FM - Mutual Funds Comparison - Report

4/14/2019 FM - Mutual funds comparison - Google Docs
FINANCIAL MANAGEMENT
Semester: 18192
A Comparative Study on AXIS AND LIC Mutual Funds Of

India
Under the guidance of

Ms. Parul Mahajan
Assistant Professor
Centre of Management and Humanities (CMH)
Punjab Engineering College (Deemed to be University)
Chandigarh
TEAM MEMBERS
ARVIND KATHPAL 15103003
PRITEESH GOYAL 15103005
NIKITA GOYAL 15103018
GAURAV GUPTA 15103044
DHEERAJ SINGLA 15103052
NAMRATA SHARMA 15103053
Department of Computer Science and Engineering

Punjab Engineering College (Deemed to be University),
Chandigarh
https://docs.google.com/document/d/1bVEN6eaIcWfD0ro5Eir1O4JLX0PEuCVK3ShkIi-2w6M/edit# 1/61
DECLARATION
We hereby declare that the project work entitled “A Comparative Study on AXIS AND LIC
Mutual Funds Of India” is an authentic record of our own work carried out as per requirement
of the subject Financial Management project for the award of degree B.Tech. Computer Science
and Engineering, Punjab Engineering College (Deemed to be University) Chandigarh, under the
guidance of Prof. Parul Mahajan, during February to April, 2019.
ARVIND KATHPAL 15103003 GAURAV GUPTA 15103044
PRITEESH GOYAL 15103005 DHEERAJ SINGLA 15103052
NIKITA GOYAL 15103018 NAMRATA SHARMA 15103053
Certified that the above statement made by the student is the correct to the best of my
knowledge and belief.
Faculty Supervisor
Ms. Parul Mahajan
Assistant Professor
Centre of Management and Humanities (CMH)
Punjab Engineering College (Deemed to be University)
Chandigarh
Date: 9 th April 2019
ACKNOWLEDGEMENT
We would like to use this opportunity to express our gratitude to everyone who supported us
throughout this project. First of all, we would like to thank our college, Punjab Engineering
College (Deemed to be University), for giving us such a wonderful opportunity to the students
to work on such diverse topics in the form of projects. The project “A Comparative Study on
AXIS AND LIC Mutual Funds Of India” lead to complete understanding of concept rather than
just implementation of the project. Because of different areas of implementation of these
projects, we have got a great exposure as well.
We would also like to thank and express our deepest appreciation to financial management
professor and project mentor, Ms. Parul Mahajan, for her valuable suggestions, aspiring
guidance and direction with regard to the project. We are sincerely grateful to her for sharing
her truthful and illuminating views on a number of issues related to the project and its
documentation.
Finally, words will not be enough to express our deepest gratitude to our other faculty members
without whose enthusiasm and support, we would not have been able to pursue our goals.
EXECUTIVE SUMMARY
Mutual Funds offer a platform to the common investor with limited savings to participate in the
capital market. It is a perfect example of size diversification service provided by the various
financial institutions. A Mutual Fund is an investment option that forms a bridge connecting
individual investors or retail investors and the corporate titans. The Indian Mutual Fund industry
has been growing rapidly with the televisions of each household flooded with ‘Mutual Funds
Sahi Hai’ adverts.
Mutual Fund investment is less risky and a safer as compared to directly investing in stocks for
risk averse investors. Various Mutual Fund investment plans yield various types of returns
giving the investors a wide array of opportunities for investment, be it equity, debt or balanced
securities. However, it has been witnessed that most of the investors are still not aware of the
benefits of investment in Mutual Funds.
In this project, a comparison between Mutual Funds of two different companies, with a focus on
investors’ investment decision making towards Mutual Funds has been performed.
The report first describes the concept behind Mutual Funds, how it came into being and
financial interrelations using the economic indicators. The reports then identifies and analyzes
the advantages and disadvantages with investment in Mutual Funds.
The report also tries to analyze why people invest in Mutual Funds and which scheme is most
preferred amongst the investors. The report is an attempt to find out the dependence and
interlinking of socio-economic indicators and Mutual Fund investment.
In this report, using the secondary data collected from various governmental and non-
governmental sites, an effort is made to analyze the different opportunities and possibilities of
investment with respect to various factors such as risk, rate of annual income, tax benefits etc.
A comparative study between two major Mutual Fund schemes, AXIS mutual funds and LIC
mutual funds, comparing their Equity, Debt, Hybrid and Tax-Saving Schemes has been shown
using various statistical and ratio analysis tools such as Net Asset Value (NAV), Sharpe Ratio,
Portfolio Turnover, Yield to Maturity, Asset under Management. The result from these
indicators vary according to which segment of mutual funds the funds belong to and which fund
will be best for the investor for the given type. Under each category, the user has been suggested
which mutual fund will be better for him based on his investment objective, risk aversion,
expected returns and fund performance. We hence gives an idea to the investor where and how
he should invest.
CONTENTS
Declaration....................................................................................................................................2
Acknowledgement........................................................................................................................3
Executive Summary.....................................................................................................................4
List of Figures...............................................................................................................................8
List of Tables.................................................................................................................................9
Chapter 01: Introduction
1.1 Concept of Mutual Funds........................................................................................10
1.2 History of Mutual Funds.........................................................................................12
1.3 Types of Mutual Funds in India..............................................................................13
1.4 Advantages................................................................................................................17
1.5 Disadvantages...........................................................................................................19
Chapter 02: Literature Review.................................................................................................21
Chapter 03: Need of the study..................................................................................................23
Chapter 04: Objectives of the study.........................................................................................24
Chapter 05: Research Methodology.........................................................................................25
Chapter 06: Discussions And Analysis.....................................................................................27
6.1 Axis Asset Management Ltd. ……………....…………………………………...27
6.2 LIC Mutual Fund Asset Management Ltd……………………………………..29
6.3 Mathematical Analysis Tool …………………………………………………….31
6.4 LIC Large Cap vs Axis Bluechip…………………………………………..33
6.5 LIC MF Government Securities fund vs Axis Guilt Fund……………….37
6.6 LIC Banking & PSU Fund vs Axis Banking PSU Fund…………………..42
6.7 LIC Children’s Gift Funds vs Axis Children’s Gift……………………….46
6.8 LIC Nifty ETF vs Axis NIFTY ETF………………………………………..51
Chapter 07: Findings……………………………………………………………………...56
Chapter 08: Suggestions…………………………………………………………………..58
Chapter 09: Conclusions………………………………………………………………….60
Chapter 10:Bibliography………………………………………………………………….61
LIST OF FIGURES
DESCRIPTION PAGE NO.
Figure 1 The concept of mutual funds 11
Figure 2 History of mutual funds 12
Figure 3 Types of mutual funds 13
Figure 4 Quarterly returns of Axis Bluechip funds vs LIC large cap funds 35
Figure 5 NAV of Axis Blue chip fund and LIC Large cap fund 36
Figure 6 Quarterly returns for Axis GILT fund and LIC MF G-Sec funds 39
Figure 7 Net Asset Value of LIC MF G-Sec funds and Axis GILT funds 40
Figure 8 Quarterly returns of Axis and LIC banking & PSU funds 43
Figure 9 NAV for Axis and LIC Banking & PSU funds 44
Figure 10 Quarterly returns of Axis and LIC children’s gift funds 47
Figure 11 NAV of Axis and LIC children’s gift fund 48
Figure 12 Quarterly returns of Axis and LIC Nifty ETF 53
Figure 13 NAV of Axis and LIC Nifty ETF fund 54
LIST OF TABLES
DESCRIPTION PAGE NO.
Table 1 Sharpe Ratios Large Cap Funds 33
Table 2 Portfolio of LIC Large Cap Funds and Axis Blue chip funds 34
Table 3 Sharpe Ratios Large Cap Funds 37
Table 4 Portfolio of Axis Gilt fund and LIC MF G-Sec funds 38
Table 5 Banking & PSU funds sharpe ratio 42
Table 6 Banking & PSU funds portfolio 43
Table 7 Children’s funds sharpe ratios 47
Table 8 Children’s gift funds portfolio 48
Table 9 Nifty ETF sharpe ratios 52
Table 10 NIFTY ETF Fund Details 53
Table 11 Result of each category 57
1 INTRODUCTION
1.1 CONCEPT OF MUTUAL FUNDS
The Indian financial system is based on four basic components - Financial Markets, Financial
Institutions, Financial Services, and Financial Instruments. These components play an important
role for the transfer and allocation of the funds. All the four components are connected to each
other. To boost the economic system, intermediation of these four components is vital. Mutual
Fund companies as a financial institution offer financial services as well as financial instruments
to the investors and helps in boosting the financial markets.
[6] A mutual fund is a type of financial vehicle made up of a pool of money collected from
many investors to invest in securities such as stocks, bonds, money market instruments, and
other assets. Mutual funds are operated by professional money managers, who allocate the
fund's assets and attempt to produce capital gains or income for the fund's investors. A mutual
fund's portfolio is structured and maintained to match the investment objectives stated in its
prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of
equities, bonds and other securities. Each shareholder, therefore, participates proportionally in
the gains or losses of the fund. Mutual funds invest in a vast number of securities, and
performance is usually tracked as the change in the total market cap of the fund—derived by the
aggregating performance of the underlying investments.
Mutual Funds are one of the most popular and convenient vehicles for investment. Depending
on your risk appetite and investment objective it offers the investors a wide range of options to
choose ranging from stability, growth and high returns. With over thousands of mutual fund
schemes to choose from, mutual funds offer investment option for every type of investor from
risk averse to someone who wants to take high risk for high returns. The investment manager
invests the money collected into assets that are defined by the stated objective of the scheme.
For example, an Equity fund would invest in Equity and Equity related instruments and a Debt
fund would invest in Bonds, Debentures, Gilts etc.
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Figure 1 The concept of Mutual Funds
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1.2 HISTORY OF MUTUAL FUNDS

