A TRAINING REPORT

ON
( COMPARATIVE ANALYSIS BETWEEN RETURN OF MID AND SMALL
CAP MUTUAL FUND AND NIFTY FIFTY)

Submitted to:
Satyug Darshan Institute of Engineering and Technology
By:
NAME: PREETI
ROLLNO-( 6300200)

Batch 2015 – 2018

In Partial Fulfillment of
Bachelor of Business Administration
(Industry-Integrated)
(Specialization: Financial Services and Banking)
MAHARSHI DAYANAND UNIVERSITY
ROHTAK

(April, 2017)

Satyug Darshan Institute of Engineering and Technology

Bhupani Lalpur Road, Village Bhupani
Faridabad - 121002, NCR, Haryana, India
 DECLARATON
I, Preeti hereby declare that this summer training report is the record of authentic
work carried out by me during the period from 15 July to12 November and has not
been submitted to any other University or Institute for the award of any degree /
diploma etc.

(Signature)
Preeti

Date:
 BONAFIDE CERTIFICATE

This is to certify that Preeti of Satyug Darshan Institute of Engineering and

Technology has successfully completed the project work titled COMPARATIVE
ANALYSIS BETWEEN RETURN OF MID AND SMALL CAP MUTUAL
FUND AND NIFTY FIFTY in partial fulfillment of requirement for the
completion of Bachelor in Business Administration (BBA IIFSB) course as
prescribed by the Maharshi Dayanand University, Rohtak, (HARYANA).

This project report is the record of authentic work carried out by him/her during
the period from 15 July to 12 November. He / She have worked under my
guidance.

(Signature)

Ms. Sapna Taneja

Assistant Professor, BBA Department

Project Guide (Internal)

Date:

Counter signed by

(Signature)

Mr. Ravi Bakshi

Department Coordinator (BBA Department)

Date:
 TABLE OF CONTENT

S.NO PARTICULARS PAGE NO.

1 Introduction to the study

2 Company Profile

3 Research Methodology
 Objective of study
 Research Design
 Method of Data Collection
 Limitations of the Study
4 Data analysis and Interpretation

5 Finding and Suggestion

6 Bibliography

7 Annexure
 ACKNOWLEDGEMENT

Perseverance, inspiration and motivation have always played a great role in the success of any
venture. At this level of understanding it is often different to understand the wide spectrum of
knowledge without proper guidance and advice.

I have great pleasure and privilege in expressing my deep sense of gratitude to my Project Guide
for his guidance and support in completing this project and giving his valuable insights and
suggestion regarding the same, which has helped my project to shape up the way, it is now. It
was only because of his helpful nature that I was given absolute freedom to explore new
directions in this project.

I would take this opportunity to thank our honorable Mr. Amit Virmani for assigning me a
good project, under responsible person.

Finally, I would like to thank all my friends and family who have helped me for the completion
of this project.

Preeti
 PREFACE

There is no doubt, that class room study is quite important for gaining theoretical knowledge, but
practical is also important of students who wants to equip themselves with the real life of
corporate environment in any field of studies. It is also true in Management studies.

Project work is conducted as an integral part of the Management Courses. It provides an

opportunity to apply the theoretically knowledge in practice. Hence, it gives an excellent
opportunity to a student to apply his capability, ability, intellect, knowledge, brief reasoning and
mettle by giving a solution to the assigned problem, which reflects his caliber.
 CHAPTER- 1
INTRODUCTION
MUTUAL FUND

The first introduction of a mutual fund in India occurred in 1963, when the Government of
India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian
mutual fund market. Then a host of other government-controlled Indian financial companies
came up with their own funds. These included State Bank of India, Cañar Bank, and Punjab
National Bank. This market was made open to private players in 1993, as a result of the
historic constitutional amendments brought forward by the then Congress-led government under
the existing regime of Liberalization, Privatization and Globalization (LPG). The first private
sector fund to operate in India was Kothari Pioneer, which later merged with Franklin
Templeton. A mutual fund is a financial intermediary that pools the savings of investors for
collective investment in a diversified portfolio of securities. A fund is “mutual” as all of its
returns, minus its expenses, are shared by the fund’s investors. The Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996 defines a mutual fund as a ‘a fund established
in the form of a trust to raise money through the sale of units to the public or a section of the
public under one or more schemes for investing in securities, including money market
instruments’. According to the above definition, a mutual fund in India can raise resources
through sale of units to the public. It can be set up in the form of a Trust under the Indian Trust
Act. The definition has been further extended by allowing mutual funds to diversify their
activities in the following areas:
 Portfolio management services
 Management of offshore funds
 Providing advice to offshore funds
 Management of pension or provident funds
 Management of venture capital funds
 Management of money market funds
 Management of real estate funds
A mutual fund serves as a link between the investor and the securities market by mobilising
savings from the investors and investing them in the securities market to generate returns.
Thus, a mutual fund is akin to portfolio management services (PMS). Although, both are
conceptually same, they are different from each other. Portfolio management services are offered
to high net worth individuals; taking into account their risk profile, their investments are
managed separately. In the case of mutual funds, savings of small investors are pooled under a
scheme and the returns are distributed in the same proportion in which the investments are made
by the investors/unit-holders. Mutual fund is a collective savings scheme. Mutual funds play an
important role in mobilising the savings of small investors and channelizing the same for
productive ventures in the Indian economy.

