Mutual Funds

Portfolio Management In Mutual Funds

A Project On PORTFOLIO MANAGEMENT IN MUTUAL FUNDS
In partial fulfillment of the requirement of two years full time Masters of Business Administration (MBA) Programme (2008-2010) Of Christ University Institute of Management, Bangalore-560029

SUBMITTED BY : AARNESH KARAMCHANDANI

(08 PG 0122)
UNDER THE GUIDANCE OF: PROF. T.S. R AMACHANDRAN

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CONTENT
Certificate Declaration Preface Acknowledgement Research Methodology Executive Summary 1 Introduction to Mutual Fund 2 Investors portfolio 2.1. Fixed Return Options 2.2. Variable Return Options 3 Concept of mutual funds 4 Types of mutual funds By structure By investment objective 5 6 7 8 9 10 11 Different styles of Mutual Funds Process of Mutual Fund Net Asset Value (NAV) Companies in India Portfolio Management Portfolio Management Process Types of Investors 11.1. Portfolio for Cautious Investor 11.2. Portfolio for Balance Investor 11.3. Portfolio for Aggressive Investor 12 Measurement of Returns on Portfolios 13 Scheme Portfolio 13.1. HDFC Equity Fund 13.2. HDFC Core & Satellite Fund 13.3. Reliance Growth fund 13.4. Prudential ICICI Growth Fund 13.5. DSP Tiger Fund

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13.6. Kotak Opportunity Fund 14 Conclusion 15 Bibliography

DECLARATION

I,

hereby,

declare

that

the

Project

titled

“Portfolio

Management in Mutual Funds” is original to best to

my knowledge

& has not published elsewhere. This is for the purpose of partial fulfillment of Christ University Institute of Management requirement for the award of the degree of Master of Business Administration.

AARNESH KARAMCHANDANI

Portfolio Management In Mutual Funds

Date:

PREFACE

Investing money where the risk is less has always been risky to decide. The first factor, which an investor would like to see before investing, is risk factor. Diversification of risk gave birth to the phenomenon called Mutual Fund. We are preparing comprehensive report of Mutual Fund industry in India. The basic idea of assignment of this project is to augment our knowledge about the industry in its totality and appreciate the use of an integrated loom. It is concerned the environmental issues and tribulations. This makes us more conscious about Industry and its pose and makes us capable of analyzing Industry’s position in the competitive market. This may also enhance our logical abilities.

The Mutual Fund Industry is in the growing stage in India, which is evident from the flood of mutual funds offered by the Banks, Financial Institutes & Private Financial Companies. There are various aspects, which have been studied in detail in the project and have been added to this project report.

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Hope this report would help one understand the mutual Industry of India in detail.

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ACKNOWLEDGEMENT

I am indebted to a multitude of persons who have provided me with valuable help during our endeavor of research. The project would not have seen the illumination of the day without the efforts of the many who managed the show in the wings. I am thankful to all people who have put in great efforts and gave me guidance for the successful completion of the project. I am indeed grateful to MR. PRASHANT UKANI (CLUSTER HEAD – B2B BUSINESS, REGIONAL OFFICE, ANGEL BROKING LTD., RAJKOT) for providing me the guidance, advice, constructive suggestions and faith in my ability inspired to perform well who gave me a valuable opportunity of involving our self in studying this project. Preparing a project of this nature is an arduous task and I am fortunate enough to get support from a large number of people to whom we shall always remain grateful.

Finally, I thank all those who directly and indirectly contributed to this project.

Portfolio Management In Mutual Funds

AARNESH KARAMCHANDANI

Portfolio Management In Mutual Funds

EXECUTIVE SUMMARY

As a part of my study curriculum it is necessary to conduct a grand project. It provides us an opportunity to understand the particular topic in depth and which leads to through to that topic. My topic for the grand project is titled as “Portfolio management in mutual funds performance” in which emphasis given to the study of different mutual funds in respect to the risk and return involved in it. Since mutual funds are a relatively recent phenomenon in India, general public or investors don’t have clarity about this concept. As we have started witnessing the concept of more saving now being entrusted to the funds than to keeping it in banks. So it is very important to manage investor’s portfolio efficiently. By efficient we mean which reduces the risk of investor and increases return on the other hand. This project is all about how to manage an investor’s portfolio in mutual fund. How to diversify the investments into different schemes of funds. To manage client’s portfolio efficiently we first need to understand the industry, current economic condition of the economy, investor’s behavior, their objective, risk apatite. This report has divided into two phases. First phase covered investor’s portfolio part where we have included, Introduction of mutual funds, Indian mutual fund industry, Investment options available with individuals and at last techniques of managing a client’s portfolio in mutual funds. Second phase of the report covered scheme’s portfolio part, where we have compared HDFC Equity Fund and HDFC Core & Satellite Fund with their competitors. It also included fund’s portfolio part where we have given information about the different funds available to investor for investment

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RESEARCH METHODOLOGY
Primary Objectives
The main objective of this study is doing an In-depth analysis of Mutual Fund portfolio by taking sample of funds and comparing it with it others

Secondary objectives
– to understand the portfolio management process in mutual fund – To know the effects of political, economical, social and technological factors on Mutual Fund Industry in India. – Evaluating fund performance

Collection of data
For the complete study I required data of Mutual Fund and getting from the secondary data base. Sources of the data collection will be, (1) (2) (3) (4) Internet Various magazines/bulletins News papers Related books

Limitations

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? It is based on Secondary Data. ? Time Constraint ? Lack of resources

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INTRODUCTION
Economic liberalization and globalization of the Indian markets began in 1991. This meant that the Indian consumers had access to imported goods which resulted in fall of prices of domestic goods due to high competition. This also meant that lower interest rates and more importantly transfer of risk from government to the individuals, forcing them to protect their investments them self. Investors have variety of options for investments. Some of them are providing fixed rate of returns are some of them provide variable rate of returns. Many had investments with UTI, Company fixed deposits, and Bank fixed deposits that were offering high returns that now they are starting falling after globalization and liberalization. There are some investors who are active. They are the ones who act promptly and make educated, informed decisions about market. They done their own research and understand the factors which may have effect on their investments in future. On the other hand some investors who are apprehensive and will take action only when they can see tangible merits on the change. As every individual is different, their objectives behind investments also differ from person to person. Their objectives can for fixed return, capital appreciation, tax planning or current income. The investment decision will mainly depend upon the objective of investor. He or she needs to design their portfolio according to their risk and return profile. The individual should start by specifying investment goals. Once these goals are established, the individual should be aware of the mechanics of investing and the environment in which investment decision are made. These include the process by which securities are issued and subsequently bought and sold, the regulations and tax laws that have been enacted by various levels of government, and the sources of information concerning investment that are available to the individuals.

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Designing a portfolio is not simple task. Ones individual has decided about the type of investment then he or she needs to decide portfolio in that category. There are various ways of maintaining portfolio of individual.

Phase I
Investor’s Portfolio
What is an Investment?
An investment is the use of capital to create more money through the acquisition of a security that promise the safety of the principal and generate a reasonable return.

Various Investment Options
Savings form an important part of the economy of any nation. With the saving invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenue to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. There are basically two kinds of investments. One that gives returns at fixed rate and other where the rate of return is depending upon the certain factors of the economy.

1. Fixed Return Options
• • • • • • Post office monthly income scheme Public provident fund Bank fixed deposits Government securities or gilts RBI taxable bonds Insurance

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• •

Company fixed deposits Infrastructure bonds

2. Variable Return Options
• • Mutual Funds Share and Stock market 1. Primary invested in equity (IPO) 2. Secondary market investment in equity 3. Derivative, Futures and Options Gold Real estate Foreign exchange assets

• • •

3. UNIT LINKED INSURANCE PLANS
1. 2. 3. 4. 5. 6. 7. ULIP capital secure fund. ULIP balanced fund. ULIP growth fund ULIP equity fund Pension capital secure fund Pension balanced fund Pension growth fund

1. Fixed Return Options
Under fixed return investments, investor will get fixed return on their investments. The rate of return is pre decided at the time of investment. Rate of return can be calculated on per annum basis or at completion of particular time period. a. Post Office Monthly Income Scheme:

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In this scheme an investment can be made by individuals in single or joint names maximum of Rs. 6 lakhs (Rs.3 lakhs per person) with an interest of 8% p.a. in a monthly income scheme. This will give you Rs. 4000/- per month if you invested the maximum amount. In addition, this investment will fetch you a taxable bonus of 10% on the deposit maturity (i.e. after 6 years)

b.

Other Post Office Scheme Kisan Vikas Patra: Money can be doubled in 8 years and 7 months. There is no upper limit on the amount that you invest. There are no tax benefits for the investments made under this scheme. The rate of interest works out to a compounded annual return of about 8.4%. There are no tax deductions at source and banks loans are available against Kisan Vikas Patra. Interest is paid at maturity and cannot be claimed prior to maturity. Senior Citizen Savings Scheme (2004): As per the 2004-2005 budgets, the Government has announced a new Senior Citizen Savings Scheme. It has been launched only through designated Post Offices from the 2nd August, 2004. it for the individuals who have attained the age of 60 years or above on the date of opening of an account or who have attained the age of 55 years or more but less than 60 years, and who have retired under Voluntary Retirement scheme or a Special Voluntary Retirement scheme on the date of opening of an account. The main feature of the scheme is that is carries an interest of 9% p.a. (taxable) on the deposits. Deposits can be a minimum of Rs. 1000 and maximum of Rs. 15 lakhs, to be held for a period of 5 years and extendable for further 3 years. It can also be prematurely withdrawn after one year with some deductions. Interest qualifies for deduction u/s 80L. c. Public Provident Fund:

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The rate of public provident fund is 8.5% p.a. currently. This is basically a long term investment opportunities (maturity 15 year) as the entire amount that is accumulated in this account can be withdrawn entirely only after 15 years. Partial withdrawal is allowed only after 5 years. Interest is exempt from income tax and contributions are eligible for tax deductions.

d.

Bank Fixed Deposits:

Bank fixed deposits yield will vary from bank to bank but they are more or less streamlined. The yields are currently in the region of 5.5% to 6.5% per annum for deposits ranging from 30 days to five years. All the schedule banks are covered by DICGC (Deposit Insurance and Credit Guarantee Corporation) which means that up to 1 lakh deposited in a bank per person is absolutely safe and insured even if the bank collapse.
HDFC Bank FD 7 days-14 days 15 days-29days 30days-45days 46days-60days 61days-90days 91days-180days 6month 1 day-1 year 1 year 1 day-2 years 2 year1 day- 3 years 3 year 1 day- 5 years 5 year 1 day-8 Interest Rate in % p.a. 3.5 4.25 4.25 4.5 4.75 5 5.5 6 6.25 6.25 6.5

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years

e.

