Mutual Fund

Performance evaluation and comparison between of Thematic and Diversified
About Naimi investors

As all the human being has to do earn something for themselves they need to do
some kind of activity which can be proven beneficial for them to earn. As a business Mr. Mukund Patel the proprietor of Naimi Investors they have started the business in 1985. They are sub agent of Shah Investors and Karvy Investors. They
trade equity in Shah investors and Mutual fund through Karvy. Naimi is a member of the National Stock Exchange (registration number INB-230597630). NAIMI INVESTORS has always focused on the needs of the retail client. Last year, billings crossed Rs.50 crore with around 1500 people making their trades through Naimi. They are also dealing with India first a bank of baroda initiative for Life insurance. They are having branch office in Nikol area of Ahmedabad. Naimi does proprietarily trading and manages mutual funds. They believe in offering advice that is completely untainted with ulterior motives. There are no sweetheart deals with clients pressed to buy stocks simply because the firm has taken a position or lent money to a company. The only relationships will be those that citizens choose to forge is all about service. The firm has its roots in
especially Gujarat where it is the biggest player. But it has expanded considerably
well.
Investment Philosophy of NAIMI
The investment philosophy of Naimi focuses primarily on recommending purchases in financially sound companies at reasonable market prices. We would also recommend sales of companies which are above the sales price targets or whose business prospects are poor. Naimi recognises that every individual is unique in terms of his investment time horizon, investment objectives, personal financial situations, level of interest and inclination in the investment decision taking process and last but not the least, his risk taking ability. Whilst it is hard to beat the level of absolute customisation and
hand holding that a qualified personal financial planner would provide, we have
attempted to individualise, as much as possible, model portfolios that we believe reflect the individuals unique investment profile. A team of highly skilled analysts and experienced Investment professionals will be constantly monitoring a population of potential investment in companies so as to buy and sell on the basis of analytically derived risk/return ratios. The populations of companies have been selected based on many quantitative and qualitative benchmarks. The effort is directed to prevent permanent loss of capital and to make absolute
returns over time with a minimal amount of business risk. Naimi is confident that
through this process, over a three year period, the investment results will be superior to any market index. The portfolio, however, may fluctuate in the short run as the investment decisions will be guided by business prospects and not by short term market movements. We feel that this process will be well suited to the needs of investors. We see our role as that of an unbiased information provider and advisor
attempting to empower individuals to take investment decisions and styles that
suit them. Our selection of companies reflects this many of the companies that we have recommended for investment are providers of goods and services that touch the every day life of most of us. Our belief is that the comfort level of investing in such companies, therefore, would be very high.
Presence in India
ANDHRA PRADESH CHHATTISGARH DELHI GOA GUJARAT HARYANA JHARKHAND KARNATAKA KERALA MADHYA PRADESH MAHARASHTRA RAJASTHAN TAMIL NADU WEST BENGAL ORISSA UTTAR PRADESH UTTARANCHAL Performance evaluation and comparison between of Thematic and Diversified
CHAPTER- I Mutual Funds: An overview

Introduction
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 holders in proportion
to the number of units owned by them (pro rata). 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. Anybody
with an investible surplus of as little as a few thousand rupees can invest in

Mutual Funds. Each Mutual Fund scheme has a defined investment objective and
strategy. A mutual fund is the ideal investment vehicle for todays complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their
implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time
basis. The large pool of money collected in the fund allows it to hire such staff at
a very low cost to each investor. In effect, the mutual fund vehicle exploits
economies of scale in all three areas - research, investments and transaction

processing. While the concept of individuals coming together to invest money
collectively is not new, the mutual fund in its present form is a 20th century phenomenon. In fact, mutual funds gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of mutual
10 funds with different investment objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks. A draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according
to the investment objective. It also hires another entity to be the custodian of the
assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund. In the Indian context, the sponsors promote the Asset Management Company
also, in which it holds a majority stake. In many cases a sponsor can hold a 100%
stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.
11
History of Mutual Funds in India

The end of millennium marks 36 years of existence of mutual funds in this
country. The ride through these 36 years is not been smooth. Investor opinion is
still divided. While some are for mutual funds others are against it.
UTI commenced its operations from July 1964 .The impetus for establishing a
formal institution came from the desire to increase the propensity of the middle
and lower groups to save and to invest. UTI came into existence during a period
marked by great political and economic uncertainty in India. With war on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter capital market. The already existing companies found it difficult to raise fresh capital, as investors did not respond adequately to new issues. Earnest efforts were required to canalize savings of the community into productive uses in order to speed up the process of industrial growth. The then Finance Minister, T.T. Krishnamachari set up the idea of a unit trust that would be "open to any person or institution to purchase the units offered by the
trust. However, this institution as we see it, is intended to cater to the needs of individual investors, and even among them as far as possible, to those whose
means are small." His ideas took the form of the Unit Trust of India, an intermediary that would help
fulfill the twin objectives of mobilizing retail savings and investing those savings
in the capital market and passing on the benefits so accrued to the small investors. UTI commenced its operations from July 1964 "with a view to encouraging savings and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities." Different provisions of the UTI Act laid down the structure of management, scope of business, powers and functions of the Trust as well as accounting, disclosures and regulatory requirements for the Trust. One thing is certain the fund industry is here to stay. The industry was oneentity show till 1986 when the UTI monopoly was broken when SBI and Canbank
12 mutual fund entered the arena. This was followed by the entry of others like BOI, LIC, GIC, etc. sponsored by public sector banks. Starting with an asset base of Rs0.25bn in 1964 the industry has grown at a compounded average growth rate of 26.34% to its current size of Rs1130bn.
13
The period 1986-1993 can be termed as the period of public sector mutual funds
(PMFs). From one player in 1985 the number increased to 8 in 1993. The party
did not last long. When the private sector made its debut in 1993-94, the stock market was booming. The openings up of the asset management business to private sector in 1993 saw international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International along with the host of domestic players join the party. But for the equity funds, the period of 1994-96 was one of the worst in the history of Indian Mutual Funds. 1999-2000 Year of the funds Mutual funds have been around for a long period of time to be precise for 36 yrs but the year 1999 saw immense future potential and developments in this sector. This year signaled the year of resurgence of mutual funds and the regaining of investor confidence in these MFs. This time around all the participants are involved in the revival of the funds ----- the AMCs, the unit holders, the other related parties. However the sole factor that gave life to the revival of the funds was the Union Budget. The budget brought about a large number of changes in one stroke. An insight of the Union Budget on mutual funds taxation benefits is provided later. It provided centre stage to the mutual funds, made them more attractive and provides acceptability among the investors. The Union Budget exempted mutual fund dividend given out by equity-oriented schemes from tax, both at the hands of the investor as well as the mutual fund. No longer were the mutual funds
interested in selling the concept of mutual funds they wanted to talk business
which would mean to increase asset base, and to get asset base and investor base they had to be fully armed with a whole lot of schemes for every investor .So new schemes for new IPOs were inevitable. The quest to attract investors extended beyond just new schemes. The funds started to regulate themselves and were all out on winning the trust and confidence of the investors under the aegis of the Association of Mutual Funds of India (AMFI)
14 One can say that the industry is moving from infancy to adolescence, the industry is maturing and the investors and funds are frankly and openly discussing difficulties opportunities and compulsions.
The Definition
think of a mutual fund as a company that brings together a group of people and
15
A mutual fund is nothing more than a collection of stocks and/or bonds. You can invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund. You 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 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.
16
CONCEPT
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 appreciations realized are 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 flow chart below describes broadly the
working
of
mutual
fund:
Mutual Fund Operation Flow Chart
ORGANISATION OF A MUTUAL FUND
17
Structure of the Indian mutual fund industry