The formation of Unit Trust of India in 1963 was a significant milestone in the evolution of
India’s mutual fund industry. Series of schemes were floated by UTI between 1964 and 1968
with varied objectives. In September 1986, UTI floated India’s first equity mutual fund scheme,
namely, “Mastershare-86”.
However, the MF sector gained significant traction after the entry of private players in 1993.
The industry has seen rapid growth since 1990, both in terms of size and number of players.
During 1986 to 1994, eight public sector undertakings and banks sponsored asset management
companies. These were SBI mutual fund, Can Bank mutual fund, Indbank mutual fund, BoI2
mutual fund, BoB3 mutual fund, PNB mutual fund, GIC and LIC mutual funds. Since 1992, the
government allowed setting up of asset management companies by private enterprises. That led
to the establishment of asset management companies during 1993-94 by reputed private sector
enterprises, viz., Indian Corporate, Foreign and Joint venture companies. Since then mutual
funds have become popular investment avenues in India.
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1.3 TYPES OF MUTUAL FUNDS IN INDIA
Figure 3 Types of mutual funds
It is important to understand the mutual fund types and their features. Mutual fund types can be
classified based on the following characteristics.
Mutual Fund Types Based On Structure
Mutual funds can be categorized based on different attributes (like risk profile, asset class etc.).
Structural classification – open-ended funds, close-ended funds, and interval funds – is broad in
nature and the difference depends on how flexible is the purchase and sales of individual mutual
fund units.
a. Open-Ended Funds
These funds don’t have any constraints in a time period or number of units – an investor can
trade funds at their convenience and exit when they like at the current NAV (Net Asset Value).
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This is why its unit capital changes constantly with new entries and exits. An open-ended fund
may also decide to stop taking in new investors if they do not want to (or cannot manage large
funds).
b. Closed-Ended Funds
Here, the unit capital to invest is fixed beforehand, and hence they cannot sell a more than a
pre-agreed number of units. Some funds also come with an NFO period, wherein there is a
deadline to buy units. It has a specific maturity tenure and fund managers are open to any fund
size, however large. SEBI mandates investors to be given either repurchase option or listing on
stock exchanges to exit the scheme.
c. Interval Funds
This has traits of both open-ended and closed-ended funds. Interval funds can be purchased or
exited only at specific intervals (decided by the fund house) and are closed the rest of the time.
No transactions will be permitted for at least 2 years. This is suitable for those who want to save
a lump sum for an immediate goal (3-12 months).
Mutual Fund Types Based on Asset Class
a. Equity Funds
Primarily investing in stocks, they also go by the name stock funds. They invest the money
amassed from investors from diverse backgrounds into shares of different companies. The
returns or losses are determined by how these shares perform (price-hikes or price-drops) in the
stock market. As equity funds come with a quick growth, the risk of losing money is
comparatively higher.
b. Debt Funds
Debt funds invest in fixed-income securities like bonds, securities and treasury bills – Fixed
Maturity Plans (FMPs), Gilt Fund, Liquid Funds, Short Term Plans, Long Term Bonds and
Monthly Income Plans among others – with fixed interest rate and maturity date. Go for it, only
if you are a passive investor looking for a small but regular income (interest and capital
appreciation) with minimal risks.
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c. Hybrid Funds
As the name implies, Hybrid Funds (also go by the name Balanced Funds) is an optimum mix
of bonds and stocks, thereby bridging the gap between equity funds and debt funds. The ratio
can be variable or fixed. In short, it takes the best of two mutual funds by distributing, say, 60%
of assets in stocks and the rest in bonds or vice versa. This is suitable for investors willing to
take more risks for ‘debt plus returns’ benefit rather than sticking to lower but steady income
schemes.
Mutual Fund Types Based on Investment Goals
a. Growth Funds
Growth funds usually put a huge portion in shares and growth sectors, suitable for investors
(mostly Millennials) who have a surplus of idle money to be distributed in riskier plans (albeit
with possibly high returns) or are positive about the scheme.
b. Income Funds
This belongs to the family of debt mutual funds that distribute their money in a mix of bonds,
certificate of deposits and securities among others. Helmed by skilled fund managers who keep
the portfolio in tandem with the rate fluctuations without compromising on the portfolio’s
creditworthiness, Income Funds have historically earned investors better returns than deposits
and are best suited for risk-averse individuals from a 2-3 years perspective.
c. Money Market Funds
Just as some investors trade stocks in the stock market, some trade money in the money market,
also known as capital market or cash market. It is usually run by the government, banks or
corporations by issuing money market securities like bonds, T-bills, dated securities and
certificate of deposits among others. The fund manager invests your money and disburses
regular dividends to you in return. If you opt for a short-term plan (13 months max), the risk is
relatively less.
d. Balanced Funds
Balanced funds invest in both stocks and bonds to reduce the risk of exposure to one asset class
or another. Another name for this type of mutual fund is "asset allocation fund." An investor
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may expect to find the allocation of these funds among asset classes relatively unchanging,
though it will differ among funds. This fund's goal is asset appreciation with lower risk.
However, these funds carry the same risk and can be as subject to fluctuation as other
classifications of funds.
Other funds
a. Tax-Saving Funds
ELSS or Equity Linked Saving Scheme is gaining popularity as it serves investors the double
benefit of building wealth as well as save on taxes – all in the lowest lock-in period of only 3
years. Investing predominantly in equity (and related products), it has been known to earn you
non-taxed returns from 14-16%. This is best-suited for long-term and salaried investors.
b.Index Funds
Another group, which has become extremely popular in the last few years, falls under the
moniker "index funds." Their investment strategy is based on the belief that it is very hard, and
often expensive, to try to beat the market consistently. So, the index fund manager buys stocks
that correspond with a major market index such as the S&P 500 or the Dow Jones Industrial
Average (DJIA). This strategy requires less research from analysts and advisors, so there are
fewer expenses to eat up returns before they are passed on to shareholders. These funds are
often designed with cost-sensitive investors in mind.
c. Sector Funds
Investing solely in one specific sector, theme-based mutual funds. As these funds invest only in
specific sectors with only a few stocks, the risk factor is on the higher side. One must be
constantly aware of the various sector-related trends, and in case of any decline, just exit
immediately. However, sector funds also deliver great returns. Some areas of banking, IT and
pharma have witnessed huge and consistent growth in recent past and are predicted to be
promising in future as well.
There is a fund for nearly every type of investor or investment approach. Other common types
of mutual funds include alternative funds, smart-beta funds, target-date funds, and even
funds-of-funds, or mutual funds that buy shares of other mutual funds.
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1.4 ADVANTAGES OF INVESTING IN MUTUAL FUNDS

