SVKM’S NMIMS

School of Business Management, Hyderabad

PGDM 2015-17

Summer Internship Project Report

PERFORMANCE ANALYSIS OF SELECTIVE EQUITY

MUTUAL FUND SCHEMES
A dissertation submitted in partial fulfillment of the requirement for the award of
degree in

POST GRADUATE DIPLOMA IN MANAGEMENT

Submitted by

AMIT AGARWAL 80011315002

Under the guidance of

PROF. S.BHATTACHARYA

(Faculty Guide)

Professor - Finance

NMIMS, Hyderabad

&

Mr.VENUGOPAL YARABATI

(Company Guide)

Deputy Manager

Birla Sun Life Mutual Fund-Hyderabad

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NARSEE MONJEE INSTITUTION OF MANAGEMENT STUDIES, HYDERABAD

PGDM Batch of 2015 -17

DECLARATION CERTIFICATE

I, hereby declare that the work entitled “Performance analysis of selective equity
mutual fund schemes” from 11th April-28th May is submitted in partial fulfillment of
the requirement for the award of the degree in POST GRADUATE DIPLOMA IN
MANAGEMENT, NMIMS is a record of my own work carried out me during the
academic year 2015 – 2016 under the supervision and guidance of
Prof.S.Bhattacharya, Faculty Mentor – Summer Internship and Mr.Venugopal
Yarabati, Mentor, Birla Sun Life Mutual Fund ,Hyderabad. The project embodies the
result of original work and studies carried out by the student himself.

I certify that the declaration made above by the candidate is true to the best of my
knowledge.

AMIT AGARWAL-80011315002

Mr. VENUGOPAL YARABATI PROF.S.BHATTACHARYA

Company Guide Faculty Guide

Deputy Manager, Professor-Finance

BIRLA SUN LIFE AMC, HYDERABAD NMIMS-Hyderabad

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 PREFACE
The successful completion of this project was a unique experience for me and I achieved a
better knowledge about mutual fund industry in India. The experience which I got by doing
this project is essential to me for my future. The information in this project being submitted
by me contains detailed analysis of the research undertaken by us. The research provides an
opportunity to me to devote my skills, knowledge and competencies during the knowledge
gathering sessions of marketing management. The research is on the topic “Comparative
Study on performance evaluation of equity mutual fund schemes of Indian Companies”.

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 ACKNOWLEDGEMENT

I, Amit Agarwal would like to take the opportunity to express my gratitude and deep regards
to my college mentor Prof.S.Bhattacharya for his guidance, monitoring and constant
encouragement throughout the course of my internship. The blessing, help and guidance
given by him shall carry me a long way in journey of my life on which I am about to embark.

I express my deep sense of gratitude to my company guide Mr.Venugopal Yarabati because

of his constant support, valuable information given by him and guidance who despite their
enormously hectic work schedule left no stone unturned to make me learn the most in my
entire internship period of 8 Weeks. I am grateful to his cooperation and support throughout
my internship period.

Amit Agarwal

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EXECUTIVE SUMMARY OF THE PROJECT

Executive Summary
The title of the project is “Performance analysis of selective equity
mutual fund schemes” It is about comparative analysis of equity funds
offered by players in the mutual fund industry, the advantages of investing
in Birla Sun Life, returns pattern, behavioral pattern of investors .To do the
comparative analysis I have taken the four main players of this industry so
that the true picture comes out after doing the analysis.

Mutual fund industry depicts a pattern in returns by which we will

be able to identify the Standard deviation and Sharpe ratio in that
particular fund. Moreover it’s about the analyzing the behavior of investors
as where they want to invest in the times of slump or boom in the stock
market.

Comparative Study on performance evaluation of equity mutual fund

schemes of Indian Companies would be done by following pathway:

1. Identifying all the players in equity fund industry

2. Returns of each and every fund offered by those four players in their
equity funds.
3. Comparative analysis of all returns with Birla Sun Life equity funds.
4. Prepare the advantages and disadvantages of investing in Birla Sun Life

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 TABLE OF CONTENT

Preface........................................................................................................................................(iii)

Acknowledgement......................................................................................................................(ii)

Executive Summary ...................................................................................................................(iii)

Chapter 1 Introduction-Company Overview

1.1Corporate Profile…………………………………................................................................1

1.2Our Vision………………………………..............................................................................2

1.3Our Mission ……………………….......................................................................................3

1.4Our Values……………………………………………….....................................................4

Chapter 2-Industry Overview

2.1 About Mutual Fund………………………………………………………………………...

2.2History of Mutual Fund ……………………… ...................................................................8

2.2.1 First Phase...................................................................................................................8

2.2.2 Second Phase……………………… .................................................................................9

2.2.3 Third Phase........................................................................................................................10

2.2.4Fourth Phase.......................................................................................................................10

2.2.5 Growth of Mutual Fund in India………………………………………………………. ..

Chapter 3-Regulatory Framework for Mutual Fund Industry in India

3.1 SEBI......................................................................................................................................14

3.2 Association of Mutual Fund in India ………………………………………………………15

Chapter 4-Types of Mutual Fund

4.1 Open ended fund…………………………………................................................................1

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4.2 Closed ended fund………………………………………………………………………..

4.3 Exchange traded fund………………………………………………………………………

4.4 Difference between Exchange traded and open ended fund……………………………..

4.5 Difference between Exchange traded and closed ended fund……………………………..

4.6 Types of open ended fund……………………………………………….

4.7Risk return Hierarchy………………………………………………………….