The Indian mutual fund industry is dominated by the Unit Trust of India which has a total corpus of Rs700bn collected from more than 20 million investors. The UTI has many funds/schemes in all categories ie equity, balanced, income etc
with some being open-ended and some being closed-ended. The Unit Scheme
1964 commonly referred to as US 64, which is a balanced fund, is the biggest

scheme with a corpus of about Rs200bn. UTI was floated by financial institutions
and is governed by a special act of Parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes.
The second largest categories of mutual funds are the ones floated by nationalized banks. Canbank Asset Management floated by Canara Bank and SBI Funds
Management floated by the State Bank of India are the largest of these. GIC AMC
floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated
by the LIC are some of the other prominent ones. The aggregate corpus of funds managed by this category of AMCs is about Rs150bn.
The third largest categories of mutual funds are the ones floated by the private sector and by foreign asset management companies. The largest of these are
Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets managed by this category of AMCs is in excess of Rs250bn
Some of the AMCs operating currently are: Name of the AMC Alliance Capital Asset Management (I) Private Limited Birla Sun Life Asset Management Company Limited Bank of Baroda Asset Management Company Limited Bank of India Asset Management Company Limited Canbank Investment Management Services Limited Cholamandalam Cazenove Asset Management Company Limited Dundee Asset Management Company Limited DSP Merrill Lynch Asset Management Company Limited Escorts Asset Management Limited First India Asset Management Limited GIC Asset Management Company Limited IDBI Investment Management Company Limited Indfund Management Limited ING Investment Asset Management Company Private Limited J M Capital Management Limited Jardine Fleming (I) Asset Management Limited Kotak Mahindra Asset Management Company Limited Kothari Pioneer Asset Management Company Limited Private Indian Private foreign Private Indian Private Indian Private foreign Private foreign Private Indian Private Indian Institutions Institutions Banks Private foreign Nature of ownership Private foreign Private Indian Banks Banks Banks Private foreign
18
Jeevan Bima Sahayog Asset Management Company Limited Institutions Morgan Stanley Asset Management Company Private Limited Punjab National Bank Asset Management Company Limited Banks Reliance Capital Asset Management Company Limited State Bank of India Funds Management Limited Shriram Asset Management Company Limited Private Indian Banks Private Indian Private foreign
19 Sun F and C Asset Management (I) Private Limited Sundaram Newton Asset Management Company Limited Tata Asset Management Company Limited Credit Capital Asset Management Company Limited Templeton Asset Management (India) Private Limited Private foreign Private foreign Private Indian Private Indian Private foreign
Recent trends in mutual fund industry
20
The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties
and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organizations. The performance of most of the schemes floated by these funds was not good. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by
paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMCs have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions, they have serious plans of continuing the activity in a major way. The experience of some of the AMCs floated by private sector Indian companies was also very similar. They quickly realized that the AMC business is a business, which makes money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on. The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact, they have forced the industry to upgrade itself and service levels of organizations
like UTI have improved dramatically in the last few years in response to the
competition provided by these.
Market Trends
21
A lone UTI with just one scheme in 1964 now competes with as many as 400 odd
products and 34 players in the market. In spite of the stiff competition and losing
market share, UTI still remains a formidable force to reckon with.

Last six years have been the most turbulent as well as exiting ones for the
industry. New players have come in, while others have decided to close shop by either selling off or merging with others. Product innovation is now pass with the game shifting to performance delivery in fund management as well as service. Those directly associated with the fund management industry like distributors, registrars and transfer agents, and even the regulators have become more mature and responsible. The industry is also having a profound impact on financial markets. While UTI has always been a dominant player on the bourses as well as the debt markets, the new generation of private funds which have gained substantial mass are now seen flexing their muscles. Fund managers, by their selection criteria for stocks have forced corporate governance on the industry. By rewarding honest and transparent management with higher valuations, a system of risk-reward has been created where the corporate sector is more transparent then before. Funds have shifted their focus to the recession free sectors like pharmaceuticals,
FMCG and technology sector. Funds performances are improving. Funds
collection, which averaged at less than Rs100bn per annum over five-year period spanning 1993-98 doubled to Rs210bn in 1998-99. In the current year mobilization till now have exceeded Rs300bn. Total collection for the current financial year ending March 2000 is expected to reach Rs450bn. What is particularly noteworthy is that bulk of the mobilization has been by the private sector mutual funds rather than public sector mutual funds. Indeed private MFs saw a net inflow of Rs. 7819.34 crore during the first nine months of the year as against a net inflow of Rs.604.40 crore in the case of public sector funds. Mutual funds are now also competing with commercial banks in the race for retail investors savings and corporate float money. The power shift towards mutual
22 funds has become obvious. The coming few years will show that the traditional saving avenues are losing out in the current scenario. Many investors are realizing that investments in savings accounts are as good as locking up their deposits in a closet. The fund mobilization trend by mutual funds in the current year indicates that money is going to mutual funds in a big way. The collection in the first half of the financial year 1999-2000 matches the whole of 1998-99.
India is at the first stage of a revolution that has already peaked in the U.S. The U.S. boasts of an Asset base that is much higher than its bank deposits. In India, mutual fund assets are not even 10% of the bank deposits, but this trend is beginning to change. Recent figures indicate that in the first quarter of the current fiscal year mutual fund assets went up by 115% whereas bank deposits rose by only 17%. This is forcing a large number of banks to adopt the concept of narrow banking wherein the deposits are kept in Gilts and some other assets which improves liquidity and reduces risk. The basic fact lies that banks cannot be ignored and they will not close down completely. Their role as intermediaries
cannot be ignored. It is just that Mutual Funds are going to change the way banks
do business in the future.
Banks v/s Mutual Funds

BANKS Returns Risk Low Low Administrative exp. High MUTUAL FUNDS Better Low Moderate More Low but improving Better Transparent
Investment options Less Network Liquidity Quality of assets High penetration At a cost Not transparent
Interest calculation Minimum balance between 10th. & 30th. Of every month Everyday Guarantee Maximum Rs.1 lakh on deposits None
23
Global Scenario Some basic factsThe money market mutual fund segment has a total corpus of $ 1.48 trillion in the U.S. against a corpus of $ 100 million in India.
Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity and Capital are non-bank mutual funds in this group.
In the U.S. the total number of schemes is higher than that of the listed companies while in India we have just 277 schemes
Internationally, mutual funds are allowed to go short. In India fund managers do not have such leeway.
On- line trading is a great idea to reduce management expenses from the
current 2 % of total assets to about 0.75 % of the total assets. Internationally, online investing continues its meteoric rise. Many have debated about the success of e- commerce and its breakthroughs, but it is true that this aspect of technology could and will change the way financial sectors function. However, mutual funds cannot be left far behind. They have realized the potential of the Internet and are equipping themselves to perform better. In fact in advanced countries like the U.S.A, mutual funds buy- sell transactions have already begun on the net, while in India the Net is used as a source of Information. Such changes could facilitate easy access, lower intermediation costs and better
services for all. A research agency that specializes in internet technology estimates that over the next four years Mutual Fund Assets traded online will
grow ten folds from $ 128 billion to $ 1,227 billion; whereas equity assets traded on-line will increase during the period from $ 246 billion to $ 1,561 billion. This will increase the share of mutual funds from 34% to 40% during the period.Such increases in volumes are expected to bring about large changes in the way Mutual Funds conduct their business Performance evaluation and comparison between of Thematic and Diversified
24 Here are some of the basic changes that have taken place since the advent of the Net.
Lower Costs:
Mutual funds could bring down their administrative costs to 0.75% if trading is done online. As per SEBI regulations, bond funds can charge a maximum of 2.25% and equity funds can charge 2.5% as administrative fees. Therefore if the administrative costs are low, the benefits are passed down and hence Mutual Funds are able to attract mire investors and increase their asset base.
Better advice:
Mutual funds could provide better advice to their investors through the Net rather than through the traditional investment routes where there is an additional channel to deal with the Brokers. Direct dealing with the fund could help the investor with their financial planning.
In India, brokers could get more Net savvy than investors and could help the investors with the knowledge through get from the Net.
New investors would prefer online :
Mutual funds can target investors who are young individuals and who are Net savvy, since servicing them would be easier on the Net.
India has around 1.6 million net users who are prime target for these funds and this could just be the beginning. The Internet users are going to increases dramatically and mutual funds are going to be the best beneficiary. With smaller administrative costs more funds would be mobilized .A fund manager must be ready to tackle the volatility and will have to maintain sufficient amount of investments which are high liquidity and low yielding investments to honor redemption.
Net based advertisements:
There will be more sites involved in ads and promotion of mutual funds. In the U.S. sites like AOL offer detailed research and financial details about the
25 functioning of different funds and their performance statistics. A is witnessing a genesis in this area. There are many sites such as regarding their investments. indiainfoline.com and indiafn.com that are doing something similar and providing advice to investors
In the U.S. most mutual funds concentrate only on financial funds like equity and debt. Some like real estate funds and commodity funds also take an exposure to physical assets. The latter type of funds are preferred by corporate who want to hedge their exposure to the commodities they deal with. For instance, a cable manufacturer who needs 100 tons of Copper in the month of January could buy an equivalent amount of copper by investing in a copper fund. For Example, Permanent Portfolio Fund, a conservative U.S. based fund invests a fixed percentage of its corpus in Gold, Silver, Swiss francs, specific stocks on various bourses around the world, short term and long-term U.S. treasuries etc. In U.S.A. apart from bullion funds there are copper funds, precious metal funds and real estate funds (investing in real estate and other related assets as well.).In India, the Canada based Dundee mutual fund is planning to launch a gold and a real estate fund before the year-end. In developed countries like the U.S.A there are funds to satisfy everybodys requirement, but in India only the tip of the iceberg has been explored. In the near future India too will concentrate on financial as well as physical funds.
26
Types of Mutual Funds

