A Project Report

On

“RISK & PERFORMANCE ON

MUTUAL FUNDS ”

Submitted in partial fulfillment for the requirement of MBA

MAHARISH MARKANDSHWER UNIVERSITY
MULLANA

SUBMITTED TO: - SUBMITTED BY:-

ISHA CHUG
MBA 4TH SEM.

1
 Table of Contents

 Acknowledgement
 Introduction
 History of the Company
 Products profile
 Managerial usefulness of study
 Definition of the concepts used in the study
 Objectives
 Scope of work
 Research Methodology

○ Research Design

○ Sample

○ Collection of data

 Data Analysis
 Findings
 Recommendations
 Limitations

Bibliography/References
Annexures

2
 Acknowledgment

I would like to take this opportunity to acknowledge the support and

cooperation of all those who enabled the successful completion of this
project.

We would like to extend our sincere gratitude towards MISS. SHILPI

GUPTA under whose guidance we undertook this project, for extending
the advice and direction that is required to carry on a study of this
nature, and for helping us with the intricate details of the project every
step of the way.

I am also thankful to Mr. RAJESH MAKKAR(Manager) to give me right

direction.

Finally we would like to thank all the employees who helped us and took
out time to answer our questions and helped complete this project. It
was a wonderful learning experience for me.

DHEERAJ

3
4
 Introduction to the project

Role of financial systems to enthuse economic development. As investor are getting more
educated, aware and prudent they look for innovative investment instruments so that they are
able to reduce investment risk, minimize transaction costs and maximize return along with
certain level of conveniences as a result there has been an advent of numerous innovative
financial instruments such as bonds company deposits, insurance and mutual funds all of
which could be marked with individuals investment needs
Mutual funds score over all other investment options in terms of safety , liquidity returns and
are a transparent convenient as it can get goal of mutual funds is to provide an efficient way
to make money. In India there are 36 mutual funds with different investment strategies and
goals to choose from. Different mutual funds have different risks, which differ because of the
funds goals, funds managers and investment styles.

5
 Intdustry Profile

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 realized is shared by its unit holders in proportion to the number of
units owned by them. Thus a Mutual Fund is the most suitable investment for the common
man as it offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost. The flow chart below describes broadly the working of a
mutual fund:

6
 ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational
set up of a mutual fund

History of the Indian Mutual Fund Industry

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. At the end of 1988 UTI had Rs.6,700 crores of assets under
management

7
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

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.

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 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.

8
9
 Parties Involved In Mutual Fund

• Mutual Fund Manager: Establishes one or more mutual funds, markets them and
oversees their general administration.

• Portfolio Adviser: The professional money manager appointed by the Mutual Fund
Manager to direct the fund's investments. The Mutual Fund Manager also often acts
as the Portfolio Adviser.

• Principal Distributor: Coordinates the sale of the fund to investors, either directly or
through a network of registered dealers.

• Custodian: The bank or trust company appointed by the Mutual Fund Manager to
hold all of the securities owned by the fund.

• Transfer Agent and Registrar: The group responsible for maintaining a list of all
investors in the fund.

• Auditor: The independent accountants retained by the Mutual Fund Manager to audit
each year, and report on the financial statements of the fund.

• Trustee: The entity that has title to the securities owned by the fund on behalf of the
unit holders.

Mutual funds are generally categorized according to their investment objectives. Some
mutual funds focus on stocks, others on bonds, money market instruments or other securities.
Some mutual funds invest primarily in Canada, others invest internationally, and some
specialize in countries or specific industries. Some mutual funds will invest in only low-risk
investments, while others may hold much riskier securities. If you decide to become a mutual
fund investor, choosing funds whose investment objectives and risk profile are right for you
will be one of your most important decisions.

10
Asset
Major types Reasons to choose Major risk
class
• Common, preferred
• High return potential
• Large cap, mid cap, small cap
• May provide income
Stocks • Growth, value High

• Long-term horizon
• Int'l/domestic
• Government, agency
• Regular income
• Municipal
• Potential for price
• Corporate
Bonds appreciation Medium
• Mortgage-backed, asset-backed
• Possible tax advantages
• Int'l/domestic
• Treasury bills
• Regular income
Cash • Commercial paper
• Relative price stability
equivale • CDs and banker's acceptances Low
nts
• Liquidity
• Money markets

11
VARIOUS MUTUAL FUNDS COMPANIES IN INDIA
ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO
Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO
Asset Management (India) Ltd. was incorporated on November 4, 2003.
Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and
is being represented in Canada, the US, the Philippines, Japan, Indonesia and
Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative
long-term approach to investment. Recently it crossed AUM of Rs. 10,000
crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Asset Management
Company Limited is the AMC of BOB Mutual Fund and was incorporated on
November 5, 1992. Deutsche Bank AG is the custodian.

12
HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely
Housing Development Finance Corporation Limited and Standard Life
Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and
Capital Markets (India) Private Limited as the sponsor. Board of Trustees,
HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America,
one of the largest life insurance companies in the US of A. Prudential ICICI
Mutual Fund was setup on 13th of October, 1993 with two sponsorers,
Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential
ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management
Company Limited incorporated on 22nd of June, 1993.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to
launch offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr.
approximately. Today it is the largest Bank sponsored Mutual Fund in India.

13
They have already launched 35 Schemes out of which 15 have already yielded
handsome returns to investors. State Bank of India Mutual Fund has more than
Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread
over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The
sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment
Corporation Ltd. The investment manager is Tata Asset Management Limited
and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's
is one of the fastest in the country with more than Rs. 7,703 crores (as on April
30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of

KMBL. It is presently having more than 1,99,818 investors in its various
schemes. KMAMC started its operations in December 1998. Kotak Mahindra
Mutual Fund offers schemes catering to investors with varying risk - return
profiles. It was the first company to launch dedicated gilt scheme investing only
in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003,

14
manages the UTI Mutual Fund with the support of UTI Trustee Company
Privete Limited. UTI Asset Management Company presently manages a corpus
of over Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of
Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and
Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund
are Liquid Funds, Income Funds, Asset Management Funds, Index Funds,
Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act,
1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital
Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as
Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance
Mutual Fund was formed for launching of various schemes under which units
are issued to the Public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in diversified
securities.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based

company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one
of the largest financial services groups in the world. Investors can buy or sell
the Mutual Fund through their financial advisor or through mail or through their
website. They have Open end Diversified Equity schemes, Open end Sector
Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes,

15
Open end Income and Liquid schemes, Closed end Income schemes and Open
end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in

the market in securities, investmenty management and credit services. Morgan
Stanley Investment Management (MISM) was established in the year 1975. It
provides customized asset management services and products to governments,
corporations, pension funds and non-profit organisations. Its services are also
extended to high net worth individuals and retail investors. In India it is known
as Morgan Stanley Investment Management Private Limited (MSIM India) and
its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end
diversified equity scheme serving the needs of Indian retail investors focussing
on a long-term capital appreciation.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance
Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is
ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset
Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial

16
Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd.
as the Trustee Company. Incorporated on October 16, 2000 and headquartered
in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank
acting as the sponsor. Canbank Investment Management Services Ltd.
incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC
is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment &

Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee
Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989.
It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund
was constituted as a Trust in accordance with the provisions of the Indian Trust
Act, 1882. . The Company started its business on 29th April 1994. The Trustees
of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management
Company Ltd as the Investment Managers for LIC Mutual Fund.

17
18
 .

Religare, a Ranbaxy promoter group company, is one of India’s

largest and fastest growing integrated financial services
institutions. The company offers a large and diverse bouquet of
services ranging from equities, commodities, insurance broking,
to wealth advisory, portfolio management services, personal
finance services, Investment banking and institutional broking
services. The services are broadly clubbed across three key
business verticals- Retail, Wealth management and the
Institutional spectrum. Religare Enterprises Limited is the holding
company for all its businesses, structured and being operated
through various subsidiaries.

Religare’s retail network spreads across the length and breadth

of the country with its presence through more than 900 locations
across more than 300 cities and towns. Having spread itself fairly
well across the country and with the promise of not resting on its
laurels, it has also aggressively started eyeing global
geographies

For more information contact us at info@religare.in

19
20
Vision - To build Religare as a globally trusted brand in the
financial services domain and present it as the ‘Investment
Gateway of India’

Mission - Providing financial care driven by the core values of

diligence and transparency.

Brand Essence - Religare is driven by ethical and dynamic

processes for wealth creation.

21
 Religare Brand Identity

Name
Religare is a Latin word that translates as 'to bind together'. This
name has been chosen to reflect the integrated nature of the
financial services the company offers. The name is intended to
unite and bring together the phenomenon of money and wealth
to co-exist and serve the interest of individuals and institutions,
alike.

Symbol
The Religare name is paired with the symbol of a four-leaf clover.
The four-leaf clover is used to define the rare quality of good
fortune that is the aim of every financial plan. It has traditionally
been considered good fortune to find a single four leaf clover
considering that statistically one may need to search through
over 10,000 three-leaf clovers to even find one four leaf clover.

Each leaf of the four-leaf clover has a special meaning in the

sphere of Religare.

The first leaf of the clover represents Hope. The aspirations

to succeed. The dream of becoming. Of new possibilities. It
is the beginning of every step and the foundations on which
a person reaches for the stars.

The second leaf of the clover represents Trust. The ability

to place ones own faith in another. To have a relationship as
partners in a team. To accomplish a given goal with the
balance that brings satisfaction to all not in the binding but
in the bond that is built.

The third leaf of the clover represents Care. The secret

ingredient that is the cement in every relationship. The
truth of feeling that underlines sincerity and the triumph of
diligence in every aspect. From it springs true warmth of

22
 service and the ability to adapt to evolving environments
with consideration to all.

The fourth and final leaf of the clover represents Good

Fortune. Signifying that rare ability to meld opportunity and
planning with circumstance to generate those often looked
for remunerative moments of success.

Hope. Trust. Care. Good fortune. All elements perfectly

combine in the emblematic and rare, four-leaf clover to
visually symbolise the values that bind together and form
the core of the Religare vision.

Accent usage
The diacritical tilde mark ( ˜ ) over the letter A in the Religare
typeface indicates a palatal emphasis sound of the letter A.

Pronunciation
rel•i•ga•re (rel'i-gâir)

23
 Our Top Management Team

Mr. Sunil Godhwani - CEO & Managing Director, Religare

Enterprises Limited

Mr. Sunil Godhwani is the CEO and Managing Director of our

Company. He is a graduate in chemical engineering and has a
master’s degree in industrial engineering and finance from
Polytechnic Institute, New York. He has more than 20 years
experience in business.

Mr. Godhwani joined our Board on July 13, 2006. He was

appointed as CEO and Managing Director of our Company on April
9, 2007. Mr. Godhwani is also the managing director of Fortis
Financial Services Limited. Prior to becoming the Managing
Director of our Company, he was Managing Director of Religare
Securities Limited since April 15, 2002

Mr. Shachindra Nath - Group Chief Operating Officer,

Religare Enterprises Limited

Mr. Shachindra Nath (Group Chief Operating Officer) aged 36

years, carries the overall responsibility for managing the key
operations of our group. He joined RSL on May 8, 2000. RSL, at
that relevant point of time, was a subsidiary of Fortis Financial
Services Limited, our Promoter Group company. He received a
bachelor’s degree in law from the Banaras University, Varanasi,
and a post graduate diploma in intellectual property rights from
the Amity Law College, Delhi.

Prior to joining us, he was at Abhipra Capital Limited as a Senior

Consultant and Divisional Incharge and held several key positions
there from 1998 until 2000. In the past, he has also worked with
Obeetee Textiles Limited, R. D & Company and Garware Wall
Ropes Limited. He has over 14 years of experience in the financial
services industry.

