COMPARATIVE STUDY OF VARIOUS MUTUAL FUND SCHEMES OF VARIOUS COMPANIES

SUBMITTED BY: FAIZ HASAN

MBA (G),SEM-IV
Enrollment no-A7001908273

UNDER GUIDENCE OF: ------------------------Designation ABS, Lucknow

DISSERTATION REPORT IN PARTIAL FULFILLMENT OF THE AWARD OF FULL TIME MASTERS IN BUSINESS ADMINISTRATION (2009-11))

AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH LUCKNOW

Declaration
I HEREBY STATE THAT THIS PROJECT, SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENTS OF MBA(G) PROGRAM OF THE AMITY UNIVERSITY, LUCKNOW IS AN ORIGINAL RESEARCH WORK CARRIED OUT BY ME UNDER THE GUIDANCE AND SUPERVISION OF Mr. NIMISH GUPTA, AMITY BUSINESS SCHOOL ,LUCKNOW AND THE THESIS OR ANY PART HAS NOT BEEN PREVIOUSLY SUBMITTED. Signature Name_______________ Name_____________ (Faculty Guide) (Student) Signature

ACKNOWLEDGEMENT
In preparing this dissertation report a considerable amount of thinking and informational inputs from various sources were involved. I express my deep sense of gratitude to --------------------,my faculity guide for his excellent spirit, effective guidance, encouragement and constant criticism, which gave me the confidence to complete the term paper effectively. In spite of having a very busy schedule, he made sure in every way that I acquire the best possible exposure and knowledge during my preparation of research report under his guidance. He gave all the time and attention, which I needed to complete my research and compile my term paper in as much orderly way as possible. I am also thankful to all those people, who are directly or indirectly associated with the timely completion my term paper, without which I otherwise would not have able to complete my dissertation report.

Faiz Hasan MBA(G),SEM-IV Enrollment no. A7001908273

Table of contents

CHAPTER I: INTRODUCTION 1.1. Background 1.2. Significance of the study 1.3. Scope and objectives 1.4. Limitations CHAPTER II: PROFILE OF THE COMPANY 2.1. MUTUAL FUND 2.11. Definition 2.12. Characteristics 2.13. Structure of Mutual Fund in India 2.14. History of Indian Mutual Fund Industry 2.15. Types of Mutual Funds Schemes in India 2.16. Mutual Fund Investing Strategies 2.17. Advantages of Investing in Mutual Funds

2.18. Risks Associated With Mutual Funds 2.19. Market Share of Mutual Fund in India

2.2. Major Players in market

CHAPTER III:

RESEARCH METHODOLOGY

3.1. Sources of data Primary data Secondary data 3.2. Statistical Tools

CHAPTER IV:

ANALYSIS OF DATA

CHAPTER IV:

SUMMARY AND CONCLUSION

CHAPTER V:

SUGGESTIONS AND RECCOMENDATIONS

BIBILIOGRAPHY

CHAPTER I: INTRODUCTION
1.1. Background 1.2. Significance of the study 1.3. Scope and objectives 1.4. Limitations

1.1. BACKGROUND
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments and other securities. Mutual funds have a fund manager who invests the money on behalf of the investors by buying / selling stocks, bonds etc. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include professional money management, buying in small amounts and diversification. Mutual fund units are issued and redeemed by the Fund Management Company based on the fund's Net Asset Value (NAV), which is determined at the end of each trading session. NAV is calculated as the value of all the shares held by the fund, minus expenses, divided by the number of units issued. Mutual Funds are usually long term investment vehicle though there are some categories of mutual funds, such as money market mutual funds which are short term instruments. Currently, the worldwide value of all mutual funds totals more than $US 26 trillion. The United States leads with the number of mutual fund schemes. There are more than 8000 mutual fund schemes in the U.S.A. Comparatively, India has around 1000 mutual fund schemes, but this number has grown exponentially in the last few years. The Total Assets under Management in India of all Mutual funds put together touched a peak of Rs. 5,44,535 crs. at the end of August 2009. Why Mutual Fund? There are various investment avenues available to an investor such as real estate, bank deposits, post office deposits, shares, etc. A mutual fund is one more type of Investment

Avenue available to investors. There are many reasons why investors prefer mutual funds. Buying shares directly from the market is one way of investing. But this requires spending time to find out the performance of the company whose share is being purchased, understanding the future business prospects of the company, finding out the track record of the dividend, bonus issue history of the company etc. Many investors find it cumbersome and time consuming to pore over so much of information, get access to so much of details before investing in the shares. Investors therefore prefer the mutual fund route. They invest in a mutual fund scheme which in turn takes the responsibility of investing in stocks and shares after due analysis and research. The investor need not bother with researching hundreds of stocks. It leaves it to the mutual fund and its professional fund management team. Another reason why investors prefer mutual funds is because mutual funds offer diversification. An investors money is invested by the mutual fund in a variety of shares, bonds and other securities thus diversifying the investors portfolio across different companies and sectors. This diversification helps in reducing the overall risk of the portfolio. It is also less expensive to invest in a mutual fund since the minimum investment amount in mutual fund units is fairly low (Rs. 500 or so). These are some of the reasons why mutual funds have gained in popularity over the years.

