erformance of mutual fund scheme i,e Balanced fund-Growth option with respect to bench mark of BSE-...

8/7/2019 erformance of mutual fund scheme i,e Balanced fund-Growth option with respect to bench mark of BSE- sensex.

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PERFORMANCE EVALUATION OF MUTUAL FUND SCHEME

INDUSTRY PROFILE

The Indian broking industry is one of the oldest trading industries that

have been around even before the establishment of the BSE in 1875. Despite

passing through a number of changes in the post liberalisation period, the

industry has found its way towards sustainable growth. With the purpose of

gaining a deeper understanding about the role of the Indian stock broking

industry in the countrys economy, we present in this section some of the

industry insights gleaned from analysis of data received through primaryresearch.

i. On the basis of geographical concentration, the West region has the

maximum representation of 52%. Around 24% firms are located in the

North, 13% in the South and 10% in the East

ii. 3% firms started broking operations before 1950, 65% between 1950-

1995 and 32% post 1995.

iii. In the cash market, around 34% firms trade at NSE, 14% at BSE and

52% trade at both exchanges. In the derivative segment, 48% trade at

NSE, 7% at BSE and 45% at both, whereas in the debt market, 31% trade

at NSE, 26% at BSE and 43% at both exchanges.

iv. Trading, IPOs and Mutual Funds are the top three products offered with

90% firms offering trading, 67% IPOs and 53% firms offering mutual fund

transactions

v. In terms of various areas of growth, 84% firms have expressed interest in

expanding their institutional clients, 66% firms intend to increase FII

clients and 43% are interested in setting up JV in India and abroad

vi. In terms of IT penetration, 62% firms have provided their website and

around 94% firms have email facility.

AMC ENGINEERING COLLEGE BANGALORE Page 1


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TERMINAL:

Branches & Sub-Brokers:

The maximum concentration of branches is in the North, with as many as

40% of all branches located there, followed by the Western region, with 31%

branches. Around 24% branches are located in the South and East constitutes

for 5% of the total branches of the total sample.

In case of sub-brokers, almost 55% of them are based in the South. West

and North follow, with 30% and 11% sub-brokers respectively, whereas East

has around 4% of total sub-brokers.



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Financial Markets:

The financial markets have been classified as cash market, derivatives

market, debt market and commodities market. Cash market, also known as spot

market, is the most sought after amongst investors. Majority of the sample

broking firms are dealing in the cash market, followed by derivative and

commodities.

In the cash market, around 34% firms trade at NSE, 14% at BSE and

52% trade at both exchanges. In the equity derivative market, 48% of the

sampled broking houses are members of NSE and 7% trade at BSE, while 45%

of the sample operates in both stock exchanges. Around 43% of the broking

houses operating in the debt market, trade at both exchanges with 31% and

26% firms uniquely at NSE and BSE respectively.



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Products

The firm offers trading and various investment related value added

services. The sustained growth of the economy in the past couple of years has

resulted in broking firms offering many diversified services related to IPOs,

mutual funds, company research etc. However, the core trading activity is still

the predominant form of business, forming 90% of the firms in the sample.

Additionally, a host of other value added services such as fundamental and

technical analysis, investment banking, arbitrage etc are offered by the firms at

different levels.



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COMPANY PROFILE

2. 1.Background and inception of the company.

Geojit financial services limited was founded by Mr. C. J. George in 1987

as a partnership for doing broking business in Cochin Stock Exchange. In 1994,

the business was taken over by Geojit Financial Services Ltd... A joint venture

between Mr. C. J. George and the Kerala State Industrial Development

Corporations Ltd (KSIDC). In the following year, the company came up with an

IPO and the shares were listed in the various stock exchanges in India in 1995.

The company stands as the first member of NSE, the first company give

depository services in South India. Geojit Securities Ltd. is Indias first internet

brokerage firm. It has been active in the field of capital markets for 15 years. It is

a leading retail broker listed on major stock exchange and has 100 offices across

the country. The company has been growing at over 300% annually and has anet worth of over Rs.13 cr. The company endeavours to provide the best service

at the lowest possible cost to investors. The aim is supported by well qualified

human resource and constant up-gradation of technology. The company

possesses the largest pool of certified professionals in the Indian stock broking

industry.

2.2) Nature of the business carried.

Depository services

Stock Broking

Commodity futures

Distribution of financial products

Portfolio management services

Software development and sales

Loan against shares and warehouse receipts



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2.3)VISION, MISSION & QUALITY POLICIES:

VISION:

The vision of GEOJIT BNP PARIBAS is to be leading financial and

commodities markets intermediary for individual and institutional clients

from India and Overseas.

They continually strive to raise their products and service standards by

intelligent application of technology and processes.

MISSION:

They understand and respect customers needs to consistently deliver

total quality solution through constants skills up-gradation.

They believe that the company culture help to attract and retain the best

talent.

They uphold uncompromising ethical standards and strive to maintain adistinctive identity in public mindshare through innovation and quality.

They are committed to achieve profitable progress consistently.

They freely share their investments experience across all ages and strata

of society to encourage wise investments for a better future.

QUALITY POLICY

Talented, efficient and competent team of youngsters rolling out high

profile applications for the global business community, keeping in mind

true quality, total customer satisfaction, delivering on time, right time,

every time.

We, at Geojit Technologies, are always striving for continued

improvement and betterment of our own set standards in achieving total

quality management.



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The quality of the products and services delivered by Geojit

Technologies to customers is the concern of every personnel in the

organization.

2.4) PRODUCTS/SERVICES PROFILE:

Services Provided By GEOJIT BNP PARIBAS:

GEOJIT BNP PARIBAS Ltd. Plays a key role in India Capital Market by

giving different financial services to the investors. The company is regarded as

Indias first on-line share brokers and the first internet share trading firm in India.

The scope of GEOJIT BNP PARIBAS Ltd and various functions can be clubbed

under the following heads-

Equities (Broking Services through)

National Stock Exchange (NSE)

The Stock Exchange, Mumbai (BSE)

Derivatives(NSE)

Index Futures

Index Options

Stock Futures

Stock Options

Depository Services-NSDL

All DP services available at all branches

Delivery of shares through internet (Speed-e)



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Off market Transactions

Internet Services

Portfolio Management

GEOJIT BNP PARIBAS Ltd. Is SEBI registered portfolio Manager (Reg

no. 1N000316). They offer discretionary portfolio management services

to those who can invest a minimum of Rs. 5, 00,000. The initial

investment to the portfolio can be made either by transferring the

existing shares or by cash.



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2.5) AREAS OF OPERATION:-

Globally

Abu Dhabi

Bahrain

Dubai

Kawait

Mascat

Ras Alkhaimah

Sharjah

Nationally

Delhi

Kerala

Karanataka

Goa

Timal Nadu

Andhra Pradesh

Maharashtra

Madhya Pradesh

Rajasthan

Gujarat

Uttar Pradesh

West Bengal

Regional



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Belgaum

Bangalore

Hubli

Davangere

Tumkur

Mysore

2.6) OWNERSHIP PATTERN



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2.7) COMPETITORS INFORMATION

INDIABULLS

Indiabulls Group is one of Indias top Business houses with

businesses spread over Real Estate, Infrastructure, Financial Services,

Securities, Retail, Multiplex and Power sectors. The group companies are

listed on important Indian and Overseas markets. Indiabulls has been

conferred the status of a Business Superbrand by The Brand Council,

Superbrands India.