Government Security or Gilts:

Government security and gilts are totally secure. Government bonds are issued by the government of India periodically. These are now available in the secondary market through satellite dealers and banks. They are known to yield 5% to 6% per annum. Interest exceeding Rs. 2500 is liable for TDS at 10.455%.

f.

RBI Taxable Bonds:

These are 8% saving bonds which are taxable. The maturity is after 6 years and there is no upper limit to investment is these bonds. The interest accrued on these bonds is taxable under the Income Tax Act, 1961.
Key Rates 1 yr G-sec 5 yr G-sec 10 yr G-sec 5 yr AAA Current 6.81% 7.22% 7.41% 8.25% 1 Month ago 6.72% 6.96% 7.31% 7.77%

g.

Insurance:

There are several types of insurance policies available in the market today through various players. Life insurance is the most sought after cover life it also offer a tax benefit for the amount of premium paid in a particular year. Though insurance is considered as expenditure, it became an investment option.

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The insurance policies available in the market are either pure insurance or a combination of the three basic types of life insurance policies namely, Term, Whole and Endowment. Term assurance policy is purely protection policy with no investment elements. Whole life and Endowment policies are different as a payout is certain in these policies. A Whole life policy pays out on the death of the life assured, whenever that occurs and in Endowment policy pay will be on maturity date or earlier death. There is one more type of insurance policy is so popular these days is UNIT Link Insurance under which premium amount will be invested in to equity market via mutual fund investment. h. Company Fixed Deposits:

Company fixed deposits was a highly popular investment vehicle in the past. In today’s changing scenario where the corporate world has access to cheaper funds from sources all over the world, the rate of interest offered by good companies make this a less attractive investment vehicle.

i.

Infrastructure Bonds:

An infrastructure bond is a tax saving bond that was innovated in order to provide funds for the development of the key infrastructure projects. Thus, investors in these bonds apart from the material benefits in term of tax saving, have the higher satisfaction of having contributed to the development of the country’s infrastructure. The rate of return on such bonds is between 5 to 5.5%. The bonds have lock in period of 3 years.

2. Variable Return Options
a. Mutual Funds: A mutual fund is a company that pools the money of many investors to invest in a variety of different securities. Investment may be in stocks, bonds, debentures, money market or combination of these. These securities are professionally managed on the behalf of investor, by the fund manager. b. Shares and the Stock Market:

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An equity share is a certificate or a book entry that represents the single unit of ownership in a company or its business. They are sold either directly by the company or they can be acquired through broker from the stock market. By purchasing a share of a company, an individual gets a ownership rights, right to vote and share in the company’s future profits and losses. Primary Market Investment in Equity (IPO) The primary market is a place where the new offerings by companies are made as an Initial Public Offering (IPO) IPO’s are offering made by the company for the first time in the market. Such offers to the public can be at par or can be at premium.

Secondary Market Investment in Equity: The stock exchange is a place where buyers and sellers meet to trade in shares in an organized manner. There are at present 26 recognized stock exchanges in the country and are governed by security board of India (SEBI).

Derivative, Futures and Options: Derivative is a contract/ product that has no independent value i.e. it derives its value from the underlying assets. Underlying assets can be securities, commodities, bullion, currency, livestock or any thing else. Through the use of derivative product, an investor can transfer the price by locking in asset prices. c. Gold: Of late, an inverse relationship between the dollar and gold has been in India. The lower the dollar goes, the higher is the gold prices. Why does this happen? The dollar is the international currency with nothing besides gold to challenge it. Besides being a commodity, gold is a universally accepted form of money. India is a net importer of gold. The domestic production is almost negligible and India is the highest consumer of gold in the world.

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d. Real estate: Investment in real estate or property is a good long term investment for wellheeled investors with a huge amount of money. Depending on the total resources at your disposal, you can invest a part of it in property. e. Foreign Exchange Asset: Till January 2004, Indian residents’ investors were not allowed by our exchange control rules to invest in foreign exchange assets. Recently, the reserve bank of India has allowed residents to invest overseas to the extent of an equivalent of US $ 25,000 per year. Now investor from India can take advantage of any attractive investment opportunity overseas.

3. UNIT LINKED INSURANCE PLANS
Risks of investment in the Units of the Fund the Proposer / Life Assured should be aware that the investment in the units is subject to the following risks: CashPlus is a Unit-Linked Insurance Policy (ULIP) and is different from traditional products. Investments in ULIPs are subject to market risks. The premium paid in Unit-Linked Life Insurance policies are subject to investments risks associated with capital markets and debt markets; and the NAVs of the units may fluctuate based on the performance of fund and factors influencing the

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Capital market; and the insured is responsible for his /her decisions. ICICI Prudential Life Insurance Company Limited and CashPlus are only names of the company and the policy respectively and do not in any way indicate the quality of the policy, its future prospects or returns. The investment in the Fund is subject to market and other risks and there can be no assurance that the objectives of the Fund will be achieved. The fund does not offer a guaranteed or assured return.

CONCEPT OF MUTUAL FUNDS
A Mutual Fund is a body corporate that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or securities. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Mutual funds can thus be considered as financial intermediaries in the investment business that collect

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funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities. Mutual funds are commonly categorized by their general investment objectives. Equity funds consist mainly of common stocks and are organized primarily to achieve capital appreciation, or growth, rather than periodic distribution of income. Bond funds, on the other hand, are composed predominantly of corporate, Government, or municipal bonds and emphasize regular income rather than growth. Income funds have the same objective as bond funds but include Government National Mortgage Association securities, Government securities, and common and preferred stocks as well as bonds. Money market mutual funds consist of short-term instruments, such as Government securities, bank CDs, and commercial paper. Short-term municipal bond funds are composed predominantly of tax-exempt, short-term municipal securities.

Types of Mutual Funds
Mutual Fund schemes may be classified on the basis of its structure and its investments.

By Structure:

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Open-End Funds: • • • Available for sale and repurchase at all times based on the net asset values Unit capital of the fund is not fixed Fund size and its total investment go up if more new subscriptions come in than redemptions and vice versa.

Close-End Funds: • • One time sale of fixed number of units. Investors are not allowed to buy or redeem the units directly from the funds. Some funds offer repurchase after a fixed period. • Listed on stock exchange and investors can buy or sell units through exchange. May be traded at a discount or premium to NAV based on investor’s perception about the funds future performance and other market factors. 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.

Interval Funds: Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

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By Investment Objective:Money/Cash Market Funds: Instruments having less then one year maturity; • • • • • Treasury bills issued by government Certificates of deposit issued by governments Commercial paper issued by companies Inter bank call money Aim to provide easy liquidity, preservation of capital and moderate income. Gilt Funds: Securities maturity over a year;

• • •

Invested in government securities are called dated securities Virtually zero risk of default it is backed by the government It is more sensitive to market interest rates

Debt/Income Funds:

•

Investment in debt instruments issued not only by Government but also by private companies, banks and financial institution and other entities such as infrastructure companies.

• • • •

Target low risk and stable income for investors. Have higher price fluctuation as compared to money market funds due to interest rate fluctuation. Have higher risk of default by borrowers as compared to Gilt funds. Debt funds can be categorized further based on their risk profiles.

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•

Carry both credit risk and interest rate risk.

Equity Funds:

• Invest a major portion of their surplus in equity shares issued by co s,
acquired directly in initial public offering or through secondary market and keep a part in cash to take care of redemption. • • • Risk is very high than debt funds but offer very high growth potential for the capital. It can be further categorized based on investment strategy. It must have along term objectives.

Balanced Funds: • • Has a portfolio of debt instrument, convertible securities, preference and equity shares. Almost equal proportion of debt/money market securities and equities. Normally funds maintain a ratio of 55:45 or 60:40 some funds allocate a flexible proportion based on market conditions. • • Aim is to gain income, capital appreciation and preservation of capital. Ideal for investors for a conservative and long term orientation.

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:

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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:Tax saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000. Special Schemes:? Industry Specific Schemes Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG and Pharmaceuticals etc. ? Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sense or the NSE 50

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? Sector Schemes Sector Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.

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Different styles of Mutual Funds
Different Mutual Funds have very different investing styles. These styles are a function of the individuals managing the fund with the overall investment objectives and policies of the organization acting as a constraint. These are manifest in things likeortfolio turnover – Buy and hold strategy versus frequent investment changes. Kind of investments made – small versus large companies, multi baggers (investments which yield high gains) versus percentage players (investing in shares which will give small gains in line with the market), high quality – low yield bonds versus low quality – high yield bonds. Asset allocations – Varying percentage of cash depending on aggressive views on markets The following examples serve to illustrate a few styles of equity fund managers: Some fund managers are passive value seekers and some are value creators. The former type buys undervalued assets and patiently waits for the market to discover the value. The latter aggressively promote the undervalued stocks that they have bought. Some fund managers restrict themselves to liquid stocks while some thrive on illiquid stocks which offer themselves easily to large price changes. Some fund managers are masters of the momentum game and seek to buy stocks that are in market fancy. They attach lesser importance to

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fundamentals and believe that a rising stock price and favorable momentum indicators imply that fundamentals are changing. In effect, they are following the philosophy, "The trend is my friend". Other fund managers go more by deep fundamental analysis completely ignoring price movements. They do not mind price going down and are in fact happy to buy more. Some fund managers are growth investors i.e. they buy stocks with a high P/E using the forecasted growth to justify the high valuation. Others are value investors who buy shares with low P/E or P/BV multiples - typically companies rich with undervalued assets.

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Process of Mutual Fund

In the above graph shows how Mutual Fund works and how investor earns money by investing in the Mutual Fund. Investors put their saving as an investment in Mutual Fund. The Fund Manager who is a person who takes the decisions where the money should be invested in securities according to the scheme’s objective. Securities include Equities, Debentures, Govt. Securities,

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Bonds, and Commercial Paper etc. These Securities generates returns to the Fund Manager. The Fund Manager passes back return to the investor.

NET ASSET VALUE (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention. Calculation of NAV The most important part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The detailed methodology for the calculation of the asset value is given below. Asset value is equal to Sum of market value of shares/debentures + + Liquid assets/cash held, if any Dividends/interest accrued Amount due on unpaid assets

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Expenses accrued but not paid Details on the above items For liquid shares/debentures, valuation is done on the basis of the last or closing market price on the principal exchange where the security is traded. For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be estimated. For shares, this could be the book value per share or an estimated market price if suitable benchmarks are available. For debentures and bonds, value is estimated on the basis of yields of comparable liquid securities after adjusting for illiquidity. The value of fixed interest bearing securities moves in a direction opposite to interest rate changes Valuation of debentures and bonds is a big problem since most of them are unlisted and thinly traded. This gives considerable leeway to the AMCs on valuation and some of the AMCs are believed to take advantage of this and adopt flexible valuation policies depending on the situation. Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with every passing day, interest is said to be accrued, at the daily interest rate, which is calculated by dividing the periodic interest payment with the number of days in each period. Thus, accrued interest on a particular day is equal to the daily interest rate multiplied by the number of days since the last interest payment date. Usually, dividends are proposed at the time of the Annual General meeting and become due on the record date. There is a gap between the dates on which it becomes due and the actual payment date. In the intermediate period, it is deemed to be "accrued". Expenses including management fees, custody charges etc. are calculated on a daily basis.

