A STUDY ON PERFORMANCE EVALUATION OF EQUITY IN

MUTUAL FUND WITH SPECIAL REFERENCE TO HEDGE

EQUITIES LIMITED

PROJECT REPORT

Submitted by
ANJALY SUKUMARAN
MLM17MBA12

Under the guidance of

Mrs. JEENU MATHEW

In partial fulfillment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Of
A P J Abdul Kalam Technological University

DEPARTMENT OF MANAGEMENT STUDIES

MANGALAM COLLEGE OF ENGINEERING, ETTUMANOOR
APRIL 2019
 ACKNOWLEDGEMENT

Through this acknowledgement I express my sincere gratitude towards all those

people who helped me in this project, which has been a learning experience.

I extend my whole hearted gratitude to Dr. J.M. MADANA, Principal of

Mangalam College of Engineering, Ettumanoor, Kottayam for her valuable
guidance and support throughout the project.

I would like to express my sincere gratitude to our Dean, Department of

Management Studies Prof. JOHN T VARUGHESE, M. Com, M.Phil. for his
support in this project.
I would like to express my heartfelt thanks to Dr. SIBU C. CHITHRAN, MBA,
M.Phil., PhD (Mgmt.), FDP (IIM-K), AMT (AIMA), MAIMSI (USA),
Professor & Head of the Department of Management Studies for extending all
the help for doing the project.

This space wouldn’t be enough to extend my warm gratitude towards my project

guide Mrs. JEENU MATHEW (Asst. Professor), for her efforts in
coordinating with my work and guiding in right direction.

I would like to extend my heartfelt regards to the management team of Hedge

Equities Ltd, for providing me with the support for completing my project work.
I also express my sincere gratitude to Mr. RAJANIKANTH.C. S, Assistant
Vice President, Hedge School for his kindly support in doing my project.

I also express my heartfelt regards towards my company guide Mrs.

KARTHIKA BALACHANDRAN, Research Analyst cum Faculty, Hedge
School for providing all the support for the project work.

It would be injustice to proceed without acknowledging those vital supports I

received from my beloved classmates and friends, without whom I would have
been half done.

I also use this space to offer my sincere love to my parents and all others who
had been there, helping me walk through this work.

ANJALY SUKUMARAN
 LIST OF TABLES

TABLE TITLE OF THE PAGE

No. TABLE No.

2.1 Fund details of ICICI 50

Prudential Focused
Blue-chip Fund

2.2 Fund details of Axis 53

Blue-chip Fund

2.3 Fund details of HDFC 56

Mid cap
Opportunities Fund

2.4 Fund details of Kotak 59

Emerging Equity
Scheme Fund

2.5 Fund details of 62

Franklin India
Smaller Companies
Fund

2.6 Fund details of 66

Reliance Small Cap
Fund

5.1 General Information

About the Funds 97

5.2 Return on 2014-15 of 98

ICICI

5.3 Return on 2015-16 of 98

ICICI
 LIST OF FIGURES

FIGURE TITLE OF PAGE

No. THE No.
FIGURE
1.1 Financial System 15

1.2 Formation of 17
Mutual
Funds
1.3 Mutual Funds Process 17

1.4 Phases in Mutual 23

Fund Formation

1.5 Organization of 31
Mutual Funds
1.6 Organization Structure 44
3.1 Why Mutual Funds 46

5.1 Chart Showing 101

Return of ICICI

5.2 Chart Showing 104

Return of Axis

5.3 Chart Showing 108

Return of HDFC

5.4 Chart Showing 112

Return of Kotak

5.5 Chart Showing 115

Return of Franklin

5.6 Chart Showing 119

Return of Reliance

5.7 Chart Showing 141

Risk
Analysis
 TABLE OF CONTENTS

Sl. TOPICS Page No.

No.
1 INTRODUCTION 1-5
1.1 Background of the study 2
1.2 Need and significance of the study 3
1.3 Statement of problem 3
1.4 Objectives of the study 3
1.5 Scope of the study 4
1.6 Limitations of the study 4
1.7 Organization of the report 4
2 LITERATURE REVIEW 6-72
2.1 Industry Profile 7
2.2 Company Profile 34
2.3 Product Profile 38
2.4 Performance Analysis of the Schemes 50
2.5 Literature Review 68
3 THEORETICAL FRAMEWORK 73-
3.1 Introduction 74
3.2 Meaning of mutual funds 74
3.3 Advantages and Disadvantages of Mutual Funds 78
3.4 Types of mutual funds 80
3.5 SIP 85
4 RESEARCH METHODOLOGY 90-
4.1 Research Design 91
4.2 Sources of Data 92
4.3 Primary and Secondary Data 93
4.4 Sampling Method 93
4.5 Research Design 94
4.6 Method of Data Collection 95
5 DATA ANALYSIS 96-151
5.1 Return Analysis 97
5.2 Risk Analysis 119
5.3 Sharpe Ratio 141
5.4 Treynor Ratio 145
6 FINDINGS 154
7 SUGGESTIONS 156
8 CONCLUSIONS 158
9 REFERENCES 174
 EXECUTIVE SUMMARY

In the current economic scenario interest rates are falling and fluctuations in the share
market has put investors in confusion. One finds it difficult to take decision on
investment. This is primarily, because of investments are risky in nature and investors
have to consider various factors before investing in investment avenues.

These factors include risk, return, volatility of shares and liquidity. The main objective
of comparing investment in equity shares with mutual fund schemes is to analyse the
performance of mutual funds with their benchmark and comparing them with equities
by using risk, return, beta and alpha as a parameter. Historical data were taken for
calculating risk, return, alpha and beta.

The study will guide new investors who want to invest in mutual funds schemes in
equity by providing knowledge about how to measure the risk and return of particular
mutual fund scheme. The study recommends new investors to go for mutual funds
rather than equities because of high risk and market instability.

Mutual fund is an undertaking which functions in the form of financial intermediary

between investors and business world. They initiate resource mobilization, allocation
of resources and development of financial markets in the economy. The basic
objective of the mutual funds is to collect the funds from the large number of investors
which usually hesitate to enter directly into capital market due to various constraints
such as lack of expertise, professional knowledge, adequate resources, availability of
adequate time for study and analysis, etc. therefore the present study is a humble effort
to examine the performance of mutual funds as a financial intermediary in the society.
The study has concentrated on three important aspects. First, performance evaluation
of mutual fund as per financing point of view, analysing the different risk and return
while investing in financial market. Second, the performance evaluation of the mutual
fund as per the investors point of view who have contributed their money to mutual
funds. Their perception, attitude, behaviour, preference, objectives, satisfaction, etc.
regarding mutual funds are studied. Third aspect is related with the performance of
mutual funds in context to their regulatory norms whether the mutual funds are
performing as per norms or not.
 CHAPTER 1

INTRODUCTION

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1.1 BACKGROUND OF THE STUDY

Mutual fund is an expertly managed kind of collective investment scheme that pools
cash from numerous financial specialists and puts resources into stocks, securities,
short term money market instrument and different securities. Mutual funds have
turned into a broadly famous and compelling path for speculators to take an interest
in financial markets in a simple, low cost fashion, while quieting hazard includes by
spreading the venture crosswise over various sorts of securities, likewise called as
diversification. Mutual funds have assumed vital job in financial market in late
decades so it is relevant to contemplate the execution of common assets as it turns into
the financial specialists. The investment performance of mutual funds has been
extensively examined for the development of capital market. The mutual fund industry
in India started with setting up of the Unit Trust of India (UTI) in 1964 by the
administration of India. In 1987 public sector banks and two insurance agencies (LIC
and GIC) were permitted to launch mutual fund. Securities and Exchange Board of
India (SEBI), regulatory body for Indian capital market, planned far reaching
administrative structure for Mutual funds in 1993 and enabled private corporate bodies
to dispatch mutual fund schemes. Opening up the business way to private sector banks
and financial institution in 1993 had introduced another period in the advancement of
Indian mutual fund sector. Outside resource the executive organizations were
additionally permitted to set up their assets. With the section, aggressive proficiency
in the business demonstrated an enormous improvement and prompted a material
increment in the number and assortment of plan offered to the financial specialists as
far as hazard return inclinations, development period and tax breaks.

An Equity fund is a mutual fund that invests principally in stocks. It can be actively
or passively managed. Equity funds are also known as stock funds. Stock mutual funds
are principally categorized according to company size, the investment style of the
holdings in the portfolio and geography. The size of an equity fund is determined by
a market capitalization, while the investment style, reflected in the fund’s stock
holdings, is also used to categorize equity mutual funds. Equity funds are also
categorized by whether they are domestic or international. These can be broad market,
regional or single-country funds. Some specialty equity funds target business sectors,
such as health care, commodities and real estate.

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1.2 NEED AND SIGNIFICANCE OF THE STUDY

The project study on HEDGE EQUITIES, PALARIVATTOM, ERNAKULAM is

based on the performance evaluation of mutual funds in equity for a period of 1 month
in 2019. The main aim of the study is to find out the investment tendency in mutual
funds. The study is also aimed at finding out the role of mutual fund investment. The
study focuses on finding out the factors affecting the investment in mutual funds and
measure the performance of mutual funds through the models which are used
worldwide to evaluate the investment tendency in the area of mutual funds through
portfolio (Risk/Return) Sharpe Measure and Treynor Measure, to make the best point
for investment which is much easier to take better decision for investment, either sell
or buy.

1.3 STATEMENT OF THE PROBLEM

The project study titled “PERFORMANCE EVALUATION OF EQUITY MUTUAL

FUNDS WITH SPECIAL REFERENCE TO HEDGE EQUITIES Ltd.” is an attempt
to analyse and evaluate the performance of mutual funds in equity.

1.4 OBJECTIVES OF THE STUDY

1. To evaluate the performance of selected large cap, mid cap and small cap
mutual fund schemes.
2. To identify the best scheme by evaluating the performance for the last five
financial years.
3. To study and analyse the significance of different statistical tools used by the
brokers and portfolio managers for the performance evaluation of mutual fund
schemes.
4. To examine whether there is a significant relationship between risk and return
variables of selected mutual fund schemes with respect to their benchmark.
5. To recommend the best scheme to different risk class investors.

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 6. To examine the points of interest and detriments of putting resources into
Equity and Mutual Funds.

1.5 SCOPE OF THE STUDY

The project primarily deals with equity in mutual funds. The scope of the study of
mutual funds is very large but my study is confined to only 6 AMC’s mutual funds.
This study confines as how mutual fund is good investment avenue for investors. The
study considers performance evaluation of mutual fund based on three measures that
are Jensen’s measures, Sharpe’s measures and Traynor’s measures.

1.6 LIMITATIONS OF THE STUDY

The time period for the project was limited to only one month and information
provided is limited to the extent of internet and journals.

1. The study deals with only selected equity schemes in India.

2. The study is restricted to one month to evaluate the performance of the selected
schemes of equities in mutual funds and not their inception.
3. The study is confined only to Indian mutual fund industry.
4. Some of the persons were not so responsive.
5. The sample size may not be adequately representing the whole market.

1.7 ORGANISATION OF THE REPORT

The report of the study is presented in five chapters.

CHAPTER 1 – INTRODUCTION

This chapter includes executive summary, background of the study, problem

statement, need and significance of the study, scope of the study, objectives of the
study and limitations of the study.

CHAPTER 2 – LITERATURE REVIEW

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This chapter includes review of related literature, industry profile, company profile,
department analysis, organisational structure, and product profile, functional areas,
literature review, recent studies on the topic.

CHAPTER 3 – THEORETICAL FRAMEWORK

This chapter gives the theoretical knowledge about the topic. This includes
introduction to Mutual Funds, nature of mutual funds, advantages, uses and limitations
of equity in Mutual Funds.

CHAPTER 4 – RESEARCH METHODOLOGY

This chapter includes the research design, sources of data, primary and secondary
data, method of data collection and data analysis techniques.

CHAPTER 5 – DATA ANALYSIS AND INTERPRETATION

It includes objective-wise data analysis using tools like Sharpe ratio, Treynor’s ratio,
Risk analysis, Return analysis, Beta, Standard deviation and regression.

CHAPTER 6 – FINDINGS

CHAPTER 7 – RECOMMENDATIONS

CHAPTER 8 – CONCLUSIONS

xxiii
 CHAPTER-2

LITERATURE REVIEW

xxiv
2.1 INDUSTRY PROFILE

GLOBAL SCENARIO

The financial sector is in a process of rapid transformation. Reforms are continuing

globally as part of the overall structural reforms aimed at improving the productivity
and efficiency of the economy in the highly competitive world. The role of an
integrated financial infrastructure is to stimulate and sustain economic growth. The
US$ 28 billion Indian financial sector has grown at around 15 percent and has

displayed stability for the last several years, even when other markets in the Asian
region were facing a crisis. This stability has come through the resilience that the In-
country system and the finance companies have built over these years. The financial
sector has kept pace with the growing needs of corporate and other borrowers. Banks,
capital market participants and insurers have developed a wide range of products and
services to suit needs.

INDIAN SCENARIO

FINANCIAL SERVICE IN INDIA

In last few years, India has emerged as the one of the most rapidly growing economies
in the world. India has been categorized with national like Brazil, Russia, and China
(BRIC Nations) who are going to the prime drives of the world economy in the next
few decades. Since the time, India first opened its gates to foreign investment (FDI
&FII) there has been a complete turnaround. Now the traditional Hindu rate of growth
is a thing of past and clocking 8% to 9% GDP growth rate.

Even if we taking the case of on-going global recession India has managed to perform
far better than other nations. Right from banking system to financial regularities, the
country has thrived on discipline and out-performance. The booming Indian economy
resulted in widespread growth and arrival of new industries; the most sparkling
phenomenon is in form of financial market of India. Financial service in India has
taken a giant leap from the days of standing in the banks queue for several hours for
opening a savings account or trying to get some fixed deposits (FD) done. The

xxv
financial services have increased manifold and now people have the choice to choose
the most suitably fits the bill.

INDIAN STOCK MARKET

The India stock and invest market is mainly divided into 2 parts, namely the capital
market and the money market. The stock market is an important part of the capital
market in the country through which one can carry out the transaction of capital. It is
usually done through the means of direct financing through the use of security and
investment. The investment market can further be sub divided into the primary and
secondary market.

P. T. Barnum, the nineteenth-century showman and politician, once said that money
is a great master but an excellent servant. He was only repeating what man had realised
centuries before him. Indeed, the well-to-do had already started trying out ways to
make wealth work for them. Today’s financial services industry, with its many
products and services, is the result of this age-old endeavour.

The financial services industry manages money for individuals and corporations. It
comprises such organisations as commercial and investment banks, insurance
companies, hedge funds, credit-card companies, consumer finance firms, accounting
agencies, and brokerage firms. The industry’s services are mainly related to banking
and insurance services, asset management, investments, foreign exchange, and
accounting.

Financial services form the lifeblood of economic growth and development. They
facilitate the setting up of big and small businesses and the expansion of businesses.
Employment and entrepreneurship created with the help of the services enable people
to earn and save.

Financial services show the poor ways out of poverty and of leading better lives. To
the wealthy, financial services offers opportunities to make money grow.

The financial services industry is the largest-earning sector in the world. Through
interventions in industry and agriculture and other formal sectors, they provide lines
of credit and investment.

xxvi
However, financial services have largely eluded the poor and small and micro units,
and there is great potential to extend the services to the informal sector, too. Perhaps,
the future of the financial sector lies here.

Financial Services Industry In USA

Until the 1970s, the financial services industry in the United States consisted of a few
broad segments such as banks and savings/loan agencies that catered to individuals
and companies and brokerage firms that assisted in making investments in stocks and
bonds.

However, during that decade, federal regulations curbing the activities of banks in
mutual funds, insurance, and stocks made banks less profitable. The oil embargo and
the steep increase in oil prices ordered by the Organisation of Petroleum Exporting
Countries (OPEC) — the “oil shock” — caused a staggering rise in inflation that made
the interest rate on bank deposits unattractive.

Soon, companies that offered higher returns from mutual funds that they invested in
safe government securities began sprouting, severely affecting banks.

However, banks rose from the ashes, making full use of gaps in Glass-Steagall
Banking Act of 1933, which had originally restricted their functions. They began to
offer more services; they sold mutual fund products, established loan subsidiaries, and
set up automatic teller machines. These steps brought them unprecedented profits by
1993.

The convergence of organisations offering financial products and services continued.

Perhaps, a most important event was the setting up of Citigroup with the merger of
Citicorp and Travelers Insurance.

Other mega mergers followed, breaking the compartmentalisation of the financial

services sector. Today, many banks offer products much beyond their traditional
portfolios and many financial enterprises offer conventional banking services.

Despite its almost permanent sheen, the financial services industry has had to face
many crises.

Among the more recent ones are Black Monday (October 19, 1987), when the New
York Stock Exchange experienced its biggest single-day loss in history, losing nearly

xxvii
26 percent of its value; the dot-com bubble of 2000; and the subprime mortgage
(housing bubble) crisis of 2007-2009.

The Gramm-Leach-Bliley Act passed in the US in 1999 allowed financial services

companies to engage in multi-segment transactions, but brought in stringent
regulations for protecting the customer and ensuring solvency.

But the industry came under strict government scrutiny following the collapse of the
Enron Corporation in 2004 and accusations of fraud against top executives of JP
Morgan Chase and Merrill Lynch and the bankruptcy of the financial services firm
Lehman Brothers.

While fraud and greed on the part of financial sector head-honchos and poor policy
implementation by national governments now threaten to derail the financial services
industry, new technology has brought it a global, 24/7 reach.

This has made the industry more customer-oriented and led to greater competition;
but regulatory measures will have to become fool proof for it to thrive once again.

Financial Services in Europe

The financial services industry in Europe, in the face of economic crises, continues to
provide the means to finance infrastructure development and business expansion and
make available saving and investment options to individuals.

According to a research report by the City of London, Europe’s financial services

industry accounts for nearly 6 percent of the continent’s GVA (gross value added), or
€731 billion, gives employment to 6.4 million people, and contributes €209 billion in
taxes.

Nineteen of the European Union’s 28 countries share the euro and make up the
Eurozone. Apart from a common currency, these nations have free-trade pacts, besides
labour and capital agreements that allow the free movement of these resources.

The European Central Bank decides the monetary policy of the Eurozone, whose main
job is to check inflation. Political decisions related to the Eurozone and the euro are
under the purview of the Eurogroup.

xxviii
The global economic crises since 2000 have deeply affected the financial services
sector in Europe, too. Following the international financial crisis of 2008, public funds
were used generously to bail out banks and other financial institutions.

This has led to the decline in public finances and calls for a more robust financial
system and more transparent financial markets. The latest turbulence to hit the
European finances services industry is the debt crisis, caused by mismanagement of
public finances and overspending by governments.

In order to stabilise the financial market and the financial services industry, the
European Commission has put forward more than 40 regulatory reform measures.
Efforts to fully develop a European banking union that would preserve the single
market for financial services are on the cards.

Financial Services in India - History and Trends

The financial services sector in India, which accounts for 6 percent of the nation’s
GDP, is growing rapidly. Although the sector consists of commercial banks,
development finance institutions, nonbanking financial companies, insurance
companies, cooperatives, mutual funds, and the new “payment banks,” it is dominated
by banks, which holds over 60 percent share.

The Reserve Bank of India (RBI) is the apex bank of the country, controlling all
activities in the financial sector. Commercial banks include public sector and private
sector banks and are under the regulatory supervision of the RBI. Development
finance institutions include industrial and agriculture banks.

Non-banking finance companies (NBFC) provide loans, purchase stocks and

debentures, and offer leasing, hire purchase, and insurance services.

Insurance companies function in both public and private sectors and are controlled by
the Insurance Regulatory and Development Authority (IRDA).

India also has a vibrant capital market with stocks exchanges controlled by the
Securities and Exchange Board of India (SEBI).

According to “India in Business,” a website of the Union Government, India’s

banking sector assets were worth $1.8 trillion in the 2014-15 financial year.

xxix
According to a report by KPMG-CII, India’s banking sector is on the way to becoming
the fifth largest in the world by 2020. The country’s life insurance sector is the biggest
in the world, and the market size is expected to touch about $400 billion by 2020.

The assets of the mutual fund industry are worth $190 billion. The pension corpus
fund is projected to record $1 trillion by 2025. Reforms to put the financial services
industry and the economy on the fast track include measures to make finance available
to medium, small, and micro industries.

India once had a heavily government-dominated financial services industry, and most
services were provided by nationalised banks. Financial sector reforms were initiated
in 1991 with the aim of accelerating economic growth.

In the following years, industry and service sectors were opened up for foreign direct
investment. The reforms ended the dominance of the public sector and reduced direct
government control on industrial investments.

Financial sector reforms in India have improved resource mobilisations and

allocation. The liberalisation of interest rates and the easing of cash reserve norms
have helped make funds available to various sectors.

However, prudential norms have been tightened and transparency and regulation
increased to avoid a systemic collapse that other countries have suffered.

Financial Services in The Rest of Asia

Asia, particularly the eastern region, faced a severe setback with the 1997-98 financial
crisis that started with the collapse of the Thai baht and Thailand’s near bankruptcy.

However, the Asian financial sector, particularly banks, has lived to see better days.
The middle-income nations in the region have been able to strengthen their stock
markets and their nonbanking financial sector.

However, the financial services sector in the region is lagging way behind that in the
US and Europe. But the potential to develop is huge and the sector is developing
rapidly. Along with opportunities for development, the sector also faces threats to
stability. Reforms and regulatory measures have to be quickly initiated.

xxx
Types of Financial Services

Some of the services offered by the financial services sector are given below:

Accounting

Accounting is the process of measuring the financial parameters of a company and

presenting them to investors and managers of the company for making investment
decisions and evolving management strategies.

Brokerage

A firm that functions as an agent for the purchase of stocks or other financial securities
is known as a brokerage. Full-service brokerage firms study the market and advise
their clients on which securities to buy. Portfolio and pension fund managers are
among their clients.

Consumer finance

The grant of loans or other credit lines to consumers is called consumer finance, and
includes auto loans and credit cards.

Credit cards

Credit cards are instruments that help the cardholder to make payments for goods or
services without using cash. The bank issuing a credit card offers the cardholder a line
of credit on which an interest is charged.

Foreign exchange

Foreign exchange is the conversion of one currency into another by individuals or

corporations for completing transnational deals. It is the biggest segment of the
financial market, and its daily turnover runs into trillions of dollars.

Hedge funds

Hedge funds are private limited investment partnerships that use a large initial
investment. They have low liquidity, and funds usually have a lock-up period of at

xxxi
least one year. Hedge funds are flexible and help investors spread their risk through
their diverse investment opportunities.

Insurance

Insurance is a risk management tool that an individual or company uses to transfer

risk of financial loss to an insurance company in return for a one-time or periodic
premium.

Investment banking

An investment bank enables corporations to raise capital and assists them in issuing
stocks. Investment banks underwrite new debts and equity securities for companies.
They provide their clients guidance in mergers and acquisitions.

Private banking

Private banking is the set of speciality financial services offered by banks to high-net-
worth individuals who make very large investments.

