A

Project Report

(Submitted for the Degree of B.Com under the

Ravenshaw University)

ON

A COMPARATIVE ANALYSIS OF
SELECTED MUTUAL FUNDS IN INDIA
DURING PERIOD 2009-10 TO 2013-14
Submitted by: Omm Uddesh Nanda
Roll No- 21DCO-167

Under Guidance of :
Dr. Suprava Sahu
Ravenshaw University, Cuttack.

Department of Commerce
Ravenshaw University,

1
 SUPERVISOR’S CERTIFICATE

This is to certify Omm Uddesh Nanda a student of B.com Department

under the Ravenshaw University has worked under supervision and
guidance for his Project work and prepared a Project Report with the
title : A COMPARATIVE ANALYSIS OF SELECTED MUTUAL
FUNDS IN INDIA DURING PERIOD 2009-10 TO 2013-14
which he is submitting is his genuine and original work to the best of my
knowledge.

DATED : SIGNATURE:
Cuttack

2
 STUDENT’S DECLARATION

I hereby declare that the Project Work with the title : A COMPARATIVE
ANALYSIS OF SELECTED MUTUAL FUNDS IN INDIA DURING THE
PERIOD 2009-10 TO 2013-14 submitted by me for the partial fulfillment of the
degree of B.Com under the Ravenshaw University is my original work and has
not been submitted earlier to any other university for the fulfillment of the
requirement for any course of study .

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has been
duly acknowledged providing details of such literature in the references.

Roll No : 21DCO-167 Signature :

Omm Uddesh Nanda
Place : Cuttack

Date:

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 ACKNOWLEDGEMENT

I have taken efforts in this project. However , it would not have been possible
without the kind support and help of many individuals . I would like to extend my
sincere thanks to all of them .

I am highly indebted to my teachers and project supervisor for their guidance and
regarding the project & also for their support in completing constant supervision as
well as for providing necessary information the project .

I would like to express my gratitude towards my parents , friends and brother for
their kind co-operation and encouragement which helped me in completion of this
project . I would like to express my special thanks to official persons and mutual
fund agents for giving me such attention and time .

I thank you one and all .

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 INTRODUCTION

Mutual fund is the pool of the money, based on the trust who invests the savings of
a number of investors who shares a common financial goal, like the capital
appreciation and dividend earning. The money thus collect is then invested in
capital market instruments such as shares, debenture, and foreign market. Investors
invest money and get the units as per the unit value which we called as NAV (net
assets value). Mutual fund is the most suitable investment for the common man as
it offers an opportunity to invest in diversified portfolio management, good
research team, professionally managed Indian stock as well as the foreign market,
the main aim of the fund manager is to taking the scrip that have under value and
future will rising, then fund manager sell out the stock. Fund manager
concentration on risk – return trade off, where minimize the risk
and maximize the return through diversification of the portfolio.
The most common features of the mutual fund unit are low cost.

For individual investors who don’t have the time to study and
research investments, mutual funds are the best option for
reaping the benefits of diversified investments with minimum
efforts . In most funds , it is possible to start investing with as
little as a few hundred rupees . Mutual fund are highly liquid and
can be withdrawn without any delay .

In india , mutual funds are registered with the Securities and

Exchange board of India today are registered by SEBI. The association of mutual
fund of India (AMFI) is a self governing association of mutual funds that regulates
its member sales , distribution and communication practices . Investors can invest
in Indian mutual funds directly or through distributors under codes of practice
developed by AMFI.

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6
 EQUITY
FUNDS
Equity mutual funds may
be described as “A mutual
that invests principally in
stocks” . It can be actively
or passively managed.
Stock mutual funds are
the principally
categorized according to
company size , the
investment style of
holdings in the portfolio.
There are many types of
fund they are as follows –
LARGE CAP – Funds
with more than 80% of
assets in large cap
companies over last 3
years .
LARGE AND MID
CAP – Funds with
between 60%-80% of
assestsin large cap
companies over last 3
years .
MID AND SMALL
CAP – Funds with at
least 60% of assests in
samall and mid cap
companies over last 3
years .
DEBT FUNDS HYBRID
FUND
An investment pool such
as a mutual fund or A fund that combines a
exchange traded fund , in stock component , a bond
which core holdings are component and
fixed income instruments sometimes a money
. A debt fund invest in market component in a
single portfolio .
short term or long term
Generally these hybrid
bonds , securitized
funds stick to a relatively
products , money market
instruments are the fixed mix of stocks and
floating instrument where bonds that reflects either a
moderate or conservative
risk is very high .
orientation . A balanced
Different types of debt
funds are as follows – fund is geared towards
investors who are looking
for a mixture of safety
INCOME – Funds income and capital
which can vary their appreciation . different
average maturity widely . types of funds are as
follows –
GILT – MEDIUM
AND LONG TERM –
Funds which invest in EQUITY ORIENTED –
Hybrid fund whose
guilt gilt securities and
average equity exposure
can vary their average
over the last 1 year is
maturity widely .
SHORT TERM – greater than 60 % .
Funds whose average
DEBT ORIENTED –
maturity over the last 6 AGGRESSIVE – Hybrid
months is between 1 funds whose average
year – 4.5 years. equity exposure over the
last 1 year is between 25
GILT SHORT and 60%.
TERM – Funds which
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TAX PLANNING – invests in gilt securities CONSERVATIVE –
Funds whisch offer tax with average maturity is Hybrid funds whose
rebate under section 80C 6 months . equity exposure over the
of the income tax act . last 1 year is less than
25%.
ULTRA SHORT
INTERNATIONAL TERM – Funds whose ARBITAGE- Funds
– Funds with more than average maturity over last which seeks returns from
65% of assests of invested 6 months is less than 1 arbitrage opportunities
abroad . year . between equity and
deriviatives and invest in
BANKING SECTOR LIQUID FUND – debt when no arbitrage is
FUND - As per declared Fundswhich do not invest possible .
objective . any part of assets in
securities with a residual ASSET ALLOCATION
PHARMA SECTOR maturity of more than 91 – Funds which may invest
days . fully in equity or debt
FUND – As per the depending on the market
declared objective .
conditions .