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COMPANIES IN INDIA
1. ABN AMRO Mutual Fund 2. Birla Sun Life Mutual Fund 3. Bank of Baroda Mutual Fund (BOB Mutual Fund) 4. HDFC Mutual Fund 5. HSBC Mutual Fund 6. ING Vysya Mutual Fund 7. Prudential ICICI Mutual Fund 8. Sahara Mutual Fund 9. State Bank of India Mutual Fund 10. Tata Mutual Fund 11. Kotak Mahindra Mutual Fund 12. Unit Trust of India Mutual Fund 13. Reliance Mutual Fund 14. Standard Chartered Mutual Fund 15. Franklin Templeton India Mutual Fund 16. Morgan Stanley Mutual Fund India 17. Escorts Mutual Fund 18. Alliance Capital Mutual Fund 19. Benchmark Mutual Fund 20. Canbank Mutual Fund 21. Chola Mutual Fund 22. GIC Mutual Fund 23. LIC Mutual Fund 24. Fidelity Mutual Fund

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25. IL&FS Mutual Fund 26. DSP Merill lynch Mutual Fund 27. Sundaram Mutual Fund 28. Principal Mutual Fund 29. Taurus Mutual Fund 30. Deutsche Mutual fund 31. IDBI Investment Company Ltd. 32. Bank of India Mutual Fund

PORTFOLIO MANAGEMENT
People have different investment objective and risk appetite so to get the highest returns asset allocation through active portfolio management is the key element. Asset allocation is a method that determines how you divide your portfolio among different investment instruments and provides you with the proper blend of various asset classes. It is based on the theory that the type or class of security you own equity, debt or money market- is more important than the particular security itself. In other words asset allocation is way to control risk in your portfolio. Different asset class will react differently to market conditions like inflation, rising or falling interest rates or a market segment coming into or falling out of favor. Asset allocation is different from simple diversification. Suppose you diversify your equity portfolio by investing in five or ten equity funds. You really have not done much to control risk in your portfolio if all these funds come from only one particular segment of the market say large cap stocks or mid cap stocks. In case of an adverse reaction for that segment, all the funds will react similarly means they will go down.

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If you build your portfolio with various top performing growth funds without really bothering to analyze their portfolio allocation, you may end up with overexposure to a particular segment. Another point you need to remember is that growth funds are highly correlated- they tend to move in the same direction in response to a given market force. The advantage of asset allocation lies in achieves superior returns when markets are down while minimizing the exposure of the portfolio to volatility. In fact, asset allocation is based on certain dimensions that, when combined tend to control the volatility while achieving targeted returns.

Portfolio Management Process
Portfolio management is a complex activity, which may be broken down into the following steps: 1. Specification of investment objectives and constraints: The typical objectives sought by an investor are current income, capital appreciation, safety, fixed returns on principal investment. 2. Choice of asset mix: The most important decision in portfolio management is the asset mix decision. This is concerned with the proportions of “Stock” or “ Units” of mutual fund or “Bond” in the portfolio. The appropriate mix of Stock and Bonds will depend upon the risk tolerance and investment horizon of the investor. 3. Formulation of portfolio strategy: Once the certain asset mix has been chosen an appropriate portfolio strategy has to be decided out. Two broad portfolio choices are available

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An active portfolio management: it strive to earn superior risk adjusted returns by resorting to market timing, or sector rotation or security selection or some combination of these. A passive portfolio management involves holding a broadly diversified portfolio and maintaining a pre-determined level of risk exposure. Designing a model Portfolio There are certain objectives that should keep in mind while designing a portfolio these are: • • • • • • Higher absolute rate of return and high real rate of return Maximization current income High post tax returns Positive real return Preservation of capital Growth in capital

For my study I am making three dummy portfolios for three different kinds of investors.

Types of Investor:
1. Cautious Investor: It’s kind of investor who is less bothers about high returns. He wants to lower down his risk profile and demand for fixed income on his investment. His main objective of investment is fixed returns with less risk. 2. Balanced Investor: It’s a kind of investor who is bothers about returns as well as risk. He wants moderate returns with moderate risk. 3. Aggressive Investor: It’s a kind of investor who is ready to take risk. He believes in high risk and high returns. So he only wants to invest in equity schemes.

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I have made an assumption that each investor want to invest 5 Lakh Rs.

Portfolio for Cautious Investor
Investment Instrument Kisan Vikas Patra PPF Bank Fixed Deposits NSC Post office monthly MIP TOTAL Amount 1,50,000 Rs. 70,000 Rs. 1,00,000 Rs. 80,000 Rs. 1,00,000 Rs. 5,00,000 Rs. Returns 8.4% p.a. 8.5% p.a. 6.5% p.a. 8.16% p.a. 8% p.a.

Logic behind selection of particular Instrument: As investor does not want to take risk, he is satisfied with fixed return rather they are less than equity investment’s returns. So I took thus instrument which provides good return as well as secure also. All of these instruments will give him return around 8% annually.

Portfolio for Balance Investor
Investment Instrument HDFC Prudence Fund Reliance Vision Fund Bank Fixed Deposits PPF Kisan Vikas Patra TOTAL Amount 1,30,000 Rs. 1,00,000 Rs. 1,00,000 Rs. 70,000 Rs. 1,00,000 Rs. 5,00,000 Rs. Returns 54.2% p.a. 78.3% p.a. 6.5% p.a. 8.5% p.a. 8.4% p.a.

Logic behind selection of particular Instrument: As investor does not want to take high risk, he is satisfied with fixed return plus some equity exposure. But he wants some safety in equity exposure also. So I took thus instrument which provides good return as well as safety also. Fixed return instruments like PPF, Bank FD and kisan viaks patra will give him return around 8% annually and I suggest Balance kind of funds to

Portfolio Management In Mutual Funds

him where he will have exposure of both equity as well as debts. HDFC prudence fund is best performing fund under balance scheme. To increase the ratio of equity in portfolio I suggested Reliance vision fund which is mainly based on large and mid cap companies.

Portfolio for Aggressive Investor
Investment Instrument HDFC Core & Satellite Fund Prudential ICICI Emerging Star Fund Franklin Flexi Cap Fund Fidelity Equity Fund DSP Top 100 TOTAL Amount 1,30,000 Rs. 90,000 Rs. 1,10,000 Rs. 80,000 Rs. 90,000 Rs. 5,00,000 Rs. Returns 83.56% p.a. 93.3% p.a. 86.25% p.a. 82.4% p.a. 79.28% p.a.

Logic behind selection of particular Instrument: As investor ready to take high risk, he is looking for high returns on his investment. I took thus instrument which provides good return. All of these instruments will give him return around 80% annually. Currently Mid cap companies will perform better than large cap companies so, I select more funds which are focusing on mid cap companies like HDFC, Franklin’s funds. To take the benefit of increasing Sensex I took DSP top 100.

MEASUREMENT OF RETURNS ON PORTFOLIOS
The realized rate of return will be calculated by

Portfolio Management In Mutual Funds

1.

Time Weighted Rate of Return (TWROR) It is calculated by using Dietz Algorithm Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100 Po= Portfolio value at the beginning of the period Pi= Portfolio value at the end of the period Ci= Net contributions during time interval Ri= Rate of Return for the time interval

a) Rate of return for cautious investor Investment Instrument Kisan Vikas Patra PPF Bank Fixed Deposits NSC Post office monthly MIP TOTAL Amount 1,50,000 Rs. 70,000 Rs. 1,00,000 Rs. 80,000 Rs. 1,00,000 Rs. 5,00,000 Rs. Returns 8.4% p.a. 8.5% p.a. 6.5% p.a. 8.16% p.a. 8% p.a. Current Value 1,62,600 75,950 1,06,500 86,528 1,08,000 5,39,578

Time Weighted Rate of Return (TWROR) Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100 = {(539578-0.5(0))/ (500000+0.5(0))-1}*100 = 7.91% p.a. b) Rate of return for balance investor Investment Instrument HDFC Prudence Fund Amount 1,30,000 Rs. Returns 54.2% p.a. Current Value 2,00,460

Portfolio Management In Mutual Funds

Reliance Vision Fund Bank Fixed Deposits PPF Kisan Vikas Patra TOTAL

1,00,000 Rs. 1,00,000 Rs. 70,000 Rs. 1,00,000 Rs. 5,00,000 Rs.

78.3% p.a. 6.5% p.a. 8.5% p.a. 8.4% p.a.

1,78,300 1,06,500 75,950 1,08,400 6,69,610

Time Weighted Rate of Return (TWROR) Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100 = {(669610-0.5(0))/ (500000+0.5(0))-1}*100 = 33.92%p.a. c) Rate of return for aggressive investor Investment Instrument HDFC Core & Satellite Fund Prudential ICICI Emerging Star Fund Franklin Flexi Cap Fund Fidelity Equity Fund DSP Top 100 TOTAL Amount 1,30,000 Rs. 90,000 Rs. 1,10,000 Rs. 80,000 Rs. 90,000 Rs. 5,00,000 Rs. Returns 83.56% p.a. 93.3% p.a. 86.25% p.a. 82.4% p.a. 79.28% p.a. Current Value 2,38,628 1,73,790 2,04,875 1,45,920 1,61,352 9,24,565

Time Weighted Rate of Return (TWROR) Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100 = {(924565-0.5(0))/ (500000+0.5(0))-1}*100 = 84.91%p.a.

Portfolio Management In Mutual Funds

Phase II
Scheme Portfolio
Scheme Portfolio: Like investors portfolio different scheme under mutual fund have different portfolio. By scheme portfolio we mean portfolio or companies in which fund

Portfolio Management In Mutual Funds

manager invested the fund. The selection of companies depend upon many issue which have great impact in current scenario as well as in near future. Fund manager has to do lot of research before investing into particular script. Before going into detail one should understand Sensex movement. Mutual fund returns are based on Sensex. Their Net Asset Value is directly related to Share market. The below table shown the Sensex change on monthly basis. Means what is % change in Sensex during one month.

