Description
A mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities.
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CONTENTS
CONCEPTUAL OVERVIEW:
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2.
RESEARCH METHODOLOGY: 2.1 Objectives 2.2 Methodology 2.3 Significance 2.4 Limitations 8 8 8 9
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THEORETICAL BACKGROUND: 3.1 Mutual Fund 3.2 History of Mutual Fund 3.3 Types of Mutual Fund
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CASE STUDY
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DATA ANALYSIS
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6.
FINDINGS
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REFRENCES
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CHAPTER 1
CONCEPTUAL OVERVIEW
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CONCEPTUAL OVERVIEW
1. BASICS OF MUTUAL FUND A mutual fund is a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When investors invest in a mutual fund, they are buying units or portions of the mutual fund and thus on investing becomes a unit holder of the fund. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns. Mutual funds are set up to buy many stocks. Beyond that, investors can diversify even more by purchasing different kinds of stocks which helps to spreading out investors’ money across different types of investments and hence, reduces risk tremendously up to certain extent. It could take you weeks to buy all these investments, but if you purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in a predetermined category of investments.
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CHAPTER 2
RESEARCH METHODOLOGY
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2.1) OBJECTIVES: Objective of this study is to analyze the Past Performance of the various Mutual Funds Schemes on the Basis of there Historical NAV’s and application of statistical tools on the same. This helps in understanding the performance of mutual fund schemes in terms of both risk as well as return involved. 2.2 METHODOLOGY: 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
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.
2.3 SIGNIFICANCE: ? ? ? Able to learn the various analytical tools of Mutual Fund like Beta, Standard Deviation, Compounded annual growth rate (CAGR) and Sharp Ratio. Get complete overview of Mutual Fund industries in India. Able to know the past performance of various Mutual Funds Schemes.
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Investors are able to know the investment pattern and market trend of investing in various sectors.
2.4 LIMITATIONS: ? ? ? Samples sizes is limited factor, only last fives 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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CHAPTER 3
THEORETICAL BACKGROUND
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3.1 Mutual Fund: 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
Advantages of Mutual Fund:
a) 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.
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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 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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3.2 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.
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Third Phase- 1993-2003(Entry of Private sector funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase – since February 2003: In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund 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
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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.
A graph indicates the growth of assets over the years.
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3.3 Types of Mutual Funds Schemes: 3.3.1 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.
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3.3.2 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 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. returns. Equity part provides growth and the debt part provides stability in
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3.3.3 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 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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3.3.4 Types of Funds taken for analysis: a) 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%.
b) 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
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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%. 5) L&T mid cap fund: It’s Compounded Annualized Returns of last 5 years is 17%.
c) 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):
d) Sector Funds: These types of Funds are investing their money in particular sector of the
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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%. 5) UTI Banking sector fund (G): It’s Compounded Annualized Returns of last 5 years is 20.4%.
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e) Diversified funds: These are a kind of funds which invest there most of there 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%.
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CHAPTER 4
CASE STUDY
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4.1 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 wellrounded 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: 4.1.1 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
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4.1.2 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. Fund overview: Fund TypesInvestment PlainAssets sizesLaunch dateBenchmarkFund ManagerOpen Ended Growth Rs112.05 crores Sep 27, 2007 NA Mr. Sailesh Raj Bhan
4.1.3 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
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4.2 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 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: 4.2.1 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.
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Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 1581crores Apr7, 2004 BSE 100 Mr. Sanjay Dongre
4.2.2 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 dateBench markFund ManagerOpen Ended Growth Rs 2170crores may18, 1992 BSE sensitive index Mr. Anoop Bhaskar
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4.2.3 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
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4.3 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. 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:
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4.3.1SBI MAGNUM SECTOR UMBRELLA-PHARMA (G) [under sector Fund]: It provides the investor’s maximum growth opportunity through equity investments in stocks of 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
4.3.2 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
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4.3.3 SBI 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 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
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4.4 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: 4.4.1 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. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 51crores Mar 31.1999 NA Anil Prabhudas
4.5 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.