Mr. Anil Saxena- Group Chief Finance Officer, Religare

Enterprises Limited
Mr. Anil Saxena (Group Chief Finance Officer), aged 38 years,
carries the overall responsibility for management and supervision
of our group and has played a key role in driving its growth. He
joined RSL on August 1, 2001. RSL, at that relevant point of time,
was a subsidiary of Fortis Financial Services Limited, our

24
Promoter Group Company. He received a bachelor’s degree in
commerce from the University of Delhi.

He is a member of the Institute of Chartered Accountants of India

as well as the Institute of the Cost and Works Accountants of
India. Prior to joining us, he was at Kotak Securities Limited as
their Vice-President. In the past, he has also worked with Fortis
Financial Services Limited and R. Singhania & Co. He has over 15
years of experience in the financial services industry.

Board of Directors - Religare Enterprises Limited

• Mr. Malvinder Mohan Singh - Chairman (Non Executive)
• Mr. Sunil Godhwani - CEO & Managing Director
• Mr. Shivinder Mohan Singh - Non Executive Director
• Mr. Harpal Singh - Non Executive Director
• Mr.Deepak Ramchand Sabnani - Independent Director
• Mr.Padam Bahl - Independent Director
• Mr.J.W. Balani - Independent Director
• Mr. Baldev Singh Johal - Independent Director
• Mr. R. K. Shetty - Alternate to Mr. J. W. Balani
Capt.G.P.S.Bhalla - Alternate to Mr. Deepak Sabnani

25
 New Initiatives

• Religare is on a fast and ambitious growth trajectory with

some interesting plans in the pipeline

• AEGON Religare Life Insurance - Life Insurance Company, a

Joint Venture with Aegon

• Religare AEGON AMC - Asset Management Company, a Joint

Venture with Aegon

• Religare Finance - Personal Loans / Credit Cards / Loan

against Property / Mortgage & Reverse Mortgage

Trading in Equities with Religare truly empowers you for your

investment needs. A highly process driven, diligent approach
backed by powerful Research & Analytics and one of the “best in
class” dealing rooms ensures that you have a superlative
experience. Further, Religare also has one of the largest retail
networks, with its presence in more than 900 locations across
more than 320 towns & cities. This means, you can walk into any
of these branches and connect to our highly skilled and dedicated
relationship managers to get the best services. You could also
choose to enjoy the freedom to execute your own trade through
our online mechanism.

26
There are three types of facilities providing by religare.

1. Retail Spectrum –
To cater to a large number of retail clients by offering
all products under one roof through the Branch Network and
Online mode.

2. Institutional Spectrum –
To Forge & build strong relationships with Corporate
and Institutions.

3. Wealth Spectrum –
To provide customized wealth advisory services to
High Networth Individuals.

27
Equity trading
Commodies trading
Online investment portal
Personal financial services
Personal credit

28
 Equity trading

Trading in Equities with Religare truly empowers you for your investment
needs. A highly process driven, diligent approach backed by powerful
Research & Analytics and one of the “best in class” dealing rooms ensures
that you have a superlative experience.

Further, Religare also has one of the largest retail networks, with
its presence in more than 900 locations across more than 320
towns & cities. This means, you can walk into any of these
branches and connect to our highly skilled and dedicated
relationship managers to get the best services. You could also
choose to enjoy the freedom to execute your own trades through
our online mechanism.

29
 Commodities

Religare Commodities Limited (RCL) was initiated to spearhead

Exchange based Commodity Trading. As a member of NCDEX,
MCX and NMCE, RCL is a trade facilitator providing the platform
to trade in commodities. Grounded in the Religare philosophy,
highly skilled and dedicated professionals strive to offer the
clients "best-fit" investment solutions in the country.
The Operating Fabric-Commodities Business
In terms of the business structure, RCL caters to retail clients; it
has a structured arbitrage desk which focuses on spot futures
arbitrage, RCL is also present in close to 40 Mandi locations
across the country and also caters to the Corporate / Institutional
business through one of the “best in class” Corporate Desks.
Our business philosophy is to treat each client situation as
unique, requiring customized solutions. Our list of corporate
clients reads like a Who’s Who of the Indian Industry and we have
been successful in providing them with practical customized
solutions for their requirements. We are propelled by our group
vision and desire to strive tirelessly and aim to be the best within
this category.

The Religare Edge

• Pan India footprint
• Ethical business practices
• Nationwide presence including Mandi Locations for in-depth
and firsthand information
• Offline/Online delivery models
• Powerful research and analytics supported by a pool of
highly skilled Research Analysts
• Single window for all investments needs through you unique

30
 Online investment portal

Investing online will never be the same again with our 360 degree
portal www.religareonline.com Now you can not just invest online
in Equities, IPOs, Mutual Funds, Commodities and much more but,
also get TRADE REWARDS each time you invest.

Besides this, we also offer you a host of other revolutionary

features such as Zero Percent Brokerage; Interest on cash
margin, exposure upto 20 times your cash margin etc... on our
select product schemes available through our highly
sophisticated and customized platform R-ACE (Religare Advanced
Client Engine).

So get empowered, enrich your experience of investing online

and open yourself to a whole new world of possibilities.

For more information log on to www.religareonline

31
 Personal financial services

Religare has recently entered into personal financial advisory

services. It caters to the financial needs of individuals by advising
them on various financial plans. Religare’s Personal financial
advisors, also called financial planners or financial consultants,
use their knowledge of investments, tax laws, and insurance to
recommend financial options to individuals in accordance with
the individual’s short-term and long-term goals. Some of the
issues that planners address are general investments, retirement
and tax planning.

Why Financial Planning?

Financial planning is the process of meeting your life goals
through proper management of your finances. Life goals can
include buying a home, saving for your child’s education or
planning for retirement. Financial planning services are offered
to individuals to put together a financial plan for managing
financial resources.
Advantage - Financial Planning
• Provides direction and meaning to your financial decisions
• Helps understanding how each financial decision you make
affects other areas of your finances
• Helps assessing the level of risk you are willing to take with
your investments
• You can also adapt more easily to life changes and feel more
secure that your goals are on track.
Product offerings
• Mutual Funds
• Insurance - Life & Non - Life
• Bonds
• Deposits
• IPO’s
• Small Savings Instruments

PHILOSOPHY

At Religare we believe “Our clients are people, not accounts”

hence successful investment management relationship begins
with a clear understanding of each clients specific needs,
concerns and long term objectives. Our investment philosophy

32
applies a disciplined approach to building a customized strategy
designed to meet your individual financial goals and tolerance for
risk.

PROCESS

33
 Credit finance

Religare as part of its NBFC business being operated through

Religare Finvest Ltd. offers Personal Credit to cater to the
growing wave of consumerism in India.

Through our Loan against Shares (LAS) and Personal Lending

Services (PLS) offerings, we have entered into consumer lending
business activities. Our PLS service offering is marketed as
“Personal Credit” services and developed by leveraging our
branch network to generate opportunities from existing equity
customers. Our PLS business consists of unsecured consumer
loans to our retail customers. Our LAS business consists of loans
secured by shares held by our retail customers and helps them
leverage their equity market positions to take increased
exposure.

34
Wealth advisory
Portfolio management services
Arts intiative
Priority equityclient services

35
 Wealth advisor

Wealth…Grow It, Protect It, Spend It, Share It…..

Copyright- Book by the same name by Stuart Lucas

"At Religare, we are always at It, partnering with you

relentlessly…..

We would want you to sleep in peace , but never would

we want your wealth to sleep or go into a slumber…
Ethical, dynamic and diligent processes is what we are
truly about…”
Wealth Management @ Religare
• To provide investment advisory and execution services
• To work hand in hand with clients to identify and analyze
their long-term goals, risk tolerance and existing asset base
• To Utilise our full-suite platform with an open architecture
along with a fully focussed client centric approach to offer
customized solutions for clients
• Supported by dedicated team of highly skilled and qualified
wealth managers and research professionals.

Our Value Proposition

• Strong lineage and pedigree
• Young, professional, innovative and fully client centric
human capital
• Full suite platter of services from the Religare umbrella
• National and International Foot print
• An open architecture and client centric philosophy “Not just lip service”

Product Recommendations
• Equities (Including International)
• Debts
• Commodities
• Structured Products
• Emerging Investment Classes.

Critical Steps in our Client Centric Operating Process

• Risk Profiling
• Research & Asset Allocation
• Product Recommendations

36
 • Review & Rebalancing

To know more about us mails us at info@religare.in

International Advisory Fund Management Services

(AFMS) - A new horizon for international investments
We provide our wealth clients an opportunity to invest in
international financial instruments (currently limited to the US).
Equities, Mutual Funds and Debts are some the key instruments
available and the clients have the option to choose from various
asset allocation modules.

Why Invest Overseas?

• Avenues for enhancing returns, minimizing risk and portfolio
diversification
• Global outreach of opportunities
• Pre approved route for resident individuals to invest
(Healthy Govt. Patronage and favorable regulatory
developments)

Religare's Edge

Exclusive Tie-ups with full suite broking firms in the US and top of
the line institutional research service providers

To know more about us mails us at

international.equity@religare.in

37
 Portfolio management services

Religare offers PMS to address varying investment preferences.

As a focused service, PMS pays attention to details, and
portfolios are customised to suit the unique requirements of
investors.

Religare PMS currently extends five portfolio management

schemes, viz Panther, Tortoise, Elephant,Caterpillar and Leo.
Each scheme is designed keeping in mind the varying tastes,
objectives and risk tolerance of our investors

Investment Philosophy

We believe that our investors are better served by a disciplined

investment approach, which combines an understanding of the
goals and objectives of the investor with a fine tuned strategy
backed by research.

• Stock specific selection procedure based on fundamental

research for making sound investment decisions.
• Focus on minimizing investment risk by following rigorous
valuation disciplines.
• Capital preservation.
• Selling discipline and use of Derivatives to control volatility.
• Overall to enhance absolute return for investors.

Our Schemes

Panther

The Panther portfolio aims to achieve higher returns by taking

aggressive positions across sectors and market capitalizations. It
is suitable for the “High Risk High Return” investor with a
strategy to invest across sectors and take advantage of various
market conditions.

Tortoise

38
The Tortoise portfolio aims to achieve growth in the portfolio
value over a period of time by way of careful and judicious
investment in fundamentally sound companies having good
prospects. The scheme is suitable for the “Medium Risk Medium
Return” investor with a strategy to invest in companies which
have consistency in earnings, growth and financial performance.

Elephant

The Elephant portfolio aims to generate steady returns over a

longer period by investing in Securities selected only from BSE
100 and NSE 100 index. This plan is suitable for the “Low Risk
Low Return” investor with a strategy to invest in blue chip
companies, as these companies have steady performance and
reduce liquidity risk in the market.

Caterpillar

The Caterpillar portfolio aims to achieve capital appreciation over

a long period of time by investing in a diversified portfolio. This
scheme is suitable for investors with a high risk appetite. The
investment strategy would be to invest in scrips which are poised
to get a re-rating either because of change in business, potential
fancy for a particular sector in the coming years/months,
business diversification leading to a better operating
performance, stocks in their early stages of an upturn or for
those which are in sectors currently ignored by the market.

Leo

Leo is aimed at retail customers and structured to provide

medium to long-term capital appreciation by investing in stocks
across the market capitalization range. This scheme is a mix of
moderate and aggressive investment strategies. Its aim is to
have a balanced portfolio comprising selected investments from
both Tortoise and Panther. Exposure to Derivatives is taken
within permissible regulatory limits.

39
The Religare Edge

We serve you with a diligent, transparent & process driven

approach and ensure that your money gets the care it deserves.

