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Portfolio Management In Mutual Funds

Project

On
PORTFOLIO MANAGEMENT IN MUTUAL

FUNDS
In partial fulfillment of the requirement of two years full time
Masters of Business Administration (MBA) Programme (2008-2010)
Of Christ University Institute of Management, Bangalore-560029

SUBMITTED BY :

AARNESH KARAMCHANDANI
(08 PG 0122)

UNDER THE GUIDANCE OF:

PROF. T.S. R AMACHANDRAN


Portfolio Management In Mutual Funds

CONTENT

Certificate
Declaration
Preface
Acknowledgement
Research Methodology
Executive Summary

1 Introduction to Mutual Fund


2 Investors portfolio

2.1. Fixed Return Options


2.2. Variable Return Options

3 Concept of mutual funds


4 Types of mutual funds
By structure
By investment objective

5 Different styles of Mutual Funds


6 Process of Mutual Fund
7 Net Asset Value (NAV)
8 Companies in India
9 Portfolio Management
10 Portfolio Management Process
11 Types of Investors

11.1. Portfolio for Cautious Investor


11.2. Portfolio for Balance Investor
11.3. Portfolio for Aggressive Investor

12 Measurement of Returns on Portfolios


13 Scheme Portfolio

13.1. HDFC Equity Fund


13.2. HDFC Core & Satellite Fund
13.3. Reliance Growth fund
13.4. Prudential ICICI Growth Fund
13.5. DSP Tiger Fund
Portfolio Management In Mutual Funds

13.6. Kotak Opportunity Fund

14 Conclusion
15 Bibliography

DECLARATION

I, hereby, declare that the Project titled “Portfolio


Management in Mutual Funds” is original to best to my knowledge
& has not published elsewhere. This is for the purpose of partial
fulfillment of Christ University Institute of Management requirement
for the award of the degree of Master of Business
Administration.

AARNESH KARAMCHANDANI
Portfolio Management In Mutual Funds

Date:

PREFACE

Investing money where the risk is less has always been risky to decide. The
first factor, which an investor would like to see before investing, is risk factor.
Diversification of risk gave birth to the phenomenon called Mutual Fund.

We are preparing comprehensive report of Mutual Fund industry in India. The


basic idea of assignment of this project is to augment our knowledge about
the industry in its totality and appreciate the use of an integrated loom. It is
concerned the environmental issues and tribulations. This makes us more
conscious about Industry and its pose and makes us capable of analyzing
Industry’s position in the competitive market. This may also enhance our
logical abilities.

The Mutual Fund Industry is in the growing stage in India, which is evident
from the flood of mutual funds offered by the Banks, Financial Institutes &
Private Financial Companies.

There are various aspects, which have been studied in detail in the project
and have been added to this project report.
Portfolio Management In Mutual Funds

Hope this report would help one understand the mutual Industry of India in
detail.
Portfolio Management In Mutual Funds

ACKNOWLEDGEMENT

I am indebted to a multitude of persons who have provided me with valuable


help during our endeavor of research. The project would not have seen the
illumination of the day without the efforts of the many who managed the show
in the wings. I am thankful to all people who have put in great efforts and gave
me guidance for the successful completion of the project.

I am indeed grateful to MR. PRASHANT UKANI (CLUSTER HEAD – B2B


BUSINESS, REGIONAL OFFICE, ANGEL BROKING LTD., RAJKOT) for
providing me the guidance, advice, constructive suggestions and faith in my
ability inspired to perform well who gave me a valuable opportunity of
involving our self in studying this project.

Preparing a project of this nature is an arduous task and I am fortunate


enough to get support from a large number of people to whom we shall
always remain grateful.

Finally, I thank all those who directly and indirectly contributed to this project.
Portfolio Management In Mutual Funds

AARNESH KARAMCHANDANI
Portfolio Management In Mutual Funds

EXECUTIVE SUMMARY

As a part of my study curriculum it is necessary to conduct a grand project. It


provides us an opportunity to understand the particular topic in depth and
which leads to through to that topic. My topic for the grand project is titled as
“Portfolio management in mutual funds performance” in which emphasis given
to the study of different mutual funds in respect to the risk and return involved
in it.

Since mutual funds are a relatively recent phenomenon in India, general


public or investors don’t have clarity about this concept. As we have started
witnessing the concept of more saving now being entrusted to the funds than
to keeping it in banks. So it is very important to manage investor’s portfolio
efficiently. By efficient we mean which reduces the risk of investor and
increases return on the other hand.

This project is all about how to manage an investor’s portfolio in mutual fund.
How to diversify the investments into different schemes of funds. To manage
client’s portfolio efficiently we first need to understand the industry, current
economic condition of the economy, investor’s behavior, their objective, risk
apatite.

This report has divided into two phases. First phase covered investor’s
portfolio part where we have included, Introduction of mutual funds, Indian
mutual fund industry, Investment options available with individuals and at last
techniques of managing a client’s portfolio in mutual funds.

Second phase of the report covered scheme’s portfolio part, where we have
compared HDFC Equity Fund and HDFC Core & Satellite Fund with their
competitors. It also included fund’s portfolio part where we have given
information about the different funds available to investor for investment
Portfolio Management In Mutual Funds

RESEARCH METHODOLOGY

Primary Objectives

The main objective of this study is doing an In-depth analysis of Mutual Fund
portfolio by taking sample of funds and comparing it with it others

Secondary objectives
– to understand the portfolio management process in mutual fund
– To know the effects of political, economical, social and technological
factors on Mutual Fund Industry in India.
– Evaluating fund performance

Collection of data
For the complete study I required data of Mutual Fund and getting from the
secondary data base.

Sources of the data collection will be,

(1) Internet
(2) Various magazines/bulletins
(3) News papers
(4) Related books

Limitations
Portfolio Management In Mutual Funds

➢ It is based on Secondary Data.


➢ Time Constraint
➢ Lack of resources
Portfolio Management In Mutual Funds

INTRODUCTION

Economic liberalization and globalization of the Indian markets began in 1991.


This meant that the Indian consumers had access to imported goods which
resulted in fall of prices of domestic goods due to high competition. This also
meant that lower interest rates and more importantly transfer of risk from
government to the individuals, forcing them to protect their investments them
self.
Investors have variety of options for investments. Some of them are providing
fixed rate of returns are some of them provide variable rate of returns. Many
had investments with UTI, Company fixed deposits, and Bank fixed deposits
that were offering high returns that now they are starting falling after
globalization and liberalization.
There are some investors who are active. They are the ones who act promptly
and make educated, informed decisions about market. They done their own
research and understand the factors which may have effect on their
investments in future. On the other hand some investors who are
apprehensive and will take action only when they can see tangible merits on
the change.
As every individual is different, their objectives behind investments also differ
from person to person. Their objectives can for fixed return, capital
appreciation, tax planning or current income. The investment decision will
mainly depend upon the objective of investor. He or she needs to design their
portfolio according to their risk and return profile. The individual should start
by specifying investment goals. Once these goals are established, the
individual should be aware of the mechanics of investing and the environment
in which investment decision are made. These include the process by which
securities are issued and subsequently bought and sold, the regulations and
tax laws that have been enacted by various levels of government, and the
sources of information concerning investment that are available to the
individuals.
Portfolio Management In Mutual Funds

Designing a portfolio is not simple task. Ones individual has decided about the
type of investment then he or she needs to decide portfolio in that category.
There are various ways of maintaining portfolio of individual.

Phase I
Investor’s Portfolio

What is an Investment?
An investment is the use of capital to create more money through the
acquisition of a security that promise the safety of the principal and generate a
reasonable return.

Various Investment Options


Savings form an important part of the economy of any nation. With the saving
invested in various options available to the people, the money acts as the
driver for growth of the country. Indian financial scene too presents a plethora
of avenue to the investors. Though certainly not the best or deepest of
markets in the world, it has reasonable options for an ordinary man to invest
his savings.
There are basically two kinds of investments. One that gives returns at fixed
rate and other where the rate of return is depending upon the certain factors
of the economy.

1. Fixed Return Options


• Post office monthly income scheme
• Public provident fund
• Bank fixed deposits
• Government securities or gilts
• RBI taxable bonds
• Insurance
Portfolio Management In Mutual Funds

• Company fixed deposits


• Infrastructure bonds

2. Variable Return Options


• Mutual Funds
• Share and Stock market
1. Primary invested in equity (IPO)
2. Secondary market investment in equity
3. Derivative, Futures and Options
• Gold
• Real estate
• Foreign exchange assets

3. UNIT LINKED INSURANCE PLANS


1. ULIP capital secure fund.
2. ULIP balanced fund.
3. ULIP growth fund
4. ULIP equity fund
5. Pension capital secure fund
6. Pension balanced fund
7. Pension growth fund

1. Fixed Return Options


Under fixed return investments, investor will get fixed return on their
investments. The rate of return is pre decided at the time of investment. Rate
of return can be calculated on per annum basis or at completion of particular
time period.

a. Post Office Monthly Income Scheme:


Portfolio Management In Mutual Funds

In this scheme an investment can be made by individuals in single or joint


names maximum of Rs. 6 lakhs (Rs.3 lakhs per person) with an interest of 8%
p.a. in a monthly income scheme. This will give you Rs. 4000/- per month if
you invested the maximum amount. In addition, this investment will fetch you
a taxable bonus of 10% on the deposit maturity (i.e. after 6 years)

b. Other Post Office Scheme


Kisan Vikas Patra:

Money can be doubled in 8 years and 7 months. There is no upper limit on


the amount that you invest. There are no tax benefits for the investments
made under this scheme. The rate of interest works out to a compounded
annual return of about 8.4%. There are no tax deductions at source and
banks loans are available against Kisan Vikas Patra. Interest is paid at
maturity and cannot be claimed prior to maturity.

Senior Citizen Savings Scheme (2004):

As per the 2004-2005 budgets, the Government has announced a new


Senior Citizen Savings Scheme. It has been launched only through
designated Post Offices from the 2nd August, 2004. it for the individuals who
have attained the age of 60 years or above on the date of opening of an
account or who have attained the age of 55 years or more but less than 60
years, and who have retired under Voluntary Retirement scheme or a Special
Voluntary Retirement scheme on the date of opening of an account. The main
feature of the scheme is that is carries an interest of 9% p.a. (taxable) on the
deposits. Deposits can be a minimum of Rs. 1000 and maximum of Rs. 15
lakhs, to be held for a period of 5 years and extendable for further 3 years. It
can also be prematurely withdrawn after one year with some deductions.
Interest qualifies for deduction u/s 80L.

c. Public Provident Fund:


Portfolio Management In Mutual Funds

The rate of public provident fund is 8.5% p.a. currently. This is basically a
long term investment opportunities (maturity 15 year) as the entire amount
that is accumulated in this account can be withdrawn entirely only after 15
years. Partial withdrawal is allowed only after 5 years. Interest is exempt from
income tax and contributions are eligible for tax deductions.

d. Bank Fixed Deposits:

Bank fixed deposits yield will vary from bank to bank but they are more or less
streamlined. The yields are currently in the region of 5.5% to 6.5% per annum
for deposits ranging from 30 days to five years. All the schedule banks are
covered by DICGC (Deposit Insurance and Credit Guarantee Corporation)
which means that up to 1 lakh deposited in a bank per person is absolutely
safe and insured even if the bank collapse.

