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Comprative Analysis of Aditya Birla Sunlife Equity Hybrid 95 Fund & Sebi Equity Hybrid Fund in Hubli City
Comprative Analysis of Aditya Birla Sunlife Equity Hybrid 95 Fund & Sebi Equity Hybrid Fund in Hubli City
EXECUTIVE SUMMARY
Vrushti investment & wealth management is founded in the year 2012, majorly in
Finance business from last 7 years Current chairperson is DIVYA VIKAS VIBHUTI &
the Wealth manager VIKAS VIBHUTI. We are one of the premier investment
consultancy firm know for creating wealth with un biased service VRUSHTI Investments
&wealth management is an authorized business associates of BMA WEALTH
CREATORS LTD a BMA Group.The 1000 cr BMA GROUP has created its forte by
promoting successful ventures in the fields of coal mining, refactoring, steel & ferro
alloys in the form of established names in the market such as BMA STAINLESS STEEL
prop.We at VRUSHTI Investments & wealth management make you realize your dreams,
financial needs, aspirations & concerns as closely as you do. We also implement the
strategic wealth creation ideas to create, enhance &preserve your wealth according to
your risk appetite & investment horizon.A Mutual Fund is a trust that pools the savings of
a number of investors who share a common financial goal. The money thus collected is
then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital appreciation
realized is shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost.
CHAPTER 1
INTRODUCTION
This project involves evaluating the performance of two mutual fund scheme.
This project will helps the company (i.e.“Vrushti investments and wealth
management”) to recommend the good scheme in selected two mutual fund
schemes.
In this project risk, return and performance measures are calculated, so that it will
be easy to recommend better scheme.
This project report helps the investor to understand the investment opportunities
in the mutual fund industry.
DATA COLLECTION:
Both primary and secondary data r required to the collection for the purpose of project on
“comparative analysis of two different schemes in mutual fund ”.
Data collection is process of collecting the required topic.
Two types of data collection :
a) Primary data
b) Secondary data
a) Primary data:
Data which r collected for the first time , directly from the field and
communicating with managerial person is called primary data.
The primary data collection done through the direct communicating with
the manager of Vrushti investments and wealth management The primary
data collected by personal visiting to the field and observation.
b) Secondary data :
Secondary data is the data which has been already collected and analyzed by
enumerators .secondary data is also called as second hand data.
Collected through fact sheets.
Collected through internet.
Sahil Jain has measured the performance of equity-based mutual funds for 15 years. 45
schemes were studied over a period of 1997-2012 (15 years).The analysis was done on
the basis of beta risk, expected return calculated using Capital Asset Pricing Model.
Beta is calculated by regressing market return on a mutual fund scheme's return. And
then the expected returns are compared with the actual returns which show whether the
fund has over performed or underperformed or averagely performed. And on the basis
of risk beta and return performance analysis, it is observed that private sector mutual fund
schemes are better than public sector mutual fund schemes. (Jain, 2012)
Sharad Panwar and R. Madhumati studied the public sector and private sector mutual
fund schemes. The period under study is May 2002- May 2005. The study has analyzed
mean returns, standard deviation, variance and coefficient of variation. It reveals that
public sector mutual funds do not differentiate from private sector ones in terms of
mean returns. On the flip side, public sector mutual fund differentiate from the
private sector in terms of standard deviation, variance, and coefficient of variation.