HISTORY OF MUTUAL FUNDS IN INDIA

The Evolution:
The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in
the year 1963. The primary objective at that time was to attract the small investors and it was
made possible through the collective efforts of the Government of India and the Reserve Bank of
India. The history of mutual fund industry in India can be better understood divided into
following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87:

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an
act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under
the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was
transferred in the hands of Industrial Development Bank of India
(IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which
attracted the largest number of investors in any single investment scheme over the years. UTI
launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It
launched ULIP in 1971, six more schemes between 1981 & 1984, Children's Gift Growth Fund
and India Fund (India's first offshore fund) in 1986, Master share (India's first equity diversified
scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the
end of 1987, UTI's assets under management grew ten times to Rs 6700 corers.
 Phase II. Entry of Public Sector Funds - 1987-93:
The Indian mutual fund industry witnessed a number of public sector players entering the market
in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the
first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Can bank Mutual
fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual
Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased
seven times to Rs. 47,004 corers. However, UTI remained to be the leader with about 80%
market share
Phase III. Emergence of Private Sector Funds - 1993-96:
The permission given to private sector funds including foreign fund management companies
(most of them entering through joint ventures with Indian promoters) to enter the mutual fund
industry in 1993, provided a wide range of choice to investors and more competition in the
industry. Private funds introduced innovative products, investment techniques and investor-
servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004:

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the
year 1996. The mobilization of funds and the number of players operating in the industry reached
new heights as investors started showing more interest in mutual funds. Investors' interests were
safeguarded by SEBI and the Government offered tax benefits to the investors in order to
encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set
uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all
dividend incomes in the hands of investors from income tax. Various Investor Awareness
Programmers were launched during this phase, both by SEBI and AMFI, with an objective to
educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a
trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual
fund players on the same level.
Advantages:

1. Increased diversification: A fund normally holds many

securities; diversification decreases risk.

2. Daily liquidity: Shareholders of open-end funds and unit investment trusts may sell their
holdings back to the fund at the close of every trading day at a price equal to the closing
net asset value of the fund's holdings.

3. Professional investment management: Open-and closed-end funds hire portfolio

managers to supervise the fund's investments.

4. Ability to participate in investments that may be available only to larger investors. For
example, individual investors often find it difficult to invest directly in foreign market.

5. Service and convenience: Funds often provide services such as check writing.

6. Government oversight: Mutual funds are regulated by the SEC

7. Ease of comparison: All mutual funds are required to report the same information to
investors, which makes them easy to compare.

Disadvantages:

1. Fees

2. Less control over timing of recognition of gains

3. Less preen

4. No opportunity to customize
Types:
There are three principal types of mutual funds in the United States: open-end funds, unit
investment trusts (UITs); and closed-end funds. Exchange-traded funds (ETFs) are open-end
funds or unit investment trusts that trade on an exchange; they have gained in popularity
recently. ETFs are one type of "exchange-traded product". While the term "mutual fund" may
refer to all three types of registered investment companies, it is more commonly used to refer
exclusively to the open-and closed-end funds.

Open-end funds:
Open-end mutual funds must be willing to buy back their shares from their investors at the end
of every business day at the net asset value (NAV) computed that day. Most open-end funds also
sell shares to the public every day; these shares are also priced at NAV. A professional
investment manager oversees the portfolio, buying and selling securities as appropriate. The total
investment in the fund will vary based on share purchases, share redemptions and fluctuation in
market valuation. There is no legal limit on the number of shares that can be issued.

Closed-end funds:

Closed-end funds generally issue shares to the public only once, when they are created through
an initial public offering. Their shares are then listed for trading on stock. Investors who no
longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an
open-end fund). Instead, they must sell their shares to another investor in the market; the price
they receive may be significantly different from NAV. It may be at a "premium" to NAV (i.e.,
higher than NAV) or, more commonly, at a "discount" to NAV (i.e., lower than NAV). A
professional investment manager oversees the portfolio, buying and selling securities as
appropriate.

At the end of 2015, there were 558 closed-end funds in the United States with combined assets of
$261 billion.[8]
Unit investment trusts:

Unit investment trusts (UITs) can only issue to the public once, when they are created. UITs
generally have a limited life span, established at creation. Investors can redeem shares directly
with the fund at any time (similar to an open-end fund) or wait to redeem them upon the trust's
termination. Less commonly, they can sell their shares in the open market. Unit investment trusts
do not have a professional investment manager; their portfolio of securities is established at the
UIT's creation and does not change.

Exchange-traded funds:

A relatively recent innovation, exchange-traded funds (ETFs) is structured as open-end

investment companies or UITs. ETFs are part of a larger category of investment vehicles known
as "exchange-traded products" (ETPs), which, other than ETFs, may be structured as a
partnership or grantor trust or may take the form of an exchange-traded note. Non-ETF
exchange-traded products may be used to provide exposure to currencies and commodities.

ETFs combine characteristics of both closed-end funds and open-end funds. ETFs are traded
throughout the day on a stock exchange. An arbitrage mechanism is used to keep the trading
price close to net asset value of the ETF holdings.

Most ETFs are passively managed index funds, though actively managed ETFs are becoming
more common.
[8]
Investments and classification:

Mutual funds are normally classified by their principal investments, as described in the
prospectus and investment objective. The four main categories of funds are money market funds,
bond or fixed income funds, stock or equity funds, and hybrid funds. Within these categories,
funds may be sub classified by investment objective, investment approach or specific focus.

The SEC requires that mutual fund names be consistent with a fund's investments. For example,
the "ABC New Jersey Tax-Exempt Bond Fund" would generally have to invest, under normal
circumstances, at least 80% of its assets in bonds that are exempt from federal income tax, from
the alternative minimum tax and from taxes in the state of New Jersey.[11]

Bond, stock, and hybrid funds may be classified as either index (passively managed) funds or
actively managed funds.

Money market funds:

Money market funds invest in money market instruments, which are fixed income securities with
a very short time to maturity and high credit quality. Investors often use money market funds as a
substitute for bank savings accounts, though money market funds are not insured by the
government, unlike bank savings accounts.

Money market funds strive to maintain a $1.00 per share net asset value, meaning that investors
earn interest income from the fund but do not experience gains or losses. If a fund fails to
maintain that $1.00 per share because its securities have declined in value, it is said to "break the
buck". Only two money market funds have ever broken the buck—Community Banker's U.S.
Government Money Market Fund in 1994 and the Reserve Primary Fund in 2008.

In 2014, the SEC approved significant changes in money market fund regulation. Beginning in
October 2016, money market funds that are sold to investors and that invest in non-government
securities will no longer be allowed to maintain a stable $1.00 per share net asset value. Instead,
these funds will be required to have a floating net asset value.

