1.

1 DEFINITION

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

You can buy mutual fund shares directly from the mutual fund company or from a
stock broker or intermediary. Either way buying and redeeming is relatively easy.

FIGURE: PROCESS OF MUTUAL FUND1

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Source: www.mutualfundindia.com

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1.2 SUBJECT BACKGROUND OF THE RESEARCH TOPIC

1.2.1 ADVANTAGES OF MUTUAL FUND

1. Professional Management
Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of the
scheme.

2.Diversification
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors.
This diversification reduces the risk because seldom do all stocks decline at the same
time and in the same proportion. You achieve this diversification through a Mutual Fund
with far less money than you can do on your own.

3. Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.

4. Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.

5. Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and
other fees translate into lower costs for investors.

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6. Liquidity
In open-end schemes, the investor gets the money back promptly at net asset
Value related prices from the Mutual Fund. In closed-end schemes, the units can be sold
on a stock exchange at the prevailing market price or the investor can avail of the facility
of direct repurchase at NAV related prices by the Mutual Fund.

7. Transparency
You get regular information on the value of your investment in addition to
disclosure on the specific investments made by your scheme, the proportion invested in
each class of assets and the fund manager's investment strategy and outlook.

8. Flexibility
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds according
to your needs and convenience.

9. Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A
mutual fund because of its large corpus allows even a small investor to take the benefit of
its investment strategy.

10. Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.

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1.2.2 DRAWBACKS OF MUTUAL FUND:

Mutual funds have their drawbacks and may not apply for everyone:

1) No Guarantees:

No investment is risk free. If the entire stock market declines in value, the value of
mutual fund shares will go down as well, no matter how balanced the portfolio. Investors
encounter fewer risks when they invest in mutual funds than when they buy and sell
stocks on their own. However, anyone who invests through a mutual fund runs the risk of
losing money.

2) Fees and commissions:

All funds charge administrative fees to cover their day-to-day expenses. Some funds
also charge sales commissions or "loads" to compensate brokers, financial consultants, or
financial planners. Even if you don't use a broker or other financial adviser, you will pay
a sales commission if you buy shares in a Load Fund.

3) Taxes:

During a typical year, most actively managed mutual funds sell anywhere from 20 to
70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you
will pay taxes on the income you receive, even if you reinvest the money you made.

4) Management risk:

When you invest in a mutual fund, you depend on the fund's manager to make the
right decisions regarding the fund's portfolio. If the manager does not perform as well as
you had hoped, you might not make as much money on your investment as you expected.
Of course, if you invest in Index Funds, you forego management risk, because these
funds do not employ managers

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1.2.3 TYPES OF MUTUAL FUND SCHEMES

Mutual fund schemes may be classified on the basis of its structure and its
investment objective.

By structure

 Open ended.
 Close ended.
 Interval schemes.

By investment objectives

 Growth schemes.
 Income schemes.
 Balanced schemes.
 Money market schemes.

Other schemes

 Tax saving schemes.

 Special schemes
 Index schemes.
 Sector specific schemes.

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By Structure

1) Open-end Funds

An open-end fund is one that is available for subscription all through the year.
These do not have a fixed maturity. Investors can conveniently buy and sell units at Net
Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.

2) Closed-end Funds

A closed-end fund has a stipulated maturity period which generally ranging from
3 to 15 years. The fund is open for subscription only during a specified period. Investors
can invest in the scheme at the time of the initial public issue and thereafter they can buy
or sell the units of the scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.

3) Interval Funds

Interval funds combine the features of open-ended and close-ended schemes.

They are open for sale or redemption during pre-determined intervals at NAV related
prices.

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By Investment Objective

1) Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to
long term. Such schemes normally invest a majority of their corpus in equities. It has
been proved that returns from stocks, have outperformed most other kind of investments
held over the long term. Growth schemes are ideal for investors having a long term
outlook seeking growth over a period of time.

2) Income Funds

The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures and Government securities. Income Funds are ideal for capital stability and
regular income.

3) Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities and
fixed income securities in the proportion indicated in their offer documents. In a rising
stock market, the NAV of these schemes may not normally keep pace, or fall equally
when the market falls. These are ideal for investors looking for a combination of income
and moderate growth.

4) Money Market Funds

The aim of money market funds is 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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 Returns on these schemes may fluctuate depending upon the interest rates
prevailing in the market. These are ideal for Corporate and individual investors as a
means to park their surplus funds for short periods.

Other schemes

1) Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws as the Government offers tax incentives for investment in
specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and
Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961.

2) Special Schemes

a) Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer
document. The investment of these funds is limited to specific industries like InfoTech,
FMCG, and Pharmaceuticals etc.

b) Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the
BSE Sensex or the NSE 50.

c) Sectoral Schemes

Sectoral Funds are those which invest exclusively in a specified sector. This could
be an industry or a group of industries or various segments such as 'A' Group shares or
initial public offerings.

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1.2.4 MUTUAL FUND STRUCTURE

Sponsor

Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net
worth of the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor
is not responsible or liable for any loss or shortfall resulting from the operation of the
Schemes beyond the initial contribution made by it towards setting up of the Mutual
Fund.

Trust

The Mutual Fund is constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908.

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Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body of

individuals). The main responsibility of the Trustee is to safeguard the interest of the unit
holders and inter alias ensure that the AMC functions in the interest of investors and in
accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations,
1996, the provisions of the Trust Deed and the Offer Documents of the respective
Schemes. At least 2/3rd directors of the Trustee are independent directors who are not
associated with the Sponsor in any manner.

Asset Management Company (AMC)

The Trustee as the Investment Manager of the Mutual Fund appoints the AMC.
The AMC is required to be approved by the Securities and Exchange Board of India
(SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the
directors of the AMC are independent directors who are not associated with the Sponsor
in any manner. The AMC must have a net worth of at least 10 crore at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form, redemption
requests and dispatches account statements to the unit holders. The Registrar and
Transfer agent also handles communications with investors and updates investor record.

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1.2.5 RIGHTS OF A MUTUAL FUND UNIT HOLDER

A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual Funds)
Regulations is entitled to:

1. Receive information about the investment policies, investment objectives,

financial position and general affairs of the scheme.

2. Receive unit certificates or statements of accounts confirming the title within 6

weeks from the date of closure of the subscription or within 6 weeks from the date
of request for a unit certificate is received by the Mutual Fund.

3. Receive dividend within 42 days of their declaration and receive the redemption
or repurchase proceeds within 10 days from the date of redemption or repurchase.

4. Vote in accordance with the Regulations to:-

a. Approve or disapprove any change in the fundamental investment policies

of the scheme, which are likely to modify the scheme or affect the interest
of the unit holder. The dissenting unit holder has a right to redeem the
investment.

b. Change the Asset Management Company.

c. Wind up the schemes.

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1.2.6 TAX BENEFITS OF MUTUAL FUNDS

Section 94(6) of the Income Tax Act 1961

Section 94(6) of the Income Tax Act 1961 now provides that any person who
buys or acquires any securities or unit within a period of three months prior to the record
date and such person sells or transfers such securities or unit within a period of three
months after such date and the dividend or income on such securities or unit received or
receivable by such person is exempt, then, the loss, if any, arising to him on account of
such purchase and sale of securities or unit, to the extent such loss does not exceed the
amount of dividend or income received or receivable on such securities or unit, shall be
ignored for the purposes of computing his income chargeable to tax.

Section 10(33) of the Income Tax Act 1961

The dividend received by the investors from the scheme will be exempt from
income tax for all categories of investors under Section 10(33) of the Income Tax Act,
1961. The scheme will pay a distribution tax currently @10% plus surcharge if the
portfolio holds less than 50 percent debt securities on an average during the last one year
period.

Section 88 of the Income Tax Act 1961

Specified units of mutual fund schemes qualify for rebate under Section 88 of the
Income Tax Act, 1961, subscription to the Units of the Scheme by Individuals and Hindu
Undivided Families, not exceeding Rupees ten thousand would be eligible to a deduction,
from income-tax, of an amount equal to 20% of the amount so subscribed. In the case of
subscription by an individual, whose income is derived from the exercise of his
profession as an author, playwright, artist, musician, actor or sportsman (including an
athlete), the deduction admissible would be at the rate of 25%.