INDIA INFOLINE

The India Info line group, comprising the holding company, India

Info line Limited and its wholly-owned subsidiaries, straddle the entire

financial services space with offerings ranging from Equity research,

Equities and derivatives trading, Commodities trading, Portfolio

Management Services, Mutual Funds, Life Insurance, Fixed deposits,

Gold bonds and other small savings instruments to loan products and

Investment banking.

SHAREKHAN

Sharekhan Limited was formerly known as SSKI Investor Services

Private Limited. The company is based in Mumbai, India. Sharekhan

Limited offers online security broking and portfolio services to institutions

and large corporate houses as well as individual investors.

EDELWEISS CAP

Edelweiss is one of the leading financial services company in India.

Its current businesses include investment banking, securities broking, and

investment management. They provide a wide range of services to

corporations, institutional investors and high net-worth individuals.



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HSBC

HSBC Securities Services, "HSS", is a dedicated provider of

securities services to a wide range of corporate and institutional clients,

including investment managers, insurance funds, pension funds, charityfunds, and private, commercial and central banks and government

agencies.

2.8) INFRASTRUCTURE FACILITIES:-

WELFARE FACILITIES:-

Every employee is provided with the facilities such as, PF, Health

Insurance, Mediclaim along with their spouse and children, ESI, ESOP for

outstanding performers, Performance Appraisal for efficient and

extraordinary workers and for employees above 35yrs. Age is provided with

free health checkup annually.

Also the high authority members are provided with the transport facilities

and many more.

.

RESEARCH FACILITIES:-

A separate R and D department functions in finding out the information

about the area when they are planning to start up a new branch.

Also they function in providing the detailed information about the companys

performance in the market and about the Customers changing preferences

according to the changing environment.



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2.10) WORK FLOW MODEL:

2.11) FUTURE GROWTH AND PROSPECTS:-

Geojit BNP Paribas today is a leading retail financial services company in

India with a growing presence in the Middle East. The company rides on its rich

experience in the capital market to offer its clients a wide portfolio of savings andinvestment solutions. The gamut of value-added products and services offered

ranges from equities and derivatives to Mutual Funds, Life & General Insurance

and third party Fixed Deposits. The needs of over 495,000 clients are met via

multichannel services - a countrywide network of over 500 offices, phone

service, dedicated Customer Care centre and the Internet.

Strategic joint ventures and business partnerships in the Middle East haveprovided the company access to the large Non-Resident Indian (NRI) population


Surveillance

Admin. Server

Internet

Cloud

D P Interface

(Proposed)

GEOJIT

Internet Server

Bank Interface

(Proposed)NSE Terminal

(Stock Exchange)

Clients


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MCKENSYS 7 S FRAME WORK WITH SPECIAL REFERENCE

TO THE ORGANIZATION UNDER STUDY

INDRODUCTION

Two persons who developed this model, Tom Peters and Robert

Waterman, have been consultant at Mckinsey & co. so the 7S-Model is

popularly known as Mckinsey 7S. They published their 7-SModel in their

articleStructure is not Organization (1980) and in their books The art of

Japanese and Management (1981) and In search of excellence (1982).



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Strategy

Strategy is a plan an organization formulates to gain a substantial

advantage over the competition. Strategy is the art of devising and

employing a system of activities that mobilizes all resources towards a

valuable goal. Strategy is the determination of basic long term goals and

objectives of an enterprise, and the adoption of course of action and the

allocation of resources available for carrying out these goals.

Companys Strategy

Strategy comprises of actions a company plans in response to or in

anticipation of changes in its external environment. Being a company of

the stature that it is, Geojit cannot afford to work without objectives. An

overall group objective is already set and all the employees are driventowards that. Geojit believes that no individual is as big as the

organization itself. Competition is the key to survival. Geojit updates itself

of the surrounding competition which is always good and bring out service

and related products to beat the competition.

Structure

Structure describes the hierarchy of authority and accountability in the

organization. These relationships are frequently diagrammed in

organizational charts. Most organizations use some mix of structures

pyramidal, matrix or networked ones to accomplish their goals. A structure

is the formalizing of relationships, roles and responsibilities in order to

organize and perform work.



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Systems

SYSTEMS refer to the processes used to manage the organization.

Systems include

Management Information Systems

Innovation Systems

Performance Management Systems

Financial Systems / Capital Allocation Systems

Compensation System / Reward System

Customer Satisfaction Monitoring System

A system is defined process or set of processes that links and orders

activities to enable work to be done and goals to be achieved. System in

simple words is the formal and informal procedures including

compensation systems, management information systems and capital

allocation systems that govern everyday activity.

Companys Systems

The organization has laid down strict rules and regulations for its

employees. It follows a specific entry and exit timing for all its employees.

Each employee has to follow a specific dress code depending on his line

of work or duty. All junior staff members will have to report to the

designated senior staff member, daily attendance register to the HR

department, is duly processed at the end of each month.

Style

Style of leadership or relationship refers to the manner in which an

individual uses his or her talents, values, knowledge, judgment and

attitudes to lead and relate to others. Style expresses the persons

character. Style is the leadership approach; also the way in which the



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organizations employees present themselves to the outside world, to

suppliers and customers. In simple words, a style is the pattern of

behavior, which a leader adopts in influencing the behavior of his followers

(Subordinates) in the organization context.

Companys Style

The culture of the organization consists of two components:

Organizational Culture - the dominant values and beliefs, and norms,

which have developed over time and become relatively enduring, features

of the organization.

Management Style - This is more of what the managers do, than what they

say. How do the companys managers spend their time? What their

attention focused on? Symbolism- the creation and maintenance of

meaning is the fundamental responsibility of managers. Its Chairman who

sits at the Head Office in Cochin heads the organization. At all other

branches across the country, Regional Managers have been appointed.The Chairman will take decisions related to the group as such. Regional

Heads will take all other decisions relevant to the regions and their line of

work. Each and every manager is responsible and accountable for his or

her decisions and its subsequent implementations. By and large the

decision-makings are decentralized for day-to-day affairs. Only key

decisions are made at the Head Office.

Staff

Staffing may be defined as filling and keeping filled the positions in the

organization structure. This is done by identifying work force requirements,

inventorying the people available and recruiting, selecting, placing,

promoting, appraising, planning the careers of, compensating and training



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or otherwise developing both candidates and current job holders so that

tasks are accomplished effectively and efficiently.

Companys Staff

The human resource management is processes used to develop

managers, socialization processes and ways of shaping basic values of

management cadre, ways of introducing young recruits to the company,

and ways of helping to manage the careers of employees.

CATEGORIES DUTIES RESPONSIBILITY

HUMAN RESOURCE

MANAGER

1) To maintain the

Human Resource in the

organization

2) To maintain

personnel files of all

employees

1) To maintain the

relationship between the

employee and employer

2) To select right person

for the right job

FINANCE MANAGERTo manage the funds of

the organization

1) Planning of funds

2) Arranging for internal aswell as External Audit

MARKETING MANAGER

To know the current

happenings in the

market and make

relative changes

1) To assist the middle and

lower level staff

2) Responsibility is to

increase the sale of the

company

Skills

A skill is the ability, knowledge, understanding and judgment to

accomplish a task. Skills may be defined as what the company does best;

the distinctive capabilities and competencies that reside in their

organization.