At the end of 2015, money market funds accounted for 18% of open-end fund assets.[8]
Bond funds:
Bond funds invest in fixed income or debt securities. Bond funds can be sub-classified according
to the specific types of bonds owned (such as high-yield or junk bonds, investment-
grade corporate bonds, government bonds or municipal bonds) and by the maturity of the bonds
held (short-, intermediate- or long-term). Bond funds may invest in primarily U.S. securities
(domestic or U.S. funds), in both U.S. and foreign securities (global or world funds), or primarily
foreign securities (international funds).

At the end of 2015, bond funds accounted for 22% of open-end fund assets. [8]

Stock funds:
Stock or equity funds invest in common stocks which represent an ownership share (or equity) in
corporations. Stock funds may invest in primarily U.S. securities (domestic or U.S. funds), in
both U.S. and foreign securities (global or world funds), or primarily foreign securities
(international funds). They may focus on a specific industry or sector.

A stock fund may be sub classified along two dimensions: (1) market capitalization and (2)
investment style (i.e., growth vs. blend/core vs. value). The two dimensions are often displayed
in a grid known as a "style box".

Market capitalization ("cap") indicates the size of the companies in which a fund invests, based
on the value of the company's stock. Each company's market capitalization equals the number of
shares outstanding times the market price of the stock. Market capitalizations are typically
divided into the following categories, with approximate market capitalizations in parentheses:

 Micro cap (below $300 million)

 Small cap (below $2 billion)
 Mid cap
 Large cap (at least $10 billion)
Funds can also be classified in these categories based on the market caps of the stocks that it
holds.

Stock funds are also sub classified according to their investment style: growth, value, or blend
(or core). Growth funds seek to invest in stocks of fast-growing companies. Value funds seek to
invest in stocks that appear cheaply priced. Blend funds are not biased toward either growth or
value.

Hybrid funds:
Hybrid funds invest in both bonds and stocks or in convertible securities. Balanced funds, asset
allocation funds, target date or target risk funds and lifecycle or lifestyle funds are all types of
hybrid funds.

Hybrid funds may be structured as funds of funds, meaning that they invest by buying shares in
other mutual funds that invest in securities. Many fund of funds invest in affiliated funds
(meaning mutual funds managed by the same fund sponsor), although some invest in unaffiliated
funds (i.e., managed by other fund sponsors) or some combination of the two.

Expenses:

Investors in a mutual fund pay the fund's expenses. These expenses fall into five categories:
distribution charges (sales loads and 12b-1 fees), the management fee, securities transaction fees,
shareholder transaction fees and fund services charges. Some of these expenses reduce the value
of an investor's account; others are paid by the fund and reduce net asset value.

Recurring fees and expenses—specifically the 12b-1 fee, the management fee and other fund
expenses—are included in a fund's total expense ratio (TER), often referred to simply the
"expense ratio". Because all funds must compute an expense ratio using the same method,
investors may compare costs across funds.

There is considerable controversy about the level of mutual fund expenses.

Management fee:
The management fee is paid to the Management Company or sponsor that organizes the fund,
provides the portfolio management or investment advisory services and normally lends its brand
to the fund. The fund manager may also provide other administrative services. The management
fee often has breakpoints, which means that it declines as assets (in either the specific fund or in
the fund family as a whole) increase. The management fee is paid by the fund and is included in
the expense ratio.

The fund's board reviews the management fee annually. Fund shareholders must vote on any
proposed increase, but the fund manager or sponsor can agree to waive some or all of the
management fee in order to lower the fund's expense ratio.

Distribution charges:
Charges pay for marketing, distribution of the fund's shares as well as services to investors.
There are three types of distribution charges:

 Front-end load or sales charge. A front-end load or sales charge is a commission paid to
a broker by a mutual fund when shares are purchased. It is expressed as a percentage of the
total amount invested or the "public offering price", which equals the net asset value plus the
front-end load per share. The front-end load often declines as the amount invested increases,
through breakpoints. The front-end load is paid by the shareholder; it is deducted from the
amount invested.
 Back-end load. Some funds have a back-end load, which is paid by the investor when shares
are redeemed. If the back-end load declines the longer the investor holds shares, it is called a
contingent deferred sales charges (CDSC). Like the front-end load, the back-end load is paid
by the shareholder; it is deducted from the redemption proceeds.
 12b-1 fees. Some funds charge an annual fee to compensate the distributor of fund shares for
providing ongoing services to fund shareholders. This fee is called a 12b-1 fee, after the SEC
rule authorizing it. The 12b-1 fee is paid by the fund and reduces net asset value.
A no-load fund does not charge a front-end load or back-end load under any circumstances and
does not charge a 12b-1 fee greater than 0.25% of fund assets.

Securities transaction fees:

A mutual fund pays expenses related to buying or selling the securities in its portfolio. These
expenses may include brokerage commissions. Securities transaction fees increase the cost basis
of investments purchased and reduce the proceeds from their sale. They do not flow through a
fund's income statement and are not included in its expense ratio. The amount of securities
transaction fees paid by a fund is normally positively correlated with its trading volume or
"turnover".

Shareholder transaction fees:

Shareholders may be required to pay fees for certain transactions. For example, a fund may
charge a flat fee for maintaining an individual retirement account for an investor. Some funds
charge redemption fees when an investor sells fund shares shortly after buying them (usually
defined as within 30, 60 or 90 days of purchase); redemption fees are computed as a percentage
of the sale amount. Shareholder transaction fees are not part of the expense ratio.

Fund services charges:

A mutual fund may pay for other services including:

 Board of directors or trustees fees and expenses

 Custody fee: paid to a custodian bank for holding the fund's portfolio in safekeeping and
collecting income owed on the securities
 Fund administration fee: for overseeing all administrative affairs such as preparing financial
statements and shareholder reports, SEC filings, monitoring compliance, computing total
returns and other performance information, preparing/filing tax returns and all expenses of
maintaining compliance with state blue sky laws
 Fund accounting fee: for performing investment or securities accounting services and
computing the net asset value (usually every day the Exchanges open)
 Professional services fees: legal and auditing fees
 Registration fees: paid to the SEC and state securities regulators
 Shareholder communications expenses: printing and mailing required documents to
shareholders such as shareholder reports and prospectuses
 Transfer agent service fees and expenses: for keeping shareholder records, providing
statements and tax forms to investors and providing telephone, internet and or other investor
support and servicing
 Other/miscellaneous fees

The fund manager or sponsor may agree to subsidize some of these other expenses in order to
lower the fund's expense ratio.