POWER SECTOR
FUND – As per the
declared objective Etc.

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 LITERATURE REVIEW

Literature on mutual fund performance evaluation is enormous. A few research

studies that have influenced the preparation of this paper substantially are
discussed in this section Sharpe, William F. (1966) suggested a measure for
the evaluation of portfolio performance. Drawing on results obtained in
the field of portfolio analysis, economist Jack L. Treynor has suggested a
new predictor of mutual fund performance, one that differs from virtually all those
used previously by incorporating the volatility of a fund's return in a
simple yet meaningful manner.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio

performance (Jensen’salpha) that estimates how much a manager’s forecasting
ability contributes to fund’s returns. As indicated by Statman (2000), the e SDAR
of a fund portfolio is the excess return of the portfolio over the return of the
benchmark index, where the portfolio is leveraged to have the benchmark index’s
standard deviation.

S.Narayan Rao evaluated performance of Indian mutual funds in a bear market

through Jensen’s measure, and Fama’s measure. The study used 269 open-ended
schemes (out of total schemes of 433) for computing relative performance index.
Then after excluding funds whose returns are less than risk-free returns,
58 schemes are finally used for further analysis. The results of performance
measures suggest that most of mutual fund schemes in the sample of 58were able
to satisfy investor’s expectations by giving excess returns over expected returns
based on both premium for systematic risk an total risk BIJON ROY
conducted an

Empirical study on conditional performance of Indian mutual funds. This

paper uses a technique called conditional performance evaluation on a sample
of eighty-nine Indian mutual fund schemes .This paper measures the performance
of various mutual funds with both unconditional and conditional
f o r m of C A P M . The results suggest that the use of conditioning lagged
information variables improves the performance of mutual fund schemes, causing
alphas to shift towards right and reducing the number of negative timing
coefficients.

9
 Mishra Gupta (2002) measured mutual fund performance using lower partial
moment. In this paper, measures of evaluating portfolio performance based on
lower partial moment are developed. Risk from the lower partial moment is
measured by taking into account only those states in which return
is below a pre-specified “target rate” like risk-free rate.

Kshama Fernandes (2003) evaluated index fund implementation in India. In

this paper, tracking error of index funds in India is measured. The
consistency and level of tracking errors obtained by some well-run index fund
suggests that it is possible to attain low levels of tracking error under
Indian conditions. At the same time, there do seem to be periods where
certain index funds appear to depart from the discipline of indexation.

K. Pendarakietal. methodology is based on the combination of discrete and

continuous multi-criteria decision aid methods for mutual fund selection and
composition. UTADIS multi-criteria decision aid method is employed in order to
develop mutual fund’s performance models. Goal programming model is
employed to determine proportion of selected mutual funds in the final.

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 PROJECT OBJECTIVE

OBJECTIVE
PRIMARY :
They main objective of this study is doing an in depth analysis of Mutual Fund
Portfolio by taking sample of funds and comparing it with others.

SECONDARY :
1) TO understand the concept of portfolio management and its relation with
mutual fund.
2) To evaluate and understand a portfolio consisting the best mutual fund
scheme which will earn highest possible refuses and will minimize the risk
3) To understand the process of portfolio revision using different types of plans
.
4) Also to analyze the performance of mutual fund scheme on the basis of
various parameters .

LIMITATION :
Although the report has been made on the basis of relevant facts and figures but
certain problem have been faced , which are follows –

1) The time constraint was one of the major problems .

2) The portfolio of mutual investment can change according to the market
condition .

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 RESEARCH METHODOLOGY

DATA SOURCE : The present study is mainly based on secondary data

sources as obtained from company websites , brochures , journals and magazines.

