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Final Report

ON

Management Thesis-I

“A Critical analysis of the Potentials and


Awareness level of floated Gold Exchange Traded
Fund in Indian context with special reference to
Nagpur city”

SUBMITTED IN FULFILLMENT
OF

MASTER OF BUSINESS ADMINISTRATION


ICFAI UNIVERSITY, DEHRADUN

SUBMITTED TO:
Ms. Chandrima Das
(Project Guide)

SUBMITTED BY:
Mr. Shailesh Patil
Enroll: 8NBNG041
ACKNOWLEDGEMENT

Before getting in the thick of the things, I would like to add a few heartfelt
words for the people who were part of this project in numerous ways. People
who gave unending support right from the stage the ideas were conceived.

It is with profound gratitude that I express my sincere thanks to ICFAI


UNIVERSITY for designing “Management Thesis” as a part of MBA
program and giving me the opportunity of expressing practical aspects.

Finally, heartfelt appreciations to my Project Guide, Ms. Chandrima Das


for coordinating project work and giving me guidelines to make me delve
deeper and deeper in this project by offering her timely help. I owe more
than what I can mention mostly for teaching me to see the silver lining in
every dark cloud.

Shailesh Patil
8NBNG041

2
DECLARATION

I, Mr. Shailesh Patil, the student of MBA course 2008-10 of INC, Nagpur,
hereby submit my “Final Report- Management Thesis”. Most of the work
carried out in this project is original and was done under the guidance of
Project Guide, Ms. Chandrima Das. A good amount of textual content in
this project is derived from other works published earlier. However, this
material that has been picked up has been used to enhance the clarity of the
hypothesis and has been used for an academic purpose only.

I further assert that this project or any part of it has never been submitted by
me or anyone else to any university in the world. Also no part of this project
may be used or reproduced by others either academically or commercially
without the written consent of the authors and their guide.

Shailesh Patil

3
CERTIFICATE

Shailesh Patil, have worked on the “Final Report- Management Thesis”.


It has been my pleasure to guide her on this project. After going through the
work presented in this project, I can vouch for the authenticity and
genuineness of the hard work put in by her. She have been meticulously
methodical, diligent and relatively intelligent with the research work. I
strongly recommend this project as a genuine piece of research on a topic
not so very common. I would like to take this opportunity to wish her all the
best for the future.

Signature

Ms. Chandrima Das


(Project Guide)

4
INDEX

5
ABSTRACT

6
Introduction

Exchange Traded Funds (ETFs) are open ended mutual funds that are passively managed
and most of them seek to mirror the return of an index, a commodity or a basket of assets.
ETFs are listed and traded on stock exchanges like stocks. They enable investors to gain
broad exposure to indices or defined underlying asset (commodity) with relative case, on
a real-time basis, and at a lower cost than many other forms of investing.
Gold ETFs provided investors a means of participating in the gold bullion market without
the necessity of taking physical delivery of gold, and to buy and sell that participation
through the trading of a security on stock exchange. Gold ETF would be a passive
investment; so, when gold prices move up, the ETF appreciates and when gold prices
move down, the ETF loses value.
Gold ETF tracks the performance of Gold Bullion. Gold ETFs provide returns that,
before expenses, closely correspond to the returns provided by physical Gold. Each unit
is approximately equal to the price of 1 gram of Gold. But, there are Gold ETFs which
also provide a unit which is approximately equal to the price of ½ gram of Gold

Why should an investor invest in Gold ETF?


 No worry on adulteration
 Gold provides diversification to the portfolio
 Gold is considered as a Global Asset Class
 Gold is used as a Hedge against Inflation
 Gold is considered to be less volatile compared to equities
 Held in Electronic Form
 Store of value
 Extremely Liquid

Advantages of Investing in Gold ETFs


 Potentially cheaper to have price exposure to gold price as compared to other
available avenues
 Quick and convenient dealing through demat account
 No storage and security issue for investors
 Transparent pricing
 Taxation of Mutual Fund
 Can be traded on stock exchange like buying / selling a stock
 Ideal for retail investor as minimum lot size to trade is one unit on secondary
market
 NAV of a unit will track price of approximately 1 gram of gold