There are a variety of reasons that mutual funds have been the retail investor's vehicle of choice
for decades. The overwhelming majority of money in employer-sponsored retirement plans goes
into mutual funds.
● Diversification
Diversification, or the mixing of investments and assets within a portfolio to reduce risk,
is one of the advantages of investing in mutual funds. Buying individual company stocks
and offsetting them with industrial sector stocks, for example, offers some
diversification. However, a truly diversified portfolio has securities with different
capitalizations and industries and bonds with varying maturities and issuers. Buying a
mutual fund can achieve diversification cheaper and faster than by buying individual
securities.
● Easy Access
Trading on the major stock exchanges, mutual funds can be bought and sold with
relative ease, making them highly liquid investments. Also, when it comes to certain
types of assets, like foreign equities or exotic commodities, mutual funds are often the
most feasible way—in fact, sometimes the only way—for individual investors to
participate.
● Economies of Scale
Mutual funds also provide economies of scale. Buying one spares the investor of the
numerous commission charges needed to create a diversified portfolio. Buying only one
security at a time leads to large transaction fees, which will eat up a good chunk of the
investment. Also, the $100 to $200 an individual investor might be able to afford is
usually not enough to buy a round lot of the stock, but it will purchase many mutual
fund shares. The smaller denominations of mutual funds allow investors to take
advantage of dollar cost averaging.
● Flexibility
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Through features such as Systematic Investment Plans (SIP), Systematic Withdrawal

Plans (SWP) and dividend reinvestment plans, investors can systematically invest or
withdraw funds according to their needs and convenience.
● Professional Management
Most private, non-institutional money managers deal only with high-net-worth
individuals—people with at least six figures to invest. However, mutual funds, as noted
above, require much lower investment minimums. So, these funds provide a low-cost
way for individual investors to experience and hopefully benefit from professional
money management.
● Freedom of Choice
Investors have the freedom to research and select from managers with a variety of styles
and management goals. For instance, a fund manager may focus on value investing,
growth investing, developed markets, emerging markets, income or macroeconomic
several different styles.
● Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps the investors avoid many
investing, among many other styles. One manager may also oversee funds that employ
problems such as bad deliveries, delayed payments and unnecessary follow up with
brokers and companies. Mutual Funds saves time and make investing easy and
convenient.
● Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual
Funds are regularly monitored by SEBI.
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1.5 DISADVANTAGES OF INVESTING IN MUTUAL FUNDS

Liquidity, diversification, and professional management, all these factors make mutual funds
attractive options for a younger, novice, and other individual investors who don't want to
actively manage their money. However, no asset is perfect, and mutual funds have drawbacks
too.
● Fluctuating Returns
Like many other investments without a guaranteed return, there is always the possibility
that the value of your mutual fund will depreciate. Equity mutual funds experience price
fluctuations, along with the stocks that make up the fund. The Federal Deposit Insurance
Corporation (FDIC) does not back up mutual fund investments, and there is no
guarantee of performance with any fund. Of course, almost every investment carries
risk. It is especially important for investors in money market funds to know that, unlike
their bank counterparts, these will not be insured by the FDIC.
● Heavy Cash Supplies
Mutual funds pool money from thousands of investors, so every day people are putting
money into the fund as well as withdrawing it. To maintain the capacity to accommodate
withdrawals funds typically have to keep a large portion of their portfolios in cash.
Having ample cash is excellent for liquidity, but money is sitting around as cash and not
working for you and thus is not very advantageous.
● High Costs
Mutual funds provide investors with professional management, but it comes at a
cost—those expense ratios mentioned earlier. These fees reduce the fund's overall
payout, and they're assessed to mutual fund investors regardless of the performance of
the fund. As you can imagine, in years when the fund doesn't make money, these fees
only magnify losses.
● Diworsification
Diworsification—a play on words—is an investment or portfolio strategy. Many mutual
fund investors tend to overcomplicate matters. That is, they acquire too many funds that
are highly related and, as a result, don't get the risk-reducing benefits of diversification.
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These investors may have made their portfolio more exposed; a syndrome called
diworsification. At the other extreme, just because you own mutual funds doesn't mean
you are automatically diversified. For example, a fund that invests only in a particular
industry sector or region is still relatively risky.
● Lack of Transparency
One thing that can lead to diworsification is the fact that a fund's purpose or makeup isn't
always clear. Fund advertisements can guide investors down the wrong path. The
Securities and Exchange Commission (SEC) requires that funds have at least 80% of
assets in the particular type of investment implied in their names. How the remaining
assets are invested is up to the fund manager. However, the different categories that
qualify for the required 80% of the assets may be vague and wide-ranging. A fund can,
therefore, manipulate prospective investors via its title. A fund that focuses narrowly on
Congolese stocks, for example, could be sold with a far-ranging title "International
High-Tech Fund."
● Evaluating Funds
Researching and comparing funds can be difficult. Unlike stocks, mutual funds do not
offer investors the opportunity to juxtapose the price to earnings (P/E) ratio, sales
growth, earnings per share (EPS), or other important data. A mutual fund's net asset
value can offer some basis for comparison, but given the diversity of portfolios,
comparing the proverbial apples to apples can be difficult, even among funds with
similar names or stated objectives. Only index funds tracking the same markets tend to
be genuinely comparable.
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2 LITERATURE REVIEW
Review of the literature plays an important role in any research as several academicians have
tried to study the various aspects of mutual funds. A number of studies on awareness,
performance and comparisons of various funds have been conducted in India and foreign
countries. Review of some of the studies is presented in the following discussion:
In [1], Mr. Ankit Goel, Dr. Rajendra K. Khatik (2017) try to know the Investors' awareness and
preference towards Mutual Funds as an Investment option using primary data. The findings
showed that majority of investors had heard about mutual funds but still an important fraction of
them had not initiated to invest because of lack in full knowledge. The paper suggested that
companies and government should come forward in getting investors more literate and train
their advisors in a way so to build more confidence among investors for taking initiative to
invest in mutual funds.
In [2], Arathy B, Aswathy A Nair, Anju Sai P,Pravitha N R (2015), aim at finding out the
factors affecting investment decision on mutual funds and its preference over retail investors
and the factors that prevent the people to invest in mutual funds. The findings were aimed at
helping mutual fund companies to identify the areas required for improvement and can also
improve their marketing strategies.
In [3] , Dr Vikas Choudhary, and Preeti Sehgal Chawla (2014) made an attempt is made to
analyse the performance of the growth-oriented equity diversified schemes on the basis of return
and risk evaluation. The analysis was achieved by assessing various financial tests like Average
Return, Sharpe Ratio, Treynor Ratio, Standard Deviation, Beta and Coefficient of Determination
(R2). Their analysis depicted that majority of funds selected for study have outperformed under
Sharpe Ratio as well as Treynor Ratio.
In the research paper [4], Alka Solanki (2016) has tried to evaluate the performance of Reliance
open-ended equity schemes with growth option. The period of the study was from 1st April
2007 to 31st March 2016. To evaluate the performance of the selected mutual fund schemes,
monthly returns were compared with Benchmark BSE National 100 and SENSEX returns.
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In [5], Ms. Dhanalakshmi K (2013) has compared and analysed the performances of SBI and
HDFC Mutual Funds which special reference to Equity, Gilt and Balanced Mutual Funds using
Sharpe Ratio, Treynor Ratio and Jensen Ratio over three years. She concluded that the funds
fluctuated in their performance according to the market conditions i.e. the volatility in the
market affected the returns of the schemes in the year 2010 and 2011, but the performance of
the schemes revived better in the year 2012. Overall the study conducted revealed that
investment in HDFC Mutual Fund is better over the specified time period.
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3 NEED OF THE STUDY