1.2. SCOPE OF THE STUDY

The main aim of the project is to project Mutual Fund as a better avenue for investment on a long-term or short-term basis. Mutual Fund is a productive package for an investor with limited finances, this project creates an awareness that the Mutual Fund is a worthy investment practice. Mutual Fund is a globally proven instrument. Mutual Funds are Unit Trust as it is called in some parts of the world has a long and successful history, of late Mutual Funds have become a hot favorite of millions of people all over the world. The driving force of Mutual Funds is the safety of the principal guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. The various schemes of Mutual Funds provide the investor with a wide range of investment options according to his risk bearing capacities and interest besides. Mutual Funds offers an investor to invest even a small amount of money, each Mutual Fund has a defined investment objective and strategy. Mutual Funds schemes are managed by respective asset managed companies sponsored by financial

institutions, banks, private companies or international firms. A Mutual Fund is the ideal investment vehicle for todays complex and modern financial scenario. The study is basically made to analyze the various open-ended equity schemes of different Asset Management Companies to highlight the diversity of investment that Mutual Fund offer. Thus, through the study one would understand how a common man could fruitfully convert a pittance into great penny by wisely investing into the right scheme according to his risk taking abilities. The study here has been limited to analyse open-ended equity Growth schemes of different Asset Management Companies namely Reliance growth fund , Sundaram BNP Paribas Select Midcap Growth, Birla Sun Life Mid Cap Fund - Plan A Growth, SBI Magnum Global Fund 94 Growth, Franklin India Prima Fund Growth, IDFC premier Equity Fund Plan A- Growth Each scheme is analysed according to its performance against the other, based on factors like Sharpes Ratio, Treynors Ratio, (Beta) Co-efficient, Returns. Research is carried out to appraise the financial performance of mutual funds.

1.3. OBJECTIVES OF THE STUDY

1.

To project Mutual Fund as the productive avenue for investing activities.

2.

To compare the schemes based on Sharpes ratio, Treynors ratio, Co-efficient, Returns and show which scheme is best for the investor based on his risk profile.

3.

To help an investor make a right choice of investment, while considering the inherent risk factors.

4.

To understand the recent trends in Mutual Funds world.

2.3 LIMITATIONS OF THE STUDY 1. The study is limited only to the analysis of different schemes and its suitability to different investors according to their risk-taking ability. 2. The study is based on secondary data available from monthly fact sheets, websites and other books, as primary data was not accessible. 3. The study is limited by the detailed study of various schemes of Five Asset Management Company. 4. Five years return data not available for IDFC Premier Equity Fund Plan AGrowth Mutual Fund.

CHAPTER II: PROFILE OF THE COMPANY

2.1. MUTUAL FUND

2.11. Definition
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

The chart below describes broadly the working of a mutual fund:

2.12. CHARACTERISTICS:

A Mutual fund actually belongs to the investors who have pooled their funds. The ownership of the mutual fund is in the hands of the investors.

A Mutual fund is managed by investment professionals and other service providers.

The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated everyday.

The investors share fund is denominated by units. The value of the units changes with change in the portfolios value everyday. The value of one unit of investment is called as the net assets value.

The investment portfolio of the mutual fund is created according to the stated investment objectives. We can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution.

2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.

3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.

Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.

2.13. STRUCTURE OF MUTUAL FUND IN INDIA:

Sponsor

Trustee s

Mutual fund

ASSET MANAGEMENT COMPANY

Custodia n

Registra r

Mutual Funds in India follow a 3-tier structure. There is a Sponsor (the First tier), who thinks of starting a mutual fund. The Sponsor approaches the Securities & Exchange Board of India (SEBI), which is the market regulator and also the regulator for mutual funds. SEBI checks whether the person is of integrity, whether he has enough experience in the financial sector, his net-worth etc. Once SEBI is convinced, the sponsor is allowed to create a Public Trust (the Second tier) as per the Indian Trusts Act, 1882. Trusts have no legal identity in India and cannot enter into contracts, hence the Trustees are the people authorized to act on behalf of the Trust. Contracts are entered into in the name of the Trustees. Once the Trust is created, it is registered with SEBI after which this trust is known as the mutual fund. It is important to understand the difference between the Sponsor and the Trust. They are two separate entities. Sponsor is not the Trust; i.e. Sponsor is not the Mutual Fund. It is the Trust which is the Mutual Fund. The Trustees role is not to manage the money. Their job is only to see, whether the money is

being managed as per stated objectives. Trustees may be seen as the internal regulators of a mutual fund. ASSET MANAGEMENT COMPANIES (AMC) AMC forms the third tier of the mutual fund structure. Trustees appoint the Asset Management Company (AMC), to manage investors money. The AMC in return charges a fee for the services provided and this fee is borne by the investors as it is deducted from the money collected from them. The AMCs Board of Directors must have at least 50% of Directors who are independent directors. The AMC has to be approved by SEBI. The AMC functions under the supervision of its Board of Directors, and also under the direction of the Trustees and SEBI. It is the AMC, which in the name of the Trust, floats new schemes and manages these schemes by buying and selling securities. In order to do this the AMC needs to follow all rules and regulations prescribed by SEBI and as per the Investment Management Agreement it signs with the Trustees. If any fund manager, analyst intends to buy/ sell some securities, the permission of the Compliance Officer is a must. A compliance Officer is one of the most important persons in the AMC. Whenever the fund intends to launch a new scheme, the AMC has to submit a Draft Offer Document to SEBI. This draft offer document, after getting SEBI approval becomes the offer document of the scheme. The Offer Document (OD) is a legal document and investors rely upon the information provided in the OD for investing in the mutual fund scheme. The Compliance Officer has to sign the Due Diligence Certificate in the OD. This certificate says that all the information provided inside the OD is true and correct. This ensures that there is accountability and somebody is responsible for the OD. In case there is no compliance officer, then senior executives like CEO, Chairman of the AMC has to sign the due diligence certificate. The certificate ensures that the AMC takes responsibility of the OD and its contents. CUSTODIAN

A custodians role is safe keeping of physical securities and also keeping a tab on the corporate actions like rights, bonus and dividends declared by the companies in which the fund has invested. The Custodian is appointed by the Board of Trustees. The custodian also participates in a clearing and settlement system through approved depository companies on behalf of mutual funds, in case of dematerialized securities. In India today, securities and units of mutual funds are no longer held in physical form but mostly in dematerialized form with the Depositories. The holdings are held in the Depository through Depository Participants (DPs). The deliveries and receipt of units of a mutual fund are done by the custodian or a depository participant at the instruction of the AMC and under the overall direction and responsibility of the Trustees. Regulations provide that the Sponsor and the Custodian must be separate entities.

