A RESEARCH PROJECT REPORT ON
In partial fulfillment of the Requirement for the Degree Of Master of Business Administration
SUBMITTED BY
RITIKA VERMA Roll no. 1172770069 (MBA FOURTH SEMESTER)
UNDER THE GUIDANCE OF
Dr. Anand Kr. Tiwari
(Sr. Lecturer)
SHAMBHUNATH INSTITUTE OF MANAGEMENT ALLAHABAD 2011-2013
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DECLARATION
I, Ritika Verma along with Azaz Ahmed, students of MBA-IV Semester, SHAMBHUNATH INSTITUTE OF MANAGEMENT, ALLAHABAD (U.P), Batch (2011-2013) JHALWA, ALLAHABAD affiliated to GAUTAM BUDDH TECHNICAL UNIVERSITY, UTTAR PRADESH, hereby declare that this Project report is a result of culmination of our sincere efforts. We declare that this submitted work done solely by us and to the best of our knowledge. No such work has been submitted by any other person for the award of post-graduation Degree or Diploma.
DATE:
Ritika Verma MBA 2ND YEAR (SIM)
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ACKNOWLEDGEMENT
We offer our sincere gratitude towards our college guide DR.ANAND TIWARI Sir for his guidance & continuous support and cooperation throughout our project, and the valuable suggestions regarding the project as well as important information regarding SCHEMES OF MUTUAL FUND without which the present work would not have been possible. We would also like to thank the entire team of Mutual Fund Companies Civil Lines, Allahabad for their constant support and successful completion of our project.
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EXECUTIVE SUMMARY
Mutual funds pool money from different investors and invest in different investment sources like stocks, shares, bonds etc. A professional fund manager manages these and returns are paid in form of dividends. Some schemes assured fixed returns that are less in risk and some offer dividends based on the market fluctuations and prices. Mutual funds have to be subscribed in units and the purchase or sale is dependent on NAV (Net Asset Value), taking into consideration the exit and entry load factors into account. This project undertaken deals with Investors with regard to mutual funds that is the schemes they prefer, the plans they are opting, the reasons behind such selections and also this project dealt with different investment options, which people prefer along with and apart from mutual funds. Like postal saving schemes, recurring deposits, bonds, and shares. The findings from this project is that most of the people are hesitant in going for new age investments like mutual funds and prefer to avert risks by investing in less riskier investment options like recurring deposits and so. Also people going for investment in mutual funds are not going for high-risk portfolios and schemes but want to go for medium risk elements. And another finding is that most of the workingwomen do not prefer this type of investments.
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TABLE OF CONTENT
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DECLARATION ………………………………………. ACKNOWLEDGEMENT ……………………………… EXECUTIVE SUMMARY…………………………………
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CHAPTER 1 1.1. INTRODUCTION……………………………………... 1.2. NEED & BACKGROUND OF RESEARCH………… 1.3. BRIEF OUTLINE OF THE CHAPTER……………… CHAPTER 2 2.1. REVIEW LITERATURE………………………………. 2.2. OBJECTIVES OF THE STUDY……………………….. CHAPTER 3 3.1. RESEARCH METHODOLOGY……………………….
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13 15
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CHAPTER 4
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4.1. CASE STUDY …………………………………………… 4.2. DATA ANALYSIS & INTERPRETATION……………
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CHAPTER 5 5.1. FINDINGS & CONCLUSIONS…………………………. 5.2. SUGGESTIONS & RECOMMENDATIONS…………… 5.3. LIMITATIONS……………………………………………
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BIBLIOGRAPHY………………………………………………… GLOSSARY……………………………………………………….
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Chapter1
Introduction
Need & Background of the problem
Brief outline of the chapter
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INTRODUCTION
INTRODUCTION TO MUTUAL FUND
Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion 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 basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The fund?s Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.
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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme?s assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme?s assets by the total number of units issued to the investors.
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ADVANTAGES OF MUTUAL FUND
? ? ? ? ? ? ? ?
?
Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency
DISADVANTAGE OF MUTUAL FUND
? ? ? ? No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme
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NEED OF RESEARCH & BACKGROUND
History of Mutual Fund in India: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. The history of mutual funds in India can be broadly divided into four distinct phases: ? First Phase-(1964-87):
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management?s
Second Phase –1987-93(Entry of Public sector funds): 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores Third Phase- 1993-2003(Entry of Private sector funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase – since February 2003: In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulation. The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth.
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MUTUAL FUND AND ITS VARIOUS TYPES OF SCHEMES
A Mutual Fund is kinds of trust that pools the savings of a number of investors, investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized 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 basket of securities at a relatively low cost.
3.1.1 9)
Advantages of Mutual Fund:
Professional Management – The basic advantage of funds is that, they are professionally managed by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio.
b) Diversification – Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. c) Economies of Scale – Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors. d)Liquidity – Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want. e) Simplicity – Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis. 3.1.2 Disadvantages of Mutual Fund: a) Professional Management- Some funds don?t perform according to the market, as their management is not dynamic enough to explore the available opportunity in the market, thus investor
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loose there money. b) Costs – The biggest source of AMC income is generally from the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.
c) Dilution – Because funds have small holdings across different companies, high returns from a few investments often don?t make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. d) Taxes – when making decisions about your money, fund managers don?t consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability
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TYPES OF MUTUAL FUND SCHEMES
1. ON THE BASIS OF STRUCTURE:
a) Open – Ended Schemes: An open-end fund is one that is available for subscription throughout the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (“NAV”) related prices. The key feature of open-end schemes is liquidity, where you can buy and sell the mutual fund unit at any time. b) Close – Ended Schemes: These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. First, the Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. Second, some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at the schemes NAV. SEBI Regulations ensure that at least one of the two exit routes is provided to the investor.
c) Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.
2 .ON THE BASIS OF NATURE:
a) Equity fund: These funds invest a maximum part of their Principal amount into equities holdings. The structure of the fund may vary different for different schemes and the fund manager?s outlook on different stocks. Equity investments are meant for a longer term, thus Equity funds rank
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high on the risk-return matrix. b) Debt funds: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. c) Balance fund: They are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the Funds. Equity part provides growth and the debt part provides stability in returns.
3.ON THE BASIS OF INVESTMENT OBJECTIVE:
a)Growth Schemes: These Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation b) Income Schemes: These are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited
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c) Money Market Schemes: These Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
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Chapter 2
Literature Review
Objective of the study
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REVIEW OF THE LITERATURE
Literature on mutual fund performance evaluation is enormous. A few research studies that have influenced the preparation of this paper substantially are discussed in this section. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance. Drawing on results obtained in the field of portfolio analysis, economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those used previously by incorporating the volatility of a fund?s return in a simple yet meaningful manner.
Michael C. Jensen (1967) derived a risk-adjusted measure of
portfolio performance
(Jensen?salpha) that estimates how much a manager?s forecasting ability contributes to fund?s returns. A sindicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index, where the portfolio is leveraged to have the benchmark index?s standard deviation. S.Narayan Rao , et. Al., evaluated performance of Indian mutual funds in a bear market throughrelative performance index, riskreturn analysis, Treynor?s ratio, Sharpe?s ratio, Sharpe?smeasure , Jensen?s measure, and Fama?s measure. The study used 269 open-ended schemes (I total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes in the sample of 58were able to satisfy investor?sexpectations by giving excess returns over expected returns based on both premium for systematic risk and total risk. Bijan Roy, et. Al., conducted an empirical study on conditional performance of Indian mutual funds. This paper uses a technique called conditional performance evaluation on a sample of eighty-nine Indian mutual fund schemes .This paper measures the performance of various mutual funds with both unconditional and conditionalform of CAPM, Treynor- Mazuy model and Henriksson
Merton model. The effect of incorporating lagged information variables into the evaluation of mutual fund managers? performance is examined in the Indian context. The results suggest that the use of conditioning lagged information variables improves the performance of mutual fund schemes, causing alphasto shift towards right and reducing the number of negative timing coefficients.
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Mishra, et al.,(2002) measured mutual fund performance using lower partial moment. In this paper, measures of evaluating portfolio performance based on lower partial moment are developed. Risk from the lower partial moment is measured by taking into account only those states in which return is below a pre-specified “target rate” like risk-free rate.
Kshama Fernandes(2003) evaluated index fund implementation in India. In this paper, tracking error of index funds in India is measured. The consistency and level of tracking errors obtained by some well-run index fund suggests that it is possible to attain low levels of tracking error under Indian conditions. At the same time, there do seem to be periods where certain index funds appear to depart from the discipline of indexation. The methodology is based on the combination of discrete and continuous multi-criteria decision aid methods for mutual fund selection and composition. UTADIS multi-criteria decision aid method is employed in order to develop mutual fund?s performance models. Goal programming model is employed to determine proportion of selected mutual funds in the final portfolios.
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OBJECTIVES OF THE STUDY
? Analysis of mutual fund schemes of top five companies in each sector ? To examine the performance of selected schemes on the basis of risk and return ? To compare the performance of selected schemes with benchmark index to see whether the scheme is outperforming or underperforming the benchmark. ? To examine the performance of selected schemes by using the portfolio performance evaluation models namely Sharpe, Beta and Standard Deviation.
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Chapter 3
Research methodology
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RESEARCH METHODOLOGY
Research methodology is way to systematically solve the research problem. It is a plan of action for a research project and explains in detail how data are collected and analyzed. Research Methodology may be understood as a science of studying how research is done scientifically. It can cover a wide range of studies from simple description and investigation to the construction of sophisticated experiment. A clear objective provides the basis of design of the project. Since the main objective of this study is to identify the customers preference, expectation and perception. It was decided to use descriptive research design include, surveys and fact-findings enquires of different kinds, which found out to be the most suitable design in order to carry out the project. MEANING OF RESEARCH: Research is an art of scientific investigation. The advanced learner?s dictionaries of current English lay are down the meaning of research as, “a careful investigation (or) inquiry especially through search for new facts in any branch of knowledge”. Redmen and Mary define research as a “systematic effort to gain knowledge”. RESEARCH DESIGN : A Research design is plan that specifies the objectives of the study, method to be adopted in the collection of the data, tools in analysis of data and helpful to frame hypothesis. “A research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to research purpose with economy in procedure”. Research design is needed because it facilitates the smooth sailing of the various project operations, thereby making the project as efficient as possible yielding maximal information with minimal expenditure of effort time and money. Also it minimizes bias and maximizes the reliability of the data collected.
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NATURE AND SOURCE OF DATA :
Secondary data: The data which have already been collected and analyzed by someone else is called secondary data. The secondary data was used mainly to support primary data. Company profiles, websites, magazines, articles were used widely. Size of sample: A Sample of 5Schemes each from 5different types of Funds is being taken. Types of Funds taken are follows: ? ? ? ? ? Diversified funds Large cap funds Mid cap funds Small cap funds Sector funds
Sample design: When population elements are selected for inclusion in the sample based on the case of access, it is called convenience sampling method for the convenience of the researcher. STATISTICAL TOOLS USED: To arrange and interpret the collected data the following statistical tools were used. Analysis has been done by using following Statistical tools: ? ? ? ? Sharpe Ratio: It indicates the Risk-Return Performance of Portfolio. Beta: It measures the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Standard Deviation: It shows the historical volatility. Annualized Return: It indicate the return on return over the period of times.
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Chapter 4
Case Study Data Analysis & Interpretation
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CASE STUDY OF VARIOUS MUTAUL FUNDS COMPANIES
RELIANCE MUTUAL FUND: Reliance Mutual Fund is India?s leading Mutual Fund with Quarter Average Assets under management (AAUM) of Rs 102066Crores. Reliance Mutual Fund, a part of the Reliance – Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 159 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. “Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM. The schemes that I have taken for analysis from Reliance Mutual Fund are: 1.1 RELIANCE BANKING FUND (G) [under Sector Fund]: The primary investment objective of the Scheme is to seek to generate continuous returns by actively investing in equity and equity related or fixed income securities of companies in the Banking Sector. Fund overview: Fund TypesInvestment PlanAssets sizesLaunches dateBenchmarkFund ManagerOpen Ended Growth Rs1466 Crores May21, 2003 Bank Nifty Mr. Sunil Singhania
1.2 RELIANCE MEDIA & ENTERTAINMENT FUND(G) [under Sector Fund]: The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies.
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Fund overview: Fund TypesInvestment PlainAssets sizesLaunch dateBenchmarkFund ManagerOpen Ended Growth Rs112.05 crores Sep 27, 2007 NA Mr. Sailesh Raj Bhan
1.3 RELIANCE VISION (G) [under large cap fund]: Seeks to provide long term capital appreciation by primarily investing in growth oriented stocks. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 61crores Aug?8, 2007 BSE 100 Mr. Ashwani Kumar
UTI MUTUAL FUND: UTI Mutual Fund was started in 14, January 2003 by UTI Trustee Co, Pvt. Ltd. For managing the schemes of UTI Mutual Fund. UTIAMC provides professionally managed back office support for all business services of UTI Mutual Fund in accordance with the provisions of the Investment Management Agreement, the Trust Deed, the SEBI Regulations and the objectives of the schemes. Since February 3, 2004, UTIAMC is also a registered portfolio manager under the SEBI for undertaking portfolio management services. UTIAMC also acts as the manager and marketer to offshore funds through its 100 % subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. UTIAMC presently manages a capital of over Rs. 65, 38,724.42 lakhs as on 31st December 2010. UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs of every
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class of citizens. It has a nationwide network consisting 148 UTI Financial Centers (UFCs) and UTI International offices in London, Dubai and Bahrain. UTIAMC has a well-qualified, professional fund management team, which has been fully empowered to manage funds with greater efficiency and accountability in the sole interest of the unit holders. UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and registrar offices are connected on a robust IT network to ensure cost-effective quick and efficient service. The schemes that I have taken for analysis from UTI Mutual Fund are: 2.1 UTI INFRASTRUCTURE FUND(G) [under Sector Fund] : Investment Objective is capital appreciation by investing in the companies engaged in the sectors like Metals, Real Estate, Oil ; Gas, Power, Chemicals, Engineering etc. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 1581crores Apr7, 2004 BSE 100 Mr. Sanjay Dongre
2.2 UTI LARGE EQUITY FUND (G) [under large cap Fund]: The Scheme is designed specifically for large corporate investors and as well as high net worthy investors who would like to invest large amount in exclusive Scheme which allows entry and exit at NAV.
Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateOpen Ended Growth Rs 2170crores may18, 1992
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Bench markFund Manager-
BSE sensitive index Mr. Anoop Bhaskar
2.3 UTI MID CAP FUND [ under Mid cap fund]: It?s aims to provide to investors growth of capital over a period of time by investing in mid cap stock ,as well as to make periodical distribution of income from investment in stocks of respective sectors of the Indian economy. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 375crores Apr 07, 2004 CNX mid cap Mr. Anoop Bhaskar
SBI MUTUAL FUND: SBI Mutual Fund is India?s largest bank sponsored mutual fund and has a track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI – India?s largest banking enterprise. The institution has grown immensely since its inception and today it is India?s largest bank, patronized by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint venture between the State Bank of India and Society General Asset Management, one of the world?s leading fund management companies that manages over US$ 500 Billion worldwide. In twenty years of operation, the fund has launched 38 schemes and successfully redeemed fifteen of them. In the process it has rewarded it?s investors handsomely with consistent returns. A total of over 5.8 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund. Today, the fund manages over Rs. 42,100 crores of assets and has a diverse profile of investors actively parking their investments across 38 active schemes.
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The fund serves this vast family of investors by reaching out to them through network of over 130 points of acceptance, 29 investor service centers, 59 investor service desks and 6 Investor Service Points. SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund. The schemes that I have taken for analysis from SBI Mutual Fund are: 3.1SBI MAGNUM SECTOR UMBRELLA-PHARMA (G) [under sector Fund]: It provides the investor?s maximum growth opportunity through equity investments growth oriented sector called Pharma in long run. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 39.69 crores JUL 14, 1999 BSE health care Mr. Sohini Andani in stocks of
3.2 SBI MAGNAM EQUITY FUND (G)[ under large cap Fund]: To provide investors long term capital appreciation along with the liquidity of an open-ended scheme. The scheme will invest in a diversified portfolio of equities of high growth companies. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 469 crores jan 1, 1991 BSE 100 Mr. R Srinivasan
3.3SBI MAGNUM MID CAP FUND [under mid cap Fund]: To provide investors with opportunities for long term growth in capital along with the liquidity of an open ended
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scheme by investing predominantly in a well diversified basket of equity stocks of companies and in debt and money market instruments. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 303crores Mar 17.2005 CNX MID CAP Mr. Sohini Andani
AWARDS AND ACHIEVEMENTS
SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award – 8 times, CNBC TV – 18 Crisil Award 2006 – 4 Awards, The Lipper Award (Year 2005-2006) and most recently with the CNBC TV – 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.
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FRANKLIN TEMPLETION MUTUAL FUND: Franklin Templeton Investments is one of the largest financial services groups in the world based at San Mateo, California USA. The group has US$ 642.3 billion in assets under management globally. Franklin Templeton has offices in 33 locations across India and manages average AUM of Rs. 42142.21 crores for over 22 lakhs investors (as on September 30, 2010). The schemes that I have taken for analysis from FRANKLIN TEMPLETION Mutual Fund are: 4.1 FRANKLIN TEMPLETION FMCG FUND [under Sector Fund]: The scheme aims to achieve long term capital appreciation through exclusively investing in shares of Fast Moving Consumer Goods Companies.
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Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 51crores Mar 31.1999 NA Anil Prabhudas
JM FINANCIAL MUTUAL FUND: It is one of India „s first private sector mutual funds-an integral part of the first wave that commenced operations in 1993-94.It is a part of JM Financial Group , which has a rich heritage, built over three decade. Group?s origins can be traced back to the 1950s when the Kampani family began to get involved in India?s then capital markets. JM Financial & Investment Consultancy Services was founded on September 15, 1973. JM Financial Asset Management Private Limited started operations in December 1994 with a simultaneous launch of three funds-JM Liquid Fund (now JM Income Fund), JM Equity Fund and JM Balanced Fund. Today, JM Financial Mutual Fund offers a bouquet of funds that caters to the diverse needs of both its institutional and individual investors. It?s mission is to manage risk effectively while generating top quartile returns across all product categories. We believe that to cultivate investor loyalty, we must provide a safe haven for their investments. We are 34ehavio on helping our investors realize their investment goals through prudent advice, judicious fund management, accurate research, and strong systems of managing risk scientifically. The schemes that I have taken for analysis from JM FINANCIAL Mutual Fund are: 5.1 JM LARGE CAP FUND (G) [under large cap Fund]: The Scheme aims to provide long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments in the Healthcare sector. Fund overview: Fund TypesInvestment PlanAssets SizesOpen Ended Growth Rs5.1 crores
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Launch dateBench markFund Manager-
Jun 9.2004 BSE Health care sector Mr. Sanjay Chhabaria
5.2 JM MID CAP FUND [under mid cap Fund]: The investment objective of the Scheme is to provide capital appreciation by primarily investing in mid cap fund. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs9.7 crores Jun 9.2004 BSE 500 Mr. Sanjay Chhabaria
5.3 JM SMALL & MID CAP FUND (G)[under small cap Fund]: The investment objective of the Scheme is to provide capital appreciation by primarily investing in small cap and mid-cap stocks. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 58 crores Mar 9, 2007 CNX MID CAP Mr. Sanjay Chhabaria
BIRLA SUNLIFE MUTUAL FUND: Birla Sun Life Asset Management Company Ltd. (BSLAMC) is a joint venture between the Aditya Birla Group and the Sun Life Financial Services Inc. of Canada. The joint venture brings together the Aditya Birla Group?s experience in the Indian market and Sun Life?s global experience. Birla Sunlife Mutual Fund is established in 1994 .It offer a range of investment options, including diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds. BSLAMC is one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in.
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BSLAMC strives to provide transparent, ethical and research-based investments and wealth management services. The schemes that I have taken for analysis from BIRLA SUNLIFE Mutual Fund are: 6.1 BIRLASUNLIFE ADVANTAGE FUND [under Large cap Fund]:- To achieve long-term growth of capital through investments mainly in equity and equity related instruments. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 414 crores Feb 24, 1995 BSE Sensitive index Mr. Ajay Argal
6.2 BIRLASUNLIFE SMALL & MID CAP FUND [under small cap Fund]: It objective is to generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities of companies considered to be small and mid cap. It may also invest a certain portion of its corpus in fixed income securities including money market instruments, in order to meet liquidity requirements from time to time. Fund overview Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 189 crores Apr 9, 2007 CNX MID CAP Mr. Ankit Sancheti
KOTAK MAHINDRA MUTUAL FUND: Kotak Mahindra is one of India?s leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to
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life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of Rs.7,911 crore and employs around 20,000 employees across its various businesses, servicing around 7 million customer accounts through a distribution network of 1,716 branches, franchisees and satellite offices across more than 470 cities and towns in India and offices in New York, California, San Francisco, London, Dubai, Mauritius and Singapore. Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kota Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk – return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. The schemes that I have taken for analysis from KOTAK MAHINDRA Mutual Fund are: 7.1 KOTAK MAHINDRA MID CAP FUND [under mid cap Fund]: The investment objective of Kotak Midcap is to generate capital appreciation from a diversified portfolio of equity & equity related securities. The scheme predominantly invests in companies in the mid market capitalization segment across sectors. The scheme is well positioned to provide the benefit of potential growth offered by mid cap stocks which are likely to become tomorrows large caps. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 254 crores jan 28, 2005 CNX Nifty junior Mr. Pankaj Tibrewal
7.2 KOTAK EQUITY FOF [under Diversified fund]: To generate long-term capital appreciation from a portfolio created by investing predominantly in open-ended diversified equity schemes of Mutual Funds registered with SEBI. Fund overview: Fund TypesInvestment PlanOpen Ended Growth
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Assets SizesLaunch dateBench markFund Manager-
Rs 49 crores Aug 09, 2004 NA Mr. Sajit Pisharodi
SUNDARAM BNB PARIBAS MUTUAL FUND: Sundaram Mutual, identifying an investment opportunity long before it manifests as one, is the heart
of our business belief.
Being in the financial sector for a long time has given us a great understanding of the Indian economy and that guides us while picking the companies for its Funds. Once it unearth a potential opportunity, it?s Financial Experts spend countless time to research the companies, to see what will deliver the best returns for your money. Its financial experts are fine tuned to the larger global picture and all its complexities as well as the intricacies of the Indian market. We track global economic trends and market 38ehavior to better understand the domestic markets. We are constantly on the trail of promising opportunities and once identified, a new theme is thoroughly researched and tested on various platforms before being offered to the investing public. The schemes that I have taken for analysis from SUNDARAM BNB PARIBAS Mutual Fund are: 8.1 SUNDARAM SELECT MID CAP FUND (G) [under mid cap fund]: Sundaram Select Mid Cap Fund is an open ended equity scheme that seeks capital appreciation by investing in diversified stocks that are generally termed as mid –caps. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 2294 crores Jul 19, 2002 BSE Mid cap index Mr. Satish Ramanathan
8.2SUNDARAM BNB PARIBAS SELECT SMALL CAP FUND(G)[small cap fund]: The primary investment objective of the scheme is to generate consistent long-term returns by investing predominantly in equity/equity related instruments of companies that can be termed as small cap. Fund objective: Fund TypesOpen Ended
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Investment PlanAssets SizesLaunch dateBench markFund Manager-
Growth Rs 364 crores Jan 24, 2006 BSE Small cap index Mr. Satish Ramanathan
L & T MUTUAL FUND: L&T Mutual Fund is one of the premier mutual funds in India that serves the investment needs of investors through a suite of acclaimed mutual fund schemes. With world class investment management practices and an equally competent fund management team, L&T Mutual Fund helps its investors reach their financial goals. Whether you are an individual investor, institution, or finance professional, you can gain from the products and expertise that we offer. L&T Mutual Fund is backed by one of the most trusted and valued brands, L&T Finance – incorporated as Non Banking Finance Company in November 1994, has earned the trust of thousands of investors by adapting well to the changing marketing dynamics and emerging as a profitable venture despite the turbulences in the Financial market over the past few years. The schemes that I have taken for analysis from L & T Mutual Fund are: 9.1 L & T SMALL CAP FUND [under small cap fund]: The scheme seeks to generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies with small cap. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 20 crores Dec 20, 2007 BSE Small cap index Mr. Anant Deep Katre
TATA MUTUAL FUND:
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Tata Mutual Fund has earned the trust of lakhs of investors with its consistent performance and world-class service. It manages around Rs20,854.00 crores (average AUM for the quarter of October-December 2010) worth of assets across its varied offerings. Tata Mutual Fund offers an investment option for everyone, whether you are a businessman or salaried professional, a retired person or housewife, an aggressive investor or a conservative capital builder. The Tata Asset Management philosophy is centered on seeking consistent, long-term results. Tata Asset Management aims at overall excellence, within the framework of transparent and rigorous risk controls. Tata Mutual Fund offers investors a broad range of managed investment products in various asset classes and risk parameters, with operational flexibility to suit their varied investment needs. It offer a wide range of services to assist investors have a fulfilling and rewarding financial planning experience with us. It have designed our services keeping in mind the needs of our investors, giving them a smooth and hassle-free financial planning process. The schemes that I have taken for analysis from TATA Mutual Fund are: 10.1 TATA DIVIDENT YIELD FUND (G) [under Diversified fund]: To Provide income distribution and / or medium to long term capital gains by investing predominantly in high dividend yield stocks. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markOpen Ended Growth Rs 177 crores Oct 27, 2004 BSE Sensitive index
HDFC MUTUAL FUND: HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.
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In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore. The AMC is managing 28 open-ended schemes of the Mutual Fund some are HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, and HDFC Index Fund. The AMC is also managing 7 closed ended Schemes some are HDFC Long Term Equity Fund, HDFC Infrastructure Fund, and HDFC Fixed Maturity Plans – Series XI, HDFC Fixed Maturity Plans – Series XII.The AMC is also providing portfolio management / advisory services. The schemes that I have taken for analysis from HDFC MUTUAL FUND are: 11.1 HDFC TOP200 FUND [under Diversified fund]: It objective is to generate long term capital appreciation by investing in a portfolio of equities and equity linked instruments drawn from the BSE 200 Index. Fund Overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs. 9425 crores Oct 27, 2004 BSE 200 index Mr. Prashant Jain
RELIGARE MUTUAL FUND: Religare Mutual Fund is managed by Religare Asset Management Company Limited, a subsidiary of Religare Securities Limited (RSL). The AMC was incorporated on May 20, 2005 and the mutual fund was set up on July 24, 2006. It manages Assets around Rs104 billion dollars. Religare Asset Management aims to serve investment needs of individual investors, corporate and institutions through mutual funds and subadvised portfolios. Its product portfolio is managed by individually focused management teams to create optimum balance and results. They are committed to providing financial care and top class service. They subscribe to sustainable business models and process that factor in the dynamism of the business in fast changing market scenarios. The schemes that I have taken for analysis from Religare Mutual Fund are:
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12.1 RELIGARE SMALL &MID CAP FUND [under small cap fund]: The Scheme seeks to provide long term capital appreciation by investing in a portfolio that is predominantly constituted of equity and equity related instruments of mid and small cap companies.
Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 22.4 crores Jan 7, 2008 NA Mr. Vinay Paharia
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FIVE TYPES OF MUTUAL FUNDS SCHEMES TAKEN INTO ANALYSIS
A) Diversified funds:
These are a kind of funds which invest there most of their money in different sectors like FMCG, Infrastructure, Pharma, ect. This helps to Diversified there Risk into various sectors. If one sector is going down then other sector may compensate the loss. These types of funds give consistent return without much volatility in long term. Top Performer Funds under this category: 1) IDFC Premium Equity fund-planA (G): It?s Compounded Annualized Returns of last 5 years is 26.9%. 2) Reliance regular saving fund-Equity growth: It?s Compounded Annualized Returns of last 5 years is 26% return. 3) HDFC Top 200- Growth: It?s Compounded Annualized Returns of last 5 years is 21.5%. 4) HDFC Equity fund (G): It?s Compounded Annualized Returns of last 5 years is 21.3%. 5) Birlasunlife frontline Equity fund: It?s Compounded Annualized Returns of last 5 years is 21.2%.
B) Sector Funds:
These types of Funds are investing their money in particular sector of the economy. Such as infrastructure, Banking, Retail, FMCG, ect. These Funds are more volatile than Diversified funds having stocks of many sectors. These Funds are high risk –reward category. These types of Funds are only for the short term investors, who are able to take high risk ability. Top Performer funds under this category: 1) Reliance Diversified Power sector fund (G): It?s Compounded Annualized Returns of last 5 years is 27.8%. 2) Reliance Banking fund (G): It?s Compounded Annualized Returns of last 5 years is 25.7%. 3) Reliance Pharma (G): It?s Compounded Annualized Returns of last 5 years is 25.4%. 4) ICICI Prudential infrastructure fund (G): It?s Compounded Annualized Returns of last 5 years is 20.5%.
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5) UTI Banking sector fund (G): It?s Compounded Annualized Returns of last 5 years is 20.4%.
C) Large Cap Funds:
These are those types of Funds which invest their money in large Blue chip Companies, having with a market capitalization of more than Rs 1000 crores. Investing in large cap is a low risk-return preposition because such funds are widely research and information available. One of the advantage of large cap funds are that they are less volatile than mid cap and small cap funds because investors are investing in this types of fund for a long term prospective and help to keep these fund away from the volatility of the markets. Top Performer under this category: 1) HDFC Top 200: It?s Compounded Annualized Returns of last 5 years is 24.5%. 2) Reliance Large Cap Fund: It?s Compounded Annualized Returns of last 5 years is 22.6%. 3) Franklin India Blue Chip: It?s Compounded Annualized Returns of last 5 years is 20.7%. 4) Kotak 30: It?s Compounded Annualized Returns of last 5 years is 19%. 5) DSPML Top 100 Equity: It?s Returns of last year is 18.4%.
D) Mid Cap Funds:
This types of Funds invest their money in mid sizes companies. Companies having market Capitalization between the Rs 500crores to Rs 1000 crores are come under the mid cap companies. Mid Cap Funds are very volatile and tends to fall if the market is fall in bad times. But this gives good return in short term. Top Performer under this category: 1) IDFC Premier equity fund: It?s Compounded Annualized Returns of last 5 years is 29.2%. 2)Sundaram select mind cap fund (G): It?s Compounded Annualized Returns of last 5 years is 24.8%. 3) Reliance Growth: It?s Compounded Annualized Returns of last 5 years is 23%. 4) Birla Sun life mid cap fund: It?s Compounded Annualized Returns of last 5 years is 21.9%.
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5) L&T mid cap fund: It?s Compounded Annualized Returns of last 5 years is 17%.
E) Small Cap Funds
These types of Funds are investing their money in Small size companies. Companies having market capitalization up to Rs 500 crores come under the categories of Small Cap companies. Small Cap Funds are more volatile than Mid Cap & Large Cap Funds. It?s Risk-Return Matrix are very high. Top performer under this category: 1) L&T Small cap fund: 2) JP Morgan India smaller companies fund(G) 3) HSBC Small cap fund 4) Sundaram select small cap fund (G):
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DATA ANALYSIS & INTERPRETATION A) DIVERSIFIED FUNDS
1) CAGR
Tata Dividend yield Kotak Equity FOF 86.03 13.08 21.11 Reliance Diversified Power 96 32.07 40.16 Sundaram Balance fund 71.52 12.61 16.47 HDFC TOP200
Yr/Schemes
Last 1 yrs Last3 yrs Last 5yrs
103.78 20.3 19.14
102.25 20.7 29.14
CAGR
120 100 Percent(%) 80 60 40 20 0 Tata Kotak Equity Reliance dividend FOF diversified yield power Schemes Sundaram balance fund HDFC TOP200 last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1yr HDFC, Tata and Reliance gave maximum return of 102.2%, 103.7% and 96% respectively, Followed by Kotak and Sundaram by 86.03% and 71.5% respectively. b) In last 3 & 5 yrs, Reliance gave maximum return against its competitors.
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2) Standard Deviation
Yrs/Schemes Tata Dividend yield Last 1 yrs Last 3 yrs Last 5yrs 0.071419205 0.09292427 0.099664831 0.09966483 0.087110732 0.11201375 Kotak Equity FOF Reliance Diversified power 0.101266115 0.111054683 0.09839249 Sundaram Balance fund 0.068953248 0.082246954 0.085491183 0.0932788 0.0968572 0.0841035 HDFC TOP200
STANDARD DEVIATION
0.12 0.1 (in Rs) 0.08 0.06 0.04 0.02 0 Tata divident Kotak Equity Reliance Sundaram yield FOF diversified balance fund power Schemes HDFC TOP200 last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) As far as the Standard Deviation in last 1 yrs is concern, it is high in Reliance, which is 0.1 and low in Sundaram (0.068). b) In last 3years, again Reliance has high Standard Deviation about 0.011 followed by Kotak and Tata by0.09 both. c) But in last5 yrs, Kotak is highly volatile followed by Reliance and Tata.
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3) Beta
Yrs/Schemes Tata Dividend yield Kotak Equity FOF Reliance Diversified Power 0.970784506 0.839178531 0.889744 Sundaram HDFC
Balance fund TOP200
0.685522556 0.91563 3 Last 1 yrs Last 3 yrs
0.173402004 0.1508907 0.100171515
0.094652253
0.127550
Last 5yrs
-0.01188823
0.1985720 0.970784506
0.120147547
0.167198
BETA
1.2 1 0.8 (in Rs) 0.6 0.4 0.2 0 -0.2 Tata divident yield Kotak Reliance Sundaram Equity FOF diversified balance power fund Schemes HDFC TOP200 last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr Reliance has high Beta about 0.97 as compare to others. b) In last 3 yrs all the funds are less volatile with Nifty, but in last 5 yrs Reliance has high Beta of 0.97, so it has high volatility. c) Tata dividend has low Beta in all the year.
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4) Sharpe Ratio
Yrs/Schemes Tata Dividend yield Last 1 yrs 2.82288 Kotak Equity FOF 1.92184 Reliance Diversified power 1.941195962 Sundaram Balance fund 1.78291329 2.189613153 HDFC TOP200
Last3 yrs
0.54053
0.36523
0.75575441
0.34489246 0.551588391
Last 5yrs
0.46532
0.68236
0.991355024
0.50778455 0.82590418
SHARPE RATIO
3 2.5 2 1.5 1 0.5 0 Tata divident Kotak Equity Reliance Sundaram yield FOF diversified balance fund power Schemes HDFC TOP200 (in Rs)
last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) As far as last 1 yr is concern, Tata has highest Sharpe ratio (2.8), followed by HDFC (2.1), Reliance (1.94), Kotak (1.92) and Sundaram (1.7) . b) In last 3 yrs & 5 yrs, Reliance has highest Sharpe Ratio against its competitors. c) Tata has low Beta in all the years.
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B) SECTOR FUND
1) CAGR (in %)
Yr/Schemes Reliance Franklin UTI SBI Reliance Media&Ent(G)
Banking(G) FMCG(G)
infrastructure(G) magnum Pharma(G)
Last1 yrs Last3 yrs Last 5yrs
120.55 30.21 25.37
68.57 17.52 21.73
66.77 10.89 23.23
112.96 3.61 12.31
18.94 2.07 88.77
CAGR
140 120 100 80 60 40 20 0 Percentage(%)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In last1 years, Reliance Banking and SBI gave highest return of 120% and 112.9% respectively against its competitors. b) In last 3 years, Reliance Banking gave highest return of 30.2%. And In last 5 yr, Reliance Media & Ent give maximum return of 88.7%.
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2) Standard Deviation
Yr/Schemes
Reliance banking(G)
Franklin FMCG(G)
UTI
SBI
Reliance Media&Ent(G)
infrastructure(G) magnum Pharma(G)
Last1 yrs Last3 yrs Last 5yrs
0.128943375 0.115829428 0.102489584
0.054102785 0.094154994 0.060318612 0.104597968 0.060205922 0.09752141
0.095626797 0.107992407 0.109212679 0.118757826 0.09470864 0.104554454
STANDARD DEVIATION
0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 (in Rs)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In all the three years is concern Reliance Banking has highest Standard Deviation, so it is highly volatile as compare to its competitors. b) Franklin FMCG is less volatile as compare to its competitors, so it is less Risky to invest in this Fund.
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3) Beta
Yr/Schemes Reliance banking(G) Franklin FMCG(G) UTI SBI magnum Reliance Media&Ent(G)
infrastructure(G) Pharma(G)
Last1 yrs
1.230722931 0.162919496 0.914220081
0.85286803
1.031589083
Last3 yrs
0.213887277 0.054444645 0.096699523
0.130467228
0.231784503
Last 5yrs
0.248025961 0.093340307 0.145949941
0.168794462
0.26664004
BETA
1.4 1.2 1 0.8 0.6 0.4 0.2 0 (in Rs)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In last 1 yr, Reliance Banking has high Beta of 1.2, so it is highly volatile as compare to its competitors. b) Overall, Franklin FMCG is less volatile as compare to its competitors, so it is less Risky to invest in this Fund.
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4) Sharpe ratio
Yr/Schemes Reliance banking(G) Last1 yrs Last3 yrs Last 5yrs 1.867210636 0.701616713 0.642094973 Franklin FMCG(G) UTI SBImagnum Reliance Media&Ent(G) 1.738190637 -0.044702739 0.40984207
infrastructure(G) Pharma(G) 1.919779766 0.125784902 0.339000122
2.60860683 1.550735632 0.59406659 0.296815592 0.76680298 0.611539329
SHARPE RATIO
3 2.5 2 1.5 1 0.5 0 -0.5 (in Rs)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In last 1 yr Franklin FMCG has highest Sharpe Ratio of 2.6 as compare to its competitors, so it is good indicator for it. b) In last 3 yrs Reliance Banking & Franklin FMCG has high Sharpe Ratio of 0.7 and 0.5respectively and Reliance Media & Ent. Has lowest of -0.4. c) In last 5 yrs, Franklin has highest Sharpe ratio of 0.7 and SBI has lowest of 0.3.
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C) Large cap Funds 1) CAGR
Yrs/Schemes Reliance vision last 1 yrs last 3 yrs 88.44 14.1 UTI equity(G) 82.65 16.34 JM large cap 48.28 0.8 Birlasunlife adv fund 14.48 8.24 SBI magnum eq 94.09 37.61
last 5 yrs
23.39
18.02
7.94
18.16
21.11
CAGR
100 90 80 70 60 50 40 30 20 10 0 Reliance vision UTI equity(G) JM largecap Birlasunlife SBI magnum adv fund eq Schemes Percentage(%)
last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, CAGR of SBI, Reliance vision & UTI has high by94%, 88.4%, and 82.6% respectively, as compare to its competitors. b) In last 3&5 yrs SBI gave highest return of about 37.6% &21.1% respectively. c) Overall, Birlasunlife adv. Fund gave least return.
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2) Standard Deviation
Yrs/Schemes Reliance vision Last 1 yrs Last 3 yrs Last 5 yrs UTI equity(G) JM large cap 0.0783383 0.0888638 0.0813522 Birlasunlife adv fund 0.115973242 0.112693896 0.096871642 SBI magnum eq 0.097667168 0.105668883 0.095151301
0.09991376 0.0744288 0.10018448 0.0833512 0.08864059 0.0780083
STANDARD DEVIATION
0.14 0.12 Percentage(%) 0.1 0.08 0.06 0.04 0.02 0 Reliance vision UTI JM largecap Birlasunlife SBI equity(G) adv fund magnum eq Schemes last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1, 3&5 years, Birlasunlife adv. Fund has high Standard Deviation, so it is highly volatile as compare to its competitors. b) Overall, UTI equity is least volatile fund among its competitors, so it is better to invest in such a less risky fund.
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3) Beta
Yrs/Schemes Reliance vision Last 1 yrs UTI equity(G) JM large cap 0.7575292 Birlasunlife adv fund 1.128608674 SBI magnum eq 0.93092074
0.17248455 0.7078600
Last 3 yrs
0.13229572 0.1190345
0.0703577
0.165711517
0.139890907
Last 5 yrs
0.17248455 0.1607937
0.1049985
0.206156923
0.182037128
BETA
1.2 1 0.8 in(Rs) 0.6 0.4 0.2 0 Reliance vision UTI JM largecap Birlasunlife SBI magnum equity(G) adv fund eq Schemes last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, Birlasunlife has a high Beta of 1.1 as compare to its competitors, which shows high volatility. b) In last 1yr, Reliance vision has low Beta (0.17) c) JM large cap in last 3&5 yrs also has low Beta about 0.7 &0.1 respectively, so it is less risky and safer to invest.
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4) Sharpe Ratio
Yr/Schemes Reliance vision UTI equity(G) JM large cap Birlasunlife adv fund SBI magnum eq
Last 1 yrs
2.194170308 0.01409560
0.3844196
1.741029813 1.80743058
Last 3 yrs
0.377029792 0.46218302
-0.0158758
0.237019813 0.200605215
Last 5 yrs
0.646034027 0.5301262
0.2093977
0.485836378 0.53402252
SHARPE RATIO
2.5 2 Percentage(%) 1.5 1 0.5 0 -0.5 Reliance vision UTI equity(G) JM largecap Birlasunlife SBI magnum adv fund eq Scheme last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr Reliance vision, SBI equity& Birlasunlife has high Sharpe Ratio about 2.1, 1.8
&1.7respectively, which shows good indicators.UTI has low which is.01. b) In last 3&5 years, JM large cap has a less Sharpe ratio about -.01 &0.2 respectively, which shows its poor Performance.