4.8 benefits of Mutual Fund………………………………………………………………

Chapter 5-Comparison between Bank and Mutual Fund…………………………………

Chapter 6-Types of Mutual fund schemes offered by Birla Sun Life in equity……………

Chapter 7-Why one should invest in Mutual fund……………………………………….

Chapter 8-Comparative analysis

8.1 About SBI mutual fund schemes in equity…………………………………………..

8.2 Abouut Reliance mutual fund schemes in equity……………………………………………..

8.3About ICICI mutual fund schemes in equity………………………………………..

Chapter 9-Analysis Result and Excel Link

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Chapter 1- Introduction –Company Overview
1.1 Corporate Profile

Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment
manager for Birla Sun Life Mutual Fund, is a joint venture between the Aditya
Birla Group and the Sun Life Financial Inc. of Canada. The joint venture brings
together the Aditya Birla Group's experience in the Indian market and Sun Life's
global experience.
Birla Sun Life has been established in 1994, it has emerged as one of India's
leading flagships of Mutual Funds business managing assets of a large investor
base. Our solutions offer a range of investment options, including diversified and
sector specific equity schemes, fund of fund schemes, hybrid and monthly income
funds, a wide range of debt and treasury products and offshore funds.
Birla Sun Life Asset Management Company has one of the largest team of research
analysts in the industry, dedicated to tracking down the best companies to invest in.
Birla Sun life Asset Management Company strives to provide transparent, ethical
and research-based investments and wealth management services.It is India’s
fourth largest mutual fund in terms of asset.

1.2 Our Vision

To be a leader and role model in a broad based and integrated financial services
business.

1.3 Our Mission

To consistently pursue investor's wealth optimization by:

 Achieving superior and consistent investment results.

 Creating a favorable environment to hone and retain talent.
 Providing customer delight.
 Institutionalizing system-approach in all aspects of functioning.
 Upholding highest standards of ethical values at all times.

1.4 Our Values

 Integrity
 Commitment

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  Passion
 Seamlessness
 Speed

Chapter 2-Industry Overview

2.1 About Mutual Fund:

A mutual fund is basically a pool of money of various investors with the same
motive that their money will grow in future. The collected money is invested in
equity market, debt market, money market, bond market etc.

2.2 History of Mutual Fund

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 of India.
The history of mutual funds in India can be broadly divided into four distinct
phases

2.2.1 First Phase - 1964-1987

Unit Trust of India (UTI) was established in 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.

2.2.2 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 Can bank 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.

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47,004 cr.

2.2.3 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.

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.

2.2.4 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, 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.

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 1996-SEBI

1995-
AMFI

1985-SBI
First Mutual
Fund

1963-UTI
Formation

2.2.5 Growth of Mutual Funds in India

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Chapter-3 Regulatory Framework for Mutual
Fund
3.1 Security and Exchange Board of India
The Government of India constituted Securities and Exchange Board of India, by
an Act of Parliament in 1992, the apex regulator of all entities that either raise
funds in the capital markets or invest in capital market securities such as shares and
debentures listed on stock exchanges. Mutual funds have emerged as an important
institutional investor in capital market securities. Hence they come under the
purview of SEBI. SEBI requires all mutual funds to be registered with them. It
issues guidelines for all mutual fund operations including where they can invest,
what investment limits and restrictions must be complied with, how they should
account for income and expenses, how they should make disclosures of
information to the investors and generally act in the interest of investor protection.
To protect the interest of the investors, SEBI formulates policies and regulates the
mutual funds. MF either promoted by public or by private sector entities including
one promoted by foreign entities is governed by these Regulations. SEBI approved
Asset Management Company (AMC) manages the funds by making investments in
various types of securities. Custodian, registered with SEBI, holds the securities of
various schemes of the fund in its custody. According to SEBI Regulations, two
thirds of the directors of Trustee Company or board of trustees must be
independent.

3.2 Association of Mutual Funds in India

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 organization.
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 member. 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 line enhancing and
maintaining standards. It follows the principle of both protecting and promoting
the interests of mutual funds as well as their unit holders.

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Chapter 4-Types of Mutual Fund

Mutual Funds

Open ended Funds Closed ended Funds Exchange Traded Funds

4.1 Open Ended Fund:

4 Not listed on BSE /NSE
5 Fund act as a market maker for its own unit
6 NAV=$22(say)
7 Investor can buy/sell at $22
8 Investors can buy fresh units at $22+entry load fees and redeem existing units at
$22-exit load fees.
9 Annual Management fees is charged by AMC
10 Price=NAV
11 Cannot be traded like a share

4.2 Close ended Fund

 Listed on an exchange
 Investors can buy/sell from the exchange
 Brokerage fees is involved
 Price is not equal to NAV
 Can be traded like a share i.e., Margin trading, short selling ,day trading are
possible
 Annual Management fees is charged

4.3 Exchange Traded Fund

The intent is to create a fund which combines the advantages of open ended fund
and closed ended funds.

4.4 Difference between ETF and Open Ended

 Price=NAV(In ETF it is made possible by the role of an specialist who act

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 as an arbitrageur)
 In an open ended fund, when investors on a large scale redeem funds, the
funds have to sell its portfolio of securities resulting in capital gain tax
liability. However in ETF, we have in “in kind” redemption i.e., the fund
does not have to sell its portfolio thereby avoiding capital gain tax liability.

4.5 Difference between ETF and Closed ended

 Both can be traded like a share
 Usually closed ended funds are active funds while ETF is passive.