(Sharad Panwar)
Prof. Prajapati and Prof. Patel have evaluated the performance of mutual fund schemes
between the period 2007 to 2011. The risk-return analysis is done. And Treynor
ratio, Sharpe's ratio, Jenson's measure are used for the comparison of mutual fund
schemes. The study concludes that HDFC and Reliance mutual fund has performed
better. But the ICICI and UTI are having lower risk than HDFC and
Reliance. (Prajapati & Patel, 2012)
Ms. Shalini and Ms. Dauly have focused on the journey of mutual fund industry in India
in their paper. The study has tried to predict what the future may hold for the mutual fund
investors in the long run. The study has concluded that the Indian economy is likely to
give high returns. Mutual fund organizations are needed to upgrade their skills and
technology. Mutual fund investors need to develop a sense of
timing and investment discipline. (Ms Shalini Goyal)
In the paper written by Arrathy, Aswathy, Anju, and Pravitha, factors affecting
investment in mutual fund is studied. And the study found that major factors
influencing the investment decision of retail investors are tax benefits, high return, price,
and capital appreciation. Also, equity-based schemes are more preferred. (Arathy B,
2015)
Raghu Anand had analyzed the performance of various mutual fund schemes on the
basis of risk and returns. The study has selected to asset management companies HDFC
and SBI. The statistical tools used are CAGR (compounded annual growth rate), Alpha,
Beta, Standard deviation and Sharpe ratio. The period of study is 2005 to 2014. The
study found that mutual funds as an investment option has tremendous growth
potential. On the basis of CAGR study found that it is better to invest for 1 year. In
terms of risk analysis beta, HDFC seems to be a better fund to invest in. In
terms of expense ratio HDFC is giving better returns. (Anand, 2017)
Tariq Zafar, Chaubey and Syed Imran Nawab Ali have studied the application of
Sharpe's, Treynor’s and Jenson's ratio. Also, study analyses interdependence of funds
and Index. The study concludes that fund performs and is ranked differently. The same
fund may be best as per one criterion and maybe worst as per second criteria. Also, it
found that mutual fund in India has a bright future for a long run under
SEBI regulations. (S. M. Tariq Zafar, 2015)
Choudhary and Chawla have studied the various equity mutual fund schemes. Risk
and returns of mutual fund schemes are analyzed. For the analysis, Sharpe and Treynor
ratio is used. Also, beta, standard deviation, and coefficient of determination are
compared. The study concludes that as per standard deviation 62% schemes are less
risky than the market. And all schemes are having a beta less than 1. Seven out of eight
funds have shown superior performance under the Sharpe and Treynor ratio. (Chawla,
2014)
Chavan and CA Patil has studied the capital asset pricing model with reference to
the S&P BSE Sensex index. The study has empirically tested the validity of the CAPM
model in the Indian stock market with reference to the S&P BSE Sensex Index for the
period of 2011-2015. The study concludes that CAPM is not testable because the true
market portfolio cannot be measured. (Chavan & Patil , 2019)
CHAPTER 2
INDUSTRY AND COMPANY PROFILE
Industry
Mutual fund industry today is a booming investment sector with more than 30
players. And these players bring plenty of schemes to there investor. Some of them
gained the trust of there investors, and still some gained the mutual fund awards from the
industry. Between these healthy competitions the investors are getting some good
investment schemes. However with a plethora of schemes to choose from, the investor
faces many problems that is he will get struck in thinking that should I take more risk or
should I invest in some other investment sector for ex. In Banking.
World wide good mutual companies over are known by their AMC’s and this
fame is directly linked to their superior stocks selection skill. For mutual fund to grow,
AMC’s must be held accountable for their selection of stocks. In other words there must
be some performance indicator that will reveal th equality of stock selection of various
AMC’s
We have seen that many of the mutual fund schemes are giving good returns to its
investors, here we should not assume that the good return giving schemes are better to
invest, because return alone should not be consider as the basis of measuring of the
performance of a mutual fund sachem. It should also include the risk taken by the fund
manager, because as we know that the fund manager invest the pooled fund into
securities in this securities there are many companies like large cap companies small cap
companies and mid cap companies while investing into these share market the fund
10
manager has to study the companies and invest, if he invest in high risk yielding
companies then there will be very risk in investing into such type of fund.
11
COMPANY PROFILE:-
Type : Franchise
Industry : VRUSHTI investment &Wealth management
Founded : 2012
Branch : Hubli
Area served : Dharwad, Belagum, Bangalore, and Mysore.
Founder : Divya.V
Key people : Vikas. S. Vibhuti. (Manager)
Service : Financial planning, Wealth management.
