project by saikat Nandy 1 - Copy final

West Bengal University of Technology
Summer Project Report
Comparative Analysis of Reliance ULIP Funds
At
By
Saikat Nandy
WBUT Registration No: 141360710087 of 2014-2015
WBUT Roll No: 13600914087
Army Institute of Management
Kolkata

DECLARATION
I hereby declare that this Project Report entitled Comparative Analysis of
Reliance ULIP funds submitted by me to the Army Institute of
Management Kolkata, is a bonafide work undertaken by me under the
guidance of Mr. Ankur Das, ULIP Sales Manager at Reliance Life Insurance
and Prof. Rajib Bhattacharya, faculty of AIMK and it is not submitted to any
other University or Institution for the award of any degree or diploma /
certificate or published any time before.
Signature
[Saikat Nandy]

ACKNOWLEDGEMENT
First of all I would like to acknowledge our indebted to our Director Maj Gen
(Dr) SC Jain, VSM**(Retd) for his valuable guidance and consistent
supervision throughout the course.
I am also thankful to Mr. Ankur Das, Company Guide of Reliance Life
Insurance Company LTD, Kolkata, for his valuable guidance for preparing
the Final Report and also for providing the necessary facilities.
I am extremely thankful to Prof. Rajib Bhattacharya, Faculty Guide of
Army Institute of Management, Kolkata for their timely guidance and
support throughout the project work.
Finally I am indebted to our other faculty members, my friends and my
parents who gave their full-fledged co-operation for successful completion
of my project.
It was an indeed learning experience for me.
Saikat Nandy

Table of Contents
Authorization
Certificate from Guides i
Declaration by the Student ii
Acknowledgements iii
Executive Summary iv
1. Introduction
1.1 Company Profile .………………………………....................................1
1.2 Objectives of the Study …………………………………………………..3
1.3 Scope, and Limitations ………………………………..………………....3
2. Methodology
2.1 Data collection ……………………………….…………………………...5
2.2 Data Analysis and interpretations…………………..…………………...9
3. Findings and recommendations
3.1 Results ……………………..……………………………………………..23
3.2 Conclusions ...………………..…………………………………………..24
3.3 Recommendation ……………..………………………………………... 25
Appendices & Annexure …………………………………………………..26
References ...…………………………………………………………………46

EXECUTIVE SUMMARY:
The project is basically towards conducting a comparative performance
analysis of ULIP funds, the ULIP funds are basically similar to mutual funds
scheme but the only difference in ULIP is that it has an insurance cover
attached with it to protect the investor from uncertainties.
In this project an attempt has been made to present a clear picture of the
risk and return aspects of the ULIP funds. The project includes different
benchmark analysis to begin with, in order to attract investors it is of critical
nature that the investor’s perception and the sentiments are kept intact. So,
in order to do that certain benchmark analysis is presented in this project
which is very common to investors, these benchmark analysis is presented
with the motive of capturing the investors’ attention and to indulge them in
investing in these ULIP funds.
The problem that this research project is trying to address is the problem of
choice, which fund to select and which fund to reject. Now this choice is
entirely up to the investor how he or she would like to create their own
portfolio which will help in diversification of risk and maximisation of return.
To address this basic problem the ULIP funds are analysed from numerous
technical standpoints which will help the investor in identifying the accurate
fund for him or her.
The methodology used in this project is the technical analysis comprising
of volatility test then differentiating the volatility into good and bad volatility
.After trimming out the harmful volatility from general volatility certain
minimum accrued returns are targeted which acts as the threshold limit.
Tests are conducted based on it to analyse the performance of these funds.
The analysis is conducted for five selected ULIP funds which are selected
randomly from given array of funds, the number of funds is restricted to five
funds because of the design of the Reliance ULIP plans which restricts an
investor to only five funds at a time, the data is analysed for every quarter

in last twenty four months. The time period is also restricted due to the
inconsistency of funds over a period of time.
Since this project is only acting as a guidance tool for a ULIP investor,
certain recommendations related to certain specific fund is mentioned over
here which includes conditions and results that are followed if that particular
fund is added to a portfolio or in other words every fund is analysed in such
a way so that by just going through this project the ideal investor can gather
enough expertise on whether to actually select the particular ULIP fund or
not and whether to add it in his or her portfolio or not.

