A Project Report

On

“Mutual Fund Analysis”

At
Pearl Institute of Financial Market

By
Ganesh Kishor Dabhade
Under the guidance of
Prof. Divya Y Lakhani

Submitted to
University of Pune
In the partial fulfillment of
the requirement for the award of the degree of
Masters of Business Administration (MBA)
Through
Dr. Vikhe Patil Foundation’s
PRAVARA CENTRE FOR MANAGEMENT RESEARCH &
DEVELOPMENT
PUNE – 16.

1
 CERTIFICATE

This is to certify that Mr. Ganesh Kishor Dabhade has done the research project titled
‘Mutual Fund Analysis’. It is an authentic project. The same project has been
completed under my guidance.

Name of Guide: Divya Lakhani

Designation: Lecturer

Date:

2
 DECLARATION

I hereby declare that the project titled “Mutual Fund Analysis at Pearl Institute Of
Financial Market” is an original piece of research work carried out by me under the
guidance and supervision of Prof. Divya Lakhani. The information has been collected
from genuine & authentic sources. The work has been submitted in partial fulfillment
of the requirement of Master of Business Administration to University of Pune.

Date:

Place: Pune Ganesh Kishor Dabhade

3
 ACKNOWLEDGEMENT

I take this opportunity to sincerely thank one and all that have made this
happen. At, the completion of my project, I take great pleasure of acknowledging the
management of “Pearl Institute of Financial Market” for giving this golden
opportunity to do my summer project in their organization.

I offer my profound gratitude to the management for giving me this

opportunity of amalgamating my theoretical knowledge with my practical experience
in a professional environment.

Sincere thanks to Mr. Ankush Garg (C.E.O), for the confidence shown in me
and his guidance and motivation throughout the project, with his helpful attitude. He
always added to my thoughts, provided timely suggestions and cleared my doubts to
perfection.

Above all I am deeply grateful to Dr. Rakesh Dholakia (Director-PCMRD)

and my project guide Prof. Divya Lakhani for helping me and giving me the
opportunity to complete this project successfully.

4
 INDEX

Sr. No Content Page No

1 Introduction

2. Company Profile

3. Objectives of the Study

4. Research Methodology

5. Project Work Undertaken

6. Data Analysis & Interpretation

7. Observation & Findings

8. Recommendation & Conclusion

5
 EXECUTIVE SUMMARY:-

The project titled “Mutual Funds Analysis” being carried out for Pearl Institute Of
Financial Market. Today an investor is interested in tracking the value of his
investments, whether he invests directly in the market or indirectly through Mutual
Funds. This dynamic change has taken place because of a number of reasons. With
globalization and the growing competition in the investments opportunity available he
would have to make guided and rational decisions on whether he gets an acceptable
return on his investments in the funds selected by him, or if he needs to switch to
another fund.

In order to achieve such an end the investor has to understand the basis of appropriate
performance measurement for the fund, and acquire the basic knowledge of the
different measures of evaluating the performance of the fund. Only then would he be
in a position to judge correctly whether his fund is performing well or not, and make
the right decision.

This project is undertaken to help the investors in tracking the performance of their
investments in Mutual Funds and has been carried out with the objective of giving
performance analysis of Mutual Fund.

The methodology for carrying out the project was very simple that is through
secondary data obtained through various mediums like fact sheet of the funds, the
Internet, Business magazines, Newspaper, etc. the analysis of Funds has been done
based on one year return, standard deviation, sharp ratio, beta.

6
 CHAPTR 1

INTRODUCTION

7
 CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures, and other securities. The income earned
through these investments and the capital appreciation realised are shared by its unit
holders in proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest
in a diversified, professionally managed basket of securities at a relatively low cost.
The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

8
IMPORTANT CHARACTERISTICS OF THE MUTUAL FUND

1. A mutual fund actually belongs to the investors who have pooled

their funds. The ownership of the mutual fund is in the hand of the
investor

2. A mutual fund is managed by investment professional and other

service providers who earn a fee for their services from the fund

3. The pool of funds is invested in a portfolio of marketable

investments. The value of the portfolio is updated every day.

4. The investor’s share in the fund is denominated by “UNIT”. The

value of the unit changes with changes in the portfolio value every
day the value of the unit of investment is called as the Net Assets
Value or NAV.

5. The investment portfolio of the fund is created according to the

stated investment objectives of the fund.

Types Of Mutual Fund Schemes

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance, and return expectations etc. The table below gives an
overview into the existing types of schemes in the Industry.

9
TYPES OF MUTUAL FUND SCHEMES

BY STRUCTURE

• Open – Ended Schemes

• Close – Ended Schemes
• Interval Schemes

BY INVESTMENT OBJECTIVE

• Growth Schemes
• Income Schemes
• Balanced Schemes
• Money Market Schemes

OTHER SCHEMES

• Tax Saving Schemes

• Special Schemes
• Index Schemes
• Sector Specific Scheme

10
 5 Easy Steps to Invest in Mutual Funds

1) Search: “Where to look for if we want to invest in MF”

• Contacting an Investment advisor in a bank or a brokerage house or an
Independent Financial Advisor is the first step to gathering information.
• Mutual funds units can also be bought over the Internet.
• Mutual funds are much like any other product, in that there are
manufacturers who provide the product and there are dealers who sell
them.