Mutual fund schemes may be classified on the basis of its structure and its investment By Structure: Open-ended Funds 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. Closed-ended Funds 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. Interval Funds
Interval funds combine the features of open-ended and close-ended schemes.
objective.
They are open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective: Growth Funds
27
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of
investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. Income Funds
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures and Government securities. Income Funds are ideal for capital stability
and regular income. Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents.
In a rising stock market, the NAV of these schemes may not normally keep pace,
or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. Money Market Funds The aim of money market funds is 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. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Load Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry
28 and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. Other Schemes: Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction under Income Tax Act, 1961. Special Schemes
Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer
document. The investment of these funds is limited to specific industries like InfoTech, FMCG, Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50.
Sectoral Schemes
Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.
29
Merits of Mutual Fund investment

Professional Management Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme. Diversification Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. Convenient Administration Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return Potential Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can
30 avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Transparency One can get regular information on the value of his investment in addition to
disclosure on the specific investments made by his scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and outlook. Flexibility Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Affordability Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy. Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. Well Regulated All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. The
operations of Mutual Funds are regularly monitored by SEBI.
Demerits of Mutual Fund investment:

Professional Management
31
Many investors debate over whether or not the so-called professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. Dilution It's possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often don't
make much difference on the overall return. Dilution is also the result of a
successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. Entry and exit costs Mutual funds are a victim of their own success. When a large body like a fund invests in shares, the concentrated buying or selling often results in adverse price movements ie at the time of buying, the fund ends up paying a higher price and while selling it realizes a lower price. This problem is especially severe in
emerging markets like India, where, excluding a few stocks, even the stocks in the
Sensex are not liquid, let alone stocks in the NSE 50 or the CRISIL 500. So, there is simply no way that a fund can beat the Sensex or any other index, if it blindly
invests in the same stocks as those in the Sensex and in the same proportion. For
obvious reasons, this problem is even more severe for funds investing in small capitalization stocks. However, given the large size of the debt market, excluding UTI, most debt funds do not face this problem. Wait time before investment It takes time for a mutual fund to invest money. Unfortunately, most mutual funds receive money when markets are in a boom phase and investors are willing to try out mutual funds. Since it is difficult to invest all funds in one day, there is some money waiting to be invested. Further, there may be a time lag before investment opportunities are identified. This ensures that the fund underperforms
32 the index. For open-ended funds, there is the added problem of perpetually keeping some money in liquid assets to meet redemptions. Fund management costs The costs of the fund management process are deducted from the fund. This includes marketing and initial costs deducted at the time of entry itself, called
"load". Then there is the annual asset management fee and expenses, together
called the expense ratio. Usually, the former is not counted while measuring performance, while the latter is. A standard 2% expense ratio means that, everything else being equal, the fund manager underperforms the benchmark index by an equal amount. Cost of churn The portfolio of a fund does not remain constant. The extent to which the portfolio changes is a function of the style of the individual fund manager i.e. whether he is a buy and hold type of manager or one who aggressively churns the fund. It is also dependent on the volatility of the fund size i.e. whether the fund constantly receives fresh subscriptions and redemptions. Such portfolio changes have associated costs of brokerage, custody fees, registration fees etc. which lowers the portfolio return commensurately.
33 Change of index composition
World over, the indices keep changing to reflect changing market conditions.
There is an inherent survivorship bias in this process, with the bad stocks weeded
out and replaced by emerging blue chips. This is a severe problem in India with
the Sensex having been changed twice in the last 5 years, with each change being quite substantial. Another reason for change index composition is Mergers &
Acquisitions. The weightages of the shares of a particular company in the index changes if it acquires a large company not a part of the index.
How to overcome demerits of the mutual funds? Tendency to take conformist decisions From the above points, it is quite clear that the only way a fund can beat the index
is through investment of some part of its portfolio in some shares where it gets excellent returns, much more than the index. This will pull up the overall average return. In order to obtain such exceptional returns, the fund manager has to take a strong view and invest in some uncommon or unfenced investment options. Most people are unwilling to do that. They follow the principle "No fund manager ever got fired for investing in Hindustan Lever" i.e. if something goes wrong with an unusual investment, the fund manager will be questioned but if anything goes wrong with the blue chip, then you can always blame it on the "environment" or "uncontrollable factors" knowing fully well that there are many other fund
managers who have made the same decision. Unfortunately, if the fund manager
does the same thing as several others of his class, chances are that he will produce
average results. This does not mean that if a fund manager takes "active" views
and invests in heavily researched "uncommon" ideas, the fund will necessarily
outperform the index. If the idea does not work, it will result in poor fund performance. But if no such view is taken, there is absolutely no chance that the fund will outperform the index. Performance evaluation and comparison between of Thematic and Diversified
Net Asset Value (NAV)

net of its liabilities. In other words, if the fund is dissolved or liquidated, by
34
The net asset value of the fund is the cumulative market value of the assets fund selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which
is the value, represented by the ownership of one unit in the fund. It is calculated
simply by dividing the net asset value of the fund by the number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention. Calculation of NAV
The most important part of the calculation is the valuation of the assets owned by
the fund. Once it is calculated, the NAV is simply the net value of assets divided
by the number of units outstanding. The detailed methodology for the calculation
of the asset value is given below. Asset value is equal to Sum of market value of shares/debentures + Liquid assets/cash held, if any + Dividends/interest accrued Amount due on unpaid assets Expenses accrued but not paid
Details on the above items For liquid shares/debentures, valuation is done on the basis of the last or closing market price on the principal exchange where the security is traded. For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be estimated. For shares, this could be the book value per share or an estimated market price if suitable benchmarks are available. For debentures and bonds, value is estimated on the basis of yields of comparable liquid securities after adjusting for illiquidity.
35
The value of fixed interest bearing securities moves in a direction opposite to interest rate changes Valuation of debentures and bonds is a big problem since most of them are unlisted and thinly traded. This gives considerable leeway to the AMCs on valuation and some of the AMCs are believed to take advantage of this and adopt flexible valuation policies depending on the situation. Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with every passing day, interest is said to be accrued, at the daily interest rate, which is calculated by dividing the periodic interest payment with the number of days in each period. Thus, accrued interest on a particular day is equal to the daily interest rate multiplied by the number of days since the last interest payment date. Usually, dividends are proposed at the time of the Annual General meeting and become due on the record date. There is a gap between the dates on which it becomes due and the actual payment date. In the intermediate period, it is deemed to be "accrued". Expenses including management fees, custody charges etc. are calculated on a daily basis.
36
Regulatory Aspects
Schemes of a Mutual Fund
The asset management company shall launch no scheme unless the

trustees approve such scheme and a copy of the offer document has been
filed with the Board.
Every mutual fund shall along with the offer document of each scheme
pay filing fees.
The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision including
the disclosure on maximum investments proposed to be made by the
scheme in the listed securities of the group companies of the sponsor A

close-ended scheme shall be fully redeemed at the end of the maturity period. "Unless a majority of the unit holders otherwise decide for its
rollover by passing a resolution".
The mutual fund and asset management company shall be liable to refund
the application money to the applicants,(i) If the mutual fund fails to receive the minimum subscription amount referred to in clause (a) of subregulation (1); (ii) If the moneys received from the applicants for units are in excess of subscription as referred to in clause (b) of sub-regulation (1).
The asset management company shall issue to the applicant whose application has been accepted, unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than six weeks from the date of closure of the initial subscription list and or from the date of receipt of the request from the unit
holders in any open ended scheme.
37
Rules Regarding Advertisement:
The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false. Investment Objectives and Valuation Policies:
The price at which the units may be subscribed or sold and the price at which such units may at any time be repurchased by the mutual fund shall
be made available to the investors. General Obligations:
Every asset management company for each scheme shall keep and
maintain proper books of accounts, records and documents, for each

scheme so as to explain its transactions and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the fund and intimate to the Board the place
where such books of accounts, records and documents are maintained.
The financial year for all the schemes shall end as of March 31 of each year. Every mutual fund or the asset management company shall prepare in respect of each financial year an annual report and annual statement of
accounts of the schemes and the fund as specified in Eleventh Schedule.
Every mutual fund shall have the annual statement of accounts audited by
an auditor who is not in any way associated with the auditor of the asset management company. Procedure for Action In Case Of Default:
On and from the date of the suspension of the certificate or the approval, as the case may be, the mutual fund, trustees or asset management
company, shall cease to carry on any activity as a mutual fund, trustee or
asset management company, during the period of suspension, and shall be subject to the directions of the Board with regard to any records, documents, or securities that may be in its custody or control, relating to its activities as mutual fund, trustees or asset management company.
38
Restrictions on Investments:
A mutual fund scheme shall not invest more than 15% of its NAV in debt
instruments issued by a single issuer, which are rated not below
investment grade by a credit rating agency authorized to carry out such
Activity under the Act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees
and the Board of asset Management Company.
A mutual fund scheme shall not invest more than 10% of its NAV in
unrated debt instruments issued by a single issuer and the total investment
in such instruments shall not exceed 25% of the NAV of the scheme. All
such investments shall be made with the prior approval of the Board of
Trustees and the Board of asset Management Company.
No mutual fund under all its schemes should own more than ten per cent of any company's paid up capital carrying voting rights.
Such transfers are done at the prevailing market price for quoted
instruments on spot basis. The securities so transferred shall be in