Companys Skills



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Establishing a leadership position in all chosen areas of business.

In the process, become the crucial link between the industry, finance and

people.

Geojits adherence to its core values-integrity, enterprise and innovation

has earned it an enviable reputation amongst all the intermediaries and

regulatory authorities of the capital and financial markets.



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SWOT ANALYSIS

Strengths

Every organization has some strength. In some cases this is obvious, for

example, dominant market shares. In other cases, it is a matter of

perspective, for instance, a company is very small and hence has the

ability to move fast. It is important to note that companies that are in a bad

position also have strengths. Whether these strengths are adequate is anissue for analysis.

Companys Strengths

It was the first to start Depository Services through the internet in

India.

It was the first Online Trading Brokerage in India by offering trading

facilities through the Net.

It was the first Online brokerage house to launch integrated internet

trading system for both cash and derivatives segments.

It was the first to start an all-women branch exclusively for women

investors.

The company has the largest pool of certified professionals in the

Indian Stock Broking Industry.



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retains a positive outlook on business aspects and that the

companys initiatives will help it to grow substantially in the near

future.

Threats

No organization is immune to threats. These could be internal, such as

falling productivity, or they could be external, such as lower priced

international competition.

Companys Threats

The threats faced by the company are mainly external in nature.

The major threat to the business of the company is on account of

the developments on the political and technical fronts.

The nature of the Companys business is cyclical depending upon

the business cycle. The Companys business flourishes or remains

depressed depending on the movement of the business cycle.

Enhanced competition among the brokers with ever increasing net

work is also a risk that the company faces.

The entry of banks to broking will lead to further competition in the

business of the company.



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ANALYSIS OF FINANCIAL STATEMENT

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH

2009

Sch.

No.

For the Year

Ended

31st March 2009

For the Year

Ended

31st March 2008INCOMEIncome from operations 12 1,406,065,233 1,915,854,181Other income 13 188,166,490 121,870,403

1,594,231,723 2,037,724,584

EXPENDITURE

Employee costs 14 430,864,623 410,593,592Operating expenses 15 485,856,183 573,119,731Establishment & Other

expenses16 372,435,978 320,455,068

Interest 17 1,118,610 1,491,013Depreciation 4 101,322,357 62,096,335

1,391,597,751 1,367,755,739

PROFIT BEFORE TAX &

EXCEPTIONAL ITEM202,633,972 669,968,845

Exceptional item:

Profit on sale of long term non-

trade investment- 47,430,477

PROFIT BEFORE TAX 202,633,972 717,399,322

Provision for tax- Current 57,090,000 251,700,000- Deferred (3,843,822) (19,843,400)- Fringe Benefit 4,200,000 3,250,000

57,446,178 235,106,600NET PROFIT 145,187,794 482,292,722

Balance brought forward from

previous year564,667,164 303,530,650

PROFIT AVAILABLE FOR

APPROPRIATION709,854,958 785,823,372

Less: Appropriations



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Transfer to General Reserve 30,000,000 50,000,000Proposed Dividend on Equity

Share Capital111,705,932 146,293,609

Corporate Dividend Tax 18,151,809 24,862,5992007-08 Dividend on shares

allotted under ESOP Scheme359,141 -

160,216,882 221,156,208BALANCE CARRIED TO

BALANCE SHEET -Schedule

3

549,638,076 564,667,164



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BALANCE SHEET AS ON 31ST MARCH 2009



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ANALYSIS OF FINANCIAL STATEMENT

GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD. ANNUALRESULTS

Industry: Finance - General Chairman /

ChairPerson:

A P KurianISINNo

INE007B01023

52WeekHigh

53 BookValue

12.24 FaceValue

1

BSE

Code

532285 52Week

Low

15 EPS 0.65 P/E 56.52

NSECode

GEOJITBNPP P/BV 2.99 DivYield

1.37 MarketCap.

820.54


Sch.

No

As at

31st March 2009

As at

31st March 2008SOURCES OF FUNDS

Shareholders Funds

Share capital 1 223,411,864 208,990,870Monies pending allotment - 89,522,754Employee stock options

outstanding

2 14,712,153 9,285,887

Reserves and Surplus 3 2,522,467,393 2,117,726,2992,760,591,410 2,425,525,810

Deferred Tax Liability (Net) - 2,177,822TOTAL 2,760,591,410 2,427,703,632

APPLICATION OF FUNDS

Fixed Assets 4Gross Block 666,634,104 456,531,343Less: Accumulated

Depreciation

214,138,800 125,564,979

452,495,304 330,966,364

Capital Work -in- Progress 3,638,383 17,303,275Net Block 456,133,687 348,269,639Investments 5 1,504,369,055 1,471,909,936

Deferred Tax Asset (Net) 1,666,000 -Current Assets, Loans &

Advances

Sundry Debtors 6 413,734,664 647,351,693Cash & Bank Balances 7 1,441,114,513 1,260,258,310Other Current Assets 8 10,680,030 5,145,148

Loans & Advances 9 1,381,230,122 1,253,993,2823,246,759,329 3,166,748,433

Less :

Current Liabilities &

Provisions

Liabilities 10 1,893,161,610 1,886,474,259Provisions 11 555,175,051 672,750,117

2,448,336,661 2,559,224,376Net Current Assets 798,422,668 607,524,057

TOTAL 2,760,591,410 2,427,703,632

Significant Accounting Policies

and Notes to Accounts

18


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DIFFERENT RATIO

CURRENT RATIO = CURRENT ASSETSCURRENT LIBILITIES

EARNING PER SHARE = EARNING AFTER TAXNO. OF SHARES OUTSTANDING

NET PROFIT MARGIN RATIO = PROFIT AFTER TAXSALES

FIXED ASSET TURNOVER ASSETS = NET SALESFIXED ASSESTS

Ratios Mar ' 09 Mar ' 08 Mar ' 07

Current Ratio 1.32 1.23 2.09

Reported EPS (Rs.) 0.64 2.31 1.01

Net Profit Margin (%) 9.15 23.72 19.16Fixed Assets Turnover

Ratio 2.41 4.90 3.85



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LEARNING EXPERIENCE:-

It was a very good and pleasant experience to work with the people who

are very enthusiastic and highly dedicated in their work within the

organization.

The basic knowledge about the online trading of the shares, derivatives,

commodities etc. was taught by the dealers and the other employees too.

The manager was highly co-operative and informative regarding the stock

market and their organization details.

The details about the steps to be followed to open an account and trading

processes were provided by the back office staffs.

It was really informative, knowledge based environment to students like

us, who will get exposed to the actual practical situations about the

current market conditions.

The technical analysis about the movement of the stock prices and the

market indices values due to several factors which bring major impact on

the countrys economy.

Thus, totally a brief knowledge about the current market condition

analysis and the co-operative working nature within an organization was

taught by the company in charges.

I would thank each and every person of this organization who has helped

me directly or indirectly to complete my project successfully and get a

corporate field exposure.

At last but not the least I thank my non-staff guide in helping me out to

complete my project efficiently.