Sensex Journey Percentage Changes at the End of the Day
Date 30-Sep-08 3-Oct-08 31-Oct-08 2-Nov-08 30-Nov-08 2-Dec-08 30-Dec-08 2-Jan-09 31-Jan-09 2-Feb-09 28-Feb-09 2-Mar-09 31-Mar-09 Opening 8,672.66 8,662.99 7,717.07 7,953.28 8,962.92 9,010.58 9,339.32 9,422.49 9,892.23 9,890.90 10,308.71 10,597.19 11,325.96 Closing 8,634.48 8,697.65 7,892.32 8,072.75 8,788.81 8,961.61 9,397.93 9,390.14 9,919.89 9,843.87 10,370.24 10,626.78 11,279.96 Change -38 35 175 119 -174 -49 58 -32 27 -47 62 29 -46 Change in % -0.43 0.44 2.26 1.49 -0.19 -0.54 0.62 -0.33 0.27 -0.47 0.61 0.27 -0.4 1

Percentage Changes at the End of the Month
Date 30-Sep-08 8,672.66 8,634.48 Nil Nil Opening Closing Change In Closing Prices Change in %

Portfolio Management In Mutual Funds

31-Oct-08 30-Nov-08 30-Dec-08 31-Jan-09 28-Feb-09 31-Mar-09

7,717.07 8,962.92 9,339.32 9,892.23 10,308.71 11,325.96

7,892.32 8,788.81 9,397.93 9,919.89 10,370.24 11,279.96

74 2 896 609 522 451 909

8.59 11.35 6.92 5.55 4.54 8.76

Sensex has boomed with lots of ups and down from last year. It seems very fluctuating.

Portfolio Management In Mutual Funds

For my study purpose I have taken HDFC Equity Fund and HDFC Core & Satellite Fund. What is their portfolio means in which companies the fund manager invested the fund. How he has allocated funds among various industries as well as various companies. After studying both the fund’s portfolio I compare them with reliance Growth fund, Prudential ICICI Growth Fund, DSP Tiger Fund and Kotak Opportunity Fund. Comparison is based on per month returns and Sensex returns during the same period.

Portfolio Management In Mutual Funds

HDFC Equity Fund
Portfolio Top 10 Holdings For October S. No. 1 2 3 4 5 6 7 8 Company Oil & Natural Gas Corporation Ltd. State Bank of India Infosys Technologies Ltd. Satyam Computer Services Ltd. Bharat Heavy Electricals Ltd. Amtek Auto Ltd. Maruti Udyog Ltd. United Phosphorus Ltd. Industry Oil Banks Software Software Industrial Capital Goods Auto Ancillaries Auto Ancillaries Pesticides Industrial Capital Goods Auto Top 10 Holdings Others Equity Holdings TOTAL % of NAV 9.11 9.02 7.97 7.68 7.25 6.05 5.21 4.69 4.67 4.54 66.09 33.91 100

9 Crompton Greaves Ltd. 10 Mahindra & Mahindra Ltd.

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Oct 2008 93.055 31, Oct 2008 88.295 -4.76 -5.11

Compare returns with Sensex Movement Date Closing Change % change 30-Sep8,634.4 08 8 31-Oct7,892.3 08 2 -742 -8.59

Portfolio Management In Mutual Funds

HDFC Equity Fund
Portfolio Top 10 Holdings For December S. No. 1 2 3 4 5 Company Oil & Natural Gas Corporation Ltd. Infosys Technologies Ltd. Tata Motors Ltd. Satyam Computer Services Ltd. State Bank of India Industry Oil Software Auto Software Banks Industrial Capital Goods Auto Ancillaries Auto Industrial Capital Goods Auto Ancillaries Top 10 Holdings Others Equity Holdings TOTAL % of NAV 9.14 8.91 8.67 7.72 5.19 4.87 4.76 4.45 4.44 4.36 62.51 37.49 100

6 Crompton Greaves Ltd. 7 Amtek Auto Ltd. 8 Mahindra & Mahindra Ltd. 9 Bharat Heavy Electricals Ltd. 10 Maruti Udyog Ltd.

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Dec 2008 102.827 3o, Dec 2009 107.009 4.182 4.06 Compare returns with Sensex Movement Date Closing Change % change 30-Nov8,788.8 08 1 30-Dec9,397.9 08 3 609 6.92

In the month of December Sensex has grown by 6.92% but fund’s return were only 4.06% which indicating towards lower performance of fund.

Portfolio Management In Mutual Funds

HDFC Equity Fund
How Fund's Portfolio effected Returns

October
Industry Software Industrial Capital Goods Auto Banks Oil Auto Ancillaries Pesticides Power Transportation Petroleum Products Hardware Textile Metals Pharmaceuticals Chemicals % Of Allocation Industry 19.97 Software 13.73 12.73 9.28 9.11 8.68 4.69 4.07 2.74 2.41 2.11 1.92 1.76 1.45 0.88

December
% Of Allocation 20.14 17.48 13.77 9.14 7.73 7.19 3.98 3.27 3.15 2.25 2.01 1.63 1.5 2.57 0.82 0.79 0.21 0.09

Auto Industrial Capital Goods Oil Banks Auto Ancillaries Pesticides Consumer Non Durables Transportation Metals Gas Pharmaceuticals Hardware Textile Chemicals Telecom-service Construction IT Consulting & Services

Oct-Dec Month Portfolio
Industry Software Auto Industry Capital Goods Oil Banks Auto Ancillaries Pesticides Consumer Non Durables Change 0.17 4.75 0.04 0.03 -1.55 -1.49 -0.71 3.27

Portfolio Management In Mutual Funds

Transportation Metals Gas Pharmaceuticals Hardware Textile Chemicals

0.41 0.51 2.01 0.18 -0.61 0.66 -0.06

Tata Motors Share Benefit Chang % Date Price e Change 31, Oct 2008 472 31, dec2008 639.55 167.55 35.49%

Fund manager added auto industry by taking Tata motors to 8.67 % which had no exposure in the month of October in the portfolio. During that time Tata Motors has grown from 472 to 639.55 Rs means 35.49% increase which fletched fund performance in to positive. So, fund manager decision of taking Tata Motors has proved right.
Amtek Share Benefit Chang Price e % Change 273.7 297 24 8.79%

Date 31, Oct 2008 31, dec2008

Fund manager reduced Amtek exposure in the portfolio by 1.26 % which proved right because its share price rose only by 8.79% where Sensex was increasing at 19.2%.so Amtek performed lower than market so its good to sell this script from portfolio.
HDFC Equity Fund Portfolio Top 10 Holdings For April S. No. 1 2 3 4 Company Tata Motors Ltd. State Bank of India Infosys Technologies Ltd. Oil & Natural Gas Corporation Industry Auto Banks Software Oil % of NAV 9.04 8.13 8.04 7.89

Portfolio Management In Mutual Funds

Ltd. 5 Satyam Computer Services Ltd. 6 Bharat Heavy Electricals Ltd. 7 Maruti Udyog Ltd. 8 Crompton Greaves Ltd. 9 Siemens Ltd. 10 Amtek Auto Ltd.

Software Industrial Capital Goods Auto Ancillaries Industrial Capital Goods Industrial Capital Goods Auto Ancillaries Top 10 Holdings Others Equity Holdings TOTAL

7.44 5.55 5.23 5.17 4.47 3.94 64.9 35.1 100

NAV Changed During the Month (GROWTH) Date 1, Aprl 2009 30, Aprl 2009 NAV 107.009 132.31 Change % Change Beta 0.88 0.88

29.30

23.64

Compare returns with Sensex movement Date Closing Change % change 30 march 09 11329.05 31 april 09 14700.01 2677.96 23.64

Industry Wise Allocation
April Industry Software Auto Industry Capital Goods Oil Banks Auto Ancillaries % Of Allocation 20.14 17.48 13.77 9.14 7.73 7.19 May Industry Software Auto Industry Capital Goods Banks Oil Auto Ancillaries % Of Allocation 22.03 18.16 15.35 8.6 7.89 6.65

Portfolio Management In Mutual Funds

Pesticides Consumer Non Durables Transportation Metals Gas Pharmaceuticals Hardware Textile Chemicals Telecom-service Construction IT Consulting & Services

3.98 Consumer Non Durables 3.27 3.15 2.25 2.01 1.63 1.5 2.57 0.82 Pesticides Transportation Gas Metals Pharmaceuticals Hardware Textile Chemicals IT Consulting & 0.79 Services 0.21 0.09

3.94

3.93 2.84 2.1 1.85 1.42 1.38 2.04 0.7 0.1

April-May Month Portfolio
Industry Software Auto Industry Capital Goods Oil Banks Auto Ancillaries Pesticides Consumer Non Durables Transportation Metals Gas Pharmaceuticals Hardware Textile Chemicals Change 1.89 0.68 1.58 -1.25 0.87 -0.54 -0.05 0.67 -0.29 -0.4 0.09 -0.19 -0.12 -0.5 -0.12

Portfolio Management In Mutual Funds

Siemens Share Benefit
Date Price Change % Change 30, April 2009 3625.85 31, May 2009 4486 860.15 23.72 Beta 1.29 1.4

Add siemens to 4.47 which had no exposure in the month of December in the portfolio. During that time siemens has grown from 3625.85 to 4486 Rs means 23.72% increase which fletched fund performance at good rate.