No experts, only expertise. Religare PMS comes to you from

Religare, a Ranbaxy promoter group company with a solid
reputation for an ethical and scientific approach to financial
management. While we offer you the services of a Dedicated
Relationship Manager who is at your service 24x7, we do not
depend on individual expertise alone. For you, this means lower
risk, higher dependability and unhindered continuity. Moreover,
you are not limited by a particular individual’s investment style.

No hidden profits. We ensure that a part of the broking at

Religare Portfolio Management Services is through external
broking houses. This means that your portfolio is not churned
needlessly. Using more broking firms gives us access to a larger
number of reports and analysis, enabling us to make better, more
informed decisions. Furthermore, your portfolio is customised to
suit your investment objectives.

Daily disclosures. Religare Portfolio Management Services

gives you daily updates on your investment. You can pinpoint
where your money is being invested, 24x7, instead of waiting till
the end of the month to keep track.

No charge till you profit*.So sure are we of our approach to

Portfolio Management that we do not charge you for our services,
until your investments start showing profit. With customised
investment options Religare Portfolio Management Services
invites you to invest across five broad portfolios to suit your
investment needs.

* Except fixed administrative charges.

40
For Portfolio Management Services(Client Login) log on to
http://wealth.religare.in/webfincrm/login.jsp

Arts intiative

Religare Arts Initiative (RAI)

The Indian arts Industry is currently valued as one of the growing
industries of the world market. Art prices in India are escalating
every year.
The Religare Arts Initiative is a venture of Religare Enterprises
Limited with a view to provide a quality platform and
infrastructure for Arts. This initiative has been envisioned as a
true champion "for the cause of arts".
The RAI will provide a platform for artists of all ages, genres, and
statures. We are already in the process of creating a transparent
and highly rich infrastructure that would involve cataloguing,
documentation, art research, and the development of an art
aesthetic on an institutional basis. RAI will work closely with the
Indian art and design schools on the issues such as the
curriculum and resources to bring them into the same quality
domain as their international counterparts.
RAI's envisaged activities include building infrastructure for arts,
creation of an arts awareness program, creation of spaces /
canvases for the artists, creation of International quality Gallery
Spaces, providing Art Advisory Services and much more.

Keep watching this space for more action in the times to come

For more logon to www.religarearts.com

or mail us at: - info@religarearts.com

41
 Priority equityclient services

Priority Client Group Services (PCG)

At Religare we strongly beleive in not just providing you with
incisive investment advice but we are equally focussed to ensure
timely execution of your important trades. With this as our
driving philosophy we have created a unique client centric
business model that revolves around optimum service delivery.
Further, our investment advisory is underpinned by
comprehensive fundamental and technical research – helping you
to time your investment decisions perfectly.
Invest smart
Our goal is to cut through the labyrinth of potential investment
avenues and bring you only the most rewarding investment
ideas. As our compass, we have a team of highly qualified
research professionals with collectively close to 100 man-years of
equity research experience and a keen market perception. We
don’t simply focus on recognised companies, but also strive to
unearth "hidden gems" – companies where value is waiting to be
unlocked. Our fresh insights come from a vast business network
and a research approach that emphasises fundamentals over
sentiments.
Incisive research – the hallmark of our services
As a part of our Priority Client Group, you get exclusive access to
our research reports. We bring you fundamental analysis
covering a wide spectrum of companies across sectors, supported
by the latest and most reliable research inputs. Religare’s team
of fundamental research analysts specialise in specific industry
sectors and monitor sectoral developments keenly, while tracking
individual companies – so you never lose sight of the bigger
picture. Moreover, our comprehensive derivatives trading
reports, intra-day technical calls and technical strategies keep
you abreast of the latest market trends.
Professional team of dealers
Our experienced team of dealers maintain a close watch on the
market to ensure that information reaches clients at the earliest.
Moreover, our state-of-the-art infrastructure and superior
execution systems help us serve you more efficiently.
Avail of personalised services
Personalised services form the hallmark of the Religare PCG
offerings. We examine the risk profile and financial objective of
every client, so as to chart out highly purposeful, result-oriented

42
plans. A dedicated back office team complements our services to
ensure that all your transactions are concluded in a prompt and
efficient manner.

43
Institutional broking services
Banking investment
Corporate finance
Insurance advisory

44
 Institutional Broking Services

The mission of this division is to institutionalize and implement a

process driven approach to cater to the needs of leading
corporate houses and institutions.

The division would like to be seen as a one stop investment

gateway and knowledge repository for its clients servicing their
unique and sophisticated needs.

The division is structured as a separate SBU and is housed out of

Mumbai, manned by a small yet fleet footed and extremely skilled
group of top notch professionals drawn from the best in the
industry.

The key highlights of our service platter are:

• Highly skilled, dedicated dealing, research and sales teams

• Dealing capabilities on the NSE, BSE and in the cash and
derivatives segment
• In-depth, detailed and insightful coverage of more than 60
stocks across diverse sectors. The sectors covered are FMCG,
Hotels, Media, Pharma, Auto, Cement, Steel pipes, Logistics,
Telecom, Construction and much more.

Our Current clientele includes some major domestic mutual

funds, insurance companies, banks and FII’s

45
 Investment Banking

We provide innovative, integrated and best-fit solutions to our

corporate customers. It is our continuous endeavor to provide
value enhancement through diverse financial solutions on an on-
going basis, through offerings like corporate debt, private equity,
IPO, ECB, FCCB, GDR/ADR etc.

Religare's Investment Banking Division offers the

following services:

Corporate Finance
We focus on finding partners for our clients, who not only help in
adding value , but also improve the future valuation of the
organization. We specialize in structured financing and in
providing advisory services related to financial planning,
modeling and advising on financial requirements.

• Placement of Debt
 Syndication of Domestic Loan / Foreign Currency Loan
 Securitisation
 Debt Swap & Loan Restructuring
 Short Term Corporate Debt
 Working Capital (Cash Credit & Short term Loan)
 Capital Market Instruments
 Overseas Acquisition

• Placement of Equity (Private Equity)

 Both for listed and unlisted companies

Merchant Banking

• IPO/FPO/RIGHTS
• Mergers & Acquisitions
• Corporate Advisory Services
• ADR/GDR/FCCB
• Buy Back Of Shares

46
 Corporate Finance

We focus on finding right and relevant partners for our clients,

who not only help in adding value but also improve the future
valuation of the organization. We specialize in structured
financing and providing advisory services related to financial
planning, modeling and advising on financial requirements.

Corporate finance products offered by us:

Placement of Debt

 Syndication of Domestic Loan / Foreign Currency Loan

 Securitisation
 Debt Swap & Loan Restructuring
 Short Term Corporate Debt
 Working Capital (Cash Credit & Short term Loan)
 Capital Market Instruments
 Overseas Acquisition

Placement of Equity (Private Equity)

 Both for listed and unlisted companies

47
 Insurance Advisory

Religare Insurance Broking, a Religare Enterprises Limited

venture, is one of India's leading insurance broking firms, with
one of the largest retail networks in the country. The company
holds a composite broking license operating in the Life, Non-Life
and Reinsurance domains.

The company not only services and provides customized solutions

to individual retail households / clients but also to some leading
corporate houses and institutions across the country.

True to the spirit of its existence, the company proactively

represents and champions the interests of its clients tirelessly to
principal insurance companies.

Within a short span it has inked MoU’s with all the leading
insurance companies in the country and is backed by passionate
professionals, a robust IT infrastructure and strong risk analysis
teams adept at identifying and analyzing risks to offer tailor-
made solutions.

The team across the country is driven by the core philosophy of

creating and delivering value to its customers.

48
49
 Managerial Usefulness of Study

 This study will give us an insight risk & performance of various mutual

funds and no ways to investing in mutual funds.

 It will provide complete details on Systematic Investment Plan (SIP)

which is rapidly become popular among the people of all sectors.

 This study will make the concept of SIP clear and explain its pros and

cons. SIP is coming up as a good investment of option because of certain

benefits that are available only with SIPs.

 Moreover, the study focuses on various aspects associated with SIPs that

will make us understand it much better. Besides, an analysis has been

done based on the real data available through some resources which

makes the study more reliable.

50
51
 Scope

Mutual Funds can be a conundrum for people who are not closely
associated with the industry. Even many who have been part of the
industry for several years continue to have some misconceptions.

INTRODUCTION

1. What is a mutual fund?

1. Pooled Vehicle

A mutual fund (MF) is a vehicle to pool money from investors, with

a promise that the money would be invested in a particular
manner, by professional managers who are expected to honour the
promise.

Mutual funds in India are governed by the regulations of Securities

and Exchange Board of India (SEBI).

2. Professional Management

The idea behind a MF is that investors lack the time or the

inclination or the skills to manage their own investments.
Professional managers, acting on behalf of the MF, manage the
investments for the benefit of investors, in return for a management
fee.

3. Schemes

Investors have their individual preferences on how they would like

their money invested and how much risk they are willing to take.

Professional managers can choose to manage each individual

investor’s money as per the investor’s preferences. Such personal
treatment, often referred to as Portfolio Management Scheme
(PMS) in India, entails significant demands on the time of the
managers

52
 It is possible to balance the time and cost required to manage
investments by grouping investors together based on their
preferences. In this manner, the focus of the investment activity
can be shifted from a single investor (in the case of PMS) to a group
of investors having similar expectations (in the case of a MF).

For ease of management and reporting, such a group of investors is

identified with a ‘mutual fund scheme’. In commercial
terminology, the investors have invested in a scheme – and the
professional managers manage the scheme. A MF can, and
typically does, have several schemes to cater to different investor
preferences.

4. Money in Trust

The MF manages investments of the scheme for the benefit of its

investors. Every scheme has an:

investment portfolio (Portfolio Statement)

account of income and expenditure (Revenue Account)

account of assets and liabilities (Balance Sheet).

In order to ensure fairness to investors, the expenditure that can be

charged to the scheme, whether as management fees or as other
expenses, is regulated by SEBI.

The gains of any scheme (after accounting for income, permitted

expenses, profits and losses from the investment activity) would
belong to

its investors. Similarly losses, if any, would need to be borne by its

investors, upto the amount invested. Thus, the MF manages the
moneys in trust for the benefit of investors.

5. Legal framework

Across the world, the MF sector is viewed as a critical mechanism to

channel funds of investors into the capital market. Since these
investors are often not so well qualified to invest, the mutual fund

53
business is highly regulated. Regulations vary from country to
country.

54
Performance Measures Of Mutual Funds

Mutual Fund industry today, with about 34 players and more than five hundred
schemes, is one of the most preferred investment avenues in India. However,
with a plethora of schemes to choose from, the retail investor faces problems in
selecting funds. Factors such as investment strategy and management style are
qualitative, but the funds record is an important indicator too. Though past
performance alone can not be indicative of future performance, it is, frankly, the
only quantitative way to judge how good a fund is at present. Therefore, there is
a need to correctly assess the past performance of different mutual funds.

Worldwide, good mutual fund companies over are known by their AMCs and
this fame is directly linked to their superior stock selection skills. For mutual
funds to grow, AMCs must be held accountable for their selection of stocks. In
other words, there must be some performance indicator that will reveal the
quality of stock selection of various AMCs.

Return alone should not be considered as the basis of measurement of the

performance of a mutual fund scheme, it should also include the risk taken by
the fund manager because different funds will have different levels of risk
attached to them. Risk associated with a fund, in a general, can be defined as
variability or fluctuations in the returns generated by it. The higher the
fluctuations in the returns of a fund during a given period, higher will be the
risk associated with it. These fluctuations in the returns generated by a fund are
resultant of two guiding forces. First, general market fluctuations, which affect
all the securities present in the market, called market risk or systematic

55
risk and second, fluctuations due to specific securities present in the portfolio of
the fund, called unsystematic risk. The Total Risk of a given fund is sum of
these two and is measured in terms of standard deviation of returns of the
fund. Systematic risk, on the other hand, is measured in terms of Beta, which
represents fluctuations in the NAV of the fund vis-à-vis market. The more
responsive the NAV of a mutual fund is to the changes in the market; higher
will be its beta. Beta is calculated by relating the returns on a mutual fund with
the returns in the market. While unsystematic risk can be diversified through
investments in a number of instruments, systematic risk can not. By using the
risk return relationship, we try to assess the competitive strength of the mutual
funds vis-à-vis one another in a better way.