Mutual fund is an investment method which provides investment opportunity even to the people
who don’t have much knowledge or experience in the field. Mutual funds started growing as an
investment method in India only in the last one decade and the growth is still quite steady. There
are many types of mutual funds like equity funds, balanced funds, fixed income funds etc
available in the market provided by different companies or banks. There is no clear distinction
as to which mutual fund is more beneficial or which organisation’s offerings are the least risky
ones thus leaving the investor as clueless as ever. All these types work differently for different
set of investor’s needs.
For example, equity funds are primarily aimed at providing long term growth to investors who
are ready to take risk. However, the investor must be aware that how much will be the actual
returns he will be getting by investing in a moderately risky scheme. Comparing two different
mutual funds, which have the same investment objectives and investment in similar securities
on the basis of certain statistical tools can help us understand the viability of both the funds and
better choice for an investor.
So, this study aims at studying few tools and methods that can be used to compare performance
of a mutual fund on the basis of its returns as well as the risk they possess and also understand
how can we interpret the portfolios of various Mutual Funds on the basis of these tools so as to
know which kind suits one’s intention or requirement.
In order to achieve this . we picked up two major mutual fund providing companies and
compared some of their mutual fund types (plans) to each other in order to provide a clear
picture to the investors when it comes to selecting one of the many plans and also providing a
suggestion to which company will be better for them for a given mutual fund type.
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4 OBJECTIVES
1) To compare the different types of mutual fund plans of two major mutual fund
companies to each other based on various financial parameters.
This research is an attempt to study comparative performance of Mutual Funds of Axis Mutual
Funds and LIC Mutual Fund Asset Management Limited. The schemes compared fall under the
categories of equity, debt, index and specialized mutual funds. The comparison is made on the
basis of various performance indices, statistical parameters and ratio analysis.
2) To provide a suggestion to the reader about which company will be better for them for a
given mutual fund scheme.
Axis is a privately managed company, on the other hand LIC mutual funds is an initiative of
State-owned Life Insurance Corporation of India. Comparing the performance of funds, reader
is given suggestions on which company is better at management of funds and drafting its
portfolios.
3) To provide a suggestion to the reader about which type of mutual funds is better for
their requirements and expectations based on the plan’s risk and return parameters.
Based on the statistical data available for both the funds in the respective categories, suggestions
are made to the reader about the tentative performance of the fund, and which one is better in
terms of risk and returns. The reader can then make wise decisions about which plan to choose
based on their investment objectives.
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5 RESEARCH METHODOLOGY
In a competitive market, there are multiple mutual funds present in the Indian market. It is
necessary to know to know the performance of mutual funds before making an informed
decision. This reports aims to compare different types of mutual funds for two leading
companies on basis of various financial parameters and suggest the reader which mutual fund
would be better, catering to his needs and requirements.
Scope of study: The Schemes of mutual funds of the two companies have been categorized and
selected for evaluating their performance and relative risk. The scope of the study is mainly
concentrated on the different categories of the mutual funds such as equity schemes, debt funds,
balanced funds and liquid fund and other thematic and sector specific funds of the two selected
banks that are Axis Bank mutual funds and LIC mutual funds.
These two banks are a part of top leading mutual funds companies in the country and hence
were shortlisted for the study. Another reason being that these two banks belong to different
sectors, i.e Axis bank is part of private sector while LIC is an integral part of public sector
banking. The study on these two banks will also help us in drawing difference between the
performance of private and public sector mutual funds.
a) Type of Data: Secondary data collection from various mutual funds websites primary being
the official websites of the selected banks.
b) Sampling Time: The schemes are being taken from the selected banks for a period of two
years starting from April 2015 till March 2019.
c) Types of Research:
○ Ex post facto research has been used for this study.
○ Descriptive analysis has been chosen as the research method.
○ Comparative and co-relational methods have been followed under ex post facto
research to discover the causes even if the variable of the research are not under
the direct control of the team.
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d) Tools for Analysis: This research is analytical in nature. It aims at drawing conclusions after
analyzing the existing facts and figures and backing them up with proper reasoning and
support. There are two types of tools, that is, Statistical Tools and Ratio Analysis Tools along
with some factors that acts as determinants of the performance of mutual funds like Rate of
annual income, rate of capital appreciation, investment term, risk, Portfolio Turnover, Yield
to Maturity, risk marketability, tax benefit and convenience and many others.
○ Statistical Tools: Standard Deviation, Beta, Return and Risk
○ Ratio Analysis Tools: Sharpe Measure, Information Measure, Treynor Measure
and Jensen Measure
As part of our study, we have focused on limited set of tools and factors. These provide a brief
insight into the performance of the mutual funds.
Factors and Tools used for Comparison: Quarterly returns of the fund, Net Asset Value
(NAV), Sharpe Ratio, Portfolio Turnover, Yield to Maturity, Asset under Management.
During the working on the report, various websites were being considered for getting insight
about the mutual funds. Along with the official sites of the selected banks other websites like
moneycontrol and Value Research were also considered. Such diversification helped us to
validate our conclusions and give strong backing to them.
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6 DISCUSSIONS AND ANALYSIS
AXIS VS LIC MUTUAL FUNDS

Investing in Mutual Funds has an inherent risk assumed upon the ownership. However,
performance of the Mutual Funds can be quantified with the mathematical calculation of the
historical returns. The correlation of the potential risk and the potential returns constantly put
forth the opportunities to invest in Mutual Funds and drive maximum potential returns with
minimum underlying risk.
6.1 AXIS ASSET MANAGEMENT LTD.
Axis Mutual Funds is a subsidiary of Axis Bank. Axis Bank was the first of the new private
banks to have begun operations in 1994, after the Government of India allowed new private
banks to be established. The Bank was promoted jointly by the Administrator of the specified
undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC)
and General Insurance Corporation of India (GIC) and other four PSU insurance companies,
i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The
Oriental Insurance Company Ltd. and United India Insurance Company Ltd.
The Bank today is capitalized to the extent of Rs. 405.17 crores with the public holding
(other than promoters and GDRs) at 53.09%.
Axis Mutual Funds launched its first scheme in 2009. Since then, Axis Mutual fund has
grown strongly. It works on 3 founding principles - Long term wealth creation, Outside in
(Customer) view and Long term relationship.
The company boasts of A well rounded product suite that consists of more than 50 Schemes,
90+ cities and more than 20 lakh active investors.
The schemes provided by it are :
1) Axis Focused 25 Fund
2) Axis Banking & PSU Debt Fund
3) Axis Liquid Fund
4) Axis Bluechip Fund
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5) Axis Long Term Equity Fund

6) Axis Dynamic Bond Fund
7) Axis Equity Saver Fund
8) Axis Strategic Bond Fund
9) Axis Short Term Fund
10) Axis Regular Saver Fund
11) Axis Midcap Fund
12) Axis Arbitrage Fund
13) Axis Treasury Advantage Fund
14) Axis Gold Fund
15) Axis Gilt Fund
16) Axis Credit Risk Fund
17) Axis Triple Advantage Fund
18) Axis CPO Fund
19) Axis Small Cap Fund
20) Axis Ultra Short Term Fund
21) Axis Children's Gift Fund
22) Axis NIFTY ETF
23) Axis Gold ETF
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6.2 LIC MUTUAL FUND ASSET MANAGEMENT LIMITED
Life Insurance Corporation of India (LIC) is an Indian state-owned insurance group and
investment company headquartered in Mumbai. It is the largest insurance company in India
with an estimated asset value of ₹2,529,390 crore (US$350 billion)(2016).[2] As of 2013 it
had total life fund of ₹1,433,103.14 crore and total number of policies sold coming in at
₹367.82 lakh that year (2012-13).
The Life Insurance Corporation of India was founded in 1956 when the Parliament of India
passed the Life Insurance of India Act that nationalised the private insurance industry in
India. Over 245 insurance companies and provident societies were merged to create the
state owned Life Insurance Corporation.
LIC Mutual Fund was established on 20th April 1989 by LIC of India. Being an associate
company of India's premier and most trusted brand, LIC Mutual Fund is one of the well
known players in the asset management sphere. With a systematic investment discipline
coupled with a high standard of financial ethics and corporate governance, LIC Mutual
Fund is emerging as a preferred Investment Manager amongst the investor fraternity.
They endeavour to create value for its investors by adopting innovative and robust
investment strategies, catering to all segments of investors. LIC MF is a joint venture with:
● LIC Housing Finance Ltd. - One of the largest Housing Finance companies in
India, with over 15.56 lac prudent house owners who have enjoyed its
financial assistance.
● GIC Housing Finance Ltd. - With a presence of 59 branches across the
country, tie-ups with builders and corporates, GIC HFL provides finance to
individual borrowers for various housing finance needs.
● Corporation Bank - With a nationwide network of 2364 fully automated CBS
branches, 2998 ATMs and 4685 Branchless Banking Units across 4685
villages.
The schemes provided are :