HDFC Equity Fund Portfolio Top 10 Holdings For February Company Industry Infosys Technologies Ltd. Software State Bank of India Banks Satyam Computer Services Ltd. Software Industrial Capital Bharat Heavy Electricals Ltd. Goods Oil & Natural Gas Corporation Ltd. Oil Tata Motors Ltd. Auto Maruti Udyog Ltd. Auto Ancillaries Consumer Non ITC Ltd. Durables Amtek Auto Ltd. Auto Ancillaries Top 10 Holdings Others Equity Holdings TOTAL

S. No. 1 2 3 4 5 6 7 8 9

% of NAV 8.78 7.92 7.24 7.05 6.58 6.55 6.04 5.97 5.48 61.61 38.39 100

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Feb 2009 113.063 28, Feb 2009 116.844 3.781 3.344

Beta 0.83 0.83

Compare returns with Sensex Movement Date Closing Change % change 31-Jan06 9236 28-Feb06 8800 436 -4.72

Industry Wise Allocation
January Industry Software Auto Industry Capital Goods Banks Oil Auto Ancillaries Consumer Non Durables Pesticides Transportation % Of Allocatio n 22.03 18.16 15.35 8.6 7.89 6.65 3.94 3.93 2.84 February Industry Software Industry Capital Goods Auto Consumer Non Durables Auto Ancillaries Banks Oil Pesticides Transportation % Of Allocatio n 21.06 17.32 12.59 10.16 8.9 7.92 6.58 3.7 2.32

Portfolio Management In Mutual Funds

Gas Metals Pharmaceuticals Hardware Textile Chemicals IT Consulting & Services

2.1 Metals Pharmaceuticals 1.42 1.38 2.04 0.7 0.1 Hardware Textile Chemicals IT Consulting & Services

1.78 1.45 1.29 2.09 0.67 0.12

Jan-Feb Month Portfolio
Industry Software Industry Capital Goods Auto Consumer Non Durables Auto Ancillaries Banks Oil Pesticides Transportation Metals Pharmaceuticals Hardware Textile Chemicals IT Consulting & Services Change -0.97 1.97 -5.57 6.22 2.25 -0.68 -1.31 -0.23 -0.62 -0.07 0.03 -0.09 0.05 -0.03 0.02

ITC Share Benefit
Date 31, Jan 2006 28, Feb 2006 % Price Change Change 154.8 172.45 17.65 11.41

Add ITC to 5.97 which had no exposure in the month of January in the portfolio. During that time ITC has grown from 154.8 to 172.45 Rs means

Portfolio Management In Mutual Funds

11.41% increase which is higher than Sensex 4.54% growth, this decision gave return at 3.44%. Crompton Greaves Share Benefit
Date 31, Jan 2006 28, Feb 2006 Price 906.35 892.45 -13.9 -1.53 % Change Change

Reduce share of Crompton Greaves which had less exposure in the month of February than January in the portfolio. During that time Crompton has felt from 906.35 to 892.45 Rs means 1.53% decrease. Due to this fund’s performance has not felt.
HDFC Equity Fund Portfolio Top 10 Holdings For March Company Industry Infosys Technologies Ltd. Software State Bank of India Banks ITC Ltd. Consumer Non Durables Satyam Computer Services Ltd. Software Tata Motors Ltd. Auto Bharat Heavy Electricals Ltd. Industrial Capital Goods Maruti Udyog Ltd. Auto Ancillaries Crompton Greaves Ltd. Industrial Capital Goods Siemens Ltd. Industrial Capital Goods Amtek Auto Ltd. Auto Ancillaries Top 10 Holdings Others Equity Holdings TOTAL

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

% of NAV 8.72 7.88 7.81 6.86 5.87 5.71 5.5 5.06 4.78 4.57 62.76 37.24 100

NAV Changed During the Month (GROWTH) Date 1, Mar 2009 NAV 116.844 Change % Change Beta 0.88

Portfolio Management In Mutual Funds

31, Mar 2009

127.151

10.307

8.821

0.88

Compare returns with Sensex Movement Date
28-Feb-06 31-Mar-06

Closing
8800 9568.14

Change 768.14

% change 8.73

Industry Wise Allocation February March Industry % Of Allocation Industry % Of Allocation Software 21.06 Software 18.09 Industry Capital Goods 17.32 Industry Capital Goods 17.35 Consumer Non Auto 12.59 Durables 12.46 Consumer Non Durables 10.16 Auto 11.37 Auto Ancillaries 8.9 Banks 7.88 Banks 7.92 Auto Ancillaries 7.67 Oil 6.58 Oil 3.86 Pesticides 3.7 Media & Entertainment 3.29 Transportation 2.32 Pesticides 2.87 Metals 1.78 Telecom- Services 2.65 Pharmaceuticals 1.45 Metals 2.13 Hardware 1.29 Transportation 1.86 Textile 2.09 Hardware 1.81 Chemicals 0.67 Textile 2.05 IT Consulting & Services 0.12 Pharmaceuticals 1.09 Chemicals 0.87 IT Consulting & Services 0.08

Feb-March Month Portfolio

Portfolio Management In Mutual Funds

Industry Software Industry Capital Goods Consumer Non Durables Auto Banks Auto Ancillaries Oil Media & Entertainment Pesticides Telecom- Services Metals Transportation Hardware Textile Pharmaceuticals Chemicals IT Consulting & Services

Change -2.97 0.03 2.3 -1.22 -0.04 -1.23 -2.72 3.29 -0.83 2.65 0.35 -0.46 0.52 -0.04 -0.36 0.2 -0.04

Crompton Greaves Share Benefit
Date 28, Feb 2006 31, March 2006 Price Change 892.45 1049.3 156.85 % Change

17.57

Add share of Crompton Greaves which had less exposure in the month of February in the portfolio. During March Crompton has grown from 892.45 to 1049.3 Rs means 17.57% increase. So, these decision results in 8.4% return on fund. Satyam Computer Share Benefit
Date 28, Feb 2006 31, March 2006 Price Change 769.65 848.5 78.85 % Change

10.24

Portfolio Management In Mutual Funds

Satyam computer has grown at the rate of 10.24% which is 20% higher than Sensex growth in that time period. Prudential ICICI Growth Fund January
S. No 1 2 3 4 5 6 7 8 9 10 Companies Hindalco Industry Ltd. Bharat Heavy Electricals Limited Associated Cement Companies Ltd Oil & Natural Gas Company Ltd Grasim Industries Limited Reliance Industries Limited Satyam Computer Services Ltd. Jaiprakash Associates Ltd Mahindra & Mahindra Limited ITC Limited Industry Non Ferrous Metals Industrial Capital Goods Cement Oil Cement Petroleum Products Software Construction Auto Consumer Non Durables % of NAV 5.43 4.16 3.87 3.73 3.47 3.36 3.14 3.08 3.03 3

Industry Wise Allocation

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Jan 2009 68.7

Beta 0.98

Portfolio Management In Mutual Funds

31, Jan 2009

70.42

1.72

2.5

0.98

In January, ICICI Growth Fund has given only 2.5% returns where HDFC Equity Fund has given 5.34% returns. So we can say that HDFC has performed better in January. Reliance Industry Share Benefit
Date 31, Dec 2008 31, Jan 2009 % Price Change Change 897.85 713.9 -183.95 -20.4

In the month of January Reliance Industry’s share price has come down to 713.9 Rs which is 20.4% lesser than December price. ICICI has exposure of reliance industry in to portfolio which harms the fund’s overall returns. Jai Prakash Associate Share’s Benefit
Date 31, Dec 2008 31, Jan 2009 % Price Change Change 379.9 408.25 28.35 7.46

ICICI has exposure of Jai Prakash Associates which has rose by 7.46% in January month. HDFC Mutual fund did not have Jai Prakash’s exposure in their portfolio.

Prudential ICICI Growth Fund February
S. No 1 2 3 4 Companies Bharat Heavy Electricals Limited Jaiprakash Associates Ltd Reliance Industries Limited ITC Limited Industry Industrial Capital Goods Construction Petroleum Products Consumer Non % of NAV 4.84 4.14 3.99 3.82

Portfolio Management In Mutual Funds

5 Grasim Industries Limited Associated Cement Companies 6 Ltd 7 Bajaj Auto Limited 8 Satyam Computer Services Ltd. 9 Mahindra & Mahindra Limited 10 Oil & Natural Gas Company Ltd

Durables Cement Cement Auto Software Auto Oil

3.73 3.71 3.68 3.45 3.44 3.44

Industry Wise Allocation

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Feb 2009 70.42 28, Feb 2009 71.79 1.37 1.94

Beta 0.96 0.96

Portfolio Management In Mutual Funds

In February market has boomed by 4.54% where HDFC Equity fund has given 3.33% returns. So it has performed similar to market trend but ICICI Growth fund has given only 1.94% in same period. So, we can say that this fund has performed lower than market.

Prudential ICICI Growth Fund March
S. No Companies Industry Industrial Capital Goods Petroleum Products Industrial Capital Goods Consumer Non Durables Industrial Capital Goods Auto Cement Auto Pharmaceuticals Cement % of NAV 4.84% 4.64% 4.03% 3.91% 3.82% 3.52% 3.49% 3.32% 3.28% 3.17%

1 Bharat Heavy Electricals Limited 2 Reliance Industries Limited 3 Larsen & Toubro Limited 4 ITC Limited 5 Siemens India Limited 6 Bajaj Auto Limited Associated Cement Companies 7 Ltd 8 Mahindra & Mahindra Limited 9 Cipla Limited 10 Grasim Industries Limited

Industry Wise Allocation

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, March 2009 71.79 31, March 2009 80.94 9.15 12.74

Beta 0.78 0.78

ICICI Growth fund has grown up by 12.74% in March where HDFC Equity Fund has grown only by 8.8% CIPLA Share’s Benefit
Date 31, Dec 2008 31, Jan 2009 % Price Change Change 552.15 662.25 110.1 19.94

ICICI has CIPLA script in their portfolio which has grown to 662.25 Rs. It has rose by 19.94% in March month. HDFC did not have CIPLA’s exposure. This script has the main reason behind ICICI better performance over HDFC.

Portfolio Management In Mutual Funds

Reliance Growth Fund January
S. No. 1 2 3 4 5 6 7 8 9 10 Companies Bharat Earth Movers Ltd. Kirloskar Brothers Crompton Greaves Ltd. Hindustan Lever Ltd. State Bank of India Strides Arcolabs Ltd. United Phosphorous Jindal Saw Ltd. Jaiprakash Associates Reliance Industries Ltd. % of NAV 4.96 3.84 2.99 2.64 2.58 2.35 2.26 2.2 2.11 2.08

Industry Wise Allocation
S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Industry Industry Capital Goods Consumer Non Durable Industrial Products Software Banks Pharmaceuticals Ferrous Metals Fertilizers Chemicals Construction Auto Ancillaries Pesticides Petroleum Products % Of Allocation 10.44 10.41 9.34 8.92 7.25 6.1 5.16 3.09 3.09 2.8 2.33 2.26 2.08

Portfolio Management In Mutual Funds

14 Auto 15 Telecom Services

2.05 1.86

Reliance Growth Fund March
S. No. 1 2 3 4 5 6 7 8 9 10 Companies Bharat Earth Movers Ltd. Reliance Industries Ltd. Kirloskar Brothers Bombay Dying Ltd. Bank of Baroda Crompton Greaves Ltd. Jaiprakash Associates Strides Arcolabs Ltd. Jindal Saw Ltd. JSW Steels Ltd. % of NAV 4.91 4.6 4.18 2.66 2.58 2.57 2.31 2.16 2.1 2.04

Industry Wise Allocation
S. No. 1 2 3 4 5 6 7 8 Industry Industry Capital Goods Industrial Products Consumer Non Durable Software Pharmaceuticals Banks Ferrous Metals Petroleum Products % Of Allocation 10.76 10.19 8.37 8.17 7.78 7.19 6.98 5.95

Portfolio Management In Mutual Funds

9 Chemicals 10 Construction 11 Fertilizers 12 Telecom Services 13 Auto 14 Auto Ancillaries 15 Pesticides

4.55 3.11 2.78 2.56 2.34 2.19 2.14

NAV Changed During the Month (GROWTH)
Date 1, Mar 2009 31, Mar 2009 NAV 207.15 229.76 Change 22.61 % Change 10.91 Beta 0.87 0.87

Reliance growth fund has given 10.91% returns to investors in the month of March where market has boomed by only 8.4%. In the same month HDFC Equity fund has given only 8.84 % returns.