PERIOD OF STUDY : The study is conducted for the period 2009-2010

to 2013-2014 .

METHODOLOGY : The study involves simple statistical tools like pie

charts and bar graphs for the purpose of analysis .

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 ORGANIZATION STRUCTURE OF
MUTUAL FUND

Mutual funds have organization structure as per the Security Exchange Board of
India guideline, Security Exchange Board of India specified authority and
responsibility of Trustee and Asset Management Companies. The objectives is to
controlling, to promoted, to regulate, to protected the investors right and efficient
trading of units. Operation of Mutual fund start with investors save their money on
mutual fund, than Mutual Fund manager handling the funds and strategic
investment on scrip. As per the objectives of particular scheme manager selected
scripts. Unit value will become high when fund manager investment policy
generate the return on capital market. Unit return depends on at last economic
policy. Below the graph indicates how the process was going on to investors to
earn returns. Mutual fund manager having high responsibility inside of return and
how to minimize the risk. fund return and efficient capital market. Also affects
international capital market, liquidity and When fund provided high return with
high risk, investors attract to invest more fund for same scheme.

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 ORIGIN OF MUTUAL FUNDS IN
INDIA

The history of mutual funds dates backs to 19th century when it was introduced in
Europe, in particular, Great Britain. Robert Fleming set up in 1968 the first
investment trust called Foreign and Colonial Investment Trust which promised to
manage the finances of the moneyed classes of Scotland by spreading the
investment over a number of different stocks. This investment trust and other
investments trusts which were subsequently set up in Britain and the US,
resembled today’s close – ended mutual funds. The first mutual in the U.S.,
Massachusetts investor’s Trust, was set up in March 1924. This was the open –
ended mutual fund

The stock market crash in 1929, the Great Depression, and the outbreak of the
Second World War slackened the pace of mutual fund industry, innovations in
products and services increased the popularity of mutual funds in the 1990s and
1960s. The first international stock mutual fund was introduced in the U.S. in
1940. In 1976, the first tax – exempt municipal bond funds emerged and in 1979,
the first money market mutual funds were created. The latest additions are the
international bond fund in 1986 and arm funds in 1990. This industry witnessed
substantial growth in the eighties and nineties when there was a significant
increase in the number of mutual funds, schemes, assets, and shareholders. In the
US, the mutual fund industry registered a ten – fold growth the eighties. Since
1996, mutual fund assets have exceeded bank deposits. The mutual fund industry
and the banking industry virtually rival each other in size.

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 GROWTH OF MUTUAL FUNDS

By the year 1970, the industry had 361 Funds with combined total assets of 47.6
billion dollars in 10.7 million shareholder’s account. However, from 1970 and on
wards rising interest rates, stock market stagnation, inflation and investors some
other reservations about the profitability of Mutual Funds, Adversely affected the
growth of mutual funds. Hence Mutual Funds realized the need to introduce new
types of Mutual Funds, which were in tune with changing requirements and
interests of the investors. The 1970’s saw a new kind of fund innovation; Funds
with no sales commissions called “ no load “ funds. The largest and most
successful no load family of funds is the Vanguard Funds, created by John Bogle
in 1977.
In the series of new product, the First Money Market Mutual Fund (MMMF) i.g.
The Reserve Fund” was started in November 1971. This new concept signaled a
dramatic change in Mutual Fund Industry. Most importantly, it attracted new small
and individual investors to mutual fund concept and sparked a surge of creativity in
the industry.

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 PHASES

The mutual fund industry in India started in 1963 while formation of Unit trust of
India , at the initiative of government of India and Reserve Bank of India . The
history of mutuals funds in India can be broadly divided into four distinct phases .

FIRST PHASE -1964-1987 – Unit Trust Of India was established in 1963 by the
act of parliament . It was set up by the Reserve Bank Of Indiaand functioned by the
Regulatory and admistrative control of Reserve Bank of India . In 1978 UTI was
de-linked from RBI and the Industrial Development Bank Of India (IDBI) took
over the regulatory and administrative control in place of RBI . The first scheme
launched by the UTI scheme 1964. At the end of 1988 UTI had Rs 6700 crores of
assets under management .

SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUND ) –

1987 marked the entry of non – UTI , public sector mutual funds set up by the
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation (GIC) . SBI mutual fund was the first non UTI mutual fund
established in June in 1987 followed by Canbank Mutual Fund (Dec87) , Punjab
National Bank mutual fund (Aug89) , Indian Bank Mutual Fund (Nov 89) . LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990 . At the end of 1993 , the mutual fund industry had assets under
management of Rs 47,004 crores . funds , except the UTI were to be registered by
the Governed . The number of mutual fund houses went on increasing , with many
foreign mutual funds setting up funds in India and also Industry was witnessed
several mergers and acquisitions . As at the end of January 2003 , there were 33
mutual funds with total aassets of Rs 1,22,805 crores .