conformity with the investment objective of the scheme to which such
transfer has been made.
A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that aggregate interscheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund.
The initial issue expenses in respect of any scheme may not exceed six per cent of the funds raised under that scheme. Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and
in all cases of sale, deliver the securities and shall in no case put itself in a
position
whereby
it
39 has to make short sale or carry forward transaction or engage in badla finance.
Every mutual fund shall, get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long-term nature.
Pending deployment of funds of a scheme in securities in terms of investment objectives of the scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled commercial banks.
No mutual fund scheme shall make any investment in; i. the sponsor; or ii. Any security issued by way of private placement by an associate or group company of the sponsor; orThe listed securities of group companies of the sponsor which is in excess of 30% of the net assets [of all the schemes of a mutual fund]
No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity shares or equity related instruments of any company. Provided that, the limit of 10 per cent shall not be applicable for investments in index fund or sector or industry specific scheme.
A mutual fund scheme shall not invest more than 5% of its NAV in the
equity shares or equity related investments in case of open-ended scheme
and 10% of its NAV in case of close-ended scheme.
40
THEMATIC INTRODUCTION Thematic funds identify themes based on global trends or unique criteria as part of their stock picking guidelines. Some funds may focus on just one major theme as the backbone for their investment process. DWS Global Themes Equity Fund and DBS Shenton Global Opportunities Fund are example of global equity funds that have explicit global themes. A thematic fund invests in a single theme, but there are several sectors within it, maybe as many as 12-15 sectors, so its pretty diversified in that sense. Global trends indicate that thematic funds are going to get very popular. The theme is not just one or two sectors, rather a broader opportunity encompassing several sectors. For instance, the outsourcing opportunity is not restricted to technology; it includes manufacturing and pharma among other sectors. The capital goods and infrastructure theme includes several sectors. latest example to the thematic category is sundaram energy opportunites fund which would be investing in energy stocks and energy related stocks.
41
CHAPTER- II RESEARCH METHODOLOGY

Research design simply means a search for facts answer to questions and solutions to problems. A research design is a purposeful scheme of action
proposed to be covered out in a sequence during the process of research focusing on the problem to be tackled. It is a guideline for the researcher to enable him to
keep track of his actions and to know whether he was moving in the right direction in order to achieve his goal. The design has a specific presentation of the various steps in the process of the research. For the purpose of this study, the following methodology was adopted: Identification of the study period. Identification of certain Thematic Fund schemes and Diversified Fund schemes that are performing best among Schemes of different companies.
Collection of Monthly open, close prices of NSE and Monthly Opening
and Closing Net Assets Values of Funds selected.

Conducting serial correlation tests on the fund returns. Calculation of
Standard deviation, Calculation of Portfolio Beta and Alpha. Performance Evaluation of Funds Using Sharpes, Jensens and Tenors Model. Finding out Best Performing Funds using combinations of three methods Collection of Charges in THEMATIC and DIVERSIFIED Comparison of both funds. Comparing returns for THEMATIC and DIVERSIFIED Conclusion based on findings.
42
OBJECTIVES OF THE STUDY

The main objective of the study is to Evaluate performance of some THEMATIC and DIVERSIFIED. Rank them based on performances, and comparing THEMATIC vs. DIVERSIFIED.
Following are the objectives of the study: To study the technique associated with the performance evaluation. To know Mutual fund product. To know working of Mutual Fund. Understanding the performance of selected funds comparison with market index. To find out the best among THEMATIC and DIVERSIFIED.
SCOPE OF THE STUDY

Now Indian Financial Industry is in boom. As stock market growing Mutual Fund is also performing very well In Indian scenario. According to Analyst Indias growth story will continue in the future. Study will help The investors in understanding the performance of selected portfolios in comparison with market index. It also helps the investor differentiate between different fund schemes. Will help in making investment decision based on his/ her need. It serves as a reference for further research.
43
REVIEW OF LITERATURE:
Literature on mutual fund performance evaluation is enormous. A few research
studies that have influenced the preparation of this paper substantially are
discussed in this section. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio
performance. Drawing on results obtained in the field of portfolio analysis, economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those used previously by
incorporating the volatility of a fund's return in a simple yet meaningful manner.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio
performance (Jensens alpha) that estimates how much a managers forecasting ability contributes to funds returns. As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess
return of the portfolio over the return of the benchmark index, where the portfolio
is leveraged to have the benchmark indexs standard deviation. S.Narayan Rao ,

et. al., evaluated performance of Indian mutual funds in a bear market through
relative performance index, risk-return analysis, Treynors ratio, Sharpes ratio,

Sharpes measure , Jensens measure, and Famas measure. The study used 269 open-ended schemes (out of total schemes of 433) for computing relative
performance index. Then after excluding funds whose returns are less than riskfree returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes in the sample of
58 were able to satisfy investors expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk. Bijan Roy, et. al., conducted an empirical study on conditional performance of
Indian mutual funds. This paper uses a technique called conditional performance
evaluation on a sample of eighty-nine Indian mutual fund schemes
44 .This paper measures the performance of various mutual funds with both
unconditional and conditional form of CAPM, Treynor- Mazuy model and
Henriksson-Merton model. The effect of incorporating lagged information variables into the evaluation of mutual fund managers performance is examined in the Indian context. The results suggest that the use of conditioning lagged information variables improves the performance of mutual fund schemes, causing alphas to shift towards right and reducing the number of negative timing coefficients. For the purpose of this study, the following books were referred: Security analysis and portfolio management, fifth edition, Balla. Investments, sixth edition, Jack Clark Francis. How Mutual Fund Works. Albert J. Fredman, Russ Wiles, PHI, New Delhi Investment analysis and portfolio management, ninth edition, Prasanna Chandra. Tata McGraw-Hill publishing Co Ltd., New Delhi. Financial management, Prasanna Chandra
45
DEFINITION OF CONCEPTS
Market index: A stock index is a number that helps measure the levels of the market. Stock index is a derivative asset because it derives its existence and value from independent stocks issued by corporations
Equity: The net worth of a firm consisting of paid up equity capital plus,
reserves and surplus. Portfolio: A combination of assets Correlation Analysis: It is the statistical tool used to describe the degree to which one variable is linearly related to another. Beta: The degree, to which different portfolios are affected by these systematic risks as compared to the effect on the market as a whole, is different and is measured by Beta. To put it differently, the systematic risks of various securities differ due to their relationships with the market. The Beta factor describes the movement in a stock's or a portfolio's returns in relation to that of the market return. For all practical purposes, the market returns are measured by the returns on the index (Nifty, Mid-cap etc.), since the index is a good reflector of the market. Beta is denoted by symbol beta () Standard Deviation: Standard Deviation is a statistical tool, which measures the variability of returns from the expected value, or volatility. It is denoted by sigma(s).
Alpha: It is the risk-adjusted returns that a portfolio manager generates in
excess of the risk-adjusted returns expected by the Capital Asset Pricing Model (CAPM). It is denoted by Alpha ( ). Risk Free rate: The risk-free interest rate is the interest rate that it is
assumed can be obtained by investing in financial instruments with no
default risk. In this research National Savings Certificates (NSC) interest rate 8.0 % is taken as Risk free Rate.
46 SAMPLING METHOD A sample is a small representation of lot of population selected at random.

