Sector Fund - Risk or Opportunity For Investors

S.P. MANDALI’S PRIN L. N.
WELINGKAR INSTIUTE OF MANAGEMENT

DEVELOPMENT & RESEARCH
SUMMER INTERNSHIP RESEARCH PROJECT
ON
SECTORAL FUNDS- RISKS AND OPPORTUNITIES FOR THE INVESTOR
BY
GANESH JAIN
PGDM E-Biz 2019-21
SPECIALIZATION: FINANCE
ROLL NO.: 17
Under the Guidance of

Prof. Vanita Patel
Prin.L.N. Welingkar Institute of Management Development and Research, Mumbai.

ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my college Prin. L.N. Welingkar Institute
of Management Development and Research, Mumbai to provide me with the opportunity to work
on this research project. I would also like to thank my institute mentor, Prof. Vanita Patel, Dean-
Finance, my Head of Department, Prof. Sandeep Kelkar, and all other faculties who guided me
through my research project and provided blessed me with their invaluable time and guidance.
Last, but not the least, I would like to thank my family and all friends who gave their direct and
indirect inputs towards my project.

TABLE OF CONTENTS
S. No. Title Page No.
1 Executive Summary 1
2 Mutual Fund Industry 2
2.1 Asset Management Company 6
2.2 Sector Fund 8
2.3 Banking & Financial Services Fund 9
2.4 FMCG Fund 14
2.5 Pharma & Healthcare Fund 17
2.6 Technology or IT Fund 21
2.7 Infrastructure Fund 25
2.8 Energy Fund 30
2.9 Service Fund 33
3 Comparative Return Analysis of Sector Funds 37
4 Comparative Risk Analysis of Sector Funds 39
5 Conclusion 40
6 References 41

LIST OF TABLES
I List of Mutual Fund Companies in India 6
II Sector wise composition of NSE Nifty 9
III Banking & Financial Fund Return Analysis 10
IV Banking & Financial Fund Risk Analysis 11
V Banking & Financial Fund Portfolio Analysis 13
VI FMCG Fund Return Analysis 15
VII FMCG Fund Risk Analysis 16
VIII Composition of the FMCG Fund 16
IX Pharma & Healthcare Fund Return Analysis 18
X Pharma & Healthcare Fund Risk Analysis 19
XI Pharma & Healthcare Fund Risk Portfolio Analysis 20
XII IT Fund Return Analysis 22
XIII IT Fund Risk Analysis 23
XIV IT Fund Portfolio Analysis 23
XV Infrastructure Fund Return Analysis 26
XVI Infrastructure Fund Risk Analysis 27
XVII Infrastructure Fund Portfolio Analysis 28
XVIII Energy Fund Return Analysis 31
XIX Energy Fund Risk Analysis 31
XX Energy Fund Portfolio Analysis 32
Service Fund Return Analysis 35
XXI
XXII Service Fund Risk Analysis 35

XXIII Service Fund Portfolio Analysis 36
XXIV Service Fund Composition 36
XXV Comparative Return Analysis of Sector Funds 37
XXVI Comparative Risk Analysis of Sector Funds 39

LIST OF GRAPHS
I Average Asset Under Management (AAUM) 2
II SIP Contribution (Rs. Crore) 3
III Geography Wise Break-up of AAUM 3
IV February 2020 Assets vis-à-vis March 2020 Assets 4
V Accounts Across Investor Type 4
VI Types of Mutual Fund Schemes 5
VII Performance of Nifty 50 vis-à-vis Bank Nifty 10
VIII Performance of Nifty 50 vis-à-vis Nifty FMGC 15
IX Performance of Nifty Pharma 17
X Performance of Nifty 50 vis-à-vis Nifty Pharma 18
XI Performance of Nifty 50 vis-à-vis Nifty IT 22
XII Performance of Nifty 50 vis-à-vis Nifty Infra 26
XIII Performance of Nifty 50 vis-à-vis Nifty Energy 30
XIV Performance of Nifty Service 33
XV Composition of Nifty Service 34
XVI Comparative Return Analysis of Sector Fund- 1 Year Return 37
XVII Comparative Return Analysis of Sector Fund- 3 Years Return 38
XVIII Comparative Return Analysis of Sector Fund- 5 Years Return 38

Executive Summary
Saving forms, a vital part of any economy of any nation. It is very much important that the cash in
the form of saving must be invested to infuse the money back within the economy, there are
multiple options available for the investor to invest in. An investment is also known as the
commitment of your present consumption to earn some positive returns.
The multiple options available to investor are investment in Stocks, Provident Fund, Fixed Deposit
and a lot of others. Among the available options investment in Mutual Fund is most popular
because the funds are managed by industry experts, various products available to investors, small
capital required and so on.
There are multiple funds option provided by Mutual fund companies to invest in, one such fund is
Sector Fund where the AMC (Asset Management Company) invest in companies of that particular
sector for e.g. Banking Fund – majority of the investment portion will be invested in shares/ stocks
of Banks, NBFC (Non-Banking Financial Company), Insurance Company. Just like Banking Fund
there are various such funds that aims at particular sector of an economy e.g. IT Fund, FMCG
Fund, Energy Fund, Service Fund, Pharma & Healthcare Fund etc.
Investing in sector fund is like betting on the companies of that sector to earn return, this help
investor to invest in multiple companies of that sector and not just one company with the limited
capital.
After reading this report, the reader will:
• Have an understanding of mutual fund industry

• Have an understanding of various sectors and their fund
• Know what were the past returns of sector funds
• Know the risk & opportunity of sector funds
This report is based on secondary research of the past trend of sector funds, the risk associated
with each fund, portfolio analysis of the funds.
1
Mutual Fund Industry in India: -
Individuals or institutions when they have savings, they would like to invest with the aim of
generating positive returns from that investment. There are multiple avenues in which one can
invest such as equity, mutual funds, real estate, gold etc.
To get good returns one must have knowledge of the economy as well as performance of the
avenue in which they invest. For a common man it becomes difficult to manage both the
investment and the profession or job or business at the same time and hence the concept of Mutual
Fund has evolved to manage the fund on behalf of the investor.
According to Investopedia Mutual Funds are described as “A mutual fund is a type of financial
vehicle made up of a pool of money collected from many investors to invest in securities like
stocks, bonds, money market instruments, and other assets. Mutual funds are operated by
professional money managers, who allocate the fund's assets and attempt to produce capital gains
or income for the fund's investors. A mutual fund's portfolio is structured and maintained to match
the investment objectives stated in its prospectus.”
Average Asset Under Management (AAUM)
Graph I: Average Asset Under Management (AAUM)
Source: - https://www.amfiindia.com/Themes/Theme1/downloads/home/Industry-Trends.pdf
2
The Average Asset Under Management of Indian Mutual Fund Industry as of March 2020 is
Rs.24.71 Lakh Crore. In case of year 2019 we have seen a growth from 24.58 Lakh crore to 27.26
Lakh crore which is 10.90% even though 2019 was not a good year for financial markets.
SIP Contribution: -
Graph II: SIP Contribution (Rs. Crore)
SIP Contribution (Rs. Crore)
120000
100084
100000 92693
80000 67190
60000
43921
40000
20000
0
2016-2017 2017-2018 2018-2019 2019-2020
Source: https://www.amfiindia.com/mutual-fund
Systematic Investment Plan or SIP has been gaining popularity among retail investors as it helps
them in many ways such as investor doesn’t have to constantly watch market, SIP helps in Rupee
cost averaging it also helps to build the habit of investing.
SIP contribution has grown at a CAGR of 22.86% from 2016-2017 to 2019-2020.
Geography Wise Break-up of AAUM: -
Graph III: Geography Wise Break-up of AAUM
Geography Wise Break-up AAUM
15.58
84.42
T30 B30
Source: https://www.amfiindia.com/Themes/Theme1/downloads/home/B30vsT30.pdf
3
T30 represent Top-30 Cities in India and B30 represent Beyond the Top-30 Cities in India. Out
of total Rs 24.71 trillion T-30 contributes 84.42% i.e. Rs. 20.85 trillion and remaining Rs. 3.84
trillion is contributed by B30 cities.
Graph IV: February 2020 Assets vis-à-vis March 2020 Assets
Source:- https://www.amfiindia.com/Themes/Theme1/downloads/home/B30vsT30.pdf
AAUM from B30 location has decreased from Rs 4.46 trillion in February 2020 to Rs 3.84 trillion
in March 2020.
Accounts Across Investor Type: -
Graph V: Accounts Across Investor Type
Accounts Across Investor Type
8,167,846 743,415
78,215,464
Retail investor accounts HNI accounts Institutional investor accounts
Source: https://www.amfiindia.com/Themes/Theme1/downloads/home/FolioandTicketSize.pdf
4
There are a total 8.71 Crore Mutual Fund Accounts as of December 2019. Out of which 89.8%
accounts are of retail investors followed by 9.4% of HNI accounts and the least accounts are of
Institutional Investors accounts.
Mutual Fund Schemes: -
Graph VI: Types of Mutual Fund Schemes
Top 3 Schemes are: -