HDFC Bank FD Interest Rate


in % p.a.
7 days-14 days 3.5
15 days-29days 4.25
30days-45days 4.25
46days-60days 4.5
61days-90days 4.75
91days-180days 5
6month 1 day-1 5.5
year
1 year 1 day-2 6
years
2 year1 day- 3 6.25
years
3 year 1 day- 5 6.25
years
5 year 1 day-8 6.5
Portfolio Management In Mutual Funds

years

e. Government Security or Gilts:

Government security and gilts are totally secure. Government bonds are
issued by the government of India periodically. These are now available in the
secondary market through satellite dealers and banks. They are known to
yield 5% to 6% per annum. Interest exceeding Rs. 2500 is liable for TDS at
10.455%.

f. RBI Taxable Bonds:

These are 8% saving bonds which are taxable. The maturity is after 6 years
and there is no upper limit to investment is these bonds. The interest accrued
on these bonds is taxable under the Income Tax Act, 1961.

Key Rates Current 1 Month ago


1 yr G-sec 6.81% 6.72%
5 yr G-sec 7.22% 6.96%
10 yr G-sec 7.41% 7.31%
5 yr AAA 8.25% 7.77%

g. Insurance:

There are several types of insurance policies available in the market today
through various players. Life insurance is the most sought after cover life it
also offer a tax benefit for the amount of premium paid in a particular year.
Though insurance is considered as expenditure, it became an investment
option.
Portfolio Management In Mutual Funds

The insurance policies available in the market are either pure insurance or a
combination of the three basic types of life insurance policies namely, Term,
Whole and Endowment. Term assurance policy is purely protection policy
with no investment elements. Whole life and Endowment policies are different
as a payout is certain in these policies. A Whole life policy pays out on the
death of the life assured, whenever that occurs and in Endowment policy pay
will be on maturity date or earlier death. There is one more type of insurance
policy is so popular these days is UNIT Link Insurance under which premium
amount will be invested in to equity market via mutual fund investment.

h. Company Fixed Deposits:

Company fixed deposits was a highly popular investment vehicle in the past.
In today’s changing scenario where the corporate world has access to
cheaper funds from sources all over the world, the rate of interest offered by
good companies make this a less attractive investment vehicle.

i. Infrastructure Bonds:

An infrastructure bond is a tax saving bond that was innovated in order to


provide funds for the development of the key infrastructure projects. Thus,
investors in these bonds apart from the material benefits in term of tax saving,
have the higher satisfaction of having contributed to the development of the
country’s infrastructure. The rate of return on such bonds is between 5 to
5.5%. The bonds have lock in period of 3 years.

2. Variable Return Options


a. Mutual Funds:

A mutual fund is a company that pools the money of many investors to invest
in a variety of different securities. Investment may be in stocks, bonds,
debentures, money market or combination of these. These securities are
professionally managed on the behalf of investor, by the fund manager.

b. Shares and the Stock Market:


Portfolio Management In Mutual Funds

An equity share is a certificate or a book entry that represents the single unit
of ownership in a company or its business. They are sold either directly by the
company or they can be acquired through broker from the stock market. By
purchasing a share of a company, an individual gets a ownership rights, right
to vote and share in the company’s future profits and losses.

Primary Market Investment in Equity (IPO)

The primary market is a place where the new offerings by companies are
made as an Initial Public Offering (IPO) IPO’s are offering made by the
company for the first time in the market. Such offers to the public can be at
par or can be at premium.

Secondary Market Investment in Equity:

The stock exchange is a place where buyers and sellers meet to trade in
shares in an organized manner. There are at present 26 recognized stock
exchanges in the country and are governed by security board of India (SEBI).

Derivative, Futures and Options:

Derivative is a contract/ product that has no independent value i.e. it derives


its value from the underlying assets. Underlying assets can be securities,
commodities, bullion, currency, livestock or any thing else. Through the use of
derivative product, an investor can transfer the price by locking in asset
prices.

c. Gold:

Of late, an inverse relationship between the dollar and gold has been in India.
The lower the dollar goes, the higher is the gold prices. Why does this
happen? The dollar is the international currency with nothing besides gold to
challenge it. Besides being a commodity, gold is a universally accepted form
of money. India is a net importer of gold. The domestic production is almost
negligible and India is the highest consumer of gold in the world.
Portfolio Management In Mutual Funds

d. Real estate:

Investment in real estate or property is a good long term investment for well-
heeled investors with a huge amount of money. Depending on the total
resources at your disposal, you can invest a part of it in property.

e. Foreign Exchange Asset:

Till January 2004, Indian residents’ investors were not allowed by our
exchange control rules to invest in foreign exchange assets.
Recently, the reserve bank of India has allowed residents to invest overseas
to the extent of an equivalent of US $ 25,000 per year. Now investor from
India can take advantage of any attractive investment opportunity overseas.

3. UNIT LINKED INSURANCE PLANS

Risks of investment in the Units of the Fund the Proposer / Life Assured
should be aware that the investment in the units is subject to the following
risks:
CashPlus is a Unit-Linked Insurance Policy (ULIP) and is different from
traditional products. Investments in ULIPs are subject to market risks. The
premium paid in Unit-Linked Life Insurance policies are subject to investments
risks associated with capital markets and debt markets; and the NAVs of the
units may fluctuate based on the performance of fund and factors influencing
the
Portfolio Management In Mutual Funds

Capital market; and the insured is responsible for his /her decisions. ICICI
Prudential Life Insurance Company Limited and CashPlus are only names of
the company and the policy respectively and do not in any way indicate the
quality of the policy, its future prospects or returns. The investment in the
Fund is subject to market and other risks and there can be no assurance that
the objectives of the Fund will be achieved. The fund does not offer a
guaranteed or assured return.

CONCEPT OF MUTUAL FUNDS

A Mutual Fund is a body corporate that pools the savings of a number of


investors and invests the same in a variety of different financial instruments,
or securities. The income earned through these investments and the capital
appreciations realized by the scheme are shared by its unit holders in
proportion to the number of units owned by them. Mutual funds can thus be
considered as financial intermediaries in the investment business that collect
Portfolio Management In Mutual Funds

funds from the public and invest on behalf of the investors. The losses and
gains accrue to the investors only. The Investment objectives outlined by a
Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The
investment objectives specify the class of securities a Mutual Fund can invest
in. Mutual Funds invest in various asset classes like equity, bonds,
debentures, commercial paper and government securities.

Mutual funds are commonly categorized by their general investment


objectives. Equity funds consist mainly of common stocks and are organized
primarily to achieve capital appreciation, or growth, rather than periodic
distribution of income. Bond funds, on the other hand, are composed
predominantly of corporate, Government, or municipal bonds and emphasize
regular income rather than growth. Income funds have the same objective as
bond funds but include Government National Mortgage Association securities,
Government securities, and common and preferred stocks as well as bonds.
Money market mutual funds consist of short-term instruments, such as
Government securities, bank CDs, and commercial paper. Short-term
municipal bond funds are composed predominantly of tax-exempt, short-term
municipal securities.

Types of Mutual Funds

Mutual Fund schemes may be classified on the basis of its structure and its
investments.

By Structure:
Portfolio Management In Mutual Funds

Open-End Funds:

• Available for sale and repurchase at all times based on the net asset
values
• Unit capital of the fund is not fixed
• Fund size and its total investment go up if more new subscriptions
come in than redemptions and vice versa.

Close-End Funds:

• One time sale of fixed number of units.


• Investors are not allowed to buy or redeem the units directly from the
funds. Some funds offer repurchase after a fixed period.
• Listed on stock exchange and investors can buy or sell units through
exchange. May be traded at a discount or premium to NAV based on
investor’s perception about the funds future performance and other
market factors.
A closed-end fund has a stipulated maturity period which generally
ranging from 3 to 15 years. The fund is open for subscription only during
a specified period. Investors can invest in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an
option of selling back the units to the Mutual Fund through periodic
repurchase at NAV related prices. SEBI Regulations stipulate that at
least one of the two exit routes is provided to the investor.

Interval Funds:

Interval funds combine the features of open-ended and close-ended


schemes. They are open for sale or redemption during pre-determined
intervals at NAV related prices.
Portfolio Management In Mutual Funds

By Investment Objective:-

Money/Cash Market Funds:

Instruments having less then one year maturity;


• Treasury bills issued by government
• Certificates of deposit issued by governments
• Commercial paper issued by companies
• Inter bank call money
• Aim to provide easy liquidity, preservation of capital and moderate
income.

Gilt Funds:

Securities maturity over a year;


• Invested in government securities are called dated securities
• Virtually zero risk of default it is backed by the government
• It is more sensitive to market interest rates

Debt/Income Funds:
• Investment in debt instruments issued not only by Government but
also by private companies, banks and financial institution and other
entities such as infrastructure companies.
• Target low risk and stable income for investors.
• Have higher price fluctuation as compared to money market funds due
to interest rate fluctuation.
• Have higher risk of default by borrowers as compared to Gilt funds.
• Debt funds can be categorized further based on their risk profiles.
Portfolio Management In Mutual Funds

• Carry both credit risk and interest rate risk.

Equity Funds:
• Invest a major portion of their surplus in equity shares issued by co s,
acquired directly in initial public offering or through secondary market
and keep a part in cash to take care of redemption.
• Risk is very high than debt funds but offer very high growth potential for
the capital.
• It can be further categorized based on investment strategy.
• It must have along term objectives.

Balanced Funds:
• Has a portfolio of debt instrument, convertible securities, preference
and equity shares.
• Almost equal proportion of debt/money market securities and equities.
Normally funds maintain a ratio of 55:45 or 60:40 some funds allocate
a flexible proportion based on market conditions.
• Aim is to gain income, capital appreciation and preservation of capital.
• Ideal for investors for a conservative and long term orientation.

Load Funds:
A Load Fund is one that charges a commission for entry or exit. That
is, each time you buy or sell units in the fund, a commission will be
payable. Typically entry and exit loads range from 1% to 2%. It could
be worth paying the load, if the fund has a good performance history.

No-Load Funds:
Portfolio Management In Mutual Funds

A no-Load Fund is one that does not charge a commission for entry or
exit. That is, no commission is payable on purchase or sale of units in
the fund. The advantage of a no load fund is that the entire corpus is
put to work.

Other Schemes:-

Tax saving Schemes


These schemes offer tax rebates to the investors under specific
provisions of the Indian Income Tax laws as the Government offers tax
incentives for investment in specified avenues. Investments made in
Equity Linked Savings Schemes (ELSS) and pension Schemes are
allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also
provides opportunities to investors to save capital gains u/s 54EA by
investing in Mutual Funds, provided the capital asset has been sold
prior to April 1, 2000 and the amount is invested before September 30,
2000.

Special Schemes:-

➢ Industry Specific Schemes


Industry Specific Schemes invest only in the industries specified in the
offer document. The investment of these funds is limited to specific
industries like InfoTech, FMCG and Pharmaceuticals etc.

➢ Index Schemes
Index Funds attempt to replicate the performance of a particular index
such as the BSE Sense or the NSE 50
Portfolio Management In Mutual Funds

➢ Sector Schemes
Sector Funds are those, which invest exclusively in a specified industry
or a group of industries or various segments such as 'A' Group shares
or initial public offerings.
Portfolio Management In Mutual Funds

Different styles of Mutual Funds


Different Mutual Funds have very different investing styles. These styles are a
function of the individuals managing the fund with the overall investment
objectives and policies of the organization acting as a constraint. These are
manifest in things like:-

Portfolio turnover – Buy and hold strategy versus frequent investment


changes.

Kind of investments made – small versus large companies, multi baggers


(investments which yield high gains) versus percentage players (investing in
shares which will give small gains in line with the market), high quality – low
yield bonds versus low quality – high yield bonds.

Asset allocations – Varying percentage of cash depending on aggressive


views on markets

The following examples serve to illustrate a few styles of equity fund


managers:

Some fund managers are passive value seekers and some are value
creators. The former type buys undervalued assets and patiently waits for the
market to discover the value. The latter aggressively promote the undervalued
stocks that they have bought.

