A PROJECT REPORT ON PORTFOLIO MANAGEMENT

For RELIANCE MUTUAL FUND

SUBMITTED BY ASHWINI PRASHANT KANGO MBA-II 2010-12 UNDER GUIDANCE OF MRS. SHWETA CHORDIYA SUBMITTED TO NORTH MAHARASHTRA UNIVERSITY

ACKNOWLEDGEMENT
This project (Portfolio Management) bears imprint of all those who have directly or indirectly helped and extended their kind support in completing this project. At the time of making this report I express my sincere gratitude to all of them. I must first express my gratitude to Mr.Dhiraj Chaudhari, (Branch Manager) and the staff members for having accorded me the permission to undertake a project in Reliance Mutual Fund. I also must show my deepest gratitude to Director Dr. Vivek Katdare and guide Prof.Shweta Chordiya for their valuable suggestions, guidance and advice in bringing out this project.

INDEX

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Title INTRODUCTION COMPANY PROFILE OBJECTIVE OF THE STUDY RESEARCH METHODOLOGY LITERATURE REVIEW DATA ANAYLSIS FINDINGS & OBSERVATION CONCLUSION RECOMMANDATION BIBLIOGRAPHY

Page No.

Title page introduction ? EXECUTIVE SUMMERY

As the old proverb not putting all your eggs in one basket applies very much in the case of portfolios. Portfolio risk (standard deviation of returns) is not the weighted average of the risk of individual assets in the portfolio. This gives raise to opportunities to elimination the risk of assets, at least partly, by combining risky asset in a portfolio. When there are many projects run by an organization, it is vital for the organization to manage their project portfolio. This helps the organization to categorize the projects and align the projects with their organizational goals. The portfolio analysis begins where the security analysis ends & this fact has important consequences for investors. The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against Performance.Portfolio Management is a management process with the help of methods aims at helping the organization to acquire information and sort out projects according to a set of criteria. The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against Performance. The invention of new technology and services by banks and financial institutions has given the consumers a wide range of investment avenues to invest in. One of the special services brought out by banks and financial institutions is PORTFOLIO MANAGEMENT SERVICES (PMS) which aims at providing an investor to invest a combination of securities all together which enables him to earn maximum returns at minimum level of risk & without any confusion. I am inclined to this topic, as it has given me actual knowledge of this service along with its working and how the portfolio manager manages the portfolio In Reliance Mutual Fund, they shown how an investor reduce expected risk through diversification, why this risk reduction result from proper diversification, &the investors may estimate the expected returns & expected risk level of a given portfolio asset. OBJECTIVE OF THE PROJECT:

OBJECTIVE OF THE PROJECT

To enrich the research experience, increase the breadth of training, and expand the scholarly credentials. It provides an opportunity in highly theoretical disciplines to obtain applied knowledge from allied fields of study and vice-versa.

It helps to expand the research and scholarly credentials of students, thereby increasing their marketability with prospective employers. To develop critical and creative thinking abilities by learning how to identify assumptions and to work out how those assumptions inform results. To develop ability to assess and conduct interdisciplinary research by engaging with diverse areas of knowledge and kinds of inquiry

COMPANY PROFILE

Reliance Mutual Fund

Introduction:
The Reliance group one of Indias largest business houses with revenues of Rs. 990 billion ($22.6 billion) that is equal to 3.5 percent of the countrys gross domestic product was split into two. The group which claims to contribute nearly 10 per cent of the countrys indirect tax revenues and over six percent of Indias exports was divided between Mukesh Ambani and his younger brother Anil on June 18, 2005.The groups activities span exploration, production, refining and marketing of oil and natural gas, petrochemicals, textiles, financial services, insurance, power and telecom. The family also has interests in advertising agency and life sciences. Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settler /Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the Trustee.RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBIs letter no. IMD / PSP / 4958 / 2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 90,938 Crores (AAUM for Mar 08 ) and an investor base of over 66.87Lakhs.Reliance Mutual Fund, a part of the Reliance Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country.RMF offers investors a wellrounded portfolio of products to meet varying investor requirements and has presence in 115 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders. Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth.