1) LIC MF Bond Fund
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2) LIC MF Liquid
3) LIC MF Savings Fund
4) LIC MF Large & Midcap Fund
5) LIC MF G-Sec
6) LIC MF Banking & PSU Debt Fund
7) LIC MF Tax Plan
8) LIC MF Equity Hybrid Fund
9) LIC MF Multi Cap Fund
10) LIC MF Large Cap Fund
11) LIC MF Index Fund-Nifty Plan
12) LIC MF Index Fund-Sensex Plan
13) LIC MF Debt Hybrid Fund
14) LIC MF Infra Fund
15) LIC MF Banking & Financial Services Fund
16) LIC MF Arbitrage Fund
17) LIC MF Children’s Gift Fund
18) LIC MF ETF - Nifty 100
19) LIC MF ETF -Nifty 50
20) LIC MF ETF - SENSEX
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6.3 MATHEMATICAL ANALYSIS TOOLS

While comparing mutual funds, a number of mathematical parameters can be considered to
understand the performance, risks associated and objectives achieved by the funds.
Net Asset Value
The NAV or the net asset value is the total asset value per unit of the Mutual Fund after
deducting all related and permissible expenses. The NAV is calculated at the end of every
business day. It is the value at which the investor enters or exits the Mutual Fund. It is
calculated as
NAV = net assets of the scheme / no. of units outstanding or NAV = market value of all
investments in a fund minus liabilities and expenses/outstanding number of units.
The NAV of a fund is calculated by the mutual fund house itself or by an accounting firm
hired by the mutual fund.
Sharpe Ratio
Developed by Nobel laureate economist William Sharpe, the Sharpe ratio measures
risk-adjusted performance. It is calculated by subtracting the risk-free rate of return (U.S.
Treasury Bond) from the rate of return for an investment and dividing the result by the
investment's standard deviation of its return. The Sharpe ratio tells investors whether an
investment's returns are due to wise investment decisions or the result of excess risk. This
measurement is useful because while one portfolio or security may generate higher returns
than its peers, it is only a good investment if those higher returns do not come with too much
additional risk. The greater an investment's Sharpe ratio, the better its risk-adjusted
performance.
Portfolio Turnover
Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by
the managers. Portfolio turnover is calculated by taking either the total amount of new
securities purchased or the amount of securities sold (whichever is less) over a particular
period, divided by the total net asset value (NAV) of the fund. The measurement is usually
reported for a 12-month time period.
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Asset Under Management

Assets under management are the overall market value of assets/capital that a mutual fund
holds. The fund manager manages these assets and takes investment decisions on behalf of
investors. AUM is an indicator of the size and success of a fund house.
Yield To Maturity
Mutual funds usually publish the yield to maturity or YTM for all debt funds in their
factsheets. The YTM is based on the current marked-to-market price of the bond, not the
yield at which the security was acquired. Basically, YTM captures the returns that the bond
will generate if held from current date until maturity, after factoring in all the interest
received in this period. The other number that is disclosed by fund houses is the average
maturity of the portfolio. This tells you the number of years to maturity for debt securities in
a fund portfolio. It helps decide the NAV sensitivity to interest rate changes. Longer the
average maturity, higher the NAV swings due to rate changes.
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6.4 LIC MF Large Cap fund vs Axis blue chip fund

What are large cap equity funds?
Also known as blue chip funds, Large-cap equity funds is a type of mutual fund that invests a
larger proportion of their corpus in companies with large market capitalization. Large-cap
companies are well-established players with a good track record and vintage and they typically
have strong corporate-governance practices. Having generated wealth for their investors slowly
and steadily over a long term, these corporate houses are always among the most highly
followed in the market.
Investment Objective - To achieve long term capital appreciation by investing in a diversified
portfolio predominantly consisting of equity and equity related securities of Large Cap
companies including derivatives.
Product Label (An open ended equity scheme predominantly investing in large cap stocks) -
This product is suitable for investors who are seeking:
1) Capital appreciation over long term.
2) Investment in a diversified portfolio predominantly consisting of equity and equity related
instruments of large cap companies.
Risk – Moderately High
Comparison between LIC MF Large cap fund and Axis Blue Chip fund:
● Based on Sharpe ratio:
Axis bluechip fund 0.75
LIC MF Large cap fund 0.43
Category Avg 0.47
Table 1 Sharpe Ratios Large Cap Funds
Interpretation - As discussed earlier, sharpe ratio indicates how much risk was taken to generate
the returns. Axis Bluechip has a higher sharpe ratio than both the category average of 0.47 and
its competitor LIC MF large cap, making it a better choice in risk adjusted returns provided by
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the fund. On the other hand, LIC’s fund is performing worse than the category average, making
it a more riskier investment option in comparison to the returns it is providing. Thus we can
conclude that for LIC’s fund gives less marginal return on same risk as Axis’s fund.
● Based on portfolio:
Scheme Axis Bluechip Fund LIC Large Cap Fund
Fund Class Equity Large Cap Equity Large Cap
Fund Type Open Ended Open Ended
Min investment amount ₹5000 ₹5000
Launch Date 05-Jan-2010 15-Sep-1999
Total AUM for this 4220.99 258.32

Scheme (Cr)
Portfolio Turnover Ratio 137.00% 47.00%

(Category average
turnover ratio is
169.33%)
Equity Holding 82.08% 89.54%
Debt Holding 5.92% 0.00%
Others 12% 10.46%
CRISIL Rank Rank 1 Rank 3
Table 2 Portfolio of LIC Large Cap Funds and Axis Blue chip funds
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Interpretations: Both the funds fall under the category of equity funds and invest primarily in
large cap equity securities. Axis Bluechip fund has lesser equity holdings as well as some debt
holdings making it more diversified in asset allocation. Despite being launched 11 years earlier,
LIC Large cap funds has lesser asset under management, suggesting that Axis Bluechip is
comparatively much more popular among existing investors. Axis Bluechip has a higher
portfolio turnover percentage, suggesting that the fund manager of this fund has actively
changed all the holdings under the portfolio. On the other hand, LIC large cap follows a buy and
hold strategy and that the fund manager has high conviction in his picks.
● Based on Returns:
Figure 4 Quarterly returns of Axis Bluechip funds vs LIC large cap funds
Interpretation: The above chart shows the quarterly returns of the two starting from 2015 Q1 to
2019 Q1. From this chart, we can see that the performance of LIC large cap fund was better than
Axis’s fund in 2015 and 2016 but from 2017 Q1 onwards, the axis blue chip fund has picked up
and has given better returns than the other one till now. This supports our conclusion of previous
comparison that the fund manager of Axis bluechip fund has been actively updating the
holdings and making them better.
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● Based on Net Asset Value(NAV):
Figure 5 NAV of Axis Blue chip fund and LIC Large cap fund
Interpretation: This chart shows us that the NAV of LIC Large cap fund has always been higher
than the Axis bluechip fund. Although as per the experts, NAV makes no particular difference
towards the returns that the investors get, but since we out through the portfolio that AUM of
Axis blue chip fund is higher and NAV equals (AUM-liabilities)/No. of outstanding units, hence
there are less available units for the LIC large cap fund in the market. Thus if extended, this
might mean that LIC large cap fund isn’t as popular in the market as Axis bluechip fund.
Conclusion: From the above four comparisons, we can conclude that Axis bluechip fund has
been doing better in terms of risk adjusted returns, fund manager’s decision making, fund
diversity as well as the quarterly returns for the last 2 years. So through this discussion we can
suggest the investor to go for Axis bluechip fund over LIC MF Large cap fund if they wish to
invest in the large firm’s equity funds.
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6.5 LIC MF Government Securities fund vs Axis Gilt fund
What are government securities/Gilt funds?

When the Government of India requires funds (or loans), it approaches the Reserve Bank of
India (RBI). Apart from being the apex bank, RBI also acts as banker to the government. So, the
RBI lends money to the government after taking it from other entities like insurance companies
and banks.
In return for the loan, the RBI issues government securities having a specific tenure, which the
fund manager of a gilt fund subscribes. Upon maturity, this gilt fund returns the government
securities and receives money in return. For an investor, gilt funds can be an ideal blend of low
risk and reasonable returns. However, the returns are highly dependent on the movement of
interest rates. So G-Sec mutual funds invest primarily in government securities.
Investment Objective – The Scheme will aim to generate credit risk-free returns through
investments in sovereign securities issued by the Central Government and/or State Government.
Product Label (An open ended debt scheme investing in government securities across
maturity) – This product is suitable for investors who are seeking:
1) Credit risk free returns over medium to long term.