The random of drawing a sample from large population is called as sampling. The
sampling method adopted in this study is judgment sampling. Sampling data in

this study comprised of eight funds (4 thematic and 4 diversified), 13 months
Opening and Closing NAV of those funds, 13 months monthly opening and closing prices of S&P CNX Nifty. LIMITATIONS OF THE STUDY Though sincere attempts have been made during the research work, certain limitations cannot be avoided, they are:
Difference in definitions. Comparison is done only for 6 funds, where as there exist several funds in the market. Charges in every fund are different. Where as only one kind of charges is consider here for calculation. Ranking is based on past performance which may not sustain in the future. There may exist funds, which is performing better than the funds selected for study.
47
PERFORMANCE EVALUATION TECHNIQUE

Fund Performance is measured in terms of 1) Total Return and 2) The volatility of the return. TOTAL RETURN: In case of Index, Return is Percentage Change in Index Opening and Closing Prices Thus,
In Case of Mutual Fund and ULIP, Return consist of 1) Opening NAV 2) Closing NAV and 3) Dividend RISK: The volatility or Variation in the return is called as risk. There are two measure of risk 1) Standard Deviation 2) Beta
48 Standard Deviation: Standard Deviation is a statistical tool, which measures the variability of returns from the expected value, or volatility. It is denoted by sigma(s). It is calculated using the formula mentioned below:
Where, is the sample mean and N is number of observation. Beta: The degree, to which different portfolios are affected by these systematic risks as compared to the effect on the market as a whole, is different and is measured by Beta. To put it differently, the systematic risks of various securities differ due to their relationships with the market. The Beta factor describes the movement in a stock's or a portfolio's returns in relation to that of the market return. Beta is calculated as:
Where, Y is the returns on your portfolio (FUND)- DEPENDENT VARIABLE X is the market returns or index - INDEPENDENT VARIABLE Where, N denotes the total number of observations. Calculation of Geometric Mean: Geometric mean is calculated as
Calculation of Alpha: Alpha of a portfolio is calculated as below..
49
Here Rp is portfolio return, Rm is market return and p denotes Beta of portfolio. There are three important measure used for performance evaluation 1) Sharpe Method 2) Treynnors Method 3) Jensens Method Sharpe Measure: This method evaluates a portfolio based on Total Risk, Sigma ().
Rp is portfolio return Rf is risk free rate.. is total risk of the portfolio. Here,
Treynor Ratio: The Treynor ratio is a measurement of the returns earned in excess of that which could have been earned on a riskless investment (i.e. Treasury Bill) (per each unit of market risk assumed). The Treynor ratio (sometimes called reward-to-volatility ratio) relates excess
50
return over the risk-free rate to the additional risk taken; however systematic risk instead of total risk is used. The higher the Treynor ratio, the better the performance under analysis.
Treynor ratio, portfolio return, risk free rate portfolio beta
Jensens Alpha : In finance, Jensen's alpha (or Jensen's Performance Index) is security's required rate of return as determined by the Capital Asset Pricing Model. This model is used to adjust for the level of beta risk, so that riskier securities are expected to have higher returns. Alpha is calculated as:
51
used to determine the excess return of a stock, other security, or portfolio over the
Rp is portfolio Return Rf is risk free rate Rm is market Return. is portfolio beta
52
DATA ANALYSIS
S & P CNX NIFTY Index: It is a market index and is used by funds to benchmark their fund performance. It is a well diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. It is
owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. Impact cost of the S&P CNX Nifty for a
portfolio size of Rs.5 million is 0.07%.It is professionally maintained and is ideal for derivatives trading Calculation of Index (S&P CNX Nifty) Return TABLE 1: Monthly Returns for S&P CNX Nifty
S&P CNX nifty Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
Nov-11
Dec-11 Jan-12 Feb-12
Opening Closing Price Price 4137.2 3745.3 3811.2 3821.5 3633.6 4087.9 4150.85 4295.8 4297.05 4318.3 4313.75 4528.85 4345.85 4464 4474.75 5021.35 5068.95 5900.65 5866.45 5762.75 5865 6138.6 6144.35 5137.45 5317.25 5223.5
Change -391.9 10.3 454.3 144.95 21.25 215.1 118.15 546.6 831.7 -103.7 273.6 -1006.9
RETURN IN % -9.47259015 0.270256087 12.50275209 3.492055844 0.494525314 4.986380759 2.718685643 12.21520755 16.4077373 -1.76767892 4.664961637 -16.3874128
-93.75 -1.76312943
53
BIRLA TOP 100 DIVERSIFIED GROWTH OPENING CLOSING RETURN IN NAV NAV CHANGE % 16.3633 14.877 -1.486 -9.08313115 14.9992 15.0022 0.003 0.020001067 14.4025 15.8705 1.468 10.19267488 16.0436 16.7066 0.663 4.132488968 16.8106 17.0818 0.2712 1.613267819 17.1399 17.7979 0.658 3.83899556 17.2295 17.5526 0.3231 1.875272062 17.7554 19.3244 1.569 8.836748257 19.4304 21.7234 2.293 11.80109519 21.6536 21.9051 0.2515 1.161469686 22.3205 23.2025 0.882 3.951524383 23.2792 19.3575 -3.922 -16.8463693 19.6353 19.1431 -0.492 -2.50670985
MONTH Feb-11
Mar-11 Apr-11 May-11
Jun-11
Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
Jan-12
Feb-12
54
ICICI PRUDENTIAL SERVICE INDUSTRIES THEMATIC FUND GROWTH MONTH
OPENING NAV Feb-11

Mar-11
CLOSING NAV 14.98 14.96 16.01 17.05 17.51 17.65 17.34 18.75 20.92 21.32 23.77 20.6 19.74
CHANGE -1.01 -0.16

1.59 0.97 0.41 0.04 0.27 1.21 2.06 0.67 2.07
RETURN IN %
15.99 15.12 14.42 16.08

17.1
-6.31644778 -1.058201058
11.02635229 6.032338308 2.397660819 0.227143668 1.58172232 6.898517674 10.92258749 3.244552058 9.539170507
Apr-11 May-11 Jun-11 Jul-11

Aug-11 Sep-11
17.61 17.07 17.54 18.86 20.65

21.7
Oct-11
Nov-11 Dec-11
Jan-12
Feb-12
24.85 20.67
-4.25 -0.93
-17.10261569 -4.499274311
55
Co-Movements of Nifty,Birla TOP 100 and IPru (G)
S&P CNX nifty
BIRLA TOP 100 DIVERSIFIED GROWTH
IPru. Thematic(G)
20
15 10
in % R e turn
5 0
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
-5 -10
-15 -20
Months
56
HDFC TOP 200 DIVERSIFIED DIVIDEND OPENING MONTH NAV Feb-11

Mar-11
CLOSING NAV 34.152 34.565 36.979 39.391 39.802 42.208 41.741 46.467 52.991 52.376 56.159 48.858
43.75
Apr-11
May-11
Jun-11 Jul-11
Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
42.388 34.657 33.078 37.549 39.532 40.117 40.637 42.036 46.717

52.82
Jan-12 Feb-12
53.058 56.307 50.035
DIVIDEND CHANGE 5 0 0 0 0 0 0 0 0 0 0 0 5
RETURN IN % -8.236 -19.4300273 -0.092 -0.26545863

3.901 11.79333696 1.842 4.905590029
0.27 2.091 1.104 4.431 6.274 -0.444 3.101 -7.449 -6.285
0.682990995 5.212254157 2.71673598 10.54096489 13.42980071 -0.84059068 5.844547476 -13.2292610 -12.5612071
57
KOTAK GLOBAL INDIA THEMATIC DIVIDEND

OPENING MONTH NAV Feb-11
Mar-11
CLOSING NAV
Apr-11
May-11
Jun-11 Jul-11
Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
22.072 18.096 17.549 19.569 20.571 21.049 20.562 21.017 22.412 25.431
25.21
Jan-12 Feb-12
25.882 22.016
DIVIDEND CHANGE 17.906 2.5 18.189 0 19.4 0 20.404 0 20.862 0 21.168 0 20.859 0 22.357 0 25.522 0 24.851 0 25.837 0 21.778 0 21.772 0
RETURN IN % -4.166 -18.8745922

0.093 1.851 0.835 0.291 0.119 0.297 0.513925729 10.54760955 4.266952834 1.414612804 0.565347522 1.444412022
1.34 6.375791026
3.11 13.87649473 -0.58 -2.28068105
0.627 2.48710829 -4.104 -15.8565798 -0.244 -1.10828488
58
Co-Movements of Nifty, HDFC Top 200 and Kotak Global India(D)

S&P CNX nifty
KOTAK GLOBAL INDIA THEMTIC DIVIDEND HDFC TOP 200 DIVERSIFIED DIVIDEND
20
15 10
R etu rn i n %
5 0 -5 -10 -15 -20

Months
59
SBI MAGNUM BLUECHIP DIVERSIFIED DIVIDEND

OPENING CLOSING RETURN IN MONTH NAV NAV DIVIDEND CHANGE % Feb-11 11.97 10.72 0 -1.25 -10.4427736 Mar-11 10.84 10.9 0 0.06 0.553505535 Apr-11 10.44 11.58 0 1.14 10.91954023 May-11 11.71 12.17 0 0.46 3.928266439 Jun-11 12.23 12.17 0 -0.06 -0.49059689 Jul-11 12.24 12.74 0 0.5 4.08496732 Aug-11 12.31 12.54 0 0.23 1.868399675 Sep-11 12.64 13.89 0 1.25 9.889240506 Oct-11 14.03 15.62 0 1.59 11.33285816 Nov-11 15.47 13.58 2 -1.89 -12.2171945 Dec-11 13.86 14.57 0 0.71 5.122655123 Jan-12 14.61 12.11 0 -2.5 -17.1115674 Feb-12 12.35 12.06 0 -0.29 -2.34817813
60
BIRLA INFRASTUCTURE FIND THEMATIC DIVIDEND OPENING CLOSING RETURN IN MONTH NAV NAV DIVIDEND CHANGE % Feb-11 12.43 11.37 0 -1.06 -8.52775543 Mar-11 11.44 11.27 0 -0.17 -1.48601398 Apr-11 11.3 10.28 0 -1.02 -9.02654867 May-11 12.46 13.19 0 0.73 5.858747994 Jun-11 13.26 13.82 0 0.56 4.223227753 Jul-11 13.96 14.95 0 0.99 7.091690544 Aug-11 14.4 14.77 0 0.37 2.569444444 Sep-11 14.99 16.47 0 1.48 9.873248833 Oct-11 16.62 18.9 0 2.28 13.71841155 Nov-11 18.78 19.26 0 0.48 2.555910543 Dec-11 19.66 21.12 0 1.46 7.426246185 Jan-12 21.39 17.31 0 -4.08 -19.0743338 Feb-12 17.2 16.57 0 -0.63 -3.66279069
61
Co-Movements of Nifty,SBI Bluechip and Birla Infra.(D)

