PROJECT REPORT

A SUMMER TRAINNG PROJECT REPORT ON Analysis of Debt Funds for Reliance Mutual Funds with Peer Group AT (Reliance Mutual Fund, Chandigarh Reliance Capital Company) Submitted in partial fulfillment of the requirements for the award of Degree of Maters of Business Administration To Kurukshetra University (Session 2015-2017) Under the Supervision of Submitted By: Mr.Neeraj Anshika Mittal (Assistant Professor) Roll No.:1416142 SUBMITTED TO ICL INSTITUTE OF MANAGEMENT AND TECHNOLOGY SOUNTLI (KURUKSHETRA UNIVERSITY , KURUKSHETRA) CERTIFICATE This is to certify that Anshika Mittal has completed the report entitled “Analysis of Debt Funds” under my supervision. To the best of my knowledge, the report consists of result of the empirical study conducted by the student. In my opinion, the work is of requisite standard expected of an BBA student. Therefore, I recommend the same to be sent for evaluation. Mr. Neeraj (Assistant Professor)  DECLARATION I Hereby declare that, the project entitled “ Analysis of Debt Funds” assigned to me for the partial fulfillment of MBA degree from Kurukshetra University, Kurukshetra. The work is originally completed by me and information provided the study is authentic to the best of my knowledge. This study has not been submitted to any other institutions or university for the award of any other degree. ANSHIKA MITTAL MBA 3rd SEM 1416142 ACKNOWLEDGEMENT “Gratitude is the hardest of emotions to express and one often does not adequate words to convey what one feels and trying to express if” The project file is an amalgamated of various thoughts and experiences. The successful completion of this project report would not have been possible without the help and guidance of number of people and especially to my project guide. I take this opportunity to thank all those who have directly and indirectly inspired, directed and helped me towards successful completion of this project report. I am also immensely indebted to my project guide Mr. Neeraj Assistant Professor, ICL-IMT) for his illumining observation, encouraging suggestions and constructive criticisms which have helped me in completing this research project successfully. I also acknowledge with deep sense of gratitude and wholeheartedness to several other people who also deserve much more than a mere knowledgement for their exemplary help and cooperation intended to meet by them. (Anshika Mittal) PREFACE “No one can undermine the importance of training as a part of ongoing process to enrich knowledge and skill and levels of oneself”. Management training, however, has gained rapid importance only recently. Management was previously considered as an inborn talent but in today’s developing world this view has been abandoned. To develop managerial capabilities and to supplement theoretical knowledge with practical experience, the management students are required to go for training in business organizations. I undertook Eight-week training in RELIANCE MUTUAL FUND, (CHANDIGARH). Here, I was given a project on Analysis of Debt Funds. This training report is the knowledge acquired during that practical training. ANSHIKA MITTAL MBA 3rd Sem 1416142 Table of Contents CERTIFICATE I DECLARATION II ACKNOWLEDGEMENTS III PREFACE IV CHAPTERS TITLE PAGE NO CHAPTER-1 Introduction of the topic Concept & Definition Advantages of Mutual Fund Disadvantages of Mutual Fund Types of Mutual Fund schemes in India Structure of Mutual Funds Development of Mutual Funds in India CHAPTER-2 Profile of the Industry and Company About – Reliance Capital History – Reliance Capital Operations – Reliance Capital About-Reliance Capital Asset Management About Reliance Mutual Objectives Vision & Mission Statement Organization Structure Board Of Directors Management Team Equity Fund Managers Debt Fund Managers CHAPTER-3 Research Methodology 3.1 Objectives of Study 3.2 Scope of Study 3.3 Types of Data 3.4 Sampling Procedure 3.5 Data Collection 3.6 Research Design 3.7 Survey Period 3.8 Limitations of the Study CHAPTER -4 Analysis & Interpretation Objective 1 Objective 2 Objective 3 Objective 4 CHAPTER-5 Conclusion Suggestions Scope for future studies Bibliography Annexure CHAPTER 1 INTRODUCTION INTRODUCTION The first introduction of a mutual fund in India occurred in 1963, when the Government of India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian mutual fund market. Then a host of other government-controlled Indian financial companies came up with their own funds. These included State Bank of India, Canara Bank, and Punjab National Bank. This market was made open to private players in 1993, as a result of the historic constitutional amendments brought forward by the then Congress-led government under the existing regime of Liberalization, Privatization and Globalization (LPG). The first private sector fund to operate in India was Kothari Pioneer, which later merged with Franklin Templeton. Concept of Mutual Fund: A mutual fund is a common pool of money into which investors place their contributions that are to be invested in accordance with a stated objective. The ownership of the fund is thus joint or “mutual”; the fund belongs to all investors. A single investor’s ownership of the fund is in the same proportion as the amount of the contribution made by him or her bears to the total amount of the fund. Mutual Funds are trusts, which accept savings from investors and invest the same in diversified financial instruments in terms of objectives set out in the trusts deed with the view to reduce the risk and maximize the income and capital appreciation for distribution for the members. A Mutual Fund is a corporation and the fund manager’s interest is to professionally manage the funds provided by the investors and provide a return on them after deducting reasonable management fees. Definition: “A mutual fund is an investment that pools your money with the money of an unlimited number of other investors. In return, you and the other investors each own shares of the fund. The fund's assets are invested according to an investment objective into the fund's portfolio of investments. Aggressive growth funds seek long-term capital growth by investing primarily in stocks of fast-growing smaller companies or market segments. Aggressive growth funds are also called capital appreciation funds”. Why Select Mutual Fund? The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vice versa if he pertains to lower risk instruments, which would be satisfied by lower returns.  For example, if an investors opt for bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases in the same proportion. Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional management, diversification, convenience and liquidity. That doesn’t mean mutual fund investments risk free. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile. ADVANTAGES OF MUTUAL FUNDS: If mutual funds are emerging as the favorite investment vehicle, it is because of the many advantages they have over other forms and the avenues of investing, particularly for the investor who has limited resources available in terms of capital and the ability to carry out detailed research and market monitoring. The following are the major advantages offered by mutual funds to all investors: Portfolio Diversification: Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold a diversified investment portfolio even with a small amount of investment that would otherwise require big capital. Professional Management: Even if an investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund in the management of the investor’s portfolio. The investment management skills, along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own. Few investors have the skill and resources of their own to succeed in today’s fast moving, global and sophisticated markets. Reduction/Diversification Of Risk: When an investor invests directly, all the risk of potential loss is his own, whether he places a deposit with a company or a bank, or he buys a share or debenture on his own or in any other from. While investing in the pool of funds with investors, the potential losses are also shared with