a) Equity Oriented Scheme
b) Hybrid Scheme
c) Solution Oriented Scheme
Source: -https://www.amfiindia.com/Themes/Theme1/downloads/home/FolioandTicketSize.pdf
There are various types of mutual fund schemes offered by mutual fund companies to their
investor, and investor select an appropriate scheme based on their goals, investment period,
investment amount etc. The most favorite schemes among investor are Equity Oriented, Hybrid
Scheme and Solution Oriented Scheme.
a) Equity Oriented Scheme: - Equity oriented schemes are also known as growth scheme
where majority of the portion is invested in stock/ shares of companies.
b) Hybrid Scheme: - From the name itself we come to they that this scheme invests in both
equity as well as debt. Aggressive ones invest majority portion in equity and conservative
ones invest majority in debt to minimize their risk.
c) Solution Oriented Scheme: - They are made to achieve particular goal for e.g. Retirement
Fund, Children’s Fund.
d) Debt Oriented Scheme: - They are also known as income scheme, under this scheme
majority of the investments are made in debt instruments to minimize the risk of fluctuation
in the market and they also they provide regular income in the form of dividend.
5
Asset Management Company: -
An Asset Management Company is the firm that collects funds from various individual investor
and invest in different securities with the sole objective to maximize return for the investor in
exchange for a fee. AMC maintain the diversity of portfolio by investing in various asset class
such stocks, debt, real estate, bonds, pension funds, etc.
AMC takes into consideration multiple factors such as market risk, industry risk, political risk
before selecting any asset class to meet the return on investment target.
AMC offers multiple schemes in which an investor can invest in according to their time horizon,
risk taking capacity, etc.
List of Mutual Fund Companies in India: -
Table I: List of Mutual Fund Companies in India

Sr. No Mutual Fund Company QAAUM (Rs. Ownership Market Share
Cr) (%)
1 SBI Mutual Fund 373498.3 Part Foreign 13.83
2 HDFC Mutual Fund 369782.8 Part Foreign & 13.69

Insurance
3 ICICI Prudential Mutual Fund 350634.4 Part Foreign & 12.98
Insurance
4 Aditya Birla Sun Life Mutual 247521.7 Part Foreign & 9.16
Fund Insurance
5 Nippon India Mutual Fund 204857.8 Part Foreign & 7.58
Insurance
6 Kotak Mahindra Mutual Fund 186081.3 100% Indian 6.89
7 UTI Mutual Fund 151512.5 Part Foreign 5.61
8 Axis Mutual Fund 138401.6 Part Foreign 5.12
9 Franklin Templeton Mutual 116223 100% Foreign 4.30

Fund
10 IDFC Mutual Fund 103893.2 100% Indian 3.85
Source: - https://www.mutualfundindia.com/mf/Aum/details
http://www.citigroup.com/emeaemailresources/gra30616_2019_IndiaCountryUpdate_v9.pdf
There are total 44 AMC in India, out of which 27 AMC are 100% Indian owned and remaining
are either Part Foreign, Part Foreign & Insurance or 100% Foreign owned
6
How are the funds managed by AMC? –
When an investor invests with an AMC, he invests in a portfolio maintained by AMC. It the
responsibility of the AMC to fulfill investors financial objective, to fulfill those objectives AMC
does the following things: -
a) Research and Analysis: - To build a portfolio for an investor, the asset manager does an
extensive research on macro as well micro economic factors. On the basis of the research
he selects appropriate asset class which will meet the investors expected returns.
b) Asset Allocation: - On the basis of the research the asset manager allocates the funds into
different asset class. For example, in an equity-oriented scheme the asset manager will
allocate 70% in equity and rest in debt asset class.
c) Portfolio Formation: - After the research and asset allocation is done an asset manager
creates the portfolio and he take the decision to buy, sell or hold an asset class in that
portfolio. The portfolio is made entirely based on expertise of the asset manager and the
goals of the investor.
d) Performance Review: - The performance review is very much important as the fund
belongs to investors. The asset manager has to justify every buy, sell or hold of asset class
or securities to the trustee as well as investors. Every asset manager has to give regular
update to its investors.
Governing Bodies of AMC in India: -
AMC usually works under the supervision of the boards of trustees and also, they are answerable
to SEBI (Securities and Exchange Board of India) and AMFI (The Association of Mutual Funds
in India). SEBI is a government body where as AMFI is formed by mutual fund companies, they
both help in functioning of the industry ethic-driven as well as transparent.
RBI is also the plays the role of regulator where the bank is one of the sponsors. Ministry of
Finance works as the authority for all these regulators.
Mutual Fund Charges: -
a) Expense Ratio: - It is the percentage of fund asset used for operating expense. If the asset
under management is small the expense ratio is high. Investor must check the expense ratio
before investing, if the expense ratio is higher the profit which the investor gets reduces.
b) Entry Load: - Investor has to pay a nominal charge when he purchases a unit of fund.
c) Exit Load: - This fee is charges when an investor decides to redeem the fund.
7
Sector Funds
While investing most investors look out for different ways to diversify their risk. One wat to
diversify investment is by investing in different asset class such as equity, gold, mutual fund, real
estate etc. whereas another way to diversify investing is to invest in different sector of the
economy. There are multiple mutual funds which allow people to invest in a specific sector of the
economy such funds as known as Sectoral Mutual Fund.
Sectoral mutual funds are those mutual funds that limits their investment portfolio to a particular
sector of the economy. They focus only on one industry such as Banking, Infrastructure, Pharma,
Technology and so on. The main purpose of such mutual funds is to allow investor to invest in a
specific industry, or sector of the economy which is expected to have future growth potential.
Sector Mutual Fund are generally equity schemes that which allows people to invest in best
performing stocks in that specific sector. These funds are expected to be more volatile as compared
to portfolio having investment in securities more than one industry or sector of the economy.
Sectoral mutual funds fall into high risk- high reward category.
Broadly funds can be categorized into following funds: -
• Banking Funds
• FMCG Funds
• Infrastructure Funds
• Energy Funds
• Pharmaceutical Funds
• Technology/ IT Funds
• Service Funds
Factors to consider before investing in Sector Funds: -
a) Little Exposure: - It is always advisable to investor to invest in bunch of different asset