2.14. HISTORY OF THE INDIAN MUTUAL INDUSTRY

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. The history of mutual funds in India can be broadly divided into four distinct phases. First phase-1964-87 Unit trust of India (UTI) was established on 1963 by an act of parliament. It was set up 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 schemes launched by UTI were unit schemes 1964. At the end of 1988 UTI scheme 1964. At the end of 1988 UTI had Rs.6700 Crores of assets under management.

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 can bank mutual fund (Dec 87), Punjab national bank mutual fund (Aug 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 settings up funds in India and the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total 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 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 Ltd, 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. As at the end of September, 2004, there were 29funds, which manage assets of Rs.153108 Crores under 421 schemes.

2.15. Types of Mutual Funds Schemes in India

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. Being a collection of many stocks, investors 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:

1.

By Structure

o o 2.

Open - Ended Schemes Close - Ended Schemes

By Investment Objective o o o o Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

Other Schemes o o Tax Saving Schemes Special Schemes Index Schemes Sector Specific Schemes

Classification of schemes based on structure: Open - Ended Schemes: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. Close - Ended Schemes: A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to

provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. Classification of schemes based on the investment objective: 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: Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. 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.

Other schemes: 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 more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.

2.16. MUTUAL FUND INVESTING STRATEGIES:

1. Systematic Investment Plans (SIPs) These are best suited for young people who have started their careers and need to build their wealth. SIPs entail an investor to invest a fixed sum of money at regular intervals in the Mutual fund scheme the investor has chosen, an investor opting for SIP in xyz Mutual Fund scheme will need to invest a certain sum on money every month/quarter/half-year in the scheme. 2. Systematic Withdrawal Plans (SWPs) These plans are best suited for people nearing retirement. In these plans, an investor invests in a mutual fund scheme and is allowed to withdraw a fixed sum of money at regular intervals to take care of his expenses 3. Systematic Transfer Plans (STPs) They allow the investor to transfer on a periodic basis a specified amount from one scheme to another within the same fund family meaning two schemes belonging to the same mutual fund. A transfer will be treated as redemption of units from the scheme from which the transfer is made. Such redemption or investment will be at the applicable NAV. This service allows the investor to manage his investments actively to achieve his objectives. Many funds do not even charge any transaction fees for his service an added advantage for the active investor.

2.17. ADVANTAGES OF INVESTING IN MUTUAL FUND

Affordable Almost everyone can buy mutual funds. Even for a sum of Rs 1,000 an investor can invest in a mutual fund. Professional Management For an average investor, it is a difficult task to decide what securities to buy, how much to buy and when to sell. By buying a mutual fund, you acquire a professional fund manager who manages your money. This is the person who decides what to buy for you, when to buy it and when to sell. The fund manager takes these decisions after doing adequate research on the economy, industries and companies, before buying stocks or bonds. Most mutual fund companies charge a small fee for providing this service which is Diversification According to finance theory, when your investments are spread across several securities, your risk reduces substantially. A mutual fund is able to diversify more easily than an average investor across several companies, which an ordinary investor may not be able to do. With an investment of Rs.5000, you can buy stocks in some of the top Indian companies through a mutual fund, which may not be possible to do as an individual investor. Liquidity Unlike several other forms of savings like the public provident fund or National Savings Scheme, you can withdraw your money from a mutual fund on immediate basic. Tax Benefits called the management fee.

Mutual funds have historically been more efficient from the tax point of view. A debt fund pays a dividend distribution tax of 12.5 per cent before distributing dividend to an individual investor or an HUF, whereas it is 20 per cent for all other entities. There is no dividend tax on dividends from an equity fund for individual investor. Transparency The investor gets regular information on the value of his investment in addition to disclosure on the specific investments made by the fund, the proportion invested in each class of assets and the fund managers investment strategy and outlook.

2.18. Risks Associated With Mutual Funds

Investing in Mutual Funds, as with any security, does not come without risk. One of the most basic economic principles is that risk and reward are directly correlated. In other words, the greater the potential risk the greater the potential return. The types of risk commonly associated with Mutual Funds are: 1) Market Risk Market risk relates to the market value of a security in the future. Market prices fluctuate and are susceptible to economic and financial trends, supply and demand, and many other factors that cannot be precisely predicted or controlled. 2) Political Risk Changes in the tax laws, trade regulations, administered prices, etc are some of the many political factors that create market risk. Although collectively, as citizens, we have indirect control through the power of our vote individually, as investors, we have virtually no control.

3) Inflation Risk Interest rate risk relates to future changes in interest rates. For instance, if an investor invests in a long-term debt Mutual Fund scheme and interest rates increase, the NAV of the scheme will fall because the scheme will be end up holding debt offering lower interest rates. 4) Business Risk Business risk is the uncertainty concerning the future existence, stability, and profitability of the issuer of the security. Business risk is inherent in all business ventures. The future financial stability of a company cannot be predicted or guaranteed, nor can the price of its securities. Adverse changes in business circumstances will reduce the market price of the companys equity resulting in proportionate fall in the NAV of the Mutual Fund scheme, which has invested in the equity of such a company. 5) Economic Risk Economic risk involves uncertainty in the economy, which, in turn, can have an adverse effect on a companys business. For instance, if monsoons fail in a year, equity stocks of agriculture-based companies will fall and NAVs of Mutual Funds, which have invested in such stocks, will fall proportionately.