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GENERAL INTRODUCTION

Research design simply means a search for facts & answers to the

questions and problems. A research design is a purposeful scheme of action

proposed to be covered out in a sequence during the process or research

focusing on the problem to be tackled. It is a guideline for a researcher to enable

him to keep track of his action and to know whether he has moving in the right

direction in order to achieve the goals. The design has specific presentation of

the various steps in the process of research.

I. STATEMENT OF THE PROBLEM

In the current economic scenario interest rates and inflation have

high volatility in the share prices and also in stock market have made

investors confused, one finds it difficult to take decisions on investments.

This is primarily, because investments are risky in nature and investors

have to consider various factors before investing in investment avenues.

Therefore the study aims in knowing the risks & returns of every stock.

II. OBJECTIVES OF THE STUDY

Primary objective

To evaluate the performance of mutual fund scheme i,e Balanced fund-

Growth option with respect to bench mark of BSE- sensex.

Secondary objectives

To study mutual fund industry in India

To study different mutual funds schemes

To make decisions to invest in mutual funds

To know the risk and return of selected companies shares.



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III. SCOPE OF THE STUDY

One of the most important functions of the market index is to showin which direction the set of scrips are heading towards. The market index

as a benchmark against which, the investor evaluate the risk and return of

their institutional portfolio. Market indicator is one of the economic

indicators, if the index is heading upwards; it shows that economy is in a

boom, investors purchasing power is high, and market is bullish. If the

index is downtrend, it signifies slack period in the economy and market is

bearish. If the historical data is projected it shows future trends, by thehelp of this investor can forecast and take decisions accordingly to buy or

sell or to hold the securities. This research seeks to investigate and

constructively contribute to help.

The investors understand the risk and return of selected securities

in comparison with market index.

It also helps investor to understand the working of market index

and their related concepts.

IV. METHODOLOGY

The methodology followed for the current study as follows:

Research Design: is the specification of methods and procedures for acquiring

the information needed. It is the overall operational pattern or framework of the

project that stipulates what information is to be collected from which sources, by

what methods. The current study is aimed at determining the financial

performance of the firm, so descriptive design has been followed.

Geojit BNP Paribas Ltd, taken as a case study to analyse the financial

performance of a firm, for which recent 2 years financial statements selected to

calculate accounting ratios and comparing these statements over the previous

period comparative and common size analysis is used.

Sources of Data: the required information has been collected form followingsources,



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Primary sources: it is discussed with the company executives in collecting

information regarding functioning of the firm and technical aspects, as well as

with the internal guide to learn how to analyze financial performance of the

company.

Secondary data: All secondary data has been collected from the Company

Website, Internet, The required information are also collected form respective

FACT SHEETS of different companies & website of mutual fund India.com,

Global research study is also adhered.

V. LIMITATIONS OF THE STUDY

This study is based on the secondary data collected from Mutual fund

India.com information; no other efforts have been made to verify their

correctness.

Possibility of errors in data collection.

The time period for the project was limited only Ten Weeks And

information provided is limited to the extent of internet and journals.

The analysis is strictly based on the share price and unit price information.

MUTUAL FUND INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the

concept of mutual fund by UTI in the year 1963. Though the growth was slow,

but it accelerated from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen a dramatic

improvement, both qualities wise as well as quantity wise. Before, the monopoly

of the market had seen an ending phase; the Assets under Management (AUM)

was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs.

470 bn in March 1993 and till April 2004, it reached the height of 1540 bn.



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The main reason of its poor growth is that the mutual fund industry in

India is new in the country. Large sections of Indian investors are yet to be

intellectuated with the concept. Hence, it is the prime responsibility of all mutual

fund companies, to market the product. The mutual fund industry can be broadlyput into four phases according to the development of the sector. Each phase is

briefly described as under.

First phase -1964-1978

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.

It was set up by the Reserve Bank of India and functioned under the Regulatory

and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took

over the regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700

crores of assets under management.

Second phase-1987-1993 (Entry of public sector funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by

Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),

Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda

Mutual Fund (Oct 92).

LIC in 1989 and GIC in 1990.The end of 1993 marked Rs.47, 004 as assets

under management.

Third phase-1993-2003 (Entry of private sector funds)

With the entry of private sector funds in 1993, a new era started in the

Indian mutual fund industry, giving the Indian investors a wider choice of fund

families. Also, 1993 was the year in which the first Mutual Fund Regulations

came into being, under which all mutual funds, except UTI were to be registered

and governed. The erstwhile Kothari Pioneer (now merged with Franklin

Templeton) was the first private sector mutual fund registered. The 1993 SEBI

(Mutual Fund) Regulations were substituted by a more comprehensive and



39/79


revised Mutual Fund Regulations in 1996. The industry now functions under the

SEBI (Mutual Fund) Regulation 1996.

Fourth phase-since February 2003

This phase had bitter experience for UTI. It was bifurcated into two

separate entities. One is the Specified Undertaking of the Unit Trust of India with

AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of

Unit Trust of India, functioning under an administrator and under the rules

framed by Government of India and does not come under the purview of the

Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB

and LIC. It is registered with SEBI and functions under the Mutual Fund

Regulations. With the bifurcation of the erstwhile UTI which had in March 2000

more than Rs.76,000 crores of

AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBIMutual Fund Regulations, and with recent mergers taking place among different

private sector funds, the mutual fund industry has entered its current phase of

consolidation and growth. As at the end of September, 2004, there were 29

funds, which manage assets of Rs.153108 crores under 421 schemes.

FUTURE OF MUTUAL FUNDS IN INDIA

By December 2004, Indian mutual fund industry reached Rs 1,50,537

crore. It is estimated that by 2010 March-end, the total assets of all scheduled

commercial banks should be Rs 40900 crores The annual composite rate of

growth is expected 13.4% during the rest of the decade. In the last 5 years we

have seen annual growth rate of 9%. According to the current growth rate, by

year 2010, mutual fund assets will be double.



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Some facts for the growth of mutual funds in India

100% growth in the last 6 years.

Number of foreign AMC's are in the que to enter the Indian markets like

Fidelity Investments, US based, with over US$1trillion assets under

management worldwide.

Our saving rate is over 23%, highest in the world. Only channelizing these

savings in mutual funds sector is required.

We have approximately 29 mutual funds which is much less than US

having more than 800. There is a big scope for expansion.

'B' and 'C' class cities are growing rapidly. Today most of the mutual funds

are concentrating on the 'A' class cities. Soon they will find scope in the

growing cities.

Mutual fund can penetrate rurals like the Indian insurance industry with

simple and limited products.

SEBI allowing the MF's to launch commodity mutual funds.

Emphasis on better corporate governance.

Trying to curb the late trading practices.

Introduction of Financial Planners who can provide need based advice.



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MUTUAL FUNDSMeaning

A mutual fund is a trust that pools the money of many investors -- its

shareholders -- to invest in a variety of different securities. Investments may be

in stocks, bonds, money market securities or some combination of these. Those

securities are professionally managed on behalf of the shareholders, and each

investor holds a pro rata share of the portfolio -- entitled to any profits when the

securities are sold, but subject to any losses in value as well.

A mutual fund, by its very nature, is diversified -- its assets are invested in

many different securities. Beyond that, there are many different types of mutual

funds with different objectives and levels of growth potential, furthering your

chances to diversify.