2) Evaluation: “Evaluation: choosing the right mutual fund for you

As an investor one may
• for the short term or long term want to invest
• want regular income or growth
• want to target lower risk or higher returns
• be convinced of a particular sector and want to invest in it
3) Purchase:
• Systematic Investment Plan (SIP): Allows you to save a part of your
income regularly. Also used to reduce risk when investing in schemes
targeting aggressive growth.
• Systematic Withdrawal Plan (SWP): Allows you to withdraw a part of
your investment regularly. Used when you want to withdraw your
investment for a specific regular payment, like insurance premium
payments of monthly/quarterly frequency.
• Automatic debit: Saves the hassle of writing a cheque when making an
investment. Your account is debited automatically for the amount
invested.
• Dividend Plan :
o Dividend Payout: Under this plan investor can redeem his/her
dividend at specific times.

11
 o Dividend Reinvestment: Under this plan investor’s dividend is
reinvested back to it’s principal amount which therefore increase
the number of units investor is holding.
• Growth: Under this plan income generated from investment will put
back to it’s invested amount which therefore increases the value of each
unit customer is holding.

4) Post Purchase Monitoring:

Once you have invested in an ongoing fund, expect a period of two to
three days before you receive an account statement on the address mentioned
by you in your application form.
• The Account Statement: Your account statement indicates your current
holding in the scheme that you have invested.
• The transaction slip: The transaction slip at the end of the account
statement can be used for additional purchases, redemptions or to
intimate the mutual fund on any change in bank mandates/address.
• NAV: The NAVs of all the open-ended schemes are published at the
fund's website, financial newspapers and AMFI (Association of Mutual
Funds) web-site www.amfiindia.com.

5) EXIT:
Every AMC advice that every investor should monitor the his/her
units NAV periodically but AMC also recommend their unit holders to not get
swayed by short term considerations in deciding their exit.

Redemption: In case of open ended funds investor can redeem his/her invested
amount. Most funds take 1-3 days to credit your account with your redemption
proceeds.

12
 HISTORY OF MUTUAL FUND IN INDIA

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history
of mutual funds in India can be broadly divided into four distinct phases
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from
the 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
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets
under management
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC 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.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.

13
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores. The Unit
Trust of India with Rs.44,541 crores of assets under management was way ahead of
other mutual funds.
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.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores
of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of March, 2006, there were
29 funds.

14
The graph indicates the growth of assets over the years.

Source: amfiindia.com

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association
in India was generated to function as a non-profit organisation. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex
body of all Asset Management Companies (AMC) which has been registered with
SEBI. Till date all the AMCs are that have launched mutual fund schemes are its
members. It functions under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund
Industry to a professional and healthy market with ethical lines enhancing and
maintaining standards. It follows the principle of both protecting and promoting the
interests of mutual funds as well as their unit holders.

15
Major Mutual Fund Companies in India

• Birla Sun Life Mutual Fund

• Bank of Baroda Mutual Fund (BOB Mutual Fund)

• HDFC Mutual Fund

• HSBC Mutual Fund

• ING Vysya Mutual Fund

• Prudential ICICI Mutual Fund

• Sahara Mutual Fund

• State Bank of India Mutual Fund

• Tata Mutual Fund

• Kotak Mahindra Mutual Fund

• Unit Trust of India Mutual Fund

• Reliance Mutual Fund

• Standard Chartered Mutual Fund

• Franklin Templeton India Mutual Fund

• Morgan Stanley Mutual Fund India

• Escorts Mutual Fund

16
• Alliance Capital Mutual Fund

• Benchmark Mutual Fund

• Canbank Mutual Fund

• LIC Mutual Fund

17
 CHAPTER 2.

COMPANY PROFILE

18
PiFM (Pearl institute of Financial Markets)

The vibrant and dynamic financial industry demands talented, competent and
knowledgeable people to drive the growth vehicle. The industry is on a watch-out
for people who not only are technically equipped, but also have some hands-on
experience in the related areas. Organizational always prefer professionals who
have the potential to become productive with minimal investment. PiFM is
committed to develop such workforce that can be productive, with minimal training
efforts required by the organizations. PiFM does so by delivering practical financial
knowledge through various modes. All its modules, seminars, workshops, etc aim
at providing conceptual as well as practical outlook about the various finance
related areas of study. At PiFM we help the budding professionals acquire the right
set of skills and get equipped with the right amount of knowledge to become
successful professionals and investors.

PiFM is promoted by PEARL group, which is a well known name in financial

market and are the members of MCX, NSE and others exchanges.

Institute is assisted by an advisory board comprising of leading industry experts in

banking, mutual funds, insurance, financial planning and reputed academics.

PiFM’s Services

1. One year Post Graduate Diploma in Finance

2. Diploma in Stock Market Trading and Operations
3. Diploma in Commodity Market Trading and Operations
4. Diploma in Equity Research & Portfolio Management
5. Foundation Certification in Stock Market
6. Foundation Certification in Commodity Market
7. Advanced Certification in Stock Market
8. Advanced Certification in Commodity Market
9. Certification in Technical Analysis
10. Certification in Arbitrage Trading
11. Classroom and Practical training for certifications of NSE & MCX
12. Share, Commodity & Currency Trading

19
 Currently PiFM is located in Pune, Dehradun, Sarangpur, Mathura &
Haridwar.

Vision
To be a reputed institute that nurtures finance professionals in India by offering high-
end education in financial markets.

Mission
To be among leading institutes in India providing financial market education by 2011.

Objectives
 To provide learning facilities to individuals for pursuing careers in finance

 To develop professionals with the right skill set who can serve the
growing financial services market in India and help India become a major
financial hub in world

 To assist in multi-dimensional personality development of young

professionals by conducting seminars and workshops by experts from various
areas.