2.19. MARKET SHARE OF MUTUAL FUNDS IN INDIA:

The industry concentration has been sluggish in the last four-year period from 2005 to 2008; the top 5 players comprising 50-52 percent of industry AUM. However, as of March 2009, the share of Top 5 players increased to 58 percent, as against 38 percent in

the US. The AUM share of the Top 10 players has consistently been in the range of 75 percent. A GLIMPSE OF INDIAN MUTUAL FUND INDUSTRY- The Current State: REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA: The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These regulations make it mandatory for mutual fund to have three structures of sponsor, trustee and asset Management Company. The sponsor of the mutual fund appoints the trustees. The trustees are responsible to the investors in mutual fund and appoint the AMC for managing the investment portfolio. The AMC is the business face of the mutual fund, as it manages all the affairs of the mutual fund. The AMC and the mutual fund have to be registered with SEBI.

WHO CAN BE THE SPONSOR? WHAT DOES THE SPONSOR DO? 1) Sponsor appoints the trustees, custodians and AMC with prior approval of SEBI. 2) Sponsor must have at least 5 year track record of business interest in the financial market. 3) Sponsor must have been profit making in 3 out of the above 5 years. 4) Sponsor must contribute at least 40% of the capital of the AMC.

HOW ARE MUTUAL FUNDS STRUCTURED? Mutual funds can be structured in the following way: 1) COMPANY FORM, in which investors hold shares of the mutual fund. In this structure, management of the fund is in the hands of an elected board which in turn appoints investment managers who manage the fund. 2) TRUST FORM, in which the funds of the investors are held by a trust on behalf of the

investors. The trust appoints the investment managers and monitors their functioning in the interest of investors.

WHO ACTUALLY MANAGES THE MUTUAL FUND? The sponsors acting through the trustees appoint all the functionaries required for managing the investors money. These are: 1.Asset Management Company. 2.Registrars and transfer agents. 3.Brokers 4 .Selling agents and distributors. 5 .Custodians 6 .Depository participants. 7 .Bankers. 8 .Legal advisors. 9. Auditors.

WHAT ARE THE REGULATORY REQUIREMENTS FOR TRUSTEES? The mutual fund which is a trust is either managed by a trust company or a board of trustee and trust companies are governed by the provisions of the Indian Trust Act. If a trustee is a company then it is also regulated by the provisions of the Indians companies act. The AMC and the other functionary are functionally responsible to the investors. The sponsor executes and registers a trust deed in favor of the trustees. The appointment of all the trustees has to be done with prior approval of SEBI. There must be at least 4 members in the board of trustees and at least 2/3 of the members of the board of trustees must be independent. The trustee of one mutual fund cannot be a trustee of another mutual fund, unless he is independent trustee in both cases, and has the approval of both the boards.

WHAT ARE THE RIGHTS OF THE TRUSTEES? 1) Trustees appoint the AMC in consultation with the sponsor and according to SEBI regulations. 2)All mutual fund schemes floated by the AMC on the operations and the compliance of the mutual fund with provisions of the trust deed, investment management agreement and the SEBI regulations. 3) Trustees can seek remedial actions from AMC and in the extreme situation of dissatisfactory performance, dismiss the AMC. 4) Trustees review and ensure that net worth of AMC is according to stipulated norms of quarter.

WHAT ARE THE OBLIGATIONS OF THE TRUSTEES? 1) Trustees must ensure that the transactions of the mutual fund are in accordance with the trust deed. 2) Trustees must ensure that the AMC has systems and procedures in place, and that all the constituents are appointed. 3) Trustees must ensure that due diligence on the part of AMC in the appointment of constituents and business associates. 4) Trustees must furnish to SEBI, on half yearly basis, a report on the activity of AMC 5) Trustees must ensure that the activities of mutual fund are in compliance with the SEBI regulations.

OTHER CONSTITUENTS REGISTRAR AND TRANSFER AGENTS: These are responsible for the investor servicing function, as they maintain the records of investors in mutual funds. They process investors applications, record details provided

but the investors sent on application forms send details regarding investment in the mutual fund process dividend payout, send out information on the performance of mutual funds. Keep the investors record up to date. BROKERS: They support the investment management function. By enabling the investment managers to buy and sell securities. Brokers are registered members of stock exchanges. They manage to buy and sell securities. They charge a commission for their services. They also provide information on the performance of the various companies and industrial sectors and investment recommendations.

SELLING AND DISTRIBUTING AGENTS. Mutual fund products reach across the country through selling agents and distributors. Selling agents are usually individuals who bring in investors funds for a commission. Distributors are the institutions that appoint agents and other mechanisms to mobilize funds from investors. Banks tend to offer mutual fund products to their choose customers.

CUSTODIANS: They are responsible for the securities held in the mutual funds portfolio. They discharge an important back office function, by ensuring that securities that are bought are delivered and transferred to the books of mutual fund and that the funds are paid out when a mutual fund buy securities. They also track corporate actions like bonus issues, right offers offer for sale, buy back and open offers for acquisitions. On the advice of the fund managers, they act on these corporate actions.

LEGAL ADVISORS AND AUDITORS: They advise on regulatory and taxation issues. Every mutual fund has a compliance officer who works under the advice of legal advisors. The accounts of the mutual funds

are actually the accounts of the pool in which investors have invested.