class to diversify the risk. In case of sector fund, it is advised to invest only 5% - 10% of
your total portfolio value.
b) Sector Knowledge: - Before investing in any sectoral fund an investor is advised to have
complete knowledge regarding that particular sector, he wishes to invest in. Certain sectors
such as auto sector perform in cyclic manner i.e. in 10 years period, they will perform great
in 6 years and in 4 years they won’t give return to investor in that case the exit timing is
also very crucial.
c) Future Opportunity: - Assessing a sector fund based on past performance will help the
investor to get insights into how the fund has performed, it is also important to analyze the
future scope of that sector the investor wishes to invest in.
8
Banking & Financial Services Fund: -
The Banking and Financial Service sector plays a very important role for upliftment of the
economy. It is easy to estimate the contribution done by the banking and financial sector for the
smooth functioning of the commerce and various industries in our country. With the use of
technology, the banking transaction are carried out more effectively and efficiently.
Banking and Financial Service industry has undergone many changes from 1947 and more changes
since 1991. In last couple of years banks have not only been successfully increase their customer
base but also their service which they can offer to their customer. With such drastic improvement
many mutual houses decided to open sector focused mutual fund. Reliance Mutual Fund in 2003
was the first Mutual Fund house to launch first Banking focused fund i.e. Reliance Baking Mutual
Fund and then UTI Mutual Fund launched their Banking focused mutual fund in 2005 and other
fund mutual houses started. Today Banking & Finance Sector occupies a major portion in Nifty50.
Table II: Sector wise composition of NSE Nifty
Sector Weightage (%)
Banking & Financial Services 36.19
Oil & Gas 13.92
Power 2.13
IT 14.48
Consumer Goods 13.08
Automobile 5.00
Construction 2.70
Pharma 3.11
Metals 2.62
Telecom 3.16
Cement & Cement Products 2.12
Service 0.55
Fertilizers & Pesticides 0.56
Media & Entertainment 0.35
Data as on 1/5/2020
Source: https://www1.nseindia.com/content/indices/ind_nifty50.pdf
From the above table we can clearly state that Banking & Financial Service plays a vital role in
market performance indicator.
Banking Companies before Covid-19 have outperformed always outperformed Nifty50. The chart
below shows the growth of Bank Nifty V/S Nifty 50 in 5-year duration. It is only because of covid-
19 there has been a major fall in Bank Nifty.
9
Graph VII: Performance of Nifty 50 vis-à-vis Bank Nifty
Bank Nifty Nifty 50

Source: - https://in.tradingview.com/chart/?symbol=NSE%3ABANKNIFTY
Banking & Financial Services Fund Return Analysis: -
Table III: Banking & Financial Fund Return Analysis

Sr. No Name of Fund Return Return 3 Return 5
1Year Years (%) Years (%)
(%)
1 Nippon India Banking Fund -39.75 -10.80 -0.47
2 ICICI Prudential Banking and -34.38 -7.52 4.18
Financial Service Fund
3 Aditya Birla Sun Life Banking & -33.18 -7.37 3.92
Financial Services Fund
4 UTI Banking and Financial Services -36.95 -9.88 -.0.29
Fund
5 Sundaram Financial Services -22.04 -3.46 3.03
Opportunities Fund
10
6 Invesco India Financial Services -23.11 -0.30 6.45
Fund
7 Taurus Banking & Financial -22.19 -0.76 3.50
Services Fund
8 Baroda Banking & Financial Service -26.12 -5.01 1.91
Fund
9 SBI Banking & Financial Services -24.43 1.62 8.40
Fund
10 LIC MF Banking & Financial -26.03 -11.92 -3.01
Services
11 Tata Banking & Financial Services -26.62 -1.07 -
Fund
12 IDBI Banking and Financial -33.51 - -
Services Fund
Category Average -29.02 -5.13 3.10
Bank Nifty -33.03 -8.22 11.49
Data Source: - https://www.personalfn.com/fund-category/Equity-Sectoral-Fund-Banks-Financial-
Services, Groww, Investing,
From the above chart we can clearly see that the individual funds have perform better as compared
to Bank Nifty with respect to 1 year and 3-years’ time frame where are in 5-years’ time frame
Bank Nifty has performed better.
Banking & Financial Services Risk Analysis: -
Table IV: Banking & Financial Fund Risk Analysis

Sr. No Name of Fund Std Sharpe Beta Alpha
Deviation
1 Nippon India Banking Fund 30.30 -0.30 1.05 -7.58

2 ICICI Prudential Banking and 29.39 -0.21 1.02 -4.76
Financial Service Fund
3 Aditya Birla Sun Life Banking 29.31 -0.22 0.99 -4.96
& Financial Services Fund
4 UTI Banking and Financial 29.36 -0.30 1.02 -7.29
Services Fund
5 Sundaram Financial Services 25.82 -0.12 0.91 -1.86
Opportunities Fund
6 Invesco India Financial 25.20 -0.03 0.88 0.59
Services Fund
11
7 Taurus Banking & Financial 24.86 -0.02 0.88 0.72
Services Fund
8 Baroda Banking & Financial 25.40 -0.19 0.89 -3.44
Service Fund
9 SBI Banking & Financial 26.85 0.07 0.92 3.26
Services Fund
10 LIC MF Banking & Financial 28.55 -0.41 0.93 -10.30
Services
11 Tata Banking & Financial 25.13 0.03 0.83 2.07
Services Fund
12 IDBI Banking and Financial - - - -
Services Fund
Category Average 27.28 -0.15 0.94 -3.05
Bank Nifty 38.24 - - -
Source: - Value Research Online, NSE
Standard Deviation in mutual fund is a tool for the investor to know how much percent their returns
can vary from the historic return for e.g. If a mutual fund has an avg return of 10% and a S.D of
3% this means the investor can expect a return of 7% to 13%.
Sharpe Ratio in mutual fund is the difference between the portfolio return minus risk free return
divided by the S.D of the fund. It tells the investor the return the fund has generated for 1 unit of
risk. Higher the Sharpe Ratio means high return has been generated for 1 unit of risk. For e.g. If
Fund A as Sharpe ratio of 1.4 and Fund B has Sharpe ratio of 1.7 then this means that Fund B has
performed better.
Alpha Ratio in mutual fund indicate the fund managers ability to perform against the benchmark
index. For e.g. If a fund can generate annual return of 11% and benchmark index has an annual
return of 8% the alpha ratio of the fund manager will be 3.
Beta indicated the volatility of the fund. If the Beta of a fund is more than 1 it indicated that the
fund is more volatile and riskier whereas Beta less than 1 it indicated that the fund is less volatile
than the market.
From the above chart we can say that the Banking funds are less risky as compared to Bank Nifty
because their avg. S.D is 27.50 whereas the S.D of Bank Nifty is 40.16 this indicates the banking
fund less deviate less than Bank Nifty.
12
Banking & Financial Services Fund Portfolio Analysis: -
Table V: Banking & Financial Fund Portfolio Analysis
Sr. No Name of Fund Top 5 Holding
(%)
1 Nippon India Banking Fund 48.6
2 ICICI Prudential Banking and Financial Service 44.5
Fund
3 Aditya Birla Sun Life Banking & Financial 47.9
Services Fund
4 UTI Banking and Financial Services Fund 65.4
5 Sundaram Financial Services Opportunities Fund 69.2
6 Invesco India Financial Services Fund 71.1
7 Taurus Banking & Financial Services Fund 66.1
8 Baroda Banking & Financial Service Fund 44.6
9 SBI Banking & Financial Services Fund 67.3
10 LIC MF Banking & Financial Services 69.5
11 Tata Banking & Financial Services Fund 67.9
12 IDBI Banking and Financial Services Fund 68.3
Data Source: - Groww
From the above table it is clear that only 4 funds have invested less than 50% of their investment
in Top 5 holding and remaining funds have invested more than 65% of their investment in Top 5
holding. Most common stock were HDFC Bank, ICICI Bank, Axis Bank, State Bank of India,
Kotak Mahindra Bank, Housing Development Finance Corporation (HDFC Ltd.), Bajaj FinServ
Ltd. All the funds in their Top 5 holding consist of only large cap companies which minimizes the
risk for the investors. On an average funds have invested 93.6% in equity and 6.4% in cash.
13
FMCG FUND
The Fast-Moving Consumer Goods (FMCG) is the 4th largest sector in India. FMCG is
characterized by high turnover sales of personal and household care products such as toothpaste,
toilet cleaning products, deodorants etc. The few dominating companies into this sector are Nestle,
HUL, Britannia, Dabur, Colgate etc.
According to ibef.org the revenues of FMCG sector was around 3.4 lakh crore (US$52.75 billion)
in 2018 and it is expected to reach US$ 103.7 billion in the year 2020. Rural consumption mainly
drives the FMCG sector, which contributes around 36% of the total revenue. Even Government is
trying to boost the FMCG sector by allowing 100% FDI into certain segment of FMCG and even
by implementing GST on various products such as oil, toothpaste under 18% GST which were
earlier under 28% taxation.
Investments in FMGC Industry: -