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FOURTH PHASE -SINCE FEBRUARY 2003 – In February 2003 , following
the repeal of the Unit Trust Of India Act 1963 UTI was bifurcated into two
separate entities. One is the specified Undertaking of the Unit trust Of India with
assets under management of Rs 29,835crores as at the end of January 2003 . The
second is the UTI mutual fund , sponsored by SBI , PNB, BOB, and LIC .

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 ADVANTAGES & CONVENIENCES
OF INVESTING IN MUTUAL FUND

Mutual funds have designed to provide maximum benefits to investors, and fund
manager have research team to achieve schemes objective. Assets Management
Company has different type of sector funds, which need to proper planning for
strategic investment and to achieve the market return.

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Portfolio Diversification

Mutual Funds invest in a well-diversified portfolio of securities which enables

investor to hold a diversified investment portfolio (whether the amount of
investment is big or small).

Professional Management
Fund manager undergoes through various research works and has better investment
management skills which ensure higher returns to the investor than what he can
manage on his own.

Less Risk
Investors acquire a diversified portfolio of securities even with a small investment
in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in
merely 2 or 3 securities.

Low Transaction Costs

Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser
transaction costs. These benefits are passed on to the investors.

Liquidity
An investor may not be able to sell some of the shares held by him very easily and
quickly, whereas units of a mutual fund are far more liquid.

Choice of Schemes
Mutual funds provide investors with various schemes with different investment
objectives. Investors have the option of investing in a scheme having a correlation
between its investment objectives and their own financial goals. These schemes
further have different plans/options

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 DISADVANTAGES

The mutual fund not just advantage of investor but also has disadvantages for the
funds. The fund manager not always made profits but might creates loss for not
properly managed. The fund have own strategy for investment to hold, to sell, to
purchase unit at particular time period.

Costs Control Not in the Hands of an Investor

Investor has to pay investment management fees and fund distribution costs as a
percentage of the value of his investments (as long as he holds the units),
irrespective of the performance of the fund

No Customized Portfolios
The portfolio of securities in which a fund invests is a decision taken by the fund
manager. Investors have no right to interfere in the decision making process of a
fund manager, which some investors find as a constraint in achieving their
financial objectives.

Difficulty in Selecting a Suitable Fund Scheme

Many investors find it difficult to select one option from the plethora of
funds/schemes/plans available. For this, they may have to take advice from
financial planners in order to invest in the right fund to achieve their objectives.

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 WHERE AND HOW TO INVEST

1) DIRECTLY THROUGH AMC :- To invest directly through the AMC ,

you can get each AMC’s details through its website . Most AMC’s also
having a toll free helpline which can also be a good starting point if you do
not use internet.

2) INTERMEDIARIES:- There is a wide variety of intermediaries available ,

These include most banks, some stock brokers and a large number of
individuals and small advisory companies . All intermediaries are to be
registered with AMFI.
3) DIRECT PLANS :- From January 1 , 2013 , all mutual fund houses have
rolled out a new plan of their existing fund schemes – THE DIRECT PLAN
. These plans are targeted at investors who do not make their mutual fund
investments through distributors and hence a lower expense compared to the
existing fund scheme of the AMC .
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4) SYSTEMATIC INVESTMENT PLAN :- SIP works on the principle of
regular investments. It is like your recurring deposit where you put in a
small amount every month. It allows you to invest in a MF by making
smaller periodic investments (monthly or quarterly) in place of a heavy one-
time investment i.e. SIP allows you to
pay 10 periodic investments of Rs 500
each in place of a one-time investment
of Rs 5,000 in an MF. Thus, you can
invest in an MF without altering your
other financial liabilities. It is
imperative to understand the concept
of rupee cost averaging and the power
of compounding to better appreciate
the working of SIPs.

5) SYSTEMATIC TRANSFERPLAN:-
STP refers to the Systematic Transfer
Plan whereby an investor is able to invest lump sum amount in a scheme and
regularly transfer a fixed or variable amount into another scheme.

6) SYSTEMATIC WITHDRAWAL PLAN :- SWP refers to Systematic

Withdrawal Plan which allows an investor to withdraw a fixed or variable
amount from his mutual fund scheme on a preset date

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1) 100% Income Tax exemption on all Mutual Fund dividends

2) Equity Funds - Short term capital gains is taxed at 15%. Long term capital gains
is not applicable.
Debt Funds - Short term capital gains is taxed as per the slab rates applicable to
you. Long term capital gains tax to be lower of - 10% on the capital gains without
factoring indexation benefit and 20% on the capital gains after factoring indexation
benefit.
3) Open-end funds with equity exposure of more than 65% (Revised from 50% to
65% in Budget 2006) are exempt from the payment of dividend tax for a period of
3 years from 1999-2000.

Mutual funds can be tax-efficient investment

avenues that can help reduce your tax burden
and at the same time increase your wealth.
ELSS – An Ideal Tax-saving Instrument -
Equity Linked Savings Schemes (ELSS) offers
an easy option to obtain tax benefits and an opportunity to harness
the potential upside of investing in the equity market.