2.2. MAJOR PLAYERS IN THE MARKET

 ABN AMRO Mutual Fund ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund) Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers namely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

 HSBC Mutual Fund HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited.

 Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1, 99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004.

Standard Chartered Mutual Fund Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard

Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20, 1999.

Franklin Templeton India Mutual Fund The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organizations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was

incorporated on December 1, 1995 with the name Escorts Asset Management Limited. Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund

have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund

GIC Mutual Fund GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India 1882.

CHAPTER III: RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

The Methodology involves randomly selecting Open-Ended equity schemes of different fund houses of the country. The data collected for this project is basically from two sources, they are:1. 2. Primary sources : The monthly fact sheets of different fund houses and research reports from banks. Secondary sources : Collection of data from Internet and Books. 3.1. Statistical Tools Usually the returns derived are only considered for choosing the best scheme. But it is only half of the consideration for choosing the best scheme. The risk should also be considered in choosing the suitable and best scheme. Therefore, what matters a lot, is the risk adjusted returns. There are several measures to measure the performance of the scheme and rate it. Each of these measures uses past performance data. The various statistical tools are as follows The Treynor Measure Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free rate of return (generally taken to be the return on securities backed by the government, as there is no credit risk associated), during a given period and systematic risk associated with it (beta). Symbolically, it can be represented as:

Treynor's Index (Ti) = (Ri - Rf)/Bi. Where, Ri represents return on fund, Rf is risk free rate of return, and Bi is beta of the fund. All risk-averse investors would like to maximize this value. While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index is an indication of unfavorable performance. The Sharpe Measure In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about. So, the model evaluates funds on the basis of reward per unit of total risk. Symbolically, it can be written as: Sharpe Index (Si) = (Ri - Rf)/Si Where, Si is standard deviation of the fund, Ri represents return on fund, and Rf is risk free rate of return. While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a low and negative Sharpe Ratio is an indication of unfavorable performance.

Comparison of Sharpe and Treynor Sharpe and Treynor measures are similar in a way, since they both divide the risk premium by a numerical risk measure. The total risk is appropriate when we are evaluating the risk return relationship for well-diversified portfolios. On the other hand, the systematic risk is the relevant measure of risk when we are evaluating less than fully diversified portfolios or individual stocks. For a well-diversified portfolio the total risk is equal to systematic risk. Rankings based on total risk (Sharpe measure) and systematic risk (Treynor measure) should be identical for a well-diversified portfolio, as the total risk is reduced to systematic risk. Therefore, a poorly diversified fund that ranks higher on Treynor measure, compared with another fund that is highly diversified, will rank lower on Sharpe Measure. Standard Deviation The most basic of all measures- Standard Deviation allows you to evaluate the volatility of the fund. It allows you to measure the consistency of the returns. Volatility is often a direct indicator of the risks taken by the fund. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return, the average return of a fund over a period of time. A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment. Beta Beta indicates the level of volatility associated with the fund as compared to the benchmark. So quite naturally the success of Beta is heavily dependent on the correlation between a fund and its benchmark. Thus if the fund's portfolio doesn't have a relevant benchmark index then a beta would be grossly inadequate.

A beta that is greater than 1 means that the fund is more volatile than the benchmark, while a beta of less than 1 means that the fund is less volatile than the index. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark. Investors expecting the market to be bullish may choose funds exhibiting high betas, which increase investors' chances of beating the market. If an investor expects the market to be bearish in the near future, the funds that have betas less than 1 are a good choice because they would be expected to decline less in value than the index. 3.2. Formulae Standard Deviation: (i - Ri )2 /n

Beta: nXY - X Y nX2 (X)2

Sharpe Ratio: Rt - Rf S.D

Treyners Ratio: Rt - Rf

CHAPTER IV: ANALYSIS OF DATA

DATA ANALYSIS AND INTERPRETATION

HYPOTHESIS

The Hypothesis of the study involves Comparison between 1. Reliance Growth Fund 2. Sundaram BNP Paribas Select Midcap - Growth 3. Birla Sun Life Mid Cap Fund - Plan A Growth 4. SBI Magnum Global Fund 94 Growth 5. Franklin India Prima Fund Growth 6. IDFC Premier Equity Fund Plan A- Growth (Note: All the data used for analysis is taken on period 16-11-2009)

Reliance Growth Growth

Fund Objective The scheme aims at long term growth of capital through research based investment approach. The funds will be invested in Equity and equity related instruments ,and there will be an exposure to debt and money market instruments also. Table 3.1.1 showing the covariance of reliance Growth Year last 1 year last 3 years last 5 years 27.47 19.36 34.85 Total where 21.17 10.48 25.27 3.23 3.23 3.23 17.94 7.25 22.04 47.23 24.24 16.13 31.62 71.99 Rp Rm Rf Rm-Rf X Rp-Rf Y 321.843 6 52.5625 485.761 6 860.167 7 434.865 6 116.942 5 696.904 8 1248.71 3 2.19666 7 4.825344 -8.49333 72.13671 6.29666 7 39.64801 0 116.6101 X2 XY X - X D2

Rp - Portfolio Return- Reliance growth-growth Rm - Market Return-Funds Benchmark BSE-100 Rf - Risk free rate of return CALCULATION OF ARTHMETIC MEAN:= X / N = 47.23/ 3 = 15.74333 CALCULATION OF STANDARD DEVIATION () := (X-Xbar)2 / N = 116.6101/3 = 6.03173 CALCULATION OF BETA CO-EFFICIENT;= N (XY) XY N (X2) (X) 2 = 3(1248.713) (47.23)(71.99) 3(860.1677) (47.23) 2 = 0.989197 CALCULATION OF SHARPES RATIO:= Rp-Rf/ = 71.99 6.03 = 11.93522 CALCULATION OF TREYNORS RATIO := Rp-Rf/ = 71.99