7
Comparison of Gold ETF with Physical Gold

Parameter Jewelers Bank Gold ETF


Physical (Bars /
How Gold is held Physical (Bars / Coins) Dematerialized (Electronic Form)
Coins)
Differs from one to
another. Neither Differs from bank to Linked to International Gold Prices
Pricing
transparent nor bank. Not Standard. and very transparent.
standard.
Buying Premium
Likely to be more Likely to be more Likely to be less
above gold price
Making Charges Charges are incurred Charges are incurred No Charges are incurred
Impurity Risk High Nil Nil
Storage
Locker / Safe Locker / Safe Demat Account
Requirement
Investor is
Security of Asset Investor is responsible Fund House takes the responsibility
responsible
Conditional and Banks do not buy
Resale At Secondary Market Prices
uneconomical back
Less convenient, as Less convenient, as
Convenience in More Convenient, as held in electronic
Gold needs to be Gold needs to be
Buying / Selling form under the demat account
moved physically moved physically
Quantity to Buy / Available in standard Available in standard Minimum is ½ or 1 gram according to
Sell denomination denomination the fund
Bid Ask Spread Very High Can’t Sell Back Very Low
Risk of Theft Yes, possible Yes, possible No, Not possible
Wealth Tax Yes Yes No
Long Term
Only after 3 years Only after 3 years After 1 year
Capital Gains Tax

Source- Gold Exchange Traded Fund - EquityBulls_com.htm

8
Chapter
Gold ETF Funds in India

1. Benchmark Gold ETF (GOLDBEES) lists on NSE


Benchmark Assent Management Company, a Mumbai-based mutual fund house, has
listed India's first gold exchange traded fund (EFT) Gold BeES on the National Stock
Exchange Feb 07. Listed at rs. 950 per gram BoES soon gained momentum with price
surged to Rs 1104 but slumped due to profit booking to Rs 947 within an hour of the
launch. Allotment price, however, remained at Rs 945.7 per gram. 

The trading unit for BeES has been fixed at one gram with a tick size of one paisa. This
instrument offers only trading and holding it in DMAT account and not the physical
delivery of gold. "Gold BeES, like any other mutual fund instrument, would attract
common men to save in small quantity with a minimum possible monthly balance of Rs
1000 (roughly equivalent to the price of one gram gold BoES) which, if continued, may
accumulate over a period of time to give handsome amount on the occasions like
daughter's wedding or higher education of their child," A P Kurian, chairman, AMFI said.

He further added that the New Year was adding a new benchmark in the history of
mutual funds with the addition of BeES to the securities portfolio. Looking at the success
of gold exchange traded funds in the countries like the US, South Africa and Australia
which has created an asset of about $12 billion, this production in India is all set to attract
good amount of retail participation from the common man, Kurian said.     

Gold BeES is designed to provide returns that, before expenses, closely correspond to the
returns provided by physical Gold. Each unit is approximately equal to the price of 1
gram of Gold.

Entry Load Slabs will be as below:

 Rs. 10,000 to Rs. 49,99,000 - 1.5%


 Rs. 50,00,000 to Rs. 1,99,99,000 - 1.0%
 Rs 2,00,00,000 to Rs 4,99,99,000 - 0.5%
 Rs. 5,00,00,000 and above - Nil

There will be no exit load charge by the Fund The total expense ratio will be maximum of
1% per annum. Since Gold BeES is classified under Mutual Fund, investor investing in
this need not pay Wealth Tax. The scheme will have Non equity Mutual Fund taxation,
applicable as per current Tax laws, which investor has to pay after redemption.

9
2. UTI GOLD Exchange Traded Fund
UTI Gold Exchange Traded Fund is an open ended exchange traded fund. The investment
objective of the scheme is to endeavor to provide returns that, before expenses, closely
track the performance and yield of Gold. However the performance of the scheme may
differ from that of the underlying asset due to tracking error.