Some fund managers restrict themselves to liquid stocks while some thrive on
illiquid stocks which offer themselves easily to large price changes.

Some fund managers are masters of the momentum game and seek to buy
stocks that are in market fancy. They attach lesser importance to
Portfolio Management In Mutual Funds

fundamentals and believe that a rising stock price and favorable momentum
indicators imply that fundamentals are changing. In effect, they are following
the philosophy, "The trend is my friend". Other fund managers go more by
deep fundamental analysis completely ignoring price movements. They do not
mind price going down and are in fact happy to buy more.

Some fund managers are growth investors i.e. they buy stocks with a high P/E
using the forecasted growth to justify the high valuation. Others are value
investors who buy shares with low P/E or P/BV multiples - typically companies
rich with undervalued assets.
Portfolio Management In Mutual Funds

Process of Mutual Fund

In the above graph shows how Mutual Fund works and how investor earns
money by investing in the Mutual Fund. Investors put their saving as an
investment in Mutual Fund. The Fund Manager who is a person who takes the
decisions where the money should be invested in securities according to the
scheme’s objective. Securities include Equities, Debentures, Govt. Securities,
Portfolio Management In Mutual Funds

Bonds, and Commercial Paper etc. These Securities generates returns to the
Fund Manager. The Fund Manager passes back return to the investor.

NET ASSET VALUE (NAV)


The net asset value of the fund is the cumulative market value of the assets
fund net of its liabilities. In other words, if the fund is dissolved or liquidated,
by selling off all the assets in the fund, this is the amount that the
shareholders would collectively own. This gives rise to the concept of net
asset value per unit, which is the value, represented by the ownership of one
unit in the fund. It is calculated simply by dividing the net asset value of the
fund by the number of units. However, most people refer loosely to the NAV
per unit as NAV, ignoring the "per unit". We also abide by the same
convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned
by the fund. Once it is calculated, the NAV is simply the net value of assets
divided by the number of units outstanding. The detailed methodology for the
calculation of the asset value is given below.

Asset value is equal to

Sum of market value of shares/debentures


+ Liquid assets/cash held, if any
+ Dividends/interest accrued
Amount due on unpaid assets
Portfolio Management In Mutual Funds

Expenses accrued but not paid


Details on the above items
For liquid shares/debentures, valuation is done on the basis of the last or
closing market price on the principal exchange where the security is traded.

For illiquid and unlisted and/or thinly traded shares/debentures, the value has
to be estimated. For shares, this could be the book value per share or an
estimated market price if suitable benchmarks are available. For debentures
and bonds, value is estimated on the basis of yields of comparable liquid
securities after adjusting for illiquidity. The value of fixed interest bearing
securities moves in a direction opposite to interest rate changes Valuation of
debentures and bonds is a big problem since most of them are unlisted and
thinly traded. This gives considerable leeway to the AMCs on valuation and
some of the AMCs are believed to take advantage of this and adopt flexible
valuation policies depending on the situation.

Interest is payable on debentures/bonds on a periodic basis say every 6


months. But, with every passing day, interest is said to be accrued, at the
daily interest rate, which is calculated by dividing the periodic interest
payment with the number of days in each period. Thus, accrued interest on a
particular day is equal to the daily interest rate multiplied by the number of
days since the last interest payment date.

Usually, dividends are proposed at the time of the Annual General meeting
and become due on the record date. There is a gap between the dates on
which it becomes due and the actual payment date. In the intermediate
period, it is deemed to be "accrued". Expenses including management fees,
custody charges etc. are calculated on a daily basis.
Portfolio Management In Mutual Funds

COMPANIES IN INDIA

1. ABN AMRO Mutual Fund


2. Birla Sun Life Mutual Fund
3. Bank of Baroda Mutual Fund (BOB Mutual Fund)
4. HDFC Mutual Fund
5. HSBC Mutual Fund
6. ING Vysya Mutual Fund
7. Prudential ICICI Mutual Fund
8. Sahara Mutual Fund
9. State Bank of India Mutual Fund
10. Tata Mutual Fund
11. Kotak Mahindra Mutual Fund
12. Unit Trust of India Mutual Fund
13. Reliance Mutual Fund
14. Standard Chartered Mutual Fund
15. Franklin Templeton India Mutual Fund
16. Morgan Stanley Mutual Fund India
17. Escorts Mutual Fund
18. Alliance Capital Mutual Fund
19. Benchmark Mutual Fund
20. Canbank Mutual Fund
21. Chola Mutual Fund
22. GIC Mutual Fund
23. LIC Mutual Fund
24. Fidelity Mutual Fund
Portfolio Management In Mutual Funds

25. IL&FS Mutual Fund


26. DSP Merill lynch Mutual Fund
27. Sundaram Mutual Fund
28. Principal Mutual Fund
29. Taurus Mutual Fund
30. Deutsche Mutual fund
31. IDBI Investment Company Ltd.
32. Bank of India Mutual Fund

PORTFOLIO MANAGEMENT

People have different investment objective and risk appetite so to get the
highest returns asset allocation through active portfolio management is the
key element.
Asset allocation is a method that determines how you divide your portfolio
among different investment instruments and provides you with the proper
blend of various asset classes.
It is based on the theory that the type or class of security you own equity, debt
or money market- is more important than the particular security itself. In other
words asset allocation is way to control risk in your portfolio. Different asset
class will react differently to market conditions like inflation, rising or falling
interest rates or a market segment coming into or falling out of favor.
Asset allocation is different from simple diversification. Suppose you diversify
your equity portfolio by investing in five or ten equity funds. You really have
not done much to control risk in your portfolio if all these funds come from only
one particular segment of the market say large cap stocks or mid cap stocks.
In case of an adverse reaction for that segment, all the funds will react
similarly means they will go down.
Portfolio Management In Mutual Funds

If you build your portfolio with various top performing growth funds without
really bothering to analyze their portfolio allocation, you may end up with over-
exposure to a particular segment. Another point you need to remember is that
growth funds are highly correlated- they tend to move in the same direction in
response to a given market force.
The advantage of asset allocation lies in achieves superior returns when
markets are down while minimizing the exposure of the portfolio to volatility. In
fact, asset allocation is based on certain dimensions that, when combined
tend to control the volatility while achieving targeted returns.

Portfolio Management Process

Portfolio management is a complex activity, which may be broken down into


the following steps:

1. Specification of investment objectives and constraints:

The typical objectives sought by an investor are current income, capital


appreciation, safety, fixed returns on principal investment.

2. Choice of asset mix:

The most important decision in portfolio management is the asset mix


decision. This is concerned with the proportions of “Stock” or “
Units” of mutual fund or “Bond” in the portfolio. The appropriate mix of
Stock and Bonds will depend upon the risk tolerance and investment
horizon of the investor.

3. Formulation of portfolio strategy:

Once the certain asset mix has been chosen an appropriate portfolio
strategy has to be decided out. Two broad portfolio choices are available
Portfolio Management In Mutual Funds

An active portfolio management: it strive to earn superior risk adjusted


returns by resorting to market timing, or sector rotation or security
selection or some combination of these.
A passive portfolio management involves holding a broadly diversified
portfolio and maintaining a pre-determined level of risk exposure.

Designing a model Portfolio


There are certain objectives that should keep in mind while designing a
portfolio these are:

• Higher absolute rate of return and high real rate of return


• Maximization current income
• High post tax returns
• Positive real return
• Preservation of capital
• Growth in capital

For my study I am making three dummy portfolios for three different kinds of
investors.

Types of Investor:

1. Cautious Investor:
It’s kind of investor who is less bothers about high returns. He wants to
lower down his risk profile and demand for fixed income on his
investment. His main objective of investment is fixed returns with less
risk.

2. Balanced Investor:
It’s a kind of investor who is bothers about returns as well as risk. He
wants moderate returns with moderate risk.

3. Aggressive Investor:
It’s a kind of investor who is ready to take risk. He believes in high risk
and high returns. So he only wants to invest in equity schemes.
Portfolio Management In Mutual Funds

I have made an assumption that each investor want to invest 5 Lakh Rs.

Portfolio for Cautious Investor


Investment Instrument Amount Returns
Kisan Vikas Patra 1,50,000 Rs. 8.4% p.a.
PPF 70,000 Rs. 8.5% p.a.
Bank Fixed Deposits 1,00,000 Rs. 6.5% p.a.
NSC 80,000 Rs. 8.16% p.a.
Post office monthly MIP 1,00,000 Rs. 8% p.a.
TOTAL 5,00,000 Rs.

Logic behind selection of particular Instrument:

As investor does not want to take risk, he is satisfied with fixed return rather
they are less than equity investment’s returns. So I took thus instrument which
provides good return as well as secure also. All of these instruments will give
him return around 8% annually.

Portfolio for Balance Investor

Investment Instrument Amount Returns


HDFC Prudence Fund 1,30,000 Rs. 54.2% p.a.
Reliance Vision Fund 1,00,000 Rs. 78.3% p.a.
Bank Fixed Deposits 1,00,000 Rs. 6.5% p.a.
PPF 70,000 Rs. 8.5% p.a.
Kisan Vikas Patra 1,00,000 Rs. 8.4% p.a.
TOTAL 5,00,000 Rs.

Logic behind selection of particular Instrument:

As investor does not want to take high risk, he is satisfied with fixed return
plus some equity exposure. But he wants some safety in equity exposure
also. So I took thus instrument which provides good return as well as safety
also. Fixed return instruments like PPF, Bank FD and kisan viaks patra will
give him return around 8% annually and I suggest Balance kind of funds to
Portfolio Management In Mutual Funds

him where he will have exposure of both equity as well as debts. HDFC
prudence fund is best performing fund under balance scheme. To increase
the ratio of equity in portfolio I suggested Reliance vision fund which is mainly
based on large and mid cap companies.

Portfolio for Aggressive Investor

Investment Instrument Amount Returns


HDFC Core & Satellite Fund 1,30,000 Rs. 83.56% p.a.
Prudential ICICI Emerging Star 90,000 Rs. 93.3% p.a.
Fund
Franklin Flexi Cap Fund 1,10,000 Rs. 86.25% p.a.
Fidelity Equity Fund 80,000 Rs. 82.4% p.a.
DSP Top 100 90,000 Rs. 79.28% p.a.
TOTAL 5,00,000 Rs.

Logic behind selection of particular Instrument:

As investor ready to take high risk, he is looking for high returns on his
investment. I took thus instrument which provides good return. All of these
instruments will give him return around 80% annually. Currently Mid cap
companies will perform better than large cap companies so, I select more
funds which are focusing on mid cap companies like HDFC, Franklin’s funds.
To take the benefit of increasing Sensex I took DSP top 100.