0.989 = 72.7762 Interpretation Last 1 year: It reveals that Reliance growth Fund Returns are 27.47 as compare to Funds Benchmark Returns Are 21.17, and The Risk Free Rate is 3.23% Last 3 years : It reveals that Reliance growth Fund Returns are 19.36 as compare to Funds Benchmark Returns are 10.48, and The Risk Free Rate is 3.23% Last 5 years : It reveals that Reliance growth Fund Returns are 34.85 as compare to Funds Benchmark Returns are 25.27 and The Risk Free Rate is 3.23%

Sundaram BNP Paribas Select Midcap

Fund Objective The scheme aims to achieve capital appreciation by investing in mid-cap stocks. The fund defines 'midcap' as a stock whose market capitalization shall not exceed the market capitalization of the 50th stock (after sorting the securities in the descending order of market capitalization) listed with the NSE. Table 3.1.2 showing the covariance of Sundaram BNP Select Midcap Growth Year last 1 year last 3 years last 5 years 32.39 12.83 33.33 total 21.17 10.48 25.27 3.23 3.23 3.23 17.94 7.25 22.04 47.23 29.16 9.6 30.1 68.86 Rp Rm Rf Rm-Rf X Rp-Rf Y 321.843 6 52.5625 485.761 6 860.167 7 523.130 4 69.6 663.404 1256.13 4 2.19666 7 4.825344 -8.49333 72.13671 6.29666 7 39.64801 0 116.6101 X2 XY X - X D2

where Rp - Portfolio Return- Sundaram BNP Paribas Select Midcap Rm - Market Return-Funds Benchmark BSE Mid Cap Rf - Risk free rate of return

CALCULATION OF ARTHMETIC MEAN:= X / N = 47.23/ 3 = 15.74333

CALCULATION OF STANDARD DEVIATION () := (X-Xbar)2 / N = 116.6101/3 = 6.03173

CALCULATION OF BETA CO-EFFICIENT;= N (XY) XY N (X2) (X) 2 = 3(1256.134) (47.23)( 68.86) 3(860.1677) (47.23) 2 = 1.475417

CALCULATION OF SHARPES RATIO = Rp-Rf/ = 68.86 6.03 = 11.41629

CALCULATION OF TREYNORS RATIO := Rp-Rf/ = 68.86 1.475 = 46.67155

Interpretation: Last 1 year: It reveals that Sundaram BNP Paribas select midcap Fund Returns are 32.39 as compare to Funds Benchmark Returns Are 21.17 and The Risk Free Rate is 3.23%) Last 3 years : It reveals that Sundaram BNP Paribas select midcap Fund Returns are 12.83 as compare to Funds Benchmark Returns are 10.48, and The Risk Free Rate is 3.23% Last 5 years : It reveals that Sundaram BNP Paribas select midcap Fund Returns are 33.33 as compare to Funds Benchmark Returns are 25.27, and The Risk Free Rate is 3.23%.

Brila Sunlife Midcap Fund Plan A

Fund Objective The scheme aims at long-term growth of capital at controlled level of risk by investing primarily in mid-cap stocks, to generate returns higher than a fund focused on large and liquid stocks. Table 3.1.3 showing the covariance of Brila Sunlife Midcap fund plan A- Growth Year last 1 year last 3 years last 5 years 36.07 17.18 29.98 Total where Rp - Portfolio Return- Brila Sunlife Midcap Fund plan A Rm - Market Return-Funds Benchmark CNX Midcap Rf - Risk free rate of return CALCULATION OF ARTHMETIC MEAN:= X / N = 47.23/ 3 = 15.74333 21.17 10.48 25.27 3.23 3.23 3.23 17.94 7.25 22.04 47.23 32.84 13.95 26.75 73.54 Rp Rm Rf Rm-Rf X Rp-Rf Y 321.843 6 52.5625 485.761 6 860.167 7 589.149 6 101.137 5 589.57 1279.85 7 2.19666 7 4.825344 -8.49333 72.13671 6.29666 7 39.64801 0 116.6101 X2 XY X - X D2

CALCULATION OF STANDARD DEVIATION () := (X-Xbar)2 / N = 116.6101/3 = 6.03173

CALCULATION OF BETA CO-EFFICIENT;= N (XY) XY N (X2) (X) 2 = 3(1279.857) (47.23)( 73.54) 3(860.1677) (47.23) 2 = 1.047014

CALCULATION OF SHARPES RATIO:= Rp-Rf/ = 73.54 6.03 = 12.19219

CALCULATION OF TREYNORS RATIO := Rp-Rf/ = 73.54 1.047 = 70.23784

Interpretation: Last 1 year: It reveals that Brila Sunlife Midcap Fund plan A Returns are 36.07 as compare to Funds Benchmark Returns are 21.17 and The Risk Free Rate is 3.23%) Last 3 years : It reveals that Brila Sunlife Midcap Fund plan A Returns are 17.18 as compare to Funds Benchmark Returns are 10.48, and The Risk Free Rate is 3.23% Last 5 years : It reveals that Brila Sunlife madcap Fund plan A Returns are 29.98 as compare to Funds Benchmark Returns are 25.27, and The Risk Free Rate is 3.23%