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 ROLE OF SEBI

A index fund scheme’ means a mutual fund scheme that invests in securities in the
same proportion as an index of securities;” A mutual fund may lend and borrow
securities in accordance with the framework relating to short selling and securities
lending and borrowing specified by the Board.”A mutual fund may enter into short
selling transactions on a recognized stock exchange, subject to the framework
relating to short selling and securities lending and borrowing specified by the
Board.” “Provided that in case of an index fund scheme, the investment and
advisory fees shall not exceed three fourths of one percent (0.75%) of the weekly
average net assets.“

“Provided further that in case of an index fund scheme, the total expenses of the
scheme including the investment and advisory fees shall not exceed one and one
half percent (1.5%) of the weekly average net assets.” Every mutual fund shall buy
and sell securities on the basis of deliveries and shall in all cases of purchases, take
delivery of relevant securities and in all cases of sale, deliver the securities:
Provided that a mutual fund may engage in short selling of securities in accordance
with the framework relating to short selling and securities lending and borrowing
specified by the Board: Provided further that a mutual fund may enter into
derivatives transactions in a recognized stock exchange, subject to the framework
specified by the Board.”

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 ROLE OF ASSOCIATION MUTUAL
FUND IN INDIA (AMFI )

The Association of Mutual Funds in India (AMFI) is dedicated to developing

the Indian Mutual Fund Industry on professional, healthy and ethical lines and to
enhance and maintain standards in all areas with a view to protecting and
promoting the interests of mutual funds and their unit holders.
AMFI working group on Best Practices for sales and marketing of Mutual Funds
under the Chairmanship of Shri B. G. Daga, Former Executive Director of Unit
Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP
Merrill Lynch, Shri Nikhil Khattau of Sun F & C and Shri Chandrashekhar Sathe,
Formerly of Kotak Mahindra Mutual Fund has suggested formulation of guidelines
and code of conduct for intermediaries and this work has been ably done by a sub-
group consisting of Shri B. G. Daga and Shri Vivek Reddy.

IMPORTANCE-

 AMFI provides professionalism and a proper balance in the mutual fund

industry.
 It promotes the highly-efficient business practices as well as the code of
conduct in the mutual fund industry among its members and those who are
involved in mutual fund investments.
 AMFI is registered with SEBI and follows its suggestions while executing its
activities.
 AMFI also represents the Government of India, the Reserve Bank of India
and other related higher authority bodies in the mutual fund operations.
 It also provides training programs to hone the skills of those who are involved
in mutual fund investments and also develops a team of efficient and skilled
agents.

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 WANT TO BE A MUTUAL FUND
ADVISOR ?
Intermediaries play a pivotal and valuable role in promoting sale of Mutual Funds.
It is therefore vital that those engaged in selling Mutual Funds have the highest
standards of knowledge attitude and ethics. Their well being, quality orientation
and ways of doing business will have a significant impact on how the Mutual Fund
Industry develops in the future.
AMFI introduced the process to register the intermediaries who have passed the
certification test as AMFI Registered Mutual Fund Advisors (ARMFA), thus
laying the foundation for an organized industry and allotting a unique code-AMFI
Registration Number (ARN) along with an identity card. SEBI recognizing the
importance of this initiative taken by AMFI had made Registration with AMFI
after passing AMFI Certification Test compulsory for intermediaries. SEBI has
clarified that after obtaining certification from NISM as per changed mandate, the
requirement of registration with AMFI, in terms of its circular dated November 28,
2002 would continue.

As such, all AMFI/ NISM Certified Intermediaries engaged in marketing and

selling of Mutual Fund schemes are required to be registered with AMFI after
passing AMFI/ NISM Certification Test. The Mutual Funds will not be able to deal
with intermediaries who are not registered with AMFI and obtained ARN.
In terms of SEBI Circular dated September 13, 2012, "AMFI shall create a unique
identity number of the employee/ relationship manager/ sales person of the
distributor interacting with the investor for the sale of mutual fund products, in
addition to the AMFI Registration Number (ARN) of the distributor. The
application form for mutual fund schemes shall have provision for disclosing the
unique identity number of such sales personnel along with the ARN of the
distributor."

26
 NISM CERTIFICATE

PERSON HAS TO PASS NISM VA MUTUAL FUND DISTRIBUTORS

EXAM

AMFI IDENTITY CARD

PERSON HAS TO GET REGISTERED UNDER AMFI

27
 KNOW YOUR DISTRIBUTOR
ACKNOWLEDGEMENT

KNOW YOUR DISTRIBUTOR IS ALSO TO BE SUBMITED

AT THE TIME OF ARN NUMBER REGISTRATION

COMPUTER AGE MANAGEMENT SERVICE ( CAMS ) - ALL MUTUAL

Fund: Transaction processing & Valuation, Record Keeping, Corporate actions, Cash
management support & reconciliations, Unit capital to the fund accountant or AMC, Analytical
reporting and MI, Distributor relationship management, Special product support, Regulation
Implementation, Investor Services. Distributor: Computation and issuance of Commissions, Trail
fees, Other incentives, Incoming and outgoing STP with distributors, "Mailback" data
distribution services to smaller distributors, Extensive MI for smaller distributors and Channel
partners' business support. Investor: Anytime, anywhere service, Single window service,
Consistency a cross touch points, Consistency a cross geographies, Measurable service
parameters and on demand, Unlimited service.

