International Review of Business and Finance

ISSN 0976-5891 Volume 2 Number 2 (2010), pp. 131–135

© Research India Publications
http://www.ripublication.com/irbf.htm

Comparative Study of Balanced Schemes of UTI &

Reliance Mutual Funds with Respect to Net Asset
Value, Returns & Investment Pattern

Esha Sharma

Faculty in Finance & Marketing,

Haryana College of Technology & Management, Kaithal-136027 (Haryana) India
E-mail Id: sharma.esha1@gmail.com

Abstract

We have seen that the mutual funds falling both in private sector and public
sector have displayed significant growth from 2000. However, this growth has
posed a difficulty to investors in making a selection of suitable schemes as
presently there are more than 403 schemes. The issues related to the choice
among the public and private sector debt funds, have become highly important
because even a single wrong decision may put the investors in financial crisis,
sometimes leading to their bankruptcy. A proper performance evaluation
measures will remove such confusion and help the small investors in selecting
various mutual fund debt schemes for investment. Moreover, with growing
competition in the market, the fund managers also need to satisfy themselves
that management fees and research expensed are justified dripping in view the
returns generated. In this context, close monitoring and evaluation of mutual
funds is very important for 'investors and fund managers both. The most
important objective of the paper is to compare the balanced schemes of UTI
and Reliance through analytical tools.

Keywords: Mutual Funds, NAV, Descriptive Research Design, Correlation.

Introduction
A mutual fund is a form of collective investment that pools money from many
investors and invests the money in stocks, bonds, short-term money market
instruments, and/or other securities. Mutual Funds are going to be amongst the most
exciting players in the years to come. Fund managers of well oiled operations and
their clients are in for a terrific experience.
132 Esha Sharma

Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income earned
through these investments and the capital appreciation realized by the scheme is
shared by its unit holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed portfolio at a relatively
low cost. The small savings of all the investors are put together to increase the buying
power and hire a professional manager to invest and monitor the money. Anybody
with an investible surplus of as little as a few thousand rupees can invest in Mutual
Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

Table 1: Balanced Schemes Under Various Selected Assets Management Companies

(Dec. 2008).

Asset Management Companies Number of Balanced Schemes

A) Public Sector
SBI 43
UTI 57
LIC 17
BOB 12
Canbank Q 19
B)Private Sector
Prudential ICICI 70
Templeton 34
HDFC 53
Reliance 101
Birla 47

Investment pattern has been analyzed on selected individual debt schemes basis.
Debt schemes are selected on the top performance (last 3 years) basis from selected
Mutual Funds from both private and public sectors.
Mutual fund houses are selected on the basis of the resource mobilization or
Assets Under Management (AUM) of the month Dec 2008

Objectives of the Study

The objectives of the study are spelled out as under:
• To know about the various types of Balanced Schemes and Different players
working in Indian Market
• To know the performance of UTI & Reliance Mutual Fund with respect to
Comparative Study of Balanced Schemes 133

NAV, Return, Investment Pattern.

• To evaluate the performance of Balanced Schemes in Mutual Funds in public
and private sectors in India
• To compare private and public sectors on the basis of investment pattern.

Research Design
Descriptive research design has been used.

Data Collection
The data is collected through secondary sources like magazines, books, internet,
company records, etc.

Analytical Tool
The statistical tool used here is Karl Pearson’s Coefficient of Correlation.

UTI Mutual fund

Here the correlation is used between NAVs and 3 years annualized return of Bal- INC
under balanced fund of public sector Mutual fund of UTI of last 4 years from 31 Dec.
2003 to 31 Dec, 2006.
X= NAVs on 31st Dec of every year from 31st Dec., 03 to 31st Dec., 06.
Y= 3 years Annualized Return

X Y dx(X-Ax) Dx2 dY(Y-Ay) Dy2 dxdy

23.0 6.40 -1.4 1.96 -.6 .36 .84
24.40 7.0 0 0 0 0 0
24.15 6.90 -.25 .0625 -.1 .01 .025
21.90 5.85 -2.5 6.25 -1.15 1.3225 2.875
-4.15 8.2725 -1.85 1.6925 3.74

Since the actual mean are not whole number we take 24.4 assumed mean for X
and 7.0 for Y.
Applying the formula,
134 Esha Sharma

So, there is a high degree of positive correlation between NAVs and 3years
annualized return of Bal INC of balanced fund of UTI

RELIANCE Mutual fund

Here the correlation is used between NAVs and 3 years annualized return of Balanced
Scheme of private sector Mutual fund of Reliance from of last 4 years from 31 Dec.
2003 to 31 Dec, 2006.
X= NAVs on 31st Dec of every year from 31st Dec., 03 to 31st Dec., 06.
Y= 3 years Annualized Return

X Y dx(X-Ax) Dx2 dY(Y-Ay) Dy2 dxdy

18.70 7.50 -.55 .3025 1.1 1.21 -.605
19.25 6.40 0 0 0 0 0
19.15 6.35 -.1 .01 -.05 .0025 .005
20.70 8.35 1.45 2.1025 1.95 3.8025 2.8275
.8 2.415 3 5.0145 2.2275

Since the actual mean are not whole number we take 19.25 assumed mean for X
and 6.40 for Y.
Applying the formula,

So there is a high degree of positive correlation between NAVs and 3years

annualized return of balanced fund of Reliance Mutual Fund.

Findings
The major findings of the study are as follows:
• High degree of correlation between NAV and Return: - From my entire study,
I have found that the NAV and return are highly correlated. Higher the NAVs,
higher the profits.
• Performance of Schemes on the basis of Sectors: - The returns in the case of
Public Sector balanced Schemes, some schemes are low or negative returns
but balanced schemes in Private Sector yield much higher average return than
the Public Sector. It means that performance of Private Sector mutual funds is
better than the Public Sector mutual funds.
• Return on balanced Schemes: - Large variability in return on balanced
Comparative Study of Balanced Schemes 135

Schemes of Mutual Funds and returns on balanced Schemes are on a decline

year by year.
• Expected value of NAV- The expected value of NAV of both the UTI and
reliance Mutual Fund is higher than the previous years.

Conclusions
From the above research, it is concluded that Reliance mutual fund has topped in
terms of return lagging behind the UTI, a public sector mutual fund which shows that
the private sector MF has performed better again. So there is a need to restructure the
portfolio by public sector MF and the 3 utmost important factors taken into
consideration by investor are safety, liquidity and profitability.

Bibliography
Books
[1] Gupta S.P., statistical methods-Sultan chand publications ,30th edition (Page
378-418).
[2] Kothari C.R.- Business Research Methodology (Page 138-146).
[3] Pandey I.M.-Financial Management by Vikas Publishing House (Page 6.23-
6.57).
[4] Srivastava: Management of Indian Financial Institutions-Himalaya Publishing
House 6th edition (Page 272-285, Page 313 to 335).

Journals
[5] ICFAI reader- Mutual fund distribution channel – Article by C.V. Srivastava
(Page 31-43).
[6] Economic & political weekly April-2006 – Article by V.S. Sharma (Page 23-
25).
[7] SEBI Bulletin – July,2005.

Websites
[8] http://www.amfiindia.com/showhtml.asp?page=aboutus
[9] www.mutualfundsindia/navreports.jsp
[10] www.financeindiamart.com
[11] http://www.reliancemutual.com/
[12] http://www.utimf.com/navs/latest_navs.asp
136 Esha Sharma