 To collaborate with other institutions in India with a view to further

professionalizing financial education and assisting in institution building, in a
meaningful manner

The Promoter Pearl group

Pearl group is among India’s leading conglomerated in the financial market. The
group has reinvented itself from a leading equity trading house to a diversified
financial services business mix. Pearl group is not only present in financial industry
they have also spread their footprints in manufacturing industry.
Pearl group is owned by professionals who have 15 years of rich experience in
equity, commodity, currency and derivative market operations in the country. Pearl
broking house is also involved largely in jobbing and arbitrage, the group
collectively generate daily turnover of Rs. 100 crores and provide a huge liquidity
pool in the market.

20
PBH (Pearl Broking House) has diversified geographical presence with total
presence in 27 cities and list is expanding.

PBH offices
North Zone Headquarter: Dehradun
Also at: Haridwar, Chandigarh, Jagadhari, Kanpur, Ludhiana, Mathura,
Muzafarnagar, Saharangpur
East Zone Headquarter: Kolkata
Also at: Asansol, Bahrampur, Burdwan, Durgapur, Kharagpur, Malda, Siliguri
West Zone Headquarter: Bhuj
Also at: Pune, Bhuj, Ahmedabad, Gandhidham, Rajkot, Surat
South Zone Headquarter: Bangalore
Also at: Dawangiri, Mysore, Tumkur
Head office
18-68, Mohini Road, Opposite Gurudwara, Dalanwala, Dehradun – 248001
(Uttarakhand)

Pune Office
PALASH Poshville, A-01, Vilas Javdekar Associates, Near Dutta Mandir,Wakad,
Pune-57
Pin- 411057. Phone :- 020 – 20270416

21
CHAPTR 3

OBJECTIVE

22
1.1 OBJECTIVES

1. To study and analyse the performance of mutual funds.

2. To study the awareness of people about investment in mutual funds.

3. To compare the performance of mutual funds with Nifty(index).

23
 CHAPTER 4

RESEARCH METHODOLOGY

24
Research Design:
• The project was done towards partial fulfillments of MBA (FINANACE)
course.
• The research was conducted in the city of Pune, Maharashtra.
• The study was covered over a period of 2 months

Sample design:

The researcher has undertaken Probability sampling.

The sample size is 157 individuals. The survey was conducted in the Kothrud area of
Pune city. A structured questionnaire was administered to each respondent.

The researcher also collected secondary data from:

a) Brochures and pamphlets issued by PIFM
b) Internet
c) Books and magazines

The date was collected and tabulated. This was then analyzed through charts,
diagrams, Sharpe ratio, and statistical measures such as mean, standard deviation.

On The Job Training:

OJT is basically to give intern exposure to the outside world and it help to teach
them the real world work by giving him practical knowledge. Through OJT I learn
that the theory we have learned is difficult to implement in practical work. And we
have to apply them in a very different way.
I started my OJT from the very first day. And the day to day work that I am
suppose to do is my OJT and it is not fixed what I have to do and before start
working I have to learn the work which is assigned to me. My company guide has
given me incremental work to make me understand the equity market better

25
Need & Scope of the Project

1. To study and analyse the performance of mutual funds for investment purpose.

2. To study the awareness of people about investment in mutual funds.

3. Comparative analysis the performance of mutual funds with Nifty.

4. Measure the performance of mutual funds with the help of tools as beta,
standard deviation, means, sharp ratio & return on investment.

Significance of the project:-

1. To take decision on best investment alternative regarding the mutual fund.

2. To evaluate performance of various mutual fund schemes on the basis of fund

return, standard deviation, sharp ratio and beta.

3. To know the perception of investors towards the mutual fund.

4. To compare the mutual fund performance with benchmark index and within
themselves.

26
 CHAPTER 5

PROJECT WORK UNDERTAKEN

27
In this project I have taken 5 mutual funds & I have consider the followintg things
• Mutual fund return of 1 year at monthly interval
• Standard deviation
• Beta
• Sharpe ratio

Measurement of risk
Risk refers to the possibility that the actual outcome of an investment will differ from
the expected outcome. In other words we can say that risk refers to variability or
dispersion. If any investment is said to invariable it means that it is totally risk free.
Whenever we calculate the mean returns of an investment we also need to calculate
the variability in the returns

NAV:-
Net Asset Value (NAV) represents a fund’s per share marker value. This is the price
at which investors buy (bid price) fund shares from a fund company and sell them
(redemption price) to a fund company. Dividing the total value of all the cash and
securities in a funds portfolio, less any liabilities, by the number of shares outstanding
derives it. The NAV computation is undertaken once the end of the each trading day
based on the closing market prices of the portfolio’s securities.

NAV: Net Asset of the scheme/ Number of units outstanding

Or
NAV= (Market Value Of Investment + Receivables + Other Accrued Income +
Other Assets - Accrued Expenses - Other Payables - Other liabilities) / Number of
Units Outstanding on The Valuation Date

For the purpose of NAV calculation, the day on which NAV is calculated by a fund is
known as the valuation date. NAV of all schemes and daily for Open-end schemes.
The day’s NAV must be posted on AMFI website by 8:00 p.m. that day. This applies
to both Open-end & Closed-end schemes.
The fund’s NAV is affected by these 4 factor:

28
 1. Purchase & Sale of investment securities
2. Valuation of all investment securities held
3. Other assets & Liabilities
4. Units sold or redeemed

RETURN METHODS
In this project I have calculate mutual fund return by Change in NAV or Absolute
return method:
Suitable for computing returns between two dates
Return= (NAV at the end of period – NAV at the beginning of period)* 100 /
NAV at the beginning of period

29
 5 Pointers to Measure Mutual Fund Performance

MEASURES DESCRIPTION IDEAL RANGE

STANDARD Standard Deviation allows to evaluate the volatility Should be near to it’s mean
DEVIATION of the fund. The standard deviation of a fund return.
measures this risk by measuring the degree to which
the fund fluctuates in relation to its mean return.