In order to determine the risk-adjusted returns of investment portfolios, several

eminent authors have worked since 1960s to develop composite performance
indices to evaluate a portfolio by comparing alternative portfolios within a
particular risk class. The most important and widely used measures of
performance are:

Ø The Treynor Measure

Ø The Sharpe Measure

Ø Jenson Model

Ø Fama Model

56
The Treynor Measure

Developed by Jack Treynor, this performance measure evaluates funds on the

basis of Treynor's Index. This Index is a ratio of return generated by the fund
over and above risk free rate of return (generally taken to be the return on
securities backed by the government, as there is no credit risk associated),
during a given period and systematic risk associated with it (beta).
Symbolically, it can be represented as:

Treynor's Index (Ti) = (Ri - Rf)/Bi.

Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta
of the fund.

All risk-averse investors would like to maximize this value. While a high and
positive Treynor's Index shows a superior risk-adjusted performance of a fund,
a low and negative Treynor's Index is an indication of unfavorable performance.

The Sharpe Measure

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio,

which is a ratio of returns generated by the fund over and above risk free rate of
return and the total risk associated with it. According to Sharpe, it is the total
risk of the fund that the investors are concerned about. So, the model

57
evaluates funds on the basis of reward per unit of total risk. Symbolically, it can
be written as:

Sharpe Index (Si) = (Ri - Rf)/Si

Where, Si is standard deviation of the fund.

While a high and positive Sharpe Ratio shows a superior risk-adjusted

performance of a fund, a low and negative Sharpe Ratio is an indication of
unfavorable performance.

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the
risk premium by a numerical risk measure. The total risk is appropriate when
we are evaluating the risk return relationship for well-diversified portfolios. On
the other hand, the systematic risk is the relevant measure of risk when we are
evaluating less than fully diversified portfolios or individual stocks. For a well-
diversified portfolio the total risk is equal to systematic risk. Rankings based on
total risk (Sharpe measure) and systematic risk (Treynor measure) should be
identical for a well-diversified portfolio, as the total risk is reduced to
systematic risk. Therefore, a poorly diversified fund that ranks higher on
Treynor measure, compared with another fund that is highly diversified, will
rank lower on Sharpe Measure.

58
Jenson Model

Jenson's model proposes another risk adjusted performance measure. This

measure was developed by Michael Jenson and is sometimes referred to as the
Differential Return Method. This measure involves evaluation of the returns
that the fund has generated vs. the returns actually expected out of the fund
given the level of its systematic risk. The surplus between the two returns is
called Alpha, which measures the performance of a fund compared with the
actual returns over the period. Required return of a fund at a given level of risk
(Bi) can be calculated as:

Ri = Rf + Bi (Rm - Rf)

Where, Rm is average market return during the given period. After calculating
it, alpha can be obtained by subtracting required return from the actual return of
the fund.

Higher alpha represents superior performance of the fund and vice versa.
Limitation of this model is that it considers only systematic risk not the entire
risk associated with the fund and an ordinary investor can not mitigate
unsystematic risk, as his knowledge of market is primitive.

59
Fama Model

The Eugene Fama model is an extension of Jenson model. This model compares
the performance, measured in terms of returns, of a fund with the required
return commensurate with the total risk associated with it. The difference
between these two is taken as a measure of the performance of the fund and is
called net selectivity.

The net selectivity represents the stock selection skill of the fund manager, as it
is the excess return over and above the return required to compensate for the
total risk taken by the fund manager. Higher value of which indicates that fund
manager has earned returns well above the return commensurate with the level
of risk taken by him.

Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)

Where, Sm is standard deviation of market returns. The net selectivity is then

calculated by subtracting this required return from the actual return of the fund.

Among the above performance measures, two models namely, Treynor measure
and Jenson model use systematic risk based on the premise that the
unsystematic risk is diversifiable. These models are suitable for large investors
like institutional investors with high risk taking capacities as they do not face
paucity of funds and can invest in a number of options to dilute some risks. For
them, a portfolio can be spread across a number of stocks and sectors. However,
Sharpe measure and Fama model that consider the entire

60
risk associated with fund are suitable for small investors, as the ordinary
investor lacks the necessary skill and resources to diversified. Moreover, the
selection of the fund on the basis of superior stock selection ability of the fund
manager will also help in safeguarding the money invested to a great extent.
The investment in funds that have generated big returns at higher levels of risks
leaves the money all the more prone to risks of all kinds that may exceed the
individual investors' risk appetite.

61
CONSIDERATION WHILE SELECTING A MUTUAL FUND

For most investors, choosing a qualified financial adviser is an important first

step in any investment program. With the help of financial adviser, we can
establish our investment goals, assess our risk tolerance, and develop a personal
investment strategy.

Once we have identified some funds that seem to meet our investment needs,
we must consider the following parameters.

Investment Objectives: Are the fund's investment objectives consistent with

our own? Can the fund provide the level of regular income you need? Does it
provide the type of diversification we're looking for? If we have other
investments, how will this fund affect the overall balance of our portfolio?

Risk: Are we comfortable with the level of risk associated with the fund? If we
have other investments, would this fund tend to increase or decrease our overall
risk exposure? Unlike GICs or savings accounts, mutual funds are not covered
by deposit insurance. Values of most mutual funds will fluctuate and we can
lose money depending on changes in the marketplace.

62
Time Horizons: Does the investment fit with our expected investment time
horizon? For example, if we're investing for a relatively short time, will sales
charges and redemption fees offset any possible gains? Might the value of the
fund be down just when we need to redeem we investment?

Expected Return: Does the fund have the potential to provide the returns you
need to meet our goals? Remember, predicting the return of any mutual fund
requires that we predict the future - something that can never be done with
certainty. Past performance will tell us about the fund's historical volatility and
its performance relative to competing funds, but it is not a reliable indicator of
future performance. The return we can expect from a mutual fund is closely
related to its risk. The lower the risk of the fund, the lower the return we should
expect.

Costs: Fees and commissions associated with mutual funds will affect our
overall return and can vary widely from one fund to the next. Higher fees and
commissions do not necessarily mean better performance. We should check and
compare fees and commissions before investing.

Flexibility: Will we be entitled to switch our investment to other funds in the

same fund family'? Can we afford the minimum initial investment? Does the
fund offer other features such as regular monthly purchase plans or redemption
plans that are attractive to us?

63
Tax Considerations: Is the mutual fund a qualifying investment for our
Registered Retirement Income Fund (RRIF) or other registered plan? If we are
investing in the fund outside a registered plan, do we understand the tax
implications of the distributions of income or capital gains that the fund may
make to us?

RISK FACTORS IN GENERAL

We take risks when we invest in any mutual fund. We may lose some or all of
the money we invest (our principal) because the securities held by a fund go up
and down in value. What we earn on our investment (dividends and interest)
also may go up or down. The various types of risk are:

Volatility: The unpredictability of changes in stock prices.

Interest-rate risk: The fluctuation in bond prices due to interest rate changes.

Credit risk: The likelihood that payments of bond interest and principal will not
be made as promised.

Inflation risk: The risk that the lowered purchasing power of the dollar will
erode our return.

Each kind of mutual fund has different risks and rewards. Generally, the higher
the potential return, the higher the risk of loss. The following

64
discussion of risk for the various types of funds is intended to aid us in choosing
a fund that meets our requirements as an investor.

Type of Mutual Fund Potential Risk and Return

Money Market Funds Low
Fixed Income Funds Low
Balanced Funds Moderate
Growth and Equity Funds High
Specialty Funds High
Index Funds (Equity) High

65
66
 Objectives of the Project

The objectives of the project are as under

• To study about the Mutual Funds in detail
• To evaluate investment performance of selected mutual funds in terms of
risk and return
• To analyze the returns given by different kind of funds selected for study

The project of my SIP is about Comparative Analysis of various types of

Mutual Funds and risk analysis of various Mutual funds based on some
selective parameters.
Invented in the 1920s, mutual funds are pools of money managed by an investment
company or advisor. Different mutual funds have different goals. For example,
funds may seek growth, growth and income, specific market cap sizes, sectors, etc

67
68
 RESEARCH METHODOLOGY
Meaning: Research means a search for knowledge. Research is an art of
scientific investigation. It is a careful investigation or inquiry especially
through search for new facts in any branch of knowledge.

Some people consider research as a movement, a movement from the known

to unknown. It is actually a voyage of discovery.

Research is an academic activity and as such the term should be used in a

technical sense. Research comprises defining and redefining problem,
formulating hypothesis or suggested solutions, collecting, organizing and
evaluating data, making deductions and reaching conclusions and at last
carefully testing the conclusions to determine whether they fit the
formulated hypothesis.

Research Methodology is a way to systematically solve the research

problem. It is a science of studying how research is done scientifically.

For Example, an architect, who designs a building, has to consciously

evaluate the basis of his decisions i.e; he has to evaluate why and what basis
he selects particular size, number and location of doors, windows and
ventilators, uses particular material and not others and the like.

69
Similarly, in research the scientist has to expose the research decisions to
evaluations before they are implemented. He has to specify very clearly and
precisely what decisions he selects and why he selects them so that they can
be evaluated by others also.

70
Type of Research

The type of research that I took is descriptive as well as analytical.

Descriptive research includes surveys and fact-finding enquiries of
different kinds. The major purpose of descriptive research is description
of the state of affairs as it exists at presents. The main characteristic of
this method is that the researcher has no control over the variables; he
can only report what has happened or what is happening.

Research Design

A research design is the arrangement of condition for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with
economy in procedure.

Research design is divided into the following parts:

1. The sampling design- methods of

selecting items to be observed
2. The observational design – relates
to the condition under which the observations are to be made
3. Statistical design – it is concerned
with the observation and analysis of the data.
4. The operational design – the
techniques by which the procedures like sampling observational

71
 designs etc. can be carried out.

Sample

The sample taken for this research are funds of a few AMCs – Franklin India
Prima Plus Fund, UTI Master Value Fund , HSBC Blue Chip fund etc. I
personally visited the offices of the AMCs – Franklin Templeton to collect the
data. The research revolves around the performances of these fund houses.

Collection of data

Data can be collected in two ways primary and secondary. The data that is used
in this research is secondary data. Secondary data is the data which is already
available i.e. the data which have already been collected and analysed by
someone else. This data may either be published or unpublished data such as
reports and publications of various associations connected with business and
industry, banks, stock exchange etc. unpublished biographies and published
biographies available with research workers, scholars etc.

The Secondary sources were:

 Performance and NAV sheets

 Fact sheets of AMCs etc.

72
 RISK ANALYSIS

Risk analysis has been done in two parts.

1) Quantitative Analysis
2) Qualitative Analysis

Quantitative analysis ;it is a form of analysis, which uses numbers and ratios
derived from a company's financials to assess its prospects. Under quantitative
analysis various types of funds have been evaluated based on some selective
parameters

The entry of private mutual funds (since 1993) has injected a sense of
competition and the industry has been witnessing a structural transformation
from a public sector monopoly to monopolistic industry. A proper evaluation
will help small investors to decide about level of investments in various mutual
funds schemes, so as to maximize the returns. Present study is confined to
evaluate the performance of mutual funds on the basis of average returns of last
three years compared with the risk free securities returns and BSE index. In this

73
project funds have been divided on the basis of their investments in different
type of securities e.g.
1) Large cap funds – Mutual funds which have invested most of their

corpus in large cap equities

2) Medium cap funds – Mutual funds which have invested most of

their corpus in medium cap equities

3) Aggressive funds – Mutual funds which have invested most of

their corpus in small cap equities.