Private equity

Private equity is a method by which an investor takes control of a significant portion

of a company’s stock in the hope of maximising his or her returns. A typical method
of operation of a private equity fund is to take control of a company and use its returns
to repay themselves.

Retail banking

Retail banking services are offered to individuals rather than to organisations. Retail
banking helps people open savings accounts, take personal and housing loans, make
deposits, and use credit/debit and ATM cards.

Venture capital

Venture capital is the initial seed money provided by an investor to the holder of a
new, potentially financially rewarding business idea for a share in the returns of the
start-up business. Venture capital companies make investments from a long-term
perspective. Venture capital funds are a big boon for start-ups that do not have access
to financial markets.

xxxii
Wealth management

Wealth management (or asset management) is a strategy to help the affluent maximise
returns from their investments by alerting them to investment opportunities and
helping them choose appropriate financial products.

The financial service is a pat of financial system.

FINANCIAL SYSTEM

A financial system is the system that covers financial transactions and the exchange
of money between investors, lender and borrowers. A financial system can be defined
at the global, regional or firm specific level. Financial systems are made of intricate
and complex models that portray financial services, institutions and markets that link
depositors with investors.

Organised and Money market

Banking Banking
unorganised and capital

Primary and market Merchant

Non Banking
Secondary instruments Banking

Money market
Development and capital Short term Brokerage
market

Regulatory Medium Term Underwriting

Others Long Term Credit rating

Discount house

Figure 1.1 Financial System

xxxiii
Mutual funds

Mutual funds are investment companies that pool money from investors at large and
offer to sell and buy back its shares on a continuous basis and use the capital thus
raised to invest in securities of different companies. The stocks these mutual funds
have are very fluid and are used for buying or redeeming and/or selling shares at a net
asset value. Mutual funds possess shares of several companies and receive dividends
in lieu of them and the earnings are distributed among the shareholders.

With the growth of the economy and the capital market in India, the size of investors
has also increased rapidly. In fact, small investors in India have regularly invested in
public issue to finance big and small green field projects of known and unknown
promoters. They have been benefited from such investment in the past. As the stock
market crumbled later on and new issues flopped, small investors again began looking
for a good opportunity.

Mutual funds are conceived as institutions for providing small investors with avenues
of investments in the capital market. Since small investors generally do not have
adequate time, knowledge, experience and resources for directly accessing the capital
market, they have to rely on an intermediary, which undertakes informed investment
decisions and provides consequential benefits of professional expertise.

Mutual funds have diversified investments spread in calculated proportions amongst

securities of various economic sectors. Mutual funds get their earnings in two ways.
First, is the most organic way, which is the dividend they get on the securities they
hold? Second, is by the redemption of their shares by investors will be at a discount
to the current NAVs (net asset values).

xxxiv
Process of investing in Mutual Fund

Fund manager
invest in different
securities

Securities
money with fund
manager

Returns are

investors

FIGURE 1.2 Formation of mutual funds

Pool their
money

Mutual

Fund

FIGURE 1.3 Mutual Funds Process

xxxv
The mutual fund industry has been in India for a long time. This came into existence
in 1963 with the establishment of Unit Trust of India, a joint effort by the Government
of India and the Reserve Bank of India. The next two decades from 1986 to 1993 can
be termed as the period of public sector funds with entry of new public sector players
into the mutual fund industry namely, Life Insurance Corporation of India and General
Insurance Corporation of India.

The year of 1993 marked the beginning of a new era in the Indian mutual fund industry
with the entry of private players like Morgan Stanley, J.P Morgan, and Capital
International. This was the first time when the mutual fund regulations came into
existence.

SEBI (Security Exchange Board of India) was established under which all the mutual
funds in India were required to be registered. SEBI was set up as a governing body to
protect the interest of investor. By the end of 2008, the number of players in the
industry grew enormously with 46 fund houses functioning in the country.

With the rise of the mutual fund industry, establishing a mutual fund association
became a prerequisite. This is when AMFI (Association of Mutual Funds India) was
set up in 1995 as a non-profit organization. Today AMFI ensures mutual funds
function in a professional and healthy manner thereby protecting the interest of the
mutual funds as well as its investors.

The mutual fund industry is considered as one of the most dominant players in the
world economy and is an important constituent of the financial sector and India is no
exception. The industry has witnessed startling growth in terms of the products and
services offered, returns churned, volumes generated and the international players
who have contributed to this growth. Today the industry offers different schemes
ranging from equity and debt to fixed income and money market.

The market has graduated from offering plain vanilla and equity debt products to an
array of diverse products such as gold funds, exchange traded funds (ETF’s), and
capital protection-oriented funds and even thematic funds. In addition, investments in
overseas markets have also been a significant step. Due credit for this evolution can
be given to the regulators for building an appropriate framework and to the fund

xxxvi
houses for launching such different products. All these reasons have encouraged the
traditional conservative investor, from parking fund in fixed deposits and government
schemes to investing in other products giving higher returns.

It is interesting to note that the major benefits of investing in a mutual funds is to

capitalize on the opportunity of a professionally managed fund by a set of fund
managers who apply their expertise in investment. This is beneficial to the investors
who may not have the relevant knowledge and skill in investing. Besides investors
have an opportunity to invest in a diversified basket of stocks at a relatively low price.
Each investor owns a portion of the fund and hence shares the rise and fall in the value
of the fund. A mutual fund may invest in stocks, cash, bonds or a combination of
these.

Mutual funds are considered as one of the best available investment options as
compare to others alternatives. They are very cost efficient and also easy to invest in.
The biggest advantage of mutual funds is they provide diversification, by reducing
risk & maximizing returns.

India is ranked one of the fastest growing economies in the world. Despite this huge
progression in the industry, there still lies huge potential and room for growth. India
has a saving rate of more than 35% of GDP, with 80% of the population who save.
These savings could be channelized in the mutual funds sector as it offers a wide
investment option. In addition, focusing on the rapidly growing tier II and tier III cities
within India will provide a huge scope for this sector. Further tapping rural markets
in India will benefit mutual fund companies from the growth in agriculture and allied
sectors. With subsequent easing of regulations, it is estimated that the mutual fund
industry will grow at a rate of 30% - 35% in the next 3 to 5 years and reach US 300
billion by 2015.

Mutual Fund Companies in India

The first introduction of a mutual fund in India occurred in 1963, when the
Government of India launched UNIT TRUST OF INDIA (UTI).

Until 1987, UTI enjoyed a monopoly in the Indian Mutual Fund market. Then a host
of other government controlled Indian Financial companies came up with their own

xxxvii
funds, these included STATE BANK OF INDIA, CANARA BANK, AND PUNJAB
NATIONAL BANK.

This market was made open to private players in 1993, as a result of the historic
constitutional amendments brought forward by the then Congress-led Government
under the regime of Liberalization, Privatization and Globalization.

Kothari Pioneer was the first private sector mutual fund company in India which has
now merged with Franklin Templeton. Just after ten years with private sector player’s
penetration, the total assets rose up to Rs. 1218.05 bn.

Mutual Funds are an under tapped market in India. Despite being available in the
market for over two decades now with Assets under Management equalling Rs.
78,171,152 Lakhs (as of 28th February 2010) less than 10% of Indian households have
invested in mutual funds.

A recent report on Mutual Fund Investments in India published by research and

analytics firm BOSTON ANALYTICS suggests investors are holding back their
money into mutual funds due to their perceived high risk and a lack of information on
how mutual funds work. This report is based on a survey of approx. 10000 respondents
in 15 Indian cities and towns as of March 2010. There are 43 Mutual funds recently
in India.

Major Mutual Fund Companies in India

• ABN AMRO Mutual Fund

• Bank of Baroda Mutual Fund
• HSBC Mutual Fund
• ING Vysya Mutual Fund
• Prudential ICICI Mutual Fund
• State Bank of India Mutual Fund
• Tata Mutual Fund
• Unit Trust of India Mutual Fund
• Reliance Mutual Fund
• Standard Chartered Mutual Fund
• Birla Sun Life Mutual Fund
• HDFC Mutual Fund

xxxviii
 • Escorts Mutual Fund
• Alliance Capital Mutual Fund
• Franklin Templeton India Mutual Fund
• Morgan Stanley Mutual Fund India
• IIFL Mutual Fund
• IDFC Mutual Fund
• Indiabulls Mutual Fund
• LIC Nomura Mutual Fund
• JM Financial Mutual Fund
• Axis Mutual Fund
• BNP Paribas Mutual Fund
• BOI AXA Mutual Fund
• Deutsche Mutual Fund
• Edelweiss Mutual Fund
• IDBI Mutual Fund
• JP Morgan Mutual Fund
• Kotak Mahindra Mutual Fund
• L&T Mutual Fund

HISTORY OF MUTUAL FUNDS IN INDIA

The mutual fund industry is a lot like the film star of the finance business. Though it
is perhaps the smallest segment of the industry, it is also the most glamorous – in that
it is a young industry where there are changes in the rules of the game every day, and
there are constant shifts and upheavals. The mutual fund is structured around a fairly
simple concept, the mitigation of risk through the spreading of investments across
multiple entities, which is achieved by the pooling of a number of small investments
into a large bucket. Yet it has been the subject of perhaps the most elaborate and
prolonged regulatory effort in the history of the country. The mutual fund industry
started in India in a small way with the UTI Act creating what was effectively a small
savings division within the RBI. Over a period of 25 years this grew fairly successfully
and gave investors a good return, and therefore in 1989, as the next logical step, public
sector banks and financial institutions were allowed to float mutual funds and their
success emboldened the government to allow the private sector to foray into this area.

xxxix
The initial years of the industry also saw the emerging years of the Indian equity
market, when a number of mistakes were made and hence the mutual fund schemes,
which invested in lesser-known stocks and at very high levels, became loss leaders
for retail investors. From those days to today the retail investor, for whom the mutual
fund is actually intended, has not yet returned to the industry in a big way. But to be
fair, the industry too has focused on brining in the large investor, so that it can create
a significant base corpus, which can make the retail investor feel more secure.

A Retrospect: The last year was extremely eventful for mutual funds. The aggressive
competition in the business took its toll and two more mutual funds bit the dust.
Alliance decided to remain in the ring after a highly public bidding war did not yield
an acceptable price, while Zurich has been sold to HDFC Mutual. The growth of the
industry continued to be corporate focused barring a few initiatives by mutual funds
to expand the retail base. Large money brought with it the problems of low retention
and consequently low profitability, which is one of the problems plaguing the
business. But at the same time, the industry did see spectacular growth in assets,
particularly among the private sector players, on the back of the continuing debt bull
run. Equity did not find favour with investors since the market was lack-luster and
performances of funds, barring a few, were quite disappointing for investors. The
other aspect of this issue is that institutional investors do not usually favour equity. It
is largely a retail segment product and without retail depth, most mutual funds have
been unable to tap this market. The tables given below are a snapshot of the AUM
story, for the industry as a whole and for debt and equity separately.

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FIGURE 1.4 PHASES IN MUTUAL FUND FORMATION

• Unit Trust of India, single MF entity in India

1964

• Eight new funds established by banks, LIC and GIC

1987 - 1993
• Total number of schemes up to 167

• Asset under management (AUM) grows to Rs 6700 Crore

1988

• AUM shoots up to Rs 61000 Crore

• Private and foreign sector players enter the industry
1993 • Kothari pioneer mutual

• SEBI formulates Mutual Fund Regulation, a comprehensive regulatory framework

1996

• 45 Mutual Fund organizations

2014
• AUM nearly Rs10 lakh Crore

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The
history of mutual funds in India can be broadly divided into four distinct phases

First Phase - 1964-1987

Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from
the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory
and administrative control in place of RBI. The first scheme launched by UTI was
Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under
management.

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

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.
47,004 crores.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets
under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs. 29,835 crores as at the end of

xlii
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores
of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth.

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The
history of mutual funds in India can be broadly divided into four distinct phases:

Mutual Fund Industry in World Market

One of the most interesting financial phenomena of the 1990s was the explosive
growth of mutual funds. This was particularly true in the United States where total net
assets of mutual funds grew from USD 1.6 trillion in 1992 to 5.5 trillion in 1998,
equivalent to an average annual rate of growth of 22.4 percent. But, with the exception
of some East Asian countries (including Japan), it was also true of most other countries
around the world. The 15 countries that are members of the European Union witnessed
an increase in their total mutual fund assets from USD 1 trillion in 1992 to
2.6 trillion in 1998 (average annual growth rate of 17.7 percent). Among EU member
countries, Greece recorded the highest growth rate at 78 percent, followed by Italy at
48 percent and Belgium, Denmark, Finland and Ireland, all with growth rates of
around 35 percent. Some developing countries, such as for example Morocco,
registered even higher growth rates, but from much smaller starting points. In the
United States, not only did mutual fund assets grow explosively over this period, but
household ownership of mutual funds also experienced rapid growth. Survey
estimates reported by the Investment Company Institute (the trade association of US
mutual funds) show that the proportion of US households owning mutual funds grew
from 6 percent in 1980 to 27 percent in 1992 and 44 percent in 1998 (ICI 2002).1 The

xliii
global growth of mutual funds was fuelled by the increasing globalization of finance
and expanding presence of large multinational financial groups in a large number of
countries and by the strong performance of equity and bond markets throughout most
of the 1990s. A third factor was probably the demographic aging that characterizes
the populations of most high and middle-income countries and the search of financial
instruments that are safe and liquid but also promise high long-term returns by
growing numbers of investors.

The mutual fund industry is regulated by the Securities and Exchange Commission
(SEC) and by state regulations and securities laws. The first mutual fund was
developed on March 21, 1924, when three Boston securities executives pooled their
money to establish the Massachusetts Investors Trust. In just one year, the mutual
fund grew from $50,000 to $392,000 in assets. Investors welcomed the innovation and
invested in this new vehicle heavily; however, the stock market crash of 1929 slowed
its growth. To instill investors with confidence, the U.S. Congress passed the
Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment
Company Act of 1940, which set standards with which mutual funds must comply.

By the end of the 1960’s, there were approximately 270 funds with $48 billion in
assets. One of the largest contributors to the mutual funds’ growth was the provision
added to the Internal Revenue Code in 1975 that allowed individuals already in a
corporate pension fund to contribute up to $2,000 per year to an individual retirement
account (IRA). Mutual funds became popular in employer sponsored 401(k)
retirement plans, IRAs, and Roth IRAs. In 1976, John Bogle founded the first retail
index fund (a passively managed fund that tries to mirror the performance of a specific
index, such as the S&P 500), named First Index Investment Trust. Later renamed
Vanguard 500

Index Fund, its revolutionized investing, becoming one of the world’s largest mutual
funds, with more than $115 billion in assets. Mutual fund assets first reached the
trillion-dollar mark in January, 1990. By the end of 1990, the industry had also posted
new records, both in the number of funds (3,108) and in the number of individual
accounts (62.6 million). By 1996, total mutual fund assets reached $3 trillion. The
industry blossomed in the dawn of the new millennium, and in 2007, there were 8,015
mutual funds, with a combined worth of $12.4 trillion.

xliv
Organization of Mutual Funds

In accordance with the provisions of the Indian Trust Act, 1882 every mutual fund
shall be constituted in the form of a trust. SEBI Guidelines, 1992 spell out in clear
terms the establishment norms for mutual funds. It contemplated a three-tier system
for managing the affairs of mutual funds. The three constituents are the sponsoring
company, the trustees and the assets management company (AMC). These three
constituents were incorporated in SEBI Regulations, 1996 for the management of
mutual funds. Apart from these three, Custodians and transfer agents are two more
important constituents of mutual funds.

• Sponsor

Sponsor of a mutual fund is akin to the promoter of a company as he gets the fund
registered with SEBI. Under SEBI regulations, sponsor is defined as any person who
acting alone or in combination with another body corporate establishes the mutual
fund. Sponsor can be Indian companies, banks or financial institutions, foreign entities
or a joint venture between two entities. As Reliance mutual fund has been sponsored
fully by an Indian entity. Whereas, funds like Fidelity mutual fund and J P Morgan
mutual fund are sponsored fully by foreign entities. ICICI Prudential mutual fund has
been set up as a joint venture between ICICI Bank and Prudential plc. Both sponsors
have contributed to the capital of the Asset Management Company of ICICI
Prudential.

SEBI has laid down the eligibility criteria for sponsor as it should have a sound track
record and at least five years’ experience in the financial services industry. SEBI
ensures that sponsor should have professional competence, financial soundness and
general reputation of fairness and integrity in business transactions. At least 40 percent
of the capital of AMC has to be contributed by the sponsor. Also, they identify and
appoint the trustees and Asset Management Company. Sponsors are also free to get
incorporated an AMC as well as to appoint a board of trustees. They, either directly
or acting through trustees, will appoint a custodian to hold the fund assets. To submit
trust deed and draft of memorandum and articles of association of AMC to SEBI is
also a duty of sponsor. After the mutual fund is registered, sponsors technically take
a backseat.

xlv
• Trustees

Under the Indian trust act 1882, a sponsor creates mutual fund trust, which is the main
body in creation of mutual funds. Trustees may be appointed as an individual or as a
trustee company with the prior approval of SEBI. As defined under the SEBI
regulations, 1996, trustees mean board of trustees or Trustee Company who hold the
property of mutual fund for the benefit of the unit holders. A Trustee acts as the
protectors of the unit holders’ interests and is the primary guardians of the unit
holders’ funds and assets. Sponsor executes and registers a trust deed in favour of
trustees. There must be at least 4 members in the board of trustees and least two third
of them need to be independent. For example, HDFC Trustee Company Limited is the
Trustee of HDFC Mutual Fund vide the Trust deed dated June 8, 2000. It has five
board members, of whom three are independent.

To ensure fair dealings, mutual fund regulations require that trustee of one mutual
fund cannot be a trustee of another one, unless he is an independent trustee in both the
cases, and has approval of both the boards. AMC, its directors or employees shall not
act as trustees of any mutual fund. Trustees must be the person with experience in
financial services and every trustee should be a person of integrity, ability and
standing. SEBI has also defined the rights and obligations of trustees. Under their
rights, trustees appoint AMC with the prior approval of SEBI. They approve each of
the schemes floated by AMC in consultation with the sponsors. They have the right
to obtain from the AMC, such information as they consider necessary to fulfil their
obligations.

Trustees can even dismiss AMC with the approval of the SEBI and in accordance with
the regulations. Under their obligations, trustees must ensure that the transactions of
mutual funds are in accordance with the trust deed and its activities are in compliance
with SEBI regulations. They must ensure that AMC has all the procedures and systems
in place, and that all the fund constituents are appointed. Also, they must ensure due
diligence on the part of AMC in the appointment of business associates and
constituents. Trustees must furnish to SEBI, on half-yearly basis a report on the
activities of the AMC.

xlvi
 • Asset Management Company (AMC)

Asset Management Company is the body engaged to run the show of a mutual fund.
The sponsor or trustees appoint AMC to manage the affairs of the mutual fund to
ensure efficient management. SEBI desires that AMC must have a sound track record
in terms of net worth, dividend paying capacity, profitability, general reputation and
fairness in transactions. AMC is involved in basically three activities as portfolio
management, investment analysis and financial administration. Therefore, the
directors of AMC should be expert in these fields. SEBI’s regulation for AMC
requires that it should have a net worth of at least Rs. 10 crores at all times and that a
company can act as an AMC of one mutual fund only. Also, at least 50 percent of the
members of the board of an AMC have to be independent and these can be the director
of another AMC also. Its chairman should be an independent person.

AMCs cannot engage in any business other than that of financial advisory and
investment management. Its memorandum and articles of association have to be
approved by the SEBI. Statutory disclosures regarding AMCs operations should be
periodically submitted to SEBI. Prior approval of the trustees is required, before a
person is appointed as a director on the board of AMC. An AMC cannot invest in its
own schemes until it is disclosed in the offer document. Moreover, in such
investments, AMC will not be eligible for fees also. The appointment of an AMC can
be terminated by the majority of trustees or by 75 percent of unit holders. Example:
HDFC Asset Management Company Ltd. was approved by SEBI vide its letter dated
June 30, 2000 to act as an Asset Management Company of the HDFC mutual fund. In
terms of investment management agreement, the trustee appointed this AMC. HDFC
holds 60 percent of the capital and Standard Life Investments holds remaining 40
percent of the capital of the AMC. Its board has 12 members of whom 6 are
independent. Apart from three constituents discussed above, Custodians and transfer
agents are another two important constituents of mutual funds. These have been
discussed below.

xlvii
• Custodian

SEBI requires that each mutual fund shall have a custodian who is independent and
registered with it. SEBI regulations provide for the appointment of a custodian by
trustees of the mutual fund who are responsible for carrying on the activities of safe
keeping of securities and participating in any clearing system on behalf of mutual
fund. Custodian is not permitted to act as a custodian of more than one mutual fund
without the prior approval of SEBI. They should be independent of the sponsors. As
for example, ICICI Bank is a sponsor of ICICI Prudential Mutual fund. It is also a
custodian bank. But it cannot offer its services to ICICI Prudential Mutual fund,
because it is a sponsor of this fund.

The appointment of any agency as custodian depends upon its track record, quality of
services, experience, transparency, computerization and other infrastructure facilities.
Custodians primarily perform securities settlement functions. However, some also
offer fund accounting and valuation services. The responsibilities of custodian include
delivering and accepting securities and cash, to complete transactions made in the
investment portfolio of mutual funds. Custodians also track and keep pay outs and
corporate actions such as bonus, rights, offer for sale, buy back offers, dividends,
interest and redemption on the securities held by the fund. They also look after that
the discrepancies and failure must be timely resolved.

•Transfer agent Registrar and transfer (R&T) agents are responsible for creating and
maintaining investor records kept in numbered account called folios and servicing
them. They accept and process investor transactions and also operate investor service
centre (ISCs) which acts as an official point for accepting investor transactions with a
fund. As for example, Computer Age Management Services (CAMS) is the R&T
agent for HDFC mutual fund. R&T functions include issuing and redeeming the units
and updating the unit capital account. R&T perform creating, maintaining and
updating the investors’ records and enabling their transactions such as redemption,
purchase and switches. Banking the payment instruments such as drafts and cheques
given by investors and notifying the AMC is also done by them. R&T send statutory
and periodic information to investors and process pay outs to investors in the form of
dividends and redemptions.

xlviii
 Agent

Figure 1.5 Organization of Mutual Funds

Regulatory Bodies/ Agencies

• Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India (SEBI) is entrusted with the role of regulating
and supervising mutual funds in India. It has been set up by an Act of Parliament
namely the SEBI Act, 1992 and is supervised by the Ministry of Finance. As the
regulator of Indian capital market, SEBI came out with its first mutual fund
regulations in 1993 that were revised and enlarged subsequently in 1996. Apart from
sharply focused normative standards, the regulatory mechanism laid huge emphasis
on market discipline through enhanced transparency and disclosure requirements.
These regulations have been amended from time to time. With SEBI regulations, all
mutual funds have been brought under a common regulatory framework to ensure
greater degree of transparency in their operations and adherence to a common
structure. This act spells out several requirements and restrictions designed to protect
the interests of investors and ensure that each mutual fund scheme is managed and
operated in the best interest of its unit holders.