Controversy:

Critics of the fund industry argue that fund expenses are too high. They believe that the market
for mutual funds is not competitive and that there are many hidden fees, so that it is difficult for
investors to reduce the fees that they pay. They argue that the most effective way for investors to
raise the returns they earn from mutual funds is to invest in funds with low expense ratios.

Fund managers counter that fees are determined by a highly competitive market and, therefore,
reflect the value that investors attribute to the service provided. They also note that fees are
clearly disclosed.

An additional critique of mutual funds is their potential role in herd behavior during asset
bubbles. Australian researchers Preston Teeter and Jorgen Sandberg argue that the explosive
growth of mutual funds during the 1990s resulted in a large number of rookie mutual fund
managers, many of whom were quick to follow industry trends as opposed to carving out their
own unique investment strategies.[9] As a result, funds started to closely mimic one another, and
stock prices, particularly of internet companies, quickly surpassed fundamental valuations.

Definitions of key terms:

Net asset value:

A fund's net asset value (NAV) equals the current market value of a fund's holdings minus the
fund's liabilities (sometimes referred to as "net assets"). It is usually expressed as a per-share
amount, computed by dividing net assets by the number of fund shares outstanding. Funds must
compute their net asset value according to the rules set forth in their prospectuses. Funds
compute their NAV at the end of each day that the New York Stock Exchange is open, though
some funds compute NAVs more than once daily.

Valuing the securities held in a fund's portfolio is often the most difficult part of calculating net
asset value. The fund's board typically oversees security valuation.

Expense ratio:

The expense ratio allows investors to compare expenses across funds. The expense ratio equals
the 12b-1 fee plus the management fee plus the other expenses divided by average daily net
assets. The expense ratio is sometimes referred to as the total expense ratio (TER).

Average annual total return:

The SEC requires that mutual funds report the average annual compounded rates of return for
one-, five-and ten year-periods using the following formula:[12]

P(1+T)n = ERV

Where:
 P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning
of the one-, five-, or ten-year periods at the end of the one-, five-, or ten-year periods (or
fractional portion)

Turnover:

Turnover is a measure of the volume of a fund's securities trading. It is expressed as a percentage

of average market value of the portfolio's long-term securities. Turnover is the lesser of a fund's
purchases or sales during a given year divided by average long-term securities market value for
the same period. If the period is less than a year, turnover is generally annualized.
 CHAPTER -2
COMPANY PROFILE
Top 10 small and mid cap Mutual Funds to invest in 2015

A few days back we had reviewed the top large cap funds based on CRISIL’s most recent
ranking. In this blog, we will review the top small and midcap funds While, in the last one year
the large cap equity mutual funds gave on average over 61% trailing annualized returns, the
returns of small and midcap equity funds were even higher over the last one year. The chart
below shows the comparison of average annualized returns of large cap funds versus small and
midcap fund categories over 1 year, 3 years and 5 years investment horizon.

In fact, on a trailing annualized basis small and midcap funds gave the highest returns among all
mutual fund categories over the last 3 year period. While small and midcap funds have the
potential to give higher returns than large cap funds, the intrinsic risk of small and midcap funds
is higher than large cap funds. However, small and midcap funds appropriately weighted in the
investment portfolio based on the investor’s risk tolerance level, can significantly enhance the
overall portfolio total returns.
In this blog, we will review top 10 small and midcap equity funds based on CRISIL’s mutual
fund rankings for the last quarter. CRISIL ranks equity funds based on several parameters like
average 3 year annualized returns, volatility, portfolio concentration risk (both industry and
company) and portfolio liquidity risk. In addition to selecting funds based on their relative
ranking within the small and midcap categories, we have also selected consistent performers
among small and midcap funds. Each of the small and midcap equity funds in our selection has
been assigned either Rank 1 or 2 by CRISIL. Further, in addition to CRISIL ranking, we have
applied MORNINGSTAR rating as a secondary filter for our fund selection. The table below
lists the top 10 small and midcap funds, in order of the highest 1 year annualized returns. Returns
in the table are for growth options in regular plans, based on NAVs on Feb 25, 2014.
Let us now look at SIP returns of each of these funds over the last 5 years, assuming a monthly
SIP of र 5,000 made in the growth option of these schemes on the first working day of every
month. Please note that since the Reliance has not yet completed 5 years, the SIP return of this
fund is since inception (NAVs as on February 25, 2015).

For each of these schemes, the investment value as on February 25 2015 is more than double of
what the total investment made by the investor. Further, for each of these schemes the SIP return
is more than the lump sum return. This is a testimony of the power of SIPs in wealth creation.
Conclusion

In this article, we have reviewed the top picks among small and mid cap equity funds based on
the most recent CRISIL rankings and Morningstar ratings. While all these funds have
demonstrated a strong track record of performance, the suitability of each of these funds would
depend on your risk profile and time horizon. You should consult with your financial adviser if
these small and midcap funds are suitable for your portfolio.