In past few decades there has been an immense investment done by companies to either expand
their market share or capture new market some examples are Patanjali which has set up an 100%
export manufacturing plant in Nagpur. Even RP Sanjiv Goenka Group have set up venture fund of
$14.74million to invest in FMCG startup. The online portals have also contributed in the growth
of FMCG industry in India.
Today FMCG has become an important part of mankind, since these sectors is totally recession
proof because people can’t stop consuming essential goods for once they can stop consuming/using
their luxury products but FMGC are mostly essential goods. This shows that FMCG segment have
a smooth road ahead.
14
Performance of Nifty 50 v/s Nifty FMCG
Graph VIII: Performance of Nifty 50 vis-à-vis Nifty FMGC
Nifty FMCG Nifty 50

Source: - https://in.tradingview.com/chart/?symbol=NSE%3ACNXFMCG
Over the past 5 years we can clearly see that Nifty FMCG gas given a return of 35.01% whereas
Nifty 50 has given a return of only 12.94%. Even because of Covid-19 there have not been a major
fall in Nifty FMCG as compared to Nifty 50 which proves that FMCG sector is recession proof.
FMCG Fund Return Analysis: -
Table VI: FMCG Fund Return Analysis
(%)
1 ICICI Prudential FMCG Fund -11.94 4.17 6.82
Category Average -11.94 4.17 6.82
Nifty FMCG -9.96 19.71 11.49
Source: - https://www.fincash.com/l/best-fmcg-sector-funds , Groww, Chart ink, Trading View
15
There are not many fuds which focused entirely on FMCG. From the above table we can clearly
state that Nifty FMCG has outperformed FMCG fund in 1-3-5-year returns.
FMCG Fund Risk Analysis: -
Table VII: FMCG Fund Risk Analysis

Deviation
1 ICICI Prudential FMCG Fund 14.83 0.02 0.03 1.83

Category Average 14.83 0.02 0.03 1.83
Nifty FMCG 19.36 - - -
Source: - Value Research Online, Investing
From the above table we can clearly say that the result of risk and return in FMCG fund has
outperformed the Nifty FMCG. The Variation from mean in Nifty FMCG is high as compared to
FMCG fund. Even the Sharpe ratio is positive for FMCG fund but it is very less and since the Beta
of FMCG fund is 0.03 which is positive sign because Beta less than 1 means that the security is
less volatile and has less risk. Considering Alpha of the fund is also positive which is a good sign
for a fund.
Composition of the FMCG Funds: -
Table VIII: Composition of the FMCG Fund

Name Instrument % Asset
ITC Ltd. Equity 22.5
HUL Ltd. Equity 15.9
Marico Ltd. Equity 5.8
Nestle India Ltd. Equity 5.0
Britannia Industries Ltd Equity 4.5
Source: - https://groww.in/mutual-funds/icici-prudential-fmcg-direct-growth
The top 5 stocks contribute almost 53.7% of the portfolio which is not a good sign because if one
of the stocks get beaten up badly the whole portfolio suffers which is a negative sign. Along with-
it Changing Consumer Trend/ Choices is also a concern in FMCG sector fund.
16
Pharma & Healthcare Fund: -
Pharma & Healthcare mutual fund invest in various pharmaceutical & healthcare provider
companies. The major players in this segment currently are Sun Pharma, Divis Lab, Cipla, Lupin
etc. Because of massive population size in India there have been always huge demand for
healthcare facilities and medicine. Around 1.6% of GDP is being spent on healthcare.
According to ibeff report on pharmaceutical industry in India, this sector is expected to grow to
$100 billion by 2025 at a GACR of 15%. India is the largest provider of generic drugs globally.
Indian Pharma sector export contributes more than 50% of global demand for vaccines.
In India there are approximately 3000 pharma companies which have a network of 10,500
manufacturing plants. India is a source of 60000 generic brand across 60 therapeutic category and
manufactures more than 450 APIs (Active Pharmaceutical Ingredients).
In terms of volume production India stand 3rd across the globe and 13th in terms of value. India
exports $3.8 billion worth of medicines to USA which accounts to 32.9% of India medicines
export.
To give boost to Pharma sector in India Govt. allowed 100% FDI which includes 74% direct and
remaining 26% through government approval mode.
Performance of Nifty Pharma
Graph IX: Performance of Nifty Pharma
Source: - https://in.tradingview.com/chart/?symbol=NSE%3ACNXPHARMA
17
Nifty Pharma has given a return of 960.22% since inception till date. In last few months sectors
such as banking, retail, infra which were investors favorite sector has underperformed as compared
to pharma sector. Nifty Pharma has given a return of 18.73% whereas Nifty Bank has given just a
return of 6.39% and Nifty infra has given a return of 13.67%
Graph X: Performance of Nifty 50 vis-à-vis Nifty Pharma
Bank Nifty Nifty Pharma Nifty Infra

Source: - https://in.tradingview.com/chart/?symbol=NSE%3ACNXPHARMA
Pharma & Healthcare Fund Return Analysis: -
Table IX: Pharma & Healthcare Fund Return Analysis

(%)
1 Nippon India Pharma Fund 19.99 12.71 7.49
2 SBI Healthcare Opportunities Fund 17.36 3.73 2.20
3 Tata India Pharma & Healthcare 20.17 8.26 -
Fund
4 UTI Healthcare Fund 17.36 6.19 2.45
18
5 DSP Healthcare Fund 24.92 - -
6 ICICI Prudential Pharma Healthcare 20.49 - -
Diagnostics Fund
7 Aditya Birla Sun Life Pharma 23.10 - -
Healthcare Fund
8 Mirae Asset Healthcare Fund 26.92 - -
Category Average 21.28 7.72 4.04
Nifty Pharma 3.03 -10.56 -24.43
Source: - https://www.personalfn.com/fund-category/Equity-Sectoral-Fund-Pharma-Health-Care,
Groww
The individual pharma fund has given some extra ordinary return to their investors in every time
frame i.e. 1 year, 3years & 5years. The category avg. of pharma funds outperformed the pharma
benchmark. In 1year time frame Mirae Asset Healthcare fund has given an extraordinary return on
26.92% followed by DSP healthcare fund 24.92%. In case of 3years return Nippon India has given
highest return of 12.71% followed by Tata India Pharma & Healthcare fund 8.26%. There are only
3 players who have 5years return highest being 7.49% of Nippon India Pharma Fund followed by
2.45% return of UTI Healthcare Fund.
Many of the pharma focused fund have started last year and that was the reason they don’t have
3years & 5 years return. Increasing competition in pharma focused fund shows the attractiveness
of the pharma sector in India.
Pharma Fund Risk Analysis: -
Table X: Pharma & Healthcare Fund Risk Analysis