Issue Open  01-Mar-2007 Issue Close  16-Mar-2007


Scheme Objective
Mutual Fund Family UTI Asset Mgmt Company Pvt. Ltd.
Fund Class Gold
Fund Type Open-Ended
Investment plan Dividend
Fund Manager Swati Kulkarni
Entry Load 0.00 %
Exit Load 0.00 %
Comment None

A gold ETF was eagerly awaited by US investors. Now, there are two to choose from.
One is IAU from Barclay's Global Investors. The other is GLD from State Street.
State Street's started trading first and has managed to capture a larger slice of the market.
In February, the GLD ETF held $6 billion worth of assets. However, both should be
equivalent bets for those looking to invest in gold. In its first three days of trading, GLD
traded roughly 30 million shares and nearly all of that has been a new buyer if you
believe the press.
I, for one, am not interested in holding too much of this particular asset class. Why?
Because gold has no real use in the world. Sure, it is admired and hoarded by people
across the globe, but it doesn't generate value on its own. Warren Buffet said it best, "I
would rather own assets that produce value. Dow went from 66 to 12000 and paid
dividends. If you owned Gold you paid 20 and went to 400 a hundred years later."
However some investors are attracted since gold is likely to increase in value when other
areas of the market are suffering. As such, it is used as hedge against other investments.
Regardless, I prefer to invest in the long-term returns that company stocks and bonds
offer. This isn’t to say that I don’t own any gold. In fact, the commodities ETF that have
is 10% gold.
Note that gains from the gold ETF will be taxed at the collectibles rate of 28% vs. the
long-term capital gains rate of 15%. If you're going to invest in this ETF, you might want
to consider using a tax deferred account. And since gold doesn't produce income, partial
shares of your holdings will be sold to pay for management fees.

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3. Kotak Gold Exchange Traded Fund
Investment Objective: the investment objective of the scheme is to generate returns that
are in line with the return on investment in physical gold, subject to tracking errors.

Type of fund: Kotak Gold ETF is open ended fund. The ongoing of the scheme
commenced from August 8, 2007. The fund creates/redeem the scheme units in large size
known as creation unit. The value of unit is 1000 gram of physical gold or multiple
thereof called as the portfolio deposit and a cash component which will be exchanged for
corresponding number of units. The portfolio deposit and cash component may change
from time to time and will be announced by fund on its website.

Issue Open  01-july-2007 Issue Close  08-Aug-2007


Scheme Objective
Mutual Fund Family Kotak mahindra Asset Mgmt Company
Pvt. Ltd.
Fund Class Gold
Fund Type Open-Ended
Investment plan Dividend
Fund Manager Mr. Abhishek Bisen
Entry Load 0.00 %
Exit Load 0.00 %
Comment None

Indemnity is a legal exemption from the penalties or liabilities incurred by any course of
action. Some of the risk factors listed in the prospectus are · the loss, damage, theft or
restrictions on access to the Trust's gold · the lack of adequate sources of recovery if the
Trust's gold is lost, damaged, stolen or destroyed, including a lack of insurance · the
failure of gold bullion allocated to the Trust to meet the London Good Delivery Standards
· the failure of sub-custodians to exercise due care in the safekeeping of the Trust's gold ·
the limited ability of the Trustee and the Custodian to take legal action against sub-
custodians; · the insolvency of the Custodian · the Trust's obligation to reimburse the
Purchaser and the Market Agent for certain liabilities in the event the Sponsor fails to
indemnify them · the lack of experience of the Sponsor and its management in operating
an investment vehicle such as the Trust · competing claims over ownership of intellectual
property rights related to the Trust.

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4. Reliance Gold Exchange Traded Fund.
Reliance Gold Exchange Traded Fund (RGETF) is an open ended Gold Exchange Traded
Fund which will track the performance of Gold Bullion. The units issued under the
scheme will represent the value of gold held in the scheme. It is designed to provide
returns that, before expenses, closely correspond to the returns provided by domestic
price of Gold. Gold ETF is a security listed on the stock exchange available for trading
with an intention to offer investors a means of participating in the gold bullion market
without the necessity of taking physical delivery of gold.

Product Features
Type: An open-ended Gold Exchange Traded Fund that tracks the domestic prices of
gold through investments in physical Gold.

Investment Objective: The investment objective is to seek to provide returns that closely
correspond to returns provided by price of gold through investment in physical Gold (and
Gold related securities as permitted by Regulators from time to time). However, the
performance of the scheme may differ from that of the domestic prices of Gold due to
expenses and or other related factors.

Options: Only Dividend Pay-out Option

Minimum Application Amount


On going purchase directly from mutual fund would be available only to the Authorized
Participants provided the value of units to be purchased is in creation unit size.
Authorized Participants may buy the units on any business day for the scheme directly
from the mutual fund at applicable NAV and transaction charges, if applicable, by
depositing Gold or cash, value of which is equal to creation size. Each creation unit
consists of 1000 units and cash components, if any, of Reliance Gold Exchange Traded
Fund.
RGETF units will be credited to the unit holders demat account on the date of realization
of instrument, at the applicable NAV.
The AMC will appoint Authorized Participants to provide liquidity in secondary market
on an ongoing basis. The Authorized Participants would offer daily two way quote in the
market.