4.6 Types of Open Ended Fund

1. Equity/Growth- Equities are a popular mutual fund category amongst retail
investors. Although it could be a high-risk investment in the short term,
investors can expect capital appreciation in the long run. If you are at your
prime earning stage and loking for long-term benefits, growth schemes could
be an ideal investment.
 Index Scheme- Index schemes is a widely popular concept in the
west. These follow a passive investment strategy where your
investments replicate the movements of benchmark indices like Nifty,
Sensex, etc.
 Sectoral Scheme-- Sectoral funds are invested in a specific sector like
infrastructure, IT, pharmaceuticals, etc. or segments of the capital
market like large caps, mid-caps, etc. This scheme provides a
relatively high risk-high return opportunity within the equity space.
 Tax Savings- As the name suggests, this scheme offers tax benefits to
its investors. The funds are invested in equities thereby offering long-
term growth opportunities. Tax saving mutual funds (called Equity
Linked Savings Schemes) has a 3-year lock-in period.
 Equity Diversified Fund-100% of the capital is invested in equities
spreading across different sectors and stocks.
4.7 Risk Return Hierarchy of Different Funds:

Before jumping into investing van wagon of mutual funds, an investor must be
aware of the risk he is taking. Below figure shows risk and return attached to funds
category wise.

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Benefits of Mutual Fund

Expert
money
manageme
nt

Tax Diverse
saving Portfolio
Key
benefits
of MFs

Affordibil
Liquidity
ity

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Chapter 5-Comparison between Bank and
Mutual Fund in India
Mutual Funds are now also competing with commercial banks in the race for retail
investor’s savings and corporate float money. The power shift towards mutual
funds has become obvious. The coming few years will show that the traditional
saving avenues are losing out in the current scenario. Many investors are realizing
that investments in savings accounts are as good as locking up their deposits in a
closet. The fund mobilization trend by mutual funds indicates that money is going
to mutual fund in a big way.

CATEGORY BANKS MUTUAL FUNDS

Returns Low High
Administrative exp. High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but improving
Liquidity At a cost Better
Quality of assets Not transparent Transparent
Minimum balance
Interest calculation between 10th& 30th of Everyday
every month
Maximum Rs.1 lakh on
Guarantee None
deposits

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6.Types of Mutual fund schemes offered by Birla
Sun Life AMC in equity

Scheme An Open Ended Small and Mid Cap Equity Scheme

About the Scheme An equity fund that aims to generate growth and capital
appreciation by investing predominantly in equity and
equity related securities of companies considered to be
small and mid cap.
Inception Date May-2007
Fund Manager Mr.Nishit Dholakia

Scheme An Open Ended Banking and Financial Services Scheme

About the Scheme An equity fund that aims to generate growth and capital
appreciation by investing predominantly in Banking and
Financial Services related companies in India.
Inception Date December,2013
Fund Manager Mr.Satyabrata Mohanty and Mr.Dhaval Gala

Scheme Birla Sun Life Emerging Leaders Fund Series-3

About the Scheme An equity fund that aims to generate long term capital
appreciation by investing predominantly in equity and
equity related securities of companies considered to be
small and mid cap.
Inception Date July,2014
Fund Manager Mr.Mahesh Patil

Scheme Birla Sun Life Emerging Leaders Fund Series-4

About the Scheme An equity fund that aims to generate growth and capital
appreciation by investing predominantly in equity and
equity related securities of companies considered to be
small and mid cap.
Inception Date August,2014
Fund Manager Mr.Atul Penkar

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Scheme Birla Sun Life New Millennium Fund
About the Scheme A thematic fund that invests in IT sector like hardware,
peripheral components, media,internet and other
technology.
Inception Date January,2000
Fund Manager Mr.Naysar Shah

Scheme Birla Sun Life India GenNext Fund

About the Scheme A fund that strives to benefit from the rising
consumption pattern in India,fuelled by high disposable
incomes of the income of the young generation.
Inception Date August,2005
Fund Manager

Scheme Birla Sun Life Equity Fund

About the Scheme A diversified equity fund that looks for opportunities
without any sectoral or market cap bias with the aim to
give you long term growth of capital.
Inception Date August,1998
Fund Manager Mr.Anil Shah

A Quick Summary of Birla Sun Life Products.

S.L Scheme Composition of Bench Mark USPs of the

No. the fund Index Scheme
1 Birla Sun Life Frontline 100% Equity S&P BSE Long term growth
Equity Fund 200
2 Birla Sun Life Midcap Fund Mid-Cap Stock Nifty Long term growth
Midcap 100
3 Birla Sun Life Equity Fund 90% Equity + S&P BSE Long term growth
10% Debt 200

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 4 Birla Sun Life Dividend Stocks of Nifty 500 Relative high
Yield Plus dividend paying dividend yield
companies
5 Birla Sun Life MNC Fund Securities of Nifty MNC Long term growth
MNCs
6 Birla Sun Life Balanced '95 60% Equity + Nifty 50 Long term growth
Fund 10% Debt
7 Birla Sun LifeTax Relief '96 80% Equity + Nifty 50 ELSS
20% Debt
8 Birla Sun Life Top 100 Top 100 by S&P BSE Medium to long
Fund Market Cap SENSEX term
9 Birla Sun Life Cash Debt and Money CRISIL Short maturity
Manager Market INDEX
10 Birla Sun Life Dynamic High Quality CRISIL Returns with high
Bond Fund Debt and Money INDEX liquidity
Market
11 Birla Sun Life Medium Debt and Money CRISIL Regular Dividend
Term Plan Market INDEX Payments
12 Birla Sun Life Short Term Fixed income CRISIL Short maturity
Opportunities Fund Securities INDEX
/Money Market

All the various equity funds are classified under these funds:-

Sectoral

Index
Equity Funds

Tax Saver or ELSS

Mid Cap/ Small Cap

Diversified

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.