4) Balanced funds – Mutual funds which have invested their corpus

in all kinds of securities

5) Thematic funds – Mutual funds which invest only in some

particular kind of stocks based on a particular theme.

6) Four funds have been taken under each type and therefore the samples
size consists of 20 mutual funds on one year basis. The broad 50 share
based BSE 50 has been used as a proxy to find out whether the scheme is
able to beat the market or not.

• The collection of information is based on the primary and secondary

data. The primary data has been collected through discussion with the
mutual funds institutes officials, to get the first hand information

• Secondary information has been collected through various books,

studies and annual reports of various institutes like Kotak, UTI,

74
 HDFC etc. In addition many internet sites like
mutualfundsofindia.com , myiris.com etc will be referred

Alpha, beta, and R-squared are components of Modern Portfolio Theory (MPT),
which is a standard financial and academic method for assessing the risk of a
fund, relative to a benchmark. A mutual fund's alpha and beta are calculated in
relation to a market index. Each fund is linked to an appropriate index based on
its investment category.

The parameters that have been taken for the evaluation of funds are as under.

(a) Risk- The difference between the required rate of return on mutual fund
investment and risk free is the risk premium. The sources that determine risk
premium includes market risk, financial risk, credit risk, liquidity risk etc.

(b) Beta - Beta coefficient compares the variability of funds returns to the
market as a whole. It is a relative measure unlike absolute measure. Beta, a
component of Modern Portfolio Theory statistics, is a measure of a fund's
sensitivity to market movements. It measures the relationship between a fund's
excess return over T-bills and the excess return of the benchmark index. Equity

75
funds are compared with the S&P 500 index; bond funds are compared with the
Lehman Brothers Aggregate Bond index.

By definition, the beta of the benchmark (in this case, an index) is 1.00.
Accordingly, a fund with a 1.10 beta has performed 10% better than its
benchmark index--after deducting the T-bill rate--than the index in up markets
and 10% worse in down markets, assuming all other factors remain constant.
Conversely, a beta of 0.85 indicates that the fund has performed 15% worse
than the index in up markets and 15% better in down markets. A low beta does
not imply that the fund has a low level of volatility, though; rather, a low beta
means only that the funds market-related risk is low. A specialty fund that
invests primarily in gold, for example, will often have a low beta, relative to the
S&P 500 index, as its performance is tied more closely to the price of gold and
gold-mining stocks than to the overall stock market. Thus, though the specialty
fund might fluctuate wildly because of rapid changes in gold prices, its beta
relative to the S&P may remain low.

(c) Jensen Alpha – It represents the difference between a mutual fund’s

actual performance that would be expected on the level of risk taken by the
manager. If a fund produces the expected return at the level of risk assumed, the
fund would have an alpha equal to zero. Alpha measures the difference between

76
a fund's actual returns and its expected performance, given its level of risk (as
measured by beta). A positive alpha figure indicates the fund has performed
better than its beta would predict. In contrast, a negative alpha indicates a fund
has underperformed, given the expectations established by the fund's beta.
Some investors see alpha as a measurement of the value added or subtracted by
a fund's manager. There are limitations to alpha's ability to accurately depict a
manager's added or subtracted value. In some cases, a negative alpha can result
from the expenses that are present in the fund figures but are not present in the
figures of the comparison index. Alpha is dependent on the accuracy of beta: If
the investor accepts beta as a conclusive definition of risk, a positive alpha
would be a conclusive indicator of good fund performance.

(d) Standard Deviation - Standard deviation is a statistical measure of

the range of a fund's performance, and is reported as an annual number. When a
fund has a high standard deviation, its range of performance has been very
wide, indicating that there is a greater potential for volatility.

(e) Sharpe Ratio -A measure of a fund's excess return relative to the total
variability of the fund's holdings. The higher the Sharpe ratio, the better the
fund's historical risk-adjusted performance.

(f) Treynor Ratio - A measure of the excess return per unit of risk, where
excess return is defined as the difference between the portfolio's return and the
risk-free rate of return over the same evaluation period and where the unit of
risk is the portfolio's beta.

77
Qualitative Analysis- It is an analysis that gathers information, which is
varied, in-depth and rich. The information sought is about how something is experienced and
not specifically about facts and figures. Information from qualitative research is often more
difficult to interpret, partly because it cannot be ‘measured'. The emphasis is on the quality
and depth of information. In the Qualitative analysis first hand information has been through
personal interviews . Through this person buying behavior can be judged, in case of mutual
funds and what they think about the returns from particular mutual funds. For this, sample
size of 50 has been taken.

78
 Methodology Used

The analysis and interpretation is based upon following methodology.

Of the 20 funds selected, the following parameters have been calculated:

Return
The return will be calculated as under:

Portfolio Return (R it) = NAV t – NAV t-1

NAV t-1

Where R it is the difference between markets indexes of two consecutive days

divided by market index for the preceding day
Market Return (R mt) = M.Ind t – M.Ind t-1
M.Ind t-1

Where R mt is the difference between markets indexes of two consecutive days

divided by market index for the preceding day.

Sharpe ratio –Sharpe performance index gives a single value to be used

for the performance ranking of various funds. Sharpe index measures the risk
premium of the portfolio relative to the total amount of risk in the portfolio. The
risk premium is the difference between the portfolio average rate of return and
the risk less rate of return.

79
Sharpe Index = Portfolio average return ( R p ) – Risk free rate of interest
( R f)
Standard deviation of the portfolio return (σ p )

Treynor’s Performance index –It is expressed as ratio of returns to

systematic risk (beta). Precisely, it is reward to volatility ratio and is defined as:

Treynor Index = Portfolio average return ( R p ) – Risk free rate of

interest ( R f )
Beta coefficient of portfolio ( β )
p

It measures portfolio risk in term of beta that is the weighted average of

individual security betas. The ratio is relevant to investors, for whom the fund
represents only a fraction of their total assets. The higher the ratio better is the
performance.

Jensen’s Measure –It is regression of excess fund return with excess

market return. It is expressed as:

R pt –R f = α + β ( R m –R f ) + e i

Where:

80
Alpha = intercept
Beta = Systematic risk
R m = Market return
R f = Return on risk free asset
R pt = Fund return for time period t

After finding all these parameters for the sample size selected, I will plot all the
funds on the Risk-Return graph.

Benchmark Index For this study, broad 500 shares based BSE 500 has
been used as a proxy for market index. This is because BSE 500 is
comparatively far broad based than BSE Sensex which is constituted of 30
shares only.

81
82
 Mutual funds selected for the study
Large-cap Funds

• DSP-MERILL LYNCH TIGER FUND-GROWTH

• KOTAK OPPORTUNITIES
• BIRLA SUNLIFE EQUITY FUND-GROWTH
• TATA PURE EQUITY FUND-GROWTH

Mid Cap Funds

• SUNDARAM SELECT MIDCAP – GROWTH

• BIRLA MIDCAP FUND – DIVIDEND
• CHOLA MIDCAP FUND – GROWTH
• SHARA MIDCAP FUND –GROWTH

Aggressive Funds

• PRUDENTIAL ICICI EMERGING STAR FUND – GROWTH

• FRANKLIN INDIA PRIMA FUND-GROWTH
• HDFC CAPITAL BUILDERS
• SBI MAGNUM GLOBAL 94-GROWTH

83
Balanced Funds

• KOTAK BALANCE
• SBI MAGNUM BALANCED FUND –GROWTH
• PRUDENTIAL ICICI BALANCED FUND –GROWTH
• JM BALANCED FUND

Thematic Funds

• BIRLA SUNLIFE BUY INDIA FUND-GROWTH

• UTI THEMATIC BASIC INDUSTRIES FUND-GROWTH
• KOTAK MNC FUND
• BIRLA MNC FUND-GROWTH

84
 Returns given by the funds in one year (10th April 05 – 10th April 06)

Funds NAV NAV Return

(Last (This (%)
year ) Year)
• DSP-MERILL LYNCH TIGER FUND- 10 19.8 98
GROWTH

• KOTAK OPPORTUNITIES 12.89 26.1 102.4

BIRLA SUNLIFE EQUITY FUND-GROWTH 35.18 68.6 95

TATA PURE EQUITY FUND-GROWTH
SUNDARAM SELECT MID CAP – GROWTH
• KOTAK MID CAP-GROWTH 10.20 20.51 101

BIRLA MID CAP FUND – DIVIDEND 13.75 24.75 80

• CHOLA MIDCAP FUND – GROWTH

• SHARA MIDCAP FUND –GROWTH 10.21 18.33 79.4

• PRUDENTIAL ICICI EMERGING STAR FUND 12.84 25.7 100.1

– GROWTH

FRANKLIN INDIA PRIMA FUND- GROWTH 117.34 203 73

HDFC CAPITAL BUILDERS 36.6 62.9 71.8
SBI MAGNUM GLOBAL FUND 94- GROWTH 37.89 37.89 113.06

KOTAK BALANCE-GROWTH 14 23.9 70.6

SBI MAGNUM BALANCED FUND –GROWTH 18.70 32.7 74.83
PRUDENTIAL ICICI BALANCED FUND – 19.88 31.75 59.7
GROWTH
JM BALANCED FUND-GROWTH 12.97 20.75 59.9
ESCORTS BALANCED FUND 26.42 44 66.5
BIRLA SUNLIFE BUY INDIA FUND- 13.81 25.83 86.93
GROWTH
UTI THEMATIC BASIC INDUSTRIES FUND- 12.5 24.98 99.8
GROWTH
KOTAK MNC FUND 16.31 28.2 72.9

85
BIRLA MNC FUND-GROWTH 68.33 124.5 82.2

86
LARGE CAP

DSP-MERILL LYNCH TIGER FUND-GROWTH

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 13.71
2 31/05/05 14.52 5.90809628 -0.75390372 0.568370819
3 30/06/05 14.58 0.41322314 -6.24877686 39.04721224
4 31/07/05 16.36 12.2085048 5.546504801 30.76371551
5 31/08/05 17.97 9.841075795 3.179075795 10.10652291
6 30/09/05 19.45 8.235948804 1.573948804 2.477314836
7 31/10/05 17.81 -8.431876607 -15.09387661 227.825111
8 30/11/05 20.16 13.19483436 6.532834363 42.67792481
9 31/12/05 21.5 6.646825397 -0.015174603 0.000230269
10 31/01/06 23.62 9.860465116 3.198465116 10.2301791
11 28/02/06 24.46 3.556308213 -3.105691787 9.645321473
12 31/03/06 27.36 11.85609158 5.194091578 26.97858732
6.662681535 36.39277185

Sigma =6.03

KOTAK OPPORTUNITIES
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 13.68
2 31/05/05 14.41 5.33625731 -0.79774269 0.6363934
3 30/06/05 14.68 1.87369882 -4.26030118 18.15016614
4 31/07/05 16.65 13.41961853 7.285618529 53.08023734
5 31/08/05 17.48 4.984984985 -1.149015015 1.320235505
6 30/09/05 17.95 2.688787185 -3.445212815 11.86949134
7 31/10/05 16.54 -7.855153203 -13.9891532 195.6964073
8 30/11/05 18.6 12.45465538 6.320655381 39.95068444
9 31/12/05 20.45 9.946236559 3.812236559 14.53314758
10 31/01/06 22.02 7.677261614 1.543261614 2.381656408
11 28/02/06 23.22 5.449591281 -0.684408719 0.468415295
12 31/03/06 25.89 11.49870801 5.36470801 28.78009204
6.13405877 33.3515388