28
 HOW TO HAVE A BEST
PERFORMING PORTFOLIO ?

Investments in equities, especially for the long term, are likely to yield the highest
returns. However, for many, keeping track of markets and individual stocks is not
possible and also not advisable. Especially so as professionally-managed and
tightly regulated mutual funds are available to do the same job. The endeavour
here is to highlight some basic steps to consider in building an equity portfolio
through mutual funds.

Identify financial goals: The process starts with identifying your financial goals.
You may be looking to plan for retirement, children's education, a marriage or
buying a house. If you have a fair sense of the time frame in which to build the
corpus, financial websites can help you plan for the various scenarios, including
factoring in possible rates of inflation.

Risk tolerance: Identifying your risk tolerance is important. If you are young and
at the start of your career, you can have an equity-oriented portfolio as you can
afford to take a risk in anticipation of higher returns. Those approaching retirement
or are retired should ideally have low equity exposure.

Selecting a fund house: The next step is to identify fund houses that have a
pedigree in the financial services and provide funds with a consistent track record
across all categories. A minimum of five years consistent returns could be a
prerequisite.

Investment objective: yourself with the investment objective of the shortlisted

funds. Identify whether the fund invests across market capitalisations or limits
itself to large-cap, midcap or small-cap stock baskets. Some funds could also be
thematic. Most financial goals are long term and so it is better to invest in diversified
funds that have broad mandates. Also consider the benchmark that the fund follows. It

29
will give you a broad sense of whether the fund is tracking a broad index, such as the
CNX 500 or the BSE 200.

Asset allocation: Selecting funds based on their investment objective brings us to

the next step-asset allocation. This, for the limited purpose of the column, means
you should not be putting all your eggs in one basket. A decision on asset
allocation is broad and will include other investment options, such as real-estate
and bank deposits.

Shortlisting schemes: You may use performance as a measure to make your final
list of schemes. However, also consider consistency in performance over longer
tenures, including for three, five and 10 years. Your selected schemes should
ideally be those that have consistently beaten their benchmark and compare
reasonably with their peers over long periods. You should also be aware that there
is no advantage to over diversifying your investments. A maximum of four or five
equity schemes is more than enough. To choose between two funds with a similar
mandate, consider the charges for the two. A fund manager's track record is also a
factor. The longer a manager has been with a fund, the better.

Keeping track: Monitoring your investments is the next step. Ask your advisor or
sign up for periodic updates on your investments. Do not be tempted to make
changes in the first six months or even a year. If you have followed the steps
outlined above, you will not need to make a short-term change. Changing funds
also incur additional charges.

Course corrections: As long as your investments are giving you the required rate
of return, don't change your chosen funds or add funds, especially based on short-
term performance. The only reason you will need to consider making a change
would be if your selected scheme is trailing your required rate of return for over a
year or even two.

30
 HOW TO SELECT A MUTUAL FUND

MUTUAL FUND INVESTORS HAVE TO LOOK FOR VARIOUS FACTOR

BEFORE INVESTING ARE AS THE FOLLOWING :-

1) Management Stability : If you find a manager , hang on to them . Top

managers usually continue to perform better in up and down markets,
because they have the stability and experience to stay focused on their
objective .
2) Management Participation : The management team of a great mutual fund
usually invests heavily in their own fund . If it is good enough for their
money .
3) No Load Structure : High commissions can have a detrimental effect on
even a good mutual fund . Most great funds offer a no load option .
4) Lower Expense Ratio : Keeping fund expense low is a goal for all funds ,
but the most great funds are better at it than poorly manage funds . Top
quality funds experience lower costs for reasons and this strongly helps keep
them on top .
5) Consistent Returns : When looking at the funds annual returns over the
year , focus on funds that are consistent and consistenly beat their peer
group . One year of out performance can be luck , but regularly being in top
ten percent takes skills and hard work . These are the gems that you want
handling your money .
6) Very Specific Strategy : Every fund has an investment strategy . Some are
very vague and others pinpoint their objective and follow their plan with
laser like focus .

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 ANALYSIS

AXIS LONG TERM EQUITY FUND (G)

OBJECTIVE – The scheme seeks aggressive growth and to provide long term
capital appreciation through investing in different shares such as HDFC , KOTAK
, MAHINDRA , LARSEN , TCS, HDFC BANK ETC .