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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 focussed 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: 4.5.1 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 SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs5.1 crores Jun 9.2004 BSE Health care sector Mr. Sanjay Chhabaria
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4.5.2 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
4.5.3 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
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4.6BIRLA 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. 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 are: 4.6.1BIRLASUNLIFE 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 Mutual Fund
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4.6.2BIRLASUNLIFE 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
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4.7 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 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 Fund are:
Mutual
4.7.1 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:
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Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund Manager-
Open Ended Growth Rs 254 crores jan 28, 2005 CNX Nifty junior Mr. Pankaj Tibrewal
4.7.2 KOTAK EQUITY FOF [under Diversified fund]: To generate long-term capital appreciation from a portfolio created by investing predominantly in openended diversified equity schemes of Mutual Funds registered with SEBI. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 49 crores Aug 09, 2004 NA Mr. Sajit Pisharodi
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4.8 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 behaviour 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 Mutual Fund are: 4.8.1 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 SUNDARAM BNB PARIBAS
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4.8.2SUNDARAM 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 TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 364 crores Jan 24, 2006 BSE Small cap index Mr. Satish Ramanathan
4.8.3 SUNDARAM BNB PARIBAS GROWTH FUND (G)[under Diversified fund]: It seeks to achieve capital appreciation by investing in a well diversified basket of equities and equity-related instruments. Income generation would be the secondary consideration. Fund Overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth -
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4.9 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: 4.9.1 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
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4.10 TATA MUTUAL FUND: 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 OctoberDecember 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: 1.10.1 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 dateOpen Ended Growth Rs 177 crores Oct 27, 2004
40
Bench markFund Manager-
BSE Sensitive index Mr. Mahendra Jajoo / Sachin Relekar
4.11 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. 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,
41
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: 4.11.1 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
4.12 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 sub-advised 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
42
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:
4.12.1 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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CHAPTER 5
DATA ANALYSIS
5.1 Diversified Funds: 1) CAGR Kotak Equity FOF Reliance Diversified Power Sundaram Balance fund
Yr/Schemes
Tata Dividend yield
HDFC TOP200
44
Last 1 yrs Last3 yrs Last 5yrs
103.78 20.3 19.14
86.03 13.08 21.11
96 32.07 40.16
71.52 12.61 16.47
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.
2) Standard Deviation Yrs/Schemes Tata Dividend yield Last 1 yrs 0.071419205 Kotak Equity FOF Reliance Diversified power 0.068953248 0.0932788 Sundaram Balance fund HDFC TOP200
0.09292427 0.101266115
45
Last 3 yrs Last 5yrs
0.099664831 0.087110732
0.09966483 0.111054683 0.11201375 0.09839249
0.082246954 0.085491183
0.0968572 0.0841035
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.
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
46
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.
4) Sharpe Ratio Yrs/Schemes Tata Dividend Kotak Equity Reliance Diversified Sundaram Balance HDFC TOP200
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yield Last 1 yrs 2.82288
FOF 1.92184
power 1.941195962
fund 1.78291329 2.189613153
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.
5.2 Sector Fund 1) CAGR (in %)
48
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%.
2) Standard Deviation
49
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.
3) Beta
50 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.
4) Sharpe ratio
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Yr/Schemes
Reliance banking(G)
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
Last1 yrs Last3 yrs Last 5yrs
1.867210636 0.701616713 0.642094973
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.
5.3 Large cap Funds 1) CAGR
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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. 2) Standard Deviation Yrs/Schemes Reliance UTI JM large Birlasunlife SBI magnum
53
vision Last 1 yrs Last 3 yrs Last 5 yrs
equity(G)
cap 0.0783383 0.0888638 0.0813522
adv fund 0.115973242 0.112693896 0.096871642
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.
54
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.
55
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 eq& 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.
56
5.4 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.
57
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.
58
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 respectively. b) In last 3 & 5 years. All the Funds showed almost equal Beta. shows low Beta about0.99 &0.94
59
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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5.5 Small cap 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 JM small & Birlasunlife smallcap 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.
63
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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CHAPTER 6
FINDINGS
65
6. Performance Sheets: Basis on Compounded annual growth rate (CAGR) 6.1.1Performance 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
6.1.2 Performance Sheet (Sector Funds) Fig (in %) 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 1 4 3 5 2 2 4 3 5 1 Rank1 yr Rank 2yrs Rank 3yrs
66
6.1.3Performance 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
6.1.4Performance 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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6.1.5Performance 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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6.2Finding &suggestions 6.2.1Diversified Funds a) The Performance of Tata Dividend & HDFC top200 are better than there competitors because there Sharpe ratio & CAGR are relatively high against there competitors, there Beta & Standard Deviation both are low. b) The Performance of Reliance Diversified & Sundaram are poor because of there low Sharpe ratio & CAGR. Also they are more risky as compare to there competitors because of there high Beta. c) I would suggest giving first priority to HDFC TOP200 and second to Tata Dividend.
6.2.2 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.
6.2.3 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.
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b) JM large cap & Birlasunlife adv both is poor performer as far as CAGR and Sharpe ratio is concern, so try to avoid them. 6.3.4 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.
6.3.5 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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CHAPTER 6
REFRENCES
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6.1 Books: 1) Donald E Fischer ,Security Analysis & Portfolio Management
6.2) 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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doc_695608693.docx
A mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities.
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SR. NO
CONTENTS
CONCEPTUAL OVERVIEW:
PG. NO.