Market Share (%) of Mutual Fund Companies :

Major Associates

Reliance Power Project Reliance Power IPOs GlaxoSmithKline Consumers Ranbaxy Laboratories Reliance Life Insurance Reliance Energy Reliance Industries Reliance Mutual Fund Reliance Communications

Reliance Group Structure:

Organization of Mutual Work:

Sponsor: Reliance Capital Ltd. Trustee: Reliance Capital Trustee Co.Ltd. Investment Manager: Reliance Capital Asset Management Ltd. Registrar: karvy Computershare Private Ltd. Custodian: Deutsche Bank AG Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Reliance Mutual fund has largest AUM in India. Reliance capital asset Management is no. 1 AMC in India.

Culture of Reliance:
We are sure that the business comes first, the employees second and the later we this approach will remove self-interest from our decision making. Company thinks that Self-interest is a culture-destroyer Inspire employees and love employees and they will love you back. And remember, there are a lot more of them than you. We always try to improve peoples jobs (and lives) we try our best to redesign processes and systems to create more time for people to work on the things they like doing. This will improve productivity and generate more ideas from more people.

Vision & Mission Statement: Vision:

By 2015, it will be a company that is known as: "The most profitable, innovative, and most trusted financial services company in India and in the emerging markets". In achieving this vision, the company will be both customer-centric and innovation-driven. To be globally respected wealth creator, with an emphasis on customer care & culture of good corporate governance.

Mission:

To created nature a world-class, high performance environment at delighting their customers. Mutual Fund Assets under Management: Top 10 companies: Name of the asset management company HDFC Mutual Fund Tata Mutual Fund SBI Mutual Fund Reliance Mutual Fund DSP BlackRock Mutual Fund Kotak Mutual Fund Principal Mutual Fund Sundaram BNP Paribas Mutual Fund Franklin Templeton Mutual Fund Birla Sun Life Mutual Fund Inception Date June 30th 2000 June 30th 1995 June 29th 1987 June 30th 1995 December 16th 1996 June 23rd 1998 November 25th 1994 August 24th 1996 February 19th 1996 December 24th 1994 Position 1 2 3 4 5 6 7 8 9 10

Schemes:
1. EQUITY/GROWTH SCHEME: The aim of growth funds is to provide capital appreciation over the medium to longterm. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

2. DEBT/EQUITY SCHEME: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. 3. SECTOR SPECIFIC SCHEMES: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

Products:
Reliance Growth Fund (Sept 1995) Reliance Income Fund (Dec 1997) Reliance Medium Term Fund (Aug 2000) Reliance Gilt Securities Fund (July 03) Reliance Monthly Income Plan (Dec. 03) Reliance Pharma Fund ( May 04) Reliance Media & Ente. Fund (Sept 04) Reliance NRI Income Fund (October 04) Reliance Vision Fund (Sept 1995) Reliance Liquid Fund (March 1998) Reliance Short Term Fund (Dec 02) Reliance Banking Fund (May 03) Reliance Diversified Power Sect. Fund (Mar04) Reliance Floating Rate Fund (August 04) Reliance NRI Equity Fund (Oct 04) Reliance Index Fund (Feb 05)

Reliance Equity Opportunities Fund (Feb 05) Reliance Liquidity Fund (June 05) Reliance Fixed Tenor Fund (Nov 05) Reliance Fixed Horizon Fund I (Aug 06) Reliance Fixed Horizon Fund III (Mar 07) Reliance Liquid Plus Fund (Mar 07) Reliance Long Term Equity Fund (Nov 06) Reliance Fixed Horizon Fund (Aug 07)

Reliance Regular Savings Fund (May 05) Reliance Tax Saver (ELSS) Fund (July 05) Reliance Equity Fund (Feb 06) Reliance Fixed Horizon Fund (Apr 06) Reliance Fixed Horizon Fund II (Nov 06) Reliance Long Term Equity Fund (Nov 06) Reliance Interval Fund (Mar 07) Reliance Fixed Horizon Fund(Sep 2007)

Reliance Gold Savings Fund(Mar 07)

Reliance Gold Exchange Traded Fund (Nov 07)

Reliance Money Manager (Mar 07)

Management Team:
Board of Directors Mr. Amitabh Chaturvedi Mr. Kanu Doshi Mr. Manu Chadha Mr. Sushil Tripathi Management Team CEO Mr. Vikrant Gugnani Deputy CEO Mr. Sundeep Sikka Head Equity Investments Mr. Madhusudan Kela Head Fixed Income Mr. Amitabh Mohanty Equity Fund Managers