To begin with, SEBI (Mutual Fund) Regulations, define a mutual fund as a fund
established in the form of a trust by a sponsor, to raise capital by the trustees, through
the sale of units to the public under one or more schemes for investing in securities in
accordance with these regulations. This entails three limitations on a mutual fund.
xlix
First, it allows mutual fund to raise capital through sale of units to the public. Second,
it permits the mutual fund to invest only in securities prescribed in SEBI (Mutual
Fund) Regulations. Third, it requires the mutual fund to be set up in the form of a trust
under the Indian Trust Act. In a trust structure, the beneficial owner has no power to
challenge the bona fide actions of the trustee. SEBI Regulations provides stringent
qualifications for the appointment of trustees. The regulation had also spelled out the
rights and obligations of the trustees, the disqualification from being appointed as
trustees etc, to ensure that they carry out their fiduciary responsibilities in the best
interest of their unit holders. Also, a code of conduct to be abided by the trustees has
been delineated in the act. All mutual funds are required to register with the Securities
and Exchange Board of India. Registration is intended to provide adequate and
accurate disclosure of material facts concerning the mutual funds. Mutual funds are
allowed to launch schemes only with the prior approval of SEBI. Also, the mutual
funds are required to disclose to SEBI regular, comprehensive disclosures of their
operations. Mutual funds must adhere to specific rules laid down by SEBI regarding
their sale, distribution and advertising. According to it, the advertisement for each
scheme shall disclose investment objective for each scheme. The offer document and
advertisement materials shall not be misleading or contain any statement or opinion
that is incorrect or false. SEBI has prescribed a detailed code of conduct for all mutual
fund intermediaries i.e., agents and distributors. For the purpose of implementing this
code of conduct effectively, AMFI certification examination has been made
mandatory for all the distributors and agents of mutual funds. Mutual funds need to
specify certain information about their scheme in the offer document as the name of
directors of Asset Management Company, trustees and the contact person whom unit
holders may approach in case of any query, complaints or grievances. Investors can
also approach SEBI for rectifying their complaints after which, SEBI takes up the
matter with the concerned mutual fund and follows up with them till the matter is
resolved.

• Reserve Bank of India (RBI)

RBI is the regulatory authority of banks in India. Banks can function as sponsors,
custodians and distributors of mutual funds. For performing these functions, they are
subject to regulations stipulated by RBI from time to time. RBI is the regulator of the
government securities and money markets in India. Since mutual funds may invest in

l
these securities, they are required to abide by the RBI Regulations as may be
applicable.

• Stock Exchanges

It is mandatory for close-ended funds to be listed on a stock exchange. Mutual funds

also offer exchange traded funds (ETF) that can be bought and sold on a stock
exchange. For these funds, the mutual fund will enter into a listing agreement with
stock exchange and subject itself to the necessary regulatory and disclosure
requirements.

• Association of Mutual Funds in India (AMFI)

AMFI is the apex body of all the registered asset management companies (AMC). It
was incorporated on August 22, 1995 as a non-profit organization. All the AMCs that
have launched mutual fund schemes are its members. The objective of AMFI is to
promote investor’s interest by defining and maintaining high ethical and professional
standards in the mutual fund industry. It recommends the best business practices and
code of conduct for its members. AMFI represents the mutual fund industry regarding
its various matters to regulators and policy makers as SEBI, RBI and Government of
India. It also conducts various awareness programmers to promote the understanding
of mutual funds and disseminates information on mutual fund industry.

It is mandatory for intermediaries to register themselves with AMFI after completing

the certification exam and obtain AMFI Registration Number (ARN). A distributor,
whether individual or corporate will be empanelled by an AMC only after obtaining
an ARN. The AMFI code of ethics (ACE) set out the standards of good practices to
be followed by the asset management companies in their operations and dealings with
investors, intermediaries and the public. AMFI has also framed a set of guidelines and
code of conduct as AMFI Guidelines and Norms for Intermediaries (AGNI), for
intermediaries who sell and distribute mutual fund products. According to SEBI it is
mandatory for all distributors to follow this code of conduct. If it is violated by any
distributor, AMFI is authorized by SEBI to seek explanation, issue warnings or cancel
the registration of that intermediary.

li
2.2 COMPANY PROFILE

HEDGE EQUITIES (P) LTD

Hedge equities is one of the leading financial services company in India, established
in 2008 and officially inaugurated in May 2008. They are specialized in offering a
wide range of financial products, tailor made to suit individual need. As a first step
hedge equities made their presence global the company had initiated their operations
in middle –east to cater to the vast Non-resident Indian (NRI) population in that
region. Ever since their inception, they have spanned their presence all over India
through their meticulous research, high brand awareness, intellectual management and
extensive industry knowledge, hedge equities believe in creating a new breed of
investors who take judicious decisions through them. Team Hedge is a balanced mix
of more than 15 years of experience cutting across various industries with a strong
background in financial markets.

Mission

To create an ethical and sustainable financial services platform for our customers
and partner them to build business, to provide employees with meaningful work, self-
development and progression, and to achieve a consistent and competitive growth in
profit and earnings for our shareholders and staff.

Vision

Hedge equities have been a household name among the masses owing our success
to timely Professional financial assistance to our clients. This aptly articulates our
vision of ‘Evolving into a financial supermarket which will be a one stop shop for all
financial solutions’.

lii
Social Corporate Responsibility

Being a responsible corporate citizen, Hedge equities has initiated a non-profit

movement, “Hedge Yuva”, which focuses on educating the masses about Stock
Market. The movement has also formulated various scholarship programs for young
and dynamic youth.

. Promise

➢ To our Customers: We exist to serve and meet your needs. Our focus is to
create ethical and sustainable financial services platform that places your
unique needs over and above everything else.
➢ To our Employees: We will provide our employees with a meaningful and
rewarding career with emphasis on self-development and career progression.
➢ To our Shareholders: We will spare no efforts to achieve a consistent and
competitive growth in earnings and profitability.

Hedge Advantage

• At Hedge Equities, the needs of Customers stand before everything

else.
• SEBI Registered Portfolio Manager with a dedicated Wealth
Management Services desk that aims to provide objective guidance
tailored to meet each customer’s individual needs.
• Strong Research Team backed with best of breed data mining and
analysis.
• Industry leading technology solutions that make portfolio
administration simpler and cost-effective.
• A Global Outlook blended with a Local Flavour and backed with a
growing network of over 120 service outlets, 450 qualified employees,
and over 200 support associates.
• The Trust and Goodwill of over 20,000 satisfied customers.
• Member of BSE, NSE, MCX, MCXSX, NMC, and Depository
Participant in CDSL
• Rated as the top brand by the investor community of Asianet channel

liii
 • Growing overseas presence with operations in Middle East and an
expanding presence in the European region and North America.

ABOUT HEDGE EQUITIES

Hedge equities is one of the leading Financial services company in India, specialized
in offering a wide range of financial products, tailor made to suit individual needs. As
a first step to make their presence Global, Hedge equities have initiated operations in
Middle East to cater to the vast Non-Resident Indian (NRI) population in that region.
Ever since their inception, they have spanned their presence all over India through
their Meticulous Research, High Brand awareness, Intellectual Management and
Extensive Industry knowledge. Hedge believes in creating a new breed of investors
who take judicious decisions through them.

Team Hedge is a balanced mix of more than 15 years’ experience cutting across
various industries with a strong background in the financial markets. The board
comprises of six power houses in their respective fields- FedEx Securities, Baby
Marine Exports, Thakker Developers, Smart financial, SM Hedge (CFO, Videocon
Industries) and Padmashree Mohan Lal.

FedEx securities

Managed by a team of ex-bankers, FedEx is a SEBI registered category 1 merchant

banker. The company concentrates on non-fund-based activities like structuring, tie
up of project financing, financial restructuring investment banking, corporate and
advisory services. The core management team consists of bankers with rich
experience of decades and exposure to volatile situations in commercial and
investment banking. With offices at Nariman point and Vile Parle east, Mumbai, state
of the art infrastructure and qualified manpower to conduct the business, FedEx
securities envisages a phenomenal growth in this sector for its clients.

Baby Marine Exports

Baby Marine Group, started its operation in 1977 from Kozhikode and through
innovations and hard work has grown into three unit and related industries spanning
both the west and east coast of Indian.

liv
Baby Marine Exports, B.M Products and Baby Marine (Eastern) Exports are
efficiently aided by pre-processing units, ice factories and a fleet of insulated and
refrigerated trucks for sea food transportation. Due to constant upgrading of
machinery, state-of-the-art infrastructural facilities, better links with raw materials
suppliers, and an established network of purchasers have obviously made Baby
Marine Group a leading exporter of processed marine products to various international
markets.

Smart financial

Smart financial entered the financial market only in 1992 but over this brief span has
covered a niche for itself by becoming the leading financial provider. The company
offer guidance to investors as equities, commodities, mutual fund’s portfolio
management services and insurance. It offers complete range of financial solutions
that encompasses every sphere of life

Thakker group

Starting off as a land developer and builder in 1962, Thakker groups diversified into
commercial production of agricultural and horticultural products, housing real estate
marketing plantation etc. They have provided shelter to more than 40000 families by
offering residential plots and premises. Thakker developers is the flagship company
of the group. It was established as private limited in 1987 and later went on to become
the only public limited company in North Maharashtra engaged in housing,
commercial construction and land development. The company is also a Class1
contractor registered with the Public Work Department, Govt. of Maharashtra.

SM Hedge

Mr. S.M Hedge, a chartered accountant by profession is the Chief Finance Officer of
the Indian Multinational Videocon International and has been at the helm of affairs
for the last 20 year.

Padmashree Bharat Mohanlal

Mohanlal, the south Indian movie superstar has become a legend, a brand and cultural
ambassador owing to various factors. Versatility and natural flair for donning complex
characters have won him numerous accolades not to speak of some unforgettable films

lv
contributed by him. Intellectual and knowledge arbitrage is the mantra of modern-day
business. The same holds true for the financial markets. With the breadth and depth
of knowledge of modern-day business that the Board of Hedge brings to the table, you
can be rest assured that some of the best minds in the business are taking care of your
investments.

Management

• Alex. K. Babu, Managing Director

• N. Bhuvanendran, Chief Executive Officer
• Bobby J Arakunnel, Chief Operating Officer
• Mr. Mohanlal – Director
• Dr. Samuel George
• Mr. Pradeep Kumar C, Director

2.3 PRODUCTS PROFILE

Services provided by Hedge Equities Ltd.

1. Equity Trading

Equity gives you the opportunity to have a partnership with all the leading Business
tycoons around the globe. Total capital contribution for a company comprises of
investments through equity share holdings by small and big investors. The investors
who have a stake in a company are referred to as shareholders.

Power of Equity shareholders lies in the optimum selection of the Industry, have a
strong belief in the Company's fundamentals and also having a confidence in the
profit-making capability of the company.

Equity Market, at present, is a rewarding field for the investors and investing in Indian
stocks are profitable for not only the long and medium-term investors, but also the
position traders, short-term swing traders and also very short-term intra-day traders.
Fundamentally, stock market is an avenue for business people to meet shareholders.
Other than bank loans, they now have another option to finance their businesses. They

lvi
did it by offering their company's equities in exchange of shareholders cash. The
company is never required to repay the capital, but the new shareholders have a right
to future profits distributed by the company. For shareholders, they have alternatives
to where they should put their money into. In the same time, they get the opportunity
to participate in capital intensive businesses at an affordable price. Equity is an
investment area which you can capitalize on with proper assistance regardless of the
market circumstances. Hedge Equities opens the door to this highly lucrative
investment opportunity that could provide a feasible solution to all your financial
queries.

2. Commodities Trading

Commodity "futures" are contracts to buy or sell certain goods at set prices at a pre-
determined time in the future. Futures trading plays a key role in the marketing of a
number of important agricultural and non-agricultural commodities as it provides the
industrial and farming communities with a transparent price discovery platform,
which also enables them to hedge their price risk and price volatility. The growth of
Indian commodities futures trading towards an efficient, transparent and well-
organized market has thrown open a window of benefits and opportunities to Indian
producers and traders. Besides the primary benefits of its twin economic functions of
price discovery and price risk management, commodity futures trading has also played
an instrumental role in integrating various fragmented components of the commodity
ecosystem, thus developing the overall infrastructure of agricultural commodities
marketing in the country.

At present, 24 commodity futures exchanges are operational in India, which include

21regional bourses and the three national-level players, with another three proposed
exchanges on the cards. With the state-of the-art technology-powered secure and
efficient operational infrastructure, these national exchanges are creating a near-
perfect market situation with a much wider participation from the ecosystem
stakeholders in a large number of domestic and global commodities during local and
international timings.

While the trade in non-agricultural commodities, especially bullion and crude, has
increased in the past two financial years, the same in agricultural commodities has
declined. The share of agricultural commodities almost halved during 2008-09, due

lvii
to the continued ban on several commodities. The clients can trade in commodity
futures like gold, silver, crude oil, rubber etc. And take advantage of the extended
trading hours (10 am to 11pm) in commodities trading.

3. Currency Trading

Investments in Currency Derivatives can help you to diversify your portfolio from
traditional asset classes. Currency derivatives can be described as contracts between
the sellers and buyers, whose values are to be derived from the underlying assets, the
currency amounts. These are basically risk management tools in force and money
markets used for hedging risks and act as insurance against unforeseen and
unpredictable currency and interest rate movements. Any individual or corporate
expecting to receive or pay certain amounts in foreign currencies at future date can
use these products to opt for a fixed rate - at which the currencies can be exchanged
now itself. Currency derivative serve the purpose of financial risk management
encompassing various market risks. An upfront premium is payable for buying a
derivative.

Currency Futures will bring in more transparency and efficiency in price discovery,
eliminate Counterparty credit risk, provide access to all types of market participants,
offer standardized products and provide transparent trading platforms.

4. Mutual Funds

A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income earned
through these investments and the capital appreciations realized by the scheme are
shared by its unit holder. Thus, a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified, professionally
managed portfolio at a relatively low cost. Mutual fund is also called unit trust or
open-ended trust a company that invests the funds of its clients in diversified securities
and in turn represent those holdings. They make continuous offering of new shares at
NAV (Net Asset Value) determined daily by the market values of the securities they
hold. In Hedge Equities the clients can select from a wide range of Mutual Funds and
Bonds available in the markets today.

lviii
5. Online trading

Hedge Equities has a large network of branches with online terminals of NSE and
BSE in the Capital market and derivative segments. The clients are assured of prompt
order execution through dedicated phones and expert dealers at our offices.

6. Internet trading

Hedge Equities offers Internet trading through this site. You can trade through the
Internet from the comforts of your office or home, anywhere in the world. The
dedicated IT systems ensure service up time and speed, making Internet broking
through Hedge Equities hassle-free. Using the easiest facility provided by NSDL, the
clients can transfer the shares sold by them online without delivery instruction slips.
Additionally, digitally signed contract notes can be sent to clients through E-mail.

7. Depository services

Hedge Equities is a member of the National Securities Depository Limited (NSDL),

offer depository services with minimum Annual Maintenance Charges and transaction
charges. Account holders can view their holding position through the Internet. They
also offer the ‘easiest’ facility provided by NSDL (electronic access to securities
information and execution of secured transaction) through which clients can give
delivery instructions via the Internet.

8. Derivative trading

Hedge offer trading in the futures and options segment of the National Stock Exchange
(NSE). Through the present derivative trading an investor can take a short- term view
on the market for up to a three months perspective by paying a small margin on the
futures segment and a small premium in the options segment. In the case of options,
if the trade goes in the opposite direction the maximum loss will be limited to the
premium paid.

9. Knowledge Centre

Knowledge Centre activities are intended to provide systematic and structured

services mainly to new investors and also to young aspirant aiming for a career in
financial markets. The centre has three functional areas: the Publication Division, the

lix
Training Centre, and Wealth Management Advisory Service which provides complete
investment solutions to investors through knowledge based personalized service.

10. Equity Research

Hedge Equities constantly strive to deliver insightful research to enable pro-active

investment decisions. The research department is broadly divided into two divisions-
Fundamental Analysis Group (FAG) and Technical Analysis Group (TAG). The
fundamental analysts are continuously scanning the entire economy for discovering
what they call the hidden gems in stock market terminology and present it to the clients
for profitable investments. Timing the market has always been the most difficult task
for all analysts and their Technical Analysis Group has emerged to predict the market
movements well in advance using complex Analytical methods including Eliot Wave
Theory. They are equipped with cutting edge technologies for technical charting
which assist the technical analysts to predict both upside and downside movements
efficiently for the benefit of clients.

11. Portfolio Management Service

Hedge Equities is a SEBI-approved portfolio manager offering discretionary and non-

discretionary schemes to its clients. Hedge Equities portfolio management team keeps
track of the markets on a daily basis and is exposed to a lot of information and analytic
tools which an investor would not normally have access to. Other technicalities
pertaining to shares like dividends, rights, bonus, buy-back, mergers and acquisitions
are also taken care of by them.

12. Hedge school of Applied economics

Hedge school of applied economics is a distinguishing school instituted on the

sturdy premises of quality, with a singular objective of creating credentialed
professionals for the financial markets. The focus is on grooming students to have a
cutting edge in hare trading banking, insurance or wealth management by
implementing innovative solution .it is also considered as an ideal branch of hedge
equities.

lx
Branches of Hedge Equities

Hedge equities has 130 branches in India and 1 branch in Dubai, UAE

❖ 106 branches in Kerala

❖ 6 branches in Karnataka
❖ 7branches in Maharashtra
❖ 1 branch in Tamil Nadu

Hedge Equities Registered Office is in Nariman Point, Mumbai and corporate office
is in Kaloor, Kochi and their regional offices are in Bangalore, Shimoga, and
Hyderabad. There are 117 employees in their Head Office., 8-10 employees in their
Regional Offices and 4-5 employees in each branch.

Main Competitors

❖ GEOJIT BNP PARIBAS

❖ JRG SECURITIES
❖ RELIGARE
❖ MUTHOOT SECURITIES
❖ SHAREWEALTH
❖ MOTILAL OSWAL
❖ ANANDRATHI

lxi
FIGURE 1.6 ORGANIZATION STRUCTURE

UNDER THE GM

ADMI
N

lxii
REGIONAL ORGANIZATIONAL STRUCTURE

DEPARTMENTS OF HEDGE EQUITIES

• Client Relation Department

• Finance Department
• Marketing Department
❖ Business associate development
❖ Brand promotion
❖ Investment promotion
• Systems Department
• Human Resources Department
• Training Department
❖ Wages and Salary
❖ Performance Appraisal
• Trading Department
❖ Online Trading
❖ Internet Trading
• Delivery and Depository Department
❖ Power of attorney
❖ Depository function

lxiii
 ❖ Dematerialization
❖ Pledging
• Equity Research Department
❖ Fundamental analysis
❖ Technical analysis

Client Relation Department

The client relation department assists the client or customer top open an
account in HEDGE EQUITIES (p) Ltd securities. This department is also known as
the front office. A client has to open two types of accounts to trade and own securities
in the NSE and BSE.

Finance Department

Thus, a department, to organize financial activities may be created under the

direct control of the board of directors. Finance manager will decide the major
financial policy methods. Lower levels can delegate the other routine activities.

Marketing Department

The major functions of marketing department are:

• Business associate development: The Company takes up the marketing

activities of the various branches. It ensures an efficient marketing arena at its
various branches. The company encourages better relations in its branches and
promotes for the development of various marketing strategies.
• Brand promotion: An important function of marketing department is to
promote the name of the company. HEDGE EQUITIES (P) LTD does it
through the different promotional activities. The name of HEDGE EQUITIES
(P) LTD as a stock broking firm is made known to the outside world.
• Investment promotion: The main clients of HEDGE EQUITIES (P) LTD
were its investors. Hence the marketing department tries to capture as many
investors as possible to encourage them to invest.
• Delivery promotion: Intraday trading is not always profitable and might
involve a lot of risk hence HEDGE EQUITIES (P) LTD promotes for delivery
were the shares are kept to be sold for a later date analysing the profitability
factors.

lxiv
 Systems Department

The systems department is playing a vital role in the day operations of the
company. It is through the systems department that the clients can avail the facilities
of Internet trading. Optic fibre cables and high bandwidth connections from the
HEDGE EQUITIES (P) LTD office to the ISP, a dedicated server and back-up ISDN
connections were maintained directly by the systems department. For the purpose of
trading they have made use of two software namely ODIN (Open Dealers Integrated
Network)

Human Resources Department

Human resource is often considered as the back bone of an organization even

in this age of advanced automation and mechanization. Since virtual organizations are
not very much popular in our part of the world, it is very important to any organization
to have a HR department. The presence of an excellent HR department increases the
efficiency of an organization considerably. Human resource management is defined
as asset of practices, policies and programmes designed to maximize both personal
and organizational goals.

a) Training and induction

The selected employees will undergo three days continuous induction.

During this period, he will undergo training with all the department of HEDGE
EQUITIES (P) LTD Securities (India) Pvt Ltd. There will also be classroom induction
also within 3 months.

b) Wages and Salary Administration

The wages and salaries of the employees were fixed and granted by the
HR department with consent of the finance department.

c) Performance Appraisal

It was human resources department which gives the promotion to all

employees, making transfers and taking disciplinary actions if needed.

lxv
 d) Grievance Handling

The grievance of employees is received only through proper channels

i.e., through the particular department heads. The HR department will make solutions
to the complaints as per the rules and regulations of the company.

Trading Department

The department deals with the trading related activities of the company. The
trading refers to the buying and selling of shares. This department is the most
important part of the organization.

There are two types of trading. They are:

i. Online Trading:

These are the trading terminal of the organization. Each computer of the
department is termed as the trading terminal. Each terminal is assigned with NCFM
certified dealers, who is in charge of each portal will do the trade according to the
client request. The terminal is managed by either NEAT (National Exchange for
Automated Trading) software or ODIN (Open Dealers Integrated Network) software.
The client can also place his through written request or through the telephone, in this
the order will be placed by the dealer.

ii. Internet Trading:

The internet trading is a facility provides by the company in order to

trade the securities from his convenient place like his office, home etc. the order will
be placed by the client itself, and he can make changes before the trade is done for
changing the price, cancellation of the order.

Delivery and Depository Department

Delivery refers to the share that bought on particular day are not sold
on that day itself and holding of the share for an appreciation in the value of the
security and to trade it on a future date. Deliver Instruction Slip: it is a slip the client
should fill and gave to the dealer regarding the purchase of the share.