Modes of payment for subscriptions & redemptions during NFO & continuous offer
with the AMC
During NFO all the subscriptions will happen by cash (by issuing a cheque / DD)
however during continuous offer the transactions with the AMC by Authorized
Participants & Large Investors can happen by issuing a cheque / DD or by transferring
requisite gold (as per LBMA Good Delivery Norms referred in the Offer Document) to
the fund’s Designated DP account (in the form of Portfolio Deposit) while the balance
Cash Component, if any has to be paid to the AMC. Please refer to the offer Document
for further details.

Allotment Price
Allotment price will be equal to the face value of Rs100/- plus premium equivalent to the
difference between the face value and price of one gram of gold on the date of allotment.

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For example :
If on the date of allotment the price of 10 gm of gold is 9000, then the allotment price
becomes as follows;
Rs 100 + premium equivalent to the difference between the face value and price of one
gram of gold on the date of allotment.
i.e Rs 100 + Rs (900-100) = Rs 900 approx
(The above example is for illustration purpose and does not include the expenses of the
scheme)

Purity of Gold
All gold bullion held in the scheme’s allocated account with the custodian shall be of
fineness (or purity) of 995 parts per 1000 (99.5%) or higher.

Load Structure: During NFO and Continuous Offer


Entry Load:
 
Less than Rs. 1 lacs - 1.50%
 
Rs. 1 lacs & less than Rs. 25 lacs 0.75%
 
Rs. 25 lacs & less than Rs. 50 lacs 0.50%
 
Rs. 25 lacs & less than Rs. 1 crs 0.25%
 
Rs 50 lacs & less than Rs 1cr 0.25% & NOT Rs
  25 lacs & less..

Entry Load: Nil


During continuous offer: Entry & Exit Load: NIL

Listing: The Fund would endeavor to get the units of the Scheme listed on the National
Stock Exchange and / or any other stock exchange(s) as may be decided by the AMC
within 30 days from the closure of the New Fund Offer period.

Liquidity : After the close of the NFO, as RGETF would be listed on the Exchange,
subsequent buying or selling by Unit holders can be made from the secondary market.
The minimum number of Units that can be bought or sold on the exchange is 1 (one) unit.
All investors including Authorised Participants and large investors may sell their units in
the stock exchange(s) on which these units are listed on all the trading days of the stock
exchange. The trading will be as per the normal settlement cycle.
Alternatively, Authorised Participants and Large investors can directly buy / sell Units in
blocks from the Fund in ‘Creation Unit’ size, as defined in this Offer Document on all
working days. Mutual fund will repurchase units from Authorised Participants and Large
investors on any business day provided the units offered for repurchase is not less than
100 units.

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5. Quantum Gold Exchange Traded Fund
The Quantum Gold Fund (QGF) seeks to offer investors an innovative, cost-efficient and
secure way to invest in gold. The QGF is an Open Ended Fund, which is listed on the
National Stock Exchange (NSE) in the form of an Exchange Traded Fund (ETF) tracking
domestic prices of gold. The scheme enables investors to participate in the gold bullion
market without taking physical delivery of gold, and to buy and sell units just like a stock
on any of the recognized exchanges where it is listed..

Investment Objective
The investment objective of the Quantum Gold Fund is to provide returns that, before
expenses, closely correspond to the returns provided by the domestic price of gold.

Scheme Details
Each unit of the QGF will be approximately equal to price of half (½) gram of Gold. In
the New Fund Offer (NFO) period, the Fund will accept cheque or demand draft. The
minimum amount of investment is Rs.5,000/- and in multiples of Rs.1,000/- thereafter.
After the NFO, the QGF units are listed on the NSE and investors can buy or sell units
just like any equity share. Investors can buy or sell QGF units through member-brokers
on the NSE. The minimum quantity for buying and selling would be at least 1 unit.

