MURUGAN Latest

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A STUDY OF RISK AND RETURN OF MUTUAL FUND

IN INDIA
EXECUTIVE SUMMARY
In the current economic scenario interest rates are falling and fluctuation
in the share market has put investors in confusion. One finds it difficult to take
decision on investment. This is primarily, because of investments are risky in
nature and investors have to consider various factors before investing in
investment avenues.
These factors include risk, return, and volatility of shares and liquidity. The
main objective investment in mutual fund schemes is to analyze the performance
of mutual funds by using risk and return as a parameter.
Historical data were taken for calculating risk and return. Analysis has
done on percentage method for mutual fund schemes. Compare to equities
mutual funds is less risky with stable returns and mutual funds give the investor a
diversified portfolio. Those who have well knowledge in equity market they can
go for equity investments rather that investing in mutual funds because no control
on the expenses made by the fund manager.
The study will guide the new investor who wants to invest in equity and
mutual fund schemes by providing knowledge about how to measure the risk and
return of particular scrip or mutual fund scheme. The study recommends new
investors to go for mutual funds rather than equities, because of high risk and
market instability.
R.V.INSTITUTE OF MANAGEMENT
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INTRODUCTION
PART-A: ABOUT THE MUTUAL FUND
History of Indian Mutual Funds industry

The history of Indian mutual fund industry can be classified into four
phases.
1] First Phase : 1964-1987: Initiative taken by UTI.

2] Second Phase : 1987-1993: Entry of public sector (LIC, GIC etc).
3] Third Phase : 1993-2003: Entry of private sector
4] Fourth Phase : 2003 onwards.
First Phase
The Mutual Fund industry in India started in 1963 with formation
of Unit Trust of India (UTI) initiated by the Government of India and
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 instead of RBI.
The first scheme launched by UTI was Unit Scheme 1964. At
the end of 1998, UTI had Asset Management of Rs. 6700 cr.
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Second Phase:
The year1987 marked the entry of non-UTI, public sector
mutual funds set up by public sector banks and Life Insurance
Company (LIC) and General Insurance Company of India (GIC).
• SBI Mutual Fund was the first non-UTI Mutual Fund

established in June 1987
• Canara bank Mutual Fund December 1987)
• Punjab National Bank Mutual Fund August 1989
• India Bank Mutual Fund November 1989
• Bank of India Mutual Fund June 1990
• Bank of Baroda Mutual Fund October 1992
• LIC established its mutual fund in June 1989
• while GIC set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had Assets

under Management of Rs. 47,000 cr.
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Third Phase
The entry of private sector funds in 1993, A new era started in
the India was Mutual Fund industry, providing Indian investors with a
wider choice of investment alternatives
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 by the SEBI MUTUAL FUND
ACT 1992.
Franklin Templeton was the first private sector mutual fund registered
in 1993.
The 1992 SEBI MUTUAL FUND Regulations were substituted
by a more comprehensive and revised Mutual Fund Regulations in
1996. The industry now works under the SEBI MUTUAL FUND ACT
1996.
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Fourth Phase:
In February 2003, following the repeal of Unit Trust of
India with Assets Under Management of Rs. 29835 cr as at the end of
January 2003, representing broadly the assets of US-64 Scheme,
assured return and certain other schemes. It does not come under
the purview of the Mutual Fund Regulations.
The second is UTI Mutual Fund sponsored by SBI, PNB, BOB
and LIC. It is registered with SEBI and works under the Mutual Fund
Regulations.
At the end of March, 2006 the Assets Under Management were
Rs.2, 31,513 cr.
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GROWTH OF ASSET MANAGEMENT COMPANY
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For the individual investor
mutual funds provide the benefit of having someone else

manage your investments, take care of record keeping for your
account, and diversify the investment into many different securities
that are available in the primary market and secondary market.
Today, minimum investment requirements on many funds are

low enough that even the smallest investor can get started in mutual
funds.
A mutual fund, by its very nature, is diversified -- its assets are

invested in many different securities. Beyond that, there are many
different types of mutual funds with different objectives and levels of
growth potential, chances to diversify the investment
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Strengths of Mutual Fund

Mutual Funds provide several benefits to investors. They are
 The concept is based on ‘Drops make an Ocean’. So, it is a
mutual act for common benefit.
 It is ‘Professionally Managed’.
 There is flexibility of portfolio diversification.
 There is diversification of risk as it contains small investors in
one hand and investment in basket of blue chip companies, gilt-
edged securities, bonds, debt instruments or indices.
 It can be easily convert into liquidity.
 The entry and exit load is nominal. The administration
expenses are also economical.
 The MUTUAL FUND is tax efficient, as in the year 1999 the
government has fully exempted the dividends of Mutual fund
units in the hands of investors from tax obligations.
 Various investment options are available in the hands of
investors, which may cater to their specific needs, Re-
investment option, dividend option, investment pattern such as
equity, debt, or balanced funds etc.
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Weaknesses of Mutual Fund

As it is the case with other investment vehicles, Mutual
fund are not free from certain weakness
 It has no tailor-made schemes to suit to each individual retail
investor.
 No guarantee of returns on investment
 No control over costs.
 It has the drawback of the problem of managing large
corpus.
 Volatility of return depends on market conditions, which is
subject to frequent market volatility.
 Mostly investment period is medium-term to long-term where
expected return is more. Money Market Mutual Funds
scheme is for short period where return is not lucrative and
the instruments are less in number.
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Meaning of Mutual Fund

A mutual fund is simply a financial intermediary that allows a group of
investors to pool their money together with a predetermined
investment objective. The mutual fund will have a fund manager who
is responsible for investing the pooled money into specific securities
(usually stocks or bonds). When you invest in a mutual fund, you are
buying shares (or portions) of the mutual fund and become a
shareholder of the fund.
Mutual funds are one of the best investments ever created because
they are very cost efficient and very easy to invest in (you don't have
to figure out which stocks or bonds to buy).
Mutual Fund Operation Flow Chart
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What is a Mutual fund?

A mutual fund basically pools the money of investors, who share
some common financial objective. This money is invested in capital
market instruments like shares, debentures and other securities and
also in other investible avenues such as real estate, commodities etc.
Income thus earned and the capital appreciation realised, are shared
by its unit holders (investors) in proportion to the number of units
owned by them.
Benefits of mutual funds
1. Sets the investor free from four main constraints
A] Convenience and Knowledge: The investor need not go

through the tedious task of research and stock selection and need
not track the market to manage the portfolio.
B] Time: Frees one from spending his precious time to track
his portfolio everyday.
C] Complexity: Frees from the complexity involved in equity
and debt markets.
2. Diversification: Investing in mutual funds enable a well-
diversified portfolio, with a very small amount of investment.
Diversification across various securities lowers the risk associated
with investment.
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3. Higher risk-adjusted returns: Majority of equity funds have

outperformed indices while other avenues like fixed deposits, post-
office schemes etc. have delivered lower returns
4. Professional management: Investors purchase funds because

they do not have time or expertise to manage their own portfolio. A
mutual fund is relatively an inexpensive way for a small investor to
get a full-time manager to create and monitor his portfolio.
5. Low entry barrier: Any investor can invest in mutual funds. He

need not open a broking or a demat account to invest in mutual
funds. Further, investment can be made in mutual funds with an
amount as low as Rs. 500
6. Liquidity: Easy and fast redemption leads to high liquidity. Also,

one can enter and exit the fund (open-ended) depending on his
discretion.
7. Transparency: The transparency levels are very high in this

industry. Investors can view his fund's NAV on a daily basis. Also
industry. Investors can view his fund's NAV on a daily basis. Also,
majority of the funds disclose their portfolio holdings on a monthly
basis.
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8. Tax-saving: Mutual funds are exempted from capital gains

arising out of portfolio churning. If an investor shifts his holdings,
he will have to pay these taxes. Thus, mutual funds are a cost-
efficient way of portfolio management. Also, there are ELSS funds
(tax saving funds) which help availing the benefit of tax-saving u/s
80C. As compared to other tax saving avenues, they have lowest
lock-in period and also offer higher return potential
9. Innovative schemes to suit unique needs of different

investors: There are schemes that offer international
diversification to reduce the geographical risk. There are derivative
funds which adopt various derivative strategies to gain from the
either side movement of the market. Capital protection funds offer
a unique feature of capital protection coupled with market linked
returns.
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Disadvantages of Mutual Fund
Some of the drawbacks associated with mutual funds.
1. No Insurance
Mutual funds, although regulated by the government,

are not insured against losses. The Federal Deposit Insurance
Corporation (FDIC) only insures against certain losses at banks,
credit unions, and savings and loans, not mutual funds. That means
that despite the risk-reducing diversification benefits provided by
mutual funds, losses can occur, and it is possible (although extremely
unlikely) that you could even lose your entire investment.
2. Dilution
Although diversification reduces the amount of risk involved in

investing in mutual funds,
For example, if a single security held by a mutual fund doubles

in value, the mutual fund itself would not double in value because that
security is only one small part of the fund's holdings. By holding a
large number of different investments, mutual funds tend to do neither
exceptionally well nor exceptionally poor
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3. Fees and Expenses
Most mutual funds charge management and operating fees

that pay for the fund's management expenses (usually around 1.0%
to 1.5% per year).
4. Poor Performance
Returns on a mutual fund are by no means guaranteed. In fact,

on average, around 75% of all mutual funds fail to beat the major
market indexes, like the S&P 500, and a growing number of critics
now question whether or not professional money managers have
better stock-picking capabilities than the average investor.
5. Loss of Control
The managers of mutual funds make all of the decisions about

which securities to buy and sell and when to do so. This can make it
difficult for you when trying to manage your portfolio.
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6. Trading Limitations
Although mutual funds are highly liquid in general, most mutual

funds (called open-ended funds) cannot be bought or sold in the
middle of the trading day. You can only buy and sell them at the end
of the day, after they have calculated the current value of their
holdings.
7. Size
Some mutual funds are too big to find enough good

investments. This is especially true of funds that focus on small
companies, given that there are strict rules about how much of a
single company a fund may own. If a mutual fund has $5 billion to
invest and is only able to invest an average of $50 million in each,
then it needs to find at least 100 such companies to invest in; as a
result, the fund might be forced to lower its standards when selecting
companies to invest in.
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8. Inefficiency of Cash Reserves
Mutual funds usually maintain large cash reserves as

protection against a large number of simultaneous withdrawals.
Although this provides investors with liquidity, it means that some of
the fund's money is invested in cash instead of assets, which tends to
lower the investor's potential return.
9. Different Types
However, there are over 10,000 mutual funds in operation, and

these funds vary greatly according to investment objective, size,
strategy, and style. Mutual funds are available for virtually every
investment strategy (e.g. value, growth), every sector and every
country or a region of the world. There will be a difficulty in selecting
the best mutual fund scheme
CATEGORIES OF MUTUAL FUNDS
Introduction
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In terms of ease with which investors can enter and exit funds, mutual
funds are broadly divided into two classes:
• Open-ended funds: Investors can buy and sell the units from
the fund, at any point of time.
• Close-ended funds: These funds raise money from investors
only once. Therefore, after the offer period, fresh investments
can not be made into the fund. If the fund is listed on a stocks
exchange the units can be traded like stocks (E.g., Morgan
Stanley Growth Fund). Recently, most of the New Fund Offers
of close-ended funds provided liquidity window on a periodic
basis such as monthly or weekly. Redemption of units can be
made during specified intervals. Therefore, such funds have
relatively low liquidity.
There are various classes of mutual funds depending
upon the nature of investments. Here are three broad classes from
which one can choose to invest, depending upon his risk-return
profile.
• Equity funds
• Balanced funds
• Debt funds
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Equity funds
These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even
losses. However, short term fluctuations in the market, generally
smoothens out in the long term, thereby offering higher returns at
relatively lower volatility. At the same time, such funds can yield great
capital appreciation as, historically, equities have outperformed all
asset classes in the long term. Hence, investment in equity funds
should be considered for a period of at least 3-5 years
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Fund classification based on capitalisation focus

There are also funds based on capitalisation which invest in
companies falling within a certain segment of market capitalization.
Based on capitalization, equity funds can be placed on the risk return
grid as shown below
Balanced funds
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Their investment portfolio includes both debt and equity. As a result,

on the risk-return ladder, they fall between equity and debt funds.
Balanced funds are the ideal mutual funds vehicle for investors who
prefer spreading their risk across various instruments. Following are
balanced funds classes:
• Debt-oriented funds
• Equity-oriented funds
Debt Funds
They invest only in debt instruments, and are a good option for
investors averse to idea of taking risk associated with equities.
Therefore, they invest exclusively in fixed-income instruments like
bonds, debentures, Government of India securities; and money
market instruments such as certificates of deposit (CD), commercial
paper (CP) and call money. Put your money into any of these debt
funds depending on your investment horizon and needs.
• MIPs
• Arbitrage Funds
• FMPs
• Arbitrage Funds
• Income Funds
• Floating rate funds
• Gilt funds
Risk-return grid
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ST : Short term ; LT : Long term.