-: COMPANY PROFILE:-
We are one of the premier investment consultancy firm, known for creating wealth with
un based service and excellence. Vrushti investments and wealth management is an
authorized business associate of BMA WEALTH CREATORS LTD a BMA GROUP.
The 1000 crore BMA GROUP has created its forte by promoting successful ventures in
the field of coal mining, refractory steel and Ferro alloys in the form of established names
in the market such as BMA STAINLESSS STEEL (captain TMT Bars) prop. Snowed
Udyog ltd, Maintan smelters limited, and BMA international. Its continuous strive to
12
achieve excellence and keeps it abreast of the latest in technology and business practices
there by making it customer oriented while forging alliance high quality standards and
proactive business standards.
We at VRUSHTI investment and wealth management make you realize your dreams,
financial needs, aspirants and concern as you do. We also implement the strategic wealth
creation ideas to create enhance and preserve your wealth according to your risk appetite
and investment horizon.
OUR APPROACH:
Research based investment advisory
We extremely value investors trust
Personalized investment solution
Wide range of network across all our product
Customized portfolios
Re balancing of existing portfolios
Personalized client servicing
Individually managed accounts
Integrity and honesty
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fund and to beat the today’s monstrous inflation in an easiest way either by lump
sum or through (SIP) systematic investment plan route.
EQUITY:
Gone are the days where an individual used to invest in a bank fixed deposits.
FINANCIAL MARKETS history reveals there are number of LARGE CAP, MID
CAP, and SMALL CAP, companies which have delivered double digit returns and
dividend consistently. We serve you better by picking fundamentally and technically
sound companies to create your wealth for short term and long term and medium
term. We provide you both online and offline trading platforms to invest in equities
with NSE and BSE exchanges registered stockbroker.
PORTFLIO MANAGEMENT:
In today’s digital world its more difficult task to manage your investment
portfolio, PMS is studied for the investors who would like to diversify their
investment portfolio within board equity class. Who are in need of personalized
investment advice in tune with their specific requirements…
WEALTH MANAGEMENT:
We manage our client’s wealth in well-organized manner and keep you regularly
updated through our constant communication. We also provide you unique
platform where you can see all your investments like MUTUAL FUNND, SIP’S,
INSURANCE, DEPOSITS, RECURRING DEPOSITS, GOLD, PPF, NSE, TAX
SAVING, BONDS, CAPIRTAL GAIN BONDS, with accuracy.
14
SERVICE PROVIDES:
1. Mutual fund SIP
2. Portfolio management
3. Equity
4. IPO’s
5. Wealth management
6. NSE
7. Life insurance
8. PPF
9. KVP
10. General insurance
11. Tax planning advisory
15
SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an
enviable track record in judicious investments and consistent wealth creation.
The fund traces its lineage to SBI - India’s largest banking enterprise. The
institution has grown immensely since its inception and today it is India's largest bank,
patronized by over 80% of the top corporate houses of the country.
SBI Mutual Fund is a joint venture between the State Bank of India and Society
General Asset Management, one of the world’s leading fund management companies that
manages over US$ 330 Billion worldwide.
In eighteen years of operation, the fund has launched thirty-two schemes and
successfully redeemed fifteen of them. In the process it has rewarded it’s investors
handsomely with consistently high returns.
A total of over 3.5 million investors have reposed their faith in the wealth
generation expertise of the Mutual Fund. Schemes of the Mutual fund have
consistently outperformed benchmark indices and have emerged as the preferred
investment for millions of investors and HNI’s.
Today, the fund manages over Rs. 16500 crores of assets and has a diverse
profile of investors actively parking their investments across 30 active schemes.
16
The fund serves this vast family of investors by reaching out to them through
network of 100 collection branches, 26 investor service centers, 28 investor service
desks and 52 districts organize
17
Equity scheme
The investments of these schemes will predominantly be in the stock markets and
endeavor will be to provide investors the opportunity to benefit from the higher returns
which stock markets can provide. However they are also exposed to the volatility and
attendant risks of stock markets and hence should be chosen only by such investors who
have high risk taking capacities and are willing to think long term. Equity Funds include
diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds
invest in various stocks across different sectors while sectoral funds which are specialized
Equity Funds restrict their investments only to shares of a particular sector and hence, are
riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of
a particular index and the performance of such funds move with the movements of the
index.