Kirloskar Brother Share’s Benefit
% Price Change Change 196.55 291.7 95.15 48.41

Date 28, Feb 2009 31, Mar 2009

Kirloskar Brother Share price has risen from 196.55 to 291.7 Rs. This means 48.41% increase in March month. HDFC Mutual Fund had not this script into their portfolio.

Bombay Dyeing Share’s Benefit
Date 28, Feb 2009 31, Mar 2009 % Price Change Change 375.35 596 220.45 58.71

Portfolio Management In Mutual Funds

Bombay Dyeing shares have grown by 58.71% where the overall Sensex has grown only by 8.76% Reliance has 4.18% exposure to this script.

JSW Steel Share’s Benefit
Date 28, Feb 2009 31, Mar 2009 % Price Change Change 205.1 302.85 97.75 47.61

In the month of March JSW Steel has moved to 302.85 Rs which was 47.61% increase. Reliance has 2.04% exposure to this script.

HDFC Equity Fund
February

Portfolio Management In Mutual Funds

S. No. Company % of NAV 1 Infosys Technologies Ltd. 8.78 2 State Bank of India 7.92 3 Satyam Computer Services Ltd. 7.24 4 Bharat Heavy Electricals Ltd. 7.05 5 Oil & Natural Gas Corporation Ltd. 6.58 6 Tata Motors Ltd. 6.55 7 Maruti Udyog Ltd. 6.04 8 ITC Ltd. 5.97 9 Amtek Auto Ltd. 5.48 10 Crompton Greaves Ltd. 4.8 11 Siemens Ltd. 4.25 12 United Phosphorus Limited 3.7 13 Nestle India Ltd. 2.87 14 Balkrishna Industry Ltd. 2.5 15 I-flex Solutions Limited 2.42 16 Container Corporation of India Ltd. 2.32 17 HCL Technology Ltd. 2.29 18 ISMT Ltd. 1.78 Dishman Pharmaceuticals & 19 Chemicals 1.45 20 Britannia Industries Limited 1.32 21 CMC Ltd. 1.29 22 Larsen & Toubro Ltd. 1.22 23 Indo Rama Synthetics (India) Limited 1.06 24 Himatsinka Seilde Ltd. 1.03 25 J K Industries Limited 0.92 26 Savita Chemicals Limited 0.67 27 Datamatics Technologies Limited 0.33

TOTAL

100

Portfolio Management In Mutual Funds

March
S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Company Infosys Technologies Ltd. State Bank of India ITC Ltd. Satyam Computer Services Ltd. Tata Motors Ltd. Bharat Heavy Electricals Ltd. Maruti Udyog Ltd. Crompton Greaves Ltd. Siemens Ltd. Amtek Auto Ltd. ONGC Zee Tele films Ltd. United Phosphorus Limited Nestle India Ltd. Bharti Tele-ventures Ltd. Balkrishna Industry Ltd. HCL Technology Ltd. ISMT Ltd. Hindustan Lever Ltd. Container Corporation of India Ltd. CMC Ltd. Larsen & Toubro Ltd. Himatsinka Seilde Ltd. Disahman Pharmaceuticals & Chemicals Indo Rama Synthetics (India) Limited Savita Chemicals Limited J K Industries Limited Datamatics Technologies Limited TOTAL

% of NAV 8.72 7.88 7.81 6.86 5.87 5.71 5.5 5.06 4.78 4.57 3.86 3.29 2.87 2.78 2.65 2.35 2.25 2.13 1.87 1.86 1.81 1.8 1.15 1.09 0.9 0.87 0.75 0.26 100

Portfolio Management In Mutual Funds

Change in Portfolio

Companies
United Phosphorus Limited Tata Motors Ltd. State Bank of India Siemens Ltd. Savita Chemicals Limited Satyam Computer Services Ltd. ONGC Nestle India Ltd. Maruti Udyog Ltd. Larsen & Toubro Ltd. J K Industries Limited ITC Ltd. ISMT Ltd. Infosys Technologies Ltd. Indo Rama Synthetics (india) Limited Himatsinka Seilde Ltd. HCL Tecnology Ltd. Disahman Pharmaceuticals & Chemicals Datamatics Technologies Limited Crompton Greaves Ltd. Container Corporation of India Ltd. CMC Ltd. Bharat Heavy Electricals Ltd. Balkrishna Industry Ltd. Amtek Auto Ltd. Zee Tele Films Ltd. Bharti Tele-ventures Ltd. Hindustan Lever Ltd. I-Flex Solution Ltd. Britannia Industry Ltd.

Change
-0.83 -0.68 -0.04 0.53 0.2 -0.38 -2.72 -0.09 -0.54 0.58 -0.17 1.84 0.35 -0.06 -0.16 0.84 -1.14 0.8 0.76 -4.54 2.74 0.57 -5.24 0.15 0.23 3.29 2.65 1.87 -2.42 -1.32

Portfolio Management In Mutual Funds

Zee Tele Films Share's Effect
Date 28, Feb 2009 31, Mar 2009 % Price Change Change 176.6 239 62.4 35.33

Fund adds exposure of zee tele films into portfolio by 3.29 % which has increased by 35.33% during March. In the same time period market has boomed only by 8.76%.

I- Flex Share's Effect
Date 28, Feb 2009 31, Mar 2009 Price 1063. 5 1327 % Change Change

263.5

24.77

Fund eliminate I flex solution from its portfolio which has increased by 24.77% during March.

Hindustan Lever Ltd. Share's Effect
Date 28, Feb 2009 31, Mar 2009 % Price Change Change 243.7 272 28.3 11.61

Fund added Hindustan Lever Ltd. into their portfolio which has risen by 11.61% during March.

Portfolio Management In Mutual Funds

ITC Ltd. Share's Effect
Date 28, Feb 2009 31, Mar 2009 % Price Change Change 172.4 5 195.1 5 22.7 13.16

Fund added ITC Ltd. into portfolio which has risen 13.16% during March.

Crompton greaves Ltd. Share's Effect
Date 28, Feb 2009 31, Mar 2009 Price 892 1049. 5 % Change Change

157.5

17.61

Fund reduces the share of Crompton from portfolio which has increased by 17.61% during March.

Core & Satellite Fund Nature of scheme : Open ended growth scheme Objective: To generate capital appreciation through equity investment in companies whose shares are quoting at prices below their true value. Fund Manager : Dhawal Mehta Inception Date : September 17, 2004

Core & Satellite Fund
Portfolio Top 10 Holdings For October S. No. Company Industry 1 State Bank of India Banks Industrial Capital 2 Bharat Heavy Electricals Ltd. Goods % To NAV 8.83 7.95

Portfolio Management In Mutual Funds

3 Infosys Technologies Ltd. 4 Tata Motors Ltd. 5 Satyam Computer Services Ltd. 6 ITC Ltd. 7 Crompton Greaves Ltd. 8 Hindalco Industries Ltd. 9 United Phosphorus Ltd. Hindustan Construction Company 10 Ltd.

Software Auto Software Consumer Capital Goods Industrial Capital Goods Non- Ferrous Metals Pesticides Construction Top 10 Holdings Others Equity Holdings TOTAL

7.73 7.17 6.34 5.27 4.96 4.74 4.22 4.07 61.28 28.72 100

NAV Changed During the Month (GROWTH) Date 1, oct 2008 31, oct 2008 NAV 17.18 15.699 Change (-1.481) % Change (-8.6) Beta 1.03 1.03

Compare returns with Sensex Movement
Date Closing Change 30-Sep-08 8,634.48 31-Oct-08 7,892.32 (-742) % change

(-8.59)

Core & Satellite Fund
Portfolio Top 10 Holdings For December S. No. 1 2 3 4 Company Satyam Computer Services Ltd. Bharat Heavy Electricals Ltd. Tata Motors Ltd. State Bank of India Industry Software Industrial Capital Goods Auto Banks % To NAV 6.78 6.65 6.33 6.21

Portfolio Management In Mutual Funds

5 Infosys Technologies Ltd. 6 Crompton Greaves Ltd. 7 Hindustan Construction Company Ltd. 8 ITC Ltd. 9 Hindalco Industries Ltd. 10 Hindustan zinc Ltd.

Software Industrial Capital Goods Construction Consumer Non Durable Non- Ferrous Metals Non- Ferrous Metals Top 10 Holdings Others Equity Holdings Total

5.5 5.35 5.18 5.15 4.14 3.75 55.04 28.72 100

NAV Changed During the Month (GROWTH)
Date 1, Dec 2008 30, Dec 2008 NAV 17.542 18.822 Change % Change Beta 0.87 0.87

1.28

7.2

Compare returns with Sensex Movement
Date Closing Change % change 30-Nov8,788.8 08 1 30-Dec9,397.9 08 3 609 6.92 Industry Wise Allocation

October
Industry Industry Capital Goods Software Banks Auto Ancillaries Non-Ferrous Metals Auto Pesticides % Of Allocation 22.15 15.61 12.61 11.12 8.48 7.17 5.42

December
Industry Industry Capital Goods Software Auto Ancillaries Banks Non-Ferrous Metals Auto Construction % Of Allocation 21.42 14.03 10.76 9.75 7.89 6.33 5.18

Portfolio Management In Mutual Funds

Consumer Non Durable Construction Industrial Products Chemicals Consumer Durables Power

5.27 Consumer Non Durable 4.07 2.67 1.71 1.29 0.53 Pesticides Industrial Products Chemicals Consumer Durables

5.15 4.96 2.94 2.12 1.43

Oct-Dec month portfolio
Industry Industry Capital Goods Software Auto Ancillaries Banks Non-Ferrous Metals Auto Construction Consumer Non Durable Pesticides Industrial Products Chemicals Consumer Durables Change -0.73 -1.58 -0.36 -2.86 -0.59 -0.84 -0.5 1.11 -0.12 0.27 0.41 0.14

Hindustan Construction Ltd. Share Benefit
Date 31, Oct 2008 31, Dec2008 Price 853.85 127.2 Change % Change

Fund bought Hindustan Construction Ltd. shares. Core & Satellite Fund Portfolio Top 10 Holdings For January
S. No. Company 1 Infosys Technologies Ltd. 2 Tata Motors Ltd. 3 Bharat Heavy Electricals Ltd. Industry Software Auto Industrial Capital Goods % To NAV 8.94 8.48 8.08

Portfolio Management In Mutual Funds

4 Satyam Computer Services Ltd. 5 Crompton Greaves Ltd. 6 State Bank of India 7 ITC Ltd. 8 Hindustan zinc Ltd. 9 Hindalco Industries Ltd. 10 United Phosphorus Ltd.