Mr. Sunil B. Singhania Mr. Shailesh Raj Bhan Mr. Omprakash S. Kuckian Debt Fund Managers

Mr. Ashwani Kumar Mr. Shiv Chanani

Mr. Amit Tripathi Mr. Arpit Malaviya Commodities Head of Commodities

Ms. Anju Chhajer

Mr. Vikram Dhawan Marketing Communication: Mr Rajat Johri Finance and Accounts: Mr. Sanjay Wadhwa

HumaHuman Resource Development:Mr. Rajesh Derhgawen

Information Technology: Mr. Vinay Nigudkar Legal & Compliance: Mr. Balkrishna Kini Operations & Settlement: Ms. Geeta Chandran R&T Operations & Investor Relations:Mr. Milind Nesarikar Risk Management: Mr. Lav Chaturvedi Sales & Distribution: Mr Himanshu Vyapak Zonal Heads Northern Zone Head Western Zone Head Southern Zone Head Eastern Zone Head Mr. Aashwin Dugal Mr. Sanjiv Gudal Mr. Gurbir Chopra Mr. Gopal Khaitan

OBJECTIVES OF THE STUDY

To understand the entire portfolio management process and to build an asset allocation model by minimizing the risk of the portfolio keeping in mind the SEBI & AMFI guidelines.

To understand the dynamics of the different instruments like stocks, bonds and cash equivalents. To understand and learn factors that need to be assessed when making investment in debt instruments and the various risk management tools and its implication and application on the portfolio as a whole. To give suggestions on the basis of analysis this can be beneficial to the organization

Research Methodology:
Research in simple terms, refers to a search for knowledge. Research is a logical, scientific and systematic search for new and useful information on a particular topic or issue. It is a systematized effort to gain new knowledge. It is a search for knowledge, whereas Research helps to study and find out the techniques with the proper process. It is a systematic way of presenting information Research has its special significance in solving various operational and planning problems of business and industry. Research methodology is a way to systematically analyze the research problem. Objective of Research: To discover new facts To verify and test important facts To find solution Types of Research:

Types of Research

ptive vs. Analytical l

Other types of resea Applied vs. Fundamental Quantitative vs. Conceptual vs. Emprical Types of Research Qualitative

Research Process:
Problem Formation

Review of Literature [Concept & Theories]

Hypothesis

Formulation

Data Collection Method

Research Design Data Analysis Data Collection Report Writing

Sampling Design

Data Collection:

Primary Data

Secondary Data

Primary Data: Data gathered for the first time by the researcher. It is the data observed or collected from the first hand experience.

Secondary Data: Those data which have been already collected and analyzed by some earlier agency for its own use, and later the same data are used by different agency. AMFI module, websites. Methods of Data Collection:

Methods of Data Collection

Observation

1. Observation:

Interview

Questionnaire

Schedule

Collection of Data
This research is solely based on primary research done by means of questionnaires targeted to respondents who primarily belong to the business and service sector. It is very essential in the research process to know the accuracy of the findings which depends on how systematically the study has been carried out so that it can make sense. I have executed the project after prior discussion with our guide and structured in the following steps: Preparation of a questionnaire The focal point of the designing the questionnaire was to comprehend the current investment scenario with respect to tax planning part. This questionnaire was primarily aimed to respondents who belong to the service and business class people The questionnaires were discussed through personal interface with the respondents The data has been solely based on primary research done by interviewing the customers who primarily belong to the business and the service sector. The data is essential for the company so that on that basis they would do asset allocation..The main research has been done by collecting data from different websites and books. This can be a benchmark against which the findings can be tested.

Development of Working Hypothesis:

The hypothesis could be developed by discussing with the consulting department heads and guides about this exploratory research and reach to the conclusion that the data is to be collected by personal interaction with the clients, asking them about their investment planning and their need for financial advisory service from RELIANCE MUTUAL FUND. First of all are they aware of tax and investment planning or not and then analyzing the findings to reach to the objectives of research.