There are two procedures to move the share namely:

lxvi
 a) Power of attorney

This is which the client signs at the time of opening a trading account and
depository participant account. If the client has given the power of attorney, HEDGE
EQUITIES (P) LTD will have the power to transact the clients stock without pay –in
slips.

b) Easiest

It is secured internet enabled service which means Electronic Access to

Securities information and Execution of Secured Transaction. This is facility wherein
the clients can give delivery instructions via internet. Easiest is a facility provided by
CDSL. The activities related with the depository department

c) Depository function

d) Dematerialization

e) Pledging

Equity Research Department

The function of the department is to study the details regarding the share or
securities and to make prediction regarding the future performance of the company.
The following types of approaches done through this department:

a) Fundamental analysis

b) Technical analysis

lxvii
2.4 PERFORMANCE ANALYSIS OF THE SCHEMES

For conducting the analysis twelve equity diversified mutual funds were taken. The
effectiveness in fund management was evaluated using Sharpe and Treynor ratios.
The funds that were analysed are as follows;

1. ICICI PRUDENTIAL FOCUSED BLUE-CHIP FUND(G)

2. AXIS BLUE-CHIP FUND(G)
3. HDFC MID CAP OPPORTUNITIES FUND(G)
4. KOTAK EMERGING EQUITY SCHEME FUND(G)
5. FRANKILN INDIA SMALLER COMPANIES FUND(G)
6. RELIANCE SMALL CAP FUND GROWTH PLAN(G)

1. ICICI PRUDENTIAL FOCUSED BLUE-CHIP FUND(G)

• A scheme aimed at Long Term Wealth Creation
• An open-ended equity scheme investing in maximum 30 stocks across
market-capitalisation

OBJECTIVES

To generate long term capital appreciation and income distribution to investors

from a portfolio that is predominantly invested in equity and equity related
securities of large cap companies.

TABLE 2.1 FUND DETAILS

Type Open Ended

Fund Style Growth, Equity - Focused Fund

Risk Grade Low

Return Grade Above Avg.

NAV 42.02 (19/3/2019)

AUM 318174.64 Cr.

lxviii
 Total Return (Historically) 14.18%

Net Assets 20,10,083.85 Lakhs

Expense Ratio 2.02%

52 Week High & Low High

Portfolio Manager Priyanka Khandelwal, Rajat

Chandak, Anish Tawakley

FUND PERFORMANCE(HISTORICALLY)

Fund YTD 1- 3- 1 3 5
Performance Month Month Year Year Year
(Historically) Fund 3.68 9.03 2.56 9.23 15.87 14.84
S&P 5.20 9.09 4.27 13.49 16.61 14.06
BSE 500
TRI
Category 4.86 8.85 3.89 11.85 15.04 13.34
Rank 77 28 77 60 32 11
within
Category
No. of 99 101 98 91 76 62
Funds in
Category

TOP HOLDINGS

Top Holdings HDFC Bank Ltd. 6.89

ICICI Bank Ltd 5.92
Infosys ltd. 4.94
Axis Bank Ltd. 4.43
HDFC 4.13

lxix
 ASSET ALLOCATION

ASSET ALLOCATION

7%2%

91%

SECTOR ALLOCATION

Column1

lxx
INVESTMENT DETAILS

Investment AMC ICICI Prudential Asset Management

Details Company Ltd
Registrar Computer Age Management Services Ltd.
Launch 23/05/2008
Date
SIP Min 100
Investment
Exit Load 1% for redemption within 365 days

2. AXIS BLUE CHIP FUND

The Scheme is an open-ended equity scheme predominantly investing in large
cap stock. The investment objective of the Scheme is 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.

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. However, there can be no assurance that the
investment objective of the Scheme will be achieved.

TABLE 1.2 FUND DETAILS

Open/Closed Ended Open Ended Schemes

Fund Style Equity - Large Cap Fund
Risk Grade Low
Return Grade Above Average
NAV 27.88

lxxi
 AUM ₹ 4220.99 Cr
Total Return 11.77%
(Historically)
Net Assets 4,22,098.96 Lakhs.
Expense Ratio 1.98%
52 Week High & 22.19- 27.18
Low
Portfolio Manager Shreyash Devalkar

FUND PERFORMANCE (HISTORICALLY)

Fund YTD 1- 3- 1 Year 3 Year 5 Year

Performance Month Month
(Historically) Fund 3.14 4.07 4.07 4.07 4.07 4.07
S&P 5.66 7.23 4.87 14.74 16.86 14.09
BSE 250
Smallcap
TRI
Category 4.07 5.99 5.04 10.75 14.14 13.21
Rank 66 88 67 32 23 7
within
Category
No. of 91 95 90 84 69 57
Funds in
Category

TOP HOLDINGS

Top Holdings HDFC Bank 9.55

Bajaj Finance 8.41
Kotak Mahindra Bank 7.64
Tata Consultancy Services 7.61
Infosys 7.03

lxxii
ASSET ALLOCATION

ASSET ALLOCATION
Equity Debt Cash

0%
18%

82%

SECTOR ALLOCATION

lxxiii
INVESTMENT DETAILS

Investment AMC Axis Mutual Fund

Details Registrar
Launch Jan 05, 2010
Date
SIP Min 1000.00
Investment
Exit For units in excess of 10% of the investment,1%
will be charged for redemption within 365 days

3. HDFC MID CAP OPPORTUNITIES FUND

• A scheme aimed at Long Term Wealth Creation
• An open-ended equity scheme investing in maximum 30 stocks across
market-capitalisation.

OBJECTIVE

To provide long-term capital appreciation/income by investing predominantly

in Mid-Cap companies. There is no assurance that the investment objective of the
Scheme will be realized.

TABLE 1.3 FUND DETAILS

Open/Closed Ended Open Ended

Fund Style Growth, Equity: Mid Cap
Risk Grade Below Avg.
Return Grade Above Avg.
NAV 54.783 (19/3/2019)
AUM 332898.45 Cr.
Total Return (Historically) 15.59%

Net Assets 20,53,880.89 Lakhs

lxxiv
 Expense Ratio 2.15%
52 Week High & Low 48.56 – 61.46

Portfolio Manager Chirag Setalvad, Amar Kalkundrikar

FUND PERFORMANCE (HISTORICALLY)

Fund YTD 1- 3- 1 3 Year 5 Year

Performance Month Month Year
(Historically) Fund 2.42 11.16 2.52 -0.99 15.91 20.48
S&P -1.28 9.83 -1.79 -3.72 15.07 19.04
BSE 500
TRI
Category 1.14 9.56 .95 -2.29 13.81 19.42
Rank 7 2 3 8 6 8
within
Category
No. of 24 24 24 23 20 20
Funds in
Category

TOP HOLDINGS

Top Holdings Cholamandalam 3.92

Sundram 3.75
Balkrishna 3.58
Torrent Phar. 3.03
Voltas 2.94

lxxv
ASSET ALLOCATION

ASSET ALLOCATION

8 %0%

Equity
Debt
Cash

92%

SECTOR ALLOCATION

lxxvi
4. KOTAK EMERGING EQUITY SCHEME FUND
• Fund has 97.91% investment in Indian stocks of which 7.35% is in large cap
stocks, 75.28% is in mid cap stocks, 15.28% in small cap stocks.
• Suitable for investors who are looking to invest money for at least 3-4 years and
looking for high returns. At the same time, these investors should also be ready
for possibility of moderate losses in their investments.
OBJECTIVE
The investment objective of the scheme is to generate long-term capital
appreciation from a portfolio of equity and equity related securities, by investing
predominantly in mid companies. The scheme may also invest in Debt and
Money Market Instruments, as per the asset allocation table. There is no
assurance that the investment objective of the Scheme will be achieved.

1.4 FUND DETAILS

Type Open-ended
Benchmark Name NIFTY Midcap 100 TRI
Fund Style Equity- Mid Cap Fund
Risk Grade Below Average
Return Grade High
NAV 38.85
AUM 3535.16 crores
Net Assets 3,53,516.35 Lakhs. (As on
28/02/2019)
Expense Ratio 2.12% As on (28-02-2019)
52 Week High & 33.52-42.84
Low
Portfolio Manager Mr. Pankaj Tibrewal

lxxvii
FUND PERFORMANCE

Fund YTD 1- 3- 1 3 Year 5 Year

Performance Month Month Year
(Historically) Fund S&P 4.52 4.24 5.50 -3.89 15.73 22.11
BSE 0.63 4.92 2.56 -5.02 15.02 17.92
Mid Cap
TRI
Category
Rank 2.64 4.16 3.77 -4.72 13.65 18.50
within 5 14 4 10 7 2
Category
No. of
Funds in 24 24 24 23 20 20
Category

ASSET ALLOCATION

ASSET ALLOCATION

20%%

Cash
Deposits
Equity

98%

SECTOR ALLOCATION

lxxviii
 SECTOR ALLOCATION

11.3 11.07 11.3 11.0 7

8.72 8.72
6.72 6.46 6.19 6.13
5.46 5.39

SECTOR ALLOCATION

TOP HOLDINGS

Top Holdings The Ramco Cements Ltd 3.9

Schaeffler India Ltd 3.42
P I Industries Ltd 3.27
Supreme Industries
3.27
Limited
RBL Bank Ltd. 3.21

INVESTMENT DETAILS

Investment AMC Kotak Mahindra Mutual Fund

Details Registrar Computer Age Management Services Ltd.
Launch date 30/03/2007

lxxix
 SIP Min 1,000
Investment
Exit 1% for redemption within 365 days

5. FRANKLIN INDIA SMALLER COMPANIES FUND

• A scheme aimed at Long Term Wealth Creation
• An open-ended equity scheme investing in maximum 30 stocks across market-
capitalisation

OBJECTIVE
The Fund seeks to provide long-term capital appreciation by investing
predominantly in small cap companies

TABLE 1.5 FUND DETAILS

Open/Closed Ended Open Ended

Fund Style Growth, Equity: Small Cap
Risk Grade Low
Return Grade Avg.
NAV 54.1.029 (22/3/2019)
AUM 332898.45 Cr.
Total Return 13.66
(Historically)
Net Assets 6,77,717.08 Lakhs
Expense Ratio 2.01%
52 Week High & Low 49.16 – 64.79

Portfolio Manager R. Janakiraman, Srikesh Nair, Hari

Shyamsunder

lxxx
 FUND PERFORMANCE (HISTORICALLY)

Fund YTD 1- 3- 1 Year 3 Year 5 Year

Performance Month Month
(Historically) Fund 3.08 10.41 2.95 -7.41 13.38 21.19
S&P 1.86 13.00 1.59 -13.33 13.80 15.64
BSE 250
Smallcap
TRI
Category 1.54 10.21 1.17 -9.27 14.32 21.05
Rank 5 10 3 3 7 4
within
Category
No. of 18 20 17 14 13 10
Funds in
Category

INVESTMENT DETAILS

Investment AMC Franklin Templeton Mutual

Details Fund
Registrar Franklin Templeton Asset
Management (India) Pvt Ltd.
Launch Date Jan 13, 2006
SIP Min Investment 500
Exit 1% for redemption within 365
days

TOP HOLDINGS

Top Holdings The Ramco Cements Ltd 3.9

Schaeffler India Ltd 3.42
P I Industries Ltd 3.27

lxxxi
 Supreme Industries
3.27
Limited

RBL Bank Ltd. 3.21

ASSET ALLOCATION

ASSET ALLOCATION

6%
0%

Equity

94%

SECTOR ALLOCATION

lxxxii
 SECTOR ALLOCATION

20.62

11.25 10.8
7.25 6.84
6.44 5.82
4.58 2.01 4.35 4.73 3.44

SECTOR ALLOCATION

6. RELIANCE SMALL CAP FUND GROWTH PLAN(G)

• An open-ended equity scheme predominantly investing in small cap stocks.
• Reliance small cap fund aims to generate capital appreciation by investing
mainly in equity and equity related securities. The fund predominantly invests
in companies with smaller market capitalization and it is benchmarked against
S&P BSE small cap index. The scheme was launched on 16th September 2010
and currently has an asset size of Rs 1,579 crores. The fund is managed by Mr.
Sunil Singhania since its inception. The minimum lump sum amount that needs
to be invested in the fund is Rs 5000 with multiples of Rs 1000 thereafter.

OBJECTIVE

The primary investment objective of the scheme is to generate long term capital
appreciation by investing predominantly in equity and equity related instruments
of small cap companies and the secondary objective is to generate consistent
returns by investing in debt and money market securities.

lxxxiii
TABLE 1.6 FUND DETAILS

Type Open ended

Fund Style Equity: Small Cap Fund
Risk Grade Average
Return Grade Above Average
NAV Rs.40.5292
AUM R 7,245 crore (As on Feb 28, 2019)
Benchmark S&P BSE Small Cap TRI
Total Return 39.90%%
(Historically)
Net Assets 7,24,494.48 Lakhs. (As on 28/02/2019)
Expense Ratio 2.3% As on (28-02-2019)
52 Week High & Low 37.21-49.80
Portfolio Manager Mr. Sunil B Singhania, Mr. Samir
Rachh

FUND PERFORMANCE

Fund YTD 1- 3- 1 Year 3 Year 5 Year

Performance Month Month
(Historically) Fund 1.97 3.98 2.76 -10.69 18.40 24.58
S&P 2.43 4.37 3.23 -14.67 13.39 16.67
BSE
Small
Cap TRI
Category 3.01 4.67 3.83 -11.32 13.87 19.98
Rank 13 14 13 6 3 2
within
Category

lxxxiv
 No. of 18 20 18 14 13 10
Funds in
Category

TOP HOLDINGS

Top Holdings Axis Bank Limited 2.5

Deepak Nitrite Limited 2.29
Housing Development 2.28
Finance Corporation Ltd.
Vindhya Tele links 2.12
Limited
Zydus Wellness Limited 2.09

INVESTMENT DETAILS

Investment AMC Reliance Mutual Fund

Details Registrar Karvy Fintech Private Limited
Launch Date 05-09-2010
SIP Min 1000.0
Investment
Exit load 1% on or before 1 Year
Nil after 1 Year

lxxxv
ASSET ALLOCATION

ASSET ALLOCATION

Equity

98%

SECTOR ALLOCATION

lxxxvi
2.5 REVIEW OF LITERATURE

Writing on common finances execution assessment is huge. In this area, a couple of

research ponders that have affected the planning of this paper are talked about.
Dhanda [1] made an endeavour to think about the execution assessment of chose open
finished plans as far as hazard and return relationship by utilizing rate of return, Beta,
Standard Deviation, Sharp Ratio and Treynor Ratio. BSE-30 has been utilized as a
benchmark to think about the execution of shared reserve in India and the
investigation time frame has been taken from April 1, 2009 to March 31, 2011. The
finding of the investigation uncovered that just three plans have performed superior
to benchmark.

Kumar Lenin Nooney and Devi Rama Vengapandu [2] assessed the execution of
chose common subsidizes utilizing normal rate of return, standard deviation,
Risk/Return, Sharpe proportion, Treynor proportion, Jenson Ratio and tried the theory
with ANOVA investigation. The example for the investigation comprises of 340
shared subsidizes having a place with Money advertise, Debt, Equity and Balanced
classification reserves and further ordered into open and private assets. The
examination of the investigation demonstrated that there is no noteworthy distinction
between the profits of private and open shared assets.

Gohar et al. [3] looked at the execution of various sorts of common assets in Pakistan
and presumed that value reserves outflank pay reserves. Test has been chosen on the
positioning of organizations according to Pakistan Credit Rating Agency (PACRA)
and the information will be gathered for a long time from 2005 to 2009 on month to
month premise. The finding demonstrated that inside value reserves, intermediary
supported classification indicates preferred execution over institutional assets and
institutional assets are beating agent sponsored assets among salary reserves.

Ruler and Bacon [4] in their exploration paper broke down the little top development
stock part of shared store industry against hazard free and market returns over the ten
years 1997-2006. In this paper result were tried against a toolbox of act of benchmarks
to check whether expected execution intently compares to genuine outcomes. The
outcomes demonstrated that some overabundance returns have been created anyway
past a bunch of the assets, it is difficult to depend upon a solitary benchmark as a solid
marker of even past execution. The proof will in general help showcase productivity

lxxxvii
since generally, the effectively overseen reserves analysed in this investigation
delivered restores that were to a great extent anticipated.

Debashish [5] endeavoured to consider in his paper the execution of chose plan of
shared subsidizes dependent on hazard return relationship models and measures. An
aggregate of 23 plot offered by six private division common assets and three open part
shared assets have been examined over the timespan April 1996 to March 2009. The
general investigation discovered Franklin Templeton and UTI being the best
entertainers and Birla Sunlife, HDFC and LIC shared subsidizes appearing poor
beneath normal execution when estimated against the hazard return relationship
models and measures. This paper finished up as in the midst of high securities
exchange instability, common assets are the best wellspring of speculations with
guaranteed and sufficient returns gave the choice of shared assets is the correct way.

Somya [6] utilized some extra, measures like data proportion, evaluation proportion
and M2 measure other than traditional execution apportions to realize extra data the
capability of the store director. He was seen that review period from Jan2000 to Dec
2005 could extensively separate into two stages, the first being a bear period while the
second one being a dominatingly bull period. He found that, amid the out of test
period, which is a by and large bull period, the assets have beated well on the normal
however their benchmarks have performed far and away superior.

Deb et al. [7] assessed return-based investigation of value common assets in India
utilizing quadratic advancement of a benefit class factor show proposed by William
Sharpe. The information utilized in the examination covers the period from January
2000 to January 2005. They found the styles benchmarks of each example of value
assets as ideal introduction to eleven inactive resource class lists. They likewise
examined the overall execution of the assets regarding their style benchmarks. The
consequence of the examination demonstrated that the assets have not had the capacity
to beat their style benchmarks on the normal.

Panwar and Madhumathi [8] utilized example of open area and private segment
assets of shifted net resource for explore the distinctions in qualities of advantage held,
portfolio broadening on venture execution for the period May, 2002 to May, 2005.
The examination found that open area supported assets don't contrast altogether from
open segment supported assets as far as mean returns rate. The investigation was

lxxxviii
additionally discovered that there was a factual contrast between sponsorship classes
in wording ESDAR (abundance standard deviation balanced returns) as an execution
measure.

Noulas and Athanasios [9] assessed the execution of Greek value assets amid the
period 1997-2000. The assessment depended on the examination of hazard and return.
The initial three years were described by positive returns of the financial exchange
and the fourth year was year of quick fall of the securities exchange concerning danger
and return. The outcome demonstrated that there were enormous contrasts among the
value shared assets concerning danger and return and the outcome showed that there
was a positive connection among hazard and return for the entire time frame while the
betas for all assets were littler than one. Rao Narayan and Ravindram inspected the
execution assessment of Indian common reserve industry in a bear advertise was
brought out through relative execution list, hazard return investigation, Treynor's
proportion, Sharpe's proportion, Jensen's proportion and Fama's measure. The
information was month to month shutting NAV's gathered from AMFI for the time of
Sep. 98 to April 02 (bear period) of 269 open finished plans. They barring the assets
whose arrival were not as much as hazard free returns, 58 plans were utilized for
further investigation. The aftereffect of relative measures proposed that the vast
majority of the common store conspires in the example of 58 had the capacity to fulfill
financial specialist's desire by giving overabundance returns over expected profits
based for both premiums for precise hazard and all out hazard.

Mehta and Shah (2012) attempted to analyse preference of investors towards mutual
fund investment and compare performance of various mutual fund schemes based on
the return parameters. The study was conducted in Ahmedabad and Baroda city. The
study found out that mutual fund is the second most preferred investment avenue after
saving account. Age and factor preferred by investors displayed no significant
relationship. Annual income is independent of annual investment in mutual fund and
also share of mutual funds in total investment. A significant association was found
between knowledge about mutual fund and qualification of investors. A risk and
return analysis of various schemes of mutual funds revealed that Canara Robeco
Equity TaxSaver – Growth is a better scheme as per Sharpe and Treynor ratio but
according to standard deviation, beta and correlation Axis Long Term Equity Fund -
Growth is considered a better scheme. Return analysis suggests that an investor has

lxxxix
to keep invested in mutual funds for a long-term period as all top 5 schemes of equity
sector yield negative return in short term.

Karrupasamy and Vanaja (2013) used measures like Sharpe, Treynor and Jenson to
appraise the performance of different categories of mutual funds. Funds were
categorized into large cap and mid cap. The outcome of the study revealed that
majority of the schemes performed better than the market and also better than their
category average. In large cap performance of SBI Blue Chip Fund (G) and Birla SL
Frontline Equity -A (G) was better than other schemes for all the three appraisal
measures and in mid cap category SBI Emerging Busi (G) and IDFC Premier Equity
- A (G) outperformed others. Shukla (2015) defined 5 categories of mutual funds
namely large cap, infrastructure, hybrid, multi cap and mid & small cap. Three
schemes from each category was chosen and compared on the basis of their
performance using statistical tools like standard deviation, beta, alpha, R squared,
Sharpe ratio. It was reported that all the schemes gave a positive return. Midcap and
small cap performed superiorly over benchmark, large and hybrid funds. Risk analysis
revealed that hybrid funds had low overall risk as compared to other funds because
they had large proportion of debt funds in their portfolio. Large cap funds and
consumption funds witnessed least deviation of returns from benchmark and thereby
had lower beta. Overall mutual fund investment proofed to be a good avenue for the
time period 2012 to 2014.

Goyal (2015) examined top 10 equity diversified mutual funds in India as per Crisil
September 2014. The funds chosen were Birla Sun Life Top 100 Fund, BNP Paribas
Equity Fund, SBI Blue Chip Fund, UTI Equity Fund, Birla Sun Life Frontline Equity
Fund, BOI AXA Equity Fund, Canara Robeco Large Cap+ Fund, Franklin India
Opportunities Fund, Kotak Opportunities, L&T Equity Fund. Performance of these
funds was also compared with S&P CNX Nifty. The study concluded that average
returns of mutual fund schemes are better than benchmark indices return. It also
pointed out that standard deviation of mutual fund schemes is higher. Franklin India
mutual fund was reported to give best return. It has low variation in return and high
sharp ratio, Treynor ratio and Jensen alpha

Bhagyashree and Kishori (2016) examined performance of 30 mutual fund schemes

selected randomly. Closing NAV’s for each day was noted for a period of five years.

xc
Findings of the study show that Tata Equity Opportunity funds gave maximum returns
while Reliance growth funds had minimum return. 14 out of 30 schemes had less risk
than market risk, rest all the schemes have greater risk than market. 8 schemes have
beta value greater than one which signifies that they have high risk. All the funds
studied have positive value of Sharpe ratio, 14 funds had Sharpe ratio greater than
benchmark portfolio. Top three funds in terms of Sharpe ratio were Tata Equity
opportunities funds, HDFC large cap fund and Franklin India flexi cap fund.

CHAPTER 3

THEORETICAL FRAMEWORK

xci
Introduction

Mutual funds have become hot favourite of millions of people all over the world. The
driving force of mutual fund is safety of “Principal Money” guaranteed, plus the added
advantage of capital appreciation together with the income earned in the form of
interest or dividend. People now prefer mutual funds to bank deposits. Life insurance
and even bonds because with little money they can get into the investment game on
the stock market, and own a string of blue chips. They act as a gateway to enter into
big companies, which are ordinarily inaccessible to an ordinary investor with his small
investment.

In India, the domestic mutual fund industry has continued to grow by leaps and bounds
even in the current financial year (2002-03) despite the slowdown. In the first nine
months till November 2002, the Net Assets under Management (AUM) of the industry

xcii
grew by a massive Rs.20799 Crore or about 21 per cent across all classes of mutual
funds.