MEASUREMENT OF RETURNS ON PORTFOLIOS

The realized rate of return will be calculated by


Portfolio Management In Mutual Funds

1. Time Weighted Rate of Return (TWROR)


It is calculated by using Dietz Algorithm
Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100
Po= Portfolio value at the beginning of the period
Pi= Portfolio value at the end of the period
Ci= Net contributions during time interval
Ri= Rate of Return for the time interval

a) Rate of return for cautious investor


Current
Investment Instrument Amount Returns
Value
Kisan Vikas Patra 1,50,000 Rs. 8.4% p.a. 1,62,600
PPF 70,000 Rs. 8.5% p.a. 75,950
Bank Fixed Deposits 1,00,000 Rs. 6.5% p.a. 1,06,500
NSC 80,000 Rs. 8.16% p.a. 86,528
Post office monthly MIP 1,00,000 Rs. 8% p.a. 1,08,000
TOTAL 5,00,000 Rs. 5,39,578

Time Weighted Rate of Return (TWROR)


Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100

= {(539578-0.5(0))/ (500000+0.5(0))-1}*100

= 7.91% p.a.

b) Rate of return for balance investor


Investment Instrument Amount Returns Current
Value
HDFC Prudence Fund 1,30,000 Rs. 54.2% p.a. 2,00,460
Portfolio Management In Mutual Funds

Reliance Vision Fund 1,00,000 Rs. 78.3% p.a. 1,78,300


Bank Fixed Deposits 1,00,000 Rs. 6.5% p.a. 1,06,500
PPF 70,000 Rs. 8.5% p.a. 75,950
Kisan Vikas Patra 1,00,000 Rs. 8.4% p.a. 1,08,400
TOTAL 5,00,000 Rs. 6,69,610

Time Weighted Rate of Return (TWROR)


Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100
= {(669610-0.5(0))/ (500000+0.5(0))-1}*100
= 33.92%p.a.

c) Rate of return for aggressive investor


Investment Instrument Amount Returns Current
Value
HDFC Core & Satellite Fund 1,30,000 83.56% p.a. 2,38,628
Rs.
Prudential ICICI Emerging Star 90,000 Rs. 93.3% p.a. 1,73,790
Fund
Franklin Flexi Cap Fund 1,10,000 86.25% p.a. 2,04,875
Rs.
Fidelity Equity Fund 80,000 Rs. 82.4% p.a. 1,45,920
DSP Top 100 90,000 Rs. 79.28% p.a. 1,61,352
TOTAL 5,00,000 9,24,565
Rs.

Time Weighted Rate of Return (TWROR)


Ri= [(Pi-0.5Ci)/ (Po+0.5Ci)-1}*100
= {(924565-0.5(0))/ (500000+0.5(0))-1}*100
= 84.91%p.a.
Portfolio Management In Mutual Funds

Phase II
Scheme Portfolio

Scheme Portfolio:
Like investors portfolio different scheme under mutual fund have different
portfolio. By scheme portfolio we mean portfolio or companies in which fund
Portfolio Management In Mutual Funds

manager invested the fund. The selection of companies depend upon many
issue which have great impact in current scenario as well as in near future.
Fund manager has to do lot of research before investing into particular script.
Before going into detail one should understand Sensex movement. Mutual
fund returns are based on Sensex. Their Net Asset Value is directly related to
Share market. The below table shown the Sensex change on monthly basis.
Means what is % change in Sensex during one month.

Sensex Journey
Percentage Changes at the End of the Day
Date Opening Closing Change Change in %
30-Sep-08 8,672.66 8,634.48 -38 -0.43
3-Oct-08 8,662.99 8,697.65 35 0.44
31-Oct-08 7,717.07 7,892.32 175 2.26
2-Nov-08 7,953.28 8,072.75 119 1.49
30-Nov-08 8,962.92 8,788.81 -174 -0.19
2-Dec-08 9,010.58 8,961.61 -49 -0.54
30-Dec-08 9,339.32 9,397.93 58 0.62
2-Jan-09 9,422.49 9,390.14 -32 -0.33
31-Jan-09 9,892.23 9,919.89 27 0.27
2-Feb-09 9,890.90 9,843.87 -47 -0.47
28-Feb-09 10,308.71 10,370.24 62 0.61
2-Mar-09 10,597.19 10,626.78 29 0.27
-0.4
31-Mar-09 11,325.96 11,279.96 -46 1

Percentage Changes at the End of the Month


Date Opening Closing Change In Closing Change in %
Prices
30-Sep-08
8,672.66 8,634.48 Nil Nil
Portfolio Management In Mutual Funds

31-Oct-08 7,717.07 7,892.32 74


2 8.59
30-Nov-08 8,962.92 8,788.81 896 11.35
30-Dec-08 9,339.32 9,397.93 609 6.92
31-Jan-09 9,892.23 9,919.89 522 5.55
28-Feb-09 10,308.71 10,370.24 451 4.54
31-Mar-09 11,325.96 11,279.96 909 8.76

Sensex has boomed with lots of ups and down from last year. It seems very
fluctuating.
Portfolio Management In Mutual Funds

For my study purpose I have taken HDFC Equity Fund and HDFC Core &
Satellite Fund. What is their portfolio means in which companies the fund
manager invested the fund. How he has allocated funds among various
industries as well as various companies. After studying both the fund’s
portfolio I compare them with reliance Growth fund, Prudential ICICI Growth
Fund, DSP Tiger Fund and Kotak Opportunity Fund. Comparison is based on
per month returns and Sensex returns during the same period.
Portfolio Management In Mutual Funds

HDFC Equity Fund

Portfolio Top 10 Holdings For October


S.
No. Company Industry % of NAV
Oil & Natural Gas Corporation
1 Ltd. Oil 9.11
2 State Bank of India Banks 9.02
3 Infosys Technologies Ltd. Software 7.97
4 Satyam Computer Services Ltd. Software 7.68
Industrial Capital
5 Bharat Heavy Electricals Ltd. Goods 7.25
6 Amtek Auto Ltd. Auto Ancillaries 6.05
7 Maruti Udyog Ltd. Auto Ancillaries 5.21
8 United Phosphorus Ltd. Pesticides 4.69
Industrial Capital
9 Crompton Greaves Ltd. Goods 4.67
10 Mahindra & Mahindra Ltd. Auto 4.54
Top 10 Holdings 66.09
Others Equity Holdings 33.91
TOTAL 100

NAV Changed During the Month (GROWTH)


Date NAV Change % Change
1, Oct 2008 93.055
31, Oct
2008 88.295 -4.76 -5.11

Compare returns with Sensex Movement


Date Closing Change % change
30-Sep- 8,634.4
08 8
31-Oct- 7,892.3
08 2 -742 -8.59
Portfolio Management In Mutual Funds

HDFC Equity Fund

Portfolio Top 10 Holdings For December


S.
No. Company Industry % of NAV
Oil & Natural Gas Corporation
1 Ltd. Oil 9.14
2 Infosys Technologies Ltd. Software 8.91
3 Tata Motors Ltd. Auto 8.67
4 Satyam Computer Services Ltd. Software 7.72
5 State Bank of India Banks 5.19
Industrial Capital
6 Crompton Greaves Ltd. Goods 4.87
7 Amtek Auto Ltd. Auto Ancillaries 4.76
8 Mahindra & Mahindra Ltd. Auto 4.45
Industrial Capital
9 Bharat Heavy Electricals Ltd. Goods 4.44
10 Maruti Udyog Ltd. Auto Ancillaries 4.36
Top 10 Holdings 62.51
Others Equity Holdings 37.49
TOTAL 100

NAV Changed During the Month (GROWTH)


Date NAV Change % Change
1, Dec 2008 102.827
3o, Dec
2009 107.009 4.182 4.06

Compare returns with Sensex Movement


Date Closing Change % change
30-Nov- 8,788.8
08 1
30-Dec- 9,397.9
08 3 609 6.92

In the month of December Sensex has grown by 6.92% but fund’s return were
only 4.06% which indicating towards lower performance of fund.
Portfolio Management In Mutual Funds

HDFC Equity Fund

How Fund's Portfolio effected Returns

October December
Industry % Of Allocation Industry % Of Allocation
Software 19.97 Software 20.14
Industrial Capital
Goods 13.73 Auto 17.48
Auto 12.73 Industrial Capital Goods 13.77
Banks 9.28 Oil 9.14
Oil 9.11 Banks 7.73
Auto Ancillaries 8.68 Auto Ancillaries 7.19
Pesticides 4.69 Pesticides 3.98
Consumer Non
Power 4.07 Durables 3.27
Transportation 2.74 Transportation 3.15
Petroleum Products 2.41 Metals 2.25
Hardware 2.11 Gas 2.01
Textile 1.92 Pharmaceuticals 1.63
Metals 1.76 Hardware 1.5
Pharmaceuticals 1.45 Textile 2.57
Chemicals 0.88 Chemicals 0.82
Telecom-service 0.79
Construction 0.21
IT Consulting &
Services 0.09
Oct-Dec Month Portfolio
Industry Change
Software 0.17
Auto 4.75
Industry Capital Goods 0.04
Oil 0.03
Banks -1.55
Auto Ancillaries -1.49
Pesticides -0.71
Consumer Non Durables 3.27
Portfolio Management In Mutual Funds

Transportation 0.41
Metals
0.51
Gas 2.01
Pharmaceuticals 0.18
Hardware -0.61
Textile 0.66
Chemicals -0.06

Tata Motors Share Benefit


Chang %
Date Price e Change
31, Oct 2008 472
31, dec2008 639.55 167.55 35.49%

Fund manager added auto industry by taking Tata motors to 8.67 % which
had no exposure in the month of October in the portfolio. During that time
Tata Motors has grown from 472 to 639.55 Rs means 35.49% increase which
fletched fund performance in to positive. So, fund manager decision of taking
Tata Motors has proved right.

Amtek Share Benefit


Chang
Date Price e % Change
31, Oct 2008 273.7
31, dec2008 297 24 8.79%

Fund manager reduced Amtek exposure in the portfolio by 1.26 % which


proved right because its share price rose only by 8.79% where Sensex was
increasing at 19.2%.so Amtek performed lower than market so its good to sell
this script from portfolio.

HDFC Equity Fund


Portfolio Top 10 Holdings For April
S.
No. Company Industry % of NAV
1 Tata Motors Ltd. Auto 9.04
2 State Bank of India Banks 8.13
3 Infosys Technologies Ltd. Software 8.04
4 Oil & Natural Gas Corporation Oil 7.89
Portfolio Management In Mutual Funds

Ltd.
5 Satyam Computer Services Ltd. Software 7.44
Industrial Capital
6 Bharat Heavy Electricals Ltd. Goods 5.55
7 Maruti Udyog Ltd. Auto Ancillaries 5.23
Industrial Capital
8 Crompton Greaves Ltd. Goods 5.17
Industrial Capital
9 Siemens Ltd. Goods 4.47
10 Amtek Auto Ltd. Auto Ancillaries 3.94
Top 10 Holdings 64.9
Others Equity Holdings 35.1
TOTAL 100

NAV Changed During the Month (GROWTH)

Date NAV Change % Change Beta


1, Aprl 2009 107.009 0.88
30, Aprl 0.88
2009 132.31 29.30 23.64

Compare returns with Sensex movement

Date Closing Change % change


30 march
09 11329.05
31 april
09 14700.01 2677.96 23.64

Industry Wise Allocation


April May
Industry % Of Allocation Industry % Of Allocation
Software 20.14 Software 22.03
Auto 17.48 Auto 18.16
Industry Capital Goods 13.77 Industry Capital Goods 15.35
Oil 9.14 Banks 8.6
Banks 7.73 Oil 7.89
Auto Ancillaries 7.19 Auto Ancillaries 6.65
Portfolio Management In Mutual Funds

Pesticides 3.98 Consumer Non 3.94


Durables
Consumer Non
Durables 3.27 Pesticides 3.93
Transportation 3.15 Transportation 2.84
Metals 2.25 Gas 2.1
Gas 2.01 Metals 1.85
Pharmaceuticals 1.63 Pharmaceuticals 1.42
Hardware 1.5 Hardware 1.38
Textile 2.57 Textile 2.04
Chemicals 0.82 Chemicals 0.7
IT Consulting &
Telecom-service 0.79 Services 0.1
Construction 0.21
IT Consulting &
Services 0.09

April-May Month Portfolio


Industry Change
Software 1.89
Auto 0.68
Industry Capital Goods 1.58
Oil -1.25
Banks 0.87
Auto Ancillaries -0.54
Pesticides -0.05
Consumer Non Durables 0.67
Transportation -0.29
Metals -0.4
Gas 0.09
Pharmaceuticals -0.19
Hardware -0.12
Textile -0.5
Chemicals -0.12
Portfolio Management In Mutual Funds

Siemens Share Benefit


Date Beta
Price Change % Change
30, April 2009 3625.85 1.29
31, May 2009 4486 860.15 23.72 1.4

Add siemens to 4.47 which had no exposure in the month of December in the
portfolio. During that time siemens has grown from 3625.85 to 4486 Rs
means 23.72% increase which fletched fund performance at good rate.