Literature Review:
What is a Mutual Fund?
A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The fund's Net Asset Value (NAV) is determined each day. Mutual Funds are financial intermediaries. They are companies set up to receive your money, and then having received it, make investments with the money Via an AMC. It is an ideal tool for people who want to invest but don't want to be bothered with deciphering the numbers and deciding whether the stock is a good buy or not. A mutual fund manager proceeds to buy a number of stocks from various markets and industries. Depending on the amount you invest, you own part of the overall fund. The beauty of mutual funds is that anyone with an investible surplus of a few hundred rupees can invest and reap returns as high as those provided by the equity markets or have a steady and comparatively secure investment as offered by debt instruments.

Advantages of Mutual Funds

Professional Management - The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a fulltime manager to make and monitor investments. Diversification - By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you (think about Enron). Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money. Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than what an individual

would pay for securities transactions. Liquidity - Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at any time. Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and the minimum investment is small. Most companies also have automatic purchase plans whereby as little as $100 can be invested on a monthly basis.

Disadvantages of Mutual Funds

Professional Management - Many investors debate whether or not the professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still gets paid. Costs - Creating, distributing, and running a mutual fund is an expensive proposition. Everything from the managers salary to the investors statements cost money. Those expenses are passed on to the investors. Since fees vary widely from fund to fund, failing to pay attention to the fees can have negative long-term consequences. Remember, every dollar spend on fees is a dollar that has no opportunity to grow over time. Dilution - It's possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. Taxes - When a fund manager sells a security, a capital-gains tax is triggered. Investors who are concerned about the impact of taxes need to keep those concerns in mind when investing in mutual funds. Taxes can be mitigated by investing in tax-sensitive funds or by holding non-tax sensitive mutual fund in a tax-deferred account, such as a 401(k) or IRA.

Mutual Funds: Different Types of Funds:

No matter what type of investor you are, there is bound to be a mutual fund that fits your style. It's important to understand that each mutual fund has different risks and rewards. In general, the higher the potential return, the higher the risk of loss. Although some funds are less risky than others, all funds have some level of risk - it's never possible to diversify away all risk. This is a fact for all investments. Each fund has a predetermined investment objective that tailors the fund's assets, regions of

investments and investment strategies. At the fundamental level, there are three varieties of mutual funds: 1) Equity funds (stocks) 2) Fixed-income funds (bonds) 3) Money market funds all mutual funds are variations of these three asset classes. For example, while equity funds that invest in fast-growing companies are known as growth funds, equity funds that invest only in companies of the same sector or region are known as specialty funds. Some popular objectives of Mutual Funds are Fund Objective Equity (growth) Debt (income) Money market (including guilt) Balanced What the fund will invest in Only in stock Only in fixed income securities In short money market instrument (including govt. securities) Partly in stock and partly in fixed income securities in order to maintain balance and return and risk

Mutual Funds Industry in India:

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700

crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

The major players in the Indian Mutual Fund Industry are:

GROWTH IN ASSETS UNDER MANAGEMENT

Association of Mutual Fund In India (AMFI):

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and a guideline of its Board of Directors Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

The objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:

 This mutual fund association of India maintains a high professional and ethical standard in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. Association of Mutual Fund of India does represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

Flow chart of how Mutual Fund works

Meaning of portfolio & portfolio management:

Literally means "a case for carrying loose papers," (from Latin, the imperative of portare "to carry" and folium, meaning "a sheet for writing upon").From about 1930 it has also come to mean a "collection of securities or responsibilities held by an individual" Portfolios, which are combination of securities, may or may not take on the aggregate characteristic of their individual part. Portfolio analysis considers the determination of future risk & the return in holding various blends of individual securities. A portfolio is a collection of securities. Since it is rarely desirable to invest the entire funds of an individual or an institution in a single security, it is essential that every security be viewed in a portfolio context. Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk. Portfolio management is a administration of a pool of investments vehicles, selected on the basis of clearly articulated investment objectives (such as asset protection, capital enhancement, income), by an advisor or broker on behalf of a client.) It is a management of investment in securities that is intended for financial gain only and does not create a lasting interest in or effective management control over an enterprise. In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management: passive and active. Passive management simply tracks a market index, commonly referred to as indexing or index investing. Active management involves a single manager, comanagers, or a team of managers who attempt to beat the market return by actively managing a fund's portfolio through investment decisions based on research and decisions on individual holdings. Closed-end funds are generally actively managed.