LIPPER AWARD
ICRA
OUTLOOK MONEY
LIPPER AWARDS
CNBC
LIPPER AWARDS
ICRA
Aditya Birla Sun Life Mutual Fund was established in 1994 as a joint venture between
Aditya Birla Group and Sun Life Financial Inc. of Canada. The fund house deals in 4
main fund classes, namely, Equity Funds, Debt Funds, Income Funds and ELSS Funds,
all with good crisil rating. It has completed more than 20 years in its journey to offer
wealth creation solutions to its customers.
Whether you are a seasoned investor or a novice in this area, investing in ABSLMF is
made very simple with Clear Tax. You can visit Clear Tax to pick from a diverse list of
handpicked funds that are designed keeping in mind the risk profile and investment
objective of investors. You can be assured of a hassle-free quick process of selecting any
product from your favorite fund house – ABSLMF, with Clear tax. This requires just
one KYC formality that will take not more than 7 minutes of your time. Clear Tax makes
investing simple for you.
Money laundering and corruption can cripple the economy and the stability of our
country. Here, Know Your Customer (KYC) and In-Person Verification (IPV) can help a
financial institution significantly. However, Clear Tax doesn’t believe in inconveniencing
their investors. So they have enabled a way to do KYC in a quick and simple way.
What’s more, if investing via Clear Tax Save, the investor needs to do it only once for
their first investment.
KYC is necessary for all fund houses. If you are investing through Clear Tax, you need to
do your KYC just once. The same KYC will be used for all your future investments.
KYC verification through Clear Tax is a very simple process. You can verify by:
Aditya Birla Sun Life Advantage Fund 8.60 11.28 21.81 11.50
Aditya Birla Sun Life Equity Fund 9.89 12.87 21.55 11.93
Aditya Birla Sun Life Floating Rate 6.87 7.38 8.13 7.98
Fund
Aditya Birla Sun Life Focused Equity 7.49 8.73 16.90 12.01
Fund
Aditya Birla Sun Life Frontline Equity 8.41 9.08 16.35 12.62
Fund
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ABSLMF: Equity
ABSLMF Equity Funds are medium to high-risk funds invested in stocks and equities
that offer investors dynamic returns on their investments. The schemes are designed
for long term capital appreciation and are curated to meet investment needs based on
individual risk appetite.
CHAPTER 3
THEROTICAL BACKGROUND OF THE
STUDY
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a major part of their corpus in equities.
Such funds have comparatively high risks. These schemes provide different options to
the investors like dividend option, capital appreciation, etc. and the investors may
choose an option depending on their preferences. The investors must indicate the
option in the application form. The mutual funds also allow the investors to change
the options at a later date. Growth schemes are good for investors having a long-term
outlook seeking appreciation over a period of time.
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments. Such funds are
less risky compared to equity schemes. These funds are not affected because of
fluctuations in equity markets. However, opportunities of capital appreciation are also
limited in such funds. The NAVs of such funds are affected because of change in
interest rates in the country. If the interest rates fall, NAVs of such funds are likely to
increase in the short run and vice versa. However, long term investors may not bother
about these fluctuations.
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as
such schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for
moderate growth. They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAVs of such funds are likely to be less volatile compared to pure
equity funds.
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in
safer short-term instruments such as treasury bills, certificates of deposit, commercial
paper and inter-bank call money, government securities, etc. Returns on these
schemes fluctuate much less compared to other funds. These funds are appropriate for
corporate and individual investors as a means to park their surplus funds for short
periods.
Gilt Fund:
Index Funds:
Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities
in the same weight age comprising of an index. NAVs of such schemes would rise or
fall in accordance with the rise or fall in the index, though not exactly by the same
percentage due to some factors known as "tracking error" in technical terms.