ADVANTAGES OF MUTUAL FUND INVESTMENT

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Affordability

Well Regulated



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TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its

investment objectives.

ON THE BASIS OF ITS STRUCTURE

_Open-ended Funds

An open-end fund is one that is available for subscription all through the

year. These do not have a fixed maturity. Investors can conveniently buy and sell

units at Net Asset Value (NAV) related prices. The key feature of open-end

schemes is liquidity.

Closed-ended Funds

A closed-end fund has a stipulated maturity period which generally

ranging from 3 to 15 years. The fund is open for subscription only during a

specified period. Investors can invest in the scheme at the time of the initial

public issue and thereafter they can buy or sell the units of the scheme on the

stock exchanges where they are listed. In order to provide an exit route to the

investors, some close-ended funds give an option of selling back the units to the

Mutual Fund through periodic repurchase at NAV related prices. SEBI

regulations stipulate that at least one of the two exit routes is provided to the

investor



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ON THE BASIS OF INVESTMENT OBJECTIVE\SCHEMES OFMUTUAL FUND

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the

medium to long- term. Such schemes normally invest a major part of their corpus

in equities. Such funds have comparatively high risks. These schemes provide

different options to the investors like dividend option, capital appreciation, etc.

and the investors may choose an option depending on their preferences

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income toinvestors. Such schemes generally invest in fixed income securities such as

bonds, corporate debentures, Government securities and money market

instruments. Such funds are less risky compared to equity schemes. These

funds are not affected because of fluctuations in equity markets.

Balanced Scheme

The aim of balanced funds is to provide both growth and regularincome as such schemes invest both in equities and fixed income securities in

the proportion indicated in their offer documents. These are appropriate for

investors looking for moderate growth. They generally invest 40-60% in equity

and debt instruments. These funds are also affected because of fluctuations in

share prices in the stock markets. However, NAVs of such funds are likely to be

less volatile compared to pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy

liquidity, preservation of capital and moderate income. These schemes invest

exclusively in safer short-term instruments such as treasury bills, certificates of

deposit, commercial paper and inter-bank call money, government securities,

etc. Returns on these schemes fluctuate much less compared to other funds.



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Gilt Fund

These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due tochange in interest rates and other economic factors as is the case with income

or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE

Sensitive index, S&P NSE 50 index (Nifty), etc, these schemes invest in the

securities in the same weightage comprising of an index. NAVs of such

schemes would rise or fall in accordance with the rise or fall in the index, thoughnot exactly by the same percentage due to some factors known as terms.

Necessary disclosures in this regard are made in the offer document of the

mutual fund scheme.



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THEORY OF PORTFOLIO MANAGEMENT

Portfolio is a combination of securities such as stocks, bonds, and money

market instruments.. Diversification of investments helps to spread risk over

many assets. A diversification of securities gives the assurance of obtaining the

anticipated return on the portfolio. In a diversified portfolio. Some securities may

not perform as expected, but others may exceed the expectation and the actual

return of the portfolio reasonably close to the anticipated one.

PROCESS OF PORTFOLIO MANAGEMENT

Portfolio management can be described as a systematic, continuous, dynamicand flexible process, which involves:

Identifying and specifying an investors objective, preferences and

constraints to develop clear investment policies.

Developing strategies by choosing optimal combinations of financial and

real assets available in the market and implementing the strategies

Monitoring the market conditions, relative asset values, and the investors

circumstances

Making adjustments in the portfolio to reflect significant changes in one or

more relevant variables

PORTFOLIO CONSTRUCTION


Specification and qualification of investor

objectives, constraints and Preferences

Relevant economic, social, political

sectors and security considerations

Portfolio construction and revision, asset

allocation, portfolio optimization. security

selection, implementation and execution


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Portfolio is a combination security such as stocks, bonds and money

marketing instruments. The process of blending together broad assets classes

so as to obtain optimum return with minimum risk is called portfolio construction.

PORTFOLIO EVALUATIONThe portfolio theory is the basis of portfolio management and relates to

the efficient portfolio investment in financial and physical assets, including

shares and debentures of companies. A portfolio of an individual or a corporate

unit is the holding of securities and investment in financial assets. These

holdings are the result of individual preferences and decisions of the holders

regarding risk and return and a host of other considerations.

Portfolio evaluation can be done under three heads, they are

Sharpe index model

Treynor model

Jensen model

SHARPE PERFORMANCE INDEX MODEL

William Sharpe has suggested a new model. Instead of comparing the

risk of each scrip to every other scrip, it can be compared with market risk, which

leads to the comparison of market return to Scrip Return. He takes into account

only the systematic Risk on the Portfolio (Beta). The two major factors which

influence his performance are the return achieved and the level of risk that the

portfolio is exposed to.

Market returns being related positively to risk, evaluation has to take into

account:

1. Rate of returns or excess return over risk free rate.

2. Level of Risk both Systematic (Beta) and Unsystematic and residual risks

through proper diversification.

Sharpe index = Rp - RfP

Rp = Average return on the portfolio

Rf = Average risk free rate



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P= Standard deviation ofportfolio return

TREYNOR PERFORMANCE INDEX

In treynors measure the risk measure of standard deviations namely, total

risk of the portfolio is replaced by market risk, measured by beta, which is not

diversification. The measure is calculated by dividing the portfolio beta (a

measure of market, or systematic risk) into the average difference between the

portfolio's returns and returns on a risk-free asset

Treynor measure = Rp - Rf

pRp = Average return on the portfolio

Rf= Average risk free rate

p = Weighted average for portfolio



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ANALYSIS, INTERPRETATION OF RESULTS

PERFORMANCE ANALYSIS OF 6 MUTUAL FUNDS OFDIFFERENT COMPANYS

1. UTI Balanced fund: The fund facts are as follows

Fund Objective.

Aims to invest in portfolio pf equity/equity related securities and fixed

income securities (Debt and money market instrument) with a view to generate

regular income together with capital appreciation.

Fund Feature.

Type of scheme: Open ended

Nature : Equity and Debt

Option : Growth

Launch date : Jan 20, 1995

NAV : 43

Corpus (Rs cr) : 726.7 as on dec. 31, 08

Entry load : Nil

Exit load : = 3 Years - NIL.

Fund Manager : Amandine Chopra



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Table 1. Showing the Portfolio investment of UTI Balanced fund

SECTOR ALLOCATION (%)

Auto & Auto Ancillaries 1.94

Bank 18.88

Cements 6.25

Computers software & education 4.68

Current Assets 2.93

Electrical & Electrical equipments 4.37

Electronics 3.51

Engineering & Industrial machinery 5.08Fertilizers & Pesticides agro chemicals 0.96

Finance 27.94

Glass & ceramics 0.73

Hotels & Restaurants 0.52

House & Constructing 0.65

Metals 0.62

Oil & Gas petroleum refine 5.5

Pharmaceuticals 2.95

Power generation, transmission & equipments 4.42

Rubber & tyres 0.86

Securities 3.38

Steel 1.13

Sugar 0.21

Telecom 1.25

Tobacco & pan masala 1.24



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Asset Allocation (%)

Equity DebtCash &

Equivalent

57.41 21.29 21.3



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TABLE 2 SHOWINGCALCULATIONOFMEAN , STANDARDDEVIATIONAND BETA FOR1 YEAR ofUTI Balanced fund