Meaning of Portfolio Plan:

An investment strategy applied to a personal or corporate portfolio that determines its general purpose and constraints. Once a portfolio plan has been determined, investments adhering to the plan are bought and sold accordingly. Individual investors have ranging risk tolerances, liquidity needs and investment time horizons. A proper portfolio plan must take these factors into consideration along with any other unique requirements.

Meaning of Portfolio analysis:

1. Commerce: An analysis of elements of a company's product mix to determine the optimum allocation of its resources. Two most common measures used in a portfolio analysis are market growth rate and relative market share. 2. Securities: An analysis of an investment portfolio relative to an idealized balance of holdings, used as means of optimizing allocation.

Toolbox of portfolio management:

These tools play an important role in the process of managing portfolios.

Approaches of Portfolio Management

Hold Traditional Approach Buy

Buy

Modern Approach

Sell Hold

Types of Portfolios: 1. Conservative model portfolios generally allocate a large percent of the present portfolio to
lower risk securities such as fixed-income and money market securities. The main goal with a conservative model portfolio is to protect the principal value of your portfolio. As such these models are often referred to as Capital Preservation portfolios. Even if they are very conservative and prefer to avoid the stock market entirely, some exposure can help offset inflation. They could invest the equity portion in high quality blue chip companies, or an index fund, since the goal is not to beta the market. Fig. 1

oleObject1

2. Moderately conservative portfolio is ideal for those who wish to preserve a large portion of
the portfolios total value, but are willing to take on a higher amount of risk to get some inflation protection. A common strategy within the risk level is called current income. With this strategy, you can choose securities that pay a high level of dividends or coupon payments. Fig. 2

oleObject2

3. Moderately aggressive portfolios are often referred as balanced portfolios since the asset
composition is divided almost equally between fixed-income securities and equities in order to provide a balance of growth and income. Since these moderately aggressive portfolios have a higher level of risk than those conservative portfolios mentioned above, select this strategy only if you have a longer time horizon (generally more than five years), and have a medium level of risk tolerance.

Fig. 3

oleObject3

4. Aggressive portfolios mainly consist of equities, so these portfolios value tends to fluctuate
widely. If you have an aggressive portfolio, your main goal is to obtain long term growth of the capital. As such the strategy of an aggressive portfolio is often called a capital growth strategy. To provide some diversifications, investors with aggressive portfolios usually add some fixed-income securities. Fig. 4

oleObject4

5. Very aggressive portfolios consist almost entirely of equities. As such, with a very
aggressive portfolio, your main goal is aggressive capital growth over a long term horizon. Since these portfolios carry a considerable amount of risk, the value of the portfolio will vary widely in the short term. Fig. 5

oleObject5

As each asset class has verifying levels of return for certain risk, their risk tolerance, investment objectives, time horizon & available capital will provide the basis for asset composition of their portfolio.

oleObject6

DATA ANALYSIS / FINDINGS: Profile: 1

Name Mr. kulkarni Mrs. kulkarni Sneha kulkarni Investment: Rs 1000000 P.a. Age 32 31 4 Annual income Rs.1200000 Rs.800000 Nil

Allocation:
After considering the risk taking capacity of the investor, the fund will be allocated to various assets classes in the following manner: Asset/ Instrument Equity Bonds FD Mutual Fund Pension Fund& child fund Gold Returns: Equity: Equity stock Infosys Axis Bank Hidalgo Industries ACC Cement. Total Total Profit Sector IT Banking Metal Cement April 2010 2510 990 142 858 April 2011 3166 1450 220 1120 Qty 60 100 185 110 Amount 150600 99000 26020 94380 370000 Returns (%) 189960 145000 40700 123200 498860 128860 Amount(Rs.) 370000 225000 200000 60000 145000 Percentage(%) 37 22.5 20 6 14.5

Total Return Asset/ Instrument Equity Bonds F.D. Mutual Fund Pension fund & child fund Gold Total INTERPRETATION: The return calculated for the period of 1 year is estimated to be 25.21%.. However the return is not guaranteed, it is totally based on the market scenario over the time horizon. The all returns are calculated on the following basis.
The FD interest rate is 9.40%. Gold rate in 2010 is 19300 and its increased in 2011 is 22400.