Ongoing Sales/Redemption
On an ongoing basis (after the NFO), direct purchases from the Fund would be restricted
to only Authorized Participants and Eligible Investors. Authorised Participants and
Eligible Investors can buy/redeem in creation unit size and multiples thereof directly
from the Fund on all business days. Retail investors can buy and sell only on the
exchange

Creation Unit Size


‘Creation Unit Size’ is the number of QGF units, which is exchanged for the Portfolio
Deposit and cash component. The Portfolio Deposit shall consist of physical gold of
defined purity and quantity, and the cash component represents the difference between
the applicable NAV of units in creation unit size and the market value of physical Gold.
The facility of creating/redeeming units in creation unit size will be available only for the
Authorized Participants and large or eligible investors as defined in the Scheme
Information Document. The Fund may from time to time change the size of the creation
unit size in order to equate it with marketable lots of the underlying instruments.
Through the lower cost of operations and the availability of units having smaller
denominations, the Quantum Gold Fund would provide investors an excellent means of
asset allocation. Thus, an investor can buy gold in unit form, with each unit being
approximately equal to ½ gram of Gold, for as low as around Rs. 600 per unit at the
current prices. (As on January 9th, 2008) Gold ETFs offer the best of both worlds. The
investor has the advantages of owning physical gold, without incurring additional
expenses and losses like making charges (for gold jewellery), and bank vault charges (for
keeping coins or bars or jewellery). If investors purchased gold from the retail jeweller or
a bank, it would have cost at least a straight loss to the extent of the premium paid (which
usually ranges from 5 to 20%). And there are no concerns of quality or theft– The gold
backing the ETF is certified by the London Bullion Market Association and stored in
vaults of the custodian / sub-custodians. The fund house takes care of all risks of storage
and safety. Buying and selling is very easy. Like any other security, you just buy and sell

14
it though your broker on the stock exchanges. And unlike your jeweler and bank, you do
not suffer premiums or making charges in the transactions. About the Quantum Gold
Fund. The Quantum Gold Fund is an Open Ended Exchange Traded Fund (ETF)
launched by Quantum Mutual Fund and listed on the NSE. It will track domestic prices of
Gold through investments in physical Gold. How to purchase and sell Quantum Gold
Fund units.

The Quantum Gold Fund Highlights


Minimum Investments Rs 5,000 (multiples of 1000)
Minimum target amount during initial offer period Rs. 10 Lacs
Face value per unit Rs. 100/-

Entry and Exit Load structure


Entry Load Entry Load Nil
Exit Load Authorized Participants Nil
Exit Load Eligible Investors 0.50%

The load structure is however, subject to change from time to time and such changes shall
be implemented prospectively.

15
RESEARCH METHODOLOGY

 Secondary Data
I. SKEWNESS
Skewness describe asymmetry from the normal distribution in a set of statistical data.
Skewness can come in the form of "negative skewness" or "positive skewness",
depending on whether data points are skewed to the left (negative skew) or to the right
(positive skew) of the data average.  
Negative skew: The left tail is longer; the mass of the distribution is concentrated on the
right of the figure. It has relatively few low values. The distribution is said to be left-
skewed.
Positive skew: The right tail is longer; the mass of the distribution is concentrated on the
left of the figure. It has relatively few high values. The distribution is said to be right-
skewed.

Source- Skewness - Wikipedia, the free encyclopedia.htm

Skewness is extremely important to finance and investing. Most sets of data, including
stock prices and asset returns, have either positive or negative skew rather than following
the balanced normal distribution (which has a skewness of zero). By knowing which way
data is skewed, one can better estimate whether a given (or future) data point will be
more or less than the mean .Most advanced economic analysis models study data for
skewness and incorporate this into their calculations. Skewness risk is the risk that a
model assumes a normal distribution of data when in fact data is skewed to the left or
right of the mean

For univariate data Y1, Y2, ..., YN, the formula for skewness is:

Where is the mean, is the standard deviation, and N is the number of data points. The
skewness for a normal distribution is zero, and any symmetric data should have a
skewness near zero.. By skewed left, we mean that the left tail is long relative to the right

16
tail. Similarly,skewed right means that the right tail is long relative to the left tail. Some
measurements have a lower bound and are skewed right.