S&P CNX nifty SBI MAGNUM BLUECHIP DIVERSIFIED DIVIDEND BIRLA INFRASTRUCTURE FUND THEMATIC DIVIDEND
20
15 10
Return in %
5 0
-5 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
-10 -15 -20
Months
62
ICICI STAR FUND DIVERSIFIED GROWTH

OPENING CLOSING RETURN IN MONTH NAV NAV CHANGE % Feb-11 29.98 27.45 -2.53 -8.43895930 Mar-11 27.41 26.61 -0.8 -2.91864283 Apr-11 25.8 28.93 3.13 12.13178295 May-11 26.8 31.28 4.48 16.71641791 Jun-11 31 32.58 1.58 5.096774194 Jul-11 32.86 33.21 0.35 1.065124772 Aug-11 32.13 32.56 0.43 1.338313103 Sep-11 32.91 34.3 1.39 4.223640231 Oct-11 34.53 37.8 3.27 9.470026064 Nov-11 36.81 38.88 2.07 5.623471883 Dec-11 39.8 46.12 6.32 15.87939698 Jan-12 46.98 38.16 -8.82 -18.7739463 Feb-12 38.11 36.98 -1.13 -2.96510102
63
UTI MNC FUND THEMATIC GROWTH OPENING CLOSING RETURN IN NAV NAV CHANGE % 35.82 33.02 -2.8 -7.81686208 33.04 32.67 -0.37 -1.11985472 31.74 34.4 2.66 8.380592313 34.83 37.13 2.3 6.603502728 37.3 38.7 1.4 3.753351206 38.81 38.44 -0.37 -0.95336253 37.29 38.1 0.81 2.172164119 38.22 39.7 1.48 3.872318158 39.75 42.64 2.89 7.270440252 41.86 42.3 0.44 1.05112279 42.94 46 3.06 7.126222636 46.07 37.27 -8.8 -19.1013674 37.49 38.24 0.75 2.000533476
MONTH Feb-11
Mar-11
Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12
Feb-12
64
Co-Movements of Nifty,ICICI Fund and UTI MNC Fund(G)

S&P CNX nifty
UTI MNC FUND THEMATIC DIVIDEND
20
15 10
R e tu rn i n %
5 0
-5 -10 -15 -20
Months
65
Performance Evaluation of Portfolios using Sharpes Ratio, Treynors Ratio and Jensens Alpha
Calculation of Sharpes Ratio and Treynors Ratio for the Index Standard Deviation of the index
13(944.337) 8.523 Calculation of Average Return of Index

13
GM= 1.263499 - 1
GM= GM=. Or 1.01815 - 1 0.01815 1.815 %
Sharpe Ratio for Index
Sharpe Ratio(S) =
1.815 -.08 / 8.523 0.2036
Sharpe Ratio(S) =
66
BIRLA TOP 100 DIVERSIFIED GROWTH

%Change %Changes in S&P In Mutual CNX Fund MONTHS NIFTY (x) X=x-x X*X Portfolio(y) Y=y-y Feb -9.4726 11.8361 140.0925 -9.0831 10.6654 126.2365 Mar 0.2703 -2.0932 4.3816 0.0200 -1.5623 Apr 12.5028 10.1393 102.8049 10.1927 8.6104 May 3.4921 1.1286 1.2737 4.1325 2.5502 Jun 0.4945 -1.8690 3.4930 1.6133 0.0310 4.9864 2.6229 6.8796 3.8390 2.2567 Aug 2.7187 0.3552 0.1262 1.8753 0.2930 Sep 12.2152 9.8517 97.0566 8.8367 7.2545 Oct 16.4077 14.0443 197.2412 11.8011 10.2188 143.5157 Nov -1.7677 -4.1312 17.0665 1.1615 -0.4208 Dec 4.6650 2.3015 5.2968 3.9515 2.3692 Jan -16.3874 18.7509 351.5960 -16.8464 18.4286 345.5536 Feb -1.7631 -4.1266 17.0289 Total Mean=x 28.3618 2.3635 944.3373 Mean(y)= 18.9873 1.5823
Y*Y 113.7509
X*Y
Jul
2.4407 3.2702 74.1389 87.3032 6.5036 2.8781 0.0010 -0.0579 5.0928 5.9191 0.0858 0.1041 52.6273 71.4691 104.4242 0.1771 5.6133 339.6150 1.7384 5.4528
-2.5067 -4.0890 16.7198 16.8736
721.1906 810.2565
67
Beta of the portfolio (p) p= COV(X,Y)/VAR X p= XY/X p= 810.2565 / 944.3373 p= 0.8580
Calculation of Standard Deviation of the portfolio
13 ( 721.1906 ) 7.4482
Calculation of Geometric Mean
13
GM= GM= GM= Or
1.16324- 1
1.0117 - 1 0.0117 1.17 % monthly
Calculation of Sharpe Ratio
Sharpe Ratio ( S ) =
1.17 - 0.08 / 7.482
Sharpe Ratio (S) = 0.1457 . Calculation of Treynors Ratio
68
T= 0.8580 T=
1.17 - 0.08 /
1.2704
Calculation of Jensens Alpha
1.17- (0.08 + 0.8580 (1.815 - 0.08))
-0.3987
Note: p denote Beta of the portfolio,
is Standard deviation of the portfolio.
69
ICICI PRUDENTIAL SERVICE INDUSTRIES THEMATIC FUND GROWTH

%Change in S&P CNX MONTHS Nifty (x) Feb Mar Apr May Jun Jul Aug
Sep
X=x-x
-9.4726 11.8361 0.2703 12.5028 3.4921 0.4945 -2.0932 10.1393 1.1286 -1.8690
4.9864 2.6229 2.7187 12.2152 16.4077 -1.7677 4.6650 0.3552 9.8517 14.0443 -4.1312 2.3015
Oct
Nov
Dec Jan Feb TOTAL Mean (x)
-16.3874 -18.750 -1.7631 -4.1266 28.3618 2.3635
%Changes in Mutual Fund Portfolio X*X (y) Y=y-y 140.0925 -6.3164 8.2242 4.3816 -1.0582 2.9660 102.8049 11.0264 9.1186 1.2737 6.0323 4.1245 3.4930 2.3977 0.4899 6.8796 0.2271 1.6806 0.1262 1.5817 0.3261 97.0566 6.8985 4.9907 197.2412 10.9226 9.0148 17.0665 3.2446 1.3368 5.2968 9.5392 7.6314 351.596 -17.102 19.010 17.0289 -4.4993 6.4071 944.3373 22.8935 1.9078
Y*Y
X*Y
67.6381 97.3427 8.7971 83.1481 17.0119 0.2400 2.8246 0.1063 24.9073 81.2665 1.7869 58.2379 6.2085 92.4556 4.6549 -0.9155 -4.4082 -0.1158 49.1673 126.6061 -5.5224 17.5635
361.395 356.462 41.0505 26.4395 748.411 765.9381
70
13 ( 748.411 ) 7.58749
13
GM = GM= GM=
1.207273- 1
1.0146 - 1 0.0146 Or 1.46 % monthly
1.46 - 0.08 / 7.58749 0.1819 . Calculation of Treynors Ratio
T T
= =
1.46 - 0.08 / 0.81108 1.7014
71
1.46 - (0.08 + 0.8118 (1.815 0.08)) -0.0285
72
HDFC TOP 200 DIVERSIFIED DIVIDEND