other investors. The risk reduction is one of the most important benefits of a collective investment vehicle like the mutual fund. Reduction Of Transaction Costs: What is true of risk as also true of the transaction costs. The investor bears all the costs of investing such as brokerage or custody of securities. When going through a fund, he has the benefit of economies of scale; the funds pay lesser costs because of larger volumes, a benefit passed on to its investors. Liquidity: Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When they invest in the units of a fund, they can generally cash their investments any time, by selling their units to the fund if open-ended, or selling them in the market if the fund is close-end. Liquidity of investment is clearly a big benefit. Convenience And Flexibility: Mutual fund management companies offer many investor services that a direct market investor cannot get. Investors can easily transfer their holding from one scheme to the other; get updated market information and so on. Tax Benefits: Section 80C of the Income Tax Act, 1961 allows an assessee deduction in respect of certain investments, the limit for the said deduction is Rs.1, 00, 000 per year per assessee. From FY 10-11, a sub-section 80CCF has also been introduced where one can invest up to Rs. 20,000 in Long Term Infrastructure Bonds issued by some specified institutions/ entities and avail additional tax benefit. A mutual fund investor can avail of the deduction through investment in notified mutual fund schemes, known as ELSS (Equity Linked Saving Schemes). This helps them not only in availing tax benefits under section 80C, but also gives them the benefit of diversification in equity for a long time period. Dividends are tax free in the hands of the investors and long term capital gains are also tax free. Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook. DISADVANTAGES OF INVESTING THROUGH MUTUAL FUNDS: No Control Over Costs: An investor in a mutual fund has no control of the overall costs of investing. The investor pays investment management fees as long as he remains with the fund, albeit in return for the professional management and research. Fees are payable even if the value of his investments is declining. A mutual fund investor also pays fund distribution costs, which he would not incur in direct investing. However, this shortcoming only means that there is a cost to obtain the mutual fund services. No Tailor-Made Portfolio: Investors who invest on their own can build their own portfolios of shares and bonds and other securities. Investing through fund means he delegates this decision to the fund managers. The very-high-net-worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. However, most mutual fund managers help investors overcome this constraint by offering families of funds- a large number of different schemes- within their own management company. An investor can choose from different investment plans and constructs a portfolio to his choice. Managing A Portfolio Of Funds: Availability of a large number of funds can actually mean too much choice for the investor. He may again need advice on how to select a fund to achieve his objectives, quite similar to the situation when he has individual shares or bonds to select. The Wisdom Of Professional Management: That's right, this is not an advantage. The average mutual fund manager is no better at picking stocks than the average nonprofessional, but charges fees. No Control: Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat of somebody else's car Dilution: Mutual funds generally have such small holdings of so many different stocks that insanely great performance by a fund's top holdings still doesn't make much of a difference in a mutual fund's total performance. Buried Costs: Many mutual funds specialize in burying their costs and in hiring salesmen who do not make those costs clear to their clients. TYPES OF MUTUAL FUNDS SCHEMES IN INDIA Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a collection of many stocks, an investors can go for picking a mutual fund might be easy. There are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in categories , mentioned below.. BY STRUCTURE 1. Open - Ended Schemes: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. 2. Close - Ended Schemes: A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. 3. Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices. BY NATURE Equity Fund: These funds invest a maximum part of their corpus into equities holdings. The structure of the fund may vary different for different schemes and the fund manager’s outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows: Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix. Debt Funds: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as: Gilt Funds: Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government. Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities. MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes. Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures. Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. Balanced Funds: As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns. Further the mutual funds can be broadly classified on the basis of investment parameter viz, Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly. BY INVESTMENT OBJECTIVE: 1. Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation. 2. Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited. 3.Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50). Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Load Funds: A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. OTHER SCHEMES 1.Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate. 2. Index Schemes: Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will be identical to the stocks index weightage. And hence, the returns from such schemes would be more or less equivalent to those of the Index. 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. STRUCTURE OF A MUTUAL FUND: India has a legal framework within which Mutual Fund have to be constituted. In India open and close-end funds operate under the same regulatory structure i.e. as unit Trusts. A Mutual Fund in India is allowed to issue open-end and close-end schemes under a common legal structure. The structure that is required to be followed by any Mutual Fund in India is laid down under SEBI (Mutual Fund) Regulations, 1996. The Fund Sponsor: Sponsor is defined under SEBI regulations as any person who, acting alone or in combination of another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the promoter of a company as he gets the fund registered with SEBI. The sponsor forms a trust and appoints a Board of Trustees. The sponsor also appoints the Asset Management Company as fund managers. The sponsor either directly or acting through the trustees will also appoint a custodian to hold funds assets. All these are made in accordance with the regulation and guidelines of SEBI. As per the SEBI regulations, for the person to qualify as a sponsor, he must contribute at least 40% of the net worth of the Asset Management Company and possesses a sound financial track record over 5 years prior to registration. Mutual Funds as Trusts: A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor acts as a settler of the Trust, contributing to its initial capital and appoints a trustee to hold the assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The fund then invites investors to contribute their money in common pool, by scribing to “units” issued by various schemes established by the Trusts as evidence of their beneficial interest in the fund. It should be understood that the fund should be just a “pass through” vehicle. Under the Indian Trusts Act, the trust of the fund has no independent legal capacity itself, rather it is the Trustee or the Trustees who have the legal capacity and therefore all acts in relation to the trusts are taken on its behalf by the Trustees. In legal parlance the investors or the unit-holders are the beneficial owners of the investment held by the Trusts, even as these investments