Meaning of Mutual Funds

A mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. Anybody with an investible surplus of as little as a few
thousand rupees can invest in mutual funds. These investors buy units of a particular
mutual fund scheme that has a defined investment objective and strategy.

To use a layman's language for the sake of simplicity, mutual funds work on the
principle of "Small drops of water make an ocean". A mutual fund collects the savings
from small investors, invest them in government and other the savings from small
investors, invest them in government and other corporate securities and earn income
through interest and dividends, besides capital gains.

A mutual fund is nothing but a form of collective investment formed by the coming
together of a number of investors who transfer their surplus funds to a professionally
qualified organization to manage it.

According to Mutual Fund fact book (Published by Investment Company of USA)".

A mutual fund is a financial service organization that receives money from
shareholders, invests it earns return on it, attempts to make it grow and agrees to pay
the shareholders cash on demand for the current value of his Investment.

Mutual funds are trusts or corporations, which pool funds and reduce risk by
diversification of investment. Mutual funds are financial intermediaries, which bring
a wide variety of securities within the reach of the most modest investors. A mutual
fund is an indirect investment made by the public by pooling in resources comprising
of equal unit's investible in stock. bonds and debt instruments/ the earnings of which
are distributed amongst the fund owners.

Analysing the given definitions, one finds that it is difficult to capture the real meaning
of a mutual fund through a conventional statement. It can therefore be best defined by
its functions, which include:

1. It pools resources.
2. It is allocated in units.

xciii
3. The collective investment is indistinguishable.
4. It spreads risk in diversified yielding investments.
5. It wedges inflation for the small investors.
6. It refunds the principal on risk sharing basis.
7. It distributes the yield prorata to the investors.

To get the surplus funds from investors, the fund adopts a simple technique- each
fund is divided into a small fraction called “units” of equal value. Each investor is
allocated units of proportion to the size of his investment. Thus, every investor,
whether big or small will have a stake in the fund and can enjoy the wide portfolio of
the investment held by the fund. Hence, mutual funds enable millions of small and
large investors to participate in and derive the benefit of the capital market growth. It
has emerged as a popular vehicle of creation of wealth due to his return, lower cost
and diversified risk.

Mutual funds are investment companies that pool money from investors at large and
offer to sell and buy back its shares on a continuous basis and use the capital thus
raised to invest in securities of different companies. The stocks these mutual funds
have are very fluid and are used for buying or redeeming and/or selling shares at a
net asset value. Mutual funds possess share of several companies and receive
dividends in lieu of them and the earnings are distributed among the shareholders.

Mutual funds can be either or both of open ended and closed ended investment
companies depending on their fund management pattern. An open-end fund offers to
sell its shares (units) continuously to investors either in retail or in bulk without a
limit on the number as opposed to a closed-end fund. Closed end funds have limited
number of shares.

Mutual funds have diversified investments spread in calculated proportions amongst

securities of various economic sectors. Mutual funds get their earnings in two ways.
First is the most organic way, which is the dividend they get on the securities they
hold. Second is by the redemption of their shares by investors will be at a discount to
the current NAVs (net asset values).

xciv
MUTUAL FUND OPERATION FLOW CHART

GENESIS OF MUTUAL FUNDS

It is said that Egyptians and Phoenicians sold their shares in vessels and caravans with
a view to spreading risk attached with risky ventures. Thus, the origin of the concept
of mutual funds dates back to the very dawn of commercial history. However, the real
credit of introducing the modern concept of mutual fund goes to the foreign colonial
government trust of London established in 1868. Therefore, a large number of close-
ended mutual funds were formed in the U.S.A in 1930’s followed by many countries
in Europe. The Far East and Latin America. In most of the countries, both open and
close-ended types of mutual funds were popular.

xcv
Investment trust companies set up on the West European model following
recommendations of central banking enquiry committee in the 1930’s were the
forerunners of Indian mutual funds.

In 1954, the committee on finance for the private sector, recommended mobilisation
of savings of middle-class investors through unit trusts. Stock markets in India
suffered a major setback in 1962 following Chinese aggression. To augment resources
for industrial growth, and to stabilise the stock markets, Unit Trust of India (UTI) Act
was passed in 1963 and UTI became functional as the first mutual fund in India in
July 1964.

ADVANTAGES OF MUTUAL FUNDS

xcvi
 Figure 3.1 Why Mutual Funds

There are many reasons why investors choose to invest in mutual funds with such
frequency. Let's break down the details of these benefits.

Advanced Portfolio Management

When you buy a mutual fund, you pay a management fee as part of your expense ratio,
which is used to hire a professional portfolio manager who buys and sells stocks,
bonds, etc. This is a relatively small price to pay for getting professional help in the
management of an investment portfolio.

xcvii
Dividend Reinvestment

As dividends and other interest income is declared for the fund, it can be used to
purchase additional shares in the mutual fund, therefore helping your investment
grow.

Risk Reduction (Safety)

Reduced portfolio risk is achieved through the use of diversification, as most mutual
funds will invest in anywhere from 50 to 200 different securities—depending on the
focus. Several stock index mutual funds own 1,000 or more individual stock positions.

Convenience and Fair Pricing

Mutual funds are easy to buy and easy to understand. They typically have low
minimum investments (some around $2,500) and they are traded only once per day at
the closing net asset value (NAV). This eliminates price fluctuation throughout the
day and various arbitrage opportunities that day traders’ practice. [Important: As with
any type of investment, the specifics of your budget, timeline and profit goals will
dictate what the best mutual fund options are for you.]

DISADVANTAGES OF MUTUAL FUNDS

However, there are also disadvantages to being an investor in mutual funds. Here's a
more detailed look at some of those concerns.

High Expense Ratios and Sales Charges

If you're not paying attention to mutual fund expense ratios and sales charges, they
can get out of hand. Be very cautious when investing in funds with expense ratios
higher than 1.20%, as they are considered to be on the higher cost end. Be wary of
12b-1 advertising fees and sales charges in general. There are several good fund
companies out there that have no sales charges. Fees reduce overall investment
returns.

xcviii
Management Abuses

Churning, turnover, and window dressing may happen if your manager is abusing his
or her authority. This includes unnecessary trading, excessive replacement, and selling
the losers prior to quarter-end to fix the books.

Tax Inefficiency

Like it or not, investors do not have a choice when it comes to capital gains pay-outs
in mutual funds. Due to the turnover, redemptions, gains, and losses in security
holdings throughout the year, investors typically receive distributions from the fund
that are an uncontrollable tax event.

Poor Trade Execution

If you place your mutual fund trade any time before the cut-off time for same-day
NAV, you'll receive the same closing price NAV for your buy or sell on the mutual
fund. For investors looking for faster execution times, maybe because of short
investment horizons, day trading, or timing the market, mutual funds provide a weak
execution strategy.

TYPES OF MUTUAL FUNDS

Any mutual fund has an objective of earning income for the investor’s and/ or getting
increased value of their investments. To achieve these objectives mutual funds, adopt
different strategies and accordingly offer different schemes of investments.

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. thus mutual funds has Variety of
flavours, being a collection of many stocks, an investor can go for picking a mutual
fund might be easy. There are over hundreds of mutual funds scheme to choose from.
It is easier to think of mutual funds in categories, mentioned below.

• Open - Ended Schemes

As the name implies the size of the scheme (Fund) is open – i.e., not specified or
predetermined. Entry to the fund is always open to the investor who can subscribe at
any time. Such fund stands ready to buy or sell its securities at any time. It implies
that the capitalization of the fund is constantly changing as investors sell or buy their
shares.

xcix
Further, the shares or units are normally not traded on the stock exchange but are
repurchased by the fund at announced rates. Open-ended schemes have comparatively
better liquidity despite the fact that these are not listed. The reason is that investor can
any time approach mutual fund for sale of such units. No intermediaries are required.
Moreover, the realizable amount is certain since repurchase is at a price based on
declared net asset value (NAV). No minute-to-minute fluctuations in rates haunt the
investors. The portfolio mix of such schemes has to be investments, which are actively
traded in the market. Otherwise, it will not be possible to calculate NAV. This is the
reason that generally open-ended schemes are Equity Based.

• Close - Ended Schemes

Such schemes have a definite period after which their shares/units can be redeemed.
Unlike open-ended funds, these funds have fixed capitalization, i.e., their corpus
normally does not change throughout its life period. Close ended fund units trade
among the investors in the secondary market since these are to be quoted on the stock
exchanges. Their price is determined on the basis of demand and supply in the market.
Their liquidity depends on the efficiency and understanding of the engage broker.
Their price is free to deviate from NAV, i.e., there is every possibility that the market
price may be above or below its NAV. If one takes into account the issue expenses,
conceptually close ended fund units cannot be traded at a premium or over NAV
because the price of a package of investments, i.e., cannot exceed the sum of the prices
of the investments constituting the package. Whatever premium exists that may exist
only on account of speculative activities. In India as per SEBI (MF) Regulations every
mutual fund is free to launch any or both types of schemes. Close– ended mutual funds
are different from the open-ended mutual fund. Close-ended and Investment Company
has definite target amount for the funds and cannot sell more shares after its initial
offering. Its growth in terms of numbers is limited. Its shares are issued like together
company’s new issue listed and quoted at stock exchange. That minimum corpus for
Close-ended fund is Rs20 crores. Close-ended funds changed funds the secondary
market acquisition of corporate securities.

There is no necessary relationship between the price of close-ended mutual fund share
and its NAV. Its shares may les per the current NAV per share, per more, (at a
premium) as per less (at discount). Investor’s doubts about the abilities of the fund’s

c
management lack of sales effort (brokers earn less commission of close ended
schemes then open-ended schemes) riskiness of the fund.

• Interval Schemes

Interval Schemes are that scheme, which combines the features of open-ended and
close- ended schemes. The units may be traded on the stock exchange or may be open
for sale or redemption during pre-determined intervals at NAV related prices.

• Equity Fund

These funds invest the maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund manager’s
outlook on different stocks. The Equity Funds are sub-classified depending upon their
investment objective, as follows:

❖ Diversified Equity Funds

❖ Mid-Cap Funds
❖ Sector Specific Funds
❖ Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon; thus, Equity funds rank high
on the risk-return matrix.

• Debt Funds

The objective of these Funds is to invest in debt papers, Government authorities,

private companies, banks and financial institutions are some of the major issuers of
debt papers. By investing in debt instruments, these funds ensure low risk and provide
stable income to the investors. Debt funds are further classified as:

• Gilt Funds: Invest their corpus in securities issued by Government, popularly

known as Government of India debt papers. These Funds carry zero Default
risk but are associated with Interest Rate risk. These schemes are safer as they
invest in papers backed by Government.
• Income Funds: Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities. o MIPs: Invests
maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme

ci
 ranks slightly high on the risk-return matrix when compared with other debt
schemes. o Short Term Plans (STPs): Meant for investment horizon for three to
six months. These funds primarily invest in short term papers like Certificate of
Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also
invested in corporate debentures. o Liquid Funds: Also known as Money Market
Schemes, these funds provide easy liquidity and preservation of capital. These
schemes invest in short-term instruments like Treasury Bills, inter-bank call
money market, CPs and CDs. These funds are meant for short-term cash
management of corporate houses and are meant for an investment horizon of 1
day to 3 months. These schemes rank low on risk-return matrix and are considered
to be the safest amongst all categories of mutual funds.
• Balanced Funds

As the name suggest they are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme. These schemes aim to provide investors with
the best of both the worlds. Equity part provides growth and the debt part provides
stability in returns. Further the mutual funds can be broadly classified on the basis
of investment parameter viz; each category of funds is backed by an investment
philosophy, which is predefined in the objectives of the fund. The investor can align
his own investment needs with the funds objective and invest accordingly.

• Growth Schemes:

Growth Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally
invest a major part of their fund in equities and are willing to bear short-term decline
in value for possible future appreciation.

• Income Schemes

Income Schemes are also known as debt schemes. The aim of these schemes is to
provide regular and steady income to investors. These schemes generally invest in
fixed income securities such as bonds and corporate debentures. Capital
appreciation in such schemes may be limited.

• Balanced Schemes

cii
Balanced Schemes aim to provide both growth and income by periodically
distributing a part of the income and capital gains they can. These schemes invest in
both shares and fixed income securities, in the proportion indicated in their offer
documents (normally 50:50).

• Money Market Schemes

Money Market Schemes aim to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer, short-term instruments,
such as treasury bills, certificates of deposit, commercial paper and inter-bank call
money.

• Tax Saving Schemes

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from
time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity
Linked Savings Scheme (ELSS) are eligible for rebate.

• Index Schemes

Index schemes attempt to replicate the performance of a particular index such as the
BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those
stocks that constitute the index. The percentage of each stock to the total holding will
be identical to the stocks index weightage. And hence, the returns from such schemes
would be more or less equivalent to those of the Index.

• Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents, e.g., Pharmaceuticals, Software, Fast
Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds
are dependent on the performance of the respective sectors/industries. While these
funds may give higher returns, they are riskier compared to diversified funds.
Investors need to keep a watch on the performance of those sectors/industries and
must exit at an appropriate time.

Systematic Investment Plan

ciii
 SIP, also known as Regular Savings Plan (RSP) in some countries, allows you to
invest a fixed amount at pre-defined frequencies in mutual funds. A bank / post office
recurring deposit is the only other investment option that is similar to SIP. There are
basically two options that an investor could take when they are making investments,
one would be to invest lump sum into mutual funds and the other would be to invest
using a SIP. The following are some of the benefits associated with investing in a SIP:
SIP is actually a Systematic Investment Plan of investing in Mutual Fund. It is
specially designed for those who aim to build wealth over a long period and want a
better future for him and their dependants. The investment in a Mutual fund can be
done in two ways. First way is onetime payment i.e. making payment to a fund at once
and gets the units of the fund as per the Net Asset Value (NAV) of the fund on that
day. A person wishes to invest in a fund Rs. 24,000/-. On the day of Investment, the
NAV of the fund was Rs. 10/-. He gets 2400 units @ Rs. 10/- per unit. The other way
of investment is making payment to the fund periodically, which is termed as Mutual
Fund SIP. When you commit to invest a fixed amount monthly in a fund, it is called
as Systematic Investment. It is actually beneficial for those investors who wish to
invest a large amount in a fund and wishes to create a large chunk of wealth for long
term but due to financial constraints are able to do so. The SIP provides them a way
to invest in the fund of their choice in installments.

E.g. A person wishes to invest Rs. 24000/- in a fund but due to other obligations, it
is not possible for him to invest such an amount in a fund. He takes the SIP route and
contributes to the fund Rs. 2000/- monthly for a year. At the end of the year, he’ll have
invested Rs. 24,000/- in the fund. When the NAV is high, he will get the fewer units
and when the NAV is low, he’ll get the more units. So, he’ll get the benefit of
averaging through the SIP route. The NAV in the first month was Rs. 10/-, he’ll get
200 units in the first month. The NAV in the second month was Rs. 9.50/-, he’ll get
210.52 units in second month The NAV for the following month was Rs. 10, he’ll get
200 units in the next month So, at the end of the year he may get more units as
compared to the units he’ll get through single investment. Systematic investment plans
are a systematic and disciplined approach to investment and wealth creation. Instead
of making a large investment at one time, in SIP you can invest small sums at regular
intervals thus creating a habit of regular savings. If you are a big spender and find
your expenditures are more than your earnings then go for SIP mutual funds. This

civ
will force you to spend at least some part of your earnings every month. Mutual funds
are a very safe way of investing money and SIP mutual funds are even better. These
are perfect solutions to most of us who cannot afford to make a large investment at
one go. This is a good way to save for your child's education, marriage or comfortable
retirement for you and your spouse. The lowest start up investment amount is 500
rupees per month which is affordable by most people.

3.2 BENEFITS OF MUTUAL FUND

There are two major reasons why most people around the globe are afraid to take
investment decisions on their own. One of them is the lack of time to study the pros
and cons of different investment opportunities and the other being lack of financial
knowhow. Apart from that, some financial markets have a steep entry barrier, which
prevents a small ticket investor from participating in the growth of that sector.
Investment needs across different category of investors are also not common. While
some may settle for safety of capital, others may chase returns. There may be others
who would want their capital to grow at a steady pace, while some may want to save
for retirement or child’s education. The need and objective of the investors are truly
diverse and one financial product can’t fulfill all of them. The emergence of mutual
funds in the past decade as a popular investment vehicle is due to the fact that it serves
broadly all categories of investors through the plethora of schemes that it offers. The
benefits provided by mutual funds far outweigh its shortcomings, and has thus gained
wide-spread acceptance.

Following are the key benefits of investing in mutual funds:

• Professional Management:

Mutual funds provide the benefit of professional management as people’s money is

managed by experienced fund managers. Investors, who do not have time, inclination
and the know-how to manage their investments, can look towards mutual funds as an
alternative. It is inexpensive and is ideal for a small ticket investor.

• Economies of scale:

cv
The way mutual funds are structured gives it a natural advantage. The “pooled” money
from a number of investors ensures that mutual funds enjoy economies of scale; it is
cheaper compared to investing directly in the capital markets which involves higher
charges. This also allows retail investors access to high entry level markets like real
estate, and also there is a greater control over costs.

• Diversification:

Mutual funds provide investors with the benefit of diversification across different
companies and sectors. Diversification in simple terms means to spread your portfolio
across different instruments, sectors, industries, companies and countries so that the
overall portfolio is relatively safeguarded from downturns in one or more sectors,
companies or countries. Since small investors do not have enough money to make
meaningful investments across different assets, a mutual fund does the job for them.

• Liquidity:

Open ended mutual funds provide easy liquidity and investors can buy or sell units
anytime, at the prevailing NAV based prices. Close-ended schemes are listed on a
stock exchange where investors can redeem their units at the prevailing market price.
Interval funds which are a cross between a close-ended and an open-ended structure
also provide periodic liquidity option to its investors.

• Flexibility:

There are a lot of features in a regular mutual fund scheme, which imparts flexibility
to the scheme. An investor can opt for a Systematic Investment Plan (SIP), Systematic
Withdrawal Plan (SWP), and Systematic Transfer Plan (STP) etc. to plan his cash
flow requirements as per his convenience. The wide range of schemes being launched
in India by different mutual funds also provides an added flexibility to the investor to
build his portfolio accordingly.

• Convenience:

Mutual fund companies offer convenient routes to investing in their schemes.

Investors can invest through the internet or mobile phone in addition to the
conventional option of physically filling up an application form and submitting it.
Further, as bank details are required to be submitted at the time of investment,

cvi
redemptions become very convenient as an investor directly receives the proceeds in
the bank account.

• Transparency:

The mutual fund industry in India works on a very transparent basis, and various kind
of information is available to their investors through fact sheets, offer documents,
annual reports etc.

• Well Regulated:

Indian Mutual Fund industry is well regulated by the Securities and Exchange Board
of India (SEBI). This helps to instill confidence and provides comfort to the investors.
The regulatory environment in India is quite healthy, and ensures transparency in the
processes and transactions.

The best practices adopted by the industry in India have helped them win investors’
confidence over the years. The ease and convenience which mutual funds offer and
the different variety of schemes made available to the investors creates popularity for
mutual funds, which cuts across investor classes and creates a favourable appeal.

cvii
 CHAPTER 4

RESEARCH METHODOLOGY

cviii
 4.1 OBJECTIVES

The purpose of research is to discover answers to questions through the application of

scientific procedures. The main aim of research is to find out the truth which is hidden
and which has not been discovered as yet.

❖ To gain familiarity with a phenomenon or to achieve new insights

into it (studies with this object in view are termed as exploratory or
formulative research studies);
❖ To portray accurately the characteristics of a particular individual,
situation or a group (studies with this object in view are known as
descriptive research studies);
❖ To determine the frequency with which something occurs or with
which it is associated with something else (studies with this object in
view are known as diagnostic research studies);
❖ To test a hypothesis of a causal relationship between variables (such
studies are known as hypothesis-testing research studies).

4.2 RESEARCH METHODOLOGY

“Research Methodology” refers to the methodology that has been adopted to conduct
a particular study, because in the project work; the study of a special subject is dealt
with. Research methodology is a careful investigation or inquiry in systematic manner
and finding solution to a problem under investigation. It accompanies of defining and
redefining problems formulating hypothesis or reaching conclusion and at last
carefully testing the conclusion to determine whether they fit the formulating
hypothesis.

Data collection

Primary data Secondary data

cix
4.3 PRIMARY AND SECONDARY DATA

Primary Data

Primary data are those data which are collected for the first time These data are
information collected by a researcher specifically for a research assignment. In other
words, primary data are information that a company must gather because no one has
compiled and published the information in a forum accessible to the public.
Companies generally take the time and allocate the resources required to gather 8
primary data only when a question, issue or problem presents itself that is sufficiently
important or unique that it warrants the expenditure necessary to gather the primary
data. Primary data are original in nature and directly related to the issue or problem
and current data. Primary data are the data which the researcher collects through
various methods like interviews, surveys, questionnaires etc.

• Face to face interaction

Secondary Data

For presenting the theoretical and conceptual background of the present

study, published sources in various academic libraries and study of company archives
are used. Secondary data are usually in the shape of finished products. This data may
be collected from published or unpublished sources.

• Journals
• Magazines
• Brochures
• Printed materials
• Web site of the organization
• Money control

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4.4 SAMPLING METHOD

Sample Size

For the purpose of study, samples of twelve mutual funds are taken based on past
performance. The analysed mutual funds are,

1. Principal Emerging Blue-chip Fund-Direct Plan (G)

2. HDFC Small Cap Fund – Direct Plan (G)
3. Invesco India Contra Fund (G)
4. Axis Focused 25 Fund - Regular Plan (G)
5. HDFC Capital Builder Fund - Direct Plan (G)
6. SBI Magnum Multicap Fund - Direct Plan (G)
7. Mirae Asset India Opportunities Fund - Regular Plan (G)
8. Tata Equity P/E Fund- Direct Plan (G)

Period of study

The period of study is 1month (5th March 2019 to 5th April 2019).

4.5 TOOLS FOR ANALYSIS

The following criteria were 8 in to consideration for analysing different mutual

funds.

Measuring Portfolio Returns

The total gain or loss on an investment over a given period of time is calculated by
dividing the assets cash distributions during the period minus change in value by its
beginning period value is termed as return.

Stock return = (Closing value – Opening value) x 100

Opening value

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Risk adjusted Returns

One obvious method of adjusting for risk is to look at the reward per unit of risk. We
know that investment in shares is risky. Risk free rate of interest is the return that an
investor can earn on a riskless security, i.e. without bearing any risk. The return earned
over and above the risk-free rate is the risk premium that is reward for bearing risk. If
the risk premium is divided by a measure of risk, we get the risk premium per unit of
risk. Thus, the reward per unit of risk for different portfolios or mutual funds may be
calculated and the funds may he ranked in descending order of the ratio. A higher ratio
indicates better performance.

Standard deviation:

It is used to measure the variation in individual returns from the average expected
returns over a certain period. Standard deviation is used in the concept of risk of a
portfolio of investments. Higher standard deviation means a greater fluctuation in
expected return.