UTI

Days Ri Rm Ri-Ri Ri-Ri2 Rm-RmRm-Rm2

(Rm-Rm)(Ri-Rm)

Jan-09 -0.3725 -0.3660 -0.4148 0.1721 -0.6330 0.4007 0.2626

Feb-09 0.3875 -0.2947 0.3452 0.1191 -0.5617 0.3155 -0.1939

Mar-09 0.1779 0.4804 0.1356 0.0184 0.2134 0.0455 0.0289

Apr-09 -1.906 0.9717 -1.9491 3.7989 0.7047 0.4966 -1.3735

May-09 1.6975 1.4483 1.6552 2.7397 1.1813 1.3954 1.9553

Jun-09 0.1255 -0.0119 0.0832 0.0069 -0.2789 0.0778 -0.0232

Jul-09 0.1384 0.3580 0.0962 0.0092 0.0910 0.0082 0.0087

Aug-09 -0.066 0.0434 -0.1084 0.0117 -0.2235 0.0499 0.0242

Sep-09 0.2275 0.4156 0.1852 0.0343 0.1486 0.0220 0.0275

Oct-09 -0.2543 -0.3397 -0.29663 0.0879 -0.6067 0.3681 0.1799Nov-09 0.3695 0.3495 0.327233 0.1070 0.0825 0.0068 0.0270

Dec-09 -0.0164 0.1510 -0.05884 0.0034 -0.1159 0.0134 0.0068

0.0423 0.2671 7.1091 0.0017 3.2005 0.9305

Ri

Rm

Mean 0.0423 Mean 0.2671

Std 0.8039 Std 0.5394

Beta 0.2907



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Data Analysis

Interpretation:

The UTI has a portfolio investment in that it has invested more on finance i.e.

27.94%. The overall asset allocation is more on equity i.e. 57.41% . The

calculation of mean and standard deviation shows that 0.0423 and 0.8039

respectively. The beta is .291, risk free rate is 8% taken as on basis of

assumption. On the basis of these data the Sharpes measure is better than

Treynors measure, i.e. -.O22is greater than -.061.


Measures

Sharpe = Rp-Rf / sd 0.0423-6/0.8039 -.O22

Treynor = Rp-Rf /Bp 0.0423-6/.291 -.061

Funds Mean StandardDeviation

Beta Risk free

UTI Balanced fund 0.0423 0.8039 .291 6%


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Table 3 showing Portfolio investment of LIC Balanced fund


Bank 16.65

Current Assets 34.46


Engineering & Industrial machinery 7.37

Entertainment 0.67

Finance 5.23


Metals 0.81

Miscellaneous 0Oil & Gas petroleum refine 10.65

Power generation, transmission & 10.84

Steel 1.78

Telecom 0.32

Textiles 1.25



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Equity DebtCash &

Equivalent

64.6 0 35.4

Table 4 showing calculation of mean ,standard deviation and Beta for

1 yearof LIC Balanced fund


LIC

Days Ri RmRm-Rm

Rm-Rm2 Ri-Ri Ri-Ri2

(Rm-Rm)(Ri-Ri)

Jan-09 0.1027 -0.3660 -0.6330 0.4007 0.0372 0.0014 -0.0236

Feb-09 -0.0102 -0.2947 -0.5617 0.3156 -0.0757 0.0057 0.0425

Mar-09 0.2946 0.4805 0.2135 0.0456 0.2291 0.0525 0.0489

Apr-09 -1.8598 0.9717 0.7047 0.4966 -1.9253 3.7066 -1.3568

May09 1.5469 1.4483 1.1813 1.3955 1.4814 2.1945 1.7500

Jun-09 0.0620 -0.0120 -0.2790 0.0778 -0.0035 0.0000 0.0010

Jul-09 0.2728 0.3581 0.0911 0.0083 0.2073 0.0430 0.0189Aug-09 -0.0219 0.0434 -0.2236 0.0500 -0.0874 0.0076 0.0195

Sep-09 0.3639 0.4156 0.1486 0.0221 0.2984 0.0891 0.0443

Oct-09 -0.4289 -0.3397 -0.6067 0.3681 -0.4944 0.2444 0.3000

Nov-09 0.2922 0.3496 0.0826 0.0068 0.2267 0.0514 0.0187

Dec-09 0.1720 0.1511 -0.1159 0.0134 0.1065 0.0114 -0.0124

0.0655 0.2671 3.2005 0.8511Ri

Rm

Mean 0.0655 Mean 0.2671

Std 0.7632 Std 0.5394

Beta 0.2659


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Data Analysis

Mersures

Sharpe = Rp-Rf / P .0655-.06/.7632 .0072Treynor = Rp-Rf /Bp .0655-.06/.266 .021

Interpretation:

The LIC has a portfolio investment in that it has invested more on current assets

i.e. 34.46%. The overall asset allocation is more on equity i.e. 64.66% . The


respectively. The beta is 0.2659, risk free rate is 6% taken as on basis of

assumption. On the basis of these data the Treynors measure is better than

Sharpes measure, i.e. .0072 is greater than .021.


Funds Mean Standard

Deviation

Beta Risk free

LIC Balanced fund-G

0.06550.7632 0.2659

6%


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table 5 showing Portfolio investment of ING Balanced fund



Auto & Auto Ancillaries 3.76Bank 15.37

Computer software & education 5.59

Consumer & durables 0.73



Fertilizers & pesticides Agrochemicals 3.15

Finance 4.78

House & Constructing 2.06Miscellaneous 0.11



Plastic 1.15

Power generation, transmission & equipments 4.93

Shipping 0.9

Steel 2.55

Telecom 4.89

Tobacco & panmasala 3.21


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Equity DebtCash &Equivalent

74.94 0 25.06



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Table 6 showing calculation of mean, standard deviation and Beta for

1 year of ING Balanced fund

Data Analysis


Beta Risk free

ING Balanced fund-G 0.061 0.9906 0.1717

6%

INTERPRETATION

The ING has a portfolio investment in that it has invested more on Electrical and

electrical equiptment i.e. 25.06%. The overall asset allocation is more on equity

i.e. 74.94% . The calculation of mean and standard deviation shows that 0.061

and 0.9906 respectively. The beta is 0.1717 , risk free rate is 8% taken as on


Months Ri Rm Rm-Rm Rm-Rm2 Ri-Ri Ri-Ri2

(Rm-Rm)(Ri-Ri)

Jan-09 -0.1069 -0.3660 -0.6330 0.4007 -0.1679 0.0282 0.1062

Feb-09 -0.0423 -0.2947 -0.5617 0.3155 -0.1033 0.0107 0.0580

Mar-09 0.1878 0.4804 0.2134 0.0455 0.1268 0.0161 0.0270

Apr-09 -2.6264 0.9712 0.7047 0.4966 -2.6874 7.2223 -1.8938

May-09 1.8129 1.4483 1.1813 1.3954 1.7519 3.0693 2.0695

Jun-09 0.1682 -0.0112 -0.2789 0.0778 0.1072 0.0115 -0.0299

Jul-09 0.3584 0.3580 0.0910 0.0082 0.2974 0.0885 0.0270

Aug-09 0.2831 0.0434 -0.2235 0.0499 0.2221 0.0493 -0.0496

Sep-09 0.3359 0.4156 0.1486 0.0220 0.2749 0.0756 0.0408

Oct-09 -0.2494 -0.3397 -0.6067 0.3681 -0.3104 0.0964 0.1883Nov-09 0.3729 0.3495 0.0825 0.0068 0.3119 0.0973 0.0257

Dec-09 0.2336 0.1510 -0.1159 0.0134 0.1726 0.0298 -0.0200

Sum 0.0606 0.2671 0.0011 3.2005 -0.0039 10.7950 0.5496

ING Balanced fund BSE 100 SNSEX

mean 0.061 mean 0.2671

Std 0.9906 Std 0.5394

Beta 0.1717

MersuresSharpe = Rp-Rf / P .061-.06/.991 .001Treynor = Rp-Rf /Bp .061-.06/.1717. .0058


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basis of assumption. On the basis of these data the Sharpes measure is better

than Treynors measure, i.e. .001 is greater than .0058

4. Sundaram BNP Balanced fund Growth

Fund objective

The scheme seeks to generate capital appreciation & current

income through a mix of investment in equity & fixed income securities.