Software Industrial Capital Goods Banks Consumer Non Durable Non- Ferrous Metals Non- Ferrous Metals Pesticides Top 10 Holdings Others Equity Holdings Total

6.44 5.98 5.69 5.26 5.25 4.79 3.91 62.82 37.18 100

NAV Changed During the Month (GROWTH)
Date 1, Jan 2009 31, Jan 2009 NAV 18.822 20.609 Change % Change Beta 0.90 0.90

1.78

9.49

Compare returns with Sensex movement
Date Closing Change % change 30-Dec9,397.9 08 3 31-Jan9,919.8 09 9 522 5.55 Industry Wise Allocation

December
Industry Industry Capital Goods Software Auto Ancillaries Banks Non-Ferrous Metals Auto Construction % Of Allocation 21.42 14.03 10.76 9.75 7.89 6.33 5.18 Industry Industry Capital Goods Software Non-Ferrous Metals Banks Auto Ancillaries Auto Consumer Non

January
% Of Allocation 24.12 16.99 10.04 9.73 8.99 8.48 5.26

Portfolio Management In Mutual Funds

Durable Consumer Non Durable Pesticides Industrial Products Chemicals Consumer Durables 5.15 4.96 2.94 2.12 1.43 Pesticides Construction Industrial Products Consumer Durables Chemicals 3.91 3.73 3.52 1.43 1.01

Dec-Jan month portfolio
Industry Industry Capital Goods Software Non-Ferrous Metals Banks Auto Ancillaries Auto Consumer Non Durable Pesticides Construction Industrial Products Consumer Durables Chemicals Change 2.7 2.96 2.15 -0.02 -1.77 2.15 0.11 -1.05 -1.45 0.58 Nil -1.11

Infosys Share effect
Date 31, Dec2008 31, Jan 2009 % Price Change Change 2979.4 2880.3 -99.1 3.33

Fund has increased the share of Infosys in to portfolio by 3.5%. The share price of Infosys during that time period has failed down to 2880.3 Rs. Its 3.33% lower than the price in the beginning of January. Core & Satellite Fund
Portfolio Top 10 Holdings For February Company Industry 1 Bharat Heavy Electricals Ltd. Industrial Capital Goods 2 Tata Motors Ltd. Auto 3 Infosys Technologies Ltd. Software

S. No.

% To NAV 8.87 8.74 8.53

Portfolio Management In Mutual Funds

4 State Bank of India 5 Satyam Computer Services Ltd. 6 Hindustan zinc Ltd. 7 Crompton Greaves Ltd. 8 ITC Ltd. 9 Hindalco Industries Ltd. 10 Bharti Shipyard Ltd.

Banks Software Non- Ferrous Metals Industrial Capital Goods Consumer Non Durable Non- Ferrous Metals Industrial Capital Goods Top 10 Holdings Others Equity Holdings Total

7.52 6.45 6.05 5.72 5.7 4.22 3.84 65.64 34.39 100

NAV Changed During the Month (GROWTH)
Date 1, Feb 2009 28, Feb 2009 NAV 20.609 21.159 Change % Change Beta 0.91 0.91

0.55

2.66

Compare returns with Sensex Movement
Clo % Date sing Change Change 31-Jan09 9,919.89 28-Feb09 8800 1119.89 -11.29

In February fund has given 2.66% returns on investment but in the same time Sensex has decreased by 4.54%. So, fund has performed higher than market trend.

Industry Wise Allocation

January
Industry % Of Allocation Industry

February
% Of Allocation

Portfolio Management In Mutual Funds

Industry Capital Goods Software Non-Ferrous Metals Banks Auto Ancillaries Auto Consumer Non Durable Pesticides Construction Industrial Products Consumer Durables Chemicals

24.12 Industry Capital Goods 16.99 10.04 9.73 8.99 8.48 5.26 3.91 3.73 3.52 1.43 1.01 Software Banks Non-Ferrous Metals Auto Ancillaries Auto Consumer Non Durable Pesticides Construction Industrial Products Power Consumer Durables Chemicals

21.64 16.63 10.79 10.27 9.02 8.74 5.7 3.78 3.63 3.51 2.62 1.49 0.89

Jan-Feb month portfolio
Industry Industry Capital Goods Software Banks Non-Ferrous Metals Auto Ancillaries Auto Consumer Non Durable Pesticides Construction Industrial Products Power Consumer Durables Chemicals Change -2.48 -0.36 1.06 0.23 0.03 0.26 0.44 -0.13 -0.16 -0.01 2.62 0.06 -0.12

Portfolio Management In Mutual Funds

United Phosphorus Ltd. Share’s effect
Date 31, Jan 2009 28, Feb 2009 Price 272 270 2 0.07 Change % Change

Reduce the share of united phosphorus ltd. from portfolio. The share price of united has fall during February. Core & Satellite Fund Portfolio Top 10 Holdings For March
S. No. Company 1 Tata Motors Ltd. 2 Bharat Heavy Electricals Ltd. 3 Infosys Technologies Ltd. 4 Crompton Greaves Ltd. 5 Hindustan zinc Ltd. 6 State Bank of India 7 ITC Ltd. 8 Satyam Computer Services Ltd. 9 Hindalco Industries Ltd. Hindustan Construction Company 10 Ltd. Industry Auto Industrial Capital Goods Software Industrial Capital Goods Non- Ferrous Metals Banks Consumer Non Durable Software Non- Ferrous Metals Construction Top 10 Holdings Others Equity Holdings Total % To NAV 7.99 7.87 7.53 7.53 7.34 6.95 6.62 5.96 4.29 3.84 65.92 34.08 100

NAV Changed During the Month (GROWTH)
Date 1, Mar 2009 31, Mar 2009 NAV 21.159 23.82 Change 2.661 % Change 12.57 Beta 0.86 0.86

Portfolio Management In Mutual Funds

Compare returns with Sensex Movement
% Date Closing Change change 28-Feb06 8800 31-Mar- 11,279.9 06 6 2479.96 28.18 Industry Wise Allocation

February
Industry Industry Capital Goods Software Banks Non-Ferrous Metals Auto Ancillaries Auto Consumer Non Durable Pesticides Construction Industrial Products Power Consumer Durables Chemicals % Of Allocation 21.64 16.63 10.79 10.27 9.02 8.74 5.7 3.78 3.63 3.51 2.62 1.49 0.89

March
Industry Industry Capital Goods Software Non-Ferrous Metals Banks Auto Ancillaries Auto Consumer Non Durable Construction Power Pesticides Industrial Products Consumer Durables Chemicals % Of Allocation 19.76 15.12 11.63 10.62 8.47 7.99 6.62 3.84 3.16 3.15 3 1.51 0.91

Feb-March month portfolio
Industry Industry Capital Goods Software Non-Ferrous Metals Banks Auto Ancillaries Auto Consumer Non Durable Change -1.88 -1.51 1.34 -0.18 -0.55 -0.75 0.92

Portfolio Management In Mutual Funds

Construction Power Pesticides Industrial Products Consumer Durables Chemicals

0.21 0.54 -0.63 -0.51 0.02 0.02

Bharti Shipyard Ltd. Share's effect
Date 28, Feb 2009 31, March 2009 Price Change 383.85 384.5 0.65 % Change

0.016

Reduce the share of Bharti ship yard in the month of March. The price of bhatri’s share has just increased by 0.016 % in March. Where the over all share market has boomed by 8.76%. in the same time fund increased the share of Crompton greaves in the portfolio which was boomed by 17.57%.

Portfolio as of January 31, 2009 DSP Merrill Lynch India T.I.G.E.R Fund
Company L&T Reliance Industries BHEL ONGC Siemens Thermax Grasim Industries Jyoti Structures HDFC Industry Industrial Capital Goods Petroleum Products Industrial Capital Goods Oil Industrial Capital Goods Industrial Capital Goods Cement Industrial Capital Goods Finance % to NAV 4.79 4.65 4.64 3.05 2.95 2.74 2.67 2.65 2.18

Portfolio Management In Mutual Funds

Crompton Greaves

Industrial Capital Goods

2.15

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Jan 2009 21.5 31, Jan 2009 23.62 2.12 9.86

Beta 1.6 1.6

L&T share price Date 1, Jan 2009 31, Jan 2009 % Price Change Change 1825.65 2172.1 346.45 18.97

DSP fund has given more returns than HDFC Core & Satellite fund. DSP has exposure of L& T which has grown by 18.97% during January. In January market has grown up only by 5.55%.

Portfolio as of February 28, 2006

DSP Merrill Lynch India T.I.G.E.R Fund
Company L&T BHEL Reliance Industries Grasim Industries Siemens Bharati TeleVentures Thermax ONGC Industry Industrial Capital Goods Industrial Capital Goods Petroleum Products Cement Industrial Capital Goods Telecom- Services Industrial Capital Goods Oil % to NAV 4.29% 4.25% 3.74% 3.14% 2.99% 2.67% 2.55% 2.27%

Portfolio Management In Mutual Funds

HDFC Jyoti Structures

Finance Industrial Capital Goods

2.19% 2.14%

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Feb 2009 23.62 28, Feb 2009 24.46 0.84 3.55

Beta 1.78 1.78

Grasim Industries share's price
Date 1, Feb 2009 28, Feb 2009 Price Change 1454.25 1742.6 288.35 % Change

19.82

DSP has given 3.55% returns where HDFC has given only 2.55% returns in the month of February. DSP has exposure of Grasim Industry in their portfolio. Grasim has increased by 19.82% during February month.

Portfolio as of March 31, 2009 DSP Merrill Lynch India T.I.G.E.R Fund
Company Reliance Industries Reliance Communications BHEL Grasim Industries L&T Industry Petroleum Products Telecom- Services Industrial Capital Goods Cement Industrial Capital Goods % to NAV 5.87% 4.41% 4.28% 3.56% 3.48%

Portfolio Management In Mutual Funds

Bharati TeleVentures Siemens Thermax Jyoti Structures Crompton Greaves

Telecom- Services Industrial Capital Goods Industrial Capital Goods Industrial Capital Goods Industrial Capital Goods

3.17% 2.82% 2.56% 2.26% 2.13%

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Mar 2009 24.46 31, Mar 2009 27.36 2.9 11.85

Beta 1.69 1.69

Hindalco share's price
Date 1, Mar 2009 31-Mar-09 Price Change % change 75 182.7 107.7 143.6

In March, DSP has given 11.85% returns where HDFC has given 12.54% returns. HDFC had Hindalco in their portfolio which has grown by 143.6% in March.