Sigma =5.77

87
BIRLA SUNLIFE EQUITY FUND-GROWTH
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 81.75
2 31/05/05 90.37 10.54434251 4.346342508 18.89069319
3 30/06/05 92.72 2.600420494 -3.597579506 12.94257831
4 31/07/05 100.7 8.606557377 2.408557377 5.801148639
5 31/08/05 108.2 7.447864945 1.249864945 1.562162382
6 30/09/05 117.04 8.170055453 1.972055453 3.889002709
7 31/10/05 106.09 -9.355775803 -15.5537758 241.9199417
8 30/11/05 119.73 12.8570082 6.659008201 44.34239022
9 31/12/05 126.52 5.671093293 -0.526906707 0.277630678
10 31/01/06 134.98 6.686689851 0.488689851 0.238817771
11 28/02/06 139.49 3.341235739 -2.856764261 8.161102045
12 31/03/06 155.69 11.61373575 5.415735752 29.33019373
6.198475255 33.39596922

Sigma =5.78

TATA PURE EQUITY FUND-GROWTH

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 30.19
2 31/05/05 32.41 7.353428288 1.550428288 2.403827875
3 30/06/05 32.87 1.419315026 -4.383684974 19.21669395
4 31/07/05 35.2 7.088530575 1.285530575 1.652588859
5 31/08/05 37.75 7.244318182 1.441318182 2.077398101
6 30/09/05 40.19 6.463576159 0.660576159 0.436360862
7 31/10/05 36.84 -8.335406818 -14.13840682 199.8945473
8 30/11/05 41.24 11.94353963 6.140539631 37.70622696
9 31/12/05 43.22 4.801163919 -1.001836081 1.003675534
10 31/01/06 47.6 10.13419713 4.331197131 18.75926859
11 28/02/06 49.56 4.117647059 -1.685352941 2.840414536
12 31/03/06 55.31 11.60209847 5.799098467 33.62954302
5.802946147 29.05641324

Sigma =5.39

88
 Ris

105.00%

100.00%

95.00%
Return

0.45
90.00%

0.4

85.00%
0.35

0.3
89
80.00%
 Mid Cap Funds

SUNDRAM SELECT MIDCAP-GROWTH

S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 38.59
2 31/05/05 41.16 6.659756414 0.210756414 0.044418266
3 30/06/05 41.07 -0.218658892 -6.667658892 44.4576751
4 31/07/05 46.04 12.10129048 5.65229048 31.94838767
5 31/08/05 50.22 9.079061685 2.630061685 6.917224469
6 30/09/05 51.66 2.867383513 -3.581616487 12.82797666
7 31/10/05 47.9 -7.278358498 -13.7273585 188.4403713
8 30/11/05 52.37 9.331941545 2.882941545 8.311351951
9 31/12/05 57.57 9.929348864 3.480348864 12.11282821
10 31/01/06 62.26 8.146604134 1.697604134 2.881859796
11 28/02/06 66.02 6.039190491 -0.409809509 0.167943833
12 31/03/06 75.45 14.28355044 7.834550439 61.38018059
6.449191834 33.59001981

Sigma =5.79

BIRLA MIDCAP FUND-GROWTH

S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 32.43
2 31/05/05 34.36 5.951279679 0.463279679 0.214628061
3 30/06/05 33.8 -1.629802095 -7.117802095 50.66310667
4 31/07/05 37.55 11.09467456 5.606674556 31.43479958
5 31/08/05 41.15 9.587217044 4.099217044 16.80358037
6 30/09/05 42.69 3.742405832 -1.745594168 3.047098998
7 31/10/05 39.79 -6.793159991 -12.28115999 150.8268907
8 30/11/05 44.35 11.46016587 5.972165871 35.66676519
9 31/12/05 47.68 7.508455468 2.020455468 4.082240298
10 31/01/06 50.58 6.082214765 0.594214765 0.353091187
11 28/02/06 50.57 -0.01977066 -5.50777066 30.33553765
12 31/03/06 57.34 13.38738382 7.899383824 62.40026481
5.488278572 35.07527305

Sigma =5.92

90
CHOLA MIDCAP FUND-GROWTH
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 14.97
2 31/05/05 15.66 4.609218437 -0.107581563 0.011573793
3 30/06/05 15.72 0.383141762 -4.333658238 18.78059372
4 31/07/05 17.09 8.715012723 3.998212723 15.98570498
5 31/08/05 18.75 9.713282621 4.996482621 24.96483859
6 30/09/05 19.59 4.48 -0.2368 0.05607424
7 31/10/05 18.15 -7.350689127 -12.06748913 145.6242938
8 30/11/05 19.9 9.641873278 4.925073278 24.2563468
9 31/12/05 21.31 7.085427136 2.368627136 5.610394508
10 31/01/06 22.14 3.894885031 -0.821914969 0.675544217
11 28/02/06 22.44 1.35501355 -3.36178645 11.30160813
12 31/03/06 24.54 9.35828877 4.64148877 21.543418
4.716859471 24.43730826

Sigma =4.94

SHARA MIDCAP FUND –GROWTH

91
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 10.29
2 31/05/05 10.85 5.442176871 0.309176871 0.095590337
3 30/06/05 10.95 0.921658986 -4.211341014 17.73539313
4 31/07/05 11.85 8.219178082 3.086178082 9.524495155
5 31/08/05 13.5 13.92405063 8.791050633 77.28257123
6 30/09/05 14.02 3.851851852 -1.281148148 1.641340578
7 31/10/05 12.94 -7.703281027 -12.83628103 164.7701106
8 30/11/05 13.97 7.959814529 2.826814529 7.990880379
9 31/12/05 14.93 6.871868289 1.738868289 3.023662927
10 31/01/06 15.71 5.224380442 0.091380442 0.008350385
11 28/02/06 15.84 0.827498409 -4.305501591 18.53734395
12 31/03/06 17.57 10.92171717 5.788717172 33.50924649
5.132810385 30.3744532

Sigma =5.51

1.2

0.8
Return

0.6 92
 0.6

0.5

Aggressive Funds
PRUDENTIAL ICICI EMERGING STAR FUND – GROWTH
0.4
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 12.18
2 31/05/05 13.47 10.591133 3.638533005 13.23892243
3 30/06/05 13.51 0.296956199 -6.655643801 44.29759441
4 31/07/05 15.21 12.58327165 5.630671651 31.70446324
5 31/08/05 17.73 16.56804734 9.615447337 92.4568275
Alpha

6 30/09/05 18.38 3.666102651 -3.286497349 10.80106483

7 31/10/05 16.3 -11.31664853 -18.26924853 333.7654419
8
9
0.3
30/11/05
31/12/05
18.68
20.25
14.60122699
8.404710921
7.648626994
1.452110921
58.50149489
2.108626126
10 31/01/06 21.76 7.456790123 0.504190123 0.254207681
11 28/02/06 22.04 1.286764706 -5.665835294 32.10168958
12 31/03/06 24.76 12.34119782 5.388597822 29.03698649
6.952686625 58.93339264

Sigma =7.67

0.2

93

0.1
FRANKLIN INDIA PRIMA FUND-GROWTH

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 118.08
2 31/05/05 124.54 5.470867209 0.573167209 0.328520649
3 30/06/05 122.89 -1.324875542 -6.222575542 38.72044638
4 31/07/05 136.37 10.96915941 6.071459411 36.86261938
5 31/08/05 154.47 13.27271394 8.37501394 70.1408585
6 30/09/05 158.65 2.70602706 -2.19167294 4.803430275
7 31/10/05 149.4 -5.830444374 -10.72814437 115.0930817
8 30/11/05 164.69 10.23427041 5.336570415 28.47898379
9 31/12/05 174.03 5.671261157 0.773561157 0.598396864
10 31/01/06 180.17 3.528127334 -1.369572666 1.875729286
11 28/02/06 182.34 1.20441805 -3.69328195 13.64033157
12 31/03/06 196.88 7.974114292 3.076414292 9.464324896
4.897785359 29.0915203

Sigma =5.39

HDFC CAPITAL BUILDERS

S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 35.93
2 31/05/05 37.66 4.814917896 -0.125082104 0.015645533
3 30/06/05 37.47 -0.504514073 -5.444514073 29.64273349
4 31/07/05 41.82 11.60928743 6.66928743 44.47939482
5 31/08/05 45.95 9.87565758 4.93565758 24.36071575
6 30/09/05 48.85 6.311207835 1.371207835 1.880210926
7 31/10/05 44.94 -8.004094166 -12.94409417 167.5495738
8 30/11/05 49.43 9.991099243 5.051099243 25.51360357
9 31/12/05 51.96 5.118349181 0.178349181 0.03180843
10 31/01/06 54.1 4.118552733 -0.821447267 0.674775613
11 28/02/06 55.29 2.199630314 -2.740369686 7.509626015
12 31/03/06 60.17 8.826189184 3.886189184 15.10246638
4.941480287 28.79641403

Sigma =5.37

SBI MAGNUM GLOBAL 94-GROWTH

94
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 17.8
2 31/05/05 19.34 8.651685393 2.065085393 4.264577681
3 30/06/05 19.07 -1.396070321 -7.982670321 63.72302545
4 31/07/05 21.11 10.69743052 4.110830519 16.89892756
5 31/08/05 24.03 13.83230696 7.245706964 52.5002694
6 30/09/05 25.74 7.116104869 0.529504869 0.280375406
7 31/10/05 23.79 -7.575757576 -14.16235758 200.5723721
8 30/11/05 26.25 10.34047919 3.753879193 14.091609
9 31/12/05 28.27 7.695238095 1.108638095 1.229078426
10 31/01/06 30.66 8.454191723 1.867591723 3.487898843
11 28/02/06 31.64 3.196347032 -3.390252968 11.49381519
12 31/03/06 35.26 11.44121365 4.854613654 23.56727373
6.586651777 35.64629298

Sigma =5.97

1.2

0.8

95
s
 0.6

0.5

Balanced Funds
0.4
KOTAK BALANCE
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 17.3
2 31/05/05 17.42 0.693641618 -2.172358382 4.719140938
3 30/06/05 18.08 3.788748565 0.922748565 0.851464914
Alpha

4 31/07/05 19.66 8.738938053 5.872938053 34.49140138

5 31/08/05 20.6 4.78128179 1.91528179 3.668304337
6
7
0.3
30/09/05
31/10/05
21.3
20.05
3.398058252
-5.868544601
0.532058252
-8.734544601
0.283085984
76.29226939
8 30/11/05 21.44 6.932668329 4.066668329 16.5377913
9 31/12/05 21.79 1.632462687 -1.233537313 1.521614304
10 31/01/06 23.45 7.618173474 4.752173474 22.58315273
11 28/02/06 24.85 5.970149254 3.104149254 9.635742589
12 31/03/06 23.32 -6.15694165 -9.02294165 81.41347602
2.866239616 22.90885853

0.2 Sigma =4.786

96
SBI MAGNUM BALANCED FUND –GROWTH

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 18.43
2 31/05/05 19.81 7.487791644 2.448091644 5.993152698
3 30/06/05 20.36 2.776375568 -2.263324432 5.122637485
4 31/07/05 22.1 8.546168959 3.506468959 12.29532456
5 31/08/05 23.66 7.058823529 2.019123529 4.076859827
6 30/09/05 24.57 3.846153846 -1.193546154 1.424552421
7 31/10/05 23.76 -3.296703297 -8.336403297 69.49561993
8 30/11/05 25.64 7.912457912 2.872757912 8.252738024
9 31/12/05 26.41 3.003120125 -2.036579875 4.147657588
10 31/01/06 27.97 5.906853465 0.867153465 0.751955131
11 28/02/06 28.55 2.07365034 -2.96604966 8.797450588
12 31/03/06 31.44 10.12259194 5.082891944 25.83579051
5.039753094 13.29033989