Deviation
1 Nippon India Pharma Fund 20.67 0.34 0.85 8.26

2 SBI Healthcare Opportunities 21.50 -0.06 0.87 -0.13
Fund
3 Tata India Pharma & 20.00 0.09 0.82 3.01
Healthcare Fund
4 UTI Healthcare Fund 21.26 0.06 0.88 2.53
5 DSP Healthcare Fund - - - -
6 ICICI Prudential Pharma - - - -
Healthcare Diagnostics Fund
7 Aditya Birla Sun Life Pharma - - - -
Healthcare Fund
8 Mirae Asset Healthcare Fund - - - -
Category Average 20.86 0.11 0.85 3.42
19
Nifty Pharma 28.41 - - -
In terms of risk the category avg is below the benchmark which is a positive sign for the pharma
funds. Nippon India Pharma Fund has the lowest S.D which means the fund doesn’t deviate
more from the mean which is a good sign. The Sharpe Ratio of Nippon India Pharma Fund is
0.34 which means for every 1 unit of risk they are rewarding their investor with 0.34 unit of
reward. In case of Beta the most fund have a beta of less than 1 which indicates that the funds are
less volatile and the risk associated with them is less. The Nippon India Pharma Fund has an
Alpha of 8.26 which is the highest as compared to the other pharma funds which indicates the
ability of fund manager to beat the benchmark index.
Analysis of Pharma Healthcare Fund Portfolio Analysis
Table XI: Pharma & Healthcare Fund Risk Portfolio Analysis
(%)
1 Nippon India Pharma Fund 49.3
2 SBI Healthcare Opportunities Fund 35.4
3 Tata India Pharma & Healthcare Fund 57.2
4 UTI Healthcare Fund 38.3
5 DSP Healthcare Fund 41.2
6 ICICI Prudential Pharma Healthcare Diagnostics 41.9
Fund
7 Aditya Birla Sun Life Pharma Healthcare Fund 38.2
8 Mirae Asset Healthcare Fund 47.4
Source: - Groww
Being sector focused fund, almost every pharma fund has adopted top- down approach where
majority of the holding is with top 5 stocks in pharma industry. Out of 7 funds only DSP
Healthcare Fund and Tata India Pharma & Healthcare Fund has used aggressive approach
because their top 5 holding not only includes large cap stocks but also midcap and small cap
companies whereas remaining funds have used defensive approach because their top 5 holding
includes only large cap stocks.
20
Technology Fund or IT Fund
Technology has become an important aspect of our day to day life, this lead to say that sectors
seem to be on bright side. However, after the boom and decline of IT Industry in late nineties have
made investors think about IT sector before investing. For investors who are seeking to invest for
a long-term, IT is the sector which make sense. Today after two decade if we calculate the
contribution given by IT sector is massive, during 1998-1999 the contribution of IT sector to
India’s GDP was 1.2% and now it’s around 8%, the revenue generated by this sector in financial
year 2019 was $180 billion, major portion of the revenue was from export and the domestic
revenue was less than $50 billion.
Biggest IT service providers in India are TCS, Wipro, Infosys, Tech Mahindra, LT InfoTech etc.
Majority of the market share is captured by TCS followed by Infosys, Wipro and so on. Major IT
hubs in India are located in Bangalore, Chandigarh, Chennai, Hyderabad, Pune & Kochi.
Bangalore is known as Silicon Valley of India.
Even after the 2008 crash the Nifty IT has given a return of 158% till date which is really good
which shows the smart recovery done by IT sector and the confidence by the investors. When we
compared Nifty IT & Nifty 50, Nifty IT has given a return of 19.7% and Nifty 50 has given return
of 12.54%.
21
Performance of Nifty 50 vis-à-vis Nifty IT
Graph XI: Performance of Nifty 50 vis-à-vis Nifty IT
Nifty IT Nifty 50
Source: - https://in.tradingview.com/chart/?symbol=NSE%3ACNXIT
IT Fund Return Analysis: -

Table XII: IT Fund Return Analysis
(%)
1 Franklin India Technology Fund -5.19 11.50 8.42
2 ICICI Prudential Technology Fund -15.29 8.42 6.27
3 SBI Technology Opportunity Fund -5.98 13.08 7.46
4 TATA Digital India Fund -13.39 14.27 -
5 Aditya Birla Sun Life Digital India -8.36 12.71 9.15
Fund
Category Average -9.64 12 7.83
Nifty IT -16.93 26.54 19.97
Source: - https://www.personalfn.com/fund-category/Equity-Sectoral-Fund-TECk , Groww, Trading
View
22
Form the above chart we can say that Nifty IT has performed better in all the 1-3-5 years
performance. In case of 1-year return Franklin India Technology Fund performed better than his
peers while in case of 3 years return the TATA Digital India Fund has performed better than the
category average while SBI Technology Fund dominated the 5 years return.
Technology Fund Risk Analysis: -

Table XIII: IT Fund Risk Analysis
Deviation
1 Franklin India Technology 15.89 0.39 0.77 -2.66

Fund
2 ICICI Prudential Technology 17.34 0.30 0.85 -4.50
Fund
3 SBI Technology Opportunity 16.16 0.53 0.81 -0.70
Fund
4 TATA Digital India Fund 19.03 0.53 0.94 -0.81
5 Aditya Birla Sun Life Digital 18.46 0.45 0.87 -1.58
India Fund
Category Average 17.38 0.44 0.85 -2.05
Nifty IT 21.47 - - -
Being sector fund focused all the fund has shown same level of deviation, but less than the
benchmark index and since all the funds have less than 1 Beta this indicate that all the funds are
less volatile and less risky. We can also notice that the Alpha of all the funds are negative which
shows that fund managers are not able to beat the returns of the benchmark index. Incase of Sharpe
Ratio all the funds ae near the category average only TATA Digital India Fund was able to beat
the category average.
Analysis of IT or Technology Fund Portfolio: -