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1. INTRODUCTION
1.1 COMPANY PROFILE:
Reliance Life Insurance Company (RLIC) is one of the largest life
insurance companies in India with a market share of 5%. The company has
over 7 million policy holders and a distribution network of close to 1,230
branches with over 124,000 agents as of 31 March 2013. The firm offers
life insurance products targeted at individuals and groups, catering to four
distinct segments: protection, children, retirement and investment plans.
Reliance Life Insurance is amongst the top 5 private sector life insurance
companies in terms of individual WRP (weighted received premium) and
new business WRP. The company is by far the largest non-bank supported
private life insurer with over 10 million policy holders, a strong distribution
network of over 800 branches and over 1,00,000 advisors as on March 31,
2015. Claim settlement ratio stands at 91% as of June 30, 2015.
Rated amongst the Top 2 Most Trusted Private Life Insurance Service
Brands by Brand Equity-Nielsen Most Trusted Brands Survey 2014. The
company’s vision is “To be a company people are proud of, trust in and
grow with; providing financial independence to every life we touch.” With
this in mind, Reliance Life caters to five distinct segments, namely
Protection, Child, Retirement, Saving & Investment and Health; for
individuals as well as Groups/Corporate entities.
Reliance Life Insurance is a part of the Reliance Capital of the Reliance Anil
Dhirubhai Ambani Group and is one of the top five Private Sector Insurance
companies in terms of weighted received premium (WRP). In 2007, Japan’s
largest private sector insurance player, Nippon acquired 26% interest in
equity share capital of the company. Currently, with over 9 million
policyholders, over 900 branches in the domain and around 1,00,000

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insurance agents, Reliance Life Insurance is strongly and surely continuing
on a successful spree of satisfying its customers.
Reliance Life Insurance ULIP Plans
These are unit linked plans that provide you the security required for the
future of your loved ones as well as returns on your investments through
market-linking of funds. Here are a couple of such schemes by the
company.
 Reliance Classic Plan II - The Classic plan comes with a life cover
as well as long-term investment option that is protected against any
uncertainties. The flexibility to choose and manage your funds is in
your hands. You get to avail life cover as well as market-linked profits
on your premiums paid.
 Reliance Pay Five Plan - This is a unique investment plan that
allows you to generate a life cover as well as savings option with just
5 premiums to be paid in each policy year.

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1.2 OBJECTIVES OF THE STUDY
 To understand the nature behaviour and structure of ULIP funds, by
analysing and comparing different ULIP funds.
 To understand the perception of risk and return and how can returns
vary from one ULIP fund to another ULIP fund depending on the
nature of its risk, volatility and several variable factors.
 To understand how the ULIP funds would perform, in terms of
returns, when pitched against each other for different benchmark
disciplines vis-à-vis NIFTY, NSE 100, NSE 200 and NSE 500
 To understand, check and interpret the returns series and analyse
how this return series will perform against risk-free securities and
whether this fund is suitable for investors based on wide variety of
parameters.
1.3 SCOPE AND LIMITATIONS
SCOPE:
The scope of this project is limited i.e. the project includes analysis of NAV
data of selected ULIP funds and comparing them against certain standard
benchmarks like NIFTY, NSE 100, NSE 200 and NSE 500. The scope
includes the normality test of returns series based on data from twenty four
months for five ULIP funds.
The significant scope of this project is the computation and interpretation
part of the six ratios which are calculated, computation of Beta, Alpha,
Omega, Treynor, Sharpe and Sortino which help portray a clear picture of
the scenario from volatility clusters, threshold return, comparison between
different market & govt. securities and finally discriminating the harmful
volatility from general volatility.

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The scope of this project essentially highlights the features of risk and return
for the selected ULIP funds.
LIMITATIONS:
The limitations can be listed out as:
1. The project was limited to a time frame of twenty four months because
Reliance ULIP plans showed that the ULIP funds were shut down by the
company too often.
2. Based on the criteria of investment flexibility in Reliance Classic Plan II
our project is limited to only five funds.

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2. METHODOLOGY:
The entire methodology for the project includes computation of the six ratios
vis-à-vis Beta, Jensen’s Alpha, Treynor ratio, Sharpe ratio, Omega ratio and
Sortino.
The implications of these ratio is:
BETA : A measure of the volatility, or systematic risk, of a security or a
portfolio in comparison to the market as a whole. Beta is calculated using
regression analysis, and it can be considered as the tendency of a security's
returns to respond to swings in the market. A beta of 1 indicates that the
security's price will move with the market. A beta of less than 1 means that
the security will be less volatile than the market. A beta of greater than 1
indicates that the security's price will be more volatile than the market. For
example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the
market.
β = (Covariance of Market Return with Stock Return) / (Variance of Market
Return)
TREYNOR RATIO: the Treynor ratio is a risk-adjusted measure of return
based on systematic risk. It is similar to the Sharpe ratio, with the difference
being that the Treynor ratio uses beta as the measurement of volatility. Also
known as “reward-to-volatility ratio”, it can be calculated as:

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Where:
Treynor ratio,
Return,
Risk free rate
Beta
SHARPE RATIO: The Sharpe Ratio is the measure for calculating risk-
adjusted return, and this ratio has become the industry standard for such
calculations. It was developed by Nobel laureate William F. Sharpe. The
Sharpe ratio is the average return earned in excess of the risk-free rate per
unit of volatility or total risk. Subtracting the risk-free rate from the mean
return, the performance associated with risk-taking activities can be
isolated. One intuition of this calculation is that a portfolio engaging in “zero
risk” investment, such as the purchase of Treasury bills (for which the
expected return is the risk-free rate), has a Sharpe ratio of exactly zero.
Generally, the greater the value of the Sharpe ratio, the more attractive the
risk-adjusted return.
Sharpe ratio = (Mean portfolio return − Risk-free
rate)/Standard deviation of portfolio return
JENSEN’S ALPHA: The basic idea is that to analyse the performance of
an investment manager, the focus should not only be at the overall return
of a portfolio, but also at the risk of that portfolio. For example, if there are
two mutual funds that both have a 12% return, a rational investor will want

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the fund that is less risky. Jensen's measure is one of the ways to help
determine if a portfolio is earning the proper return for its level of risk. If the
value is positive, then the portfolio is earning excess returns. In other words,
a positive value for Jensen's alpha means a fund manager has "beat the
market" with his or her stock picking skills.
OMEGA RATIO: The Omega ratio is a relative measure of the likelihood of
achieving a given return, such as a minimum acceptable return (MAR) or a
target return. The higher the omega value, the greater the probability that a
given return will be met or exceeded. Omega represents a ratio of the
cumulative probability of an investment's outcome above an investor's
defined return level (a threshold level), to the cumulative probability of an
investment's outcome below an investor's threshold level. The omega
concept divides expected returns into two parts – gains and losses, or
returns above the expected rate (the upside) and those below it (the
downside). Therefore, in simple terms, consider omega as the ratio of
upside returns (good) relative to downside returns (bad).

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SORTINO RATIO: A modification of the Sharpe ratio that differentiates
harmful volatility from general volatility by taking into account the standard
deviation of negative asset returns, called downside deviation. The Sortino
ratio subtracts the risk-free rate of return from the portfolio’s return, and
then divides that by the downside deviation. A large Sortino ratio indicates
there is a low probability of a large loss.
It is calculated as follows:
2.1 DATA COLLECTION
Data are values of qualitative or quantitative variables, belonging to a set
of items. Data in computing are often represented by a combination of items
organized in rows and multiple variables organized in columns. Data are
typically the results of measurements and can be visualized using graphs
or images. The data related to the study is collected mainly from secondary
sources.
1) PRIMARY DATA
Since the study is based on secondary data, primary data is not considered.
2) SECONDARY DATA
Secondary data consists of periodical fund reports, publications, NAVs
indicator, files; obtained from different websites.

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2.2 DATA ANALYIS AND INTERPRETATION
Funds taken into consideration:
Life Corporate Bond Fund 2
With reference to Chart I, Chart VI, Chart XI and Chart XVI of ANNEXURE
BETA: The beta analysis for this fund in almost all the benchmarks shows
that returns from this fund is operating in the range of low to moderate risks.
The CNX NIFTY test results reveals that upto 2nd quarter the volatility is
rising to the point of 0.141 and the results of remaining six quarters is
observed with a steady fall in the volatility.
The CNX NSE 100 test results reveals that for the 1st two quarters we see
the beta is rising , again in the 3rd quarter period it is observed that the
beta fall by a some margin and remaining quarters fall by steady margin .
Even with these fluctuations it is observed that the beta is still operating at
a low to moderate risks level.
It is observed in CNX NSE 200 test that beta is operating in between 0.121
to 0.095, for the entire eight quarter which is considered a low to moderate
risks level.
The CNX NSE 500 operates within the risky zone of 0.131 to .095 which is
considered low risks level.
From this test we can say that our fund is very safe because we know that
in a beta test “0” means riskless and “1” means average risk. Now in the
two years data that we have taken we see a beta appearing 1st quarter is
0.13 and at high point 0.15 (approx) and end of the two years it is at .096.
So, it is safe to assume that our fund is quite safe as its low risk to moderate.