Fund class ELSS

Fund type Open – ended
Option Growth
Launch date 01 DEC 2009
Face value 10
Fund manager Jinesh Gopani
NAV (05-12-2014) 28.63
AUM 2020.07 cr
52 Week high 28.64
52 Week low 16.654
Entry load Nil
Exit load 1% if the investor redeem it before a
span of 1 year .

SOURCE : The above data is collected from www.moneycontrol.com

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 HDFC TOP 200 FUND (G)

OBJECTIVE – The scheme seeks aggressive growth and aims to provide long
term capital appreciation through investment in shares such as STATE BANK OF
INDIA , INFOSYS , ICICI BANK , LARSEN , RELIANCE ETC .

Type of scheme LARGE CAP

Fund type Open – ended
Option Growth
Launch date 19 AUGUST 1996
Face value 10
Fund manager Prashant Jain
NAV 354.81
AUM 12,276.81
52 week high 356.81
52 week low 219.9
Entry load NIL
Exit load 1% if the investor redeem it before a
span of 1 year .

SOURCE : The above data is collected from www.moneycontrol.com

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ICICI PRUDENTIAL TOP 200 FUND
(G)

OBJECTIVE – The scheme seeks aggressive growth and aims to provide medium
and long term capital appreciation through investment in shares such as HDFC
BANK , POWER GRID , WIPRO , ICICI BANK ETC .

Type of scheme LARGE CAP

Fund type Open – ended
Option Growth
Launch date 19 th June 1998
Face value 10
Fund manager Sankaran Naren
NAV 242.06
AUM 1012.25 cr
52 week high 243.90
52 week low 125.9
Entry load NIL
Exit load 1% if the investor redeem it before a
span of 1 year .

SOURCE : The above data is collected from www.moneycontrol.com

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 COMPARISION OF RETURNS

PERIOD AXIS LONG HDFC TOP 200 ICICI

TERM FUND (%) PRUDENTIAL
EQUITY FUND TOP 100 FUND(%)
(%)
3Months (JAN- 9.55 6.00 4.90
MARCH 2014)
6 Months (OCT 29.20 13.25 13.50
2013 – MARCH
2014)
1 Year (2013- 69.90 53 42.50
2014)
2 years (2012 - 33.40 25.50 26
2014)
3 Years (2011- 33.80 23.60 26
2014)
5 Years 2009(- 28.6 14.87 15.30
2014)
80.00%
70.00%
PERFORMANCE
60.00%
50.00%
40.00%
30.00%
20.00% axis long term equity fund
10.00% HDFC Top 200 Fund
0.00%
ICICI Prudential top 100 Fund

ANALYSIS: The above table and graphical representation shows return given by these three funds . the
best performing fund is AXIS LONG TERM EQUITY FUND because of the stock selection by the fund
manager and there was boom in the market condition .

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 ASSET ALLOCATION

AXIS HDFC TOP ICICI

LONG 200 FUND PRUDENTIAL
TERM (%) TOP 100
EQUITY FUND (%)
FUND (%)
Equity 98.60 99.44 95.48

Debt 1.40 0.56 4.47

120.00%

100.00%

80.00%

60.00% EQUITY
DEBT
40.00%

20.00%

0.00%
AXIS LONG TERM EQUITY HDFC TOP 200 FUND ICICI PRUDENTIAL TOP 100
FUND FUND

Analysis- Since these funds are equity funds , the investment in equity should
be more than 65% . Anything below this would make it a debt fund . So from this
table and bar chart we can clearly see that these funds have a majorly invested in
equity which is far above the minimum requisite .
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 SECTORAL ALLOCATION: AXIS

AXIS LONG TERM EQUITY

SECTORS FUND
BANKS / FINANCE 28.42%
AUTO 12.49%
ENGINEERING 11.51%
TECHNOLOGY 9.27%
PHARMACEUTICALS 9.11%
CONS DURABLE 6.27%
OTHERS 22.93%

AXIS LONG TERM EQUITY FUND

BANKS / FINANCE AUTO ENGINEERING TECHNOLOGY
PHARMACEUTICALS CONS DURABLE OTHERS

23% 28%

6%
9% 13%
9% 12%

SOURCE : The above data is collected from www.moneycontrol.com

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SECTORAL ALLOCATION: HDFC

SECTORS HDFC TOP 200 FUND

BANKS / FINANCE 30.65%
AUTO 8.77%
ENGINEERING 8.45%
TECHNOLOGY 12.46%
PHARMACEUTICALS 5.40%
OIL & GAS 15.20%
OTHERS 19.07%

AXIS LONG TERM EQUITY FUND

BANKS / FINANCE AUTO ENGINEERING TECHNOLOGY
PHARMACEUTICALS CONS DURABLE OTHERS

23% 28%

6%
9%
13%
9% 12%

Source- The above data is colleceted from

www.moneycontrol.com

38
 SECTORAL ALLOCATION : ICICI

SECTOR ICICI TOP 100 FUND

BANKS / FINANCE 26.53%

UTILISES 8.31%

ENGINEERING 6.10%

TECHNOLOGY 14.68%

METAL &MINING 7.23%

OIL & GAS 14.09%

OTHERS 23.06%

ICICI TOP 100 FUND

BANKS / FINANCE UTILISES ENGINEERING TECHNOLOGY
METAL &MINING OIL & GAS OTHERS

23% 27%

14% 8%

6%
7%
15%

ANALYSIS – It is evident from the above table & graph that all these mutual funds house
have biggest investment in the banking sector followed by the IT sectors .