Sectoral Scheme - Sectoral funds are invested in a specific sector like infrastructure, IT,
pharmaceuticals, etc. or segments of the capital market like large caps, mid-caps, etc.
This scheme provides a relatively high risk-high return opportunity within the equity
space.

Tax Saving - As the name suggests, this scheme offers tax benefits to its investors. The
funds are invested in equities thereby offering long-term growth opportunities. Tax
saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period.

Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.

Chapter 7-Why one should invest in Mutual Fund?

Beat
Inflation
Safe &
Transpare Expertise
nt

Why
High Convenien
Mutual
Return ce
Funds?

Economic
Liquidity
al
Diversifica
tion

Beat Inflation:

Mutual funds generate better inflation adjusted returns without involving much time and energy
from investors

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Experts Managers:

A mutual fund company provide an expert manager to look after the investments in best possible
way as these managers are well equipped to analyse the market and prospects available

Convenience:

Low investment options, any business day to sell or buy, expert guardian of the investment etc.
make mutual funds very convenient for thee investors

Low Cost:

Investor can invest as low as 500. Investment cost is very less than as of equity investment
directly

Diversification:

Mutual funds mitigate the risk by large extent by distributing the investment to diverse range of
assets

Liquidity:

Investors can get their money promptly, in case of opened ended based on Net asset value
scheme where as in case of closed ended scheme it can be traded in stock exchange

Higher Return Potential:

Based on the medium to long term investment, as investment is diversified, mutual funds offer
higher return potential

Safety and transparency:

Regular update from fund manager about the current value of the assets and their strategy about
the future

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8. Comparative Analysis
For comparison ,I have taken the top four AMC in India i.e Birla Sun Life
AMC,ICICI Mutual Fund,SBI Mutual Fund and Reliance Mutual Fund.

Now Let us see the various equity based fund schemes of SBI Mutual
Fund,Reliance Mutual Fund and ICICI Mutual Fund.
8.1 About SBI Mutual Fund Schemes in equity

Scheme SBI Banking and Financial Services Fund

About the Scheme Open ended fund that will invest in banking and financial
services sector that are poised to grow along with the
emerging Indian economy.
Inception Date Feb,2015
Fund Manager Mr.Sohini Andani

Scheme SBI Magnum Midcap Fund

About the Scheme It invests in an equity stocks of mid cap companies .
Inception Date March,2005
Fund Manager Mr.Sohini Andani

Scheme SBI Small and Midcap Fund

About the Scheme SBI Small & Midcap Fund is an open ended equity scheme
and primarily invests in Small and Midcap equity and
equity related securities of the companies in the small
and midcap segment. The portfolio will comprise of a
maximum of 30 stocks.
Inception Date March,2009
Fund Manager Mr.R.Srinivasan

Scheme SBI FMCG Fund

About the Scheme Open ended Scheme
Inception Date Dec,2010

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Fund Manager Mr.Saurabh Pant

Scheme SBI Equity Savings Fund

About the Scheme SBI Small & Midcap Fund is an open ended equity scheme
and primarily invests in Small and Midcap equity and
equity related securities of the companies in the small
and midcap segment. The portfolio will comprise of a
maximum of 30 stocks.
Inception Date Aug,2010
Fund Manager Mr.Ruchit Mehta

Scheme SBI Tax Advantage Fund

About the Scheme The investment objective of the scheme is to generate
capital appreciation over a period of ten years by
investing predominantly in equity and equity-related
instruments of companies across large, mid and small
market capitalization, along with income tax benefit
Inception Date March,2012
Fund Manager Mr.Dharmendra Grover

Scheme SBI Magnum Comma Fund

About the Scheme The objective of the scheme would be to generate
opportunities for growth along with possibility of
consistent returns by investing predominantly in a
portfolio of stocks of companies engaged in the
commodity business within the following sectors - Oil&
Gas, Metals, Materials & Agriculture and in debt & money
market instruments.
Inception Date January,2011
Fund Manager Mr.Richard Dsouza

Scheme SBI Blue Chip Fund

About the Scheme To provide investors with opportunities for long-term
growth in capital through an active management of

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 investments in a diversified basket of equity stocks of
companies whose market capitalization is at least equal to
or more than the least market capitalized stock of BSE 100
Index.
Inception Date 2006
Fund Manager Mr.Sohini Andani

8.2 Reliance Mutual Fund Schemes in equity

Scheme Reliance Media and Entertainment Fund

About the Scheme The primary investment objective of the scheme is to
generate consistent returns by investing in equity and
equity related or fixed income securities of Media &
Entertainment and other associated companies.
Inception Date 2013
Fund Manager Mr.Sailesh Rajbhan

Scheme Reliance Mid and Small Cap Fund

About the Scheme The primary investment objective of the scheme is to seek
to generate long term capital appreciation & provide
long-term growth opportunities by investing in a portfolio
constituted of equity & equity related securities and
Derivatives predominantly in Mid Cap and Small Cap
companies and the secondary objective is to generate
consistent returns by investing in debt and money market
securities.
Inception Date 2013
Fund Manager Mr.Sunil Singhania

Scheme Reliance Capital Builder Fund-Series A

About the Scheme The investment objective of the scheme is to provide
capital appreciation to the investors, which will be in line
with their long term savings goal, by investing in a
diversified portfolio of equity & equity related
instruments with small exposure to fixed income