Fund Feature

Type of scheme : Open ended

Nature :Equity and Debt

Option : Growth

Launch date : May 25, 2000

NAV : 25.65

Corpus (Rs cr) : 29 as on dec 31, 08

Entry load : Nil

Exit load : Redemptions: For all investmet of 1% of he applicable NAV

If redeemed or switched out

Fund Manager : Satish ramanath,Rahul pal



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Ttable 7 Showing Portfolio investment of Sundaram BNP

Balanced fund



Bank 2.62

Cement 2.25


Current Assets 4.13

Diversified 5.87




Finance 15.45




Steel 8.23

Telecom 1.39



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Equity DebtCash &

Equivalent67.07 28.81 4.12



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Table 8 showing calculation of mean,standard deviation and Beta for

1 year of Sundaram BNP Balanced fund

Data Analysis


Beta Risk free


Days Ri Rm Rm-Rm Rm-Rm2 Ri-Ri Ri-Ri2 (Rm-Rm)(Ri-Ri)Jan-09 -0.1167 -0.3660 -0.6330 0.4007 -0.1667 0.0278 0.10554

Feb-09 -0.0387 -0.2947 -0.5617 0.3155 -0.0887 0.0078 0.04984

Mar-09 -0.5513 0.4804 0.2135 0.0455 -0.6013 0.3616 -0.12838

Apr-09 -1.3267 0.9717 0.7047 0.4966 -1.3767 1.8953 -0.9701

May-09 2.4539 1.4483 1.1813 1.3954 2.4038 5.7787 2.8397

Jun-09 -0.4476 -0.0112 -0.279 0.0778 -0.4976 0.2476 0.1388

Jul-09 0.2213 0.3580 0.0910 0.0082 0.1713 0.0293 0.0156

Aug-09 0.2489 0.0434 -0.2235 0.0499 0.1989 0.0395 -0.0445

Sep-09 -0.1623 0.4156 0.1486 0.0220 -0.2123 0.0451 -0.0315

Oct-09 -0.2797 -0.3397 -0.6067 0.3681 -0.3297 0.1087 0.2001

Nov-09 0.3049 0.3496 0.0826 0.0068 0.2549 0.06490.0210

Dec-09 0.2903 0.1510 -0.1159 0.0134 0.2403 0.0577-0.0278

0.0496 0.2671 3.20052.1682

Ri Rm

Mean 0.0496 Mean 0.0496 0.2671

Std 0.8875 Std 0.8875 0.5394

Beta 0.6774


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SundaramBNP Paribas 0.0496 0.8875 0.6774

6%

INTERPRETATION

The Sundaram BNP has a portfolio investment in that it has invested more on

Finance i.e. 15.45%. The overall asset allocation is more on equity i.e. 67.07% .

The calculation of mean and standard deviation shows that 0.0496 and 0.8875

respectively. The beta is 0.6774, risk free rate is 6% taken as on basis of

assumption. On the basis of these data the Sharpes measure is better than

Treynors measure, i.e. -.017 is greater than -.022.

5. Birla sun life balanced fund growth

Fund objectiveThe scheme aims to balance income requirement with growth of capital

balanced mix of investment in equity & debt.

Fund Feature

Type of scheme: Open ended


Option : Growth

Launch date : oct 4,1999

NAV : 25.78

Corpus (Rs cr) : 82.24 as on dec 31,08

Entry load : Nil

Exit load : Nil


Mersures

Sharpe = Rp-Rf / P .045-.06/.8875 -.017Treynor = Rp-Rf /Bp .045-.06/..6774 -.022


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Fund Manager : A.Balasubramania



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Asset Allocation (%

Table 10 showing calculation of mean, standard deviation and Beta

for 1 yearof Birla sun life Balanced fund-Growth

Days Ri Rm Rm-RmRm-Rm2 Ri-Ri Ri-Ri2

(Rm-Rm)(Ri-Ri)

Jan-09 -0.3641 -0.3660 0.0990 0.0098 -0.3911 0.1530 -0.0387

Feb-09 -0.0353 -0.2947 0.0277 0.0008 -0.0623 0.0039 -0.0017

Mar-09 -0.0246 0.4805 -0.7475 0.5587 -0.0516 0.0027 0.0385

Apr-09 -1.5783 0.9717 -1.2387 1.5344 -1.6053 2.5770 1.9885

May-09 1.7579 1.4483 -1.7153 2.9423 1.7309 2.9962 -2.9691

Jun-09 -0.0288 -0.0120 -0.2550 0.0650 -0.0558 0.0031 0.0142

Jul-09 0.2976 0.3581 -0.6251 0.3907 0.2706 0.0732 -0.1692

Aug-09 0.0506 0.0434 -0.3104 0.0964 0.0236 0.0006 -0.0073Sep-09 0.0625 0.4156 -0.6826 0.4660 0.0355 0.0013 -0.0243

Oct-09 -0.2580 -0.3397 0.0727 0.0053 -0.2850 0.0812 -0.0207

Nov-09 0.2582 0.3496 -0.6166 0.3802 0.2312 0.0535 -0.1426

Dec-09 0.1873 0.1511 -0.4181 0.1748 0.1603 0.0257 -0.0670

0.0271 0.2671 6.6243 -1.3994

Ri. Rm

Mean 0.0271 Mean 0.2671

Std 0.7368 Std 0.5394

Beta -0.2112


Equity DebtCash &

Equivalent

60.29 36.55 3.16


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Data Analysis

INTERPRETATION

The Birla Sun has a portfolio investment in that it has invested more on Banks

i.e. 21.67%. The overall asset allocation is more on equity i.e. 60.29% . The


respectively. The beta is -0.2112, risk free rate is 6% taken as on basis of

assumption. On the basis of these data the Treynors measure is better than

Sharpes measure, i.e. .156 is greater than -.045.



Beta Risk free

Birla sun life 0.0271 0.7368 -0.2112 6%

Mersures

Sharpe = Rp-Rf / P .027-.06/.7368 -.045

Treynor = Rp-Rf /Bp .027-.06/-.2112 .156


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6. HDFC Balanced fund growth

Fund objective

The primary objective of the scheme is to generate capital appreciationalong with current income form a combined portfolio of equity & equity related

&debt money market instruments.