BETA Beta > 1 = high risky

Beta is a fairly commonly used measure of risk. It Beta = 1 = Avg
basically indicates the level of volatility associated Beta <1 = Low Risky
with the fund as compared to the benchmark.

R-SQUARE R- square measures the correlation of a fund’s R-squared values range

movement to that of an index. R-squared describes between 0 and 1, where 0
the level of association between the fund's volatility represents no correlation and 1
and market risk. represents full correlation.

ALPHA Alpha is the difference between the returns one Alpha is positive = returns of
would expect from a fund, given its beta, and the stock are better then market
return it actually produces. It also measures the returns.
unsystematic risk . Alpha is negative = returns of
stock are worst then market.
Alpha is zero = returns are
same as market.
SHARPE
Sharpe Ratio= Fund return in excess of risk free The higher the Sharpe ratio,
RATIO
return/ Standard deviation of Fund. Sharpe ratios are the better a funds returns
ideal for comparing funds that have a mixed asset relative to the amount of risk
classes. taken.

30
1. Name: LIC Equity Fund-Growth

Type: Open-Ended Equity Diversified

Fund Manager: Mr. Nagendra Singh

Inception Date: January 11, 1993

OBJECTIVE OF FUND-
The primary objective of the fund is to obtain maximum possible capital growth consistent with
reasonable levels of safety and security by investing the funds mainly in equities and also in debts and
other permitted instruments of capital and money market.

Mutual fund return v/s Nifty return of 1 year

Period 3 Months 6 Months 1 Year Since Inception
Mutla fund return 9.72% 78.70% 19.49% 11.30%
Nifty return 16.12% 15.66% 16.12%

FUND V/S NIFTY PERFORMANCE

Fund
Nifty
Sources: mutualfundsindia.com

31
Measures of risk:-

Mean -0.51
Standard Deviation 5.72
Sharpe -0.11
Beta 0.98

ASSET ALLOCATION:-

Asset Allocation As on 31/08/09 % Net Assets

Equity 98.25
Debt 0.00
Others 1.75

ASSET ALLOCATION

1.75
0

EQUITY
DEBT
OTHERS
Slice 4

98.25

32
. TOP 5 SECTOR

Top 5 Sectors % Net Asset

As on 31/08/2009
Energy 34.64
Financial 26.61
Diversified 10.97
Communication 7.40
Engineering 6.38

TOP 5 SECTOR

6.38
Energy
7.4
34.64 Financial
10.97
Diverisfied
26.61
Communication

Engineering

33
Analysis:-
LIC Mutual fund has underperformed in the period of 3 months. In this period nifty has given
16.12% return and fund has given 9.72% return. In the period of 6 months nifty has given
15.66% and fund has given 78.70% return. And in the period of 1 year nifty has given
16.12% return and fund has given 19.49% return.
Standard deviation of nifty is 5.74 and funds’ standard deviation is 5.72.Standard
deviation of fund is less than nifty.
Sharp ratio of nifty is 5.8077 and fund sharp ratio is – 0.11.
The beta of Nifty is 1 and beta of fund is 0.98.
On the basis of SD, sharp ratio, beta we can conclude this fund is less risky.

34
 2. NAME: JPMORGAN INDIA EQUITY- GROWTH

Type: Open-Ended Equity Diversified

Fund manager: Nandkumar Surti

Inception Date: Jun 14, 2007

FUND OBJECTIVE:
The investment objective of the Scheme is to generate income and long-term capital growth from a
diversified portfolio of predominantly equity and equity-related securities including equity
derivatives.

Mutual fund return v/s Nifty return of 1 year

Period 3 Months 6 Months 1 Year Since Inception
Mf return 13.33% 79.17% 17.84% 3.36%
Nifty return 16.12% 15.66% 16.12%

Fund v/s Nifty Performance

Fund
Nifty
Sources: mutualfundsindia.com

35
Measures of risk :-

Mean -0.59
Standard Deviation 5.42
Sharpe -0.13
Beta 0.92

ASSET ALLOCATION
Asste Allocation As On 31/08/2009
% Net Assets
Equity 89.05
Debt 0.00
Others 10.95

ASSET ALLOCATION

10.95 0

EQUITY
OTHERS
DEBT

89.05

TOP 5 SECTOR

Top 5 Sectors As on 31/08/2009 % Net Asset

36
 Energy 16.16
Financial 12.00
Diversified 6.68
Technology 6.53
Communication 2.58

TOP 5 SECTORS

12
16.16
FINANCIAL
DIVERSIFIED
TECHNOLOGY
COMMUNICATION
ENERGY
6.68
2.58
6.53

Analysis:-
JPmorgan has gives average return as compare to the nifty. In the period of 3 months
fund has given 13.33% return and nifty has given 16.12% return. In the period of 6
months fund has given 79.17% return and nifty has given 15.66% return and in the
period of 1 year fund has given the return 17.84% and nifty has given 16.12% return.
So we can conclude that this fund gives not high return but not less return than nifty.
Standard deviation of nifty is 5.74 and funds standard deviation is 5.42.Standard
deviation of funds is less than nifty.
Sharp ratio of nifty is 5.8077 and fund sharp ratio is – 0.13.
The beta of Nifty is 1 and beta of fund is 0.92.
On the basis of SD, sharp ratio, beta we can conclude this fund is less risky and this fund
is also less risky than LIC Mutual fund because SD and beta of this fund is less than LIC
Mutual fund.