Sigma =3.64

PRUDENTIAL ICICI BALANCED FUND –GROWTH

S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 19.25
2 31/05/05 20.33 5.61038961 1.21488961 1.475956765
3 30/06/05 20.75 2.065912445 -2.329587555 5.426978178
4 31/07/05 22.37 7.807228916 3.411728916 11.63989419
5 31/08/05 24.02 7.375949933 2.980449933 8.883081803
6 30/09/05 25.04 4.246461282 -0.149038718 0.022212539
7 31/10/05 23.68 -5.431309904 -9.826809904 96.56619289
8 30/11/05 25.5 7.685810811 3.290310811 10.82614523
9 31/12/05 26.77 4.980392157 0.584892157 0.342098835
10 31/01/06 28.51 6.499813224 2.104313224 4.428134144
11 28/02/06 28.37 -0.49105577 -4.88655577 23.87842729
12 31/03/06 30.64 8.00140994 3.60590994 13.0025865
4.395545695 16.04470076

Sigma =4

JM BALANCED FUND

97
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 12.71
2 31/05/05 13.19 3.776553895 -0.534446105 0.28563264
3 30/06/05 13.43 1.819560273 -2.491439727 6.207271914
4 31/07/05 13.97 4.020848846 -0.290151154 0.084187692
5 31/08/05 14.82 6.084466714 1.773466714 3.145184187
6 30/09/05 15.48 4.453441296 0.142441296 0.020289523
7 31/10/05 14.4 -6.976744186 -11.28774419 127.4131688
8 30/11/05 15.87 10.20833333 5.897333333 34.77854044
9 31/12/05 16.53 4.15879017 -0.15220983 0.023167832
10 31/01/06 17.63 6.654567453 2.343567453 5.492308407
11 28/02/06 18.42 4.480998298 0.169998298 0.028899421
12 31/03/06 20.03 8.740499457 4.429499457 19.62046544
4.311028686 17.91810148

Sigma =4.23

98
 Ri

0.8

0.7

0.6

0.5

0
Beta

0.4 1.08

-0.05
0.3

-0.1
0.2

-0.15
0.1

-0.2
99
0
a
Thematic Funds
PRUDENTIAL ICICI FMCG-GROWTH
S.No Date NAV Returns Deviation (D) D Square
1 30/04/05 18.85
2 31/05/05 20.85 10.61007958 5.031579576 2.109732752
3 30/06/05 21.48 3.021582734 -2.556917266 6.537825906
4 31/07/05 24.21 12.70949721 7.130997207 50.85112116
5 31/08/05 27.87 15.11771995 9.53921995 90.99671726
6 30/09/05 29.72 6.637961966 1.059461966 1.122459658
7 31/10/05 27.04 -9.017496635 -14.59599664 213.0431178
8 30/11/05 29.96 10.79881657 5.220316568 27.25170507
9 31/12/05 32.48 8.411214953 2.832714953 8.024274006
10 31/01/06 34.11 5.018472906 -0.560027094 0.313630346
11 28/02/06 35.43 3.869832894 -1.708667106 2.919543281
12 31/03/06 39.46 11.37454135 5.796041349 33.59409532
7.141111224 39.70583841

Sigma =6.30

UTI THEMATIC BASIC INDUSTRIES FUND-GROWTH

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 12.3
2 31/05/05 12.92 5.040650407 -1.191549593 1.419790434
3 30/06/05 13.13 1.625386997 -4.606813003 21.22272605
4 31/07/05 14.14 7.692307692 1.460107692 2.131914473
5 31/08/05 15.93 12.65912306 6.426923055 41.30533996
6 30/09/05 16.54 3.829252982 -2.402947018 5.774154372
7 31/10/05 14.94 -9.673518742 -15.90571874 252.9918887
8 30/11/05 16.72 11.91432396 5.682123963 32.28653273
9 31/12/05 17.68 5.741626794 -0.490573206 0.24066207
10 31/01/06 19.32 9.2760181 3.0438181 9.264828623
11 28/02/06 20.03 3.67494824 -2.55725176 6.539536563
12 31/03/06 23.39 16.77483774 10.54263774 111.1472106
6.232268839 44.02950769

Sigma =6.635

100
KOTAK MNC FUND

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 16.849
2 31/05/05 18.081 7.312006647 2.542006647 6.461797795
3 30/06/05 17.798 -1.565178917 -6.335178917 40.13449191
4 31/07/05 19.11 7.371614788 2.601614788 6.768399506
5 31/08/05 20.67 8.163265306 3.393265306 11.51424944
6 30/09/05 20.521 -0.720851476 -5.490851476 30.14944993
7 31/10/05 19.31 -5.901271868 -10.67127187 113.8760433
8 30/11/05 21.55 11.60020715 6.830207147 46.65172966
9 31/12/05 23.24 7.842227378 3.072227378 9.438581063
10 31/01/06 24.675 6.174698795 1.404698795 1.973178705
11 28/02/06 25.51 3.383991895 -1.386008105 1.921018468
12 31/03/06 27.758 8.812230498 4.042230498 16.3396274
4.77026729 25.92986974

Sigma =5.09

BIRLA MNC FUND-GROWTH

S.No Date NAV Returns Deviation (D) D Square

1 30/04/05 67.86
2 31/05/05 73.1 7.721780136 2.239980136 5.017511008
3 30/06/05 73.88 1.067031464 -4.414768536 19.49018123
4 31/07/05 79.23 7.241472658 1.759672658 3.096447865
5 31/08/05 82.73 4.417518617 -1.064281383 1.132694863
6 30/09/05 87.34 5.572343769 0.090543769 0.008198174
7 31/10/05 82.05 -6.056789558 -11.53858956 133.139049
8 30/11/05 93.97 14.527727 9.045926996 81.82879521
9 31/12/05 98.07 4.363094605 -1.118705395 1.251501762
10 31/01/06 105.13 7.198939533 1.717139533 2.948568176
11 28/02/06 108.13 2.853609816 -2.628190184 6.907383641
12 31/03/06 120.45 11.39369278 5.911892777 34.95047621
5.481856437 26.34280065

Sigma =5.13

101
 R

1.2

0.8

0.7
Returns

0.6
0.6

0.4
0.5
102
DATA ANLAYIS OF PERFROMANCE OF VARIOUS MUTUAL
FUNDS ON THE BASIS OF RISK V/S RETURN

Large Cap Funds

If we look at the graph of Risk Vs Return in case of large cap funds, then DSP
Merrill Lync tiger fund has given maximum returns with minimum Beta. On the
other hand Tata pure Equity fund has given the minimum returns with high risk
involved in the portfolio. Whereas opportunities and Birla Sunlife equity funds
have given returns as per the risk in their portfolios

Mid Cap Funds

Sundram select Mid Cap fund has given maximum returns with low risk
(Beta=0.6). Chola Mid Cap and Sahara Mid Cap Funds have almost same Beta
values but Sahara Mid Cap funds have given better returns than Chola Mid Cap
Fund. Birla Mid Cap fund has given returns proportional to the Beta of its
portfolio.

Aggressive Funds

If we look at the graph of Aggressive funds then we find some surprising

results, HDFC Capital Builders have given proportionate returns as compared to
the Risk evolved in its portfolio ( Beta = 0.58 ). On the other hand SBI Magnum

103
Global 94 and Prudential ICICI emerging star fund have almost same risk in
their portfolio but Prudential ICICI emerging star fund has given better returns
than SBI Magnum Global 94. Franklin India Prima fund has given better returns
than HDFC Capital Builders.

Balanced Funds

Prudential ICICI Balanced Fund has high risk but has given lowest return if
compared to other funds in its category. Kotak Balance has given less return
than SBI Magnum Balanced Fund with high risk. JM Balanced Fund has given
better returns than Prudential ICICI Balanced Fund even with less risk in its
portfolio as compared to that in portfolio of ICICI Balanced Fund.

Thematic Funds

Kotak MNC Fund has given lowest returns among the Funds selected in its
category with Beta of 0.66. Also Birla MNC fund has given fewer returns as
compared to Prudential ICICI FMCG Funds in spite of having more risky
portfolio. Returns given by UTI Thematic Basic Industries fund is good as it
has more risk in its portfolio as compared to other funds in this category.

104
 Overall Risk Vs Return Analysis of the Funds selected for the
study

S.No Fund Name Last year Beta

Return

1 DSP-MERILL LYNCH TIGER FUND-GROWTH 99.56% 0.9

2 KOTAK OPPORTUNITIES 0.8925 0.99
3 BIRLA SUNLIFE EQUITY FUND-GROWTH 0.9044 1.04
4 TATA PURE EQUITY FUND-GROWTH 0.832 1.23
5 SUNDRAM SELECT MIDCAP-GROWTH 0.955 0.6
6 BIRLA MIDCAP FUND-GROWTH 0.7681 0.72
7 CHOLA MIDCAP FUND-GROWTH 0.6392 0.8
8 SAHARA MIDCAP FUND –GROWTH 0.7074 0.8
PRUDENTIAL ICICI EMERGING STAR FUND –
9 GROWTH 1.0328 0.8
10 FRANKLIN INDIA PRIMA FUND-GROWTH 0.667 0.67
11 HDFC CAPITAL BUILDERS 0.6746 0.58
12 SBI MAGNUM GLOBAL 94-GROWTH 0.9808 0.8
13 KOTAK BALANCE 0.71 1.23
14 SBI MAGNUM BALANCED FUND –GROWTH 0.75 1.15
15 PRUDENTIAL ICICI BALANCED FUND –GROWTH 0.5916 1.33
16 JM BALANCED FUND 0.633 1.08
17 PRUDENTIAL ICICI FMCG FUND- GROWTH 1.093 0.74
18 UTI THEMATIC BASIC INDUSTRIES FUND-GROWTH 0.9016 0.91
19 KOTAK MNC FUND 0.685 0.66
20 BIRLA MNC FUND-GROWTH 0.775 0.72

If we study the above table we see that only two funds have given returns more
than 100% and seventeen out of twenty funds have given returns more than the
market return which is approximately 65.2 %. Only three funds Chola mid cap
fund, JM Balanced Fund and Prudential ICICI Balanced Fund has given returns
less than the market returns.

105
S.No of Treynor's
Fund Last year Standard Beta Sharpe Index Index Jensen's Alpha
Return deviation β ( Sr ) ( Tn ) α

1 99.56% 6.03 0.9 0.151840796 1.017333333 0.40116

2 0.8925 5.77 0.99 0.140814558 0.820707071 0.246616
3 0.9044 5.78 1.04 0.142629758 0.792692308 0.229936
4 0.832 5.39 1.23 0.139517625 0.611382114 0.048932
5 0.955 5.79 0.6 0.151122625 1.458333333 0.53204
6 0.7681 5.92 0.72 0.116233108 0.955694444 0.276548
7 0.6392 4.94 0.8 0.113198381 0.699 0.10192
8 0.7074 5.51 0.8 0.113865699 0.78425 0.17012
9 1.0328 7.67 0.8 0.12422425 1.191 0.49552
10 0.667 5.39 0.67 0.10890538 0.876119403 0.204028
11 0.6746 5.37 0.58 0.110726257 1.025172414 0.263072
12 0.9808 5.97 0.8 0.150887772 1.126 0.44352
13 0.71 4.78 1.23 0.131799163 0.512195122 -0.073068
14 0.75 3.64 1.15 0.184065934 0.582608696 0.01266
15 0.5916 4.01 1.33 0.127581047 0.384661654 -0.248628
16 0.633 4.23 1.08 0.130732861 0.512037037 -0.064328
17 1.093 6.3 0.74 0.160793651 1.368918919 0.590016
18 0.9016 6.63 0.91 0.123921569 0.902857143 0.301444
19 0.685 5.09 0.66 0.118860511 0.916666667 0.227744
20 0.775 5.13 0.72 0.135477583 0.965277778 0.283448

All the parameters for different funds have been calculated and shown in the
above table and a graph between risk and return for all the funds have been
made as shown on the next page. From the above table we note that the alpha

106
 values for most of the balanced funds is negative. This shows that these funds
have under performed, given the expectations established by the fund's beta.