Notes:
Arbitrage funds here include funds which do not indulge in shorting
(selling futures without holding the stock) and do not have naked
equity positions. They can have upto 50% (as per previous SEBI
regulation) or 80% (as per latest SEBI regulation) allocation to equity
and equity related instruments.
The risk-return profile of FMPs depend upon prevailing interest rate
scenario, duration of the scheme and outlook on interest rates.
Fund of funds
A fund of funds is a mutual fund scheme that invests primarily in
other schemes of the same mutual fund or other mutual funds.
Hence, it is a step ahead of mutual fund in the sense that while a
mutual fund keeps a track of the stocks it invests, a fund of fund
keeps track of the mutual funds it invests and hence manages the
portfolio on behalf of investors. Such funds are treated as a debt-
oriented fund for tax purposes.
Advantages
1. Convenience
• Investors switch between different funds at different times, and

dynamically manage their portfolio in an endeavour to achieve
high risk-adjusted returns. This task of managing the mutual
funds portfolio is done on their behalf by fund of funds.
• Instead of having different account statements for different
funds, investing in a fund of fund offers the convenience of
having a single consolidated account statement, while still
maintaining a diversified portfolio across various schemes.
2. Flexibility
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• Investors can spread their money across different

strategies/managers.
• An investor may not be able to sell off when markets fall in the
direct stock market. A fund of fund can easily switch from one
fund to another
3. Cost factor
For an investor, who actively manages his portfolio, cost of execution
and tax impact on short term switches could be a constraint. In such
a case, investment in a fund of fund could prove to be an efficient
route
Disadvantages
1. Fee structure
Expense fees on fund of funds are typically higher than
those on regular funds because investors have to bear
expenses for the main fund of fund and other funds it invests
into.
2. Stock-wise portfolio tracking
Since a fund of funds buys many different funds which
further invest in many different stocks, it is possible for the
fund of funds to own the same stock through several
different funds. Thus, it may be difficult for an individual
investor to keep a track of the overall stock holdings.
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Risk-return profile
Its position in the risk-return grid depends on its allocation to
equity and debts funds.
Advantages
1: Limit the downside risk
Derivatives are generally used for hedging purpose so that
they can limit the downside risk of equities. Hence this fund
will be suitable in a falling market.
2: Higher potential in generating returns
It can offer higher return through short or long positions. But
this involves high risk.
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Rating of Mutual Fund Schemes

Mutual Fund schemes are periodically evaluated by
independent institutions. CRISIL, Value Research India, and
economic Times are three such institutions whose rankings or
evaluations are currently very popular.
CRISIL
“Credit rating and Information Services of India Limited” carries
out Composite performance Rankings that cover all open-ended
schemes that disclose their entire portfolio composition and have
NAV information for at least two years.
It currently ranks schemes in five categories
1) Equity Schemes
2) Debt Schemes
3) Gilt Schemes
4) Balanced Schemes
5) Liquid Schemes.
Its ranking is based on four criteria, they are
a) risk-adjusted return of the scheme’s NAV,

b) diversification of the portfolio,
c) liquidity,
d) asset size
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PART-B: ABOUT THE TOPIC

Any rational investor, before investing his or her ingestible
wealth in the stock, analyses the risk associated with the particular
stock. The actual return he receives from a stock may vary from his
expected return and the risk is expressed in terms of variability of
return. The down side risk may be caused by several factors, either
common to all stocks [or] specific to a particular stock. Investor in
general would like to analyze the risk factors and a through
knowledge of the risk helps him to plan his portfolio in such a manner
so as to minimize the risk associated with the investment.
Definition of Risk
The dictionary meaning of risk is the possibility of loss or injury;
the degree or probability of such loss. In risk, the probable outcomes
of all the possible events are listed. Once the events are listed
subjectively, the derived probabilities can be assigned to the entire
possible events.
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Types of Risk:
Risk consists of two components
1) The systematic risk
2) The unsystematic risk
Systematic Risk
The systematic risk affects the entire market. Often we read in
the newspaper that the stock market is in the bear or the bull grip.
This indicates that the entire market is moving in a particular direction
either downward or upward. The economic conditions, political
situations and the sociological changes affect the security market.
The recession in the economy affects the profit prospect of the
industry and the stock market.
The 1998 recession experienced by developed and developing
countries have affected the stock markets all over the world. The
South East Asian crisis has affected the stock market world wide.
There factors are beyond the control of the corporate and the
investor. They cannot be entirely avoided by the investor. It drives
home the point that the systematic risk is unavoidable.
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The systematic risk is further sub-divided into

• Market Risk
• Interest Rate Risk
• Purchasing Power Risk
Market Risk
Market risk as that portion of total variability of return caused by
the alternating forces of bull and bear markets. When the security
index moves upward haltingly for a significant period of time, it is
known as bull market. In the bull market, the index moves from a low
level to the peak.
Bear market is just a reverse to the bull market; the index declines
haltingly from the peak to a market low point called through for a
significant period of time. During the bull and bear market more than
80% of the securities’ prices rise or fall along with the stock market
indices.
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Interest Rate Risk

Interest rate risk is the variation in the single period rates of
return caused by the fluctuations in the market interest rate. Most
commonly interest rate risk affects the price of bonds, debentures
and stocks. The fluctuations in the interest rates are caused by the
changes in the government monetary policy and the changes that
occur in the interest rates of treasury bills and the government bonds.
The bonds issued by the government and quasi-government are
considered to be risk free.
Purchasing Power Risk

Variations in the returns are caused also by the loss of
purchasing power of currency. Inflation is the reason behind the loss
of purchasing power. The level of inflation proceeds faster than the
increase in capital value. Purchasing power risk is the probable loss
in the purchasing power of the returns to be received. The rise in
price penalizes the returns to the investor, and every potential rise in
price is a risk to the investor.
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Unsystematic Risk
As already mentioned, unsystematic risk is unique and peculiar
to a firm or an industry. Unsystematic risk stems from managerial
inefficiency, technological change in the production process,
availability of raw material, changes in the consumer preference, and
labor problems. The nature and magnitude of the above mentioned
factors differ from industry to industry, and company to company.
They have to be analyzed separately for each industry and firm. The
changes in the consumer preference affect the consumer products
like television sets, washing machines, refrigerators, etc.
unsystematic risk can be classified into
 Business risk
 Financial risk
Business Risk
Business risk is that portion of the unsystematic risk caused by
the operating environment of the business. Business risk arises from
the inability of a firm to maintain its competitive edge and the growth
or stability of the earnings. Variation that occurs in the operating
environment as reflected on the operation income and expected
dividends.
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Financial Risk
It refers to the variability of the income to the equity capital due
to the debt capital. Financial risk in a company is associated with the
capital structure of the company. Capital structure of the company
consists of equity funds and borrowed funds. The presence of debt
and preference capital results in a commitment of paying interest or
per fixed rate of dividend. The interest payment affects the payments
that are due to the equity investors.
Measurement of Risk
The risk associated with a single asset is assessed from both a
behavior and a quantitative/statistical point of view. The behavioral
view of risk can be obtained by using:
• Sensitivity analysis
• Probability distribution
Sensitivity Analysis
It is a behavior approach to assess risk using number of possible
returns estimates to obtain a sense of the variability among
outcomes.
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Probability Distribution
It is a model that relates probabilities to the associated
outcomes based on the rerun the expected value of the return can be
computed the expected rate of return is the weighted average of all
possible returns multiplied by their respective probabilities.
The statistical measure of risk of an asset/security is
 Standard deviation
 Coefficient of variation
Standard Deviation
Risk refers to the dispersion of returns around expected values.
The most common statistical measure of risk of an asset is the
standard deviation from the mean/expected values of return. It
represents the square root of the average squared deviation of the
individual returns from the expected returns.
Co-efficient of Variation
It is a measure of relative dispersion used in comparing the risk
of assets with differing expected values. The co-efficient of variation
is computed by dividing the for an asset by its expected value.
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Return
Investment decisions are influenced by various motives. Some
people invest in a business to acquire control and enjoy the prestige
associated with it. Some people invest in expensive yachts and
famous villas to display their wealth. Most investors, however, are
largely guided by the pecuniary motive of earning a return on their
investment.
For earning returns investors have to almost invariably bear
some risk. In general, risk and return go hand in hand. While
investors like returns they abhor risk. Investment decisions, therefore,
involve a tradeoff between risk and return. Since risk and return are
central to investment decisions.
Meaning of Return
Return is the primary motivation force that drives investment. It
represents the reward for undertaking investment. Since the game of
investing is about returns (after allowing for risk), measurement of
realized (historical) returns is necessary to assess how well the
investment manager has done. In addition, historical returns are often
used as an important input in estimating future (prospective) returns.
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Components of Return
The return of an investment consists of two components.
Current Return
The first component that often comes to mind when one is
thinking about return is the periodic cash flow (income), such as
dividend or interest, generated by the investment. Current return is
measured as the periodic income in relation to the beginning price of
the investment.
Capital Return
The second component of return is reflected in the price
change called the capital return it is simple the price appreciation (or
depreciation) divided by the beginning price of the asset. For assets
like equity stocks, the capital return predominates.
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Measuring Historical Return
The total return on an investment for a given period is:

Cash payment received during the period + price change
over the Price of the investment at the beginning Period
All items are measured in rupees. The rupee cash payment

received during the period may be positive may be positive zero. The
rupee price change over the period is simply the difference between
the ending price and the beginning price. This can be positive
(ending price exceeds the beginning price) or zero (ending price
equals the beginning price) or negative (ending price is less then the
beginning price) in formal terms
C + ( PE − PB )
R=
PB
Where R = total return over the period

C = cash payment received during the period
PE = ending price of the investment
PB= beginning price
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Return Relative
Often it is necessary to measure returns in a slightly different
manner. This is particularly true when a cumulative wealth index or a
geometric mean has to be calculated, because in such calculations
negative returns cannot be used. The concept of return relative is
used in such cases. The return relative is defined as:
C + PE
Return relative=
PB
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RESEARCH DESIGN
1. Title of the Study