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Tax Deduction at Source

There will not be any Tax Deduction at Source on payment to resident unit-
holders towards redemption or dividends.

Wealth tax benefits

Mutual Fund units are exempt from Wealth Tax.

To NRI’s / OCB’s

a) Tax Deduction at Source (TDS)

Redemptions/Exchanges/Switches by non-residents, OCBs & FIIs will be

subjected to tax deduction at source at the rates in force and certificates for tax deducted
will be issued.

To Charitable Trusts

Investment in the units of the scheme is an eligible mode of investment under

Section 11(5) of the Income Tax Act read with Income Tax Rule 17 C.

To the Fund

Open Ended Mutual Funds are exempt from income tax under Section 10 [23D]
of the Act.

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2.1 STATEMENT OF THE PROBLEM

To study about the performance of various Mutual funds and compare it with the
respective Benchmark indices in the market and rank them in a systematic order over a
period of time (5 year’s) and to find the risk and return of each scheme and also creating
awareness about Equity Schemes among the investors.

2.2 NEED FOR STUDY

The Performance evaluation of equity schemes with their respective Benchmark

indexes and to find out the Beta of the fund, Standard deviation of the fund and
performance measures of Sharpe and Treynors. It helps the investors whether to invest in
Equity Schemes in Mutual Fund house. The performance of Equity schemes in Mutual
Fund industry however helps the prospective investors to choose the best investment
avenue that suit his objective.

There has always been high volatility in India, which leads to very high-risk
levels. So there is an absolute need to develop. This concept makes all the investors
aware of its advantages and makes them use these instruments according to their needs.

To study the concept of Mutual funds such as how mutual funds have come into
existence, the different types of mutual funds schemes such as open ended schemes
closed ended schemes, to compare the performance of different mutual funds to
understand the concept of NAV and mutual funds, to identify the different players in
mutual fund industry, to compare equity funds with their respective Bench Mark index.

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2.3 OBJECTIVES OF THE STUDY

 To compare the performance of different mutual funds.

 To identify different players in mutual fund industry.
 To study and compare the return of Equity mutual funds with their respective
Benchmark indexes.
 To study the best performing Funds using Sharpe, Treynor & Jensen measures.

2.4 OPERATIONAL DEFINITION OF CONCEPTS

Net Asset Value or NAV

NAV is the total asset value (net of expenses) per unit of the fund and is
calculated by the Asset Management Company (AMC) at the end of every business day.
Net asset value on a particular date reflects the realizable value that the investor will get
for each unit that he his holding if the scheme is liquidated on that date.

Net asset Value of an investment company is the company’s total assets minus its
total liabilities. For Example, if an investment company has securities and other assets
worth $100 million and has liabilities of $10 million, the investment company’s NAV
will be $90 million one day, $100 million the next, and $80 million.

NAV Periodic performance in percentage

NAV Closing Value – NAV Opening Value
= *100
NAV Opening Value

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Entry Load
It is the load charged by the fund manager when one invests into the fund. It
increases the price of the units to more than the NAV and is expressed as a percentage of
NAV. SEBI has removed the entry load on mutual funds from 18th June, 2009.

ExitLoad
It is the load charged by the fund when one redeems the units from the fund. It
reduces the price of the units to less than the NAV and is expressed as a percentage of
NAV.

Performance
Performance of an investment indicates the returns from an investment. The
returns can come by way of income distributions as well as appreciation in the value of
the investment.

RISK MEASUREMENT CONCEPTS

STANDARD DEVIATION
A measure of the dispersion of a set of data from its mean. The more spread apart
the data is higher the deviation. In finance, a standard deviation is applied to the annual
rate of return of an investment to measure the investment Volatility (Risk). A volatile
stock would have a high standard deviation. In mutual funds, the standard deviation tells
us how much the return on the fund is deviating from the expected normal returns.
Standard deviation can also be calculated as the square root of the variance.

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Standard Deviation (Risk) of the Fund:

σ p= n∑ Rp2 - (∑ R ) p
2 1/2

n2

Where:

σ p : Risk of the Fund.

Rp : Return of the fund.

Standard Deviation (Risk) of the benchmark index:

1/2

σ m=
n∑ Rm2 - (∑ R ) m
2

n2

Where

Rm Index Return (Market Return)

σ m Risk of the Index

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BETA
It is the measure of the relative sensitivity of a stock or mutual fund to the market.
The market is assigned a beta of 1. The higher the beta, the more sensitive the stock or
fund is considered to be relative to the market as a whole. In other words, funds with beta
more than 1 will react more to any fluctuations (whether upward or downward) in market
than funds with beta less than 1.

Beta of the Fund:

∑ [(R - AR ) (R
p p m – ARm ]

β p=
∑ [Rm – ARm]2

Where:

β p : Beta of the fund.

Rp: Return of the fund.

ARp: Average return of the Mutual Fund Scheme.

ARm: Average return of the benchmark index.

Sharpe’s Measure
Sharpe measure adjusts portfolio performance for total risk rather than market risk. It tells
us whether a portfolio's returns are due to smart investment decisions or a result of excess
risk. The higher the Sharpe ratio for a portfolio, the better the portfolio has performed.

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Sharpe’s Measure of Performance:

ARp - r*
Sp =
σp

Where, Sp = Sharpe Index

r* = riskless rate of interest (T-Bill 91 days)
σ p = Standard deviations of the returns of portfolio p
ARp= average return on portfolio p

Treynor’s Measure
It is a relative measure of performance for investment managers and measures the
return premium per unit of systematic risk as measured by the beta or relative volatility of
the portfolio. While a high and positive index shows a superior risk-adjusted performance
of a fund, a low and negative index is an indication of unfavorable performance.

Treynor’s Measure of Performance:

ARp - r*
Tp =
βp

Where, Tp = Treynor’s Index

r* = Riskless rate of interest (T-Bill 91 days)
β p = Beta coefficient of portfolio p
ARp= Average return on portfolio p

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2.5 METHODOLOGY

To find out the performance of the Equity Diversified mutual funds, past 5 Years
performance is taken into consideration for the 10 schemes of 10 Mutual Fund houses.
These funds are analyzed on the basis of the following:

• Average return of the fund

• Average return of the benchmark index
• Standard deviation of the fund
• Standard deviation of the benchmark index
• Beta of the fund

• Sharpe’s and Treynor’s Measure

To ease out the research work, many books and articles related to the research have
been referred. In this project, technical and trade journals, books, magazines and reports
and publication of various associations connected with business and industry are referred.

i. Security analysis and portfolio management by Donald Fischer & Ronald Jordan
and Investment analysis & portfolio management by Prasanna Chandra- These
books helped to study the nature and scope of the mutual fund, definitions, kinds
of mutual fund and also the factors affecting risk.

ii. Business World Magazine- This magazine helped to grasp the facts about overall
private players and their performance in the recent years in the mutual fund
industry. The brochures of the each company helped to gain a detailed knowledge
about the product and its features.

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2.6 SAMPLE DESIGN

EXPLORATORY RESEARCH

The main purpose of exploratory studies is that of formulating a problem for

precise investigation or of developing the working hypothesis from an operational point
of view both primary and secondary data are used for the purpose of the study.
The population consists of 10 five year old funds; the entire population has been
taken in to consideration for the study. This study chose a sample of 10 Equity Schemes
to evaluate their performance for a period of 5 years and compare it with their respective
Benchmark index. Variables yearly calculated risk and returns were used for comparing
equity schemes.

2.7 TOOLS AND TECHNIQUES FOR DATA COLLECTION

PRIMARY DATA

The primary data was collected through records, manuals, fact sheets & brochures
of the company.

SECONDARY DATA

The Secondary data for this study was collected from newspapers, books,
magazines, internet, mutual fund prospectus, offer documents, fact sheets, memorandums
and other literatures.