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D) MIDCAP FUND
1) CAGR
Yrs/Schemes JM midcap SBI magnum UTI mid cap Last1yrs 110 119.2 midcap 129.86 Kotak midcap 109.6 Sundaram select mid cap 139.49
Last3 yrs
7.9
1.2
13.14
5.2
15.94
Last 5yrs
14.54
16.86
16.49
17.19
28.38
CAGR
160 140 120 100 80 60 40 20 0 JM midcap SBI magnum UTImidcap Kotak midcap Sundaram mid cap select mid cap Schemes
(in Rs)
last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr, Sundaram midcap gave highest return about 139.4%, followed byUTI, SBI and JM by 129.8%, 119%, and 110% respectively, and Kotak gave lowest retun of 109.6% b) In last 3&5 yrs, Sundaram gave highest return about 15.9% & 28.3% respectively. And SBI gave lowest return.
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2) Standard Deviation
Yrs/Schemes JM midcap Last1yrs 0.1182776 SBI magnum UTI midcap mid cap 0.156138896 0.1040285 Kotak midcap 0.1010611 Sundaram select mid cap 0.150454556
Last3 yrs Last 5yrs
0.1129622 0.102009
0.144536727 0.229935443
0.1173093 0.105609
0.1118037
0.130397639
0.09941857 0.109763284
STANDARD DEVIATION
0.25 0.2 in (Rs) 0.15 0.1 0.05 0 JM midcap SBI magnum UTImidcap mid cap Schemes Kotak midcap Sundaram select mid cap last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr, Standard Deviation of SBI midcap has very high about 0.15which shows high volatility. Followed by Sundaram about 0.11. b) In last 3& 5yrs, alsoSBI shows high Standard Deviation about 0.14 & 0.22.
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3) Beta
Yrs/Schemes JM midcap SBI magnum UTI mid cap Last1yrs 1.143846 1.512159602 midcap 0.998759 Kotak midcap 0.9419961 Sundaram select mid cap 1.428028244
Last3 yrs
0.154830
0.187077319
0.157491
0.1782199
0.184278143
Last 5yrs
0.192531
0.229935443
0.207778
0.21723842
0.21284543
BETA
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 JM midcap SBI magnum mid cap UTImidcap Kotak midcap Sundaram select mid cap Schemes
(in Rs)
last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr, Beta of SBI and Sundaram has high about 1.5 &1.4 respectively, as compare to its competitors .UTI and Kotak shows low Beta about0.99 &0.94 respectively. b) In last 3 & 5 years. All the Funds showed almost equal Beta.
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4) Sharpe Ratio
Yrs/Schemes JM midcap last1yrs last3 yrs last 5yrs 1.883957 0.230390 0.388877 SBI magnum mid cap 1.590404948 0.143719771 0.435169362 2.3660246 0.3559378 0.437773 UTI midcap Kotak midcap 2.1446380 0.1710649 0.48133648 Sundaram select mid cap 1.81157006 0.115906618 0.682191305
SHARPE RATIO
2.5 2 (in Rs) 1.5 1 0.5 0 JM midcap SBI magnum mid cap UTImidcap Kotak midcap Schemes Sundaram select mid cap last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1year Sharpe Ratio of UTI is highest about 2.3 followed by
Kotak(2.1),JM(1.88),Sundaram(1.81) and SBI(1.5). b) In last 3 years, UTI & JM shows highest Sharpe ratio about 0.35 & 0.23 respectively. SBI showed lowest about 0.14. c) In last 5 years, Sundaram (0.68) shows highest Sharpe ratio and JM (0.38) shows lowest.
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E) SMALLCAP FUND
1) CAGR
Yrs/Schemes Sundaram JM small Birlasunlife small cap & mid cap small&mid cap L&T small Religare cap small&mid cap Last 1yr Last 3 yrs Last 5 yrs 9.4 6.51 113.48 -17.27 140.75 4.26 119.77 -14.99 133.77 7.36
CAGR
160 140 120 100 80 60 40 20 0 -20 -40
in(Rs)
last 1yr last 3 yrs last 5 yrs Sundaram smallcap JM small & mid cap Birlasunlife small&mid cap Schemes L&T small cap Religare small&mid cap
INTERPRETATIONS: a) In last 1 yr, Birlasunlife small midcap gave highest return about140.7% followed by Religare small& midcap, L&T & JM about 133.7, 119.7%, and 113.4% respectively. b) In last 3 yr, Religare small cap give highest return about 7.3% against its competitors.JM small cap gave -17%.
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2) Standard Deviation
Yrs/Schemes Sundaram small cap JM small & Birlasunlife mid cap small&mid cap Last1yr 0.052904985 0.14490943 0.119329293 L&T small cap 0.102897 0.084923964 Religare small&mid cap
Last3 yrs Last5 yrs
0.098308914 0.160988697 0.122212359 -
0.138513 0.11489531 -
STANDARD DEVIATION
0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 Sundaram JM small & Birlasunlife L&T small Religare smallcap mid cap small&mid cap small&mid cap cap Schemes
(in Rs)
last 1yr last 3 yrs last 5 yrs
INTERPRETATIONS: a) JM small cap Funds have high Standard deviation, which shows high volatility as compare to its competitors. b) Sundaram small cap shows least standard deviation, which shows its strength.
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3) Beta
Yrs/Schemes Sundaram small cap JM small & Birlasunlife mid cap small&mid cap Last 1yr 0.757755664 1.277975835 1.132571413 L&T small cap 0.923006 0.791631306 Religare small&mid cap
Last3 yrs
0.156519161 0.233322213 0.179818858
0.491886 0.442382937
Last5 yrs
-
-
-
-
-
BETA
1.4 1.2 1 0.8 0.6 0.4 0.2 0 Sundaram smallcap JM small & Birlasunlife mid cap small&mid cap Schemes L&T small cap Religare small&mid cap
in(Rs)
last 1yr last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, there is high Beta in JM small&mid cap (1.2) and low in Sundaram small cap(0.7) b) In last 3 yrs,L&T and Religare shown high Beta about 0.49&0.44. Sundaram has low Beta about 0.15.
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4) Sharpe Ratio
Yrs/Schemes Sundaram small cap JM small & Birlasunlife mid cap small&mid cap Last 1yr 0.740297547 1.624960177 2.216180638 L&Tsmall cap Religare small&mid cap 2.258105041 2.902924217
Last 3 yrs Last 5 yrs
-0.52788846 -
-0.16756146 -
0.165643299 -
-0.32554 -
0.323392115 -
SHARPE RATIO
3.5 3 2.5 2 (in Rs) 1.5 1 0.5 0 -0.5 -1 Sundaram smallcap JM small & Birlasunlife mid cap small&mid cap Schemes L&T small cap Religare small&mid cap last 1yr last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, Religare small& midcap shows highest Sharpe ratio of 2.9 against its competitors, whereas Sundaram shows lowest, which is0.74. b) In last 3 yrs,again Religare shows high Sharpe ratio of 0.32 and low in Sundaram about -.052.
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Performance Sheets
Basis on Compounded annual growth rate (CAGR) 9) Performance Sheet (Diversified Funds) fig (in %) Schemes CAGR (1yrs) 1.Tata dev 2.Kotak eq 3.Reliance diversified 4.Sundaram Bal 71.52 12.61 16.47 5 5 5 100 86.03 100 CAGR (3yrs) 20.3 13.08 32.07 CAGR (5yrs) 19.14 21.11 40.16 2 4 3 3 4 1 4 3 1 Rank1 yr Rank 2yrs Rank 3yrs
5.HDFC TOP50
102.25
20.7
29.14
1
2
2
2. Performance Sheet (Sector Funds)
Schemes CAGR (1yrs) 1.Reliance Banking 2.Franklin FMCG 3.UTI infrastructure 4.SBI Pharma 5.Reliance Media&Ent 120.55 68.68 66.77 112.96 18.94 CAGR (3yrs) 251.23 17.52 10.89 3.61 20.9 CAGR (5yrs) 25.37 21.73 23.23 12.31 88.77 2 5 1 3 Rank1 yr
Fig (in %) Rank 2yrs Rank 3yrs
1 4 3 5 2
2 4 3 5 1
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3. Performance Sheet (Large cap Funds)
Fig (in %) Schemes CAGR (1yrs) 1.Reliance Vision 2.UTI Eq 3.JM largecap 4.Birlasunlife adv 5.SBI Eq 88.44 82.65 48.58 14.48 94.19 CAGR (3yrs) 14.1 16.34 0.8 8.24 37.61 CAGR (5yrs) 23.39 18.02 7.94 18.16 21.11 2 3 4 5 1 3 2 5 4 1 1 4 5 3 2 Rank1 yr Rank 2yrs Rank 3yrs
4. Performance Sheet (Midcap Fund)
Fig (in %) Schemes CAGR (1yrs) CAGR (3yrs) CAGR (5yrs) Rank1 yr Rank 2yrs Ran k 3yrs 1JM midcap 2.SBI mid cap 3.UTI midcap 4.Kotak midcap 5.Sundaram midcap 110 119.2 129.86 109.6 139.49 7.9 1.2 13.14 5.2 15.94 14.54 16.86 16.49 17.19 28.38 4 3 2 5 1 3 5 2 4 1 5 3 4 2 1
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5. Performance Sheet (Small cap Fund)
Fig (in %) Schemes CAGR( 1yrs) 1.Sundaram small cap 2.JM small&mid cap 113.48 3.Birlasunlife small 140.75 midcap 4.L&T smallcap 5.Religare small midcap 119.75 133.77 -14.99 7.36 3 2 4 1 -17.27 4.26 4 1 5 3 9.4 CAGR CAGR Rank1 yr (3yrs) 6.51 (5yrs) 5 2 Rank 2yrs Rank 3yrs
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Chapter 5
Findings & Conclusion Recommendation & Suggestion Limitation
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CONCLUSIONS
1. Diversified Funds
a) The Performance of Tata Dividend & HDFC top200 are better than their competitors because there Sharpe ratio & CAGR are relatively high against their competitors, there Beta & Standard Deviation both are low. b) The Performance of Reliance Diversified & Sundaram are poor because of their low Sharpe ratio & CAGR. Also they are more risky as compare to their competitors because of their high Beta. c) I would suggest giving first priority to HDFC TOP200 and second to Tata Dividend.
2. Sector Funds
a) The Performance of Reliance Banking on the Basis of CAGR is outperforming as compare to its competitors. Its Sharpe ratio is also good after Franklin FMCG. b) Those who want to take high return as well as risk Reliance Banking is good for them because its Beta is also high among its competitors. c) Those who want to keep them safe and able to take less risk, for them Franklin is better option.
3. Large cap Funds
a) SBI & Reliance vision both have good CAGR and Sharpe ratio, But Reliance have very less Beta as compare to SBI, so Reliance should be the priority for investment. b) JM large cap & Birlasunlife adv both is poor performer as far as CAGR and Sharpe ratio is concern, so try to avoid them.
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4. Mid cap Funds
a) Sundaram select mid cap is the top performer in term of CAGR and Sharpe ratio, but have relatively high Beta, It is good for Risk taking investors. b) UTI is second best performer, also have low Beta as compare to Sundaram select mid cap, so it is good for safe investment. c) CAGR & Sharpe ratio of SBI is relatively low and its Beta and Standard Deviation are very high as compare to its competitors, so try to avoid it.
5. Small cap Funds
a) Sharpe ratio and CAGR of Religare are relatively high, also its Beta is low, and so it is good to invest in this fund. b) Sundaram small cap has very low CAGR & Sharpe ratio.
.
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SUGGESTIONS & RECOMMENDATIONS
?
The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.
?
Mutual funds offer a lot of benefit which no other single option could offer. But most of
the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time.
?
Mutual Fund Company needs to give the training of the Individual Financial Advisors
about the Fund/Scheme and its objective, because they are the main source to influence the investors.
?
Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration.
?
Younger people aged fewer than 35 will be a key new customer group into the future,
so making greater efforts with younger customers who show some interest in investing should pay off.
?
Customers with graduate level education are easier to sell to and there is a large
untapped market there. To succeed however, advisors must provide sound advice and high quality.
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Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons
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LIMITATIONS
? Samples sizes is limited factor, only last five years of Data has been taken. ? Past performance may not guarantee the future return. ? Micro level data have been taken in analysis; Macro level data may affect the returns.
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BIBLIOGRAPHY
Books: 1) Donald E Fischer ,Security Analysis & Portfolio Management
Web sites:
1) http://www.bluechipindia.co.in/ 2) http://www.franklintempletonindia.com 3) http://www.utimf.com 4) http://www.hdfcfund.com/ 5) http://mutualfund.birlasunlife.com 6) http://reliancemutual.com/ 7) http://investopedia.com 8) http://money.rediff.com 9) http://moneycontrol.com
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GLOSSARY
FORMULAE USED IN TOOLS & TECHNIQUES Calculation of CAGR
Method of calculating CAGR is given by this equation.
