COMPARATIVES STUDY OF PERFORMANCE

OF MUTUAL FUNDS COMPANIES IN INDIA

Prepared By:
Bhavin Patel
Piyush Radadiya

INTRODUCTION
MUTUAL FUNDS
A mutual fund is a company that brings together money from many
people and invests it in stocks, bonds or other assets. The combined
holdings of stocks, bonds or other assets the fund owns are known as
its portfolio. Each investor in the fund owns shares, which represent
a part of these holdings..
-The U.S. Securities and Exchange Commission

WORKING OF A MUTUAL FUND

CLASSIFICATION OF MUTUAL
FUNDS
Constitution
Structure

Collection entry or exit

charges from investors

Close ended

Load funds

Open ended

No-Load funds

TYPES OF FUNDS
By Objective
Equity Funds
Balance Funds

Money market

REVIEW OF LITERATURE
Zakri Y.Bello (2005):

He was matched a sample of socially responsible stock mutual funds matched to

randomly selected conventional funds of similar net assets to investigate differences
in characteristics of assets held, degree of portfolio diversification and variable
effects of diversification on investment performance. The study found that socially
responsible funds do not differ significantly from conventional funds in terms of any
of these attributes. Moreover, the effect of diversification on investment performance
is not different between the two groups. Both groups underperformed the Domini 400
Social Index and S & P 500 during the study period.
Vikram K. Nanda (1997):

This paper provides a model that explains the structure of mutual funds. Specifically,
the paper explains why funds structure as open-or closed-end funds, and managers
generate earn excess returns that on the margin are increasing in their ability and
decreasing in the size of funds under management. Managers capture the rents from
their ability by optimally setting the management fee and attracting funds from
investors. Investors have stochastic liquidity needs that impose a cost on open-end
funds available for investment to deviate from an optimal level.

 OBJECTIVE OF STUDY

To evaluate the performance of mutual funds in

security market.
To evaluate investment performance of mutual funds
in terms of risk.
To find the investment patterns of investors to invest
in mutual funds.
To study about the different opportunities available in
mutual fund.
To know the factors which are considered by the
investors while investing in mutual fund.

RESEARCH METHODOLOGY
HYPOTHESIS
H0 : Investment in Mutual Funds is beneficial and profitable.
H1 : Investment in Mutual Funds is not beneficial and profitable.
H0 : There would be no significant difference in overall performance of selected

mutual fund Schemes during the study period.

H1: There would be significant difference in overall performance of selected

mutual fund Schemes during the study period.

SAMPLING DESIGN
The samples consist of 10 mutual funds companies Balance fund schemes selected, five
funds from public sector and five funds from private sector mutual funds which have a
history of more than five years.

TYPES OF RESEARCH
For the present study, exploratory research was
adopted to discover the ideas. Through exploration, it
developed the concepts more clearly, establish
priorities, develop operational definitions, and improve
the final research design. This research is both
quantitative and qualitative.

SOURCES OF DATA
Secondary Data

Secondary data is data taken from secondary sources,

internal or external. The sources of secondary data are
published documents, periodicals, books, journals,
reports, internet, magazines, newspapers, etc

List Of Companies
1.

2.
3.
4.
5.
6.
7.
8.
9.
10.

Birla Sun Life 95 Fund (G)

HDFC Balanced Fund (G)
Reliance Regular Savings Balanced Option (G)
DSP Black Rock Balanced Fund (G)
Franklin Templeton India Balanced Fund (G)
UTI Balanced Fund (G)
SBI Magnum Balanced Fund (G)
Canara Robeco Balance fund (G)
LIC Nomura Balanced Fund (G)
ICICI Prudential Balanced funds (G)

DATA ANALYSIS & INTERPRETATION

RETURN
Returns (in %)
0
1 ICICI Prudential Balanced funds
(G)

-5

2 Canara Robeco Balance fund (G)

-10

-15

-20

-25

-9.5 -9.8

3 HDFC Balanced Fund (G)

-10.8
-12.6

4 Franklin Templeton India

Balanced Fund (G)

-14.1

5 Birla Sun Life 95 Fund (G)

6 DSP Black Rock Balanced Fund
(G)

-17.3
-19.5 -19.6

7 Reliance Regular Savings

Balanced Option (G)

-22.5

8 UTI Balanced Fund (G)

9 SBI Magnum Balanced Fund (G)
10 LIC Nomura Balanced Fund (G)

-30

-35
-35.6
-40

Calculation of T TEST
N

Mean

10

-17.13

S.D

D.f

Tc

Tt

Result

7.9123

N - 1=
10 1 =9

1.147

2.262

H1

T =
cal

= -17.13 (5)
7.9123/10

Tcal= 8.84
H0 : There is no significant difference in return of selected mutual fund during the study Period.
H1 : There is significant difference in return of selected mutual fund during study period.
Table of at 5% level of significant and degree of freedom = (n-1) = 2.262
Tc > Tt
8.84 > 2.262
From the above calculation we can says that the calculated value of T is greater than the table value of T
so null hypothesis will be rejected and the result is there is significant difference in return of selected
mutual fund during study period.