SBI Magnum Global Fund 94 Growth

Fund Objective The scheme seeks to prove maximum growth opportunities from a portfolio of equity and debt instruments of companies having high growth potential. Table 3.1.4 showing the covariance of SBI magnum Global fund94 Growth Year last 1 year last 3 years last 5 years 14.48 6.33 29.48 Total 21.17 10.48 25.27 3.23 3.23 3.23 17.94 7.25 22.04 47.23 11.25 3.1 26.25 40.6 Rp Rm Rf Rm-Rf X Rp-Rf Y 321.843 6 52.5625 485.761 6 860.167 7 201.82 5 22.475 578.55 802.85 2.19666 7 4.825344 -8.49333 72.13671 6.29666 7 39.64801 0 116.6101 X2 XY X - X D2

where Rp - Portfolio Return- SBI Magnum Global fund 94 -growth Rm - Market Return-Funds Benchmark BSE-100 Rf - Risk free rate of return

CALCULATION OF ARTHMETIC MEAN:= X / N = 47.23/ 3 = 15.74333

CALCULATION OF STANDARD DEVIATION () := (X-Xbar)2 / N = 116.6101/3 = 6.03173

CALCULATION OF BETA CO-EFFICIENT;= N (XY) XY N (X2) (X) 2 = 3(802.85) (47.23)( 40.6) 3(860.1677) (47.23) 2 = 1.403572

CALCULATION OF SHARPES RATIO:= Rp-Rf/ = 40.6 6.03 = 6.731071

CALCULATION OF TREYNORS RATIO := Rp-Rf/ = 40.6 1.40 = 28.92619

Interpretation: Last 1 year: It reveals that SBI Magnum Global fund Returns are 14.48 as compare to Funds Benchmark Returns are 21.17 and The Risk Free Rate is 3.23%) Last 3 years : It reveals that SBI Magnum Global fund Returns are 6.33 as compare to Funds Benchmark Returns are 10.48, and The Risk Free Rate is 3.23% Last 5 years : It reveals that SBI Magnum Global fund Returns are 29.48 as compare to Funds Benchmark Returns are 25.27, and The Risk Free Rate is 3.23%

Franklin India Prima Fund Growth

Fund Objective The primary objective of the fund is capital appreciation and secondary objective is income generation by focussing on mid and small cap industry. Table 3.1.5 showing the covariance of Franklin India prima fund Growth Year last 1 year last 3 years last 5 years 22.29 5.07 20.58 Total where 21.17 10.48 25.27 3.23 3.23 3.23 17.94 7.25 22.04 47.23 19.06 1.84 17.35 38.25 Rp Rm Rf Rm-Rf X Rp-Rf Y 321.843 6 52.5625 485.761 6 860.167 7 341.936 4 13.34 382.394 737.670 4 2.19666 7 4.825344 -8.49333 72.13671 6.29666 7 39.64801 0 116.6101 X2 XY X - X D2

Rp - Portfolio Return- Franklin India Prima Fund growth Rm - Market Return-Funds Benchmark S&P CNX 500 Rf - Risk free rate of return

CALCULATION OF ARTHMETIC MEAN:= X / N = 47.23/ 3 = 15.74333

CALCULATION OF STANDARD DEVIATION () := (X-Xbar)2 / N = 116.6101/3 = 6.03173

CALCULATION OF BETA CO-EFFICIENT;= N (XY) XY N (X2) (X) 2 = 3(737.6704) (47.23)( 38.25) 3(860.1677) (47.23) 2 = 1.161889

CALCULATION OF SHARPES RATIO:= Rp-Rf/ = 38.25 6.03 = 6.341464

CALCULATION OF TREYNORS RATIO := Rp-Rf/ = 38.25 1.16 = 32.92054

Interpretation: Last 1 year: It reveals that Franklin India Prima Fund Returns are 22.29 as compare to Funds Benchmark Returns are 21.17 and The Risk Free Rate is 3.23%) Last 3 years : It reveals that Franklin India Prima Fund Returns are 5.07 as compare to Funds Benchmark Returns are 10.48, and The Risk Free Rate is 3.23% Last 5 years : It reveals that Franklin India Prima Fund Returns are 20.58 as compare to Funds Benchmark Returns are 25.27, and The Risk Free Rate is 3.23

IDFC Premier Equity fund plan A- Growth

Fund objective The scheme aims to generate long-term capital growth from an actively managed portfolio of predominantly equity and equity related instruments. It would invest in small and medium size businesses with good long term potential, which are available at cheap valuations. Table 3.1.6 showing the covariance of IDFC Premier Equity-Growth XYear last 1 year last 3 years 25.28 26.36 Total 21.17 10.48 3.23 3.23 17.94 7.25 25.19 22.05 23.13 45.18 Rp Rm Rf Rm-Rf X Rp-Rf Y 321.843 6 52.5625 374.406 1 395.577 167.692 5 563.269 5 5.345 28.56903 -5.345 28.56903 0 57.13805 X2 XY X D2

where Rp - Portfolio Return- IDFC Premier Equity Fund-growth Rm - Market Return-Funds Benchmark BSE 500 Rf - Risk free rate of return CALCULATION OF ARTHMETIC MEAN:= X / N

= 25.19/ 2 = 12.595

CALCULATION OF STANDARD DEVIATION () := (X-Xbar)2 / N = 57.13805/2 = 7.38733

CALCULATION OF BETA CO-EFFICIENT;= N (XY) XY N (X2) (X) 2 = 2(563.2695) (25.19)(45.18) 2(374.4061) (25.19) 2 = -0.10103

CALCULATION OF SHARPES RATIO:= Rp-Rf/ = 45.18 7.38 = 6.115876

CALCULATION OF TREYNORS RATIO := Rp-Rf/ = 45.18 -0.101 = -447.197

Interpretation: Last 1 year: It reveals that IDFC Premier Equity Fund Returns are 25.28 as compare to Funds Benchmark Returns are 21.17 and The Risk Free Rate is 3.23%) Last 3 years : It reveals that IDFC Premier Equity Fund Returns are 26.36 as compare to Funds Benchmark Returns are 10.48, and The Risk Free Rate is 3.23%.