HDFC Equity Fund

Portfolio Top 10 Holdings For February


S. No. Company Industry % of NAV
1 Infosys Technologies Ltd. Software 8.78
2 State Bank of India Banks 7.92
3 Satyam Computer Services Ltd. Software 7.24
Industrial Capital
4 Bharat Heavy Electricals Ltd. Goods 7.05
Oil & Natural Gas Corporation
5 Ltd. Oil 6.58
6 Tata Motors Ltd. Auto 6.55
7 Maruti Udyog Ltd. Auto Ancillaries 6.04
Consumer Non
8 ITC Ltd. Durables 5.97
9 Amtek Auto Ltd. Auto Ancillaries 5.48
Top 10 Holdings 61.61
Others Equity Holdings 38.39
TOTAL 100
Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Feb 2009 113.063 0.83
28, Feb 0.83
2009 116.844 3.781 3.344

Compare returns with Sensex Movement


Date Closing Change % change
31-Jan-
06 9236
28-Feb-
06 8800 436 -4.72

Industry Wise Allocation

January February
% Of % Of
Allocatio Allocatio
Industry n Industry n
Software 22.03 Software 21.06
Auto 18.16 Industry Capital Goods 17.32
Industry Capital Goods 15.35 Auto 12.59
Banks 8.6 Consumer Non Durables 10.16
Oil 7.89 Auto Ancillaries 8.9
Auto Ancillaries 6.65 Banks 7.92
Consumer Non Durables 3.94 Oil 6.58
Pesticides 3.93 Pesticides 3.7
Transportation 2.84 Transportation 2.32
Portfolio Management In Mutual Funds

Gas 2.1 Metals 1.78


Metals Pharmaceuticals 1.45
Pharmaceuticals 1.42 Hardware 1.29
Hardware 1.38 Textile 2.09
Textile 2.04 Chemicals 0.67
Chemicals 0.7 IT Consulting & Services 0.12
IT Consulting & Services 0.1

Jan-Feb Month
Portfolio
Industry Change
Software -0.97
Industry Capital Goods 1.97
Auto -5.57
Consumer Non
Durables 6.22
Auto Ancillaries 2.25
Banks -0.68
Oil -1.31
Pesticides -0.23
Transportation -0.62
Metals -0.07
Pharmaceuticals 0.03
Hardware -0.09
Textile 0.05
Chemicals -0.03
IT Consulting &
Services 0.02

ITC Share Benefit


%
Date Price Change Change
31, Jan 2006 154.8
28, Feb 2006 172.45 17.65 11.41

Add ITC to 5.97 which had no exposure in the month of January in the
portfolio. During that time ITC has grown from 154.8 to 172.45 Rs means
Portfolio Management In Mutual Funds

11.41% increase which is higher than Sensex 4.54% growth, this decision
gave return at 3.44%.

Crompton Greaves Share Benefit


%
Date Price Change Change
31, Jan
2006 906.35
28, Feb
2006 892.45 -13.9 -1.53

Reduce share of Crompton Greaves which had less exposure in the month of
February than January in the portfolio. During that time Crompton has felt
from 906.35 to 892.45 Rs means 1.53% decrease. Due to this fund’s
performance has not felt.

HDFC Equity Fund

Portfolio Top 10 Holdings For March


SR. No. Company Industry % of NAV
1 Infosys Technologies Ltd. Software 8.72
2 State Bank of India Banks 7.88
3 ITC Ltd. Consumer Non Durables 7.81
4 Satyam Computer Services Ltd. Software 6.86
5 Tata Motors Ltd. Auto 5.87
6 Bharat Heavy Electricals Ltd. Industrial Capital Goods 5.71
7 Maruti Udyog Ltd. Auto Ancillaries 5.5
8 Crompton Greaves Ltd. Industrial Capital Goods 5.06
9 Siemens Ltd. Industrial Capital Goods 4.78
10 Amtek Auto Ltd. Auto Ancillaries 4.57
Top 10 Holdings 62.76
Others Equity Holdings 37.24
TOTAL 100

NAV Changed During the Month (GROWTH)

Date NAV Change % Change Beta


1, Mar 2009 116.844 0.88
Portfolio Management In Mutual Funds

31, Mar 2009 127.151 10.307 8.821 0.88

Compare returns with Sensex Movement

Date Closing Change % change


28-Feb-06 8800
31-Mar-06 9568.14 768.14 8.73

Industry Wise Allocation

February March
Industry % Of Allocation Industry % Of Allocation
Software 21.06 Software 18.09
Industry Capital Goods 17.32 Industry Capital Goods 17.35
Consumer Non
Auto 12.59 Durables 12.46
Consumer Non
Durables 10.16 Auto 11.37
Auto Ancillaries 8.9 Banks 7.88
Banks 7.92 Auto Ancillaries 7.67
Oil 6.58 Oil 3.86
Pesticides 3.7 Media & Entertainment 3.29
Transportation 2.32 Pesticides 2.87
Metals 1.78 Telecom- Services 2.65
Pharmaceuticals 1.45 Metals 2.13
Hardware 1.29 Transportation 1.86
Textile 2.09 Hardware 1.81
Chemicals 0.67 Textile 2.05
IT Consulting &
Services 0.12 Pharmaceuticals 1.09
Chemicals 0.87
IT Consulting &
Services 0.08

Feb-March Month Portfolio


Portfolio Management In Mutual Funds

Industry Change
Software
-2.97
Industry Capital Goods 0.03
Consumer Non Durables 2.3
Auto -1.22
Banks -0.04
Auto Ancillaries -1.23
Oil -2.72
Media & Entertainment 3.29
Pesticides -0.83
Telecom- Services 2.65
Metals 0.35
Transportation -0.46
Hardware 0.52
Textile -0.04
Pharmaceuticals -0.36
Chemicals 0.2
IT Consulting & Services -0.04

Crompton Greaves Share Benefit


%
Date Price Change Change
28, Feb 2006 892.45
31, March
2006 1049.3 156.85 17.57

Add share of Crompton Greaves which had less exposure in the month of
February in the portfolio. During March Crompton has grown from 892.45 to
1049.3 Rs means 17.57% increase. So, these decision results in 8.4% return
on fund.

Satyam Computer Share Benefit


%
Date Price Change Change
28, Feb 2006 769.65
31, March
2006 848.5 78.85 10.24
Portfolio Management In Mutual Funds

Satyam computer has grown at the rate of 10.24% which is 20% higher than
Sensex growth in that time period.

Prudential ICICI Growth Fund


January

S. No Companies Industry % of NAV


1 Hindalco Industry Ltd. Non Ferrous Metals 5.43
2 Bharat Heavy Electricals Limited Industrial Capital Goods 4.16
3 Associated Cement Companies Ltd Cement 3.87
4 Oil & Natural Gas Company Ltd Oil 3.73
5 Grasim Industries Limited Cement 3.47
6 Reliance Industries Limited Petroleum Products 3.36
7 Satyam Computer Services Ltd. Software 3.14
8 Jaiprakash Associates Ltd Construction 3.08
9 Mahindra & Mahindra Limited Auto 3.03
10 ITC Limited Consumer Non Durables 3

Industry Wise Allocation

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Jan 2009 68.7 0.98
Portfolio Management In Mutual Funds

31, Jan 70.42 1.72 2.5 0.98


2009

In January, ICICI Growth Fund has given only 2.5% returns where HDFC
Equity Fund has given 5.34% returns. So we can say that HDFC has
performed better in January.

Reliance Industry Share Benefit


%
Date Price Change Change
31, Dec 2008 897.85
31, Jan 2009 713.9 -183.95 -20.4

In the month of January Reliance Industry’s share price has come down to
713.9 Rs which is 20.4% lesser than December price. ICICI has exposure of
reliance industry in to portfolio which harms the fund’s overall returns.

Jai Prakash Associate Share’s Benefit


%
Date Price Change Change
31, Dec 2008 379.9
31, Jan 2009 408.25 28.35 7.46

ICICI has exposure of Jai Prakash Associates which has rose by 7.46% in
January month. HDFC Mutual fund did not have Jai Prakash’s exposure in
their portfolio.

Prudential ICICI Growth Fund


February

S. No Companies Industry % of NAV


Industrial Capital
1 Bharat Heavy Electricals Limited Goods 4.84
2 Jaiprakash Associates Ltd Construction 4.14
3 Reliance Industries Limited Petroleum Products 3.99
4 ITC Limited Consumer Non 3.82
Portfolio Management In Mutual Funds

Durables
5 Grasim Industries Limited Cement 3.73
Associated Cement Companies
6 Ltd Cement 3.71
7 Bajaj Auto Limited Auto 3.68
8 Satyam Computer Services Ltd. Software 3.45
9 Mahindra & Mahindra Limited Auto 3.44
10 Oil & Natural Gas Company Ltd Oil 3.44

Industry Wise Allocation

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Feb 2009 70.42 0.96
28, Feb 0.96
2009 71.79 1.37 1.94
Portfolio Management In Mutual Funds

In February market has boomed by 4.54% where HDFC Equity fund has given
3.33% returns. So it has performed similar to market trend but ICICI Growth
fund has given only 1.94% in same period. So, we can say that this fund has
performed lower than market.

Prudential ICICI Growth Fund


March

S. No Companies Industry % of NAV


Industrial Capital
1 Bharat Heavy Electricals Limited Goods 4.84%
2 Reliance Industries Limited Petroleum Products 4.64%
Industrial Capital
3 Larsen & Toubro Limited Goods 4.03%
Consumer Non
4 ITC Limited Durables 3.91%
Industrial Capital
5 Siemens India Limited Goods 3.82%
6 Bajaj Auto Limited Auto 3.52%
Associated Cement Companies
7 Ltd Cement 3.49%
8 Mahindra & Mahindra Limited Auto 3.32%
9 Cipla Limited Pharmaceuticals 3.28%
10 Grasim Industries Limited Cement 3.17%

Industry Wise Allocation


Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, March 0.78
2009 71.79
31, March 0.78
2009 80.94 9.15 12.74

ICICI Growth fund has grown up by 12.74% in March where HDFC Equity
Fund has grown only by 8.8%

CIPLA Share’s Benefit


%
Date Price Change Change
31, Dec 2008 552.15
31, Jan 2009 662.25 110.1 19.94

ICICI has CIPLA script in their portfolio which has grown to 662.25 Rs. It has
rose by 19.94% in March month. HDFC did not have CIPLA’s exposure. This
script has the main reason behind ICICI better performance over HDFC.
Portfolio Management In Mutual Funds

Reliance Growth Fund


January
S. No. Companies % of NAV
Bharat Earth Movers
1 Ltd. 4.96
2 Kirloskar Brothers 3.84
3 Crompton Greaves Ltd. 2.99
4 Hindustan Lever Ltd. 2.64
5 State Bank of India 2.58
6 Strides Arcolabs Ltd. 2.35
7 United Phosphorous 2.26
8 Jindal Saw Ltd. 2.2
9 Jaiprakash Associates 2.11
10 Reliance Industries Ltd. 2.08