1.
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2.
RESEARCH METHODOLOGY: 2.1 Objectives 2.2 Methodology 2.3 Significance 2.4 Limitations 8 8 8 9
3.
THEORETICAL BACKGROUND: 3.1 Mutual Fund 3.2 History of Mutual Fund 3.3 Types of Mutual Fund
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4
CASE STUDY
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5.
DATA ANALYSIS
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6.
FINDINGS
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7.
REFRENCES
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CHAPTER 1
CONCEPTUAL OVERVIEW
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CONCEPTUAL OVERVIEW
1. BASICS OF MUTUAL FUND A mutual fund is a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When investors invest in a mutual fund, they are buying units or portions of the mutual fund and thus on investing becomes a unit holder of the fund. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns. Mutual funds are set up to buy many stocks. Beyond that, investors can diversify even more by purchasing different kinds of stocks which helps to spreading out investors’ money across different types of investments and hence, reduces risk tremendously up to certain extent. It could take you weeks to buy all these investments, but if you purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in a predetermined category of investments.
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CHAPTER 2
RESEARCH METHODOLOGY
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2.1) OBJECTIVES: Objective of this study is to analyze the Past Performance of the various Mutual Funds Schemes on the Basis of there Historical NAV’s and application of statistical tools on the same. This helps in understanding the performance of mutual fund schemes in terms of both risk as well as return involved. 2.2 METHODOLOGY: 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
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.
2.3 SIGNIFICANCE: ? ? ? Able to learn the various analytical tools of Mutual Fund like Beta, Standard Deviation, Compounded annual growth rate (CAGR) and Sharp Ratio. Get complete overview of Mutual Fund industries in India. Able to know the past performance of various Mutual Funds Schemes.
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?
Investors are able to know the investment pattern and market trend of investing in various sectors.
2.4 LIMITATIONS: ? ? ? Samples sizes is limited factor, only last fives 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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CHAPTER 3
THEORETICAL BACKGROUND
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3.1 Mutual Fund: 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
Advantages of Mutual Fund:
a) 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.
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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 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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3.2 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.
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Third Phase- 1993-2003(Entry of Private sector funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase – since February 2003: In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund 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
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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.
A graph indicates the growth of assets over the years.
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3.3 Types of Mutual Funds Schemes: 3.3.1 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.
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3.3.2 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 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. returns. Equity part provides growth and the debt part provides stability in
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3.3.3 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 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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3.3.4 Types of Funds taken for analysis: a) 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%.
b) 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
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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%. 5) L&T mid cap fund: It’s Compounded Annualized Returns of last 5 years is 17%.
c) 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):
d) Sector Funds: These types of Funds are investing their money in particular sector of the
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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%. 5) UTI Banking sector fund (G): It’s Compounded Annualized Returns of last 5 years is 20.4%.
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e) Diversified funds: These are a kind of funds which invest there most of there 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%.
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CHAPTER 4
CASE STUDY
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4.1 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 wellrounded 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: 4.1.1 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
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4.1.2 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. Fund overview: Fund TypesInvestment PlainAssets sizesLaunch dateBenchmarkFund ManagerOpen Ended Growth Rs112.05 crores Sep 27, 2007 NA Mr. Sailesh Raj Bhan
4.1.3 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
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4.2 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 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: 4.2.1 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.
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Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 1581crores Apr7, 2004 BSE 100 Mr. Sanjay Dongre
4.2.2 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 dateBench markFund ManagerOpen Ended Growth Rs 2170crores may18, 1992 BSE sensitive index Mr. Anoop Bhaskar
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4.2.3 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
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4.3 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. 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:
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4.3.1SBI MAGNUM SECTOR UMBRELLA-PHARMA (G) [under sector Fund]: It provides the investor’s maximum growth opportunity through equity investments in stocks of 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
4.3.2 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
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4.3.3 SBI 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 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
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4.4 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: 4.4.1 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. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 51crores Mar 31.1999 NA Anil Prabhudas
4.5 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.