A study on Risk and Return towards Mutual Fund
2. Statement of the Problem
In the current economic scenario interest rates are falling and

fluctuation in the share market has put investors in confusion. One
finds it difficult to take decision on investment. This is primarily,
because investments are risky in nature and investors have to
consider various factors before investing in investment avenues.
Therefore the study aims to create awareness about mutual fund
schemes in form their risk, return & liquidity among the investors.
3. Objectives of the Study
Saving money is not enough. Each of us also need to invest

one’s savings intelligently in order to have enough money available
for funding the higher education of one’s children, for buying a house,
or for one’s own golden years. But the rapidly growing number of
investment avenues often led to confusion. Objectives of the study
are to provide information to individual investors regarding their risk,
and choosing the best investment options to match their goals and
attitude to risk.
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1. To find out Mutual Fund Schemes in respect of their risk, return and
liquidity.
2. Analyzing the performance of mutual fund schemes.
3. Objective is to provide information to investors how to invest their hard

money most profitably in mutual funds schemes.
4. Objective is to provide information to investors how to adjust their

investment portfolio with changes in their life and volatile market situation.
5. Provide information about pros and cons of investing in Mutual Funds
6. To offer valuable suggestions on the basis of findings
4. Scope of the Study
The project has been done at, which primarily deals with equity,
derivatives, mutual funds, portfolio management and insurance for
managing the portfolio of its clients.
The study is limited to mutual fund schemes in respect of their

risk, return and liquidity. The study covers 4 randomly selected
mutual fund schemes out of mutual fund industry in India. The
analysis is strictly based on unit price information. Other company
performance indicators are not considered. It focuses on every day
net asset value prices during the period from 1 st Jan, 2007 to 31st
Mar, 2007.
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5. Methodology of the Study

Keeping the objective in mind the study was based on the Net
Asset Value of one month market data of schemes. The data used
are the first hand information collected with newspaper and online
trading .the second hand information also contains the net asset
value of the schemes through companies’ websites
The whole study can be termed as comparative study. It is also

a desk research hence, there is no field work and collection of
primary date for this research except information provided by fortune
advisory services the business partner of Reliance Money which
constantly prepares a wealth management plan for its clients and
constantly updates its client’s portfolio.
The study centers on mutual fund schemes in respect of their

risk, return and liquidity. However, with the objective and scope of the
study in mind, it was decided to base the study on return series of
selected mutual fund schemes.
Daily unit prices of the selected schemes were collected from

historical data. In order to know liquidity, at least three months daily
data was decided to be necessary. The reference period is from 1st
Jan, 2007 to 31st Mar, 2007.
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Research Technique
The quality of research output and the validity of its findings
depend upon appropriateness of the sampling design selected for the
study. It was needed to apply inferential statistical analysis; hence
probability sampling was chosen to be essential.
The study is relating to the risk and return if mutual fund scheme.
Therefore the Random Sampling was used.
Research Instruments
For analysis of the scheme value the risk and return
formulas was used for one month data.
Source of Data
 Primary data
The data has collected with observation of net asset value of
each scheme and with online trading.
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IN INDIA
 Secondary data
The data has collected from
Company websites
Magazines and journals
Internet and stock brokers
Limitations of the Study

 The study is limited to some selected mutual fund schemes
 The data which relates to three months because of limited
time
 The information is not available at a proper time
 Investments in securities are subject to market risks and
include price fluctuation risks
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OVER VIEW OF THE CHAPTER SCHEMES

CHAPTER-1
This chapter gives the broad area about the history of Indian
mutual fund industry, growth of asset under management, strengths
and weakness of mutual fund, advantages and disadvantages of
mutual fund to investors and rating of mutual fund schemes. The
subject gives the broad area about the historical return and risk
profile about the particular schemes and the parameters which
measures the historical return and risk.
Chapter-2
This chapter describes the title of the study, the problem
statement which describes the objectives and scope to study the
topic. This research tells the methodology how the sample size has
been taken to study and technique used to find the solution for the
problem.
Chapter-3
This chapter gives the profile of the chairman, corporate
governance of the company, investment approach, investment
options, and risk factor which is associated for investment in portfolio.
45
IN INDIA
Chapter-4
This chapter gives the monthly risk and return of each selected
mutual fund scheme out of five mutual fund schemes. Based on the
above calculations the table and graph shows three months risk
return of each selected mutual fund schemes and inference for the
analysis.
Chapter-5
This chapter shows the findings based on the above
calculations, suggestions for the findings and conclusion for the
whole study.
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COMPANY PROFILE
RELIANCE MONEY – ANIL DHIRUBHAI AMBANI Group
Chairman's Profile
Regarded as one of the foremost corporate leaders of

contemporary India, Anil Dhirubhai Ambani is the Chairman of all the
listed Group companies — Reliance Communications, Reliance
Capital, Reliance Energy and Reliance Natural Resources Ltd.
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IN INDIA
He is also Chairman of the Board of Governors of Dhirubhai

Ambani Institute of Information and Communication Technology,
Gandhi Nagar, Gujarat.
Till recently, he also held the post of Vice Chairman and

Managing Director of Reliance Industries Limited (RIL), India’s largest
private sector enterprise.
Anil D Ambani joined Reliance in 1983 as Co-Chief Executive

Officer, and was centrally involved in every aspect of the company’s
management over the next 22 years.
He is credited with having pioneered a number of path-breaking

financial innovations in the Indian capital markets. He spearheaded
the country’s first forays into the overseas capital markets with
international public offerings of global depositary receipts,
convertibles and bonds. Starting in 1991, he directed Reliance
Industries in its efforts to rise over US$ 2 billion. He also steered the
100-year Yankee bond issue for the company in January 1997.
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IN INDIA
He is a member of
• Wharton Board of Overseers, The Wharton School, USA
• Central Advisory Committee, Central Electricity Regulatory

Commission
• Board of Governors, Indian Institute of Management,

Ahmedabad
• Board of Governors Indian Institute of Technology, Kanpur
In June 2004, he was elected for a six-year term as an

independent member of the Rajya Sabha, Upper House of India’s
Parliament a position he chose to resign voluntarily on March 25,
2006.
Awards and Achievements:
• Conferred the ‘CEO of the Year 2004’ in the Platts Global

Energy Awards
• Rated as one of ‘India’s Most Admired CEOs’ for the sixth

consecutive year in the Business Barons – TNS Mode opinion
poll, 2004
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IN INDIA
• Conferred ‘The Entrepreneur of the Decade Award’ by the

Bombay Management Association, October 2002
• Awarded the First Wharton Indian Alumni Award by the

Wharton India Economic Forum (WIEF) in recognition of his
contribution to the establishment of Reliance as a global leader
in many of its business areas, December 2001
• Selected by Asiaweek magazine for its list of ‘Leaders of the

Millennium in Business and Finance’ and was introduced as the
only ‘new hero’ in Business and Finance from India, June 1999
Corporate Governance
Organizations, like individuals, depend for their survival,

sustenance and growth on the support and goodwill of the
communities of which they are an integral part, and must pay back
this generosity in every way they can.
This ethical standpoint, derived from the vision of their founder,

lies at the heart of the CSR philosophy of the Reliance – ADA Group.
While they strongly believe that their primary obligation or duty

as corporate entities is to their shareholders – they are just as mindful
of the fact that this imperative does not exist in isolation; it is part of a
much larger compact which they have with their entire body of
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IN INDIA
stakeholders: From employees, customers and vendors to business

partners, eco-system, local communities, and society at large.
They evaluate and assess each critical business decision or

choice from the point of view of diverse stakeholder interest, driven
by the need to minimize risk and to pro-actively address long-term
social, economic and environmental costs and concerns.
For them, being socially responsible is not an occasional act of

charity or that one-time token financial contribution to the local
school, hospital or environmental NGO. It is an ongoing year-round
commitment, which is integrated into the very core of our business
objectives and strategy.
Because they believe that there is no contradiction between

doing well and doing right. Indeed, doing right is a necessary
condition for doing well.
Investment Approach
The heart of their approach

An important fact of their approach is their constant endeavor to
consistently generate absolute returns by pursuing a robust and
disciplined investment process.
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IN INDIA
They strive to build a concentrated portfolio by including certain

select stocks that meet their set benchmarks. While their bottom-up
approach enables them to concentrate on identifying competitive
growth companies, using cash as a strategic investment tool allows
them to grab attractive opportunities arising in the dynamic market
environment.
Thus, they work towards creating reasonably concentrated

portfolios of what they believe are compelling opportunities.
Investment Process
They understand that having a discretionary control of customer
portfolio is a privileged position that requires a great degree of
expertise and care
. Each investment decision is taken after an in-depth
understanding of the opportunity through intensive in-house research.
Their team scans a large universe of stocks with a special focus

on under-researched or undiscovered opportunities. They interact
extensively with the managements of diverse companies in a
multitude of sectors to understand emerging business strategies and
trends. This process allows them to filter the most compelling
opportunities from the universe.
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IN INDIA
Investment Options
Varied Investment Options:
Equities as an asset class provide a wide spectrum of

opportunities, though not all of them are tapped at all times. Their
three different product options are an endeavor to unearth these very
opportunities across market segments. To create personalized
portfolios as per customer specific needs
• Absolute Freedom
A highly flexible investment option that exploits opportunities

across the broad market spectrum. The option pursues an aggressive
approach to portfolio construction and allocates assets judiciously
among large-cap, mid-cap and small-cap stocks.
• Large-Caps
A relatively protective investment option with investments
predominantly in large caps stocks. This ensures liquidity and
lower impact costs leading to a more stable portfolio.
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IN INDIA
• Mid-Caps/Small-Caps
A relatively aggressive option that helps to harness the

potential of companies in the mid-cap/small-cap segment. This
option attempts to discover companies with the potential of both
earnings and multiples to rise.
Risk Factor
 Investments in securities are subject to market risks and include
price fluctuation risks. There are no assurances or guarantees

that the objectives of any of the Schemes will be achieved. The
investments may not be suited to all categories of investors.
 The past performance of the Portfolio Manager in any

Scheme/option is not indicative of the future performance in the
same Scheme/option or in any other scheme /option either
existing or that may be offered. There is no assurance that past
performances indicated in earlier Schemes/options will be
repeated. Investors are not being offered any guaranteed or
indicative returns through any of the Schemes.
 The names of the Schemes/option do not in any manner
indicate their prospects or returns. The performance in the

equity Schemes/options may be adversely affected by the
54
IN INDIA
performance of individual companies’ changes in the market

place and industry specific and macro economic factors.
 Technology stocks and some of the investments in niche

sectors run the risk of volatility, high valuation, obsolescence
and low liquidity.
 Risk attached with the use of derivatives. The portfolio manager
may use derivative products as may be permitted by SEBI from

time to time. As and when the schemes trade in the derivatives
market there are risk factors and issues concerning the use of
derivatives that investors should understand.
 Derivative products are specialized instruments that require

investment techniques and risk analyses different from those
associated with stocks and bonds. The use of a derivative
requires an understanding not only of the underlying instrument
but also of the derivative itself. Derivatives require maintenance
of adequate controls to monitor the transactions entered into,
the ability to assess the risk that a derivative adds to the
portfolio and other related capabilities.
 In the case of stock lending, risks relate to the defaults from
counterparties with regard to securities lent and the corporate

benefits accruing thereon, inadequacy of the collateral and
55
IN INDIA
settlement risks. The Portfolio Manager is not responsible or

liable for any loss resulting from the operations of the
schemes/options.
 The Portfolio Manager may invest in the shares, units of mutual

funds, debt, deposits and other financial instruments of group
companies.
Reliance Money
Reliance Money is the electronic transaction platform
associated with Reliance Capital; one of India’s leading and fastest
growing private sector financial services companies, ranked amongst
the top 3 private sector financial services and banking companies, in
terms of net worth. Reliance Capital is a part of the Reliance- Anil
Dhirubhai Ambani Group.
Reliance money provides a comprehensive platform, offering
an investment avenue for a wide range of asset classes. Its endeavor
is to change the way India transacts in financial markets and avails
financial services.
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IN INDIA
Reliance Money offers a single window facility. Enabling you to

access, amongst others, Equity, Equity and Commodities Derivatives,
Offshore Investment, IPO’s, Mutual Funds, Life Insurance and
General Insurance products.
Reliance Money is the most cost-effective, convenient and

secures way to transact in a wide range of financial products and
services.
The highlights of Reliance Money’s offering are
• Cost-effective
The fee charged by the affiliates of Reliance Money, through
whom the transactions can be placed, is among the lowest charged in
the present scenario. As an introductory offer, pay a flat fee of just
Rs. 500/- valid for 2 months or specified transactional value.
• Convenience
You have the flexibility to access Reliance Money services in
multiple ways: through the Internet, Transaction Kiosks, Call and
Transact or seek assistance through out Business Partners.
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IN INDIA
• Security
Reliance Money provides secure access through an electronic
token that flashes a unique security number every 32 seconds (and
ensures that the number used for the earlier transaction is discarded).
This number works as a third level password that keeps your account
extra safe.
• Single window for multiple products
Reliance Money through its affiliates/partners facilitates
transactions in Equity, Equity and Commodity Derivatives, Offshore
Investments, Mutual Funds, IPO’s, Life Insurance and General
Insurance products.
• 3 in 1 integrated access
Reliance Money offers integrated access to your banking,
trading and demat account. We can transact without the hassle of
writing cheques
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IN INDIA
PROFILE OF SELECTED MUTUAL FUND
1. Birla Sun Life Mutual Fund