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2.8 PLAN OF ANALYSIS

The data collected are edited, classified & tabulated for easy interpretation &
analysis. Statistical tools like Measures of central tendency (averages), Measures of
Dispersion (Correlation, standard deviation etc), presentation tools (graphs, charts, tables)
and other research tools are used to analyze the data.

2.9 LIMITATIONS OF THE STUDY

• Not all the information required was freely available.

• Interaction with the company professional was limited.
• Only 10 Equity funds of different AMCs were compared and analyzed.
• Only funds, which are more than five years old, have been considered.
• Only open-ended growth funds have been considered.
• The NAV values and the Benchmark Index values obtained may not be entirely
accurate. (as taken directly from mutual fund & market indices websites)

2.10 CHAPTER SCHEME

• The first chapter deals with the introduction about the topic and the industry profile.

• The research design is covered in the second chapter which consists of the various

sampling techniques and methodology used and contextual definition.

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• The third chapter consists of the industry profile.

• The fourth chapter that is the computation of Return, Risk, and Beta deals with the

analysis and interpretation of data.

• The summary of findings, conclusion and suggestion is the fifth chapter.

3.1 INDUSTRY PROFILE

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 the Reserve Bank. 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.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canbank 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.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

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 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.

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 `29,835 crores as at the end of January
2003. It does not come under the purview of the Mutual Fund Regulations. The second is
the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI
and functions under the Mutual Fund Regulations.
As on 31st July 2010, there are a total of 40 Asset Management Companies
(AMCs) with a total of 3661 schemes. The total assets under management (AUM) of all
these AMCs is to the tune of `6,65,567 crores. The top fund house as per AUM is
Reliance Mutual Fund with the total assets of `1,02,179 crores.

FIGURE : THE GROWTH OF ASSETS

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3.2 COMPANY PROFILE

Almondz Global Securities Ltd.

3.2.1 Introduction

• Almondz Global Securities Limited (AGSL) is a well established Independent

Investment Bank.

• The company was incorporated in 1994 and is listed on the Bombay Stock Exchange.

• It is part of the Almondz group which also comprises of the following companies:
o Almondz insurance brokers pvt. ltd

o Almondz reinsurance brokers pvt ltd

o Almondz capital and Management services ltd.

o Almondz commodities pvt. ltd.

• Experienced & professional Board supported by a team of over 1000 professionals &
Support Staff.
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• An Associate/sub-broker network of 4000+ spread across India.

• Head offices in Delhi & Mumbai along with 17 branch offices all across the country.

• The company has a well diversified client base of Public Sector Units, Private
Corporate, Insurance Companies, Fund Houses, Banks & Financial Institutions,
Employee Benefit Funds, High Net worth Individuals & Retail Investors. The company
has also tied up with NOBLE Investment Group of UK to increase their reach in the
Global Financial Markets.

3.2.2 Business Segments

 Corporate Finance
1. Investment Banking
* IPOs, FPOs & Rights Issues
* Private Placement of Equity
* Delisting, Takeover, Substantial Acquisitions & ESOPs
* Private Placement of Debt
* Project Finance
2. Infrastructure Advisory
* Road
* Power

 Debt Portfolio Management

1. Secondary Debt Trading
2. Debt Portfolio Advisory

 Retail & Distribution

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 1. Equity IPOs
2. Public Issue of Debt
3. Mutual Funds
4. Tax Saving Instruments
5. Fixed Deposits & Other Fixed Income Products
6. Portfolio Management Services
7. Insurance Products

 Equity Broking
1. Retail Equity Broking
2. Institutional Equity Broking
3. DP Services

3.2.3 Guiding Principles

Objectives

Endeavor to be amongst the ‘Top Ranked, Highly Networked & Fully Integrated
Financial Products and Services House’ in the country.

Mission

Creating Wealth and Value for Our Clients & Associates.

Vision

To Position Ourselves Amongst Top 3 Integrated & Professionally Managed Financial

Services Firms in India.

27
Values

• Responsibility towards Clients.

• Professional Management.

• High Corporate Governance Standards.

• System and Process Driven Business Practices &.

•Integrity, Commitment, Accountability.

3.2.4 Activity Focus: Publication & Research

• Value added in-Depth research

• Specialized Industry & Company coverage

• Daily morning updates

• Investment Opportunity suggestions

• Daily suggestions / trading idea

• Monthly Magazine

� Research Reports

28
� Debt Market Commentary

� The Daily Market Reports

� Kya Lagta hai

� Stock Ideas

� Wealth Park

Activity Focus: Service Deliverables

• Daily

• Mutual Fund Performance score card

• Weekly

• Market review of Equity and Debt

• Monthly

• Market review of Equity, Debt and Forex with focus on Mutual Funds.
• Portfolio update through email.
• Wealth Park Magazine
• Mutual Fund Performance score card

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• Event based

• Research note on New Fund Offerings by Mutual funds and Initial Public offerings of
Primary market.
• Note on special event like credit policy etc.
• Any good investment ideas.

• Dedicated Wealth Managers.

• Customer Service email id: atyourservice@almondz.com

3.2.5 Current Investor Profile

Investor base of more than 1,00,000 with AUM in excess of `1300 crores

Retail

� Manage the retail investors through our channel partners.

� Have more than 2000 partners across the country
� Service a client base of over 1,00,000

High Net worth individuals

� Advise and manage over 1000 clients through a dedicated wealth management team.
� The ticket size varies from ` 5 lakhs to ` 10 crores.

Corporate, PSU, FI & Banks

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� Manage over 100 investors in this category.
� Empanelled with most of the banks and FI.
� The ticket size vary from `50 lakhs to `200 crores.

4.1 Introduction to Performance study of Mutual Funds

The performance of Mutual Funds has been measured for a period of five years starting
from January 2005 to December 2009. The funds’ performance is analyzed and a
comparison is made between the performances of various funds with their respective
benchmark index with the help of above discussed methods (methodology section) on
yearly basis. The funds chosen belong to the top 10 AMCs in India as on 31st December
2009. The funds are selected based on their corpus and objective of the portfolio
investment (Growth Schemes). More than 80% of the total corpus of each fund is
invested in the equity. The following 10 Equity funds are included in the study –

1. Birla Sunlife Frontiline Equity

2. DSP Blackrock opportunities growth

3. ICICI Prudential growth fund

4. HDFC Equity fund

5. J M Mutual fund equity growth

6. Kotak 30 growth fund

7. Reliance mutual growth fund

31
 8. Sundaram BNP Paribas growth

9. TATA pure equity growth

10. HSBC equity fund

4.2 Brief Description of Funds

An introduction to various mutual funds used for comparison is as follows-

 BIRLA SUNLIFE MUTUAL FUNDS

Scheme: Birla Sun life Frontline Equity

Objective

The scheme aims to generate long-term capital growth, income generation and
distribution of dividend. It would target the same sectoral weights as BSE 200, subject to
flexibility of selecting stocks within a particular sector..

TABLE 3.2

Description of the Birla sun life frontline Equity

Mutual fund family Birla Sun life Mutual Fund

Fund class Equity Diversified
Launch Date August 2002
Fund Manager Mahesh Patil

32
 Minimum Investment Rs.5000
Subsequent Investment Rs.1000
Minimum Withdrawal --
Minimum Balance --
Pricing Method Forward
Type Open End
Bench Mark BSE 200

Source secondary data

 DSP Blackrock Mutual Fund

Scheme: Opportunities Growth

Objective

The scheme seeks to achieve long-term capital appreciation by responding to the

dynamically changing Indian economy by moving across sectors such as the lifestyle,
pharma, cyclical and technology.

TABLE 3.3

Description about the fund:

Mutual fund family DSP Merillynch Mutual Fund

Fund class Equity Diversified
Launch Date August 2000
Fund Manager Anup Maheshwari
Minimum Investment Rs.5000
Subsequent Investment Rs.1000
Minimum Withdrawal Rs.1000
Minimum Balance Rs.500
Pricing Method Forward
Type Open End

33
 Bench Mark S & P CNX Nifty

Source secondary data

 ICICI Mutual Fund

Scheme: Prudential Growth

Objective

The scheme seeks to generate long-term capital appreciation by investing

predominantly in equities that is 95% in equities while the rest would be invested in debt
and money market instruments.