are held in the name of the Trustees on a day-to-day basis. Being public trusts, Mutual Fund can invite any number of investors as beneficial owners in their investment schemes. Trustees: A Trust is created through a document called the Trust Deed that is executed by the fund sponsor in favour of the trustees. The Trust- the Mutual Fund – may be managed by a board of trustees- a body of individuals, or a trust company- a corporate body. Most of the funds in India are managed by Boards of Trustees. While the boards of trustees are governed by the Indian Trusts Act, where the trusts are a corporate body, it would also require to comply with the Companies Act, 1956. The Board or the Trust company as an independent body, acts as a protector of the of the unit-holders interests. The Trustees do not directly manage the portfolio of securities. For this specialist function, they appoint an Asset Management Company. They ensure that the Fund is managed by ht AMC as per the defined objectives and in accordance with the trusts deeds and SEBI regulations. The Asset Management Companies: The role of an Asset Management Company (AMC) is to act as the investment manager of the Trust under the board supervision and the guidance of the Trustees. The AMC is required to be approved and registered with SEBI as an AMC. The AMC of a Mutual Fund must have a net worth of at least Rs. 10 Crores at all times. Directors of the AMC, both independent and non-independent, should have adequate professional expertise in financial services and should be individuals of high morale standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a Trustee of any other Mutual Fund. Besides its role as a fund manager, it may undertake specified activities such as advisory services and financial consulting, provided these activities are run independent of one another and the AMC’s resources (such as personnel, systems etc.) are properly segregated by the activity. The AMC must always act in the interest of the unit-holders and reports to the trustees with respect to its activities. Custodian and Depositories: Mutual Fund is in the business of buying and selling of securities in large volumes. Handling these securities in terms of physical delivery and eventual safekeeping is a specialized activity. The custodian is appointed by the Board of Trustees for safekeeping of securities or participating in any clearance system through approved depository companies on behalf of the Mutual Fund and it must fulfill its responsibilities in accordance with its agreement with the Mutual Fund. The custodian should be an entity independent of the sponsors and is required to be registered with SEBI. With the introduction of the concept of dematerialization of shares the dematerialized shares are kept with the Depository participant while the custodian holds the physical securities. Thus, deliveries of a fund’s securities are given or received by a custodian or a depository participant, at the instructions of the AMC, although under the overall direction and responsibilities of the Trustees. Bankers: A Fund’s activities involve dealing in money on a continuous basis primarily with respect to buying and selling units, paying for investment made, receiving the proceeds from sale of the investments and discharging its obligations towards operating expenses. Thus the Fund’s banker plays an important role to determine quality of service that the fund gives in timely delivery of remittances etc. Transfer Agents: Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and provide other related services such as preparation of transfer documents and updating investor records. A fund may choose to carry out its activity in-house and charge the scheme for the service at a competitive market rate. Where an outside Transfer agent is used, the fund investor will find the agent to be an important interface to deal with, since all of the investor services that a fund provides are going to be dependent on the transfer agent. DEVELOPMENT OF MUTUAL FUND IN INDIA The mutual fund industry in India started in 1963 with the formation of unit trust of India at the initiative of government of India and reserve bank of India. The history of mutual fund in India can be divided into four phases: FIRST PHASE : 1964 – 87 SECOND PHASE : 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) THIRD PHASE : 1993 – 2003 (ENTRY OF PRIVATE SECTOR FUNDS) FOURTH PHASE: SINCE FEBURARY 2003 The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase – 1964-87   Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.   Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canara bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.   Third Phase – 1993-2003 (Entry of Private Sector Funds)   with the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.   The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.   The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.   Fourth Phase – since February 2003   In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.   The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth.   COMPANY’S PROFILE COMPANY’S PROFILE ABOUT RELIANCE CAPITAL Reliance Capital Limited is an Indian diversified financial services holding company promoted by Reliance Group. It is a financial services company in India. Reliance Capital also ranks among the top private sector financial services and banking groups, in terms of net worth in India. The company is a constituent of MSCI India and CNX Junior Nifty. As of July 2014, Reliance Capital's market capitalization was over Rs. 160 billion (US$2.4 billion), ahead of Bajaj Holdings, L&T Finance promoted by Larsen & Toubro and Muthoot Finance. As of March 31, 2013, Reliance Capital had assets worth Rs. 455.28 billion (US$6.8 billion), a 16-fold increase in 8 years and net worth of Rs. 124.83 billion (US$1.9 billion). Reliance Capital has interests in asset management and mutual funds; life insurance and general insurance; commercial finance; stock broking; wealth management services; distribution of financial products; private equity; asset reconstruction; proprietary investments and other activities in financial services. The company operates across India and has over 20 million customers and workforce of approximately 18,500 as of March 31, 2014. Anil Ambani, promoter of Reliance Group is the Chairman of Reliance Capital, while Amitabh Jhunjhunwala is the Vice-Chairman and Sam Ghosh is the Chief Executive Officer. HISTORY – RELIANCE CAPITAL Reliance Capital Limited was incorporated in year 1986 at Ahmedabad in Gujarat as Reliance Capital & Finance Trust Limited. The name Reliance Capital came into effect from January 5, 1995. In 2002, Reliance Capital Ltd shifted its registered office to Jamnagar in Gujarat before it finally moved to Mumbai in Maharashtra in 2006. In 2006, Reliance Capital Ventures Limited merged with Reliance Capital and with this merger the shareholder base of Reliance Capital rose from 0.15 million shareholders to 1.3 million. Reliance Capital entered the Capital Market with a maiden public issue in 1990 and in subsequent years further tapped the capital market through rights issue and public issues. The equity shares were initially listed on the Ahmedabad Stock Exchange and The Stock Exchange Mumbai. Presently the shares are listed on The Stock Exchange Mumbai and the National Stock Exchange of India. OPERATIONS – RELIANCE CAPITAL Asset Management Mutual Fund, Offshore Fund, Pension fund, Portfolio Management Insurance Life Insurance, General Insurance Commercial Finance Mortgages, Loans against Property , SME Loans, Loans for Vehicles, Loans for Construction Equipment, Business Loans, Infrastructure financing Broking and Distribution Equities, Commodities and Derivatives, Wealth Management Services, Portfolio Management Services, Financial Products Other Businesses Asset Reconstruction ABOUT RELIANCE CAPITAL ASSET MANAGEMENT Reliance Nippon Life Asset Management Limited (formerly Reliance Capital Asset Management Limited) (RNLAM) is the Asset Manager of Reliance Mutual Fund (RMF). RNLAM is a subsidiary of Reliance Capital Limited (RCL). Presently, RCL holds 51% of its total issued and paid-up equity share capital of RNLAM. Nippon Life Insurance Company (NLI) holds 44.57% of RNLAM's total issued and paid up equity share capital. Reliance Capital Limited is one of India’s leading and fastest growing, RBI registered Non-Banking Finance Company (NBFC) and has its business interests in Asset Management, Life Insurance, General Insurance, Private Equity, Proprietary Investments, Stock Broking, & other activities in the Financial Services Sector. Nippon Life Insurance Company (“NLI”) is a Japan’s leading private life insurer and offers a wide range of financial products, including individual and group life and annuity policies through various distribution channels, mainly using face-to-face sales channels for its traditional insurance products. It primarily operates in Japan, North America, Europe and Asia, and is headquartered in Osaka, Japan. NLI conducts asset management operations in Asia, through its subsidiary Nissay Asset Management Corporation (“Nissay”), which manages assets globally. RNLAM has been appointed as the Asset Management Company (AMC) of Reliance Mutual Fund (RMF) by the Trustees of RMF vides Investment Management Agreement (IMA) dated May 12, 1995 amended on August 12, 1997, January 20, 2004 and February 17, 2011 in line with Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. RELIANCE MUTUAL FUND Reliance Mutual Fund (RMF) is one of India's leading mutual funds, with Average Assets Under Management (AAUM) of Rs. 1,58,408 Crores (January 2016 - March 2016 Quarter Q4) and 59.14 lakhs folios (as on​ 31st March 2016). Reliance Mutual Fund, a part of the Reliance Anil Dhirubhai Ambani (ADA) Group, is one of the fastest growing mutual funds in India. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 160​cities across the country. RMF constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. It 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 (RCTC), as the Trustee. Reliance Mutual Fund 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 was changed to Reliance Mutual Fund effective March 11, 2004 vide SEBI's letter no. IMD/PSP/4958/2004 dated March 11, 2004. RMF 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. The main objectives of RMF are VISION AND MISSION STATEMENT​ ​​​​​​​Vision Statement ​​​To be a globally respected wealth creator with an emphasis on customer care and a culture of good corporate governance. Mission Statement To create and nurture a world-class, high performance environment aimed at delighting our customer. ORGANIZATION STRUCTURE ​ OUR TEAM Board of Directors Name Designation ​​​​​​​​​​​​​​​​​MR. KANU DOSHI Director MR. KAZUHIDE TODA Executive Director MR. S C TRIPATHI Director MR. SOUMEN GHOSH Executive Director MS. AMEETA CHATTERJEE Director GENERAL VED PRAKASH MALIK (RETD.) Director MR. SUNDEEP SIKKA Executive Director ​​MR. TOMONAO GOTODA Executive Director MANAGEMENT TEAM​ Name Designation MR. SUNDEEP SIKKA Executive Director & CEO MR. HIMANSHU VYAPAK Deputy CEO MR. SUNIL B. SINGHANIACIO Equity Investments ​​​​​​​​​​​​​ MR. AMIT TRIPATHICIO Fixed Income Investments EQUITY FUND MANAGERS​ Name Designation ASHWANI KUMAR Senior Fund Manager -Equity Investments OMPRAKASH KUCKIAN Senior Fund Manager-Equity Investments SAILESH RAJ BHAN Deputy CIO SAMIR RACHH Fund Manager -Equity Investments SANJAY PAREKH Senior Fund Manager-Equity Investments SUNIL SINGHANIA CIO-Equity Investments DEBT FUND MANAGERS​ Name Designation AMIT TRIPATHICIO Fixed Income. ANJU CHHAJER Fund Manager PRASHANT PIMPLE Senior Fund Manager -Fixed Income Investment CHAPTER II RESEARCH METHODOLOGY RESEARCH & METHODOLOGY Need of the Study Mutual funds in India have gained immense popularity in terms of number of schemes and assets under Management during the last decade. With this we can say the investor base has also increased. But the retail investors are facing problems in selecting funds from the various schemes existing in the Indian mutual fund industry. Experts generally recommend equity mutual funds as a suitable option for most people with a long-term investment horizon. However, there are situations where equity is not the most suitable asset class: Your goals are less than 5 years away; or Your growth objectives will be met with a lower (8-9%) rate of return; or You are not comfortable with volatility and willing to adjust your growth expectations accordingly. If people are in this position, there are two convenient options for them: Bank Fixed Deposits and Debt Funds. People generally prefer bank FD’s because they are aware about this concept and using this from years and years but there are other options as well like debt mutual funds. This study is taken to compare the returns of debt mutual funds of reliance with other peer groups so that we can evaluate the performance of the funds over a period of time and give suggestions to both company regarding improvement and general public so that they can focus more on debt funds instead of FD’s which give more rate of return if chosen a good debt fund so that they can utilize their excess funds and savings in a better manner. Objectives of the Study To give overview of the products of reliance mutual funds. To study the trend of rolling returns of reliance income fund(long term debt fund) and its comparison with the peer group. To study the trend of modified duration of reliance income fund(long term debt fund) and its comparison with the peer group. To find out which option is better option Debt funds or Bank Fixed Deposits. Sampling Procedure The method used for selecting sample i.e. the type of debt funds of Reliance Mutual Funds along with the funds of companies included in peer group for comparison of its funds is Purposive sampling. This method is used so as to get necessary and sufficient data which will be helpful in studying the trend of rolling returns and modified duration of funds. Peer group includes: Birla Sun life Mutual funds- Birla Sun life Income Plus Fund HDFC Mutual funds- HDFC Income Fund ICICI Prudential Mutual funds- ICICI Prudential Income Plan Franklin Templeton Investments- Templeton India Income Opportunities Fund The schemes which have been selected above of the peer group have same objectives as of schemes of reliance mutual funds. Data Collection To carry out the study secondary sources are used. The necessary data have been collected from mutual fund companies’ monthly factsheets and websites of various mutual fund companies including the website of the AMFI and the other research based websites like that of money control and the value research online to get monthly figures of NAV and Modified duration of all the funds. Monthly estimates of NAV are more precise than quarterly estimates therefore monthly values are considered. The study has been conducted from period Oct, 2011 to May, 2016 because modified duration of reliance mutual funds was not available prior to Oct, 2012. Tools used for data analysis MS Excel has been used to study the trend of rolling returns and modified duration. Monthly NAVs are used to calculate the rolling returns with the help of following formulae:- Current year Monthly Nav- Preceding year Nav of the same month X 100 Preceding year Nav of the same month Rolling returns are calculated for each moth of the period covered. Various tables and charts have been drawn using features of MS Excel so as to give tabular and graphical representation of data and trends prevailed at that time. CHAPTER III DATA ANALYSIS & INTERPRETYATION DATA ANALYSIS AND INTERPRETATION Objective I: To give overview of the products of Reliance mutual funds. Reliance Mutual Fund offers various types of products which are given below: Reliance Growth Fund (An Open-ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long term growth of capital by investing in equity and equity related securities through a research based investment approach. Reliance Vision Fund (An Open-ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach Reliance Equity Opportunities Fund (An Open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Quant Plus Fund (An Open-ended Equity Scheme): The investment objective of the Scheme is to generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation by investing in an active portfolio of stocks selected from S & P CNX Nifty on the basis of a mathematical model. Reliance NRI Equity Fund (An Open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to generate optimal returns by investing in equity and equity related instruments primarily drawn from the Companies in the BSE 200 Index. Reliance Tax Saver (ELSS) Fund (An Open-ended Equity Linked Savings Scheme): The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Reliance Regular Savings Fund (An open ended Scheme) Equity Option: The primary investment objective of this Option is to seek capital appreciation and/or to generate consistent returns by actively investing in equity / equity related securities. Reliance Regular Savings Fund (An open ended Scheme) Balanced Option: The primary investment objective of this Option is to generate consistent return and appreciation of capital by investing in mix of securities comprising of Equity, Equity related Instruments & Fixed income instruments.  