Birla Sun Life Asset Management Company Ltd. (BSLAMC),
the investment managers of Birla Mutual Fund, is a joint venture
between the Aditya Birla Group and the Sun Life Financial Services
Inc. of Canada. The joint venture brings together the Aditya Birla
Groups' experience in the Indian market and Sun Life's global
experience.
Since its inception in 1994, Birla Mutual Fund has emerged as

one of India's leading Mutual Funds with over Rs. 16,500 crores * of
assets under management and an investor base in excess of 8 lakhs.
The fund offers a range of investment options, which include
diversified and sector specific equity schemes, fund of fund schemes,
hybrid and monthly income funds, a wide range of debt and treasury
products and offshore funds.
BSLAMC is the first asset management company in India to be

awarded the coveted ISO 9001:2000 certification by DNV,
Netherlands. BSLAMC also provides private Wealth Management
services.
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IN INDIA
BSLAMC follows a long-term, fundamental research based

approach to investment. The approach is to identify companies,
which have excellent growth prospects and strong fundamentals. The
fundamentals include the quality of the company’s management,
sustainability of its business model and its competitive position,
amongst other factors. Birla Sun Life Asset Management Company
has one of the largest team of research analysts in the industry,
dedicated to tracking down the best companies to invest in.
2. UTI Mutual Fund
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IN INDIA
UTI Mutual Fund is managed by UTI Asset

Management Company Private Limited (Estb: Jan 14, 2003) who has
been appointed by the UTI Trustee Company Private Limited for
managing the schemes of UTI Mutual Fund and the schemes
transferred / migrated from UTI Mutual fund.
The UTI Asset Management Company has its registered office
at: UTI Tower, Grouund-Block, Bandra - Kurla Complex, Bandra
(East), Mumbai - 400 051 will provide professionally managed back
office support for all business services of UTI Mutual Fund (excluding
fund management) in accordance with the provisions of the
Investment Management Agreement, the Trust Deed, the SEBI
(Mutual Funds) Regulations and the objectives of the schemes.
State-of-the-art systems and communications are in place to ensure a
seamless flow across the various activities undertaken by UTI AMC.
UTI AMC is a registered portfolio manager under the SEBI

(Portfolio Managers) Regulations, 1993 on February 3 2004, for
undertaking portfolio management services and also acts as the
manager and marketer to offshore funds through its 100 %
subsidiary, UTI International Limited, registered in Guernsey,
Channel Islands.
UTI Mutual Fund has come into existence with effect from 1st
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IN INDIA
February 2003. UTI Asset Management Company presently manages

a corpus of over Rs. 34500 Crore.
UTI Mutual Fund has a track record of managing a
variety of schemes catering to the needs of every class of citizenry. It
has a nationwide network consisting 70 UTI Financial Centers (UFCs)
and UTI International offices in London, Dubai and Bahrain. With a
view to reach to common investors at district level, 4 satellite offices
have also been opened in select towns and districts. It has a well-
qualified, professional fund management team, who has been highly
empowered to manage funds with greater efficiency and
accountability in the sole interest of unit holders. The fund managers
are also ably supported with a strong in-house equity research
department. To ensure better management of funds, a risk
management department is also in operation.
It has reset and upgraded transparency standards for the mutual

funds industry. All the branches, UFCs and registrar offices are
connected on a robust IT network to ensure cost-effective quick and
efficient service. All these have evolved UTI Mutual Fund to position
as a dynamic, responsive, restructured, efficient, and transparent and
SEBI compliant entity.
3.LIC Mutual Fund
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IN INDIA
Life Insurance Corporation of India set up LIC Mutual Fund

on 19th June 1989 and contributed Rs. 2 Crores towards the corpus
of the Fund. LIC Mutual Fund was constituted as a Trust in
accordance with the provisions of the Indian Trust Act, 1882. The
settler is not responsible for the management of the Trust. The settler
is also not responsible or liable for any loss or shortfall resulting in
any of the schemes of LIC Mutual Fund
The Trustees of the LIC Mutual Fund have exclusive ownership
of Trust Fund and are vested with general power of superintendence,
discretion and management of the affairs of the Trust. LIC Mutual
Fund Asset Management Company Ltd. was formed on 20th April
1994 in compliance with the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1993. The Company commenced
business on 29th April 1994. The Trustees of LIC Mutual Fund have
appointed LIC Mutual Fund Asset Management Company Ltd. as the
Investment Managers for LIC Mutual Fund. The Trustees are
responsible for appointing a Custodian. The Trustees should also
ensure that the activities of the Trust and the Asset Management
Company are in accordance with the Trust Deed and the SEBI
Mutual Fund Regulations as amended from time to time. The
Trustees have also to report periodically to SEBI on the functioning of
the Fund.
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4.HDFC MUTUAL FUND

HDFC Asset Management Company Ltd (AMC) was
incorporated under the Companies Act, 1956, on December 10,
1999, and was approved to act as an Asset Management Company
for the HDFC Mutual Fund by SEBI vide its letter dated June 30,
2000.
The registered office of the AMC is situated at Ramon
House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation,
Churchgate, Mumbai - 400 020.
In terms of the Investment Management Agreement, the Trustee has

appointed the AMC to manage the Mutual Fund.
The present equity shareholding pattern of the AMC is as follows :
Particulars % of the paid up

equity capital
Housing Development Finance 60
Corporation Limited
Standard Life Investments Limited 40
Zurich Insurance Company (ZIC), the Sponsor of Zurich India
Mutual Fund, following a review of its overall strategy, had decided to
divest its Asset Management business in India. The AMC had
entered into an agreement with ZIC to acquire the said business,
subject to necessary regulatory approvals.
On obtaining the regulatory approvals, The Schemes of

Zurich India Mutual Fund have migrated to HDFC Mutual Fund on
June 19, 2003. These Schemes have been renamed
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DATA ANALYSIS AND INTERPRETATION

CALUCLATION OF RISK AND RETURN OF MUTUAL FUND SCHEMS
1. BIRLA SUN LIFE MUTUAL FUND
1.1 Table showing the Risk and Return of Equity Fund (Dividend option) for
the Month of JULY-2007
Date NAV Returns (%)  −

  −

 R − R  R − R2
   
2-July-2007 58.44
3-July-2007 59.05 1.04 0.97 0.95
4-July-2007 58.89 -0.27 -0.34 0.12
5-July-2007 58.59 -0.51 -0.58 0.34
6-July-2007 58.1 -0.84 -0.91 0.82
9-July-2007 57.47 -1.08 -1.15 1.33
10-July-2007 56.93 -0.94 -1.01 1.02
11-July-2007 57.53 1.05 0.98 0.97
12-July-2007 58.22 1.20 1.13 1.28
13-July-2007 58.55 0.57 0.50 0.25
16-July-2007 58.7 0.26 0.19 0.03
17-July-2007 59.12 0.72 0.65 0.42
18-July-2007 59.67 0.93 0.86 0.74
19-July-2007 59.37 -0.50 -0.57 0.33
20-July-2007 59.63 0.44 0.37 0.14
23-July-2007 58.8 -1.39 -1.46 2.14
24-July-2007 59.18 0.65 0.58 0.33
25-July-2007 59.63 0.76 0.69 0.48
26-July-2007 59.59 -0.07 -0.14 0.02
27-July-2007 59.2 -0.65 -0.72 0.52
Total 1.35 12.21
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The Fund Return
− ∑ Ri
R= i =1
1.35
= = 0.07%
19
The Standard Deviation
n 2
 Ri − R− 
σ = ∑ 
i =1 


n −1
12.21
= = 0.82%
19 − 1
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1.2 Table showing the Risk and Return of Equity Fund Dividend Option for
the Month of AUGUST-2007

  −

 R − R  R − R2
   
1-Aug-2007 59.62
2-Aug-2007 60.4 1.31 1.82 3.31
3-Aug-2007 60.51 0.18 0.69 0.48
6-Aug-2007 60.22 -0.48 0.03 0.00
7-Aug-2007 60.74 0.86 1.37 1.89
8-Aug-2007 60.6 -0.23 0.28 0.08
9-Aug-2007 59.42 -1.95 -1.44 2.07
10-Aug-2007 57.23 -3.69 -3.18 10.08
13-Aug-2007 56.96 -0.47 0.04 0.00
14-Aug-2007 57.06 0.18 0.69 0.47
16-Aug-2007 58.44 2.42 2.93 8.58
17-Aug-2007 58.56 0.21 0.72 0.51
20-Aug-2007 58.27 -0.50 0.01 0.00
21-Aug-2007 57.94 -0.57 -0.06 0.00
22-Aug-2007 57.44 -0.86 -0.35 0.12
23-Aug-2007 56.34 -1.92 -1.41 1.97
27-Aug-2007 56.73 0.69 1.20 1.45
28-Aug-2007 56.57 -0.28 0.23 0.05
29-Aug-2007 54.3 -4.01 -3.50 12.27
Total -9.10 43.33
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The Fund Return The Standard Deviation

n
∑ Ri
n 2
 Ri − R− 
− σ = ∑ 
i =1 


R= i =1
n n −1
−9.10 43.33
= = −0.51% = = 1.60%
18 18 − 1
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1.3 Table showing the Risk and Return of Equity Fund (Dividend Option) for
the Month of SEPTEMBER -2007

  −

 R − R  R − R2
   
3-Sep-2007 54.98
4-Sep-2007 54.45 -0.96 -0.93 0.87
5-Sep-2007 52.35 -3.86 -3.83 14.64
6-Sep-2007 52.56 0.40 0.43 0.19
7-Sep-2007 51.84 -1.37 -1.34 1.80
10-Sep-2007 53.18 2.58 2.61 6.84
11-Sep-2007 52.96 -0.41 -0.38 0.15
12-Sep-2007 53.05 0.17 0.20 0.04
13-Sep-2007 53.64 1.11 1.14 1.30
14-Sep-2007 52.63 -1.88 -1.85 3.43
17-Sep-2007 52.8 0.32 0.35 0.12
18-Sep-2007 52.18 -1.17 -1.14 1.31
19-Sep-2007 52.79 1.17 1.20 1.44
20-Sep-2007 53.27 0.91 0.94 0.88
21-Sep-2007 53.75 0.90 0.93 0.87
24-Sep-2007 54.78 1.92 1.95 3.79
25-Sep-2007 55.26 0.88 0.91 0.82
26-Sep-2007 54.93 -0.60 -0.57 0.32
27-sep-2007 54.12 -1.47 -1.44 2.09
28-Sep-2007 54.21 0.17 0.20 0.04
29-Sep-2007 54.52 0.57 0.60 0.36
Total -0.63 41.30
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n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−0.63 41.30
= = −0.03% = = 1.47%
20 20 − 1
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1.4 Table showing the Risk and Return of Equity Fund (Growth Option) for
the month of JULY2007
Date NAV Returns(%)  −