ICICI Dynamic Plan January Portfolio

Portfolio Management In Mutual Funds

S. No. Companies 1 Deccan Chronicle Holdings Ltd 2 Subex Systems Limited 3 Hindalco Industries Limited 4 E.I.D. Parry (India) Limited 5 State Bank of India 6 Bajaj Hindustan Limited 7 Reliance Industries Limited 8 Larsen & Toubro Limited Sterlite Industries (India) 9 Limited 10 Grasim Industries Limited

% of NAV 7.18 4.02 3.89 3.49 3.38 3.35 3.18 3.12 2.98 2.98

Industry Wise Allocation

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Jan 2009 42.68 31, Jan 2009 44.51 1.83 4.28

Beta 0.91 0.91

Sterlite share's price
Date 1, Jan 2009 31, Jan 2009 Chang % Price e change 1074.7 5 1363.4 5 288.75 26.86

Fund has 2.98% exposure of sterlite which has grown 26.86% in January month.

Portfolio Management In Mutual Funds

ICICI Dynamic Plan February Portfolio
S. No. 1 2 3 4 5 6 7 8 Companies Deccan Chronicle Holdings Ltd Jain Irrigation Systems Limited Subex Systems Limited E.I.D. Parry (India) Limited Larsen & Toubro Limited Grasim Industries Limited Hindalco Industries Limited Reliance Industries Limited Century Textiles & Industries 9 Ltd 10 Amtek Ltd. % of NAV 8.65 4.5 4.01 3.65 3.44 3.34 3.21 3.16 3.14 3.01

Industry Wise Allocation

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Feb 2009 44.51 28, Feb 2009 46.22 1.71 3.64

Beta 0.98 0.98

Century textile share's price
Date 1, Feb 2009 28, Feb 2009 Price Change 2.9 2.9 Nil % Change

Nil

Dynamic plan has 3.14% exposure of this script which has grown by 0 % means its share price remained same during the month of February.

Portfolio Management In Mutual Funds

ICICI Dynamic Plan March Portfolio
S. No. Companies 1 Deccan Chronicle Holdings Ltd 2 Reliance Industries Limited Triveni Engineering & Industries 3 Ltd 4 Jain Irrigation Systems Limited 5 Subex Systems Limited 6 Century Textiles & Industries Ltd 7 E.I.D. Parry (India) Limited 8 Tata Consultancy Services Limited 9 Grasim Industries Limited 10 Larsen & Toubro Limited % of NAV 7.31 5.17 4.98 3.89 3.7 3.46 3.36 3.18 2.97 2.93

Industry Wise Allocation

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, March 2009 46.22 31, March 2009 53.35 7.13 15.42

Beta 0.95 0.95

Triveni share's price
Date 1, Mar 2009 31-Mar-09 Price 76.95 125.9 5 Change % change

49

64.47

Fund has increased triveni sharein portfolio to 4.98% which has grown by 64.47% during March.

Portfolio Management In Mutual Funds

Kotak Opportunity January
S. No. Companies 1 National Aluminium Company Ltd Industry Non - Ferrous Metals Industrial Capital Goods Construction Banks Software Software Consumer Non Durables Auto Industrial Capital Goods Pharmaceuticals % of NAV 6.66 5.49

2 3 4 5 6

Larsen And Toubro Ltd. Jaiprakash Associates Ltd Punjab National Bank Satyam Computer Services Ltd. Infosys Technologies Ltd.

5.06 4.12 3.59 3.57 3.5 3.38 3.23 3.11

7 Shree Renuka Sugars Ltd. 8 Mahindra & Mahindra Ltd. 9 Areva T and D India Ltd. 10 Alembic Ltd.

Industry Wise Allocation

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)

Date 1, Jan 2009 31, Jan 2009

NAV 20.45 22.021

Change

% Change

Beta 1.25 1.25

1.571

7.68

Kotak Opportunity February
S. No. Companies 1 Bajaj Auto Ltd. 2 3 4 5 6 Larsen And Toubro Ltd. Jaiprakash Associates Ltd Punjab National Bank Mahindra & Mahindra Ltd. Tata Steel Limited. Industry Auto Industrial Capital Goods Construction Banks Auto Ferrous Metals Industrial Capital Goods Consumer Non Durables Software Ferrous Metals % of NAV 5.86 5.31 4.53 4.51 4.23 4.2 3.47 3.46 3.25 3.18

7 Areva T and D India Ltd. 8 Balrampur Chini Mills Ltd Satyam Computer Services 9 Ltd. 10 Jindal Steel & Power Ltd. Industry Wise Allocation

Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, Feb 2009 22.021 28, Feb 2009 23.225 1.2 5.46

Beta 1.12 1.12

Kotak Opportunity March
S. No. 1 2 3 4 5 6 7 8 9 10 Companies Jindal Steel & Power Ltd. Tata Steel Limited. National Aluminium Company Ltd Sterlite Industries (India) Ltd Satyam Computer Services Ltd. Larsen And Toubro Ltd. Maharashtra Seamless Ltd. Ultratech Cement Ltd. Tata Chemicals Ltd. Bajaj Auto Ltd. Industry Ferrous Metals Ferrous Metals Non - Ferrous Metals Non - Ferrous Metals Software Industrial Capital Goods Ferrous Metals Cement Fertilizers Auto % of NAV 5.1 4.64 4.38 4.17 3.93 3.92 3.49 3.37 3.27 3.25

Portfolio Management In Mutual Funds

Industry Wise Allocation

NAV Changed During the Month (GROWTH) Date NAV Change % Change 1, March 2009 23.225 31, March 2009 25.89 2.66 11.47

Beta 1.20 1.20

CONCLUSION
The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders were accustomed with guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the preparedness of risks factor after the liberalization.

Portfolio Management In Mutual Funds

The annual composite rate of growth is expected 13.4% during the rest of the decades. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double. The government is also helping in boosting mutual fund industry. Government is emphasizing a lot on infrastructure development and social spending and yet targeting a lower fiscal deficit. FIIs continued to be positive on emerging markets in general and the Indian markets in particular. FIIs buying have considerable portion in mutual funds buying. Key Points: • • • • Almost 100% growth in the last 6 years.(excepting 2008) Our saving rate is over 30%, highest in the world. Only channel zing these savings in mutual funds sector is required. We have some 70 mutual funds which are much less than US having more than 800. There is a big scope for expansion. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities. SEBI allowing the MFs to launch commodity mutual funds. This year budget has increased the limit of investment in overseas market by mutual funds to 33-35%. During last financial year investment habit of India has increased by 25 % and it is expected to grow by 30 % this year.

• • •

RECOMMENDATIONS
Studying the mutual fund industry I came to know that there are more then 700 types of funds available in the market. What I see that most of the fund managers who are investing in equity market are putting their funds into large cap funds which is of course more secure but it is giving less return to the investors. i thought of preparing my own portfolio by investing 25 percent in

Portfolio Management In Mutual Funds

money market and the rest of the 75 percent in mid cap equity To provide investors with opportunities for long term growth in capital along with the liquidity of an open ended scheme by investing predominantly in a well diversified basket of equity stocks of companies and in debt and money market instruments.. The portfolio is mentioned below:EQUITY Company Name % of Net Assets Maharashtra Seamless Ltd 4.61 Infotech Enterprises Limited 4.33 Kesoram Industries Ltd 4.02 Gitanjali Gems Ltd. 3.18 KEC International Ltd. 3.08 Nagarjuna Construction Company Ltd 3.06 Thermax Limited 3.02 Pantaloon Retail (India) Ltd. Equity 2.89 Eastern Silk Industries Limited 2.81 3 i Infotech Limited. 2.68 Crompton Greaves Ltd 2.65 Welspun Gujarat Stahl Rohren Ltd 2.65 Hotel Leela Venture Ltd 2.51 Adlabs Films Limited 2.23 Mangalam Cement Ltd 2.19 Amtek Auto Ltd 2.17 KEI Industries 2.14 Elecon Engineering Company Ltd 2.09 India Cements Ltd 1.79 IVRCL Infrastructure & Projects Ltd. 1.67 Raymond Ltd 1.61 Opto Circuit Ltd. 1.52 SKF Bearings India Ltd 1.48 Crest Animation Studios Ltd 1.46 Ansal Properties & Industries Ltd 1.36 Gujarat Mineral Development Corporation Limited 1.3 Lupin Ltd. 0.97 Deepak Fertilizers & Petrochemicals Corp Ltd 0.93 Usha Martin Ltd 0.93 RPG Transmission Ltd 0.86

Portfolio Management In Mutual Funds

Gujarat State Petronet Ltd. Jagran Prakashan Ltd Rajshree Sugars & Chemicals Ltd Indo Asian Fuse Gear Ltd Sri Adhikari Brothers Television Network Ltd Global Vectra Helicorp Ltd Sagar Cements Ltd Bharati Shipyard PVR Ltd. K E C Infrastructure Ltd. Dwarikesh Sugar Industries Tanla Solutions Ltd Mahindra Ugine Steel Company Ltd Redington India Ltd. Suryalakshmi Cotton Mills Ltd Top Industry Allocation Industry Steel Computers - Software & Education Housing & Construction Textiles Diversified Electricals & Electrical Equipments Engineering & Industrial Machinery Entertainment Cement Power Generation, Transmission & Equip Asset Allocation Equity 74.06 Allocation 8.35% 7.18% 6.09% 5.85% 5.63% 5.44% 5.11% 4.57% 4.30% 3.94%

0.78 0.75 0.66 0.65 0.58 0.37 0.32 0.3 0.3 0.28 0.26 0.17 0.16 0.15 0.15

Debt -

Money Market 25.94

Portfolio Management In Mutual Funds

MY LEARNING FROM PROJECT
I have learnt many things which I might not be able to learn under class room training like looking at the stock market terminal and analyzing the stocks and thereby deducing about their performance and thus designing the portfolio on the basis of their performances. I want to share some of experience or learning with you.
•

First and the most important I learnt about Mutual Fund Industry. Before this project I dint have much knowledge about Mutual funds. But now I have good knowledge about Mutual Funds.

•

I learnt about marketing elements also. How the companies, banks and brokerage houses market their products in front of customer in presence of competitor’s products.

•

I learnt about mutual funds as well as other products like insurance, DMAT account, IPO, some of banking product and transactions and some financial services offered by Angel Broking Ltd.

• I also learnt about the risk factor calculation of the mutual funds, how the various broking firms calculate the risk factors of various mutual funds.

Portfolio Management In Mutual Funds

WEBOGRAPHY
? ? ? ? ? ? ? ? hdfcfund.com google.com altavista.com investmart.com icicidirect.com amfiindia.com nseindia.com mutualfundsindia.com

BIBLIOGRAPHY
? ? ? Book on “Portfolio Management” by ICFAI Press Magazine “AAG” by HDFC Bank, April issue. Business world



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