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 securities. Although, the objective of the Fund is to
generate optimal returns, the objective may or may not
be achieved.
Inception Date 2014
Fund Manager Mr.Sunil SInghnia

8.3 About ICICI Mutual Fund Scheme

Scheme ICICI Prudential growth Fund-Series 4

About the Scheme The investment objective of the Scheme is to provide
capital appreciation by investing in a well-diversified
portfolio of equity and equity related securities.
Inception Date Oct,2014
Fund Manager Mr.Yogesh Bhatt

Scheme ICICI Prudential India Recovery Fund-Series 2

About the Scheme ICICI Discovery Fund is an open-ended diversified
equity scheme. The objective of the scheme aims
to provide long term capital growth by investing
primarily in a well-diversified portfolio of
companies accumulated at a discount to its fair
value.
Inception Date 2004
Fund Manager Mr.Mrinal Singh

For Comparison, I have taken the monthly returns of the last 5 years of the above
schemes available in various AMC.

For Analysis, I have calculated the Standard deviation and Sharpe Ratio for all the
equity based funds.

Standard Deviation-It is the measure of a dispersion of a set of data from its

mean. The more spread apart the data, the higher the deviation. Standard
deviation is calculated as the square root of the variance. In finance, standard

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deviation is applied to the annual rate of return of an investment to measure the
investment volatility. It is also known as historical volatility and is used by
investors as a gauge for the amount of expected volatility.

Sharpe Ratio-The Sharpe ratio is a measure for calculating risk adjusted return
and the ratio has become the industry standard for such calculations. The sharpe
ratio is the average return earned in excess of the risk free rate per unit of
volatility or total risk. Subtracting the risk free rate from the mean return, the
performance associated with risk taking activities can be isolated.

Information Ratio- The Information ratio is a ratio of portfolio returns above the
returns of a benchmark to the volatility of those returns. The information ratio
measures a portfolio managers ability to generate excess returns relative to a
benchmark but also attempts to identify the consistency of the investor. This ratio
will identify if a manager has beaten the benchmark by a lot in a few months or a
little every month.

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Chapter 9-Analysis Result

For detailed Calculation, Click on the link below.

Microsoft Office
Word Document

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Conclusion
From the analysis, I came to know that SBI Equity Saving fund gave the highest
return for 1 % of the risk taken by the investors and thus the best fund scheme
available among all the available mutual schemes.

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 BIBLIOGRAPHY
 http://economictimes.indiatimes.com/
 www.moneycontrol.com
 http://mutualfund.birlasunlife.com
 www.financialexpress.com

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 Industry Analysis-Mutual Fund
Mutual Fund Industry Synopsis
 In Financial year 2015-2016 there was an inflow of Rs 103288 Cr into the
Indian mutual fund industry .Out of the Rs 103288 Cr, Rs 74024 Cr came in
equity and ELSS funds. Income funds were able to collect Rs 14738 Cr.

 Total AUM at the end of the financial year was Rs 1232824 Cr, increase in
14% of which 46% was held by income funds and 31% by equity funds.

 In April 2016, there was a net inflow of Rs 170161 Cr, of which Rs 31448
Cr was in income funds and Rs 4438 Cr in equity funds.

Growth of AUM

Page | 30
Category wise inflow/outflow in financial year 2015-2016

Source-icicidirect.com,Research

Category wise AUM share at the end of financial year 2016

Source: icicidirect.com, Research

Page | 31
Equity Market
 After recovering sharply in April and May 2016 from the fall in equity
market at the start of the year, Indian equity market consolidated in 2016.

 Inflation rose to 5.39% in April from a six month low of 4.83% in March. It
happens because of an increase in food price index mainly led by an increase
in the price of vegetables, fruits and sugar prices. The increase in food prices
can be because of water shortages, high temperature, etc.

 Beaten down sectors like banking, real estate, consumer goods and capital
goods outperformed since Budget in the market recovery. PSU’s in India
also underperformed because of negative outlook.

Outlook
 Currently Indian market is being dominated by global factors. Therefore,
any development in global capital markets is likely to have an impact on the
Indian equity market.

 Domestic macroeconomic variables like inflation, increased expectations

from monsoons, implementation of the seventh pay commission along with

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 various Government projects on roads, railways, etc are set to provide the
much needed fillip to the economic activity.

 India equity market has been growing and recovering some of their gains
post budget. Sectorally, most companies among auto, private
banks,NBFC,cement etc have declared good results .Also the earning growth
is likely to pickup much fast .So the earning growth for the coming years
will be more better as compared to 2015.

 If global markets remains supportive ,Indian markets are likely to perform

well as the domestic economic outlooks is improving on normal monsoons,
Government policy actions and improved liquidity actions from RBI.

Growth Drivers
 Improvement in Key economic drivers- An improvement in the economic
environment over the last 3-4 years helped to increase the investment in
mutual funds. Indian household saving pattern shown a decline after 15
years in saving physical assets and same has been channelized to financial
assets.

 Aligning Product Promotion and Distribution: AMCs are advising

individual investors to invest through the SIP route which appear to yield
better results. The SIP count increased from Rs6.2mn in March 2014 to Rs
7.3mn over one year. Larger number of SIPs from B15 reflects the
efficiency of investor awareness programs in B15 cities.
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 Source-Crisil

 Regulatory and Technology Enablers: Enabling technology to sell the

plans through mobile apps as well as the MF utility portal has made sale
possible on a 24*7 basis. Acceptance of E-KYC by some AMCs and to do in
person varification has also made the transaction easier. An increase in GDP
as well as good stock market performance enabled retail customers to use
mutual fund fo create wealth.