2) Investment mainly in Government securities across maturities
Risk – Moderate
Comparison between LIC MF Government Securities fund vs Axis Gilt fund:
Axis Gilt fund 0.02
LIC MF G-Sec fund 0.2
Category Avg 0.21
Table 3 Sharpe Ratios Gilt Funds
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Interpretation: As discussed earlier, sharpe ratio indicates how much risk was taken to generate
the returns. LIC MF G-Sec fund has a higher sharpe ratio than its competitor Axis Gilt fund,
making it a better choice in risk adjusted returns provided by the fund. However, it is still
performing poorly when compared with its category average. On the other hand, Axis Gilt has a
very poor ratio of 0.02, showing us its poor returns on the risk adjustment and making it a less
attractive option.
Scheme Axis Gilt Fund LIC MF G-Sec Fund
Fund Class Gilt Fund Gilt Fund
Launch Date Jan 23, 2012 Dec 11, 1999
Total AUM for this Scheme 35.32 37.06

(Cr)
Yield To maturity (Category 6.78% 6.77%

Avg – 7.13%)
Equity Holding 0% 0%
Others 10.27% 7.58%
Table 4 Portfolio of Axis Gilt fund and LIC MF G-Sec funds
Interpretations:Both the funds fall under the category of gilt funds and invest primarily in
Government debt securities. Axis Gilt fund has less debt holdings in comparison to its
competitor. The yield-to-maturity ratios of both the funds are similar, but they are less than their
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category average, suggesting both these funds are comparatively less attractive in terms of yield
as compared to other firms’ funds in government securities funds. Investment in Axis funds has
a lesser minimum requirement, making it easier to invest in this fund for small and common
investors(otherwise the minimum amount requirement is the biggest problem for investors in
debt funds).
Figure 6 Quarterly returns for Axis GILT fund and LIC MF G-Sec funds
2019 Q1. From this chart, we can see that the performance of the two has been doing quite
comparable through these years, by performing better than the other interchangeably. But as per
our observation, the LIC MF G-Sec fund is performing marginally better for the last four
quarters making it a more attractive option for the investor in current times. But just like the
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yields-to-maturity percentage, both the funds are not giving very good returns if compared to
the market level of other funds.
● Based on Net Asset Value (NAV):
Figure 7 Net Asset Value of LIC MF G-Sec funds and Axis GILT funds
Interpretation: Given that the underlying asset value of both these funds i.e. Axis GILT funds
and LIC G-Sec funds is comparable (35.2 crores and 37.06 crores respectively) whereas there’s
a very big gap in the NAV of two, we can conclude that the number of units in market of Axis
GILT funds is much more than the other which could be further extended to the conclusion that
popularity of Axis GILT fund is higher than the other. This difference in NAV may also be due
to the minimum investment requirement for the Axis GILT fund.
Conclusion: There are a lot of similar characteristics of LIC G-sec funds and Axis GILT fund
like less-than avg. yield to maturity percentage and comparable AUM’s. However, if we look at
the sharpe ratio, then the LIC g-sec fund is much more preferable as compared to its competitor.
Thus LIC G-Sec fund is going to provide better returns in accordance with the risk taken as
compared to the Axis GILT fund(which has very low sharpe ratio) at the same risk. But if the
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investor can’t afford the minimum requirement of LIC’s fund, then they may either put their
funds for lower returns with Axis fund or they may consider some other firm.
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6.6 Axis Banking & PSU Funds LIC MF Banking & PSU Fund
What are Banks and PSU Mutual Funds?

These funds provide investors with opportunities for long-term growth in capital along with the
liquidity of an open-ended scheme through an active management of investments in a
diversified basket of equity stocks of domestic Public Sector Undertakings (and their
subsidiaries) and in debt and money market instruments issued by PSUs and others.
Investment Objective - To generate stable returns by investing predominantly in debt & money
market instruments issued by Banks, Public Sector Units (PSUs) & Public Financial Institutions
(PFIs). The Scheme shall endeavor to generate optimum returns with low credit risk.
Product Label (An open ended debt scheme predominantly investing in debt instruments of
Banks, Public Sector Undertakings & Public Financial Institutions) This product is suitable for
investors who are seeking:
1) Regular income over short to medium term
2) Investment in debt and money market instruments issued by Banks, PFIs & PSUs.
Risk – Moderately Low
Comparison between Axis Banking & PSU Funds LIC MF Banking & PSU Fund:
Axis Banking & PSU Funds 1.22
LIC MF Banking & PSU 1.10

Funds
Category Avg 0.55
Table 5 Banking & PSU funds sharpe ratio
Interpretations: As discussed earlier, sharpe ratio indicates how much risk was taken to generate
the returns. Both the funds are performing better than the average performance of the fund.
However, Axis Banking & PSU Funds has a higher sharpe ratio than its competitor LIC MF
Banking & PSU Funds, making it a better choice in terms of risk adjusted returns provided by
42
the fund. That is to say that Axis Banking & PSU fund will provide a higher return as compared
to the LIC MF banking and PSU return if the risk amount is same.
Scheme Axis Banking & PSU LIC MF Banking & PSU

Funds Funds
Fund Class Debt Fund Debt Fund
Launch Date Jun 08, 2012 May 30, 2007

Scheme (Cr)
Yield To maturity 8.01% 7.57%

(Category Avg - 8.09%)
Equity Holding 0% 0%
Others 8.21% 12%
Table 6 Banking & PSU funds portfolio
Interpretations: Both the funds invest their funds in debt instruments issued by PSU and banks .
Axis Gilt fund has less debt holdings in comparison to its competitor. The yield to maturity of
both the funds is less than the average of the category, but Axis Banking & PSU Funds
performed better than LIC Banking & PSU Funds in this regard. Despite being launched earlier,
LIC fund has lesser asset under management, suggesting that Axis fund is comparatively much
43
more popular among existing investors. Overall, it seems Axis Banking & PSU Funds is
performing better in these parameters.
Figure 8 Quarterly returns of Axis and LIC banking & PSU funds
Interpretations: The above chart shows the quarterly returns of the two starting from 2015 Q1 to
2019 Q1. From this chart, we can see that the performance of Axis Banking & PSU fund was
better than the LIC Banking & PSU fund constantly with exception of just 3 quarters. This
observation further supports our results derived in previous comparisons that Axis banking &
PSU fund is a better option for the investor.
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● Based on NAV:
Figure 9 NAV for Axis and LIC Banking & PSU funds
Interpretations: The chart above shows the huge difference between the NAV of the two funds.
While the NAV of LIC Banking & PSU fund is less than Rs. 25, that of Axis’ fund has always
been over Rs. 1400. This difference goes in support of the humongous difference between the
AUM value of both the competitors.
Conclusion: From the various observations made above, we can conclude that Axis banking &
PSU fund is better than the LIC banking & PSU fund in terms of risk adjust returns, in terms of
quarterly returns or in terms of speed of expanding the assets in the fund hence the quick
decisiveness of the fund manager. Thus to any investor looking for a banking and PSU fund,
Axis bank offers a much profitable option.
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6.7 Axis Children’s Gift Fund LIC Children’s Gift Fund
What are Solution oriented funds?