Standard Deviation (SD) = Square root of Variance (V)

Variance = (Sum of squared difference between each monthly return and its mean /
number of monthly return data – 1)

Standard Deviation = √𝑽𝒂𝒓𝒊𝒂𝒏𝒄𝒆

Variance = 𝟏 ( 𝑹 − ̅𝑹)𝟐
𝒏

Where R – Return

R- Avg Return

Beta:

Beta is a measure of the volatility of a particular fund in comparison to the market as

a whole, that is, the extent to which the fund's return is impacted by market factors.
Beta is calculated using a statistical tool called regression analysis. By definition, the
market benchmark index of Sensex and Nifty has a beta of 1.0. Conservative investors
should focus on mutual funds schemes with low beta. Aggressive investors can opt to
invest in mutual fund schemes which have higher beta value for higher returns taking
more risk.

cxii
Sharpe Ratio:

Sharpe index measures risk premium of a portfolio, relative to the total amount of risk
in the portfolio. Sharpe index summarizes the risk and return of a portfolio in a single
measure that categorizes the performance of funds on the risk- adjusted basis. The
larger the Sharpe’s index the portfolio over performs the market and vice versa.

Formula to calculate Sharpe’s measure is:

Sharpe Ratio= Rp– Rf

SD

Where,

Rp= portfolio return

Rf= Risk free rate of return (5%)

SD= Standard Deviation of the port folio

Treynor Ratio:

Treynor model is on the concept of the characteristics straight line. The characteristics
line has drawn a relationship between the market return and a specific portfolio
without taking into consideration any direct adjustment for risk. It is also known as
reward to volatility ratio and is defined as:

The formula for Treynor Ratio is:

Treynor Ratio = 𝒓𝒑 − 𝒓𝒇/𝜷

Where, rp= return of portfolio

rf= risk free-rate

𝛽= beta coefficient of portfolio

It measures portfolio risk in terms of beta, which is weighted average of individual

security beta. The ratio is investors, for who the fund represents only a fraction of their
total assets. The higher the ratio better is the performance.

cxiii
 CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

cxiv
DATA ANALYSIS OF EQUITY MUTUAL FUNDS

General Information About the Funds

Sl. Launch
Name of Funds Category Benchmark
No. Date

ICICI Prudential
23rd May Equity: Large NIFTY 100
1 Focused Blue-chip
2008 Cap TRI
Equity Fund

Axis Blue-chip 5th Jan Equity: Large NIFTY 50

2
Fund (G) 2010 Cap TRI

NIFTY
HDFC Mid-Cap 25th Jun Equity: Mid
3 Midcap 100
Opportunities Fund 2007 Cap
TRI

Kotak Emerging NIFTY

30th Mar Equity: Mid
4 Equity Scheme Midcap 100
2007 Cap
Fund TRI

Franklin India NIFTY

13th Jan Equity: Small
5 Smaller Companies Smallcap
2006 Cap
Fund 250 TRI

S&P BSE
Reliance Small Cap 16th Sep Equity:
6 Small Cap
Fund Growth Plan 2010 Small Cap
TRI

Table No.5.1 General Information of Funds

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5.1 Calculation of return on funds

Return = P1 – P0 (closing price – opening price) of NAV / P0 x 100

1. ICICI Prudential Focused Blue-chip Equity Fund - NIFTY 100 TRI

Table No. 5.2 Return on 2014 - 2015

Month P1 P0 P1 – P0 Return
April 21.62 21.66 -0.04 -0.184672
May 23.80 21.70 2.1 9.677419
June 25.27 24.32 0.95 3.906250
July 25.59 25.46 0.13 0.510605
August 26.57 25.31 1.26 4.978269
September 26.88 26.93 -0.05 -0.185667
October 28.34 26.80 1.54 5.746269
November 29.32 28.32 1 3.531073
December 28.63 29.19 -0.56 -1.918465
January 30.38 28.93 1.45 5.012098
February 30.39 30.33 0.06 0.197824
March 29.48 30.96 -1.48 -4.780362
Total 26.490642

Table No.5.3 Return on 2015 - 2016

Month P1 P0 P1 – P0 Return
April 28.61 29.75 -1.14 -3.831933
May 29.38 29.10 0.28 0.962199
June 28.99 29.32 -0.33 -1.125512
July 30.23 29.34 0.89 3.033401
August 28.44 30.28 -1.84 -6.076618

cxvi
September 28.29 27.78 0.51 1.835853
October 28.75 28.18 0.57 2.022711
November 28.75 28.79 -0.04 -0.138937
December 28.57 28.82 -0.25 -0.867453
January 27.13 28.63 -1.5 -5.239260
February 24.88 27.11 -2.23 -8.225747
March 27.52 25.65 1.87 7.290448
Total -10.360846

Table No. 5.4 Return on 2016 - 2017

Month P1 P0 P1 – P0 Return
April 28.38 27.50 0.88 3.200000
May 29.21 28.30 0.91 3.215548
June 30.17 29.16 1.01 3.463649
July 31.71 30.39 1.32 4.343534
August 32.31 31.73 0.58 1.827923
September 31.89 32.29 -0.4 -1.238774
October 32.28 32.41 -0.13 -0.401111
November 31.09 32.27 -1.18 -3.656647
December 30.78 30.91 -0.13 -0.420576
January 32.15 30.82 1.33 4.315380
February 33.53 32.66 0.87 2.663809
March 34.34 33.70 0.64 1.899110
Total 19.211845

Table No. 5.5 Return on 2017 - 2018

Month P1 P0 P1 – P0 Return
April 35.07 34.50 0.57 1.652174
May 35.88 34.97 0.91 2.602230
June 35.73 35.84 -0.11 -0.306920
July 35.85 35.97 -0.12 -0.333611

cxvii
 August 37.72 38.01 -0.29 -0.762957
September 37.48 37.94 -0.46 -1.212441
October 39.70 37.64 2.06 5.472901
November 39.59 40.17 -0.58 -1.443864
December 40.86 39.19 1.67 4.261291
January 41.77 40.62 1.15 2.831118
February 39.97 41.68 -1.71 -4.102687
March 38.64 39.70 -1.06 -2.670025
Total 5.987210

Table No. 5.6 Return on 2018 - 2019

Month P1 P0 P1 – P0 Return
April 40.56 38.89 1.67 4.294163
May 40.35 40.28 0.07 0.173784
June 39.62 40.11 -0.49 -1.221640
July 41.69 39.42 2.27 5.758498
August 43.38 41.51 1.87 4.504939
September 40.51 43.05 -2.54 -5.900116
October 39.28 40.79 -1.51 -3.701888
November 40.02 39.27 0.75 1.909855
December 40.53 40.24 0.29 0.720676
January 39.74 40.67 -0.93 -2.286698
February 39.72 39.79 -0.07 -0.175924
March 42.19 39.94 2.25 5.633450
Total 9.709099

cxviii
 Chart of return

-5

Figure No. 5.1: Return of principal ICICI Prudential Blue-chip Fund

Interpretation

The graph shows the return of Principal ICICI Prudential Blue-chip Fund – Regular
Plan (G) from April 1st 2014 to March 31st 2019. It is found that the return of the
fund on 2014-15 is high (26.490642) compared to other years. In 2015-16, the fund
shows a decline change that is only (-10.360846). But in 2016-17, it increased to
19.211845 and in 2017-18 the fund is showing decreasing trend (5.987210). But in
2018-19, it shows an increasing trend.

2. Axis Blue-chip Fund (G) - NIFTY 50 TRI

Table No. 5.7 Return on 2014 - 2015

Month P1 P0 P1 – P0 Return
April 14.75 14.66 0.09 0.613915
May 16.28 14.74 1.54 10.447761
June 17.42 16.69 0.73 4.373877
July 17.18 17.51 -0.33 -1.884637
August 17.80 17.03 0.77 4.521433
September 18.15 18.06 0.09 0.498339

cxix
October 19.00 18.06 0.94 5.204873
November 20.13 19.06 1.07 5.613851
December 19.76 20.09 -0.33 -1.642608
January 20.55 19.77 0.78 3.945372
February 20.46 20.50 -0.04 -0.195122
March 19.99 20.80 -0.81 -3.894231
Total 27.602822

Table No. 5.8 Return on 2015 - 2016

Month P1 P0 P1 – P0 Return
April 19.22 20.19 -0.97 -4.804359
May 19.86 19.48 0.38 1.950719
June 19.89 19.79 0.1 0.505306
July 20.52 20.09 0.43 2.140368
August 19.29 20.56 -1.27 -6.177043
September 19.35 18.87 0.48 2.543720
October 19.64 19.39 0.25 1.289324
November 19.57 19.57 0 0.000000
December 19.71 19.56 0.15 0.766871
January 18.73 19.79 -1.06 -5.356241
February 17.32 18.73 -1.41 -7.528030
March 18.89 17.80 1.09 6.123596
Total -8.545768

Table No. 5.9 Return on 2016 - 2017

Month P1 P0 P1 – P0 Return
April 19.49 18.83 0.66 3.505045
May 20.12 19.43 0.69 3.551209
June 20.31 20.09 0.22 1.095072
July 21.06 20.41 0.65 3.184713

cxx
 August 21.58 20.96 0.62 2.958015
September 21.17 21.55 -0.38 -1.763341
October 21.17 21.62 -0.45 -2.081406
November 19.67 21.15 -1.48 -6.997636
December 19.19 19.57 -0.38 -1.941748
January 20.17 19.21 0.96 4.997397
February 20.94 20.62 0.32 1.551891
March 21.86 21.05 0.81 3.847981
Total 11.907194

Table No. 5.10 Return on 2017 - 2018

Month P1 P0 P1 – P0 Return
April 22.75 22.00 0.75 3.409091
May 23.33 22.82 0.51 2.234882
June 23.36 23.37 -0.01 -0.042790
July 24.78 23.58 1.2 5.089059
August 25.00 24.91 0.09 0.361301
September 24.99 25.17 -0.18 -0.715137
October 25.83 25.12 0.71 2.826433
November 25.87 26.06 -0.19 -0.729087
December 26.83 25.70 1.13 4.396887
January 27.14 26.60 0.54 2.030075
February 26.46 27.20 -0.74 -2.720588
March 26.19 26.35 -0.16 -0.607211
Total 15.532915

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 Table No. 5.11 Return on 2018 - 2019

Month P1 P0 P1 – P0 Return
April 27.95 26.61 1.34 5.035701
May 28.58 27.97 0.61 2.180908
June 28.87 28.39 0.48 1.690736
July 30.56 28.86 1.7 5.890506
August 30.73 30.57 0.16 0.523389
September 28.36 30.42 -2.06 -6.771861
October 26.93 28.33 -1.4 -4.941758
November 28.77 26.96 1.81 6.713650
December 28.99 28.77 0.22 0.764685
January 28.74 29.06 -0.32 -1.101170
February 28.77 28.99 -0.22 -0.758882
March 30.42 28.87 1.55 5.368895
Total 14.594799

Chart showing the return

-5

Figure No.5.2 Chart showing return on Axis Blue-chip Fund

cxxii
 Interpretation

The graph shows the return of Axis Blue-chip Fund – Regular Plan (G) from April
1st 2014 to March 31st 2019. In 2014-15, the fund results a good amount of growth
that is 27.602822 and in 2017-18, it results 15.532915. But in the year 2015-16 it
becomes negative and in 2016-17 and 2018-19, the fund has less amount of growth
that is 11.907194 and 14.594799 respectively.

3. HDFC Mid-Cap Opportunities Fund - NIFTY Midcap 100 TRI

Table No.5.12 Return on 2014 - 2015

Month P1 P0 P1 – P0 Return
April 23.66 22.65 1.01 4.459161
May 26.61 23.80 2.81 11.806723
June 29.45 27.12 2.33 8.591445
July 29.26 29.50 -0.24 -0.813559
August 30.99 29.13 1.86 6.385170
September 32.18 31.41 0.77 2.451449
October 33.24 32.24 1 3.101737
November 35.42 33.51 1.91 5.699791
December 36.51 35.43 1.08 3.048264
January 37.66 36.65 1.01 2.755798
February 37.22 37.76 -0.54 -1.430085
March 37.27 38.06 -0.79 -2.075670
Total 43.980224

Table No. 5.13 Return on 2015 - 2016

Month P1 P0 P1 – P0 Return
April 36.71 37.75 -1.04 -2.754967
May 38.14 37.31 0.83 2.224605
June 37.65 38.18 -0.53 -1.388161
July 39.73 38.11 1.62 4.250853

cxxiii
August 38.27 40.08 -1.81 -4.515968
September 38.11 37.54 0.57 1.518380
October 38.23 38.09 0.14 0.367551
November 38.50 38.28 0.22 0.574713
December 39.01 38.61 0.4 1.036001
January 36.49 39.26 -2.77 -7.055527
February 33.21 36.46 -3.25 -8.913878
March 37.11 34.15 2.96 8.667643
Total -5.988757

Table No. 5.14 Return on 2016 - 2017

Month P1 P0 P1 – P0 Return
April 38.23 37.24 0.99 2.658432
May 39.33 38.45 0.88 2.288687
June 41.27 39.37 1.9 4.826010
July 43.91 41.61 2.3 5.527517
August 46.61 44.08 2.53 5.739564
September 46.70 46.28 0.42 0.907519
October 47.67 47.55 0.12 0.252366
November 45.08 47.86 -2.78 -5.808608
December 43.84 44.88 -1.04 -2.317291
January 46.57 43.98 2.59 5.889040
February 48.84 47.33 1.51 3.190366
March 51.46 49.01 2.45 4.998980
Total 28.152582

cxxiv
 Table No. 5.15 Return on 2017 - 2018

Month P1 P0 P1 – P0 Return
April 55.65 51.75 3.9 7.536232
May 52.93 53.77 -0.84 -1.562209
June 53.60 53.41 0.19 0.355739
July 56.09 54.14 1.95 3.601773
August 55.11 56.12 -1.01 -1.799715
September 55.17 55.53 -0.36 -0.648298
October 58.51 55.39 3.12 5.632786
November 59.87 58.90 0.97 1.646859
December 62.72 59.37 3.35 5.642580
January 61.11 62.70 -1.59 -2.535885
February 59.54 61.07 -1.53 -2.505322
March 57.89 59.39 -1.5 -2.525678
Total 12.838862

Table No. 5.16 Return on 2018 - 2019

Month P1 P0 P1 – P0 Return
April 63.01 59.09 3.92 6.633948
May 59.81 62.20 -2.39 -3.842444
June 57.40 59.21 -1.81 -3.056916
July 60.10 57.41 2.69 4.685595
August 62.01 60.27 1.74 2.887008
September 54.50 61.49 -6.99 -11.367702
October 54.02 54.62 -0.6 -1.098499
November 54.80 54.39 0.41 0.753815
December 56.32 54.83 1.49 2.717490
January 53.91 56.38 -2.47 -4.380986
February 53.77 54.10 -0.33 -0.609982

cxxv
 March 59.40 54.52 4.88 8.950844
Total 2.272172

Chart showing the return

50

40

30

20

10

0
2014 2015 2016 2017 2018
-10

Figure No. 5.3 Chart showing the return of HDFC Mid Cap Opportunities
Fund

Interpretation

The graph shows the return of HDFC Mid Cap Opportunities Fund (G) from April
1st 2014 to March 31st 2019. In this graph indicate the performance of fund in 2014-
15 is very high (43.980224) compared to other years. In the year 2015-16, it turns to
be negative (-5.988757) and in 2016-17 and 2017-18 the return has small amount of
growth that is 28.152582 and 12.838862 respectively. But in 2018-19, the
performance is low at 2.272172.

cxxvi
4. Kotak Emerging Equity Scheme Fund - NIFTY Midcap 100 TRI

Table No. 5.17 Return on 2014 - 2015

Month P1 P0 P1 – P0 Return
April 16.65 13.99 2.66 19.013581
May 16.65 16.93 -0.28 -1.653869
June 18.42 16.93 1.49 8.800945
July 18.87 18.56 0.31 1.670259
August 20.16 18.78 1.38 7.348243
September 21.20 20.38 0.82 4.023553
October 22.18 21.21 0.97 4.573314
November 23.56 22.33 1.23 5.508285
December 24.60 23.60 1 4.237288
January 25.62 24.66 0.96 3.892944
February 25.67 25.66 0.01 0.038971
March 25.75 26.18 -0.43 -1.642475
Total 55.811039

Table No. 5.18 Return on 2015 - 2016

Month P1 P0 P1 – P0 Return
April 25.15 26.23 -1.08 -4.117423
May 25.81 25.51 0.3 1.176009
June 25.78 25.74 0.04 0.155400
July 27.34 26.06 1.28 4.911742
August 25.94 27.56 -1.62 -5.878084
September 26.02 25.48 0.54 2.119309
October 26.27 26.15 0.12 0.458891
November 26.38 26.31 0.07 0.266059
December 26.67 26.42 0.25 0.946253
January 24.66 26.83 -2.17 -8.087961

cxxvii
 February 22.64 24.82 -2.18 -8.783239
March 25.17 23.26 1.91 8.211522
Total -8.621522

Table No. 5.19 Return on 2016 - 2017

Month P1 P0 P1 – P0 Return
April 26.40 25.17 1.23 4.886770
May 27.46 26.50 0.96 3.622642
June 28.86 27.57 1.29 4.678999
July 30.31 29.08 1.23 4.229711
August 31.37 30.41 0.96 3.156856
September 31.43 31.25 0.18 0.576000
October 32.55 31.97 0.58 1.814201
November 30.33 32.74 -2.41 -7.361026
December 29.44 30.06 -0.62 -2.062542
January 31.67 29.66 2.01 6.776804
February 33.19 32.13 1.06 3.299097
March 35.12 33.42 1.7 5.086774
Total 28.704286

Table No. 5.20 Return on 2017 - 2018

Month P1 P0 P1 – P0 Return
April 36.37 35.28 1.09 3.089569
May 36.03 36.32 -0.29 -0.798458
June 36.24 36.19 0.05 0.138160
July 37.13 36.54 0.59 1.614669
August 36.96 37.16 -0.2 -0.538213
September 37.08 37.24 -0.16 -0.429646
October 39.38 37.12 2.26 6.088362
November 40.50 39.54 0.96 2.427921

cxxviii
December 42.10 40.23 1.87 4.648272
January 40.79 41.95 -1.16 -2.765197
February 39.96 40.97 -1.01 -2.465218
March 38.99 39.87 -0.88 -2.207173
Total 8.803048

Table No. 5.21 Return on 2018 - 2019

Month P1 P0 P1 – P0 Return
April 41.51 39.58 1.93 4.876200
May 39.86 41.10 -1.24 -3.017032
June 37.89 39.38 -1.49 -3.783647
July 39.34 37.82 1.52 4.019038
August 40.18 39.36 0.82 2.083333
September 35.59 40.03 -4.44 -11.091681
October 34.96 35.43 -0.47 -1.326559
November 36.09 35.26 0.83 2.353942
December 37.16 36.28 0.88 2.425579
January 35.68 37.14 -1.46 -3.931072
February 35.96 35.85 0.11 0.306834
March 38.90 36.36 2.54 6.985699
Total -0.099366

cxxix
 Chart showing the return

Figure No. 5.4 Return of Kotak Emerging Equity Scheme

Interpretation

The graph shows the return of Kotak Emerging Equity Scheme Fund (G) from April
1st 2014 to March 31st 2019. In this graph the performance of fund in 2014-15 is
very high (55.811039) compared to other years. In 2015-16, there is a great decline
that is -8.8621522 and 2016-17 have a growth of 28.704286 and in the year 2017-
18, the return is 8.803048. But in 2018-19 the performance is negative -0.099366.

5. Franklin India Smaller Companies Fund - NIFTY Smallcap 250 TRI

Table No. 5.22 Return on 2014 - 2015

Month P1 P0 P1 – P0 Return
April 22.53 21.63 0.9 4.160888
May 25.72 22.59 3.13 13.855688
June 28.16 26.16 2 7.645260
July 29.36 28.39 0.97 3.416696
August 31.37 29.18 2.19 7.505141
September 32.45 31.86 0.59 1.851852
October 33.73 32.50 1.23 3.784615
November 35.25 33.80 1.45 4.289941

cxxx
 December 36.69 35.31 1.38 3.908241
January 38.02 36.75 1.27 3.455782
February 38.18 38.06 0.12 0.315292
March 38.45 38.81 -0.36 -0.927596
Total 53.261800

Table No. 5.23 Return on 2015 - 2016

Month P1 P0 P1 – P0 Return
April 37.70 39.10 -1.4 -3.580563
May 38.64 38.15 0.49 1.284404
June 37.99 38.66 -0.67 -1.733057
July 39.99 38.30 1.69 4.412533
August 38.18 40.11 -1.93 -4.811768
September 38.46 37.47 0.99 2.642114
October 39.26 38.52 0.74 1.921080
November 39.69 39.26 0.43 1.095262
December 40.20 39.63 0.57 1.438304
January 37.87 40.42 -2.55 -6.308758
February 34.50 37.81 -3.31 -8.754298
March 38.18 35.58 2.6 7.307476
Total -5.087271

Table No. 5.24 Return on 2016 - 2017

Month P1 P0 P1 – P0 Return
April 40.32 38.41 1.91 4.972663
May 41.67 40.23 1.44 3.579418
June 43.59 41.72 1.87 4.482263
July 45.74 43.87 1.87 4.262594
August 47.42 45.81 1.61 3.514516
September 47.27 47.33 -0.06 -0.126769

cxxxi
October 48.54 48.10 0.44 0.914761
November 45.33 48.85 -3.52 -7.205732
December 44.30 45.02 -0.72 -1.599289
January 47.24 44.53 2.71 6.085785
February 48.75 47.86 0.89 1.859590
March 51.66 48.93 2.73 5.579399
Total 26.319200

Table No. 5.25 Return on 2017 - 2018

Month P1 P0 P1 – P0 Return
April 53.58 52.10 1.48 2.840691
May 53.53 53.55 -0.02 -0.037348
June 53.67 53.65 0.02 0.037279
July 55.14 54.19 0.95 1.753091
August 55.33 55.15 0.18 0.326383
September 55.88 55.72 0.16 0.287150
October 58.95 56.08 2.87 5.117689
November 61.54 59.01 2.53 4.287409
December 63.55 60.96 2.59 4.248688
January 62.00 63.40 -1.4 -2.208202
February 60.88 62.20 -1.32 -2.122186
March 58.87 60.82 -1.95 -3.206182
Total 11.324460

Table No. 5.26 Return on 2018 - 2019

Month P1 P0 P1 – P0 Return
April 62.07 59.74 2.33 3.900234
May 59.70 61.64 -1.94 -3.147307
June 56.75 59.06 -2.31 -3.911277

cxxxii
 July 57.45 56.38 1.07 1.897836
August 58.09 57.59 0.5 0.868206
September 52.21 57.89 -5.68 -9.811712
October 50.54 51.95 -1.41 -2.714148
November 51.14 51.00 0.14 0.274510
December 52.48 51.34 1.14 2.220491
January 51.20 52.63 -1.43 -2.717082
February 50.03 51.30 -1.27 -2.475634
March 50.03 50.78 -0.75 -1.476959
Total -17.092841