Table XIV: IT Fund Portfolio Analysis
(%)
1 Franklin India Technology Fund 60.1
2 ICICI Prudential Technology Fund 84.3
23
3 SBI Technology Opportunity Fund 76.7
4 TATA Digital India Fund 76.7
5 Aditya Birla Sun Life Digital India Fund 60
Source: - Groww
All the funds have played defensively because the top 5 holding consist of only large caps
companies but in Franklin India Technology Fund out of 60.1% they hold 10.1% in Foreign Mutual
Fund Equity which is something unusual because all the other funds in Top 5 holding consist of
Infosys, TCS, HCL Tech, Mindtree and LT Infotech.
24
Infrastructure Fund: -
For the growth of the economy it is important for there must be growth in the infrastructure of the
country. In India infrastructure industry is considered as the driver of the Indian economy. The
infrastructure industry consists of roads, electricity, airports, oil and gas pipelines, storing facility,
irrigation and smooth water supply etc.
The Govt of India is spending heavily on infrastructure development in India mainly on
transportation, highways and son on. According to Department of Industrial Policy and Promotion
the FDI in infrastructure stood at UDS 25.67 Billion from April 2000 to December 2017. Mostly
the investment comes from the developed countries across the global economy. The Delhi Mumbai
Industrial Corridor is one such example where the Japan has contributed to develop one of the
largest projects in infrastructure sector in India.
Some of the recent development in this industry are as following: -
a) Smart Cities
b) Affordable Housing
c) Robust Transportation
d) Macro Realties
In case of Real Estate, SEBI allowed the Indian firms to launch Real Estate Investment Trust
(REITs) as well as Infrastructure Investment Trust in 2014 which allowed investor to own a share
of property without physically possessing them, and also allowed real estate builders to raise
capital for their projects. Mutual funds are also allowed to invest in such instruments.
In next 5 years India plans to spend approximately USD 1.4trillion on infrastructure for economic
development.
The current government’s focus and higher allocation towards country infrastructure in budget
2020-2021 is expected to benefit those investors who have already invested in the country
infrastructure story. Mutual fund offers such specific sector fund which invest in companies
belonging to infrastructure industry. According to Groww infrastructure mutual fund had a total
corpus of approximately 28,962 crores as of December,2017.
25
Performance of Nifty Infra: -
Graph XII: Performance of Nifty 50 vis-à-vis Nifty Infra
Source: - https://in.tradingview.com/chart/?symbol=NSE%3ACNXINFRA
Even as far as the performance of Nifty Infra fund is concerned, they haven’t given appealing
returns. In term if 5 yeas the Nifty Infra has given negative returns of 13.47 percent. Nifty Infra
has witnessed a bull run from 2016 to 2018, in 2 year there were approximately 10 IPO of
companies related to infrastructure, and investors too gave an encouraging repose to those
companies but after 2018 that the growth was stagnant and now due to Covid-19 there was a huge
fall in Nifty Infra in span of just 2 months the Nifty Infra has fallen from 3300 level to 2100 level
and it is recovering from 2100 level to 2700 level.
Infrastructure Fund Return Analysis: -
Table XV: Infrastructure Fund Return Analysis
(%)
1 BOI AXA Manufacturing & -11.55 -3.18 3.50
Infrastructure Fund
2 Canara Robeco Infrastructure Fund -18.48 -9.23 0.22
3 Franklin Build India Fund -29.62 -7.49 1.62
26
4 HDFC Infrastructure Fund -40.94 -20.83 -9.11
5 Aditya Birla Sun Life Infrastructure -30.80 -12.95 -
Fund
6 HSBC Infrastructure Equity Fund -35.50 -21.20 -8.65
7 ICICI Prudential Infrastructure Fund -30.95 -10.72 -2.73
8 IDFC Infrastructure Fund -30.59 -13.05 -1.26
9 Invesco Infrastructure Fund -8.35 -0.82 3.05
10 Kotak Infrastructure and Economic -25.11 -9.86 0.96
Reform Fund
11 LIC MF Infrastructure Fund -21.60 -6.16 -0.45
12 SBI Infrastructure Fund -17.15 -4.37 2.41
13 Sundaram Infrastructural Advantage -26.97 -10.19 -0.70
Fund
14 TATA Infrastructure Fund -22.66 -8.94 0.36
15 Taurus Infrastructure Fund -13.94 -2.70 3.52
16 UTI Infrastructure Fund -24.12 -9.49 -1.29
Category Average -24.27 -9.45 -0.57
Nifty Infra -12.28 -15.26 -13.47
Nifty 50 -18.56 1.78 12.94
Source: - https://www.personalfn.com/fund-category/Equity-Sectoral-Fund-Infrastructure, Groww,
Trading View, Chartink
It is observed that fund has underperformed in 1-year time frame where as in case of 3- & 5-years’
time frame the funds have performed better than the Nifty Infra benchmark.
We can also observe that the Nifty 50 has overperformed the infrastructure fund in 3-5 years’ time
frame which indicate that diversified portfolio i.e. Nifty 50 has generated more returns than
focused funds.
Infrastructure Fund Risk Analysis: -
Table XVI: Infrastructure Fund Risk Analysis
Sr. No Name of Fund Std. Sharpe Beta Alpha
Deviation
1 BOI AXA Manufacturing & 23.70 -0.24 0.88 9.68

Infrastructure Fund
2 Canara Robeco Infrastructure 22.55 -0.52 0.84 2.95
Fund
3 Franklin Build India Fund 23.74 -0.37 0.89 6.70
4 HDFC Infrastructure Fund 30.44 -0.69 1.19 -0.33
27
5 Aditya Birla Sun Life 25.63 -0.55 0.98 2.97
Infrastructure Fund
6 HSBC Infrastructure Equity 28.39 -0.84 1.10 -4.75
Fund
7 ICICI Prudential Infrastructure 24.12 -0.49 0.94 4.62
Fund
8 IDFC Infrastructure Fund 27.84 -0.84 1.08 3.84
9 Invesco Infrastructure Fund 23.34 -0.16 0.88 11.68
10 Kotak Infrastructure and 24.18 -0.52 0.92 3.48
Economic Reform Fund
11 LIC MF Infrastructure Fund 23.40 -0.34 0.88 7.45
12 SBI Infrastructure Fund 24.19 -0.27 0.92 9.59
13 Sundaram Infrastructural 25.87 -0.43 0.97 5.92
Advantage Fund
14 TATA Infrastructure Fund 22.65 -0.47 0.88 4.68
15 Taurus Infrastructure Fund 21.34 -0.25 0.80 8.77
16 UTI Infrastructure Fund 24.98 -0.40 0.96 6.64
Category Average 24.77 -0.46 0.96 6.64
Nifty Infra 21.15 - - -
With the deviation is concerned the Nifty Infra has less deviated as compared to infrastructure
fund. The average S.D of Nifty Infra was 21.15 whereas for Infrastructure fund was 24.77.
With High S.D the Sharpe Ratio of funds are also negative which indicates that fund managers are
taking more risk and giving less return to the investors which is an alarming situation for
infrastructure funds.
As well as coming to Beta the category average is around 0.96 which means they are moderate
risky and volatile. Coming to the fund managers efficiency which is shown with the help of Alpha
indicated that fund managers are able to beat benchmark index.
Infrastructure Fund Portfolio Analysis: -

Table XVII: Infrastructure Fund Portfolio Analysis
(%)
1 BOI AXA Manufacturing & Infrastructure Fund 25.3
2 Canara Robeco Infrastructure Fund 30
3 Franklin Build India Fund 37.7
4 HDFC Infrastructure Fund 41.2
28
5 Aditya Birla Sun Life Infrastructure Fund 32.6
6 HSBC Infrastructure Equity Fund 39.1
7 ICICI Prudential Infrastructure Fund 36.1
8 IDFC Infrastructure Fund 36.9
9 Invesco Infrastructure Fund 30.1
10 Kotak Infrastructure and Economic Reform Fund 30.6
11 LIC MF Infrastructure Fund 39.7
12 SBI Infrastructure Fund 38
13 Sundaram Infrastructural Advantage Fund 28.5
14 TATA Infrastructure Fund 35.6
15 Taurus Infrastructure Fund 29.8
16 UTI Infrastructure Fund 33.9
Source: - Groww
The reason being infrastructure fund doesn’t deviate much is diversification, none of the
infrastructure fund has more than 40% in their top 5 holding and the top 5 holding mostly include
Large Cap Companies which are also known as blue chip companies.
Only 2 Infrastructure Fund plays aggressively by investing in small cap companies they are Aditya
Birla Sun Life Infrastructure Fund & TATA Infrastructure Fund their top 5 holding includes small
cap companies. Out of remaining funds 4 funds have mid cap companies in their top 5 holding and
other 10 infrastructure funds play defensively by investing their top 5 companies only in large cap
companies.
Favorite Equity Companies for Infrastructure Funds include Reliance, Honeywell Automation,
Larsen & Toubro, Ultratech Cement, Shree Cement and so on.
29
Energy Fund: -
Investors looking to invest for a very long-term horizon can invest in energy fund as this is a stable
industry with bright future. With growing population in India there is a rapid increase in demand
for energy, and also with this trend the pressure on natural resources which are used to produce
energy has also increased. With the help of professional expertise and well diversified risk mutual
funds are the best viable option to invest in this sector.
There have been many initiatives taken by the government to boost this industry in India. 100%
Foreign Direct Investment is allowed for projects which are related to generation of electricity,
and also transmission and distribution. All these initiatives make this sector attractive for investors.
Performance of Nifty 50 vis-à-vis Nifty Energy: -
Graph XIII: Performance of Nifty 50 vis-à-vis Nifty Energy
Nifty Energy Nifty 50

Source: https://in.tradingview.com/chart/?symbol=NSE%3ACNXENERGY
The Comparison between Nifty 50 & Nifty Energy shows that in 5 years term the return on
Nifty Energy is higher than Nifty 50, and Nifty energy is less volatile.
30
Energy Fund Return Analysis: -
Table XVIII: Energy Fund Return Analysis