Reliance Equity Fund (An open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & of companies which are available in the derivatives segment from time to time and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Equity Advantage Fund (An Open ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio predominately of equity & equity related instruments with investments generally in S & P CNX Nifty stocks and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Long Term Equity Fund (An open ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Equity Linked Saving Fund – Series I (A 10 year close-ended Equity Linked Savings Scheme): The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equities along with income tax benefit. Reliance Natural Resources Fund (An Open Ended Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in companies principally engaged in the discovery, development, production, or distribution of natural resources and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Infrastructure Fund (An open ended Equity Scheme): The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies engaged in infrastructure and infrastructure related sectors and which are incorporated or have their area of primary activity, in India and the secondary objective is to generate consistent returns by investing in debt and money market securities. Reliance Index Fund-Nifty Plan(An Open-Ended Index Linked Scheme): The primary investment objective of the scheme is to replicate the composition of the Nifty, with a view to generate returns that are commensurate with the performance of the Nifty, subject to tracking errors. Reliance Index Fund -Sensex Plan (An Open Ended Index Linked Scheme): The primary investment objective of the scheme is to replicate the composition of the Sensex, with a view to generate returns that are commensurate with the performance of the Sensex, subject to tracking errors. Reliance Banking Fund (Open-ended Banking Sector Scheme): The primary investment objective of the Scheme is to seek to generate continuous returns by actively investing in equity and equity related securities of companies in the Banking Sector and companies engaged in allied activities related to Banking Sector. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above with a view to maximize the returns or on defensive considerations. However, there can be no assurance that the investment objective of the Scheme will be realized, as actual market movements may be at variance with anticipated trends. Reliance Diversified Power Sector Fund (Open-ended Power Sector Scheme): The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related securities of companies in the power sector. Reliance Media & Entertainment Fund (Open-ended Media & Entertainment Sector Scheme): The primary investment objective of the scheme is to generate continuous returns by investing in equity and equity related or fixed income securities of Media & Entertainment and other associated companies Reliance Pharma Fund (Open-ended Pharma Sector Scheme): The primary investment objective of the scheme is to seek to generate consistent returns by investing in equity and equity related or fixed income securities of Pharma and other associated companies. Reliance Japan Equity Fund (Open-ended Diversified Equity Scheme): The primary investment objective of Reliance Japan Equity Fund is to provide long term capital appreciation to investors by primarily investing in equity and equity related securities of companies listed on the recognized stock exchanges of Japan and the secondary objective is to generate consistent returns by investing in debt and money market securities of India. However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved. Reliance US Equity Opportunities Fund (An Open Ended Diversified Equity Scheme): The primary investment objective of Reliance US Equity Opportunities Fund is to provide long term capital appreciation to investors by primarily investing in equity and equity related securities of companies listed on recognized stock exchanges in the US and the secondary objective is to generate consistent returns by investing in debt and money market securities in India. However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved. Reliance Liquidity Fund (An Open Ended Liquid Scheme): The investment objective of the scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Reliance Liquid Fund - Treasury Plan (Open-ended Liquid Scheme): The investment objective of the scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Reliance Liquid Fund -Cash Plan (Open-ended Liquid Scheme): The primary investment objective of the scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments. Reliance Medium Term Fund(Open-ended Income Scheme with no assured returns) The primary investment objective of the scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital. Reliance Floating Rate Fund - Short Term Plan (Formerly as Reliance Floating Rate Fund)( An Open-ended Income Scheme):The primary investment objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitized debt, Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed Rate Debt Securities (including fixed rate securitized debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns). Reliance Short Term Fund (Open-ended Income Scheme): The primary investment objective of the scheme is to generate stable returns for investors with a short term investment horizon by investing in fixed income securities of a short term maturity Reliance Regular Savings Fund - Debt Option (Open-ended scheme): The primary investment objective of this option is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt & Money Market Instruments. Reliance Corporate Bond Fund(An open ended income scheme):To generate income through investments in a range of debt and money market instruments of various maturities with a view to maximizing income while maintaining the optimum balance of yield, safety and liquidity. The scheme would focus its investments predominantly in corporate bonds of various maturities and across ratings for the purpose of achieving regular income and capital appreciation Reliance Income Fund (Open-ended Income Scheme): The primary investment objective of the scheme is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money Market Instruments Debt Reliance Gilt Securities Fund(An Open Ended Government scheme):The primary investment objective of the scheme is to generate optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by the Central Government and State Government. R*Shares Gold ETF (Formerly R*Shares Gold Exchange Traded Fund) (An open ended Gold Exchange Traded Fund): The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold (and Gold related securities as permitted by Regulators from time to time). However, performance of the scheme may differ from that of the domestic prices of Gold due to expenses and or other related factors. Reliance Gold Savings Fund (An open ended Fund of Fund Scheme): The investment objective