TABLE- 1.1

Month Benchmark UTI Kotak Reliance Quantam


NAV NAV NAV NAV NAV
Mar-07 945.4541
Apr-07 940.4872 937.3458
May-07 893.4265 893.6763
Jun-07 876.1564 877.0542
Jul-07 880.3478 881.2746 882.3436
Aug-07 887.2831 888.6244 889.5782
Sep-07 935.7657 937.8366 938.2891
Oct-07 973.0185 974.4634 975.7427
Nov-07 1035.861 1037.613 1038.926 1041.069
Dec-07 1031.232 1033.43 1034.26 1027.807
Jan-08 1131.715 1133.995 1135.073 1123.458
Feb-08 1190.288 1192.831 1193.836 1179.419 1236.447
Mar-08 1267.401 1266.205 1270.998 1254.922 1259.423
Apr-08 1179.574 1180.68 1182.541 1165.983 1175.705
May-08 1211.464 1214.134 1158.586 1198.634 1208.373
Jun-08 1230.128 1232.896 1233.496 1216.781 1226.84
Jul-08 1300.312 1303.126 1303.705 1286.13 1296.946
Aug-08 1167.096 1169.524 1173.577 1152.213 1163.65
Sep-08 1215.513 1218.141 1211.857 1198.67 1217.317
Oct-08 1276.098 1272.639 1282.453 1243.208 1270.181
Nov-08 1191.37 1203.437 1203.887 1174.442 1186.89
Dec-08 1285.379 1288.289 1288.67 1233.083 1285.355
Jan-09 1342.77 1339.655 1346.147 1311.78 1339.609
Feb-09 1481.607 1487.818 1490.018 1448.862 1476.716
Mar-09 1522.739 1523.885 1526.056 1483.273 1516.569
Apr-09 1433.229 1434.158 1437.899 1396.233 1428.574
May-09 1440.682 1442.595 1444.074 1404.696 1436.832
Jun-09 1446.332 1449.078 1450.091 1410.565 1443.234
Jul-09 1454.058 1457.173 1457.491 1418.224 1451.348

17
TABLE – 1.2
Return on Gold Exchange traded fund

Month Benchmark UTI Kotak Reliance Quantam


Apr-07 -0.00229
May-07 -0.02229 -0.02072
Jun-07 -0.00848 -0.00815
Jul-07 0.002073 0.002085
Aug-07 0.003408 0.003607 0.003546
Sep-07 0.023105 0.023409 0.023153
Oct-07 0.016954 0.016638 0.016999
Nov-07 0.02718 0.02727 0.027249
Dec-07 -0.00195 -0.00175 -0.00195 -0.00557
Jan-08 0.040381 0.04033 0.040394 0.038645
Feb-08 0.021915 0.021968 0.021921 0.021111
Mar-08 0.027262 0.025925 0.0272 0.026949 0.007996
Apr-08 -0.03119 -0.03037 -0.03133 -0.03192 -0.02987
May-08 0.011585 0.012134 -0.00889 0.011994 0.011903
Jun-08 0.00664 0.00666 0.027209 0.006526 0.006587
Jul-08 0.024097 0.02406 0.024042 0.024073 0.024134
Aug-08 -0.04694 -0.04698 -0.04567 -0.04775 -0.0471
Sep-08 0.017653 0.017689 0.01394 0.017167 0.019581
Oct-08 0.021125 0.019008 0.02459 0.015844 0.018462
Nov-08 -0.02984 -0.02428 -0.02746 -0.02471 -0.02945
Dec-08 0.032984 0.02959 0.029556 0.021161 0.034612
Jan-09 0.018971 0.01698 0.018951 0.026869 0.017955
Feb-09 0.042731 0.045557 0.044099 0.043166 0.042319
Mar-09 0.011892 0.010403 0.010379 0.010194 0.011565
Apr-09 -0.02631 -0.02636 -0.02584 -0.02626 -0.02596
May-09 0.002253 0.002548 0.001861 0.002625 0.002503
Jun-09 0.0017 0.001947 0.001806 0.001811 0.001931
Jul-09 0.002314 0.002419 0.002211 0.002352 0.002435
Mean 0.006676 0.007097 0.009082 0.006713 0.004094
-0.64859 -0.64454 -0.81546 -0.75956 -0.67643
Skewness

18
II. KURTOSIS
Kurtosis is statistical measure used to describe the distribution of observed data around
the mean.Kurtosis is a measure of whether the data are peaked or flat relative to a normal
distribution. That is, data sets with high kurtosis tend to have a distinct peak near the
mean, decline rather rapidly, and have heavy tails. Data sets with low kurtosis tend to
have a flat top near the mean rather than a sharp peak.
Used generally in the statistical field, kurtosis describes trends in charts. A high kurtosis
portrays a chart with fat tails and a low, even distribution, whereas a low kurtosis portrays
a chart with skinny tails and a distribution concentrated toward the mean
For univariate data Y1, Y2, ..., YN, the formula for kurtosis is:

This definition is used so that the standard normal distribution has a kurtosis of zero. In
addition, with the second definition positive kurtosis indicates a "peaked" distribution and
negative kurtosis indicates a "flat" distribution.