Necessary disclosures in this regard are made in the offer document of the mutual
fund scheme.
There are also exchange traded index funds launched by the mutual funds which are
traded on the stock exchanges.
These are the funds/schemes which invest in the securities of only those
sectors or industries as specified in the offer documents. e.g. Pharmaceuticals,
Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns
in these funds are dependent on the performance of the respective sectors/industries.
While these funds may give higher returns, they are more risky compared to
diversified funds. Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time. They may also seek advice of
an expert.
These schemes offer tax rebates to the investors under specific provisions of
the Income Tax Act, 1961 as the Government offers tax incentives for investment in
specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes
launched by the mutual funds also offer tax benefits. These schemes are growth
oriented and invest pre-dominantly in equities. Their growth opportunities and risks
associated are like any equity-oriented scheme.
A scheme that invests primarily in other schemes of the same mutual fund or
other mutual funds is known as a FoF scheme. An FoF scheme enables the investors
to achieve greater diversification through one scheme. It spreads risks across a greater
universe.
A Load Fund is one that charges a percentage of NAV for entry or exit. That
is, each time one buys or sells units in the fund, a charge will be payable. This charge
is used by the mutual fund for marketing and distribution expenses. Suppose the NAV
per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors
who buy would be required to pay Rs.10.10 and those who offer their units for
repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should
take the loads into consideration while making investment as these affect their
yields/returns. However, the investors should also consider the performance track
record and service standards of the mutual fund which are more important. Efficient
funds may give higher returns in spite of loads.
Affordability:
Investors individually may lack sufficient funds to invest in high grade stocks.
A mutual fund because of its large corpus allows even a small investor to take the
benefits of its investment strategy.
Convenient administration:
Investment in mutual fund reduces paper work and helps in avoiding many
problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual fund saves time and makes investing easy and convenient.
Diversification:
Flexibility:
Liquidity:
In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the mutual fund. In closed-end schemes the units can be sold on a
stock exchange at the prevailing market price or the investor can avail of the facility
of direct repurchase at NAV related prices by the mutual fund.
Low costs:
Mutual funds are a relatively less expensive way to invest capital markets because the
benefits of scale in brokerage, custodial and other fees transaction into lower costs for
investors
Professional management:
Mutual funds provide the services of experienced and skilled professionals, backed by
a dedicated investment research team that analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.
Return potential:
Over a medium to long term mutual funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
Choice of scheme:
Mutual funds offer a family of schemes to suit your varying needs over a lifetime.
Transparency
Well regulated:
All mutual funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interest of investors. The
operations of mutual funds are regularly monitored by SEBI.
The origin of mutual fund industry in India is with the introduction of the concept
of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated
from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen dramatic improvements,
both quality wise as well as quantity wise. Before, the monopoly of the market had seen
an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector
entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004;
it reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total
of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits
held by the Indian banking industry. The main reason of its poor growth is that the
mutual fund industry in India is new in the country. Large sections of Indian investors are
yet to be
intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund
companies, to market the product correctly abreast of selling.
The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian
Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct
92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under
management.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets
under management was way ahead of other mutual funds.
This phase had bitter experience for UTI. It was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with AUM of
Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of India
and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With
the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores
of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and growth.
As at the end
of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under
421 schemes.
SEBI Regulations:
MEAN:
The return on any investment measured over a given period of time is simply the sum
of its capital appreciation and any income generated divided by the original amount of
the investment, which is expressed as percentage .the term applied to this composite
calculation is total return.
Standard Deviation
The square root of the variance in a series. It shows how the data are spread
out. A measure of the dispersion of a set of data from its mean. The more spread apart
the data is, the higher the deviation.
In finance, standard deviation is applied to the annual rate of return of an
investment to measure the investment’s volatility (risk).