of the scheme is to seek to provide returns that closely correspond to returns provided by R*Shares Gold ETF. Objective II: - To study the trend of Rolling Returns of Reliance Income Fund with peer group. Reliance income fund is a long term debt scheme whose primary investment objective is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money Market Instruments. Following income schemes of the peer group are included for comparison over the period of time:- Mutual Fund Company Mutual Fund Scheme Reliance Mutual fund Reliance income fund(Investments shall predominantly be made in Debt & Money Market Instruments to generate optimal returns consistent with moderate level of risk) Birla Sun life Mutual funds Birla Sun life Income Plus Fund(A fund that invests in a combination of bonds and Government securities of varying maturities from time to time with an aim to optimize returns) HDFC Mutual funds HDFC Income Fund (To optimize returns while maintaining a balance of safety, yield and liquidity) ICICI Prudential Mutual funds ICICI Prudential Income Plan (A Debt Fund that invests in debt and money market instruments of various maturities with a view to maximize income while maintaining optimum balance of yield, safety and liquidity) Franklin Templeton Investments Templeton India Income Opportunities Fund (The Fund seeks to provide regular income and capital appreciation by investing in fixed income securities across the yield curve) TABLE 1: Rolling Returns (in percentages) Rolling Returns Reliance Birla Sunlife HDFC ICICI Franklin 31,OCT,2012 12.46% 11.66% 12.09% 11.50% 10.17% Nov,30 12.53% 11.24% 11.46% 11.07% 10.18% Dec,31 11.11% 10.70% 10.51% 10.21% 10.17% 30,JAN,2013 10.81% 11.36% 10.22% 10.35% 10.38% Feb,28 10.32% 11.18% 9.83% 10.01% 10.09% March,28 9.35% 11.34% 10.99% 11.12% 10.53% April,30 12.66% 13.42% 12.76% 13.43% 11.15% May,31 14.82% 15.48% 13.91% 15.23% 11.77% June,30 12.44% 13.67% 11.77% 12.58% 10.95% July,31 6.51% 7.98% 5.67% 5.70% 7.89% Aug,30 4.37% 5.54% 3.09% 2.33% 6.89% Sep,30 3.54% 3.77% 2.28% 1.24% 7.62% Oct,30 5.33% 5.51% 3.95% 3.04% 8.79% Nov,29 3.88% 3.87% 3.05% 1.84% 8.70% Dec,31 2.80% 2.65% 2.17% 0.86% 8.64% 31,Jan,2014 1.83% 1.47% 1.28% 0.013% 8.31% Feb,28 1.29% 0.57% 0.71% -0.542% 8.65% March,28 3.85% 1.52% 1.99% 0.738% 8.85% April,30 0.96% 0.10% 0.69% -1.197% 8.07% May,30 -0.26% -1.02% -2.82% -1.468% 8.02% June,30 1.31% 0.60% 2.34% 1.329% 8.78% July,31 6.48% 6.13% 7.96% 7.752% 11.54% Aug,28 8.40% 7.93% 10.08% 10.649% 12.29% Sep,30 8.77% 9.41% 10.78% 11.655% 11.42% Oct,30 9.35% 10.40% 11.63% 11.996% 10.96% Nov,28 12.66% 13.79% 8.67% 14.705% 11.71% Dec,31 14.81% 16.03% 15.67% 16.920% 11.65% 29,JAN,2015 16.41% 17.50% 17.87% 18.80% 12.51% Feb,26 16.71% 18.20% 18.18% 19.17% 12.36% March,31 15.24% 16.79% 16.47% 17.41% 11.90% April,29 13.88% 15.03% 15.04% 15.96% 11.45% May,28 12.03% 13.26% 16.29% 13.41% 10.95% June,30 12.74% 11.47% 10.69% 10.64% 10.46% July,31 11.15% 11.66% 11.52% 11.63% 10.98% Aug,31 11.93% 12.42% 12.16% 12.61% 11.21% Sep,30 13.22% 13.55% 13.02% 13.45% 10.86% Oct,30 10.29% 10.20% 9.96% 10.55% 10.19% Nov,30 7.20% 7.13% 12.53% 7.77% 9.31% Dec,31 5.12% 4.56% 5.32% 5.08% 9.30% 29,JAN,2016 3.08% 1.92% 2.67% 2.40% 8.05% Feb,29 2.83% 1.57% 2.36% 2.14% 6.16% March,31 5.31% 4.69% 5.49% 5.73% 6.15% April,29 6.62% 6.34% 7.01% 7.40% 6.86% May,25 6.91% 6.08%   7.56% 6.99% From Oct, 2012 to June, 2013- This table shows rolling returns calculated from NAV-regular plan from Oct, 2012 to May, 2016 for all the companies. From this table we can clearly see that from Oct, 2012 to June, 2013 rolling returns of all the companies are above 9%. For reliance the returns were as high as 14.82% and as low as 9.35%. For Birla Sunlife and ICICI the return were highest among all almost equal to 15% and lowest equal to 10%. HDFC shows its highest rolling returns equal to 13.91% and lowest approx. 9%. In case of Franklin highest was 11.77% and lowest 10.09% Among all the companies Franklin has earned lower returns which may indicate that fund managers are less willing to take risk whereas from the rolling returns of other companies we can say that they are interested in taking more returns which has helped them in increasing their returns and hence they are able to fetch returns as high as 15%. From July, 2013 to June, 2014- In july,2013,RBI Governor increases the interest rates due to which markets suffered lot a and lead to decreasing rate of rolling returns of all the mutual fund schemes including reliance and peer group. In case of reliance, in June, 2013 the rolling returns were 12.44% but after increase in interest rates it decreases to 6.51% and it followed decreasing trend for full one year. In May, 2014 the returns even became negative i.e. -0.26%. In case of Birla Sunlife, in June, 2013 the rolling returns was 13.67% but after increasing interest rates it decreased to 7.98% in July, 2013. Again it followed the decreasing trend and lowest rate was negative i.e.-1.02%. Its negative returns are higher as compared to reliance income fund. In June, 2013 HDFC showed rolling return equal to 11.77%. But in July, 2013 it decreased to 5.67%. In May, 2013 it became negative i.e. -2.82%, most negative as compared to all schemes. Throughout the year it has followed the decreasing trend. In June, 2013 ICICIs rolling return was 12.58%. But it decreased to 2.70% due to increase in interest rates by RBI. Again it followed the decreasing trend the lowest return in the month of February, April and May- negative in all the three months i.e. -0.542%, -1.197 and -1.468 respectively. It followed the decreeing trend till June, 2013 After June, 2014 In case of reliance, the returns start increasing after June, 2014 i.e. after one year of increasing interest rate by RBI during the month of July, 2013. It increased to 6.48% in July, 2014 from 1.31% in June, 2014. Then it followed an increasing trend till February, 2015 with few ups and downs. The highest rolling return was in that month i.e. 16.71%. After March, 2015 again it started following the decreasing trend i.e. from 16.71% in Feb, 2015 to 2.83% in Feb, 2016. It has made a drastic change in the rolling returns during this period of time. After that it followed the increasing trend again and now the latest rolling return as on 31st May, 2016 is 6.91%. After June, 2013 the rolling returns of Birla Sunlife start increasing. Earlier it was 0.60% but in July, 2014 it increased to 6.13% and afterwards it followed increasing trend till Feb, 2016 same as Reliance. After that it starts decreasing slowly and reached its lowest level on 29th Feb, 2016 (1.57%). After that it has started increasing again. And now latest rolling return in the month of May is 6.08%. In case of HDFC the rolling return in June, 2014 was 2.34%. After one year of increasing interest rate by RBI from July, 2014 rolling returns start increasing and it became 7.96%. After that it followed increasing trend in between there was a downfall in November, 2014 with return being 8.67%. Then it again started rising and became 18.18% in February, 2015. After that it is continuously falling and became 2.36% in Feb, 2016. Post Feb, 2016 again it has started rising. In case of HDFC the returns start increasing from July, 2014. It was 7.75% at that time after adopting increasing trend it raised to 19.17%, highest among all the funds of the peer group as well as of reliance in the month of Feb, 2015. From Feb. onwards it started falling again and became 2.14% after one year i.e. on Feb, 2016. After that it has started increasing again. Latest rolling is 7.56% in May, 2016. Franklin’s approach of taking less risk has protected itself from going very low and when other schemes were incurring losses having negative rolling returns its rate was approx 8%, very high as compared to all the companies included in the study. From July to Oct2015 the returns remain fairly constant fluctuating between 10-14%. From Nov, 2015 it has started falling but still remain constant between intervals 9-6%. From the above table we can say reliance and other mutual funds excluding Franklin are following same approaches of forecasting and taking risk hence