  −

 R − R   R − R 2
   
2-July-2007 11.1
3-July-2007 11.22 1.08 1.01 1.02
4-July-2007 11.19 -0.27 -0.34 0.11
5-July-2007 11.13 -0.54 -0.61 0.37
6-July-2007 11.03 -0.90 -0.97 0.94
9-July-2007 10.91 -1.09 -1.16 1.34
10-July-2007 10.81 -0.92 -0.99 0.97
11-July-2007 10.92 1.02 0.95 0.90
12-July-2007 11.05 1.19 1.12 1.26
13-July-2007 11.12 0.63 0.56 0.32
16-July-2007 11.15 0.27 0.20 0.04
17-July-2007 11.23 0.72 0.65 0.42
18-July-2007 11.33 0.89 0.82 0.67
19-July-2007 11.28 -0.44 -0.51 0.26
20-July-2007 11.33 0.44 0.37 0.14
23-July-2007 11.17 -1.41 -1.48 2.20
24-July-2007 11.24 0.63 0.56 0.31
25-July-2007 11.32 0.71 0.64 0.41
26-July-2007 11.32 0.00 -0.07 0.00
27-July-2007 11.24 -0.71 -0.78 0.60
Total 1.32 12.29
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
1.32 12.29
= = 0.07% = = 0.83%
19 19 − 1
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1.5 Table showing the Risk and Return of Equity Fund (Growth Option) fjor
the Month of AUG-2007
  −

 R − R   R − R 2
   
1-Aug-2007 11.32
2-Aug-2007 11.47 1.33 1.83 3.33
3-Aug-2007 11.49 0.17 0.67 0.45
6-Aug-2007 11.44 -0.44 0.06 0.00
7-Aug-2007 11.53 0.79 1.29 1.66
8-Aug-2007 11.51 -0.17 0.33 0.11
9-Aug-2007 11.28 -2.00 -1.50 2.24
10-Aug-2007 10.87 -3.63 -3.13 9.83
13-Aug-2007 10.82 -0.46 0.04 0.00
14-Aug-2007 10.83 0.09 0.59 0.35
16-Aug-2007 11.1 2.49 2.99 8.96
17-Aug-2007 11.12 0.18 0.68 0.46
20-Aug-2007 11.06 -0.54 -0.04 0.00
21-Aug-2007 11 -0.54 -0.04 0.00
22-Aug-2007 10.91 -0.82 -0.32 0.10
23-Aug-2007 10.7 -1.92 -1.42 2.03
27-Aug-2007 10.77 0.65 1.15 1.33
28-Aug-2007 10.74 -0.28 0.22 0.05
29-Aug-2007 10.31 -4.00 -3.50 12.28
Total -9.10 43.19
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n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−9.10 43.19
= = −0.51% = = 1.59%
18 18 − 1
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the Month of SEP-2007
  −

 R − R   R − R 2
   
3-Sep-2007 10.44 - - -
4-Sep-2007 10.34 -0.96 -0.93 0.86
5-Sep-2007 9.94 -3.87 -3.84 14.73
6-Sep-2007 9.98 0.40 0.43 0.19
7-Sep-2007 9.84 -1.40 -1.37 1.88
10-Sep-2007 10.1 2.64 2.67 7.14
11-Sep-2007 10.06 -0.40 -0.37 0.13
12-Sep-2007 10.07 0.10 0.13 0.02
13-Sep-2007 10.19 1.19 1.22 1.49
14-Sep-2007 9.99 -1.96 -1.93 3.74
17-Sep-2007 10.02 0.30 0.33 0.11
18-Sep-2007 9.91 -1.10 -1.07 1.14
19-Sep-2007 10.02 1.11 1.14 1.30
20-Sep-2007 10.12 1.00 1.03 1.06
21-Sep-2007 10.21 0.89 0.92 0.85
24-Sep-2007 10.4 1.86 1.89 3.58
25-Sep-2007 10.49 0.87 0.90 0.80
26-Sep-2007 10.43 -0.57 -0.54 0.29
27-sep-2007 10.28 -1.44 -1.41 1.98
28-Sep-2007 10.29 0.10 0.13 0.02
29-Sep-2007 10.35 0.58 0.61 0.38
Total -0.66 41.68
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−0.66 41.68
= = −0.03% = = 1.48%
20 20 − 1
74
IN INDIA
2. HDFC MUTUAL FUND

2.1 Table showing the Risk and Return of Equity Fund (Dividend Option)
for the Month of JULY-2007
  −

 R − R  R − R2
   
2-July-2007 43.97
3-July-2007 44.2 0.53 0.38 0.15
4-July-2007 44.1 -0.22 -0.22 0.05
5-July-2007 44 -0.23 -0.23 0.05
6-July-2007 43.49 -1.17 -1.32 1.73
9-July-2007 43.2 -0.66 -0.81 0.66
10-July-2007 42.86 -0.78 -0.93 0.87
11-July-2007 43.59 1.69 1.54 2.38
12-July-2007 44.44 1.96 1.81 3.27
13-July-2007 44.94 1.12 0.97 0.95
16-July-2007 45.08 0.32 0.17 0.03
17-July-2007 45.45 0.82 0.67 0.44
18-July-2007 45.6 0.32 0.17 0.03
19-July-2007 45.26 -0.74 -0.89 0.80
20-July-2007 45.33 0.17 0.02 0.00
23-July-2007 44.98 -0.78 -0.93 0.87
24-July-2007 45.17 0.42 0.27 0.07
25-July-2007 45.55 0.85 0.70 0.50
26-July-2007 45.36 -0.43 -0.58 0.33
27-July-2007 45.19 -0.37 -0.52 0.27
Total 2.82 13.44

n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
2.82 13.44
= = 0.15% = = 0.86%
19 19 − 1
75
IN INDIA
  −

 R − R   R − R 2
   
1-Aug-2007 45.499
2-Aug-2007 45.871 0.82 1.23 1.51
3-Aug-2007 46.141 0.59 1.00 1.00
6-Aug-2007 46.112 -0.06 0.35 0.12
7-Aug-2007 46.374 0.57 0.98 0.96
8-Aug-2007 46.26 -0.25 0.16 0.03
9-Aug-2007 45.91 -0.76 -0.35 0.12
10-Aug-2007 44.916 -2.17 -1.76 3.08
13-Aug-2007 44.628 -0.64 -0.23 0.05
14-Aug-2007 44.579 -0.11 0.30 0.09
16-Aug-2007 45.73 2.58 2.99 8.95
17-Aug-2007 45.757 0.06 0.47 0.22
20-Aug-2007 45.261 -1.08 -0.67 0.45
21-Aug-2007 45.031 -0.51 -0.10 0.01
22-Aug-2007 44.469 -1.25 -0.84 0.70
23-Aug-2007 43.459 -2.27 -1.86 3.46
27-Aug-2007 43.548 0.20 0.61 0.38
28-Aug-2007 43.415 -0.31 0.10 0.01
29-Aug-2007 42.16 -2.89 -2.48 6.15
Total -7.47 27.3
76
IN INDIA

n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−7.47 27.30
= = −0.42% = = 1.27%
18 18 − 1
77
IN INDIA
the Month of SEP-2007
  −

 R − R   R − R 2
   
3-Sep-2007 42.89
4-Sep-2007 41.95 -2.19 -1.55 2.41
5-Sep-2007 40.22 -4.12 -3.48 12.10
6-Sep-2007 40.86 1.58 2.22 4.92
7-Sep-2007 40.35 -1.24 -0.60 0.36
10-Sep-2007 36.4 -9.80 -9.16 83.93
11-Sep-2007 36.22 -0.48 0.16 0.03
12-Sep-2007 36.58 0.99 1.63 2.64
13-Sep-2007 36.86 0.77 1.41 1.98
14-Sep-2007 35.89 -2.65 -2.01 4.02
17-Sep-2007 36.18 0.82 1.46 2.14
18-Sep-2007 35.86 -0.88 -0.24 0.06
19-Sep-2007 36.29 1.19 1.83 3.34
20-Sep-2007 36.59 0.82 1.46 2.13
21-Sep-2007 37.08 1.36 2.00 3.98
24-Sep-2007 37.85 2.06 2.70 7.31
25-Sep-2007 37.84 -0.03 0.61 0.37
26-Sep-2007 37.52 -0.85 -0.21 0.04
27-sep-2007 36.81 -1.89 -1.25 1.56
28-Sep-2007 37.06 0.68 1.32 1.74
29-Sep-2007 37.42 0.98 1.62 2.64
Total -12.87 137.70
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−12.87 137.70
= = −0.64% = = 2.70%
20 20 − 1
78
IN INDIA
  −

 R − R   R − R 2
   
2-July-2007 147.29
3-July-2007 148.07 0.53 0.38 0.15
4-July-2007 147.74 -0.22 -0.37 0.14
5-July-2007 147.4 -0.23 -0.38 0.15
6-July-2007 145.68 -1.17 -1.32 1.74
9-July-2007 144.72 -0.66 -0.81 0.66
10-July-2007 143.58 -0.78 -0.93 0.87
11-July-2007 146.01 1.69 1.54 2.38
12-July-2007 148.87 1.96 1.81 3.27
13-July-2007 150.55 1.12 0.97 0.95
16-July-2007 151.02 0.32 0.17 0.03
17-July-2007 152.25 0.82 0.67 0.44
18-July-2007 152.74 0.32 0.17 0.03
19-July-2007 151.61 -0.74 -0.89 0.80
20-July-2007 151.86 0.17 0.02 0.00
23-July-2007 150.67 -0.78 -0.93 0.87
24-July-2007 151.3 0.42 0.27 0.07
25-July-2007 152.6 0.85 0.70 0.50
26-July-2007 151.95 -0.43 -0.58 0.33
27-July-2007 151.4 -0.36 -0.51 0.26
Total 2.82 13.62
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
2.82 13.62
= = 0.15% = = 0.89%
19 19 − 1
79
IN INDIA
Date NAV Return (%)  −
  −

 R − R   R − R 2
   
1-Aug-2007 152.4
2-Aug-2007 153.7 0.82 1.24 1.53
3-Aug-2007 154.6 0.59 1.01 1.02
6-Aug-2007 154.5 -0.06 0.36 0.13
7-Aug-2007 155.3 0.57 0.99 0.98
8-Aug-2007 155 -0.25 0.17 0.03
9-Aug-2007 153.8 -0.76 -0.34 0.11
10-Aug-2007 150.5 -2.17 -1.75 3.05
13-Aug-2007 149.5 -0.64 -0.22 0.05
14-Aug-2007 149.3 -0.11 0.31 0.10
16-Aug-2007 153.2 2.58 3.00 9.01
17-Aug-2007 153.3 0.06 0.48 0.23
20-Aug-2007 151.6 -1.08 -0.66 0.44
21-Aug-2007 150.8 -0.51 -0.09 0.01
22-Aug-2007 149 -1.25 -0.83 0.69
23-Aug-2007 145.6 -2.27 -1.85 3.43
27-Aug-2007 145.9 0.21 0.63 0.39
28-Aug-2007 145.4 -0.31 0.11 0.01
29-Aug-2007 141.2 -2.89 -2.47 6.10
Total -7.47 27.30

n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−7.47 27.30
= = −0.42% = = 1.27%
18 18 − 1
80
IN INDIA
2.6 Table showing the Risk and Return of Equity Fund (Growth Option ) for
the of SEP-2007
  −