Chart showing the return

60
50
40
30
20
10
0
2014 2015 2016 2017 2018
-10
-20
-30

Figure No. 5.5 Chart Showing return of Franklin India Smaller Companies
Fund

Interpretation

The graph shows the return of Franklin India Smaller Companies Fund (G) from
April 1st 2014 to March 31st 2019. In this graph, it indicates that the performance of
fund in 2014-15 is very high (53.261800) compared to other years. In 2015-16, it is
negative (-5.087271) and 2016-17 and 2017-18 have a growth that is 26.319200 and
11.324460 respectively. But in 2018-19 the performance is high 25.39304.

cxxxiii
6. Reliance Small Cap Fund Growth Plan - S&P BSE Small Cap TRI

Table No. 5.27 Return on 2014 - 2015

Month P1 P0 P1 – P0 Return
April 13.78 13.50 0.28 2.074074
May 16.43 13.86 2.57 18.542569
June 19.19 16.75 2.44 14.567164
July 18.871 19.31 -0.439 -2.273433
August 20.34 18.78 1.56 8.306709
September 22.01 20.64 1.37 6.637597
October 22.68 21.97 0.71 3.231680
November 23.05 22.92 0.13 0.567190
December 24.09 22.99 1.1 4.784689
January 25.13 24.28 0.85 3.500824
February 24.60 25.09 -0.49 -1.952969
March 24.11 24.91 -0.8 -3.211562
Total 54.774531

Table No. 5.28 Return on 2015 - 2016

Month P1 P0 P1 – P0 Return
April 23.52 24.47 -0.95 -3.882305
May 24.10 23.88 0.22 0.921273
June 23.79 24.03 -0.24 -0.998752
July 26.06 24.10 1.96 8.132780
August 24.68 26.38 -1.7 -6.444276
September 24.89 24.09 0.8 3.320880
October 26.56 25.10 1.46 5.816733
November 27.34 26.64 0.7 2.627628

cxxxiv
December 27.73 27.44 0.29 1.056851
January 25.39 27.98 -2.59 -9.256612
February 21.89 25.35 -3.46 -13.648915
March 24.32 22.66 1.66 7.325684
Total -5.029030

Table No. 5.29 Return on 2016 - 2017

Month P1 P0 P1 – P0 Return
April 25.48 24.55 0.93 3.788187
May 25.89 25.71 0.18 0.700117
June 27.46 26.93 0.53 1.968065
July 28.24 27.54 0.7 2.541757
August 29.18 28.09 1.09 3.880384
September 29.72 29.11 0.61 2.095500
October 32.08 30.42 1.66 5.456936
November 29.79 32.25 -2.46 -7.627907
December 29.27 29.58 -0.31 -1.048005
January 31.24 29.47 1.77 6.006108
February 32.44 31.75 0.69 2.173228
March 34.59 32.65 1.94 5.941807
Total 25.876178

Table No. 5.30 Return on 2017 - 2018

Month P1 P0 P1 – P0 Return
April 37.20 35.14 2.06 5.862265
May 36.50 37.27 -0.77 -2.066005
June 37.01 36.82 0.19 0.516024
July 39.07 37.48 1.59 4.242263
August 38.87 39.03 -0.16 -0.409941

cxxxv
September 39.02 39.28 -0.26 -0.661914
October 42.70 39.04 3.66 9.375000
November 45.05 43.02 2.03 4.718735
December 47.70 44.73 2.97 6.639839
January 46.53 47.72 -1.19 -2.493713
February 46.01 46.72 -0.71 -1.519692
March 43.40 46.03 -2.63 -5.713665
Total 18.489196

Table No. 5.31 Return on 2018 - 2019

Month P1 P0 P1 – P0 Return
April 46.88 44.36 2.52 5.680794
May 43.88 46.51 -2.63 -5.654698
June 41.27 43.25 -1.98 -4.578035
July 42.27 40.88 1.39 3.400196
August 44.97 42.34 2.63 6.211620
September 39.37 45.09 -5.72 -12.685740
October 38.87 39.44 -0.57 -1.445233
November 39.50 39.33 0.17 0.432240
December 39.74 39.50 0.24 0.607595
January 37.79 39.82 -2.03 -5.097941
February 37.06 37.93 -0.87 -2.293699
March 40.30 37.71 2.59 6.868205
Total -8.554696

cxxxvi
 Chart showing the return

Figure No. 5.6 Chart showing the return of Reliance Small Cap Fund Growth

Interpretation

The graph shows the return of Reliance Small Cap Fund Growth from April 1st 2014
to March 31st 2019. The performance of fund in 2014-15 is very high that is
54.774531. And in 2015-16 and 2018-19 the results are comparatively less and turns
to be negative, -5.029030 and -8.554696 respectively. But in 2016-17 the
performance of fund grows up to 25.876178. In the year 2017-18 there is a small
growth of 18.489196.

5.2 Calculation of Risk

Standard Deviation = √𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

Variance = 1 ( 𝑅 − ̅𝑅)2
𝑛

Where,

R – Return

̅𝑅– Avg. Return

cxxxvii
 1. ICICI Prudential Focused Blue-chip Equity Fund

Table No. 5.32 Risk on 2014 - 2015

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January -0.184672 2.207553 -2.392225 5.722742
February 9.677419 2.207553 7.469866 55.798892
March 3.906250 2.207553 1.698697 2.885570
April 0.510605 2.207553 -1.696948 2.879634
May 4.978269 2.207553 2.770716 7.676865
June -0.185667 2.207553 -2.393220 5.727504
July 5.746269 2.207553 3.538716 12.522508
August 3.531073 2.207553 1.323520 1.751704
September -1.918465 2.207553 -4.126018 17.024028
October 5.012098 2.207553 2.804545 7.865470
November 0.197824 2.207553 -2.009729 4.039012
December -4.780362 2.207553 -6.987915 48.830962
172.7249

172.7249
Variance = =14.3937 Standard Deviation = √14.3937 =3.794
12

Table No. 5.33 Risk on 2015 - 2016

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January -3.831933 -0.863404 -2.968529 8.812164
February 0.962199 -0.863404 1.825603 3.332826
March -1.125512 -0.863404 -0.262108 0.068701
April 3.033401 -0.863404 3.896805 15.185089
May -6.076618 -0.863404 -5.213214 27.177600
June 1.835853 -0.863404 2.699257 7.285988
July 2.022711 -0.863404 2.886115 8.329660

cxxxviii
August -0.138937 -0.863404 0.724467 0.524852

cxxxix
September -0.867453 -0.863404 -0.004049 0.000016
October -5.23926 -0.863404 -4.375856 19.148116
November -8.225747 -0.863404 -7.362343 54.204094
December 7.290448 -0.863404 8.153852 66.485302
210.5544

210.5544
Variance = = 17.5462 Standard Deviation = √17.5462 = 4.189
12

Table No. 5.34 Risk on 2016 - 2017

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 3.2 1.600987 1.599013 2.556842
February 3.215548 1.600987 1.614561 2.606807
March 3.463649 1.600987 1.862662 3.469509
April 4.343534 1.600987 2.742547 7.521564
May 1.827923 1.600987 0.226936 0.051500
June -1.238774 1.600987 -2.839761 8.064243
July -0.401111 1.600987 -2.002098 4.008397
August -3.656647 1.600987 -5.257634 27.642716
September -0.420576 1.600987 -2.021563 4.086717
October 4.31538 1.600987 2.714393 7.367929
November 2.663809 1.600987 1.062822 1.129590
December 1.89911 1.600987 0.298123 0.088877
68.5947

68.5947
Variance = = 5.7162 Standard Deviation = √5.7162 = 2.391
12

cxxxix
Table No. 5.35 Risk on 2017 - 2018

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 1.652174 0.498934 1.153240 1.329962
February 2.60223 0.498934 2.103296 4.423854
March -0.30692 0.498934 -0.805854 0.649401
April -0.333611 0.498934 -0.832545 0.693131
May -0.762957 0.498934 -1.261891 1.592369
June -1.212441 0.498934 -1.711375 2.928805
July 5.472901 0.498934 4.973967 24.740347
August -1.443864 0.498934 -1.942798 3.774464
September 4.261291 0.498934 3.762357 14.155330
October 2.831118 0.498934 2.332184 5.439082
November 26.167929 0.498934 -4.601621 21.174917
December -2.670025 0.498934 -3.168959 10.042302
90.9440

90.9440
Variance = = 7.5787 Standard Deviation = √54.3589 = 2.7
12

Table No. 5.36 Risk on 2018 - 2019

Month Return Avg. R R- 𝐑̅ ( 𝐑 − 𝐑̅)𝟐

January 4.294163 0.809092 3.485071 12.145723
February 0.173784 0.809092 -0.635308 0.403616
March -1.22164 0.809092 -2.030732 4.123871
April 5.758498 0.809092 4.949406 24.496624
May 4.504939 0.809092 3.695847 13.659288
June -5.900116 0.809092 -6.709208 45.013466
July -3.701888 0.809092 -4.510980 20.348937
August 1.909855 0.809092 1.100763 1.211680
September 0.720676 0.809092 -0.088416 0.007817

cxl
 October -2.286698 0.809092 -3.095790 9.583913
November -0.175924 0.809092 -0.985016 0.970256
December 5.63345 0.809092 4.824358 23.274434
155.2396

155.2396
Variance = = 12.9366 Standard Deviation = √12.9366 = 3.597
12

2. Axis Blue-chip Fund (G)

Table No. 5.37 Risk on 2014 - 2015

Month Return Avg. R R- 𝐑̅ ( 𝐑 − 𝐑̅)𝟐

January 0.613915 2.300235 -1.686320 2.843676
February 10.447761 2.300235 8.147526 66.382176
March 4.373877 2.300235 2.073642 4.299990
April -1.884637 2.300235 -4.184872 17.513156
May 4.521433 2.300235 2.221198 4.933719
June 0.498339 2.300235 -1.801896 3.246830
July 5.204873 2.300235 2.904638 8.436920
August 5.613851 2.300235 3.313616 10.980049
September -1.642608 2.300235 -3.942843 15.546013
October 3.945372 2.300235 1.645137 2.706475
November -0.195122 2.300235 -2.495357 6.226808
December -3.894231 2.300235 -6.194466 38.371412
181.4872

181.4872
Variance = = 15.1239 Standard Deviation = √15.1239 = 3.889
12

cxli
 Table No. 5.38 Return on 2015 - 2016

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January -4.804359 -0.712147 -4.092212 16.746196
February 1.950719 -0.712147 2.662866 7.090858
March 0.505306 -0.712147 1.217453 1.482193
April 2.140368 -0.712147 2.852515 8.136844
May -6.177043 -0.712147 -5.464896 29.865084
June 2.54372 -0.712147 3.255867 10.600673
July 1.289324 -0.712147 2.001471 4.005888
August 0 -0.712147 0.712147 0.507154
September 0.766871 -0.712147 1.479018 2.187495
October -5.356241 -0.712147 -4.644094 21.567605
November -7.52803 -0.712147 -6.815883 46.456255
December 6.123596 -0.712147 6.835743 46.727388
195.3736

195.3736
Variance = = 16.2811 Standard Deviation = √16.2811 =
12

4.035

Table No. 5.39 Risk on 2016 - 2017

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 3.505045 0.992266 2.512779 6.314058
February 3.551209 0.992266 2.558943 6.548189
March 1.095072 0.992266 0.102806 0.010569
April 3.184713 0.992266 2.192447 4.806824
May 2.958015 0.992266 1.965749 3.864169
June -1.763341 0.992266 -2.755607 7.593370
July -2.081406 0.992266 -3.073672 9.447460

cxlii
 August -6.997636 0.992266 -7.989902 63.838534
September -1.941748 0.992266 -2.934014 8.608438
October 4.997397 0.992266 4.005131 16.041074
November 1.551891 0.992266 0.559625 0.313180
December 3.847981 0.992266 2.855715 8.155108
135.5410

135.5410
Variance = = 11.2951 Standard Deviation = √11.2951 = 3.361
12

Table No. 5.39 Risk on 2017 - 2018

Month Return Avg. R R- 𝐑̅ ( 𝐑 − 𝐑̅)𝟐

January 3.409091 1.294410 2.114681 4.471877
February 2.234882 1.294410 0.940472 0.884488
March -0.04279 1.294410 -1.337200 1.788103
April 5.089059 1.294410 3.794649 14.399364
May 0.361301 1.294410 -0.933109 0.870692
June -0.715137 1.294410 -2.009547 4.038277
July 2.826433 1.294410 1.532023 2.347096
August -0.729087 1.294410 -2.023497 4.094538
September 4.396887 1.294410 3.102477 9.625366
October 2.030075 1.294410 0.735665 0.541204
November -2.720588 1.294410 -4.014998 16.120206
December -0.607211 1.294410 -1.901621 3.616161
62.7974

62.7974
Variance = = 5.2331 Standard Deviation = √5.2331 = 2.288
12

cxliii
Table No. 5.40 Risk on 2018 - 2019

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 5.035701 1.216233 3.819468 14.588334
February 2.180908 1.216233 0.964675 0.930597
March 1.690736 1.216233 0.474503 0.225153
April 5.890506 1.216233 4.674273 21.848826
May 0.523389 1.216233 -0.692844 0.480033
June -6.771861 1.216233 -7.988094 63.809650
July -4.941758 1.216233 -6.157991 37.920856
August 6.71365 1.216233 5.497417 30.221591
September 0.764685 1.216233 -0.451548 0.203896
October -1.10117 1.216233 -2.317403 5.370358
November -0.758882 1.216233 -1.975115 3.901080
December 5.368895 1.216233 4.152662 17.244600
196.7450

196.7450
Variance = = 16.3954 Standard Deviation = √16.3954 = 4.049
12

3. HDFC Mid-Cap Opportunities Fund

Table No. 5.41 Risk on 2014 - 2015

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 4.459161 3.665019 0.794142 0.630662
February 11.806723 3.665019 8.141704 66.287349
March 8.591445 3.665019 4.926426 24.269676
April -0.813559 3.665019 -4.478578 20.057658
May 6.38517 3.665019 2.720151 7.399223
June 2.451449 3.665019 -1.213570 1.472751

cxliv
 July 3.101737 3.665019 -0.563282 0.317286
August 5.699791 3.665019 2.034772 4.140298
September 3.048264 3.665019 -0.616755 0.380386
October 2.755798 3.665019 -0.909221 0.826682
November -1.430085 3.665019 -5.095104 25.960081
December -2.07567 3.665019 -5.740689 32.955506
184.6976

184.6976
Variance = = 15.3915 Standard Deviation = √15.3915 = 3.923
12

Table No. 5.42 Risk on 2015 - 2016

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January -2.754967 -0.499063 -2.255904 5.089103
February 2.224605 -0.499063 2.723668 7.418367
March -1.388161 -0.499063 -0.889098 0.790495
April 4.250853 -0.499063 4.749916 22.561701
May -4.515968 -0.499063 -4.016905 16.135526
June 1.51838 -0.499063 2.017443 4.070076
July 0.367551 -0.499063 0.866614 0.751020
August 0.574713 -0.499063 1.073776 1.152995
September 1.036001 -0.499063 1.535064 2.356421
October -7.055527 -0.499063 -6.556464 42.987221
November -8.913878 -0.499063 -8.414815 70.809113
December 8.667643 -0.499063 9.166706 84.028497
258.1505

258.1505
Variance = = 21.5125 Standard Deviation = √21.5125 = 4.638
12

cxlv
 Table No. 5.43 Risk on 2016 - 2017

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 2.658432 2.346049 0.312384 0.097583
February 2.288687 2.346049 -0.057362 0.003290
March 4.82601 2.346049 2.479962 6.150209
April 5.527517 2.346049 3.181469 10.121742
May 5.739564 2.346049 3.393516 11.515947
June 0.907519 2.346049 -1.438530 2.069367
July 0.252366 2.346049 -2.093683 4.383506
August -5.808608 2.346049 -8.154657 66.498423
September -2.317291 2.346049 -4.663340 21.746735
October 5.88904 2.346049 3.542992 12.552789
November 3.190366 2.346049 0.844318 0.712872
December 4.99898 2.346049 2.652932 7.038046
142.8905

142.8905
Variance = = 11.9075 Standard Deviation = √11.9075 =
12

3.451

Table No. 5.45 Risk on 2017 - 2018

Month Return Avg. R R- 𝐑̅ ( 𝐑 − 𝐑̅)𝟐

January 7.536232 1.069905 6.466327 41.813383
February -1.562209 1.069905 -2.632114 6.928025
March 0.355739 1.069905 -0.714166 0.510033
April 3.601773 1.069905 2.531868 6.410355
May -1.799715 1.069905 -2.869620 8.234720
June -0.648298 1.069905 -1.718203 2.952222
July 5.632786 1.069905 4.562881 20.819881
August 1.646859 1.069905 0.576954 0.332876
cxlvi
 September 5.64258 1.069905 4.572675 20.909355
October -2.535885 1.069905 -3.605790 13.001723
November -2.505322 1.069905 -3.575227 12.782249
December -2.525678 1.069905 -3.595583 12.928218
147.6230

147.6230
Variance = = 12.3019 Standard Deviation = √12.3019 = 3.507
12

Table No. 5.45 Risk on 2018 - 2019

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 6.633948 0.189348 6.444600 41.532875
February -3.842444 0.189348 -4.031792 16.255343
March -3.056916 0.189348 -3.246264 10.538227
April 4.685595 0.189348 4.496247 20.216241
May 2.887008 0.189348 2.697660 7.277372
June -11.367702 0.189348 -11.557050 133.565395
July -1.098499 0.189348 -1.287847 1.658549
August 0.753815 0.189348 0.564467 0.318623
September 2.71749 0.189348 2.528142 6.391504
October -4.380986 0.189348 -4.570334 20.887949
November -0.609982 0.189348 -0.799330 0.638928
December 8.950844 0.189348 8.761496 76.763819
336.0448

336.0448
Variance = = 28.0037 Standard Deviation = √28.0037 =
12

5.292

cxlvii
 4. Kotak Emerging Equity Scheme Fund

Table No. 5.46 Risk on 2014 - 2015

Month Return Avg. R R- 𝐑̅ ( 𝐑 − 𝐑̅)𝟐

January 19.013581 4.650920 14.362661 206.286033
February -1.653869 4.650920 -6.304789 39.750363
March 8.800945 4.650920 4.150025 17.222708
April 1.670259 4.650920 -2.980661 8.884340
May 7.348243 4.650920 2.697323 7.275552
June 4.023553 4.650920 -0.627367 0.393589
July 4.573314 4.650920 -0.077606 0.006023
August 5.508285 4.650920 0.857365 0.735075
September 4.237288 4.650920 -0.413632 0.171091
October 3.892944 4.650920 -0.757976 0.574527
November 0.038971 4.650920 -4.611949 21.270073
December -1.642475 4.650920 -6.293395 39.606820
342.1762

342.1762
Variance = = 28.5147 Standard Deviation = √28.5147 = 5.340
12

Table No. 5.47 Risk on 2015 - 2016

Month Return Avg. R R- 𝐑̅ ( 𝐑 − ̅𝐑)𝟐

January -4.117423 -0.718460 -3.398963 11.552948
February 1.176009 -0.718460 1.894469 3.589013
March 0.1554 -0.718460 0.873860 0.763632
April 4.911742 -0.718460 5.630202 31.699176
May -5.878084 -0.718460 -5.159624 26.621718
June 2.119309 -0.718460 2.837769 8.052934
July 0.458891 -0.718460 1.177351 1.386156

cxlviii
 August 0.266059 -0.718460 0.984519 0.969278
September 0.946253 -0.718460 1.664713 2.771270
October -8.087961 -0.718460 -7.369501 54.309543
November -8.783239 -0.718460 -8.064779 65.040658
December 8.211522 -0.718460 8.929982 79.744581
286.5009

Variance = 286.5009 = 23.8751 Standard Deviation = √23.8751 = 4.886

12

Table No. 5.48 Risk on 2016 - 2017

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 4.88677 2.392024 2.494746 6.223758
February 3.622642 2.392024 1.230618 1.514421
March 4.678999 2.392024 2.286975 5.230255
April 4.229711 2.392024 1.837687 3.377094
May 3.156856 2.392024 0.764832 0.584968
June 0.576 2.392024 -1.816024 3.297943
July 1.814201 2.392024 -0.577823 0.333879
August -7.361026 2.392024 -9.753050 95.121981
September -2.062542 2.392024 -4.454566 19.843157
October 6.776804 2.392024 4.384780 19.226297
November 3.299097 2.392024 0.907073 0.822782
December 5.086774 2.392024 2.694750 7.261678
162.8382

Variance = 162.8382 = 13.5699 Standard Deviation = √13.5699 =

12

3.684

cxlix
Table No. 5.49 Risk on 2017 - 2018

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 3.089569 0.733587 2.355982 5.550650
February -0.798458 0.733587 -1.532045 2.347163
March 0.13816 0.733587 -0.595427 0.354534
April 1.614669 0.733587 0.881082 0.776305
May -0.538213 0.733587 -1.271800 1.617476
June -0.429646 0.733587 -1.163233 1.353112
July 6.088362 0.733587 5.354775 28.673612
August 2.427921 0.733587 1.694334 2.870767
September 4.648272 0.733587 3.914685 15.324756
October -2.765197 0.733587 -3.498784 12.241492
November -2.465218 0.733587 -3.198805 10.232356
December -2.207173 0.733587 -2.940760 8.648071
89.9903

89.9903
Variance = = 7.4992 Standard Deviation = √7.4992 = 2.738
12

Table No. 5.50 Risk on 2018 - 2019

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 4.8762 -0.008280 4.884481 23.858150
February -3.017032 -0.008280 -3.008752 9.052586
March -3.783647 -0.008280 -3.775367 14.253392
April 4.019038 -0.008280 4.027319 16.219294
May 2.083333 -0.008280 2.091614 4.374847
June -11.091681 -0.008280 -11.083401 122.841767
July -1.326559 -0.008280 -1.318279 1.737858
August 2.353942 -0.008280 2.362223 5.580095

cl
 September 2.425579 -0.008280 2.433860 5.923672
October -3.931072 -0.008280 -3.922792 15.388293
November 0.306834 -0.008280 0.315115 0.099297
December 6.985699 -0.008280 6.993980 48.915749
268.2450

268.2450
Variance = = 22.3538 Standard Deviation = √22.3538 =
12

4.728

5. Franklin India Smaller Companies Fund

Table No. 5.51 Risk on 2014 - 2015

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 4.160888 4.438483 -0.277595 0.077059
February 13.855688 4.438483 9.417205 88.683744
March 7.64526 4.438483 3.206777 10.283417
April 3.416696 4.438483 -1.021787 1.044049
May 7.505141 4.438483 3.066658 9.404389
June 1.851852 4.438483 -2.586631 6.690662
July 3.784615 4.438483 -0.653868 0.427544
August 4.289941 4.438483 -0.148542 0.022065
September 3.908241 4.438483 -0.530242 0.281157
October 3.455782 4.438483 -0.982701 0.965702
November 0.315292 4.438483 -4.123191 17.000707
December -0.927596 4.438483 -5.366079 28.794807
163.6753