BETA

BETA
1.2
1.08

1
0.98
0.8
0.6
0.4
0.2
0

0.82

0.86

0.87

0.88

0.89

0.9

0.9

0.98

Calculation of T TEST
N
10

Mean
0.916

S.D
0.07604

D.f
N -1
=10 1
=9

Tc
1.913

Tt
2.262

Result
H0

Tcal =
= 0.916 - 0.87
0.07604/10

Tcal = 1.913
H0 : There is no significant difference in beta of selected mutual fund during the study Period.
H1 : There is significant difference in beta of selected mutual fund during study period.
Table of at 5% level of significant and degree of freedom = (n-1) = 2.262
Tc > Tt
1.913 > 2.262
From the above calculation we can says that the calculated value of T is less than the table value of T so
null hypothesis will be accepted and the result is there is no significant difference in beta of selected
mutual fund during study period.

STANDARD DEVIATION
Standard Deviation
4
3.73

3.5
3
2.5
2
1.5
1
0.5
0

2.4

2.46

2.52

2.56

2.58

2.6

2.72

2.77

2.97

Calculation of T TEST
N
10

Mean
2.731

S.D

D.f

Tc

Tt

Result

0.3878

N -1
=10 1
=9

14.115

2.262

H1

Tcal =
= 2.731 - 1
0.3878/10

Tcal =14.115
H0 : There is no significant difference in S.D of selected mutual fund during the study Period.
H1 : There is significant difference in S.D of selected mutual fund during study period.
Table of at 5% level of significant and degree of freedom = (n-1) = 2.262
Tc > Tt
14.115 > 2.262
From the above calculation we can says that the calculated value of T is greater than the table
value of T so null hypothesis will be rejected and the result is there is significant difference in
S.D of selected mutual fund during study period.

FINDINGS

ICICI Prudential balanced fund has the better returns to compare the all other funds. As it has

yielded the return is (-9.5). This is due to the portfolio of its investments which have performed
very well. There for the fund manager should be credited for the success of the fund.

DSP Black Rock balanced fund has delivered more consistent returns, as it has the lowest

Standard Deviation (2.4) among all the funds. This is due to the low risk profile of its port
folio of investments. Investors interested in stable returns & less volatility would like to invest
in this mutual fund. The returns of the fund can hence be trusted.

DSP Black Rock Balanced Fund has the lowest risk among all the selected funds, as it has the

lowest Beta (0.82) and thus is less volatile. This means if the market goes up by say 10%, the
funds returns would go up by 8.2% and vice-versa. It is to be noted here that SBI magnum
Balanced fund has a highest Beta of 1.8. Therefore investors who prefer lesser risk would want
to invest in this fund.

 In terms of the size UTI Balanced fund is the largest fund, as it has Net Assets of Rs

898.40 crore, which is the largest among all the selected funds. This shows that a
large number of investors have invested their fund in this fund and also are
confident about the funds performance.
From the table it can be observed that Canara Robeco Balanced fund has the best
performance according to the Sharp Ratio (-5.7) other than that. This means it has
better performance of the mutual fund. The investors should select a mutual fund
with a higher Sharpe ratio, as it yields higher return for the same risk level.
ICICI Prudential balanced fund also has the best performance according to the
Treynors Measure (-17.22) as compared to the other funds. Higher the Treynors
ratios better the returns of the mutual fund. The investor should again select a
mutual fund with a higher Treynors ratio, as it yields higher returns for the same
risk level.
Birla sun life 95 balanced fund has the highest ranking according to Jensons
Measures (-11.57). As with the two measures, higher the Jonsons measures value,
better the performing. This again means it has yielded higher returns at a lower risk
level and has risk adverse investor should go for this fund.

CONCLUSIONS
Investors who want the highest returns and are willing to take higher risk should

invest their fund in ICICI Prudential balance fund, as yielded better returns (-9.5)
among the selected mutual funds.
Investor here should understand the basic fact that all investors are associated with

risk and therefore only by taking a higher return, can they obtain higher returns.
Investors who are interested in consistent returns should invest in DSP Black balance

fund, as it has the lowest standard deviation (2.4) among all the selected mutual
funds.
Investors who have a lower risk appetite should invest in DSP Black Rock Balance

funds, as it has the lowest Beta (0.82) among all the selected mutual funds. Beta
measures the volatility of the fund relative to a particular market benchmark.
Therefore lower the beta lowers the risk and vice-versa.

Thank you