Bet

1.2

If we look at the above graph, it is clear that many funds have given almost
0.8
same returns even with different amount of risks in their portfolio. Two funds
of ICICI (Prudential ICICI Emerging Star Fund and Prudential ICICI FMCG
Fund) have given more than 100% returns even with very less beta whereas one
fund of ICICI (Prudential ICICI Balanced Fund- Growth ) has given very less
returns as compared to the beta of its portfolio.
Return

0.6

107
 QUALITATIVE ANALYSIS

Consumer behavior is the study of how people buy, what they buy, when they
buy and why they buy. It is a subcategory of marketing that blends elements
from psychology, sociology, socio psychology, anthropology and economics. It
attempts to understand the buyer decision making process, both individually
and in groups. It studies characteristics of individual consumers such as
demographics, psychographics, and behavioral variables in an attempt to
understand people's wants. It also tries to assess influences on the consumer
from groups such as family, friends, reference groups, and society in general.

Detailed Model of Factors Influencing behavior

108
Cultural Factors

Cultural factors exert the broadest and deepest influence on consumer behavior.
In general, the marketer’s distinguish three different cultural factors:
Culture
Subculture
Social class (this is a social factor, too)

Culture
Culture (or civilization) is the highest entity of personal identification with the
society. These entities were in the past the nations and could be in the future the
civilizations (Western, Muslim, Hindi, Chinese).
Humane behavior is largely learned. The growing child acquires a set of values,
perceptions, preferences and behaviors through a process of socialization
involving.
the family and other education institutions.

Subculture
Each culture consists of smaller subcultures that provide more specific
identification and socialization for its members.

We can distinguish several subcultures in the different countries.

Not only in the India, but also in European countries we can distinguish:
• National groups (immigrants, Europeans and non-Europeans)
• Religious groups (Catholics, Protestants, Orthodoxs, Muslims, Jews)

109
 • Geographical areas (Regions, regional identity in Germany and in other
European countries)

Social Class
“Social classes are relatively homogeneous and enduring divisions in a society,
which are hierarchically ordered and whose members share similar values
interests and behavior”. Social classes show distinct product and brand
preferences in such areas as clothing, home furnishing, leisure activities,
automobiles, and food and beverages.

Social Factors

The consumer’s behavior is also influenced by (other) social factors as

• Reference groups
• Family
• Social rules and statuses

Reference Groups

“A person’s reference groups consist of all social groups that have a direct (face
to face) or indirect influence on the person’s attitudes or behavior”

We distinguish different reference groups:

Membership groups are the groups, to which the person belongs,

- Family, friends, neighbors, coworkers (primary groups)

- Religious, political, professional groups (secondary groups)

Non-membership groups are the groups to which a person not belongs, but
which influence the attitudes and behavior of the person.

110
- Aspirational groups are groups to which a person would like to belong.
- Dissociative groups are groups whose values or behavior are rejected.

Family

Family members constitute the most influential primary reference group

shaping the buyer’s behavior.

We distinguish between two types of families in the consumer’s life:

- the family of orientation (family of origin) consists of one’s parents.

From parents a person acquires an orientation towards religion, ethics, politic

and economic behavior and also food patterns.
- the family of procreation (own family) consists of one’s spouse and children.

This family is the most important consumer-buying organization in society.

Roles and Statuses
A person participates in many groups throughout life:
- Family, clubs, organizations.
The person’s position in each group can be defined in terms of role and
status.

A role consists of the activities that a person is expected to perform according

to the persons around him or her.

Each role carries a status reflecting the esteem accorded to it by society.

Roles and statuses are at the same time dynamic and static phenomena:
- They change with the economic and social progress (land owner,
entrepreneur)
- People with higher status like to remain their position

111
People choose products that communicate their role and status in society.
But status symbols vary for social classes and also geographically.

Personal Factors
A buyer’s decisions are also strongly influenced by personal characteristics, so
the
- Age and Life-cycle Stage,
- Occupation or Profession,
- Economic Situation,
- Lifestyle.

Age and Life-cycle Stage

People buy different goods and services over their lifetime. They eat baby food
in the early years, most foods in the growing and maturing years, and special
diets in the later years.

Occupation
A person’s consumption pattern is also influenced by his or her occupation. A
white-collar worker will buy other clothing and food as a blue-collar worker.

Economic circumstances
People economic circumstances consist of their
- Spendable income
- Savings and assets
- Borrowing power
- Attitude toward spending and saving.

112
Lifestyle
People coming from the same subculture, social class, occupation but may lead
different lifestyles.

A person’s lifestyle is the person’s pattern of living in the world as expressed

in the person’s activities, interests, and opinions. Lifestyle portrays the
“whole person” interacting with his or her environment. Personality and Self-
concept lead to the Psychological factors. Personality means the person’s
distinguishing psychological characteristics. Self concept (or self image)
means our image of ourselves.

113
114
 FINDINGS

In my study i have concentrated on two major issues one deals with the
performance of various mutual funds and the other one is risk in various method
s of investing in mutual funds. findings of my study are follows :

IN RESPECT TO PERFORMANCE :

Large Cap Funds

If we look at the graph of Risk Vs Return in case of large cap funds, then DSP
Merrill Lync tiger fund has given maximum returns with minimum Beta. On the
other hand Tata pure Equity fund has given the minimum returns with high risk
involved in the portfolio. Whereas opportunities and Birla Sunlife equity funds
have given returns as per the risk in their portfolios

Mid Cap Funds

Sundram select Mid Cap fund has given maximum returns with low risk
(Beta=0.6). Chola Mid Cap and Sahara Mid Cap Funds have almost same Beta
values but Sahara Mid Cap funds have given better returns than Chola Mid Cap
Fund. Birla Mid Cap fund has given returns proportional to the Beta of its
portfolio.

115
Aggressive Funds

If we look at the graph of Aggressive funds then we find some surprising

results, HDFC Capital Builders have given proportionate returns as compared to
the Risk evolved in its portfolio ( Beta = 0.58 ). On the other hand SBI Magnum
Global 94 and Prudential ICICI emerging star fund have almost same risk in
their portfolio but Prudential ICICI emerging star fund has given better returns
than SBI Magnum Global 94. Franklin India Prima fund has given better returns
than HDFC Capital Builders.

Balanced Funds

Prudential ICICI Balanced Fund has high risk but has given lowest return if
compared to other funds in its category. Kotak Balance has given less return
than SBI Magnum Balanced Fund with high risk. JM Balanced Fund has given
better returns than Prudential ICICI Balanced Fund even with less risk in its
portfolio as compared to that in portfolio of ICICI Balanced Fund.

Thematic Funds

Kotak MNC Fund has given lowest returns among the Funds selected in its
category with Beta of 0.66. Also Birla MNC fund has given fewer returns as
compared to Prudential ICICI FMCG Funds in spite of having more risky
portfolio. Returns given by UTI Thematic Basic Industries fund is good as it
has more risk in its portfolio as compared to other funds in this category.

116
WITH RESPECT TO METHOD OF INVESTING :

In some of the above examples we see that an investor who has invested lump
sum gains much better that the one who invests through SIP. This is due to the
fact that the former invested at the time when the unit price of the fund was low.
Though the market fluctuated and the price of the unit fell poorly, mostly we
saw a rise in the prices. When spread the investment over a period of 3 years
ultimately the price at the time of selling was much higher which gave the lump
sum investor an upper hand. Still we cannot completely go against the SIP on
this basis. Because SIP is the best option for small investors and those who
don’t want to take any chances or risks. Moreover, it inculcates the saving
tendencies among the people who otherwise never think of investing for the
future. Besides this it usually gives them an advantage of the rising market
trends and economic booms which they would otherwise miss if they had not
thought of investing in the mutual funds. This is not that a SIP investor is
always a loser to a lump sum investor. Nobody can fully predict the market
trends. Sometimes it rises steadily, at other times it falls and they rise,
sometimes it rises and then falls. Think of a scenario when the at the time of
initiation of a SIP the market price of the unit is low, then it rises for a few
months and then falls for a very long time and suddenly rises. In that case the
SIP investor can gain a lot more than the lump sum investor. I am neither in
favour of nor totally against lump sum or SIP. Instead, I would like to
emphasize on the fact that gain or loss to a large extend depends on the market
trend and so many other factors. Right timing is the key to getting success in the
money market. It is true also for a SIP investor.

117
118
119
 RECOMMENDATIONS

Following are some recommendations to reduce the losses through

investments in mutual funds .

• Mutual funds are not guaranteed or insured by any government

agency — even if you buy through a bank and the fund carries the
bank's name. You can lose money investing in mutual funds.

• Past performance is not a reliable indicator of future performance.

So don't be dazzled by last year's high returns. But past performance
can help you assess a fund's volatility over time.

As per the National Stock Exchange, the Mid-Cap Universe is defined as

stocks having average six months market capitalisation between Rs 75
crore and Rs 750 crore such as Amtek Auto, Federal Bank, Allahabad
Bank, BEML etc.

Market capitalisation means the number of shares issued multiplied by

their market value. Generally these are mid sized businesses.

And hence display high rates of growth in a growing economy. But being
mid-sized in nature, they are very susceptible to changes in the economy
and could suffer more in a bad period than a large company. Hence, mid
cap stocks are good to have in a portfolio, but in a limited proportion, as
compared to large cap stocks. In times of panic or crises, we have seen mid
caps falling much more than large caps.

Stock prices never grow in a straight line, unlike deposits. Their values
keep swinging based on perceptions (of buyers and sellers) of the
company’s business prospects.

This nature of “swinging” is called volatility. Moreover, the swinging does

not occur in a set pattern. So the swinging nature combined with an

120
irregular pattern renders stock prices unpredictable in the short run.

Greater the volatility, lesser the predictability. High volatility also implies
that you could have purchased the stock at an abnormal high or an
abnormal low.

Buying low is beneficial whereas buying high is not! The chart above shows
the NAVs of two funds, one more volatile than the other.

The blue line fund is more volatile than the black line. You will observe
that the blue line dips lower and rises further, too. But if you are the sort
with a weak stomach, you will lose sleep over the steep falls. Hence my
advise that conservative investors have more of less volatile funds. But the
aggressive investor can opt for higher volatility, as long as it returns him
more eventually, like in the chart below. Mid caps are more volatile than
large caps.

121
122
Limitations of the study

The study is limited to some particular Mutual funds and can’t be generalized to
other funds. The study is limited to a particular year of returns and can’t be
generalized for future returns Funds which have been selected under a particular
category is based on the following assumptions.

1) Funds which have given maximum returns in last one year.

2) No two funds from a same company have been selected under one
category.
3) A fund selected is at least one year old.
4) Only open ended schemes have been taken for analysis.
5) Minor change in the portfolio of a fund is not taken into consideration.
6) There is very less time to complete the study.

123
124
References

• www.amfiindia.com
• NAVIndia.com
• Bloomberg.com
• Investopedia.com
• www.bseindia.com
• www.kotak.com
• www.kotakmutual.com
• www.mutualfundsindia.com
• www.myiris.com
• www.nseindia.com
• Kotak’s Asset Management Company (AMC )
• NSE course for AMFI
• Moneycontrol.com
• Nav.com

125