Solution-oriented schemes include the schemes like childcare/gift or retirement schemes. Earlier
these schemes were considered as regular equity or balanced schemes however with the recent
circular these are classified under the solution-oriented schemes. These are open-ended schemes
which have a minimum lock-in period of 5 years. These types of schemes are particularly
helpful for the investors who are willing to create their retirement and children education or
marriage corpus with mutual funds but lack in selecting mutual funds and balancing investment.
These funds are more attractive in terms of returns and investment than that of the plans offered
by the insurance companies.
What are Children’s Gift Funds?
The primary investment objective of this scheme is to seek to generate capital appreciation &
provide long-term growth opportunities by investing in a portfolio constituted of equity
securities & equity related securities and the secondary objective is to generate consistent
returns by investing in debt and money market securities. They usually have a mandatory
lock-in period.
Investment Objective - The investment objective of the scheme is to generate income by
investing in debt & money market instruments along with long-term capital appreciation
through investments in equity & equity related instruments.
Product Label (An open ended fund for investment for children, having a lock-in of 5 years or
till the child attains age of majority (whichever is earlier)) - This product is suitable for
investors who are seeking :
1) Capital appreciation & generating income over long term
2) Investment in debt and money market instruments as well as equity and equity related
instruments.
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Comparison between Axis Children’s Gift Fund and LIC Children’s Gift Fund:
Axis Children’s Gift Fund 0.31
LIC MF Children’s Fund -0.07
Category Avg 0.42
Table 7 Children’s funds sharpe ratios
Interpretation: A negative sharpe ratio suggested by LIC Children’s funds suggests that the
return on this fund is less than the risk free interest rates. This suggests a poor performance of
the fund with respect to giving returns in relation to the risk involved. The Axis Children’s
fund is performing worse than the category average, but is better than its competitor.
Scheme Axis Children’s Gift LIC MF Children’s Fund

Fund
Fund Class Specialized Fund Specialized Fund
Launch Date Dec 8, 2015 Dec 11, 2001

Scheme (Cr)
Portfolio Turnover Ratio 168% 88.00%

(Category average
turnover ratio is 90.03%)
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Debt Holding 24.2% 0%
Others 6.74% 10.65%
Table 8 Children’s gift funds portfolio
Interpretations: Both the funds are long term investment avenues involving a lock in period,
primarily to meet the education and future requirements of children. Despite being launched
earlier, LIC fund has lesser asset under management, suggesting that Axis fund is comparatively
much more popular among existing investors and has a fierce fund manager. The Axis fund has
a more diversified portfolio as it has invested both in the equity and debt instruments, as
compared to LIC, which primarily has equity holdings. Axis fund has a higher portfolio
turnover percentage, suggesting that the fund manager of this fund actively changes all the
holdings under the portfolio. On the other hand, LIC fund follows a buy and hold strategy and
that the fund manager has high conviction in his picks.
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Figure 10 Quarterly returns of Axis and LIC children’s gift funds
2019 Q1. From this chart, we can see that the performance of LIC children’s gift fund was
performing better than Axis’ fund in till 2017 Q2 but from then onwards, the axis children’s gift
fund has picked up and has given better returns than the other one till now. This supports our
conclusion of previous comparison that the fund manager of Axis children’s gift fund has been
actively updating the holdings and making them better.
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● Based on NAV:
Figure 11 NAV of Axis and LIC children’s gift fund
Interpretation: This chart shows us that the NAV of LIC children’s gift fund has always been
higher than the Axis children’s gift fund. Although as per the experts, NAV makes no particular
difference towards the returns that the investors get, but since we out through the portfolio that
AUM of Axis fund is higher and NAV equals (AUM-liabilities)/No. of outstanding units, hence
there are less available units for the LIC large cap fund in the market. Thus if extended, this
might mean that LIC children’s gift fund isn’t as popular in the market as Axis children’s gift
fund.
Conclusion: From the above four comparisons, we can conclude that Axis children’s fund has
been doing better in terms of risk adjusted returns, fund manager’s decision making, fund
diversity as well as the quarterly returns for the last 2 years. So through this discussion we can
suggest the investor to go for Axis children’s gift fund over LIC children’s gift fund if they wish
50
to invest in this category of funds. We can also suggest that it’s better to invest in a risk free
fund instead of the LIC children’s gift fund.
6.8 Axis Nifty ETF LIC MF ETF - CNX Nifty 50

What are Exchange Traded Funds?
Exchange Traded Funds are essentially Index Funds that are listed and traded on exchanges like
stocks. Until the development of ETFs, this was not possible before. Globally, ETFs have
opened a whole new panorama of investment opportunities to Retail as well as Institutional
Money Managers. They enable investors to gain broad exposure to entire stock markets in
different Countries and specific sectors with relative ease, on a real-time basis and at a lower
cost than many other forms of investing.
An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or
BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks
that it represents. Think of it as a Mutual Fund that you can buy and sell in real-time at a price
that change throughout the day.
What is NIFTY 50?
The NIFTY 50 index is National Stock Exchange of India's benchmark broad based stock
market index for the Indian equity market. Full form of NIFTY is National Stock Exchange
Fifty . It represents the weighted average of 50 Indian company stocks in 12 sectors and is one
of the two main stock indices used in India, the other being the BSE Sensex. Nifty is owned and
managed by India Index Services and Products (IISL), which is a wholly owned subsidiary of
the NSE Strategic Investment Corporation Limited. IISL had a marketing and licensing
agreement with Standard & Poor's for co-branding equity indices until 2013. The Nifty 50 was
launched 1st April 1996, and is one of the many stock indices of Nifty. NIFTY 50 Index has
shaped up as a largest single financial product in India, with an ecosystem comprising:
exchange-traded funds (onshore and offshore), exchange-traded futures and options (at NSE in
India and at SGX and CME abroad), other index funds and OTC derivatives (mostly offshore).
NIFTY 50 is the world's most actively traded contract.
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Investment Objective - To provide returns before expenses that closely correspond to the total
returns of the Nifty 50 Index subject to tracking errors.
Product Label (An open ended Scheme replicating/ tracking Nifty 50 Index) - This product is
suitable for investors who are seeking :
1) Capital appreciation over medium to long term.
2) Investments in Equity & Equity related instruments covered by Nifty 50 Index.
Comparison between Axis Nifty ETF LIC MF ETF - CNX Nifty 50:
Axis Nifty ETF 1.00
LIC MF ETF - CNX Nifty 50 0.75
Category Avg 0.35
Table 9 Nifty ETF sharpe ratios
Interpretations: The sharpe ratio tells about the risk adjusted returns. Comparing the ratios with
the category average, both the funds give a better risk adjusted return. Among them, Axis Nifty
ETF has a better performance in this regard as compared to its competitor LIC MF ETF.
● Based on Portfolio:
Scheme Axis Nifty ETF LIC MF ETF - CNX