Calculation of SH ARPE RATIO
The Sharpe ratio formula is:
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Calculation of BETA
Beta coefficient is given by the following formulas: ?= ?= Covariance of Market Return with Stock Return Variance of Market Return Correlation Coefficient Between Market and Stock × Standard Deviation of Stock Returns Standard Deviation of Market Returns
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doc_188143307.docx
In partial fulfillment of the Requirement for the Degree Of Master of Business Administration
SUBMITTED BY
RITIKA VERMA Roll no. 1172770069 (MBA FOURTH SEMESTER)
UNDER THE GUIDANCE OF
Dr. Anand Kr. Tiwari
(Sr. Lecturer)
SHAMBHUNATH INSTITUTE OF MANAGEMENT ALLAHABAD 2011-2013
1|Page
DECLARATION
I, Ritika Verma along with Azaz Ahmed, students of MBA-IV Semester, SHAMBHUNATH INSTITUTE OF MANAGEMENT, ALLAHABAD (U.P), Batch (2011-2013) JHALWA, ALLAHABAD affiliated to GAUTAM BUDDH TECHNICAL UNIVERSITY, UTTAR PRADESH, hereby declare that this Project report is a result of culmination of our sincere efforts. We declare that this submitted work done solely by us and to the best of our knowledge. No such work has been submitted by any other person for the award of post-graduation Degree or Diploma.
DATE:
Ritika Verma MBA 2ND YEAR (SIM)
(i)
2|Page
ACKNOWLEDGEMENT
We offer our sincere gratitude towards our college guide DR.ANAND TIWARI Sir for his guidance & continuous support and cooperation throughout our project, and the valuable suggestions regarding the project as well as important information regarding SCHEMES OF MUTUAL FUND without which the present work would not have been possible. We would also like to thank the entire team of Mutual Fund Companies Civil Lines, Allahabad for their constant support and successful completion of our project.
(ii)
3|Page
EXECUTIVE SUMMARY
Mutual funds pool money from different investors and invest in different investment sources like stocks, shares, bonds etc. A professional fund manager manages these and returns are paid in form of dividends. Some schemes assured fixed returns that are less in risk and some offer dividends based on the market fluctuations and prices. Mutual funds have to be subscribed in units and the purchase or sale is dependent on NAV (Net Asset Value), taking into consideration the exit and entry load factors into account. This project undertaken deals with Investors with regard to mutual funds that is the schemes they prefer, the plans they are opting, the reasons behind such selections and also this project dealt with different investment options, which people prefer along with and apart from mutual funds. Like postal saving schemes, recurring deposits, bonds, and shares. The findings from this project is that most of the people are hesitant in going for new age investments like mutual funds and prefer to avert risks by investing in less riskier investment options like recurring deposits and so. Also people going for investment in mutual funds are not going for high-risk portfolios and schemes but want to go for medium risk elements. And another finding is that most of the workingwomen do not prefer this type of investments.
(iii)
4|Page
TABLE OF CONTENT
PAGE NO
DECLARATION ………………………………………. ACKNOWLEDGEMENT ……………………………… EXECUTIVE SUMMARY…………………………………
(i) (ii) (iii)
CHAPTER 1 1.1. INTRODUCTION……………………………………... 1.2. NEED & BACKGROUND OF RESEARCH………… 1.3. BRIEF OUTLINE OF THE CHAPTER……………… CHAPTER 2 2.1. REVIEW LITERATURE………………………………. 2.2. OBJECTIVES OF THE STUDY……………………….. CHAPTER 3 3.1. RESEARCH METHODOLOGY……………………….
2 5 7
13 15
17
CHAPTER 4
5|Page
4.1. CASE STUDY …………………………………………… 4.2. DATA ANALYSIS & INTERPRETATION……………
20 39
CHAPTER 5 5.1. FINDINGS & CONCLUSIONS…………………………. 5.2. SUGGESTIONS & RECOMMENDATIONS…………… 5.3. LIMITATIONS……………………………………………
63 65 67
BIBLIOGRAPHY………………………………………………… GLOSSARY……………………………………………………….
68 69
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Chapter1
Introduction
Need & Background of the problem
Brief outline of the chapter
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8|Page
INTRODUCTION
INTRODUCTION TO MUTUAL FUND
Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion 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 basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The fund?s Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.
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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme?s assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme?s assets by the total number of units issued to the investors.
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ADVANTAGES OF MUTUAL FUND
? ? ? ? ? ? ? ?
?
Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency
DISADVANTAGE OF MUTUAL FUND
? ? ? ? No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme
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NEED OF RESEARCH & BACKGROUND
History of Mutual Fund in India: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. The history of mutual funds in India can be broadly divided into four distinct phases: ? First Phase-(1964-87):
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management?s
Second Phase –1987-93(Entry of Public sector funds): 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores Third Phase- 1993-2003(Entry of Private sector funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase – since February 2003: In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulation. The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth.
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MUTUAL FUND AND ITS VARIOUS TYPES OF SCHEMES
A Mutual Fund is kinds of trust that pools the savings of a number of investors, investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized 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 basket of securities at a relatively low cost.
3.1.1 9)
Advantages of Mutual Fund:
Professional Management – The basic advantage of funds is that, they are professionally managed by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio.
b) Diversification – Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. c) Economies of Scale – Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors. d)Liquidity – Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want. e) Simplicity – Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis. 3.1.2 Disadvantages of Mutual Fund: a) Professional Management- Some funds don?t perform according to the market, as their management is not dynamic enough to explore the available opportunity in the market, thus investor
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loose there money. b) Costs – The biggest source of AMC income is generally from the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.
c) Dilution – Because funds have small holdings across different companies, high returns from a few investments often don?t make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. d) Taxes – when making decisions about your money, fund managers don?t consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability
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TYPES OF MUTUAL FUND SCHEMES
1. ON THE BASIS OF STRUCTURE:
a) Open – Ended Schemes: An open-end fund is one that is available for subscription throughout the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (“NAV”) related prices. The key feature of open-end schemes is liquidity, where you can buy and sell the mutual fund unit at any time. b) Close – Ended Schemes: These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. First, the Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. Second, some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at the schemes NAV. SEBI Regulations ensure that at least one of the two exit routes is provided to the investor.
c) Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.
2 .ON THE BASIS OF NATURE:
a) Equity fund: These funds invest a maximum part of their Principal amount into equities holdings. The structure of the fund may vary different for different schemes and the fund manager?s outlook on different stocks. Equity investments are meant for a longer term, thus Equity funds rank
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high on the risk-return matrix. b) Debt funds: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. c) Balance fund: They are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the Funds. Equity part provides growth and the debt part provides stability in returns.
3.ON THE BASIS OF INVESTMENT OBJECTIVE:
a)Growth Schemes: These Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation b) Income Schemes: These are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited
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c) Money Market Schemes: These Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
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Chapter 2
Literature Review
Objective of the study
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REVIEW OF THE LITERATURE
Literature on mutual fund performance evaluation is enormous. A few research studies that have influenced the preparation of this paper substantially are discussed in this section. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance. Drawing on results obtained in the field of portfolio analysis, economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those used previously by incorporating the volatility of a fund?s return in a simple yet meaningful manner.
Michael C. Jensen (1967) derived a risk-adjusted measure of
portfolio performance
(Jensen?salpha) that estimates how much a manager?s forecasting ability contributes to fund?s returns. A sindicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index, where the portfolio is leveraged to have the benchmark index?s standard deviation. S.Narayan Rao , et. Al., evaluated performance of Indian mutual funds in a bear market throughrelative performance index, riskreturn analysis, Treynor?s ratio, Sharpe?s ratio, Sharpe?smeasure , Jensen?s measure, and Fama?s measure. The study used 269 open-ended schemes (I total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes in the sample of 58were able to satisfy investor?sexpectations by giving excess returns over expected returns based on both premium for systematic risk and total risk. Bijan Roy, et. Al., conducted an empirical study on conditional performance of Indian mutual funds. This paper uses a technique called conditional performance evaluation on a sample of eighty-nine Indian mutual fund schemes .This paper measures the performance of various mutual funds with both unconditional and conditionalform of CAPM, Treynor- Mazuy model and Henriksson
Merton model. The effect of incorporating lagged information variables into the evaluation of mutual fund managers? performance is examined in the Indian context. The results suggest that the use of conditioning lagged information variables improves the performance of mutual fund schemes, causing alphasto shift towards right and reducing the number of negative timing coefficients.
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Mishra, et al.,(2002) measured mutual fund performance using lower partial moment. In this paper, measures of evaluating portfolio performance based on lower partial moment are developed. Risk from the lower partial moment is measured by taking into account only those states in which return is below a pre-specified “target rate” like risk-free rate.
Kshama Fernandes(2003) evaluated index fund implementation in India. In this paper, tracking error of index funds in India is measured. The consistency and level of tracking errors obtained by some well-run index fund suggests that it is possible to attain low levels of tracking error under Indian conditions. At the same time, there do seem to be periods where certain index funds appear to depart from the discipline of indexation. The methodology is based on the combination of discrete and continuous multi-criteria decision aid methods for mutual fund selection and composition. UTADIS multi-criteria decision aid method is employed in order to develop mutual fund?s performance models. Goal programming model is employed to determine proportion of selected mutual funds in the final portfolios.
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OBJECTIVES OF THE STUDY
? Analysis of mutual fund schemes of top five companies in each sector ? To examine the performance of selected schemes on the basis of risk and return ? To compare the performance of selected schemes with benchmark index to see whether the scheme is outperforming or underperforming the benchmark. ? To examine the performance of selected schemes by using the portfolio performance evaluation models namely Sharpe, Beta and Standard Deviation.
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Chapter 3
Research methodology
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RESEARCH METHODOLOGY
Research methodology is way to systematically solve the research problem. It is a plan of action for a research project and explains in detail how data are collected and analyzed. Research Methodology may be understood as a science of studying how research is done scientifically. It can cover a wide range of studies from simple description and investigation to the construction of sophisticated experiment. A clear objective provides the basis of design of the project. Since the main objective of this study is to identify the customers preference, expectation and perception. It was decided to use descriptive research design include, surveys and fact-findings enquires of different kinds, which found out to be the most suitable design in order to carry out the project. MEANING OF RESEARCH: Research is an art of scientific investigation. The advanced learner?s dictionaries of current English lay are down the meaning of research as, “a careful investigation (or) inquiry especially through search for new facts in any branch of knowledge”. Redmen and Mary define research as a “systematic effort to gain knowledge”. RESEARCH DESIGN : A Research design is plan that specifies the objectives of the study, method to be adopted in the collection of the data, tools in analysis of data and helpful to frame hypothesis. “A research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to research purpose with economy in procedure”. Research design is needed because it facilitates the smooth sailing of the various project operations, thereby making the project as efficient as possible yielding maximal information with minimal expenditure of effort time and money. Also it minimizes bias and maximizes the reliability of the data collected.
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NATURE AND SOURCE OF DATA :
Secondary data: The data which have already been collected and analyzed by someone else is called secondary data. The secondary data was used mainly to support primary data. Company profiles, websites, magazines, articles were used widely. Size of sample: A Sample of 5Schemes each from 5different types of Funds is being taken. Types of Funds taken are follows: ? ? ? ? ? Diversified funds Large cap funds Mid cap funds Small cap funds Sector funds
Sample design: When population elements are selected for inclusion in the sample based on the case of access, it is called convenience sampling method for the convenience of the researcher. STATISTICAL TOOLS USED: To arrange and interpret the collected data the following statistical tools were used. Analysis has been done by using following Statistical tools: ? ? ? ? Sharpe Ratio: It indicates the Risk-Return Performance of Portfolio. Beta: It measures the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Standard Deviation: It shows the historical volatility. Annualized Return: It indicate the return on return over the period of times.
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Chapter 4
Case Study Data Analysis & Interpretation
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CASE STUDY OF VARIOUS MUTAUL FUNDS COMPANIES
RELIANCE MUTUAL FUND: Reliance Mutual Fund is India?s leading Mutual Fund with Quarter Average Assets under management (AAUM) of Rs 102066Crores. Reliance Mutual Fund, a part of the Reliance – Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 159 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. “Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM. The schemes that I have taken for analysis from Reliance Mutual Fund are: 1.1 RELIANCE BANKING FUND (G) [under Sector Fund]: The primary investment objective of the Scheme is to seek to generate continuous returns by actively investing in equity and equity related or fixed income securities of companies in the Banking Sector. Fund overview: Fund TypesInvestment PlanAssets sizesLaunches dateBenchmarkFund ManagerOpen Ended Growth Rs1466 Crores May21, 2003 Bank Nifty Mr. Sunil Singhania
1.2 RELIANCE MEDIA & ENTERTAINMENT FUND(G) [under Sector Fund]: The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies.
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Fund overview: Fund TypesInvestment PlainAssets sizesLaunch dateBenchmarkFund ManagerOpen Ended Growth Rs112.05 crores Sep 27, 2007 NA Mr. Sailesh Raj Bhan
1.3 RELIANCE VISION (G) [under large cap fund]: Seeks to provide long term capital appreciation by primarily investing in growth oriented stocks. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 61crores Aug?8, 2007 BSE 100 Mr. Ashwani Kumar
UTI MUTUAL FUND: UTI Mutual Fund was started in 14, January 2003 by UTI Trustee Co, Pvt. Ltd. For managing the schemes of UTI Mutual Fund. UTIAMC provides professionally managed back office support for all business services of UTI Mutual Fund in accordance with the provisions of the Investment Management Agreement, the Trust Deed, the SEBI Regulations and the objectives of the schemes. Since February 3, 2004, UTIAMC is also a registered portfolio manager under the SEBI for undertaking portfolio management services. UTIAMC also acts as the manager and marketer to offshore funds through its 100 % subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. UTIAMC presently manages a capital of over Rs. 65, 38,724.42 lakhs as on 31st December 2010. UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs of every
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class of citizens. It has a nationwide network consisting 148 UTI Financial Centers (UFCs) and UTI International offices in London, Dubai and Bahrain. UTIAMC has a well-qualified, professional fund management team, which has been fully empowered to manage funds with greater efficiency and accountability in the sole interest of the unit holders. UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and registrar offices are connected on a robust IT network to ensure cost-effective quick and efficient service. The schemes that I have taken for analysis from UTI Mutual Fund are: 2.1 UTI INFRASTRUCTURE FUND(G) [under Sector Fund] : Investment Objective is capital appreciation by investing in the companies engaged in the sectors like Metals, Real Estate, Oil ; Gas, Power, Chemicals, Engineering etc. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 1581crores Apr7, 2004 BSE 100 Mr. Sanjay Dongre
2.2 UTI LARGE EQUITY FUND (G) [under large cap Fund]: The Scheme is designed specifically for large corporate investors and as well as high net worthy investors who would like to invest large amount in exclusive Scheme which allows entry and exit at NAV.
Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateOpen Ended Growth Rs 2170crores may18, 1992
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Bench markFund Manager-
BSE sensitive index Mr. Anoop Bhaskar
2.3 UTI MID CAP FUND [ under Mid cap fund]: It?s aims to provide to investors growth of capital over a period of time by investing in mid cap stock ,as well as to make periodical distribution of income from investment in stocks of respective sectors of the Indian economy. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 375crores Apr 07, 2004 CNX mid cap Mr. Anoop Bhaskar
SBI MUTUAL FUND: SBI Mutual Fund is India?s largest bank sponsored mutual fund and has a track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI – India?s largest banking enterprise. The institution has grown immensely since its inception and today it is India?s largest bank, patronized by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint venture between the State Bank of India and Society General Asset Management, one of the world?s leading fund management companies that manages over US$ 500 Billion worldwide. In twenty years of operation, the fund has launched 38 schemes and successfully redeemed fifteen of them. In the process it has rewarded it?s investors handsomely with consistent returns. A total of over 5.8 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund. Today, the fund manages over Rs. 42,100 crores of assets and has a diverse profile of investors actively parking their investments across 38 active schemes.
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The fund serves this vast family of investors by reaching out to them through network of over 130 points of acceptance, 29 investor service centers, 59 investor service desks and 6 Investor Service Points. SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent India Opportunities Fund. The schemes that I have taken for analysis from SBI Mutual Fund are: 3.1SBI MAGNUM SECTOR UMBRELLA-PHARMA (G) [under sector Fund]: It provides the investor?s maximum growth opportunity through equity investments growth oriented sector called Pharma in long run. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 39.69 crores JUL 14, 1999 BSE health care Mr. Sohini Andani in stocks of
3.2 SBI MAGNAM EQUITY FUND (G)[ under large cap Fund]: To provide investors long term capital appreciation along with the liquidity of an open-ended scheme. The scheme will invest in a diversified portfolio of equities of high growth companies. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 469 crores jan 1, 1991 BSE 100 Mr. R Srinivasan
3.3SBI MAGNUM MID CAP FUND [under mid cap Fund]: To provide investors with opportunities for long term growth in capital along with the liquidity of an open ended
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scheme by investing predominantly in a well diversified basket of equity stocks of companies and in debt and money market instruments. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 303crores Mar 17.2005 CNX MID CAP Mr. Sohini Andani
AWARDS AND ACHIEVEMENTS
SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award – 8 times, CNBC TV – 18 Crisil Award 2006 – 4 Awards, The Lipper Award (Year 2005-2006) and most recently with the CNBC TV – 18 Crisil Mutual Fund of the Year Award 2007 and 5 Awards for our schemes.
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FRANKLIN TEMPLETION MUTUAL FUND: Franklin Templeton Investments is one of the largest financial services groups in the world based at San Mateo, California USA. The group has US$ 642.3 billion in assets under management globally. Franklin Templeton has offices in 33 locations across India and manages average AUM of Rs. 42142.21 crores for over 22 lakhs investors (as on September 30, 2010). The schemes that I have taken for analysis from FRANKLIN TEMPLETION Mutual Fund are: 4.1 FRANKLIN TEMPLETION FMCG FUND [under Sector Fund]: The scheme aims to achieve long term capital appreciation through exclusively investing in shares of Fast Moving Consumer Goods Companies.
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Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 51crores Mar 31.1999 NA Anil Prabhudas
JM FINANCIAL MUTUAL FUND: It is one of India „s first private sector mutual funds-an integral part of the first wave that commenced operations in 1993-94.It is a part of JM Financial Group , which has a rich heritage, built over three decade. Group?s origins can be traced back to the 1950s when the Kampani family began to get involved in India?s then capital markets. JM Financial & Investment Consultancy Services was founded on September 15, 1973. JM Financial Asset Management Private Limited started operations in December 1994 with a simultaneous launch of three funds-JM Liquid Fund (now JM Income Fund), JM Equity Fund and JM Balanced Fund. Today, JM Financial Mutual Fund offers a bouquet of funds that caters to the diverse needs of both its institutional and individual investors. It?s mission is to manage risk effectively while generating top quartile returns across all product categories. We believe that to cultivate investor loyalty, we must provide a safe haven for their investments. We are 34ehavio on helping our investors realize their investment goals through prudent advice, judicious fund management, accurate research, and strong systems of managing risk scientifically. The schemes that I have taken for analysis from JM FINANCIAL Mutual Fund are: 5.1 JM LARGE CAP FUND (G) [under large cap Fund]: The Scheme aims to provide long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments in the Healthcare sector. Fund overview: Fund TypesInvestment PlanAssets SizesOpen Ended Growth Rs5.1 crores
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Launch dateBench markFund Manager-
Jun 9.2004 BSE Health care sector Mr. Sanjay Chhabaria
5.2 JM MID CAP FUND [under mid cap Fund]: The investment objective of the Scheme is to provide capital appreciation by primarily investing in mid cap fund. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs9.7 crores Jun 9.2004 BSE 500 Mr. Sanjay Chhabaria
5.3 JM SMALL & MID CAP FUND (G)[under small cap Fund]: The investment objective of the Scheme is to provide capital appreciation by primarily investing in small cap and mid-cap stocks. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 58 crores Mar 9, 2007 CNX MID CAP Mr. Sanjay Chhabaria
BIRLA SUNLIFE MUTUAL FUND: Birla Sun Life Asset Management Company Ltd. (BSLAMC) is a joint venture between the Aditya Birla Group and the Sun Life Financial Services Inc. of Canada. The joint venture brings together the Aditya Birla Group?s experience in the Indian market and Sun Life?s global experience. Birla Sunlife Mutual Fund is established in 1994 .It offer a range of investment options, including diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds. BSLAMC is one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in.
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BSLAMC strives to provide transparent, ethical and research-based investments and wealth management services. The schemes that I have taken for analysis from BIRLA SUNLIFE Mutual Fund are: 6.1 BIRLASUNLIFE ADVANTAGE FUND [under Large cap Fund]:- To achieve long-term growth of capital through investments mainly in equity and equity related instruments. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 414 crores Feb 24, 1995 BSE Sensitive index Mr. Ajay Argal
6.2 BIRLASUNLIFE SMALL & MID CAP FUND [under small cap Fund]: It objective is to generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities of companies considered to be small and mid cap. It may also invest a certain portion of its corpus in fixed income securities including money market instruments, in order to meet liquidity requirements from time to time. Fund overview Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 189 crores Apr 9, 2007 CNX MID CAP Mr. Ankit Sancheti
KOTAK MAHINDRA MUTUAL FUND: Kotak Mahindra is one of India?s leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to
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life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of Rs.7,911 crore and employs around 20,000 employees across its various businesses, servicing around 7 million customer accounts through a distribution network of 1,716 branches, franchisees and satellite offices across more than 470 cities and towns in India and offices in New York, California, San Francisco, London, Dubai, Mauritius and Singapore. Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kota Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk – return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. The schemes that I have taken for analysis from KOTAK MAHINDRA Mutual Fund are: 7.1 KOTAK MAHINDRA MID CAP FUND [under mid cap Fund]: The investment objective of Kotak Midcap is to generate capital appreciation from a diversified portfolio of equity & equity related securities. The scheme predominantly invests in companies in the mid market capitalization segment across sectors. The scheme is well positioned to provide the benefit of potential growth offered by mid cap stocks which are likely to become tomorrows large caps. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 254 crores jan 28, 2005 CNX Nifty junior Mr. Pankaj Tibrewal
7.2 KOTAK EQUITY FOF [under Diversified fund]: To generate long-term capital appreciation from a portfolio created by investing predominantly in open-ended diversified equity schemes of Mutual Funds registered with SEBI. Fund overview: Fund TypesInvestment PlanOpen Ended Growth
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Assets SizesLaunch dateBench markFund Manager-
Rs 49 crores Aug 09, 2004 NA Mr. Sajit Pisharodi
SUNDARAM BNB PARIBAS MUTUAL FUND: Sundaram Mutual, identifying an investment opportunity long before it manifests as one, is the heart
of our business belief.
Being in the financial sector for a long time has given us a great understanding of the Indian economy and that guides us while picking the companies for its Funds. Once it unearth a potential opportunity, it?s Financial Experts spend countless time to research the companies, to see what will deliver the best returns for your money. Its financial experts are fine tuned to the larger global picture and all its complexities as well as the intricacies of the Indian market. We track global economic trends and market 38ehavior to better understand the domestic markets. We are constantly on the trail of promising opportunities and once identified, a new theme is thoroughly researched and tested on various platforms before being offered to the investing public. The schemes that I have taken for analysis from SUNDARAM BNB PARIBAS Mutual Fund are: 8.1 SUNDARAM SELECT MID CAP FUND (G) [under mid cap fund]: Sundaram Select Mid Cap Fund is an open ended equity scheme that seeks capital appreciation by investing in diversified stocks that are generally termed as mid –caps. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 2294 crores Jul 19, 2002 BSE Mid cap index Mr. Satish Ramanathan
8.2SUNDARAM BNB PARIBAS SELECT SMALL CAP FUND(G)[small cap fund]: The primary investment objective of the scheme is to generate consistent long-term returns by investing predominantly in equity/equity related instruments of companies that can be termed as small cap. Fund objective: Fund TypesOpen Ended
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Investment PlanAssets SizesLaunch dateBench markFund Manager-
Growth Rs 364 crores Jan 24, 2006 BSE Small cap index Mr. Satish Ramanathan
L & T MUTUAL FUND: L&T Mutual Fund is one of the premier mutual funds in India that serves the investment needs of investors through a suite of acclaimed mutual fund schemes. With world class investment management practices and an equally competent fund management team, L&T Mutual Fund helps its investors reach their financial goals. Whether you are an individual investor, institution, or finance professional, you can gain from the products and expertise that we offer. L&T Mutual Fund is backed by one of the most trusted and valued brands, L&T Finance – incorporated as Non Banking Finance Company in November 1994, has earned the trust of thousands of investors by adapting well to the changing marketing dynamics and emerging as a profitable venture despite the turbulences in the Financial market over the past few years. The schemes that I have taken for analysis from L & T Mutual Fund are: 9.1 L & T SMALL CAP FUND [under small cap fund]: The scheme seeks to generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies with small cap. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 20 crores Dec 20, 2007 BSE Small cap index Mr. Anant Deep Katre
TATA MUTUAL FUND:
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Tata Mutual Fund has earned the trust of lakhs of investors with its consistent performance and world-class service. It manages around Rs20,854.00 crores (average AUM for the quarter of October-December 2010) worth of assets across its varied offerings. Tata Mutual Fund offers an investment option for everyone, whether you are a businessman or salaried professional, a retired person or housewife, an aggressive investor or a conservative capital builder. The Tata Asset Management philosophy is centered on seeking consistent, long-term results. Tata Asset Management aims at overall excellence, within the framework of transparent and rigorous risk controls. Tata Mutual Fund offers investors a broad range of managed investment products in various asset classes and risk parameters, with operational flexibility to suit their varied investment needs. It offer a wide range of services to assist investors have a fulfilling and rewarding financial planning experience with us. It have designed our services keeping in mind the needs of our investors, giving them a smooth and hassle-free financial planning process. The schemes that I have taken for analysis from TATA Mutual Fund are: 10.1 TATA DIVIDENT YIELD FUND (G) [under Diversified fund]: To Provide income distribution and / or medium to long term capital gains by investing predominantly in high dividend yield stocks. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markOpen Ended Growth Rs 177 crores Oct 27, 2004 BSE Sensitive index
HDFC MUTUAL FUND: HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.
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In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore. The AMC is managing 28 open-ended schemes of the Mutual Fund some are HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, and HDFC Index Fund. The AMC is also managing 7 closed ended Schemes some are HDFC Long Term Equity Fund, HDFC Infrastructure Fund, and HDFC Fixed Maturity Plans – Series XI, HDFC Fixed Maturity Plans – Series XII.The AMC is also providing portfolio management / advisory services. The schemes that I have taken for analysis from HDFC MUTUAL FUND are: 11.1 HDFC TOP200 FUND [under Diversified fund]: It objective is to generate long term capital appreciation by investing in a portfolio of equities and equity linked instruments drawn from the BSE 200 Index. Fund Overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs. 9425 crores Oct 27, 2004 BSE 200 index Mr. Prashant Jain
RELIGARE MUTUAL FUND: Religare Mutual Fund is managed by Religare Asset Management Company Limited, a subsidiary of Religare Securities Limited (RSL). The AMC was incorporated on May 20, 2005 and the mutual fund was set up on July 24, 2006. It manages Assets around Rs104 billion dollars. Religare Asset Management aims to serve investment needs of individual investors, corporate and institutions through mutual funds and subadvised portfolios. Its product portfolio is managed by individually focused management teams to create optimum balance and results. They are committed to providing financial care and top class service. They subscribe to sustainable business models and process that factor in the dynamism of the business in fast changing market scenarios. The schemes that I have taken for analysis from Religare Mutual Fund are:
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12.1 RELIGARE SMALL &MID CAP FUND [under small cap fund]: The Scheme seeks to provide long term capital appreciation by investing in a portfolio that is predominantly constituted of equity and equity related instruments of mid and small cap companies.
Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 22.4 crores Jan 7, 2008 NA Mr. Vinay Paharia
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FIVE TYPES OF MUTUAL FUNDS SCHEMES TAKEN INTO ANALYSIS
A) Diversified funds:
These are a kind of funds which invest there most of their money in different sectors like FMCG, Infrastructure, Pharma, ect. This helps to Diversified there Risk into various sectors. If one sector is going down then other sector may compensate the loss. These types of funds give consistent return without much volatility in long term. Top Performer Funds under this category: 1) IDFC Premium Equity fund-planA (G): It?s Compounded Annualized Returns of last 5 years is 26.9%. 2) Reliance regular saving fund-Equity growth: It?s Compounded Annualized Returns of last 5 years is 26% return. 3) HDFC Top 200- Growth: It?s Compounded Annualized Returns of last 5 years is 21.5%. 4) HDFC Equity fund (G): It?s Compounded Annualized Returns of last 5 years is 21.3%. 5) Birlasunlife frontline Equity fund: It?s Compounded Annualized Returns of last 5 years is 21.2%.
B) Sector Funds:
These types of Funds are investing their money in particular sector of the economy. Such as infrastructure, Banking, Retail, FMCG, ect. These Funds are more volatile than Diversified funds having stocks of many sectors. These Funds are high risk –reward category. These types of Funds are only for the short term investors, who are able to take high risk ability. Top Performer funds under this category: 1) Reliance Diversified Power sector fund (G): It?s Compounded Annualized Returns of last 5 years is 27.8%. 2) Reliance Banking fund (G): It?s Compounded Annualized Returns of last 5 years is 25.7%. 3) Reliance Pharma (G): It?s Compounded Annualized Returns of last 5 years is 25.4%. 4) ICICI Prudential infrastructure fund (G): It?s Compounded Annualized Returns of last 5 years is 20.5%.
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5) UTI Banking sector fund (G): It?s Compounded Annualized Returns of last 5 years is 20.4%.
C) Large Cap Funds:
These are those types of Funds which invest their money in large Blue chip Companies, having with a market capitalization of more than Rs 1000 crores. Investing in large cap is a low risk-return preposition because such funds are widely research and information available. One of the advantage of large cap funds are that they are less volatile than mid cap and small cap funds because investors are investing in this types of fund for a long term prospective and help to keep these fund away from the volatility of the markets. Top Performer under this category: 1) HDFC Top 200: It?s Compounded Annualized Returns of last 5 years is 24.5%. 2) Reliance Large Cap Fund: It?s Compounded Annualized Returns of last 5 years is 22.6%. 3) Franklin India Blue Chip: It?s Compounded Annualized Returns of last 5 years is 20.7%. 4) Kotak 30: It?s Compounded Annualized Returns of last 5 years is 19%. 5) DSPML Top 100 Equity: It?s Returns of last year is 18.4%.
D) Mid Cap Funds:
This types of Funds invest their money in mid sizes companies. Companies having market Capitalization between the Rs 500crores to Rs 1000 crores are come under the mid cap companies. Mid Cap Funds are very volatile and tends to fall if the market is fall in bad times. But this gives good return in short term. Top Performer under this category: 1) IDFC Premier equity fund: It?s Compounded Annualized Returns of last 5 years is 29.2%. 2)Sundaram select mind cap fund (G): It?s Compounded Annualized Returns of last 5 years is 24.8%. 3) Reliance Growth: It?s Compounded Annualized Returns of last 5 years is 23%. 4) Birla Sun life mid cap fund: It?s Compounded Annualized Returns of last 5 years is 21.9%.
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5) L&T mid cap fund: It?s Compounded Annualized Returns of last 5 years is 17%.
E) Small Cap Funds
These types of Funds are investing their money in Small size companies. Companies having market capitalization up to Rs 500 crores come under the categories of Small Cap companies. Small Cap Funds are more volatile than Mid Cap & Large Cap Funds. It?s Risk-Return Matrix are very high. Top performer under this category: 1) L&T Small cap fund: 2) JP Morgan India smaller companies fund(G) 3) HSBC Small cap fund 4) Sundaram select small cap fund (G):
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DATA ANALYSIS & INTERPRETATION A) DIVERSIFIED FUNDS
1) CAGR
Tata Dividend yield Kotak Equity FOF 86.03 13.08 21.11 Reliance Diversified Power 96 32.07 40.16 Sundaram Balance fund 71.52 12.61 16.47 HDFC TOP200
Yr/Schemes
Last 1 yrs Last3 yrs Last 5yrs
103.78 20.3 19.14
102.25 20.7 29.14
CAGR
120 100 Percent(%) 80 60 40 20 0 Tata Kotak Equity Reliance dividend FOF diversified yield power Schemes Sundaram balance fund HDFC TOP200 last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1yr HDFC, Tata and Reliance gave maximum return of 102.2%, 103.7% and 96% respectively, Followed by Kotak and Sundaram by 86.03% and 71.5% respectively. b) In last 3 & 5 yrs, Reliance gave maximum return against its competitors.
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2) Standard Deviation
Yrs/Schemes Tata Dividend yield Last 1 yrs Last 3 yrs Last 5yrs 0.071419205 0.09292427 0.099664831 0.09966483 0.087110732 0.11201375 Kotak Equity FOF Reliance Diversified power 0.101266115 0.111054683 0.09839249 Sundaram Balance fund 0.068953248 0.082246954 0.085491183 0.0932788 0.0968572 0.0841035 HDFC TOP200
STANDARD DEVIATION
0.12 0.1 (in Rs) 0.08 0.06 0.04 0.02 0 Tata divident Kotak Equity Reliance Sundaram yield FOF diversified balance fund power Schemes HDFC TOP200 last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) As far as the Standard Deviation in last 1 yrs is concern, it is high in Reliance, which is 0.1 and low in Sundaram (0.068). b) In last 3years, again Reliance has high Standard Deviation about 0.011 followed by Kotak and Tata by0.09 both. c) But in last5 yrs, Kotak is highly volatile followed by Reliance and Tata.
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3) Beta
Yrs/Schemes Tata Dividend yield Kotak Equity FOF Reliance Diversified Power 0.970784506 0.839178531 0.889744 Sundaram HDFC
Balance fund TOP200
0.685522556 0.91563 3 Last 1 yrs Last 3 yrs
0.173402004 0.1508907 0.100171515
0.094652253
0.127550
Last 5yrs
-0.01188823
0.1985720 0.970784506
0.120147547
0.167198
BETA
1.2 1 0.8 (in Rs) 0.6 0.4 0.2 0 -0.2 Tata divident yield Kotak Reliance Sundaram Equity FOF diversified balance power fund Schemes HDFC TOP200 last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr Reliance has high Beta about 0.97 as compare to others. b) In last 3 yrs all the funds are less volatile with Nifty, but in last 5 yrs Reliance has high Beta of 0.97, so it has high volatility. c) Tata dividend has low Beta in all the year.
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4) Sharpe Ratio
Yrs/Schemes Tata Dividend yield Last 1 yrs 2.82288 Kotak Equity FOF 1.92184 Reliance Diversified power 1.941195962 Sundaram Balance fund 1.78291329 2.189613153 HDFC TOP200
Last3 yrs
0.54053
0.36523
0.75575441
0.34489246 0.551588391
Last 5yrs
0.46532
0.68236
0.991355024
0.50778455 0.82590418
SHARPE RATIO
3 2.5 2 1.5 1 0.5 0 Tata divident Kotak Equity Reliance Sundaram yield FOF diversified balance fund power Schemes HDFC TOP200 (in Rs)
last 1 yrs last3 yrs last 5yrs
INTERPRETATIONS: a) As far as last 1 yr is concern, Tata has highest Sharpe ratio (2.8), followed by HDFC (2.1), Reliance (1.94), Kotak (1.92) and Sundaram (1.7) . b) In last 3 yrs & 5 yrs, Reliance has highest Sharpe Ratio against its competitors. c) Tata has low Beta in all the years.
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B) SECTOR FUND
1) CAGR (in %)
Yr/Schemes Reliance Franklin UTI SBI Reliance Media&Ent(G)
Banking(G) FMCG(G)
infrastructure(G) magnum Pharma(G)
Last1 yrs Last3 yrs Last 5yrs
120.55 30.21 25.37
68.57 17.52 21.73
66.77 10.89 23.23
112.96 3.61 12.31
18.94 2.07 88.77
CAGR
140 120 100 80 60 40 20 0 Percentage(%)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In last1 years, Reliance Banking and SBI gave highest return of 120% and 112.9% respectively against its competitors. b) In last 3 years, Reliance Banking gave highest return of 30.2%. And In last 5 yr, Reliance Media & Ent give maximum return of 88.7%.
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2) Standard Deviation
Yr/Schemes
Reliance banking(G)
Franklin FMCG(G)
UTI
SBI
Reliance Media&Ent(G)
infrastructure(G) magnum Pharma(G)
Last1 yrs Last3 yrs Last 5yrs
0.128943375 0.115829428 0.102489584
0.054102785 0.094154994 0.060318612 0.104597968 0.060205922 0.09752141
0.095626797 0.107992407 0.109212679 0.118757826 0.09470864 0.104554454
STANDARD DEVIATION
0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 (in Rs)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In all the three years is concern Reliance Banking has highest Standard Deviation, so it is highly volatile as compare to its competitors. b) Franklin FMCG is less volatile as compare to its competitors, so it is less Risky to invest in this Fund.
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3) Beta
Yr/Schemes Reliance banking(G) Franklin FMCG(G) UTI SBI magnum Reliance Media&Ent(G)
infrastructure(G) Pharma(G)
Last1 yrs
1.230722931 0.162919496 0.914220081
0.85286803
1.031589083
Last3 yrs
0.213887277 0.054444645 0.096699523
0.130467228
0.231784503
Last 5yrs
0.248025961 0.093340307 0.145949941
0.168794462
0.26664004
BETA
1.4 1.2 1 0.8 0.6 0.4 0.2 0 (in Rs)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In last 1 yr, Reliance Banking has high Beta of 1.2, so it is highly volatile as compare to its competitors. b) Overall, Franklin FMCG is less volatile as compare to its competitors, so it is less Risky to invest in this Fund.
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4) Sharpe ratio
Yr/Schemes Reliance banking(G) Last1 yrs Last3 yrs Last 5yrs 1.867210636 0.701616713 0.642094973 Franklin FMCG(G) UTI SBImagnum Reliance Media&Ent(G) 1.738190637 -0.044702739 0.40984207
infrastructure(G) Pharma(G) 1.919779766 0.125784902 0.339000122
2.60860683 1.550735632 0.59406659 0.296815592 0.76680298 0.611539329
SHARPE RATIO
3 2.5 2 1.5 1 0.5 0 -0.5 (in Rs)
last1 yrs last3 yrs last 5yrs
Schemes
INTERPRETATIONS: a) In last 1 yr Franklin FMCG has highest Sharpe Ratio of 2.6 as compare to its competitors, so it is good indicator for it. b) In last 3 yrs Reliance Banking & Franklin FMCG has high Sharpe Ratio of 0.7 and 0.5respectively and Reliance Media & Ent. Has lowest of -0.4. c) In last 5 yrs, Franklin has highest Sharpe ratio of 0.7 and SBI has lowest of 0.3.
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C) Large cap Funds 1) CAGR
Yrs/Schemes Reliance vision last 1 yrs last 3 yrs 88.44 14.1 UTI equity(G) 82.65 16.34 JM large cap 48.28 0.8 Birlasunlife adv fund 14.48 8.24 SBI magnum eq 94.09 37.61
last 5 yrs
23.39
18.02
7.94
18.16
21.11
CAGR
100 90 80 70 60 50 40 30 20 10 0 Reliance vision UTI equity(G) JM largecap Birlasunlife SBI magnum adv fund eq Schemes Percentage(%)
last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, CAGR of SBI, Reliance vision & UTI has high by94%, 88.4%, and 82.6% respectively, as compare to its competitors. b) In last 3&5 yrs SBI gave highest return of about 37.6% &21.1% respectively. c) Overall, Birlasunlife adv. Fund gave least return.
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2) Standard Deviation
Yrs/Schemes Reliance vision Last 1 yrs Last 3 yrs Last 5 yrs UTI equity(G) JM large cap 0.0783383 0.0888638 0.0813522 Birlasunlife adv fund 0.115973242 0.112693896 0.096871642 SBI magnum eq 0.097667168 0.105668883 0.095151301
0.09991376 0.0744288 0.10018448 0.0833512 0.08864059 0.0780083
STANDARD DEVIATION
0.14 0.12 Percentage(%) 0.1 0.08 0.06 0.04 0.02 0 Reliance vision UTI JM largecap Birlasunlife SBI equity(G) adv fund magnum eq Schemes last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1, 3&5 years, Birlasunlife adv. Fund has high Standard Deviation, so it is highly volatile as compare to its competitors. b) Overall, UTI equity is least volatile fund among its competitors, so it is better to invest in such a less risky fund.
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3) Beta
Yrs/Schemes Reliance vision Last 1 yrs UTI equity(G) JM large cap 0.7575292 Birlasunlife adv fund 1.128608674 SBI magnum eq 0.93092074
0.17248455 0.7078600
Last 3 yrs
0.13229572 0.1190345
0.0703577
0.165711517
0.139890907
Last 5 yrs
0.17248455 0.1607937
0.1049985
0.206156923
0.182037128
BETA
1.2 1 0.8 in(Rs) 0.6 0.4 0.2 0 Reliance vision UTI JM largecap Birlasunlife SBI magnum equity(G) adv fund eq Schemes last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, Birlasunlife has a high Beta of 1.1 as compare to its competitors, which shows high volatility. b) In last 1yr, Reliance vision has low Beta (0.17) c) JM large cap in last 3&5 yrs also has low Beta about 0.7 &0.1 respectively, so it is less risky and safer to invest.