Top 7 Best Mid and Small Cap Equity Mutual Funds to Invest in 2016:

In the first part of this series, Top 7 Small and Midcap Equity Mutual Funds for investment in
2016: , we saw the top 7 small and midcap funds, based on CRISIL’s latest mutual fund ranking
(for quarter ended March 2016) and also our internal quartile ranking based ranking criteria.
Here is a brief re-cap of the top 7 midcap funds.
DSP Black Rock Micro Cap Fund

The scheme was launched in 2007 and has been one of the top performing small / midcap funds
for several years. The fund has given over 18% annualized returns since inception. The AUM of
this fund has crossed र2,500 corers, but DSP Black Rock is controlling the AUM by imposing a
limit on the amount of one time purchases (Maximum र 2 Laces per day per PAN number). The
expense ratio of the fund is 2.49%. Visit Somber and Jay Kothari are the fund managers of this
scheme. The chart below shows the 3 year rolling returns of DSP Black Rock Micro Cap Fund
over the last 5 years. We have chosen a three year rolling returns period, because investors must
have a long investment horizon for investing in equity funds. For midcap funds in fact, investors
should have a longer investment horizon than large cap or diversified equity funds

You can see that, the fund has not only beaten the benchmark consistently, but the three year
rolling returns have consistently been exceedingly good. From a portfolio perspective, the fund is
biased towards small cap segment. From an investment style standpoint, the fund managers
invest in growth stocks. While the volatility of the fund is above average, the Sharpe Ratio is
excellent (for more scheme performance and other details, please see our fund research page).
This has been an investor favorite for the last few years. SIP is the best mode of investment for
small and midcap funds, because these funds are intrinsically more volatile. No wonder this fund
has been an investor favorite for the last few years.

Franklin India Smaller Companies Fund

The scheme was launched in 2006 and is another investor favorite in small/midcap space, by
virtue of its performance. The fund has given nearly 15% annualized returns since inception. The
AUM of this fund is nearlyर 2,800 corers, which is quite comfortable given that the fund
managers invest primarily in midcap companies. The expanse ratio of the fund is 2.38%. R Jana
Karajan, Hair Sham sunder and Shrikes Nair are the fund managers of this scheme. The chart
below shows the 3 year rolling returns of Franklin India Smaller Companies Fund over the last 5
years.

You can see that, the fund has not only beaten the benchmark consistently, but the three year
rolling returns have consistently been exceedingly good. From a portfolio perspective, the fund is
biased towards midcap segment. From an investment style standpoint, the fund managers invest
in growth stocks. Even though the volatility of the fund is below average, the Sharpe Ratio is
excellent, indicating excellent risk adjusted performance (for more scheme performance and
other details.

Marie Asset Emerging Blue-chip Fund

The scheme was launched in 2010 and built a formidable reputation in small/midcap space, by
virtue of its performance. The fund has given nearly 22% annualized returns since inception. The
AUM of this fund is over र1,460 corers, while the expense ratio of the fund is 2.46%. Niles
Saran is the fund manager of this scheme. The chart below shows the 3 year rolling returns of
Marie Asset Emerging Blue chip Fund over the last 5 years.
Like the previous two funds, this fund too has not only beaten the benchmark consistently, but
the three year rolling returns have consistently been exceedingly good. From a portfolio
perspective, the fund invests in companies whose market cap is at least र 100 cores. From an
investment style standpoint, the fund manager has a bias for growth stocks. Even though the
volatility of the fund is below average, the Sharpe Ratio is excellent (for more scheme
performance and other details.

Birla Sun Life MNC Fund

This is one of the oldest thematic funds. The fund was launched in 1994 and has र 3,220 corers.
The expense ratio of the fund is 2.37%. Industry veteran, Ajay Greg, is the fund manager of this
scheme. The fund has over 20% compounded annual returns since inception. By investing र 1
lack in the fund, at the time of its launch, the investor could have grown his or her wealth by
nearly र 60 lacks. The chart below shows the 3 year rolling returns of Birla Sun Life MNC Fund

years.
You can see that, the fund has not only beaten the benchmark consistently, but the three year
rolling returns have consistently been exceedingly good. The fund has given more than 20% 3
year rolling returns over the last 5 years. From a portfolio perspective, the fund invests
exclusively in securities of multinational companies in order to achieve long term growth of
capital at relatively moderate levels of risk. From an investment style standpoint, the fund
manager has a bias for growth stocks. The fund has excellent Sharpe Ratio (for more scheme
performance and other details.
Reliance Small Cap Fund
This is another very popular small/midcap fund. We reviewed this fund a few days back (please
see our fund review, Reliance Small Cap Fund: More than 2.5 times returns in the last years).
The fund has nearly र 2,000 corers of AUM and an expense ratio of 2.1%. Industry veteran,
Sunil Sing hernia, also the CIO of Reliance Mutual Fund, is the fund manager of this scheme.
The fund has given 18% annualized returns since inception. The chart below shows the 3 year
rolling returns of Reliance Small Cap Fund over the last 5 years.

You can see that, the fund has not only beaten the benchmark consistently, but the three year
rolling returns have consistently been exceedingly good. The fund has given more than 20% 3
year rolling returns over the last 5 years. From a portfolio perspective, the fund is biased towards
small cap segment. From an investment style standpoint, the fund managers invest in growth
stocks. While the volatility of the fund is above average, the Sharpe Ratio is excellent (for more
scheme performance and other details.

Canada Robe co Emerging Equities Fund

This is another popular small/midcap fund from Canada Robe co stable. The fund was launched
in 2005 and has nearly र 1,000 corers of AUM. The expense ratio of the fund is 2.47%. Ravi
Goal Krishnan is the fund manager of this scheme. The fund has given 17% annualized returns
since inception. The chart below shows the 3 year rolling returns of Canada Robe co Emerging
Equities Fund over the last 5 years.

You can see that, the fund has not only beaten the benchmark consistently, but the three year
rolling returns have consistently been exceedingly good. The fund has given more than 20% 3
year rolling returns over the last 5 years. From a portfolio perspective, the fund is biased towards
mid cap segment. The fund manager invests in companies whose market cap ranges from र 150
to 500 corers. From an investment style standpoint, the fund managers invest in a blend of value
and growth stocks. While the volatility of the fund is above average, the Sharpe Ratio is
excellent (for more scheme performance and other details.
SBI Magnum Midcap Fund

This is another popular small/midcap fund from SBI. The fund was launched in 2005 and has
nearly र 1,777 corers of AUM. The expense ratio of the fund is 2.55%. Shine Adana is the fund
manager of this scheme. The fund has given 18% annualized returns since inception. The chart
below shows the 3 year rolling returns of SBI Magnum Midcap Fund over the last 5 years.