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TREYNOR: The second test for this fund will be the treynor ratio analysis
which will help us understand the reward to volatility ratio, the treynor
movements of this funds for all the benchmarks indicates a more or less
similar pattern i.e. the treynor initially is at a zero level or a negative level
and from there it reaches a higher positive value, this pattern is observed
in NIFTY, NSE 100, NSE 200 and NSE 500.
Now it is known that higher the treynor higher is the reward to volatility ratio,
it is observed that in Nifty benchmark the Treynor is maximised at the end
of eighth quarter with Treynor = 1.41 , similarly the NSE 100, NSE 200
and NSE 500 benchmark analysis revealed that at the end of eighth quarter
the Treynor is maximised.
SHARPE: The third test conducted was the computation of Sharpe ratio,
keeping NIFTY, NSE 100, NSE 200 and NSE 500 as benchmarks.
The Sharpe ratio in NIFTY showed us that for the first 12 months we see a
negative Sharpe ratio that is trying to reach “0” and at the end of 15 months
sharpe ratio become with an increasing trend.
Since, Sharpe is calculated on the basis of standard deviation and not on
the basis of volatility so it is natural that the graph of Sharpe ratio will be
similar in all the benchmark standards i.e. the graph that is generated in
NIFTY would be same graph generated in NSE 100, NSE 200 and NSE
500.
Thus the result of this test would indicate similar movements for all the
benchmarks.
The movements indicated in this test tell us that the risk adjusted return for
this particular fund is not at all sound, it is understood that with a low beta
or the low volatility ratio the expected return would be very less but still it is
observed that the returns generated from this fund is not at all up to the

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mark. The negative Sharpe indicates us that initially the returns generated
from this fund was very low compared to the risk taken, but gradually it is
observed that the Sharpe ratio curve is trying to move upwards to bridge
the gap and arrive at a positive value. By the end of 15 months it is seen
that Sharpe becomes positive and continues to show an increasing trend
for the remaining quarter i.e. the returns generated from this fund are finally
keeping up with the amount of risk that is initiated.
JENSEN’s ALPHA: The fourth test conducted was the computation of
Jensen’s Alpha, it will help in determining whether the performance of the
fund is earning proper return for its level of risk. A positive alpha would
determine that a particular fund is earning excess returns.
For this Life corporate bond fund 2 the curve derived from benchmark
analysis with CNX NIFTY, CNX NSE 200 and CNX NSE 500 resulted in a
similar movement pattern. The movements in NIFTY ,CNX 100 ,CNX 200
and CNX 500 indicates us that the returns from this fund is justified with the
amount of risk that is taken, or the fund is giving excess reward in terms of
return compared to the benchmark markets. The alpha in all of these
benchmarks show that the fund is continuously trying to improve its
performance in every single quarter that we have tested.
OMEGA: The fifth test includes the Omega computation, this test result will
demonstrate whether the returns are above or below threshold.
The Omega curve demonstrates a downward trend for the two continuous
quarters, a landslide movement is exhibited in this test for straight
6months.The downward trend is an indication that the returns generated
are getting close to a specific threshold value and the fund is not performing
at a desired level. The performance of this particular fund in the first two
quarters is poor, the perception of an investor would be always to attain
returns above threshold.

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For the next 6 quarters the fund is trying to come out the downward trend
and move towards a greater omega ratio, ensuring a return above the
threshold. The beginning of the 6th month it is seen that the fund’s omega
ratio has stopped falling and is trying to move in upward direction, aiming
for a higher omega value.
SORTINO: The sixth test conducted was the sortino test, sortino is a
measure for identifying the downward deviation in the returns series, a
higher value will ensure that risk of having a significance loss will be much
less.The CNX Nifty benchmark analysis shows us that the 6th to 12 months
sortino was negative, remaining quarter the sortino showed a growth
pattern to make more than zero. The CNX NIFTY 100, CNX NIFTY 200 and
CNX NIFTY 500 showed a similar movement pattern that is observed in
CNX NIFTY benchmark test .The formula does not penalize a portfolio
manager for volatility, and instead focuses on whether returns are negative
or below a certain threshold. The mean in the Sortino ratio formula
represents the returns a portfolio manager is able to get above the return
that an investor expects.