 R − R   R − R 2
   
3-Sep-2007 143.68
4-Sep-2007 140.53 -2.19 -2.17 4.72
5-Sep-2007 134.74 -4.12 -4.10 16.81
6-Sep-2007 136.86 1.58 1.60 2.55
7-Sep-2007 135.17 -1.24 -1.22 1.48
10-Sep-2007 138.69 2.60 2.62 6.89
11-Sep-2007 138.03 -0.47 -0.45 0.21
12-Sep-2007 139.39 0.99 1.01 1.01
13-Sep-2007 140.46 0.77 0.79 0.62
14-Sep-2007 136.75 -2.64 -2.62 6.89
17-Sep-2007 137.87 0.82 0.84 0.71
18-Sep-2007 136.66 -0.88 -0.86 0.74
19-Sep-2007 138.28 1.19 1.21 1.46
20-Sep-2007 139.42 0.82 0.84 0.71
21-Sep-2007 141.3 1.35 1.37 1.89
24-Sep-2007 144.22 2.06 2.08 4.34
25-Sep-2007 144.18 -0.03 -0.01 0.00
26-Sep-2007 142.96 -0.85 -0.83 0.68
27-sep-2007 140.26 -1.89 -1.87 3.49
28-Sep-2007 141.21 0.68 0.70 0.49
29-Sep-2007 142.6 0.98 1.00 1.01
Total -0.46 56.67
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−0.64 56.67
= = −0.02% = = 1.73%
20 20 − 1
81
IN INDIA
3 LIC MUTUAL FUND

  −

 R − R   R − R 2
   
2-July-2007 11.95
3-July-2007 12.02 0.58 0.43 0.19
4-July-2007 11.97 -0.41 -0.56 0.31
5-July-2007 11.98 0.07 -0.08 0.01
6-July-2007 11.86 -1.01 -1.16 1.35
9-July-2007 11.73 -1.04 -1.19 1.41
10-July-2007 11.59 -1.19 -1.34 1.79
11-July-2007 11.85 2.23 2.08 4.34
12-July-2007 12.14 2.45 2.30 5.30
13-July-2007 12.33 1.54 1.39 1.94
16-July-2007 12.37 0.30 0.15 0.02
17-July-2007 12.56 1.55 1.40 1.97
18-July-2007 12.55 -0.11 -0.26 0.07
19-July-2007 12.38 -1.34 -1.49 2.22
20-July-2007 12.36 -0.13 -0.28 0.08
23-July-2007 12.22 -1.10 -1.25 1.56
24-July-2007 12.3 0.61 0.46 0.21
25-July-2007 12.47 1.42 1.27 1.62
26-July-2007 12.48 0.07 -0.08 0.01
27-July-2007 12.28 -1.67 -1.82 3.30
Total 2.84 27.70
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
2.84 27.70
= = 0.15% = = 1.24%
19 19 − 1
82
IN INDIA
3.2 Table showing the Risk and Return of LIC Equity Fund (Dividend
Option) for the Month of AUG-2007
  −

 R − R   R − R 2
   
1-Aug-2007 11.949
2-Aug-2007 12.018 0.58 0.32 0.10
3-Aug-2007 11.969 -0.41 -0.67 0.45
6-Aug-2007 11.977 0.07 -0.19 0.04
7-Aug-2007 11.856 -1.01 -1.27 1.62
8-Aug-2007 11.733 -1.04 -1.30 1.69
9-Aug-2007 11.594 -1.19 -1.45 2.09
10-Aug-2007 11.853 2.23 1.97 3.89
13-Aug-2007 12.143 2.45 2.19 4.81
14-Aug-2007 12.331 1.54 1.28 1.65
16-Aug-2007 12.368 0.30 0.04 0.00
17-Aug-2007 12.56 1.55 1.29 1.67
20-Aug-2007 12.545 -0.11 -0.37 0.14
21-Aug-2007 12.377 -1.34 -1.60 2.56
22-Aug-2007 12.361 -0.13 -0.39 0.15
23-Aug-2007 12.225 -1.10 -1.36 1.85
27-Aug-2007 12.3 0.61 0.35 0.12
28-Aug-2007 12.475 1.42 1.16 1.36
Total 4.44 24.19

n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
4.44 24.19
= = 0.26% = = 1.23%
17 17 − 1
83
IN INDIA
3.3 Table showing the Risk and Return of LIC Equity Fund (Dividend
Option) for the Month of SEP-2007

  −

 R − R   R − R 2
   
3-Sep-2007 10.85
4-Sep-2007 10.68 -1.54 -1.44 2.07
5-Sep-2007 10.16 -4.87 -4.77 22.71
6-Sep-2007 10.21 0.40 0.50 0.25
7-Sep-2007 10.05 -1.54 -1.44 2.09
10-Sep-2007 10.45 3.96 4.06 16.45
11-Sep-2007 10.39 -0.53 -0.43 0.19
12-Sep-2007 10.48 0.83 0.93 0.86
13-Sep-2007 10.62 1.37 1.47 2.17
14-Sep-2007 10.35 -2.51 -2.41 5.82
17-Sep-2007 10.4 0.48 0.58 0.34
18-Sep-2007 10.24 -1.52 -1.42 2.01
19-Sep-2007 10.37 1.24 1.34 1.80
20-Sep-2007 10.48 1.04 1.14 1.29
21-Sep-2007 10.68 1.93 2.03 4.12
24-Sep-2007 10.62 -0.61 -0.51 0.26
25-Sep-2007 10.56 -0.57 -0.47 0.22
26-Sep-2007 10.43 -1.21 -1.11 1.24
27-sep-2007 10.48 0.52 0.62 0.38
28-Sep-2007 10.61 1.18 1.28 1.63
Total -1.96 65.90
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−1.96 65.90
= = −0.10% = = 1.91%
19 19 − 1
84
IN INDIA
3.4 Table showing the Risk and Return of LIC Equity Fund (Growth
Option) for the Month of JULY-2007

  −

 R − R   R − R 2
   
2-July-2007 21.597
3-July-2007 21.723 0.58 0.43 0.19
4-July-2007 21.635 -0.41 -0.56 0.31
5-July-2007 21.649 0.07 -0.08 0.01
6-July-2007 21.43 -1.01 -1.16 1.35
9-July-2007 21.207 -1.04 -1.19 1.42
10-July-2007 20.956 -1.19 -1.34 1.79
11-July-2007 21.424 2.23 2.08 4.34
12-July-2007 21.949 2.45 2.30 5.30
13-July-2007 22.288 1.54 1.39 1.94
16-July-2007 22.355 0.30 0.15 0.02
17-July-2007 22.702 1.55 1.40 1.97
18-July-2007 22.676 -0.11 -0.26 0.07
19-July-2007 22.372 -1.34 -1.49 2.22
20-July-2007 22.342 -0.13 -0.28 0.08
23-July-2007 22.097 -1.10 -1.25 1.56
24-July-2007 22.232 0.61 0.46 0.21
25-July-2007 22.549 1.42 1.27 1.62
26-July-2007 22.564 0.07 -0.08 0.01
27-July-2007 22.188 -1.67 -1.82 3.29
Total 2.84 27.70
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
2.84 27.70
= = 0.15% = = 1.24%
19 19 − 1
85
IN INDIA
3.5 Table showing the Risk and Return of LIC Equity Fund (Growth Option)
for the Month of AUG-2007
  −

 R − R   R − R 2
   
1-Aug-2007 22.53
2-Aug-2007 22.76 1.00 1.83 3.36
3-Aug-2007 22.77 0.07 0.90 0.81
6-Aug-2007 23.02 1.07 1.90 3.61
7-Aug-2007 22.79 -0.97 -0.14 0.02
8-Aug-2007 22.36 -1.91 -1.08 1.18
9-Aug-2007 21.27 -4.87 -4.04 16.31
10-Aug-2007 21.17 -0.47 0.36 0.13
13-Aug-2007 21.17 0.00 0.83 0.69
14-Aug-2007 21.74 2.72 3.55 12.60
16-Aug-2007 21.73 -0.05 0.78 0.62
17-Aug-2007 21.47 -1.22 -0.39 0.15
20-Aug-2007 21.42 -0.24 0.59 0.35
21-Aug-2007 21.28 -0.64 0.19 0.03
22-Aug-2007 20.59 -3.23 -2.40 5.76
23-Aug-2007 20.46 -0.63 0.20 0.04
27-Aug-2007 20.29 -0.87 -0.04 0.00
28-Aug-2007 19.5 -3.85 -3.02 9.11
Total -14.08 54.76
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−14.08 54.76
= = −0.83% = = 1.85%
17 17 − 1
86
IN INDIA
3.6 Table showing the Risk and Return of LIC Equity Fund (Growth
Option) for the Month of SEP-2007
  −

 R − R   R − R 2
   
3-Sep-2007 19.614
4-Sep-2007 19.312 -1.54 -1.44 2.07
5-Sep-2007 18.373 -4.86 -4.76 22.70
6-Sep-2007 18.447 0.40 0.50 0.25
7-Sep-2007 18.162 -1.54 -1.44 2.09
10-Sep-2007 18.88 3.96 4.06 16.45
11-Sep-2007 18.779 -0.53 -0.43 0.19
12-Sep-2007 18.935 0.83 0.93 0.86
13-Sep-2007 19.195 1.37 1.47 2.17
14-Sep-2007 18.712 -2.51 -2.41 5.82
17-Sep-2007 18.803 0.48 0.58 0.34
18-Sep-2007 18.517 -1.52 -1.42 2.01
19-Sep-2007 18.747 1.24 1.34 1.80
20-Sep-2007 18.941 1.04 1.14 1.30
21-Sep-2007 19.307 1.93 2.03 4.12
24-Sep-2007 19.19 -0.61 -0.51 0.26
25-Sep-2007 19.08 -0.57 -0.47 0.22
26-Sep-2007 18.849 -1.21 -1.11 1.23
27-sep-2007 18.946 0.52 0.62 0.38
28-Sep-2007 19.169 1.18 1.28 1.63
Total -1.96 65.90
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−1.96 65.90
= = −0.10% = = 1.91%
19 19 − 1
87
IN INDIA
4. UTI MUTUAL FUND
4.1 Table showing the Risk and Return of UTI Equity Fund (Growth
Option) for the Month of JULY-2007
  −

 R − R  R − R2
   
2-July-2007 32.86
3-July-2007 33.01 0.46 0.38 0.14
4-July-2007 32.78 -0.70 -0.78 0.60
5-July-2007 32.67 -0.34 -0.42 0.17
6-July-2007 32.33 -1.04 -1.12 1.26
9-July-2007 32.22 -0.34 -0.42 0.18
10-July-2007 31.91 -0.96 -1.04 1.09
11-July-2007 32.61 2.19 2.11 4.47
12-July-2007 33.18 1.75 1.67 2.78
13-July-2007 33.48 0.90 0.82 0.68
16-July-2007 33.54 0.18 0.10 0.01
17-July-2007 33.45 -0.27 -0.35 0.12
18-July-2007 33.45 0.00 -0.08 0.01
19-July-2007 33.41 -0.12 -0.20 0.04
20-July-2007 33.66 0.75 0.67 0.45
23-July-2007 33.22 -1.31 -1.39 1.92
24-July-2007 33.24 0.06 -0.02 0.00
25-July-2007 33.47 0.69 0.61 0.37
26-July-2007 33.38 -0.27 -0.35 0.12
27-July-2007 33.36 -0.06 -0.14 0.02
Total 1.58 14.43
88
IN INDIA

n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
1.58 14.43
= = 0.08% = = 0.89%
19 19 − 1
89
IN INDIA
4.2Table showing the Risk and Return of UTI Equity Fund (Growth Option)
Date NAV Return(%)  −
  −