TABLE 3.4

Description of the ICICI Prudential Growth

Mutual fund family ICICI Mutual Fund

Fund class Equity Diversified
Launch Date June 1998
Fund Manager Kaushik Roychaudhary
Minimum Investment Rs.5000
Subsequent Investment Rs.500
Minimum Withdrawal Rs.500
Minimum Balance Rs.5000
Pricing Method Forward
Type Open End
Bench Mark S & P CNX Nifty

Source secondary data

34
  HDFC Mutual Fund

Scheme: Equity

Objective

The scheme seeks to provide long-term capital appreciation by predominantly

investing in high growth companies.

TABLE 3.5

Description of the HDFC Equity Growth fund

Mutual fund family . HDFC Mutual Fund

Fund class Equity Diversified
Launch Date December 1994
Fund Manager Prashanth Jain
Minimum Investment Rs.5000
Subsequent Investment Rs.1000
Minimum Withdrawal Rs.500
Minimum Balance Rs.1000
Pricing Method Forward
Type Open End
Bench Mark S & P CNX 500

Source secondary data

 J M Mutual Fund

35
Scheme: Equity Growth

Objective

The scheme seeks long-term capital growth and appreciation through investment
primarily in equities.

TABLE 3.6
Description of the JM Equity Growth

Mutual fund family J M Mutual Fund

Fund class Equity Diversified
Launch Date December 1994
Fund Manager Amandeep Chopra
Minimum Investment Rs.5000
Subsequent Investment --
Minimum Withdrawal Rs.0
Minimum Balance --
Pricing Method Forward
Type Open End
Bench Mark Sensex

Source: Secondary data

 Kotak Mutual Funds

Scheme: Kotak 30 Growth

Objective

36
 The scheme seeks capital appreciation, through investments in equities. The fund
would invest in not more than 30 stocks. A part of the corpus will be invested in debt
also.

TABLE 3.7

Description of the Kotak 30 Growth

Mutual fund family Kotak Mutual Funds

Fund class Equity Diversified
Launch Date December 1998
Fund Manager Krishna Sanghvi
Minimum Investment Rs.5000
Subsequent Investment Rs.1000
Minimum Withdrawal Rs.1000
Minimum Balance Rs.5000
Pricing Method Forward
Type Open End
Bench Mark S&P CNX Nifty

Source: Secondary data

 Reliance Mutual Funds

Scheme: Reliance Growth

Objective

The scheme aims at long-term growth of capital through research based

investment approach. The funds will be invested in Equity and equity related instruments,
and there will be an exposure to debt and money market instruments also.

TABLE 3.8
37
Description of the Reliance Growth

Mutual fund family Reliance Mutual Funds

Fund class Equity Diversified
Launch Date October 1995
Fund Manager V Ramanan
Minimum Investment Rs.5000
Subsequent Investment Rs.1000
Minimum Withdrawal Rs.0
Minimum Balance Rs.5000
Pricing Method Forward
Type Open End
Bench Mark BSE 100

Source: Secondary data

 Sundaram Mutual Funds

Scheme: BNP Paribas Growth

Objective:

The scheme aims to provide to investors a reasonably diversified portfolio of

stocks essentially meant to give higher returns in the medium to long term. However on a
selective basis, short-term opportunities that may yield above average returns will not be
ignored.

TABLE 3.9

Description of the Sundaram BNP Paribas Growth

38
 Mutual fund family Sundaram Mutual Funds
Fund class Equity Diversified
Launch Date March 1997
Fund Manager Rajesh Singh
Minimum Investment Rs.2000
Subsequent Investment Rs.1000
Minimum Withdrawal Rs.500
Minimum Balance Rs.500
Pricing Method Forward
Type Open End
Bench Mark BSE 200

Source: Secondary data

 TATA Mutual Funds

Scheme: Pure Equity Growth

Objective:

Earlier known as Tata Twin Option (Equity), the scheme aims at medium to long
term capital growth, with 100 per cent investments in the equity of large-cap, liquid blue-
chip companies.

TABLE 3.10

Description of the Tata Pure Equity Growth

Mutual fund family TATA Mutual Fuds

Fund class Equity Diversified
Launch Date March 1998
Fund Manager M Venugopal
Minimum Investment Rs.5000
Subsequent Investment Rs.1000

39
 Minimum Withdrawal Rs.1000
Minimum Balance Rs.5000
Pricing Method Forward
Type Open End
Bench Mark Sensex

Source: Secondary data

 HSBC Mutual Fund

Scheme: Equity

Objective:

The scheme seeks to generate long-term capital growth from a diversified

portfolio of equity and equity related securities of companies across a range of market
capitalization’s, with a preference for medium and large companies.

TABLE 3.11

Description of the HSBC Equity

Mutual fund family HSBC Mutual Fund

Fund class Equity Diversified
Launch Date December 2002
Fund Manager Mihr Vora
Minimum Investment Rs.10000
Subsequent Investment Rs.1
Minimum Withdrawal Rs.1000
Minimum Balance Rs.1000
Pricing Method Forward
Type BSE 200
Bench Mark Sensex

40
Source: Secondary data

4.3 BIRLA SUNLIFE FRONTLINE EQUITY

This part of the chapter provides the comparison of Birla Frontline Equity with
Market Indicators (BSE200)

TABLE 4.1

Comparison of Birla Frontline equity fund with market indicators (BSE200.)

NAV B SE 200
Y e a rO p . V aCl lu. eV a l u Re p R p ^2O p . V aCl lu. eV a l u Re m R m ^2( R p - A (RRpm) - A RP mr o )d u( cRtm - A R m ) ^2
2 0 0 5 2 4 .4 6 3 3 . 9 4 3 8 . 7 6 1 5 0 2 . 1829 0 . 4 81 1 8 6 . 2 3 3 . 2 1 1 1 0 3 . 0 7-2 . 6 8 0 . 4 6 - 1 .2 4 0 . 2 1
2 0 0 6 3 3 .9 8 5 0 . 1 3 4 7 . 5 3 2 2 5 8 . 9111 8 8 . 7186 5 5 . 7 34 9 . 2 8 1 5 4 2 . 9 76 . 0 9 6 . 5 3 3 9 .7 9 4 2 . 6 6
2 0 0 7 5 0 .8 6 8 1 . 3 4 5 9 . 9 3 3 5 9 1 . 5116 5 5 . 2286 5 6 . 5 62 0 . 4 9 3 6 5 8 . 7 16 8 . 4 9 2 7 . 7 4 5 1 2 . 9 6 7 6 9 . 4 3
2 0 0 8 8 2 .1 3 6 1 . 4 2 - 2 5 . 2 26 3 5 . 8 52 6 6 4 . 6171 5 6 . 5-95 6 . 6 03 2 0 3 . 0-46 6 . 6 5- 8 9 . 3 45 9 5 5 . 0 47 9 8 2 . 4 2
2 0 0 9 4 2 .8 5 7 9 . 7 8 8 6 . 1 8 7 4 2 7 . 7141 6 3 . 6271 8 0 . 2 85 7 . 3 6 7 6 3 1 . 7 4 4 . 7 5 5 4 . 6 1 2 4 4 3 . 7 2 9 8 2 . 3 4
2 0 7 . 1 18 5 4 1 6 . 1 3 1 6 3 . 7 15 7 1 3 9 . 5 6 8 9 5 0 . 2 16 1 7 7 7 .0 7

A rp 4 1.44 S D rp 36.9 6 β 0 .76 Sp 1.1 2

A rm 3 2.75 S D rm 48.5 3 r* 0 .04 Tp 5 4 .4 7

Source: Secondary data

Where

Rp Fund Return (Portfolio Return)

Rm Index Return (Market Return)
ARp Average fund return
Arm Average Index return
SDRp Standard deviation of Fund Return

41
SDRm Standard deviation of Index return
r* Riskless rate of return (T-bill 91 days)2

2
www.rbi.org: official Reserve Bank of India website

42
FIGURE 4.1

Comparison of Birla Frontline equity fund with market indicators (BSE200.)