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Life Energy Fund 2
With reference to chart II, chart VII, chart XII and chart XVII of ANNEXURE
BETA: The beta for this Life Energy Fund 2 appeared to be high risky for
all the benchmarks.
The CNX NIFTY benchmark showed that for the 1st two quarters there is a
steady growth of beta upto 0.78, then there is a slightly fall in 3rd quarters,
after 3rd quarter there is an upwards increasing of beta upto 7th quarters
make it beta 0.91, which consider high risky. By end of final quarter of 2
years there is a slightly fall in beta and end it at 0.893.
The movements observed imply that the operating region of this beta is very
limited in this benchmark, the beta fluctuates in between 0.78 to 0.91, this
indicates that the volatility of this particular fund is of high risk because it is
close to 1 and “1” implies risky .
The next benchmark is CNX NSE 100, it is observed that in this benchmark
analysis also the operating range for the beta is tight like the previous
benchmark i.e. the fluctuations are in between 0.81 to 0.92.
The movements observed in this discipline states that the volatility is high
and the returns from this fund is of high.
The CNX NSE 200 benchmark analysis reveals same movement observed
like CNX NIFTY, 1st two quarters there is a growth and make it 0.83, after
that there is slightly fall. In 4th quarters growth increase of beta is quite high.
After 4th quarter growth of beta is steady up to 7th quarter .The final quarter
is observed that there is slightly fall of beta to make it 0.94.
This movement in this particular benchmark indicates that the fund is
moving in High Risks.

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The CNX NSE 500 benchmark again showed a movement pattern similar
to the first three benchmark analysis.
The entire beta analysis of this fund with respect to the market disciplines,
it is observed and noted that this particular fund has a beta that is operating
in the High Risk region.
TREYNOR: The second test for this fund will be the treynor ratio analysis
which will help us understand the reward to volatility ratio, the treynor
movements of this funds for all the benchmarks indicates a more or less
similar pattern i.e. the treynor initially is at a zero level or a negative level
and from there it reaches a higher positive value, this pattern is observed
in NIFTY,CNX 100, CNX 200 and CNX 500 all of them start at -.001, but
there is a fall in 2nd quarter . At the end of 3rd quarter its reaches towards
positive value.There is a steady increase and at the end of final quarter the
ratio is 0.38 approx.
SHARPE: The next test conducted was the Sharpe ratio, as it is known that
Sharpe ratio doesn’t take into consideration the volatility factor and solely
relies on the standard deviation so it is expected that the Sharpe will show
a similar movement pattern in all the benchmarks.
The CNX NSE NIFTY, NSE 100, NSE 500 showed a similar movement that
is the Sharpe was initially in the negative zone for first three quarters
gradually it moved towards zero, in between the 9th and 15th month the
Sharpe in all of the above mentioned benchmark moved upwards of zero
and in 6th quarter there is slightly fall but the remaining quarters it kept on
moving up.
JENSEN’s ALPHA: According to the graph in annexure observed that
Nifty, CNX 100 & CNX 200 movement of the alpha are quite similar trend,
there is a fall in 2nd quarter, but alpha remain above zero and after then
movement of trends is toward upwards. In Case of CNX 500 , there is a fall

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in 2nd quarter and it become negative, but suddenly from 3rd quarter
onwards upwards trends is observed which continue till the end.
OMEGA: The results of this test were quite similar in all the benchmarks
because the beta factor is not coming in play here so it is assumed that for
all the disciplines we have a consolidated omega graph. Now since omega
measures returns which are above threshold (the threshold is assumed to
be the G sec return), so we see a quite supportive omega graph. The
omega fall in the 2nd quarters, the next three quarters is observed with
movements towards upward trend. Remaining quarter between the 15th and
24st month period, the movement is towards down A higher omega
indicates a higher return compared to the threshold, the returns from this
fund is quite standard as it is not going below the minimum threshold value.
SORTINO: The sortino analysis which indicates if the negative returns are
close to the threshold or not (the threshold here is the g sec return), the
sortino analysis of this fund in different benchmark shows that the
performance in the first three quarters is not satisfactory because we see a
negative sortino in almost all the benchmarks. It is observed that in the CNX
NIFTY, CNX NSE 100, CNX NSE 200 and CNX 500 benchmark the sortino
gets negative in first three quarters. After the 3rd quarter it is observed that
the sortino movements are positive for the entire quarter and never even
once they have gone down zero, though there is fluctuations but still
movements are acceptable.