You can see that, the fund has not only beaten the benchmark consistently, but the three year
rolling returns have consistently been exceedingly good. The fund has given more than 20% 3
year rolling returns over the last 5 years. From a portfolio perspective, the fund is biased towards
mid cap segment. From an investment style standpoint, the fund managers invest in growth
stocks. Even though the volatility of the fund is below average, the Sharpe Ratio is excellent (for
more scheme performance and other details.

Conclusion

In this 2 part series, we reviewed the top 7 small and midcap equity mutual funds, based on a
combination of CRISIL mutual fund ranking (for the quarter ended March 2016) and our quartile
ranking based criteria. Small and Midcap Funds in the right proportion can significantly improve
the risk adjusted returns of your overall portfolio, over a long investment horizon (please see our
post, what should be the percentage of mid caps in your mutual fund portfolio: Analytical
Perspective). Investors should consult with their financial advisors, if the funds discussed in this
series, are suitable for their mutual fund portfolios.
 NIFTY fifty

NIFTY 50 Index

1995

Foundation

Operator India Index Services and

Products

Exchanges National Stock Exchange of

India

Constituents 50

Type Large cap

Market cap INR billion (2014)

Weighting Capitalization-weighted
method

Website Official home page

The NIFTY fifty indexes is National Stock Exchange of India's benchmark stock market
index for Indian equity market. Nifty is owned and managed by India Index Services and
Products (IISL), which is a wholly owned subsidiary of the NSE Strategic Investment
Corporation Limited. IISL had marketing and licensing agreement with Standard & Poor's for
co-branding equity indices until 2013.

NIFTY fifty Index has shaped up as a largest single financial product in India, with an ecosystem
comprising: exchange traded funds (onshore and offshore), exchange-traded futures and options
(at NSE in India and at SGX and CME abroad), other index funds and OTC derivatives (mostly
offshore).NIFTY 50 is the world’s most actively traded contract. WFE, IOMA and FIA surveys
endorse NSE’s leadership position.

The NIFTY fifty covers 22 sectors of the Indian economy and offers investment managers
exposure to the Indian market in one portfolio. During 2008-12, NIFTY 50 Index share of NSE
market capitalization fell from 65% to 29%[2] due to the rise of sect oral indices like NIFTY
Bank, NIFTY IT, NIFTY Next 50, etc. The NIFTY 50 Index gives 29.70% weight age to
financial services, 0.73% weight age to industrial manufacturing and nil weight age to
agricultural sector.

The NIFTY 50 index is a free float market capitalization weighted index. The index was initially
calculated on full market capitalization methodology. From June 26, 2009, the computation was
changed to free float methodology. The base period for the CNX Nifty index is November 3,
1995, which marked the completion of one year of operations of National Stock Exchange Equity
Market Segment. The base value of the index has been set at 1000, and a base capital of Rs 2.06
trillion.

History

Formerly known as the S&P CNX Nifty Index, it was renamed in 2013 with the expiration of
agreement between IISL and Standard and Poor’s Financial Service on 31st Jan 2013.

List of 50 companies that form part of NIFTY fifty Index as on 11 March 2016:
Company Name Symbol Sector

ACC Limited ACC Cement

Adani Ports & SEZ Limited ADANIPORTS Infrastructure

Ambuja Cements Ltd. AMBUJACEM Cement

Asian Paints Ltd. ASIANPAINT Paint

Axis Bank Ltd. AXISBANK Banking

Bajaj Auto Ltd. BAJAJ-AUTO Automobiles

Bank of Baroda BANKBARODA Banking

Bharat Heavy Electricals Limited BHEL Electrical Equipment

Bharat Petroleum Corporation BPCL Oil & Gas

Bhatia Airtel Ltd. BHARTIARTL Telecommunications

Bosch Ltd. BOSCHLTD

Company Name Symbol Sector

Cairn India Ltd. CAIRN Oil & Gas

Cipla Ltd. CIPLA Pharmaceuticals

Coal India Ltd. COALINDIA Metals

Dr. Reddy's Laboratories Ltd. DRREDDY Pharmaceuticals

GAIL (India) Ltd. GAIL

Grasim Industries Ltd. GRASIM

HCL Technologies Ltd. HCLTECH Information Technology

Banking & Financial

HDFC Bank Ltd. HDFCBANK
Services

Hero MotoCorp Ltd. HEROMOTOCO Automobiles

Hindalco Industries Ltd. HINDALCO Metals

Hindustan Unilever Ltd. HINDUNILVR Consumer Goods

Company Name Symbol Sector

Housing Development Finance Corporation

HDFC Financial Services
Ltd.

ITC Limited ITC Consumer Goods

Banking & Financial

ICICI Bank Ltd. ICICIBANK
Services

Idea Cellular Ltd. IDEA Telecommunications

IndusInd Bank Ltd. INDUSINDBK Banking

Infosys Ltd. INFY Information Technology

Kotak Mahindra Bank Ltd. KOTAKBANK Financial Services

Larsen & Toubro Ltd. LT

Lupin Limited LUPIN Pharmaceuticals

Mahindra & Mahindra Ltd. M&M Automobiles

Maruti Suzuki India Ltd. MARUTI Automobiles

Company Name Symbol Sector

NTPC Limited NTPC Electric Utility

Oil & Natural Gas Corporation Ltd. ONGC Oil & Gas

PowerGrid Corporation of India Ltd. POWERGRID Electric Utility

Punjab National Bank PNB Banking

Reliance Industries Ltd. RELIANCE Energy

Banking & Financial

State Bank of India SBIN
Services

Sun Pharmaceutical Industries Ltd. SUNPHARMA Pharmaceuticals

Tata Consultancy Services Ltd. TCS Information Technology

Tata Motors Ltd. TATAMOTORS Automobiles

Tata Power Co. Ltd. TATAPOWER Electric Utility

Tata Steel Ltd. TATASTEEL Steel

Company Name Symbol Sector

Tech Mahindra Ltd. TECHM Information Technology

UltraTech Cement Ltd. ULTRATECH Cement

Vedanta Ltd. VEDL Metals & Mining

Wipro WIPRO Information Technology

Banking & Financial

Yes Bank Ltd. YESBANK
Services

Zee Entertainment Enterprises Ltd. ZEEL Media & Entertainment

Major falls

On the following dates, the NIFTY fifty index suffered major single-day falls (of 150 or more
points)