A volatile stock would have a high standard deviation. In mutual funds the
standard deviation tells us how much the return on the fund is deviating from the
expected normal returns. Standard deviation can also be calculated as the square root
of the variance. To determine how well a fund is maximizing the return received for
its volatility, you can compare the fund to another with a similar investment strategy
and similar returns. The fund with the lower standard deviation would. Be more
optimal because it is maximizing the return received for the amount of risk acquired
Variance
Variance (σ2) is a measurement of the spread between numbers in a data set. It
measures how far each number in the set is from the mean and is calculated by taking
the differences between each number in the set and the mean, squaring the differences
(to make them positive) and dividing the sum of the squares by the number of values
in the set.Variance is one of the key parameters in asset allocation. Along with
correlation, the variance of asset returns helps investors to develop optimal portfolios
by optimizing the return-volatility trade-off in investment portfolios.
The various methods for measuring mutual fund returns are as follows.
Calculation is as follows
In case the period is not equal to one year then there will be change calculation.
Converting a return value for a period other than one year, into a value for 1 year is
called as annualisation. In order to annualize a rate, we find out what the return would
be for a year, if the return behaved for a year, in the same manner it did, for any other
fractional period.
Calculation is as follows
This method is simple and very easy to calculate and understand. However,
examining return over a single period may not provide an indication of long term
returns. An important limitation also is that this method is more useful for computing
returns on growth options of mutual fund schemes. It may not be suitable for
computing returns on schemes with dividend distributions or withdrawal plans.
Calculation is as follows
This return is called the simple annualized return from investing in mutual fund.
The total return method takes into account the dividend distributions and is
therefore comparable across various kinds of mutual fund classes. The most important
limitation of this method is that it does not take into account the re – investment of
dividends received at the intervening period.
This method is also called the return of investment (ROI) method. In this
method, we assume that dividend are re- invested into the scheme as soon as they are
received at the then prevailing NAV (ex-dividend NAV).
(Value of the holding at the end of the period/value of the holdings at the
beginning of the period)-1)* 100
Value of holding at the beginning of the period = number of units at the beginning *
beginning NAV.
Value of holding at the end of the period = number of units at the end * end NAV.
1. Mutual funds can only use standard return computations such as annual
dividend on face value, annual yield on purchase price, and annual
compounded rate of return.
2. If the scheme has been in existence for over a year, compounded annual yield
is the accepted method of calculating return.
3. return calculations for funds with payouts should assume that dividend are
reinvested at the ex- dividend NAV
4. Return should be shown for the past 1,3 and 5 years of the scheme, or since
inception, which ever is lower.
5. For funds in existence for less than one year, total returns should be shown,
and such returns should not be annualize or compounded.
Sharpe Ratio:
The Sharpe Ratio is calculated by taking the return of the portfolio and subtracting the
risk- free return ,then dividing the result(the excess return) by standard deviation of
the portfolio return .Basically ,it is measuring excess return (over risk-free rate) per
unit of risk.
Annual Return:
The percentage of change in net asset value over a year's time, assuming
reinvestment of distribution such as dividend payment and bonuses.
Annualized Return:
This is the hypothetical rate of return, if the fund achieved it over a year's
time, would produce the same cumulative total return if the fund performed
consistently over the entire period. A total return is expressed in a percentage and tells
you how much money you have earned or lost on an investment over time, assuming
that all dividends and capital gains are reinvested.
Benchmark:
Capital Appreciation:
As the value of the securities in a portfolio increases, a fund's Net Asset Value
(NAV) increases, meaning that the value of your investment rises. If you sell units at
a higher price than you paid for them, you make a profit, or capital gain. If you sell
units at a lower price than you paid for them, you'll have a capital loss.
Compounding:
When you deposit money in a bank, it earns interest. When that interest also
begins to earn interest, the result is compound interest. Compounding occurs if bond
income or dividends from stocks or mutual funds are reinvested. Because of
compounding, money has the potential to grow much faster.
Entry Load:
Load on purchases/ switch-out of units.
Equity Schemes:
Schemes where more than 50% of the investments are made in the equity
shares of various companies. The objective is to provide capital appreciation over a
period of time.
Exit Load:
Load that is charged on redemptions i.e. during the exit of the fund.