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Life Infrastructure Fund 2
With reference to Chart III, Chart VIII, Chart XIII and Chart XVIII of
ANNEXURE
BETA: The beta analysis for this fund in almost all the benchmarks shows
that returns from this fund is operating in the range of high level of risk.
The CNX NIFTY test results reveals that for the 2nd quarters the volatility
is increasing from 0.86 to 0.9. In the 3rd Quarter there is a fall in Beta. After
the 3rd the volatility is increasing upto 7th Quarter and in the Final quarter
observed with a fall in growth.
The next benchmark is CNX NSE 100, it is observed that in this benchmark
analysis also the operating range for the beta is tight like the previous
benchmark i.e. the fluctuations are in between 0.90 to 1.01.
The movements observed in this discipline states that the volatility is high
and the returns from this fund is of high.
It is observed in CNX NSE 200 test that beta is operating in between 0.92
to 1.03, for the entire eight quarter which is considered a risky.
The CNX NSE 500 operates within the risky zone of 0.95 to 1.06 which is
high risk zone.
JENSEN’S ALPHA: According to the Graph observed are pretty much
standard because in almost all of the benchmarks an identical movement
is observed, except for the CNX NSE 500 where it is observed that the
returns were not satisfactory in the initial 2nd quarters because negative
alpha is not desirable, a negative alpha would indicate return below the
standard annual risk free rate. But overall the fund’s performance is pretty
good enough because it is earning the returns for its investors which are
pretty much above the returns from annualised risk free instruments.

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TREYNOR: The CNX NSE NIFTY benchmark test indicates that initially the
returns generated from this fund for the amount of volatility was not
sufficient but later on it is observed that the treynor corrects itself and
ensures a very high reward for the high volatility, the movements observed
indicate that during the first two quarter the returns were not at all
satisfactory because a negative treynor is not desirable, but gradually we
see a boost in returns in the next six quarters.An almost similar pattern is
observed in three of the benchmarks CNX NSE 100, CNX NSE 200 and
CNX NSE 500.
SHARPE: The Sharpe test results for the CNX NIFTY, CNX NSE 100, CNX
NSE 200 and CNX NSE 500 benchmark reveals that except for the 1st three
quarters we see a rising Sharpe for the remaining quarters are in positive.
Since sharpe ratio doesn’t take into consideration the beta factor it is
observed that more or less similar movements is observed in all the
benchmarks. The sharpe ratio here indicates that the fund’s return are
operating at a satisfactory level or in other words the risk adjusted returns
are feasible in all of the benchmarks. The risk adjusted return is basically
computed on a risk free return instrument or the G sec return.
OMEGA: According to the graphical pattern of omega for all the
benchmarks, the movements observed first 15 months is an upwards trend,
the operating region for the omega is very tight and no major fluctuations
are observed in the last three quarters.
The omega remained entirely positive indicating heavy amounts of positive
returns or returns above the minimum accrued return or the threshold
return.
SORTINO: The test analysis of Sortino reveals that in all of the benchmarks
the first three quarter is clearly struggling to maintain a positive return above
threshold value or the propensity of harmful returns / negative returns is

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more during this particular time frame. While the remaining five quarters
clearly indicates that the returns are healthy and are not accompanied by
the harmful volatility.

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Pension Balanced Fund 1
With reference to Chart IV, Chart IX, Chart XIV and Chart XIX of
ANNEXURE
BETA: The beta analysis for this fund shows that the fund in CNX NIFTY
is operating in between a tight range 0.254 to 0.252 and high point at 0.284
which can be considered a Low to moderate level of risk zone, in CNX NSE
100 the operating range for beta for the entire eight quarters is in between
0.26 to 0.25 again a moderate to a very high risk zone, in CNX NSE 200 it
is observed that initially during the first two quarter the beta is operating
between 0.271 to 0.298 but remaining six quarters show a steady fall and
the range of operation is in between 0.29 to 0.25. A similar pattern is
observed in NSE 500 where the movements indicate that the find is low to
moderate volatile.
TREYNOR: The treynor ratio is an indication of the reward to volatility ratio,
the rewards generated for volatility is satisfactory for only six quarters
because in all of the benchmark disciplines it is observed that the first
quarters the trend are in positive but in at end of 2nd quarter it become
negative, means there is a fall and after then gradually an increasing trend
is observed in the remaining six quarters. The CNX NIFTY, NSE 100, NSE
200 and NSE 500 show a similar growth pattern.
SHARPE: In this sharpe analysis it is observed that the curve is following
a pattern which was identical to the pattern observed in treynor for this fund.
The sharpe is a tool which indicates risk adjusted returns, so it is observed
that for the first two quarters the fund didn’t quite perform well, as result at
the end of second quarter Sharpe is negative. The returns generated
compared to a risk free instrument was not all justified but this situation is
only temporary and in the long run, i.e. the remaining six quarter, the
performance is a lot better and it keeps on improving in every quarter.