%Change in S&P CNX MONTHS Nifty (x) X=x-x Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Dec
-9.473 0.270 12.503 3.492 0.495 4.986 2.719 12.215 16.408 -1.768
11.836 -2.093 10.139 1.129 -1.869 2.623 0.355 9.852 14.044 -4.131
4.665 2.301
Jan Feb TOTAL Mean (x)
-16.387 18.751 -1.763 -4.127 28.3618 2.3635
%Changes in Mutual Fund Portfolio X*X (y) Y=y-y 140.093 -19.430 20.163 4.382 -0.265 -0.999 102.805 11.793 11.060 1.274 4.906 4.172 3.493 0.683 -0.050 6.880 5.212 4.479 0.126 2.717 1.983 97.057 10.541 9.808 197.241 13.430 12.697 17.066 -0.841 -1.574 5.297 5.845 5.111 351.596 -13.229 13.963 17.029 -12.561 13.295 944.3373 8.7997 0.7333
Y*Y
X*Y
406.560 238.655 0.998 2.091 122.324 112.141 17.408 4.709 0.003 0.094 20.061 11.748
3.934 0.705
96.190 96.622 161.201 178.313 2.477 6.502 26.125 11.763 194.953 261.810 176.744 54.861
1228.9780 980.0137
73 Beta of the portfolio (p) p= COV(X,Y)/VAR X p= XY/X p= 980.0137 / 944.3373 p= 1.03777
13 (1228.978) 9.7230
13
GM= GM= GM=
1.026184- 1
1.00199 - 1 0.00199 Or 0.199 % monthly
74 Calculation of Sharpe Ratio
Sharpe Ratio (S) = 9.7230 .0122 . Calculation of Treynors Ratio
0.199 - 0.08 /
T= 0.08 / 1.0377 T= Calculation of Jensens Alpha
0.199 0.1147
0.199 - (0.08 + 1.0377 (1.815 - 0.08)) -1.6814
75
KOTAK GLOBAL INDIA THEMTIC DIVIDEND

%Change in S&P CNX MONTHS Nifty (x) X=x-x Feb Mar Apr May Jun Jul Aug
Sep
X*X
%Changes in MF Portfolio (y) -18.875 0.514 10.548 4.267 1.415 0.565 1.444 6.376 13.876 -2.281 2.487 -15.857 -1.108 3.372 0.281
Oct Nov Dec Jan Feb TOTAL Mean (x)
-9.473 0.270 12.503 3.492 0.495 4.986 2.719 12.215 16.408 -1.768 4.665 -16.387 -1.763 28.362 2.363
11.836 -2.093 10.139 1.129 -1.869 2.623 0.355 9.852 14.044 -4.131 2.301 18.751 -4.127
140.093 4.382 102.805 1.274 3.493 6.880 0.126 97.057 197.241 17.066 5.297 351.596 17.029
944.337
X*Y Y=y-y Y*Y 19.156 366.937 226.727 0.233 0.054 -0.488 10.267 105.403 104.096 3.986 15.888 4.498 1.134 1.285 -2.119 0.284 0.081 0.746 1.163 1.354 0.413 6.095 37.146 60.044 13.595 184.837 190.939 -2.562 6.562 10.583 2.206 4.867 5.077 16.138 260.421 302.594 -1.389 1.930 5.733 986.767 908.844
76 Beta of the portfolio (p) p= COV(X,Y)/VAR X p= XY/X p= 908.844 / 944.337 p= 0.9624
13 (986.767) 8.7123
13
GM= GM= GM=
0.9815705
0.99857 - 1 -0.00143 Or
-1 -0.143% monthly
Sharpe Ratio (S) = Sharpe Ratio (S) = . Calculation of Treynors Ratio
-0.143 - 0.08 / 8.7123 -0.0256
T=
-0.143 0.08 / -0.2317
0.9624
T=
-0.143 - (0.08 + 0.9624 (1.815 - 0.08))
77 -1.8928
78
SBI MAGNUM BLUECHIP DIVERSIFIED DIVIDEND

%Change in S&P MONTHS CNX Nifty (x) X=x-x Feb -9.473 11.836 Mar 0.270 -2.093 Apr 12.503 10.139 May 3.492 1.129 Jun 0.495 -1.869 Jul 4.986 2.623 Aug 2.719 0.355 Sep 12.215 9.852 Oct 16.408 14.044
Nov -1.768 -4.131
Dec Jan Feb TOTAL Mean (x)
4.665 2.301 -16.387 18.751 -1.763 -4.127 28.362

2.363
%Changes in MF X*X Portfolio (y) Y=y-y 140.093 -10.443 10.867 4.382 0.554 0.129 102.805 10.920 10.495 1.274 3.928 3.504 3.493 -0.491 -0.915 6.880 4.085 3.661 0.126 1.868 1.444 97.057 9.889 9.465 197.241 11.333 10.909 17.066 -12.217 12.641 5.297 5.123 4.699 351.596 -17.112 17.536 17.029 -2.348 -2.772 944.337 5.089 0.424
X*Y Y*Y 118.089 0.017 110.154 12.279 0.837 13.402 2.086 89.589 119.001 128.621 -0.271 106.416 3.955 1.710 9.602 0.513 93.248 153.205
159.802 52.223 22.076 10.814 307.500 328.809 7.686 11.440 962.517 900.285
79
13 (962.517) 8.6046
13
GM= GM= GM=
1.00524
1.0004 - 1 0.0004 Or
-1 0.04% monthly
Sharpe Ratio (S) = . Calculation of Treynors Ratio
0.04 - 0.08 / 8.6046
Sharpe Ratio (S) = -0.1116
T= T=
0.04 - 0.08 / 0.9533 -1.0070
0.04 - (0.08 + 09533 ( 1.815 - 0.08) )
-1.6939
80
Note: p denote Beta of the portfolio, is Standard deviation of the portfolio.
81
BIRLA INFRASTRUCTURE FUND THEMATIC DIVIDEND

Sep
X*X
%Changes in MF Portfolio (y)
Y=y-y
Y*Y
X*Y
-9.473 11.836 140.093 0.270 -2.093 4.382 12.503 3.492 0.495 4.986 2.719 12.215 16.408 10.139 102.805 1.129 1.274 -1.869 3.493 2.623 6.880 0.355 0.126 9.852 97.057 14.044 197.241
Oct Nov
Dec
-1.768 -4.131 17.066 4.665 2.301 5.297 -16.387 18.751 351.596 -1.763 -4.127 17.029 28.362
2.363
-8.528 -9.489 90.048 112.317 -1.486 -2.448 5.991 5.123 -9.027 -9.988 99.763 101.273 5.859 4.897 23.982 5.527 4.223 3.262 10.638 -6.096 7.092 6.130 37.578 16.079 2.569 1.608 2.585 0.571 9.873 8.912 79.417 87.795 13.718 12.757 162.736 179.160 2.556 1.594 2.542 -6.586 7.426 6.465 41.792 14.878 -19.074 20.036 401.439 375.692 -3.663 -4.624 21.385 19.083 11.539 0.962 979.897 702.270
944.337
Beta of the portfolio (p) p= COV(X,Y)/VAR X p= XY/X p= 702.270 / 944.337 p= 0.7436 Calculation of Standard Deviation of the portfolio
82
13 (979.897) 8.6820
13
GM= GM= GM= Calculation of Sharpe Ratio
1.06624- 1
1.00495 - 1 0.00495 Or 0.495% monthly
Sharpe Ratio (S) = 0.495 - 0.08 / 8.6820 Sharpe Ratio (S)= 0.0478 . Calculation of Treynors Ratio
T=
0.495 - 0.08 / 0.7436
T = 0.5581
0.495 - (0.08 + 0.7436 (1.815 - 0.08))
-0.875
Note: p denote Beta of the portfolio, is Standard deviation of the portfolio.
83
Sep
X*X
%Changes in MF Portfolio (y) -8.439 -2.919 12.132 16.716 5.097 1.065 1.338 4.224 9.470 5.623 15.879 -18.774 -2.965 38.448 3.2040
Oct
Nov Dec
-9.473 0.270 12.503 3.492 0.495 4.986 2.719 12.215 16.408
11.836 -2.093 10.139 1.129 -1.869 2.623 0.355 9.852 14.044
140.093 4.382 102.805 1.274 3.493 6.880 0.126 97.057 197.241
-1.768 -4.131 17.066
4.665 2.301 5.297 -16.387 18.751 351.596 -1.763 -4.127 17.029 28.362 2.3635 944.337
Y=y-y 11.643 -6.123 8.928 13.512 1.893 -2.139 -1.866 1.020 6.266 2.419 12.675 21.978 -6.169
Y*Y 135.559 37.487 79.705 182.585 3.583 4.575 3.481 1.040 39.263 5.854 160.666
X*Y 137.807 12.816 90.521 15.250 -3.538 -5.610 -0.663 10.045 88.002 -9.995 29.172
483.030 412.106 38.058 25.457 1174.885 801.371
84
13 (1174.885) 9.5066
13
GM= GM= GM=
1.37828 -1
1.02499 - 1 0.02499 Or 2.499 % monthly
85 Calculation of Sharpe Ratio
2.499 - 0.08 / 9.5066
Sharpe Ratio (S) = 0.2545
T= - 0.08 / 0.848 T=
2.499
2.8526
2.499 - ( 0.08 + 0.848 (1.815 - 0.08) )
0.9477
86
UTI MNC FUND THEMATIC DIVIDEND %Change in S&P MONTHS CNX Nifty (x) X=x-x Feb Mar Apr May Jun Jul Aug
Sep
X*X
%Changes in MF Portfolio (y) Y=y-y -8.920 -2.223 7.277 5.500 2.650 -2.057 1.069 2.769 6.167 -0.052 6.023 -19.101 20.205 2.001 0.897 13.239 1.103 -7.817 -1.120 8.381 6.604 3.753 -0.953 2.172 3.872 7.270 1.051 7.126
Y*Y 79.568 4.942 52.960 30.253 7.023 4.229 1.143 7.668 38.035 0.003 36.277
X*Y 105.579 4.653 73.787 6.208 -4.953 -5.394 0.380 27.281 86.614 0.215 13.862
Oct Nov
Dec
-9.473 0.270 12.503 3.492 0.495 4.986 2.719 12.215 16.408 -1.768 4.665 -16.387 -1.763 28.362
2.363
11.836 -2.093 10.139 1.129 -1.869 2.623 0.355 9.852 14.044 -4.131 2.301 18.751 -4.127
140.093 4.382 102.805 1.274 3.493 6.880 0.126 97.057 197.241 17.066
5.297
351.596 17.029 944.337
408.225 378.854 0.805 -3.703 671.131 683.382
87
Beta of the portfolio (p) p= COV(X,Y)/VAR X p= XY/X p= 683.382 / 944.337 p= 0.7237 Calculation of Standard Deviation of the portfolio
13 (671.131) 7.1851
13
GM= GM= GM=
1.100543
1.0074 -1 0.0074 Or 0.74 % monthly
88
0.74 - 0.08 / 7.1851 0.0918
Sharpe Ratio (S) =
T= - 0.08 / 0.7237 T= 0.9120
0.74
0.74 - (o.08 + 0.7237(1.815
- 0.08))
-0.5956
89
Results: According to Sharpes RatioRatios of different funds are