Source-Kurtosis - Wikipedia, the free encyclopedia.htm

A distribution with positive excess kurtosis is called leptokurtic, or leptokurtotic. In


terms of shape, a leptokurtic distribution has a more acute peak around the mean (that is,
a higher probability than a normally distributed variable of values near the mean) and
fatter tails (that is, a higher probability than a normally distributed variable of extreme
values).A distribution with negative excess kurtosis is called platykurtic, or
platykurtotic. In terms of shape, a platykurtic distribution has a lower, wider peak around
the mean (that is, a lower probability than a normally distributed variable of values near
the mean) and thinner tails (if viewed as the height of the probability density—that is, a
lower probability than a normally distributed variable of extreme values)

With reference to Table No.1.2

Funds Benchmark UTI Kotak Reliance Quantam

KURTOSIS 0.018208 0.181668 0.079536 0.11987 -0.05912

19
III. COEFFICIENT OF VARIATION - CV
A statistical measure of the dispersion of data points in a data series around the mean. It
is calculated as follows:

The coefficient of variation represents the ratio of the standard deviation to the mean, and
it is a useful statistic for comparing the degree of variation from one data series to
another, even if the means are drastically different from each other. In the investing
world, the coefficient of variation allows you to determine how much volatility (risk) you
are assuming in comparison to the amount of return you can expect from your
investment. In simple language, the lower the ratio of standard deviation to mean return,
the better your risk-return tradeoff.

With reference to Table No.1.2

Funds Benchmark UTI Kotak Reliance Quantam

Co-efficient 3.344704 3.117695 2.560534 3.561133 5.915582


of variation

IV. ANALYSIS OF VARAINCE (ANOVA)

The Analysis Of Variance, popularly known as the ANOVA test, can be used in cases
where there are more than two groups. When we have only two samples we can use the t-
test to compare the means of the samples but it might become unreliable in case of more
than two samples. If we only compare two means, then the t-test (independent samples)
will give the same results as the ANOVA. It is used to compare the means of more than
two samples. This can be understood better with the help of an example.

20
Benchmark KOTAK Reliance Quantum
gold ETF UTI GOLD ETF GOLD ETF GOLD ETF gold ETF
Quarte Quarter Quarter Quarter Quarter
r
07- 09 NAV 07- 09 NAV 07- 09 NAV 07- 09 NAV 07- 09 NAV

1 926.46 1 902.69 1 903.4 1 1064.11 1 1223.85


2 881.26 2 902.57 2 1016.3 2 1200.1 2 1244.05

3 981.55 3 1015.2 3 1200 3 1233.84 3 1217.04


4 1117.7 4 1197.7 4 1191.5 4 1198.03 4 1270.61

5 1219.5 5 1209.2 5 1229.7 5 1239.76 5 1473.95


6 1232.5 6 1230.3 6 1258.3 6 1442.78 6 1443.8

7 1227.7 7 1254.8 7 1454.1 7 1411.16

8 1369.9 8 1450.5 8 1444

9 1465.6 9 1441.9 9 1497.2

10 1459.9 10 1495.3

Step-1 : Variance Between Colum


Sample sample mean (sample mean N(sample mean
)2
N mean Grand mean - grand mean - grand mean - grand mean ) 2
10 1188.202 1234.28 -46.078 2123.182084 21231.82084
10 1210.005 1234.28 -24.275 589.275625 5892.75625
9 1243.844 1234.28 9.564 91.470096 823.230864
7 1255.688 1234.28 21.408 458.302464 3208.117248
6 1312.223 1234.28 77.943 6075.111249 36450.66749
          67606.5927
Variance between column =16901.64817
Step-2: variance within column

21
s12 44294.02 10774.22108
s22 46939.75 11417.77703
s32 40151.62 8681.431351
s42 17170.76 2784.447568
s52 13342.98 1803.105405
   

Variance with in column= 35460.98243

Calculated value of F = Variance between column / Variance with in column


= 16901.64817 / 35460.98243
= 0.476626619

Table Value of f for (4,126 ) degree of freedom & 5 % significance level is 2.45 approx
Table Value of f for (4,126 ) degree of freedom & 1 % significance level is 3.32 approx

calculated value of F= 0.476627 < Table value


So hypothesis accepted

Which specifies that return from all the Gold exchange traded fund are same they
bear no difference.