Return 136900 50625 40000 3600 21025 252150

% Return 54.293 20.077 15.863 1.427 8.338 100

The Pension Fund& child fund is a long term investment for 30years.

Profile: 2
Name Mr. Desai Mrs. Desai sujit Desai Sakshi Desai Note: Mr.Desai is a Businessman Risk bearing capacity Objective: Investment: Rs 1500000 P.a. Allocation: After considering the risk taking capacity of the investor, the fund will be allocated to various assets classes in the following manner: Asset/ Instrument Equity FD Mutual Fund Pension Fund& child fund Gold Real Estate Insurance Total Amount(Rs.) 225000 75000 225000 375000 150000 300000 150000 1500000 Percentage (%) 15 5 15 25 10 20 10 100 Age 40 34 8 5 Annual income Rs.5000000 Nil Nil Nil

Returns: Equity: Equity stock ONGC HDFC Bank Tata Steel Jain irrigation Total Total Profit Total Return Asset/ Instrument Equity FD Mutual Fund Pension Fund & child fund Gold Real Estate Insurance Total INTERPRETATION: The return calculated for the period of 1 year is estimated to be 19%.. However the return is not guaranteed, it is totally based on the market scenario over the time horizon. The all returns are calculated on the following basis.

Sector Oil Banking Steel Agree.

April 2010 255 950 610 190

April 2011 305 1100 660 210

Qty 250 60 90 300

Amount 56100 57000 54900 57000 225000

Returns 76250 66000 59400 63000 39650

Return 33750 3750 33750 93750 15000 90000 15000 285000

% Return 11.842 1.315 11.842 32.894 5.263 31.578 5.263 100

The FD interest rate is 9.40%. Gold rate in 2010 is 19300 and its increased in 2011 is 22400. The Pension Fund& child fund is a long term investment for 30years. Insurance policy is a long term investment for life security.

Profile: 3
Note: Mr. Dixit is a salaried person

Name Mr.Dixit Mrs. Dixit Gauri Dixit Risk bearing capacity Objective: Investment: Rs 700000 P.a. Allocation:

Age 50 43 20

Annual income 1200000 -

After considering the risk taking capacity of the investor, the fund will be allocated to various assets classes in the following manner: Particular Equity FD Pension Fund& child fund Gold Real Estate Insurance Amount(Rs.) 70000 105000 140000 210000 105000 70000 Percentage(%) 10 15 20 30 15 10

Returns: Equity: Equity stock Raliance Industries Union Bank Ultra Tech Cement ITC Total Total Profit 70000 15300 Banking Cement Sector April 2010 970 265 970 130 April 2011 1050 350 1050 185 Qty 20 55 20 130 Amount 19400 14300 19400 16900 Returns(%) 21000 19250 21000 24050

Total Return Asset/ Instrument Equity FD Pension Fund & Child Fund Gold Real Estate Insurance Total INTERPRETATION: The return calculated for the period of 1 year is estimated to be 19.5%.However the return is not guaranteed, it is totally based on the market scenario over the time horizon. The all returns are calculated on the following basis. The FD interest rate is 9.40%. Gold rate in 2010 is 19300 and its increased in 2011 is 22400. Insurance policy is a long term investment for life security. Return 7000 15750 28000 63000 15750 7000 136500 % Retuen 5.128 11.538 20.512 46.153 11.538 5.128 100

The Pension Fund& child fund is a long term investment for 30years.

Profile: 4

Note: Mr. Patil is a Farmer. Name Mr. Patil Mrs. Patil Suresh Patil Shraddha Patil Risk bearing capacity Objective: Investment: Rs 500000 P.a. Allocation: After considering the risk taking capacity of the investor, the fund will be allocated to various assets classes in the following manner: Asset/ Instrument Equity FD Pension Fund& child fund Gold Real Estate Insurance Total Return Asset/ Instrument Equity FD Pension Fund & Child Fund Gold Real Estate Insurance Total INTERPRETATION: The return calculated for the period of 1 year is estimated to be 21%.However the return is not guaranteed, it is totally based on the market scenario over the time horizon. The all returns are calculated on the following basis. The FD interest rate is 9.40%. Return -11250 31250 31250 20000 11250 105000 % Return -10.714 29.761 29.761 19.047 10.714 100 Amount(Rs.) 75000 125000 125000 100000 75000 Percentage(%) 15 25 25 20 15 Age 50 45 20 17 Annual income Rs.1000000 Nil Nil Nil

 Gold rate in 2010 is 19300 and its increased in 2011 is 22400. The Pension Fund& child fund is a long term investment for 30years. Insurance policy is a long term investment for life security.