compared. Funds whose value is maximum is Ranked as 1st and so on. In the above, Sharpes Ratios of the funds are THEMATIC FUNDS Rank 1: Rank 2: Rank 3: Rank 4: ICICI PRUDENTIAL Service Industries Fund 0.1819 UTI MNC Fund 0.0918 Birla Infrastructure Fun 0.0478 Kotak Global Fund -0.0256
DIVERSIFIED FUNDS Rank 1: Rank 2: Rank 3: Rank 4: ICICI PRUDENTIAL Emerging S.T.A.R. Fund 0.2545 Birla Top 100 Fund 0.1457 HDFC Top 200 Fund 0.0122 SBI magnum Fund -0.1116
90 Shows the Return Per unit of Risk () Ranking according to Treynors Ratio: Treynors Ratio gives us return for per unit of Systematic Risk() thus more the ratio better the funds performance. In the above, Treynors Ratios of the funds are.. THEMATIC FUNDS Rank 1: ICICI PRUDENTIAL Service Industries Fund 1.7014 Rank 2: UTI MNC Fund 0.9120 Rank 3: Rank 4: Birla Infrastructure Fund 0.5581 Kotak Global Fund -0.2317
DIVERSIFIED FUNDS Rank 1: Rank 2: Rank 3: Rank 4: ICICI PRUDENTIAL Emerging S.T.A.R. Fund 2.499 Birla Top 100 Fund1.2704 HDFC Top 200 Fund 0.1147 SBI magnum Fund -1.0070
91 Ranking according To Jensens Alpha THEMATIC FUNDS Rank 1: Rank 2: Rank 3: Rank 4: ICICI PRUDENTIAL Service Industries Fund -0.0285 UTI MNC Fund -0.5956 Birla Infrastructure Fund -0.8750 Kotak Global Fund -1.8928
DIVERSIFIED FUNDS
Rank 1: ICICI PRUDENTIAL Emerging S.T.A.R. Fund 0.9477
Rank 2: Rank 3: Rank 4:
Birla Top 100 Fund -0.3987 HDFC Top 200 Fund-1.6814 SBI magnum Fund -1.6939
92
CHAPTER: IV FINDINDS:
Thematic and Diversified are the two terms which can be said as one aspect only. But while trying to prove on share market aspect both have its own prone and cons.
I would like to explain this in a simple manner and is on bullish way definitely
both will be giving up ample amount of returns on its own way. But when market is on Bearish period/trend assuming that the fund manager would invest on a particular sector like software. But in Diversified Fund way the fund manager would be able to gather a balanced amount of returns for its clients. At last, would like to conclude that both Thematic and Diversified funds has
its own way to deal in the market and expect a ample amount of balanced
result/return on its own way.
93
CHAPTER- V Future Scenario:

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal, Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
94
CHAPTER- VI Conclusion:
Basic Understanding
A mutual fund brings together a group of people and invests their money in stocks, bonds and other securities.
The advantages of mutual fund are professional management,
diversification, economies of scale, simplicity and liquidity. The disadvantages of mutual fund are high cost, over diversification,
possible tax consequences and the inability of management to guarantee a
superior return.
There are many types of mutual funds. You can classify funds based on
asset class, investing strategy, region, etc. Mutual funds have lots of cost.
Cost can be broken down into ongoing fees (represented by the expense
ratio) and transaction fees (loads). The biggest problems with mutual funds are their cost and fees.
Mutual funds are easy to buy and sell. You can either buy them directly
from the fund company or through a third party. Mutual funds ads can be very deceiving.
CHAPTER: VII
95
Bibliography:
Books: Security analysis and portfolio management, fifth edition, by Balla. Investments, sixth edition, by Jack Clark Francis. How Mutual Fund Works, by Albert J. Fredman, Russ Wiles, PHI, New Delhi
Investment analysis and portfolio management, ninth edition, by
Prasanna Chandra. Tata McGraw-Hill publishing Co Ltd., New Delhi. Financial management, by Prasanna Chandra Internet: IRDA India site www.irda.org www.money.rediff.com www.in.finance.yahoo.com www.licindia.com www.amfiindia.com Other mutual Fund and Insurance company web sites.

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Performance evaluation and comparison between of Thematic and Diversified

About Naimi investors

Performance evaluation and comparison between of Thematic and Diversified

Investment Philosophy of NAIMI

Performance evaluation and comparison between of Thematic and Diversified

CHAPTER- I Mutual Funds: An overview

with an investible surplus of as little as a few thousand rupees can invest in

economies of scale in all three areas - research, investments and transaction

Performance evaluation and comparison between of Thematic and Diversified

History of Mutual Funds in India

Performance evaluation and comparison between of Thematic and Diversified

Performance evaluation and comparison between of Thematic and Diversified

Performance evaluation and comparison between of Thematic and Diversified

Mutual Fund Operation Flow Chart

ORGANISATION OF A MUTUAL FUND

Structure of the Indian mutual fund industry

1964 commonly referred to as US 64, which is a balanced fund, is the biggest

Performance evaluation and comparison between of Thematic and Diversified

Performance evaluation and comparison between of Thematic and Diversified

Recent trends in mutual fund industry

competition provided by these.

Performance evaluation and comparison between of Thematic and Diversified

market share, UTI still remains a formidable force to reckon with.

do business in the future.

Banks v/s Mutual Funds

New investors would prefer online :

Net based advertisements:

Performance evaluation and comparison between of Thematic and Diversified

Types of Mutual Funds

Performance evaluation and comparison between of Thematic and Diversified

By Investment Objective: Growth Funds

and regular income. Balanced Funds

Industry Specific Schemes

Performance evaluation and comparison between of Thematic and Diversified

Merits of Mutual Fund investment

operations of Mutual Funds are regularly monitored by SEBI.

Performance evaluation and comparison between of Thematic and Diversified

Demerits of Mutual Fund investment:

Performance evaluation and comparison between of Thematic and Diversified

33 Change of index composition

Net Asset Value (NAV)

Performance evaluation and comparison between of Thematic and Diversified

The asset management company shall launch no scheme unless the

filed with the Board.

pay filing fees.

scheme in the listed securities of the group companies of the sponsor A

rollover by passing a resolution".

holders in any open ended scheme.

Rules Regarding Advertisement:

be made available to the investors. General Obligations:

maintain proper books of accounts, records and documents, for each

where such books of accounts, records and documents are maintained.

accounts of the schemes and the fund as specified in Eleventh Schedule.

investment grade by a credit rating agency authorized to carry out such

and the Board of asset Management Company.

Trustees and the Board of asset Management Company.

instruments on spot basis. The securities so transferred shall be in

transfer has been made.

and 10% of its NAV in case of close-ended scheme.

Performance evaluation and comparison between of Thematic and Diversified

CHAPTER- II RESEARCH METHODOLOGY

and Closing Net Assets Values of Funds selected.

OBJECTIVES OF THE STUDY

SCOPE OF THE STUDY