• The fund has performed excellently and the return of the fund has always been
greater than the respective market index for the period 2005-2009.

• The average return of the fund is also satisfactory barring the year 2008 when all
funds did not perform well.

• The Beta shows that it is less volatile than the market which is good for the
investors.

• The standard deviation of fund return compared to index return is satisfactory.

43
 • The Sharpe & Treynor Measure suggests that the fund is performing better
compared to other mutual funds in the same family.

4.4 DSP BLACKROCK OPPORTUNITIES GROWTH

This part of the chapter provides the comparison of DSP Merrilynch Opportunities
Growth with Market Indicators (S & P CNX Nifty)

TABLE 4.2

Comparison of DSP Opportunities growth equity fund with market indicators

(S & P CNX Nifty)

NAV S & P C N X N IF T Y
Y e a Or p . V Cal l. uVe a l Ru pe R p ^ O2 p . V Cal l. uVe a lRu me R m ^(2R p - A( RR mp )- AP Rr omd )(uR cmt - A R m ) ^ 2
2 0 0 5 2 6 . 4 83 9 . 0 64 7 . 5 12 2 5 6 .29078 0 .20803 6 . 35 56 . 3 71 3 2 2 . 91 72 . 0 45 . 4 3 6 5 . 4 2 2 9 . 5 2
2 0 0 6 3 9 . 0 75 6 . 2 34 3 . 9 21 9 2 9 .20873 6 .38906 6 . 34 09 . 8 21 5 8 5 . 58 9. 4 5 8 . 8 8 7 5 . 0 7 7 8 . 8 5
2 0 0 7 5 6 . 8 18 9 . 8 95 8 . 2 3 3 9 0 .36946 6 .62153 8 . 56 04 . 7 72 9 9 9 . 82 52 . 7 62 3 . 8 35 4 2 . 4 55 6 7 . 9 2
2 0 0 8 9 0 . 5 44 0 . 3 5- 5 5 . 4330 7 2 .69143 6 .27955 9 . -1551 . 7286 8 1 . -1950 . 9 -08 2 . 772 5 1 9 . 26 8 4 2 . 5 3
2 0 0 9 4 1 . 0 97 5 . 2 48 3 . 1 16 9 0 7 .23916 3 .53200 1 . 70 5 . 5 25 7 0 2 . 54 97 . 6 44 4 . 5 82 1 2 3 . 71 49 8 7 . 0 0
1 7 7 . 31 37 5 5 6 . 9 2 1 5 4 . 71 04 2 9 2 . 1 5 1 0 3 2 5 9. 9570 5 . 8 2

A rp 3 5 .4 7 S D rp 4 7 .4 7 β 1 .0 9 S p 0 .7 5
A rm 3 0 .9 4 S D rm4 3 .6 0 r* 0 .0 4 T p 3 2 .6 1

Source: secondary data

44
FIGURE 4.2

Comparison of DSP Opportunities growth equity fund with market indicators

(S & P CNX Nifty)

• The fund has performed better in terms of average returns if compared to market
index.

• The beta of the fund suggests that it is quite volatile and it has greater risks if
compared to the benchmark index.

• The standard deviation of the fund shows that the returns are quite fluctuating
which is not good from the investor’s point of view.

• Sharp’s & Treynor’ Measure suggests that the fund has not performed good if
compared to similar funds in the family.

45
4.5 ICICI PRUDENTIAL GROWTH FUND

This part of the chapter provides the comparison of ICICI Prudential Growth with Market
Indicators (S & P CNX Nifty)

TABLE 4.3

Comparison of ICICI Prudential growth fund with market indicators

(S & P CNX Nifty)

NAV S & P C N X N IF T Y
Y e a Or p . VC al l. uV ea lRu pe R p ^O2 p . VC al l. uV e a lRume R m ^( 2R p - A( RRmp )- AP Rr omd ()uR cmt - A R m ) ^ 2
2 0 0 5 4 4 . 0 86 5 . 3 94 8 . 3 42 3 3 7 .21038 0 .20803 6 . 35 65 . 3 71 3 2 2 . 19 7 . 0 45 . 4 3 9 2 . 5 9 2 9 . 5 2
2 0 0 6 6 5 . 5 89 3 . 3 64 2 . 3 61 7 9 4 .24813 6 .38906 6 . 34 90 . 8 21 5 8 5 . 15 19 . 0 68 . 8 8 9 8 . 2 0 7 8 . 8 5
2 0 0 7 9 4 . 4 81 3 4 . 8 41 2 . 6 91 8 2 2 .31926 6 .62153 8 . 56 40 . 7 72 9 9 9 . 18 15 . 3 82 3 . 8 32 7 1 . 3 15 6 7 . 9 2
2 0 0 81 3 4 . 7 72 0 . 4 5- 4 7 . 7212 7 5 .69103 6 .27955 9 .-1551 . 7286 8 1 .-17 59 . 0 -18 2 . 7625 3 5 . 65 08 4 2 . 5 3
2 0 0 9 7 2 . 0 1 2 3 . 0 71 0 . 8 25 0 1 5 .29976 3 .53200 1 . 70 5 . 5 25 7 0 2 . 35 9 . 5 24 4 . 5 81 7 6 1 . 17 29 8 7 . 0 0
1 5 6 . 51 13 2 4 5 . 5 3 1 5 4 . 71 40 2 9 2 . 1 5 8 7 5 9 . 93 25 0 5 . 8 2

A rp 3 1 .3 0 S D rp 4 0 .8 6 β 0 .9 2 S p 0 .7 7
A rm 3 0 .9 4 S D r m4 3 . 6 0 r* 0 .0 4 T p 3 3 .9 3

Source: secondary data

46
FIGURE 4.3

Comparison of ICICI Prudential growth fund with market indicators

(S & P CNX Nifty)

• The fund returns have always been at the similar level of the market returns.

• The beta of the fund suggests that it is not so volatile when compared to the
benchmark index.

• The average return of the fund is satisfactory

• The standard deviation of fund return is less than that of Bench mark return.

• Sp and Tp measures suggests that the fund has performed satisfactory in

relation to other funds and the market.

47
4.6 HDFC EQUITY FUND

This part of the chapter provides the comparison of HDFC Equity with Market Indicators
(S & P CNX 500)

TABLE 4.4

Comparison of HDFC equity fund with market indicators (S & P CNX500)

NAV S& P CN X 500

Y e a Or p . VC al .l uV ea Rl up e R p ^O2 p . VC al .l uV ea Rl ume R m ^( 2R p - (AR Rmp -) PA rRo md( uR) cmt - A R m ) ^ 2
2 0 0 56 6 . 6 19 0 7 . 0610 . 4 36 6 5 5 1. 28 71 8 2. 54 55 9 .32 50. 2 13 2 4 1 .20 06 . 5 62 . 9 0 5 9 . 5 9 8 . 4 0
2 0 0 61 0 7 . 1 94 5 . 3395 . 6 14 2 7 0 2. 04 46 5 3. 02 09 5 .30 35. 6 17 1 3 3 .-94 0. 2 61 . 3 4 - 5 . 7 1 1 . 8 0
2 0 0 71 4 7 . 2 92 3 . 3521 . 6 2 6 6 4 3. 52 59 9 5. 93 05 4 .67 20. 2 37 8 7 7 .13 17 . 7 2 9 . 9 34 5 1 . 0 80 9 6 . 2 5
2 0 0 82 2 4 . 51 91 2 . 3- 48 9 . 92 64 9 6 5. 23 27 0 2. 32 59 5 .- 75 57 . 23 52 7 7 .- 78 29 . 8- 68 9 . 58 80 4 9 .86 00 2 5 . 0 1
2 0 0 91 1 4 . 52 23 1 . 01 10 1 . 17 02 3 4 72 .30005 4. 93 52 9 .81 70. 7 74 6 9 7 .66 12 . 8 35 5 . 4 31 4 2 5 .34 04 6 9 . 7 2
1 9 9 . 24 07 4 3 3 . 0 8 1 6 1 . 16 76 2 2 7 . 6 7 1 1 8 7 91 . 29 02 0 1 . 1 8

A rp 3 9 .8 9 S D r p4 9 . 9 5 β 0 .9 9 S p 0 .8 0
A rm 3 2 .3 3 S D r m4 8 . 9 9 r* 0 .0 4 T p 4 0 .2 6

Source: secondary data

48
FIGURE 4.4

Comparison of HDFC equity fund with market indicators (S & P CNX500)

• The fund returns are highly inconsistent during the last 5 years.