Industry Wise Allocation


S.
No. Industry % Of Allocation
Industry Capital
1 Goods 10.44
Consumer Non
2 Durable 10.41
3 Industrial Products 9.34
4 Software 8.92
5 Banks 7.25
6 Pharmaceuticals 6.1
7 Ferrous Metals 5.16
8 Fertilizers 3.09
9 Chemicals 3.09
10 Construction 2.8
11 Auto Ancillaries 2.33
12 Pesticides 2.26
13
Petroleum Products 2.08
Portfolio Management In Mutual Funds

14 Auto 2.05
15
Telecom Services 1.86

Reliance Growth Fund


March
S. No. Companies % of NAV
Bharat Earth Movers
1 Ltd. 4.91
2 Reliance Industries Ltd. 4.6
3 Kirloskar Brothers 4.18
4 Bombay Dying Ltd. 2.66
5 Bank of Baroda 2.58
6 Crompton Greaves Ltd. 2.57
7 Jaiprakash Associates 2.31
8 Strides Arcolabs Ltd. 2.16
9 Jindal Saw Ltd. 2.1
10 JSW Steels Ltd. 2.04

Industry Wise Allocation


S.
No. Industry % Of Allocation
Industry Capital
1 Goods 10.76
2 Industrial Products 10.19
Consumer Non
3 Durable 8.37
4 Software 8.17
5 Pharmaceuticals 7.78
6 Banks 7.19
7 Ferrous Metals 6.98
8 Petroleum Products 5.95
Portfolio Management In Mutual Funds

9 Chemicals 4.55
10
Construction 3.11
11 Fertilizers 2.78
12 Telecom Services 2.56
13 Auto 2.34
14 Auto Ancillaries 2.19
15 Pesticides 2.14

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Mar 2009 207.15 0.87
31, Mar 2009 229.76 22.61 10.91 0.87

Reliance growth fund has given 10.91% returns to investors in the month of
March where market has boomed by only 8.4%. In the same month HDFC
Equity fund has given only 8.84 % returns.

Kirloskar Brother Share’s Benefit

%
Date Price Change Change
28, Feb 2009 196.55
31, Mar 2009 291.7 95.15 48.41
Kirloskar Brother Share price has risen from 196.55 to 291.7 Rs. This means
48.41% increase in March month. HDFC Mutual Fund had not this script into
their portfolio.

Bombay Dyeing Share’s Benefit


%
Date Price Change Change
28, Feb 2009 375.35
31, Mar 2009 596 220.45 58.71
Portfolio Management In Mutual Funds

Bombay Dyeing shares have grown by 58.71% where the overall Sensex has
grown only by 8.76% Reliance has 4.18% exposure to this script.

JSW Steel Share’s Benefit


%
Date Price Change Change
28, Feb 2009 205.1
31, Mar 2009 302.85 97.75 47.61

In the month of March JSW Steel has moved to 302.85 Rs which was 47.61%
increase. Reliance has 2.04% exposure to this script.

HDFC Equity Fund


February
Portfolio Management In Mutual Funds

S. No. Company % of NAV


1
Infosys Technologies Ltd. 8.78
2 State Bank of India 7.92
3 Satyam Computer Services Ltd. 7.24
4 Bharat Heavy Electricals Ltd. 7.05
5 Oil & Natural Gas Corporation Ltd. 6.58
6 Tata Motors Ltd. 6.55
7 Maruti Udyog Ltd. 6.04
8 ITC Ltd. 5.97
9 Amtek Auto Ltd. 5.48
10 Crompton Greaves Ltd. 4.8
11 Siemens Ltd. 4.25
12 United Phosphorus Limited 3.7
13 Nestle India Ltd. 2.87
14 Balkrishna Industry Ltd. 2.5
15 I-flex Solutions Limited 2.42
16 Container Corporation of India Ltd. 2.32
17 HCL Technology Ltd. 2.29
18 ISMT Ltd. 1.78
Dishman Pharmaceuticals &
19 Chemicals 1.45
20 Britannia Industries Limited 1.32
21 CMC Ltd. 1.29
22 Larsen & Toubro Ltd. 1.22
23 Indo Rama Synthetics (India) Limited 1.06
24 Himatsinka Seilde Ltd. 1.03
25 J K Industries Limited 0.92
26 Savita Chemicals Limited 0.67
27 Datamatics Technologies Limited 0.33
TOTAL 100
Portfolio Management In Mutual Funds

March

S.
No. Company % of NAV
1 Infosys Technologies Ltd. 8.72
2 State Bank of India 7.88
3 ITC Ltd. 7.81
4 Satyam Computer Services Ltd. 6.86
5 Tata Motors Ltd. 5.87
6 Bharat Heavy Electricals Ltd. 5.71
7 Maruti Udyog Ltd. 5.5
8 Crompton Greaves Ltd. 5.06
9 Siemens Ltd. 4.78
10 Amtek Auto Ltd. 4.57
11 ONGC 3.86
12 Zee Tele films Ltd. 3.29
13 United Phosphorus Limited 2.87
14 Nestle India Ltd. 2.78
15 Bharti Tele-ventures Ltd. 2.65
16 Balkrishna Industry Ltd. 2.35
17 HCL Technology Ltd. 2.25
18 ISMT Ltd. 2.13
19 Hindustan Lever Ltd. 1.87
20 Container Corporation of India Ltd. 1.86
21 CMC Ltd. 1.81
22 Larsen & Toubro Ltd. 1.8
23 Himatsinka Seilde Ltd. 1.15
Disahman Pharmaceuticals &
24 Chemicals 1.09
25 Indo Rama Synthetics (India) Limited 0.9
26 Savita Chemicals Limited 0.87
27 J K Industries Limited 0.75
28 Datamatics Technologies Limited 0.26
TOTAL 100
Portfolio Management In Mutual Funds

Change in Portfolio

Companies Change
United Phosphorus Limited -0.83
Tata Motors Ltd. -0.68
State Bank of India -0.04
Siemens Ltd. 0.53
Savita Chemicals Limited 0.2
Satyam Computer Services Ltd. -0.38
ONGC -2.72
Nestle India Ltd. -0.09
Maruti Udyog Ltd. -0.54
Larsen & Toubro Ltd. 0.58
J K Industries Limited -0.17
ITC Ltd. 1.84
ISMT Ltd. 0.35
Infosys Technologies Ltd. -0.06
Indo Rama Synthetics (india) Limited -0.16
Himatsinka Seilde Ltd. 0.84
HCL Tecnology Ltd. -1.14
Disahman Pharmaceuticals &
Chemicals 0.8
Datamatics Technologies Limited 0.76
Crompton Greaves Ltd. -4.54
Container Corporation of India Ltd. 2.74
CMC Ltd. 0.57
Bharat Heavy Electricals Ltd. -5.24
Balkrishna Industry Ltd. 0.15
Amtek Auto Ltd. 0.23
Zee Tele Films Ltd. 3.29
Bharti Tele-ventures Ltd. 2.65
Hindustan Lever Ltd. 1.87
I-Flex Solution Ltd. -2.42
Britannia Industry Ltd. -1.32
Portfolio Management In Mutual Funds

Zee Tele Films Share's Effect


%
Date Price Change Change
28, Feb 2009 176.6
31, Mar 2009 239 62.4 35.33

Fund adds exposure of zee tele films into portfolio by 3.29 % which has
increased by 35.33% during March. In the same time period market has
boomed only by 8.76%.

I- Flex Share's Effect


%
Date Price Change Change
28, Feb 1063.
2009 5
31, Mar
2009 1327 263.5 24.77

Fund eliminate I flex solution from its portfolio which has increased by 24.77%
during March.

Hindustan Lever Ltd. Share's Effect


%
Date Price Change Change
28, Feb 2009 243.7
31, Mar 2009 272 28.3 11.61

Fund added Hindustan Lever Ltd. into their portfolio which has risen by
11.61% during March.
Portfolio Management In Mutual Funds

ITC Ltd. Share's Effect


%
Date Price Change Change
28, Feb 172.4
2009 5
31, Mar 195.1
2009 5 22.7 13.16

Fund added ITC Ltd. into portfolio which has risen 13.16% during March.

Crompton greaves Ltd. Share's Effect


%
Date Price Change Change
28, Feb
2009 892
31, Mar 1049.
2009 5 157.5 17.61

Fund reduces the share of Crompton from portfolio which has increased by
17.61% during March.

Core & Satellite Fund

Nature of scheme : Open ended growth scheme


Objective: To generate capital appreciation through equity investment in
companies whose shares are quoting at prices below their true value.
Fund Manager : Dhawal Mehta
Inception Date : September 17, 2004

Core & Satellite Fund


Portfolio Top 10 Holdings For October
S. No. Company Industry % To NAV
1 State Bank of India Banks 8.83
Industrial Capital
2 Bharat Heavy Electricals Ltd. Goods 7.95
Portfolio Management In Mutual Funds

3 Infosys Technologies Ltd. Software 7.73


4
Tata Motors Ltd. Auto 7.17
5 Satyam Computer Services Ltd. Software 6.34
Consumer Capital
6 ITC Ltd. Goods 5.27
Industrial Capital
7 Crompton Greaves Ltd. Goods 4.96
8 Hindalco Industries Ltd. Non- Ferrous Metals 4.74
9 United Phosphorus Ltd. Pesticides 4.22
Hindustan Construction Company
10 Ltd. Construction 4.07
Top 10 Holdings 61.28
Others Equity Holdings 28.72
TOTAL 100

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, oct 2008 17.18 1.03
31, oct 2008 15.699 (-1.481) (-8.6) 1.03

Compare returns with Sensex Movement


Date Closing Change % change
30-Sep-08 8,634.48

31-Oct-08 7,892.32 (-742) (-8.59)

Core & Satellite Fund

Portfolio Top 10 Holdings For December


% To
S. No. Company Industry NAV
1 Satyam Computer Services Ltd. Software 6.78
2 Bharat Heavy Electricals Ltd. Industrial Capital Goods 6.65
3 Tata Motors Ltd. Auto 6.33
4 State Bank of India Banks 6.21
Portfolio Management In Mutual Funds

5 Infosys Technologies Ltd. Software 5.5


6
Crompton Greaves Ltd. Industrial Capital Goods 5.35
7 Hindustan Construction Company Ltd. Construction 5.18
8 ITC Ltd. Consumer Non Durable 5.15
9 Hindalco Industries Ltd. Non- Ferrous Metals 4.14
10 Hindustan zinc Ltd. Non- Ferrous Metals 3.75
Top 10 Holdings 55.04
Others Equity Holdings 28.72
Total 100

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Dec 2008 17.542 0.87
30, Dec 0.87
2008 18.822 1.28 7.2

Compare returns with Sensex


Movement
Date Closing Change % change
30-Nov- 8,788.8
08 1
30-Dec- 9,397.9
08 3 609 6.92

Industry Wise Allocation

October December
% Of
Industry % Of Allocation Industry Allocation
Industry Capital Goods 22.15 Industry Capital Goods 21.42
Software 15.61 Software 14.03
Banks 12.61 Auto Ancillaries 10.76
Auto Ancillaries 11.12 Banks 9.75
Non-Ferrous Metals 8.48 Non-Ferrous Metals 7.89
Auto 7.17 Auto 6.33
Pesticides 5.42 Construction 5.18
Portfolio Management In Mutual Funds

Consumer Non Durable 5.27 Consumer Non Durable 5.15


Construction
4.07 Pesticides 4.96
Industrial Products 2.67 Industrial Products 2.94
Chemicals 1.71 Chemicals 2.12
Consumer Durables 1.29 Consumer Durables 1.43
Power 0.53

Oct-Dec month portfolio


Industry Change
Industry Capital Goods -0.73
Software -1.58
Auto Ancillaries -0.36
Banks -2.86
Non-Ferrous Metals -0.59
Auto -0.84
Construction -0.5
Consumer Non Durable 1.11
Pesticides -0.12
Industrial Products 0.27
Chemicals 0.41
Consumer Durables 0.14

Hindustan Construction Ltd. Share


Benefit
Date Price Change % Change
31, Oct
2008 853.85
31, Dec2008 127.2

Fund bought Hindustan Construction Ltd. shares.