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JENSEN’S ALPHA: The alpha analysis for this fund reveals that the fund’s
performance is better as the trend are toward upward,but the first two
quarters it is observed that the fund is operating at a level close to zero
which indicates that the returns generated in the first two quarters is poor
compared to the risk factor, average market return and the annual risk free
rate, but the latter half shows better results compared to the first two
quarters. The movements of this fund is similar to the movements observed
in all the benchmark disciplines.
OMEGA: In this omega analysis it is observed that the omega is operating
in tight range of 1.2 to 1.26, which is observed in all the benchmarks and
an inference can be made that the return are above the threshold limit, there
is a fall in 2nd quarters but after that the omega is climbing with slight
fluctuations .
SORTINO: The sortino analysis for this fund reveals that in CNX NIFTY,
CNX NSE 100 CNX NSE 200 and CNX NSE 500 the sortino shows that 2nd
and 3rd quarters the harmful returns or the negative returns , but gradually
in the last five quarters the fund has overcome its limitations and
outperformed itself indicating positive returns which in other words would
indicate that the fund is healthy with less harmful volatility compared to
general volatility.

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Reliance Assured Maturity Debt Fund
With reference to Chart V, Chart X, Chart XV and Chart XX of ANNEXURE
BETA: The CNX NSE NIFTY test results reveal that the beta for the first
two quarter is showing stready , the level of volatility here is .08 indicating
low risk. However the remaining quarters shows a steady fall curve with no
major fluctuations.
The CNX NSE 100 benchmark results show that the beta is operating
between a tight range of 0.07 to 0.04 for the entire eight quarters and thus
operating at a low risk zone.
The CNX NSE 200 benchmark result show that the beta is operating
between 0.08 to 0.046 again a low risk zone
The CNX NSE 500 benchmark results show that the beta movements are
restricted in between 0.08 to 0.04 for the entire eight quarter, though slight
fluctuations are observed in this range but a tight segment is maintained for
the entire 24 months.The beta is observed to operate at a low risk zone in
all of the benchmarks.
TREYNOR: The treynor test results reveal an almost identical pattern in all
of the benchmark disciplines i.e. except for a fall in the performance in 2nd
quarters the treynor’s overall performance can be marked with an overall
growth trend in the remaining six quarters. The returns from this fund is
justified compared to the amount of volatility observed but such statement
only holds good for the remaining six quarters.
SHARPE: The movements observed in the Sharpe ratio computations
reveal that in 2nd quarter there is in fall in growth, still it is positive.But later
on by the end of 24 months the performance of Sharpe gets better because
in every quarter the performance level has improved significantly.

22
JENSEN’S ALPHA: The alpha test results in CNX NIFTY,CNX NSE 100,
CNX NSE 200, CNX NSE 500 are quite similar i.e. for the entire eight
quarters the fund is earning returns on an average better than an risk free
instrument or in other words the returns are better than the annual risk free
returns, whose risk is very minimal compared to the returns, the alpha
movements for this fund beats that because the returns are quite better
than annual risk free rate.
OMEGA: The omega movements are operating in between 1.6 to 1.3 in
almost all of the benchmark disciplines, the movements indicate that the
the fund is performing at a satisfactory level and the returns are above the
fixed threshold limit indicating healthy and positive returns compared to risk
free instruments.
SORTINO : The sortino analysis for this fund reveals that in CNX NIFTY,
CNX NSE 100 CNX NSE 200 and CNX NSE 500 the sortino shows that 2nd
quarters the harmful returns or the negative returns , but gradually in the
last six quarters the fund has overcome its limitations and outperformed
itself indicating positive returns which in other words would indicate that the
fund is healthy with less harmful volatility compared to general volatility.

23
3. FINDINGS AND RECOMMEDATIONS:
3.1 RESULTS
This study is mainly done to know the asset allocation of ULIPs’ funds with
regards to Reliance Life. In the study, the investment portfolio of different
ULIPs’ funds has been described and detailed. For a life insurance
companies offering ULIPs, its funds investment portfolio and funds
performance plays very important role. With the information pertaining to
fund where ULIPs invest, the customers both existing as well as potential
can simply identify the funds where they can put the investing portion of
their premium. As we know, ULIPs are becoming a growing and common
avenue for investment, it is very important to understand the funds’ asset
allocation and their performance to avoid risks and to achieve financial
goals.
The project was carried out with the purpose to study and understand the
fund’s portfolio and performance of Reliance Life. It was prepared by visiting
the branch of the company in Kolkata and interacting with different
personnel like Branch Manager, Financial Consultants, Sales Block
Manager and HR executives as well as with my college guide. The study
gives a bird’s eye view on the asset allocation and the performance against
the benchmark performance of the funds.
Graphical and tabular representation has been used to analyse and
interpret the investment portfolio of the funds. The performance of the fund
over various periods has been compared against the benchmark
performance. The description is made available regarding the equities,
debentures/bonds, government securities and money market instruments
depending upon the type of the funds.