37
3. NAME: SBI MAGNUM EQUITY FUND- GROWTH

Type: Open-Ended Equity Diversified

Fund Manager: Rama Iyer Srinivasan

Inception Date: Jan 1, 1991

Fund Objective:
The scheme invests in companies having sustainable competitive advantage owing to their
leadership in either technology, brands, distribution network and adopts bottom-up approach
in choosing companies.

Mutual fund return v/s Nifty return of 1 year

Period 3 Months 6 Months 1 Year Since Inception
MF return 9.97% 91.40% 28.37% 11.61%
Nifty return 16.12% 15.66% 16.12%

Nifty v/s Fund Performance

Fund
Nifty

38
 Sources:- mutualfundsindia.com

Risk measures:

Mean -0.46
Standard Deviation 5.48
Sharpe -0.10
Beta 0.92

ASSET ALLOCATION

Asste Allocation As on 31/08/2009 % Net Assets

Equity 91.81
Debt 1.33
Others 6.87

ASSET ALLOCATION

6.87
1.33
EQUITY
DEBT
OTHERS
Slice 4

91.81

39
 TOP 5 SECTOR

Top 5 Sectors As on 31/08/2009 % Net Asset

Energy 20.04
Financial 12.23
Chemicals 9.72
Metals 9.56
Diversified 9.53

TOP 5 SECTOR

9.53
20.04 ENERGY
9.56 FINANCIAL
CHEMICALS
METALS
DIVERSIFIED

9.72 12.23

Analysis:-
SBI Magnum Equity Fund has given a less return as compare to nifty for the period of
3 months. But in the period of 6 months and 1 years fund has given a high return as
compare to nifty. In the period of 3 months fund has given 9.97% return and nifty has
given 16.12% return and in the period of 6 months nifty has given 15.66% return and
fund has given very high return as compare to nifty. Fund has given 91.40% return for
the period of 6 months. And in the period of 1 years fund has given 28.37% return and
nifty has given a less return that is 16.12% . So we can conclude that fund has given a
good return from long term investment horizer.
Standard deviation of nifty is 5.74 and funds standard deviation is 5.48.Standard
deviation of funds is less than nifty.
Sharp ratio of nifty is 5.8077 and fund sharp ratio is – 0.10.
The beta of Nifty is 1 and beta of fund is 0.92.

40
On the basis of SD, sharp ratio, beta we can conclude this fund is less risky this fund is also
less risky than LIC mutual fund and JPMorgan mutual fund because SD, sharp ratio and
beta of this fund is less than LIC and JPMorgan mutual fund.

41
 4. NAME: FIDELITY EQUITY MUTUAL FUND- GROWTH

Type: Open-Ended Equity Diversified

Fund Manager: Subramanian Balakrishnan

Inception Date: May 16, 2005

Fund Objective:
To generate long-term capital growth from a diversified portfolio of predominantly equity and equity-
related securities.

Mutual fund return v/s Nifty return of 1 year

Period 3 Months 6 Months 1 Year Since Inception
Fund Return 14.09% 80.16% 26.45% 25.87%
Nifty return 16.12% 15.66% 16.12%

Nifty v/s Fund Performance

Fund
Nifty

42
 Sources:- mutualfundsindia.com

Risk measures

Mean -0.39
Standard 4.72
Deviation
Sharpe -0.11
Beta 0.80

ASSET ALLOCATION
Asset Allocation As on 31/08/2009 % Net Assets
Equity 95.09
Debt 0.00
Other 4.91

ASSET ALLOCATION

4.91 0

EQUITY
OTHER
DEBT

95.09

43
TOP 5 SECTOR

Top 5 Sectors As on 31/07/2009

% Net Asset
Financial 23.60
Energy 13.54
FMCG 10.18
Technology 9.28
Health Care 8.40

TOP5 SECTOR

8.4 FINANCIAL
9.28 23.6
ENERGY
FMCG
TECHNOLOGY
10.18
13.54 HEALTHCARE

Analysis:- Fidelity Equity Mutual Fund was perform good as compare to S&P CNX
NIFTY. Nifty has given 16.12% return and fund has given 14.09% return in the
period of 3 months. And in the period of 6 months nifty has given 15.66% and fund
has given 80.16% return.
In the period of 1 year nifty has given 16.12% return and fund has given 26.45%
return. This fund is useful for long term investment horizon.
Standard deviation of nifty is 5.74 and funds standard deviation is 4.72.Standard
deviation of funds is less than nifty.

44
Sharp ratio of nifty is 5.8077 and fund sharp ratio is – 0.11.
The beta of Nifty is 1 and beta of fund is 0.80.
On the basis of SD, sharp ratio, beta we can conclude this fund is less risky.
This mutual fund is less risky than LIC, JPMORGAN & SBI Mutual fund because
SD, sharp ratio and beta of this fund is less than LIC Mutual Fund, JPMorgan mutual
fund and SBI Mutual Fund.