V. CORRELATION Matrix:

The study of correlation is of immense use in practical life. Correlation analysis


contribute to the understanding of economic behavior , aids in locating the critically
important variable on which other depend, may revel to the economist the connection by
which distribution spread and suggest to him the paths through which stabilizing force
may become effective. Correlation analysis is based on the relationship between two or
more variables. The degree of relationship between the variable under consideration is
measured through the correlation analysis. The measure of correlation called coefficient
of correlation. It is also said to be a measure of covariance between two series.

Coefficient of correlation (r) = Cov (X, Y)

Sx Sy

 r = 0 , No relation between X and Y.


 r = 1 , Perfect positive linear relationship.
 r = -1, Perfect negative linear relationship.

Benchmark gold ETF

22
  benchmark gold Mcx bsc100 nifty

23
benchmark 1 0.99964 -0.03745 -0.46234 -0.43995
gold 0.999647 1 -0.04762 -0.46899 -0.4467
mcx -0.03745 -0.04762 1 0.472066 0.561259
bse-100 -0.46234 -0.46899 0.472066 1 0.97291
nifty -0.43995 -0.4467 0.561259 0.97291 1

UTI Gold ETF


  UTI gold mcx bsc100 nifty
UTI 1 0.999735 -0.0564 -0.49742 -0.47768
gold 0.999735 1 -0.04762 -0.46899 -0.4467
mcx -0.0564 -0.04762 1 0.472066 0.561259
bse-100 -0.49742 -0.46899 0.472066 1 0.97291
nifty -0.47768 -0.4467 0.561259 0.97291 1

Kotak Gold ETF


  Kotak gold mcx bsc100 nifty
Kotak 1  0.997627 -0.17965 -0.59646 -0.59162
Gold 0.997627 1 -0.04762 -0.46899 -0.4467
Mcx -0.17965 -0.04762 1 0.472066 0.561259
bse-100 -0.59646 -0.46899 0.472066 1 0.97291
Nifty -0.59162 -0.4467 0.561259 0.97291 1

Reliance Gold ETF


  Reliance gold mcx bsc100 nifty
Reliance 1  0.996905 -0.39414 -0.59054 -0.64952
gold 0.996905 1 -0.04762 -0.46899 -0.4467
mcx -0.39414 -0.04762 1 0.472066 0.561259
bse-100 -0.59054 -0.46899 0.472066 1 0.97291
nifty -0.64952 -0.4467 0.561259 0.97291 1

Quantam Gold ETF


  Quantam gold mcx bsc100 nifty
Quantam 1  0.9928832 -0.562012  -0.32219 -0.42889
gold 0.9928832 1 -0.04762 -0.46899 -0.4467
mcx -0.5620122 -0.04762 1 0.472066 0.561259
bse-100 -0.3221971 -0.46899 0.472066 1 0.97291
nifty -0.4288937 -0.4467 0.561259 0.97291 1

PRIMARY DATA:
Sample Size – 100
Sampling method: convenience sampling

24
Collected by Questionnaire

Parameters Out of 100 sample


Awareness of Gold ETF 35 are aware
Preference for Gold ETF 21
Preference for physical gold 79

Awareness in Nagpur city

people aware
35%

unaware
65%

As per preference

for Gold ETF


21%

preference to the
physical gold
79%

RESULT AND DATA ANALYSIS

25
Secondary Data analysis:

 From Table1.2 we have analyze that the average rate of return on


investment of all Five gold exchange traded fund are following in the
same range which shows that all funds giving more or less same
return on investment.
 Skewness result shows that all five gold exchange traded fund having
Negative skewness which means all are skew toward Left thus it is
clear that the data point of Return on investment are less than the
mean.

26

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