• The fund volatility and risk factors are similar to benchmark index.

• The return on the fund has picked up after the instant fall in the year 2008.

• The overall performance is pretty good when compared to other mutual

funds in the same class and family in the industry.

49
4.7 J M Mutual Fund Equity Growth

This part of the chapter provides the comparison of JM Equity Growth with Market
Indicators (Sensex)

TABLE 4.5

Comparison of JM equity fund with market indicators (Sensex)

NAV SEN SEX

Y e a Or p . VC al . l uV ea Rl up e R p ^O2 p . VC al . l uV eaRl um e R m ^( R2 p - (AR Rm p -)PA r Ro md( Ru) mc t - A R m ) ^ 2
2 0 0 51 8 . 0 32 7 . 2 45 1 . 0 28 6 0 9 6. 36 2 6 9. 34 9 7 4. 91 3. 8 12 7 4 9 2. 24 2. 6 19 . 4 32 3 1 . 9 88 8 . 8 5
2 0 0 62 7 . 3 3 9 . 2 54 3 . 6 12 9 0 2 9. 24 72 21 . 34 79 8 64 .69 . 13 22 1 4 5 1. 47 7. 1 41 3 . 9 2 3 8 . 6 18 9 3 . 8 1
2 0 0 73 9 . 9 05 7 . 6 04 4 . 3 16 9 6 71 . 38 89 2 27 0. 72 78 64 .69 . 97 21 1 8 2 1. 07 1. 8 91 4 . 3 21 5 6 . 0 29 0 4 . 9 0
2 0 0 85 8 . 4 92 2 . 1 -56 2 . 13 38 6 02 . 01 37 2 95 6. 24 77 -. 53 21 . 52 47 5 9 -. 89 87 . 6- 08 4 . 97 35 2 5 .71221 3 . 6 2
2 0 0 92 2 . 8 63 5 . 5 35 5 . 4 32 0 7 1 9. 87 62 01 . 75 45 6 47 .98 . 16 67 3 4 7 2. 18 4. 9 54 7 . 2 17 3 6 8 .26293 4 . 5 7
1 3 2 .13 35 4 1 1 . 5 1 1 6 1 .19 59 1 8 3 . 8 0 9 6 2 0 .95973 5 . 7 5

A rp 2 6 .4 7 S D r p4 4 . 5 2 β 0 .9 7 S p 0 .5 9
A rm 3 2 .4 0 S D r m4 4 . 5 8 r* 0 .0 4 T p 2 7 .3 0

Source: secondary data

50
FIGURE 4.5

Comparison of JM equity fund with market indicators (Sensex)

• The average return of the fund is quite low as compared to the respective
benchmark index. The fund has performed badly in relation to the benchmark
return.

• The beta of 0.97 indicates that it is less volatile as compared to the benchmark
index
• The standard deviation of fund return is very much similar to that of benchmark
return.
• Overall the fund has not been up to mark when compared to other funds in the
industry.

51
4.8 KOTAK 30 GROWTH FUND

This part of the chapter provides the comparison of Kotak 30 Growth with Market
Indicators (S & P CNX Nifty)

TABLE: 4.6

Comparison of Kotak 30 Growth fund with market indicators (S&P CNX Nifty)

NAV S & P C N X N IF T Y
Y e a Or p . VC al .l uV ea Rl up e R p ^O2 p . VC al .l uV ea Rl ume R m ^( 2R p - (AR Rmp -) AP rRomd( u)R cmt - A R m ) ^ 2
2 0 0 53 2 . 5 54 7 . 5 94 6 . 2 21 1 3 4 2. 90 88 0 2. 08 03 6 .35 65 . 3 17 3 2 2 .19 27 . 6 35 . 4 3 6 8 . 6 2 2 9 . 5 2
2 0 0 64 7 . 6 36 8 . 3 44 3 . 4 18 8 9 0 2. 68 03 6 3. 89 06 6 .34 90 . 8 12 5 8 5 . 95 .99 1 8 . 8 8 8 7 . 9 6 7 8 . 8 5
2 0 0 76 8 . 9 31 1 3 . 8645 . 1 45 2 4 4 3. 99 26 6 6. 21 53 8 .56 40 . 7 27 9 9 9 .38 15 . 5 82 3 . 8 37 5 2 . 5 53 6 7 . 9 2
2 0 0 81 1 4 . 2506 . 5 3- 5 0 . 52 05 5 0 6. 11 63 6 2. 79 55 9 .- 15 51 . 72 86 8 1 .- 18 54 . 0- 78 2 . 76 29 5 4 . 6 82 4 2 . 5 3
2 0 0 95 7 . 6 29 4 . 2 36 3 . 5 4 0 3 6 2. 99 56 3 5. 32 00 1 .70 55 . 5 52 7 0 2 .25 99 . 9 64 4 . 5 18 3 3 5 . 15 95 8 7 . 0 0
1 6 7 . 18 48 8 5 7 . 6 0 1 5 4 . 17 40 2 9 2 . 1 5 9 1 9 9 . 92 58 0 5 . 8 2

A rp 3 3 .5 8 S D rp4 2 .9 4 β 0 .9 7 S p 0 .7 8
A rm 3 0 .9 4 S D r m4 3 . 6 0 r* 0 .0 4 T p 3 4 .6 5

Source: secondary data

52
FIGURE 4.6

Comparison of Kotak 30 Growth fund with market indicators (S&P CNX Nifty)

• The fund has performed better than the benchmark index from 2005 to 2008
however after the correction in the market, the fund has deteriorated.

• The Beta of the scheme is 0.97 which shows that its volatility is similar to
benchmark index.

• The standard deviation of Fund return is similar to that of Benchmark return

which means that the fund’s return has been similar to benchmark return.

• The overall performance has been satisfactory for the fund during the last 5 years
which is clear from its positive sharp’s & treynor’s measure.

53
4.7 RELIANCE MUTUAL GROWTH FUND

This part of the chapter provides the comparison of Reliance Growth with Market
Indicators (BSE 100)

TABLE 4.7

Comparison of Reliance Growth fund with market indicators (BSE 100)

NAV B SE 100
Y e a rO p . V Ca l u. Ve a l uR ep R p ^2O p . V Ca l u. Ve a l uR em R m ^2(R p - A( R pm ) - A PRrmo d) u( Rc mt - A R m ) ^2
2 0 0 5 1 1 2 . 8 16 8 9 . 1 86 7 . 6 24 5 7 2 . 39 5 9 3 . 45 98 5 3 . 2387 . 8 41 4 3 1 . 6233 . 4 2 4 . 5 9 1 0 7 . 5 3 2 1 . 0 8
2 0 0 6 1 9 0 . 7 28 6 6 . 7 43 9 . 8 21 5 8 5 . 42 79 6 4 . 6 94 8 2 . 5460 . 6 51 6 5 2 . 0- 84 . 3 9 7 . 4 0 - 3 2 . 4 7 5 4 . 7 7
2 0 0 7 2 7 0 . 0 45 7 1 . 7 37 4 . 6 85 5 7 7 . 64 79 9 9 .1710 1 5 4 .52 98 . 3 53 5 2 2 . 8360 . 4 8 2 6 . 1 17 9 5 . 7 66 8 1 . 6 4
2 0 0 8 4 7 6 . 8 25 1 6 . 4 9- 5 4 . 6 02 9 8 1 .11 16 1 8 6 4. 49 58 8 . 0- 54 5 . 4 31 0 7 0 . 2- 97 8 . 8 0- 8 8 . 6 68 7 5 9 . 4738 5 9 . 7 9
2 0 0 9 2 2 0 . 8 46 2 7 . 3 59 3 . 4 98 7 4 1 . 50 60 2 1 . 95 28 2 9 . 7813 . 8 07 0 2 2 . 5499 . 2 9 5 0 . 5 62 4 9 1 . 9215 5 5 . 8 5
2 2 1 . 0223 4 5 7 . 9 1 1 6 6 . 2136 6 9 9 . 4 4 1 2 1 2 2 .11 16 1 7 3 . 1 3

A rp 4 4 .2 0 S D rp 5 2 .3 2 β 1 .0 8 Sp 0 .8 4
A rm 3 3 .2 5 S D rm 4 7 .2 7 r* 0 .0 4 Tp 4 0 .7 1

Source secondary data

54
FIGURE 4.7

Comparison of Reliance Growth fund with market indicators (BSE 100)

 Since the last 5 years, the fund has always performed better than its benchmark
index BSE 100.