 R − R   R − R 2
   
1-Aug-2007 33.62
2-Aug-2007 34.1 1.43 1.91 3.64
3-Aug-2007 34.31 0.62 1.10 1.20
6-Aug-2007 34.07 -0.70 -0.22 0.05
7-Aug-2007 34.15 0.23 0.71 0.51
8-Aug-2007 34 -0.44 0.04 0.00
9-Aug-2007 33.82 -0.53 -0.05 0.00
10-Aug-2007 32.92 -2.66 -2.18 4.76
13-Aug-2007 32.67 -0.76 -0.28 0.08
14-Aug-2007 32.58 -0.28 0.20 0.04
16-Aug-2007 33.22 1.96 2.44 5.98
17-Aug-2007 33.38 0.48 0.96 0.92
20-Aug-2007 33 -1.14 -0.66 0.43
21-Aug-2007 33.02 0.06 0.54 0.29
22-Aug-2007 32.68 -1.03 -0.55 0.30
23-Aug-2007 31.78 -2.75 -2.27 5.17
27-Aug-2007 31.78 0.00 0.48 0.23
28-Aug-2007 31.53 -0.79 -0.31 0.09
29-Aug-2007 30.79 -2.35 -1.87 3.49
Total -8.63 27.19
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−8.63 27.19
= = −0.48% = = 1.26%
18 18 − 1
90
IN INDIA
4.3 Table showing the Risk and Return of UTI Equity Fund (Growth Option)
for the Month of SEP-2007
  −

 R − R   R − R 2
   
3-Sep-2007 31.06
4-Sep-2007 30.43 -2.03 -1.98 3.91
5-Sep-2007 29.33 -3.61 -3.56 12.71
6-Sep-2007 29.52 0.65 0.70 0.49
7-Sep-2007 29.32 -0.68 -0.63 0.39
10-Sep-2007 30.13 2.76 2.81 7.91
11-Sep-2007 29.83 -1.00 -0.95 0.89
12-Sep-2007 29.85 0.07 0.12 0.01
13-Sep-2007 30.31 1.54 1.59 2.53
14-Sep-2007 29.47 -2.77 -2.72 7.41
17-Sep-2007 29.59 0.41 0.46 0.21
18-Sep-2007 29.24 -1.18 -1.13 1.28
19-Sep-2007 29.65 1.40 1.45 2.11
20-Sep-2007 29.86 0.71 0.76 0.57
21-Sep-2007 30.17 1.04 1.09 1.18
24-Sep-2007 30.85 2.25 2.30 5.31
25-Sep-2007 30.86 0.03 0.08 0.01
26-Sep-2007 30.65 -0.68 -0.63 0.40
27-sep-2007 30.2 -1.47 -1.42 2.01
28-Sep-2007 30.28 0.26 0.31 0.10
29-Sep-2007 30.7 1.39 1.44 2.07
Total -0.91 51.51
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n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−0.91 51.51
= = −0.05% = = 1.65%
20 20 − 1
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4.4 Table showing the Risk and Return of UTI Equity Fund (Income Option)
for the Month of JULY-2007
  −

 R − R   R − R 2
   
2-July-2007 30.41
3-July-2007 30.56 0.49 0.41 0.17
4-July-2007 30.35 -0.69 -0.77 0.59
5-July-2007 30.25 -0.33 -0.41 0.17
6-July-2007 29.93 -1.06 -1.14 1.29
9-July-2007 29.82 -0.37 -0.45 0.20
10-July-2007 29.54 -0.94 -1.02 1.04
11-July-2007 30.19 2.20 2.12 4.50
12-July-2007 30.71 1.72 1.64 2.70
13-July-2007 30.99 0.91 0.83 0.69
16-July-2007 31.06 0.23 0.15 0.02
17-July-2007 30.98 -0.26 -0.34 0.11
18-July-2007 30.98 0.00 -0.08 0.01
19-July-2007 30.94 -0.13 -0.21 0.04
20-July-2007 31.17 0.74 0.66 0.44
23-July-2007 30.78 -1.25 -1.33 1.77
24-July-2007 30.79 0.03 -0.05 0.00
25-July-2007 30.99 0.65 0.57 0.32
26-July-2007 30.9 -0.29 -0.37 0.14
27-July-2007 30.88 -0.06 -0.14 0.02
Total 1.61 14.23
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
1.61 14.23
= = 0.08% = = 0.89%
19 19 − 1
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  −

 R − R   R − R 2
   
1-Aug-2007 31.12
2-Aug-2007 31.57 1.45 1.91 3.63
3-Aug-2007 31.77 0.63 1.09 1.20
6-Aug-2007 31.55 -0.69 -0.23 0.05
7-Aug-2007 31.62 0.22 0.68 0.46
8-Aug-2007 31.49 -0.41 0.05 0.00
9-Aug-2007 31.31 -0.57 -0.11 0.01
10-Aug-2007 30.47 -2.68 -2.22 4.94
13-Aug-2007 30.25 -0.72 -0.26 0.07
14-Aug-2007 30.16 -0.30 0.16 0.03
16-Aug-2007 30.75 1.96 2.42 5.84
17-Aug-2007 30.91 0.52 0.98 0.96
20-Aug-2007 30.56 -1.13 -0.67 0.45
21-Aug-2007 30.58 0.07 0.53 0.28
22-Aug-2007 30.26 -1.05 -0.59 0.34
23-Aug-2007 29.43 -2.74 -2.28 5.21
27-Aug-2007 29.42 -0.03 0.43 0.18
28-Aug-2007 29.17 -0.85 -0.39 0.15
29-Aug-2007 28.48 -2.37 -1.91 3.63
Total -8.71 27.45
n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−8.71 27.45
= = −0.46% = = 1.23%
19 19 − 1
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for the Month of SEP-2007
  −

 R − R  R − R2
   
3-Sep-2007 28.72
4-Sep-2007 28.14 -2.02 -1.98 3.92
5-Sep-2007 27.12 -3.62 -3.58 12.85
6-Sep-2007 27.3 0.66 0.70 0.50
7-Sep-2007 27.12 -0.66 -0.62 0.38
10-Sep-2007 27.87 2.77 2.81 7.87
11-Sep-2007 27.59 -1.00 -0.96 0.93
12-Sep-2007 27.61 0.07 0.11 0.01
13-Sep-2007 28.03 1.52 1.56 2.44
14-Sep-2007 27.26 -2.75 -2.71 7.33
17-Sep-2007 27.37 0.40 0.44 0.20
18-Sep-2007 27.05 -1.17 -1.13 1.28
19-Sep-2007 27.43 1.40 1.44 2.09
20-Sep-2007 27.62 0.69 0.73 0.54
21-Sep-2007 27.91 1.05 1.09 1.19
24-Sep-2007 28.54 2.26 2.30 5.28
25-Sep-2007 28.55 0.04 0.08 0.01
26-Sep-2007 28.36 -0.67 -0.63 0.39
27-sep-2007 27.94 -1.48 -1.44 2.08
28-Sep-2007 28.01 0.25 0.29 0.08
29-Sep-2007 28.4 1.39 1.43 2.05
Total -0.86 51.40
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n n 2
 Ri − R− 
− ∑ Ri σ = ∑  
R= i =1 i =1  
n n −1
−0.86 51.40
= = −0.04% = = 1.64%
20 20 − 1
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ANALYSIS AND INTERPRETATION

Birla Sun Life Mutual Fund
5.1 Table showing the Risk and Return of Birla Equity Fund
(Dividend Option) FROM 1st JULY 2007 to 30TH SEPTEMBER 2007
Month Risk Return (%)

July 0.82 0.07
Aug 1.60 -0.51
Sep 1.47 -0.03
Analysis:
In the above table the risk profile of Birla Equity Fund (Dividend
Option) is increased from JULY to AUGUST and then it decreased to
1.47% in SEPTEMBER. The Return indicates negative sign that is –
0.51% in AUGUST and –0.03% in SEPTEMBER
Inference:
According to the selected mutual fund, the risk and return is the
major factor to all types of investors. In this fund, the risk is increasing
form JULY to SEPTEMBER. There is a moderate risk to investors will
bear in their return. But the volatility is there in the Market because of
the factors which comes under market risk.
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GRAPH-1
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Graph showing the Risk and Return of Birla Equity Fund

(Dividend Option)
FROM 1st JULY 2007 to 30TH SEPTEMBER 2007
5.2 Table showing the Risk and Return of Birla Equity Fund
(Growth Option) FROM 1st JULY 2007 to 30TH SEPTEMBER 2007

July 0.83 0.07
Aug 1.59 -0.51
Sep 0.86 0.51
Analysis:
According to the calculations the fund risk profile shows the
same what the dividend option is having from JULY to AUGUST, and
then it changes in the month of SEPTEMBER. The return also shows
same thing from JULY to AUGUST, and changes to 0.51% with
0.86% of risk.
Inference:
In the growth fund also there is no changes compare to
dividend option except the risk and return of SEPTEMBER. in the
growth option. It means that there is no high volatility in the net asset
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value to investors. Therefore investors think that mutual fund is the

better option for their investment because they don’t bare high risk
what they have in stock market. Therefore there is a high liquidity in
their return.
GRAPH-2
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Graph showing the Risk and Return of Birla Equity Fund

(Growth Option)
HDFC MUTUAL FUND
6.1 Table showing the Risk and Return of HDFC Equity Fund
Month Risk Return

July 0.86 0.15
Aug 1.27 -0.42
Sep 2.70 -0.64
Analysis:
Above calculations shows, the fund is bearing high-risk
compare to birla equity fund (dividend Option), that is in the month of
JULY is 0.86%, in AUGUST is 1.27%, and in SEPTEMBER. it is
2.70%. The return is high in JULY, in AUGUST and SEPTEMBER. is
–0.42% and –0.64%.
Inferences:
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According to the analysis, the fund bearing high risk as well

returns except AUGUST and SEPTEMBER. . It means that, the fund
doesn’t have high fluctuations in its net asset value. The fund
performance is moderate, and it fluctuating from month to month in its
return. Investors can have normal return compare to equity market.
GRAPH-3
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Graph showing the Risk and Return of HDFC Equity Fund

6.2 Table showing the Risk and Return of HDFC Equity Fund
(Growth Option) FROM 1st JULY 2007 to 30TH SEPTEMBER 2007

July 0.89 0.15
Aug 1.27 -0.42
Sep 1.73 -0.02
Analysis:
From the calculated value, the risk profile of growth option is
increased from 0.89% to 1.27% and then it decreased to 1.73%. The
return of this option is 0.15% in JULY and it indicates negative sign
that is –0.42% and 0.02% in the month of AUGUST and
SEPTEMBER
Inferences:
According to the analysis, this growth option has beard high risk
compare to Birla Equity growth option fund and return also low. It
means that, if the risk is high, the return also high. Investors needs
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have knowledge about mutual fund organization when they are

investing in mutual fund.
GRAPH-4
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Graph showing the Risk and Return of HDFC Equity Fund

(Growth Option)
LIC MUTUAL FUND
7.1 Table showing the Risk and Return of LIC Equity Fund
(Dividend Option) from 1st JULY 2007 to 30TH SEPTEMBER 2007.