45
 5. NAME: SAHARA GROWTH FUND- GROWTH

Type: Open-Ended Equity Diversified

Fund Manager: A N Sridhar

Inception Date: Sep 3, 2002

Fund Objective:
To achieve capital appreciation by investing primarily in equities

Mutual fund return v/s Nifty return of 1 year

Period 3 Months 6 Months 1 Year Since Inception
MF return 10.58% 71.02% 32.80% 32.91%
Nifty return 16.12% 15.66% 16.12%

.
FUND V/S NIFTY PERFORMANCE

Fund
Nifty
Sources:- mutualfundsindia.com

46
Risk measures:-

Mean -0.24
Standard Deviation 4.36
Sharpe -0.08
Beta 0.73

ASSET ALLOCATION

Asset Allocation As on 31/08/2009 % Net Assets

Equity 96.14
Debt 0.00
Other 3.86

ASSET ALLOCATION

3.86 0

EQUITY
OTHER
DEBT

96.14

TOP 5 SECTOR

47
 Top 5 Sectors As on 31/08/2009 % Net Asset
Energy 22.15
Construction 11.74
Automobile 10.78
Financial 9.67
Engineering 9.01

TOP5 SECTOR
9.01

22.15
9.67 ENERGY
CONSTRUCTION
AUTOMOBILE
FINANCIAL
ENGINEERING
10.78
11.74

Analysis:-
Sahara Growth Fund was well performed compare to the nifty in to the period of one
year. In to the period of 3 months fund has given 10.58% return and Nifty has given
16.12 % return so in the period of 3 months funds has underperforms the nifty. But In
the period of 6 months fund has given 71.02% return and Nifty has given 15.66% return
and 1 years fund has given 32.80% return and nifty has given 16.12% return so fund has
over performed than nifty. So From above table and diagram we can conclude that the
fund is good for the long term investment horizon.

Standard deviation of nifty is 5.74 and funds standard deviation is 4.36.Standard

deviation of funds is less than nifty.
Sharp ratio of nifty is 5.8077 and fund sharp ratio is – 0.08.
The beta of Nifty is 1 and beta of fund is 0.73.
On the basis of SD, sharp ratio, beta we can conclude this fund is less risky.
This fund is less risky than other funds because SD, sharp ratio & beta of

48
this fund lower than other funds.

49
 CHAPTER 6

DATA ANALYSIS & INTERPRETATION

Fund ranking on the basis of standard deviation

Sr. Fund SD
No.
S&P CNX NIFTY 5.74

50
1 Sahara Growth Fund 4.36
2 Fidelity Equity Mutual Fund- Growth 4.72
3 JPMorgan India Equity Fund- 5.42
Growth
4 SBI Magnum Equity Fund- Growth 5.48
5 LIC Equity Mutual Fund- Growth 5.72

Analysis:-
All Funds having a low standard deviation as compared to the nifty.
Sahara Growth Fund is best among all with standard deviation 4.36.
LIC Equity Mutual Fund is bad performance among all with standard
Deviation 5.72

Fund ranking on the basis of Sharpe Ratio

Sr. Funds Sharp
No. Ratio
S&P CNX NIFTY 5.8077
1 Sahara Growth Fund -0.8
2 SBI Magnum Equity Fund- Growth -0.10
3 LIC Equity Mutual Fund- Growth -0.11
4 Fidelity Equity Mutual Fund – Growth -0.11
5 JPMorgan Equity Fund – Growth -0.13

Analysis:-
All funds having a low sharp ration as compared to the nifty. JPMorgan equity fund
Is Bad among all with sharp ratio -0.13 and Sahara growth fund is best performance
among all with sharp ratio -0.8 because higher the sharp ratio gives higher return and
lower sharp ratio gives lower the return.

51
Fund ranking on the basis of Beta

Sr. Funds Beta

No.
S&P CNX NIFTY 1
1 LIC Equity Mutual Fund- Growth 0.98
2 JPMorgan Equity Fund – Growth 0.92
3 SBI Magnum Equity Fund- Growth 0.92
4 Fidelity Equity Mutual Fund – Growth 0.80
5 Sahara Growth Fund 0.73

Analysis:-
None of the schemes have beta greater than 1(i.e. market beta) suggesting that all
these funds were holding a portfolio which was less risky as compared with the
market portfolio. Still they have generated returns greater than the benchmark index’s
rate of return. This shows a good performance.
Sahara Growth Fund is more risky among all with beta 0.73 and lice Equity fund,
JPMorgan Equity fund, SBI Magnum Equity fund is less risky.
This shows that apart from these schemes having higher risk as inferred previously by
the high values of standard deviation of their returns, they show a low value of data
implying that the variations in their returns are largely not explainable by the
variations in the market returns.

All 5 Mutual funds are good performers because all funds standard deviation & beta is
lower than nifty’s value of SD & beta.

52
Data Collected by survey:-

EDUCATIONAL LEVEL OF RESPONDENTS

Education level No. of Respondents Percentage
Under Graduate 38 24.20
Graduate 70 44.58
Post Graduate 49 31.21
Total 157 100

24%
31%
Under Graduate
Graduate
Post Graduate

45%

More than 40 % respondents are graduate, 35% are post graduate and 24 % are under
graduate.

53
 AGE DISTRIBUTION OF RESPONDENTS

Frequency Percentage
<20 1 6
21-30 46 29.3
31-40 48 30.6
41-50 38 24.2
51-60 14 8.9
61 < 10 6.4
Total 157 100
Source: Sample survey

Age Distribution

8% 6% 6%
<20
21-30
23% 28%
31-40
41-50
51-60
61 <
29%

30% of the respondents are in the age group of 31 to 40 years.