24
3.2 CONCLUSIONS
The life insurance sector has been booming in recent times and the growth
rate of this sector has been substantial. It is a place where the insurance
services are offered like traditional insurance plans, conventional insurance
plans and Unit linked insurance plans (ULIPs). In the present context, the
life insurance sector is booming exceptionally from the introduction of
information, communication and technology. Reliance Life, being one of the
major insurance companies providing life insurance products and services
to the general public in the country. It has always focused on building
products and services to cater the changing needs of the clients that
enhance high comfort value.
In Unit Linked Insurance Plans (ULIPs), the investments made are subject
to risks associated with the capital markets. This investment risk in
investment portfolio is borne by the policy holder. Thus, one should make
the investment choice after considering the risk appetite and needs.
Another factor that one needs to consider is the future need for funds.
Reliance Life offers a variety of unit-linked insurance products to suit
financial goals - be it for retirement planning, for health, for child's education
and marriage or for investment purposes. In a Unit Linked Plan (ULIP), the
premiums you pay are invested in the funds chosen by you after deducting
allocation charges and charges including those for managing funds, policy
administration and for providing insurance cover are deducted from the
funds by cancelling certain units. The value of each unit of a fund is
determined by dividing the total value of the fund's investments by the total
number of units.
From this study of analysing different funds where Reliance Life makes
investment out of ULIPs holders’ premium, it can be concluded that the
asset allocation among equities, corporate bonds/debentures, government
securities and money market instruments is done by the fund managers
based on different market tactics, investment situations, investment options

25
available and investment strategies. The investment in ULIPs funds is
subject to capital market risks and the fund performance is high or stable
or low or even negative as against the benchmark performance depending
upon various factors. Credit rating is highly taken into consideration while
pooling investment in different investment avenues.
3.3 RECOMMENDATIONS AND SUGGESTIONS
The investors prefer most economical mode of investment. Hence, ULIPs
being one of the emerging medium of investment should be economical
mainly in terms of different fees and charges associated with them such as
Administration charges, Fund management charges, Switch charges,
Surrender charges, Mortality charges, Premium Allocation charges and
Partial Withdrawal charges.
 As ULIPs are not still the popular investment option as compared to
others like Gold/Silver, Mutual Funds, Equities trading etc., the
company create awareness and initiate customer education about
ULIPs and its structure, functioning and benefits to the general mass
of investors. This will help the company to create increased customer
base.
 The company should utilize the fund in best financial instruments as
per fund objective and policy holders’ goals to yield higher returns as
compared to its benchmark counterparts.
 The company should focus on achieving regular premium payments
from the policy holders and minimizing the surrender/discontinuity of
the insurance policies.
 The company should build up its funds’ investment portfolio in such
a way that it yields maximum return at minimal risks considering
tactics in buying, selling, and holding assets in capital market.
 The company should also consider its competitors’ business, its
competitors’ funds’ investment portfolio, marketing strategies,
investment strategies so as to sustain and progress in the sector.

26
ANNEXURE
NIFTY BENCHMARK: Life Corporate Bond Fund 2
CHART - I

27
Life Energy Fund 2
CHART - II

28
CHART - III

29
CHART - IV

30
CHART V

31
NSE 100 BENCHMARK: Life corporate bond fund 2
CHART – VI

32
Life Energy Fund 2
CHART VII

33
CHART VIII

34
CHART IX

35
CHART X

36
CHART XI

37
Life Energy Fund 2
CHART XII

38
CHART XIII

39
CHART XIV

40
CHART XV

41
CHART XVI

42
Life Energy Fund 2
CHART XVII

43
CHART XVIII

44
CHART XIX

45
CHART XX

46
References:
Bloomberg. (n.d.). Retrieved from http://www.bloomberg.com
Chandra, P. (2012). Investment Analysis and Portfolio Management. McGraw-Hill.
Fischer, D. E., & Jordan, R. J. (2008). SECURITY ANALYSIS AND PORTFOLIO
MANAGEMENT. Prentice - Hall of India Private Limited.
Investopedia.com. (n.d.). Retrieved from http://www.investopedia.com
Moneycontrol. (n.d.). Retrieved from http://www.moneycontrol.com
Reliance Life Insurance. (n.d.). Retrieved from http://www.reliancelife.com/fund-
performance
Value Research. (2015). Great Old Fund. Mutual Fund Insight.

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