(%)
1 DSP Natural Resources and New -28.42 -7.67 6.15
Energy Fund
2 Nippon India Power & Infra Fund -26.18 -11.09 0.33
3 Tata Resources and Energy Fund -5.07 -1.61 -
Nifty Energy -17.52 7.31 53.59
Source: - https://www.personalfn.com/fund-category/Equity-Sectoral-Fund-Energy-Power, Groww,
From the above table it is clearly seen that the funds have not given positive return in 1- and 3-
year time frame and incase of 5 years’ time frame only DSP Natural Resources and New Energy
Fund has given 6.15% but with comparison with Nifty Energy the return is very low.
Energy Fund Risk Analysis: -
Table XIX: Energy Fund Risk Analysis
Deviation
1 DSP Natural Resources and 22.20 -0.55 0.64 -18.17

New Energy Fund
2 Nippon India Power & Infra 25.29 -0.51 0.98 -4.22
Fund
3 Tata Resources and Energy 21.21 -0.25 0.65 -11.14
Fund
Nifty Energy 24.72 - - -
When the funds are measured on their deviation front, the fund deviate less than the benchmark
index, but the Sharpe ratio indicated that the fund generated -0.44 return for 1unit of risk which
is very less.
In case of Beta the Nippon India Power & Infra Fund is very much volatile and risky as their
Beta is near to 1 and also the fund managers efficiency is not as good because the category
average of Alpha is -11.18.
31
Analysis of Energy Fund Portfolio
Table XX: Energy Fund Portfolio Analysis
(%)
1 DSP Natural Resources and New Energy Fund 42.61
2 Nippon India Power & Infra Fund 42.12
3 Tata Resources and Energy Fund 35.53
Source: - Value Research Online
From the diversification point of view only Tata Resources and Energy Fund has top 5 holding
of less than 40% which is a good sign. From the nature point of view of fund Nippon is
aggressive in nature as they hold small cap companies in their top 5 holding where as other two
funds are defensive because they hold only large cap companies.
32
Service Fund: -
Service Sector is considered as the backbone of India’s economy. Service sector doesn’t only
provide mass employment but they also contribute majority of the portion is India GDP. They are
considered as key driver in India’s growth.
According to India Brand Equity Foundation, Service industry collectively put up 54% India’s
Gross Domestic Value Added (GVA) and provides employment to over 28% of India’s population.
Export oriented services industries have been witnessing even a rapid growth. Various government
initiatives such as digitalization of services and implementation of Goods and Service Tax have
contributed to the impressive performance of services sector of India.
The drivers for the rapid growth of service industry are Growing trend of digitalization, Changing
lifestyle and growing aspiration, Under-penetration of financial services, India’s cost effectiveness
and global trend of outsourcing.
Services in India can be broadly classified into Transport, Storage, Financial Service, Trade,
Repair, Hotels & Restaurant, Professional Services etc.
Performance of Nifty Service
Graph XIV: Performance of Nifty Service
Source: - https://in.tradingview.com/chart/?symbol=NSE%3ACNXSERVICE
33
It is clearly visible from the above chart that due to Covid-19 there has been a major drop-in
Nifty Service Sector. Before this pandemic the Nifty Service Sector has shown a growth of
62.36% in 5 years’ time frame which is impressive. When compared with Nifty 50 (12.94%) in 5
years’ time frame Nifty Service Sector has given better return to investors.
Composition of Nifty Service: -

Graph XV: Composition of Nifty Service
Power, 3.54% Service, 1.32% Media &

Entertainment,
Oil & Gas, 1.45% 0.58%
Telecom, 4.64%
IT, 24.02%
Financial Services,
64.45%
Financial Services IT Telecom Oil & Gas Power Service Media & Entertainment
Source: - https://www1.nseindia.com/content/indices/ind_nifty_services_sector.pdf
The majority of portion of Nifty Service Sector belongs to Financial Services i.e. 64.45% which
mostly includes Banks, NBFC and Insurance Companies where as in case of IT includes only 5
companies they are Infosys, TCS, HCL Tech, Tech Mahindra & Wipro. Telecom which
contributes 4.64% includes only Bharti Airtel whereas Power contributes 3.54% includes two
companies NTPC and PowerGrid. In Oil & Gas section includes Petronet and GAIL and in
Services section includes Adani Port and Concor a small portion of 0.58% belongs to Media &
Entertainment which includes only Zee Entertainment.
34
Service Fund Return Analysis: -
Table XXI: Service Fund Return Analysis

(%)
1 ICICI Prudential Exports & Services -15.81 -4.24 2.12
Fund
2 Sundaram Services Fund -9.00 - -
Nifty Service -19.93 7.31 21.17
Source: - https://www.personalfn.com/fund-category/Equity-Sectoral-Fund-Service-Industry, Groww,
TradingView
There are only two funds which focuses on service sector and the table above reveals that the
benchmark index i.e. Nifty Service outperformed the service funds in 3-5 years’ time frame where
as in 1 year return the funds have performed better.
Service Fund Risk Analysis: -

Table XXII: Service Fund Risk Analysis
Deviation
1 ICICI Prudential Exports & 19.19 -0.35 0.84 -4.53

Services Fund
2 Sundaram Services Fund - - - -
Nifty Service Sector 20.95 - - -
As far as deviation is concerned, the funds deviate less as compared to Nifty Service Sector, the
Share ratio of funds is disappointing as they give investors -0.35 for 1 unit of risk
whereas Beta is concerned, the funds has a Beta of less than 1 which indicates that the volatility
of fund is less. The fund is not able to beat the benchmark index revealed by negative Alpha.
35
Service Fund Portfolio Analysis: -
Table XXIII: Service Fund Portfolio Analysis
(%)
1 ICICI Prudential Exports & Services Fund 48.87
2 Sundaram Services Fund 32.5
Source: - Value Research Online
The above table reveals the diversification in Sundaram Service Fund is more than ICICI
Prudential Exports & Services Fund and both the fund in their top 5 holding include 4 large cap
companies and 1 mid cap companies. The Common companies in both the of their top 5 includes
ICICI Bank and Bharti Airtel.
Asset under Sundaram Service Fund is Rs 916 Crore where the asset under ICICI Prudential
Exports & Services Fund is Rs449 Crore and the Asset allocation is as following
Table XXIV: Service Fund Composition
Name of Fund Equity Debt Cash
(%) (%) (%)
ICICI Prudential Exports & 99.8 0.2 0
Services Fund
Sundaram Services Fund 91.9 0 8.1
36
Comparative Return Analysis of Sector Funds: -
Table XXV: Comparative Return Analysis of Sector Funds (Returns in %)
Sr. No Sector 1 Year Return 3 Years Return 5 Years Return
1 Banking & Financial Service -29.02 -5.13 3.1
Funds
2 FMCG Funds -11.94 4.17 6.82
3 Pharma & Healthcare Funds 21.28 7.72 4.04
4 Technology Funds -9.64 12 7.83
5 Infrastructure Funds -24.27 -9.45 -0.57
6 Energy Funds -19.89 -6.79 3.24
7 Service Funds -12.41 -4.24 2.12
The Returns in the above table are the category average returns of the funds in their respective
sector
1 Year Return
Graph XVI: Comparative Return Analysis of Sector Fund- 1 Year Return
1 Year Sector Funds Return

30
Pharma & Healthcare
Fund, 21.28
20
10
% Returns
0 Banking & Financial Services Fund FMCG Fund Pharma & Healthcare Fund Technology Fund Infrastructure Fund Ene rgy Fund Service Fund
-10
Technology Fund, -9.64
FMCG Fund, -11.94 Service Fund, -12.41
-20
Energy Fund, -19.89
-30 Infrastructure
Banking & Financial
Fund, -24.27
Services Fund, -29.02
-40
1 Year Return
37
3 Years Return
Graph XVII: Comparative Return Analysis of Sector Fund- 3 Years Return
3 Years Sector Funds Return