Fund Category:
It is a type of scheme which the mutual fund company invests its corpus in a
particular category. It could be a growth, debt, balanced, gilt or liquid scheme
Fund Family:
It is the AMC which manages the various types of funds.
Fund Manager:
The person who makes all the final decisions regarding investments of a
scheme, i.e. the person who makes all the investment decisions.
Investment Objective:
The identification of attributes associated with an investment or investment
strategy, designed to isolate and compare risks, define acceptable levels of risk, and
match investments with personal goals.
Load:
A charge that is levied as a percentage of NAV at the time of entry into the
Scheme/Plans or at the time of exiting from the Scheme/Plans.
No-Load Scheme:
A Scheme where there is no initial Entry or Exit Load.
Mutual Funds:
Net Worth:
A person's net worth is equal to the total value of all possessions, such as a
house, stocks, bonds, and other securities, minus all outstanding debts, such as
mortgage and revolving credit lines.
Net Yield:
Rate of return on a security net of out-of-pocket costs associated with its
purchase, such as commissions or markups.
The price at which a fund offers to sell one unit of its scheme to investors.
This NAV is grossed up with the entry load applicable, if any.
Sales Charge:
Fee on the purchase of new shares of a mutual fund. A sales charge is similar
to paying a premium for a security in that the customer must pay a higher offering
price. Sometimes, it is called a load.
Scheme:
It is a fund or plan where the money contributed by the unit holders are maintained
and managed and the profit/loss from the scheme accrue only to the unit holders. A
mutual fund can launch more than one scheme.
Total Return%:
Return on an investment, taking into account capital appreciation, dividends or
interest, and individual tax considerations adjusted for present value and expressed on
an annual basis.
Unit:
Unit representing a share in the assets of the corresponding plan of the
Scheme.
Unit Holder:
A person who holds Unit(s) under any plan of the Scheme.
Valuation:
Calculating the market value of the assets of a mutual fund scheme at any
point of time.
Volatility:
Volatility Measures:
Volatility measures the variability of historical returns. Relative Volatility,
Beta, and R2 compare a portfolio's total return to those of a relevant market,
represented by the benchmark index. Standard Deviation is calculated independent of
an index.
CHAPTER 4
DATA ANALSIS AND INTERPRETATION
FUND
YEAR RETURN X
2015 2.98
2016 8.36 -2.69
2017 25.2 -8.42
2018 -4.64 14.92
2019 4.62 -4.63
2020 11.47 -3.425
Total -4.245
Mean -0.849
Year Fund X
Return
2015 6.57
2016 3.24 1.665
2017 27.35 -12.055
2018 0.31 13.52
2019 13.23 -6.46
2020 12.75 0.24
Total -3.09
Mean -0.618
INTERPRETATION:
Above calculation shows the returns (mean) of ADITYA BIRLA SUN LIFE Equity
fund and SBI equity hybrid fund. The return of ADITYA BIRLA SUN LIFE Equity
fund is -0.849 and return in SBI equity fund is -0.618. So we can say that the return
of SBI Equity Hybrid fund is more than ADITYA BIRLA SUN LIFE Equity fund.
X- (X-
YEAR X MEAN MEAN)2
2016 -1.841 3.3892
-2.69
2017 -7.571 57.3200
-8.42
2018 15.769 248.6613
14.92
2019 -3.781 14.2959
-4.63
2020 -2.576 6.6357
-3.425
TOTAL 330.3021
-4.245
MEAN -0.849
VARIANCE 66.06
X-
YEAR X MEAN (X-MEAN)2
2016 1.665 2.283 5.2121
2017 -12.055 -11.437 130.8049
2018 13.52 14.138 199.8830
2019 -6.46 -5.842 34.1289
2020 0.24 0.858 0.7361
Total -3.09 370.765
Mean -0.618
Variance 74.153
INTERPRETATION:
Above calculation shows the risk (Fluctuations) i,e. variance of ADITYA BIRLA
SUN LIFE equity fund and SBI hybrid equity fund. The risk of ADITYA BIRLA
SUN LIFE equity fund is 66.06 and SBI hybrid equity fund 74.153. It shows less
fluctuations in ADITYA BIRLA SUN LIFE equity fund. And more fluctuations in
ADITYA BIRLA SUN LIFE equity fund So investor can prefer ADITYA BIRLA
SUN LIFE equity fund to invest.
