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Preeti Verma

Roll No.


Course & Semester Master of Business Administration MBA Semester 3rd

A Comparative Study of Equity Linked Savings Schemes

Floated by Sundaram BNP Paribas Asset Management

Company Ltd - a Domestic Mutual Fund Player

Date of Submission 04/04/2015



A Comparative Study of Equity Linked Savings Schemes Floated by

Sundaram BNP Paribas Asset Management Company Ltd - a Domestic
Mutual Fund Player

ACADEMIC GUIDE: Ankur Kumar Gaur



A project report provides the opportunity to study the organization and try to
correlate the theoretical and practical aspects of working in a real business
Though investment in Mutual Fund gives a better return as its managed by
experts, its not easy to forecast the future returns as mutual fund investment
are subject to market risk. Its not easier for common investors also to predict
the returns if they are not aware of risk return analysis.
An Investor in mutual fund has no control over the overall costs of investing.
He pays an investment management fee (which is a percentage of his
investments) as long as he remains invested in fund, whether the fund value
is rising or declining. He also has to pay fund distribution costs, which he
would not incur in direct investing.
However this only means that there is a cost to obtain the benefits of mutual
fund services. This cost is often less than the cost of direct investing.
1. No Control: Investor does not have control on investment; all the
decisions are taken by the fund manager. Investor can just join or leave the
2. No Tailor-Made Portfolios:
Investing through mutual funds means delegation of the decision of portfolio
composition to the fund managers. The very high net worth individuals or
large corporate investors may find this to be a constraint in achieving their

However, most mutual funds help investors overcome this constraint by

offering large no. of schemes within the same fund.
3. Managing A Portfolio Of Funds:
Availability of large no. of funds can actually mean too much choice for the
investors. He may again need advice on how to select a fund to achieve his
objectives. AMFI has taken initiative in this regard by starting a training and
certification program for prospective Mutual Fund Advisors. SEBI has made
this certification compulsory for every mutual fund advisor interested in
selling mutual fund.
a. 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.
b. Cost of Churn:
The portfolio of fund does not remain constant. The extent to which

portfolio changes is a function of the style of the individual fund

manager i.e. whether he is a buy and hold type of manager or one who
aggressively churns the fund. It is also dependent on the volatility of the
fund size i.e. whether the fund constantly receives fresh subscriptions and
redemptions. Such portfolio changes have associated costs of brokerage,
custody fees etc. that lowers the portfolio return commensurately.


To understand the Functions of an Asset Management Company

To understand the performances of various schemes using various
tools to measure the performances.
To measure and compare the performance of selected mutual fund
schemes of different mutual fund companies and other Asset
Management Companies.
To analyze the trends in returns of selected mutual funds.
To understand the basic concepts of Mutual fund and its benefits as an
investment avenue.
To compare and evaluate the performance of different schemes of
mutual fund companies on the basis of risk, return and volatility


The study was carried out for a period of 60 days, in which the main focus
was to follow the performance of the different-different mutual fund
companies and assent management companies. Since different companies
come out with similar themes in the same season, it becomes crucial for the
company to constantly perform well so as to survive the competition and
provide maximum capital appreciation or return as the case may be. Other
than the market the performance of the fund depends on the kind of stock
chosen by the fund managers of the company.
The analysis is done on the performance of funds with the same theme or
sector and reason out why a fund performs better than the others in the lot.

There are two types of research to be included in the study:
1) Primary Research; and
2) Secondary Research.
Primary Data:
The primary data was gathered through personal interaction with
various functional heads and other technical personnel.
Secondary Data:
Secondary data was collected various reports / annual reports, documents
charts, management information systems and collected various magazines,
books, newspapers and internet.
Research Methodology:
Data analysis and tools used for data:
It describes the relationship between the stocks return and the index returns.
It indicates that the stock return is independent of the market return. If the
portfolio is well diversified, the alpha value would turn out to be zero. The
intercept of characteristic regression line is alpha.

Alpha shows whether the particular fund has produced returns justifying the
risks it is taking by comparing its actual return to the one 'predicted' by the
Correlation Co-efficient:
It measures the nature and the extent of relationship between the stock
market index returns and a funds return in a particular period.
Co-efficient of Determination:
The square of correlation of co-efficient is the co-efficient of determination.
It gives the percentage variation in the stocks return explained by the
variation in the market return.
Treynors Ratio:
The Treynor Ratio, named after Jack L. Treynor, one of the fathers of
modern portfolio theory, helps analyze returns in relation to the market risk
of the fund. The Ratio, also known as the reward-to-volatility ratio, provides
a measure of performance adjusted for market risk. Higher the Treynor
Ratio, better the performance under analysis.
Sharpes Ratio:
Sharpes ratio is similar to treynors ratio the difference being, instead of
beta here we take standard deviation.
Standard Deviation:
It is the degree that a single value in a group of values varies from the mean
(average) of the distribution.

Jensen Ratio (JR):

A risk-adjusted performance measure that represents the average return on a
portfolio over and above that predicted by the capital asset pricing model
(CAPM), given the portfolio's beta and the average market return.