1. Over 2016 --- 229.45 Points (driven by US election results & demonetization move by
the government)
2. 24 June 2016 --- 181.85 Points (driven by the Bruit referendum)[6]
3. 24 Aug 2015 --- 490.95 Points (driven by meltdown in the Chinese stock market)
4. 16 Aug 2013 --- 234.45 Points(because of rupee depreciation)[8]
5. 27 Aug 2013 --- 189.05 Points
6. 03 Sep Aug 2013 --- 209.30 Points
 7. 06 May 2015 - NSE Nifty slipped below the 8,200-level by falling 179.25 points or 2.15
per cent to 8145.55. Besides, overnight losses in the US markets on worries about
surging oil prices, poor trade data and growing tensions over the Greek debt crisis
weighed on sentiments.
8. 1997 Asian Financial Crisis - Investors deserted emerging Asian shares, including an
overheated Hong Kong stock market. Crashes occur in Thailand, Indonesia, South
Korea.

Nifty fifty Companies – List & Sector-wise

Weight age

Here is a breakdown of the 50 companies which constitute the CNX Nifty. Over the last decade,
while sect oral weight-age has remained largely similar, the constituent companies have
constantly changed.

NSE has announced the following changes in the composition of Nifty 50 index. The
replacement of stocks in the index, change in weight age of existing companies will be effective
from April 1, 2016.

Removed:
  Cairn
 Vedanta
 Punjab National Bank
Added:
 Aura Parma
 Bhatia Inflate
 Either Motors
 Tata Motors DVR

Notable Facts:

 Financial Services and Information Technology contribute 40.81% to the overall weight-
age.
 There are 5 Pharmaceutical companies. India is amongst the biggest pharmaceutical
exporters in the world.
 Of all things, cigarettes still have a dominant weight-age in the pie.
 No modern day e-commerce businesses find place in the CNX Nifty. Compare this with the
U.S. where Face book, Amazon, e-Bay and Yahoo are all part of the NASDAQ 100.
 The breakup hardly showcases India as a developing economy. Construction, Infrastructure,
Industrial manufacturing and cement put together contribute 6.09%. Energy and power is at
15.17%
 6 out of the 10 financial services companies are private sector banks. Consider the fact that
in India, there are 24 listed public sector banks and only 16 listed private sector banks. This
is significantly different from how things were a decade back.

 CHAPTER-3

RESEARCH METHODOLOGY
Research methodology is a way to systematically study & solve the research problems. If a
research wants to claim his study as a good study. He must clearly state the methodology
adopted in conducting the research so that it may be judged by the reader whether the
methodology of work done is so or not.

RESEARCH PROBLEM

I am trying to study of comparative analysis between returns of mid and small cap mutual fund
and nifty fifty.

Sources of Data

Both primary and secondary sources of data have been used to collect information:

1. The primary data is collected through structured unbiased questionnaire and personal
interviews. For this purpose the structure questionnaire was administered for the respondent.

2. The secondary data, on the other hand is collected through books, magazines and websites.

Sample size

The overall sample involved in the study consisted of 78 individuals and corporate. Keeping
view and limited sources of time, a limited sample of individuals from local area of city of
Faridabad was picked up. It was fixed before hand and every effort was made to cover the given
number of individuals within the available time for collection of data for this report. The data
was collected with the help of questionnaire, himself by the researcher.

Sample design

The selection of respondents for our study is done on the basis of convenient sample.
RESEARCH OBJECTIVES

 The first and the foremost objective of the present study is to evaluate comparative
analysis between returns of mid and small cap mutual fund and nifty fifty.
 To analyze the performance of mid and small cap mutual fund and nifty fifty.
 To evaluate risk and return of mid and small cap mutual fund and nifty fifty.
 Comparison and analysis of selected funds on the basis of :
o Alpha
o Beta
o Standard Deviation
o Sharpe Ratio.
 CHAPTER-4
DATA ANALYSIS
AND
INTERPRETATION
 Data Analysis & Interpretation

1. Which age group invests the money in mutual fund scheme?

Interpretation - Here, it is been found that most of the investors i.e,35% of the investors who
invest in Mutual Fund lies in between the age group of 36-40, they are more reluctant as well as
experienced in this field of Mutual Fund. Then the Second highest age group lies in between the
age group of 41-45 (22%), they are also aware of the benefits in investing in mutual fund. The
least interested group is the Youth Generations.
 2. Analysis of investor’s qualification.

Interpretation - Out of my survey of 100 people, 71% of the investors are Graduates and
Post Graduates and 16.67% are Under Graduates and Others, around 12.5%, which may include
persons who have passed their 10th standard or 12th standard invests in Mutual Funds.
 3. Analysis of investors’ Occupation

Interpretation - Here it is amazed to see that around 46% of the investment is been invested
by the persons working in Private sectors, according to them investing in Mutual Funds is more
safer as well as more gainer. Then we find that the businessmen of around 25%gives more
preference in investing in mutual funds, they think that investing in mutual fund is better than
investing in shares as well as Post office. Next we see that the persons working in Government
sectors of around 24% only invests in Mutual Fund.
 4. What is the monthly family income?

Interpretation - Here, we find that investors of around 43% with the monthly income of Rs.
>30000 are the most likely to invest in Mutual fund, than any other income group.
 5. What criteria being followed by the investors before investing?

Interpretation - As it can be clearly stated from the above Diagram that investors before
investing, the main criteria that they used to give more Preference is Low Risk. According to
them, if a scheme is low risk, it may or may not give a very good return, but still 56% of the
investors choose low risk as the option while investing in Mutual Funds. Then we see that 27%
of the investors take High return as one of their most important criteria. According to them, if
there is no high return then we should opt for Post office and not mutual fund.11% of the
investors take trust as one of their important factors only 4% of the Investors think liquidity as
their most preferable options.
 6. Preference towards mode of investment

Interpretation - It can be clearly stated from the above Figure that 82% of the investors like
to invest in SIP, as the investor feels that they are more comfortable to save via SIP than the
Long term. While 18% of the investors find SIP as very burdensome, and they are more reluctant
to save in Long term investment.
 7. What are the objectives of investment?