Core & Satellite Fund


Portfolio Top 10 Holdings For January
S. No. Company Industry % To NAV
1 Infosys Technologies Ltd. Software 8.94
2 Tata Motors Ltd. Auto 8.48
3 Bharat Heavy Electricals Ltd. Industrial Capital Goods 8.08
Portfolio Management In Mutual Funds

4 Satyam Computer Services Ltd. Software 6.44


5
Crompton Greaves Ltd. Industrial Capital Goods 5.98
6 State Bank of India Banks 5.69
7 ITC Ltd. Consumer Non Durable 5.26
8 Hindustan zinc Ltd. Non- Ferrous Metals 5.25
9 Hindalco Industries Ltd. Non- Ferrous Metals 4.79
10 United Phosphorus Ltd. Pesticides 3.91
Top 10 Holdings 62.82
Others Equity Holdings 37.18
Total 100

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Jan 2009 18.822 0.90
31, Jan 0.90
2009 20.609 1.78 9.49

Compare returns with Sensex


movement
Date Closing Change % change
30-Dec- 9,397.9
08 3
31-Jan- 9,919.8
09 9 522 5.55

Industry Wise Allocation

December January
Industry % Of Allocation Industry % Of Allocation
Industry Capital
Industry Capital Goods 21.42 Goods 24.12
Software 14.03 Software 16.99
Auto Ancillaries 10.76 Non-Ferrous Metals 10.04
Banks 9.75 Banks 9.73
Non-Ferrous Metals 7.89 Auto Ancillaries 8.99
Auto 6.33 Auto 8.48
Construction 5.18 Consumer Non 5.26
Portfolio Management In Mutual Funds

Durable
Consumer Non Durable
5.15 Pesticides 3.91
Pesticides 4.96 Construction 3.73
Industrial Products 2.94 Industrial Products 3.52
Chemicals 2.12 Consumer Durables 1.43
Consumer Durables 1.43 Chemicals 1.01

Dec-Jan month portfolio


Industry Change
Industry Capital Goods 2.7
Software 2.96
Non-Ferrous Metals 2.15
Banks -0.02
Auto Ancillaries -1.77
Auto 2.15
Consumer Non Durable 0.11
Pesticides -1.05
Construction -1.45
Industrial Products 0.58
Consumer Durables Nil
Chemicals -1.11

Infosys Share effect


%
Date Price Change Change
31, Dec2008 2979.4
31, Jan 2009 2880.3 -99.1 3.33

Fund has increased the share of Infosys in to portfolio by 3.5%. The share
price of Infosys during that time period has failed down to 2880.3 Rs. Its
3.33% lower than the price in the beginning of January.

Core & Satellite Fund

Portfolio Top 10 Holdings For February


S. No. Company Industry % To NAV
1 Bharat Heavy Electricals Ltd. Industrial Capital Goods 8.87
2 Tata Motors Ltd. Auto 8.74
3 Infosys Technologies Ltd. Software 8.53
Portfolio Management In Mutual Funds

4 State Bank of India Banks 7.52


5
Satyam Computer Services Ltd. Software 6.45
6 Hindustan zinc Ltd. Non- Ferrous Metals 6.05
7 Crompton Greaves Ltd. Industrial Capital Goods 5.72
8 ITC Ltd. Consumer Non Durable 5.7
9 Hindalco Industries Ltd. Non- Ferrous Metals 4.22
10 Bharti Shipyard Ltd. Industrial Capital Goods 3.84
Top 10 Holdings 65.64
Others Equity Holdings 34.39
Total 100

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Feb 2009 20.609 0.91
28, Feb 0.91
2009 21.159 0.55 2.66

Compare returns with Sensex Movement


Clo %
Date sing Change Change
31-Jan-
09 9,919.89
28-Feb-
09 8800 1119.89 -11.29

In February fund has given 2.66% returns on investment but in the same time
Sensex has decreased by 4.54%. So, fund has performed higher than market
trend.

Industry Wise Allocation

January February
Industry % Of Allocation Industry % Of Allocation
Portfolio Management In Mutual Funds

Industry Capital Goods 24.12 Industry Capital Goods 21.64


Software
16.99 Software 16.63
Non-Ferrous Metals 10.04 Banks 10.79
Banks 9.73 Non-Ferrous Metals 10.27
Auto Ancillaries 8.99 Auto Ancillaries 9.02
Auto 8.48 Auto 8.74
Consumer Non Durable 5.26 Consumer Non Durable 5.7
Pesticides 3.91 Pesticides 3.78
Construction 3.73 Construction 3.63
Industrial Products 3.52 Industrial Products 3.51
Consumer Durables 1.43 Power 2.62
Chemicals 1.01 Consumer Durables 1.49
Chemicals 0.89

Jan-Feb month portfolio


Industry Change
Industry Capital Goods -2.48
Software -0.36
Banks 1.06
Non-Ferrous Metals 0.23
Auto Ancillaries 0.03
Auto 0.26
Consumer Non Durable 0.44
Pesticides -0.13
Construction -0.16
Industrial Products -0.01
Power 2.62
Consumer Durables 0.06
Chemicals -0.12
Portfolio Management In Mutual Funds

United Phosphorus Ltd. Share’s effect


%
Date Price Change Change
31, Jan
2009 272
28, Feb
2009 270 2 0.07

Reduce the share of united phosphorus ltd. from portfolio. The share price of
united has fall during February.

Core & Satellite Fund


Portfolio Top 10 Holdings For March
S. No. Company Industry % To NAV
1 Tata Motors Ltd. Auto 7.99
Industrial Capital
2 Bharat Heavy Electricals Ltd. Goods 7.87
3 Infosys Technologies Ltd. Software 7.53
Industrial Capital
4 Crompton Greaves Ltd. Goods 7.53
5 Hindustan zinc Ltd. Non- Ferrous Metals 7.34
6 State Bank of India Banks 6.95
Consumer Non
7 ITC Ltd. Durable 6.62
8 Satyam Computer Services Ltd. Software 5.96
9 Hindalco Industries Ltd. Non- Ferrous Metals 4.29
Hindustan Construction Company
10 Ltd. Construction 3.84
Top 10 Holdings 65.92
Others Equity Holdings 34.08
Total 100

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Mar 2009 21.159 0.86
31, Mar 2009 23.82 2.661 12.57 0.86
Portfolio Management In Mutual Funds

Compare returns with Sensex


Movement
%
Date Closing Change change
28-Feb-
06 8800
31-Mar- 11,279.9
06 6 2479.96 28.18

Industry Wise Allocation


February March
Industry % Of Allocation Industry % Of Allocation
Industry Capital Goods 21.64 Industry Capital Goods 19.76
Software 16.63 Software 15.12
Banks 10.79 Non-Ferrous Metals 11.63
Non-Ferrous Metals 10.27 Banks 10.62
Auto Ancillaries 9.02 Auto Ancillaries 8.47
Auto 8.74 Auto 7.99
Consumer Non Durable 5.7 Consumer Non Durable 6.62
Pesticides 3.78 Construction 3.84
Construction 3.63 Power 3.16
Industrial Products 3.51 Pesticides 3.15
Power 2.62 Industrial Products 3
Consumer Durables 1.49 Consumer Durables 1.51
Chemicals 0.89 Chemicals 0.91

Feb-March month portfolio


Industry Change
Industry Capital Goods -1.88
Software -1.51
Non-Ferrous Metals 1.34
Banks -0.18
Auto Ancillaries -0.55
Auto -0.75
Consumer Non Durable 0.92
Portfolio Management In Mutual Funds

Construction 0.21
Power
0.54
Pesticides -0.63
Industrial Products -0.51
Consumer Durables 0.02
Chemicals 0.02

Bharti Shipyard Ltd. Share's effect

%
Date Price Change Change
28, Feb 2009 383.85
31, March
2009 384.5 0.65 0.016

Reduce the share of Bharti ship yard in the month of March. The price of
bhatri’s share has just increased by 0.016 % in March. Where the over all
share market has boomed by 8.76%. in the same time fund increased the
share of Crompton greaves in the portfolio which was boomed by 17.57%.

Portfolio as of January 31, 2009


DSP Merrill Lynch India T.I.G.E.R Fund

Company Industry % to NAV


Industrial Capital
L&T Goods 4.79
Reliance
Industries Petroleum Products 4.65
Industrial Capital
BHEL Goods 4.64
ONGC Oil 3.05
Industrial Capital
Siemens Goods 2.95
Industrial Capital
Thermax Goods 2.74
Grasim Industries Cement 2.67
Industrial Capital
Jyoti Structures Goods 2.65
HDFC Finance 2.18
Portfolio Management In Mutual Funds

Crompton Industrial Capital 2.15


Greaves Goods

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Jan 2009 21.5 1.6
31, Jan 1.6
2009 23.62 2.12 9.86

L&T share price


%
Date Price Change Change
1, Jan 2009 1825.65
31, Jan 2009 2172.1 346.45 18.97

DSP fund has given more returns than HDFC Core & Satellite fund. DSP has
exposure of L&
T which has grown by 18.97% during January. In January market has grown up only
by 5.55%.

Portfolio as of February 28, 2006


DSP Merrill Lynch India T.I.G.E.R Fund

Company Industry % to NAV


Industrial Capital
L&T Goods 4.29%
Industrial Capital
BHEL Goods 4.25%
Reliance Industries Petroleum Products 3.74%
Grasim Industries Cement 3.14%
Industrial Capital
Siemens Goods 2.99%
Bharati
TeleVentures Telecom- Services 2.67%
Industrial Capital
Thermax Goods 2.55%
ONGC Oil 2.27%
Portfolio Management In Mutual Funds

HDFC Finance 2.19%


Jyoti Structures Industrial Capital
Goods 2.14%

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Feb 2009 23.62 1.78
28, Feb 1.78
2009 24.46 0.84 3.55

Grasim Industries share's price

Date Price Change % Change


1, Feb 2009 1454.25
28, Feb
2009 1742.6 288.35 19.82

DSP has given 3.55% returns where HDFC has given only 2.55% returns in the
month of February. DSP has exposure of Grasim Industry in their portfolio. Grasim
has increased by 19.82% during February month.

Portfolio as of March 31, 2009


DSP Merrill Lynch India T.I.G.E.R Fund

% to
Company Industry NAV
Reliance Industries Petroleum Products 5.87%
Reliance Communications Telecom- Services 4.41%
BHEL Industrial Capital Goods 4.28%
Grasim Industries Cement 3.56%
L&T Industrial Capital Goods 3.48%
Portfolio Management In Mutual Funds

Bharati TeleVentures Telecom- Services 3.17%


Siemens
Industrial Capital Goods 2.82%
Thermax Industrial Capital Goods 2.56%
Jyoti Structures Industrial Capital Goods 2.26%
Crompton Greaves Industrial Capital Goods 2.13%

NAV Changed During the Month


(GROWTH)
Date NAV Change % Change Beta
1, Mar 2009 24.46 1.69
31, Mar 2009 27.36 2.9 11.85 1.69

Hindalco share's price

Date Price Change % change


1, Mar 2009 75
31-Mar-09 182.7 107.7 143.6

In March, DSP has given 11.85% returns where HDFC has given 12.54%
returns. HDFC had Hindalco in their portfolio which has grown by 143.6% in
March.

