr Pratap M Chauhan, Comparative study of mutual funds of selected
Indian companies, Issn no: 2394-1537, publishing year: 2015
[3] R K. Agarwal, Performance evaluation of mutual funds. Issue 4, publishing year: 2010
[4] Indian Mutual Fund Association, www.amfiindia.com
[5] Company Profile: Reliance, https://www.reliancemutual.com/about-us/company-
profile/reliance-mutual-fund
[6]Company Profile: Birla Sun Life, http://mutualfund.birlasunlife.com/Pages/Individual/About-
Us/Overview.aspx
[7] Working of Mutual Funds .Available at:
http://www.investopedia.com/ask/answers/111015/how-do-mutual-funds-work-india.asp
[8] Annual return of Reliance. http://www.moneycontrol.com/mutual-funds/amc-details/RC
[9] Annual return of Birla Sun Life. http://www.moneycontrol.com/mutual-funds/amc-details/BS
[10] Statistical Method by NG DAS.
[11] Research Methodology by C.R. Kothari.
[12] NAV and returns data- www.rbo.org.in, www.moneycontrol.com, www.bseindia.com
[13] History of Mutual Fund in India and Industry Profile-
https://www.slideshare.net/hemanthcrpatna/a-project-report-on-comparative-study-of-mutual-
funds-in-india
[14] Concept of Mutual Funds. www.mutualfundsindia.com
[15] Books on Mutual Funds in India - (D. V. Ingle)

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