Mutual Fund Category Analysis

Equity Funds
 Midcap funds outperforms large cap funds by delivering positive returns of
3.1% over a one year period whereas large cap funds delivered negative
returns of 4.1% over the same period.

 Among sector funds, all delivered negative returns with IT and FMCG the
exception delivering positive returns of 6.9% and 4.1% respectively.

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Source-Crisil Fund Analyzer

 Exposure to banks and finance stocks together accounts for 25% of equity
assets followed by technology and pharma.

Equity Diversified Funds

 This fund has seen a fall of 1.8% last year. On the other hand, midcap funds
were outperformers gaining 3.1% during last year whereas large cap fund
dropped by 4.1% again BSE sensex return.

 Indian market after been in a decline trend from March 2015 to Feb 2016,
recovering some of their gain post budget .Market has been really improved
now.

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  The sectors which were not doing well like banking, FMCG, Real estate are
going good after budget announcement but the PSU’s are not doing well.
 Global markets also seem to have stabilized after a rebound in crude oil
price. Markets have triggered a positive structural post budget.

 We expect market to enter a consolidation phase in the range of 24000 to

26000 on Sensex levels.

Equity Infrastructure Funds

 In terms of segments, road ,railways ,water and power will continue to
develop and out of the total lenders floated during 2015 i.e., Rs 6.2 lakh
crore ,the share of these segments comprise of around Rs 4 lakh crore.

 This fund is quiet attractive and will continue to improve. Thus one can
invest in this type of fund.

 Both the short term and the long term are positive in term of investment.

Equity Banking Funds

 FY 2016 has been seen a tough year for banks with significant additions of
NPA s, SDRs, resulting from troubled corporate in infrastructure .metals,
textile and power.

 PSU banks have seen a growth in GNPA to Rs 390443 Cr .On the other
hand private banks reported a profit of Rs 11364 Cr in the third quarter of
the last year.

 Thus. banking sector will continue to outperform in the coming years.

Equity FMCG
 FMCG growth has been increased by 4.9% and I believe that expected
normal monsoons may spur volume growth in rural India while urban
market in India continues to remain slow.

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  On the back of subdued commodity prices, RM cost is expected to fall by
1%.But companies will come out with innovative products to increase the
sales and thus the profit. Our FMCG coverage universe is expected to
witness 16.5% increase in net profit.

 GST implementation to lead to a reduction in logistic cost, a simplified tax

structure and level playing field for organized players in categories
dominated by highly unorganized entities.
 This fund is not so attractive right now but may outperform in the coming
years.

Equity Pharma Fund

 The expectation from the pharma industry to grow at a CAGR of 16%
around in the coming years as per the analysis.

 After outperforming the broader indices for the last five years, the NIFTY
pharma index underperformed .Paradoxically, the fiscal witnessed highest
number of USFDA products approval in the last five years.

 This sector looks positive because of the forecasted growing rate of 16% in
the coming years .The views for this are positive because of the consistent
earning cash flow ,healthy operating margins, relatively low leverage, etc.

Equity Technology Fund

 Big IT companies reported the growth of 1.7% QoQ which is below the
estimated growth rate of 2.2%.

 Constant currency revenues grew 2.1% as dollar growth was negatively

impacted by cross currency headwinds.

 Due to the healthy deal signs in digital technologies. , this sector will surely
outperform in the coming years.

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  Currently,this sector is not that attractive as compared to earlier years but
because of various signs with other countries in digital technologies,
railways etc, this sector will surely outperform in the coming years.

Exchange Traded Funds

 In India three kinds of ETF are available.

ETF
Equity Index Liquid Gold

 An equity index ETF tracks a particular equity index such as the BSE
Sensex,NSE Nifty,Nifty Junior,etc.

 An equity index ETF scores higher the index funds on several grounds. The
expense of investing in ETF is lower than that of index funds, The expense
ratio is in the range of .50-.75% excluding brokerage fees while for the
index fund the expense ratio is in the range of 1-1.5% excluding brokerage
fees.

 ETF are liquid funds as they are traded on exchange and investors may
subscribe or redeem them even on intra day basis. This is unavailable in
index funds which are redeemed on NAV basis.

 There are over 400 ETF traded globally. Also they are efficient and cost
effective. The decision on which ETF to buy should be largely governed by
the decision on getting exposure in that asset class.

 Volume is high only on Goldman Sachs benchmark ETF and the tracking
error is also low.

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AUM s in ETF

Source-ICICIdirect.com

Balanced Fund
 There was an inflow of Rs 19743 in financial year 2016.AUM of balanced
fund has increased from Rs 26368 Cr in March 2015 to Rs 39146 Cr in
March 2016.Over the years, the balanced funds has emerged as one of the
fastest growing equity category

 Balanced funds are hybrid funds .More than 65% of the overall portfolio is
invested in equities. Hence as per the provision of Income tax act, any
capital gain over one year is free. Also dividends declared are tax free.

 In case one separately invests 35% of one’s investible corpus in a debt fund,
they have to pay the higher tax. However if the whole fund is invested in
balance funds, 100% shall have lower taxation applicable as mentioned
above.

 After a sharp rally in equity market, the funds can be preferred as a debt
proportion serves to protect in intermediate relief rallies or the downturn
while providing 65% participation on further upsides.