OBSERVATIONS; Observations are made from the data analysis. The following observations are drawn from the analysis of schemes:

AMC Companies Statistical Tools

Reliance GrowthGrowth

Sundaram BNP Paribas Select MidcapGrowth

Brila Sunlife Midcap Fund Plan A

SBI Magnum Global Fund 94Growth

Franklin India Prima Fund Growth

IDFC Premier Equity Fund Plan A Growth

Last 1 year return Last 3 years return Last 5 years return Std.Deviation( ) Co-efficient ( ) Sharpes Ratio Treynors Ratio

27.47 19.96 34.85 6.03 0.989 11.94 72.78

32.39 12.83 33.33 6.03 1.475 11.42 46.67

36.07 17.18 29.98 6.03 1.047 12.192 70.24

14.48 6.33 29.48 6.03 1.403 6.731 28.92

22.29 5.07 20.58 6.03 1.161 6.34 32.92

25.28 26.36 7.38 -0.101 6.11 -447.197

CHAPTER IV: SUMMARY AND CONCLUSION

SUMMARY
After interpretation of the above data the following finding have been done Reliance Growth Growth Fund category: Equity Diversified It is an Open-ended Equity scheme Since the is very close to 1 the fund is considered to have a lower risk when compared to the other funds It can also be seen that the fund provides a higer return It suits people who are willing to take lesser risk for a greater return

Sundaram BNP Paribas Select Midcap Fund category: Equity Diversified It is an Open-ended Equity scheme Since the is more than 1(i.e 1.47) the fund is considered to have a higer risk when compared to the other funds It can also be seen that the fund provides a higer return The return is not very high for the risk taken

Brila Sunlife Midcap Fund Plan A Fund category: Equity Diversified It is an Open-ended Equity scheme

Since the is very close to 1 the fund is considered to have a lower risk. It can also be seen that the fund provides a higer return It suits people who are willing to take lesser risk for a greater return

SBI Magnum Global Fund 94 Growth Fund category: Equity Diversified It is an Open-ended Equity scheme Since the is more than 1(i.e 1.40) the fund is considered to have a higer risk It can also be seen that the fund provides above average return

Franklin India Prima Fund Growth Fund category: Equity Diversified It is an Open-ended Equity scheme Since the is more than 1 the fund is considered to have a above average risk. It can also be seen that the fund provides a lower return

IDFC Premier Equity fund plan A- Growth Fund category: Equity Diversified It is an Open-ended Equity scheme Since the is lesser than 1 the fund is considered to have a very low risk when compared to the other funds It can also be seen that the fund provides a higer return It suits people who are willing to take lesser risk for a greater return

CONCLUSION
It is seen that all the fund are open-ended diversified Equity fund It can seen that IDFC fund gives a very high return and a lower risk, so we say that this fund performs much better than all the other funds, but the sharpe ratio(i.e) risk-adjusted ratio is low when compared to that of all the other fund When we compare Reliance Growth Fund to that of Brila Sunlife Midcap Fund Plan A, we can find both having lower risk to that of a higher return, but Reliance fund provides greater return than that of Brila when invested for 3 and 5 years and Brila provides a greater return when invested for 1 year. high and positive Sharpe Ratio shows a superior risk-adjusted performance of a both Reliance and Brila funds Other funds like Sundaram and SBI can be rated as average performance as it has a higher risk when compared to its return, even in this we can see that sundaram has greater risk that SBI. These funds can be given to people who are ready to take a higher risk The franklin India Prima fund is not suggested as the risk is above average and the return is below average

CHAPTER V: RECCOMENDATIONS

The fund house has to reduce the total risk involved in the fund in order to increase the return with good portfolio construction.

The fund house should select the innovative way of portfolio construction and should see the attracting areas of investing funds.

The fund houses should concentrate on the market conditions according to that they have to set the benchmark and invest in different sectors.

The fund houses should invest in good and attracting sectors to reduce standard deviation.

The fund house should try to reduce little more beta in order to generate more returns to investors.

BIBLIOGRAPHY
Reference books: 1)Avadhani V.A. (1999), Marketing of Financial Services, Mumbai., Himalaya Publishing House 2)Bhole L.M., Financial Institutions & Markets 3)Gordon.N (2004) Financial Market & Services . Mumbai, Himalaya Publishing House 5)Kothari, C. R(1990) Research Methodology: Methods and Techniques. New Delhi, Wishwa Prakashan. References articles: 1)Mark.G (1995) Momentum Investment Strategies, Portfolio Performance, and Herding: A Study of Mutual Fund Behavior available at ideas.repec.org/a/aea/aecrev/v85y1995i5p1088-1105.html - 10k

2)Murad J.A (2005) Someone Will Make Money on Your FundsWhy Not You? A Better Way to Pick Mutual and Exchange-Traded Funds available at www.cfapubs.org/doi/abs/10.2469/br.v2.n1.15 3)Roger.E(1999), Investor flows and the assessed performance of open-end mutual funds available at linkinghub.elsevier.com/retrieve/pii/S0304405X99000288 Reference Magazines: The Business India , the Business Standard, the Dalal Street,the India Today ,the 4 Ps.

Reference Newspapers: The Business Line , the Economic Times, ,the Hindustan Times, the Tribune, etc.