Profile: 5
Note: Mr. Pawar and Mrs. Pawar is salaried person Name Mr. Pawar Mrs. Pawar Sayali Pawar Investment: Rs 1200000 P.a. Allocation: After considering the risk taking capacity of the investor, the fund will be allocated to various assets classes in the following manner: Particular Equity Insurance FD Mutual Fund Pension Fund& child fund Gold Total Amount(Rs.) 180000 120000 96000 144000 360000 300000 1200000 Percentage(%) 15 10 8 12 30 25 100 Age 30 26 6 Annual income Rs.1000000 Rs.800000 Nil

Return: Equity: Equity stock TATA Motors ICICI Bank Dr.Reddys Laboratories Ambuja Cement Total Total Profit Mutual Fund: Fund Name NAV(04/10) NAV(04/11) Amount Profit Cement 125 150 209 26150 180000 31350 214825 34825 Sector Auto. Banking Pharma April 2010 170 390 460 April 2011 245 480 490 Qty 155 150 150 Amount 26350 58500 69000 Returns(%) 37975 72000 73500

Total Return Asset/ Instrument Equity Insurance F.D. Mutual Fund Pension Fund & Child Fund Gold Total INTERPRETATION: The return calculated for the period of 1 year is estimated to be 20.58%. However the return is not guaranteed, it is totally based on the market scenario over the time horizon. The all returns are calculated on the following basis.

Return 27000 12000 7680 17280 108000 75000 246960

% Retuen 10.932 4.859 3.109 6.997 43.731 30.369 100

The FD interest rate is 9.40%. Gold rate in 2010 is 19300 and its increased in 2011 is 22400. The Pension Fund & child fund is a long term investment for 30years.

Insurance policy is a long term investment for life security.

OBSERVATION
Profile No. 1. 2. Portfolio Strategy Moderately Conservative Portfolio Conservative Model Portfolio 3. Conservative Model Portfolio 4. 5. Conservative Model Portfolio Conservative Model Portfolio Client profile Client risk taking capacity is high. So he invests more in equities and gets more returns. Client risk taking capacity is low. So he less invests in equities and give more preference to other investment options. Client risk taking capacity is low. So he less invests in equities and give more preference to other investment options. Client risk taking capacity is low. So he avoid stock market entirely. Client risk taking capacity is low. So he less invests in equities and give more preference to other investment options.

According to my survey method I find:

People risk taking capacity is low so they avoid investing in stock market. Generally people dont choose Aggressive Portfolio, Very Aggressive Portfolio because they dont want to take higher risk to invest 80% to 100% in equities.

There is less awareness of stock market in rural area so the farmers dont know about this investment options.

SUGGESTIONS
To Firm: With the growing competition it needs to be more focused and give special services to lead in market. Feedback should be taken by every customer regularly. Organize and make accessible a database of customer information. To Clients: Invest and monitor portfolio from time to time

When fear strikes, one dreads to even take normal investment risks. Due to this, one may lose on opportunities while investing in the market.

Conclusion:

Financial analysis is very essential in investment of funds .A systematic investment gives good returns as well as safety of funds

Portfolio management is helpful to manage income. It gives future planning of funds Customer awareness is essential to promote financial products. Managing funds is not easy for any other person, but it needs good study in financial products and income tax sections which gives rebates, discounts. Right investment in right instrument can gives better planning of funds. Income tax law provides a number of rebates and discounts by various investment of annual income. Portfolio having many types. According to tax payer desire and risk factor considering, different portfolio are used. By using right portfolio we can reduce heavy taxes and manage income

Bibliography:

www.learntoinvest.com

http://www.learntoinvest.com/investmentPortfolioTheory Management.htm

and

Portfolio

Investment management by v.k. Bhalla NCFM Basic Module www.google.com www.mutualfundindia.com AMFI module Advancedge provided by RMF