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4) Sharpe Ratio
Yr/Schemes Reliance vision UTI equity(G) JM large cap Birlasunlife adv fund SBI magnum eq
Last 1 yrs
2.194170308 0.01409560
0.3844196
1.741029813 1.80743058
Last 3 yrs
0.377029792 0.46218302
-0.0158758
0.237019813 0.200605215
Last 5 yrs
0.646034027 0.5301262
0.2093977
0.485836378 0.53402252
SHARPE RATIO
2.5 2 Percentage(%) 1.5 1 0.5 0 -0.5 Reliance vision UTI equity(G) JM largecap Birlasunlife SBI magnum adv fund eq Scheme last 1 yrs last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr Reliance vision, SBI equity& Birlasunlife has high Sharpe Ratio about 2.1, 1.8
&1.7respectively, which shows good indicators.UTI has low which is.01. b) In last 3&5 years, JM large cap has a less Sharpe ratio about -.01 &0.2 respectively, which shows its poor Performance.
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D) MIDCAP FUND
1) CAGR
Yrs/Schemes JM midcap SBI magnum UTI mid cap Last1yrs 110 119.2 midcap 129.86 Kotak midcap 109.6 Sundaram select mid cap 139.49
Last3 yrs
7.9
1.2
13.14
5.2
15.94
Last 5yrs
14.54
16.86
16.49
17.19
28.38
CAGR
160 140 120 100 80 60 40 20 0 JM midcap SBI magnum UTImidcap Kotak midcap Sundaram mid cap select mid cap Schemes
(in Rs)
last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr, Sundaram midcap gave highest return about 139.4%, followed byUTI, SBI and JM by 129.8%, 119%, and 110% respectively, and Kotak gave lowest retun of 109.6% b) In last 3&5 yrs, Sundaram gave highest return about 15.9% & 28.3% respectively. And SBI gave lowest return.
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2) Standard Deviation
Yrs/Schemes JM midcap Last1yrs 0.1182776 SBI magnum UTI midcap mid cap 0.156138896 0.1040285 Kotak midcap 0.1010611 Sundaram select mid cap 0.150454556
Last3 yrs Last 5yrs
0.1129622 0.102009
0.144536727 0.229935443
0.1173093 0.105609
0.1118037
0.130397639
0.09941857 0.109763284
STANDARD DEVIATION
0.25 0.2 in (Rs) 0.15 0.1 0.05 0 JM midcap SBI magnum UTImidcap mid cap Schemes Kotak midcap Sundaram select mid cap last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr, Standard Deviation of SBI midcap has very high about 0.15which shows high volatility. Followed by Sundaram about 0.11. b) In last 3& 5yrs, alsoSBI shows high Standard Deviation about 0.14 & 0.22.
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3) Beta
Yrs/Schemes JM midcap SBI magnum UTI mid cap Last1yrs 1.143846 1.512159602 midcap 0.998759 Kotak midcap 0.9419961 Sundaram select mid cap 1.428028244
Last3 yrs
0.154830
0.187077319
0.157491
0.1782199
0.184278143
Last 5yrs
0.192531
0.229935443
0.207778
0.21723842
0.21284543
BETA
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 JM midcap SBI magnum mid cap UTImidcap Kotak midcap Sundaram select mid cap Schemes
(in Rs)
last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1 yr, Beta of SBI and Sundaram has high about 1.5 &1.4 respectively, as compare to its competitors .UTI and Kotak shows low Beta about0.99 &0.94 respectively. b) In last 3 & 5 years. All the Funds showed almost equal Beta.
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4) Sharpe Ratio
Yrs/Schemes JM midcap last1yrs last3 yrs last 5yrs 1.883957 0.230390 0.388877 SBI magnum mid cap 1.590404948 0.143719771 0.435169362 2.3660246 0.3559378 0.437773 UTI midcap Kotak midcap 2.1446380 0.1710649 0.48133648 Sundaram select mid cap 1.81157006 0.115906618 0.682191305
SHARPE RATIO
2.5 2 (in Rs) 1.5 1 0.5 0 JM midcap SBI magnum mid cap UTImidcap Kotak midcap Schemes Sundaram select mid cap last1yrs last3 yrs last 5yrs
INTERPRETATIONS: a) In last 1year Sharpe Ratio of UTI is highest about 2.3 followed by
Kotak(2.1),JM(1.88),Sundaram(1.81) and SBI(1.5). b) In last 3 years, UTI & JM shows highest Sharpe ratio about 0.35 & 0.23 respectively. SBI showed lowest about 0.14. c) In last 5 years, Sundaram (0.68) shows highest Sharpe ratio and JM (0.38) shows lowest.
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E) SMALLCAP FUND
1) CAGR
Yrs/Schemes Sundaram JM small Birlasunlife small cap & mid cap small&mid cap L&T small Religare cap small&mid cap Last 1yr Last 3 yrs Last 5 yrs 9.4 6.51 113.48 -17.27 140.75 4.26 119.77 -14.99 133.77 7.36
CAGR
160 140 120 100 80 60 40 20 0 -20 -40
in(Rs)
last 1yr last 3 yrs last 5 yrs Sundaram smallcap JM small & mid cap Birlasunlife small&mid cap Schemes L&T small cap Religare small&mid cap
INTERPRETATIONS: a) In last 1 yr, Birlasunlife small midcap gave highest return about140.7% followed by Religare small& midcap, L&T & JM about 133.7, 119.7%, and 113.4% respectively. b) In last 3 yr, Religare small cap give highest return about 7.3% against its competitors.JM small cap gave -17%.
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2) Standard Deviation
Yrs/Schemes Sundaram small cap JM small & Birlasunlife mid cap small&mid cap Last1yr 0.052904985 0.14490943 0.119329293 L&T small cap 0.102897 0.084923964 Religare small&mid cap
Last3 yrs Last5 yrs
0.098308914 0.160988697 0.122212359 -
0.138513 0.11489531 -
STANDARD DEVIATION
0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 Sundaram JM small & Birlasunlife L&T small Religare smallcap mid cap small&mid cap small&mid cap cap Schemes
(in Rs)
last 1yr last 3 yrs last 5 yrs
INTERPRETATIONS: a) JM small cap Funds have high Standard deviation, which shows high volatility as compare to its competitors. b) Sundaram small cap shows least standard deviation, which shows its strength.
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3) Beta
Yrs/Schemes Sundaram small cap JM small & Birlasunlife mid cap small&mid cap Last 1yr 0.757755664 1.277975835 1.132571413 L&T small cap 0.923006 0.791631306 Religare small&mid cap
Last3 yrs
0.156519161 0.233322213 0.179818858
0.491886 0.442382937
Last5 yrs
-
-
-
-
-
BETA
1.4 1.2 1 0.8 0.6 0.4 0.2 0 Sundaram smallcap JM small & Birlasunlife mid cap small&mid cap Schemes L&T small cap Religare small&mid cap
in(Rs)
last 1yr last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, there is high Beta in JM small&mid cap (1.2) and low in Sundaram small cap(0.7) b) In last 3 yrs,L&T and Religare shown high Beta about 0.49&0.44. Sundaram has low Beta about 0.15.
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4) Sharpe Ratio
Yrs/Schemes Sundaram small cap JM small & Birlasunlife mid cap small&mid cap Last 1yr 0.740297547 1.624960177 2.216180638 L&Tsmall cap Religare small&mid cap 2.258105041 2.902924217
Last 3 yrs Last 5 yrs
-0.52788846 -
-0.16756146 -
0.165643299 -
-0.32554 -
0.323392115 -
SHARPE RATIO
3.5 3 2.5 2 (in Rs) 1.5 1 0.5 0 -0.5 -1 Sundaram smallcap JM small & Birlasunlife mid cap small&mid cap Schemes L&T small cap Religare small&mid cap last 1yr last 3 yrs last 5 yrs
INTERPRETATIONS: a) In last 1 yr, Religare small& midcap shows highest Sharpe ratio of 2.9 against its competitors, whereas Sundaram shows lowest, which is0.74. b) In last 3 yrs,again Religare shows high Sharpe ratio of 0.32 and low in Sundaram about -.052.
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Performance Sheets
Basis on Compounded annual growth rate (CAGR) 9) Performance Sheet (Diversified Funds) fig (in %) Schemes CAGR (1yrs) 1.Tata dev 2.Kotak eq 3.Reliance diversified 4.Sundaram Bal 71.52 12.61 16.47 5 5 5 100 86.03 100 CAGR (3yrs) 20.3 13.08 32.07 CAGR (5yrs) 19.14 21.11 40.16 2 4 3 3 4 1 4 3 1 Rank1 yr Rank 2yrs Rank 3yrs
5.HDFC TOP50
102.25
20.7
29.14
1
2
2
2. Performance Sheet (Sector Funds)
Schemes CAGR (1yrs) 1.Reliance Banking 2.Franklin FMCG 3.UTI infrastructure 4.SBI Pharma 5.Reliance Media&Ent 120.55 68.68 66.77 112.96 18.94 CAGR (3yrs) 251.23 17.52 10.89 3.61 20.9 CAGR (5yrs) 25.37 21.73 23.23 12.31 88.77 2 5 1 3 Rank1 yr
Fig (in %) Rank 2yrs Rank 3yrs
1 4 3 5 2
2 4 3 5 1
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3. Performance Sheet (Large cap Funds)
Fig (in %) Schemes CAGR (1yrs) 1.Reliance Vision 2.UTI Eq 3.JM largecap 4.Birlasunlife adv 5.SBI Eq 88.44 82.65 48.58 14.48 94.19 CAGR (3yrs) 14.1 16.34 0.8 8.24 37.61 CAGR (5yrs) 23.39 18.02 7.94 18.16 21.11 2 3 4 5 1 3 2 5 4 1 1 4 5 3 2 Rank1 yr Rank 2yrs Rank 3yrs
4. Performance Sheet (Midcap Fund)
Fig (in %) Schemes CAGR (1yrs) CAGR (3yrs) CAGR (5yrs) Rank1 yr Rank 2yrs Ran k 3yrs 1JM midcap 2.SBI mid cap 3.UTI midcap 4.Kotak midcap 5.Sundaram midcap 110 119.2 129.86 109.6 139.49 7.9 1.2 13.14 5.2 15.94 14.54 16.86 16.49 17.19 28.38 4 3 2 5 1 3 5 2 4 1 5 3 4 2 1
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5. Performance Sheet (Small cap Fund)
Fig (in %) Schemes CAGR( 1yrs) 1.Sundaram small cap 2.JM small&mid cap 113.48 3.Birlasunlife small 140.75 midcap 4.L&T smallcap 5.Religare small midcap 119.75 133.77 -14.99 7.36 3 2 4 1 -17.27 4.26 4 1 5 3 9.4 CAGR CAGR Rank1 yr (3yrs) 6.51 (5yrs) 5 2 Rank 2yrs Rank 3yrs
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Chapter 5
Findings & Conclusion Recommendation & Suggestion Limitation
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CONCLUSIONS
1. Diversified Funds
a) The Performance of Tata Dividend & HDFC top200 are better than their competitors because there Sharpe ratio & CAGR are relatively high against their competitors, there Beta & Standard Deviation both are low. b) The Performance of Reliance Diversified & Sundaram are poor because of their low Sharpe ratio & CAGR. Also they are more risky as compare to their competitors because of their high Beta. c) I would suggest giving first priority to HDFC TOP200 and second to Tata Dividend.
2. Sector Funds
a) The Performance of Reliance Banking on the Basis of CAGR is outperforming as compare to its competitors. Its Sharpe ratio is also good after Franklin FMCG. b) Those who want to take high return as well as risk Reliance Banking is good for them because its Beta is also high among its competitors. c) Those who want to keep them safe and able to take less risk, for them Franklin is better option.
3. Large cap Funds
a) SBI & Reliance vision both have good CAGR and Sharpe ratio, But Reliance have very less Beta as compare to SBI, so Reliance should be the priority for investment. b) JM large cap & Birlasunlife adv both is poor performer as far as CAGR and Sharpe ratio is concern, so try to avoid them.
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4. Mid cap Funds
a) Sundaram select mid cap is the top performer in term of CAGR and Sharpe ratio, but have relatively high Beta, It is good for Risk taking investors. b) UTI is second best performer, also have low Beta as compare to Sundaram select mid cap, so it is good for safe investment. c) CAGR & Sharpe ratio of SBI is relatively low and its Beta and Standard Deviation are very high as compare to its competitors, so try to avoid it.
5. Small cap Funds
a) Sharpe ratio and CAGR of Religare are relatively high, also its Beta is low, and so it is good to invest in this fund. b) Sundaram small cap has very low CAGR & Sharpe ratio.
.
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SUGGESTIONS & RECOMMENDATIONS
?
The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.
?
Mutual funds offer a lot of benefit which no other single option could offer. But most of
the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time.
?
Mutual Fund Company needs to give the training of the Individual Financial Advisors
about the Fund/Scheme and its objective, because they are the main source to influence the investors.
?
Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration.
?
Younger people aged fewer than 35 will be a key new customer group into the future,
so making greater efforts with younger customers who show some interest in investing should pay off.
?
Customers with graduate level education are easier to sell to and there is a large
untapped market there. To succeed however, advisors must provide sound advice and high quality.
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Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons
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LIMITATIONS
? Samples sizes is limited factor, only last five years of Data has been taken. ? Past performance may not guarantee the future return. ? Micro level data have been taken in analysis; Macro level data may affect the returns.
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BIBLIOGRAPHY
Books: 1) Donald E Fischer ,Security Analysis & Portfolio Management
Web sites:
1) http://www.bluechipindia.co.in/ 2) http://www.franklintempletonindia.com 3) http://www.utimf.com 4) http://www.hdfcfund.com/ 5) http://mutualfund.birlasunlife.com 6) http://reliancemutual.com/ 7) http://investopedia.com 8) http://money.rediff.com 9) http://moneycontrol.com
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GLOSSARY
FORMULAE USED IN TOOLS & TECHNIQUES Calculation of CAGR
Method of calculating CAGR is given by this equation.
Calculation of SH ARPE RATIO
The Sharpe ratio formula is:
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Calculation of BETA
Beta coefficient is given by the following formulas: ?= ?= Covariance of Market Return with Stock Return Variance of Market Return Correlation Coefficient Between Market and Stock × Standard Deviation of Stock Returns Standard Deviation of Market Returns
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