163.6753
Variance = = 13.6396 Standard Deviation = √13.6396 = 3.693
12

cli
Table No. 5.52 Risk on 2015 - 2016

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January -3.580563 -0.423939 -3.156624 9.964273
February 1.284404 -0.423939 1.708343 2.918437
March -1.733057 -0.423939 -1.309118 1.713789
April 4.412533 -0.423939 4.836472 23.391464
May -4.811768 -0.423939 -4.387829 19.253041
June 2.642114 -0.423939 3.066053 9.400683
July 1.92108 -0.423939 2.345019 5.499115
August 1.095262 -0.423939 1.519201 2.307972
September 1.438304 -0.423939 1.862243 3.467950
October -6.308758 -0.423939 -5.884819 34.631092
November -8.754298 -0.423939 -8.330359 69.394877
December 7.307476 -0.423939 7.731415 59.774782
241.7175

241.7175
Variance = = 20.1431 Standard Deviation = √20.1431 = 4.488
12

Table No. 5.53 Risk on 2016 - 2017

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 4.972663 2.193267 2.779396 7.725044
February 3.579418 2.193267 1.386151 1.921416
March 4.482263 2.193267 2.288996 5.239505
April 4.262594 2.193267 2.069327 4.282116
May 3.514516 2.193267 1.321249 1.745700
June -0.126769 2.193267 -2.320036 5.382565
July 0.914761 2.193267 -1.278506 1.634577
August -7.205732 2.193267 -9.398999 88.341174
September -1.599289 2.193267 -3.792556 14.383478

clii
 October 6.085785 2.193267 3.892518 15.151700
November 1.85959 2.193267 -0.333677 0.111340
December 5.579399 2.193267 3.386132 11.465893
157.3845

157.3845
Variance = = 13.1154 Standard Deviation = √13.1154 = 3.622
12

Table No. 5.54 Return on 2017 - 2018

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 2.840691 0.943705 1.896986 3.598555
February -0.037348 0.943705 -0.981053 0.962465
March 0.037279 0.943705 -0.906426 0.821608
April 1.753091 0.943705 0.809386 0.655105
May 0.326383 0.943705 -0.617322 0.381087
June 0.28715 0.943705 -0.656555 0.431065
July 5.117689 0.943705 4.173984 17.422141
August 4.287409 0.943705 3.343704 11.180355
September 4.248688 0.943705 3.304983 10.922912
October -2.208202 0.943705 -3.151907 9.934519
November -2.122186 0.943705 -3.065891 9.399689
December -3.206182 0.943705 -4.149887 17.221563
82.9311

82.9311
Variance = = 6.9109 Standard Deviation = √6.9109 = 2.629
12

cliii
Table No. 5.55 Risk on 2018 - 2019

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 3.900234 -1.424404 5.324638 28.351765
February -3.147307 -1.424404 -1.722904 2.968396
March -3.911277 -1.424404 -2.486874 6.184540
April 1.897836 -1.424404 3.322240 11.037275
May 0.868206 -1.424404 2.292610 5.256058
June -9.811712 -1.424404 -8.387309 70.346944
July -2.714148 -1.424404 -1.289745 1.663441
August 0.27451 -1.424404 1.698914 2.886307
September 2.220491 -1.424404 3.644895 13.285256
October -2.717082 -1.424404 -1.292679 1.671018
November -2.475634 -1.424404 -1.051231 1.105086
December -1.476959 -1.424404 -0.052556 0.002762
144.7588

144.7588
Variance = = 12.0632 Standard Deviation = √12.0632 = 3.473
12

6. Reliance Small Cap Fund Growth Plan

Table No. 5.56 Risk on 2014 - 2015

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 2.074074 4.564544 -2.490470 6.202442
February 18.542569 4.564544 13.978025 195.385174
March 14.567164 4.564544 10.002620 100.052400
April -2.273433 4.564544 -6.837977 46.757934
May 8.306709 4.564544 3.742165 14.003796
June 6.637597 4.564544 2.073053 4.297547
July 3.23168 4.564544 -1.332864 1.776527

cliv
 August 0.56719 4.564544 -3.997354 15.978842
September 4.784689 4.564544 0.220145 0.048464
October 3.500824 4.564544 -1.063720 1.131501
November -1.952969 4.564544 -6.517513 42.477980
December -3.211562 4.564544 -7.776106 60.467830
488.5804

488.5804
Variance = = 40.7150 Standard Deviation = √40.7150 = 6.381
12

Table No. 5.57 Risk on 2015 - 2016

Month Return Avg. R R- 𝐑̅ ( 𝐑 − 𝐑̅)𝟐

January -3.882305 -0.419086 -3.463219 11.993886
February 0.921273 -0.419086 1.340359 1.796562
March -0.998752 -0.419086 -0.579666 0.336013
April 8.13278 -0.419086 8.551866 73.134411
May -6.444276 -0.419086 -6.025190 36.302916
June 3.32088 -0.419086 3.739966 13.987345
July 5.816733 -0.419086 6.235819 38.885438
August 2.627628 -0.419086 3.046714 9.282466
September 1.056851 -0.419086 1.475937 2.178390
October -9.256612 -0.419086 -8.837526 78.101867
November -13.648915 -0.419086 -13.229829 175.028378
December 7.325684 -0.419086 7.744770 59.981461
501.0091

501.0091
Variance = = 41.7508 Standard Deviation = √41.7508 = 6.461
12

clv
Table No. 5.58 Risk on 2016 - 2017

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 3.788187 2.156348 1.631839 2.662898
February 0.700117 2.156348 -1.456231 2.120609
March 1.968065 2.156348 -0.188283 0.035451
April 2.541757 2.156348 0.385409 0.148540
May 3.880384 2.156348 1.724036 2.972300
June 2.0955 2.156348 -0.060848 0.003702
July 5.456936 2.156348 3.300588 10.893881
August -7.627907 2.156348 -9.784255 95.731648
September -1.048005 2.156348 -3.204353 10.267879
October 6.006108 2.156348 3.849760 14.820651
November 2.173228 2.156348 0.016880 0.000285
December 5.941807 2.156348 3.785459 14.329699
153.9875

153.9875
Variance = = 12.8323 Standard Deviation = √12.8323 =
12

3.582

Table No. 5.59 Risk on 2017 - 2018

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 5.862265 1.540766 4.321499 18.675351
February -2.066005 1.540766 -3.606771 13.008799
March 0.516024 1.540766 -1.024742 1.050097
April 4.242263 1.540766 2.701497 7.298084
May -0.409941 1.540766 -1.950707 3.805259
June -0.661914 1.540766 -2.202680 4.851801
July 9.375 1.540766 7.834234 61.375217

clvi
 August 4.718735 1.540766 3.177969 10.099485
September 6.639839 1.540766 5.099073 26.000542
October -2.493713 1.540766 -4.034479 16.277023
November -1.519692 1.540766 -3.060458 9.366405
December -5.713665 1.540766 -7.254431 52.626774
224.4348

224.4348
Variance = = 18.7029 Standard Deviation = √18.7029 =
12

4.325

Table No. 5.60 Risk on 2018 - 2019

Month Return Avg. R R- ̅𝐑 ( 𝐑 − ̅𝐑)𝟐

January 5.680794 -0.712891 6.393685 40.879212
February -5.654698 -0.712891 -4.941807 24.421453
March -4.578035 -0.712891 -3.865144 14.939336
April 3.400196 -0.712891 4.113087 16.917487
May 6.21162 -0.712891 6.924511 47.948857
June -12.68574 -0.712891 -11.972849 143.349105
July -1.445233 -0.712891 -0.732342 0.536324
August 0.43224 -0.712891 1.145131 1.311326
September 0.607595 -0.712891 1.320486 1.743684
October -5.097941 -0.712891 -4.385050 19.228661
November -2.293699 -0.712891 -1.580808 2.498953
December 6.868205 -0.712891 7.581096 57.473022
371.2474

371.2474
Variance = = 30.9373 Standard Deviation = √30.9373 = 5
12

clvii
Table No.5.61 Risk of Funds

Risk

Name of Funds
2014- 2015- 2016- 2017- 2018-
2015 2016 2017 2018 2019

ICICI Prudential Focused

3.794 4.189 2.391 2.753 3.597
Blue-chip Equity Fund

Axis Blue-chip Fund (G) 3.889 4.035 3.361 2.288 4.049

HDFC Mid-Cap Opportunities

3.923 4.638 3.451 3.507 5.292
Fund

Kotak Emerging Equity

5.340 4.886 3.684 2.738 4.728
Scheme Fund

Franklin India Smaller

3.693 4.488 3.622 2.629 3.473
Companies Fund

Reliance Small Cap Fund

6.381 6.461 3.582 4.325 5.562
Growth Plan

clviii
Chart showing the risk analysis

Kotak
Fund (G) Emerging Smaller
Fund
Fund Fund Fund

Figure No. 5.7 chart showing the risk analysis

Interpretation

The funds Principal Reliance Small Cap Fund has high amount of standard
deviation. So, it shows they are the riskier funds from the selected mutual funds.

Axis Blue-chip fund has very less amount of standard deviation. So, it is having
less Risk compared to other funds

The funds ICICI Prudential Blue-chip Fund, Kotak Emerging Equity Scheme,
Franklin India Smaller Companies Fund and HDFC Mid cap Opportunities Fund
also have moderate amount of standard deviation. So, it is also less risky funds.

clix
5.3 Calculation of Sharpe

Table No. 5.62 Calculation of Sharpe Ratio 2014-2015

Risk
Return on Standard Sharpe
Name of Fund free
2014-2015 Deviation Ratio
rate

ICICI Prudential Focused

26.490642 7.31 3.794 5.055520
Blue-chip Equity Fund

Axis Blue-chip Fund (G) 27.602822 7.31 3.889 5.218005

HDFC Mid-Cap
43.980224 7.31 3.923 9.347495
Opportunities Fund

Kotak Emerging Equity

55.811039 7.31 5.34 9.082592
Scheme Fund

Franklin India Smaller

53.2618 7.31 3.693 12.442946
Companies Fund

Reliance Small Cap Fund

54.774531 7.31 6.381 7.438416
Growth Plan

clx
 Table No. 5.63 Calculation of Sharpe Ratio 2015-2016

Risk
Return on Standard Sharpe
Name of Fund free
2015-2016 Deviation Ratio
rate

ICICI Prudential Focused - -

7.31 4.189
Blue-chip Equity Fund 10.360846 4.218392

-
Axis Blue-chip Fund (G) -8.545768 7.31 4.035
3.929558

HDFC Mid-Cap -
-5.988757 7.31 4.638
Opportunities Fund 2.867347

Kotak Emerging Equity -

-8.621522 7.31 4.886
Scheme Fund 3.260647

Franklin India Smaller -

-5.087271 7.31 4.488
Companies Fund 2.762315

Reliance Small Cap Fund -

-5.02903 7.31 6.461
Growth Plan 1.909771

Table No. 5.64 Calculation of Sharpe Ratio 2016-2017

Risk
Return on Standard Sharpe
Name of Fund free
2016-2017 Deviation Ratio
rate

ICICI Prudential Focused

19.211845 7.31 2.391 4.977769
Blue-chip Equity Fund

Axis Blue-chip Fund (G) 11.907194 7.31 3.361 1.367805

clxi
 HDFC Mid-Cap
28.152582 7.31 3.451 6.039578
Opportunities Fund

Kotak Emerging Equity

28.704286 7.31 3.684 5.807352
Scheme Fund

Franklin India Smaller

26.3192 7.31 3.622 5.248261
Companies Fund

Reliance Small Cap Fund

25.876178 7.31 3.582 5.183188
Growth Plan

Table No. 5.65 Calculation of Sharpe Ratio 2017-2018

Risk
Return on Standard Sharpe
Name of Fund free
2017-2018 Deviation Ratio
rate

ICICI Prudential Focused -

5.987210 7.31 2.753
Blue-chip Equity Fund 0.480490

Axis Blue-chip Fund (G) 15.532915 7.31 2.288 3.593931

HDFC Mid-Cap
12.838862 7.31 3.507 1.576522
Opportunities Fund

Kotak Emerging Equity

8.803048 7.31 2.738 0.545306
Scheme Fund

Franklin India Smaller

11.32446 7.31 2.629 1.526991
Companies Fund

Reliance Small Cap Fund

18.489196 7.31 4.325 2.584785
Growth Plan

clxii
Table No. 5.66 Calculation of Sharpe Ratio 2018-2019

Risk
Return on Standard Sharpe
Name of Fund free
2018-2019 Deviation Ratio
rate

ICICI Prudential Focused

9.709099 7.31 3.597 0.666972
Blue-chip Equity Fund

Axis Blue-chip Fund (G) 14.594799 7.31 4.049 1.799160

HDFC Mid-Cap -
2.272172 7.31 5.292
Opportunities Fund 0.951971

Kotak Emerging Equity -

-0.099366 7.31 4.728
Scheme Fund 1.567125

Franklin India Smaller - -

7.31 3.473
Companies Fund 17.092841 7.026444

Reliance Small Cap Fund -

-8.554696 7.31 5.562
Growth Plan 2.852337

clxiii
Chart showing the Sharpe Ratio

Kotak
-5 Emerging Smaller
chip Equity Fund
Fund Fund Fund

2014 2015 2016 2017

Figure No. 5.6 Chart showing the calculation of Sharpe Ratio

Interpretation

From the selected funds principal Franklin India Smaller Companies Fund shows
high Sharpe ratio. It indicates the funds have more risk adjusted return.

HDFC mid cap opportunities fund and Kotak Emerging Equity Scheme fund have
high Sharpe ratio in 2014. In 2014 the almost all funds have high Sharpe ratio.

In 2015 and 2016 all the funds have less Sharpe ratio. Some funds show negative
shape ratio. It indicates funds have less risk adjusted return in those years.

In 2017 and 2018 the Sharpe index is again falling up. Almost all funds show
negative Sharpe index. That mean less risk adjusted return indicates that fund is
falling.

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Table No. 5.67 Calculation of Treynor Ratio 2014-2015

Risk
Return on Treynor
Name of Fund free Beta
2014-2015 Ratio
rate

ICICI Prudential Focused

26.490642 7.31 13.295 1.442643
Blue-chip Equity Fund

Axis Blue-chip Fund (G) 27.602822 7.31 17.534626 1.157300

HDFC Mid-Cap
43.980224 7.31 16.475142 2.225791
Opportunities Fund

Kotak Emerging Equity

55.811039 7.31 13.748040 3.527851
Scheme Fund

Franklin India Smaller

53.2618 7.31 0.000711 3.958688
Companies Fund

Reliance Small Cap Fund

54.774531 7.31 17.899226 2.651764
Growth Plan

Table No. 5.68 Calculation of Treynor Ratio 2015-2016

Risk
Return on Treynor
Name of Fund free Beta
2015-2016 Ratio
rate

ICICI Prudential Focused - 7.31 13.295 -

Blue-chip Equity Fund 10.360846 1.329086

-8.545768 7.31 17.534626 -

Axis Blue-chip Fund (G)
0.904255

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 HDFC Mid-Cap -5.988757 7.31 16.475142 -
Opportunities Fund 0.807201

Kotak Emerging Equity -8.621522 7.31 13.748040 -

Scheme Fund 1.158821

Franklin India Smaller -5.087271 7.31 0.000711 -

Companies Fund 1.068009

Reliance Small Cap Fund -5.02903 7.31 17.899226 -

Growth Plan 0.689361

Table No. 5.69 Calculation of Treynor Ratio 2016-2017

Risk
Return on Treynor
Name of Fund free Beta
2016-2017 Ratio
rate

ICICI Prudential Focused 19.211845 7.31 13.295 0.895179

Blue-chip Equity Fund

Axis Blue-chip Fund (G) 11.907194 7.31 17.534626 0.262178

HDFC Mid-Cap 28.152582 7.31 16.475142 1.265093

Opportunities Fund

Kotak Emerging Equity 28.704286 7.31 13.748040 1.556170

Scheme Fund

Franklin India Smaller 26.3192 7.31 0.000711 1.637618

Companies Fund

Reliance Small Cap Fund 25.876178 7.31 17.899226 1.037262

Growth Plan

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Table No. 5.70 Calculation of Treynor Ratio 2017-2018

Risk
Return on Treynor
Name of Fund free Beta
2017-2018 Ratio
rate

ICICI Prudential Focused 5.98721 7.31 13.295 -

Blue-chip Equity Fund 0.099492

Axis Blue-chip Fund (G) 15.532915 7.31 17.534626 0.468953

HDFC Mid-Cap 12.838862 7.31 16.475142 0.335588

Opportunities Fund

Kotak Emerging Equity 8.803048 7.31 13.748040 0.108601

Scheme Fund

Franklin India Smaller 11.32446 7.31 0.000711 0.345841

Companies Fund

Reliance Small Cap Fund 18.489196 7.31 17.899226 0.624563

Growth Plan

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Table No. 5.71 Calculation of Treynor Ratio 2018-2019

Risk
Return on Treynor
Name of Fund free Beta
2018-2019 Ratio
rate

ICICI Prudential Focused 9.709099 7.31 13.295 0.180445

Blue-chip Equity Fund

Axis Blue-chip Fund (G) 14.594799 7.31 17.534626 0.415452

HDFC Mid-Cap 2.272172 7.31 16.475142 -

Opportunities Fund 0.305784

Kotak Emerging Equity -0.099366 7.31 13.748040 -

Scheme Fund 0.538940

Franklin India Smaller - 7.31 0.000711 -

Companies Fund 17.092841 2.102273

Reliance Small Cap Fund -8.554696 7.31 17.899226 -

Growth Plan 0.886334

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Chart showing the Treynor’s Ratio

-1

-2

-3

2014-15 2015-16 2016-17 2017-18 2018-19

Figure 5.7 Chart Showing the Treynor Ratio of Funds

Interpretation

Franklin India Smaller Companies Fund and Kotak Emerging Equity Scheme have
more Treynor ratio in 2014. And Axis Blue-chip fund have less Treynor ratio. It
represents the less amount of volatility.

In 2015 and 2016 almost all funds showing a negative Treynor ratio it means in that
year the funds have high volatility.

In 2017 the funds are showing low Treynor ratio especially ICICI Prudential Blue-
chip fund.

In 2018-19, all funds are turning negative.

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CHAPTER 6

FINDINGS

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6.1 FINDINGS

From the analysis of 6 equity diversified mutual funds for the past 5 years that reveals
the following findings.

• From the selected 6 top diversified equity funds Reliance Small Cap Fund Growth
Plan produces high amount of return within 5 years of period i.e. (17.11%).

• From calculating the risk, Reliance Small Cap Fund Growth Plan is having high
amount of risk. If there is high return that means there is high risk.

• HDFC is having 16.25% returns within 5 years and the risk factor is comparatively
very less. And the fund is showing high Sharpe ratio indicate the fund have more risk-
free return.

• HDFC, Franklin and Axis fund also shows less amount of risk and those funds also
provides average return of 4.16%, 3.58% and 3.52% respectively. They are
moderately riskier funds.

• ICICI Prudential is showing less amount of return and lower amount of risk from
selected mutual funds. But it is good for the long run.

• Kotak Emerging Equity Scheme is also found providing high return and is highly
risky.

• From the selected funds, Franklin India Smaller Companies Fund is having high
NAV.

• According to Treynor ratio, the return is higher for Kotak Emerging Equity Scheme
fund as it has a higher proportion.

• ICICI Prudential Blue-chip fund and Axis Blue Chip funds are having less Treynor
ratio.

• In 2014, all the funds produce high amount of return. i.e. almost around 50%.
because of political changes and other favourable global market condition the Sensex
benchmark move 6000 point up in 2016 and also nifty grow up by 26%.

• But in the year 2015-16, because of the change of political power in India and US
almost all funds declined.
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 CHAPTER 7

RECOMMENDATIONS

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7.1 RECOMMENDATIONS OF THE STUDY

• Investing in equity diversified mutual funds is one best investment opportunity that
provides a high amount of return to long term investors.

• The investors should be aware of the portfolio that included in the fund and they
should be clear about the risk and uncertainty in the market.

• For the aggressive and moderate investors, best investment choice is equity mutual
fund.

• From the selected funds, Reliance Small Cap Fund Growth Plan and Kotak
Emerging Equity Scheme Fund is best to aggressive investors. Their risk and return
are high. Therefore, the overall performance is high in those funds.

• For the moderate investors, it is better to choose HDFC Mid cap Opportunities
Fund and Franklin India Smaller Companies Fund because there is only moderate risk
and also there are better returns.

• For the Conservative investors, it is better to choose Axis Blue-chip Fund and ICICI
Prudential Blue-chip Fund as they are less risky and is safe to play with.

• It is better to invest in those funds with high Sharpe and Treynor ratio for long term
investment.

• It is better to select the funds based on the performances of previous years, top AMC
companies in the industry and also should be aware of the fund manager.

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CHAPTER 8

CONCLUSION

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8.1 CONCLUSION

Mutual funds are one of the most highly growing products in financial services
market. Mutual funds are suitable for all types of investors from risk adverse to risk
bearer. Mutual funds have many options of return, risk free return, constant return,
market associated return, etc. mutual funds are suitable to all age of investors,
businessmen, salary person, etc. Investors need not to be expert in equity market;
mutual funds can satisfy their need. Fund managers are expert in this area and invest
fund in well diversified portfolio, high return with low risk is possible inn mutual
fund.

In today’s world, investors are showing more trust in mutual fund than any other
financial product. There is no need of a financial consultant, if you have good
knowledge of mutual funds and their type to invest. Mutual fund is subject to market
risk, despite of that it has low risk than stock market. This is proved in performance
evaluation section of this report. The investors can use Standard Deviation, Sharpe’s
and Treynor’s analysis before selecting their portfolio.

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REFERENCES

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BIBLIOGRAPHY

1. Reilly / Brown “Investments Analysis and Portfolio Management”, Ch 25

2. Fisher and Jordan “Security analysis and portfolio management”, Ch 20

3. S. Kevin “Portfolio Management”, Ch 14 “Portfolio Evaluation” Page No: - 197 -

212

4. Prof. Banerjee, Ashok et. Al (2007),” Performance Evaluation of Indian Mutual

Funds vis-à-vis their style benchmarks”, www.ssrn.com, paper no.962827 and PP.1-
18

5. C Bhattacharjee, Kaushik and Prof. Roy, Bijan (2006), “Fund Performance

6. Ahmed, Parvez; Gangopadhyay, Partha & Nanda, Sudhir (2001)

7. Rao, D.N. (2006), “4 Step model to evaluate performance of Mutual Funds in

Saudi Arabia” www.ssrn.com, paper no.946937 and PP. 1-16

8. Kothari, S.P. and Warner, Jerold (1997), “Evaluating Mutual Fund Performance”,
www.ssrn.com, paper no.75871 and PP. 1-46 Agrawal, Deepak (2007), “Measuring
Performance of Indian Mutual funds”, paper no.1311761 and PP. 1-17

WEBLIOGRAPHY

• www.valueresearchonline.com
• www.mutualfundindia.com
• www.besindia.com
• www.niftyindia.com
• www.cleartax.com
• www.advisorkhoj.com
• www.fundsindia.com
• www.morningstar.com
• www.moneycontrol.com

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