15
Technology Fund, 12
Pharma & Healthcare
10 Fund, 7.72
FMCG Fund, 4.17

5
% Returns
-5
Service Fund, -4.24
Banking & Financial
Services Fund, -5.13 Energy Fund, -6.79
-10
Infrastructure Fund,
-9.45
-15
3 Years Return
5 Years Return
Graph XVIII: Comparative Return Analysis of Sector Fund- 5 Years Return
5 Years Sector Funds Return

9
Technology Fund, 7.83
8
FMCG Fund, 6.82
7
6
5 Pharma & Healthcare
% Returns
Banking & Financial Fund, 4.04

4 Services Fund, 3.1 Energy Fund, 3.24
3
Service Fund, 2.12
2
Infrastructure Fund,
1 -0.57
-1
5 Years Return
38
Comparative Risk Analysis of Sector Funds: -
Table XXVI: Comparative Risk Analysis of Sector Funds
Deviation
1 Banking & Financial Service 27.28 -0.15 0.94 -3.05

Funds
2 FMCG Funds 14.83 0.02 0.03 1.83
3 Pharma & Healthcare Funds 20.86 0.11 0.85 3.42
4 Technology Funds 17.38 0.44 0.85 -2.05
5 Infrastructure Funds 24.77 -0.46 0.96 6.64
6 Energy Funds 22.9 -0.44 0.76 -11.18
7 Service Funds 19.19 -0.35 0.84 -4.53
The Risk Analysis in the above table are the category average risk of the funds in their respective
sector
As far as returns are concerned Pharma & Healthcare Funds have given great return whether its
short term- medium term or long term but in case of deviation from the mean & risk associated
with volatility is much higher than other few funds. From the above table we can say that the
FMCG funds have less deviated and they are less volatile as compared to any other sector funds
and this sector is also considered as recession proof.
Technology funds have the highest Sharpe ratio as compared to other sectors which indicates that
for every 1 unit of risk, they have rewarded 0.44 unit to investors still its less but as compared to
other funds they have negative or less than 0.44-unit Sharpe ratio.
The fund managers of Infrastructure, Pharma & Healthcare and FMCG funds were able to
outperformed their benchmark index which is indicated by positive Alpha.
When we compared all the funds, we came up on conclusion that FMCG funds have less standard
deviation and less Beta and also positive Sharpe ratio and positive Alpha which is one of the best
sector funds to invest in.
39
Conclusion
After analyzing the performance of sector fund on the 1-3-5 years return parameter, we can say
that only few sector funds have some amazing returns as compared to other sector. It is very much
difficult to establish a particular trend among the performance of various sector but surely some
sectors such as Pharma, FMCG & Technology sector have emerged as evergreen sectors.
The performance in long term i.e. 5 years sectors such as Banking, FMCG, Pharma, Energy,
Service and Technology have given return up to the standards but only Pharma funds and
Infrastructure funds were able to outperformed the benchmark index fund.
The performance in medium term i.e. 3 years only FMCG, Pharma & Technology funds were able
to give positive returns where as other funds have given negative returns. Whether its medium
term (3years) or long term (5years) some Pharma and FMCG funds have over performed their
benchmark index and their category average.
On the other hand, the performance of sectoral funds in short term i.e. 1 year have disappointed
investors by giving negative returns. Pharma funds have given positive return of 21.28%. Fund
such as Infrastructure, Energy, Service despite having scope and growth potential have given
negative returns. Such funds were not even able to attain the return of their benchmark index.
On the basis of risk analysis FMCG fund is very less volatile and less risky and the Alpha and
Sharpe ratio is also positive which shows this sector is suitable in every condition.
40
REFERENCES
Following is the list of references that were used for generation of this report
• https://www.crisil.com/content/dam/crisil/our-analysis/views-and-
commentaries/insights/CRISIL-Fund-Insights-Sectoral-and-thematic-funds-Focused-
play-for-savvy-investors-April-2017.pdf
• https://wealthtrust.in/blog/sectoral-fund-advantages-disadvantages/
• https://www.ibef.org/industry/power-sector-india.aspx
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• https://shodhganga.inflibnet.ac.in/bitstream/10603/30696/4/chapter%204.pdf
• https://www.motilaloswal.com/article.aspx/1387/A-checklist-before-investing-in-sectoral-
and-thematic-funds..
• https://medium.com/@gulaqfintech/sectoral-mutual-fund-a-fund-for-experienced-
investor-748b21102f4a
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mutual-funds-what-are-the-key-sectors-in-the-indian-stock-market/
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• https://www.fincash.com/l/best-sector-mutual-funds
• https://www.ibef.org/industry/fmcg.aspx
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• https://businessjargons.com/sector-funds.html
• https://cleartax.in/s/thematic-sector-funds-explained
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• https://www.ibef.org/industry/information-technology-india.aspx
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S.P. MANDALI’S PRIN L. N.

WELINGKAR INSTIUTE OF MANAGEMENT

SUMMER INTERNSHIP RESEARCH PROJECT

SECTORAL FUNDS- RISKS AND OPPORTUNITIES FOR THE INVESTOR

Under the Guidance of

Prin.L.N. Welingkar Institute of Management Development and Research, Mumbai.

Prin.L.N. Welingkar Institute of Management Development and Research, Mumbai.

S. No. Title Page No.

2 Mutual Fund Industry 2

2.1 Asset Management Company 6

2.2 Sector Fund 8

2.3 Banking & Financial Services Fund 9

2.4 FMCG Fund 14

2.5 Pharma & Healthcare Fund 17

2.6 Technology or IT Fund 21

2.7 Infrastructure Fund 25

2.8 Energy Fund 30

2.9 Service Fund 33

3 Comparative Return Analysis of Sector Funds 37

4 Comparative Risk Analysis of Sector Funds 39

Prin.L.N. Welingkar Institute of Management Development and Research, Mumbai.

XXII Service Fund Risk Analysis 35

Prin.L.N. Welingkar Institute of Management Development and Research, Mumbai.

S. No. Title Page No.

I Average Asset Under Management (AAUM) 2

II SIP Contribution (Rs. Crore) 3

III Geography Wise Break-up of AAUM 3

IV February 2020 Assets vis-à-vis March 2020 Assets 4

V Accounts Across Investor Type 4

VI Types of Mutual Fund Schemes 5

VII Performance of Nifty 50 vis-à-vis Bank Nifty 10

VIII Performance of Nifty 50 vis-à-vis Nifty FMGC 15

IX Performance of Nifty Pharma 17

X Performance of Nifty 50 vis-à-vis Nifty Pharma 18

XI Performance of Nifty 50 vis-à-vis Nifty IT 22

XII Performance of Nifty 50 vis-à-vis Nifty Infra 26

XIII Performance of Nifty 50 vis-à-vis Nifty Energy 30

XIV Performance of Nifty Service 33

XV Composition of Nifty Service 34

XVI Comparative Return Analysis of Sector Fund- 1 Year Return 37

XVII Comparative Return Analysis of Sector Fund- 3 Years Return 38

XVIII Comparative Return Analysis of Sector Fund- 5 Years Return 38

Prin.L.N. Welingkar Institute of Management Development and Research, Mumbai.

• Have an understanding of mutual fund industry

Average Asset Under Management (AAUM)

Graph I: Average Asset Under Management (AAUM)

Geography Wise Break-up of AAUM: -

Graph III: Geography Wise Break-up of AAUM

Geography Wise Break-up AAUM

Graph IV: February 2020 Assets vis-à-vis March 2020 Assets

Retail investor accounts HNI accounts Institutional investor accounts

Top 3 Schemes are: -

List of Mutual Fund Companies in India: -

Table I: List of Mutual Fund Companies in India

2 HDFC Mutual Fund 369782.8 Part Foreign & 13.69

7 UTI Mutual Fund 151512.5 Part Foreign 5.61

8 Axis Mutual Fund 138401.6 Part Foreign 5.12