X- (X-
YEAR X MEAN MEAN)2
2016 -1.841 3.3892
-2.69
2017 -7.571 57.3200
-8.42
2018 15.769 248.6613
14.92
2019 -3.781 14.2959
-4.63
2020 -2.576 6.6357
-3.425
TOTAL 330.3021
-4.245
MEAN -0.849
VARIANCE 66.06
SD 9.08
X- (X-
YEAR X MEAN MEAN)2
2016 1.665 2.283 5.2121
2017 -12.055 -11.437 130.8049
2018 13.52 14.138 199.8830
2019 -6.46 -5.842 34.1289
2020 0.24 0.858 0.7361
Total -3.09 370.765
Mean -0.618
Variance 74.153
SD 9.62
INTERPRETATION:
As seen in the above calculation ADITYA BIRLA SUN LIFE EQUITY FUND
standard deviation (risk) 9.08% and SBI hybrid equity fund risk is 9.62% ,that means
SBI hybrid equity fund has more risk than ADITYA BIRLA SUN LIFE equity fund.
So investor can invest in SBI hybrid equity fund which is having less risk.
CHAPTER 5
SUMMARRY OF FINDINGS,
SUGGESTIONS AND CONCLUSION
5.1 FINDINGS
1. Here between the chosen schemes SBI HYBRID EQUITY FUND is having
higher return as compared to ADITYA BIRLA SUN LIFE Equity fund. So it
is obvious to say that SBI HYBRID EQUITY FUND is on an average
performing well, in terms of average daily return.
3. It reveals that ADITYA BIRLA SUN LIFE Equity fund standard deviation
(risk) is less compared to SBI HYBRID EQUITY FUND.
4. So it should be noted that SBI HYBRID EQUITY FUND having high risk
and more return as compared to ADITYA BIRLA SUN LIFE Equity fund
which is having high risk and less return
5. SBI HYBRID EQUITY MUTUAL FUND beta value is greater than ADITYA
BIRLA SUN LIFE Equity fund beta value. So we can consider that high
volitality and high risk.in the long term horizon is in the present scenario.
5.2 SUGGESTIONS
1. Here I would like to suggest, the Investors should consider the risk and
returns while investing into the company.
2. From this project report it is clear that the investors who want to take high risk
and higher return they can go for SBI HYBRID EQUITY MUTUAL FUND -
Growth.
3. Here I also suggest the company to make some awareness campaign because
most of the people who are interested to earn through investment in companies
are not aware about the concept of mutual fund.
5.3 CONCLUSION
In the conclusion part I have compared the two schemes with each other and
suggested that which schemes is having less risk and high return compare to other
scheme.
From the project report we can conclude that SBI hybrid equity Fund is having
high risk with high returns and also performing good compared to ADITYA BIRLA
SUN LIFE Equity Fund is having high risk and less return compare to SBI hybrid
equity Fund.
At present both schemes are performing good and are meeting the investor’s
expectations. SBI hybrid equity Fund is more volatile than that of ADITYA BIRLA
SUN LIFE Equity Fund.
From the overall study we can conclude that SBI hybrid equity Fund . is safe
investment for the investors who are looking for long term investment.
BIBLIOGRAPHY
Books:-
Web sites:-
www.amfiindia.com
www.mutualfundsindia.com
www.bseindia.com
www.nseindia.com
www.ask.com
www.icicipru.com
www.hdfcfund.com
www.fundsindia.com
News papers:-
Business lines
Business standard
Mutual Fund Insight
Reference:-
1)Anuja Magdu & CA. Girish A.Samant in “ A Comparative Study on Mutual
Fund Schemes of Selected AMC’s in India” 117, March 2019, 2456-6470
ANNEXURE