facing wide fluctuations especially after July, 2013 when RBI increased the interest rates. Where all these funds were going through downfall to a large extent Franklin was able to main its returns to a higher level as compared to others and was able to provide constant returns to investors to some extent. Hence an investor by studying the past trend will prefer to invest in Franklin if he is risk averse. But if the investors are ready to take higher risks he can invest in other fund houses including reliance because higher the risk higher the returns. So it purely depends upon the nature of investor. FIGURE: 1 Rolling Returns The diagram is also drawn with help of above table showing the trend of rolling returns over period of time. From the figure clearly can be seen that since the Fund manager of Franklin is risk averse therefore the scheme has earned positive returns all the time. In case of other schemes, all of them are on the same path. The curves in the figure are very close to each other and all are negative during the month of April and May, 2014. As on May, 2013 rolling returns of all the companies are at peak especially of Birla Sunlife followed ICICI, Reliance and HDFC. The rolling returns of Franklin are lowest as compared to all other companies. After that the rolling returns start falling and the rate of fall is high in all the schemes except Franklin. The rate of fall was highest in case of ICICI. But the lowest point of curve shows HDFC has lowest rate of returns followed by ICICI, Birla Sunlife and reliance. In between the rolling returns raised little bit and the increasing rate was higher in case of reliance then followed by HDFC, Birla Sunlife and ICICI during March, 2014. Franklin has also followed the same trend but the rate of fall and rise is less as compared to other schemes. After June, 2014 the rolling returns start rising and its highest point during Feb, 2015. ICICI has highest rolling returns followed by HDFC and Birla approximately at same level and then reliance. Franklin has also reached its highest point like other schemes. Then all the schemes start following decreasing trend with few ups and downs. From Jan and Feb, 2015 after again reaching their lowest points all the schemes have started following rising trend. Objective III: - To study the trend of Modified Duration of Reliance Income Fund with peer group. TABLE: 2 Modified Duration (in years) Modified Duration Reliance Birla Sunlife HDFC ICICI Franklin 31,OCT,2012 5.69 6.59 5.57 6.01 2.61 Nov,30 5.53 7.32 5.64 6.03 2.65 Dec,31 5.35 7.63 6.24 6.60 2.77 30,JAN,2013 6.54 3.56 5.87 6.01 2.79 Feb,28 6.13 4.70 5.27 6.56 2.89 March,28 5.04 6.09 5.63 6.48 2.77 April,30 6.00 5.67 5.84 6.58 2.95 May,31 6.59 7.40 6.02 5.87 2.62 June,30 6.35 5.88 5.94 6.17 2.45 July,31 5.44 5.49 5.40 6.15 2.06 Aug,30 5.28 3.57 5.65 6.43 2.04 Sep,30 5.60 6.16 5.76 6.43 2.04 Oct,30 5.40 6.41 5.55 6.56 2.11 Nov,29 5.59 5.97 5.71 6.68 2.07 Dec,31 5.90 6.72 6.08 6.52 2.09 31,JAN,2014 5.93 6.06 6.00 6.93 1.89 Feb,28 4.56 6.09 5.52 6.95 1.96 March,28 4.12 6.10 5.59 7.24 1.84 April,30 4.47 6.28 5.33 7.19 1.80 May,30 5.39 6.28 5.99 6.61 1.84 June,30 5.79 8.07 6.69 5.94 2.21 July,31 6.75 8.10 6.73 7.01 2.18 Aug,28 7.09 7.61 6.80 7.00 2.77 Sep,30 7.20 7.19 6.86 7.13 2.40 Oct,30 7.57 8.12 6.98 7.15 2.39 Nov,28 8.06 7.99 6.98 7.40 2.38 Dec,31 8.02 6.92 7.38 7.73 2.81 29,JAN,2015 8.02 7.37 7.73 7.42 2.94 Feb,26 8.23 7.13 7.76 6.97 2.88 March,31 8.40 7.51 7.47 7.76 2.76 April,29 8.10 7.14 7.71 7.57 2.68 May,28 7.81 7.09 7.89 7.80 2.59 June,30 8.02 7.18 7.86 7.91 2.63 July,31 7.73 8.53 8.05 8.02 2.49 Aug,31 8.04 8.82 8.05 8.15 2.50 Sep,30 8.33 8.92 8.21 8.46 2.30 Oct,30 8.59 9.20 8.14 8.36 2.42 Nov,30 8.13 9.06 8.19 8.40 2.36 Dec,31 6.69 9.49 8.14 8.60 2.27 29,JAN,2016 7.58 9.19 8.15 8.53 1.95 Feb,29 7.28 8.79 8.21 8.65 1.90 March,31 7.17 8.49 8.31 8.02 1.88 April,29 6.97 8.12 8.27 6.99 1.87 May,25 6.58     7.75 1.84 Above table shows the modified duration of all the debt fund schemes over a period of time. It can clearly seen that Reliance has modified duration which varies between 5 to 8 years with few exceptions in the months of Feb. and marfch,2014 with modified duration 4.56 and 4.17 respectively. The fund manager has carried this fund with long term perception. In case of other funds like Birla Sunlife modified duration varies from 3 to 9 years minimum being 3.56 in Jan, 2013 which shows it has high fluctuations as compared to Reliance. In case of HDFC the duration varies between 5 to 8 with minimum being 5.27. This shows that the fluctuations occurred are less as compared to reliance because in case of reliance it falls up to 4yesr as well. In case of ICICI the modified duration varies between 6 to 8 with an exception i.e. 5.87years in May, 2013 which sows less variability between duration of this fund as compared to all other funds discussed above. In case of Franklin the modified duration is always less than 2 which means the fund manager is operating this fund on accrual basis as a short term fund. Income fund being a long term should not be carried on accrual basis so all other funds except Franklin are performing on a right path. But one advantage of carrying fund on accrual basis is that there is no need to go for mark to market everyday by the fund managers which reduces fluctuations in the returns which we have seen in case of rolling returns also where Franklin has more rolling returns in the period when interest rates has gone up giving consistent returns to investors. A chart (Figure 2) has also been drawn showing the trend of modified duration of all the funds over a period of time. Following observations have been drawn from above chart:- It is very much clear that Franklin is operation on a short term basis whereas other funds are working as a long term fund. The fluctuations are very high in case of Birla Sunlife and low in ICICI. Reliance is working at moderate level with few fluctuations as compared to Birla Sunlife. FIGURE: 2 Modified Duration (in years) Hence we can say there is a need to constantly change the modified duration in response to changes in interest rates, YTM, NAV and rolling return Objective IV: To find out which option is better option Debt funds or Bank Fixed Deposits. When it comes to saving money, people often opt for fixed deposits, considering them to be relatively risk free. The security of having the money in the bank is apparently a great factor. But we need to introspect that is this actually saving of money or rather losing of it? Fixed deposits of FDs may give attractive returns on paper, but with the tax payable at the current tax slab, the more one invests in FDs, the more tax one has to pay. Taking in consideration the rate of inflation over the years, it is possible that one may actually be facing a loss by investing in FDs. In the case of Mutual Funds or MFs, the scenario is a wee bit different. Although MFs are affected by market volatility and do have a level of risk, they are managed by professional fund managers, who do their best not only to protect investments but also to grow it. When it comes to rate of returns, FD rates are pre-specified and do not change for the entire tenure. On the other hand MF rates are affected by market conditions, hence during positive market conditions; MFs have the potential to earn high returns where as FD rates are unaffected. In terms of risk, FDs are generally known for minimal risk, where as equity mutual funds carry high market risk, and debt mutual funds carry lower market risk than equity. But risks can be mitigated to a certain extent as MFs are managed by professionals. Yet, MFS are prone to market risk. But as it is said, big risks give big returns. This objective aims at finding which option is better along with evidences so that it can be found which option is better and focus can be made more on debt funds instead of FD’s if it is a better option. Some debt fund schemes generally provide more rate of return if chosen with care so that they can utilize their excess funds and savings in a better manner. Bank FDs vs. Debt Mutual Funds Following parameters have been used to evaluate