ICICI Dynamic Plan

January Portfolio
Portfolio Management In Mutual Funds

S. No. Companies % of NAV


1
Deccan Chronicle Holdings Ltd 7.18
2 Subex Systems Limited 4.02
3 Hindalco Industries Limited 3.89
4 E.I.D. Parry (India) Limited 3.49
5 State Bank of India 3.38
6 Bajaj Hindustan Limited 3.35
7 Reliance Industries Limited 3.18
8 Larsen & Toubro Limited 3.12
Sterlite Industries (India)
9 Limited 2.98
10 Grasim Industries Limited 2.98

Industry Wise Allocation


Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Jan 2009 42.68 0.91
31, Jan 0.91
2009 44.51 1.83 4.28

Sterlite share's price

Chang %
Date Price e change
1, Jan 1074.7
2009 5
31, Jan 1363.4
2009 5 288.75 26.86

Fund has 2.98% exposure of sterlite which has grown 26.86% in January
month.
Portfolio Management In Mutual Funds

ICICI Dynamic Plan


February Portfolio

S. No. Companies % of NAV


1 Deccan Chronicle Holdings Ltd 8.65
2 Jain Irrigation Systems Limited 4.5
3 Subex Systems Limited 4.01
4 E.I.D. Parry (India) Limited 3.65
5 Larsen & Toubro Limited 3.44
6 Grasim Industries Limited 3.34
7 Hindalco Industries Limited 3.21
8 Reliance Industries Limited 3.16
Century Textiles & Industries
9 Ltd 3.14
10 Amtek Ltd. 3.01

Industry Wise Allocation


Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Feb 2009 44.51 0.98
28, Feb 0.98
2009 46.22 1.71 3.64

Century textile share's price


Date Price Change % Change
1, Feb 2009 2.9
28, Feb
2009 2.9 Nil Nil

Dynamic plan has 3.14% exposure of this script which has grown by 0 %
means its share price remained same during the month of February.
Portfolio Management In Mutual Funds

ICICI Dynamic Plan


March Portfolio
S. No. Companies % of NAV
1 Deccan Chronicle Holdings Ltd 7.31
2 Reliance Industries Limited 5.17
Triveni Engineering & Industries
3 Ltd 4.98
4 Jain Irrigation Systems Limited 3.89
5 Subex Systems Limited 3.7
6 Century Textiles & Industries Ltd 3.46
7 E.I.D. Parry (India) Limited 3.36
8 Tata Consultancy Services Limited 3.18
9 Grasim Industries Limited 2.97
10 Larsen & Toubro Limited 2.93

Industry Wise Allocation


Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, March 0.95
2009 46.22
31, March 0.95
2009 53.35 7.13 15.42

Triveni share's price

%
Date Price Change change
1, Mar
2009 76.95
125.9
31-Mar-09 5 49 64.47

Fund has increased triveni sharein portfolio to 4.98% which has grown by
64.47% during March.
Portfolio Management In Mutual Funds

Kotak Opportunity
January
S. No. Companies Industry % of NAV
1 National Aluminium Company Ltd Non - Ferrous Metals 6.66
5.49
Industrial Capital
2 Larsen And Toubro Ltd. Goods
3 Jaiprakash Associates Ltd Construction 5.06
4 Punjab National Bank Banks 4.12
5 Satyam Computer Services Ltd. Software 3.59
6 Infosys Technologies Ltd. Software 3.57
Consumer Non
7 Shree Renuka Sugars Ltd. Durables 3.5
8 Mahindra & Mahindra Ltd. Auto 3.38
Industrial Capital
9 Areva T and D India Ltd. Goods 3.23
10 Alembic Ltd. Pharmaceuticals 3.11

Industry Wise Allocation


Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)

Date NAV Change % Change Beta


1, Jan 2009 20.45 1.25
31, Jan 1.25
2009 22.021 1.571 7.68

Kotak Opportunity
February
S. No. Companies Industry % of NAV
1 Bajaj Auto Ltd. Auto 5.86
Industrial Capital
2 Larsen And Toubro Ltd. Goods 5.31
3 Jaiprakash Associates Ltd Construction 4.53
4 Punjab National Bank Banks 4.51
5 Mahindra & Mahindra Ltd. Auto 4.23
6 Tata Steel Limited. Ferrous Metals 4.2
Industrial Capital
7 Areva T and D India Ltd. Goods 3.47
Consumer Non
8 Balrampur Chini Mills Ltd Durables 3.46
Satyam Computer Services
9 Ltd. Software 3.25
10 Jindal Steel & Power Ltd. Ferrous Metals 3.18

Industry Wise Allocation


Portfolio Management In Mutual Funds

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, Feb 2009 22.021 1.12
28, Feb 2009 23.225 1.2 5.46 1.12

Kotak Opportunity
March
% of
S. No. Companies Industry NAV
1 Jindal Steel & Power Ltd. Ferrous Metals 5.1
2 Tata Steel Limited. Ferrous Metals 4.64
3 National Aluminium Company Ltd Non - Ferrous Metals 4.38
4 Sterlite Industries (India) Ltd Non - Ferrous Metals 4.17
5 Satyam Computer Services Ltd. Software 3.93
6 Larsen And Toubro Ltd. Industrial Capital Goods 3.92
7 Maharashtra Seamless Ltd. Ferrous Metals 3.49
8 Ultratech Cement Ltd. Cement 3.37
9 Tata Chemicals Ltd. Fertilizers 3.27
10 Bajaj Auto Ltd. Auto 3.25
Portfolio Management In Mutual Funds

Industry Wise Allocation

NAV Changed During the Month (GROWTH)


Date NAV Change % Change Beta
1, March 1.20
2009 23.225
31, March 1.20
2009 25.89 2.66 11.47

CONCLUSION

The performance of mutual funds in India in the initial phase was not even
closer to satisfactory level. People rarely understood, and of course investing
was out of question. But yes, some 24 million shareholders were accustomed
with guaranteed high returns by the beginning of liberalization of the industry
in 1992. This good record of UTI became marketing tool for new entrants. The
expectations of investors touched the sky in profitability factor. However,
people were miles away from the preparedness of risks factor after the
liberalization.
Portfolio Management In Mutual Funds

The annual composite rate of growth is expected 13.4% during the rest of the
decades. In the last 5 years we have seen annual growth rate of 9%.
According to the current growth rate, by year 2010, mutual fund assets will be
double.
The government is also helping in boosting mutual fund industry. Government
is emphasizing a lot on infrastructure development and social spending and
yet targeting a lower fiscal deficit. FIIs continued to be positive on emerging
markets in general and the Indian markets in particular. FIIs buying have
considerable portion in mutual funds buying.

Key Points:
• Almost 100% growth in the last 6 years.(excepting 2008)
• Our saving rate is over 30%, highest in the world. Only channel zing
these savings in mutual funds sector is required.
• We have some 70 mutual funds which are much less than US having
more than 800. There is a big scope for expansion.
• 'B' and 'C' class cities are growing rapidly. Today most of the mutual
funds are concentrating on the 'A' class cities. Soon they will find scope
in the growing cities.
• SEBI allowing the MFs to launch commodity mutual funds.
• This year budget has increased the limit of investment in overseas
market by mutual funds to 33-35%.
• During last financial year investment habit of India has increased by
25 % and it is expected to grow by 30 % this year.

RECOMMENDATIONS
Studying the mutual fund industry I came to know that there are more then
700 types of funds available in the market. What I see that most of the fund
managers who are investing in equity market are putting their funds into large
cap funds which is of course more secure but it is giving less return to the
investors. i thought of preparing my own portfolio by investing 25 percent in
Portfolio Management In Mutual Funds

money market and the rest of the 75 percent in mid cap equity To provide
investors with opportunities for long term growth in capital along with the
liquidity of an open ended scheme by investing predominantly in a well
diversified basket of equity stocks of companies and in debt and money
market instruments.. The portfolio is mentioned below:-

EQUITY
Company Name % of Net Assets
Maharashtra Seamless Ltd 4.61
Infotech Enterprises Limited 4.33
Kesoram Industries Ltd 4.02
Gitanjali Gems Ltd. 3.18
KEC International Ltd. 3.08
Nagarjuna Construction Company Ltd 3.06
Thermax Limited 3.02
Pantaloon Retail (India) Ltd. Equity 2.89
Eastern Silk Industries Limited 2.81
3 i Infotech Limited. 2.68
Crompton Greaves Ltd 2.65
Welspun Gujarat Stahl Rohren Ltd 2.65
Hotel Leela Venture Ltd 2.51
Adlabs Films Limited 2.23
Mangalam Cement Ltd 2.19
Amtek Auto Ltd 2.17
KEI Industries 2.14
Elecon Engineering Company Ltd 2.09
India Cements Ltd 1.79
IVRCL Infrastructure & Projects Ltd. 1.67
Raymond Ltd 1.61
Opto Circuit Ltd. 1.52
SKF Bearings India Ltd 1.48
Crest Animation Studios Ltd 1.46
Ansal Properties & Industries Ltd 1.36
Gujarat Mineral Development Corporation Limited 1.3
Lupin Ltd. 0.97
Deepak Fertilizers & Petrochemicals Corp Ltd 0.93
Usha Martin Ltd 0.93
RPG Transmission Ltd 0.86
Portfolio Management In Mutual Funds

Gujarat State Petronet Ltd. 0.78


Jagran Prakashan Ltd 0.75
Rajshree Sugars & Chemicals Ltd 0.66
Indo Asian Fuse Gear Ltd 0.65
Sri Adhikari Brothers Television Network Ltd 0.58
Global Vectra Helicorp Ltd 0.37
Sagar Cements Ltd 0.32
Bharati Shipyard 0.3
PVR Ltd. 0.3
K E C Infrastructure Ltd. 0.28
Dwarikesh Sugar Industries 0.26
Tanla Solutions Ltd 0.17
Mahindra Ugine Steel Company Ltd 0.16
Redington India Ltd. 0.15
Suryalakshmi Cotton Mills Ltd 0.15

Top Industry Allocation

Industry Allocation

Steel 8.35%
Computers - Software & Education 7.18%
Housing & Construction 6.09%
Textiles 5.85%
Diversified 5.63%
Electricals & Electrical Equipments 5.44%
Engineering & Industrial Machinery 5.11%
Entertainment 4.57%
Cement 4.30%
Power Generation, Transmission & Equip 3.94%

Asset Allocation
Equity Debt Money Market
74.06 - 25.94
Portfolio Management In Mutual Funds

MY LEARNING FROM PROJECT

I have learnt many things which I might not be able to learn under
class room training like looking at the stock market terminal and
analyzing the stocks and thereby deducing about their
performance and thus designing the portfolio on the basis of their
performances. I want to share some of experience or learning with
you.

• First and the most important I learnt about Mutual Fund


Industry. Before this project I dint have much knowledge
about Mutual funds. But now I have good knowledge about
Mutual Funds.

• I learnt about marketing elements also. How the companies,


banks and brokerage houses market their products in front of
customer in presence of competitor’s products.

• I learnt about mutual funds as well as other products like


insurance, DMAT account, IPO, some of banking product
and transactions and some financial services offered by
Angel Broking Ltd.

• I also learnt about the risk factor calculation of the mutual


funds, how the various broking firms calculate the risk factors
of various mutual funds.
Portfolio Management In Mutual Funds

WEBOGRAPHY

➢ hdfcfund.com
➢ google.com
➢ altavista.com
➢ investmart.com
➢ icicidirect.com
➢ amfiindia.com
➢ nseindia.com
➢ mutualfundsindia.com

BIBLIOGRAPHY
➢ Book on “Portfolio Management” by ICFAI Press
➢ Magazine “AAG” by HDFC Bank, April issue.
➢ Business world