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 RECOMMENDATION FOR FUTURE
RESEARCH

Best Mutual funds for SIP to Invest in India in 2015

We all are aware that, for any common man, among all other asset class, equity is
the only and the best asset that can give excellent returns over the long term. And
the best way to get into equity-investing is by taking the assistance of mutual
funds. The recommended sips for the the year 2015 are as the following :-

1) L&T Business Cycles Fund: This is one of the best mutual funds to
invest in India in 2015 actively managed open-ended equity fund that seeks
to take exposure to stocks at different stages of business cycle by using
business cycle strategy. They basically switch from one sector to another
seeking upturn in respective sector.

2) Kotak Select Focus :- This is a diversified equity fund and has been
consistently performing for the last 3 years. The average return from this
mutual fund has been 15.6% compounded annually. This performance of the
fund has been successful in beating the benchmark index, CNX200 whose
return has been 10.6% annually for the same period. An SIP in this fund
since its launch would have given 18% rate of return compounded annually.

3) Birla Sunlife Frontline Equity Fund : is Birla sunlife frontline equity

fund has consistently beaten its benchmark, S&P BSE 200, at least 9 times

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 in the past 10 calendar years. It had more than 1000 crore of AUM at the end
of April 2014 . The last 10 years return 23.30%.

4) Mirrae Assets India oppurtunites Fund : Mirrae Asset fund is

consistenly beaten its benchmark and is providing a return of 25.45% from
last 5 years compounded annually .

5) Hdfc Balanced Fund : Hdfc balanced fund mainly focusing in equity

and debt to so it is giving customers a balanced return of 19.20%
compounded annually .

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 LIMITATIONS OF THE STUDY

Mutual funds are not customized portfolios

Mutual funds are like pre-plated meals; there is no customized assembling of the meal by the
customer. Mutual funds are standard products, managed centrally, offering significant advantages
to investors who are not equipped to make complex investment choices. Investors do not exercise
any direct control on how the portfolio is managed, but participate equity in it. Customized
portfolio as Portfolio Management Services(PMS)

No direct control over costs

Investors is a mutual fund participate in the pool of the funds, according to the proportion they
have contributed. The costs for managing the fund are centrally incurred and apportioned to
every unit. Investors cannot directly determine what costs can be incurred and how it would be
apportioned. SEBI has however, imposed limits on the amount and type of a cost a mutual fund
can incur.

Mutual fund offer too many product variants

To the investor, making a choice among many funds becomes tough when so many variants of
the same product are available in the market. Mutual funds try to vary their products, even if
slightly, to provide a choice to customers. If these are similar in objective and performance,
investors may find it tough to differentiate the products and make the right choice for their needs.

ALL INVESTORS SHOULD UPDATE KYC DOCUMENTS - Investors should

fill in the KNOW YOUR CUSTOMER form and with that he/she should attach a self attested copy
of PAN CARD & ADDRESS proof along with it . Without KYC no customer can invest in any
mutual funds .

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 FINDINGS

1) Active management of funds is a far better approach than passive

management of funds because portfolios are continuously checked & revised
to take appropriate measures .
2) Portfolio diversification is necessary in order to manage the risk .
3) Portfolio is created as per Investor class risk is more preferable.
4) Before Investing , the past performance of several years should be
considered and consistency should be checked rather than going for higher
return in recent period.
5) Investor should take advice from Mutual Fund advisor who can guide them
easy where to invest .
6) Pofit booking should also be done at the right time and right place .
7) Investors before investing should read the offer documents carefully.
8) SIP is the best type of investment one can do for future because it is safe and
high return is possible.
9) Investors should read the form of the company in which they are investing
because all details of the company , what are the future plans , goals and
where they are going to investment all details are mentioned so investors
should be alert while investing .
10) Most people want to invest in high return fund and secondly wants to
invest in liquid fund .
11) 65 % of people in India prefer SIP and 35% prefer one time .

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 CONCLUSION

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

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

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

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 REFERENCES

WEBLIOGRAPHY:
1) www.amfiindia.com
2) www.moneycontrol.com
3) www.nseindia.com
4) www.mutualfundindia.com
5) www.valueresearchonline.com

BIBLIOGRAPHY:
1) Savings and Investment book by Dhirendra Kumar
2) NSE VA mutual fund distributor book.

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