54
 OCCUPATION OF THE RESPONDENTS

Frequency Percentage
Business 36 22.92
Employees 78 49.68
Retired 13 8.28
Housewife 12 7.64
Student 18 11.46
Total 157 100

Occupation Distribution

11%
23%
8% Business
Employees
8%
Retired
Housewife
Student
50%

Employees dominated the respondent profile with 49.68 percent, followed by 22.92
percent business men .

55
 INVESTMENT OF RESPONDENTS

Investment made p.a. Frequency Percent

<10000 14 8.91
10000-50000 36 22.92
50000-100000 43 27.38
100000-500000 58 36.94
500000 < 7 4.45
Total 157 100

Investment Distribution

4% 9%
<10000
23% 10000-50000
37%
50000-100000
100000-500000
500000 <
27%

36% percent of the respondents invest from 1 lakh to 5 lakhs . 24% percent of them
invest less than 50000 to 1 lakh .

GENDER DISTRIBUTION OF RESPONDENTS

56
Gender Frequency Percent
Male 98 62.42
Female 59 37.57
Total 157 100

Gender Distribution

38%

Male
Female

62%

A massive 62%of the clients were men .

RESPONDENTS’ OVERALL ASSET ALLOCATION

57
 Assets Name No. of Respondents
Saving Acc & Fixed
Deposits 21
Mutual Funds 43
Equity & Equity Funds 41
Real estate 29
Insurance 33
PPF 30
Post Office Savings 24
Gold 26
Others 15
Total 262

Saving a/c & Fixed

15 21 Deposits
26 Bonds & Mutual
Funds
43 Equity & Equity
24 Funds
Real Estate

Insurance
30 PPF
41
Post Office Saving
33 29 Gold

Others

58
 It is evident from the chart that Mutual Fund has highest number of respondents
43 no. followed by Stocks (Equity and equity funds) i.e. 41, whereas Insurance,
Saving accounts and Fixed deposits and Real Estate and other allocations have
more or less the same rating i.e. 21, 29 and 15 no. respectively.

TYPES OF INVESTMENT

Types of investment Frequency Percentage

Short Term Investment 33 21
Long Term Investment 69 44
Both 55 35
Total 157 100

Typesof Investment

35% 21%
Shor TermInvestment
LongTermInvestment
Both
44%

Interpretation:
Among the total sample size 44 per cent investors are prefer to investing in
long term and 21 percent are prefer to investment in short term. Where as 35 per cent
of investors are preferred to invest in both long terms as well as in short term
investment avenues

59
 BASIS OF INVESTMENT DECISION

Reasons Frequency Percentage

Self-Awareness 42 26.75
Financial Advisors 25 15.92
Friend’s or Relative’s Advice 34 21.65
Media 56 35.66
Total 157 100

27% Self-Awareness
35%
Financial Advisors

Friend's&
Relative'sAdvice
16% Media

22%

More than 35% respondents chose investment due to the media, 27 % respondents
due to the self-awareness.

60
 Frequency Of Investment

Frequency No. of Respondents Percentage

Weekly 6 3.82
Monthly 71 45.22
Quarterly 19 12.1
Half-Yearly 17 26.69
Yearly 44 28.02
Total 157 100

3%
24%
Weekly
Monthly
40%
Quarterly
Half-Yearly

23% Yearly

10%

More than 45% respondents invest in monthly and very less number of respondents
are invest in weekly.

61
 Data Interpretation of Investors:

• From the given analysis we see that 75% of the investors do not deal in
Mutual funds but they still believe in the traditional mode of investment,
which means there still exists a high degree of Mutual Fund un-awareness
among the people. Therefore focus should be on Investors education.

• There is a great diversity in the pattern of investment, majority of people

who are mostly the business class people invest for long term as they look
for the high returns and long term capital appreciation. These people have
great capacity to take risk they are called as Risk Takers , while rest invest
for short term which mostly comprise of service class people who go for
regular/Monthly income plans i.e. short term benefits.

• Customers who are aware of the market situations perfectly find it futile to
invest through bank and generally had brokers who refund part of the
commission to them.

62
 CHAPTER 7

OBSERVATION AND FINDINGS

63
7.1 Comparative analysis of Mutual Funds based on return

Mutual Fund 3months 6months 1years

LIC Equity Fund 9.72 78.70 19.49
JPMorgan Equity Fund 13.33 79.17 17.84
SBI Magnum Equity Fund 9.97 91.40 28.37
Fidelity Equity Fund 14.09 80.16 26.45
Sahara Growth Fund 10.58 71.02 32.80

This table indicates the return of 5 mutual funds in different period.

In the period of 3 months Fidelity mutual funds had given high return than other 4
funds. So this fund is best for short term investment.
In the period of 6 months SBI Magnum Mutual fund had given 91.40% return. This
fund had given high return then other 4 funds in the period of 6 months.
Sahara Growth Fund had given 32.80% return in the period 1 year. Sahara growth
fund had given a high return than other 4 funds and SBI Magnum mutual fund had
gives 28.37% return.
So Sahara growth fund and SBI Magnum Fund is best fund for investment in long
term period.

64
7.2 Findings
After having met more than 100 individuals the views expressed by these
respondents have been vary significant. Some of views express by them about
the Mutual Funds.