Interpretation - Here we see that 36% of the investor’s objectives are to preserve the

principal amount, so that it can be used as a savings for the future period. While 22% investors
invest to get derive their current income through investing in Mutual Funds. While 15% and
17% of the investors invest to get a conservative as well as aggressive growth.
 8. Awareness about Mutual Fund?

Interpretation -. From The total lot of 100 people, 96 people are actually aware of the fact of
Mutual fund are regular investors of Mutual Funds.4 People were there who have just heard the
name or rather are just aware of the fact of existence of the word called Mutual Fund, but doesn’t
know anything else about Mutual Funds.
 9. In which place investor invest the money in Mutual Fund?

Interpretation - Here from the Line Graph it can be clearly stated that around 46% of the
investors came to know the benefits of Mutual Fund from Financial Advisors. According to the
suggestions given by the financial advisors, people use to choose Mutual Funds Scheme. Then
Secondly 24% and 21% of the people used to know from Advertisement and Peer group
respectively. Lastly 9% of the investors do invests after being intimated by the Banks about the
benefits of Mutual Fund.
 10. Which mutual fund company’s investors prefer to invest in?

Interpretation - From this above Pie Chart it can be clearly stated that 45% , 17%of the
people like to invest in large cap companies where return is comparatively less but risk is low
thus they invest in Reliance, SBI respectively.15%, 10% of the people like to invest in Mutual
Fund Companies like HDFC, UTI, etc. where risk is slightly higher than the above two
mentioned companies as well as return is also slightly hig13% of the investors like to invest in
the Small Cap’s and Mid Cap’s companies
 CHAPTER-5

FINDING AND CONCLUSION

 FINDING

Through this Project the results that was derived are-

 People who lie under the age group of 36-40 have more experience and are more
interested in investing in Mutual Funds.
 There was a lot of lack of awareness or ignorance, that’s why out of 200 people, 120
people have invested in Mutual Fund and 80 people is unaware of investing in Mutual
Funds.
 Generally, People employed in Private sectors and Businessman is more likely to
invest in Mutual Funds, than other people working in other professions.
 Generally investors whose monthly income is above Rs. 20001-30000 are more likely
to invest their income in Mutual Fund, to preserve their savings of at least more than
20%.
 People generally like to save their savings in Mutual Fund, Fixed Deposits and
Savings Account.
 Many people came to know about Mutual Fund from Financial Advisors,
Advertisement as well as from their Peer group, and they generally invest in the
Mutual Fund by taking advices from their Legal Advisors.
 Investors generally like to invest in Large Cap Companies like Reliance, SBI, etc. to
minimize their risk.
 The most popular medium of investing in Mutual Fund is through SIP and moreover
people like to invest in Equity Fund though it is a risky game.
 The main Objective of most of the Investors is to preserve their Income.
 CONCLUSION

Mutual Funds now represent perhaps most appropriate investment opportunity for most
investors. As financial markets become more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing. As the investor always try to maximize the returns and minimize the risk.
Mutual fund satisfies these requirements by providing attractive returns with affordable risks.
The fund industry has already overtaken the banking industry, more funds being under mutual
fund management than deposited with banks. With the emergence of tough competition in this
sector mutual funds are launching a variety of schemes which caters to the requirement of the
particular class of investors. Risk takers for getting capital appreciation should invest in growth,
equity schemes. Investors who are in need of regular income should invest in income plans.

The stock market has been rising for over three years now. This in turn has not only protected the
money invested in funds but has also to help grow these investments.

This has also instilled greater confidence among fund investors who are investing more into the
market through the MF route than ever before.

Reliance India mutual funds provide major benefits to a common man who wants to make his
life better than previous.

The mutual fund industry as a whole gets less than 2 per cent of household savings against the 46
per cent that go into bank deposits. Some fund managers say this only indicates the sector's
potential."If mutual funds succeed in chipping away at bank deposits, even a triple digit growth
is possible over the next few years.
 CHAPTER-6

BIBLIOGRAPHY

A) Books

 Pandean, Punithavathy Security Analysis and Portfolio Management, Sixth Edition.

 Kothari, C.R. Research Methodology, Second Edition Vishay Parkas an, New Delhi.
 Kilter, Philip Marketing Management, Ninth Edition, Prentice Hall of India Pvt. Ltd.,
New Delhi.
Fisher, Donald E. and Jordan, Ronald J. Security Analysis and Portfolio Management, Sixth
Edition.
CHAPTER-7

ANNEXURE
 QUESTIONNAIRE

Sample Questionnaire
Name: ................... Age: …………….. Mob. ……………

Ques1. Which age groups invest the money in mutual fund scheme?

(a) >=30 (b) 31-35 (c) 36-40 (d) 46-50

Ques2. What is the Qualification?

(a) Under-graduation (b) Graduation (c) Post Graduation (d) Others

Ques3. What is your Occupation?

(a) Government (b) Private (c) Business (d) Others

Ques.4 What is your monthly family income?

(a) <=10000 (b) 10001-20000 (c) 20001-30000 (d) >30000

Ques.5 What criteria being followed by the investors before investing?

(a) Liquidity (b) Low risk (c) High return (d) Trust

Ques.6 Which modes of investment will you prefer?

(a) Long term (b) short term

Ques.7 What is the Objective of investment?

(a) Preservation (b) Current Income (c) Conservative Growth (d) Aggressive
Growths
Ques.8 Are you aware about mutual fund?

(a) Yes (b) No

Ques.9 In Which place investor invest the money in mutual fund?

(a) Advertisement (b) peer group (c) bank (d) financial advisor

Ques.10 Which Mutual Fund Company you will prefer to invest?

(a) Reliance (b) SBI (c) UTI (d) HDFC (e) Others