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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 focussed 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: 4.5.1 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 SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs5.1 crores Jun 9.2004 BSE Health care sector Mr. Sanjay Chhabaria
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4.5.2 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
4.5.3 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
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4.6BIRLA 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. 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 are: 4.6.1BIRLASUNLIFE 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 Mutual Fund
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4.6.2BIRLASUNLIFE 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
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4.7 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 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 Fund are:
Mutual
4.7.1 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:
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Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund Manager-
Open Ended Growth Rs 254 crores jan 28, 2005 CNX Nifty junior Mr. Pankaj Tibrewal
4.7.2 KOTAK EQUITY FOF [under Diversified fund]: To generate long-term capital appreciation from a portfolio created by investing predominantly in openended diversified equity schemes of Mutual Funds registered with SEBI. Fund overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 49 crores Aug 09, 2004 NA Mr. Sajit Pisharodi
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4.8 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 behaviour 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 Mutual Fund are: 4.8.1 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 SUNDARAM BNB PARIBAS
37
4.8.2SUNDARAM 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 TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth Rs 364 crores Jan 24, 2006 BSE Small cap index Mr. Satish Ramanathan
4.8.3 SUNDARAM BNB PARIBAS GROWTH FUND (G)[under Diversified fund]: It seeks to achieve capital appreciation by investing in a well diversified basket of equities and equity-related instruments. Income generation would be the secondary consideration. Fund Overview: Fund TypesInvestment PlanAssets SizesLaunch dateBench markFund ManagerOpen Ended Growth -
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4.9 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: 4.9.1 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
39
4.10 TATA MUTUAL FUND: 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 OctoberDecember 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: 1.10.1 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 dateOpen Ended Growth Rs 177 crores Oct 27, 2004
40
Bench markFund Manager-
BSE Sensitive index Mr. Mahendra Jajoo / Sachin Relekar
4.11 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. 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,
41
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: 4.11.1 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
4.12 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 sub-advised 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
42
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:
4.12.1 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
43
CHAPTER 5
DATA ANALYSIS
5.1 Diversified Funds: 1) CAGR Kotak Equity FOF Reliance Diversified Power Sundaram Balance fund
Yr/Schemes
Tata Dividend yield
HDFC TOP200
44
Last 1 yrs Last3 yrs Last 5yrs
103.78 20.3 19.14
86.03 13.08 21.11
96 32.07 40.16
71.52 12.61 16.47
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.
2) Standard Deviation Yrs/Schemes Tata Dividend yield Last 1 yrs 0.071419205 Kotak Equity FOF Reliance Diversified power 0.068953248 0.0932788 Sundaram Balance fund HDFC TOP200
0.09292427 0.101266115
45
Last 3 yrs Last 5yrs
0.099664831 0.087110732
0.09966483 0.111054683 0.11201375 0.09839249
0.082246954 0.085491183
0.0968572 0.0841035
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.
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
46
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.
4) Sharpe Ratio Yrs/Schemes Tata Dividend Kotak Equity Reliance Diversified Sundaram Balance HDFC TOP200
47
yield Last 1 yrs 2.82288
FOF 1.92184
power 1.941195962
fund 1.78291329 2.189613153
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.
5.2 Sector Fund 1) CAGR (in %)
48
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%.
2) Standard Deviation
49
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.
3) Beta
50 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.
4) Sharpe ratio
51
Yr/Schemes
Reliance banking(G)
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
Last1 yrs Last3 yrs Last 5yrs
1.867210636 0.701616713 0.642094973
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.
5.3 Large cap Funds 1) CAGR
52
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. 2) Standard Deviation Yrs/Schemes Reliance UTI JM large Birlasunlife SBI magnum
53
vision Last 1 yrs Last 3 yrs Last 5 yrs
equity(G)
cap 0.0783383 0.0888638 0.0813522
adv fund 0.115973242 0.112693896 0.096871642
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.
54
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.
55
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 eq& 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.
56
5.4 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.
57
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.
58
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 respectively. b) In last 3 & 5 years. All the Funds showed almost equal Beta. shows low Beta about0.99 &0.94
59
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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5.5 Small cap 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 JM small & Birlasunlife smallcap 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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CHAPTER 6
FINDINGS
65
6. Performance Sheets: Basis on Compounded annual growth rate (CAGR) 6.1.1Performance 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
6.1.2 Performance Sheet (Sector Funds) Fig (in %) 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 1 4 3 5 2 2 4 3 5 1 Rank1 yr Rank 2yrs Rank 3yrs
66
6.1.3Performance 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
6.1.4Performance 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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6.1.5Performance 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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6.2Finding &suggestions 6.2.1Diversified Funds a) The Performance of Tata Dividend & HDFC top200 are better than there competitors because there Sharpe ratio & CAGR are relatively high against there competitors, there Beta & Standard Deviation both are low. b) The Performance of Reliance Diversified & Sundaram are poor because of there low Sharpe ratio & CAGR. Also they are more risky as compare to there competitors because of there high Beta. c) I would suggest giving first priority to HDFC TOP200 and second to Tata Dividend.
6.2.2 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.
6.2.3 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.
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b) JM large cap & Birlasunlife adv both is poor performer as far as CAGR and Sharpe ratio is concern, so try to avoid them. 6.3.4 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.
6.3.5 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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CHAPTER 6
REFRENCES
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6.1 Books: 1) Donald E Fischer ,Security Analysis & Portfolio Management
6.2) 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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