Nifty 50
Fund Class Index Funds/ETFs Index Funds/ETFs
Launch Date Jun 21, 2017 Nov 16, 2015
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Scheme (Cr)
Debt Holding 0% 0%
Others 0.67% 0.12%
Table 10 NIFTY ETF Fund Details
Interpretations: Both the funds fall under the category of ETF funds investing in Nifty 50 Index.
Axis Nifty ETF was launched 2 years after the LIC ETF, and also shows lesser asset under
management. Comparatively, LIC ETF has 70 times more assets, suggesting it as a more
popular choice of investors and has an actively expanding fund manager.
Figure 12 Quarterly returns of Axis and LIC Nifty ETF
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Interpretations: From the above chart, we can conclude that both the contenders i.e. Axis Nifty
ETF and LIC Nifty ETF have been giving very close returns which are not very high anyway.
From this we can’t conclude much about which fund is better based on the returns.
● Based on NAV:
Figure 13 NAV of Axis and LIC Nifty ETF fund
Interpretations: This chart shows us that the NAV of Axis Nifty ETF fund has always been
higher than LIC Nifty gift fund. Although as per the experts, NAV makes no particular
difference towards the returns that the investors get, but since we out through the portfolio that
AUM of LIC nifty ETF fund is higher and NAV equals (AUM-liabilities)/No. of outstanding
units, hence there are less available units for the Axis Nifty ETF fund in the market. Thus if
extended, this might mean that Axis Nifty ETF fund isn’t as popular in the market as its
competitor.
Conclusion: While we remained inconclusive if talking in the terms of quarterly returns, we can
only suggest Axis Nifty ETF over the other one based on better risk adjusted return i.e. the
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sharpe ratio. However, we can also see that the no.of available units hence probable user base is
much larger for LIC Nifty ETF.
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7 FINDINGS
1) To compare the different types of mutual fund plans of two major mutual fund
companies to each other based on various financial parameters.
Mutual funds under different categories were compared on the basis of Net Asset Values,
diversification, Sharpe ratios and returns. The sharpe ratio is a good indicator of risk
adjusted return, and was helpful in analysing risk of negative returns in LIC Children’s
Fund. Also Portfolio turnover can act as an indicator of a proactive fund manager.
Graphical data has been added to support the analysis of the 2 years data. Using all these
tools and factors, we have been able to suggest the better alternative in each of the 5
selected pairs.
2) To provide a suggestion to the reader about which company will be better for them
for a given mutual fund scheme.
Axis MF is a privately owned company, whereas LIC MF is a subsidiary of a government
owned LIC. On comparing schemes provided by both companies, Axis Mutual Funds has
more number of funds in equity, debt and hybrid schemes, while LIC has more ETF and
index funds. In our case overall performance of most of Axis funds was found to better
than LIC funds.
3) To provide a suggestion to the reader about which type of mutual funds is better for
their requirements and expectations based on the plan’s risk and return parameters.
Different schemes have different investment objectives and different scales of investment,
so we can only compare the schemes that lie in the same category. From our discussion, we
concluded that the following funds have been better in their respective categories :
Large Cap Equity Funds Axis Bluechip Fund
Government Security Funds LIC MF G-Sec Fund
56
Banking & PSU Debt Fund Axis Banking & PSU Debt Fund
Children’s Gift Fund Axis Children’s Gift Fund
ETF Fund Axis Nifty ETF (though quite comparable)
Table 11 Result of each category
57
8 SUGGESTIONS
Based on the discussions and analysis done above, we have the following suggestions to make
about which mutual fund performed better than its competitor in the respective category:
Large Cap Equity Funds Axis Bluechip Fund
Government Security Funds LIC MF G-Sec Fund
Banking & PSU Debt Fund Axis Banking & PSU Debt Fund
Children’s Gift Fund Axis Children’s Gift Fund
ETF Fund Axis Nifty ETF (though quite comparable)
In case of the investor being interested in some other company’s funds, they must take care of
the following factors while making a decision :
● Understand the purpose of investment: The investors should understand the expectations
they have from an investment, and choose the fun only if it meets their investment
requirements. For example, if an investor is risk averse, he should not go for high risk
equity schemes. Similarly, children’s schemes are mainly for long term returns and not
short term gains.
● Track record: Investors should thoroughly go through the past performance statistics of
the fund to get an idea of its return behaviour.
● Period of investment: Periods longer than 3-5 years usually give better returns as
compared to very short term investments.
● Diversification: Asset allocation describes how much the investor’s money is invested in
different assets. Allocation of funds in different equity and debt instruments can help in
hedging against market fluctuations.
58
● Risk Tolerance: Higher the risks, higher the returns. But the investors should be aware
about the risks they are willing to take. Risk averse investors should consider debt
related schemes over equity.
59
9 CONCLUSION
Mutual funds have emerged as one of the best investment options in terms of variety,
flexibility, diversification, liquidity as well as tax benefits. Besides, through mutual funds
investors can gain access to investment opportunities that would otherwise be unavailable to
them due to limited knowledge and resources. Through this study we have compared the
performance of various schemes of two major mutual fund companies in India - Axis and
LIC Mutual funds. It can be concluded that Axis had better performance in the large cap
equity scheme, Children’s Gift plan, Banking & PSU debt fund whereas LIC had better
schemes in Government securities fund. For Nifty ETF fund, both the options are quite
comparable. This conclusion has been drawn based on tools like the net asset value, quarterly
returns, sharpe ratio and yield to maturity.
To conclude the study, it can be said that investors can judge mutual fund schemes for
investment on the basis of their structure, size, performance, risk associated, expertise of the
manager and regular returns. Therefore, mutual fund companies should emphasize strong
points of their schemes regarding these characteristics. Further, investors must understand
their investment objectives to find the fund right suited for them and compare funds within
the category itself to know their actual performance.
60
10 BIBLIOGRAPHY
[1] “A study on investors' awareness and preference towards mutual funds as an investment
option” Mr. Ankit Goel, Dr. Rajendra K. Khatik, International Journal of Commerce and
Management Research, Volume 3; Issue 3; March 2017
[2] “A Study on Factors Affecting Investment on Mutual Funds and Its Preference of Retail
Investors” - Arathy B, Aswathy A Nair, Anju Sai P,Pravitha N R, International Journal of
Scientific and Research Publications, Volume 5, Issue 8, August 2015
[3] “Performance Evaluation of Mutual Funds: A Study of Selected Diversified Equity Mutual
Funds in India” - Dr Vikas Choudhary, and Preeti Sehgal Chawla, International Conference on
Business, Law and Corporate Social Responsibility Oct 1-2, 2014 Phuket (Thailand)
[4] “A Study of Performance Evaluation of Mutual Fund and Reliance Mutual Fund” - Alka
Solanki, Abhinav National Monthly Refereed Journal of Research in Commerce &
Management, May 2016
[5] “A Comparative Analysis On Performance Of Sbi And Hdfc Equity, Balanced And Gilt
Mutual Fund” - Ms. Dhanalakshmi K, Vidyaniketan Journal of Management and Research,
2013
[6] “https://www.investopedia.com/terms/m/mutualfund.asp”
[7] “ https://cleartax.in/s/mutual-fund-types”
[8] “https://www.axismf.com/mutual-funds”
[9] “https://www.licmf.com/”
[10]“https://economictimes.indiatimes.com/mf/analysis/ten-tools-for-analysing-mutual-funds-to
-invest-smartly/articleshow/47212462.cms?from=mdr”
[11] ” https://www.moneycontrol.com/mutualfundindia/”
61

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A Comparative Study on AXIS AND LIC Mutual Funds Of

Under the guidance of

Department of Computer Science and Engineering

ARVIND KATHPAL 15103003 GAURAV GUPTA 15103044

PRITEESH GOYAL 15103005 DHEERAJ SINGLA 15103052

NIKITA GOYAL 15103018 NAMRATA SHARMA 15103053

Ms. Parul Mahajan

Centre of Management and Humanities (CMH)

Punjab Engineering College (Deemed to be University)

Date: 9 th April 2019

Chapter 01: Introduction

1.1 Concept of Mutual Funds........................................................................................10

1.2 History of Mutual Funds.........................................................................................12

1.3 Types of Mutual Funds in India..............................................................................13

Chapter 02: Literature Review.................................................................................................21

Chapter 03: Need of the study..................................................................................................23

Chapter 04: Objectives of the study.........................................................................................24

Chapter 05: Research Methodology.........................................................................................25

Chapter 06: Discussions And Analysis.....................................................................................27

6.1 Axis Asset Management Ltd. ……………....…………………………………...27

6.2 LIC Mutual Fund Asset Management Ltd……………………………………..29

6.3 Mathematical Analysis Tool …………………………………………………….31

6.4 LIC Large Cap vs Axis Bluechip…………………………………………..33

6.5 LIC MF Government Securities fund vs Axis Guilt Fund……………….37

6.7 LIC Children’s Gift Funds vs Axis Children’s Gift……………………….46

6.8 LIC Nifty ETF vs Axis NIFTY ETF………………………………………..51

Chapter 07: Findings……………………………………………………………………...56

Chapter 08: Suggestions…………………………………………………………………..58

Chapter 09: Conclusions………………………………………………………………….60

DESCRIPTION PAGE NO.

Figure 1 The concept of mutual funds 11

Figure 2 History of mutual funds 12

Figure 3 Types of mutual funds 13

Figure 10 Quarterly returns of Axis and LIC children’s gift funds 47

Figure 11 NAV of Axis and LIC children’s gift fund 48

Figure 12 Quarterly returns of Axis and LIC Nifty ETF 53

Figure 13 NAV of Axis and LIC Nifty ETF fund 54

DESCRIPTION PAGE NO.

Table 1 Sharpe Ratios Large Cap Funds 33

Table 3 Sharpe Ratios Large Cap Funds 37

Table 4 Portfolio of Axis Gilt fund and LIC MF G-Sec funds 38

Table 5 Banking & PSU funds sharpe ratio 42

Table 6 Banking & PSU funds portfolio 43

Table 7 Children’s funds sharpe ratios 47

Table 8 Children’s gift funds portfolio 48

Table 9 Nifty ETF sharpe ratios 52

Table 10 NIFTY ETF Fund Details 53

Table 11 Result of each category 57

1.1 CONCEPT OF MUTUAL FUNDS

Figure 1 The concept of Mutual Funds

1.2 HISTORY OF MUTUAL FUNDS

1.3 TYPES OF MUTUAL FUNDS IN INDIA

Figure 3 Types of mutual funds

Mutual Fund Types Based On Structure

Mutual Fund Types Based on Asset Class

Mutual Fund Types Based on Investment Goals

1.4 ADVANTAGES OF INVESTING IN MUTUAL FUNDS

Through features such as Systematic Investment Plans (SIP), Systematic Withdrawal

1.5 DISADVANTAGES OF INVESTING IN MUTUAL FUNDS

3 NEED OF THE STUDY

6 DISCUSSIONS AND ANALYSIS

AXIS VS LIC MUTUAL FUNDS