• The beta of the fund suggests that it is quite volatile and possess greater risks than
the benchmark index

• The standard deviation of fund return is quite erratic when compared to other
funds in the industry.

• The fund has performed better in providing better returns to the investors.

55
4.8 SUNDARAM BNP PARIBAS GROWTH

This part of the chapter provides the comparison of Sundaram BNP Paribas Growth with
Market Indicators (BSE 200)

TABLE 4.8

Comparison of Sundaram BNP Paribas Growth fund with market indicators

(BSE 200)

NAV BSE 200

Y e a rO p . V Ca ll.u Ve a l Ru pe R p ^ O2 p . V Ca ll.u Ve a l Ru me R m ^2(R p - A( RR mp )- AP Rr om d )(uRcmt - A R m ) ^ 2
2 0 0 5 3 4 . 2 94 8 . 1 34 0 . 3 61 6 2 9 . 80 96 0 . 4181 8 6 . 23 3 . 2 11 1 0 3 . 07 7. 8 7 0 . 4 6 3 . 6 5 0 . 2 1
2 0 0 6 4 8 . 1 76 8 . 6 34 2 . 4 71 8 0 4 .10 19 8 8 .17 68 5 5 . 73 49 . 2 81 5 4 2 . 99 7. 9 8 6 . 5 3 6 5 . 2 0 4 2 . 6 6
2 0 0 7 6 9 . 3 91 1 7 . 8 68 9 . 8 84 8 8 3 .12 67 5 5 .22 68 5 6 . 56 20 . 4 93 6 5 8 . 73 67 . 3 92 7 . 7 41 0 3 7 . 0786 9 . 4 3
2 0 0 8 1 1 8 . 8 54 0 . 1 2- 5 7 . 8 33 3 4 3 .28 61 6 4 .16 17 5 6 . -5 596 . 6 30 2 0 3 . -094 0 . 3 2- 8 9 . 3 84 0 6 9 . 47 59 8 2 . 4 2
2 0 0 9 5 1 . 8 48 6 . 8 76 7 . 5 74 5 6 6 .11 15 6 3 .26 17 8 0 . 28 57 . 3 67 6 3 1 . 73 45 . 0 85 4 . 6 11 9 1 5 . 72 79 8 2 . 3 4
1 6 2 . 41 66 2 2 6 . 3 7 1 6 3 . 71 57 1 3 9 . 5 6 1 1 0 9 1 1. 1157 7 7 . 0 7

A rp 3 2 .4 9 S D rp 4 6 .7 9 β 0 .9 4 Sp 0 .6 9
A rm 3 2 .7 5 S D rm 4 8 .5 3 r* 0 .0 4 Tp 3 4 .4 6
Source: secondary data

56
FIGURE 4.8

Comparison of Sundaram BNP Paribas Growth fund with market indicators

(BSE 200)

• The return of the fund was similar to benchmark index from 2005 to 2008
however it has lagged behind in the year 2009 in terms of return on investment.

• The beta of the fund and its standard deviation indicates that its volatility and
deviation in returns were similar to the benchmark index.

• The fund has performed fairly during the five years taken together but it seems
that it has lost some sense after the corrections in the market in 2009.

57
4.9 TATA PURE EQUITY GROWTH

This part of the chapter provides the comparison of TATA Pure Equity Growth with
Market Indicators (Sensex)

TABLE: 4.9

Comparison of Tata Pure equity growth fund with market indicators (Sensex.)

NAV SEN SEX

Y e a Or p . VC al . l uV ea Rl up e R p ^O2 p . VC la . l uV eaRl um e R m ^( R2 p - (AR Rm p - )PA r Ro md( Ru) mc t - A R m ) ^ 2
2 0 0 53 0 . 1 49 3 . 2 42 3 . 1 16 8 6 2 6. 76 82 69. 34 9 7 4. 91 3. 8 12 7 4 9 .92. 2 9 9 . 4 3 8 7 . 5 38 8 . 8 5
2 0 0 64 3 . 3 60 1 . 6 45 2 . 3 18 7 9 5 9. 94 62 21 . 34 79 8 64 .69 . 13 22 1 4 5 .84. 75 0 1 3 . 9 12 1 8 . 4 10 9 3 . 8 1
2 0 0 76 2 . 5 95 9 . 4 5 8 . 9 39 4 8 01 . 31 85 2270. 27 87 64 .69 . 97 21 1 8 2 2. 05 1. 1 12 4 . 3 31 5 9 . 5 26 0 4 . 9 0
2 0 0 81 0 0 . 05 30 . 5 -14 9 . 52 14 5 02 . 07 36 2 95 6. 24 7 -. 53 21 . 52 47 5 9 -. 89 37 . 3- 8 4 . 97 30 8 1 .76231 3 . 6 2
2 0 0 95 1 . 3 83 9 . 4 79 4 . 3 54 5 2 6 9. 87 12 01 . 75 45 6 47 .98 . 16 67 3 4 7 4. 10 4. 4 47 7 . 2 17 9 1 3 .20213 4 . 5 7
1 6 9 .13 57 1 1 6 . 4 6 1 6 1 .19 59 1 8 3 . 8 0 9 5 6 0 .91933 5 . 7 5

A rp 3 3 .8 7 S D r p4 3 . 3 1 β 0 .9 6 S p 0 .7 8
A rm 3 2 .4 0 S D r m4 4 . 5 8 r* 0 .0 4 T p 3 5 .1 6
Source: secondary data

58
FIGURE 4.9

Comparison of Tata Pure equity growth fund with market indicators (Sensex.)

• The fund has always performed in tune with the benchmark returns during
the last 5 years.

• The difference in the fund return and benchmark return is negligible.

• There is not much volatility in the fund when compared to benchmark index.

• Overall the fund has performed quite satisfactory and has been a good
investment for investors who do not require risky instruments.

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4.10 HSBC EQUITY FUND

This part of the chapter provides the comparison of HSBC Equity with Market Indicators
(Sensex)

TABLE: 4.10

Comparison of HSBC equity fund with market indicators (Sensex)

NAV SEN SEX

Y e a rO p . V Ca l .u Ve a l uR ep R p ^2O p . V Ca l .u Ve a l Ru me R m ^2(R p - A( R mp )- AP Rr mo d) (uRc mt - A R m ) ^ 2
2 0 0 5 3 7 . 4 45 2 . 4 94 0 . 2 01 6 1 5 .68 65 2 6 .94 39 9 7 . 94 31 . 8 21 7 4 9 . 21 21 . 5 5 9 . 4 3 1 0 8 . 8 78 8 . 8 5
2 0 0 6 5 2 . 3 97 2 . 0 43 7 . 5 11 4 0 6 .97 49 2 2 .14397 8 6 .4961. 3 22 1 4 5 . 487. 8 6 1 3 . 9 21 2 3 . 3 41 9 3 . 8 1
2 0 0 7 7 3 . 0 21 1 4 . 9 25 7 . 3 83 2 9 2 .16348 2 72.07 27 8 6 .4969. 7 12 1 8 2 . 02 18 . 7 31 4 . 3 14 1 1 . 3 12 0 4 . 9 0
2 0 0 8 1 1 5 . 0 45 9 . 7 0- 4 8 . 1 21 3 1 4 .20093 2 59. 26 74 7 . 3- 51 2 . 5 24 7 5 9 . 9- 77 6 . 7 5- 8 4 . 9 63 5 1 8 . 8732 1 3 . 6 2
2 0 0 9 6 0 . 5 89 4 . 6 65 6 . 2 63 1 6 4 .97 76 2 0 .15754 6 4 .7891. 6 76 3 4 7 . 12 47 . 6 14 7 . 2 71 3 0 5 . 1202 3 4 . 5 7
1 4 3 . 2141 7 9 4 . 1 3 1 6 1 . 91 95 1 8 3 . 8 0 8 4 6 7 . 4949 3 5 . 7 5

A rp 2 8 .6 5 S D rp 3 9 .2 2 β 0 .8 5 Sp 0 .7 3
A rm 3 2 .4 0 S D rm 4 4 .5 8 r* 0 .0 4 Tp 3 3 .5 7

Source: secondary data

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FIGURE 4.10

Comparison of HSBC equity fund with market indicators (Sensex)

• The fund return has been consistent during the last 5 years however many of
the times; it has dipped below the benchmark returns.