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Inflow into balance funds remained volatile

Source:-AMFI

AUM increasing in balanced funds

Source: AMFI

Page | 40
DEBT MARKET
 The yield on the bond remained steady. Benchmark 10 years G-Sec yields
remained absolutely flat during April 2016 at around 7.45%

 Liquidity continued to be in deficit but improved in April 2016.It will

improve further as RBI has committed to increase the liquidity by lowering
the interest rates.

 Increasing liquidity helped reduce yields in money market like CDs, CPs.

 Consumer price index for April 2016 came in much higher than expected at
5.39% where in the previous month it was 4.83% as food inflation climbed
to 6.32% from 5.39% on account of ongoing heat waves ,water shortages
etc.

Outlook
 Liquidity measure announced is extremely positive for the funds at the short
to medium terms maturity papers. Ultra short term debt funds and liquid
funds are going to benefit from the fall in short term yields.

 Also the outlook on Government securities remains positive, the duration

strategy should be played through actively managed income .They will be
able to make changes in the duration within Government securities.

 Also the Government securities yield turns flat for higher maturities.

Page | 41
 Source-Bloomberg

Effect of macroeconomic variables on debt funds

Debt funds are often considered preferred investment vehicle for conservative
investors who look for risk free returns. The returns from debt funds are influenced
by interest rate, oil prices, bad monsoon, and inflation rate and credit risk.
 Effect of Interest rate fluctuation: The prices of fixed income securities
are governed by the interest rate prevailing in the market. Interest rate and
the prices of fixed income securities are inversely proportional as the interest
rate increases the prices of fixed income security decreases and vice versa.
For example consider a 10 year bond which has a face value of Rs
1000 a coupon rate of 8% i.e. one receives an interest payment of Rs
80. If the interest rate has been increased to 10%, the new bonds with
same face value of 1000 will provide a coupon rate of 10%. This
makes the existing bond at 8% coupon rate less attractive and it will
be traded below face value let us assume at 900. So at the face value
of 900, the bond will give the interest of 80, i.e. at a rate of 8.89%.
That means the yield of the bond is increased from 8% to 8.89%.

Page | 42
 Similarly if the interest rates are slashed to 7% then with the coupon
rate of 8% will become superior and the demand in the market will
increase of such bonds. Now the bond trades at higher price than face
value. If the bond trades at 1050, the yield of the bond will be 7.62%
and which is lower compared to initial rate of 8%.
So the decrease in the interest rates will create more demand of
existing bond in secondary market and increases the bond price.
Likewise the increase in interest rate, the existing bonds will be traded
at below their face value.

DEBT FUNDS
Category average return

Source: ICICIdirect.com

 Investment into securities with maturity less than 90 days and more than 1
year dominate total investment by mutual funds,

Page | 43
Source-ICICIdirect.com

Liquid Funds
 Liquid fund return moderated to 8-8.5 % return pretax from over 9% earned
in the previous year. Liquid fund witnessed as inflow of Rs 17109 Cr in
financial year 2016.Returns, going forward, may be lower as the money
market yield curve has shifted lower on improved liquidity.

 The RBI proactively liquidity management operations ensured that call rates
stayed range bound around the policy rate reducing day to day volatility.
With an improvement in liquidity conditions, the certificate of deposit and
commercial paper rates in the three month bracket also eased over 1% to the
7.5-8% range.

 For less than a year, individuals in the higher tax bracket should opt for
dividend option as the dividend distribution tax @28.325 % is marginally
lower. Also though the tax arbitrage has reduced, they still earn better pretax
returns over banking savings and current accounts.

 Changes in taxation rule announced in Union budget 2014 are also

applicable to liquid funds as post tax returns in less than 3 years period get
reduced for individuals falling in the higher tax bracket.

Page | 44
Call rate near Repo rates graph

Source:ICICIdirect.com

Commercial paper/Certificate of deposit yields

Source –ICICIdirect.com

Page | 45
 AUM increases drastically in April 2016

Source-Bloomberg, ICICIdirect.com

The liquid funds look attractive and are expected to give high returns in the coming years.

Income Funds
 In income funds category, long terms debt funds delivered 7.99%
absolute return last year as 10 year Government securities yield have
corrected to 7.45% levels from 7.78 levels after the union budget.

 Yields on longer duration securities particularly Government securities,

continue to trade in a narrow range in the year 2015.The yield after
started correcting since February 2016.

 Short term debt funds remain a stable performing category, especially in

the current volatile environment. Credit funds with reasonable credit
quality should be preferred over an aggressive credit fund.

Page | 46
Income fund witness inflow in April

Source-ICICIdirect.com

 Dynamic bond funds are suitable for all types of investors and for longer
duration. They can take exposure to all durations as per the interest rate
outlook and switch between Government securities and corporate bonds.

Gilt Fund
 Gilt fund delivered 7.76% absolute returns as on May 16, 2016 as lower
inflation kept further rate cut expectation high. The Government adherence
to fiscal discipline by maintaining the fiscal deficit target for FY16-17 at
3.5% and a sharp cut in small savings deposit rates have led to a much
anticipated rally in Government securities. Benchmark 10 year G-security
yield has witnessed a correction of around 35bps.

 The liquidity situation was tight at the start of the year 2016 but eased off
significant post March.

 Inflation is not a policy concern currently with the RBI governor saying
inflation on a projected trajectory. Overall assuming normal monsoon and
current levels of Oil and Exchange rates, the RBI expects CPI to be inertial
and be around 5% by the end of financial year 2017.