both options and hence finding the best alternative. Safety of Capital is almost the same To understand how safe the money is, it I required to look at the credit rating of the instrument. This is given by Independent Credit rating agencies using the below scale. Most Fixed Deposits are AAA rated implying very high safety of capital. In other words where are very low chances of losing the money which you had invested. It is commonly assumed that FDs are guaranteed by the government. They are, but only to the extent of Rs 1 Lakhs. Beyond that the credit rating of the bank comes into play and which bank to choose is important. Debt funds are not themselves rated but their safety can be deduced from the portfolio they invest in - typically sovereign to AA. With careful analysis, debt funds can be pick whose portfolio has a combined credit risk almost at par with FDs. For example, Scripbox recommended portfolio of debt funds have most of their investments with a high credit rating. II FDs offer assured returns but debt funds offer higher post-tax returns When an FD is placed, the interest rate gets locked. It’s currently 8 to 9% for FDs above a year. One can accurately predict the amount of money he will have at the time of maturity even before they start the FD. Debt funds also provide 8-9% returns when you look at the historical debt funds’ performance. However, returns for debt funds are not guaranteed. While debt funds are mostly safe investments, there could be some volatility due to the fluctuations in interest rates. Some debt funds react more to these fluctuations than others and once again, with careful analysis, you can pick those with low volatility. Scripbox selection methodology, for example, takes this into account. Taxes significantly affect income from FDs The income which is earned from FDs and debt funds is categorized differently a person can earn interest from FDs while a debt fund gives capital appreciation or dividend. While interest from Bank FDs is always taxed at the maximum rate, Debt funds attract almost nil tax after 3 years and lower tax between 1 and 3 years. Up to 1 year the tax impact for both is similar. What hurts an FD investor even more is that they have to pay taxes on accrued interest every year (even if you haven’t actually received it in your hands) and therefore the amount of money which compounds is less. Debt funds provide better liquidity or easy access to your money Withdrawing from FDs If money is required before the maturity of the FD, a lower rate of interest will be credited and also a penalty. Some banks allow breaking FD in part but most requires withdrawing the whole amount. If a person has INR 1 lakhs deposit, but he wants only INR 20,000, then he had to break the entire FD. Interest Rate on premature withdrawal = Interest Rate applicable for actual period of FD as per the rates prevalent at the time of investment - 1% The penalty for withdrawing is 0-1.5% of the invested amount viz. Rs 0-1500 for a one lakhs deposit. Withdrawing from Debt Funds With debt funds, there is full liquidity for the investments. Any amount can be withdrawn from the total debt fund value whenever the investor requires. The money comes into bank account in 3-4 working days. The return provided is the amount earned by the fund during the period funds were invested. There is no complex formula. Some debt funds will charge an exit load if money is withdrawn within a certain period of time. This is usually small (0.25% - 0.5%) and only for periods less than a year. Burden of tax related paperwork is higher for FDs Since everyone must declare and pay taxes on interest income from FDs every year, they have to maintain records, compute their interest income and file taxes accordingly. This gets even more complicated in case of premature withdrawals where they may already have paid tax but the income he finally gets is lower. For debt funds, capital gains tax has to be paid and only when withdrawn. This could mean only once in 5 years. Hence it can be see, with debt funds, the person gets superior returns post-tax, high level of liquidity, and safety of capital compared to FDs. These make debt funds an excellent alternative to keeping the money in Bank FDs. CHAPTER III SUMMARY & CONCLUSION Summary In this project the trend of rolling returns and modified duration of all companies included were studied. Since five year data has been used we are able to see various points of fluctuations in the performance of fund of respective companies in one way or other. YTM (yield to maturity) is an important concept used to analyze the risk and return relationship of a debt fund. But in order to get deep understanding of the performance rolling returns and modified duration can be used in a beater manner. Moreover 5 years time is good enough to evaluate the performance of a fund instead of just focusing on recent statistics. The benefits of investing in debt mutual funds have also been seen in the last objective where it was proved that debt funds are better than FD’s because they provide better returns along with taxation benefits if invested properly in good funds having effective portfolio. Hence we can say in order to earn regular income and to get money after period of time to meet various needs along with capital appreciation debt funds are the best options. RECOMMENDATIONS RECOMMENDATIONS After analyzing various trends some recommendations can be made to both fund manager and the companies for providing better services to investors in order to increase their satisfaction as well as profits of the firm. Following recommendations are made:- The factsheets prepared by the asset management companies for showing details regarding various mutual fund schemes should disclose data of longer period say 5 years instead of just 2-3 years as this time period is sufficient to get better insight into the product The factsheets and other documents should contains calculated rolling returns because it is a relative measure being shown in percentages so as to measure the performance of a debt funds instead of NAVs which are in rupees. More awareness should be creates among customers. FD being a famous product requires mutual fund companies to pay better attention on marketing area so as to educate people about the benefits of investing in mutual funds. The last recommendation is that more disclosures practices should be made in all the documents so that investors have full knowledge about the product and are able to keep track of where there money is going, how it is appreciating, how the schemes are performing and how much benefit they are getting from investing in it. Limitations of the Study The present study is subject to the following limitations: The period of study has been limited to the recent few years i.e. from Oct, 2011 to May, 2016. The reason for limiting the said period is that the modified duration for reliance debt funds was not available prior to Oct, 2012 and also the required data was also available for this period. Only debt funds have been selected for the study. Equity schemes and guilty schemes have been totally excluded. Further, only open-ended mutual fund schemes have been considered for the study. Only five debt schemes have been chosen and four mutual fund companies are included in the peer group for comparison with reliance mutual fund. More number can be taken for both schemes and peer group. Scope for future studies Present study can be extended by considering equity schemes, guilt schemes and many other schemes present in the market. Analysis can be done by taking a bigger period which can present better trend of rolling returns and modified duration over a period of time. The number of mutual fund companies in peer group can be increased from four. Trend can be studied by using daily or quarterly estimates instead of monthly estimates of NAV The trend can be analyzed by using standard benchmarks of Indian Mutual Funds like BSE Index. REFERENCES https://www.amfiindia.com/ http://www.enotesmba.com/2012/05/project-study-of-performance-of-mutual.html www.franklintempletonindia.com/ http://www.hdfcfund.com/