July 1.24 0.15
Aug 1.23 0.26
Sep 1.91 -0.10
Analysis:
Above table indicates that, the risk has decreased from JULY
is1.24% and in AUGUST is 1.23% and in SEPTEMBER is1.91%. The
return also increased in JULY is 0.15%, in AUGUST is 0.26% and in
March is –0.10%.
Inferences:
According to the analysis, the LIC equity fund is having
moderate risk in the calculated data with moderate return. The risk
and return is fluctuating from month to month because of both market
risk and unsystematic risk of the company. But investor doesn’t bear
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high risk, they will get minimum return for their investment and they
can save their tax.
GRAPH-5
Graph showing the Risk and Return of LIC Equity Fund (Growth
Option)
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7.2 Table showing the Risk and Return of LIC Equity Fund
(Growth Option)FROM 1st JULY 2007 to 30TH SEPTEMBER 2007
July 1.24 0.15
Aug 1.85 -0.83
Sep 1.91 -0.10
Analysis:
In the above table, the risk and return of LIC Equity Fund is
fluctuating form month to month.
 In JULY it has 0.15% return with 1.24% of risk.
 In AUGUST it has -0.83% return with 1.85% of risk and
 In SEPTEMBER is has -0.10% return with 1.91% of risk.
Inferences:
Risk and Return is a major factor for all types of investors.
Based on the above analysis the risk of the fund is varies from month
to month with moderate return. But in the month of AUGUST and
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SEPTEMBER, the return shows negative sign. It means that

investors need to bear the risk in mutual fund also.
GRAPH-6
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Graph showing the Risk and Return of LIC Equity Fund (Growth
Option) FROM 1st JULY 2007 to 30TH SEPTEMBER 2007
UTI MUTUAL FUND
8.1 Table showing the Risk and Return of UTI Equity Fund
(Growth Option) FROM 1st JULY 2007 to 30TH SEPTEMBER 2007.
July 0.89 0.08
Aug 1.26 -0.48
Sep 1.65 -0.05
Analysis:
In the above table, the risk and return of UTI Equity Fund also
fluctuating form month to month.
♦ In JULY it has 0.08% return with 0.89% of risk which is less
than one.
♦ In AUGUST it has -0.48% return with 1.26% of risk which is
more than one.
♦ In SEPTEMBER it has -0.05% return with 1.65% of risk which is
more than one.
Inferences:
In the above selected mutual fund scheme, the risk factor is
increasing from JULY to SEPTEMBER. The return also changing
from positive sigh to negative sign, because of unique risk of the
mutual fund. Therefore investors need to bare the moderate risk with
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their return compare to the risk in equity shares. Because mutual fund
provides portfolio option to investors.
GRAPH-7
Graph showing the Risk and Return of UTI Equity Fund (Growth
Option)
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8.2 Table showing the Risk and Return of UTI Equity Fund
(Income Option).FROM 1st JULY 2007 to 30TH SEPTEMBER 2007

July 0.89 0.08
Aug 1.23 -0.46
Sep 1.64 -0.04
Analysis:
In above table, the performance of the fund is not upto the mark
it has both positive and negative sign in its return with moderate risk.
• In JULY it has 0.08% return with 0.89 of risk which is less than
one.
• In AIUGUST it has -0.46% return with 1.23 of risk which is more
than one.
• In SEPTEMBER it has -0.04% return with 1.64 of risk which is
more than one.
Inferences:
Based on the above analysis, the risk profile of the fund is
increasing from month to month which is based on the information of
three months. The return of the fund is decreasing because of unique
risk of the mutual fund company. Company needs to avoid the cost
which is related to organization. Then only more investors will attract
to invest in the above fund.
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GRAPH-8
Graph showing the Risk and Return of UTI Equity Fund (Income
Option) from 1st JULY 2007 to 30TH SEPTEMBER 2007
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FINDINGS, SUGGESTIONS & CONCLUSIONS
FINDINGS
 Mutual fund schemes are subject to market risk.
 Now a day’s mutual fund schemes are increases because of
falling interest rates and awareness about mutual fund

schemes in the minds of investors.
 Birla Equity Fund (Dividend Option) risk profile has increased

from July to September and return of this fund shows negative
sing in the month of August and September. Though it is
diversified portfolio it has risk with moderate return.
 Birla Equity Fund (Growth Option) hold risk in July 0.83%, in
August 1.59% and in September 0.86% with moderate return.

There is volatility in the market in which investors have
moderate risk.
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 HDFC Equity Fund (Dividend Option) is having the risk of
0.86% with 0.15% return in July, 1.27% with -0.42% in august

and 2.70% with -0.64%in September. The performance of the
fund is moderate.
 HDFC Equity Fund (Growth Option) is having same risk with
moderate return what the dividend option is having but return

shows negative sign.
 Based on the above analysis, the LIC Equity Fund has bared
the risk of 1.24% with 0.15% return in July, 1.23% with 0.26%
return in August and 1.91% with -0.10% in September. The
fund is giving good performance based on the analysis of three
month data.
 On the basis of above statements it has proved higher the risk
higher the return and lower the risk lower the return.
 Investment in mutual fund schemes gives diversified portfolio to
investors.
 Standard deviation is one of the best ways for finding risk of
mutual fund units.
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 In case of mutual funds(open ended) liquidity is very high, with
in three working days mutual funds will converted into cash and
liquidity of equity is based on demand and supply conditions of
the market for a particular scrip.
 The UTI Equity Fund also having moderate risk and return
which is not up to the mark to the investors.
 SBI Equity Fund’s risk profile is moderate and return is
fluctuating based on the above analysis.
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SUGGESTIONS
Particularly Mutual fund investments are subject to market risk.

Investors think that Mutual fund investments are better than Equity
Shares because of high risk. But in mutual fund also investors needs
to bare risk not more than the risk in equity shares. But this
investment is more suitable for retail investors to invest their small
savings to get return for the future. The following suggestions to
investors particularly in their risk and return are as follows.
 Now a day’s Indian mutual fund industry is attracting more and
more retail investors because of economic stability and

increasing growth rate, it leads to gradual increase in the stock
market indices.
 This is the right time to invest in mutual funds because of above
reason.
 Investors can save their tax by investing in mutual fund
because there is no high risk in mutual fund according to the

calculated data.
 Interest rates are falling gradually and mutual fund industry is
booming because of this reason investors can move from bank

deposits to mutual funds.
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Five basic norms of smart investing
 Investors must have a portfolio approach to wealth.
 One must analyze one's risk appetite.
 One must possess a long-term outlook
 Never forget to do homework and analysis.
 It is essential to have control over one's emotions.
CONCLUSIONS
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The study will guide the new investor who wants to invest in
mutual fund schemes by providing knowledge about how to measure
the risk and return of particular mutual fund scheme. The study
recommends new investors to go for mutual funds rather than
equities, because of high risk and market instability.
 There is a great need to disclose the risk involved in the
schemes properly to the investor by the investment companies.
 The high returns (above 20 per cent) are definitely not
sustainable over a long term, as they have been generated

during the biggest Bull Run in recent mutual fund industry.
 Investments in both mutual fund schemes are subjected to
market risk.
 Now a day’s investments in equity and mutual fund schemes
are increases because of falling interest rates and awareness

of mutual fund schemes in the minds of investors.
 Investment in mutual fund schemes gives diversified portfolio to
investors. Standard deviation is one of the best ways for finding

risk of scrip’s mutual fund units.
 In case of both equities and mutual funds(open ended) liquidity
is very high, with in three working days mutual funds will
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converted into cash and liquidity of equity is based on demand

and supply conditions of the market for a particular scrip.
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BIBLIOGRAPHY
SL.N Title of the Book Author Year of Publisher
O Publication s
1 Investment Analysis and Prasanna 2005 Tata
Portfolio Management Channdra McGra Hill
(Second Edition)
2 Financial Management (Sixth Prasanna 2005 Tata
Edition) Channdra McGra Hill
3 Company prospectus
ICFAI Magazines
Business world
Economic times
www.amfiindia.com
www.reliancemoney.com
www.karvy.com
www.livemint.com
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EXECUTIVE SUMMARY
In the current economic scenario interest rates are falling and

fluctuation in the share market has put investors in confusion. One
finds it difficult to take decision on investment. This is primarily,
because of investments are risky in nature and investors have to
consider various factors before investing in investment avenues.
These factors include risk, return, and volatility of shares and

liquidity. The main objective investment in mutual fund schemes is to
analyze the performance of mutual funds by using risk and return as
a parameter.
Historical data were taken for calculating risk and return.

Analysis has done on percentage method for mutual fund schemes.
Compare to equities mutual funds is less risky with stable returns and
mutual funds give the investor a diversified portfolio. Those who have
well knowledge in equity market they can go for equity investments
rather that investing in mutual funds because no control on the
expenses made by the fund manager.
The study will guide the new investor who wants to invest in
equity and mutual fund schemes by providing knowledge about how
to measure the risk and return of particular scrip or mutual fund
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scheme. The study recommends new investors to go for mutual funds

rather than equities, because of high risk and market instability.

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1

A STUDY OF RISK AND RETURN OF MUTUAL FUND

PART-A: ABOUT THE MUTUAL FUND

History of Indian Mutual Funds industry

1] First Phase : 1964-1987: Initiative taken by UTI.

• SBI Mutual Fund was the first non-UTI Mutual Fund

At the end of 1993, the mutual fund industry had Assets

GROWTH OF ASSET MANAGEMENT COMPANY

For the individual investor

mutual funds provide the benefit of having someone else

Today, minimum investment requirements on many funds are

A mutual fund, by its very nature, is diversified -- its assets are

Strengths of Mutual Fund

Weaknesses of Mutual Fund

Meaning of Mutual Fund

Mutual Fund Operation Flow Chart

What is a Mutual fund?

A] Convenience and Knowledge: The investor need not go

3. Higher risk-adjusted returns: Majority of equity funds have

4. Professional management: Investors purchase funds because

5. Low entry barrier: Any investor can invest in mutual funds. He

6. Liquidity: Easy and fast redemption leads to high liquidity. Also,

7. Transparency: The transparency levels are very high in this

8. Tax-saving: Mutual funds are exempted from capital gains

9. Innovative schemes to suit unique needs of different

Disadvantages of Mutual Fund

Some of the drawbacks associated with mutual funds.

Mutual funds, although regulated by the government,

Although diversification reduces the amount of risk involved in

For example, if a single security held by a mutual fund doubles

3. Fees and Expenses

Most mutual funds charge management and operating fees

Returns on a mutual fund are by no means guaranteed. In fact,

The managers of mutual funds make all of the decisions about

Although mutual funds are highly liquid in general, most mutual

Some mutual funds are too big to find enough good

8. Inefficiency of Cash Reserves

Mutual funds usually maintain large cash reserves as

However, there are over 10,000 mutual funds in operation, and

CATEGORIES OF MUTUAL FUNDS

Fund classification based on capitalisation focus

Their investment portfolio includes both debt and equity. As a result,

ST : Short term ; LT : Long term.

• Investors switch between different funds at different times, and

• Investors can spread their money across different

Rating of Mutual Fund Schemes

a) risk-adjusted return of the scheme’s NAV,

PART-B: ABOUT THE TOPIC

2) The unsystematic risk

The systematic risk is further sub-divided into

Interest Rate Risk

Purchasing Power Risk

unsystematic risk can be classified into

The statistical measure of risk of an asset/security is

Measuring Historical Return

The total return on an investment for a given period is:

All items are measured in rupees. The rupee cash payment

Where R = total return over the period

1. Title of the Study

In the current economic scenario interest rates are falling and

3. Objectives of the Study

Saving money is not enough. Each of us also need to invest