Fund feature

Type of scheme : Open ended


Option : Growth

Launch date : Aug 10,2000.NAV : 25.30

Corpus (Rs cr) : 82.37 as on dec 31,08

Entry load : Nil

Exit load : 1%, if the value is less than Rs. 5crore and within 1 year, if

Nil

Fund Manager : Chirag setalvad.



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Table 11 showing Portfolio investment of HDFC Balanced fund-Growth


SECTOR ALLOCATION (%)Auto & autoanciliaries 6.52

Bank 14.44

Cement 5.67

Chemicals 1.57


Consumer & durables 3.31

Current assets 1.97

Electrical & electrical equipment 4.98



Finance 16.88


Oil & Gas petroleum refiner 8.61

Paper 2.02

Personal care 2.52Pharmaceuticals 9.95

Plastics 0.96

Steel 0.88

Telecom 2.57

Tobacco & pan masala 3.81


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Table 12 showing calculation of mean, standard deviation and Betafor 1 year of HDFC Balanced fund-Growth

Days Ri Rm Rm-RmRm-Rm2 Ri-Ri Ri-Ri2

(Rm-Rm)(Ri-Ri)

Jan-09 -0.3616 -0.3660 0.0990 0.0098 -0.3708 0.1375 -0.0367

Feb-09 -0.3716 -0.2947 0.0277 0.0008 -0.3807 0.1449 -0.0106

Mar-09 0.2644 0.4805 -0.7475 0.5587 0.2553 0.0652 -0.1908

Apr-09 -2.0926 0.9717 -1.2387 1.5344 -2.1017 4.4173 2.6034

May-09 1.2435 1.4483 -1.7153 2.9423 1.2343 1.5236 -2.1173

Jun-09 0.1260 -0.0120 -0.2550 0.0650 0.1169 0.0137 -0.0298

Jul-09 0.4792 0.3581 -0.6251 0.3907 0.4701 0.2210 -0.2938

Aug-09 -0.0047 0.0434 -0.3104 0.0964 -0.0139 0.0002 0.0043

Sep-09 0.4501 0.4156 -0.6826 0.4660 0.4410 0.1945 -0.3010

Oct-09 -0.1156 -0.3397 0.0727 0.0053 -0.1247 0.0156 -0.0091

Nov-09 0.2962 0.3496 -0.6166 0.3802 0.2870 0.0824 -0.1770

Dec-09 0.1963 0.1511 -0.4181 0.1748 0.1872 0.0350 -0.0783

0.0091 0.2671 6.6243 -0.6366

Ri

Mean 0.0091

Rm

Mean 0.2671

Std 0.7892 Std 0.5394

Beta -0.0961

Data Analysis


Equity DebtCash &

Equivalent67.59 15.41 17.00


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.

Table 13 Showing Ranking of different Mutual Fund Scheme.

Table 14 Showing Points Allotments to Mutual Fund to assign

ranks.

FundsMea

n

StandardDeviatio

nBeta

Sharpe

Treynor

Points Ranks

UTI balanced fund-G 4 4 5 5 5 23 5

LIC Balanced fund-G

1 2 4 1 3 11 1

ING Balanced fund-G

2 6 3 2 4 17 4

Sundaram BNPParibas

3 5 6 3 6 23 6

Birla sun life5 1 2 6 2 16 3

HDFC Balanced-G 6 3 1 4 1 15 2


Funds MeanStandardDeviation

Beta Sharpe'sTreynor'sRankings

UTI balanced fund-G 0.0423 0.8039 .291 -.O22 -.061 1

LIC Balanced fund-G 0.0655 0.7632 0.2659 .0072 .021 6

ING Balanced fund-G 0.061 0.9906 0.1717 .001 .0058 5

Sundaram BNPParibas

0.0496 0.8875 0.6774 -.017 -.022 2

Birla sun life 0.0271 0.7368 -0.2112 -.045 .156 7

HDFC Balanced-G 0.0091 0.7892 -0.0961 -.0645 .529 3


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INTERPRETATION

1. Beta:- In this category all the funds have all most the same beta value. In

this Bearish market condition the fund, which has least Beta, is considered

has good beta value. We can evaluate the performance by comparing the

beta values. HDFC &Birla sun life both the funds have least volatile, where

has Sundaram BNP has more volatile compare to other six funds.

2. Mean:- It indicates the average return of mutual fund schemes .In this

case LIC Balanced Growth has highest value of mean and HDFC

Balanced G fund has least value.

3. Standard Deviation:- For a better return deviation should be zero with

respect to mean value. LIC Balanced Growth has highest value of mean but

at the same time Birla Sun Life has least value of Standard Deviation. INGBalanced fund-G has more deviate from its daily average return

4. Sharpe ratio:- The Sharpe Ratio is a measure of excess return per unit of

total risk. Higher the Sharpe Ratio, the better. LIC Balanced fund-G has

highest Sharpe ratio value because it is less risk than other funds

schemes.

5.Treynor ratio:- It is a measure of excess return per unit of systematic

risk. Sundaram BNP Paribas has least value of Treynor ratio it indicates thatreturn is less than risk but at the same time HDFC Balanced-G has highest

value. It means that performance of HDFC is much betterthan other funds.



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9.1 FINDINGS

1. Performance Evaluation of mutual funds on the basis of Sharpes measure by

taking into consider the Beta, Standard deviation & Average return.

The Birla sun life fund is having return value of 0.0271% whose Beta &

Standard are -0.2112& 0.7368.

ING Balanced fund-G is having highest standard deviation value of

0.9906 whose beta & return are 0.1717 & 0.061.

Sundaram BNP Paribas is having highest beta value of 0.6774 which is

having more risk compared to other nine funds..

2. Sharpes index top position to LIC Balanced fund-G with the value of .0072 &

its return is 0.0655 & the beta is 0.2659 & its standard deviation is 0.7632.

.

3. Treyners index top position to HDFC Balanced-G fund with the value of .529

& its return is 0.0091 & its standard deviation is 0.7892.

4. LIC & Birla sun life funds both are also performing well according to Treyners

index with the value of .021 & .156.



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CONCLUSION

After studying & analyzing different mutual fund schemes the following

conclusions can be made: The most important consideration while making

investment decision was Return aspect followed by Safety, Liquidity and

Taxability On the basis of the analysis the performance of the schemes

during the study period Can be concluded to be good those who want to

eliminate the risk element but still want to reap a better then it would be

advisable to go for debt or arbitrage schemes, which ensure both safety and

return.

So the future of mutual funds in India is bright, because it meets investors needs

perfectly this will give boost to Indian investors and will attract foreign investors

also. It will lead to the growth of strong institutional framework that can support

the capital markets in the long run



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BIBLIOGRAPHY

Books:

Security analysis and Portfolio management: Punithavathy

Pandian

Business Research metholodgy: Kotari

Key information memorandums.

Franklin Templeton KIM

Reliance mutual fund KIM

SBI mutual fund KIM

Www.amfiindia.com / Historical NAVs of mutual fund schemes

www.mutualfundindia.com

www.geojitbnpparibas.com

www.theeconomictimes.com
http://www.mutualfundindia.com/http://www.geojitbnpparibas.com/http://www.mutualfundindia.com/http://www.geojitbnpparibas.com/

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