• From the respondents, 34% of the respondents lies in the income level
of Rs. 150000 to Rs. 300000 and the majority of the respondents saving
Rs. 1000 to Rs.3000 regularly.
• Majority of the respondents of the sample are invested their money in
Bank Deposits and Insurance.
• From the respondents surveyed, 69% of the respondents are aware about
the concept of Mutual Fund and remaining are not aware of this. Friends
and Print Media create large part of this awareness of concept of Mutual
Fund.
• Among the 69 aware respondents 53% are invested their money in
Mutual Funds Schemes and the remaining respondents are not invested
because of risk factor involved in it and lack of information about the
various scheme of Mutual Funds.

While investing in Mutual Funds people look in for some attributes they
are:

• Reputation of the Company: In this project I have found that the name
of Mutual Fund Company matters lot. If the company’s name is good
then the people will think that their money will be more secured in the
reputed company.

• Service: I found that wanted good services from the AMC i.e.
information of Mutual Funds Schemes, details of NAV should be
available on phone calls.

65
• While investing in Mutual Fund majority of the people will look for the
past performance of the funds. If it is good people will think that their
money is safer and they can get good returns.

• Portfolio of the Scheme: it is the very important parameter that the

clients consider because the returns of the schemes depended upon the
portfolio.

• Sector Portfolio: These portfolios consist of the company only one

sector like Auto sector, IT sector etc and they will invest in that sector
funds, which is in boom period.

• Flexibility: the clients wanted an exit option whenever they required.

They also wanted option of shifting from one scheme to another.

• The respondents those who are already invested in Mutual Funds gives
mixed opinion about investing there increased savings in Mutual Funds.

o Those who are given positive opinion towards this are wanted
some extra feature like sufficient information about the various
schemes and wanted agent’s service and those who are not given
the positive opinion are wanted to invest their money in bank
deposits and in Insurance (ULIP) because of the safety and the
fluctuations in the stock markets. And very few of investors are
invested in the S.I.P (systematic investment plans).

• In this project I found that respondents preferred debt fund to equity

fund because of regular returns, less risk, and high fluctuation in the
stock markets. And they are having vague information about the Mutual
Funds

66
 CHAPTER 8

RECOMMENDATION & CONCLUSION

67
 Recommendation
• Client awareness program has to be conducted by mutual fund and
mutual fund advisory broking firm because most of the people in are
unaware about mutual fund.

• Since the intent and web based communication is getting popular mutual
fund companies should update web site frequently and provide
information up to date

• As investors’ investment decision is based on the study of different

sources, mutual fund companies should start giving advertisement in
business newspaper and in business magazine.

• Mutual fund companies should expand his business by setting up of new

branches in various places where they have lot of client

68
 Conclusion:

• Every scheme can not fulfil all the fronts like risk, volatility and the
returns.

• Mutual fund investments are not short term investment avenues but they
are more of a long term investment avenue. If one holds long term horizon
of the investments then he can reap maximum benefits from the mutual
fund investment.

• On the basis of the analysis the performance of the schemes during the
study period can be concluded to be good.

• Sahara Growth fund has good performed than other funds for long term
period.

69
 Limitations of the project
This report gives an insight about mutual funds and mutual fund schemes but with
few limitations as follow:
The big question is how to judge a mutual fund before investing? It is important
for an investor to consider his risk bearing capacity and funds performance over
several years.

• The report only analyses 5 equity mutual fund schemes of only some funds
and there are around 34 AMCs offering wide range of scheme but to
analyze them is a tedious task

• The analysis is based on historical data and thus indicates the past
performance which may not always be indicative of the future
performance.

• Different schemes consider different market indices as their benchmarks,

but for the purpose of uniformity in the study all schemes have to be
compared against same benchmark index.

• Different fund managers adopt different strategies to improve

performance. While one fund manager may have invested in speculative
stocks may over a period, another one who have invested in speculative
stocks may have struck gold in that year to outperform the former by a
long way

• Lack of proper knowledge and awareness about advantages and

disadvantages associated with various schemes among the investor.

• Usually there is a tendency among investors to ignore the consistency of

returns over a period of time rather they focus on absolute returns
generated in the short term.

70
• In this project primary data is collected by asking questions to the 157
people so the primary data is collected by a very less number of peoples
survey and all individuals has a different opinion about mutual fund.

71
 BIBLIOGRAPHY

Mutualfundsindia.com

Mfindia.com

Valueresearchonline.com

Amfiindia.com

Moneycontrol.com

72
 QUESTIONNAIRE

Kindly fill up the following questionnaire.

1. Name :
2. Educational level
 Under Graduate  Graduate
 Post-Graduate
3. Age
 Less than 20  21 – 30  31 – 40  41 – 50
 51 – 60  More than 61

4. Occupation
 Business  Employees  Retired
 Housewife  Student

5. Annual Saving
 Less than 10,000
 10,000 – 50,000
 50,000 – 1,00,000
 1,00,000 – 5,00,000
 5,00,000 & above
6. Investment avenues that you like to choose
 Saving Account & Fixed Deposits  Mutual Funds
 Equity & Equity Funds  Real Estate
 Insurance  PPF
 Post-office Savings  Gold
 Others ………….
7. Are you a short term or long term investor?
 Short term  Long term  Both
8. State reason behind the basis of your investment options
73
  Self – Awareness  Financial Advisors
 Friends’ or Relatives’ Advice  Media
9. What is your frequency of investments?
 Weekly  Monthly  Quarterly
 Half-yearly  Yearly

74