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  The Government has increased the FPI limit in Government bond of total
outstanding Government securities in a staggered manner by March
2018.Currently FPI holding is 3.8%.

 The central Government has signed a memorandum with the Reserve Bank
of India setting out a clear inflation objective to bring the inflation to the mid
point of the band of 4+- 2%.CPI as per our assessment should average close
to 5% for financial year 2016.

 The outlook of Government securities yield remains positive; the duration

strategy should be played through actively managed income or dynamic
bond funds. They will be able to make swift duration change with
Government securities or switch between corporate or G-Securities.

Inflow of Gild Funds

Source-ICICIdirect.com

Gold Funds
 The year 2016 has turned the wave in favor of safe haven demand amid
extreme global capital market uncertainty. Global gold prices rallied around
20% since the start of 2016.

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  Gold prices have been consolidating since March 2016 after rallying
significantly in a short time at around Rs 30000 per 10 gram.

 Gold price is close to US $1300 per ounce, highest since January

2015.Investors are flocking to the precious metals due to such weaker dollar
and the poor performance of the stock markets. Gold is priced in dollars, so
a weak dollar makes it more attractive investment to non US buyers.

 The near term outlook is positive on the dovis rate hike stance of the US
Fed ,a weak US dollar ,an uncertain global economic outlook on weak
global growth and lack of investment options for investors.

 The steep fall in industrial commodity prices, including crude oil led to a
sharp fall in inflation and inflationary expectations across the globe and
particularly in developed countries.

Gold price rallying sharply since start of 2016

Source-ICICIdirect.com

Page | 49
Gold price in India

Source-ICICIdirect.com

Leading AMC in INDIA

Page | 50
Breakup of fund allocation of various investors

Page | 51
Distribution Channels of Mutual Fund

 Direct Channel- In this channel the investor buy and redeem the units
directly from fund, or more precisely through the fund agent. Fund
companies sponsoring the fund do not provide investment advice so
investors prefer to do their own research.
 Advice Channel- The principal feature of advice channel is the provision
of investment guidance, assistance and advice by financial professionals.

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  Retirement Plan Channel-The retirement plans, such as 401(k) plans,
became one of the primary sources through which investors buy mutual
funds.
 Supermarket Channel-The introduction of the first mutual fund
supermarket by a discount broker in 1992 showed a significant innovation in
the distribution of mutual funds. Many other discount brokers, some
attached with mutual fund companies, have since organized fund
supermarkets.
 Institutional Channel-The institutional channel comprises a variety of
institutions purchasing fund units for their own accounts. These institutions
include financial institutions, endowments, businesses, foundations, and
state and local governments. Fund sponsors often create special unit classes
or funds for institutional investors.

Porter five Forces Analysis

1. Intensity of Existing rivalry-
 Government limits competition
 The industry size is large
 Fastest growing industry in India
 The storage cost is low
 Few Competitors are there
 Exit barriers are low
2. Threat of Substitutes-
 Substitute product is inferior
 Substantial product differentiation
 High cost of switching to substitutes
 Limited number of Substitutes

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3. Threats of New Competitors-
 High Capital is required
 High sunk cost limit competition
 Strong distribution network required
 Advance technology is required
 Patent limits new competition
 Geographic factors limit competition
4. Bargaining power of suppliers-
 High competition among suppliers
 Low concentration of suppliers
 Diverse distribution channel
 Inputs have little impact on costs
 Volume is critical to suppliers
5. Bargaining power of Customers
 Buyers require special customization
 Low dependency on distributors
 Product is important to customer
 Large number of customers
 Limited buyer choice

Page | 54
SWOT ANALYSIS
Strength-
 Large number of potential customers-The number of customers is high as
all the potential customers are not tapped to invest in mutual fund.
 Government support-The Government is also supporting the mutual
support industries in India by lowering the interest rates to increase the
liquidity in the market.
 Liquidity-Liquidity is high as any can enter and exit in the mutual fund at
any point of time.
 Varieties of Products-All the mutual fund company offer varieties of
products and any one can buy any product as per his/her choice.

Weakness
 All the retail customers who do not invest in stock markets are not aware of
mutual funds. Either they have no knowledge about mutual fund or they
fear to invest.
 Many mutual fund companies do not offer good services to the customers
and that is why the customers don’t invest in mutual fund schemes.
 Many mutual fund companies under perform which creates fear in the
mind of the people.

Opportunities
 The rural areas are untapped and one cap taps those areas to increase the
liquidity of the funds.
 In India, the mindset of the people is to save the maximum money they ear.
One can make those people aware about the mutual fund schemes and the
return that they can get from the mutual fund.
 Investment opportunities are very good in India as the Government always
tries to deregulate the policies.


Page | 55
Threats
 Large numbers of players are already there in the market and one has to
come out with innovative ways of investing money so that the retail
customers can get high return.
 The volatility that is risk is too high in stock market .So the mutual fund
companies can decrease the level of volatility by buying Government
bonds, Commercial papers of highly rated companies etc.
 Also the regulatory bodies can become more stringent over the period of
time and this can harm all the financial institutions in the country.

•Large number of potential •poor participation of retail

customers investors
•G0vernment support •lack of focus
•Volatility of bank interest rate •under performance
•Liquidity •poor services
•varieties of Products

Strength Weakness

Opportunities
Threats

•High untapped market in rural •IIncresing competition aong the

areas players
•High level of savings habit among •High level of volatility in the
people stock market
•liberalized business environment •Possibility of more stringent
•Investment opportunities regulations by SEBI,RBI,AMFI

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Page | 57