• The volatility of the fund is quite low which means that the fund has been
managed improperly to reduce the risk factor, ignoring its return.

• The fund has performed quite poorly when compared to its benchmark and
other similar funds in the industry.

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Table: 4.11 Overall Ranking of 10 Mutual Funds
O V E R A LL R A N K
S l . N o . M u t u a l F u n d sA r p S h a r pS D T r e y n Bo er t a N A V S h a r pS D R pT r e y n Bo er t aO v e r a l l
1 B ir la S u n life F r o n t ilin
4 1 e. 4 E41q. 1u 2it y3 6 . 9 65 4 . 4 70 . 7 6 2 1 1 1 1 1
2 D S P B la c k r o c k o p3 p5 o. 4r 70 t u .n7it5ie4s7 .g4r 73o w2 . t6h 11 . 0 9 4 7 8 9 10 9
3 I C I C I P r u d e n t ia l g 3r o1 w. 3 t00h . fu7 7n 4d 0 . 8 63 3 . 9 30 . 9 2 8 6 3 7 3 6
4 H D F C E q u it y f u n d 3 9 . 8 90 . 8 0 4 9 . 9 54 0 . 2 60 . 9 9 3 3 9 3 8 4
5 J M M u t u a l f u n d e q2 6u .it4y70g. r5o9 w4 t4h. 5 22 7 . 3 00 . 9 7 1 0 1 0 6 10 7 10
6 K o t a k 3 0 g r o w t h f3u 3n .d5 80 . 7 8 4 2 . 9 43 4 . 6 50 . 9 7 6 5 4 5 6 4
7 R e lia n c e m u t u a l g r o4 w4 . t2h00f u. 8n4d 5 2 . 3 24 0 . 7 11 . 0 8 1 2 10 2 9 3
8 S u n d a r a m B N P P a3 r2ib. 4a 90s .g6r 9o 4w 6 t.h7 93 4 . 4 60 . 9 4 7 9 7 6 4 8
9 T A T A p u r e e q u it y 3g3r .o8 w70 t.h7 8 4 3 . 3 13 5 . 1 60 . 9 6 5 4 5 4 5 2
1 0 H S B C e q u it y f u n d 2 8 . 6 50 . 7 3 3 9 . 2 23 3 . 5 70 . 8 5 9 8 2 8 2 7

4.12 Top 5 Mutual Funds

Ran
NAV Sharp SD Treynor Beta Overall
k
Reliance Birla Birla Birla Birla Birla
mutual Sunlife Sunlife Sunlife Sunlife Sunlife
1
growth fund Frontiline Frontiline Frontiline Frontiline Frontiline
Equity Equity Equity Equity Equity
Birla Sunlife Reliance HSBC Reliance HSBC TATA pure
Frontiline mutual equity fund mutual equity fund equity
2
Equity growth growth growth
fund fund
HDFC Equity HDFC ICICI HDFC ICICI Reliance
fund Equity fund Prudential Equity Prudential mutual
3
growth fund growth growth
fund fund fund
DSP TATA pure Kotak 30 TATA Sundaram HDFC
Blackrock equity growth pure equity BNP Equity
4
opportunities growth fund growth Paribas fund
growth growth
5 TATA pure Kotak 30 TATA Kotak 30 TATA pure Kotak 30
equity growth growth pure equity growth equity growth

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 fund growth fund growth fund

5.1 FINDINGS

 All funds had a steep decline in their returns in the year 2008 as markets in india
tanked due to recessionary pressures in the American markets.

 The analysis of 10 Equity Diversified Mutual funds based on NAV returns for a
period of 5 years ranked Reliance Equity fund as the top performer with an
average rate of return of 44.20% per year.

 All Equity schemes have shown better returns than their respective benchmark
index except JM Equity Mutual fund, Sundaram BNP Paribas Growth fund &
HSBC equity fund.

 Birla Sunlife Frontline Equity Fund has managed its portfolio in the best possible
manager and thus can easily be regarded as the overall best performed mutual
fund.

 The beta of the funds suggest that they are no highly volatile funds when it is
compared to their respective benchmark indices.

 None of the fund has performed poorly as per various measures of performance of
mutual fund. However, Birla Sunlife Frontline Equity Fund & Reliance
Mutual Growth Fund has outperformed in the industry during the last 5 years in
terms of average return on funds.

 Overall performance comparison of the mutual fund after taking into

consideration the risk and return involved will put Birla Sunlife Fronline Equity
fund at the top due to its efficient management of its fund.

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5.2 RECOMMENDATIONS

 The Mutual Fund Asset Management companies can educate and give awareness
about the concept of Mutual Funds to the investors. As majority of the investors
do not know about this type of investment, it should highlight the benefits of
mutual fund over other investment and attract more number of customers

 The Mutual Fund Asset Management companies can come up with more
advertisements and promotional measures and it should also target the FII’s and
individual investors who invest in the capital markets.

 The fund distributors should clearly state the objective of each fund floated by the
Asset Management Companies to help the investors choose the right investment
plan.

 To induce investments into mutual funds, the government may provide tax
benefits to attract investment into mutual funds.

 The risk management systems and the benchmarking of indices may be improved
by AMFI (Association of Mutual Funds in India) to give the investors more
guidelines and tools to take a good investment decision.

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5.3 CONCLUSION

Saving money is not enough. Each of us also need to invest one’s savings
intelligently in order to have enough money available for funding the higher education
of one s children, for buying a house and many other future dreams.

This study will guide the new investor who wants to invest in equity-diversified
schemes by providing knowledge about how to measure the risk and return of particular
mutual fund scheme. The study recommends new investors to go for equity schemes
due to their high return and managed risk by professionals.

The biggest advantage of the Mutual Fund is its various diversified investment
plan and transparency in the operation of the Asset management Company. It is quite
clear from the analysis that such type of investment give small investors of invested sum
as low as `3000/- a chance to put their hard earned money in the best and diversifies
investment plans effectively and efficiently managed by market professionals.

From the analysis of equity schemes with their respective benchmark index it is
known that Reliance Growth is the best scheme with high NAV returns followed by Birla
Sunlife Frontiline Equity, HDFC Equity fund, DSP Blackrock opportunities growth &
TATA pure equity growth. Such type of analysis by the mutual fund regulators and
various investor assisting agency can not only enhance the customer confidence in mutual
funds but can also help them understand the various advantages and disadvantages of
investing their money in the mutual funds. Thus, Mutual fund is the one of the best
available investment option available to individual future growing requirements and
needs.

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 BIBLIOGRAPHY

BOOKS

 Fischer & Jordan “Securities Analysis & Portfolio Management”

 Prasanna Chandra.- “Financial management: Theory and Practice”

 Chakrabarthi A. Rungta H. – “Mutual Fund Industry in India”, The ICFAI

Journal of Applied Finance,

JOURNALS

 Value Research, Feb 2008.

WEBSITES

 www.valueresearchonline.com
 www.mutualfundsindia.com
 www.amfiindia.com
 www.bseindia.com
 www.nseindia.com
 www.indiainfoline.com

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